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TMI Blog2021 (9) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Rs. 10,00,000/- made to "School of Human Genetics and Pollution Health" which is unjust, illegal, arbitrary and against the facts and circumstances of the case. 3. On the facts and circumstances of the case the Ld. CIT(A) erred in confirming the disallowance of the genuine expenditure amounting to Rs. 5,71,958/- being 20% of the expenses of Rs. 28,59,700/- made by the AO in view of section 37(1) and thereby treated the same for non business purpose and added the same to the total income of the Assessee. 4. On the facts and circumstances of the case the Ld. CIT(A) erred in confirming the addition of Rs. 30,00,000/- made by the AO in view of section 68 and thereby treated the same as undisclosed income of the assessee and added the same to the total income of the assessee. The ld. CIT(A) erred in considering the genuine fact that the said amount of Rs. 30,00,000/- was received as gift from his father. 5. The ld. CIT(A) erred in confirming the charging of interest under section 234A,234B,234C and 234D of the Income Tax Act, 1961. 6. The ld. CIT(A) erred in confirming the initiation of the penalty proceeding under Sec. 271(1)(c) of the Income tax Act 1961. 7. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income claimed a weighted deduction of Rs. 17.50 lac i.e an amount equal to one and three fourth times of the amount of donation of Rs. 10 lac in terms of Sec. 35(1)(ii) of the Act. As is discernible from the records, it is an admitted fact that at the time of making of such donation SHG&PH was having a valid approval granted under the Act by the CBDT. In the backdrop of the aforesaid facts, we have to examine as to whether or not the subsequent cancellation of registration to SHG&PH, vide CBDT order dated 15.09.2016 with retrospective effect can invalidate the assesse's claim of deduction under Sec. 35(1)(ii) of the Act. For a fair appreciation of the issue under consideration we would herein cull out the 'Explanation' to Sec. 35(1)(ii) of the Act, which will have a strong bearing on the adjudication of the issue, and reads as under: 'Explanation.-The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nches of the Tribunal on the issue pertaining to the allowability of deduction under Sec. 35(1)(ii) of the Act in respect of a donation given to SHG&PH by the assessee before them had vacated the disallowance of the assessee's claim for deduction under Sec.35(1)(ii) of the Act, observing as under: '6. We have heard the rival submissions of the parties and gone through the material on record including the cases relied upon by the parties. In the case of Mahesh C. Thakker vs. ACIT (supra), the coordinate Bench has decided the identical issue in favour of the assesse holding as under:- '6. In view of the above submissions, it was claimed that exactly on identical issues the co-ordinate Bench of this Tribunal ‗B' Bench Kolkata in the case of DCIT vs. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017 vide order dated 14.03.2018 for AY 2013-14 has considered the issue in regard to very same trust i.e. SGHPH and holds that prior to the date of donation under cancellation of registration has happened and there is absolutely no provision of withdrawal of recognition under section 35(1)(ii) of the Act. Hence, allowed the claim of the assessee by observing in Para 8.1 and 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Mahesh C. Thakker vs. ACIT. Since, this issue has been decided by the coordinate Bench in favour of the assessee in the aforesaid case, we do not find any reason to take a different view from the view already taken by the coordinate Bench. Hence, respectfully following the decision of the coordinate Bench rendered in the case of Mahesh C. Thakker vs. ACIT (supra), we allow ground No 6 & 7 of the assessee's appeal and direct the AO to allow the claim of the assessee.' In the backdrop of our aforesaid deliberations and considering the fact that the issue involved in the present appeal is squarely covered by the aforesaid orders of the co-ordinate benches of the Tribunal, we, thus, finding no justifiable reason to take a different view respectfully follow the same. Accordingly, we set-aside the order of the CIT(A) and vacate the disallowance of the assessee's claim for deduction under Sec.35(1)(ii) of Rs. 17,50,000/-. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 8. We shall now deal with the grievance of the assessee that the CIT(A) had erred in confirming the ad hoc disallowance of an amount of Rs. 5,71,958/- i.e 20% of the expenses th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of the assessment proceedings had placed on record supporting documentary evidence to substantiate his aforesaid claim of expenses. In order to drive home his aforesaid claim the ld. A.R had taken us through the copy of the ledger accounts of the various expenses, and also, the copies of the supporting vouchers that were filed in the course of the proceedings before the lower authorities, Page 47 - 99 of the Assessee's Paper book (for short 'APB'). It was submitted by the ld. A.R that the A.O had disallowed part of the aforesaid expenses on an ad hoc basis without pointing out as to what all expenses were not supported by the requisite documentary evidence. It was vehemently submitted by the ld. A.R that an ad hoc disallowance without placing on record any material to substantiate the same cannot be sustained and was liable to be struck down on the said count itself. In order to support his aforesaid contention the ld. A.R had relied upon the order of the ITAT, Kolkata in the case of Animesh Sadhu Vs. ACIT, Circle-1, Hoogly, ITA No. 11/Kol/2013, dated 12.11.2014 and that of the ITAT, Delhi in the case of ACIT, New Delhi Vs. M/s Modi Rubber Ltd. ITA No. 1952/Del/2014, dated 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Animesh Sadhu Vs. ACIT, Circle-1, Hoogly, ITA No. 11/Kol/2013, dated 12.11.2014 and that of the ITAT, Delhi in the case of ACIT, New Delhi Vs. M/s Modi Rubber Ltd. ITA No. 1952/Del/2014, dated 15.05.2018. We, thus, not being able to persuade ourselves to subscribe to the view taken by the lower authorities, therefore, vacate the disallowance of Rs. 5,71,958/-. The Ground of appeal No. 3 is allowed in terms of our aforesaid observations. 