IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.205/JP/2011 ASSESSMENT YEAR : 2001-2002 SH. KAMAL KISHORE BAID, VS. I.T.O. WARD-5(3), JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJEEV SOGANI RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING: 03.10.2011 DATE OF PRONOUNCEMENT : 07.10.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER O F LD. CIT (A) DATED 26.07.2010. THE APPEAL HAS BEEN FILED BELATEDLY AND AN APPLICAT ION HAS BEEN FILED FOR CONDONATION OF DELAY. IN THE APPLICATION FOR CONDONATION OF DELAY IT HAS BEEN SUBMITTED AS UNDER: MOST HUMBLY SUBMITTED THAT PENALTY ORDER FOR ASSESS MENT YEAR 2001-02 U/S 271(1)(C) WAS PASSED VIDE ORDER DATED 23.03.2009. A GGRIEVED BY THE ORDER I FILED AN APPEAL BEFORE THE LD. CIT (A)-II, JAIPUR WHICH WAS DISPOSED OFF VIDE ORDER DATED 26.07.2010 IN APPEAL NO.35/2009-10 IN WHICH PENALTY AMOUNTING TO RS.52,650/- WAS CONFIRMED. 2. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE OF C ONDONATION OF DELAY. IT IS TRUE THAT IF A CONSCIOUS DECISION IS TAKEN IN NOT FILING THE APPEAL THEN DELAY IS NOT TO BE CONDONED. IN THE APPLICATION IT IS MENTIONED THAT THE ASSESSE E DID NOT FILE APPEAL AFTER CONSIDERING THE FINANCIAL IMPLICATION AND TIME COST AND NEVER THOUG HT OF NOT FILING APPEAL WILL RESULT INTO ADVERSE CONSEQUENCES. THE REVENUE HAS FILED A PROSE CUTION CASE AGAINST THE ASSESSEE AND THERE HAS BEEN ADVERSE IMPACT ON THE ASSESSEE BECAU SE OF NOT FILING OF APPEAL AGAINST PENALTY ORDER. WE THEREFORE FEEL THAT THERE IS A SU FFICIENT CAUSE WITH THE ASSESSEE IN NOT FILING THE APPEAL IN TIME. IN THE SHOW CAUSE NOTICE , OF LAUNCHING PROSECUTION, THE REVENUE HAS TAKEN COGNIZANCE OF THE FACT THAT ASSESSEE HAS NOT FILED APPEAL AGAINST PENALTY ORDER. THE HONBLE APEX COURT IN THE CASE OF IMPROVEMENT T RUST V UJAGAR SINGH (ITAT ON LINE) HAS HELD THAT DELAY SHOULD NOT BE CONDONED IF THE C ONDUCT, BEHAVIOUR AND ATTITUDE OF APPELLANT SHOWS THAT IT IS ABSOLUTELY CALLOUS AND N EGLIGENT IN PROSECUTING THE MATTER JUSTICE CAN BE DONE IF MATTER IS FOUGHT ON MERITS A ND NOT AN TECHNALITIES. AN ATTEMPT SHOULD BE MADE TO ALLOW THE MATTER TO BE CONTESTED ON MERITS AND NOT ON TECHNALITIES. DELAY OF 43 YEARS WAS CONDONED IN THE CASE OF ALL I NDIA PRIMARY TEACHERS FEDERATION V DIT (EXEMPTION) 93 TTJ 155 (DEL) ON THE GROUND OF I GNORANCE OF NUANCES OF INCOME TAX LAW AND BONAFIDE BELIEF THAT PREDECESSORS IN OFFICE HAD DULY COMPLIED WITH ALL STATUTORY REQUIREMENTS. IN THAT CASE NOTICE U/S 148 WAS ISSUE D AND IT WAS FOUND THAT APPLICATION FOR REGISTRATION U/S 12A WAS NOT FILED. IN THE INSTANT CASE, THE ASSESSEE WAS NOT AWARE THAT HIS ACTION OF NOT FILING OF APPEAL WILL RESULT INTO A L ONGER LITIGATION AS AGAINST HIS BONAFIDE BELIEF THAT PAYMENT OF PENALTY & TAX WILL BE SUFFIC IENT FOR THE END OF LITIGATION. THE LITIGATION NOW MAY RESULT INTO A LONGER LITIGATION AND MAY RESULT INTO CRIMINAL CULPABILITY. 3. IN THE AFFIDAVIT, THE ASSESSEE HAS ALSO GIVEN TH E FOLLOWING REASONS WHICH PREVENTED HIM IN NOT FILING THE APPEAL IN TIME. (I) DURING THE RELEVANT PERIOD, THE ASSESSEE WAS ST RUGGLING WITH LABOUR UNREST IN HIS FACTORY M/S. HULASI METALS PVT. LTD. (II) DUE TO LABOUR UNREST, THE ASSESSEE WAS DELISTE D FROM THE VENDOR LIST BY MAJOR CUSTOMER. (III) THE LABOUR UNREST WAS DIFFICULT AND IN THE PR OCESS OF TACKLING THAT ISSUE, THE ASSESSEE DID NOT ATTEND INCOME-TAX MATTERS. 4. AFTER CONSIDERING THE CONTENTIONS GIVEN IN THE A FFIDAVIT AND LOOKING TO THE FACTS OF THE CASE. WE FEEL THAT DELAY IN FILING THE APPEAL I S TO BE CONDONED. 5. SEARCH AND SEIZURE OPERATION WAS CARRIED IN B.C. PUROHIT GROUP IN APRIL 2005 AND DURING THE COURSE OF SEARCH IT WAS NOTICED THAT THE GROUP WAS INDULGING IN PROVIDING ENTRIES. THE ASSESSEE HAS SHOWN GIFT OF RS.1,50,000 /- FROM SH. KRIPA SHANKAR. NOTICE U/S 148 WAS ISSUED AND THE ASSESSEE IN RESPONSE TO NOTI CE U/S 148 INCLUDED THE GIFTED AMOUNT AS INCOME. THE INCOME SO DECLARED WAS ACCEPTED AND PENALTY PROCEEDINGS U/S 271(1)(C) WERE UNINITIATED. BEFORE THE A.O. THE ASSESSEE STAT ED THAT HE HAS PAID THE TAX. IT HAS NOT BEEN ESTABLISHED THAT ASSESSEE HAS CONCEALED THE PA RTICULARS OF INCOME. THERE IS NO GUILTY MIND OR WILLFUL NEGLAT ON THE PART OF THE ASSESSEE HOWEVER CONTENTION OF THE ASSESSEE WAS REJECTED. 6. THE LD. CIT (A) CONFIRMED THE PENALTY OF RS.52,6 50/- AFTER OBSERVING AS UNDER: I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS T AKEN BY SH. BHANDARI QUITE CAREFULLY. IT IS A FACT THAT IN THE ORIGINAL RETURN OF INCOME FILED THE APPELLANT HAS NOT OFFERED RS.1,50,000/- AS INCOME A ND WITHIN THE PERMISSIBLE TIME EVEN THE REVISED RETURN OF INCOME WAS NOT FILED. THE DEPARTMENT THEREAFTER, HAS CARRIED OUT SEARCH ACTIO N IN THE CASE OF B.C. PUROHIT & GROUP WHO WAS FOUND TO HAVE ENGAGED IN PR OVIDING BOGUS GIFT/LOAN ENTRY TO VARIOUS PERSONS AND THE APPELLAN T WAS ALSO FOUND ONE OF SUCH PERSON ACCEPTING SUCH BOGUS ENTRY FOR LOAN/GIF T. WITH THE SPECIFIC INFORMATION A NOTICE U/S 148 WAS ISSUED AND IN RESP ONSE TO THAT THE APPELLANT HAD OFFERED SUCH AMOUNT OF LOAN/GIFT AS A DDITIONAL INCOME AND UNDER THESE CIRCUMSTANCES IT CANNOT BE SAID THAT IT WAS A VOLUNTARY OFFERING OF THE INCOME AND ALL THE CASES RELIED UPO N BY SH. BHANDARI ARE DISTINGUISHED ON FACTS AND CIRCUMSTANCES AND UNDER THESE FACTS IN MY CONSIDERED VIEW THE AO WAS JUSTIFIED IN IMPOSING TH E SAID PENALTY OF RS.52,650/- U/S. 271(1)(C) OF I.T. ACT. ON THIS ISS UE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V/S MOHD. MOHTRAM FAR OOQI 259 ITR 132 HAS HELD THAT IN VIEW OF EXPLANATION FOR DEEMING CO NCEALMENT THE ASSESSEE HAS A DUTY TO OFFER EXPLANATION BUT WHERE THE EXPLA NATION OFFERED IS FOUND TO BE UNRELIABLE, PENALTY BECOME EXIGIBLE. HONBLE HIGH COURT HAS FURTHER OBSERVED THAT THOUGH PENALTY IS NOT AUTOMATIC BUT I T IS NOT NECESSARY THAT FURTHER MATERIAL SHOULD BE BROUGHT ON RECORD FOR PE NALTY PROCEEDINGS WHEN THERE IS ALREADY MATERIAL ON RECORD JUSTIFYING THE PENALTY. UNDER THESE SPECIFIC FACTS AND CIRCUMSTANCES OF THE CASE IN MY CONSIDERED VIEW THE ASSESSING OFFICER WAS JUSTIFIED IN IMPOSING SAI D PENALTY OF RS.52,650/- U/S 271(1)(C) OF I.T. ACT WHICH IS HEREBY CONCERNED BY REJECTING RELEVANT GROUND OF APPEAL. 7. BEFORE US THE LD. A/R HAS FILED THE FOLLOWING SU BMISSIONS: THERE IS NO SPECIFIC FINDING LEADING TO THE CONCLUS ION THAT THE LOAN AMOUNT REPRESENTED UN-ACCOUNTED MONEY OF THE ASSESSEE. TH E ASSESSEE WAS NEVER CONFRONTED WITH ANY SUCH EVIDENCE. NOR THE LENDER H AS EVER GIVEN ANY STATEMENT MENTIONING THAT HE HAS RECEIVED CASH FROM THE ASSESSEE FOR GIVING THE CHEQUE TO HIM. SIMILARLY, THERE IS NO FI NDING THAT CASH WAS DEPOSITED BY SHRI K.S. SHARMA IN HIS BANK ACCOUNT F OR ISSUING THE CHEQUE. THE TAX AUTHORITIES COULD HAVE VERY WELL REACHED TH E LENDER SHRI K.S. SHARMA THROUGH THE DETAILS OF HIS BANK STATEMENT WH ICH THEY DELIBERATELY AVOIDED. IT IS MOST HUMBLY SUBMITTED THAT IN SOME CASES A PA RTICULAR PERSON MIGHT HAVE INDULGED IN PROVIDING FALSE ENTRIES WHEREAS IN SOME OTHER CASES HE MIGHT HAVE BEEN INVOLVED IN GENUINE LOAN. UNLESS TH ERE ARE SPECIFIC FINDINGS FOR THE PARTICULAR SPECIFIC TRANSACTION TH E AMOUNT, EVEN IF SURRENDERED, CANNOT BE CONCLUDED TO BE CONCEALED IN COME AND PENALTY BE IMPOSED. RELIANCE IS PLACED ON THE JUDGMENT OF HON BLE SUPREME COURT IN INCOME-TAX OFFICER V. LAKHMANI MEWAL DAS [1976]103 ITR 0437(SC) IN WHICH THE SUPREME COURT OBSERVED THAT THERE WAS NOT HING TO SHOW THAT THE CONFESSION RELATED TO ANY LOAN ADVANCED TO THE ASSE SSEE OR EVEN THE PERIOD DURING WHICH NAME, AND NOT LOAN, WAS LENT. IT WAS F URTHER OBSERVED THAT THERE WAS ALSO NO MATERIAL TO SHOW THAT THE CONFESS ION MADE WAS IN RELATION TO THE PERIOD WHICH WAS THE SUBJECT-MATTER OF THE ASSESSMENT SOUGHT TO BE REOPENED. IT WAS, UNDER THESE CIRCUMST ANCES, THAT THE INFORMATION RECEIVED IN ITO VS. LAKHMANI MEWAL DAS (SUPRA) WAS HELD TO BE VAGUE, INDEFINITE, REMOTE AND FAR-FETCHED. WE REPRODUCE BELOW FROM HEAD NOTES : HELD(II) THAT SINCE THERE WAS NOTHING TO SHOW THAT THE CONFESSION OF M.K. REL ATED TO A LOAN TO THE ASSESSEE, MUCH LESS TO THE LOAN WHICH WAS SHOWN TO HAVE BEEN ADVANCED BY THAT PERSON TO THE RESPONDENT, IN THE FIRST GROU ND THE LIVE LINK OR CLOSE NEXUS WHICH SHOULD BE THERE BETWEEN THE MATERIAL BE FORE THE INCOME-TAX OFFICER AND THE BELIEF WHICH HE WAS TO FORM WAS MIS SING OR IN ANY EVENT TOO TENUOUS TO PROVIDE LEGALLY SOUND BASIS FOR REOP ENING THE ASSESSMENT. FROM THE BODY OF THE ORDER: WE MAY NOW DEAL WITH THE FIRST GROUND MENTIONED IN THE REPORT OF THE INCOME-TAX OFFICER TO THE COMMISSIONER OF INCOME-TA X. THIS GROUND RELATES TO MOHANSINGH KANAYALAL, AGAINST WHOSE NAME THERE WAS AN ENTRY ABOUT THE PAYMENT OF RS. 74, ANNAS 3 AS INTER EST IN THE BOOKS OF THE ASSESSEE, HAVING MADE A CONFESSION THAT HE WAS DOIN G ONLY NAME- LENDING. THERE IS NOTHING TO SHOW THAT THE ABOVE CO NFESSION RELATED TO A LOAN TO THE ASSESSEE AND NOT TO SOMEONE ELSE, MUCH LESS TO THE LOAN OF RS. 2,500 WHICH WAS SHOWN TO HAVE BEEN ADVANCED BY THAT PERSON TO THE ASSESSEE-RESPONDENT.THERE IS ALSO NO INDICATION AS TO WHEN THAT CONFESSION WAS MADE AND WHETHER IT RELATES TO THE P ERIOD FROM APRIL 1, 1957, TO MARCH 31, 1958, WHICH IS THE SUBJECT-MATTE R OF THE ASSESSMENT SOUGHT TO BE REOPENED. THE REPORT WAS MADE ON FEBRU ARY 13, 1967. IN THE ABSENCE OF THE DATE OF THE ALLEGED CONFESSION, IT WOULD NOT BE UNREASONABLE TO ASSUME THAT THE CONFESSION WAS MADE A FEW WEEKS OR MONTHS BEFORE THE REPORT. TO INFER FROM THAT CONFES SION THAT IT RELATES TO THE PERIOD FROM APRIL 1, 1957, TO MARCH 31, 1958, A ND THAT IT PERTAINS TO THE LOAN SHOWN TO HAVE BEEN ADVANCED TO THE ASSESSE E, IN OUR OPINION, WOULD BE RATHER FAR-FETCHED. KIND ATTENTION OF THE HONBLE BENCH IS DRAWN TOWARD S THE CASE OF SHRI ANIL LODHA IN ITA NO. 650/JP/08 WHEREIN THE HONBLE BENCH WAS PLEASED TO ACCEPT LOANS AMOUNTING TO RS 8,50,000/- WHICH WERE ALSO RELATED TO B.C PUROHIT GROUP AS GENUINE LOANS. IN P ARTICULAR, LOAN FROM SHRI SAGARMAL PUROHIT. THIS CONFIRMS THAT NOT NEC ESSARILY ALL THE LOANS OR THE TRANSACTIONS OF B.C. PUROHIT GROUP WERE ENTR Y TRANSACTIONS BUT MANY OF THEM WERE GENUINE LOAN TRANSACTIONS (PAPER BOOK PAGES 4,8,9 ) THE LOWER AUTHORITIES IMPOSED THE PENALTY BASED ON THE GENERAL OBSERVATIONS IN THE SEARCH PROCEEDINGS AGAINST B.C. PUROHIT GROUP. EVEN IT IS NOT CLEAR WHETHER SHRI K.S. SHARMA IS ANY WAY CONNECTED WITH SHRI B.C. PUROHIT OR NOT. HONBLE DELHI HIGH COURT IN A RECENT DECISION IN CA SE OF SARTHAK SECURITIES CO. P. LTD. VS. INCOME-TAX OFFICER. (201 0)329 ITR 110 HAS HELD THAT GENERAL OBSERVATION OF THE INVESTIGATION WING CANNOT BE A REASON FOR RE-OPENING OF A CASE. IN THE PRESENT CASE PENAL TY IS IMPOSED BASED ON GENERAL OBSERVATION OF THE INVESTIGATION WING. WHEN A CASE CANNOT BE RE- OPENED ON THE BASIS OF SUCH GENERAL OBSERVATION, DE FINITELY SUCH GENERAL OBSERVATION CANNOT BE MADE A BASIS FOR IMPOSING THE PENALTY. FURTHER RELIANCE IS PLACED ON THE JUDGMENT OF THE H ONBLE ITAT DELHI I IN THE CASE OF PUNEET SEHGAL & ORS. VS. INCOME TAX OFFICER (2009) 24 DTR 178 WHEREIN ALSO PENALTY WAS IMPOSED ON THE BASIS OF S OME REPORT FROM DIRECTOR OF IT (INVESTIGATION) MEERUT. THE HON BLE ITAT WHILE ALLOWING THE APPEAL OF THE ASSESSEE HELD AS UNDER A T PARA 7 OF THE ORDER:- DOUBTS HAVE BEEN RAISED BY THE REVENUE ON THE BASI S OF REPORT OF DIRECTOR OF IT (INV.) MEERUT BUT ON THE BASIS OF DOUBT ONLY, IT CA NNOT BE CONCLUDED THAT THE GIFTS IN QUESTION ARE BOGUS AND HENCE THE CONCEALMENT ITS ELF HAS NOT BEEN ESTABLISHED BY THE REVENUE AND THEREFORE, THIS QUESTION IS NOT THERE IN THE PRESENT CASES TO WHETHER THE CONCEALMENT IS WILLFUL OR NOT AND THERE FORE, THIS JUDGMENT OF HONBLE APEX COURT IS NOT RELEVANT FOR DECIDING THIS ISSUE IN QUESTION IN ALL THESE PRESENT CASES. THE CASUALNESS OF THE OBSERVATION CAN BE GAUGED FRO M THE FACT THAT THE LD. A.O. WAS NOT CLEAR WHETHER IT WAS A TRANSACTION OF GIFT OR A LOAN. THIS WAS A LOAN TAKEN WHEREAS IN THE ASSESSMENT ORDER THE LD . A.O. HAS GIVEN A FINDING REGARDING THE TRANSACTION BEING GIFT. SUCH CASUAL FINDING CANNOT FASTEN ANY PENAL LIABILITY ON THE ASSESSEE. THE FIN DING HAS TO BE SPECIFIC AND CATEGORICAL RATHER THAN CASUAL AND GENERAL. RELIANCE IS FURTHER PLACED ON THE JUDGMENT OF THE H ONBLE JAIPUR IN THE CASE OF SMT. ARCHANA JAIN VS. CIT, CIRCLE-6 JAIPUR (ITA NO. 701/JP/2008(COPY ENCLOSED) ASSTT: YEAR; 2003-04 WHEREIN THE PENALTY IMPOSED ON SURRENDER AMOUNT WAS QUASHED BY ALLOWING THE APPEAL OF THE ASSESSEE. THE TRANSACTIONS WERE RELATED TO B.C. PUR OHIT GROUP. RELIANCE IS PLACED ON THE JUDGMENT OF THE PUNJAB AN D HARYANA HIGH COURT IN THE CASE OF: CIT V. RAJIV GARG [2009] 313 ITR 256 (P&H) THE ASSESSEE HAD DISCLOSED LONG-TERM CAPITAL GAINS ON SALE OF SHARES AMOUNTING TO ABOUT RS. 30 LAKHS. MEANWHILE, THE INVESTIGATION WING OF THE DEPARTMENT FOUND ON ENQUIRY THAT THE BROKER HAD ACCOMMODATED THE ASS ESSEE WITH BOGUS ENTRIES RELATING TO PURCHASES AND SALES OF SHARES, SO THAT THERE COULD HAVE BEEN NO LONG- TERM CAPITAL GAINS ASSESSABLE AT THE LOWER RATE OF 20 PER CENT. NOTICE UNDER SECTION 148 WAS ISSUED AND THE ASSESSEE FILED A RET URN SHOWING THE ENTIRE AMOUNT OF RS. 33 LAKHS AMOUNTING TO RECEIPTS AS BUSINESS I NCOME IN THE REVISED RETURN. THE QUESTION AROSE WHETHER PENALTY EXIGIBLE IN RESP ECT OF INCOME OFFERED IN THE ORIGINAL RETURN AS CAPITAL GAINS AT THE RATE OF 20 PER CENT ON 30 LAKHS AS AGAINST REVISED RETURN AT THE NORMAL RATE ON 33 LAKHS. THE TRIBUNAL RELYING UPON THE DECISION OF THE APEX COURT IN CIT V. SURESH CHANDRA MITTAL [2001] 251 ITR 9 HELD THAT IT WAS FOR THE REVENUE TO DISCHARGE ITS B URDEN, THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS. SUCH BURDEN, IT WAS D ECIDED, BY THE TRIBUNAL WAS NOT DISCHARGED BY THE REVENUE. IT WAS THIS VIEW, WHICH WAS ENDORSED BY THE HIGH COURT IN CIT V. RAJIV GARG [2009] 313 ITR 256 (P&H) IN A COMMON JUDGMENT FOR MEMBERS OF THE GARG FAMILY ON SIMILAR FACTS. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS WHERE IN IT IS HELD THAT A VOLUNTARY SURRENDER OF INCOME CANNOT BE TERMED AS C ONCEALMENT AND THEREFORE NO PENALTY CAN BE IMPOSED : CIT VS. S.V. ELECTRICALS PVT. LTD. (2205) 274 ITR 3 34 CIT VS. SURAJ BHAN (2007) 294 ITR 481 DR. CHANDRAKANT VS. ACIT 32 TAX WORLD 99 (JP) ITO VS. CHET RAM GOYAL 32 TAX WORLD 77 (JP) VERMA TRACTORS VS. ACIT 36 TAX WORLD 226 (JP) THE ASSESSEE HAD OFFERED THE EXPLANATION THAT THE T RANSACTION WAS OF LOAN AND INTEREST WAS ALSO PAID. THIS EXPLANATION WAS NO T FOUND FALSE NOR THE BONA FIDES OF THE SAME HAVE BEEN OR COULD BE DOUBTE D. THUS EXPLANATION 1 TO SECTION 271(1)(C) IS NOT ATTRACTED. RELIANCE IS PLACED ON JUDGMENT OF HONBLE ITAT, PUNE A BENCH IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (200 9) 119 ITD 153 . RELEVANT PORTION OF THE ORDER APPEARING AT PARA 68 OF THE SAID ORDER IS REPRODUCED BELOW:- 68. IN ANY EVENT, WHEN AN EXPLANATION IS OFFERED B Y THE ASSESSEE IN DISCHARGE OF THE ONUS CAST UPON HIM BY EXPL. 1 TO S.271(1)(C) , IT IS NOT FOR THE AO TO PONDER OVER WHAT SHOULD HAVE HAPPENED IN IDEAL CIRC UMSTANCES, AND REJECT THE EXPLANATION BECAUSE WHAT HAS ACTUALLY HAPPENED IS L ESS THAN SUCH AN IMAGINARY IDEAL SITUATION; HE IS TO CONSIDER THE EX PLANATION OBJECTIVELY AND UNLESS HE FINDS THE SAME AGAINST THE HUMAN PROBABIL ITIES OR UNLESS THERE ARE ANY REAL INCONSISTENCIES OR FACTUAL ERRORS IN SUCH AN EXPLANATION, THE AO OUGHT TO ACCEPT THE SAME. IT CANNOT ALWAYS BE FEASI BLE TO PROVE THE CLAIM OF BONA FIDE TO THE HILT, NOR IN OUR CONSIDERED VIEW, THE ASSESSEE CAN BE EXPECTED TO DO SO. WHETHER OR NOT A PERSON HAS ACTED BONA FI DE REFLECTS THE STATE OF HIS MIND IN RESPECT OF HIS CONDUCT, AND, THEREFORE, THE ASSESSEE HAS HIS INHERENT LIMITATIONS IN ESTABLISHING THIS ASPECT OF THE MANN ER. ALL THAT THE ASSESSEE CAN DO IS TO EXPLAIN THE CIRCUMSTANCES IN WHICH HE HAS ACTED IN A PARTICULAR MANNER AND SET OUT THE RELATED FACTS. THE EXPLANATI ON FOR BONA FIDES, AT THE COST OF REPETITION, NEEDS TO BE CONSIDERED IN A FAI R AND OBJECTIVE MANNER AND IN THE LIGHT OF HUMAN PROBABILITIES. AS LONG AS THE EXPLANATION GIVEN BY THE ASSESSEE IS IN THE LIGHT OF THE HUMAN PROBABILITIES , THERE ARE NO FACTUAL ERRORS OR INCONSISTENCIES, AND IT IS SUPPORTED BY REASONAB LE SUPPORTING EVIDENCES REGARDING FACTUAL ELEMENTS EMBEDDED THEREIN, IF ANY , THE BONA FIDES SHOULD BE TAKEN AS PROVED. THE ASSESSEES EXPLANATION REGARDI NG BONA FIDES OF THE CLAIM DOES NOT SUFFER FROM ANY APPARENT CONSISTENCIES OR FACTUAL ERRORS AND IT IS QUITE IN TUNE WITH THE HUMAN PROBABILITIES. THERE I S NO GOOD REASON TO REJECT THE SAME AS UNACCEPTABLE FOR THE PURPOSE OF MAKING OF THE CLAIM OF DEDUCTION BEING COVERED BY THE DEEMING FICTION UNDER EXPL. 1 TO S. 271(1)(C). LD. CIT (A) HAS CONFIRMED THE PENALTY BY PLACING RE LIANCE ON THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MOHD. MOHTRAM FAROOQI 259 ITR 132. THE FACTS OF THE CASE ARE TOTALLY DIFFERENT FROM T HE FACTS OF THE PRESENT CASE. IN THE CASE BEFORE HONBLE RAJ ASTHAN HIGH COURT THE ASSESSEE HAD SURRENDERED THE INCOME AFTER THE CASH WAS SEIZED FROM HIS