2015 (3) TMI 453 - HC - Income Tax

Penalty under Section 271(1)(c) - ingenuineness of the gift - Held that - An appraisal of the facts reveals that the appellant claimed that one Sh. Sunil Kumar Garg had gifted ₹ 2 lacs but when called upon to prove the genuineness of the transaction or the identity of the donor, could not prove the genuineness of the transaction or even the identity of the donor. Even the address of the donor supplied by the appellant was found to be false. It is, therefore, apparent that the appellant made an intentional attempt to evade tax by setting up a false gift. The impugned orders passed after considering all relevant facts and recording satisfaction in terms of Section 271(1)(c) of the Act, do not call for interference and as no substantial question of law arises for adjudication, the appeals are dismissed. - Decided against assessee.

Summary

Issues:
Challenge to penalty under Section 271(1)(c) of the Income Tax Act, 1961 based on intentional evasion of tax through false gift claim.

Analysis:
The appellant contested the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, arguing that all relevant facts were disclosed to the assessing officer, and the mere rejection of the gift and dismissal of the quantum appeal should not automatically lead to penalty imposition. The appellant maintained that the gifts were duly declared in the accounts books, and the absence of the donor at the given address should not be a basis for penalty. It was emphasized that penalty can only be justified in cases of conscious income concealment or intentional furnishing of inaccurate particulars.

Upon review, it was found that the appellant claimed a gift of Rs. 2 lacs from Sh. Sunil Kumar Garg but failed to substantiate the genuineness of the gift or the identity of the donor. The address provided for the donor was discovered to be incorrect, leading to the addition of Rs. 2 lacs to the appellant's capital account for the assessment year 2002-03. Despite the gifts being recorded in the accounts books, the assessing officer proceeded to impose a penalty of Rs. 66,151, which was upheld in subsequent appeals.

The court determined that the appellant's actions indicated a deliberate attempt to evade tax by fabricating a false gift claim, as evidenced by the inability to prove the genuineness of the transaction or the donor's identity, along with the false donor address provided. Consequently, the orders upholding the penalty under Section 271(1)(c) were deemed appropriate, as they were based on a thorough examination of all pertinent facts and satisfaction under the Act. As no substantial legal question arose for consideration, the appeals were dismissed.