Case Law Details
Anisha R. Dhanani Vs A.C.I.T (ITAT Ahmedabad)
We note that the AO levied the penalty with respect to addition amounting to Rs. 15,28,128/- being gift/amount received on the demise of assessee’s father which was treated as unexplained cash credit under section 68 of the Act in absence of documentary evidences to establish credit worthiness of her father. It is settled position of law that the penalty proceedings are distinct from the assessment proceedings. Therefore the addition made during the assessment proceedings does not authorize the AO ipso facto to levy the penalty under section 271(1)(c) of the Act. As such the AO is under the obligation to carry out the necessary verification before reaching to the conclusion that the assessee has furnished any inaccurate particulars of income or concealed the income. In the instant case, the penalty was initiated on account of the addition made for unexplained cash credit under section 68 of the Act. The assessee explained that the amount was received in form of cash and jewelry on the death of her father and disclosed the same in her return filed under section 139(1) of the Act as gift not subject to tax. During the quantum she has furnished affidavit from her mother in this But the authorities below in quantum proceeding without confronting her mother and without bringing any material contrary to affidavit sustained the addition holding that the creditworthiness of the father was not established. As per the assessee, the impugned issue was not perused for further litigation due to involvement of cost and to get the peace of mind. Thus, in quantum proceeding addition was made in absence of documentary evidences which was accepted by the assessee. As such the penalty proceedings being distinct and separate from the assessment proceedings, the AO is under the obligation to carry out the fresh verification as held by the Hon’ble Gujarat High Court in the case of National Textiles reported 249 ITR 125.
In view of the above, we hold that the AO cannot just levy the penalty merely on the ground that the additions were made during the quantum proceedings and assessee did not pursue further appeal. As such the AO has to carry out necessary verification by issuing the notice to the assessee’s mother to examine the veracity of the affidavit filed by her and bring cogent material which establishes that the amount of gift disclose by the assessee in return indeed represent her income subject to tax before levying the In view of the above, we are of the view that no penalty can be levied under section 271(1)(c) of the Act for the reasons as stated above. Hence the ground of appeal of the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeals have been filed at the instance of different Assessee against the orders of the Learned Commissioner of Income Tax(Appeals)-1, Vadodara, arising in the matter of Penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Years 2005-2006, 2006-07 & 2010-11.
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