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TMI Blog2020 (11) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act. Not only this, even at the time of assessment proceedings, AO has not applied his mind as to whether he is satisfied if the assessee company has concealed the income or furnished inaccurate particulars of income mandatory to initiate the penalty proceedings u/s 271(1)(c) of the Act which is apparent from the satisfaction note of the AO - When the AO has not applied his mind at the time of initiation of penalty proceedings by satisfying himself if it is a case of concealment of income or furnishing of inaccurate particulars of income then the entire penalty proceedings are vitiated and bad in law. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... for levy of penalty as the necessary ingredients to levy penalty as described in Section 271 (1) (c) are required to be shown as existed. 6. That under the facts and circumstances of the case and in law, Ld. (IT (A) has erred in sustaining the levy of penalty as he has failed to appreciate that the ALP determined by the TPO was only a matter of difference of opinion on which there could be difference and if the difference is based on bona fide view then it will not attract the penalty U/S 271 (1) (c). 7. Each of the above ground is independent and without prejudice to the other grounds of appeal preferred by the Appellant." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of assessment order framed u/s 143(3)/144C at an income of ₹ 2,03,92,252/- for AY 2012-13 by making addition of ₹ 74,41,060/- on account of arm's length price qua international transactions carried out by the assessee with its Associated Enterprises (AE), the penalty proceedings were initiated u/s 271(1)(c) of the Act by way of issuance of notices dated 29.04.2016 & 14.10.2016 u/s 274 r/w section 271(1)(c) of the Act. Declining the contentions r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h section 271 of the Act to initiate the penalty proceedings for Assessment Year 2012-13 which is extracted as under for ready perusal:- "Notice Under Section 274 Read With Section 271 of the Income Tax Act-1961 To M/s Cramster E-Learning Services Pvt. Ltd. (Now known as Chegg India Pvt. Ltd. PAN AACCC7975R 312-315, DLF Tower-A, Jasola, New Delhi. Where in the course of proceeding before me for the assessment year 2012-13 it appears to me that you:- *have without reasonable cause failed to comply with a notice under section 142(1)/143(2) of the income Tax Act, 1961 dated *have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1,2,3,4 and 5. You are requested to appear before me at 11 :30 A.M./P.M. on 31/05/2016 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271. Place Date : 29.04.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not only this, even at the time of assessment proceedings, AO has not applied his mind as to whether he is satisfied if the assessee company has "concealed the income" or "furnished inaccurate particulars of income" mandatory to initiate the penalty proceedings u/s 271(1)(c) of the Act which is apparent from the satisfaction note of the AO, extracted for ready perusal as under :- "For the above mentioned reasons, I am satisfied that assessee company concealed the income/filed inaccurate particulars, hence penalty proceedings u/s 271(1)(c) of the I.T. Act have been initiated separately." 11. When the AO has not applied his mind at the time of initiation of penalty proceedings by satisfying himself if it is a case of "concealment of income" or "furnishing of inaccurate particulars of income" then the entire penalty proceedings are vitiated and bad in law. 12. Coordinate Bench of the Tribunal in the case of Smt. Harmeet Kaur Sran (supra) dealt with the identical issue and deleted the penalty by returning the following findings :- "13. Hon'ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra) while deciding the identical issue held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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