Appeals Dismissed for Donation Disallowance & Assessment Reopening

The Tribunal dismissed the appeals for Assessment Years 2009-10 and 2010-11, upholding the disallowance of the donation claimed under Section 35AC and validating the reopening of assessment based on search findings. It emphasized evaluating transaction genuineness using the test of human probabilities and surrounding circumstances. The appeals were dismissed, affirming the disallowance and reopening of assessment.

---

---

Issues Involved:
1. Withdrawal of appeal for Assessment Year 2009-10 under Vivad Se Vishwas Act, 2020.
2. Validity of disallowance of donation claimed under Section 35AC for Assessment Year 2010-11.
3. Reopening of assessment under Section 148 based on search findings.
4. Examination of the genuineness of donations to Navjeevan Charitable Trust.
5. Consideration of retraction of statements made under oath.
6. Application of the test of human probabilities in evaluating the genuineness of transactions.

Detailed Analysis:

1. Withdrawal of Appeal for Assessment Year 2009-10:
The assessee withdrew the appeal for Assessment Year 2009-10, citing the benefit availed under the Vivad Se Vishwas Act, 2020. Consequently, the appeal was treated as dismissed as withdrawn without any objection from the Departmental Representative.

2. Validity of Disallowance of Donation Claimed Under Section 35AC for Assessment Year 2010-11:
The assessee firm had claimed a deduction for a donation of Rs. 15 lacs to Navjeevan Charitable Trust under Section 35AC. The Assessing Officer disallowed the deduction, concluding that the donation was part of a tax fraud scheme, as the trust was not engaged in genuine charitable activities. The CIT(A) upheld this disallowance, and the Tribunal found no merit in the appeal, confirming the disallowance.

3. Reopening of Assessment Under Section 148 Based on Search Findings:
The assessment was reopened under Section 148 based on findings from a search conducted on Navjeevan Charitable Trust. The search revealed that the trust's expenses were merely book entries, and donations received were returned in cash to donors after deducting a commission. The Tribunal upheld the reopening of the assessment, agreeing with the findings of the lower authorities.

4. Examination of the Genuineness of Donations to Navjeevan Charitable Trust:
The investigation revealed that Navjeevan Charitable Trust was involved in providing accommodation entries for bogus donations. The trust received donations of about Rs. 80 crores over five years, which were transferred to various parties and withdrawn in cash. The Tribunal agreed with the CIT(A)'s detailed findings that the trust was not engaged in any genuine charitable activities and that the donations were part of a financial fraud scheme.

5. Consideration of Retraction of Statements Made Under Oath:
The assessee's director retracted his earlier statement made under oath, claiming it was given under pressure. However, the Tribunal found that the retraction was an afterthought without any corroborative evidence. The Tribunal cited judicial precedents emphasizing that voluntary statements made under oath are significant and cannot be retracted without substantial evidence.

6. Application of the Test of Human Probabilities in Evaluating the Genuineness of Transactions:
The Tribunal applied the test of human probabilities, as established by the Supreme Court in CIT v. Durga Prasad More and Sumati Dayal v. CIT, to evaluate the genuineness of the transactions. The Tribunal concluded that the donations were not genuine, considering the surrounding circumstances, the modus operandi of the trust, and the lack of evidence supporting genuine charitable activities.

Conclusion:
The Tribunal dismissed the appeals for both Assessment Years 2009-10 and 2010-11. The disallowance of the donation claimed under Section 35AC was upheld, and the reopening of the assessment based on the search findings was found valid. The Tribunal emphasized the importance of evaluating the genuineness of transactions based on human probabilities and surrounding circumstances.

---