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TMI Blog2019 (9) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... h Mr SK Sharma and backed by the statement of the donors, statement of the chartered accountant, statement of the entry operator et cetera, reasons are recorded. Unexplained income in treating the donation is bogus donation - HELD THAT:- Apparently if the trusts has credited alleged donation to the income and expenditure account, provisions of section 68 cannot be applied. Therefore in such cases from 1-4-2007 u/s 15 BBC the provisions of anonymous donation and its taxability at a different rate applies. However if the donation is not credited to the income and expenditure account on provisions of section 68 are rightly applied by the lower authorities. We confirm the actions of lower authorities in taxing the sum of INR 4,000,000 as unexplained income being bogus donation credited to the general fund in the balance sheet. In the result ground number 2 of the appeal is dismissed. - ITA No. 4572 and 4573/Del/2017 - - - Dated:- 18-9-2019 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Soumitra Choudhary, Adv For the Revenue : Shri Arun Kumar Yadav, Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and his wife during the period 1990 2008 which he could not satisfactorily account for. It was also disclosed during the investigation that Sri SK Sharma floated society by the name and style of Brijbasi education and welfare society ( Appellant) on 21/7/2005 having 7 members belonging to 3 members of the family of Sri Manoj Kumar Agarwal who were authorised to operate the bank account of the appellant. It was further noted that huge amount of cash was deposited in the bank accounts of the said society. The examination of several witnesses disclosed during the CBI investigation that they have not donated to the appellant. One of the witnesses Shri Mahesh Garg stated that ₹ 35,00,000 in cash were given by Sri SK Sharma for arranging the donation in favour of appellant. Therefore number of suspicious transactions in the account of the appellant and the role of Sri Manoj AGrwal needs to be thoroughly investigated to find out the source of the above funds. 6. Based on the above information the reasons were recorded. A notice u/s 148 of the income tax act was issued on 28/3/2013. Subsequently notices u/s 143 (2) were also issued. In response to the query, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be bogus. After the time of original assessment, enquiries made by the CBI , the statement of those donors were recorded and they have categorically denied to have made any donation to the assessee society. Therefore, the learned AO held that it is proved that the assessee society has generated unaccounted cash, which has been routed to its books of accounts in the disguise of donation, which are proved bogus. Thus, the learned assessing officer made an addition of INR 4,000,000 under section 68 of The Income Tax Act. Further with respect to the accommodation entry of INR 3,500,000 received by the assessee from Shri Mahesh Garg , the learned AO on the basis of statement of accommodation entry provider, made an addition of INR 3,500,000 in the hands of the assessee. Thus assessment order u/s 143 (3) read with section 147 of the income tax act was passed on 28/02/2014 determining the total income of the assessee at INR 7,500,000. 8. The assessee aggrieved with the order of the learned assessing officer challenged the same before the learned CIT A on the issue of the reopening of the assessment as well as on the merits of the addition of INR 75 Lacs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that relevant application form signed by the 22 people along with the supporting documents for obtaining the permanent account number was made by him. Further the conversation in the compact disc also proves the unaccounted money routed of Mr Manoj, kumar Agarwal. He further referred to the reasons which clearly shows that the confirmation submitted by the donor were not genuine persons and a bogus donation. He therefore submitted that there is a clear-cut failure on the part of the assessee to disclose the correctness of the amount of donation received by it and hence the reopening has been correctly made by the learned assessing officer and confirmed by the learned CIT appeal. 11. We have carefully considered the rival contention and perused the orders of the lower authorities. No doubt, the reasons were recorded on 28/3/2013, i.e. is after the expiry of 4 years from the end of the assessment year. However, the reasons recorded clearly shows that that information was received from the Deputy Director of Income Tax on 21/1/2013 about the assessee that a huge amount of cash was deposited in the bank accounts of the society by Sri SK Sharma and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Appeals in upholding the reopening of the proceedings under section 148 of the income tax act. 12. The learned authorised representative has vehemently relied upon the judicial precedents and especially on the decision of the honourable Delhi High Court in SABH INFRASTRUCTURE LTD VS ASST COMMISSIONER OF INCOME TAX dated 25/9/2017. We have carefully gone through the decision of the honourable Delhi High Court. In that particular decision the honourable Delhi High Court in para number 14 has held that merely an allegation that the companies are paper companies without further facts is by itself insufficient to reopen assessments that stand closed after passing of the order u/s 143 (3) of the income tax act. Here in the present case all the donors were found to be bogus, their permanent account numbers were also obtained by the chartered accountant of the assessee, the accommodation entry operator has given a categorical statement that he has provided the assessee with the bank funds in lieu of cash funds. Further, on reading of para number 15 of that order where there is a clear-cut finding that where there is a mention of the fact or information which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular case does not apply to the facts in the case before us. 14. The assessee also relied upon the decision of the honourable Supreme Court in case of ACIT vs Dharia construction Co 328 ITR 515 (SC). In that particular decision the reopening on the basis of the report of the district valuation officer was held to be not an information for the purpose of the reopening of the assessment. It was further held that the assessing officer has to apply mind to the information collected and must form a belief thereon. In the present case the assessing officer has received a specific information about the huge cash deposit in the bank account of the assessee and through Mr SK Sharma and backed by the statement of the donors, statement of the chartered accountant, statement of the entry operator et cetera, reasons are recorded. Therefore, the reliance placed on this decision is incorrect. 15. In view of above facts we do not find any merit on ground number 1 of the appeal of the assessee against the reopening of the assessment. In view of this ground number 1 is dismissed. 16. The ground number 2 is against the confirmation of the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not reply. Therefore in view of this it is very high onus cast upon the assessee in reassessment proceedings to show that these donations are genuine donation. He further referred to the order of the learned assessing officer as well as the learned CIT A before both the lower authorities the assessee failed to produce any cogent evidences. In view of this, he submitted that there is no infirmity in the order of the lower authorities. 19. We have carefully considered the rival contention and perused the orders of the lower authorities. During the year the assessee has received from 38 persons amount ranging between ₹ 1,00,000 1,50,000 amounting in all to INR 4,000,000. In the list of donor, assessee has given the address of those donors as well as the date of donation. The above amount has not been credited to the income and expenditure account of the trust but is shown as a general fund account in the balance sheet. Therefore, the above amount was not shown as income in the income and expenditure account but was carried to the balance sheet as a general fund. Concurrent lower authorities have held that assessee has failed to show the genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (assessment year 2006 07). Therefore, assessee is not aggrieved in this year. It is not contested that CIT (A) does not have any such power. Hence, ground number 3 of the appeal is dismissed. 23. Ground number 4 is general in nature, no arguments were advanced by the parties, hence same is dismissed. 24. In the result, appeal of the assessee in ITA number 4572/Del/2017 for assessment year 2006 07 is dismissed. 25. Now we come to the appeal of the assessee for assessment year 2007 08. Assessee filed its return of income on which the assessment was completed u/s 143 (3) on 29/12/2009 at nil income. The assessment was reopened on the similar facts has mentioned for assessment year 2006 07. During the year the addition of INR 6,000,000 was made to the total income of the assessee out of INR 9,500,000credited to the general fund , as INR 3,500,000 were already added by the learned assessing officer for assessment year 2006 07. The assessment u/s 143 (3) read with section 147 of the income tax act was passed on 20/3/2015 determining the total income of the assessee at INR 6,000,000. The assessee preferred an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have any reason to believe of his own. Examination of facts revealed that AO received information from CBI, New Delhi vide letter dated 5/2/2013. The AO made enquiries from CBI, calling for requisite information from CBI. AO received further information vide letter dated 10/2/2014 wherein copies of the statement of donors, copies of statement of one Shri Mahesh Garg and Shri Vinod the Garg recorded u/s 161 of the criminal procedure code were enclosed. These documents revealed to the AO that the alleged donors have not made any donation to the appellant and Shri Mahesh Garg allegedly involved in work of providing accommodation entries through the bank account of his brother Shri Vinod the Garg. It was further found that during the month of June 2006 appellant received a sum of INR 3,500,000 from Shri Mahesh Garg in June 2006. 5.1.1 The information received from CBI as a communication to the AO can very well be a basis for forming believe. The plain reading of section 147 suggest that when an income liable to tax has escaped assessment in original assessment proceedings due to oversight, inadvertent, mistake or any other external source of information, reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined income treating the donation is bogus donation and further taxing the income by INR 3,500,000 on account of loan from Shri Mahesh Garg. 31. The learned authorised representative reiterated the same arguments as were raised contesting the addition on identical facts and circumstances for assessment year 2006 07. 32. The learned departmental representative vehemently supported the orders of the lower authorities. 33. We have carefully considered the rival contentions and perused the orders of the lower authorities. During the year, the assessee has received a donation from 122 persons amounting to INR 9,500,000. The assessee has given the name, address, permanent account number of those persons as per 7 pages list placed on the paper book at page number 12 18. This year also the assessee has credited the same amount to general fund. The opening balance of general fund at the beginning of the year on 01/04/2006 was ₹ 40,00,000 and at the end of the year on 31/03/2007 is INR 13,500,000. The above donation of INR 9,500,000 also was not credited to the income and expenditure account but directly carried to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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