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2011 (8) TMI 748 - AT - Income TaxPenalty u/s 271 - reopening of an assessment - whether the assessee can raise question of validity of assessment in appeal against levy of penalty - held that:- the decision of Hon'ble Rajasthan High Court in the case of Deep Chand Kothari (1987 -TMI - 25179 - RAJASTHAN High Court) is also in favour of the assessee and therefore we are of the view that the validity of assessment proceedings can be looked into during the penalty proceedings even though the assessment itself has not been challenged by the assessee. Income escaping assessment - Survey u/s 133 - loose paper Impounded - Opening Balance of creditors could not be examined - Credits may have been shown opening balances instead of fresh deposits - AO Invoked 148 - held That:- Reasons recorded by the AO speak of non-application of mind - 147 of the Act cannot be initiated either on the basis of mere suspicion or making fishing or roving enquiries. Initiation of proceedings were Bad in Law. As assessment is invalid very basis of imposition of penalty cease to exist. Penalty under 271(1)(c) - Held That:- In view of Manu Engineering Works (1978 - TMI - 37011 - GUJARAT High Court), Either Concealment or In accurate particulars. No such clear-cut finding was reached by the AO and, on that ground alone the order of penalty passed by the AO is liable to be struck down.
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