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2018 (5) TMI 1847 - ITAT MUMBAIPenalty u/s. 271(1)(c) - payment under the head ‘management service charges to shareholders’ treated as capital expenditure - HELD THAT:- We have heard the rival submissions, perused the orders of the authorities below and the Coordinate Bench decision. On perusal of the Coordinate Bench decision for the Assessment Year 2007-08 we find that on identical circumstances penalty was deleted [2017 (3) TMI 810 - ITAT MUMBAI] held that no information given in the return of assessee was found to be incorrect or inaccurate. The statement given by the assessee was not found to be factually incorrect hence prima facie assessee could not be held guilty for furnishing inaccurate particulars. Therefore, in this case the claim of the assessee was partly allowed by the CIT(A) and Tribunal has submitted the finding of CIT(A). Therefore, we are of the view that CIT(A) has rightly justified in following the decision of RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT]. Whenever there is a debatable issue the penalty cannot be levied. - Decided in favour of assessee. Penalty under which limb - disallowance of prior period expenses - A.Y.2003-04 - AO not specified as to which limb of the penalty notice was invoked i.e. either for concealment of income or furnishing of inaccurate particulars of such income - non striking off the irrelevant portion of the charge - HELD THAT:- On the technical issue we find that the Assessing Officer has not made the charge clear to the assessee i.e. the penalty is initiated either for concealment of income or for furnishing inaccurate particulars of income by striking off the irrelevant portion of the charge in the notice issued u/s. 274 r.w.s. 271(1)(c). We also find from the Assessment Order that the Assessing Officer except stating that penalty proceedings u/s. 271(1)(c) is being initiated, he has not mentioned as to on what charge the penalty proceedings are initiated i.e. either for concealment of income or for furnishing inaccurate particulars of income. See M/S. ORBIT ENTERPRISES VERSUS ITO-15 (2) (2) , MUMBAI [2017 (11) TMI 172 - ITAT MUMBAI]. Thus notice issued u/s. 274 r.w.s. 271(1)(c) of the Act suffers from infirmity as it was issued on non-application of mind by the Assessing Officer Even on merits, we find that the penalty was levied for disallowing the expenses claimed by the assessee relating to prior period, the claim was based on the bills received by the assessee during the current Assessment Year. There is complete disclose of the expenses by the assessee in its Books of Accounts and therefore there is neither concealment of income nor furnishing of inaccurate particulars of income. Mere disallowance of expenses cannot attract levy of penalty u/s. 271(1)(c) of the Act, thus even on merits the assessee should succeed - Decided in favour of assessee.
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