Dr. Dipti D. Patel , Surat V. The Dy.CIT, Circle-3, Surat

ITA 516/AHD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5755 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R B SHAH
• Keywords: Unexplained cash credit; Gift; Source of fund; Corroborative evidences
• Section: 143(3); 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, VICE-PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 516/AHD/2015 / ASSESSMENT YEAR: 2006-07 DR. DIPTI D. PATEL, PROP. LOVE & CARE MATERNITY HOSPITAL, 9, SHIV SHAKTI SOCIETY, TADWADI, SURAT PAN : ABNPP 1076 D VS. DCIT, CIRCLE-3, SURAT [ / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI R.B. SHAH, AR REVENUE BY : SHRI PRASOON KABRA, SR DR / DATE OF HEARING : 14/06/2017 / DATE OF PRONOUNCEMENT: 16/06/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, SURAT DATED 09.01.2015 VIDE APPEAL NO.CAS/IV/111/2013-14 & CAS/2/40/TRF/2014-15, ARISI NG OUT OF ORDER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT), FRAMED ON 25.11.2013 BY THE DCIT, CIRCLE-3, SURAT. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS AGAINS T THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY IMPOSED UNDER SECT ION 271(1)(C) OF THE ACT BY THE LD. ASSESSING OFFICER AT RS.2,69,280/- ON THE A DDITION OF RS.8,00,000/-. 3. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE REC ORD, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS A DOCTOR BY PROFESSION. SHE I S A GYNECOLOGIST, RUNNING A MATERNITY HOSPITAL. RETURN OF INCOME WAS FILED ON 31.12.2006 SHOWING TOTAL ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 2 INCOME AT RS.9,55,014/-, WHICH WAS FURTHER REVISED ON 31.12.2007 DECLARING THE REVISED INCOME AT RS.11,33,843/-. CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND NOTICES UNDER SECTION 143(2)/142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPON ASSESSEE. NECESSARY DETAILS, AS CA LLED FOR, WERE SUBMITTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVED RS.53, 21,000/- AS GIFT FROM HER FATHER BY WAY OF WILL WHICH INCLUDED ORNAMENTS VA LUING RS.35,21,000/- AND CASH OF RS.18,00,000/-. ASSESSEES FATHER WAS LIVI NG IN USA AND THE IMPUGNED GIFTS WERE GIVEN BY HIM FROM HIS SOURCES OF INCOME IN USA. COPY OF WILL WAS ALSO PLACED ON RECORD. HOWEVER, LD. ASSESSING OFFI CER WAS NOT CONVINCED WITH THE DETAILED SUBMISSIONS GIVEN BY THE ASSESSEE AND PROCEEDED TO COMPLETE THE ASSESSMENT BY MAKING THE ADDITION OF RS.55,03,463/- WHICH INCLUDED THE UNEXPLAINED CASH CREDIT ADDITION U/S 68 OF THE ACT AT RS.53,21,000/-. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.66,37,310 /- VIDE ORDER U/S 143(3) OF THE ACT DATED 30.12.2008. 