2019 (10) TMI 1281 - AT - Income Tax

Deduction u/s 35(1)(ii) - Rejection of claim of deduction u/s 35(1)(ii) @ 175% of the donation and made addition of the said amount to the income of the assessee - HELD THAT - As decided in Mahesh C. Thakker 2019 (8) TMI 1505 - ITAT MUMBAI has considered the same Trust/ institute i.e. SHG PG and allowed the claim of the assessee.

Summary

Issues:
1. Reopening of assessment
2. Violation of principles of natural justice
3. Disallowance of deduction claimed u/s 35(1)(ii)
4. Not allowing deduction u/s 80G

Reopening of assessment:
The assessee challenged the reopening of assessment under section 147 of the Income Tax Act, claiming that the donation given was not bogus and reopening the assessment on that ground was bad in law. The appellant sought directions for the Commissioner of Income Tax (Appeals) to address the grounds of reopening, as it was crucial to the case. The contention was that the reopening was not valid due to the alleged bogus donation.

Violation of principles of natural justice:
The appellant argued that the principles of natural justice were violated as the Assessing Officer did not provide an opportunity for cross-examination of the parties whose statements were relied upon. The appellant claimed that this violation rendered the order bad in law, seeking a favorable ruling on this ground.

Disallowance of deduction claimed u/s 35(1)(ii):
The dispute centered around the disallowance of a deduction claimed under section 35(1)(ii) amounting to ?1,75,00,000. The Assessing Officer rejected the deduction, stating that the donation was returned to the appellant after deducting a commission, making the appellant ineligible for the deduction. The appellant contended that they were entitled to the deduction for the donation made to the School of Human Genetics & Population Health.

Not allowing deduction u/s 80G:
Additionally, the appellant challenged the decision of not allowing a deduction under section 80G concerning the donation made to the School of Human Genetics & Population Health. The appellant sought directions for the Assessing Officer to allow the deduction under section 80G if the deduction under section 35(1)(ii) was not permitted.

The Tribunal referred to a similar case, Mahesh C. Thakker vs. ACIT, where the issue was decided in favor of the assessee. The Tribunal highlighted that withdrawal of recognition subsequent to the donation did not impact the claim of the assessee, citing relevant provisions of the Income Tax Act. The Tribunal acknowledged the consistency in decisions across different benches and allowed the deduction under section 35(1)(ii) for the appellant. As a result, the appeal filed by the assessee for the assessment year 2012-2013 was allowed, based on the precedent set in the Mahesh C. Thakker case.