SHRI BALWINDER SINGH , HOSHIARPUR V. INCOME TAX OFFICER,DASUYA, HOSHIARPUR

ITA 440/ASR/2018

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0462 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 69; 27; 12; 271(1)(c); 144; 2; 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 440/Asr/2018 Assessment Year: 2009-10 Sh. Balwinder Singh Prop. M/s Deep Satellite System, Tanda Urmur, Tehsil Dasuya, Distt. Hoshiarpur [PAN: ABSPS 5499Q] Vs. Income Tax Officer, Dasuya, Distt. Hoshiarpur (Appellant) (Respondent) Appellant by : None (Written Submission) Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 18.05.2022 Date of Pronouncement: 05.07.2022 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the impugned order dated 18.06.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-1, Jalandhar in respect of the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal: “1. That penalty order under appeal passed by the CIT (A)-l, Jalandhar is against law and facts of the case. ITA No. 440/Asr/2018 Balwinder Singh v. ITO 2 2. The Assessee has not concealed any particulars of income or furnished inaccurate particulars of his income by disclosing the HDFC saving A/c in which all the sale proceeds and stock proceeds were deposited during the year under consideration. 3. That penalty was imposed on the peak additions in the returned income for which the source of deposit in the bank was explained out of redeposit of withdrawal and sale of stock due to closer of business before the CIT(A). 4. That no penalty can be imposed for rejecting the convincing explanation of the source of deposits duly explained before the CIT (A) and the Honorable Tribunal as the Assessment order was passed u/s 144 of the Act. 5. That penalty proceedings are independent proceedings and penal in nature. There must be some cogent evidence or material on the record that the Assessee has concealed his particulars of income and furnished inaccurate particulars of income. 7. The CIT (A) -1, order under appeal being against law and facts of the case is liable to be quashed.” 3. Briefly the facts are that the assessment in this case was reopened u/s 148 of Income Tax Act, 1961 and completed under section 144 of the act with an addition of Rs.3,44,000/- on account of peak amount of deposit in the bank account. The AO mentioned that the assessee has failed to explain the source of cash deposits with documentary evidence. The assessing officer has initiated penalty proceedings u/s 271(1) (c) as he was not satisfied with the explanation of as regards to peak cash deposit in his saving bank account. The assessing officer has issued notice u/s 274 r.w.s 271 of the Income Tax Act, 1961 for levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961 and levied penalty for the charge of concealed of particulars of income and furnished inaccurate particulars of income. ITA No. 440/Asr/2018 Balwinder Singh v. ITO 3 4. In appeal, the Ld. CIT(A) has confirmed the action of the AO by observing as under: “11. I have carefully considered the facts of the case and submissions of the appellant.. The assessment in this case was reopened u/s 148 of Income Tax Act, 1961 and completed under section 144 after adding the addition of Rs.3,44,000/- on account of peak amount of deposit in the bank account. The assessee has not explained the source of cash deposits with documentary evidence. The assessing officer has initiated penalty proceedings u/s 271(1) (c) as he was satisfied that assessee has furnished inaccurate particulars of income in regard to cash deposit in his saving bank account. The assessing officer has issued notice u/s 274 r.w.s 271 of the Income Tax Act, 1961 before levy of penalty u/s 271(1 )(c) of the Income Tax Act, 1961. Considering the reply of the assessee, the assessing officer has levied penalty for inaccurate particulars of income amounting to Rs.55140/- of the tax sought to be evaded. The assessee has also relied upon the judgment of Hon’ble Punjab and Haryana High Court in the case of Hari Gopal Singh Vs. CIT (P&H) (2002) 177 CTR 580, wherein the Hon’ble Pujab and Haryanan High Court held that “In the result, the appeal is allowed and the question posed in the earlier part of the order is answered in the negative holding that the provisions of Section 271(1)(c) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein on that basis. Consequently, the impugned order of the Tribunal dated May 30, 2001, is set aside.' The judgment of Hon’ble Court does not help to the assessee as in this case the addition has been made on estimate basis on GP rate but in the instant case the addition has been made on specific amount which has been deposited in the bank account, and the assessee has not explained the source of cash deposit in his bank account in the assessment proceedings as well as in the appellate proceedings. The amount deposited in the bank account cannot be held as an addition made merely on estimate basis. Reliance is made in this regard in the case of Hon’ ble ITAT, Ahmadabad in the case of Narayanbhai S. Patel, Ahmedabad vs Assessee on 30 June, 2014, in ITA No s. 1 2 7 2 & 1 2 7 3 /A h d /2 0 1 1 where in it was held that:- “11 We find that it is not in dispute that the six bank accounts with reference to which addition was made by the Assessing Officer were not disclosed by the assessee in its return of income. The source of deposit in the said bank accounts could not be explained by the assessee. In the above circumstances, the addition of peak balance in the said bank ITA No. 440/Asr/2018 Balwinder Singh v. ITO 4 accounts cannot be held as an addition made merely on estimate basis without relevant materials. The two decisions relied upon by the Authorized Representative of the assessee are found to be distinguishable on facts in as much as in those cases penalty was levied only on difference between the peak balance declared by the assessee and the peak balance estimated by the Department whereas in the instant case, the addition was made on actual peak balance in the bank account for which no plausible explanation about the source of the same could be given by the assessee. Therefore, such decisions are found to be not applicable in the instant case. 12. Further, in this connection we would like to quote the decision of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Becharbhai P. ITA Nos. 1272 & 1273/Ahd/2011 Shri Narayanbhai S. Patel, Ahmedabad. AYs 1991-92 & 1992-93 Parmar (2012) 341 ITR 0499 (Guj.) wherein the Hon'ble High Court has held as under: "Penalty corresponding to the addition of Rs 17.22 lakhs was deleted on the ground that the assessee had demonstrated that there was estimation of additions and that, therefore, no penalty could be levied. Here again, we are of the opinion that the Tribunal interfered with the penalty on the ground which was not permissible. Additions made on the basis of estimation may be one of the grounds on which discretion not to impose penalty may be exercised. However, in the absence of any requirement to prove the concealment or furnishing of inaccurate particulars found in section 271(l)(c) of the Act cannot form the sole basis to delete penalty imposed by the Assessing Officer and confirmed by the Commissioner (Appeals). " 13. Further, we also do not find merit in the alternative argument of the assessee because the other five bank accounts which were also not disclosed in the return had transfer entries to the one undisclosed bank account which was already detected by the Department. Thus, the disclosure of the other five undisclosed bank accounts by the assessee cannot be held as voluntary disclosure by the assessee on the facts of the instant case. The disclosure came up because the Department already detected one undisclosed bank account which contained transfer entries of the remaining five undisclosed bank accounts. In the above circumstances, we do not find any good reason to interfere with the orders of the lower authorities. Therefore, both the appeals of the assessee are dismissed.” ITA No. 440/Asr/2018 Balwinder Singh v. ITO 5 12. In view of the above facts, that the assessing officer has passed the penalty order after providing due opportunity to the assessee and considering the facts and submissions made by the assessee. In view of the same, I have no option but to accept the order of the Assessing Officer. Hence, levy of penalty under section 271(1) (c) of the Income tax Act, 1 9 6 1 amounting to Rs.55410/- is hereby confirmed.” 5. The appellant assessee submitted that penalty was imposed on the peak additions made to the returned income where the source of deposit in the bank was explained out of redeposit of withdrawal and sale of stock due to closer of business before the authorities below; that the source of alleged deposits was duly explained before the CIT (A) and since, the Assessment order was passed u/s 144 of the Act and that penalty proceedings are independent proceedings and penal in nature, the AO/CIT(A) ought have brought on record some cogent material evidence to establish that the Assessee has concealed his particulars of income and furnished inaccurate particulars of income. He has filed a brief written submission which reads as under: “Most respectfully the appellant submits as under:- 1. That the assessment in this case was completed U/s 144 of the I.T. Act 1961 by issue of notice U/s 143(2) served by affixture at the last known address. The Assessee closed his business in January 2009 and gone to Belgium in the same month. The notices issued U/s 143(2) was not complied by the Assessee, because he was not in India. 2. That addition of Rs.3,44,000/- was made U/s 69 of I.T. Act 1961 of two amount credited in the bank Rs.1,44,000/- on 14-11-2008 and Rs. 2,00,000/- on 15-11-2018 treating this amount as peak deposit in the bank without issuing any proposed notice for the said addition. ITA No. 440/Asr/2018 Balwinder Singh v. ITO 6 3. That according to the AO and CIT (A)-l Jalandhar the Assessee was doing business of satellite service and was not doing any business of sale and purchase of Audio, Video cassettes player, water filter etc. The AO decided the case ex-party without made any local enquiry regarding the nature of business of the Assessee. 4. That in the quantum appeal CIT(A)-1, Jalandhar and the Honorable Income Tax Appellate Tribunal, Amritsar Bench dismissed the quantum appeal of Assessee rejecting the explanation of the Assessee regarding re-deposited of withdrawals and deposits was made out of sales of stock due to closure of business and on the ground that the Assessee was not doing any business of purchase and sales of audio, video cassettes player etc. during the year under assessment expect doing business of satellite services. 5. That the learned CIT(A)-1, Jalandhar confirmed the penalty imposed by the AO by citing judgement of the Honorable ITAT, Ahmedabad in the case Narayan Bhai S Patal V/s Assessee decided on 30-06-2014 in ITA No. 1272 AND 1273/AHD/2011 wherein it was held that the Assessee has not disclosed the said bank in his return of Income, addition was made on actually peak balance in the bank account for which no plausible explanation about the source of same could be given by the Assessee, but in the Assessee case convincing explanation of peak deposit was submitted at the appellant stage that deposits was made out of withdrawal and sales of stock due to closer of business. 6. Since the explanation of the Assessee is not accepted by the department regarding source of peak deposit does not come the Assessee by the way of penalty u/s 271(1)(C) for concealment of particulars of income. If the Assessee gives explanation which is unproved but not disproved, i.e. it is not accepted but circumstances does not lead to the reasonable and positive interference that the Assessee case falls, explanation cannot help the department because there will be no material to show that the amount in question was the income of Assessee as held in the case of National Textile v/s CIT 2001/249/ITR (GUJ). 7. The learned CIT(A)-1, Jalandhar accepted the version of AO in respect of nature of business of the Assessee of satellite service, but ignored the business of purchase and sale of audio, video cassette player. The Assessee was doing this business since 1992 and had stock in the shop which was sold due to closure of business and sale proceeds was deposited in the bank. ITA No. 440/Asr/2018 Balwinder Singh v. ITO 7 8. No penalty can be imposed by merely rejecting the explanation of the Assessee as held in the above noted case of National Textile v/s CIT 2001/249/ITR (GUJ). The said case is distinguishable, because no plausible explanation was given by the Assessee regarding source of deposit and is not applicable in the Assessee case. The facts and circumstances regarding source of peak deposit was rejected without any material on the record and the explanation of the source was not disproved. 9. That penalty proceeding are independent and separate proceedings. The department has not established that the Assessee has concealed his particulars of income or furnished any inaccurate particulars of income. The mere taxed the peak amount without any cogent material or documentary evidence on the record that the Assessee has furnished inaccurate particulars of income or concealed any particulars of income, penalty u/s 271(l)(c) cannot be imposed by mere rejection of the convincing explanation. 10. In view of above facts and circumstances of the case it is therefore respectfully prayed that penalty imposed u/s 271(1)(C) of the Act may kindly be cancelled and oblige.” 6. Per contra, the ld. DR stands by the CIT(A)’s order. The learned DR reiterated the observation of the PCIT (exemption). 7. We have heard the learned Addl. CIT DR, perused the material on record, the impugned order and submissions of the assessee. The assessment was completed U/s 144 of the I.T. Act 1961 exparte qua the assessee with an addition of Rs.3,44,000/- U/s 69 of I.T. Act 1961, on account of two amount credited in the bank at Rs.1,44,000/- on 14/11/2008 and Rs. 2,00,000/- on 15/11/2018 treating as peak deposit in the bank. It is seen that in the quantum appeal CIT(A)-1, Jalandhar and the Honorable Income Tax Appellate Tribunal, Amritsar Bench dismissed the quantum appeal of Assessee, rejecting the explanation of the Assessee regarding re-deposited of withdrawals and out of sales of stock due to closure of ITA No. 440/Asr/2018 Balwinder Singh v. ITO 8 business and that the Assessee was not doing any business of purchase and sales of audio, video cassettes player etc. 8. It is noted that the learned CIT(A)-1, Jalandhar has confirmed the penalty imposed by the AO by citing judgement of the Honorable ITAT, Ahmedabad in the case of ‘Narayan Bhai S Patel (Supra) order dated 30- 06-2014 in ITA No. 1272 AND 1273/AHD/2011 wherein it was held that the Assessee has not disclosed the said bank A/c in his return of Income and the addition was made on actually peak balance in the bank account for that no plausible explanation could be given by the Assessee, whereas in the present case the assessee has submitted explanation of peak deposit at the appellant stage that deposits was made out of withdrawal and sales of stock due to closer of business, although not accepted in the quantum proceeding. Thus, the decision relied upon by the CIT(A) is distinguishable on the peculiar fact of the present case. 9. Since, the Assessee’s explanation was not accepted by the department regarding source of peak deposit does not establish that the Assessee has concealed particulars of income until or unless the explanation of assessee disproved with the material to show that the amount in question was the income of Assessee as held in the case of ‘National Textile v/s CIT’, (Supra). 10. Admittedly, the learned CIT(A)-1, Jalandhar has accepted the fact on record as noted by the AO, that the Assessee was engaged in the business of satellite service, then how he can ignore the business of purchase and sale of audio, video cassette player without proving the contrary by bringing ITA No. 440/Asr/2018 Balwinder Singh v. ITO 9 corroborative material evidence on record. The Assessee was doing this business since 1992 and had stock in the shop which was sold due to closure of business and sale proceeds was deposited in the bank. 11. We understand that the penalty proceeding are independent and separate proceedings and the department has not established that the Assessee has concealed his particulars of income or furnished any inaccurate particulars of income. Merely taxing the peak amount without any cogent material or documentary evidence on the record can held the assessee guilty of the charge for either furnishing inaccurate particulars of income or concealment of any particulars of income, for levy of penalty u/s 271(l)(c). Considering the peculiar facts of the case and meagre amount of penalty of Rs. 55,410/-, we hold that the CIT(A) was not justified in confirming the aforesaid penalty imposed u/s 271(1)(c ) of the Act by the AO. 12. In the above view, we accept the grievance of the assessee as genuine and as such delete the penalty of Rs. 55,410/-, imposed u/s 271(1)(c ) of the Act by the AO and confirmed by the CIT(A). 13. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 05.07.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* ITA No. 440/Asr/2018 Balwinder Singh v. ITO 10 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order