IN THE INCOME TAX APPELLATE TRIBUNAL
`C' : NEW DELHI
DELHI BENCH `C
GUPTA, VICE PRESIDENT AND
BEFORE SHRI G.C. GUPTA,
KAPOOR, ACCOUNTANT MEMBER
SHRI TARVINDER SINGH KAPOOR,
No.252/Del/2009
ITA No.
1994-95
Assessment Year : 1994-
Shri Bhupinder Kumar Vs. Income Tax Officer,
Chugh, Ward-4,
Ward-
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
GUPTA, VP :
PER G.C. GUPTA,
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/-
KAPOOR)
(TARVINDER SINGH KAPOOR) (G.C. GUPTA)
(G.C. GUPTA)
ACCOUNTANT MEMBER VICE PRESIDENT
VK.
Copy forwarded to: -
1. Appellant : Shri Bhupinder Kumar Chugh,
11-
11-12, Sukhdev Nagar, Panipat.
2. Ward-4, Panipat.
Respondent : Income Tax Officer, Ward-
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
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