Shri Vasantlal Amrutlal Doriwala, Surat V. The Income tax Officer,Ward-5(2), Surat

ITA 19/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67600 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 19/AHD/2013 A.Y: 2005-06 VASANTLAL AMRUTLAL DORIWALA (HUF), PROP. OF M/S. NIRAV RAYONS 516 HAZOORI CHAMBERS, ZAMPA BAZAAR, SURAT. PAN: AABHV 3106M VS INCOME TAX OFFICER WARD 5(2), SURAT (ASSESSEE) (REVENUE) REVENUE BY : SHRI O.P. BATHEJA, SR.D.R. ASSESSEE(S) BY : SHRI MEHUL SHAH, A.R. / // / DATE OF HEARING : 14/08/2013 / DATE OF PRONOUNCEMENT: 23/08/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FR OM THE ORDER OF LEARNED CIT(A)-I, SURAT, DATED 30.10.2012. THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS: ON THE FACT AND IN CIRCUMSTANCES OF THE CASE AS WEL L AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CON FIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY OF RS.3 ,60,110/- U/S 271(1)(C) OF THE ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S. 271(1)(C), DATED 29.3.2010 AND TH E ASSESSMENT ORDER PASSED U/S. 143(3), DATED 30.12.2007 WERE THA T THE ASSESSEE HUF IS IN THE BUSINESS OF TRADING OF YARN. IT WAS N OTED BY THE AO THAT THE ASSESSEE HAD RECEIVED RS.5,00,000/- AS A G IFT EACH FROM SRI ITA NO.19/AHD/2013 SHRI VASANTLAL AMRUTLAL DORIWALA VS. ITO SURAT A.Y. 2005-06 - 2 - VINODBHAI JAYANTILAL RATHOD AND BALVANTBHAI CHHAGAN BHAI JOSHI. THE ASSESSEE HAD FURNISHED COPIES OF THE DECLARATIO N OF THE GIFTS MADE BY THOSE DONORS. IN RESPECT OF THE DECLARATION OF RS.5,00,000/- GIFTED BY SRI VINOD JAYANTILAL RATHOD , IT WAS NOTED THAT AMOUNT WAS GIFTED OUT OF HIS S.B. A/C NO. 1005 4 WITH THE SUTEX CO-OPERATIVE BANK, SURAT. SIMILARLY, ON VERIF ICATION OF THE DECLARATION OF SRI BALVANTBHAI CHHAGANBHAI JOSHI, I T WAS NOTED THAT A GIFT OF RS.5,00,000/- WAS MADE OUT OF HIS S. B. A/C. NO. 10062 WITH THE SUTEX CO-OPERATIVE BANK LIMITED. THE AO HAS RAISED CERTAIN DOUBTS ABOUT THE DONORS AND THEIR BA NK ACCOUNTS. HOWEVER, THE ASSESSEE HAS STRESSED UPON THE CORRECT NESS OF THE GIFT BY FILING THE INCOME TAX RETURNS OF THOSE DONORS AL ONG WITH ENCLOSURE IN SUPPORT OF THE CLAIM. THE AO WAS NOT C ONVINCED AND NOTED THAT THE PAY ORDERS WERE NOT DIRECTLY ISSUED IN FAVOUR OF THE ASSESSEE BUT IN RESPECT OF SOME OTHER PERSONS. ACCO RDING TO HIM, SEVERAL PAY ORDERS WERE ISSUED FROM ONE OD ACCOUNT. AFTER THE DETAILED DISCUSSION, THE IMPUGNED AMOUNT OF RS.10,0 0,000/- WAS TAXED BY INVOKING THE PROVISIONS OF SECTION 68 OF T HE IT ACT. 2.1 DURING PENALTY PROCEEDINGS, IT WAS NOTED BY THE AO THAT AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE LEARNED CIT(A)-III, SURAT. HOWEVER, WITHOUT ANY SUCCESS THE ADDITION UN DER SECTION 68 OF THE IT ACT WAS CONFIRMED. AT THIS CONJECTURE, LEARNED AR HAS FAIRLY STATED BEFORE US THAT NO FURTHER APPEAL WAS FILED BY THE ASSESSEE. THE AO HAS CITED FEW CASE LAWS AND THEREA FTER LEVIED A MINIMUM PENALTY OF RS.3,60,110/-, WHICH WAS CONFIRM ED BY CIT(A). NOW THE ASSESSEE IS FURTHER IN APPEAL BEFOR E US. ITA NO.19/AHD/2013 SHRI VASANTLAL AMRUTLAL DORIWALA VS. ITO SURAT A.Y. 2005-06 - 3 - 3. WE HAVE HEARD BOTH THE SIDES. FROM THE SIDES OF THE REVENUE, LEARNED DR HAS PLACED RELIANCE UPON THE OR DERS OF THE AUTHORITIES BELOW. HE HAS PLEADED THAT AO HAD MADE CERTAIN INQUIRES AND THEREUPON CAME TO KNOW THAT THERE WAS CERTAIN IRREGULARITIES IN THE PREPARATION OF THE DRAFTS IN FAVOUR OF THE ASSESSEE. THE DONORS WERE NOT PRESENT BUT ONLY THEI R RETURNS WERE FURNISHED. HE HAS, THEREFORE, PLEADED THAT IN A SIT UATION WHEN THE CORRECTNESS OF THE GIFT WAS NOT SATISFACTORILY PROV ED THEN THE SAME WAS RIGHTLY DISALLOWED AS ALSO THE LEVY OF PENALTY WAS JUSTIFIED. 3.1 FROM THE SIDE OF THE ASSESSEE, LEARNED AR, MR. MEHUL SHAH, APPEARED AND PLACED RELIANCE IN THE CASE OF JALARAM OIL MILLS, 253 ITR 192 (GUJ) AND NATIONAL TEXTILES, 249 ITR 125 (GUJ) FOR THE LEGAL PROPOSITION THAT NO PENALTY CAN BE LE VIED WHEN THE ADDITION IS MADE U/S 68 OF THE IT ACT. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A CASE WHER E THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION. FACTS OF THE CASE HAVE REVEALED THAT THE DECLARATION OF GIFT WAS FILED BY THE ASSES SEE. COPIES OF THOSE DECLARATIONS ARE FURNISHED BEFORE US IN A COM PILATION. FURTHER, THE ASSESSEE HAS PLACED ON RECORD THE COPY OF THE BANK ACCOUNT WHEREIN THE GIFTED AMOUNT WAS CREDITED. THE ASSESSEE HAS ALSO FURNISHED THE PHOTOCOPIES OF THE RETURN FILED BY THOSE DONORS. WITH THIS FACTUAL BACKGROUND, WE HAVE CAREFULLY PER USED THE DECISION OF NATIONAL TEXTILES (GUJ) (SUPRA) , WHEREIN THE COURT ITA NO.19/AHD/2013 SHRI VASANTLAL AMRUTLAL DORIWALA VS. ITO SURAT A.Y. 2005-06 - 4 - HAS OBSERVED THAT IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTORS MUST CO-EXIST, (I) THERE MUST BE SOME MATER IAL OR CIRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THA T THERE WAS ANIMUS I.E., CONSCIOUS CONCEALMENT OR ACT OF FU RNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE AND IN ORDER TO JUSTIFY LEVY OF PENALTY FOR ADDITION OF CA SH CREDITS, THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADIN G TO REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESEN T ASSESSEES INCOME AND THE CIRCUMSTANCES MUST SHOW T HAT THERE WAS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF I NACCURATE PARTICULARS; EXPLN. 1 DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE . THIS PENALTY HAS BEEN LEVIED BY INVOKING THE DEEMING PROVISIONS UNDER SECTION 68 OF THE IT ACT. THOSE DEEMING PROVISIONS CANNOT BE EXTENDED TO HOLD THAT THE ASSESSEE HAS CONCEALED THE INCOME ESPECIALLY WHEN T HE ASSESSEE HAS PLACED ON RECORD CERTAIN EVIDENCES SUCH AS GIFT DECLARATIONS AND BANK ACCOUNTS TO SHOW THAT THE GIFT WAS RECEIVE D UNDER BONA FIDE BELIEF THAT THE SAME WAS A GENUINE GIFT. ALTHO UGH, IT WAS TAXED DURING ASSESSMENT PROCEEDINGS BUT THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED AUTOMATICALLY. P LACING RELIANCE ON THE DECISIONS CITED HEREINABOVE, WE HEREBY REVER SE THE FINDING OF THE AUTHORITY BELOW AND DIRECT TO DELETE THE PEN ALTY. THE GROUND IS ALLOWED. ITA NO.19/AHD/2013 SHRI VASANTLAL AMRUTLAL DORIWALA VS. ITO SURAT A.Y. 2005-06 - 5 - 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. SD/- SD/- (A.K. GARODIA ) (MUK UL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMB ER AHMEDABAD; DATED 23/08/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD