TaxTMI 
TaxTMI 
2019 (9) TMI 812
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.... case and when there was no sanction of the appropriate authority. 2. Ld. C.I.T (A) is not justified by upholding the addition of Rs. 40,00,000/- added the AO as unexplained income and treating the donation as bogus donation when such addition was made by him without making an independent enquiry at his end. 3. Ld. CIT(A) is not justified by enhancing the income by Rs. 35,00,000/- during the AY -2007-08 without considering the fact but simply relying on CBI information." 4. The facts for assessment year 2006 - 07 shows that appellant is a trust registered u/s 12 AA of The Income Tax Act and enjoying exemption u/s 80 G of The Income Tax Act. It filed its return of income on 14/9/2006 showing NIL income. The assessment u/s 143 (3) was passed on 28/2/2014 on a total income of INR 4,000,000. The assessee preferred an appeal before the learned CIT - A , who confirmed the above addition. Against which the assessee filed appeal before the coordinate bench that is set aside the order of the learned assessing officer to the file of the learned AO. Consequent to that the assessing officer assessed income of the assessee at RS. nil. 5. The Joint Director Of Income T....
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....d Garg and charge INR 500 per lakh for giving such entries. It was further noted that in the month of June 2006 Sri SK Sharma contacted Shri Mahesh Garg for issue of demand draft in favour of the appellant. He gave INR 3,500,000 to Shri Mahesh Garg in cash for issuance of demand draft and Mr Mahesh Garg was having 12 firms deposited the same cash in those accounts. He deposited the cash in one company and issued the cheques from another company. He has deposited the cash in several companies and issue demand draft favouring the appellant from various companies. Assessee was asked to explain the donation of INR 4,000,000 as well as an accommodation entry of INR 3,500,000 from Shri Mahesh Garg and assessee was confronted with statements recorded by the various donors where they have denied giving any donation to the assessee as well as the findings of the Central bureau of investigation. The assessee submitted the details of unsecured loan, list of donors along with name and address and date of donation and further stated that society was not in receipt of INR 3,500,000 from Shri Mahesh Garg and it does not have any connection with that. The learned AO noted that despite confronting ....
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....rned assessing officer which are placed at page number 16 - 17 of the paper book and submitted that the reassessment has been made after the 4 years from the end of the assessment year and there is no allegation that assessee has failed to disclose fully and truly the correct facts of his income. He therefore submitted that the reopening made by the learned assessing officer is not in accordance with the law. He relied upon the several judicial precedents prominently among them of the honourable Delhi High Court in case of SUBH INFRASTRUCTURE LTD VS ACIT and PRINCIPAL COMMISSIONER OF INCOME TAX VS MORE INTERNATIONAL placed at serial number 10 and 11 of the paper book. 10. The learned departmental representative vehemently supported the order of the learned CIT - A and submitted that information was received from the investigation wing as well as the central bureau of investigation which categorically stated that there are credit entries in the books of accounts of the assessee from various sources and INR 29,700,000 were received from l 31/7/2006 from various persons ranging from Rs. 5,00,000 to INR 2,500,000. It was further stated that in the reasons recorded there is a specifi....
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....ssment, however during the investigation by the central bureau of investigation, in interrogation all the donors have confessed that they have not given any such donation. Therefore, the donation details submitted by the assessee in the original assessment proceedings were false. Thus, assessee has failed to disclose fully and truly material facts of the income of the assessee. The learned CIT - A has categorically held in para number 7.1 of his order that the AO received information from Central bureau of investigation as per letter dated 5/2/2013 and AO made enquiry from CBI calling for requisite information which was received on 10/2/2014 wherein copies of the statement of the donors, copies of statement of Mahesh Garg recorded u/s 161 of the criminal procedure code was also enclosed. These documents categorically revealed that alleged donors have not donated to the appellant and Shri Mahesh Garg was allegedly involved in providing accommodation entries through the bank account of his brother. It was further found that in the month of June 2006 appellant received a sum of INR 3,500,000 from Shri Mahesh Garg. Thus, it was apparent that the information disclosed originally by the ....
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....reliance placed on the decision of the honourable Delhi High Court on above decision is misplaced. 13. The learned authorised representative further relied on the decision of the honourable Calcutta High Court in case of CIT Vs More International dated 08/02/2018. We have carefully perused the facts and the ratio laid down by the honourable High Court in that particular case. The fact in that particular case shows that the honourable High Court held that no reopening could be initiated merely based on action initiated by the customs department. In that particular case merely based on the show cause notice issued by the custom authorities the reopening was initiated by the AO. Further neither in the reasons recorded for reopening the assessment nor in the order of reassessment under section 147 of the income tax act there was any noting about the failure of the assessee to disclose fully and truly material facts necessary for the assessment. However, in the present case it is not a show cause notice but the statement of the donors, enquiry by the investigation wing of the income tax department, enquiry by the central bureau of investigation, the statement of the chartered acco....
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.... officer has accepted the above donation as genuine donation however subsequently after reopening of the assessment the learned assessing officer has made the above addition as bogus donation. He referred to the page number 25 and 26 of the paper book wherein he has given the list of donation received stating the name, address and the date and amount of the donation received. He referred that 38 persons has given a donation in the range of INR 100,000 to INR 150,000 to the assessee which totaled to INR 4,000,000. He therefore submitted that assessee has given the complete detail of the donation received by the assessee and therefore the addition made by the AO is incorrect 18. The learned departmental representative submitted that assessee has received the donation of INR 4,000,000 and credited it to the general fund account in the balance sheet for the year ended on 31st of March 2006. The assessee did not produce any information about the donor such as permanent account number as well as their income tax details. He further submitted that all the 22 donors have categorically stated that they have not given any donation to the assessee. Such statement was confronted to the asse....
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....ions of section 68 cannot be applied. Therefore in such cases from 1-4-2007 u/s 15 BBC the provisions of anonymous donation and its taxability at a different rate applies. However if the donation is not credited to the income and expenditure account on provisions of section 68 are rightly applied by the lower authorities. 21. In view of the above facts, we confirm the actions of lower authorities in taxing the sum of INR 4,000,000 as unexplained income being bogus donation credited to the general fund in the balance sheet. In the result ground number 2 of the appeal is dismissed. 22. The ground number 3 of the appeal is related to the enhancement made by the learned assessing officer for assessment year 2007 - 08. The above ground relates to the assessment year 2007 - 08 and not to the assessment year 2006 - 07, therefore, the above ground does not arise from the orders of the lower authorities and we will deal with the same at the time of dealing with the appeal of the assessee for assessment year 2007 - 08. Even otherwise, the learned CIT - A has deleted the addition of INR 3,500,000 from this year (assessment year 2006 - 07). Therefore, assessee is not aggrieved in this....
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....sidering the fact but simply relying on CBI information." 26. The first ground of appeal is against the confirmation of the reopening by the learned CIT - A of the assessment proceedings by the learned assessing officer. The learned authorised representative submitted that the facts of this case is identical to the facts for assessment year 2006 - 07 and his arguments also remains the same. The learned departmental representative also referred to the order of the learned CIT - A and submitted that he has correctly confirmed the reopening of the assessment. He extensively referred to para number 5.1 of his order. 27. We have carefully considered the rival contentions and perused the orders of the lower authorities. The learned CIT - A has dealt with the whole issue as per para number 5.1 of his order as under:- "5.1 ground numbers 1 and 2:- The appellant has challenged the reopening of the assessment proceedings on the basis of 3rd party information alleging that AO did not have any reason to believe of his own. Examination of facts revealed that AO received information from CBI, New Delhi vide letter dated 5/2/2013. The AO made enquiries from CBI, calling for requisi....
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....of appeal are dismissed." 28. Apparently, in this case the approval of CIT on 28/3/2013 is obtained as mentioned by the learned CIT - A which could not be controverted by the learned authorised representative. Therefore, the ground with respect to sanction by the authority is not maintainable and dismissed. 29. With respect to the other aspects of the reopening of the assessment, we have dealt with the issue at great length while deciding the appeal of the assessee for assessment year 2006 - 07. Therefore, for the reasons stated therein, we do not find any infirmity in the action of the learned assessing officer in reopening the assessment proceedings and confirmation of the same by the learned CIT - A. In view of this ground number 1 of the appeal of the assessee is dismissed. 30. Ground number 2 and 3 of the appeal of the assessee is with respect to upholding the addition of INR 6,000,000 as unexplained income treating the donation is bogus donation and further taxing the income by INR 3,500,000 on account of loan from Shri Mahesh Garg. 31. The learned authorised representative reiterated the same arguments as were raised contesting the addition on identical facts and....