SH. RAKESH GUPTA,NEW DELHI vs. ITO, NEW DELHI

We have heard arguments of both the sides and carefully perused the relevant material on record placed before the Tribunal. The learned counsel for the assessee submitted that no incriminating evidence was found during assessment proceedings to impeach or discredit genuineness against the sources of funds as per submissions of the assessee before the AO and the assessee surrendered the amount voluntarily to buy piece of mind and avoid mental harassment on the condition that no penalty shall be levied on the assessee. The learned counsel pointed out that the ld. CIT(A) for confirming penalty has placed reliance on the decision of Hon’ble Delhi High Court in the case of Zoom Communication Private Ltd. reported as 191 taxmann 179 (Del) which is not applicable to the present case as that was the case of false claim with malafide intention to evade taxes and in the present case the assessee voluntarily surrendered the amount on account of expenditure incurred on the occasion of marriage of his daughter. The learned counsel vehemently pointed out that penalty imposed by the AO wrongly confirmed by the learned CIT(A) hence the penalty may kindly be cancelled.

Replying to the above, the learned Sr. DR strongly supported the action of the AO and first appellate authority and submitted that when the department had detected concealment during assessment proceedings based on tax evasion petition then penalty has to be levied on the assessee. 4. On careful consideration of rival submissions and perusal of relevant record from the penalty order, we observe that the Assessing Officer imposed penalty by observing that the assessee deliberately concealed particulars of his income hence the penalty has to be levied. The learned CIT(A) confirmed the penalty by placing reliance on the decision of Hon’ble Delhi High Court in the case of Zoom Communication Private Ltd,.(supra).

From the orders of the authorities below in quantum and penalty proceedings the undisputed facts is that the assessee filed return declaring income of Rs. 1,70,950/- and his case was selected for scrutiny and assessment was completed u/s 143(3) of the Act at total income of Rs. 7,20,950/- by making an addition of Rs. 5,50,000/- on account of expenditure on the marriage of daughter of the assessee. During the assessment proceedings, the assessee surrendered said amount before the AO vide letter dated 9.1.2013 stating that “in connection of above said proceedings to have peace in mind and to avoid further litigations I surrender the amount of cash received by me from my relatives as gift on the occasion of marriage of my daughter.” Admittedly assessee did not file any appeal before the learned CIT(A) against the above assessment order and subsequently penalty was levied on the assessee on this surrendered amount.

At the very outset, on respectful perusal of the decision of Hon’ble Delhi High Court in the case of Joom Communication Private Ltd.(supra), we observe that the Hon’ble Delhi High Court confirmed the penalty by observing that person who make claims of unacceptable nature, actuated by a malafide intention to evade tax which is otherwise payable by him attracts penalty. Hence, it was a case of bogus and malafide claim. In the present case, penalty has been levied on account of expenditure incurred by the assessee on the occasion of his daughter’s marriage. During the assessment proceedings when the assessee surrendered the said amount he categorically stated that to have peace in mind and to avoid further litigations he surrendered an amount of cash received by him from his relatives as gift on the occasion of marriage of his daughter. The statement of surrendered does not show any act of concealment of income or furnishing of inaccurate particulars of income by the assessee. Per contra, from the surrender letter it is clear that the assessee surrendered the amount of cash received by him on the occasion of marriage of his daughter to buy peace of mind and to terminate litigation and thus he did not file any appeal before any higher forum against the addition. We, therefore, are of the respectful opinion that the benefit of the ratio of the decision of Hon’ble Delhi High Court in the case of Zoom Communication (supra) is not applicable to the present case not being a case of malafide unsustainable claim hence benefit of the ratio of this decision is not available for the Revenue in the present case and learned first appellate authority was not correct in taking support of the ratio of this judgment.

In view of foregoing discussion, we are inclined to hold that it is not a case of concealment of income or furnishing of inaccurate particulars of income and merely because the claim of assessee, that he incurred expenditure on the occasaion of marriage of his daughter out of cash gifts received from his relatives, was not accepted or was not found to be acceptable by the Revenue authorities does not automatically attracts penalty provision of section 271(1)(c) of the Act. In our humble opinion penalty in the present case is not leviable in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Private Ltd., and hence we direct the AO to cancel the penalty. Accordingly, the sole ground of the assessee is allowed.

In the result, appeal is allowed.