COMMISSIONER OF INCOME TAX Vs. P.ROJES

JUDGEMENT

(1.) The Revenue is on appeal against the order passed by the Tribunal in ITA.No.531/Mds/2009 dated 05.10.2009, for the relevant assessment year 2005-2006 by raising the following substantial question of law:-

(2.) The assessee, is an individual. He originally admitted the income of Rs.1,99,440/- under Section 44 AF of Income Tax Act. The said assessment was selected for scrutiny under 'CASS' based on information AIR() that the assessee had deposited cash of Rs.47,36,000/- on 31.03.2005. On notice, the assessee filed a letter on 30.11.2007 along with the revised Profit and Loss Account statement with copy of the bank statement and stated that he had not deposited cash of Rs.47,36,000/- on a single day and that the cash deposit was spread over for the period of twelve months and the deposit was made out of sales and also recovery from the sundry debtors. As such the assessee had admitted the net profit of Rs.3,92,649/- being 5% of the total gross income of Rs.78,52,980/-. Further, the assessee agreed for addition of 3% being the profit which works out to Rs.2,35,589/-. Thus the Income Tax Officer assessed the income as Rs.6,58,240/-. Consequently, the Assessing Officer imposed penalty of Rs.4,28,706/- being 300% by invoking his power under Section 271(1)(c) of the said Act.

(3.) Aggrieved against the said imposition of penalty, assesee filed appeal before the Commissioner of Income Tax (Appeals) in ITA.No.20/08-09. The Appellate Authority confirmed the order of penalty by holding that the assessee had not shown the deposits and he had not given any explanation, except saying that books of accounts were not maintained. The Appellate Authority further observed that the reasons for increase the profit percentage from 5% to 8% was not clear. Consequently, the appeal filed by the assessee was dismissed.