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TMI Blog2018 (3) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO u/s 271(1)(c) levying penalty of Rs. 6,54,058/-. Ground No.2: On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in not appreciating the fact that the AO has not recorded specific reasons for initiation of penalty proceedings under Section 271(1)(c) of the Act. Under the law, the Ld. AO is duty bound to state specific reasons for initiation of such penalty proceedings. Ground No.3: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that the penalty notice issued by the Ld. AO suffers from defects which makes the notice invalid. The Ld. AO in his show cause notice ought to have mentioned clearly whether penalty proceeding is initiated f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of vehicles, operating weigh bridges, road rollers, sale of plots etc., There was a search and seizure operation conducted in the case of Venigalla Ananda Prasad & Others and their group of cases on 7.10.2009. The assessee was also searched. During the course of search, the assessee was found to be deriving incomes from various sources like plying of vehicles, operating weigh bridges, Road Rollers, sale of plots etc. which were not disclosed in the returns filed prior to the search. Accordingly, notice u/s 153A of the Act was issued to the assessee for the A.Y 2008-09 on 30.08.2010. 3. In response to the said notice, the assessee filed his return of income and offered the income from the sources found during the course of search. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 271(1)(c) of the Act, contending that the AO has not indicated the ground on which the penalty has been initiated and that he has not struck off the irrelevant portion of the notice. The CIT (A) however, confirmed the order of the AO and the assessee is in second appeal before us. 5. The learned Counsel for the assessee submitted that the assessee was not aware of the legal provisions and therefore, had made the claim u/s 54F of the Act, while declaring the long term capital gain. He submitted that in the return of income itself, the assessee has offered the rental income from various properties and also in response to the notice issued by the AO, he has given the details of the properties and the rental income therefrom. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from such property to tax. Therefore, it is clear that the assessee owned more than two residential properties and was not eligible for making such claim and all the relevant details with regard to the ownership of the properties by the assessee were before the AO. The AO has disallowed the claim u/s 54F of the Act, solely on the ground that the assessee has not given details of the investments made u/s 54F of the Act. It is only the CIT (A), who has held that the assessee is not eligible for exemption u/s 54F of the Act, because the assessee was already holding more than two residential properties. The assessee had not filed the details of the property purchased by him before the AO during the assessment proceedings or during the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has held as under: "7. As against this, Learned Counsel appearing on behalf of the respondent pointed out that the language of Section 271(1)(c) had to be strictly construed, this being a taxing statute and more particularly the one providing for penalty. It was pointed out that unless the wording directly covered the assessee and the fact situation herein, there could not be any penalty under the Act. It was pointed out that there was no concealment or any inaccurate particulars regarding the income were submitted in the Return. Section 271(1)(c) is as under:- "271(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person (c) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs.Rajasthan Spg. & Wvg. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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