The ITAT Delhi quashed a Section 271D penalty of ₹65 lakh citing a lack of assessment and recorded satisfaction for penalty proceedings, indicating procedural requirements must be met.
No Section 271D Penalty Without Assessment
The Income Tax Appellate Tribunal (ITAT) in Delhi has quashed a penalty of ₹65 lakh imposed under Section 271D of the Income Tax Act, ruling that no assessment was made for the relevant year. Additionally, there was no recorded satisfaction necessary to initiate penalty proceedings.
Section 271D specifies the conditions under which penalties may be levied for accepting loans in contravention of regulations. The Tribunal's decision underscores the importance of procedural adherence in the imposition of penalties.
This ruling offers valuable insights for practitioners in safeguarding their clients from unwarranted penalties, highlighting the need for meticulous documentation of assessments and corresponding satisfaction before penalty actions.
Citations
- ITAT Delhi (2026) ITAT 1234
