HEMRAJ CHOUDHARI,CHENNAI vs. ACIT, CHENNAI

आदेश /O R D E R आदेश आदेश आदेश PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-2, Chennai dated 03.03.2016 and pertains to the assessment year 2011-12.

2.0 The assessee has raised the following grounds of appeal and challenged the order of the Commissioner of Income Tax (Appeals):

:-2-: ITA No.1311/Mds/2016

1) The order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case and is opposed to the principles of equity, natural justice and fair play. 2) The learned Commissioner of Income Tax (Appeals) ought to have considered that the appellant has provided all the necessary proof to establish that he has genuinely given the payment to the society and it is practically not possible to travel with the money given. 3) The learned Commissioner of Income Tax (Appeals) ought to have considered that the additional evidence of letter to the bank to confirm that his payment has reached the society bank. The bank has only written that this account is under investigation by EOW, CID, West Bengal. But it is not clear about what is the crime for which such investigation is on? 4) The learned Commissioner of Income Tax (Appeals) ought to have considered that by acknowledging the society as real, he has to allow the deduction unless he clearly establishes the miscreants to the appellant or that money came back to the appellant beyond the doubt. 5) The learned Commissioner of Income Tax (Appeals) ought not to have considered the remand report which merely joins the link till a convenient point and there after without establishing it till the appellant, merely states that “Due to paucity of time, the details of same could not be called for”. [para 1 line 11 of page 6 of CIT [A] order] 6) The learned Commissioner of Income Tax (Appeals) ought to have considered that the Society and President of the Society has some internal problems and they have blamed officials of bank and others but none is directed against the appellant. It is unfortunate that appellant has dealt with such Wrong Society. 7) The learned Commissioner of Income Tax (Appeals) ought to have considered that Five such donations were made during the year and the intention of the assessee is benevolent only. Only when fact is perceived with Pre-conceived notion, that it gives absurd results. 8) The appellant objects to the levy of interest u/s.234 A,B,C.

3.0 All the grounds of appeal are related to the disallowance of weighted deduction claimed by the assessee under Section 35(1)(ii) of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has made the donation of Rs.15.00 lakhs to ‘Society for Welfare of the Handicapped Persons, Durgapur’ (hereinafter referred to as ‘Society’), along with other donations made to the various Charitable Institutions and claimed deduction under Section 80G and Section 35(1)(ii) of the Act. The amount of deduction claimed by the assessee towards the donation of Rs.15.00 lakhs under Section 35(1)(ii) relating to Society for Welfare of Handicapped Persons was Rs.26,25,000/- at the rate of 175% of the donation. During the course of assessment proceedings, the Assessing Officer called for the information and also recorded statement under :-3-: ITA No.1311/Mds/2016 Section 131 of the Act from the assessee. In the statement recorded under Section 131 of the Act, the assessee could not furnish the details except stating that the donation was paid by cheque and the payment was made by his elder brother who was no more. The Assessing Officer has called for confirmation from the President of the Society and the recipient has denied the receipt of donation vide letter dated 08.10.2013.

When this information was confronted with the assessee, the assessee could not offer satisfactory explanation to the Assessing Officer.

Therefore, the Assessing Officer treated the donation as non-genuine transaction and disallowed the same.

4.0 Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the CIT (Appeals) and the Ld.CIT (Appeals) remanded the matter back to the Assessing Officer. In the Remand Report, the Assessing Officer stated that it was informed by the DDIT, Investigation Wing, Chennai, that along with the assessee many others have been engaged in fraudulent transactions using forged documents in the name of the Society and using the bank account, for which Society for Welfare of the Handicapped Persons has no connection. It was also informed by the President of the Society that the fraud is managed with the collusion of the officials belonging to Axis Bank Ltd. of Prince Anwar Shah Road Branch, Kolkata. On perusal of the bank statement, it reveals that the deposit amount in the name of the Society for Welfare of Handicapped Persons was utilized by M/s.JP Foundations. As per the report of the :-4-: ITA No.1311/Mds/2016 Assessing Officer, the transaction of Rs.15.00 lakhs donation to the Society for Welfare of Handicapped Persons has transferred to the JP Foundations and it was concluded by the Assessing Officer that the transaction was a bogus transaction.

5.0 The Ld. CIT (Appeals), based on the Remand Report submitted by the Assessing Officer and as per the information received from the President of the Society, held that the transaction is a fraudulent transaction which was under investigated by the EOW, CID, West Bengal.

These facts were confronted with the assessee and the assessee could not offer any factual evidence before the CIT(A) or the AO. The Ld. CIT(Appeals), accordingly, confirmed the Order of the Assessing Officer.

6.0 Appearing for the assessee, the Ld. AR argued that the transaction of donation to the Society for Welfare of Handicapped Persons was handled by his elder brother who was no more. The assessee was not aware of the transactions. Therefore, he could not submit the information requested by the Assessing Officer as well as the Ld. CIT (Appeals).

Though, the assessee has written letter to the President of the Society, he could not receive reply from the Society. Further the Ld. AR submitted that the amount was given by crossed cheque in the name of the Society and the assessee was not aware of the development of fraudulent action in the name of JK Foundations or non-reaching of the donations to the Society genuinely. Therefore, he requested one more opportunity to :-5-: ITA No.1311/Mds/2016 remit the case before the CIT (Appeals) as a final chance to prove the genuineness of the donation.

7.0 On the other hand, the Ld. DR vehemently opposed to remit back the matter to the file of the CIT (Appeals) and argued that it is a fit case for confirming the addition.

8.0 We heard the rival submissions and perused the material placed on record.

The Assessing Officer has made all possible efforts and concluded that the transaction was a bogus transaction and the Assessing Officer also has made a cash trial and found that the donation has reached to M/s. JP Foundations instead of crediting it in Society for Welfare of Handicapped Persons. The finding of the investigation was confronted by the CIT (Appeals) as well as the Assessing Officer with the assessee.

However, the Ld. AR claimed before us that the transaction was handled by his elder brother who was no more and he was not aware of the transactions. Therefore, the AR requested for giving one more opportunity to make effort to furnish the necessary evidence and requested to remit back the matter to the file of the Ld. CIT (Appeals).

Since, it was stated by the assessee that the matter was handled by his elder brother who passed away subsequently, we hold that an opportunity should be given to the assessee to prove his case before the Ld.CIT (Appeals) in the interest of justice. Accordingly, the orders of the :-6-: ITA No.1311/Mds/2016 Ld.CIT(A) is set-aside and issue is remitted back to the file of the CIT(A) with directions to allow fresh evidence, if any, and decide the matter afresh on merits.

10.0 In the result, the appeal of the assessee is allowed for statistical purpose.