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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 22.12.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.
The only issue raised by the assessee is against the confirmation of penalty by Ld. CIT(A) of Rs.1,01,970/- as imposed by the AO under section 271(1)(c) of the Act.
The facts in brief are that the assessee is a salaried employee and filed return of income on 17.11.2009 declaring
2 Shri Anoop P. Babani an income of Rs.17,84,110/-. The case of the assessee was selected for scrutiny. The AO observed during the course of assessment proceedings that assessee has received salary from three employers and also share of profit from four firms. According to the AO, the assessee could not explain the deposit of Rs.3 lakhs out of Rs.11,32,085/-. Thereafter, the assessment was framed ex-parte under section 144 of the Act vide order dated 23.11.2011 wherein additions towards unexplained receipts Rs.45,000/-, unexplained cash credits Rs.11,32,085/- under section 68 and self assessment tax payment under section 69C of Rs.41,945/- were made.
In the appellate proceedings, out of various additions as made by the AO, only Rs.3 lakhs was confirmed by way of estimation of personal purposes towards the household expenses on which a penalty of Rs.1,01,970/- was imposed equal to 100% of the tax sought to be evaded. In the appellate proceedings, the Ld. CIT(A) confirmed the penalty by holding that the assessee was not able to explain the source of Rs.3 lakhs and thus justifies the imposition of penalty.
The Ld. A.R. vehemently submitted before us that the Ld. CIT(A) passed the order by ignoring the remand report filed by the AO to Ld. CIT(A) in which the AO has given a clear cut finding that availability of cash has been verified and found to be in order from the books of accounts of the assessee. The Ld. A.R. also submitted that the assessee has duly furnished the sources out of the cash was deposited as the assessee
3 Shri Anoop P. Babani was having sufficient opening balance and made the withdrawals during the year which completely explain the sources of deposit into the bank account of the assessee as given by Ld. CIT(A) in para 4.17 of the appellate order. The Ld. A.R. finally submitted that since the addition was made/sustained towards the household expenses by holding that the money withdrawn from the bank was used for the personal purposes of household expenses and nothing was left to deposit into the bank account of the assessee. The Ld. A.R. submitted that this is just an estimation/conjecture without any corroborating evidences. Therefore, the penalty should be deleted.
The Ld. D.R., on the other hand, relied on the order of authorities below and submitted that since the assessee has made inadequate withdrawal and Ld. CIT(A) has correctly sustained Rs.3 lakhs towards withdrawal for household expenses and its only on this amount the AO has imposed penalty and same should be confirmed.
After hearing the rival submissions and perusing the material on record, we find that the AO has added Rs.11,32,085/- on account of deposits into savings bank account under section 68 of which the Ld. CIT(A) sustained only Rs.3 lakhs towards withdrawal for household expenses thereby allowing part relief after considering the remand report dated 21.08.2012. The relevant extract of which is reproduced below: “2) Deposits in Bank of Baroda saving A/c: As per the AIR information, the assessee was shown to have made cash deposits to the extent of Rs.11,32,085. The 4 Shri Anoop P. Babani AO has disallowed the claim of the assessee since he could not furnish the source for introduction of cash. The same was added back u/s 68 of the I.T. Act as unexplained cash credit.
During the remand proceedings, the AR has submitted copy of bank pass book and the cash flow statement. It has been submitted by the AR that the cash has been deposited from own sources. The availability of cash have been verified from the cash book and found to be in order.”
It is clear from the above that the deposits into the bank account of the assessee have been verified by the AO by checking the cash book and bank book of the assessee. However, the Ld. CIT(A) sustained Rs.3 lakhs towards household expenses. In our opinion, this is mere a confirmation on the basis of estimation without any concrete evidences or corroboration which could prove the furnishing of inaccurate particulars of income by the assessee. In such a scenario, we are not in agreement with the conclusion reached by Ld. CIT(A) qua confirmation of penalty. Accordingly, we hold that since the penalty was imposed on the adhoc estimation of withdrawal for household expenses which in our opinion is wrong and has to be deleted .
Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 10.08.2018.