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Shri. K. Sundararaj, Chennai and others Versus The Asst. Commissioner of Income tax, Central Circle –I (5) , Chennai and others

Penalty u/s.271(1)(c) - treating part of agricultural income disclosed by the assessee as non agricultural income on estimation basis - Held that:- Assessing Officer was not sure what the exact income of the assessee from agricultural income. In other words, the Assessing Officer has estimated the agricultural income. As there is no material to suggest any undisclosed income as such levy of penalty cannot be sustained on estimated basis. This is not normal assessment and assessment was made cons .....

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ing part of agricultural income disclosed by the assessee as non agricultural income on estimation basis. - Decided in favour of assessee.

Addition in respect of unexplained bank deposits - Levy of penalty - Held that:- Any amount deposited in bank account of the assessee, the assessee has to explain the source from which it was deposited. In the present case, the assessee is not able to explain the deposits. According to the assessee, the assessee is not educated and return subsequen .....

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It is the duty of the assessee to disclose truly and fully while filing the return of income. The assessee cannot shift his responsibility to its Chartered Accountant. Further the assessee stated it was ill advised by the Chartered Accountant without mentioning the name of the Chartered Accountant. It is not brought on record what advice was given by the Chartered Accountant on this issue. In our opinion, the assessee has concealed particulars of income and also not given any bonafide explanati .....

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y peace and to avoid litigation and penalty cannot be levied. In our opinion, this cannot be a bonafide explanation so as to go out of the rigours of penalty proceedings. As held by the Supreme Court in the case of Mak Data Pvt. Ltd. vs. CIT (supra), that penalty is leviable. In our opinion, the assessee failed to substantiate non offering of G10,00,000/- as income which was received by the assessee from the company where the assessee is having substantial interest. Being so, in the absence of t .....

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st the common order of the Commissioner of Income Tax (Appeals)-II, dated 29.01.2014, for the above assessment years, wherein the Commissioner of Income Tax (Appeals) confirmed the levy of penalty u/s.271(1)(c) of the Act. The Revenue s appeals in ITA Nos.954 & 955/Mds/2014 are directed against common order of Commissioner of Income Tax (Appeals)-I, dated 28.02.2013, wherein the Commissioner of Income Tax (Appeals) deleted the penalty for the assessment years 2002-03 and 2004-05. 2. The fact .....

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treated as undisclosed income. 2. Unexplained investment in bank/deposits in bank account. 3. Investment in Koilpatti land. 4. Income from House property. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the additions made by the Assessing Officer. Against this, the assessee preferred an appeal before the Tribunal. The Tribunal vide its order dated 19.05.2010 in ITA No.384/Mds/2010 set aside the issue .....

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as follows:- Assessment year Assessed Income Date of order 2000-01 G4,73,745/- 30.12.2011 2001-02 G88,37,613/- 30.12.2011 2002-03 G14,23,179/- 30.12.2011 2003-04 G7,43,957/- 30.12.2011 2004-05 G29,32,209/- 30.12.2011 2005-06 G5,02,416/- 30.12.2011 2006-07 G25,23,964/- 30.12.2011 2007-08 G10,01,016/- 30.12.2009 2.1 The Assessing Officer in the penalty order stated the returns of income were filed by the assessee only, on consequent to the search conducted at the assessee s premises on 21.09.2005 .....

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19.06.2009 2005-06 G4,83,541/- 30.03.2010 2006-07 G6,53,121/- 30.03.2010 Against this, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 2.2 Against sustenance of penalty, the assessee is in appeal before us for the assessment years 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07 and against deletion of penalty, the Revenue is in appeal before us for the assessment years 2002-03 & 2004-05. 3. We have heard both the sides and perused the materi .....

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he Authorised Representative for the assessee contended that penalty cannot be levied where the income is estimated. He relied on the judgment of Supreme Court in the case of CIT vs. Reliance Petro Products 322 ITR 158, wherein it was held that merely because the assessee claimed deduction of interest expenses it has not been accepted by the Revenue, penalty u/s.271(1)(c) of the Act is not attracted. Merely making of the claim is not sustainable in law, by itself will not amount to furnishing in .....

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assessee to conceal the income and the assessee had agreed to offer sundry credit which were carried forward from previous year as income, as a measure of purchasing peace, imposition of penalty u/s.271(1)(c) of the Act was unjustified. He further relied on the judgment of jurisdictional High Court in the case of CIT vs. M/s. Gem Granites (Kar),Chennai in T.C (Appeal) No.504/2009, dated 12.11.2013. 4.1. On the other hand, the Departmental Representative submitted that the assessee was not able t .....

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al income was in fact derived from agricultural operation. He further submitted that the claim of the assessee is not genuine and the penalty was righty levied by the Assessing Officer which was confirmed by the Commissioner of Income Tax (Appeals). He relied on the following judgments (1) CIT vs. Ramanujam Thampi, 233 ITR 521 (Ker) (2) A.M. Shah & Co vs. CIT 108 Taxman 137 (Guj) (3) CIT vs. HCIL Kalindee Arsspl 37 Taxman.com 347 (Del) (4) Sharma Alloys (India) Ltd. vs ITO 37 Taxmann.com 51 .....

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ultivation like documents in support of purchase of seeds, fertilizers, pesticides and proof for sale of agricultural produce. However, the assessee furnished details of land, nature of crops without further details which provoked the Assessing Officer to treat the agricultural income declared by the assessee at G1,84,550/- as income from other sources. Consequent to this, the Assessing Officer levied penalty u/s.271(1)(c) of the Act. In this year, while levying penalty the Assessing Officer has .....

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income, after the Tribunal remitted the issue back to the file of the Assessing Officer to re-compute the agricultural income in the light of the assessment of assessee in the assessment year 2007-2008 and 2008-09 vide order dated 19.5.2010 in ITA No.384/Mds/2010, the Assessing Officer considered only 20% of G1,84,550/- as agricultural income which worked out to G36,910/- as income of assessee. Thus it means that the Assessing Officer was not sure what the exact income of the assessee from agri .....

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vied. In our opinion, as there is no material to suggest any undisclosed income as such levy of penalty cannot be sustained on estimated basis. This is not normal assessment and assessment was made consequent to search action and that is also by estimating portion of the agricultural income as non agricultural income. Had it been undisclosed income based upon concrete evidence recovered from search action, then our opinion would have been different. In the present case, the estimation of portion .....

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0/-. The Assessing Officer treated 20% of 1,94,600/- i.e worked out at G38,920/- as non agricultural income, consequent to assessment u/s.153A r.w.s. 143(3) r.w.s 254 of the Act. As discussed in the earlier assessment year 2000-2001 in earlier para (supra), penalty cannot be levied. We delete the penalty for the assessment year 2001-2002 as discussed in para 4 and 4.1. In the result, the assessee s appeal in ITA No.937/Mds/2014 is allowed. 6 ITA No.938/Mds/2014, assessment year :2002-03. The ass .....

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appeal by Revenue, the Assessing Officer made an addition in respect of unexplained bank deposits of G9,60,000/- vide order dated 05.06.2008, and levied penalty of G2,67,396/-. During the course of search, it was found that the assessee has made deposits of above amount in the saving bank account no.1397 with Indian Overseas Bank, Santhome Branch, Chennai. The assessee was not able to explain the source of deposits. Hence it was treated as income of the assessee and levied penalty u/s.271(1) (c .....

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the deposits. According to the assessee, the assessee is not educated and return subsequent to the search was filed by a Chartered Accountant who obviously has not made out a proper disclosure. The intention of the assessee was to make a proper disclosure, come out clean and pay the taxes. However, it was submitted that it was only the mistake of the Chartered Accountant and not of the assessee in proper disclosure. Later the assessee accepted for the addition to purchase peace and to avoid pro .....

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the assessee has concealed particulars of income and also not given any bonafide explanation for this. This case is squarely covered by the judgment of Supreme Court in the case of Mak Data (Pvt) Ltd. vs. CIT 358 ITR 593, wherein held that the assessee had only stated that it had surrendered the additional sum of ₹ 40,74,000 to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the Income-tax Department. The .....

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it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it was clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The Assessing Officer had reco .....

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in ITA No.954/Mds/2013 is allowed. 8. ITA No.939/Mds/2014, assessment year: 2003-2004 The assessee declared agricultural income of G.4,11,350/-. The Assessing Officer treated 20% of G4,11,350/- i.e. 82,270/- as non agricultural income, consequent to assessment u/s.153A r.ws. 143(3) r.w.s 254 of the Act. As discussed in the earlier assessment year 2000-2001 in earlier para (supra), penalty cannot be levied. We delete the penalty for the assessment year 2003-2004. In the result, the assessee s ap .....

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2009, the Assessing Officer considered items in (2) & (3) of above for levy of penalty u/s.271(1)(c) . In our opinion, levy of penalty was in respect of treating the agricultural income as non agricultural income which is only on estimation basis. Consequent to the Tribunal order for the assessment year 2007-08 and 2008-09 wherein the Assessing Officer considered only 20% of G4,45,350/- as agricultural income as discussed in the earlier para in the assessment year 2002-2003, the levy of pena .....

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in levy of penalty in respect of unexplained cash deposits of G4,00,000/-. This appeal of the assessee in ITA No.940/Mds/2014 for the assessment year 2004-2005 is partly allowed for statistical purposes. 10 ITA No.955/Mds/2013, assessment year: 2004-05 This appeal by Revenue. In this case penalty was levied for unexplained deposits of G18,20,000/-. The facts are similar as in the assessment year 2002-2003. Accordingly, levy of penalty u/s.271(1)(c) was confirmed as discussed in ITA No.954/Mds/2 .....

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,65,000/- (iii) Deemed dividend of G10,00,000/-. It is to be noted that penalty in respect of unexplained bank deposit was passed by the Assessing Officer in separate order dated 16.06.2008. Further, in penalty order dated 30.03.2010, he levied penalty in respect of other two items at G4,83,541/- as tax was evaded. 11.1 In respect of agricultural income, addition was reduced to 20% of G4,45,350/-, i.e G89,070/- which is only on estimation basis consequent to order of the Tribunal for the assessm .....

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