Rajesh Agarwal, Rudrapur V. ITO, Rudrapur

ITA 3206/DEL/2010

• Counselvise Citation: 320620114 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 28-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Gift; Principle of natural justice; Revised return
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 3206/DEL/2010 ASSTT. YR: 2004-05 RAJESH AGARWAL VS. INCOME-TAX OFFICER, PROP. M/S HARDWARIMAL RAM AUTAR RUDRAPUR. AGM-4, GALLA MANDI, RUDRAPUR DISTT. UDHAM SINGH NAGAR. PAN/GIR NO. ABIPA1762A (APPELLANT) ( RESPONDENT ) APPELLANT BY : SHRI ANIL KUMAR GUPTA FCA RESPONDENT BY : MS. Y. KAKKAR SR. DR O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER DA TED 2-3-2010 RELATING TO A.Y. 2004-05. SOLE GROUND RAISED IS AS UNDER: THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN I MPOSING AND CONFIRMING THE PENALTY OF RS. 1,50,000/- WHICH IS A BSOLUTELY ILLEGAL, ARBITRARY, AGAINST FACTS, LAW AND NATURAL JUSTICE AND THE ORDER HAS BEEN PASSED WITHOUT GIVING PROPER OPPORTU NITY. 2. BRIEF FACTS ARE: THE ASSESSEE CLAIMED TO HAVE RE CEIVED AN AMOUNT OF RS. 5,00,000/- BY WAY OF GIFT FROM ONE UNRELATED PE RSON SHRI D.K. AGARWAL OF DELHI. THE ASSESSEES CASE WAS TAKEN UP FOR SCRU TINY. AO MADE ADDITION OF RS. 5,00,000/- BY FOLLOWING OBSERVATIONS: 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE SHOWN TO HAVE RECEIVED GIFT AMOUNTING TO RS. 5,00,000/- F ROM SHRI DALIP KUMAR AGARWAL S/O SHRI V.N. AGARWAL R/0 160, CHIRAG, DELHI. THEREFORE NOTICE U/S 131 OF THE I.T. ACT, 19 61 REQUIRING ASSESSEE TO ATTEND OFFICE ON 24-02-2005 WAS ISSUED AND DATE OF ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 2 COMPLIANCE WAS FIXED ON 28-2-2005. HOWEVER, THE ASS ESSEE HAS NOT ATTENDED OFFICE, INSTEAD HIS BROTHER SHRI ROSHA N LAL AND SHRI BAJRANG LAL, ACCOUNTANT OF THE ASSESSEE, ATTEN DED OFFICE AND FILED GIFT DEED ETC. FURTHER VIDE ORDER SHEET E NTRY DATED 22- 11-2005 THE ASSESSEE WAS ASKED TO PRODUCE DONOR FO R EXAMINATION BUT THE ASSESSEE APPEARED ON 9-12-2005 AND HE FAILED TO PRODUCE THE DONOR. HE HAS ONLY FILED GIFT DEED, ITR AND COPY OF BANK ACCOUNT OF THE DONOR. IT IS APPARENT THAT INSPITE OF AMPLE OPPORTUNITIES, THE ASSESSEE COULD NOT PRODUCE DONOR FOR EXAMINATION AND ESTABLI SH ANY RELATIONSHIP, NATURAL OR MAN-MADE, WITH SO CALLED D ONORS, THEREFORE, IT IS APPARENT THAT THE DONOR IS NEITHER RELATIVE OF THE ASSESSEE NOR KNOWN TO HIM. THE SUMS GIVEN TO THE A SSESSEE THROUGH BANK DRAFT IS NOTHING BUT MANAGED AFFAIRS O F FUNDS AND IT IS ESTABLISHED THAT IT IS NOTHING BUT A HAWALA T RANSACTION. IN THESE CIRCUMSTANCES, THE CREDIT-WORTHINESS OF THE P ERSON IS NOT PROVED AND THE TRANSACTION CANNOT BE TREATED AS GEN UINE. MERE IDENTIFICATION AND SHOWING MOVEMENT THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO ESTABLISH THAT GIFT WAS ACTUAL