TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 1263
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....er section 143 (1) of the Act on 14.5.2001. Subsequently, inquiries were conducted by the ADIT (Inv.)-II, Chandigarh regarding gifts made by Shri Avinashi Lal Bajaj and his family out of their NRI accounts. The assessee had also shown a gift of Rs. 10 lacs from Shri Avinashi Lal Bajaj during the assessment year under consideration. During the course of inquiries, ADIT (Inv.) had recorded the statement of Shri Avinashi Lal Bajaj, who denied having made any gift but stated that only pay order was issued in lieu of cash received from Shri Krishan Kumar Palta i.e. the assessee. Consequently, notice under section 148 of the Act was issued on 4.3.2005 after recording reasons. In response to the said notice, the assessee filed written reply stating that the original return filed by him may be treated as return filed in response to notice under section 148 of the Act. Thereafter, statutory notices were issued to the assessee. During the course of assessment proceedings, the Assessing Officer required the assessee to prove the genuineness of the gift. In response to the said query, the assessee submitted photocopy of Gift Deed and photocopy of affidavit of Shri Avinashi Lal Bajaj dated 22.1....
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....n the income tax proceedings, therefore to avoid litigation and purchase peace Rs. 10 lac is being surrendered subject to penal action under the provisions of the Income Tax Act. Surrender by the assessee is very clear and conclusive. Accordingly, the A.O. has framed the assessment and taxed the gifted amount. Now our submission is that surrender offer of the assessee is in good faith and does not automatically means that gift received agreed to be added was concealed income. Reliance on Sir Shadi Lai Sugar & General Mills Ltd. Vs CIT (1987) 168 ITR 705,713 (SC). Again in good faith the assessee did not prefer an appeal before CIT(A) against the orders of the A.O. b) That only part of the surrender offer letter has been accepted. Its first part offering surrender of Rs. 10 lacs has been accepted and has taxed accordingly now its second part making the said surrender offer subject to no penal action under the provisions of Income Tax Act be considered with same spirit. Any offer must be accepted/rejected in full and not partly. c) That no satisfactory reasons have been recorded during the course of assessment either in respect of concealment of any income or furnishing of inaccu....
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.... before the Hon'ble Supreme Court was that "whether High Court in a reference could interfere with the finding of a fact and transform the same into a question of law on the ground that there has been non-consideration of all relevant facts" The Hon'ble Supreme Court held that in preferring one view to another view of factual appreciation, the High court transgressed the limits of its jurisdiction under the income tax reference in answering the question of law. Further on facts the main additions made in the cited case were on account of various disallowances. c) The assessee's contention that any offer should be accepted in full not in part is not relevant as the offer of the assessee was never accepted by the AO. d) The last averment of the assessee that no satisfaction was recorded by the AO during the course of assessment proceedings that the assessee has concealed the particulars of income is not correct as the AO while framing assessment has duly mentioned that penalty proceedings for concealment of particulars of income are being initiated separately. The AO in his entire order u/s 143(3) has discussed this very concealment of income and has given clear finding....
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....tity of the donor and genuineness of transaction have been duly established. He further pointed out that in the surrender letter dated 20.2.2006, it was specifically stated that the donor has not cooperating in the income tax proceedings and, therefore, to avoid litigation and to buy peace, Rs. 10 lacs were surrendered. The learned counsel for the assessee submitted that the first part of the surrender has been accepted. However, the later part that it is subject to no penal action, was not accepted. The learned counsel for the assessee also relied upon the decision of the I.T.A.T. Delhi Bench 'B', New Delhi in the case of Deepak Kumar Jain Vs. ITO in ITA No.2189/Del/2012 relating to assessment year 2002-03. The I.T.A.T., Delhi Bench vide its order dated 20.7.2012 deleted the penalty levied under section 271 (1) (c) of the Act holding that it is not the case of the Revenue that the documents submitted by the assessee were false. In the said case, gifts were received by the assessee from three persons amounting to Rs. 15 lacs (Rs.5 lacs each). In order to establish the identity, genuineness, the assessee submitted documents from the donors like memorandum of gifts, affidavits, PAN c....
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.... Shri Avinashi Lal Bajaj S/o Shri B.D.Bajaj, resident of House No.3046, Sector 20D, Chandigarh. During the course of enquiries made by the Investigation Wing, Shri Avinashi Lal Bajaj in his statement stated that he retired on 1.7.1996 from Public Health Department, U.T., Chandigarh and drawing pension of Rs. 4000/- per month. After his retirement, Shri Avinashi Lal Bajaj went to USA and joined the business of his son Shri Suresh Bajaj, who was already in USA for the last 10 years. As regards the entries in his NRE Account No.1062 with Vijay Bank, Sector 34, Chandigarh, he has stated that these are on account of pay orders obtained by him in different names and these pay orders were paid to some persons through Shri Ramesh Kumar. He further stated that these pay orders were paid in lieu of cash received from alleged donee and he has not given any loan or gift to any person in India out of NRE Account No.1062 with Vijya Bank, Chandigarh. He further stated that Shri Ramesh Kumar (middle man) promised to helf in export business to USA and obtained draft/pay orders in different names and paid in cash immediately in lieu of the same. The Investigation Wing of the Revenue has also recorde....
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.... has dismissed the appeal of the assessee, observing as under : "8 As far as issue regarding merit is concerned it is not correct that the statement of the donor was recorded behind the back of the assessee. In fact the statement of the donor, Shri Abinashi Lal Bajaj was recorded by Investigation Wing and same was confronted to the assessee which fact becomes clear from the latter written by the Assessing officer on 9.1.2006 which is as under: "You have received a gift amounting to Rs. 10 lakhs from Abinashi Lal Bajaj. The statement of Bajaj was recorded by the ADIT (Inv) II, Chandigarh. In his statement Shri Bajaj has stated that he has not made any gift to any persons; only pay order has been given in lieu of cash. It is quite clear from the above facts the gift is not genuine. You are requested to furnish the complete postal address of the person from whom gift has been received or produce the donor to verify the genuineness of the gift on the date of hearing i.e. 18.1.2006." Therefore it is clear that the assessee was confronted with the statement given by Shri Abinashi Lal Bajaj before the Investigation Wing. There after the assessee vide letter dated 20.2.2006 stated as u....
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.... scam in respect of bogus gifts. The ADIT (Inv.)-II, Chandigarh vide letter dated 27.4.2004 forwarded a detailed report which is annexed as A-2 to the impugned order, was sent to the Assessing Officer. The authorities below have categorically stated that Bajaj family was involved in giving bogus gifts. The statements of members of Bajaj family (Annexure-3) to the order of the learned CIT (Appeals) were recorded and they have accepted that pay orders were given in lieu of cash. It is clear case where the assessee has miserably failed to satisfy the ingredients of section 68 of the Act. The onus was on the assessee to prove the genuineness of the transaction and creditworthiness of the donor. In the case of Jaspal Singh Vs. CIT (2007) 290 ITR 306 (P&H), the facts of the case were that the assessee had constructed a house property. He had claimed to have received various gifts aggregating to Rs. 15,69,000/- in the assessment years 1997-98 to 2001-02 from NRIs. In assessment year 1998-99, the assessee had claimed to have received a sum of Rs. 4,70,000/- from NRIs and Rs. 1,20,000/- from four persons at Rs. 30,000/- each. The Assessing Officer asked the assessee to prove the identity of....
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....l amount in cash, along with premium for arranging that gift. During proceedings under section 148 of the Act initiated against the assessee, the amount equal to the amount of the gift, i.e., Rs. 1,75,000 and Rs. 17,500 on account of premium at the rate of 10 per cent. were added to the income of the assessee. The Commissioner of Income-tax (Appeals) (in short "the CIT(A)"), confirmed the order of the Assessing Officer whereas the Tribunal accepted the appeal of the assessee and deleted the penalty, vide order dated September 22, 2005. Meanwhile proceedings under section 271(1)(c) of the Act were also initiated against the assessee whereby a penalty of Rs. 82,000 was imposed on the assessee. The assessee preferred appeal against imposition of penalty. The Commissioner of Income-tax (Appeals) cancelled the penalty imposed, vide order dated October 26, 2005. The appeal carried by the Revenue was dismissed by the Tribunal vide order under appeal and it was observed that since the Assessing Officer had not recorded his satisfaction before initiating the penalty proceedings, the order of penalty could not be sustained." The Hon'ble jurisdictional High Court has held as under:- "T....
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..... It is thus, not believable that such a person can ever dream of making a gift of Rs. 10 lacs. Now, the question is as to why the alleged donor will give a gift of huge amount to the assessee, particularly in absence of any relationship between Mr.Bajaj (alleged donor) and the assessee and there was no occasion for gift. In my considered opinion, the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) relied upon by the learned counsel for the assessee is not applicable to the facts and circumstances of the present case. Similarly, other decisions relied upon by the learned counsel for the assessee are not applicable to this case since the facts are different and distinguishable. 17. The assessee vide his letter dated 20.2.2006 made a surrender of Rs. 10 lacs subject to no penal action. The assessee has made the surrender after detection of concealment by the Department. It is admitted fact that the detailed investigations were carried out by the Revenue in regard to the gifts given by the alleged donor. The assessee made surrender only after detection of concealment of income by the Department. In my opinion, ....
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....nt. In the assessment order itself, the Assessing Officer has stated that penalty proceedings under section 271(1)(c) of the Act for concealing/furnishing inaccurate particulars of income have been initiated separately. As regards the contention of the assessee, the Assessing Officer has stated that it is not a right of the assessee to offer the income as per his requirements that the Assessing Officer should have also accepted the surrender made by the assessee. In the instant case, the Assessing Officer has not accepted the surrender made by the assessee. It is true that the surrender has not been made by any mistake of law or fact as the assessee came to know that the Revenue has made detailed investigation. On investigation, the claim made by the assessee was found to be false. Therefore, the assessee is precluded from taking the plea that the facts were disclosed in the return of income. After perusing the order of the Assessing Officer, it is clear that the Assessing Officer was satisfied that the assessee has concealed the income or furnished inaccurate particulars of income In the instant case, the detailed investigation was made by the Revenue and it was found that certain....
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....ng that the members of the group are indulging in tax evasion by showing income from other sources as agricultural income. During the investigation, the assessee Rajesh Chawla was asked to produce the evidence about agricultural income. In response to the said query, Rajesh Chawla failed to produce any documentary evidence in support of his claim. However, the assessee's counsel offered to disclose income subject to no penalty but he was told that disclosure could not be conditional. The assessee was again asked to produce the genuineness of his claim. On 20.6.1996, the learned counsel for the assessee stated that certain agricultural receipts were in cash for which no record was available and original agreements of the family members was not traceable. On 18.6.1996, revised return surrendering agricultural income was filed. The Assessing Officer completed the assessment under section 143(3) r.w.s. 147 of the Act. In the said assessment order, the revised return was accepted. However, the Assessing Officer initiated penalty proceedings under section 271 (1) (c) of the Act. The stand of the assessee was that since agricultural income was voluntarily surrendered before being detected....
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....d the amount of gift to avoid litigation and buy peace with the Department. 19. Recently, the Hon'ble Supreme Court in the case of Mak Data P. Ltd. Vs. CIT (2013) 358 ITR 593 (SC) held that voluntary surrender does not release the assessee from the mischief of penal proceedings. The Hon'ble Supreme Court held that law does not provide that when an assessee makes a voluntary surrender of his concealed income, he has to be absolved from penalty. The relevant observations of the Hon'ble Supreme Court (pages 597 to 599) are as under : We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(l)(c) of the Act, which reads as follows:- "Explanation l:-Where in respect of any facts material to the computation of the total income of any person under this Act,- A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation ....
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....igned, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003,inthecase of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee 'had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not requi....