TaxTMI 
TaxTMI 
2020 (11) TMI 776
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....(1)(c) of the Income-tax Act, 1961 (for short 'the Act'), qua the assessment year 2012-13 on the grounds inter alia that :- "1. That under the facts and circumstances of the case and in law Ld. CIT (A) has erred in law as much as in fact in upholding the penalty levied u/s 271(1) (c) of the Act. 2. That under the facts and circumstances of the case and in law Ld. CIT(A) has failed to appreciate that the impugned penalty is bad in law because it was initiated for both the charges and as against that it is levied for one charge as:- (a) the penalty was initiated in the Assessment Order for both the charges namely for concealing the income and for furnishing inaccurate particulars and while issuing the Notice dated 29th April 2016 also b....
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....s he has failed to appreciate that the mere acceptance of the addition and not challenging the same in further Appeal in itself is not sufficient for levy of penalty as the necessary ingredients to levy penalty as described in Section 271 (1) (c) are required to be shown as existed. 6. That under the facts and circumstances of the case and in law, Ld. (IT (A) has erred in sustaining the levy of penalty as he has failed to appreciate that the ALP determined by the TPO was only a matter of difference of opinion on which there could be difference and if the difference is based on bona fide view then it will not attract the penalty U/S 271 (1) (c). 7. Each of the above ground is independent and without prejudice to the other grounds of appe....
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....see. It is also not in dispute that arm's length price has been determined by the TPO by rejecting the TP analysis carried out by the assessee who has computed the margin of comparables at 10.67% vis-à-vis the margin computed by the TPO at 24.59% by selecting different companies for comparability analysis. 6. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower authorities and arguments addressed by the authorized representatives of both the parties, the sole question arises for determination in this case is:- "as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during transfer pricing as well as assessment proceedings?" 7. Ld.....
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.... at 11 :30 A.M./P.M. on 31/05/2016 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271. Place Date : 29.04.2016 Assessing Officer *Delete inappropriate paragraphs and words" On the change of incumbency, second notice dated 14.10.2016 u/s 271(1)(c) of the Act was issued which is also vague and ambiguous and is extracted for ready perusal as under :- "Office of the Asst. Commissioner of Income Tax Circle 6(2), Room No.390....
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....tative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271. Yours faithfully, Sd/- (Praduman Chauhan) Asst. Commissioner of Income Tax, Circle 6 (2), New Delhi." 9. Bare perusal of the notices issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee go to prove that at that point of time, AO himself was not aware/sure as to whether he is initiating penalty proceedings by way of impugned notice either for "concealment of particulars of income" or "furnishing of inaccurate particulars of income" by the assessee rather issued vague or ambiguous notice by incorporating both the limb....
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....ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra) while deciding the identical issue held as under :- "21. The Respondent had challenged the upholding of the penalty imposed under Section 271 (1) (c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty 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 s....