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Sudhir Awasthi Versus I.T.O., Ward 5 (2) , Jaipur

2016 (5) TMI 367 - ITAT JAIPUR

Penalty levied U/s 271(1)(c) - unexplained investment U/s 69A - Held that:- It is a fact that the assessee’s father was 90 years old suffering from cancer, have not been denied. The fact that the earlier gift of ₹ 13.75 lacs from the father has not been disputed by the department. The ld CIT(A) while confirming the penalty has relied only on the observation of the ITAT in quantum proceedings. It is a settled law that the penalty proceedings are neither mechanical nor automatic and merely b .....

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e imposition of penalty. The assessee has given a reasonable explanation on merits about the gift and while considering the penalty issue, nothing adverse has been commented thereon except the finding of the ITAT.

It is a settled law that penalty proceedings are distinguished and separate and assessee can raise fresh plea in the penalty proceedings, which has been done in this case. Having raised proper explanation and please in the penalty proceedings, it was incumbent on the CIT(A) .....

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nish Agarwal (CA) For The Revenue : Shri Raj Mehra (JCIT) ORDER PER: R.P. TOLANI, J.M. This is an appeal filed by the assessee against the order dated 09/03/2015 passed by the learned CIT(A)-II, Jaipur for A.Y. 2006-07. The sole effective ground of appeal is as under:- 1. Under the facts and circumstances of the case, the ld CIT(A) is not justified in confirming the penalty levied U/s 271(1)(c) of the IT Act, 1961, for concealment of income in respect of addition of ₹ 10,00,000/- made to r .....

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the Income Tax Act, 1961 (in short the Act). 3. Penalty proceedings were initiated, which now remain confined to the addition on account of Section 69A. The AO imposed the penalty in this respect of this addition by following observations: In this case the assessee has made cash deposits to the extent of ₹ 10,00,000/- in the bank accounts, the sources of which remains unproved and the respective income not declared in the return of income. Also, the assessee has net maintained any account .....

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by the assessee in his defense during course of assessment proceedings and appellate proceedings have not been found satisfactory and in this way also the case of the assessee falls in the category of Explanation-1 to section 271(1)(c). 4. Aggrieved, the assessee preferred first appeal against penalty. The ld CIT(A) while confirming it relied only on the observations of the ITAT in quantum proceedings in this behalf by following observations: 3.4.1. In this case, addition of ₹ 10,00,000/- .....

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nproved. As afore- stated, and as would also be apparent from the foregoing, the assessee s explanation is also inflicted by inference of lack of genuineness, which stems from the factual and circumstantial gaps in his explanation, which is unsubstantiated, and which we shall examine next. In view of the above discussion, it is held that the appellant has not been able to substantiate his explanation and has failed to prove that this explanation is bonafide and that all facts material to the com .....

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the explanation offered by assessee during the course of penalty proceedings as well as before the Ld. CIT(A) was discarded and penalty was levied and upheld merely because the addition has been sustained in quantum appellate proceedings. The penalty proceedings being distinct and separate the explanation submitted during the course thereof by the assessee is not at all considered thus. There is no independent application of mind on the facts and explanation of the assessee at the time of levyi .....

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sessee. Explanation - 1 to section 271 (1)(c) has no bearing on factor No. 1 but has a bearing only on factor No. 2. The explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. If the assessee gives an explanation which is reasonable Department cannot ignore it and impose penalty merely relying an observation in quantum. There is no material to show that the gifted amount by father was in any way the income of the assess .....

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dicata. Penalty is not a matter of course and it is not attracted automatically simply because the addition have been sustained in quantum proceedings. On merits of the penalty, it is submitted that the cash of ₹ 10 lacs was deposited by the assessee out of the gift received by assessee from his father. The fact of receipt of gift is duly evident from the letter dated 10.01.2004 wherein, the assessee s father has conveyed the aforementioned gift to assessee. The contents of the said letter .....

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ld counsel further contends that for asking such questions from ailing father in Hindu society is sacrilegious. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT 214 ITR 801 (SC) for the proposition that the inference can be drawn on the basis of human conduct, preponderance of probabilities and surrounding circumstances. In this case, adverse inference drawn ignoring the near death condition of ailing father from the deadly disease cancer, has b .....

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iii) 103 ITR 344 (Patna) Sarogi Credit Corpn. (iv) 59 ITR 632 (Asm) Tolaram Daga (v) 32 TTJ 300 (Pune) (AT) ™ Suresh Kalmadi. (vi) 113 Taxation 11 (JP) (AT) 1993 Surindra Singh In reply to other allegations raised by the revenue authorities to draw an adverse inference in quantum proceedings, it is submitted that the occurrence of time gap between receipt of the amount and deposition of the same in the bank account does not in any way lead to the conclusion that the assessee had concealed .....

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out the contingency of requirement of huge cash for treatment of assessee s father. After the death of father assessee could not realize that last deposit of cash could be doubted when he had sufficient sources in the shape of gift for such amount. Though, the expenses for treatment were met out by the assessee only, but the cash was kept in reserve to meet out any huge requirement of money if need so arises. Thus, merely because the cash was not deposited in the bank account immediately after .....

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t. It is further submitted that, apart from the amount of ₹ 10 lacs, the assessee also received the amount of ₹ 13.75 lacs from his father which fact was within the knowledge of the Ld. AO in as much as the same was mentioned on the gift letter itself, but the same was not at all doubted by the Ld. AO. Thus, the Ld. AO has accepted the source of amount received by assessee to the extent of ₹ 13.75 lacs and has also accepted the capacity of the assessee s father to gift so much .....

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offered by assessee as wrong by leading material evidence which the revenue has miserable failed to do. Further, the Ld. AO as well as Ld. CIT(A) have placed complete reliance on the outcome of quantum proceedings and have simply borrowed the observations made thereon, without independent application of mind the penalty proceedings which according to the embellished law are completely distinct from the assessment proceedings. Further reliance is placed on the following decisions: (i) Eilly Lill .....

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