GAURAV AGARWAL,NEW DELHI vs. DCIT, CIRCLE-1, MUZAFFARNAGAR

At the time of hearing no one was present on behalf of the assessee, the appeal was passed over. In the second round also the assessee remained unrepresented. The record shows that the Registry has pointed out a delay of one day in the filing of the present appeal. The record shows that the appeal has been presented by Post on 07.08.2018. Accordingly considering the delay of one day on account of the documents being in transit and beyond the control of the assessee since 03/08/2018 (the date of Speed Post Stamp) the receipt of the same on 07/08/2018 leading to the delay is condoned. No objection was posed by the Ld. Sr. DR to the condonation of the delay. Said order was pronounced in the open Court. The Ld. Sr. DR was accordingly directed to argue the appeal.

The record shows that the assessee in the course of the assessment proceedings was required to explain the deposit of Rs. 2,00,000/- in his savings bank account on 28.09.2009. The assessee attempted to explain the deposits however ultimately he gave up the issue accepted the addition. The record shows that no appeal against the addition made by the AO was filed before the CIT(A). As a result of this addition, penalty proceedings were initiated.

The explanation offered was discarded by the A.O. and penalty of Rs. 61,800/- was imposed. Before the CIT(A), the assessee relied upon a cash flow statement. However the penalty was confirmed. Aggrieved the assessee is in appeal. The assessee remains unrepresented however the explanation offered before the CIT(A) extracted in the impugned order is extracted for the sake of completeness: From the facts of the case and material on record, it is noted that the explanation " of the AR for the source of cash deposits of Rs.2,00,000/- in his bank account is based upon cash flow statement which is a summary of periodic cash withdrawals made and cash deposits made in the bank account by the appellant. The cash flow statement is reproduced as under:-

The Ld. Sr. DR relies upon the impugned Order.

In the light of the facts available on record as referred to herein above I am of the view that the levy of penalty cannot be confirmed. Simply because the addition has been accepted by the assessee cannot lead to the conclusion that levy of penalty is automatic. It is well settled that penalty proceedings and assessment proceedings are separate and distinct. The explanation offered in the penalty proceedings necessarily is required to be addressed in the context of the penal provisions. In the facts of the present case I find that the explanation of the assessee has been discarded in the penalty proceedings on the reasoning that the explanation that cash withdrawals were the sources of deposits was considered to be not relevant. A perusal of the grounds specifically ground no. 2 shows that it had been argued that the addition was accepted for the sake of avoiding litigation but there was adequate withdrawals available both with the assessee and also with his wife from her accounts. The said claim made when considered with the explanation offered before the Ld. CIT(A) leads to the conclusion that it has been discarded based on generalistic opinions as nothing is available on record to show that the said withdrawals were not available to the assessee. In the absence of any discussion on record as to the utilization of the funds available the claim of the assessee that the withdrawals made from the bank account were the source of the deposits deserves to be accepted de horse the fact that the addition was accepted in the assessment proceedings. Considering the factual matrix as available on record, I hold that the explanation offered by the assessee in the penalty proceedings deserves to be accepted. The impugned Order accordingly is set aside and the penalty Order is directed to be quashed. The appeal of the assessee is allowed. Said order was pronounced in the open court at the time of hearing itself. 7. In the result the appeal of the assessee is allowed. Sd/-Sd/-SsSd/- (DIVA SINGH) JUDICIAL MEMBER Dated: 125.06.2019 ITA No.:- 5306/Del/2018 Gaurav Agarwal.