2017 (2) TMI 323 - AT - Income Tax

Penalty u/s 271(1)(c) - bogus gifts - Held that - the case of the assessee represents a classic case of creating the dubious capital. The assessee is owned agricultural income which has been found to be not justified and the gifts from co-owner brother Shri Vinodbhai Patel has been found to be not correct as the bills were found to be bogus. In view of these facts and circumstances, I find no infirmity in the order of the ld. CIT(A) which is upheld. Accordingly, this appeal of the assessee is dismissed.

Issues Involved:
1. Validity of reopening of assessment under section 148.
2. Admission of additional ground regarding non-issuance of notice under section 143(2).
3. Quantum addition on account of gift received.
4. Imposition of penalty under section 271(1)(c).

Issue-wise Detailed Analysis:

1. Validity of Reopening of Assessment under Section 148:
The appellant contested the initiation of proceedings under section 147 and the consequent issue of notice under section 148. The CIT(A) initially dismissed this ground, stating no arguments were presented by the appellant. The ITAT had directed the CIT(A) to verify if the ground was argued. Upon verification, the CIT(A) reaffirmed that no arguments were made by the appellant on this ground during the original proceedings. The appellant's affidavit claiming otherwise was deemed self-serving and unsupported by the record. The ITAT upheld the CIT(A)'s finding, noting the absence of any written submissions or application under section 154 by the appellant to correct the alleged oversight.

2. Admission of Additional Ground Regarding Non-issuance of Notice under Section 143(2):
The appellant raised an additional ground claiming non-issuance of notice under section 143(2). The CIT(A) rejected this ground, stating it was not raised in the original proceedings and was beyond the scope of the ITAT's remand order, which was limited to verifying the argument on reopening of assessment. The ITAT concurred, emphasizing that the additional ground was factual in nature and required extensive verification, which was not permissible at this stage.

3. Quantum Addition on Account of Gift Received:
The appellant challenged the addition of ?19,40,826/- on account of gifts received. The CIT(A) had previously dismissed this ground, and the ITAT found no new facts or evidence to warrant a different conclusion. The appellant's reliance on various case laws was considered irrelevant as the primary issue was the factual verification of the gifts' genuineness, which the CIT(A) had already addressed.

4. Imposition of Penalty under Section 271(1)(c):
The appellant argued against the penalty, claiming no concealment or furnishing of inaccurate particulars. The CIT(A) upheld the penalty, noting the appellant's failure to prove the genuineness and creditworthiness of the donors. The donors' financial status and the agricultural income claimed as the source of the gifts were found to be dubious. The ITAT agreed with the CIT(A), highlighting the inconsistencies and lack of credible evidence supporting the gifts. The penalty of ?6,09,972/- was thus upheld.

Conclusion:
Both appeals filed by the appellant were dismissed. The ITAT upheld the CIT(A)'s findings on all grounds, including the validity of the reassessment proceedings, the rejection of the additional ground regarding notice under section 143(2), the quantum addition on account of gifts, and the imposition of penalty under section 271(1)(c). The decisions were based on a thorough examination of the records and the appellant's failure to provide sufficient evidence to support their claims.

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