Shri Chhaganlal K.Patel,HUF, Bhavnagar V. The Income tax Officer,Ward-2(3), Bhavnagar

ITA 3032/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80319 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANI L CHATURVEDI, ACCOUNTANT MEMBER ITA NO.3032/AHD/2010 A.Y.2004-05 CHAGGANBHAI K. PATEL HUF, VILLAGE NARI, DISTRICT BHAVNAGAR. PAN: AADHP3097H VS ITO, WARD 2(3) BHAVNAGAR. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M.K. SINGH, SR.D.R., ASSESSEE(S) BY : SHRI TUSHAR HEMANI, AR / // / DATE OF HEARING : 21/08/2014 / DATE OF PRONOUNCEMENT: 05/09/2014 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M AN ORDER OF LD. CIT(APPEALS)-XX, AHMEDABAD, DATED 02/09/2010 FOR A. Y.2004-05. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD AS UNDER. 3. THE ASSESSEE IS A HUF STATED TO BE IN THE RETAIL BUSINESS OF VEGETABLE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y.2004-05 ON 17.06.2004 DECLARING TOTAL INCOME OF RS.1,07,070/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.143(3) VIDE ORDER DATED 07.12.2006 AND THE TOTAL TAXABLE I NCOME WAS DETERMINED AT RS.14,07,070/- BY MAKING ADDITION OF RS.9,00,000 /- ON ACCOUNT OF GIFT CONSIDERED AS NON-GENUINE AND LOAN OF RS.4,00,000/- WHICH WAS TREATED AS NON-GENUINE. ON THE AFORESAID ADDITIONS, AO VIDE PENALTY ORDER DATED ITA NO.3032/AHD/2010 SHRI CHAGGANBHAI K. PATEL HUF VS. ITO WARD 2(3) BHA VNAGAR FOR A.Y. 2004-05 - 2 - 14.09.2009, LEVIED PENALTY OF RS.3,03,730/- U/S.271 (1)(C) OF THE IT ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LEARNED CIT(A). LEARNED CIT(A) VIDE ORDER DATED 2.9.2010, D ISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LEARNED CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND RAI SED THE FOLLOWING GROUND: THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PEN ALTY U/S.271(1)(C). 4. BEFORE US, LEARNED AR SUBMITTED THAT ASSESSEE HA D RECEIVED GIFTS FROM AMRUTBEN POPATBHAI, POPATBHAI PARSHOTTAMBHAI A ND POPATBHAI PARSHOTTAMBHAI (HUF) OF RS.3,00,000/- EACH BY WAY O F CHEQUE BETWEEN 1.3.2004 AND 1.8.2004. HE ALSO SUBMITTED THAT THE P ERSONS GIVING THE GIFT TO ASSESSEE ARE CLOSE RELATIVES OF THE ASSESSEE AS AMRUTBEN POPATBHAI IS THE SISTER, POPATBHAI PARSHOTTAMBHAI IS BROTHER-IN- LAW AND POPATBHAI PARSHOTTAMBHAI (HUF) IS THE HUF OF BROTHER-IN-LAW. HE FURTHER SUBMITTED THAT ADDITIONS WERE CONFIRMED BY LEARNED CIT(A) AND HONBLE ITAT IN QUANTUM APPEALS MERELY FOR THE REASON THAT THE AUTHORITIES DOUBTED THE CREDITWORTHINESS OF THE DONORS BUT HOWE VER THE IDENTITY AND THE GENUINENESS OF THE DONORS WERE NOT DOUBTED AT A LL. BEFORE US, LEARNED AR FURTHER SUBMITTED THAT POPATBHAI PARSHOTTAMBHAI ON BEHALF OF THE DONORS HAD FILED A LETTER DATED 16.11.2006 RETRACTI NG HIS EARLIER STATEMENT AND CLARIFIED THE GIFT HAD INDEED BEEN GIVEN BY HIM AND HAD ALSO CLARIFIED THAT HE HAD A BANK ACCOUNT AND APART FROM AGRICULTU RE ACTIVITIES, HE HAS ALSO BEEN DEALING IN THE BUSINESS OF MILK, CURD AND BUTTER MILK. LD. A.R., THEREFORE, SUBMITTED THAT THE ASSESSEE HAD ESTABLIS HED THE IDENTITY AND GENUINENESS OF THE DONORS. HE FURTHER SUBMITTED THA T DURING QUANTUM PROCEEDINGS SINCE THE ASSESSEE COULD NOT ESTABLISH THE CREDITWORTHINESS OF DONORS, IT MIGHT JUSTIFY THE ADDITION U/S.68 OF THE ACT BUT MERE ADDITION ITA NO.3032/AHD/2010 SHRI CHAGGANBHAI K. PATEL HUF VS. ITO WARD 2(3) BHA VNAGAR FOR A.Y. 2004-05 - 3 - DID NOT JUSTIFY LEVY OF PENALTY BECAUSE SECTION 68 OF THE ACT CREATES A LEGAL FICTION AND FICTION IS CREATED FOR THE LIMITE D PURPOSE OF ASSESSMENT AND THE SAME CANNOT BE MADE APPLICABLE FOR THE PURP OSE OF LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. HE THEREFORE SUBM ITTED THAT MERELY BECAUSE GIFTS WERE CONFIRMED AS INCOME U/S.68 OF TH E ACT, NO PENALTY CAN BE LEVIED. HE HAS ALSO PLACED RELIANCE UPON THE DEC ISION OF THE HONBLE ITAT A BENCH, AHMEDABAD IN THE CASE OF ITO VS. SHRI PRAKASHBHAI BEARING ITA NO.3095/AHD/2005, ORDER DATED 14.08.201 3 AND ALSO PLACED ON RECORD ITS COPY. 5. ON THE OTHER HAND, LEARNED DR RELIED UPON THE OR DERS OF THE AO AND LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ADDITION OF R S.9,00,000/- WAS MADE U/S.68 OF THE ACT IN RESPECT OF GIFTS RECEIVED BY A SSESSEE FROM THREE PERSONS, NAMELY, AMRUTBEN POPATBHAI, POPATBHAI PARS HOTTAMBHAI AND POPATBHAI PARSHOTTAMBHAI (HUF). IT IS ASSESSEES SU BMISSION THAT THE GIFTS WERE RECEIVED BY CHEQUES AND THREE DONORS WER E THE CLOSE RELATIVES OF THE ASSESSEE. THE ASSESSEE HAD ALSO FILED THE NA ME, ADDRESS, PAN NUMBER, AFFIDAVIT FOR DECLARATION OF GIFT AND ACKNO WLEDGEMENT OF FILING OF RETURN IN CASE OF AMRUTBEN POPATBHAI AND POPATBH AI PARSHOTTAMBHAI. WE FURTHER FIND THAT AO AT PARAGRAPH 5 OF THE PENAL TY ORDER HAS NOTED THAT SRI POPATBHAI PURUSHOTTAMBHAI KARTA OF HUF IN A STATEMENT OF OATH STATED THAT HE WAS HAVING 17 VIGHAS OF LAND, WAS HA VING BANK ACCOUNT AND HAD FURTHER CLARIFIED THAT DURING THE CURRENT YEAR HE HAS NOT GIVEN GIFT TO ANYBODY BUT HAS GIVEN GIFT IN THE FINANCIAL YEAR 20 03-04. IT IS FURTHER ITA NO.3032/AHD/2010 SHRI CHAGGANBHAI K. PATEL HUF VS. ITO WARD 2(3) BHA VNAGAR FOR A.Y. 2004-05 - 4 - CLARIFIED BY HIM THAT IN ADDITION TO AGRICULTURE AC TIVITIES, HE WAS DOING BUSINESS OF MILK, CURD AND BUTTER MILK. THE AFORESA ID SUBMISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE BY PL ACING ANY CONTRARY MATERIAL ON RECORD. 7. IT IS A WELL SETTLED LAW THAT PENALTY PROCEEDING S ARE ENTIRELY DISTINCT FROM ASSESSMENT PROCEEDINGS AND HOWEVER RELEVANT AN D GOOD, THE FINDINGS IN ASSESSMENT PROCEEDINGS MAY NOT BE CONCL USIVE SO FAR AS PENALTY PROCEEDINGS ARE CONCERNED. IT IS WELL SETTL ED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN T HE ASSESSMENT PROCEEDINGS IS DIFFERENT FROM THE PENALTY IMPOSED O N ACCOUNT OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITIONS COULD LEGALLY B E MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROB ABILITIES BUT NO PENALTY COULD BE IMPOSED U/S.271(1)(C) OF THE ACT O N PREPONDERANCE OF PROBABILITY AND THE REVENUE HAS TO PROVE THAT THE C LAIM OF THE ASSESSEE WAS NOT GENUINE. IN THE PRESENT CASE, REVENUE HAS N OT PLACED ANY MATERIAL ON RECORD TO PROVE THAT ASSESSEE HAD FURNI SHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEDED THE PARTICULA RS OF INCOME. REVENUE IN THE PRESENT CASE HAS LEVIED PENALTY ON THE AMOUN T OF ADDITION MADE IN QUANTUM PROCEEDINGS. WE ALSO FIND THAT THE CO-ORDIN ATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI PRAKASH K. PATEL (SUPRA) CONCURRED WITH THE VIEW OF LEARNED CIT(A) WHO HAD HELD THAT ADDITION O N THE BASIS OF THE PROVISIONS OF SECTION 68 OF THE ACT CREATES LEGAL F ICTION AND FICTION CREATED BY SUCH PROVISIONS ARE ONLY FOR THE LIMITED PURPOSE OF ASSESSMENT AND THE SAME CANNOT BE MADE APPLICABLE U/S.271(1)(C ) OF THE ACT. MERE OPERATION OF THE FICTION IN QUANTUM PROCEEDINGS DOE S NOT BY ITSELF JUSTIFY ITA NO.3032/AHD/2010 SHRI CHAGGANBHAI K. PATEL HUF VS. ITO WARD 2(3) BHA VNAGAR FOR A.Y. 2004-05 - 5 - THE LEVY OF PENALTY. CONSIDERING THE AFORESAID FACT S AND RELYING ON THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL, WE A RE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY CAN BE LEVIED AND WE TH EREFORE DIRECT ITS DELETION. THUS THE GROUND OF THE ASSESSEE IS ALLOWE D. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; DATED 05/09/2014 PRABHAT KR. KESARWANI, SR. P.S. / 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