M C Dalal & Co, CHENNAI V. DCIT, NCC-5, CHENNAI

ITA 583/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2061 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABIJIT RAKSHIT
• Assessee Lawyers: D ANAND
• Keywords: Principle of natural justice; Wrong claim; Accommodation entries

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , ! . , ! ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.583/CHNY/2019 /ASSESSMENT YEAR: 2013-14 M/S.M.C.DALAL & CO., C/O.PASS ASSOCIATES, UNIT NO.208, 2 ND FLOOR, BETA WING, RAHEJA TOWERS, NO.113-134, ANNA SALAI, CHENNAI-600 002. [PAN: AAFFM 0790 G] VS. THE DY. COMMISSIONER- OF INCOME TAX, NON-CORPORATE CIRCLE-5, CHENNAI. ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.D.ANAND, ADV. *+) , /RESPONDENT BY : MR.ABIJIT RAKSHIT, JCIT , /DATE OF HEARING : 19.06.2019 , /DATE OF PRONOUNCEMENT : 19.06.2019 / 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)-5, CHENNAI, IN ITA NO.411/CIT(A)- 5/2017-18 DATED 28.12.2018 FOR THE AY 2013-14. 2. SHRI ABIJIT RAKSHIT, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND SHRI D.ANAND, ADV., REPRESENTED ON BEHALF OF THE AS SESSEE. ITA NO.583/CHNY/2019 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE MAIN ISSU E IN THE APPEAL OF THE ASSESSEE WAS THAT THE OBJECTIONS OF THE ASSESSE E IN RESPECT OF THE RE- OPENING OF THE ASSESSMENT HAD NOT BEEN DISPOSED OFF BY THE AO. IT WAS A FURTHER SUBMISSION THAT THE AO HAS NOT GIVEN THE DE TAILS OF THE STATEMENT RECORDED FROM VARIOUS PERSONS WHILE DISALLOWING THE ASSESSEES CLAIM U/S.35(1)(II) OF THE ACT . IT WAS A SUBMISSION THA T AS THE OBJECTIONS OF THE ASSESSEE HAVE NOT BEEN DISPOSED OFF BEFORE PROCEEDI NG WITH THE RE- ASSESSMENT, THE RE-ASSESSMENT IS LIABLE TO BE QUASH ED. 4. IN REPLY, THE LD.DR SUBMITTED THAT HE HAD NO OBJ ECTION IF THE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE AO F OR RE-ADJUDICATION AND DISPOSING THE ASSESSEES OBJECTIONS IN RESPECT OF T HE RE-OPENING. IT WAS A FURTHER SUBMISSION THAT ON MERITS IN RESPECT OF THE CLAIM U/S.35(1)(II) OF THE ACT IN RESPECT OF THE DONATION GIVEN TO M/S.HER BICURE HEALTHCARE BIO HERBAL RESEARCH FOUNDATION (HHBHR), KOLKATTA, THE ISSUE WAS NOW SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.MEGATRENDS INC., IN ITA NOS.417 & 740/CHNY/2017 ON 05.03.2018 WHEREIN, IN PARA NO.11, IT HAS BEEN HELD AS FOLLOWS: 11. COMING TO THE ISSUE OF THE DONATIONS IN RESPEC T OF WHICH, THE ASSESSEE HAS CLAIMED WEIGHTED DEDUCTION U/S.35(1)(II) OF THE ACT , IT IS NOTICED THAT THE AO HAS DISBELIEVED THE DONATIONS ON THE BASIS OF STATEMENT RECORDED FROM ONE 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 TH E BASIS OF SURVEY REPORT. IT IS NOTICED 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 DONATION MUCH BEFORE THE ASSESSE E HAS PROVED THE ITA NO.583/CHNY/2019 :- 3 -: GENUINENESS OF THE DONATION. WHEN AN ASSESSEE STEP S FORWARD TO GIVE DONATIONS OF RS.1.25 CRS, RS.25.00 LAKHS, RS.1.45 CRS. RESPEC TIVELY, THE ASSESSEE WOULD HAVE ADEQUATE REASONS TO GIVE SUCH DONATIONS. HERE , IT IS NOTICED THAT THE ASSESSEE HAS NOT BEEN GIVEN ANY OPPORTUNITY TO PROV E THE GENUINENESS BUT THE ASSESSMENT HAS BEEN MADE BASED ON THE EVIDENCES COL LECTED BY THE REVENUE IN THE COURSE OF THE SURVEY CONDUCTED ON THE RESPECTIV E ORGANIZATIONS. THIS IS NOT PERMISSIBLE. THIS BEING SO, IN THE INTEREST OF NAT URAL JUSTICE, THE ISSUE OF THE GENUINENESS OF THE DONATIONS ARE RESTORED TO THE FI LE OF THE AO FOR RE-ADJUDICATION. THE AO MUST KEEP IN MIND THAT THE ONUS OF PROVING T HE DONATIONS ARE ACTUALLY DONATIONS AND NOT ACCOMMODATION ENTRIES AND THAT TH E SAID ORGANIZATIONS WERE ELIGIBLE FOR CLAIMING DEDUCTION U/S.35(1)(II) OF TH E ACT 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 RECIPIENT S OF THE DONATION FOR EXAMINATION ALONG WITH THE EVIDENCES TO PROVE THE R ECEIPT OF THE DONATION. THE INTERNAL COMMUNICATIONS OF THE REVENUE ARE EVIDENCE S FOR DRAWING AN OPINION ON POSSIBLE WRONG CLAIMS BUT THEY ARE NOT THE FINAL EV IDENCE. THIS BEING SO, THE ISSUE OF THE DONATION IN THESE APPEALS ARE RESTORED TO TH E FILE OF THE AO FOR RE- ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE O PPORTUNITY TO PROVE THE GENUINENESS OF THE DONATION. IT WAS A SUBMISSION THAT THE ISSUES IN THIS APPEAL MAY BE RESTORED TO THE FILE OF THE AO FOR GRANTING THE ASSESSEE ADE QUATE OPPORTUNITY TO PROVE THE GENUINENESS OF THE DONATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. ADMITTEDLY, A PERUSAL OF THE ASSESSMENT ORDER CL EARLY SHOWS THAT THE ASSESSEES OBJECTIONS IN RESPECT OF THE RE-OPEN ING HAVE NOT BEEN DISPOSED OFF BY THE AO. THIS BEING SO, IN THE INTE REST OF NATURAL JUSTICE, THE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE AO FOR RE- ADJUDICATION. WHEN RE-ADJUDICATING THE ISSUES, TH E AO SHALL FIRST DISPOSE OFF THE OBJECTIONS RAISED BY THE ASSESSEE IN RESPEC T OF THE RE-OPENING. THE AO SHALL ALSO KEEP IN MIND THAT THE DECISION OF THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. MEGATRENDS INC., ITA NO.583/CHNY/2019 :- 4 -: REFERRED TO SUPRA, IF HE PROPOSES TO GO INTO THE ME RITS IN RESPECT OF THE RE- ASSESSMENT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 19 TH DAY OF JUNE, 2019, IN CHENNAI. SD/- SD/- ( . ) ( S. JAYARAMAN ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 19 TH JUNE, 2019. TLN , *45 65 /COPY TO: 1. ) /APPELLANT 4. 7 /CIT 2. *+) /RESPONDENT 5. 5 * /DR 3. 7 ( ) /CIT(A) 6. /GF