Landmark Judgements of Supreme Court on Section Section 271E [Penalty for failure to comply with the provisions of Section 269T]

Pursuant to directions issued by Commissioner (Appeals), Assessing Officer passed a fresh assessment order wherein no satisfaction was recorded for initiating penalty proceedings under section 271E, impugned penalty order passed under said section deserved to be set aside

Recording of satisfaction - Assessment Order was passed on the basis of CIB information informing the Department that the assessee was engaged in large scale purchase and sale of wheat, but it is not filing Income Tax Return. Ex-parte order was passed at certain income. Assessing Officer observed that the assessee had contravened the provisions of Section 269SS of the Act and because of this, Assessing Officer initiated penalty proceedings under section 271E of the Income Tax Act.CIT (A) allowed the appeal and set aside the order with direction of De novo after affording adequate opportunity to the assessee. After remand, the Assessing Officer passed fresh Assessment Order. In this Assessment Order, the Assessing Officer did not record satisfaction regarding initiation of penalty proceedings under section 271E. On the basis of original Assessment order, show cause notice was given to the assessee and it resulted in passing the penalty order. Tribunal and High Court allowed the appeal of assessee and deleted penalty. On appeal in SC, Hon’ble SC held that fresh assessment order was concerned that there was no satisfaction recorded regarding penalty proceedings under section 271E of the Act, though in the order the Assessing Officer wanted penalty proceedings to be initiated under section 271(1)(c) of the Act. Penalty under section 271E was without any satisfaction and no such penalty could be levied. [In favour of assessee] (Related Assessment years : 1991-92,1992-93) – [CIT, Panchkula v. Jai Laxmi Rice Mills (2015) 379 ITR 521 : (2016) 286 CTR 159 : 237 Taxman 375 : 134 DTR 223 (SC)]