Rasi Electrodes Ltd, Chennai V. DCIT, Corp Cir 5(2), Chennai

ITA 396/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1854 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 15-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS D ROHINI
• Assessee Lawyers: R PADMANABHAN
• Keywords: Principle of natural justice; Wrong claim; Accommodation entries

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , . , & BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.395 & 396/CHNY/2019 /ASSESSMENT YEARS: 2012-13 & 2013-14 M/S.RASI ELECTRODES LTD., NO.21, RAJA ANNAMALAI ROAD, RAMS APARTMENTS, FLAT NO.A-14, 3 RD FLOOR, CHENNAI-600 084. [PAN: AAACR 4682 G] VS. THE DY. COMMISSIONER- OF INCOME TAX, CORPORATE CIRCLE-5(2), CHENNAI. ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.R.PADMANABHAN, CA )*( + /RESPONDENT BY : MRS.D.ROHINI, JCIT + /DATE OF HEARING : 17.06.2019 + /DATE OF PRONOUNCEMENT : 17.06.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, CHENNAI, IN ITA NO.134/2016- 17/A-3 DATED 12.12.2018 FOR THE AY 2012-13 AND IN I TA NO.135/2016- 17/A-3 DATED 12.12.2018 FOR THE AY 2013-14. 2. MRS.D.ROHINI, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND R.PADMANABHAN, CA, REPRESENTED ON BEHALF OF THE ASS ESSEE. ITA NOS.395 & 396/CHNY/2019 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ONLY ISSU E IN THE TWO APPEALS WAS AGAINST THE ACTION OF THE LD.CIT(A) IN CONFIRMI NG THE DISALLOWANCE U/S.35(1)(II) OF THE ACT IN RESPECT OF DONATIONS MA DE TO HUMAN GENETICS AND POPULATION HEALTH, KOLKATA, FOR THE AY 2012-13. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUES IN THESE APPEAL A RE SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF M/S.MEGATRENDS INC., CHENNAI VS. ACIT, CHENNAI IN I TA NOS.417 & 740/CHNY/2017 VIDE ORDER DATED 05.03.2018, WHEREIN, THE ISSUE HAS BEEN HELD WITH THE FOLLOWING DIRECTIONS: 11. COMING TO THE ISSUE OF THE DONATIONS IN RESPECT OF WHICH, THE ASSESSEE HAS CLAIMED WEIGHTED DEDUCTION U/S.35(1)(II) OF THE ACT, IT IS NO TICED THAT THE AO HAS DISBELIEVED THE DONATIONS ON THE BASIS OF STATEMENT RECORDED FROM O NE MR.SWAPAN RANJAN DAS GUPTA, ONE OF THE MAJOR SHAREHOLDERS OF HHBHRF AND ON ACCOUNT OF A LETTER FROM CROSS AND IN RESPECT OF M/S.SHGPH ON THE BASIS OF SURVEY REPORT. IT IS N OTICED THAT THE ONUS OF PROVING THE GENUINENESS OF THE DONATION RESTS ON THE ASSESSEE. HOWEVER, THE AO HAS TAKEN UP HIMSELF THE ONUS TO DISPROVE THE GENUINENESS OF THE DONATIO N MUCH BEFORE THE ASSESSEE HAS PROVED THE GENUINENESS OF THE DONATION. WHEN AN ASSESSEE STEPS FORWARD TO GIVE DONATIONS OF RS.1.25 CRS, RS.25.00 LAKHS, RS.1.45 CRS. RESPECTIV ELY, THE ASSESSEE WOULD HAVE ADEQUATE REASONS TO GIVE SUCH DONATIONS. HERE, IT IS NOTICE D THAT THE ASSESSEE HAS NOT BEEN GIVEN ANY OPPORTUNITY TO PROVE THE GENUINENESS BUT THE AS SESSMENT HAS BEEN MADE BASED ON THE EVIDENCES COLLECTED BY THE REVENUE IN THE COURSE OF THE SURVEY CONDUCTED ON THE RESPECTIVE ORGANIZATIONS. THIS IS NOT PERMISSIBLE. THIS BEIN G SO, IN THE INTEREST OF NATURAL JUSTICE, THE ISSUE OF THE GENUINENESS OF THE DONATIONS ARE RESTO RED TO THE FILE OF THE AO FOR RE- ADJUDICATION. THE AO MUST KEEP IN MIND THAT THE ONU S OF PROVING THE DONATIONS ARE ACTUALLY DONATIONS AND NOT ACCOMMODATION ENTRIES AN D THAT THE SAID ORGANIZATIONS WERE ELIGIBLE FOR CLAIMING DEDUCTION U/S.35(1)(II) OF THE A CT RESTS ON THE ASSESSEE. IF THE AO DOES HAVE ANY EVIDENCE TO THE CONTRARY, IT IS TO BE PUT TO THE ASSESSEE FOR HIS REBUTTAL. THE ASSESSEE SHALL PRODUCE THE RECIPIENTS OF THE DONATI ON FOR EXAMINATION ALONG WITH THE EVIDENCES TO PROVE THE RECEIPT OF THE DONATION. TH E INTERNAL COMMUNICATIONS OF THE REVENUE ARE EVIDENCES FOR DRAWING AN OPINION ON POS SIBLE WRONG CLAIMS BUT THEY ARE NOT THE FINAL EVIDENCE. THIS BEING SO, THE ISSUE OF TH E DONATION IN THESE APPEALS ARE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTI NG THE ASSESSEE ADEQUATE OPPORTUNITY TO PROVE THE GENUINENESS OF THE DONATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 5. CONSIDERING THE SUBMISSIONS, AS IT IS NOTICED TH AT THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION TO LET THE ASSESSEE HAVE THE OPPORTUNITY TO PROVE THE TRANSACTIONS ON IDENTI CAL DIRECTIONS AS GIVEN ITA NOS.395 & 396/CHNY/2019 :- 3 -: IN THE CASE OF M/S.MEGATRENDS INC., CHENNAI VS. ACI T, CHENNAI, REFERRED TO SUPRA, THE ISSUES IN THESE APPEALS ARE RESTORED TO THE FILE OF THE AO FOR RE- ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE O PPORTUNITY TO PROVE THE GENUINENESS OF THE DONATIONS. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 17 TH DAY OF JUNE, 2019, IN CHENNAI. SD/- SD/- ( . ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED: 17 TH JUNE, 2019. TLN + )34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 ) /DR 3. 6 ( ) /CIT(A) 6. /GF