ITAT rules in favor of Assessee on deduction for donation to research foundation

The ITAT allowed the Assessee's appeal, overturning the lower authorities' decisions regarding the deduction under Section 35(1)(ii) for a donation to a research foundation. The ITAT found in favor of the Assessee, emphasizing the lack of concrete evidence against them and highlighting inconsistencies in the information provided by the revenue authorities. The appeal was allowed based on the evidence presented, ultimately dismissing the Revenue's appeal and upholding the Assessee's position.

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Issues:
Appeal against confirmation of deduction under Section 35(1)(ii) based on information from DDIT, Kolkata, and cancellation of certificate by CBDT with retrospective effect.

Analysis:
1. The appeal challenges the confirmation of a deduction under Section 35(1)(ii) by the Ld. CIT(A) based on information received from DDIT, Kolkata. The Assessee contests the claim of Rs. 87,50,000, arguing that it relies on presumption and lacks evidence of cash receipt. The AO did not conduct an independent inquiry and relied solely on the information received.

2. The Assessee claimed a deduction for a donation to Herbicure Healthcare Bio-Herbal Research Foundation. Supporting documents included a donation letter, receipt, and registration details. However, information from DDIT, Kolkata revealed a bogus donation syndicate involving the Foundation, leading to the disallowance of the deduction by the AO.

3. The Ld. CIT(A) dismissed the Assessee's appeal, citing proof from the survey that the Foundation engaged in fraudulent activities. The Assessee failed to establish the Foundation's credibility as a genuine research organization. The Assessee then appealed to the ITAT for redressal.

4. The ITAT analyzed the case, considering the evidence presented by both parties. While the survey indicated fraudulent activities, the Assessee provided a certificate from the Ministry of Science and Technology valid at the time of donation. Additionally, a CBDT Circular in effect during the donation supported the Assessee's position.

5. Referring to a previous ITAT Bench order involving a similar case, the ITAT found in favor of the Assessee. The Bench highlighted the lack of specific evidence against the Assessee and the absence of cross-examination of the Foundation's representatives. The ITAT concluded that the donation could not be doubted without concrete proof.

6. Given the observations and the consistency with the previous Bench ruling, the ITAT allowed the Assessee's appeal, overturning the lower authorities' decisions. The appeal was allowed, emphasizing the lack of substantial evidence against the Assessee.

7. The ITAT's decision was pronounced in open court on 24-08-2021, ultimately dismissing the Revenue's appeal and allowing the Assessee's appeal based on the evidence and legal provisions presented during the proceedings.

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