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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY
For Assessee : Shri A.V. Raghuram For Revenue : Shri Rohit Majumdar Date of Hearing : 15-12-2020 Date of Pronouncement : 17-12-2020 O R D E R PER P. MADHAVI DEVI, J.M. :
This is the appeal of the assessee for the AY 2011-12 against the order of CIT(A) – 7, Hyderabad, dated 10/10/2018 confirming the penalty levied by the AO u/s 271(1)(c) of the IT Act.
Brief facts of the case are that the assessee, an individual, is the grand-daughter of Sb. Basheerunnisa Begum, daughter of late Nizam, and filed her return of income for the AY 2011-12
:- 2 -: Sahibzadi Rasheed Unnisa Begum, Hyd. electronically on 31/03/2013 declaring taxable income of Rs. 24,46,750/-. The return was selected for scrutiny and during the assessment proceedings u/s 143(3) of the Act, AO noticed that there was a cash deposit of Rs. 25 lakhs in the assessee’s Saving Bank account. When the assessee was asked to explain the source of the cash deposit, no information was filed by the assessee and, therefore, the AO brought the said amount to tax u/s 69A of the Act. Further, AO also noticed that the assessee derived interest income of Rs. 25,74,533/-, but, she had only declared an amount of Rs. 23,34,280/-. Since, there was no reconciliation for the difference amount of Rs. 2,40,253/-, the AO brought this amount also to tax.
Aggrieved, the assessee preferred an appeal before the CIT(A). However, the same was not contested before the CIT(A).
Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) of the Act. Even during the penalty proceedings, assessee did not appear and give any explanation for the source and as to why penalty should not be levied. Therefore, the AO held that it is a clear case of concealment by not furnishing the material facts for the computation of income and, accordingly, levied penalty of 200% of the tax sought to be evaded, which comes to Rs. 16,93,480/-.
:- 3 -: Sahibzadi Rasheed Unnisa Begum, Hyd.
Aggrieved by the penalty, the assessee filed an appeal before the CIT(A) stating the assessee is a well-known person and a regular assessee who is earning huge income and, therefore, the cash deposits of Rs. 25 lakhs cannot be treated as unexplained. It was submitted that assessee has withdrawn the sum of Rs. 25 lakhs from the joint account held with her mother, which was kept for medical treatment of her mother and was later deposited into her individual account. The CIT(A) did not accept the submissions of the assessee observing that assessee did not make any effort to explain these facts before the AO. He, accordingly, confirmed the penalty levied.
Against the said order of the CIT(A), the assessee is in appeal before us by raising the following grounds of appeal: “1. On the facts and in the circumstances of the case, the ld. Commissioner of Income Tax (Appeals)-7, Hyderabad, dismissing the appeal of the Appellant is erroneous and unsustainable in law.
2. The Commissioner (Appeals) erred in not admitting additional evidence filed by the Appellant explaining the alleged unexplained deposit in the bank account of the Appellant. The Commissioner (Appeals) failed to appreciate that the proceedings before the Commissioner (Appeals) are in continuous to that of asst. proceedings/penalty proceedings and the Commissioner (Appeals) has co- terminus power as that of AO.
3. The Commissioner (Appeals) failed to appreciate that the penalty proceedings are independent of quantum proceedings and since the appeal proceedings are in :- 4 -: Sahibzadi Rasheed Unnisa Begum, Hyd. continuance of the penalty proceedings, the Commissioner (Appeals) ought to have admitted additional evidence.
4. The Commissioner (Appeals) erred in not admitting additional ground with respect to scoring of relevant portion in the penalty show cause notice. The Commissioner (Appeals) failed to appreciate that the Appellant pleaded for the same and the said ground will go to the root of the appeal.
5. Without prejudice to above grounds, the Commissioner (Appeals) erred in sustaining the penalty of Rs.16,93,480 on the alleged unexplained deposit in the bank account of the Appellant and the alleged difference in the interest income from the bank offered by the Appellant when compared to interest income reflected in Form 26AS. The Commissioner (Appeals) ought to have appreciated that the sources for deposits in the bank account are in the knowledge of the AO and hence there is no question of penalty. (Tax effect - Rs.16,93,480)”
7. In support of the grounds raised by the assessee, ld. counsel for the assessee has filed additional evidence by way of bank statement jointly held by the assessee with her mother and bank statement of the assessee for the relevant period, which were filed as additional evidence before the CIT(A). He submitted that the assessee has filed relevant details before the CIT(A) and that though assessee did not appear before the AO during assessment proceedings, she could explain the source of the cash deposit even during the penalty proceedings, but, the CIT(A) has failed to consider the same. He, therefore, prayed for remand of the issue to the file of the AO, so that the assessee can explain the sources of the cash deposits.
:- 5 -: Sahibzadi Rasheed Unnisa Begum, Hyd.
The ld. DR, however, supported the orders of the authorities below and submitted that in spite of sufficient opportunities given, the assessee failed to appear before the AO and CIT(A) and failed to submit relevant details. He, therefore, prayed for confirmation of the penalty levied.
Having regard to the rival submissions and material on record, we are of the opinion that though the assessee has failed to explain the source for the cash deposit of Rs. 25 lakhs before the AO and CIT(A) during the assessment proceedings and the first appeal, the assessee is entitled to file all the details before the AO even during the penalty proceedings. But the assessee failed to produce the details before the AO, but, before the CIT(A), additional evidences were filed. In such circumstances, the CIT(A) ought to have called for a remand report from the AO and got the claim of the assessee verified. Since all the relevant information has been filed before the CIT(A) as well as before us, we deem it fit and proper to remand the issue to the file of the AO with a direction to reconsider the issue denovo by taking into consideration all the information filed by the assessee and decide the issue in accordance with law. Needless to mention that the assessee shall be given fair opportunity of hearing.
:- 6 -: Sahibzadi Rasheed Unnisa Begum, Hyd.
In the result, appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 17th December, 2020.