MAHANANDA G. PAWAR,PUNE vs. INCOME-TAX OFFICER,

आदेश / ORDER

PER D. KARUNAKARA RAO, AM :

This appeal has been filed by assessee against the order of CIT (Appeals)- 3, Pune dated 23.03.2016 for the assessment year 2004-05.

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u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), the

Assessing Officer assessed the total income of assessee at Rs.18,81,300/- and

in the process, Assessing Officer made addition of Rs.13,40,000/- on account

of bogus gifts u/s.68 of the Act. Relevant discussion is given in Para 3.4 and

3.5 of the assessment order. The Assessing Officer made addition u/s.68 of the

Act after rejecting the assessee’s claim of genuine gifts of (i) sum of

Rs.10,00,000/- received from her mother and (ii) sum of Rs.5,00,000/- as gift

from her brother-in-law. The Assessing Officer initiated penalty proceedings

separately u/s.271(1)(c) of the Act for furnishing inaccurate particulars of

income and levied penalty of Rs.4,02,000/- on the said addition of

Rs.13,40,000/- vide order dated 19.06.2009. The Assessing Officer discussed

this fact vide para 3.4 and 3.5 of the assessment order and the same are

extracted as under:

“3.4 The sale deed executed on 16.01.2003 by the mother of the assessee with Shri OmPrakash Laxmichand Sahdeo HUF of Ahmednagar of the land situated at Mauje Malkapur bearing S. No. 76 admeasuring 2.64 hectare was for a total consideration of Rs.1,60,000/-. As for the balance amount it is stated that she has extended the gift out of the sale of lands that belonged to the HUF of which the mother of the assessee also is a member. However, it is seen that the said HUF has not been partitioned and that the share in the property of the HUF members are undivided. Moreover, the assessee could not establish that the said sum was actually in the possession of her mother. There is absolutely no evidence for this and the assessee could not produce or cause to be produced any such evidence that would support her claim. In absence of any evidence in this regard, it is held that the gift: transaction reported by the assessee is actually a sham transaction and that the said money actually belonged to her. Out of total gift' given by the mother only Rs.1,60,000/- is allowable and balance amount i.e. Rs.8,40,000/- for which the assessee could not produce a reasonable explanation or any evidence, is treated as the assessee's own money and is brought to tax u/s. 68 of the IT Act, 1961. Penalty proceedings u/s.271(1)( c) of the Act for furnishing inaccurate particulars of income is initiated separately.

3.5. The assessee has also stated that her brother in law has gifted her amount of Rs.5 lacs. As the said gift was given by means of cash and as there was no evidence of the transaction of this amount furnished by the assessee, the bank account of Shri Mahadev R.Vithole was examined. A perusal of the bank accounts as well as the reply submitted by the assessee reveals the details of withdrawal made by Shri Mahadev R. Vithole as under:

Date Amount

11/09/2002 Rs.40,000/-

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18/01/2003 Rs.51,000/- 12/03/2003 Rs.32,000/- It is clear from the above details that the withdrawals made from these accounts are on dates which are much prior to the date (29.08.2003) on which the gift has been given. Moreover, even if the total withdrawals made from the bank account is taken, it works out to Rs.1,23,000/-. In his written undertaking Shri Mahadev R. Vithole has stated that the said gift has been given out of his savings in Amravati Zilla Madhyavarti Sahakari Bank Shirsa Br. Account number 9689. But the amounts withdrawn from this bank account do not sufficiently cover up the amount donated by him. For the balance amount, Shri Vithole has stated that he has given the same out of monies received from sale of his land. However, there is no evidence either with the assessee or with Shri Vitole to establish the gift transaction that was made in cash on the said date. Hence, an amount of Rs.5,00,000/- for which the assessee could-not produced reasonable explanation or any evidence, is treated as the assessee's own money and is brought to tax u/s.68 of the 1.T. Act, 1961. Penalty proceedings u/s.271(1)(c) of the Act for furnishing inaccurate particulars of income is initiated separately.”

Rs.4,02,000/- on the said addition Rs.13,40,000/-.

Tribunal by raising following grounds:

“1. The learned CIT(A) erred on facts and in law in confirming penalty of Rs.4,02,000/- on gifts of Rs.13,40,000/- received from close relatives only on the ground that addition has been upheld by CIT(A) in quantum proceedings. She failed to appreciate the submissions of the assessee in this regard. She also erred in stating that no evidences were filed either in quantum proceedings or penalty proceedings, when all the documents and evidences were already on record with the AO. 2. The appellant craves leave to add, alter, delete or substitute all or any of the above grounds of appeal.”

of disclosing of full details by the assessee in the return of income filed in

regular course. In the assessment proceedings also, all the details pertaining

to the gift transactions were submitted to the Assessing Officer and CIT(A).

However, Lower Authorities have taken a different view in the matter and

rejected the claim of the assessee. Further, it is not the case of the Revenue

that any incriminating /tangible material is found which is capable of proving

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the incrimination nature of the said gift transactions involving mother and

brother in law. We find, the issue of genuineness of the gifts is debatable on

the facts of the present case. Therefore, on the ground of debatability of issue,

Ld. Counsel submitted that the penalty levied by the Assessing Officer and

approved by the CIT(A) should not be confirmed. Further, Ld. Counsel for the

assessee submitted that addition on merits was not agitated by the assessee

before the Tribunal. The assessee accepted the decision of the CIT(A) and paid

taxes on the said addition of Rs.13,40,000/-. Therefore, as per Ld. A.R., the

penalty should not be sustained.

as order of the CIT(A) in confirming the said penalty.

penalty u/s.271(1)(c) of the Act for furnishing inaccurate particulars of income.

A perusal of the facts placed before us, we find that the particulars of income

furnished by the assessee are free from any inaccuracy. Although, the

particulars of income furnished by the assessee relating to the claim of gifts

from mother/brother-in-law, were not accepted by the Assessing Officer and

the CIT(A). We find the claim of the assessee is not free from the dispute or

debate. We find that there is no discrepancy of furnishing particulars of

income, per-se. The Assessing Officer did not bring any incriminating/tangible

material against the claim of the assessee which reveals the inaccuracy of

furnishing particulars of income. Assessee claims that they are genuine gifts

and the Revenue claims that they are not genuine on the ground of non-

discharge of onus by the assessee. The view taken by the Revenue Authorities

on merits is one plausible view and therefore, we are of the opinion that on the

ground of debatability and full disclosure of the relevant facts, it is not a fit

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case for levying penalty u/s. 271(1)(c) of the Act. Accordingly, ground raised by the assessee is allowed.

Order pronounced on 17th day of October, 2018.

Sd/- Sd/- (�वकास अव�थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

पुणे / Pune; �दनांक / Dated : 17th October, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-3, Pune. 4. The Pr. CIT-2, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.