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Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH
Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR
PER DR.B.R.R.KUMAR, A.M. :
The present appeal has been filed by the Assessee against the order of the Ld. CIT(A), Karnal dt. 18/12/2017. 2. In the present appeal the Assessee has raised following grounds:
That the Ld. CIT(A) erred in confirming the penalty levied by A.O on agricultural income as there was no business income. 2. That the Ld. CIT(A) erred in confirming a penalty levied by A.O. under section 271(1)(c) as appellant neither concealed the particulars of income nor furnished inaccurate particulars. 3. That the Ld. CIT(A) erred in not appreciating the submissions of appellant and dismissed all submissions without the application of mind. 4. That the Ld. CIT(A) also erred in not following the decisions of superior courts by disbelieving 3 case-laws of jurisdictional High Court.
The Assessing Officer found cash deposit of Rs.34,33,000/- in the bank account of the assessee. The assessee was asked to explain the sources of alongwith necessary evidence in this regard respect of the cash deposited in the bank.
Before the Assessing Officer the assessee stated that he was an agriculturist and having only four Acre of Agricultural Land. The annual income from the agriculture is nearly two lacs out of which forty thousand is spent for earning agricultural income and 2 tons wheat has been kept for domestic use. It was explained that the assessee has no other sources. The assessee explained that the elder son has gone to Newzeland for study on 01/01/2012 and second son is studying in 10+2 and his wife is household lady and no other family member is earning hand and his household expenses is near about Rs. 20,000/- per month. It was further explained that the assessee has sold 4 acres for Rs. 17,10,000/- in October 2008 out of the total ownership of land of 8 acres and deposited the amount in HDFC bank. He explained that the purpose of selling the land was, to send son for further study to Newzealand and achieved this purpose in January 2012 till then the money (17,10,000) remained in the bank after withdrawing & depositing process, hence the same money rotated or recycled during that period. 5. Having gone through the factum of the case and going through the deposits and withdrawals the Assessing Officer made addition of Rs. 4,50,000/- to the income of the assessee and consequently levied penalty of Rs. 45,835/-. 6. The Ld. CIT(A) upheld the penalty levied. 7. Before us, the Ld. AR explained that there was neither concealment of income nor the assessee has furnished any inaccurate particulars of income. The penalty was levied as the addition was made under section 69 and no separate enquiries were conducted nor any new material was brought on record for levy of penalty. He relied on the decision of Hon'ble Madras high- court in the case of S.V Kalyanam Vs. Income-tax officer (2010) 327 ITR 477 (Mad.) wherein it was held that addition made u/s 69 rejecting the explanation of the assesses, section 69 is deeming provision and it cannot be extended to the penalty proceedings. The department could not presume that there was concealment. There must be an independent findings. Hon'ble Gujarat High-court in case of CIT v. Vinaychand Harilal (1979) 120 ITR 752 (Guj.) held the mere fact that the explanation of the assessee was found unsatisfactory and that the deeming provision of section 69 could be invoked, does not necessary mean that he has not discharged the burden cast upon him by the explanation.
Relying on the above judgments the Ld. AR prayed that no penalty is leviable on the facts of the case. 8. Ld. DR relied on the order of the lower authorities. 9. We have heard Ld. Representatives of both the parties and perused the material placed before us. 10. We find that while levying penalty no material was brought on record and the penalty was levied just as a matter of consequential action to the addition made to the total income. It is a well-settled legal position relating to the exigibility of the penalty u/s 271(1)(c) of the Act that the assessment proceedings and penalty proceedings are different in nature. Hence findings are given in assessment proceeding, though may constitute good evidence whereas it is cannot constitute conclusive evidence for the purpose of levying penalty. Similarly in the case of Shervani Hospitalities Ltd. Vs. CIT, Report om (2011), Delhi High Court, it was held by the court, levy of penalty is not an automatic consequence when an addition is made by disallowing an expense and by not accepting the explanation given by the assessee. Thus, keeping in view the facts and circumstances of the case, the addition made by the Assessing Officer, the penalty levied subsequently, the explanation of the assessee and the ratios laid down by the Hon’ble Courts regarding the levy of penalty we hereby order the penalty levied be deleted.
In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court.
Sd/- Sd/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 09/05/2018 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR