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2014 (3) TMI 493 - AT - Income TaxGenuineness of the Transaction - Claim of gift was received through banking channels Held that - Held that - On considering the particulars of the bank account from which the gift was given it was disclosed that the amount had been transferred from Account No. 3401 of the very same branch on the very same date - the account was in the name of Usha Motor Company and from the account two cheques transferring the amount were transferred in the names of Shri Sunil Kumar Garg and Shri Om Prakash - On the basis of the cumulous facts it was concluded that no amount has been given as gift and in-fact Shri Sunil Kumar Garg and the other persons were engaged in the business of providing accommodation entries on commission basis to various persons - these facts have been confirmed by the ITAT in the quantum proceedings passed in the case of both the assessees Relying upon CIT vs Orissa Co-operation Ltd. 1986 (3) TMI 3 - SUPREME Court - the bank account of the donor was operated only with the view to furnish accommodation entries has also been confirmed by the ITAT. The assessee is not required to prove the source of the source, but the primary onus of proving the gift to the genuine by adducing satisfactory evidence about three primary conditions lies on him, which remains undischarged - As a matter of fact, the evidence by way of bank account of the donor, collected by the AO and confronted to the assessee, directly proves the gift to be non-genuine thus, the addition of the amount to the total income of the assessee upheld. Penalty u/s 271(1)(c) of the Act Held that - Whether penal action has rightly been invoked or not is a matter of fact - The principle of law laid down where the genuineness of the gift has been accepted is a distinguishable fact which is not present in the facts of the present case there is no reason to interfere in the findings arrived in the order Decided against Assessee.
Issues Involved:
1. Confirmation of penalty under Section 271(1)(c) of the Income Tax Act. 2. Application of legal provisions under Section 271(1)(c). 3. Disclosure of particulars of income and alleged concealment. 4. Furnishing of particulars regarding the donor's identity, capacity, and genuineness of the transaction. 5. Arguments and evidence presented by the assessee and the revenue. Detailed Analysis: 1. Confirmation of Penalty under Section 271(1)(c) of the Income Tax Act: The appeals involved the confirmation of penalties imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, amounting to Rs. 66,151 and Rs. 1,32,259 for the assessment year 2003-04. The penalties were confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], Rohtak. 2. Application of Legal Provisions under Section 271(1)(c): The CIT(A) and the Tribunal upheld the penalties, emphasizing that the assessee failed to prove the identity, creditworthiness, and genuineness of the donor, Shri Sunil Kumar Garg. The AO's penalty proceedings were based on the satisfaction recorded in the assessment order, which was confirmed by the CIT(A) and the ITAT in quantum proceedings. 3. Disclosure of Particulars of Income and Alleged Concealment: The assessee argued that all particulars of the gift received were disclosed in the capital account and income tax return. However, the AO and CIT(A) found that the assessee failed to produce the donor and establish the genuineness of the transaction. The Tribunal noted that the donor was engaged in providing accommodation entries, and the assessee's claim of receiving a genuine gift was not substantiated. 4. Furnishing of Particulars Regarding the Donor's Identity, Capacity, and Genuineness of the Transaction: The assessee provided the donor's affidavit, PAN, bank account details, and income tax return. However, the donor, Shri Sunil Kumar Garg, could not be traced or produced for verification. The AO's investigation revealed that the donor's bank account was used for providing accommodation entries, and the assessee failed to prove the donor's creditworthiness and the genuineness of the gift. 5. Arguments and Evidence Presented by the Assessee and the Revenue: The assessee contended that the gift was genuine and supported by sufficient evidence. However, the Tribunal found that the evidence was self-serving and unsubstantiated. The Tribunal also noted that the donor's bank account was systematically used to launder money through a web of transactions. The revenue argued that the assessee failed to provide a credible explanation and that the penalties were justified. Conclusion: The Tribunal dismissed both appeals, upholding the penalties imposed under Section 271(1)(c). The Tribunal concluded that the assessee failed to discharge the onus of proving the genuineness of the gift and that the donor was engaged in providing accommodation entries. The Tribunal found no merit in the assessee's arguments and confirmed the findings of the AO and CIT(A). Pronouncement: The order was pronounced in the open court on 11th March 2014, dismissing both appeals of the assessee.
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