M/S. KOMAL TODI, THANE V. THE ITO WD 1(3), THANE

ITA 190/MUM/2008

• Counselvise Citation: 19019914 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SONGATTE
• Assessee Lawyers: DR P DANIEL SHRI M P MAKHIJA
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI S. V. MEHROTRA, A.M. AND SHRI R.S. PADV EKAR, J.M. I.T.A. NO.: 190/MUM/2008 ASSESSMENT YEAR : 2004-05 MISS KOMAL TODI 504, KISHORE NAGAR SOCIETTY, KOPRI, THANE(W) PAN NO: AABPT4567G VS. THE INCOME TAX OFFICER, WARD 1(3), THANE. (APPELLANT) (RESPONDENT) APPELLANT BY : DR. P. DANIEL / SHRI M.P. MAKHIJA RESPONDENT BY : SHRI D. SONGATTE ORDER PER R. S. PADVEKAR (J.M.) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 13.11.2007 OF CIT(A)II, THANE AND RELATES TO THE A .Y. 2004-05. THE ASSESSEE HAS TAKEN FOLLOWING EFFECTIVE GROUND : 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)( C) OF THE ACT.(1)(C) OF THE INCOME TAX ACT, 1961 @ 200% AMOUNTING TO `. 4,22,394/- WITHOUT CONSIDERING THE FACTS OF THE CASE. 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RET URN OF INCOME FOR THE A.Y. 2004-05, WHICH WAS SELECTED FOR SCRUTINY AND A SSESSMENT WAS COMPLETED U/AS.143 OF THE ACT. IT WAS A NOTICE BY T HE AO THAT THE ASSESSEE HAS SHOWN THE GIFT RECEIVED FROM ONE SHRI PRAKASH K . JAIN OF `. 6,51,000/-. THE ASSESSEE FILED THE COPY OF THE GIFT DEED EXECUT ED BY THE DONOR DATED 13.05.2003, IN WHICH IT WAS STATED THAT THE DONOR H AS GIVEN THE GIFT OUT OF NATURAL LOVE AND AFFECTION. THE AO RECORDED THE STA TEMENT OF THE ASSESSEE BY ISSUING THE SUMMONS U/S.131. IN THE STATEMENT, THE ASSESSEE STATED THAT 2 SHRI PRAKASH K. JAIN IS HER UNCLE AND SHE ALSO DESC RIBED THE AGE OF THE DONOR, COMPLEXION AND HEIGHT, BUT SHE EXPRESSED HE R INABILITY TO GIVE MORE DETAILS. THE ASSESSEE ALSO STATED THAT SHE HAS MET HIM IN THE FAMILY FUNCTIONS AND OTHER THAN THAT THERE WERE NO OCCASIO NS TO SPEAK TO HIM. THE ASSESSEE ALSO EXPRESSED HER INABILITY TO GIVE THE D ETAILS OF THE FAMILY MEMBERS OF THE DONOR. SHE ALSO STATED THAT THERE WA S A KIRTAN AT HER UNCLES PLACE ON 13.05.2003, WHEN SHE RECEIVED THE GIFT FROM THE DONOR. SHE ALSO STATED THAT SHE RECEIVED THE AMOUNT OF THE GIF T BY CHEQUE. THE AO ASKED THE ASSESSEE TO PRODUCE THE DONOR NAMELY SHRI PRAKASH K. JAIN ON 26.10.2006. BUT IT APPEARS THAT DONOR DID NOT APPEA R BEFORE THE AO. THE AO HAS ALSO NOTED THAT INSPECTOR FROM HIS OFFICE WAS DEPUTED TO FIND OUT THE DONOR. BUT THE DONOR WAS NOT FOUND ON THE GIVEN ADD RESS. 3. THE AO ALSO CALLED THE INFORMATION FROM THE BANK OF INDIA, BRANCH AT MUMBAI U/S.133(6) OF THE ACT, TO FIND OUT THE ORIGI N SOURCE OF THE GIFT DRAFT/PAY-ORDER AND ALSO TO CROSS THE GENUINENESS A ND CREDIT WORTHINESS OF THE DONOR. AS PER THE INFORMATION FURNISHED BY THE BANK, IT WAS SEEN BY THE AO THAT THE PAY ORDER WAS PROCURED TO THE BANK ACCO UNT, WHICH WAS BELONGING TO M/S. MAHADEV JEWELLERS, A PROPRIETORSH IP CONCERN ONE SHRI PRABHAKAR PREMJI PUROHIT. THE BANK ALSO INFORMED TH AT THE AMOUNT WAS DEPOSITED ON THE SAME DAY IN THE SAID ACCOUNT DATE ON WHICH PAY ORDER WAS DRAWN. THE AO, THEREFORE, SOUGHT THE EXPLANATION OF THE ASSESSEE. THE ASSESSEE FILEWD REPLY ALONG WITH COPIES OF THE RETU RN FILED BY SHRI PRAKASH K. JAIN, COMPUTATION OF INCOME, BALANCE SHEET AND GIFT DEED. THE ASSESSEE ALSO EXPRESSED HER INABILITY TO PRODUCE THE DONOR AND OF FERED AMOUNT OF GIF AS ADDITIONAL INCOME BY STATING THAT FOR AVOIDING THE LEGAL HARASSMENT, SHE IS READY TO PAY TAX. SHE ALSO REQUESTED THE AO THAT NO PENALTY BE LEVIED, AS SHE HAS OFFERED THE SAID AMOUNT AS INCOME FOR BUYING TH E PEACE. THE AO, THEREFORE, MADE THE ADDITION OF `. 6,51,000/- PLUS ADDED 10% AS COST FOR PROCURING THE ENTRY OF THE GIFT, WHICH WAS `. 65,100/-. THE AO INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT.(1)(C ) OF THE ACT AND LEVIED THE PENALTY OF `. 4,22,394/- FOR WILLFUL CONCEALMENT OF INCOME AS WEL L AS FOLLOWING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE CHAL LENGED THE PENALTY LEVIED BY THE AO BEFORE THE LD.CIT(A), BUT WITHOUT SUCCESS . NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3 4. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PART IES AND PERUSED THE RECORDS. THE LD. COUNSEL VEHEMENTLY ARGUED THAT AO HAS NOT RECORDED THE SATISFACTION AT ALL IN THE ASSESSMENT ORDER, AND HE NCE, NO PENALTY CAN BE LEVIED. WE DO NOT FOUND MERIT ON THIS PLEA OF THE A SSESSEE. ON THE PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT IN CLEAR TERM S THE AO HAS RECORDED THE SATISFACTION FOR INITIATING THE PENALTY PROCEEDINGS AGAINST ASSESSEE U/S. 271(1)(C) OF THE ACT. THOUGH THE LD. COUNSEL RELIED ON THE DECISION IN THE CASE OF CIT VS. KRISHNA MARUTI LTD. (2009) 309 ITR 138 (DELHI), THE SAID CASE PERTAINS TO THE A.Y.1995-96. MOREOVER SUB-SECTION ( 1B) IS INSERTED U/S. 271(1)(C) OF THE ACT BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE FROM 01.04.1989, AND MERE DIRECTION FOR INITIATING OF TH E PENALTY PROCEEDINGS IS SUFFICIENT TO COMPLY WITH THE REQUIREMENT OF THE SA TISFACTION OF THE AO. ON THE PERUSAL OF THE LD.CIT(A) ORDER, WE FIND THAT TH E LD.CIT(A) HAS OBSERVED THAT THE IDENTITY OF THE DONOR WAS NOT ESTABLISHED. THE LD.CIT(A) ALSO TAKEN A NOTE OF THE FACT THAT THE PAY ORDER WAS DRAWN ON THE BANK OF INDIA, THROUGH CD A/C. NO.41850 WHICH BELONGS TO SHRI PRAB HAKAR PREMJI PUROHIT. AS PER THE FACTS ON RECORD, THE ASSESSEE COULD NOT PRODUCE THE DONOR, NOR COULD GIVE THE PROPER INFORMATION IN RESPECT OF THE DONOR IN HER STATEMENT RECORDED U/S.131 OF THE ACT. THOUGH THE ASSESSEE GA VE THE PHYSICAL DESCRIPTION OF THE DONOR AND AT THE SAME TIME SHE D ENIED THAT THE DONOR HAS VISITED HER HOUSE AT ANY TIME. THE ASSESSEE ALSO EX PRESSED HER INABILITY TO GIVE THE DETAILS OF THE DONORS FAMILY MEMBERS. IN OUR CONSIDERED VIEW THE ALLEGED GIFT IS BOGUS ONE AND THE A.O. HAS BROUGHT OUT ALL FACTS ON RECORDS TO PROVE MODUS OPARENDI OF THE ASSESSEE. IN OUR OPINION, AS PER THE FACTS ON RECORD THE A.O. IS JUSTIFIED TO LEVY THE PENALTY U/S. 271(1)(C) OF THE ACT ON THE AMOUNT OF ADDITION OF BOGUS GIFT. 5. IS SEEN IN THIS CASE THAT APART FROM THE ADDITI ON OF INCOME TAX APPELLATE TRIBUNAL ` `. 65,100/-, AO ALSO MADE AN ADDITION ON THE PRESUMPTION THAT THE ASSESSEE WOULD HAVE INCURRED S OME COST FOR GETTING THE ENTRY. IN OUR OPINION, THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE INCURRED ANY EXPENDITURE TO THE EXTENT `. 65,100/-. IT IS WELL SETTLED PRINCIPLE THAT ADDITIONS MADE ON THE PRESUMPTION CANNOT BE SU BJECTED TO THE PENAL CONSEQUENTIAL. WE, THEREFORE, HOLD THAT NO PENALTY CAN BE LEVIED ON THE ADDITION OF `. 65,100/- AND ACCORDINGLY SAME IS DELETED. 4 6. NEXT LIMB OF ARGUMENT IS THAT MINIMUM LEVY OF PE NALTY IS 100% AND MAXIMUM PENALTY IS 300%. HE FURTHER ARGUES THAT THE MAXIMUM PENALTY SHOULD BE RESERVED ONLY FOR THE EXCEPTIONAL BAD CAS E, AND IN THE PRESENT CASE AS THE ASSESSEE COULD NOT PRODUCE THE DONOR, T HERE WAS NO JUSTIFICATION TO LEVY THE MAXIMUM PENALTY. IN SUPPORT OF THE SAID CONTENTION, HE RELIED ON THE DECISION IN THE CASE OF BRAJA LAL BANIK V. STAT E OF TRIPURA (1990) 78 STC 283 AT PG. 297(GAU). WE FIND FORCE IN THE CONTENTIO N OF THE LD. COUNSEL ON THE QUANTUM OF PENALTY. THE AO HAVE LEVIED THE PENA LTY AT 200% ON THE ADDITION OF `. 7,16,000/-. IN OUR OPINION, THIS IS A CASE WHERE TH E ASSESSEE COULD NOT PROVE THE GIFT RECEIVED FROM SHRI PRAKASH K. JAIN AND THE CASE CANNOT SAID TO BE THE EXCEPTIONAL BAD CASE. WE, THE REFORE, RESTRICT THE PENALTY TO 100% OF TAX PAYABLE ON `. 6,51,000/- AND ACCORDINGLY, DIRECT THE AO TO REWORK OUT THE QUANTUM OF THE PENALTY. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2011. SD/- SD/- ( S.V. MEHROTRA ) (R.S. P ADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 27 TH APRIL, 2011 PRONOUNCED IN THE OPEN COURT ON 27.04 .2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, ( RAJENDRA SINGH ) ( R.S. PADVEKA R) 3. THE C.I.T. A.M. J. M. 4. CIT (A) 5. THE DR, A - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI