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INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A -BENCH
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Before S/Sh. D. Manmohan,Vice President & Rajendra,Accountant Member
/.ITA No.6693/Mum/2011, /Assessment Year-2005-06
Shri Akbar J. Momin Income tax Officer
C/o. V.B. Goyal & Co., Ward-21(3)-1
102, Unique Tower, Vs Bandra (E)
Goregaon (W)Mumbai-400 062. Mumbai-400 051.
PAN:AAOPM 7808 E
( /Appellant) ( / Respondent)
/Assessee by :Shri Vimal Punmiya
/ Revenue by :Shri Asghar Zain
/ Date of Hearing :27 - 04 -2015
/ Date of Pronouncement : -04-2015
,1961 254(1)
Order u/s.254(1)of the Income-tax Act,1961(Act)
PER RAJENDRA, AM-
Challenging the order dated 8.7.2011 of CIT(A)-32 , Mumbai, the assessee has raised following
Grounds of Appeal:
"1. The ld. CIT(A) is not justifying the penalty of Rs.2,11,165/- u/s. 271(1)(c) of the income tax Act, 1961.
2. The assessee craves leave to add further grounds or to amend or alter the existing grounds of appeal on
or before the date of hearing."
Assessee,an individual filed his return of income on 17/8/2005 declaring total income at Rs.
2,82,918/-.The Assessing Officer(AO)completed the assessment on 15.11.2007 u/s.143(3) of the
Act,determining income of the assessee at Rs.8,88,920/-.
2.Effective ground of appeal is about levy of penalty of Rs.2.11 lacs u/s. 271(1)(c) of the
Act.During the course of assessment proceedings,the AO found that the assessee deposited cash
of Rs.26.42 lacs in his bank account at Development credit Bank Ltd.When asked to explain the
source of cash deposit the assessee could not explain the source of deposit to the extent of
Rs.6.06 lacs.The AO made an addition of the above sum u/s. 68 of the Act treating it as
unexplained cash credit.The assessee challenged the order of the AO before the First appellate
Authority (FAA),who dismissed the appeal filed by him.In the meanwhile,the AO issued a notice
u/s. 274 r.w.s. 271(1)(c) of the Act.Further a show cause notice dt.19.10. 2010 was issued and
served to the assessee.Vide his letter,dt. 25/3/2010,the assessee submitted that he required the
Bank Balance for the purpose of his son who wanted to go to Canada during the year of
Assessment,that the assessee had time to time deposited the amount in his Bank account, that
there was no concealment of income of the assessee,that the penalty proceedings u/s. 271 (1)(c)
of the Act should be dropped.After considering the submissions of the assessee,the AO held that
his explanation was not acceptable, that he had not offered income voluntarily at the time of
filing return of income,that on a specific query raised during the course of assessment
proceedings the assessee had not discharged the onus to establish the source of such credit
appearing in his bank account,that had there been no scrutiny the income would have been
escaped assessment,that the discrepancy was detected,that income was enhanced during the
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ITA No.6693/M/11 Akbar J. Moin
course of assessment proceedings,that the assessee has concealed the income to the extent of
enhanced income,that it was a fit case for levy of penalty u/s.271(1)(c) of the Act.
3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate
Authority(FAA).Before him,the assessee argued that penalty proceedings were different from
assessment proceedings,that merely because of an addition penalty could not be levied
automatically,that there was no concealment of income.After considering the submissions of the
assessee and the penalty order,the FAA held that the assessee had given only vague replies
which he had not been able to substantiate with evidence,that during assessment proceedings he
said that there were cash withdrawals from wife's a/c. and account of M/s.Print India which were
deposited in the personal account,that the said explanation was found unsubstantiated,that there
was violation of the provisions of section 269SS of the Act,that the assessee did not try to
adduce any evidence to further to corroborate his earlier stand,that he was not able to explain the
source of such credits.Referring to the cases of Jeevan Lal Shah(205 ITR 244), K P
Madhusudan(251 ITR 99),Mussadilal Rambharose(165ITR 14),he held that the assessee had not
been able to rebut the presumption with an explanation which could be said a bonafide
explanation,that levy of penalty was justified.
4.Before us,Authorised Representative(AR)stated that assessee had filed explanation about the
withdrawal made by the wife of the assessee, that while imposing the penalty the AO and the
FAA had not considered the entries appearing in her bank account, that if the explanation offered
about the withdrawal by his wife was considered there would be no concealment of particulars of
income, that the withdrawal and deposit of cash are necessitated because of the requirement of
visa formalities to be performed for the son of the assessee who was travelling to Canada.
Departmental Representative (DR) supported the order of the FAA.
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 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.
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ITA No.6693/M/11 Akbar J. Moin
.
Order pronounced in the open court on 27th , April, 2015.
27th April,2015
Sd/- Sd/-
(. /D. Manmohan) ( / RAJENDRA)
/ Vice President / ACCOUNTANT MEMBER
/Mumbai, /Date: 27.04.2015
JV.
/Copy of the Order forwarded to :
1.Appellant / 2. Respondent /
3.The concerned CIT(A)/ , 4.The concerned CIT /
5.DR "A" Bench, ITAT, Mumbai / , ,.. .
6.Guard File/
//True Copy//
/ BY ORDER,
/ Dy./Asst. Registrar
, /ITAT, Mumbai.
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