TaxTMI 
TaxTMI 
2020 (4) TMI 399
X X X X Extracts X X X X
X X X X Extracts X X X X
....donors like the assessee. She sought to refer to both the lower authorities' detailed discussion rejecting the genuineness of assessee's claim in the light of the Hon'ble Apex Court's landmark judgments in the cases of Sumati Dayal & Durgaprasad More reported in (1995) 214 ITR 801(SC) & 82 ITR 540(SC) as well as the recipient's authorised person, Shri Swapan Ranjan Dasgupta's statement dt. 27-01-2015 admitting to have been providing accommodation entries to its donors. I find no merit in revenue's instant reason. This tribunal's co-ordinate bench decision in ITA No. 2346/Kol/2018 Raj Karan Dassani dt. 8-5-2019 had already dealt with all these aspects against the department as follows:- 2. The assessee is an individual and is in the business of general order supplier of machinery and spare- parts. He filed his return of income on 25.03.2014 declaring total income of Rs. 5,43,7 12/- . The return was processed u/s 143(1) and later it was reopened u/s 147 of the Act. The reopened assessment was completed u/s 16.12.2016 disallowing the claim for deduction u/s 35(1 )(ii) of the Act of Rs. 8, 75,000/- which is 175% from Rs. 5,00,000/- of donation paid to M/s Heribicure Healthcare....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../-) as deduction u/s 35(1)(ii) of the Act. In reply to the show cause notice dated 01.12.2016, the assessee denied the fact of the bogus billing, which is not accepted in the context of Statements of the persons mentioned above. 9. In the light of the above mentioned facts of the case and also considering the submission of the assessee's I am of the opinion that the assessee has made bogus donation u/s 35( I )(ii) of the LT Act, made to M/s Heribicure Healthcare Bio Herbal Research Foundation (HHBRF) to the tune of Rs. 5,00,000/-.Hence, the same is disallowed and added back to the total income of the assessee." I.T.A. No. 23461K0112018 Raj Karan Dassani Assessment Year: 2013-14 5. Aggrieved, the assessee carried the matter in appeal. The first appellate authority considered the submissions of the assessee as well as the findings of the Assessing Officer. Thereafter at Para 12 onwards he applied the theory of human probabilities and relied on the decisions of the Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More & Ors. At Para 13 he held as follows: 13. In my opinion the suspicious evidence that the Ld. AO has gathered clearly bring fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egistration was valid and in force when he has made a donation LT.A. No. 23461K0112018 Raj Karan Dassani Assessment Year: 2013-14 and hence he is entitled to deduction. (e) That none of the copies of the statements referred to and relied upon by the Revenue have been given/confronted to the assessee. (f) That the assessee was not given any opportunity of cross- examination of any of with these persons. (g) That there is no proof that the assessee had received back the money in question. For this proposition he relied on the judgment of the Hon'ble Gujarat High Court in the case of Pr. CIT Surat vs. Tejua Rohit Kumar Kapadia judgment dated 18/0912017.He relied on the decisions of the Kolkata 'B' Bench of the Tribunal in the case of Tushar Chawda vs. ITO; ITA No.23621K01l2017 order dated 23.03.2018, Kolkata 'SMC' Bench of the Tribunal in the case of Santosh Suresh Kumar Agarwal vs. ACIT; ITA No.11621K0V20 18 order dated 05.09.2018. 7. The Id. Counsel also relied on the order in the case of Rajda Polymers vs. DCIT in ITA No.3331K01l20 17 order dated 08.11.2017, wherein a donation of Rs. 24,75,0001- given to HHBRF was considered and the issue was adjudicate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egistered in her name and nature of business of this firm is trading of cloths. I have two brothers. One is Vijay Bhawsinghka, he is engaged in business of trading in handicraft in local market in the name of 'Viki Export' situated at 6, Mullick Street, Kolkata-700007 and second is Shyamsunder Bhawsinghka" he is engaged in business of cloth merchants which is situated at 196, Jarnunalal Bazar Street, Kolkata-700007. Q.6 What is your occupation? Ans. I am working as a broker. My office address is at 7, Mango Lane, 3rd Floor, Room No.-307, Kol-I and this office is currently managed & controlled by my partner Ashok Kumar Sureka. Q.7 What is your source of income? I.T.A. No. 2346/KOl/2018 Raj Karan Dassani Assessment Year: 2013-14 Ans. My main source of income is from brokerage for land deals, arranging accommodation entry/jamakharchi work, raising bogus bills for various beneficiaries/parties. I also earn rental income from shop situated at Avani Mall, Shop no.12, 1st floor, Howrah which is given on rent to Sree Shoppers Limited. I also have some interest income. I also do investment through Dimensional Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Q15 Kindly go through the donor list of HHBRF for FY 20 I 0-11 to 2012-13. Identify your donors. Ans. SI. No. Donors' Name Amount (Rs.) 1. YASH-MAC RESOURCE 3,00,000/- 2 SHREE VRAJ GLOBAL 30,00,000/- 3 DR. ANJALI KUMAR 15,00,000/- 4 NATHMAL NEVATIA 35,00,000/- 5 BIPIN SHAH & ASSOCIATES Rs. 93,00,001/- 12. A perusal of that above statement demonstrates that all that Mr. Kishan states is that, he has to introduce the donor to the HHBRF and received a commission ranging from Rs. 2000 to 10000 per donation from the donors. He also clearly states that he does not agree with the statement of Shri Swapan Ranjan Dasgupta, founder director of HHBRF, taken on oath on 27.01.2015 and to the statement of Mr. Manoj Kothari taken on 27.02.2015. He specifically answered so in reply to questions nos.12, 13 & 14. This statement does not help the revenue. The statement of Shri Swapan Ranjan Dasgupta and Mr. Manoj Kothari is not corroborated by Mr. Kishan Bhawasingka. On the contrary he denies the allegations. Hence these statements are not evidence for the revenue. 13. I now examine the statement recorded for Shri Sw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ni Assessment Year: 2013-14 not supported by corroborative evidence. The copies of the statements are not furnished nor was the assessee given a chance of cross-examination. 16. We now examine the decision of the Co-ordinate benches of ITAT. The Bench of the Tribunal in the case of Rajda Polymers vs. DCIT (supra) held as follows: "5. We have heard the rival submissions and perused the materials available on record. The brief facts pertaining to HHBRF are as under:- a) HHBRF was registered u/s 12AA of the Act by the Id DIT(Exemptions), Kolkata with effect from 26.12.2003. b) HHBRF was registered u/s 6( I)(a) of the Foreign Contribution (Regulation) Act, 1976 on 26.2.2008 vide registration no. 147120804. c) HHBRF was also recognized in the year 2006-07 as a scientific industrial research organization (SIRO) by Ministry of Science & Technology, Government of India. d) HHBRF was recognized vide Gazette Notification No. 35/2008 dated 14.3.2008 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance, Government of India, u/s 35(1) (ii) of the Act. 5.1. We find that the assessee had explained about its....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 5.3. We find that similar views were taken in the following decisions :- a) Decision of Hon'ble Bombay High Court in the case ofH R Mehta vs CIT reported in 387 ITR 561 (Born) b) Decision of Hon'ble Delhi High Court in the case ofCIT vs Ashwani Gupta reported in 322 ITR 396 (Del) c) Decision of Hon'ble Delhi High Court in the case ofCIT vs SMC Chare Brokers Ltd reported in 288 ITR 345 (Del) d) Decision of Hon'ble Supreme Court in the case of Prakash Chand Nahta vs Union of India reported in 247 ITR 274 (SC) e) Decision of Hon'ble Jurisdictional High Court In the case of CIT vs Eastern Commercial Enterprisesreported in 210 ITR 103 (Ca I) f) Decision of Hon'ble Kerala High Court in the case of P.S.Abdul Majeed vs Agricultural Income Tax & Sales Tax Officer & Ors reported in 209 ITR 821 (Ker) 5.4. We find....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le Settlement Commission and declares some additional income thereon, it does not I.T.A. No. 23461K01l2018 Raj Karan Dassani Assessment Year: 2013-14 automatically implead the assessee herein on the negative side and the express provisions of the Act cannot be ignored thereon. There cannot be any malafide that could be attributed on the assessee herein. We find that the assessee was under the bona fide belief and had made proper due diligence before granting donation to HHBRF which was duly recognized U/S 35(1 )(ii) of the Act at the time of giving donation. We hold that if the subsequent notification cancelled the registration U/S 35(1) (ii) of the Act, the same does not affect the donation made by the assessee when the said notification was in force. The bonafide belief of the assessee donor at the time of granting donation to an institution on the basis of recognition then available, cannot be disturbed by subsequent event. This is more clearly spelt out in the provisions of the Act itself by way of an Explanation to Section 35(1) of the Act. Hence even as per the provisions of the Act, the denial of deduction U/S 35(1 )(ii) of the Act is not in order. We also find that the Hon&....
X X X X Extracts X X X X
X X X X Extracts X X X X
....njan Dasgupta may have deposed to the fact that HHBRF were in receipt of various donations from various persons in cheques and the same were routed back to the donors in cash after retaining certain portion as their commission and intermediaries' commission. This is only a general statement given by Swapan Ranjan Dasgupta about the modus operandi carried out by HHBRF. But nowhere in the said statement or in the subsequent enquires 1 investigation, it came to light that the assessee herein had indeed received back the cash in lieu of cheque donations given to HHBRF. This serves as a clinching missing evidence in the entire gamut of this case. 5.7. Now let us come to yet another legal aspect as to whether any addition 1 disallowance could be made merely based on statement recorded during survey which is not backed by any other supporting material. It would be pertinent to note that the sworn statement recorded during survey does not have any evidentiary value. In this regard, the decision of the Hon'ble Madras High Court in the case of S.Khader Khan (2008) 300 ITR 157 (Mad) assumes significance, wherein it was held that :- LT.A. No. 23461K0V2018 Raj Karan Da....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n bogus donation or that the amount donated to it (M/s. Herbicure) was given back to the assessee after deducting the commission. We note that the statement recorded on oath during survey cannot be the sole basis for making the disallowance as decided by the Hon'ble Supreme Court in CIT Vs. S. Kader Khan Son (2013) 352 HR 480 (SC). In any case, if the AO was of the opinion that the statement of Shri Swapan Ranjan Dasgupta, the founder Director of Mls. Herbicure has adversely affected the veracity of the donation made by the assessee then he was duty bound to summon Shri Swap an Ranjan Dasgupta and allowed the assessee to have cross examined him, failing which the statement of Shri Swapan Ranjan Dasgupta could not be used against the assessee trust as held by the Hon'ble Supreme Court in Andaman Timbers Ltd. Vs.Commissioner of Central Excise 62 Taxman 3. We note that the AO had in fact, recorded the fact that the partners of the assessee firm desired to cross examine the founder Director of M/s. Herbicure Shri Swapan Ranjan Dasgupta regarding the purported deposition made at the time of survey. However, AO did not grant him that opportunity to cross examine Shri Swa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad filed a letter on 28/0112016 stating "Referring to the above and your comments on my reply dated 22.01.2016, I would further request your good office to elaborate the financial years in question to enable our Accounts Deptt for verification and submission. However, we apparently observe from our records that following donations were received by us from M/s. Saimed Innovation, the assessee in the financial years mentioned against each: F.Ys Amount Mode of transaction Date Receipt No. 2012-13 7,51,000/- RTGS-UTR 1307406758 15.03.2013 HHBHR No. BARBH /15-03-13/004 2012-13 7,51,000/- RTGS-UTR 13085899500 26.03.2013 HHBHR No. BARBH /26-03-13 /004 Further, it is submitted for your kind record that no money was refunded to the above named assessee against donations given by them. Meantime, I may submit that I am critically indisposed due to acute lumber scoliosis and am not able to move. I am under strict medical supervision. As such, my personal appearance may kindly be waived on compassionate ground. I am attaching the current medical prescription/advice along with MRI reports for your kind record. However, the informatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Supreme Court in the case of CIT vs. Chotatingrai Tea & Ors.; (2002) 258 ITR 529 has held as follows: "4. The High Court followed the reasoning of the Calcutta High Court in Commissioner of Income Tax v. Bhartia Cutler Hammer Co., 232 LT.R 785 and came to the conclusion that once it was found that the assessees had fulfilled all the conditions which had been laid down under Section 35CCA of the Act for claiming deduction of the amount donated by it, there was no obligation on the part of the assessee to see that the amount was utilised for the purpose for which it was donated. Furthermore, the deduction was allowed on the certificate furnished and it was not for the assessee to show whether the institution to which the money had been donated was carrying on the rural development work, as envisaged under Section 35CCA of the Act. 5. In our view, the reasoning of the High Court while answering the question referred to it in favour of the assessee is sound and calls for no interference. 6. The final submission of the learned counsel appearing on behalf of the appellant is that the High Court's final observation that the order of the tribunal remanding ....