Income Tax Appellate Tribunal - Delhi
Bhupinder Kumar Chugh, Panipat vs Assessee on 2 June, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'C
'C' : NEW DELHI
BEFORE SHRI G.C. GUPTA,
GUPTA, VICE PRESIDENT AND
SHRI TARVINDER SINGH KAPOOR,
KAPOOR, ACCOUNTANT MEMBER
ITA No.
No.252/Del/2009
Assessment Year : 1994-
1994-95
Shri Bhupinder Kumar Vs. Income Tax Officer,
Chugh, Ward-
Ward-4,
11-
11-12, Sukhdev Nagar, Panipat.
Panipat.
PAN : ABAPK8485E.
(Appellant) (Respondent)
Appellant by : Dr. Rakesh Gupta and
Shri Ashwani Taneja, Advocates.
Respondent by : Shri T.Vasanthan, Senior DR.
Date of hearing : 18.05.2015
Date of pronouncement : 02.06.2015
ORDER
PER G.C. GUPTA, GUPTA, VP :
This appeal by the assessee for the assessment year 1994-95 is directed against the order of learned CIT(A), Karnal dated 4th November, 2008.
2. The grounds of appeal of the assessee are as under:-
"1. The assessee had duly filed the return of income for the Asstt. Year 1994-95 u/s 139(1). The case was assessed accordingly on the returned income. The assessee was subsequently served a notice u/s 148 by the ld.A.O. for reopening the assessment proceedings alleging that the assessee has accepted a bogus gift from one Shri Subhash Sethi of Delhi, permanently residing in Manchester, U.K. and has allegedly paid a premium of 10 percent in consideration of obtaining the said gift.
2. It is emphasized that in the return of income originally furnished, it was indicated that during the F.Y. 1993-94, the assessee had received a gift from NRE A/c of Sh. Subhash Sethi. The assessee had filed the copy of 2 ITA-252/Del/2009 affidavit, gift deed, DD of Rs.10.00 lacs as also certificate from the American Express Bank where it was confirmed that a DD No.078451 dt. 30.07.1993 for Rs.1.00 lacs was issued by it, debiting the NRE A/c No.320169733 of Subhash Sethi."
3. The learned counsel for the assessee submitted that the only issue in this appeal of the assessee is regarding the validity of penalty imposed u/s 271(1)(c) of the Income-tax Act, 1961 amounting to `4,91,413/-. He submitted that the assessee has discharged its burden of proving the identity and creditworthiness of the donor of gift of `10 lakhs and the transaction of gift was genuine. He submitted that the assessee has filed all documentary evidences in support of its case. He submitted that the donor Shri Subhash Sethi was an NRI settled in UK and was holding passport No. W 409703 issued at Liverpool and has confirmed the fact of gift made from his NRE account to the assessee by filing an affidavit dated 30th July, 1993 to this effect. The gift deed was also executed on 30th July, 1993 between the donor Shri Subhash Sethi and the assessee (donee) wherein the demand draft drawn on State Bank of Travancore out of donor's NRE account with American Express Bank, New Delhi was purchased. The donor has admitted that he has natural love and affection towards the donee and the gift was made out of his own sources and income. The donor further confirmed that he is an NRI and has transferred all the rights in the gifted sum to the donee and none of his legal heirs shall have any right in the gifted sum from the date of the said gift. The copy of certificate dated 30th July, 1993 of American Express Bank confirming the above facts was also filed with the Assessing Officer. The copy of the passport of Shri Subhash Sethi, the donor, was filed before the Assessing Officer. He submitted that the Enforcement Directorate, FEMA, Government of India has initiated proceedings and the Assistant Director thereof has exonerated the assessee of all the charges leveled against him. He submitted that the case of the Assessing Officer that the assessee has made the compensatory payments along with some 3 ITA-252/Del/2009 premium in regard to the gifts received from Shri Subhash Sethi, is far from truth and is merely a surmise and conjecture. He submitted that the whole case of the Department is based on suspicion and the penalty under Section 271(1)(c) of the Act could not be levied on mere suspicion. He submitted that no opportunity to cross-examine the donor was ever allowed to the assessee.
4. Learned DR has opposed the submissions of the learned counsel for the assessee. He submitted that the donor Shri Subhash Sethi has denied as having made any gift to any person in India out of his said NRE account vide letter dated 7th August, 1995 and this fact was found during the course of proceedings in the case of Shri Ved Prakash Chugh in which the penalty levied was confirmed by the learned CIT(A), Karnal. In these facts, he submitted that the Assessing Officer was justified in levying penalty under Section 271(1)(c) of the Act as the donor was never produced before the Assessing Officer and there was no blood relation between the donor and the donee in this case. He submitted that there was no specific occasion to make the gift by the donor to the assessee. He relied on the order of the Assessing Officer and the learned CIT(A).
5. We have considered the submissions of both the sides and have perused the order of the Assessing Officer and the learned CIT(A) and also the copies of various documents filed by the assessee in the compilation filed before the Tribunal. We find that the assessee has claimed that it has received the gift of `10 lakhs from Shri Subhash Sethi, an NRI through NRE account on 30th July, 1993 vide draft drawn on State Bank of Travancore out of donor's NRE account with American Express Bank, New Delhi. We find that it is not the case where there is no evidence supporting the claim of the assessee. The assessee has filed duly sworn-in affidavit dated 30th July, 1993 of the donor and also the gift deed executed on 30th July, 1993 between the donor Shri 4 ITA-252/Del/2009 Subhash Sethi and the assessee before the Assessing Officer. The assessee has also filed the bank certificate of American Express Bank dated 30th July, 1993 certifying that they have purchased a demand draft dated 30th July, 1993 for `10 lakhs from the State Bank of Travancore, New Delhi favouring the assessee by debiting the NRE account of Shri Subhash Sethi (the donor) with them. The copy of the bank draft of State Bank of Travancore dated 30th July, 1993 was also filed along with the copy of the passport No. W 409703 of the donor Shri Subhash Sethi showing the complete address of the donor. We find that the claim of the assessee that he was exonerated by the Enforcement Directorate, FEMA, Government of India from all the charges leveled against him in the proceedings initiated by the Enforcement Directorate, could not be controverted on behalf of the Revenue. We are aware that we, vide our separate order in the quantum appeal of the assessee for the relevant assessment year 1994-95 in ITA No.4659/Del/2004, have confirmed the addition of `10 lakhs on account of the aforesaid gift by holding that the assessee could not prove the genuineness of the said NRI gift from Shri Subhash Sethi to the assessee. It is settled legal position that the penalty proceedings are different from assessment proceedings and the finding given in the assessment may constitute good evidence but same could not be taken as conclusive in the penalty proceedings. Further, merely because the addition has been confirmed in appeal, it could not be the sole ground for coming to the conclusion that the assessee had concealed any income. We are of the considered view that in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but, in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee has concealed his income or has filed inaccurate particulars of his income. In the assessment case of the assessee, the addition could be sustained on preponderance of probabilities, but, penalty under Section 271(1)(c) of the Act for concealment of income or filing 5 ITA-252/Del/2009 of inaccurate particulars of income could not be sustained merely on preponderance of probabilities.
6. In the case of the assessee before us, it was pointed out in the quantum appeal of the assessee that there was no blood relation of the assessee (donee) with the donor and there was no specific occasion to make the gift to the assessee. It was also pleaded on behalf of the Revenue that during the course of proceedings in the case of one Shri Ved Prakash Chugh, it was found that the donor Shri Subhash Sethi has written a letter to the Assistant Director of Enforcement stating that he had not made any gift to any person in India out of his said NRE account and that he had not remitted any money from abroad into this account. In these facts of the case, the addition made by the Assessing Officer and confirmed by the learned CIT(A) in the quantum case of the assessee was confirmed by the Tribunal. However, the parameters of deciding the validity of addition made in the assessment case of the assessee and the penalty imposed under Section 271(1)(c) of the Act are essentially different. The onus to prove that the assessee has concealed his income or has filed inaccurate particulars of his income lies with the Department in the penalty proceedings initiated under Section 271(1)(c) of the Act. In this case, there was a suspicion that the gift claimed by the assessee to have received from NRI Shri Subhash Sethi was not genuine, but, the suspicion, however strong it may be, could not take place of proof and could not made the basis for imposing the penalty for concealment of income. We find that the Assessing Officer has not made further enquiries required in this case to reach the truth. He has not enquired that who has deposited the amount in the NRE account of the NRI donor Shri Subhash Sethi. No enquiry was made directly from Shri Subhash Sethi or from the bank or from the Enforcement Directorate etc. that under what circumstances he was exonerated. The Assessing Officer has not given any reason to believe the denial of the donor Shri Subhash Sethi 6 ITA-252/Del/2009 in some letter written by him to the Assistant Director of Enforcement in some other case of Shri Ved Prakash Chugh and disbelieving the claim of the assessee.
7. Moreover, the assessee has filed the affidavit of the donor along with the gift deed, both executed on the date of gift, i.e., 30th July, 1993 and, therefore, carries more evidentiary value. The Assessing Officer has failed to give any reason for disbelieving the bank certificate dated 30th July, 1993 itself (the date of gift) of American Express Bank along with the copy of the demand draft dated 30th July, 1993 issued by the State Bank of Travancore in the name of the assessee. The identity of the donor Shri Subhash Sethi is proved beyond doubt with the copy of his passport filed by the assessee before the Assessing Officer. The only reason given by the Assessing Officer was that the assessee has made the compensatory payments along with the premium in regard to the gift received from Shri Subhash Sethi. We find that there is no evidence whatsoever brought on record by the Assessing Officer to suggest that the assessee has in fact made such compensatory payment to the donor. No doubt that the suspicion of the Assessing Officer could be a possibility but the other possibility of the donor not stating the truth in his letter written to the Assistant Director of Enforcement in some other case of Shri Ved Prakash Chugh could not be ruled out. No enquiry was made as to why the donor kept mum after the amount of `10 lakhs was debited to his NRE bank account with American Express Bank on 30th July, 1993 till the letter written by him to the Assistant Director of Enforcement in some other case of Shri Ved Prakash Chugh (the date of this letter was nowhere mentioned). The fact that the amount of `10 lakhs was debited to the NRE account of the donor with American Express Bank, New Delhi as evidenced by the bank certificate of American Express Bank and the copy of the demand draft dated 30th July, 1993 of `10 lakhs from State Bank of Travancore in favour of the assessee, could 7 ITA-252/Del/2009 not be controverted on behalf of the Revenue. The Assessing Officer never provided the opportunity to the assessee to cross-examine the donor regarding his letter to the Assistant Director of Enforcement. In these facts of the case, we are of the considered view that the facts of the case may justify the addition made in the quantum case of the assessee to be sustained but evidence brought on record was not sufficient to prove the charge of concealment of income or furnishing of inaccurate particulars of income on the part of the assessee. In this view of the matter, we are unable to sustain the penalty imposed under Section 271(1)(c) of the Act, which is accordingly cancelled and the grounds of appeal of the assessee are allowed.
8. In the result, the appeal of the assessee is allowed.
Decision pronounced in the open Court on 2nd June, 2015.
Sd/- Sd/-
(TARVINDER SINGH KAPOOR)
KAPOOR) (G.C.
(G.C. GUPTA)
GUPTA)
ACCOUNTANT MEMBER VICE PRESIDENT
VK.
Copy forwarded to: -
1. Appellant : Shri Bhupinder Kumar Chugh,
11-
11-12, Sukhdev Nagar, Panipat.
2. Respondent : Income Tax Officer, Ward-
Ward-4, Panipat.
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar