DR. SANJAY MANHARLAL SANGHAVI, MUMBAI V. ACIT 14(3), MUMBAI

ITA 7035/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6637 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 26-03-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 18-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: AJAY R SINGH
• Keywords: Gift; Search and seizure; Source of fund; Revised return
• Section: 143(3); 139(5); 147; 131; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDI CIAL MEMBER . / ITA NO. 7035 / MUM./ 2011 ( / ASSESSMENT YEAR : 2001 02 . ) DR. SANJAY MANHARLAL SANGHAVI C/O MEDI PHARMA DRUG HOUSE GROUND FLOOR, BULAKHIDAS BLDG NO.13 VITHAL DAS ROAD, PRINCESS STREET MUMBAI 400 002 .. / APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 14 (3 ), EARNEST HOUSE 6 TH FLOOR, NARIMAN POINT MUMBIA 400 021 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAVPS0595B / ASSESSEE BY : MR. AJAY R. SINGH / REVENUE BY : MR. ASHOK SURI / DATE OF HEARING 26 . 0 3 .201 4 / DATE OF ORDER / ORDER , / PER AMIT SHUKL A , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 24 TH AUGUST 2011, PASSED BY THE DR. SANJAY MANHARLAL SANGHAVI 2 LEARNED COMMISSIONER (APPEALS) XX V , MUMBAI, IN THE MATTER OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT , 1961 (FOR SHORT 'THE ACT') OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) R/W SECTION 254, FOR THE ASSESSMENT YEAR 2001 02. 2 . THE SOLE DISPUTE IN THIS APPEAL IS, WHETHER OR NOT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING PENALTY OF ` 1,84,930, LEVIED UNDER SECTION 271(1)(C) BY THE ASSESSING OFFICER FOR THE IMPUGNED ASSESSMENT YEAR. 3 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL WHO HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001 02 ON 10 TH JANUARY 2002, DECLARING TOTAL IN COME OF ` 58,12,780. THEREAFTER, A SEARCH AND SEIZURE ACTION WAS CARRIED OUT ON SHAH GROUP (TIP TOP MITHAIWALA) BY THE INVESTIGATION WING OF THE PUNE DIRECTORATE IN THE MONTH OF OCTOBER 2002, DURING THE COURSE OF WHICH, IT CAME TO THE NOTICE THAT THE MEMBE RS OF SHAH GROUP I.E., SHAH FAMILY ARE ALSO ENGAGED IN MONEY LAUNDERING UNDER THE G A RB OF PROVIDING BOGUS GIFTS. IT WAS FURTHER REVEALED THAT SOME OF THE BENEFICIARIES OF THESE BOGUS GIFTS WERE RESIDENT OF MUMBAI. ACCORDINGLY, THE MATTER WAS REFERRED BACK BY THE PUNE DIRECTORATE TO MUMBAI INVESTIGATION WING. IN PURSUANCE THEREOF, SUMMONS UNDER SECTION 131 DATED 5 TH NOVEMBER 2004 WAS ISSUED BY THE ADIT (INV.), UNIT 1 TO THE ASSESSEE TO FURNISH THE DETAILS OF SOURCES OF INCOME, COPY OF BANK ACCOUNT, COPY OF P ROFIT & LOSS ACCOUNT, BALANCE SHEET, CAPITAL ACCOUNT FOR THE FINANCIAL YEAR 1997 98 TO 2002 03 AND DETAILS OF LAST RETURN OF INCOME FILED. THEREAFTER, THE ASSESSEE HAD FILED REVISED RETURN OF INCOME ON 29 TH DECEMBER 2004, DECLARING TOTAL INCOME OF ` 64,14, 782. THIS REVISED RETURN OF INCOME INCLUDED ` 6 LAKHS UNDER THE HEAD INCOME FROM OTHER SOURCES WHICH WAS ON ACCOUNT OF GIFT RECEIVED IN THE HANDS OF THE TWO MINOR