SRI MISHRI PROMOTORS, CHENNAI V. DCIT, CORP CIR-5(2), CHENNAI

ITA 3262/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7415 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: S SUNIL KUMAR JAINC A
• Keywords: Bogus purchase; Accommodation entries; Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , , ' BEFORE SHRI GEORGE MATHAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3262/CHNY/2018 /ASSESSMENT YEAR: 2012-13 M/S.SRI MISHRI PROMOTERS , 21/9,RAJ PARIS APARTMENT, CENOTAPH,2 ND LAND,ALWARPET, CHENNI 600 108. VS. THE DCIT, CORPORATE CIRCLE 5(2), CHENNAI. [ PAN: ABHFS 9766 R ] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.S.SUNIL KUMAR JAIN,C.A *+) , /RESPONDENT BY : MR. R.CLEMENT RAMESH KUMAR, ADDL., C.I.T D.R , /DATE OF HEARING : 22.07.2019 , /DATE OF PRONOUNCEMENT : 22.07.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, CHENNAI, IN ITA NO.15/2017- 18/A.Y.2012-13/C.I.T(A)-4, DATED23.08.2018 FOR THE AY 2012-13. ITA NO.3262/CHNY/2018 :- 2 -: 2. MR.S.SUNIL KUMAR JAIN REPRESENTED ON BEHALF OF T HE ASSESSEE AND MR. R.CLEMENT RAMESH KUMAR REPRESENTED ON BEHALF OF THE REVENUE. 3. THE LD.AR SUBMITTED THAT THE APPEAL OF ASSESSEE IS DELAYED BY 11 DAYS FOR WHICH ASSESSEE HAS FILED AFFIDAVIT WHEREIN ASSESSEE HAS MENTIONED THAT THE DELAY IN FILING OF THE APPEAL IS ON ACCOUNT OF ITS AUDITOR BEING BUSY IN FILING THE RETURNS AND BY OVERSIGHT, AUDITOR HAD NOT FILED THE APPEAL WITHIN THE DUE DATE. THE REVENUE HAS NOT RA ISED ANY SERIOUS OBJECTIONS TO CONDONE THE APPEAL FILED BELATEDLY. T HE REASONS GIVEN FOR DELAY HAVE ALSO NOT BEEN FOUND TO BE FALSE. THIS BE ING SO, THE DELAY IN FILING OF THE APPEAL IS CONDONED AND APPEAL IS DISP OSED OF ON MERITS. 4. THE LD.AR SUBMITTED THAT THE ASSESSEE IS A PART NERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPERS. IT WAS A SUBMISSION THAT WHEN THE ORIGINAL RETURN WAS FILED, THE ASSESS EE HAD CLAIMED DEDUCTION U/S.35(1)(II) OF THE ACT IN RESPECT OF TW O DONATIONS BEING AN AMOUNT OF RS.15/- LAKHS PAID TO M/S.HERBICURE HEALT HCARE BIO HERBAL RESEARCH FOUNDATION, KOLKTA ( IN SHORT M/S.HHBHRF ) AND RS.15/- LAKHS PAID TO M/S. COMMUNITY RURAL ORIENT SERVICE SOCIETY (IN SHORT M/S.CROSS ). IN THE COURSE OF ASSESSMENT PROCEEDINGS ORIGINALLY DONE, THE ASSESSEE HAD WITHDRAWN THE CLAIM OF DEDUC TION U/S.35(1)(II) OF THE ACT, AND THE ASSESSMENT CAME TO BE COMPLETED U/ S.143(3) OF THE ACT ON 13.03.2015. IT WAS A SUBMISSION THAT SUBSEQUENT LY A NOTICE U/S.148 OF THE ACT CAME TO BE ISSUED FOR THE PURPOSE OF BRINGI NG TO TAX THE ALLEGED ITA NO.3262/CHNY/2018 :- 3 -: POSSIBLE COMMISSION PAID BY THE ASSESSEE TO THE BRO KERS FOR THE DONATIONS PAID TO M/S.HHBHRF AND M/S.CROSS. IT WAS A SUBMISSI ON THAT THE ASSESSEE HAD CLAIMED DONATION OF ONLY RS.30/- LAKHS AND HAD MADE CLAIM OF DONATION U/S.35(1)(II) OF THE ACT TO AN EXTENT O F RS.52.5 LAKHS. IN THE COURSE OF ORIGINAL ASSESSMENT, THE ASSESSEE HAS WIT HDRAWN THE SAID CLAIM. THE ASSESSEE HAD NOT MADE ANY CLAIM FOR ANY EXPENDI TURE IN THE FORM OF COMMISSION OR BROKERAGE IN RESPECT OF DONATIONS PAI D RS.30/- LAKHS, BEING AN AMOUNT OF RS.15/- LAKHS PAID TO M/S.HHBHRF AN D RS.15/- LAKHS PAID TO M/S.CROSS. IT WAS A SUBMISSION THAT ON PURE P RESUMPTIONS, ASSESSING OFFICER HAD ON THE BASIS OF STATEMENT OF RECORDS FROM THE PERSONS ASSOCIATED WITH M/S.HHBHRF AND M/S.CROSS, T HE ASSESSING OFFICER HAD MADE A FURTHER DISALLOWANCE OF RS.1.5 L AKHS IN RESPECT OF M/S.HHBHRF AND RS.15,000/- IN RESPECT OF M/S.CROSS AS COMMISSION PAYMENTS. IT WAS A SUBMISSION THAT AS THE ASSESSEE HAS NOT MADE ANY CLAIM FOR COMMISSION EXPENDITURE, THERE IS NO ROOM FOR MAKING DISALLOWANCE. IT WAS A FURTHER SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF LAKSHMAN BHANDARI, IN ITA NO.681/CHNY/2018FOR AS SESSMENT YEAR 2014-15 VIDE ORDER DATED 01.08.2018 WHEREIN THE CO- ORDINATE BENCH OF THIS TRIBUNAL HAS HELD THAT:- 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT ASSESSEE HAD WITHDRAWN THE CLAIM OF WEIGHTED DEDUCTION U/S.35(1) (II) OF THE A CT THROUGH A REVISED RETURN. OR IN OTHER WORDS, ASSESSEE HAD NOT INSIST ED ON WEIGHTED DEDUCTION ITA NO.3262/CHNY/2018 :- 4 -: OF 1,31,25,000/ - FOR THE DONATION OF 75,00,000/ - TO M/S. HHBRF. ASSESSMENT WAS COMPLETED BASED ON THE REVISED RETUR N FILED BY THE ASSESSEE. QUESTION OF ANY ADDITION FOR COMMISSION PAID ON THE DONATION AGAINST WHICH THE WEIGHTED DEDUCTION WAS ORIGINALL Y CLAIMED, IN OUR OPINION BECOMES IRRELEVANT, ONCE SUCH DEDUCTION WAS WITHDR AWN BY THE ASSESSEE, THROUGH A REVISED RETURN WHICH WAS ACCEPTED BY THE REVENUE. THAT APART, WE FIND THAT SHRI. SWAPAN RANJAN DAS GUPTA IN ANSW ER TO A QUESTION REGARDING MODUS OPERANDI THROUGH WHICH ACCOMMODATIO N ENTRIES WERE PROVIDED BY HHBRF THROUGH DONATIONS, HAD ANSWERED AS UNDER:- PLEASE EXPLAIN IN DETAIL THE MODUS OPERANDI OF GI VING THE ACCOMMODATION ENTRIES BY WAY OF ACCEPTING DONATIONS TO DIFFERENT BENEFICIARIES . ALSO STATE W HO IS THE / ARE THE BROKER / BROKERS (WHILE GIVING HIS MOBILE NO. AND ADDRESS) T HROUGH WHICH YOU HAVE GIVEN ACCOMMODATION ENTRIES IN THE FORM OF BOGUS DONATIO N ON COMMISSION? PLEASE STATE WHAT ARE THE C OMISSION C HARGED BY YOU AND BROKER CONCERNED FOR PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT BENEFICIARIES. ANS . THE ENTIRE ACCOMMODATION ENTRIES OF BOGUS DONATI ONS ARE FACILITATED BY MR. KISHAN BHAWASINGKA HAVING HIS MO BILE NOS.9830087866 & 9883051515 WHO LIVES SOMEWHERE IN BHAWANIPORE NEAR NETAJI SUBHAS METRO STATION. THIS MODUS IS LIKE THIS. THIS INFORMATION IS GIVEN TO US BY MR. KISHA N BHAWASINGKA AS TO BOGUS DONATION ENTRY IS NEEDED BY A PARTICULAR PART Y. SOMETIMES WE COME TO KNOW ABOUT THE ACCOMMODATION ENTRY BEING GI VEN TO A PARTY WHEN WE DIRECTLY RECEIVE COMMUNICATION FROM THE CO NCERNED BANK THAT THE AMOUNT HAS BEEN CREDITED. THUS, THE ACCOMMODATION ENTRY IS COMPLETELY CONTROLLED AND MANAGED BY MR MR. KISHAN BHAWASINGKA. THE BOGUS DONATION ARE RECEIVED VIDE CHEQUE/ RTGS INTO ANY OF THE BANK ACCOUNTS MENTIONED BY ME IN RESPONSE TO QUESTION NO.7 OF THIS STATEMENT. AFTER THIS, PAYMEN T IS MADE TO ANY OF THE PAPER / BOGUS C OMPANIES ON ACCOUNT OF BOGUS PURCHASES/EXPENSE ON THE ADVICE OF MR. KISHAN BHAWA SINGKA. THE REMAINING TRANSACTION IS ALSO MANAGED ON PAPER BY HIM ONLY W HICH HAPPENS COMPANIES IN 2 TO 3 LAYERS. FINALLY, CHEQUE OF THE DONATION AMOUNT (AFTER DEDUCTING THE CUT OF COMMISSION CHARGED BY U S AND BROKER AMOUNT MR. KISHAN BHAWASINGKA) IS GIVEN BACK TO THE ORIGINAL BENEFICIARY WHO GAVE DONATION TO US. SOMETIMES, TH E AMOUNT IS WITHDRAWN AT 3 RD OR 4 TH LEVEL AND CASH IS GIVEN BACK TO THE ORIGINAL BENEFICIARY (AFTER DEDUCTING THE CUT OF COMMISSION CHARGED BY US AND BROKER MR. KISHAN BHAWASINGKA) WHO GAVE DONATION TO US. ITA NO.3262/CHNY/2018 :- 5 -: IN THE ENTIRE PROCESS OF PROVIDING ENTRY IN THE FOR M OF BOGUS DONATION TO DIFFERENT BENEFICIARY COMPANIES/INDIVIDUALS A CO MMISSION OF 5% APPROX IS CHARGED BY US WHICH IS THE ACTUAL DONATIO N WE RECEIVED FROM THAT PARTICULAR DONE IN REALITY. THE COMMISSI ON OF ALMOST 5 TO 8% IS CHARGED BY MR. KISHAN BHAWASINGKA FOR FACILIT ATING THE SAID ACCOMMODATION ENTRY. SUBSEQUENTLY, A SANCTION LETTER IS RECEIVED FROM TH E DONOR REFLECTING THE AMOUNT OF DONATION AND MODE OF PAYMENT. THE PA RTICULARS ARE THEN VERIFIED WITH THE AMOUNT CREDITED IN OUR BANK ACCOUNTS AFTER WHICH AN EXEMPTION U/S.35(1) (II) OF THE I.T. ACT, 1961 WHICH QUALIFIES HIM/HER TO CLAIM ONE AND THREE FOURTH OF THE SAID DONATION AS TAX EXEMPT U/S.35(1)(II) OF THE I.T. ACT, 1961. IT IS CLEAR FROM THE REPLY GIVEN BY SHRI. SWAPAN RA NJAN DAS GUPTA THAT THE AMOUNTS RETURNED WERE AFTER DEDUCTING COMMISSI ON. THUS, ONCE ASSESSEE ITSELF WITHDREW THE CLAIM OF WEIGHTED DEDU CTION IN FULL BY NECESSARY IMPLICATION THERE IS NO MORE ANY CLAIM OF PAYMENT OF COMMISSION. WHEN DONATION ITSELF IS DISBELIEVED, THE QUESTION OF FURTHER ADDITION FOR COMMISSION PAID IN OUR OPINION DOES NOT ARISE. THE ADDITION OF 7,50,000/ - IS THEREFORE DELETED. GROUNDS 4 TO 10 ARE ALLOWED. 5. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE OR DER OF ASSESSING OFFICER AND THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE HAS NOT MADE ANY CLAIM IN RESPECT OF ANY COMMISSION PAID IN RESPECT OF DONATI ONS TO M/S.HHBHRF AND M/S.CROSS. NO EVIDENCE HAS ALSO BEEN BROUGHT T O SUBSTANTIATE SHOW THAT ASSESSEE HAS INCURRED ANY EXPENDITURE TOWARDS COMMISSION. THIS BEING SO, RESPECTFULLY FOLLOWING THE DECISION OF CO -ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF LAKSHMAN BHANDARI REFERRED TO SUPRA, THE ITA NO.3262/CHNY/2018 :- 6 -: ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRM ED BY THE LD.CIT(A) STAND DELETED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON THE 22 ND DAY OF JULY, 2019 IN CHENNAI. SD/- SD/- ( ) ( INTURI RAMA RAO ) / ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 22 JULY, 2019. K S SUNDARAM , * 45 65 /COPY TO: 1. ) /APPELLANT 4. 7 /CIT 2. *+) /RESPONDENT 5. 5 * /DR 3. 7 ( ) /CIT(A) 6. /GF