LY RECEIVED. THE HONBLE DELHI HIGH COURT IN THE CASE OF SAJAN DAS & SONS VS. COMMISSIONER OF INCOME TAX, 264 ITR 435 (2002) HELD THAT MERE IDENTIFICATION OF THE DONOR AND SHOWING THE M OVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNEL IS NOT SUFF ICIENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF THE GIFT IS MADE BY THE ASSESSEE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE A GIFT AND THAT IT HAS ACTUALLY BEEN RECEIV ED AS A GIFT FROM THE DONOR. IT IS PERTINENT TO MENTION HERE THAT IN FACT, THE A SSESSEE WAS NOT IN A POSITION TO PROVE THE GENUINENESS OF THE TRANS ACTION AND CREDITWORTHINESS OF THE DONOR. DUE TO ABOVE FACTS, ULTIMATELY THE ASSESSEE REVISED HIS RETURN OF INCOME ON 20-12- 2005, SURRENDERING SO CALLED GIFT AMOUNT OF RS. 5,00,000/ -. THE ABOVE REVISED RETURN WAS PROCESSED ON 20-12-2005. IN VIEW OF THE ABOVE, ONE MORE OPPORTUNITY WAS GIVE N AND NOTICE U/S 143(2) WAS ISSUED ON 20-12-2005 FIXING D ATE OF COMPLIANCE ON 23-12-2005. THE ASSESSEE SUBMITTED NO THING IN ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 3 RESPONSE TO THIS NOTICE. HOWEVER, WRITTEN SUBMISSIO N ENCLOSED BY THE ASSESSEE WITH THE RETURN OF INCOME SPEAKS THAT DURING THE YEAR FINANCIAL YEAR 2003-2004 I RECEIVED A GIFT OF RS. 5 LACS THROUGH DRAFT FROM SHRI DALIP KUMAR AGARWAL OF DELH I. THIS DRAFT WAS DEPOSITED IN MY SB A/C NO. 10544 WITH OB C, RUDRAPUR. NOW HE IS NOT COOPERATING WITH ME HENCE A FTER CONSIDERING SO MANY CIRCUMSTANCES I AM OFFERING IT IN MY INCOME JUST TO AVOID PROTECTED LITIGATION AND TO PU RCHASE PEACE OF MIND PROVIDED NO PENALTY ACTION IS TAKEN AGAINST ME. FOR THIS PURPOSE I AM REVISING MY RETURN AND DEPOSITING THE FULL ADMITTED TAX. FROM THE ABOVE IT IS APPARENT THAT ASSESSEE AHS SUR RENDERED GIFT AMOUNT ONLY WHEN HE CAME TO KNOW THAT HE IS UNABLE TO PROVE THE CREDIT WORTHINESS AND GENUINENESS OF THE GIFT T RANSACTION ETC. SINCE THE ASSESSEE AHS FURNISHED INACCURATE PARTICU LARS OF INCOME BY SHOWING GIFT AMOUNT OF RS. 5,00,000/-, TH US CONCEALED HIS INCOME BY THIS AMOUNT. THEREFORE, PEN ALTY PROCEEDINGS U/S 271(1)(C) IS INITIATED. 2.1. AS MENTIONED IN THE ASSESSMENT ORDER, AO INIT IATED PENALTY PROCEEDINGS. IT WAS PLEADED BY ASSESSEE THAT PENALT Y PROCEEDINGS MAY BE KEPT IN ABEYANCE AS APPEAL HAS BEEN FILED AND FURTH ER PLEADED THAT THE DONOR HAS BEEN IDENTIFIED AND THE GIFT WAS THROUGH BANKIN G CHANNEL. AO, HOWEVER, WAS NOT SATISFIED INASMUCH AS NO THE APPEAL WAS F ILED BY THE ASSESSEE AGAINST THE QUANTUM ADDITIONS AND MERE IDENTIFICATI ON OF DONOR AND GIFT THROUGH BANKING CHANNEL WAS NOT SUFFICIENT TO PROVE THE GIFT. THE IMPUGNED PENALTY WAS IMPOSED. 