DAUGHTERS FOR ` 3 LAKHS DR. SANJAY MANHARLAL SANGHAVI 3 EACH. LATER ON , A NOTICE UNDER SECTION 148 WAS ISSUED ON 8 TH FEBRUA RY 2005, WHICH WAS SERVED UPON THE ASSESSEE ON 9 TH FEBRUARY 2005. IN PURSUANCE OF THIS NOTICE, THE REVISED RETURN OF INCOME FILED ON 29 TH DECEMBER 2004, WAS TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148. ACCORDINGLY, T HE ASSESSING OFF ICER COMPLETED THE ASSESSMENT VIDE ORDER DATED 30 TH NOVEMBER 2005, AFTER TAKING INTO ACCOUNT THE ALLEGED BOGUS GIFT OF ` 6 LAKHS. I N THE SAID ORDER, THE ASSESSING OFFICER OBSERVED THAT THE REVISED RETURN OF INCOME WAS FILED BY THE ASSESSEE ONLY AFTER THE S EARCH OPERATION IN CASE OF SHAH GROUP IN THE MONTH OF OCTOBER 2002, WHEREFROM RECEIVING BOGUS GIFT CAME INTO LIME LIGHT. ACCORDINGLY, HE INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). 4 . IN THE PENALTY PROCEEDINGS, THE ASSESSEE FILED HIS EXPLANATION BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 16 TH MARCH 2006. HOWEVER, THE SAID EXPLANATION WAS REJECTED BY THE ASSESSING OFFICER AND THE PENALTY WAS LEVIED. THEREAFTER, THE PENALTY WAS ALSO CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) AND THE MATTER HA D TRAVELLED UP TO THE STAGE OF THE TRIBUNAL. THE TRIBUNAL , HOWEVER, SET ASIDE THE PENALTY, VIDE ORDER DATED 21 ST MARCH 2009 AND THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH , PARTICULARLY IN THE LIGHT OF THE DIR ECTION TO THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, AND ACCEPTED THAT THE GIFT RECEIVED BY HIS MINOR DAUGHTERS AGGREGATING TO ` 6 LAKHS WERE BOGUS BEFORE FILING OF THE REVISED RETURN OF INCOME. 5 . IN THE SET ASIDE PROCEEDINGS, IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THERE WAS NO CONFIRMATION OR ADMISSION BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, IN RESPECT OF THE DR. SANJAY MANHARLAL SANGHAVI 4 GIFT RECEIVED BY THE ASSESSEE IN THE NAME OF HIS DAUGHTERS AND THE DECLARATION OF ADDITIONAL INCOME WAS MADE VOLUNTARILY. IN ORDER TO VERIFY TH IS CONTENTION OF THE ASSESSEE, THE ASSESSING OFFICER, ON 29 TH NOVEMBER 2010, WROTE A LETTER TO THE DDIT (INV.), UNIT 1(2), MUMBAI. I N RESPONSE TO THE SAME, IT WA S CONFIRMED BY THE SAID OFFICER THAT THE INVESTIGATION UNIT (KALYAN) OF PUNE DIRECTORATE HAD CONDUCTED ENQUIRIES ON D R. SANJAY M ANHARLAL SANGHVI (ASSESSEE HEREIN) BY ISSUING SUMMONS UNDER SECTION 131, WHEREIN THE ASSESSEE HAD DEPOSED THAT HE HAD RECEIVED B OGUS GIFT IN THE MONTH OF JUNE 2002, AND IN PURSUANCE THEREOF, REVISED RETURN OF INCOME WAS FILED FOR THE ASSESSMENT YEAR 2001 02. BASED ON THIS INFORMATION, THE ASSESSING OFFICER AGAIN LEVIED THE PENALTY ON THE ALLEGED BOGUS GIFT OF ` 6 LAKHS. 