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2020 (6) TMI 374 - ITAT DELHILevy of penalty u/s 271(1)(c) - Defective notice - Whether mere mistake in language used or mere non-striking off of inaccurate portion cannot by itself invalidate the notice under section 274? - addition being the service tax disallowable u/s 43B - HELD THAT:- AO on the basis of the details furnished by the assessee during the course of assessment proceedings, made an addition u/s 43B being the unpaid liability towards service tax. The above liability was shown under the head ‘Current liabilities’ in the balance sheet. The assessee did not prefer any appeal and thereafter penalty was levied u/s 271(1)(c) of the IT Act which has been upheld by the CIT(A). A perusal of the copy of the notice issued u/s 274 shows that the inappropriate words in the said notice has not been struck off. Even the last line of the said notice only speaks of section 271 and does not even mention section 271(1)(c) . We find, the Delhi Bench of the Tribunal in the case of Sanjay Mittra [2018 (10) TMI 132 - ITAT DELHI] had considered an identical issue and following the decision of the Tribunal in the case of Sahiwal Investment & Trading Co. vs. ITO [2018 (7) TMI 1472 - ITAT DELHI] has cancelled the penalty levied by the AO. Even on merits also we find, the Hon’ble Delhi High Court in the case of Noble & Hewitt (I) (P) Ltd. [2007 (9) TMI 238 - DELHI HIGH COURT] has held that where the assessee did not debit the amount to the P&L Account as an expenditure nor did the assessee claim any deduction in respect of the amount where the assessee was following mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. We further find the CIT(A) in assessee’s own case for A.Y. 2012-13, deleted the addition of unpaid service tax which was added back by the assessee in its revised computation of income. Issue as to addition u/s 43B on account of non-payment of service tax liability when the same has not been debited in the Profit & Loss Account nor claimed as an expenditure has become a debatable issue. It has been held in various decisions that penalty u/s 271(1)(c) is not leviable on account of additions which are debatable issues. We, therefore, are of the opinion that penalty u/s 271(1)(c) of the IT Act, 1961 is not leviable on merit also. We are of the considered opinion that no penalty u/s 271(1)(c) of the Act is leviable. - Decided in favour of assessee.
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