9911796707
TMI Blog2023 (3) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... ing his independent mind. AO has relied on the report of investigation wing who had recorded statements of certain persons which have been claimed by the assessee as having no relation with assessee or trust. From the perusal of answers to certain questions noted by the ld. Assessing Officer in the assessment order, we note that the persons mentioned in the answers have no connection with the assessee as claimed by the assessee. Such an aversion in the statements relied upon, leads us to understand that heavy reliance placed by the ld. Assessing Officer on these statements, is misplaced. From the perusal of documentary evidence placed in the paper book, it is evident that the three trusts/societies are eligible entities duly notified by the Central Government/CBDT u/s 35(1)(iii) and u/s 35AC of the Act. It is also noted that approval is granted to an organization u/s 35(1)(iii) and u/s 35AC by the Central Government/CBDT only after strict compliance of law. The approval is granted for after various levels of scrutiny and checks and to the concerns of evident track record and doing research activity. It is also a fact that the three trusts/societies were eligible to receive the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tre, Delhi, (hereinafter the "ld. CIT(A)") dated 27/09/2022 for Assessment Year 2015-16 against the assessment order passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') passed by DCIT, Circle-6(1), Kolkata, dated 23/12/2017. 2. Assessee has taken as many as ten grounds and the issues involved in these grounds relate to disallowance of deduction claimed u/s 35(1)(iii) and 35AC of the Act for contribution made by it under respective Sections and in respect of credit of Rs.10,00,000/- towards advance tax paid, not given in computation of tax as reflected in Form 26AS. Grounds of appeal are not reproduced for the sake of brevity. 3. Brief facts of the case are that, assessee filed its return of income on 29/09/2015, reporting total income of Rs.56,66,010/-. Case of assessee was selected for scrutiny through CASS for which statutory notices were issued and served and were duly complied with by the assessee. In course of assessment proceedings, ld. Assessing Officer noted that assessee has claimed deduction of Rs.2,38,25,000/- which included weighted deduction of Rs.1,41,25,000/- u/s 35(1)(iii) and Rs.97,00,000/- u/s 35AC of the Act. Ld. Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that, ld. Assessing Officer has not made any effort to examine the evidence placed before him but simply relied on observations of the investigation wing without any material to support the said observations. Further, assessee submitted that statements recorded of certain persons had no relation with the assessee and moreover, said statements were not supplied to assessee for cross-examination and rebuttal. It was thus contended that all the observations, findings and conclusions arrived at by the ld. Assessing Officer are based on suspicion and surmises. According to the assessee, the presumption or suspicion, howsoever strong it may appear to be true has to be corroborated with evidence to prove that assessee had adjusted its profit in the form of bogus donations. According to assessee, statements relied upon by ld. Assessing Officer were just plain statements without any supporting material or evidence in support of such statements. Contrary to this, all the positive material filed by the assessee has been ignored. It was also strongly submitted that neither ld. Assessing Officer himself has examined neither these persons nor any opportunity to cross-examine has been gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. e) In answer to question no. 12 of the same statement, it is stated that Shri Raj Kr. Mishra, does not hold any position in the trust, Kashba Youth. Ld. Counsel asserted that merely on some telephonic communication as stated in the answer, Shri Raj Kr. Mishra arranged for the accommodation entry who is stated to hold no position in the aforesaid trust. According to ld. Counsel, Department has not identified who is Shri Raj Kr. Mishra and what are his connection with the assessee and the said trust. f) Ld. Assessing Officer, according to the ld. Counsel, has simply relied on these statements which do not have any legs to stand in absence of any corroborative material. Ld. Counsel submitted that Shri Raj Kr. Mishra, is neither an employee nor Director of the assessee company and has no relation with the assessee. According to him, ld. Assessing Officer has made no effort to summon Shri Raj Kr. Mishra to who Shri Ambikesh Manna, has alleged that cash was given. According to ld. Counsel, all the observations and conclusions are thus based on suspicion and surmise. (ii) Red Plus Society (deduction of Rs.30,00,000/- u/s 35AC of the Act) - a) This society is registered under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the commission report. Ld. Counsel submitted that Secretary of the trust sought some time to submit its reply against the summons. In absence of the response from the secretary, ld. Assessing Officer took an adverse view and treated the donations as bogus, ignoring all the documents and evidence filed by the assessee. In this case also, it was submitted that ld. Assessing Officer has presumed the donations as bogus without conducting any independent enquiry to verify the authenticity of the transaction, from the evidence placed on record. 7. Per contra, ld. Sr. D/R, vehemently argued and submitted that, donations made by assessee are rightfully held as bogus since funds were transferred by the respective societies/trust to the companies which are shell companies as observed by the ld. Assessing Officer from the bank statement of the trusts/societies. Ld. Sr. D/R reiterated the observations made by the ld. Assessing Officer that these are accommodation entries for which the cash has been routed giving it a colour of donations eligible for deduction u/s 35(1)(iii) and 35AC of the Act. Ld. Sr. D/R also submitted that the statements recorded and referred to by ld. Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT only after strict compliance of law. The approval is granted for after various levels of scrutiny and checks and to the concerns of evident track record and doing research activity. It is also a fact that the three trusts/societies were eligible to receive the contributions from assessee as duly notified by CBDT. Further, ld. Counsel for assessee had made submission before the Bench which is taken on record as a statement at the Bar that in case of all the three trusts/societies, their registrations have not been cancelled by the Department. 9. We also note that ld. Assessing Officer has made some enquiries regarding the bank account of the assessee and that of the three trusts/societies from where he noted that donations made by assessee got transferred from the accounts of the three trusts/societies to certain companies which have been alleged to be shell companies. In this respect, we take note of the statement of the ld. Counsel that once assessee has made payments to these trusts/societies, it was neither authorized nor required to check the end use of the funds by these organizations that are independent in their own accord. Thus, if any irregularities have happened, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the Hon'ble Supreme Court as under:- "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment in which ld. Assessing Officer has failed. 12. Before concluding, we also draw attention to the decision of the Hon'ble Supreme Court in the case of CIT (Exemp) vs. Batanagar Education and Research Trust [2021] 129 taxmann.com 30 (SC), which has dealt with the cancellation of registration of Trust u/s 12AA of the Act on the ground that the Trust had received bogus donation. On this, ld. Counsel for the assessee has made a statement before the Bench noted above that in the present case of the assessee, registration of the three donee trust/societies has not been cancelled and, therefore, the ratio of this judgment does not apply to the facts and circumstances of assessee's case. 13. After carefully considering the entire gamut of facts and circumstances of the present case, answers to specific questions in the statements recorded referred to in assessment order and the submission made along with corroborative documentary evidence placed on record and the judicial precedence stated above, we find favor with the claim of the assessee to allow the claim of deduction u/s 35(1)(iii) and 35AC of the Act, details of which are already tabulated above. Thus, grounds taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