6 . THE LEARNE D COMMISSIONER (APPEALS), AFTER TAKING INTO NOTE OF THE ENTIRE FACTS HAD CONFIRMED THE PENALTY ON THE GROUND THAT: I ) THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 29 TH DECEMBER 2004, IS NONEST AS THE ORIGINAL RETURN OF INCOME WAS NOT FILED UNDER SE CTION 139(1) BUT UNDER SECTION 139(4); II ) IT WAS DUE TO THE INVESTIGATIONS WHICH LEAD TO FILING OF REVISED RETURN OF INCOME BY THE ASSESSEE, WHICH ITSELF WAS INVALID AND WAS NOT VOLUNTARY AND, THEREFORE, THIS ESTABLISHE S THAT THE GIFTS ARE NOTHING BUT CONCEA LED INCOME OF THE ASSESSEE , AS THE ASSESSEE HAS DISCLOSED ONLY AFTER DE TE CTION BY THE DEPARTMENT; AND LASTLY; III ) HE REFERRED TO AND RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S ZOOM DR. SANJAY MANHARLAL SANGHAVI 5 COMMUNICATIONS PVT. LTD., [ 2010 ] 233 CTR 465 (BOM.) AND HELD THAT THE PENALTY HAS RIGHTLY BEEN LEVIED. 7 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD RECEIVED SUMMONS UNDER SECTION 131 ISSUED BY THE ADDL. DIT (I), ON 5 TH NOVEMBER 2004. IN THE SAID SUM MON , NOTHING W AS MENTIONED ABOUT THE GIFT OF ` 6 LAKHS OR ABOUT ANY INFORMATION RECEIVED FROM INVESTIGATION UNIT, PUNE. THE ASSESSEE WAS ONLY REQUIRED TO FURNISH THE DETAILS OF SOURCES OF INCOME, COPY OF PROFIT & LOSS ACCOUNT, BALANCE SHEET, CAPITAL ACCOUNT FOR THE FINA NCIAL YEARS 1997 98 TO 2002 03, DETAILS OF BANK ACCOUNT, PAN DETAILS AND COPY OF LATEST RETURN OF INCOME. THEREAFTER, THE ASSESSEE HAD FILED REVISED RETURN OF INCOME VOLUNTARILY ON 29 TH DECEMBER 2004, WHEREBY THE ALLEGED BOGUS GIFT OF ` 6 LAKHS WAS SURREND ERED. VIDE LETTER DATED 10 TH JANUARY 2005, THE ASSESSEE ALSO INFORMED THE DDIT (INV.) AND FURNISHED THE COPY OF REVISED RETURN OF INCOME ALONG WITH THE CHALLAN OF SELF ASSESSMENT TAX AND THE OTHER DETAILS WHICH WERE REQUIRED TO BE FURNISHED AS PER THE SUMM ONS UNDER SECTION 131. THUS, THE REVISED RETURN OF INCOME WHICH WAS FILED ON 29 TH DECEMBER 2004, WAS VOLUNTARY AND NOT WHEN THE ASSESSEE WAS CORNERED ABOUT THE ALLEGED BOGUS GIFT. HE FURTHER SUBMITTED THAT I N THIS CASE, THE TRIBUNAL HAS GIVEN A VERY SPECIF IC DIRECTION WHETHER THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, BEFORE FILING OF REVISED RETURN OF INCOME OR NOT . THE ASSESSEE HAD NOT APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, PRIOR TO FILING REVISED RETURN OF INCOME , W HICH IS EVIDENT FROM THE FACT THAT THE LETTER WHICH HAS BEEN RECEIVED BY THE ASSESSING OFFICER FROM THE DDIT (INV.), UNIT 1(2), MUMBAI, DOE S NOT MENTION ABOUT THE DATE ON WHICH THE ASSESSEE HAD APPEARED AFTER THE SUMMONS WERE ISSUED DR. SANJAY MANHARLAL SANGHAVI 6 UNDER SECTION 131. IT W AS ONLY ON 10 TH JANUARY 2005 THAT THE ASSESSEE HAD RESPONDED TO THE DDIT (INV.), UNIT 1(2), MUMBAI. THUS, THE ASSESSEE WAS NEVER CORNERED BY THE DEPARTMENT ABOUT THE ALLEGED GIFT BEFORE FILING OF THE REVISED RETURN OF INCOME AND, ACCORDINGLY, NO PENALTY SH OULD BE LEVIED BECAUSE THE SAID GIFT HAS BEEN DISCLOSED IN THE RETURN OF INCOME WHICH HAS BEEN ACCEPTED BY THE A .O. IN THE ORDER PASSED U /S 148. 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED UPON THE ORDER OF THE LEARNED COMM ISSIONER (APPEALS) AND SUBMITTED THAT IN THE PRESENT CASE, THE ASSESSEE ONLY CAME FORWARD FOR SURRENDERING THE GIFT WHEN THERE WAS INVESTIGATION DONE ON THE BOGUS GIFT AS DETECTED DURING COURSE OF SEARCH IN CASE OF SHAH GROUP BY THE PUNE INVESTIGATION WING OF THE DEPARTMENT. THEREAFTER, THE SAID INFORMATION WAS RECEIVED BY THE MUMBAI INVESTIGATION WING AND SUMMONS WAS ISSUED. IT WAS AFTER THE SUMMONS, THE ASSESSEE CAME FORWARD FOR SURRENDERING THE GIFT. THUS, SUCH SURRENDER WAS NOT VOLUNTARY AT ALL . MOREOVE R, THE REVISED RETURN OF INCOME IN WHICH SURRENDER WAS MADE WAS INVALID IN THE EYES OF LAW AS CATEGORICALLY HELD BY THE LEARNED COMMISSIONER (APPEALS). HE THUS, SUBMITTED THAT THE PENALTY SHOULD BE CONFIRMED. 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS, PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. THE SUBJECT MATTER OF PENALTY IN THE PRESENT CASE IS ON ACCOUNT OF SURRENDER OF ALLEGED BOGUS GIFT AGGREGATING TO ` 6 LAKHS. THE MAIN CONTROVERSY IS WHETHER SUCH SURRENDER WAS VOLUNTARY OR NOT AND WHETHER THE ASSESSEE HAS OFFERED THIS GIFT TO BE TAXED ONLY WHEN HE DR. SANJAY MANHARLAL SANGHAVI 7 WAS CORNERED BY THE DEPARTMENT. FOR DECIDING THIS ISSUE, FOLLOWING SEQUENCE OF EVENTS ARE IMPORTANT TO BE ANALYSED. 10.01.2002 THE ASSESSEE HAS FIL ED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 58,12,780 FOR THE ASSESSMENT YEAR 2001 02. SUCH RETURN OF INCOME WAS NOT FILED U/S 139(1) BUT WAS FILED U/S 139(4). OCTOBER 2002 THE SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE INVESTIGATION WING, K ALYAN OF PUNE, INVESTIGATION DIRECTORATE ON SHAH GROUP. DURING THE COURSE OF POST SEARCH INVESTIGATION, IT WAS UNEARTHED THAT THE MEMBERS OF SHAH FAMILY WERE INVOLVED IN MONEY LAUNDERING UNDER THE GARB OF BOGUS GIFT. SUCH INVESTIGATION REVEALED THAT THE DO NOR AND SOME OF THE BENEFICIARIES OF THIS BOGU S GIFT WERE RESIDENT OF MUMBAI, ALSO. 05.11.2004 SUMMONS U/S 131 WAS ISSUED BY THE OFFICE OF ADDL. DIRECTOR OF INCOME TAX (INV.), UNIT I, MUMBAI , BY WHICH THE ASSESSEE REQUIRED TO FURNISH CERTAIN INFORMATION. THE ENTIRE CONTENT OF THE SUMMON / LETTER IS AS UNDER: TO SHRI SANJAY MANHARLAL SANGHVI C/O MEDI PHARMA DRUG HOUSE 13, VITHALDAS ROAD MUMBAI 400 002 WHEREAS YOUR ATTENDANCE IS REQUIRED IN CONNECTION WITH THE PROCEEDINGS UNDER THE INCOME TAX ACT IN YOUR CASE, YOU ARE HEREBY REQUIRED TO ATTEND PERSONALLY MY OFFICE AT ROOM NO.203, 2 ND FLOOR, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 38 ON THE 10TH DR. SANJAY MANHARLAL SANGHAVI 8 NOVEMBER 2014 AT 11.15 AM TO GIVE EVIDENCE AND TO SUBMIT THE FOLLOWING BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND NOT TO DEPART UNTIL YOU RECEIVE MY PERMISSION TO DO SO. I ) DETAILS OF YOUR SOURCES OF INCOME; II ) COPIES OF PROFIT & LOSS ACCOUNT, BALANCE SHEET, CAPITAL ACCOUNT, ETC., FOR THE FINANCIAL YEARS 97 98 TO 02 03. III ) DETAILS OF YOUR BANK ACCOUNTS; IV ) YOUR PAN, DETAILS OF ASSES SING OFFICER AND COPY OF LATEST RETURN FILED BY YOU. WITHOUT PREJUDICE TO THE PROVISIONS OF ANY OTHER LAW FOR THE TIME BEING IN FORCE IF YOU INTENTIONALLY OMIT TO SO ATTEND AND GIVE EVIDENCE OR PRODUCE THE BOOKS OF ACCOUNT OR DOCUMENTS A FIND OF ` 10,000 M AY BE IMPOSED UPON YOU UNDER SUB SECTION 2 OF SECTION 272A OF THE INCOME TAX ACT, 1961. SD/ (H. PHANI RAJU) DY. DIRECTOR OF INCOME TAX (INV.) UNIT I(2), MUMBAI 29.1 2.2004 THE ASSESSEE FILED R EVISED RETURN OF INCOME WHEREBY THE ASSESSEE DECLARED GIFTS OF ` 6 LAKHS RECEIVED IN THE HANDS OF HIS TWO MINOR DAUGHTERS OF ` 3 LAKHS EACH , AS INCOME FROM OTHER SOURCES AND OFFERED THE SAME FOR TAX. SUCH RETURN OF INCOME CANNOT BE SAID TO BE U/S 139(5) AS THE ORIGINAL RETURN OF INCOME WAS FILED UNDER SECTION 139(4). 10.01.2005 THE ASSESSEE FILED LETTER BEFORE THE DDIT (I) , UNIT 1(2), MUMBAI , AND SUBMITTED THE COPY OF REVISED DR. SANJAY MANHARLAL SANGHAVI 9 RETURN OF INCOME AND CHALLAN OF SELF ASSESSMENT TAX ALONG WITH OTHER DETAILS. 08 .02.2005 NOTICE U/S 148 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 9.2.2005. THE ASSESSING OFFICER TREATED THE SO CALLED REVISED RETURN OF INCOME FILED ON 29.12.2004, AS RETURN FILED IN RESPONSE TO NOTICE U/S 148. 30.11.2005 THE ASSESSING OFFICER PASSED T HE ORDER UNDER SECTION 143(3) R/W SECTION 147 BY TREATING THE SAID AMOUNT OF ALLEGED BOGUS GIFT OF ` 6 LAKHS AS INCOME FROM OTHER SOURCES AND FURTHER ADDED COMMISSION OF ` 12,000 @ 2% FOR PROCURING THE GIFT. THUS, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF ` 64,26,780. SUCH ASSESSMENT ORDER HAD BECOME FINAL AS NO FURTHER APPEAL WAS FILED. 30.11.2005 SHOW CAUSE NOTICE WAS ISSUED UNDER SECTION 274 R/W 271(1)(C) FOR LEVYING PENALTY. 16.03.2006 THE ASSESSEE FILED HIS SUBMISSION IN RESPONSE TO THE AFORESAID SHOW CAUSE NOTICE. 20.04.2006 THE ASSESSING OFFICER PASSED THE ORDER U/S 271(1)(C) LEVYING PENALTY OF ` 1,84,930 ON ACCOUNT OF ALLEGED BOGUS GIFT AND COMMISSION TOTALLING TO ` 6,12,000. 20.02.2007 THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. 25.03.2009 THE TRIBUNAL, AFTER DISCUSSING THE ISSUE IN DETAIL, RESTORED THE MATTER TO THE FILE OF THE A .O. AFTER CATEGORICAL DIRECTION IN THE FOLLOWING MANNER: DR. SANJAY MANHARLAL SANGHAVI 10 7. THE ASSESSING OFFICER HAS NOT GIVEN CREDENCE TO THE PL EA OF THE AS ON ACCOUNT OF THE FACT THAT THE ASSESSEE HAD APPEARED BEFORE DDIT (INV.), UNIT I(2), MUMBAI, AND CONFIRMED THAT IT HAD RECEIVED BOGUS GIFTS. THE ASSESSEE THEREON HAD FURNISHED REVISED RETURN AND IT IS THE STAND OF THE AUTHORITIES THAT THE SAID STAND OF THE AUTHORITIES THAT THE SAID REVISED RETURN WAS NOT LIKE VOLUNTARILY BUT BECAUSE OF THE CIRCUMSTANCES FACED BY THE ASSESSEE. ON THE OTHER HAND, THE ASSESSEE CLAIMS NOT TO HAVE APPEARED BEFORE THE DDIT(INV.), UNIT I(2), MUMBAI, IN CASE, THE ASSE SSEE HAD NOT APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, AND THE PLEA OF THE ASSESSEE IN THIS REGARD IS ACCEPTED THEN THE REVISED RETURN FILED BY THE ASSESSEE IS VOLUNTARY AND ONCE THE ADDITIONAL INCOME OFFERED IN THE SAID RETURN HAS BEEN ACCEPTED, THERE IS NO MERIT IN THE LEVY OF ANY PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT. THE REVENUE AUTHORITIES HAVE DISBELIEVED THE CONTENTION OF THE ASSESSEE THAT THE REVISED RETURN FILED BY HIM WAS VOLUNTARILY BECAUSE OF THE FACT THAT THE ASSESSEE HAD AP PEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI AND SURRENDERED THE AMOUNT. THIS ASPECT OF APPEARANCE OF THE ASSESSEE BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, AND ACCEPTING THE GIFTS OF ` 6.00 LAKHS RECEIVED BY HIS MINOR DAUGHTERS AS BOGUS NEEDS VERIFIC ATION FROM RECORDS, IN VIEW OF THE AFFIRMATION OF THE ASSESSEE BY WAY OF AFFIDAVIT FILED BEFORE US. IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING DR. SANJAY MANHARLAL SANGHAVI 11 OFFICER WHO IN TURN SHALL VERIFY WHETHER THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, AND ACCEPTED THAT THE GIFTS RECEIVED BY HIS MINOR DAUGHTERS TOTALING ` 6.00 LAKHS WERE BOGUS OR THE CONFRONTATION OF THE ASSESSEE BY THE DDIT (INV.), UNIT 1(2), MUMBAI, WHEREIN BECAUSE OF THE CIRCUMSTANCE S IF TRANSPIRES THAT THE MINOR DAUGHTERS OF THE ASSESSEE HAD RECEIVED BOGUS GIFTS TOTALING ` 6.00 LAKHS. IN THE CIRCUMSTANCES, WE DEEM IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME IN ACCORDANCE WITH THE LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN CASE, THE STAND OF THE ASSESSEE IS FOUND TO BE CORRECT THAT THE REVISED RETURN FILED BY HIM WAS VOLUNTARY AND NOT BECAUSE OF ANY PRESSURE OR ADMISSION BEFORE THE DDIT (INV.), UNIT I(2), MUM BAI, THEN THERE IS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS THE DECLARATION HAS BEEN MADE BY EH ASSESSEE VOLUNTARILY AND THE SAME HAS BEEN ACCEPTED AS PER THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE I.T. ACT. THE DIFFERENCE ON ACCOUNT OF COMMISSION OF THE ALLEGED GIFTS DOES NOT WARRANT IN LEVY OF THE PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT. IN CASE THE STAND OF ASSESSEE IS FOUND TO BE INCORRECT, THEN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF T HE I.T. ACT IS JUSTIFIED. THUS, THE GROUND OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. DR. SANJAY MANHARLAL SANGHAVI 12 29.11.2010 THE ASSESSING OFFICER WROTE A LETTER TO THE DDIT (INV.), TO CONFIRM WHETHER THE ASSESSEE HAS APPEARED BEFORE THE INVESTIGATION UNIT AND HAS DEPOSED THAT HE HAS RECEIVED BOGUS GIFT OF ` 6 LAKHS BEFORE FILING THE REVISED RETURN OF INCOME. 30.12.2010 DDIT (INV.), UNIT 1(2), MUMBAI, WROTE LETTER TO THE ASSESSING OFFICER THAT THE ASSESSEE HAD DEPOSED TO HAVE RECEIVED BOGUS GIFT BEFORE THE INVESTIGATION UNIT. 31.12.2010 THE ASSESSING OFFICER PASSED THE PENALTY ORDER IN PURSUANCE OF THE DIRECTION GIVEN BY THE TRIBUNAL. 10 . IN THIS ROUND OF PROCEEDINGS, THE SCOPE OF ADJUDICATION IS , HOWEVER, CIRCUMSCRIBED BY THE DIRECTIONS OF THE TRIBUNA L GIVEN , VIDE ORDER DATED 25 TH MARCH 2009 , AS NOTED ABOVE . THE TRIBUNAL HAS GIVEN A CATEGORICAL DIRECTION TO THE ASSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, AND HAS ACCEPTED BEFORE HIM THAT THE G IFTS RECEIVED BY HIS MINOR DAUGHTERS AGGREGATING TO ` 6 LAKHS WERE BOGUS OR NOT . TRIBUNAL HAS ALSO HELD THAT IF THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 29 TH DECEMBER 2004 IS VOLUNTARY AND WITHOUT ANY PRESSURE OR ADMISSION BEFORE THE DDIT (INV .), UNIT 1(2), MUMBAI, THEN NO PENALTY SHOULD BE LEVIED. IN THE SET ASIDE PRO CEEDINGS, THE ASSESSING OFFICER, IN PURSUANCE OF THE DIRECTION, HAD SOUGHT CONFIRMATION FROM THE DDIT (INV.), UNIT 1(2), MUMBAI, AND IN RESPONSE TO WHICH FOLLOWING INFORMATION WAS GIVEN : DR. SANJAY MANHARLAL SANGHAVI 13 TO THE ACIT 14(3) EARNEST HOUSE, 6 TH FLOOR NARIMAN POINT, MUMBAI 400 020 MADAM, SUB: SET ASIDE OF PENALTY IN THE CASE OF DR. SANAJAY SANGHAVI A.Y. 2001 02 REGARDING. KINDLY REFER TO YOUR LETTER NO.ACIT 14(3)/SET ASIDE/2010 11 DT. 19.11.20 10 WHEREIN YOU HAVE DESIRED TO CONFIRM AS TO WHETHER THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.) UNIT I(2), MUMBAI, AND ACCEPTED THAT THE GIFTS RECEIVED BY HIS DAUGHTERS TOTALING TO ` 6 LAKHS WERE AS BOGUS. IN THIS CONNECTION, I HAVE TO INTIMATE THA T THE FILE REGARDING THE ENQUIRY CONDUCTED BY SHRI H. PHANIRAJU, THE THEN DDIT (INV.), UNIT I(2), MUMBAI, NOW THE ADDL. CIT / DIT, HYDERABAD (MOBILE NO.09985920555) HAS NOT BEEN HANDED OVER TO ME BY MY PREDECESSOR AS VERIFIED FROM THE HANDING OVER NOTE. AC CORDINGLY, THE UNDERSIGNED CONTACTED SHRI H. PHANIRAJU ON HIS MOBILE AND ENQUIRED ABOUT THE SAME. HE CONVEYED TO ME TELEPHONICALLY THAT CONSEQUENT TO THE INFORMATION RECEIVED FROM INVESTIGATION UNIT (KALYAN) OF PUNE DIRECTORATE, CONSEQUENT TO THE SEARCH CO NDUCTED ON SHAH GROUP (TIP TOP MITHAIWALA), HE HAD CONDUCTED ENQUIRIES ON SHRI SANJAY M. SANGHAVI BY ISSUING SUMMON U/S 131 WHEREIN THE LATER HAD DEPOSED THAT HE HAD RECEIVED BOGUS GIFTS OF ` 6 LAKHS IN THE MONTH OF JUNE 2002, FOR WHICH REVISED RETURN WAS FILED FOR A.Y. 2001 02. THE LETTER NO.ADDL.DIT (INV.)U I (2).G.H./2004 05/2163 DATED 13.1.2005, ADDRESSED TO YOUR OFFICE, ISSUED BY THE THEN DDIT(INV.) 1(2) IS ON YOUR RECORD AND YOU MAY TAKE THE NECESSARY ACTION IN THE MATTER BY RELYING UPON HIS AFOREMENTI ONED LETTER DATED 13.1.2005. IN THE MEANTIME, AS INTIMATED BY SHRI H. PHANIRAJU, THAT UPON REORGANIZATION, THE SAID FILE WAS TRANSFERRED TO UNIT VIII, MUMBAI. I AM SEPARATELY REQUESTING THE ADDL. DIT (INV.) UNIT VIII, MUMBAI TO INSTRUCT THE DDITS WORKING UNDER HIM IN THE UNIT TO TRACE THE INVESTIGATION FILE OF SHRI SANJAY SHANGHAVI AND TO TO INTIMATE THE ACIT 14(3), MUMBAI, ABOUT THE BOGUS GIFT AS TO WHETHER SHRI SANJAY SANGHAVI HAD ADMITTED BEFORE THE THEN DDIT ABOUT THE BOGUS GIFTS. YOURS F AITHFULLY SD/ (K.K. JALALI) DY. DIRECTOR OF INCOME TAX (INV.) UNIT I(2), MUMBAI DR. SANJAY MANHARLAL SANGHAVI 14 11 . FROM THE AFORESAID LETTER, IT CAN BE GATHERED THAT NO SPECIFIC DATE HAS BEEN MENTIONED AS TO W HEN THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, FOR DEPOSING OR FOR SURRENDERING OF THE ALLEGED GIFT S OF ` 6 LAKHS. THE SAID AUTHORITY HAS MERELY STATED THAT HE WAS CONVEYED THROUGH TELEPHONE THAT SUMMON WAS ISSUED UNDER SECTION 131 AND IN RESPONSE TO WHICH HE HAS DEPOSED OF THE RECEIVING OF THE GIFT IN THE MONTH OF JUNE 2002. HOWEVER, NO EVIDENCE HAS BEEN GIVEN AS TO WHEN THE ASSESSEE HAD APPEARED BEFORE THE INVESTIGATION WING AND ON WHICH DATE PRIOR TO FILING OF REVISED RETURN OF INCOME . SUCH A TE LEPHONIC INTIMATION AFTER A GAP OF EIGHT YEARS CANNOT BE HELD TO BE VERY CREDIBLE EVIDENCE. IN THE PRESENT CASE, SUMMON WAS ISSUED BY THE MUMBAI INVESTIGATION WING UNDER SECTION 131 ON 5 TH NOVEMBER 2004. IT APPEARS THAT THEREAFTER THE ASSESSEE HAD NEITHER APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, NOR ANY EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE ASSESSEE HAD RESPONDED TO SUCH SUMMON AND HAD APPEARED BEFORE THE SAID AUTHORITY, BEFORE T HE ASSESSEE HAD FILED THE SO CALLED REVISED RETURN OF INCOME ON 29 TH DECEMBER 2004. EVEN FROM THE CONTENTS OF THE SUMMON ISSUED UNDER SECTION 131, ( WHICH HAS BEEN REPRODUCED ABOVE ) , IT CAN BE SEEN THAT THERE IS NO MENTION ABOUT THE INFORMATION WHICH HAS BEEN RECEIVED FROM THE INVESTIGATION UNIT, PUNE, THAT THE ASSES SEE HAD RECEIVED ANY ALLEGED BOGUS GIFT NOR THERE IS ANY WHISPER ABOUT THE VERIFICATION OF THE GIFTS. THE DETAILS WHICH HAVE BEEN REQUIRED TO BE PROVIDED BY THE ASSESSEE ARE PURELY GENERAL IN NATURE. THUS, IT CANNOT HELD THAT SUMMONS ISSUED UNDER SECTION 1 31 WAS SPECIFIC FOR ENQUIRING ABOUT THE GIFT S . IF NOTHING HAS BEEN BROUGHT ON RECORD THAT THE ASSESSEE WAS SPECIFICALLY CORNERED OR CONFRONTED FOR RECEIVING THE ALLEGED BOGUS GIFT WHICH HAD COMPELLED HIM TO MAKE THE SURRENDER THROUGH REVISED RETURN OF INCO ME ON 29 TH DECEMBER 2004, DR. SANJAY MANHARLAL SANGHAVI 15 THEN IT HAS TO BE PRESUMED THAT THE ACT OF SURRENDERING GIFT S IN THE RETURN OF INCOME FILED ON 29 TH DECEMBER 2004, WAS VOLUNTARY. THE DIRECTION OF THE TRIBUNAL WAS VERY CATEGORICAL AND CIRCUMSCRIBED TO , WHETHER THE ASSESSEE HAD AP PEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI , AND HAS ACCEPTED THE GIFT PRIOR TO THE FILING OF THE RETURN OF INCOME OR NOT . FROM THE LETTER, AS HAS BEEN REPRODUCED ABOVE, AND ALSO FROM THE FACTS WHICH HAS BEEN DISCUSSED IN DETAIL IN THE FORGOING PARAGR APH, IT IS NOT BORNE OUT THAT PRIOR TO FILING OF RETURN OF INCOME, THE ASSESSEE HAD APPEARED BEFORE THE DDIT (INV.), UNIT 1(2), MUMBAI, FOR SURRENDER OF GIFT. UNDER THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE SURRENDER MADE BY THE ASSESSEE WAS VOLUNTAR Y AND, THEREFORE, PENALTY CANNOT BE LEVIED UNDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME AS HELD BY THE TRIBUNAL, VIDE ORDER DATED 25 TH MARCH 2009. WE THUS SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ALLOW THE GROUND R AISED BY THE ASSESSEE. 12 . 12. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 23 RD APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL 2014 SD / - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 23 RD APRIL 2014 DR. SANJAY MANHARLAL SANGHAVI 16 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. C HOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI