TMI Blog2020 (5) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that they were for the purpose of the business of that company. In all these facts, the assessee has not concealed any particulars of his income. This was the statement of the assessee during the course of search also. This is confirmed by the directors of the company who were the relatives of the assessee. In view of this we do not find any merit in levy of the penalty on the assessee. There is another facet of the issue also. During the course of assessment proceedings where the assessment has been made, while making an addition, the learned assessing officer has not recorded any satisfaction whether the assessee has concealed his income or has furnished inaccurate particulars of income. At the time of levy of the penalty in the penalty order the assessing officer in para number 2 has categorically held that a show cause notice was issued on 30/3/2014 wherein the assessee was called upon to explain that it has concealed the particulars of its true income and furnished inaccurate particulars of its income in terms of explanation 271 (1) (C) of the income tax act 1961. In the same order in para number 4, while issuing the other show cause notice for levy of penalty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appeal in the case of Late Shri Jaswant singh Madhok, This is an appeal filed by the assessee against the order of the ld CIT (A)-25, New Delhi dated 29.09.2016 for the Assessment Year 2012-13. 3. The assessee has raised the following grounds of appeal:- 1. That the Id. CIT(A) has erred in sustaining the penalty of ₹ 29,331/- imposed u/s 271(1)(c) of the Act without appreciating the facts of the case and detailed submissions made by the appellant. 2. That the Id. CIT(A) has erred in not appreciating the facts of the case by holding that there is no double taxation. 3. That the Id. CIT(A) has erred in not adjudicating Ground Nos. 2 3 raised before him. 4. That the order imposing penalty is bad in law and void ab initio since in the show cause notice issued u/s 274 read with section 271 the Id. AO has not struck off the irrelevant clause of the notice, meaning thereby the AO has not apprise the assessee about the specific charge, under which assessee has been held guilty of penal action 4. Briefly, the fact shows that assessee is an individual, deceased, was subjected to search under section 132 of the income tax act in case of Jay Polychem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een deleted in the hands of that company. It is merely a disallowance of expenditure in the hands of that company, which has resulted into the income in the hands of the assessee. It was further stated that the learned CIT A in the order of that company has never held that expenditure at all resulted in to any benefit to any of the directors of the company including the appellant. These expenses were disallowed only for the reason that they were not incurred wholly and exclusively for the purposes of the business of that company. The learned assessing officer rejected the explanation of the assessee and held that assessee has concealed its income to the extent of ₹ 9 4924/ and levied the penalty of ₹ 29331/ . Thus, penalty order was passed on 22/3/2016. 6. The assessee challenged the same before the learned CIT A. The learned CIT A confirmed the penalty on the merits, for the reason that none attended before him. However, he did not answer each of the grounds of the appeal but dealt with all these grounds cumulatively and confirmed the penalty. Assessee aggrieved with the order of the learned CIT A has preferred this appeal. 7. None appeared on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of perquisite, the AO should have established employer-employee relationship between the assessee and the company, which paid the bills. There is no such finding. The assessing officer is merely stated that assessee is a director of Madhok group of companies, but whether he was employee of Jay Polychem Ltd or not was established. Further those expenses were liability of the assessee but discharged by Jay Polychem was also not established. Merely being a director, can he be considered to be an employee of the company has also not been established. Further, whether the expenditure of the credit card was an obligation of the assessee, which was paid by the employer, was also not shown. However, we are not on the quantum addition made in the hence of the assessee, but on the penalty levied on the assessee with respect to the income already taxed. According to us, the assessee has disclosed complete details that these are the expenditure, which has been incurred by the assessee through his credit card; these expenses have been paid by one of the company as those expenses were pertaining to that company. The directors of that company examined during the course of search stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on one of those charges. This issue is squarely covered in favour of the assessee by the decision of Honourable Delhi High court in case of Sahara India Life Insurances Co Ltd 475/2019 dated 2-8-2019 where in para no 21 of that order it is so held that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Therefore, also, the penalty levied by the learned assessing officer and confirmed by the learned CIT A cannot be upheld. In the result, we direct the learned assessing officer to delete the penalty of ₹ 20 9331/ imposed under section 271 (1)( c) of the act. 11. Accordingly, appeal filed by the assessee is allowed. ITA No 6471/Del/2016 12. Now become to the appeal in ITA number 6471/del/2016 in case of Smt Sumohita Kaur, where the AO made an addition of such expenditure amounting to ₹ 356063/- as per assessment order dated 30/3/2014. The addition in the hands of the company was sustained of ₹ 178031/ . Therefore penalty under section 271 (1) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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