2016 (6) TMI 1300 - AT - Income Tax

Tribunal confirms penalty for unexplained credit & rejects appeal on NRI gift authenticity

The Tribunal upheld the imposition of penalty under Section 271(1)(c) and the addition of Rs. 4,00,000 as unexplained credit under Section 68. The ... Penalty u/s 271(1)(c) - proof of concealing the particulars of income - Held that:- In the instant case, penalty proceedings are separately initiated and has been mentioned by the AO that the penalty proceedings u/s 271(1)(c) initiated separate Therefore following case of Nainu Mal Het Chand vs. CIT, (2006 (10) TMI 130 - ALLAHABAD High Court) it is of the view that the AO was justified in holding that the penalty u/s 271(1)(c) is separately initiated. Therefore, it is not necessary for AO to mention that penalty proceedings is initiated for concealment of income for filing inaccurate particulars of income. Therefore, this legal ground of the assessee is dismissed. Unexplained gifts - Held that:- During the course of hearing of the appeal, the assessee was asked to prove sufficiency of fund for making the gift. No documentary evidence was produced at any stage. Therefore, the Tribunal held that the amount received by the assessee through Banking channel is not sufficient to prove the genuineness of the gift. Therefore, as assessee could not prove the sufficiency of source of income which the Donor has no evidence to produce at any stage and when the done is not a close relative, the transaction is not genuine. Therefore, the AO has correctly levied the penalty. When the assessee has given the gifts to various persons, therefore, the penalty is to be confirmed. Therefore, opinion that the AO and ld. CIT(A) are justified in their action. - Decided against assessee. Issues Involved:1. Legality of the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961.2. Genuineness of the NRI gift received by the assessee.Detailed Analysis:1. Legality of the Imposition of Penalty under Section 271(1)(c):The assessee contended that the Assessing Officer (AO) was not specific about whether the penalty was for concealment of income or for filing inaccurate particulars of income. The AO had merely mentioned that the penalty proceedings under Section 271(1)(c) were separately initiated. The assessee's representative relied on the decision of the Tribunal in the case of ACIT vs. M.P. State Tourism Development Corporation Limited and Others, which held that if the penalty proceedings are initiated for inaccurate particulars of income, no penalty can be imposed for concealment of income and vice versa.The Departmental Representative argued that the initiation of penalty proceedings was valid and relied on several judicial precedents, including M. Sajjanraj Nahar v. CIT, Nainu Mal Het Chand v. CIT, and Ms. Madhushree Gupta & British Airways PLC vs. Union of India and Another. The Tribunal noted that the AO's satisfaction regarding the concealment of income or furnishing inaccurate particulars must be discernible from the assessment order, even if not explicitly stated.The Tribunal, referencing the Allahabad High Court's decision in Nainu Mal Het Chand vs. CIT, emphasized that for the levy of penalty, two factors must co-exist: (i) there must be material leading to a reasonable conclusion that the amount represents the assessee’s income, and (ii) there must be conscious concealment or furnishing of inaccurate particulars by the assessee. The Tribunal concluded that the AO's initiation of penalty proceedings was justified and dismissed the legal ground raised by the assessee.2. Genuineness of the NRI Gift Received by the Assessee:The assessee declared a total income of Rs. 1,77,750 for the assessment year 2004-05 and credited Rs. 4,00,000 in the capital account as an NRI gift from Smt. Meenakshi Jain. The AO questioned the genuineness of this gift, noting that the donor was not a blood relative and there was no occasion for the gift. The AO concluded that the transaction was not genuine and treated the amount as unexplained credit under Section 68 of the Income-tax Act, 1961.The assessee provided various documents, including a gift deed, cheque copy, passport copy of the donor, and a bank certificate, to support the genuineness of the gift. However, the Tribunal found that these documents were insufficient to prove the genuineness of the transaction. The Tribunal emphasized that mere identification of the donor and movement of the amount through banking channels were not enough; the assessee also needed to prove the donor's capacity to make the gift.The Tribunal referred to its own earlier decision in the assessee's case, where it was observed that the donor had insufficient funds and the transaction appeared to be an arranged affair. The Tribunal concluded that the assessee failed to establish the genuineness of the transaction and upheld the addition under Section 68.The Tribunal also noted that the assessee could not provide documentary evidence to prove the sufficiency of funds available with the donor. The Tribunal relied on judicial precedents, including CIT vs. Anil Kumar and CIT vs. Suresh Kumar Kakkar, to support its view that the genuineness of the gift was not established.Conclusion:The Tribunal dismissed the appeal of the assessee, confirming the imposition of penalty under Section 271(1)(c) and the addition of Rs. 4,00,000 as unexplained credit under Section 68. The Tribunal held that the AO and CIT(A) were justified in their actions, and the assessee failed to prove the genuineness of the NRI gift.