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2011 (3) TMI 973 - ITAT, VISAKHAPATNAMPenalty u/s 271(1)(c) - Survey - Revised return - In response to penalty notice, the assessee contended before the Assessing Officer that originally the advances paid which were in the nature of capital outgo were wrongly booked as revenue expenditure in the books of account - The appellant has contended that Explanation 2 is applicable only when there are any tangible or intangible additions made in course of the assessment proceedings - From a careful perusal of the statement and note of the assessee, it is abundantly clear that during the course of survey proceedings, assessee has categorically admitted that discrepancies relate to the labour charges and machinery maintenance etc - Additions may be made merely for lack of proof or on estimate as for lack of stock account coupled with lower gross profit compared to other dealers in the same line of business - The scope of explanation was explained in paragraph 61.9 in Circular No. 204, dated 24-7-1996 according to which Explanation 2 seeks to punish concealment discovered as though in retrospect It is well settled that the blameworthiness of the assessee with respect to the original return cannot be avoided by filing a fresh return after concealment was detected by the ITO - As the assessee claimed the source for investment made in a year as the income assessed for the earlier assessment year for which no penalty for concealment had been levied, it has fallen within Explanation 2 to section 271(1) - Having carefully perused the assessment orders and the notices issued by the Assessing Officer, we are of the view that it was a typographical error in the penalty notice and the provisions of section 292B of the I.T. Act comes in rescue for the department - Held that: this defect in the notice to be a typographical error in mentioning the assessment year for which the entire penalty proceedings cannot be held to be invalid whether the additional income declared by the assessee during the course of survey conducted before the start of the assessment proceedings can be called to be an addition for invoking the Explanation 2, on claim of the assessee raised in succeeding year to be the source of deposits - Held that: the provisions of Explanation to section 271 can only be invoked where the source of any receipt, deposit, outgoing or investment in any assessment year is claimed by any person to be an amount which had been added in computing the income or deducted in computing the loss in the assessment year of such person for any earlier assessment year or years but in respect of which no penalty under clause (3) of section 271(1) had been levied - Decided in favor of the assessee
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