Renu Agarwal, Mathura V. I.T.O.-3(3), Mathura

ITA 195/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0392 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 11 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-03-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 30-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Gift; Source of fund; Question of law; Corroborative evidences; Set aside
• Section: 271(1)(c); 195; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 107/AGRA/ 2011 ASSESSMENT YEAR 2001-02 SARV PRAKASH KAPOOR VS. THE ASST. COMMISSIONER OF PROP. M/S YASH HOTEL AND RESTAURANT INCOME -TAX 4(1), MOTI KATRA, AGRA AGRA (PAN AGMPK8788K) (APPELLANT) (RESPONDENT) ITA NO. 195/AGRA/ 2011 ASSESSMENT YEAR 2003-04 RENU AGARWAL VS. INCOME TAX OFFICER MATHURA (U.P.) WARD 3(3), MATHURA (PAN ABDPA1965G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GUPTA, ADVOCATE. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 25.03.2013 DATE OF PRONOUNCEMENT : 04.04.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: THIS ORDER SHALL DISPOSE OF BOTH THE APPEALS FILED BY THE DIFFERENT ASSESSEES AGAINST THE ORDERS OF LEARNED CIT(A) II, AGRA DATED 10.02.2011 ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 2 FOR A.Y. 2001-02 AND ORDER OF LEARNED CIT(A)-I AGR A DATED 15.02.2011 FOR A.Y. 2003-04, CHALLENGING THE LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. EARLIER ITA NO.195/AGRA/2011 WAS DISMISSED IN DE FAULT VIDE ORDER DATED 24.07.2012. THE ASSESSEE PREFERRED M.A. NO. 3 0 OF 2012, SEEKING RECALLING OF THE EARLIER ORDER OF THE TRIBUNAL. THE M.A. OF THE ASSESSEE WAS ALLOWED VIDE ORDER DATED 14.12.2012 AND APPEAL OF THE ASSESSEE WAS RESTORED. THEREFORE, THE SAME WAS FIXED FOR HEARING ON MERIT. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF BOTH THE PARTIES, PERUSED FINDINGS OF THE AUTHORITIES BELOW AND CONSI DERED THE MATERIAL AVAILABLE ON RECORD. BOTH THE PARTIES STATED THAT I SSUES ARE IDENTICAL AND BOTH THE PARTIES MAINLY ARGUMENT IN THE CASE OF SRI SARV PRAKASH KAPOOR. THEREFORE, FOR THE PURPOSE OF DISPOSAL OF THE APPEA LS BY THE DIFFERENT ASSESSEES, WE TAKE UP THE APPEAL IN ITA NO. 107 OF 2011 FOR THE PURPOSE OF DISPOSAL OF BOTH THE APPEALS AS UNDER :- ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 3 ITA NO. 107 OF 2011 (ASSESSEE SARV PRAKASH KAPOOR) 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DU RING THE YEAR ASSESSEE HAD SHOWN A LOAN OF RS.9,80,000/- FROM HIS SON MAST ER ROMIT KAPOOR. DURING THE ASSESSMENT PROCEEDINGS, IT CAME TO THE L IGHT THAT THIS LOAN WAS GIVEN OUT OF GIFT RS.10 LAKHS RECEIVED BY MASTER RO MIT KAPOOR FROM ONE SHRI SANJEEV KUMAR DAGAR. WHILE FRAMING THE ASSESSM ENT ORDER THE GIFT CLAIMED TO HAVE BEEN RECEIVED BY MASTER ROMIT KAPOO R WAS HELD TO BE BOGUS BY THE A.O. BY GIVING ELABORATE REASONS. THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED CIT(A) WHO HAS ALSO CONFIRMED THE ADDITION ON MERIT. THE A.O. ACCORDINGLY INITIATED PENALTY PROCE EDINGS AND VIDE SEPARATE ORDER THE A.O. LEVIED PENALTY @ 300% AGAIN ST THE ASSESSEE. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND WRI TTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED APPELLAT E ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVING INCOME FROM HOTEL BUSINESS AS WELL AS CONSTRUCTION` WORK. THE ASSESSEE HAD DISCLOSED RECEIPT OF LOAN OF RS.9,80,000/- FROM HIS MINOR SON MASTER ROMIT KAPOOR AND IN SUPPORT OF THE GENUINENESS OF T HE LOAN RECEIPT EXPLAINED THAT FUNDS OF LOAN WERE AVAILABLE TO HIS SON ON ACCOUNT OF GIFT RECEIVED FROM SRI SANJEEV KUMAR DABOR WHO HAS ALSO CONFIRMED GIVING ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 4 OF THE GIFT. THE LOAN WAS RECEIVED THROUGH BANKING CHANNEL AND WAS CONFIRMED. THE ASSESSEE ALSO PRODUCED THE DONOR AT THE APPELLATE STAGE WHOSE STATEMENT WAS RECORDED IN WHICH HE HAS CONFIR MED GIVING OF GIFT TO SRI ROMIT KAPOOR. THE ASSESSEE SUBMITTED THAT IN ORDER TO SUPPORT THE GENUINE LOAN, THE ASSESSEE HAS FILED ALL THE DOCUME NTARY EVIDENCES I.E. AFFIDAVIT OF DONOR, GIFT DEED EXECUTED BY THE DONOR AND COPY OF THE STATEMENT RECORDED UNDER SECTION 131 OF THE INCOME TAX ACT OF THE DONOR. SINCE THE GENUINE GIFT WAS RECEIVED BY THE S ON OF THE ASSESSEE WHO IN TURN ADVANCED LOAN TO THE ASSESSEE THROUGH BANKI NG CHANNEL, THEREFORE, EVEN IF THE ADDITION ON QUANTUM HAVE BEEN MADE BUT IT IS NOT A FIT CASE FOR LEVY OF PENALTY AND RELIED UPON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. COMMISSI ONER OF INCOME TAX 249 ITR 125. THE LEARNED CIT(A) HOWEVER DID NOT ACC EPT THE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASS ESSEE. FINDINGS OF CIT(A) IN IMPUGNED ORDER IN PARAS 2.2 AND 3 ARE REP RODUCED AS UNDER :- 2.2 I HAVE ANALYSED THE MATTER AND FIND THAT THE FACTUM OF GENUINE GIFT IN THE HANDS OF THE APPELLANTS MINOR SON HAS NOT BEEN ESTABLISHED. AS PER THE PROVISIONS OF SEC. 271 (1)(C) MORE OFFERING OF EXPLANATION IS NOT SUFFICIENT. EXPLANAT ION HAS TO BE SUBSTANTIATED BY COGENT AND RELIABLE EVIDENCE. THE APPELLANT CAMOUFLAGED HIS INCOME AS GIFT RECEIVED FROM SHRI D AGAR. A READING OF CIT(A)S ORDER WHEREIN QUANTUM ADDITION MADE BY THE ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 5 AO HAS BEEN CONFIRMED BRINGS OUT CLEARLY THAT THE A PPELLANT MISERABLY FAILED TO PROVE THE GENUINENESS OF THE GI FT CLAIMED TO HAVE BEEN RECEIVED BY HIS MINOR SON. AS PER PROVISI ONS OF SEC. 68 THE ASSESSEE HAS TO PROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO TO PROVE THE NATURE AND SOURCE OF THE AMOUNT A ND GENUINENESS OF THE TRANSACTION. THE APPELLANT HAS F AILED TO PROVE THE CREDITWORTHINESS OF THE DONOR AS THE SOURCE OF FUNDS OUT OF WHICH THE DONOR CLAIMED TO HAVE MADE THE GIFT IS NO T SATISFACTORILY EXPLAINED AS HELD BY CIT(A)-II, AGRA VIDE HIS ORDER DATED 12.1.05 AND I AM IN COMPLETE AGREEMENT WITH H IM AND IT IS NOT CONSIDERED NECESSARY TO REPRODUCE THE SAME AS I T WILL BE MERE REPETITION. AS ALREADY STATED THE APPELLANT HA S FAILED TO PROVE THE GENUINENESS OF THE GIFT. ON THESE FACTS, I AM OF THE OPINION THAT THE PROVISIONS OF CLAUSE (B) EXPLANATI ON 1 TO SEC. 271(1) (C) ARE CLEARLY APPLICABLE IN THE APPELLANT S CASE. MERE OFFERING AN EXPLANATION IS NOT SUFFICIENT AS IT HAS TO BE SUBSTANTIATED AS HELD IN THE CASE OF CIT VS. LALCHA ND JIZATH RAM (P&H) 225 ITR 675. FOR LEVY OF PENALTY U/S 271 (1) (C) MENS REA IS NOT NECESSARY AS IT IS A STRICT LIABILITY FOR BR EACH OF CIVIL LIABILITIES AS HELD BY HONBLE SUPREME COURT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSORS (306 ITR 277). TH EREFORE, I AM OF THE OPINION THAT THE PENALTY U/S 271(1)(C) H AS BEEN RIGHTLY LEVIED AND THE SAME IS CONFIRMED. 3. IN THE RESULT, APPEAL IS DISMISSED. 5. THE ASSESSEE IN HIS APPEAL CHALLENGED THE CONFIR MATION OF LEVY OF THE PENALTY. LEARNED COUNSEL FOR ASSESSEE REITERATE D THE SUBMISSION MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT SON OF THE ASSESSEE RECEIVED GENUINE GIFT FROM SANJEEV KUMAR DAGAR THROUGH BANKI NG CHANNEL. THE CONFIRMATION OF THE GIFT AND GIFT DEED WERE FILED B EFORE THE AUTHORITIES BELOW. THE DONOR ALSO APPEARED AT THE APPELLATE STA GE AND STATEMENT WAS ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 6 RECORDED IN WHICH HE HAS CONFIRMED GIVING OF GIFT T O THE SON OF THE ASSESSEE, THEREFORE, GENUINE GIFT HAS BEEN PROVED A ND THE INCOME TAX AUTHORITIES CANNOT ASK FOR SOURCE OF SOURCE TO BE E XPLAINED BY THE ASSESSEE. THE ASSESSEE PROVED IDENTITY, RELIABILITY AND CREDITWORTHINESS AND GENUINENESS OF THE LOAN RECEIVED FROM HIS MINOR SON. MERELY BECAUSE QUANTUM ADDITION HAS BEEN CONFIRMED ON MERIT IS NO GROUND TO LEVY THE PENALTY. THE CIT(A) HAS IGNORED THE FACT THAT PENAL TY AND QUANTUM PROCEEDING ARE SEPARATE, DISTINCT AND INDEPENDENT P ROCEEDING. THE A.O. IN THE PENALTY ORDER HAS MERELY NOTED, THE GIFT REC EIVED BY THE SON OF THE ASSESSEE WAS DOUBTFUL, THEREFORE, AT THE MOST THERE MAY BE FAILURE TO PROVE GENUINE GIFT IN THE MATTER BUT IT IS NOT A CA SE OF DISAPPROVAL BY THE A.O OR HOLDING BOGUS GIFT IN THE MATTER. LEARNED CO UNSEL FOR ASSESSEE RELIED UPON FOLLOWING DECISIONS :- 1. NATIONAL TEXTILES VS. COMMISSIONER OF INCOME TAX 249 ITR 125 2. DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX AND ANOTHER [2007] 291 ITR 519 SC 3. A. RAJENDRAN & ORS. VS. ASSTT. COMMISSIONER OF I NCOME TAX 134 TTJ 498 (CHENNAI B). 4. BHARTESH JAIN VS. INCOME TAX OFFICER 43 DTR 320 (DEL.E) 5. PUNEET SEHGAL & ORS. VS. INCOME TAX OFFICER 24 D TR 178 (DEL.). ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 7 6. COMMISSIONER OF INCOME TAX VS. BALBIR SINGH 304 ITR 125 (P&H). 7. SMT. SANDHYA VERMA VS. INCOME TAX OFFICER 114 TT J 933 (DEL G). 8. RONAQ RAM NAND LAL VS. INCOME TAX OFFICER 92 ITD 514 (CHD.) 6. LEARNED COUNSEL FOR THE ASSESSEE APART FROM ABOV E SUBMISSION ALSO SUBMITTED THAT THE A.O. CONFIRMED THE PENALTY ON TH E REASONS THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME A ND FURNISHED INACCURATE PARTICULARS INCOME AND BOTH ARE DISTINCT PROVISIONS, THEREFORE, IN THE ABSENCE OF ANY CLEAR CUT FINDING, THE ORDER PASSED BY THE A.O. WAS LIABLE TO BE SET ASIDE AND RELIED UPON THE ORDER OF ITAT AGRA BENCH IN THE CASE OF INCOME TAX OFFICER VS. SMT. SUSHMA VARS HNEY ITA NO. 152/AGRA/ 2006 AND ITA NO. 118/AGRA/2006 DATED 18.0 5.2007 COPY OF THE ORDER IS PLACED ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT ON QUANTUM ASSESSEE PREFERRED AN APP EAL BEFORE HONBLE ALLAHABAD HIGH COURT WHICH IS PENDING FOR ADJUDICAT ION. LEARNED D.R. RELIED ON ORDER OF CIT(A) AND 225 ITR 675 (P&H) 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND MATE RIAL AVAILABLE ON RECORD. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE. THE ASSESSEE HAS RECEIVED LOAN OF RS.9,80,000/- FROM HIS SON. THE SO N OF THE ASSESSEE ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 8 RECEIVED GIFT OF RS.10 LAKHS FROM SRI SANJAY KUMAR DAGAR OF NEW DELHI. THE ASSESSEE PRODUCED ALL THE DOCUMENTS OF G IFT BEFORE THE AUTHORITIES BELOW I.E. CONFIRMATION OF THE DONOR, G IFT DEED, COPY OF THE BANK ACCOUNT ETC. THE DONOR WAS ALSO PRODUCED AT TH E APPELLATE STAGE AND STATEMENT ON OATH WAS RECORDED IN WHICH HE HAS CONF IRMED THE GIVING OF GIFT TO THE SON OF THE ASSESSEE. THE IDENTITY OF TH E SON OF THE ASSESSEE IS NOT IN DISPUTE AND SON OF THE ASSESSEE ALSO CONFIRM ED GIVING OF LOAN TO HIS FATHER. THE A.O. INSTEAD OF VERIFYING GENUINENESS O F THE LOAN ASKED THE ASSESSEE TO FURNISH SUPPORTING EVIDENCE OF CREDITWO RTHINESS OF THE DONOR AND TO PRODUCE THE DONOR FOR EXAMINATION. SINCE THE ASSESSEE HAS FAILED TO PRODUCE THE DONOR BEFORE A.O., THEREFORE, ADDITION OF LOAN WAS CONFIRMED AGAINST THE ASSESSEE. HOWEVER, THE A.O. RECORDED IN THE PENALTY ORDER THAT THE DONOR WAS PRODUCED AT THE APPELLATE STAGE ON QU ANTUM PROCEEDINGS AND STATEMENT OF DONOR WAS RECORDED. THE DONOR HAS CONFIRMED GIVING OF GIFT TO THE SON OF THE ASSESSEE AND ALL DOCUMENTS E VIDENCES WERE PRODUCED TO PROVE THE GENUINENESS OF THE GIFT IN THE MATTER. THE A.O. IN THE PENALTY ORDER, AFTER EXAMINATION OF THE EVIDENCE AND MATERI AL, FOUND THE IDENTITY, RELIABILITY, AND CREDITWORTHINESS OF THE DONOR TO B E DOUBTFUL. THE A.O. DID NOT FIND THE GIFT GIVEN BY THE DONOR TO THE SON OF THE ASSESSEE TO BE FALSE. THEREFORE, IT WAS A CASE WHERE THERE WAS NO CIRCUMS TANCES TO LEAD TO A ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 9 REASONABLE AND POSITIVE INFERENCE THAT THE EXPLANAT ION REGARDING GIFT OR GIVING TEMPORARILY LOAN WAS FALSE. IT IS ALSO WELL SETTLED LAW THAT SOURCE OF THE SOURCE COULD NOT BE ASKED TO BE PROVED. THE HON BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. COMMISSI ONER OF INCOME TAX 249 ITR 125 HELD AS UNDER :- HELD, THAT, IN THE INSTANT CASE, THE CASH CREDITS WERE NOT SATISFACTORILY EXPLAINED BY EVIDENCE AND DOCUMENTS. THE PARTIES WHO HAD ADVANCED THE ALLEGED TEMPORARY LOANS WERE N EITHER DISCLOSED NOR WERE THERE ANY SUPPORTING DOCUMENTS O N RECORD. THE ACCOUNTANT, WHO HAD ARRANGED THE LOANS WAS NOT PRODUCED AND IT WAS STATED THAT HE HAD LEFT THE SERVICE AS R ELATIONS WITH HIM WERE STRAINED. IN THIS STATE OF ACCOUNTS AND EV IDENCE IN THE QUANTUM PROCEEDINGS, THE DEPARTMENT WAS JUSTIFIED I N TREATING THE CASH CREDITS AS INCOME OF THE ASSESSEE, BUT MER ELY ON THAT BASIS BY RECOURSE TO EXPLANATION1, PENALTY UNDER SE CTION 271(1)(C)COULD NOT HAVE BEEN IMPOSED WITHOUT THE DE PARTMENT MAKING ANY OTHER EFFORT TO COME TO THE CONCLUSION T HAT THE CASH CREDITS COULD IN NO CIRCUMSTANCES HAVE BEEN AMOUNTS RECEIVED AS TEMPORARY LOANS FROM VARIOUS PARTIES. ADMITTEDLY , THE ASSESSEE IN THE QUANTUM PROCEEDINGS FAILED TO PRODU CE THE ACCOUNTANT BUT THE DEPARTMENT ALSO IN PENALTY PROCE EDINGS MADE NO EFFORT TO SUMMON HIM. THEREFORE, IT WAS A C ASE WHERE THERE WAS NO CIRCUMSTANCE TO LEAD TO A REASONABLE A ND POSITIVE INFERENCE THAT THE EXPLANATION THAT CASH CREDITS WE RE ARRANGED AS TEMPORARY LOANS WERE FALSE. THE FACTS AND CIRCUM STANCES WERE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT TH EY COULD HAVE BEEN SUNDRY LOANS IN SMALL AMOUNTS OBTAINED FROM DI FFERENT PARTIES. THEREFORE, THE IMPOSITION OF PENALTY WAS N OT JUSTIFIED. ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 10 HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F VS. JOINT COMMISSIONER OF INCOME TAX AND ANOTHER [2007] 291 I TR 519 SC HELD THAT IMPOSITION OF PENALTY IS NOT AUTOMATIC. IT IS A MATTER OF DISCRETION AND THE ASSESSING OFFICER HAS TO BE FAIR AND OBJECTIVE WHILE LEVYING THE PENALTY. THE ITAT, CHENNAI BENCH IN THE CASE OF A. RAJENDRAN & ORS. VS. ASSTT. COMMISSIONER OF INCOME TAX 134 TTJ 498 (CHEN NAI B) HELD AS UNDER :- THOUGH ADDITIONS MADE BY THE AO WERE SUSTAINED DIS BELIEVING THE ALLEGED GIFTS RECEIVED BY THE RESPECTIVE ASSESSEES ON THE BASIS OF PREPONDERANCE OF PROBABILITY, IT CANNOT BE SAID THA T THE AMOUNTS WERE CONCEALED INCOME OR THE EXPLANATIONS FURNISHED BY T HE ASSESSEES WERE NOT BONA FIDE AS THE DONOR HAD APPEARED AND CONFIRM ED THE GIFTS AND ALSO EXPLAINED THAT HE HAD MADE THE GIFTS ON ACCOUNT OF HIS CLOSE RELATIONSHIP WITH THE ASSESSEES AND, THEREFORE, PENALTY UNDER S. 271(1)(C) WAS NOT LEVIABLE. THE ITAT, DELHI BENCH IN THE CASE OF BHARTESH JAIN VS. INCOME TAX OFFICER 43 DTR 320 (DEL. E) HELD AS UNDER :- ASSESSEE HAVING PRODUCED CONFIRMATIONS FOR BOTH TH E ALLEGED LOANS, IT CANNOT BE SAID THAT THE EXPLANATION OF THE ASSES SEE WAS NOT BONA FIDE OR THAT MATERIAL FACTS WERE NOT DISCLOSED MERELY BECAU SE ADDITIONS UNDER S. 68 HAVE BEEN CONFIRMED FOR THE REASON THAT THE FIRS T CREDITOR DENIED THAT THE AMOUNT WAS GIVEN TO ASSESSEE AS A LOAN AND THER E WAS SERIOUS DOUBT ABOUT THE GENUINENESS OF THE SOURCE OF SOURCE OF SE COND LOAN AND, THEREFORE, EXPLN. 1 TO S. 271(1)(C) IS NOT APPLICAB LE AND PENALTY IS NOT LEVIABLE. ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 11 THE ITAT, DELHI BENCH IN THE CASE OF PUNEET SEHGAL & ORS. VS. INCOME TAX OFFICER 24 DTR 178 (DEL.) HELD AS UNDER :- ASSESSEES SURRENDERING THE AMOUNTS ALLEGEDLY RECEI VED AS GIFTS FROM ONE S AS THEY COULD NOT PRODUCE THE DONOR SINC E HE HAD DIED BEFORE ASSESSMENTS WERE REOPENED BUT HAVING FILED CONFIRMA TORY DOCUMENTS LIKE MEMORANDUM OF GIFT, AFFIDAVIT OF THE DONOR, COPY OF RETURN AND BALANCE SHEET OF THE DONOR AS WELL AS THE COPY OF THE RATIO N CARD OF THE DONOR, ASSESSEES EXPLANATION WAS BONA FIDE AND PENALTY UN DER S. 271(1)(C)COULD NOT BE IMPOSED BY INVOKING EXPLN. 1 THERETO. HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BALBIR SINGH 304 ITR 125 (P&H) HELD AS UNDER :- AMOUNT ALLEGEDLY HAVING BEEN RECEIVED BY ASSESSEES AS GIFT HAVING BEEN DISCLOSED BY ASSESSEES, THE SAME HAVING COME THROUGH BANKING CHANNELS AND THE IDENTITY OF DONOR HAVING B EEN ALSO ESTABLISHED, PENALTY UNDER S. 271(1)(C) WAS NOT IMPOSSIBLE EVEN THOUGH THE AMOUNT WAS NOT CONSIDERED AS GIFT. THE ITAT, DELHI BENCH IN THE CASE OF SMT. SANDHYA VERMA VS. INCOME TAX OFFICER 114 TTJ 933 (DEL G) HELD AS UN DER :- ASSESSEES EXPLANATION REGARDING GIFT BEING BONA F IDE, PENALTY UNDER S. 271(1)(C) COULD NOT BE IMPOSED IN RESPECT OF ADDITION TO INCOME. THE ITAT, CHANDIGARH BENCH IN THE CASE OF RONAQ RAM NAND LAL VS. INCOME TAX OFFICER 92 ITD 514 (CHD.) HELD AS UN DER :- ASSESSEE HAVING FURNISHED PRIMA FACIE EVIDENCE IN SUPPORT OF GENUINENESS OF CASH CREDITS AND CREDITWORTHINESS OF CREDITORS, THE ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 12 EXPLANATION OF THE ASSESSEE IS PLAUSIBLE AND DOES N OT ATTRACT PENALTY UNDER S. 271(1)(C), EXPLN. 8. CONSIDERING THE FACTS OF THE CASE, IN THE LIGHT OF THE EVIDENCES AND MATERIAL PRODUCE BEFORE THE AUTHORITIES BELOW AND T HAT THE DONOR CONFIRMED GIVING OF GIFT TO THE SON OF THE ASSESSEE AND THAT THE SON OF THE ASSESSEE HAS CONFIRMED GIVING OF LOAN TO THE ASSESS EE WOULD PROVE THAT ASSESSEE HAS BONAFIDELY EXPLAINED RECEIPT OF LOAN I N THE MATTER. THE EXPLANATION OF THE ASSESSEE IS SUBSTANTIATED THROUG H EVIDENCES AVAILABLE ON RECORD AND THE EXPLANATION OF THE ASSESSEE WAS N OT FOUND TO BE FALSE OR BOGUS. THE A.O. MERELY FOUND THE GIFT TO BE DOUBTFU L MAY NOT BE SUFFICIENT TO LEVY THE PENALTY IN THE MATTER. IT IS WELL SETTLED LAW THAT QUANTUM AND PENALTY PROCEEDINGS ARE INDEPENDENT AND ALTOGETHER DIFFERENT PROCEEDINGS. THE FINDING GIVEN IN THE QUA NTUM MAY HAVE PROBATIVE VALUE BUT IN THE CASE OF THE ASSESSEE, TH E ASSESSEE HAS BEEN ABLE TO EXPLAIN THAT HE HAS RECEIVED A GENUINE LOAN FROM HIS SON. THEREFORE, IN THE CIRCUMSTANCES EVEN IF QUANTUM ADDITION IS CONFI RMED, THE A.O. SHOULD HAVE EXERCISED DISCRETION IN FAVOUR OF THE ASSESSEE FOR NOT LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE. ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 13 9. WE MAY NOT FURTHER THAT THE A.O. IN THE PENALTY ORDER HAS RECORDED HIS SATISFACTION THAT THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF I NCOME IN RESPECT OF THE LOAN AMOUNT, THEREFORE, THE PENALTY IS LEVIABLE UND ER SECTION 271(1) (C) READ WITH EXPLANATION (1) TO THE ABOVE SECTION. FRO M SUCH FINDINGS RECORDED BY THE A.O. AND INFERENCE DRAWN, IT IS EVI DENT THAT ASSESSING OFFICER DID NOT GIVE CLEAR CUT FINDING IN THE PENAL TY ORDER, NOR THERE WAS ANY SUCH FINDINGS IN THE IMPUGNED ORDER AS TO WHETH ER THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY ASSESSEE. 10. FROM THE LANGUAGE OF SECTION 271(1) (C) OF THE ACT IT WAS INCUMBENT UPON THE ASSESSING OFFICER OR LEARNED CIT (A) TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF THE INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAVE BEEN FURNISHED BY THE ASSESSEE. IN THE ABSENCE OF S UCH CLEAR CUT FINDING, THE PENALTY ORDER PASSED BY THE A.O. WAS LIABLE TO BE SET ASIDE. THIS VIEW IS SUPPORTED BY THE JUDGMENT OF HONBLE GUJARAT HIG H COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX [2006] 282 ITR 642 (GUJ) . THE SAME VIEW IS ALSO TAKEN BY ITAT AGRA ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 14 BENCH, IN THE CASE OF SMT. SUSHMA VARSHNEY (SUPRA). ON THIS REASON ALONE THE PENALTY IS LIABLE TO BE CANCELLED IN THE MATTER. LEARNED D.R. HOWEVER, RELIED UPON THE DECISION IN THE CASE OF CI T VS. LALCHAND JIZATH RAM (SUPRA) WHICH WOULD NOT SUPPORT THE CASE OF THE REVENUE. 11. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT O F THE DECISIONS NOTED ABOVE AND THE FACT THAT ASSESSEE HAS OFFERED BONA-F IDE EXPLANATION BEFORE A.O. AND EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FALSE, WE ARE OF THE VIEW, LEVY OF THE PENALTY IN THIS CASE WAS NOT JUSTIFIED. WE HAVE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 12. IN THE RESULT, ITA NO. 107 OF 2011 IS ALLOWED. ITA NO. 195/AGRA/ 2011 (RENU AGARWAL) 13. IN THIS CASE ALSO ASSESSEE CHALLENGED THE LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 15 14. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING T HE ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT ASSESSEE HAS SHOWN T WO GIFTS OF RS.2 LAKHS EACH FROM SHRI JAI SINGH YADAV AND SHRI GAJANAND GO YAL RESPECTIVELY, TOTALING TO RS.4 LAKHS. THE DONOR COULD NOT BE PROD UCED AT THE ASSESSMENT STAGE. THE CREDITWORTHINESS OF THE DONOR WAS NOT PR OVED. THERE WAS NO RELATIONSHIP BETWEEN THE DONOR AND THE DONEE. THE A .O. ACCORDINGLY MADE ADDITION OF RS.4 LAKHS ON ACCOUNT OF UNEXPLAIN ED GIFT. LEARNED CIT(A) CONFIRMED THE ADDITION. A.O. INITIATED PENAL TY PROCEEDING UNDER SECTION 271(1) (C) FOR CONCEALMENT OF INCOME AND FU RNISHING OF INACCURATE PARTICULARS OF INCOME ON FINDING THAT GI FT OF RS.4 LAKHS SHOWN BY THE ASSESSEE WAS NOT GENUINE. THE A.O. VIDE SEPA RATE ORDER IMPOSED 100% PENALTY WHICH IS CONFIRMED BY THE LEARNED CIT( APPEALS). 15. LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT FAC TS ARE SAME AS DISCUSSED IN OTHER CASE. ONE OF THE DONOR SHRI JAI SINGH YADAV APPEARED AT THE APPELLATE STAGE AND STATEMENT WAS RECORDED A ND HE HAS CONFIRMED GIVING OF GIFT TO THE ASSESSEE. ALL EVIDENCES OF GE NUINE GIFT WERE FILED AND GIFT WAS THROUGH BANKING CHANNEL. OTHER DONOR GAJAN AND GOYAL SUFFERED INJURIES DURING BOMB BLAST IN DELHI WAS NOT AVAILAB LE. HE SUBMITTED THAT ASSESSEE PRODUCED ALL POSSIBLE EVIDENCE AND APPEAL OF THE ASSESSEE IS ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 16 PENDING BEFORE HONBLE HIGH COURT ON QUANTUM. THE A SSESSEE PRODUCED CONFIRMATION OF GIFT, GIFT DEED, PAN CARD, RATION C ARD, RETURN OF WEALTH TAX AND CAPITAL ACCOUNT OF THE DONOR, THEREFORE, LE VY OF PENALTY IN THIS CASE IS ALSO NOT JUSTIFIED. APART FROM ABOVE SUBMIS SION, HE HAS SUBMITTED THAT WHEN THE MATTER CAME UP BEFORE ITAT, AGRA BENC H ON QUANTUM APPEALS, THE HONBLE JUDICIAL MEMBER DECIDED THE AP PEAL IN FAVOUR OF THE ASSESSEE BY HOLDING THAT SINCE THE ASSESSEE RECEIVE D THE GIFT AMOUNT IN HER BANK PASS BOOK IN INDIVIDUAL CAPACITY AND DID NOT M AINTAIN BOOKS OF ACCOUNT, THEREFORE, NO ADDITION UNDER SECTION 68 OF THE ACT CAN BE MADE. HOWEVER, HONBLE ACCOUNTANT MEMBER DIFFERED WITH SU CH A VIEW AND DISMISSED THE APPEAL OF THE ASSESSEE. THE MATTER WE NT TO THIRD MEMBER (VICE PRESIDENT) WHO HAS CONFIRMED THE VIEW OF THE LEARNED ACCOUNTANT MEMBER. COPIES OF THE ORDER IS PLACED ON RECORD. LE ARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE APPEAL OF T HE ASSESSEE WAS MERELY DECIDED ON QUESTION OF LAW WHETHER SECTION 68 IS AP PLICABLE. IN SUCH CIRCUMSTANCES, WHEN ASSESSEE DID NOT MAINTAIN ANY B OOKS OF ACCOUNT AND THE APPEAL HAS BEEN DECIDED ON MERIT AND APPEAL OF THE ASSESSEE IS PENDING BEFORE HONBLE HIGH COURT, WOULD CLEARLY DI SCLOSE THAT LEVY OF PENALTY IS NOT JUSTIFIED IN THE MATTER. ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 17 16. ON THE OTHER HAND, LEARNED A.R. RELIED UPON ORD ERS OF AUTHORITIES BELOW. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND MAT ERIAL AVAILABLE ON RECORD. THE ISSUE OF LEVY OF PENALTY IS IDENTICAL AS HAS BEEN CONSIDERED IN CASE OF OTHER ASSESSEE SARV PRAKASH KAPOOR ABOVE. T HEREFORE, FOLLOWING DECISIONS IN THE CASE OF SARV PRAKASH KAPOOR (SUPRA ) THE PENALTY IS NOT JUSTIFIED IN THE MATTER. 18. APART FROM ABOVE, IN THIS CASE, THERE IS NO FIN DING OF FACT RECORDED BY THE TRIBUNAL WITH REGARD GENUINENESS OF THE GIFT IN THE MATTER BECAUSE THE MATTER WAS DECIDED ONLY ON QUESTION OF LAW WITH REGARD TO APPLICABILITY THE PROVISION OF SECTION 68 OF THE AC T IN THE MATTER WHEN ASSESSEE DID NOT MAINTAIN BOOKS ACCOUNT, THEREFORE, FACTS OF THIS CASE ARE IN BETTER FOOTING AS HAS BEEN CONSIDERED IN THE CAS E OF SARV PRAKASH KAPOOR FOR CANCELING THE PENALTY. 19. CONSIDERING THE ABOVE DISCUSSION AND FOLLOWING THE REASON FOR DECISION IN THE CASE OF SARV PRAKASH KAPOOR (SUPRA) , WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. ITA NO.107/AGRA/2011 A.Y. 2001-02 ITA NO.195/AGRA/2011 A.Y.2003-04 18 20. IN THE RESULT, ITA NO. 195 OF 2011 IS ALSO ALLO WED. 21. NO OTHER POINT IS ARGUED OR PRESS. 22-. IN THE RESULT, BOTH THE APPEALS OF DIFFERENT A SSESSEES ARE ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCO ME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY