TaxTMI 
TaxTMI 
2021 (3) TMI 167
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....Ld. AO, imposing penalty of Rs. 3,21,013/- (Three Lakh Twenty One Thousand Thirteen only), u/s 271(1)(c) of the Act read with Explanation 1 thereto, levied without recording proper satisfaction in terms of provision of Section 271(1)(c) read with section 274 of the Income Tax Act, 1961. 1.1 That the impugned penalty order of the AO is invalid and void ab initio, since framed in absence of recording of specific satisfaction or levying of specific charge as to concealment of income or furnishing of inaccurate particulars of income, in the notice issued u/s 274 of the Act. 1.2 That the ld. CIT(A) in an arbitrary manner, on wholly erroneous, illegal and untenable grounds, without adhering to principles of natural justice, has ....
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....irm has claimed proportionate expenses amounting to Rs. 11,88,878/- against the said Income u/s 57 (iii) of the Income Tax Act, 1961. 6. The balance expenses amounting to Rs. 15,11,122/- have been al located towards exempt income of Rs. 1,57,26,057/- representing dividend income exempt u/s 10(34) /(35) of the Act. 7. It was submitted that the claim of expenses is both bonafide and reasonable, expended wholly and exclusively for the earning of such income in terms of Section 57(iii) of the Income Tax Act, 1961. In support of its claim, the assessee relied on the following decisions: • CIT vs. Taj International Jewellers (2011) 335 ITR 144 (HC) • CIT vs. New Savan Sugar and Gur Refining Co. Ltd. 185 ITR 564 (HC....
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....ly and exclusively for the purpose of earning interest. * As the amount of 'service charges' & 'maintenance expenses' is not related to the earning of income chargeable under the head 'income from other sources', the same has to be treated as not incurred solely and exclusively for the purpose of earning income. It was also held that there was no nexus between the expenditure incurred and income sought to be earned as the income has been earned on deposit with ICICI Bank and loan given to Shri Dhiraj Sarna & Shri Shakti Singh @ 4% P.A. and the 'service charges' & 'maintenance expenses' have been incurred in connection with overall establishment of the assessee firm. 10. The AO held that as....
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....rnishing inaccurate particulars within the meaning of explanation 1 to the Sub-Section (1) of the Section 271(1)(c) of the Act are initiated." 13. We have also gone through the last page of the order wherein the Assessing Officer held as under: "Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 for concealment of income as aforesaid and furnishing inaccurate particulars within the meaning of explanation 1 to the Sub-Section (1) of the Section 271(1)(c) of the Act are initiated. Notice u/s 271(1)(c) read with Section 274 of the Act is being issued separately." 14. We have gone through the penalty order wherein the penalty of Rs. 3,21,013/- has been levied by the Assessing Officer. 15. Para no. 5 of the penalty o....