M.JAGABAR NISHA UMMAL,CHENNAI vs. ITO, CHENNAI

The assessee has raised seven grounds in her appeal however the crux of the issue is that the Ld.CIT(A) has erred in confirming the order passed by the Ld.AO levying penalty of Rs.1,00,000/- U/s.271(1)(c) of the Act with respect to excess cash deposit of Rs.4,00,000/- and undisclosed bank interest of Rs.10,486/-.

The brief facts of the case are that the assessee is an individual filed her return of income for the assessment year 2012-13 on 01.10.2012 admitting total income of Rs.5,23,955/-. The case was selected for scrutiny and finally assessment was completed U/s.143(3) of the Act on 25.02.2015, determining the total income of the assessee at Rs.9,34,440/-.

During the course of scrutiny assessment, it was observed by the Ld.AO that the assessee had deposited cash in her bank account amounting to Rs.4,00,000/-, the source of which could not be explained by the assessee. Before the Ld.AO the assessee admitted the same as unexplained income. Further the assessee had failed to disclose bank interest of Rs.10,846/- in her return of income. Therefore the Ld.AO invoked the provisions of Section 271(1)(c) of the Act. In the penalty proceedings, the assessee had explained that she had admitted the amount of Rs.4,00,000/- as her unexplained income to buy peace with the department. The assessee had further argued that she has enough own source of income for depositing such amount in her bank account because for the relevant assessment year itself she had disclosed income of Rs.5,23,955/-. She had further explained that the bank interest not disclosed in her return of income was due to inadvertent omission. However the Ld.AO rejecting her explanation levied penalty to the extent of 100% of tax sought to be evaded which worked out to Rs.1,00,000/-. On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO by agreeing with the view of the Ld.AO.

Before us the Ld.AR reiterated the submissions made before the Ld.Revenue Authorities on the earlier occasions and the Ld.DR relied on the orders of the Ld.Revenue Authorities.

We have heard the rival submissions and carefully perused the materials on record. From the facts of the case it is apparent that the assessee had substantial source of income. Further in the relevant assessment year she had sold her agriculture land for Rs.40,00,000/-. In these circumstances, the source of Rs.4,00,000/- deposited in the bank is not abnormal. Moreover it appears that in order to avoid protracted litigation the assessee had agreed for the addition. Further it is passable explanation that non-disclosure of bank interest of mere Rs.10,846/- is an inadvertent omission on the part of the assessee. In these circumstances relying in the decision of the Hon’ble Apex Court in the case Price Waterhouse Coopers Pvt. Ltd. vs. CIT & others reported in 348 ITR 306, we are of the considered view that the case of the assessee is not fit for levy of penalty. Therefore we hereby direct the Ld.AO to delete the penalty of Rs.1,00,000/- imposed on the assessee.

In the result the appeal of the assessee is allowed.