DEBU KARMAKAR,KOLKATA V. I.T.O., WARD - 26(4), KOLKATA, KOLKATA

ITA 1062/KOL/2024

AI Insights

The case revolves around the imposition of a penalty under section 270A of the Income Tax Act, 1961, against Debu Karmakar for underreporting business income. The assessee had not filed a return of income for the assessment year 2017-18, and it was discovered that he had deposited substantial cash during the demonetization period. Initially, the Assessing Officer (AO) added Rs. 13 lakh as unexplained money under section 69A and assessed the total income at Rs. 13,65,160. However, the Commissioner of Income-tax (Appeals) later deleted this addition. The penalty was contested on the grounds that the addition which led to the penalty was no longer in effect, as it had been removed by the CIT(A). The Tribunal found that the imposition of the penalty was based on an estimated income, which did not attract a concealment penalty, especially after the CIT(A)'s decision and subsequent refund to the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36277 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-08-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 10-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income
• Section: 144; 142(1); 250; 139(1); 13; 69A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1062/KOL/2024 Assessment Year: 2017-18 Debu Karmakar………………………………………………………………Appellant [PAN: ANQPK 0877 J] Vs. ITO, Ward-26(4), Kolkata......................................................Respondent Appearances: Assessee represented by: S. Ghoshal, AR. Department represented by: P.P. Barman, Addl. CIT, Sr. DR. Date of concluding the hearing : August 12th, 2024 Date of pronouncing the order : November 5th, 2024 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2017-18 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)- NFAC, Delhi [in short ld. ‘CIT(A)’] dated 08.04.2024 arising out of the penalty order framed u/s 270A of the Act dated 09.03.2022. 1.1. The brief facts of the case of the appellant are that the assessee had not filed its return of income u/s 139(1) of the Act and the Department as per the ITS data available came to know that the assessee had deposited cash during the demonetization period amounting to Rs. 11 Lakh and Rs. 2 Lakh in ICICI I.T.A. No.: 1062/KOL/2024 Assessment Year: 2017-18 Debu Karmakar. Page 2 of 6 Bank, Behala Branch, Kolkata. The assessee has been noticed and asked to submit correct return of income, assessee failed to furnish return of income as a result of which the proceeding u/s 144 of the Act was initiated. The assessee in response to the said notice filed copies of computation of income, profit & loss account, balance sheet, payment of receipt etc. The Assessing Officer (hereinafter referred to as ld. 'AO') completed the assessment u/s 144 of the Act by assessing total income of the assessee at Rs. 13,65,160/- and further determined the business income of the assessee at Rs. 65,160/- and further made addition of Rs. 13 Lakh u/s 69A of the Act treating the cash deposit in the bank during the demonetization period as assessee's unexplained money. The assessee has challenged the said order before the ld. CIT(A) wherein he got relief and appeal of the assessee has been partly allowed and addition of Rs. 13 Lakh made by the ld. AO on the pretext of unexplained money has been deleted. The present case has been cropped up as the imposition of the penalty proceedings against the assessee u/s 270A of the Act wherein penalty u/s 270A(9)(a) of the Act has been levied @ 200% that comes out to Rs. 32,786/-. The said order of the imposition of the penalty has been challenged by the assessee before the ld. CIT(A) wherein his appeal has been dismissed. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 1.2. The ld. Counsel for the assessee challenges the impugned order thereby submitting that the imposition of penalty u/s 270A of the Act to the tune of Rs. 32,786/- was opposed to the requirement of law and also arbitrary and bad in the eyes of law. The ld. Counsel for the assessee submits that the order of the ld. AO in which there was an addition of Rs. 13 Lakh has been passed and in the same order penalty notice has been issued dated 04.02.2019. The said order has been challenged before the ld. CIT(A) wherein in ITA No. 10580/CIT(A)-7/Kol/19-20, ld. CIT(A) has deleted the addition of Rs. 13 Lakh made by the ld. AO. So, issuance of penalty proceeding u/s 270A of the Act is bad in law. The ld. Counsel for the assessee further submits that after the order passed by the ld. CIT(A) effect of the said order has also been done by I.T.A. No.: 1062/KOL/2024 Assessment Year: 2017-18 Debu Karmakar. Page 3 of 6 the office of the Income Tax Officer and demand notice has also been issued, the assessee has also got refund after the assessment. The ld. Counsel for the assessee further submits that the ld. AO initiated the penalty proceedings u/s 271AAC of the Act for the income determined at Rs. 13 Lakh u/s 69A of the Act and no penalty proceedings u/s 270A of the Act is initiated for income determined u/s 69A of the Act. The prayer is that penalty proceedings u/s 270 of the Act may be dropped. 1.3. On the contrary, the ld. D/R supports the impugned order. 2. After hearing the rival submissions of the Counsels of the respective parties the following facts have been emerged. a) The present appeal has been cropped up for the issue of imposition of penalty that amounts to Rs. 32,786/-. b) It is not in dispute that order of the ld. AO in which penalty notice was issued that was dated 04.02.2019 in which the ld. AO determined the income of total deposit in the bank of Rs. 21,14,526/- under two heads; first, Rs. 13 Lakh u/s 69A of the Act and second, Rs. 65,162/- under the business income by way of an estimate and presumption basis @ 8%. c) The AO determined the tax liability of Rs. 7.80 Lakh for income determined u/s 69 of the Act by applying Section 115BBE of the Act. 2.1. There is no tax liability for normal rate determined under the head 'business income' of Rs. 65,162/-. 2.2. It is evident that the ld. AO initiated the penalty proceeding u/s 271AAC of the Act for the income determined of Rs. 13 Lakh u/s 69A of the Act and there is no penalty proceeding u/s 270A of the Act is initiated for income determined u/s 69 of the Act. 2.3. While we go through the order of the ld. AO, it is evident that penalty u/s 270A of the Act is initiated for under reported of the 'business income' of Rs. 65,162/- only determined by way of estimate and presumption. There is no dispute that normal income of Rs. 65,162/- is not taxable since the normal I.T.A. No.: 1062/KOL/2024 Assessment Year: 2017-18 Debu Karmakar. Page 4 of 6 income is not taxable up to Rs. 2.50 Lakh. It admits of no doubt that the order of the ld. AO in which he assessed the income of the assessee at Rs. 13 Lakh u/s 69 of the Act has been deleted. The operative portion of the order of the ld. CIT(A) passed in ITA No. 10580/CIT(A)-7/Kol/19-20 is as follows: “It is found from the information of ITS details that the assesses has deposited cash during the demonetization period amounting to Rs.11,00,000/- in Account no 32805500229 and Rs.2,00,000/- in account no. 032801510084 in ICICI Bank, Behala Branch, Kolkata. Accordingly, notice u/s 142(1) issued on 12.03.2018 calling the assesses to prepare a true and correct return of income in respect of which the assessee is assessable under the Income tax Act. 1961 (Act) during the previous year relevant to assessment year 2017-18. As per provisions of Section 142(1) of the Act, the assessee was required to furnish the said return of income as required to be furnished as per the conditions and manner prescribed in Rule 12 of the Income Tax Rules, 1962, on or before 31.03.2018. But the assessee has failed to furnish return of income for A.Y 2017-18 either u/s 139 (on or before 31/03/2018) and failed to furnish Income Tax Return (ITR) in response to notice issued u/s 142(1) of the Act. On the basis of data analytics and information gathered during the phase of online verification under ‘Operation Clean Money', the Income Tax Department gathered a list of assessees who had deposited substantial Cash in bank account(s) during the demonetization period (9th November. 2016 to 30th December, 2016), but have not filed Income tax Return for AY 2017-18. The data reveals that the assessee has deposited by Cash amounting to Rs. 11,00,000/- in Account no 32805500229 and Rs.2,00,000/- in account no.032801510084 in ICICI Bank. Behala Branch Kolkata during the demonetization period (9th November, 2016 to 30th December). Accordingly the proceedings u/s 144 of the I.T. Act' was initiated. The assessee was also issued a notice u/s 142(1)(ii) on 30.05.2019 and duly served through postal service.” 2.4. In the said order the ld. CIT(A) directed the AO to apply the accepted net profit of Rs. 19.35% on the total gross deposit of Rs. 21,14,526/-. Effect to the order u/s 254/250/251/143(3) of the Act passed by the Income Tax Officer, Kolkata that is also enclosed in the paperbook that goes to reveal that after estimation there was a refund amount of Rs. 24,548/-. 3. We have gone through the order of the ld. AO and find that the order has been passed on the basis that assessee has failed to furnish any plausible explanation for under reporting income. As per the AO the assessee has I.T.A. No.: 1062/KOL/2024 Assessment Year: 2017-18 Debu Karmakar. Page 5 of 6 suppressed the fact regarding the business income by not filing the due return of income. As we have already discussed in our precedent paragraph that assessee has filed an appeal against the order of the assessment and he got relief before ld. CIT(A). After getting relief, the order has also been takes its effect and after that the assessee got refund. The submission of the ld. Counsel for the assessee is that since assessee got a refund, he was in a bona fide belief that nothing has to be done. Ld. Counsel for the assessee submits that there was no intention to suppress the fact regarding the business income as the assessee was in bona fide belief that there was no tax liability for normal rate determined under the head 'business income' of Rs. 65,162/- since it is not more than the prescribed limit of income of Rs. 2.50 Lakh. Now only dispute with respect to Plausible Explanation. 4. Keeping in view the above facts as well as the fact that the assessee in the appellate order got a relief and after that he also got refund amount, we are of this view that imposition of penalty on the ground that assessee has failed to furnish any plausible explanation for under reporting of the income is nothing but a misconception of the facts as the income was estimated and on estimation of income no penalty for concealment of income is liable to be imposed. Accordingly, we hereby set aside the imposition of penalty made by the ld. AO confirmed by the ld. CIT(A). Ld. AO is directed to delete the penalty keeping in view the factual aspects of the case. Accordingly, the order passed for imposition of penalty is hereby set aside and the penalty is deleted. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 5th November, 2024. Sd/- Sd/- [Rakesh Mishra] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 05.11.2024 Bidhan (P.S.) I.T.A. No.: 1062/KOL/2024 Assessment Year: 2017-18 Debu Karmakar. Page 6 of 6 Copy of the order forwarded to: 1. Debu Karmakar, 39/C, Chandicharan Ghosh Road, Sealpara, Kolkata, West Bengal, 700008. 2. ITO, Ward-26(4), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "