KOSANAM RAMA RAO,GUNTUR vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1), GUNTUR

Facts

The assessee sold immovable properties for Rs. 72.75 lacs in A.Y. 2017-18, receiving Rs. 46.76 lacs of the consideration in cash, which violated Section 269SS of the Income Tax Act. Consequently, the Addl/Joint Commissioner of Income Tax imposed a penalty of Rs. 46.76 lacs under Section 271D of the Act, which was subsequently upheld by the CIT(A). The assessee filed an appeal against this order, which also involved a 15-day delay in filing that was condoned by the Tribunal.

Held

The Tribunal quashed the penalty of Rs. 46.76 lacs imposed under Section 271D of the Income Tax Act. It held that the Assessing Officer failed to record the requisite satisfaction for initiating penalty proceedings in the body of the assessment order. Citing Supreme Court and High Court judgments, the Tribunal emphasized that such recorded satisfaction is a mandatory prerequisite for the valid assumption of jurisdiction to impose penalties under Sections 271D and 271E of the Act.

Key Issues

Whether the penalty imposed under Section 271D of the Income Tax Act is sustainable in the absence of the Assessing Officer recording satisfaction for initiating penalty proceedings in the assessment order.