KESHAV DALAL,PALWAL vs. DCIT, CENTRAL CIRCLE-31, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”, NEW DELHI BEFORE SHRI VIMAL KUMAR, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER ITA No. 5772/Del/2026, A.Y. 2016-17 Keshav Dalal Vs. DCIT, House No. 32, Central Circle-31, Housing Board Colony, New Delhi Palwal Haryana �थायीलेखासं./जीआइआरसं./PAN/GIR No: APYPD2023D Appellant .. Respondent Appellant by : Sh. Surjeet Singh, CA Respondent by : Shri Tarun Sharda, Sr. DR Date of Hearing 06.08.2026 Date of Pronouncement 12.08.2026

O R D E R PER VIMAL KUMAR, JM: The appeal filed by the appellant/assessee is against order dated 25.03.2026 of the Ld. Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as “the CIT(A)”] arising out of penalty order dated 31.03.2024 of Ld. Assessing Officer/ DCIT, Central Circle-31, new Delhi u/s 271(1)(c) of the Act

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in pursuance to assessment order dated 27.12.2019 u/s 153A of the Act for A.Y. 2016-17.

2.1 Against penalty order dated 31.03.2024 of ld. AO, the assessee filed appeal before the ld. CIT(A) which was dismissed vide order dated 25.03.2024.

“1. Because the action for levying the Penalty u/s 271(1)(c) is being challenged on facts and law since AO has not specified under which limb penalty is levied i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. 2. Because the action is under challenge on facts and law for levying penalty of Rs 1,20,000 u/s 271(1)(c) overlooking the submission and documents filed during

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quantum proceedings. Moreover, merely the contention of the assessee is not accepted, it does not mean that penalty can be levied u/s 271(1)(c). 3. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee.” 4. Ld. Authorized Representative for appellant/assessee submitted that Ld. CIT(A) erred in confirming penalty order failed to appreciate that the assessee had received Rs. 4 lacs from Sumer Singh. The assessee had got the amount through the banking channel. The identity of donor had been established, therefore, penalty u/s 271(1)(c) of the Act was not imposable. Hon’ble High Court of Punjab and Haryana in CIT vs. Balbir Singh had held that penalty u/s 271(1)(c) of the Act was not imposable, even though the genuineness of gift was not accepted and the amount of gift was added to the total income of assessee u/s 68 of the Act. Reliance was placed on order dated 16.03.2012 in ITA No. 1236/Mum/2006 titled as Shri Chandrkant J Shah vs. ITO.

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Act for A.Y. 2016-17 on account of concealed income of Rs. 4 lacs. The confirmation of Account, PAN Card, Bank Statement of Sh. Sumer Singh page No. 5 to 7 and Bank statement of assessee page No. 8 of paper book undisputedly established that the assessee received Rs. 4 lacs from Sh. Sumer Singh through banking channel. Therefore, the identity, genuineness and creditworthiness of Sh. Sumer Singh was established.

“5. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the claim of the assessee of having received gifts from 8 donors aggregating to Rs.11,25,000/- was supported by the gift deeds executed by the concerned donors. All the relevant details of the said donors such as, names, addresses, premium account Nos. were also duly given in the said gifts. The AO, however, treated the said gifts as bogus and added the entire amount of gifts to the total income of the assessee u/s 68 treating the same as unexplained cash credit on the ground that the donors had no financial capacity to give such gifts to the assessee. He also found that cash was deposited in the bank accounts of many donors just before giving cheques to the assessee towards gifts. It is observed that the total addition of Rs.11,25,000/- made by the AO on account of bogus gifts, however, has been restricted initially by the learned CIT(Appeals) to Rs.6,25,000/- and finally by the Tribunal to Rs.3,50,000/- in the quantum proceedings accepting the remaining amount of gifts as genuine. Moreover, even if it has been alleged by the AO that the gifts were arranged by the assessee by paying premium amount, there is nothing brought on

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record to support and substantiate the said allegation. There is also nothing brought on record to show that the cash deposited by the donors in their accounts prior to giving gifts to the assessee was actually belonging to the assessee and the same was given by the assessee to the said donors for returning the same in the form of gifts. In the case of Addl. CIT vs. Rawalpindi Flour Mills Ltd. reported in 125 ITR 243, it was held by the Hon'ble Allahabad High Court that if the assessee fails to prove the genuineness of the loans in the assessment proceedings, the addition to the total income u/s 68 can be said to be justified but on that ground alone penalty u/s 271(1)(c) cannot be imposed. In the case of CIT vs. Bhimji Bhanjee & Co. 146 ITR 145, cash credits were found in the books of the assessee. In the assessment proceedings, assessee admitted the existence of creditors and stated that he was not in a position to produce the parties in whose names the said cash credits appeared. The ITO worked out the amount of such peak credits and assessed the said amount as income of the assessee. He also imposed penalty u/s 271(1)(c) which was cancelled by the Tribunal. On reference, the Hon'ble Bombay High Court upheld the decision of the Tribunal holding that there was nothing on record to show that the amount of cash credits added to the total income of the assessee was his concealed income earned from undisclosed sources. In the case of CIT vs. Balbir Singh reported in 214 CTR 147, the Hon'ble Punjab & Haryana High Court has held that the amount allegedly received by the assessee as gift having been disclosed by him and the same having come through banking channels and the identity of the donor having been established, penalty u/s 271(1)(c) was not imposable even though the genuineness of gift was not accepted and the amount of gift was added to the total income of the assessee u/s 68.”

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Order pronounced in the open court on 12.08.2026

Sd/- Sd/- (KRINWANT SAHAY) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12.08.2026 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI