SHRI PRAKASH BAFNA, Dhar V. THE ITO, Dhar

ITA 540/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6174 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 17-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: RAVI SARDA
• Keywords: Unexplained investment; Gift; Business expenditure; Salary income; Period of limitation; Agreed addition; Onus to prove; Revised return
• Section: 143(3); 133A; 68; 148; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NOS.538 TO 540/IND/2015 A.Y. : 2002-03 TO 2004-05 SHRI PRAKASH BAFNA, DHAR ITO, DHAR VS APPELLANT RESPONDENT PAN NO. AAZPB2677D APPELLANTS BY : SHRI RAVI SARDA, ADVOCATE RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE CONSOLIDATED ORDER OF CIT(A)-I, INDORE, DATED 05.0 2.2015 FOR THE ASSESSMENT YEARS 2002-03, 2003-04 & 2004-05. DATE OF HEARING : 02 . 0 5 .2016 DATE OF PRONOUNCEMENT : 02 . 0 5 .2016 SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 2 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED RETURN FOR ASSESSMENT YEARS 2002-03, 2003-04 AND 2004- 05 DECLARING INCOME OF RS. 2,61,401/-, RS. 1,92,959 /- AND RS. 1,88,416/-. IN THE RETURN OF INCOME, THE ASSESSEE H AS SHOWN INCOME OF SALARY OF RS. 2,94,375/-, RS. 2,70,000/- AND RS. 2,70,000/- AND LOSS FROM BUSINESS OF RS. 32,974/-, RS. 49,541/- AND RS. 49,084/-. FURTHER IT WAS FOUND THAT THE ASSESSEE WAS IN RECEIPT OF INTEREST FROM TIRUPATI ST ARCH AND CHEMICALS LIMITED, GHATABILLOD OF RS. 66,747/-, RS. 29,756/- AND RS. 31881/-. AGAINST THESE RECEIPTS, HE HAS CLA IMED EXPENSES AND HAS REFLECTED LOSS OF RS. 32,974/-, RS . 49,488/- AND RS. 49,084/-. SUCH CLAIM OF THE DEDUCTION WAS FO UND TO BE INADMISSIBLE IN NATURE AND NOT DEDUCTIBLE FROM S UCH RECEIPTS. PENALTY PROCEEDINGS U/S 271(1)(C) WERE IN ITIATED AFTER SATISFACTION ON THE GROUNDS FOR FURNISHING INACCURA TE PARTICULARS OF INCOME BY CLAIMING EXPENSES OF INADM ISSIBLE IN NATURE AND NOT SHOWING INCOME UNDER PROPER HEAD OF I NCOME. 3. DURING THE PENALTY PROCEEDINGS, THE SHOW CAUSE NOTIC E WAS GIVEN AND ASSESSEE HAS REPLIED AS UNDER :- SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 3 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO CLAIMS THAT THE ASSESSEE VOLUNTARILY SUBMITTED A LETTER DTD. 26-09-2006 STATING THAT ONLY ON RECEIPT OF NOTICE U/S 148 IT CAME TO HIS NOTICE THAT THROUGH MISTAKE HE HAD CLAIMED CERTAIN EXPENSES WHICH ARE OF INADMISSIBLE NATURE AND HE AGREED TO INCLUSION OF SUCH EXPENSES IN HIS TOTAL INCOME AND ON SOLE BASIS, AO ADDED RS.66,747/- WITHOUT MAKING ANY ENQUIRY ABOUT THE NATURE AND ALLOWABILITY AND ANY FINDING IN THE MATTER. IN FACT ASSESSEE HAS BEEN-ADOPTING THIS PRACTICE OF PREPARING INCOME & EXPENDITURE ACCOUNT RIGHT FROM BEGINNING AND SHOWING INCOME ON THAT BASIS. NONE OF THE PREDECESSORS OF THE AO EVER TOOK OBJECTION ON THE ASSESSEE'S PRACTICE OF KEEPING SUCH AN ACCOUNT AND DISCLOSING SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 4 4 INCOME ON THAT BASIS. A PERUSAL OF THE SAID INCOME & EXPENDITURE A/C WILL SHOW THAT ALL EXPENSES CLAIMED THEREIN ARE BUSINESS EXPENSES AND NONE OF THEM IS EITHER OF CAPITAL NATURE OR PERSONAL EXPENSES LIABLE TO BE DISALLOWED U/S 37. DISALLOWANCE MADE BY THE AO IS WITHOUT ANY BASIS OR REASON. THE SIMPLE FACT THAT THE ASSESSEE UNDER WRONG IMPRESSION ADMITTED THAT THE EXPENSES CLAIMED BY HIM ARE OF INADMISSIBLE NATURE, WHEREAS HE IS NOT AN TAX EXPERT CAPABLE OF JUDGING ADMISSIBILITY OR OTHERWISE OF THE EXPENSES CLAIMED BY HIM. RELIED ON.- (1) HUKUMCHAND MILLS LTD. VS. CIT- (1966) 63 ITR 232 SC PAGE 20-26 (2) CIT VS. LATE JAWAHARLAL NAGPAT - (1988) 171 ITR 136 MP PAGE 27-32 (3) SAHELI SYNTHETICS VS. CIT-(2008) SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 5 5 302 ITR 126 GUJ PAGE 33-36 ANY ORDER PASSED IN DEFIANCE OF THE LAW LAID DOWN BY THE APEX COURT OF COUNTRY IS NOTHING BUT ONLY AN ILLEGAL ORDER LIABLE TO BE QUASHED. UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA, THE LAW DECLARED BY THE SUPREME COURT IS BINDING ON ALL WITHIN THE TERRITORY OF INDIA. BY JUDICIAL PRECEDENTS, THE LAW DECLARED BY THE HIGHER COURTS IS TO BE FOLLOWED BY EVERYONE SUBORDINATE TO IT AND THEY CANNOT IGNORE IT IN INITIATION PROCEEDINGS OR DECIDING PROCEEDINGS. PROCEEDINGS CONTRARY, TO THE LAW LAID DOWN BY THE HIGHER COURTS, WOULD BE INVALID AND WITHOUT JURISDICTION. IMPUGNED ORDER HAVING PASSED IN DEFIANCE OF THE DIRECTIONS OF JURISDICTIONAL HIGH COURT BEING WITHOUT JURISDICTION BE ANNULLED. IN ADDITION TO THAT YOUR HONOUR FURTHER KIND SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 6 6 ATTENTION IS DRAWN THAT ASSESSEE IN ORIGINAL ASSESSMENT PROCEEDINGS U/S 148 FILED A LETTER DT26-09- ' 2006, COPY FILED OR PAGE 19 FOR ASSESS. YEARS 2002-03,2003-04 AND 2004-05, THROUGH WHICH ASSESSEE SURRENDERS INADMISSIBLE NATURE EXPENSES AN AGREED TO INCLUDE SAME IN INCOME AND TO PAY TAX ON IT AND ALSO REQUESTED YOUR HONOURS NOT TO INITIATE PENALTY PROCEEDINGS ON THE SAME. SURRENDER/AGREED ADDITION OF INCOME TO BUY PEACE OR FOR OTHER REASON CANNOT CONSTITUTE EVIDENCE OF CONCEALMENT OF INCOME WITH IN THE MEANING OF SECTION 271(1)(C) PENALTY PROCEEDINGS AND IT IS LIABLE TO BE DROPPED. RELIED ON:- , (1) CIT VS. S. V. ELECTRICALS - (200S) 2741TR 334 MP . (2) CIT VS. BETA NAPTHOL- (2005) 272 ITR 323 MP (3) CIT VS. D&H SECHRON - (2008) 2961TR 193 SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 7 7 MP (4) CIT VS. SURESH CHAND GUPTA - (1997) 226 ITR 613 MP 4. AFTER CONSIDERING THE REPLY, THE ASSESSEE HAS ADMITTED HIS MISTAKE. THE INTEREST ON DEPOSIT WITH T HE COMPANY HAS TO BE TREATED AS INCOME FROM OTHER SOUR CES. AS PER SECTION 57(III) ANY EXPENDITURE WHOLLY AND EXPEN DABLE FOR THE PURPOSE OF MAKING AND EARNING INCOME, IT IS ALL OWABLE. THEREFORE, THE AO AND CIT(A) HAS HELD THAT THE ASSE SSEE HAS SUBMITTED INACCURATE PARTICULARS OF INCOME TO THE E XTENT OF RS. 99,719/- , RS. 79,244/- AND RS. 80,965/-. 5. IN THE ASSESSMENT YEAR 2002-03, THE ASSESSEE HAS SUBMITTED THE STATEMENT OF AFFAIRS, WHEREIN HE HAS S HOWN THE LIABILITY OF RS. 5,49,542/- PAYABLE TO SMT. SAJJANB AI. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ADMITT ED THAT SMT. SAJJAN BAI WAS HIS MOTHER. SHE HAS EXPIRED ON 3 1 ST DECEMBER, 1990. THE ASSESSEE DID NOT HAVE ANY DOCUM ENTARY EVIDENCE TO SHOW THAT HIS MOTHER HAD ANY INCOME. THE MATTER TRAVELLED UP TO I.T.A.T. AND I.T.A.T. HAS DIRECTED RS. 2.50 LAKHS SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 8 8 TO BE TREATED AS MONEY GIVEN BY SMT. SAJJAN BAI. TH EREFORE, THE PENALTY WAS INITIATED ON THIS GROUND AND CIT(A) HAS CONFIRMED THE PENALTY. IN ASSESSMENT YEAR 2004-05, THE AO HAS LEVIED THE PENALTY ON THE GROUND THAT THE ASSES SEE HAS RECEIVED THE GIFT FROM ONE SHRI NITIN PATNI OF RS. 1,00,000/- ON 08.04.2003 AND SHRI VINOD BANGAR OF RS. 1,00,000/- ON 08.04.2003. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSEE WAS REQUESTED TO SUBMIT THE DETAILS OF GIFT S RECEIVED. SHRI VINOD BANGAR ATTENDED ON 20.11.2006 AND STATED THAT HE DOES NOT HAVE ANY CAPACITY TO GIVE SUCH GIFT AND AS SESSEE HIMSELF HAS MADE GIFT DEED AND BANK STATEMENT. THER EFORE, CONSIDERING THE OVERALL POSITION, THE AO HAS LEVIED THE PENALTY OF RS. 1,30,000/-, RS. 25,000/- AND RS. 1,00,000/- FOR ASSESSMENT YEARS 2002-03 AND 2003-04. 6. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE SAME. 7. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE H AS FILED THE WRITTEN SUBMISSION WHICH READS AS UNDER :- 8. GROUND NOS. 1 & 2: BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 9 9 INDIVIDUAL, A DIRECTOR OF TIRUPATI STARCH & CHEMICA LS FILING REGULAR RETURN OF INCOME. ASSESSEE FILED HIS RETURN DECLARING INCOME OF RS.2,61,401/- WHICH WAS ASSESSED ON 18/12/06 U/S 148 ON INCOME OF 9,41 ,018/-. COPY OF IT RETURN FILED IS AT PAGE 1-4. ADDITIONS ARE FOR DISALLOWANCE OF EXPENSES AND ALLEGED ADDITION OF CR EDIT. ASSESSEE REGULARLY IN HIS STATEMENT OF AFFAIRS, SHO WING OPENING CREDIT BALANCE OF SMT. SAJJANBAI, WHO IS MO THER OF ASSESSEE. IT IS AN INHERITED CAPITAL OF MOTHER, SHOWN AFTER HER DEATH ON 31/12/1990, WHICH SHOULD HAVE BEEN INCLUDED IN ASESSEEES CAPITAL IMMEDIATELY AFTER SMT . SAJJANBAI'S DEATH ON 31/12/90 I.E. IN THE YEAR1991. CARRIED FORWARD AMOUNT OF THE PREVIOUS YEAR DOES NO T BECOME AN INVESTMENT OR CASH CREDIT OF THE RELEVANT YEAR. COPY OF STATEMENT OF AFFAIRS FOR ACCOUNTING P ERIOD 1998-99, 1999-2000, 2000-01, 2001-02. UNFORTUNATEL Y AO ADDED RS. 5,49,542/- AND WHICH IS CONFIRMED BY CIT(A) AND HON'BLE ITAT RESTRICTED THIS TO 2,99,542/-. COPY OF ORDER OF HON'BLE ITAT & CIT(A) IN QUANTUM PROCEEDINGS. IN ADDITION TO THIS AO ADDED RS.99,721/- SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 10 10 FOR DISALLOWANCE OF EXPENSES FOR WHICH ASSESSEE AGR EED TO PAY TAX IN ASSESSMENT PROCEEDINGS. AO IMPOSED PENALTY U/S 271(1)(C) FOR RS.1,30,000/- ON THE ABOVE MENTIONED ADDITIONS OF RS.2,99,542 AND RS.99,721/-. ASSESSEE HAS DISCLOSED THE ENTIRE FACTS BEFORE THE AUTHORITIES BELOW WITHOUT CONCEALING ANY INCOME. TH E ASSESSEE MADE A CLAIM OF DEDUCTION IN THE RETURN OF INCOME AND EXPLAINED THE FACTS BUT THE SAME WERE NO T ACCEPTED BY THE AUTHORITIES BELOW AND ADDITIONS HAV E BEEN CONFIRMED. THEREFORE, IT IS A CASE OF MERE DISALLOWANCE OF EXPENDITURE WITHOUT BRINGING ANY ADEQUATE MATERIAL AGAINST ASSESSEE TO PROVE THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ASSESSE E MADE A BONA FIDE CLAIM OF DEDUCTION OF THE EXPENDIT URE EVEN THOUGH IT WAS NOT ACCEPTABLE TO THE REVENUE, W OULD NOT LEAD TO INFERENCE THAT ASSESSEE HAS CONCEALED T HE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. PENALTY IMPOSED BE DIRECTED TO BE DELETED . GROUND NO.3 :- DATE WISE EVENTS, FACTS OF THE CASE ARE SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 11 11 AS UNDER :- (1) ASSESSEE FILED HIS RETURN DECLARING INCOME OF RS.2,61,401/- 26/08/2002. (2) RETURN PROCESSED ON U/S 143(1) (A) ON 15/08/03 AND AO ISSUED NOTICE U/S 148 ON 13/02/06. (3) AO PASSED ORDER ON 18/12/06 ON INCOME OF 9,41,018/- . (4) BEING AGGRIEVED APPELLANT PREFERRED AN APPEAL BEFORE HON'BLE CIT(A), INDORE, WHICH WAS DISMISSED BY ORDER DATED 25/06/2010. (5) AO ISSUED SHOW CAUSE NOTICE U/S 271 (L)(C) ON 16/04/2012 AND THEN PASSED ORDER IMPOSING PENALTY U/S 271(1)(C) VIDE ORDER DATED 21/05/2012. SI. NO. DATE EVENT 1. 18/12/2006 ASSESSMENT ORDER UNDER S. 143(3) WAS PASSED BY THE LTO,DHAR. 2. 25/06/2010 CIT(A)-I, INDORE PASSED THE ORDER IN THE CASE OF TH E ASSESSEE IN THE FIRST APPELLATE PROCEEDINGS. SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 12 12 4. 31/03/2011 THE LAST DATE FOR PASSING THE PENALTY ORDER UNDER S . 271(1)(C) AS PER THE PROVISO TO S. 275(1) WHICH PROVIDES THAT ORDER IM POSING THE PENALTY SHOULD HAVE BEEN COMPLETED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF CIT (A) IS RECEIVED, 5. 21/05/2012 PENALTY ORDER UNDER S. 271(1)(C) IMPOSING THE PENAL TY APPELLANT SUBMITS THAT HON'BLE CIT(A) PASSED ORDER ON 25/06/2010 AND AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON 16/04/2012 AND PASSED ORDER IMPOSING PENALTY ON 21/0512012 BEING TIME BARRED AND LIABLE TO BE QUASHED OUTRIGHT. THE LEGAL PLEA OF THE ASSESSEE IS THAT THE ORDER OF PENALTY UNDER S. 271(1)(C) OF THE ACT WHICH WAS PASSED BY THE AO ON 21/05/2012 IS BEYOND THE PERIOD OF LIMITATION THAT HAD EXPIRED ON 31S T MARC H, 2011 AS PRESCRIBED BY NEWLY INSERTED PROVISO TO SEC . 275(1)(A) OF THE IT ACT W.E.F. I ST JUNE, 2003 FOR CALCULATION OF PERIOD OF LIMITATION WITH REFERENCE TO THE DATE OF ORDER OF CIT(A) PASSED ON OR AFTER 1 ST JUN E, 2003. FROM THE PROVISIONS CONTAINED IN THE PROVISO TO S. 275(1 )(A) IT IS CRYSTAL CLEAR THAT IF AN ORDER IS PASSED BY THE CIT(A) ON OR AFTER THE 1 ST JUNE, 2003 THEN AN ORDER IMPOSING PENALTY SHALL BE PASSED BEFORE THE EXPIRY OF SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 13 13 THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HA S BEEN INITIATED, ARE COMPLETED OR WITHIN ONE YEAR FR OM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE CIT(A) IS RECEIVED WHICHEVER IS LATER. IN THE PRESENT CASE, THE CIT(A) PASSED THE ORDER ON 22/06/2010, THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO IN 16/04/2012 AND THE PENALTY ORDER WAS PASSED ON 21/05/2012. THE CIT(A) HAD PASSED THE ORDER ON 25/06/2010 SO THE PENALTY ORDER WAS TO BE PASSED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE CIT(A). AS SUCH THE PENALTY ORDER WAS TO BE PASSED UPTO 31 ST MARCH, 20 I I. HOWEVER, THE