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TMI Blog2022 (8) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... or has furnished inaccurate particulars of income so as to make aware the assessee under which of the limb of section 271(1)(c) of the Act it is going to be penalized. Since the AO has not issued a valid notice by framing a specific charge to be initiated against the assessee rather invoked both the limbs of section 271(1)(c) of the Act for furnishing inaccurate particulars of income or for concealing the particulars of income no penalty can be imposed on the basis of the same. Hon ble Bombay High Court in the case of Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] has decided the identical issue as to initiating the penalty proceedings on the basis of invalid notice and held that penalty levied on the basis invalid notice issued under section 274 read with section 271(1)(c) of the Act is not sustainable and is liable to be set aside. As contended for the assessee that when the assessee company has suffered huge losses no penalty under section 271(1)(c) of the Act can be levied and relied upon the order passed by Hon ble Gujarat High Court and order passed by the co-ordinate Bench of the Tribunal in the cases cited as National Textiles [ 2000 (10) TMI 19 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) erred in deleting the penalty ignoring the provisions of sec. 27i(i)(c) of the Act. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the DCIT 9(3X2) be restored. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 2. Briefly stated facts necessary for adjudication for the controversy are that; on the basis of assessment framed under section 143(3) of the Act by making disallowance of Rs.5,33,08,153/- and Rs.9,58,000/- under section 40(a)(ia) of the Act and on account of prior period expenses respectively, Assessing Officer initiated the penalty proceedings against the assessee by way of issuance of notice under section 274 read with section 271(1)(c) of the Act. Declining the contentions raised by the assessee the Assessing Officer proceeded to levy the penalty to the tune of Rs.1,85,000/- @ 100% of the tax sought to be evaded under section 271(1)(c) of the Act. 3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has partly allowed the same. Feeling aggrieved the Revenue has come up before the Tribunal by way of filing the present appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded inter alia that the assessee company has intentionally concealed its income by furnishing inaccurate particulars of income by claiming inadmissible amount under section 40(a)(ia) of the Act despite being pointed out by tax audit report and that assessee company has also debited prior period expenses of Rs.9,58,000/- on account of electricity expenses again despite being pointed out in tax audit report and relied upon the assessment order as well as penalty order passed by the Assessing Officer. 10. However, on the other hand, the Ld. A.R. for the assessee, in order to repel the argument addressed by Ld. D.R. for the Revenue, relied upon impugned order passed by Ld. CIT(A) and contended inter alia that initiation of the penalty proceedings by way of issuance of notice under section 274 read with section 271(1)(c) of the Act is bad in law as the assessee has not been made aware of as to whether he was being penalized for concealing the particulars of income or for furnishing inaccurate particulars of such income and drew our attention towards the notice of penalty available at page No.1 of the paper book; that even at the time of assessment, Assessing Officer has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. 12. Not only this, AO at the time of initiating the penalty proceedings during framing assessment order has failed to apply his mind as he was not clear enough as to whether he is initiating the penalty proceedings for furnishing inaccurate particulars of income or for concealing the particulars of income rather invoked both the limbs of section 271(1)(c) of the Act. Operative part of the assessment order initiating the penalty proceedings is extracted as under for ready reference: Penalty proceedings u/s. 271(1)(c) are initiated separately for furnishing inaccurate particulars of income and for concealing the particulars of income. 13. So we are of the considered view that AO has not applied his mind before init ..... X X X X Extracts X X X X X X X X Extracts X X X X
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