Sh. Rajiv Jain (HUF), New Delhi V. ACIT, New Delhi

ITA 1135/DEL/2014

• Counselvise Citation: 113520114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 02-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Assessee Lawyers: ROHIT JAIN; DEEPASHREE RAO
• Keywords: Gift
• Section: 147; 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO. - 1135 /DEL/201 4 (ASSESSMENT YEAR - 200 7 - 08 ) RAJIV JAIN (HUF), D - 6, KALINDI COLONY, NEW DELHI - 110065. PAN - AAIHR3064H ( APPELLANT) VS ACIT, CIRCLE - 39(1), NEW DELHI (RESPONDENT ) APPELLANT BY SH.ROHIT JAIN, ADV. & MS. DEEPASHREE RAO, CA RESPONDENT BY SH.GAGAN SOOD, SR.DR ORDER BY THE PRESENT APPEAL, THE ASSESSEE ASSAILS THE CORRECTNESS OF THE ORDER DATED 20.11.2013 OF CIT(A) - XII, NEW DELHI PERTAINING TO 2007 - 08 ASSESSMENT YEAR WHEREIN THE PENALTY IMPOSED U/S 271(1)(C) AT THE RATE OF 200% HAS BEEN UPHEL D. THE RELEVANT FACTS OF THE CASE AS EMANATING FROM THE RECORD ARE THAT THE ASSESSEE RETURNED AN INCOME OF RS.2,22,830/ - . THE SAID RETURN WAS ACCEPTED BY AN ORDER U/S 143(3). SUBSEQUENTLY THE ASSESSMENT WAS RE - OPENED BY ISSUANCE OF NOTICE U/S 148 AS ASS ESSEE S INCOME CHARGEABLE TO TAX ON EXAMINATION OF RECORDS SHOWED THAT IT HAD ESCAPED ASSESSMENT. THE RECORDS SHOWED THAT THE ASSESSEE HAD RECEIVED A GIFT OF RS.10,00,000/ - BY CHEQUE NO. - 14263 DATED 15.05.2006 FROM SH.DEVENDRA CHANDRA JAIN, THE FATHER OF THE KARTA OF THE ASSESSEE HUF. THE ASSESSEE CLAIMED THE GIFT AS EXEMPT UNDER PROVISO (A) OF SECTION 56(2)(IV) AS IT HAD BEEN RECEIVED FROM A RELATIVE. THE ASSESSING OFFICER DID NOT AGREE WITH THE CLAIM BEING OF THE VIEW THAT A GIFT RECEIVED FROM THE REL ATIVE WHICH WAS NOT ON OCCASION OF MARRIAGE OF THE INDIVIDUAL OR BY WAY OF INHERITANCE HAD NO APPLICATION TO HUF. THE ASSESSEE WAS INTIMATED THAT IT WOULD BE ASSESSED AS INCOME FROM OTHER SOURCES WITHIN THE MEANING OF SECTION 56(2)(VI) OF THE ACT. AS A RESULT THEREOF THE ASSESSEE REVISED ITS RETURN DISCLOSING THE SAID GIFT AS INCOME. DATE OF HEARING 02 .0 7 .2015 DATE OF PRONOUNCEMENT 09 .0 9 .2015 I.T.A .NO. - 1135/ DEL/2014 PAGE 2 OF 6 2. IN VIEW OF THIS ADDITION OF RS.10,00,000/ - PENALTY PROCEEDINGS WERE INITIATED AND THE ASSESSEE WAS REQUIRED TO ADDRESS WHY PENALTY SHOULD NOT BE IMPOSED. THE ASSESSEE I N ITS REPLY SOUGHT AN ADJOURNMENT THEREAFTER THE ASSESSEE FILED ITS REPLY DATED 24.02.2012 STATING THAT PENALTY ON FACTS CANNOT BE IMPOSED. THE SAID PRAYER WAS NOT ACCEPTED. THE ASSESSEE WAS HELD TO BE NON - COOPERATIVE AND PENALTY @ 200% OF THE TAX SOUGHT TO BE EVADED WAS IMPOSED BY THE ASSESSING OFFICER. 3. THE ASSESSEE WAS UNSUCCESSFUL IN APPEAL BEFORE THE CIT(A). AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. AR INVITING ATTENTION TO THE IMPUGNED ORDER SUBMITTED THAT THE CIT( A) HAS ARRIVED AT THE FINDING VERY MECHANICALLY WITHOUT ADDRESSING ANY OF THE ISSUES WHICH THE ASSESSEE HAD RAISED IN ITS APPEAL. IT WAS SUBMITTED THAT BEFORE THE CIT(A) DETAILED SUBMISSIONS WERE ADVANCED AND ALTHOUGH THESE HAVE BEEN REPRODUCED AT PAGE 3 - 20 IN PARAS (I) TO (V) OF THE SAID ORDER HOWEVER THEY HAVE BEEN SUMMARILY DISMISS E D WITHOUT CARING TO ADDRESS THE ISSUES. 4.1. COMING TO THE LAST ISSUE FIRST, IT WAS SUBMITTED THAT THERE WAS NOTHING ON RECORD TO SHOW WHY PENALTY @ 200% ON FACTS WAS JUSTIF IED BECAUSE AS PER THE PENALTY ORDER ITSELF ON THE FIRST DATE, THE ASSESSEE SOUGHT AN ADJOURNMENT AND ON THE SECOND DATE THE ASSESSEE HAD PLACED WRITTEN SUBMISSION BEFORE THE AO AND PLEADED THAT THE PENALTY WAS NOT ATTRACTED. ACCORDINGLY IT WAS HIS SUBMIS SION THAT HOW IN THESE FACTS, IT CAN BE SAID THAT THE ASSESSEE HAD NOT COOPERATED HAS NOT BEEN BROUGHT IN THE PENALTY ORDER. THE ASSESSEE HAS ASSAILED THIS IN THE APPELLATE PROCEEDINGS AND THE CIT(A) HAS FAILED TO ADDRESS THIS ISSUE ALSO IN THE IMPUGNED O RDER. THIS FACT ALONE IT WAS SUBMITTED WOULD HIGHLIGHT THE HIGH HANDEDNESS WITH WHICH THE ASSESSEE HAS BEEN TREATED. 4.2. THIS HIGHHANDEDNESS AND UNREASONABLENESS IT WAS SUBMITTED IS EVEN CONTINUED FURTHER AS THE LD. CIT(A) FAILS TO GIVE A REASONED FINDING. REFERRING TO THE RECORD IT WAS SUBMITTED THAT IT HAD BEEN POINTED OUT ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE HAD SUO - MOTO ACCEPTED THE ADDITION BY REVISING THE RETURN IN THE ASSESSMENT PROCEEDINGS WHICH WOULD ESTABLISH THE LEVEL OF CO - OPERAT ION SHOWN BY THE ASSESSEE. THUS THE ORDER IT WAS POINTED WAS UNREASONABLE. 4.3. ADDRESSING THE FACTS ON RECORD, IT WAS SUBMITTED THAT INFACT THE ASSESSEE WRONGLY ACCEPTED THE ADDITION IN THE ASSESSMENT PROCEEDINGS AND THE BONAFIDE I.T.A .NO. - 1135/ DEL/2014 PAGE 3 OF 6 ACT OF ACCEPTING THE ADD ITIONS SUO MOTO WHICH WAS NOT EVEN CHALLENGED IN APPEAL CANNOT DETRACT FROM THE LEGAL POSITION THAT ON MERITS THE ADDITION ITSELF WAS NOT WARRANTED. IT WAS HIS SUBMISSION THAT EVEN IF THE ADDITION IS ACCEPTED BY THE ASSESSEE ATLEAST PENALTY IN THE FACTS COULD NOT HAVE BEEN IMPOSED. THIS POSITION IT WAS SUBMITTED IS EVIDENT FROM A BARE READING OF THE RELEVANT PROVISIONS NAMELY CLAUSE (V) OF THE EXPLANATION TO PROVISO (A) OF SECTION 52(2)(V) WHERE GIFTS RECEIVED FROM A RELATIVE HAVE BEEN ADDRESSED AND THE TERM RELATIVE HAS BEEN DEFINED AS ANY LINEAR ASCENDANT OR DESCENDENT OF THE INDIVIDUAL WHICH NECESSARILY INCLUDES THE FATHER OF THE KARTA. RELIANCE WAS PLACED UPON THE DECISION OF THE RAJKOT BENCH OF THE ITAT IN THE CASE OF VINEET KUMAR RAGHAVJIBHAI BHA LODIA VS ITO (RAJKOT) [2011] 140 TTJ 58 [RAJKOT] AND HARSHAD BHAI DAHYALAL VAIDHYA (HUF) VS ITO 153 TTJ 71 (AHMEDABAD - TRIB.), SO AS TO CONTEND THAT EVEN ON MERIT THE ADDITION COULD NOT HAVE BEEN MADE. IT WAS HIS SUBMISSION THAT NO DOUBT THE ASSESSEE HAS NOT AGITATED THE ISSUE ON MERIT AND HAS ACCEPTED THE ADDITION HOWEVER IN THESE CIRCUMSTANCES IT WAS SUBMITTED THAT PENALTY WAS NOT ATTRACTED. RELIANCE WAS ALSO PLACED UPON THE DECISION OF THE APEX COURT IN CIT VS RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 BY WAY OF ABUNDANT CAUTION. 5. THE LD. SR. DR RELIES UPON THE IMPUGNED ORDER. HOWEVER, NOTHING FURTHER COULD BE SAID BY HIM IN THE FACE OF THE OBJECTIONS OF THE LD.AR HOW THE DETAILED ARGUMENTS HAVE BEEN SUMMARILY DISMISSED BY THE CIT(A). 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, THE DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEE AND THE PROVISIONS OF THE STATUTE HAVE BEEN TAKEN INTO CONSIDERATION. A PERUSAL OF THE RECORD SHOWS THAT IN THE SCRUTINY ASSESSMENT U/S 143(3) NO SUCH ADDITION WAS MADE. IN THE PROCEEDINGS U/S 147 AFTER ISSUANCE OF NOTICE U/S 148 OF THE ASSESSEE ACCEPTED THAT GIFT OF RS.10 LAKH HAD BEEN RECEIVED ON A SPECIFIC DATE FROM SH. DEVENDRA CHANDRA JAIN WHOSE ADMITTED RELATIONSHIP WAS FATHER OF KARTA OF ASSESSEE HUF. ACCORDINGLY BEING A GIFT FROM A RELATIVE EXEMPTION WAS CLAIMED. HOWEVER THE SAID VIEW WAS NOT ACCEPTED BY THE AO WHO CONFRONTED TO THE ASSESSEE THAT AS IT IS NOT RECEIVED FROM A RELATIVE ON OCCASION OF MARRIAGE N OR IS IT RECEIVED B Y WAY OF AN INHERITANCE THE GIFT FROM A RELATIVE DOES NOT APPLY TO HUF . IN VIEW THEREOF THE ASSESSEE REVISED ITS RETURN AND ADD ED THE SAID AMOUNT TO ITS INCOME. AS A RESULT OF THIS, PENALTY WAS INITIATED. IN THE WRITTEN REPLY IN THE I.T.A .NO. - 1135/ DEL/2014 PAGE 4 OF 6 PENALTY PROCEEDI NGS AS EVIDENT FROM THE PENALTY ORDER ITSELF, THE ASSESSEE PLEADED THAT PENALTY WAS NOT IMPOSABLE YET , THE AO LEVIED PENALTY @ 200% HOLDING THE ASSESSEE TO BE NON - COOPERATIVE . 6.1. ON CONSIDERATION OF THE MATERIAL AVAILABLE ON RECORD, I FIND THAT THE ASSES SING OFFICER HAS MADE REFERENCE TO N O FACT OR CIRCUMSTANCES TO JUSTIFY THE CONCLUSION THAT THE ASSESSEE WAS NON - COOPERATIVE. N O REASONS WHATSOEVER HAVE BEEN GIVEN BY THE AO JUSTIFYING WHY PENALTY @ 200% WAS IMPOSED . P ENALTY @ 200% IS AN ABERRATION AND NOT A NORM THUS IT WAS INCUMBENT UPON THE AO TO REFER TO SOME AGGRAVATED FACT OR CIRCUMSTANCES TO SUPPORT THAT THE ASSESSEE WAS NON - COOPERATIVE WARRANTING PENALTY @ 200%. I FIND THAT THERE IS NO REFERENCE TO ANY FACT OR CIRCUMSTANCE TO JUSTIFY THE CONCLUSIO N . IN THE RE - ASSESSMENT PROCEEDINGS THE CLAIM IS PROMPTLY GIVEN UP. MERELY BECAUSE IN THE PENALTY PROCEEDINGS THE ASSESSEE TAKES THE PLEA THAT PENALTY WAS NOT ATTRACTED AS IN THE FACTS OF THE PRESENT CASE THE SAID PLE A CANNOT L EAD TO AN INFERENCE THAT T HE ASSESSEE WAS NON - COOPERATIVE AND THE SAME CANNOT BE TAKEN AS AN AGGRAVATE D FACT OR CIRCUMSTANCE. IT IS UNFORTUNATE THAT EVEN THE LD. CIT(A) HAS ALSO NOT CARED TO CONSIDER WHAT WERE THE SPECIAL CIRCUMSTANCES WARRANTING LEVYING PENALTY @ 200%. FOR READY - R EFERENCE, THE FINDING UNDER CHALLENGE I S REPRODUCED HEREUNDER: - 1.2. THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.10,00,000/ - TO THE INCOME OF THE APPELLANT AND LEVIED PENALTY HOLDING THAT THE APPELLANT HAD FURNISHED WRONG PARTICULARS OF INCOME AN E VADED TAX THEREON. THE CONTENTION OF THE APPELLANT IS THAT THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME LEADING TO LEVY OF PENALTY U/S 271(1)(C). I HAVE CONSIDERED THE CONTENTION AS WELL AS THE FACTS OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY. IN VIEW OF THE FACT THAT THE GIFT OF RS.10,00,000/ - WAS TAXABLE BUT WAS NOT OFFERED FOR TAXATION IN THE ORIGINAL RETURN, THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME BY FILIN G INACCURATE PARTICULARS OF INCOME ATTRACTING THE PROVISIONS OF SECTION 271(1)(C), AND THE PENALTY HAS BEEN CORRECTLY LEVIED. THE CASE LAWS RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS. ALL THE GROUNDS RAISED IN APPEAL ARE DISMISSED. 6.2. I FIND THAT THE TAX AUTHORITIES IN THE FACTS OF THE PRESENT CASE HAVE PROCEEDED IN A MECHANICAL WAY AND HAVE FAILED TO BRING ANYTHING ON RECORD TO JUSTIFY PENALTY @ 200%. THE SAID ACTION ON THE PART OF THE AO COMPOUNDED BY THE LD.CIT(A) IN DECIDING THE IS SUE IN A MECHANICAL MANNER HIGHLIGHTS THE SHEER APATHY AND INDIFFERENCE OF THE TAX DEPARTMENT TOWARDS THE GRIEVANCES OF THE I.T.A .NO. - 1135/ DEL/2014 PAGE 5 OF 6 P R E S E N T TAX PAYERS, A TAG WHICH A VIGILANT AND ALERT TAX DEPARTMENT SHOULD PROMPTLY ATTEMPT TO SHUN. 6.3. IN THE FACTS OF THE PRESENT CA SE IT IS SEEN THAT THE LD. CIT(A) HAS NOT EVEN CARED TO ADDRESS THE DETAILED ARGUMENTS ADVANCED AND INSTEAD OF GIVING REASONS FOR NOT ACCEPTING THE ASSESSEE S REPRESENTATION HAS MERELY SUMMED UP WHY THE AO IS FOUND TO BE CORRECT. THE SAID DECISION DOES NO T FULFILL THE STATUTORY REQUIREMENTS WHICH MANDATE THAT THE FIRST APPELLATE AUTHORITY WHILE DECIDING THE APPEAL AS PER SECTION 250(6) OF THE INCOME TAX ACT, 1961 HAS TO SET OUT THE POINTS FOR DETERMINATION AND THE REASONS FOR THE DECISION ARRIVED. IT CANN OT BE OVER - EMPHASIZED THAT THE CORRECTNESS OF THE DECISION WHEN TESTED AT A HIGHER FORUM CAN BE ASCERTAINED ONLY ON THE BASIS OF THE REASONS BROUGHT OUT IN THE ORDER TO ARRIVE AT A DECISION. 6. 4 . A PERUSAL OF THE LEGAL PRECEDENT IN THE CASES OF VINEET KU MAR RAGHAVJIBHAI BHALODIA VS ITO (RAJKOT) [2011] 140 TTJ 58 [RAJKOT] AND HARSHAD BHAI DAHYALAL VAIDHYA (HUF) VS ITO 153 TTJ 71 (AHMEDABAD - TRIB.) RELIED UPON AND ON CONSIDERATION OF THE DEFINITION GIVEN TO RELATIVE IN EXPLANATION (V) TO PROVISO (A) OF SEC TION 56(2)(V) WOULD SHOW THAT THE SUM OF MONEY EXCEEDING A SPECIFIC AMOUNT IS DEEMED TO BE ASSESSEE S INCOME UNLESS IT IS FROM A RELATIVE ; OR ON THE OCCASION OF MARRIAGE; UNDER WILL/INHERITANCE ETC. ADMITTEDLY THE OR CANNOT BE SUBSTITUTED BY AN AND . THE RELATIVE IN CLAUSE (V) IN THE EXPLANATION TO THE PROVISION (A) OF SECTION 56(2)(V) SPECIFICALLY EXCLUDES A LINEAR ASCENDANT OR DESCENDENT. THUS EVEN ON MERITS THE ASSESSEE HAD A CASE. SIMPLY BECAUSE FOR WANT OF LEGAL ADVISE OR FOR PEACE OF MIND THE ISSUE WAS NOT AGITATED IN THE QUANTUM PROCEEDINGS IT CANNOT BE AUTOMATICALLY CONCLUDED THAT PENALTY HAS TO BE LEVIED BECAUSE THE ADDITION HAS BEEN ACCEPTED. THERE MAY BE MANY REASONS WHY THE ASSESSEE DOES NOT CONTEST THE ISSUE FURTHER EITHER FOR WANT OF LEGAL ADVISE OR FOR THE SAKE OF PEACE OF MIND. HOWEVER, IT IS THE DUTY AND THE RESPONSIBILITY OF THE TAX AUTHORITIES TO CONSIDER AND DECIDE THE ISSUE INDEPENDENTLY IN THE PENALTY PROCEEDINGS. IT IS TRITE LAW THAT THE EXPLANATION OFFERED IN THE PENALTY PR OCEEDINGS HAS TO BE CONSIDERED SEPARATELY AND INDEPENDENTLY. IN THE FACTS OF THE PRESENT CASE TO HOLD THAT IT AS A CASE OF NON - COOPERATION SIMPLY BECAUSE IN THE ASSESSMENT PROCEEDINGS THE ADDITION PROPOSED IS PROMPTLY ACCEPTED AND IN THE PENALTY PROCEEDI NGS AFTER INITIALLY SEEKING AN ADJOURNMENT, A WRITTEN REPLY IS PLACED ON RECORD ON THE NEXT DATE I.T.A .NO. - 1135/ DEL/2014 PAGE 6 OF 6 PLEADING THAT PENALTY WAS NOT ATTRACTED DEMONSTRATES THAT THE TAX AUTHORITIES IN THE FACTS OF THE PRESENT CASE HAVE FAILED TO GIVE DUE AND FAIR CONSIDERATION T O THE TAX PAYER AND HAVE ADDED INSULT TO INJURY BY HOLDING THE ASSESSEE TO BE NON - COOPERATI VE . ACCORDINGLY, FOR THE REASONS GIVEN HEREIN ABOVE , THE IMPUGNED ORDER IS SET ASIDE AND THE PENALTY ORDER IS DIRECTED TO BE QUASHED. 7. IN THE RESULT, THE APPEAL O F THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 9 T H OF SEPTEMBER, 2015. S D / - (DIVA SINGH) JUDICIAL MEMBER DATED: 0 9 /09 /2015 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI