2015 (7) TMI 723 - AT - Income Tax

Addition towards unexplained bank deposits - Penalty proceedings u/s.271(1)(c) - CIT(A) deleted penalty levy - Held that - If any amount is deposited in bank account of the assessee the assessee has to explain the source from which it was deposited. In the present case the assessee is not able to explain the deposits. According to the assessee the assessee is not educated and return subsequent to the search was filed by a Chartered Accountant who obviously has not made out a proper disclosure. The intention of the assessee was to make a proper disclosure come out clean and pay the taxes. However it was submitted that it was only the mistake of the Chartered Accountant and not of the assessee in making proper disclosure. Later the assessee accepted for the addition to purchase peace and to avoid prolonged litigation. In our opinion this contention of the assessee is totally misconceived. It is the duty of the assessee to disclose all income truly and fully while filing the return of income. The assessee cannot shift his responsibility to his Chartered Accountant. Further the assessee stated it was ill advised by the Chartered Accountant without mentioning the name of the Chartered Accountant. It is not brought on record what advice was given by the Chartered Accountant on this issue. In our opinion the assessee has concealed particulars of income and also not given any bonafide explanation for this. Hence levy of penalty u/s.271(1)(c) conformed . See Mak Data (Pv) Ltd. vs. CIT 2013 (11) TMI 14 - SUPREME COURT - Decided against assessee. Addition of E40, 00, 000/- relating to credits in ICICI bank account - CIT(A) deleted addition - Held that - In our opinion how the amount of E40, 00, 000/- has been considered in the hands of ex-husband is not on record. In our opinion it is appropriate to remit the issue back to the Commissioner of Income Tax (Appeals) to give reasons on what basis he came to the conclusion that it was shown in the hands of ex-husband. Hence this issue is remitted back to the file of the Commissioner of Income Tax (Appeals) for fresh consideration. Decided partly in favour of Revenue for statistical purposes.

Summary

Issues involved:
1. Penalty u/s.271(1)(c) for unexplained bank deposits in assessment year 2005-2006.
2. Penalty u/s.271(1)(c) for unexplained cash and bank deposits in assessment year 2006-2007.
3. Addition of unexplained credits in bank account in assessment year 2007-2008 and deletion of penalty.

Issue 1: Penalty u/s.271(1)(c) for unexplained bank deposits in assessment year 2005-2006:
The appeal by the Revenue was against the deletion of penalty by the Commissioner of Income Tax (Appeals) based on the judgment in CIT vs. Suresh Chandra Mittal. The ITAT Chennai held that the assessee failed to explain the source of bank deposits adequately, shifting blame to the Chartered Accountant. Referring to the case of Mak Data (Pv) Ltd. vs. CIT, the ITAT concluded that the assessee concealed income without providing a genuine explanation. Consequently, the ITAT reversed the order of the Commissioner of Income Tax (Appeals) and upheld the penalty u/s.271(1)(c) for the assessment year 2005-2006.

Issue 2: Penalty u/s.271(1)(c) for unexplained cash and bank deposits in assessment year 2006-2007:
Similar to the previous year, the ITAT Chennai reversed the order of the Commissioner of Income Tax (Appeals) and upheld the penalty u/s.271(1)(c) for the assessment year 2006-2007. The assessee failed to explain the source of deposits adequately, leading to the imposition of the penalty by the Assessing Officer.

Issue 3: Addition of unexplained credits in bank account in assessment year 2007-2008 and deletion of penalty:
The ITAT Chennai remitted the issue back to the Commissioner of Income Tax (Appeals) for fresh consideration in the assessment year 2007-2008. The Commissioner of Income Tax (Appeals) had deleted the addition of E40,00,000 based on certain observations. However, the ITAT found the basis for considering the amount in the hands of the ex-husband unclear and instructed a reevaluation. Consequently, the appeal of the Revenue was partly allowed for statistical purposes, and the penalty issue was also remitted back for reconsideration.

In conclusion, the ITAT Chennai allowed the appeals of the Revenue in ITA Nos.956 & 957/Mds/2013, upholding penalties for unexplained deposits in the assessment years 2005-2006 and 2006-2007. For the assessment year 2007-2008, the ITAT remitted the issue back for fresh consideration, partly allowing the appeal for statistical purposes.