Dakshaben Prakashbhai Shah, Kalol V. The Income tax Officer,Ward-3, Mehsana

ITA 359/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0212 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-10-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 04-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT JHAVERI
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment; Gift; Onus to prove; Set aside
• Section: 271(1)(c); 143(3); 133A; 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGARWAL, A.M.) I.T.A. NO. 359/AHD./2009 ASSESSMENT YEAR : 2002-2003 & I.T.A. NOS. 78 & 4024/AHD./2007 ASSESSMENT YEAR : 2003-2004 SMT. DAXABEN PRAKASHBHAI SHAH, KALOL -VS.- INCOM E TAX OFFICER, WARD-3, MEHSANA (P.A. NO. AWIPS 3204 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : DR. JAYANT JHAVERI O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- ALL THESE THREE APPEALS FILED BY THE SAME ASSESSEE WERE HEARD ON THE SAME DATE, ARGUED BY COMMON LD. R EPRESENTATIVES. THEREFORE, THESE ARE DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO. 359/AHD./2009 FOR THE ASSESSMENT YEAR 2002-03 THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORD ER DATED 03.11.2008 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR C ONFIRMING THE ADDITION OF RS.3,25,000/- AS NON-GENUINE GIFT RECEIVED BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002-03. ITA NO. 78/AHD/2007 FOR THE ASSESSMENT YEAR 2003-04 THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 23.10.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XXI, AHMEDABAD CONFIRMING THE ADDITION OF RS.2,35,000/- AS NON-GENUINE GIFT RECEIVED BY THE A SSESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003-04. ITA NO. 4024/AHD./2007 FOR THE ASSESSMENT YEAR 2003-04 THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 24.08.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XXI, AHMEDABAD CONFIRMING THE PENALTY OF RS.64,636/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE A CT FOR THE ASSESSMENT YEAR 2003-04. 2 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. FOR THE ASSESSMENT YEAR 2003-04 ON 31.03.2004 SHE FILED HER RETURN OF THE D ETAIL TO THE TUNE OF RS.60,550/-. IN THIS CASE, A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF SHRI PRAKASHBHAI KANYALAL SHAH, PROP. OF ASHOK READYMADE STORES, KALOL ON 29.09.2003. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT HOUSE PROPERT Y STANDING IN THE ASSESSEES NAME WAS PURCHASED FROM FOUR DIFFERENT PARTIES FOR RS.3,68,5 00/-, WHICH WAS ALSO REFLECTED IN THE CAPITAL ACCOUNT OF THE ASSESSEE AS PER RETURN FILED AFTER T HE DATE OF SURVEY, BUT THE COST OF THE PROPERTY WAS MENTIONED AT RS.3,17,900/-. DURING THE COURSE O F SURVEY, THE ASSESSEES HUSBAND SHRI PRAKASHBHAI SHAH HAD DECLARED AN AMOUNT OF RS.4,00, 000/- AS UNDISCLOSED INVESTMENT IN THE AFORESAID PROPERTY PURCHASED IN THE NAME OF ASSESSE E. HOWEVER, THE ASSESSEE DID NOT MENTION ABOUT THE DISCLOSURE IN HER RETURN OF INCOME NOR HE R HUSBAND HAD MADE DISCLOSURE OF THE AMOUNT AS DECLARED DURING THE SURVEY. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY. THE A.O. FRAMED THE ASSESSMENT UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 2003-04, WHEREIN HE MADE AN ADDITION OF RS.5,45,000/- ON ACCOUNT OF UNDISCLOSED INVESTME NT IN THE PROPERTY. IN THIS ASSESSMENT YEAR, THE A.O. OBSERVED THAT RS.2,89,000/- WILL BE TAXED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002-03. 4. SUBSEQUENTLY, FOR ASSESSMENT YEAR 2002-03, A NOT ICE UNDER SECTION 148 WAS ISSUED AND ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON 20.12 .2007, WHEREIN HE MADE AN ADDITION OF RS.3,25,000/- IN RESPECT OF GIFT RECEIVED BY THE AS SESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002-03. ON APPEAL, FOR THE ASSESSM ENT YEAR 2003-04, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE A DDITION TO THE EXTENT OF RS.3,25,000/- AND DELETED THE REMAINING ADDITION OF RS.2,35,000/-. IN THE ASSESSMENT YEAR 2002-03, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ADDI TION OF RS.3,25,000/-. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ), THE ASSESSEE IS IN APPEALS BEFORE US FOR BOTH THE ASSESSMENT YEARS. 5. IN THE ASSESSMENT YEAR 2003-04, THE A.O. LEVIED THE PENALTY OF RS.64,636/- ON THE ADDITION TO THE EXTENT OF RS.2,35,000/- MADE ON ACC OUNT OF UNACCOUNTED INVESTMENT OUT OF ALLEGED GIFTS, WHICH WERE CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE QUANTUM APPEAL. THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) CONFIRMED THE PENALTY. 3 AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO, THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E SHRI S.N. DIVETIA APPEARED AND CONTENDED THAT IN THE ASSESSMENT ORDER FOR THE ASSE SSMENT YEAR 2003-04, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) STATED THAT THE ASSESSEE HAD NOT DECLARED THE AMOUNT OF RS.4,00,000/- AS UNDISCLOSED INVESTMENT BY WAY OF P URCHASE OF HOUSE PROPERTY THOUGH THE SAME WAS DECLARED BY HER HUSBAND SHRI PRAKASHBHAI SHAH I N HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT ON 29.09.20 03 AT HIS BUSINESS PREMISES. BEFORE THE A.O., THE ASSESSEE EXPLAINED THAT INVESTMENT IN PUR CHASE OF IMMOVABLE PROPERTY WAS MADE AMOUNTING TO RS.7,06,560/-, WHEREIN COST OF PROPERT Y WAS RS.6,24,000/-, STAMP DUTY WAS RS.62,400/-, REGISTRATION CHARGES WAS OF RS.10,160/ -, MISC. LEGAL EXPENSES AMOUNTING TO RS.10,000/- AS ESTIMATED AT THE TIME OF SURVEY. AS AGAINST THIS INVESTMENT, GIFT AMOUNTING TO RS.5,60,000/- WAS RECEIVED FROM VARIOUS CLOSE RELAT IVES. THE A.O. CONCLUDED THAT THE ASSESSEES HUSBAND HAS DECLARED IN HIS STATEMENT AT THE TIME O F SURVEY THE TOTAL INVESTMENT IN THE PROPERTY OF RS.8,00,000/-. OUT OF WHICH RS.2,55,000/- WAS WITHD RAWN FROM THE BANK DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002-03, SO TH E BALANCE OF RS.5,45,000/- WAS TREATED AS UNDISCLOSED INVESTMENT FOR THE ASSESSMENT YEAR 2003 -04. IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE A CTION OF A.O. TREATING AS BOGUS GIFT TO THE EXTENT OF RS.2,35,000/-. THE LD. COUNSEL OF THE ASS ESSEE SUBMITTED THAT ALL THE DONORS HAD FURNISHED AFFIDAVITS IN SUPPORT OF THEIR GIFTS. BEF ORE THE A.O., DONORS COULD NOT BE PRODUCED DUE TO HEAVY RAINS AND BOMB BLAST IN MUMBAI AND NOW THE ASSESSEE UNDERTAKES TO PRODUCE ALL THE DONORS, THEREFORE, THE IMPUGNED ORDER OF LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) BE SET ASIDE AND MATTER BE RESTORED TO THE FILE OF A.O. SO THAT THE ASSESSEE CAN PRODUCE THE DONORS AND A.O. MAY EXAMINE THEM AND RE-ADJUDICATE THE ADDITIO N OF RS.2,35,000/- AFRESH IN ACCORDANCE WITH LAW. 7. WITH REGARD TO THE ASSESSMENT YEAR 2002-03 ALSO, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN THIS YEAR, COMPLETE DETAILS OF DO NORS ALONGWITH NAMES AND ADDRESSES, THEIR AFFIDAVITS WERE FURNISHED. ALL THESE DONORS CAN ALS O BE PRODUCED. THEREFORE, THE MATTER BE RESTORED TO THE FILE OF A.O. FOR THIS YEAR ALSO. 4 8. ON THE OTHER HAND, DR. JAYANT JHAVERI APPEARING ON BEHALF OF THE DEPARTMENT SUPPORTED THE ORDER OF AUTHORITIES BELOW. HE POINTED OUT THAT IN THIS CASE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CALLED THE REMAND REPORT AND A. O. VIDE LETTER DATED 25.08.2006 AFTER MAKING VERIFICATION IN RESPECT OF ALLEGED GIFTS FRO M THE BANKS REVEALED THE FOLLOWING FACTS :- (I). SHRI VASTIMAL G. SISODIA RS. 25.0007- ON 05/0 7/2001: THE ADDRESS OF THE ABOVE PARTY IS SHOWN AS MAHAVIR CHOWK, NERAL, TAL: KARJAT, DISTT. RAIGAD, BUT NO HOUSE/FLAT NO. IS GIVEN. THE GIFT DEED SHOWS THAT S TAMP PAPER OF RS. 50/- WAS PURCHASED FROM A STAMP VENDER OF KATOL ON 27/06/2001 IN THE NAME OF SMT. D AKSHABEN P. SHAH AND SIGNED BY SHRI MUKESH K. SHAH. PAY ORDER OF RS. 25,000/- WAS DRAWN FROM B ANK OF BARODA, KALOL BRANCH ON 05.07.2001 {BANK PAY ORDER NO. 14055) SIGNATURE OF APPLICANT IS MADE BY SHRI MUKESH SHAH (BROTHER-IN-LAW OF THE ASSESSEE) (II) SHRI MANGILAL DOLAJI JAIN RS.30,000/- ON 16. 07.2001 : ADDRESS : AT MAIN BAZAR, KAMSHET, TAL: MOVAL, DIST. : PUNE GIFT DEED SHOWS THAT THE STAMP PAPER OF RS. 507- IS PURCHASED ON 16/07/2001 IN THE NAME OF DAKSHABEN P. SHAH AND MANISH SHAH SIGNED AS THE PUR CHASER BANK PAY ORDER OF RS. 30,000/- DRAWN FROM BANK OF BARODA, KALOL BY DEPOSITING CASH (PAY ORDER NO. 14060) (III) SMT. DAIBEN B. JAIN RS. 40,000/- (16/01/2002) : ADDRESS: AT. OLD BAZAR, PET, NEAR JAIN, NERAL, TAL: KARJAT, DISTT RAIGAD STAMP PAPER OF RS. 50/- PURCHASED IN THE NAME OF SM T. DAKSHABEN P. SHAH,SIGNED BY MUKESH SHAH BANK PAY ORDER OF RS. 40.000/- IN CASH FROM BANK OF BARODA - PAY ORDER NO. 14183 NAME OF APPLICANT: MUKESH SHAH (IV) JAVANLAL VASTIMAL JAIN RS. 25.000/- DATED 08/0 2/2002 : ADDRESS: MAHAVIR CHOWK, NERAL, TAL: KARJAT, DISTT.: RAIGAD STAMP PAPER FOR GIFT DECLARATION IS PURCHASED IN TH E NAME OF DAKSHABEN P.SHAH FROM KALOL, SIGNED BY 'RAJU' BANK PAY ORDER PURCHASED BY MUKESH SHAH BANK OF BARODA, KALOL - PAY ORDER NO. 14202 (V) GULABCHAND C. JAIN RS. 25.000/- DATED 09/02/200 2 : ADDRESS : MAHAVIR CHOWK, NERAL, TAL: KARJAT, DISTT. : RAIGAD GIFT DEED NOT FILED, CONFIRMATION NOT FILED, NO BAN K STATEMENT, NO DRAFT NUMBER, ETC. (VI) SHRI BHAIRAVMAL D. JAIN RS. 35.000/- DATED 14/ 02/2002 : ADDRESS: AT. SOLAPUR BAZAR, TAL: KORAD, DISTT.: SAL ERA STAMP PAPER PURCHASED ON 11/02/2002 IN THE NAME OF DAKSHABEN P. SHAH,FROM KALOL, SIGNED BY SHRI MUKESH SHAH DD STATE BANK OF INDIA, KALOL BY PAYMENT OF CASH, S IGNED BY APPLICANT SHRI MUKESH SHAH (VII) GISIBAI C. JAIN RS. 40.000/-DATED 14/03/2002 : STAMP PAPER OF RS. 20/- PURCHASED IN THE NAME OF DA KSHABEN P. SHAH FROM KALOL, SIGNED BY A. D. SHAH BANK OF BARODA PAY ORDER NO. 14242 BY CASH PAYMENT -APPLICANT SHRI MUKESH K.SHAH 5 (VIII). KANAIVALAL C. SHAH RS. 40.000/- DATED 15/0 3/2002 AND RS. 40.0007- DATED 03/04/2002: ADDRESS: KALOL STAMP PURCHASED IN THE NAME OF DAKSHABEN P. SHAH, S IGNED BY SHRI MANISH SHAH (ASSESSEE'S SON) PAY ORDER NO. 14223 OF BANK OF BARODA BY CASH ON 15 /03/2002 - APPLICANT SHRI MUKESH SHAH AND RS. 40.000/- ON 03/04/2002 BANK DRAFT NO. 832455 DR AWN SB!, KALOL BY DEPOSITING CASH - APPLICANT SHRI MUKESH SHAH (IX). PRAKASH T. JAIN RS. 30.000/- DATED 22/03/200 2 : ADDRESS: MAIN BAZAR, KARJAT, TAL.: KARJAT, DISTT.: RAIGAD STAMP PURCHASED IN THE NAME OF DAKSHABEN P. SHAH, S IGNED BY SHRI MANISH SHAH STATE BANK OF INDIA DRAFT - NAME OF APPLICANT AND S IGNED BY SHRI MUKESH SHAH SHOWING ADDRESS OF KALOL (X). ANARAII SARMAL GHOPDA RS. 35,000/-DATED 28/03/ 2002: ADDRESS: NEW HANUMAN SALLI, KAIABADEVI ROAD, MUMBAI STAMP PURCHASED ON 28/03/2002 IN THE NAME OF DAKSHABEN P. SHAH - SIGNED BY SHRI MUKESH S HAH STATE BANK OF INDIA DD NO. 832422 BY PAYMENT OF CAS H, SIGNED BY APPLICANT SHRI MUKESH SHAH (XI). VIMLABEN HARKHADUL JAIN RS. 30.000/- DATED 05 /04/2002 : STAMP PAPER PURCHASED ON 05/04/2002 IN THE NAME OF DAKSHABEN P. SHAH, KALOL, SIGNED BY RUPESH GADHVI SBI DD NO. 832464 BY CASH- APPLICANT SHRI MUKESH SH AH SIGNED (XII). MOHANLAL M. JAIN RS. 40.000/- DATED 09/04/2 002 : ADDRESS: OLD BAZAR, PET, NR. JAIN MANDIR, TAL.: KAR JAT, DIST. RAIGAD STAMP PAPER PURCHASED ON 08/04/2002 IN THE NAME OF SHIT DAKSHABEN SHAH, KALOL, SIGNED BY SHRI MUKESH SHAH SB1 DD NO. 832478 DATED 09/04/2002 BY DEPOSITING CA SH - APPLICANT SHRI MUKESH SHAH, KALOL (XIII). KAMLABEN K. SHAH RS. 45.000/- DATED 18/04/ 2002 : STAMP PAPER DATED 12/04/2002 IN FAVOUR OF SHRI DAKS HABEN SHAH SBL DD NO. 832501 BY DEPOSITING CASH - APPLICANT SHRI MUKESH SHAH (XIV). FOOTENMAL C. JAIN RS. 40.000/- DATED 23/05/ 2002 : ADDRESS: NERAL, MAHAVIR ROAD, TAL.: KARJAT, DISTT.: RAIGAD STAMP PAPER OF RS. 20/- IN THE NAME OF DAKSHABEN SH AH SBI DD NO. 832577 DATED 23/0572002 BY DEPOSITING C ASH - APPLICANT FOR DD ASSESSEE SMT. DAKSHABEN SHAH (XV). SMT. JIVIBEN F. JAIN RS. 40.000/- DATED 29/0 5/2002 : ADDRESS: NERAL, MALHAR ROAD, TAL.: KARJAT, DISTT.: RAIGAD STAMP PAPER PURCHASED FROM KALOL IN THE NAME OF SMT . DAKSHABEN P. SHAH BY SHRI ARVINDBHAI SBI DEMAND DRAFT NO. 832585 - APPLICANT JAIN JIVIBA I F., KALOL, SIGNED FOR RECEIPT-GADVI THE LD. D.R. SUBMITTED THAT VERIFICATION OF ABOVE B ANK RECORDS SHOWS THAT, THE ASSESSEES BROTHER- IN-LAW SHRI MUKESH K. SHAH, WHO HAD BEEN ATTENDING ALL THE BUSINESS AFFAIRS OF THE ASSESSEE AND HER HUSBAND, PARTICULARLY THE INCOME-TAX MATTER HAD PLAYED A VITAL ROLE RIGHT FROM PURCHASE OF STAMP PAPER, OBTAINING BANK PAY ORDERS EITHER IN TH E NAME OF HIMSELF OR IN THE NAMES OF THE SO- 6 CALLED DONORS AND THUS CONVERTING THE ASSESSEES UN ACCOUNTED CASH INTO ACCOUNTED ONE, SO AS TO EXPLAIN THE UNACCOUNTED INVESTMENTS IN IMMOVABLE PR OPERTIES IN THE NAME OF ASSESSEE WHEN THE SAME WAS DETECTED BY THE DEPARTMENT DURING THE SURV EY OPERATION. IN THESE CIRCUMSTANCES, THE ADDITION WAS RIGHTLY MADE AND THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN CONFIRMING THE SAME IN BOTH TH E ASSESSMENT YEARS. THE LD. D.R. FURTHER SUBMITTED THAT LOOKING TO THE PECULIAR FACTS, NO US EFUL PURPOSE WILL BE SERVED IN REMANDING THE MATTER BACK TO THE FILE OF A.O. BECAUSE IN THIS CAS E THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CALLED THE REMAND REPORT AND AFTER CON FRONTING THE SAME, CONFIRMED THE ADDITION TO THE EXTENT OF RS.2,35,000/- AND RS.3,25,000/- IN TH E ASSESSMENT YEARS 2003-04 AND 2002-03 RESPECTIVELY. THEREFORE, THE VIEW TAKEN BY THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 9. WE HAVE HEARD BOTH THE SIDES. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS RECEIVED ALLEGED GIFTS AGGREGATING TO RS.3,25,000/- AND RS.2,35,000/- DURING THE ASSESSME NT YEAR 2002-03 AND 2003-04 RESPECTIVELY. THE ASSESSEE FILED CONFIRMATION LETTER, DECLARATION OF GIFT, VOTER IDENTITY CARD OF THE DONORS, ETC. BUT MOST IMPORTANT THING IS THAT NONE OF THE DONORS PURCHASED BANK DRAFT FROM THEIR REGULAR BANK A/C. IT WAS CLAIMED THAT THE BANK DRAFTS WERE PURCHASED IN AHMEDABAD ITSELF, FOR WHICH PAYMENT IS MADE IN CASH. IN THESE CIRCUMSTANCES, GE NUINENESS OF THE TRANSACTIONS IS IN DOUBT. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) FOR CONFIRMING THE ADDITION OF RS.2,35,000/- IN THE ASSESSMENT YEAR 20 03-04 IS AS UNDER :- FROM THIS, IT IS OBVIOUS THAT, AS MENTIONED BY THE ASSESSING OFFICER IN THE CASE OF ALL THE DONORS OF ALLEGED GIFTS, NON OF THE DONOR A PPROACHED TO THE BANK FOR GETTING A DEMAND DRAFT OF GIFT ALLEGED TO HAVE BEEN RECEIVED BY THE APPELLANT. IT IS VERY IMPORTANT TO NOTE THAT EXCEPT THE FATHER IN LAW AND MOTHER IN LA W OF THE APPELLANT ALL THE DONORS ARE RESIDING HOT ONLY OUTSIDE KALOL BUT OUTSIDE STATE O F GUJARAT THOUGH, IN THE LETTER DTD. 27.9.2006 OF THE APPELLANT IT HAS BEEN CLAIMED THAT THE DONORS HAD COME WITH CASH AND GIFTS WERE MADE, THERE IS NO DOCUMENTARY EVIDENCE P RODUCED TO ESTABLISH THIS CLAIM MADE BY THE APPELLANT. NEITHER, IT IS ESTABLISHED THAT A NY OF THE DONOR HAD COME WITH CASH AT THE RELEVANT POINT OF TAME, NOR IT IS ESTABLISHED THAT CASH UTILISED IN OBTAINING THE DDS FOR ALLEGED GIFTS TO THE APPELLANT BELONGED TO THE ALLE GED DONORS. AS PER THE VERIFICATIONS MADE BY THE ASSESSING OFFI CER, SHRI MUKESH SHAH HAS PLAYED A VITAL ROLE IN OBTAINING BANK PAY ORDERS, D EMAND DRAFTS EITHER IN THE NAME OF HIMSELF OR SO CALLED DONORS. IN SUCH CIRCUMSTANCES, IT IS DIFFICULT TO BELIEVE THAT IT WAS THE CASH BROUGHT BY THE DONORS FROM SUCH DISTANT PLACES FOR MAKING THE GIFTS TO THE APPELLANT. I ALSO AGREE WITH THE OBJECTIONS OF THE ASSESSING OFF ICER THAT THE DECLARATION OF GIFT IN THE 7 FOLLOWING SENTENCE 'VIDE CHEQUE NO............. OF MY BANK ACCOUNT WITH STATE BANK OF INDIA, BANK OF BARODA,' WAS CERTAINLY MISLEADING. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE GENUINENESS OF RECEIPT OF GIFT BY THE APPELLANT FRO M THE ALLEGED DONORS, IS NOT ESTABLISHED. I, THEREFORE, AGREE THAT THE AMOUNT OF ALLEGED GIFT CLAIMED TO HAVE BEEN RECEIVED BY THE APPELLANT FROM VARIOUS PERSONS DURING THE YEAR AS U NDER: - NAME AMOUNT KANIYALAL C. SHAH RS.40,000/- VIMLABEN HAKHADUL JAIN RS.30,000/- MOHANLAL M. JAIN RS.40,000/- KAMLABEN K. SHAH RS.45,000/- FOOTERMAL C. JAIN RS.40,000/- SMT. JIVIBEN F. JAIN RS.40,000/- TOTAL RS.2,35,000/- WHICH IS UNDISCLOSED INCOME OF THE APPELLANT FOR TH E CURRENT YEAR AND THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER OF THIS AMOU NT IS CONFIRMED. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE ASSESSMENT YEAR 2002-03 IS CONTAINED IN PARA 2.4 WHEREIN HE F OLLOWS HIS ORDER OF ASSESSMENT YEAR 2002-03 BECAUSE ACCORDING TO HIM, THE FACTS IN BOTH THE ASS ESSMENT YEARS ARE IDENTICAL. IT IS PERTINENT TO NOTE THAT BEFORE NONE OF THE AUTHORITIES BELOW THE ASSESSEE HAS FURNISHED THE DETAILS OF BANK A/C./ SOURCE AVAILABLE TO THE VARIOUS DONORS FOR BUYING T HE ALLEGED BANK DRAFTS. THERE IS NOT AN IOTA OF EVIDENCE BROUGHT ON RECORD, WHICH INDICATES THAT TH E ALLEGED DONORS WERE PRESENT FOR MAKING DRAFTS AND HAD BROUGHT CASH FROM VARIOUS PLACES. TH E BANK DETAILS OF NONE OF THE DONORS INDICATING WITHDRAWAL OF CASH FOR BUYING BANK DRAFT S WERE MADE AVAILABLE TO ANY OF THE AUTHORITIES BELOW. NO USEFUL PURPOSE WILL BE SERVED BY ALLOWING ONE MORE OPPORTUNITY TO ASSESSEE TO EXPLAIN HIS CASE BEFORE A.O. KEEPING IN VIEW OF THE PECULIAR FACTS OF THE CASE, IN OUR CONSIDERED OPINION, THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN CONFIRMING THE ADDITION OF RS.2,25,000/- AND RS.3,35,000/- IN RESPECT OF ALLEGED GIFTS FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 RESPECT IVELY. WE, THEREFORE, INCLINED TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ). 10. WITH REGARD TO PENALTY OF RS.64,636/- LEVIED BY THE A.O., THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT MERELY BECAUSE THE ADDITION HAS BEEN CONFIRMED IN QUANTUM APPEAL, NO PENALTY IS ATTRACTED AUTOMATICALLY. WHILE CONFIRMING THE PENAL TY, BOTH THE DEPARTMENTAL AUTHORITIES BELOW FAILED TO CONSIDER THE MATERIAL PRODUCED BY THE ASS ESSEE IN SUPPORT OF THE CLAIM THAT THE GIFTS WERE GENUINE. IN THE ASSESSMENT PROCEEDINGS, BOTH THE DE PARTMENTAL AUTHORITIES BELOW TREATED THE GIFTS AS BOGUS ON DOUBT AND SUSPICION. ON DOUBT AND SUSPI CION, ADDITION MAY BE MADE AND CONFIRMED 8 BY THE APPELLATE AUTHORITY, BUT MERELY BECAUSE THE ADDITION IS CONFIRMED DOES NOT IP SO FACTO ATTRACT THE PENALTY PROVISION. THE PENALTY PROCEEDI NG REQUIRES A STRICT ADHERENCE OF ONUS TO PROVE THAT THERE WAS CONCEALMENT OF INCOME. IN THIS CASE, NO SUCH ONUS IS DISCHARGED BY THE REVENUE. THE ASSESSEE HAS FURNISHED ALL THE RELEVANT MATERIA L, WHICH WERE NOT FOUND FALSE, THEREFORE, SHE HAS NOT CONCEALED THE PARTICULARS OF INCOME, WHICH WERE NECESSARY FOR COMPUTATION OF INCOME. THEREFORE, PENALTY TO THE EXTENT OF RS.64,636/- LEV IED BY THE A.O. IN THE ASSESSMENT YEAR 2003-04 BE CANCELLED. 11. ON THE OTHER HAND, DR. JAYANT JHAVERI APPEARED FOR THE REVENUE AND SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. D.R. SUBMITTED THAT R ETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL WAS FILED ON 31.03.2004 IN RESPONSE TO NOTIC E UNDER SECTION 148. PRIOR TO THE DATE OF FILING THE RETURN OF INCOME ON 29.09.2003, A SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEES HUSBAND SHR I PRAKASHBHAI KANYALAL SHAH, PROP. OF ASHOK READYMADE STORES, KALOL. DURING THE COURSE OF SURVE Y, IT WAS NOTICED THAT THE HOUSE PROPERTY STANDING IN THE ASSESSEES NAME WAS PURCHASED FROM FOUR DIFFERENT PARTIES FOR RS.3,68,500/-, WHICH WAS ALSO REFLECTED IN THE CAPITAL ACCOUNT OF THE ASSESSEE, BUT THE COST OF THE PROPERTY WAS MENTIONED AT RS.3,17,900/-. IN THIS REGARD, THE ASS ESSEES HUSBAND SHRI PRAKASHBHAI KANYALAL SHAH DURING THE COURSE OF SURVEY UNDER SECTION 133A MADE A DISCLOSURE OF RS.4,00,000/- BEING THE UNDISCLOSED INVESTMENT IN THE AFORESAID PROPERT Y PURCHASED IN THE NAME OF ASSESSEE. WHILE FILING THE RETURN FOR THE RELEVANT ASSESSMENT YEAR, NEITHER THE ASSESSEE NOR HER HUSBAND MADE ANY DISCLOSURE OF AMOUNT AS DECLARED DURING THE COURSE OF SURVEY AND, THEREFORE, AFTER DISCUSSING THE ISSUE ELABORATELY IN THE ASSESSMENT ORDER, AN AMOUN T OF RS.5,45,000/- ALLEGED TO HAVE BEEN RECEIVED AS GIFT, WHICH WAS UTILIZED FOR PURCHASE O F THE SAID PROPERTY FROM VARIOUS PARTIES OF THE ASSESSEE, HAD BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HE ALSO POINTED OUT THAT THERE IS DEEMED CONCEALMENT AS PER EXPLANATION 1 TO SECTION 271(1)(C) OF THE I.T. ACT. 12. CONTINUING HIS ARGUMENT, THE LD. D.R. SUBMITTED THAT IN QUANTUM APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DIRECTED THE A. O. TO CONDUCT DETAILED ENQUIRY IN WHICH IT WAS PROVED THAT ALL THE GIFTS ALLEGED TO HAVE BEEN RECEIVED FROM VARIOUS RELATIVES LOCATED IN MAHARASHTRA AND GUJARAT WERE BOGUS AS THE ASSESSEE TRIED TO HOODWINK THE REVENUE BY FILING COPY OF 15 GIFT DEEDS IN RESPECT OF ALLEGED GIFTS D URING THE COURSE OF APPELLATE PROCEEDINGS, WHICH WAS NOT PRODUCED BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE 9 COURSE OF SURVEY, IN HIS STATEMENT, THE HUSBAND OF THE ASSESSEE COULD NOT GIVE THE NAME OF EVEN A SINGLE DONOR, NONE OF THE ALLEGED DONORS CONSIST OF HIS OWN FATHER, MOTHER, BROTHER-IN-LAW, UNCLE, ETC. IN THE AFFIDAVIT, IT IS MENTIONED THAT THE GIF T AMOUNT WAS RECEIVED BY CHEQUE, WHEREAS TRUTH IS THAT THE ALLEGED GIFTS WERE RECEIVED BY BANK DRAFTS . THERE IS A CONCEALMENT OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) AND THE ASSESSEE HAS N OT DISCHARGED HER ONUS. IN THESE CIRCUMSTANCES, THE PENALTY ON THE ALLEGED ADDITION OF RS.2,35,000/- UNDER SECTION 271(1)(C) WAS CORRECTLY LEVIED AND UPHELD BY THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER. 13. IN REPLY, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ASSESSEES HUSBAND HAS NOTHING TO DO WITH THE INVESTMENT MADE BY HIS WIFE. WITH RE GARD TO DECLARATION OF RS.4,00,000/- MADE BY THE HUSBAND OF THE ASSESSEE, IT WAS CONTENDED THAT SAME WAS ERRONEOUS UNDER PRESSURE AND STRESS AND WITHOUT UNDERSTANDING AND APPRECIATING FACTS, A CCOUNTS, GIFTS RECEIVED ETC. THE DECLARATION MADE BY THE HUSBAND IS NOT BINDING ON THE ASSESSEE. NEITHER AT THE TIME OF SURVEY NOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE STATEMENT OF THE ASSESSEE WAS RECORDED. THE ASSESSEE HAS RECEIVED GIFTS FROM VARIOUS PARTIES AND MERE FACT I N THE AFFIDAVIT SUBMITTED BY THE DONORS, THE MODE MENTIONED IS CHEQUE AS AGAINST DRAFT MAY B E A GOOD GROUND FOR SUSPICION OR EVEN MAKING ADDITION UNDER SECTION 68 OF THE I.T. ACT BU T THIS ALONE IS NOT SUFFICIENT TO HOLD THAT THOSE GIFTS ARE BOGUS FOR WHICH PENALTY CAN BE LEVIED UND ER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE LD. COUNSEL OF THE ASSESSEE ALSO RELIED O N THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS.- CIT (2 001) 249 ITR 125 (GUJ.), WHEREIN IT WAS HELD THAT MERE ADDITION MADE UNDER SECTION 68 BY NOT FIN DING EXPLANATION OF THE ASSESSEE SATISFACTORY WOULD NOT JUSTIFY THE PENALTY UNDER SECTION 271(1)( C) OF THE I.T. ACT. IN THIS CASE, THE EXPLANATION FURNISHED BY THE ASSESSEE MAY BE UNSATISFACTORY BUT IT CANNOT BE TERMED AS FALSE SO AS TO ATTRACT PROVISIONS CONTAINED IN SECTION 271(1)(C) OF THE IN COME TAX ACT, 1961. 14. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AU THORITIES BELOW AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS WELL SETTLED THAT THE AS SESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND THE FINDINGS GIVEN IN THE ASSESSMENT P ROCEEDINGS, THOUGH CONSTITUTE GOOD EVIDENCE, CANNOT BE CONCLUSIVE IN THE PENALTY PROCEEDINGS. IT IS ALSO WELL SETTLED THAT THE ENTIRE EVIDENCE IN THE CASE HAS TO UNDERGO A REAPPRAISAL IN THE COURSE OF THE PENALTY PROCEEDINGS IN ORDER TO 10 ESTABLISH THE GUILT OF THE ASSESSEE AND THAT MERELY BECAUSE THE ADDITION HAS BEEN SUSTAINED BY THE TRIBUNAL IT DOES NOT AUTOMATICALLY FOLLOW THAT THE ASSESSEE CONCEALED HIS INCOME. IN THE PRESENT CASE, THE TRIBUNAL HAS OBSERVED THAT THE ASSESSEE W AS UNABLE TO ESTABLISH THE RELATIONSHIP BETWEEN HER AND THE DONOR AS ERSTWHILE NEIGHBOURS AND THAT THERE WAS NO CORROBORATIVE EVIDENCE ABOUT THE CAPACITY OF THE DONORS. THESE ARE FINDINGS WHICH HA VE BEEN RENDERED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THEY CANNOT BE HELD TO B E CONCLUSIVE IN THE COURSE OF THE PENALTY PROCEEDINGS. REFERENCE IN THIS CONNECTION MAY BE MA DE TO THE JUDGMENTS OF THE SUPREME COURT IN THE CASE OF KHODAY ESWARSA & SONS, 83 ITR 369 AN ANANTRAM VEERASINGIAH & SONS, 123 ITR 457. IN QUANTUM PROCEEDINGS, THE A.O. TREATED THE GIFT A MOUNTING TO RS.3,25,000/- AND RS.2,35,000/- DURING THE ASSESSMENT YEAR 2002-03 AN D 2003-04 RESPECTIVELY ALLEGED TO HAVE BEEN RECEIVED FROM VARIOUS DONORS AS UNEXPLAINED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. ALL THE DONORS HAVE SUBMITTED AFFIDAVITS. NO CROSS VERIFICATION FROM THE DONORS WERE MADE EITHER DURING THE COURSE OF ASSESS MENT PROCEEDINGS OR IN PENALTY PROCEEDINGS. THERE IS NO EVIDENCE TO SHOW THAT THE MONIES WERE THE ASSESSEES OWN MONIES BROUGHT I T IN THE FORM OF GIFTS. SHE HAD ADDUCED WHATEVER EVIDENCE THAT WAS IN HER P OSSESSION IN SUPPORT OF THE GIFTS. SHE WAS MERELY UNABLE TO PROVE THE GIFTS IN THE MANNER REQUIRED BY THE DEPARTMENT. IN THESE CIRCUMSTANCES, IT IS NOT POSSIBLE TO SAY THAT THE ASSESSEE CONCEALED HER INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE EXPLANATION 1 TO SECTION 271(1)(C) READS AS UNDER : [ EXPLANATION I. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, ( A ) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFE RS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO BE FALSE, OR ( B ) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. ADMITTEDLY, EXPLANATION 1(A) WOULD BE APPLICABLE IN THE PRESENT CASE BECAUSE THE ASSESSEE HAS FURNISHED AN EXPLANATION AND WHICH HAS NOT BEEN FOU ND TO BE FALSE. REGARDING EXPLANATION 1(B), THERE ARE THREE CONDITIONS REQUIRED TO BE SATISFIED CUMULATIVELY AND SIMULTANEOUSLY, THEY ARE (1) THE ASSESSEE OFFERS AN EXPLANATION, WHICH HE IS NOT ABLE TO SUBSTANTIATE; (2) HE FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE; AND (3) ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. UNLESS THE A.O. GIVES A FINDING ON THE 11 BASIS OF MATERIAL ON RECORD THAT ALL THE THREE COND ITIONS ARE SATISFIED, PENALTY UNDER SECTION 271(1)(C) READ WITH EXPLANATION 1(B) CANNOT BE LEVI ED. IN OUR CONSIDERED VIEW, THE ASSESSEE HAD OFFERED AN EXPLANATION, WHICH ON THE FACE OF IT APP EARS TO BE BONAFIDE, INASMUCH AS, THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF THE PERSONS, WHO HAD GIVEN THE GIFTS AND THEY WERE NOT FOUND INCORRECT. THE ADDITION WAS MADE BY NOT BELIEVING O N THE EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF GIFTS. THERE IS NO FINDING THAT PARTI CULARS OF THE PERSONS GIVING GIFTS WERE INCORRECT OR THAT THOSE DONORS HAD NOT GIVEN ANY GIFT TO THE ASSESSEE. THERE IS ALSO NO FINDING THAT IT WAS ASSESSEES OWN MONEY, WHICH WAS ROUTED THROUGH THE DONORS BACK TO HIM. THE LEVEL OF INQUIRIES AND EXTENT THEREOF AND THE MATERIAL BROUGHT ON RECO RD DID NOT INDICATE THAT EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT BONAFIDE OR THAT ANY MATERI AL FACT HAS NOT BEEN DISCLOSED BY THE ASSESSEE. PENALTY HAS BEEN LEVIED MERELY ON THE GROUND THAT A DDITION HAS BEEN CONFIRMED BY THE TRIBUNAL, BUT THIS ALONE IS NOT SUFFICIENT TO COME TO THE CON CLUSION THAT THE GIFTS ARE BOGUS OR IT WAS ASSESSEES OWN MONEY. 15. IN THIS CASE, WE MAY REFER TO THE DECISION OF T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS.- CIT (2001) 249 ITR 125 (GUJ .), WHEREIN IT WAS HELD THAT MERE ADDITION MADE UNDER SECTION 68 BY NOT FINDING EXPLANATION OF THE ASSESSEE SATISFACTORY WOULD NOT JUSTIFY THE PENALTY UNDER SECTION 271(1)(C). THE HON'BLE MA DRAS HIGH COURT IN THE CASE OF CIT VS.- CAFCO SYNDICATE SHIPPING CO. [(2007) 294 ITR 134 (M AD.)] HELD THAT MERELY ON THE BASIS OF ADDITION OF INCOME BY DISALLOWING EXPENSES IS NOT C ONCEALMENT OF INCOME AND, THEREFORE, PENALTY CANNOT BE IMPOSED. THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF CIT -VS.- JALARAM OIL MILLS REPORTED IN (2002) 253 ITR 198 (GUJ.) HELD THAT ADD ITION TO INCOME UNDER SECTION 68 BY NOT ACCEPTING THE EXPLANATION REGARDING CREDIT IS NOT S UFFICIENT FOR LEVY OF PENALTY. THE REVENUE DID NOT ADDUCE ANY EVIDENCE TO PROVE CONCEALMENT OF INC OME. 16. IT IS CRYSTAL CLEAR THAT NO PENALTY FOR CONCEAL MENT OF INCOME CAN BE LEVIED BY MERELY DISBELIEVING ON THE EXPLANATION FURNISHED BY THE AS SESSEE. ONUS IS ON THE REVENUE TO ADDUCE SOME POSITIVE MATERIAL WHICH COULD SHOW THAT EITHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. FOR BRI NGING THE CASE WITHIN THE MEANING OF EXPLANATION 1(B), IT HAS TO BE FURTHER SHOWN THAT A LL THE THREE INGREDIENTS ARE SIMULTANEOUSLY SATISFIED. THERE HAS TO BE SOMETHING FOR COMPARISON TO PROVE THAT WHAT WAS CLAIMED BY THE 12 ASSESSEE WAS FALSE OR INACCURATE OR NOT BONAFIDE. M ERE DISBELIEVING ON THE CLAIM MADE BY THE ASSESSEE IS NOT SUFFICIENT. 17. IN VIEW OF THE FOREGOING, IN OUR OPINION, IT I S NOT A FIT CASE TO LEVY THE PENALTY OF RS.64,636/- UNDER SECTION 271(1)(C) OF THE ACT LEVI ED BY THE A.O. WE ACCORDINGLY CANCEL THE SAME. 18. IN THE RESULT, I.T.A. NO. 4024/AHD./2007 IS ALL OWED. I.T.A. NO. 359/AHD./2009 AND I.T.A. NO. 78/AHD./2007 ARE DISMISSED. THE ORDER PRONOUNCED IN THE COURT ON 30.10.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 / 10 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT, 3) CIT(A)- CONCERNED, (4) CIT CONCERNED, (5) D.R ., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.