Shri Satishbhai Kantilal Shah, (HUF), Bhavnagar V. The Income Tax Officer, Ward-1(1), Bhavnagar

ITA 525/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6153 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 19-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH D RATNOO HEARING CONCL
• Assessee Lawyers: B R BA PAT
• Keywords: Unexplained cash credit; Gift; Bonafide belief

Judgement Text

I.T.A. NO.: 525/AHD/2014 ASSESSMENT YEARS: 2004 - 05 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM ] I.T.A. NO. : 525 /AHD/201 4 ASSESSMENT YEAR S: 2004 - 05 SATISHBHAI KANTILAL SHAH HUF ............APPELLANT PLOT NO. 622E, VIKAS DAIRY ROAD GEETA CHOWKM KRISHN A NAGAR BHAVNAGAR 364 001 [PAN: AAGHS1595G] VS INCOME TAX OFFICER WARD 1(1) , SURAT ...........RESPONDENT APPEARANCES BY B R BA PAT FOR THE APPELLANT KAILASH D RATNOO FOR THE RESPONDENT HEARING CONCLUDED ON: 27 /0 2 /1 7 ORDER PRONOUNCED ON : 26 /0 4 /1 7 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER DATED 20 TH DECEMBER 2013 PASSED BY THE CIT(A), IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2004 - 05 . 2. GR IEVANCE OF THE ASSESSEE IS THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) ERRED IN CONFIRMING THE IMPUGNED PENALTY OF RS 3,38,578. 3. THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. DURING THE COURSE OF THE RELATED SCRUTINY AS SESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED A GIFT OF RS 9,51,257 FROM A US RESIDENT BY THE NAME OF SMT BHANUMATI J DOSHI - WHO HAPPENS TO BE A COUSIN OF THE KARTA S WIFE . THE ASSESSING OFFICER NOTED THAT AS THE ASSESSEE HAS NOT COMP LIED WITH HIS REQUISITION TO FILE CERTAIN EVIDENCES IN SUPPORT OF CREDIT WORTHINESS OF THE DONOR ( I.E. HER PASSBOOK, SALARY CERTIFICATE, COPY OF CAPITAL ACCOUNT AND BALANCE SHEET, AND A COPY OF THE INCOME TAX RETURN FILED IN THE UNITED STATES), THE GIFT RE CEIVED BY THE ASSESSEE IS REQUIRED TO BE TREATED AS UNEXPLAINED CREDIT I.T.A. NO.: 525/AHD/2014 ASSESSMENT YEARS: 2004 - 05 PAGE 2 OF 3 UNDER SECTION 68. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) , AND FINALLY BEFORE A DIVISION BENCH OF THIS TRIBUNAL, BUT WITHOUT ANY SUCCESS. IT WAS IN THIS BACKD ROP THAT A PENALTY UNDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME WAS ALSO INITIATED . THE TRIBUNAL, AS NOTED BY THE AO, HAD NOTED THAT THE RETURN WAS NOT FILED BY THE DONOR BUT IT WAS FILED JOINTLY WITH HER HUSBAND AND THAT RELIED UPON THE TEST OF HU MAN PROBABILITIES PRESCRIBED BY THE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE (82 ITR 540) AND SUMATI DAYAL (214 ITR 80) AND CONFIRMED THE ADDITIONS MADE BY THE AO . THE AO WAS OF THE VIEW THAT IT IS FOR THE ASSESSEE TO PROVE THAT THE EXPLANATION, W HICH COULD NOT BE SUBSTANTIATED, WAS SUBMITTED UNDER THE BONAFIDE BELIEF OF ITS BEING TRUE BUT IN THE PRESENT CASE, THE ASSESSEE HAS FAILED TO DISCHARGE SUCH AN ONUS . THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS NOT, AS HELD BY THE TRIBUNAL, GIVEN SUFFI CIENT EVIDENCE ABOUT CREDIT WORTHINESS OF THE DONOR, AND, THEREFORE, THE ADDITION WAS TO BE CONFIRMED. THE AO WAS OF THE VIEW THAT ALL THESE FACTS TAKEN TOGETHER CLEARLY SHOW THAT IT WAS A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). ACCORD INGLY, A PENALTY OF RS 3,38,578, BEING 100% OF THE TAX SOUGHT TO BE EVADED, WAS IMPOSED. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THIS TRIBUNA L. 5 . I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6 . I HAVE NOTED THAT IN THE PRESENT CASE THERE IS NO DISPUTE ABOUT THE FACT OF GIFT AND THE IDE NTITY OF DONOR AS THE CONFIRMATION, AS ALSO PARTICULARS OF THE OWNER, ARE ON RECORD. THE MAIN ISSUE IS WITH RESPECT TO THE CREDIT WORTHINESS OF DONOR, AND, ON AN APPRECIATION OF EVIDENCE IN THIS REGARD, A DIVISION BENCH OF THIS TRIBUNAL HAS COME TO THE CON CLUSION THAT THE ASSESSEE DID NOT FILE SUFFICIENT EVIDENCE IN THIS REGARD. THE INCOME TAX RETURN FILED BY HER IN THE UNITED STATES HAS BEEN REJECTED AS A RELEVANT PIECE OF DOCUMENT AS IT IS FILED JOINTLY WITH HER HUSBAND AND NOT IN HER INDIVIDUAL CAPACITY. THE GENUINENESS OF GIFT HAS ALSO BEEN CALLED IN QUESTION ON THE GROUND THAT RELATIONSHIP BETWEEN THE DONOR AND THE ASSESSEE IS NOT CLEARLY ESTABLISHED. IT IS NOT FOR ME TO REVISIT THESE CONCLUSIONS BUT, AS THE SETTLED LEGAL POSITION, THE DEGREE OF PROOF T HAT THE ASSESSEE IS REQUIRED TO FURNISH IN THE PENAL TY PROCEEDINGS IS QUALITATIVELY DIFFERENT IN THE SENSE THAT, SO FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED, ALL THAT THE ASSESSEE IS REQUIRED TO SHOW IS THAT HE HAD A REASONABLE EXPLANATION FOR THE STAN D THAT HE HAD TAKEN; HE NEED NOT PROVE I.T.A. NO.: 525/AHD/2014 ASSESSMENT YEARS: 2004 - 05 PAGE 3 OF 3 CORRECTNESS OF HIS CLAIM TO THE HILT AT THIS STAGE. VIEWED THUS, IN MY HUMBLE UNDERSTANDING, THE ASSESSEE HAD FURNISHED REASONABLE EXPLANATION TO DISCHARGE HIS ONUS TO THE EXTENT REQUIRED FOR THE PURPOSE OF PENALTY PR OCEEDINGS. HIS EXPLANATION HAS NOT BEEN FOUND TO BE FALSE OR INCORRECT. YET, CLAIM OF THE ASSESSEE COULD NOT BE CONCLUSIVELY ESTABLISHED FOR WANT OF CLINCHING EVIDENCE. THAT ASPECT OF THE MATTER, HOWEVER, IS ONLY RELEVANT FOR THE QUANTUM PROCEEDINGS. AS RE GARDS THE JOINT RETURN FILED BY THE DONOR IN USA, NOTHING REALLY TURNS AGAINST THE ASSESSEE ON THIS POINT IN THE PENALTY PROCEEDINGS. IT IS A REASONABLE PRESUMPTION, EVEN IF NOT LEGALLY ACCEPTABLE TO THE DB IN THE QUANTUM PROCEEDINGS , THAT FILING OF INCOM E TAX RETURN IN JOINT CAPACITY, AS IS PERMISSIBLE UNDER THE US LAW, WILL NOT ACT TO THE DETRIMENT TO THE CLAIM. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I AM OF THE CONSIDERED VIEW THAT IT WAS INDEED NOT A FIT CASE FOR I MPOSITION OF PENALTY UNDER SECTION 271(1)(C) . I, THEREFORE, DELETE THE IMPUGNED PENALTY. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 7 . IN THE RESULT, T HE APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN COURT TODAY ON THE 26 TH DAY OF APRIL, 2017 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: AHMEDABAD, THE 26 TH DAY OF APRI L , 2017. COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD