Taxpayer is Co-Owner of Bank Account, No Concealment of Income: ITAT deletes penalty u/s 271(1) (c) of Income Tax Act [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 observing that there is no concealment of income  particulars. The taxpayer is the co-owner of the bank account whose deposits have been added was also not taken into account either by the Assessing Officer ( AO ) or by the Commissioner of Income Tax (Appeals) [CIT (A)].  

Information AIR data reveal that during the financial year 2006-07 the assessee deposited cash of Rs.16, 97,000/- in savings Bank Account. The assessee did not file a return of income. The assessment was reopened after recording reasons and notice under Section 148 of the Income Tax Act, 1961 was issued on 25.03.2014. In response to the notice under Section 148 of the Act, the assessee did not file return of income.

The assessee Suchit Arvindbhai Patel, failed to comply with the statutory notices and, therefore, the assessment was finalised under Section 144 read with Section 148 of the Act on 29.12.2014 determining the total income at Rs.23, 67,710/- making addition to that effect as undisclosed income from other sources being cash deposited, cheque deposits and interest income accrued in DCB Bank Account. Penalty proceedings under Section 271(1)(c) of the Income Tax Act were initiated for concealment of income and notice under Section 274 read with Section 271(1)(c) of the Income Tax Act was issued on 29.12.2014. The assessee did not file any reply as such and the Assessing Officer imposed a penalty to the extent of Rs.7, 40,871/- under Section 271(1)(c) of the Income Tax Act.

Mr. Parin S Shah representing the assessee submitted that there was neither concealment of income nor furnishing of inaccurate particulars of income which needs invocation of penalty. In fact, the assessee was an NRI during the year under consideration and did not have any income chargeable to tax and, therefore, the assessee did not file any return of income

Further submitted that no case for concealment of income or for furnishing of inaccurate particulars of income was made out by the Assessing Officer. The assessee was the third co-owner in respect of the Bank Account from which deposits have been added to assessee’s income, therefore, this is not a fit case for penalty

The bench noted that the Assessing Officer as well as the CIT(A) has not taken cognisance of the status of the assessee for the assessment year 2007-08 and without looking into the same, has simply imposed penalty without verifying whether there is concealment of income or furnishing of inaccurate particulars of income by the assessee.

The two member bench of the tribunal comprising Anupama Gupta (Accountant member) and Suchithra Kamble (Judicial member) concluded that the assessee was the third co-owner of the Bank Account whose deposits have been added was also not taken into account either by the Assessing Officer or by the CIT (A). Thus, this amounts to non-application of mind by invoking Section 271(1)(c) of the Income Tax Act which was  a penalty. Therefore, in the present assessee’s case, the penalty does not sustain. Appeal of the assessee was allowed.

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