TMI Blog2016 (5) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... of particulars of income nor furnished inaccurate particulars of income. Because of the failure of the assessee to file ‘cogent and reliable evidence’ we are of the opinion that the order of the FAA has to be reversed. Secondly, penalty proceedings are not criminal in nature and the rationale behind the provisions of section 271(1)(c)of the Act is to compensate the State exchequer for the revenue loss caused due to commission or omission of an assessee. In the case before us, the assessee has tried to deprive the State by showing taxable income as not taxable in the garb of Gift. Such an action justifies invoking of the provisions of section 271(1)(c)of the Act. - Decided in favour of revenue - ITA/103/Mum/2011, C. O. No. 40/M/13 - - - Dated:- 18-5-2016 - Sh. Joginder Singh, Judicial Member And Rajendra, Accountant Member For the Revenue : Shri M. Murli For the Assessee : Shri Ajay R. Singh ORDER Per Rajendra A. M. Challenging the order dt. 25. 10. 2010 of CIT(A)-34, Mumbai, the Assessing Officer (A. O) has filed the present appeal. The assessee has filed Cross Objection. 2. The assessee has filed a petition for condonation of delay in filing cross obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings the AR submitted that the donor filed a letter confirming the gift during the scrutiny proceedings, that identity and credit worthiness of the donor was established, that the transaction was genuine and should not be treated as unexplained cash credit, that the assessee had requested the AO during the assessment proceedings to issue a summon to the donor. After considering the submission of the assessee the AO held that the alleged letter wherein a request was made to summon the donor was not signed by assessee or her AR, that the unsigned letter was not acted upon, that the issue to be decided by him was to levy/non levy of the penalty u/s. 271(1)(c )and not to decide genuineness of the alleged gift. Finally, the AO held that the assessee had failed to put forth any plausible explanation as to why penalty should not be levied, that she had not discharged the onus cast upon her, that she was allowed sufficient opportunity. The AO referred to the cases of Madanlal Kishorilal(144CTR197) and Shri Krishna Trading Co. (253ITR645)and observed that if an assessee fails to furnish an explanation or offers an explanation which he is not able to substa -ntiate, Explanation 1 to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and taking. The giving and taking are the two contem -poraneous reciprocal acts which constitute a 'gift'. In order to make a valid gift, there must be perfect knowledge in the mind of the person making the gift of the extent of the beneficial interest intended to be conferred, and of which making it. Donor gives gift in money or money's worth and taking love and affection from donee. To examine the issue from point of view of the provisions of Income Tax Act we are to see the nature of the transaction Gift. Its nature is credit in the hands of the donee because donee credited gift amount his/her capital account and being treated as own money/capital. Normally such credit entry in capital account can be made only of the transition-which- has been processed through the provisions of the Income Tax Act. It appears from reading of section 68 of the Act that whenever a sum is found credited in the books of account of the assessee then, irrespective of the colour or the nature of the sum received which is sought to be given by the assessee, the Income-tax Officer has the jurisdiction to enquire from the assessee the nature and source of the said amount. When an explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be one general guiding yardstick in the matter. 12. 1The assessee has furnished various type of material/evidence in the form of gift deed, confirmation and others, to appreciate those material evidences we would like refer one of the judgment of the Apex Court in the case of CIT v Durga Prasad More 82 ITR 540 (SC) wherein the Court held that Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities, It has been further held as under:- It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it as the income of the assessees from undisclosed sources. The credit entries have been made during the period from July 8, 1992 to October 19, 1995. There is no dispute that the payments were made by instruments issued by a foreign bank and credited into the respective assessee's account by negotiation through a bank in India. Most of the cheques sent from abroad were drawn on Citibank, N . A. Singapore. The Assessing Officer dealt with the controversy as regards the cash credit entries received from the foreign donor. He noticed that the gifts have been sent in the name of Ariavan Thottan and received by A. Srinivasan and others who are all his family members . Each one of them is an individual assessee. All the assessees were summoned and their statements have been recorded by the Assessing Officer. Srinivasan who is the key person in his statement said that he knew Sampathkumar for the last 20 years and he had been helping Sampathkumar prior to 1985 by paying ₹ 100 to 200 every month as he had no source of income to get himself educated. Sampathkumar in his own statement stated that he was in Indonesia up to the year 1992 and employed as an engineer. Thereafter, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding circumstances and found it difficult to accept the explanation offered by the assessees. The High Court came to the conclusion that the reasons assigned by the Tribunal and other authorities are in the realm of surmises, conjectures and suspicions . . . the authorities under the Act have failed to draw the only conclusion that is possible legally and logically. The Apex Court held as under: explanation offered was not satisfactory. The assessees did not take the plea that even if the explanation is not acceptable the material and attending circumstances available on record do not justify the sum found credited in the books to be treated as a receipt an income nature. The burden in this regard was on the assessees. No such attempt hasbeen made before any authority. All the decisions cited and referred to hereinabove are required to be appreciated and understood in the light of the law declared by this court in Sumati Dayal [1995]Supp 2 SCC 453 Whether the High Court was justified in interfering with the concurrent finding of fact arrived at by all the authorities including the Tribunal?The Assessing Officer found that all the so called gifts came from Ariavan T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding ''circumstances, prevailing practice/customs in the society, we find that the assessee is not remotely connected with the family of the donor as evident from the replies given by the assessee in her statement recorded by the AO which are reproduced above in Para No 3 of this order. She has no knowledge about the family of the donor, she never visited their house. She never attended any social function or normal get together with the family of the donor. She was never invited by the donor family and the same was the case with the assessee as the donor family had no link whatsoever with the assessee. That Donor, Mrs. Chandra Hingorani is not in any way connected to the assessee or to her family. There was no such occasion for such huge gifts to the assessee. Under the alleged circumstances gift received by the assessee is not a genuine gift. When gift is not genuine, the addition u/s 68 is warranted. Further, as said above those two elements are essential in the gift, 'giving' and 'taking. In the case under consideration, the assessee has failed to establish second part of that element i. e. giving any love and affection to donor. One of the aspect of the gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not related to the assessee nor was there any occasion for her to part with such a big sum of ₹ 30 lakhs. 7. 3. The FAA has referred to the case of Reliance Petro Products (322ITR158). What the Hon ble Supreme Court has held in that case is that mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee and that merely because the assessee had claimed deduction of expenditure, which claim was not acceptable to the Revenue, that by itself would not attract the penalty under section 271(1)(c). In the case before us, the issue is not making a unsustainable claim of expenditure-the assessee has shown an item of income received by her as gift. The fact of non genuineness of the gift has been confirmed by both the appellate authrorities. There is a difference between a debatable claim and false claim. In first case the AO and the assessee have difference of opinion about a claim but in the later the very basis of the claim does not exists. The AO and the assessee may differ as to whether an expenditure is revenue or capital expenditure and such a situation penalty for concealin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim made by him is unsustainable in law provided that he either substantiates the explanation offered by him or the explanation is found to be bona fide. If the explanation is neither substantiated nor shown to be bona fide, the Explanation u/s. 271(1)(c) would come into play and the assessee would be liable for the prescribed penalty. A claim made by the assessee needs to be bona fide and if the claim, besides being incorrect in law, is mala fide, Explanation 1 to section 271(1) (c) would come into play and work to the disadvantage of the assessee. In short, Explanation 1 to section 271(1)(c) of the Act, raises a presumption of concealment, when a difference is noticed by the AO, between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation has been discharged by him, the onus shifts to the Department to show that the amount in question constituted income and not otherwise. In the case under consideration initial burden was not discharged by the assessee. The Hon ble Supreme Court in MAK Data (P. ) Ltd. 's case (358ITR593), has held that the assessee should f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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