TaxTMI 
TaxTMI 
2020 (4) TMI 362
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.... the AO to the tune of Rs. 93,00,000/- on account of bogus donation made by the assessee and allowing the deduction claimed to the tune of Rs. 1,62,75,000/- u/s 35(1)(ii) of the I.T. Act, 1961." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the AO has solely relied upon the report of Investigation Wing and has not carried out any worthwhile independent inquiry in this matter as it is evident form the record that post survey investigation was also carried out. Notices were also issued u/s 131 of the IT Act to various brokers. During post survey proceedings, statement of brokers who are providing the accommodation entries were recorded and they accepted during the statement that they had arranged accommodation entries in the form of bogus billing for School of Human Genetics & Population Health(SHG&PH), Herbicure Healthcare Bio- Herbal Research Foundation (HHBRF) and Matrivani Institute of Experimental Research & Education(MIERE) in lieu of commission." 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that addition has been done without any investigation....
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....nveyed that the survey action was carried out by the Kolkata Directorate on Institutions in the matter of facilitating bogus donation u/s 35(1)(ii) of the Income Tax Act, 1961. School of Human Genetics & Population Health, (SHG & PH), Herbicure Healthcare Bio- Herbal Research & Education (MIERE) were listed as the institution engaged in the bogus donation u/s 35(1)(ii) of the Act through various brokers in lieu of commission. The assessee was one of the beneficiary who had given donation of Rs. 93,00,000/- to the institution engaged in the bogus donation u/s 35(1)(ii) of the Act through various brokers in lieu of commission and claimed deduction u/s 35 of the I. T. Act, 1961 to the tune of Rs. 1,62,75,000/- and claimed of bogus donation in connection with the HHBRF to the tune of Rs. 54,25,000/- and claimed of the bogus donation to MIER & E to the tune of Rs. 36,75,000/- was disallowed and added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs. 2,78,05,289/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenues has filed the present appeal before us. ISSUE NO....
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....he appellant would not affect the powers of the AAC to call for the production of any document or the examination of any witness to enable him to dispose of the appeal Under sub-section (4,) of section 250, the AAC is empowered to make such further inquiry as he thinks fit or to direct the ITO to make further inquiry and to report the result of the same to him. Sub-section (5) of section 250 empowers the AAC to allow the appellant, at the hearing of the appeal, to go into any ground of appeal not specified in grounds of appeal on his being satisfied that the omission of the ground from the form of appeal was not wilful It is clear from the above provisions that the powers of the AAC are much wider than the powers of an ordinary court of appeal The scope of his powers is coterminous with that of the ITO. He can do what the ITO can do. He can also direct the IT() to do what he failed to do. The power conferred on the MC under sub-section (4) of section 250 being quasi-judicial power, it is incumbent on him to exercise the same if the facts and circumstances jusit. If the MC fails to exercise his discretion judicially and arbitrarily refuses to make enquiry in a case where the facts a....
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....isions of rule 46A(1), section 250 of the Act read with sub-rule (4) of rule 46A enable the Commissioner of Income-tax (Appeals) to accept additional evidence in appropriate cases. The Court, therefore, upheld the impugned order of the Tribunal whereby the Assessing Officer was directed to consider the evidence produced by the appellant before the first appellate authority to prove the genuineness of the credits. 6.5 Therefore, a bare reading of the exposition of law relating to the power of the Commissioner of Income-tax (Appeals) to admit additional evidence as made by the Bombay High Court and relied on by the Kerala High Court (discussed above) clearly indicates that even if the repeated opportunities were given to the appellant to produce evidence and even if the appellant does not suo-motu produce any additional evidence, in the spirit of justice and fair-play, it is incumbent on the first appellate authority, being a quasi-judicial authority, to require the appellant to produce requisite evidence or to make necessary inquiry and admit any such fresh and additional evidence, by virtue of section 250(4) and (5) read with sub-rule(4) of rule 46A. 6.6 In the pr....
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....ations' received and refunding amounts. The Hon'ble Settlement Commission, Kolkata has passed order u/s 245D(1) of the Income-tax Act, 1961 dated 25.03.2015. Further observed during the course of survey U/s. 133A of the Act, the Directors of the Herbicure Healthcare Bio-Herbal Research Foundation in the statements recorded U/s. 131 of the Act, had stated before the investigation team of the department that owing to severe financial crisis, genuine donations were not coming to them and they were compelled to accept the proposal to adopt the prevalent practice of scientific and research organizations giving accommodation entries on commission basis to different beneficiaries in the garb of donation receipts. The survey team also observed that the Institute has violated Rule SC, 5D and 5E of Income Tax Rules to be followed by an institution approved U/s. 35(1)(H) of the Act. Further, during the course of survey U/s. 133A, in the statements were recorded U/s. 131 of the Act, the authorized persons of the Matrivani Institute of Experimental Research & Education had stated before the investigation team of the department that MIER & E has earned service charges by providing accommodat....
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....Research organization (SIRO) by the Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Government of India. The said institute was registered as an institution whose income does not form part of the total income U/s 12AA and also was an approved institution U/s. 35(1)(H) of the Act as a scientific research organization for the purpose of deduction on account of expenditure on scientific research. The assessing officer during the course of assessment proceedings had issued a show cause to the appellant The appellant has submitted Donation receipts issued by the said institute, Certificate of registration issued by Registrar of Companies, West Bengal, Extract from "The Gazette of India" wherein it was notified for general information that HHBRF has been approved by the Government of India for the purpose of Clause (H) of Sub Section (1) of Section 35 of the Income Tax Act read with Rules 5C and 5E of the Income Tax Rules 1962, Letter from the Secretary, the School of Human Genetics and Population Health, West Bengal as regards renewal of recognition of Scientific and Industrial Research Organizations (SIR0s) and Registration certificate U/s. ....
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....cognition and approvals U/s. 35(1)(U) of the Income Tax Act 1961.Further, appellant has stated that the donation receipts issued by School of Human Genetics and Population Health and Herbicure Healthcare Bio - Herbal Research Foundation have been submitted during the course of assessment proceeding vide submission dated 12.10.2015 and it was duly acknowledged by the assessing officer in Paragraph 5, Page No. 2 of the assessment order itself. The A.O. has thereafter made an allegation that this was an exercise to re-route the money into the books of accounts. No specific instances of re-routing have been pointed out by the assessing officer either at the time of assessment proceedings or in the remand report. The provisions of section 35(1)(H) of the Act, which reads as follows: - "35. (1) in respect of expenditure on scientific research. the following deductions shall he allowed- (ii) an amount equal to one and three fourth limes of any sun? paid to a research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research: Provide that such association, univers....
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....similar issue in the case of National Leather Cloth Manufacturing Co reported in 110 Taxman 511 (Bombay). While adjudicating the writ petition on the issue of re-opening of the assessment. The honorable Jurisdictional High Court had clearly held as under: - The only question that arises for consideration is whether the assessee who donated a sum of Rs. 2.00.000 to the scientific research association on the basis of the approval granted by the prescribed authority to it for the purposes of clause (ii) of sub-section (1) of section 35 of file Act by notification in the Official Gazette at the material time can be adversely affected the withdrawal of the approval subsequently with retrospective effect by the prescribed entitled to rely upon the certificate granted by the prescribed authority. We have already decided an identical controversy in the context of deduction under section 35CCA of the Act to the institution or association to which it had donated any sum of money for claiming deduction under that section if it was subsisting and valid at the time the donation was made. The retrospective withdrawal and/or cancellation of the certificate will have no effect upon the as....
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....sions of the statute which entitle persons dealing with registered dealers to act upon the strength of registration certificates." 6.18 In the case of General Magnets Ltd reported in [2002] 123 TAXMAN 1015 (CAL.) the honourable Calcutta High Court held that it is impermissible to withdraw deduction allowed to assessee for which he is entitled under valid certificate issued by society which was approved by department on date of payment to that society, notwithstanding the fact that said approval was withdrawn with retrospective effect. 6.19 The Honorable Calcutta Tribunal in the case of Shri Mayapur Dham Pilgrim and vs. CIT(Exemptions), Kolkata I.T.A No. 1165/Ko1/2016 order pronounced 03.05.2017 has decided similar issue, wherein the appellant in that case had taken donation from School of Human Genetics and Population Health, Kolkata and subsequent after survey action by the Investigate(' Wring or Calcutta, the exemptions u/s. 12A has been denied to the appellant. The Honorable Tribunal had given IS findings in Paragraph No. 19 of the its order which is reproduced as under: - "19. The fact that assessee's name figures in the list of donations give....
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.... and claimed weighted deduction of u/s 35(1)(ii) of the Act @ 175%. The A.O. after taking note of the Gazette Notification dated 28.01.2010 issued by CBOT which recognized M/s. SHGPH as an institution which is entitled for weighted deduction u/s 35(1)(ii) of the Act, allowed the weighted deduction @ 175% for the donation given by the assesse. Later, Pr. CIT came across a communiqué of CBDT which conveyed the information that the Central Govt. has rescinded the relevant notification dated 28.01.2010 to the effect that the said notification would be deemed as not issued for any tax benefits under the Act to the said research institute. Taking note of this development, the Pr. CIT cancelled the assessment order passed by the AO. In an appeal to Tribunal, the honorable Tribunal held that the subsequent developments i.e. CBDT Notification rescinding the recognition for M/s. SHGPH on 15.09.2016 cannot be a ground to hold that A.O' s order on 29.06.2016 is erroneous in the light of the explanation in section 35(1)(ii) of the Act (supra). 6.21 Further, the Hon'ble Income Tax Appellate Tribunal - Mumbai in the case of Vora Financial Services Private Vs Assistant Commissi....
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....ation in rejecting the claim of weighted deduction claimed u/s.35(I)(ii) of the Act Accordingly we set aside the order passed by Id. CIT(A) on this issue and direct the AO to allow the weighted deducted claimed u/s.35(1)(ii) of the Act 6.22 The addition has been made by the A.O. on the basis of admission made in the statement recorded U/s. 131 of Act in the case of institution to which the appellant had given donations. However, no evidence/seized material has been mentioned/found in the statement with respect to such donation which would specifically establish that the same is bogus. It is settled proposition of law as held by the Hon'ble Madras High Court in the case of CIT V/s. S. Khader Khan Son reported in 214 CTR 589 and subsequently affirmed by the Honourable Apex Court reported in 352 ITR 0480 that the addition to income merely on the basis of statement recorded during the course of survey is not valid. In this regard the observation of the Hon'ble Madras High Court in the concluding portion is reproduced herewith which has considered Apex Court's decision in the case of Pullangode Rubber Produce Co. Ltd vs. State of Kerala reported in (1973) 91 ITR 18:....
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....ey - Assessment years 1996-97 and 1997-98 - Whether section 133/1(3) (iii) authorises authority to record statement of any person which may he useful for or relevant to any proceedings under Act; however, officer is not authorized to record statement on oath and hence, statement taken during course of survey has no evidentiary value; it is simply an information which can be used fin- corroboration purpose for deciding any issue in favour or against, assessee - Held, yes 6.24 The Hon'ble Kerala High Court in the case of PAUL MATHEWS AND SONS V. C.I.T. reported in (2003) 263 ITR 101 (Ker) wherein it is held: A power to examine a person on oath is specifically conferred on the authorized officer only under section 132(4) in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas Section 1314 does not empower any Income-tax Officer to examine any person on Oath. Thus in contradistinction to the power under Section 1334. Section 132(4) of the Income-tar Act enables the authorised officer to examine a person on oath and any statement made....
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....tary evidences submitted during assessment proceedings. Without pointing out any lacuna in the evidences submitted by the appellant, the genuineness of transaction cannot be doubted. Once evidences related to a transaction is submitted before the A.O., the onus shifts on him to prove these as non-genuine. The A.O. has not discharged the onus casted on him. In my opinion, merely based on the statement of a third person without any corroborative evidence will not make the donation, in question, as accommodation entries. As such, in the absence of any contrary evidence placed on record, the donation cannot be treated as accommodation entries. During the assessment proceedings, the appellant has submitted sufficient documents. The genuineness of the transaction is established from the fact that the payment had been made through banking channels. In the assessment order, the A.O. did not at all discuss the merit of submission made by the appellant and casually brushed aside details filed by the appellant. Further, the appellant has stated that the had & all the relevant details during the course of the assessment proceedings and duly discharged its onus. There was no material w....