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2021 (2) TMI 1030 - AT - Income TaxPenalty u/s 271(1)(c) - defective notice - non specification of charge - deduction of long term capital gain in computing book profit u/s 115JB - difference in the computation of book profit under bonafide mistake was subsequently rectified the mistake by filing revised return - HELD THAT:- Bare perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for “concealment of particulars of income” or “furnishing of inaccurate particulars of such income” by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA’s Emerala Meadows [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act the same has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Even otherwise, when the assessee has duly produced balance sheet and profit & loss account before the AO during the assessment proceedings and the income computed in the profit & loss account has been accepted and at the same time, it is nowhere the case of the Revenue that assessee has furnished false information or has not furnished necessary information. So, mere mistake, claimed to be inadvertent by the assessee, is not a concealment of income by furnishing of inaccurate particulars in the facts and circumstances of the case, when the assessee has filed revised computation of book profit claiming correct figures acceptable to the Revenue. So far as question of filing the revised return only after issuance of notice u/s 143 (2) of the Act to the assessee is concerned, it is again undisputed fact that with the notice u/s 143(2), no questionnaire was issued pointing out wrongly computing the book profit, leading to the reasonable inference that the mistake was inadvertent on the part of assessee. Thus initiating penalty u/s 271(1)(c) of the Act on the basis of vague and ambiguous notice issued u/s 143 (2) of the Act is not sustainable in the eyes of law and that mere difference in the computation of book profit under bonafide mistake is not furnishing of inaccurate particulars of income particularly when assessee had filed balance sheet, profit & loss account showing all the capital gains and has subsequently rectified the mistake by filing revised return - Decided in favour of assessee.
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