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2016 (5) TMI 1252 - ITAT DELHI

2016 (5) TMI 1252 - ITAT DELHI - TMI - Penalty u/s 271(1)(c ) - Held that:- Penalty u/s 271(1)(c ) cannot be imposed in case where no specific charges are mentioned in the penalty notice. - Decided in favour of assessee - ITA No. 5838/Del/2013 - Dated:- 25-4-2016 - SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SH. LALIT KUMAR, JUDICIAL MEMBER For The Appellant by : Sh. T.R.Talwar, Adv. For The Respondent : Sh. R.C.Danjay, Sr.D.R. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER This is an appeal f .....

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noring the settled law that the disallowance of expenditure claimed per se does not by itself leads to the inference that the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. 3. In sustaining the said penalty ignoring that the assessee is in the business of investment and trading company and in order to maintain its status of a company various expenses are required to be incurred in its normal course of business, even when there is lull in .....

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ch the expenditure can be claimed. The assessee was directed to apportion the expenses under various heads of income. The assessee replied that no such apportionment can be made, as the expenditure was incurred under the head income from business . The A.O. rejected this explanation. On appeal, the First Appellate Authority broadly upheld the finding of the A.O. He granted relief to the assessee on audit fee paid. Thereafter, the A.O. levied penalty u/s 271(1)(c ) of the Income Tax Act, 1961 (th .....

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to be apportioned between various heads of income earned by the assessee. The assessee has income from rent, interest, dividend, long term capital gain and short term capital gain. When the assessee has income from dividend, interest and capital gain, to say that the assessee has not done any business during the year, in our view, is not correct. Be it as it may, there is no furnishing of inaccurate particulars of income of concealment of income in this case. The issue whether the expenditure o .....

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assessee does not specify the charge. In the notice none of the alternative charges are struck off. From the notice it is not clear whether penalty is proposed to be levied for failure to comply with the notice u/s 143(1)/143(2) of the Act or for concealment of particulars of income or furnishing of inaccurate particulars of income. 6. The Hon ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton Ginning Factory, 359 ITR 565, wherein the Hon ble High Court considered the entire case .....

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271(1)(c) is a civil liability. (b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. (c) Wilful concealment is not an essential ingredient for attracting civil liability. (d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. (e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional A .....

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o initiate the proceedings because of the deeming provision contained in Section 1 (B). (h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. (i) The imposition of penalty is not automatic. (j) Imposition of penalty even if the tax liability is admitted is not automatic. (k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be suffic .....

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he assessee fails to prove that the explanation offered is not 'bonafide, an order imposing penalty could be passed. (m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. (n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. (o) If the .....

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