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2017 (8) TMI 412 - ITAT HYDERABADPenalty proceedings u/s 271(1)(c) - furnishing of inaccurate particulars of income - additional income offered during the course of survey - satisfaction of the authority that there is a concealment - Held that:- We noticed that in the assessment order u/s 143(3), the AO has not indicated any discrepancy in the book entry nor observed any hint of income being concealed or assessee furnished inaccurate particulars. AO has accepted the return of income filed by the assessee. Since AO accepted the return of income filed by the assessee and computed the assessment u/s 143(3) and not found any discrepancy in the details filed by the assessee, now the AO cannot bring any issues in the penalty proceedings after accepting financial statements and return of income filed by the assessee. The assessee neither concealed any particulars of income nor furnished inaccurate particulars in the return of income filed , which was duly accepted and assessment was completed. Hence, penalty cannot be levied in this case. In Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT) observed that the condition precedent for levying the penalty is the satisfaction of the authority that there is a concealment of the particulars of the income or inaccurate particulars are furnished to avoid payment of tax. Where the assessee offers an explanation and substantiate the explanation, the question of imposing penalty would not arise. Even in cases where he fails to substantiate the explanation but if he proves that the explanation offered is a bonafide one and all the facts relating to the same and material to the computation of his total income has been disclosed by him, then, in law, a discretion is vested with the authority not to impose penalty. If the assessee offers explanation but fails to substantiate the same, but if he proves that explanation offered is bonafide but is not Sufficient to substantiate the explanation and discloses all material for the computation of his total income, the question of imposing penalty would not arise. Issue of improper show cause notice - Held that:- Notice issued by Assessing Officer u/s 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Therefore, on this aspect also, the penalty order does not withstand. Assessee appeal allowed.
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