A.R.Viswanathan, Coimbatore V. ACIT, Coimbatore

ITA 797/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73739 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-02-2014
• Assessment Year: 1994-1995
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARI RAO
• Assessee Lawyers: K RAGHU
• Keywords: Gift; Block assessment
• Section: 143(3); 147; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , !' # , $ % BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NOS. 796 TO 798/MDS/2013 (ASSESSMENT YEARS: 1993-94 TO 1995-96) MR. A.R.VISWANATHAN, 318, RAJA STREET, COIMBATORE-641 001. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-III, COIMBATORE. PAN: ABGPV5965Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K. RAGHU, C.A. /RESPONDENT BY : MR. HARI RAO, JCIT / DATE OF HEARING : 18 TH FEBRUARY, 2014 /DATE OF PRONOUNCEMENT : 28 TH FEBRUARY, 2014 & / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAI NST COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBATORE DATED 24.01.2013 CHALLENGIN G LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 1993-94 TO 1995-96. ITA NO.796 TO 798/MDS/2013 2 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINESS OF JEWELLERY. A SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 12.9.1995 BOTH AT THE ASSESSEES BUSINESS PREMISES AS WELL AS RESIDENTIAL PREMISES. THE ASSESSING OFFICER COMPLETED THE BLOC K ASSESSMENT AND MADE ADDITIONS ON ACCOUNT OF FOREIG N REMITTANCES CLAIMED AS GIFTS RECEIVED BY THE ASSESS EES FAMILY MEMBERS. THE ASSESSEE PREFERRED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS TR IBUNAL. THE TRIBUNAL BY ORDER 30.5.2005 GAVE DIRECTIONS REG ARDING NRI GIFT THAT ASSESSING OFFICER SHALL RESTRICT NRI TRANSACTIONS ONLY WHICH WERE NOT DECLARED IN THE RETURN OF INCOM E. THE ASSESSING OFFICER PASSED CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL DELETING THE NRI GIFTS RE CEIVED BY ASSESSEES FAMILY MEMBERS IN THE BLOCK ASSESSMENT A ND ISSUED 148 PROCEEDINGS AND COMPLETED THE ASSESSMEN T UNDER SECTION 143(3) READ WITH SECTION 147 IN ASSES SEES CASE BY ADDING SUCH GIFTS IN THE ASSESSEES HANDS FOR THESE THREE ASSESSMENT YEARS 1993-94 TO 1995-96. HOWEVER ADDITIONS MADE IN THE ASSESSMENTS WERE CONFIRMED BY THE ITA NO.796 TO 798/MDS/2013 3 COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS TRI BUNAL AND THE MATTER IS NOW PENDING BEFORE THE HONBLE SU PREME COURT. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT ALL TH ESE GIFTS WERE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE AND THERE IS NO CONCEALMENT OF THESE GIFTS OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. HE SUBMITS THAT T HIS TRIBUNAL HAD IN FACT DELETED THESE GIFTS MADE AS ADDITION IN THE BLOCK ASSESSMENTS. THE COUNSEL SUBMITS THAT THIS TRIBUNA L GAVE DIRECTION TO REDUCE NRI GIFTS RECEIVED BY THE ASSES SEES WIFE MRS.GIRIJA AND HIS MOTHER SMT. SEETHALAKSHMI AMMAL