Tax Department appeal on bogus deduction claim dismissed; valid deductions for donations to approved foundation upheld. Reassessment confirmed.

The Department's appeal against the deletion of a bogus deduction claim for donations made to a research foundation was dismissed. The CIT(A) and ITAT found the deductions valid as the foundation was approved at the time of donation, with no evidence of ineligibility. The deletion of commission expenses related to the donation was also upheld. The reassessment proceedings and addition for late payment of employee contributions were confirmed, and interest charged under Section 234A was upheld. All appeals and cross objections were dismissed for the assessment years 2013-14 and 2014-15.

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Issues Involved:
1. Deletion of bogus deduction claim under Section 35(1)(ii) of the Income Tax Act.
2. Commission expense paid on account of donation.
3. Validity of reassessment proceedings under Section 147.
4. Addition under Section 43B for payment of Employee's Contribution to PF and ESI.
5. Interest charged under Section 234A.

Summary:

1. Deletion of Bogus Deduction Claim under Section 35(1)(ii):
The Department appealed against the CIT(A)'s decision to delete the bogus deduction claim of Rs. 2,10,00,000/- for the assessment year 2013-14 and Rs. 1,75,00,000/- for the assessment year 2014-15 on account of donations made to Hebicure Health Cure Bio Herbal Research Foundation (HHBRF). The Assessing Officer (AO) had disallowed the deduction based on information that HHBRF was not an approved entity under Section 35(1)(ii) and was involved in providing bogus donation entries. The CIT(A) allowed the appeal of the assessee, noting that the approval of HHBRF was in place when the donations were made and that the AO did not establish an independent finding of ineligibility for the deduction. The ITAT upheld the CIT(A)'s decision, relying on the Gujarat High Court's ruling in PCIT vs. M/s. Thakkar Govindbhai Ganpatlal HUF, which found no evidence that the donations were returned in cash and confirmed that the donations were utilized for scientific research.

2. Commission Expense Paid on Account of Donation:
For the assessment year 2014-15, the Department also contested the deletion of commission expenses of Rs. 12,00,000/- related to the donation. The CIT(A) deleted this addition, and the ITAT upheld the decision, following the same reasoning as in the bogus deduction claim.

3. Validity of Reassessment Proceedings under Section 147:
The assessee filed cross objections challenging the validity of the reassessment proceedings initiated by the AO under Section 147. However, since the Department's appeals were dismissed on merits, the ITAT dismissed the cross objections as not pressed.

4. Addition under Section 43B for Payment of Employee's Contribution to PF and ESI:
For the assessment year 2014-15, the assessee also challenged the addition of Rs. 2,69,613/- made by the AO under Section 43B for late payment of Employee's Contribution to PF and ESI. The CIT(A) confirmed the addition, and the ITAT dismissed the cross objections as not pressed, given the dismissal of the Department's appeal on other grounds.

5. Interest Charged under Section 234A:
The assessee contested the interest charged under Section 234A, arguing that the return was filed within the extended time allowed by CBDT. The CIT(A) did not delete the interest, and the ITAT dismissed the cross objections as not pressed.

Conclusion:
Both the appeals filed by the Department and the cross objections filed by the assessee for the assessment years 2013-14 and 2014-15 were dismissed. The ITAT upheld the CIT(A)'s decisions, relying on the precedent set by the Gujarat High Court in similar cases.

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