TaxTMI 
TaxTMI 
2024 (2) TMI 103
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....e 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 upholding the reopening of the assessment. 6. Brief....
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....cience 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 being filed by the ld. Counsel for the assessee in a supplementary paper book, though without any certificate. The ld....
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....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 5th March, 2012, when a date of hearing will be fixed and an order disposing of the objections will be passed on or before 16th 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 15th May, 2012. The assessee must fully cooperate in the proceedings. The concerned Commissioner will examine the reassessment file in he present case and is at liberty to take appropriate a....
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....d 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 response to your Notice u/s148, was filed in accordance to the pronouncement by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd Vs ITO & Others ....
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....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 search upon the donee took place before completion of assessment order in the case of assessee. The assessment order was completed on 27.03.2015 whereas search upon the donee was conducted somewhere in the month of Jan....
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....ws 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 case law where original assessment was under section 143(1) would not make much change in the opinion formed by the ld. 1st Appellate Authority. The question is assessment has been reopened within four years from the end of....
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.... 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 Rs. 87,50,000/- under section 35(1)(ii) of the Income Tax Act. The ld. Assessing Officer has observed that a donation of Rs. 50,00,000/- has been paid by the assessee to the School of Human Genetics and Population Health (in short 'SHG&PH') and in lieu of such donation, it has claim....
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.... 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 accommodation to the assessee. The ld. Assessing Officer accordingly disallowed the claim of the assessee in both the years and appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. ITA No. 136/KOL/2020 (P.S. Magnum) 4. The present appeal is directed at the instance of assessee against the order of ld. CIT(Ap....
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....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. Contrary to this confrontation, nothing was submitted by the assessee and accordingly ld. Assessing Officer has disallowed the deduction claimed by the assessee. 5.3. Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. Hence the assessee is in appeal before the Tribunal. ITA No. 132/KOL/2021 (Abhilasha Tradecom Pvt. Limited 6. The assessee is in appeal be....
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....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 it. On scrutiny of the accounts, it revealed to the assessee that it has given a donation of Rs. 7,00,000/- to M/s. Horticulture Harbal Healthcare Bio-Harbal Research Foundation and claimed weighted deduction @175% of the donation amounting to Rs. 12,25,000/-. The ld. Assessing Officer has disallowed this claim as was disallowed in A.Y. 2011-12. The reasonings in both the years are identical and the ld. CIT(Appeals) has confirmed the addition, hence appeal before the Tribunal.....
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....n 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. 10.1. In the solitary substantial ground of appeal, the assessee has pleaded that ld. CIT(Appeals) has erred in confirming the disallowance of Rs. 26,25,000/-, which was claimed as a deduction under section 35(1)(ii) of the Income Tax Act. 10.2. Brief facts of the case are that the assessee has filed its return of income on 25.09.2014. 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 asses....
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....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 Act.. 12.2. The facts in the present year are almost verbatim except variation of the amounts as available in A.Y. 2013-14 discussed in ITA No. 2448/KOL/2019. Question in dispute 13. With the assistance of ld. Representative, we have gone through the record carefully. The solitary issue involved in all these appeals relates to - "whether the appellants are entitled to weighted deduction @ 175% of the donations given by them to allege Research Institute namely SHG&PH under section 35(1)(ii) of the Act. 14. It is imperative upon us to take note of this provision, the relevant part reads as un....
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.... 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 submitted that authorities whenever required to approve any Institute engaged in research work, they carry out necessary inquiries/ investigation to ensure the genuineness of such Institution and after analysis all the objects, activities, personnel, who will be managing such organisation, they approve such an organisation to receive donation. Thus a person/entity, who wishes to avail the benefit of section 35(1)(ii) by contributing a specified sum, is not supposed to and in fact is not equipped with so much tools to verify genuineness of the activities of such Institution. It is a bonafide belief that once approval is granted by CBDT, contribution made to such Institution will qualify exemption, mo....
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....onducted 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 Rs,159,36,11,602/-. In other words, it is Rs. 159.36 crores. Similarly one more list has been placed on pages no. 136 to 159, where the Revenue has complied with PAN, Data, who has availed weighted deduction on this bogus donation. On the strength of all these details, it was submitted by the Revenue that during the course of assessment proceedings in all these appeals, the ld. Assessing Officer has confronted the assessees with the material discovered during the course of survey on the premises of the recipient. None of the assessees has justified their claim. They are only harping upon bonafide. He pointed out that originally the Institute might have prepared the documents and submitted for carrying out the researc....
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....is 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 has filed a paper book containing 268 pages in M/s. Tarasafe International Pvt. Limited. On second page of the paper book, order of the Settlement Commission dated 22.07.2016 passed under section 245D(4) of the Income Tax Act has been placed on record. In this order, Settlement Commission has noticed the facts of assessee before them, i.e. SHG&PH. Such facts have been noticed by them on the basis of statement of facts filed before them. We deem it appropriate to take note of the facts about the Institution, who has received such a huge donation. As emerging out from that order, the facts are that the Society SHG&PH was registered under West Bengal Society Registration Act, 1961 on 26.04.1993. It was founded by Professor D.P. Mukherjee, the S....
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....chial 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 society had ongoing community projects i.e. Kangaroo Project - exclusive breast feeding in urban and rural Ben; health situation assessment studies at Ruppur Birbhum, West Bengal and had acquired six acres of land at Ruppur, Birbhum, along with 3 building structures for care centre for elders and disabled senior citizens. Besides, the lab of applicant society is located in approx. 1000 sq. ft space at 6A, Malanga Lane, Kolkata-12, which has been taken on rent of Rs. 28,000/- p.m. Various machines and equipments have been purchased for various research/testing etc. by the society at Rs. 25 lakh. In addition, the donee has also incurred huge expenses or chemicals, Primars and other consumables for research work, salary and rent etc. 26. It was further, submitted that as the society had inadequate financial resources, it was made to ....
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....e 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 ITAT. The Hon'ble High Court has reproduced the finding of the Tribunal recorded in paragraph no. 2, 4, 5 & 6 verbatim and thereafter held that no question of law is involved. This finding reads as under:- "6. Learned Senior Advocate Mr. M.R. Bhatt for the appellant submitted that there no appeal is filed by the Revenue against the decision of the Tribunal in the case of S.G. Vat Care Private Limited (supra). It would therefore be germane to refer to the following findings, given by the Tribunal in the case of S.G. Vat Care Private Limited (supra):- "2. In the first ground of appeal, the grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs. 8,75,000/- on account of alleged bogus donation to Herbicure Heathcare Bio-Herbal Research Foundation. 3. Brief facts of the case are that the assessee has filed return of income on 20.11.2014 de....
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....celled 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 finding of the fact that the amount of donation was transferred to the Herbicure through Bank channel and there is no evidence that the same is returned back in cash. 8. It is also found that the Herbicure Foundation has confirmed that the amount has been utilized for scientific research vide confirmation dated 29.09.2016. Accordingly, the onus placed upon the assessee was discharged. 9. In view of the aforesaid findings of the fact given by both the authorities below, no interfere in the impugned order passed by the Tribunal is required to be made. No substantial question of law arises from the order of the Tribunal. Therefore, the appeal fails and is hereby dismissed. Sd/- &n....
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....nd 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 across the country. It has been brought to our notice that in one assessment year total donations of around Rs. 387 crores were received by this Institution and the donors have availed benefit of deduction of more than Rs. 650 crores. This is the magnitude of revenue swindled by the donors with the connivance of brokers and SHG&PH. These details have come up in the Settlement order. 35. We would like to refer the statement of one of the brokers Shri Vijay Kumar Agarwal, son of Late Mohan Lal Agarwal, aged about 65 years. His statement was recorded under section 131 of the Income Tax Act, 1961 on Oath on 23.02.2015, which was in continuation of his statement recorded dated 13.02.2015 i.e. subsequent to the survey conducted upon SHG&PH. Copy of this statement along with the statements of other brokers have been placed by the Revenue and copy of the statement of Shri Vijay Kumar Agarwal is available on pages 82 to 90 of the paper book. Certain questions and their answers ar....
