2020 (2) TMI 1456 - AT - Income Tax

Reopening of assessment u/s 147 - disallowance of claim under section 35(1)(ii) - bogus donations for claiming deduction under section 35(1)(ii) - HELD THAT - As decided in M/S. THAKKAR GOVINDBHAI GANPATLAL 2019 (7) TMI 1559 - ITAT AHMEDABAD AO is harping upon an information supplied by the survey team 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. There is no disparity on the facts. On the basis same survey report, the genuineness of the donation has been doubted in the case of the assessee also. Therefore no merit in the appeal of the Revenue.

Summary

Issues:
Challenge to reassessment under section 143(3) r.w.s. 147 of the Act and disallowance of claim under section 35(1)(ii) of the Act.

Reassessment Challenge:
The appeal was against the order dated 08.03.2018 passed by the Commissioner of Income Tax (Appeals) – 5, Ahmedabad, which arose from the order dated 29.12.2016 passed by the ITO, Ward-5(3)(1), Ahmedabad under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 for Assessment Year 2014-15. The assessee challenged the reassessment under section 143(3) r.w.s. 147 of the Act. The Tribunal considered the relevant materials on record and found that the issue was squarely covered by previous judgments in favor of the assessee. The Tribunal allowed the appeal, and the reassessment was deleted.

Disallowance of Claim under Section 35(1)(ii):
The disallowance of the claim under section 35(1)(ii) of the Act to the tune of &8377; 3,50,000 was also challenged. The assessee had donated to an institution during the subsistence of approval, but the approval was later withdrawn. The Ld. AO disallowed the claim as the assessee failed to furnish the certificate issued by the prescribed authority to the institution granting approval for tax exemption. The Tribunal referred to a similar case where the genuineness of the donation was doubted based on a survey report. The Tribunal found that the issue in dispute was covered in favor of the assessee and dismissed the appeal of the Revenue. Consequently, the disallowance under section 35(1)(ii) for A.Y. 2014-15 was not permissible, and the addition was deleted. Therefore, the assessee's appeal was allowed.

This judgment highlights the importance of substantiating claims under the Income Tax Act and the significance of previous judgments in similar cases. The Tribunal's decision to allow the reassessment challenge and delete the disallowance emphasizes the need for proper documentation and compliance with statutory requirements to support deductions claimed under the Act.