2021 (5) TMI 245 - AT - Income Tax

Tribunal directs deletion of penalty for genuine claim supported by evidence

Jyotiben Jayvadan Kapadia & Rupesh Jayvadan Kapadia Versus The Deputy Commissioner of Income, Circle-3, Surat.

Jyotiben Jayvadan Kapadia & Rupesh Jayvadan Kapadia Versus The Deputy Commissioner of Income, Circle-3, Surat. - TMI Issues:Penalty imposition under section 271(1)(c) for non-genuine gifts received by the assessee.Detailed Analysis:1. The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the penalty on gifts received by the assessee. The assessee declared income for AY 2003-04, but the AO made an addition on account of non-genuine gifts. The matter was set aside by the Tribunal for further examination of evidence, including the relationship of donors with the assessee. The AO initiated penalty proceedings under section 271(1)(c) of the Act.2. The AO issued a show cause notice for penalty, which the assessee contested, stating that the gifts were genuine and voluntarily offered as additional income. However, the AO held that the revised return was time-barred and the explanation was not acceptable. The penalty was levied at 100% of the tax sought to be evaded. The CIT(A) upheld the penalty order, leading to the present appeal before the Tribunal.3. The AR for the assessee argued on two fronts: technical/legal issues and merits of the case. It was contended that the AO did not specify the specific charge in the penalty notice and that the penalty was imposed on a different charge than the one in the assessment order. On merit, it was argued that the assessee disclosed all details of the gifts, but donors did not cooperate, leading to the voluntary declaration of gifts as additional income.4. The Revenue argued that the penalty was justified as the assessee failed to prove the genuineness of the gifts. Despite opportunities, the assessee could not discharge the onus to prove the gifts' genuineness. The AO and CIT(A) held that the assessee concealed income, justifying the penalty under section 271(1)(c) of the Act.5. The Tribunal noted that the assessee provided details of donors and offered the gifts as additional income after donors did not cooperate. The AO did not investigate the creditworthiness or genuineness of donors. The Tribunal found that the assessee made a bonafide claim with documentary evidence, though not conclusively proved due to lack of donor confirmation.6. Considering the facts and circumstances, the Tribunal held that it was not a fit case for penalty imposition under section 271(1)(c) as the assessee made a genuine claim supported by evidence. The AO's failure to gather adverse evidence and the voluntary offer of gifts as additional income led to the deletion of the penalty.7. The Tribunal allowed the appeal, directing the AO to delete the penalty under section 271(1)(c) of the Act, rendering further adjudication on the primary contention of the assessee academic.