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2021 (7) TMI 894 - AT - Income TaxDisallowance u/s 35(1)(ii) - donation made to one 'Herbicure Health Care Bio-herbal Research Foundation' as bogus - case of the Revenue that the certificate for receiving donation of that institution was cancelled on 06.09.2016 and therefore, the assessee's claim is bogus - HELD THAT - As relying on M/S. THAKKAR GOVINDBHAI GANPATLAL 2019 (7) TMI 1559 - ITAT AHMEDABAD addition made merely on the basis of the statement made during the survey proceeding and in the absence of any evidence showing the donation received by HHBRF returned back in cash to the assessee after taking commission the said transaction cannot be held to be bogus. Moreso, withdrawal of approval by the CBDT as was granted to the said HHBRF was only on 06.09.2016 i.e. much after the donation made by the assessee. Principally, even if subsequently for any reason if approval granted is withdrawn the deduction claimed cannot be denied. We, thus, are of the considered opinion that the disallowance made under Section 35(1)(ii) of the Act is not sustainable in the eye of law and hence quashed. - Decided in favour of assessee.
Issues Involved:
Challenge to disallowance of deduction under Section 35(1)(ii) of the Income Tax Act for a donation made to an organization engaged in scientific research activity. Detailed Analysis: Issue 1: Disallowance of Deduction under Section 35(1)(ii) The appeal was against the disallowance of a deduction under Section 35(1)(ii) of the Income Tax Act related to a donation made to a specific organization. The disallowance was based on information received during a survey that suggested the organization was involved in arranging bogus donations. The Revenue contended that the certificate for receiving donations by the organization was canceled, making the claim of the assessee bogus. However, the assessee argued that the donation was used for scientific research activities and questioned the evidentiary value of the statements made during the survey. The assessee relied on judgments like CIT vs. Khader Khan Son and Andaman Timber Industries vs. CCE to support their case. The assessee also highlighted that no material was confronted to them, and no cross-examination was allowed, which could constitute as admissible evidence. The cancellation of the institution's certificate came after the donation was made, and similar judgments in identical matters favored the deletion of such additions. The Co-ordinate Bench's judgment in a related case supported the assessee's argument, emphasizing the lack of specific evidence to doubt the donation's genuineness. Issue 2: Judicial Precedents and Co-ordinate Bench Decisions The Tribunal considered previous judgments and Co-ordinate Bench decisions in similar cases to support the assessee's claim. Specifically, the case of S.G. Vat Care Pvt. Ltd. vs. ITO was cited, where the Tribunal found that the donation made by the assessee could not be doubted based on general information collected from the donee. The Tribunal emphasized the lack of specific evidence or cross-examination to support the Revenue's claim of bogus donations. The Tribunal's decision in the S.G. Vat Care Pvt. Ltd. case, which was similar to the present case, favored the assessee, leading to the deletion of the addition made by the authorities. The Tribunal concluded that the disallowance under Section 35(1)(ii) was not sustainable in the eyes of the law and therefore quashed the addition. In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing that the disallowance of the deduction for the donation made to the organization engaged in scientific research activity was not justified based on the available evidence and legal precedents. The Tribunal's decision highlighted the importance of specific evidence and cross-examination in such cases and relied on previous judgments to support the deletion of the addition made by the authorities.
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