Bansilal Bagri, CHENNAI V. DCIT Non Corporate Circle, CHENNAI

ITA 860/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4269 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 12-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N VIJAY KUMAR
• Keywords: Accommodation entries; Sham transactions
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.859 & 860/CHNY/2018 ' (' / ASSESSMENT YEARS : 2012-13 & 2013-14 SHRI BANSILAL BAGRI, 6B, WADDLES ROAD, KILPAUK, CHENNAI - 600 010. PAN : AACPB 6561 B V. THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 10(1), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI N. VIJAY KUMAR, CA ,-*+ . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 01.05.2019 2!( . 1$ / DATE OF PRONOUNCEMENT : 10.05.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 12, CHENNAI, DATED 28.12.2017 AND PERTAIN TO ASSESS MENT YEARS 2012-13 AND 2013-14. SINCE COMMON ISSUES ARISE FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THESE A PPEALS TOGETHER AND DISPOSING THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.859 & 860/CHNY/18 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF 1,44,556/- UNDER SECTION 37 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI N. VIJAY KUMAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE MET WITH AN ACCIDENT AN D SUFFERING HEAD INJURY FOR THE LAST SEVERAL YEARS. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE IS CARRYING OUT HIS BU SINESS THROUGH SALES COMMISSION AGENTS FOR PROCURING ORDERS AND OT HER BUSINESS RELATED ACTIVITIES. THE ASSESSEE PAID COMMISSION T O VARIOUS AGENTS WHO RENDERED SERVICE FOR PROCURING ORDERS, COLLECTI ON, ETC. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER DISALLOWED THE ENTIRE PAYMENTS. IN RESPECT OF THE ASSESSEES SON SHRI NAVNEET BAGDI, THE ASSESSEE HAS PAID A SUM OF 2,89,112/-. THE ASSESSING OFFICER, HOWEVER, DISALLOWED THE ENTI RE PAYMENT. ON APPEAL BY THE ASSESSEE, ACCORDING TO THE LD. REPRES ENTATIVE, THE CIT(APPEALS) RESTRICTED THE DISALLOWANCE TO 50%, I. E. 1,44,556/-. ACCORDING TO THE LD. REPRESENTATIVE, THE RATE OF CO MMISSION PAID TO OTHER AGENTS, WHICH WAS ALLOWED BY THE CIT(APPEALS) IS ON PAR WITH THE COMMISSION PAID TO THE ASSESSEES SON. ACCORDI NG TO THE LD. 3 I.T.A. NOS.859 & 860/CHNY/18 REPRESENTATIVE, WHEN THE CIT(APPEALS) HAS NOT DISAL LOWED ANY PAYMENT WITH REGARD TO OTHER COMMISSION AGENTS, MER ELY BECAUSE ONE OF THE AGENTS WAS THE SON OF THE ASSESSEE, THER E CANNOT BE ANY DISALLOWANCE. 4. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE CIT (APPEALS) ALLOWED THE COMMISSION IN RESPECT OF OTHER PERSONS EXCEPT THE ASSESSEES SON SHRI NAVNEET BAGDI. ACCORDING TO TH E LD. D.R., THE CIT(APPEALS) ALLOWED 50% OF THE COMMISSION TO BE PA ID IN THE CASE OF ASSESSEES SON, THEREFORE, THERE MAY NOT BE ANY GRIEVANCE FOR THE ASSESSEE. 5. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASSE SSEE AND THE LD. D.R., THIS TRIBUNAL FINDS THAT WHEN THE RAT E OF COMMISSION PAID TO OTHER AGENTS WAS ON PAR WITH THE RATE PAID TO THE ASSESSEES SON, MERELY BECAUSE SHRI NAVNEET BAGDI APPEARS TO B E THE ASSESSEES SON, THE CIT(APPEALS) IS NOT JUSTIFIED I N RESTRICTING THE PAYMENT TO 50%. MOREOVER, IT IS NOT THE CASE OF TH E REVENUE THAT SHRI NAVNEET BAGDI HAS NOT RENDERED ANY SERVICE. I N THOSE CIRCUMSTANCES, THE CIT(APPEALS) OUGHT TO HAVE ALLOW ED THE CLAIM OF 4 I.T.A. NOS.859 & 860/CHNY/18 THE ASSESSEE IN TOTO. THEREFORE, THE ORDER OF THE CIT(APPEALS) IN RESPECT OF COMMISSION PAYMENT TO SHRI NAVNEET BAGDI IS MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE ENTIRE PAYMENT OF 2,89,112/-. 6. NOW COMING TO THE DISALLOWANCE OF 3,50,000/- UNDER SECTION 35(1)(II) OF THE ACT. 7. SHRI N. VIJAY KUMAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE MADE DONATIONS TO THE I NSTITUTIONS THROUGH BANKING CHANNEL. THEREFORE, ACCORDING TO T HE LD. REPRESENTATIVE, THE CIT(APPEALS) IS NOT JUSTIFIED I N DISALLOWING THE DONATIONS UNDER SECTION 35(1)(II) OF THE ACT. 8. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS MADE DONATION TO ON E HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION OF KOLKAT A. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT I T IS A BOGUS TRANSACTION AND THE ACCOMMODATION ENTRY WAS COMPLET ELY CONTROLLED AND MANAGED BY ONE SHRI KISHAN BHAWASINGKA. THE BO GUS ENTRY WITH REGARD TO DONATION WAS MADE FOR GETTING COMMIS SION OF 5%. ACCORDING TO THE LD. D.R., THE ASSESSEE-FIRM KNOWS VERY WELL THE 5 I.T.A. NOS.859 & 860/CHNY/18 ACTIVITIES OF THE TRUST. THE LD. D.R. FURTHER SUBM ITTED THAT THE DONATIONS WERE MADE IN A SYSTEMATIC MANNER BY TRANS FERRING THE FUNDS THROUGH BANKING CHANNEL TO THE BOGUS PARTIES. ACCORDING TO THE LD. D.R., BOTH THE PARTIES TO THE TRANSACTION G AVE COLOUR OF GENUINENESS IN THE BOOKS OF ACCOUNT. AFTER SEVERAL TRANSFERS, THE ASSESSEE WOULD GET THE AMOUNT AFTER REDUCING THE CO MMISSION CHARGES. AFTER EXPLAINING THE ENTIRE TRANSACTION, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS INVOLVED IN SHAM TRANSACTIONS OF GETTING ACCOMMODATION ENTRIES UNDER THE GARB OF DONATIONS, THEREFORE, HE CONFIRMED THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER. 9. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASSE SSEE AND THE LD. D.R., THIS TRIBUNAL FINDS THAT THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. THE VERY FACT THAT THE TRANSACTIO N ULTIMATELY ENDED IN REFUNDING THE MONEY TO THE ASSESSEE THROUGH BANK ING CHANNEL AFTER REDUCING THE COMMISSION TO THE EXTENT OF 5% S HOWS THAT THE MONEY HAS COME BACK TO THE ASSESSEE. THIS IS THE T RANSACTION ARRANGED IN SUCH A WAY THAT THE ACCOMMODATION ENTRI ES WERE MADE AT SEVERAL ENTITIES LEVEL AND ULTIMATELY THE MONEY CAME BACK TO THE ASSESSEE. HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION 6 I.T.A. NOS.859 & 860/CHNY/18 OF KOLKATA INVOLVED IN THE FRAUDULENT AND SHAM TRAN SACTIONS, PROVIDING ACCOMMODATION ENTRIES AND CLAIMING BOGUS WEIGHTED DEDUCTION TO THE EXTENT OF 175%. THE ANTECEDENTS O F THE RECIPIENT WERE UNEARTHED BY THE DEPARTMENT DURING THE COURSE OF SURVEY OPERATION. THE MATERIAL AVAILABLE ON RECORD CLEARL Y ESTABLISHES THAT THE SO-CALLED DONATION ULTIMATELY RECEIVED BACK BY THE ASSESSEE AFTER REDUCING THE COMMISSION. THEREFORE, THE CIT( APPEALS) IN A VERY REASONED ORDER FOUND THAT THE ASSESSEE INVOLVE D IN THE SHAM TRANSACTION UNDER THE GARB OF DONATION. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2019 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 10 TH MAY, 2019. 7 I.T.A. NOS.859 & 860/CHNY/18 KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.