AKBAR J MOMIN,MUMBAI vs. ITO 21(3)(1), MUMBAI

आदेश ORDER अिमत शु�ला : �या. स.: PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the assessee against impugned order dated 29.08.2013, passed by Commissioner of Income Tax (Appeals)-32, Mumbai [CIT(A)] in relation to the penalty proceedings under section 271(1)(c) for the assessment year 2006-07. The assessee is aggrieved by levy of penalty of Rs.5,37,292/- on account of addition made under section 68 on account of unexplained cash credit of sums aggregating to Rs.17,62,900/-.

3 अकबर जे मो�मन Mr. Akbar J Momin ITA 6256/Mum/2013 as unexplained cash credit under section 68 and added back to the income of the assessee. d. Rs. 3,37,900/- The assessee had submitted that he was not in a position to offer any explanation in respect of an amount of Rs. 2,37,900/-. Further, the Assessing Officer found out a difference of Rs. 1,00,000/- in the cash deposits and total cash deposited in the bank account and treated this total sum of Rs. 3,37,000/- as unexplained cash credit under section 68 and added back to the income of the assessee”.

The sources of fund of the deposits as explained by assessee during the year were in the following manner:

Total deposits during the year Rs.31,86,000 Sources of Funds: a) Withdrawals from bank Rs. 14,23,100 b) Loan from various parties shown in Balance sheet i) Samruddin Ali Rs.2,00,000/- ii) Zarina Akbar Rs.1,75,000/- iii) Mohammed KhanRs.1,50,000 iv) Kasim NoorabhaiRs.1,75,000/- Rs. 7,75,000 v) Rubin MaknokjiaRs. 75,000/- c) Family Borrowings & earlier savings from agriculture income Rs. 2,50,000 d) Borrowed from Mrs. Zarina A Momin (PAN AGBPM 8118N) Rs. 4,00,000 e) Other Mixed funds Rs. 3,37,900 Rs.31,86,000 In the written submissions filed before us, the assessee has raised various legal contentions as to why the penalty on such an addition cannot be levied. The Tribunal in the AY 2005-06 vide order dated 27th April, 2015 in has deleted the penalty after observing and holding as under: “5. We have heard the rival submissions and perused the material before us. We find that the AO had held that the assessee had offered explanation about Rs.20.36 lakhs out of the cash deposit of Rs.26.42 lakhs, that a claim about cash withdrawal from the bank account of the wife of the assessee was made before the AO and the FAA, that relevant documents were furnished in support of the claim, that while levying the penalty the cash available in the bank account of the wife of the assessee was not considered. If the peak amount available in the bank account of the wife of the assessee is taken in to consideration it becomes clear that the assessee had logically explained the sources of Rs.26.42 lakhs. The AO and the FAA had mixed the issue of section 269SS and concealment penalty. We are of the opinion that both the issues are separate and have no relation. For contravention of the provisions of section 269SS a penalty

4 अकबर जे मो�मन Mr. Akbar J Momin ITA 6256/Mum/2013 u/s.271(1)(c) cannot be imposed. One of the basic principle governing penalty provisions is that an addition made during assessment proceedings should not result in automatic levy of penalty. In the case under consideration, the AO had levied the penalty as a result of the addition made during quantum proceedings. But, in our opinion, for levying concealment penalty explanation offered by the assessee has to be considered and it has to be decided as to whether the explanation is plausible or not. If the explanation of the assessee is substantiated and is bonafide, then no penalty can be levied for concealing the particulars of income or filing inaccurate particulars of income. We find that the assessee had offered an explanation and same is substantiated by the bank account of his wife. Considering the peculiar facts and circumstances of the case, we are reversing the order of the FAA and deciding the effective ground of appeal in favour of the assessee. As a result, appeal filed by the assessee stands allowed”. However, we find that facts are slightly different, which may not apply completely. Here the source of bank deposits have been shown through loans taken from family members and relatives. Though in the quantum proceedings, the assessee could not substantiate the creditworthiness, but, in the penalty proceedings, the matter has to be re-examined afresh and even if in the quantum proceedings the assessee’s explanation has not found to be tenable but that finding itself does not lead to any inference that assessee is guilty of furnishing of inaccurate particulars. The nature of credit has been shown out of loans and own funds and source has been explained from family members and relatives. The creditworthiness may not have been established but that factum itself could not be the case for furnishing of inaccurate particulars. The AO here in this case has levied the penalty for furnishing of inaccurate particulars and not for concealment of income, albeit there could be a case for concealment of income, but in the facts of the case it cannot be held that the particulars of income has not been furnished, because the nature of deposits and its source have been given and duly disclosed. Thus, penalty cannot be levied for furnishing of inaccurate particulars and it is not the case of the revenue before us that penalty should be levied for concealment of income. Thus penalty is directed to be deleted.

5 अकबर जे मो�मन Mr. Akbar J Momin ITA 6256/Mum/2013