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Mr. Satish Babladi and Smt. Asha Babladi Versus DCIT, Central Circle-36, Aayakar Bhavan, Mumbai

2016 (9) TMI 248 - ITAT MUMBAI

Penalty u/s 271()(C) - ungenuineness of gift - Held that:- Merely because the additions have been made by the AO and confirmed by the Tribunal on account of inability of the assessee to furnish more evidences as required by the authorities to prove the genuineness of the transaction that itself is not sufficient to hold that the claim of the assessee was wrong, inaccurate or that there was any concealment of income. The penalty proceedings are separate from quantum assessment proceedings. In the .....

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ed, PAN number of the donor, the bank statement reflecting the transaction and even the copy of the income tax returns and accounts of the assessee. The evidences produced on the file by the assessee have not been proved wrong or false. The Hon’ble Bombay High Court in the case of “CIT vs. Upendra V. Mithani” in ITA (L) No.1860 of 2009 decided on 05.08.2009, has observed in the matter of levy of penalty under section 271(1)(c) of the Act, that if the assessee gives an explanation which is unprov .....

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e not on account of inaccurate particulars of income but due to the reason that the assessee could not furnish the required evidences/reconciliation during the assessment proceedings, we do not find it to be a case for levy of penalty under section 271(1)(c) of the Act.- Decided in favour of assessee - Non offering of the income from short term capital gains - Held that:- The assessee has explained that he was under bonafide belief that the said gain was not attracted to tax. The explanation .....

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the compensation of amount received by the assessee was exigible to capital gains tax in A.Y. 2006-07 or in A.Y. 2007-08? - Held that:- in view of the assessee, since the possession had been taken in the Financial Year 2006-07 relevant to A.Y. 2007-08, therefore amount of capital gain was assessable in A.Y. 2007-08 and the assessee had also offered the same in A.Y. 2007-08. The Tribunal, considering the facts, has held that it was a case of difference of opinion and that the issue was a debatab .....

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ction 271(1)(c) of the Act is not leviable on this issue in the case of the assessee also. - ITA Nos.345 & 346/M/2015, ITA Nos.343 & 344/M/2015 - Dated:- 28-7-2016 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER For The Assessee : Shri V.C. Shah, A.R. For The Revenue : Shri Sujit Bangar, D.R. ORDER Per Sanjay Garg, Judicial Member: The above captioned appeals in the case of assessee Mr. Satish Babladi have been preferred by the assessee against two separated ord .....

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se of Mr. Satish Babladi were heard on 27.07.16 whereas in the case of Smt. Asha Babladi were heard on 28.07.16. Since the facts involved in all the above captioned appeals are identical, hence the same are taken together for disposal by this common order. 2. The issue raised in all the appeals is relating to the levy of penalty under section 271(1)(c) of the Income Tax Act. First we take up the assessee Mr. Satish Babladi s appeal for A.Y. 2004-05 in ITA No.345/M/2015. ITA No.345/M/2015 for A.Y .....

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he AO. The assessee, thus, has come in appeal before us. 5. The Ld. A.R. of the assessee has made his submissions regarding the explanation of the assessee relating to the above additions made by the AO and has further contended that the levy of penalty under section 271(1)(c) of the Act in relation to the above stated additions was not justified. The Ld. D.R., on the other hand, has relied upon the finding of the lower authorities. 6. We have heard the rival contentions and have also gone throu .....

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orities that the donor was assessed to tax, his identity was established and that there was no reason to disbelieve the transaction which has been carried out through the banking channel and was supported with the confirmation of the donor. However, the AO disbelieved the transaction observing that the assessee had failed to establish the creditworthiness of the donor and the genuineness of the gift. 7. In the quantum proceedings, the matter travelled before the Tribunal. The Ld. A.R. has invite .....

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establishing that the said friend was in immediate need of such fund. As discussed above, the assessee had produced the evidence which was in his possession to prove the creditworthiness of the donor and genuineness of the transaction. Merely because the AO insisted the assessee to bring more evidence and the assessee could not produce the same, as the assessee was not in possession of the same, that itself does not establish that the assessee had furnished inaccurate particulars of income or t .....

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quired by the authorities to prove the genuineness of the transaction that itself is not sufficient to hold that the claim of the assessee was wrong, inaccurate or that there was any concealment of income. The penalty proceedings are separate from quantum assessment proceedings. In the case of levy of penalty, it should be proved on the file that the particulars furnished by the assessee were inaccurate particulars of income or that there was concealment of income. Every case of confirmation of .....

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proved wrong or false. The Hon ble Bombay High Court in the case of CIT vs. Upendra V. Mithani in ITA (L) No.1860 of 2009 decided on 05.08.2009, has observed in the matter of levy of penalty under section 271(1)(c) of the Act, that if the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee s case is false, then no penalty can be imposed in such cases. When the facts of t .....

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at the assessee, during the year, had earned ₹ 40,50,000/- by way of professional fees. He further, inviting our attention to the computation of income and has stated that the assessee in the return of income had shown the net income on this account at ₹ 4,06,168/-. He, in this respect, has explained that the expenses of ₹ 43,832/- were incurred in relation to the above income which were claimed in the computation of income. However, the AO has disallowed the same because the a .....

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ate particulars of income. 10. In relation to the addition on account of understated income of ₹ 45,081/-, the Ld. A.R. has given somewhat identical submissions stating that this addition was on account of difference in some figures noticed as the assessee was not maintaining any regular books of accounts. Hence, during the assessment proceedings, the assessee could not reconcile each and every amount that was not a case of any concealment of income or avoidance of tax but only because of .....

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dvisor, the assessee opted to reshuffle some schemes of mutual funds. The funds received from some schemes on redemptions were further invested in some other scheme of mutual funds of the same organizations. That the assessee was under impression that as the final realization would be beyond the prescribed limit of exemption, therefore no tax was attracted. The assessee was illadvised by the mutual fund advisor that as the investments continued and therefore there was no liability of tax. The Ld .....

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inaccurate particulars of income but due to the reason that the assessee could not furnish the required evidences/reconciliation during the assessment proceedings, we do not find it to be a case for levy of penalty under section 271(1)(c) of the Act. 11. The third disallowance relating to the non offering of the income from short term capital gains, the assessee has explained that he was under bonafide belief that the said gain was not attracted to tax. The explanation given by the assessee in r .....

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wer authorities under section 271(1)(c) of the Act in relation to the above stated disallowances, is hereby ordered to be deleted. 13. Now coming to the assessee Mr. Satish Babladi s appeal bearing ITA No.346/M/2015 for A.Y. 2006-07. ITA No.346/M/2015 for A.Y. 2006-07 14. The penalty in this case has been levied under section 271(1)(c) of the Act on account of difference of opinion as to whether the compensation of amount of ₹ 6 lakhs received by the assessee was exigible to capital gains .....

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unal and it was held by the Tribunal that this was not a case of concealment of income. It was only a case of difference of opinion as the AO had taken the view that transfer of asset was in A.Y. 2006-07 and that capital gains were also assessable in A.Y. 2006-07. Whereas, in view of the assessee, since the possession had been taken in the Financial Year 2006-07 relevant to A.Y. 2007-08, therefore amount of capital gain was assessable in A.Y. 2007-08 and the assessee had also offered the same in .....

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action, hence respectfully following the above cited decision of the co-ordinate bench of the Tribunal, we hold that the penalty under section 271(1)(c) of the Act is not leviable on this issue in the case of the assessee also. 15. In view of our findings given above, both the appeals of the assessee Mr. Satish Babladi are hereby allowed. 16. Now coming to the appeals of the assessee Smt. Asha Babladi bearing ITA No.343/M/2015 for A.Y. 2001-02. ITA No.343/M/2015 for A.Y. 2001-02 17. In this appe .....

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lakhs claimed as gift by the assessee is concerned, the facts are almost identical to that of the case of the son of the assessee i.e. Mr. Satish Babladi except that the recipient and donor are different persons. The Ld. A.R. has demonstrated that the assessee had produced all the details such as name and PAN number of the donor Smt. Mamta V. Singhavi, address of the donor, confirmation of gift, copy of documents evidencing gift, bank statement showing payment by cheque of the gift amount, copy .....

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n which the penalty has been levied on account of addition of ₹ 10200/- on account of undisclosed bank balance. In this respect, the Ld. A.R. of the assessee has submitted that the assessee was holding only one bank account which was fully disclosed to the Revenue Authorities. The assessee explained that it was not the case of furnishing of inaccurate particulars of income or concealment of income. It was just a simple accounting error. 21. Considering the smallness of the amount and also .....

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i bearing ITA No.344/M/2015 for A.Y. 2004-05. ITA No.344/M/2015 for A.Y. 2004-05 24. In this case the penalty under section 271(1)(c) of the Act has been levied on account of the following additions: (a) Short term capital gain on redemption of mutual funds of ₹ 2,53,690/-. (b) Long term capital gain on redemption of mutual funds of ₹ 1847/-. (c) Capital Receipt being gift received of ₹ 7,50,000/- though full explanation was given to clarify that there was no concealment. 25. S .....

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