2021 (5) TMI 245 - AT - Income Tax

Penalty under section 271(1)(c) - Addition on account of non-genuine gifts in absence of sufficient evidence - HELD THAT - In appeal before the Tribunal, the matter was restored to the AO with the direction to assessee to furnish complete evidences. In restoration proceedings, the assessee in response to show cause notice furnished the details of donors along with their PAN and stated that now the donors are co-operating with the assessee and that the assessee has offered the amount of gift as an additional income in revise return of income. As noted that the AO neither accepted the revised return of income nor investigated about the creditworthy of donor and genuineness of donor by issuing any notice under section 133(6) of the Act or summon under section 131 of the Act. The AO simply held that assessee concealed the income. We have further notices that the assessee voluntarily offered the amount of gift as additional income, therefore, the assessee has no right to challenge the action of AO in holding the gift as non-genuine. Penalty proceedings are separate and independent. It is an admitted fact that assessee offered the additional income, though, after issuing notice under section 142(1) by AO. Assessee was having in position of certain evidence in the form of declaration, details of donor and PAN number which were furnished the AO. It is also an admitted fact that no efforts were made by AO by issuing any notice to the donor under section 133(6) of the Act or any summon under section 133(1) of the Act. Facts remaining same that a gift received by assessee was treated as non-genuine gift for the want of complete evidence. In our view, this is a case where the assessee made a bonafide claim, it was accompanying with certain documentary evidence, and however, it was not conclusively proved for the want of confirmation from donor. A.O. also made no efforts to bring and adverse evidence on record. When the assessee mad a claim which was coupled with evidence, though it was not conclusively proved, it cannot be a fit case for levy of penalty under section 271(1)(c) of the Act. Therefore, we direct the A.O. to delete the penalty under section 271(1)(c) - Decided in favour of assessee.

Summary

Issues:
Penalty imposition under section 271(1)(c) for non-genuine gifts received by the assessee.

Detailed Analysis:
1. The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the penalty on gifts received by the assessee. The assessee declared income for AY 2003-04, but the AO made an addition on account of non-genuine gifts. The matter was set aside by the Tribunal for further examination of evidence, including the relationship of donors with the assessee. The AO initiated penalty proceedings under section 271(1)(c) of the Act.

2. The AO issued a show cause notice for penalty, which the assessee contested, stating that the gifts were genuine and voluntarily offered as additional income. However, the AO held that the revised return was time-barred and the explanation was not acceptable. The penalty was levied at 100% of the tax sought to be evaded. The CIT(A) upheld the penalty order, leading to the present appeal before the Tribunal.

3. The AR for the assessee argued on two fronts: technical/legal issues and merits of the case. It was contended that the AO did not specify the specific charge in the penalty notice and that the penalty was imposed on a different charge than the one in the assessment order. On merit, it was argued that the assessee disclosed all details of the gifts, but donors did not cooperate, leading to the voluntary declaration of gifts as additional income.

4. The Revenue argued that the penalty was justified as the assessee failed to prove the genuineness of the gifts. Despite opportunities, the assessee could not discharge the onus to prove the gifts' genuineness. The AO and CIT(A) held that the assessee concealed income, justifying the penalty under section 271(1)(c) of the Act.

5. The Tribunal noted that the assessee provided details of donors and offered the gifts as additional income after donors did not cooperate. The AO did not investigate the creditworthiness or genuineness of donors. The Tribunal found that the assessee made a bonafide claim with documentary evidence, though not conclusively proved due to lack of donor confirmation.

6. Considering the facts and circumstances, the Tribunal held that it was not a fit case for penalty imposition under section 271(1)(c) as the assessee made a genuine claim supported by evidence. The AO's failure to gather adverse evidence and the voluntary offer of gifts as additional income led to the deletion of the penalty.

7. The Tribunal allowed the appeal, directing the AO to delete the penalty under section 271(1)(c) of the Act, rendering further adjudication on the primary contention of the assessee academic.