PRAKASH MADHUBHAI PATEL,,AHMEDABAD vs. INCOME TAX OFFICER., WARD 6(1)(3), AHMEDABAD

By way of this appeal, the assessee-appellant has challenged correctness of the order dated 30th August 2017 passed by the CIT(A)-6, Ahmedabad, in the matter of penalty under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2013-14.

Grievance of the assessee, in substance, is against learned CIT(A)’s confirming the penalty of Rs.2,16,300/- imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961.

To adjudicate on this appeal, only a few material facts need to be taken note of. During the course of scrutiny assessment proceedings, the Assessing Officer noted that the assessee had made cash deposits aggregating to Rs.13,76,500/- in his bank accounts and these deposits are out of his drawings from the partnership firms Ishwar Petroleum and Unity Printers. While the assessee had made considerable withdrawals from these concerns, he could not correlate the drawings and deposits. The deposits were unexplained to the extent of Rs.4,65,500/-. It was in this backdrop and due to assessee’s inability to correlate the cash withdrawals and cash deposits that he offered Rs.7 lakhs as income, paid taxes thereon and the assessment was concluded. The matter, however, did not rest at that. The Assessing Officer also imposed penalty of Rs.2,16,300/- being tax on income sought

I have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

As I find, on a perusal of material on record, this agreed addition was made on account of assessee’s inability to correlate the drawings and deposits, and, thus, for inability to reconcile the accounts to that extent. The assessee’s explanation is that this lapse occurred due to bonafide mistake on the part of employees and their lacking the requisite skills. The assessee has, in any way, paid the requisite taxes immediately upon noticing the mistake and offered more than unreconciled amount to tax. Considering all these facts in totality, I do not think it is a fit case for imposition of penalty. The explanation given by the assessee, in my considered view, merits acceptance.

In the light of above discussions and bearing in mind entirety of the case, I deem it fit and proper to delete the impugned penalty of Rs. 2,16,300/-. Ordered, accordingly.

In the result, the appeal is allowed. Pronounced in the open court today on the 10th May, 2019. Sd/-