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2022 (7) TMI 863 - AT - Income TaxLevy of penalty u/s 271(1) (c) - inaccurate particulars of income by claiming deduction under section 80IA on interest income - HELD THAT:- The quantum addition confirmed by the ITAT was challenged before the Hon'ble High Court and same was admitted which was posted for final hearing - Thus, it was also stated when the issue is pending before the Hon'ble High Court it became debatable issue and penalty cannot be levied. It was also stated that even after the addition confirmed by the co-ordinate Benches on the quantum proceedings, the income of the assessee is still assessed under Section 115JB of the Act. Circular dated 31 December 2015 was referred to that in cases prior to 1 April 2016 as any adjustment is made, the penalty cannot be levied under Section 271(1) (c) of the Act. Even on this ground, also penalty requires to be deleted. In view of the above arguments, where individually these arguments are tested for levy of penalty levied by learned CIT (A), penalty order suffers from severe infirmities. As following the decision in Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] where in it is held that Where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings . Therefore, the appeal of the assessee deserves to be allowed on this point itself. Accordingly, we quash the penalty levied by the learned CIT (A) - Appeal of assessee allowed.
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