FROM THE UNDISCLOSED INCOME AND AS SUCH THERE IS NO CONC EALMENT OF INCOME. THE COUNSEL SUBMITS THAT SIMPLY BECAUSE ADDITIONS WERE SUSTAINED REJECTING EXPLANATION OF THE ASSESSE E THAT DOES NOT MEAN THAT THERE IS CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. THE COUNSEL SUBMITS THAT GIFTS RECEIVED C ANNOT BE CONSIDERED AS UNDISCLOSED INCOME UNDER SECTION 68 O F THE ACT AFTER A LAPSE OF MORE THAN TEN YEARS AND THERE IS N O DISPUTE ITA NO.796 TO 798/MDS/2013 4 THAT GIFTS RECEIVED HAD BEEN DISCLOSED IN THE RETUR N FILED REGULARLY BY THE ASSESSEE. THE COUNSEL SUBMITS THAT EVEN IF THE EXPLANATION OF THE ASSESSEE FELL SHORT OF REQUI REMENT OF PROVING THE CREDITS IN THE ASSESSMENT PROCEEDINGS T HAT BY ITSELF CANNOT BE SUFFICIENT FOR REJECTING THE EXPLA NATION OF THE ASSESSEE FOR HOLDING THE ASSESSEE AS HAVING FURNISH ED INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. T HE COUNSEL FOR THE ASSESSEE SUBMITS THAT ALL THE GIFTS FROM NRI WERE THROUGH BANKING CHANNELS AND THE DONORS HAVE CONFIRMED REMITTANCES. THE COUNSEL FOR THE ASSESS EE REFERRING TO THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MR. A.RAJENDRAN & OTHERS VS. ACIT IN ITA NOS.60 TO 63 & 83 TO 86/MAD/2009 DATED 12.03.2010 , WHO ARE ALSO FAMILY MEMBERS OF THE ASSESSEE, SUBMITS TH AT THE CO- ORDINATE BENCH OF THIS TRIBUNAL DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON IDENTICAL FAC TS AND CIRCUMSTANCES. 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. ITA NO.796 TO 798/MDS/2013 5 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISION RELIED ON BY THE ASSESSEE. ON REA DING OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF A .RAJENDRAN & OTHERS (SUPRA), THE ASSESSEES GROUP, ON IDENTICA L CIRCUMSTANCES THE CO-ORDINATE BENCH HAD DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON THE AD DITION MADE TOWARDS GIFTS RECEIVED FROM NRIS OBSERVING AS UNDER :- ACCOR DING TO THE HON'BLE APEX COURT , THE OBSERVATION OF THE JURISDICTIONAL HIGH COURT THAT THE EXPLANATIONS OF THE ASSES S E ES WERE REJECTED BASED ON SURMISES, CONJECTURES AND SUSPICIONS WAS NOT CORRECT . HOWEVER, IN OUR OPINION, THIS CANNOT BY ITSELF MEAN THAT THE EXPLANATIONS GIVEN B Y THE ASSESSEES WERE NOT BONA FIDE. OF COURSE THE EXPLANA TIONS REGARDING THE ALLEGED GIFTS WERE DISCOUNTED BY THE AO AS WELL AS CIT(A) AND THEREAFTER BY THE TRIBU N AL FOR REASONS LIKE CONTRADICTIONS IN THE STATEMENTS GIVEN BY THE ASSES SEES AND THE DONOR , FAILURE OF THE RESPECTIVE ASSESSEES TO IDENTIFY THE DONOR CORRECTLY IN THE INITIAL PHASES OF THE ASS E SSMENT, AND THEIR INAB I LITY TO IDENTIFY CLOSE RELATIVES OF THE DONOR . HOWEVER, I T REMAINS A FAC T THAT SHRI SAMPATH KUMAR HAD APPEARED AND CONFIRMED THE GIFT AND ALSO EXPLAINED THAT HE W A S MAKING SUCH GIFTS ON ACCOUNT OF HIS RELATIONSHIP WITH SHRI A . SRINIVASAN . NO DOUBT , NONE OF THE ASSESSEES WE R E ABLE TO IDENTIFY THE CLOSE RELATIVES OF THE DONOR WHICH J USTIFIABLY WAS SUFF I CIE N T ENOUGH REASON TO AROUSE SUSPICION IN T H E MIND O F THE ASSESSING OFFICER. . ALSO IT CANNOT BE CONTROVERTED THAT RECEIPT OF MONE Y BY BANK CHE Q UES WOULD NOT BE A SUFFICIENT ENOUGH EVIDENCE TO GIVE CREDIBILITY TO A TRANSACTION OF T HE NATURE PUT FORWARD BY THE ASSESSEES. BUT NONE OF THESE WOULD BE SUFFICIENT EN OUGH TO COME T O A CONCLUSION THAT AMOUNTS WERE CONCEALED OR THE EXPLANATIONS FURNISHED WERE NOT BONA F I DE . THE RULES OF PREPONDERANCE OF PROBABILITY THAT ARE TO BE APPLIED TO ASSESSMENT PROCEEDINGS C ANNOT BE SO APPLIED QUA PENALTY PROCEEDINGS. THE RULES OF PROBABILITY WHEN APPLIED I N A P ENALTY PROCEEDING WOULD HAVE TO BE APPLIED WITH MOR E RIGOUR OF PREPONDERANCE , SO AS TO TILT THE BALANCE TO THE SIDE OF THE REVENUE IN AN ACCENTUATED MANNER . OTHERWISE, KEEPING THE PENALT Y PROCEEDINGS SEPARATE FROM THE ASSESSMENT PROCEEDING ITA NO.796 TO 798/MDS/2013 6 WOULD BECOME REDUNDANT . ASSESSEE S ' E XPLANATIONS REGARDING GIFTS WERE ALL REJECTED ON THE APPLICATION OF RULES OF PREPONDERANCE O F P ROBABILIT Y . BUT AS AFORESAID, THE SAME RULES CANNOT BE APPLIED JUST AS IT IS IN A PEN A L TY P ROCEEDING SINCE HERE WHAT IS TO BE VERIFIED IS THE BONA FIDE NATURE OF THE EXPLANATIONS AN D W HETHER THERE WAS ANY CONCEALMENT . THE TONE OF RECIPROCITY FOUND I N THE STATEMENT GIVEN BY SHRI SAMPATH KUMAR WOULD NOT BE SUFFICIENT ENOU G H TO COME TO A CONCLUSION THAT THE EXPLANATIONS GIVEN BY THE ASSESSEE COULD NOT BE SUBSTANTIATED BY IT . OF COURSE , TH E S UBSTANTIATION DONE MAY FALL SHORT OF THE REQUIREMENTS FOR PROVING THE CREDITS IN AN ASSESSMENT P ROCEEDING, BUT THIS WOULD NOT BE EQUIVALENT TO WHAT COULD BE AN INABILITY TO SUBSTANTIATE T HE C REDITS . TAKING THE ENTIRE GAMUT OF THE CASE INTO ACCOUNT , WE ARE OF THE OPINION THAT THERE WA S N O CASE FOR THE REVENUE THAT THE EXPLANATIONS OFFERED BY THE ASSESSEES WERE NOT BONA FID E OR T HERE WAS A CONCEALMENT . THUS THESE WERE NOT CASES WHICH WERE FIT FOR A LEVY OF PENALTY UN DER S. 271 (1 )(C) OF THE ACT . IN TAKING THIS VIEW, WE ARE FORTIF I ED BY THE DECISION OF THE DELHI BENCH O F TH I S TRIBUNAL IN THE CASE OF ADDL . CIT VS . PREM CHAND GARG (SUPRA) AND THAT OF THE HON ' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. BALBIR SINGH (BOTH CI TED SUPRA). WE THEREFORE HAVE NO HESITATION TO DELET E SUCH L E V Y OF PENA L TY. 6. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL CITED ABOVE AND FOR THE REAS ONS MENTIONED THEREIN, WE DELETE THE PENALTY LEVIED IN THE CASE OF THE ASSESSEE ALSO. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, TH E 28 TH DAY OF FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) (CHALLA NAGEN DRA PRASAD) ACCOUNTANT MEMBER JUDI CIAL MEMBER CHENNAI, DATED THE 28 TH FEBRUARY, 2014. SOMU ITA NO.796 TO 798/MDS/2013 7 COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R (3) CIT (6) G.F.