DR. K.C. GARG, Jaipur V. ITO, Jaipur

ITA 161/JPR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62011 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-05-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Unexplained expenditure; Gift
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ITA NO. 161/JP/2012 ASSTT. YEAR : 2001-02 LATE SMT KESAR DEVI GARG, VS THE ITO, WARD 5(2), L/H OF DR K.C.GARG , JAIPUR A-22, KESAR KOTHI, J.L.N. MARG, JAIPUR PAN NO. AARPD6290L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL GOYAL RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 03.5.2012 DATE OF PRONOUNCEMENT : 11.5.2012. ORDER PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST CONFIRMING T HE LEVY OF PENALTY U/S 271(1)(C) ON THE AMOUNT OF RS. 10,00,000/- RECEIVED AS GIFT F ROM ONE M/S SANWAR MAL SARAFF (KARTA OF M/S SANWAR MAL VIMAL KUMAR HUF) AND SHRI JAI SI NGH SETHIA (KARTA OF HUNUMAN BUX UMA DUTTA SASRAF, HUF). FURTHER, A GIFT OF RS. 99,683/- WAS RECEIVED FROM SMT KIRAN BALA GARG (NRI). SINCE ASSESSEE COULD NOT PR OVE THE GENUINENESS OF THESE GIFTS, THEREFORE, THEY WERE ADDED TO THE INCOME OF THE ASS ESSEE. WHILE CONFIRMING THE ADDITION, THE ASSESSING OFFICER HAS MADE CERTAIN OBSERVATIONS IN HIS ORDER THAT SHRI SANWAR MAL SARAFF AND SHRI JAI SINGH SETHIA AND SMT. KIRAN BAL A GARAG COULD NOT PRODUCED FOR VERIFICATION. IT WAS ALSO OBSERVED THAT HUSBAND OF THE ASSESSEE HAS SHOWN IGNORANCE 2 ABOUT RECEIVING ANY GIFT FOR HIMSELF OR BY HIS WIFE , THEREFORE, AN ADVERSE INFERENCE WAS DRAWN AGAINST THE ASSESSEE AND THE IMPUGNED ADDITIO N WAS MADE. THE MATTER TRAVELED UP TO THE STAGE OF TRIBUNAL. THE TRIBUNAL CONFIRMED T HE ADDITION OF RS. 10 LAKS AS GIFT RECEIVED FROM SHRI SANWAR MAL SARAFF, KARTA OF M/S SANWAR MAL VIMAL KUMAR HUF FROM WHOM THE GIFT WAS RECEIVED. HOWEVER, IN RESPE CT TO GIFT RECEIVED FROM SHRI JAI SINGH SETHIA AT RS. 5,00,0000/-, THE MATTER WAS RES TORED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE SAME AFRESH AND IN RESPECT T O GIFT RECEIVED FROM SMT. KIRAN BALA GARG OF RS. 99,683/-, THE ADDITION WAS DELETED BY T HE TRIBUNAL. IN THE MEANTIME, TO STARTED PROCEEDINGS U/S 271(1)(C) OF THE ACT IN RES PECT OF TOTAL GIFTS RECEIVED OF RS. 15,99,683/- INCLUDING AN ADDITION OF RS. 90,000/- O N ACCOUNT OF UNEXPLAINED EXPENDITURE WHICH WAS ALSO ADDED BY THE ASSESSING OFFICER, HOWE VER, THE SAME WAS DELETED BY THE TRIBUNAL. DETAILED SUBMISSIONS WERE FILED BEFORE T HE ASSESSING OFFICER DURING THE CONCEALMENT PROCEEDINGS. HOWEVER, ASSESSING OFFICE R WAS NOT SASTISFIED, IN HIS VIEW, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HER I NCOME TO THE EXTENT OF RS. 16,89,683/-, THEREFORE, HE LEVIED A PENALTY ON THE TOTAL AMOUNT AND IN THIS WAY A PENALTY OF RS. 5,87,263/- WAS LEVIED. 2. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A), BEFORE WHOM DETAILS SUBMISSIONS WERE FILED. IT WAS SUBMITTED THAT THE ISSUE IN RESPECT OF RS. 5 LAKHS HAS BEEN REMANDED BACK TO THE ASSESSING OFFICER BY THE TRIBU NAL AND THE ADDITION OF RS. 99,683/- AND RS. 90,000/- HAVE BEEN DELETED BY THE TRIBUNAL, THEREFORE,, THE ONLY ADDITION WHICH WAS SUSTAINED BY THE TRIBUNAL WAS OF RS. 10 LAKHS A S GIFT RECEIVED FROM SHRI SANWAR MAL SARAFF. THE COPY OF THE ORDER OF TRIBUNAL WAS ALSO FOILED. IT WAS FURTHER EXPLAINED THAT 3 ASSESSEE HAS FILED ALL THE PARTICULARS OF GIFTS REC EIVED; GIFTS WERE RECEIVED THROUGH BANKING CHANNELS. CONFIRMATION ALONG WITH AFFIDAVITS WERE FILED. IT WAS ALSO SUBMITTED THAT COPY OF CAPITAL ACCOUNT IN THE BOOKS OF SANWAR MAL SARAF F KARTA OF M/S SANWAR MAL VIMAL KUMAR, COPY OF ACCOUNT OF ORIENTAL BANK OF COMMERCE IN THE BOOKS OF DONOR WERE ALSO PRODUCED TO ESTABLISH THAT THE ASSESSEE HAD RECEIVE D A GIFT OF RS. 10 LAKHS. IT WAS ALSO EXPLAINED THAT THE DONOR HAD HUGE CAPITAL BALANCE O F RS. 1.17 CRORES OUT OF WHICH A MEAGER GIFT OF RS. 10 LAKS WAS GIVEN, THEREFORE, TH E CAPACITY OF THE DONOR IS PROVED. ENTRIES IN THE CAPITAL ACCOUNT OF THE DONOR WERE AL SO EXPLAINED ALONG WITH AN AFFIDAVIT OF SHRI SANWAR MAL SARAFF, KARTA OF M/S SANWAR MAL VIM AR KUMAR, HUF CONFIRMING THE GIFT. AFTER CONSIDERING THE SUBMISSIONS AND PERUSI NG THE MATERIAL ON RECORD, CIT(A) WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THE CASES RELIED UPON BY THE ASSESSEE WERE FOUND NOT APPLICABLE TO THE FACTS OF THE PRESE NT CASE. THEREFORE, HE SUSTAINED THE LEVY OF PENALTY. FURTHER, THE ASSESSING OFFICER W AS DIRECTED TO RECALCULATE THE PENALTY ON THE AMOUNT OF RS. 10 LAKHS ONLY AS THE REMAINING HA S ALREADY BEEN DELETED OR REMANDED BACK BY THE TRIBUNAL TO THE FILE OF ASSESSING OFFIC ER. 3. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL. COUNSEL OF THE ASSESSEE FILED WRITTEN SUBMISSIONS, CONTENTIONS RAISED BEFOR E LD. CIT(A) WERE REITERATED. ATTENTION OF THE BENCH WAS DRAWN TO THE COPY OF CAP ITAL ACCOUNT AS WELL AS COPY OF BANK ACCOUNT SHOWING THE SOURCE OF GIFT AND CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE THROUGH BANKING CHANNEL. COPY OF AFFIDAVIT IS PLACE D AT PAGE 5. IT WAS FURTHER EXPLAINED THAT PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS. AT THE TIME OF PENALTY PROCEEDINGS, NEITHER THE DONOR WAS ALIVE NOR THE ASSESSEE WAS ALIVE, 4 EVEN HUSBAND OF THE ASSESSEE HAD BEEN DIED AND NOW THE SON OF THE ASSESSEE SHRI K.C.GARG WHO WAS LIVING ABROAD FOR LAST 25 YEARS DO E NOT KNOW ANY THING ELSE EXCEPT THE MATERIAL WAS FOUND AND PRODUCED BEFORE THE LOWER AU THORITIES. THEREFORE, THIS IS NOT THE CASE OF FILING OF INACCURATE PARTICULARS BUT IT IS THE CASE OF NON- SUBSTANTIATION TO THE SATISFACTION OF THE ASSESSING OFFICER, THEREFORE, P ENALTY CANNOT BE LEVIED. RELIANCE WAS PLACED ON VARIOUS CASE LAWS MENTIONED IN THE WRITTE N SUBMISSIONS. 