ITO 17(3)(3), MUMBAI vs. NARENDRA NAGINDAS RAHTOD, MUMBAI

O R D E R PER D. T. GARASIA, JM:

This appeal is directed against the order u/s 271(1)(c) of the Income Tax Act (in short I.T. Act), 1961 passed on 29.06.2009 by the ITO.17(3)(3), Mumbai for the Assessment Year 2006-07.

The following grounds are raised in the appeal:

2 Narendra Nagindas Rathod u/s.271(1)(c) even through concealment and filing of inaccurate particulars of income have been established during the assessment proceedings and the quantum addition has also been confirmed by the Ld. CIT(A)."

"On the facts and in the circumstances of the case and in law, the 2. Ld., CIT(A) has erred in deleting the penalty of Rs. 32 lacs levied u/s.271(1)(c) even through concealment and filing of inaccurate particulars of income have been established during the assessment proceedings and the quantum addition has also been confirmed by the Ld. CIT(A)."

4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.

The short facts of the case are as under: 1. On the basis of AIR Information received that the assessee has made cash deposits of Rs.20,00,000/- on different dates in his bank accounts in the Bank of India, Nana Chawk Branch, Mumbai. Subsequently, once again intimation from AIR received that the assessee has cash deposited of Rs.20,00,000/- on 31/03/2006 by using his PAN in the name of Shri Nagindas Harigovind Rathod. It is further seen from AIR that the assessee has also deposited an amount of Rs. 5,00,000/- in Reserve Bank of India and again Rs.5,00,000/- by cheque in ICICI Bank. With a view to verify these cash deposits, the statement/bank summary from these banks have been called for. On verification of the same, it is confirmed that the assessee has made these

3 Narendra Nagindas Rathod cash deposits to the tune of Rs. 5,00,000/- on 25/03/2006 and also deposited Rs.5,00,000/- after two days. But the information received from AIR that the assessee has made cash deposit of Rs. 40,00,000/- which includes Rs.10,00,000/- as confirmed by the Bank summary. Since the assessee has neither attended in response to the notices of hearing issued nor furnished any relevant necessary document source of investment in the bank same was treated and unexplained credit under Section 68 of the I.T Act and simultaneously the penalty u/s 271(1)(c) was initiated. The show cause notice u/s 274 read with Section 271(1)(c) of the I.T. Act 1961 was issued. However the assessee did not comply with the notice. Therefore the Assessing Officer has levied the penalty u/s 271(1)(c) of the I.T. Act for concealment of income and furnishing inaccurate in regard to the property income impose the penalty of Rs.27,33,815/-.

“Regarding fifth category of addition of Rs. 32,00,000/- it is claimed that appellant was not aware of the deposit of Rs. 32,00,000/- in his bank account. This addition was confirmed by the Ld. CIT(A) in the quantum appeal order making the observations that appellant could not provide details of source of credits in the bank as the Bank Manager explained difficulty in accessing old records. As appeals could not be kept pending indefinitely, the Ld. CIT(A) confirmed the addition of Rs. 32,00,000/- explanation could not be offered before him. A very important factor about this deposit of Rs.32,00,000/- is that a cheque of Rs.32,00,000I- was 4 Narendra Nagindas Rathod deposited in appellant’s bank account on 13.10.2005 and immediately on the next date i.e., on 14.10.2005 this amount was transferred to the bank account of the father of the appellant. This amount was subsequently withdrawn from his father's bank account by Shri Ramesh Thakker. A copy of the appellant's father's bank account is submitted in which the name of Mr.Remesh/Ramesh Thakker is mentioned against the subsequent cash withdrawals. This fact also proves that Mr.Ramesh Thakker has used the bank accounts of the appellant and his family members for his own benefit. In view of this, it is held that there is sufficient explanation to show that appellant has not concealed any income or has given inaccurate particulars of his income. In fact he and his family members are the victims of an economic fraud committed by one Mr.Ramesh Thakker. The appellant is a green cardholder and has not visited India during relevant financial year and even three years prior and after the financial year. He has no source of income in India from which he can earn any unaccounted income. Similar additions u/s.68 were also made in the case of father of appellant. Penalty u/s.271(1)(c) was levied in respect of additions confirmed by CIT(A). By order dated 16.8.2012, the learned CIT(A) has deleted the penalty levied u/s.271(1)(c) in case of appellant's father, making similar observations. In view of the above it is held that penalty levied by the Assessing Officer u/s 271 (1)(c) cannot be sustained and 5 Narendra Nagindas Rathod appeal is allowed”.

3. We have heard the rival contention of both the parties looking to the facts and circumstances of the case the Assessing Officer has levied the penalty on the ground that the assessee could not explain deposit of Rs.32,00,000/- in his bank account. During the course of hearing the Ld. AR submitted that the assessee is non-residence residing in USA for the last several years the assessee had old parents living in India the family has appointed one Mr. Ramesh Takkar to attend the banking and financial matter of diligently. Shri Ramesh Takkar took the advantage of the trust placed on him and misappropriated the certain funds and Thakkar has also misused the bank account. The assessee has lodged a complaint with the Economic Offences Wing of Mumbai Police and investigations are yet ongoing, the Police inform that Thakkar is absconder. We find from the CIT(A) while deleting the penalty has categorically held that the cheque of Rs. 32,00,000/- was deposited in assessee’s bank account on 13/10/2005 immediately on 14/10/2005 this amount was transferred to bank account of the father of the assessee this amount was subsequently withdrawn by Shri Ramesh Thakkar. The CIT(A) has verified the father’s bank account wherein it is mention that Ramesh Thakkar has withdrawn this cash CIT(A) has verified the father’s account and found that Mr. Ramesh Thakkar has withdrawn this amount. The CIT(A) has also considered the submission of the assessee that the assessee and his family members are victim of economical fraud committed by one Mr. Ramesh Thakkar. The assessee has not visited India during the Financial Year even prior to Financial Year. Therefore, considering all these facts the CIT(A) has deleted the penalty and our interference is not required.

6 Narendra Nagindas Rathod