TaxTMI 
TaxTMI 
2020 (12) TMI 663
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....w since the original assessment was completed u/s.143(3) on 30.03.2014. 2. On the facts and circumstances of the case. the learned Commissioner of Income Tax (A) erred in confirming the action of Assessing Officer's without appreciating that the AO failed to provide the copy of Approval Note/Satisfaction from the Principal - CIT before the issuance of the Notice u/s.148 dated 02.03.2017. 3. On the facts and circumstances of the case, the learned Commissioner of Income Tax (A) erred in passing the order without appreciating that the Assessing Officer failed to provide the copies of Statements Recorded from third party and no opportunity given to the appellant company to cross-examine and hence the process of natural justice was not followed. 4. On the facts and circumstances of the case, Id. Commissioner of Income Tax (A) erred in confirming the assessment order passed u/s 143(3) r.w.s. 147 without issuance of notice u/s 143(2). 5. On the facts and circumstances of the case, the Id. Commissioner of Income A) failed to appreciate that at the time when the donation of Rs. 60,00,000/ - was made by the appellant company the proper Approvals/Exemptions were in force and in fa....
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.... objections raised by the assessee therein rejected the same vide his order dated 26.10.2017. 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had in its computation of income claimed deduction of Rs. 1.05 crore under Sec. 35(1)(ii) of the Act. On a perusal of the records, it was noticed by him that the assessee had paid a donation of Rs. 60 lac to a Kolkata based research institution, viz. M/s Herbicure Healthcare Bio-Herbal Research Foundation and had claimed deduction under Sec. 35(1)(ii) of the Act @ 175% on Rs. 60 lac which worked out to Rs. 1.05 crore. On being called upon to substantiate the basis for claim of such deduction it was stated by the assessee that the donation to the aforesaid party was genuine and was given on the basis of exemption certificates issued by the Income tax Department. However, the assessee neither produced any of the parties/persons for verification nor appeared personally for examination. Accordingly, summons u/s 131 were issued by the A.O on 16.11.2007 to both the directors of the assessee company for verifying the genuineness and veracity of the aforesaid donations. But then, the assessee failed t....
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....f funds the institution had to yield to the prevalent practice of providing accommodation entries to different beneficiaries in the garb of donation receipts. It was further admitted by him that with the services of brokers and accommodation entry providers the amount of donations would be returned back to the donors by way of bogus billing after deducting commission of 5%. Further, it was stated by him that the letters issued to the donors were back dated and the amounts received by way of donations after deduction of commission would thereafter find its way back to the pocket of the alleged donors in the form of advances towards purchases expenses. It was also admitted by him that all the members of the governing body of the assesseee institution were fully aware of the functions and modus operandi of such raising of funds by the assessee organisation. On the other hand, Smt. Sujata Ghosh Dastidar, director of HHBRF in her statement had claimed that she had signed the papers on the instructions of S/sh. Swapan Ranjan Dasgupta and Tapan Ranjan Dasgupta. It was admitted by her that the donations received from some of the parties were returned to them with the help of some brokers ....
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....i Institute of Experimental Research & Education; and (iii). M/s Bioved Research Society. On the basis of the aforesaid deliberations, it was observed by the A.O that the aforesaid research organization was only engaged in providing accommodation entries of bogus donations. Observing, that the CBDT, New Delhi vide its order, viz. F.No. 203/09/2015/ITA-II, Govt. Of India, Ministry of Finance, Department of Revenue, North Block, New Delhi, dated 15.09.2016 had withdrawn the notification u/s 35(1)(ii) for the aforesaid research organization, viz. HHBRF, the A.O held a conviction that the aforesaid research organization, viz. HHBRF had not carried out any genuine activities and was only engaged in the business of issuing bogus donation receipts u/s 35(1)(ii) of the Act. Accordingly, it was observed by the A.O that the aforesaid research organization, viz. HHBRF had received huge number of donations on which it had earned service charges and after deducting the same had refunded the balance in cash to the donors. Also, it was observed by the A.O that as the assessee had failed to comply with the summons which were issued to the directors u/s 131 of the Act, therefore, it had failed to ....
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.... an 'affidavit' on its own. Lastly, it was observed by the CIT(A) that the very fact that the CBDT had withdrawn the approval granted to the research organization, viz. HHBRF, therein evidenced that the institute had misused the approval that was granted to it u/s 35(1)(ii) of the Act. Observing, that the A.O had sufficient, cogent, tangible, reliable and authenticated proof to conclude that the donation booked by the assessee in its books of account during the year was bogus to evade taxes and launder money the CIT(A) upheld the disallowance of the assessee's claim for deduction u/s 35(1)(ii) of Rs. 1.05 crores. Accordingly, the assessee's appeal was dismissed by the first appellate authority. 4. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee at the very outset of the hearing of the appeal assailed the validity of the jurisdiction assumed by the A.O u/s 147 of the Act. It was submitted by the ld. A.R that regular assessment in the case of the assessee for the year under consideration i.e A.Y 2011-12 was earlier framed by the A.O vide his order passed u/s 143....
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....2-13, dated 28.10.2019. 3. Mahesh C Thakkar Vs. ACIT, Mumbai ITA 5121 5122/Mum/2018, A.Y.2012-13 and 2014-15, dated 21.08.2019. 4. Borsad Tobacco Co. Pvt. ltd. Vs. DCIT Cen Circle 8(1), Mumbai ITA 2040/Mum/2018, A.Y. 2014-15, dated 17.06.2019. 5. Urnish Jewellers Vs. Asst. CIT, Mumbai, ITA 1583/Mum/2019, A.Y. 2012-13, dated 22.05.2019. 6. M/s Motilal Dahyabhai Jhaveri & Sons vs. Asst. CIT, Mumbai ITA 3453/Mum/2018 and 1584/Mum/2019, AY.2013-14 and 2014-15, dated 24.04.2019 7. Kitchen Essential Vs. ACIT, Thane, ITA 6672 & 6673/Mum/2013, A.Y. 2013-14 and 2014-15, dated 15.01.2019. 8. M/s Avis Life Care Pvt. ltd .Vs. DCIT, Jaipur, ITA 989/JP/2018, AY 2014-15, dated 20.06.2019. 9. Narbheram Vishram Vs. DCIT Central Circle, Kolkata, ITA 42 & 43/Kol/2018, AY. 2013-14 and 2014-15, dated 27.07.2018 10. DCIT, Kolkata Vs. M/s Maco Corporation (India) Pvt. Ltd. ITA 16/Kol/2017, AY.2013-14, dated 14.03.2018. 11. Rajda Ploymers Vs. DCIT Kolkata, ITA 333/Kol/2017, AY. 2013-14, dated 08.11.2017 Also, reliance was placed by the ld. A.R on a host of certain other judicial pronouncements forming part of the assessee's paper book (for short 'APB') to which our attention was drawn d....
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....roval granted under the Act by the CBDT. In the backdrop of the aforesaid facts, we shall herein examine as to whether or not the subsequent cancellation of registration of HHBRF u/s 35(1)(ii) by the CBDT vide its order dated 15.09.2016 viz. F.No. 203/09/2015/ITA-II, Govt. Of India, Ministry of Finance, Department of Revenue, North Block, New Delhi, dated 15.09.2016 can invalidate the assessees claim of deduction under Sec. 35(1)(ii) of the Act. For a fair appreciation of the issue under consideration we would herein cull out the 'Explanation' to Sec. 35(1)(ii) of the Act, which in our considered view will have a strong bearing on the adjudication of the issue and reads as under: "Explanation.-The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn;‖ Now, in the case before us, we find that the afore....
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....to a similarluy placed institution before them, viz. School of Human Genetics & Population Health had vacated the disallowance of the assesses claim for deduction under Sec.35(1)(ii) of the Act by observing as under: "6. We have heard the rival submissions of the parties and gone through the material on record including the cases relied upon by the parties. In the case of Mahesh C. Thakker vs. ACIT (supra), the coordinate Bench has decided the identical issue in favour of the assesse holding as under:- "6. In view of the above submissions, it was claimed that exactly on identical issues the co-ordinate Bench of this Tribunal ‗B' Bench Kolkata in the case of DCIT vs. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017 vide order dated 14.03.2018 for AY 2013-14 has considered the issue in regard to very same trust i.e. SGHPH and holds that prior to the date of donation under cancellation of registration has happened and there is absolutely no provision of withdrawal of recognition under section 35(1)(ii) of the Act. Hence, allowed the claim of the assessee by observing in Para 8.1 and 8.5 as under: - "8.1. The brief fact pertaining to SGHPH are as under: - a) SGHPH ....
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.... decided by the coordinate Bench in favour of the assessee in the aforesaid case, we do not find any reason to take a different view from the view already taken by the coordinate Bench. Hence, respectfully following the decision of the coordinate Bench rendered in the case of Mahesh C. Thakker vs. ACIT (supra), we allow ground No 6 & 7 of the assessee's appeal and direct the AO to allow the claim of the assessee.‖ In the backdrop of our aforesaid deliberations', and the fact, that the issue involved in the present appeal is squarely covered by the aforesaid orders of the co-ordinate benches of the Tribunal, we finding no justifiable reason to take a different view respectfully follow the same. Accordingly, we set aside the order of the CIT(A) and vacate the disallowance of the assesse's claim for deduction under Sec.35(1)(ii) of Rs. 1,05,00,000/-. The Grounds of appeal No. 1 and 2 are allowed in terms of our aforesaid observations. 7. As we have allowed the appeal of the assessee on merits and had vacated the disallowance of the assessee's claim for deduction u/s 35(1)(ii) of Rs. 1.05 crores, therefore, we refrain from adverting to the contentions advanced by the ld. A.R as....
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....ly stated, the assessee company had e-filed its return of income for A.Y. 2012-13 on 29.09.2012, declaring its total income at Rs. 6,88,14,580/-. Original assessment was framed by the A.O vide his order passed u/s 143(3), dated 18.03.2015 and the income of the assessee company was assessed at an Rs. 6,92,51,860/-. Observing, that the Ministry of Finance vide its notification No. 82/2016/F.No.203/64/2009/ITA.II, dated 15.09.2016 had withdrawn the approval that was earlier granted u/s 35(1)(ii) of the Act on 28.01.2010 to M/s School of Human Genetics and Population Health (for short "SHG&PH"), the A.O for the purpose of withdrawing the deduction of Rs. 26,25,000/- that was claimed by the assessee u/s 35(1)(ii) in respect of a donation of Rs. 15 lac stated to have been given to SHG&PH reopened its case u/s 147 of the Act. In compliance to the notice issued u/s 148 of the Act it was requested by the assessee that its original return of income filed on 29.09.2012 may be treated as the return filed in compliance thereof. Accepting the aforesaid request of the assessee, the A.O, therein proceeded with and issued notices u/ss. 143(2)/142(1) to the assessee. On receipt of the copy of the r....
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....thenticity of the aforesaid transaction had remained unproved. Also, it was observed by the A.O that the assessee company and its directors had made donations to such alleged trusts during similar period which by no means could be held to be a coincidence. It was further observed by the A.O that a survey operation was conducted by the Directorate of Investigation (Kolkata) under Sec. 133A of the Act on 27.01.2015 at the registered/administrative offices of SHG&PH, which revealed, that the said institution had indulged into providing accommodation entries of bogus donations to the donors through a network of brokers and accommodation entry providers. It was gathered by the A.O that Smt. Samadrita Mukherjee Sardar, Secretary, had admitted in her statement that was recorded in the course of the survey proceedings on 27.01.2015 under Sec. 131(1) of the Act, that the aforesaid institution i.e SHG&PH in lieu of commission was providing accommodation entries of bogus donations through a network of market brokers. Also, it was noticed by the A.O that Shri Pinaki Pal, accountant of SHG&PH in the course of the survey proceedings was found to be in possession of a number of messages from the ....
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....the basis of the aforesaid facts, it was observed by the A.O that SHG&PH had admitted before the Settlement Commission of its earning of additional income by providing of accommodation entries of bogus donations during the years 2011-12, 2012-13 and 2013-14. It was also noticed by the A.O that the CBDT vide its letter dated F. No. 203/09/2015/ITA (ii), dated 25.09.2016 had withdrawn the notification granting approval under Sec.35(1)(ii) of the Act to SHG&PH. On the basis of the aforesaid facts, the A.O was of the view that the assessee in connivance with SHG&PH had misused the provisions of Sec. 35(1)(ii) and as a beneficiary had obtained accommodation entries in the guise of donation. It was noticed by the A.O that due to extensive efforts of the investigation wing the modalities of the transactions carried out by the aforesaid institution were completely exposed. Also, it was noticed by him that before the Settlement Commission, Kolkata the aforesaid institution viz. SHG&PH had admitted that they had indulged in providing accommodation entries in the guise of bogus donations and had also elaborated upon the modus operandi that was adopted by them. On the basis of his aforesaid ob....