Income Tax Appellate Tribunal - Ahmedabad
Mohd. Soeb Haji Moosa Tumbi, Surat vs Assessee on 5 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH - AHMEDABAD
(BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. K. GARODIA, AM)
ITA No.2747/Ahd/2010
A. Y.: 2004-05
Mohd. Soeb Haji Moosa Tumbi, Vs The Income Tax Officer,
1002, Siddique Square, Ward 3(4), Aayakar Bhavan,
Adajan Patia, Majura Gate,
Surat Surat
PA No. AAOPT 9895 N
(Appellant) (Respondent)
Appellant by Shri Rasesh Shah, AR
Respondent by Shri Ravindra Kumar and
Shri B. L. Yadav, DR
Date of hearing: 05-08-2011
Date of pronouncement: 12-08-2011
ORDER
PER BHAVNESH SAINI: This appeal by the assessee is directed against the order of the learned CIT(A)-II, Surat dated 16th August, 2010, for assessment year 2004-05, challenging the levy of penalty u/s 271 (1) (c) of the IT Act.
2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record.
3. The facts relating to levy of penalty is disused in detail in Para 1, 2 and 3 of the penalty order. In short, an addition of Rs.76,75,000/- was made as unexplained cash credit and Rs.2,00,000/- as ITA No.2747/Ahd/2010 2 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat unexplained cash credit u/s 68 of the IT Act. The cash credits of Rs.76,75,000/- were introduced in the books as gifts received from 15 participants and the amount of Rs.2,00,000/- was introduced in the books as fresh capital in cash. The AO also made an addition of Rs.52.000/- on account of low household withdrawals and disallowed depreciation loss of Rs.3,38.442/-. The AO also initiated penalty proceedings u/s 271(1) (c) of the Act. The assessment order was contested before the C1T(A), who confirmed the additions. On further appeal by the assessee, the Tribunal has vide order dated 9-1-2009 in 1TA No.3449/Ahd/2007 out of the addition of Rs.76,75,000/-, confirmed addition of Rs.26,25,000/- and also gift received from Fanooq Mohd. H. Ghaniwala amounting to Rs.5,00,000/- on the ground that the assessee could not place on record his P.A. Number. The above amount of gift has therefore, been held as non-genuine gift. The Tribunal has, therefore, confirmed the addition to the extent of Rs.31,25,000/- ( Rs.26,25,000/- + Rs.5,00,000/-) . The Tribunal has also confirmed addition of Rs.50,000/- out of addition of Rs.2,00,000/- made on account of unexplained cash credit and upheld addition of Rs.52,000/- made on account of low house hold withdrawals and confirmed disallowance of depreciation loss of Rs.3,38,442/-. Consequent to the order of the Tribunal, the AO provided fresh opportunity to the assessee as to why penalty may not be levied. The assessee replied that the additions have been sustained only in the case of five donors who did not appear before the AO and in the case of one donor, PAN was not available and his explanation has not been found false or not bona fide as he has substantiated his explanation by tracing evidence in the form of ITA No.2747/Ahd/2010 3 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat furnishing of capital account and acknowledgement of donors and merely the fact that the addition has been confirmed does not make a case for levy of penalty. The assessee has also submitted that addition of Rs.50,000/-, Rs. 52,000/- and Rs.3,38,442/- made on account of cash introduced in capital account, low household withdrawal, and disallowance of depreciation loss, confirmed by the Tribunal is not correct. The AO after considering the explanation of the assessee discussed in Para 6.1 of the order held that once addition of disallowance is made in the assessment order, there is no onus on the department to prove concealment of income or furnishing inaccurate particulars of income and the onus is entirely on the assessee to prove his bona fide. The AO, accordingly, levied penalty on the concealed income of Rs.31,75,000/-
4. The penalty order was challenged before the learned CIT(A) and written submission was filed which is reproduced in the appellate order. For the sake of brevity, the same is not reproduced again. The assessee in the written submission precisely explained that out of 15 donors 10 donors have appeared before the AO and their statements have been recorded by the AO in which giving of gifts was confirmed. The rest of the 5 ladies donors could not be produced being pardanashin ladies. However, it is a fact that all the ladies donors have filed their return of income and gift given to the assessee have been duly reflected in their capital accounts filed with their return of income. Copies of acknowledgement of filing of their return and their capital accounts were filed before the AO. It was, therefore, submitted that nothing was brought on record which indicate that the amounts ITA No.2747/Ahd/2010 4 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat received as gifts actually came from the coffers of the assessee. In fact, the assessee was not having any source of income before commencement of restaurant business during the year under consideration. Therefore, there was no scope of earning any undisclosed income. Certain decisions were also relied upon in support of the contention to show that penalty is not leviable in the facts and circumstances of the case.
5. The learned CIT(A) considering the explanation of the assessee did not accept the same and dismissed the appeal of the assessee. The findings of the learned CIT(A) in Para 4 and 5 of the appellate order are reproduced as under:
4. I have duly considered the discussion made in the penalty order and the submission of the appellant. As far as the facts relating to levy of penalty are concerned, they are settled vide Tribunal's Order dt. 9.1.2009. With regard to the donors of gifts appearing at SI. No. 11 to 15 amounting to Rs.5,50,000/- , Rs.5,75,000/-, Rs.5,75,000/, Rs.4.50,000/- and Rs.4,75,000/- totaling to Rs.26,25,000/, the Hon'ble Bench has confirmed additions of these amounts with the observation "There is no evidence on record about the confirmations from the donor's side that they have gifted the money to the assessee." The Tribunal has, therefore, confirmed the addition to the extent of Rs.26,25,000/-". In regard to gift of Rs.5,O0,000/- received from Faruk Mohmed Habib Ghaniwala, the hon'ble Bench has given the finding as follows :
"Now coming to the gift received from Faruk Mohmad H., Ghaniwala amounting to Rs.5,00,0OO/-, since the assessee could not place on record its PA Number, therefore, we also treat this gift to be non-genuine and the addition in that regard is also confirmed. " Similarly, with ITA No.2747/Ahd/2010 5 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat regard to addition of Rs.50,000/-, the Hon'ble Bench has confirmed this amount out of addition of Rs.2,00,000/- with the following observation. "We find that the assessee has introduced the sum of Rs.2,00,000/- in September 2003. The assessee was having opening cash in hand as on 1.4.2003 amounting to Rs.l,74,370/-. Since the assessee has not given any details of the income, etc. which the assessee had earned during the period, we, therefore, treat the sum of Rs. 1,50,000/-tas available with the assessee out of the opening balance for capital investment and accordingly the addition to the extent of Rs.1,50,000/- is deleted and for Rs.50,000/- the addition is confirmed. Thus, this ground stands partly allowed."
The addition of Rs.50000/- made by the A.O. on account of low household withdrawal has been confirmed by the ITAT as justified. Also disallowance of depreciation of Rs.5,38,448/- has been upheld by the hon'ble bench with following observation . "In our opinion, the onus is on the assessee to prove that the assessee has incurred the expenditure. No doubt, there had been flood during the year but that does not absolve the assessee from adducing the evidence. There is a finding that the assessee did not file even the copy of FIR. Insurance claim if any made. Even the assessee could have taken duplicate bills from the respective parties. The assessee although told the names of the parties from whom the assessee bought the capital assets, but when the addresses were asked for. The assessee did not furnish the same. Even no such evidence brought to our knowledge. Under these facts, in our opinion, no interference is called for in the order of the CIT(A)". 7he hon'ble bench of the Tribunal has, therefore, held gift to the extent of Rs.31,25,000/- as non genuine. As far as the other additions are concerned, no evidence or proof regarding claim made by the appellant was provided either during the course of assessment or appellate proceedings. The appellant has made non-genuine claims and has not disclosed fully expenses incurred in connection with household withdrawals. The above finding of the hon'ble bench therefore, casts onus on the ITA No.2747/Ahd/2010 6 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat appellant to establish that he has not concealed or filed inaccurate particulars of income.
