TaxTMI 
TaxTMI 
2021 (10) TMI 732
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....assessment order ought to have been quashed by the CIT(A). The appellants further, contend that the reasons recorded by the Assessing Officer are vague, insufficient and without application of mind and hence, the CIT(A) ought to have quashed the notice under section 148 and thereby the consequent assessment order. 2. The CIT(A) erred in upholding the action of the Assessing Officer in disallowing Rs. 35,00,000, being the claim of weighted deduction of 175% under section 35(l)(ii), on the ground that donation receipt of Rs. 20,00,000 is not submitted. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have confirmed the action of the Assessing Officer in making the impugned disallowance of the claim of deduction under section 35(l)(ii) of the Act inasmuch the CIT(A) has not appreciated that the letter dated 29th March, 2012 of the scientific research institution acknowledges receipt of Rs. 20,00,000 by RTGS to their bank account (details mentioned therein) and has enclosed the necessary documents and hence, the said disallowance requires to be deleted. 3. Brief facts are that for the AY 2012....
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.... regular scrutiny assessment u/s.l43(3) was completed by the assessing officer in March, 2015 itself, accepting the returned income as assessed income, after verification of alt supporting documents, including the documents of the subject under appeal. Hence reo-opening the case for the matter which was already discussed during the assessment proceedings is itself bad in low. 2) The re-opening of the said case was duly objected to by the appellant Company. The appellants contend that the Assessing Officer has made the impugned addition merely relying on the information received from the Investigation Wing and no independent inquiries are conducted by the Assessing Officer and no evidences are brought on record to prove that the contribution made by the appellants is non-genuine. 3) The appellants further, contend that the assessment has been made in utter disregard to the principles of nature justice in as much as the Assessing Officer has not provided the statements on oath of persons searched, on which he has placed reliance and hence, there was no opportunity to the appellants to rebut the request for an opportunity to cross-examine the said persons. 4....
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.... by the Kolkata Directorate of the Investigation wing wherein it was found that the said entity did no conduct any research activity or any such activity which can be considered as scientific in nature or for the purpose for which the section 35 was incorporated in the Act. On the contrary the investigation wing opined that the said entity was more involved in providing assistance to tax evaders by offering their services on account of obtaining funds through other than cash and after deducting a commission returned the amount to the beneficiary in cash. 8. Thereafter the Assessing Officer referred to the modus operandi found by the investigation team and also the reply of the founder director of the said institution. By referring to it, the Assessing Officer made following conclusion:- "The said faces clearly proved that the contributions to the said entity was not a donation or payment made for scientific research or any purpose mentioned in section 35 of the Act but merely a transaction created to give the effect of a donation wherein the chequc/RTGS transfer was created as the evidence and for a small commission obtained a certificate of contribution as another evid....
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.... the Assessing Officer's order by observing as under :- 5.4.1 1 have considered the rival contentions, I find that the present appeal is against disallowance of Rs. 35,00,000/- representing deduction claimed u/s, 35(1) of the Act towards donation made to HHBHRF, The AO rejected the submissions of the appellant and disallowed the claim of the appellant relying on the findings of the Directorate of income Tax (Investigation), Kolkata from the Survey conducted on 27.01.2015. I also find that the approval u/s 35(1)(ii) of the Act had been subsequently withdrawn only vide Notification No.79/2015/F.No.203/135/ 2007/ITA.II dated 06th September. 2016. Notification dated 6lh September, 2016 is reproduced below: "S.O. 2882(E)- In exercise of the powers conferred under clause (ii) of subsection (1) of section 35 of the Income-tax Act, 1961 read with rides 5C and 5E of the Income-tax Rules 1962, the Central Government hereby rescinds the notification of the Government of India, Ministry of finance, Department of Revenue number 35/2008 dated 14th March, 2008 published in the Gazette of India, Part II. Section 3, Subsection (II) vide S.O. 798 dated I4lh March, 2008 with effect ....
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..... ITA No. 16/Kol/2017 (Kol-Trib) 14. Per contra learned Departmental Representative relied upon the order of authorities below. 15. Upon careful consideration we note that the notice for reopening in this case reads as under :- "Reasons for reopening Entertainment Private Limited PAN: AADCK8786D A.Y. 2012-13 The Assessee, M/R Crossover Entertainment Private Limited, PAN: AADCK8786D is in the business of Talent & Event Management, sponsorship/allied promotions and branding activities. The assesses company tiled, its return of income for A.Y. 2012-13 on 28.09.201 2 declaring of Rs. 4,48,03,337/-. The return was processed u/s. 143(1) of the I.T. Act. As per the information, received from Kolkata Directorate of investigation, the institution-Herbicure Healthcare Bio-Herbal Research Foundation was providing accommodation entries to beneficiaries in the nature of bogus donation in lieu of commission. As per the modus operandi, the bogus donations were returned buck 10 the donors in the lieu of commission. The assessor company i.e. M/s Krossover Entertainment Private Limited has been identified as one of the beneficiaries of such syndi....
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....gus transaction, which tantamount to "income" and which has "escaped assessment". Thus, there is no reason to believe that income chargeable to tax has escaped assessment which is the sine qua non for issuing a notice under section 148. Assessee had made the payment of Rs. 20,00,000/- through RTGS from its bank account of State Bank of India, Bandra (East) branch, Mumbai, directly to their IDBI Bank account, which has been duly acknowledged vide their letter dt 29.03.2012. This payment is also reflecting in the bank statement of the assessee. c. Further, your good selves has very wrongly stated and alleged that the funds have been paid back to the assessee company. d. Your good selves have further stated in the notice u/s. 148 that: Further, vide notification No. 79/2016/F. No. 203/135/2007/ITA. II. Central government has rescinded approval issued vide notification number 35/2008 dated 14.03.2008 to Herbicure Healthcare Bio-Herbal Research Foundation u/s 35(1 )(ii) of the Income Tax Act. 1961 retrospectively w.e.f. 1st April 2007. Notification reads as it shall be deemed that the said notification has not been issued for any tax benefits under In....
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....on143(3) by holding as under :- "The final argument advanced by the assesses is that the assessment was completed earlier u/s. 143(3) and consequently the issue was examined by the then Assessing Officer for allowing the claim. However the assessee has not provided any supporting to prove that the Assessing Officer was aware of the actual activity conducted by IIHBRF which was unearthed consequent to investigation by the Kolkata Directorate. Accordingly there is no justification in the said contention of the assessee that the matter was examined in detail including in the light of the present findings by the Kolkata Directorate. In view of the same the argument of the assessee on this ground is also not acceptable." 19. We note that in the case assessment was earlier completed under section 143(3) of the Act. Subsequently on information from the investigation wing at Kolkata that M/s. Herbicure Healthcare Bio-Herbal Research Foundation (HHBHRF) was engaged in providing accommodation entries the case of the assessee was reopened. In this regard it is noted that there is nothing on record that any specific information regarding the assessee was received. Consequently, upo....
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.... to the rival submissions and perused the materials available on record, we note that the assesses has challenged disallowance of weighted deduction of Rs. 4,81,25,0007- for A.Y. 2013-14 and disallowance of weighted deduction of Rs. 10,50,00,000/-, for A.Y. 2014-15, claimed by him under section 35(l)(ii) of the Act in respect of the amounts of donations made to two Institutions viz. 'Matrivani Institute Experimental Research & Education' (hereinafter referred to as 'Matrivani') and 'The School of Human Genetics and Population Health' (hereinafter referred to as 'SHG'). The Assessee Firm in A.Y. 2014-15, made donation of Rs,2,00,00,000/ to Matrivani and Rs,4,00,00,000/ to SHG and claimed weighted deduction of Rs. 10,50,00,000 under section 35(l)(ii) of the Income Tax Act, 1961, being 175% of the aggregate sum of Rs. 6,00,00,000/-(Rs,2,00,00,000 + Rs,4,00,00,000) donated to these two institutes which were approved by the Central Government for the purposes of section 35(1) (ii) of the Act read with Rule 5C and SE of the Income Tax Rules, 1962. In the assessment year 2013-14, the assessee claimed weighted deduction of Rs. 4,81,25,000/- under section 35(....
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.... bogus donation after deducting their commission. We note that the statements of the various parties and persons were recorded behind the back of the assessee and the Assessing Officer did not allow opportunity of cross examination. We note that in absence of opportunity of cross-examination no reliance could be made on such statements to draw any adverse inference against the assessee firm. The assessee firm denied its knowledge of the statements made by these institutes which were relied on by the Investigation Wing and the Assessing Officer. We note that not providing the opportunity of cross-examination is against the principle of natural justice and for that we rely of-the judgment of Hon'ble Delhi High Court in the case of CIT vs. Dharam Pal Prern Chand Ltd. [2007] 295 ITR 105, 108 (del). We note that on identical facts, the similar proposition was upheld by the Coordinate Bench of Kolkata in the case of Rajda Polymers, ITA No.333/Kol/2017for Assessment Year 2013-14 wherein it was held as follows:- "10. ....Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta d....
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....)(ii) of the Act, for that we rely on the judgment of the Coordinate Bench, Kolkata, in the case of M/s Maco Corporation India (P) Ltd, ITA No.l6/Kol/2017, for Assessment Year 2013-14, wherein it was held as follows: "29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration fill 01.10.2004; and lastly. Section 21 of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section I2AAC3) of the Act w.e.f. 01.10.2004. We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. In fact the assessee's case herein falls on ....