SHRI PRADIPKUMAR JETHABHAI PATEL,,ANAND vs. THE INCOME TAX OFFICER, WARD-1,, ANAND

This appeal by the Assessee is preferred against the order of the Ld. CIT(A)-4, Vadodara dated 26.12.2014 pertaining to A.Y. 2008-09.

The roots for the levy of penalty lie in the assessment order dated 27.12.2010 framed u/s. 143(3) of the Act. While scrutinizing the return of income, the A.O. found that the assessee has deposited cash in the Savings Bank Account of Canara Bank to the tune of Rs. 14,71,950/-. Assessee was asked to furnish the sources of the cash deposited in the Savings Bank account. Assessee filed a detailed reply explaining the sources of funds. The explanation of the assessee did not find any favour with the A.O.. However, the A.O. accepted the plea of the assessee that the Peak credit balance should only be added and accordingly made the addition of Rs. 3,74,286/-. Penalty proceedings u/s. 271(1)(c) were separately initiated.

During the course of the penal proceedings, the assessee was asked to explain why penalty should not be levied for concealing the particulars of income to the extent of the peak credit disallowance of Rs. 3,74,286/-.

On receiving no plausible reply, the A.O. levied the penalty of Rs. 1,09,133/-.

Assessee carried the matter before the ld. CIT(A) but without any success.

Before us, the ld. counsel for the assessee stated that the assessee has given complete explanation to the sources of cash deposited in the Savings Bank account. It is the say of the ld. counsel that it was explained during the course of the assessment proceedings that the money has been borrowed from friends and relatives who are agriculturists their names and address were also

The ld. D.R. supported the findings of the revenue authorities.

We have given a thoughtful consideration to the orders of the authorities below. We have also carefully perused the assessment order and the facts relating to the additions made in the assessment. It is true that the cash found to be deposited in the bank account was not explained to the satisfaction of the A.O. and therefore the peak credit balance has been added. A perusal of the bank statement shows that the assessee was having opening cash balance of Rs. 2,59,086/- for which no credit has been given. In our considered opinion, in the penalty proceedings, the assessee can raise additional plea supported by evidences. We find that since the assessee was having opening balance of Rs. 2,59,086/- to this extent, the peak credit gets reduced to Rs. 1,15,200/-. On the given facts, we think that the penalty should be levied on this amount. We accordingly direct the A.O. to re-compute the penalty on Rs. 1,15,200/-.

Appeal filed by the Assessee is partly allowed.