4. ASSESSEE FILED APPEAL AGAINST THE QUANTUM ADDITI ON BEFORE THE LD. CIT(A) AND PARTLY SUCCEEDED. HOWEVER, WITH REGARD TO THE A DDITION MADE TOWARDS UNEXPLAINED CASH CREDIT OF RS.53,21,000/- , LD. CIT (A) DELETED THIS ADDITION ACCEPTING ASSESSEES CONTENTION AND GENUINENESS OF THE GIFTS RECEIVED IN THE FORM OF ORNAMENTS VALUING RS.35,21,000/- AS WELL A S CASH GIFT OF RS.18,00,000/-. THEREAFTER, REVENUE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS.53,21 ,000/-, BUT REVENUE COULD PARTLY SUCCEED AS THE CO-ORDINATE BENCH CONFIRMED T HE ORDER OF THE LD. CIT(A) DELETING THE ADDITION TOWARDS GIFT OF ORNAMENTS VAL UING RS.35,21,000/-; BUT WITH REGARD TO THE UNEXPLAINED CASH RECEIPTS OF RS. 18,00,000/- , ADDITION FOR A SUM OF RS.8,00,000/- WAS SUSTAINED. SUBSEQUENT THER ETO, THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED AND LD. ASSESSING OFFICER, WITHOUT APPRECIATING THE SUBMISSIONS MADE BY THE APPELLANT, IMPOSED PENALTY OF RS.2,69,280/-. AGAINST THIS ORDER OF T HE LD. ASSESSING OFFICER ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 3 ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), BU T COULD NOT SUCCEED AS THE PENALTY WAS CONFIRMED ON THE BASIS OF ADDITION OF R S.8,00,000/- CONFIRMED BY THE TRIBUNAL. 5. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FULLY ESTABLISHED THE SOURCE OF GIFT AND IDENTITY OF THE PERSON, I.E., HER FATHER, FROM WHOM THE IMPUGNED CASH GIFT OF RS.8,00,000/- WAS RE CEIVED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE COPY OF WILL MADE BY ASSESSEES FATHER WAS PRODUCED, BUT LATER ON HE EXPIRED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE BY WAY OF PRODUCING WILL OF HER FATHER HAS ESTABLISH ED THE CREDITWORTHINESS OF THE SAID CASH RECEIPTS AS THE FATHER OF THE ASSESSEE WA S FROM A VERY WELL RENOWNED FAMILY OF JEWELLERS, ENGAGED IN JEWELLERY BUSINESS FOR SO MANY YEARS. THE WILL OF THE ASSESSEES FATHER WAS PROVED TO BE GE NUINE AND ACCEPTED EVEN BY THE HONBLE TRIBUNAL, AHMEDABAD. HE FURTHER SUBMITT ED THAT THE ASSESSEES FATHER WAS SETTLED IN USA SINCE 1990 AND WAS WORKIN G WITH GLOBE AIRPORT SECURITY SERVICES AND WAS DRAWING REMUNERATION. LD . COUNSEL FOR THE ASSESSEE THUS PLEADED THAT AS THE ASSESSEE HAS EXPLAINED THE SOURCE OF THE CASH GIFT OF RS.8,00,000/-, NO PENALTY SHOULD HAVE BEEN IMPOSED BY THE ASSESSING AUTHORITY UNDER SECTION 271(1)(C) OF THE ACT. IN SUPPORT OF HIS CONTENTION, LD. COUNSEL REFERRED AND RELIED UPON THE JUDGMENT OF HONBLE SU PREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT LTD, REPORTED IN [2010] 322 ITR 158 (SC) AND THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF NATIONAL TEXTILES VS. CIT, REPORTED IN (2001) 249 ITR 125 (G UJ.) 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. ASSESSEES SOLITARY GRIEVANCE IS AGAINS T THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF T HE ACT AT RS.2,69,280/-. WE OBSERVE THAT THIS PENALTY FINDS ITS NEXUS TO THE AD DITION OF RS.8,00,000/- CONFIRMED BY THE TRIBUNAL UNDER SECTION 68 OF THE A CT. WE NOTICE THAT THE ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 4 ASSESSEE, WHO IS A DOCTOR BY PROFESSION, RECEIVED G IFTS TOTALING TO RS.53,21,000/-, WHICH INCLUDED ORNAMENTS VALUED AT RS.35,21,000/- A ND CASH OF RS.18,00,000/-, FROM HER FATHER. ASSESSEES FATHER WENT TO USA AND WAS WORKING THERE SINCE 1990. BEFORE HIS DEATH, HE PREPARED A WILL AND, AS PER WHICH, THE ABOVE REFERRED GIFT OF RS.53,21,000/- WAS RECEIVED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS, THE SAID WILL HAS BEEN CONSISTENTLY ACCEPTED TO BE GE NUINE. IN THE QUANTUM PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, T HE IMPUGNED ADDITION OF RS.53,21,000/- WAS DELETED BY LD. CIT(A). FURTHER, WHEN THE REVENUE APPROACHED BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) DELETING THE ADDITION, REVENUE COULD PARTLY SUCCEED AS CO-ORDINA TE BENCH CONFIRMED THE ADDITION ONLY AT RS.8,00,000/- AS AGAINST TOTAL ADD ITION OF RS.53,21,000/- BY OBSERVING AS FOLLOWS:- 8. BEFORE WE PRONOUNCE OUR FINDINGS, IT IS WORTH T O REPRODUCE SOME OF THE RELEVANT PORTIONS OF THE SUBMISSIONS MADE BY THE AS SESSEE BEFORE THE LOWER AUTHORITIES. 'WE HAVE ENCLOSED HEREWITH A JOINT DECLARATION MADE BY THE OTHER MEMBERS OF FAMILY OF THE TESTATOR LATE SHRI PRAVINB HAI R. PARIKH I.E. HIS WIFE SMT MANJULABEN P PARIKH, HIS SON SHRI DEEPAK P . PARIKH, HIS ANOTHER SON SHRI KULDIP P. PARIKH AND HIS DAUGHTER MRS DAXA SHAURIN MEHTA, WHEREBY THEY CONFIRM TO HAVE KNOWLEDGE ABOUT THE EXECUTION OF WILL AND CONTENTS OF WILL AND THEY ALSO CONFIRMED T HAT LATE SHRI PRAVINBHAI PARIKH HAD BEQUEATHED THE GOLD ORNAMENTS AND CASH AS MENTIONED IN THE WILL AFTER MUTUAL DISCUSSION WITH ALL THE FAMILY MEMBERS AND THEY CONFIRMED THE EXISTENCE OF ASSETS MENTIONED IN THE WILL.' 8.1 THIS PARAGRAPH WAS IN RESPECT OF THE FAMILY. TH E FOLLOWING PARAGRAPHS ARE ABOUT THE STATUS OF THE FAMILY. 'IT IS RESPECTFULLY SUBMITTED THAT THE APPELLANT'S FATHER LATE SHRI PRAVINBHAI PARIKH WAS FROM A VERY WELL REPUTED FAMI LY JEWELLERS AND SINCE LAST MORE THAN THREE GENERATIONS HIS FAMILY W AS ENGAGED IN THE BUSINESS OF JEWELLERY AT VADODARA AND HIS GRANDFATH ER WAS REPUTED AS JEWELLERS OF MAHARAJA GAYEKWAD FAMILY OF BARODA ST ATE. THEREFORE, HE WAS FROM A REPUTED FAMILY WITH HIGH STATURE AND STA TUS. IN VIEW OF THIS ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 5 BACKGROUND, LATE SHRI PRAVINBHAI PARIKH POSSESSED G OOD QUANTITY OF JEWELLERY. MOREOVER, HE HIMSELF WAS ALSO ENGAGED IN JEWELLERY BUSINESS FOR SO MANY YEARS AND DURING LATER PART OF HIS LIFE, HE MIGRATED TO THE USA TO SETTLE DOWN WITH HIS TWO SONS AND ONE DAUGHTER IN T HE USA. LATE SHRI PRAVINBHAI PARIKH HAD TWO SONS AND TWO DA UGHTERS AND OUT OF FOUR CHILDREN, THREE OF THEM HAD SETTLED DOWN THERE . THEREFORE, EXCEPT THE APPELLANT DR.DIPTI PATEL, HIS ENTIRE FAMILY HAD PER MANENTLY SETTLED DOWN IN THE USA AND ALL OF THEM WERE WELL SETTLED. UNDER THESE CIRCUMSTANCES, NONE OF THE FAMILY MEMBERS WERE INCLINED TO COME BA CK TO INDIA. WHILE CLOSING DOWN THE BUSINESS OF JEWELLERY AT BARODA, L ATE SHRI PRAVINBHAI PARIKH HAD KEPT CERTAIN QUANTITY OF ORNAMENTS FOR H IMSELF AND HIS FAMILY MEMBERS. APART FROM ANCESTRAL JEWELLERY RECEIVED BY HIM FROM HIS FOREFATHERS, HE HAD ALSO ACQUIRED SOME ORNAMENTS FR OM TIME TO TIME OVER A PERIOD OF HIS LIFE TIME DURING HIS TENURE AT VADODA RA. SINCE ALL THE FAMILY MEMBERS HAD SETTLED DOWN IN USA AND SINCE GOLD JEWE LLERY WERE ANCESTRAL AND LYING IN INDIA, IT WAS A MATTER OF EM OTIONAL ATTACHMENT OF THE ENTIRE FAMILY MEMBERS WITH THE APPELLANT AND TH EREFORE, IT WAS DECIDED WITH MUTUAL DISCUSSION AMONGST ALL THE FAMILY MEMBE RS THAT THE ENTIRE LOT OF JEWELLERY MIGHT