AMAR R. SONI,MUMBAI vs. ITO WD 19(3(1), MUMBAI

The common issue in all the grounds of appeal relates to confirmation of penalty of Rs.2,82,355/- by CIT(A) by not proving the explanation offered by the assessee qua the said gift to be false and without substantiating that the explanation of the assessee is not bonafide. A.Y. 05-06 [Shri Amar R. Soni vs. ITO] Page 3

The facts of the case are that the assessee in the assessment order made an addition of Rs.9,55,000/- u/s.68 on account of gift received by the assessee from Tejpal Mehta a non resident who was family friend of the assessee on the ground that the assessee failed to prove the genuineness of the gift. The ld. CIT(A) deleted the addition. However, on second appeal filed by the department, the Tribunal reversed the order of CIT(A) and upheld the order of A.O. by holding that the genuineness of the gift, capacity and creditworthiness were not proved by the assessee. Thus, the A.O. levied a penalty of Rs.2,82,355/- u/s.271(1)(c) of the Act.

The ld. CIT(A) confirmed the penalty by rejecting the submission of the assessee that he had shown the amount of gift received by the filing of amount in return which means that addition is not on account of the fact that assessee had concealed the particulars of income or furnished inaccurate particulars of income. The submission of the assessee further fortified by the order of CIT(A) who deleted the quantum addition by making the following observations, namely, identity of the donor is not in doubt. CIT(A) deleted the addition based on the declaration of gift, copy of passport, certificate from the donor’s bank, confirmation from donor, financial statement of the donor thereby discharging the initial burden on the assessee and thus, the action of A.O. is based on the suspicion and without any material. A.Y. 05-06 [Shri Amar R. Soni vs. ITO] Page 4

The ld. A.R. submitted before us that assessee had disclosed all the particulars relating to the gift received from the non-resident friend in his return of income. All the necessary evidences comprising the declaration of gift, copy of passport, certificate from the donor’s bank, confirmation from donor, financial statement of the donor thereby discharging the initial burden on the assessee and thus, the action of A.O. is based on the suspicion and without any material. Moreover, the ld. Counsel submitted that penalty u/s.271(1)(c) could not be imposed and sustained on the ground that quantum addition is confirmed by the Tribunal. The facts of the matter is that the quantum was first deleted by the CIT(A) and thereafter, confirmed by the Tribunal, this proved beyond doubt that the issue on which the penalty imposed was debatable with regard to which the different inferences were drawn. The ld. Counsel strongly placed reliance on the CIT vs. Reliance Petro Products (P) Ltd. (2010) 230 CTR 320, Devsons P. Ltd. vs. CIT (2011) 196 Taxman 21 (Delhi) & ITO vs. Dr. Sameer Kant Agarwal (2009) 34 SOT 12. The ld. D.R., on the other hand, relied on the orders of authorities below.

We have heard the rival submissions and perused the material on record. We find that the assessee received gift of Rs.9,55,000/- from Mr. Tejpal Mehta, a non resident family friend of the assessee and the facts of receiving the said gift was duly disclosed in the return of income by the assessee. A.Y. 05-06 [Shri Amar R. Soni vs. ITO] Page 5 The quantum addition was finally sustained by the Tribunal by reversing the order of CIT(A) which deleted the addition of Rs.9,55,000/-. We also note that the assessee filed before the A.O. and the CIT(A) the necessary evidences comprising the declaration of gift, copy of passport, certificate from the donor’s bank, confirmation from donor, financial statement of the donor thereby discharging the initial burden on the assessee and thus, the action of A.O. is based on the suspicion and without any material. We are of the view that the penalty u/s.271(1)(c) cannot be imposed where different conclusion and inferences are possible. In the present case, the fact that the addition of Rs.9,55,000/- was deleted by CIT(A) and thereafter the reversal of order of CIT(A) by the Tribunal itself proves that the issue involved is liable for different inferences. The bonafides of the assessee are not in doubt as he had filed all the necessary evidences qua the said gift with the IT authorities. In the case of CIT vs. Reliance Petro Products (P) Ltd. (2010) 322 ITR 158, the Hon’ble Supreme Court has held as under: “Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”

As a result, appeal filed by assessee is allowed.