Sadhana Foundation, V. DCIT Circle-9,

ITA 1875/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8516 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-06-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 14-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VENKATESWARLU
• Assessee Lawyers: MRS INDRA BANSAL
• Keywords: Opportunity of being heard; Additional evidence; Set aside
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE HON'BLE SENIOR VICE PRESIDENT, SHRI R.P. GAR G AND HON'BLE JUDICIAL MEMBER, SHRI RAJPAL YADAV ITA NO.1875/DEL./2008 (ASSESSMENT YEAR : 2002-03) M/S. SADHANA FOUNDATION, VS. DCIT, CENTRAL CIRCLE 9, A-41, MOHAN COOPERATIVE INDL. ESTATE, NEW DELHI. BADARPUR, NEW DELHI 110 044. (PAN : AAOFS6179A) (APPELLANT) (RESPONDENT) ASSESSEE BY : MRS. INDRA BANSAL, CA REVENUE BY : SHRI S. VENKATESWARLU, CIT DR O R D E R GARG, SENIOR VP : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (APPEALS) FOR ASSESSMENT YEAR 2002 -03. THE ONLY DISPUTE IN THIS APPEAL IS AGAINST THE ADDITION OF RS.2,94,00,0 00/- BEING DONATION RECEIVED BY THE ASSESSEE TRUST FROM FOUR PARTIES, DETAILS OF WHICH ARE AS UNDER : S.NO. NAME OF THE COMPANY/INDIVIDUAL AMOUNT (RS.) 1. SHRI VINAY RAI 12, AURNAGZEB LANE, NEW DELHI 5,00,000/- 2. GORDON HERBERT (INDIA) LIMITED 94, MAHATAMA GANDHI ROAD, LUCKNOW. 89,00,000/- 3. KOSHIKA TELECOM LIMITED B-309, IIIRD FLOOR, ANSAL CHAMBER-1, 3, BHIKAJI CAMA PLACE, NEW DELHI. 1,00,00,000/- 4. INFORMATION TECHNOLOGIES (INDIA) LIMITED SHANKAR VIHAR COLONY, HARDOOI ROAD, LUCKNOW. 1,00,00,000/- 2,94,00,000/- 2 ITA NO.1875/DEL./2008 2. THE ASSESSING OFFICER WAS OF THE OPINION THAT TH ESE COMPANIES WERE BOGUS FRONT COMPANIES OF USHA GROUP CONTROLLED BY V INAY RAI WHO WERE INVOLVED IN TRANSFER OF FUNDS FROM ONE ENTITY TO AN OTHER. SOME OF THE DONORS WERE PRODUCED BEFORE THE ASSESSING OFFICER BUT THEY DID NOT CARRY THE IDENTITY PAPERS NOR BOOKS OF ACCOUNT, HENCE NOT TAKEN THE CO GNIZANCE OF. THE ASSESSING OFFICER ALSO NOTICED THAT THEY HAVE NOT F ILED THE TAX RETURNS AS WELL. ACCORDINGLY, HE TREATED THE DONATION AS INCOME OF T HE ASSESSEE. 3. BEFORE THE CIT (APPEALS), THE ASSESSEE SUBMITTED THAT ALL THE DONATIONS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES, DETAILS OF WHICH WERE GIVEN TO THE ASSESSING OFFICER; THAT CONFIRMATION CERTIFICATES W ERE FILED WITH CHEQUE NUMBER AND AMOUNTS, INCOME-TAX PARTICULARS OF THE D ONORS; THAT COPIES OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS ON 31.3. 2002 OF THE DONORS WERE FILED; AND THAT THE DONORS WERE PRODUCED UNDER SECT ION 131 WITH ACCOUNT BOOKS AND THEIR STATEMENTS WERE RECORDED. BEFORE T HE CIT (APPEALS), AFFIDAVITS WERE ALSO FILED WHICH WERE NOT ADMITTED BEING ADDITIONAL EVIDENCE CONTAINING MATERIAL, WHICH WERE NOT FILED BEFORE TH E ASSESSING OFFICER. THE CIT (APPEALS) CONFIRMED THE ADDITION BY OBSERVING A S UNDER : 2.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR AND HAVE PERUSED THE MATERIAL ON RECORD. IT HAS BEEN C LAIMED THAT THE DONATIONS FROM THESE PARTIES WERE RECEIVED BY ACCOU NT PAYEE CHEQUES. SIMPLY BECAUSE THE AMOUNTS WERE RECEIVED BY CHEQUE AND THE PARTIES ARE ASSESSED TO CHEQUE DOES NOT EST ABLISH THE 3 ITA NO.1875/DEL./2008 GENUINENESS OF THE DONATIONS CLAIMED TO HAVE BEEN R ECEIVED FROM THEM. AS REGARDS THE PRODUCTION OF THE REPRESENTAT IVES/DIRECTORS OF THREE PARTIES BEFORE THE AO IN RESPONSE TO SUMMO NS U/S 131, I HAVE PERUSED THE STATEMENTS OF THESE PERSONS RECORD ED BY THE AO ON 24.3.05. SH. M.N. CHOUDHARY, DIRECTOR OF INFORM ATION TECHNOLOGIES INDIA LTD. IN HIS STATEMENT HAD NO KNO WLEDGE ABOUT FILING OF INCOME-TAX RETURN OF THE COMPANY AFTER AS STT. YEAR 1995-96. HE STATED THAT HE HAD JOINED THE COMPANY W.E.F. 16.6.03 AND THE EARLIER ASPECT WAS NOT KNOW TO HIM. HE FURTHER STATED THAT ALL THE RECORDS OF THE COMPANY WERE LYI NG IN THE REGISTERED OFFICE AT LUCKNOW. HE ALSO STATED THAT HE WAS NOT AWARE OF THE TAXATION MATTERS AND REGARDING FILING OF THE RETURNS OF INCOME FOR WHICH HE WILL HAVE TO CONSULT THE AUD ITORS. HE ALSO COULD NOT PRODUCE ANY EVIDENCE TO SUPPORT THAT HE W AS THE DIRECTOR OR PRINCIPAL OFFICER OF THE COMPANY. THE RECORDS ALSO SHOW THAT NO BOOKS OF ACCOUNT OR OTHER IDENTIFICATI ON PAPERS WERE PRODUCED BEFORE THE AO. SIMILAR IS THE POSITION IN RESPECT OF SH. SANJAY GUPTA WHO APPEARED BEFORE THE AO AS A DIRECT OR OF M/S KOSHIKA TELECOM LTD. AND INFORMATION TECHNOLOGIES I NDIA LTD. SH. DINESH GUPTA WHO APPEARED ON BEHALF OF M/S GORD ON HERBERT (INDIA) LTD. STATED HIMSELF TO BE AN ACCOUN TANT IN SCHOOL OF MANAGEMENT AND SCIENCE AT 12/1, MATHURA ROAD, FA RIDABAD. HE ALSO DID NOT HAVE ANY POWER OF ATTORNEY OR OTHER EVIDENCE AUTHORIZING HIM TO APPEAR BEFORE THE AO ON BEHALF O F THE COMPANY. IN FACT, HE HAD NO LOCUS STANDI AT ALL TO APPEAR BEFORE THE AO. AS REGARDS AFFIDAVITS OF THESE THREE PERSO NS FILED DURING THE COURSE OF APPELLATE PROCEEDINGS, THESE AFFIDAVI TS NOT ONLY STATE THAT THESE PERSONS APPEARED BEFORE THE AO BUT THEY ARE STATING SO MANY OTHER FACTS WHICH WERE NOT STATED B Y THEM DURING THE COURSE OF THEIR DEPOSITION BEFORE THE AO ON 24. 3.05. THEREFORE, THESE AFFIDAVITS ARE ADDITIONAL EVIDENCE AND NONE OF THE CONDITIONS OF RULE 46A IS SATISFIED FOR ADMISSI ON OF ADDITIONAL EVIDENCE. THEREFORE, THESE AFFIDAVITS ARE NOT ADMI TTED AS ADDITIONAL EVIDENCE. FURTHER, NO COMMENTS HAVE BEE N OFFERED WITH REGARD TO THE OBSERVATIONS OF THE AO WHEREIN I T IS STATED THAT THE ABOVE NAMED PARTIES ALONG WITH THE ASSESSEE ARE SOME OF THE MANY COMPANIES AND FLOATED BY USHA GROUP IN ORDER T O SIPHON OFF MONEY FROM ONE PARTY TO ANOTHER THEREBY EVADING TAXES. THE AO HAS ALSO STATED THAT THESE COMPANIES ARE OBVIOUS LY BOGUS COMPANIES FLOATED TO TRANSFER FUNDS FORM ONE ENTITY TO THE OTHER. THESE FINDINGS OF THE AO ARE VERY CRUCIAL TO DECIDE THE ISSUE AND NO COMMENTS WERE OFFERED ON THE SAME. THE ISSUE RE GARDING 4 ITA NO.1875/DEL./2008 FLOATING OF BOGUS COMPANIES AND TRUSTS FOR SIPHONIN G OFF OF FUNDS HAD ALSO COME UP PROMINENTLY IN THE CASE OF M/S USH A FOUNDATION, ANOTHER TRUST OF USHA GROUP IN THE ASST T. YEAR 2001- 02 AND SIMILAR ADDITION IN RESPECT OF CORPUS DONATI ONS MADE IN THE CASE OF THAT TRUST WAS UPHELD BY CIT (A). IN T HE LIGHT OF THESE FACTS AND CIRCUMSTANCES STATED ABOVE, I AM OF THE C ONSIDERED VIEW THAT THE SUM CREDITED IN THE BOOKS OF ACCOUNT IN THE APPELLANT TRUST IN THE GARB OF CORPUS DONATIONS AMO UNTING TO RS.2,94,00,000/- DOES NOT GET PROVED AND, THEREFORE , THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS.2,94,00,000/- AN D THE SAME IS UPHELD. 4. WE HAVE HEARD THE PARTIES AND CONSIDERED THE RIV AL SUBMISSIONS. ON GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE FIND THAT REVENUE IS MORE PERSUADED TO HOLD AGAINST THE ASSESSEE BY THE FACT THAT DONATIONS WERE RECEIVED FROM USHA GROUP OF COMPANIES WHO WERE INDU LGED IN TRANSFER OF FUNDS, THEIR RETURNS WERE NOT FILED AND THE IDENTIF ICATION OF THE PERSONS WHO WERE PRODUCED WERE NOT ESTABLISHED. THIS, IN OUR O PINION, IS NOT A CORRECT APPROACH. WHATEVER MAY BE THE SITUATION WITH THE D ONOR COMPANIES IF THE FACT IS ESTABLISHED THAT THEY HAVE GIVEN THE DONATION, T HE MATTER SHOULD BE EXAMINED IN THAT CONTEXT AND IF THERE ARE CIRCUMSTA NCES ESTABLISHING TO THE CONTRARY ABOUT THE RECEIPT OF DONATIONS OR THE MONE Y HAVING GONE BACK TO THE DONORS OR SAME OTHER ATTENDING CIRCUMSTANCES. ON D IS-SATISFACTION OF THE ASSESSING OFFICER ABOUT THE IDENTITY OF THE PERSONS PRODUCED AND THAT NO RETURNS WERE FILED BY THEM AND NO ACCOUNT BOOKS WER E PRODUCED, THE AFFIDAVITS WERE FILED BEFORE THE CIT (APPEALS) WHIC H SHOULD, IN OUR OPINION, HAVE BEEN ADMITTED AND EXAMINED TO DECIDE THE MATTE R INSTEAD OF THROWING 5 ITA NO.1875/DEL./2008 THEM OUT ON THE GROUND THAT THEY WERE FRESH EVIDENC E CONTAINING CERTAIN FACTS NOT STATED BEFORE THE ASSESSING OFFICER. EVEN THOU GH THE SITUATION WARRANTED, THE AFFIDAVITS SHOULD BE ADMITTED AND EXAMINED TO T AKE A FINAL VIEW OF THE MATTER. WE ACCORDINGLY SET ASIDE THE MATTER OF CIT (APPEALS) AS WELL AS OF THE ASSESSING OFFICER AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE MATTER AFRESH AFTER AFFORDIN G AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TAKE A FINAL VIEW AFTER T AKING INTO CONSIDERATION THE MATERIAL PRODUCED BY THE ASSESSEE AND BROUGHT ON RE CORD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF JULY 2009. SD/- SD/- (RAJPAL YADAV ) (R.P. GARG) JUDICIAL MEMBER SENIOR VICE PRESIDENT DATED THE 10 TH DAY OF JULY, 2009 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), KARNAL. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.