2.2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE FOLLOWING WAS PLEADED: EVERYTHING WAS DONE BY ME IN GOOD FAITH AND UNDER COMPULSION OF CIRCUMSTANCES I REVISED THE RETURN JU ST TO COOPERATE THE DEPTT. SIMPLY REVISING THE RETURN DOE S NOT MEAN ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 4 THAT I HAVE CONCEALED MY INCOME OR THERE WAS ANY MA LAFIDE INTENTION. ON THE OTHER SIDE ON THE PART OF ASSESSI NG OFFICER HE AHS ALSO NOT ESTABLISHED ANY CONCEALMENT BY WAY OF MAKING HIS INDEPENDENT ENQUIRES OR MY EXERCISE. THIS PROVES TH AT MY OFFER WAS CLEARLY ACCEPTED BY HIM AND ONCE IT HA BEEN ACC EPTED, THEN THE INITIATION OF PROCEEDINGS U/S 271(1)(C) IS QUIT E ILLEGAL BECAUSE HE HAD TO RIGHT TO ACCEPT ONE PART OF OFFER AND REJECT THE OTHER PART. 2.3. FOR THIS PROPOSITION, ASSESSEE PLACED RELIANCE ON FOLLOWING JUDGMENTS: - K.C. BUILDERS VS. ACIT 265 ITR 562 (SC); - CIT VS. M.M. GUJAMGADI 290 ITR 168 (KAR.); - CIT VS. SHASHIBALA & OTHER 272 ITR 36 (ALL.) - CIT VS. SURESH CHANDRA MITTAL 251 ITR 9 (SC) - BHARAT RICE MILL VS. CIT 278 ITR 599 (ALL.) - JOHRI SARI HOUSE VS. ITO 188 TAXATION 188 (JODHPUR TRI.) 2.4. CIT(A), HOWEVER, UPHELD THE PENALTY BY FOLLOWI NG OBSERVATIONS: (1) THE ASSESSEES ACT WAS IN GOOD FAITH AND COMPULSION OF CIRCUMSTANCES, WAS NOT BORNE OUT FROM THE PROCEEDIN GS BEFORE THE AO. (2) THE IDENTITY, CREDITWORTHINESS AND GENUINENESS ABOU T THE GIFT WERE NOT ESTABLISHED BY THE ASSESSEE DURING THE ASSESSME NT OR PENALTY PROCEEDINGS. (3) AFTER INVESTIGATION BY AO, THE ASSESSEE WAS COMPELL ED TO FURNISH A REVISED RETURN, ACCEPTING THE GIFT AS HIS INCOME W HICH DOES NOT DILUTE THE ASSESSEES LIABILITY VIS A VIS PENALTY. (4) ASSESSEES CITATIONS WERE DISTINGUISHED BY AO AND C IT(A) RELIED ON FOLLOWING CASE LAWS: - RAJENDRA BEESANI VS. ITO (2004) 90 TTJ (IND) 813 - SMT. NITABEN TRIBHOVANDAS VS. ITO (2004) 84 TTJ 475 . ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 5 2.5. AGGRIEVED, ASSESSEE IS BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE ASSESSEES DISCLOSURE BEFORE AO AND CONTENDS THAT THE REVISED RETURN WAS FILED WITH A CLEAR NOTE THAT DONOR WAS NOT COOPERATING AND DUE TO SO MANY CIRCUMSTANCES ASSESSEE WAS OFFERING THE AMOUNT OF RS. 5,00,000/- AS INCOME TO AVOID LITIGATION, PENALTY PROCEEDINGS AND TO BUY PEACE, PROVIDED NO P ENAL ACTION IS TAKEN. AO HAS MADE THE ADDITION ONLY ON THE BASIS OF ASSESSEE S SURRENDER AND NO OTHER MATERIAL, WHICH WAS CLEARLY CONDITIONAL THAT NO P ENALTY WOULD BE IMPOSED. DEPARTMENT HAVING ACCEPTED ASSESSEES PROPOSAL, CAN NOT GO BEYOND THE OFFER AND IMPOSE THE PENALTY. 3.1. THE ASSESSEE HAD FURNISHED ALL THE DETAILS ABO UT THE GIFT BY FILING CONFIRMATION, AFFIDAVIT, ASSESSEE EXPRESSED ITS INA BILITY TO PRODUCE THE DONOR AS HE WAS NOT COOPERATING. ASSESSEE FILED GIFT DEED , STATEMENT OF BANK A/C., INCOME-TAX RETURNS OF DONORS. AO, HOWEVER, DID NOT MAKE ANY INQUIRY FROM HIS COUNTER PART. CONSEQUENTLY, NO MATERIAL IS BROU GHT ON RECORD THAT GIFT WAS BOGUS. 