2019 (3) TMI 1546 - AT - Income Tax

Tax Tribunal: Mixed decisions on ITA cases, some allowed, some dismissed, some for stats. Order on March 27, 2019.

Shri Narendra P. Musale Versus The Income Tax Officer, Ward-1 (4), Nashik.

The Tribunal partly allowed ITA 2226/PUN/2016, dismissed ITA 1520/PUN/2016, allowed ITA 1521/PUN/2016 for statistical purposes, allowed ITA 153/PUN/2017 ... Unexplained cash deposits in bank accounts - addition u/s 68/69 - AIR information received the assessee has deposited cash in three saving bank account with Vishwas Co-operative bank - Information u/s.133(6) was requisitioned from the bank - CIT-A upheld the addition u/s.69 - HELD THAT:- The facts reveal that the assessee is doing regular deposits in the aforesaid accounts without disclosing them in his return of income and thus evading tax. It was first through the AIR information that he was taken into task in 2011-12 and thereafter, he has executed Saate Khat with his relative which was also not registered and was later cancelled. The entire transaction was carried in cash so that any trail of money cannot be established. For the cash deposit in same account during 147 proceedings and in preceding year and in succeeding year the assessee has stated that the deposits are result of its unaccounted purchase and sales and has offered it for taxation under section 44AD of the Act. These are some of the facts which comes from the findings of the Ld. CIT(Appeals). No infirmity with the findings of the CIT(Appeals) in respect of these grounds and the same is therefore, upheld. - Decided against assessee. GP rate @15% with regard to the additional income in the hands of the assessee - HELD THAT:- On the similar issue, the Pune Bench of the Tribunal in assessee’s own case In respect of unexplained deposit in Bank of Baroda, we direct the Assessing Officer to apply GP rate at 15% to work out additional income in the hands of the assessee. Thus, ground Nos. 5 to 8 raised in appeal by the assessee are partly allowed. Penalty proceedings u/s.271(1)(c) - Defective notice - penalty order mentioned both the limbs of section 271(1)(c) of the Act i.e. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ - HELD THAT:- There is ambiguity in the mind of Assessing Officer as to which limb/charge, penalty is to be levied. That taking guidance from the decision of CIT Vs. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein considered the decision of CIT Vs. Manjunath Cotton and Ginning Factory [2017 (1) TMI 1292 - BOMBAY HIGH COURT] the legal proposition that comes out and which is binding in nature is that the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Thus direct the Assessing Officer to delete the penalty from the hands of the assessee - decided in favour of assessee. Issues Involved:1. Addition of unexplained cash deposits in bank accounts.2. Calculation mistake in considering cash deposits.3. Enhancement of income by unexplained deposits.4. Consideration of total bank deposits as income.5. Determination of income from undisclosed bank accounts.6. Ex-parte order passed by CIT(Appeals).7. Penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Addition of unexplained cash deposits in bank accounts:The assessee contested the addition of Rs. 53,63,000/- as unexplained cash deposits. The Assessing Officer (AO) inferred the total cash deposits based on information from AIR and bank records, leading to the addition under Section 69 of the Income Tax Act. The assessee claimed the deposits were from an advance received for the sale of ancestral land. However, the AO and CIT(Appeals) found no substantial evidence to support this claim, and the transaction appeared dubious as it was unregistered and conducted in cash. The Tribunal upheld the addition, citing the lack of convincing evidence and the assessee's failure to disclose these deposits in the return of income.2. Calculation mistake in considering cash deposits:The assessee argued that the CIT(Appeals) erred in considering the cash deposits at Rs. 53,63,000/- instead of Rs. 53,43,000/- due to a calculation mistake. The Tribunal, after reviewing the records, upheld the CIT(Appeals)'s findings, dismissing the assessee's contention due to insufficient evidence to correct the alleged mistake.3. Enhancement of income by unexplained deposits:The CIT(Appeals) enhanced the income by Rs. 64,36,209/- due to unexplained deposits in the Bank of Baroda, which were already assessed by the AO. The Tribunal directed the AO to apply a Gross Profit (GP) rate of 15% to work out the additional income, following the precedent set in the assessee's own case for previous years. This partial allowance aimed to ensure consistency and fairness in the assessment of unexplained deposits.4. Consideration of total bank deposits as income:The assessee contended that the CIT(Appeals) and AO erred in considering the total deposits as income without accounting for dishonored cheques. The Tribunal found merit in the assessee's plea that the undisclosed bank account was used for both unaccounted sales and purchases. Consequently, the Tribunal directed the application of a 15% GP rate on the additional income, aligning with the assessee's business practice and previous Tribunal decisions.5. Determination of income from undisclosed bank accounts:The Tribunal observed that the assessee systematically deposited and withdrew amounts from the undisclosed bank account, indicating unaccounted business transactions. By applying a 15% GP rate, the Tribunal aimed to estimate the income fairly, considering the nature of the transactions and the assessee's business history.6. Ex-parte order passed by CIT(Appeals):For the assessment years 2012-13 and 2013-14, the CIT(Appeals) passed an ex-parte order without considering the assessee's detailed submissions. The Tribunal set aside these orders, restoring the appeals to the CIT(Appeals) for re-adjudication, ensuring compliance with the principles of natural justice and allowing the assessee to present requisite documentary evidence.7. Penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961:The assessee challenged the penalty proceedings initiated under Section 271(1)(c) for being vague and unspecific. The AO initially cited 'concealment of income' but later mentioned both 'concealment of income' and 'furnishing of inaccurate particulars.' The Tribunal, referencing the Hon'ble Bombay High Court's decision in CIT Vs. Samson Perinchery, found the penalty proceedings invalid due to this ambiguity. The Tribunal directed the AO to delete the penalty, emphasizing the need for clear and specific charges to uphold natural justice.Conclusion:- ITA 2226/PUN/2016: Partly allowed.- ITA 1520/PUN/2016: Dismissed.- ITA 1521/PUN/2016: Allowed for statistical purposes.- ITA 153/PUN/2017: Allowed for statistical purposes.- ITA 1853/PUN/2016: Allowed.Order pronounced on 27th day of March, 2019.