The Agra Bench of Income Tax Appellate Tribunal ( ITAT ) restored the penalty under section 271(1)(c) of Income Tax Act,1961 for unexplained cash deposits to the Assessing Officer ( AO ) for fresh reassessment.
Chirag Uddin,appellant-assessee, was reassessed by the Revenue after it found an Rs. 8,25,000/- deposit in his bank account through AIR information. The assessee did not file a return of income or explain the source of the deposit. As a result, a notice under section 148 was issued on 30.03.2017, and a reassessment order was passed on 30.11.2017, adding Rs. 8,25,000/- as unexplained income.
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Further, the assessee failed to comply with proceedings under section 271(1)(c), and despite a show cause notice on 02.05.2018, no response was received. This led to a penalty of Rs. 2,06,000/- being imposed on 25.05.2018.
The assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)] against the penalty under section 271(1)(c). He argued that the appeal against the quantum order was still pending before the ITAT and that he had not filed a return as his income was below taxable limits. He also claimed that he was unaware of the notices and the assessment, leading to an ex-parte order.
The assessee explained that the deposited money belonged to his brother, Nawab Uddin, and the bank account was jointly held with him. Despite these submissions, the CIT(A) upheld the penalty imposed by the AO.
The assessee then appealed before the tribunal aggrieved by the decision of the CIT(A).
A 28-day delay in filing the appeal before the ITAT was noted. The appellant explained that illness caused the delay and filed a condonation application. After review, sufficient cause for the delay was found, and no mala fide intent was observed. The delay was condoned in the interest of substantial justice, and the appeal proceeded on merits, following the Supreme Court’s ruling in Collector Land Acquisition vs Mst. Katiji (1987) 167 ITR 471 (SC).
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A single member bench of Ramit Kochar ( Accountant Member ) restored the quantum additions to the AO for de novo reassessment, considering new evidence and affidavits from the appellant’s brother, Nawab Uddin. The reassessment proceedings were initiated based on AIR information about a Rs. 8,25,000/- cash deposit in the assessee’s joint bank account.
Due to non-compliance, the AO added the amount as unexplained income. The assessee claimed the income was below taxable limits and provided explanations regarding the deposit.
Since the tribunal had remanded the quantum additions, it was decided that the penalty issue under section 271(1)(c) should also be restored to the AO for fresh determination, considering the reassessment outcome and additional evidence. Proper opportunities were to be given to both parties. The merits of the case were not addressed.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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