Commissioner Of Income Tax, Dehradun And Another ……… v. Vishan Naraiyan Khanna

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 167 of 2007 Commissioner of Income Tax, Dehradun and another ……….. Appellants Versus Vishan Naraiyan Khanna ..………… Respondent Present: Mr. H.M Bhatia, Advocate for the appellants. Coram: Hon’ble Barin Ghosh, C.J.Hon’ble U.C. Dhyani, J. BARIN GHOSH, C.J. (Oral) In this case, respondent assessee, during the relevant year, disclosed that he has received a sum of ` 3,51,000/- as and by way of gift from one Shiv Prasad Jagat Ram Kala. The said sum was received by cheque drawn on an NRE account maintained with Union Bank of India, Rajpur Road, Dehradun. In course of assessment proceedings, the assessee produced, both, the Deed of Gift as well as an affidavit purported to have been executed by Shiv Prasad Jagat Ram Kala. Shiv Prasad Jagat Ram Kala was not produced by the assessee before the Assessing Officer. It was, accordingly, not established that Shiv Prasad Jagat Ram Kala, the holder of the said NRE account, is the deponent of the said affidavit and executer of the said Deed of Gift. The Assessing Officer did not accept the Deed of Gift and the affidavit. He made inquiries and located the residence of one Shiv Prasad Jagat Ram Kala, situate in a village and not at the place, which was given as the address of the account holder Shiv Prasad Jagat Ram Kala. The Assessing Officer found that the family of Shiv Prasad Jagat Ram Kala, as was located in a village, is in such condition that Shiv Prasad Jagat Ram Kala was not in a position to make that gift. Accordingly, the sum of ` 3,51,000/- was added to the income of the assessee during the relevant period. 2. The Appeal preferred against the said addition was not pressed unconditionally. Subsequent thereto, penalty proceeding under Section 271(1)(c) of the Income Tax Act, 1961 was initiated. The Assessing Officer levied the minimum penalty of ` 1,40,400/- under Section 271(1)(c) of the Act. Commissioner of Appeals deleted the penalty and the said deletion has been affirmed by the Tribunal principally on the ground that there was no bona fidefailure on the part of the assessee in substantiating the explanation pertaining to the gift, as was furnished by him. Section 271(1)(c) of the Act is as follows: “If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,. . . . .” Explanation 1(B) thereto is as follows: “Where in respect of any facts material to the computation of the total income of any person under this Act,- Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed.” 3. In the instant case, it was held out by way of explanation given by the assessee that Shiv Prasad Jagat Ram Kala is the holder of the subject NRE account, wherefrom the money came to the assessee, and the same is evidenced by the Deed of Gift and the affidavit, both executed by the said Shiv Prasad Jagat Ram Kala. Shiv Prasad Jagat Ram Kala, or his family, could not be located at 3. In the instant case, it was held out by way of explanation given by the assessee that Shiv Prasad Jagat Ram Kala is the holder of the subject NRE account, wherefrom the money came to the assessee, and the same is evidenced by the Deed of Gift and the affidavit, both executed by the said Shiv Prasad Jagat Ram Kala. Shiv Prasad Jagat Ram Kala, or his family, could not be located at the address, which was furnished to the bank while the bank account was opened. In course of inquiry, the Assessing Officer located the family of one Shiv Prasad Jagat Ram Kala in a village. The family represented that Shiv Prasad Jagat Ram Kala, who is a member of their family, has no relationship with the assessee and held out that finance of Shiv Prasad Jagat Ram Kala could not permit him to make such a gift. Therefore, in the instant case, if Shiv Prasad Jagat Ram Kala, the holder of the said NRE account, is the same Shiv Prasad Jagat Ram Kala, whose family was located in the village, then, there is no bona fide on the part of the assessee to substantiate the explanation of gift as was given by him and also failure on his part to disclose facts relating to computation of his income pertaining to the said receipt of ` 3,51,000/-. In the event, Shiv Prasad Jagat Ram Kala, whose address was given to the bank, and Shiv Prasad Jagat Ram Kala, whose family was located at a village are different people, then, there is total failure on the part of the assessee to prove that Shiv Prasad Jagat Ram Kala, whose address was given to the bank, made the gift as the Deed of Gift and the affidavit alleged to have been signed by Shiv Prasad Jagat Ram Kala was not substantiated. The matter, therefore, squarely comes within the Explanation 1(B) to the Section and, accordingly, there is deemed concealment of the income by the assessee. We, accordingly, set aside the order of the appellate Commissioner and the Tribunal and restore the order of the Assessing Officer. 4. The appeal is, accordingly, disposed of. P. Singh (U.C. Dhyani, J.) (Barin Ghosh, C.J.) 11.12.2012 11.12.2012