NAZMAIZHARUL HASAN SHAH,,RATNAGIRI vs. INCOME TAX OFFICER,,

The appeal is time barred by two days. The assessee has filed an application seeking condonation of delay in filing of the appeal. After

Shri M.K. Kulkarni appearing on behalf of the assessee submitted that the penalty has been levied in respect of two additions made by the Assessing Officer i.e. addition of Rs.58,72,000/- on account of peak cash credits u/s. 69 of the Act and addition of Rs.77,515/- on account of interest income on bonds and bank deposits. The assessee had challenged the additions before the Tribunal in ITA No. 246/PUN/2015. The Tribunal vide order dated 21-02-2018 deleted the addition of Rs.58,72,000/-. However, the addition of Rs.77,515/- on account of interest income was confirmed. A copy of Tribunal order in ITA No. 246/PUN/2015 (supra) is at pages 55 to 61 of the paper book.

Shri M.K. Verma representing the Department vehemently defended the impugned order. The ld. DR submitted that during the period relevant to the assessment year under appeal there were cash deposits aggregating to Rs.1,79,86,007/- in various banks accounts of the assessee. The Assessing Officer had made addition u/s. 68 of the Act of Rs.58,72,000/- on the basis of peak cash credits. The penalty u/s. 271(1)(c) was rightly levied for concealment of income.

Both sides heard. Orders of authorities below perused. The penalty u/s. 271(1)(c) for concealment of income has been levied in respect of two additions. i. Unexplained cash credits (peak cash) in the bank account of assessee Rs.58,72,000/-.

We find that the Co-ordinate Bench of Tribunal in an appeal by the assessee in ITA No. 246/PUN/2015 (supra) has deleted the addition of Rs.58,72,000/- on account of peak cash deposits. Once, the addition has been struck off, the penalty levied on such addition is unsustainable. Accordingly, penalty on Rs.58,72,000/- is set aside.

The other addition on which the penalty has been levied is undisclosed interest income of Rs.77,515/-. The assessee had earned interest income on bonds and cash deposits aggregating to Rs.77,515/- and the same was not disclosed by the assessee in the return of income. The said addition was upheld by the Co-ordinate Bench of Tribunal. The ld. Counsel for the assessee has failed to show any reason to strike down the penalty. Hence, the penalty on the addition of Rs.77,515/- is upheld.

In the result, the appeal of assessee is partly allowed in the terms aforesaid.