Mamta Shirish Raisoni, Jalgaon V. ACIT, Cirlce -1, Jalgaon, Jalgaon

ITA 104/PUN/2012

• Counselvise Citation: 10424514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MODI; ANIL CHAVRE
• Keywords: Unexplained expenditure; Gift; Business income; Income from undisclosed sources; Question of law
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 104/PN/2012 (ASSTT.YEAR : 2005-06) MAMTA SHIRISH RAISONI, PLOT NO.22, GANPATI NAGAR, NEAR DHYAN MANDIR, JALGAON 425001. .. APPELLANT PAN NO.AANPR 5877P VS. ADDL. COMMISSIONER OF INCOME-TAX, CIRCLE-1, JALGAON. .. RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI A.K. MODI & SHRI ANIL CHAVRE DATE OF HEARING : 20-08-2013 DATE OF PRONOUNCEMENT : 28-08-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 07-12-2011 OF THE CIT(A) II, NASHIK RELATING TO AS SESSMENT YEAR 2007-08. LEVY OF PENALTY OF RS.9,25,000/- BY THE ASSESSING O FFICER U/S.271(1)(C) OF THE INCOME TAX ACT WHICH HAS BEEN CONFIRMED BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPE AL. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE, AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YE AR ON 31-03-2006 DECLARING TOTAL INCOME AT RS.12,93,306/- AND AGRICU LTURAL INCOME OF RS.50,000/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS TRADED IN VARIO US SCRIPS DURING THE YEAR. CONSIDERING THE FREQUENCY AND MAGNITUDE OF THE TRAN SACTIONS THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME RECEIVED FROM 2 SUCH PURCHASE AND SALE OF SHARES SHOULD NOT BE TREA TED AS BUSINESS INCOME AS AGAINST SHORT TERM AND LONG TERM CAPITAL GAIN DE CLARED BY THE ASSESSEE. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASS ESSEE AND RELYING ON VARIOUS DECISIONS THE ASSESSING OFFICER HELD THAT T HE ASSESSEE IS ENGAGED IN THE TRADING OF SHARES. HE ACCORDINGLY TREATED THE SHORT TERM CAPITAL GAIN OF RS.12,56,352/-, LONG TERM CAPITAL GAIN OF RS.15,92, 653/- AND DIVIDEND INCOME OF RS.52,242/- TOTALLING TO RS.29,01,247/- A S BUSINESS INCOME OF THE ASSESSEE. 2.1 THE ASSESSING OFFICER FURTHER NOTED THAT THE AS SESSEE HAS RECEIVED GIFT OF RS.3 LAKHS FROM MRS. CHANDRAKANTA SUBASHCHA NDRA MANIYAR ON 05- 05-2004 VIDE CHEQUE NO.134358 DRAWN ON JALGAON JANT A SAHAKARI BANK LTD. DANA BAZAR BRANCH,JALGAON. THE DONOR APPEARED BEFORE THE ASSESSING OFFICER IN RESPONSE TO SUMMONS U/S.131 AND HER STAT EMENT WAS ALSO RECORDED BY THE ASSESSING OFFICER. FROM THE VARIO US DETAILS FURNISHED BY THE DONOR THE ASSESSING OFFICER NOTED THAT THE DONO R IS ENGAGED IN THE BUSINESS OF CHILLI POWDER ON SMALL SCALE AND OPERAT ES HER BUSINESS FROM HER RESIDENCE ONLY. FOR THE A.Y. 2005-06 SHE HAD SHOWN SALES OF CHILL POWDER AT RS.2,92,419/- AND HAS SHOWN PROFIT OF RS.82,310/ - ONLY. HER OPENING CAPITAL BALANCE AS ON 01-04-2004 WAS RS.3,97,511/-. SHE HAD SHOWN HOUSEHOLD EXPENSES AT RS.24,500/- ONLY. HE FURTHER NOTED THAT THE DONOR IS STAYING WITH HER HUSBAND WHO IS A SMALL SHOP OWNER OF KIRANA ITEMS AND A SON WHO HAS RECENTLY BECOME A CHARTERED ACCOUNTANT. CONSIDERING THE VARIOUS FACTORS THE ASSESSING OFFICER CAME TO THE C ONCLUSION THAT THE DONOR IS NOT IN A FINANCIALLY SOUND POSITION TO GIVE A GI FT OF RS.3 LAKHS TO THE ASSESSEE. HE FURTHER OBSERVED THAT JUST BEFORE GIV ING THE GIFT, AN AMOUNT RS.3 LAKHS IN CASH WAS DEPOSITED BY THE DONOR IN HE R BANK ON THE SAME 3 DATE. RELYING ON THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF CIT VS. DURGA PRASAD MORE REPORTED IN 82 ITR 540 AND IN THE CASE OF SUMATI DAYAL VS. CIT REPORTED IN 214 ITR 801 THE AO HELD T HAT THE SO-CALLED GIFT IS NOT GENUINE AND THE AMOUNT OF RS.3 LAKHS IS ASSE SSEES OWN MONEY FROM UNDISCLOSED SOURCES. IN ORDER TO ACCOMMODATE THE A SSESSEE THE DONOR RECEIVED AN AMOUNT OF RS.3 LAKHS IN CASH AND IMMEDI ATELY A CHEQUE WAS ISSUED TO THE ASSESSEE. HE, THEREFORE, TREATED THE AMOUNT OF RS. 3 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. THE AO FURTHER NOTED THAT FOR ENTERING INTO SUCH TYPE OF TRANSACTIONS, I.E FOR CONVERTING UNACCOUNTED INCOME INTO A LEGAL INCOME ONE HAS TO SPEND CERTAIN AMOUNT WHICH IS GENERALLY 10% OF THE AMOUNT CONVERTED. HE, THEREFORE, ADDED AN AMOUNT O F RS.30,000/- BEING 10% OF THE GIFT AS UNEXPLAINED EXPENDITURE FOR THE ACCOMMODATION ENTRY. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WH O CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESS EE WAS ALSO WITHOUT ANY SUCCESS BEFORE THE TRIBUNAL. IN THE MEANTIME THE A SSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASS ESSEE AND RELYING ON CERTAIN DECISIONS THE ASSESSING OFFICER LEVIED PENA LTY OF RS.9,25,000/- U/S.271(1)(C) OF THE INCOME TAX ACT. IN APPEAL TH E LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. AGGRI EVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A). HE FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED AN APPEAL AGAINST THE O RDER OF THE ITAT BEFORE THE HONBLE HIGH COURT ON THE ISSUE OF TREATMENT OF SURPLUS ON SALE OF SHARES AS BUSINESS INCOME AS AGAINST CAPITAL GAIN D ECLARED BY THE ASSESSEE. 4 REFERRING TO THE ORDER DATED 21-03-2012 VIDE TAX AP PEAL NO.54/2011 THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE SUBSTANTIAL QUESTION OF LAW FRAMED BY THE HIGH COUR T WHICH READS AS UNDER : 1. HEARD 2. THE APPEAL IS ADMITTED AS TO THE FOLLOWING SUBST ANTIAL QUESTION OF LAW : WHETHER THE TRIBUNAL ERRED IN COMING TO THE CONCLU SION THAT THE SURPLUS ON SALE OF THE SHARES IN WHICH THE APPE LLANT HAD MADE INVESTMENT WAS NOT A CAPITAL GAIN, BUT WAS BUS INESS INCOME EARNED BY THE APPELLANT IN TRADING OF THE SH ARES 3. MR. ALOK SHARMA, LD. ASSISTANT SOLICITOR GENERAL , WAIVES SERVICES ON BEHALF OF THE RESPONDENT. 5. REFERRING TO THE DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. AMIT JAIN REPORTED IN 2013(1)-TMI-340 VI DE ITA NO.683/2012 ORDER DATED 21-12-2012 (A COPY OF WHICH WAS FILED D URING THE COURSE OF HEARING) HE SUBMITTED THAT UNDER IDENTICAL CIRCUMST ANCES THE APPEAL FILED BY THE REVENUE AGAINST CANCELLATION OF PENALTY U/S.271 (1)(C) OF THE INCOME TAX ACT BY THE TRIBUNAL HAS BEEN DISMISSED BY THE HON BLE HIGH COURT HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. REFERR ING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. DHARIWAL INDUSTRIES LTD. VIDE ITA NOS.580 AND 581/PN/2009 ORDER DATED 3 0-08-2011 FOR A.YS. 1999-2000 AND 2000-01 HE SUBMITTED THAT THE TRIBUNA L IN THE SAID DECISION HAS HELD THAT WHEN THE HIGH COURT ADMITS THE QUANTU M APPEAL ON SUBSTANTIAL QUESTION OF LAW THEN IN THAT CASE PENAL TY U/S.271(1)(C) OF THE ACT IS NOT LEVIABLE. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LIQUID INVESTMENT AND TRADIN G COMPANY VIDE ITA NO.240/2009 ORDER DATED 05-10-2010 HE SUBMITTED THA T THE HONBLE DELHI HIGH COURT HAS HELD THAT NO PENALTY U/S.271(1)(C) I S LEVIABLE WHEN THE APPEAL OF THE ASSESSEE HAS BEEN ADMITTED AND SUBSTA NTIAL QUESTION OF LAW 5 FRAMED. HE ACCORDINGLY SUBMITTED THAT NO PENALTY U /S.271(1)(C) OF THE INCOME TAX ACT IS LEVIABLE ON ACCOUNT OF TREATMENT OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND DIVIDEND INCOME AS BUSINESS INCOME. 5.1 SO FAR AS THE PENALTY LEVIED ON GIFT IS CONCERN ED HE SUBMITTED THAT THE DONOR APPEARED BEFORE THE ASSESSING OFFICER AND CON FIRMED TO HAVE MADE THE GIFT. THE DONOR PRODUCED HER BANK ACCOUNT. TH E ASSESSING OFFICER HAS SIMPLY DISBELIEVED THE GIFT BUT HAS NOT DISPROVED T HAT THE ASSESSEE HAS NOT RECEIVED THE GIFT. THE LAW DOES NOT PROHIBIT THE L ADY TO KEEP MONEY WITH HER SINCE IT IS NATURAL THAT LADIES KEEP MONEY WITH THEM. HE SUBMITTED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT AND DISTINCT AND THE ASSESSEE CAN ALWAYS ARGUE AFRESH IN PENALTY PROCEEDINGS. REFERRING TO THE DECISION OF CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF A. RAJENDRAN AND OTHERS VS. ACIT REPORTED IN 127 ITD 3 61 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THO UGH ADDITIONS MADE BY THE ASSESSING OFFICER WERE SUSTAINED DISBELIEVING THE A LLEGED GIFTS RECEIVED BY THE RESPECTIVE ASSESSEES ON THE BASIS OF PREPONDERA NCE OF PROBABILITY, IT CANNOT BE SAID THAT THE AMOUNTS WERE CONCEALED INCO ME OR THE EXPLANATION FURNISHED BY THE ASSESSEE WERE NOT BONAFIDE AS THE DONOR HAD APPEARED AND CONFIRMED THE GIFTS AND ALSO EXPLAINED THAT HE HAD MADE THE GIFTS ON ACCOUNT OF CLOSE RELATIONSHIP WITH THE ASSESSEE. ACCORDINGL Y PENALTY LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) WAS CANC ELLED. 5.2 REFERRING TO THE UNREPORTED DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. UPENDRA V. MITHANI VID E ITA NO.1860/2009 ORDER DATED 05-08-2009 HE SUBMITTED THAT THE HONBL E HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL WHEREIN THE PENALT Y WAS CANCELLED ON THE GROUND THAT THE ASSESSEE HAS GIVEN AN EXPLANATION W HICH IS UNPROVED BUT 6 NOT DISPROVED, I.E. IT IS NOT ACCEPTED BUT CIRCUMST ANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE S CASE IS FALSE. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED ON AC COUNT OF ADDITION OF GIFT ALSO SHOULD BE DELETED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) REFERRED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HCIL KALIND EE ARSSPL VIDE ITA NO.480 AND 481/2012 ORDER DATED 29-07-2013 AND SUBMITTED THAT FOR NON LEVY OF PENALTY U/S.271(1)(C) OF THE ACT THE AS SESSEE HAS TO SHOW THAT THE EXPLANATION GIVEN WAS BONAFIDE AND THAT THE FAC TS AND MATERIAL RELATING TO COMPUTATION OF HIS INCOME HAD BEEN DISCLOSED. H E SUBMITTED THAT IN THE INSTANT CASE THE ASSESSEE HAS NOT DONE SO. FURTHER , THE PROFIT FROM PURCHASE AND SALE OF SHARES AS SHORT TERM CAPITAL GAIN AND L ONG TERM CAPITAL GAIN AS BUSINESS INCOME IS A MIXED QUESTION OF LAW AND FACT S AND IT IS NOT A SUBSTANTIAL QUESTION OF LAW. THEREFORE, THE VARIOU S DECISIONS RELIED ON BY THE LD.COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6.1 SO FAR AS THE ISSUE RELATING TO LEVY OF PENALTY ON GIFT IS CONCERNED HE SUBMITTED THAT THE ASSESSEE HAS MISERABLY FAILED TO SUBSTANTIATE THE CREDIT WORTHINESS OF THE DONOR FOR WHICH THE ADDITION HAS BEEN UPHELD EVEN BY THE TRIBUNAL AND THEREFORE PENALTY IS LEVIABLE. HE SUBM ITTED THAT IN THE DECISION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN TH E CASE OF A. RAJENDRAN AND OTHERS (SUPRA) THE CREDIT WORTHINESS OF THE DON OR WAS NEVER DOUBTED. REFERRING TO PARA 6 OF THE ORDER OF THE CHENNAI BEN CH OF THE TRIBUNAL HE SUBMITTED THAT THE DONORS IDENTITY AS WELL AS CRED IT WORTHINESS WAS PROVED BEYOND DOUBT. THEREFORE, THE FACTS IN THE INSTANT CASE BEING DISTINGUISHABLE 7 FROM THE FACTS IN THE CASE OF A. RAJENDRAN AND OTHE RS AND THEREFORE, THE DECISION OF THE MADRAS BENCH OF THE TRIBUNAL CANNOT BE APPLIED. 6.2 AS REGARDS THE RELIANCE ON DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF UPENDRAN V. MITHANI IS CONCERNED HE SUBMITTED THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS CATEGORIC ALLY POINTED OUT THAT MONEY WAS DEPOSITED IN THE BANK ACCOUNT JUST BEFORE ISSUING THE CHEQUE TOWARDS THE GIFT AND THE CIRCUMSTANCES LEADING TO T HE REASONABLE AND POSITIVE INFERENCE IS THAT THE ASSESSEES CASE IS F ALSE. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THE ADDITION OF GIFT ALSO HAS TO BE UPHELD. 7. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R SUBMITTED THAT WHILE DECIDING THE CASE IN THE CASE OF HCCL KALINDEE ARSS PL THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF LIQUID I NVESTMENT AND TRADING COMPANY WAS NOT BROUGHT TO ITS NOTICE. FURTHER, TH E ISSUE AS TO WHETHER PENALTY IS LEVIABLE WHEN THE HIGH COURT ADMITS THE APPEAL OF THE ASSESSEE ON SUBSTANTIAL QUESTION OF LAW WAS NOT THERE BEFORE THE HONBLE HIGH COURT. THEREFORE, THE DECISION IN THE CASE OF HCCL KALINDE E ARSSPL (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING O FFICER LEVIED PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT ON ACCOUNT OF 2 ADDITIONS, I.E. (A) TREATING THE SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND DIVIDEND INCOME AMOUNTING TO RS.29,01,247/- AS BUSINESS INCO ME AND (B) TREATMENT 8 OF GIFT OF RS.3 LAKHS AS UNEXPLAINED INCOME. WE FI ND THE LD.CIT(A) UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCO UNT OF 2 ADDITIONS. 8.1 SO FAR AS THE FIRST ISSUE IS CONCERNED, I.E. TR EATMENT OF INCOME FROM PURCHASE AND SALE OF SHARES AS BUSINESS INCOME AS A GAINST CAPITAL GAIN TREATED BY THE ASSESSEE WE FIND THE HONBLE HIGH CO URT HAS ADMITTED THE APPEAL OF THE ASSESSEE TO DECIDE THE SUBSTANTIAL QU ESTION OF LAW. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DHARI WAL INDUSTRIES LTD. (SUPRA) HAS HELD THAT THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW IN QUANTUM PROCEEDING BY THE JURISDICTIONAL HIGH COURT LENDS CREDENCE TO THE BONAFIDES OF THE ASSESSEE IN CLAIMING DEDUCTION AND UNDER SUCH SITUATION PENALTY IS NOT EXIGIBLE UNDER THE PROVISIONS OF SEC TION 271(1)(C) OF THE INCOME TAX ACT. WE FIND THE HONBLE DELHI HIGH COU RT IN THE CASE OF LIQUID INVESTMENT AND TRADING COMPANY (SUPRA) HAS H ELD THAT WHEN THE HIGH COURT ADMITS THE APPEAL OF THE ASSESSEE AND FRAMES SUBSTANTIAL QUESTION OF LAW IT SHOWS THAT THE ISSUE IS DEBATABLE AND UNDER SUCH CIRCUMSTANCES PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT IS NOT LEVIABLE. SINCE IN THE INSTANT CASE THE HONBLE JURISDICTIONAL HIGH COURT HAS ADMITTED THE QUANTUM APPEAL OF THE ASSESSEE TO DECIDE THE SUBSTA NTIAL QUESTION OF LAW WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT IS A DEBATABLE ISSUE AND THEREFORE PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT IS NOT LEVIABLE. 8.2 SO FAR AS THE DECISION RELIED ON BY THE LD. DEP ARTMENTAL REPRESENTATIVE IN THE CASE OF HCCL KALINDEE ARSSPL (SUPRA) IS CONCERNED WE FIND THE HONBLE HIGH COURT HAS DECIDE D THE PENALTY ON MERITS AND THE ISSUE OF LEVIABLE OF PENALTY U/S.271 (1)(C) WHEN THE APPEAL OF THE ASSESSEE IS ADMITTED AND SUBSTANTIAL QUESTION O F LAW IS FRAMED WAS NOT 9 THERE. THEREFORE, THE AFORESAID DECISION IS NOT AP PLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER, WE HOLD THAT NO PENALTY IS LEVIABLE U/S.271(1)(C) ON ACCOUNT OF TREATMENT OF PROFIT FRO M PURCHASE AND SALE OF SHARES AS BUSINESS INCOME AS AGAINST CAPITAL GAIN D ECLARED BY THE ASSESSEE. THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS SET AS IDE AND THE ASSESSING OFFICER IS DIRECTED TO CANCEL THE PENALTY LEVIED ON ACCOUNT OF TREATMENT OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND DIVIDEND INCOME AS BUSINESS INCOME. 9. NOW COMING TO THE SECOND ISSUE ON WHICH PENALTY HAS BEEN LEVIED, I.E. PENALTY ON ACCOUNT OF ADDITION OF THE GIFT AS UNEXPLAINED INCOME WE FIND THE ASSESSING OFFICER HAS CLEARLY BROUGHT ON R ECORD THAT THE DONOR HAS NO CAPACITY TO GIVE SUCH GIFT OF RS. 3 LAKHS CONSID ERING HER MEAGRE INCOME AND FAMILY HISTORY. THE ASSESSING OFFICER HAS ALSO BROUGHT ON RECORD THAT MONEY WAS DEPOSITED ON THE SAME DATE ON WHICH THE G IFT WAS GIVEN BY THE DONOR. FURTHER, THE LD. COUNSEL FOR THE ASSESSEE A LSO COULD NOT CONTROVERT THE OBSERVATION GIVEN BY THE LD. CIT(A) THAT THE DE POSIT OF RS. 3 LAKHS IN THE DONORS BANK ACCOUNT WAS THE ONLY DEPOSIT DURING THAT YEAR AND THAT THE ASSESSEE IS AT HIGHER SOCIAL/FINANCIAL STRATA IN TH E SOCIETY THAN THE DONOR. NOTHING HAS BEEN PRODUCED BY THE LD. COUNSEL FOR TH E ASSESSEE REGARDING THE PARTICULAR OCCASION FOR GIVING THE GIFT OF RS. 3 LAKHS BY THE DONOR TO THE DONEE. FURTHER, NO EVIDENCE HAS BEEN FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE TO SUBSTANTIATE THAT THE DONEE HAD ALSO GI VEN SUCH GIFTS IN THE PAST TO THE DONOR. UNDER THESE CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) CONFIRMING THE PENALTY LEVIED ON A CCOUNT OF THE GIFT OF RS.3 LAKHS. THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. 10 9.1 SO FAR AS THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF A. RAJENDRAN AND OTHERS (SUPRA) RELIED ON B Y THE LD. COUNSEL FOR THE ASSESSEE IS CONCERNED WE FIND IN THAT CASE THE DONORS CREDIT WORTHINESS WAS NOT AT ALL IN DOUBT. FURTHER, THE DONOR IN THA T CASE WAS BROUGHT UP BY ONE OF THE ASSESSEES IN THE FAMILY AND THE DONOR WA S HAVING HIGH POSITION IN LIFE. THEREFORE, THE DECISION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. S O FAR AS THE DECISION OF HONBLE MUMBAI HIGH COURT IN THE CASE OF UPENDRAN V . MITHANI IS CONCERNED WE FIND THE SAME IS ALSO NOT APPLICABLE T O THE FACTS OF THE PRESENT CASE. IN THAT CASE PENALTY DELETED BY THE TRIBUNAL WAS UPHELD BY THE HONBLE HIGH COURT ON THE GROUND THAT IF ASSESSEE G IVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POS ITIVE INFERENCE THAT THE ASSESSEES CASE IS FALSE THEN IN THAT CASE NO PENAL TY IS LEVIABLE. IN THE INSTANT CASE THE ASSESSEE HAS NOT PROVED BEYOND DOU BT THE CREDIT WORTHINESS OF THE DONOR. THEREFORE, THE ABOVE DECISION IS ALS O NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. CONSIDERING THE TOTALIT Y OF THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD .CIT(A) CONFIRMING THE LEVY OF PENALTY ON THE GIFT OF RS.3 LAKHS. ACCORDI NGLY, THE SAME IS UPHELD. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF AUGUST 2013. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 28 TH AUGUST 2013 SATISH 11 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE