2019 (11) TMI 600 - AT - Income Tax

Penalty u/s 271(1)(c) - wrong claim of having received a cash gift of ₹ 11 lac from own sister - HELD THAT - In the course of penalty proceedings also the assessee could not place on record any documentary evidence which could have substantiated his explanation of having received a genuine gift of ₹ 11 lac from his sister. In our considered view, the assessee had not only failed to substantiate his explanation that he had received a cash gift of ₹ 11 lac from his sister, but he had also failed to substantiate the bonafides of his aforesaid explanation. We find that the claim of the assessee that the amount of ₹ 11 lac received as cash gift from his sister, was sourced from the gifts which she had received from her siblings and her personal savings is in fact a concocted story that was hatched in order to justify the availability of funds with her. In our considered view, the A.O had rightly observed that as the assessee had deliberately raised a wrong claim of having received a cash gift of ₹ 11 lac from his sister, therefore, the same tantamounts to concealment of income on his part. We are in agreement with the view taken by the CIT(A) that the assessee had concealed his income as per the provisions of Explanation 1(B) to Sec. 271(1)(c) of the Act. Even in the course of the proceedings before us the assessee had failed to place on record any documentary evidence which would substantiate the genuineness of the gift transaction. Accordingly, finding no infirmity in upholding of the penalty imposed by the A.O under Sec. 271(1)(c) by the CIT(A), we find no reason to dislodge the well reasoned view taken by him. - Decided against assessee

Issues Involved:
1. Addition of cash gift as income.
2. Rejection of affidavit and declaration of gift.
3. Lack of occasion or purpose for the gift.
4. Imposition of penalty under Sec. 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

1. Addition of Cash Gift as Income:
The primary issue was whether the cash gift of ?11,00,000/- received by the assessee from his sister should be added to his income. The Assessing Officer (A.O) did not accept the assessee's claim of receiving the gift and added the amount to the returned income, assessing the total income at ?14,50,800/-. The CIT(A) upheld this addition, and the Tribunal also dismissed the assessee's appeal, observing that the donor did not have the capacity to grant such a gift. The Tribunal noted the financial status of the donor, who was married to an accountant with limited income, and the lack of evidence supporting the donor's capacity to gift such a substantial amount.

2. Rejection of Affidavit and Declaration of Gift:
The CIT(A) rejected the affidavit and declaration of gift provided by the assessee's sister, doubting her creditworthiness. The Tribunal supported this view, noting that the donor’s financial status and the absence of any bank statements or detailed workings to substantiate the opening balance further undermined the credibility of the gift. The Tribunal concluded that the donor did not have the capacity to gift ?11,00,000/- to the assessee.

3. Lack of Occasion or Purpose for the Gift:
The CIT(A) held that there was no occasion or reason for the sister to give such a gift to the assessee. The Tribunal agreed, noting that the assessee failed to establish any occasion for receiving the gift and had never reciprocated any gift transaction with his sister. The absence of any significant occasion or purpose for the gift further cast doubt on the genuineness of the transaction.

4. Imposition of Penalty under Sec. 271(1)(c):
The A.O imposed a penalty of ?3,37,388/- under Sec. 271(1)(c) for the assessee’s wrong claim of receiving a cash gift. The CIT(A) confirmed this penalty, noting that the assessee failed to provide evidence regarding the creditworthiness of the donor, genuineness of the transaction, and the occasion for the gift. The Tribunal upheld this decision, observing that the assessee had deliberately raised a wrong claim, amounting to concealment of income. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal.

Conclusion:
The Tribunal upheld the orders of the lower authorities, confirming the addition of ?11,00,000/- to the assessee's income and the imposition of the penalty under Sec. 271(1)(c). The appeal filed by the assessee was dismissed, with the Tribunal finding no merit in the claims regarding the genuineness of the gift and the creditworthiness of the donor. The Tribunal also rejected the assessee's request to keep the penalty proceedings in abeyance pending the outcome of the appeal before the High Court.

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