TaxTMI 
TaxTMI 
2024 (2) TMI 103
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....e decision over it is covered in favour of the Revenue and against the assessee by the ITAT, Kolkata in the case of Tarasafe International Pvt. Limited -vs.- DCIT in ITA No. 261/KOL/2020 dated 7th March, 2023. However, before taking up the issue on merit, we deem it appropriate to consider the jurisdictional aspect pleaded by the assessee in the Cross Objection. Therefore, we first take the Cross Objection filed by the assessee. C.O. No. 13/KOL/2023 3. The assessee has raised four grounds in the Cross Objection. As far as Ground No. 4 is concerned, it is a general ground, which does not call for recording of any finding. Hence, it is rejected. 4. Grounds No. 2 & 3 are in support of the ld. CIT(Appeals)'s finding. They are connected with the issue agitated by the Revenue in its appeal. Therefore, we will take up these issues along with the grounds of appeal raised by the Revenue. 5. The only preliminary issue, which has been agitated by the assessee in its Cross Objection, is pleaded in Ground No. 1. The assessee has pleaded that ld. CIT(Appeals) has erred in not allowing the assessee's objection under section 147 of the Income Tax Act. The ld. CIT(Appeals) has erred in ....
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....axmann.com 237 (Delhi)- order dated 16.02.2012; (iii) Bayer Material Science Pvt. Limited -vs.- DCIT - 66 taxmann.com 335 (Bombay)- Order dated 27.01.2016; (iv) Swadesh Trading Co. -vs.- DCIT 111 taxmann.com 446 (Karnataka)- Order dated 03.09.2019; (v) Torrent Power SEC Ltd. -vs.-ACIT - 45 taxmann.com 443 (Gujarat)- Order dated 12.03.2014; (vi) Nimitaya Hotel & Resorts Ltd. -vs.- ACIT - 109 taxmann.com 185 (delhi)- Order dated 01.04.2019; (vii) Arvind Sahdeo Gupta -vs.- ITO - 153 taxmann.com 244 (Bombay) - Order dated 08.08.2023; (viii) Ferrous Infra Pvt. Ltd. -vs.- DCIT- 63 taxmann.com 201 (Delhi)- Order dated 21.05.2015. Sr. 1 to 8 (index) The copies of these decisions have been filed before us as discernable from the above Index. 9. We have duly considered the rival contentions and gone through the record carefully. A perusal of the assessment order would reveal that notices under sections 143(2) and 142(1) were issued on 30.05.2016 fixing the case for hearing on 06.06.2016. It means that reassessment machinery was put in motion. The assessee has allegedly filed the objections vide letter dated 29.08.2016, whose copy is....
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....e Hon'ble High Court in paragraph no. 14 of this decision is worth to note, which reads as under:- We are informed that the Assessing Officer, i.e. respondent No.1, has now changed. The Assessing-Officer will now pass a fresh order on the objections raised by the petitioner in terms of direction issued by the Supreme Court in GKN Driveshafts (India) Ltd. (supra). The petitioner will appear before the Assessing Officer on 5^th March, 2012, when a date of hearing will be fixed and an order disposing of the objections will be passed on or before 16^th March, 2012. In case of an adverse order, the Assessing Officer shall give 15 days time to the petitioner to take further steps, in accordance with law, and fix the next date of hearing accordingly. The learned counsel for the petitioner submits that they will not raise any objection with regard to the limitation period and a time period may be fixed for passing the re-assessment order. Keeping in view of the aforesaid facts, it is directed that it will be open to the Assessing Officer to thereafter proceed with the assessment and pass a re-assessment order on or before 15^th May, 2012. The assessee must fully cooperate in the p....
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....r the assessment proceeding in nullity and if that be so, we will drop the proceeding by quashing the reassessment order. Therefore being a Second Appellate Authority assume our powers as of an Assessing Officer for examining those objections on merit because error committed by the ld. Assessing Officer is a curable error, which is procedural one and, therefore, we can consider those objections filed by the assessee before the ld. Assessing Officer. 15. We have perused the letter dated 29.08.2016. The objections are running into 10 pages. However, they are narration of various judgments, which started from page no. 3 of the objections. Apart from those judgments, the only pleading taken in the objection reads as under:- "1. We would like to submit here that the Income for the Asst. Year 2012-13 was correctly returned u/s139 and there has been no escapement of any income. 2. Further, the filing of the Return in response to the notice u/s148 is not acceptance to the proceedings initiated u/s147 of the Act. We had our reservations on the validity of your notice u/s148 and we have not legally accepted the said Notice u/s148. However, the Return of Income , in respo....
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....hemselves. The reasons must provide a live link to the formation of the belief that income had escaped assessment. The reasons cannot keep the assessee guessing fur the reasons for initiating the proceedings u/s147. These reasons cannot be supplied subsequent to the recording of such reasons either in the form of an order rejecting the objections or an affidavit filed by the Revenue. Further, it is also well established law that the satisfaction with respect to escapement of assessment of income must be of the A.O. himself and not a borrowed satisfaction. If the proceedings u/s147 is initiated on the satisfaction recorded by some other authority, like Sales Tax, Excise or Director of Investigation without recording own satisfaction by the AO, the initiation of proceeding u/s 147 of the Act have been held as bad in law. 16. Apart from the above, we have gone into rest of the judgments filed by the ld. Counsel for the assessee during the course of hearing while challenging the reopening of assessment. He submitted in the second-fold, that the assessee has filed its original return, which was duly gone into an assessment under section 143(3) read with section 153A, the sea....
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....a borrowed opinion. The DDIT has transmitted the details exhibiting the fact that donee was engaged in providing accommodation entries to alleged such donors. Therefore, we do not deem it necessary to recite six case laws referred by the ld. Counsel for the assessee on this point because it is a question of fact and not any proposition. We agree if there is no specific information to the ld. Assessing Officer, and he has blindly followed some dictum, then reopening is not justified but here the DDIT has remitted the information and on that basis he formed his opinion. 19. The ld. Counsel for the assessee further contended that ld. CIT(Appeals) has erred in rejecting its ground of reopening by following the case law where original assessment was processed under section 143(1) of the Income Tax Act. We are of the view that ld. Assessing Officer reopened the assessment on the basis of information transmitted to it by the DDIT (Investigation). Therefore, that investigation revealed that more than 1500 donors have taken accommodation entries. The ld. Assessing Officer has gone through these materials and thereafter prima facie formed an opinion. Therefore, by making reference to a ca....
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....7 & 8, the assessee has submitted that ld. CIT(Appeals) has erred in confirming the action of the ld. Assessing Officer for considering disallowance of Rs. 87,50,000/- under normal provisions for computing book profit and thereby erred in calculating the book profit at Rs. 4,17,01,736/- as against returned book profit of Rs. 3,29,51,736/-. (c) The ld. Assessing Officer has erred in charging interest under section 234C of the Income Tax Act. 2.1 In rest of the grounds, i.e. Grounds No. 1 & 11, it has not raised any specific grievance. Similarly Grounds No. 3 to 6 are supporting arguments with Ground No. 2. 2.2 Brief facts of the case are that the assessee-company has filed its return of income electronically on 29.09.2013 disclosing total income at Rs. 2,41,07,380/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued on 04.09.2014, which was duly served upon the assessee. The ld. Assessing Officer thereafter issued a questionnaire by way of a notice under section 142(1). During the course of assessment proceeding, it revealed to the ld. Assessing Officer that assessee has claimed weighted deduction of....
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....Genetics and Population Health. 3.3. Ground No. 2 is common with Ground No. 3 of A.Y. 2014-15. In this ground, the assessee has not raised any specific grievance. In A.Y. 2014-15, it has raised one more ground of appeal whereby it has challenged the disallowance of Rs. 13,12,500/-, which was claimed deduction @ 175% in respect of donation of Rs. 7,50,000/- to Maitribani Institute of Experimental Research & Foundation. 3.4. Brief facts of the case are that the assessee has filed its return of income on 30.09.2013 and 29.11.2014 declaring total income of Rs. 61,76,369/- and Rs. 62,00,581/- respectively in A.Y. 2013-14 and 2014-15. The returns of both the years were selected for scrutiny assessment and notices under section 143(2) were issued and served upon the assessee. The ld. Assessing Officer found that the assessee has given donation to SHG&PH, similarly to Maitribani Institute of the Experimental Research & Foundation, Kolkata. He observed that both the Trusts were involved in providing accommodation entries in lieu of such donations. SHG&PH has admitted this fact before the Settlement Commissioner and offered its commission income for providing such an accomm....
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....ts grievances revolve around a single issue, namely ld. CIT(Appeals) has erred in confirming the disallowance of deduction claimed under section 35(1)(ii) amounting to Rs. 17,50,000/-. 5.2. Brief facts of the case are that the assessee has filed its return of income electronically on 27.09.2015 declaring total income of Rs. 1,43,82,590/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the ld. Assessing Officer that the assessee has paid a donation of Rs. 10,00,000/- to M/s. SHG&PH. It has claimed deduction under section 35(1)(ii) of the Income Tax Act @ 175% of the donation given by it. In this way, a deduction of Rs. 17,50,000/- was claimed. The ld. Assessing Officer has made reference towards the evidence collected by Investigation team on the recipient of the donation, i.e. on the SHG&PH. The ld. Assessing Officer has confronted the assessee as to how such recipient was involved in providing accommodation entry under the garb of receipt of donation and as to how the recipient has admitted this fact on oath before the Settlement Commission....
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....ef to the assessee. ITA No. 133/KOL/2021 7. The assessee is in appeal before the Tribunal against the order of ld. CIT(Appeals) dated 31.03.2021 passed for A.Y. 2012-13. 7.1. In the grounds of appeal, the assessee has raised six grounds of appeal, however, its grievances revolve around two issues, namely- (a) ld. CIT(Appeals) has erred in upholding the reopening of assessment; (b) ld. CIT(Appeals) has erred in confirming the addition of Rs. 12,25,000/-, which was claimed as a deduction under section 35(1)(ii) of the Income Tax Act. In rest of the grounds, the assessee has raised supporting arguments qua these two issues. 7.2. Brief facts of the case are that the assessee has filed its return of income on 29.09.2012 declaring total income of Rs. 4,26,540/-. This return was processed under section 143(1). The assessment of the assessee was reopened by issuance of a notice under section 148 on 05.11.2015. The ld. Assessing Office has reopened the assessment on the strength of information received from the Director (Investigation), Kolkata exhibiting the fact that assessee is a beneficiary of alleged bogus donation given by....
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.... CIT(Appeals) has erred in confirming the disallowance of Rs. 5,25,000/- in A.Y. 2013-14 and Rs. 5,25,000/- in A.Y. 2014-15. 9.2. Brief facts of the case are that the assessee his filed its return of income on 20.12.2013 and 28.03.2015 declaring total income of Rs. 13,08,950/- and Rs. 13,74,490/- respectively in A.Ys. 2013-14 and 2014-15. All the returns of the assessee involved in both the years were for scrutiny assessment. It was found that the assessee has given bogus donation to School of Human Genetics and Population Health in both the years and such claim of the assessee has been disallowed. The facts of the present appeals are common with ITA No. 2448 & 2449/KOL/2019 discussed in immediate preceding paragraph in the case of assessee M/s. Hiralal Bhandari as represented the legal heir of Late Champalal Bhandari. The earlier appeals are of Late Shri Champalal Bhandari, Kolkata, which are being represented by the assessee. The facts on all vital points are common in all these four appeals. ITA No. 2385/KOL/2019 10. The assessee is in appeal before the Tribunal against the order of ld. CIT(Appeals) dated 30.08.2019 passed for A.Y. 2014-15. 10....
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....e the Settlement Commission that it has provided accommodation entries after receipt of commissions. The assessee was unable to submit any evidence in support of its claim except pleading bonafide belief of its donation. It was submitted by the assessee that since recipient was enjoying the status of a Research Institute when it has made donation. If any subsequent enquiry was made, it unearthed that such recipient was receiving bogus donation beyond the control of the assessee, the ld. Assessing Officer was not satisfied with the explanation of the assessee. He disallowed the claim of the assessee and made the addition of Rs. 35,00,000/- by way of an assessment order dated 29.11.2016 passed under section 143(3) of the Income Tax Act. Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. ITA No. 2449/KOL/2019 (M/s. Hiralal Bhandari) 12. The assessee is in appeal before the Tribunal against the order of ld. CIT(Appeals) dated 28.08.2019 passed for A.Y. 2014-15. 12.1 The grievance of the assessee is that ld. CIT(Appeals) has erred in confirming the disallowance of Rs. 61,25,000/-, which was claimed under section 35(1)(ii) of the Income Tax A....
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.... this section is concerned, there is no dispute between the parties. In other words, interpretation of the meaning of section is not involved, which requires reference to any judgment from the authoritative pronouncements of Hon'ble High Courts as well as Hon'ble Supreme Court. 16. The dispute relates to the factum of giving donations to a genuine institution for claiming deduction under section 35(1)(ii) of the Income Tax Act. Arguments: 17. Shri S.M. Surana, ld. Sr. Advocate has led the arguments on behalf of the assessees. He could not dispute to the proposition that as far as interpretation and scope of section 35(1)(ii) is concerned, there is no dispute. He submitted that neither the ld. Assessing Officer nor the ld. CIT(Appeals) have denied the fact that payments of donation by all these appellants were made to the Institution, who was enjoying the benefit of registration with the Department. In other words, the section contemplates approval of prescribed authority for carrying out research work. If such approval is available, then donations given by the donor is allowed to be deduction given in the provision. While elaborating this contention, he s....
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....cross India, such deductions have been allowed to the assessees. 19. All the ld. Counsels have been by and large took the same line of argument. They only placed on record different ITAT orders in their paper book, wherein identical issues were involved. 20. Originally Shri Amal Kamat, ld. CIT(DR) appeared in the case of Tarasafe International Private Limited assisted with Smt. Ranu Biswas, Addl. CIT, Sr. D.R. Thereafter Shri Arup Chatterjee, ld. Sr. D.R. represented the Revenue. In the case of Tarasafe International Pvt. Limited, a paper book has been filed by the Revenue running into 268 pages. In this paper book, the Revenue has placed on record the papers recovered during the course of survey conducted at the premises of the recipient of the donations. It has also placed on record the copy of the Settlement Order passed in the case of the recipient. Such order is available on pages no. 52 to 62. On pages no. 63 to 81, a list of the alleged bogus donors has been placed by the Revenue. Such list has been prepared on the basis of alleged brokers, who have arranged the donations to the Institution and a total revenue received through by means of such donation is R....
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....nce this decision was supplied by the Revenue after conclusion of the arguments, therefore, we re-fixed the hearing and confronted the assessee with this latest position of law. However, Shri Soumitra Chowdhury, ld. Counsel for the assessee has placed on record the judgment of the Hon'ble Calcutta High Court in the case of Commissioner of Income Tax (Exemption), Kolkata -vs.- Sanskriti Sagar. In this decision, the Hon'ble High Court has considered the judgment of the Hon'ble Supreme Court in the case of Batanagar Education & Research Trust and dismissed the appeal of the Revenue. In this case also, registration under section 12AA was cancelled by the ld. Commissioner by exercising the powers under section 12AA(3) of the Act. This cancellation was set aside by the Tribunal and Revenue carried the matter before the Hon'ble High Court, who upheld the order of the ITAT by dismissing the appeal of the Revenue. On the strength of this decision, ld. Counsel for the assessee submitted that Hon'ble High Court has explained the ratio laid down in Batanagar Education & Research Trust and, therefore, this subsequent decision is to be followed. "Finding:- 23. The Department ha....
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....ii) of the I.T. Act, 1961 Notification No. 4/2010 28.01.2010 Government of India, Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) 24. The Governing Body members of the recipient are as under: (a) Dr. Madhumita Roychoudhury President (b) Dr. Shyamal Kumar Nandy Vice-President (c) Dr. Samadrita Mukherjee Sardar Secretary (d) Ms. Basanti Rauth Assistant Secretary (e) Mrs. Moumita Raghavan Treasurer (f) Mr. Gautam Das Executive Member (g) Dr. Debashis Mukherjee Executive Member 25. The Society, carried scientific research in the field inherited genetic diseases, cancer genetics (leukemia) and Geriatric disorders in the research lab. The donee had pursued research in the community understand the population, i.e. monarchial age, nutrition status and reproductive health issues. It is stated that at the level of community welfare, the society had trained teachers and counselors to take care Attention Deficit Hyperactivity Disorder including Cystic Fibrosis Children workshops of Arts & Crafts, which had been published in various national GBP international journals. The socie....
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....G/8 and SHG/PD/1 (one Pen Drive) NIL NIL NIL 28. The main allegation and reason for the survey against the donee was that it had received huge amount of donations on which the applicant society earned service charges. During the survey operation, statements of the Secretary and the Treasurer of the Society were recorded in which they admitted the fact of accepting donations through certain mediators and refunding the same after keeping 3% - 8% as service charges for the society. 29. In 2019, one of us was posted ITAT, Ahmedabad VicePresident (Judicial Member), when first time such issue came up for consideration. Deduction of Rs. 8,75,000/- was claimed by the assessee and we passed the order in ITA No. 1943/AHD/2017. This order was followed in ITA No. 2318 of 2017 since in the first appeal tax effect was less, therefore, it was not challenged by the Revenue before the Hon'ble High Court. However, the second order in the case of Principal CIT-3 -vs.- M/s. Thakkar Govindbhai Ganpatlal HUF was challenged before the Hon'ble High Court in Tax Appeal No. 881 of 2019. The Hon'ble Gujarat High Court has dismissed the appeal of Revenue and upheld the order of the ....
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....entions and gone through the record carefully. The AO is harping upon an information supplied by the survey tern of Calcutta. He has not specifically recorded statement of representative of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received the same was repaid in cash, has been brought on record. In the absence of such circumstances, donation given by the assessee to the donee, on which the assessee no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has * been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue. We allow this ground". 7. In the facts of the present case, the CIT(Appeals) has given the fi....
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.... of the material placed before us persuading us to record a finding of fact being a last authority on this aspect. There is no dispute that a survey under section 133A was carried out at the premises of M/s. SHG&PH as well as M/s. Herbicure Healthcare Bio-Herbal Research Foundation (in short 'HHBRF') because Abhilasha Tradecom Pvt. Limited obtained the accommodation entry from this Institution and issue is involved in ITA No. 132/KOL/2021. In this survey, statement of the Secretary of M/s. SHG&PH was recorded. The Secretary has admitted that the Trust has not used such amount in any research activity, rather it has received the donation in a connived manner on the alliance of certain brokers. They have pleaded specifically in their statement of facts before the Settlement Commission that certain brokers have approached them for augmentation of their revenue in this fraudulent manner and without realising the seriousness of its impact upon the economy in general and Income Tax Department in particular. They involved in this activity. 34. The Department thereafter recorded the statements of the brokers, who have arranged these claim of bogus deduction for the assessees acros....
