2019 (11) TMI 1436 - AT - Income Tax

Donation u/s 35(1)(ii) - disallowance of weighted deduction and disallowance of weighted deduction - withdrawal of recognition u/s 35(1)(ii) in the hands of the payee organizations - HELD THAT - As decided in NARBHERAMVISHRAM GUA 2018 (11) TMI 1314 - ITAT KOLKATA there is absolutely no provision for withdrawal of recognition u/s 35(1)(ii) of the Act . Hence we hold that the withdrawal of recognition u/s 35(1)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii) of the Act. We direct the ld AO to grant deduction u/s 35(1)(ii) claimed in respect of the amounts of donations made to two Institutions.- Appeal of the assessee is allowed.

Summary

Issues involved:
1. Disposal of appeal ex parte due to non-appearance of the assessee.
2. Claim of weighted deduction under section 35(1)(ii) of the Income Tax Act, 1961 for donations made to specific institutions.
3. Denial of deduction by the Assessing Officer based on allegations of donations being bogus.
4. Withdrawal of recognition of institutions by the CBDT and its impact on the claim of weighted deduction.
5. Application of judicial precedents to support the assessee's claim for deduction.

Detailed analysis:
1. The appeal was disposed of ex parte as the assessee did not appear despite multiple notices. The appeal was against the order passed by the Commissioner of Income Tax (Appeal)-6, Kolkata, arising from an assessment order by the Assessing Officer under sections 147/143(3) of the Income Tax Act, 1961.

2. The issue involved the claim of weighted deduction under section 35(1)(ii) of the Act for donations made to specific institutions. The Tribunal noted that a similar issue had been adjudicated in favor of the assessee in a previous order related to donations made to "The School of Human Genetics and Population Health." The Revenue agreed that the present issue was covered by the previous Tribunal order.

3. The Assessing Officer denied the deduction claimed by the assessee, alleging that the donations were bogus based on statements from key persons of the institutions. The assessee contended that the donations were genuine, and the institutions were registered under section 12A of the Income Tax Act. The Tribunal found that the denial of deduction without providing an opportunity for cross-examination was against the principles of natural justice.

4. The CBDT withdrew the recognition of the institutions with retrospective effect, impacting their entitlement to claim benefits under section 35(1)(ii) of the Act. However, the Tribunal held that the withdrawal of recognition did not affect the assessee's right to claim weighted deduction, citing judicial precedents and the quasi-judicial nature of the CIT's order.

5. Relying on various judicial precedents, the Tribunal directed the Assessing Officer to grant the deduction claimed by the assessee for donations made to the institutions. The decision was based on the findings of the Coordinate Bench and the absence of material produced by the Revenue to counter the previous findings.

In conclusion, the appeal was allowed in favor of the assessee, and the Tribunal directed the Assessing Officer to grant the claimed deductions for the donations made to the specified institutions.