2019 (1) TMI 1694 - AT - Income Tax

Bogus donation to Herbicure Healthcare Bio-Herbal Research Foundation - HELD THAT - AO is harping upon an information supplied by the survey tem of Calcutta. He has not specifically recorded statement of representatives of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of a general information collected from the donee the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination nor any specific reply deposing that such donation was not received or if received the same was repaid in cash has been brought on record. In the absence of such circumstances donation given by the assessee to the donee on which the assessee no mechanism to check the veracity can be doubted more particularly when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore there cannot be any disallowance on this issue. We allow this ground. Failure to make payment of employees contribution towards provident fund within due date as provided under this Act - deduction disallowed u/s 36(1)(va) - HELD THAT - CIT(A) has confirmed disallowance by putting reliance upon judgment of Hon ble Gujarat High Court in the case of Gujarat State Road Transport Corporation Ltd. 2014 (1) TMI 502 - GUJARAT HIGH COURT . Considering reliance put forth by the ld.CIT(A) on the judgment of Hon ble jurisdictional High Court we are of the view that no interference is called in the order of the ld.CIT(A) on this issue. This ground of appeal is rejected.

Summary

Issues:
1. Addition of alleged bogus donation to Herbicure Healthcare Bio-Herbal Research Foundation.
2. Disallowance of employees' contribution towards provident fund.

Analysis:

Issue 1:
The assessee appealed against the addition of Rs. 8,75,000 on account of an alleged bogus donation to Herbicure Healthcare Bio-Herbal Research Foundation. The assessee claimed that the donation was made when the donee was a notified eligible institution, but its certificate was canceled later. The Assessing Officer (AO) relied on a survey report from Calcutta, which suggested misuse of donations by the donee. However, the AO did not present specific evidence or statements from the donee's representatives to prove the donations were refunded in cash after deducting commission. The Tribunal observed that without concrete evidence or cross-examination of the donee's representatives, the donation made by the assessee could not be doubted. Since the cancellation of the donee's certificate occurred after the donation was made, the Tribunal concluded that there was no basis for disallowance. Therefore, the Tribunal allowed this ground of appeal.

Issue 2:
The second ground of appeal involved the disallowance of Rs. 1,33,018 due to the assessee's failure to pay employees' contribution towards provident fund on time. The disallowance was made under section 36(1)(va) of the Act. The ld.CIT(A) upheld the disallowance citing a judgment of the Hon'ble Gujarat High Court. The Tribunal, considering the precedent cited by the ld.CIT(A), decided not to interfere with the order on this issue. Consequently, the Tribunal rejected this ground of appeal. In the final result, the appeal of the assessee was partly allowed by the Tribunal.

This judgment by the Appellate Tribunal ITAT Ahmedabad addressed the issues of an alleged bogus donation and the disallowance of provident fund contributions. The Tribunal found in favor of the assessee regarding the donation issue due to lack of concrete evidence and cross-examination. However, the disallowance of provident fund contributions was upheld based on a precedent from the Hon'ble Gujarat High Court.