Commissioner Of Income Tax, Karnal v. Sh. Subhash Mittal

ITA No. 527 of 2006 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Karnal Versus Sh. Subhash Mittal ITA No. 527 of 2006 Date of Decision: 15.2.2011 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. Pankaj Jain, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 2.3.2006 passed by the Income Tax Appellate Tribunal, DelhiBench 'SMC', New Delhi (hereinafter referred to as “the Tribunal”) in ITANo. 4890/Del/2005, for the assessment year 1994-95, claiming followingsubstantial questions of law:- “(a)Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of CIT(A) in cancelling the penalty levied undersection 271(1)(c) by placing reliance upon the caseof CIT Vs. Munish Iron Store (263 ITR 484), whereascase, the Ld. ITAT was right in law in confirming theorder of CIT(A) in cancelling the penalty levied undersection 271(1)(c) by placing reliance upon the caseof CIT Vs. Munish Iron Store (263 ITR 484), whereas facts of the two are entirely different? (b)Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of CIT(A) in cancelling the penalty levied u/s271(1)(c) particularly when the A.O. recorded itssatisfaction as envisaged u/s 271(1)(c) of the IncomeTax Act, 1961?” 2.Briefly stated, the facts necessary for adjudication asnarrated in the appeal are that in pursuance of notice under Section 148of the Act, the assessee filed his return on 20.9.2001 for theassessment year 1994-95 declaring an income of Rs.43,534/- with anote that during the financial year 1993-94, he had received a gift ofRs.2,00,000/- from NRE Account of Shri Sanjeev Gupta vide DDNo.190733 dated 28.10.1993. The gift of Rs.2,00,000/- was held to bebogus as admitted by the donor Shri Sanjeev Gupta. The AssessingOfficer made an addition of Rs.2,00,000/- treating it as undisclosedincome of the assessee under Section 68 of the Act. Further, additionof Rs.20,000/- at the rate of 10% of bogus gift representing thepremium paid for arranging such bogus gift was also made.Accordingly, total addition of Rs.2,20,000/- was made as undisclosedincome. Penalty proceedings under Section 271(1)(c) of the Act forconcealment of income were also initiated separately. Feelingaggrieved, the assessee took the matter in appeal and theCommissioner of Income Tax (Appeals) [hereinafter referred to as “theCIT(A)”] vide order dated 18.11.2003 affirmed the addition made by theAssessing Officer. The Assessing Officer vide order dated 18.3.2005 ITA No. 527 of 2006-3- imposed a penalty of Rs.91,825/- under Section 271(1)(c) of the Actagainst which the assessee filed an appeal before the CIT(A) who videorder dated 26.10.2005 deleted the said penalty on the ground that theTribunal had deleted the addition of Rs.2,20,000/- by accepting the giftto be genuine. The department filed appeal challenging the deletion ofthe penalty. The Tribunal vide order dated 2.3.2006 dismissed theappeal of the revenue on the ground that the gift received by theassessee from Sh. Sanjeev Gupta had been held to be valid and theappeal of the revenue against quantum addition has already beendismissed. Hence, the present appeal by the revenue . 3.We have heard learned counsel for the parties. 4.The point for consideration in this appeal is whether theTribunal was justified in holding that the alleged gift received by therespondent-assessee from a Non-resident Indian with whom theassessee had no relationship, was a genuine gift and consequentlydeleting the penalty imposed under Section 271(1)(c) of the Act. 3.We have heard learned counsel for the parties. 4.The point for consideration in this appeal is whether theTribunal was justified in holding that the alleged gift received by therespondent-assessee from a Non-resident Indian with whom theassessee had no relationship, was a genuine gift and consequentlydeleting the penalty imposed under Section 271(1)(c) of the Act. 5.The revenue had approached this Court by filing ITA No.356 of 2006 (Commissioner of Income Tax, Karnal v. Sh. SubhashMittal) challenging the legality and validity of alleged gift received by theassessee from Shri Sanjeev Gupta, wherein it has been held that thealleged gift from NRE, Sh. Sanjeev Gupta was not a genuine gift. Oncethat is so, the only conclusion is that the assessee had furnishedinaccurate particulars of his income and the order of the Tribunaldeleting penalty is unsustainable in law. Accordingly, it is held that theassessee had concealed the particulars of the income and was liable forpenalty under Section 271(1)(c) of the Act. Further, the issue regarding ITA No. 527 of 2006-4- recording of satisfaction for initiation of penalty proceedings in thecourse of assessment proceedings stands concluded against theassessee in the judgment of this Court reported in Commissioner of Income Tax v. Pearey Lal & Sons (EP) Ltd. [2009] 308 ITR 438. 6.In view of the above, the substantial questions of law areanswered in favour of the revenue and against the assessee. Theappeal is allowed. (AJAY KUMAR MITTAL) JUDGE February 15, 2011gbs (ADARSH KUMAR GOEL)JUDGE