2018 (7) TMI 1958 - AT - Income Tax

Disallowance of deduction u/s 35(1)(ii) - donation made to School of Human Genetics Pollution Health - Addition based on statements recorded from key persons of the Trust - opportunity of crossexamination has not been provided in this case - denial of naural justice - HELD THAT - The statement recorded from Shri Avijit Sinha Roy u/s 131 of the Act on 13/04/2015 he states that after the month of February 2011 he left this bogus donation work. On the other hand he has signed a declaration on 30/07.2015. The list prepared by the revenue was signed with a remark that he has seen the list. There is a contradiction in these two. In such circumstances it has to be seen as to which is correct. No opportunity of cross-examining Shri Avijit Sinha Roy has been provided to the assessee. Hence the declaration as well as the statement cannot be the basis of addition. Similarly the statement of the key persons of the trust cannot be the basis of addition as no cross-examination of witness was provided. No proof of money being returned is available with the revenue. As relying on TUSHAR CHAWDA VERSUS I.T.O. WARD-31 (4) KOLKATA 2018 (3) TMI 1405 - ITAT KOLKATA we delete this addition and allow this appeal of the assessee.

Summary

Issues:
- Disallowance of deduction under section 35(1)(ii) of Rs. 3,50,000 on a donation of Rs. 2,00,000 made to School of Human Genetics & Pollution Health without proper appreciation of submissions.

Analysis:
The appeal was against the order of the Commissioner of Income Tax (Appeals) relating to Assessment Year 2014-15. The appellant contested the disallowance of deduction under section 35(1)(ii) regarding a donation made to a specific organization. The appellant argued that reliance on a statement made by a key person for making the addition was incorrect, especially since no opportunity for cross-examination was provided. The appellant cited precedents where similar issues were decided in favor of the assessee by other benches of the Tribunal.

The Departmental Representative (D/R) contended that statements from key persons of the Trust indicated the provision of accommodation entries for donations, and specific individuals admitted to such practices. The D/R highlighted statements and submissions to support the revenue's position. The appellant reiterated that the key person had ceased such activities in 2011, and the lack of cross-examination opportunities undermined the credibility of the statements used by the revenue authorities.

Upon considering the arguments and case law, the Tribunal found inconsistencies in the statements and declarations of the key person involved in providing bogus donations. The Tribunal noted the lack of cross-examination opportunities for the appellant and emphasized the importance of verifying evidence before making additions. Referring to a previous case, the Tribunal highlighted the need for thorough investigation and the absence of concrete evidence of funds being returned. In line with the jurisprudence of the Jurisdictional Tribunal, the Tribunal decided to delete the addition and allow the appeal of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, deleting the addition and allowing the appeal. The decision was consistent with the approach taken in similar cases by the Jurisdictional Tribunal, emphasizing the importance of proper verification and evidence before making additions based on statements alone.