2014 (1) TMI 486 - AT - Income Tax

Appellate Tribunal upholds penalty under Income-tax Act for unexplained cash deposits

Dr. Kapil Dev Versus Income-tax Officer

The Appellate Tribunal upheld the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2006-07. The penalty was ... Penalty u/s 271(1)(c) – Held that:- The assessee claimed to have past savings in the form of cash which were introduced in the business – The assessee failed to explain the source of such cash – No evidence of having accumulated such amount has been established - Decided against assessee. Issues:Challenge against penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 2006-07.Detailed Analysis:1. Background and Assessment Details:The appellant's appeal was against the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2006-07. The appellant had filed the return of income declaring an income of Rs.2,40,760, which was later scrutinized, and the assessment was framed at an income of Rs.6,36,520. The additions were made based on unexplained cash savings and negative cash balance shown in the cash book.2. Penalty Proceedings and Grounds of Appeal:Penalty proceedings were initiated during the assessment, and the penalty was imposed against the unexplained cash deposits. The appellant challenged the penalty on various grounds, including improper initiation of penalty proceedings. The appellant cited several case laws to support the appeal.3. Decision of the CIT(A) and Appellate Tribunal:The CIT(A) upheld the imposition of the penalty, stating that the appellant failed to explain the source of the deposited amount. The CIT(A) relied on various case laws to support the decision. The appellant, in the appeal, reiterated that the amount deposited was from past savings due to not maintaining books of account in earlier years. However, the Appellate Tribunal found that the appellant could not establish the known source of the deposited amount, leading to the confirmation of the penalty.4. Final Decision and Dismissal of Appeal:After considering the arguments from both parties and reviewing the material on record, the Appellate Tribunal upheld the decision of the CIT(A) and confirmed the penalty imposed by the Assessing Officer. The Tribunal found the penalty justified as the appellant failed to explain the source of the deposited amount. Consequently, the appeal of the appellant was dismissed.In conclusion, the Appellate Tribunal upheld the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2006-07, based on the appellant's failure to explain the source of the unexplained cash deposits.