RAMALINGAM KANAGASAPAI,ARIYALUR V. ITO, WARD-1, PERAMBALUR

ITA 3135/CHNY/2024

AI Insights

The case involves Mr. Ramalingam Kanagasapai, who appealed against the penalty levied by the AO for the Assessment Year 2014-15. The AO had reopened the case upon discovering a substantial deposit in Mr. Kanagasapai's bank account and estimated additional income based on 5% of the total deposit. The penalty was imposed for alleged concealment of income, which Mr. Kanagasapai contested, arguing that the AO's estimation was unreasonable and arbitrary. The Tribunal agreed with Mr. Kanagasapai, noting that the penalty was based on an estimated addition with subjective judgment, and thus, it was not justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126656 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. RAGHUPATHY
• Assessee Lawyers: MAKING
• Section: 271(1)(c)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3135/Chny/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2014-15 Mr. Ramalingam Kanagasapai, T Pottakollai, Thathanoor Post, Udayarpalayam, Ariyalur-621 804. v. The ITO, Ward-1, Perambalur-621 212. [PAN: BGDPK 5952 P] (अपीलाथ\u0015/Appellant) (\u0016\u0017यथ\u0015/Respondent) अपीलाथ\u0015 क\u001a ओर से/ Appellant by : None \u0016\u0017यथ\u0015 क\u001a ओर से /Respondent by : Mr.R. Raghupathy, Addl.CIT सुनवाईक\u001aतारीख/Date of Hearing : 19.02.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 23.04.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 25.10.2024 for the Assessment Year (hereinafter referred to as \"AY”) 2014-15 confirming the penalty levied by the AO u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as \"the Act”) to the tune of Rs.4,47,204/-. 2. None appeared for the assessee. Having heard the Ld.DR and after perusing the records, it is noted that in the relevant year under ITA No.3135/Chny/2024 (AY 2014-15) Mr. Ramalingam Kanagasapai :: 2 :: consideration, the assessee didn’t file any return of income (RoI) for AY 2014-15. The AO received information that assessee had deposited Rs.1,55,70,000/- in his Savings Bank account. In order to verify the transaction in the bank account of the assessee, the case of the assessee was re-opened; and during the assessment proceedings, the assessee is noted to have filed computation of income along with documents called for by the AO; and the AO noted in this regard that the assessee has shown Rs.12,27,250/- as total income from business. The AO after hearing the assessee, estimated the income of the assessee by making addition of 5% on the total deposit made in the bank i.e. Rs.1,55,70,000/- i.e. Rs.7,78,500/- which was added to the total income of the assessee and thus, made an addition of Rs.7,78,500/- [estimated income of 5% on the deposited cash of Rs.1,55,70,000/-] by assessment order dated 25.03.2022. Thereafter, the Ld.CIT(A) has initiated the penalty proceedings u/s.271(1)(c) of the Act for concealment of income and thereafter, has levied the penalty of Rs.4,47,204/-. The assessee filed an appeal before the Ld.CIT(A) against the penalty which was dismissed by the impugned order. Aggrieved by the Ld.CIT(A)’s order, the assessee has preferred this appeal before this Tribunal. 3. From the impugned order, it is discerned that the assessee was an agriculturist and labor-supply-contractor; and didn’t file any RoI for AY 2014-15; and after receiving notice u/s.148 of the Act, duly filed the ITA No.3135/Chny/2024 (AY 2014-15) Mr. Ramalingam Kanagasapai :: 3 :: requisite documents and admitted that the amount deposited in the bank was on account of his business of supplying labourers to various contractors. The assessee admitted a net income of Rs.12,27,250/- and also paid tax on it. However, the AO made further addition of Rs.7,78,500/- by estimating 5% of the total cash deposit of Rs.1,55,70,000/- which according to the assessee was unreasonable & arbitrary. The main grounds of appeal of the assessee against levy of penalty is that since the AO had only estimated the income over and above the admitted net income of Rs.12,27,250/-, the penalty ought not to have been levied u/s 271(1)(c) of the Act. In the factual back ground, we find force in this grounds of appeal of the assessee and note that quantum addition made by the AO of Rs.7,78,500/- was purely on estimated basis with inherent subjectivity involved. Therefore, we are of the opinion that penalty needn’t have been levied and hence, it is directed to be deleted and therefore, we direct the AO to delete penalty of Rs.4,47,204/- 4. In the result, appeal filed by the assessee is allowed. Order pronounced on the 23rd day of April, 2025, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER ITA No.3135/Chny/2024 (AY 2014-15) Mr. Ramalingam Kanagasapai :: 4 :: चे ई/Chennai, !दनांक/Dated: 23rd April, 2025. TLN आदेश क\u001a \u0016ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF "