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Judgment
PER BRAJESH KUMAR SINGH, AM:
This appeal filed by the assessee is directed against the order dated 11.02.2025 of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the penalty order dated 17.03.2024 passed under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) levying of penalty or Rs. 4,99,210/- by the Assessment Unit, Income Tax Department (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2012-13.
In this case, the AO had made an addition of Rs. 22,17,700/- u/s 68 of the Act on account of credit entries in the bank account of the assessee on which penalty u/s 271(1)(c) of the Act levying penalty of Rs. 4,99,210/- being 100% of the addition of Rs. 22,17,700/- was levied. Against this order, the assessee filed an appeal before the Ld. CIT(A), who confirmed the impugned penalty order ex-parte on the ground that the assessee did not submit any explanation in support of the appeal despite several opportunities being given to the assessee as per the details mentioned in para no. 3 of the appellate order.
Further, aggrieved with the said order, the assessee filed an appeal before the Tribunal on the following grounds:
“1.That the learned authority below erred in passing the order on erroneous and insufficient grounds.
2.That in any event the order passed is Un-lawful, Unjustified and illegal taking into consideration the facts of the case apparent on records.
3.That the learned authority below further erred in imposing penalty of Rs.499210 on account of concealment of income whereas no concealment made nor any concealment proved.”
At the outset, the Ld. Counsel for the assessee submitted that in respect of the appeal filed by the assessee, in respect of the quantum addition of Rs. 22,17,700/-, the co-ordinate Bench of the Tribunal vide its order dated 22.01.2026 in ITA No. 8704/Del/2025, restricted the said addition to Rs. 2 lakhs and deleted the balance addition of Rs. 20,17,700/-. The relevant extract of the order of the Tribunal is reproduced as under:
“ 4. That being the case, this tribunal hereby notices from a perusal of case records that the assessee/appellant is engaged in trading business of electronic items. He further appears to have deposited cash of Rs.12.29 lakhs in Assessment Year 2011-12 which stood accepted in the Assessing Officer’s section 143(3) assessment framed on 06.12.2018 (page-10 of the paper book). All this gives rise to a prima facie inference in assessee’s favour and against the department is that the impugned cash deposits represent his cash sales turn over and cash in hand which could not be reconciled and verified in both the lower proceedings in entirety.
5.Be that as it may, it is thus deemed appropriate and in the larger interests of justice that a lumpsum addition of only Rs.2 lakhs in the given facts would be just and proper with a rider that the same shall not be treated as precedent. The assessee gets relief of Rs.20,17,700/- lakhs in other words. Necessary computation shall follow as per law.”
4 In view of the above facts, since the Tribunal has substantially accepted the explanation of the assessee, that the impugned cash deposits represented the cash sales turn over and cash in hand of the assessee, which could not be reconciled and verified in both the lower proceedings in entirety and restricted the addition to Rs. 2 lakhs on estimate basis, the penalty of Rs. 4,99,210/- levied by the AO under section 271(1)(c) of the Act is not sustainable and the same is hereby deleted. Accordingly, Ground No. 3 of the appeal is allowed.
In the result, appeal of the assesses is allowed.