BE GIVEN TO THE APPELLANT WHO WA S THE ONLY MEMBER OF THE FAMILY REMAINED IN INDIA. ..... IT IS RESPECTFULLY SUBMITTED THAT THE CREDIT WORTHI NESS OF THE APPELLANT'S FATHER AND THE POTENTIALITY TO HOLD THE QUANTUM OF JEWELLERY IN DISPUTE CAN BE VERY WELL ESTABLISHED BY THE FACT THAT HE WAS BO RN IN A VERY REPUTED FAMILY OF JEWELERS AND HIS FATHER (THE APPELLANT'S GRANDFATHER) LATE SHRI RAMANLAL MANEKLAL ZAVEN HAD ESTABLISHED HIS CREDIT IN THE SOCIETY AS 'ROYAL JEWELLER' (SHAHI JHAVERI) IN THE ROYAL COURT OF GAEKWAD STATE AND HE WAS A GENEROUS DONOR / PHILANTHROPIST AND SOCIAL WORKER OF VODODARA. WE HAVE ENCLOSED HEREWITH A BOOKLET PUBLISHED BY S HRI DASHA SHRI MALI SONI GYATI MANDAL, VODODARA ON THE OCCASION OF GOLD EN JUBILEE YEAR - 2008 IN WHICH A BRIEF TRIBUTE IS GIVEN TO LATE SHRI RAMANLAL MANEKCHAND JHAVERI FROM WHICH THE SOCIAL STATURE AND STATUS OF THE FAMILY CAN BE WELL ESTABLISHED.' 8.2 HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, AND AFTER CONSIDERING THE DOCUMENTS ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT IT WOULD BE UNJUST AND UNFAIR ON OUR PART TO TREAT THE WILL A BOGUS DOCUME NTS OR NON-GENUINE DOCUMENT. IN SUPPORT OF THE CORRECTNESS OF THE WILL , MAXIMUM EXPECTED FROM THE ASSESSEE WAS TO PLACE THE WILL IN ORIGINAL BEFORE T HE REVENUE AUTHORITIES SO THAT IN CASE OF DOUBT, THE CONTENTS OF THE WILL, SIGNATU RE OR THE THUMB IMPRESSION ETC. COULD HAVE BEEN VERIFIED. THAT EXERCISE HAD NOT BEE N DONE BY THE AO, AND HE HAS TAKEN A PRESUMPTIVE ACTION OF DISMISSING THE CONTEN TS OF THE WILL WITHOUT HAVING ANY COGENT EVIDENCE IN HIS HAND. THE SAID DISMISSAL WITHOUT HAVING ANY ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 6 SUPPORTING EVIDENCES CANNOT BE APPROVED IN THE EYES OF LAW. ALTHOUGH IT IS CORRECT THAT IN A SITUATION WHERE THE ASSESSEE IS N OT IN A POSITION TO ESTABLISH CREDIT-WORTHINESS, GENUINENESS AND THE IDENTITY OF THE SAID PERSON, THEN IT IS POSSIBLE FOR THE REVENUE DEPARTMENT TO INVOKE THE P ROVISION OF SECTION 68 OF THE I.T. ACT. BUT IN A SITUATION WHERE A WILL HAS BEEN EXECUTED, AND IT IS NOT POSSIBLE EITHER FOR THE ASSESSEE OR FOR THE REVENUE TO CROSS - EXAMINE THE TESTATOR, WHO HAS ALREADY GONE FOR HEAVENLY ABODE, EXCEPT TO ACCEPT T HE SAME. IN THE ABSENCE OF SUCH VERIFICATION, IT IS NOT FAIR TO TAKE AN ADVERSE ACT ION MERELY ON PRESUMPTION THAT THE TESTATOR MIGHT NOT BE HAVING SUFFICIENT CA PACITY TO BEQUEATH THE PROPERTY FOUND LISTED IN THE WILL. IN THE PRESENT CASE, AS F AR AS THE EXISTENCE OF THE JEWELLERY IS CONCERNED, WE ARE IN AGREEMENT WITH TH E LEARNED CIT(A) THAT KEEPING IN MIND THE FAMILY BACK GROUND OF THE ASSESSEE, AS ESTABLISHED THROUGH SEVERAL SOUVENIRS, THERE WAS A POSSIBILITY OF HAVING HEIR-L OOMS IN THE SHAPE OF JEWELLERY, WHICH WAS GIVEN TO THE ASSESSEE BEING DAUGHTER STAY ING IN INDIA. WE HAVE BEEN INFORMED THAT THE LEARNED CIT(A) HAS TAKEN DUE COGN IZANCE OF THE EXISTENCE OF THE JEWELLERY AS CERTIFIED BY A REGISTERED VALUER. UNDE R THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, WE ARE NOT INCLINED TO R EVERSE THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 9. AS FAR AS THE QUESTION OF HAVING CASH OF RS.18 L AKHS IS CONCERNED, THE FACTS HAVE REVEALED THAT THE TESTATOR WAS WORKING IN THE USA AND EARNING REMUNERATION ON PER DAY BASIS. THE ENTIRE AMOUNT OF RS.18 LAKHS CANNOT BE ACCEPTED AS TRANSFERRED FROM THE USA TO INDIA. EVEN THE EXISTENCE OF CASH IN INDIA HAS NOT BEEN ESTABLISHED, AS IT WAS ESTABLISH ED IN THE CASE OF BEQUEATHING OF THE JEWELLERY. THE REASONS GIVEN BY THE LEARNED CIT (A) IS ALSO NOT VERY CONVINCING, THEREFORE, WE HEREBY HOLD THAT MAXIMUM A SUM OF RS.10 LAKHS COULD HAVE BEEN TRANSFERRED BY THE FATHER, AS ADMITTED IN THE SUBMISSION THAT ON EACH TRIP, EACH PERSON CAN BRING US $ 10,000 ONLY. THERE FORE, THE REST OF THE AMOUNT IS NOW REQUIRED TO BE HELD AS UNEXPLAINED INCOME OF THE ASSESSEE. RESULTANTLY, THE GROUNDS OF THE APPEAL OF THE REVENUE ARE PARTLY ALL OWED. 7.1 FROM THE PERUSAL OF THE FINDINGS OF THE CO-ORDI NATE BENCH AND OUR DISCUSSIONS MADE HEREIN ABOVE, WE OBSERVE THAT ASSE SSEE HAS GIVEN COMPLETE DETAILS OF THE SOURCE OF THE IMPUGNED GIFT OF CASH SUM OF RS.8,00,000/- RECEIVED BY HER FROM HER FATHER THROUGH HIS WILL. EXAMINI NG THE ASPECT OF THE PENALTY IMPOSED ON THE ASSESSEE ON THIS SUM OF RS.8,00,000/ -, WE FIND THAT THE ASSESSEE HAS GIVEN A PLAUSIBLE BASIS WITH THE COMPLETE DOCUM ENTARY EVIDENCES TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF T HE SUM OF RS.8,00,000/- RECEIVED BY HER. NO MISTAKE HAS BEEN POINTED OUT I N THESE DOCUMENTS BY THE LOWER AUTHORITIES. EVEN THE CO-ORDINATE BENCH HAS A LSO SUSTAINED A LUMP-SUM ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 7 AMOUNT OF RS.8,00,000/-. IN THESE CIRCUMSTANCES, W E DO NOT FIND A CASE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME SO AS TO GET COVERED UNDER TH E PROVISIONS OF SECTION 271(1)(C) OF THE ACT. OUR VIEW FURTHER GETS SUPPOR T FROM THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRO DUCTS PVT LTD (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER:- A GLANCE OF PROVISION OF SECTION 271(1)(C ) WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICU LARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. THE INSTANT CASE WAS NOT THE CASE OF CONCEA LMENT OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE EITHER. IT WAS AN ADMIT TED POSITION IN THE INSTANT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND T O BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL S UPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE RE VENUE ARGUED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON IN TEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INCOME. SUCH CANNOT BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAG INATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INA CCURATE PARTICULARS. [PARA 7] THEREFORE, IT MUST BE SHOWN THAT THE CONDITIONS UND ER SECTION 271(1)(C ) EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISP UTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED, BECAUSE THAT IS THE O NLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. [PARA 8] THE WORD 'PARTICULARS' MUST MEAN THE DETAILS SUPPLI ED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING T O TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE WAS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. [PARA 9] THE REVENUE CONTENDED THAT SINCE THE ASSESSEE HAD C LAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY WERE INCORRECT, IT AMOUNTED TO CO NCEALMENT OF INCOME. IT WAS ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITH ER OF THE TWO FORMS: (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 8 THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUN T TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. SUCH CONTENTION COULD NOT BE ACCEPTED AS TH E ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE H AD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT, BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)( C). IF THE CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, T HE ASSESSEE WOULD INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NO T THE INTENDMENT OF THE LEGISLATURE. [PARA 10] 7.2 WE FURTHER OBSERVE THAT THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF NATIONAL TEXTILES (SUPRA) HAS ALSO COME ACROSS S IMILAR FACTS, WHEREIN THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPO SED ON UNEXPLAINED ADDITION UNDER SECTION 68 OF THE ACT AND THE HONBL E COURT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER:- 21. THE PROVISIONS OF SECTION 68 PERMITTING THE AS SESSING OFFICER TO TREAT UNEXPLAINED CASH CREDIT AS INCOME ARE ENABLING PROV ISIONS FOR MAKING CERTAIN ADDITIONS, WHERE THERE IS FAILURE BY THE ASSESSEE T O GIVE AN EXPLANATION OR WHERE THE EXPLANATION IS NOT TO THE SATISFACTION OF THE A SSESSING OFFICER. HOWEVER, THE ADDITION MADE ON THIS COUNT WOULD NOT AUTOMATICALLY JUSTIFY IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) BY RECOURSE ONLY TO EXPLANATION 1 BELOW SECTION 271(1)(C). 22. IN ORDER TO JUSTIFY THE LEVY OF PENALTY, 2 FACT ORS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE RE ASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS, I.E., CONSCIOUS CO NCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. THE EXPLANATION HAS NO BEARING ON FACTOR NO. (I) BU T IT HAS BEARING ONLY ON FACTOR NO. (II). THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE I NCOME OF THE ASSESSEE. NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANC ES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT C ONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES. IF AN ASSESSEE GIVES AN EX PLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEPTED BUT CIRCUMS TANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE S CASE IS FALSE, THE EXPLANATION ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 9 CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE. 23. ALTERNATIVELY TREATING THE EXPLANATION AS DEALI NG WITH BOTH THE INGREDIENTS (I) AND ( II) ABOVE, WHERE THE CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES EXPLANATION IS FALSE, THE ASSESSEE MUST BE HELD TO HAVE PROVED THAT THERE WAS NO MENS REA OR G UILTY MIND ON HIS PART. EVEN IN THIS VIEW OF THE MATTER, THE EXPLANATION ALONE C ANNOT JUSTIFY THE LEVY OF PENALTY. ABSENCE OF PROOF ACCEPTABLE TO THE DEPARTM ENT CANNOT BE EQUATED WITH FRAUD OR WILFUL DEFAULT. AS WE FIND NO MATERIAL DIF FERENCE BETWEEN THE ORIGINAL EXPLANATION 1 AND EXPLANATION 1 AS SUBSTIT UTED, IN OUR OPINION, IT HAS TO BE SO CONSTRUED AS TO HARMONISE IT WITH BASIC PR INCIPLES OF JUSTICE AND FAIRNESS, AS IN THE CASE OF ORIGINAL EXPLANATION. WE ARE GUID ED BY THE COMMENTARIES OF THE LEARNED AUTHORS KANGA & PALKHIWALA LAW AND PRACTICE OF INCOME-TAX VOL. 1. PAGES 1637, 1639 TO 1640. 24. IN THE INSTANT CASE, THE CASH CREDITS WERE NOT SATISFACTORILY EXPLAINED BY EVIDENCE AND DOCUMENTS. THE PARTIES WHO HAD ADVANCE D THE ALLEGED TEMPORARY LOANS WERE NEITHER DISCLOSED WITH THEIR PARTICULARS NOR ANY SUPPORTING DOCUMENTS WERE ON RECORD. ONLY 2 ENTRIES WERE EXPLA INED. THE ACCOUNTANT WHO HAD ARRANGED THE LOANS WAS NOT PRODUCED STATING THA T HE HAD LEFT THE SERVICE AND RELATIONS WITH HIM ARE STRAINED. ON THIS STATE OF A CCOUNTS AND EVIDENCE IN THE QUANTUM PROCEEDINGS, THE DEPARTMENT WAS JUSTIFIED I N TREATING THE CASH CREDIT AS INCOME OF THE ASSESSEE BUT MERELY ON THAT BASIS BY RECOURSE TO EXPLANATION 1, PENALTY UNDER SECTION 271(1)(C) COULD NOT HAVE BEEN IMPOSED WITHOUT THE DEPARTMENT MAKING ANY OTHER EFFORT TO COME TO A CON CLUSION THAT THE CASH CREDITS COULD IN NO CIRCUMSTANCES HAVE BEEN AMOUNTS RECEIVE D AS TEMPORARY LOANS FROM VARIOUS PARTIES. THE ASSESSEE IN THE QUANTUM PROCEE DINGS FAILED TO PRODUCE THE ACCOUNTANT BUT THE DEPARTMENT ALSO IN PENALTY PROCE EDINGS MADE NO EFFORT TO SUMMON HIM. APPLYING THE TEST (II) DISCUSSED ABOVE, THEREFORE, IT WAS A CASE WHERE THERE WAS NO CIRCUMSTANCE TO LEAD TO A REASON ABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE - THAT THE CASH CREDITS WE RE ARRANGED AS TEMPORARY LOANS, WAS FALSE. THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT IT COULD HAVE BEEN SUNDRY LOANS IN SMALL AMOUN TS OBTAINED FROM DIFFERENT PARTIES. IN OUR OPINION, THEREFORE, EVEN TAKING REC OURSE TO EXPLANATION 1, SAME CIRCUMSTANCES OR STATE OF EVIDENCE ON WHICH THE CAS H CREDITS WERE TREATED AS INCOME, COULD NOT BY THEMSELVES JUSTIFY THE IMPOSIT ION OF PENALTY WITHOUT ANYTHING MORE ON RECORD PRODUCED BY THE ASSESSEE OR THE DEPARTMENT. 7.3 RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENTS OF HONBLE APEX COURT AND THE HONBLE JURISDICTIONAL HIGH COURT AND IN TH E GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD NOT BE VISITED WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITION OF ITA NO. 516/AHD/2015 DR. DIPTI D PATEL VS. DCIT AY : 2006-07 - 10 RS.8,00,000/- AS COMPLETE EXPLANATION AND DETAILS W ERE PROVIDED ABOUT THE SOURCE OF THE SUM SO RECEIVED. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 16 TH JUNE, 2017 AT AHMEDABAD. SD/- SD/- (R.P. TOLANI) VICE - PRESIDENT (AZ) (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 16/06/2017 **BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ & / CONCERNED CIT 4. & ) ( / THE CIT(A)- 5. $ , $ , /DR,ITAT, AHMEDABAD, 6. 0 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) $ ITAT, AHMEDABAD