Hiren Girish Davey , CHENNAI v. ACIT Non Corporate Circle 4(1) , CHENNAI

ITA 2063/CHNY/2017 | 2013-2014
Pronouncement Date: 21-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 206321714 RSA 2017
Assessee PAN AAFPD3984R
Bench Chennai
Appeal Number ITA 2063/CHNY/2017
Duration Of Justice 2 month(s) 28 day(s)
Appellant Hiren Girish Davey , CHENNAI
Respondent ACIT Non Corporate Circle 4(1) , CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 21-11-2017
Assessment Year 2013-2014
Appeal Filed On 24-08-2017
Judgment Text
C/ SMC IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH CHENNAI . BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER I.T.A.NO.2063 /MDS./2017 ( ASSESSMENT YEAR : 2013-14 ) MR.HIREN GIRISH DAVEY 14 KESAVA IYER STREET PARK TOWN CHENNAI 600 003. VS. THE ACIT NON-CORPORATE CIRCLE 4(1) CHENNAI-34. PAN AAFPD 3984 R ( / APPELLANT ) ( / RESPONDENT ) I.T.A.NO.2064 /MDS./2017 ( ASSESSMENT YEAR : 2014-15 ) MR.HIMANSHU GIRISH DAVEY 14 KESAVA IYER STREET PARK TOWN CHENNAI 600 003. VS. THE ACIT NON-CORPORATE CIRCLE 4(1) CHENNAI-34. PAN AABPD 0269 K ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.A.S.SRIRAMAN ADVOCATE / RESPONDENT BY : MR.B.SAGADEVAN JCIT D.R ! ' / DATE OF HEARING : 09.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 21.11.2017 / O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THESE TWO APPEALS OF DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME- TAX (APPEALS)-V ITA NOS. 2063 & 2064/MDS/2017 2 CHENNAI IN ITA NO.104/CIT(A)-5/2016-17 AND ITA NO.1 05/CIT(A)-5/2016- 17 DATED 11.08.2017 PERTAINING TO ASSESSMENT YEAR S 2013-14 & 2014-15 RESPECTIVELY. SINCE GROUNDS RAISED IN THESE TWO DIFF ERENT ASSESSEES APPEALS ARE COMMON IN NATURE THESE APPEALS ARE CLU BBED TOGETHER HEARD TOGETHER DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROU NDS FOR ADJUDICATION. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING THE A PPELLANTS CLAIM OF DEDUCTION UNDER SECTION 35(1)(II) ON THE DONATION M ADE TO A SCIENTIFIC RESEARCH ASSOCIATION. 2. THE APPELLANT SUBMITS THAT IT HAS PAID A DONATIO N OF RS. 2 50 000(FOR A.Y 2013-14) & RS.8 00 000/- (FOR A.Y.2014-15) TO M/S H ERBICURE HEALTHCARE BI-HERBAL RESEARCH FOUNDATION KOLKATTA WHICH IS AN APPROVED SCIENTIFIC RESEARCH ASSOCIATION DULY APPROVED BY THE CENTRAL B OARD OF DIRECT TAXES U./S 35(1)(II) BY CHEQUE DULY SUPPORTED BY THE CERT IFICATE ISSUED BY THE INSTITUTION AND HAS SATISFIED ALL THE CONDITIONS LA ID DOWN IN SECTION 35(1 )(II) FOR ITS CLAIM OF WEIGHTED DEDUCTION U/S 35(1) (II). 3. THE ASSESSING OFFICER DENIED THE EXEMPTION BASED ON THE ALLEGED INSPECTION REPORT CONDUCTED IN THE HANDS OF THE INS TITUTION TO DENY THE EXEMPTION IN THE HANDS OF THE DONOR WHICH IS CONTRA RY TO THE PROVISIONS OF THE ACT. 4. THE APPELLANT SUBMITS THAT ALL THE ALLEGED ENQUI RIES CONDUCTED BY THE DEPARTMENT WERE BEHIND THE BACK OF THE APPELLANT AN D THE APPELLANT WAS NOT PROVIDED WITH ANY SPECIFIC DOCUMENT OR MATERIAL TO SUGGEST THAT THE ITA NOS. 2063 & 2064/MDS/2017 3 DONATION MADE BY IT WAS BOGUS AND THUS THE ENTIRE A SSESSMENT IS DEVOID OF MERIT AND WITHOUT AFFORDING REASONABLE OPPORTUNI TY AND FAIR PLAY. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO CONSIDER THE EXPLANATION TO SECTION 35(1)(II) WHICH CLEARLY STIPU LATES THAT THE DEDUCTION TO WHICH AN ASSESSEE IS ENTITLED IN RESPECT OF ANY SUM PAID TO A RESEARCH ASSOCIATION SHALL NOT BE DENIED MERELY ON THE GROUN D THAT SUBSEQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESSEE THE APPROV AL OF SUCH ASSOCIATION HAS BEEN WITHDRAWN. 6. THE APPELLANT SUBMITS THAT IT IS NOT EVEN THE CA SE OF THE DEPARTMENT THAT THE APPROVAL OF THE SCIENTIFIC ASSOCIATION TO WHICH DONATION WAS MADE BY THE APPELLANT WAS WITHDRAWN SUBSEQUENTLY AND EVEN I F IT IS SO THE DEDUCTION CLAIMED BY THE APPELLANT CANNOT BE DENIED AT ALL. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT DID NOT FURNISH ANY MATERIAL TO ESTAB LISH THAT THE INSTITUTION WAS APPROVED AND WAS SPECIFIED IN THE NOTIFICATION WHEN THE APPROVAL OF THE CBDT APPROVING THE INSTITUTION AS A SCIENTIFIC ASSOCIATION U/S 35(1)(II) WAS SUBMITTED BEFORE HIM. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) 3 ERRED IN HOLDING THAT THERE WAS NO EVIDENCE PRODUCED BY THE APPELLANTS TH AT IT HAD REQUESTED THE ASSESSING OFFICER TO PROVIDE AN OPPORTUNITY TO CROSS EXAMINE THE DONOR. IT IS WELL SETTLED RULE OF TAXATION THAT WHE N AN EVIDENCE IS RELIED ON AGAINST THE ASSESSEE IT IS THE BOUNDEN DUTY OF THE ASSESSING OFFICER TO PROVIDE SUCH EVIDENCE TO THE ASSESSEE FOR REBUTTAL WITHOUT ANY REQUEST BY THE ASSESSEE. IN FACT ACCORDING TO THE ASSESSEME NT ORDER THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY WITH THE TRUST AND RELIED ONLY ON THE INFORMATION RECEIVED FROM SOME SOURCE WHICH IS NOT ACCEPTABLE AS PER DELHI HIGH COURT JUDGEMENT IN THE CASE OF PRINI CIPAL COMMISSIONER OF ITA NOS. 2063 & 2064/MDS/2017 4 INCOME TAX V RMG POLYVINYL (I) LTD S MURLIDHAR AND MS PRATIBA M SINGH (2017) 83 TAXMANN 348(DELHI) 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ALSO ERRED IN HOLDING THAT THE APPELLANT DID NOT FILE ANY CONFIRMATION FR OM THE DONEE . THE RECEIPT ISSUED BY THE INSTITUTION ACKNOWLEDGING THE RECEIPT OF THE DONATION THROUGH BANKING CHANNEL WOULD ITSELF TANTA MOUNT TO CONFIRMATION OF THE RECEIPT OF THE DONATION. 10. THE APPELLANT SUBMITS THAT THE COMMISSIONER OF LNCOME-TAX(APPEALS) DISMISSED THE APPEAL ON IRRELEVANT GROUNDS AND THE DEDUCTION CLAIMED BY THE APPELLANT UNDER SECTION 35(1)(II) IS FULLY SUPP ORTED WITH ALL DOCUMENTS REQUIRED TO CLAIM THE DEDUCTION. 11. THE APPELLANT THEREFORE PRAYS THAT THE HONBLE INCOME-TAX APPELLATE TRIBUNAL MAY BE PLEASED TO GRANT WEIGHTED DEDUCTION U/S 35(1)(II) OF THE ACT ON THE DONATION MADE TO M/S HERBICURE BIO-HERBA L RESEARCH FOUNDATION AND RENDER JUSTICE. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORD IT IS NOTICED THAT SIMILAR ISSUE CAME FOR CONSIDERA TION BEFORE THIS TRIBUNAL IN THE CASE OF M/S.HIREN PHARMA & SURGICALS IN I.T.A.NO.2007 / MDS./2017 FOR ASSESSMENT YEAR : 2013-14 VIDE O RDER DATED 07.11.2017 HELD AS UNDER:- 4. BEFORE US AT THE OUTSET THE LD.A.R ARGUED THA T NO OPPORTUNITY OF CROSS EXAMINATION OF THIRD PARTIES HAS BEEN GIVE N TO THE ASSESSEE AND THE ASSESSEE WAS NOT PROVIDED WITH ANY SPECIFIC DOC UMENT OR MATERIAL TO SUGGEST THAT THE DONATIONS MADE BY IT FOR BOGUS AND JUST ENTIRE ITA NOS. 2063 & 2064/MDS/2017 5 ASSESSMENT TO BE SCRAPPED. ADMITTEDLY IN THIS CAS E THE AO RELIED THE FOLLOWING DOCUMENTS WHILE FRAMING THE ASSESSEE. SL. NO. NAME & DETAILS OF THE PERSONS WHOSE STATEMENT WAS RECORDED & DATE RELEVANT NO . OF THE QUESTIONS AND ANSWERS REMARKS 1 MR.SWAPAN RAJAN DAS GUPTA DT.27.1.15. FOUNDER DIRECTOR AND OVERALL CONTROL AND SUPERVISION OF THE FOUNDATION WHICH ACCEPTS THE DONATION ANSWERS TO QUESTION NO.22 & 23 HE ADMITTED TO HAVING RECEIVED DONATION INCHEQUES FROM VARIOUS PERSONS INCLUDING YOURSELF AND THEREAFTER RETURNING THE AMOUNT IN CASH THROUGH VARIOUS INTERMEDIARIES. THE MODUS OPERANDI OF VARIOUS TRANSACTIONS WAS ALSO DISCUSSED. HE ALSO ACCEPTED THAT THE ENTIRE ACCOMMODATION ENTRIES OF BOGUS DONATIONS WERE FACILITATED BY MR.KISHAN BHAWA SINGKA WHO IN TURN HAD CHARGED COMMISSION TO THE EXTENT 5 TO 8% FOR FACILITATING THE SAID ACCOMMODATION ENTIRES. 2 MR.SANKAR KUMAR KHETAN OF KOLKATA- ENTRY OPERATOR STATEMENT RECORDED ON 16.5.15 ANSWERS TO Q.NO. 12 13 14 17 HAS DEPOSED THAT HE WAS CLOSE TO MR.DAS GUPTA DIRECTOR-HHBRF AND USED TO TAKE CHEQUES FROM HHBRF AND RETURN BACK THE SAME AMOUNT IN CASH FOR COMMISSION @ .08%. THESE SUMS RECEIVED INCHEQUE WERE LATER PASSED ON FOR ANOTHER ACCOMMODATION ENTRY TO BENEFIT PEOPLE WHO WANTED SHARE CAPITAL LTGG UNSECURED LOAN ETC. THUS HE GOT COMMISSION FROM TWO ITA NOS. 2063 & 2064/MDS/2017 6 PARTIES VIZ. THE FOUNDATION AS WELL AS BENEFICIARIES WHO HAVE TAKEN BOGUS. 3 MR.KISHAN BHAWA SINGKA OF KOLKATA BROKER CUM OPERATOR STATEMENT RECORDED ON 17.04.2015 ANSWERS TO QUESTION NO.7 10 11 DEPSOSED THAT HE USED TO WORK DIRECTLYUNDER MR.SWAPAN RANJAN DAS GUPTA FOUNDER DIRECTOR HHBRF AND THAT HIS MAIN SORUCE OF INCOME WAS FROM ARRANGING ACCOMMODATION ENTRY/JAMAKHARCHIWORK RAISING BOGUS BILLS FOR VARIOUS BENEFICIARIES/PARTIES. EVIDENCE OF MORE THAN RS.40 CRORE BILLING UNDER HIS NAME WAS FOUND FROM THE DATA BACKUP OF HHBRF. 4 MR.MAHESH KUMAR SINGHANIA ENTRY OPERATOR/BOGUS BILLER STATEMENT RECORDED ON 29.05.2015 ANSWERS TO Q.NO. 14 15 1 6 17 18 WHEN CONFRONTED WITH THE VARIOUS EVIDENCES HE HAS DEPOSED UNDER OATH ALL THE TRANSACTIONS MADE BYHIS PROPRIETORSHIP CONCERNS AND THE NAME AND STYLE SWANTANA SYNDICATE SUPREME TRADERS SREEMA ENTERPRISE MAHESH SINGHANIA WITH HHBRF ARE BOGUS TRANSACTION MADE FOR PROVIDING ACCOMMODATION ENTRIES WITH THE HELP OF PEOPLE LIKE SANJAYBAJORIA A WELL KNOWN MARKET BROKER FOR ACCOMMODATION ENTRY AND JAMAKHARACHIWORKS. HE ALSO CONFIRMED THAT HE WAS ASSISTED BY HIS SON IN LAW SHRI JITENDRA SINGH WAS A DUMMYPROPRIETOR OF MANNAT TRADERS HE ALSO ITA NOS. 2063 & 2064/MDS/2017 7 EXPLAINED MODUS OPERANDI ALSO. 5 MR.RAMA KANTH PANSARI DIRECTOR OF M.S.SHREE SHYAM IN ORGANICS PVT LTD. BOGUS BILLER STATEMENT RECORDED ON 23.2.15 ANSWERS TO Q.NO. 14 ACCEPTED THAT HE HAS CREATED BOGUS SUPPLY TO HHBRF WITHOUT ANY PHYSICAL DELIVERY OF CHEMICALS. SINCE NO CHEMICALS WERE ACTUALLY PURCHASED BY HHBRF THERE WAS NO RESEARCH CARRIED ON BY IT. 6 MR.KAILASH KUMAR RUNGTA BOGUS BILLER STATEMENT RECORDED ON 17.8.15 ANSWERS TO Q.NO..6 10 13 14 1 5 16 17 20 HE DEPOSED THAT THROUGH THE SEVEN COMPANIES HE CONTROLLED HE HAD PROVIDED BOGUS BILLS IN VIEW OF COMMISSION TO HHBRF. HE HAD EXPLAINED IN DETAILS THE MODUS OPERANDI HAS TO HOW THE SUMS RECEIVED BY RTGS/CHEQUE FROM HHBRF WERE LAYER AND ACCOMMODATION ENTIRES WERE PROVIDED AND PARALLYAND BOGUS BILLS WERE ISSUED TO HHBRF 7 MR.ANAND KRISHNA MAITIN PAST DIRECTOR OF HHBRF ANSWERS TO Q.NO.10 12 13 HE HAD DEPOSED THAT HE RESIGNED FROM HHBRF AS ITS DIRECTOR ON ACCOUNT OF UNETHICAL PRACTICES CARRIED BY ON HHBRF AND MOVEMENT OF SUSPICIOUS FUNDS. HE CATEGORICALLY ADMITTED THAT HHBRF WAS TAKING DONATIONS IN VIEW OF COMMISSION AND ROUTED BACK THE MONEY TO THE DONORS. 8 MR.KALIPADI BHATTACHARYA AUDITOR OF HHBRF STATEMENT RECORDED ON DT 24.2.15 ANSWERS TO Q.NO.16 17 HAS DEPOSED THAT HE HAD NEVER TAKEN ANY INDEPENDENT THIRD PARTY CONFIRMATION MOST OF THE AUDIT WAS DONE FROM THE BANK STATEMENT ITSELF WITHOUT ANY VERIFICATION FOR ITA NOS. 2063 & 2064/MDS/2017 8 GENUINENESS OF THE TRANSACTIONS AS SUCH AS NOT AUDITED V AS REQUIRED BY HIS AS AN AUDITOR. 9 SHRI DEBANJAN MUKHOPADYAY EMPLOYEE OF HHBRF STATEMENT RECORDED ON 27.1.15 ANSWERS TO Q.NO.9 12 HE DEPOSED THAT BOOKS OF ACCOUNTS WERE NOT MAINTAINED AT THE REGISTERED OFFICE PREMISES BY HHBRF 10 SMT.SUJATA GHOSH DASTIDAR DIRECTOR HHBRF STATEMENT RECORDED ON 27.1.15 ANSWERS TO Q.NO.16 18 HE HAS CATEGORICALLY ADMITTED THAT SHE HAD SIGNED THE PAPERS AND DOCUMENTS AS ITS DIRECTOR BASED ON THE DIRECTIONS OF SHRI SWAPAN RANJAN DAS GUPTA THE FOUNDER DIRECTOR. SHE WAS ALSO AWARE THAT THE DONATIONS FROM VARIOUS PARTIES WERE RETURN BACK TO THEM WITH THE HELP OF BROKERS THROUGH PAPER COMPANIES. 11 SMT.SHAHNAZ ALI EMPLOYEE OF HHBRF STATEMENT RECORDED ON 27.1.15 ANSWERS TO Q.NO.11& 12 HAD ADMITTED THE BOOKS OF ACCOUNTS WERE NOT MAINTAINED BY HHBRF 12 SHRI VIKASH BAJPAYEE EMPLOYEE OF THE OFFICE OF SHRI MANOJ KOTHARY & CO. STATEMENT RECORDED ON ANSWERS TO Q.NO.5 HE DEPOSED THAT HE DOES NOT KNOW ANYTHING ABOUT HHBRF BUT MAINTAINED ENTRIES OF HHBRF IN TALLY SOFTWARE AS INSTRUCTED BY MR.MANOJ KOTHARY WITHOUT ANY SUPPORTING EVIDENCES. ITA NOS. 2063 & 2064/MDS/2017 9 27.1.15 WHENEVER THE AO PLACED RELIANCE ON THE ABOVE DOCUME NTS AND WHEN HE HAS TAKEN ADVERSE VIEW ON THE BASIS OF SUCH STATEMENT O F THIRD PARTY THE PERSON AFFECTED SHOULD BE AFFORDED A REASONABLE OPPORTUNIT Y OF CROSS EXAMINATION IF REQUESTED FOR. IT WAS NOT AT ALL OFFERED TO THE ASS ESSEE. I THEREFORE BY PLACING RELIANCE ON THE JUDGEMENT OF THE SUPREME COURT IN T HE CASE OF KISHINCHAND CHELLARAM VS. CIT IN [1980] 125 ITR 713 (SC) AND AL SO THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. SMC SHARE BROKERS L TD. IN [2007] 288 ITR 345 (DEL) WHEREIN HELD THAT THE LD. ASSESSING OFFIC ER CANNOT TAKE AN ADVERSE VIEW ON THE BASIS OF THE STATEMENT OF THE THIRD PAR TIES. IF THE STATEMENT OF THE THIRD PARTIES ARE DISCARDED OR IGNORED WHILE CONSID ERING THE EVIDENCES ON RECORD THERE IS NO OTHER MATERIAL BEFORE THE AO TO TAKE AN ADVERSE VIEW. FURTHER THIS VIEW IS FORTIFIED BY THE JUDGEMENT OF DELHI HIGH CO URT IN THE CASE OF CIT VS. ARUN MALHOTRA IN [2014] 363 ITR 195 (DEL). BEING S O IT IS AN APPROPRIATE TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMIN E THE PARTIES WHOSE STATEMENTS ARE RELIED UPON WHICH ARE NOT PROVIDED IN THIS CASE IN HAND. ACCORDINGLY THE ISSUE IS REMITTED TO THE FILE OF L D. ASSESSING OFFICER TO GIVE AN OPPORTUNITY OF CROSS EXAMINATION AND TO DECIDE THER EUPON. SINCE I HAVE REMITTED THE ISSUE TO THE FILE OF LD. ASSESSING OFF ICER FOR PROVIDING AN OPPORTUNITY TO CROSS EXAMINATION OF THE PARTIES WHOSE STATEMEN TS ARE RELIED UPON I REFRAIN FROM GOING INTO OTHER GROUNDS RAISED BY THE ASSESSE E . 3.1 IN VIEW OF THE ABOVE ORDER OF TRIBUNAL I AM IN CLINED TO REMIT THE ISSUE RAISED IN BOTH THE ABOVE APPEALS TO THE FILE OF LD. ASSESSING OFFICER ON THE SAME DIRECTION. ITA NOS. 2063 & 2064/MDS/2017 10 4 IN THE RESULT BOTH THE APPEALS OF THE ABOVE CIT ED TWO ASSESSEES IN THE TITLE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 21 ST NOVEMBER 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI DATED THE 21 ST NOVEMBER 2017 . K S SUNDARAM. ' ( )!*+ +%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF