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TMI Blog2020 (10) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... s a company which had indulged in bogus donation. Copy of the statement was not given to the assessee. It is well settled that when adverse material is not given to the assessee, the same cannot be used against them. No opportunity of cross examination of the witness of the Revenue was granted. Thus, these statements cannot form evidence, based on which an addition can be sustained. When the assessee had given a donation to the donee organization, the registration granted u/s 35(1)(ii)(iii) of the Act by the competent authority was in force. Just because this was withdrawn at a later date, the assessee to claim for deduction cannot be rejected. All these propositions have been laid down in the case law extracted above. Consistent with the view taken by different Benches of the ITAT on this very issue on similar facts, we hold that the assessee is entitled for deduction u/s 35(1)(ii) of the Act. In the result this ground of the assessee is allowed. - I.T.A. No. 2670/Kol/2018 - - - Dated:- 21-10-2020 - Sri J. Sudhakar Reddy, Accountant Member And Sri Aby T. Varkey, Judicial Member For the Assessee : Sh. Subash Agarwal, Adv. For the Revenue : Sh. Supriyo Pal, Addl. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort Limited. . The assessee was asked to furnish supporting documents in this regard. But the assessee failed to produce any proper details, nor any justification was given. As such, the total amount of Rs. l,13,75,000/-{ That was claimed deduction u/s 35(i)(ii)} is disallowed and added back to the total income of the assessee company. Penalty u/s 271(l)(c) r.w.s 274 of the IT Act,1961 is being issued separately for furnishing inaccurate particulars and concealment of income. 4. Aggrieved, the assessee carried the matter in appeal. The first appellate authority held as follows: I have considered the submission of the appellant and perused the relevant assessment records. The survey operation were conducted in the case of M/s School of Genetics and Population Health, Kolkata during which the functionaries of the institute had given statement admitting accepting bogus donation for commissions. The names of the brokers for facilitated the transactions were also disclosed in the statements. The M/S School of Genetics and Population Health, Kolkata had been granted approval u/s 35(l)(ii) of the I.T. Act, 1961 vide Notification No. 4/2010/F. No. 203/64/2009/ITA.II dated 28.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been issued for any tax benefits under the Incometax Act, 1961 or any other law of the time being in force. Though the appellant made a donation of only ₹ 65,00,000/-, however, he has claimed u/s 35(i)(i) and (ii) weighted deduction amounting to ₹ 1,13,75,000/- from his return income. The disallowance is, therefore, restricted to the deduction claimed at ₹ 1,13,75,000/-. After a careful consideration of the relevant assessment records and the submission of the appellant, the disallowance of ₹ 1,13,75,000/- on account of expenditure made u/s 35(1)(i) and (ii) of the I.T. Act, 1961 is, hereby, confirmed. Tire Assessing Officer is directed accordingly. 5. The ld. Counsel for the assessee Mr. Subash Agarwal submitted that the disallowance is bad in law. His submissions are summarised as follows: a) From the copy of the statement of Smt. Samadrita Mukherjee Sardar, it can be seen that nowhere the name of the assessee appears. b) In reply to question no. 8, Smt. Samadrita Mukherjee Sardar stated that their institute in doing activities of research in human genetics etc. c) The assessee had made a donation to the said institute on a genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus donations. He relied on the orders of the ld. CIT(A) and took this Bench through the same. He prayed that the donations were bogus donations and hence the claim has been rightly disallowed. 8. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and case laws cited, we hold as follows. 9. We find that the issue in question has come up before the Kolkata Bench of the Tribunal in a number of cases. This Bench of the Tribunal in ITA No. 16/Kol/2017 AY 2013-14 in the case of DCIT vs. Maco Corporation (India) Pvt. Ltd. held as follows: 8. We have heard the rival submissions and perused the materials available on record. The brief facts pertaining to HHBHRF are as under:- a) HHBHRF was registered u/s 12AA of the Act by the ld DIT(Exemptions), Kolkata with effect from 26.12.2003. b) HHBHRF was also recognized in the year 2006-07 as a scientific industrial research organization (SIRO) by Ministry of Science Technology, Government of India. The renewal of recognition as SIRO by the Department of Scientific and Industrial Research under the Scheme on Recognition of Scientific and Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r withdrawal of recognition in the Act, the action of the revenue in withdrawing the recognition with retrospective effect from 1.4.2007 is unwarranted. In this regard, the recent decision of the Hon'ble Supreme Court in the case of Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd vs CIT Gwalior reported in (2018) 90 taxmann.com 281 (SC) wherein it was held that :- 21. In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel the registration certificate granted under Section 12A of the Act. Second, the order passed under Section 12A by the CIT is a quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power vested in him under the Act to do so. In this case there was no such express power. 22. Indeed, the functions exercisable by the CIT under Section 12A are neither legislative and nor executive but as mentioned above they are essentially quasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llahabad High Court in the case of Oxford Academy for Career Development v. Chief CIT [2009] 315 ITR 382. 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till 01.10.2004; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004. We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. Infact the assessee's case herein falls on a much better footing than the facts before the Hon'ble Apex Court. In the case before Hon'ble Apex Court, the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act in respect of the amounts of donations made to two Institutions viz. 'Matrivani Institute Experimental Research Education' (hereinafter referred to as 'Matrivani') and 'The School of Human Genetics and Population Health' (hereinafter referred to as 'SHG'). The Assessee Firm in A.Y. 2014-15, madedonation of Rs,2,00,00,000/ to Matrivani and Rs,4,00,00,000/ to SHG and claimed weighted deduction of ₹ 10,50,00,000 under section 35(1)(ii) of the Income Tax Act, 1961, being 175% of the aggregate sum of ₹ 6,00,00,000/- (Rs,2,00,00,000 + Rs,4,00,00,000) donated to these two institutes which were approved by the Central Government for the purposes of section 35(l)(ii) of the Act read with Rule 5C and5E of the Income Tax Rules, 1962. In the assessment year 2013-14, the assessee claimed weighted deduction of ₹ 4,81,25,000/- under section 35(1) (ii) of the Act, which is 175% of the amount of donation being the sum of ₹ 2,75,00,000/- in respect of the donation given to 'The School of Human Genetics and Population Health'. We note that the Notifications to this effect, that these two institutions viz: 'Matrivani& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity of cross examination. We note that in absence of opportunity of cross-examination no reliance could be made on such statements to draw any adverse inference against the assessee firm. The assessee firm denied its knowledge of the statements made by these institutes which were relied on by the Investigation Wing and the Assessing Officer. We note that not providing the opportunity of cross-examination is against the principle of natural justice and for that we rely of the judgment of Hon'ble Delhi High Court in the case of CIT vs. Dharam Pal Prem Chand Ltd. [2007] 295 ITR 105, 108 (del).We note that on identical facts, the similar proposition wasupheld by the Coordinate Bench of Kolkata in the case of Rajda Polymers, ITA No.333/Kol/2017,for Assessment Year 2013-14 wherein it was held as follows: 10.....Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment Year 2013-14, wherein it was held as follows: 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till 01.10.2004; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004. We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. Infact the assessee's case herein falls on a much better footing than the facts before the Hon'ble Apex Court. In the case before Hon'ble Apex Court, the power of cancellation of registration us 12A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the case of Rajda Polymers vide ITA No.333/Kol/2017 order dated 08.11.2017 at page 7 has held as follows:- 5.6. We find that the ld CITA had made an observation which has been heavily relied upon by the ld DR that the assessee's line of business has got nothing to do even remotely with the healthcare or herbal healthcare industry much less in the area of research thereon and accordingly there was no need for the assessee to give donation of ₹ 14,00,000/- to HHBRF . We find that this aspect has been duly addressed by the assessee by stating that one Cardiologist Doctor had introduced the assessee to HHBRF and donations were given after due satisfaction of the assessee based on personal visits to the two research centres of HHBRF and activities carried on by them. Moreover, it is well settled that it is always the prerogative of the assessee to give or not to give any donation to a particular institution, which wisdom cannot be questioned by the revenue. The question of business expediency of an expenditure had to be viewed from the point of view of the businessman and not from the view point of the revenue. The businessman knows his interest best. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. ITO, ITA No. 718/Kol/2018 order dated 20.07.2018 by this Bench of the ITAT, Kolkata. In these cases the fact that the donee has approached the Settlement Commission were also considered and it was held that these facts do not affect the claim of the assessee for deduction u/s 35(1)(ii) of the Act. The case on hand, reliance was placed by the AO on the copy of statement of Smt. Samadrita Mukherjee Sardar, the Secretary of SHG PH. In the statement, the name of the assessee is not mentioned as a company which had indulged in bogus donation. Copy of the statement was not given to the assessee. It is well settled that when adverse material is not given to the assessee, the same cannot be used against them. No opportunity of cross examination of the witness of the Revenue was granted. Thus, these statements cannot form evidence, based on which an addition can be sustained. 12. When the assessee had given a donation to the donee organization, the registration granted u/s 35(1)(ii)(iii) of the Act by the competent authority was in force. Just because this was withdrawn at a later date, the assessee to claim for deduction cannot be rejected. All these propositions have been laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X
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