2015 (9) TMI 268 - AT - Income Tax

Penalty u/s.271(1)(C) - addition made invoking the provisions of section 69A - Held that - There is no dispute with regard to the fact that neither the transactions were not disclosed nor the Bank Account in which the cash deposits have been made were disclosed to the Revenue Authorities. The only explanation for not disclosing the transactions are that there was loss in share transactions, therefore the assessee has not reflected the same in the return of income. But the question remains that what about the source of such cash deposits which was made into the bank account. The ld.counsel for the assessee could not explain satisfactorily about the cash deposits neither in the quantum proceedings nor in the penalty proceedings. It was incumbent upon the assessee to furnish the true and correct particulars of income. In the case in hand, it is transpired from the records that the assessee has failed to disclose the Bank Account on various dates cash deposits were made. Under these facts, we do not see any reason to interfere with the findings of the authorities below. However, ld.counsel for the assessee submitted that in the quantum proceedings, the Tribunal has reduced the addition from ₹ 37,75,000/- to ₹ 14,19,919.88 in assessee s own case for AY 2008-09. We, therefore, direct the AO to delete the penalty on the addition in sum of ₹ 23,55,080/-. - Decided partly in favour of assessee.

Summary

Issues:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:

Issue 1: Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961

The case involved an appeal against the order of the Ld. Commissioner of Income Tax (Appeals) concerning the levy of a penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2008-09. The Assessee had made cash deposits in a bank account without reflecting them in the income tax return. The Assessing Officer (AO) invoked section 69A of the Act and made an addition of the undisclosed cash deposits. The penalty proceedings were initiated, and the AO levied a penalty of Rs. 12,86,987 on the undisclosed amount. The Assessee appealed the penalty order before the Ld. CIT(A), who upheld the penalty. The Assessee further appealed to the ITAT.

In the appeal before the ITAT, the Assessee contended that the penalty was unjustified as the undisclosed cash deposits were due to losses in share transactions, which were not reflected in the return of income. The Assessee cited judicial pronouncements to support their argument. The Assessee also highlighted that the Tribunal had reduced the quantum addition in the related proceedings. The Senior DR opposed the Assessee's submissions, emphasizing the non-disclosure of the bank account and cash deposits to the Revenue Authorities.

After considering the submissions and evidence, the ITAT observed that the Assessee failed to satisfactorily explain the undisclosed cash deposits and the non-disclosure of the bank account to the Revenue Authorities. While the Tribunal had reduced the quantum addition in related proceedings, the penalty was upheld by the lower authorities. However, based on the Tribunal's reduction of the quantum addition, the ITAT directed the AO to delete the penalty on the reduced sum.

Therefore, the ITAT partly allowed the Assessee's appeal, directing the deletion of the penalty on the reduced quantum addition. The decision was pronounced in court on August 7, 2015, at Ahmedabad.

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