Shri Dineshbhai P. Sorathia, Rajkot-Gujarat V. The Assistant Commissioner of Income Tax, Cen. Circle-1, Rajkot-Gujarat

ITSSA 102/RJT/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4888 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY ATRI
• Assessee Lawyers: DEEPAK RINDANI
• Keywords: Gift
• Section: 132; 271(1)(c); 274

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER IT(SS)A No.102/Rjt/2017 Assessment Year : 2005-06 Shri Dineshbhai Popatbhai Sorathia 501-506, Shilp Tower Tagore Road, Rajkot. PAN : AIOPS 1567 J Vs ACIT, Cental Circle Rajkot. अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri Deepak Rindani, AR Revenue by : Shri Ajay Atri, CIT-DR स ु नवाई क तार ख/Date of Hearing : 29/03/2022 घोषणा क तार ख /Date of Pronouncement: 31/03/2022 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the assessee against order dated 12.09.2017 passed by the Ld.Commissioner of Income-tax (Appeals)- 11, Ahmedabad [for short “Ld.CIT(A)] in appeal No.CIT(A)- 1/686R/CC-1/Raj/2014-15 by which he confirmed levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (“the Act” for short) relating to the assessment year 2005-06. 2. Brief facts of the case is that the assessee is an individual and partner in various firms, and also Director in Om Kirti construct P.Ltd. The assessee derives income from remuneration from firms, interest income and income from sale of land. There was a search action under section 132 of the Act at the residential premises of the assessee on 25.2.2011. During the course of search, a copy of bill no.1204 of Shilpa IT(SS)A No102/Rjt/2017 2 Life Style dated 3.12.2004 for purchase of 237.720 grams of gold jewellery was found and the said bill was in the name of the assessee. The value of the gold jewellery amounted to Rs.1,84,775/- for which payment was made in cash. This has been questioned by the Department. The assessee vide his reply dated 19.2.2013 submitted that it was not bill of Shilpa Life Style but a mere delivery receipt with payment details given by the said Shilpa Life Style on delivery of jewellery. The jewellery so collected was actually a gift made on the occasion of assessee’s daughter’s marriage on 9.12.2004 by her maternal grand-parents, and the name of the person collecting the jewellery was on the document and there was no reason to believe that the payment was made by the assessee, when the document was not even an invoice. The assessee further declared during the course of search a list of jewellery owned by him, contained details of gold weighing about 1330.320 and diamond of 4.17 carat in all, total valuing Rs.27,88,814/-. But the AO held that the assessee has not produced any documentary evidence in support of 237.72 grams of jewellery that these are gifts given by his in-laws on the occasions of his daughter’s marriage. Therefore, the AO initiated penalty proceedings for the reason of concealing particulars of income, accordingly issued notice under section 274 of the Act. 3. During the course of penalty proceedings, the assessee stated that appeal against the quantum addition was dismissed by the ld.CIT(A)-4, Ahmedabad vide his order dated 18.9.2014. However, to buy peace with the department, the assessee did not file further appeal before the Tribunal. The assessee further reiterated that this jewellery are nothing but given as gift by her maternal grandfather, and the assessee is nowhere connected with the purchase of jewellery from the said Shilpa Lifestyle. The assessee has also further pleaded that rejection of assessee’s explanation about the jewellery does not amount to concealment of income, and thus penalty under section 271(1)(c) of the Act does not get attracted, and requested to drop the same, and relied few judgments of IT(SS)A No102/Rjt/2017 3 Hon’ble high Courts. The above reply was not considered by the AO, and levied minimum penalty of Rs.56,542/-. Aggrieved, the assessee challenged the penalty order before the ld.CIT(A), who after hearing the assessee, confirmed by the impugned penalty. Hence, the assessee is in further appeal before the Tribunal. 4. We have given our thoughtful consideration on the matter; gone through both orders of the Revenue authorities and perused material available on record. During the course of search, from the seized material, the ld.AO a bill of Shilpa Life Style for the purchase of 237.720 grams of gold in the name of assessee valuing Rs.1,84,775/-. The assessee explained the same to be of gift by maternal grandfather given to his assessee-daughter during her marriage. The ld.AO disbelieved the same and treated the value of the jewellery of Rs.1,84,775/- as undisclosed income and added to the total income of the assessee. Thereafter, the AO initiated penalty proceedings by issuance of notice under section 274 of the Act, and after hearing imposed penalty of Rs.56,542/- under section 271(1)(c) of the Act. During the hearing before us, the ld.counsel for the assessee filed an affidavit duly sworn by daughter of the assessee, Komal Piyushkumar Sakariya, deposing as under: “I, the deponent named below namely Smt. Komal Piyushkumar Sakariya, Age 39 residing at Amidhara 1 Jay Park, Near Parnakutir Society, Nana Mava Road, Rajkot - 360001, do hereby solemnly state on oath as under: (1) That I am a daughter of Shri Dineshbhai Popatbhai Sorathia; (2) That I got married to Piyushkumar Sakariya on 09-12-2004 at Rajkot; (3) That I was shown a chit/paper no. 1204 dated 03-12-04 said to be issued by Shilpa Lifestyle, a photocopy of which is annexed hereto; (4) That I have examined the said chit/paper which shows details of jewellery; (5) That the items described in the aforesaid chit/paper was given to me by my maternal grandparents Hirjibhai Basida and Kuvarben H. Basida on the occasion of my marriage and that I had received the said jewellery at that time; (6) That I am aware that the said jewellery was purchased by my said maternal grandparents prior to my marriage and not by my parents; IT(SS)A No102/Rjt/2017 4 (7) That I have also been shown a copy of letter dated 19-2-2013 by my father addressed to the ACIT, Cebntrla Circle-1, Rajkot with Para (c) thereof of page 2 and I hereby confirm the said reply. Sd/- Komalben Piyushbhai Sakariya) 5. A perusal of para-5, 6 and 7 of the affidavit clearly reveal that the she has seen the bill and confirmed the contents therein by stating that jewellery was purchased by her maternal grandparents and gifted the same to her at the time of her marriage. This affidavit corroborates what was stated by the assessee during the penalty proceedings. This affidavit was not disputed by the Revenue. It is a well settled law that assessment proceedings and penalty proceedings are distinct and findings given in the assessment proceedings, though constitute good evidence, cannot be conclusive in the penalty proceedings. There is also no evidence to show that monies were assessee's own money brought in the form of gift. In the instant case, a maternal grandfather has offered a gift to daughter in the form of some jewellery at the time of her marriage. The ld.AO simply rejected the explanation of the assessee. It is customary in Indian society, particularly in the Hindu community to give jewellery and other valuable to the daughters by their grandparents, relatives etc. particularly at the time of marriage. Therefore, the explanation of the assessee cannot be simply brushed aside. Even looking to the quantum of gift, it was not so huge to disbelieve the same as to attract the vigour of penalty under section 271(1)(c) of the Act. The totality of the facts indicated that the assessee has explained the nature of gift but the AO did not accept such explanation. Further, the AO failed to note that penalty is to be levied under the Explanation 1 of Section 271(1)(c) only when the assessee fails to offer an explanation or offers an explanation which is found to be false or 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 facts relating to the same and material to the computation of his total Income IT(SS)A No102/Rjt/2017 5 have been disclosed by him. In case of appellant, explanation has furnished and evidence in support thereof was also furnished and it is a case of rejection of explanation furnished by the appellant and that there is no failure on the part of the appellant to prove that the explanation furnished was not bonafide. Further, Hon’ble jurisdictional High Court, in the case of Sonal Construction Co. (2015) 55 taxman.com 425 wherein penalty was levied for concealment of income on disallowance in respect of outstanding liabilities on account of labour charges, Tribunal found that assessee furnished relevant details i.e. names, addresses, confirmations etc. and offered Assessing Officer to call some of them for examination but these details were not inquired into further, and assessee offered about amount for addition purpose - To avoid litigation, Tribunal held that assessee's offer could not be held to be without bona fide and therefore, penalty imposition solely on basis of such addition, overlooking details and explanation filed by assessee cannot be sustained. 6. In the light of the above, we are of the view that it is not fit case to impose penalty under section 271(1)(c) of the Act. Accordingly, penalty of Rs.56,542/- is cancelled, and the ground of appeal of the assessee is allowed. 7. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 31 st March, 2022 at Ahmedabad. Sd/- Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Ahmedabad, dated 31/03/2022 vk*