TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 399
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....o 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 Bio Herbal Research Foundation. 3. The facts, in br....
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....e 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 forth that the transaction is a dubious one, and against the rational behaviour of a businessman. ....
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....nd 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 adjudicated in favour of the assessee. He submitted that in all these cases, the statements of Shri Swapan Rajan Dasgupta, Founder Member of HHBRF w....
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....icraft 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 Securities Pv1. Ltd. Q.8 Are you assessed to tax? If yes, please state your PAN and jurisdiction. Ans. Yes, I submit Income tax return regularly and my PAN number is ADDPB6929P. I am assessed with Ward 43(1), Kolkata. Q.9 Ple....
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....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 Swapan Ranjan Dasgupta. In response to question no.23, he states that bogus donations were received by cheque and RTGS through bank accounts and thereafter payments were made to paper/bogus companies on account of bogus purchase on the advice of Mr. Kishan Bhawasingka and that after the amount passes through in 2 to 3 layers of companies the same was returned back in cash to the original don....
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....lable 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 commercial objective for association with such an accredited institution apart from getting an immediate tax benefit via weighted deduction for any donation made to the institution. We find that when the Id AO informed the assessee that Director of HHBRF had given some statement before the Investigation wing as per which the donation made by the assessee was to be held as a bogus transaction and assessee would be invited with consequential disallowan....
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....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 that the Id AO did not provide the material rather he merely allowed the assessee to read the statement. This, in our considered opinion, was not justified. The assessee cannot be expected to give reply to the statement without going through the same in detail and prepare its counter thereon. Hence it could be safely concluded that in the instant case, the Id AO did not provide the relevant materials to the assessee. Further despite request for cross examination being made by the assessee, the same was not allowed ....
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....g 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'ble Jurisdictional High Court in the cases of B.P.Agarwalls & Sons Ltd vs CIT reported in 208 ITR 63 (Cal) and Jai Kumar Kankaria vs CIT reported in 251 ITR 707 (Cal) had held that there was no power to cancel the registration retrospectively. Hence even on this count, the deduction claimed U/S 35( I )(ii) of the Act by the assessee deserves to be allowed. 5.6. We find that the Id CITA had made an observation which has been heavily relied upon by the Id DR that the assessee's line of business has got nothing to do even remotely with th....
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....o 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 Dassani Assessment Year: 2013-14 "An admission is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the person, who made it, to show it has incorrectly been made and the person, making the statement should be given proper opportunity to show that it does not show the correct state of facts." It was further held that the materials found in the course of survey could not be the basis for making any addition in the assessment. The word "may" used in section I 33A(3)(iii) of the Act makes it clear that the material collecte....
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....ned 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 Swapan Ranjan Dasgupta. We also note that the AO issued notice u/s. 131 of the Act to the partners of the assessee firm and has recorded their statement on oath on 28.12.2015. We note for question no. 14 as to how the partner knew about Mls. Herbicure, the partner of the assessee firm has answered that Dr. Bhuban Chakraborty, a Cardiologist friend introduced them to Mls. Herbicure and to question no. 15 as whether the partners have visited the office of M/s. I.T.A. No. 2346/Ko1l20 18 Raj Karan Dassani Assessment Year: 2013-14 Herbicure to which the partners answered that they had visited the premises of M/s. Herbicure on two occasions and for question n....
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....6-03-13 /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 information as submitted above may please recorded as my witness." 10. Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when th....