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TMI Blog2018 (3) TMI 1864X X X X Extracts X X X X X X X X Extracts X X X X ..... the deposits made in the bank account. Hence, in the facts and circumstances of the case, we do not find any error or illegality in the orders of the authorities below. Accordingly we confirmed the levy of penalty u/s 271(1)(c) of the Act. - Decided against assessee. - ITA No. 694/JP/2017 - - - Dated:- 19-3-2018 - SHRI VIJAY PAL RAO, JM AND SHRI BHAGCHAND, AM For the Assessee : None (Written submissions) For the Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 22.06.2017 of CIT(A), Jaipur arising from penalty order passed U/s 271(1)(c) of the Act for the assessment year 2006-07. The assessee has raised the following grounds:- 1. The learned C.I.T. (A) has erred in fact as well as in law in confirming the penalty of ₹ 4,99,321/- levied by the A.O. u/s 271(1)(c) of the I.T. Act, 1961 on the basis of an exparte assessment order u/s 144 of the ITA. 2. The learned C.I.T. (A) has erred in fact as well as in law in confirming the order passed by the AO u/s 271(1)(c) and in not accepting the submissions of the appellant as also to the court decisions in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P H) CIT vs. P. rojes 356 ITR 703 (Mad) Naresh Chandra Agrawal vs. CIT 357 ITR 514 (All) CIT vs. Manjunatha Cotton Ginning Factory 359 ITR 565 (Karn) CIT vs. Krishi Tyer Retreading Rubber Ind. 360 ITR 580 (Raj.) CIT vs. Whiteline chemicals 360 ITR 385 (Guj.) CIT vs. Sandur Manganese Iron Ores Ltd. 362 ITR 160 (Kar) CIT vs. Cholamandalam Inv. Fin. Co. Ltd. 364 ITR 680 (Mad) CIT vs. Shyam RajSingh 367 ITR 74 (P H) CIT vs. Nayan Builders 368 ITR 722 (Bom) CIT-II Lucknow Vs. Jal Vidyut Nigam Limited MANU/UP/0358/2016 The above decision has been cited in support of the contention that disallowance of any claim cannot be become the basis of levy of penalty u/s 271(1)(c) of the Act. However, we find that the decisions relied upon by the assessee were rendered in the specific facts of each case and has no similarity to the facts of the assessee. In the case of the assessee the addition was made on account of deposits in the bank account and the assessee failed to explain the source of such deposits. Therefore, when the assessee has failed explanation source and the said addition has been confirmed even up to the stage of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appeal. 3- In this case, on the basis of AIR information a total cash of ₹ 15,25,000/- was found deposited in the assessee's bank account of Indusind Bank Ltd., Jaipur (A/c No. 0016-586131-001) on various dates during the financial year 2005-06 . The details of the case deposits are as under:- Date Amount 18.05.2005 5000 19.07.2005 300000 03.08.2005 300000 18.08.2005 300000 23.08.2005 350000 07.09.2005 270000 Total 1525000/- During the assessment proceedings, the assessee could not furnish or explain the source of such cash deposits , therefore the addition was made for ₹ 15,25,000/-to the income of the assessee on account of unexplained cash deposits in bank account. The total unexplained income of ₹ 15,25,000/- was added to the income of the assessee and penalty proceedings u/s 271(1)(c) were initiated, accordingly. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an addition was, to say theleast, made on a presumptuous basis. It may be relevant to state and mention that in making a cash deposit in the bank account, there is always a presumption that the depositer is seeking to bring the amount of deposit within the regular channel, which unless so deposited , may have escaped the entry into the regular channel. Before the CIT(A) in the quantum proceedings, entire set of documents demonstrating the basis, details and reasons for the amount having been received in cash and then deposited in the bank, were sought to be explained. However, the CIT (A) treated the said documents as falling within the ambit of 'Additional Evidence' and refused to look into or to even consider the same. The A's appeal to the ITAT also suffered the same fate. This has resulted in the addition having been made in an ex-parte assessment on a presumptuous basis, having never been subjected to any verification at any stage whatsoever. It is in the light of this fact situation that the provisions of sec 271 (1)( c) have to be looked at and an adjudication made as to whether the A has attempted to conceal any income[ taxable income] at all or has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unproven credits in the assessee's books of account to the tune of ₹ 14 Lacks were added to his declared income. In proceedings for penalty, the assessee took a simple plea of having offered the credits to tax only because of its inability to prove genuineness. The penalty levied by the AO was cancelled by the CIT[A] and such cancellation was upheld by the ITAT and the High Court. 4. CIT v/s Saneeta Leasi' 2012 343 ITR 428(Delhi). In this case the assessee had claimed depreciation based on a transaction of sale and simultaneous lease of assets. The authorities found that the claim was bogus as no sale was affected and the assessee was cheated. The CIT (A) deleted the penalty as the particulars filed and the claim made by the assessee was bonafide and deleted the penalty. His order was upheld both by the ITAT and the Hon'ble Delhi High Court. 5. CIT v/s Sadhu Singh Sons[2012] 344ITR316(P H) In this case there was a finding that the difference in valuation stock was due to lower GP rate and cash credits were due to bona fide mistakes. In this case also the penalty levied by the Ao was deleted by the CIT(A) . Revenue's contentions to the contrary wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of Lower Court unless there is certain error apparent on face of record. 9. CIT v/s Amit Jain [2013] 351 ITR 74(Delhi) The Delhi High Court observed that the record reveals that the amount in question, which formed the basis for the Assessing Officer to levy penalty was in fact truthfully reported in the returns. In view of this circumstance, that the Assessing Officer chose to treat the income under some other head cannot characterize the particulars or reported in the return as an inaccurate particulars or as suppression of facts. It was held that it is up to the Assessing Officer to interpret the return and discern as to which head of income the amount had to be brought to tax. In view of the above circumstance, this court is of the view that no substantial question of law arises for consideration and the same is dismissed. 10. CIT v/s Amtek Auto Ltd. [2013] 352 ITR 394(P H) Assessee disclosed the nature of transactions in its return. It was on the basis of the interpretation of the provisions of the statute, the Assessing Officer found that such expenditure claimed by the assessee is not the revenue expenditure but the capital expenses. There is a fine distinction as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be inferred that the said addition is on account of concealment. Moreover, the assessee has offered the explanation. The said explanation is not found to be false. On the contrary, it is held to be bona fide. In fact in the assessment proceedings there is no whisper about these concealment. Under these circumstances, the entry found in the rough cash book could have been reflected in the accounts for the said financial year in which the survey took place as the last date for closing the account was still not over. The very fact that the assessee agreed to pay tax and did not challenge the assessment order, it is clear the conduct of the assessee cannot be construed as mala fide. Therefore, the Tribunal was justified in setting aside the orders passed by the appellate authority as well as the assessing authority. The Tribunal was justified in holding that the entire proceedings are vitiated as the notice issued is not in accordance with law and accordingly justified in interfering with the order passed by the appellate authority as well as the assessing authority and in setting aside the same. If the appellate authority was satisfied with the addition it has to be made on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is illegal. That is precisely what the Tribunal has held. It is settled law, imposition of penalty is not automatic. It is only when there is an attempt to evade tax by offering explanation which is found to he false or not bona fide the penalty can be imposed In the facts of the case we are also satisfied that the imposition of penalty by the lower Appellate Authority was not justified or the material on record and the Tribunal was justified from setting aside the order of imposing penalty. The court found no merits in the appeal by revenue and the same was dismissed 17. CIT v/s Cholamandalam Inv. Fin. Co Ltd [2014]364 ITR 680(Mad) The contention raised by the assessee was not held to be not according to truth or an inaccurate particulars furnished or with a view to conceal the actual income. In fact, the Assessing Officer in the penalty order dated 26.04.2000, has not given any independent finding in support of his conclusion that there was a deliberate design on the part of the assessee to inflate the cost of acquisition. As pointed out by the first Appellate Authority all the details of the transactions were placed before the Assessing Officer and an explanation was given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the variation in returned income and assessed income is disallowance of expenses not found allowable, no penalty under Section 271(1) (c) of the Act is imposable and once such a finding has specifically been recorded, the penalty proceedings in -the facts and circumstances of the case cannot be sustained. As such, the onus lying on the department to show that the necessary con-commit ants of section 271(1) of the Income Tax Act, have not been discharged in the case in hand and the penalty levied by the impugned order is without any basis whatsoever. The same may therefore be quashed and set-aside. 4.3 I have carefully considered the facts of the case, findings of the AO and submission of the appellant. It is seen that AO levied penalty u/s 271(1)(c) w.r.t. unexplained deposit of ₹ 15,25,000/- deposited in bank account. The assessment was completed u/s 144 as assessee did not produce evidence in his support. In appellate proceedings also, the addition was confirmed as evidence given was not accepted. Even in penalty proceedings, no evidence was furnished. These facts show that assessee has concealed the income and AO has rightly imposed the penalty. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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