ACIT, Kanpur V. Shri Surendra Kumar Gupta, Kanpur

ITA 690/LKW/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78578 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-05-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: AKSHAY KUMAR GUPTA
• Keywords: Gift; Agreed addition

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.690/LKW/2010 ASSESSMENT YEAR:2001 - 02 A.C.I.T. - 1, KANPUR. VS. SHRI SURENDRA KUMAR GUPTA, 51/40 NAYAGANJ, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY SHRI AKSHAY KUMAR GUPTA, FCA DATE OF HEARING 27/05/2014 DATE OF PRONOUNCEMENT 1 3 /06/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - I, KANPUR DATED 09/09/2010 FOR ASSESSMENT YEAR 2001 - 2002. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I. KANPUR HAS ERRED IN LAW AND ON FACTS IN CANCELLING THE PENALTY UNDER SECTION 271(1)(C) OF RS.12,28,500/ - IMPOSED BY THE ASSESSING OFFICER ON THE CONCEALED INCOME OF RS.35,00,000/ - WITHOUT APPRECIATING THE FACTS OF THE CASE AND MATERIAL BROUGHT ON RECORD BY THE AS SESSING OFFICER. 2. IN DOING SO, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS NOT APPRECIATED THAT THE ACTION WAS TAKEN BY THE A.O. ON THE BASIS OF CREDIBLE INFORMATION REGARDING TAX EVASION IN THE FORM OF BOGUS GIFTS AS PROVIDED BY THE DIRE CTOR OF INCOME TAX (INVESTIGATION), KANPUR. 2 3. THE LD COMMISSIONER OF INCOME TAX (APPEALS) - I. KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE VOLUNTARILY SURRENDERED RS.35.00,000/ - , THE AMOUNT OF GIFT FOR TAX. THE ASSESSEE HAD SURRENDERE D THIS AMOUNT ONLY AFTER INITIATION OF ENQUIRIES IN THE TRANSACTION OF ALLEGED GIFT IN THE CASE OF THE ASSESSEE, BY THE DIT (INV), KANPUR. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD FA ILED TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE DONOR AND ALSO THE GENUINENESS OF THE TRANSACTION. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE PENALTY ORDER. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF MAK DATA P. LTD. VS. CIT AS REPORTED IN [2013] 358 ITR 593 (SC). 4. LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT CITED BY LEARNED D.R. OF THE REVENUE. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) AS PER PARA 13 & 14 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 13. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING AS PECTS ARE RELEVANT TO THE FACTS OF THE CASE IN RELATION TO LEVY OF PENALTY : - I . THE APPELLANT HAS FILED HIS REVISED COMPUTATION WITH THE DEPARTMENT SUO - MOTO AND VOLUNTARILY ON 25.09.2003 AND DEPOSITED THE TAX AND INTEREST THEREON WITH STATED REASON THAT NO COOPERATION FROM THE DONOR WAS FORTHCOMING. IT IS ALSO ON RECORD THAT COPIES OF THE GIFT DEED AND COPY OF BANK ACCOUNT OF THE DONOR ETC. WERE FILED WITH THE RETURN OF INCOME AND CAPITAL ACCOUNT OF THE APPELLANT FILED WITH THE RETURN WAS SHOWING SUCH ENTRIE S WHICH HAVE NOT BEEN EXAMINED AND QUESTIONED BY THE A.O., SO AS TO VERIFY THE GENUINENESS OF SUCH TRANSACTIONS. II . THE ADDITION MADE BY THE A.O. ON ACCOUNT OF EXPENDITURE FOR ARRANGING THE ALLEGED BOGUS GIFT HAS BEEN 3 DELETED BY THE CIT(A) - I, AGRA VIDE ORDE R DATED 09.12.2005 IN APPEAL NO. 107/CIT(A) - 1/DCIT - 1/KNP/2005 - 06/980, WHICH IMPLIEDLY AMOUNTS TO REJECTION OF THE PREMISES ON WHICH THE TRANSACTIONS OF GIFT IS DOUBTED BY THE A.O. III . THE CIT(A) HAS ALSO NOTED THAT 'THE A.O. HAD ON THE OTHER HAND HAS NOT B ROUGHT ANY EVIDENCE TO SHOW THAT ANY COMMISSION WAS PAID BY THE APPELLANT FOR PROCURING GIFTOFRS.35.00.000/ - .' IV . THE A.O. HAS RELIED ON THE GENERAL INFORMATION OF BOGUS ENTRIES IN THE GARB OF GIFT WHICH WAS NOTED BY THE INVESTIGATION WING. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, NO MATERIAL HAS BEEN BROUGHT ON RECORD IN RESPECT OF THE SAID TRANSACTION OF RS.35,00,000/ - WHICH IS SPECIFIC AND RELATING TO THE TRANSACTION OF GIFT, TO SHOW THAT THE TRANSACTION WAS SHAM/BOGUS. V . IT HAS BEEN SUBMITTED BY THE AP PELLANT THAT 'MR. SURESH KUMAR AGARWAL CAME TO KANPUR AND WAS PRESENTED BEFORE THE ASSESSING OFFICER AND THE GIFT OF RS.10.00,000/ - WAS CONFIRMED BY HIM.' VI . FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CAN BE SEEN THAT THE AMOUNT OF RS.35,00,000/ - IS IN THE NATURE OF AGREED ADDITION, BUT HOWEVER THE VERACITY/GENUINENESS OF THE TRANSACTION HAS NOT BEEN EXAMINED BY THE A.O. AND AT THE SAME TIME IT HAS NOT BEEN ADMITTED BY THE APPELLANT TO BE IN - GENUINE/BOGUS. THE SPECIFIC QUERIES RAISED BY MY PRED ECESSOR IN THE REMAND REPORT DATED 27.07.2006 HAVE ALSO NOT BEEN ADDRESSED BY THE A.O. VII . IN ANY CASE THE APPELLANT HAS AGREED TO THE ADDITION OF RS.35,00,000/ - BEFORE ANY MATERIAL/EVIDENCE AGAINST THE SAID TRANSACTION WHICH COULD BE CONSIDERED AS A CLINCHING EVIDENCE FOR PROVING THE SAID TRANSACTION AS BOGUS. VIII . FINALLY, THERE IS COMPLETE LACK OF MATERIAL, EVIDENCE AND FINDING IN THE ASSESSMENT ORDER REQUIRED FOR INITIATION OF PENALTY, WHICH COULD BE CONSIDERED AS RELEVANT MATERIAL 4 FOR THE PURPOSE OF Q UESTIONING THE GENUINENESS OF THE SAID TRANSACTION. CONTRARILY, THE CIT(A) HAS ALREADY DELETED THE ADDITION RELATING TO THE EXPENDITURE INVOLVED IN ARRANGEMENT OF BOGUS TRANSACTION. 14. IN VIEW OF ABOVE, I FIND THAT THE PENALTY U/S 271( 1 )(C) LEVIED BY THE A.O. IS UNJUSTIFIED AND BAD IN LAW AS PER DECISION IN THE CASES OF ( I ) CIT VS. M. PACHAMUTHU 295 ITR (MAD) (II) CIT VS ASHOK TAKER 170 TAXMAN (DEL) AND (III) PUNEET SEHGAL VS. ITO 123 TTJ (DELHI) WHERE IT WAS RESPECTIVELY HELD THAT - I ) 'MERE ADDITION AGREED TO BY ASSESSEE DURING COURSE OF SURVEY WOULD NOT EMPOWER A.O. TO LEVY PENALTY.' CIT VS. M. PACHAMUTHU 295 ITR (MAD) II ) 'WHERE APART FROM FACT THAT ASSESSEE HAD SURRENDERED INCOME, THERE WAS NO ADDITIONAL ADVERSE MATERIAL BROUGHT ON RECORD BY A.O., SURRENDERED INCOME COULD NOT BE TREATED AS ASSESSEE'S CONCEALED INCOME.' CIT VS ASHOK TAKER 170 TAXMAN (DEL) III ) 'WHERE ASSESSEE HAD SURRENDERED CERTAIN GIFT TO B U Y PEACE AS DONOR HAD DIED AND ASSESSEE COULD NOT PRODUCE DONOR, AS ASSESSEE'S EXPLANATION WAS BONAFIDE, LEVY OF PENALTY WAS NOT JUSTIFIED.' PUNEET SEHGAL VS. ITO 123 TTJ (DELHI) 5.1 FROM THE ABOVE PARAS OF THE ORDER OF CIT(A), IT IS SEEN THAT A CLEAR FINDING IS GIVEN BY CIT(A) THAT THIS ADDITION OF RS.35 LACS IS IN THE NATURE OF AGREED ADDITION. HE HAS ALSO GIVEN A FINDING THAT SPECIFIC QUERIES RAISED BY HIS PREDECESSOR IN THE REMAND REPORT DATED 27/07/2006 HAVE NOT BEEN ADDRESSED BY THE ASSESSING OFFICER. HE HAS ALSO GIVEN A FINDING THAT THE ASSESSEE HAS AG REED TO THE ADDITION OF RS.35 LACS BEFORE ANY MATERIAL/EVIDENCE AGAINST THE SAID TRANSACTION WHICH COULD BE CONSIDERED AS A CLINCHING EVIDENCE FOR PROVING THAT THE SAID TRANSACTION AS BOGUS. HE HAS ALSO FOLLOWED VARIOUS JUDGMENTS OF DIFFERENT HIGH COURTS AND THE TRIBUNAL DECISION ALSO. LEARNED D.R. OF THE REVENUE COULD NOT CONTROVERT THESE SPECIFIC FINDINGS OF CIT(A) AND HENCE, CONSIDERING THE FACTS OF THE PRESENT CASE, WHERE THE ASSESSING OFFICER COULD 5 NOT ESTABLISH THAT THE ASSESSEE HAS CONCEALED ANY I NCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, MERE SURRENDER OF INCOME BY THE ASSESSEE BECAUSE OF THIS REASON THAT THE DONOR IS NOT CO - OPERATING, PENALTY IS NOT JUSTIFIED. WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /06/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR