Income Tax Appellate Tribunal - Lucknow
Rajeev Kumar Srivastava, Lucknow vs Department Of Income Tax on 19 March, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH „A' : LUCKNOW
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
I.T.A. No.467/Lkw/2011
Assessment Year:2002-2003
Dy. C.I.T., Vs. Shri Rajeev Kumar Srivastava,
Range-1, B-46, Vibhuti Khand,
Lucknow. Gomti Nagar, Lucknow.
AQVPS6100L
(Appellant) (Respondent)
Appellant by : Shri Alok Mitra, D.R.
Respondent by : Shri K. R. Rastogi, F.C.A.
Date of hearing :19/03/2013
Date of Pronouncement :25/04/2013
ORDER
PER SUNIL KUMAR YADAV:
This appeal is preferred by the Revenue against the order of CIT(A) on a solitary ground that CIT(A) has erred in deleting the penalty of `5,00,000/- levied u/s 271(1)(c) of the I.T. Act, 1961.
2. The facts of the case, in brief, are that the Assessing Officer has made an addition of `8,00,000/- u/s 68 of the Act after treating the gifts received by the assessee as unexplained against which appeals were filed before the CIT(A) and the Tribunal but the addition was confirmed. The Assessing Officer accordingly 2 initiated the penalty proceedings u/s 271(1)(c) of the Act and after treating it to be the concealed income or furnishing of inaccurate particulars, the Assessing Officer levied the penalty at `5,00,000/- having computed the tax sought to be evaded at `2,40,000/- against which the appeal was filed before the CIT(A) with the submissions that section 68 is deeming section and explanation given regarding gift may not be to the satisfaction of the Assessing Officer but nothing has been brought on record that the explanations offered by the assessee were false. Therefore, the penalty u/s 271(1)(c) cannot be levied on merits or on deeming provisions of the Act. Out of total gift of `8,00,000/-, a gift of `6,00,000/- was received from NRIs and balance `2,00,000/- was received from father-in-law through banking channels, hence the doubting of genuineness of the gift is not valid for levying the penalty. It was further contended that the penalty proceedings are independent proceedings and the Assessing Officer could have summoned the donors to counter check the claim of the assessee in the form of confirmation, affidavit etc. Thus, by no conclusive evidence it can be said that the assessee has concealed any income or furnished inaccurate particulars. Reliance was placed upon the various judgments. The CIT(A) re-
examined the claim of the assessee and being convinced with the explanation of the assessee, had deleted the penalty. The relevant observation of the CIT(A) are extracted hereunder for the sake of reference:
3"3.1 The AO's action in doing so did not find support from the learned CIT(A) who deleted the addition on the grounds that four out of five alleged donors were NRIs; that documentary evidence such as NRI accounts, passport, confirmations and affidavits filed were not questioned by the AO; that identity of the donors, genuineness of the transactions and creditworthiness of the donors stood established by the documentary evidence. This would show that a view opposed to that of the Assessing Officer was taken by the CIT(A) and thus two diametrically opposite conclusions or the same set of facts and evidence were possible and had in fact, been drawn by these authorities. It was only the decision of the Tribunal that was finally in consonance with the view taken by the Assessing Officer. In the back drop of these facts, though bringing the amounts to tax as income by invoking the deeming provisions of section 68 would have been valid and justified, no definitive finding can be arrived at to the effect that the amounts treated as income really and certainly represented concealed income so as to entail a penalty u/s 271(1)(c). The provisions of section 68 conferring powers on the AO to deem a credit as income are enabling provisions to bring the credit to tax where there is either a failure on the part of the assessee to offer on explanation, or the explanation, if offered is not to the satisfaction of the AO. However, an addition made on this count would not automatically conclude that the amount deemed as income constituted concealed income and would thus not justify imposition of penalty on that premise No penalty can be justifiably imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. In the instant case divergence of views between AO and I.T.A.T. on one side and those of CIT(A)-I, Lucknow on the other go to highlight that in the facts and circumstances of the case two contrary hypotheses were equally possible.
3.2 The moot point is whether the assessment of amounts claimed to be gifts as income of the assessee could be by itself the basis for imposition of penalty especially when the AO in his penalty order has not brought out as to how the amounts added in the assessment on account of appellant's explanation not found to be satisfactory represented the income which was concealed or in respect of which inaccurate particulars had been furnished The AO is seen to have levied the penalty based on the order of assessment wherein an amount of Rs.8,00,000/- was, inter alia, 4 brought to tax as income in terms of the provisions of section 68 which addition was first deleted by the CIT(A)-I but was subsequently upheld by the Tribunal. While taxing an amount treating it as income could be justified by invoking the deeming provisions of section 68 it can not be said that the findings in the assessment were conclusive in the matter of imposition of penalty unless the entirety of circumstances reasonably pointed out to the conclusion that the disputed amount represented income which the assessee concealed or in respect of which he deliberately furnished inaccurate particulars (Dilip N. Shroff Vs. Jt.CIT 291 ITR 519 SC). The Hon'ble High Court of Allahabad in the case of CIT Vs. Mohinder Singh (139 ITR 160) observed that the proceedings for imposition of penalty are quasi criminal nature and that the findings in assessment are not binding in the penalty proceedings. The Hon'ble High court (supra) went on to observe that the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has to be found by the authority concerned. Any other interpretation would make the proceedings for levy of penalty completely subservient to the assessment proceedings, which does not appear to be the scheme of the Act. Thus in the instant case, the confirmation of quantum assessed does not ipso facto become a tenable ground for levy of penalty u/s 271(1)(c). This confirmation of amount assessed seems to have weighed on the mind of the AO who decided to levy the penalty What the Tribunal confirmed was the AO's view in not holding the assessee's explanation as satisfactory and consequential assessability of the amount as income within the scope of the provisions of section 68 and hot the established fact that the amount so assessed represented income concealed.
3.3 Lastly the tenability of penalty imposed in this case needs to be examined in the light of the Explanation 1 clauses A and B to section 271(1)(c) of the I.T.Act. It is not disputed that the appellant did offer an explanation with regard to the amounts in question and furnished certain documentary evidence in order to substantiate this explanation. The Assessing Officer did not find the explanation satisfactory and his view to this-'effect was confirmed by the Tribunal. However, the explanation held not to be satisfactory by the AO in his opinion does not imply that the explanation was found to be false. The test for taxing an amount u/s 68 is obviously different from-that laid down for the purpose of penalty. The assessee's explanation might have been unproved or 5 not satisfactory but it has not been disproved or proved to be false and the primary burden in this regard for penalty to be justified was on the revenue. The conditions stipulated in clause (A) to Explanation 1 are thus not found satisfied in this case. The conditions stipulated in clause (B) are also not found satisfied in as much as the explanation is not held to lack bonafide and to suffer from any non disclosure of facts relating to such explanation and material to the computation of the appellant's total income. Thus the stipulations in Explanation 1 to section 271(1)(c) which constitute conditions precedent to statutory tenability of levy of penalty are not found satisfied in the instant case."
3. Now the Revenue has preferred an appeal and placed heavy reliance upon the order of the Assessing Officer.
4. Besides placing reliance upon the order of CIT(A), the learned Counsel for the assessee has submitted that the assessee has placed all relevant evidence to prove genuineness of the gift but it was not accepted by the Assessing Officer.
For non acceptance of the explanation of the assessee, the additions can be made but the penalty u/s 271(1)(c) of the Act cannot be levied.
5. We have carefully examined the orders of the lower authorities in the light of rival submissions and we find that the assessee has placed the evidence on record to justify genuineness of the gift but it was not accepted to be genuine by the Assessing Officer and he made the addition thereof which were later on confirmed by the Tribunal. It is settled position of law that the penalty proceedings are independent proceedings and during the penalty proceedings some independent enquiry should have been made to establish either 6 concealment of income or furnishing of inaccurate particulars on behalf of the assessee but no additional enquiry was made by the Assessing Officer. He has simply placed reliance upon the assessment order. It is also undisputed fact that section 68 is deeming provision and when the assessee has failed to explain the unexplained credit, the addition can be made. The failure of explanation cannot be held to be the explanation furnished by the assessee to be false for which penalty u/s 271(1)(c) can be levied. The onus in this regard is always on the Assessing Officer. We have also examined the order of CIT(A) and we find that the CIT(A) has examined all aspects before deleting the penalty. Since we do not find any infirmity in his order, we confirm the same.
6. In the result, the appeal of the Revenue is dismissed.
(Order pronounced in the open court on 25/04/2013) Sd/. Sd/.
(J. SUDHAKAR REDDY ) (SUNIL KUMAR YADAV) Accountant Member Judicial Member Dated:25/04/2013 *CL Singh Copy forwarded to the: 1. Appellant. 2. Respondent. 3. CIT (A) 4. CIT 5. DR. Assistant Registrar