TaxTMI 
TaxTMI 
2021 (7) TMI 1139
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....ome-tax (A)-I erred in deleting the penalty levied by Assessing Officer u/s 271(1)(c) for furnishing inaccurate particulars of its income on account of disallowance of the deduction claimed by the assessee u/s 35 of the Income-tax Act, 1961 when the Central board of Direct Taxes vide Office Memorandum dated 21/09/2016 withdraw notification granting approval u/s 35(1)(ii) of the IT. Act, 1961 in case of M/s School of Human Genetics and Population Health to whom the assessee claimed to have donated sum. 4. The Ld. Commissioner of Income-tax (A)-I erred in deleting the penalty levied by Assessing Officer u/s 271(1)(c) for furnishing inaccurate particulars of its income on account of disallowance the deduction claimed by the assessee u/s 35 of the Income-tax Act, 1961 when the Central board of Direct Taxes vide Office Memorandum dated 21/09/2016 withdraw notification granting approval u/s 35(1)(ii) of I.T. Act, 1961 in case of M/s School of Human Genetics and Population Health to whom the assessee has claimed to have donated sum and the assessee company accepted the quantum addition made by the AO vide order u/s 143(3) dated 08/12/2016. 5. In this case the department ....
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....withdrawn the notification granting approval u/s.35(1)(ii) of the Act. Penalty proceedings were also initiated for filing inaccurate particulars of income and levy of penalty @ 100% being Rs. 8,51,681/- was also imposed. 6. It is the case of the assessee that SHGPH was approved by the Central Government as a notified organization u/s.35(1)(ii) of the Act vide Notification No.4/2010 dated 28th January, 2010. Further approval in perpetuity was also granted to SHGPH by the Income Tax Department on 12th December, 2011. SHGPH was also recognized as Scientific and Industrial Research Organization (SIRO) by the Ministry of Science and Technology, Government of India on 25th April, 2008. This recognition was renewed by the Government of India on 17th June, 2010 and 1st April, 2013. On the basis of notifications and approvals granted by the various arms of the Government and the Income Tax Department, the assessee paid an amount of Rs. 15,00,000/- to SHGPH and claimed deduction u/s.35(1)(ii) of the Act on the basis of the same. 7. Thereafter, the case of the assesse company was selected under limited scrutiny (CASS) and accordingly, scrutiny proceedings were initiated. During that ....
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....the assessee had filed return of income on 13.10.2014, at that point of time, SHGPH was duly notified organization u/s.35(1)(ii) of the Act. It was only on 15th September, 2016 the Central Government had rescinded the approval earlier granted to SHGPH. 9. The Hon‟ble Bombay High Court in the case of Ramdas Menklal Gandhi Vs. Union of India, 241 ITR 437 on the same set of facts and circumstances has held that the assessee was entitled to get the deduction on the basis of certificate granted to the assessee by prescribed authority which was valid and operative in the previous year despite withdrawal of the same by the prescribed authority subsequently with retrospective effect. The law is now well settled that retrospective withdrawal or cancellation of certificate will have no effect upon the assessee who had acted upon it when it was valid and operative. The Hon‟ble Bombay High Court had referred the decision of the Hon‟ble Supreme Court in the case of State of Maharashtra Vs. Suresh Trading Company, 109 STC 439 (SC) wherein it was held that retrospective cancellation had no effect upon any person who had acted upon the strength of a registration certificate wh....
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.... this Trust were beneficiaries of the bogus entries. In the result, impugned notice is set aside- Decided in favour of assessee." 13. We have perused the case records and heard the rival contentions and analyzed the facts and circumstances in this case. Herein, the penalty u/s.271(1)(c) of the Act was imposed by the Assessing Officer stating that the assessee had furnished inaccurate particulars of income. However, the facts on record clearly specifies that the assessee had made donation to SHGPH and at the time of filing return of income by the assessee, the said SHGPH was notified organization and approved by the Government of India and even recognized as Scientific and Industrial Research Organization (SIRO) by the Ministry of Science and Technology, Government of India. With these particulars existing and being valid at the time of filing return of income, the assessee had claimed deduction u/s.35(1)(ii) of the Act. The bona-fide action of the assessee cannot be doubted since donation given during relevant assessment year to SHGPH and at that point of time, it was a recognized organization. 14. The Hon'ble Delhi High Court in the case of CIT Vs. M/s. SAS Pharmaceutica....