The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has held that penalty u/s 271 will not sustain when AO failed to specify inaccurate particulars of income found.
The appellant engaged in the business of dealing in lands for which the return of income was filed declaring a total income of Rs.4,77,360/-. The assessment was completed u/s 143(3) of the Income Tax Act, 1961 at a total income of Rs.39,64,550/- after making an addition on account of an unexplained cash deposit of Rs.34,42,000/-.CIT(A) on appeal had partly allowed the appeal by restricting the addition to Rs.15,00,000/- thereby granting relief of Rs.19,42,000/-. The Assessing Officer initiated penalty proceedings by issuing of show-cause notice u/s 274 r.w.s. 271(1)(c) of the Act for which the assessee failed to file any explanation.
The appellant contended that the addition was made for the inability of the assessee to explain the source of a cash deposit in the bank accounts which does not amount that the appellant furnished inaccurate particulars of income.
The revenue contended that the appellant had not submitted any explanation in support of the source of cash deposits and failed to explainthe response to the show-cause notice issued.
It was observed that the addition was made u/s 69 or section 69A of the Act and the Assessing Officer failed to render a finding as to what kind of particulars was false resulting in the addition to returned income.
The Tribunal consisted of Shri S SGodara, JM and Shri Inturi Rama Rao, AM, directed the Assessing Officer to delete the penalty of Rs.4,44,018/- made u/s 271(1)(c) of the Act and allowed the appeal filed by the assessee.
Shri Sharad Shah appeared on behalf of the assessee and Shri M. G. Jasnani appeared on behalf of the revenue.
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