2023 (2) TMI 695 - AT - Income Tax

Addition u/s 68 - difference between deposits in bank account and total turnover as unexplained cash credit - As per CIT no infirmity is found in the documents and therefore the addition is required to be deleted - HELD THAT - We note that a perusal of the aforesaid order of ld. CIT (A) fairly shows that assessee has submitted the necessary details and ld. CIT (A) has passed a well-reasoned order giving factual findings. The Revenue has not been able to rebut any of the findings except submitting that these were not before the AO. For the sake of repetition this argument is totally unsustainable as ld. CIT (A) has asked for remand report for additional documents but AO chose to ignore. In this regard we do not find any infirmity in the order of ld. CIT(A) which is a well-reasoned order and uphold the same. Penalty u/s 271(1)(c) - Addition u/s 68 - HELD THAT - Penalty made on the addition was already deleted by the ld. CIT (A) which we have also confirmed in our order herein above. As regards deletion of penalty on the balance amounts we are in conformity with the reasoning of ld. CIT (A) that these additions do not warrant levy of penalty u/s 271(1)(c) of the Act on the touchstone of the decision of Hon ble Apex Court in the case of CIT vs. Reliance Petro Products 2010 (3) TMI 80 - SUPREME COURT . Hence we uphold the order of ld. CIT (A). Revenue appeal dismissed.

Summary

Issues:
- Deletion of quantum addition under section 68 of the Income-tax Act
- Deletion of penalty under section 271(1)(c) of the Income-tax Act

Analysis:

1. Deletion of Quantum Addition under Section 68:
The case involved appeals by the Revenue against the deletion of quantum addition under section 68 of the Income-tax Act. The Assessing Officer had noted a discrepancy between the deposits in the bank account and the total turnover of the assessee, treating the difference as unexplained cash credit. The ld. CIT (A) examined the documents provided by the assessee, which included audited accounts, bank statements, franchisee agreements, and details of security deposits received. The ld. CIT (A) found that all details were available and confirmed, leading to the deletion of the addition. The Revenue contended that the additional documents were not submitted before the AO but only before the ld. CIT (A), suggesting a remand to the AO. However, the Tribunal upheld the ld. CIT (A)'s order, stating that the necessary details were submitted, and the ld. CIT (A) had passed a well-reasoned order based on factual findings, which the Revenue failed to rebut effectively.

2. Deletion of Penalty under Section 271(1)(c):
The second issue pertained to the deletion of penalty under section 271(1)(c) of the Income-tax Act. The ld. CIT (A) had deleted the penalty imposed on the additions made to the total income, including the major part relating to bank account credits that were already deleted in the quantum appeal proceedings. The ld. CIT (A) further analyzed other items on which penalty was levied and found that they did not constitute concealment of income or furnishing inaccurate particulars. The Tribunal concurred with the ld. CIT (A)'s decision, emphasizing that the additions did not fall within the purview of concealment of income or furnishing inaccurate particulars as per the decision of the Hon'ble Apex Court. Consequently, the Tribunal upheld the deletion of the penalty under section 271(1)(c) for the balance amounts, in addition to the already deleted penalty related to the bank account credits.

In conclusion, the Tribunal dismissed both appeals filed by the Revenue, affirming the deletion of quantum addition under section 68 and the penalty under section 271(1)(c) of the Income-tax Act. The judgments were based on a thorough examination of the facts, documents submitted, and legal precedents, ultimately upholding the decisions of the ld. CIT (A) in both instances.