Lakshman Bhandari, CHENNAI V. DCIT Corporate Circle 5(2), CHENNAI

ITA 681/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4982 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 26-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries; Revised return
• Section: 5(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.681/CHNY/2018 / ASSESSMENT YEAR : 2014-2015. LAKSHMAN BHANDARI, 73, M.G. ROAD, NUNGAMBAKKAM, CHENNAI 600 034. [ PAN AAJPB 1222A ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(2) CHENNAI 600 034. ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. M. KARUNAKARAN, ADVOCATE /RESPONDENT BY : SHRI. CLEMENT RAMESH KUMAR, JCIT. /DATE OF HEARING : 26-07-2018 ! /DATE OF PRONOUNCEMENT : 01-08-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS D IRECTED AGAINST AN ORDER DATED 13.12.2017 OF COMMISSION ER OF INCOME-TAX (APPEALS)-4, CHENNAI, IT HAS ALTOGETHER RAISED TEN GROUNDS, OF WHICH GROUNDS 1 TO 3 ASSAIL REOPENING OF ASSESSMENT DONE FOR THE IMPUGNED ASSESSMENT YEAR, WHEREAS GROUNDS 4 TO 10 ASSAIL AN ADDITION MADE ON A COMMISSION OF A7,50,000/- ALLEGED TO HAVE BEEN PAID FOR A DONATION OF A75,00,000/- MADE BY THE ASSESSEE TO ONE M/S.HER BICURE ITA NO.681/2018 :- 2 -: HEALTHCARE BIO HERBAL RESEARCH FOUNDATION (HEREINAF TER REFERRED TO HHBRF). 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESS EE HAD FILED RETURN FOR THE IMPUGNED ASSESSMENT YEAR ORIGI NALLY ON 26.09.2014 ADMITTING INCOME OF A22,65,320/-. AS PER THE LD. AU THORISED REPRESENTATIVE IN SUCH RETURN, ASSESSEE HAD CLAIME D WEIGHTED DEDUCTION OF 175% ON A DONATION OF A75,00,000/- MA DE TO HHBRF, UNDER SECTION 35(1) (II) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT). THEREAFTER ACCORDING TO THE LD.AR, ASSESSEE HAD REVISED THIS RETURN ON 28.12.2015 WITHDRAWING THE CLAIM OF WE IGHTED DEDUCTION OF A1,31,25,000/-. AS PER THE LD. AUTHORISED REPRE SENTATIVE THE ASSESSMENT WAS COMPLETED ON 18.05.2016 ACCEPTING T HE INCOME RETURNED AS PER THE REVISED RETURN. HOWEVER, AS PE R THE LD. AUTHORISED REPRESENTATIVE, THROUGH A NOTICE U/S.148 OF THE ACT S ISSUED ON 12.08.2016, LD. ASSESSING OFFICER SOUGHT REOPENING OF ASSESSMENT. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, SU CH REOPENING WAS FOR THE PURPOSE OF ADDING AN ALLEGED COMMISSION OF A7,50,000/- ON THE DONATION OF A75,00,000/- TO HHBRF. AS PER THE LD. AUTHORISED REPRESENTATIVE, DESPITE ASSESSEE POINTING OUT THAT IT HAD WITHDRAWN THE CLAIM FOR WEIGHTED DEDUCTION ON SUCH DONATION, LD. ASSESSING OFFICER COMPLETED THE REASSESSMENT MAKING AN ADDIT ION OF A7,50,000/-. ACCORDING TO THE LD. AUTHORISED REPRE SENTATIVE, LD. ITA NO.681/2018 :- 3 -: ASSESSING OFFICER TOOK A VIEW THAT ASSESSEE HAD I NCURRED COMMISSION EXPENDITURE OF A7,50,000/- FOR OBTAINING THE ACCOMM ODATION ENTRIES FOR CLAIMING DEDUCTION U/S.35(1)(II ) OF THE ACT T HROUGH THE DONATION OF A75,00,000/- TO HHBRF. 3. CONTINUING HIS SUBMISSION, LD. AUTHORISED REPRESENT ATIVE SUBMITTED THAT ASSESSEE FILED AN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), POINTING OUT THAT THE ADDITI ON OF A7,50,000/- WAS MADE PURELY ON ESTIMATION, BASED ON A STATEMENT FROM ONE SHRI. SWAPAN RANJAN DAS GUPTA, WHO WAS THE FOUNDER DIREC TOR OF HHBRF. ACCORDING TO HIM, DESPITE POINTING OUT THE REPLY OF SHRI. SWAPAN RANJAN DAS GUPTA, WHICH CLEARLY MENTIONED THAT WHAT WAS GIVEN BACK BY HHBRF WAS ONLY THE NET AMOUNT AFTER DEDUCTION OF ITS COMMISSION, LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION MADE BY THE LD. ASSESSING OFFICER. CONTENTION OF T HE LD. AUTHORISED REPRESENTATIVE, WAS THAT ASSESSEE HAVING WITHDRAWN THE CLAIM OF WEIGHTAGE DEDUCTION, THERE WAS NO QUESTION OF ANY FURTHER ADDITION. 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT ASSESSEE HAD WITHDRAWN THE CLAIM OF WEIGHTED DEDUCTION U/S.35(1 ) (II) OF THE ACT ITA NO.681/2018 :- 4 -: THROUGH A REVISED RETURN. OR IN OTHER WORDS, ASSES SEE HAD NOT INSISTED ON WEIGHTED DEDUCTION OF A1,31,25,000/- FOR THE DON ATION OF A75,00,000/- TO M/S. HHBRF. ASSESSMENT WAS COMPLET ED BASED ON THE REVISED RETURN FILED BY THE ASSESSEE. QUESTION OF ANY ADDITION FOR COMMISSION PAID ON THE DONATION AGAINST WHICH THE WEIGHTED DEDUCTION WAS ORIGINALLY CLAIMED, IN OUR OPINION BE COMES IRRELEVANT, ONCE SUCH DEDUCTION WAS WITHDRAWN BY THE ASSESSEE, THROUGH A REVISED RETURN WHICH WAS ACCEPTED BY THE REVENUE. THAT APART, WE FIND THAT SHRI. SWAPAN RANJAN DAS GUPTA IN ANSWER 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 DONATION ON COMMISSION? PLEASE STATE WHAT AR E THE C OMISSION CHARGED 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. KISHAN BHAWASINGKA AS TO BOGUS DONATION ENTRY IS NEEDED BY A PARTICULAR PARTY. SOMETIMES WE COME TO KNOW ABOUT T HE ACCOMMODATION ENTRY BEING GIVEN TO A PARTY WHEN WE DIRECTLY RECEIVE COMMUNICATION FROM THE CONCERNED 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 ITA NO.681/2018 :- 5 -: ACCOUNT OF BOGUS PURCHASES/EXPENSE ON THE ADVICE OF MR. KISHAN BHAWASINGKA. 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 COMMISS ION CHARGED BY US AND BROKER AMOUNT MR. KISHAN BHAWASIN GKA) IS GIVEN BACK TO THE ORIGINAL BENEFICIARY WHO GAVE DON ATION TO US. SOMETIMES, THE AMOUNT IS WITHDRAWN AT 3 RD OR 4 TH LEVEL AND CASH IS GIVEN BACK TO THE ORIGINAL BENEFICIARY (AFTER DE DUCTING THE CUT OF COMMISSION CHARGED BY US AND BROKER MR. KISHAN BHAWASINGKA) WHO GAVE DONATION TO US. IN THE ENTIRE PROCESS OF PROVIDING ENTRY IN THE FOR M OF BOGUS DONATION TO DIFFERENT BENEFICIARY COMPANIES/INDIVID UALS A COMMISSION OF 5% APPROX IS CHARGED BY US WHICH IS T HE ACTUAL DONATION WE RECEIVED FROM THAT PARTICULAR DONE IN R EALITY. THE COMMISSION OF ALMOST 5 TO 8% IS CHARGED BY MR. KISH AN BHAWASINGKA FOR FACILITATING THE SAID ACCOMMODATION ENTRY. SUBSEQUENTLY, A SANCTION LETTER IS RECEIVED FROM TH E DONOR REFLECTING THE AMOUNT OF DONATION AND MODE OF PAYME NT. THE PARTICULARS ARE THEN VERIFIED WITH THE AMOUNT CREDI TED IN OUR BANK ACCOUNTS AFTER WHICH AN EXEMPTION U/S.35(1) (I I) 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 A7,50,000/- IS THEREFORE DELETED. GROUN DS 4 TO 10 ARE ALLOWED. 6. THOUGH GROUNDS TAKEN BY THE ASSESSEE INCLUDE GROUN DS ASSAILING THE REOPENING DONE FOR THE IMPUGNED ASSES SMENT YEAR, THERE ITA NO.681/2018 :- 6 -: WERE NO ARGUMENTS ADVANCED BY THE LD. AUTHORISED RE PRESENTATIVE ON SUCH GROUNDS. HENCE GROUNDS 1 TO 3 ARE DISMISSED A S NOT PRESSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 1 ST DAY OF AUGUST, 2018, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 1 ST AUGUST, 2018 KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF