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2013 (4) TMI 662 - AT - Income TaxLevy of penalty u/s 271(1)(c) - disallowance of deduction u/s 54F, disallowance on 60% of car insurance and depreciation, disallowance of business promotion expenses, disallowance on 'discount' bills and disallowance on generator expenses and depreciation thereon - Held that:- A perusal of the notice issued u/s 271(1)(c) by the AO demonstrates that the penalty notice u/s 271(1)(c) was not issued related to the addition pertaining to the disallowance of claim of exemption from capital gain. The notice has been issued only on concealment of particulars of income of Rs.40823 which is disallowance of generator expense and depreciation thereon. Thus, reading of assessment order along with the notice issued u/s 271(1)(c) and reply filed by the assessee clearly demonstrates that the AO had no intention to levy penalty during the course of assessment proceedings on this particular issue of Section 54F even by reading section 271(1B). Thus,to conclude no satisfaction as required by law has been recorded by AO during the assessment proceedings, hence, imposition of penalty is bad in law. As from the computation that the land at Haridwar was sold on 7.5.2004 (A.Y. 2005-06) and exemption u/s 54F was claimed. The period of three (3) years stipulated under the Act expires on 7.5.2007 related to AY 2008-09. Technically and legally, the assessee has time to invest on or before 7.5.2007. Meaning thereby that section 54F(3) cannot legally be invoked for AY 2007-08. Thus, there is no concealment by the assessee on account of non-declaration of the said income in this assessment year. Accordingly, the appeal of the assessee deserves to be accepted & penalty order is set aside. In favour of assessee.
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