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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 23.08.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.
The grounds raised
by the assessee are as under:
1. The learned CIT(A) erred in holding that the AO was justified in levying penalty u/s.271(1)(c) of the Act at Rs.60,074/-. It is prayed that the said addition be directed to be deleted.
2. Not withstanding the fact that penalty is not leviable, the learned CIT(A) erred in holding that the assessing officer was justified in levying penalty oil alleged concealed income at the maximum marginal rate of tax at Rs.60,074/- as against penalty correctly leviable on the tax computed at the normal rates at Rs.7,036/-. It is prayed that the AO be directed
2 Mr. Tanaji Dattatraya Chavan to delete the penalty levied in excess. 3. The appellant craves leave to amend, alter or modify the above grounds of appeal or to add fresh grounds of appeal if found necessary.”
At the outset, we would like to mention that neither assessee nor his authorised representative appeared before the Tribunal today when the case was called up for hearing. Previously the case of the assessee was fixed for hearing on 17.08.2017 and thereafter on 26.02.2017. However, on 26.02.2017 the hearing was adjourned at the request of the assessee’s counsel to 17.05.2018 on which the Bench did not function and the case was further adjourned to 24.07.2018 for today. Since no one is appearing on behalf of the assessee so we are disposing of the appeal on merits after hearing the Ld. D.R.
The issue raised in ground No.1 is against the order of Ld. CIT(A) upholding the order of AO imposing penalty at maximum marginal rate of tax at Rs.60,074/- and the issue in second ground of appeal is against the order of Ld. CIT(A) upholding the order of AO imposing the penalty at maximum marginal rate of tax instead of normal applicable rates of tax according to which the tax sought to be evaded comes to Rs.7,036/-.
The facts in brief are that during assessment proceedings, the AO noticed that assessee has deposited cash in his bank account to the tune of Rs.19,44,144/-. The assessee is engaged in the business of running a retail shop and is also a partner of M/s. D.R. Chavan having 30% share
3 Mr. Tanaji Dattatraya Chavan and also carries on the business of fruits and vegetables on commission basis. The said cash was deposited in Sangli Urban Co-operative Bank Ltd. bearing saving account No.10903. According to the assessee the said account was opened by Mr. Babasaheb Bhimrao Chavan (Patil) who is cousin of the assessee. Thereafter, the assessee’s uncle name Mr. Bhimrao Chavan was also included in the said bank account. However, the ownership of the said account vested with the Mr. Babasaheb Bhimrao Chavan (Patil) and Mr. Babasaheb Bhimrao Chavan (Patil) expired on 24.11.2008. The assessee replied before the AO that due to old age assessee’s uncle and father’s name were added to the account for the purpose of convenience in operation. It is pertinent to state that Mr. Babasaheb Bhimrao Chavan (Patil) was running kiryana shop and has to deposit various proceeds from time to time related to the business of the assessee in the said account. During the assessment proceedings the assessee denied to have any connection with the said account whatsoever. After the death of the Mr. Babasaheb Bhimrao Chavan (Patil), the business was bound up by selling the unsold stocks and the sale proceeds were deposited in the said account. The assessee also furnished the copy of death certificate, copy of bank passbook and certificate from the bank certifying that the name of the Mr. Bhimrao Chavan was added to the account only after the death of the Mr. Babasaheb Bhimrao Chavan (Patil). The assessee also submitted that since the Mr. Babasaheb Bhimrao Chavan (Patil) was running a kiryana shop and the turnover was below
4 Mr. Tanaji Dattatraya Chavan Rs.40 lakhs and same should be assessed under section 44F of the Act. Assessee denied to have any connection with the said business. However, in order to buy peace of mind assessee offered 5% of the total deposits in the said account as income of the assessee with the condition that no penalty proceeding would be initiated. The AO came to the conclusion that assessee was indirectly carrying on the business after dealth of Mr. Babasaheb Bhimrao Chavan (Patil) cousin of the assessee and failed to prove that he was not having any connection with the kiryana shop and consequently assessed the income in the hand of the assessee @ 10% thereby adding a sum of Rs.1,94,414/- to the income of the assessee by framing assessment vide order dated 26.11.2011. The said order was not challenged before the appellate authority as assessee voluntarily offered the income as his own income. Thereafter, the penalty proceedings were initiated under section 271(1)(c) for concealment of particulars of income and the AO levied a penalty of Rs.60,074/- at marginal rate for concealment of particulars of income within the meaning of Explanation-1 to section 271(1)(c) of the Act after taking into account the contentions and submissions of the assessee.
In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee.
After hearing the Ld. D.R. and perusing the material on record, we observe that in this case the assessee has denied all along the connection with the said business. During the assessment proceedings the assessee offered to tax the 5 Mr. Tanaji Dattatraya Chavan amounts deposited in the bank account to be assessed as per the provisions of section 44AF of the Act which belonged to Mr. Babasaheb Bhimrao Chavan (Patil) who was running a kirana shop @ 5% only in order to buy peace of mind subject to no penal action. In this case, the account holder Mr. Babasaheb Bhimrao Chavan (Patil) expired and assessee submitted that the unsold stocks after his death was sold and deposited in the said bank account. It is also undisputed that the amount deposited in the said account represented the sales of the stocks in the shop of Mr. Babasaheb Bhimrao Chavan (Patil). Under these circumstances, to levy penalty on the assessee who has denied to have connection with the retail shop of Mr. Babasaheb Bhimrao Chavan (Patil) is quite unreasonable and can not be sustained or accepted. Moreover, the AO levied penalty at the rate of maximum marginal tax where penalty could only be levied as per applicable rate of tax comes to Rs.7,036/- which was also wrongly upheld the Ld. CIT(A). In our opinion, this is also not as per the provision of the Act. Thus, there is no valid ground for levy of penalty on the assessee when the assessee denied the bank account to be belonging to him. The assessee can only penalized for the concealment of income or for furnishing of inaccurate particulars of income, if the assessee has resorted to any such act whereas in the present case the income of Mr. Babasaheb Bhimrao Chavan (Patil) has been assessed in the hand of assessee which is apparent from the submissions of the assessee before the AO. We, therefore, do
In the result, appeal of the assessee is allowed. 8.
Order pronounced in the open court on 06.08.2018.