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2021 (3) TMI 167 - AT - Income TaxPenalty u/s 271(1)(c) - Non recoding of satisfaction - defective notice - deduction u/s 57 on the expenditure of 'service charges' & 'maintenance expenses' has not been incurred in connection with making investment in deposit with ICICI bank or loan / advance given to Shri Dhiraj Sarna & Shri Shakti Singh and disallowed the expenditure - HELD THAT:- Revenue has not specified under which limb of Section 271(1)(c) the penalty has been levied. It is elementary that for assuming valid jurisdiction to impose penalty, the Assessing Officer must, first be satisfied, though prima facie, that the assessee has either “concealed income” or furnished “inaccurate particulars of income” and on the basis of such satisfaction a show cause notice has to be issued u/s 274 of the Act to the assessee specifying the addition/ disallowance in respect of which penalty is sought to be imposed and also the precise charge/ ground on which penalty is proposed to be imposed thereon. The particulars of expenses have been duly provided in the P&L account and has also provided the basis of apportionment of these expenses. Hence, it cannot be said that the assessee has furnished “inaccurate particulars of income”. The disallowance made by the Assessing Officer cannot be treated as “concealment” too. Mere disallowance of an expense cannot lead to levy of penalty u/s 271(1)(c). This is not a fit case for levy of penalty u/s 271(1)(c) - Decided in favour of assessee.
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