Dr. Pritam Singh Dhaliwal, Muktsar V. The Income Tax Officer, Muktsar

ITA 95/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8893 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Gift; Rule of consistency
• Section: 69C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.95(ASR)/2014 ASSESSMENT YEAR:2005-06 PAN: AASPD3420F DR. PRITAM SINGH DHALIWAL, VS. INCOME TAX OFFICER, MUKTSAR. WARD III(2), MUKTSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. ASHWANI KALIA, CA RESPONDENT BY:SH. S.S. KANWAL, DR DATE OF HEARING: 12/01/2016 DATE OF PRONOUNCEMENT: 01/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005-06 AGAINST THE ACTION OF THE LD. CIT(A), CONFIRMING TH E PENALTY OF RS.45,900/- UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, ( IN SHORT, THE ACT). 2. THE FACTS ARE THAT AS PER THE ASSESSMENT ORDER, THE AO NOTICED THAT THE ASSESSEE HAD MADE THE FOLLOWING PAYMENTS FOR TH E HIGHER EDUCATION OF HIS DAUGHTER, MS. RAMNIK KAUR: 04.08.2004 RS. 50,000/- 04.08.2004 RS. 50,000/- 06.08.2004 RS. 50,000/- 06.08.2004 RS. 50,000/- 09.08.2004 RS. 50,000/- 09.08.2004 RS. 50,000/- 11.08.2004 RS. 45,000/- 11.08.2004 RS. 45,000/- 11.08.2004 RS. 45,000/- RS. 4,35,000/- IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 2 SINCE THIS EXPENDITURE DID NOT FIND MENTION IN THE INCOME TAX RETURN OF THE ASSESSEE, THE AO INITIATED PROCEEDING S UNDER SECTION 147 OF THE ACT. THE ASSESSEE EXPLAINED THAT THE EXPENSES O N THE EDUCATION OF THE DAUGHTER OF THE ASSESSEE WERE MET OUT OF GIFTS OF RS.4,35,000/- RECEIVED FROM VARIOUS RELATIVES AND THAT BESIDES C ERTAIN EXPENSES WERE INCURRED BY HIS WIFE AND MADE OUT OF HUF FUNDS. TH E AO ACCEPTED ALL THE GIFTS, EXCEPT THAT OF RS.50,000/- EACH GIFTED B Y SH. KULDEEP SINGH S/O SH. MUKHTIAR SINGH, ON 04.08.2004, 06.08.2004 AND 0 9.08.2004, TOTAL AMOUNTING TO RS.1,50,000/-. BEFORE THE AO, IT WAS S UBMITTED BY SH. KULDEEP SINGH THAT HE WAS AN AGRICULTURIST OWNING ABOUT 12 ACRES OF AGRICULTURAL LAND TO SELL AGRICULTURAL PRODUCE OF A BOUT RS.5,00,000/- PER ANNUM. HOWEVER, HE COULD NOT ADDUCE ANY EVIDENCE W ITH REGARD TO SALE OF AGRICULTURAL PRODUCE, THE AO OBSERVED THAT HE WA S ALSO AVAILING OF LIMIT FROM PUNJAB & SIND BANK, FARIDKOT. CONSIDERIN G THE FAMILY COMPOSITION OF SH. KULDEEP SINGH AND THE FACT THAT HE WAS A DISTANT RELATIVE OF THE ASSESSEE, THE AO HELD THAT SH. KUL DEEP SINGH WAS NOT IN A POSITION TO MAKE A GIFT OF RS.1,50,000/-. HE HEL D THAT THE ALLEGED GIFT WAS NOT GENUINE AND IN FACT, IT WAS THE UNDISCLOSED INCOME OF THE ASSESSEE, TO WHICH A COLOUR OF GENUINENESS HAD TRI ED TO BE GIVEN. ACCORDINGLY, THE AO ADDED THE AMOUNT OF RS.1,50,000 /- TO THE INCOME OF THE ASSESSEE. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). HOWEVER, LATER ON THE SAME WAS WITHDRAWN. IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 3 3. IN THE PENALTY PROCEEDINGS, THE ASSESSEE CONTEND ED THAT THE GIFTS HAVING BEEN RECEIVED BY THE DAUGHTER OF THE ASSESS EE FROM A NON- RELATIVE, THE SAME FORMED HER INCOME IN VIEW OF THE PROVISIONS OF SECTION 56(2)(VI) AND THAT IT WAS NOT UNEXPLAINED EXPENDITU RE OF THE ASSESSEE U/S 69C OF THE ACT. THE AO, HOWEVER, REFUSED TO ACCEPT THE ASSESSEES EXPLANATION AND HE IMPOSED A PENALTY OF RS.45,900/ - ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY ON THE ASSESSEE. AGGREIVED, THE ASSESSEE IS IN APPEAL BEFORE THIS BENCH, BY WAY OF HE PRESENT APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE AUTHORITIES BELOW HAVE WRONGLY AND INORDINATELY TAKEN THE FACT UM OF WITHDRAWAL OF THE QUANTUM APPEAL BY THE ASSESSEE TO GO AGAINST T HE ASSESSEE. IT IS CONTENDED THAT THE APPEAL WAS WITHDRAWN BY THE ASSE SSEE TOWARDS THE END OF FINISHING THE LITIGATION. IT HAS BEEN CONTE NDED THAT OTHERWISE, THE VERY ADDITION WAS WRONGLY MADE IN THE HANDS OF THE ASSESSEE AND THE SAME WAS, IN FACT, IT AT ALL, ASSESSABLE IN THE HA NDS OF THE DAUGHTER OF THE ASSESSEE WHO WAS THE ACTUAL RECIPIENT OF THE GIFTS AND NOT IN THE HANDS OF THE ASSESSEE. IT HAS ALSO WRONGLY WEIGHED WITH THE TAXING AUTHORITIES THAT INITIALLY, THE GIFT WAS STATED TO BE FROM A RELATIVE AND THAT LATER ON, IT WAS STATED TO BE FROM A NON-RELATIVE. THE CONTENTION ON BEHALF OF THE ASSESSEE IS THAT THIS WAS MERELY DUE TO THE FACT THAT DESPITE THE GIFT HAVING BEEN MADE BY THE FIRST COUSIN OF THE ASSESSE E TO THE DAUGHTER OF IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 4 THE ASSESSEE, THIS RELATIONSHIP OF FIRST COUSIN IS NOT RECOGNIZED U/S 56(2)(VI) OF THE ACT, TO BE A RELATIVE OF THE RECI PIENT OF THE AMOUNT. IT HAS FURTHER BEEN CONTENDED THAT MOREOVER, THE AO HAD H IMSELF ACCEPTED THAT THE GIFT WAS RECEIVED BY MS. RAMNIK KAUR, DAUGHTER OF THE ASSESSEE AND THERE WAS NO OCCASION TO MAKE THE ADDITION IN THE H ANDS OF THE ASSESSEE. IT HAS BEEN SUBMITTED THAT THEREFORE, THERE WOULD B E OCCASION OF LEVY OF PENALTY ON THE ASSESSEE. IT HAS ALSO BEEN SUBMITTE D THAT IN THE SUBSEQUENT YEAR, THE LD. CIT(A), WHILE DECIDING THE QUANTUM APPEAL PERTAINING TO GIFT OF RS.45.000/- FROM THE SAME DON OR, HELD THE AMOUNT TO BE ASSESSABLE UNDER SECTION 56(2)(VI), BEING A GIFT FROM A NON-RELATED PERSON; AND THAT FOR THAT YEAR NO CONCEALMENT PENAL TY WAS LEVIED ON THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. DR HAS STRONGLY RELIE D ON THE IMPUGNED ORDER, CONTENDING THAT AS RIGHTLY HELD BY THE LD. C IT(A), FIRSTLY, THE ASSESSEE HAS BEEN CHANGING STANDD IN AS MUCH AS EAR LIER, IN THE QUANTUM PROCEEDINGS UPTO THE FIRST APPELLATE STAGE, IT HAS BEEN MAINTAINED THAT THE DONOR, SH. KULDEEP SINGH WAS A RELATIVE OF THE ASSESSEE, WHEREAS IN THE PENALTY PROCEEDINGS, IT WA S ARGUED THAT THE GIFT WAS FROM A NON-RELATIVE; THAT EVERY YEAR IS AN INDE PENDENT YEAR AND THE PRINCIPLE OF RES-JUDICATA IS NOT APPLICABLE TO IN COME TAX PROCEEDINGS; THAT THE GIFT ALLEGEDLY RECEIVED FROM SH. KULDEEP S INGH WAS NOT GENUINE AND THE ASSESSEE HAD MADE THE EXPENDITURE ON THE HI GHER EDUCATION OF HIS DAUGHTER AMOUNTING TO RS.1,50,000/- FROM HIS UN DISCLOSED INCOME. IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 5 7. I HAVE HEARD THE PARTIES AND HAVE PERUSED THE MA TERIAL ON RECORD. THE LD. CIT(A)S OBSERVATION THAT SINCE THE AO HAD HELD THAT THE EXPENDITURE HAD BEEN INCURRED BY THE ASSESSEE OUT O F HIS UNDISCLOSED INCOME AND HE ASSESSEE HAD WRONGLY ALLEGED THAT THE AMOUNT OF RS.1,50,000/- HAD BEEN RECEIVED AS GIFT FROM SH. KU LDEEP SINGH, IS NOT DETRIMENTAL TO THE CASE OF THE ASSESSEE. THIS IS S O, BECAUSE AS PER THE PROVISIONS OF SECTION 56(2)(VI) AND PROVISO (A) THE RETO, INCOME SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES, WHERE ANY SUM OF MONEY EXCEEDING RS.50,000/- IS REC EIVED WITHOUT CONSIDERATION BY AN INDIVIDUAL OR HUF, BUT IT SHALL NOT BE SO, IF THE RECEIPT IS FROM ANY RELATIVE. FOR FACILITY, THE SA ID PROVISION PER SE IS REPRODUCED AS UNDER: 56(2): IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB-SECTION (1), THE FOLLOWING INCOME S, SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES, NAMELY:- .. VI) WHERE ANY SUM OF MONEY, THE AGGREGATE VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, IS RECEIVED WITHOUT CONSIDERATION, BY AN INDIVIDUAL OR A HUF IN ANY PREVIOUS YEAR FROM ANY PERSON OR PERSONS ON OR AFTER IST DAY OF APRIL, 2006, BUT BEF ORE THE IST DAY OF OCTOBER, 2009, THE WHOLE OR AGGREGATE VALUE OF SUCH SUM; .. PROVIDED THAT THIS CLAUSE WAS NOT APPLIED TO ANY SUM OF MONEY RECEIVED.. A) FROM ANY RELATIVE; 8. THE PROVISION IS EXPLICIT. IT TALK OF INCOME OF THE INDIVIDUAL, I.E., RECIPIENT. THEREFORE, ASSESSMENT IF ANY, IN THE PRE SENT CASE, HAD TO BE MADE IN THE HANDS OF THE RECIPIENT OR THE INDIVIDU AL, I.E., MS. RAMNIK IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 6 KAUR, THE DAUGHTER OF THE ASSESSEE. THIS, HOWEVER, WAS NOT DONE AND THE AMOUNT WAS ASSESSED AS THE UNDISCLOSED INCOME OF TH E ASSESSEE. 9. IN THESE FACTS, EVEN THE FACTUM OF WITHDRAWAL OF APPEAL BY THE ASSESSEE CANNOT BE SAID TO ACT CONTRARY TO THE INTE RESTS OF THE ASSESSEE, IN THE FACE OF THE CLEAR-CUT PROVISION OF SECTION 5 6(2)(VI), PROVISO (A) OF THE ACT, AS DISCUSSED HEREINABOVE. NOW, THE OBTAINING SITUATION REMAINS THAT SINCE THE ASSESSEE PREFERRED TO WITHDRAW THE Q UANTUM APPEAL FILED BY HIM, THOUGH FOR THE REASON OF FINISHING OFF THE DESPITE, THEREBY LENDING FINALITY TO THE ASSESSMENT, THIS CANNOT HAV E ANY ADVERSE EFFECT ON THE ASSESSEE IN THE PENALTY PROCEEDINGS. EVIDENTLY, PENALTY PROCEEDINGS ARE QUITE DISTINCT AND SEPARATE FROM ASSESSMENT PRO CEEDINGS. THE LEVY OF PENALTY NEEDS TO BE DECIDED IN THE TENOR ON THE BASIS OF THE ASSESSMENT ON A STAND ALONE BASIS. THOUGH THE OBSERVATIONS IN THE ASSESSMENT ORDER MIGHT HAVE BEARING ON THE LEVY OF PENALTY, THEY ARE NOT DETERMINATIVE OF SUCH LEVY, MORESO IN THE PRESENT CASE, AS DISCUSSED . THE FACTUM OF THE ASSESSMENT HAVING BEEN MADE AGAINST THE ASSESSEE DO ES NOT AUTOMATICALLY LEAD TO LEVY OF CONCEALMENT PENALTY. 10. IN THIS REGARD, IT IS ALSO PERTINENT TO NOTE TH AT THE AO, IN THE ASSESSMENT PROCEEDINGS, HAD SUMMONED THE DONOR SH. KULDEEP SINGH, WHO HAD ADMITTED OF THE RELATIONSHIP OF FIRST COUS IN OF THE ASSESSEE, AS WELL AS THE FACTUM OF HAVING GIVEN THE AMOUNT OF R S.1,50,000/- TO THE DAUGHTER OF THE ASSESSEE. IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 7 11. I ALSO DO NOT FIND THE LD. CIT(A) TO BE CORREC T, WHEN HE OBSERVED THAT THE ASSESSEE HAS BEEN TAKEN SHIFTING STANDS, I .E., INITIALLY STATING THE GIFT TO BE FROM A RELATIVE AND THEN CONTENDING THAT IT WAS FROM A NON- RELATIVE. IT REMAINS UNDISPUTED THAT SH. KULDEEP SI NGH, THE DONOR, IS THE FIRST COUSIN OF THE ASSESSEE. AS SUCH, HE IS A CLOS E RELATIVE OF THE ASSESSEE. HOWEVER, APROPOS THE DAUGHTER OF THE AS SESSEE, ACCORDING TO THE PROVISIONS OF SECTION 56(2)(VI), THE EXPLANATIO N OF WHICH PROVISION DESCRIBES RELATIVE FOR THE PURPOSE OF THE SAID SE CTION AS FOLLOWS: EXPLANATION- FOR THE PURPOSES OF THIS CLAUSE, RELA TIVE MEANS (I) SPOUSE OF THE INDIVIDUAL; (II) BROTHER OR SISTER OF THE INDIVIDUAL; (III) BROTHER OR SISTER OF THE SPOUSE OF THE INDIVIDUAL; (IV) BROTHER OR SISTER OF EITHER OF THE PARENTS OF THE I NDIVIDUAL; (V) ANY LINEAL ASCENDANT OR DESCENDANT OF THE INDIVIDUA L; (VI) ANY LINEAL ASCENDANT OR DESCENDANT OF THE SPOUSE OF THE INDIVIDUAL; (VII) SPOUSE OF THE PERSON REFERRED TO IN CLAUSES (II) TO (VI); SH. KULDIP SINGH IS NOT HER RELATIVE ACCORDING TO THIS SECTION, AS HE IS NOT COVERED IN ANY OF THE CLAUSES (I) TO (VII) OF I TS EXPLANATION. THUS, ACTUALLY, THERE IS NO SHIFTING OF STANDS BY THE AS SESSEE, THOUGH IT APPEARS TO BE SO AND AT FIRST SIGHT. SH. KULDIP SI NGH IS A CLOSE RELATIVE OF THE ASSESSEE, BUT THE GIFT MADE BY HIM IS NOT EXEMP T FROM TAX UNDER THE SPECIFIC PROVISIONS OF SECTION 56(2)(VI) OF THE ACT , AS HE IS NOT COVERED WITHIN THE DEFINITION OF RELATIVE AS PER THE SAID PROVISION. 12. SO FAR AS REGARDS THE OBSERVATION OF THE LD. CI T(A) THAT EVERY YEAR IS INDEPENDENT AND SEPARATE AND THE PRINCIPLE OF RES JUDICATA IS NOT IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 8 APPLICABLE TO INCOME TAX PROCEEDINGS, THIS OBSERVAT ION DOES NOT AID THE CASE OF THE DEPARTMENT, IN AS MUCH AS THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE UNDISPUTEDLY EXACTLY IN PARI MATE RIA WITH THOSE OF ASSESSMENT YEAR 2007-08 WHEREIN, THE LD. CIT(A) HA S CONFIRMED THAT IF AT ALL ANY ADDITION WAS CALLED FOR, IT COULD HAVE B EEN MADE U/S 56(2)(V) OF THE ACT AND NO PENALTY GETS LEVIED. THIS POSITION HAS NOT BEEN SHOWN TO BE ANY DIFFERENT IN THE TWO YEARS AND, THEREFORE, I T IS THE PRINCIPLE OF CONSISTENCY, WHICH APPLIES IN FAVOUR OF THE ASSESS EE AND THAT OF RES JUDICATA DOES NOT OBSTRUCT THE ASSESSEES PATH. 13. IN VIEW OF THE ABOVE DISCUSSION, FINDING THE GR IEVANCE OF THE ASSESSEE TO BE JUSTIFIED, THE SAME IS HEREBY ACCEPT ED. THE ORDER OF THE LD. CIT(A) IS REVERSED. THE LEVY OF PENALTY IS CANCELLE D. 14. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/02/2016 . SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 01/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:DR. PRITAM SINGH DHALIWAL, MUKTSAR. 2. THE ITO, MUKTSAR 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER IT NO.95(ASR)/2014 ASSTT. YEAR: 2005-06 9 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.