ACIT, New Delhi V. Shri Akhil Jain (HUF), Delhi

ITA 1308/DEL/2014

• Counselvise Citation: 130820114 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 07-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: PRANJAL SRIVASTAVA
• Keywords: Gift; Bonafide belief; Wrong claim; Revised return
• Section: 143(3); 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - I , NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 1308 /DEL/201 4 : ASSTT. YEAR : 200 7 - 08 ACIT, CIRCLE - 39(1), NEW DELHI VS SHRI AKHIL JAIN (HUF) 4561, DEPUTY GANJ, SADAR BAZAR, DELHI - 110006 (APPELLANT) (RESPONDENT) PAN NO. A A GHA2487K ASSESSEE BY : SH. VED JAIN , CA & PRANJAL SRIVASTAVA , ADV. REVENUE BY : SH. BHIM SINGH, SR. DR DATE OF HEARING : 07 .0 7 .2015 DATE OF PRONOUNCEMENT : 15 .07 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 24.12 .2013 OF LD. CIT (A) - XII, NEW DELHI . 2 . THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE DELETION OF PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT ON 31.03.2009 AT AN INCOME OF RS. 1,74,350/ - . SUBSEQUENTLY, NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. HOWEVER, THE ASSESSEE DID NOT FURNISH ANY RETURN. THEREAFTER THE AO ISSUED NOTICE U/S 142(1) OF THE ACT ON 19.04.2011 ASKING THE ASSESSEE TO FURNISH RETURN IN RESPONSE TO THE ALREADY ISSUED NOTICE U/S 148 OF THE ACT ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 2 AND ALSO TO SUBMIT PHO TOCOPIES OF ALL BANK ACCOUNT ALONG WITH DEBIT AND CREDIT ENTRIES FOR THE PERIOD 01.04.2007 TO 31.03.2008. IN RESPONSE THE ASSESSEE FILED A REVISED RETURN DECLARING AN INCOME OF RS. 11,24,348/ - . DURING COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT T HE ASSESSEE UNDER THE STATUS OF HUF HAD RECEIVED A GIFT OF RS. 10,00,000/ - ON 15.05.2006 FROM SH. SHARAT CHAND JAIN WHO IS THE FATHER OF KARTA OF ASSESSEE HUF. HE FURTHER OBSERVED THAT THE ASSESSEE HAD CLAIMED THIS GIFT AS EXEMPT UNDER THE PROVISO (A) OF SECTION 56(2)(IV) OF THE ACT AND TREATED IT AS RECEIVED FROM RELATIVE. THE AO WAS OF THE VIEW THAT THE GIFT RECEIVED FROM RELATIVE OR ON OCCASION OF MARRIAGE OF THE INDIVIDUAL OR BY WAY OF INHERITANCE HAVE NO APPLICATION TO HUF. AS SUCH THE EXCEPTION IN C ASE OF HUF IS RESTRICTED TO THE GIFT BY WILL OR IN CONTEMPLATION TO DEATH AND THE GIFT OF RS. 10,00,000/ - WAS TO BE TREATED AS INCOME FROM OTHER SOURCES. HE ACCORDINGLY MADE THE ADDITION OF RS. 10,00,000/ - AND INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND OBSERVED THAT IT WAS A CLEAR CASE OF TAX EVASION B Y FURNISHING WRONG PARTICULARS AND THAT THE ASSESSEE CAME FORWARD ONLY WHEN THE NOTICE U/S 148 OF THE ACT AND FURTHER NOTICED U/S 142(1 ) OF THE ACT WERE ISSUED. HE ALSO OBSERVED THAT THOUGH THE GIFT RECEIVED WAS CLEARLY TAXABLE, IT WAS NOT OFFERED FOR TAXATION IN THE ORIGINAL RETURN OF INCOME. ACCORDINGLY, THE PENALTY AMOUNTING TO RS. 6,60,900/ - BEING 200% TAX SOUGHT TO BE EVADED, WAS LEV IED U/S 271(1)(C) OF THE ACT. 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) , THE SUBMISSIONS MADE BY THE ASSESSEE ARE REPRODUCED BY THE LD. CIT(A) AT ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 3 PAGES NO. 3 TO 20 OF THE IMPUGNED ORDER , FOR THE COST OF REPETITION, THE SAME IS N OT REPRODUCED HEREIN. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE WAS OF A BONAFIDE BELIEF THAT THE GIFT RECEIVED BY HUF FRO M KARTA/ FATHER OF KARTA WAS EXEMPT ED UNDER THE PROVISIONS OF THE ACT AND THAT THE SA ID FACT WAS ACCEPTED BY THE AO WHILE PASSING THE ASSESSMENT ORDER DATED 31.03.2009 U/S 143(3) OF THE ACT. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE BEFORE RECEIVING THE C OPY OF REASONS RECORDED , SUO MOTU REVISED ITS RETURN OF INCOME ON 29.04.2011 AND OFFERED THE AMOUN T RECEIVED AS GIFT FOR TAXATION. T HE SAID ACTION OF THE ASSESSEE WAS CONSIDERED AS A VOLUNTARILY SURRENDER AS NOTHING SPECIFIC OF ESCAPEMENT OF INCOME WAS COMMUNICATED BEFORE THE RETURN WAS REVISED. THE LD. CIT(A) FURTHER OBSERVED THAT THE GIFT HAD BEEN RECEIVED FROM THE FAMILY MEMBER OF THE KARTA OF THE ASSESSEE AND ALL THE INFORMATIONS IN THE FORM OF BANK STATEMENTS ETC. WERE AVAILABLE WITH THE AO WHILE PASSING THE ORDER DATED 31.03.2009 U/S 143(3) OF THE ACT. THUS, IT COULD NOT HA VE BEEN CONSTRUED THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF ITS INCOME AND THAT THE ASSESSEE ALSO COULD NOT HAVE BEEN ALLEGED TO HAVE FILED INACCURATE PARTICULARS AS IT WAS UNDER A BONAFIDE BELIEF THAT THE GIFT RECEIVED BY HUF WAS NOT TAXABLE. THE LD. CIT(A) DELETE D THE PENALTY LEVIED BY THE AO. 5 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR REITERATED THE OBSERVATIONS MADE BY THE AO AND STRONGLY SUPPORTED THE PENALTY ORDER DATED 19.03.2012. ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 4 6. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSMENT OF THE ASSESSEE HUF WAS COMPLETED U/S 143(3) OF THE ACT ON 31.03.2009 AND THEREAFTER NOTICE U/S 148 OF THE ACT DATED 18.11.2010 WAS ISSUED AND THE ASSESSEE FILED A RETURN DECLARING AN INCOME OF RS. 11,24,348/ - IN PURSUANCE OF NOTICE U/S 148 OF THE ACT. THE SAID INCOME WAS REVISED BY ADDING RS. 9,50,000/ - (RS.10,00,000/ - - RS.50,000/ - ) ON ACCOUNT OF GIFT RECEIVED FROM SH. SARAT CHANDRA JAIN, THE FATHE R OF THE KARTA OF THE HUF. THE SAID GIFT OF RS.10,00,000/ - WAS CLAIMED AS EXEMPT UNDER THE PROVISO (A) TO SECTION 56(2)(IV) OF THE ACT TREATING THE SAME AS RECEIVED FROM THE RELATIVE WHILE FILING THE ORIGINAL RETURN. HOWEVER, THE GIFT RECEIVED FROM RELATIV E OR ON THE OCCASION OF MARRIAGE OF AN INDIVIDUAL OR BY WAY OF INHERITANCE HAVE NO APPLICATION TO THE HUF, SO IT WAS QUITE EVIDENT THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE GIFT WAS NOT TAXABLE THAT IS WHY THE SAME WAS NOT INCLUDED IN THE ORIG INAL RETURN OF INCOME . IT WAS STATED THAT AS SOON AS THE ASSESSEE RECEI VED NOTICE U/S 148 OF THE ACT, T HE RETURN OF INCOME WAS REVISED, ADDING THE SAID GIFT AND ALL THE DUE TAXES WERE PAID, THEREFORE, PENALTY U/S 271(1)(C) OF THE ACT WAS NOT LEVIABLE ON TH E SAME. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: PRICE WATERHOUSE COOPERS PVT. LTD. VS CIT (2012) 348 ITR 308 (SC) CIT VS ESCORTS FINANCE LTD. (2010) 328 ITR 0044 (DEL) CIT, UDAIPUR VS THE UDAIPUR CENTRAL COOPERATIVE BANK LTD., ITA NO. 105/2013 , ORDER DATED 01.05.2015 (RAJ. HC) M/S RIFFLEBERG CAPITAL (P) LTD. VS ADDL. CIT, ITA NO. 4990/DEL/2012 , ORDER DATED 02.02.2015 , NEW DELHI ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 5 CIT VS BENNETT COLEMAN & CO. LTD. (2013) 87 DTR 0368 (BOM HC) CIT VS MAHANAGAR TELEPHONE NIGAM LTD. (2011) 63 DTR 0087 (DEL HC) M/S ST. SOLDIER PROPE RTIES & INDUSTRIES LTD. VS ACIT, ITA NO.6256 - 58/DEL/2012, ORDER DATED 11.10.2013, NEW DELHI CIT VS SOMANY EVERGREEN KNITS LTD. (2013) 352 ITR 0592 CIT VS RELIANCE PETRO PRODUCT (SC) 230 CTR 320 CIT VS RAJ OVERSEAS (P&H) (2011 ) 336 ITR 261 ACIT VS HARMONY PLASTICS P. LTD., ITA NO S. 344 & 393/JODH/2014, DATED 12.09.2014 CHARBHUJA INDUSTRIES P. LTD. VS ACIT, ITA NOS.6345 - 6/MUM/2012, DATED 22.05.2013 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE HUF RECEIVED A GIFT FROM THE FATHER OF THE KARTA. HOWEVER, THE SAID GIFT WAS CONSIDERED AS EXEMPT UNDER A BONAFIDE BELIEF THAT THE GIFT RECEIVED FROM R ELATIVE WAS NOT TAXABLE AS PER PROVISO ( A) TO SECTION 56(2)(IV) OF THE A CT. HOWEVER, WHEN A NOTICE U/S 148 OF THE ACT WAS RECEIVED, THE ASSESSEE SUO MOTU REVISED ITS RETURN OF INCOME BEFORE RECEIVING ANY NOTICE U/S 142(1) OF THE ACT , INCLUDED THE SAID GIFT IN ITS REVISED INC OME AND PAID ALL THE DUE TAXES. HOWEVER, T HE AO CONSIDERED THE SAID INCOME DISCLOSED IN THE REVISED RETURN AS CONCEALED INCOME AND LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE AT THE MOST HAD COMMITTED , AN INADVERTENT AND BONAFIDE ERROR BUT DID NOT INTEND TO OR ATTEMPTED TO CONCEAL ITS INCOME BECAUSE THE RETURN OF INCOME WAS REVISED BEFORE RECEIVING ANY NOTICE U/S 142(1) OF THE ACT FROM THE AO. ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 6 8. ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ESCORTS FINANCE LTD. (SUPRA) HAS HELD AS UNDER: IT IS REPEATEDLY HELD BY THE COURTS THAT THE PENALTY ON THE GROUND OF CONCEALMENT OF PARTICULARS OR NON - DISCLOSURE OF FULL PARTICULARS CAN BE LEVIED ONLY WHEN IN THE ACCOUNTS/RETURN AN ITEM HAS BEEN SUPPRESSED DISHONESTLY OR THE ITEM HAS BEEN CLAIMED FRAUDULENTLY OR A BOGUS CLAIM HAS BEEN MADE. WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RETURN OF INCOME, PENALTY CANNOT BE LEVIED AND MERELY BECAUSE AN AMOUNT IS NOT ALLOWED OR TAXED TO I NCOME, IT CANNOT BE SAID THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. FURTHER, CONSCIOUS CONCEALMENT IS NECESSARY. EVEN IF SOME DEDUCTION OR BENEFIT IS CLAIMED BY THE ASSESSEE WRONGLY BUT BONA FIDE AND NO MA LAFIDE CAN BE ATTRIBUTED, THE PENALTY WOULD NOT BE LEVIED. 9. IN THE PRESENT CASE ALSO THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE GIFT RECEIVED FROM FATHER OF THE KARTA WAS EXEMPT UNDER THE PROVISO (A) TO SECTION 56(2)(IV) OF THE ACT AND EVEN THE AO WHILE FRAMING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT ON 31.03.2009 DID NOT MAKE ANY ADDITION AND ACCEPTED THE PARTICULARS FURNISHED BY THE ASSESSEE. THEREFORE, THE MISTAKE OF THE ASSESSEE WAS A BONAFIDE WHICH WAS RECTIFIED BY FILING THE REVISED RETURN BEFORE RECEIVING ANY NOTICE U/S 142(1) OF THE ACT AND BEFORE RECEIVING THE COPY OF REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT. 10. ON A SIMILAR ISSUE THE HON BLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS CIT (S UPRA) HAS HELD AS UNDER: ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 7 19. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO M AKE. THE CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT, DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 20. WE ARE OF THE OPINION, GIVEN THE PECULIAR FACTS OF THIS CASE, THAT THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. WE ARE SATISFIED THAT THE ASSESS EE HAD COMMITTED AN INADVERTENT AND BONA FIDE ERROR AND HAD NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. 11. IN THE PRESENT CASE ALSO THERE WAS NO QUESTION OF FURNISHING OF INACCU RATE PARTICULARS OF INCOME AS T HE GIFT WAS RECEIVED BY THE ASSESSEE HUF FROM THE FATHER OF THE KARTA AND THIS FACT WAS AVAILABLE TO THE AO WHO FRAMED THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT ON 31.03.2009. LATER ON, WHEN A NOTICE U/S 148 OF THE ACT WAS RECEIVED BY THE ASSESSEE THE RETURN OF INCOME WAS REVISED AND THE SAID GIFT WHICH WAS EARLIER CONSIDERED AS EXEMPT UNDER A BONAFIDE BELIEF IN VIEW OF PROVISO (A) TO SECTION 56(2)(IV) OF THE ACT WAS OFFERE D FOR TAXATION AND DUE TAXES WERE PAID. THEREFORE, IN VIEW OF THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT AS WELL AS THE HON BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO ITA NO.1308 /DEL /2014 AKHIL JAIN (HUF) 8 CASES, THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT LEVIABLE IN THE PECULIAR FACTS OF THE PRESENT CASE. I DO NOT SEE ANY VALID GROUND TO INTERFE RE WITH THE FINDINGS OF THE LD. CIT(A). 12 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ( ORDER PRON OUNCED IN THE COURT ON 15 /07 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 15 /07 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR