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TMI Blog2015 (8) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals), Chandigarh dated 23.1.2009 relating to assessment year 2000-01. 2. The issue involved in these appeals is common and the appeals were heard together and are being disposed off by this common order for the sake of convenience. 3. Firstly, I will take up ITA No.243/Chd/2009. The assessee has challenged the action of the learned CIT (Appeals) in confirming the penalty of ₹ 3,30,000/- levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ) for the assessment year 2000-01. 4. The assessee is an individual and filed his return of income on 31.10.2000 declaring an income of ₹ 1,98,166/-. The said return was processed under section 143 (1) of the Act on 14.5.2001. Subsequently, inquiries were conducted by the ADIT (Inv.)-II, Chandigarh regarding gifts made by Shri Avinashi Lal Bajaj and his family out of their NRI accounts. The assessee had also shown a gift of ₹ 10 lacs from Shri Avinashi Lal Bajaj during the assessment year under consideration. During the course of inquiries, ADIT (Inv.) had recorded the statement of Shri Avinashi Lal Bajaj, who denied having made any gift but stated that only pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. On the other hand neither the ADI at Panchkula nor the AO ever offered any opportunity to the assessee to examine or cross-examine the donor throughout the proceedings to verify the contention of the donor. He has denied the fact to save his own skin otherwise an affidavit from him confirming gift has already been on the record. Therefore the assessee has not been provided with any proper effective opportunity to examine/cross examine the donor. That in his surrender letter of dated 20.02.2006 before the A.O., the assessee has clearly mentioned the fact of receiving gift from Mr. Avinashi Lai Bajaj. It has also been made clear in para 2 of the said surrender letter that since now the donor is co-operating in the income tax proceedings, therefore to avoid litigation and purchase peace ₹ 10 lac is being surrendered subject to penal action under the provisions of the Income Tax Act. Surrender by the assessee is very clear and conclusive. Accordingly, the A.O. has framed the assessment and taxed the gifted amount. Now our submission is that surrender offer of the assessee is in good faith and does not automatically means that gift received agreed to be added was concealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed by the department that there was not a genuine gift, the entry of ₹ 10,00,000/-wasobtained after paying amount in cash to the said donor. The department had already reopened the case u/s 147 of the Income Tax Act, 1961 and the assessee was specifically confronted with the facts and was asked to prove the genuineness of the alleged gift. The assessee surrendered only when he was cornered from all sides and was left with no way out except to surrender the entry of ₹ 10,00,000/-. The conditional surrender of the assessee was never accepted by the AO . The facts of the case law cited by the assesee are different from this case. In the case of Sir Shadi Lal Sugar General Mills Ltd. Vs CIT reported in 168 ITR 705 the main issue before the Hon'ble Supreme Court was that whether High Court in a reference could interfere with the finding of a fact and transform the same into a question of law on the ground that there has been non-consideration of all relevant facts The Hon'ble Supreme Court held that in preferring one view to another view of factual appreciation, the High court transgressed the limits of its jurisdiction under the income tax reference in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt came through banking channels and the identity of donor has not been doubted. Therefore, penalty under section 271(1)(c) of the Act was not imposable even though the amount was not considered as gift. He relied upon the decision of Hon'ble Jurisdictional High Court in the case CIT Vs. Balbir Singh (2008) 304 ITR 125 (P H). The learned counsel for the assessee further submitted that the Assessing Officer has not afforded any opportunity to the assessee to cross examine the donor Shri Avinashi Lal Bajaj on whose statement reliance was placed by the Assessing Officer. However, the learned counsel for the assessee submitted that in this case the assessee has produced a Gift Deed and the amount in question come through banking channels and, therefore, identity of the donor and genuineness of transaction have been duly established. He further pointed out that in the surrender letter dated 20.2.2006, it was specifically stated that the donor has not cooperating in the income tax proceedings and, therefore, to avoid litigation and to buy peace, ₹ 10 lacs were surrendered. The learned counsel for the assessee submitted that the first part of the surrender has been accepted. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s obtained after paying the amount in cash to the said donor. The assessee was confronted with the facts and was asked to prove the genuineness of the alleged gift. The assessee surrendered only when he was cornered from all sides and was left with no way out except to surrender the entry of ₹ 10 lacs. He further submitted that the assessee has disclosed the factum of receipt of gift in the return of income. But on investigation and also during the course of assessment proceedings, the said claim was found to be false. The learned D.R for the Revenue relied upon the following decisions : i) CIT Vs. Deep Chand (2011) 336 ITR 292 (P H) ii) Mak Data P.Ltd. Vs. CIT (2013) 358 ITR 593 (SC) 10. In this case, the assessee claimed that he had received gift of ₹ 10 lacs from Shri Avinashi Lal Bajaj S/o Shri B.D.Bajaj, resident of House No.3046, Sector 20D, Chandigarh. During the course of enquiries made by the Investigation Wing, Shri Avinashi Lal Bajaj in his statement stated that he retired on 1.7.1996 from Public Health Department, U.T., Chandigarh and drawing pension of ₹ 4000/- per month. After his retirement, Shri Avinashi Lal Bajaj went to USA and joined th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of I-Tax Act. 11. From the above letter of the assessee, it is clear that the assessee surrendered ₹ 10 lacs as his income for the assessment year 2000-01 as he failed to prove the genuineness of gift and the amount of ₹ 10 lacs was treated as undisclosed income of the assessee for the assessment year under consideration. In the instant case, the assessee failed to establish the genuineness of the transaction and creditworthiness of the donor during the course of assessment proceedings andalso during the course of penalty proceedings. 12. The addition made by the Assessing Officer has been confirmed by the learned CIT (Appeals) in the quantum appeal. The Tribunal vide its common order dated 21.4.2014 in ITA No.242/Chd/2009 (Krishan Kumar Palta) and in ITA No.244/Chd/2009 (Sandeep Kumar Palta) has dismissed the appeal of the assessee, observing as under : 8 As far as issue regarding merit is concerned it is not correct that the statement of the donor was recorded behind the back of the assessee. In fact the statement of the donor, Shri Abinashi Lal Bajaj was recorded by Investigation Wing and same was confronted to the assessee which fact becomes clear from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Punjab and Haryana High Court in case of Smt. Usha Rani Vs. CIT (Supra) are clearly applicable to the facts of the case. In view of this we find nothing wrong with the order of the Ld. CIT(A) and confirm the same. 13. While deciding the quantum appeal, the Division Bench of this Tribunal has categorically held that the assessee has surrendered the amount after fully cornered and the addition has been made on the basis of the payment made by the assessee. The Tribunal has also observed that the assessee failed to show any relationship with the donor and, therefore, there cannot be any love and affection with the non-relative and further the assessee could not produce any evidence to show close relationship between him and Shri Avinashi Lal Bajaj. 14. After perusing the records, it is observed that the Revenue has unearthed the scam in respect of bogus gifts. The ADIT (Inv.)-II, Chandigarh vide letter dated 27.4.2004 forwarded a detailed report which is annexed as A-2 to the impugned order, was sent to the Assessing Officer. The authorities below have categorically stated that Bajaj family was involved in giving bogus gifts. The statements of members of Bajaj family (An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2006, in Subhash Chander Sekhri v. Deputy CIT (2007) 290 ITR 300 (P H) (ITA No.265 of 2006) We are of the view that the concurrent findings of fact recorded by the authorities that the gifts in question were not genuine, are pure findings of fact and no substantial question of law arises. 15. When the gift received by the assessee is held to be bogus, the only conclusion would be that the assessee had furnished inaccurate particulars of his income and, therefore, penalty under section 271 (1) (c) of the Act had to be levied. The Hon'ble Jurisdictional High Court in the case of CIT Vs. Deep Chand (2011) 336 ITR 292 (P H) observed as under : The facts, in brief, necessary for adjudication as narrated in the appeal, are that during the assessment year under consideration, the assessee had received a gift amounting to ₹ 1,75,000 on payment of an equal amount in cash, along with premium for arranging that gift. During proceedings under section 148 of the Act initiated against the assessee, the amount equal to the amount of the gift, i.e., ₹ 1,75,000 and ₹ 17,500 on account of premium at the rate of 10 per cent. were added to the income of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied by the assessee in his return of income were found to be incorrect and false. Now, the assessee can not take the plea that all the particulars were disclosed in the return of income. The assessee has disclosed the factum of receipt of gift of ₹ 10 lacs in the return of income. The said claim of the assessee was found to be incorrect and false and when the concealment of income was detected by the Revenue, the assessee made false claim and ultimately surrendered the amount for taxation. The assessee has knowingly made a false claim in the return of income to the extent of ₹ 10 lacs, which is not a small amount by any means. The alleged donor was working as a Storekeeper, who retired on 1.7.1996 from Public Health Department, U.T., Chandigarh. He was drawing pension of ₹ 4000/- per month. There is no evidence on record to show that the alleged donor had any other source of income. It is thus, not believable that such a person can ever dream of making a gift of ₹ 10 lacs. Now, the question is as to why the alleged donor will give a gift of huge amount to the assessee, particularly in absence of any relationship between Mr.Bajaj (alleged donor) and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the original return filed by him on 31.10.2000 may be treated as return filed in response to the said notice. It is observed that vide letter dated 20.2.2006, the assessee surrendered ₹ 10 lacs as his income for assessment year 2000-01. Thus, it is clear that the assessee surrendered the amount after more than five years from the date of filing of original return of income. Even in the return filed in response to notice under section 148 of the Act, the assessee made false claim. In such circumstances, it cannot be said that the assessee had made voluntary surrender of the amount of gift. In my opinion, there was a deliberate attempt on the part of the assessee to evade tax on the amount of ₹ 10 lacs. The explanation given by the assessee regarding the alleged gift was found to be false by the Assessing Officer. The Assessing Officer has brought ample evidence on record to discharge its burden of proving concealment. In the assessment order itself, the Assessing Officer has stated that penalty proceedings under section 271(1)(c) of the Act for concealing/furnishing inaccurate particulars of income have been initiated separately. As regards the contention of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... false documentation to artificially suppress his earnings in order to evade tax liability. This clearly showed the conscious and willful action on the part of the assessee and, hence penalty under section 271 (1) (c) of the Act should be levied. It is relevant to observe here that in view of the judgment of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (2008) 306 ITR 277 (SC), the concept of penalty has not undergone a change. In the said judgment, it has been categorically observed that the penalty is imposed only when there is some element of deliberate default and not mere mistake. In my opinion, the contentions raised on behalf of the assessee in all respect deserve to be rejected. 18. The facts in the case of Rajesh Chawla Vs. CIT, 203 CTR 209 dated 22.5.2006 (P H) are that the assesses were members of group known as M/s Baldev Electricals, Ludhiana. Information was received by the Intelligence Wing that the members of the group are indulging in tax evasion by showing income from other sources as agricultural income. During the investigation, the assessee Rajesh Chawla was asked to produce the evidence about agricultural income. In response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not escape penalty merely on the ground that he had surrendered the amount. Similar view has been taken in P.C. Joseph Bros. vs. CIT (2000) 158 CTR (Ker) 104 : (2000) 240 ITR 818 (Ker) and CIT vs. Sudharshan Silks Sarees (2001) 171 CTR (Kar) 256 : (2002) 253 ITR 145 (Kar). Accordingly, no substantial question of law arises. The appeals are dismissed. 18.1 In the above case, the Hon'ble Jurisdictional High Court held that it was not a case of bonafide voluntary disclosure but only to avoid consequences of law. The Hon'ble Jurisdictional High Court further held that the revised returns were filed on coming to know about detection of concealment. In the instant case also, the surrender of amount of gift was not voluntary and the same was surrendered after detection of concealment by the Revenue. In view of the above judgment, the assessee could not escape penalty merely on the ground that he had voluntarily surrendered the amount of gift to avoid litigation and buy peace with the Department. 19. Recently, the Hon'ble Supreme Court in the case of Mak Data P. Ltd. Vs. CIT (2013) 358 ITR 593 (SC) held that voluntary surrender does not release the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Statute does not recognize those types of defence sunder the explanation 1 to Section 271(l)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003,inthecase of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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