SHRI. MAHENDRAKUMAR S. SURANA, MUMBAI v. ASST.C.I.T., CIRCLE-19, MUMBAI

ITA 6716/MUM/2008 | 2001-2002
Pronouncement Date: 02-11-2011 | Result: Allowed

Appeal Details

RSA Number 671619914 RSA 2008
Assessee PAN AAAHS2166R
Bench Mumbai
Appeal Number ITA 6716/MUM/2008
Duration Of Justice 2 year(s) 11 month(s) 11 day(s)
Appellant SHRI. MAHENDRAKUMAR S. SURANA, MUMBAI
Respondent ASST.C.I.T., CIRCLE-19, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 02-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 02-11-2011
Date Of Final Hearing 19-10-2011
Next Hearing Date 19-10-2011
Assessment Year 2001-2002
Appeal Filed On 21-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI B.R. MITTAL JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER I.T.A. NO.6716/MUM/2008 (ASSESSMENT YEAR : 2001-02) MR. MAHENDRAKUMAR S. SURANA SINGAPORE ARCADE 4 TH FLOOR 3 RD ROAD KHAR (W) MUMBAI-400 052 PAN AAAHS2166R VS. ASST. COMMISSIONER OF INCOME TAX CIR. 19 PIRAMAL CHAMBERS PAREL MUMBAI-400 012. APPELLANT RESPONDENT. APPELLANT BY : MR. C.J. LALA. RESPONDENT BY : MR. P.C. MAURYA. DATE OF HEARING : 20.10.2011. DATE OF PRONOUNCEMENT : O R D E R. PER B.R. MITTAL J.M. : THE ASSESSEE HAS FILED THIS APPEAL FOR THE ASSESS MENT YEAR 2001-02 AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DT.29. 9.2008 DISPUTING THE CONFIRMATION OF PENALTY OF RS.2 80 800 IMPOSED UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT 1961 (THE ACT). 2. THE RELEVANT FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED GIFTS TO THE TUNE OF RS.8 LAKHS FROM 7 PERSONS THE DETAILS OF WHICH ARE MENTIONED BY ASSESSING OFFICER AT PAGE 1 OF THE PENALTY ORDER. THE ASSESSING OFFICER STATED THAT CREDIT-WORTHINESS OF THE DONORS COULD N OT BE PROVED BY THE ASSESSEE. THEREFORE THE ASSESSING OFFICER DID NOT ACCEPT THE SAID GIFTS AS GENUINE AND ADDED TO THE TOTAL INCOME OF 2 ITA NO.6716/MUM/2008 THE ASSESSEE UNDER SECTION 68 OF THE ACT. THE SAID ADDITION WAS CONFIRMED IN FURTHER APPEAL. IN VIEW OF THE ABOVE THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C ) OF THE ACT. THE ASSESSING OFFICER ALSO IMPOSED PEN ALTY UNDER SECTION 271(1)( C ) OF RS.2 80 800 I.E. @ 100% OF THE TAX SOUGHT TO BE EVADED ON THE S AID AMOUNT OF RS.8 LAKHS. THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER AND HELD THAT THE ASSESSEE HAS WILLFULLY AND WITH CONSCIOUS MIND PL ANNED HIS AFFAIRS WELL IN ADVANCE TO RECEIVE GIFTS FROM SEVEN PERSONS WHO WERE NOT HAVING SUFFIC IENT SOURCES OF INCOME. THEREFORE THE ENTIRE STORY OF RECEIVING GIFTS WAS BOGUS AND SHAM TRANSACTIONS. HE ALSO OBSERVED THAT CONDUCT OF THE ASSESSEE IS NOT BONA FIDE AT ALL AND THE ASS ESSEE DID NOT DISCLOSE MATERIAL FACT RELEVANT FOR THE ASSESSMENT. HENCE ASSESSEE IS IN FURTHER APPEA L BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING THE LEARNED AUTHOR ISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE FILED REQUISITE DETAILS BEFORE THE ASSESSI NG OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO PROVED IDENTITY OF THE DONORS BUT THE ASSESSING OFFICER DID NOT ACCEPT GENUINENESS OF THE GIFT(S) AND CREDITWORTHIN ESS OF THE DONOR(S) AND ACCORDINGLY HELD THAT GIFTS RECEIVED BY THE ASSESSEE WERE SHAM AND BOGUS. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SAID ADDITION HAD BEEN MADE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS ON MERE SUSPICION AND NOT ACCEPTING THE CONTENTION OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAD NOT CONCEALED HIS INCOME NOR FILED WRO NG PARTICULARS OF INCOME. HE SUBMITTED THAT ALL GIFTS WERE RECEIVED BY THE ASSESSEE BY ACC OUNT PAYEE CHEQUES AND THE DONORS WERE ASSESSED TO TAX. HE SUBMITTED THAT AUTHORITIES BEL OW HAVE CONFIRMED GIFTS AS BOGUS BY NOT 3 ITA NO.6716/MUM/2008 ACCEPTING THE CONTENTION OF THE ASSESSEE. HE SUBMI TTED THAT IT IS NOT THE CASE WHERE THE ASSESSEE MADE A CLAIM BUT COULD NOT OFFER ANY EXPLA NATION. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE AUTHORITIES BELOW HAVE LEVIED PENALTY ONLY BECAUSE ADDITION HAS BEEN MADE BUT PENALTY PROCEEDINGS AND ASSESSME NT PROCEEDINGS ARE SEPARATE AND IF THE ASSESSEE HAD DISCLOSED ALL RELEVANT FACTS THE LEVY OF PENALTY IS NOT JUSTIFIED MERELY BECAUSE THE EXPLANATION OF THE ASSESSEE HAS NOT BEEN ACCEPTED. THE LEARNED AUTHORISED REPRESENTATIVE AT THE TIME OF HEARING REFERRED TO THE DECISION OF ITA T GAUHATI BENCH IN THE CASE OF AMITA DEVI SANGANERIA VS. ACIT 129 ITD 72 (GAU) (TM) AND ALSO THE DECISION OF DELHI BENCH OF ITAT IN THE CASE OF ACIT VS. UJJAGAR SINGH OBEROI 121 TTJ 228. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE COULD NOT DISCHARGE HIS ONUS THAT GIFT AMOUNT WAS NOT CONCEALED INCOME OF THE ASSESSEE AND REFERRED TO THE DECISION OF BOMBAY HIGH COURT REPORTED IN 112 ITR 1046 . 5. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE SUBMISSION OF LEARNED REPRESENTATIVES OF THE PARTIES. AT THE OUTSET WE STATE THAT CASES CITED BY THE LEARNED AUTHORISED REPRESENTATIVE (SUPRA) ARE NOT RELEVANT AS IN THOSE CASES THE GIFT AMOUNTS WHICH WERE ADDED BY THE ASSESSING OFFICER UNDER SECTION 6 8 OF THE ACT BY NOT ACCEPTING THEM AS GENUINE WERE DELETED BY THE APPELLATE AUTHORITY. T HESE ARE NOT THE CASES RELATING TO PENALTY PROCEEDINGS. WE ALSO OBSERVE THAT CASES CITED BY LEARNED DEPARTMENTAL REPRESENTATIVE TO STATE THAT ONUS IS ON ASSESSEE TO PROVE THAT AMOUNT WAS NOT CONCEALED INCOME UNDER SECTION 68 OF THE ACT IS NOT RELEVANT WHILE DECIDING THE IS SUE BEFORE US. IN THE CASE BEFORE US WE OBSERVE THAT THE ASSESSEE CLAIMED THAT HE RECEIVED GIFTS AGGREGATING RS.8 LAKHS FROM SEVEN 4 ITA NO.6716/MUM/2008 PERSONS THE NAMES OF WHICH ARE MENTIONED IN THE PE NALTY ORDER AT PAGE 1 AND ALSO STATED THAT AMOUNTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES. WE OBSERVE THAT THE ASSESSEE FILED AFFIDAVITS FROM THE DONORS ALONG WITH THEIR PA NUMB ERS. HOWEVER IN THE QUANTUM PROCEEDINGS IT WAS FOUND THAT THE GIFTS WERE NOT GENUINE AND TH E SAME WERE ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. WE OBSERVE T HAT THE ASSESSEE HAD GIVEN EXPLANATION BUT HE COULD NOT PROVE THAT THE GIFTS WERE GENUINE. IT IS NOT THE CASE WHERE THE EXPLANATION GIVEN BY THE ASSESSEE WAS DISPROVED TO BE FALSE AND WRONG . THE HON'BLE GUJARAT HIGH COURT HAS HELD IN THE CASE OF NATIONAL TEXTILES VS. CIT 249 ITR 12 5 THAT IMPOSITION OF PENALTY UNDER SECTION 271(1)( C ) IS NOT JUSTIFIED IF THE ASSESSEE GIVES EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LE AD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CLAIM IS FALSE. THE DEPARTMENT HAS ALSO NOT BROUGHT ANY EVIDENCE TO SHOW THAT GIFT AMOUNT AGGREGATING RS.8 LAKHS IS NOT THE INCOME OF THE ASSESSEE. THE DEPARTMENT HAS ONLY STATED THAT THE ASSESSEE COULD NOT DISCHARGE I TS ONUS THAT THE GIFTS RECEIVED WERE GENUINE AND ALSO COULD NOT ESTABLISH THAT DONORS HAD CREDIT -WORTHINESS TO GIVE GIFTS TO THE ASSESSEE. THEREFORE THE SAID GIFTS WERE NOT ACCEPTED AS GENUI NE AND ADDITIONS WAS MADE UNDER SECTION 68 OF THE ACT. THE HON'BLE MADRAS HIGH COURT ALSO HEL D IN THE CASE OF CIT VS. INDIAN BISLERI REPORTED IN 158 CTR 323 THAT THE MERE FACT THAT CER TAIN CLAIM IS DISALLOWED IT DOES NOT FOLLOW THAT THE ASSESSEE HAD CONCEALED ANY INCOME. THE SP ECIAL BENCH OF AHMEDABAD TRIBUNAL IN THE CASE OF GUJARAT CREDIT CORPORATION LTD. VS. ACIT 30 2 ITR (AT) 250 HELD THAT IF THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE CLAIM OF EXPENDITURE IT D OES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E HON'BLE APEX COURT ALSO HELD IN THE CASE OF CIT VS. RELIANCE PETROPRODUCT LTD. 322 ITR 158 THAT A MERE MAKING OF THE CLAIM WHICH IS NOT 5 ITA NO.6716/MUM/2008 SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FUR NISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IT IS ALSO RELEVANT TO STA TE THAT HON'BLE APEX COURT HAS ALSO HELD IN THE CASE CIT V. N.C. BUDHARAJA & CO. 204 ITR 412 THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE DIFFERENT. 6. CONSIDERING THE ABOVE DECISIONS AND THE FACTS OF THE CASE BEFORE US WE OBSERVE THAT THE AUTHORITIES BELOW HAVE MERELY LEVIED THE PENALTY ON THE GROUND THAT IN THE QUANTUM PROCEEDINGS THE SAID GIFTS WERE NOT ACCEPTED AS GE NUINE AND THE ADDITION WAS CONFIRMED UNDER SECTION 68 OF THE ACT. WE ARE OF THE CONSIDERED VI EW THAT IT IS NOT THE CASE WHERE THE ASSESSEE CONCEALED HIS INCOME AND/OR FURNISHED INACCURATE PA RTICULARS OF INCOME. HENCE MERELY NOT ACCEPTING THE GENUINENESS OF THE CLAIM OF THE ASSES SEE DOES NOT AMOUNT TO FURNISHING OF WRONG PARTICULARS OF INCOME OR CONCEALMENT OF INCOME BY T HE ASSESSEE. THEREFORE WE DELETE THE PENALTY OF RS.2 80 800 UNDER SECTION 271 (1)( C )OF THE ACT BY ALLOWING GROUND OF APPEAL TAKEN BY THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT O N 2 ND NOVEMBER 2011. SD/- SD/- (R.K. PANDA) (B. R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 2 ND NOVEMBER 2011. *REDDY GP 6 ITA NO.6716/MUM/2008 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR -BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI 7 ITA NO.6716/MUM/2008 . DATE INITIALS DRAFT DICTATED ON 20.10.20 11 SR. P.S. DRAFT PLACED BEFORE THE AUTHOR 21.10.11 SR. P.S. DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS SR. P.S. KEPT FOR PRONOUNCEMENT ON SR. P.S. FILE SENT TO THE BENCH CLERK SR. P.S. DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH