When Law Specifies Authority, Others Cannot Act: ITAT Cancels 271D Penalty:

When Law Specifies Authority, Others Cannot Act: ITAT Cancels 271D Penalty The Tribunal agreed with the appeal and said that the penalty under Section 271D imposed by the AO before April 01, 2025, was not valid because only the Joint Commissioner had the power to impose such a penalty at that time. Sonal Lal filed the present case against the ITO ward, challenging the order passed by the CIT(A) dated 11/08/2025.

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Background of the case

The case arose after the assessee and his brother sold an immovable property for Rs 16 lakh. The assessee's share was Rs 8 lakh. During reassessment, the AO accepted the capital gains declared by the assessee. However, the AO further noticed that the assessee had received Rs 1.50 lakh in cash from the sale consideration. As a result, AO treated the transaction as a violation of Section 269SS and imposed a penalty of Rs 1.50 lakh under Section 271D on September 16, 2024. The assessee then challenged the penalty before the CIT(A), but the appeal was dismissed. The assessee then approached the Tribunal. Before the Tribunal, the AR argued that, under Section 271D(2), only the Joint Commissioner of Income Taxes (JCIT) is authorised to impose such a penalty. In this case, the penalty was imposed by the AO, not by the Joint Commissioner.

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Tribunal's Ruling

After hearing both sides, the Tribunal observed that until April 1, 2025, the power to levy a penalty under Section 271D rested only with the Joint Commissioner. Since the penalty in this case was imposed on September 16, 2024 (before April 01, 2025), it should have been imposed by the JCIT and not by the AO; the penalty order was invalid. The Tribunal stated that "When the law mandates any act to be done by a specified authority, the same must be done by that specified authority only." As a result, it allowed the assessee's appeal.