LAILA CHAGANI, MUMBAI V. ITO WD 28(13), MUMBAI

ITA 4385/MUM/2010

• Counselvise Citation: 438519914 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: O A RAO
• Keywords: Unexplained investment; Gift; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.4385/ MUM/2010 ASSESSMENT YEAR: 1996-97 LAILA CHAGANI, .. APPELLANT C/501, GREEN PARK, NEAR SHANTIVAN, MHADA, PHADI, GOREGOAN(W), MUMBAI-062. PA NO.ACKPC 2834 J VS INCOME TAX OFFICER 24(1)(1) .. RESPONDEN T MUMBAI. APPEARANCES: DHARMESH SHAH, FOR THE APPELLANT O.A.RAO , FOR THE RESPONDENT DATE OF HEARING : 18.1.2012 DATE OF PRONOUNCEMENT : 31 .1.2012 O R D E R PER PRAMOD KUMAR: 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT CIT(A) WAS JUSTIFIED IN UPHOLDING PENALTY OF ` .36,210 IMPOSED ON THE ASSESSEE U/S.271(1)(C) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 1996-97. 2. THE RELEVANT MATERIAL FACTS, SO FAR AS NECESSARY FOR DISPOSAL OF THE APPEAL, ARE LIKE THIS. THE ASSESSEE IS AN INDIVIDUAL. THE AS SESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3), WHEREIN, HE HAS MA DE ADDITION OF RS.75,000 ON I.T.A NO.4385/ MUM/2010 ASSESSMENT YEAR: 1996-97 2 ACCOUNT OF INVESTMENT IN FDR IN THE NAME OF MINOR A ND RS.18,750 ON ACCOUNT OF UNEXPLAINED GIFT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. IT WAS IN THIS BAC KDROP THAT PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED AGAINST THE ASSESSEE F OR CONCEALMENT OF THE INCOME AND FURNISHING INACCURATE PARTICULARS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE GIF T BY FURNISHING NAME & ADDRESS OF THE DONOR AND PROVIDING HIS CREDITWORTHINESS AND THE INVESTMENT IN THE NAME OF MINOR SON IS CLEARLY INCOME IN THE HANDS OF THE ASS ESSEE. HE, ACCORDINGLY, LEVIED PENALTY U/S.271(1)(C) AS EQUIVALENT TO 100% OF TAX SOUGHT TO BE EVADED WHICH WORKED OUT TO ` .36,210. AGGRIEVED, ASSESSEE CARRIED THE MATTER BE FORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) CONFIRMED THE PENALTY AND OBSERVED AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO AND SUBMISSIONS OF THE APPELLANT. SO FAR THE LEGAL ARGUMENT IS CONCER NED, THE SAME IS NOT TENABLE BECAUSE THE AO HAS DISCUSSED BOTH ADDITIONS IN ASSESSMENT ORDER IN DETAIL AND HE HAS GIVEN REASON AS TO WHY T HE ADDITIONS ARE MADE. FDR IN THE NAME OF MINOR SON WAS NOT DISCLOS ED AT ALL. NO SOURCE WAS EXPLAINED. THEREFORE, RS.75,000 WAS TAXED IN T HE HANDS OF THE APPELLANT AS UNEXPLAINED INVESTMENT IN THE NAME OF MINOR SON. IN THE BOTTOM OF THE ORDER THE AO HAS WRITTEN ALSO ISSUE S HOW CAUSE NOTICE U/S.274/271(1)(C) READ WITH EXPLANATION. THIS OBSE RVATION OF THE AO IN THE ASSESSMENT ORDER FULFILLS THE CONDITIONS FOR RE CORDING SATISFACTION OF CONCEALMENT AND INDICATE HIS INTENTION OF INITIATIN G PENALTY PROCEEDINGS FOR CONCEALMENT. SO IT CANNOT BE SAID THAT NO SATI SFACTION WAS RECORDED. SO FAR THE FACTUAL POSITION AS MENTIONED ABOVE IS CO NCERNED, THE APPELLANT HAS FAILED TO PROVE GENUINENESS OF GIFTS CREDITWORTHINESS OF DONORS AND THE FDR IN THE NAME OF MINOR SON WAS NOT DISCLOSED AT ALL. SO THERE IS CONCEALMENT OF INCOME WHICH WAS ADMITTE D AND SAME WAS CONCERNED BY CIT(A). THEREFORE, AO WAS FULLY JUSTI FIED IN LEVYING PENALTY U/S.271(1)(C) FOR CONCEALMENT. 3. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 5. WE FIND THAT IN THE COURSE OF QUANTUM PROCEEDING S, THE ASSESSEE HAD EXPLAINED THE SOURCE OF FUNDS IN THE HANDS OF HER D EPENDANT SON MAST MALIK CHAGANI I.T.A NO.4385/ MUM/2010 ASSESSMENT YEAR: 1996-97 3 BUT THE EXPLANATION SO GIVEN BY THE ASSESSEE WAS RE JECTED. WHILE DOING SO, THE CIT(A) OBSERVED AS FOLLOWS: I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISS IONS OF LD A.R. CAREFULLY. THE APPELLANT CLAIMED TWO KINDS OF SOUR CES FOR THE SAID DEPOSIT; GIFTS AND REMUNERATION. NO DETAILS OR EVI DENCE OF ANY KIND COULD BE PRODUCED AT ANY STAGE IN SUPPORT OF THE PAS T GIFTS. SO, THE CONTENTION REGARDING PAST GIFTS CANNOT BE ACCEPTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT G IVE ANY EXPLANATION REGARDING THE SOURCE OF THE SAID DEPOSIT DESPITE SP ECIFIC OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER. IF MASTER MALIK CH AGANI HAD GENUINELY RECEIVED ANY REMUNERATION AND THE FD WAS MADE OUT O F SUCH REMUNERATION, THE APPELLANT WOULD HAVE STATED SUCH FACTS DURING THE ASSESSMENT PROCEEDINGS. NO SUCH SUBMISSION WAS MADE . THIS CLAIM NOW MADE DURING THE APPELLATE PROCEEDING IS SUPPORTED B Y A SALARY CERTIFICATE. THIS CERTIFICATE IS ISSUED BY THE FAM ILY CONCERN. SO, IT IS A SELF SERVING INTERNAL DOCUMENT. IT IS NOT AN INDEPENDEN T DOCUMENT. ITS GENUINENESS CANNOT BE ACCEPTED. MOREOVER, IN CASE T HE REMUNERATION WAS GENUINELY PAID BY THE FAMILY CONCERNS, THEIR BOO KS OF ACCOUNT SHOULD HAVE BEEN DEBITED BY THAT AMOUNT. THE APPELLA NT COULD NOT SHOW ANY SUCH ENTRY IN THE BOOKS OF ACCOUNT OF THE FAMILY CONCERNS OF THE CONCERNED PERIOD. MOREOVER, MASTER MALIK CHAGANI W AS A MINOR DURING THAT PERIOD AND THE NATURE OF SERVICES RENDERED BY HIM COULD NOT BE EXPLAINED. CONSIDERING ALL THESE FACTS, I AGREE WI TH THE ASSESSING OFFICER THAT THE SUBMISSION MADE REGARDING REMUNERATION WAS AN AFTERTHOUGHT AND NOT A GENUINE CLAIM. I, THEREFORE, HOLD THAT T HE SOURCE OF THE SAID FD OF RS.75,000 WAS NOT EXPLAINED. AS MASTER MALIK CH AGANI WAS MINOR AT THE TIME OF MAKING THE DEPOSIT AND HE DID NOT HAVE INDEPENDENT SOURCE OF INCOME, THE ADDITION WAS RIGHTLY MADE IN THE HAN DS OF HER MOTHER, MRS LAILA CHAGANI. I, THEREFORE, CONFIRM THE ADDIT ION. 6. AS IS EVIDENT FROM THE ABOVE OBSERVATION OF THE CIT(A), THE ASSESSEE HAS GIVEN EXPLANATION, WHICH HAS NOT BEEN FOUND TO BE U NTRUE OR FALSE BUT HAS BEEN REJECTED ONLY ON THE BASIS OF PREPONDERANCES OF PRO BABILITIES. WHILE THIS EXPLANATION MAY OR MAY NOT BE SUFFICIENT EXPLANATIO N SO FAR AS QUANTUM PROCEEDINGS ARE CONCERNED, IN OUR CONSIDERED VIEW, IN THE LIGHT OF THE SAID EXPLANATION, WHICH HAS NOT BEEN FOUND TO BE UNTRUE, IT IS CERTAINLY NOT A FIT CASE FOR IMPOSITION OF PENALTY. THE AMOUNT INVOLVED IS AS SMALL AMOUNT AND THE ADDI TION IS IN RESPECT OF MINOR, WHO WAS SAID TO BE WORKING IN A FAMILY CONCERN, WHOSE R ENDERING OF SERVICE HAS NOT BEEN FOUND TO BE UNTRUE. KEEPING IN VIEW ALL THESE FACT ORS IN MIND, WE ARE OF THE I.T.A NO.4385/ MUM/2010 ASSESSMENT YEAR: 1996-97 4 CONCERNED VIEW THAT IT IS NOT A FIT CASE FOR IMPOSI TION OF PENALTY. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO DELETE THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2012 SD/- (D.MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 31 ST JANUARY, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),34, MUMBAI 4. COMMISSIONER OF INCOME TAX, 24 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI