BHAVANJI S. BHADRA,MUMBAI vs. D.C.I.T. (OSD-I) CENTRAL RG.7, MUMBAI

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ITA 4872/MUM/2012Status: DisposedITAT Mumbai27 April 2016AY 2003-043 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the disclosure of bogus gifts was made only after the detection of income during search proceedings, making it non-voluntary. Therefore, the penalty was confirmed.

What were the facts?

The assessee appealed against a penalty imposed under Section 271(1)(c) for assessment year 2003-04. During a search, the assessee admitted to receiving bogus gifts totaling Rs. 50 lakhs, which were offered for taxation as they could not be substantiated.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when income is disclosed after detection during search operations and if such disclosure can be considered voluntary.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “B”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM

Hearing: 04/03/2016Pronounced: 27/04/2016

O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A), Mumbai, dated 22-5-2012, for the assessment year 2003-04, in the matter of imposition of penalty u/s.271(1)(c) of the I.T.Act.

2.

In this appeal, the assessee is aggrieved for levy of penalty of Rs.3,50,000/- in respect of bogus gift received by it.

3.

Ld. AR submitted that the return of income of the donor was filed at income of Rs.43,94,916/- for the relevant assessment year under consideration, on which donor has paid income tax of Rs.12,92,475/-. Out of its income the donor has given gift of Rs.10 lakhs to the assessee. As per ld. AR, the assessee has filed full explanation with regard to genuineness of gift, creditworthiness of donor and genuineness of 2 transaction, however, the department did not agree with it and during search assessee has also agreed to surrender this amount and to pay tax thereon.

4.

We have considered rival contentions and gone through the orders of the authorities below. From the record we found that there was search at the assessee’s premises. During the course of search, the assessee offered Rs.2.77 crores as additional income comprising of Rs.2.27 crores, Rs.10 lakhs and Rs.40 lakhs for A.Y.05-06, 03-04 and 01-02 respectively. The AO further stated that Rs.2.77 crores was offered on account of bogus short term and long term capital gian on sale of Bolton shares and Rs.50 lakhs was on account of bogus gifts obtained by the assessee in his name and in the name of family members. During the course of search assessment proceedings, the assessee could not prove the genuineness of the gift and accordingly the amount of Rs.50,00,000/- was declared as his additional income. The relevant portion of the assessee’s statement is as under :- “Gifts received on page no.135 to 139 are the total gifts received by me and family member amount to Rs.50 lacs. About the gifts amounted to Rs.50 lacs, I am offering for taxation since I am not able to prove identity of the donor and love and affection.” As the gifts amount was not even declared in the return filed in pursuance to the notice u/s.153A, the AO levied penalty which was confirmed by CIT(A) after giving detailed finding at para 3.6 to 3.10 of his appellate order, against which assessee is in further appeal before us. We found that similar penalty levied by the AO in assessee’s own case for

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