M/S SUINDU & CO., Mumbai V. ASST. CIT 17(3), Mumbai

ITA 1476/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1926 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 12-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Charitable institution; Opportunity of cross examination
• Section: 143(3); 143(1); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 1476 / /201 9 ((. .2010-11 ) ITA NO. 1476/MUM/2019 (A.Y.2010-11) M/S. SUINDU & CO., 33, JUPITER BUILDING, CUFFE PARADE, MUMBAI 400 005. PAN: AACFS5934P / VS. : / APPELLANT ASST. COMMISSIONER OF INCOME TAX-17(3), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS SMITA VERMA / DATE OF HEARING : 04/11/2020 / DATE OF PRONOUNCEMENT : 04/11/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-28, MUMBAI (IN SHORT THE CIT(A)) DATED 08/02/2019 FOR THE ASSESSMENT YEAR 2010-11. 2. THE NOTICE OF THE APPEAL WAS SENT TO THE ASSESSE E ON THE ADDRESS MENTIONED IN FORM NO.36 THROUGH RPAD. THE SAME WAS RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARKS LEFT. AGAIN NOTICE WAS SENT TO THE 2 ITA NO. 1476/MUM/2019 (A.Y.2010-11) ASSESSEE THROUGH RPAD ON 13/10/2020 FOR TODAY I.E. 04/11/2020. THE NOTICE HAS NOT BEEN RECEIVED BACK UNSERVED NOR ACKNOWLEDGE MENT OF THE SERVICE IS RECEIVED BACK. THE ASSESSEE HAS NOT INTIMATED FRES H ADDRESS FOR SERVICE OF NOTICE. IT SEEMS THAT ASSESSEE IS NOT INTERESTED IN PURSUING ITS APPEAL. UNDER THESE CIRCUMSTANCES THE APPEAL IS DECIDED IN THE AB SENCE OF THE ASSESSEE AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE AND EXAMINI NG MATERIAL AVAILABLE ON RECORD. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COMMISSION, FOREX BRO KING , ETC. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, T HE ASSESSEE HAD MADE DONATIONS TO THE TUNE OF RS.7,50,000/- TO NAVJEEVAN CHARITABLE TRUST AND HAD CLAIMED DEDUCTION OF THE SAME UNDER SECTION 35AC OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE RETURN OF THE ASSE SSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER, ON THE BASI S OF INFORMATION RECEIVED FROM DCIT, CENTRAL CIR.2(1), MUMBAI, ASSESSMENT FOR ASSESSMENT YEAR 2010-11 WAS REOPENED ON THE GROUND THAT THE ASSESSEE HAD OB TAINED ACCOMMODATION ENTRY FROM THE NAVJEEVAN CHARITABLE TRUST AND HENCE , THE DONATION IS NON- GENUINE. THE ASSESSING OFFICER VIDE ASSESSMENT OR DER DATED 22/12/2017 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 35AC OF THE ACT. AGGRIE VED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) RAISING A LEGAL ISSUE THAT THE OPPORTUNITY OF CROSS EXAMINATION WAS NOT GRANTED TO THE ASSESSEE. THE CIT(A) REJECTED THE OBJECTION OF THE ASSESSEE AND DISMISSE D THE APPEAL. NOW THE ASSESSEE IS BEFORE THE TRIBUNAL ASSAILING THE FINDI NGS OF CIT(A). THE SOLITARY GROUND RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL R EADS AS UNDER:- 3 ITA NO. 1476/MUM/2019 (A.Y.2010-11) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD .CIT(A)-28, MUMBAI ERRED IN CONFIRMING THE DISALLOWANCE MADE BY LD.ACIT-17(3), MUMBAI IN RESPECT OF DONATION OF RS.7,50,000/- GIVEN TO NAVJI VAN CHARITABLE TRUST ON THE BASIS OF ALLEGED INFORMATION FROM INVESTIGATION WING WIT HOUT ANY INDEPENDENT INQUIRY AND WITHOUT GRANTING ANY OPPORTUNITY FOR CROSS EXAMINAT ION AND WITHOUT BRINGING ANY MATERIAL EVIDENCE ON RECORD TO CONCLUSIVELY PROVE T HAT THE DONATION WAS INDEED IN THE NATURE OF ACCOMMODATION ENTRY. 4. MS SMITA VERMA, REPRESENTING THE DEPARTMENT VEHEMEN TLY DEFENDED THE IMPGUEND ORDER AND PRAYED FOR DISMISSING THE AP PEAL OF ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT A SE ARCH ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF N AVJEEVAN CHARITABLE TRUST. THE STATEMENT OF ONE OF THE TRUSTEES, SHRI SUBHASH RAJARAM KADAM WAS RECORDED ON OATH UNDER SECTION 131 OF THE ACT ON 10 /11/2014. IN HIS STATEMENT HE CONFESSED THAT THE TRUST IS PROVIDING ACCOMMODAT ION ENTRIES. HE EXPLAINED THE MODUS OPERANDI. DONATIONS WERE RECEIV ED BY THE TRUST THROUGH BANKING CHANNELS AND CASH WAS RETURNED BACK TO TH E DONORS AFTER DEDUCTING COMMISSION OF 3%. THE ASSESSEE IS ONE OF THE BENEFI CIARIES OF BOGUS DONATIONS. THUS, IT IS BEYOND DOUBT THAT THE DEDUCT ION CLAIMED BY THE ASSESSEE UNDER SECTION 35AC OF THE ACT IS THE RESUL T OF BOGUS DONATION. 5. THE SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESE NTATIVE HEARD. THE MATERIAL AVAILABLE ON RECORD EXAMINED. THE ASSESSE E DURING ASSESSMENT PROCEEDINGS IN ORDER TO SUBSTANTIATE GENUINENESS OF THE DONATION MADE HAD PRODUCED THE DONATION RECEIPTS AND BANK STATEMENTS . WE OBSERVE THAT WHEN THE ALLEGED DONATION WAS MADE ON 17/07/2009 BY TH E ASSESSEE, THE TRUST WAS HOLDING VALID CERTIFICATE OF EXEMPTION. THE RE GISTRATION WAS WITHDRAWN ON 20/12/2016. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER PLACED HEAVY RELIANCE ON THE STATEMENT OF SHRI SUB HASH RAJARAM KADAM RECORDED UNDER SECTION 131 OF THE ACT ON 10/11/2014 . HE HAD PURPORTEDLY 4 ITA NO. 1476/MUM/2019 (A.Y.2010-11) ADMITTED THAT THE TRUST WAS PROVIDING BOGUS ACCOMMO DATION ENTRIES. THE SOLE GRIEVANCE OF THE ASSESSEE BEFORE THE TRIBUNAL IS TH AT OPPORTUNITY TO CROSS EXAMINE THE TRUSTEE WAS NOT PROVIDED TO THE ASSESS EE. THE ASSESSING OFFICER HAS WITHDRAWN BENEFIT OF DEDUCTION UNDER SE CTION 35AC ON THE BASIS OF STATEMENT OF TRUSTEE. 6. IT IS A WELL SETTLED LAW THAT A STATEMENT CANNOT BE USED AGAINST THE ASSESSEE UNLESS AN OPPORTUNITY IS GRANTED TO THE A SSESSEE TO CROSS EXAMINE THE PERSON WHO HAS MADE SUCH STATEMENT. [ RE. KISHA NCHAND CHELLARAM VS. CIT, 125 ITR 713(SC)]. THE HONBLE APEX COURT IN T HE CASE OF ICDS LTD. VS. CIT, 273 TAXMAN 12, HELD THAT WHERE OPPORTUNITY TO CROSS-EXAMINE WITNESS RELIED UPON BY THE ASSESSING OFFICER IS NOT EXTENDE D TO THE ASSESSEE, THE ENTIRE ISSUE HAS TO BE ADJUDICATED FRESH BY GIVING FAIR OPPORTUNITY TO BOTH THE SIDES. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE BOMB AY HIGH COURT IN THE CASE OF R.W. PROMOTIONS (P) LTD. VS. ASSTT. CIT 376 ITR 342(BOM). 7. NOWHERE IT IS EMANATING FROM PERUSAL OF ASSES SMENT ORDER THAT THE STATEMENT RECORDED BY THE DEPARTMENT THAT WAS USE D TO DISALLOW ASSESSEES CLAIM WAS PROVIDED TO THE ASSESSEE OR THE OPPORTU NITY TO CROSS- EXAMINE THE PERSON WHOSE STATEMENT WAS USED AGAINST THE ASSESS EE WAS AFFORDED TO THE ASSESSEE. THE ASSESSING OFFICER OUGHT TO HAVE PROV IDED MATERIAL USED AGAINST THE ASSESSEE APART FROM PROVIDING AN OPPORT UNITY TO CROSS EXAMINE DEPONENT WHOSE STATEMENT WAS USED AGAINST THE ASSES SEE. BESIDES THE SAID STATEMENT THERE IS NO SUBSTANTIVE MATERIAL TO DISBE LIEVE THE CLAIM OF ASSESSEE. THE REQUEST OF THE ASSESSEE TO CROSS-EXAMINE THE PERSON WHOSE STATEMENT WAS USED BY THE REVENUE FOR MAKING THE ADDITION WAS ALSO DECLINED BY THE CIT(A). TAKING INTO CONSIDERATION ENTIRETY OF FAC TS, I DEEM IT APPROPRIATE TO 5 ITA NO. 1476/MUM/2019 (A.Y.2010-11) RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER AFFORDING OPPORTUNITY OF CROSS EXAMINATION TO THE A SSESSEE, IN ACCORDANCE WITH LAW. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS AFORESAID. ORDER PRONOUNCED ON WEDNESDAY THE 4 TH DAY OF NOVEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, +(/ DATED: 04 /11/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT , 2. -. / THE RESPONDENT. 3. /. ( )/ THE CIT(A)- 4. /. CIT 5. 01-.( , . . . , / DR, ITAT, MUMBAI 6. 12345 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI