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TMI Blog2017 (8) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Fortune Technocomps P.Ltd.(2016 (5) TMI 859 - DELHI HIGH COURT), the very basis of initiation of penalty proceedings has been rendered as nonexistent. Further find the search in the instant case took place on 30.06.2009. Provision of section 271 AAA speaks of penalty leviable in case of searches conducted on or after 1.6.2007 but before 1.7.2012. Thus penalty should have been levied u/s 271AAA and not u/s 271(1)(c) of the Act. Since the penalty has been levied u/s 271(1)(c) instead of S.271AAA and considering the fact that the Ld.CIT(A) in the instant case in the quantum proceedings has altered the assessment order in a significant way, therefore, in view of the decision cited (supra), the very basis of initiation of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of coal outside the books of accounts and an amount of ₹ 20,27,478/- on account of Kattha business. 3. In appeal the Ld. CIT(A) deleted the addition of ₹ 20,27,478/- made by the AO on account of Kattha business. However, he restricted the addition to ₹ 3,43,360/- on account of purchase of coal outside the books of accounts by observing as under. 4.3. I have considered the assessment order and the grounds raised by the appellant and the submissions filed in relation thereto. Facts are that during search and seizure, incirminating documents were seized from various premises, particularly indicating purchases and sales outside the books of accounts. Based on the seized materials, the appellant admitted undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative suggestion made by Ld. AR appears reasonable in the facts of the case. Accordingly, the addition is restricted to ₹ 3,43,360/- and appellant gets relief of ₹ 5,83,280/=. 4. Thereafter the AO initiated penalty proceedings under section 271(1)(c) of the Act. Rejecting the various explanation given by the assessee the AO levied penalty of ₹ 1,06,097/- under section 271(1)(c) of the Act. The Ld. CIT(A) confirmed the penalty so levied by the AO for which the assessee is in appeal before the Tribunal. 5. Ld. Counsel for the assessee submitted that the assessee during the course of search had offered an additional income of ₹ 80 lakh to be taxed in the Assessment Year 2009-10 on account of unaccoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the AO has recorded satisfaction u/s 271(1)(c ) of the Act for furnishing of inaccurate particulars of income/concealment of income. However, the direction in the order was for furnishing inaccurate particulars of income. The show cause notice issued mentions the two defaults in the printed notice where inapplicable charges were not struck off. Since the AO is not clear in reaching to a satisfaction about the nature of default attributable to the assessee at any point of time of completing the assessment as to whether the defect is for furnishing of inaccurate particulars of income or for concealment or both, therefore, in view of the decision of Hon ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 20,27,478/- has been deleted by the Ld.CIT(A) and the Revenue is not in appeal. So far as addition of ₹ 9,26,640/- on account of unaccounted purchases outside the books of accounts is concerned, I find the ld.CIT(A) has already granted substantial relief of ₹ 5,85,280/- and for that also the Revenue is not in appeal. I find on the basis of addition sustained by the Ld.CIT(A) of ₹ 3,48,360/- the AO levied penalty of ₹ 1,06,097/- u/s 271(1)(c ) of the Act which has been confirmed by the Ld.CIT(A). 9. It is the submission of the Ld.Counsel for the assessee that since substantial amount has been reduced by the Ld.CIT(A) and the addition is on estimation basis, therefore, no penalty u/s271(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was altered by the CIT(A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT(A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the assessee that warranted the imposition of penalty u/s 271(1)(c ) of the Act. 10.1. I further find the search in the instant case took place on 30.06.2009. Provision of section 271 AAA speaks of penalty leviable in case of searches conducted on or after 1.6.2007 but before 1.7.2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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