Nirmalaben Bachubhai Shah, Ahmedabad V. The Income tax Officer,Ward-8(1), Ahmedabad

ITA 3167/AHD/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6874 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 26-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Assessee Lawyers: N C AMIN
• Keywords: Unexplained investment; Gift; Income from undisclosed sources
• Section: 68; 69; 27

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. MOHAN ALANKAMON Y, AM. NIRMALABEN BACHUBHAI SHAH, 16, SUVUDHINATH SOCIETY, NR. SHANTIVAN, NARAYAN NAGAR ROAD, PALDI, AHMEDABAD. VS. INCOME-TAX OFFICER, WAD-8, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI N. C. AMIN, AR RESPONDENT BY:- SHRI D.V. SINGH, SR.DR DATE OF HEARING :16/11/2011 DATE OF PRONOUNCEMENT : 9/12/11. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) DATED 16.09.2009 WHEREIN PENALTY OF RS.2,25, 000/- LEVIED U/S 271(1)(C) BY THE AO HAS BEEN CONFIRMED. 2. THE FACTS OF THE CASE LEADING TO THE ADDITION OF RS.5 LACS AND CONSEQUENTIAL LEVY OF PENALTY U/S 271(1)(C) FOR FU RNISHING INACCURATE PARTICULARS OF INCOME ARE THAT THE ASSESSEE FILED R ETURN OF INCOME SHOWING ITA NO.3167/AHD/2009 ASST. YEAR :2005-06 ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 2 TOTAL INCOME OF RS.3,10,972/- ON 16/08/2005 WHICH W AS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELEC TED FOR SCRUTINY ON CASS AND NOTICE U/S 143(1) WAS ISSUED. THE ASSESSEE CLAIMED TO HAVE RECEIVED GIFT OF RS.5 LACS FROM ONE SHRI DHANJIBHAI MULJIBHAI SOLANKI IN HER RETURN OF INCOME FILED FOR ASST. YEAR 2005-06. SHE ALSO FILED WITH THE RETURN OF INCOME, A COPY OF CONFIRMATION OF GIFT FR OM SHRI DHANJIBHAI MULJIBHAI SOLANKI ON A RS.20/- STAMP PAPER. AGAIN V IDE NOTE-SHEET ENTRY DATED 6.8.2007 THE ASSESSEE WAS ASKED TO FILE DETAI LS OF THE DONOR FROM WHOM SHE HAD RECEIVED GIFT OF RS.5,00,000/-. IN RES PONSE TO WHICH THE ASSESSEE VIDE LETTER DTD.22.8.2007 AT POINT NO.6 SH E HAD GIVEN THE DETAILS OF DONOR WHICH IS REPRODUCED AS UNDER : REGARDING GIFT RECEIVED FROM NRI, I AM ENCLOSING H EREWITH DECLARATION OF GIFT AND COPY OF CHEQUE AND OTHER DETAILS WHICH YOU ASKED ARE AS UNDER:- (A) NAME AND ADDRESS : DHANJIBHAI MULJIBHAI SOLANKI (B) COPY OF BANK PASS-BOOK AND ACKNOWLEDGEMENT OF IT RE TURN IT WAS NOT POSSIBLE FOR WE DUE TO NRI PERSON AND OUT O F MY CONTROL (C) REGARDING RELATION RELATIVE AND FRIENDS. THE ASSESSEE, HOWEVER, DID NOT SUBMIT WITH THIS LET TER EITHER THE DECLARATION OF GIFT OR THE COPY OF CHEQUE. THEREAFT ER, THE ASSESSEE VIDE LETTER DTD.31.8.2007 FURNISHED A XEROX COPY OF THE DD NO.514888 DTD.16.8.2004 OF RS.5,00,000/- ISSUED IN FAVOUR OF NIRMLABEN BASHUBHAI SHAH AND ALSO A XEROX COPY OF THE CERTIFICATE ISSUE D BY THE STATE BANK OF ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 3 SAURASHTRA DTD.16.8.2004. THE CERTIFICATE ISSUED BY THE STATE BANK OF SAURASHTRA READS AS FOLLOWS : THIS IS TO CERTIFY THAT OUR DD NO.514888 DTD.16.8. 2004 FOR RS.5,00,000 (RS.FIVE LACS ONLY) FAVOURING NIRMALABE N BACHUBHAI SHAH HAS BEEN ISSUED BY DEBITING FROM NON-RESIDENT (EXTERNAL) A/C NO.01192083135 OF SHRI/SMT. KHIMJI LALJI GARASIYA W ITH US. THE AO NOTED THAT THESE TWO ARE CONTRADICTORY STATE MENT. AS PER THE ASSESSEE DONOR IS DHANJI MULJI SOLANKI AND AS PER B ANK CERTIFICATE FURNISHED BY HER THE DONOR IS KHIMJI LALJI GARASIYA . THE AO ISSUED SHOW CAUSE NOTICE AND ASSESSEE FILED HER REPLY. THE AO A FTER CONSIDERING THE REPLIES OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD OFFERED GIFT AMOUNT FOR TAXATION ONLY AFTER THE DISCREPANCIES WERE DETE CTED AND POINTED OUT BY THE DEPARTMENT. THE ASSESSEE HAD NOT OFFERED VOLUNT ARILY THE SAME OF RS.5,00,000/- FOR TAXATION BEFORE THE DETECTION OF DISCREPANCY OF THE SAME BY THE DEPARTMENT. THE A.O. MADE AN ADDITION TO THE INCOME OF ASSESSEE BUT THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST TH E SAME. THE ASSESSMENT WAS FINAL. THEREFORE, PENALTY PROCEEDINGS U/S 271(1 )(C) WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEAL MENT OF INCOME. THE AO WAS OF THE OPINION THAT THIS WAS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AS THE ASSESSEE HAD DELIBERATE LY CONCEALED OR INACCURATE PARTICULARS HAD BEEN FURNISHED. THE TAX ON SUCH CONCEALED INCOME OR IN RESPECT OF WHICH INACCURATE PARTICULAR S HAD BEEN FURNISHED WORKED OUT TO RS.1,50,000/-. THE MINIMUM AND MAXIMU M PENALTY ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 4 LEVIABLE WORKED OUT TO RS.1,50,000/- AND RS.4,50,00 0/- RESPECTIVELY. CONSIDERING ALL THE ABOVE ASPECT OF THE CASE HE LEV IED A PENALTY OF RS.2,25,000/- U/S 271(1)(C) OF THE ACT AS AGAINST T HE MAXIMUM PENALTY LEVIABLE AT RS.4,50,000/-. 3. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ) WHEREIN THE LD. COUNSEL OF THE ASSESSEE FILED WRITTEN SUBMISSION ON 27.7.2009 AND 11.9.2009. BEFORE THE LD. CIT(A) IT WAS ADMITTED BY THE LD.AR THAT HE WAS UNABLE TO GIVE THE FOREIGN ADDRESS OF DONOR, HI S SOURCE OF INCOME AND ALSO THE BANK STATEMENT OF THE DONOR TO PROVE THE G ENUINENESS AND THE CREDITWORTHINESS OF THE DONOR. HE STATED THAT AS PE R THE BANK STATEMENT SUPPLIED BY THE STATE BANK OF SAURASHTRA TO THE ASS ESSING OFFICER, THERE ARE MANY CREDITS WHICH EXPLAINS THE SOURCE OF GIFT GIVEN BY SHRI KHIMJI LALJI GARASIYA TO THE VARIOUS PERSONS INCLUDING THE ASSESSEE. IN THE WRITTEN SUBMISSIONS FOLLOWING SUBMISSIONS WERE MADE :- 1. INITIALLY IT WAS THE MISTAKE ON THE PART OF THE APPELLANT TO STATE THAT THE GIFT WAS RECEIVED FROM SHRI DHANJI MULJI S OLANKI. AS SOON AS THE APPELLANT CAME TO KNOW ABOUT IT THE SAM E WAS RECTIFIED. 2. DURING THE COURSE OF ASSESSMENT PROCEEDING THE APPELLANT VOLUNTARILY OFFERED THE INCOME OF RS.5 LACS BEFORE THE AO AND DID NOT FILE ANY APPEAL AGAINST THE ADDITION. 3. SINCE THE APPELLANT IS NOT MAINTAINING A NY BOOKS OF ACCOUNTS THERE CANNOT BE ANY ADDITION U/S 68 AS HELD BY VARI OUS COURTS. ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 5 4. THE AMOUNT OF RS.5 LACS WAS SURRENDERED TO BUY PEAC E OF MIND AND AVOID LITIGATION. 5. THE APPELLANT RELIED UPON VARIOUS CASE LAWS SUCH AS ITAT, DELHI G BENCH (THIRD MEMBER) IN THE CASE OF PREMCHAND G ARG, SURESH CHANDRA AMRATLAL SHAH, IIAT (SMC) AHMEDABAD & OTHER S TO PROVE THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED I N THE CASE OF THE APPELLANT. 4. THE LD. CIT(A) AFTER CONSIDERING THE CONTENTIONS OF AO AND THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ACTION OF THE AO OBSERVING AS UNDER :- 4. I HAVE CONSIDERED THE SUBMISSIONS. I DO NOT AGR EE WITH THE AUTHORIZED REPRESENTATIVE THAT IT WAS A BONA FIDE M ISTAKE ON THE PART OF THE APPELLANT TO STATE THE NAME OF DHANJI MULJI SOL ANKI AS AGAINST THE CORRECT DONOR SHRI KHIMJI LALJI GARASIYA. HAD IT BE EN THE MISTAKE ON THE PART OF THE APPELLANT THEN THE CONFIRMATION FROM SH RI DHANJI MULJI SOLANKI WOULD HAVE NOT BEEN ENCLOSED BY THE APPELLA NT WITH THE RETURN OF INCOME. THE APPELLANT HAS SUBMITTED CONFIRMATION FR OM SHRI DHANJI MULJI SOLANKI ON A STAMP PAPER OF RS.20/- WHEREIN SHRI DH ANJI MULJI SOLANKI HAS CONFIRMED HAVING MADE GIFT OF RS.5 LAC TO THE A PPELLANT. AFTER THE INVESTIGATION WERE MADE BY THE AO HE CAME TO KNOW T HAT IN FACT THE DEMAND DRAFT OF GIFT WAS ISSUED FROM THE ACCOUNT OF KHMJI LALJI GARASIYA. AFTER A SHOW CAUSE NOTICE WAS GIVEN TO THE APPELLAN T THE APPELLANT TOOK A PLEA THAT IT WAS A MISTAKE ON HER PART TO STATE THE SOURCE OF THE GIFT FROM DHANJI MULJI SOLANKI AS AGAINST SHRI KHIMJI LALJI G ARASIYA. FURTHER THE AO INSISTED UPON THE PERSONAL PRESENCE OF THE APPEL LANT BEFORE HIM AS THE AO WANTED TO RECORD HER STATEMENT REGARDING HER REL ATIONSHIP WITH THE SO CALLED DONOR BUT THE APPELLANT FAILED TO BE PRESENT HERSELF BEFORE THE AO DESPITE THE FACT THAT THE AO HAS ISSUED SUMMONS TO HER. INSTEAD OF PRESENTING HERSELF BEFORE THE AO, SHE AVOIDED HER P RESENCE ON ONE PRETEXT OR OTHER OF ILLNESS. WHEN THE AO PROVED THAT THE NR I ACCOUNT MAINTAINED WITH STATEMENT BANK OF SAURASHTRA OF SHRI DHANJI MU LJI SOLANKI AND SHRI KHIMJI LALJI GARASIYA ARE USED FOR GIVING ENTRIES O F BOGUS GIFTS TO VARIOUS PERSONS INCLUDING THE APPELLANT THEN ONLY THE APPEL LANT OFFERED THE AMOUNT OF RS.5 LAC AS HER INCOME. IN THE OFFER LETT ER, SHE STATED THAT SHE IS MAKING THE DISCLOSURE OF RS.5 LAC VOLUNTARILY TO AV OID LITIGATION AND TO BUY PEACE OF MIND. THE SEQUENCE OF EVENTS CLEARLY P ROVES THAT OFFER LETTER ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 6 SUBMITTED BY THE APPELLANT BEFORE THE AO WAS NOT VO LUNTARILY BUT IT WAS GIVEN ONLY WHEN THE DEPARTMENT HAS PROVED THAT THE GIFT FROM DHANJI MULJI SOLANKI/KHIJI LALJI GARASIYA ARE BOGUS. 4.1 FURTHER THE CONTENTION OF THE APPELLANT THAT AD DITION U/S 68 CANNOT BE MADE IN THE CASE OF THE APPELLANT AS SHE IS NOT MAINTAINING BOOKS OF ACCOUNT. IN MY VIEW, THIS CONTENTION IS NOT OF ANY USE BECAUSE - (1) IF THE ADDITION CANNOT BE MADE U/S 68 THEN THE SAME CAN BE MADE U/S 69 BECAUSE THERE ARE UNEXPLAINED INVESTMENT OF RS.5 LAC IN THE BANK ACCOUNT OF THE APPELLANT WHICH WAS CLAIMED TO HAVE BEEN RECEIVED IN THE FORM OF GIFT. (2) EVEN IF THE ADDITION IS NOT SUSTAINABLE U/S 68 IT IS SUSTAINED U/S 69 OF THE ACT. FURTHER THE APPELLANT HAS NOT FILED ANY APPEAL AGAINST THE ASSESSMENT ORDER WHICH PROVES THAT THE APPELLAN T ALSO ADMITS THAT THE ADDITION OF RS.5 LAC WAS CORRECTLY MADE IN HER CASE. THE APPELLANT CANNOT AGITATE THE QUANTUM ADDITION IN PE NALTY PROCEEDINGS PARTICULARLY WHEN SUCH ADDITION IS ACCE PTED BY THE APPELLANT. (3) THE CONTENTION OF THE APPELLANT THAT THE OF FER WAS MADE VOLUNTARILY, TO AVOID LITIGATION AND TO BUY PEACE OF MIND IS AGA IN NOT CORRECT BECAUSE THE DEPARTMENT HAS ALREADY PROVED THAT THE GIFT ARE NOT GENUINE. FURTHER SINCE EVEN FOREIGN ADDRESS OF THE DONOR, HIS SOURCE OF INCOME AND HIS BANK STATEMENT HAS NOT BEE N FURNISHED BY THE APPELLANT EITHER BEFORE THE AO OR BEFORE ME, PR OVES THAT THE APPELLANT HAS MANAGED BOGUS GIFT OF RS.5 LAC FROM S HRI DHANJI MULJI SOLANKI/SHRI KHIMJI LALJI GARASIYA. 5. IN VIEW OF THE ABOVE MENTIONED DISCUSSION, I FUL LY AGREE WITH THE AO THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 27 1(1)(C). AS THE APPELLANT HAS FAILED TO FURNISH HER BONA FIDE AND ALSO FURNIS HED INACCURATE PARTICULARS OF HER INCOME DELIBERATELY, THE PENALTY OF RS.2.25,000/- LEVIED BY THE AO IS HEREBY CONFIRMED. 5. BEFORE US THE LD. COUNSEL OF THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 7 6. ON THE OTHER HAND, THE LD. DR HEAVILY RELIED ON THE ORDERS OF LOWER AUTHORITIES AND SUBMITTED THAT LD. CIT(A) HAS PASSE D A WELL REASONED ORDER AND THERE IS NO SCOPE TO INTERFERE IN THE ORD ER OF LD. CIT(A), WHICH MAY KINDLY BE UPHELD. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RECORD, WE FIND THAT UNDISPUTED FACT IS THAT ASSESSEE HAD OFFE RED GIFT AMOUNT FOR TAXATION ONLY AFTER THE DISCREPANCIES WERE DETECTED AND POINTED OUT BY THE DEPARTMENT. THE ASSESSEE HAD NOT OFFERED VOLUNTARIL Y THE SUM OF RS.5,00,000/- FOR TAXATION BEFORE THE DETECTION OF DISCREPANCY OF THE SAME BY THE DEPARTMENT. THE ASSESSEE CLAIMED TO HAVE REC EIVED GIVE OF RS.5 LACS FROM SHRI DHANJI MULJI SOLANKI BUT THE BANK CE RTIFICATE FURNISHED BY HERSELF STATES THAT DONOR OF GIFT OF RS.5,00,000/- WAS SHRI KHIMJI LALJI GARASIYA. THESE TWO ARE CONTRADICTORY STATEMENTS. A S PER ASSESSEE DONOR IS DHANJI MULJI SOLANKI AND AS PER BANK CERTIFICATE FURNISHED BY HER THE DONOR IS KHIMJI LALJI GARASIYA. BY NO STRETCH OF IM AGINATION ONE CAN BELIEVE OR ACCEPT THAT ONE DOES NOT KNOW THE IDENTI TY OF THE PERSON WHO HAS DONATED A HUGE AMOUNT OF RS.5 LACS. THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION AS SHE IS CLAIMING EXEMPTION OF RS.5 LACS IN THE GUISE OF GIFT. IT IS CRYSTAL CLEAR THAT THE AMOUNT OF RS.5 LACS CREDITED UNDER GUISE OF GIFT RECEIVED IS NOTHI NG BUT INTRODUCTION OF ASSESSEES UNACCOUNTED INCOME. THE ASSESSEE HERSELF OFFERED THIS ENTIRE ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 8 AMOUNT OF RS.5 LACS FOR TAXATION WHICH FURTHER STRE NGTHENS THIS FACT. IN VIEW OF ALL THE ABOVE FACTS, WE ARE OF THE CONSIDER ED OPINION THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT A S THE ASSESSEE HAS DELIBERATELY CONCEALED HER INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME. THE AO WAS JUSTIFIED IN LEVYING THE PENALTY AND THE LD. CIT(A) HAS RIGHTLY CONFIRMED HIS ACTION. HOWEVER, TAKING A LENIENT VIEW IN THE MATTER WE RESTRICT THE PENALTY TO RS.1,50,000/- I.E . THE MINIMUM PENALTY IN THE CASE. THE APPEAL FILED BY THE ASSESSEE IS PARTL Y ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 9.12.11. SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ITA NO.3167/AHD/2009 ASST. YEAR 2005-06 9 1.DATE OF DICTATION 28/11/2011. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 2/12/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..