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Shri K.A. Malani 17, Jayshree, 65 Pestom Sagar Road no.2, Chambur, Mumbai 400089 Vs. Income Tax Officer Ward 22(2)1 Navi Mumbai
October, 29th 2014

                              "G"BENCH, MUMBAI

    . .   ,   ,    , 


                        . / ITA no. 3312/Mum./2009
                     (   / Assessment Year : 2004­05)

Shri K.A. Malani
                                                                  .................   /
17, Jayshree, 65 Pestom Sagar
Road no.2, Chambur, Mumbai 400089                                           Appellant


Income Tax Officer
                                                                  ................... /
Ward­ 22(2)­1
Navi Mumbai                                                                   Respondent

      / Permanent Account Number ­AABPM7979B

                    / Assessee by :               Shri A.L. Sharma
                  / Revenue by               :    Shri Pavan Kumar Beerla

             /                                                      /
Date of Hearing ­13.10.2014                         Date of Order ­21.10.2014.

                                 / ORDER


      The   present    appeal   has   been       preferred   by     the    assessee,

challenging the impugned order dated 17th February 2009, passed by

the learned Commissioner (Appeals)­XXII, Mumbai, for the assessment

year 2004­05. The sole dispute in this appeal is whether or not the

learned Commissioner (Appeals) was justified in confirming the penalty
                                                            Shri K.A. Malani


of Rs. 1.20 lakhs levied by the Assessing Officer under section


2.   Facts in brief:­The assessee had shown gifts of sums aggregating

to Rs. 4 lakhs from four persons which were credited to the capital

account. Before the Assessing Officer, the assessee had submitted gift

confirmation, copy of bank statement of the donors, copy of affidavit,

copy of cash flow statement to prove the genuineness of the gift.

However, the said gift was treated as unexplained on the ground that

the assessee could not prove the creditworthiness of the donors and

also could not produce them. In the quantum proceedings up to the

stage of Tribunal out of gifts of Rs. 4 lakhs, the gift from 3 donors

aggregating to Rs. 3 lakhs was confirmed. In the penalty order, the

Assessing Officer has levied the penalty of Rs. 1.20 lakhs on account of

gift received from the following three donors:­

Kasturbai R. Sampat           Rs. 1.00 lakh

Lalitaben M. Parmar           Rs. 1.00 lakh

Tushar R. Sampat              Rs. 1.00 lakh

3.   Before   the   learned    Commissioner   (Appeals),   the   assessee

submitted that the prima­facie evidence to prove the genuineness of

the gift was given which is evident from the fact that the assessee has

furnished copy of bank pass book of the donors, copy of PAN card,

confirmation copy, affidavit and in some cases copy of form no.2D i.e.,
                                                                 Shri K.A. Malani


acknowledgment of filing of return of income. The details of such

evidence have been incorporated in Page­3 of the appellate order.

Besides this, the assessee had submitted that, during the course of

remand proceedings, the donors have attended before the Assessing

Officer, however, the Assessing Officer has not recorded the statement

and all the details were furnished with regard to the genuineness of the

gift   during   the   remand   proceedings.      However,    the       learned

Commissioner (Appeals) have confirmed the penalty on the ground that

the assessee has failed to prove the creditworthiness of the donor'

relationship with the donor and the occasion of gift. Accordingly, after

relying upon the decision of the Hon'ble Supreme Court in Dharmendra

Textiles v/s CIT, confirmed the said penalty.

4.     Before us, the learned Counsel for the assessee submitted that

the penalty proceedings are separate and distinct from the assessment

proceedings and therefore, the evidences filed by the assessee should

have been re­examined for the purpose of levy of penalty under

section 271(1)(c). Insofar as the assessee is concerned, he has

discharged his onus by giving all the necessary evidence except for

producing the donors which was done during the course of the penalty

proceedings and also by the fact that the letter from the donors were

filed directly before the Assessing Officer which were addressed to the

Assessing Officer. Thus, he submitted           that   on such     facts    and
                                                           Shri K.A. Malani


circumstances no penalty should be levied. Ld. DR on the other hand

relied upon the order of the CIT(A).

5.   We have heard the rival contentions, perused the relevant

findings of the authorities below and the material available on record.

Out of gifts received from 4 persons for sums aggregating to Rs. 4

lakhs, the gift from 3 persons for Rs. 3 lakhs stands confirmed from the

stage of the Tribunal. It is a settled law that the penalty proceedings

are separate and distinct from the assessment proceedings and for the

purpose of penalty under section 271(1)(c) the evidence and the

explanations have to be reappraised to see, whether the assessee is

guilty of concealment of income or for furnishing of inaccurate

particulars or not. From the records it is seen that the assessee has

filed the copy of gift confirmation along with the PAN of the donors; in

some cases copy of acknowledgment of their return of income; copy of

bank statement of donors; affidavit of the donors giving the particulars

of their income tax assessment and the cash flow statement from

where such amount was given to the assessee. In all these cases, the

amount was giving through account payee cheque. The addition has

been confirmed by the Tribunal on the ground that before giving the

gift certain cash were deposited in the bank account. Such a finding in

the quantum proceedings may be quite relevant, however the same is

not conclusive for proving that the assessee is guilty of concealment of
                                                          Shri K.A. Malani


income, unless it is brought on record that money deposited does not

belong to the donors.

6.   The addition has been confirmed solely on the circumstantial

evidences and on the presumption that the cash deposited by the

donor belongs to the assessee. Even that is also believed, then the

donors have undertaken the risk that the cash deposited in the bank

account belongs to them on which they are liable to be taxed. In such a

situation, the source should have been enquired from them when they

are separately assessed to tax. Insofar as the assessee is concerned,

the prima­facie onus which lies upon the assessee has been discharged

by proving the identity of the donors and source from where the

assessee has received gifts. The Explanation 1 to section 271(1)(c)

raises a rebuttal presumption i.e., such a presumption can be rebutted

by adducing evidences along with the explanation. If such an

explanation has not been found to be false, then there cannot be a

case for levying the penalty under section 271(1)(c) either for

concealment of income or for furnishing of inaccurate particulars of

income. Thus, under the facts and circumstances, we do not find any

reason to confirm the penalty. Accordingly, the penalty levied u/s

271(1)(c) is deleted.


7.                          s appeal is allowed.
     In the result, assessee'
                                                              Shri K.A. Malani


      Order pronounced in the open Court on 21st October, 2014.

        Sd/-   Sd/-                                        Sd/- Sd/-
     B.R. BASKARAN                                      AMIT SHUKLA
  ACCOUNTANT MEMBER                                   JUDICIAL MEMBER

 MUMBAI,          DATED: 21.10.2014.

             / Copy of the order forwarded to:

(1)      / The Assessee;
(2)     / The Revenue;
(3)    ( ) / The CIT(A);
(4)     / The CIT, Mumbai City concerned;
(5)        , 
                   ,   / The DR, ITAT, Mumbai;
(6)     / Guard file.
                                          / True Copy
                                             / By Order
      / Pradeep J. Chowdhury
     / Sr. Private Secretary
                                      / (Dy./Asstt. Registrar)
                                    ,  / ITAT, Mumbai
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