Penalty can be levied only on Charges for which Penalty proceedings were initiated: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune held that penalty can be levied only on charges for which penalty proceedings were initiated.

The appellant, Babasaheb Kondiram Dongre, is an individual and no regular return of income was filed. Subsequently, on receipt of information that the appellant made cash deposits of Rs.14,16,500/- in savings bank accounts during the financial year 2008-09 relevant to the assessment year 2009-10, the Assessing Officer formed an opinion that the income had escaped assessment to tax and, accordingly, issued notice u/s 148 of the Act. In response to the notice u/s 148, the return of income was filed on 18.07.2016 declaring a total income of Rs.1,43,430/-. Against the said return of income, the assessment was completed by the Income Tax Officer u/s 143(3) and 147 of the Act at a total income of Rs.4,85,930/-.

While doing so, the Assessing Officer made the addition of Rs.3,42,500/- being the unexplained cash deposits in the bank accounts on the ground that the appellant had failed to explain the source for cash deposits made in the bank accounts. The Assessing Officer also initiated penalty proceedings for both the limbs i.e., concealment of particulars of income as well as furnishing of inaccurate particulars of income u/s 271(1)(c) of the Act.

 In response to the show-cause notice, the appellant filed an explanation stating that the cash deposits were made, out from the proceeds of agricultural produce, etc and the assessee is neither guilty of concealment of particulars of income nor furnishing inaccurate particulars of income. The Assessing Officer had rejected the said explanation of the assessee and proceeded with a levy of penalty of Rs.64,662/- u/s 271(1)(c) of the Act by holding that the appellant is guilty of concealment of particulars of income. Even on appeal before the CIT(A), the CIT(A) confirmed the levy of penalty u/s 271(1)(c) of the Act.

The Bench consisting of Inturi Rama Rao, Accountant Member, and SS Viswanethra Ravi held that “On perusal of the assessment order, it would reveal that the Assessing Officer had initiated penalty proceedings for both the limbs i.e., concealment of particulars of income as well as furnishing of inaccurate particulars of income, however, the penalty was levied only holding that the assessee is guilty of concealment of particulars of income. It is a settled position of law that the Assessing Officer cannot levy a penalty on the charges different from the charges for which the penalty proceedings were initiated. Accordingly, we direct the Assessing Officer to delete the penalty of Rs.64,662/- u/s 271(1)(c) of the Act.”

To Read the full text of the Order CLICK HERE

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