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2015 (10) TMI 1269 - AT - Income TaxPenalty u/s 271(1)(c) - bogus gifts - CIT(A) deleted the penalty - Held that - The co-ordinate Bench of the Tribunal had decided identical issue in case of late Smt. Kesar Devi Garg wife of assessee wherein the gift of ₹ 10,00,000/- was received from Shri Sanwar Mal Saraff. The quantum addition was also confirmed by the ITAT in case of late Smt. Kesar Devi Garg for A.Y. 2001-02. The penalty under section 271(1)(c) was imposed in that case which has been deleted by the co-ordinate Bench vide order dated 11th May, 2012. The assessee is no more and expired on 26.09.2006. The penalty proceedings were completed on legal heir i.e. Dr. K.C. Garg, who was in practice for more than 25 years out of India. The case law referred by the assessee are squarely applicable and the co- ordinate Bench decided the identical issue in favour of the assessee. Therefore, we uphold the order of ld. CIT (A). - Decided against revenue.
Issues:
Appeal against deletion of penalty under section 271(1)(c) for assessment year 2001-02 based on gifts declared as bogus by the AO. Analysis: 1. The AO added Rs. 25,00,000 to the assessee's income for A.Y. 2001-02 due to three gifts declared as bogus. Penalty proceedings under section 271(1)(c) were initiated separately. The legal heir of the deceased assessee contended that no penalty could be imposed on him, citing a legal precedent. The AO, however, held the legal heir liable for penalty under section 271(1)(c) for concealing income through bogus gifts, imposing a penalty of Rs. 6,68,116. 2. The ld. CIT (A) allowed the appeal, noting that in a similar case involving the wife of the appellant, the penalty was deleted by ITAT Jaipur 'B' Bench. The ITAT held that the levy of penalty was not justified as the genuineness of the gifts could not be conclusively proven, even though the addition to income was sustained. The ld. CIT (A) directed the AO to delete the penalty of Rs. 6,68,116 based on the ITAT's decision in the wife's case. 3. The Revenue challenged the CIT (A)'s order, arguing that the gifts were proven to be bogus, and hence, penalty under section 271(1)(c) was warranted. The Revenue relied on a High Court decision confirming penalty in similar circumstances. The Revenue requested the reversal of the CIT (A)'s order. 4. The assessee's representative reiterated arguments made before the CIT (A), emphasizing that the penalty was deleted in a similar case involving the wife of the appellant. The representative provided documentary evidence supporting the gifts received, contending that penalty should not be imposed where such evidence exists. The representative also highlighted legal principles and decisions supporting the cancellation of penalty in such cases. 5. The ITAT upheld the CIT (A)'s order, citing the decision in the wife's case where the penalty was deleted. The ITAT noted that the legal heir, who was a practicing doctor abroad and had limited knowledge of the case, should not be penalized for the deceased's actions. The ITAT found the legal precedents and arguments presented by the assessee's representative to be applicable and upheld the deletion of the penalty. 6. The ITAT dismissed the Revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) for the assessment year 2001-02. The ITAT's decision was based on the precedent set in the wife's case and the circumstances surrounding the legal heir's involvement in the penalty proceedings. Judges: - Shri R.P. Tolani, JM - Shri T.R. Meena, AM
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