1976 (6) TMI 62 - AT - Income Tax

Summary

Issues:
- Appeal against cancellation of penalty under section 271(1)(c) for the year 1963-64.
- Determination of whether unexplained cash deposits constituted taxable income.
- Assessment of whether the assessee concealed income or furnished inaccurate particulars.

Analysis:
The appeal before the Appellate Tribunal ITAT Patna-A concerned the cancellation of a penalty of Rs. 6,100 imposed by the Income Tax Officer (ITO) under section 271(1)(c) for the year 1963-64. The assessee, a Doctor practicing at Samastipur, had unexplained cash deposits totaling Rs. 6,100 in his bank account made on different dates in 1962. The ITO added this amount as income from undisclosed sources, initiating penalty proceedings. The assessee contended that the deposits were from past savings and rental income of his mother, citing the Supreme Court's decision in Anwar Ali's case. The ITO, finding the explanation unsatisfactory, levied the penalty. The Appellate Assistant Commissioner (AAC) later canceled the penalty, leading to the Department's appeal.

During the proceedings, the Departmental Representative supported the ITO's position, while the assessee's counsel backed the AAC's decision. The Tribunal considered whether the Department had established that the disputed amount constituted taxable income of the assessee. It was noted that if the assessee's explanation was false, it did not automatically make the receipt taxable income. The Tribunal emphasized that before imposing a penalty, it must be reasonably proven that the disputed amount was income and that the assessee consciously concealed or furnished inaccurate particulars. In this case, the deposits were explained by the assessee as past savings and rental income, with no concrete evidence provided by the Revenue to refute this explanation.

Ultimately, the Tribunal upheld the AAC's decision, stating that there was insufficient material to conclude that the disputed amounts were the assessee's income. As a result, the Department's appeal against the cancellation of the penalty was dismissed. The judgment highlighted the importance of establishing the link between the disputed amount and taxable income before penalizing an assessee for concealment or inaccurate particulars.