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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI G.S. PANNU & SHRI SANJAY GARG
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 28.03.2014 of the Commissioner of Income Tax (Appeals) [(hereinafter referred to as the CIT(A)] in relation to levy of penalty under section 271(1)(c) of the Income Tax Act.
The brief facts of the case are that the assessee was engaged in the business of trading in ready-made garments and filed his return of income declaring an income of Rs.99,791/- under presumptive tax at scheme under the provisions of section 44AF of the Act. During the assessment proceedings the Assessing Officer (hereinafter referred to as the AO) found that the assessee had made several deposits in his bank account which in total were more than Rs.10 lakhs. He accordingly made an addition of Rs.9,27,000/- into the income of the assessee on account of unexplained cash deposited into his bank
2 Shri Jignesh Girishbhai Bengari account. The assessee unsuccessfully contested the appeal before the Learned CIT(A) and the matter travelled to the Tribunal. The Tribunal in the quantum appeal found merit in the argument of the assessee that the assessee was a small trader in ready-made garments. The assessee deposited into his bank account the amount realized out of cash sales and also made withdrawals frequently that the only basis of addition was the deposit of cash into bank account of the assessee on various dates. The assessee had filed the return of income under the provisions of section 44 AF of the act and was not required to maintain books correction of account and the tax was payable on presumptive basis at the rate of 8% of the turnover. The Tribunal noted that the submissions of the assessee in this respect were reasonable and plausible. However the Tribunal accepted the alternate contention of the AR that at the most the additions the basis of peak balance in the bank account could have been made. The Tribunal therefore sustained the addition to the extent of Rs.177482/- only. The AO in the mean time initiated the penalty proceedings and levied the penalty under section 271(1)(c) of the act in respect of the addition of Rs.9.27 lacs made by him. The learner CIT(A) vide impugned order has confirmed the penalty. Being aggrieved the assessee thus has come in appeal before us.
We have heard the rival contentions. We find that in the quantum appeal, the Tribunal has noted that the explanation given by the assessee that he is small trader and that the deposits were out of the amounts realized out of cash sales and there were also made withdrawals frequently was plausible and reasonable. Since the assessee has been offering his income for taxation under section 44 AF of the act on presumptive basis and he was not required to maintain the books of account, under such circumstances the levy of penalty by the assessing officer on account of small deposits in the bank account of the assessee was not justified at all. We therefore deleted the penalty so levied by the assessing officer in this case.