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2016 (2) TMI 128

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..... e assessments order for levying penalty which is mandatory as per Section 271(1B) of the Act. Considering the relevant factors, appellate commissioner has rightly allowed the appeal of the assessee setting-aside the order passed by the Assessing Officer which has been reversed by the ITAT on the ground that the assessee deliberately evaded the payment of tax by declaring the capital expenditure as revenue expenditure in the ‘financial expenses’. In our considered opinion, for the reasons stated above, the order passed by the ITAT is not sustainable. Accordingly, we set aside the order of the ITAT and restore the order passed by the CIT(A) answering the substantial questions of law in favour of the assessee and against the revenue. - ITA No .....

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..... mited company incorporated under the provisions of the Companies Act, 1956. The appellant filed the return of income for the assessment year 2001-02 disclosing income only under the head income from business amounting to ₹ 1,64,74,416/- Action was initiated under Section 132 of the Income Tax Act, 1961 (the Act for short) and orders were passed under Section 143(3) read with Section 158(b)(c) of the Act. The appellant had claimed ₹ 28,40,409/- as loss on sale of investment under the financial charges as revenue expenditure. The Assessing Officer held the above income to be in the nature of capital expenditure and disallowed the claim made by the assessee. Accordingly, assessments were concluded. The Assessing Officer also .....

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..... h relates to Section 271(1)(c) of the Act has been deleted by the Assessing Officer which reads thus, has concealed the particulars of his income or furnished inaccurate particulars of such income . However the Assessing Officer though issued notice under Section 271(1)(b) of the Act proceeded to pass the order under Section 271(1)(c) of the Act. Further, it is submitted that Section 271(1B) of the Act contemplates recording of satisfaction for levy of penalty under Section 271(1)(c) of the Act by the Assessing Officer. No iota of satisfaction is recorded by the Assessing Officer in the assessment order to impose penalty under Section 271(1)(C) of the Act. As such, the mandatory requirement of Section 271(1)(c) of the Act is not complied b .....

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..... 271 of the Act has deleted only a portion of the contents of para relating to Section 271(1)(c), i.e., the deletion is made only with respect to, have concealed the particulars of your income , the remaining portion furnished inaccurate particulars of such income , remains intact. This clearly establishes the basis for the Assessing Officer to initiate proceedings under Section 271(1)(c) of the Act. Thus, he submits that there is no variance between the contents of the notice issued and the orders passed. 6. It is further contended that the assessee had wrongly claimed the capital expenditure as the revenue expenditure under the head financial expenses in the return of income filed, Assessing Officer has disallowed the deduction towa .....

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..... the particulars of income and for furnishing inaccurate particulars of such income. We have perused the notice, a printed proforma issued by the Assessing Officer under Section 274 read with Section 271 of the Act dated 30.08.2006 which clearly discloses that the Assessing Officer has deleted the paragraph relating to have concealed the particulars of your income or furnished inaccurate particulars of such income and has put a right mark(G) on the printed form relating to the para failure to comply with a notice under Section 22(4)/23(2) of the Indian Income-tax Act, 1922 or under Section 142(1)/143(2) of the Income Tax Act, 1961 which corresponds to Section 271(1)(b) of the Act. Thus, it is clear that the notice is issued proposing to .....

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..... ,r, it is held thus: (n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. (p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. (q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. (r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. 10. As regards Section 271(1-B) of the Act, i .....

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