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.... Ans.: The donor will deposit cheque/RTGS in the account of SHG&PH. The SHG&PH will transfer the amount to my concerns which is mentioned in Annexure-A. Sometimes they used to transfer the amount after deducting their commission @ 8% and we used to settle our accounts periodically for settling commission. After that, my concerns will pay to the parties who have raised bogus bills to my concerns cheque/RTGS. In lieu of the same, I will get the amount in cash. Thereafter, I will get the phone calls from the donors who will give me distinctive number of Indian currency of any denomination. They I will give the cash to Angarias with the details of note number. The Angaria's commission was given by the donors and Angaria's commission was not the part of my job. This is how the whole system was run. Q.11. Kindly provide the list of donors with amount for whom you have worked. Ans.: I will submit all the required details by 27.03.2015. 36. In identical manner, other brokers have deposed and thereafter provided the details of the donors, which are also compiled with and certain details are available on pages 63 to 81 of the paper book filed by the Revenue. The ld. Assessing Offi....
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....past or in the future? (c) How the assessee came to know about the activities of the Trust? (d) What influence the assessee to give this donation to this Institution other than deduction under section 35(1)(ii). (e) The appellants are not in this line of business and, therefore, it is difficult to understand the very purpose of this transaction undertaken by them. They have failed to explain how the cheques in their case were given to the Society, whether it was given by post or directly to the Office bearer or through some agents. (f) If it was handed over to the office bearer, then name of such office bearer. 38. These are certain questions, which point a figure to the circumstances, which are to be explained by each appellant. Their first onus discharged by them has been dispelled by the ld. Assessing Officer with credible material. If the appellants are of such a spirited Corporate House, who wants to build the research organisation of the nation, then they have to demonstrate how such donations were given in the past or in the subsequent period. We have confronted them specifically, but none of the assesses except M/s. H.K. Dutta & Company could submit anything ....
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....celled by the ld. Commissioner (Exemption) by exercising the powers under section 12AA(3). This order was upheld by the ITAT. However, on further appeal, Hon'ble High Court has reversed this order but Hon'ble Supreme Court restored this order, in other words upheld the cancellation of the registration to Batanagar Education & Research Trust. In this judgment, Hon'ble Supreme Court has made reference to the outcome of the survey at SHG&PH coupled with the post survey enquiry conducted upon Batanagar Society and satisfied that it was an organized fraud to misuse the status of a charitable entity. This judgment has been pronounced on 02.08.2021. After this judgment, a judgment of the Hon'ble Calcutta High Court in the case of Mackaw Corporation has been passed, which has been relied upon by the ld. Counsel, but in this decision, Hon'ble High Court has not considered the judgment of the Hon'ble Supreme Court, because the judgment of the Hon'ble Supreme Court in the case of Batanagar Education & Research Trust was not cited by both the parties. 40. The ld. Counsel for the assessee, Shri Soumitra Chowdhury, during the course of argument submitted that in the decision rendered on 26.04....
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....ether such donation has been given to the School in the past or in the future; whether the Corporate Houses have discussed in the meeting and the Management Committee passed the Resolution for giving the donations; what influenced the assessee to give this donation to the Institution other than deduction under section 35(1)(ii) etc. 44. It is also pertinent to observe that recently Hon'ble Jurisdictional High Court has examined the issue of bogus capital gain claim made by a large number of assessees in Kolkata. This issue has been examined in the case of Swati Bajaj & Others (2022) 139 taxmann.com 352(Cal.) pronounced on 14.06.2022. A large number of assessees have claimed long-term capital gain/loss. The Income Tax Department has carried out search/survey upon different entities, which unearthed that certain companies and professionals were providing such claim in the shape of accommodation by manipulating the stocks of certain shell companies. The Hon'ble Court has made a detailed analysis of the material found during the course of search and survey on the premises of third entities and set aside the orders of the ITAT in a group of appeals by holding that such claim by the a....