TaxTMI 
TaxTMI 
2022 (12) TMI 1545
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....of them by this common order. In order to appreciate the facts in a simplified manner, we deem it appropriate to take note of the facts in a seriatim from each appeal. 2. ITA No. 261/KOL/2020 (Tarasafe International Pvt. Limited) The assessee is impugning the order of ld. Commissioner of Income Tax (Appeals) dated 29.11.2019 passed in A.Y. 2013-14, which has arisen against the assessment order dated 30.03.2016 passed under section 143(3) of the Income Tax Act. The assessee has taken eleven grounds of appeal. However, on perusal of the grounds, it revealed to us that basically three-folds of grievance are being raised by the assessee, namely- (a) in Grounds No. 2 to 6, the assessee has pleaded that ld. CIT(Appeals) has erred in confirming the action of the ld. Assessing Officer for not allowing the deduction of Rs. 87,50,000/- claimed under section 35(1)(ii) of the Income Tax Act, 1961; (b) In Grounds No. 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 calculatin....
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....s) has allowed partly on other small disallowances, but the issues agitated before the Tribunal, ld. CIT(Appeals) has concurred with the ld. Assessing Officer. 3. ITA Nos. 107/KOL/2020 & 108/KOL/2020 (REACHASIA) The present two appeals are directed at the instance of assessee against the separate orders of ld. CIT(Appeals) dated 02.12.2019 passed on the appeals of the assessee for A.Y. 2013-14 and 2014-15. 3.1. The assessee has taken two grounds of appeal in A.Y. 2013-14 and three grounds of appeal in A.Y. 2014-15. 3.2. Ground No. 1 in A.Y. 2013-14 is similar with Ground No. 1 in A.Y. 2014-15. In this ground of appeal, the assessee has pleaded that ld. CIT(Appeals) has erred in confirming the disallowances of deduction amounting to Rs. 35,00,000/- and Rs. 17,50,000/-, which were claimed by the assessee under section 35(1)(ii) for grant of donation to SHG&PH i.e. School of Human 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/-, wh....
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.... for Scientific Research". In the return under Schedule (e), it claimed a deduction of Rs. 3,50,00,000/-. The ld. Assessing Officer has disallowed this deduction. He has made a similar discussion as made in the earlier two appeals of the Group. He has made reference to the statements, for appreciating the affairs of SHG&PH, recorded during post-survey enquiry in their cases. He has made reference as to how the donors went to the Settlement Commission and admitted the fact that they have provided only accommodation entries on commission based. All these materials were confronted to the assessee. 5. ITA No. 23/KOL/2020 M/s. Coalsale Co. The present appeal is directed at the instance of assessee against the order of ld. CIT(Appeals) dated 24.12.2019 passed for A.Y. 2015-16. 5.1. The assessee has raised five grounds of appeal, but its 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/-....
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....y of bogus donation. The ld. Assessing Officer found that assessee has given a donation of Rs. 3,00,000/- to M/s. Horticulture Harbal Healthcare Bio-Harbal Research Foundation (in short 'HHBRF') and it claimed weighted deduction of Rs. 5,25,000/-. The ld. Assessing Officer has confronted the assessee with regard to the material unearthed during the course of search by the Investigation Wing in the case of recipient of the donation, but the assessee failed to give any plausible reply to rebut such donation except by submitting that it has given donation under a bonafide belief. Accordingly ld. Assessing Officer has disallowed the claim of the assessee vide assessment order dated 25.10.2016 passed under section 143(3) read with section 147 of the Income Tax Act. Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. 7. ITA No. 133/KOL/2021 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 reo....
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....rs of the recipient were found to be bogus and as to how the recipient has approached the Settlement Commission admitting the fact that it was involved in bogus donation. Contrary to this claim, the assessee was unable to submit any evidence except pleading bonafide donation. The ld. Assessing Officer disallowed the claim of the assessee by passing an assessment order on 02.03.2016 under section 143(3) of the Income Tax Act. Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. 9. ITA Nos. 2316 & 2317/KOL/2019 The present two appeals are directed at the instance of assessee against separate orders of ld. CIT(Appeals) dated 28.08.2019 passed in A.Y. 2013-14 and 2014-15. 9.1. The grievance of the assessee is that ld. 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 201415. All the returns of the assessee involved in both the years were for scrutiny assessment. It was found tha....
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....se are that the assessee has filed its return of income electronically on 29.09.2013. 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 had claimed a deduction of Rs. 35,00,000/- under section 35(1)(ii) on a donation of Rs. 20,00,000/- to School of Human Genetics and Population Health. The ld. Assessing Officer confronted the assessee with regard to the material unearthed during the course of search/survey in the case of recipient of the donations. He confronted the assessee as to how this recipient has admitted before 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 ....
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....to some other scientific research organisation having its main object of undertaking scientific research or to a University, College or other Institution to be used for scientific research, then this Section provides that such Institution, University, College has to be 'approved' for such purposes by prescribed authority. Therefore, if a research institute is approved and notified by the prescribed authorities under the Rules of Income Tax Rules, 1962 and the provision of this Act, then the donors will be entitled for a deduction equivalent to 175% of donation given by them. Therefore, as far as scope of this Section or meaning/instruction of the language employed in 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....
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.... of Hon'ble Supreme Court in the case of Hitendra Vishnu Thakur -vs.- State of Maharashtra [AIR 1994 S.C. 2623]. On the strength of these two decisions, he submitted that a procedural statute should not generally be applied retrospectively, where the result would be to create new disabilities or obligations, or to impose new duties in respect of transactions are not accomplished. The ld. Counsel for the assessees thereafter made reference to a series of decisions, where ITAT has allowed such a deduction to the assesses. He pointed out that some of the decisions in Kolkata have been upheld upto the Hon'ble High Court also. He pointed out that across 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 pape....
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.... which reversed the decision of the Hon'ble Calcutta High Court and upheld the rejection of the registration under section 12A(3). He emphasized that in this decision, the Hon'ble Supreme Court has taken note of the discussion made by the ld. CIT (Exemption), who cancelled the registration as well as the finding recorded by the Tribunal. Both these findings are based upon the material discovered during the survey upon SHG&PH and, therefore, in view of this latest decision of the Hon'ble Supreme Court, he emphasized all other orders of the ITAT and the decisions of the Hon'ble High Court are not to be followed. 22. Since 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 o....
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....rpetual) DIT(E)/906/SE/23/04-05 27.10.2004 Director of Income Tax (Exemption), Kolkata DIT(E)/3248/SE/23/04-5 12.12.2011 Registration u/s 10(23C) of the I.T. Act Initial order No. 49 27.02.2004 CCIT-III, Kolkata Renewal vide No. CCITIII/10(23C)(iv)/11- 12/245 16.01.2014 Recognition of Scientific and Industrial Research Organization Renewal till 31.03.2016 vide Communication No. 14/473/2007-TU-V(for 01.04.10 to 31.03.13) For 01.04.08 to 31.03.10) 01.04.2013 01.04.2013 17.06.2010 Government of India, Ministry of Science and Technology Gazette Notification u/s 35(1)(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 ....
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....ted before Settlement Commission that a survey operation under section 133A of the Act was carried out at the premises of the done Society at 6A, Malanga Lane, Kolkat-12 on 27.01.2015. During the course of survey following documents were found and impounded:- Name & Address Items Annexure Documents found Documents impounded School of Human Genetics & Population Health, 6A, Malanga Lane, Kolkata700012 Books of accounts Cash Bank A/c. Debit/Credit Card 'A' '3' '2' '4 SHG/1 to SHG/8 and SHG/PD/1 (one Pen Drive) Rs. 82,400/- 16 nos. 4 nos. SHG/1 to SHG/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 Vice-President (Judicial Member), when fi....
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.... At that point of time, donee was notified as eligible institution and fall within the statutory eligibility criterion. Certificate for receiving donation was cancelled on 6.9.2016. There is no mechanism with the assessee to verify whether such donee was a genuine institute or not, which can avail donation from the society. 5. The Id. DR, on the other hand, contended that in the investigation it came to know about bogus affairs conducted by the donee. Hence, these donations are rightly been treated as bogus, and addition is rightly made. 6. We have duly considered rival contentions 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 don....
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....p; (BHARGAV D. KARIA, J) PALAK 30. The same line of reasoning has been developed everywhere including ITAT, Kolkata. The order of the ITAT, Kolkata got the approval of the Hon'ble High Court, a reference can be made to the decision of the Hon'ble Calcutta High Court in the case of Pr. CIT -vs.- Mackaw Corporation (2022) 8 TMI 1750, ITA 42 of 2020, G.A. No. 2 of 2019, Old G.A. No. 1477 of 2019. 31. The ld. Counsels have emphasized that under identical circumstances, deductions have been allowed by the ITAT and the order of ITAT has been upheld by the Hon'ble High Courts. Therefore, these appeals are to be allowed and deductions be granted to the appellants. 32. With respect to all the case laws including our own order, w....
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....n 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 are very important in order to demonstrate the modus operandi adopted by them:- Q. 6. What is your source of income? Ans. My main source of income is from brokerage by raising bogus bills for various beneficiaries/parties. Q. 13. How do you know the Trust called "School of Human Genetics & Population Health (SHGPH)? Ans.: Initially, I came with the contact of Smt. Moumita Raghavan, President and Smt. Samadrita Mukherjee Sardar, Secretary of School of Human Genetics & Population Health through a market broker named Shri Sailesh Gupta, residing at howrah who approached me for bogus billing. After that, I have direct contact with Smt. Moumita Raghavan & Smt. Samadrita Mukherjee Sardar of SHGPH regularly and raise bogus bills for SHGPH over ....
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....s 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 Officer armed with the above materials, confronted all these assesses during the assessment proceedings itself, the Officer brought to the notice of the assessees about the outcome of the survey and how these donations are to be treated as bogus. 37. The stand of all these appellants right from the ld. Assessing Officer upto the Tribunal is that since Institution was approved by the Competent Authority to receive donation. This approval was intact when they have made the donation. Therefore, under bonafide belief, they have given the donations and on the basis of post donation, material collected by the Revenue should not be used against them for doubting the genuineness of....
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....re 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 in this regard. In the case of this Company, ld. Counsel for the assessee has submitted that small amount of donation has been given to a different organisation in the next year. Therefore, if we weigh the simple plea of the appellants about their bonafide belief for giving such donations, vis-a-vis huge materials collected by the Revenue demonstrating the fact how such a belief is misplaced, then, the scale would tilt in favour of the revenue. It is to be appreciated that roughly 720 entities including individuals available in a part-list on pages No. 72 to 81 of the paper book compiled by the Revenue would have not formed a bonafide be....
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.....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 26.04.2022 in the case of Commissioner of Income Tax (Exemption), Kolkata - vs.- Sanskriti Sagar, this judgment of the Hon'ble Supreme Court was considered. 41. We find that in this case, the assesese was recipient of a small donation of Rs. 85,000/- from Herbicure and on the basis of receipt of this donation, its registration was sought to be cancelled. The Hon'ble High Court has propounded that the decision in the case of Batanagar Education & Research Trust is not applicable on the facts of that case because Sanskriti Sagar has neither given any donation to this Trust and claimed deduction under section 35(1)(ii) nor it has returned th....
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..... 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 assessees for long-term capital gain was a bogus claim. The Hon'ble Court has considered the material collected by the Investigating Wing of the Department on the premises of certain companies ,who were manipulating the stocks or indulging any accommodation entry business. If we apply the ratio of this judgment upon these cases, then it would reveal that the benefit of claim under section 35(1)(ii) is outcome of an organized fraud with the help of certain manipulators. Therefore, we do not find any material in the first-fold of arguments raised by the ld. Counsels for the assessees. The appellants are not entitled for deduction under se....
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....plication, we admit the additional ground of appeal for adjudication, which reads as under:- "For that the notice u/s 143(2) dated 04.09.2014 issued by the ld. AO being ITO, Ward-10(3), Kolkata was without jurisdiction and therefore the assessment is bad in law". On the other hand, it has been brought to our notice that the assessment order has been passed by the ld. DCIT. However, admission of additional ground of appeal is a preliminary step at the end of the Tribunal. It is to be adjudicated after hearing the Revenue. We will appreciate if complete details with regard to this issue are being placed by the Revenue before us demonstrating how there is no irregularity in assuming the jurisdiction for issuing notice under section 143(2) as well as passing the assessment order. We adjourn the hearing to 2nd of August, 2022 treated as part-heard. Copy of this order-sheet be supplied to both the parties for compliance. Sd/- ....
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....T Instruction bearing No. 1 of 2011 dated 31.01.2011. He placed on record the copy of such Instruction. He submitted that according to the Instructions, the notice under section 143(2) ought to have been issued by Dy. Commissioner/Asstt. Commissioner and, therefore, in the absence of such notice, no assessment ought to have been passed. For buttressing his contention, he put reliance upon the six ITAT decisions, namely- (i) Shri Sukumar Chandra Sahoo in ITA No. 2073/KOL/2016 dated 27.09.2017- 'C' Bench; (ii) Proficient Commodities Pvt. Limited in ITA No. 1346/KOL/2016 dated 18.03.2020- 'A' Bench; (iii) Anil Kumar Khetawat in ITA No. 1136/KOL/2019 dated 26.05.2022 - 'C' Bench; (iv) Shri Debabrata Kayal in ITA No. 6/KOL/2021 dated 11.02.2022 - 'C' Bench; (v) Shri Krishnendu Chowdhury in ITA No. 1153/KOL/2015 dated 18.11.2016 - 'D' Bench; (vi) Reliance is also placed on the decision of Chattisgarh High Court in the case of Sunita Finlease Ltd. Reported in 330 ITR 491 holding that CBDT Instructions for completion of assessment are binding on the AO which was followed in ITAT, Kolkata 'B' Bench in the case of Ajanta Financial Service....
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....st day of June, 2003]; (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not computed excessive loss or has not under-paid the tax in the manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return; Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished]". 50. Before construing the meaning of this clause, we would like to make reference to the CBDT's guidelines published in the Master-Guide to Income Tax Act by Taxman. On page 3.196, the publisher has published the process of selection of cases for scrutiny for Corporate Assessee in A.Y. 2006-07. This has been followed in Financial Year 2007-08, i.e. Assessment Year 2008-09 and in other years. For example, we are taking up these Instructions for A.Y. 2006-07, which read as under:- "Proceedure for selection of cases for scrutinies- For Corporate a....
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....t Rs. 1 crore or above and income declared is less than 10% of such brokerage. (m) All cases of stockbrokers (including sub-brokers) in which bad debts of Rs. 10 lakhs or more have been claimed. (n) Cases of amalgamated companies claiming set-off of loss under section 72A. (o) All cases of deduction under section 10A and/or 10B with export turnover exceeding Rs. 10 crore. (p) All cases of contractors whose gross contractual receipts exceed Rs. 5 crore and net income declared is less than 5% of gross contractual receipts. 3. Where a case does not fall in the categories specified at para 2 above but the CCIT/DGIT (International Taxation)/ DGIT (Exemptions), of his own motion or on the matter having been brought to his notice by an authority below, is satisfied that the case needs to be taken up for scrutiny, the CCIT/DGIT (International Taxation)/DGIT (Exemptions), for reasons to be recorded in writing, may direct the Assessing Officer to take up the case for scrutiny. 4. The CCIT/DGIT (International Taxation)/DGIT (Exemptions), may issue suitable guidelines for reducing/increasing the number of cases selected under specific claus....
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....or scrutiny contemplated in every year. There is no jurisdictional element involved in that. Notice is to be issued after the analysis of the computer on the basis of PAN data of an assessee. In other words, the first jurisdiction is with the ITO, Ward-10(3) and for the purpose of distribution of work in order to remove the hardship to the taxpayers/ the professionals, it is to be assigned to particular authorities on the basis of monetary limit. It is a subsequent step and for this purpose, we take note of the CBDT Instruction No. 119, which reads as under:- "CBDT -Section 119 of the Income Tax Act- Instructions to subordinate authorities- Instructions regarding income limits for assigning cases to Deputy Commissioners/Assistant Commissioners/ITOs. Instruction No. 1/2011 [F. No. 187/12/2010-IT(AI)] dated 31.01.2011. References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs /ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of c....
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....ction No. 1 of 2011 infuses a jurisdiction in different Assessing Officers instead of ease of assessment on the basis of return of income filed by the assesses. In other words, it is mere allocation of work after selection of scrutiny. We would have made a reference for constitution of a Special Bench on this issue because it is difficult for us to concur with the views of the earlier Benches on this aspect. In none of the orders relied upon before us, this issue has been examined with this angle. It is pertinent to observe that it is a group of 13 appeals, wherein we have decided the main issue against the assessees. It will ultimately travel to the Hon'ble High Courts in further appeal. Therefore, we do not deem it necessary to make a reference to the Special Bench and withholding the adjudication of one appeal, which is a lead appeal. The orders referred by the ld. Counsel for the assessee have not dealt with all these aspects. It is also pertinent to observe that on distribution of work amongst the ITOs, vis-a-vis Addl. Commissioner/Deputy Commissioner even no order for transfer of jurisdiction under section 127 is required to be passed. This is an exercise after the process of....