2020 (12) TMI 499 - AT - Income Tax

Disallowing claim of donation made u/s 35AC - addition on survey by a assessee company director for having received back in cash the donation given by the assessee company to Navjeevan Charitable Trust - HELD THAT - Upon careful consideration we find that in identical situations donation to the identical trust based upon same search has been held to be allowable by the ITAT in the assessee s associate concern in the case of Jadstone Trading Pvt. Ltd 2019 (6) TMI 1574 - ITAT MUMBAI - We set aside the orders of authorities below and direct that the impugned payment should not be disallowed.

Summary

Issues:
1. Disallowance of donation claim u/s 35AC
2. Assessment order passed u/s 143(3) instead of 153C r.w.s 143(3)
3. Speaking nature of the Assessment Order
4. Failure to consider submissions in the Appellate Order

Analysis:

Issue 1: Disallowance of donation claim u/s 35AC
The assessee challenged the disallowance of a donation claim made u/s 35AC of the Act amounting to ?50,00,000. The Assessing Officer disallowed the claim, which was confirmed by the Learned CIT(A). The assessee contended that the disallowance was unjustified and should be deleted. The ITAT examined similar cases and held that the donation to the trust was allowable based on past decisions. The ITAT referred to the retraction of the admission and concluded that the addition was based on speculation and not sustainable in law. Therefore, the ITAT set aside the orders of the lower authorities and allowed the claim.

Issue 2: Assessment order passed u/s 143(3) instead of 153C r.w.s 143(3)
The appellant argued that the assessment order should have been passed under section 153C r.w.s. 143(3) of the Act instead of u/s 143(3) as done by the Assessing Officer. The ITAT did not find any merit in this argument and upheld the assessment order passed u/s 143(3) based on the facts and circumstances of the case.

Issue 3: Speaking nature of the Assessment Order
The appellant contended that the Assessment Order passed by the Assessing Officer was non-speaking in nature as it lacked reasons for not accepting the appellant's explanations. However, the ITAT found that the Assessment Order was speaking and not bad in law. The ITAT considered the arguments presented by both parties and concluded that the Assessment Order was valid.

Issue 4: Failure to consider submissions in the Appellate Order
The appellant raised concerns that the Learned CIT(A) did not consider all submissions made by the appellant on various issues in the Appellate Order. The ITAT observed that since the main issue regarding the disallowance of the donation claim was decided in favor of the assessee, other aspects of the challenge were of academic interest. Therefore, the ITAT did not delve into those aspects, and the appeal was partly allowed in favor of the assessee.

In conclusion, the ITAT ruled in favor of the assessee regarding the disallowance of the donation claim under section 35AC, while upholding the assessment order passed under section 143(3) and confirming the speaking nature of the Assessment Order. The ITAT also noted the failure to consider all submissions in the Appellate Order but deemed it of academic interest due to the primary issue's resolution.