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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM]
ORDER Per Shri Mahavir Singh, JM:
This appeal by assessee is arising out of order of CIT(A), Siliguri in Appeal No.07/CIT(A)/Slg/2011-12 dated 17.01.2013. Assessment was framed by ITO, Ward-1(1), Siliguri u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2003-04 vide its order dated 31.01.2006. Penalty was imposed by ITO, Ward-1(1), Siliguri u/s. 271(1)(c) of the Act vide its order dated 31.03.2011.
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty u/s. 271(1)(c) of the Act to the extent of Rs.1,01,324/- out of total penalty of Rs.2,37,040/-. For this, assessee has raised following two grounds: “1. For that on the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the penalty to the extent of Rs.1,01,324/- out of the total penalty of Rs.2,37,040/- imposed by the AO u/s. 271(1)(c).
For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have deleted the entire penalty of Rs.2,37,040/- as the appellant had neither concealed his income nor furnished any inaccurate particulars thereof.”
Now only issue before us is as regards to levy of penalty u/s. 271(1)(c) of the Act by AO and confirmed by CIT(A) on account of following bogus gifts of Rs.3.5 lacs: “Pradip Mallick 27.03.2003 Rs.1,00,000/- Sunita Mallick 27.03.2003 Rs.1,00,000/- Benoy Saha 28.01.2003 Rs.1,50,000/-”
Briefly stated facts are that all the above three donors had deposed before the AO and admitted having been made gifts to the assessee. The facts regarding following three are as under:
i) Regarding Shri Benoy Saha. During the course of deposition it was stated by Shri Benoy Saha that he is employed with M/s. Sathi Times, Prop. Sri Ratan Muhury. According to him, Shri Saha made cash gift of Rs.1,50,000/- on 28.10.2003 to his employer Shri Ratan Muhury. It was also stated by Shri Binoy Saha that his annual salary income during the year was Rs.1,00,000/-. Besides his salary income he had also business income from supply of watches to different shop and income from money lending business. ii) Regarding Shri Pradip Mallick. During the course of deposition u/s. 131 of the Act, Sri Pradip Mallick stated that he made cash gift of rs.1,00,000/- to his friend Sri Ratan Muhury on 27.03.2003 on his request. It was stated by Sri Mallick that he is the Principal cum Proprietor of St. Pauls School, Shiv Mandir. He maintains his bank account with Central Bank of India, Shiv Mandir Branch. iii) Regarding Smt. Sumita Mallick. During the course of her statement recorded u/s. 131 she stated that she is a graduate and her source of income is tuition and knitting job. She also maintains joint bank account with her husband with CBI, Shiv Mandir Branch. On request from her husband’s friend Sri Ratan Muhury she made cash gift of Rs.1,00,000/- on 27.03.2003.
The AO in all the three cases had taken report from Inspector who reported that these three persons are hand to mouth condition and cannot make such huge gifts to the assessee. Accordingly, these amounts were added as unexplained cash credit/bogus gifts u/s. 68 of the Act. Aggrieved, assessee preferred appeal before CIT(A) and ITAT, both of whom confirmed the addition made by AO u/s. 68 of the Act on account of bogus gifts received by the assessee.
In the meantime, the AO started penalty proceedings and levied penalty by observing as under: “The assessee was issued with re-fix notice for hearing. In response to the notice Sri Sujit Basu, Advocate, AR of the assessee appeared and accepted that there has been evasion of tax. He also made prayer that as it is the first time such discrepancies were found in the books of the assessee, the penalty may be imposed at minimum as it shall put huge burden and bring great financial crisis on the assessee which he may not be able to bear with. Hence, considering the facts and circumstances of the case one time of tax evaded is imposed as penalty u/s. 271(1)(c).”
3 Ratan Muhury AY 2003-04 Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the penalty on the reasoning that the creditworthiness of these parties have not been proved. Aggrieved, now assessee is in appeal before us.
We have heard rival submissions and gone through facts and circumstances of the case. We find from the penalty order that the AO has no where proved that there is concealment of income or furnished inaccurate particulars of income. The only premise of the AO is that the AR of the assessee accepted that there is evasion of tax and on mere admission penalty is levied. We find that during deposition u/s. 131 of the Act, all the three persons who appeared before AO and confirmed the fact of making their gifts. Although the AO has not accepted the said gifts as genuine for the reason that the creditworthiness of these parties, according to him, is not proved but AO could not bring any contrary evidence on record during the course of penalty proceedings or he has not proved the factum of concealment of income. The assessee explained during penalty proceedings that these are genuine gifts and admission of all the donors that these are out of their bank accounts and they are all earning respectable income. Before us assessee’s counsel relied on the decision of Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Balbir Singh (2008) 304 ITR 125 (P&H), wherein it is held that where assessee had disclosed all detailed particulars and established the identity of donors and where no evidence with regard to concealment was brought on record by the AO, penalty u/s. 271(1)(c) of the Act for concealment of income cannot be levied. In view of the above, we are of the considered view that in this case also the penalty cannot be levied for concealment of income u/s. 271(1)(c) of the Act in the given facts and circumstances of the case. Accordingly, we delete the penalty and reverse the orders of the lower authorities. This appeal of assessee is allowed.
In the result, the appeal of assessee is allowed.