Allowing the appeal the Court held that the notice under section 274 read with section 271(1)(c) was issued for the assessment year 2002-03 and not for the assessment year in question that is 1999-2000. Besides this, there was no mention in the notice that the assessee had concealed the income or furnished inaccurate particulars of income. The authorities had failed to appreciate that penalty proceedings and the assessment proceedings are distinct and since, the assessee had not commenced the business, it could not have earned income, which had not been accounted for. The Tribunal had failed to take into account the well settled legal principles that mere disbelief of an explanation would not be sufficient to impose penalty. The order of penalty was not valid.( AY.1999-2000)