PURSHOTTAM G. BANSI, MUMBAI v. ITO 19(3)(3), MUMBAI

ITA 2059/MUM/2009 | 2002-2003
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 205919914 RSA 2009
Assessee PAN AABPB7114R
Bench Mumbai
Appeal Number ITA 2059/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 28 day(s)
Appellant PURSHOTTAM G. BANSI, MUMBAI
Respondent ITO 19(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 25-05-2010
Next Hearing Date 25-05-2010
Assessment Year 2002-2003
Appeal Filed On 02-04-2009
Judgment Text
ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH MUMBAI BEFORE SHRI D K AGARWAL (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER). ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PUROSHOTTAM G BANSI .APPELLANT C/O DIVINE CONSTRUCTION CO. A/37/346 MIG COLONY BANDRA EAST MUMBAI 400012 AABPB7114R VS. INCOME TAX OFFICER - WARD 19(3)(3) MUMBAI . RESPONDENT APPELLANT BY : SHRI M P MAKHIJA RESPONDENT BY : SHRI K K MAHAJAN O R D E R PER PRAMOD KUMAR: 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT THE CIT(A) WAS JUSTIFIED IN UPHOLDIN G THE PENALTY OF RS 1 53 000 IMPOSED ON THE ASSESSEE UNDER SECTION 271( 1)(C) OF THE INCOME TAX ACT 1961. THE ASSESSMENT YEAR INVOLVED IN 2002 -03 AND THE IMPUGNED ORDER WAS PASSED BY THE CIT(A) ON 10 TH FEBRUARY 2009. ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 2 OF 12 2. THE ASSESSEE BEFORE US IS AN INDIVIDUAL. ON 26 TH JULY 2001 HE HAD RECEIVED A GIFT OF RS 5 LAKHS FROM ONE GENTLEMAN BY THE NAME OF VINOD L PATOLIA. THE FACT OF HAVING RECEIVED THIS GIFT WAS DULY DISCLOSED IN THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2002-03 FILED ON 25 TH OCTOBER 2002 BUT THE INCOME TAX RETURN SO FILED WAS ONLY PROCESSED UNDER SECTION 143(1)(A) OF THE INCOME TAX ACT 1961. IT W AS NOT SUBJECTED TO ANY DETAILED SCRUTINY UNDER SECTION 143(3) BUT EV EN THEN THE MATTER DID NOT REST WITH THIS SUMMARY ASSESSMENT. AS LUCK WOUL D HAVE IT FOR THE ASSESSEE THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN SEPARATE PROCEEDINGS AROUND THE SAME TIME STUMBLE D UPON A RACKET WHICH WAS PURPORTEDLY INVOLVED IN MONEY LAUNDERING BY WAY OF BOGUS GIFTS. THE NAME OF THE ASSESSEE ALSO CAME UP IN THI S INVESTIGATION PROCEEDINGS AS THE ASSESSEE WAS APPARENTLY ONE OF T HE BENEFICIARY OF BOGUS GIFTS FROM THIS MONEY LAUNDERING RACKET. THE ASSESSEE WAS ALSO SUMMONED BY THE INVESTIGATION WING. SHORTLY AFTER S O APPEARING BEFORE THE INVESTIGATION WING AND ON 7TH MARCH 2005 THE A SSESSEE FILED ANOTHER INCOME TAX RETURN FOR THIS ASSESSMENT YEAR AND INCL UDED THE AMOUNT OF RS 5 LAKH WHICH WAS OSTENSIBLY RECEIVED AS GIFT AS I NCOME OF THE ASSESSEE. IT WAS ALSO STATED BY THE ASSESSEE IN THE SAID RETU RN ON AN ATTACHMENT TO THE RETURN THAT THOUGH THE GIFT RECEIVED FROM VIND O L PATOLIA IS A GENUINE GIFT AND VINOD L PATOLIA IS A CLOSE FAMILY FRIEND HE IS OFFERING THE SAME TO TAX SINCE PATOLIAS CURRENT WHEREABOUTS ARE NOT KNOWN AND TO BUY PEACE . IT WAS FURTHER STATED THAT I ( THE ASSESSEE ) HOPE THAT LOOKING AT ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 3 OF 12 MY COOPERATIVE ATTITUDE YOU WILL NOT LEVY ANY PENA LTY AND TAKE A LENIENT VIEW OF THE MATTER . ON 20 TH JUNE 2005 THE ASSESSING OFFICER INITIATED REASSESSMENT PROCEEDINGS UNDER SECTION 14 7 AND REQUIRED TO THE ASSESSEE INCOME TAX RETURN. IN RESPONSE TO THIS NOT ICE THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO TREAT THE RETURN DATED 7 TH MARCH 2005 AS A RETURN IN RESPONSE TO NOTICE . IT WAS IN THIS BACKDROP THAT THE AMOUNT RECEIVED BY THE ASSESSEE AS A GIFT WAS TAXED AS HIS INCOME IN THE REASSESSMENT ORDER. THE ASSESSING OFFICER ALSO REQU IRED THE ASSESSEE TO SHOW CAUSE AS TO WHY CONCEALMENT PENALTY UNDER SECT ION 271 (1)(C) NOT BE IMPOSED FOR HAVING CONCEALED THE INCOME OF RS 5 LAKHS WHICH WAS TAXED AS A BOGUS GIFT. BROADLY THE CONTENTION OF T HE ASSESSEE WAS THAT HE HAD OFFERED THE GIFT ONLY TO BUY PEACE SINCE THE A SSESSEE DID NOT HAVE SOME OF THE RELEVANT INFORMATION AND ON THE CONDITI ON THAT NO PENALTY WILL BE LEVIED BY THE ASSESSING OFFICER. IT WAS ALS O STATED THAT THE ASSESSEE HAD FILED THE REVISED INCOME TAX RETURN EV EN BEFORE INITIATION OF REASSESSMENT PROCEEDINGS WHICH SHOWS HIS BONAFIDES. IT WAS FURTHER STATED THAT WHEN THE ADDITION IS MADE ON A CONDITI ONAL OFFER AND WHEN THE ADDITION IS MADE AS A RESULT OF VOLUNTARY SUO M OTU OFFER BY THE ASSESSEE THERE IS NO OCCASION TO IMPOSE THE PENALT Y. NONE OF THESE SUBMISSIONS HOWEVER IMPRESSED THE ASSESSING OFFIC ER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE RETURN FILED BY TH E ASSESSEE WAS NOT A VALID REVISED RETURN AS IT WAS BEYOND THE TIME PERM ISSIBLE UNDER SECTION 139(5) THAT THE ASSESSEE HAD OFFERED THE BOGUS GIF T TO TAX ONLY WHEN HE ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 4 OF 12 WAS CORNERED AND HE HAD NO OTHER OPTION EXCEPT TO C OME OUT WITH TRUTH AND THAT THE ASSESSEE DID NOT HAVE ANY MATERIAL TO SUBSTANTIATE HIS CLAIM OF GIFTS BEING GENUINE. THE ASSESSING OFFICER THER EFORE CONSIDERED IT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1) (C). AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FU RTHER APPEAL BEFORE US. 3. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. LEARNED COUNSEL HAS MAINLY REITERATED THE SUBMIS SIONS BEFORE THE AUTHORITIES BELOW. THE MAIN THRUST OF LEARNED COUNS ELS ARGUMENTS IS THAT SINCE IT IS A VOLUNTARY SURRENDER OF INCOME AND A SURRENDER ON THE CONDITION THAT NO PENALTY WILL BE IMPOSED THE PENA LTY COULD NOT HAVE BEEN LEVIED ON THE FACTS OF THE PRESENT CASE. A LO T OF EMPHASIS IS PLACED ON THE FACT THAT THE REVISED RETURN WAS FILED BEFOR E THE INITIATION OF REASSESSMENT PROCEEDINGS AS ALSO THE CLAIM THAT EV EN THOUGH IT WAS A GENUINE GIFT THE ASSESSEE HAD MADE THE SURRENDER O NLY BECAUSE HE WAS NOT IN A POSITION TO FURNISH CERTAIN DETAILS. IT IS POINTED OUT THAT THE GIFT DEED CONTAINS NAME AND ADDRESS OF THE DONOR AND THA T IS ALL THE ASSESSEE IS IN A POSITION TO FURNISH. THIS EXPLANATION ACCO RDING TO THE LEARNED COUNSEL SHOULD BE ACCEPTED AS A REASONABLE EXPLANA TION FOR DISCHARGE OF ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 5 OF 12 ASSESSEES ONUS. REFERENCE IS ALSO MADE TO SEVERAL JUDICIAL PRECEDENTS WHICH ACCORDING TO THE ASSESSEE HOLD THAT CONCEAL MENT PENALTY UNDER SECTION 271(1)(C) IS NOT TO BE IMPOSED IN SUCH CIRC UMSTANCES. 5. NONE OF THESE SUBMISSIONS IN OUR CONSIDERED VIE W MERIT OUR APPROVAL. 6. WHEN AN ASSESSEE MAKES A SURRENDER OF INCOME AS HE HAS MADE ON THE FACTS OF THIS CASE IT CAN HARDLY BE TERMED AS A VOLUNTARY SURRENDER OF INCOME. THIS SURRENDER IS NOT INSPIRED BY ANY GENER OUSITY ON THE PART OF THE ASSESSEE BUT THIS ONLY REFLECTS THAT THE ASSESS EE HAD NO OPTION BUT TO ACCEPT THAT THE PURPORTED GIFT IS HIS OWN INCOME. THE ASSESSEE WAS SUBJECTED TO GRILLING BY THE INVESTIGATION WING WHI CH HAD UNEARTHED THIS BOGUS GIFT RACKED AND THE ASSESSEE DID NOT HAVE AN Y MATERIAL SAVE AND EXCEPT FOR HIS SIMPLE STATEMENT THAT THE DONOR WAS A CLOSE FAMILY FRIEND BUT UNSUPPORTED BY ANY EVIDENCE TO ESTABLISH HIS B ONAFIDES. EVEN A PLAIN READING OF THE NOTE ATTACHED WITH WHAT ASSESSEE TE RMS AS REVISED RETURN WOULD SHOW THAT THE OFFER WAS NOT CONDITION AL BUT THE ASSESSEE HAD MERELY EXPRESSED THE HOPE THAT A LENIENT VIEW W ILL BE TAKEN AND NO PENALTY WILL BE IMPOSED. OBVIOUSLY A CONDITIONAL SURRENDER EVEN IF THAT TERM HAS ANY SANCTITY UNDER THE INCOME TAX LAW IS LITTLE MORE THAN A WISHFUL THINKING. THE CASE BEFORE US BY NO STRETCH OF LOGIC IS A CASE OF CONDITIONAL SURRENDER. IT IS ALSO NOT A CASE IN WHI CH THE ASSESSEE HAS ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 6 OF 12 OFFERED THE INCOME ON HIS OWN AND BY WAY OF A REVIS ED RETURN. THE TIME FOR FILING OF REVISED RETURN HAD CLEARLY LAPSED AN D THE RETURN FILED BY THE ASSESSEE ON 7 TH MARCH 2005 HAS BEEN GIVING COGNIZANCE NOT AS A REV ISED RETURN BUT AS A RETURN IN RESPONSE TO NOTICE UNDER SECTION 148 THAT THE ASSESSEE URGED THE ASSESSING OFFICER TO TREAT THE R ETURN AS. IT IS ALSO NOW A SETTLED POSITION OF LAW THAT THE ASSESSING OFFICE R DOES NOT ANY LONGER HAVE THE ONUS TO PROVE THE MENS REA ON THE PART OF THE ASSESSEE. IT IS FOR THE ASSESSEE TO GIVE A REASONABLE EXPLANATION OR T O PROVE HIS BONAFIDES. THE ASSESSEE HAS NOT DISCHARGED THE ONUS ON ANY OF THESE COUNTS. 7. WE MAY ALSO REFER TO AND ADOPT THE REASONING CO NTAINED IN THE FOLLOWING OBSERVATIONS MADE BY A COORDINATE BENCH O F THE TRIBUNAL IN THE CASE OF ULTRAMARINE & PIGMENTS LTD VS ACIT (ITA NO. 1325/MUM/2007; ORDER DATED 20 TH APRIL 2010): 15. IN THE CASE OF CIT VS NATHULAL AGARWAL & SONS 1 FULL BENCH OF HONBLE PATNA HIGH COURT HAS OBSERVED AS FOLLOWS: AS TO THE NATURE OF EXPLANATION OFFERED BY THE ASS ESSEE IT SEEMS PLAIN ON PRINCIPLE THAT IT IS NOT THE LAW THA T THE MOMENT ANY FANTASTIC OR UNACCEPTABLE EXPLANATION IS GIVEN THE BURDEN PLACED ON HIM WILL BE DISCHARGED AND PRESUMPTION REBUTTED. IT IS NOT THE LAW AND PERHAP S HARDLY CAN BE THAT ANY AND EVERY EXPLANATION OF THE ASSES SEE MUST BE ACCEPTED. IN MY VIEW THE EXPLANATION OF THE ASS ESSEE FOR AVOIDANCE OF PENALTY MUST BE AN ACCEPTABLE EXPLANAT ION. HE MAY NOT PROVE WHAT HE ASSERTS TO THE HILT POSITIVEL Y BUT AT LEAST MATERIAL BROUGHT ON RECORD MUST SHOW THAT WHA T HE SAYS IS REASONABLY VALID 1 143 ITR 292 ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 7 OF 12 16. THE ABOVE VIEWS WERE APPROVED BY THE HONBLE SU PREME COURT IN THE CASE OF MUSSADILAL RAMBHAROSE VS CIT 2 REFERRING THE JUDGMENT OF HONBLE PATNA HIGH COURT THEIR LORDSHIPS HAVE OBSE RVED AS FOLLOWS: THE PATNA HIGH COURT EMPHASIZED THAT AS TO THE NAT URE OF EXPLANATION TO BE RENDERED BY THE ASSESSEE IT WAS PLAIN ON PRINCIPLE THAT IT IS NOT THE LAW THAT THE MOMENT AN Y FANTASTIC OR UNACCEPTABLE EXPLANATION IS GIVEN THE BURDEN PL ACED ON HIM WILL BE DISCHARGED AND PRESUMPTION REBUTTED. WE AGREE. WE FURTHER AGREE THAT IT IS NOT THE LAW THAT EACH A ND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. IT MU ST BE ACCEPTABLE EXPLANATION ACCEPTABLE TO A FACT FINDIN G BODY. 17. VIEWED IN THIS PERSPECTIVE JUST BECAUSE ASSESS EE HAS AN EXPLANATION WHATEVER BE ITS WORTH AND CREDIBILITY IT DOES NOT CEASE TO BE A CASE IN WHICH CONCEALMENT PENALTY IS TO BE LE VIED.............. 18. AS REGARDS LEARNED COUNSELS RELIANCE ON HONBL E SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRODUCTS 3 WE HAVE NOTICED THAT IT WAS A CASE IN WHICH THEIR LORDSHIPS WERE ONLY CONCE RNED WITH THE QUESTION WHETHER IN THIS CASE AS A MATTER OF FACT THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. THEIR LORDSHIPS NOT ED THAT IN THIS CASE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE A ND ADD THAT SUCH BEING THE CASE THERE WOULD BE NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THAT A MERE MAKI NG OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSE SSEE. THE SITUATION THAT WE ARE DEALING WITH IS NOT MATERIALLY SIMILAR INASMUCH AS THE FACTS STATED IN THE RETURN ARE FOUND TO BE ERRONEOUS ; TH E ASSETS WHICH WERE CLAIMED TO HAVE BEEN LEASED OUT DID NOT EXIST AND T HE ENTIRE LEASE ARRANGEMENT WAS FOUND TO BE A SHAM ARRANGEMENT. A D ISALLOWANCE OF DEPRECIATION FOR NON EXISTENT ASSETS CANNOT BE TREA TED AT PAR EVEN FOR THE PURPOSES OF IMPOSITION OF PENALTY AND FOR DECID ING WHETHER OR NOT CORRECT PARTICULARS HAVE BEEN FURNISHED WITH A DIS ALLOWANCE UNDER SECTION 14A AS WAS DEALT WITH BY THE HONBLE SUPREM E COURT IN THE CASE OF RELIANCE PETROPRODUCTS 4 . LEARNED COUNSEL HAS ALSO RELIED UPON THE DECISION OF TRIBUNAL IN THE CASE OF KANBAY SOFTWARE 5 IN HIS SUPPORT BUT WE SEE NO SUPPORT TO ASSESSEES CASE BY THIS DECISI ON EITHER. AS A MATTER OF FACT IN THIS DECISION THE TRIBUNAL REFERRED TO THREE MUTUALLY EXCLUSIVE SITUATIONS WITH REGARD TO CONSEQUENCES OF ADDITION TO INCOME BY PLACING 2 165 ITR 14 3 SUPRA 4 SUPRA 5 SUPRA ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 8 OF 12 THOSE THREE SITUATIONS IN THREE DIFFERENT BASKETS AND THEN ANALYZED POSITION REGARDING IMPOSITION OF PENALTY QUA EACH O F THOSE SITUATIONS. AS EVIDENT FROM THE FOLLOWING EXTRACTS FROM THE DECISI ON IT HAS BEEN CLEARLY HELD THAT IN A SITUATION IN WHICH ASSESSEE IS NOT ABLE TO PROVE HIS BONAFIDES THE PENALTY IS LEVIABLE: 51. THERE CAN BE THREE DISTINCT MUTUALLY EXCLUSIVE SITUATIONS IN THE CASE OF AN ADDITION TO INCOME. IN THE FIRST SCENARIO THE ADDITION MADE COULD BE ON ACCOUNT OF CONTUMACIOUS CONDUCT OF THE ASSESSEE IN WHICH MENS REA IS ESTABLISHED OR CAN BE REASONABLY INFERRED. AS FAR A S THIS SITUATION IS CONCERNED PENALTY WAS ALWAYS LEVIABLE UNDER SECTION 271(1)(C). IN THE SECOND SCENARIO WHILE TH E ADDITION IS MADE TO THE RETURNED INCOME NEITHER IS IT ESTAB LISHED OR CAN BE REASONABLY INFERRED THAT THE ADDITION MADE TO THE INCOME IS ON ACCOUNT OF CONTUMACIOUS CONDUCT OF THE ASSESSEE NOR IS IT ESTABLISHED OR CAN BE REASONABLY INFERRE D THAT THE ASSESSEES CONDUCT AND EXPLANATION IS BONAFIDE. IN SUCH A SITUATION IN THE LIGHT OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF DILIP SHROFF (SUPRA) PENALTY UNDER SE CTION 271(1)(C) COULD NOT HAVE BEEN LEVIED SINCE THE ONUS OF ESTABLISHING MENS REA OF THE ASSESSEE COULD NOT HAV E BEEN DISCHARGED IN SUCH A SITUATION. HOWEVER AS THE LAW STANDS NOW AND IN THE LIGHT OF THE HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA ) PENALTY UNDER SECTION 271(1)(C) WILL BE LEVIABLE SI NCE IT IS NOT NECESSARY FOR THE TAX AUTHORITIES TO ESTABLISH MENS REA OF THE ASSESSEE. THAT IS THE AREA IN WHICH LEGAL POSITION HAS CHANGED. HOWEVER THERE IS STILL A THIRD SCENARIO I N WHICH AN ADDITION IS MADE TO THE INCOME BUT IT IS ESTABLISHE D OR CAN BE REASONABLY INFERRED THAT ASSESSEE CONDUCT AND EXPL ANATION IS BONAFIDE. THESE ARE THE SITUATIONS IN WHICH THE ASSESSEE IS ABLE TO ESTABLISH HIS INNOCENCE. IN SUCH A SITUATIO N IN ACCORDANCE WITH THE UNDISPUTED SCHEME OF SECTION 27 1(1)(C) NEITHER THE PENALTY WAS LEVIABLE PRIOR TO HONBLE S UPREME COURTS JUDGMENT IN THE CASE OF DILIP SHROFF NOR I S IT LEVIABLE AFTER THE DHARMENDRA TEXTILE PROCESSORS CASE. 52. IN OUR CONSIDERED VIEW THEREFORE THERE IS NO CHANGE IN LAW SO FAR AS FIRST AND THIRD SCENARIO VISUALIZE D ABOVE ARE CONCERNED. THE SCHEME OF SECTION 271(1)(C) REMAINS AS IT AND THIS SCHEME CLEARLY REQUIRES MUCH MORE THAN A MERE ADDITION TO ASSESSEES INCOME BEFORE PENALTY UNDER THE SAID SECTION CAN BE IMPOSED. THE VIEWS EXPRESSED BY THEIR LORDSH IPS IN DHARMENDRA TEXTILE PROCESSORS CASE (SUPRA) DO NOT BRING ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 9 OF 12 ABOUT ANY RADICAL CHANGE IN THE SCHEME OF SECTION 2 71(1)(C) THOUGH THESE VIEWS DO SEEK TO NULLIFY THE DILIP SHR OFF JUDGMENT WHICH IN THE ESTEEMED VIEWS OF THE LARGER BENCH DID NOT TAKE INTO ACCOUNT THE CORRECT SCHEME OF THI NGS AS THESE WERE - MORE PARTICULARLY POST INSERTION OF EX PLANATION 1 TO SECTION 271(1)(C). INDEED EVEN ON THE FIRST PRINCIPLES AND AS SEEN IN THE ABOVE LIGHT WHILE THIS VIEW IS IN ACCORDANCE WITH THE SCHEME OF THE SECTION AND THE AMENDMENT BROUGHT ABOUT IN THE SCHEME OF THE SECTIO N BY INSERTION OF EXPLANATION 1 TO SECTION 271(1)(C) IT DOES NOT BRING ABOUT ANY RADICAL CHANGE TO THE MAIN SCHEME O F SECTION 271(1)(C) ITSELF. 19. LEARNED COUNSEL HAS STATED THAT IT IS A CASE IN WHICH NEITHER THE EXISTENCE OF THE LEASED ASSETS IS PROVED NOR IS IT DISPROVED AND THEREFORE IT IS NOT A FIT CASE FOR IMPOSITION OF P ENALTY. THAT ARGUMENT PROCEEDS ON THE FALLACY THAT UNLESS REVENUE AUTHORI TIES ESTABLISH BEYOND DOUBT THAT LEASED ASSET DID NOT EXIST WHICH WILL O BVIOUSLY AMOUNT TO PROVING A NEGATIVE PENALTY CANNOT BE IMPOSED. IT I S ELEMENTARY THAT NONE CAN BE EXPECTED TO PROVE A NEGATIVE. THE ONUS IS ON THE ASSESSEE TO PROVE HIS CLAIM OR AT LEAST GIVE AN ACCEPTABLE EXPL ANATION FOR HIS CLAIM AND THE ASSESSEE HAS FAILED ON BOTH OF THESE COUNTS . LEARNED COUNSEL HAS ALSO ARGUED THAT THE REVENUE HAS NOT BEEN ABLE TO E STABLISH MENS REA OF THE ASSESSEE AND IT HAS FAILED TO DISCHARGE THE BUR DEN OF PROVING FALSITY IN THE CLAIM OF THE ASSESSEE. A REFERENCE WAS ALSO MADE TO HONBLE GUJRAT HIGH COURTS JUDGMENT IN THE CASE OF NATIONA L TEXTILES VS CIT 6 BUT LATER DECISIONS OF HONBLE SUPREME COURT HAVE M ATERIALLY ALTERED THE SITUATION. WE DONOT THINK IT IS REALLY REQUIRED TO PROVE MENS REA OR FALSITY OF ASSESSEES EXPLANATION AS A SINE QUA NON FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). AS HELD BY THIS TR IBUNAL IN THE CASE OF KANBAY SOFTWARE 7 ON WHICH SO MUCH RELIANCE IS PLACED BY THE ASSESS EE WHAT FOLLOWS FROM THESE DISCUSSION IS THAT IN VIE W OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA) 8 ONCE THE MANDATE OF SECTION 271(1)(C) READ WITH EX PLANATIONS THERETO ARE SATISFIED THERE IS NO FURTHER ONUS ON THE ASSE SSING OFFICER TO ESTABLISH MENS REA. THE ASSESSEE HAS NOT SATISFAC TORILY DISCHARGED THE ONUS OF PROVING HIS BONAFIDES WITH REGARD TO CLAIM OF DEPRECIATION ON ASSETS WHICH DID NOT EXIST AND ACCORDINGLY FOLLO WING THE KANBAY SOFTWARE DECISION WE HOLD THAT IT IS A FIT CASE FO R IMPOSITION OF PENALTY. 6 249 ITR 125 7 SUPRA 8 306 ITR 277 ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 10 OF 12 8. IN VIEW OF THE ABOVE DISCUSSIONS AND HAVING REG ARD TO THE FACT THAT THE ASSESSEE HAS NOT OFFERED ANY SATISFACTORY EXPLA NATION ABOUT THE PURPORTED GIFT RECEIVED BY HIM OR PROVED HIS BONAFI DES WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NOT DISCHARGE D HIS BURDEN UNDER EXPLANATION TO SECTION 271(1)(C). WE ARE ALSO OF TH E CONSIDERED VIEW THAT THERE WAS NO VOLUNTARY OFFER OF TAXABILITY OF PURPO RTED GIFT THAT THERE WAS NO REVISED RETURN FILED BY THE ASSESSEE AND TH AT THERE WAS NO ELEMENT OF CONDITIONALITY ATTACHED TO THE TAXATION OF PURPORTED GIFT AS INCOME OF THE ASSESSEE. 9. THE LARGE NUMBER OF JUDICIAL PRECEDENTS CITED BY THE ASSESSEE HAVE NO APPLICATION ON THE FACTS OF THE PRESENT CASE AS ALL THESE JUDICIAL PRECEDENTS BARRING THAT IN THE CASE OF RELIANCE PE TROCHEMICALS (SUPRA) ADMITTEDLY DEAL WITH THE CONDITIONAL SURRENDER AND VOLUNTARY OFFER OF TAXABILITY OF INCOME. WE HAVE ALREADY GIVEN A FIND ING THAT THE CASE BEFORE US DOES NOT FIT INTO THESE CATEGORIES. AS FOR THE H ONBLE SUPREME COURTS JUDGMENT IN THE CASE OF RELIANCE PETROCHEMICALS (SU PRA) AS WE HAVE NOTED IN THE EXTRACTS FROM CO ORDINATE BENCH DECISI ON IN THE CASE OF ULTRAMARINE & PIGMENTS LTD (SUPRA) THAT CASE DEALT WITH A LEGAL CLAIM MADE BY THE ASSESSEE WITH FULL DISCLOSURE. IN THE P RESENT CASE IT IS NOT A QUESTION OF LEGAL INADMISSIBILITY OF A CLAIM BUT OF A CLAIM OF GIFT BEING FACTUALLY FOUND AND ADMITTED TO BE INCORRECT. THIS IS THUS AN ADMITTED CASE OF INACCURATE PARTICULARS. HONBLE SUPREME COU RT WERE DEALING WITH ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 11 OF 12 A SITUATION IN WHICH THERE WAS CLEARLY NO FACTUAL I NACCURACY BUT ONLY A QUESTION OF LEGAL ADMISSIBILITY OF A CLAIM. THESE T WO SITUATIONS ARE CLEARLY NOT IN PARI MATERIA AND THE DECISION IN RELIANCE PETROCHEMICALS CASE (SUPRA) WILL HAVE NO APPLICATION IN THIS FACT SITUA TION. 10. FOR THE REASONS SET OUT ABOVE AS ALSO BEARING IN MIND ENTIRETY OF THE CASE WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 11. IN THE RESULT THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON 31 ST DAY OF MAY 2010. SD/XX SD/XX (D K AGARWAL) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 31 ST DAY OF MAY 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT MUMBAI 4. COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH ITAT MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI ITA NO. 2059/MUM/09 ASSESSMENT YEAR 2002-03 PAGE 12 OF 12 DATE INITIAL 1. DRAFT DICTATED ON 25.5.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 25.5.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 25.5.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 25.5.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 25.5.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 31.5.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 31.5.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER