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2021 (4) TMI 11 - ITAT AHMEDABADPenalty u/s 271(1)(c) - bogus share capital transactions - HELD THAT:- We notice that the action of the AO for formation of satisfaction in the course of assessment is quite vague without expressing exact nature of charge proposed against the assessee. The satisfaction in the course of assessment proceedings was neither here nor there. It is not known whether the charge is formed for alleged 'furnishing of inaccurate particulars of income' or for 'concealment of particulars of income'. The assessment order does not clearly specify the nature of default for which the penalty is sought to be initiated and thus suffers from vice of ambiguity. The condition precedent for exercise of jurisdiction under s. 271(1)(c) r.w.s. 271(1B) of the Act is thus not satisfied in the instant case. Having regard to the complex facts involved in the case in hand, the nature of charge against the assessee cannot be left to imagination. Consequently, the penalty proceedings initiated towards additions made on the basis of vague satisfaction in the course of assessment is a complete non-starter. The consequent penalty imposed under s. 271(1)(c) of the Act as a sequel to such invalid satisfaction requires to be quashed. The explanation offered towards bonafide issue of share capital thus cannot be outrightly rejected when tested on the touchstone of penalty proceedings of strict nature. The fact in the present case does not conclusively establish the malafide on the part of the assessee company. The assessee has filed detailed submissions in the course of assessment. The contentions raised do create some doubt in favour of the assessee. The impugned transactions of issue of share capital have been carried out through banking channel. The statement of third party has not been cross examined to fasten the onerous penalty. Hence, the assessee has shown existence of mitigating circumstances for exoneration from imposition of penalty. Thus, when tested on distinct parameters of penalty proceedings, the issue involved cannot said to be entirely free of any debate whatsoever. Hence, additions towards share capital in question would not ipso facto tantamount to alleged concealment of income. - Decided in favour of assessee.
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