TMI Blog2019 (7) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... after, notice u/s 274 r.w.s 271(1)(c) is to be issued to the assessee. The AO thereafter has to levy penalty u/s 271(1)(c) for non-satisfaction of either of the limbs. While completing the assessment, the AO has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income. The Hon ble Bombay High Court in CIT Vs. Shri Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] has held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. In the present case, as noted hereinabove, it is seen that the AO has not recorded any satisfaction in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,430/-. Aggrieved with the penalty order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.20.09.2016 (in appeal No.Nsk/CIT(A)- 1/445/2015-16) dismissed the appeal of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following effective ground : On the facts and in the circumstances of the case and in law, the lower authorities have erred in levying the penalty of ₹ 5,77,480/- u/s 271 (1)(c) of the Act by disregarding appellant's contention that the claim made under repairs and maintenance of machinery was capitalized by Learned Assessing Officer is merely change in accounting treatment and similarly by ignoring the ratio laid down by Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) cannot be levied. He therefore submitted that penalty levied by AO be deleted. Ld.D.R. on the other hand, supported the order of lower authorities. 5. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to levy of penalty u/s 271(1)(c) of the Act. In the present case, penalty of ₹ 5,77,430/- has been levied on addition of ₹ 17,79,799/- on account of expenses which were not capitalized by the assessee to the Plant and Machinery. The perusal of assessment order reveals that no satisfaction has been recorded by the AO as to whether the penalty has been levied on account of furnishing of inaccurate particulars of income or it was a case of concealme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccurate particulars of income as well as for concealment of income i.e., for both the limbs. Considering the aforesaid facts in the light of the decision of Hon ble Bombay High Court in the case of Samson Perinchery (supra), we are of the view that in the present case the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power of AO and therefore penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO. Thus, the ground of assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced on 26th day of June, 2019. - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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