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2020 (9) TMI 95 - KARNATAKA HIGH COURTPenalty u/s 271(1)(c) - defective notice u/s 274 - appellant has not been put to notice of the correct limb u/s 271(1)(c) for which the penalty has been initiated - HELD THAT:- It is pertinent to note that the assesssee since, its inception till the end of previous year i.e., 31.03.1999 did not commence any business. The notice u/s 274 r.w.s 271(1)(c) was issued for Assessment year 2002-03 and not for the Assessment year in question that is 1999-00. Besides this, it is noteworthy that there was no mention in the notice that the assessee has concealed the income or furnished inaccurate particulars of income. The authorities have failed to appreciate that the penalty proceeding and the assessment proceeding are distinct and since, the assessee had not commenced the business, therefore, it could not have earned income, which had not been accounted for. Tribunal has failed to take into account the well settled legal principles that mere disbelief of an explanation will not be sufficient to impose penalty. For the aforementioned reasons and in view of well settled legal principles referred to by learned Senior counsel for the assessee, the first substantial question of law is answered in the negative and in favour of the assessee
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