ITAT deleted penalty as the very addition itself was deleted by it earlier
ITAT deleted penalty as the very addition itself was deleted by it earlier
Assessee declared total income at Rs.1,03,380. AO determined total income Rs.21,50,880, and made two additions on unaccounted cash deposit of Rs.17,55,000, and unexplained loans/advance of Rs 2,92,500. AO imposed penalty of Rs 20,19,900 @300% of the tax sought to be evaded. CIT(A) confirmed AO's order. On appeal, the ITAT deleted the penalty as the very addition was deleted by ITAT earlier in assessee's own case.-501145
1. The assessee filed its return of income declaring total income at Rs.1,03,380/-. The assessment order was passed under section 143(3) (of Income Tax Act, 1961) determining total income of the assessee at Rs.21,50,880/-. The ld.AO has made two additions viz. (a) unaccounted cash deposit of Rs.17,55,000/-, (b) unexplained loans/advance of Rs.2,92,500/-, thus, a total sum of Rs.20,47,500/- was added. The ld.AO initiated penalty proceedings against the assessee by issuance of a notice under section 274 (of Income Tax Act, 1961) r.w.s 271(1)(c) (of Income Tax Act, 1961). The AO imposed penalty of Rs.20,19,900/- vide order dated 14.3.2013.This penalty was imposed at the rate of 300% of the tax sought to be evaded. The minimum penalty imposable upon the assessee was of Rs.6,73,300/-.
2. CIT(A) did not bring any relief to the assessee.
3. On appeal, the ITAT held as under:
"4. A perusal of sub-clause (iii) of section 271(1)(c) (of Income Tax Act, 1961) would indicate that in case an addition is being made to the income of an assessee, and it is established that the assessee has concealed or furnished inaccurate particulars qua that addition, then apart from tax to be payable by the assessee, he would pay an amount equivalent to the tax or three times of the tax as penalty under section 271(1)(c) (of Income Tax Act, 1961). Meaning thereby, the penalty would be computed equivalent to the tax or three time of the tax sought to be evaded by the assessee on the additions made to his income for which he has held guilty of concealment of income or furnishing of inaccurate particulars of income. In the present case, the addition on which penalty has been imposed by the AO has been deleted by the ITAT, and therefore, the very addition on which the amount of tax sought to be evaded was to be calculated, has been extinguished. In view of the above discussion, penalty is not imposable upon the assessee, which is accordingly deleted, and the grounds of the appeal of the assessee are allowed.”
Case Reference - Mehulkumar Bhikhabhai Patel vs ITO, Ward-3, Gandhinagar.
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.2794/Ahd/2015
(Asstt. Year: 2008-2009)
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