Anurag Trivedi, Lucknow V. ITO, Lucknow

ITA 651/LKW/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48321 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 07-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-11-2010
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: ABINAV MEHROTRA
• Keywords: Gift
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B BB B, LUCKNOW , LUCKNOW , LUCKNOW , LUCKNOW BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI ITA NO.651/LKW/2010 ASSESSMENT YEAR:2003-04 ANURAG TRIVEDI 408, ARIF PALACE COURT 6/6 MALL AVENUE, LUCKNOW V. INCOME TAX OFFICER WARD 1(2), LUCKNOW PAN:ACCPT4290M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ABINAV MEHROTRA, C.A RESPONDENT BY: SHRI P. K. BAJAJ, D.R. O R D E R PER H. L. KARWA: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A) I, LUCKNOW DATED 30.8.2010 IN SUSTAINING THE PENALTY O F $ 35,000 LEVIED U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) RELAT ING TO ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE ENJOYS INCOME MAINLY FROM RUNNING COACHING CLASSES FOR MATH FOR IIT ASPI RANTS IN THE NAME AND STYLE OF PRAKASH ENTERPRISES OF WHICH SHRI ANURAG TRIVEDI (ASSESSEE) IS THE SOLE PROPRIETOR. BESIDE THIS, THE ASSESSEE HAS SHOWN INCOME FROM CAP ITAL GAIN AND OTHER SOURCES. FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE FILED HIS RETURN OF INCOME AT $ 14,45,375 ON 28.11.2003. THE ASSESSMENT WAS COMPLETED AT AN INC OME OF $ 15,31,880 U/S. 143(3) OF THE ACT ON 28.3.2006 AND PENALTY PROCEEDINGS U/S. 2 71(1)(C) OF THE ACT WERE INITIATED. 3. THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS MADE AN ADDITION OF $ 67,000 TO HIS CAPITAL ACCOUNT AND HE WAS REQUIRED T O PROVIDE SOURCE OF ADDITION TO THE CAPITAL AND TO SU BSTANTIATE THE ADDITION TO THE CAPITAL WITH DOCUMENTARY EVIDENCE. IN HIS REPLY, THE ASSESS EE STATED THAT ADDITION IN CAPITAL ACCOUNT HAS BEEN MADE OUT OF GIFT OF $ 57,000 FROM SHRI ANMOL SHARMA (ASSESSEES WIFES BROTHER) AND $ 10,000 WAS DEPOSITED OUT OF OWN FUNDS. IN SUPPORT O F THIS GIFT, THE ASSESSEE FILED A COPY OF GIFT DEED. ACCORDING TO T HE ASSESSING OFFICER, THE SAID GIFT DEED WAS NOT ATTESTED BY ANY WITNESS. ACCORDINGLY, THE ASSESSING OFFICER DID NOT ACCEPT THE :-2-: SAME. THE ASSESSING OFFICER FURTHER OBSERVED THAT THIS DEED ALSO SHOWS THAT THE AMOUNT WAS RECEIVED IN CASH; THEREFORE, THE SAME WAS NOT V ERIFIABLE FROM THE BANK ACCOUNT ALSO. IN REPLY, THE ASSESSEE STATED THAT SHRI ANMOL SHARM A IS PRESENTLY NOT RESIDING AT LUCKNOW AND HIS PRESENT ADDRESS IS NOT AVAILABLE. ACCORDINGLY, A NOTICE U/S. 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE PENALTY PROCEEDINGS MAY BE KEPT IN ABEYANCE TILL DISPOSAL OF THE APPEAL BEFORE THE LD. CIT(A), LUCKNOW. FINALLY, ON 4.2.2008 A SHOW CAUSE NOTICE WAS ISSUED FOR COMPLIANCE ON 15.2.2008. IN REPLY, THE ASSESSEE STATED THAT HE HAD FILED THE CONFIRMATION CERTIFICATE OF SHRI ANMOL SHARMA FOR G IVING THE LOAN OF $ 19,500 AND THE DEED OF GIFT EXECUTED BETWEEN THE ASSESSEE AND SHRI ANMOL SHARMA IN RESPECT OF GIFT OF $ 57,000. THE ASSESSEE HAS ALSO FILED COPY OF RETURN OF INCOME OF SHRI ANMOL SHARMA IN WHICH PERMANENT ACCOUNT NUMBER OF SHRI ANMOL SHARMA WAS GIVEN. THE ASSESSING OFFICER DID NOT FIND ANY MERIT IN THE EXPLANATION G IVEN BY THE ASSESSEE AND CONSEQUENTLY LEVIED PENALTY OF $ 70,000 U/S. 271(1)(C) OF THE ACT. THE PENALTY HAS BEEN LEVIED SUBJECT TO THE MAXIMUM FIXED BY THE STATUTORY PROVISIONS. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) RE DUCED THE PENALTY TO $ 35,000 SUBJECT TO THE MINIMUM PRESCRIBED UNDER THE STATUTORY PROVI SIONS. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE PENALTY OF $ 35,000. 6. BEFORE US, SHRI ABINAV MEHROTRA, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT BECAUSE THE TRANSACTION THOUGH HAVING BEEN PROVED W ITH REFERENCE TO THE GIFT DEED FOR GIFT AND CONFIRMATION CERTIFICATE FOR LOAN AND THE IDENTITY HAVING BEEN PROVED WITH REFERENCE TO THE PAN OF SRI ANMOL SHARMA AND CREDIT WORTHINESS HAVING BEEN PROVED WITH REFERENCE TO RETURN OF INCOME OF SRI ANMOL SHA RMA, THE LD. CIT(A) OUGHT TO HAVE DELETED THE PENALTY. HE FURTHER SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE PENALTY BY HOLDING THAT EXPLANATION WAS FURNISHED B Y ASSESSEE AND THERE BEING NO FINDING OF THE LEARNED ASSESSING OFFICER THAT SUCH EXPLANATION WAS FALSE AND NEITHER THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO SUBSTANTIATE NOR FAILURE TO PROVE THAT THE EXPLANATION IS NOT BONAFIDE AND THERE IS ALSO N O FINDING THAT THE ASSESSEE HAS NOT DISCLOSED ALL THE FACTS RELATING TO THE GIFT AND LO AN WHICH ARE MATERIAL TO THE COMPUTATION :-3-: OF TOTAL INCOME, HENCE THE PROVISIONS OF SECTION 27 1(1) (C) OF THE ACT ARE NOT ATTRACTED. IN VIEW OF THE ABOVE, SHRI ABINAV MEHROTRA, LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED PENALTY MAY BE CANCELLED. 7. SHRI P. K. BAJAJ, LD. D.R. STRONGLY SUPPORTED THE O RDER OF THE LD. CIT(A). HE FURTHER SUBMITTED THAT THE FINDINGS GIVEN IN THE AS SESSMENT PROCEEDINGS ARE CERTAINLY RELEVANT AND HAVE PROBATIVE VALUE IN PENALTY PROCEE DINGS. HE FURTHER SUBMITTED THAT THE ADDITIONS ON ACCOUNT OF GIFT AND LOAN HAS ALREADY B EEN UPHELD BY THE LD. CIT(A) AND THE TRIBUNAL. HE, THEREFORE, SUBMITTED THAT THE PENALT Y SUSTAINED BY THE LD. CIT(A) MAY BE CONFIRMED. 8. IN REJOINDER, SHRI ABINAV MEHROTRA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS WELL SETTLED LAW THAT THE PROCEEDINGS FOR IMPOSI TION OF PENALTY, THOUGH EMANATING FROM PROCEEDINGS OF ASSESSMENT, ARE ESSENTIALLY INDEPEND ENT AND A SEPARATE ASPECT OF THE PROCEEDINGS WHICH CLOSELY FOLLOW THE ASSESSMENT PRO CEEDINGS. PENALTY PROCEEDINGS ARE QUASI-CRIMINAL. FINDINGS GIVEN IN THE ASSESSMENT P ROCEEDINGS ARE CERTAINLY RELEVANT AND HAVE PROBATIVE VALUE, BUT SUCH FINDINGS ARE MATERIA L ALONE AND MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A GIVEN CASE, BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PROCEEDINGS ARE DIFFERENT FROM THOSE THAT ARISE IN ASSESSMENT PROCEEDINGS. SHRI ABINAV MEHROTRA, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITT ED THAT NO DOUBT THE ADDITIONS HAVE BEEN CONFIRMED AT THE LEVEL OF THE TRIBUNAL BUT SUC H FINDINGS GIVEN IN THE QUANTUM APPEALS ARE MATERIAL ALONE AND MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A GIVEN CASE, BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PR OCEEDINGS ARE DIFFERENT FROM THOSE THAT ARISE IN ASSESSMENT PROCEEDINGS. HE ALSO SUBM ITTED THAT DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE SUB MITTED THAT THOUGH SHRI ANMOL SHARMA IS THE BROTHER-IN-LAW OF THE ASSESSEE, BUT D UE TO STRAINED RELATIONS AT THAT TIME, THE ASSESSEE WAS UNABLE TO PRODUCE SHRI ANMOL SHARM A. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT HOWEVER THE THINGS HA VING TURNED AROUND SINCE THEN, SHRI ANMOL SHARMA IS AVAILABLE TO TESTIFY BEFORE HIM AND AFFIRM THE TRANSACTIONS. HOWEVER, THE LD. CIT(A) DID NOT ACCEDE TO THE ABOVE REQUEST OF THE ASSESSEE. IN VIEW OF THE ABOVE, SHRI ABINAV MEHROTRA, LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE IMPUGNED PENALTY MAY BE CANCELLED. :-4-: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO P ERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS APPARENT FROM RECORD TH AT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED CONFIRMATION CERTIFICATE OF SHRI ANMOL SHARMA FOR GIVING THE LOAN OF $ 19,500 AND THE DEED OF GIFT EXECUTED BETWEEN THE AS SESSEE AND SHRI ANMOL SHARMA IN RESPECT OF GIFT OF $ 57,000. THE ASSESSEE HAD ALSO FILED COPY OF RETURN OF INCOME OF SHRI ANMOL SHARMA IN WHICH PERMANENT ACCOUNT NUMBER OF SHRI ANMOL SHARMA WAS MENTIONED. THE MAIN REASON FOR MAKING THESE ADDITI ONS WAS THE INABILITY OF THE ASSESSEE TO PRODUCE SHRI ANMOL SHARMA BEFORE THE AS SESSING OFFICER FOR EXAMINATION. SHRI ABINAV MEHROTRA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD EXPRESSED HIS INABILITY TO PRODUCE SHRI ANMOL SHARM A BECAUSE OF THE STRAINED RELATIONS BETWEEN THE ASSESSEE AND HIS BROTHER-IN-LAW DUE TO CERTAIN PERSONAL AND FAMILY REASONS. IT IS SEEN THAT DURING THE APPELLATE PROCEEDINGS, T HE ASSESSEE STATED BEFORE THE LD. CIT(A) THAT DUE TO STRAINED RELATIONS AT THE RELEVA NT TIME, THE ASSESSEE WAS UNABLE TO PRODUCE SHRI ANMOL SHARMA, HOWEVER, THE THINGS HAVI NG TURNED AROUND SINCE THEN, SHRI ANMOL SHARMA IS AVAILABLE TO TESTIFY BEFORE THE LD. CIT(A) AND AFFIRM THE TRANSACTIONS. IN OUR CONSIDERED VIEW, THE LD. CIT(A) SHOULD HAVE ACC EPTED THE REQUEST OF THE ASSESSEE BECAUSE AT THAT TIME SHRI ANMOL SHARMA WAS AVAILABL E FOR EXAMINATION. IN OUR VIEW, GRAVE INJUSTICE HAS BEEN CAUSED TO THE ASSESSEE BY NOT CONSIDERING THE REQUEST OF THE ASSESSEE FOR EXAMINATION OF SHRI ANMOL SHARMA, MORE PARTICULARLY WHEN THE ADDITION WAS MADE ON THE GROUND THAT THE ASSESSEE FAILED TO PROD UCE THE DONOR, SHRI ANMOL SHARMA. IT IS SETTLED LAW THAT PENALTY PROCEEDINGS ARE QUAS I-CRIMINAL. FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS ARE CERTAINLY RELEVANT AND H AVE PROBATIVE VALUE, BUT SUCH FINDINGS ARE MATERIAL ALONE AND MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A GIVEN CASE, BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PR OCEEDINGS ARE DIFFERENT FROM THOSE THAT ARISE IN ASSESSMENT PROCEEDINGS. IT IS TRUE T HAT THE ADDITIONS OF $ 57,000 AND $ 19,500 HAVE BEEN CONFIRMED BY THE TRIBUNAL ON THE G ROUND THAT THE ASSESSEE STATED BEFORE THE ASSESSING OFFICER THAT HE WAS NOT AWARE OF THE PRESENT ADDRESS OF HIS BROTHER-IN-LAW AND THE ASSESSING OFFICER COULD NOT EVEN ISSUE SUMMON U/S. 131 OF THE ACT TO VERIFY THE GENUINENESS OF THE TRANSACTION. HOWEVER, DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE HAS CATEGORICALLY SUBMITTED THAT NOW SHRI ANMOL SHARMA IS AVAILABLE FOR EXAMINATION AND HE MAY BE EXAMINED. FURTHER MORE, SHRI ANMOL SHARMA IS AN EXISTING ASSESSEE AND THE G IFT MADE BY HIM TO THE ASSESSEE WAS :-5-: NOT OF A HUGE AMOUNT AND IT IS ALSO A FACT THAT HE IS A CLOSE RELATIVE OF THE ASSESSEE. MOREOVER, THE ASSESSEE HAS DISCLOSED ALL THE FACTS RELATING TO THE GIFT AND LOAN WHICH WERE MATERIAL TO THE COMPUTATION OF THE TOTAL INCOM E. IN OUR VIEW, PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED IN THE PRESE NT CASE AND THE PENALTY SUSTAINED BY THE LD. CIT(A) IS LIABLE TO BE CANCELLED. ACCORDIN GLY, WE CANCEL THE PENALTY OF $ 35,000 SUSTAINED BY THE LD. CIT(A). 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7.4.2011 . SD/- SD/- [ N. K. SAINI] [H. L. KARWA] ACCOUNTANT MEMBER VICE PRESIDENT DATED:7.4.2011 JJ:0704 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR