Shri Dushyant K.Shah, Baroda V. The Income tax Officer, Ward-5(4), Baroda

ITA 3593/AHD/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50742 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 29-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P TALATI
• Keywords: Unexplained cash credit; Gift; Additional evidence
• Section: 68

Judgement Text

, , . .. . . .. . , , , , . .. . . .. .!'#$ !'#$ !'#$ !'#$ , % % % % & & & & IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) . ITA NO. 3593/AHD./2008 : ' ()- 2002-03 SHRI DUSHYANT K SHAH, BARODA (,- /APPELLANT) -VS- (PAN : AGTPS 9437Q) I.T.O., WARD-5(4), BARODA ( ./,- /RESPONDENT ) ,- 0 1 / APPELLANT BY : SHRI BHAVIN MARFATIA, A.R. ./,- 0 1 / RESPONDENT BY : SHRI S.P.TALATI, SR.D.R. 2'3 0 4% / DATE OF HEARING : 29/09/2011 5'( 0 4% / DATE OF PRONOUNCEMENT : 30/09/2011 / ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 09-07-2008 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-V, BARO DA CONFIRMING THE ACTION OF AO IN LEVYING THE PENALTY U/S. 271(1)(C) OF THE INC OME TAX ACT ON ADDITION OF RS.1,69,680/- MADE BY THE AO UNDER SECTION UNDER SE CTION 68 OF THE ACT FOR THE ASSESSMENT YEAR 2002-2003. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN O F INCOME ON 28.10.2002 DECLARING TOTAL INCOME OF RS.1,84,660/-. IN THE ASSESSMENT OR DER, THE AO, INTER ALIA , MADE ADDITION OF RS.1,69,680/- UNDER SECTION 68 OF THE I .T. ACT IN RESPECT OF UNEXPLAINED INTRODUCTION OF CAPITAL IN THE FORM OF GIFT. IN THE ASSESSMENT ORDER, THE AO STATED THAT THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY EVID ENCE IN THE FORM OF CONFIRMATION LETTER AND SOURCE OF GIFT DULY SUPPORTED BY BANK AC COUNT, PROOF OF CAPACITY OF DONOR, ETC. EXCEPT XEROX COPY OF THE CHEQUE. IN THE ASSESS MENT ORDER, THE AO ALSO MENTIONED THAT THE ASSESSEE HAS STATED THAT GIFT IN QUESTION WAS RECEIVED BY CHEQUE BEARING ITA NO. 3593-AHD-08 2 NO.687550, WHEREAS THE COPY OF CHEQUE SUBMITTED BY THE ASSESSEE SHOWED ENTIRELY DIFFERENT NUMBER I.E. 271972572. HE ACCORDINGLY TRE ATED THIS GIFT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ALSO INITIAT ED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. IN REPLY T O SHOW-CAUSE NOTICE UNDER SECTION 271(1)(C), BEFORE THE AO, THE ASSESSEE DID NOT FURN ISH ANY EXPLANATION EXCEPT THE REPLY THAT THE PENALTY PROCEEDINGS BE KEPT IN ABEYANCE TI LL THE DECISION IN APPEAL. IN RESPECT OF THIS GIFT, IN THE PENALTY ORDER, THE AO HAS MENT IONED AS UNDER: 3. DURING THE YEAR, THE ASSESSEE HAD INTRODUCED RS. 1,69,680/- AS CAPITAL, THE SOURCE OF WHICH WAS CLAIMED AS GIFT RECEIVED. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH CONF IRMATION LETTER OF THE ALLEGED DONOR, COPY OF BANK A/C, PROOF OF CAPACITY OF DONOR ETC. HOWEVER, ASSESSEE EXPRESSED HIS INABILITY TO FURNISH THE CON FIRMATION LETTER, DETAILS PROVING SOURCE OF ALLEGED DONOR, COPY OF BANK A/C E TC. THE ASSESSEE HAS ALSO FAILED TO EXPLAIN THE RELATIONSHIP WITH THE ALLEGED DONOR MR.K.C.JALAN, THE OCCASION ON WHICH GIFT WAS GIVEN AND TO ESTABLISH T HAT THE GIFT WAS GIVEN OUT OF NATURAL LOVE & AFFECTION. FURTHER, IN HIS SUBMISSIO N, THE ASSESSES CLAIMED THAT THE SAID GIFT WAS RECEIVED VIDE CHEQUE NO.687550, W HEREAS THE COPY OF CHEQUE FURNISHED BY THE ASSESSEE DEPICT A DIFFERENT NUMBER I.E. 271972572. IN VIEW OF THESE FACTS, THE GIFT CLAIMED TO HAVE BEEN RECEIVED FROM MR.K.C.JALAN AMOUNTING TO RS.1,69,680/- WAS TREATED AS UNEXPLAIN ED AND ADDED TO ASSESSEE'S TOTAL INCOME U/S 68 OF THE ACT. THE A.O. ALSO RELIE D ON THE DECISION OF HON'BLE ITAT, AHMEDABAD- BENCH- SMC' IN THE CASE OF SMT. NEELAMBEN GOPALDAS AGRAWAL, MISS. MAMTABEN G. AGRAWAL AND SMT. SHILPAB EN D. AGRAWAL (ITA/3609-3611/A/2002). 3.1 THE AO LEVIED THE PENALTY UNDER SECTION 271(1)( C) IN RESPECT OF OTHER ADDITION INCLUDING THE UNEXPLAINED GIFT OF RS.1,69,680/- @17 5% OF TAX SOUGHT TO BE EVADED. 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY IN RESPECT OF ADDITION OF RS.1,69,680/-. AGGRIEVED WIT H THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, ON BEHALF OF THE REVENUE , SHRI BHAVIN MARFATIA, A.R. APPEARED AND CONTENDED THAT THE GIFT IN QUESTION WA S RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. IN QUANTUM APPEAL, THE TRIBUNAL HAS CONFIRM ED THIS ADDITION BY NOT ADMITTING THE ADDITIONAL EVIDENCE REGARDING CAPACITY OF THE D ONOR. HE FURTHER POINTED OUT THAT THE GIFT IN QUESTION WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE NO.271972572. BEFORE ITA NO. 3593-AHD-08 3 THE AO, THROUGH INADVERTENCE, THE BANK CODE WAS STA TED, WHICH IS 687550. THE COUNSEL OF THE ASSESSEE FURTHER CLARIFIED THAT ACTU AL BANK CODE NO. ON THE CHEQUE IS 6875509948. THIS WAS ONLY DUE TO MISTAKE. HE SUBMIT TED THAT SINCE THE GIFT IN QUESTION IS TREATED AS UNEXPLAINED ON ACCOUNT OF NO N-FURNISHING OF DETAILS REGARDING THE CAPACITY OF THE DONOR, THE PENALTY LEVIED UNDER SECTION 271(1)(C) IN RESPECT OF THIS GIFT BE CANCELLED. ALTERNATIVELY, THE COUNSEL OF TH E ASSESSEE PLEADED THAT AMOUNT OF PENALTY BE REDUCED TO 100% OF TAX SOUGHT TO BE EVAD ED ON GIFT OF RS.1,69,680/-, WHICH WAS TREATED AS UNEXPLAINED UNDER SECTION 68 OF THE I.T. ACT, 1961. 6. ON THE OTHER HAND, SHRI S.P.TALATI, SR.D.R., APP EARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. D.R. DREW OUR ATTENTION TO THE FINDING OF FACT RECORDED BY THE TR IBUNAL IN QUANTUM APPEAL. HE SUBMITTED THAT NEITHER IN QUANTUM PROCEEDING NOR IN PENALTY PROCEEDING, THE ASSESSEE HAS SUBMITTED THE BANK ACCOUNT OF THE DONOR OR ANY OTHER DOCUMENT TO EXPLAIN THE SOURCE OF THE ABOVE GIFT. IN THE DECLARATION OF GIF T, DONOR, SHRI K.C.JAIN HAS NOT MENTIONED THE OCCASION ON WHICH THE ABOVE GIFT HAS BEEN MADE. IT WAS CLAIMED THAT THE ASSESSEE IS A CLOSED FRIEND OF SHRI K.C.JAIN AN D IS KNOWN TO HIM SINCE SEVERAL YEARS. THE LD. D.R. FURTHER POINTED OUT THAT STILL THERE IS A DISCREPANCY IN MENTIONING THE SO-CALLED CHEQUE NUMBER. THE LD. D.R. FURTHER P OINTED OUT THAT FROM THE SO-CALLED CHEQUE, IT IS NOT CLEAR WHETHER IT IS CHEQUE OR BAN K DRAFT. IT IS NOT ACCOUNT PAYEE. HE ACCORDINGLY SUBMITTED THAT KEEPING IN VIEW OF THE T OTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY IN QUESTION WAS RIGHTLY LEVIED AND CONFIRMED BY THE LD. CIT(A). THEREFORE, THE ORDER OF THE LD. CIT (A) BE UPHELD. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT NEI THER IN QUANTUM PROCEEDING NOR IN PENALTY PROCEEDING, THE ASSESSEE HAS EXPLAINED THE DISCREPANCY IN SO-CALLED CHEQUE NUMBER. IT IS ALSO NOT KNOWN WHAT PREVENTED THE ASS ESSEE TO OBTAIN A COPY OF DONORS BANK STATEMENT INDICATING THE WITHDRAWAL OF GIFT AM OUNT I.E. $3,500. THE GIFT IS GENERALLY GIVEN ON ACCOUNT OF NATURAL LOVE AND AFFE CTION. IN CASE, THE DONOR FRIEND WAS HAVING ANY LOVE AND AFFECTION, IN THAT EVENT, HE CO ULD HAVE EASILY PARTED WITH THE COPY ITA NO. 3593-AHD-08 4 OF THE BANK ACCOUNT THROUGH WHICH HE HAS ISSUED THE CHEQUE OF $3,500. KEEPING IN VIEW THE FINDINGS RECORDED BY THE TRIBUNAL IN QUANT UM APPEAL AND THE FACTS THAT NO EXPLANATION ON MERIT WAS FURNISHED BEFORE THE AO, W E ARE OF THE VIEW THAT THE PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. WITH REGARD TO ALTERNATE PLEA OF THE ASSESSEE THAT PENALTY LEVIED BE REDUCED TO 100% OF TAX SOUGHT TO BE EVADED, WE AGREE THAT PENALTY LEVIED IS EXCESSIVE AND THEREFORE, IT IS REDUCED TO 100% OF TAX SOUGHT TO BE EVADED ON ADDITION OF RS.1,69,680/- MADE UNDER SECTION 68 OF THE I.T. ACT. ACCORDINGLY, THE AO IS DIRECTED TO RE-WORK OUT THE PENALTY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 6 0 5'( #' ) 30/09 /2011 ' 7 0 !3 8 THIS ORDER PRONOUNCED IN COURT ON 30/09/2011. SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30/09/2011 0 00 0 .49 .49 .49 .49 :9(4) :9(4) :9(4) :9(4)- -- - 1. ,- 2. ./,- 3. 4 2> 4. 2>- - 5. 9A! .4' , , 8 6. !$ C6 , D/ F , 8 TALUKDAR/ SR. P.S.