Mradula Agarwal v. The Income-tax officer, Ward 5(2), Jaipur
[Citation -2016-LL-0916-170]

Citation 2016-LL-0916-170
Appellant Name Mradula Agarwal
Respondent Name The Income-tax officer, Ward 5(2), Jaipur
Court ITAT-Jaipur
Relevant Act Income-tax
Date of Order 16/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags concealment of income • additional ground • capital gain • wrong claim • furnishing of inaccurate particular • initiation of penalty proceedings • waiver of penalty
Bot Summary: The assessee has raised the following grounds of appeal :- That under the facts and circumstances of the case the learned CIT has erred in confirming the action of the learned Assessing Officer in imposing the penalty u/s 271(1)(c) of the Income Tax Act, 1961 on addition of Rs. 25,52,137/- made u/s 56(2)(vii)(b) of the Income Tax Act, 1961 for gift received from nephew. The Hon ble Karnataka High Court in the case of Manjunath Cotton and Ginning Factory has held as under :- Held accordingly, dismissing the appeals, that merely because the assessee agreed to the addition and the assessment order was passed on the basis of this addition, when the assessee had paid the tax and the interest thereon in the absence of any material on record to show the concealment of income, it could not be inferred that the addition was on account of concealment. 4 ITA No. 176/JP/2016 Smt. Mradula Agarwal That when two fact finding authorities were satisfied that the explanation offered by the assessee was not false and it was a bona fide though the assessee had failed to conclusively prove the explanation the levy of penalty was not justified. The contention of the assessee is that the assessee received a gift of residential plot from Shri Paresh Agarwal son of Shri Chandra Mohan Agarwal resident of 3, Sethani Ka Bagh, Moti Doongari Road, Jaipur through Gift deed duly registered on 10.11.2009. The contention of the assessee is that the gift has been received from the nephew and the assessee was under the bonafide belief that he is covered under the definition of Relative as given in Explanation to clause of sub-section of section 56. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income.


IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM ITA No. 176/JP/2016 Assessment Year : 2010-11. Mrs. Mradula Agarwal, cuke Income Tax Officer, 395, Narnoli Mansion, Vs. Ward 5(2), Sanganeri Gate, Jaipur. Jaipur. PAN No. AASPA 6312 K Appellant Respondent Assessee by : Shri S.L. Poddar (Advocate) Revenue by: Shri Raghuvir Singh Dagur (Addl. CIT) Date of Hearing : 05.09.2016. Date of Pronouncement : 16/09/2016. ORDER PER SHRI KUL BHARAT, JM. This appeal by assessee is directed against order of ld. CIT (A)-2, Jaipur dated 01.01.2016 pertaining to A.Y. 2010-11. assessee has raised following grounds of appeal :- That under facts and circumstances of case learned CIT (A) has erred in confirming action of learned Assessing Officer in imposing penalty u/s 271(1)(c) of Income Tax Act, 1961 on addition of Rs. 25,52,137/- made u/s 56(2)(vii)(b) of Income Tax Act, 1961 for gift received from nephew. 2. During course of hearing, assessee has also taken additional ground that reads as under :- 2 ITA No. 176/JP/2016 Smt. Mradula Agarwal Additional Ground : In facts and circumstances of case learned CIT (A) has erred in confirming penalty u/s 271(1)(c) which is illegal, unlawful and justified. 3. Briefly stated facts of case are that AO initiated penalty proceedings and penalty under section 271(1)(c) of Income Tax Act, 1961 (hereinafter referred to as Act) was levied vide order dated 17.03.2015 on addition of income under section 56(2)(vii)(b) of Rs. 25,52,137/- and capital gain under section 50C of Rs. 30,08,667/-. assessee aggrieved by this order, carried matter before ld. CIT (A), who after considering submissions partly allowed appeal. ld. CIT (A) deleted penalty on addition made by invoking provisions of section 50C of Act of Rs. 30,08,667/- and confirmed penalty on addition made under section 56(2)(vii)(b) of Rs. 25,52,137/-. 4. Now assessee is in appeal before us. 5. only effective ground is against confirmation of penalty by ld. CIT (A). However, assessee has also taken additional ground as reproduced above. 5.1. contention of ld. Counsel for assessee on this ground is that notice initiating penalty proceedings was not proper as it does not specify reason for levying of penalty. ld. Counsel has relied upon decision of Hon ble Karnataka High Court rendered in case of CIT vs. Manjunath Cotton and Ginning Factory, 359 ITR 565 (Kar.). ld. Counsel submitted that AO has not given any specific reason in show cause notice dated 13th March, 2013 issued to 3 ITA No. 176/JP/2016 Smt. Mradula Agarwal assessee calling upon her to state as to why penalty on addition made should not be made. 5.2. On other hand, ld. D/R opposed submissions and supported order of AO. 5.3. We have heard rival contentions and perused material available on record. assessee has not filed any paper book. However, along with written submission, assessee has filed copy of letter dated 16th February, 2015. In notice dated 13.3.2013, AO has ticked on stereotyped format reason which reads concealed particulars of income or furnished inaccurate particulars of income . However, while levying penalty, AO has levied penalty on ground of furnishing inaccurate particulars of income and concealing income. Hon ble Karnataka High Court in case of Manjunath Cotton and Ginning Factory (supra) has held as under :- Held accordingly, dismissing appeals, (i) that merely because assessee agreed to addition and assessment order was passed on basis of this addition, when assessee had paid tax and interest thereon in absence of any material on record to show concealment of income, it could not be inferred that addition was on account of concealment. Moreover, assessee had offered explanation. explanation was not found to be false. On contrary, it was held to be bona fide. cancellation of penalty by Tribunal was justified. (ii) That Tribunal was justified in holding that entire penalty proceedings were vitiated on ground that notice issued was not in accordance with law. (iii) That subject matter of penalty proceedings was order of appellate authority and not order passed by Assessing Officer. Hence, order of penalty by Assessing Officer was not valid. 4 ITA No. 176/JP/2016 Smt. Mradula Agarwal (iv) That when two fact finding authorities were satisfied that explanation offered by assessee was not false and it was bona fide though assessee had failed to conclusively prove explanation levy of penalty was not justified. In present case also notice has been issued by ticking stereotyped format. This fact is not controverted by revenue. Therefore, in our considered view, penalty proceeding is not validly initiated. Hence initiation of penalty on basis of notice dated 13th March, 2013 is not in accordance with requirement of law in view of judgment of Hon ble Karnataka High Court referred above. additional ground is allowed. 6. solitary ground raised in assessee s appeal is against confirmation of penalty. contention of assessee is that assessee received gift of residential plot from Shri Paresh Agarwal son of Shri Chandra Mohan Agarwal resident of 3, Sethani Ka Bagh, Moti Doongari Road, Jaipur through Gift deed duly registered on 10.11.2009. contention of assessee is that gift has been received from nephew and assessee was under bonafide belief that he is covered under definition of Relative as given in Explanation to clause (vi) of sub-section (2) of section 56. 6.1. On other hand, ld. D/R opposed submissions and supported orders of authorities below. He submitted that ex-facie definition as given in Explanation does not cover assessee. Hence assessee has made wrong claim deliberately. 5 ITA No. 176/JP/2016 Smt. Mradula Agarwal 6.2. We have heard rival contentions and perused material available on record. We find that assessee has disclosed factum of gift. However, claimed exemption under section 50(2)(vii)( b) was found to be not available to assessee. We have given thoughtful consideration to judgment of Hon ble Supreme Court in case of Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) which has held as under :- glance at provisions of section 271(1)(c) of Income tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of particulars of income of assessee. Secondly, assessee must have furnished inaccurate particulars of his income. meaning of word particulars used in section 271(1)(c) would embrace details of claim made. Where no information given in return is found to be incorrect or inaccurate, assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose assessee to penalty, unless case is strictly covered by provision, penalty provision cannot be invoked. By no stretch of imagination can making incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon return filed by assessee, because that is only document where assessee can furnish particulars of his income. When such particulars are found to be inaccurate, liability would arise. To attract penalty, details supplied in return must not be accurate, not exact or correct, not according to truth or erroneous. Where there is no finding that any details supplied by assessee in its return are found to be incorrect or erroneous or false there is no question of inviting penalty under section 271(1)(c). mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of assessee. Such claim made in return cannot amount to furnishing inaccurate particulars. It is settled position of law that merely claim which was made bonafide in respect of exemption or deduction is rejected or not only on basis of levy of penalty, AO is required to give clear finding that claim of exemption as 6 ITA No. 176/JP/2016 Smt. Mradula Agarwal made was with intention to evade tax. Therefore, respectfully following judgment of Hon ble Supreme Court, coupled with fact that penalty proceedings are not validly initiated, AO is directed to delete penalty. 7. In result, appeal of assessee is allowed. Order is pronounced in open court on 16/09/2016. Sd/- Sd/- ( BHAGCHAND) ( KUL BHARAT )Accountant Member Judicial Member Jaipur Dated:- 16/09/2016. Das/ Copy of order forwarded to: s 1. Appellant- Smt. Mradula Agarwal, Jaipur. 2. Respondent ITO, Ward 5(2), Jaipur. 3. CIT(A). 4. CIT, 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 176/JP/2016) By order, Assistant. Registrar Mradula Agarwal v. Income-tax officer, Ward 5(2), Jaipur
Report Error