Nischal Anand, New Delhi V. ITO, New Delhi

ITA 4714/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6595 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 02-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.4714/DEL/2016 ASSESSMENT YEAR : 2008-09 NISCHAL ANAND, C/O CA, HARIT KUMAR GARG, 104, LGF, POCKET A-8, KALKAJI EXTN., NEW DELHI. VS. ITO, WARD- 29(3), NEW DELHI. PAN : AFKPA 1443 G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MUKUL GUPTA, ADV. RESPONDENT BY : SHRI S. K. JAIN, SR.DR DATE OF HEARING : 02-02-2017 DATE OF PRONOUNCEMENT : 28-02-2017 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 31.03.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-10, NEW DELHI, U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT) RELATING TO ASSESSMENT YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED RETURN DECLARING TOTAL INCOME OF RS.1,70,300/-. IN THE COURSE OF AS SESSMENT PROCEEDINGS, IT WAS NOTICED THAT ASSESSEE HAD DEPOSITED CASH OF RS. 19,05,375/- ON DIFFERENT DATES IN SAVINGS BANK ACCOUNT MAINTAINED WITH ICICI BANK LTD.. THE ASSESSEE EXPLAINED THE SOURCE OF CASH DEPOSITS AS U NDER :- 2 ITA NO.4714/DEL/2016 RS.6,00,000/- : GIFT RECEIVED FROM MOTHER MRS. USHA BUDKI URF CHUNI BUDKI ON 01/02/2008. IN SUPPORT OF CAPACITY OF THE DONOR, THE ASSESSEE STATED THAT AFTER COMPROMISE DEED OF PROPERTY, SH E RECEIVED 1/3 RD SHARE OF SETTLEMENT AMOUNT OF RS.14,00,000/- OUT OF WHICH 6,00,000/- WAS GIFTED TO THE DAUGHTER. RS.7,00,000/- : GIFT RECEIVED FROM FATHER SHRI CHUN I LAL BUDKI ON 01/02/2008. IN SUPPORT OF CAPACITY OF DONOR, THE A SSESSEE FURNISHED COPY OF AGREEMENT TO SALE OF PLOT AT JAMMU. RS.2,70,000/- : LOAN RECEIVED FROM DAUGHTER MS. SER ENA ANAND ON 23/02/2008. THE ASSESSEE STATED THAT SOURCE OF LOA N RECEIVED FROM DAUGHTER WAS OUT OF GIFT RECEIVED IN CASH FROM GRAN DMOTHER GIVEN OUT OF HER AGRICULTURE INCOME. RS.3,80,000/- : LOAN RECEIVED FROM SON MR. HARSHNEE T ANAND ON 23/02/2008. THE ASSESSEE STATED THAT SOURCE OF LOA N RECEIVED FROM SON IS OUT OF GIFT RECEIVED IN CASH FROM GRANDMOTHER GIVEN OUT OF HER AGRICULTURE INCOME. 3. THE ASSESSING OFFICER, AFTER EXAMINING THE CAPAC ITY OF DONORS, CONCLUDED THAT THE AMOUNT REPRESENTED UNEXPLAINED C ASH CREDIT AND, THEREFORE, MADE ADDITION U/S 68. LD. CIT(A) CONFIR MED THE FINDINGS OF ASSESSING OFFICER. THE SAID ADDITION WAS PARTLY CO NFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 01.02.2016 IN ITA NO.2451/DEL/ 2013. THE TRIBUNAL DELETED THE ADDITION IN RESPECT OF GIFT OF RS.6,00, 000/- FROM MOTHER OF THE ASSESSEE; OUT OF THE GIFT OF RS.7,00,000/- FROM FAT HER OF THE ASSESSEE, THE TRIBUNAL DELETED THE ADDITION TO THE EXTENT OF RS.3 ,70,000/- AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.3,30,000/-. AS RE GARDS THE LOAN OF RS.6,50,000/- FROM CHILDREN OF THE ASSESSEE, THE SA ME WAS CONFIRMED BY THE TRIBUNAL. IN THE BACKDROP OF THESE FACTS, THE ASSE SSING OFFICER HAD LEVIED 3 ITA NO.4714/DEL/2016 PENALTY OF RS.6,58,210/- BEING 100% OF