PAWAN KUMAR AGGARWAL,DELHI vs. ITO, NEW DELHI

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ITA 898/DEL/2014Status: DisposedITAT Delhi12 July 2016AY 2005-064 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the additions made by the AO, which formed the basis for the penalty, were subsequently deleted by the ITAT in quantum proceedings, the penalty could not be sustained. Therefore, the penalty was cancelled.

What were the facts?

The assessee explained cash deposits in his bank account as funds from individuals who deposited money for shopping in Sadar Bazar and later withdrew it. The Assessing Officer (AO) added the deposits and estimated commission as income from undisclosed sources, leading to penalty proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions forming the basis of the penalty have been deleted by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’ NEW DELHI

Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU

Hearing: 11.07.2016Pronounced: 12.07.2016

ORDER

Per L.P. Sahu, Accountant Member:

1.

This is an appeal filed by the Revenue against the order of ld. CIT(A)XXVIII, New Delhi dated 09.12.2013 for the assessment year 2005-06 on the following grounds : “The Learned CIT (A) has erred in law and in facts in upholding the penalty imposed in the instant case u/s 271(l)(c) of the Act. Reasonable opportunity has been denied and bias is writ large in the impugned order as passed. The finding that AIR information was that ‘...the assessee had made cash deposits...in his bank account...' and ‘....the appellant was unable to explain the source from which the amount of Rs. 21,28,320/- has been deposited in the account..’ is perverse since not only that the AIR information has not been correctly read but also the fact that the assessee had explained the source but the AO failed to carry it to the logical conclusion despite glaring non-compliance by the bank with the term of notice issued for furnishing complete details that showed the correctness of the submissions of the Appellant has been overlooked. The appellant craves leave to add to the grounds of appeal and pray that the records of the AO be also called for at the time of hearing of the Appeal. Relief Claimed A. The impugned order be cancelled and the penalty of Rs. Rs. 6,46,419/ imposed by the Learned ITO ward 39(2), New Delhi be cancelled; B. Such other or further relief as deemed fit just and proper by this Hon'ble Tribunal in view of the facts and circumstances of the case be allowed in favour of the Appellant.

2. The brief facts of the case are that the assessee filed return of income on 26.05.2007 declaring total income at Rs.1,08,370/-. The return was selected for scrutiny under CASS. The Revenue received information through AIR that the assessee had made cash deposit of Rs.21,28,320/- in his Saving Bank Account No. 529-I-014754 with Standard Chartered Bank, Karol Bagh, New Delhi. Statutory notice was issued u/s. 143(2) which was served upon the assessee. In response thereto, the assessee submitted before the AO that this money which was deposited in his account was not belonging to him. He explained that whenever persons come from different parts of India and wanted to shop in Sadar Bazar, Delhi, they used to deposit their money in his bank account and when they were in Delhi they contact him, take self cheques for the amount they deposited in his account and used to withdraw their money from his bank account and for the service he used to get a small commission from them. The AO insisted that the assessee should produce the depositors and asked him to furnish their addresses etc. Since the assessee could not produce them nor furnish any details about them, cash deposit of Rs.21,28,320/- was added as income of the assessee from undisclosed sources and also made an addition of estimated commission of Rs.21,283/-on the said amount Rs.21,28,320/- @ 1%. Thus, total amount of taxable income was determined by the AO at Rs.22,58,340/-. Aggrieved by the order of the AO, the assessee appealed before the first appellate authority, who upheld the order of the AO. Thereafter, penalty proceedings u/s. 271(1)(c) of the Act were initiated. The AO imposed 100% penalty on the tax sought to be evaded. The ld. CIT(A) in appeal, confirmed the penalty imposed by the AO. Aggrieved by the order of CIT(A), the assessee is in appeal before the Tribunal.

3.

During the course of hearing, the ld. AR submitted that the assessee had filed appeal against the order of CIT(A) in the quantum proceedings, wherein, the ITAT set aside the order of the ld. CIT(A) and deleted the addition vide order dated 08.04.2015 in ITA No. 2454/Del./2008. Once, the additions, on the basis of which penalty was imposed stands deleted by the ITAT, there remains no reason to sustain the penalty imposed by the Assessing Officer.

4.

The ld. DR relied on the orders of the authorities below.

5.

After hearing both the parties and perusing the material available on record, we find no justification to sustain the penalty imposed against the assessee. It is notable that once the additions which were made basis for imposition of penalty u/s. 271(1)(c), stood deleted by ITAT vide order dated 08.04.2015 (supra), the very basis for imposition of penalty stands collapsed. We, therefore, find no justification to sustain the order of the ld. CIT(A). Accordingly, the penalty imposed is liable to be cancelled and the appeal of the assessee deserves to be allowed.

6.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 12.07.2016.

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