SANJAY KOHLI, MUMBAI vs. ACIT CC 25, MUMBAI

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ITA 4335/MUM/2014Status: DisposedITAT Mumbai08 January 2016AY 2003-044 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the basis for levying the penalty had ceased to exist as the addition on which the penalty was levied was itself deleted by a prior Tribunal order. Therefore, the penalty could not be sustained.

What were the facts?

The Revenue appealed against the deletion of penalty levied under Section 271(1)(c) on a gift of Rs. 50,00,000. The original assessment had not made any addition on account of this gift, and the addition was later made during search proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition has been deleted. The validity of making an addition on grounds not emanating from search proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI

Before: Shri Joginder Singh, & Shri Ashwani Taneja

For Appellant: Shri Nishi Gandhi (AR), Shri J. Saravanan (DR)
Hearing: 8/01/2016

आदेश / O R D E R Per Ashwani Taneja (Accountant Member):

1.

This appeal has been filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals)-39, Mumbai {(in short Ld. CIT(A)} dated 3.03.2012 for the 2 Sanjay Kohli assessment year 2003-04, decided against the quantum order u/s 271(1)(c) of the Act passed by the Assessing Officer (in short ‘AO’).

2.

During the course of hearing, arguments were made by Shri Nishi Gandhi, Authorised Representative (AR) on behalf of the Assessee and by Shri J. Saravanan, Departmental Representative (DR) on behalf of the Revenue.

3.

In this appeal, assessee has challenged the levy of penalty u/s 271(1)(c) on the amount of gift of Rs.50,00,000/-.

3.1. We have heard both the parties. It is brought to our notice that impugned amount of addition on which penalty was levied has been deleted by the Tribunal in order dated 14.01.2015 the relevant portion of the above said order of the Tribunal is reproduced below:

“7. We have heard the rival contentions and perused the record. The admitted facts are that the assessee had duly disclosed the receipt of gift of Rs.50.00 lakhs in the original return of income filed for this year well before the date of search. It is also an undisputed fact that the assessing officer, during the course of original assessment proceedings, has made enquiries about the gift not only with the assessee, but also with the donor directly. Both the assessee as well as the donor has duly replied to the queries raised by the AO. Having satisfied with the 3 Sanjay Kohli genuineness of the gift, the assessing officer did not make any addition.

8.

During the course of search proceeding, the department has found the gift confirmation letter and the AC has proceeded to examine the same on the basis of this document. In this regard we agree with the contentions of the Ld A.R that this gift confirmation letter cannot be considered to be an incriminating material warranting an examination, since it only confirms the disclosure already made by the assessee and not against such disclosure. A material can be considered to be an incriminating material, only if it shows that the apparent was not real. A perusal of the present assessment order also shows that the assessing officer has only revisited the concluded matter relating to the gift and assessed the same on certain new grounds not emanating from the search. 9.In our view, the decision rendered by Hon'ble jurisdictional Bombay High Court in the case of Mural' Agro Products Ltd (supra) comes to the support of the assessee. i.e. the assessing officer is not entitled to disturb the concluded assessments in the absence of any incriminating material. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the assessment of gift amount of Rs.50.00 lakhs in this year. We notice that the assessee has raised this legal ground before the Ld CIT(A), but the first appellate authority has declined to admit the same. In our view,

4 Sanjay Kohli the action of Ld CIT(A) in rejecting the legal ground is not justified. Accordingly, we set aside the order of Ld CIT(A) and direct the assessing officer to delete the addition of Rs.50.00 lakhs relating to the gift receipt.”

3.2. Thus, it is noted from the above that the basis of levy of penalty ceased to exist. Under these circumstances, penalty cannot be sustained. Therefore, penalty is directed to be deleted.

4.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 8th January, 2016.

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