IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : D : NEW DELHI
BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM
ITA No.5120/Del/2013
Assessment Year : 2007-08
D.K. Bhatia, Vs. ACIT,
20/6, Mathur Road, Central Circle-1,
Faridabad. Faridabad.
PAN : AABPS4706A
(Appellant) (Respondent)
Assessee By : Shri Vinay Bhatia, CA
Department By : Dr. B.R.R. Kumar, Sr.DR
ORDER
PER R.S. SYAL, AM:
This appeal by the assessee is directed against the order
passed by the CIT (A) on 26.06.2013 upholding the penalty of `
45,900/- imposed by the AO u/s 271(1)(c) of the Income-tax Act,
1961 (hereinafter also called `the Act') in relation to the
assessment year 2007-08.
2. Briefly stated, the facts of the case are that during the
course of search and seizure operation conducted on the
ITA No.5120/Del/2013
assessee, cash to the tune of ` 2,28,500/- was found. Apart from
others, the assessee stated that a sum of ` 1,50,000/- was
contributed by his wife which she had withdrawn from her bank
account in Kanpur about 2 ½ years ago. During the course of
assessment proceedings, it was also explained that the amount
was kept for emergency requirement which belonged to his wife
and the amount, in turn, was given to her by her father from
Kanpur. Affidavit of the parents of the assessee's wife was also
filed to support the contention. As the AO was not agreeing with
the genuineness of the source of cash, the assessee agreed for
surrender of this amount for taxation subject to no penalty. The
AO not only made addition, but also imposed penalty without
verifying the correctness of the assessee's stand taken in support
of the genuineness of the transaction of receipt of cash by his
wife from her parents. Penalty so imposed came to be upheld in
the first appeal.
3. We have heard the rival submissions and perused the
relevant material on record. Before embarking upon the
sustainability or otherwise of the instant penalty, it is relevant to
note that the mere fact about the making or confirmation of such
2
ITA No.5120/Del/2013
addition in quantum proceedings does not automatically justify
the imposition of penalty. The criteria for sustenance of an
addition and imposition of penalty is not necessarily the same.
That is the reason for which the legislature has kept the
assessment proceedings distinct from penalty proceedings. The
reason is obvious that if the assessee fails to persuade the
authorities in quantum proceedings about the genuineness of its
claim from the angle of taxability in quantum proceedings, which
forms the foundation for the imposition of penalty, the assessee
gets another opportunity of explaining his point of view for non-
imposition of penalty by demonstrating that there was no
concealment of income or furnishing of inaccurate particulars. If
the assessee succeeds in making out a case in penalty
proceedings that either addition was wrongly made or even if it
was rightly made, but the same cannot give rise to penalty, then,
there can be no hindrance on the authorities in deleting such
penalty. The Hon'ble Bombay High Court in CIT vs. Balraj Sahni
[(1979) 119 ITR 36 (Bom)] has upheld the deletion of penalty
when the addition was confirmed in quantum proceedings. Similar
view has been taken in CIT vs. Devi Dayal Aluminium Industries
3
ITA No.5120/Del/2013
Pvt. Ltd. [(1988) 171 ITR 663 (All)]. In view of the above
discussion, we feel no hesitation in holding that the mere fact
about the sustenance of disallowance in quantum proceedings
cannot be a ground for automatic confirmation of penalty u/s
271(1)(c).
4. Adverting to the facts of the instant case, it is observed that
the assessee gave a specific explanation to support his contention
about the source of cash of ` 1,50,000/-. It was stated during the
course of search proceedings itself that this amount belonged to
his wife which she had withdrawn from her bank account at
Kanpur about 2 ½ years ago and this amount was given to her by
her parents. Not only that, the assessee also furnished an
affidavit from her parents in support of this contention during the
course of assessment proceedings. The AO did not carry out any
investigation to falsify the assessee's stand about the source of
amount. No case has been made out by the AO that though the
amount of ` 1,50,000/- was received by the assessee's wife which
was kept in bank, but the same was spent elsewhere. In view of
the prevailing factual scenario, we do not find that the AO has
made a successful case for imposition of penalty. At the most, it
4
ITA No.5120/Del/2013
can be treated as a case of unproved explanation but certainly
not a disproved explanation given by the assessee. The Hon'ble
Gujarat High Court in the case of National Textiles vs. CIT [(2001)
249 ITR 125 (Guj)] has held that if the assessee gives some
explanation which remains unproved, but, is not disproved, no
penalty is imposable. Similar view has been taken by the Hon'ble
Bombay High Court in CIT vs. Upendra V. Mithani [ITA (L) No.1860
of 2009] dated 05.08.2009. In view of the above cited
precedents, which are fully applicable to the facts of the case
under consideration, we hold that the ld. CIT(A) was not justified
in sustaining the penalty. We, therefore, order for its deletion.
5. In the result, the appeal is allowed.
The order pronounced in the open court on 09.09.2014.
/- Sd/- Sd/-
[A.T. VARKEY] [R.S. SYAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 9th September, 2014.
dk
5
ITA No.5120/Del/2013
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
6
|