4. ON THE OTHER HAND, LD. DR PLACED STRONG RELIANCE ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS OF CIT(A). IT WAS SUBMITTED THAT GIFT WAS NOT FOUND GENUINE AND, THEREFORE,, THE SAME WAS ADDED WHICH HAS BEEN CONFI RMED UPTO THE STAGE OF TRIBUNAL. THE ASSESSEE HAS FILED INACCURATE PARTICULARS AND, THER EFORE, THE ASSESSING OFFICER AND LD. CIT(A) WERE JUSTIFIED IN LEVYING AND CONFIRMING THE LEVY OF PENALTY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD, WE ARE OF THE VIEW THAT LEVY OF PENALTY IN THE PRESENT CASE WAS NOT JUSTIFI ED. IT IS SEEN THAT ASSESSEE AGED ABOUT 90 YEARS WAS EXPIRED LONG BACK ON 29.2.2004. THEREAFT ER, NOTICE DATED 9.5.2005 U/S 148 WAS ISSUED FOR REOPENING OF THE CASE OF THE ASSESSEE. THE CASE WAS BEING ATTENDED BY THE HUSBAND OF THE ASSESSEE SHRI 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 REMAINED UNATTENDED. IN VIE W OF THESE FACTS, THE ASSESSMENT WAS COMPLETED AND THE ADDITION WAS MADE IN THE ASSESSME NT ORDER COMPLETED ON 12.12.2006. IT IS SEEN THAT THE DONOR WHO WAS ALSO EXPIRED HAVE FILED AFFIDAVIT IN HIS LIFETIME THAT HE 5 HAS GIFTED A SUM OF RS. 10 LAKHS. COPY OF HIS CAPI TAL ACCOUNT SHOWING SOURCE OF GIFT AND THE BANK ACCOUNT OF THE ASSESSEE WHERE THE AMOUNT C REDITED WAS ALSO FILED. COPIES OF THESE DOCUMENTS ARE PLACED ON RECORD. COPY OF THE ORDER OF TRIBUNAL IS ALSO PLACED ON RECORD WHERE IT HAS BEEN OBSERVED THAT ASSESSEE COU LD NOT PROVE CONCLUSIVELY THAT THE GIFTS WERE GENUINE. THUS THE SAME APPEARED TO BE N ON-GENUINE AND THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS COULD ALSO NOT BE PROVED. AFTER TAKING INTO ACCOUNT THE OBSERVATION OF THE TRIBUNAL IT IS SEEN THAT THO UGH ASSESSEE COULD 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 THA T ASSESSEE HAS GIVEN HIS OWN MONEY AND THEREAFTER HAS RECEIVED THE SAME IN THE GARB OF GIF T. CONFIRMATION OF GIFT, SOURCE OF GIFT ALONG WITH BANK ACCOUNT OF THE DONOR AND DONEE WERE FILED. THE MAJOR DETAILS IN RESPECT OF GIFT WAS FILED, THEREFORE, AS STATED ABOVE THAT THESE DETAILS WERE NOT SUFFICIENT TO BE A GENUINE GIFT, THEREFORE, AMOUNT OF GIFT WAS ADDED. THIS IS NOT NECESSARY THAT WHERE ANY ADDITION HAS BEEN SUSTAINED, PENALTY IS ALSO LEVIAB LE. 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 WA S NOT FOUND FALSE. THIS IS ONLY A CASE OF THE ASSESSEE THAT ASSESSEE FAILED TO SUBSTANTIAT E IT, THEREFORE, PENALTY IS NOT LEVIABLE AS HELD BY HON'BLE RAJASTHAN HIGH COURT IN THE CASE O F 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 ADDITION HAS BEEN MADE U/S 68 OF THE ACT ON ACCOUNT THAT CREDITOR COULD NOT BE PRODUCED BUT PENALTY CANNOT BE LEVIED JUST B ECAUSE THE ADDITIONS WERE SUSTAINED. SIMILAR VIEW HAS BEEN EXPRESSED IN CASE OF S.L.N. T RADERS (2012) 341 ITR 235 (KARN) AND IN CASE OF CIT VS OASIS HOSPITALITIES P. LTD (2 011) 333 ITR 119 (DEL). WE HAVE ALSO 6 SEEN THAT OTHER CASES ON WHICH RELIANCE HAS BEEN PL ACED AND FOUND THAT THEY ARE ALSO IN SUPPORT OF THE CASE OF THE ASSESSEE. IN VIEW OF TH ESE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT ATLEAST PENALTY IS NOT ALLOWABLE ON T HE FACTS OF THE PRESENT CASE, ACCORDINGLY WE CANCEL THE LEVY OF PENALTY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11/ 5/2012. SD/- SD/ ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 TH MAY, 2012 RKK COPY TO/- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE