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2020 (8) TMI 515 - ITAT PUNELevy of penalty u/s 271(1)(c) - addition on account of bogus purchases - Defective notice - AO with respect to addition on account of bogus purchases has recorded that assessee had “furnished inaccurate particulars of income”b ut while passing the penalty order u/s 271(1)(c) held that assessee has “concealed the particulars of income and made itself liable for penalty” - AO recorded that assessee had “furnished inaccurate particulars of income” - HELD THAT:- It is a settled law that while levying penalty, the AO has to record clear satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c). The first step is to record satisfaction while completing the assessment as to whether the assessee had furnished inaccurate particulars of income or concealed his income. Notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. AO thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income Considering the facts of the present case in the light of the decision of Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein held held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. - thus we are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power and therefore penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO. - Decided in favour of assessee.
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