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2020 (2) TMI 76 - AT - Income TaxPenalty u/s 271AAB - assessee did not furnish Tax Audit Report for these years as required u/s 44AB - HELD THAT:- Hon’ble Karnataka High Court rendered in the case of CIT vs. Babu Reddy [2010 (3) TMI 918 - KARNATAKA HIGH COURT] are squarely applicable in the present case in which it was held that since no format of books of accounts were prescribed under the Rules for Civil Contracts, Penalty u/s 271A is not justified - because learned DR of the revenue could not point out any difference in facts. Therefore, respectfully following the same, we delete the penalty u/s 271B in all these six years. Penalty imposed by the AO u/s 271 (1) (c) - assessee mainly argued on this aspect that the penalty orders are bad in law because no specific allegation is made in the penalty notices issued u/s 274 r.w.s. 271 as to whether the charge is about concealment of income or furnishing of inaccurate particulars of income - HELD THAT:- We find that the Judgment of Hon’ble Karnataka High Court rendered in the case of CIT vs. Manjunath Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] is squarely applicable in the present case because learned DR of the revenue could not point out any difference in facts. We find that in each of the notices issued by the AO under section 274, the AO is alleging that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income. Hence it is seen that the allegation is vague. Notice u/s 274 should specifically state the grounds mentioned in section 271 (1) (c ) i.e. whether it is for concealment of income or for furnishing of inaccurate particulars of income and clause q) specifically states that Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. Clause r) specifically states that the assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee Penalty imposed by the AO u/s 271 AAB - existence of undisclosed income - Neither in the assessment order nor in the penalty order, this fact is pointed out by the AO that any statement was recorded u/s 132 (4) and some undisclosed income is admitted by the assessee in the same and the assessee has specified the manner in which such income has been derived. There was no undisclosed income found because to arrive at undisclosed income, Gross Profit as worked out by the AO in Para 9.1 of the Penalty Order after reducing only cost of land and Development cost but without reducing other expenses is not justified and there was a loss of ₹ 99,594/- after considering the expenses and this loss is accepted by the AO also except disallowance of ₹ 548,335/- and ₹ 265,000/- on account of disallowance of the assessee’s claim of Improvement Cost and Business Expenses respectively and for such disallowance, separate penalty of ₹ 358,987/- was imposed by the AO u/s 271 (1) (c) of I T Act to the extent of 100% of tax sought to be evaded as per the AO and hence, such disallowance is not a subject matter of penalty u/s 271 AAB. Before such disallowance, there is loss as claimed by the assessee after considering all expenses and hence, there is no undisclosed income in the present case for which, penalty u/s 271AAB can be imposed. - Appeals of the assessee are allowed
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