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2014 (5) TMI 776 - HC - Income TaxRequirement to serve notice for initiating proceedings u/s 271(1)(c) of the Act – Effect of amendment w.e.f. 1.4.1989 - Held that:- The Tribunal was of the view that the AO had not recorded any satisfaction while initiating the penalty proceedings and thus he had no jurisdiction to levy penalty u/s 271(1) (c) of the Act - Finance Act, 2008 effective retrospectively from 1.4.1989 had inserted sub section 1B in Section 271 of the Act – Relying upon Commissioner of Income Tax v. Pearey Lal and Sons (EP) Limited [2008 (9) TMI 142 - PUNJAB AND HARYANA HIGH COURT] - the view taken by the Tribunal that mere making of mention that penalty proceedings were being separately initiated in the order of assessment did not justify initiation of penalty proceedings, cannot be upheld - the initiation of penalty proceedings are held to be valid – Decided in favour of Revenue. Validity of deletion of penalty by Tribunal – Held that:- The AO had primarily levied penalty by treating the amount as cessation of liability whereas the CIT(A) did not agree with it but held that the account of BPCL showed less balance - there was inaccurate furnishing of particulars of income - The amount was shown payable to BPCL as on 31.3.2000 and 31.3.2001 - it would not amount to cessation of liability - The assessee had pleaded that the account of BPCL could not be reconciled as they were not supplying copy of the account - It was only after getting a copy of account from BPCL that the discrepancy in the account was added as income - It was claimed that there was no intentional understatement of income or deliberate furnishing of inaccurate particulars on the part of the assessee - The plea of the assessee is plausible and it cannot be held to be without any substance – thus, the levy of penalty by the AO and CIT(A) was not justified - Decided against Revenue.
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