Lilaben Labhubhai Lakhani, Surat V. The Income tax Officer,Ward-92), Surat

ITA 171/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1725 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-03-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 10-01-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S P MAJUMDAR
• Keywords: Gift; Wrong claim; Onus to prove
• Section: 143(3); 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.453/AHD/2008 A. Y.: 2002-03 LABHUBHAI DHARAMSHIBHAI LAKHANI, 78, SADHNA SOCIETY, VARACHHA ROAD, SURAT VS THE INCOME TAX OFFICER, WARD 9(2), SURAT PA NO. AAHPL 4885 H (APPELLANT) (RESPONDENT) ITA NO.171/AHD/2008 A.Y.: 2002-03 LILABEN LABHUBHAI LAKHANI, 78, SADHNA SOCIETY, VARACHHA ROAD, SURAT VS THE INCOME TAX OFFICER, WARD 9(2), SURAT PA NO. ABQPK 7978 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S.P. MAJUMDAR, AR RESPONDENT BY SHRI MUDIT NAGPAL, SR. DR O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LEARNED CIT(A)- V, SURAT DATED 26-11-2007 FOR ASSESSMENT YEAR 2002- 03, CHALLENGING THE LEVY OF PENALTY U/S 271 (1) ( C ) OF THE IT AC T. ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 2 2. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES STATED THAT THE FACTS ARE IDENTICAL IN BOTH THE APPEALS. BOTH THE A SSESSEES ARE HUSBAND AND WIFE. THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES MAINLY ARGUED IN THE CASE OF LABHUBHAI DHARAMSHIBHA I LAKHANI IN ITA NO.453/AHD/2008 AND SUBMITTED THAT THE ORDER IN THAT CASE MAY BE FOLLOWED IN THE OTHER CASE, BECAUSE THE FACTS AR E IDENTICAL. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. FOR THE PURPOSE OF D ISPOSAL OF BOTH THE APPEALS WE FIRST TAKE UP THE APPEAL IN ITA NO.453/A HD/2008. ITA NO.453/AHD/2008:A.Y. 2002-03 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME SHOWING INCOME OF RS.1,70,000/-. THE ASSESSM ENT WAS FINALIZED U/S 143(3) OF THE IT ACT DETERMINING TOTA L INCOME AT RS.9,35,000/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD TAKEN GIFTS FROM 12 P ERSONS AMOUNTING TO RS.7,65,000/- DURING THE YEAR UNDER CONSIDERATIO N. THE NAMES ARE RECORDED AT PAGE 1 OF THE PENALTY ORDER AS WELL AS IN THE ASSESSMENT ORDER. THE ASSESSEE WAS ASKED TO PRODUCE THESE 12 D ONORS AND WAS ALSO ASKED TO PROVE THEIR IDENTITY, GENUINENESS OF THE GIFTS AND CREDITWORTHINESS OF THE DONORS. THE ASSESSEE NEITHE R PRODUCED THE DONORS NOR PROVED ANYTHING IN SUPPORT OF THE GIFTS. THE AO HAS HELD THAT THESE ARE BOGUS GIFTS AND ADDED THE SAME U/S 6 8 OF THE IT ACT, AFTER RELYING UPON VARIOUS DECISIONS OF THE HONBLE SUPREME COURT INCLUDING THE DECISIONS IN THE CASE OF DURGA PRASAD MORE 82 ITR 540 ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 3 AND SUMATI DAYAL 214 ITR 801 AND NOTED THAT BY APPL YING THE TEST OF HUMAN PROBABILITY, THE ADDITION IS MADE ON ACCOUNT OF BOGUS GIFTS. THE AO ALSO NOTED THAT THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS OF INCOME