2020 (2) TMI 1694 - AT - Income Tax

Disallowance of claim u/s 35(1)(ii) - bogus donations for claiming deduction - assessee failed to furnish the certificate issued by the prescribed authority to School of Human Genetics and Population Health (SHG PH) Kolkata granting approval for exemption of tax in respect of donations made to it - HELD THAT - As relying on judgment of 2019 (7) TMI 1559 - ITAT AHMEDABAD 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. 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. Assessee s appeal is allowed.

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.

Analysis:
The appeal contested the reassessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961, and the disallowance of a claim under section 35(1)(ii) of the Act amounting to Rs. 3,50,000. The assessee's return of income was initially filed for Rs. 8,00,430 on 29.11.2014, which was processed on 11.12.2015. Subsequently, information revealed a survey action at Kolkata Directorate related to facilitating bogus donations for deduction under section 35(1)(ii) of the Act. The survey uncovered a syndicate involving donors, beneficiaries, and brokers engaged in bogus donations. The specific disallowed claim was Rs. 3,50,000 made to an institution for which the approval had been withdrawn. The assessee argued that the disallowance was impermissible as the donation was made during the approval's existence. The case also cited previous tribunal judgments in favor of the assessee, which were submitted for consideration.

The tribunal examined a similar case in ITA No. 2318/Ahd/2017 for A.Y. 2014-15, where a donation was deemed bogus due to misuse of benefits by the donee. The tribunal considered the absence of specific evidence and cross-examination of the donee's representatives, leading to the allowance of the ground in favor of the assessee. The tribunal concluded that the issue in dispute was covered in favor of the assessee based on the previous judgment, dismissing the appeal of the Revenue. The tribunal found no merit in the Revenue's appeal and allowed the appeal of the assessee, leading to the deletion of the addition. The judgment highlighted that the case was squarely covered in favor of the assessee, and the appeal was allowed accordingly.

In conclusion, the tribunal allowed the assessee's appeal, emphasizing that the addition was deleted based on the previous judgment's application. The decision was pronounced in open court on 20/02/2020, favoring the assessee in the matter of the challenged reassessment and disallowance under section 35(1)(ii) of the Act.