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2024 (5) TMI 1014 - ITAT PUNEPenalty proceedings u/s. 271(1)(c) - addition of interest income assessed under the” Income from other source” by denying exemption u/s. 80IB(10) - HELD THAT:- It is well settled in view in CIT Vs. S.V. Angidi Chettiar [1962 (1) TMI 10 - SUPREME COURT] and D.M. Manasvi [1972 (9) TMI 5 - SUPREME COURT] that power to impose penalty under section 271 of the Act depends upon the satisfaction of the AO in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfaction about the existence of the conditions specified in clauses (a), (b) and (c) before the proceedings are concluded. Same position was reiterated by the Full Bench of Hon’ble Delhi High Court in the case of CIT Vs. Rampur Engineering Co. Ltd. and others [2008 (11) TMI 54 - HIGH COURT DELHI] On mere perusal of the assessment order, it would be evident that the AO had recorded the satisfaction to initiate the penalty proceedings u/s. 271(1)(c) of the Act for alleged offence of furnishing inaccurate particulars of income, only in respect of addition of interest income by denying exemption u/s. 80IB(10) of the Act. The AO had not recorded satisfaction in respect of additional income offered during the course of assessment proceedings, which was allowed as deduction u/s. 80IB(10) of the Act. Further, we find that the addition was made on the basis of information furnished by the appellant itself. There is no finding by AO, as to which particulars filed by the appellant are found to be inaccurate. Therefore, in no case, the appellant can be held to be guilty of furnishing of inaccurate particulars of income. Therefore, the AO was not justified in levying penalty u/s. 271(1)(c) of the Act in respect of the addition made on account of additional income offered during the course of assessment proceedings. As regards the addition of interest income, it is crystal clear that it is a mere disallowance of claim for deduction u/s. 80IB(10), which is unsustainable under law, it does not amount to furnishing inaccurate particulars of income as held in the case of CIT v. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] - There is no finding by the AO as to which particulars filed by the appellant are found to be inaccurate. In the circumstances, it is not a fit case for levy of penalty u/s. 271(1)(c) of the Act, accordingly direct the AO to delete the penalty - Decided in favour of assessee.
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