TMI Blog2021 (11) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... on of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated supra, clearly establish that the notice issued under section 274 read with 271 of the Act is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. Viewing from any angle, we do not find any justification to sustain the penalty, and as a consequence thereof, we direct the learned Assessing Officer to delete the penalty in question. - Decided in favour of assessee. - ITA No. 830/Del/2017 - - - Dated:- 3-11-2021 - Shri N.K. Billaiya, Accountant Member And Shri K. Narasimha Chary, Judicial Member For the Appellant : Sh. Satyajit Goel, CA For the Respondent : Sh. N.K. Bansal, Sr. DR ORDER PER K. NARASIMHA CHARY, J.M. Aggrieved by the order dated 05.01.2017 passed by the Commissioner of Income Tax (Appeals)-22, New Delhi ( Ld. CIT(A) ) for the assessment year 2003-04, M/s. Singhal Strips Ltd.( the assessee ), preferred this appeal. 2. Assessee is a company. It filed its return of income for the assessment year 2003-04 on 28/11/2003 declaring a loss of ₹ 3,69,13,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not allowable in the eyes of law and still claimed by the assessee is clearly a form of tax evasion and false under the term furnishing of inaccurate particulars of income and, therefore, the authorities below are justified in levying and sustaining the penalty. Reliance is placed on the decision reported in CIT vs. Zoom Communications Private Limited, 327 ITR 510. He further placed reliance on the decision of the Hon ble Madras High Court in the case of Sundaram Finance Ltd vs. CIT (2018) 403 ITR 407 (Madras), Ld. DR submitted that the assessee understood the purport of the notice and without raising any objection whatsoever they have participated in the penalty proceedings as well as the proceedings before the Ld. CIT(A) and, therefore, no prejudice was caused to the case of the assessee. He therefore, prayed to dismiss the appeal. 6. We have gone through the record in the light of the submissions made on either side. As could be seen from the assessment order, during the course of the assessment proceedings, the assessee produced the books of accounts which were examined by the ld. Assessing Officer. It is an admitted fact that the assessee had debited in its P L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1 )(c). It was further held that if the contention of the Revenue is accepted, then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the Assessing Officer will initiate penalty under Section 271(1)(c) and that is clearly not the intention of the Legislature. 10. Penalty u/s 271(1)(c) of the Act can be imposed only when the assessee has concealed income or furnished inaccurate particulars of income. Where a deduction is claimed after making a proper disclosure, the mere fact that the disallowance has been made for a part of such deduction, it cannot be construed as a case covered u/s 271(1)(c) of the Act. The Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) also says that no penalty can be imposed where a proper disclosure is made but the disallowance has been made by the Assessing Officer. 11. On a consideration of the material before us, we are of the considered opinion that the above decisions are applicable to the facts of the case on hand and merely because the claim preferred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 13. In Commissioner of Income Tax v. SSA s Emerald Meadows (2016) 73 taxman.com 241 (Kar) the Hon ble Karnataka High Court Considered the question of law as to,- Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? And the Hon be High Court ruled answered the same in favour of the assessee observing that: The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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