SHRI KIRITKUMAR HIMATLAL DHOLAKIA,,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-5(1)(5), AHMEDABAD

आदेश/O R D E R

PER PRADIP KUMAR KEDIA - AM:

[Kiritkumar H. Dholakia Vs. ITO] A.Y. 2011-12 - 2 -

3. When the matter was called for hearing, the learned AR for the assessee pointed out that in the course of assessment proceedings, the learned AO observed that certain cash deposits to the extent of Rs.9,60,000/- was found to be made in the bank account of the assessee. The ITAT in the quantum proceedings in order dated 10.11.2017 sustained the addition to the extent of Rs.4,60,000/- and accepted source of cash deposit to the extent of Rs.5 Lakhs to be valid. In the matter, the learned AR submitted that his case is two fold; (i) that the source of the cash being sale of cars have not been disputed and rather accepted. The co-ordinate bench of ITAT in quantum proceedings has merely assigned lump sum value of the cars to be at Rs.5 Lakhs and thus confirmed the balance addition. Therefore, such action in the quantum proceedings for reducing the value of cars should not lead to imposition of penalty towards the cash deposits. It was submitted that the explanation of the assessee has been partly accepted and no malafides can be attributed to the assessee in the explanation for the cash deposits remained unexplained & (ii) the action of the AO while issuing notice under s. 271(1)(c) of the Act as well as while imposing the penalty vide order dated 09.03.2016 is vague and without assigning definite charge against the assessee. The learned AR pointed out that the AO has neither strike off and made specific charge towards concealment or furnishing of inaccurate particulars of income either as issuing notice under s.274 of the Act nor has specified the charge so labeled even in the penalty order. In the circumstances, the action of the AO is not sustainable in law.

4. We have carefully considered the rival submissions towards the maintainability of penalty under s. 271(1)(c) of the Act. We observe that the assessee has inter alia explained the source of cash deposits to be out of sale of two cars Rs.4 Lakhs was stated to be generated out of sale of Swift Dzire and Rs.5 Lakhs was stated to be generated on sale of Toyota [Kiritkumar H. Dholakia Vs. ITO] A.Y. 2011-12 - 3 - Qualis. The ITAT has estimated lower values on sale of such cars and thus sustained the addition to the extent of Rs.4,60,000/-. Under the circumstances, while the explanation towards source of cash deposit has not been accepted to be fully justified, the case made out by the assessee towards source of cash deposit cannot be stated to be downright false in so far as penalty proceedings are concerned. The assessee has offered explanation which has been accepted partially in the quantum proceedings and the remaining part of the explanation is only unproved. Thus, penalty, in our view, in such circumstances, is not exigible. We also find merit in the second line of argument of the assessee alleging vagueness in the specification of charge against the assessee. The AO is required to bring out specific charge against the assessee while imposing penalty under s. 271(1)(c) of the Act. The AO has clearly failed to do so. The imposition of penalty in such circumstances is not sustainable in law.

This Order pronounced in Open Court on 31/07/2019

Sd/- Sd/- (RAJPAL YADAV) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 31/07/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।