TAX SOUGHT T O BE EVADED WHICH WAS PARTLY CONFIRMED BY LD. CIT(A), INTER-ALIA, FOR THE REASON THAT EVEN AT APPELLATE STAGE BEFORE TRIBUNAL, ASSESSEE FAILED TO OFFER ANY COGENT REPLY, DULY SUPPORTED WITH DOCUMENTARY EVIDENCE, FOR THE A MOUNT OF RS.9,80,000/- (RS.3,30,000/- + RS.6,50,000/-) WHICH REMAINED UNEX PLAINED BEFORE THE ASSESSING OFFICER. HE POINTED OUT THAT DURING THE PENALTY STAGE ALSO NO REPLY WAS FURNISHED TO THE ASSESSING OFFICER TO EXP LAIN THE SOURCE OF ABOVE DEPOSIT AND EVEN DURING THE APPELLATE STAGE, ASSESS EE FAILED TO SUBSTANTIATE HIS CLAIM WITH DOCUMENTARY EVIDENCE. HE, THEREFORE , CONCLUDED THAT EXPLANATION 1 TO SECTION 271 WAS ATTRACTED. HE, INTER-ALIA, RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MAK D ATA P. LTD. VS. CIT, 1 SCC 674, WHEREIN, IT HAS BEEN LAID DOWN THAT EVEN I F INCOME WAS SURRENDERED DURING THE ASSESSMENT PROCEEDINGS TO BU Y PEACE, PENALTY CAN STILL BE LEVIED BY ASSESSING OFFICER. HE HAS ALSO DISCUSSED THE FACTS OBTAINING IN THE JUDGEMENT WHICH PRIMARILY PERTAIN TO SHARE APPLICATION MONEY WHICH WAS SURRENDERED BY THE ASSESSEE. IN TH E BACKDROP OF THIS DECISION, LD. CIT(A) OBSERVED AS UNDER :- 4.1.9 THE ABOVE JUDGMENT IS IMPORTANT IN THE SENSE THAT IT LAYS DOWN A RATIO THAT, ASSESSEE CANNOT CIRCUMVENT THE PROVISIONS OF SECTION 271(1)(C) MERELY BY MAKING VOLUNTARILY DISCLOSURE IN ASSESSMENT PROCEED INGS. EVEN IF ALL THE PARTICULARS ARE DISCLOSED AND THERE IS NO DISCREPAN CY IN THE PARTICULARS DISCLOSED IN RETURN OF INCOME TO THAT WITH BOOKS OF ACCOUNT, ONUS IS STILL ON THE ASSESSEE TO SUBSTANTIATE WHY A PARTICULAR INCOM E OR EXPENSES WAS 4 ITA NO.4714/DEL/2016 TREATED IN A SPECIFIC WAY IN RETURN OF INCOME, WHIC H IS DIFFERENT FROM THE WAY AO IS TREATING. 4.1.10 THUS IN THE FIRST INSTANCE, IT RECOGNIZES TH E BURDEN ON THE PART OF ASSESSEE FOR ADVANCING THE EXPLANATION FOR ALL THE CLAIMS MA DE IN RETURN OF INCOME AND ONLY AFTER ASSESSEE IS ABLE TO SUBSTANTIATE HIS CLAIM WITH COGENT AND RELIABLE EVIDENCE, BURDEN SHIFTS ON REVENUE. FURTHE R, COURT ALSO LAY DOWN THAT ASSESSEE CANNOT PLEAD BONAFIDE AFTER PARTICULA R DISCREPANCY IS DETECTED BY AO AS IT RAISES PRESUMPTION THAT ASSESSEE WAS HOLDI NG BACK THE ISSUE TO ESCAPE FROM IT; IF GENUINE BONAFIDE EXISTS, IT MUST BE PRO VED BY WAY OF AN EVIDENCE. 4.1.11 ON THE BASIS OF RATIO OF ABOVE JUDICIAL PRON OUNCEMENT, IT IS HELD THAT APPELLANT FAILED TO DISCHARGE HIS ONUS WHILE FILING THE RETURN OF INCOME BY DISCLOSING THE TRUE AND FULL PARTICULARS OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION TO THE EXTENT OF RS.9,80,000/- AS DIS CUSSED ABOVE, WHICH HAS BEEN UPHELD BY EVEN THE HON'BLE ITAT, WHICH IS THE FINAL FACT FINDING AUTHORITY. IN VIEW OF THE ABOVE FACTS ON RECORD, IT IS HELD THAT OUT OF THE TOTAL ADDITION OF RS.19.50 LACS BEING CASH CREDIT U/S. 68, THE BASIS ON WHICH PENALTY WAS IMPOSED BY THE ASSESSING OFFICER U/S. 271(1)(C) ONLY QUANTU M ADDITION OF RS.9,80,000/- (I.E. RS.3,30,000/- + RS.6,50,000/-) SURVIVES AND B ALANCE ADDITION OF RS.9,70,000/- STANDS DELETED. IN VIEW OF THESE FAC TS AND CIRCUMSTANCES OF THE CASE, SINCE THERE IS DRASTIC CHANGE IN THE QUANTUM OF CONCEALED INCOME, THE BASIS ON WHICH PENALTY WAS IMPOSED, I AM OF THE CONSIDERE D VIEW THAT PENALTY NEEDS TO BE RECALCULATED BY GIVING THE ASSESSEE BENEFIT OF R ELIEF ALLOWED TO HER TO THE EXTENT OF RS.9,70,000/-. THUS, THE CONCEALED INCOM E REMAINS ONLY RS.9,80,000/-. THEREFORE, AO IS DIRECTED TO RECALCULATE THE PENALT Y ON THE ABOVE CONCEALED INCOME. 4. FROM THE ABOVE OBSERVATIONS OF LD. CIT(A), IT IS EVIDENT THAT SINCE THE TRIBUNAL HAD CONFIRMED CERTAIN ADDITIONS, THEREFORE , LD. CIT(A) CONCLUDED THAT ASSESSEE FAILED TO SUBSTANTIATE ITS EXPLANATIO N. HOWEVER, EXPLANATION 1 TO SECTION 271(1)(C) IS ATTRACTED UNDER FOLLOWING C ONDITIONS :- (A) A PERSON FAILS TO OFFER AN EXPLANATION (B) OFFERS AN EXPLANATION WHICH IS FOUND BY THE AS SESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE PRINCIPAL COMM ISSIONER TO BE FALSE. 5 ITA NO.4714/DEL/2016 (C) PERSON OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON WAS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAD BEEN DISCLOSED BY HIM. UNDER THE AFOREMENTIONED CONDITIONS, ONLY THE AMOUN T ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH ASSESSEE WOUL D LEAD TO LEVY OF PENALTY AS IT WOULD BE DEEMED TO REPRESENT THE INCOME IN RE SPECT OF WHICH PARTICULARS HAD BEEN CONCEALED. 5. THUS, IN ORDER TO JUSTIFY THE LEVY OF PENALTY, T WO FACTORS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LE ADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSES SEES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT H AS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THAT T HERE WAS ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING INACCURA TE PARTICULARS ON THE PART OF ASSESSEE. 6. ADMITTEDLY, ASSESSEES CASE IS NOT COVERED BY CL AUSE (A) OF EXPLANATION 1 BECAUSE ASSESSEE HAD OFFERED AN EXPLA NATION AND HIS EXPLANATION HAS NOT BEEN FOUND TO BE FALSE. AS FAR AS THE LAST CONDITION IS CONCERNED, IT IS EVIDENT THAT MERE FAILURE ON THE P ART OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION WILL NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY BUT A FURTHER CONDITION HAS TO BE FULFILLED REGARDI NG EXPLANATION NOT BEING 6 ITA NO.4714/DEL/2016 BONA-FIDE AND FACTS RELATING TO THE SAME AND MATERI AL TO THE COMPUTATION BEING NOT DISCLOSED BY HIM. 7. IN THE PRESENT CASE, I FIND THE TRIBUNAL HAD PAR TLY CONFIRMED THE ADDITION. AS REGARDS GIFT OF RS.7,00,000/- FROM FA THER OF THE ASSESSEE ON 01.02.2008, THE FACTS WERE THAT FATHER OF ASSESSEE PASSED AWAY ON 31 ST JULY, 2009. HE WAS SUPERINTENDENT IN THE JAMMU & KASHMIR ELECTRICITY BOARD. THE TRIBUNAL OBSERVED THAT BEFORE IT THE ASSESSEE H AD NOT SUBMITTED ANY EVIDENCE EXCEPT THE GIFT DEED AND ASSESSEE EXPLAINE D HIS INABILITY TO BRING DOCUMENTS SUCH AS ACCOUNT STATEMENT AND INCOME-TAX RETURN OR ANY OTHER EVIDENCE REGARDING THIS AMOUNT. HOWEVER, THE ASSES SEE