Shri Girish Hiralal Kothlawala, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 1794/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85722 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained cash credit; Gift; Principle of natural justice
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTA NT MEMBER GIRISH HIRALAL KOTHLAWALA 2/150, HARINAGAR SOCIETY-2, UDHNA, SURAT-394210 PAN: ACAPK1995L (APPELLANT) VS INCOME TAX OFFICER, WARD-2(1), SURAT (RESPONDENT) REVENUE BY: SHRI DINESH SINGH, SR. D.R. ASSESSEE BY: NONE DATE OF HEARING : 10-02-2015 DATE OF PRONOUNCEMENT :26-02-2015 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-II, SURAT DATED 02-05-2011 FOR A.Y. 2007-08. ITA NO. 1794/AHD/2011 ASSESSMENT YEAR 2007-08 I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 2 2. IN THIS CASE, ON THE DATE OF HEARING, DESPITE TH E SERVICE OF NOTICE IN ADVANCE THROUGH REGISTERED AD ABOUT THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE BUT HOWEVER WRITTEN SUBMISSIONS WERE FILED. WE THEREFORE PROCEED TO DECIDE THE ISSUE EX - PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND THE WRITTEN SUBMISSIONS MAD E BY THE ASSESSEE. 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER: 4. ASSESSEE IS AN INDIVIDUAL STATED TO BE RUNNING TUITION CLASSES STYLED AS SUNSHINE CLASSES AND AL SO AS STOCK BROKER UNDER THE NAME SUN SHINE INVESTMENT. ASSESSEE FILED HIS RETURN OF INCOME F OR A.Y. 2007-08 ON 29-08-2008 DECLARING TOTAL INCOME A T RS. 1,88,783/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3 ) VIDE ORDER 16-12-2009 AND THE TOTAL INCOME WAS DETERMINED AT RS.3,04,800/-. AGGRIEVED BY THE ORDE R OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WH O VIDE ORDER DATED 02-05-2011 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 3 CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 8,161/- U/S. 271(1)(C) OF TH E ACT, IN RESPECT OF GIFT OF RS. 40,000/- RECEIVED BY THE APPELLANT FROM HIS FATHER-IN-LAW AND WHICH HAS BEEN VOLUNTARILY OFFERED AS INCOME, WHICH IS ABSOLUTELY ERRONEOUS AND BAD IN LAW AND NEEDS TO BE DELETED IN THE INTEREST OF NATURAL JUSTICE AND EQUITY. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE HAD RECEIVED GIFT IN CASH OF RS. 40,000/- FROM HIS FATHER-IN-LAW, SHRI DINESHCHANDRA CHUNAWALA. AO NOTICED THAT SHRI DINESHCHANDRA CHUNAWALA IN THE AFFIDAVIT HAD STATED THAT HE WAS NOT MAINTAINING BANK ACCOUNT, HE DOES NOT HAVE TAXABLE INCOME AND HAS NOT FILED HIS RETUR N OF INCOME. AO WAS THEREFORE OF THE VIEW THAT THE CAPA CITY AND THE CREDITWORTHINESS OF THE DONOR HAD REMAINED UNEXPLAINED AND THE GENUINENESS OF GIFT REMAINED UNEXPLAINED. HE ACCORDINGLY CONSIDERED THE CASH GIF T OF RS. 40,000/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT AND MADE THE ADDITION OF RS. 40,000/-. ON THE AFORESAID ADDITION OF RS. 40,000/- MADE BY AO U/S. 68 OF THE ACT, AO VIDE ORDER DATED 08/02/2010 LEVIED PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME U/S. 271(1)(C) OF THE ACT OF RS. 8,161/-. AGGRIEVED BY THE I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 4 PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO CONFIRMED THE ACTION OF AO OF LEVYING PENALTY BY HOLDING AS UNDER:- 4.1 I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FIND THAT THE ASSESSING OFFICER HAS DISCUSSED THAT THE APPELLANT FILED AN AFFIDAVIT FRO M SHRL CHUNAWALA. A COPY OF WHICH HAS BEEN FILED DURING T HE COURSE OF APPELLATE PROCEEDINGS ALSO, WHEREIN SHRI CHUNAWALA HAS STATED THAT HE IS CARRYING ON THE BUS INESS OF CARTING OF BUILDING MATERIALS ON MEAGER SCALE AN D NOT FILING RETURN OF INCOME, SINCE HIS INCOME IS BELOW TAXABLE INCOME, AND ALSO HAS NO BANK A/C. IN THE SAID AFFID AVIT, SHRI CHUNAWALA HAS ALSO STATED THAT THE APPELLANT I S HUSBAND OF HIS DAUGHTER AND THAT THE STATEMENT GIVE N BY HIM IN THE AFFIDAVIT IS TRUE AND CORRECT AND HE IS IN THE KNOWLEDGE THAT FILING OF WRONG AFFIDAVIT IS AN OFFE NCE. THE ABOVE AMOUNT WAS SURRENDERED BY THE APPELLANT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE REASON THAT HE DOES NOT HAVE FULL EVIDENCES IN SUPPORT OF BONA FIDES OF THE GIFT. THE ADDITION HAS ALSO BEEN MADE FOR THE S AME REASON. THE GENUINENESS OF THE GIFT HAS NOT BEEN ESTABLISHED; AS THE DONOR'S CAPACITY TO MAKE GIFT O F THE ABOVE AMOUNT HAS NOT BEEN ESTABLISHED. IN ORDER TO LEVY PENALTY U/S 271(L)(C) OF THE ACT, THE FOLLOWING CON DITIONS AS LAID DOWN BY THE LUCKNOW BENCH OF THE ITAT IN STAR INTERNATIONAL (P) LTD. VS ACIT (2008) 23 SOT 83 (LU CKNOW), HAVE TO BE CUMULATIVELY SATISFIED. '1) THE ASSESSEE OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE; 2) THE FAILS TO PROVE THAT SUCH EXPLANATION IS BOND FIDE; AND 3) ALL THE FACTS RELATING TO THE SAME AND MATERIAL FACTS TO THE COMPUTATION OF TOTAL INCOME THEN DISCLOSED BY HIM.' TAKING INTO ACCOUNT THE ABOVE INGREDIENTS, I FIND T HAT THE APPELLANT'S FATHER-IN-LAW HAS NOT SUBSTANTIATED AS TO WHEN I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 5 HE IS NOT FILING RETURN OF INCOME AND NOT HAVING AN Y BANK A/C , WHAT IS HIS MONTHLY INCOME AND HOW MUCH MONTHLY SAVINGS HE IS ABLE TO MAKE AFTER MEETING HIS HOUSEH OLD EXPENSES. THE EXPLANATION OFFERED BY THE APPELLANT, THEREFORE, HAS NOT BEEN SUBSTANTIATED. HE HAS ALSO FAILED TO PROVE THAT THE EXPLANATION OFFERED BY HIM IS BON AFIDE, WHICH IS EVIDENT AS THE APPELLANT HAS NOT EVEN FURN ISHED DETAILS OF WEEKLY, MONTHLY OR NET ANNUAL RECEIPTS O F HIS FATHER-IN-LAW'S INCOME FROM CARTING BUSINESS AND HA S ALSO NOT SATISFIED THE THIRD CONDITION THAT ALL THE FACT S RELATING TO THE SAME AND MATERIAL FACTS TO THE COMPUTATION OF T OTAL INCOME HAVE BEEN DISCLOSED BY HIM, I, THEREFORE, HO LD THAT THE EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, IS APPLICABLE IN THE CASE OF THE APPELLANT, AND CONFIR M THE PENALTY LEVIED IN HIS CASE. 6. AGGRIEVED BY AFORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US LD. DR SUPPORTED THE ORDER OF AO AND CIT(A). IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS SUBMITTED THAT THE GIFT WAS RECEIVED IN CASH FROM H IS FATHER-IN-LAW WHO WAS AGED ABOUT 61 YEARS. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, PROOF OF IDENTITY OF THE DO NOR IN THE FORM OF DRIVING LICENSE OF THE DONOR, NOTARI ZED AFFIDAVIT OF THE DONOR AFFIRMING THE GIFT ALONG WIT H COMPLETE NAME, ADDRESS, AMOUNT WAS SUBMITTED. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD VOLUNTARILY AND SUO MOTO SURRENDERED THE GIFT OF RS. 40,000/- F OR TAX TO BUY MENTAL PEACE OF MIND AND TO AVOID I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 6 LITIGATIONS. IT WAS ALSO SUBMITTED THAT THE ASSESSE E HAS COMPLETELY DISCHARGED PRIMARY ONUS CAST TO THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE DONOR AS ALSO THE GENUINENESS OF THE TRANSACTIO N. IT WAS FURTHER SUBMITTED THAT MERELY BECAUSE BANK ACCOUNT IS NOT MAINTAINED BY THE DONOR, GIFT RECEIV ED IN CASH CANNOT BE CONSIDERED TO BE NON-GENUINE AND THAT TOO IN THE ABSENCE OF ANY CORROBORATIVE EVIDEN CES AND FURTHER THAT THERE IS NO FINDING THAT THE DETAI LS FURNISHED BY THE ASSESSEE IN RESPECT OF GIFT RECEIV ED FROM HIS FATHER-IN-LAW WAS INCORRECT, ERRONEOUS OR FALSE. IT WAS THEREFORE SUBMITTED THAT THE PENALTY LEVIED IN THE PRESENT CASE BE DELETED. 8. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME U/S. 271(1)(C) HAS BEEN LEVIED ON THE CASH GIFT OF RS. 40,000/- RECEIV ED BY THE ASSESSEE FROM HIS FATHER IN LAW WHICH ACCORD ING TO THE AO HAS REMAINED UNEXPLAINED. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE CASH GIFT O F RS. 40,000/- HAS BEEN RECEIVED BY THE ASSESSEE FROM HIS FATHER IN LAW. THE ONLY REASON FOR MAKING THE ADDI TION U/S. 68 WAS THAT THE FATHER IN LAW IN HIS AFFIDAVIT HAD STATED THAT HE DOES NOT HAVE A BANK ACCOUNT AND HIS INCOME IS BELOW TAXABLE LIMIT. ON PERUSING THE I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 7 AFFIDAVIT OF THE DONOR DATED 11/12/2009, IT IS SEEN THAT THE RELATIONSHIP OF THE ASSESSEE AND THE DONOR IS NOT IN DOUBT, HIS AGE BEING 61 YEARS IS ALSO NOT IN DISPUTE. IN THE AFFIDAVIT, THE DONOR HAS STATED TH AT HE HAS MADE GIFT OUT OF PAST SAVING OF CARTING BUSINES S. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE DONOR COULD NOT HAVE EARNED AND SAVED THE AMOUNT WHICH HE HAS GIFTED TO HIS SON IN LAW. FURTHER IT IS A WELL SETTLED LAW T HAT PENALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM ASSESSMENT P ROCEEDINGS AND HOWEVER RELEVANT AND GOOD, THE FINDINGS IN ASSE SSMENT PROCEEDINGS MAY NOT BE CONCLUSIVE SO FAR AS PENALTY PROCEEDINGS ARE CONCERNED. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITIO N MADE IN THE ASSESSMENT PROCEEDINGS IS DIFFERENT FROM THE PENALT Y IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING OF IN ACCURATE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE /ADDITIONS COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S.271(1)(C) OF THE ACT ON PREPONDERANCE O F PROBABILITY AND THE REVENUE HAS TO PROVE THAT THE C LAIM OF THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED ITS TAX LI ABILITY. FURTHER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAR OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITI ONS MADE, IT CANNOT BE THE SOLE GROUND FOR COMING TO THE CONC LUSION THAT ASSESSEE HAS CONCEALED ANY INCOME. CONSIDERING THE AFORESAID I.T.A NO. 1794/AHD/2011 A.Y. 2007-08 PAGE NO GIRISH HIRALAL KOTHLAWALA VS. ITO 8 AND PECULIAR FACTS OF THE CASE AND CONSIDERING THE FACT THAT THE AMOUNT OF GIFT TO BE A MEAGER AMOUNT FROM THE RELAT IVE OF ASSESSEE, WE ARE OF THE VIEW THAT IN THE PRESENT CA SE, NO CASE FOR PENALTY HAS BEEN MADE. WE THUS DIRECT THE DELET ION OF PENALTY. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURV EDI) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD : DATED 26/02/2015 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,