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2005 (11) TMI 185 - AT - Income TaxPenalty levied u/s 271(1)(c) - inaccurate particulars of income or concealing particulars of income - HELD THAT:- In the absence of any centrary material brought on record by the revenue against the finding of the ld. CIT(A) and keeping in view that the assessee was under the bona fide belief that depreciation, pond filling expenses and traveling expenses are allowable and such bona fide belief of the assessee was not found to be false at any stage, we are of the view that the assessee has not concealed the particulars of his income or furnished inaccurate particulars of such income. No dispute that the assessee had filed its return of income showing loss and the assessing authority has finally assessed the assessee's income at nil, therefore, following the decision of Hon'ble Supreme Court in Prithipal Singh & Co.[2000 (7) TMI 75 - SC ORDER], the penalty is not leviable. This view also finds support from the recent decision of CIT v. Zam Zam Tanners [2005 (7) TMI 84 - ALLAHABAD HIGH COURT] in which it has been held that clause (iii) of Explanation 4 to section 271(1)(c) as amended by Finance Act, 2002, are applicable prospectively and do not apply the relevant assessment year 1985-86 and, therefore, in the absence of positive assessed income penalty u/s 271(1)(c) was not leviable. Even otherwise it is settled law that one has to adopt that interpretation which favours the assessee as held by the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd.[1973 (1) TMI 1 - SUPREME COURT]. Therefore, on this ground also penalty is not sustainable. Assessing Officer has merely stated that "penalty u/s 271(1)(c) is initiated for furnishing inaccurate particulars". A similar note recorded by the Assessing Officer was held to be insufficient to indicate the satisfaction of the Assessing Officer by the Hon'ble Delhi High Court in the case of Diwan Enterprises v. CIT [1998 (11) TMI 27 - DELHI HIGH COURT]. In CIT v. Ram Commercial Enterprises Ltd. [1998 (10) TMI 13 - DELHI HIGH COURT], the Hon'ble Delhi High Court held that merely because penalty proceedings have been initiated, it cannot be assumed that the requisite satisfaction was arrived at in the absence of the same being spelt out by the order of the assessing authority. Though section 271(1)(c) does not prescribe any particular form or language in which the requisite satisfaction is to be recorded, the bare minimum is that the language must clearly spelt out the reasons as to why the Assessing Officer feels satisfied about the guilt of the assessee. Thus, we are of the view that the penalty imposed by the Assessing Officer u/s 271(1)(c) is not sustainable in law and accordingly, we are inclined to uphold the finding of the ld. CIT(A) in deleting the penalty imposed u/s 271(1)(c) and accordingly, the grounds taken by the revenue are rejected. In the result, the appeal stands dismissed.
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