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2018 (2) TMI 1141 - AT - Income TaxPenalty u/s 271(1)(c) - non-striking-off of irrelevant portion in the notice issued u/s 274 r.w.s. 271(1)(c) - claim u/s 35(2AB)- Held that:- In view of the parity of reasoning flowing from the judgment in the case of Shri Samson Perinchery (2017 (1) TMI 1292 - BOMBAY HIGH COURT) we are unable to accept the stand of the CIT(A) that the mistake in issue of notice does not invalidate the penalty proceedings. Therefore, on this aspect, we upheld the stand of the assessee. Accordingly, the notice issued by the Assessing Officer u/s 274 r.w.s. 271(1)(c) dated 30.03.2015 is untenable as it is ambiguous, thus, suffering from the vice of non-application of mind having regard to the ratio in the case of Dilip N. Shroff (2007 (5) TMI 198 - SUPREME Court) and also the judgment in the case of Smt. Baisetty Revathi (2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT). Thus, on this count itself, the penalty imposed u/s 271(1)(c) of the Act is liable to be deleted. Addition on which penalty has been levied is the denial of deduction u/s 35(2AB) - As per the written submission of the assessee before the lower authorities, it is revealed that the said expenditure was incurred on purchase of raw materials which were utilised during the year. It was noticed that the said expenditure was transferred to Research and Development expenditure head and, therefore, it constituted a claim u/s 35(2AB). The discussion in the assessment order as well as the assertions in the written submission before the lower authorities reveal that the search party advised that the claim u/s 35(2AB) may not be sustainable. Though no specific reasons have been brought out on record, but be that as it may, there is no finding as to why the claim for deduction of cost of raw materials was improper given the fact that there is no adverse finding that the raw materials were not consumed for the purpose of business. Thus, no reason to impose penalty on such disallowance also. we, therefore, hold that having regard to the facts and circumstances and the manner in which the amounts have been assessed to tax, does not justify the assertions of the Revenue that it constitutes furnishing of inaccurate particulars of income within the meaning of Sec. 271(1)(c) of the Act. - Decided in favour of assessee.
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