TALAKSHI L. NANDU,MUMBAI vs. ACIT CEN CIR 17 & 28, MUMBAI

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ITA 7547/MUM/2013Status: DisposedITAT Mumbai15 January 2018AY 2003-044 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the addition made by the Assessing Officer was deleted in the quantum appeal by a previous order of the Tribunal. Since the quantum addition was deleted, the penalty levied on that addition has no basis.

What were the facts?

During a search, the assessee's premises were searched, and an addition of Rs. 10,00,000 was made on account of a gift received, which the assessee could not prove the genuineness of. Penalty proceedings were initiated under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition has been deleted. Whether the addition on account of gift was validly made in the absence of incriminating material found during search.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 68,Section 132,Section 143(3),Section 153A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH, JM Shri Talakshi L Naidu

For Appellant: Shri Vipul Shah
For Respondent: Shri V. Justin
Hearing: 18/10/2017Pronounced: 15/01/2018

आदेश / O R D E R PER R.C.SHARMA (A.M):

1.

This is an appeal filed by assessee against the order of CIT(A)-39, Mumbai dated 19/09/2013 for A.Y.2003-04 in the matter of imposition of penalty of Rs.2,87,700/- u/s.271(1)(c) r.w.s. 274 of the Income Tax Act, 1961. 2. The following grounds have been taken by the assessee:-

1. Re: Levy of penalty on the Addition u/s 68 with regard to gift received 1.1 On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [hereinafter referred to as 'the learned CIT (A)] erred in affirming the action of the Assessing Officer of levy of Penalty u/s. 271(l)(c) of Income Tax Act on treatment of Gifts received as "income from other sources" inspite of the fact that Shri Talakshi L Nandu no incriminating evidence being found during the course of search proceedings. 1.2 On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in discarding the various documentary evidence and explanations given during the course of assessment proceedings and appeal proceedings to prove the genuineness of the gift received. 2. The Appellant craves leave to add to, alter, amend or delete any ground of appeal.

3.

Rival contentions have been heard and record perused.

4.

Facts in brief are that a search and seizure action u/s 132 of the IT. Act, 1961 was carried out on 3.8.2006 on Euro Group of Companies. The assessee being an associate person of this group, his residential premises were also searched. Accordingly, the search related assessment for the year under consideration was completed u/s 143(3) r.w.s. 153A of the Act on 30.12.2008 determining total income at Rs. 11,11,290/- as against returned income of Rs.1,11,290/-. During the course of assessment proceedings, it was observed that the assessee has credited a sum of Rs 10,00,000/- being gift received from one Mr. Gyanchand C. Jain which the assessee had claimed as exempt income. 5. During the course of assessment proceedings, the assessee could not prove the genuineness of the transaction of receipt of the said gift of Rs.10 Lacs. The verification and enquiries conducted during the course of assessment proceedings revealed that the donor is neither a relative of the assessee nor the assessee could furnish the details of occasion on which he received the gift. The assessee could not also prove the creditworthiness of the donor who had given total gifts of Rs.

Shri Talakshi L Nandu 1,10,00,000/- to eleven persons of the same group i.e. Euro Group. Thus the credit of Rs.10 lacs appearing in the capital account of the assessee on account of gift which was claimed as exempt was charged to income tax as the assessee could not prove that the said gift is given by the donor voluntarily and out of love and affection. Since the assessee concealed the particulars of income and furnished inaccurate particulars in the return filed to the extent of Rs. 10,00,000/-, penalty proceedings u/s 271(1)(c) of the I.T. Act, were initiated and penalty of Rs.2,87,700/- was levied.

6.

By the impugned order CIT(A) confirmed the action of AO against which assessee is in further appeal before us.

7.

At the outset, learned AR placed on record the order of the Tribunal in quantum appeal filed by the assessee wherein addition has been deleted by the Tribunal in vide order dated 24/05/2017.

8.

We have carefully gone through the order of the Tribunal wherein the addition so made by the AO on account of gift has been deleted by the Tribunal after observing as under:- 7. We have examined the details and noticed that notice u/s 143(2). of the Act became time barred on 31.08.2004 at the time when the search took place much later on 03.08.2006. Therefore, it follows that as on the date of search,: there was an assessment completed or processing of return of income of the assessee under section 143(1) of the Act. Subsequently, the A.O. initiated. proceedings under s. 153A and in the assessment completed under s. 143(3) r.w.s 153A, the A.O. has brought to tax a sum of Rs. 10,00,000/- being, the amount of gift received from Shri Gayanchand Jain without any incriminating material found during the course of search. Once this is the position the issue is clearly covered in favour of assessee and against the Revenue by the decision of. Hon'ble Bombay High Court in the case of Continental Warehousing. Corporation (Nhava Sheva) Ltd. (Supra).

Shri Talakshi L Nandu Respectfully, following the same and in the given said of facts, we are of the view that this gift received from Shri Gayandhand Jain for an amount of Rs. 10,00,000/- disclosed in the return of income as evidence by the capital account and which has not been abated, the-' amount of gift cannot be added. Accordingly, we reverse the orders of CIT(A) as, well as that of the AO and delete the addition in all these eleven appeals of the; assessee.

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