PANKAJ BANSI, MUMBAI v. ITO 19(3)(3), MUMBAI

ITA 2060/MUM/2009 | 2002-2003
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 206019914 RSA 2009
Assessee PAN AABPB7114R
Bench Mumbai
Appeal Number ITA 2060/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 28 day(s)
Appellant PANKAJ 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. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 1 OF 11 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. 2060/MUM/09 ASSESSMENT YEAR 2002-03 PANKAJ P 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. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 2 OF 11 2. LEARNED REPRESENTATIVES AGREE THAT WHATEVER IS D ECIDED IN THE CASE OF PUROSHOTTAM G BANSI VS ITO ( ITA NO. 2059/MUM/09) WHICH WAS HEARD ALONGWITH THIS APPEAL WILL APPLY IN THIS CASE AS W ELL. VIDE OUR ORDER OF EVEN DATE WE HAVE DISMISSED THE SAID APPEAL AND OB SERVED AS FOLLOWS: 2. THE ASSESSEE BEFORE US IS AN INDIVIDUAL. ON 26 TH JULY 2001 HE HAD RECEIVED A GIFT OF RS 5 LAKHS FROM ONE GENTLEMA N BY THE NAME OF VINOD L PATOLIA. THE FACT OF HAVING RECEIVED THIS G IFT WAS DULY DISCLOSED IN THE INCOME TAX RETURN FOR THE ASSESSME NT 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 INCOM E TAX ACT 1961. IT WAS NOT SUBJECTED TO ANY DETAILED SCRUTINY UNDER SE CTION 143(3) BUT EVEN THEN THE MATTER DID NOT REST WITH THIS SUMMARY ASSESSMENT. AS LUCK WOULD HAVE IT FOR THE ASSESSEE THE INVESTIGAT ION WING OF THE INCOME TAX DEPARTMENT IN SEPARATE PROCEEDINGS ARO UND THE SAME TIME STUMBLED UPON A RACKET WHICH WAS PURPORTEDLY INVOLVED IN MONEY LAUNDERING BY WAY OF BOGUS GIFTS. THE NAME OF THE ASSESSEE ALSO CAME UP IN THIS INVESTIGATION PROCEEDINGS AS THE AS SESSEE WAS APPARENTLY ONE OF THE BENEFICIARY OF BOGUS GIFTS FR OM THIS MONEY LAUNDERING RACKET. THE ASSESSEE WAS ALSO SUMMONED B Y THE INVESTIGATION WING. SHORTLY AFTER SO APPEARING BEFO RE THE INVESTIGATION WING AND ON 7TH MARCH 2005 THE ASSESSEE FILED ANOT HER INCOME TAX RETURN FOR THIS ASSESSMENT YEAR AND INCLUDED THE AM OUNT OF RS 5 LAKH WHICH WAS OSTENSIBLY RECEIVED AS GIFT AS INCOME OF THE ASSESSEE. IT WAS ALSO STATED BY THE ASSESSEE IN THE SAID RETURN ON AN ATTACHMENT TO THE RETURN THAT THOUGH THE GIFT RECEIVED FROM VINDO 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 MY COOPERATIVE ATTITUDE YOU WILL NOT LE VY ANY PENALTY AND TAKE A LENIENT VIEW OF THE MATTER . ON 20 TH JUNE 2005 THE ASSESSING OFFICER INITIATED REASSESSMENT PROCEEDING S UNDER SECTION 147 AND REQUIRED TO THE ASSESSEE INCOME TAX RETURN. IN RESPONSE TO THIS NOTICE THE ASSESSEE REQUESTED THE ASSESSING OFFICE R 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 A S A GIFT WAS TAXED AS HIS INCOME IN THE REASSESSMENT ORDER. THE ASSESS ING OFFICER ALSO REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY CONCE ALMENT PENALTY UNDER SECTION 271 (1)(C) NOT BE IMPOSED FOR HAVING CONCEALED THE INCOME OF RS 5 LAKHS WHICH WAS TAXED AS A BOGUS GIF T. BROADLY THE ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 3 OF 11 CONTENTION OF THE ASSESSEE WAS THAT HE HAD OFFERED THE GIFT ONLY TO BUY PEACE SINCE THE ASSESSEE DID NOT HAVE SOME OF THE RELEVANT INFORMATION AND ON THE CONDITION THAT NO PENALTY WI LL BE LEVIED BY THE ASSESSING OFFICER. IT WAS ALSO STATED THAT THE ASSE SSEE HAD FILED THE REVISED INCOME TAX RETURN EVEN BEFORE INITIATION OF REASSESSMENT PROCEEDINGS WHICH SHOWS HIS BONAFIDES. IT WAS FURT HER STATED THAT WHEN THE ADDITION IS MADE ON A CONDITIONAL OFFER A ND WHEN THE ADDITION IS MADE AS A RESULT OF VOLUNTARY SUO MOTU 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 B OGUS GIFT TO TAX ONLY WHEN HE WAS CORNERED AND HE HAD NO OTHER OPTION EXC EPT TO COME OUT WITH TRUTH AND THAT THE ASSESSEE DID NOT HAVE ANY MATERIAL TO SUBSTANTIATE HIS CLAIM OF GIFTS BEING GENUINE. THE ASSESSING OFFICER THEREFORE CONSIDERED IT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSE SSEE IS NOT SATISFIED AND IS IN FURTHER 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 C OUNSELS ARGUMENTS IS THAT SINCE IT IS A VOLUNTARY SURRENDER OF INCOME AND A SURRENDER ON THE CONDITION THAT NO PENALTY WILL BE IMPOSED THE PENALTY COULD NOT HAVE BEEN LEVIED ON THE FACTS OF THE PRESENT CASE. A LOT OF EMPHASIS IS PLACED ON THE FACT THAT THE REVISED RETURN WAS FILE D BEFORE THE INITIATION OF REASSESSMENT PROCEEDINGS AS ALSO THE CLAIM THAT EVEN THOUGH IT WAS A GENUINE GIFT THE ASSESSEE HAD MADE THE SURRENDER ONLY BECAUSE HE WAS NOT IN A POSITION TO FURNISH CERTAIN DETAILS. IT IS POINTED OUT THAT THE GIFT DEED CONTAINS NAME AND AD DRESS OF THE DONOR AND THAT IS ALL THE ASSESSEE IS IN A POSITION TO FU RNISH. THIS EXPLANATION ACCORDING TO THE LEARNED COUNSEL SHOULD BE ACCEPTE D AS A REASONABLE EXPLANATION FOR DISCHARGE OF ASSESSEES ONUS. REFE RENCE IS ALSO MADE TO SEVERAL JUDICIAL PRECEDENTS WHICH ACCORDING TO THE ASSESSEE HOLD THAT CONCEALMENT PENALTY UNDER SECTION 271(1)(C) IS NOT TO BE IMPOSED IN SUCH CIRCUMSTANCES. 5. NONE OF THESE SUBMISSIONS IN OUR CONSIDERED VIE W MERIT OUR APPROVAL. ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 4 OF 11 6. WHEN AN ASSESSEE MAKES A SURRENDER OF INCOME AS HE HAS MADE ON THE FACTS OF THIS CASE IT CAN HARDLY BE TE RMED AS A VOLUNTARY SURRENDER OF INCOME. THIS SURRENDER IS NOT INSPIRE D BY ANY GENEROUSITY ON THE PART OF THE ASSESSEE BUT THIS ONLY REFLECTS THAT THE ASSESSEE HAD NO OPTION BUT TO ACCEPT THAT THE PURPORTED GIFT IS HIS OWN INCOME. THE ASSESSEE WAS SUBJECTED TO GRILLING BY THE INVESTIGA TION WING WHICH HAD UNEARTHED THIS BOGUS GIFT RACKED AND THE ASSESSEE DID NOT HAVE ANY MATERIAL SAVE AND EXCEPT FOR HIS SIMPLE STATEMENT THAT THE DONOR WAS A CLOSE FAMILY FRIEND BUT UNSUPPORTED BY ANY EVID ENCE TO ESTABLISH HIS BONAFIDES. EVEN A PLAIN READING OF THE NOTE AT TACHED WITH WHAT ASSESSEE TERMS AS REVISED RETURN WOULD SHOW THAT THE OFFER WAS NOT CONDITIONAL BUT THE ASSESSEE HAD MERELY EXPRESSED T HE HOPE THAT A LENIENT VIEW WILL BE TAKEN AND NO PENALTY WILL BE I MPOSED. OBVIOUSLY A CONDITIONAL SURRENDER EVEN IF THAT TERM HAS ANY SANCTITY UNDER THE INCOME TAX LAW IS LITTLE MORE THAN A WISHFUL THINK ING. THE CASE BEFORE US BY NO STRETCH OF LOGIC IS A CASE OF CONDITIONA L SURRENDER. IT IS ALSO NOT A CASE IN WHICH THE ASSESSEE HAS OFFERED THE IN COME ON HIS OWN AND BY WAY OF A REVISED RETURN. THE TIME FOR FILING OF REVISED RETURN HAD CLEARLY LAPSED AND THE RETURN FILED BY THE ASSESSE E ON 7 TH MARCH 2005 HAS BEEN GIVING COGNIZANCE NOT AS A REVISED RETURN BUT AS A RETURN IN RESPONSE TO NOTICE UNDER SECTION 148 THAT THE ASSE SSEE URGED THE ASSESSING OFFICER TO TREAT THE RETURN AS. IT IS AL SO NOW A SETTLED POSITION OF LAW THAT THE ASSESSING OFFICER DOES NOT ANY LONGER HAVE THE ONUS TO PROVE THE MENS REA ON THE PART OF THE ASSES SEE. IT IS FOR THE ASSESSEE TO GIVE A REASONABLE EXPLANATION OR TO PR OVE 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 BEN CH OF 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 THAT 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 TH E ASSESSEE MUST BE ACCEPTED. IN MY VIEW THE EXPLANAT ION OF THE ASSESSEE FOR AVOIDANCE OF PENALTY MUST BE AN 1 143 ITR 292 ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 5 OF 11 ACCEPTABLE EXPLANATION. HE MAY NOT PROVE WHAT HE ASSERTS TO THE HILT POSITIVELY BUT AT LEAST MATERI AL BROUGHT ON RECORD MUST SHOW THAT WHAT HE SAYS IS REASONABLY VALID 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 LORDSHI PS HAVE OBSERVED AS FOLLOWS: THE PATNA HIGH COURT EMPHASIZED THAT AS TO THE NAT URE OF EXPLANATION TO BE RENDERED BY THE ASSESSEE IT W AS PLAIN ON PRINCIPLE THAT IT IS NOT THE LAW THAT THE MOMENT ANY FANTASTIC OR UNACCEPTABLE EXPLANATION IS GIVEN THE BURDEN PLACED ON HIM WILL BE DISCHARGED AND PRESUMPTION REBUTTED. WE AGREE. WE FURTHER AGREE T HAT IT IS NOT THE LAW THAT EACH AND EVERY EXPLANATION B Y THE ASSESSEE MUST BE ACCEPTED. IT MUST BE ACCEPTABLE EXPLANATION ACCEPTABLE TO A FACT FINDING 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 LEVIED.............. 18. AS REGARDS LEARNED COUNSELS RELIANCE ON HONBL E SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRODUCT S 3 WE HAVE NOTICED THAT IT WAS A CASE IN WHICH THEIR LORDSHIPS WERE ONLY CONCERNED WITH THE QUESTION WHETHER IN THIS CASE AS A MATTER OF FACT THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS . THEIR LORDSHIPS NOTED THAT IN THIS CASE THERE IS NO FIN DING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE AND ADD THAT SUCH BEING THE CASE THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THAT A MERE MAKING OF TH E CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOU NT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSE SSEE. THE SITUATION THAT WE ARE DEALING WITH IS NOT MATERIALL Y SIMILAR INASMUCH AS THE FACTS STATED IN THE RETURN ARE FOUN D TO BE ERRONEOUS ; THE ASSETS WHICH WERE CLAIMED TO HAVE B EEN LEASED OUT DID NOT EXIST AND THE ENTIRE LEASE ARRANGEMENT WAS FOUND TO BE A SHAM ARRANGEMENT. A DISALLOWANCE OF DEPRECIATION FO R NON EXISTENT 2 165 ITR 14 3 SUPRA ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 6 OF 11 ASSETS CANNOT BE TREATED AT PAR EVEN FOR THE PURPO SES OF IMPOSITION OF PENALTY AND FOR DECIDING WHETHER OR NOT CORRECT PARTICULARS HAVE BEEN FURNISHED WITH A DISALLOWANCE UNDER SECTION 1 4A AS WAS DEALT WITH BY THE HONBLE SUPREME COURT IN THE CASE OF RE LIANCE PETROPRODUCTS 4 . LEARNED COUNSEL HAS ALSO RELIED UPON THE DECISIO N OF TRIBUNAL IN THE CASE OF KANBAY SOFTWARE 5 IN HIS SUPPORT BUT WE SEE NO SUPPORT TO ASSESSEES CASE BY THIS DECISION EITHER. AS A MATTER OF FACT IN THIS DECISION THE TRIBUNAL REFE RRED TO THREE MUTUALLY EXCLUSIVE SITUATIONS WITH REGARD TO CONSEQ UENCES OF ADDITION TO INCOME BY PLACING THOSE THREE SITUATIO NS IN THREE DIFFERENT BASKETS AND THEN ANALYZED POSITION REGAR DING IMPOSITION OF PENALTY QUA EACH OF THOSE SITUATIONS. AS EVIDENT FROM THE FOLLOWING EXTRACTS FROM THE DECISION IT HAS BEEN CLEARLY HELD THAT IN A SITUATION IN WHICH ASSESSEE IS NOT ABLE TO PRO VE 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 ACCOU NT OF CONTUMACIOUS CONDUCT OF THE ASSESSEE IN WHICH MENS REA IS ESTABLISHED OR CAN BE REASONABLY INFERRED. AS FA R AS THIS SITUATION IS CONCERNED PENALTY WAS ALWAYS LEV IABLE UNDER SECTION 271(1)(C). IN THE SECOND SCENARIO WH ILE THE ADDITION IS MADE TO THE RETURNED INCOME NEITHE R IS IT ESTABLISHED OR CAN BE REASONABLY INFERRED THAT TH E ADDITION MADE TO THE INCOME IS ON ACCOUNT OF CONTUMACIOUS CONDUCT OF THE ASSESSEE NOR IS IT ESTABLISHED OR CAN BE REASONABLY INFERRED THAT TH E ASSESSEES CONDUCT AND EXPLANATION IS BONAFIDE. IN SUCH A SITUATION IN THE LIGHT OF HONBLE SUPREME COURT S JUDGMENT IN THE CASE OF DILIP SHROFF (SUPRA) PENA LTY UNDER SECTION 271(1)(C) COULD NOT HAVE BEEN LEVIED SINCE THE ONUS OF ESTABLISHING MENS REA OF THE ASSESSEE C OULD NOT HAVE BEEN DISCHARGED IN SUCH A SITUATION. HOWEV ER AS THE LAW STANDS NOW AND IN THE LIGHT OF THE HONB LE SUPREME COURTS JUDGMENT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA) PENALTY UNDER SECTION 271(1)(C) WILL BE LEVIABLE SINCE IT IS NOT NECESSAR Y FOR THE TAX AUTHORITIES TO ESTABLISH MENS REA OF THE AS SESSEE. THAT IS THE AREA IN WHICH LEGAL POSITION HAS CHANGE D. HOWEVER THERE IS STILL A THIRD SCENARIO IN WHICH A N ADDITION IS MADE TO THE INCOME BUT IT IS ESTABLISHE D OR CAN BE REASONABLY INFERRED THAT ASSESSEE CONDUCT A ND 4 SUPRA 5 SUPRA ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 7 OF 11 EXPLANATION IS BONAFIDE. THESE ARE THE SITUATIONS I N WHICH THE ASSESSEE IS ABLE TO ESTABLISH HIS INNOCEN CE. IN SUCH A SITUATION IN ACCORDANCE WITH THE UNDISPUTED SCHEME OF SECTION 271(1)(C) NEITHER THE PENALTY WA S LEVIABLE PRIOR TO HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF DILIP SHROFF NOR IS 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 VISUALIZED ABOVE ARE CONCERNED. THE SCHEME OF SECTI ON 271(1)(C) REMAINS AS IT AND THIS SCHEME CLEARLY REQ UIRES MUCH MORE THAN A MERE ADDITION TO ASSESSEES INCOME BEFORE PENALTY UNDER THE SAID SECTION CAN BE IMPOSE D. THE VIEWS EXPRESSED BY THEIR LORDSHIPS IN DHARMENDR A TEXTILE PROCESSORS CASE (SUPRA) DO NOT BRING ABOUT ANY RADICAL CHANGE IN THE SCHEME OF SECTION 271(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 THINGS AS THESE WERE - MORE PARTICULARLY POST INSER TION OF EXPLANATION 1 TO SECTION 271(1)(C). INDEED EVE N ON THE FIRST PRINCIPLES AND AS SEEN IN THE ABOVE LIGHT WHILE THIS VIEW IS IN ACCORDANCE WITH THE SCHEME OF THE S ECTION AND THE AMENDMENT BROUGHT ABOUT IN THE SCHEME OF TH E SECTION BY INSERTION OF EXPLANATION 1 TO SECTION 271(1)(C) IT DOES NOT BRING ABOUT ANY RADICAL CHAN GE TO THE MAIN SCHEME OF 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 PROVE D NOR IS IT DISPROVED AND THEREFORE IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY. THAT ARGUMENT PROCEEDS ON THE FALLACY THAT UNLESS REVENUE AUTHORITIES ESTABLISH BEYOND DOUBT THAT LEASED ASSE T DID NOT EXIST WHICH WILL OBVIOUSLY AMOUNT TO PROVING A NEGATIVE PENALTY CANNOT BE IMPOSED. IT IS ELEMENTARY THAT NONE CAN BE EXPEC TED TO PROVE A NEGATIVE. THE ONUS IS ON THE ASSESSEE TO PROVE HIS CLAIM OR AT LEAST GIVE AN ACCEPTABLE EXPLANATION FOR HIS CLAIM AND T HE ASSESSEE HAS FAILED ON BOTH OF THESE COUNTS. LEARNED COUNSEL HAS ALSO ARGUED THAT THE REVENUE HAS NOT BEEN ABLE TO ESTABLISH MEN S REA OF THE ASSESSEE AND IT HAS FAILED TO DISCHARGE THE BURDEN 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 MATERIALLY ALTERED THE SITUATION. WE DONOT THINK IT IS REALLY REQUIRED TO PROVE 6 249 ITR 125 ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 8 OF 11 MENS REA OR FALSITY OF ASSESSEES EXPLANATION AS A SINE QUA NON FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). AS H ELD BY THIS TRIBUNAL IN THE CASE OF KANBAY SOFTWARE 7 ON WHICH SO MUCH RELIANCE IS PLACED BY THE ASSESSEE WHAT FOLLOWS FROM THESE DISCUSSION IS THAT IN VIEW OF HONBLE SUPREME COURT S JUDGMENT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA) 8 ONCE THE MANDATE OF SECTION 271(1)(C) READ WITH EXPLANATION S THERETO ARE SATISFIED THERE IS NO FURTHER ONUS ON THE ASSESSIN G OFFICER TO ESTABLISH MENS REA. THE ASSESSEE HAS NOT SATISFAC TORILY DISCHARGED THE ONUS OF PROVING HIS BONAFIDES WITH REGARD TO CL AIM OF DEPRECIATION ON ASSETS WHICH DID NOT EXIST AND AC CORDINGLY FOLLOWING THE KANBAY SOFTWARE DECISION WE HOLD THA T IT IS A FIT CASE FOR IMPOSITION OF PENALTY. 8. IN VIEW OF THE ABOVE DISCUSSIONS AND HAVING REG ARD TO THE FACT THAT THE ASSESSEE HAS NOT OFFERED ANY SATISFACTORY EXPLANATION ABOUT THE PURPORTED GIFT RECEIVED BY HIM OR PROVED HIS BO NAFIDES WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NOT DISCH ARGED HIS BURDEN UNDER EXPLANATION TO SECTION 271(1)(C). WE ARE ALSO OF THE CONSIDERED VIEW THAT THERE WAS NO VOLUNTARY OFFER OF TAXABILIT Y OF PURPORTED GIFT THAT THERE WAS NO REVISED RETURN FILED BY THE ASSES SEE AND THAT THERE WAS NO ELEMENT OF CONDITIONALITY ATTACHED TO THE TA XATION 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 CAS E AS ALL THESE JUDICIAL PRECEDENTS BARRING THAT IN THE CASE OF RE LIANCE PETROCHEMICALS (SUPRA) ADMITTEDLY DEAL WITH THE CO NDITIONAL SURRENDER AND VOLUNTARY OFFER OF TAXABILITY OF INCO ME. WE HAVE ALREADY GIVEN A FINDING THAT THE CASE BEFORE US DOE S NOT FIT INTO THESE CATEGORIES. AS FOR THE HONBLE SUPREME COURTS JUDG MENT IN THE CASE OF RELIANCE PETROCHEMICALS (SUPRA) AS WE HAVE NOTED I N THE EXTRACTS FROM CO ORDINATE BENCH DECISION IN THE CASE OF ULTR AMARINE & PIGMENTS LTD (SUPRA) THAT CASE DEALT WITH A LEGAL CLAIM MAD E BY THE ASSESSEE WITH FULL DISCLOSURE. IN THE PRESENT CASE IT IS NO T A QUESTION OF LEGAL INADMISSIBILITY OF A CLAIM BUT OF A CLAIM OF GIFT B EING FACTUALLY FOUND AND ADMITTED TO BE INCORRECT. THIS IS THUS AN ADMIT TED CASE OF INACCURATE PARTICULARS. HONBLE SUPREME COURT WERE DEALING WITH A SITUATION IN WHICH THERE WAS CLEARLY NO FACTUAL INA CCURACY BUT ONLY A QUESTION OF LEGAL ADMISSIBILITY OF A CLAIM. THESE T WO SITUATIONS ARE CLEARLY NOT IN PARI MATERIA AND THE DECISION IN REL IANCE PETROCHEMICALS CASE (SUPRA) WILL HAVE NO APPLICATI ON IN THIS FACT SITUATION. 7 SUPRA 8 306 ITR 277 ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 9 OF 11 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. 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN VIEW SO TAKEN BY US IN THE ABOVE CASE. THE MATERIAL FACT S AND CIRCUMSTANCES OF THE CASE AS ALSO THE PLEADINGS OF THE ASSESSEE AR E IDENTICAL. 4. RESPECTFULLY FOLLOWING THE VIEW TAKEN BY US IN T HE CASE OF PUROSHOTTAM G BANSI (SUPRA) WE CONFIRM THE ORDERS OF THE AUTHORIRTIES BELOW AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT THE APPEAL IS DISMISSED. PRONOUNC ED 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. ITA NO. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 10 OF 11 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. 20 60 /MUM/09 ASSESSMENT YEAR 2002-03 PAGE 11 OF 11 DATE INITIAL 1. DRAFT DICTATED ON 28.5.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28.5.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28.5.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28.5.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.5.2010 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