LEELABEN LABHUBHAI LAKHANI, Surat V. THE ITO, WARD-9(2), Surat

ITA 1172/AHD/2009

• Counselvise Citation: 117220514 RSA 2009
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-02-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 15-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Keywords: Gift; Competent authority; Onus to prove

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & # # # # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.1172 AND 1173/AHD/2009 [ASSTT.YEAR : 2001-2002 AND 2003-2004] LEELABEN LABHUBHAI LAKHANI 78, SADHNA SOCIETY VARACHHA ROAD, SURAT. PAN : ABQPK 7987 D /VS. ITO, WARD-9(2) SURAT. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : NONE ( / 0 &/ REVENUE BY : SHRI RAHUL KUMAR, SR.DR 2 / %3'/ DATE OF HEARING : 27 TH FEBRUARY, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 02-03-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2000-2001 AND 2003-2004 ARE DIRECTED AGAINST THE ORDERS OF THE LD CIT(A)-V, SUR AT. THESE ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. ITA NO.1172 AND 1173/AHD/2009 -2- 2 . AT THE TIME OF HEARING NONE APPEARED ON BEHAL F OF THE ASSESSEE. ACCORDINGLY, THE APPEALS OF THE ASSESSEE ARE BEING DISPOSED OF EX- PARTE QUA THE ASSESSEE-APPELLANT ON MERIT AFTER HEARING THE LEARNED DR. ITA NO.1172/AHD/2009 (A.Y.2001-2002) 3. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS REGARDING THE VALIDITY OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.12,000/-. THE LEARNED DR SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE GIFT SAID TO HAVE BEEN RECEIVED FROM HER FATHER AND THE CREDIT-WORTHI NESS OF THE DONOR WAS ALSO NOT ESTABLISHED BY THE ASSESSEE. HE SUBMI TTED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CR EDIT WORTHINESS OF THE DONOR OF THE GIFT AMOUNT, THE PENALTY IMPOSED W AS RIGHTLY SUSTAINED BY THE CIT(A). 4. WE HAVE HEARD THE LEARNED DR AND HAVE PERUSED TH E ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE H AS CLAIMED THAT SHE HAS RECEIVED A GIFT OF RS.60,000/- FROM HER FAT HER OUT OF NATURAL LOVE AND AFFECTION. EXPLANATION FILED IN THIS REGA RD BY THE ASSESSEE WAS REJECTED BY THE AO ON THE GROUND THAT THE CREDI T-WORTHINESS OF THE DONOR COULD NOT BE PROVED BY THE ASSESSEE. THE ASS ESSEE HAS A VERY CLOSE-RELATION WITH THE DONOR AS THAT OF FATHER AND DAUGHTER AND THE NATURAL LOVE AND AFFECTION COULD NOT BE DOUBTED BY THE REVENUE IN THE CASE OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE H AS FILED AN EXPLANATION WHICH COULD NOT BE SAID TO BE NOT BONA FIDE. THE M ATERIAL FACTS OF THE CASE WERE DISCLOSED BY THE ASSESSEE AT THE TIME OF ASSESSMENT ITSELF. MERELY BECAUSE THE ASSESSEE COULD NOT PROVE THE CRE DIT-WORTHINESS OF ITA NO.1172 AND 1173/AHD/2009 -3- THE DONOR BY FILING ANY DOCUMENTARY EVIDENCE, IT CO ULD NOT BE SAID THAT THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCO ME OR FILING OF INACCURATE PARTICULARS OF INCOME. THE FACTS OF THE CASE MAY JUSTIFY THE ADDITION MADE IN THE HANDS OF THE ASSESSEE, BUT ARE NOT SUFFICIENT TO JUSTIFY THE IMPOSITION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. WE ARE UNABLE TO SUSTAIN THE REASONING OF THE CIT(A ) THAT THE LEVY OF PENALTY WAS MANDATORY AND NO DISCRETION, IS LEFT WI TH THE COMPETENT AUTHORITY. IN THESE FACTS OF THE CASE, WE HOLD THA T IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH IS ACCORDINGLY CANCELLED AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NO.1173/AHD/2009 (A.Y.2003-2004) 5. THE ONLY ISSUE IN THIS APPEAL IS REGARDING VALID ITY OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS.95,650/-. 6. THE LEARNED DR SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS AND CREDIT-WORTHINESS OF THE GIFTS CLAI MED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM THE DONORS. HE SUBMI TTED THAT ONUS TO PROVE THE CREDIT WORTHINESS LIES ON THE ASSESSEE WH ICH IT HAD FAILED TO FULFILL. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 7. WE HAVE HEARD THE LEARNED DR AND HAVE PERUSED TH E ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE H AS CLAIMED TO HAVE RECEIVED FIVE GIFTS TOTALING TO RS.3,03,651/-. THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT BEFORE THE AO. THE GIFTS WERE MADE BY THE CLOSE-RELATIVES AND THEREFORE THE ELEMENT OF NATURAL LOVE AND AFFECTION COULD NOT BE RULED OUT. THE ASSESSEE HAS FILED AN EXPLANATION IN THIS BEHALF AN D THE SAME COULD NOT ITA NO.1172 AND 1173/AHD/2009 -4- BE SAID TO BE NOT BONA FIDE. MERELY BECAUSE THE AS SESSEE COULD NOT PROVE THE CREDIT-WORTHINESS OF THE DONORS, IT DOES NOT JUSTIFY THE IMPOSITION OF THE PENALTY UNDER SECTION 271(1)(C) O F THE ACT. THE FACTS OF THE CASE MAY JUSTIFY THE ADDITIONS OF THE GIFT AMOUNTS FOR TAXATION PURPOSE IN THE ASSESSMENT OF THE ASSESSEE, BUT ARE NOT SUFFICIENT TO JUSTIFY THE IMPOSITION OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE ARE UNABLE TO SUSTAIN THE OBSERVATIONS OF THE CIT(A) THAT THE LEVY OF PENALTY WAS MANDATORY AND N O DISCRETION, IS LEFT WITH THE COMPETENT AUTHORITY. IN THESE FACTS OF THE CASE, WE HOLD THAT IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHICH IS ACCORDINGLY CANCELLE D AND THE GROUNDS OF THE APPEALS OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) & && &' ( ' ( ' ( ' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 27-02-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 28-02-2012