Smt Kokilaben A Shah, Ahmedabad V. The Income tax Officer Wd. 3(2), Ahmedabad

ITA 904/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0274 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 24-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained cash credit; Gift
• Section: 271(1)(c); 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGARWAL, A.M.) I.T.A. NO. 904/AHD./2009 ASSESSMENT YEAR : 2003-2004 SMT. KOKILABEN A. SHAH, AHMEDABAD -VS.- INCOME TAX OFFICER, WARD-3(2), AHMEDABAD (P.A. NO. ADKPS 5839 G) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI M.G. PATEL RESPONDENT BY : SMT. SMITI SAMANT O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) -VII, AHMEDABAD DATED 12-02- 2009 FOR THE ASSESSMENT YEAR 2003-2004 CONFIRMING T HE PENALTY OF RS.6,64,730/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE INCOME T AX ACT, 1961. ON AN APPLICATION BEARING NO. 27/AHD./2009 STAY WAS GRANTED BY THE HO N'BLE ITAT VIDE ORDER DATED 04.09.2009 AND THE REGISTRY WAS DIRECTED TO FIX THE APPEAL OF THE ASSESSEE ON 15.09.2009. 2. BRIEF FACTS INVOLVED IN THIS APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL (RESIDENT). DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER S ECTION 143(3) OF THE INCOME TAX ACT, THE A.O. ADDED RS.21,82,450/-, WHICH WAS RECEI VED AS GIFT BY THE ASSESSEE FROM SHRI RAHUL R. SUTARIYA, U.S.A. THROUGH BANK CHANNEL. THE A.O. TREATED THE SAID GIFT AS ALLEGED UNEXPLAINED CREDITS UNDER SECTION 68 AND ADDED TO T HE TOTAL INCOME OF THE ASSESSEE. ON FURTHER APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE SAID ADDITION. THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) IS ALSO CONFIRMED BY THE HON'BLE ITAT, B BENCH, AHMEDABAD VIDE ORDE R DATED 07.09.2007. 3. SUBSEQUENTLY, THE A.O. ISSUED SHOW-CAUSE NOTICE ASKING THE ASSESSEE WHY THE PENALTY UNDER SECTION 271(1)(C) SHOULD NOT BE LEVIE D FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME TO THE EXTENT O F RS.21,82,450/-. IN RESPONSE TO THIS, 2 BEFORE THE A.O. THE LD. COUNSEL OF THE ASSESSEE VID E LETTER DATED 18.03.2008 REPLIED AS UNDER :_ (1) PLEASE REFER TO THE NOTICE U/S. 271(1)(C) OF T HE ACT SERVED ON OUR CLIENT. (2) IN THIS CONNECTION, WE HAVE BEEN INSTRUCTED TO MAKE FOLLOWING SUBMISSIONS. (3) OUR CLIENT HAS NOT COMMITTED ANY DEFAULT U/S. 271(1)(C) OF THE ACT. (4) DURING THE YEAR OUR CLIENT HAS RECEIVED GIFT OF US $ 45,000/- EQUIVALENT TO RS.21,82,450/- FROM RAHULBHAI SUTARIA . THE AMOUNT IS REALIZED ON 25.07.2002. THE ADDITION IS MADE DURING ASSESSMENT PROCEEDING FOR THE ABOVE AMOUNT CONSIDERING THE ABO VE AMOUNT AS CASH CREDIT. (5) IN CONNECTION WITH THE GIFT RECEIVED BY OUR CLI ENT WE HAVE TO SUBMIT THAT THE GIFT IS RECEIVED THROUGH OFFICIAL B ANKING CHANNEL. WE HAVE ALREADY FILED BANK ADVISE FOR RECEIPT OF THE G IFT. (6) FURTHER WE HAVE ALREADY FILED COPY OF PASSPORT OF RAHULBHAI SUTARIA. WE HAVE ALSO FILED COPY OF INCOME TAX RETU RN OF RAHULBHAI SUTARIA. ALL THESE PAPERS PROVE BEYOND DOUBT THE ID ENTITY OF DONOR AS WELL AS CAPACITY OF DONOR. (7) IN ADDITION TO ABOVE WE HAVE ALSO FILED AFFIDAV IT OF RAHULBHAI SUTARIA CONFIRMING THE GIFT. (8) CUMULATIVE EFFECT OF ALL THE ABOVE PAPER IS THA T THE TRANSACTIONS OF GIFT IS PROVED. (9) THOUGHT THE AFFIDAVIT OF RAHULBHAI SUTARIA IS F ILED, NO WHERE HE HAS BEEN EXAMINED DURING THE ASSESSMENT PROCEEDINGS . (10) FURTHER OUR CLIENT HAD OFFERED IN PARAGRAPH 8 OF LETTER DATED 23.03.2006 TO CONFIRM THE TRANSACTION OF GIFT WITH RAHULBHAI SUTARIA AT THE COT OF OUR CLIENT. HOWEVER, AT NO POINT OF TIME DURING ASSESSMENT PROCEEDING, THE CONTACT WAS MADE WITH DONOR. (11) THUS ON THE ONE HAND ALL THE PAPERS IN SUPPORT OF GIFT IS FILED BY OUR CLIENT AND ON OTHER HAND, AT NO POINT OF TIME INQUI RY IS MADE WITH DONOR WHO HAD FILED AFFIDAVIT IN SUPPORT OF GIFT. 3 (12) THE TRANSACTION OF GIFT HAVING BEEN MADE THROU GH BANKING CHANNEL, THE SAME SHOULD BE ACCEPTED AS GENUINE. (13) AS ALL THE EVIDENCES ARE FILED BY OUR CLIENT, THERE AS NOT BEEN ANY CONCEALMENT OF INCOME NOR THERE IS FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THEREFORE, NO PENALTY SHOULD BE IMPOSED U/S. 271(1)(C) OF THE ACT. (14) IN VIEW OF THE ABOVE, WE HAVE TO REQUEST YOU T O DROP THE PROPOSED PENALTY PROCEEDING. 4. THE A.O. REJECTED THE AFORESAID EXPLANATION OF T HE ASSESSEE RELYING ON EXPLANATION 1(B) TO SECTION 271(1)(C) OF THE ACT, AS ACCORDING TO HIM THE ASSESSEE HAS NOT SUBSTANTIATED ITS EXPLANATION NOR PROVED ITS BONAFI DE AND THAT ALL FACTS MATERIAL TO THE COMPUTATION OF ASSESSEES TOTAL INCOME WERE NOT DIS CLOSED BY THE ASSESSEE. HE ACCORDINGLY LEVIED MINIMUM PENALTY OF RS.6,64,730/- , I.E. 100% OF TAX SOUGHT TO BE EVADED ON INCOME OF RS.21,82,450/-. 5. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), IT WAS SUBMITTED THAT THE HON'BLE GUJRAT HIGH COURT ADMITTED THE APP EAL OF THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL CONFIRMING THE ADDITION OF RS.21,82,450/-. IT WAS FURTHER SUBMITTED THAT ALL NECESSARY DETAILS ABOUT THE DONOR, WHO HAD GIFTED AN AMOUNT O F RS.21,82,450/- EQUIVALENT TO U.S. $ 45,000/- THROUGH BANK CHANNEL WERE FURNISHED. THE A .O. DISBELIEVED THE EXPLANATION OF THE ASSESSEE COMPLETELY IGNORING THE FACT THAT THE ASSE SSEE HAS FURNISHED THE BANK STATEMENT OF THE DONOR AND INCOME DETAILS OF THE DONOR. AFTER CONSID ERING THE SUBMISSION OF THE ASSESSEE, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF THE A.O. IMPOSING LEVY OF PENALTY OF RS.6,64,730/- ON T HE GROUND THAT THE ADDITION UNDER SECTION 68 OF THE ACT OF RS.21,82,450/- MADE BY THE A.O. IS NO T ONLY CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BUT ALSO THE TRIBUNAL. AGGRI EVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMING THE PENALTY OF RS .6,64,730/-, THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E SHRI M.G. PATEL APPEARED AND PRODUCED A COPY OF THE DECISION OF ITAT, B BENCH, AHEMEDABAD DATED 07.09.2007, WHEREBY IN QUANTUM APPEAL THE ADDITION OF RS.21,82,450/- IN RESPECT OF ALLEGED GIFT WAS CONFIRMED BY THE TRIBUNAL. 4 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT FROM THE PERUSAL OF THE SAID DECISION, IT CAN BE SEEN THAT TRIBUNAL HAS ACCEPTED THAT ASSESSEE HAS PROVED THE IDENTITY OF THE DONOR AND GENUINENESS OF THE TRANSACTION. THE TRIBUNAL MERELY CONFIRMED THE ADDITION BECAUSE ACCORDING TO IT, FINANCIAL CAPACITY OF THE DONOR AND CREDITWORTHINESS WAS NOT PROVED. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED A PAPER BOOK CONTAINING 116 PAGES, WHICH INTER ALIA INCLUDES THE FOLLOWING :_ (1) COPY OF CAPITAL ACCOUNT SHOWING GIFT OF RS.21 ,82,450/- RECEIVED (PAGE NO. 13); (2) LETTER OF A.O. CONFIRMING THE RELATIONSHIP OF T HE ASSESSEE WITH DONOR MORE THAN 35 YEARS, ADDRESS OF DONORS RELATIVES. FOLLOW ING DOCUMENTS WERE ALSO SUBMITTED :- (A) AFFIDAVIT DATED 28.02.2006 OF DONOR (AT PAGE 80); (B) PHOTOCOPY OF PASSPORT OF THE DONOR (PAGES 28 TO 34); (C) INCOME TAX RETURN (PAGES NO. 35-79) (3) BANK STATEMENT OF THE DONOR FOR 1.4.2003 TO 31. 3.2004; (4) PHONE NO. OF RAHULBHAI SUTARIYA, SO THAT A.O. C AN DIRECTLY CONTACT THE DONOR AT COST OF ASSESSEE. (5) DETAILS OF VISIT OF DONOR IN INDIA (PAGES 89 TO 91); (6)CERTIFICATE FROM HDFC BANK CERTIFYING OF FOREIGN INWARD REMITTANCE. (7) PNB BANK (USA) STATEMENT OF DONOR, RAHULBHAI SUTARIYA (AT PAGES 83 & 84). 7. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT B EFORE THE A.O. THE ASSESSEE HAS SUBMITTED THAT GIFT WAS RECEIVED FROM BANKING CHANNEL. PASSPO RT AND INCOME-TAX RETURN OF RAHULBHAI SUTARIYA (DONOR) WAS FURNISHED IN ORDER TO PROVE ID ENTITY AND CAPACITY OF THE DONOR. AN AFFIDAVIT WAS ALSO FILED. NO CROSS EXAMINATION OF THE DONOR W AS CALLED BY THE A.O. NO ENQUIRY WAS MADE DIRECTLY FROM THE DONOR. BEFORE THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS), THE ASSESSEE FILED WRITTEN SUBMISSION DATED 19.01.2009 (AT PAGES 109 TO 114 OF THE PAPER BOOK), WHEREIN IN PARA 2, THE ASSESSEE SUBMITTED AS UNDER :- 5 2. THE APPELLANT HAS DURING THE COURSE OF ASSESSME NT PROCEEDINGS, FULLY AND SATISFACTORILY EXPLAINED THE GENUINENESS OF THE GIFT RECEIVED BY THE APPELLANT FROM SHRI RAHUL R. SUTARIA. THE APPELLANT EXPLAINED THAT SHRI RAHUL R. SUTARIYA IS AN OLD FAMILY FRIEND SINCE MOR E THAN 35 YEARS. HE HAS SETTLED IN USA SINCE ABOUT 23 YEARS. IN THIS REGARD , THE APPELLANT ALSO SUBMITTED TO THE LD. ASSESSING OFFICER THE COPIES O F FOLLOWING PAPERS :- (I) COPY OF PASSPORT OF SHRI RAHUL R. SUTARIYA. (II) COPIES OF TAX RETURN PAPERS FILED BY SHRI RAHUL R. SUTARIYA WITH THE TAX AUTHORITIES IN USA AS UNDER : - (A) TAX RETURN FOR C.Y. 2003 SHOWING INCOME OF US $ 900 08. (B) TAX RETURN FOR C.Y. 2004 SHOWING INCOME OF US $ 996 65, (C) ESTIMATED TAX WORKSHEET FOR C.Y. 2005 SHOWING TAX PAYABLE OF US $ 4162. (III) AFFIDAVIT BY SHRI RAHUL R. SUTARIYA, EXECUTED BY HI M WHEN HE HAPPENED TO BE IN INDIA, TO CONFIRM THAT THE GIFT M ADE BY HIM TO THE APPELLANT. (IV) CERTIFICATE ISSUED BY THE HDFC BANK FOR FOREIGN INW ARD REMITTANCE RECEIVED FROM SHRI RAHUL R. SUTARIYA, LOUISVILLEKY 40245, USA DEBITING HIS BANK ACCOUNT NO. 0214008205FF WITH PNC BANK AND CREDITED TO BANK ACCOUNT NO. 0062070000657 OF THE A PPELLANT WITH HDFC BANK, NAVRANGPURA, AHMEDABAD. (V) BANK ADVICE BY HDFC BANK IN RESPECT OF AMOUNT OF RS .21,82,450/- (EQUIVALENT TO US $ 45000) CREDITED IN THE ACCOUNT OF THE APPELLANT. 8. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN AS SESSMENT PROCEEDINGS, THE ADDITION WAS MADE BY REJECTING THE APPLICATION OF ASSESSEE ON PR EPONDERANCE OF PROBABILITY BUT IN PENALTY PROCEEDING ONCE THE ASSESSEE HAS FURNISHED THE BASI C DETAILS, ONUS SHIFTS ON THE DEPARTMENT TO PROVE THAT EXPLANATION FURNISHED BY THE ASSESSEE IS FALSE. IN THIS CASE IN ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS, THE ASSESSEE HAS FU RNISHED COMPLETE DETAILS, WHICH WERE NOT FOUND FALSE, THEREFORE, IT IS NOT A FIT CASE TO CON FIRM THE PENALTY OF RS.6,64,730/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE ACT. 9. ON THE OTHER HAND, SMT. SMITI SAMANT, LD. DEPART MENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW SHE POINTED OUT THAT IN QUANTUM APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS WELL AS TRIBUNAL UPHELD T HE ADDITION OF RS.21,82,450/- MADE BY THE 6 A.O. UNDER SECTION 68. THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS OF INCOME. THEREFORE, PENALTY WAS RIGHTLY LEVIED AND CONFIRMED BY THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER. 10. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AU THORITIES BELOW AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT I N QUANTUM PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS, THE ASSESSEE HAS FURNISHED COMPLETE DE TAILS. THE IDENTITY OF THE DONOR WAS PROVED. THE AMOUNT OF GIFT WAS RECEIVED THROUGH NORMAL BANK ING CHANNEL. IN THESE CIRCUMSTANCES, ONUS IS CLEARLY SHIFTED ON THE DEPARTMENT TO PROVE THAT EXPLANATION FURNISHED BY THE ASSESSEE IS FALSE. AS A MATTER OF FACT NONE OF THE DEPARTMENTAL AUTHO RITIES BELOW MADE ANY ATTEMPT TO FIND OUT WHETHER THE EXPLANATION OF THE ASSESSEE IS FALSE. I N THE IDENTICAL FACTS, PENALTY UNDER SECTION 271(1)(C) WAS LEVIED IN CASE OF NOSHABEN H. JARIWAL A. THE TRIBUNAL, A BENCH, AHMEDABAD VIDE ORDER DATED 24.07.2009 IN ITA NO. 761/AHD/2009 FOR THE ASSESSMENT YEAR 2004-05 CANCELLED THE SAME FOR THE DETAILED REASONS IN PARA 4, WHICH ARE AS UNDER :- 4. WE HAVE CONSIDERED THE FACTS AND THE RIVAL SUBM ISSIONS. IN OUR VIEW ,THERE IS NO JUSTIFICATION FOR THE LEVY OF PENALTY. IT IS WELL SETTLED THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS, THOUG H CONSTITUTE GOOD EVIDENCE, CANNOT BE CONCLUSIVE IN THE PENALTY PROCE EDINGS. IT IS ALSO WELL SETTLED THAT THE ENTIRE EVIDENCE IN THE CASE HAS TO UNDERGO A REAPPRAISAL IN THE COURSE OF THE PENALTY PROCEEDINGS IN ORDER TO E STABLISH THE GUILT OF THE ASSESSEE AND THAT MERELY BECAUSE THE ADDITION HAS B EEN SUSTAINED BY THE TRIBUNAL IT DOES NOT AUTOMATICALLY FOLLOW THAT THE ASSESSEE CONCEALED HIS INCOME. IN THE PRESENT CASE, THE TRIBUNAL HAS OBSER VED THAT THE ASSESSEE WAS UNABLE TO ESTABLISH THE RELATIONSHIP BETWEEN HER AN D THE DONOR AS ERSTWHILE NEIGHBOURS AND THAT THERE WAS NO CORROBORATIVE EVID ENCE ABOUT THE CAPACITY OF THE DONORS. THESE ARE FINDINGS WHICH HAVE BEEN R ENDERED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THEY CANNOT BE HELD TO BE CONCLUSIVE IN THE COURSE OF THE PENALTY PROCEEDINGS. REFERENCE IN THI S CONNECTION MAY BE MADE TO THE JUDGMENTS OF