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Facts
The assessee, a retired VAO, deposited Rs. 29,50,000/- in his bank account during FY 2011-12. The AO reopened the assessment and added the entire deposit amount, which was confirmed by the CIT(A). The assessee claimed the deposits were from past savings and retirement benefits.
Held
The Tribunal held that the assessment order was passed within the time limit as the notice was served by affixture. Regarding the addition, the Tribunal found merit in the assessee's submission that only the peak credit should be considered, which was Rs. 16,00,000/-. Further, it was held that Rs. 8,00,000/- could be presumed to be from retirement benefits, and the balance addition was deleted.
Key Issues
1. Whether the assessment order was barred by limitation due to the method of service of notice. 2. Whether the entire cash deposit amount or only the peak credit was to be considered for addition. 3. Whether the penalty for concealment of income was validly initiated.
Sections Cited
69A, 148, 153(2), 144, 271(1)(c), 274
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid two appeals filed by the assessee for Assessment Years (AYs) 2012-13 arises out of the orders of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 24.09.2024.
& 2774/Chny/2024 :- 2 -: the Income-tax Act, 1961 (hereinafter “the Act”) towards cash deposits in the assessee’s bank account.
The assessee is a retired Village Administrative Officer (VAO) and had deposited cash of Rs. 29,50,000/- during the Financial Year 2011-12. The A.O had reopened the assessment on the ground that the assessee had not filed return of income and proceeded to make addition on cash deposits of Rs.29,50,000/-. Aggrieved by the addition, the assessee filed an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) confirmed the addition for the reason that the assessee has failed to explain the source of cash deposits as past savings.
At the outset, the Ld. Authorized Representative (A.R) of the assessee raised legal ground that assessment order was time barred.
The Ld AR submitted that the notice u/s. 148 of the Act in this case was issued on 28.03.2019, therefore the assessment ought to have been completed by 31.12.2019 as per section 153(2) of the Act.
However, the assessment order was passed on 28.09.2021, therefore the assessment order was barred by limitation. On merits, the Ld. AR has submitted that the assessee retired as a VAO in the year 2010 and the cash deposits represented past savings and retirement & 2774/Chny/2024 :- 3 -: benefits. A chart showing the details of deposits and withdrawals was filed, indicating that the peak credit was only Rs.16,00,000/-. It was contended that the assessee was therefore required to explain only Rs.16,00,000/-, and the Ld. CIT(A) had erred in confirming the full addition of Rs.29,50,000/-.The Ld AR argued that past saving may be considered as explanation to the source of cash deposits.
On the other hand, the Ld. Departmental Representative (DR) has submitted that assessment order was passed within the statutory period. The Ld DR submitted that although the notice u/s. 148 of the Act was issued on 28.03.2019, it was returned unserved and the A.O has subsequently served the notice by way of affixture through the Inspector on 03.10.2019. The Ld. DR produced the report of the Inspector in this regard and argued that the assessment order dated 28.09.2021 was passed within the time limit prescribed u/s. 153(2) of the Act.
We have heard the rival submissions, and perused the materials available on record. We note that the A.O has issued notice u/s. 148 of the Act on 28.03.2019, which was returned unserved. The AO then effected service through affixture at the assessee’s address as given in the return of income, and subsequently passed the assessment & 2774/Chny/2024 :- 4 -: order on 28.09.2021. Accordingly, in view of the provisions of Section 153(2) of the Act, read with TOLA Act the assessment order passed is within the prescribed time limit. Therefore, the legal ground raised by the assessee is rejected.
The A.O has made addition of Rs.29,50,000/- in the order passed u/s. 144 of the Act on account of cash deposits. The assessee before the Ld. CIT(A) has explained that the deposits were made from past savings, which was not accepted. The assessee before us has submitted summery of cash deposit and withdrawal as under:
Date Particulars Withdrawal Deposit 08.11.2011 Cash deposit 7,00,000 10.11.2011 Cash withdrawal 7,00,000 15.12.2011 Cash deposit 8,00,000 15.12.2011 Cash deposit 8,00,000 16.12.2011 Cash withdrawal 3,00,000 19.12.2011 Cash withdrawal 3,00,000 22.12.2011 Cash withdrawal 7,50,000 28.12.2011 Cash withdrawal 1,60,000 06.01.2012 Cash deposit 6,50,000 22,10,000 29,50,000
The AO has made the addition of the entire amount of cash deposits without considering the withdrawals made from the same bank account, which were available for redeposit. We find merit in the submission of the Ld. AR that only the peak credit should have been considered, which comes to Rs.16,00,000/-. The Ld AR has explained the source of the deposit as arising from his past savings and & 2774/Chny/2024 :- 5 -: retirement benefits received upon retiring as a VAO. We note that the assessee has retired as VAO during the relevant financial year and assessee must have received gratuity, leave encashment, and provident fund benefits ordinarily receivable by a government servant on retirement. However, the assessee has not been able to submit evidence in support of his contention that deposits were out of past saving and retirement benefit. Therefore, it is reasonable to presume that Rs.8,00,000/- could have come from such retirement benefits.
Accordingly, we sustain the addition to the extent of Rs.8,00,000/- and delete the balance addition. In view of the above, the appeal filed the ITA No.2774/Chny/2024:
In this appeal, the A.O has levied penalty u/s. 271(1)(c) of the Act for concealment of income in respect of addition of Rs. 34,18,011/- made in the assessment order. On appeal, the Ld. CIT(A) has reduced the penalty corresponding to the addition of Rs.29,50,000/-, which had been confirmed in the quantum appeal. The assessee is now in appeal before us against the confirmation of the penalty.
At the outset, the Ld. AR has submitted that penalty order is Void ab-initio, as the A.O had failed to clearly specify in the notice u/s. 274 & 2774/Chny/2024 :- 6 -: of the Act whether the penalty was initiated for concealment of income or for furnishing inaccurate particulars of income. On merits, the Ld. AR has submitted that the penalty should be restricted to the amount of income sustained by the Tribunal.
On the other hand, the Ld. DR has submitted that the A.O in para 12 of assessment order had clearly stated that penalty u/s. 271(1)(c) of the Act were initiated for concealment of income. The Ld. DR further pointed out that notice issued u/s. 274 r.w.s 271(1)(c) of the Act, the additional remarks specifically mentioned that the penalty was being initiated for concealment of income.
We have heard the rival submissions, and perused the materials available on record. We find that the A.O had initiated penalty proceedings for concealment of income, and this is evident from the assessment order as well as the notice issued u/s. 274 of the Act.
Therefore, the arguments of the Ld. AR regarding the specific limbs for which penalty has been initiated is rejected.
On merits, in the quantum proceedings, we have already sustained the addition to the extent of Rs.8,00,000/- in respect of cash deposits made in the assessee’s bank account during the Financial Year 2011–12. The assessee has not been able to explain the source & 2774/Chny/2024 :- 7 -: of cash deposit, which represented the concealed income. We therefore upheld the order of Ld CIT(A)/AO to the extent of concealment of Rs.8,00,000/-. Accordingly, we direct the AO to re- compute the penalty u/s.271(1)(c) of the Act on the concealment of income of Rs.8,00,000/-. In view of the above, the appeal filed by the assessee in is partly allowed.
In the result, both the appeals filed by the assessee are partly allowed. Order pronounced on 08th May, 2025.