HAD SUBMITTED THAT A PLOT OF LAND WAS SOLD IN JAMMU ON 31 ST DECEMBER, 2001 FOR A SUM OF RS.3,70,000/-. THE TRIBUNAL CONFIRMED THE ADDITION ONLY TO THE EXTENT OF RS.3,30,000/- BUT HAS NOT OBSERVED THAT EXPLANATION FURNISHED BY ASSESSEE WAS NOT BONA-FIDE. IT CANNOT BE DISPUTED THAT AFTE R FATHER EXPIRED ON 31 ST JULY, 2009 IT BECAME DIFFICULT FOR THE ASSESSEE TO FURNISH NECESSARY EVIDENCE TO SUBSTANTIATE ITS EXPLANATION. HOWEVER, THAT DOE S NOT LEAD TO THE CONCLUSION THAT THE ASSESSEES EXPLANATION WAS NOT BONA-FIDE. IT IS WELL- SETTLED LAW THAT MERE CONFIRMATION OF ADDITION DOES NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY. THEREFORE, I DO NOT FIND ANY BASI S FOR CONFIRMATION OF 7 ITA NO.4714/DEL/2016 PENALTY IN REGARD TO SUM OF RS.3,30,000/- OUT OF RS .7,00,000/- GIFTED BY FATHER. 8. AS FAR AS ADDITION OF RS.6,50,000/- IS CONCERNED , THE ASSESSEES EXPLANATION WAS THAT SUM OF RS.6,50,000/- WAS RECEI VED FROM CHILDREN OF THE ASSESSEE ON 23.02.2008. THE LOAN OF RS.2,70,000/- WAS RECEIVED FROM HER DAUGHTER MS. SERENA ANAND AND RS.3,80,000/- FROM HE R SON HARSHNEET ANAND THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSEE E XPLAINED THAT THIS AMOUNT HAD BEEN RECEIVED AS A GIFT FROM SMT. PREM K AUR, THE GRANDMOTHER OF THE CHILDREN OF THE ASSESSEE. IT WAS EXPLAINED THAT SMT. PREM KAUR WAS AN AGRICULTURIST AND IT IS NOT DISPUTED THAT SHE WA S IN POSSESSION OF AGRICULTURAL LAND. SMT. PREM KAUR HAD CONFIRMED TH E FACTUM OF GIFT BY GIFT DEED EXECUTED IN FAVOUR OF HER GRAND CHILDREN. THE TRIBUNAL CONFIRMED THIS ADDITION OBSERVING THAT AMOUNT OF LOAN OF RS.6,50,0 00/- RECEIVED FROM CHILDREN OF THE ASSESSEE THROUGH GIFT FROM GRANDMOT HER WAS NOT SUPPORTED BY ANY CONCRETE EVIDENCE AND CONFIRMED THE ADDITION OBSERVING THAT ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE LOAN F ROM HER CHILDREN. A BARE READING OF THE TRIBUNALS ORDER MAKES IT CLEAR THAT THE ASSESSEES EXPLANATION OF RECEIVING GIFT FROM HER CHILDREN HAS NOT BEEN FO UND TO BE FALSE OR MALA- FIDE. THE ASSESSEE HAD CLEARLY EXPLAINED THAT THE GRANDMOTHER HAD GIFTED THE AMOUNTS TO GRAND CHILDREN WHICH WERE GIVEN TO ASSES SEE THROUGH ACCOUNT 8 ITA NO.4714/DEL/2016 PAYEE CHEQUES. IF THIS EXPLANATION IS EXAMINED ON THE TOUCHSTONE OF PRE- PONDERANCE OF PROBABILITIES IT CANNOT BE SAID THAT THIS EXPLANATION WAS IMPROBABLE. UNDER THE HINDU SOCIETY, GRANDMOTHERS DO GIVE HANDSOME GIFTS TO THEIR GRAND CHILDREN AND, THEREFORE, IT CA NNOT BE SAID THAT THE EXPLANATION OFFERED BY ASSESSEE WAS IN ANY WAY NOT BONA-FIDE. MERELY BECAUSE EXPLANATION WAS NOT ACCEPTED BY THE TRIBUNA L IT CANNOT LEAD TO LEVY OF PENALTY. I, THEREFORE, DO NOT CONCUR WITH THE F INDINGS RECORDED BY LD. CIT(A) AND, ACCORDINGLY, WHILE ALLOWING THE ASSESSE ES APPEAL DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED BY H IM. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2017. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 28-02-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI