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2023 (4) TMI 989 - AT - Income TaxBogus weighted deduction u/s 35(1)(ii) - donation made to Hebicure Health Cure Bio Herbal Research Foundation - CIT-A allowed the deduction - HELD THAT - CIT(A) has placed reliance on the decision of M/s. Thakkar Govindbhai Ganpatlal HUF 2020 (2) TMI 31 - GUJARAT HIGH COURT in which on similar set of facts the claim of deduction u/s. 35(1)(ii) in respect of donations made to HHBRF was allowed to the assessee as held On the basis of 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 assesses 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 - Decided against revenue.
Issues Involved:
1. Deletion of bogus deduction claim under Section 35(1)(ii) of the Income Tax Act. 2. Commission expense paid on account of donation. 3. Validity of reassessment proceedings under Section 147. 4. Addition under Section 43B for payment of Employee's Contribution to PF and ESI. 5. Interest charged under Section 234A. Summary: 1. Deletion of Bogus Deduction Claim under Section 35(1)(ii): The Department appealed against the CIT(A)'s decision to delete the bogus deduction claim of Rs. 2,10,00,000/- for the assessment year 2013-14 and Rs. 1,75,00,000/- for the assessment year 2014-15 on account of donations made to Hebicure Health Cure Bio Herbal Research Foundation (HHBRF). The Assessing Officer (AO) had disallowed the deduction based on information that HHBRF was not an approved entity under Section 35(1)(ii) and was involved in providing bogus donation entries. The CIT(A) allowed the appeal of the assessee, noting that the approval of HHBRF was in place when the donations were made and that the AO did not establish an independent finding of ineligibility for the deduction. The ITAT upheld the CIT(A)'s decision, relying on the Gujarat High Court's ruling in PCIT vs. M/s. Thakkar Govindbhai Ganpatlal HUF, which found no evidence that the donations were returned in cash and confirmed that the donations were utilized for scientific research. 2. Commission Expense Paid on Account of Donation: For the assessment year 2014-15, the Department also contested the deletion of commission expenses of Rs. 12,00,000/- related to the donation. The CIT(A) deleted this addition, and the ITAT upheld the decision, following the same reasoning as in the bogus deduction claim. 3. Validity of Reassessment Proceedings under Section 147: The assessee filed cross objections challenging the validity of the reassessment proceedings initiated by the AO under Section 147. However, since the Department's appeals were dismissed on merits, the ITAT dismissed the cross objections as not pressed. 4. Addition under Section 43B for Payment of Employee's Contribution to PF and ESI: For the assessment year 2014-15, the assessee also challenged the addition of Rs. 2,69,613/- made by the AO under Section 43B for late payment of Employee's Contribution to PF and ESI. The CIT(A) confirmed the addition, and the ITAT dismissed the cross objections as not pressed, given the dismissal of the Department's appeal on other grounds. 5. Interest Charged under Section 234A: The assessee contested the interest charged under Section 234A, arguing that the return was filed within the extended time allowed by CBDT. The CIT(A) did not delete the interest, and the ITAT dismissed the cross objections as not pressed. Conclusion: Both the appeals filed by the Department and the cross objections filed by the assessee for the assessment years 2013-14 and 2014-15 were dismissed. The ITAT upheld the CIT(A)'s decisions, relying on the precedent set by the Gujarat High Court in similar cases.
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