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TMI Blog2021 (10) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. When the assessee has disclosed all the particulars in the return of income claiming certain expenses, however found to be not allowable, it would not amount to furnishing of inaccurate particulars of income to attract the penal provisions u/s 271(1)(c) of the Act, as has been held by Hon ble Apex Court in the case of Reliance Petro Products Pvt. Ltd[ 2010 (3) TMI 80 - SUPREME COURT] . Also see MANJUNATHA COTTON AND GINNING FACTORY, MANJUNATH GINNING AND PRESSING, VEERABHADRAPPA SANGAPPA AND CO., V.S. LAD AND SONS, G.M. EXPORT [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] AO has miserably failed to specify in the notice issued under section 274 read with 271(l)(c) of the Act, as to whether the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income , and also merely making a claim which is not sustainable in law by itself, as in the present case, assessee s expenditure has been disallowed by the AO, would not amount to furnishing of inaccurate particulars of income. - Decided in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant having neither concealed' the particulars of income nor furnished inaccurate particulars of income, the levy of penalty under section 271(1)(c) read with Explanation 1 thereto is bad in law and liable to be quashed. 3.3 On facts and in the circumstances of the case and law applicable, the conditions for levying penalty under section 271(1)(c) being not satisfied, the order passed under section 271 (1)(c) is bad in law and liable to be quashed. 4.1 The learned Commissioner of Income tax (Appeals) 18 New Delhi has erred in not appreciating that the entire basis, rationale for making disallowance and the consequential levy of penalty under section 271(1)(c) was bad in law and liable to the quashed. 5.1 The learned Commissioner of Income tax (Appeals) 18 New Delhi has erred in not appreciating that a) of the total disallowance of ₹ 41,18,325/-, a sum of ₹ 20,07,018/- was towards i) Fees for drafting/vetting of various commercial agreements between the assessee company and Indian parties and vendors such as Wholesale supply agreement (ii) Assets Purchase Agreement (iii) Software purchase agreement (iv) Platform License Agreement (v) Dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO (2012) 138 ITD 189 (Delhi), Hybrid Rice International Pvt. Ltd. vs. CIT in ITA No.285/Del/2007, Earthmoving Equipment Service Corporation vs. DCIT (2017) 166 ITD 113 (Mumbai), DCIT vs. Shah Rukh Khan (2018) 93 taxmann.com 320 (Mumbai-Trib.) etc. and contended that when in the assessment order relevant limb of section 271(1)(c) i.e. furnishing of inaccurate particulars of income has been invoked, it was sufficient to attract the provisions contained u/s 271(1)(c) of the Act. Ld. DR also filed written submissions running into 12 pages which have been made part of the judicial record. 7. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower authorities and arguments addressed by the ld. DR for the Revenue, the sole question arises for determination in this case is:- as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings? 8. Undisputedly, by filing the return of income, assessee has claimed certain expenses which have been found to be not allowable and consequently, AO by disallowing the same made addition thereof. It is also not in disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against him/her. 11. Bare perusal of notice issued u/s 274 read with section 271(1)(c) shows that the AO has failed to specify in the show-cause notice (supra) if the assessee has concealed the particulars of income or has furnished inaccurate particulars of income. Issuance of valid notice in order to initiate the penal provisions as sine qua non for levying the penalty as this issue has been decided by the Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows 73 taxmann.com 241 (Kar.) and Hon ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. in ITA 475/2019 order dated 02.08.2019. 12. Hon ble Apex Court in case of CIT vs. SSA s Emerald Meadows - (2016) 73 taxmann.com 248 (SC) while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as Hon ble High Court on ground of unspecified notice has held as under:- Section 274, read with section 271(1)(c), of the Income-tax Act, 1961 - Penalty - Procedure for imposition of (Conditions precedent) - Assessment year 2009-10 - Tribunal, relying on decision of Division Bench of Karnataka High Court rendered in case of CIT v. Manjunatha Cot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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