IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. No: 547/AHD/2019 (Assessment Year: 2014-15) Hemant Navinbhai Modi V/S Income Tax Officer, Ward- 47, Harishchandra Park 5 (3)(3), Ahmedabad Co.Op. Hou. Soc. Ner Sanskar Bharti Society, Naranpura, Ahmedabad- 380013 (Appellant) (Respondent) PAN: ASCPM8299B Appellant by Shri P. F. Jain, AR Respondent by Shri Mudit Nagpal, Sr. D.R. ( )/ORDER Date of hearing 26 -06-2019 Date of Pronouncement 11-09-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. present appeal is directed at instance of assessee against order of ld. CIT(A) dated 20.02.2019. sole grievance of assessee is that ld. CIT(A) 2 ITA No. 547/Ahd/2019 . A.Y. 2014-15 has erred in confirming penalty of Rs. 75,830/- imposed by Assessing Officer u/s. 271(1)(c) of Income Tax Act. 2. brief facts of case are that assessee has filed his return of income on 02.06.2015 declaring total income at Rs. 2,07,104/-. case of assessee was selected for scrutiny assessment and notice u/s. 143(2) was issued and served upon assessee. 3. During course of assessment proceedings, it came to notice of A.O. that assessee was having Saving Bank account with Bank of Baroda, Naranpura but he has made deposits in this bank account. Ld. Assessing Officer has confronted assessee to disclose source of deposits of Rs. 2,40,96,015/-. assessee contended that total deposit was of Rs. 25,72,665/- and not Rs. 2,40,96,015/-. According to assessee, he was small man carrying out computer maintenance and repairing activities. These deposits were made out of receipt received from various customers on repair of their computers. He agreed that if 20% of these deposits is being taken as tax then he has no grievance. Ld. Assessing Officer has recognized such deposits as business receipt and ultimately computed tax at 20% as income of these amounts and made addition of Rs. 5,14,533/-. In this way income of assessee has been determined at Rs. 7,21,640/-. 4. Ld. Assessing Officer has initiated penalty proceeding u/s. 271(1)(c) of Income Tax Act and after hearing assessee imposed penalty of Rs. 75,830/-. calculation of penalty read as under: 3 ITA No. 547/Ahd/2019 . A.Y. 2014-15 Calculation of Penalty u/s 271(l)(c) Sr. No. Items Amount 1 Income assessed/Revised Income Rs. 7,21,637/- (including concealed Income) 2 Income other than concealed Income Rs. 2,07,104/- 3 Concealed Income Rs. 5,14,533/- 4 Tax on assessed/ Revised Income Rs. 76,557/- (including concealed Income) (As per Sr.l) 5 Tax on Income other than concealed Rs. 731/- Income (As per Sr.2) 6 Tax on concealed Income @100% of Rs. 75,826/- tax (Sr.4)-(Sr.5) 7 Tax on concealed Income @300% of Rs. 2,27,478/- tax 4.1 Considering facts and circumstances of case, I hereby levy penalty of Rs. 75,830/-, being 100% of tax on concealed income as against Rs. 2,27,478/- being 300% of tax on concealed income. Accordingly, I hereby levy penalty of Rs.75,830/-. 4.2 This order has been passed with prior approval of Addl. Commissioner of Income-tax, Range-5(3), Ahmedabad, conveyed vide his letter No. Addl. CIT/Ranqe- 5(3)/Pen. Appro./271(l)(c)/2017-18 dated 20.06.2017. 5. Appeal to ld. CIT(A) did not bring any relief to assessee. 6. With assistance of Ld. Representative, we have gone through record carefully. 4 ITA No. 547/Ahd/2019 . A.Y. 2014-15 7. Section 271(1)(c) of Act has direct bearing on controversy and, therefore, it is salutary upon us to take note of relevant provisions of section 271(1)(c) along with Explanation 1 which read as under: 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) If Assessing Officer or Commissioner (Appeals) or CIT in course of any proceedings under this Act, is satisfied that any person (a) and(b) . (c) has concealed particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i) and (Income-tax Officer,) (iii) in cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, sum which not be less than, but which shall not exceed three times, amount of tax sought to be evaded by reason of concealment of particulars of his income or fringe benefit furnishing of inaccurate particulars of such income or fringe benefits; Explanation 1- Where in respect of any facts material to computation of total income of any person under this Act, (A) Such person fails to offer explanation or offers explanation which is found by Assessing Officer or Commissioner (Appeals) or CIT to be false, or (B) such person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all facts relating to same and material to computation of his total income have been disclosed by him, then, amount added or disallowed in computing total income of such person as result thereof shall, for purposes of Clause (c) of this sub-section, be deemed to represent income in respect of which particulars have been concealed". 8. bare perusal of this section would reveal that for visiting any assessee with penalty, Assessing Officer or Learned CIT(Appeals) during 5 ITA No. 547/Ahd/2019 . A.Y. 2014-15 course of any proceedings before them should be satisfied, that assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as quantification of penalty is concerned, penalty imposed under this section can range in between 100% to 300% of tax sought to be evaded by assessee, as result of such concealment of income or furnishing inaccurate particulars. (The other most important features of this section is deeming provisions regarding concealment of income. section not only covered situation hi which assessee has concealed income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to computation of total income under provisions of Act, assessee fails to offer explanation or explanation offered by assessee is found to be false by Assessing Officer or Learned CIT(Appeals); and, (b) where in respect of any fact, material to computation of total income under provisions of Act, assessee is not able to substantiate explanation and assessee fails to prove that such explanation is bona fide and that assessee had disclosed all facts relating to same and material to computation of total income. Under first situation, deeming fiction would come to play if assessee failed to give any explanation with respect to any fact material to computation of total income or by action of Assessing Officer or Learned CIT(Appeals) by giving categorical finding to effect that explanation given by assessee is false, hi second situation, deeming fiction would come to play by failure of assessee to substantiate his explanation in respect of any fact material to computation of total income and in addition to this assessee 6 ITA No. 547/Ahd/2019 . A.Y. 2014-15 is not able to prove that such explanation was given bona fide and all facts relating to same and material to computation of total income have been disclosed by assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in above two situations then related addition or disallowance in computing total income of assessee, for purpose of section 271(1)(c) would be deemed to be representing income in respect of which inaccurate particulars have been furnished. 9. In light of above, if examine facts of present case then it would reveal that it is not unexplained cash deposits in bank account. If assessee has made deposits of receipts which he has received during course of his computer repair business. This fact has been accepted even by Assessing Officer while determining element of income at 20% of these deposits in bank account. 10. only allegation against assessee by Assessing Officer for visiting penalty is that while he failed to account for these amounts in his return of income. assessee has submitted that on account of some oversight this has not been taken into consideration by tax consultants. There is not deliberate attempt at end of assessee to avoid payment of taxes nor there is any planning for withholding certain information from revenue. Being layman engaged in business of computer repairs etc., he might have failed to take cognizance of this fact when his return was filed. 11. Considering bona fide of assessee and non recording of any finding by Assessing Officer that explanation put forth by assessee is false. We are 7 ITA No. 547/Ahd/2019 . A.Y. 2014-15 of view that assessee does not deserve to be visited with penalty. Therefore, appeal of Assessee is allowed and impugned penalty is deleted. Order pronounced in Open Court on 11- 09- 2019 Sd/- Sd/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad: Dated 11/09/2019 Rajesh Copy of Order forwarded to:- 1. Appellant. 2. Respondent. 3. CIT (Appeals) 4. CIT concerned. 5. DR., ITAT, Ahmedabad. 6. Guard File. By ORDER Deputy Asstt.Registrar ITAT,Ahmedabad Hemant Navinbhai Modi v. Income-tax Officer, Ward-5(3)(3), Ahmedabad