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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 08-11-2016 घोषणा क" तार"ख /Date of Pronouncement : 21-12-2016 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 8th September, 2014 passed by learned Commissioner of Income Tax (Appeals)- 31, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2009-10, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 20th March, 2012 passed by the AO u/s 271(1)(c) of the Income-tax Act,1961 (Hereinafter called “the Act”).
ITA 7202/Mum/2014 2
The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“I) The assessee is a bonafide Tax Payer since the year 1994.He is filing the Income tax return regularly since 1994.As he is not from the Commerce Background, for filing the income tax regularly he used to take the services of a Chartered Accountant, Mr Mehboob. Mr Mehboob used to do all the tax related matters such as filing returns, paying income tax etc. However, suddenly he died in the month of April 2006. 2) The assessee deals with the clients who want to get their work done expeditiously and hence they give cash for expenses purposes only. This cannot be considered as Income and if for any reasons work is not done, the same has to be refunded.
3) After the death of Mr Mehboob, his wife used to see all the matters. The assessee was of the view that his wife is also a Chartered Accountant. She was appointed for preparing Income Tax returns for three financial years ( 2006-2009) But later on it was found that she herself is not a CA. As a result, in the income tax return filed by her, there was missing some of the cash deposit issues, although the Assessee had provided the bank statements to her for the assessment year.
4) It was due to her fault that the cash deposit was not reflected in the original return. The Assessee had never the intention of hiding the income from tax.
5) So, when the Assessing Officer asked about the cash deposit details, the assessee immediately explained the discrepancy voluntarily.
6) So, although there was some cash deposit not reflected in the return, it was only due to the circumstances explained above, beyond the control of the assessee. Therefore, the Assessing Officer erred in initiating the penalty proceedings for concealment.
7) The Assessee had never the intention of hiding the income from tax.
8) So, from the facts & grounds mentioned above, the Penalty proceedings should not be levied against the assessee as the omission was not intentional but merely it was an accidental.
9) So it is humbly prayed that the penalty raised by the Assessing Officer should be deleted by the learned ITAT.”
ITA 7202/Mum/2014 3
The brief facts of the case are that the assessee in this case is aggrieved by the levy of penalty u/s 271(1)(c) of the Act. The only addition made in this case is on account of unexplained cash deposits in the bank account of the assessee with ICICI Bank amounting to Rs. 9,18,775/-. The assessee is engaged in the consultancy of computer software and also earned income from salary. It was observed by the A.O. that the assessee had deposited total cash amount of Rs. 15,60,281/- in his saving bank account. During the course of assessment proceedings, the assessee was asked to explain the nature and source of the said cash deposits in his bank account and in reply the assessee could explain the source of cash deposit to the extent of Rs. 6,41,506/- only and for the balance deposits of Rs. 9,18,775/-, the assessee could not offer any satisfactory explanation. Accordingly, the A.O. treated balance cash deposit of Rs. 9,18,775/- as unexplained cash credit within the meaning of Section 68 of the Act and added the same to the total income of the assessee , against which penalty proceedings were initiated by the AO u/s 271(1)(c) of the Act for concealment of income. Notice dated 23rd September, 2011 was issued to the assessee whereby the assessee was asked to explain why penalty u/s 271(1)(c) of the Act should not be levied on the assessee. However, the assessee could not furnish any explanation in this regard hence the A.O. held that the assessee has no plausible explanation to offer with regard to the cash deposit of Rs.9,18,775/-. Accordingly, minimum penalty @ 100% of the tax sought to be evaded amounting to Rs. 2,93,036/- was levied by the AO on the assessee vide penalty order dated 20th March, 2012 passed u/s 271(1)(c) of the Act. On the first appeal filed by the assessee before the learned CIT(A), the ld. CIT(A) confirmed the same vide appellate order dated 08-09-2014 , by holding as under:-
In the present case, penalty has been levied on the addition made on account of unexplained cash deposits in the bank account maintained by the appellant with ICICI Bank Ltd. During assessment proceedings, ITA 7202/Mum/2014 4 it was explained by the appellant that these cash deposits were sourced from cash withdrawals made by him from the same account. The AO took the said explanation into account and found that the withdrawals explained only an amount Rs. 6,41,506/- leaving an amount of Rs.9,59,647/- as income from undisclosed sources. In appeal it has only been stated that the appellant was filing returns from 1994 onwards and that his regular Chartered Accountant died in April 2006. It was further stated that thereafter the late A.R.'s wife filed the return and made the mistake since she was not a qualified CA. It was further stated that the appellant gave the explanation during assessment proceedings and the error was unintentional. Thus the main plank of the appellant's defense is that the mistake that led to the exclusion of the cash deposits in the bank account in the return filed by the appellant was due to the lack of competence or qualification of the person preparing the return i.e. the late CA's wife. However it is seen that the return in which the cash deposits were found to be omitted was for the A.Y. 2009-10 whereas the A.R. was said to have passed away in 2006. Thus, there is substantial time lag between the demise of the AR and the occurrence of the so-called inadvertent error. Also, the appellant has not explained why this reason was not put forward during the scrutiny proceedings when the cash deposits were confronted to the appellant. In such a situation, the appellant cannot be said to have discharged the onus cast upon him by the statute and is exigible to levy of penalty u/s 271(1)(c) of the Act. Accordingly, the grounds raised by the appellant are dismissed and the levy of penalty is upheld.
Aggrieved by the appellate order dated 08-09-2014 passed by the ld. CIT(A), the assessee filed second appeal before the Tribunal.
None appeared on behalf of the assessee, hence, we proceed to dispose of the appeal after hearing the ld. D.R. and material available on record.
The ld. D.R. submitted that the penalty order u/s 271(1)(c) of the Act which was confirmed by the ld. CIT(A) was with respect to the cash deposit of Rs.9,59,647/- as the assessee could not explain the source satisfactorily of the remaining amount of cash deposit of Rs. 9,59,647/-. The ld DR submitted that the assessee had explained before the authorities below that the Chartered accountant of the assessee expired in April, 2006 and the wife of the C.A. was looking after the same. The ld. D.R. contended that this is not ITA 7202/Mum/2014 5 a bonafide explanation as the C.A. of the assessee expired in the year 2006 while the impugned assessment year is 2009-10 which is after expiry of more than three years , and the return of income was filed after three years of passing away of the C.A. The assessee stated that the assessee had hired the services of wife of the C.A. who is not qualified hence error had taken place, which is not a bona-fide explanation. The ld. D.R. relied upon the decision of Hon’ble Supreme Court in the case of Mak Data Private Limited v. CIT (2013) 38 taxmann.com 448(SC).
We have heard the ld. D.R. and also perused the material available on record including case law relied upon . We have observed that the assessee has deposited cash amounting to Rs. 15,60,281/- in Savings Bank account being maintained with ICICI Bank , out of which an amount of Rs. 6,41,506/- was explained regarding source of cash deposit while the balance amount of Rs. 9,18,775/- remained unexplained as the assessee could not substantiate the sources of said cash deposits. The assessee could not come forward before the authorities below to explain the source of cash deposit of balance amount of Rs. 9,18,775/- and why the same has not incorporated in the return of income filed with the Revenue. The assessee’s contention that the C.A. of the assessee expired in April, 2006 and the assessee has engaged the services of wife of the deceased C.A., who is not a qualified C.A. hence the error had occurred, could not be accepted as bonafide explanation to take the assessee out of clutches of penal provisions as contained in Section 271(1)(c) of the Act, as the assessee has more than three years after death of his CA to have arranged his affairs so that true and correct return could be filed with the Revenue which is the obligation of the assessee and the onus is on the assessee to have filed true and correct return of income , as three year period after the death of CA is more than sufficient period available to the assessee to have arranged his affairs. The return of income was filed by the assessee in June, 2009 whereby there was a gap of more than three years when the CA ITA 7202/Mum/2014 6 expired on April 2006. In our considered view, the explanation offered by the assessee is not bonafide and the said explanation was rightly rejected by the authorities below. It is incumbent on the assessee to establish properly the sources of cash deposit and discharge the onus cast upon him which the assessee failed to do so. In our considered view, the ld. CIT(A) has passed a well reasoned order which does not require our interference and that this case is a fit case to impose penalty u/s 271(1)(c) of the Act and we uphold the appellate orders of the learned CIT(A). We order accordingly.
In the result, appeal filed by the assessee in 2009-10 is dismissed.