2014 (7) TMI 947

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.... erred both in Law and in fact in confirming the applicability of Sec.271(1)(c) of the Act on the facts of the case and thereby confirming order of ITO levying penalty of Rs. 12,32,407/-.     2. Your Appellant submits that the ITO has not satisfied himself and has not recorded any Satisfaction of concealment prior to initiation of Penalty proceedings and thereby he has violated the vary principle of applicability of Sec. 271(1)(c) and therefore the levy of Penalty be cancelled.     3. Your Appellant further submits that neither the order of ITO levying Penalty u/s.271(1)(c) nor the Show Cause Notice are clear as to whether your Appellant has committed offence of concealing income or "furnishing inaccurate....

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....nbsp;  "3. In this case the assessment was finalized u/s.143(3)on 23/11/2010on a total income of Rs. 1,13,58,240/-. During the course of assessment proceedings, the AO noticed that the assessee claimed Long Term Capital Gain of Rs. 28487270/- as exempt u/s.10 (38) of the IT Act. On further verification of details of LTCG, the AO found increase in shares of M/s.L&T. The increase in shares of M/s.L&T was bonus shares allotted by M/s.L&T which was sold by the assessee within one year of their allotment. On verification of all the document filed during the course of assessment proceedings, the AO concluded that the bonus shares of M/s. L&T sold by the assessee within one year was short tem capital gain and made addition of Rs. 1,08,77,381/....

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.... drew our attention towards para-6 of the assessment order. He placed reliance on the judgement of Hon'ble Gujarat High Court rendered in the case of CIT vs. Whiteford India Ltd. reported at (2013) 38 taxmann.com 15 (Guj.). 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgement relied upon by the ld.Sr.counsel for the assessee. We find that during the course of penalty proceedings u/s.271(1)(c) of the Act, the AO vide para-6 of his order has directed as under:-     "6. Assessed under section 143(3) of the I.T. Act. Issue Demand Notice and challan accordingly. Charge interest u/s.234A, 234B & 234C of the Act as applica....

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....ositive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear-cut finding was reached by the Inspecting Assistant Commissioner and, on that ground alone, the order of penalty passed by the Inspecting Assistant Commissioner was liable to be struck down."     4.1 Similar view has been subsequently expressed by another Division Bench in the case of New Sorathia Engineering Co. (Supra). Considering the ratio laid down by this Court in the aforesaid two decisions and the facts of the case on hand, more particularly, when it is observed that there was no clear finding by the Assessing Officer whether the assesse....