ASHOK M. MUSALE,,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 8,, PUNE

This assessee‟s appeal for AY 2005-06 arises against the CIT(A)-6, Pune‟s order dated 15-02-2018 passed in case No. PN/CIT(A)-V/DCIT, Cir.8/192/2015-16 involving proceedings under Section 271(1)(c) of the Income Tax Act, 1961, in short „the Act‟.

Coming to the assessee‟s sole substantive grievance that both the learned lower authorities have erred in law and on facts in levying impugned section 271(1)(c) penalty amounting to Rs.22,13,376/- pertaining to deemed dividend addition made in quantum proceedings, Mr. Walimbe vehemently 2 Ashok M. Musale supported the same by pleading that this taxpayer had failed to offer any justifiable explanation. He also quoted case law Mak Data Pvt. Ltd. vs. CIT (2013) 358 ITR 593 (SC) that such a penalty is indeed attracted on account of assessee‟s failure in filing a cogent explanation.

We have given our thoughtful consideration to the foregoing arguments and find no merit therein. A perusal of Assessing Officer‟s corresponding penalty show cause notice dated 28.09.2012 suggests that he had nowhere specified as to whether this taxpayer had concealed particulars of his income or furnished inaccurate particulars of such income. That being the case, we quote the hon‟ble jurisdictional high court‟s recent landmark decision in Mohd. Farhan A. Shaikh vs. ACIT (2021) 434 ITR 1 (Bom) (FB) holding that such a failure on Assessing Officer‟s part is indeed fatal to initiation of 271(1)(c) penal provision itself. We accordingly delete the impugned penalty for this precise reason alone.

This assessee‟s appeal is allowed in above terms.