ACIT Vs Mothukuri Somabrahmam (ITAT Visakhapatnam)
Material Facts: The Revenue and the assessee filed cross appeals against the order of the Commissioner of Income Tax (Appeals)-3, Visakhapatnam dated 14.12.2016 for Assessment Year 2013-14.
A search under Section 132 of the Income-tax Act, 1961 was conducted on 20.12.2012 in the Gayatri Group. The assessee was a partner in construction firms. During the search, incriminating material, bank passbooks relating to the assessee’s wife and certain employees, and gold, jewellery, diamonds and silver articles were found. Verification of employees’ bank accounts revealed cash deposits. The assessee admitted additional income of ₹1,63,73,191 for Assessment Year 2013-14 comprising:
- Cheques deposited in employees’ and ex-employees’ bank accounts – ₹56,74,868
- Gold jewellery – ₹55,94,482
- Diamonds – ₹11,79,350
- Silver articles – ₹7,43,568
- Income from construction business (Sanjeevini Mansion) – ₹30,01,421
- Income admitted towards other discrepancies – ₹1,79,502
The Assessing Officer levied penalty of ₹49,11,957 at 30% under Section 271AAB.
Procedural History
The Commissioner (Appeals):
- deleted penalty relating to construction business income of ₹30,01,421 and other discrepancies of ₹1,79,502, observing that the financial year had not ended and the Assessing Officer had not established that the income would not have been disclosed. The Revenue did not appeal against this relief.
- deleted penalty relating to deposits in employees’ bank accounts.
- granted partial relief regarding jewellery, diamonds and silver by deleting penalty relating to part of the jewellery and sustaining penalty on the balance.
The Revenue appealed against deletion of penalty relating to employees’ bank accounts, while the assessee challenged the sustained penalty relating to jewellery, diamonds and silver.
