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2010 (7) TMI 150 - HC - Income TaxPenalty u/s 271(1)(c) – bonafide – Investment loss - the sum of Rs. 40,00,000/- had given by the assessee to Shri Gautam Nemani, share broker, for purchase of shares in the month of July, 1997. - no shares were ever purchased out of the aforesaid amount – the share broker also did to return the money - The AO in his assessment order has mentioned that on March 09, 2001, the Board of Directors of the Company had taken a resolution that in view of the very poor financial conditions of Mr. Gautam Nemani, the balance amount of Rs. 30,00,000/- due from him may be treated as bad debts and be written of in that year - Held that: - if the assessee is able to bring his case within Explanation 1 to Section 271, then no penalty can be levied on him. - the explanation offered by the assessee is bona fide and the assessee’s case would fall within the ambit of Explanation 1 to Section 271 of Act, 1961.
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