PRINCIPLE COMMISSIONER OF INCOME TAX-I vs. SHRI BHUPENDRA CHOUDHARY

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 329/2017 Principal Commissioner Of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Shri Bhupendra Choudhary, C-16, Amanishah Road, Hari Nagar, Shastri Nagar, Jaipur. ----Respondent Connected With D.B. Income Tax Appeal No. 330/2017 Principal Commissioner Of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Shri Bhupendra Choudhary, C-16, Amanishah Road, Hari Nagar, Shastri Nagar, Jaipur. ----Respondent For Appellant(s) : Mr. Anuroop Singhi For Respondent(s) : Ms. Ishita Rawat for Gunjan Pathak HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 03/04/2018 1. In both these appeals, common questions of law and facts are involved, hence they are decided by this common judgment. 2. By way of these appeals, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the appeal of the Department, confirming the order of CIT (A).

(2 of 6) [ITA-329/2017] 3. This Court while admitting the appeals framed the following substantial questions of law: “In DBITA No. 330/2017 i) Whether on the facts and in the circumstances of the case and in law the Tribunal has erred in confirming the order of CIT(A) who deleted the addition of Rs. 37,03,900/- on account of unexplained cash deposits made in bank account? In DBITA No. 329/2017 i) Whether on the facts and in the circumstances of the case and in law the Tribunal has erred in confirming the order of CIT(A) who deleted the penalty u/s 27ID of the Act amounting to Rs. 33,00,000/- imposed by JCIT, Range, Jaipur on account of unexplained cash deposits made in bank account?” 4. Counsel for the appellant Mr. Singhi has taken us to the observations made by the Assessing Officer which reads as under: 1. Cash

deposit

Rs.25,46,000/- (1498000+1048000) in ICICI bank accounts as per AIR information. As regards AIR information that the assessee has deposited a sum of Rs.14,98,000/- in his bank account No.096901000654 and Rs.10,48,000/- in his Saving Bank a/c No.15370100082 with ICICI Bank, the assessee was asked to explain the source of cash deposits in his bank accounts vide this officer letter No.1221 dated 15.07.2013 and again vide letter No.2192 dated 17.09.2013. In response to this office letter No.1701 dated 07.01.2013 Sh. Girish Garg A/R of the assessee attended and submitted his written submission on 16.01.2013 wherein he submitted that the assessee Shri Bhupendre Choudhary obtained unsecured loans of Rs. 27,00,000/- from his father Shri Narain Lal Choudhary whose PAN is AFGPC7585P. In another letter dated 11.09.2013 the A/R changed his stand that the assessee had received cash gift of Rs.27,00,000/- from his father Sh. Narain Lal Choudhary. During the period cash deposited in bank out of cash gift received from father Shri Narayan Lal Choudhary. From the above it is clear that assessee himself was not clear till 11.09.2013 that assessee had received unsecured loans of Rs.27 lacs, or gift from Sh. Narain Lal (individual- PAN

(3 of 6) [ITA-329/2017] AFGPC7585P) or gift from HUF and how much gift received from Individual/HUF. Sh. Girish Garg CA filed capital a/c and balance sheet of assessee and Sh. Narain Lal Choudhary as on 31.03.2011 with his letter dated 11.09.2013. Again the A/R of assessee on 28.10.2013 filed different capital a/c and statement of affairs of both assessee as well as his father Shri Narayan Lal Choudhary as on 31.03.2011. There was a drastic change in both capital account and atatement of affairs. However from perusal of the balance sheets and capital accounts of Shri Narayan Lal Choudhary, submitted by the A/Rs the following facts emerge:- SI. No. Name

from whom amount received Amount Capital a/c as on Nature of payment Date

of reply of the A/R 1. Sh. Narayan Lal, Choudhary 27,00,000/- Unsecured Loans 16.01.2013 2. Sh. Narayan Lal, Choudhary 27,00,000/- 31.03.2011 Gift 11.09.2013 3. Sh. Narayan Lal, Choudhary Sh. Narayan Lal, Choudhary 9,00,000/- 14,00,000/- 31.03.2011 31.03.2011 Gift Unsecured loan

for Kekri Land 28.10.2013 28.10.2013 4. Narayan

Lal, HUF 24,00,000/- 31.03.2011 Gift by HUF 28.10.2013 From the above it is clear that assessee has cooked up a story to conceal truth for source of generation of cash deposits in his bank accounts. All these are prepared as per his will when cash was selected for scrutiny. These capital accounts and statement of affairs submitted by the assessee are forming part of this order. From the above table it is seen that in the capital account as on 31.03.2011, a gift of Rs.27,00,000/- has been shown to have been given to the assessee. Again the statement of affairs as on 31.03.2011 submitted by the A/R of the assessee on 28.10.2013 wherein it is seen that Sh. Narayan Lal Choudhary, has given a gift of Rs.9,00,000/- instead of Rs.27,00,000/-. Further it is seen that Sh. Narayan Lal Choudhary, has given Rs. 14 lacs as unsecured loans to the assessee for purchase of Factory land F-131-132, RICO, Industrial Area, Kekri. This loan of Rs.14,00,000/- for the purchase of Kekri Land stands verified from the bank account of Shri Narayan Lal Choudhary.

