TMI Blog2016 (5) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act is clearly attracted in the case of assessee and will prove deemed concealment on the part of the assessee so as to levy the penalty under section 271(1)(c) of the Income Tax Act. Thus Authority below have rightly levied the penalty under section 271(1)(c) of the Act against the assessee. - Decided against assessee. - ITA No. 813/Chd/2015 - - - Dated:- 23-5-2016 - Bhavnesh Saini (Judicial Member) And Rano Jain (Accountant Member) For the Appellant : Vineet Krishan For the Respondent : Manjit Singh ORDER Bhavnesh Saini (Judicial Member) This appeal by the assessee has been directed against the order of Ld. CIT(A)-1, Chandigarh dt. 22/09/2015, for Assessment year 2007-08 challenging the levy of penalty u/s 271(1)(c) of the Income Tax Act. 2. Brief facts are that the AO had made an addition of ₹ 21,07,513/- on account of gifts received by the assessee from his NRI relatives and friends on the occasion of the marriage of his daughter. The Assessing Officer had show caused the assessee why the provisions of section 56(2)(vi) of the Income Tax Act may not be invoked in the present case as the gifts have been received by the appellant and not by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riage and not on the marriage of the appellant. Before the CIT(A), the issue was further discussed with respect to whether the money credited to appelllant s bank account was transferred to daughter s account. The appellant was also asked to elaborate the relationship and give the copies of the donors bank account for verifying creditworthiness, etc. since the letters from the donors were found stereotypes revealing only the names and nothing else regarding the donors. Since no information was provided, CIT(A) did not accept these letters and held that the amounts are covered u/s 56 and have to be treated in the hands of the appellant, as such, the addition so made is, therefore, confirmed. Against the order of CIT(A), the Appellant went to appeal before Hon ble ITAT, Chandigarh. While confirming the order of CIT(A), in its order dated 04/01/2011, at page 7, Hon ble ITAT categorically remarked as Further, routing transactions through banking channels represent merely movement of funds and the genuineness of transaction. Hence, it is clear enough from the order of CIT(A) and Hon ble ITAT, that though the order of the Assessing Officer was confirmed deciding that the additions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the NRI relatives and friends as exempt. Hence the appellant fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. 6.5 In view of the above discussion, it is held that the appellant is therefore, liable to imposition of penalty u/s 271(1)(c) of the Act. Hence, I do not find any infirmity in the order of the Assessing Officer and the penalty imposed for ₹ 7,09,390/- is confirmed dismissing this ground of appeal. 7. In the result, the appeal is dismissed. 4. We have heard Ld. Representative of both the parties and perused the materials on record. Ld. Counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that the assessee has filed appeal before Hon'ble High Court of Punjab Haryana against the quantum order passed by the Tribunal, however appeal of the assessee has been dismissed by the Hon ble High Court. 4.1 Ld. Counsel for the assessee submitted that assessee could not obtain confirmation from the donors because they have already given gifts at the time of marriage of his daughter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount in question has been received on occasion of assessee s daughter marriage and not on account of marriage of assessee therefore the aggregate gifts exceeding ₹ 50,000/- were treated as income from other sources. The provision of Section 56(2)(vi) thus provide that where any sum or money, aggregate value of which exceeds ₹ 50,000/- is received without considering, by an individual or HUF, shall be chargeable to Income Tax under the head income from other sources . The proviso to the above provision provide that this clause shall not apply to any sum of money received (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) ---------- (d) ---------- (e) ---------- (f) ---------- (g) ---------- Thus the assessee was required to prove that the gifts have received from the relatives or that the gifts have been received on account of marriage of the individual i.e; assessee, in order to claim exemption under the above provision. However in the case of assessee there was no marriage solemnized of the assessee individual and no details of any relatives have been furnished before the authorities be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- is added to the returned income of the assessee. As the assessee has concealed his income, penalty proceedings u/s 271(1)(c) of the Income-tax Act,1961 are also being initiated. 8. A perusal of the findings recorded by the AO clearly reveals that the gifts have been received by the assessee and utilized by the assessee. Consequently, ld. AO was of the opinion that such gifts were received through cheque and credited in assessee's account and consequently, the aggregate gifts exceeding ₹ 50,000/- were treated as income from other sources by the AO u/s 56 of the Act. Such findings of the AO were upheld by the CIT(A). The CIT(A) recorded the findings that the cheques were issued in the name of the assessee and not in favour of the individual i.e. daughter of the assessee, whose marriage was solemnized. The ld. CIT(A) afforded further opportunity to the assessee to adduce evidence to establish his case to the effect that the donors were having credit worthiness and relations existed between the donor and donee. Ld. CIT(A) further recorded that the submission made by the assessee in the matter is purely stereo type and does not prove his case. It was further highligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the above, I agree with the finding of the AO that the amounts are covered u/s 56 and have to be treated in the hands of the appellant as such, the addition so made is therefore, confirmed, dismissing this ground of appellant. 9. A perusal of the provisions of Section 56(1) sub-clause (vi) read with second proviso to Section 56(1) sub-clause (vii) clearly reveals that the provisions of Section 56(1) shall not apply to any sum of money or any property received (b) on the occasion of the marriage of the individual . Sub-clause (b) of the said proviso clearly contemplates the sum of money or any property received by the individual on the occasion of his or her marriage. The language of the expression is very simple and clear and no other meaning can be assigned to the word individual appearing therein. Ld. 'AR' placed reliance on the decision of the Calcutta High Court in the case of CIT V Shri Krishna Bhandar Trust for the purpose of meaning of the word individual . We are of the considered opinion that the ratio of the Hon'ble Calcutta High Court is not applicable to the facts of the present case. The Hon'ble High Court defined the word indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early shows that the Ld. CIT(A) further provided opportunity to the assessee to adduce evidence to establish his case on the facts that the donors were having creditworthiness and relation exist between the donor and donee. However the assessee did not produce any evidence before the authorities below to prove the identity of the donor, their creditworthiness and genuineness of the transaction and even no information was provided about the relation between the assesse and the donors. The letters filed by the assessee of the donors were already rejected by the authorities below as of no relevance and the Tribunal also did not accept the same. 8. The findings of fact recorded above clearly shows that assessee made a wrong and bogus claim of exemption of the gift amount for the purpose of taxation. The assessee did not file any confirmation of the donor or there bank account. The assessee merely claimed that no confirmation could be obtained from the donor because of social reason that once they have been given a gift on the occasion of marriage of daughter of the assessee the assessee cannot ask for confirmation from them. This itself is no ground for cancellation of the penalty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten off , in the profit and loss account of the assessee. 8.3 Hon ble Dehi High Court in the case of Commissioner of Income-Tax Vs. Harparshad and Company Ltd. [2010] 328 ITR 53 held as under: Held, that the reasons given by the Tribunal for quashing the penalty proceedings were irrelevant, not germane to the issue and the Tribunal had lost sight of aspects which had been conclusively established in the quantum proceedings. The Tribunal had failed to take note of the fact that part of the claim as commission was allowed to the assessee not because R had rendered any services but because J had rendered services for which it was paid 1 per cent. of the commission by R out of the 3 per cent. received by her. As far as commission to R was concerned, it was accepted by the Tribunal in the quantum proceedings that she did not render any services at all. The assessee had failed to offer any explanation in respect of the addition of ₹ 1,83,078/- and it could be deemed to have concealed the particulars of income or furnished inaccurate particulars thereof, by virtue of this explanation. The Tribunal was not justified in deleting the penalty imposed by the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the amount was the assessee s own money which was introduced by way of gift in the name of the partner from a non-resident account of the donor, a distant relation of the donee. 9. Considering the facts of the case in the light of the above discussion and decisions referred to above, it is clear that no fresh evidence or fresh circumstances were produced by the assessee at penalty stage to explain the penalty matter. There is no bonafide explanation on the part of the assessee that gift amount is exempted from tax because assessee is not entitled for any exemption of income under section 56(2)(vi) of the Income Tax Act. It is a case of no evidence and no explanation offered by assessee to explain the genuineness of the gift in the matter. Assessee merely gave name of the donors but did not prove their identity, creditworthiness and genuineness of the transaction in the matter and further claim of assessee under section 56(2)(vi) was found to be wrong and bogus. Since assessee did not offered any explanation and whatever explanation was offered was not substantiated through any evidence or material on record therefore explanation 1 to section 271(1)(c) of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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