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2017 (12) TMI 1051 - AT - Income TaxPenalty u/s 271(1)(c) - exemption under section 10(23C)(vi) denied - Held that:- We find that the Assessing Officer while completing the assessment has not recorded proper satisfaction as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee and consequently no proper show cause notice was given to the assessee before initiating the penalty proceedings under section 271(1)(c) of the Act. Even otherwise, the said satisfaction was recorded in respect of the non denial of exemption under section 10(23C)(vi) of the Act and not in respect of other additions made by the Assessing Officer. Further, the Assessing Officer while levying the penalty under section 271(1)(c) of the Act, in the order imposing the penalty for concealment has held the assessee to have concealed its income or furnished inaccurate particulars of income. In the absence of the details being given by the trust on account of each and every expenditure booked, 50% of such expenditure was disallowed being his personal expenditure. Vis-a-vis the said disallowance, we hold that same has been upheld in the hands of the assessee for want of proof and not for violation of any of the provisions of the Act. In view thereof, we find no merit in the levy of penalty under section 271(1)(c) of the Act on such partial disallowance of expenditure on maintenance of car and credit card expenses of Mr. B.E. Avhad. In assessment year 2006-07, disallowance on depreciation of car and Honorarium paid, i.e. facilities to Mr. B.E. Avhad have been upheld to the extent of 50%. We hold that the assessee is not liable to levy of penalty on partial disallowance of facilities provided to Mr. B.E. Avhad. The assessee is liable to levy of penalty under section 271(1)(c) of the Act on the expenditure incurred on Foreign Tour of the trustees, scholarship given to the relatives of the trustees and also on the interest on loan given to relatives of the trustees, disallowance of which under section 13(1)(c) of the Act has been upheld in the hands of the assessee. Hence, grounds of appeal raised by the assessee are partly allowed.
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