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2015 (3) TMI 316 - AT - Income TaxPenalty u/s 158BFA(2) - undisclosed peak investment in business and undisclosed interest earned on pawing items given to others - Tribunal allowed part relief - Held that - Since the addition was made on estimate basis, penalty u/s 158BFA(2) is not justified. - Decided in favour of assessee. Penalty u/s 271(1)(c) - Held that - Undisputedly assessee has made a voluntary surrender during the course of search and returned additional income filed in response to notice under section 153A of the Act and accordingly the tax was also paid. Since the Revenue has not brought out a case to show that the surrender was made when the assessee was cornered by the queries raised by the Revenue authorities. Therefore, we are of the considered view that it was a voluntary surrender made by the assessee at the first instance, therefore, penalty under section 271(1)(c) of the Act should not be levied. We hold that penalty is not justified by following the Tribunal decision in assessee s own case for assessment year 2003-04. - Decided in favour of assessee. Penalty 271(1) (c) - Held that - For invoking explanation 5 to section 271(1) (c), it is essential that some tangible assets/documents must have been found which would reflect concealed income of the assessee and which have become basis for making addition of concealed income and if the addition is not made on such basis then explanation 5 cannot be invoked. In the present case also, the additional income declared by the assessee is not on the basis of any seized material and therefore, in our considered opinion, the present issue is squarely covered in favour of the assessee by this Tribunal decision in assessee s own case. Respectfully following the same, we delete the penalty. - Decided in favour of assessee. Penalty u/s 271(1)(b) - Held that - When the assessee is not complying with the notice u/s 142(1) but assessment order was passed u/s 143(3) and not u/a 144, that meant that subsequent compliance in assessment proceedings was considered good compliance and non compliances earlier were ignored and therefore, levy of penalty u/s 271(1) (b) was not justified - Decided in favour of assessee. Disallowance of expenses on vehicle - Held that - The assessee was having only one car and on this basis, he was of the opinion that the personal user cannot be ruled out and therefore, he made disallowance of 1/5th of the expenses. We find no infirmity in the order of the Assessing Officer and of CIT(A) on this issue. - Decided against the assessee. Addition made on account of application of provisions of 50C - Held that - Find force in the submissions of Learned A.R. of the assessee that Assessing Officer should have referred the matter to D.V.O. and therefore, we set aside the order of CIT(A) and restore the issue to the file of Assessing Officer for fresh decision after referring the matter to D.V.O. for valuation of the property u/s 50C (2). - Decided in favour of assessee for statistical purposes. Penalty u/s 271(1)(c) - Held that - The purpose of imposing penalty u/s 271(1)(c), it is essential that the concealment should be established beyond doubt. In the present case, the addition was made on the basis that the donor is not relative of the assessee but this does not amount to establishment of concealment of income beyond doubt. Hence, in our considered opinion, penalty is not justified. We, therefore, delete the penalty. - Decided in favour of assessee. Addition on enhancement of jobwork charges - Held that - Addition was made by the Assessing Officer on the basis that there is possibility that the assessee has not issued cash memo in some cases. Before observing so, not even a single instance has been pointed out by the Assessing Officer of a cash memo not accounted for by the assessee. The CIT(A) has also confirmed this addition on this basis alone that the addition is only of 10% of the returned income. This is no basis for confirming an arbitrary addition. Hence, we delete this addition. - Decided in favour of assessee. Penalty u/s 271(1)(b) - Held that - This is not disputed by Learned D.R. of the Revenue that the assessment was completed u/s 143(3) and not u/s 144 of the Act. Hence, the Tribunal decision cited by Learned A.R. of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income-tax 2007 (8) TMI 386 - ITAT DELHI-G is squarely applicable in the present case wherein held by the Tribunal that if assessment is completed by the Assessing Officer u/s 143(3), it meant that even if there was some non compliance of notices u/s 142(1), subsequent compliances in assessment proceedings were considered as good compliance and default committed earlier was ignored and therefore, levy of penalty u/s 271(1)(b) is not justified.- Decided in favour of assessee. Unaccounted cash credit - Held that - As per the details available an amount of ₹ 40,000/- was deposited in ICICI bank on 13/06/2007 and another amount of ₹ 19,000/- was deposited in bank on 14/06/2007 and total amount deposited in June was ₹ 59,000/-. As per the chart, showing availability of cash in June 2007, the assessee is showing opening cash balance of ₹ 4.15 lac and closing cash balance of ₹ 3.99 lac after reducing this amount of ₹ 59,000/-. Similarly, an amount of ₹ 25,100/- was deposited in ICICI on 19/07/2007. As per the chart showing availability of cash in July, 2007, there was opening cash of ₹ 3.99 lac and closing balance of ₹ 4.16 lac. In September 2007, cash deposited was ₹ 1.34 lac and as per the chart showing availability of cash in the September 2007, there was opening cash balance of ₹ 4.58 lac and closing balance of ₹ 3.67 lac after reducing this amount of ₹ 1.34 lac. Considering all these facts, we are of the considered opinion that the addition made by the Assessing Officer is not justified because if it is held that the cash balances shown in this chart is not acceptable than not only cash deposit in bank but the closing balance shown also stands unexplained. Since, no addition is made by the A.O. for closing balance, it means he has accepted the same. The deposit in bank is much lower than that and hence even if part opening balance is ignored as unestablished than also no addition is called for. We, therefore, delete the same. - Decided in favour of assessee.
