BARIATH PACS ICHAK,HAZARIBAGH V. ITO, WARD 1(2), HAZARIBAGH

ITA 432/RAN/2024

AI Insights

The case involves BARIATH PACS ICHAK, a cooperative society, appealing against the orders of the lower tax authorities regarding unexplained cash deposits and subsequent penalties. The primary issue was the addition of Rs. 42,09,370 as unexplained money under section 69A of the Income Tax Act, which was upheld by the CIT(A) but later contested in the Tribunal. The Tribunal found that the quantum addition had been previously deleted, leading to the conclusion that the penalty under section 271AAC(1) was not applicable. The Tribunal's decision emphasized the principle that penalties should not stand if the underlying assessment is overturned.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 845709 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Ranchi
• Assessment Year: 2017-2018
• Appeal Filed On: 14-11-2024
• Other Referred Cases: Tolaram Relumal v. State of Bombay, Virtual Soft Systems v. CIT, Abhiram Singh v. C D Commachen, Excel Crop Care Ltd v. CCI
• Laws Referred To: Income Tax Act, 1961, RBI Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No. 432/RAN/2024 (Assessment Year-2017-18) (Virtual Hearing) BARIATH PACS ICHAK, Bariath, Ichak, Hazaribagh-825402 Jharkhand. PAN No. AABAB4532A Vs. ITO, Ward 1(2) Hazaribagh Appellant/ Assessee Respondent/ Revenue Assessee represented by Shri Devesh Poddar, A.R. Department represented by Shri Kailash Gautam, Addl. CIT, DR. Date of hearing 29/01/2026 Date of pronouncement 25/03/2026 O R D E R PER: BENCH 1. This appeal was filed by the assessee against the order of the Ld. CIT(A) dated 25.07.2023 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal: \"1. For that in the facts of the present case, Section 69A could not have been invoked for bringing the cash deposit amounting to Rs. 42,09,370/- as unexplained money inasmuch as the deposit of money by the members of the Cooperative Society was duly explained by furnishing the cash book, ledger, by-laws and audit report. Hence, the pre-requisite of Section 69A is not attracted.. 2. For that in the absence of any doubt concerning the acquisition of money duly substantiated by the books of accounts/cash book along with the genuineness of the depositors, Section 69A could not have been invoked.. 3. For that section 26 and 39 of the RBI Act is manifestly clear without leaving any ambiguity as to what would be the legal tender and when a cutoff date has been prescribed, any and every deposit made within such cutoff date has to be treated as legal tender.. 4. For that the interest income of Rs. 1,13,381/- also could not have been disallowed inasmuch as the interest is against the credit facilities provided to the members of the Cooperative Society and forms part of profit & gain of the business and as such, was allowable under section 80P. 5. For that the entire penalty proceedings have been carried out ex-parte and by relying on the Assessment Order, besides, by taking into consideration the non-compliance of the notice issued by the Department, which is bad in law. 6. For that the rules of interpretations in case of penalties are now a settled law. Printed from counselvise.com ITA No. 432/RAN/2024 BARIATH PACS ICHAK Vs. ITO, Ward 1(2) 2 Suppose two possible constructions can be put upon a penal provision. In that case, the court must lean towards that Construction which exempts the subject from the penalty rather than the one which imposes penalty Tolaram Relumal v. State of Bombay AIR 1954 SC 496 1954(1) SCR 158 (SC Constitution Bench) quoted with approval in Virtual Soft Systems v. CIT(2007) 9 SCC 665 159 Taxman 155 289 ITR 83 (SC) Abhiram Singh v. C D Commachen (2017) 2 SCC 629 (SC 7 member bench-majority decision) Excel Crop Care Ltd v. CCI (2017) 8 SCC 47141 SCL 48081 taxmann.com 173 (SC). 7. For that otherwise also, going by the dictum of Section 275(1)(a) of the Act, the Assessing Officer cannot pass an order imposing penalty under Section 271AAC(1) of the Act, until relevant assessment is subject matter of appeal before Learned CIT(A) (i.e. the first appellate authority) and further, as per the said provision, the Assessing Officer will have six months' time in hand to dispose of the penalty proceedings from the end of the month in which the order of the Commissioner (Appeals) or Tribunal is received by the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner of Income Tax. 8. For that in case Appellant/ Assessee succeeds in quantum appeal, the penalty order passed by the Assessing Officer shall have no legs to stand upon, whereas, in a situation where the Appellant/ Assessee fails, the Assessing Officer will get ample time of six months to dispose of the penalty proceedings.\" 2. That fact of case, in brief, is that the assessment order in this case was passed by learned Assessing Officer under section 147/143(3) of the Income Tax Act, 1961 (in short \"the Act\") dated 17.12.2019, wherein learned Assessing Officer added a sum of Rs. 42,09,370/- under section 69A r.w.s. 115 BBE of the Act on the ground that the source of cash deposit made by the assessee in its bank account remained unexplained. 3. Aggrieved by the order of learned Assessing Officer, assessee filed appeal before the learned CIT(A), who vide the impugned order upheld the order of the learned Assessing Officer and dismissed the appeal. 4. The learned Assessing Officer thereafter, imposed penalty on the assessee under section 271AAC(1) of the Act dated 12.07.2021 for the assessment year 2017-18 and imposed a penalty of Rs. 2,52,562/- @ of 10% of tax payable under section 115BBE of the Act. 5. Aggrieved by the order of learned Assessing Officer, the appellant filed a appeal before the learned CIT(A), who vide impugned order dismissed the appeal of Printed from counselvise.com ITA No. 432/RAN/2024 BARIATH PACS ICHAK Vs. ITO, Ward 1(2) 3 the assessee on the ground that when the cash deposit was made by the appellant during the demonetisation period, it was obligatory on the part of the appellant to produce supporting evidence to explain the source of such cash deposits. 6. Aggrieved by the order of ld. CIT(A), the appellant has preferred an appeal before this Tribunal. 7. During the appellate proceeding it was submitted by the learned AR that this Bench of the Hon'ble Tribunal has already decided the quantum addition in the case of the appellant itself in ITA/405/RAN/2024 for the assessment year 2017- 18 has already been deleted and therefore, penalty under section 271 of AAC(1) of the Act is not liable to be imposed. 8. The learned DR. on the other hand, supported the order of the lower authorities. 9. We have carefully considered the facts of the case and rival submissions. We have also gone through the order of the Hon'ble I.T.A.T. (Supra), wherein the Hon'ble Tribunal has already deleted the quantum addition. Since the quantum addition has already been deleted, penalty under section 271AAC(1) of the Act cannot be imposed and thus, the same is deleted. 10. In the result, the appeal of the assessee is allowed. Order Pronounced in open court on 25th March, 2026 Sd/- Sd/- (GEORGE MATHAN) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Printed from counselvise.com ITA No. 432/RAN/2024 BARIATH PACS ICHAK Vs. ITO, Ward 1(2) 4 Ranchi, Dated: 25/03/2026. *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Ranchi Printed from counselvise.com "