IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC", NEW DELHI
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
I.T.A. No. 2856/Del/2007
A.Y. : 1994-95
M/s Miter Sain (HUF), vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : AACHM5849K)
I.T.A. No. 2857/Del/2007
A.Y. : 1993-94
Smt. Usha Sindhu, vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : ANSP52021C)
I.T.A. No. 2858/Del/2007
A.Y. : 1993-94
Smt. Shashi Sindhu, vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : ABOAS1386G)
I.T.A. No. 2919/Del/2007
A.Y. : 1994-95
Sh. Vrit Pal Sindhu, HUF, vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : AABHV4328R)
I.T.A. No. 4416/Del/2010
A.Y. : 1993-94
Smt. Shashi Sindhu, vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : ABOAS1386G)
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I.T.A. No. 4417/Del/2010
A.Y. : 1993-94
Smt. Usha Sindhu, vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : ANSP52021C)
I.T.A. No. 4418/Del/2010
A.Y. : 1994-95
Sh. Vrit Pal Sindhu, HUF, vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : AABHV4328R)
I.T.A. No. 4419/Del/2010
A.Y. : 1994-95
M/s Miter Sain (HUF), vs. ITO, Ward-I,
96-A, Model Town, Rohtak
Rohtak
(PAN/GIR NO. : AACHM5849K)
(Appellant) (Respondent)
Assessee by : Sh. Arun Kr. Jain, Adv.
Department by : Dr. B.R.R. Kumar, Sr. D.R.
ORDER
These appeals by the respective assessees are filed against the
orders of the Ld. Commissioner of Income Tax (A) on quantum as well
as penalty issue. Since the matters are connected and the case were
heard together, hence, these are being consolidated by this common
order for the sake of convenience.
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I.T.A. NOS. 2856, 2857, 2858 & 2919/Del/2007
2. The aforesaid appeals are filed by the respective assessees
against the additions made by the Assessing Officer in the respective
cases. Since the facts in these cases are identical, we are
adjudicating the issue by reference I.T.A. No. 2856 and the figures are
taken from it.
3. The grounds raised in I.T.A. NO. 2856 read as under:-
"i) The order of the Ld. Commissioner of Income Tax (A)
is bad in law and on facts.
ii) That the service of notice u/s. 148 is not proper and
therefore the Ld. Commissioner of Income Tax (A)
should have held the reassessment is illegal and liable
to be quashed.
iii) The Ld. Commissioner of Income Tax (A) has erred in
law in upholding the validity of service of notice u/s.
148 of the Act.
iv) That the Ld. Commissioner of Income Tax (A) has
erred in law in summarily dismissing the objections of
the appellant on the validity of the reasons to reopen.
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v) That the Ld. Commissioner of Income Tax (A) has
erred in law and on facts in confirming the addition of
the gift of ` 3,50,000/- received by the appellant.
vi) That the Ld. Commissioner of Income Tax (A) has
erred in falling to appreciate the fact that no
opportunity to cross examine the deonar was
provided before making the addition and the principel
of natural justice has not been followed and he
ought to have quashed the order deserves the order
of the Assessing Officer.
vii) That the Ld. Commissioner of Income Tax (A) erred in
not giving the due weight to the explanation filed by
the appellant before Assessing Officer and he should
have held the assessment order deserves to be
quashed.
viii) That the Ld. Commissioner of Income Tax (A) erred in
not considering that the charging of interest is not
proper and no interest is chargeable.
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ix) The appellant craves leave to raise any further
ground(s) of appeal at the time of hearing before your
honour."
4. Apropos issue of legality of the service of the notice. Ld.
Commissioner of Income Tax (A) considered the issue as under:-
"A perusal of record shows that a notice u/s. 148 of
the I.T. Act was issued on 29.5.2001 which appears to
have been served on one Shri Dilbag Singh on the
same date through Notice Server of the department.
On the office copy of this notice there appears a
number 1754 dated 31.5.2001. It clearly shows
that this notice was issued on 29.5.2001, served
through notice server on Shri Dilbang Singh on the
same date; after entering it in the dispatch register at
Sr. No. 1754 on 31.5.2001 it was dispatched by post
also vide postal receipt No. 2653 dated 31.5.2001
which has also been pasted on the dispatch register.
I have seen a photocopy of the dispatch register.
Therefore, the issues raised by the appellant in para
7(i) and (ii) have no force. It is normal practice in the
offices to note the dispatch number and date on the
office copy of the notice when it is issued by post,
although it has been served earlier by physical
delivery on the appellant.
ii) The appellant has not brought anything on
record to prove that the notice sent by the department
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by post was not received by it and neither has it
brought anything to prove that Sh. Dilbag Singh was
not its own person. The very fact that the appellant
participated in the assessment proceedings shows
that it has received the notice issued u/s. 48.
iii) During appeal proceedings when the
submissions of the Assessing Officer were brought
into the notice of the A.R. of the appellant. He did not
press this ground of appeal.
In view of the above discussion, this ground of appeal
is dismissed."
5. Against the above order the assessee is in appeal before me.
6. I have heard the rival contentions in light of the material
produced and precedent relied upon. I find that Ld. Commissioner of
Income Tax (A) has given a factual finding that as detailed in his
appellate order reproduced above that there was proper service of
notice in this case. It is noted that notice u/s. 148 was issued on
29.5.2011 which was served on one Shri Dibagh Singh on the same
date through Notice Server of the department. On the office copy of
this notice there appears a number 1754 dated 31.5.2001. The notice
was dispatched by post also vide postal receipt no. 2653 dated
31.5.2001 which has also been pasted on the dispatch register. In
light of the above, Ld. Commissioner of Income Tax (A) observed that
the ground on jurisdiction is not sustainable. Ld. Commissioner of
Income Tax (A) also noted that assessee has not brought anything on
record to prove that the notice sent by the department by post was
not received by it and neither has it brought anything to prove that
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Sh. Dilbag Singh was not its own person. When the assessee was
confronted that the above factual finding, the assessee's counsel did
not press this ground before the Ld. Commissioner of Income Tax (A).
I find that the finding of the Ld. Commissioner of Income Tax (A) clearly
indicate that there was proper service of notice in this case and
assessee's counsel could not controvert the factual findings in the
above Ld. Commissioner of Income Tax (A)'s order. Accordingly, this
ground is dismissed.
7. Another issue raised by the assessee in this case is that Ld.
Commissioner of Income Tax (A) erred in law in summarily dismissing
the objections of the appellant on the validity of the reasons to reopen.
8. I have carefully considered the submissions and perused the
records. I find that there is no specific ground as mentioned in the
ground of appeal before Ld. Commissioner of Income Tax (A), wherein
the assessee has agitated on the validity of the reasons to reopen.
However, I note that on this issue Ld. Commissioner of Income Tax (A)
has observed as under:-
"As regard the initiation of proceedings on the directions of
Higher Authorities, the appellant has not made it a ground
in its grounds of appeal. However, on merits this contention
of the assessee is not acceptable on the ground that at the
time of initiating proceedings the Assessing Officer had
applied its mind and formed its own belief although the
information was supplied by the Investigation Wing/ Survey
Wing. The Assessing Officer prima facie had reasons to
believe that the assessee had omitted to disclose fully and
truly the material facts and that as a consequence income
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had escaped assessment. Therefore, the notice issued and
proceedings subsequent to it are valid. In this regard,
reliance is placed on the ratio of decision of Hon'ble Kerala
High court in the case of C.I.T. vs. Abdul Khader Ahmed 285
ITR 578."
8.1 I have carefully considered the issue in this regard. I find that
assessee has not raised any specific ground in this regard before the
Ld. Commissioner of Income Tax (A). Still Ld. Commissioner of Income
Tax (A) has adjudicated upon the issue. Hence, it cannot be said that
Ld. Commissioner of Income Tax (A) has summarily dismissed the
objections of the assessee with regard to the validity of the reasons to
reopen. Hence, this ground of appeal is also dismissed.
9. On merits the issue in these appeals pertain to gift received by
the respective assessee from the donor as follows:-
I.T.A. No. 2856 - M/s Miter Sain (HUF) - ` 3.50 lacs
I.T.A. No. 2857 - Smt. Usha Sindhu - ` 1.50 lacs
I.T.A. No. 2919 - Sh. Vrit Pal Sindhu (HUF) - ` 3.00 lacs
I.T.A. No. 2858 - Smt. Shashi Sindhu - ` 1.50 lacs
10. In these cases assessee has disclosed that they had received
respective NRI gift amount as above from the donor. Subsequently,
Directorate of Enforcement, New Delhi made certain investigations for
the so-called gifts and informed the Directorate of Income Tax that a
large number of NRI account has been misused by money laundering
for channelizing non accounted money to the books of accounts of
beneficiaries and forwarded the statements of certain persons.
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11. As regard the validity of the gifts, Assessing Officer noted that
assessee was continuously non-cooperating. Hence, he was
constrained to pass the order to best of his judgment and on the basis
of material on record. Assessing Officer noted that no evidence has
been furnished with the original return of income proving the
identity, creditworthiness and genuineness of alleged gifts. The
alleged donor denied of having made any gift and stated that he is
actually a student and he had never visited in India, in his letter to
the Directorate of Enforcement. Further, Assessing Officer noted that
the relationship with alleged donor and occasion on which the gift
was received with him are missing. Therefore, Assessing Officer
held that the money actually belonged to the assessee and he
assessed the same as income from undisclosed sources.
12. Furthermore the Assessing Officer held that for taking the bogus
gifts assessee has also paid a premium of 10% to 15% of the gift.
Hence, Assessing Officer made addition on this account also as
follows:-
I.T.A. No. 2856 - M/s Miter Sain (HUF) - ` 52,500
I.T.A. No. 2857 - Smt. Usha Sindhu - ` 22,500
I.T.A. No. 2858 - Smt. Shashi Sindhu - ` 45,000
I.T.A. No. 2919 - Sh. Vrit Pal Sindhu (HUF) - ` 22,500
13. Upon assessee's appeal Ld. Commissioner of Income Tax (A)
noted that assessee has not submitted any information regarding the
relationship of the donor with the assessee and the occasion on which
the gift was made. Ld. Commissioner of Income Tax (A) further found
that Assessing Officer has noted that the donor has denied of having
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made any gift. Ld. Commissioner of Income Tax (A) further referred
the decisions of the Hon'ble Apex Court in the case of C.I.T. vs. Durga
Prasad More 82 ITR 540 (SC) and Sumati Dayal vs. C.I.T. 214 ITR 801.
Accordingly, Ld. Commissioner of Income Tax (A) affirmed the action of
the Assessing Officer.
14. Against the above order the assessee is in appeal before us.
15. I have heard the rival contentions in light of the material
produced and precedent relied upon. I find that in the present case
gift was made by unrelated donor to the assessee. There was no
relationship between the assessee and the donor and no occasion was
also specified for making the gifts. Furthermore, the Assessing Officer
has noted that no evidence has been furnished with the original return
of income proving the identity, creditworthiness and genuineness of
the alleged gift. This aspect remains uncontroverted before me also.
Furthermore, the alleged donor has denied having made any gift.
Under the circumstances, the inference made by the authorities below
that gifts were bogus is quite cogent enough.
15.1 In this regard I place reliance upon the case law of Rajiv
Tondon vs. ACIT 294 ITR 488 wherein the Hon'ble Jurisdictional High
Court has held that in a case where two donors had absolutely no
connection with the assessee and they made gifts to the assessee
only because he needed money to buy a house and they wanted to
help him. It was held that this was not only quite unusual but also
quite unnatural. It was incredible that a complete stranger would
want to gift lakhs of rupees to a person only because that person
wanted the amount for purchasing a house. The taxing authorities
were entitled to look into the surrounding circumstances, which they
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did, and come to the conclusion that the gifts could not be said to be
genuine. The reason offered by the assessee did not appear to be
reasonable, much less acceptable. Therefore, there was no error in
the view taken by the Tribunal.
15.2 Similarly, I find that the Hon'ble Apex Court in the case of Mohan
Kala 291 ITR 278 has held as under:-
"A bare reading of section 68 of the Income Tax Act, 1961,
suggests that (i) there has to be credit of amounts in the books
maintained by the assessee; (ii) such credit has to be a sum of
money during the previous year; and (iii) either (a) the assessee
offers no explanation about the nature and source of such credits
found in the books or (b) the explanation offered by the assessee, in
the opinion of the Assessing Officer, is not satisfactory. It is only then
that the sum so credited may be charged to income-tax as the
income of the assessee of that previous year. The expression "the
asessee offers no explanation" means the assessee offers no
proper, reasonable and acceptable explanation as regards the
sums found credited in the books maintained by the assessee. The
opinion of the Assessing Officer for not accepting the explanation
offered by the assessee as not satisfactory is required to be based
on proper appreciation of material and other attending
circumstances available on the record. The opinion of the
Assessing Officer is required to be formed objectively with reference
to the material on record. Application of mind is the sine qua non for
forming the opinion.
In cases where the explanation offered by the assessee about
the nature and source of the sums found credited in the books is not
satisfactory there is, prima facie, evidence against the assessee,
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viz., the receipt of money. The burden is on the assessee to rebut
the same, and, if he fails to rebut it, it can be held against the
assessee that it was a receipt of an income nature.
The burden is on the assessee to take the plea that, even if
the explanation is not acceptable, the material and attending
circumstances available on record do not justify the sum found
credited in the books being treated as a receipt of income nature."
15.3 In the background of the aforesaid discussions and precedents, I
find that there is no infirmity in the order of the lower authorities on
this issue and accordingly, I sustain the addition.
16. In the result, the I.T.A. Nos. 2856, 2857, 2858 & 2919/Del/2007
filed by the Assessee stand dismissed.
I.T.A. Nos. 4416, 4417, 4418 &
4419/Del/2010
17. The above appeals are directed against the penalty order of the
Ld. Commissioner of Income Tax (A) in these cases. The grounds
raised in the appeal no. 4416 read as under:-
"i) That the order dated 07.6.2010 passed by the
Ld. Commissioner of Income Tax (A) Rohtak is
erroneous both on facts and in law.
ii) That on the facts and in law, the Ld.
Commissioner of Income Tax (A) has erred in
confirming the penalty order u/s. 271(1)(c)
passed by the Assessing Officer without waiting
for outcome of quantum appeal pending before
the Tribunal.
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iii) That the appellant requests the Hon'ble Tribunal
to condone the delay in filing the appeal that
occurred due to reasonable cause shown in the
petition separately filed u/s. 253(5) of the Income
Tax Act, 1961.
iv) The appellant craves leave to add, alter, amend
or modify any of the grounds of appeal before or
at the time of hearing of the appeal."
18. At the threshold, I note that there is delay of 46 days in filing
these appeals. For the reason of delay it has been submitted that the
same occurred due to illness of then counsel who was suffering from
multiple ailments. Upon hearing both the parties and perusing the
records, I condone the delay in filing of the appeals.
19. In the penalty order Assessing Officer noted that assessee has
received alleged gifts and the onus squarely lied upon the assessee
for establishing the capacity of the donor and genuineness of the gift.
Assessing Officer noted that the assessee had failed to produce the
donor Sh. Sanjeev Gupta for examination. Assessing Officer further
noted that assessee was unable to submit that there is relationship of
the assessee with Shri Sanjeev Gupta. The occasion of gift was not
specified. Copy of bank account of Shri Sanjeev Gupta were not
produced. Assessing Officer noted that alleged donor Sh. Sanjeev
Gupta has stated to the Director of Enforcement that he was actually
a part-time student and he did not visit India at the time when
alleged accounts were opened, nor was he present at the time when
they were closed. He has further submitted that he had not
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deposited any money into these accounts nor did he send any money
to anybody for depositing in these accounts.
20. Therefore, Assessing Officer held that assessee has failed to
establish the genuineness of the gifts during the course of assessment
proceedings, appellate proceedings and penalty proceedings also.
Hence, Assessing Officer held that assessee has willfully and
intentionally tried to evade tax. Accordingly, Assessing Officer
proceeded to levy penalty @150%.
21. Upon assessee's appeal Ld. Commissioner of Income Tax (A)
confirmed the Assessing Officer's action.
22. Against the above order the assessee is in appeal before me.
23. I have heard the rival contentions in light of the material
produced. I note that in the quantum appeals considered by me
hereinabove, I have already confirmed the additions made in this
regard. However, I have also noted that levy of penalty is not
automatic on confirmation of the quantum. I further find that
assessee has duly disclosed the gifts and there was no concealment in
this regard. Only the assessee has failed to produce the alleged
donor that the penalty has been imposed. I further find that section
271(1(c) of the Act postulates imposition of penalty for furnishing of
inaccurate particulars and concealment of income. On the facts and
circumstances of this case, I find that assessee's conduct was not
contumacious so as to warrant levy of penalty u/s. 271(1)(c) of the
I.T. Act. Under the circumstances, I hold that the penalty was not
leviable in these cases. For this proposition, I place reliance to the
Hon'ble Apex Court decision in the case of CIT vs. Reliance Petro
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Products Ltd. in Civil Appeal No. 2463 of 2010. In this case vide
order dated 17.3.2010 wherein it has been held that the law laid down
in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word
`concealment' and `inaccurate' continues to be a good law because
what was overruled in the Dharmender Textile case was only that part
in Dilip Sheroff case where it was held that mensrea was a essential
requirement of penalty u/s 271(1)(c). The Hon'ble Apex Court also
observed that if the contention of the revenue is accepted then in case
of every return where the claim is not accepted by the AO for any
reason, the assessee will invite the penalty u/s 271(1)(c). This is
clearly not the intendment of legislature.
24. I further place reliance upon decision of the Hon'ble Apex Court
rendered by a larger Bench comprising of three of their Lordships in
the case of Hindustan Steel vs. State of Orissa in 83 ITR 26 wherein it
was held that "An order imposing penalty for failure to carry out a
statutory obligation is the result of a quasi-criminal proceedings, and
penalty will not ordinarily be imposed unless the party obliged either
acted deliberately in defiance of law or was guilty of conduct
contumacious or dishonest, or acted in conscious disregard of its
obligation. Penalty will not also be imposed merely because it is lawful
to do so. Whether penalty should be imposed for failure to perform a
statutory obligation is a matter of discretion of the authority to be
exercised judicially and on a consideration of all the relevant
circumstances. Even if a minimum penalty is prescribed, the authority
competent to impose the penalty will be justified in refusing to impose
penalty, when there is a technical or venial breach of the provisions of
the Act, or where the breach flows from a bonafide belief that the
offender is not liable to act in the manner prescribed by the statute."
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25. In the background of the aforesaid discussion and precedents
relied upon, I delete the levy of penalty u/s. 271(1)(c) in these cases.
26. In the result, assessee's appeal in I.T.A. Nos. 2856, 2857, 2858,
2919/Del/2007 are dismissed. The assessee's appeal in I.T.A. Nos.
4416, 4417, 4418, 4419/Del/2010 are allowed.
Order pronounced in the open court on 27/8/2012.
Sd/-
[SHAMIM YAHYA]
ACCOUNTANT MEMBER
Date 27/8/2012
SRBHATNAGAR
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4.CIT (A) 5.DR, ITAT
TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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