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2016 (9) TMI 246 - ITAT DELHI

2016 (9) TMI 246 - ITAT DELHI - TMI - Penalty u/s 271(1) (c) - assessee could not prove the genuineness of the gifts transactions - Held that:- Assessing Officer, in the penalty orders, has observed that the assesseee had concealed the income and has furnished inaccurate particulars. However, the penalty orders are woefully silent on the issue as to how this satisfaction of concealment/furnishing of inaccurate particulars was arrived at. The Ld. CIT (A) has relied on the principle of preponderan .....

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proceedings but will not suffice in penalty proceedings. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon’ble Apex Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT )has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars - Decided in favour of assessee - ITA Nos.-5280 & 5281/Del/2013 - Dated:- 28-7-2016 - SHRI G.D. AGRAWAL, .....

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Ld. CIT (A)-Meerut. 2. The facts of the case are that during the AY 2002-03 the assessee had received gifts amounting to ₹ 16 lakhs from three persons, whereas in AY 2003-04 the assessee had received gifts amounting to ₹ 10 lakhs from two persons. The assessee had filed affidavits, gift deeds, copies of ITRs, copies of Wealth Tax Returns, copies of bank accounts and copies of PAN for all the donors during the assessment proceedings. The assessee had shown these gifts in her capital a .....

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u/s 271(1)(c) of ₹ 489,600/- for AY 2002-03and of ₹ 371,200/- for AY 2003-04 which has been confirmed by the Ld. CIT(A) and now the assessee has preferred these appeals before the Tribunal. Since both these appeals were heard together, they are being disposed of by this common order. The grounds of appeal raised by the assessee are as under: Grounds of appeal in ITA 5280: 1. That the CIT (A) has erred by upheld the penalty order as imposed by the AO u/s 271(1)(c) at ₹ 4,89,600 .....

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d no. 1 above the CIT(A) has erred by upheld the penalty as levied by AO u/s 271(1)(c) on the basis of his alleged interference without appreciating the material and evidence available on records, is based on surmises, conjecture, bad in law and at any rate very excessive. 3. The Ld. AR submitted that in the quantum proceedings the assessee had discharged her onus by providing copies of gift deeds, affidavits, copies of ITRs, copies of Wealth Tax Returns, copies of bank statements etc. and hence .....

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iable to be deleted. 4. The Ld. DR submitted that the persons who are alleged to have gifted the amounts were having meager source of income and that the AO had made independent enquiries u/s 133(6) of the Income Tax Act and had thereafter reached the conclusion that these gifts were not genuine and hence it was a fit case for the imposition of penalty u/s 271(1) (c) of the Act. It was also submitted that the Income Tax Returns of the donors were not accompanied by balance sheets and the Wealth .....

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ssing Officer is not bound to levy penalty automatically simply because the quantum addition has been sustained. Also in case of CIT v. Khoday Eswara (83 ITR 369) (SC), incidentally reported in same ITR Volume, it is held that penalty cannot be levied solely on basis of reasons given in original order of assessment. The Hon ble Supreme Court has recently reiterated the law in case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519 by holding in Para 62 that finding in assessment proceedings cannot .....

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is burden the Assessing Officer should not begin with the presumption that he is guilty. Since the burden of proof in penalty proceedings varies from that in the assessment proceedings, a finding in the assessment proceedings that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceedings constitutes good evidence in the penalty proceedings. In the penalty proceedings the authorities must consider the matter afresh as the question has to be con .....

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is well settled that though they constitute good evidence do not constitute conclusive evidence in penalty proceedings. During penalty proceedings, there has to be reappraisal of the very same material on the basis of which the addition was made and if further material is adduced by the assessee in the course of the penalty proceedings, it is all the more necessary that such further material should also be examined in an attempt to ascertain whether the assessee concealed his income or furnishe .....

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proceedings as both assessment and penalty proceedings are distinct and separate. In CIT vs. M/s Sidhartha Enterprises (2009) 184 Taxman 460 (P & H)(HC) it was held that the judgment in Dharmendra Textile cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. Even so, the concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default. 6. At this ju .....

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he facts of that case, the court found that it was not a case of concealment of the particulars of the income, nor was it the case of the revenue either. However, the counsel for the revenue suggested that by making an incorrect claim for the expenditure on interest, the assessee had furnished inaccurate particulars of income. The court observed that it had to only see as to whether in that case, as a matter of fact, the assessee had given inaccurate particulars. The court noted that as per Law .....

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statement, copy or transcript." The court observed that reading the words "inaccurate" and "particulars" in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. The court noted that it was an admitted position that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any detail supplied was found to be factually incor .....

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ed. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. The court further observed that there can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. 7. Reverting to the facts of the presen .....

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00 lacs as gifts from 5 parties in a span of two years with whom the assessee had only family relation and that since there was no occasion to warrant these gifts, the credibility and bona fide of assessee s explanation was eroded and therefore, the penalty was sustainable. We are of the considered opinion that this kind of finding might be very relevant in quantum proceedings but will not suffice in penalty proceedings. With regard to the provisions of section 271(1)(c ) of the Act pertaining t .....

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s of his income. The present is not a case of concealment of income. That is not the case of the Revenue either. However, the Ld. Counsel for the revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars&quo .....

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