2024 (9) TMI 1269 - AT - Income Tax

Unexplained cash deposits u/s 69A - assessee has deposited cash in the Bank of India, which the assessee converted it into two fixed deposits - HELD THAT - From the above, it is clearly evident that the assessee has fulfilled the requirement of the Assessing Officer and there was no basis of making any addition by the AO u/s 69A of the Act, which was confirmed by the learned CIT(A). The assessee has offered explanation about the nature and source of acquisition of the cash which was deposited in his bank account. There cannot be any addition u/s 69A of the Act in respect of cash deposits made by the assessee into his bank account as unexplained income in the hands of the assessee. Consequently, we set aside the impugned order passed by the learned CIT(A) and direct the AO to delete the addition made under section 69A. Thus, all the grounds raised by the assessee are allowed. Penalty u/s 271(1)(c) on quantum addition - Since the quantum addition is deleted, penalty levied on such quantum addition has no legs to stand. Accordingly, the ground of appeal raised by the assessee is allowed.

Summary

Issues:
1. Addition of unexplained cash deposits under section 69A of the Income Tax Act, 1961 for the assessment year 2011-12.
2. Imposition of penalty under section 271(1)(c) of the Act for the assessment year 2010-11.

Issue 1: Addition of unexplained cash deposits under section 69A of the Income Tax Act, 1961 for the assessment year 2011-12:

The appellant challenged the addition of Rs. 8,00,000 as unexplained cash deposits under section 69A. The Assessing Officer treated the cash deposit as unexplained and added it to the total income. The appellant contended that the amount was from various legitimate sources and provided detailed explanations, including income from farming, kirana business, sale of agricultural land, and tailoring receipts. The CIT(A) dismissed the appeal due to the appellant's failure to make submissions. However, the Tribunal found that the appellant had fulfilled all requirements and provided satisfactory explanations for the cash deposits. Consequently, the Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to delete the addition under section 69A, allowing all grounds raised by the appellant.

Issue 2: Imposition of penalty under section 271(1)(c) of the Act for the assessment year 2010-11:

The appellant challenged the penalty imposed under section 271(1)(c) based on the quantum addition made by the Assessing Officer, which was confirmed by the CIT(A). However, the Tribunal had already deleted the quantum addition in the appellant's appeal for the assessment year 2011-12. As a result, since the basis for imposing the penalty was eliminated, the Tribunal allowed the appellant's ground of appeal, refraining from adjudicating on the merits of the penalty case. Consequently, the appeal filed by the appellant was allowed, and the penalty was not upheld.

In conclusion, both appeals filed by the appellant were allowed by the Tribunal. The order was pronounced in the open court on 14/08/2024.