TaxTMI 
TaxTMI 
2018 (5) TMI 1316
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.... Ld.CIT(A) erred in deleting the penalty levied u/s.271(1)(c) of the Act, without considering the decision of the Hon'ble ITAT, Mumbai in the case of Smt. Shantidevi Mahavir Prasad Gupta [(2014)43 taxmann.com 325], wherein levy of penalty on similar addition was upheld. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the penalty levied u/s.271(1)(c) of the Act, on account of furnishing of inaccurate particulars of income by claiming interest expenses of Rs. 18,65,165/-, which were not laid out or expended wholly and exclusively for the purpose of earning such income u/s 57(iii) of I.T. Act. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) of the Act, without considering the decision of Hon'ble ITAT, Mumbai in the case of J. M. Baxi & Co. [(2014) 44 taxmann.com 140], wherein levy of penalty on disallowance of expenses was upheld. 3. The Cross Objection filed by the assessee is as under: On the facts and in the circumstances of the case the AO has: 1. erred in objecting the order of CIT(A), without appreciating the facts of the case, on par....
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....g to Rs. 91,947/- by observing that "claiming the deduction of interest without showing how it was incurred wholly and exclusively for earning income which was offered under the head 'other sources', the appellant has concealed the particulars of income". However, the Ld. CIT(A) deleted the penalty levied by the AO on disallowance of interest of Rs. 18,65,165/- on the ground that "the appellant had made a bona fide claim of deduction of interest expenditure on placing reliance on law, which cannot be considered as dishonest, mala fide claim resulting into concealment or inaccurate particulars of income". Also the Ld. CIT(A) deleted the penalty levied by the AO on addition of deemed dividend of Rs. 1,17,50,000/- on the ground that "the issue of applicability of section 2(22)(e) is a legal proposition and involves debateable issues, in which case the levy of penalty is not justified". 7. Before us, the Ld. counsel of the assessee submits that in the instant case the notice issued by the AO u/s 271(1)(c) r.w.s. 274 does not specify the limb of section 271(1)(c) for which penalty proceedings were initiated i.e. whether for 'concealment of income' or 'furnishing of inaccurate particu....
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....o be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) (head note): 'Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings.' In M/s Maharaj Garage & Co. (supra), the Hon'ble Bombay High Court at para 15 held: "The requirement of section 274 of the Income Tax Act ....
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....eedings which are otherwise valid and no prejudice had been caused. This is the effect and mandate of Section 292B of the Act." In Smt. Shantidevi Mahavir Prasad Gupta (supra), the Tribunal held as under: "10. The question before us is not whether the income is of the nature of "notional income" but the question is whether the assessee has filed inaccurate particulars or concealed the true facts. As stated hereinabove, in our humble opinion, the assessee has concealed the true facts thereby filed inaccurate particulars. Therefore, we do not find any error or infirmity in the findings of the Ld. CIT(A). The penalty u/s. 271(1)(c) is leviable on the facts of the case. The reliance on the decision of the Tribunal is clearly distinguishable on the facts. We, accordingly confirm the levy of penalty u/s. 271(1)(c) of the Act." In Ms. Laudres Austin (supra), the Tribunal held the following : "In the instant case also we hold that penalty proceedings were initiated properly as there is no defect in the recording of satisfaction by the AO as well there is no defect in the notice issued u/s 271 r.w.s. 274 of the 1961 Act. The decision of Hon'ble Bombay High Court in Samson Pe....