TMI Blog2021 (8) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... s 271(1)(c) are not sustainable. Thus when the very initiation of the penalty by way of issuance of vague and ambiguous notice u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable. Assessment framed u/s 92CA(3) - TPO simply did not accept the bench marking of the assessee and has directed the Assessing Officer to consider the levy of penalty u/s 271(1)(c) of the Act in accordance with Explanation 7. As decided in VERIZON INDIA PVT. LTD. [ 2016 (8) TMI 1287 - DELHI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsuant to the order of the TPO dated 20.01.2016 framed u/s 92CA(3) of the Act, the Assessing Officer enhanced the income of the assessee by ₹ 2,78,24,585/-. While proposing enhancement, the TPO observed The Assessing Officer may examine the feasibility of initiation of penalty u/s 271(1)(c) of the Act in accordance with Explanation 7 of the same. 5. The TPO initiated penalty proceedings by issuing and serving notice u/s 274 r.w.s 271 of the Act dated 31.03.2016, which reads as under: Notice Under Section 274 Read With Section 271 of the Income Tax Act-196 To MIS GE CAPITAL SERVICES INDIA Date 31.03.2016 401 402, 4TH FLOOR, AGGARWAL MILLENIUM TOWER, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not clear in his mind whether he wants to levy penalty for filing inaccurate particulars of income or for concealment of income. 9. In our considered opinion, the extracted notice is vague and ambiguous, as the charge framed by the Assessing Officer is not clear and it is not possible for the person to explain the charge whether it is for concealment of particulars of income or for filing inaccurate particulars of income. 10. The Hon ble Apex Court in case of CIT Vs. SSA s Emerald Meadows - (2016) 73 Taxmann.com 248 (SC), while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as Hon ble High Court on the ground of unspecified notice has held as under:- Section 274, read with section 271(l)(c), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows -73 Taxmann.com 241 (Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 by order dated 5th August 2016. 12. Following the decisions rendered in the cases of CIT vs. Manjunatha Factory, CIT vs. SSA s Emerald Meadows and Pr. CIT Vs Sahara India Life Insurance Company Ltd. (supra), we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question about the data of the comparables still remains. There is no doubt that we are using the overall margin of the comparables. If the assessee version is accepted, we are comparing the overall margins of the comparables with the margin earned by the AE in one segment. That does not seem to be a good comparison when we do not have enough data about the comparables. 13. The margin that a commercial entity makes is a combination of various factors. The bedrock of any comparability' analysis is the availability of accurate data. We do not have sufficient and accurate data about the foreign comparables. We do not know what the lands of services that they provide are and what are the various sources of their revenue. We do not know w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and has directed the Assessing Officer to consider the levy of penalty u/s 271(1)(c) of the Act in accordance with Explanation 7. 18. The Hon'ble High Court of Delhi in the case of Verizon India Pvt Ltd ITA No. 460/2016 CM APPL 26591/2016 order dated 22.08.2016 has observed as under: We have considered the circumstances. The assessee in this case could not, in the opinion of this Court, visualize that out of the twelve comparables furnished, nine would be rejected and the matrix of calculations, as it worked, would radically undergo change. Pertinently, for the previous year 2006-07, the assessee s comparables including some of those which were rejected in the present order, were in fact accepted when the matter reached ..... X X X X Extracts X X X X X X X X Extracts X X X X
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