SANTOSH KUMAR BURNWAL,UKHRA vs. ITO, WARD 2(1), DURGAPUR

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ITA 2253/KOL/2025Status: DisposedITAT Kolkata15 May 2026AY 2009-20106 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that when the CIT(A) grants relief based on peak credit theory, which is an estimated figure, levying penalty under Section 271(1)(c) is not legally or factually correct. Therefore, the penalty is deleted.

What were the facts?

The assessee's income for AY 2009-10 was assessed with an addition of Rs. 170,22,950/- for unexplained cash deposits. The CIT(A) partly allowed the appeal, directing recomputation based on peak credit of Rs. 2,87,166/-. Subsequently, a penalty was levied under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) can be imposed when the addition is reduced by the CIT(A) based on the peak credit theory.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69A

AI-generated summary — verify with the full judgment below

Before: ShriRajesh Kumar & ShriPradip Kumar Choubey

IN THE INCOMETAXAPPELLATE TRIBUNAL “D” BENCH, KOLKATA Before ShriRajesh Kumar, Accountant Member and ShriPradip Kumar Choubey, Judicial Member ITA No.2253/Kol/2025 Assessment Year: 2009-10 Santosh Kumar Burnwal……………………………….………………………….Appellant Gulzarbagh Ukhra, Ukhra Burdwan- 713363 [PAN No. AKCPB3675J] Vs. ITO, WARD 2(1), Durgapur……………………..…………….………... Respondent, Aykar Bhavan, Aykar Bithi, City Center, Durgapur, West Bengal- 713216 Appearances by: Shri Shuvo Chakraborty, Advocate, appeared on behalf of the Appellant. Shri, S.B. Chakraborthy, Addl. CIT, Sr. DR,appeared on behalf of the Respondent. Date of concluding the hearing : April15, 2026 Date of pronouncing theorder :May 15,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the Assessee is directed against the order dated 14.02.2023 of the National Faceless Appeal Centre (NFAC) passed under Section 271(1)(c) of the Assessment Year 2009-10 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. At the very outset, it appears from the Registry the instant appeal has been filed by the assessee after a delay of 826 days. To condone the delay assessee has filed a petition supported with an affidavit. The gest of the affidavit is as below: -

That the honest and bona fide reason of said delay is though the appellant received the said appellate order on dt. 28/04/2023 only academically since no mail or msg intimations were received by the

ITA No.2253/Kol/2025 Assessment Year- 2009-10 appellant about the passing and service of said appellate order in the e filing portal of the appellant. The veracity of said honest contention of the appellant is self-proven from the appellant past record of high sincerity by attending and complying both the penalty as well as the quantum appellate proceeding and furnishing all the requisitions of the Ld. Appellate authorities time to time culminated in to the big tax relief obtained by the appellant in the first quantum appeal in the Ld. CIT (A). Appellant came in to the knowledge about the passing and service of impugned appellate order only after receiving the tax and penalty recovery demand notice u/s 220(2) issued on dt. 10/09/2025 vide msg nd mail intimation first time as well as tax, penalty recovery phone call from the departmental officials and started to take necessary action for expeditious filing of the Second appeal before the Honble ITAT then and there. Therefore, there has been no wilful of culpable negligence on appellant part for said delay. All are due to technical glitches of the departmental digital system and mobile tower problem in my remote colliery mining areas.

3.

The Ld. DR did not oppose the condonation petition. Keeping in view, the catena of decision that a case should be decided on merit not on technical issue and considering the facts mentioned in the affidavit delay is hereby condoned.

4.

The brief facts of the case of the assessee is that assessee filed its return of income for the assessment year 2009-10 declaring total income of Rs. 14,99,30/-. The case was selected for scrutiny on account of information about cash deposit made in the ICICI Bank. An assessment order was passed by making an addition of Rs. 170,22,950/- unexplained cash deposit and penalty proceeding U/s 271(1)(c) was initiated for showing inaccurate particulars of income. Aggrieved by the order assessee preferred appeal before the CIT(A)

ITA No.2253/Kol/2025 Assessment Year- 2009-10 wherein appeal of the assessee has been partly allowed directing the Assessing Officer to recompute the income of the assess by taking peak credit in the said bank account and as per the CIT(A) the peak credit stands at Rs. 2,87,166/- only. By giving effect to the order, AO has initiated a penalty proceeding by levy the penalty of Rs. 39,478 U/s 271(1)(c) of the Act.

Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed.

Being aggrieved by and dissatisfied the assessee preferred appeal before us.

5.

The Ld. AR challenges the very impugned order of penalty by submitting that penalty order passed U/s 271(1)(c) is illegal as no penalty could be imposed when CIT(A) by applying pick credit theory granted relief on estimated basis passed on the basis of details furnished by the assessee. The Ld. AR submits that provision of Section 271 (1) (c) has no application in the present facts of the case.He has placed reliance on the order passed by the ITAT Chennai Bench in ITA No. 728/2023.

Contrary to that Ld. DR supports the impugned order.

6.

Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, there is no dispute that in the present case during the assessment proceeding the assessee explained the deposit by stating that the amounts did not belong to him but it actually belong to his clients on his behalf he was acting as a middlemen for earning commission.The assessee has furnished a list of 24 person from whom he had collected cash on behalf of his clients and deposited it in the bank account during the period concerned. The CIT(A) after considering the submission made by the assessee during 3

ITA No.2253/Kol/2025 Assessment Year- 2009-10 the proceeding in quantum appeal has held that the peak credits stand at Rs. 2,87,166/- only and AO has directed to recompute the assessee’s income accordingly. Assessing officers levied penalty at the 100% of tax sought to be evaded on the peak credit of Rs. 28,71,66/- and levied and penalty of Rs. 39,478/- we have gone through the cited decision and find that the Chennai Tribunal in ITA No. 728 has held thus:_

6.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. During the course of assessment proceedings, the Assessing Officer noted that the assessee had a cash credit of ₹.25,00,000/- with BHEL Employees Cooperative Bank account and such credit was made on 03.02.2011. 04.02.2011, 08.02.2011 & 10.02.2011. Since the assessee has not offered any convincing explanation, the Assessing Officer added the entire sum of credit in the BHEL Employees Cooperative Bank account of ₹.25,00,000/- under section 69A of the Act. On appeal, by restricting the addition to the extent of ₹.12,73,250/-, the Id.CIT(A) added the peak credit of ₹.9,73,250/- to the declared income and moreover granted relief of 2.3,00,000/- being personal and house hold expenses, which was accepted by the assessee and no further appeal was preferred against the order of the Id. CIT(A). However, the Assessing Officer initiated penalty proceedings and levied penalty under section 271(1)(c) of the Act. which was confirmed by the Id. CIT(A).

6.1 Before us, the id. Counsel for the assessee has contended that by applying peak credit theory, the Id. CIT(A) has granted relief on estimated basis based on the details furnished by the assessee and therefore, there was no concealment of income or furnishing of inaccurate particulars and thus, the provisions of section 271(1)(c) of the Act has no application. We find force in the argument of the Id. Counsel.

ITA No.2253/Kol/2025 Assessment Year- 2009-10 Against the quantum addition, once the Id. CIT(A) has determined the unexplained cash credit by considering the peak credit amount deposited, which is nothing but an estimated credit, the Assessing Officer was not legally and factually correct to levy penalty under section 271(1)(c) of the Act. Accordingly, the penalty levied under section 271(1)(c) of the Act stands deleted.

7.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 28 July, 2023 at Chennai.

7.

The facts of the case in hand is completely similar to the cited decision. In the present case also CIT(A) has allowed the appeal of the assessee by taking the peak credits. Respectively following the decision of the Chennai Tribunal we allowed the appeal of the assessee and penalty as imposed is here by deleted.

As a result, the appeal of the assessee is allowed.

Kolkata, the 15th May, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated:. . 15 05.2026. DC, PS

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT-

ITA No.2253/Kol/2025 Assessment Year- 2009-10 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches

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