2012 (7) TMI 793 - AT - Income Tax

Penalty u/s 271 (1)(c) - Held that - A.O. after detecting the concealment of income on the basis of cash book and deposit in the Bank account & considering the all transactions for working of peak and finally he made addition of Rs. 4 lakhs as conceal income u/s 68 after detecting unaccounted deposit in the Bank account, which was confirmed by the ITAT B Bench - no reason to interfere in the order of CIT(A) for confirming the penalty on quantum addition of Rs. 4 lakhs, however the addition of Rs. 5 lakhs has accepted by the A.O. as explained, therefore, penalty on addition of Rs. 5 lakhs is deleted - partly in favour of assessee.

Summary

Issues:
Confirmation of penalty u/s. 271(1)(c) of the IT Act for concealment of income based on unexplained cash deposits and transactions in the cash book.

Analysis:
The appeal was filed by the assessee against the penalty imposed by the A.O. under section 271(1)(c) of the IT Act for assessment year 2005-06. The assessee, engaged in finance and commission business, had shown interest receipts but failed to provide proper explanations for cash deposits in the cash book. The A.O. found unexplained cash deposits and transactions, leading to additions under section 68 of the IT Act. The CIT(A) confirmed the penalty imposed by the A.O. after considering the submissions and case laws presented by the assessee.

The ITAT 'B' Bench decision in the assessee's own case for the same assessment year set aside one addition of Rs. 5 lakhs for re-adjudication but confirmed another addition of Rs. 4 lakhs. The assessee argued that since one addition was set aside for re-adjudication, no penalty should be levied. However, the ITAT upheld the penalty on the addition of Rs. 4 lakhs, as confirmed by the CIT(A). The A.O. explained the Rs. 5 lakhs in a subsequent assessment order, leading to the deletion of penalty on this amount.

The ITAT upheld the penalty on the quantum addition of Rs. 4 lakhs, as it was established that there was concealment of income based on unaccounted deposits in the bank account. The penalty on the addition of Rs. 5 lakhs was deleted as it was explained in a subsequent assessment order. The A.O. was directed to re-calculate the penalty amount and issue the demand notice accordingly.

In conclusion, the assessee's appeal was partly allowed, with the penalty on the addition of Rs. 5 lakhs being deleted, and the penalty on the addition of Rs. 4 lakhs being upheld.