Shri Vivek Karan, Bangalore V. DCIT, Bangalore

ITA 104/BANG/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1567 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-02-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 11-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: B A NAVEEN
• Keywords: Gift; Source of fund
• Section: 271(1)(c); 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 104/BANG/200 9 ASSESSMENT YEAR : 2001 - 02 SRI VIVEK KARAN, # B - 2, REGENCY MANOR, DAVIS ROAD, COOK TOWN, BANGALORE 560 084. : APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9(1), BANGALORE. : RESPONDENT APPELLA NT BY : SHRI B.A. NAVEEN, ADVOCATE RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADDL. CIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) - II, BANGALORE IN ITA NO.219/DC 9(1)/CIT(A) - II/06 - 07 DATED 28.11.2008 FOR THE A.Y. 2001 - 02 PASSED U/S. 271(1)(C) OF THE A CT. 2. THE ASSESSEE HAS RAISED TWO GROUNDS IN HIS APPEAL WHEREIN THE SECOND GROUND IS GENERAL IN NATURE AND DOES NOT SURVIVE FOR ADJUDICATION. IN GROUND NO.1, THE ASSESSEE HAS ALLEGED THAT THE DCIT HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO FOR LEVY ING PENALTY U/S. 271(1)( C ) OF THE ITA NO.104/BANG/09 PAGE 2 OF 6 ACT FOR ADDITION MADE ON ACCOUNT OF GIFTS RECEIVED, CONSIDERING IT TO BE THE INCOME OF THE ASSESSEE DISREGARDIN G THE CONFIRMATION OF THE DONOR . 3. SUBSEQUENT TO AN ORDER U/S. 263 AN ASSESSMENT ORDER U/S. 143(3) R.W.S. 263 O F THE ACT WAS PASSED BY THE LD. AO ON 22.8.2005 WHEREIN AN AMOUNT OF RS .5 LAKHS WAS BROUGHT TO TAX ON THE FINDING THAT THE GIFT GIVEN TO THE ASSESSEE BY THE DONOR IS NOT GENUINE AND AGAINST HUMAN PROBABILITY. THE ASSESSEE HAD CLAIMED THAT HE HAD RECEIVED AN AMOUNT OF RS.5 LAKHS AS GIFT FROM THE WIFE OF HIS EMPLOYEE WHO WAS IN SERVICE WITH HIM SINCE 1995, AND FURTHER THE WIFE OF THE ASSESSEE S EMPLOYE E RECEIV ED SUCH SUM FROM HER FATHER. THE LD. AO CAME TO SUCH CONCLUSION BECAUSE NO DETAILS SUCH AS ; SOURC E OF INCOME OF THE DONOR S FATHER OR INCOME TAX RETURN OF THE DONOR S FATHER WERE FURNISHED BEFORE HIM, THE BANK EXTRACT OF THE DONO R DID NOT REVEAL ENOUGH SOURCE T O DONATE SUCH SUM, THE CREDITWORTHINESS OF THE EMPLOYEE S WIFE WAS NOT ESTABLISHED, NO DETAI LS OF INCOME FROM SHARE TRANSACTION OF THE DONOR S FATHER WERE FURNISHED WHIC H WAS STATED TO BE THE PRIMARY SOURCE OF HIS INCOME AND FURTHER A SUM EQUIVALENT TO RS.5 LAKHS HAD BEEN DEPOSITED ON 16.6.2000 BY THE DONOR IN HER ACCOUNT AND A CHEQUE FOR RS.5 LA KHS WAS ISSUED ON THE NAME OF THE APPELLANT ON 25.6.2000. THEREFORE, THE LD. AO HELD IT TO BE A PLANNED GIFT. 4. THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LD. AO CAME IN APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) BASED ON THE FINDINGS OF THE TRIBUNAL IN THE ASSESSEE S CASE ITA NO.62/BANG/2006 DA TED 30.3.2007, CAME TO A VIEW THAT THERE WERE ENOUGH MATERIALS IN THE ASSESSMENT AND PENALTY ORDERS TO SHOW THAT THE GIFT WAS NOT GENUINE AND THEREFORE PENALTY WAS RIGHTLY LEVIED. THE LD. CIT(A) ALSO PLACED RELIANCE I N THE CASE UNION OF INDIA ITA NO.104/BANG/09 PAGE 3 OF 6 & OTHERS V. DHARMENDRA TEXTILES PROCESSORS & OTHERS REPORTED IN 306 ITR 277. 5. MR. B.A. NAVEEN, ADVOCATE ASSESSEE S REPRESENTATIVE FORCEFULLY SUBMITTED BEFORE US THAT THE ASSESSEE HAD SUBMITTED ALL THE PARTICULARS AND DETAILS OF TH E DONOR ALONG WITH HER CONFIRMATION. FURTHER INFORMATION WHAT WAS BEST AVAILABLE WITH HIM WAS PRODUCED BEFORE THE REVENUE. THOUGH ALL INFORMATION WAS AVAILABLE BEFORE THE REVENUE, THE REVENUE HAD NOT VENTURED IN TO MAKE ANY ENQUIRIES WITH THE DONOR OR HE R FATHER TO ASCERTAIN THE FACTS. LD. AR MR. B.A. NAVEEN VOCIFEROUSLY ARGUED THAT THOUGH FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT MAY APPEAR A CASE F IT FOR MAKING ADDITIONS , IT IS CERTAINLY NOT A FIT CASE TO LEVY PENALTY BASED ON SURMISES AND CONJEC TURES. THE LD. COUNSEL RELIED ON THE DECISION OF THE CASE A. RAJENDRAN & ORS. V. ACIT (2010) 47 DTR (CHENNAI)(TRIB) 178. 6. SMT. JACINTA ZIMIK VASHAI, LD. DR STOUTLY OPPOSED TO THE SUBMISSION OF THE LD. COUNSEL AND SUBMITTED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE GIFT RECEIVED WAS GENUINE. IT WAS HE WHO HAS TO CONVINCE THE REVENUE REGARDING THE CREDITWORTHINESS OF THE DONOR AND CIRCUMSTANCES UNDER WHICH THE GIFT WAS RECEIVED. LD. DR FORCEFULLY SUBMITTED THAT THE ENTIRE TRANSACTION IS SHAM AND BOG US AND THE CLAIM OF THE ASSESSEE FOR HAVING RECEIVED THE GIFT OF RS.5 LAKHS CANNOT BE BELIEVED AT ANY STRETCH OF IMAGINATION. LD. DR RELIED ON THE FOLLOWING CASE LAWS: (I) R. SRINIVASAN & CO. V. CIT 97 ITR 431 (MAD) (II) CIT V. MASTER SUNIL R. KALRO 292 ITR 86 (MAD) (III) CIT V. T.J. MATHAI 269 ITR 492 (KER) ITA NO.104/BANG/09 PAGE 4 OF 6 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS PRODUCED BEFORE US. ON ANALYZING THE FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE HAD FURNISHED PARTICULARS ABOUT THE DONOR AND ALSO DO NOR S FATHE R FROM WHOM THE SOURCE OF FUND ORIGINATED . THE REVENUE WAS AT LIBERTY TO MAKE A THOROUGH ENQUIRY OF THE DONOR OR HIS FATHER TO FIND OUT WHETHER THEY WERE IN ACTUAL POSITION TO GIFT THE ASSESSEE WITH SUCH SUM. HOWEVER, THE REVENUE HAD FAILED TO DO SO. NO DOUBT FROM THE FACTS AND PECULIAR CIRCUMSTANCES OF THE CASE, THE LD. AO WAS WITHIN HIS REALM TO MAKE AN ADDITION OF RS.5 LAKHS ON THE PRESUMPTION THAT THE DONOR S CREDITWORTHINESS IS NOT ESTABLISHED AND THERE IS NO SUFFICIENT CAUSE FOR THE DONO R TO GIFT THE AMOUNT TO THE ASSESSEE. THE DEPOSIT OF CASH IN THE BANK ACCOUNT OF THE DONOR AND THE ISSUANCE OF CHEQUE TO THE ASSESSEE WITHIN A SHORT SPAN OF ONE WEEK GOES ALSO AGAINST THE ASSESSEE. HOWEVER, FOR LEVYING PENALTY U/S. 271(1)(C) OF THE ACT, THE REVENUE HAS TO ADVANCE A STEP FORWARD TO ESTABLISH THE FACT THAT THE GIFT WAS REALLY BOGUS. THE CASE RELIED UPON BY THE ASSESSEE A. RAJENDRAN & OTHERS V. ACIT CITED SUPRA IS QUITE RELEVANT HERE, THE GIST OF WHICH IS REPRODUCED HEREBELOW: THOUGH ADDIT IONS MADE BY THE AO WERE SUSTAINED DISBELIEVING THE ALLEGED GIFTS RECEIVED BY THE RESPECTIVE ASSESSEES ON THE BASIS OF PREPONDERANCE OF PROBABILITY, IT CANNOT BE SAID THAT THE AMOUNTS WERE CONCEALED INCOME OR THE EXPLANATIONS FURNISHED BY THE ASSESSEE WER E NOT BONA FIDE AS THE DONOR HAD APPEARED AND CONFIRMED THE GIFTS AND ALSO EXPLAINED THAT HE HAD MADE THE GIFTS ON ACCOUNT OF HIS CLOSE RELATIONSHIP WITH THE ASSESSEES AND, THEREFORE, PENALTY UNDER S. 271(1)(C) WAS NOT LEVIABLE. 8. THE CASE LAWS REFERRED BY THE REVENUE ARE ANALYZED HEREINBELOW BRIEFLY: ITA NO.104/BANG/09 PAGE 5 OF 6 (I) R. SRINIVASAN & CO. V. CIT 97 ITR 431 (HC MAD.) : IN THIS CASE THE TRIBUNAL HAD UPHELD PENALTY NOT MERELY ON THE BASIS OF REJECTION OF ASSESSEE S EXPLANATION, BUT ON THE CONSIDERATION OF CONCRETE AND POSI TIVE MATERIALS GATHERED IN ASSESSMENT PROCEEDINGS. (II) CIT V. MASTER SUNIL R. KALRO 292 ITR 86 (HC MAD.) : IN THIS CASE, THE ASSESSEE HAD RECEIVED GIFT FROM TWO PERSONS VIZ., MR. MOHAN AND MR. ARJUNDAS, RESIDENTS OF SINGAPORE. THERE WAS NO CONFIRMATI ON LETTERS FROM THE DONORS. NO OTHER DETAILS OR PARTICULARS WERE PRODUCED BEFORE THE AO TO SHOW THE IDENTITY OR THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE. IT WAS CLEARLY ESTABLISHED BY THE AO THAT THE GIFTS ARE BOGUS WHICH WAS CONFIRMED BY THE LD. CIT(A) AND HIGHER JUDICIARY. IN THESE CIRCUMSTANCES, IT WAS HELD THAT IT CANNOT BE SAID THAT THIS IS A CASE OF NO CONCEALMENT OR OF NO ACCURATE PARTICULARS OF INCOME AND, THEREFORE PENALTY U/S. 271(1)(C) IS LEVIABLE. IN THE CASE BEFORE US, THE ASSES SEE HAS ESTABLISHED THE IDENTITY OF THE DONOR AND HER SOURCE , FURNISHED THE ADDRESS OF THE DONOR AND SUBMITTED THE CONFIRMATION LETTER. THE REVENUE HAD AN OPPORTUNITY TO EXAMINE TH E CREDITWORTHINESS OF THE DONOR AND ALSO HER FATHER , HOWEVER, FAILED TO DO SO. THEREFORE THE FACTS AND CIRCUMSTANCES OF THIS CASE IS DISTINGUISHABLE. (III) CIT V. T.J. MATHAI 269 ITR 492 (KER) : IN THIS CASE, IT WAS HELD BY THE HON BLE KERALA HIGH COURT THAT AFTER COMING INTO FORCE OF EXPLANATION 271(1)(C) THE BURDEN IS ON THE ASSE SSEE TO SHOW THAT THERE IS NO CONCEALMENT OF ANY PARTICULARS OF INCOME. THE FACTS OF THE CASE SHOWS THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THAT HE WAS NOT IN RECEIPT OF CERTAIN ITA NO.104/BANG/09 PAGE 6 OF 6 INCOME WHICH WAS EXPOSED PURSUANT TO THE SEARCH OPERATIONS IN HIS PREMISE S. THEREFORE IT IS EVIDENT THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE DIFFERENT FROM THE CASE IN HAND. 9. THE ASSESSEE HAD FURNISHED THE IDENTITY OF THE DONOR AND FATHER FROM WHOM SHE HAD RECEIVED THE FUNDS , ADDRESS AND ALSO CONFIRMATION LETTER FROM THE DONOR. THESE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE FALSE BY THE LD. AO SINCE HE HAD NOT EXAMINED ANY ONE OF THEM . THE AO HAD DISBELIEVED THE CREDITWORTHINESS OF THE DONOR WITHOUT ANY INVESTIGATION. FROM THE FACTS AND CIRCUMSTANCE S OF THE CASE AND ALSO DRAWING STRENGTH FROM THE CASE A. RAJENDRAN & ORS. V. ACIT CITED BY THE LD. AR, WE ARE OF THE CONSIDERED VIEW THAT PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF FEBRUARY, 2011 . SD/ - SD/ - ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH FEBRUARY, 2011. DS/ - COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.