ITO, KUMBAKONAM vs. DR. GRAHAM DANIEL, MAYILADUTHURAI

This appeal of the revenue is directed against the order of the CIT(A), Tiruchirapalli dated 24.10.2013 and pertains to Assessment Year 2009-10 confirming the penalty levied by the Assessing Officer under Section 271(1)(c).

Shri A.V.Shreekanth, the learned representative for the department submitted that the assessee is a medical practitioner by profession. During the year under consideration, the Assessing Officer found that there was a credit in the savings bank account of the assessee with Axis Bank, T.Nagar Branch, Chennai to the extent of Rs. 11,50,000/-. The assessee has also made a cash deposit of Rs.38,39,645/-. The assessee could not produce any material for source of deposits made in the bank account. In the absence of any material, the assessing officer found that the assessee concealed the particulars of income and accordingly, levied the penalty under Section 271(1)(c) of the Act. The assesee subsequently claimed that the source of funds were from the deceased parents. However, no material was filed either before the assessing officer of before the CIT(A) to indicate that the source of funds was from his father. Accordingly, the assessing officer found that the assessee has furnished inaccurate particulars to the extent of Rs.50,66,418/- and accordingly levied penalty. The CIT(A) however deleted the penalty without any reasonable cause. The fact that the assessee deposited the money in the bank is not a dispute and the same was not disclosed in the return of income filed by the assessee. Therefore, the CIT(A) ought not to have deleted the penalty levied by the assessing officer.

On the contrary, Shri A.S.Sriraman, the learned counsel for the assessee submitted that the assessee explained before the assessing officer that the source for making deposit is from their deceased parents. The explanation offered by the assessee may not be proved by the assessee. However, it was not found to be false by the assessing officer. According to the learned counsel, when the assessee offered an explanation with regard to source for making the deposit and the assessing officer has not found the same to be false, it cannot be said that there was a concealment of income within the meaning of Section 271(1)(c) of the Act. Even though the claim made by the assessee is not supported by any material, it cannot be said that the assessee has furnished inaccurate particulars. In the absence of any inquiry conducted by the assessing officer to show that the explanation offered by the assessee was false, the CIT(A) has rightly deleted the penalty levied by the assessing officer.

We have considered the rival submissions on either side and also perused the material available on record. The assessee is a medical practitioner by profession. Admittedly, there are deposits in the bank account. The assessee claimed before the assessing officer that the source for deposit was from their deceased parents. The assessing officer found that the claim of the assessee was not substantiated by material evidence.

We have carefully gone through the provisions of Section 271(1)(c) of the Income Tax Act. Section 271(1)(c) clearly says that if the assessee concealed any part of his income or furnished any inaccurate particulars of his income, the assessing officer or the commissioner may levy penalty. Explanation 1 to Section 271 (c) further clarifies that in respect of any facts material to the computation of the total income, if the assessee fails to offer an explanation or offers an explanation which is found to be false by the assessing officer, then, penalty can be levied. In the case before us, the assessee explained before the assessing officer that the source for making deposit is from their deceased parents. This explanation of the assessee as rightly submitted by the learned counsel for the assessee was not found to be false. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the penalty levied by the assessing officer.

In view of the above, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed.