AZAD COACH BUILDERS PRIVATE LIMTIED,BANGALORE V. INCOME TAX OFFICER, WARD-1(1)(2), BANGALORE

ITA 1978/BANG/2024

AI Insights

The case involves Azad Coach Builders Pvt. Limited, the appellant, contesting a penalty imposed by the Income Tax Officer, Bangalore, for alleged violations of Section 269SS of the Income-tax Act, which pertains to the prohibition of accepting certain loans and deposits in cash. The penalty was initially upheld by the Commissioner of Income Tax (Appeals). However, the Tribunal found that the necessary procedural requirement of recording satisfaction for initiating penalty proceedings was not met by the Assessing Officer in the assessment order. This led to the Tribunal's decision to delete the penalty and allow the appeal in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714262 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Punchkula Vs. Jayalakshmi Rice Mills Ambala City (2015) 64 taxmann.com 75 (SC)
• Laws Referred To: Income-tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALUSAMY N
• Assessee Lawyers: RAVISHANKAR S.V; FILING ITS RETURN OF
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI NARENDER KUMAR CHODHRY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.1978/Bang/2024 Assessment Years: 2012-13 Azad Coach Builders Pvt. Limited, 27th KM, Mysore Road, Sheshagirihalli, Bangalore – 562 109. PAN – AABCA 4311 Q Vs. The Income Tax Officer, Ward - 1(1)(2), Bangalore. . APPELLANT RESPONDENT Assessee by : Shri Ravishankar S.V, Advocate Revenue by : Shri Balusamy N, JCIT (DR) Date of hearing : 05.08.2025 Date of Pronouncement : 05.08.2025 O R D E R PER SHRI NARENDER KUMAR CHODHRY, JUDICIAL MEMBER: This appeal has been preferred by the assessee against the order dated 04/10/2024 impugned herein passed by the National Faceless Assessment Center (NFAC), Delhi/Ld. Commissioner of Income Tax (Appeal) [in short ‘Ld. Commissioner’] u/s 250 of the Income-tax Act 1961 (in short, ‘the Act’) for the assessment year 2012-13. 2. In this case, vide order dated 26/03/2024 u/s 143(3) of the Act, the assessment of the assessee was completed and the returned income to the tune of Rs.9,26,050/- as declared by the assessee by filing its return of income for the assessment year under consideration on 12/02/2013, was accepted. Printed from counselvise.com ITA No.1978/Bang/2024 Page 2 of 3 . 3. Subsequently, the AO vide order dated 30/03/2016 levied the penalty to the tune of Rs.25,84,920/- u/s 271D of the Act for violation of sec. 269SS of the Act. 4. The assessee being aggrieved challenged the said penalty by filing first appeal before the Ld. Commissioner but could not get any relief, as the Ld. Commissioner vide impugned order affirmed the penalty by dismissing appeal filed by the assessee. 5. Thus, the assessee being aggrieved has preferred the instant appeal and claimed that in the assessment order, the AO has not recorded any satisfaction/not initiated any penalty proceedings simultaneously and thus, violated the provision of law as well as the principle of natural justice and, therefore, the penalty levied is unsustainable, specifically in view of the judgment passed by Hon’ble ITAT in the case of CIT Punchkula Vs. Jayalakshmi Rice Mills Ambala City (2015) 64 taxmann.com 75 (SC), wherein it was held as under:- “5. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 2711, of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(l)(c) of the Act. Thus, insofar as penalty under Section 2711? is concerned, it was without any satisfaction and, therefore, no such penalty could he levied. these appeals are, accordingly, dismissed. 6. On the contrary, the ld. DR rebutted the claim of the assessee by supporting the orders passed by the authorities. 7. Having heard the authorities and perused the materials available on record. As observed above, admittedly, the AO in the assessment order dated 26/03/2014 has not recorded any satisfaction for initiation of any penalty proceedings u/s 271D of the Act or any other provision of the Act, Printed from counselvise.com ITA No.1978/Bang/2024 Page 3 of 3 . however, vide penalty order dated 30/03/2016, has levied the penalty of Rs.25,84,920/- u/s 271D of the Act for violation of the provision of sec. 269SS of the Act and, therefore, we are in concurrence with the claim of the ld. Counsel for the assessee that in view of the dictum laid down by the Hon’ble Apex Court in the case of CIT, Panchkual (Supra) to the effect “that where there is no satisfaction was recorded regarding penalty in the Assessment order, then no penalty could be levied”, we are inclined to delete the penalty under consideration, thus the penalty is deleted by allowing the appeal of the assessee. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced in court on 05th day of August, 2025 Sd/- Sd/- (WASEEM AHMED) (NARENDER KUMAR CHODHRY) Accountant Member Judicial Member Bangalore Dated, 05th August, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore Printed from counselvise.com "