Sri. MANISH N. VORA, MUMBAI V. ITO - 18(3)(3), MUMBAI

ITA 2072/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2112 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 09-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARGMR S S RANA
• Assessee Lawyers: JIGNESH SAVLA
• Keywords: Gift; Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 2072/M/2007 ASSESSMENT YEAR: 2001-02 MANISH N VORA, APPELLANT 11/12, AMRUT NAGAR OPP. SHIVAJI NAGAR POLICE STATION, KHERWADA, BANDRA (E), MUMBAI 400 051 (PAN AAAPV 5084H) VS. INCOME TAX OFFICER 18(3)(3), RESPONDENT PIRAMAL CHAMBERS, MUMBAI. APPELLANT BY : MR. JIGNESH SAVLA RESPONDENT BY : MR. ANKUR GARG/MR. S.S. RANA ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A) - XXVIII, MUMBAI, PASSED ON 20.12.2006 FOR THE ASSESSMENT YEAR 2001-02. 2. THE GROUND RAISED IN THIS APPEAL IS IN RESPECT O F LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE HAS RECEIVED RS. 2,50,000/- BY WAY OF GIFT. THE ASSESSE E FAILED TO ESTABLISH IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE G IFT, THEREFORE, THE AO MADE ADDITION, WHICH HAS BEEN CONFIRMED BY THE I TAT VIDE ITA NO. 3034/MUM/2005 ORDER DATED 30 TH AUGUST, 2006 ON THE GROUND THAT ITA NO. 2072/M/07 MANISH N VORA 2 THE ASSESSEE HAS FAILED TO ESTABLISH GENUINENESS OF THE GIFT. THE AO LEVIED PENALTY U/S 271(1)(C) OF THE ACT, AS THE ASS ESSEE DID NOT FURNISH ANY EXPLANATION BEFORE THE AO. THE CIT(A) WHILE CON FIRMING PENALTY OBSERVED THAT DISCLOSING GIFT FROM UNRELATED PERSON AVOID TO PAY TAX ON THE MONEY INTRODUCED IN THE GARB OF GIFT IN HIS CAPITAL ACCOUNT. THE CIT(A) HELD THAT IT IS CLEAR THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF HIS IN COME. 4. THE LEARNED AR SUBMITTED THAT THE ASSESSEE RECEI VED THE ALLEGED GIFT OF RS. 2,50,000/- FROM HIS FRIEND MR. MUKESH V RAJLAL GORDHANDASAN INDIAN ORIGIN SETTLED IN TANZANIA. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS BEFORE THE CIT(A) , THE ASSESSEE HAS FILED AFFIDAVIT BY DONOR DULY ATTESTED BEFORE THE C OMMISSIONER OF OATHS, TANZANIA CONFIRMING THAT GIFT WAS GIVEN ON H IS VISIT TO INDIA IN THE MONTH OF FEBRUARY, 2001. BESIDES THE ABOVE, THE ASSESSEE HAS ALSO PRODUCED VARIOUS CORRESPONDENCE MADE BY THE B ANKS TO DONOR WHERE DONORS C/O ADDRESS WAS GIVEN IN INDIA THAT O F THE ASSESSEE. THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE WAS ALSO A GUARDIAN IN INDIA FOR DONORS DAUGHTER STUDYING IN BOARDING SCHOOL AT PANCHGINI, MAHARASHTRA. GIFT WAS THROUGH PROPER BAN KING CHANNEL. THE LEARNED AR SUBMITTED THAT THOUGH THE ASSESSEE F AILED TO ESTABLISH THE GENUINENESS OF THE GIFT THAT MAY BE GOOD FOR QU ANTUM MATTER BU AS REGARDS THE PENALTY MATTER, THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE LEARNED AR IN SUPPORT OF HIS CONTENTION RELIED UPON THE FOLLOWING DECISIONS:- 1. TWIN STAR JUPITER CO-OPERATIVE HSG. SOC. LTD., V . ITO, [2009] 31 SOT 474 (MUM.) 2. KANBAY SOFTWARE INDIA (P) LTD. V. DCIT, [2009] 2 2 DTR (PUNE)(TRIB) 481. 3. CIT VS. HARYANA WAREHOUSING CORPORATION, [2009] 25 DTR (P&H) 194 ITA NO. 2072/M/07 MANISH N VORA 3 4. UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVING MILLS, [2009] 23 DTR (SC) 158. 5. JUDGMENT OF P&H HIGH COURT IN THE CASE OF CIT VS . M/S SIDHARTHA ENTERPRISES, LUDHIANA VIDE ITA NO. 908 OF 2008 ORDER DATED 14.7.2009. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF REVENUE AUTHORITIES AND SUBMITTED THAT THE ASSESSEE FAILED TO PROVE THE BONAFIDES ABOUT THE CREDIT OF THE GIFT AMOUNT I N THE CAPITAL ACCOUNT. THE LEARNED DR WHILE REFERRING QUANTUM ORD ER OF CIT(A) SUBMITTED THAT THE CIT(A) WHILE DECIDING THE QUANTU M MATTER HAS CLEARLY OBSERVED THAT PASSPORT OF THE DONOR WAS ISS UED ON 23.08.2003 WHEREAS THE AFFIDAVIT GIVEN BY THE DONOR WAS DATED 24.7.2003, WHICH MEANS THE AFFIDAVIT WAS DATED 24.7.03 IT WAS REFERR ED TO THE PASSPORT PURPORTEDLY ISSUED ON 23.08.2003. THE LEARNED DR HA S ALSO POINTED OUT THAT IN QUANTUM MATTER WHILE CONFIRMING THE ADD ITION, THE CIT(A) OBSERVED THAT THE GIFT IS FROM UNRELATED PERSON AND MERELY THE GIFT MADE THROUGH BANKING CHANNEL, IT CANNOT BECOME A GE NUINE GIFT. THE LEARNED DR HAS ALSO SUBMITTED THAT THE ASSESSEE FAI LED TO PROVE THE GENUINENESS OF THE GIFT. 6. WE HAVE HEARD LEARNED REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE DECI SIONS CITED. FROM THE REPORTED DECISIONS, WE FIND THAT THE PROCEEDING S U/S 271(1)(C) CAN BE INITIATED ONLY IF THE AO IS SATISFIED IN THE COU RSE OF ANY PROCEEDINGS UNDER THE ACT THAT THE ASSESSEE HAS CONCEALED THE P ARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. EXPLANATION 1 COMES INTO OPERATION WHEN, IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF ANY PERSON, THERE IS FAILURE TO OFFER AN EXPLANATION OR AN EXPLANATION I S OFFERED WHICH IS FOUND TO BE FALSE BY THE AO OR THE FIRST APPELLATE AUTHORITY, OR AN EXPLANATION IS OFFERED WHICH IS NOT SUBSTANTIATED. IN SUCH A CASE, THE ITA NO. 2072/M/07 MANISH N VORA 4 AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL I NCOME IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. AS PER THE PROVISION OF EXPLANATION 1, THE ONUS TO ESTABLISH THAT THE EXPLANATION OFFERED WAS BONA FID E AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS INCOME HAVE BEEN DISCLOSED BY HIM WILL BE ON THE PERSON CH ARGED WITH CONCEALMENT. THE EXPLANATION OF THE ASSESSEE FOR TH E PURPOSE OF AVOIDANCE OF PENALTY MUST BE AN ACCEPTABLE EXPLANAT ION; IT SHOULD NOT BE A FANTASTIC OR FANCIFUL ONE. THE CONSEQUENCE FOL LOWS AS A MATTER OF LAW. THE BURDEN IS ON THE ASSESSEE. IF HE FAILS TO DISCHARGE THAT BURDEN, THE PRESUMPTION THAT HE HAD CONCEALED THE I NCOME OR FURNISHED INACCURATE PARTICULARS THEREOF IS AVAILAB LE TO BE DRAWN. FROM THE ABOVE DISCUSSION, WE FIND THAT PENALTY U/S 271(1)(C) DEPENDS ON FACTS OF EACH CASE, THEREFORE, THE DECISIONS CIT ED BY THE LEARNED AR ARE DISTINGUISHABLE ON FACTS. IF WE CONSIDER THE FA CTS OF THE CASE UNDER CONSIDERATION, WE FIND THAT THE ASSESSEE DID NOT FU RNISH ANY EXPLANATION BEFORE THE AO, HOWEVER, WHATEVER EXPLAN ATION FURNISHED BEFORE THE CIT(A), THE SAME HAS BEEN CONSIDERED BY THE CIT(A) AND FOUND THAT THE ASSESSEE ACCEPTED GIFTS FROM UNRELAT ED PERSON JUST TO AVOID TAX. IN THE QUANTUM APPEAL, THE ITAT NOTED WH ILE CONFIRMING PENALTY MATTER THE GIFT WAS NOT GENUINE. 7. THE FINDING OF THE ITAT IN QUANTUM MATTER THAT G IFTS WERE NOT GENUINE IS BASED ON INACCURATE PARTICULARS OF INCOM E FURNISHED BY THE ASSESSEE. WHEN THE ASSESSEE IS CREDITING, PARTICULA RLY, HIS CAPITAL ACCOUNT HE MUST BE MORE CONSCIOUS THAT WHAT HE IS G OING TO CREDIT IN HIS CAPITAL ACCOUNT. THE CAPITAL ACCOUNT IS CREDITE D ONLY ON THE FACTS WHEN A PERSON IS SURE THAT THIS WAS HIS OWN MONEY S UPPORTED BY MATERIAL EVIDENCE. SUCH CREDIT ENTRY IN CAPITAL ACC OUNT CANNOT BE MADE MERELY ON THE BASIS OF ANY PRESUMPTIONS OR ON THE BONAFIDE BELIEF THAT THE CREDITED AMOUNT WILL BE HIS CAPITAL . IN THE CASE UNDER CONSIDERATION, THE ASSESSEE CREDITED CAPITAL ACCOUN T ALLEGING THAT HE RECEIVED THE GIFTS, WHICH WAS FINALLY FOUND BY ITAT AS NON-GENUINE. ITA NO. 2072/M/07 MANISH N VORA 5 THE LEARNED DR AT THE TIME OF HEARING POINTED OUT T HE INCORRECT AND GLARING MISTAKE IN THE AFFIDAVIT FILED BY THE ASSES SEE, WHICH WAS DATED 24 TH JULY, 2003 REFERRING PASSPORT, WHICH WAS ISSUED ON 23 RD AUGUST, 2003. IT MEANS, THE ASSESSEE FILED AFFIDAVIT ON 24 TH JULY, 2003 AND HE WAS REFERRING THE PASSPORT, WHICH WAS ISSUED SUBSEQ UENTLY ON 23 RD AUGUST, 2003. WE HAVE ALSO NOTICED THAT THE ASSESSE E DID NOT FILE ANY EXPLANATION BEFORE THE AO AND THE EXPLANATION FURNI SHED BEFORE THE CIT(A) WAS NOT SUBSTANTIATED BY THE ASSESSEE. UNDER THE CIRCUMSTANCES, THE PROVISIONS OF SECTION 271(1)(C) READS WITH EXPLANATION 1 IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE AO U/S 271(1)(C) AND WE HEREBY CONFIRM THE ORDER OF CIT(A) . 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF MAY, 2010 SD/- SD/- (D. MANMOHAN) (A.L. GEHLOT) VICE PRESIDENT ACCOUNTAN T MEMBER DATED: 14 TH MAY, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV ITA NO. 2072/M/07 MANISH N VORA 6 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 20.4.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 21.4.10/ 6.5.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER