The Commissioner of Income Tax vs Mehbhobsab Doddamani, H.No. 561, Housing Board Colony, Near Maruti Mandir, Davorlim Navelim, Salcete-Goa

We have heard the learned Counsel appearing for the Appellant. A common issue arises in this appeals. Penalty proceeding were initiated u/s 271 (1) (c) of the Income Tax Act, 1961. The penalty proceedings initiated were for the assessment years 2000-2001,2001-2002 and 2003-2004. The respondent/assessee claims to be engaged in a business.

The Assessee had received a gift received from Mr. Abdul Farrah Al Mazroni at Dubai U.A.E. The Assessment Officer called upon the assessee to substantiate the gift. In response, the assessee produced a letter of one Mr. Vallabh Gude, a resident of Dubai, U.A.E, which was duly signed by before the Vice Counsel, Consulate General of India, Dubai. In the said letter it was stated that the donor Mr. Mr. Abdul Fattah Al-Mazroui, Manging Director of Ala-Mazroui Group of companies had given gifts to the assessee and his family members out of love and affection. It was stated that the said company, however, was already wound up in the year 2002 and the donor Mr. Abdul Fattah had left Dubai to settle down in Canada. In assessment proceedings the explanation based on the said letter was not at accepted on the ground that the confirmation was given by a third party. Therefore, the said gift was held as not good and the amount was added to the total income of the assessee. The assessee filed a quantum appeal. Thereafter, penalty proceedings u/s 27 (1) (c) of the said Act of 1961 was initiated. Penalty was imposed by the Assessing Officer on the basis of order in quantum proceedings. The order of imposing of penalty was challenged by the respondent/assessee by preferring an appeal before the CIT(Appeals). In the said appeal, the appellate authority examined the case made out by the respondent. It was pointed out that even the Enforcement Directorate had initiated an inquiry to ascertain whether the gift was a hawala transaction. The proceedings were dropped as the authorities of the Enforcement Directorate came to the conclusion that the gift was not a hawala transaction. Apart from that, the appellate authority considered the explanation of the respondent based on the aforesaid letter of the third party that the donor who is now a resident of Canada, and whereabouts of the donor could not be ascertained.

The CIT(Appeals) and the Appellate Tribunal noted that the aforesaid explanation of the assessee has been neither disbelieved nor disputed during the course of penalty proceedings. Therefore, the CIT(Appeals) as well as the Appellate Tribunal came to the conclusion that only on the basis of the findings recorded in quantum proceedings it cannot be held that there was a concealment of income by the assessee. It has been found that the explanation of the assessee was a plausible one. This finding was recorded in the light of the investigation carried out by the Directorate of Enforcement. Thus, the CIT(Appeals) as well as the Appellate Tribunal have accepted the factual explanation of the respondent/assessee based on the material on record and have come to a conclusion that there is no concealment of income. In view of the concurrent findings of the CIT(Appeals) and the Appellate Tribunal which have been recorded based on the material on record, no substantial questions of law arise. We therefore, dismiss the appeals.