The assessee-HUF, which stood completely partitioned and dissolved on 26-03-2014, had claimed long-term capital loss on dissolution which was disallowed in assessment and addition of Rs. 7.29 crore was made. Though penalty proceedings were initiated alleging furnishing of inaccurate particulars of income, the Assessing Officer ultimately levied penalty treating the amount as concealed income, thereby adopting a ground entirely different from that mentioned in the show-cause notice, rendering the penalty order invalid in law. The Tribunal further found that both the notice initiating penalty and the penalty order were issued in the name of a non-existent HUF after its dissolution, and since this factual position was undisputed, the penalty proceedings were ab initio void. Even otherwise, reliance on section 171 could not assist the Revenue as the individual members of the erstwhile HUF were never put on notice and complete partition had already been accepted in assessment proceedings. The High Court held that penalty proceedings are independent of assessment proceedings and mere disallowance of a claim does not automatically warrant penalty unless concealment or deliberate furnishing of inaccurate particulars is established. The claim arose due to a bona fide mistake in treating distribution of assets on partition as transfer and the issue was tax neutral. Accordingly, the Tribunal was justified in deleting the penalty and the order was affirmed. (AY. 2014-15)