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2021 (4) TMI 666 - AT - Income TaxPenalty u/s. 271(1)(c) - unexplained share application money and unsecured loans - defective notice u/s 274 - assessment u/s. 153A r.w.s. 143(3) of the Act was completed on 24.03.2015 accepting the returned income -additional income offered in the Income Tax Return - Assessee contending that proper show cause notice was not issued and on merits relied on various decisions contending that penalty was not leviable since no incriminating material was found during the course of search and the assessee has suo moto offered the additional income for tax - HELD THAT:- As from show cause notice it is very much clear that the Ld. A.O. failed to strike off one of the specific charge levied against the assessee which thus violates the principle of natural justice available to the assessee as provided u/s. 274 of the Act.CIT(A) was justified in deleting the penalty on legal ground by holding the penalty proceedings as void ab initio as the Ld. A.O. failed to level the specific charge against the assessee. Thus on the legal ground itself the appeal of revenue deserves to be dismissed. Also no incriminating material was found during the curse of search relating to the alleged surrender of income made by the assessee in the Income Tax Return. The assessee suo moto offered the additional income in the return and paid taxes there on. It is also an established fact in the instant case that Ld. A.O. was not sure that which assessee has concealed the particulars of income or furnished inaccurate particulars of income. Even though the share application money was received by M/s. Exotic Exports P Ltd. and duly reflected in its books of accounts but Ld. A.O. accepted the additional income offered by the assessee in his individual capacity and levied the penalty also. Simultaneously the Ld. A.O. also made addition in the hands of M/s. Exotic Exports P Ltd. for the similar amount of share application money and initiated the penalty proceedings. In the given facts and circumstances itself the revenue fails to succeed and the action of initiating penalty by Ld. A.O. is unjustified. No incriminating material was found during the course of search relating to the additional income offered by the assessee during the course of search which was subsequently honoured by disclosing in the return of income and paying taxes thereon. Transaction of alleged share application money was duly reflected in the regular books of accounts. Under these given facts and circumstances revenue fails to succeed as the Ld. A.O. was not justified in levying the penalty u/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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