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2018 (8) TMI 507 - AT - Income TaxPenalty u/s 271(1)(c) - recording of satisfaction - mere direction in the assessment order to initiate penalty proceedings - Concealment/furnishing inaccurate particulars of income - Held that:- When the AO is satisfied at the stage of initiation of penalty proceedings of a clear-cut charge against the assessee in any of the three situations discussed above (say, concealment of particulars of income), but imposes penalty by holding the assessee as guilty of the other charge (say, furnishing of inaccurate particulars of income) or an uncertain charge (concealment of particulars of income/furnishing of inaccurate particulars of income), the penalty cannot be sustained. The sum and substance of submissions is that the penalty orders cannot be declared invalid on a wrong mentioning of the charge either in the penalty notices or penalty orders, since such a wrong mentioning is nothing but a mere procedural irregularity. The view canvassed by the ld. DR cannot be countenanced because the action of the AO is not a mere procedural error. These defaults go to the root of the matter. All the Hon’ble High courts are consensus ad idem in their opinion on the above issue. Not even a single contrary judgment has been brought on record by the ld. DR. Insofar as invoking section 292B of the Act is concerned, in my view, the same has no applicability, as it is triggered only when there is some mistake, defect or omission in a notice or an order etc., which is otherwise in substance and effect in conformity with or according to the intent and purpose of this Act. The extant defaults in the penalty notices/orders are so fundamental that they cannot be construed as elementary or basic mistakes etc. so as to leave them in substance and effect in conformity with the intent and purpose of the Act. The penalty was wrongly imposed and confirmed in all the four appeals under consideration. I, ergo, agree with the ld. JM. in striking down all the penalty orders. The question posed is, therefore, answered in affirmative to the effect that where the satisfaction of the AO while initiating penalty proceedings u/s 271(1)(c) is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for ‘concealment/furnishing inaccurate particulars of income’, the levy of penalty is not sustainable.
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