In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ) Agra Bench has set aside the penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961, and directed the Assessing Officer ( AO ) to reconsider the quantum addition.
Bhav Singh, appellant-assessee, also an insurance agent, who was assessed to tax for the Assessment Year 2011-12. The AO had made an addition of Rs. 18,29,000 on account of cash deposits in the assessee’s Savings Bank account, invoking provisions of Section 69A of the Act.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee had claimed that the amount represented the sale proceeds of agricultural land sold by him and his family members. However, the AO did not accept this explanation and made the addition.
The assessee filed an appeal before the Commissioner of Income-tax (Appeals) [CIT(A)], which was dismissed. The CIT(A) held that the assessee had not submitted any evidence to support his claim, and therefore, the addition made by the AO was justified.
Aggrieved, the assessee filed a second appeal before the ITAT. The ITAT observed that the CIT(A) had passed a non-speaking order, without deciding the issues arising in the appeal on merits. The ITAT held that the CIT(A) is required to pass a reasoned and speaking order, stating the points for determination, decision, and reasoning thereof.
The ITAT noted that the assessee had claimed that the cash deposits represented the sale proceeds of agricultural land, and this plea required verification by the authorities. The ITAT directed the AO to reconsider the quantum addition, after giving proper opportunity to the assessee to submit evidence and make submissions.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Bench of Ramit Kochar ( Accountant Member ) also observed that the assessee was equally responsible for not complying with the notices issued by the CIT(A) and not filing requisite details/documents to support his contentions.
In conclusion, the ITAT set aside the penalty imposed under Section 271(1)(c) and directed the AO to reconsider the quantum addition, after giving proper opportunity to the assessee. The ITAT also directed the assessee to comply with the notices issued by the CIT(A).
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