INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Alleged unexplained cash deposit - Cash fully explained

AO found that assessee deposited cash in his bank account. Assessee submitted that the said amount was in the form of maintenance charges received from company 'D' as per the maintenance agreement entered into by him with D. However, AO rejected the same on the ground that it was not understood as to how the assessee carried on the maintenance work without receiving any amount from D. He, therefore, held that the deposit of cash was an afterthought and treated the same as unexplained cash deposit and accordingly, imposed penalty under section 271(1)(c). Held: Since D already confirmed before the AO during the remand proceedings that it was paying maintenance charges to assessee, therefore, the cash deposited in the bank account stood explained being the amount received from D. Accordingly, the same stood deleted and hence, the penalty levied under section 271(1)(c) on the basis of such addition was also liable to be deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 271(1)(c)

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