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Income Tax Appellate Tribunal, DELHI BENCHES “A”: DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-1, New Delhi, Dated 05.01.2017, for the ay 2007-2008, challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961.
Briefly the facts of the case are that assessee filed return of income declaring NIL income which was assessed at 2 ITA.No.1548/Del./2017 Aithent Technologies Pvt. Ltd., New Delhi. an income of Rs.9,86,84,160/- under section 143(3) r.w.s. 144C of the I.T. Act, 1961, based on TPO’s additions and DRP’s direction after making the following additions.
(i) TP adjustment Rs.9,49,21,677/- (ii) Disallowance of depreciation on house property Rs.26,03,665/-. (iii) Addition on account of notional interest on interest free security deposit Rs.11,58,822/-.
2.1. The penalty proceedings were initiated. The assessee filed appeal before ITAT which is allowed partly. On the issue of T.P. adjustment, ITAT remitted the matter back to the file of A.O./TPO. On the issue of addition on account of notional interest, the ITAT deleted the addition. The addition made on account of disallowance of depreciation on house property to the tune of Rs.26,03,665/- was not contested by the assessee. The A.O, therefore, issued show cause notice for levy of the penalty. The A.O. ultimately levied the penalty under section 271(1)(c) of the I.T. Act, 1961 on this addition.
3 ITA.No.1548/Del./2017 Aithent Technologies Pvt. Ltd., New Delhi. 3. None appeared on behalf of the assessee.
We have heard the Ld. D.R. and perused the findings of the authorities below. The A.O. in the assessment order on the addition of Rs.26,03,665/- on which penalty have been levied has mentioned “I am satisfied that assessee had furnished inaccurate particulars of income and concealed the income of Rs.26,03,665/-. Therefore, penalty proceedings under section 271(1)(c) of the Act have been initiated on this issue.” Copy of the show cause notice dated 31.10.2011 is filed in the appeal papers in which the A.O. has mentioned “have concealed the particulars of your income or furnished inaccurate particulars of such income.”
4.1. These facts, therefore, clearly show that notice issued by the A.O. for levy of penalty under section 271(1)(c) of the I.T. Act to be bad in law as it did not specify in which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. The 4 ITA.No.1548/Del./2017 Aithent Technologies Pvt. Ltd., New Delhi. entire penalty proceedings are, therefore, vitiated and no penalty is leviable. On this score itself similar view is taken by Hon’ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows 73 taxmann.com 241. This decision is confirmed by the Hon’ble Supreme Court reported in 73 taxmann.com 248. In this view of the matter, the orders of the authorities below are set aside and penalty is cancelled.
In the result, appeal of assessee is allowed.
Order pronounced in the open Court.