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2019 (7) TMI 1216 - ITAT HYDERABADPenalty u/s 271(1)(c) - AO was not satisfied with the assessee’s explanation and holding that the assessee could not have offered the additional income after the search and concealment of income based on an estimate, he levied the minimum penalty i.e. 100% of the amount sought to be evaded - HELD THAT:- Penalty u/s 271(1)(c) is levied for not offering the additional income to tax in the original returns of income for offering the same only after confrontation during the course of search. Non-striking off the irrelevant portion of the show cause notice u/s 271(1)(c) - AO does not specify as to whether the assessee has concealed the particulars of income or furnished inaccurate particulars of income. DR had submitted that the assessee had concealed the income as well as furnished inaccurate particulars of income, but we find that the AO has used “or” and not “and” between concealment of income and furnishing of inaccurate particulars of income. Therefore, it is clear that the AO was not clear in his mind whether it was a case of furnishing of inaccurate particulars or concealment of income or he has failed to strike off the irrelevant portion in the proforma of the notice before issuing the same. Therefore, the additional grounds of appeal is to be admitted and allowed in view of the decision of the jurisdictional High Court in the case of Pr. CIT vs. Baisetty Revati reported in [2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] The additional ground is therefore, allowed. Even on merits of the other grounds, we find that the disallowance of expenditure was not because it has been found to be bogus expenditure but it was because the assessee could not substantiate the same with bills and vouchers. In response to the show cause notice u/s 271(1)(c), the assessee had filed its explanation and there is no finding of the AO that the assessee’s explanation is not acceptable or that it is not bonafide. Therefore, we are in agreement with the contentions of the learned Counsel for the assessee that though it is a good ground for making addition, it cannot be a ground for penalty u/s 271(1)(c) as held by the Hon'ble Supreme Court in the case of Reliance Petrochem Ltd [2010 (3) TMI 80 - SUPREME COURT] Notice u/s 271AAB to levy penalty u/s 271(1)(c) - HELD THAT:- AO gets the jurisdiction to levy the penalty by issuing a notice and therefore, it is not a procedural requirement but is a jurisdictional one. By issuing a notice, the AO has intimated the assessee the reasons for initiating penalty and the assessee gets an opportunity to explain the circumstances under which the default, if any, was committed and as to why the penalty was not leviable. By issuance of notice u/s 271AAB AO is seeking assessee’s explanation as to why the penalty should not be levied on the undisclosed income declared in the returns of income, whereas u/s 271(1)(c) he is seeking assessee’s explanation for furnishing of inaccurate particulars or concealment of income. Therefore, we agree with the findings of the CIT (A) that these two provisions operate in different circumstances and by issuance of notice u/s 271AAB AO cannot thereafter change it to section 271(1)(c) and levy penalty thereunder. Therefore, we do not find any reason to interfere with the order of the CIT (A). - Decided against revenue.
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