INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Assessee need to demonstrate that cash deposit in bank account were business receipts -

Assessee was a labour contractor who was called upon to explain the deposits made in his saving bank account. It was submitted that the assessee accepted that these emanated from contract work which had been omitted to be disclosed. Accordingly, it was pleaded that these amounts be taxed @ 8% since these were contract receipts. The explanation offered was not accepted. As a result of these additions made, penalty proceedings were initiated under section 271(1)(c). CIT(A) granted part relief. Held: Assessee needed to demonstrate that cash deposit in bank account were business receipts. In case assessee was able to demonstrate by way of supporting evidences, tax authorities in such an eventuality could then well consider the feasibility of allowing relief in the penalty proceedings. As such an eventuality would enable the tax authorities to consider the prayer consistently made that amount should have been taxed under section 44AD. In such an eventuality, plea in the penalty proceedings might qualify to be a valid argument justifying the quashing of penalty orders. Accordingly, in the interest of substantial justice, matter was remanded back to CIT(A) after providing opportunity of being heard to assessee.

Followed:CIT v. Reliance Petro Products (P.) Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC) CIT v. Zoom Communication (P) Ltd. (2010) 327 ITR 510 Delhi High Court : 2010 TaxPub(DT) 1957 (Del-HC) CIT v. Aero Traders (P.) Ltd. (2010) 322 ITR 316 Delhi High Court : 2010 TaxPub(DT) 1381 (Del-HC) and Hari Gopal Singh v. CIT (2002) 258 ITR 85 (P&H) : 2002 TaxPub(DT) 1625 (P&H-HC)

REFERRED :

FAVOUR : In assessee's favour (by way of remand)

A.Y. :

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