Shri Bhanubhai S.Parmar, Bhavnagar V. The Income tax Officer,Ward-2(3), Bhavnagar

ITA 9/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76747 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 29-05-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2011
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Keywords: Gift
• Section: 131; 68; 6

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 9/AHD/2011 ASSESSMENT YEAR: 2005-06 SHRI BHANUBHAI S. PARMAR PROP. OF M/S. JIBRIL AGENCY SANTKANVARAM CHOWK, OPP.PARK AVENUE, BHAVNAGAR. PAN: AHNPP1473D VS INCOME TAX OFFICER, WARD-2(3), BHAVNAGAR. )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI JAGDISH, SR. DR ASSESSEE(S) BY : MS. URVASHI SHODHAN, AR $'. / 0'/ // / DATE OF HEARING : 29/05/2014 123 / 0' / DATE OF PRONOUNCEMENT : 06/06/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XX, AHMEDABAD DATED 11.10.2010. 2. THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS TH AT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE PENALTY OF RS 9,03,648/- U/S. 271(1) (C) OF THE INCOME TAX ACT, 1961. ITA NO. 9/AHD/2011 SHRI BHANUBHAI S. PARMAR, BHAVNAGAR AY 2005-06 - 2 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INSTANT CASE, PENALTY U/S. 271(1)(C) OF RS 9,03,648/- WAS LEVIED BY THE ASSESSING OFFICER ON THE GROUND OF ADDITION OF RS 27,00,000/- MADE IN THE ASSESSMENT U/S. 68 OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS CLAIMED TO HAVE RECEIVED GIFT OF RS 27,00,000/- FROM NINE PERS ONS DURING THE RELEVANT YEAR. ACCORDING TO THE ASSESSING OFFICER, MRS. DEE PTIBEN VORA COULD NOT APPEAR BEFORE HIM ON THE GROUND OF BAD HEALTH AND I N ABSENCE OF MRS. DEEPTIBEN VORA, AVAILING OF CASH WITH HER ON THE DA TE ON WHICH CASH WERE DEPOSITED IN HER BANK ACCOUNT COULD NOT BE VERIFIED . IN RESPECT OF MR. HASITKUMAR SHAH, THE ASSESSING OFFICER OBSERVED THA T HIS IDENTITY COULD NOT BE ESTABLISHED AND IN ABSENCE OF DETAILS ABOUT HIS BUSINESS OR PROFESSION IN THE GIFT DECLARATION AS WELL AS IN ABSENCE OF DECLA RATION ABOUT THE ANNUAL INCOME IN THE GIFT DEED, IT IS DIFFICULT TO RECOGNI ZE THE CLAIM. 4. IN RESPECT OF SEVEN DONORS FROM WHOM THE ASSESS EE CLAIMED TO HAVE RECEIVED AGGREGATE GIFT OF RS 13,00,000/- THER E IS ABSOLUTELY NO DISCUSSION IN THE PENALTY ORDER. ON THE ABOVE REAS ONING, THE ASSESSING OFFICER LEVIED PENALTY IN RESPECT OF ADDITION OF RS 27,00,000/- U/S. 68 WHICH ADDITION WAS ALSO CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 5. ON APPEAL AGAINST THE LEVY OF PENALTY BEFORE TH E COMMISSIONER OF INCOME TAX (APPEALS), THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED LEVY OF PENALTY. 6. BEFORE US, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED COPIES OF STATEMENT RECORDED BY THE ASSESSING OFFIC ER OF SEVEN DONORS MAKING AGGREGATE GIFT OF RS 13,00,000/- AND POINTED OUT THAT EACH OF THE SEVEN DONORS APPEARED BEFORE THE ASSESSING OFFICER AND IN HIS STATEMENT RECORDED U/S. 131 CONFIRMED MAKING OF GIFT BY THEM TO THE ASSESSEE. SHE ALSO POINTED OUT THAT ALL THE ABOVE SEVEN PERSONS A S WELL AS MRS. DEEPTIBEN ITA NO. 9/AHD/2011 SHRI BHANUBHAI S. PARMAR, BHAVNAGAR AY 2005-06 - 3 - VORA MAKING GIFT OF RS 4,00,000/- ARE INCOME TAX AS SESSEE AND THEY ALL ARE HAVING PERMANENT ACCOUNT NUMBER (PAN) AND MADE THE GIFT FROM THEIR BANK ACCOUNT, COPIES OF WHICH ARE ALSO FILED IN THE PAPE R BOOK. 7. IN SUPPORT OF NINTH PERSON MR. HASITKUMAR SHAH, COPY OF PASSPORT WAS FILED BEFORE THE ASSESSING OFFICER COP Y OF WHICH IS ALSO PLACED AT PAGE NO. 96 TO 98 OF THE PAPER BOOK FILED BEFORE US. THUS, SHE CONTENDED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN ALLEG ING THAT IDENTITY OF THE SAID TWO DONORS WAS NOT ESTABLISHED. SHE SUBMITTED THAT THE GIFT AMOUNT CAME FROM DUBAI THROUGH PROPER BANKING CHANNEL AND THAT IT WAS ALSO SUPPORTED BY THE DECLARATION OF GIFT EXECUTED BY MR. HASITKUM AR SHAH. SHE POINTED OUT THAT NO MATERIAL AFTER MAKING INQUIRY COULD BE BROU GHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE GIFT WAS BOGUS A ND THE AMOUNTS WERE IN FACT ACTUAL INCOME OF THE ASSESSEE. THE ADDITION W AS MADE UNDER A DEEMING PROVISION OF SECTION 68 OF THE ACT AND THEREFORE, L EVY OF PENALTY U/S. 271(1)(C) IN RESPECT OF THESE ADDITIONS MADE U/S. 6 8 WAS NOT JUSTIFIED. SHE ALSO RELIED UPON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF VASANTLAL AMRUTLAL DORIWALA (HUF) VS. ITO WARD-5(2) , SURAT FOR ASSESSMENT YEAR 2005-06 PASSED IN ITA NO. 19/AHD/2013 VIDE ORD ER DATED 23.08.2013. 8. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 9. WE FIND THAT THERE IS ABSOLUTELY NO DISCUSSION IN THE PENALTY ORDER IN RESPECT OF GIFT OF RS 13,00,000/- RECEIVED FROM FOLLOWING SEVEN PERSONS SR.NO. NAME OF THE DONOR AMOUNT OF GIFT 1 MR. RASHMIBEN SHAH 709, MADHAV HILL, BHAVNAGAR. 2,00,000/- 2 MS.HIRALBEN SHAH 709, MADHAV HILL, BHAVNAGAR. 2,00,000/- ITA NO. 9/AHD/2011 SHRI BHANUBHAI S. PARMAR, BHAVNAGAR AY 2005-06 - 4 - 3 MR. PRADEEPKUMAR VORA, KISHAN KANAIYA, BHAVNAGAR. 4,00,000/- 4 MRS. REKHABEN GOSAI, BADANI DELI, BHAVNAGAR. 1,00,000/- 5 MR.RAVINDRAGIRI GASAI BADANI DELI, BHAVNAGAR. 1,00,000/- 6 MR. RAJUBHAI PATEL SITARAM KRUPA 33/B, BHAVNAGAR. 1,50,000/- 7 MRS. GEETABEN PATEL SITARAM KRUPA 33/B BHAVNAGAR 1,50,000/- AS TO WHY THE ASSESSING OFFICER WAS SATISFIED THAT THE SAME REPRESENTS CONCEALED INCOME OF THE ASSESSEE AND THEREFORE, LIA BLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. IN OUR CONSIDERED VIEW, SUC H AN ORDER OF PENALTY IS UNSUSTAINABLE. 10. FURTHER, IN OUR CONSIDERED VIEW, PENALTY PROCE EDING IS DIFFERENT FROM ASSESSMENT PROCEEDING AND THE CONSIDERATIONS W HICH APPLY IN PENALTY PROCEEDING IS DIFFERENT FROM THE CONSIDERATIONS THA T APPLY IN AN ASSESSMENT PROCEEDING. 11. THE TRIBUNAL IN THE CASE OF VASANTLAL AMRUTLAL DORIWALA (HUF) (SUPRA) HAS HELD AS UNDER: 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A CASE WHERE TH E ASSESSEE HAS NOT OFFERED ANY EXPLANATION. FACTS OF THE CASE HAVE REV EALED THAT THE DECLARATION OF GIFT WAS FILED BY THE ASSESSEE. COPI ES OF THOSE DECLARATIONS ARE FURNISHED BEFORE US IN A COMPILATI ON. FURTHER, THE ASSESSEE HAS PLACED ON RECORD THE COPY OF THE BANK ACCOUNT WHEREIN THE GIFTED AMOUNT WAS CREDITED. THE ASSESSEE HAS AL SO FURNISHED THE PHOTOCOPIES OF THE RETURN FILED BY THOSE DONORS. WI TH THIS FACTUAL BACKGROUND, WE HAVE CAREFULLY PERUSED THE DECISION OF NATIONAL TEXTILES (GUJ) (SUPRA), WHEREIN THE COURT HAS OBSER VED THAT 'IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTORS MUST CO -EXIST, (I) THERE MUST ITA NO. 9/AHD/2011 SHRI BHANUBHAI S. PARMAR, BHAVNAGAR AY 2005-06 - 5 - BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE RE ASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSES SEE'S INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOU NT HAS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS I.E., CONSCIOUS CONCEALMENT OR ACT OF FU RNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE' AND 'IN ORDER TO JUSTIFY LEVY OF PENALTY FOR ADDITION OF CASH CREDIT S, THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO REASONABLE CON CLUSION THAT THE AMOUNT DOES REPRESENT ASSESSEE'S INCOME AND THE CIR CUMSTANCES MUST SHOW THAT THERE WAS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS; EXPLN. 1 DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE'. THIS PENALTY HAS BEEN LEVIED BY I NVOKING THE DEEMING PROVISIONS UNDER SECTION 68 OF THE IT ACT. THOSE DEEMING PROVISIONS CANNOT BE EXTENDED TO HOLD THAT THE ASSE SSEE HAS CONCEALED THE INCOME ESPECIALLY WHEN THE ASSESSEE HAS PLACED ON RECORD CERTAIN EVIDENCES SUCH AS GIFT DECLARATIONS AND BANK ACCOUN TS TO SHOW THAT THE GIFT WAS RECEIVED UNDER BONA FIDE BELIEF THAT THE S AME WAS A GENUINE GIFT. ALTHOUGH, IT WAS TAXED DURING ASSESSMENT PROC EEDINGS BUT THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED AU TOMATICALLY. PLACING RELIANCE ON THE DECISIONS CITED HEREINABOVE , WE HEREBY REVERSE THE FINDING OF THE AUTHORITY BELOW AND DIRECT TO DE LETE THE PENALTY. THE GROUND IS ALLOWED. 12. IN THE INSTANT CASE, WE FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE AM OUNT ADDED U/S. 68 IN THE ASSESSMENT PROCEEDINGS REPRESENTS THE ACTUAL CO NCEALED INCOME OF THE ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, THE P ENALTY LEVIED IN RESPECT OF ENTIRE ADDITION OF RS 27,00,000/- IS UNSUSTAINABLE. WE, THEREFORE, DELETE THE PENALTY OF RS 9,03,648/- LEVIED U/S. 271(1)(C) OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 6 TH OF JUNE, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 30/ /06/06/2014 GHANSHYAM MAURYA, SR. P.S.