POSSESSION. THERE IS NO SUCH SEIZURE FROM THE ASSES SEE NOR THERE ANY EVIDENCES OF THE INCOME BELONGING TO THE ASSESSEE. IN THE CASE BEFORE THE HONBLE RAJASTHAN HIGH COURT, RELIED UPON BY THE LD . CIT (A), THE ASSESSEE IN THAT CASE COULD NOT OFFER PROPER EXPLANATION AND WHATEVER EXPLANATION WAS FURNISHED WAS FOUND TO BE FALSE. WHEREAS IN THE PRE SENT CASE THE ASSESSEE EXPLAINED THAT IT IS A LOAN. THE LOAN IS THROUGH AC COUNT PAYEE CHEQUE. INTEREST HAS BEEN PAID ON THE SAID LOAN THUS THE EXPLANATION IS BEING OFFERED AND THE EXPLANATION HAS NOT BEEN FOUND FALSE. IT IS A DIFFE RENT MATTER THAT TO AVOID LITIGATION AND TO BUY PEACE OF MIND, THE ASSESSEE A S A PRUDENT BUSINESSMAN SURRENDERED THE AMOUNT. LD. CIT (A) HAS ALTOGETHER IGNORED THE BASIC FACTS OF THE CASE AND HAS MISPLACED HIS RELIANCE ON THE JUDG MENT ON MOHD. FAROOQI (SUPRA). IT IS A TRITE LAW THAT A JUDGMENT HAS TO BE READ IN THE CONTEXT OF A PARTICULAR CASE. A JUDGMENT CANNOT BE APPLIED IN A MECHANICAL MANNER. A DECISION IS A PRECEDENT ON ITS OWN FACTS. IN STATE OF ORISSA V. MD. ILLIYAS, AIR 2006 SC 258 , THE SUPREME COURT EXPLAINED THIS PRINCIPLE IN THE FOLLOWING WORDS: .RELIANCE ON THE DECISION WITHOUT LOOKING INTO THE FACTUAL BACKGROUND OF THE CASE BEFORE IT, IS CLEARLY IMPERM ISSIBLE. A DECISION IS A PRECEDENT ON ITS OWN FACTS. EACH CASE PRESENTS ITS OWN FEATURES. THUS THE DECISION RELIED UPON BY LD. CIT(A) IS DIST INGUISHED AND NOT APPLICABLE IN THE SET OF FACTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE A HUMBLE PRAYER IS MADE THAT T HE PENALTY IMPOSED MAY PLEASE BE QUASHED. 8. ON THE OTHER HAND THE LD D/R SUBMITTED THAT THE ASSESSEE HIMSELF SURRENDERED THE GIFT BY SHOWING IT AS INCOME. THIS IS SUFFICIENT TO ESTABLISH THAT THE SO CALLED GIFT WAS NON GENUINE. THE ASSESSEE HAS NOT FILED ANY CONFIRMATIO N OF THE DONOR AND NO EFFORT HAS BEEN MADE TO ESTABLISH THE GENUINE US OF GIFT. 9. WE HAVE HEARD BOTH THE PARTIES. THE INCOME RETUR NED HAS BEEN ACCEPTED. IT IS ALLEGED IN PUROHIT GROUP THAT IT WAS PROVIDING ENTR IES AFTER CHARGING COMMISSION. NO ADDITION HAS BEEN MADE FOR COMMISSION. IN CASE THE GIFT WAS STAGE MANAGED THEN EXPENDITURE INCURRED FOR OBTAINING SUCH GIFT WAS AL SO REQUIRED TO BE ADDED. THE ASSESSEE IN THE STATEMENT OF FACTS GIVEN BEFORE THE LD. CIT (A), IT WAS STATED THAT THE AMOUNT SURRENDERED WAS A LOAN AND NOT A GIFT. IT WILL BE U SEFUL TO REPRODUCE THE STATEMENT OF FACTS GIVEN BEFORE THE LD. CIT (A). THE REVISED RETURN WAS SUBMITTED FOR RS.5,91,570/- I.E. INCREASING THE ORIGINAL INCOME BY RS.1,50,000/- BEING LOAN RECEIVE D FROM A LENDER CONFIRMATION OF WHICH COULD NOT BE AVAILED BY ASSES SEE DUE TO LAPSE OF SUCH LARGE PERIOD OF TIME. AS THE APPELLANT WAS NOT IN A POSITION TO GET THE CONFIRMATION OF THE PARTY FROM WHOM THE LOANS WAS T AKEN THEREFORE IN GOOD FAITH AND TO BUY MENTAL PEACE THE