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2021 (4) TMI 1090 - AT - Income TaxPenalty u/s 271(1)(c) - non-disclosure of income in the return - AO observed that the assessee earned remuneration from a firm which was credited to the capital but not offered for taxation - HELD THAT:- A copy of the notice issued u/s 274 of the Act has been placed in the appeal folder, from which it is discernible that the AO did not strike off either of the two limbs viz., concealment of the particulars of income; and furnishing of inaccurate particulars.The penalty order came to be passed by holding that the assessee concealed his income. Recently, a full Bench of Hon‟ble Bombay High Court in Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] considered this very issue. Answering the question in affirmative, the Full Bench held that a defect in notice of not striking the relevant words vitiates the penalty even though the AO had properly recorded the satisfaction for imposition of penalty in the order u/s 143(3) of the Act. Hon‟ble Bombay High Court in Pr.CIT Vs. Golden Peace Hotels and Resorts (P.) Ltd. [2021 (3) TMI 195 - SC ORDER] also took similar view that where inapplicable portions were not struck off in the penalty notice, the penalty was vitiated. SLP of the Department against this judgment has been recently dismissed in Pr.CIT Vs. Golden Peace Hotels and Resorts (P.) Ltd. [2020 (2) TMI 333 - BOMBAY HIGH COURT]. It is clear that where the charge is not properly set out in the notice u/s 274 viz., both the limbs stand therein without striking off of the inapplicable limb, but the penalty has been, in fact, levied for one of the two, such a penalty order gets vitiated. We find from the notice u/s 274 that the AO did not strike out one of the two limbs though the penalty was imposed with reference to the first one only, namely, concealment of particulars of income.
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