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....ong with the bank name and branch addresses of 21 concerns mentioned in the Annexure-A. Ans.: I will submit all the required details by 27.03.2015. Q.8. Kindly furnish the names, postal addresses and phone numbers of the directors /proprietors of the 21 concerns mentioned in the Annexure-A. Ans.: I will submit all the required details by 27.03.2015. Q.9. Please go through the Annexure-A in which total billing is shown as Rs. 1118848138/-. Please state where this amount has been transferred after bogus billing and how. Ans.: This amount has been transferred to the donors through 'Hawala Opeators'. First I transferred this amount to various parties, who was raised bogus bill on my concerns by bank channel through layering. Then from these parties, I have go cash in return which is transferred to the donors in cash through 'Angarias/howala'. The details of bogus bills raised by my concerns will be provided by 27.03.2015. Q. 10. Kindly explain the modus operandi of your business in the case of SHG&PH. Ans.: The donor will deposit cheque/RTGS in the account of SHG&PH. The SHG&PH will transfer the amount to my concerns which ....
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....ther this belief harped by all the appellants was such a bonafide that could not be questioned in any circumstances. To our mind, it is a misplaced argument at the end of the appellants. It is to be appreciated that recipient came into existence in 1993, it might have been working on charitable objects and got approval for the purpose of recognition of Scientific and Industrial Research Organisation first time on 17.06.2010. There might be a good intention at the end of the recipient but it has detracted its objectives and indulged in fraudulent activities. The fraud of this magnitude cannot be done without an organised planning where involvements of alleged brokers have come. Thus operative force in the minds of all decision-maker in donors organisation/individual was acting with a fraudulent intent in giving donation through broker in this manner. The ld. CIT(Appeals) in the case of Tarasafe International Pvt. Limited has posed the following questions to the assessee:- (a) What was the purpose of this donation? (b) Whether such donation has been given to the School in the past or in the future? (c) How the assessee came to know about the activities of t....
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....on & Research Trust reported in 129 taxmann.com 30, whose copy has been placed on the record by the ld. CIT(DR), has considered the identical material, which has been placed before us also. In the case of Batanagar Education & Research Trust, the facts are that during the course of survey at the premises of SHG&PH, and in post survey inquiry statement of Shri Ramendra Lahiri, Managing Trustee of the assessee, i.e. Batanagar Society was recorded. The Secretary, Smt. Samadrita Mukherjee Sardar and Treasurer Smt. Moumita Raghavan of SHG&PH have categorically deposed in their statements that source of income of SHG&PH was the money received in the form of donations from Corporate Bodies as well as from individuals. The assessee Batanagar Society was selected by the brokers, who have arranged the donations to SHG&PH as a conduit for receiving the donations from SHG&PH. This donation was to be returned back to those Corporate Houses and individuals in cash after layering the transaction and the Batanagar Education & Research Trust would also retain commission income for such an activity. On the basis of that, its registration was cancelled by the ld. Commissioner (Exemption) by exercisin....
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....It is also pertinent to note that it is not a simple case of claiming deduction on fulfilment of conditions under section 35(1)(ii) of the Income Tax Act, rather it is a case where Revenue has disproved this claim and proved that, with a criminal mind all such donors have layered their transaction in such a manner which apparently appears to be genuine, but in reality not genuine. They took such a step to commit fraud, an economic offence against the economy of the country. 43. The bonafide of the assessees can be appreciated if they have demonstrated that they have given the donations in the past or subsequent periods to some Institution of national importance, such as Tata Research Centre, certain Hospitals, etc. but none of them has given such a donation except a small amount of few thousand in the case of Abhilasha Tradecom Pvt. Limited. The moment Assessing Officers have dispelled onus discharged by the assessee, then it was their duty to prove the genuineness of their claim with circumstantial evidence as pointed out by the ld. Commissioner in the case of Tarasafe International Pvt. Limited, i.e. what was the purpose of the donation; whether such donation has been gi....