2016 (6) TMI 1359 - AT - Income Tax

Assessment of trust - assessee has paid the money to an approved institution engaged itself in charitable activity, the same is eligible for deduction while computing the taxable income - HELD THAT - When the AO received a letter from the recipient-society claiming that they have no bank account in Axis Bank and the only one bank account is maintained with State Bank of India, this Tribunal is of the considered opinion that the AO ought to have given an opportunity to the assessee to respond to the above claim of recipient-society. Since such an opportunity was not given to the assessee, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the AO after furnishing a copy of the letter dated 24.03.2014 to the assessee. The orders of the lower authorities are set aside and the Assessing Officer is directed to furnish a copy of the letter dated 24.03.2014 said to be received from the Society For Welfare Of The Handicapped Persons, Durgapur, Kolkata and thereafter decide the issue after giving reasonable opportunity to the assessee. It is made clear that this Tribunal is not commenting upon the merit of the addition made by the AO and it is for the AO to decide the same in accordance with law without being influenced by any of the observation made by the CIT(Appeals) and made by this Tribunal in this order. - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Assessment of donation to a charitable institution disallowed by the Assessing Officer based on a letter received from the recipient-society denying the receipt of funds and stating that they have no account in Axis Bank.

Analysis:
The appellant, represented by Shri F.C. Jain, CA, donated ?20,00,000 to a charitable institution named "Society For Welfare Of The Handicapped Persons" at Durgapur, transferred via RTGS mode through Indian Bank. However, the Assessing Officer disallowed the claim based on a letter from the recipient-society denying the receipt of funds and stating they have no Axis Bank account. The appellant obtained the bank statement showing the transaction, indicating funds were transferred to the recipient-society's account. The appellant argued that the donation to an approved charitable institution should be eligible for deduction.

On the contrary, Shri Murali Mohan, the Ld. Departmental Representative, stated that the recipient-society clarified that they had no Axis Bank account and it was opened fraudulently. The matter was under investigation by the police and RBI. The Ld. representative argued that even if the letter was not furnished to the appellant, it wouldn't affect the assessment proceedings.

The Tribunal noted that the Assessing Officer incorporated the recipient-society's letters in the assessment order without providing a copy to the appellant. The Tribunal observed that the failure to furnish the letter violated principles of natural justice. As the recipient-society claimed to have no Axis Bank account but funds were transferred from there, the matter needed further examination. The Tribunal directed the Assessing Officer to provide a copy of the letter to the appellant and reconsider the issue after giving a reasonable opportunity to respond, without commenting on the merit of the addition made by the Assessing Officer.

In conclusion, the appeal of the assessee was allowed for statistical purposes, emphasizing the need for the Assessing Officer to reevaluate the issue after providing the necessary documents and opportunity for the appellant to respond.