2025 (8) TMI 671 - AT - Income Tax

Penalty under Section 271(1)(c) Deleted for Genuine Cash Deposits Under Section 44AD Business Income Rules

The ITAT Delhi deleted the penalty under section 271(1)(c) imposed on the assessee for cash deposit additions and presumptive income computed under ... Penalty u/s 271(1)(c) - quantum cash deposits addition and her presumptive tax computed u/s 44AD - HELD THAT:- The only inference which prima facie arises in the given fact is that once assessee has been held as covered u/s 44AD admittedly, her cash deposits infact represent her business transactions only. Accordingly accept the assessee’s instant sole grievance to delete the addition in very terms in light of CIT vs. Reliance Petro products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] that quantum and penalty proceedings are parallel proceedings wherein each and every addition/disallowance made in the course of the former does not ipso facto attract the latter penal provision, to delete the impugned penalty in very terms. Ordered accordingly. The appeal arises under section 271(1)(c) of the Income Tax Act, 1961, challenging the penalty imposed for allegedly concealing and furnishing inaccurate particulars of income related to cash deposits and presumptive income computed under section 44AD for Assessment Year 2010-11. The penalty of Rs. 3,34,647/- was levied following an addition of Rs. 12,17,200/- to the assessee's income. The tribunal observed that since the assessee was held to be covered under section 44AD, the cash deposits represent business transactions. Relying on the Supreme Court ruling in CIT vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158, which held that 'quantum and penalty proceedings are parallel proceedings wherein each and every addition/disallowance made in the course of the former does not ipso facto attract the latter penal provision,' the tribunal found no justification for the penalty. Consequently, the penalty under section 271(1)(c) was deleted, and the appeal was allowed.