Uma Bhatia, Faridabad vs Assessee

This penalty appeal arises from the order of the ld CIT(A), Central, Gurgaon dated 26.06.2013 for Assessment Year 2007-08.

2. The ground of appeal is as under:-

"On the facts and circumstances of the case ld CIT(A), Central Gurgaon has failed to appreciate that assessment proceedings and penalty proceedings are separate proceedings and while imposing penalty. The ACIT has not brought anything record to levy the penalty.

3. Brief facts of the case are that a search operation was conducted on 07.02.2007, covering the residential as well as the business premises of the assessee. Jewellery valued at Rs.11,01,066/- was found out of which Rs. 4,03,610/- was seized out of the total weight 1469 grams, the assessee had explained that 700 grams was given by the parents and parents-in-laws at time of marriage and the balance 770 grams had been acquired during their married life spaning over 36 years. The AO gave benefit to the extent of 500 grams as gifted by the parents and parents-in-law. Accordingly 200 grams valued at Rs.1,74,000/-@ Rs.8,700/- per 10 grams, was added back. As regards the balance, evidence to the extent of acquisition of 722 grams was Page 2 of 3

furnished which was accepted and the balance of 48 gms valued at Rs.41,760/- was surrendered. Later on, the AO imposed minimum penalty of Rs.66,023/- on the assessee vide order dated 27.03.2009.

4. Aggrieved by the said penalty levied upon her, the assessee preferred an appeal before the ld CIT(A) who was pleased to dismiss the same.

5. Aggrieved by the said order of the ld CIT(A) the assessee is before us.

6. The ld AR submitted that the authorities below erred in not taking into consideration that 36 years back at the time of marriage of the assessee, she received 800 gms of gold ornaments in place of 500 ms of gold excluded by the AO and valuing the rest of the gold @ 8700 - per 10 grams is purely on estimate basis and so is without an basis; and according to him penalty cannot be imposed if the addition is made on estimated basis. Further it was contended by the ld AR that the assessee was asked to produce the bills of jewellery which was purchased much before the year 1999-2000, however assessee could produce bills for 722 grms as against 770 gms and bills for only 48 gms of gold ornaments could not be located though the Jewellery was very old and was acquired before 1999-2000, and assessee while cooperating during the assessment proceedings in order to purchase the peace of mind to avoid further litigation with the department surrendered Rs.41,760/- subject to no penalty.

8. Therefore the ld AR contended that Penalty u/s 271(1)(c) cannot be levied in this case because there has to be concealment of income or furnishing of inaccurate particulars of income for imposing penalty. In the instant case the assessee was asked to explain the source of jewellery belonging to his wife found from the residence of the assessee which was explained in writing and an affidavit from the wife of assessee was placed on record. On the other hand the ld DR relied on the orders of the authorities below.

9. We have considered the rival submission and perused the records. The ornaments found during search, which was in excess of 500 gms and for which bills were produced were not brought to tax. The assessee's explanation about 248gms has been taxed and no appeal has been preferred by the assessee against the same. However the AO has levied Page 3 of 3

penalty of Rs.66,023/-. The assessee's explanation that the gold she got before 36 years during her marriage is probable and the basis of estimation of value of gold at Rs.8,700/- per 10 gms has been contested by the assessee. And further the explanation of the assessee has not been found to be false and therefore is probable, so we are inclined to delete the penalty of Rs.66,023/-.

10. In the result the appeal of the assessee is allowed.

Order pronounced in the open court on 25.02.2015.

-Sd/- -Sd/- (R.S.SYAL) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.02.2015 A K Keot

Copy forwarded to 1. Applicant

2. Respondent

3. CIT

4. CIT (A)

5. DR:ITAT

ASSISTANT REGISTRAR ITAT, New Delhi