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TMI Blog2010 (3) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... y Pal Rao, JJ. S. Sridhar for the Appellant. P.B. Sekaran for the Respondent. Order Per Abraham P. George, Accountant Member. All these are appeals against levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred as the Act for short). Though some of these pertain to different assessees and relate to different assessment years, the factual scenario, giving rise to the levy of penalties being more or less the same, we are disposing of all these appeals through this consolidated order. 2. When the returns of all these assessees for the respective assessment years were taken up for scrutiny, the Assessing Officer noted that there were credits of varying sums in personal accounts, which were explained as gifts received from Non-resident Indians. Details of such gifts are given hereunder : Shri/Smt. A.Y. A.Y. A.Y. A.Y. 1993-94 1994-95 1995-96 1996-97 A. Srinivasan 6,40,758 14,46,933 26,47,647 8,64,500 S. Kalavathy 1,47,797 16,19,679 21,82,847 1,55,000 S. Bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the lower authorities to reject the explanation given by the assessees were in the realm of surmises, conjectures and suspicions. 5. Revenue being aggrieved by the decision of the Jurisdictional High Court, went in further appeal before Supreme Court, which reversed the findings of the Hon ble Jurisdictional High Court and held in favour of Revenue in the case of CIT v. P. Mohanakala [2007] 291 ITR 278 (SC). The pertinent findings of the Hon ble Apex Court are given hereunder : Whether the High Court was justified in interfering with the concurrent finding of fact arrived at by all the authorities including the Tribunal? The Assessing Officer found that all the so-called gifts came from Ariavan Thotan and Suprotoman. The assessees did not declare that they are the aliases of Sampathkumar. It is only an afterthought they have come forward with the said plea. The Assessing Officer also found that the gifts were not real in nature. Various surroundings circumstances have been relied upon by the Assessing Officer to reject the explanation offered by the assessees. The Commissioner of Appeals confirmed the findings and conclusion drawn by the Assessing Officer. The Tribunal spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar or his wife. As per the Assessing Officer, there were contradictions regarding the particulars, regarding the stay of Shri Sampath Kumar with Shri A.Srinivasan, in the statements given by the other assessees. Assessing Officer also relied on certain letters written by Shri Sampath Kumar to Shri A.Srinivasan and Shri A. Rajendran for concluding that there was no love and affection which ought have been there for justifying gifts. But on the other hand, according to the Assessing Officer Shri Sampath Kumar had every intention of getting back matching sums of money. Strong reliance was also placed by the Assessing Officer on the contradictions in statements of the assessees. Though the gifts initially were stated to have been received from Ariavan Thottan or Suprotoman, it was later submitted to have been received from Shri Sampath Kumar. Thus, the Assessing Officer more or less came to the same conclusions that he had come to in the quantum assessments of the respective assessees and these are reproduced here : The identity of the donor with alias was initially camouflaged and not proved beyond doubt. Existence of love and affection is not established or misdirected. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted that there was some reciprocity in the alleged gifts. Further according to him, penalty proceedings could not be equated with assessment proceedings and just because assessees explanations were rejected on preponderance of probability, in the quantum assessment, it could not be fastened with a penalty. Learned counsel for the assessee strongly urged that the explanations submitted by the assessees were never found to be not bona fide. According to him, though the penalty proceedings were civil proceedings as held by the Hon ble Apex Court in the case of Union of India v. Dharmendra Textiles Processors [2008] 306 ITR 277, it would not mean that rejection of the explanations given by an assessee would automatically lead to a levy of penalty. Strong reliance was placed on the following decisions : (a) Addl. CIT v. Prem Chand Garg [2009] 31 SOT 97 (Delhi)(TM) (b) CIT v. Balbir Singh [2008] 304 ITR 125 (Punj. Har.) (c) Santosh Narain Kapoor v. Dy. CIT [2008] 115 TTJ (Luck.) 402 (d) CIT v. Master Sunil R. Kalro [2007] 292 ITR 86 (Kar.) (e) ITO v. Smt. Sunita Bansal [2008] 10 DTR (Agra)(Trib.) 41 (f) ITO v. Dr. Sameer Kant Agarwal [2009] 34 SOT 12 (Luck.)(URO) (g) Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be a sufficient enough evidence to give credibility to a transaction of the nature put forward by the assessees. But none of these, would be sufficient enough to come to a conclusion that amounts were concealed or the explanations furnished were not bona fide. The rules of preponderance of probability that are to be applied to assessment proceedings cannot be so applied qua penalty proceedings. The rules of probability when applied in a penalty proceeding would, have to be applied with more rigour of preponderance, so as to tilt the balance to the side of the revenue in an accentuated manner. Otherwise, keeping the penalty proceedings separate from the assessment proceeding would become redundant. Assessees explanations regarding gifts were all rejected on the application of rules of preponderance of probability. But as aforesaid, the same rules cannot be applied just as it is in a penalty proceeding since here what is to be verified is the bona fide nature of the explanations and whether there was any concealment. The tone of reciprocity found in the statement given by Shri Sampath Kumar would not be sufficient enough to come to a conclusion that the explanations given b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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