AO HAS PASSED THE PENALTY ORDER LEVYING THE PENALTY UNDER S. 271 (1)( C) ON 21/05/2012 THEREFORE, THE PENALTY ORDER PASSED WAS BARRED BY LIMITATION AND DOES NOT SURVIVE. IN VIEW OF PROVISO TO S. 275(1)(A) AND THEREFORE ORDER PASSED BY THE AO LEVYING PENALTY UNDER S. 271(1)(C) ON 21/05/2012 WAS BARRED BY LIMITATION. RELIED ON: _ LT.O. VS. BLOOSOM FLOURICULTURE- (2010 ) 134 SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 14 14 TTJ 51 LUCKNOW PAGE 35-44 A.Y.2003-04 :- ITA NO. 5391INDL 2015 GROUND NO. 1 &2 :- ASSESSEE FILED HIS RETURN DECLAR ING INCOME OF RS.1 ,99,259/- WHICH WAS ASSESSED ON 18/12/06 U/S 148 ON INCOME OF RS.3,02,680/-. COPY OF IT RETURN IS FILED. ADDITIONS ARE FOR DISALLOWANCE OF EXPENSES FOR RS.79,244/- AND IMPOSED PENALTY U/S 271(1)(C) FOR RS.25,000/- . SAME ARGUMENTS AS PLEADED ABOVE IN A.Y. 2002-03 FOR PENALTY IMPOSED. GROUND NO.3 :- SAME ARGUMENTS AS PLEADED FOR TIME- BARRED PROCEEDINGS IN A.Y.2002-03. A.Y.2004-05 :- ITA NO. 540/IND/ 2015 GROUND NO. 1 &2 :- ASSESSEE FILED HIS RETURN DECLAR ING INCOME OF RS. 1 ,88,416/- WHICH WAS ASSESSED ON 18/12/06 U/S 148 ON INCOME OF RS 4,92,953/-. COPY OF I.T. RETURN FILED. ADDITIONS ARE FOR DISALLOWANCE O F EXPENSES FOR RS. 80,965/- AND ALLEGED ADDITION OF GIFTS RECEIVED FOR RS.2,00,000/-. COPY OF IT RETURN OF NITIN PATNI WITH COPY OF CHEQUE, GIFT DEED AND BANK A/C A RE SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 15 15 FILED. COPY OF IT RETURN OF VINOD BANGER WITH COPY OF CHEQUE, GIFT DEED AND BANK A/C ARE FILED. A.O. IMPOSED PENALTY U/S 271(1)( C) FOR RS. 1, 00,000/-. ASSESSEE HAS DISCLOSED THE ENTIRE FACTS BEFORE THE AUTHORITIES BELOW WITHOUT CONCEALING ANY INCOME. TH E ASSESSEE MADE A CLAIM OF DEDUCTION IN THE RETURN OF INCOME AND EXPLAINED THE FACTS BUT THE SAME WERE NO T ACCEPTED BY THE AUTHORITIES BELOW AND ADDITIONS HAV E BEEN CONFIRMED. THEREFORE, IT IS A CASE OF MERE DISALLOWANCE OF EXPENDITURE WITHOUT BRINGING ANY ADEQUATE MATERIAL AGAINST ASSESSEE TO PROVE THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ASSESSEE MADE A BONA FIDE CLAIM OF DEDUCTION OF THE EXPENDITURE EVEN THOUGH IT WAS NOT ACCEPTABLE TO TH E REVENUE, WOULD NOT LEAD TO INFERENCE THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCU RATE PARTICULARS OF INCOME. PENALTY IMPOSED BE DIRECTED TO BE DELETED. SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 16 16 GROUND NO.3 :- SAME ARGUMENTS AS PLEADED FOR TIME- BARRED PROCEEDINGS IN A.Y.2002-03. COMMON ARGUMENT FOR A.Y. 2002-03, 2003-04 & 2004- 05 ON MERITS OF PENALTY : PENALTY PROCEEDINGS ARE QUASI CRIMINAL IN NATURE AN D EVEN IF THE SAME ARE LEGALLY LIABLE THE SAME ARE LI ABLE TO BE DROPPED BEING BONA FIDE AND VENIAL IN NATURE. ASSESSEE HAD FURNISHED ALL THE DETAILS IN ITS RETUR N WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS CONCEALMENT OF INCOME MERELY AS CLAIM NOT FOUND ACCEPTABLE TO THE REVENUE THAT ITSELF WOULD NOT ATT RACT PENALTY U/S 271(1)(C). RELIED ON :- 1 CIT V S. RATANCHAND RAMPRASAD - (1983) 139 ITR 64 MP ASSESSMENT PROCEEDINGS CAN NOT BE REGARDED AS CONCLUSIVE FOR PURPOSES OF PENALTY PROCEEDINGS. AUTHORITIES TO CONSIDER AFRESH ALL THE MATERIAL AVAILABLE IN PENALTY PROCEEDINGS. 2. NATIONAL TEXTILES VS. CIT - (2000) 249 ITR 125 ( GUJ) SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 17 17 PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS. OBSERVATIONS IN QUANTUM PROCEEDINGS NOT BINDING IN PENALTY PROCEEDINGS. 3 CIT VS. RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 1 58 (S.C.) MERE MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW , BY ITSELF DOES NOT AMOUNT TO FURNISHING OF INACCURA TE PARTICULARS OF INCOME OF THE ASSESSEE AND PENALTY I S NOT AUTOMATICALLY LEVIABLE THEREBY. PENALTY CANNOT BE VISITED IF THE DETAILS AND PARTICULARS HAD BEEN PLA CED ON RECORD. HELD THAT THE ASSESSEE MADE THE CLAIM IN ITS RETURN OF INCOME, WHICH THE REVENUE AUTHORITIES INTERPRETED DIFFERENTLY. 4 CIT VS. BALBIR SINGH - (2007) 304 ITR 125 P&H PAGE 32 - 34 THAT THE ASSESSEE HAD DISCLOSED ALL DETAILED PARTICULARS ABOUT HIS INCOME WHICH HE HAD RECEIVED CLAIMING TO BE GIFT. THE CASE DID NOT FALL WITHIN T HE MISCHIEF OF SECTION 271(1)(C) AND IT COULD NOT BE SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 18 18 CONCLUDED THAT THE ASSESSEE HAD FURNISHED INCORRECT PARTICULARS. NO EVIDENCE WITH REGARD TO CONCEALMENT HAD BEEN PLACED ON RECORD BY THE REVENUE. PENALTY JUSTIFIED. 5 SUSHIL KUMAR MODI VS. ASSISTANT C.LT. (2013) 36 C CH 0414 JAIPUR TRIB PAGE 29 PENALTY U/S 271(1)(C) DURING ASSESSMENT PROCEEDINGS , AO FOUND THAT ASSESSEE RECEIVED TWO GIFTS OF RS. 1,00,000/- EACH-SINCE THERE WERE CASH DEPOSITS IN DONORS' ACCOUNT PRIOR TO DATE OF MAKING GIFT, AO DO UBTED CREDITWORTHINESS THEREOF AND TREATED GIFTS AS BOGUS AND UNEXPLAINED, MADE ADDITION. PENALTY WAS IMPOSED- CIT(A) CONFIRMED ACTION OF AO-HELD, ASSESSEE HAD FURNISHED PARTICULARS OF GIFTS IN RETURN OF INCOME FILED BY HIM-ASSESSEE HAD FURNISHED INCOME-TAX PARTICULARS A S WELL AS DECLARATIONS FOR MAKING GIFTS FROM DONORS A LONG WITH THEIR BALANCE SHEETS FURNISHED WITH INCOME TAX RETURN. IN VIEW OF JUDGMENT OF APEX COURT IN CASE O F CIT V. RELIANCE PETROPRODUCTS P. LTD. [2010] 322 ITR 15 8 SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 19 19 (SC), PENALTY IS NOT ELIGIBLE-APPEAL ALLOWED. 6 ASSISTANT C.I.T. VS. CHANDBIBI S ZAIDI KENNEDY HO USE (2013)36 CCH 099 MUM PAGE 30 -31 PENALTY U/S 271 (1)(C)-CONCEALMENT OF INCOME-CLAIM OF GIFT DISALLOWED-LEVIABILITY-ASSESSEE HAD RECEIVED G IFT OF IMMOVABLE PROPERTY BEING FLAT FROM A COMPANY-SINCE ASSESSEE HAD DISCLOSED ALL RELEVANT FACTS AND PARTICULARS REGARDING GIFT, THEREFORE, IT COULD NOT BE SAID THAT ASSESSEE HAD CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF GIFT - A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME 0: THE ASSESSEE. B Y NO STRETCH OF IMAGINATION CAN THE MAKING OF AN INCORRE CT CLAIM IN LAW TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. IF THE CONTENTION OF THE REVENUE IS AC CEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE I S NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S 271(J)(C). THE PENALTY LEVI ED U/S SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 20 20 271(1)( C) HAD BEEN DELETED RELYING ON CIT VS. RELI ANCE PETRO PRODUCTS LTD.(322 ITR 158)(SC); DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 (SC) 7 CIT. VS. SURESH CHANDRA MITTAL- (2001) 251 ITR 00 09 SC PAGE 1 - 2 PENALTY UNDER S. 271(L)(C)-CONCEALMENT-REVISED RETU RN FILED SHOWING HIGHER INCOME-ASSESSEE SURRENDERED TH E INCOME AFTER PERSISTENT QUERIES BY AO-HOWEVER, REVI SED RETURNS HAVE BEEN REGULARISED BY REVENUE-EXPLANATIO N OF THE ASSESSEE THAT HE HAS DECLARED ADDITIONAL INC OME TO BUY PEACE AND TO COME OUT OF VEXED LITIGATION CO ULD BE TREATED AS BONA FIDE-PENALTY RIGHTLY CANCELLED-N O INTERFERENCE WARRANTED AND PENALTY UNDER S. 271 (J) ( C) WAS NOT LEVIABLE.-CIT VS. SURESH CHANDRA MITTAL (20 00) 158 ETR (MP) 26: (2000) 241 ITR 124 (MP) AFFIRMED 8 C.I.T. VS. AGRAWAL ROUND ROLLING MILLS LTD (2014) 88 CCH 036 SC 17/01/2014 PAGE 3 PENALTY U/S 271 (L)(C)-CONCEALMENT OF INCOME-ASSESS EE FILED RETURN OF INCOME DECLARING LOSS RETURN WAS SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 21 21 SELECTED IN SCRUTINY ON ACCOUNT OF SHARE APPLICATIO N MONEY RECEIVED-ASSESSEE COULD NOT FURNISH DOCUMENTS RELATING TO SOME OF APPLICANTS AND SURRENDERED AMOU NT PERTAINING TO THEM AO MADE ADDITION U/S 68 IN RESPE CT OF SURRENDERED AMOUNT-PENALTY WAS IMPOSED U/S 271 (1)( C)CIT(A) DELETED PENALTY IMPOSED BY AO-HIGH CO URT AFFIRMED DELETION OF PENALTY-HELD, ADDITION WAS MAD E ON ACCOUNT OF AMOUNT SURRENDERED BY ASSESSEE-NO OTH ER INFORMATION WAS AVAILABLE WITH REVENUE-CANNOT BE SA ID THERE WAS CONCEALMENT OF INCOME-REVENUES' APPEAL DISMISSED. 9 C.LT. VS. D & H SECHERON ELECTRODES LTD. (2008) 296 ITR 0193 MP PENALTY UNDER S. 271(L)(C)-CONCEALMENT-ABSENCE OF M ENS REA - TRIBUNAL HAS GIVEN REASONS FOR ACCEPTING THE FACTUAL VERSION OF THE ASSESSEE AND FOUND THAT THER E WAS NO MENS REA AS CONTEMPLATED UNDER S. 271(1)(C) FOR IMPOSING THE PENALTY-THERE IS NO GOOD GROUND TO UPS ET THE AFORESAID FINDING OF THE TRIBUNAL-S-LEVY OF PEN ALTY SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 22 22 UNDER S. 271(1)(C) RIGHTLY CANCELLED. ASSESSEE HAVI NG SURRENDERED INCOME AND THE TRIBUNAL HAVING GIVEN REASONS FOR ACCEPTING THE FACTUAL VERSION OF THE ASSESSEE. IT IS NOTICED FROM THE RECORD OF THE CASE THAT IT IS A CASE OF SURRENDER OF INCOME BY THE ASSESSEE AN D FULL AMOUNT OF TAX HAS BEEN PAID AND FOUND THAT THE RE WAS NO MENS REA AS CONTEMPLATED UNDER S. 271(1)(C), CANCELLATION OF PENALTY WAS JUSTIFIED. 10 C.LT. VS. CHENNUPATI TYRE & RUBBER PRODUCTS (2014) 90 CCH 0181 APHC PAGE 4 -7 PENALTY U/S 271 (1)( C)-CONCEALMENT OF INCOME-ASSES SEE FILED A RETURN, SHOWING LOSS FOR A Y 1994-95-INTIMA TION WAS GIVEN U/S 143(1)(A) BY AO REDUCING LOSS-ASSESSE E FILED AN APPLICATION FOR RECTIFICATION THEREOF AND SAID REQUEST WAS ACCEPTED BY AO-THEREAFTER AN EXERCISE U /S 143(2) WAS UNDERTAKEN AND SCRUTINY OF EACH AND EVER Y ITEM WAS MADE-IN RESPECT OF TWO ITEMS OF SUNDRY CREDITS, EXPLANATION OFFERED BY ASSESSEE WAS NOT FO UND SATISFACTORY-ASSESSEE AGREED FOR TREATING THOSE TWO SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 23 23 ITEMS AS INCOME AND IT PAID TAX-AO IMPOSED PENALTY U/S 271 (1 )( C) IN RESPECT OF TWO SUNDRY CREDITORS , REJECTING ASSESSEES' EXPLANATION THAT HE DID NOT HA VE ANY INTENTION TO CONCEAL AMOUNTS, AND TWO AMOUNTS WERE CARRIED FORWARD FROM PREVIOUS ASSESSMENT YEAR- CIT(A) DELETED PENALTY IMPOSED BY AO HOLDING THAT THERE WAS NO INTENTION ON PART OF ASSESSEE TO HIDE INCOME TRIBUNAL AFFIRMED ORDER PASSED BY CIT(A)- HE LD, BEFORE LEVYING PENALTY ULS 271(1)(C) REVENUE HAS TO DISCHARGE ITS BURDEN TO PROVE THAT THERE WAS SOME INTENTION TO CONCEAL OR FURNISH INACCURATE PARTICUL ARS ON PART OF ASSESSEE-CONCEALMENT CAN OCCUR, ONLY WHEN PERSON IS IN FULL KNOWLEDGE OF STATE OF AFFAIRS AND EVEN WHILE BEING UNDER OBLIGATION TO MAKE IT KNOWN TO OT HERS, AND IN PARTICULAR AUTHORITIES UNDER THE ACT FAILS O R REFUSES TO DO SO-IT IS THEN, AND ONLY THEN, THAT HE CAN BE SAID TO HAVE CONCEALED AND ONCE FACTUM OF CONCEALME NT IS PROVED, HIS ATTEMPT TO VOLUNTARILY DISCLOSE IT D OES NOT SAVE HIM-HOWEVER, AN INADVERTENT MISTAKE, OR A BONA FIDE BELIEF, AS TO CLASSIFICATION, OR CHARACTER OF AN SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 24 24 AMOUNT, CANNOT PER SE PROVIDE A GROUND FOR LEVY OF PENALTY-IN INSTANT CASE ASSESSEE AGREED TO TREAT TW O SUNDRY CREDITORS AS INCOME AS A MEASURE OF PURCHASI NG PEACE-LACK OF ANY MALA FIDE INTENTION ON PART OF ASSESSEE CLEAR FROM THE FACT THAT THOSE TWO ITEMS W ERE CARRIED FORWARD FROM PREVIOUS YEAR AND WERE NOT NEW ADDITIONS AT ALL-THERE WAS NO INGREDIENTS OF CONCEALMENT-THUS PENALTY IMPOSED BY AO ULS 271 (1)( C) WAS RIGHTLY DELETED BY CLT(A)-REVENUES' APPEAL DISMISSED 11 LATE N. R. PALANIVEL VS. COMMISSIONER OF INCOME TAX (2015) 273 CTR 0224 (MAD) PAGE 8 - 15 PENALTY ULS 271 (1)(C)-VALIDITY OF-ASSESSEE ENGAGED IN BUSINESS OF OPERATING TRANSPORT BUS FILED RETURN OF INCOME-PURSUANT TO SURVEY ULS 133A IN PREMISES OF ASSESSEE, A STATEMENT WAS RECORDED WITH REGARD TO FIXED DEPOSITS MADE BY ASSESSEE IN A BANK ACCOUNT- SUBSEQUENTLY, ASSESSEE VIDE YEAR 1977 AND THAT SAID DEPOSITS WERE RENEWED ALONG WITH INTEREST ACCUMULAT ED THEREON-AO ISSUED NOTICES TO ASSESSEE ULS 148 AND I N SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 25 25 RESPONSE REVISED RETURN OF INCOME WAS FILED BY ASSESSEEASSESSMENT WAS COMPLETED AND REVISED RETURNS FILED BY ASSESSEE WAS ACCEPTED BY AO WITHOU T ANY ADDITION-HOWEVER PENALTY ULS 271(1)(C) WAS INITIATED AGAINST ASSESSEE ON GROUNDS OF CONCEALMEN T OF INCOME-MEANWHILE, ASSESSEE DIED AND LEGAL HEIRS OF DECEASED ASSESSEE REQUESTED AO TO DROP THE PENALTY PROCEEDINGS-DENYING EXPLANATION GIVEN BY LEGAL REPRESENTATIVE, AO LEVIED PENALTY U/S 271(1)(C) ON GROUNDS THAT ASSESSEE HAD FILED REVISED RETURN ONLY AFTER THE SURVEY WAS CONDUCTED ULS 133A AND ASSESSE E HAD FAILED TO DISCLOSED UNEXPLAINED INVESTMENT-CIT( A) AND ITA T DISMISSED ASSESSEE'S APPEAL-HELD, ONCE AN EXPLANATION IS SUBMITTED, ONUS SHIFTS TO REVENUE TO COME TO A CONCLUSION THAT EXPLANATION WAS NOT ACCEPTABLE AND THEREFORE CASE FALLS ULS 271 (1 )( C ) WHEN ASSESSEE HAD GIVEN SOME REASONABLE EXPLANATION, IT WAS INCUMBENT ON PART OF AUTHORITY TO CONSIDER SAME ON ITS OWN MERITS BEFORE PROCEEDING FURTHER-IN PRESENT CASE, EXPLANATION MADE ON BASIS OF EXPLANATION B TO SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 26 26 SECTION 271(1)(C) WAS SATISFIED BY ASSESSEE AND HIS LEGAL HEIRS TO SOME EXTENT, BUT, SAME WAS NOT CONSIDERED BY REVENUE AUTHORITIES-ORDER OF TRIBUNAL CONFIRMING PENALTY PROCEEDINGS WAS SET ASIDE-ASSESSEE'S APPEAL ALLOWED. 12 COMMISSIONER OF INCOME TAX VS. MATHURA COMMERCIAL CO. (2014) 361 ITR 0380 (ALL) PAGE 16-19 PENALTY U/S. 271 (1)( C)-FAILURE TO FURNISH RETURNS , COMPLY WITH NOTICES, CONCEALMENT OF INCOME, ETC.-IN RETURN FILED BY ASSESSEE, ASSESSEE HAD SHOWN VARIOU S OUTSTANDING AMOUNT AGAINST DIFFERENT PARTIES-AO ISS UED NOTICES TO ASSESSEE TO EXPLAIN AND ACCORDINGLY OPPORTUNITY WAS GRANTED BY AO TO ASSESSEE WITH REGA RD TO DIFFERENT ENTRIES SHOWING OUTSTANDING AMOUNT-AO DOUBTED GENUINENESS OF LIABILITIES-NOTICE FOR IMPOS ING PENALTY U/S. 271(1)(C) WAS ISSUED AND ASSISTANT COMMISSIONER IMPOSED PENALTY-ACIT HELD THAT, ASSESSEE DELIBERATELY CONCEALED INCOME AND FURNISHE D INCORRECT PARTICULARS-CIT ALLOWED APPEAL AND CANCEL LED PENALTY-HELD, PRESENT CASE IS NOT A CASE OF MENTION ING SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 27 27 OF INACCURATE PARTICULARS OR CONCEALMENT. APPEAL DISMISSED. 13 COMMISSIONER OF INCOME TAX VS. GEM GRANITES (2013) 86 CCH 0160 CHEN HC PAGE 20 - 24 PENALTY U/S 271 (1)( C)-CONCEALMENT OF INCOME-BONA FIDE CLAIM-LEVI ABILITY-SEARCH WAS CONDUCTED U/S 132, WHICH REVEALED THAT IN REAL ESTATE DEALINGS THERE W ERE ON-MONEY TRANSACTIONS ASSESSEE OFFERED TO ADMIT ON- MONEY, BUT ON COMPLETION OF PROJECTS UNDER COMPLETE D CONTRACT METHOD-AO INCLUDED ON-MONEY COMPONENT AND COMPLETED ASSESSMENT-PENALTY PROCEEDINGS INITIATED U/S 271(1)(C)-CLT(A) STATED THAT INEVITABLY AND INF ALLIBLY ASSESSEE HAD RECEIVED ON MONEY, THEREFORE PENALTY W AS SUSTAINED-IT A T CANCELLED PENALTY-HELD, IN CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS (2009) 13 SCC 448, IT WAS HELD THAT MERE MAKI NG OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, WOULD NO T AMOUNT TO FURNISHING OF INACCURATE PARTICULARS .FOR SUSTAINING PENALTY U/S 271(L)(C), PENALTY BEING MUL TIPLE LIABILITY, BONA FIDE CONDUCT OF ASSESSEE NECESSARIL Y SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 28 28 ASSUMES SIGNIFICANCE, EVEN THOUGH WILLFULNESS OF ASSESSEE MAY NOT BE CRITERIA, CONDUCT IS TO BE CONSIDERED-MERE FACT THAT ADDITION IN PRESENT CASE HAD BEEN SUSTAINED BY COURT WOULD NOT LEAD TO AUTOMATIC APPLICATION OF SECTION 271 (1)(C)- IN CASE OF MAK D ATA P. LTD., VS. CIT-II CIVIL APPEAL NO.9772, IT WAS HELD THAT BURDEN IS ON ASSESSEE TO SHOW, BY COGENT AND RELIAB LE EVIDENCE AND WHEN INITIAL ONUS HAS BEEN DISCHARGED BY ASSESSEE, ONUS SHIFTS ON REVENUE TO SHOW THAT AMOUN T IN QUESTION CONSTITUTED THEIR INCOME AND NOT OTHERW ISE- IN PRESENT CASE, ONUS CAST UPON ASSESSEE WAS DISCHARGED BY GIVING COGENT AND RELIABLE EXPLANATIO N-IF DEPARTMENT DID NOT AGREE WITH EXPLANATION, THEN ONU S WAS ON IT TO PROVE CONCEALMENT OR FURNISHING INACCU RATE PARTICULARS OF INCOME-SUCH ONUS WAS NOT DISCHARGED BY AO-ORDER OF TRIBUNAL CONFIRMED. 9. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDER OF CIT(A). SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 29 29 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. IN ASSESSMENT YEAR 2002-03, WE FIND THAT T HE ASSESSEE HAS CLAIMED IN THE RETURN OF INCOME THAT HE HAS INH ERITED THIS CAPITAL OF RS. 5,49,542/- FROM HIS MOTHER SMT. SAJJ ANBAI. THE ASSESSEE HAS ADDED THIS AMOUNT IN HIS CAPITAL ACCOU NT. THE AO AND THE LD. CIT(A) HAS CONFIRMED THE SAME, BUT T HE I.T.A.T. HAS RESTRICTED THIS ADDITION TO THE TUNE OF RS. 2,9 9,542/- AND THIS CAPITAL WAS INHERITED FROM HIS MOTHER. WE FIND THAT THE ASSESSEE HAS DISCLOSED THE ENTIRE FACTS BEFORE THE AUTHORITIES AND THE ASSESSEE HAS MADE THE CLAIM IN HIS RETURN O F INCOME AND IT WAS HIS BONA FIDE CLAIM. THE TRIBUNAL HAS ACC EPTED THE CLAIM THAT THE ASSESSEE HAS CLAIMED RS. 5,49,542/-, BUT THE TRIBUNAL HAS RESTRICTED THE ABOVE ADDITION TO RS. 2 ,99,542/-. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE COUL D NOT PROVE THE CLAIM THAT HE HAS CARRIED FORWARD THE AMOUNT AN D HE HAS INHERITED THIS CAPITAL FROM HIS MOTHER. THE ASSESSE E COULD NOT PROVE THAT HE HAS INHERITED RS. 5,49,542/-, BUT THE TRIBUNAL HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS INHERIT ED THE CAPITAL FROM HIS MOTHER. THEREFORE, WE ARE OF THE V IEW THAT THE ASSESSEE HAS MADE HIS CLAIM IN HIS RETURN OF INCOME AND SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 30 30 EXPLAINED THE FACTS. THE SAME WERE NOT ACCEPTED BY T HE AUTHORITY, BUT THE ASSESSEES CLAIM WAS BONA FIDE. T HEREFORE, THE CLAIM HAS BEEN ACCEPTED PARTLY. THEREFORE, WE AR E OF THE VIEW THAT NO PENALTY CAN BE LEVIED ON THIS ACCOUNT. THEREFORE, WE DELETE THE PENALTY. THEREFORE, WE ALLOW THE APPEAL IN I.T.A.NO. 538/IND/2015 FOR ASSESSMENT YEAR 2002-03. 11. IN ASSESSMENT YEARS 2003-04 AND 2004-05, WHEREIN THE ASSESSEE HAS CLAIMED THE INTEREST EXPENSES IN H IS RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS FOUND THAT THE ASSESSEE HAS ONLY SALARY INCOME AND HE WAS CLAIMING BUSINESS EXPENSES. THEREFORE, IT WAS NOT AL LOWED. THEREFORE, SHOW CAUSE NOTICE WAS GIVEN AND THE ASSES SMENT WAS REOPENED U/S 148 AND THE ASSESSEE AGREED THAT TH ESE EXPENSES ARE NOT ALLOWABLE AND HE HAS PAID THE TAX T HEREON. THEREFORE, THE PENALTY HAS BEEN IMPOSED ON THE GROU ND THAT THE ASSESSEE HAS CLAIMED THE BOGUS EXPENSES AGAINST THE INTEREST INCOME. 12. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS CON CEDED SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 31 31 THAT IT WAS HIS MISTAKE THAT HE HAS CLAIMED CERTAIN EXPENSES WHICH ARE INADMISSIBLE IN NATURE AND HE AGREED TO IN CLUDE SUCH EXPENSES IN ITS TOTAL INCOME. WE FIND THAT THE AO AND CIT(A) IS JUSTIFIED IN IMPOSING THE PENALTY, BECAUS E THE ASSESSEE HAD AGREED TO THIS ADDITION AND SURRENDER WAS MADE. WHEN THE ASSESSEE HAS SURRENDERED THIS INCOME, PENA LTY HAS TO BE LEVIED AS PER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PRIVATE LIMITED. THEREFORE, IF THE ASSESSEE AGREED TO SURRENDER THE INCOME FOR MENTAL PEACE, THE PENALTY HAS TO BE IMPOSED. THEREFORE, WE CONFIRM TH E ORDER OF THE PENALTY ON ACCOUNT OF BOGUS EXPENSES OF RS. 99, 719/-, RS. 79,244/- AND RS. 80,965/- AGAINST INTEREST INCOME F ROM M/S.TIRUPATI STARCH & CHEMICALS LIMITED. 13. IN ASSESSMENT YEAR 2004-05, THE AO HAS IMPOSED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS CLAIMED THAT HE HAS RECEIVED RS 1 LAKH EACH GIFT FROM SHRI NITISH P ATNI AND SHRI VINOD BANGAR. 14. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ONE SHRI VINOD BA NGAR ADMITTED THAT HE HAS NOT GIVEN ANY GIFT TO THE ASSE SSEE. SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 32 32 THEREFORE, THE PENALTY HAS BEEN LEVIED AND SHRI NIT IN PATNI DID NOT REMAIN PRESENT. THEREFORE, THE PENALTY HAS BEEN LEVIED. WE FIND THAT THE ASSESSEE COULD NOT PROVE THE GENUINEN ESS OF THE CREDITS APPEARING IN THE NAME OF SHRI NITIN PATNI A ND SHRI VINOD BANGAR. 15. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS ESTABLISHED THAT THE ASSESSEE HAS RECEIVED THE GIFT S FROM TWO PERSONS, BUT THE GIFT WAS NOT GENUINE AND IT WAS PRO VED BEYOND DOUBT THAT THE GIFTS WERE BOGUS. THEREFORE, WH EN THE CLAIM OF THE ASSESSEE IS BOGUS, THE ASSESSEE IS LIA BLE FOR THE PENALTY. THEREFORE, WE CONFIRM THE PENALTY IN RESPE CT OF GIFTS. 16. IN I.T.A.NO. 538/IND/2015 FOR ASSESSMENT YEAR 2002- 03, THE PENALTY FOR OPENING BALANCE HAS BEEN DELETE D IN ASSESSMENT YEAR 2003-04 AND IN ALL THE THREE YEARS, THE PENALTY LEVIED ON ACCOUNT OF BOGUS EXPENSES OF RS. 99,719/-, RS. 79,244/- AND 80,695/- HAS BEEN CONFIRMED AND IN ASSESSMENT YEAR 2004-05, THE ADDITION OF RS. 2 LAKH S FOR WHICH THE PENALTY HAS BEEN LEVIED IS CONFIRMED. SHRI PRAKASH BAFNA, DHAR VS. ITO, DHAR , I.T.A.NOS. 538,539 & 540/IND/2015 A.YS.2002-03, 2003-04, 20 04-05 33 33 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 538/IND/2015 IS ALLOWED, WHEREAS APPEALS IN I.T.A.NO S. 539 & 540/IND/2015 ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 2 ND MAY, 2016. (B.C.MEENA) ACCOUNTANT MEMBER ( D.T.GARASIA) JUDICIAL MEMBER DATED : 2ND MAY, 2016. CPU*