Raj Kumar Kapoor Vs Assessment Unit (ITAT Delhi)
The Tribunal allowed the assessee’s appeal and deleted the penalty of Rs. 4,99,210 imposed under Section 271(1)(c) of the Income Tax Act for alleged concealment relating to cash deposits treated as unexplained credits under Section 68. The Assessing Officer had originally added Rs. 22,17,700 to the assessee’s income and levied penalty equal to 100% of the addition. The NFAC had confirmed the penalty ex-parte due to non-submission of explanations by the assessee. However, during the quantum proceedings, the Tribunal had earlier held that the cash deposits substantially represented cash sales turnover and cash in hand arising from the assessee’s electronic trading business. Observing that the deposits could not be fully reconciled, the Tribunal restricted the addition to a lump sum amount of Rs. 2 lakhs on an estimated basis and deleted the remaining addition. Since the major addition itself was deleted and the remaining addition was purely estimated, the Tribunal held that penalty under Section 271(1)(c) was unsustainable.
Facts: The Assessing Officer made an addition of Rs. 22,17,700 under section 68 on account of unexplained credit entries in the assessee’s bank account and simultaneously levied penalty under section 271(1)(c) amounting to Rs. 4,99,210 for alleged concealment of income. In the quantum appeal, the assessee contended that the cash deposits represented cash sales turnover and cash in hand arising from his trading business of electronic items. The coordinate Bench of the Tribunal substantially accepted the explanation and restricted the addition to a lump-sum amount of Rs. 2 lakh on estimated basis, granting relief for the balance addition.