ASSESSEE OFF ERED SUCH AMOUNT FOR TAXATION. THIS FACT WAS CLEARLY MENTIONED IN THE RE VISED RETURN ALSO. THE A.O. HAS LEVIED A PENALTY OF RS.52,650/- STATING TH AT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME ALLEGING THE AM OUNT OF RS.1,50,000/- HAVING BEEN RECEIVED BY ASSESSEE AS GIFT. IT WAS SUBMITTED THAT THE LOANS WERE ACCEPTED THROU GH ANOTHER PERSON LONG TIME AGO. THE LOANS WERE RECEIVED BY ACCOUNT P AYEE CHEQUES AND HIS PAN NUMBER WAS ALSO FURNISHED AND IT WAS ALSO DULY CLARIFIED THAT THE AMOUNT WAS NOT A GIFT AS ALLEGED BY THE AO. THE ASS ESSEE FURTHER STATED THAT THERE WAS NO MATERIAL TO CONFIRM THAT THE LOAN WAS THE INCOME OF THE ASSESSEE OR THE AMOUNT EQUAL TO THE LOAN AMOUNT WER E REACHED BACK TO THE ASSESSEE. THE AO NEITHER PROVED THAT THE ALLEGED AM OUNT WAS RECEIVED BY ASSESSEE AS GIFT NOR ANY EVIDENCE TO SUPPORT SUCH V IEW WAS PRESENTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS A DDING SUCH AMOUNT TO ASSESSEES INCOME AS GIFT IS ABSOLUTELY ARBITARY. T HEREFORE, IT CAN NOT BE SAID THAT THIS AMOUNT WAS THE INCOME DETECTED BY TH E DEPARTMENT. THE ASSESSEE HAD CLEARLY STATED THAT TO BUY PEACE AND A VOID UNNECESSARY LITIGATION, THE LOAN AMOUNT WAS OFFERED FOR TAXATIO N. IT IS FURTHER STATED THAT THE ASSESSEE HAD COOPERATED IN ALL THE PREOCEEDINGS AND THEREFORE WHEN THE ASSESSEE HAD ALREADY BEEN SUFFERED HEAVILY WITH THE TAX AND INTEREST BURDEN. PENALTY IF LEVIED, WILL BE AGAINST THE SPIR IT OF LAW. 10. THE LD. CIT (A) HAS REFERRED TO SUCH CONTENTION S IN HIS ORDER. HENCE THE PENALTY HAS BEEN INITIATED ON THE GROUND THAT ASSESSEE HAS RECEIVED GIFT. BEFORE US, THE LD. A/R STATED THAT THE ASSESSEE WANTED TO AVOID LITIGATION BY PAYING TAX AND PENALTY AS THE AMOUNT WAS SHALL PAYABLE TO THE CREDITOR AND ASSESS EE THOUGHT TO RECOVER SUCH AMOUNT FROM THE CREDITOR. THE ASSESSEE SURRENDERED THE AMO UNT AS HE WAS INTERESTED TO AVOID LITIGATION. IF THE AMOUNT IS SURRENDERED IN THE INC OME TAX RETURN AND THE ASSESSEE SAYS THAT SURRENDER WAS TO AVOID LITIGATION AND THE AMOUNT IS STILL SHOWN AS PAYABLE TO THE CREDITOR THEN CONTENTION OF THE ASSESSEE CAN NOT BE CONSIDER ED AS UNTRUE. THE ASSESSEE HAS GIVEN AN EXPLANATION AND SUCH EXPLANATION IS NOT FALSE. HENCE IN SUCH A CASE PENALTY IS NOT TO BE IMPOSED. WE HAVE ALSO CONSIDERED THE ORDER OF JA IPUR TRIBUNAL IN WHICH ON SIMILLER FACTS PENALTY WAS DELETED AND HAVE ALSO CONSIDERED THE CASE LAWS ON WHICH THE ASSESSEE HAS PLACED RELIANCE. ACCORDINGLY PENALTY IS CANCELL ED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN OPEN COURT ON 07.10.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/10/2011 *S.KUMAR* COPY FORWARDED TO:- 1. SHRI KAMAL KISHORE BAID, JAIPUR 2. THE INCOME TAX OFFICER, WARD-5(3), JAIPUR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.205/JP/2011 BY ORDER A.R., I.T.A.T., JAIPUR