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2017 (5) TMI 1799 - ITAT MUMBAIPenalty u/s 271(1)(c) - Defective notice u/s 274 - Default of Concealment of particulars of income and Furnishing of inaccurate particulars of income - treatment of business loss as speculation loss - HELD THAT:- Applicability of Explanation to Section 73 of the Income Tax Act in the case of assessee in view of the judgments passed in the case of CIT vs. HSBC Securities and Capital Markets India Pvt. Ltd.[2012 (6) TMI 715 - BOMBAY HIGH COURT] is a debatable question and even otherwise treatment of business loss as speculation loss by the AO can neither be treated as the particular of income being concealed nor can it be called as furnishing inaccurate particulars of income. Assessee during the assessment or appellate proceedings had not furnished wrong or incorrect particulars of income. Merely based on change of head, the AO cannot adduce the concealment or furnishing inaccurate particulars of income by the assessee. Perusal of the notice issued u/s 274 r.w.s. 271 reveals that the AO has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default committed by the assessee, i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty under section 271(1)(c) of the Act is sought to be levied. In this regard, we find that in the case of M/s Manjunatah Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] relied on by the assessee, has held that such a notice, as has also been issued in the case on hand, is invalid and the consequential penalty proceedings are also not valid. Thus we hold that the notice issued under section 274 r.w.s. 271 for initiating penalty proceedings under section 271(1)(c) of the Act in the case on hand is invalid and consequently, the penalty proceedings are also invalid. Therefore the penalty levied by AO and upheld by the Ld. CIT(A) is hereby dropped. Appeal filed by the assessee stands allowed.
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