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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
& 636/Ind/2018 Assessment Year: 2009-10 Ramaswamy Manoharan ITO 4(1) बनाम/ C/o R.S. Bansal & Co. Chartered Indore Vs. Accountants 104, Urvashi Complex 3, Jaora Compound, Indore (Appellant) (Revenue) PAN: AGKPM9960D Appellant by Shri Vijay Bansal, CA Revenue by Shri K.G. Goyal, Sr. DR Date of Hearing: 19.06.2019 Date of Pronouncement: 26 .06.2019 आदेश / O R D E R PER MANISH BORAD, A.M: These two appeals by Assessee pertaining to A.Y. 2009-10 are directed against the separate order of Ld. Commissioner of Income Tax(Appeals)-II, Indore, (in short ‘CIT(A)’), dated 11.04.2018 arising out of the orders u/s Ramaswamy Manoharan ITANo.635 & 636/Ind/2018 271(1)(C) & 271A of the Income Tax Act 1961(hereinafter called as the ‘Act’) framed on 27.11.2012 & 22.03.2016 by ITO-4(1) respectively. The assessee has raised grounds of appeal in ITANo.635/Ind/2018 “1.That the order passed by Ld. CIT(A) is bad in law and against the facts of the case. 2.That the Ld. CIT(A) has erred in confirming the penalty of Rs.25,000/- u/s 271(1)(c) on estimation of turnover, which is quite unjust, illegal and against the fact of the case. 3.That the Ld. CIT(A) has erred in confirming penalty of Rs.25,000/- u/s 271(1)(c), where the Ld. AO has imposed the penalty on both the limps i.e. concealment of income and filing of inaccurate particulars of income, which is quite unjust, illegal and against the fact of the case.
4. The appellant craves to leave, add, amend, alter or modify of nay ground before final date of hearing.”
The assessee has raised grounds of appeal in ITANo.636/Ind/2018 “1. That the order passed by Ld. CIT(A) is bad in law and against the facts of the case.
2. That the Ld. CIT(A) has erred in confirming the penalty u/s 271A considering the cash deposit of Rs.42,59,900/- by the appellant as turnover which is quite unjust, illegal and against the fact of the case. 3.The appellant craves to leave, add, amend, alter or modify of nay ground before final date of hearing.”
2. Brief facts relating to these two appeals as culled out from the records are that the assessee is an individual earning commission income from trading of Sabudana. Income of Rs.1,80,510/- declared in the income tax return filed on 11.12.2009. On account of AIR information relating Ramaswamy Manoharan ITANo.635 & 636/Ind/2018 to assessee for cash deposited in the bank account, case was selected for scrutiny and necessary notice u/s 143(2) of the Act was served upon the assessee. During the course of assessment proceedings Ld. Assessing Officer (in short Ld. AO) observed that cash of Rs.42,59,900/- was deposited in the Saving Bank Account maintained with Corporation Bank, Indore. Assessee was asked to explain the source of cash. The assessee contended that cash was received towards amount received from buyers and RTGS/NEFT was made to manufacturers and he earned income from commission from purchase and sale of Sabudana. Various information relating to respective parties were filed by the assessee. Reply from these parties were not convincing to the assessing officer and he estimated income @ 5% of the cash deposit treating it as turnover and calculated income at Rs.2,12,995/-. After giving set off for commission income of Rs.88,500/- disclosed in income tax return, made addition for Rs.1,24,495/-. The additions were also made for unexplained investment at Rs.44,000/- and low house hold withdrawals at Rs.25,000/-. Income assessed at Rs.3,74,005/- Ld. AO also initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate 3 Ramaswamy Manoharan ITANo.635 & 636/Ind/2018 particulars of income and concealing the income and also u/s 271A of the Act for non-maintenance of books of accounts u/s 44AA of the Act on observing that the trading receipt exceeds Rs.40,00,000/- during the year.
3. Subsequently, the penalty proceedings u/s 271(1)(c) of the Act were completed on 22.03.2006 levying penalty of Rs.25,000/- on the additions of Rs.1,64,495/- and penalty of Rs.25,000/- was levied u/s 271A of the Act for non- maintenance of books of account u/s 44AA of the Act.
4. Against both the penalties assessee preferred appeal before Ld. CIT(A) but failed to succeed.
5. Now the assessee is in appeal before the Ld. Tribunal against the finding of the ld. CIT(A) confirming levy of penalty u/s 271(1)(c) of the Act at Rs.25,000/-and u/s 271A of the Act at Rs.25,000/-.
6. Ld. counsel for the assessee prayed for deletion of both the penalties submitting that the income from business was merely estimated @ 5% which was subsequently sustained @ 3% of the cash deposit by the Hon'ble Tribunal order dated 20.06.2016.
7. As regards penalty u/s 271A of the Act Ld. counsel for the assessee submitted that the regular books of accounts Ramaswamy Manoharan ITANo.635 & 636/Ind/2018 were maintained and trading profit and loss account and balance sheet were filed.
On the other hand, Ld. Departmental Representative (DR) vehemently argued and supporting the orders of lower authorities.
We have heard rival contentions and perused the record placed before us.
Apropos to ITANo.635/Ind/2018 wherein the assessee’s sole grievance is against the finding of the Ld. CIT(A) confirming the penalty of Rs.271(1)(c) of the Act at Rs.25,000/-, we find that the assessee has shown income from commission from purchase and sale of Sabudana. Party wise details were filed during the course of assessment proceedings however the assessing officer estimated income @ 5% of the total cash deposits treating the assessee as a trader. In the subsequent appeal before the Tribunal the assessee got part relief as Tribunal vide order dated 20.06.2016 sustained the addition @ 3% of the cash deposit.
In these given facts and circumstances whereas the income has been estimated by the Ld. AO and has been further scaled down by the Tribunal can ipso facto cannot lead levy of penalty u/s 271(1)(c) of the Act. Similar view 5 Ramaswamy Manoharan ITANo.635 & 636/Ind/2018 was taken in the case of Shivshakti Land & Finance & Other vs. ACIT (2015) 26 ITJ 237 and also in the case of Satya Prakash Tiwari vs. ITO (2015) 26 ITJ 377. We, therefore, delete the penalty of Rs.25,000/- levied u/s 271(1)(C) of the Act and allow the assessee’s appeal ITANo.635/Ind/2018.
Apropos second ITANo.636/Ind/2018 for the levy of penalty at Rs.25,000/- u/s 271A of the Act for non- maintenance of the books of account, we find that the assessee has maintained complete details of party wise amount received for purchase and sale. These details were forwarded to the assessing officer and some of the parties have given reply to it. Trading, profit and loss account and balance sheet were placed before the Assessing Authority which are normally prepared on the basis of regular books of account. Assessee has filed details of the bank account maintained by it. Assessee has shown income from commission based on such books of accounts. However, Ld. AO computed the income by applying 5% rate of net profit on the total cash deposited in the bank account.
In our considered view levy of penalty by the Ld. AO u/s 271A of the for non-maintenance of books of account 6 Ramaswamy Manoharan ITANo.635 & 636/Ind/2018 at Rs.25,000/- was not justified, as it was based merely on the observation that some of the parties did not respond to the assessing officer’s letter calling details of purchase and sale. Apart from this all other details were filed before the assessing officer on the basis of which income was computed by the assessee. In our considered view no penalty was leviable u/s 271A of the Act and the same deserves to be deleted. Accordingly, appeal of the assessee vide ITANo.636/Ind/2018 is allowed.
In the result, both the appeals of the assessee are allowed. Order was pronounced in the open court on 26 .06.2019.