TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 732
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....ppellants 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 2012-13, the assessee filed its return of income on 28.09.2012 declaring total income at Rs,4....
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...., 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) Further, the Assessing Officer only on presumption and without bringing any evidence on record has alleged that cash ha....
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....hich 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 evidence to benefit from the tax benefit provided by the relevant section;. The said investigation findings had resulted in most of the entities withdrawing their claim....
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....- 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 from 1st April, 2007 and shall be deemed that the said notification has not been issued for any (ax benefits under the Income-tax Act, 1961 or any Other law of the time being in force. " 5.....
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....vate 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 syndicate. I have perused the information received and case records of the assessee. It is noticed that the assesses company during A.Y. 2012-13 has shown donation of Rs. 20,00,000/- to the above institution and has claimed deduction of Rs. 35,00,000/- under section 35(l)(ii) of the Income Tax act 1961. Further, v....
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....ndra (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 Income Tax Act. 1961 or any other law of the time being in force. We respectfully submit that the statute itself, i.e., the Income Tax Act, 1961, has provided as follows: "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 d....
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....kata 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, upon reopening on the basis of the same information the Assessing Officer made the assessment disallowing the payment. There is no further material brought on record by the Assessing Officer. The assessee has submitted the payment evidence. The same was through banking channel. At the time of payment the said entity was very much eligible of the deduction. 20. We further note that the ITAT in the case of Sopariwala Exports Pvt. Ltd. (ITA....
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.... 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(1) (ii) of the Act, which is 175% of the amount of donation being the sum of Rs. 2,75,00,0007- in respect of the donation given to 'The School of Human Genetics and Population Health'. We note that the Notifications to this effect, that these two institutions viz. 'Matrivani' and 'SHG', were approved by the Central Government for the purpose of section 35(1)(ii) of the Act, was published in the Gazette of India. However, the deduction....
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....nstitutes 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 during survey conducted at the premises of M/s. Herb/cure. 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, whe....
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....ct 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 a much better footing than the facts before the Hon'ble Apex Court. In the case before Hon'ble Apex Court, the power of cancellation of registration us 12A of the Act was conferred by the Act on the Id CIT w.e.f. 1.10.2004 and the Hon'ble Apex Court held that prior to that date , no cancellation of registration could happen. But in the instant case, there is absolutely no provision for withdrawal of recognition u/s 35(l)(ii) of the Act. Hence we hold that the withdrawal of recognition u/s 35(l)(ii) of....