3.2. PENALTY AND QUANTUM PROCEEDINGS ARE SEPARATE A ND DISTINCT AND THE PENALTY CANNOT BE IMPOSED MERELY BECAUSE THE ADDITI ON HAS BEEN CONFIRMED. RELIANCE IS PLACED ON: - ADDL. CIT VS. PREM CHAND GARG (2009) 31 SOT 97 (DEL .)(T.M) - SMT. RAJ RANI MITTAL VS. ITO (2010) 36 SOT 4 (DEL.) (URO) - CIT VS. SURESH CHANDRA MITTAL (2001) 251 ITR 9 (SC) - CIT VS. M.M. GUJAMGADI (2007) 290 ITR 168 (KAR.) - CIT VS. ASHOK TAKER (2008) 170 TAXMAN 471 (DEL.) - CIT VS. MILES TRAVELLERS (P) LTD. (2008) 170 TAXMAN 473 (DEL.) 4. LEARNED DR IN REPLY CONTENDS THAT IT IS TRITE LA W THAT ASSESSEE CANNOT PUT A CONDITION OF NON-LEVY OF PENALTY IN ITS SURRE NDER/ OFFER AS THERE CANNOT BE ANY ARGUMENT AGAINST THE STATUTE. ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 6 4.1. THE DONOR WAS ASSESSEES WITNESS AND IF HE FA ILED TO PRODUCED HIM, NO FAULT CAN BE ATTRIBUTED TO AO FOR NOT INQUIRING FROM HIS COUNTER PART. 4.2. PENALTY IS A CIVIL LIABILITY AND ESTABLISHMENT OF MENS REA IS NOT NECESSARY FOR THE AO. RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF DHARMESH TEXTILE PROCESSOR 306 ITR 271; CIT VS. ZOOM COMMUNICATION 327 ITR 510. 5. LEARNED COUNSEL FOR THE ASSESSEE IN REJOINDER RE LIES ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS 322 ITR 158, WHICH HAS CONSIDERED THE SUPREME COURT JUDGMENT IN THE CASE OF DHARMESH TEXTILE PROCESSORS (SUPRA). HONBLE SUPREME COURT H AS HELD THAT IF ASSESSEE HAS FURNISHED DETAILS IN RETURN, IN THAT CASE PENAL TY CANNOT BE LEVIED. 6. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE, IT IS CLEAR THAT AO, D URING THE COURSE OF ASSESSMENT, RAISED HIS SUSPICION ABOUT THE IMPUGNE D GIFT, INASMUCH AS NEITHER THE DONOR WAS RELATED TO ASSESSEE NOR ANY O CCASION WAS DEMONSTRATED FOR THE GIFT. THE ASSESSEE ONLY FURNISHED A COPY OF CONFIRMATION AND THE FACT THAT THE GIFT WAS MADE BY D.D., WHICH WAS DEPOSITED IN ASSESSEES ACCOUNT. THE DONOR WAS THE WITNESS OF THE ASSESSEE AND NOT O F THE DEPARTMENT, CONSEQUENTLY IT WAS FOR THE ASSESSEE TO DEMONSTRATE THE IDENTITY AND CREDITWORTHINESS OF THE DONOR AS WELL AS THE GENUIN ENESS OF THE TRANSACTION. AO WANTED THE ASSESSEE TO EXPLAIN THE NATURE OF REL ATIONSHIP BETWEEN THE ASSESSEE I.E. WHETHER IT WAS NATURAL OR RELATION O RIENTED. SINCE THE ASSESSEE FAILED TO ADDUCE ANY EVIDENCE, THE INFERENCE DRAWN IS PROPER THAT THE DONOR WAS NEITHER RELATIVE OF THE ASSESSEE NOR KNOWN TO H IM. THE PURCHASE OF BANK DRAFT DOES NOT NECESSARILY DEMONSTRATE THE CRE DITWORTHINESS OF A PERSON. THE SUSPICIOUS CIRCUMSTANCES OF THE GIFT WE RE EXPLAINED TO THE ASSESSEE, IN THAT EVENTUALITY IT WAS FOR HIM TO CLE AR THE SUSPICION BY FILING ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 7 NECESSARY EVIDENCE. AFTER COUPLE OF HEARINGS, ASSES SEE HIMSELF SURRENDERED THE AMOUNT OF RS. 5,00,000/- ON THE GROUND THAT DON OR WAS NOT COOPERATING WITH ASSESSEE. NO CORRESPONDENCE WAS FILED TO SHOW THAT ANY EFFORT WAS MADE BY ASSESSEE TO CALL THE IMPUGNED DONOR SHRI D ALIP KUMAR AND HIS REFUSAL. NOTHING HAS BEEN PRODUCED BEFORE US ALSO I N THIS BEHALF. UNDER THESE CIRCUMSTANCES, WHETHER THE SAID SHRI DALIP KUMAR IS IDENTIFIABLE PERSON OR NOT, OR WHETHER HE HAS ANY MEANS, HAS NOT BEEN BROU GHT ON RECORD BY THE ASSESSEE. IN THESE CIRCUMSTANCES, IT IS APPARENT FR OM THE RECORD THAT ASSESSEE FAILED TO OFFER SATISFACTORY EXPLANATION AND EVIDEN CE IN SUPPORT OF HIS CLAIM OF GIFT. 5.1. COMING TO ASSESSEES PLEA THAT SURRENDER OF RS . 5,00,000/- AS INCOME WAS CONDITIONAL THAT NO PENALTY WOULD BE LEVIED, , IN OUR VIEW CANNOT BE ACCEPTED AS THERE CANNOT BE ANY ESTOPPEL AGAINST TH E STATUTE. COMING TO THE OTHER PLEA OF THE ASSESSEE THAT AO HAD NOT DONE ANY THING ON HIS PART TO VERIFY THE INCOME-TAX RETURNS OF THE ALLEGED DONOR FROM HI S COUNTER PART, WE HAVE ALREADY MENTIONED THAT THE DONOR WAS THE WITNESS OF THE ASSESSEE AND THE AMOUNT WAS SURRENDERED BY ASSESSEE, THEREFORE, IT W AS NOT INCUMBENT ON THE PART OF AO TO INVESTIGATE FURTHER, WHEN THE ASSESSE E HAD ALREADY SURRENDERED THE AMOUNT. 5.2. IN THE COURSE OF PENALTY PROCEEDINGS, IT WAS F OR THE ASSESSEE AGAIN TO AGITATE THE MATTER. INSTEAD, HE PLEADED ONLY MATTER OF MALA FIDE, WITHOUT DISCHARGING HIS BURDEN IN PROPER MANNER AND GIVING A SATISFACTORY EXPLANATION OF THE PENALTY. THE CASE LAWS RELIED ON BY THE ASSESSEE ARE PURELY ON PECULIAR FACTS. DURING THE COURSE OF PENA LTY PROCEEDINGS, ASSESSEE HAS FAILED TO ADDUCE ANY PLAUSIBLE EXPLANATION TO E STABLISH HIS BONA FIDES. UNDER THESE CIRCUMSTANCES, THE CASE LAWS RELIED ON BY ASSESSEE ARE CLEARLY DISTINGUISHABLE. AS HELD BY THE HONBLE SUPREME COU RT IN THE CASE OF K.P. ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 8 MADHUSUDAN 251 ITR 99, PENALTY U/S 271(1)(C) CAN BE IMPOSED QUA THE REVISED RETURN, THEREFORE, THE RELIANCE ON THE CASE OF SURESH CHANDRA MITTAL (SUPRA), IS DISTINGUISHABLE. HONBLE SUPREME COURT IN THE CASE OF DHARMESH TEXTILE PROCESSOR (SUPRA) HAS HELD THAT ESTABLISHME NT OF MENS REA IS NOT ESSENTIAL FOR LEVY OF PENALTY AND THE SAME IS A CIV IL LIABILITY IN NATURE. 5.3. COMING TO THE RATIO OF DECISION IN THE CASE OF RELIANCE PETRO (SUPRA), THE SAME CANNOT BE APPLIED TO ASSESSEES CASE, AS T HE ASSESSEE FAILED TO JUSTIFY HIS OWN CLAIM IN THE RETURN OF INCOME. 5.4. IN VIEW OF ALL THESE FACTS, WE UPHOLD THE ORDE R OF CIT(A), SUSTAINING THE PENALTY U/S 271(1)(C). 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. PRONOUNCED IN OPEN COURT ON 13-01-2012. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-01-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 3206/DEL/10 RAJESH AGARWAL VS. ITO 9