ITO, Jaipur V. KC GARG, Jaipur

ITA 133/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99311 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Assessee Lawyers: ANIL GOYAL C A DHK
• Keywords: Gift; Charitable institution
• Section: 143(3); 68; 148; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 133/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2001-02. INCOME TAX OFFICER, WARD 5(2), JAIPUR. CUKE VS. SHRI K.C. GARG, L/H OF LATE SUA LAL GARG, A-22, KESAR KOTHI, LAL BAHADUR SHASTRI NAGAR, JLN MARG, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ACPBG 2447F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : MRS. NEENA JEPH (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ANIL GOYAL (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.06.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 8 .09.2015 VKNS'K@ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 05.11.2012 PASSED BY THE LEARNED CIT (A)-II, JAIPUR FOR A.Y. 20 01-02. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE PENALTY BY LD. CIT (A ), IMPOSED UNDER SECTION 271(1)(C) BY THE AO AT RS. 6,68,116/-. 2 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. 2. IN THIS CASE ASSESSMENT FOR A.Y. 2001-02 WAS COMP LETED UNDER SECTION 148 READ WITH SECTION 143(3) OF THE IT ACT. DURING THE YE AR UNDER CONSIDERATION ASSESSEE HAS SHOWN IN CAPITAL ACCOUNT THREE GIFTS I .E. TWO FROM SHRI SANWAR MAL SARAFF (KARTA OF M/S. SANWAR MAL VIMAL KUMAR SARAFF HUF) AND (KARTA OF M/S. HANUMAN BUX UMA DUTTA SARAFF HUF) OF RS. 10,00,000/ - EACH AND RS. 5,00,000/- FROM SHRI DINESH GHIYA. THE AO HAD IN QUA NTUM PROCEEDINGS HELD THAT ALL THREE GIFTS WERE BOGUS AND ARRANGED BY THE ASSESSEE BY USING UNACCOUNTED CASH OF THE ASSESSEE. THEREFORE, HE MADE ADDITION OF RS. 25,00,000/- TO THE INCOME OF THE ASSESSEE. PENALT Y PROCEEDINGS UNDER SECTION 271(1)(C) READ WITH SECTION 274 HAD BEEN INITIATED S EPARATELY FOR FINING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INC OME. THE AO GAVE SHOW CAUSE NOTICE ON 22.03.2010 TO THE LEGAL HEIR OF THE DECEASED I.E. ASSESSEE SHRI K.C. GARG SON OF LATE SHRI SUA LAL GARG, BEFORE IMP OSING PENALTY UNDER SECTION 271(1)(C) AS THE ADDITION HAS BEEN CONFIRMED BY THE LD. CIT (A) AS WELL AS BY THE LD. CIT (A). THUS THE ASSESSEE ALSO REPLIED BEFORE T HE AO WHICH HAS BEEN REPRODUCED BY THE AO AT PAGES 2 & 3 OF THE PENALTY ORDER. THE LEGAL HEIR SUBMITTED THAT NO PENALTY CAN BE IMPOSED ON HIM BY RELYING ON THE DECISION OF PNP THULKARUNAI & CO. VS. DIRECTOR ENFORCEMENT, 71 I TR 149 (MADRAS) UNDER THE FERA PROCEEDINGS. THE AO AFTER CONSIDERING ASSESSEE S REPLY ON IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) ON LEGAL REPRESENTA TIVE UNDER SECTION 159 OF THE 3 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. ACT, HAS HELD THAT AS PER THIS SECTION THE LEGAL HE IR IS TO BE TREATED AS ASSESSEE FOR ALL MATTERS CONCERNED. THUS HE IS LIABLE FOR PE NALTY FOR CONCEALMENT OF INCOME TO THE EXTENT OF RS. 20,00,000/- BY INTRODUC ING BOGUS GIFTS AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY H E IMPOSED PENALTY AT RS. 6,68,116/- UNDER SECTION 271(1)(C) VIDE ORDER DATED 31.03.2010. 3. BEING AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO HAD ALLOWED THE APPEAL BY OBS ERVING THAT THE LD. A/R OF THE ASSESSEE SUBMITTED THAT SMT. KESAR DEVI GARG WIF E OF THE APPELLANT I.E. LATE SHRI SUA LAL GARG HAD ALSO RECEIVED GIFT OF RS. 10, 00,000/- FROM THE SAME DONOR SHRI SANWAR MAL SARAFF, KARTA OF M/S. SANWAR MAL VIMA L KUMAR HUF. HOWEVER, ITAT B BENCH JAIPUR IN THE CASE OF SMT. KESAR DEVI GARG FOR THE A.Y. 2001-02 THROUGH ORDER DATED 11.05.2012 DELETED THE PENALTY IMPOSED STATING THAT THE PENALTY CANNOT BE LEVIED JUST BECAUSE THE ADDITION WAS SUSTAINED. THE LD. CIT (A) FURTHER HELD AS UNDER :- 4. AFTER GOING THROUGH RIVAL SUBMISSIONS THE AO I S DIRECTED TO DELETE THE PENALTY U/S 271(1)(C) OF RS. 6,68,116/- BECAUSE ON SIMILAR FACTS, ON SIMILAR GIFT FROM THE SAME DONOR, HONBLE ITAT BENCH B, JAIPUR DELETED THE PENALTY IN THE CASE OF THE WIFE O F THE APPELLANT (IN THE CASE OF SMT. KESAR DEVI GARG). PARA 5 OF HONBL E ITAT ORDER IS REPRODUCED BELOW :- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS A ND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW T HAT LEVY 4 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. OF PENALTY IN THE PRESENT CASE WAS NOT JUSTIFIED. IT IS SEEN THAT ASSESSEE AGED ABOUT 90 YEARS WAS EXPIRED LONG BACK O N 29.2.2004. THEREAFTER, NOTICE DATED 9.5.2005 U/S 148 WAS ISSUED FOR REOPENING OF THE CASE OF THE ASSESSEE. T HE CASE WAS BEING ATTENDED BY THE HUSBAND OF THE ASSESSEE SH RI SHAM LAL GARG WHO WAS HIMSELF ABOUT 91 YEARS OF AGE. IT IS FURTHER SEEN THAT DURING THE PENDENCY OF THE CASE, SHRI SHAM LAL GARG ALSO EXPIRED ON 26.9.2006 AND THE CASE REM AINED UNATTENDED. IN VIEW OF THESE FACTS, THE ASSESSMENT WA S COMPLETED AND THE ADDITION WAS MADE IN THE ASSESSMEN T ORDER COMPLETED ON 12.12.2006. IT IS SEEN THAT THE DONOR WHO WAS ALSO EXPIRED HAVE FILED AFFIDAVIT IN HIS LIFETIM E THAT HE HAS GIFTED A SUM OF RS. 10 LAKHS. COPY OF HIS CAPITAL A CCOUNT SHOWING SOURCE OF GIFT AND THE BANK ACCOUNT OF THE A SSESSEE WHERE THE AMOUNT CREDITED WAS ALSO FILED. COPIES OF T HESE DOCUMENTS ARE PLACED ON RECORD. COPY OF THE ORDER O F TRIBUNAL IS ALSO PLACED ON RECORD WHERE IT HAS BEEN OBSERVED THAT ASSESSEE COULD NOT PROVE CONCLUSIVELY THAT THE GIFT S WERE GENUINE. THUS THE SAME APPEARED TO BE NO-GENUINE AND THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS COULD ALSO NOT BE PROVED. AFTER TAKING INTO ACCOUNT THE O BSERVATION OF THE TRIBUNAL IT IS SEEN THAT THOUGH ASSESSEE COUL D NOT PROVE CONCLUSIVELY THE GENUINENESS OF THE GIFT BUT HAVE F ILED ALL THE DETAILS IN RESPECT TO THE GIFT RECEIVED. THIS IS NOT A CASE OF THE DEPARTMENT THAT ASSESSEE HAS GIVEN HIS OWN MONEY AND THEREAFTER HAS RECEIVED THE SAME IN THE GARB OF GIF T. CONFIRMATION OF GIFT, SOURCE OF GIFT ALONGWITH BANK ACCOUNT OF THE DONOR AND DONEE WERE FILED. THE MAJOR DETAILS IN RESPECT OF GIFT WAS FILED, THEREFORE, AS STATED ABOVE THAT T HESE DETAILS WERE NOT SUFFICIENT TO BE A GENUINE GIFT, THEREFORE, AMOUNT OF GIFT WAS ADDED. THIS IS NOT NECESSARY THAT WHERE ANY A DDITION HAS BEEN SUSTAINED, PENALTY IS ALSO LEVIABLE. THERE ARE NUMEROUS DECISIONS WHEREIN IT HAS BEEN HELD THAT IT IS NOT NECESSARY THAT PENALTY IS LEVIABLE IF THE ADDITION IS SUSTAINED. THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT FOUND F ALSE. THIS IS ONLY A CASE OF THE ASSESSEE THAT ASSESSEE F AILED TO SUBSTANTIATE IT, PENALTY IS NOT LEVIABLE AS HELD BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SHIVLAL TAK VS. CIT (2007) 251 ITR 373 (RAJ.). IN THE CASE OF BARTESH JAIN VS. ITO (2011) 137 TTJ (DEL) 200 WHEREIN IT HAS BEEN HELD THAT IF AD DITION 5 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. HAS BEEN MADE U/S 68 OF THE ACT ON ACCOUNT THAT CRE DITOR COULD NOT BE PRODUCED BUT PENALTY CANNOT BE LEVIED JUST BECAUSE THE ADDITIONS WERE SUSTAINED. SIMILAR VIEW HA S BEEN EXPRESSED IN CASE OF S.L.N. TRADERS (2012) 341 ITR 2 35 (KARN) AND IN CASE OF CIT VS. OASIS HOSPITALITIES P. LTD. (2011) 333 ITR 119 (DEL.). WE HAVE ALSO SEEN THAT OTHER C ASES ON WHICH RELIANCE HAS BEEN PLACED AND FOUND THAT THEY A RE ALSO IN SUPPORT OF THE CASE OF THE ASSESSEE. IN VIEW OF T HESE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT AT LEAST P ENALTY IS NOT ALLOWABLE ON THE FACTS OF THE PRESENT CASE, ACCO RDINGLY WE CANCEL THE LEVY OF PENALTY. 4. AGGRIEVED, THE REVENUE IS BEFORE US. THE LD. D/R ARGUED THAT THE ADDITION ON ACCOUNT OF BOGUS GIFT HAS BEEN CONFIRMED BY THE ITAT IN QUANTUM PROCEEDINGS. IT IS EVIDENT FROM THE ASSESSMENT ORDE R THAT IN THE STATEMENT RECORDED BY THE AO OF SHRI SANWAR MAL SARAFF AS WELL AS OF ASSESSEE HAD ADMITTED THAT THESE GIFTS WERE ARRANGED GIFTS WHICH PROVED THAT ASSESSEE ROUTED HIS UNACCOUNTED CASH THROUGH GIFTS. THE AO BEFORE P ASSING THE ORDER HAS CONCLUDED THAT THESE GIFTS ARE ARRANGED AND BOGUS. THE LD. D/R RELIED UPON THE HONBLE PUNJAB & HARYANA HIGH COURT DECISION IN CAS E OF CIT VS. DEEP CHAND, (2011) 336 ITR 292 (P&H) WHEREIN THE HONBLE HIGH CO URT CONFIRMED THE PENALTY IN IDENTICAL FACTS AND CIRCUMSTANCES AND HELD THAT THE GIFT AMOUNTING TO RS. 1,75,000/- SAID TO HAVE BEEN RECEIVED BY THE ASSESS EE WAS HELD TO BE BOGUS. ONCE THAT WAS SO, THE ONLY CONCLUSION WAS THAT THE AS SESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAD C ONCEALED THE PARTICULARS OF INCOME AND THUS PENALTY WAS LIABLE TO BE LEVIED AGAI NST HIM UNDER SECTION 6 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. 271(1)(C) OF THE IT ACT. THEREFORE, SHE REQUESTED TO REVERSE THE ORDER OF LD. CIT (A). 5. AT THE OUTSET, THE LD. A/R OF THE ASSESSEE REITE RATED THE ARGUMENT MADE BEFORE LD. CIT (A) AND SUBMITTED THAT ASSESSEES WIFE SMT. KESAR DEVI GARG ALSO RECEIVED GIFT OF RS. 10,00,000/- FROM THE SAME PERS ON. IN CASE OF SMT. KESAR DEVI GARG, THE HONBLE ITAT HAD DELETED THE PENALTY IN ITA NO. 161/JP/2012 A.Y. 2001-02. ON THE SAME FACTS AND CIRCUMSTANCES IN TH AT CASE ALSO THE ADDITION OF QUANTUM HAD BEEN CONFIRMED BY THE ITAT. THE ASSESSEE HAD SUBMITTED COPY OF GIFT DEED, COPY OF CAPITAL ACCOUNT, COPY OF BANK AC COUNT OF THE HUF FOR BOTH THE GIFTS AND COPY OF THE BANK ACCOUNT WHERE ASSESSEE D EPOSITED THE GIFT I.E. UNION BANK OF INDIA. THE ITO WARD 2(2) JAIPUR ON 22.3.2005 HAD RECORDED THE STATEMENT OF THE DONOR I.E. SHRI SANWAR MAL SARAFF WH O HAD CONFIRMED THE FACT THAT HIS HUF HAD GIVEN GIFT TO THE ASSESSEE. THE AS SESSEE HAS PROVED THE IDENTITY OF THE DONOR, IMMEDIATE SOURCE OF MONEY IN THE HANDS OF THE DONOR. THE GIFTS WERE RECEIVED THROUGH BANKING CHANNEL. HE FURT HER ARGUED THAT IN NUMBER OF CASES VARIOUS HIGH COURTS HELD PENALTY UNDER SEC TION 271(1)(C) WHERE ENOUGH DOCUMENTARY EVIDENCE IN SUPPORT OF THE GIFT RECEIVE D HAD BEEN FILED, NO PENALTY REQUIRED TO BE IMPOSED. THE REVENUE HAS ALSO NOT MA DE OUT THE CASE THAT ASSESSEES OWN MONEY HAS BEEN ROUTED BACK TO THE ASS ESSEE IN THE FORM OF GIFT FROM THE DONOR. THE CONCEALMENT OF INCOME BY THE ASS ESSEE HAD NOT BEEN 7 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. PROVED WHICH IS SINE QUO NON FOR IMPOSITION OF PENAL TY. THE ASSESSEE IS NO MORE. THE PENALTY IMPOSED ON LEGAL HEIR IS DEFINED U NDER SECTION 159 OF THE IT ACT. THE LEGAL HEIR DR. K.C. GARG DOES NOT HAVE ANY KNOWLEDGE ABOUT THE FACT. HE WAS PRACTICING AS A DOCTOR FOR LAST 25 YEARS IN F OREIGN COUNTRY SINCE 1976. THE ASSESSEE EXPIRED ON 26.09.2006 DURING PENDENCY O F THE CASE AND THE CASE REMAINED ALMOST UNATTENDED. AS PER GENERAL PROVISIO NS OF LAW, IT HOLDS THAT CRIME DIES WITH A MAN. IN MATTERS OF CONCEALMENT PENALTY, WHICH IS QUASI-CRIMINAL IN NATURE, THE PRINCIPLE OF CRIMINAL JURISPRUDENCE WILL HAVE TO BE APPLIED. HE FURTHER RELIED ON THE DECISION OF KOLKATA BENCH OF THE TRIBU NAL IN THE CASE OF BHUBHAN MOHAN MITTAL CHARITABLE TRUST VS. ITO (1993) 45 ITD 6 17 WHEREIN IT HAS BEEN HELD THAT A LEGAL HEIR CANNOT BE PENALIZED FOR DEFA ULT OF THE DECEASED. HE AGAIN REFERRED THE CASE OF PNP THULKARUNAI & CO. VS. DIREC TOR ENFORCEMENT (SUPRA) UNDER THE FERA PROCEEDINGS. HE FURTHER RELIED ON T HE FOLLOWING DECISIONS :- SUSHIL KUMAR MODI VS. ACIT 49 TAX WORLD 123 (ITAT JAIPUR) JAGDISH PRASAD TANWAR VS. ITO 43 TAX WORLD 78 RAJENDRA & OTHERS VS. ACIT (2010) 134 TTJ (CHENNAI) 498/(2010) 127 ITD 361 (CH ENNAI) NEW RAJA JEWELLERY VS. ITO (2011) 7 ITR (TRIB) 459 (CHENNAI) RAGHUVEER SARAN AGARWAL VS. ITO (ITA NO. 1193/JP/2010 TAX NEWS SEPT 2011) 8 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. CIT VS. SLN TRADERS (2012) 341 ITR 235 (KARN.) CIT VS. OASIS HOSPITALITIES P. LTD. 333 ITR 119 (DELHI) BHARTESH JAIN VS. ITO (2011) 137 TTJ (DEL)200 SHIVLAL TAK VS. CIT (2007) 251 ITR 373 (RAJ.) ATMARAM MAHIPAL VS. ITO 32 TAX WORLD 260 (ITAT JODHPUR) FINALLY HE PRAYED TO CONFIRM THE ORDER OF LD. CIT (A ). 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE CO-ORDINATE BENCH OF THE TRIBUNAL HAD DECIDED IDENTI CAL ISSUE IN CASE OF LATE SMT. KESAR DEVI GARG WIFE OF ASSESSEE WHEREIN THE GIFT OF RS. 10,00,000/- WAS RECEIVED FROM SHRI SANWAR MAL SARAFF. THE QUANTUM A DDITION WAS ALSO CONFIRMED BY THE ITAT IN CASE OF LATE SMT. KESAR DEVI GARG FO R A.Y. 2001-02. THE PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED IN THAT CASE WHI CH HAS BEEN DELETED BY THE CO-ORDINATE BENCH VIDE ORDER DATED 11 TH MAY, 2012. THE ASSESSEE IS NO MORE AND EXPIRED ON 26.09.2006. THE PENALTY PROCEEDINGS WE RE COMPLETED ON LEGAL HEIR I.E. DR. K.C. GARG, WHO WAS IN PRACTICE FOR MORE THAN 25 YEARS OUT OF INDIA. THE CASE LAW REFERRED BY THE ASSESSEE ARE SQUARELY AP PLICABLE AND THE CO- 9 ITA NO. 133/JP/2013 A.Y. 2001-02. ITO VS. SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GA RG. ORDINATE BENCH DECIDED THE IDENTICAL ISSUE IN FAVOU R OF THE ASSESSEE. THEREFORE, WE UPHOLD THE ORDER OF LD. CIT (A). 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8/09/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 8/09/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- ITO WARD 5(2), JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- SHRI K.C. GARG, L/H OF LATE SHRI SUA LAL GARG. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.133/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR