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2017 (9) TMI 1842 - AT - Income TaxDeduction u/s 35(1)(ii) - bogus transactions of donations - survey was conducted in the premises of the above said two research organizations at Kolkata and it was found during the course of survey that transactions of donations were not genuine and it was only accommodation entry routed through banking channel - AO after reproducing the statement recorded from the respective persons, has concluded that the claim of donation more than 50% of profit was far-fetched one - whether the assessee is entitled to receive copy of statement and other material which were relied upon by the AO in the assessment order? HELD THAT:- Admittedly, AO placed reliance on the statement recorded during the course of survey operation and other material found during the course of survey operation. Principles of natural justice is one of the cordial rule to be followed in the adversary system of judicial administration. Rule of law is supreme in this country, therefore, unless it otherwise provided in the relevant statute enacted by the Legislature, the principles of natural justice cannot be taken away by means of the procedure or the formalities prescribed in the Office Manual which is meant for the internal administration of Department. In this case, even the Office Manual was not brought to the notice of the Bench even though the D.R. claims that as per Office Manual, copies need to be furnished only on request. Irrespective of the request of the assessee for the copies of statement and documents, the same shall be furnished to the assessee in case the AO intended to rely on such statement and the documents. In this case, the copies of the statement and other documents relied upon by the AO were not furnished to the assessee, therefore, there was gross violation of principles of natural justice. Authorities below are set aside and the entire issue is remitted back to the file of the AO. AO shall furnish the copies of documents and statement to the assessee and give sufficient opportunity to rebut the same, and thereafter decide the issue afresh in accordance with law. This being an accommodation entry and such type of donations are rampant from Chennai to Kolkata institutions, AO shall make a thorough investigation. AO shall also examine, if necessary, through his counterpart at Kolkata how the bank accounts are opened at Kolkata by such institutions. Whether any bank officials were involved in opening such accounts also needs to be found out so that this kind of irregularities can be put to an end at earlier stage. Appeal of the assessee is allowed for statistical purposes.
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