Concealment penalty u/s 271(1)(c) deleted on humanitarian grounds by ITAT

Concealment penalty u/s 271(1)(c) deleted on humanitarian grounds as the assessee had died, his business was closed and his widow was depositing the quantum demand-ITAT

ABCAUS Case Law Citation:
ABCAUS 2230 (2018) (03) ITAT

The appellant assessee was aggrieved by the order of the CIT(A) in confirming the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 (the Act).

The assessment of the assessee had been made under section 144 of the Act which included unexplained cash deposits in his two bank accounts. Before the CIT(A), it was submitted that cash deposits in bank account was made out of cash withdrawals from the other account.

The CIT(A) accepted the contentions of the assessee and deleted the additions. However, The Tribunal upheld the addition made and that there was no commercial expediency for withdrawing substantial amount from one account and depositing the same in other account within a few days.  

The Hon’ble High Court dismissed the appeal of the assessee.

The Assessing Officer issued a show cause notice under section 271(1)(c) which was replied by the assessee.However the AO did not found the reply convincing and accordingly he imposed penalty under section 271(1)(c) of the Act in respect of unexplained cash deposit in bank.

The CIT(A) upheld the penalty order passed by the Assessing Officer under section 271(1)(c) of the Act.

Before the tribunal, it was stated that the assessee had died and copy of death certificate was produced. It was submitted that a petition was moved before the Assessing Officer by the wife of deceased assessee depositing part amount with regard to the quantum demand. The widow of deceased assessee had submitted to the AO that after the demise of her husband, the business of the assessee had stopped, she was an old aged widow and having health ailments and since she have already started depositing the amount in Government account relating to quantum demand, on humanitarian grounds the penalty in the case of deceased assessee may be cancelled.

The Tribunal observed that the entire business activities of the deceased assessee was closed and none of his legal heirs were conversant with the facts of the case and moreover they were depositing the amount towards quantum demand into the Government account.

In view of the above, the ITAT opined that in the interest of justice, penalty under section 271(1)(c) of the Act should be cancelled and accordingly the Tribunal ordered the deletion of the penalty.