14. We shall now take up the assessee's grievance that the CIT(A) had erred in concurring with the A.O and wrongly held the gift of Rs. 30 lac that was received by him from his father as an unexplained cash credit under Sec. 68 of the Act. On a perusal of the 'Capital account' of the assessee, it was observed by the A.O that the assessee had during the year under consideration claimed to have received a gift of Rs. 30 lac from his father, viz. Shri. Virendra Tandon. In order to verify the authenticity of the gift transaction in question, the A.O had directed the assessee to place on record supporting documentary evidence, viz. copy of the return of income a/w the bank statement of the donor i.e Shri. Virendra Tandon. In compliance, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the A.O the assessee had in the course of the assessment proceedings furnished with him a copy of the return of income of Shri. Virendra Tandon for A.Y 2014-15. It was further submitted by the ld. A.R that the assessee had in the course of the assessment proceedings placed on record the copy of a "gift deed", dated 21.06.2013 that was executed by his father Shri. Virendra Tandon (supra), wherein the latter had provided his PAN No. and had clearly stated that he had on 21.06.2013 out of love and affection for his son i.e the assesee given an irrevocable cash gift of Rs. 30 lac to him out of his accumulated savings. In order to fortify his aforesaid contention the ld. A.R had drawn our attention to the copy of the "gift deed" at Page 112-113 of the "APB", which as certified by the ld. A.R formed part of the documents that were filed in the course of the proceedings before the lower authorities. It was submitted by the ld. A.R that both the lower authorities had failed to consider the 'gift deed', dated 21.06.2013 that was filed in the course of the assessment proceedings. Our attention was drawn by the ld. A.R to the 'Written submissions', dated 29.07.2019 that were filed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich ought to have been carried out by them, held the duly substantiated gift transaction as bogus and added the same u/s 68 of the Act. It was submitted by the ld. A.R that now when Shri. Virendra Tandon had duly disclosed the gift transaction in question in his financial statement for the year under consideration i.e A.Y 2014-15, and had also separately admitted of having gifted the amount to his son i.e the assessee a/w the source thereof in the 'gift deed', dated 21.06.2013, then, in case the A.O had any doubts as regards the authenticity of his said claim, it was incumbent on his part to have examined Shri. Virendra Tandon and taken the issue to a logical conclusion. In sum and substance, it was submitted by the ld. A.R that now when Shri. Virendra Tandon (supra) who is an existing income-tax assessee had duly disclosed the gift transaction in his financial statement for the year under consideration, and had further once again separately admitted the gift transaction a/w the source thereof in the 'gift deed', dated 21.06.2013, then, no adverse inferences qua the genuineness of the transaction in question could have validly been drawn without placing on record any such 'material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed', dated 21.06.2013 of having gifted the amount in question to his son a/w the details of the source thereof, what stopped the A.O from examining him qua the transaction under consideration. Before us is a case where a father i.e Shri. Virendra Tandon (supra) who is a regular income-tax assessee had not only disclosed the gift transaction under consideration in his financial statements for the year under consideration i.e A.Y 2014-15, but had also separately in the "gift deed" admitted the gift transaction in question a/w the source thereof i.e his accumulated savings. Nothing in rebuttal of the aforesaid facts was brought to our notice by the ld. D.R. Be that as it may, we cannot remain oblivious of the fact that insofar the assessee before us is concerned, he had explained the 'nature' and 'source' of the cash credit i.e gift received from his father and had supported his explanation by placing on record the aforesaid documentary evidences, and thus, discharged the primary onus that was cast upon him as regards proving the gift transaction under consideration. In the backdrop of the aforesaid facts, we find substantial force in the claim of the ld. A.R that as the gift transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... backdrop of the facts borne from the record. As observed by us hereinabove, the assessee had duly disclosed the gift transaction in his financial statement for the year under consideration. On a perusal of the financial statement of Shri. Virendra Tandon for A.Y 2014-15, we find, that the amount gifted by him to his son i.e the assessee is sourced out of his 'Çapital A/c'. On a careful perusal of the financial statements of Shri. Virendra Tadon to which our attention was drawn by the ld. A.R, we find that the same reveals that the