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2020 (4) TMI 362 - AT - Income TaxDeduction u/s 35 - Addition on bogus donation made by the assessee - expenditure on scientific research - reliance on the statement of brokers who are providing the accommodation entries - CIT(A) while deleting the additions has held, that the AO has solely relied upon the report of Investigation Wing and has not carried out any worthwhile independent inquiry in this matter - HELD THAT - CIT(A) has relied upon the documentary evidence on record which has been produced by assessee. The AO declined the claim of the assessee on the basis of non submission of the record. However, the CIT(A) has placed reliance upon the number of decisions but on the similar facts and circumstances, the Hon ble ITAT has also given the finding in the case of Urnish Jewellers Vs. ACIT 2019 (5) TMI 1323 - ITAT MUMBAI , Vora Financial Services Pvt. Ltd. Vs. ACIT 2018 (7) TMI 64 - ITAT MUMBAI . The said law was relied by the Ld. Representative of the assessee. The facts are not distinguishable at this stage. We nowhere found any reason to interfere with the finding of the CIT(A), therefore, in view of the said facts and circumstances, we are of the view that the finding of the CIT(A) is quite correct and justifiable - Decided against revenue
Issues Involved:
1. Bogus donation and deduction claimed under section 35(1)(ii) of the Income Tax Act, 1961. 2. Reliance on the Investigation Wing report and lack of independent inquiry by the AO. 3. Suppression of income by the assessee. 4. Genuineness of the donation transactions. 5. Failure of the assessee to produce evidence or parties related to the donation. 6. Validity of the CIT(A)'s decision to allow the deduction claimed by the assessee. Issue-wise Detailed Analysis: 1. Bogus Donation and Deduction Claimed Under Section 35(1)(ii) of the Income Tax Act, 1961: The Revenue challenged the deletion of the addition of ?93,00,000/- made by the AO on account of bogus donations and the allowance of the deduction of ?1,62,75,000/- claimed under section 35(1)(ii). The assessee had made donations to School of Human Genetics & Population Health (SHG&PH), Herbicure Healthcare Bio-Herbal Research Foundation (HHBRF), and Matrivani Institute of Experimental Research & Education (MIERE). The CIT(A) allowed the claim based on documentary evidence provided by the assessee, including donation receipts and certificates of registration and approval from relevant authorities. 2. Reliance on the Investigation Wing Report and Lack of Independent Inquiry by the AO: The AO relied on the Investigation Wing's report, which indicated that the institutions involved were engaged in facilitating bogus donations. The CIT(A) criticized the AO for not conducting an independent inquiry and solely relying on the Investigation Wing's findings. The CIT(A) admitted additional evidence submitted by the assessee and found that the conditions prescribed under section 35(1)(ii) were met, thus allowing the deduction. 3. Suppression of Income by the Assessee: The Revenue argued that the assessee was suppressing income by claiming bogus donations. The CIT(A) found no concrete evidence to support this claim and noted that the AO did not provide any specific instances of income suppression. The CIT(A) emphasized that the documentary evidence submitted by the assessee was sufficient to establish the genuineness of the donations. 4. Genuineness of the Donation Transactions: The CIT(A) examined the documentary evidence provided by the assessee, including donation receipts, certificates of registration, and approvals from relevant authorities. The CIT(A) concluded that the donations were genuine and that the assessee had complied with the conditions under section 35(1)(ii). The CIT(A) also noted that the institutions were approved for the relevant assessment year, and the assessee was entitled to rely on the certificates granted by the prescribed authorities. 5. Failure of the Assessee to Produce Evidence or Parties Related to the Donation: The Revenue contended that the assessee failed to produce evidence or parties related to the donations. The CIT(A) found that the assessee had submitted sufficient documentary evidence during the assessment proceedings, and the AO did not point out any defects in these documents. The CIT(A) held that the onus was on the AO to prove the transactions as non-genuine, which the AO failed to do. 6. Validity of the CIT(A)'s Decision to Allow the Deduction Claimed by the Assessee: The CIT(A) relied on various judicial precedents to support the decision to allow the deduction. The CIT(A) referred to the decisions of the Hon'ble Mumbai High Court, Calcutta High Court, and ITAT, which held that the assessee is entitled to rely on the certificates granted by the prescribed authorities and that subsequent cancellation of approval does not affect the assessee's claim if the approval was valid at the time of the donation. The CIT(A) concluded that the assessee's donations were genuine and allowed the deduction claimed under section 35(1)(ii). Conclusion: The ITAT upheld the CIT(A)'s decision, finding no reason to interfere with the findings. The appeal filed by the Revenue was dismissed, and the cross-objection of the assessee was also dismissed as it had become infructuous. The order was pronounced in the open court on 29/01/2020.
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