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2017 (5) TMI 534 - AT - Income TaxPenalty u/s 271(1)(c) - notice u/s 274 - no business during the year but still claimed the expenditure on depreciation and non-payment of certain interest expenses - defect in the notice - Held that:- Undoubtedly, notice u/s 274 was duly served on the assessee and the relevant clause of the standard printed form was duly ticked by the Ld. AO which shows due application of mind qua penalty proceedings. Mere non-deletion of few words, in our opinion, on the facts of the case, has not caused any prejudiced to the assessee particularly when the penalty proceedings were actively contested by him before the Ld. AO. The penalty could not be deleted merely on the basis of defect pointed by the Ld. AR in the notice and therefore, the legal grounds raised are rejected. We find that the assessee has suffered disallowance u/s 32 against depreciation & u/s 43B due to non-payment of certain interest expenses within stipulated period of time. It is not in dispute that the assessee did not carry out any business activity during the year. It is further noted that the block of asset in the books of accounts did not cease to exist and the assessee has duly explained that the suspension in business was temporary which could not be controverted by the revenue. All these factors gives strength to the various arguments of Ld. AR. So far as addition u/s 43B is concerned, we find that the nature or quantum thereof is not in dispute and the assesse, following mercantile system of accounting could debit the same in his Profit & Loss Account. It was only due to the specific provisions of Section 43B that it has suffered the said disallowance. Therefore, on the basis of these factors, we find that there were no furnishing of inaccurate particulars of income by the assessee and the penalty deserves to be deleted.
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