Issues Involved:
1. Penalty under Section 158BFA(2) of the Income Tax Act, 1961. 2. Penalty under Section 271(1)(c) of the Income Tax Act, 1961. 3. Penalty under Section 271(1)(b) of the Income Tax Act, 1961. 4. Disallowance of vehicle expenses and addition under Section 50C of the Income Tax Act, 1961. 5. Addition of job work charges and disallowance of car expenses. 6. Addition on account of cash credit. Issue-wise Detailed Analysis: 1. Penalty under Section 158BFA(2) of the Income Tax Act, 1961: The appeal of Smt. Savitri Devi was considered, where the penalty of Rs. 56,615 was imposed under Section 158BFA(2). The Tribunal found that the addition upheld was on an estimate basis and not on any seized material found during the search. Citing the case of Smt. Bitoli Devi vs. ACIT, the Tribunal held that penalty under Section 158BFA(2) is not justified if the addition is based on estimation. Consequently, the penalty was deleted, and the appeal was allowed. 2. Penalty under Section 271(1)(c) of the Income Tax Act, 1961: Several appeals were considered under this issue: - Shri Paramjeet Singh: The Tribunal found that the additional income of Rs. 13,500 was offered voluntarily to avoid litigation. Citing the Tribunal's decision in the assessee's own case for AY 2003-04, the penalty was deleted. - Smt. Surinder Kaur: The Tribunal noted that no incriminating material was found during the search, and the additional income declared was voluntary. Citing the Tribunal's decision in the assessee's own case, the penalty was deleted. - Shri Kanwar Pal Singh: The Tribunal found that the addition was based on the fact that the donor was not a relative, which does not establish concealment of income beyond doubt. Hence, the penalty was deleted. 3. Penalty under Section 271(1)(b) of the Income Tax Act, 1961: Several appeals were considered under this issue: - Smt. Surinder Kaur (AY 2008-2009): The Tribunal noted that the assessment was completed under Section 143(3) and not under Section 144, indicating that subsequent compliance was considered good compliance. Citing the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust, the penalty was deleted. - Shri Kanwar Pal Singh (AY 2008-2009): Similar to the above case, the Tribunal deleted the penalty. - Shri Paramjeet Singh (AYs 2007-08 & 2008-2009): The Tribunal found the facts identical to the case of Shri Kanwar Pal Singh and deleted the penalties. 4. Disallowance of vehicle expenses and addition under Section 50C of the Income Tax Act, 1961: - Smt. Surinder Kaur (AY 2008-2009): The Tribunal found that the Assessing Officer should have referred the matter to D.V.O. for valuation before making an addition under Section 50C. The issue was restored to the Assessing Officer for fresh decision. Regarding the disallowance of Rs. 21,277 on vehicle expenses, the Tribunal found no infirmity in the orders of the Assessing Officer and CIT(A), and the issue was decided against the assessee. 5. Addition of job work charges and disallowance of car expenses: - Shri Kanwar Pal Singh (AY 2007-2008): The Tribunal found the enhancement of job work income of Rs. 34,500 arbitrary and deleted the addition. Regarding the disallowance of Rs. 26,195 on car expenses, the Tribunal upheld the disallowance as personal use could not be ruled out. 6. Addition on account of cash credit: - Shri Raman Deep Singh (AY 2008-2009): The Tribunal found that the cash deposits in the bank were justified by the cash balance shown in the balance sheet. Since no addition was made for the closing balance, the Tribunal deleted the addition of Rs. 1,68,000. Combined Result: - Appeals in I.T.A. No.151 & 153/Lkw/2013 were partly allowed. - All other nine appeals were allowed.
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