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High Court of Judicature at Madras Hears Writ Petition Challenging Penalty Order Passed Under Section 271D of Income Tax Act, 1961. The Penalty Was Imposed for Alleged Violation of Section 269SS Regarding Cash Loans.

High Court: Madras High Court Bench: Principal
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2026-10-24 16:32:13
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Issue of Consideration

Whether the penalty order dated 19.08.2021 passed under Section 271D of the Income Tax Act, 1961 for violation of Section 269SS is without jurisdiction and contrary to principles of natural justice.

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Case Details

2025 LawText (MAD) (02) 134

W.P.No.21087 of 2021 and W.M.P.No.22344 of 2021

2025-02-25

C.Saravanan

2025:MHC:888

For petitioner: Mr.T.Ramesh for Mr.P.Rajavelu; For respondents: Dr.B.Ramaswamy, Senior Standing Counsel

Tvl.Chandro Process, represented by its Partner Sri E.A.Arumugam

1. The Deputy Commissioner of Income Tax, Circle – II, Tirupur; 2. The Joint Commissioner of Income Tax, National Faceless Assessment Centre, Delhi

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Nature of Litigation

Writ petition under Article 226 of the Constitution of India seeking certiorari to quash a penalty order.

Remedy Sought

Petitioner sought to quash the penalty order dated 19.08.2021 passed under Section 271D of the Income Tax Act, 1961 as being without jurisdiction and contrary to natural justice.

Filing Reason

The penalty was imposed for violation of Section 269SS of the Income Tax Act, 1961, alleging that the petitioner accepted loans amounting to Rs.34,00,000/- in cash.

Previous Decisions

Assessment Order dated 30.12.2019 for Assessment Year 2017-2018 was passed. The petitioner challenged the assessment in W.P.No.2668 of 2020, which was dismissed on 05.02.2020 with liberty to file an appeal. An appeal dated 25.02.2020 was filed before the Commissioner of Income Tax (Appeals) under Section 246A, which is pending.

Issues

Whether the penalty order under Section 271D is without jurisdiction and contrary to the principles of natural justice.

Judgment Excerpts

By the impugned order, the 2nd respondent has imposed a sum of Rs.34,00,000/- (Rupees Thirty Four Lakhs Only) as penalty under Section 271D of the IT Act, for the violation of Section 269SS of the IT Act.

Procedural History

Assessment Order dated 30.12.2019 passed; Writ Petition W.P.No.2668 of 2020 dismissed on 05.02.2020 with liberty to appeal; Appeal filed on 25.02.2020 before CIT(A) and pending; Show cause notice dated 18.02.2020 issued under Section 274 r/w 271D; Reminder dated 19.05.2021 and another show cause notice dated 16.08.2021; Impugned penalty order dated 19.08.2021 passed.

Acts & Sections

  • Income Tax Act, 1961: 271D, 269SS, 274, 246A
  • Constitution of India: Article 226
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penalty cash loan Section 271D Section 269SS certiorari natural justice jurisdiction

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