Tejpal Harpalsingh Gandhi, Pune V. Deputy Commissioner of Income-tax, Circle - 7, Pune

ITA 1860/PUN/2018

AI Insights

The case involves Tejpal Harpalsingh Gandhi, an individual engaged in the business of builders, developers, and promoters, who appealed against the order of the Commissioner of Income Tax (Appeals)-5, Pune. The appeal was related to the disallowance of a deduction for donations made to an NGO, which was found to be involved in providing bogus donation entries. The Assessing Officer, based on information from the Directorate of Investigation Wing of the Income Tax Department, Kolkata, concluded that the donations were not genuine and were returned to the assessee after deducting service charges. The CIT(A) upheld this decision, leading to the current appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137140 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-12-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2018
• Other Referred Cases: Sumati Dayal vs. CIT, 240 ITR 801 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1860/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2013-14 Tejpal Harpalsingh Gandhi, 5, Jewel Tower, South Main Road, Koregaon Park, Pune- 411001. PAN : AJUPG1931D Vs. DCIT, Circle-7, Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 5, Pune [‘the CIT(A)’] dated 10.08.2018 for the assessment year 2013-14. 2. Briefly, the facts of the case are that the appellant is an individual engaged in the business of builders, developers and promoters etc. The Return of Income for the assessment year Assessee by : Shri Neelesh Khandelwal Revenue by : Shri Ramnath P. Murkunde Date of hearing : 14.12.2022 Date of pronouncement : 31.01.2023 ITA No.1860/PUN/2018 2 2013-14 was filed on 29.07.2013 declaring total income of Rs.39,55,040/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Circle-7, Pune (‘the Assessing Officer’) vide order dated 28.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.68,40,040/-. While doing so, the Assessing Officer disallowed the weighted deduction u/s 35(1)(ii) in respect of donations of Rs.15,00,000/- paid to one NGO’s viz. School of Human Genetics and Population Health, based on the information received from the Directorate of Investigation Wing of the Income Tax Department, Kolkata, whereby, the modus operandi and non- genuineness of the donation was brought to light. Even the copy of the report received from Directorate of Investigation Wing of the Income Tax Department, Kolkata was furnished to the appellant. It was further brought to notice of the Assessing Officer that the said NGO filed petition before the Settlement Commission of Income Tax, Kolkata Benches, admitting the income earned by way of arranging accommodation entries for bogus donations through certain mediators and these donations were refunded back as per instructions after receiving their services charges. ITA No.1860/PUN/2018 3 3. Based on the above information, the Assessing Officer was formed an opinion that the donations were made by bogus entries and the assessee had received back the amount of donations in cash placing reliance on the decision of the Hon’ble Apex Court in the case of Sumati Dayal vs. CIT, 240 ITR 801 (SC) and, accordingly, disallowed the claim for deduction u/s 35(1)(ii) of Rs.26,25,000/-. The Assessing Officer also disallowed the donation of Rs.2,60,000/- paid to Vohuman Foundation, as the same was not allowable as expenditure u/s 37(1) of the Act. 4. Being aggrieved by the above additions, an appeal was filed before the ld. CIT(A) contending that the Assessing Officer was not justified in disallowing the claim for deduction u/s 35(1)(ii) in respect of donations made to NGO’s viz. School of Human Genetics and Population Health, as well as no opportunity of cross- examination was not given to the assessee in this regard. However, the ld. CIT(A) after analyzing the contents of the report received from Directorate of Investigation Wing of the Income Tax Department, Kolkata had come to the conclusion that the said organization was indulged in the activity of providing accommodation entries in the form of bogus donations and the appellant had not availed the opportunities to produce any person ITA No.1860/PUN/2018 4 from the said organization to prove the genuineness of these donations, accordingly, confirmed the action of the Assessing Officer. 5. Being aggrieved by the decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal. 6. The ld. AR reiterated the same contentions as advanced before the ld. CIT(A). 7. On the other hand, ld. CIT-DR placing reliance on the order of the ld. CIT(A) submits that the order of the ld. CIT(A) does not warrant any interference. 8. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowability of deduction u/s 35(1)(ii) in respect of alleged bogus donations to NGO’s viz. School of Human Genetics and Population Health. The Assessing Officer based on the information received from Directorate of Investigation Wing of the Income Tax Department, Kolkata had concluded that the said NGO was indulging in providing entries for bogus donations had provided only accommodations entries by charging service charges in the form of commission from the donors and paid back the said amount of donations in cash. In support of this conclusion, report of the ITA No.1860/PUN/2018 5 Directorate of Investigation Wing of the Income Tax Department, Kolkata, application made by the said organization before the Settlement Commission of Income Tax, Kolkata Benches was also filed. Despite giving opportunity, the appellant could not prove the genuineness of the alleged bogus donations. Thus, the appellant had not discharged the onus lying upon him proving the genuineness of the donations and also failed to rebut the allegation of the Assessing Officer, which clearly means that he had also participated to the fraudulent activity committed by the said organization i.e. NGO’s viz. School of Human Genetics and Population Health. Thus, the doctrine of fraud can be squarely invoked to the facts of the present case. Accordingly, the ratio of the decisions placed by the ld. AR have no application to the facts of the present case, inasmuch as, those cases were decided on the premises that there was no allegation that amount of donation was paid back in cash to the donors and also there was no allegation that the NGO was engaged in the fraudulent activities. Since, we held that the doctrine of fraud is applicable to the facts of the present case, even the principles of natural justice have no application, therefore, we uphold the orders of the lower authorities and dismiss the ground of appeal filed by the assessee. ITA No.1860/PUN/2018 6 9. In the result, the appeal filed by the assessee stands dismissed. Order pronounced on this 31 st day of January, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 31 st January, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-5, Pune. 4. The Pr. CIT-4, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.