MR ARIF A. RAYANI, MUMBAI V. ITO. 19(3)(1), MUMBAI

ITA 3773/MUM/2010

• Counselvise Citation: 377319914 RSA 2010
• Duration Of Justice: 1 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Gift; Bonafide belief
• Section: 27; 56(2)

Judgement Text

1 ITA NO. 3773/MUM/2010 (ASST YEAR 2006-07) IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI A AA A BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R S SYAL R S SYAL R S SYAL R S SYAL,AM ,AM,AM ,AM & & & & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM 3773/MUM/2010 3773/MUM/2010 3773/MUM/2010 3773/MUM/2010 (ASST YEAR 2006 (ASST YEAR 2006 (ASST YEAR 2006 (ASST YEAR 2006- -- -07) 07) 07) 07) MR ARIF A RAYANI FLAT NO.201 RAYANI HOUSE 30 MOUNT MARY ROAD OPP FLORIDA BLDG BANDRA (W) MUMBAI 50 VS THE INCOME TAX OFFICER WARD 19(3)(1), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. AAAPR9083N A SSESSEE BY SHRI ANIL R SHAH REVENUE BY SHRI R S ARNEJA PER PER PER PER VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 26.2.2010 OF THE CIT(A)-30 MUMBAI ARISING FROM THE PENALTY ORDER PASSED U/S 271(1)( C) OF THE ACT RELATING TO AY 2006-07. 2 THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS A PPEAL; HOWEVER, THE ONLY ISSUE ARISES FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER IN THE FACTS AND CIRCUMSTANCE OF THE CASE, THE CIT(A) IS JUSTIFIED I N CONFIRMING THE LEVY OF PENALTY OF RS. 35,000/- U/S 271(1)( C) OF THE ACT ON ACCOU NT OF THE ADDITION OF RS. 1,12,892/- BEING THE GIFT RECEIVED. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO OBSERVED THAT THE ASSESSEE HAD CREDITED TO ITS CAPITAL ACCOUNT AN AMO UNT OF RS. 1,12,892/- AS GIFT RECEIVED FROM RELATIVES. AFTER EXAMINING THE GIFT DEED AND THE RELATION OF THE 2 ITA NO. 3773/MUM/2010 (ASST YEAR 2006-07) DONOR WITH THE ASSESSEE, THE AO FOUND THAT THE DONO R IS NOT THE RELATIVE OF THE ASSESSEE AS PER THE EXPLANATION TO SEC. 56(2) (V) O F THE I T ACT. ACCORDINGLY, THE AO HELD THAT THE SAID RECEIPT IS TAXABLE U/S 56(2)( V) AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. SUBSEQUENTLY, THE AO INITIATED PROCEEDINGS U/S 271(1)( C ) OF THE I T ACT AND LEVIED PENALTY OF RS . 35,000/- AGAINST THE SAID ADDITION OF RS. 1,12,892/- U/S 56(2)( V). 2.2 THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEF ORE THE CIT(A), WHO ALSO CONFIRMED THE ACTION OF THE AO. 3 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSEE RECEIVED THE SAID GIFT FROM A DISTANT RELATIVE OF T HE ASSESSEE, WHO IS THE SON OF THE SISTER OF THE ASSESSEE. HE HAS FURTHER SUBMITTE D THAT THE ASSESSEE PRODUCED THE GIFT DEED AND THE AO HAS NOT DOUBTED THE GIFT B UT DISALLOWED THE SAME ONLY BY APPLYING THE PROVISIONS OF SEC. 56(2)( V) OF THE ACT. THE CLAIM OF THE ASSESSEE IS BASED ON BONAFIDE BELIEF THAT THE DONOR IS A REL ATIVE OF THE ASSESSEE; THEREFORE, THERE IS NO CONCEALMENT OF THE INCOME OR FURNISHING INACCURATE PARTIES OF INCOME. HE RELIED ON THE DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS P LTD REPORTED IN 32 2 ITR 158(SC). 3.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSEE ACCEPTED THE DISALLOWANCE MADE BY THE AO OF THE CLAIM OF THE GIFT. THEREFORE, ONCE THE CLAIM OF THE ASSESSEE IS FOUND AS NOT ALLOWABLE, IT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND PENALTY U/S 27 1(1)( C) IS LEVYABLE. HE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 3 ITA NO. 3773/MUM/2010 (ASST YEAR 2006-07) 4 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. UNDOUBTEDLY, THE GENUINENESS OF THE GIFT OF RS. 1,12,892/- HAS NOT BEEN DOUBTED BY THE AO. THE CLAIM OF THE AS SESSEE WAS NOT FOUND AS BOGUS OR FALSE BY THE AO BUT THE SAME HAS BEEN DISA LLOWED ONLY BY APPLYING PROVISIONS OF SEC. 56(2)(V) OF THE ACT. THE ASSESS EE HAS EXPLAINED THE PRIMARY FACTS OF RECEIPT OF THE GIFT FROM THE DISTANT RELAT IVE THROUGH THE GIFT DEED, WHICH HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. MER ELY BECAUSE THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE AS PER THE PROVISIONS OF INCOME TAX BECAUSE THE DONOR DOES NOT FALL UNDER THE DEFINITION OF THE RELATIVE AS PRESCRIBED IN THE EXPLANATION TO SEC. 56(2)(V) OF THE ACT, THE SAME DOES NOT AMOU NT TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. ACCORDINGLY, IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P LTD ( SUPRA) , THE PENALTY IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT JUSTIFIED AND THE SAME IS DELETED. 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 27 TH , DAY OF MAY 2011. SD/- SD/- ( ( ( ( R S SYAL R S SYAL R S SYAL R S SYAL ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 27 TH , MAY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI