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2016 (3) TMI 1060 - AT - Income TaxPenalty imposed u/s 271(1)(c) - addition on account of unexplained investment in cost of construction cannot be made on the basis of DVO’s report - Held that:- While dealing with the assessee’s objections on the DVO’s report, the AO has relied only on the comments of the DVO in response to the assessee’s objections but has failed to give a final finding on the issue. Thus he has not dealt with the assessee’s objections properly. This might have served the Revenue’s purpose in the quantum proceedings but when it comes to imposition of penalty for furnishing of inaccurate particulars and/or concealment, utmost caution has to be exercised. The Department has not been able to substantiate as to how there has been furnishing of inaccurate particulars of income and/or concealment by the assessee when the AO has himself not brought any cogent material on record, apart from the DVO’s report, to justify the imposition of penalty. The Hon’ble High Court of Madras in CIT vs Apsara Talkies (1981 (11) TMI 2 - MADRAS High Court ) has held that, “Penalty cannot be levied on the basis, merely of an estimate of cost of construction of a building built by an assessee with his funds. Thus the penalty imposed by the Assessing Officer under section 271(1)(c) was not sustainable - Decided in favour of assessee
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