INCOME TAX APPEAL No. - 276 of 2015 Appellant:- Principal Commissioner Of Income-Tax Central Kanpur Respondent :- Dinesh Chandra Jain Counsel for Appellant :- S.S.C. I.T.,Praveen Kumar Counsel for Respondent :- Abhinav Mehrotra Connected with:- Case :- INCOME TAX APPEAL No. - 277 of 2015 Appellant:- Principal Commissioner Of Income-Tax Central Kanpur Respondent :- Dinesh Chand Jain Counsel for Appellant :- Praveen Kumar,Abhinav Mehrotra Counsel for Respondent :- Abhinav Mehrotra Case :- INCOME TAX APPEAL DEFECTIVE No. - 197 of 2015 Appellant:- Principal Commissioner Of Income-Tax Central Kanpur Respondent :- Dinesh Chand Jain Counsel for Appellant :- Praveen Kumar,Abhinav Mehrotra Counsel for Respondent :- Abhinav Mehrotra Case :- INCOME TAX APPEAL DEFECTIVE No. - 198 of 2015 Appellant:- Principal Commissioner Of Income-Tax Central Kanpur Respondent :- Dinesh Chand Jain Counsel for Appellant :- Praveen Kumar,Abhinav Mehrotra Counsel for Respondent :- Abhinav Mehrotra Case :- INCOME TAX APPEAL DEFECTIVE No. - 199 of 2015 Appellant:- Principal Commissioner Of Income-Tax Central Kanpur Respondent :- Dinesh Chand Jain Counsel for Appellant :- Praveen Kumar,Abhinav Mehrotra Counsel for Respondent :- Abhinav Mehrotra AND Case:- INCOME TAX APPEAL DEFECTIVE No. - 200 of 2015 Appellant:- Principal Commissioner Of Income-Tax Central Kanpur Respondent :- Dinesh Chand Jain Counsel for Appellant :- S.S.C. I.T. Counsel for Respondent :- Abhinav Mehrotra,Abhinav Mehrotra Hon'ble Bharati Sapru,J. Hon'ble Rohit Ranjan Agarwal,J. (Delivered by Hon'ble Rohit Ranjan Agarwal, J.) [2] 1. All these six appeals under Section 260-A of Income Tax Act, 1961 (hereinafter called as 'Act') arise out of common order passed by Income Tax Appellate Tribunal, Delhi, Bench B , New Delhi (hereinafter called as 'Tribunal') dated 26.09.2014. leading appeal is Income Tax Appeal No. 276 of 2015 for assessment year 2000-01. These appeals were heard and decided on 22.02.2019 on preliminary objection raised by assessee regarding territorial jurisdiction of this Court. Today with consent of both parties, appeal is heard on merit. 2. This appeal was admitted on 16.11.2016 on following question of law:- (A) Whether on facts and circumstances of case, Hon'ble ITAT, New Delhi is legally justified in deleting penalty of Rs.75,76,441/- imposed by AO ignoring quantum appeal which had been confirmed by Ld. CIT(A) as well as ITAT, New Delhi on which penalty was imposed. (B) Whether on facts and circumstances of case, ITAT has not erred in law in deleting penalty of Rs.75,76,441/- imposed by AO contradicting their findings in deciding quantum appeal that whole transaction was designed to show huge amounts as gifts without any liability of paying taxes. 3. Income Tax Appeal No. 276 of 2015 for assessment year 2000-01 is being treated as leading case. brief facts of case are that under Section 132 of Act, search and seizure was conducted on business premises of persons related to Begum Gutkha Group on 09.12.2003. During course of search and seizure, various books of [3] accounts and other documents were found and seized. In response to notice under Section 153-A of Act, assessee filed letter on 23.02.2007 stating that his original return filed may be treated as return required under Section 153-A of Act. 4. assessee had filed return declaring income of Rs.1,63,65,386/- on 31.10.2000 for assessment year 2000-01. assessment in this case was completed under Section 153-A/143(3) on 08.11.2007 at income of Rs.3,27,87,990/- as against return income of Rs.1,63,65,386/-. AO in his assessment order had made addition of Rs.1,64,22,604/- by treating exempted gifts received by assessee's minor son of Rs.1,52,20,000/- as his income from other sources. Against said assessment order, appeal was filed before Commissioner of Income Tax (hereinafter called as 'CIT'). assessment order was confirmed in appeal and further on appeal before Tribunal, order of assessing authority was upheld. No further appeal was filed by assessee challenging order of Tribunal as far as quantum is concerned. 5. While, penalty proceedings under Section 271(1)(c) of Act were initiated against assessee on ground of concealment of particulars of income and sum of Rs.75,76,441/- was imposed as penalty for assessment year 2000-01, on ground that assessee had furnished inaccurate particulars and had concealed particulars of its income amounting to Rs.1,52,20,000/-. Aggrieved by penalty order under Section 271(1)(c), assessee filed [4] appeal before CIT (A) III, New Delhi, who partly allowed appeal of assessee reducing penalty at 100% instead of 150%. 6. Against said order, assessee as well as Revenue filed appeal before Tribunal at New Delhi. Tribunal dismissed appeal of Revenue and allowed assessee's appeal for assessment year 2000-01 to 2005-06. 7. Sri Praveen Kumar, learned counsel appearing for Department submitted that Tribunal was not correct to set aside penalty imposed against assessee under Section 271(1)(c) of Act, as assessing authority had categorically given finding that gifts are not genuine and allowable, and after holding gifts as unexplained, amount of Rs.1,52,00,000/- were taxed as income from other source. He further submitted that facts of case suggest that furnishing of incorrect particular/ claim and consequently concealment on assessee's part for which proceedings were initiated. It has also been contended that assessment order clearly demonstrated gifts to be sham transaction and said finding has been upheld by CIT holding these transactions being designed to avoid payment of tax. It was also contended that order of assessing authority, First Appellate Tribunal was confirmed by Tribunal, imposition of tax under Section 68 of act and findings given therein had become final and further no appeal was filed by assessee. 8. second limb of argument of counsel for Revenue is that order impugned passed by Tribunal [5] setting aside penalty, in fact is order passed by Tribunal as if it was sitting in appeal against order of Tribunal in quantum proceedings. It has also been submitted that findings of original assessment proceedings are good item of evidence in penalty proceeding, and when that is case that finding of creation of malicious design, on part of assessee, would clearly be relevant evidence and has to be taken into account while passing penalty order. He further laid stress that Tribunal has made fresh inquiry and set aside finding given by Tribunal itself in quantum proceedings and rejected imposition of penalty on assessee. He has relied upon judgment of this Court in case of Ram Baboo Agrawal v. Commissioner of Income-Tax and another (2018) 404 ITR 198 (Allahabad). 9. Per contra, counsel for respondent- assessee submitted that order of Tribunal cannot be discarded, as while deciding appeal it had recorded categorical finding in regard to factum of gift which was duly disclosed by assessee in his return of income. Further, assessee had substantiated its claim by legal evidence which has been discussed by Tribunal in Para Nos. 18, 19, 20, 21 and 22 of its order, analysing and examining in detail documents submitted by assessee in respect of gift before Assessing Officer in penalty proceedings as well as statements of both donors Naresh Jain and Anil Jain being recorded in said proceedings. 10. It is further submitted that gifts were disbelieved by citing human probability and perception. It has been stated that it [6] would have been different where any tangible, cogent and relevant material was discovered by Revenue to disapprove gift, but it is not correct to merely disbelieve it on basis of subjective perception. It was further contended that except for addition on account of alleged fictitious gift, all other additions made by Revenue to income of assessee were deleted by appellate authorities. 11. Replying to argument of Revenue on question of quantum proceedings, it was submitted that they are not sacrosanct and impregnable for proving charge of concealment of income for furnishing of inaccurate particulars of income, for causing determination on question of liveability of penalty under Section 271(1)(c) of Act. counsel for assessee to prove his case on this point has relied upon judgment of Apex Court in case of Anantharam Veersinghaiah and Company [123 ITR 457], which is extracted here as under:- Since burden of proof in penalty proceeding varies from that involved in assessment proceeding, finding in assessment proceeding that particular receipt is income cannot automatically be adopted as finding to that effect in penalty proceeding. In penalty proceeding taxing authority is bound to consider matter afresh on material before it and, in light of burden to prove resting on revenue, to ascertain whether particular amount is revenue receipt. No doubt, fact that assessment order contained finding that disputed amount represents income constitutes good evidence in penalty proceeding but finding in assessment proceeding cannot be regarded as conclusive for purposes of penalty proceeding. That is how law has been understood by this court in [7] Anwar Ali's Case [1970] 76 ITR 696 (SC), and we believe that to be law still. It was also laid down that before penalty can be imposed entirety of circumstances must be taken into account and must point to conclusion that disputed amount represents income and that assessee has consciously concealed particulars of his income or deliberately furnished inaccurate particulars. mere falsity of explanation given by assessee, it was observed, was insufficient without there being in addition cogent material or evidence from which necessary conclusion attracting penalty could be drawn.These principles were reiterated by this court in CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369. 12. He further relied upon in case of T. Ashok Pai [292 ITR 11] and Apex Court held as under:- Since burden of proof in penalty proceedings varies from that in assessment proceeding, finding in assessment proceeding that particular receipt is income cannot automatically be adopted, though finding in assessment proceeding constitute good evidence in penalty proceeding. In penalty proceedings, thus, authorities must consider matter afresh as question has to be considered from different angle. 13. Reliance has been placed on recent judgment of Apex Court in case of Reliance Petroproducts [322 ITR 158], in which Apex Court in regard to penalty proceedings held as under:- We do not agree, as assessee had furnished all details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as concealment of income on its part. It was up to authorities to accept its claim in Return or not. Merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would [8] not, in our opinion, attract penalty under Section 271(1)(c). If we accept contention of revenue then in case of every Return where claim made is not accepted by Assessing Officer for any reason, assessee will invite penalty under Section 271(1)(c). That is clearly not intendment of Legislature. 14. second argument of counsel for assessee is that finding arrived by Tribunal is finding of fact to effect that there is no material in possession of Revenue to prove charge of concealment of income or furnishing of inaccurate particulars by assessee and present appeals on behest of Revenue are not maintainable. He has relied upon decision of Apex Court in case of Additional CIT v. Jeevan Lal Sah [1994] 205 ITR 244. Similarly, question whether assessee has concealed particulars of his income or has furnished inaccurate particulars of his income continues to remain question of fact. 15. Lastly, it has been contended that by invoking provisions of Section 68 of Act or by rejecting explanation of assessee, presumption was drawn against him but that presumption was rebuttable and not at all conclusive, particularly when considering said explanation in light of penalty proceedings. It was further submitted that explanations had not remained unsubstantiated and further it can also not be held that explanation was not bona fide as prescribed in explanation to Section 271(1)(c) of Act. 16. decision of this Court in case of CIT vs. Sonali Jain, IT Appeal No. 88 of 2008 has been relied upon, wherein this Court held in Para Nos. 16 and 17 as under:- [9] 16. In view of above, neither assessee- respondent failed to furnish any explanation regarding material facts for computation of her income nor explanation so furnished by her was false. At least there is no finding to this effect. At same time, assessee-respondent having surrendered above gifts as part of her income just in order to buy peace of mind, may be on realising that she may also be ultimately affected by racket of gift deeds busted by department without any such thing being deducted in respect of her return or gifts, cannot be said to have failed to prove or substantiate her explanation regarding to be bona fides of two transactions. 17. Accordingly, assessee is not person who has failed to offer explanation or explanation offered by her was found to be false or that she was unable to substantiate explanation or that transactions were not bona fide so as to attract deeming provision contained in Explanation 1(B) to Section 271(1)(c) of Act. Therefore, amount added to her income would not be deemed to be income in respect of which particulars had been concealed. 17. We have heard Sri Praveen Kumar, learned counsel for Revenue and Sri Abhinav Mehrotra, learned counsel for assessee. 18. Before proceeding, it would be necessary to have glance of provisions of Section 271(1)(c) of Act:- 271. (1) If Assessing Officer or Commissioner (Appeals) or Commissioner in course of any proceedings under this Act, is satisfied that any person (a) .................. (b) .................. (c) has concealed particulars of his income or furnished inaccurate particulars of [such income, or] (d) .................. [10] he may direct that such person shall pay by way of penalty, (i) ............ (ii) ............. (iii) ............ Explanation 1. Where in respect of any facts material to computation of total income of any person under this Act, (A) such person fails to offer explanation or offers explanation which is found by Assessing Officer or Commissioner (Appeals) or Commissioner to be false, or (B) such person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all facts relating to same and material to computation of his total income have been disclosed by him, then, amount added or disallowed in computing total income of such person as result thereof shall, for purposes of clause (c) of this sub-section, be deemed to represent income in respect of which particulars have been concealed. 19. It is not in dispute that assessee had disclosed fact of gift in his return for relevant assessment year, but it was after assessment proceedings that Assessing Officer who did not accept creditworthiness of donor as well as genuineness of transaction made addition of Rs.1,52,00,000/- as income from other source. said addition was sustained by CIT (A) and Tribunal. As from reading of Section 271(1)(c), it is clear that that said provisions contemplate for levy of penalty where two conditions are satisfied, that assessee has concealed particulars of his income or has furnished inaccurate particulars of such income thus, concealment of income and [11] furnishing of inaccurate particulars of income are two basic ingredients for initiation of proceedings for penalty under relevant section. explanation further provides, where any such person fails to offer explanation or offers explanation which is found by Assessing Officer or Commissioner to be false or such person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all facts relating to same and material to computation of his total income have been disclosed by him, then, amount added or disallowed in computing total income of such person as result thereof was for purpose of Clause (c) of this Sub-section, be deemed to represent income in respect of which particulars have been concealed. 20. Apex Court while considering case CIT Madras v. Khoday Eswarsa and Sons [1972] 83 ITR 369 (SC) held as under:- No doubt original assessment proceedings, for computing tax may be good item of evidence in penalty proceedings but penalty cannot be levied solely on basis of reasons given in original order of assessment. In case before us we have already pointed out that in order levying penalty income-tax Officer has categorically stated that reasons for adding disputed amounts in total income of assessee have been already discussed in original order of assessment and that they need not be repeated again. Appellate Assistant Commissioner, we have already pointed out, has made only guess-work. That clearly shows that except reasons given in original assessment order for including disputed items in total income, department had no other material or evidence from which it [12] could be reasonably inferred that assessee had consciously concealed particulars of his income or had deliberately furnished inaccurate particulars. For all reasons given above, it follows that there is no merit in appeal and it is accordingly dismissed. As respondent has not appeared, there will be no order as to costs. 21. Further, Apex Court while dealing with phrase 'concealment of income' and 'inaccurate particulars' as used under Section 271(1)(c) of Act discussed in detail in judgment of Dilip N. Shroff v. CIT (2007) 6 SCC Page 329. Relevant paras are Para Nos. 48, 49, 50, 51 and 71 which are extracted here as under:- 48. expression "conceal" is of great importance. According to Law Lexicon, word "conceal" means: "To hide or keep secret. word 'conceal' is derived from latin concelare which implies con + celare to hide. It means 'to hide or withdraw from observation; to cover or keep from sight; to prevent discovery of; to withhold knowledge of'. offence of concealment is thus direct attempt to hide item of income or portion thereof from knowledge of Income Tax Authorities." 49. In Webster's Dictionary, "inaccurate" has been defined as: "not accurate, not exact or correct; not according to truth; erroneous; as inaccurate statement, copy or transcript." It signifies deliberate act or omission on part of assessee. Such deliberate act must be either for purpose of concealment of income or furnishing of inaccurate particulars. 50. term inaccurate particulars is not defined. Furnishing of assessment of value of property may not by itself be furnishing of inaccurate particulars. Even if Explanations [13] are taken recourse to, finding has to be arrived at having regard to clause (A) of Explanation 1 that assessing officer is required to arrive at finding that explanation offered by assessee, in event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all facts relating to same and material to income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all facts which was material to computation of his income. 51. explanation, having regard to decisions of this Court, must be preceded by finding as to how and in what manner he furnished particulars of his income. It is beyond any doubt or dispute that for said purpose Income Tax Officer must arrive at satisfaction in this behalf. [See CIT v. Ram Commercial Enterprises Ltd., (2000) 246 ITR 568 (Del) and Diwan Enterprises v. CIT, (2000) 246 ITR 571(Del). 71. Concealment of income and furnishing of inaccurate particulars are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on part of assessee. mere omission or negligence would not constitute deliberate act of suppressio veri or suggestio falsi. Although it may not be very accurate or apt but suppressio veri would amount to concealment, suggestio falsi would amount to furnishing of inaccurate particulars. 22. As noticed above in case of Anantharam Veersinghaiah and Company (supra), it has been constant view of Apex Court that burden of proof in penalty proceedings varies from that in case of assessment proceedings and any finding in assessment proceeding that particular receipt is income cannot automatically be adopted, though finding in assessment proceeding constitutes good evidences in penalty proceedings. In penalty proceedings [14] authorities must consider matter afresh as question has to be considered from different angle. 23. Argument of counsel for Revenue that assessee failed to prove identity of creditors, their creditworthiness and genuineness of transaction and same being confirmed by Tribunal in quantum proceedings, cannot be reopened now and looked upon in penalty proceedings, cannot be accepted, as penalty cannot be levelled solely on basis of reason given in original assessment order. reliance placed on decision of Ram Baboo Agrawal (supra) is in relation to proceedings under Section 68 and is not applicable in present case. As in penalty proceedings, case is examined afresh for limited purpose for determining whether assessee has furnished inaccurate particulars of income or has concealed income so as to make him liable for penalty under Section 271(1)(c) of Act. 24. In Khoday Eswarsa and Sons (supra) as well as in Dilip N. Shroff (supra), Apex Court had examined in depth what would constitute 'concealment of income' and 'inaccurate particulars'. In penalty proceedings burden of proof varies from that in assessment proceedings, and any finding in assessment proceeding would not automatically be adopted in penalty proceedings, thus, in penalty proceedings taxing authorities have to independently arrive at finding regarding 'concealment of income' or of 'inaccurate particular'. 25. In present case, Assessing Officer did not record any finding as to incorrect, erroneous or false return of income [15] filed by assessee which could lead to fact that assessee has furnished inaccurate particulars of income and make him liable for penalty under Section 271(1)(c) of Act. Assessing Officer had only doubted genuineness of gifts on ground of human probabilities and had also doubted creditworthiness of donors and genuineness of transaction. Tribunal on other hand had recorded finding regarding identity of creditors, their creditworthiness and genuineness of transactions which were before Assessing Officer but he had not properly appreciated same and discarded and doubted genuineness of gifts on ground of human probabilities, though they were tax payers and amounts gifted had been disclosed in their tax return for relevant year. 26. Instant case, is not case of either concealment of income or of furnishing inaccurate particulars as neither assessing authority nor first appellate authority recorded any finding to such effect that details furnished by assessee to be incorrect, erroneous or false. 27. Considering facts and circumstances of case, we are of considered opinion that Tribunal had recorded finding of fact that no penalty can be imposed under Section 271(1)(c) of Act as Revenue has failed to establish that assessee has concealed income or furnished inaccurate particulars. 28. These appeals have no merit and are hereby dismissed. question of law, therefore, is answered in favour of assessee and against Revenue. Order Date:- 26.08.2019/ V.S.Singh Principal Commissioner of Income-tax Central, Kanpur v. Dinesh Chandra Jain