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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER:
This is an appeal filed by the assessee against the Order of the Commissioner of Income Tax (Appeals)-4, Chennai, in 18/A.Y.2012-13/C.I.T(A)-4, dated23.08.2018 for the AY 2012-13.
Mr.S.Sunil Kumar Jain represented on behalf of the Assessee and Mr. R.clement Ramesh Kumar represented on behalf of the Revenue.
The ld.AR submitted that the appeal of assessee is delayed by 11 days for which assessee has filed affidavit wherein assessee has mentioned that the delay in filing of the appeal is on account of its Auditor being busy in filing the returns and by oversight, Auditor had not filed the appeal within the due date. The Revenue has not raised any serious objections to condone the appeal filed belatedly. The reasons given for delay have also not been found to be false. This being so, the delay in filing of the appeal is condoned and appeal is disposed of on merits.
The ld.AR submitted that the assessee is a partnership firm, which is engaged in the business of Real Estate Developers. It was a submission that when the original return was filed, the assessee had claimed deduction u/s.35(1)(ii) of the Act in respect of two donations being an amount of Rs.15/- lakhs paid to M/s.Herbicure Healthcare Bio Herbal Research Foundation, Kolkta ( in short ‘M/s.HHBHRF” ) and Rs.15/- lakhs paid to M/s. Community Rural Orient Service Society (in short ‘M/s.CROSS ). In the course of assessment proceedings originally done, the assessee had withdrawn the claim of deduction u/s.35(1)(ii) of the Act, and the assessment came to be completed u/s.143(3) of the Act on 13.03.2015. It was a submission that subsequently a notice u/s.148 of the Act came to be issued for the purpose of bringing to tax the alleged possible commission paid by the assessee to the brokers for the donations paid to M/s.HHBHRF and M/s.CROSS. It was a submission that the assessee had claimed donation of only Rs.30/- lakhs and had made claim of donation u/s.35(1)(ii) of the Act to an extent of Rs.52.5 lakhs. In the course of original assessment, the assessee has withdrawn the said claim.
The assessee had not made any claim for any expenditure in the form of commission or brokerage in respect of donations paid Rs.30/- lakhs, being an amount of Rs.15/- lakhs paid to ‘M/s.HHBHRF” and Rs.15/- lakhs paid to ‘M/s.CROSS”. It was a submission that on pure presumptions, Assessing Officer had on the basis of statement of records from the persons associated with M/s.HHBHRF and M/s.CROSS, the Assessing Officer had made a further disallowance of Rs.1.5 lakhs in respect of M/s.HHBHRF and Rs.15,000/- in respect of M/s.CROSS as commission payments. It was a submission that as the assessee has not made any claim for commission expenditure, there is no room for making disallowance. It was a further submission that the issue was squarely covered by the decision of Co-ordinate Bench of this Tribunal in the case of Lakshman Bhandari, in assessment year 2014-15 vide order dated 01.08.2018 wherein the Co-ordinate Bench of this Tribunal has held that:-
“5. We have considered the rival contentions and perused the orders of the authorities below. It is not disputed that assessee had withdrawn the claim of weighted deduction u/s.35(1) (ii) of the Act through a revised return. Or in other words, assessee had not insisted on weighted deduction
₹ ₹ of 1,31,25,000/ - for the donation of 75,00,000/ - to M/s. HHBRF. Assessment was completed 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 becomes 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 accommodation entries were provided by HHBRF through donations, had answered as under:-
‘’Please explain in detail the modus operandi of giving the accommodation entries by way of accepting donations to different beneficiaries . Also state who is the / are the broker / brokers (while giving his mobile no. and address) through which you have given accommodation entries in the form of bogus donation on commission? Please state what are the c omission charged by you and broker concerned for providing accommodation entries to different beneficiaries. Ans. The entire accommodation entries of bogus donations are facilitated by Mr. Kishan Bhawasingka having his mobile 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 the 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, payment is made to any of the paper / bogus companies on account of bogus purchases/expense on the advice of Mr. Kishan Bhawasingka. The remaining transaction is also managed on paper by him only which happens companies in 2 to 3 layers. Finally, cheque of the donation amount (after deducting the cut of commission charged by us and broker amount Mr. Kishan Bhawasingka) is given back to the original beneficiary who gave donation to us. Sometimes, the amount is withdrawn at 3rd or 4th level and cash is given back to the original beneficiary (after deducting 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 form of bogus donation to different beneficiary companies/individuals a commission of 5% approx is charged by us which is the actual donation we received from that particular done in reality. The commission of almost 5 to 8% is charged by Mr. Kishan Bhawasingka for facilitating the said accommodation entry.
Subsequently, a sanction letter is received from the donor reflecting the amount of donation and mode of payment. The particulars are then verified with the amount credited in our bank accounts after which an exemption u/s.35(1) (ii) 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 Ranjan Das Gupta that the amounts returned were after deducting commission. Thus, once assessee itself withdrew the claim of weighted deduction 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 7,50,000/ - is therefore deleted. Grounds 4 to 10 are allowed.”
In reply, the ld.DR vehemently supported the order of Assessing Officer and the order of the ld. CIT(A).
We have heard the rival contentions and perused the material available on record. Admittedly, the assessee has not made any claim in respect of any commission paid in respect of donations to M/s.HHBHRF and M/s.CROSS. No evidence has also been brought to substantiate show that assessee has incurred any expenditure towards commission. This being so, respectfully following the decision of Co-ordinate Bench of this Tribunal in the case of Lakshman Bhandari referred to supra, the additions made by the Assessing Officer and confirmed by the ld.CIT(A) stand deleted.
In the result, the appeal of assessee is allowed.
Order pronounced on the 22nd day of July, 2019 in Chennai.