UNNAM PARTHASARATHY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS appeal by the assessee is filed against the order of the learned Commissioner of Income -tax (Appeals) II, Hyderabad dated 2.1.2014, confirming the penalty of Rs. 12,66,839 imposed by the Assessing Officer under S. 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2008 -09.

(2.) Facts of the case in brief are that the assessee is engaged in the business of running taxies on hire under the name of M/s. Cyber Cabs. He is also engaged in the business of wholesale trading in automobile spare parts under the name of M/s. Chowdary Automotives, Bangalore. Assessee has filed return of income for the year under consideration on 25.2.2009 declaring taxable income of Rs. 6,05,592 and agricultural income of Rs. 5,94,350. During the course of assessment, the Assessing Officer examined in detail the huge cash deposits made by the assessee in his bank account. It was explained by the assessee that the amounts received by him from his friends and relatives constituted the sources for such cash deposits made into the bank account. Not satisfied with the explanation of the assessee with regard to such cash deposits, the Assessing Officer are at the peak of such cash deposits at Rs. 35,97,610, which was added to the income of the assessee. The Assessing Officer further noticed that an amount of Rs. 11,22,651 was added to the opening balance of capital account of the assessee on 1.4.2007, and this amount was received from M/s. Genpact. It was observed that the assessee was hiring out taxies to M/s. Genpact and the amount received from M/s. Genpact was not considered in the preceding year 2007 -08. During the course of asst proceedings, the Assessing Officer recorded the statement of the assessee under S. 131 raising several questions on the sources of cash deposits in the bank and also on the addition to capital account as on 1.4.2007. Not convinced with the explanation of the assessee, the Assessing Officer made an addition of Rs. 35,97,610 on account of unexplained cash deposits treating them as unexplained investment under S. 69; and Rs. 11,22,651 on account of unexplained addition to the opening balance of capital account of the assessee as on 1.4.2007. With these two additions, the Assessing Officer completed the assessment on a total income of Rs. 53,47,557, vide order of assessment dated 30.12.2010 passed under S. 143(3) of Act. While thus completing the assessment, the Assessing Of also initiated the penalty proceedings for concealment with regard to the above two additions under S. 271(1)(c) of the Act, and with the assessee, having not preferred any appeal in quantum proceedings, the assessment made with the above two additions, has become final.

(3.) DURING the course of penalty proceedings, the Assessing Officer not finding merit in the explanation of the assessee in response to the show cause notice issued proposing the penalty for concealment, imposed the impugned penalty of Rs. 12,66,839, vide his order dated 24.6.2011 passed under S. 271(1)(c) of the Act.