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2019 (8) TMI 1270 - AT - Income TaxPenalty u/s 271(1)(c) - defective notice - HELD THAT:- Notice issued u/s 274 r.w.s. 271 of the Act dated 28.12.10 reveals that the AO has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default committed by the assessee, i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty u/s 271(1)(c) is sought to be levied. In this regard, we find that the Hon'ble High Court of Karnataka in its order in the case of M/s Manjunatah Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] relied on by the assessee, has held that such a notice, as has also been issued in the case on hand, is invalid and the consequential penalty proceedings are also not valid. Notice issued under section 274 r.w.s. 271 dated 28.12.10 for A.Y. 2008-09 for initiating penalty proceedings u/s 271(1)(c) in the case on hand is invalid and consequently, the penalty proceedings are also invalid. Penalty for Exemption u/s 10(4)(ii) - assessee had received interest on NRE deposit in the financial year 2007-08 - HELD THAT:- We find that the assessee has not offered interest income for tax due to wrong interpretations of the provisions of the Act and not on account of deliberate concealment of income or furnishing inaccurate particulars of such income. The assessee was under bonafide impression that she is a ‘person resident outside India’ as defined under FEMA. The explanation furnished by the assessee in not disclosing the interest income in the return appears to be quite genuine. We also do not agree with the findings of the authorities below that the explanation furnished by the assessee is not covered by Clause(B) of Explanation-1 to Section 271(1)(c). After examining chronology of events and documents on record, we are satisfied that the explanation furnished by assessee is bonafide and acceptable.
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