Late Shri Je.Jenardhanan, Rep. by Wife & (L/R) Smt. P.J.Sujatha, CHENNAI V. ACIT, CHENNAI

ITA 3370/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4573 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 16-12-2016
• Court: TRIBUNAL
• Department Lawyers: WIFE
• Keywords: Gift; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3370/MDS/2016 * * /ASSESSMENT YEAR: 2002-03 LATE SHRI JE. JENARDHANAN, REP. BY WIFE & (L/R) SMT. P.J.SUJATHA, NO.61, USMAN ROAD, T.NAGAR, CHENNAI-600 017. VS. THE ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-1, 121, MAHATMA GANDHI ROAD, CHENNAI-600 034. [PAN: A ADPJ 4514 H ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.G.BASKAR, ADV. ./- 0 /RESPONDENT BY : MR.A.V.SREEKANTH, JCIT 0 /DATE OF HEARING : 06.03.2017 0 /DATE OF PRONOUNCEMENT : 03.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 28.10.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 2, CHENNAI, IN ITA NO.13/CIT(A)-2/2013-14 FOR THE AY 2002-03. 2.0 THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTA L INCOME OF RS.71,01,710/- AND THE ASSESSMENT WAS COMPLETED U/S .143(3) ON TOTAL ITA NO.3370/MDS/2016 :- 2 -: INCOME OF RS.83,81,890/- AND THE AO HAS MADE THE AD DITION OF RS.7,90,000/-U/S.68 IN RESPECT OF GIFT RECEIVED BY THE ASSESSEE AND INITIATED PENALTY U/S.271(1)(C). THE ASSESSEE WEN T ON APPEAL BEFORE THE LD.CIT(A) ON THE QUANTUM ADDITION AND FILED CONFIRM ATION LETTER FROM THE DONOR WHICH WAS FORWARDED TO THE AO CALLING FOR REM AND REPORT. SINCE, THE AO DID NOT SUBMIT THE REMAND REPORT, THE LD.CIT (A) DELETED THE ADDITION. 3.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A) ON QUANTUM ADDITION, THE DEPARTMENT FILED APPEAL BEFORE THE ITAT AND THE ITA T IN ITS ORDER NOS.2202 TO 2205 IN PARA NO.7.5 SET-ASIDE THE ORDER OF THE LD.CIT(A) AND CONFIRMED THE ADDITION MADE BY THE AO. FOR THE SAK E OF CONVENIENCE AND CLARITY, THE SAME IS EXTRACTED FROM THE ITATS ORDE R AS UNDER: 7.5 WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE AND PERUSED THE RELEVANT RECORDS. WE FIND THAT THERE WAS NO CONFIRMATION OF THE GIFT RECEIVED PRODUCED BEFORE THE ASSESSING OFFICER. HOWEVER, THE SAME HAS BEEN SUBMIT TED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHO ALSO DID NOT MAKE ANY VE RIFICATION TO ASCERTAIN THE VERACITY OF AVERMENT IN THE SAID CONFIRMATION. UNDER THE CIRCUM STANCES, THE UNVERIFIED CONFIRMATION CANNOT BE A BASIS OF DELETION OF ADDITION. AGAINST THE ADDITION OF RS.7,90,000/-, THE AO IMPO SED THE PENALTY U/S.271(1)(C) AMOUNTING TO RS.3,40,889/-. AGGRIEVED BY THE ORDER OF THE AO FOR IMPOSING PENALTY THE ASSESSEE FILED APPEAL B EFORE THE LD.CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO WHI CH IS A SUBJECT MATTER OF THIS APPEAL. 4.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE LEVY OF PENALTY U/S.271(1)(C) OF IT ACT. ITA NO.3370/MDS/2016 :- 3 -: APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED THAT THE ASSESSEE HAS RECEIVED A GIFT FROM SHRI DASARADHAN MADHAVAN A SUM OF RS.30,000/- SINGAPORE DOLLARS ON 09.02.2008. AT THE TIME OF AS SESSMENT, THE ASSESSEE COULD NOT PLACE THE CONFIRMATION LETTER BE FORE THE AO DUE TO NON- AVAILABILITY OF THE DONOR BEING NRI. THE AMOUNT WA S TRANSFERRED BY TELEGRAPHIC TRANSFER FROM NRI ACCOUNT AT CHENNAI. HOWEVER, AT THE TIME OF APPEAL, THE ASSESSEE COULD ABLE TO OBTAIN THE CO NFIRMATION FROM THE DONOR WHICH WAS SUBMITTED BY THE LD.CIT(A) AS AN AD DITIONAL EVIDENCE. THE LD.CIT(A) ACCEPTED THE ADDITIONAL EVIDENCE AND FORWARDED THE SAME TO THE AO BEFORE PASSING THE PENALTY ORDER. THE CON FIRMATION GIVEN BY THE DONOR WAS VERY MUCH AVAILABLE TO THE AO AS WELL AS THE LD.CIT(A) BEFORE PASSING THE PENALTY ORDER. WITHOUT CROSS VERIFYING THE INFORMATION AVAILABLE WITH THE AO, THE AO CANNOT CONCLUDE THE G IFT AS BOGUS AND IMPOSE PENALTY U/S 271(1)(C). THE ASSESSEE ALSO AR GUED THAT THE TIME LIMIT FOR IMPOSING PENALTY IS BARRED BY LIMITATION AND ACCORDING TO THE ASSESSEE HIS CASE IS COVERED BY SEC.275(A) OF INCOM E TAX ACT. FURTHER, THE LD.AR ARGUED THAT NOTICE ISSUED U/S.271(1)(C) IS BAD IN LAW SINCE THE IRRELEVANT COLUMNS OF PRINTED NOTICE WERE NOT STRU CK OFF. THE LD.AR ARGUED THAT THE PENALTY IS NOT SUSTAINABLE ON DEEME D ADDITION U/S.68 AND RELIED ON 327 ITR 447. ON THE OTHER HAND, THE LD.D R RELIED ON THE ORDERS OF LOWER AUTHORITIES. 5.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. ITA NO.3370/MDS/2016 :- 4 -: THE AO HAS MADE THE ADDITION OF RS.7,90,000/- RELA TING TO THE GIFT RECEIVED FROM SHRI DASARADHAN MADHAVAN WHO HAPPENS TO BE BROTHER-IN- LAW OF THE ASSESSEE. AT THE TIME OF ASSESSMENT, TH E ASSESSEE COULD NOT FURNISH THE CONFIRMATION LETTERS, HENCE, THE AO HAS RIGHTLY MADE THE ADDITION. AT THE TIME OF THE PENALTY PROCEEDINGS C ONFIRMATION, LETTER WAS MADE AVAILABLE TO THE ASSESSEE WHICH WAS FORWARDED BY THE LD.CIT(A) BY CALLING FOR THE REMAND REPORT. THE DETAILS FURNISHE D IN THE CONFIRMATION LETTER SHOWS THAT THE DONOR WAS AN NRI AND THE AMOU NT WAS TRANSFERRED BY TELEGRAPHIC TRANSFER AND MADE FROM NRI ACCOUNT. THE DONOR ALSO STATED IN THE LETTER THAT THE DONORS TURNOVER WAS AROUND RS.2.00 CR. AND GIFT WAS SOLELY MOTIVATED BY PURE LOVE AND AFFECTIO N. IN THE INSTANT CASE, THE DONOR IS A BROTHER-IN-LAW OF THE ASSESSEE AND T HE GIFT AMOUNT WAS TRANSFERRED FROM NRI A/C AND THE ENTIRE INFORMATION WAS AVAILABLE BEFORE THE AO AS WELL AS THE LD.CIT(A). BOTH THE LD.CIT(A ) AND THE AO HAVE NOT MADE ANY VERIFICATIONS REGARDING THE GENUINENESS AN D CORRECTNESS OF THE GIFT RECEIVED BY THE ASSESSEE EVEN THOUGH THE INFOR MATION IS AVAILABLE TO THE AO. THE DECISION OF THE TRIBUNAL IN (2010) 127 ITD 0361 (CHENNAI) AND ITA NO.3095/AHD/2009) RELIED UPON BY THE ASSESS EE ALSO SUPPORTS THAT MERE MAKING ADDITION U/S.68 DOES NOT LEAD TO C ONCEALMENT OF INCOME U/S.271(1)(C) AUTOMATICALLY. HONBLE ITAT CONFIRMED THE ORDER OF THE AO ON QUANTUM ADDITION SINCE THE LD.CIT(A) HAS DELETED THE ADDITION WITHOUT VERIFYING THE CREDENTIALS OF CONFIRMATION. THE ASSE SSEE HAS PLACED CONFIRMATION LETTER BEFORE THE LD.CIT(A) ON 09/02/2 008 WHICH WAS FORWARDED TO THE AO. THE AO HAS PASSED THE PENALTY ORDER ON 29 TH JUNE ITA NO.3370/MDS/2016 :- 5 -: 2011 WITHOUT MAKING ANY VERIFICATION OF THE CONTENT S OF THE CONFIRMATIONS EITHER WITH THE BANK OR WITH THE DONOR. ONCE THE CO NFIRMATION LETTER IS FURNISHED WITH ALL THE PARTICULARS ONUS SHIFTS ON T HE DEPARTMENT TO DISPROVE THE CONTENTS AND THE REVENUE FAILED DISCHARGE ITS ONUS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT REVENUE HAS NOT MADE OUT A CASE FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME TO IMPOSE THE PENALTY U/S 271(1)(C) OF I.T ACT. THEREFORE WE SET-ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND CANCEL THE PENALTY IMPOSE D BY THE AO. SINCE, WE HAVE DECIDED THE APPEAL ON MERITS AND THE PENALT Y IS CANCELLED BY US WE ARE OF THE VIEW THAT THE ALTERNATE GROUNDS REGAR DING THE LIMITATION AND TECHNICAL ISSUE RELATING DEFECTS IN THE NOTICE NEED NOT BE ADJUDICATE UPON. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 3 RD MAY, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF