Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 878 - ITAT MUMBAI

2016 (5) TMI 878 - ITAT MUMBAI - TMI - Penalty under section 271(1)(c) - non genuineness of the gift - Held that:- The assessee had not, during the penalty proceedings, filed any explanation about the genuineness of the gift. The FAA surprisingly states that the AO had not made any new material or did not make inquiries. In our opinion, he was shifting the burden of proof from the assessee to the AO. We agree that assessment and penalty proceedings are different proceedings, but it does not mean .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

14 - SUPREME COURT), has held that the assessee should first show by cogent and reliable evidence that there was neither concealment 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he 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 objections. In her petition, she has stated that she was advised by her husband in the tax matters, that on receipt of the order of the CIT(A) she did not take any action, that later on her CA advised her .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssue to the discretion of the Bench. We find that there is a delay of 150 days in filing cross objections. The assessee is a lady and is advised by her husband in the tax matters, she had claimed that after getting proper legal advice she decided to file the cross objections. Considering the totality of facts and circumstances we are condoning the delay and we are of the opinion that there was reasonable cause for not filing the cross objections in time . Brief facts : 3. During the course of as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee under the head unproved gift. An addition of ₹ 1. 00 lakhs was also made on account of low household expenses. Aggrieved by the order of the AO the assessee preferred an appeal before the First Appellate Authority (FAA)who dismissed her appeal. The assessee further contested the issue before the Tribunal. However, the issue of low household withdrawal was not agitated before the Tribunal. Vide its order dated 4. 10. 2010, the Tribunal upheld the order of the FAA (ITA/ 400/Mum/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

culars of income within the meaning of section 271(1)(c ) r. w. Explanation 1 to the section, that the amount involved included the cash credit of ₹ 30 lakhs and expenditure on household from undisclosed sources of ₹ 1. 00 lacs. He levied a penalty of ₹ 10. 23lacs on the income of ₹ 30 lakhs sought to be evaded by the assessee. 5. The assessee filed an appeal before the FAA. After considering the submission of the assessee and the penalty order he held penalty proceedings .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

O had made no independent enquiries from the donor, that it was not proved conclusively that the gift had been purchased by the assessee from the donor and that the AO was not justified in levying the penalty u/s. 271(1)(c)of the Act. 6. During the course of hearing before us the DR stated that the Tribunal had confirmed the additions made during quantum appeal, that assessee had not proved the genuineness of the gift, that the Explanation to section 271 (1)(c ) was applicable. The AR supported .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f gift of ₹ 30 lakh. The ordinary meaning of the gift is a transfer by one person to another of any existing movable or immovable property made voluntarily or without consideration of money or money worth. In legal effect, there cannot be a'gift' without a giving 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 in regard thereto is gi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

whether that depositor is a mere name lender or not. But that as it may, it is clear that the Income-tax Officer has to make enquiries with regard to the nature and source of a sum credited in the books of account of an assessee and it would be immaterial as to whether the amount so credited is given the colour of a loan or a sum representing the sale proceeds or even receipt of gift. The use of the words 'any sum found credited in the books' in section 68 indicates that the said section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee regarding the nature and the source of the credit in its books of account can be gone into by the Income tax Officer. There is no quarrel with the proposition that mere identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift and since the claim of a gift is made by the assessee the onus lies on him not only to establish the identity of the donor but his capacity to make such a gift. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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:- & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. 12. 2. We would also like refer one more judgment of the Apex Court in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not genuine and that it was liable to be assessed under section 68 of the Income-tax Act, 1961 ? (b) Whether, in the light of the law established and based on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal is legally justified in concluding that burden of proof cast on appellant under section 68 of the Income-tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income-tax Act are present? (c) Whether in the facts and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat they were the aliases of Sampathkumar. These gifts were made to A. Srinivasan and his wife, Smt. S. Kalavathy, his son, S. Balaji Manikandan and to one of his brothers, Rajendran and Smt. Mohanakala. In all the aggregate gifts received by the assessees is to the extent of ₹ 1, 79, 27, 703. The Assessing Officer did not accept the explanation offered by the respective assessees that the amount of credit is a gift from NRI and proceeded to add it as the income of the assessees from undis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iled the returns for the assessment years 1996-97 and 1997-98 before the Income-tax- Officer, Ward 1(4), CBE only on October 23, 1997. His investment in Indian companies according to him will be around ₹ 5 crores and made out of his income earned in the foreign countries. He did not reveal the details of his bank account in India and stated that he would be submitting the details through his auditor which he did not. Except the self serving statement there is no material evidence as regard .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of the assessees as the income of the assessees. On appeal the Commissioner of Income-tax concluded that the story set up by the assessees is unacceptable and hard to believe and the preponderance of probabilities, the common course of human livings point to the contrary". The appeals were accordingly dismissed. The ITAT concurred with the findings and conclusions arrived at .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a or abroad. " The Tribunal also took note of the various other attending 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: "explanat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

red 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 Thotan and Suprotoman. The assessees did not declare that they are the aliases of Sampathkumar. It is only an afterthought they have come forward with the said plea. The Assessing Officer also found that the gifts were not re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be contended. Relying on the decisions of this court in Bejoy Gopal Mukherji v. Pratul Chandra Ghose, AIR 1953 SC 153 and Orient Distributors v. Bank of India Ltd. AIR I 979 SC 867. Shri lyer, learned senior counsel contended that the issue relating to the propriety of the legal conclusion that could be drawn on the basis of proved facts gives rise to a question of law and. therefore, the High Court is justified in interfering in the matter since he authorities below failed to draw a proper and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

though apparent were held to be not real ones. May be the money came by way of bank cheques and was paid through the process of banking transaction but that itself is of no consequence. " No question of law much less any substantial. question of law had arisen for consideration of the High Court. The High Court misdirected itself and committed an error in disturbing the concurrent findings of fact. " 12. 3 In the light of above law laid down by the Apex Court in the case of CIT v Durg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

out 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 re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to contain any element if bounty. In the case under consideration gift is not given to relative, therefore, the burden is on the assessee to prove some element of bounty. But the assessee has failed in this regard. Under the circumstances we are of the considered view that the AO has rightly made the addition u/ s. 68 of the Act as gift was not a genuine gift. Since we followed the law laid down by the Hon'ble Supreme Court, therefore, the decision cited by the learned AR does not help the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Petro Products Private Limited. He further held that, that it was not proved conclusively that the gift had been purchased by the assessee from the donor and that the AO was not justified in living the penalty u/s. 271(1)(c)of the Act. We would like to deal with all the issues raised by the FAA. 7. 2. As per the settled principles of taxation jurisprudence a gift is a voluntary act, by a person who out of love and affection transfers money or a movable or immovable asset to another person. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t. Since the claim of gift was made by the assessee, the onus was on her to discharge the burden about the genuineness of the gift transaction. The fact finding enquiry conducted by the AO and confirmed by the FAA and the Tribunal cannot be overlooked as the donor 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ved 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 concealing or furnishing inaccurate particulars .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n was not a genuine transaction. A gift cannot be accepted as such to be genuine, merely because the amount has come by cheque or draft through banking channels, unless the identity of the donor, his creditworthiness, relationship with the donee and the occasion are proved. Unless the recipient has proved the genuineness thereof, the gift can very well be treated to be an accommodation entry of the assessee's own money, which is not disclosed for the purpose of taxation. The gift was found t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es not mean that the assessee is absolved of filing an explanation rather a plausible explanation about the claims made by him in the return that have been questioned by the AO. Explanation 1 to Sec. 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 h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

39;s case (358ITR593), has held that the assessee should first show by cogent and reliable evidence that there was neither concealment 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

act that only a small percentage of the Income-tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version