assessee had over the years accumulated substantial cash in hand with him out of which the amount in question was gifted by him to his son during the year under consideration. As is discernible from the 'balance sheets' of Shri. Virendra Tandon for three years preceding the year under consideration to which our attention was drawn by the ld. A.R, the same reveals that substantial cash in hand was available with him on the 31st day of March of the said respective years, as under: Financial Year (year ending 31st March) Cash in hand (available with the assessee) Page No. (of APB) 2010-11 Rs. 23,00,310/- Page 120 2011-12 Rs. 28,69,434/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been dislodged or rebutted by the department by placing on record any material proving to the contrary. As a matter of fact no attempt had been made by the lower authorities to disprove the genuineness and veracity of the aforesaid claim of the assessee of having received the amount in question as a gift from his father i.e Shri. Virendra Tandon. It is not the case of the department that on examination of Shri. Virendra Tandon, it was either proved that he had no such accumulated savings from where he could have gifted the amount in question to his son; or that he had at any stage retracted from his said admission. On the contrary, the disclosure of the gift transaction in question by Shri. Virendra Tandon i.e the donor in his 'Capital account' for the year under consideration a/w his clear admission in the 'gift deed', dated 21.06.2013 duly supports the claim of the assessee of having received the gift from him, which though in our considered view could not have been summarily discarded by the department, but we are afraid has been so done. Notably, there is no discussion about the 'gift deed', dated 21.06.2013 which alongwith a copy of the return of income of Shri. Virend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ably explained by reference to the concealed income earned in that very year is a matter of consideration in light of the facts of each case. Be that as it may, in the absence of any examination of Shri. Virendra Tandon (supra) qua the gift transaction in question, and the source thereof, the department not having placed on record any 'material' which would have irrefutably rebutted his claim of having gifted the amount in question to his son i.e the assessee from his accumulated funds could not have summarily discarded the same. As stated by the ld. A.R, and rightly so, in case Shri. Virendra Tandon (supra) on examination would have been found to have gifted the amount in question to his son i.e the assessee out of his unexplained sources, then, the said amount ought to have been brought to tax in the hands of the said donor i.e Shri. Virendra Tandon (supra) and no adverse inferences could have validly been drawn in the hands of the assessee. 20. Adverting to the provisions of Sec. 68 of the Act, we find, that the same therein contemplates that where any sum is found credited in the books of the assessee, and the assessee offers no explanation about the source and the nature ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our aforesaid deliberations, we are unable to persuade ourselves to subscribe to the view taken by the lower authorities. In our considered view, the A.O on the basis of half-baked facts and premature observations, and all the more without considering the material that was filed by the assessee in the course of the assessment proceedings before him, had rejected the assessee's claim of having received the gift from his father; and treated the same as an unexplained cash credit within the meaning of Sec. 68 of the Act. We cannot remain oblivious of the fact that Shri Virendra Tandon had duly disclosed the gift transaction in his financial statement for the year under consideration i.e A.Y 2014-15, and also categorically admitted in the 'gift deed', dated 21.06.2013 of having gifted the amount in question to his son. Although, we concur with the view taken by the A.O that the returned income of Shri Virendra Tandon was not substantial, however, as observed by us hereinabove, a material fact that had been lost sight of by the lower authorities is that Shri Virendra Tandon had never stated that he had gifted the amount in question out of his income for the year under consideration, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Virendra Tandon had gifted the amount in question to his son i.e the assessee by way of financial assistance at a time when the assessee is stated to be struggling for his survival in the industry. In our considered view, utilisation of accumulated savings by a father for the purpose of financially assisting his son is not something unheard of in our society. We may herein reiterate that Shri. Virendra Tandon (supra) had categorically admitted of having gifted the amount in question to his son i.e the assessee and the authenticity of the said claim had not been disproved or dislodged by the department by placing on record any material proving to the contrary. In our considered view, in case the A.O would had fairly considered the documentary evidence that was filed by the assessee in the course of the assessment proceedings to support the genuineness of the gift transaction a/w the source thereof, then, no adverse inferences qua the gift transaction in question would have surfaced. However, in case, the A.O would had still any doubts as regards the authenticity of the sources out of which the amount was gifted by Shri. Virendra Tandon (supra), then, it was for the latter to have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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