SUBRAMANIAM SANTHANAM,TIRUPUR vs. ITO, WARD-1(2), TIRUPUR

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ITA 2568/CHNY/2024Status: DisposedITAT Chennai02 January 2025AY 2013-14Bench: HON’BLE SHRI S.S. VISWANETHRA RAVI (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty could not be levied on income estimated under Section 44AD, especially when the AO accepted that the assessee was carrying out business. The case was not fit for levying a penalty.

What were the facts?

The assessee did not file a return of income but deposited a significant amount of cash into bank accounts. The AO reopened the case, estimated income based on these deposits, and levied a penalty. The CIT(A) confirmed the penalty.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied on income estimated by the AO under Section 44AD, and whether the assessee's failure to explain cash deposits in bank accounts warrants such penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: HON’BLE SHRI S.S. VISWANETHRA RAVI, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा)रण वष) / Assessment Year: 2013-14) Shri Subramaniam Santhanam ITO 29/50, Aishwaryam Garden, Ward-1(2) बनाम 1st Street, Near St.Paul’s School, Tirupur. / Vs. KNG Pudur Pirivu, Coimbatore-641 025. �थायीलेखासं./जीआइआरसं./PAN/GIR No. ASIPS-1371-C (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ� कीओरसे/ Appellant by : Shri T. Vasudevan (Advocate)- Ld.AR � थ�कीओरसे/Respondent by : Shri R. Raghupathy (Addl.CIT) - Ld. Sr. DR सुनवाई की तारीख/Date of Hearing : 18-12-2024 घोषणा की तारीख /Date of Pronouncement : 02-01-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

1.

Aggrieved by confirmation of penalty u/s 271(1)(c) for Rs.77,639/- for Assessment Year (AY) 2013-14, the assessee is in further appeal before us. The impugned order has been passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 14-08-2024 in the matter of penalty levied by Ld. Assessing Officer [AO] u/s. 271(1)(c) of the Act on 18-02- 2022. Having heard rival submissions, the appeal is disposed-off as under.

2.

It emerges that the assessee did not file return of income. However it deposited cash of Rs.74.59 Lacs in its bank accounts. The Ld. AO reopened the case of the assessee and estimated income of 8% on total deposit which came to Rs.7.26 Lacs. Consequently, impugned penalty was also levied by Ld. AO. The Ld. CIT(A) confirmed the same n the ground that the assessee failed to explain the sources of the same Aggrieved, the assessee is in further appeal before us.

3.

It clearly emerges that the fact of carrying out of business has been accepted by Ld. AO and income has been estimated u/s 44AD. In our considered opinion, penalty could not be levied on estimation of income. It is not a fit case for levy of penalty. We order so.

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