IN THE RETURN OF INCOME AND A CCORDINGLY PENALTY PROCEEDINGS WERE ALSO INITIATED. THE AO NOTED IN TH E PENALTY ORDER THAT SINCE THE ASSESSEE FILED INACCURATE PARTICULAR S OF INCOME, THEREFORE, EXPLANATION (1) TO SECTION 271 (1) (C) O F THE IT ACT IS ATTRACTED IN THE CASE OF THE ASSESSEE. THE ASSESSEE IN REPLY TO THE PENALTY NOTICE SUBMITTED THAT OUT OF THE 12 DONORS, STATEMENT OF 8 DONORS HAVE BEEN RECORDED IN WHICH THEY HAVE CONFIR MED HAVING GIVEN GIFTS TO THE ASSESSEE. ALL THE DONORS ARE NEA R RELATIVES OF THE ASSESSEE. REMAINING 4 PERSONS ARE FATHER, MOTHER, F ATHER-IN-LAW AND UNCLE. BOTH FATHER AND FATHER-IN-LAW HAVE EXPIRES. MOTHER AND UNCLE COULD NOT BE PRODUCED DUE TO THEIR OLD AGE. IT WAS EXPLAINED THAT OUT OF 8 DONORS SOME OF THEM ARE HAVING MORE THAN 30 BI GHAS OF LAND HAVING SUFFICIENT YIELD. THEREFORE, THE AO SHOULD H AVE ACCEPTED THE CREDITWORTHINESS OF THE DONORS. IT WAS SUBMITTED TH AT THE AO HAS NOT MADE ANY INDEPENDENT INQUIRY AND HAS NOT DEPUTED TH E INSPECTOR TO VERIFY THE TRUTHFULNESS OF THE STATEMENT OF THE DON ORS. THE LEARNED CIT(A) ON QUANTUM HAS NOT ACCEPTED AND APPRECIATED THE DETAILS AND DISBELIEVED THE CONTENTION OF THE ASSESSEE. THE ASSESSEE HAS PREFERRED SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS SUBMITTED THAT ADDITION ITSELF WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY. THERE IS NO EVIDENCE ON RECORD ABOUT THE POSITIVE INCOME EARNED BY THE ASSESSEE. PENALTY AND ASSESSMENT PROCEEDINGS ARE DI FFERENT PROCEEDINGS. THE AO APART FROM CONSIDERING THE LIMI TATION ISSUE AGAINST THE ASSESSEE ALSO NOTED ON MERIT THAT THE A SSESSEE PRODUCED ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 4 8 DONORS OUT OF 12 DONORS BEFORE THE AO AND DURING REMAND REPORT IT WAS NOTICED THAT ALL THESE DONORS ARE AGRICULTURIST S AND EARNED MEAGER INCOME HAVING NO CAPACITY TO GIVE SUCH GIFTS TO THE ASSESSEE. NONE OF THE DONORS ARE ASSESSED TO TAX AND HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. NO OCCASION ON THE DATE OF GIFT W AS SEEN. SOME OF THE DONORS ARE YOUNG THAN THE ASSESSEE AND THEIR AN NUAL INCOME IS LESS THAN THE ASSESSEE AND HAS NOT GIVEN ANY GIFTS TO THEIR CHILDREN ETC. IN THEIR LIFE. EVEN, SOME OF THE DONORS ARE HA VING BIG FAMILY HAVING 3 / 4 CHILDREN. IT WAS ALSO NOTICED THAT GIF T WAS TAKEN AT DIFFERENT PLACES ON THE SAME DAY WHICH IS NOT POSSI BLE. THE REMAND REPORT WAS FURNISHED TO THE LEARNED CIT(A) ON QUANT UM PROCEEDINGS AND THE FINDINGS OF THE LEARNED CIT(A) HAVE BEEN RE PRODUCED IN THE PENALTY ORDER IN WHICH THE LEARNED CIT(A) ALSO NOTE D THAT THE GIFTS HAVE NOT ONLY BEEN GIVEN IN THE ASSESSMENT YEAR UND ER APPEAL BUT SEVERAL GIFTS HAVE BEEN GIVEN IN THE YEAR 1999, 200 0, 2001 AND 2000 WHICH HAVE BEEN NOTED AT PAGE 6 TO 8 OF THE ASSESSM ENT ORDER. THE LEARNED CIT(A) IN THE QUANTUM ORDER ALSO NOTED THAT THE DONORS HAVE ONLY TV, FREEZE AND BULLOCK CARTS AT THEIR HOME BUT THE ASSESSEE IS HAVING CAR, MOTOR CYCLE, TV, FREEZE AT HIS HOME AND ANNUAL INCOME OF THE ASSESSEE WAS MORE THAN THAT OF THE DONORS. THE LEARNED CIT(A) ALSO NOTED CERTAIN FEATURES TO DOUBT THE GENUINENES S OF THE GIFTS AND ALSO NOTED THAT THE DONORS HAVE STATED THAT CASH WA S AVAILABLE WITH THEM WHICH WERE DEPOSITED IN THE BANK ACCOUNT FROM WHERE DEMAND DRAFTS WERE PREPARED. NOTHING WAS EXPLAINED AS TO W HY HUGE CASH WAS KEPT AT HOUSE. THE LEARNED CIT(A) ALSO NOTED TH AT SOME OF THE DONORS HAVE GIVEN GIFT ON 22-3-2002 AT SURAT TO THE ASSESSEE AND SOME OF THE DONORS HAVE GIVEN GIFTS TO THE ASSESSEE ON THE SAME DAY ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 5 AT VALLABHBHIPUR. THE LEARNED CIT(A), THEREFORE, HE LD THAT THE ASSESSEE HAS FABRICATED ALL THESE GIFTS. THE AO IN THE PENALTY ORDER AFTER CONSIDERING THE FINDINGS OF THE LEARNED CIT(A ) ON QUANTUM IN THE LIGHT OF EXPLANATION (1) TO SECTION 271 (1) ( C ) O F THE IT ACT HELD THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF IN COME TO THE EXTENT OF RS.7,65,000/- AND ACCORDINGLY LEVIED PENALTY U/ S 271 (1) ( C ) OF THE IT ACT VIDE SEPARATE ORDER. THE PENALTY ORDER W AS CHALLENGED BEFORE THE LEARNED CIT(A) AND SAME SUBMISSIONS WERE REITERATED. THE SUBMISSION OF THE ASSESSEE IS INCORPORATED IN T HE IMPUGNED ORDER. THE LEARNED CIT(A) HOWEVER, WAS NOT SATISFIE D WITH THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE PENAL TY ORDER. HIS FINDINGS ARE REPRODUCED AS UNDER: I HAVE GONE THROUGH THE SUBMISSION MADE BY THE A. R. OF THE APPELLANT. THE FACT OF THE MATTER IS T HAT CERTAIN CLAIMS OF RECEIPT OF GIFTS WERE MADE IN THE RETURN OF INCOME WHICH THE APPELLANT COULD NOT PROVE TO BE CO RRECT DESPITE NUMEROUS AND ADEQUATE OPPORTUNITY. EVEN IN THE APPELLATE PROCEEDINGS BEFORE THE FIRST APPELLATE AU THORITY NOTHING WAS FURNISHED TO SUBSTANTIATE THE CLAIMS AN D THEREFORE IT IS A CLEAR CASE WHERE INACCURATE PARTI CULARS HAVE BEEN FURNISHED. DESPITE THE PLETHORA OF JUDGME NTS FILED ON THE ISSUE BY THE AR I CAN NOT SEE MUCH REL EVANCE OF THE SAME. AFTER THE INSERTION OF THE EXPIATION T O SECTION 271 (1) ( C ) OF THE INCOME-TAX ACT, 1961, THE REQU IREMENT THAT THE DEPARTMENT SHOULD ESTABLISH THAT THERE H AS BEEN A CONSCIOUS CONCEALMENT OF PARTICULARS OF INCO ME OR A DELIBERATE FAILURE TO FURNISH ACCURATE PARTICULAR S, IS NO LONGER NECESSARY. IN CASE ADDITIONS ARE MADE AND TH E EXPLANATION SUBMITTED BY THE ASSESSEE IS NOT SATISF ACTORY, THE INCOME ADDED SHOULD BE TREATED AS DEEMED CONCEALMENT. PENALTY IS NOT AUTOMATIC BUT THE PENAL TY CAN BE LEVIED ON CONSIDERING THE FACTS ON THE RECORD OF THE CASE. IT IS NOT NECESSARY THAT SOME MORE MATERIAL ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 6 SHOULD BE BROUGHT ON RECORD IN SUCH A CASE IF SUFFICIENT MATERIAL IS AVAILABLE ON RECORD FOR PENA LTY. FOR EXAMPLE WHEN THE INCOME HAS BEEN SURRENDERED AFTER SEIZURE, IT COULD NOT BE SAID THAT THE ASSESS EE HAD SURRENDERED THE INCOME VOLUNTARILY. THE LEVY OF PEN ALTY WAS VALID AS HELD IN 259 ITR 132 (RAJ) MOHD. MOHTRA M FAROOQUI. FURTHER 205 ITR 244, 250 (SC) JEEVAN LAL SHAH, 165 ITR 14 (SC) MUSSADILAL RAM BHAROSE, 185 I TR 49 (SC) K. R. SADAYAPPAN, 281 ITR 421 (MP) D & H SECHERON ELECTRODES P. LTD., 279 ITR 80 (KER) N. NANDAKUMAR, AJI INDUSTRIES. SECTION 271 (1) ( C ) HAS TWO PARTS CONCEALMENT OF INCOME AND FILING OF INACCUR ATE PARTICULARS THEY HAVE TO BE READ AS ONE SECTION A ND ANY ONE INGREDIENT MAY BE CAUSE FOR IMPOSITION OF PENAL TY. BOTH PARTS MAY BE OVERLAPPING AS HELD IN 163 ITR 44 0 (RAJ) BADRI PRASAD OM PRAKASH. MOREOVER INACCURATE PARTICULARS MAY BE FURNISHED IN ORDER TO STRENGTHEN CONCEALMENT OF INCOME. THEREFOR E, THOUGH THE EXPRESSIONS CONCEALED THE PARTICULARS O F INCOME AND FURNISHED INACCURATE PARTICULARS OF SU CH INCOME ARE USED IN DISJUNCTIVE TERMS IN S. 271 (1) ( C ) OF THE I. T. ACT, 1961, AND THESE ARE TWO SEPARATE OFF ENCES, THE COMMISSION OF ONE DOES NOT EXCLUDE THE POSSIBIL ITY OF THE COMMISSION OF THE OTHER. THE TWO CHARGES CAN, A ND VERY OFTEN, DO SUBSIST TOGETHER AS LAID DOWN IN (13 0 ITR 602 (CAL) RAHMAT DEVELOPMENT AND ENGINEERING CORPORATION). EXP. -1 AFTER AMENDMENTS, W. E. F. 10 /9/86, PROVIDES THAT WHERE IN RESPECT OF ANY FACTS MATERIA L TO THE COMPUTATION OF TOTAL INCOME, ANY PERSON FAILS TO OF FER AN EXPLANATION, OR OFFERS AN EXPLANATION WHICH IS FOUN D TO BE FALSE OR WHICH HE IS NOT ABLE TO SUBSTANTIATE AND F AILS TO PROVE ITS BONAFIDE AND THAT ALL THE FACTS RELATING THERETO AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED, THEN THE AMOUNT ADDED OR DISALLOWED SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. (B. A. BALSUBRAMANIAM & BROTHES CO. VS CIT (1999) 236 ITR 977, 978 (SC)). THE BURDEN IS ON THE ASSESSEE TO SH OW ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 7 THAT THERE WAS NO CONCEALMENT OF ANY PARTICULARS OF ANY INCOME (CIT VS. T. J. MATHAI (2004) 269 ITR 492 (KE RALA) IN WHICH THE APPELLANT HAS MISERABLY FAILED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREFORE AOS AC TION OF LEVYING THE PENALTY IS UPHELD. IN THE RESULT APPEAL IS DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE PRODUCED 8 DONORS BEFORE THE AO AT THE REMAND PROCEEDINGS WHO HAVE CONFIRMED GIVING OF GIFTS TO T HE ASSESSEE. 2 OF THE DONORS EXPIRED AND 2 OF THE DONORS COULD NOT BE PRODUCED DUE TO THEIR OLD AGE. THEREFORE, BURDEN IS DISCHARGED BY T HE ASSESSEE TO PROVE GENUINENESS OF THE GIFTS IN THE MATTER. HE HA S SUBMITTED THAT THE ASSESSEE NEEDS NOT TO PROVE SOURCE OF THE SOURC E. HE HAS SUBMITTED THAT NO INDEPENDENT INQUIRY IS MADE BY TH E AO. NOTHING IS BROUGHT ON RECORD THAT THE ASSESSEE EARNED POSITIVE INCOME. THE ADDITION WOULD NOT LEAD TO AUTOMATIC PENALTY AND QU ANTUM AND PENALTY PROCEEDINGS ARE DIFFERENT PROCEEDINGS. HE H AS SUBMITTED THAT ALL THE FACTS WERE DISCLOSED TO THE AO AT THE ASSES SMENT STAGE. HE HAS SUBMITTED THAT THE AO SHOULD BRING POSITIVE FIN DINGS ABOUT THE CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME. HE HAS SUBMITTED THAT THE ADDITION ON QUANTUM HAS B EEN CONFIRMED BY THE TRIBUNAL. HE HAS RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MURLIDHAR LAHORIM AL VS CIT 280 ITR 512 IN WHICH IT WAS HELD AS UNDER: HELD, THAT THE TRIBUNAL FAILED TO NOTE THE FACT THAT THE IDENTITY OF THE DONOR WAS ESTABLISHED, THE ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 8 DONOR HAVING APPEARED IN PERSON BEFORE THE ASSESSING OFFICER, THE GENUINENESS OF THE TRANSACTI ON WAS ESTABLISHED, NOT ONLY BY THE RECEIPT OF THE BAN K DRAFT, BUT ALSO BY THE FACT OF THE TRANSACTION HAVI NG BORNE GIFT TAX ONCE THE ASSESSMENT WAS FRAMED. THE PRIMARY ONUS WHICH RESTED WITH THE ASSESSEE, THUS, STOOD DISCHARGED. THEREAFTER, IF THE REVENUE WAS NO T SATISFIED WITH THE SOURCE OF THE FUNDS IN THE HANDS OF THE DONORS, IT WAS UP TO THE REVENUE TO TAKE APPROPRIATE ACTION. THE TRIBUNAL CONSIDERED THE MOTIVATION FOR MAKING THE GIFT WHICH WAS NOT RELEVA NT. THE ADDITION OF RS.50,000 WAS NOT JUSTIFIED. 5.1 THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO R ELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F DILIP N. SHROFF VS JCIT & ANR. 210 CTR 228 IN WHICH IT WAS HELD AS UNDER: CONCLUSION: ONLY BECAUSE THE OPINION OF REGISTERED VALUER IS NOT ACCEPTED OR SOME OTHER EXPERT GIVES ANOTHER OPINION, IS NOT BY ITSELF SUFF ICIENT FOR ARRIVING AT A CONCLUSION THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS ATTRACTING PENALTY UNDER S. 271 (1) ( C ), EXPLN.; PRIMARY BURDEN OF P ROOF OF FURNISHING INACCURATE PARTICULARS OF INCOME IS O N THE REVENUE AND IT IS ONLY ON DISCHARGE OF PRIMARY BURDEN THAT SECONDARY BURDEN OF PROOF WOULD SHIFT O N THE ASSESSEE. 6. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE LEARNED CI T(A) ON QUANTUM HAS HELD THAT THE ASSESSEE HAS FABRICATED ALL THE G IFTS IN QUESTION. THE LEARNED DR SUBMITTED THAT THE AO IN THE QUANTUM ASSESSMENT ORDER HAS ALSO HELD THAT THE ASSESSEE HAS INTRODUCE D BOGUS GIFTS IN THE RETURN OF INCOME AND ACCORDINGLY FURNISHED INAC CURATE PARTICULARS OF INCOME. THEREFORE, PENALTY WAS RIGHTLY IMPOSED O N THE MATTER. HE ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 9 HAS SUBMITTED THAT EXPLANATION (1) TO SECTION 271 ( 1) ( C ) OF THE IT ACT IS CLEARLY ATTRACTED IN THIS CASE BECAUSE THE ASSES SEE HAS FAILED TO OFFER ANY EXPLANATION ABOUT THE BOGUS GIFTS AND WHA TEVER EXPLANATION WAS FILED WAS FOUND TO BE FALSE. HE HAS SUBMITTED T HAT THE BURDEN UPON THE ASSESSEE HAS NOT BEEN DISCHARGED. THE LEAR NED DR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF DHARMENDRA TEXTILES 306 ITR 277. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE AO IN THE ASSESSMENT ORDER NOTED THAT T HE ASSESSEE WAS ASKED TO PRODUCE THE DONORS BEFORE HIM FOR EXAMINAT ION OF THE GIFTS AND THE ASSESSEE WAS DIRECTED TO PROVE THE IDENTITY , GENUINENESS OF THE GIFTS AND CREDITWORTHINESS OF THE DONORS. THE A SSESSEE DID NOT PRODUCE ANY OF THE DONORS BEFORE THE AO AT THE ASSE SSMENT STAGE AS WELL AS DID NOT PROVE THE GENUINENESS OF THE GIFTS. THE AO CONSIDERING THE DETAILS OF THE GIFTS WAS SURPRISED TO NOTE THAT THE ASSESSEE NOT ONLY IN THE ASSESSMENT YEAR UNDER APPE AL HAS RECEIVED GIFTS IN HUGE AMOUNT BUT ALSO RECEIVED LARGE NUMBER OF GIFTS IN THE YEARS 1999, 2000, 2001, 2002 AND 2003. THE DETAILS OF THE SAME ARE NOTED AT PAGE 6 TO 8 OF THE ASSESSMENT ORDER. SUCH DETAILS CONTAINED THAT NOT ONLY IN SEVERAL YEARS THE ASSESSEE RECEIVE D GIFTS FROM SEVERAL PERSONS BUT HIS WIFE LILABEN LABHUBHAI LAKHANI, (TH E OTHER ASSESSEE), HIS SON MEHUL LABHUBHAI LAKHANI AND DAUG HTER MISS ANKITABEN LABHUBHAI LAKANI HAVE ALSO RECEIVED GIFTS IN SEVERAL YEARS FROM THE DONORS. LARGE NUMBERS OF DONORS ARE COMMON IN THE CASE OF THE ASSESSEE, HIS WIFE, SON AND DAUGHTER. THE AO IN THE ABSENCE OF ANY EVIDENCE AND MATERIAL ON RECORD APPLIED THE TES T OF HUMAN ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 10 PROBABILITY AS WAS PRONOUNCED BY THE HONBLE SUPREM E COURT IN THE CASES OF DUGRA PRASAD MORE AND SUAMTI DAYAL (SUPRA) AND HELD THAT THE ASSESSEE HAS INTRODUCED BOGUS GIFTS IN THE RETU RN OF INCOME AND ACCORDINGLY FURNISHED INACCURATE PARTICULARS OF INC OME IN THE RETURN OF INCOME. IN THE PENALTY ORDER, THE AO FURTHER NOTED THAT THE ASSESSEE AT THE APPELLATE STAGE BEFORE THE LEARNED CIT(A) PR ODUCED 8 DONORS OUT OF 12 DONORS BEFORE THE AO AND THEY WERE EXAMIN ED BY THE AO AND IT WAS FOUND THAT THE DONORS ARE AGRICULTURISTS AND HAVE ONLY MEAGER INCOME HAVING NO CAPACITY TO GIVE SUCH GIFTS TO THE ASSESSEE. NO OCCASION FOR GIVING OF GIFTS WAS PROVED. THE DON ORS ARE NOT ASSESSED TO TAX AND HAVE NOT MAINTAINED ANY BOOKS O F ACCOUNT. THE DONORS HAVE LESSER INCOME AS COMPARED TO THE ASSESS EE AND THE DONORS HAVE NOT GIVEN ANY GIFTS TO THEIR CHILDREN. ON SUCH FACTS, THE LEARNED CIT(A) ON QUANTUM CONFIRMED THE ORDER OF TH E AO AND NOTED THAT NO EXPLANATION IS GIVEN AGAINST THE FINDING OF THE AO AND THAT CASH HAVE BEEN DEPOSITED IN THE BANK ACCOUNT OF THE DONORS BEFORE ISSUE OF DEMAND DRAFTS FROM THEIR ACCOUNTS AND AT D IFFERENT PLACES ON THE SAME DAY GIFTS HAVE BEEN ACCEPTED BY THE ASSESS EE WHICH IS NOT POSSIBLE. THE FINDING OF FACT RECORDED BY THE LEARN ED CIT(A) ON QUANTUM HAS BEEN REPRODUCED IN THE PENALTY ORDER OF THE AO IN WHICH THE LEARNED CIT(A) FINALLY CONCLUDED THAT THE ASSES SEE HAS FABRICATED ALL THESE GIFTS. THE LEARNED COUNSEL FOR THE ASSES SEE CONCEDED THAT THE FINDINGS OF THE LEARNED CIT(A) ON QUANTUM HAVE BEEN CONFIRMED BY THE TRIBUNAL BY DISMISSING THE APPEAL OF THE ASS ESSEE. THESE FACTS ON RECORD CLEARLY PROVE THAT THE ASSESSEE INTRODUCE D LARGE NUMBER OF BOGUS GIFTS IN THE ASSESSMENT YEAR UNDER APPEAL. FU RTHER, LARGE NUMBERS OF BOGUS GIFTS WERE RECEIVED IN SEVERAL OTH ER YEARS NOT ONLY ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 11 IN THE NAME OF THE ASSESSEE BUT IN THE NAMES OF WIF E, SON AND DAUGHTER OF THE ASSESSEE. THUS, THE FINDINGS OF FAC T HAVE BECOME FINAL THAT THE ASSESSEE INTRODUCED BOGUS AND FABRIC ATED GIFTS. AT THE PENALTY STAGE, THE ASSESSEE INSTEAD OF CONTROV ERTING THE FINDINGS OF THE AUTHORITIES BELOW ON QUANTUM DID NO T PRODUCE ANY MATERIAL OR EVIDENCE IN SUPPORT OF ANY OF HIS CONTE NTIONS. IT IS SETTLED LAW THAT FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS A RE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUM STANCES IN PENALTY PROCEEDINGS, THE ASSESSEE WOULD BE DEEMED TO HAVE F AILED TO DISCHARGE THE ONUS PLACED ON HIM AND LEVY OF PENALT Y COULD BE JUSTIFIED. THE FACTS NOTED ABOVE WOULD ALSO REVEAL THAT NOT ONLY THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME BUT MADE A FALSE CLAIM OF BOGUS GIFTS IN THE RETURN OF INCOME. EXPLA NATION (1) TO SECTION 271 (1) ( C ) OF THE IT ACT READS AS UNDER: EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSO N UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFIC ER OR THE [***] [COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE I S NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM], ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 12 THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. 7.1 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE EXPLANATION (1) TO SECTION 271(1) ( C ) OF THE IT ACT, IT IS CL EAR THAT THE ASSESSEE FAILED TO OFFER EXPLANATION OR OFFERED EXPLANATION WHICH WAS FOUND BY THE AUTHORITIES BELOW TO BE FALSE. IT WOUL D, THEREFORE, PROVE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCO ME OR FILED INACCURATE PARTICULARS OF INCOME. EXPLANATION (1) T O SECTION 271 (1) (C) OF THE IT ACT IS, THEREFORE, CLEARLY ATTRACTED IN T HE CASE OF THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ESCORTS FINANCE LTD. 328 ITR 44 HELD AS UNDER: (II) THAT THE ASSESSEE HAD NOWHERE PLEADED THAT THE RETURN WAS FILED CLAIMING BENEFIT OF SECTI ON 35D OF THE ACT ON THE BASIS OF THE OPINION OF CHARTERED ACCOUNTANTS. MERELY BECAUSE INFORMATION WAS AVAILABLE IN THE TAX AUDIT REPORT THAT WOULD NO T ABSOLVE THE ASSESSEE. EVEN IF THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, BUT ON THE BASIS THEREOF THE CLAIM WHI CH WAS MADE WAS EX FACIE BOGUS, IT WOULD ATTRACT PENAL TY PROVISION. IT WAS NOT A CASE WHERE TWO OPINIONS ABO UT THE APPLICABILITY OF SECTION 35D WERE POSSIBLE. THEREFORE, IT COULD NOT BE A CASE OF A BONA FIDE ER ROR ON THE PART OF THE ASSESSEE. THE RELIEF UNDER SECTI ON 35D OF THE ACT WAS CONFINED ONLY TO AN EXISTING INDUSTRIAL UNDERTAKING FOR EXTENSION OR FOR SETTING UP A NEW INDUSTRIAL UNIT. IT WAS, THUS, NOT A WRONG CLAIM PREFERRED BY THE ASSESSEE, BUT WAS A CLEAR CASE OF FALSE CLAIM. THE MATER WAS REMITTED BACK TO THE ASSESSING OFFICER FOR DETERMINING THE PENALTY ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 13 AFRESH ATTRIBUTING THE CONDUCT RELATING TO CLAIM UN DER SECTION 35D OF THE ACT ONLY AS ATTRACTING PENALTY PROCEEDINGS. 7.2 THE HONBLE DELHI HIGH IN THE CASE OF CIT VS HA RPARSHAD AND COMPANY LTD. 328 ITR 53 HELD AS UNDER: HELD, THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT, N OT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGH T OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE OF R HAD RENDERED ANY SERVICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT. RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED, IT WAS ACCEPT BY THE TRIBUNAL IN QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER ANY EXPLANATI ON IN RESPECT OF THE ADDITION OF RS.1,83,078 AND IT CO ULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, BY VIRTUE OF EXPLANATION. THE TRIBUNAL WAS NOT JUSTIFI ED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) ( C ) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN THE PENALT Y PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, BUT ON THE BA SIS ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 14 THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS, IT MAY STILL ATTRACT PENALTY PROVISION. THE EXPLANATIONS APPENDED TO SECTION 271 (1) ( C ) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF S TRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJ ECT BEHIND ENACTMENT OF SECTION 271 (1) ( C ) READ WITH THE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE . THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILI TY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TTER OF PROSECUTION UNDER SECTION 276C OF THE ACT. THE DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE. 8. CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIN D ANY MERIT IN THE APPEAL OF THE ASSESSEE. SAME IS ACCORDINGLY DIS MISSED. ITA NO.171/AHD/2008:A.Y.2002-03 9. IN THIS CASE THE ASSESSEE IS WIFE OF LABHUBHAI D HARAMSHIBHAI LAKHANI, THE ASSESSEE IN ITA NO.453/AHD/2008. SHE H AS RECEIVED GIFTS FROM 13 PERSONS OF RS.7,10,500/-. THE ASSESSE E FAILED TO PROVE THE GIFTS ON WHICH PENALTY WAS IMPOSED AND THE LEAR NED CIT(A) SIMILARLY DISMISSED THE APPEAL OF THE ASSESSEE. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES SUBMITTED THAT THE FACTS OF THIS CASE ARE SAME AS IS CONSIDERED IN THE APPEAL IN ITA NO.453/AHD/2008 FOR ASSESSMENT YEAR 2002-03 AND THE ORDER IN THAT CASE MAY BE FOLLOWED. WE, THEREFORE, FIND THAT FIND INGS ARE SAME AND IDENTICAL AS HAS BEEN CONSIDERED IN ITA NO.453/AHD/ 2008 IN THE CASE ITA NO.453 AND 171/AHD/2008 LABHUBHAI DHARAMSHIBHAI LAKHANI & ANR VS ITO, W-9(2 ), SURAT 15 OF LABHUBHAI DHARAMSHIBHAI LAKHANI, THE HUSBAND OF THE ASSESSEE. BY FOLLOWING THE REASONS FOR DECISION IN THE SAME C ASE, WE DISMISS THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, BOTH THE APPEALS OF THE DIFFEREN T ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18-03-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 18-03-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD