TaxTMI 
TaxTMI 
2019 (9) TMI 976
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.... Income Tax Act, 1961; in short 'the Act'. Heard both the parties. Case file(s) perused. 2. It transpires at the outset that the Revenue's two appeal(s) IT(SS)A No.25/Kol/2017 & ITA No.1314/Kol/2017 for assessment year(s) 2010-11 and 2012-13 involve tax effect less than Rs.50 lakhs prescribed in revised threshold limit in CBDT's latest Circular No17/2019 dated 08.08.2019. 3. On perusal of the Circular No. 17/2019 dated 08.08.2019 and the materials available on record, we do not see these case(s) falling under any of the exceptions contemplated therein. We also find that this circular makes it very clear that the revised monetary limits shall apply retrospectively to pending appeals as well. Hon'ble apex court in Commissioner of Customs vs Indian Oil Corporation Ltd reported in 267 ITR 272 (SC) has settled the law that CBDT's circulars are very much binding on revenue authorities. We therefore decline the Revenue's instant two appeal(s) as involving lower than the prescribed tax effect. Learned authorized representative is equally fair in not pressing for assessee's cross objection CO Nos. 80 & 82/Kol/2017. These assessee's cross objections are dismissed as not pressed ther....
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....owances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." The Hon'ble Kolkata High Court in the above cases relied on the following judgments. CIT vs. Kabul Chawla (2016) 380 ITR 0573 (Del) Search and seizure-New scheme of assessment in search cases- Search was carried out u/s. 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns - As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies- AO declined to rectify the assessments-CIT also held that addition nee....
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....the date of search. Besides, the time limit to issue notice u/s 143(2) was also expired. In order to initiate assessment proceedings u/s153A, there should be a new or incriminating document. The assessment which is already completed u/s 143(3)/143(1) should not be reopened. Therefore, considering the scheme of section 132 and section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies} which has been established by the statement of Mr. Naresh Kumar Chhapperia, which cannot be relied on} as he was a double speaking person. Therefore, considering the factual position and the judgments cited by Id. AR} we are of the view that the additions made by the AD u/ s 153A and confirmed by the Id. CIT(A) needs to be deleted. Therefore} we delete the addition." Furthermore, the decision of the jurisdictional tribunal in the case of M/s Tanuj Holdings Pvt Ltd Vs. DCIT CC-l(2), Kolkata vide ITAT No. 360 to 363/Kol/2015 dated 20.01.2016 is important. The relevant portion of the order is reproduced as under: We also fi....
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....e said section in respect of the same unit is only academic and hence the assessee is entitled for deduction u/ s 80IB of the Act for the Asst Years 2007-08 and 2008-09. Accordingly, the ground raised by the revenue in this regard for the assessment years 2007-08 and 2008-09 are dismissed." Since the decisions are rendered by us on legal grounds, we refrain to give our decision on the merits of the issues." Budhiya Marketing Pvt. Ltd. & Ors. Vs. ACIT in ITA Nos-1545-1546/Kol./2012 [reported in (2015) 44 CCH 03441 dt. 10.07.2015 (ITAT Kolkata) "The issue whether the addition in an assessment framed under section 153A can be made on the basis of the incriminating material found during the course of the search where the assessment has not been abated, has not been considered or decided by this Tribunal. Therefore, this decision, in our opinion will not assist the revenue while disposing of the plea of the assessee that since no incriminating material is found during the course of the search relating to the share capital and the share premium, therefore, no addition can be made while making an assessment under section 153A of the Income Tax Act. No c....
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....e same is now only of academic interest. " DCIT Vs. Merlin Project Ltd. IT(SS)A No-138/Kol/2011 Dt. 14.11.2013 (ITAT Kolkata); "We have heard the rival submissions and perused the material available on record. The undisputed fact about this case is that the original assessment in this case was completed under section 143(3) in which deduct ion was allowed in entirety under sect ion 80IB of the Act inter alia on the amount of interest income. It is also undisputed that no incriminating material was found during the course of search casting doubt about the allowability or otherwise of such deduction under sect ion 80IB. This fact has been fairly admitted by Id. D.R. during the course of proceedings before us as well. The Mumbai Bench of the Tribunal in the case of ACIT vs. Pratibha Industries (2013) 141 ITD 151 (Mum.) has held, inter alia, that having done original assessment u/s 143(3), if no incriminating material is found during the course of search, then it is permissible to make any addition in the assessment under section 153A pursuant to search action. The Special Bench of the Tribunal in the case of All Cargo Global Logistics Limited vs. DCIT (2012)....
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....oses of making additions on account of share capital Pr. CIT v Kurele Paper Mills P Ltd, SLP (C) No.34554 of 2015". 7. The AR has also brought on record the case law of CIT, Kolkata-III vs Veerprabhu Marketing Ltd [2016] 73 taxmann 149 Kolkata In this case The Honorable Calcutta High Court expressed the following views: "We are in agreement with the views of the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." The Hon'ble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573(Del) Search and seizure-New scheme of assessment in search cases- Search was carried out u/s 132 on a....
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.... a) appeal no.442/CC-3(1)/CIT(A)-21/14-15, date of order 05-12-2014, b) appeal no.440/CC-3(1)/CIT(A)-21/14-15, date of order 15-01-2015 c) appeal no.547/CC-3(1)/CIT(A)-21/14-15, date of order 10-04-2015 d) appeal no. 129/CC-XVII/CIT(A)-21/9-10, date of order 23-09-2010 e) appeal no.292/CC-VI/CIT(A)-C-VI/11-12, date of order 23-10-2013. I have considered the findings of the AO in the assessment order, different case laws brought on record and appeal orders passed by my predecessors on this legal issue. I find that it seems that during the search and seizure operations conducted u/s 132 of the I T Act, 1961, in the case of Sri Balaji Log Products Pvt Ltd (SBLP) no incriminating documents/papers related/pertaining to the assessee were seized. At least, additions made by the AO in the assessment order passed u/s 153C/143(3) are not based on any incriminating documents/papers seized during the search operation under identification mark SBLP-4. There was neither any search nor survey in this case. It would also not be out of context to mention here that in this case, on the date of search, no assessment for this year was pending. Therefor....
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....atisfaction note has nowhere indicated that the relevant category of assets or books of account etc. "belongs to" the assessee / a third person than that subjected to the search in issue. We make it clear that the legislature has included "relates to by in sec. 153C way of an amendment by the Finance Act, 2015 with effect from 01.06.2015 whereas the satisfaction in issue was recorded much earlier than that on 16.03.2015. We hold that the CIT(A)'s findings under challenge to this effect deserve to be upheld. We order accordingly. The Revenue's appeal(s) IT(SS)A No.24/Kol/2017 and ITA No.1313/Kol/2017 for assessment year(s) 2009-10 and 2011-12 fail accordingly. The assessee's cross objection(s) CO No.79 & 81/Kol/2017 are dismissed as not pressed in view of the learned counsel fair statement made at the bar during the course of hearing. 8. We now come to the taxpayer's appeal IT(SS)A No.07/Kol/2017 raising the latter issue of disallowance of sec. 35(1)(ii) deduction on account of its contribution made to the "School of Human Genatics and Population Health". Both the lower authorities hold the above recipient organisation to be engaged in accommodation entry providing business th....
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....d business is disallowed and added to the total income of the assessee for the AY 2014-15." 4. The ld. CIT(A) had rejected the contentions of the assessee by observing as follows :- 4.1. 1 have considered the submission of the appellant and perused the relevant assessment records. The M/S School of Genetics and Population Health, Kolkata had been granted approval u/s 35(1)(ii) of the I.T Act, 1961 vide Notification No. 4/201O/F. o. 203/64/2009/ITAT dated 28.01.2010 in the Official Gazetted by the Central Government. Any expenditure to such Notified .Institution which has as its object the undertaking of scientific research is eligible for weighted deduction equal one and three fourth times of any sum paid. However, the Ministry of Finance (Department of Revenue ) (Central Board of Direct Taxes) Vide Notification No. 82/2016/F.No. 203/64/2009/IT A.I1 dated 15.09.2016 in The Gazette of India: Extra Ordinary had rescinded the Notification granting approval by the Central Government to the appellant for the purpose of clause (ii) of sub section (1) of section 35 of the I.T. Act, 1961, read with Rule 5C and 5E of the Income tax Rule, 1962. The Notific....
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....d on 17th June, 2010 by Government of India. Ministry of Science and Technology. In response to letter dated 03.02.2014 given by M/s. School of Human Genetics and Population Health, to the assessee, donation of Rs. 15,00,000/- was made on 31.03.2014 by the assessee. The said amount was given to the donee on 31.03.2014 and withdrawal was on 15.09.2016. i.e. after 17 months from the date of donation made in March, 2014. Such withdrawal in my view cannot take away the vested right of the assessee for claiming deduction under Section 35 (1) of the Act. 7.2 The Tribunal in the case of Rajda Polymers vide ITA No.333/Kol/2017 order dated 08.11.2017 at page 7 has held as follows:- "5.6. We find that the ld CITA had made an observation which has been heavily relied upon by the ld DR that the assessee's line of business has got nothing to do even remotely with the healthcare or herbal healthcare industry much less in the area of research thereon and accordingly there was no need for the assessee to give donation of Rs. 14,00,000/- to HHBRF . We find that this aspect has been duly addressed by the assessee by stating that one Cardiologist Doctor had introduced the a....
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....e approval in question, we direct the AO to grant the said deduction as claimed. In the result this issue is decided in favour of the assessee. 8. In the result the appeal of the assessee is allowed. 7.3 The Kolkata ITAT in the case of Zenith Credit Corporation in ITA No.718/Kol/2018 pronounced on 20th July, 2018 held as follows:- This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-10, Kolkata, (hereinafter the 'Ld. CIT(A)'), dt. 23/02/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the 'Act'), relating to Assessment Year 2014-15, on the following grounds:- "1. For that the Ld. CIT(Appeals) was wrong and unjustified in confirming the disallowance of deduction u/s 35(1)(ii) of Rs. 3,50,000/- on the donation of Rs. 2,00,000/- made to School of Human Genetics & Pollution Health without properly appreciating the submission of the appellant. The court decisions cited by the Ld. CIT(Appeals) are not applicable in the facts of the appellant's case. 2. For that the appellant craves leave to alter, amend, modify any of the grounds and/or take additional ground before or at t....
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....nnot be taken as evidence. He submitted that opportunity of crossexamination has not been provided in this case and hence no reliance can be placed on the statements, based on which the revenue authorities to make this addition. 3. After hearing rival contentions, perusing the papers on record, orders of the authorities below as well as case-law cited, I hold as follows:- I find that in the statement recorded from Shri Avijit Sinha Roy u/s 131 of the Act, on 13/04/2015 he states that after the month of February, 2011, he left this bogus donation work. On the other hand, he has signed a declaration on 30/07/2015. The list prepared by the revenue was signed with a remark that he has seen the list. There is a contradiction in these two. In such circumstances, it has to be seen as to which is correct. No opportunity of cross-examining Shri Avijit Sinha Roy has been provided to the assessee. Hence the declaration as well as the statement cannot be the basis of addition. Similarly, the statement of the key persons of the trust cannot be the basis of addition as no cross-examination of witness was provided. No proof of money being returned is available with the ....
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....so note that the AO issued notice u/s. 131 of the Act to the partners of the assessee firm and has recorded their statement on oath on 28.12.2015. We note for question no. 14 as to how the partner knew about M/s. Herbicure, the partner of the assessee firm has answered that Dr. Bhuban Chakraborty, a Cardiologist friend introduced them to M/s. Herbicure and to question no. 15 as whether the partners have visited the office of M/s. Herbicure to which the partners answered that they had visited the premises of M/s. Herbicure on two occasions and for question no. 16 as to whether the partners were satisfied with the work of scientific research carried on by the said M/s. Herbicure, the partners of the assessee firm had replied that during their visit at Pailan and Baral they were satisfied with the scientific research work and for question no. 17 the partners replied that they had seen the certificate issued by Govt. of India and also have gone through the research paper of the people working there. For question no. 20 they have given the name of the doctor who was a Cardiologist who introduced them to M/s. Herbicure. We note that the AO enquired about Dr. Bhuban Chakraborty's addr....
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....note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confirmed that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held....