(4 of 6) [ITA-329/2017] 5. He has further taken us to the observations made by the AO while imposing penalty which reads as under: The imposition of penalty u/s 271D of IT Act, 1961, in this case is supported by various judicial pronouncements. In the case of Kum. A.B. Shanthi, 255 ITR 258 (SC) the Hon’ble Court held that the object of introducing S.269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has made some explanation for the same. Similar views have also been expressed in the case of Sundarshan Cold Storage (P) Ltd. 296 ITR 188 (MP), Kasi Consultant Corporation 311 ITR 419 (Mad.) R.K. Singhal 221 ITR 412 (Raj.) and Bhalotia Eng. Work Ltd. 275 ITR 399 (Jharkhand). In view of the above, it is established that assessee has taken cash loan of Rs.33,00,000/- in violation of section 269SS of the Act and therefore, the assessee is liable for penalty of Rs.33,00,000/- i.e. equal to the amount of Loan accepted in cash. Accordingly, penalty for Rs.33,00,000/- is imposed on the assessee is terms of section 271D of the I.T. Act. 6. He has also taken us to the observations made by CIT (A) which reads as under: 3.1.2 I have duly considered AO’s contention and appellant’s submission, perused the materials on record, duly considered factual matrix of the and also applicable legal position. Here the moot question is whether donors are having sufficient funds for providing gift to the assessee and balance amount is verifiable from the cash flow statement submitted by the assessee or not? The assessee contends that he is regularly filing his Return of Income-tax (ROI) from AY 2010-11 declaring salary income and income from other sources and both of his parents Sh. Narayan Lal (father), Smt. Manbhari Devi (Mother) are also regular income tax assessee. It is also submitted that the source of income of assessee’s father Sh. Narayan Lal is from pension/interest. The source of income of the Narayan Lal HUF is from agriculture whereas the source of income of his mother Smt. Manbhari Devi is from dairy, capital gain and income from other sources. During the assessment proceeding, AO noticed that as per AIR Information, there is a cash deposit of Rs.

(5 of 6) [ITA-329/2017] 25,46,000/-= in ICICI Bank account. On further, enquiry, it is noticed that there is a total deposit of Rs.37,03,900/- in assessee’s various bank accounts which is unexplained. AO further observed that assessee’s claim cash gift of Rs.9lacs received from his father Sh. Narayan Lal, and cash gift of Rs.24 lacs received from Narayan Lal HUF, is a concocted story of the purported gift and therefore AO considered the same is as unsecured loan accepted in cash in violation of section 269SS of the Act. AO has examined on oath of Sh Narayan Lal, father of the assessee but did not arrive at any adverse finding, and also has not made any reference in this regard in the assessment order. Assessee has also submitted that all the cash deposits made in bank accounts are verifiable from the cash flow statements filed before the AO and in the cash flow statement, source of Rs.9,00,000/- is explained gift received from father Sh Narayan Lal Choudhary and Rs.24,00,000/-= as gift received from Narayan Lal HUF. Assessee also explained the source of money of Rs. 9,00,000/- = given by father as withdrawals from Savings Bank A/c from SBBJ and source of immediate deposit in SBBJ a/c was sale proceeds of land sold for Rs.11,00,000. Similarly, source of HUF was explained as receipts from regular agricultural income, realization of debtors and past savings and in suport of the same, assessee filed income tax returns from AY 2006-07 onwards. Further, in the statement of affairs as on 31.03.2007, debtors of Rs. 23,00,000/- was shown which was reduced to Rs.1,06,320/- as on 31.03.2011. To support his contentions, assessee has also filed assessment orders of M/s Narayan Lal HUF for 2007-08 wherein debtors to the extent of Rs 17,65,000/- was treated unexplained. In view of facts narrated above it is seen that source of cash deposits made in bank accounts are fully explained from the cash flow statement and donors have got sufficient funds in their hands for providing gift to the assessee. Even AO has on the basis of enquiries conducted could not point out any defects in the evidences filed. 7. He contended that CIT (A) has misconstrued the complete question inasmuch as the assessee himself in his own statement which are reflected as hereinabove has changed his stand from time to time. Initially he has shown unsecured loans but

(6 of 6) [ITA-329/2017] thereafter he has shown gift. Again on 28.10.2013 he has admitted the amount as gift of Rs.9 lac and another Rs. 14 lac unsecured loan and then again 24 lac as gift by the HUF. However, the Tribunal while considering the matter has only reproduced the finding of CIT (A) in para 3.2. 8. Counsel for the respondent has supported the order of CIT (A) and the Tribunal and contended that in view of concurrent finding of both the authorities, the transaction of gift is not covered under Section 269SS. In that view of the matter, having benefit of doubt, the finding arrived at by CIT (A) and the Tribunal is not required to be disturbed. 9. Heard the learned counsel for the parties. 10. While considering the matter, the CIT (A) has rightly observed that this is not a gift and taking into consideration that the donor has a sufficient fund and that is not in dispute that the amount which has been paid by the HUF was not having sufficient fund. In that view of the matter, we are confirming the order of CIT (A) and the Tribunal. 11. Thus, the issues are answered in favour of assessee against the Department. The appeals stand dismissed. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J //bmg 93-94