ITO 13(2)(4), MUMBAI V. SURENDRAMAL R. LODHA, MUMBAI

ITA 1628/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83533 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 25-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: VIMAL PUNMIYA
• Keywords: Gift; Tax effect
• Section: 260A

Judgement Text

, ,P ,P,P ,P INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. . . , , BEFORE S/SH.I.P.BANSAL, JUDICIAL M EMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 1628/MUM/2011, ! ! ! ! / ASSESSMENT YEAR-2004-05 ITO - 13(2)(4), R.NO. 477, 4TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS SURENDRA M AL R. LODHA, 306, GIRIRAJ BUILDING, 3RD FLOOR, S.T.ROAD, IRON MARKET, MUMBAI-400009 PAN: AAAPL1624K ( '# / APPELLANT) ( $%'# / RESPONDENT) & ' / REVENUE BY : SHRI PITAMBAR DAS () () () () ' ' ' ' / ASSESSEE BY : SHRI VIMAL PUNMIYA & && & )* )* )* )* / DATE OF HEARING : 25-08-2014 +,! & )* / DATE OF PRONOUNCEMENT : 25-08-2014 , 1961 & && & 254 )1( )-) )-) )-) )-) . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DT. 27.12.2010 OF THE CIT(A)- 24,MUMBAI,ASSESSING OFFICER (AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1.(I)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS.3,98,910/- LEVIED U/S.271(1)(C) O F THE I.T.ACT, 1961. (II)WHILE DOING SO, THE LD.CIT(A) WHILE OBSERVING T HAT BECAUSE OF UNAVOIDABLE CIRCUMSTANCES THE APPELLANT COULD NOT PRODUCE THE DONORS ON THE PARTI CULAR DATE AND TIME AND IN ORDER TO BUY PEACE AND AVOID LITIGATION THE APPELLANT SURRENDERED THE SAME HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAS SURRENDERED THE AMOUNT OF RS.12,00,000/- CLAIME D AS GIFTS VIDE LETTER DATED 19.11.2006 BEFORE THE AO BUT HAD OFFERED THE SAME FOR TAXATION SINCE HE COULD NOT PROVE THE GENUINENESS OF GIFTS BY PRODUCING THE DONORS, THEIR CAPACITY AND RELATIONSH IP. THE ALLEGED SURRENDER OF RS.12,00,0001- BY THE ASSESSEE CANNOT BE SAID TO BE VOLUNTARY AS HELD BY THE LD.CIT(A) BECAUSE THE ASSESSEE HAS FILED APPEAL AGAINST THE ADDITION OF RS.12,00,000/-. THIS FACT GET SUPPORT FROM THE ORDER OF THE CIT(A) DATED 22.05.2007 IN THE QUANTUM APPEAL WHERE ALSO T HE ASSESSEE HAS FAILED TO SUBSTANTIATE THE GENUINENESS OF CLAIM OF GIFTS. (III)THE LD.CIT(A) HAS FURTHER FAILED TO APPRECIATE THAT MERE FURNISHING OF GIFT CONFIRMATIONS, PANS OF THE DONORS WOULD NOT TANTAMOUNT THAT THE ASSESSE E HAS DISCHARGED HIS ONUS THAT THE GIFTS ARE GENUINE, MORE SO WHEN THE DONORS DID NOT RESPOND TO THE NOTICES ISSUED AND THE ASSESSEE DESPITE VARIOUS OPPORTUNITIES GIVEN TO HIM, FAILED TO PRODU CE THE DONORS TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM AS PROVIDED IN EXPLANATION L B TO SE CTION 271(1)(C) OF THE I.T.ACT, 1961. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD ANY NEW GROUND, IF NECESSARY. 2. ASSESSEE,AN INDIVIDAUL,FILED HIS RETURN OF INCOME O N 26.07.2004,DECLARING TOTAL INCOME OF RS. 1,63,619/-.AO FINALISED THE ASSESSMENT U/S.143(3) O F THE ACT,ON 20.11.2006,DETERMINING THE TOTAL INCOME AT RS.13,83,620/-. ITA/1628/MUM/2011SRL 2 EFFECTIVE GROUND OF APPEAL PERTAINS TO DELETION OF PENALTY IMPOSED BY THE AO U/S.271(1)(C)OF THE ACT BY THE AO.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD CREDITED HIS CAPITAL ACCOUNT WITH AN AMOUNT OF RS.12 LAKHS,THAT HE HAD CLAIMED THAT HE HAD RECEIVED GIFTS FROM SEVEN PERSONS.THE AO ADDED THE SAID AMOUNT TO THE T OTAL INCOME OF THE ASSESSEE AND INITIATED PENALTY PROCEEDINGS FOR CONCEALING PARTICULAR OF IN COME.VIDE HIS ORDER 10.03.2009 THE AO LEVIED PENALTY OF RS.3.98 LAKHS U/S.271(1)(C)OF THE ACT. 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT THE ASSESSEE HAD FILED ALL THE RELEVANT DETAILS OF THE DONORS LIKE GIFT CONFIRMATION CERTIFICATES, PAN NOS., DETAILS OF TRANSACTIONS AND BECAUSE OF UNAVOI DABLE CIRCUMSTANCES THE APPELLANT COULD NOT PRODUCE THE DONORS ON THE PARTICULAR DATE AND TIME, THAT IN ORDER TO BUY PEACE AND TO AVOID LITIGATION HE SURRENDERED THE SAME BEFORE THE AO,TH AT THE PENALTY DESERVED TO BE DELETED 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) RAISED THE ISSUE OF TAX EFFECT LIMIT.HE STATED THAT IN THE CASE UNDER CONSIDERATION,THE TAX EFFECT WAS LES S THAN 4 LAKHS,THAT AS PER THE INSTRUCTION NO.5, DATED 10.07.2014,ISSUE BY THE CBDT NO APPEAL COULD BE FILED WHERE TAX EFFECT OF THE DISPUTED ISSUE WAS LESS THAN THE SAID LIMIT,THAT THE HONBLE BOMBAY HIGH COURT HAD HELD THAT CIRCULAR OF THE CBDT WERE APPLICABLE TO THE CASES WHERE APPEALS WERE PENDING AND NOT ONLY TO THE APPEALS TO BE FILED AFTER THE CIRCULAR WAS ISSUED.HE REFERRED TO THE EARLIER INSTRUCTION ISSUE BY THE BOARD ENHANCING THE TAX LIMITS FOR FILING APPEALS BEFORE THE TRIBUNAL AND RELIED UPON THE CASES OF MADHUKAR INAMDAR(185 TAXMAN 101) AND SURESHCHANDRA D KHATOD(31TAXMANN.COM74)OF THE HONBLE BOMBAY HIGH COURT AND HONBLE GUJARAT HIGH COURT.DEPARTMENTAL REPRESENTATIVE (DR) LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE UNDER CONSIDERATION TAX EFFECT IS LESS THAN 4 LAKHS AS ON THE DATE OF HEARING.HONBLE BOMBAY HIGH COURT HAS IN THE CASE OF MADHUKAR INAMDAR(SUPR A)HAD,WHILE DECIDING ISSUE OF APPEAL EFFECTS OF 260A APPEALS,HAD HELD THAT THE TAX EFFECT LIMIT WOULD BE APPLICABLE TO PENDING APPEALS- ONCE THE CIRCULAR ENHANCES THE TAX EFFECT LIMIT.RESPECTF ULLY,FOLLOWING THE SAME PRINCIPLE WE HOLD THAT THOUGH ON THE DATE OF FILING OF APPEAL THE AO WAS J USTIFIED IN AGITATING THE ISSUE BEFORE THE TRIBUNAL,BUT,BECAUSE OF THE INSTRUCTION NO.OF THE C BCT ISSUED ON 10.07.2015,WE HOLD THAT THE APPEAL FILED BY THE AO IS NOT MAINTAINABLE AS ON TO DAY.THEREFORE, THE EFFECTIVE GROUND OF APPEAL IS DECIDED AGAINST THE AO. AS A RESULT,APP EAL FILED BY THE AO STANDS DISMISSED. /)0 () * 1 3 & - 4 & ) 56 . ORDER PRONOUNCED I N THE OPEN COURT ON 25TH,AUGUST 2014 . . & +,! 7 8 25 -) , 201 4 , & - 9 SD/- SD/- . . / I.P. BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8 /DATE: 25.08 . 2014. ITA/1628/MUM/2011SRL 3 SK . . . . & && & $) $) $) $): :: : ;:!) ;:!) ;:!) ;:!) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR H BENCH, ITAT, MUMBAI / :>- $) ,P ,P,P ,P , . . . 6. GUARD FILE/ - / %:) %:) %:) %:) $) $)$) $) //TRUE COPY// . / BY ORDER, ? / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI