2021 (7) TMI 760 - AT - Income Tax

Appellate Tribunal rules in favor of assessee in donation deduction case

Shri Jignesh Ratilal Shah Versus Dy. Commissioner of Income Tax, Circle-4 (2)

The Appellate Tribunal allowed the assessee's appeal against the disallowance of a deduction claimed for a donation made to an institution under section ... Disallowance being deduction claimed u/s. 35(1)(ii) in respect of donation - HELD THAT:- The issue in the appeal of the assessee is squarely covered by several judgments passed by Hon'ble Tribunal in the case of S.G. Vat Care P. Ltd. [2019 (1) TMI 1694 - ITAT AHMEDABAD] in the case of the Thakkar Govindbhai Ganpatlal HUF [2020 (2) TMI 31 - GUJARAT HIGH COURT], in the case of H.N. Metal Corporation [2020 (1) TMI 1477 - ITAT AHMEDABAD] and in the case of Bipin Prabhudas Shah HUF [2020 (2) TMI 1456 - ITAT AHMEDABAD] and case of Thakkar Govindbhai Ganpatlal HUF [2020 (2) TMI 31 - GUJARAT HIGH COURT]. DR is fair enough not to controvert these undisputed facts that identical issue on similar fact has been adjudicated in favour of the assessee by the aforesaid referred judicial pronouncements. Issues involved:Appeal against disallowance of deduction claimed under section 35(1)(ii) of the Income Tax Act, 1961 for donation made to an institution.Detailed Analysis:1. Background and Reopening of Case:The assessee's appeal for the assessment year 2012-13 arose from the CIT(A)-4, Ahmedabad's order dated 23-10-2018, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961. The case was reopened under section 147 based on a survey conducted by the Investigation Wing Calcutta, revealing institutions providing accommodation entries in the form of bogus donations under section 35(1)(ii) of the Act.2. Disallowance of Deduction:The Assessing Officer disallowed a deduction claimed under section 35(1)(ii) of Rs. 5,25,000 for a donation of Rs. 3 lakhs made to an institution named SHG&PH. The AO alleged that the institution provided bogus donation entries as a means of commission, taking cheques as donations and returning the same amount in cash to the donor. The disallowed amount was added to the assessee's total income.3. Appeal before CIT(A):The assessee appealed before the CIT(A), who upheld the disallowance citing the withdrawal of approval granted to the institution by the CBDT through a notification dated 15th Sep, 2016, issued retrospectively.4. Appellate Tribunal's Analysis:During the appellate proceedings, the assessee relied on various judgments by the Hon'ble Tribunal and the High Court of Gujarat, where similar issues were decided in favor of the assessee. The Tribunal considered these judgments and observed that the genuineness of the donation was doubted based on survey reports without specific evidence or cross-examination of the donee representatives. The Tribunal found no merit in the Revenue's appeal and dismissed it.5. Judicial Pronouncements Considered:The Tribunal referred to judgments in cases such as S.G. Vat Care P. Ltd., Thakkar Govindbhai Ganpatlal HUF, H.N. Metal Corporation, and Bipin Prabhudas Shah HUF, along with the High Court's decision in the case of Thakkar Govindbhai Ganpatlal HUF. These cases highlighted the importance of specific evidence and lack of mechanisms for verifying the genuineness of donations, leading to the allowance of the assessee's appeal.6. Final Decision:Based on the consistent findings in the referred judgments and the absence of disparities in the facts of the present case, the Tribunal allowed the assessee's appeal. The Tribunal emphasized the need for concrete evidence to doubt the genuineness of donations and concluded that the issue was squarely covered in favor of the assessee. The appeal was allowed, and the order was pronounced on 25-06-2021.