2015 (11) TMI 1684 - AT - Income Tax

Penalty u/s 271(1)(c) - gift treated as income from other sources u/s 68 - the donor could not be produced by the assessee nor he appeared in response to the summon issued by the AO - also no documentary evidence to prove that the donor had such a huge agricultural income - Held that - The assessee s explanation about the genuineness of the gift is substantiated by various primary evidences and once these evidences have been filed, then onus shifts upon the AO to show that the assessee s explanation and evidences are false or not bona fide. Here there has been no enquiry by the AO to rebut these evidences albeit the AO has disbelieved on the basis of certain hypothesis and premise that such a conduct of giving the gift is improbable. This hypothesis or premise, howsoever strong may be for the quantum proceedings or may have a probative value but certainly they are not sufficient so far as penalty proceedings are concerned. Once the donor has furnished his bank statement from where the amount of gift has been given, the copy of his income tax return before the AO, then without any rebuttal of such evidences by any specific enquiry, the penalty cannot be sustained. Accordingly, we delete the levy of penalty - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) for assessment year 2003-04 on account of a gift treated as income from other sources.

Analysis:
The appeal was filed against the penalty imposed on the assessee for receiving a gift of Rs. 10 lakhs, treated as income from other sources. Despite the notice served, the assessee did not appear, leading to an ex-parte decision. The assessee had provided a confirmation from the donor regarding the gift but failed to submit details about the relationship with the donor and the occasion of the gift. The Assessing Officer (AO) issued summons to the donor, who provided details but did not attend in person. The AO added the gift amount as income from other sources due to discrepancies in the donor's income details and multiple large gifts given by the donor. The assessee contended that the genuineness of the gift was proven with evidence, shifting the onus to the AO to disprove it.

The Tribunal found that the assessee had sufficiently proven the gift's nature and source with the donor's confirmation letter, bank statement, and income tax return. The revenue authorities rejected the evidence due to the donor's absence and doubts about the donor's income sources. However, the Tribunal emphasized that the burden shifts to the AO to prove the assessee's explanation false, which was not done through specific inquiry. The Tribunal noted that the donor's provided evidence was not rebutted, and the AO's disbelief was based on hypothesis rather than concrete evidence. As the genuineness of the gift was supported by primary evidence and the AO failed to disprove it, the penalty was deemed unsustainable, leading to the penalty's deletion and allowing the assessee's appeal.

In conclusion, the Tribunal allowed the assessee's appeal, deleting the penalty of Rs. 2,87,700 imposed for the gift treated as income from other sources for the assessment year 2003-04.