The case ITA 904/DEL/2019 involves an appeal filed by Ms. Sheetal Mehra, New Delhi, against the Income Tax Officer, Ward-40(1), New Delhi. The assessment year in question is 2007-08, and the appeal was filed on February 6, 2019. The final order was pronounced on February 3, 2022.
Ms. Sheetal Mehra filed regular returns of income for the assessment years 2007-08 to 2009-10. The case was reopened under Section 148 of the Income Tax Act, and assessments were made treating cash deposits and funds transferred in her account as unexplained investments. The assessment orders were passed under Section 143(3)/147 on March 3, 2014.
Ms. Mehra contended before the Commissioner of Income Tax (Appeals) [CIT(A)] that the cash deposits were from her business dealing in gold ornaments and bullion trading. Alternatively, she argued that only the peak amount of these deposits should be taxed if her explanation was not accepted. The CIT(A) reduced the additions by considering peak credits, thereby treating the deposits as income from undisclosed sources for the three assessment years.
For the assessment year 2007-08, the addition was reduced from Rs. 1.41 crores to Rs. 9,59,158. Similarly, for the assessment year 2008-09, the cash deposit of Rs. 7,43,75,300 was reduced to Rs. 29,97,239, and for the assessment year 2009-10, the cash deposit of Rs. 2,47,06,100 was reduced to Rs. 38,52,454.
The Revenue appealed to the Tribunal, arguing that the assessee’s explanation of trading in bullion and jewellery was not presented before the Assessing Officer (AO) and that the CIT(A) accepted the peak credit without calling for a remand report. The Tribunal accepted the Revenue’s plea, setting aside the assessment orders for fresh adjudication by the AO.
In compliance with the Tribunal’s order, fresh assessments were made by the AO on December 26, 2019. However, before these fresh assessments, the AO had levied penalties under Section 271(1)(c) of the Income Tax Act for the additions made in the original assessment orders. The CIT(A) upheld these penalties despite the Tribunal’s order setting aside the original assessments.
Ms. Mehra’s counsel argued that the penalty orders became infructuous since the assessments on which the penalties were based were set aside by the Tribunal. The Revenue also admitted that the penalty orders were no longer valid. The Tribunal agreed, noting that the penalties could not stand since the assessments had been set aside and fresh assessments were pending before the CIT(A).
The Tribunal canceled the penalties imposed for the assessment years 2007-08 to 2009-10, allowing the appeals. It was noted that any penalty proceedings related to the fresh assessments would be a separate matter depending on the outcome of those assessments.
Order Pronounced in Open Court on February 3, 2022, by Shri Anil Chaturvedi, Accountant Member, and Shri Amit Shukla, Judicial Member.
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