Loading judgment…
Facts
The Revenue appealed against the CIT(A)'s deletion of a penalty imposed under section 271AAC(1) for unexplained cash deposits amounting to Rs.10,04,97,350/-, which were treated as income under section 69A and taxed under section 115BBE. The penalty was levied on account of these unexplained deposits.
Held
The Tribunal noted that in the separate quantum appeal (ITA No. 445/LKW/2024), the addition of unexplained money under section 69A, which formed the basis for the penalty, had already been deleted. The deletion was based on the finding that the assessee acted merely as an agent of the bank, and the deposited money pertained to the bank. Consequently, as the underlying addition was deleted, the penalty imposed under section 271AAC(1) does not survive.
Key Issues
Whether a penalty under section 271AAC(1) for unexplained cash deposits is maintainable when the corresponding quantum addition under section 69A has been deleted by the Tribunal.
Sections Cited
271AAC(1), 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the Revenue, is directed against the order of the Learned Commissioner of Income tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 19.04.2024, pertaining to the assessment year 2017-18. The Revenue has raised the following grounds of appeal: -
1. 1. 1. 1. “1.Because on the facts and circumstances of the case, the Ld. CIT(A) has erred in law and in facts while deleting the penalty u/s 271AAC(1) of the Act, amounting to Rs.60,29,841/- levied on account of unexplained money u/s 69A of Rs,10,04,97,350/- ignoring that cash deposit of Rs.10,04,97,350/- was added to the income of assessee and income tax was charged as per provisions of section 115BBE of the Income Tax Act.”
Page 2 of 4 2. The appeal is time barred by 34 days. The Revenue has filed an application seeking condonation of delay in filing of appeal. After perusal of application, we have satisfied that delay in filing of appeal was for bonafide reasons and not on account of negligence or inaction on the part of Revenue. The delay in filing of appeal is condoned and appeal is admitted for hearing on merits.
At the outset, the Ld. Counsel for the assessee submitted that in the quantum appeal, the Tribunal (ITAT ‘A’ Bench Lucknow) vide its order dated 16.10.2025 has deleted the addition. Consequently, the penalty does not survive. He has also placed on record a copy of the said order of the Tribunal passed in the quantum appeal in for A.Y. 2017- 18.
On the other hand, the Ld. Departmental Representative for the Revenue supported the order of the Assessing Officer and relied on the penalty order.
We have heard the rival submission, perused the materials 5. available on record and gone through the orders of the authorities below. We note that this Tribunal, in the quantum appeal in ITO, Lucknow vs. Shyam Sagar Yadav, for A.Y. 2017-18, vide order dated 16.10.2025, has deleted the addition made by the Assessing Officer and confirmed by the Ld. CIT(A) has been deleted by holding as under: -
“7. Heard the Ld. Representatives of the parties and perused the material available on records. The Revenue has not disputed the fact that the assessee had entered into an agreement with the SBI to act as its Correspondent/Bank Mitra. As per the terms of the agreement, the assessee was authorized to collect the cash and make payment to the customers of the SBI. The assessee throughout has been stating that the cash in question pertained to the concerned branch of SBI and such Act of Page 3 of 4 the assessee was duly supported by the relevant terms of the agreement. During the course of assessment proceedings, the assessee had asked the bank manager about the specific details related to the cash. The response of the bank manager in this regard “we submit that Sh. ShyamSagaryadav was working as banking corresponding during the period in question i.e. 01.04.2016 to 31.03.2017 and as per the agreement with the bank he was authorized to collect cash and make payments under terms of agreement. The branch is presently not in the position to confirm/verify that the amount deposited by the assessee in the said account was consequently deposited in the concerned account holder’s account since the volume of the transactions is quite large. However, we would like to submit that we have received no complaints against the assessee for the period in question for non-deposit of amount in concerned account holder’s account which may answer your query”. However, the Assessing Officer did not appreciate the explanation offered by the assessee in the right perspective and drew an adverse inference by treating the amount as the income of the assessee in terms of Section 69A of the Act. Such an action by the Assessing Authority, without making any further inquiry from the assessee’s account statement or calling for records from the bank, in our considered view, would not be justified. Considering the totality of the facts and materials available on record, we do not see any infirmity in the finding of the Ld. CIT(A) for deleting the impugned addition. The grounds raised by the Revenue are thus, dismissed.”
6. It is undisputed that the Tribunal, in the quantum appeal, has sustained the finding of the Ld. CIT(A) deleting the addition on the ground that the assessee was merely acted as an agent of the bank and that the money deposited in the bank account pertained to the bank. The factum of assessee being the agent has also been duly accepted by the branch manager of the bank. Under these facts, when the impugned addition has been deleted the penalty imposed on the basis of such addition would not survive. Therefore, grounds raised by the Revenue are rejected.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 15/01/2026.