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2020 (1) TMI 396 - AT - Income TaxDisallowance of deduction claimed u/s 35(i)(ii) - bogus donation to Herbicure Health Care Bio Herbal Research Foundation, Calcutta - AO received information from the investigation wing that the aforesaid institution was engaged in facilitating the donation in lieu of earning commission and assessee was one the beneficiaries - HELD THAT - As decided in S.G. VAT CARE P. LTD 2019 (1) TMI 1694 - ITAT AHMEDABAD 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.
Issues:
Appeal against CIT(A)'s order disallowing deduction claimed under section 35(1)(ii) and addition under section 14A. Analysis: 1. The assessee claimed a deduction under section 35(1)(ii) for a donation made to Herbicure Health Care Bio Herbal Research Foundation. The assessing officer disallowed the deduction based on information from the investigation wing that the institution facilitated bogus donations in exchange for commissions. The assessee argued that the donation was made through a cheque and denied receiving any cash back. The CIT(A) upheld the disallowance. 2. During the appeal, the assessee reiterated that the donation was made through a cheque and emphasized the lack of opportunity for cross-examination. The assessee cited precedents where similar issues were decided in favor of the assessee due to the absence of evidence proving the donations were bogus. The department supported the CIT(A)'s decision. 3. The ITAT noted that similar cases involving donations to the same institution were decided in favor of the assessee due to the lack of mechanisms to verify the legitimacy of the donations. The ITAT referenced a specific case where the genuineness of donations was upheld despite survey reports suggesting otherwise. The ITAT found no disparity in the facts presented and ruled in favor of the assessee based on the precedent and lack of concrete evidence proving the donations were bogus. 4. Consequently, the ITAT allowed the appeal of the assessee, following the decision in the cited case. The appeal against the disallowance of the deduction under section 35(1)(ii) was dismissed in favor of the assessee, emphasizing the importance of concrete evidence to substantiate claims of bogus donations. 5. The judgment highlights the significance of providing concrete evidence to support claims, especially in cases involving deductions and additions under the Income Tax Act. It underscores the need for thorough verification processes to establish the legitimacy of transactions and donations claimed for tax benefits.
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