VINOD SINGH S/O LET. RAM GOPAL SINGH vs. INCOME TAX OFFICER

PDF · subscribers
ITA/144/2019HC RajasthanRJHC02092976201907 February 2024Author: AVNEESH JHINGAN,SHUBHA MEHTA3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal's decision to uphold the penalty under Section 271(1)(c) was sustained. The High Court found that the assessee had not filed income tax returns for preceding years. Significant cash deposits of Rs. 12,75,000/- were made between June 11, 2009, and June 19, 2009, with no withdrawals during that period. Further cash deposits were made during the assessment year. This information, along with interest on the savings bank account, was not declared in the returns. The assessee failed to explain the source of these cash deposits, and the additions made were upheld up to the ITAT, having attained finality. The court rejected the contention that additions were based on presumption, stating they were made after deducting withdrawals, relying on departmental material, and considering the assessee's explanation. Regarding the penalty, no explanation for the cash deposits was provided, and the assessee's reply stated no concealment or unexplained income. The court concluded that no substantial question of law was involved and dismissed the appeal.

What were the facts?

The assessee, Vinod Singh, filed an income tax return for Assessment Year 2010-2011 declaring an income of Rs. 1,45,245/-. During scrutiny, it was observed that the assessee had deposited Rs. 25,85,000/- cash in his savings bank account. The assessment, finalized under Section 143(3) on March 19, 2013, resulted in an addition of Rs. 15,79,000/- for unexplained cash deposits, after considering withdrawals and opening balance. Further additions were made for interest on bank deposits (Rs. 28,418/-) and investment in shares and mutual funds (Rs. 5,00,000/-). The CIT(A) partly allowed the appeal, upholding the additions for unexplained cash and bank interest but granting relief on the share and mutual fund investment. The assessee's appeal before the ITAT was dismissed. Subsequently, a penalty of Rs. 6,50,000/- was imposed under Section 271(1)(c) of the Income Tax Act, 1961. The ITAT upheld this penalty, leading to the present appeal.

What were the issues?

1. Whether the penalty under Section 271(1)(c) of the Income Tax Act, 1961, is sustainable when the quantum addition was made on an estimated basis? Assessee's Contention: The addition was made on an estimated basis by considering the peak balance of cash deposits, therefore, the penalty under Section 271(1)(c) is not sustainable. Revenue's Contention: The quantum addition has attained finality. The additions were based on unexplained cash deposits in the bank account after considering withdrawals. The assessee had not declared the amount deposited in the bank account nor the interest received on the savings bank account. The High Court noted that nine substantial questions of law were framed, but the only issue arising was the sustainability of the penalty under Section 271(1)(c).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2024:RJ-JP:6368-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 144/2019 Vinod Singh S/o Let. Ram Gopal Singh, P. No. 13-14 Om Colony, Delhi By Pass, Jai Singh Pura, Khore, Jaipur 302002 ----Appellant Versus Income Tax Officer, Ward 5(1) Jaipur Rajasthan ----Respondent For Appellant(s) : Mr. Ishwar Tiwari For Respondent(s) : Ms. Jaya P. Pathak with Mr. Sandeep Pathak HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MRS. JUSTICE SHUBHA MEHTA

Judgment 07/02/2024 Avneesh Jhingan, J (ORAL):-

1.

This appeal is filed under Section 260A of Income Tax Act, 1961 (for short ‘the Act’) against the order dated 20.06.2019 of Income Tax Appellate Tribunal (for short ‘ITAT’), Jaipur Bench, Jaipur dismissing the appeal and upholding the penalty under Section 271 (1)(c) of the Act.

2.

The brief facts of the case are that the appellant for assessment year 2010-2011 filed an income tax return showing income of Rs.1,45,245/-. The appellant had deposited Rs.25,85,000/- cash in the saving bank account with Standard Chartered Bank, MI Road, Jaipur, the case was taken in scrutiny. The assessment was finalized on 19.03.2013 under Section 143(3) of the Act. After giving the benefits of withdrawals and for the opening cash balance an addition of Rs.15,79,000/- was made as

[2024:RJ-JP:6368-DB] (2 of 3) [ITA-144/2019] appellant failed to explain the source. Addition of interest received of Rs.28,418/- on Bank deposit and of Rs.5,00,000/- invested in share and mutual fund was made.

3.

The Commissioner Income Tax (Appeals) while partly allowing the appeal of the appellant upheld the addition of unexplained cash deposit and of Bank interest but gave relief with regard to investment made in shares and mutual funds to the tune of Rs.3,30,000/- against the claim made by the appellant of Rs.5,00,000/-. The appellant failed in the quantum of appeal before the ITAT. The proceedings initiated under Section 271(1)(c) of the Act culminated in imposition of penalty of Rs.6,50,000/-. vide order dated 14.03.2016. The first appeal was dismissed on 16.11.2018 and the appeal before the Tribunal met the same fate on 20.06.2019. Hence the present appeal.

4.

The counsel for the appellant submits that the addition was made on estimate basis by taking peak balance of the cash deposits hence, the penalty under Section 271(1)(c) of the Act is not sustainable.

5.

The counsel for the respondent defends the impugned order submits that the quantum addition has attained finality. The additions were made on the basis of the unexplained cash deposits made in the Bank account and benefit of withdrawals were given. It is further argued that the appellant had not declared the amount deposited in the bank account and also the interest received in saving bank account.

6.

Nine substantial questions of law have been framed, however, the only issue which arises in the present case is as to whether penalty under Section 271(1)(c) of the Act is sustainable?

[2024:RJ-JP:6368-DB] (3 of 3) [ITA-144/2019]

6.

The appellant had not filed income tax returns for years preceding to AY 2010-2011. As per the record produced by the appellant a sum of Rs.12,75,000/- was deposited in cash in the bank account between 11.06.2009 till 19.06.2009 and there was no withdrawal in between. Thereafter during the assessment year, cash deposits were made. This information with regard to cash deposit and the interest accruing on the saving bank account maintained by the appellant with Standard Chartered Bank was not declared in the returns filed. Appellant failed to explain the source of cash deposited and the addition made was upheld till ITAT and has attained finality. The contention raised that the addition has been made on presumption is ill-founded. The addition of the cash deposits was made after deducting the withdrawal relying upon the material available with the department and after considering the explanation of the appellant.

7.

In challenge to the penalty order, no explanation of the cash deposits made. The reply filed was that there is no concealment of income and there is no unexplained income. No question of law much less substantial question of law is involved.

8.

The appeal is dismissed. (SHUBHA MEHTA),J (AVNEESH JHINGAN),J Chandan/Himanshu/52 Whether Reportable Yes/No

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →