2019 (11) TMI 1843 - AT - Income Tax

Weighted deduction u/s 35(1)(ii) - as alleged assessee to have made bogus donations - HELD THAT - Tribunal in the case of Narbheram Vishram 2018 (11) TMI 1314 - ITAT KOLKATA whereby the issue of donation u/s 35(1)(ii) of the Act has been discussed and adjudicated in favour of the assessee.

Summary

Issues:
Appeal against order passed by Commissioner of Income Tax (Appeal)-5, Kolkata for assessment year 2015-16. Ex parte disposal due to non-appearance of assessee. Issue of donation u/s 35(1)(ii) of the Income Tax Act, 1961. Disallowance of weighted deduction claimed by assessee. Allegations of bogus donations by Investigation Wing. Lack of opportunity for cross-examination. Withdrawal of recognition of institutions by CBDT. Claim of weighted deduction u/s 35(1)(ii) despite cancellation of registration of payee organizations.

Detailed Analysis:
The judgment pertains to an appeal filed by the assessee against the order passed by the Commissioner of Income Tax (Appeal)-5, Kolkata, for the assessment year 2015-16. The appeal was disposed of ex parte as the assessee did not appear despite multiple notices. The key issue in this case revolved around the claim of weighted deduction under section 35(1)(ii) of the Income Tax Act, 1961, related to donations made to two approved institutions. The Assessing Officer had disallowed the deduction based on allegations of bogus donations by the Investigation Wing of Kolkata.

The Tribunal noted that a similar issue had been adjudicated in favor of the assessee in a previous case, Narbheram Vishram, for assessment years 2013-14 & 2014-15. The Tribunal observed that the assessee had made genuine donations to approved institutions and was eligible for the claimed deduction. The Tribunal emphasized that the lack of opportunity for cross-examination of key persons and alleged brokers, whose statements were relied upon by the Investigation Wing, was against the principles of natural justice. The Tribunal cited precedents to support the importance of cross-examination in such cases.

Regarding the withdrawal of recognition of the institutions by the CBDT, the Tribunal held that it did not affect the assessee's right to claim the weighted deduction under section 35(1)(ii) of the Act. Citing a judgment related to the quasi-judicial nature of CIT orders, the Tribunal concluded that the withdrawal of recognition from payee organizations did not impact the assessee's entitlement to the deduction. The Tribunal directed the Assessing Officer to allow the claimed deductions for the relevant assessment years, as the issue was conclusively settled in favor of the assessee by the previous decision in Narbheram Vishram.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the consistent application of legal principles and precedents in determining the eligibility for weighted deductions under section 35(1)(ii) of the Income Tax Act, 1961. The judgment underscored the importance of procedural fairness, including the right to cross-examination, and upheld the assessee's entitlement to the claimed deductions despite the withdrawal of recognition of the recipient institutions by the CBDT.