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of <h1>Penalty Reversed: Tribunal Overturns Unjustified Tax Penalty Due to Lack of Justification and Mitigating Circumstances.</h1> <h3>Dipesh Singh Legal Heir of Late Nitya Nand Versus ITO Ward-3 (1) Gurugram, Haryana</h3> Dipesh Singh Legal Heir of Late Nitya Nand Versus ITO Ward-3 (1) Gurugram, Haryana - TMI Issues: Justification of imposition of penalty under u/s 271(1)(c) of the Income Tax Act, 1961 concerning AY 2013-14.Summary:Issue: Justification of imposition of penaltyThe appeal was filed against the penalty order u/s 271(1)(c) of the Income Tax Act, concerning AY 2013-14, regarding failure to explain a cash deposit in the bank account. The counsel for the assessee argued that the penalty proceedings are distinct from other proceedings. The deceased-assessee had received the cash deposit from relatives, supported by evidence such as ITR acknowledgment and bank statements. The burden of proof in penalty proceedings differs from assessment proceedings. The consistent explanation provided by the assessee regarding the source of cash deposits was considered, and it was noted that the addition in quantum proceedings does not automatically lead to penalty imposition.The discretion of the AO u/s 271(1)(c) should have been in favor of the assessee, as the imposition of penalty was deemed unjustified. Imposition of penalty is not automatic and requires some plausibility. Considering the mitigating circumstances and the inability of the deceased assessee to prove all facts, the penalty was directed to be reversed and deleted. Ultimately, the appeal of the assessee was allowed.
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