SH. AJAY KUMAR AGARWAL,MUZAFFARNAGAR vs. ITO, NEW DELHI

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ITA 2718/DEL/2009Status: DisposedITAT Delhi01 June 2018AY 2005-065 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 quantum addition was substantially deleted by a previous ITAT order, the basis for levying the penalty has vanished. Therefore, the penalty is not leviable.

What were the facts?

The Assessing Officer made an addition of Rs. 45,44,870/- under section 69A on account of unexplained cash deposits in a joint bank account. A penalty under section 271(1)(c) was levied and confirmed by the CIT(A).

What were the issues?

Whether penalty under section 271(1)(c) is leviable when the underlying addition has been deleted or substantially reduced by the appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “A” : DELHI

Before: SHRI BHAVNESH SAINI & SHRI L.P. SAHU

Hearing: 22.05.2018Pronounced: 01.06.2018

This appeal by assessee has been directed against the order of the Ld. CIT(A), Muzaffarnagar, dated 31.03.2009, for the A.Y. 2005-2006, challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961.

2 ITA.No.2718/Del./2009 Shri Ajay Kumar Agarwal, Muzaffarnagar, U.P.

2.

Briefly, the facts of the case are that A.O. passed the ex-parte order under section 144/143(3) of the I.T. Act on dated 31.12.2007 making addition of Rs.45,44,870/- under section 69A of the I.T. Act on account of unexplained income shown as sale consideration of shares. As per AIR information, it was found that assessee has maintained joint bank account with his wife and with M/s. Ganga Merchantile Urban Cooperative Bank Ltd., Muzaffarnagar and there were cash deposits of Rs.45,44,870/- on different dates. Substantive addition was made in the hands of the assessee on unexplained cash deposit and protective addition was made in the hands of Smt. Alka Agarwal, wife of the assessee. The A.O. vide separate order levied the penalty on this addition and Ld. CIT(A) confirmed the same.

3.

Learned Counsel for the Assessee submitted that the assessee preferred an appeal before the ITAT, A-Bench against the quantum addition in ITA.No.2703/Del./2009 for A.Y. 2005- 2006 which is decided vide order dated 01.11.2017. Copy of the 3 ITA.No.2718/Del./2009 Shri Ajay Kumar Agarwal, Muzaffarnagar, U.P.

order is placed on record. The assessee pleaded before the Tribunal that assessee was dealing in shares and only gets commission income. He submitted that the Tribunal has accepted the explanation of assessee and held that the commission income is to be brought to tax in the hands of the assessee and the Tribunal applied 2% against the total deposits and confirmed the addition of Rs.90,897/- as against Rs.45,44,870/-. The Ld. D.R. did not dispute the order of the Tribunal. The appeal effect order of the A.O. is also placed on record. Learned Counsel for the Assessee, therefore, submitted that since quantum addition have been deleted, therefore, penalty is not leviable.

4.

After considering the rival submissions, we are of the view that penalty is not leviable in the matter. The A.O. made substantive addition in the hands of assessee on unexplained cash deposit in joint bank account of assessee and his wife at Rs.45,44,870/-. The A.O. on the same addition, levied the penalty which is confirmed by the Ld. CIT(A). However, the 4 ITA.No.2718/Del./2009 Shri Ajay Kumar Agarwal, Muzaffarnagar, U.P.

Tribunal accepted the explanation of assessee in quantum appeal that assessee earned commission income only out of the same and a very meagre addition have been sustained. Thus, no basis is left for the Revenue to levy the penalty on unexplained cash deposit in the bank account against this addition, which have been deleted by the Tribunal. Since the foundation of levy of the penalty has gone, therefore, no penalty is leviable against the assessee. We, accordingly, set aside the orders of the authorities below and cancel the penalty.

5.

In the result, appeal of assessee is allowed.

Order pronounced in the open Court.

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