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2020 (4) TMI 580 - AT - Income TaxPenalty u/s 271(l)(c) - Defective notice without striking of inapplicable part of show cause notice - estimation of income on unexplained cash deposits in bank account - estimation of unexplained expenditure incurred by the assessee for household and ceremonial expenses - HELD THAT:- AO has recorded clear satisfaction as required under the law during the course of assessment proceedings, before initiate penalty proceedings u/s 271(1)(c). Therefore, we are of the considered view that there is no merit in legal arguments taken by the assessee and accordingly, ground of assesee appeal is rejected. Levy of penalty u/s 271(1)(c) instead of penalty u/s 271AAA - Assessment pursuant to search u/s 132 - HELD THAT:- In this case, the search was conducted on 28/02/2009, which comes within the relevant assessment year 2009-10. The addition made in assessment proceedings is consequent to search proceedings conducted u/s 132 and on the basis of incriminating material found during the course of search. Thus, two requirements of the provisions of section 271AAA i.e, the ‘undisclosed income’ and ‘specified previous year’ are fulfilled - Penalty, if at all is leviable, it can be levied only u/s 271AAA of the I.T.Act, 1961, but not u/s 271(1)(c) Arguments of the Ld. DR that although, provision of section 271AAA is applicable for specified previous year, but additions made in the assessment is on estimation basis, and therefore, the conditions prescribed u/s 271AAA are not fulfilled in order to levy penalty under said section is incorrect, because whether addition is made on estimation basis or on the basis of certain evidences, fact remains that the additions made in the assessment is pursuant to search conducted u/s 132 and such income is on the basis of incriminating material found, as a result of search. Therefore, we are of the considered view that the additions made in the assessment proceedings, is towards undisclosed income of a specified year and hence, penalty if at all is leviable, it can be levied only u/s 271AAA of the Act, but not under section 271(1)(c) AO was erred in levying penalty u/s 271(1)(c) in a cases, where the assessment has been completed for a specified previous year and addition has been made towards undisclosed income unearthed during the course of search conducted u/s 132 - penalty levied by the Ld. AO u/s 271(1)(c) cannot be sustained under the law and hence, we direct the Ld. AO to delete penalty levied u/s 271(1)(c). Additions towards undisclosed income on account of cash deposits in undisclosed bank account towards professional receipts for the relevant year, on the basis of incriminating material found during the course of search - Addition is only on estimation basis that too on the basis of expenditure incurred by the assesee in cash for household expenses, ceremonial expenses etc. Therefore, we are of the considered view that when, addition is made on estimation basis that too on the basis of material found during the course of search for part of the period, then levying penalty u/s 271(1)(c) on such estimated addition is incorrect. AO has made additions towards undisclosed cash deposits in bank account without establishing fully that assessee has deposited cash into bank account for the remaining period of the financial year. AO has not made out a clear case of concealment of particulars of income or furnishing inaccurate particulars of income, which warrants levy of penalty u/s 271(1)(c) - AO was incorrect in levying penalty u/s 271(1)(c), in respect of additions made towards undisclosed income on the basis of estimation. - Decided in favour of assessee.
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