5. The appellant has in the written submissions, relied upon same arguments as taken before the Assessing Officer. He-has also relied upon various citations. .However, I find that all the citations relied upon by the appellant have been rendered prior to the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (306 ITR 277), wherein the hon'ble Supreme Court has laid down the principle that mensrea is not essential for civil liability, of penalty as penalties under fiscal statutes are for breach of civil liabilities. The appellant has submitted that the Hon'ble Supreme Court in the case Rajasthan Spinning Mills held that the decision of Supreme Court in the case of Dharmendra Textiles (Supra) cannot be applied sumoto in every case of non payment or short payment of duty (tax). In other words, it has held that penalty is leviable only where- concealment or furnishing of inaccurate particulars of income has been established. The above observation made in the case of Rajasthan Spinning Mills cannot be twisted to mean that 'willful' or 'deliberate act' of concealment of income or furnishing of inaccurate particulars of income has to be established. The essence of decision in the case of Dharmendra Textiles (supra) has not been established. Therefore, what is to be seen is whether there has been concealment or furnishing of inaccurate particulars of income by an assessee in order to make valid levy of penalty u/s. 271(l)(c ) of the Act. In the case of the appellant, facts discussed above undoubtedly show that the appellant has concealed the income to the extent of Rs.31,75,000/-. I, therefore, uphold the penalty order and confirm the penalty of Rs. 10.19,150/- levied in the case of appellant. The ground of appeal is accordingly dismissed.
In the result, appeal is dismissed."
ITA No.2747/Ahd/2010 7Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat
6. The learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that out of 15 donors, 10 donors were produced before the AO, whose statements have been recorded on oath in which they have confirmed to have given the gifts to the assessee. All are assessed to tax and copies of their acknowledgement of filing of returns were filed before the authorities below along with their capital accounts in which gifts have been shown to have been given to the assessee. Thus, all the facts were brought on record to prove genuineness of the gifts in the matter. Only in one case P.A. Number was not filed which itself would not justify levy of penalty. 5 ladies being pardanashin lady could not be produced before the AO for examination on oath. The AO has not brought any evidence on record to prove that gifts were bogus or false. He has submitted that the matter was also explained at the penalty stage; therefore, penalty is not justified in the matter. He has relied upon the following decisions:
(1) CIT Vs Reliance Petroproducts Pvt. Ltd., 322 ITR 588 (2) Decision of the Hon'ble Gujarat High Court in the case of National Textiles Vs CIT, 249 ITR 125 (3) Decision of the Hon'ble Gujarat High Court in the case of CIT Vs Jalaram Oil Mills, 253 ITR 192 (4) Decision of the Hon'ble Delhi High Court in the case of CIT Vs A. D. Kohli, 273 ITR 223 (5) Decision of the Hon'ble Gujarat High Court in the case of Murlidhar Lahorimal Vs CIT, 280 ITR 512 ITA No.2747/Ahd/2010 8 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat
7. On the other hand, the learned DR relied upon the orders of the authorities below and submitted that genuineness of the gifts in six cases was not proved and the finding is confirmed by the Tribunal. Therefore, penalty was rightly imposed against the assessee towards those six non-genuine gifts only. The learned DR submitted that at the penalty stage no further evidence was filed. Therefore, onus upon the assessee is not discharged and he has relied upon the decision of the Hon'ble Supreme Court in the case of Union of India Vs Dharmendra Textiles Processors and others 306 ITR 277 in which it was held that "penalty under section 271 (1) ( c ) is a civil liability. Willful concealment is not an essential ingredients for attracting civil liabilities as is the case in the matter of prosecution under section 276 ( c )". The learned DR, therefore, submitted that the appeal of the assessee may be dismissed.
8. We have considered the rival submissions. The facts noted above are not disputed. It is settled law that penalty proceedings are independent and separate proceedings. Before proceeding further, we may note the relevant finding of the Tribunal on the quantum order dated 09-01-2009 while deciding the appeal of the assessee in ITA No.3449/Ahd/2007 (PB-30 and 31) as under: "This is an admitted fact in the case of the assessee that 10 donors have appeared before the AO and confirmed that they have made the gifts to the assessee. They have filed their IT returns also. Copies of their capital accounts and the copies of acknowledgement of IT returns were also filed. In the capital accounts the gifts given to the assessee have duly been shown. But when we asked for the PAN, ITA No.2747/Ahd/2010 9 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat PAN was filed only in respect of 9 persons out of 10 persons. Five donors did not appear on the ground that they were the Pardanashin ladies. Even no confirmations on their behalf have been filed.
In our opinion, once the donors are the income-tax assessees and the gifts given by the donors have duly been shown by them in their respective capital accounts, the AO should have taken action against the donors while making their assessments. A specific query was raised from the learned Departmental Representative but no action seems to have been taken in the cases of the donors. This is also a fact on record that the assessee has not commenced the business. The restaurant was under
construction only. The assessee therefore, could have not earned this much income from the business. The onus is on the assessee to prove the course of the amounts received by him. The assessee has produced some of the donors out of which nine are having PANs. Therefore, to the extent the five parties have not confirmed which are appearing at serial Nos. 11 to 15 amounting to Rs.5,50,000, Rs.5,75,000, Rs.5,75,000, Rs.4,50,000 and Rs.4,75,000 totaling to Rs.26,25,000, there is no evidence on record about the confirmations from the donor side that they have gifted the money to the assessee. We, therefore, confirm the addition to the extent of Rs.26,25,000.
Now coming to the gift received from Faruk Mohmad H. Ghaniwala amounting to Rs.5,00,000, since the assessee could not place on record his PAN, therefore, we also treat this gift to be non-genuine and the addition in that regard is also confirmed.
In respect of the gifts received by the assessee which relate to the nine parties who appeared and confirmed hat they have gifted the amounts to the assessee, we are of the view that the assessee has discharged the onus and in our opinion the AO was ITA No.2747/Ahd/2010 10 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat bound to take action in their respective cases. We, therefore, delete the additions in view of the case laws as discussed above as in our opinion on the basis of these case laws the assessee has duly discharged his onus and the assessee is not supposed to prove the source of sources. Therefore, we delete the additions with the direction that the AO should taken action in the cases of those parties in respective assessment years for examining the source of the gifts made by those parties to the assessee under the applicable provisions of the IT Act. Thus, this ground stands partly allowed."
9. In the finding of fact noted above, the Tribunal noted that 10 donors have appeared before the AO and have confirmed giving of gifts to the assessee. They have filed their IT returns also and filed copies of their capital accounts and copies of the acknowledgement of returns to show that gifts have been given to the assessee. Five donors could not be produced being pardanashin ladies. In the opinion of the Tribunal, once the donors are income tax assessee and gifts given by the donors have been duly shown by them in their respective capital accounts, the AO should have taken action against the donors while making their assessments. But no action has been taken against the donors. The restaurant was under construction only. Therefore, it was held that the assessee could not have earned this much income from the business. Addition in the case of donor Farooq Moh. H. Ghaniwala was confirmed because no P. A. Number was placed on record. The Tribunal in the order also noted that once the persons appeared before the AO and statements have been recorded u/s 131 of the IT Act and they are income tax assessees, the identity is duly proved. It is therefore clear that in the case of ITA No.2747/Ahd/2010 11 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat donor Farook Moh. H. Ghaniwala, he has appeared before the AO and his statement u/s 131 of the IT Act was recorded. He was assessed to tax. May be in quantum proceedings addition is made but penalty is not leviable in his case on the face of the findings of fact recorded by the Tribunal that identity of such donor is proved who has also confirmed giving of gifts to the assessee. The decision of the Hon'ble Gujarat High Court in the case of Murlidhar Lahorimal Vs CIT, 280ITR 512 would apply in the case of the assessee in which it was held as under:
"Held, that the Tribunal failed to note the fact that the identity of the donor was established, the donor having appeared in person before the Assessing Officer, the genuineness of the transaction was established, not only by the receipt of the bank draft, but also by the fact of the transaction having borne gift tax once the assessment was framed. The primary onus which rested with the assessee, thus, stood discharged. Thereafter, if the Revenue was not satisfied with the source of the funds in the hands of the donor, it was up to the Revenue to take appropriate action. The Tribunal considered the motivation for making the gift which was not relevant. The addition of Rs.50,000 was not justified."
10. The assessee further explained that 5 lady donors were pardanashin ladies; therefore, they could not be produced before the AO for examination. Since pardanashin ladies would not expose to public, therefore, explanation of the assessee was correct that these ladies could not be produced before the AO for examination. The explanation of the assessee was bona fide and relevant being this practice commonly followed in Muslim Community. It is also a fact ITA No.2747/Ahd/2010 12 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat that all these lady donors were assessed to income tax. The assessee filed all relevant documents to explain the gifts. The explanation of the assessee was bona fide and it is not a case where the assessee failed to offer any explanation to the penalty matter. The AO made the addition in case of one of the donor having no P. A. Number and in other cases addition was confirmed because no confirmation was filed despite they have filed their P. A. Number. Thus, the assessee filed adequate explanation before the AO who has given contradictory finding with regard to availability of P. A. Number in one case. No material is brought on record to show that gifts in question were bogus or false. The assessee made all efforts to prove all the gifts by producing the substantial donors before the AO but some of them could not be produced being the donors pardanashin ladies. The explanation of the assessee is thus bona fide and is substantiated by documentary evidence on record. The explanation of the assessee was not found to be disproved.
10.1 The Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 held as under:
"A glance at the provisions of section 271(1)
(c) of the Income-tax Act, 1961, suggest that in order to be covered by it, there has to be concealment of particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1) (c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to ITA No.2747/Ahd/2010 13 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars.
There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. 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. Decision of the Gujarat High Court affirmed."
10.2 The Hon'ble Supreme Court in the case of M/s. Rajasthan Spinning & Weaving Mills 2009 - TIOL - 63 - SC held that "on every demand penalty is not automatic".
10.3 The Hon'ble Delhi High Court in the case of CIT Vs A. D. Kohli, 173 ITR 223 held as under:
"Held, dismissing the appeal, that, in the instant case there were two sets of evidence, one produced by the assessee in the form of a pass book and another copy of the bank ledger. The pass book normally reflects whatever is in the ledger, but, in respect of two entries there was an error committed by the bank ITA No.2747/Ahd/2010 14 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat officials and the same had been relied upon by the assessee and the assessee had given an explanation and paid the tax. The explanation having been accepted the cancellation of penalty was valid. No substantial question of law arose from the order."
10.4 The Hon'ble Gujarat High Court in the case of CIT Vs Jalaram Oil Mills, 253 ITR 192 held as under:
"Held accordingly, that, in the present case, on the basis of the assessee agreeing to have credit entries in its books of account treated as its income by virtue of the provisions of section 68 of the Act, the said sums would be deemed to be income of the year under consideration. However, de hors the said provision, it was not possible to state with certainty that the said sums would be "concealed income" of the assessee for the year under consideration. The Tribunal had recorded a finding of fact to the effect that there was no past history of the assessee to show that the assessee had been earning business income outside the books, nor was there in the books relating to the year under consideration any instance pointed out indicating any transaction outside the books. The Tribunal was justified in holding that the penalty of Rs.30,000 imposed by the Inspecting Assistant Commissioner under section 271 (1) ( c) could not be sustained."
10.5 The Hon'ble Gujarat High Court in the case of National Textiles Vs CIT, 249 ITR 125 held as under:
"Held, that, in the instant case, the cash credits were not satisfactorily explained by evidence and documents. The parties who had advanced the alleged temporary loans were neither disclosed nor were there any supporting documents on record. The accountant, who had arranged the loans was not ITA No.2747/Ahd/2010 15 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat produced and it was stated that he had left the service as relations with him were strained. In this state of accounts and evidence in the quantum proceedings, the Department was justified in treating the cash credits as income of the assessee, but merely on that basis by recourse to Explanation 1, penalty under section 271 (1) (c) could not have been imposed without the Department making any other effort to come to the conclusion that the cash credits could in no circumstances have been amounts received as temporary loans from various parties. Admittedly, the assessee in the quantum proceedings failed to produce the accountant but the Department also in penalty proceedings made no effort to summon him. Therefore, it was a case where there was no circumstance to lead to a reasonable and positive inference that the explanation that cash credits were arranged as temporary loans was false. The facts and circumstances were equally consistent with the hypothesis that they could have been sundry loans in small amounts obtained from different parties. Therefore, the imposition of penalty was not justified."
10.6 The Hon'ble Karnataka High Court in the case of CIT Vs M. M. Gujamgadi, 290 ITR 168 held as under:
"A reading of sections 271and 271 (1) ( c ) of the Income-tax Act, 1961, and the Explanation appended thereto manifestly makes it clear that every addition of income by the Income-tax Officer will not automatically attract levy of penalty. It is clear from Explanation 1 (B) to section 271 (1) ( c ) of the Act that while computing the total income of an assessee, if the assessee, fails to prove that such explanation is bona fide then there will be a deemed concealment by the assessee.ITA No.2747/Ahd/2010 16
Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat The assessee filed his return of income for the assessment year 1993-94 disclosing an income of Rs.97,920. The return of income was taken up for scrutiny assessment. The Income-tax Officer found from the books of account of the assessee a sum of Rs.2,01,000 and a notice was issued to the assessee to explain the same. The assessee stated that he had borrowed the same from different creditors who are all agriculturists. When the assessee was asked to substantiate this claim, the assessee made attempts to secure those creditors to be examined before the Income-tax Officer. Despite the best efforts of the assessee, he could not secure the creditors as witnesses to substantiate his claim before the Income-tax Officer. Having no other alternative, the assessee voluntarily agreed for addition of Rs.2,01,000 to his income as cash credit. Penalty was imposed under section 271 (1) ( c) but it was canceled by the Tribunal. On a reference"
Held, that it could not be said that the explanation of the assessee for non-inclusion of an income of Rs.2,01,000 in his return of income was not bona fide. The explanation offered by the assessee was available on record. Bona fide failure on the part of the assessee in not substantiating his claim was also available on record. The Income-tax Officer, while passing the order of penalty under section 271 (1) ( c ) of the Act, had not considered the available explanation of the assessee and whether the explanation so offered was bona fide or not. The cancellation of penalty was justified."
10.7 The Hon'ble Delhi High Court in the case of CIT Vs Span Holdings Ltd., 294 ITR 83 held as under:
"Depreciation in respect of the sale and lease back of the bio gas plant in the assessment year 1993-94 was allowed. Subsequently, in the ITA No.2747/Ahd/2010 17 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat reassessment proceedings after a gap of five years the assessee was required to produce the managing director of the lessee company which the assessee could not do for reasons beyond the control. The Assessing Officer disallowed the depreciation. The assessee appealed to the Commissioner of Income- tax (Appeals). Meanwhile, the Assessing Officer also initiated penalty proceedings under section 271 (1) (c) of the Income-tax Act, 1961, imposed a penalty on the assessee. The Commissioner of Income-tax (Appeals) set aside the penalty proceedings. This was confirmed by the Tribunal. On appeal:
Held, dismissing the appeal, that the Tribunal had considered the findings arrived at by the Commissioner. The Tribunal had also taken into consideration the fact that more than five years had gone by between the original assessment and the reassessment proceedings and it was under these circumstances that the assessee was unable to produce the managing director of the lessee company. The Tribunal also noted that the Assessing Officer had merely stated after referring to the assessee's submission that the entire depreciation was disallowed. There was no material or evidence to show that the transaction of sale and lease back was not genuine or was bogus nor was any material brought on record in the course of the reassessment proceedings. In the absence of any material having been produced by the Revenue to show that transaction of sale and lease back was not genuine or was bogus, there was no reason to interfere with the concurrent findings arrived at both by the Commissioner as well as by the Tribunal. No substantial question of law arose for determination."
10.8 The facts noted above, clearly prove that even the Tribunal on quantum noted that despite the above additions on account of gifts, ITA No.2747/Ahd/2010 18 Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat the assessee could not have earned undisclosed business income being the business yet to commence in the assessment year under appeal. Thus, no definite or concrete material has been brought on record by the AO to prove that the assessee concealed the particulars of income or filed inaccurate particulars of income. It is settled law that quantum and penalty proceedings are all together different and distinct proceedings, therefore, the facts and circumstances noted above would clearly reveal that the assessee made bona fide explanation explaining the above gifts and the explanation of the assessee was substantiated through evidence and materials on record. The explanation of the assessee was not found to be false or bogus. Levy of the penalty is discretion of the AO based upon particular facts. In the facts and circumstance of this case, there may not be concealment of particulars of income or furnishing of inaccurate particulars of income for levy of penalty. Therefore, the discretion vested on the AO should have been exercised in favour of the assessee.
11. Considering the above discussions, we are of the view that no case of levy of penalty is made out in the facts and circumstances of the case. We accordingly, set aside the orders of the authorities below and cancel the penalty.
ITA No.2747/Ahd/2010 19Mohd.Soeb Haji Moosa Tumbi Bs ITO, W 3(4), Surat
12. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 12-08-2011 Sd/- Sd/-
(A. K GARODIA) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date : 12-08-2011
Lakshmikant/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad