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TMI Blog2019 (9) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... tances and the legal provisions that the penalty provisions are not automatic and the AO has to weigh the circumstances further on the turnover and demonstrated with financial statements. Accordingly, we set aside the order of CIT(A) and direct the AO to delete the penalty and allow the grounds of appeal of the assessee. Levying penalty u/s 271(1)(C) - assessee has challenged the issue of notice u/s 274 - defective notice - HELD THAT:- It was imperative for the AO to strike off irrelevant limb so as to make the assessee aware as to what is the charge made against him and so that he can respond accordingly. Further, the Hon ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] observed that the levy of penalty has to be clear as to the limb under which it is being levied - where the AO proposes to invoke the first limb being the concealment then, notice has to be appropriately marked. Further, the Hon ble High Court has held that the standard proforma of notice u/s 274 of the Act, without striking of the relevant clauses would lead to inference of non-application of mind by the AO. In the present case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of accounts audited. The assessee was issued show cause notice as the gross receipts were more than the prescribed limits u/s 44AB of the IT Act and the assessee failed to get the Books of accounts and furnish the audit report within the time limit u/s139(1)of the IT Act. The AO found that the total gross receipts for the FY: 2013-14 have been disclosed at ₹ 80,56,300/- and the assessee has opted to offer the income at 5.26% much below the presumptive @ 8% of gross receipts under provisions of section 44AD of the Act. Further, in the assessment proceedings, the AO found that the assessee has not accounted the credits in the Bank account Vijaya Bank and therefore, the AO after considering the credits of the Bank account worked out the gross receipts to ₹ 1,16,80,868/-. In the penalty proceedings, the assessee has not filed the explanations and reasonable cause for Default in not getting the Books of accounts audited. Finally, AO based on material available on record levied penalty of ₹ 58,404/- and passed order u/s 271B on 29-01-2017. 3. Aggrieved by the order, assessee has filed an appeal before the ld.CIT(A), whereas the Ld.CIT(A) in the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed u/s 271B of the IT Act,1961. Hence, the assessee was under the bonafide belief that the Books of accounts need not be audited and filed the Return of income. We find the explanations of the Ld.AR are realistic and duly supported with the financial statements which cannot be over looked. Further, the assessee is Regular in filing the Return of income and has been paying the taxes. The Reasonable cause explained by the assessee u/s 273B of the IT Act, that the assessee has maintained Books of accounts and based on Books of accounts, income and expenditure has been prepared and filed the return of income. In the Assessment proceedings, the AO found the credits in other Bank accounts which were not disclosed and the assessee has accepted the addition. We are of the substantive opinion, that the assessee has a Reasonable cause and the action of the assessee is not wanton. Considering the facts, circumstances and the legal provisions that the penalty provisions are not automatic and the AO has to weigh the circumstances further on the turnover and demonstrated with financial statements. Accordingly, we set aside the order of CIT(A) and direct the AO to delete the penalty and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 27.41 13) with retrospective effect and bra virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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