AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 787
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.... Assessing Officer & CIT(A) are liable to be quashed as the penalty u/s 271(1)(c) of the Act was not specific in the Assessment Order as to which limb of the provisions of the section, the same has been initiated. 3. That the Order passed u/s 271(1)(c} of the Act is illegal, arbitrary being passed in utter violation of natural justice as the appellant was not given show cause notice u/s 274 of the Act specifying the exact charge I limb under which the AO has initiated the Penalty. 4. That on the facts & circumstances of the case, the penalty us 271(1)(c) of the Act is not leviable as the appellant neither concealed any income nor furnished any inaccurate particular of income. The exemption u/s 54F of the Act, on the facts was claimed by the appellant on construction of first floor of his house at Sainik Farm, on the advice of his Chartered Accountant. 5. Without prejudice to the above, otherwise also penalty levied u/s 271(1)(c) of the Act is excessive as the amount of tax levied on addition of long term Capital gain at 20% of Rs. 67,68,010/- and the ACIT levied penalty @ 30% of Rs. 67,68,010/-." 2. Briefly stated the facts necessary for adjudication of the controversy at ha....
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....t proceedings?" 7. Ld. AR for the assessee challenging the impugned order passed by the ld. CIT (A) contended inter alia that at the very outset, AO has failed to satisfy himself that as to whether the assessee has concealed the particulars of income or furnished inaccurate particulars of income in the assessment order as well as in the show-cause notice issued u/s 274/271(1)(c) of the Act so as to initiate the penalty proceedings; that at no point of time, assessee has filed inaccurate particulars of income or has concealed the particulars of income rather furnished all the details necessary for claiming deduction u/s 54 of the Act and relied upon the decision rendered by Hon'ble High Court of Madras in CIT vs. D. Harindran - (2018) 97 taxmann.com 297 (Madras), Hon'ble Apex Court in CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (S.C.), coordinate Bench of the Tribunal in D. Harindran vs. ITO ITA No.233/Mds/2016 order dated 23.09.2016, Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565 and CIT vs. SSA's Emerala Meadows -73 taxmann.com 241 (kar.) (Revenue's SLP dismissed in 242 taxman 180). 8. However, on the other hand, ld. Se....
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.... and paragraphs." 10. Bare perusal of the assessment order particularly para 3.7 goes to prove that even at the time of assessment, AO was not sure enough if the assessee has concealed his income or has furnished inaccurate particulars of income and then issued the notice dated 27.12.2006 u/s 274/271(1)(c) of the Act, available at page 11 of the paper book, again with confused mind if he is going to charge the assessee for concealment of particulars of income or furnishing of inaccurate particulars of income 11. When initiation of penalty proceedings by the AO right from the stage of framing the assessment till serving of the notice u/s 271(1)(c) read with section 274 of the Act are vague and ambiguous and without application of mind rather initiated and completed the penalty proceedings in mechanical manner, we are of the considered view that the penalty proceedings are not sustainable. 12. Hon'ble Apex Court in case of CIT vs. SSA's Emerala 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 ground of unspecified notice has held as under:- "Section 274, read with section ....
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.... appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w.Section 271 of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should definitely be precluded from raising such a plea at this belated stage. 17. Thus, for the above reasons, Substantial Questions of law Nos.1 and 2 are answered against the assessee and in favour of the revenue. The additional substantial question of law, which was framed is rejected on the ground that on facts the said question does not arise for consideration as well as for the reasons set out by us in the preceding paragraphs." 14. However, we are of the considered view that in the instant case, not only the notice issued to the assessee under section 274 read with section 271(1)(c) is defective but AO has not even made himself satisfied at the time of making disallowance /....
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....ed in section 271(l)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(l)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars reg....