V) However, This Would Not Debar An Assesseefrom Furnishing Evidence To Rebut The ["Prima ][Facie"]Satisfaction Of The Assessing Officer; [Since Penalty]Proceed v. Union Of Lndiat197Ol [77 ][Trr 107(Sc)L

t, 7o 31.05.2OL1 Present: Mr. Harish Malhotra, Sr. Advocate with [Mr. ][R.K. ][Modi,]Advocate for the aPPellant.Mr. Abhishek Maratha, Sr. Standing Counsel for [the]respondent. + ITA No. 789/2O1L* * 1. While making addition, the Assessing Officer [also ][initiated]penalty proceedings against the assessee under Section271(1Xc) of the lncome Tax Act. A show cause notice was issuedto the assessee and thereafter, the [Assessing ][Officer ][passed]orders dated 21't March, 2005 imposing [penalty ]of Rs.1,85,000/-.The assessee [preferred ]appeal there against [before ][the ][CIT(A)]which was dismissed. Second appeal before the met [the]similar fate. This appeal is directed against the order of the confirming the said PenaltY. l- z. Learned senior counsel for the [appellant ][argues ][that ][while]initiating the penalty [proceedings, ]no satisfaction was recordedby the Assessing Officer and [therefore ][the ][order ][of ][penalty ][needs]to be set aside on this [ground. ]The [provisions ][of ][Section ][27I]were amended retrospeCtively doing away with [the ][recording]and satisfaction specifically. The [vires ][of this ][provision ][have] Digitally Signed By:AMULYACertify that the digital file andphysical file have been compared andthe digital data is as per the physicalfile and no page is missing. { I been upheld by the Division Bench'of [this ][Court in 307 ] [in ][the]following words: "ln the result, our conclusion are as follows: (i) Section 277(L8) of the Act is not violative ofarticle 74 of the constitution.article 74 of the constitution. (ii) the position of law both pre and post'amendment is similar, inasmuch [as, ][the ][Assessing]Officer will have to arrive at a [prima ][facie satisfaction]during the course of [proceedings ]with regard to [the]assessee having concealed [particulars ][of ][income or]furnished inaccurate [particulars, ]before he [initiates]penalty proceedings. (iii) "Prima facie" satisfaction of the AssessingOfficer that the case may deserue the [imposition ][of]penatty should be discernible from the order [passed]course of the [pioceedings. ][Obviously, the]during the Assessing Officer would arrive at a decision, i.e., [a]final conclusion only after hearing [the ][assessee.] (iv1 At the stage of initiation of penaltyproceedings the order passed by the AssessingOfficer need not reflect satisfaction [vis-it-vis ][each]and every item of addition or [disallowance ][if ][overall]sense gathered from the order is that a furtherprognosis is called for. (v) However, this would not debar an assesseefrom furnishing evidence to rebut the ["prima ][facie"]satisfaction of the Assessing Officer; [since penalty]proceedings are not a continuation of [assessment]proceedings, [See Jain Brothers V. Union of lndiat197ol [77 ][trR 107(SC)l] ,t 1vi) [due ][compliance ][would ][be ][required ][to ][be]made in respect of the [provisions ]of Sections [274]and 275 of the Act. (vii) the proceedings for initiation of penalty proceeding cannot be sef aside only on the groundthat the assessment order states ["penalty]proceedings are initiated separately' if otherwise, itconforms to the [parameters ]set out [hereinabove ][are]met." It is clear from the above that while upholding the [provision, the]Division Bench has maintained that [th.e ][satisfaction ][of ][the]Assessing Officer is necessary though it would [suffice ][if ]it [is]discernible from records. 3. In the present case, after [going ]through the [order ][of ][the]Assessing Officer we are of the [opinion ][that the ][satisfaction ][is]writ large in the order [passed ]by the AO, We may [produce ][paras]LL, !2 and 13 of the assessment [order ][passed ][by ][the ][Assessing]Ofticer, to demonstrate the same:- (vii) the proceedings for initiation of penalty proceeding cannot be sef aside only on the groundthat the assessment order states ["penalty]proceedings are initiated separately' if otherwise, itconforms to the [parameters ]set out [hereinabove ][are]met." It is clear from the above that while upholding the [provision, the]Division Bench has maintained that [th.e ][satisfaction ][of ][the]Assessing Officer is necessary though it would [suffice ][if ]it [is]discernible from records. 3. In the present case, after [going ]through the [order ][of ][the]Assessing Officer we are of the [opinion ][that the ][satisfaction ][is]writ large in the order [passed ]by the AO, We may [produce ][paras]LL, !2 and 13 of the assessment [order ][passed ][by ][the ][Assessing]Ofticer, to demonstrate the same:- L1. From the above facts of [the ][case, ][it ][is ][very]much clear that it is only a [passing ][of ][money ][and ][the]persons who are engaged in a very small business ofstitching, embroidery, cooking and [papad ][making]cannot be so rich that they [can make ][such ][gift to ][Shri]Vikal Aggarwal. They all are [living ][in ][rented]premises and are living hand to mouth. They [don't]have any day to day dealings with [the donee. ][All ][of] ,( ? them have stated that the donee's [grandfather]helped their husbands or Shri Ram Chandra [Aggarwal]in their business. But none of them [was ][able ][to]explain the nature or type of help, [which ][Assessee's]grandfather made. No evidence has been producedin this regard. Even for an argument sake if it [is]admitted that he helped them but looking [to ][the]financial status of the donors it cannot [be ][believed]that they are having that much capacity [to ][gift ][this]big amount to the Assessee. These [things ][are ][all ][an]after thought to make the rotation of the [money to]name it as gift. lt is true that the moneys [have ][been]passed on through the bank accounts and all thepersons are lncome tax Assessees but this channelhas been misused to [give ]this the colour of [gifts.] 1-2. On one side there is Sh. Vikal Aggarwal [and ][his]father Anil Aggarwal whose turnover [runs into ][crores.]Vikal himself has admitted that they [have ][two ][full]time servants, four air conditioners, 3 floor [house]and a few cars. On the other side [we ][have donor ][Sh.]Ram Chander Aggarwal, Smt. Meera Devi [Sharma,]Radha Sharma and Smt. Chanda Devi [Dokania ][who]live hand to mouth, do not have [even ][total ][worth ][of]15 lakhs [(Total ]of Balance Sheet for all [put together).]Thus the gifting of money is only a created story,which is having weak threads due to [contradictory]statements. The onus was on [Assessee ][to ][discharge]his burden to [prove ]the credit [worthiness ][of ][donors.]He refused to [produce ]them and [subsequently ][when]he said that he wanted to cross examine, [vide ][order]sheet entry dated 5.1.04, it was told ["since ][the]Assessee has taken the [gifts, ]he may [produce ][the]donors as his witnesses [and ][offer ][the ][Deptt ][for ][cross]examination. To make it convenient [to them this ][can]be done at either of the [places ]i.e., Kolkatta or [Delhi.]In that case the statements recorded by [us ][will ][not]be used. He was asked to reply [this in ][writing ][by]8.1.2OO4 alongwith the [date on which ][they will ][offer]them for examination and re-examination." 13. Again he was told on 8.1.04 that [since ][the]statements were recorded neither [in ][my ][presence]nor before Assessee, he [could produce ][those ][donors.]On 5th Jan, itself I had made [offer ][that ][donors ][could]be produced in Kolkatta or Delhi. [From ][5th ]Jan [2004] 4 13. Again he was told on 8.1.04 that [since ][the]statements were recorded neither [in ][my ][presence]nor before Assessee, he [could produce ][those ][donors.]On 5th Jan, itself I had made [offer ][that ][donors ][could]be produced in Kolkatta or Delhi. [From ][5th ]Jan [2004] 4 to 25 .2.2004, the counsel [played ]dily-dallying [tactics]and again wrote on 25.2.04 that statement [of ][Sh.]R.C. Aggarwal was recorded under [pressure ][and]wanted the statement to be recorded again,Strangely he did not raise this issue for [other ][three]persons. The onus is on Assessee, as it is he who isthe beneficiary of such [gifts ]and circumstantialevidence suggest that such a ["gift" ]is only [a]colourable device. He himself is not ready [to]produce Sh. R.C. Aggarwal and trying to delay theproceedings using such tactics. I thus treat thereceipt of Rs.5,24,000 as unexplained cash [credit ][u/s]68. The same is therefore, taxed as income [from]other sources. 4.We do not find any merit in this appeal. Same is [hereby]dismissed. A.K. Ys{'SlKRl, J. HTA, J: MAY 31, 2011 v{K