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2019 (6) TMI 289 - AT - Income TaxLevy of penalty u/s 271(1)(c) - peak balance lying in the escrow bank account with HSBC Bank, Geneva - defective notice - non application of mind by AO - HELD THAT:- It is a settled principle of law that before taking any action, including levy of penalty under section 271(l)(c) of the Act, the Assessing Officer should issue a valid show cause notice to the assessee. In the present case, a bare perusal of the notice dated 28.03.2014 issued by the AO under section 274 read with section 271 of the Act shows that the same has been issued without any application of mind. The said notice has been issued in a standard format without indicating the default on the part of the Assessee and the reason for which penalty proceedings are initiated. The said notice also makes a reference to section 24(1)/22(2)/22(4)/ 23(2)/34 of the Income-tax Act 1922 and sections139(I)/I39(2)/I42(I)/l43(2) and 148 of the Income-tax Act, 1961 without cancelling the irrelevant part in the notice. In view thereof, we are of the view that penalty proceedings have been initiated, in the present ease, without application of mind thereby rendering the initiation of such proceedings and consequent passing of the penalty order under section 271(1)(c) of the Act to be illegal and bad in law. This view of ours is supported by the decision of CIT vs. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein the decision of Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] was also considered, AO while issuing notice under section 274 r.w.s 271 of the Act, has not applied his mind. Hence, the penalty proceedings initiated in the present case is without application of mind thereby rendering the initiation of the proceedings and consequent passing of the order u/s 271(1)(c) is bad in law. Hence, we quash the penalty on this count also. - Decided in favour of assessee.
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