SHRI V. DURAI, CHENNAI V. ITO , CENTRAL CIRCLE-1(3), CHENNAI

ITA 821/CHNY/2022

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The case involves Shri V Durai, who was subjected to a search and seizure operation on October 5, 2017, resulting in the seizure of Rs. 12.96 lakhs in cash. The assessee, engaged in the civil construction business, admitted the cash but did not include it in his income tax return, claiming it was reserved for medical emergencies and not supported by books of accounts as income was offered on a presumptive basis. The Assessing Officer (AO) added the seized amount to the assessee's income, which was partially reduced by the Commissioner of Income Tax (Appeals) to Rs. 5.96 lakhs after considering past income assessments. A penalty of 30% on this amount was imposed under section 271AAB, which the assessee contested, leading to this appeal. The Tribunal, considering the nature of the business and the basis of income declaration, concluded that the penalty was improperly levied as the income addition was based on estimation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133826 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 28-09-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

आयकर अपीलीय अिधकरण ‘ए’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा12 एवं माननीय +ी मनोज कु मार अ6वाल ,लेखा सद9 के सम2। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.821/Chny/2022 (िनधाBरण वषB / Assessment Year: 2018-19) Shri V Durai Old No.44, New No.40, New Bangaru Naidu Street, West KK Nagar, Chennai – 600 078. बनाम/ V s. ITO Central Circle-1(3), Chennai. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AGX P D-8 9 3 0 -B (अ पीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Shri Y. Sridhar (C.A) & Ms. B. Revathi (Advocate) – Ld. ARs थ की ओरसे/Respondent by : Shri R. Mohan Reddy (CIT) –Ld. DR सुनवाई की तारीख/Date of Hearing : 28-02-2023 घोषणा की तारीख /Date of Pronouncement : 01-03-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] dated 12-09-2022 in the matter of penalty levied by Ld. Assessing Officer [AO] u/s.271AAB for Rs.1.78 Lacs vide order dated 25-01-2022. 2. From the fact, it emerges that assessee was subjected to search action on 05-10-2017 which led to seizure of cash for Rs.12.96 Lacs. ITA No.821/Chny/2022 - 2 - The same was admitted by the assessee. The assessee is stated to be engaged in civil construction business and offering income on presumptive basis. The cash seized by the assessee was not admitted in the return of income. During the course of assessment proceedings, the assessee submitted that cash was kept for medical emergencies and the same would not be supported by any books of accounts since the income was offered on presumptive basis. It was also submitted that most of the earnings were in cash. However, rejecting the same, Ld. AO made additions thereof in the returned income. Upon further appeal, Ld. CIT(A), considering the income of the assessee for past 10 years, held that it would be reasonable to hold Rs.7 Lacs as explained money and the balance would be unexplained money. Accordingly, the addition was restricted to the extent of Rs.5.96 Lacs. 3. Consequently, penalty proceedings were initiated by Ld. AO and penalty of 30% was levied u/s 271AAB on alleged undisclosed income of Rs.5.96 Lacs. Before Ld. CIT(A), the assessee, inter-alia, submitted that the addition was on estimated basis and there was no undisclosed income. However, rejecting the same Ld. CIT(A sustained the penalty against which the assessee is in further appeal before us. 4. From the fact, it emerges that the assessee is offering income on presumptive basis and most of the earnings are in cash only. In such a case, the assessee would not be maintaining any books of accounts. Considering the same, Ld. CIT(A) restricted the quantum additions, on estimated basis to Rs.5.96 Lacs after allowing partial relief of Rs.7 Lacs. It is very clear that the said addition is on mere estimation which could not be visited with impugned penalty. Therefore, we delete the same. ITA No.821/Chny/2022 - 3 - 4. The appeal stand allowed. Order pronounced on 01 st March, 2023. Sd/- (MAHAVIR SINGH) उपा12 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद9 / ACCOUNTANT MEMBER चे+ई / Chennai; िदनांक / Dated : 01-03-2023 EDN/- आदेश की Vितिलिप अ 6ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु4/CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF