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2016 (7) TMI 839 - ITAT CHENNAI

2016 (7) TMI 839 - ITAT CHENNAI - TMI - Penalty u/s 271(1)(c) - assessee donated to three charitable institutions and claimed exemption u/s 35AC - non opportunity to the assessee for cross examination - essee-company was in the process of winding up - Held that:- It needs to be clarified who is looking after the affairs of the assessee-company on day today basis at the relevant point of time. Whether Shri Balasubramanian or Shri Vijaysadarangani was looking after the affairs of the assessee-comp .....

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d Treasurer of the Trust who denied the receipt of money. This Tribunal is of the considered opinion that when the Assessing Officer examined the Secretary and Treasurer of the Trust, an opportunity shall be given to the assessee to cross examine them to find out whether actually the Trust received the money or not. It is also necessary to find out who actually opened the bank account in Axis Bank at Kolkata and operated the same. If the trustees of the so called three Trusts opened the bank acc .....

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observed earlier, the assessee was not given any opportunity to cross examine the Secretary and Treasurer of the Trust. Admittedly, as observed earlier, the Secretary and the Treasurer of the Trust were examined and the copies of the statement was not furnished to the assessee and what was available on record is only enquiry report and the letter said to be received by the Dy. Commissioner of Income Tax, Chennai, from Dy. Director of Income Tax (Investigation), Jamshedpur. In those circumstance .....

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Shri N. R. S. Ganesan, Judicial Member And Shri A. Mohan Alankamony, Accountant Member For the Appellant : Dr. Anita Sumanth, Advocate For the Respondent : Shri B. Koteswara Rao, CIT ORDER Per N. R. S. Ganesan, Judicial Member The assessee filed both the appeals against the respective orders of the Commissioner of Income-tax (Appeals) for assessment year 2008-09. I.T.A.No.1439/Mds/2014 is directed against the order of the CIT(A) confirming the assessment order. I.T.A.No.2084/ Mds/2015 is direct .....

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ugh RTGS. The amounts were in fact credited to the bank account of the Trusts to whom the money was donated. All the three trusts were approved u/s 35AC of the Act. The Assessing Officer made enquiry behind the back of the assessee and came to the conclusion that the Trusts had not received the money donated by the assessee. The Assessing Officer observed in the assessment order that the Secretary of the Trust was examined. According to the ld. Counsel, the erstwhile Secretary was examined by th .....

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y with the Department. Accordingly, the donations made to the extent of ₹ 2,25,00,000/- was not pressed before the CIT(A). The CIT(A) dismissed the issue as not pressed. 3. Subsequently, the Assessing Officer just 11 days before the expiry of limitation for initiating proceedings u/s 271(1)(c) of the Act issued show cause notice for initiating penalty proceedings against the assessee. The assessee explained before the Assessing Officer that the antecedents of the recipient donees were veri .....

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al as not pressed by the CIT(A) and found that the assessee concealed the particulars of its income and furnished inaccurate particulars. According to the ld. Counsel, merely because the assessee has not pressed the issue with regard to donation of ₹ 2,25,00,000/- before the CIT(A), that would not automatically result in levy of penalty u/s 271(1)(c) of the Act. There may be various reasons for not arguing the case on merit before the CIT(A). The ld. Counsel further submitted that the pena .....

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ational Committee u/s 35AC. The identity of the Trusts to whom the money was donated is not in dispute. The funds were, in fact, transferred through banking channels and the funds were credited in the accounts of the respective Trusts maintained with Axis Bank. Therefore, it cannot be said that the assessee has furnished inaccurate particulars of its income and hence, the CIT(A) is not justified in confirming the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act. 4. Referring to t .....

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hat the delay of 683 days in filing the appeal before this Tribunal may be condoned and the appeal of the assessee may be adjudicated on merit. 5. Now, coming to the merit of the addition, the ld. Counsel submitted that the Assessing Officer made enquiry behind the back of the assessee without giving any opportunity for cross examination. Therefore, the ld. Counsel submitted that an opportunity may be provided to the assessee for cross examination of the so called Secretary who was examined by t .....

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She clarified that she was working as Secretary since 1993 to July 2010. The Secretary clarified that the Trust had not received any big amount at any time in the past. Referring to the signature contained in Form 58A, the Secretary of the Trust clarified that the signature appearing in Form 58A is not of her. The Treasurer of the Trust was also examined. He could not confirm the receipt of donation by the Trust. The other person who was handling the affairs of the Trust also could not confirm .....

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lisiri Sangha, the ld. DR clarified that donations were given between 26.3.2008 to 31.3.2008. Referring to the modus operandi, the ld. DR clarified that fictitious bank account was opened at Kolkata in Axis Bank. In the name of the approved trust, some other persons opened the account without filing KYC (Know Your Customer) documents. Some of the officials of the Axis Bank, Kolkata, joined with some of the persons fraudulently opened the fictitious account for receiving this kind of money in the .....

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s. Since the assessee by misusing the banking channel claims that a sum of ₹ 2,25,00,000/- was donated to three Trusts, the Assessing Officer found that the assessee has furnished inaccurate particulars. Referring to the details said to be found in the website, the ld. DR submitted that the details available in the website are not authenticated one. It is for the assessee to further confirm whether the Trusts who claims to have obtained the approval from the National Committee u/s 35A are .....

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the Act which was confirmed by the CIT(A). 8. In the quantum appeal in I.T.A.No.1439/Mds/2014, the assessee has not pressed the issue of donation of ₹ 2,25,00,000/-, therefore, the CIT(A) has no occasion to consider the same on merit. The CIT(A) has simply rejected the appeal of the assessee on the ground that the issue was not pressed before him. This Tribunal is of the considered opinion that when the so called donation was routed through fictitious bank account, the CIT(A) ought to have .....

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nt by assessing the income which was omitted by the Assessing Officer, can be effectively exercised, provided the CIT(A) decides the appeal on merit. Therefore, the CIT(A) may not have the power to reject the ground as not pressed. In those circumstances, the this Tribunal is of the considered opinion that there was a reasonable cause in not filing the appeal in time. Accordingly, the delay of 683 days in filing the appeal is condoned and the appeal is admitted. 9. We have considered the rival s .....

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are genuine, the bank account to which the money was transferred does not belong to the abovesaid Trusts. We have carefully gone through the enquiry report filed by the Inspector of Income Tax, Jamshedpur, dated 24.12.2010, the copy of which is available at page 8 of the paper book. From the enquiry report, it appears that the receipt said to be issued by the Secretary of Aadivasi Mahila Vikas Samidhi does not contain the signature of the Secretary. In fact, the Secretary denied her signature in .....

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Director of Income Tax (Investigation), Jamshedpur. This communication clearly indicates that the bank account of the recipient Trust does not show the receipt of donation. The Dy. Director of Income Tax (Investigation), Jamshedpur, has reported to the Dy. Commissioner of Income Tax, Chennai, as follows: 1. M/s Adivasi Mahila Vikas Samiti (PAN: AAAAA 2945B) Phuldungri, Ghatsila, Jharkhand is a genuine concern, which has registration u/s 12AA/AA of IT Act, 1961 and files its return of income with .....

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p; payment Account of the Samiti for F.Yr 07-08 shows that it has not received any donation from M/s Mangal Tech Park Pvt. Ltd. Neither, the bank statements of the Samiti shows to have received such heavy smounts from donation. 5. Smt. Sukul Hansda, the then Secretray of M/s Adivasi Mahila Vikas Samiti denied to have received any amount as donation from M/s Mangal Tech Park Pvt. Ltd. She also denied her signature on the Receipts of money (Form No.58A) which have been sent to this office by you. .....

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bserved in the assessment order that the outcome of the enquiry was put to Shri Balasubramanian, one of the Director of the assessee-company. However, it is not known whether the said Balasubramanian is looking after the affairs of the assessee-company or not. From the materials available on record, it appears that one Shri Vijaysadarangani, filed the appeal before this Tribunal in his capacity as Director. If Shri Vijaysadarangani was looking after the day today affairs of the assessee-company, .....

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needs to be clarified who is looking after the affairs of the assessee-company on day today basis at the relevant point of time. Whether Shri Balasubramanian or Shri Vijaysadarangani was looking after the affairs of the assesseecompany at the relevant point of time. If Shri Balasubramanian was looking after the affairs of the assessee-company, then it has to be clarified whether the enquiry report filed by the Income Tax Inspector and the communication said to be received by the Dy. Commissioner .....

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her actually the Trust received the money or not. It is also necessary to find out who actually opened the bank account in Axis Bank at Kolkata and operated the same. If the trustees of the so called three Trusts opened the bank account in the name of some other persons with connivance of the officials of Axis Bank, the Assessing Officer has to find out what kind of action was taken against the Axis Bank officials and the trustees who are responsible for opening the bank account. Since these det .....

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