THE SUPREME COURT IN THE C ASE OF KHODAY ESWARSA & SONS, 83 ITR 369 AN ANANTRAM VEERASINGIAH & SONS, 123 ITR 457. THE INCOME-TAX AUTHORITIES HAVE NOT DISPROVE THE ASSESS EES CLAIM THAT THE MONIES WERE RECEIVED BY HER FROM OVERSEAS THROUGH B ANKING CHANNELS. THERE IS ALSO NO EVIDENCE TO SHOW THAT THE MONIES W ERE THE ASSESSEES OWN MONIES BROUGHT IT IN THE FORM OF GIFTS. IT MAY BE T HAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONORS AS NEIGHBOURS W AS NOT ACCEPTABLE TO THE DEPARTMENT, IT MAY ALSO BE THAT THE ASSESSEE WA S UNABLE TO ADDUCE EVIDENCE TO PROVE THE FINANCIAL CAPACITY OF THE DON ORS. BUT THERE IS EVIDENCE TO SHOW THAT THE AMOUNTS CAME FROM ABROAD THROUGH B ANKING CHANNELS AND 7 THIS EVIDENCE HAS NOT BEEN IMPEACHED. THE FACT CANN OT ALSO BE IGNORED THAT IT WOULD BE EMBARRASSING FOR THE RECIPIENT OF THE G IFTS TO ASK THE DONORS TO PROVE THEIR FINANCIAL CAPACITY. THE ASSESSEE HAS AL SO ADDUCED THE CERTIFICATE ISSUED BY THE BANK OF BARODA CONFIRMING THE RECEIPT OF MONIES FROM THEIR INTERNATIONAL BUSINESS BRANCH. UNDER THESE CIRCUMST ANCES, AND WITHOUT ANYTHING MORE, IT CANNOT BE SAID THAT THE ASSESSEE ATTEMPTED TO CONCEAL HER INCOME. SHE HAD ADDUCED WHATEVER EVIDENCE THAT WAS IN HER POSSESSION IN SUPPORT OF THE GIFTS. SHE WAS MERELY UNABLE TO PROV E THE GIFTS IN THE MANNER REQUIRED BY THE DEPARTMENT. ON THESE FACTS, IT IS N OT POSSIBLE TO SAY THAT THE ASSESSEE CONCEALED HER INCOME. WE ARE, THEREFORE, I NCLINED TO CANCEL THE PENALTY. WE DIRECT ACCORDINGLY AND ALLOW THE ASSESS EES APPEAL. 11. THE FACTS OF ASSESSEES CASE ARE ALMOST IDENTIC AL WITH THAT OF THE CASE OF NOSHABEN H. JARIWALA IN ITA NO. 761/AHD./2009 (SUPRA). IN OUR C ONSIDERED VIEW, THE CASE OF THE REVENUE WOULD ALSO FALL UNDER EXPLANATION 1(B) OF SECTION 2 71(1)(C). FOR THE SAKE OF CONVENIENCE, WE REPRODUCE EXPLANATION 1 TO SECTION 271(1)(C) AS UND ER : [ EXPLANATION I. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, ( A ) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFE RS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO BE FALSE, OR ( B ) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. ADMITTEDLY, EXPLANATION 1(A) WOULD BE APPLICABLE IN THE PRESENT CASE BECAUSE THE ASSESSEE HAS FURNISHED AN EXPLANATION AND WHICH HAS NOT BEEN FOU ND TO BE FALSE. REGARDING EXPLANATION 1(B), THERE ARE THREE CONDITIONS REQUIRED TO BE SATISFIED CUMULATIVELY AND SIMULTANEOUSLY, THEY ARE (1) THE ASSESSEE OFFERS AN EXPLANATION, WHICH HE IS NOT ABLE TO SUBSTANTIATE; (2) HE FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE; AND (3) ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. UNLESS THE A.O. GIVES A FINDING ON THE BASIS OF MATERIAL ON RECORD THAT ALL THE THREE COND ITIONS ARE SATISFIED, PENALTY UNDER SECTION 271(1)(C) READ WITH EXPLANATION 1(B) CANNOT BE LEVI ED. IN OUR CONSIDERED VIEW, THE ASSESSEE HAD OFFERED AN EXPLANATION, WHICH ON THE FACE OF IT APP EARS TO BE BONAFIDE, INASMUCH AS, THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF THE PERSONS, WHO HAD GIVEN THE GIFTS AND THEY WERE NOT FOUND INCORRECT. THE ADDITION WAS MADE BY NOT BELIEVING O N THE EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF GIFTS. THERE IS NO FINDING THAT PARTI CULARS OF THE PERSONS GIVING GIFTS WERE INCORRECT 8 OR THAT THOSE DONORS HAD NOT GIVEN ANY GIFT TO THE ASSESSEE. THERE IS ALSO NO FINDING THAT IT WAS ASSESSEES OWN MONEY, WHICH WAS ROUTED THROUGH THE DONORS BACK TO HIM. THE LEVEL OF INQUIRIES AND EXTENT THEREOF AND THE MATERIAL BROUGHT ON RECO RD DID NOT INDICATE THAT EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT BONAFIDE OR THAT ANY MATERI AL FACT HAS NOT BEEN DISCLOSED BY THE ASSESSEE. PENALTY HAS BEEN LEVIED MERELY ON THE GROUND THAT A DDITION HAS BEEN CONFIRMED BY THE TRIBUNAL FOR THE REASON THAT CAPACITY OF THE DONOR AND CREDI TWORTHINESS WAS NOT PROVED, BUT THIS ALONE IS NOT SUFFICIENT TO COME TO THE CONCLUSION THAT THE G IFTS ARE BOGUS OR IT WAS ASSESSEES OWN MONEY. 12. IN THIS CASE, WE MAY REFER TO THE DECISION OF T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS.- CIT (2001) 249 ITR 125 (GUJ .), WHEREIN IT WAS HELD THAT MERE ADDITION MADE UNDER SECTION 68 BY NOT FINDING EXPLANATION OF THE ASSESSEE SATISFACTORY WOULD NOT JUSTIFY THE PENALTY UNDER SECTION 271(1)(C). THE HON'BLE MA DRAS HIGH COURT IN THE CASE OF CIT VS.- CAFCO SYNDICATE SHIPPING CO. [(2007) 294 ITR 134 (M AD.)] HELD THAT MERELY ON THE BASIS OF ADDITION OF INCOME BY DISALLOWING EXPENSES IS NOT C ONCEALMENT OF INCOME AND, THEREFORE, PENALTY CANNOT BE IMPOSED. THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF CIT -VS.- JALARAM OIL MILLS REPORTED IN (2002) 253 ITR 198 (GUJ.) HELD THAT ADD ITION TO INCOME UNDER SECTION 68 BY NOT ACCEPTING THE EXPLANATION REGARDING CREDIT IS NOT S UFFICIENT FOR LEVY OF PENALTY. THE REVENUE DID NOT ADDUCE ANY EVIDENCE TO PROVE CONCEALMENT OF INC OME. 13. IT IS CRYSTAL CLEAR THAT NO PENALTY FOR CONCEAL MENT OF INCOME CAN BE LEVIED BY MERELY DISBELIEVING ON THE EXPLANATION FURNISHED BY THE AS SESSEE. ONUS IS ON THE REVENUE TO ADDUCE SOME POSITIVE MATERIAL WHICH COULD SHOW THAT EITHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. FOR BRI NGING THE CASE WITHIN THE MEANING OF EXPLANATION 1(B), IT HAS TO BE FURTHER SHOWN THAT A LL THE THREE INGREDIENTS ARE SIMULTANEOUSLY SATISFIED. THERE HAS TO BE SOMETHING FOR COMPARISON TO PROVE THAT WHAT WAS CLAIMED BY THE ASSESSEE WAS FALSE OR INACCURATE OR NOT BONAFIDE. M ERE DISBELIEVING ON THE CLAIM MADE BY THE ASSESSEE IS NOT SUFFICIENT. 14. WE, THEREFORE, RESPECTFULLY FOLLOWING OUR DECIS IONS AND ALSO THE DECISION OF THE TRIBUNAL DATED 24.07.2009 AS REFERRED ABOVE HOLD THAT THIS I S NOT A FIT CASE TO CONFIRM THE PENALTY OF 9 RS.6,64,730/- UNDER SECTION 271(1)(C) OF THE ACT LE VIED BY THE A.O. WE ACCORDINGLY CANCEL THE SAME. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE COURT ON 16.10.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 / 10 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) SMT. KOKILABEN A SHAH, 502, PANCHKUWA,. AHMEABAD-38 0 002, (2) ITO, WARD-3(2), AHMEDABAD 3) CIT(A)- ,AHMEDABAD (4) CIT- ,AHMEDA BAD.(5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMED ABAD LAHA/SR.P.S.