The ITO, Ward-1(2), Bhavnagar V. Shri Hanumanprashad Sharma, Bhavnagar

ITA 1428/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0488 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-11-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 05-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GARG SR
• Assessee Lawyers: B R POPAT
• Keywords: Gift; Source of fund; Additional evidence; Onus to prove
• Section: 271(1)(c); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 4.11.2009 DRAFTED ON: 11.1 1.2009 ITA NO.1428/AHD/2009 ASSESSMENT YEAR : 2003-2004 ITO, WARD-1(2), JASHONATHA CHOWK, BHAVNAGAR-364001. VS. SHRI HANUMANPRASAD SHARMA PROP: OF M/S. GUJARAT SHIP SCRAP CORPORATION, 102, RAJ COMPLEX, SANSAKARMANDAL, BHAVNAGAR. PAN/GIR NO. : AMZPS 8424 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SANDEEP GARG SR. A.R. RESPONDENT BY: SHRI B.R.POPAT O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD.CIT(APPEALS)-XX, AHMEDABAD, DATED 22.01.2009 IN APPEAL NO.CIT(A)- XX/142/07-08. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN LAW AN D ON FACTS IN DELETING THE PENALTY IN RS.2,65,560/- LEVIED UNDER SECTION 271(1 )(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THE CAP ITAL ACCOUNT OF THE APPELLANT WAS CREDITED BY AN AMOUNT OF RS.8,90,000/- CLAIMED TO HAVE BEEN RECEIVED AS GIFT FROM THE NEAREST RELATIVES. IN THIS REGARD, IN THE SUBSEQUENT SUBMISSION, IT IS CONTENDED BY THE APPELLANT THAT THE AMOUNT WAS TEMP ORARILY BORROWED FROM THE NEAREST RELATIVES. SINCE THE APPELLANT DID NOT ADDU CE THE DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM, THE A.O. DISBELIEVED THE CONT ENTIONS OF THE APPELLANT AND ITA NO. 1428/AHD/2009 M/S.SHRI HANUMANPRASAD SHARMA ASST.YEAR -2003-2004 - 2 - TREATED THE AMOUNT AS UNDISCLOSED INCOME OF THE APP ELLANT AND ADDED UNDER SECTION 68 OF THE ACT. CONSEQUENTLY, DURING THE COURSE OF A PPELLATE PROCEEDINGS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE AP PELLATE PRODUCED DOCUMENTARY EVIDENCE OF HAVING RECEIVED GIFT FROM T HE NEAREST RELATIVES. HOWEVER, THESE BEING THE ADDITIONAL EVIDENCES PRODUCED BY TH E APPELLANT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DID NOT ALLOW TO ADMIT AS ADDITIONAL EVIDENCES UNDER SECTION 46A OF I.T. RULES, 1962 AND THEREBY CONFIRMED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 68 OF THE ACT. THE APPELLANT DID NOT PREFER ON APPEAL AGAINST THE APPELLANT ORDER PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX(APPEALS) BEFORE THE ITAT. THE LEARNED ASSESSING OFFICER, THEREFORE, PROCEEDED FOR LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE ACT. 4. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) DELETED THE PENALTY BY OBSERVING TO QUOTE AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS FURNISHED BY THE AR OF THE APPELLANT WITH CASE-LAWS RELIED UPON BY HIM. IT IS SETTLED PROPOSITION THAT THE ASSESSMENT PROCEEDINGS ARE DIFFERENT FROM THE PENALTY PROCEEDINGS. THROUGH THE APPELLANT COULD NOT FURNISH ALL THE EXP LANATIONS, DOCUMENTARY EVIDENCES IN RESPECT OF RECEIPT OF GIFTS FROM HIS N EAREST RELATIVES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT HAD FURNIS HED THE SAID EXPLANATION AND DOCUMENTARY EVIDENCES BEFORE THE LD. LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) DURING THE APPELLANT PROCEEDINGS AS A N ADDITIONAL EVIDENCES WHICH, BY VIRTUE OF PROVISIONS OF RULE 46A OF THE I.T. RUL ES WERE NOT ADMITTED BY THE CIT(A). THE SAID DOCUMENTARY EVIDENCES AND EXPLANAT IONS WERE FURNISHED TO THE LEARNED ASSESSING OFFICER DURING THE COURSE OF PENA LTY PROCEEDINGS WHICH THE LEARNED ASSESSING OFFICER OUGHT TO HAVE CONSIDERED WITH ALL THE FACTS AND CIRCUMSTANCES OF THE CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. MERE CONFIRMATION OF THE ADDITION MADE BY THE LEARN ED ASSESSING OFFICER AND NON- FILING OF AN APPEAL AGAINST THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS)S APPELLANT ORDER BY THE APPELLANT BEFORE THE ITAT IS NOT A SUFFICIENT GROUND FOR THE LEVY OF PENALTY. IT IS HELD BY THE APEX COURT IN TH E CASE OF T. ASHOK PAL VS.CIT, 292 ITR 11 THAT THE ORDER IMPOSING PENALTY IS QUASI CRI MINAL IN NATURE AND THUS, THE BURDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED HIS INCOME, SINCE THE BURDEN OF PROOF IN PENALTY PROCEE DINGS VARIES FROM THAT IN THE ASSESSMENT PROCEEDINGS, A FINDING IN AN ASSESSMENT PROCEEDINGS THAT A PARTICULAR RECEIPT IS INCOME CANNOT AUTOMATICALLY BE ADOPTED. IN THE PENALTY PROCEEDINGS, THUS, THE AUTHORITIES MUST CONSIDER THE MATTER AFRE SH AS THE QUESTION HAS TO BE CONSIDERED FROM DIFFERENT ANGLE. THE LEARNED ASSESS ING OFFICER HAS NOT PROVED ITA NO. 1428/AHD/2009 M/S.SHRI HANUMANPRASAD SHARMA ASST.YEAR -2003-2004 - 3 - OTHERWISE BY BRINGING OUT FRESH EVIDENCES. THUS, ON THE BASIS OF THE FACTS ON RECORDS AND CONSIDERING THE VARIOUS JUDICIAL PRONOU NCEMENTS, I HOLD THAT THE APPELLANTS CASE DOES NOT FALL WITHIN THE PURVIEW O F PROVISIONS OF SECTION 271(1)(C) AND IT CANNOT BE CONCLUDED THAT THE APPELLANT HAS F URNISHED INCORRECT PARTICULARS. IN VIEW OF THE DISCUSSION AS ABOVE, THE PENALTY LEV IED IS HEREBY CANCELLED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENT LY ARGUED AND SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 6. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT ASSESSEE RECEIVED GIFT OF RS.8,90,000/- FROM 3 OF H IS CLOSE RELATIVES. THE LEARNED ASSESSING OFFICER CALLED FOR DETAILS OF GIFTS AT TH E TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ORIGINALLY BELONGS TO HARYANA AND STIL L RESIDES AT HARYANA. THE ASSESSEE HAD BUSINESS INTEREST IN BHAVNAGAR AND JAM NAGAR. THEREFORE, THE ASSESSEE WAS CONSTANTLY TRAVELLING BETWEEN HARYANA AND GUJAR AT AND WAS NOT PRESENT AT BHAVNAGAR IN THE MONTH OF MARCH WHEN THE TIME BARRI NG ASSESSMENT WAS TO BE COMPLETED. THE ACCOUNTANT BY MISTAKE IN REPLY TO TH E QUERY OF THE LEARNED ASSESSING OFFICER BY MISTAKE, STATED THAT THE AMOUN T OF RS.8,90000/- REPRESENTS LOAN FROM VARIOUS PARTIES THOUGH THE SAME WERE GIFT S FROM RELATIVES. THE ASSESSEE COULD NOT FILED EVIDENCES REGARDING THE GIFTS BEFOR E THE LEARNED ASSESSING OFFICER. 7. THE LEARNED ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY. IN REPLY TO THE SHOW CAUSE NOTICE, ASSESSE E FILED COPY OF GIFT DEED ALONG WITH PAN CARD, PHOTOCOPY OF BANK PASSBOOK, LIST OF DONORS MENTIONING THEIR RELATION WITH THE ASSESSEE AND ALSO SOURCE OF INCOM E OF DONORS REQUESTING NOT TO LEVY PENALTY. THE LEARNED ASSESSING OFFICER WITHOUT VERIFYING THE SUBMISSIONS OF THE ASSESSEE PASSED THE PENALTY ORDER STATING THAT SINCE THE ASSESSEE HAS NOT FILED APPEAL AGAINST THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS), HE HAS NOTHING TO SAY IN THE MATTER. 8. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS), ASSESSEE FILED GIFT DEEDS OF DONOR, COPY OF PAN CARD, PHOTOCOPY OF BANK PASSBOOK, LIST OF DONORS ITA NO. 1428/AHD/2009 M/S.SHRI HANUMANPRASAD SHARMA ASST.YEAR -2003-2004 - 4 - MENTIONING THE RELATION WITH THE ASSESSEE AND ALSO SOURCES OF INCOME OF THE DONOR. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) QUO TING RULE 46A DENIED ADMITTING THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER UNDE R SECTION 68 OF THE I.T.ACT. 9. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT GIFT OF RS.5,40,000/- WAS RECEIVED FROM HIS BROTHER MR. VINODKUMAR SHARMA WHO IS AN AGRICULTURIST HOLDING AGRICULTURE LAND AT HISSAR. H E EXECUTED GIFT DEED ON 11.04.2002. HE FILED PHOTO COPY OF HIS PAN CARD. FU RTHER, PASSBOOK OF ACCOUNT WITH STATE BANK OF INDIA, VPO, ARYANAGAR, HISSAR BR ANCH, ACCOUNT NO.000169 WHEREIN THERE IS ENTRY BY TRANSFER CHEQUE OF RS.5,4 3,000/- AND THE SAME FUNDS WERE UTILISED FOR PURCHASING DEMAND DRAFT WHICH WAS SENT TO THE ASSESSEE. FURTHER, SUM OF RS.2 LACS WAS RECEIVED FROM SHRI VIKRAM RAM RATA N WHO IS BROTHER IN LAW OF THE ASSESSEE. THE DONOR GIFTED RS.2 LACS BY DD NO.32342 6 OF 25.05.2002 DRAWN IN FAVOUR OF SBI, BHAVNAGAR. THE GIFT IS CONFIRMED BY GIFT DEED. THE ASSESSEE FILED EVIDENCES OF AGRICULTURAL LAND HOLDING, DETAILS OF CROP GROWN, IRRIGATION FACILITIES AVAILABLE ETC. THE LAND IS SITUATED NEAR BHAGRA NA NAGAL DAM AND HENCE THE DONOR HAS AMPLE WATER FOR CULTIVATION. GIFT OF RS.1,47,00 0/- WAS RECEIVED FROM THE BROTHER IN LAW SHRI JAGDISH SHAH. PHOTOCOPY OF THREE DRAFTS EACH OF RS.49,000/- WERE FURNISHED ALSO GIFT DEED WERE FILED. 10. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF T. ASHOK PAI VS. CIT 292 ITR 11 WHEREIN IT WAS HELD THAT INACCURATE IN THE CONTEXT OF LEVY OF PENALTY UNDER SECTION 271(1)(C) SIGNIFIES A DELIBERATE ACT OR OMISSION ON THE PART OF THE ASSESSEE FOR THE PURPOSE OF CONCEALMENT OF INCOME OR FURNISHING OF I NACCURATE PARTICULARS OF INCOME. IT WAS FURTHER HELD THAT ORDER IMPOSING PEN ALTY IS QUASI-CRIMINAL IN NATURE AND THE BURDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED HIS INCOME AND THAT THE BURDEN OF PROOF IN A PENALT Y PROCEEDING VARIES FROM THAT IN ITA NO. 1428/AHD/2009 M/S.SHRI HANUMANPRASAD SHARMA ASST.YEAR -2003-2004 - 5 - THE ASSESSMENT PROCEEDINGS. A FINDING IN AN ASSESSM ENT PROCEEDINGS THAT A PARTICULAR RECEIPT HIS INCOME CANNOT AUTOMATICALLY BE ADOPTED IN THE PENALTY PROCEEDINGS AND THE AUTHORITIES MUST CONSIDER THE M ATTER AFRESH AS THE QUESTION HAS TO BE CONSIDERED FROM A DIFFERENT ANGLE. 11. THE ASSESSEE ALSO RELIED ON THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF K.C.BUILDER 265 ITR 562, AND SUBMITTED THAT THE HON'BLE SUPREME COURT REFERRING TO THE DECISION HON'BLE SUPREME COURT IN THE CASE OF G.L.DIDVANIA 224 ITR 687 HELD THAT CONCEALMENT INHERENTLY CARRIES WI TH AN ELEMENT OF MEAN REA. THE COURT WENT ON TO HOLD THAT MERE OMISSION FROM THE R ETURN OF AN ITEM OF RECEIPT NEITHER AMOUNTS TO CONCEALMENT NOR A DELIBERATE FUR NISHING OF INACCURATE PARTICULARS OF INCOME, UNTIL AND UNLESS THERE IS SOME EVIDENCE TO SHOW OR CIRCUMSTANCES ARE FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSI ON WAS AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INC OME SO AS TO AVOID IMPOSITION OF TAX THEREON. 12. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE FURTHER RELIED ON THE DECISION OF THE HON'BLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF CIT VS. BALBIRSINGH (2007) 164 TAXMAN 65 (P& H) WHEREIN IT WAS HELD THAT THERE ARE FINDINGS OF FACTS RECORDED BY THE TRIBUNAL SHOWING THAT THE ASSESSEE HAS DISCLOSED ALL DETAILED PARTICULARS ABOUT HIS INCOME WHICH HE HAD RECEIVED ALBEIT CLAIMING THE SAME TO BE THE GIFT, THE CASE DOES NOT FALL WITHIN THE MISCHIEF OF SECTION 271(1)(C) AND IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS FU RNISHED INACCURATE PARTICULARS OF ITS INCOME. EVEN OTHERWISE, NO EVIDENCE WITH REGARD TO CONCEALMENT HAS BEEN PLACED ON RECORD BY THE REVENUE TO TAKE A VIEW IN I TS FAVOUR. ON THE CONTRARY, THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE THROUGH BA NKING CHANNEL AND IDENTITY OF THE DONOR IS ALSO ESTABLISHED. IT IS A DIFFERENT MA TTER THAT THE SAME HAS NOT BEEN CONSIDERED AS GIFT. THEREFORE, NO INTERFERENCE WITH THE ORDER OF THE TRIBUNAL IS REQUIRED. ITA NO. 1428/AHD/2009 M/S.SHRI HANUMANPRASAD SHARMA ASST.YEAR -2003-2004 - 6 - 13. HENCE, IT WAS SUBMITTED THAT FOR THE ABOVE REAS ONS, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)DELETING THE PEN ALTY SHOULD BE CONFIRMED AND THE APPEAL OF THE REVENUE SHOULD BE DISMISSED. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE HAS CLAIMED TO RECEIVED GIFTS OF RS 8,90,000/- FROM HIS BROTHER AND BROTHERS-IN-LAW. IN THE ASSESSMENT PROCEEDINGS BEFORE THE LEARNED ASSES SING OFFICER THE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE COULD NOT FILE NECESSARY EVIDENCES. IN APPEAL, THE EVIDENCES FILED WERE NOT ADMITTED IN VIEW OF RULE 46A OF THE INCOME TAX RULES, AND THEREFORE, THE ADDITION W AS CONFIRMED. WE FIND THAT THE ASSESSEE IN REPLY TO SHOW CAUSE NOTICE FOR PENALTY SUBMITTED A DETAILED REPLY WHICH WAS NOT FOUND TO BE FALSE BY THE LEARNED ASSESSING OFFICER AFTER VERIFICATION. RATHER WE FIND THAT THE LEARNED ASSESSING OFFICER H AS NOT EXAMINED THE DETAILS FURNISHED BY THE ASSESSEE ON THE GROUND THAT :- , IT IS PROVED THAT ASSESSEE HAD NEITHER RECEIVED THE GIFT NOR OBTAINED THE DEPOSIT BUT HE HAS CREDITED HIS UNACCOUNTED MONEY I N HIS BOOKS OF ACCOUNTS IN THE NAME OF VARIOUS PERSONS AND AFTER THOUGHT HE HAS MADE THIS STORY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREF ORE, THERE IS NO NECESSITY TO VERIFY THE DETAILS FILED ALONG WITH PE NALTY REPLY AT THIS STAGE. 15. IN OUR CONSIDERED OPINION, THE ABOVE ACTION OF THE LEARNED ASSESSING OFFICER IS UNJUSTIFIED AND BAD IN LAW. PENALTY PROC EEDINGS BEING DISTINCT FROM ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS A LEGAL RI GHT TO FURNISH ALL THOSE EVIDENCES AND DETAILS WHICH HE HAD NOT OR COULD NOT PRODUCE A T THE TIME OF THE ASSESSMENT PROCEEDINGS. THE LEARNED ASSESSING OFFICER SHOULD C ONSIDER ALL THE MATERIALS WHICH WERE FILED IN RESPONSE TO SHOW CAUSE NOTICE B Y THE ASSESSEE BECAUSE THE SHOW CAUSE NOTICE CANNOT BE TREATED AS AN EMPTY FORMALIT Y. WE FIND THAT UNLESS THE REPLY FURNISHED IN RESPONSE TO SHOW CAUSE NOTICE IS FOUND TO BE NOT ACCEPTABLE, THE LEARNED ASSESSING OFFICER HAS NO AUTHORITY TO IMPOS E PENALTY UNDER SECTION ITA NO. 1428/AHD/2009 M/S.SHRI HANUMANPRASAD SHARMA ASST.YEAR -2003-2004 - 7 - 271(1)(C) OF THE ACT. THUS, IN OUR CONSIDERED OPINI ON, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE LEARNED ASSESSI NG OFFICER WAS BAD IN LAW. WE THEREFORE CONFIRM THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) AND DELETE THE PENALTY LEVIED UNDER SECTION 271(1)( C) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED AT THE CLOSE OF HEARING IN THE PRE SENCE OF THE PARTIES IN THE COURT ON 04.11.2009. SD/- SD/- ( H.L. KARWA ) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD; DATED 04/11/ 2009 PREPARED AND COMPARED BY : PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XX, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD