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Facts
The assessee's appeal was filed late due to a genuine mistake regarding the jurisdiction of the ITAT bench. The case involves a penalty levied under Section 271(1)(c) on alleged un-explained cash credits of Rs. 5,69,700/- which the assessee claims are interest receipts from earlier deposits disclosed in its accounts.
Held
The Tribunal condoned the delay in filing the appeal, admitting additional evidence presented by the assessee. It was held that the amount in question represented interest income from disclosed deposits and not un-explained cash credits, thus the penalty was not sustainable.
Key Issues
Whether the delay in filing the appeal can be condoned? Whether the penalty levied under Section 271(1)(c) for alleged un-explained cash credits is sustainable when the amounts were interest income from disclosed deposits?
Sections Cited
147, 143(3), 271(1)(c), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL
Per Mahavir Singh, Vice President:
This appeal by Assessee is arising out of the order of Ld. Commissioner of Income Tax (Appeals)-27, New Delhi in Appeal No. CIT(A), Delhi-27 vide order dated 22.02.2024. Assessment was framed by ACIT, Central Circle-16 New Delhi, for the AY 2012-13 u/s 147 read with Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as, the ‘Act’), vide his order dated 1 | P a g e ValakaEngg Private Ltd Vs ACIT, Circle-20, ND 28.12.2019. The penalty under challenge was levied by ACIT, Central Circle- 20, New Delhi u/s 271(1)(c) of the Act, vide his order dated 15.03.2022.
At the outset, it is noticed that this appeal is barred by limitation i.e., by 412 days. The Assessee has filed Condonation Petition, supported by an Affidavit. The facts of the case are that the Ld. CIT(A) passed the impugned order on 22.02.2024, dismissing the appeal of assessee against the penalty order passed u/s 271(1)(c) of the Act. The Assessee filed appeal before ITAT, Kolkata Benches under bonafide belief that the said Bench had jurisdiction of the Assessee as the jurisdictional Assessing Officer was in Kolkata. The Assessee subsequently filed appeal before ITAT, Delhi Benches on 16.06.2025, after realising mistake that the assessment was framed by the Assessing Officer at Delhi i.e. ACIT, Central Circle, New Delhi. Hence, according to the advice of the Assessee’s Counsel, the appeal was filed before ITAT, Delhi Benches with the delay of 412 days which caused solely due to the aforesaid bonafide error and is neither intentional, nor deliberate. Hence, it was requested to condone the delay. The above stated facts when confronted to Ld. Senior DR, he did not controvert the same. After hearing rival contentions and going through the facts of the case that the Assessee was pursuing remedy with ITAT, Kolkata Benches by filing appeal but the correct jurisdiction lies with the ITAT, Delhi Benches because the Assessing Officer who passed the assessment order and also levied penalty u/s 271(1)(c) of the Act, is ACIT, Central Circle-20, Delhi. It means that the jurisdiction for filing of this appeal lies with ITAT, Delhi Benches and not with Kolkata Benches. Going through the above reasons, we find the cause as reasonable and sufficient for which delay occurred. Hence, we condone the delay and admit the appeal.
The only surviving issue in this appeal for assessee is as regards to the order of Ld. CITA, confirming the issue of levying penalty u/s 271(1)(c) of the 2 | P a g e ValakaEngg Private Ltd Vs ACIT, Circle-20, ND Act, in respect of un-explained cash credits in Assessee’s Bank Account, amounting to Rs. 5,69,700/-.
The brief facts of the case are that while computing the original assessment, the Assessing Officer noted that there are credit entries appearing in the Assessee’s Bank Account in respect to the Five Companies which are as under:
Date Name of the Assessee Amount (in Rs.) 22.06.2011 Wonder Rexin Pvt Ltd. 97200 02.07.2011 Wonder Images Pvt Ltd. 40500 09.08.2011 Wonder Decor Pvt Ltd. 121500 27.07.2011 Solaris Developers Pvt Ltd. 202500 24.08.2011 Steel Industries of Orissa 108000 Total 569700
When the Assessing Officer required the Assessee to explain the nature and source of above credits, appearing in the Bank Account, the Assessee could not explain the nature, hence, the Assessing Officer added the same u/s 68 of the Act. Accordingly, the Assessee preferred the appeal before the Ld. CIT(A) who confirmed the action ofAO.
Consequent to the above, the Assessing Officer initiated penalty proceedings u/s27(1)(c) of the Act for levying penalty on this amount of un- explained cash credit of Rs. 5,69,700/-, appearing in Assessee’s Bank Accounts in the above mentioned companies u/s 68 of the Act and on estimated commission of Rs. 3,27,100/-, but, CIT(A) deleted this penalty of commission estimated by the AO, however he restricted the penalty of Rs. 1,76,037/- on this un-explained credit in bank account of Rs. 5,69,700/-. Aggrieved by levy of penalty, the Assessee preferred the appeal before CIT(A). The CIT(A) also 3 | P a g e ValakaEngg Private Ltd Vs ACIT, Circle-20, ND confirmed the action of the AO by observing in Para 6.3 and Para 6.4, which is reproduced as under:
“6.3 It is clear that appellant-company has got sufficient opportunities during assessment, penalty and first appeal stage, however, the appellant has not able to furnish any explanation for nature and source of credits of sum amounting to Rs. 5,69,700/- credited into its bank account and thus, same remains explained at this stage also. 6.4 In view of above facts of the case, it is held that as sum of Rs. 5,69,700/- was not reported in its books of account, therefore, the AO has rightly recorded his satisfaction that the appellant-company has concealed particulars of its income and has rightly levied penalty u/s271(1)(c) of the Act on this issue. Therefore, penalty on addition of Rs. 5,69,700/- is hereby confirmed. ”
Aggrieved, the Assessee is in appeal before the Tribunal.
We have heard rival contentions and, gone throughthe evidences of the case. Now, before us, Ld. Counsel for the Assessee filed additional evidences along with the Petition of admissibility of additional evidences vide letter dated 17.09.2025, stating that this amount of Rs. 5,69,700/- is not cash credit coming into the bank account rather this is the interest income on previous deposits and credited during this year. Along with this, the Assessee filed details of interest receipts from Six parties wherein, total interest received was Rs. 10,83,000/- , and on this the TDS deduction was Rs. 1,08,300/- and net amount received was Rs. 9,74,700/-. The Ld. Counsel explained that as far as Form No. 26AS and Form No. 16A are concerned, for the AY 2012-13, it is clear that the above amounts except the amount of Party No. 4 i.e. Ravechi Properties, wherein the credit of Rs. 4,50,000/- is separately disclosed. Ld. Counsel filed details of 4 | P a g e ValakaEngg Private Ltd Vs ACIT, Circle-20, ND interest along with TDS deduction and the relevant details of interests reads as under:
Sl. Name of Parties Gross T.D.S Net No. Amount Amount 01 Wonder Décor Pvt 1,35,000 13,500 1,21,500 Ltd. 02 Wonder RexinPvt Ltd. 1,08,000 10,800 97,200 03 Wonder Images Pvt. 45,000 4,500 40,500 Ltd 04 Ravechi Properties 4,50,000 45,000 4,05,000
05 Solaris Developers 2,25,000 22,500 2,02,500 Pvt. Ltd. 06 Steel Industries of 1,20,000 12,000 1,08,000 Orissa Total-Amt. Cr. To 10,83,000 1,08,300 9,74,700 P&L A/c
Ld. Counsel for the Assessee explained that out of the above, a sum of Rs. 5,69,700/- was interest receipts from deposits of earlier years and disclosed in its accounts as well as return of income as income. Hence, this cannot be added as un-explained credit because this is interest receipts of old deposits made with these parties. When these facts were confronted to Ld. Senior DR, he could not controvert the above facts and situation but he only requested that the evidences now, admitted can be sent back to the file of AO.
After hearing rival contentions and going through the facts of the case, we are of the view that due to the smallness of the penalty amount, we after admitting these evidences and adjudicate this issue. In our view, the Assessee has been able to explain that these interests income have already been disclosed
5 | P a g e ValakaEngg Private Ltd Vs ACIT, Circle-20, ND in return of income and taken into account while framing its accounts. Admittedly, these are not cash credits as noted by AO or CIT(A). Going by these evidences, we are of the view that once this is not an income, there is no question of levy of penalty u/s 271(1)(c) of the Act. Hence, we delete the penalty and allow this appeal of the Assessee.
In the result, the Appeal of the Assessee is allowed in the above terms.
Order pronounced in the Open Court on 21-11-2025.