INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Defective notice - Non-application of mind by AO -

Assessee was having a unit in SEZ and entitled for deduction of 50% of its income under section 10AA. Assessee submitted a requisite certificate of a Chartered Accountant for claim made by it under section 10AA. During course of assessment proceedings, it was found that assessee had derived income from sale of scrap and refund of sales tax. Assessee claimed deduction under section 10AA @ 50% on the above sum. Assessee submitted that the above claim was made inadvertently. It offered the income during course of assessment proceedings and submitted that no penalty proceedings be intiated/levied. AO initiated the penalty proceedings under section 271(1)(c) stating that penalty proceeding was initiated for concealment of income and for furnishing inaccurate particulars of income. Held: AO had initiated penalty on both counts of concealment of income as well as of furnishing of inaccurate particulars of income. In show cause notice under section 274 also none of twin charges were stuck off. Issue was squarely covered in favour of the assessee by decision of Sahara India Insurance Company Ltd [ITA No. 475/2019 : 2019 TaxPub(DT) 6933 (Del-HC)] as held that penalty was not sustainable if none of twin charges in notice under section 274 were cancelled/ stuck off. Therefore, penalty levied by AO was not sustainable in law

Followed:UOI & Ors. v. Dharmendra Textile Processors & Ors. (2008) 13 SCC 369 : 2008 TaxPub(DT) 2320 (SC) Dilip N. Shroff v. JCIT & Anr. (2007) 291 ITR 519 (Bom) : 2007 TaxPub(DT) 0023 (Bom-HC) Pr. CIT & Ors. v. Sahara India Life Insurance Company, Ltd. ITA No. 475/2019 : 2019 TaxPub(DT) 6933 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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