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2022 (5) TMI 101 - AT - Income TaxExemption u/s 11 - allegation of accommodation entry in the garb of corpus donation - cancellation of registration - addition u/s 68 being corpus donation received from M/s Herbicure Bio- Herbal Research Foundation - HELD THAT - As decided in SANSKRITI SAGAR VERSUS CIT (EXEMPTION) KOLKATA 2017 (9) TMI 1943 - ITAT KOLKATA when donation have been shown as income and applied the receipts for objects of the Assessee-Trust, no addition could be made against the assessee. The facts in the present case are similar to the case of Fateh Chand Charitable Trust 2016 (4) TMI 1119 - ITAT LUCKNOW . Considering the above discussion in the light of material on record, it is clear that assessee has been carrying out scientific research activities as per its objects. The donation received by the assessee have been used for the scientific research purpose only. There is no legal admissible evidence on record against the assessee that assessee received any donation from any company as alleged in the report of the Investigation Wing. No evidence of any unaccounted cash transactions conducted by the assessee were found. There is no evidence on record to show that assessee received or paid any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter is merely on presumption only. - Decided in favour of assessee.
Issues Involved:
1. Validity of reopening assessment under section 147/148. 2. Addition of ?23,00,000/- as unexplained cash credit under section 68. 3. Denial of cross-examination of the donor's director. 4. Application of section 115BBE for taxing the corpus donation. 5. Discharge of onus by the assessee to prove the genuineness of the donation. Issue-wise Detailed Analysis: 1. Validity of Reopening Assessment under Section 147/148: The assessment was reopened based on information from the Commissioner of Income Tax (Exemptions), Kolkata, indicating that the assessee received an accommodation entry in the form of a corpus donation from Herbicure Bio-Herbal Research Foundation. The Tribunal upheld the reopening, citing settled law that information from other offices can constitute material for reopening a case. The Tribunal referenced the case of ITR Vs. Purushottam Das Bangur and Anr. [224 ITR 362 (SC)] and AGR Investigation Ltd. Vs. Additional CIT & Anr: [333 ITR 146 (Del)] to support the validity of the notice issued under section 148. 2. Addition of ?23,00,000/- as Unexplained Cash Credit under Section 68: The AO added ?23,00,000/- to the assessee's income, treating it as unexplained cash credit under section 68, based on the survey findings that Herbicure Bio-Herbal Research Foundation provided accommodation entries. The assessee argued that the donation was received through banking channels and was duly recorded in the balance sheet and return of income. The Tribunal found merit in the assessee's argument, noting that similar cases involving donations from Herbicure Bio-Herbal Research Foundation had been decided in favor of the assessee by various Tribunal Benches. 3. Denial of Cross-Examination of the Donor's Director: The assessee requested cross-examination of the director of Herbicure Bio-Herbal Research Foundation, which was denied by the AO. The Tribunal emphasized the importance of cross-examination, referencing the case of Andaman Timber Industries, where the Hon'ble Supreme Court held that not allowing cross-examination of a witness whose statement is relied upon is a violation of natural justice. The Tribunal noted that the request for cross-examination was made towards the end of the assessment proceedings, making it impractical for the AO to comply. 4. Application of Section 115BBE for Taxing the Corpus Donation: The AO taxed the corpus donation under section 115BBE, treating it as unexplained cash credit. The Tribunal referred to various judicial pronouncements, including the case of CIT v. Uttaranchal Welfare Society [2014] 42 taxmann.com 361, where it was held that section 68 does not apply to donations disclosed as income and applied for charitable purposes. The Tribunal concluded that the addition under section 68 and the application of section 115BBE were not justified. 5. Discharge of Onus by the Assessee to Prove the Genuineness of the Donation: The assessee provided evidence of the donation received through banking channels, including a receipt issued to the donor. The Tribunal observed that the assessee had discharged the onus of proving the identity, creditworthiness of the donor, and genuineness of the transaction. The Tribunal referenced similar cases where donations from Herbicure Bio-Herbal Research Foundation were accepted as genuine, such as Fateh Chand Charitable Trust vs Commissioner of Income Tax (Exemption) and Bioved Research Society vs CIT(Exemption). Conclusion: The Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition of ?23,00,000/-. The appeal filed by the assessee was partly allowed, with the Tribunal emphasizing the importance of cross-examination and the discharge of onus by the assessee to prove the genuineness of the donation. The Tribunal's decision was consistent with previous judgments on similar issues involving donations from Herbicure Bio-Herbal Research Foundation.
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