2018 (6) TMI 1187 - AT - Income Tax

Penalty u/s u/s 271(1)(c)- addition on account of explained cash deposits - Held that - Since the entire addition on account of unexplained cash deposits has already been deleted by the Ld. CIT(A), therefore, the penalty in dispute was rightly deleted by the ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) in deleting the penalty and reject the grounds raised by the Revenue.

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) of the Income Tax Act on unexplained cash deposits.
2. Appeal against the order of the Ld. CIT(A) regarding penalty imposition.
3. Assessment of penalty based on inaccurate particulars of income.

Analysis:
The case involved an appeal by the Revenue against the deletion of penalty under section 271(1)(c) of the Income Tax Act related to unexplained cash deposits. The assessee had filed a return declaring income, which was subsequently assessed at a higher amount. The Assessing Officer imposed a penalty, which was later deleted by the Ld. CIT(A). The Revenue appealed this decision before the Tribunal.

During the proceedings, the Ld. CIT(A) had considered the appellant's submissions and additional evidence. It was found that the total cash deposits in the appellant's bank account were significantly lower than initially assessed by the AO. The Ld. CIT(A) concluded that the appellant had provided a reasonable explanation for the cash deposits, linking them to the sale of a property. The Ld. CIT(A) referenced various judicial pronouncements supporting the appellant's case and ultimately deleted the entire addition of unexplained cash deposits.

The Tribunal, after reviewing the findings of the Ld. CIT(A), upheld the decision to delete the penalty. Since the entire addition on account of unexplained cash deposits had been removed, the Tribunal found no basis for imposing the penalty. The Tribunal agreed with the Ld. CIT(A)'s reasoning and rejected the Revenue's grounds for appeal, thereby dismissing the Revenue's appeal.

In conclusion, the Tribunal affirmed the Ld. CIT(A)'s order to delete the penalty under section 271(1)(c) of the Income Tax Act, emphasizing the importance of providing a reasonable explanation for financial transactions to avoid penalties for inaccurate particulars of income.