Rachna Mediratta vs ITO Ward-13(3), New Delhi | Assessment Year 2015-16 | Penalty Appeal Decision

Rachna Mediratta vs ITO Ward-13(3), New Delhi: Assessment Year 2015-16

Case Number: ITA 6498/DEL/2019

Appellant: Rachna Mediratta, New Delhi

Respondent: ITO Ward-13(3), New Delhi

Assessment Year: 2015-16

Order Date: 7th February 2023

Pronounced On: 7th February 2023

Order Type: Final Tribunal Order

Background

In this case, Rachna Mediratta, the appellant, filed an appeal against the order passed by the Income Tax Officer (ITO), Ward-13(3), New Delhi, for the assessment year 2015-16. The appeal was filed to challenge the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was levied by the Assessing Officer (AO) for the alleged concealment of income and furnishing of inaccurate particulars, based on the cash deposits and low household expenses reported by the appellant.

Why the Case Was Filed

The case was filed by the appellant to dispute the penalty imposed by the AO on the grounds that the cash deposits in her bank account and the low household expenses were genuine and justifiable. The appellant claimed that the cash deposits were gifts from her husband for the purchase of gifts or jewelry, and the low household expenses were due to living in a joint family where the majority of household expenses were borne by other family members. The appellant sought relief from the penalty, arguing that the AO’s decision was unjust and lacked consideration of the appellant’s explanations.

Tribunal’s Findings

The Income Tax Appellate Tribunal (ITAT), consisting of Shri N.K. Choudhry (Judicial Member) and Dr. B.R.R. Kumar (Accountant Member), reviewed the case and the arguments presented by both parties. The Tribunal noted that the AO had made additions of Rs.4,00,000/- and Rs.4,80,000/- due to the appellant’s failure to furnish adequate evidence for the cash deposits and low household expenses.

The Tribunal observed that the appellant had provided reasonable explanations for the cash deposits and low household expenses, which were not adequately considered by the AO or the Commissioner of Income-tax (Appeals). The appellant’s claim that the cash deposits were from past savings or gifts from her husband was rejected by the authorities below without substantial evidence to the contrary.

Penalty Proceedings and ITAT’s Decision

The penalty proceedings were initiated by the AO on the basis of both concealment of income and furnishing inaccurate particulars of income. However, the penalty was eventually levied only for furnishing inaccurate particulars of income. The ITAT found that the penalty proceedings and the subsequent imposition of the penalty were not consistent with each other. Moreover, the Tribunal highlighted that penalty proceedings are independent and should not be influenced solely by the outcome of the assessment order.

The ITAT further noted that the reasons provided by the appellant for the cash deposits and low household expenses were reasonable and logical. The Tribunal emphasized that merely because the appellant did not challenge the additions before the appellate authority did not automatically justify the imposition of a penalty.

Conclusion and Final Judgment

The ITAT concluded that the levy of the penalty was unwarranted under the circumstances of the case. The Tribunal deleted the penalty of Rs.2,71,920/- imposed by the AO and affirmed by the Commissioner of Income-tax (Appeals). The appeal filed by Rachna Mediratta was allowed, providing relief to the appellant from the penalty imposed for the assessment year 2015-16.

This case underscores the importance of independent examination in penalty proceedings and reaffirms that penalties should not be imposed without a thorough and fair evaluation of the facts and circumstances surrounding each case.

Rachna Mediratta vs ITO Ward-13(3), New Delhi | Assessment Year 2015-16 | Penalty Appeal Decision