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TMI Blog2023 (12) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... year before us is A.Y 2015-16. The Advisory issued by the CBDT in December-2018 brought this fact to the notice of all its Field Officers. Therefore, the fact on record was that the said Institute was not approved for receiving donations u/s. 35(1)(ii) of the Act during the impugned year. Thus there can be no two views that when the assessment order was passed by the AO, assessees claim to weighted deduction u/s 35(1)(vii) of the Act was impermissible in law. And it is a foregone conclusion therefore that the allowance of the said claim in assessment framed was patently incorrect. The assessment order was obviously in error in having allowed a patently ineligible deduction to the assessee. This is probably the simplest and most straight forward example /instance of an assessment order being erroneous causing prejudice to the Revenue, for a valid exercise of revisionary jurisdiction. All arguments of assessee against the revisionary order passed by the Ld.CIT fail and are of no consequence in the backdrop of the fact, as noted above by us, that the assessee was not eligible to claim weighted deduction on the said donation u/s 35(1)(ii) of the Act. Even if the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous and prejudicial to the interest of the revenue and thereby setting aside the order with direction for fresh assessment keeping the issue of weighted deduction u/s 35(1)(II) of the Act in mind. It is submitted it be so held now. 1.2 The CIT erred in facts and in law in Invoking Explanation 2 to sub section (1) of section 263 of the Act while holding that the assessment order was passed without proper enquiry and verification of facts when in fact inquiry had been made and details were submitted in the course of regular proceedings. It is submitted it be so held now. 1.3 The CIT ought to have appreciated that absence of reasons given in order, for allowing a deduction does not tantamount to enquiry not made in that assessment proceedings and thereby making the order erroneous and prejudicial to the interest of revenue. It is submitted it be so held now. 2. The learned CIT has erred in law and in facts in not appreciating that the donation was given by the appellant based on the notarized approval of registration u/s 35(1)(ii) of the Act given by the trust and appellant had no reason to disbelieve the operation of approval and notification of the trust. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly demonstrated that it was approved for receiving donations u/s 35(1)(ii) of the Act. The Ld.Counsel for the assessee thereafter made arguments challenging the exercise of revisionary jurisdiction contending that: (i) the Assessing Officer had examined the issue during assessment and taken a plausible view allowing the claim of weighted deduction to the assessee based on documents placed before him exhibiting approval granted to the said Institute for receiving donations u/s 35(1)(ii) of the Act for the impugned year and hence eligibility of assessee s claim of weighted deduction u/s. 35(1)(ii) of the Act on donations made to it during the year (ii) That the documents provided to the assessee by the Institute sufficiently demonstrating approval granted to it for receiving donations u/s 35(1)(ii) of the Act for the impugned year, there was no occasion to doubt assessee s claim, for prompting any further enquiry on the issue by the AO. (iii) That, it was only subsequently that the Instruction was issued by the CBDT in F.No.225/351/2018-ITA(II) dated 14/12/2018 based on which Ld.CIT had exercised revisionary powers. That, on the date of which the assessment order was pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that clearly the assessee had been allowed an otherwise patently ineligible claim of deduction u/s. 35(1)(ii) of the Act rendering the assessment order erroneous causing prejudice to the Revenue. 9. We have heard the rival contentions. We have perused all the documents placed before us and also carefully gone through the orders as well as the decisions referred to before us and also the relevant provision of law on the issue raised before us. As noted above, the Ld.CIT s finding of error in the assessment order, for exercising revisionary jurisdiction, iswith respect to wrong allowance by AO of assesses claim toweighted deduction u/s 35(1)(ii) of the Act on donation made to an Institute, i.e. M/s.ShriArvindo Institute of Applied Scientific Research Trust ,in the absence of approval to the said institute for receiving donations under the said section in the impugned year. The quantum of donation made is of Rs. 70 Lakhs and the deduction claimed by the assessee and allowed by the Assessing Officer is of Rs. 1,22,50,000/- i.e. @ 175% of the donation as allowed by section 35(1)(ii) of the Act. 10. During the course of hearing before us, the Ld.counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following documents to the assessee regarding approval u/s 35(1)(ii) of the Act: *Notarized copy of CBDT notification SO No. 1856(E) dated 30th October 2006 stating that Shri Arvindo Institute of Applied Scientific Research Puduchery (registration granted earlier under F. N. 0.203/107 / 2000 ITA II ) is one time registration and renewal is necessary *Renewal letter by CBDT dated 14/05/2012 stating that validity period for exemption to trust is forever unless and until it is withdrawn and *Letter of CBDT dated 2/7 / 2012 stating that the validity of project expires on 31/3 / 2015 and is subject to further renewal. Based on the documents submitted by the assessee, the AO was satisfied regarding the claim of the assessee and therefore, the deduction has rightly been allowed. Therefore, it was requested by the assessee to withdraw the notice issued u / s 263 of the I.T.Act, 1961. 11. Based on the above facts, the arguments of the Ld.counsel for the assessee are that since the documents fairly exhibited the genuineness and the eligibility of the claim of the assessee to weighted deduction u/s. 35(1)(ii) of the Act, the Assessing Officer had committed no err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forged certificates. The relevant Instruction is reproduced hereunder:- F.No. 225/351/2018-ITA (II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Room N0. 245A, North Block New Delhi, the 14th December, 2018 To All Principal Chief Commissioners of Income Tax All Director Generals of Income Tax (Investigation) Sir/Madam Subject: Information regarding bogus donation racket under section 35(1)(ii) of Income-tax Act, 1961-reg.- Kindly refer to the subject mentioned above. 2. In this connection, I am directed to state that Section 35(1)(ii) of the Income-tax Act,1961 ( Act ) prescribes a weighted deduction @ 150% (175% before 01.04.2018) to a donor for any sum paid to an approved research association having as its sole object the undertaking of scientific research or to a university, college or other institution for carrying out scientific research. Very recently, Board has received several references from the field authorities for clarifying whether a Trust namely M/s Shri Arvindo Institute of Applied Scientific Research Trust (PAN:AAFTS7349D) (Hereinafter the Trust ) having of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no doubt therefore that the allowance of claim of deduction to the assessee was an error in the assessment border. 14. The Ld.counsel for the assessee, in counter, has stated that this Notification was issued by the CBDT on 14/12/2018 subsequent to the allowance of assesses claim by the AO vide assessment vide order dated 20/02/2018. On consideration of the above contentions a very important fact which emerges is that the Institute, to which donation was made by the assessee during the impugned year and weighted deduction claimed thereon u/s. 35(1)(ii) of the Act, was not approved for the said purposes for the impugned year. The fact on record available with the Ld.CIT is that the approval granted to the said Institute expired on 31/03/2006. Impugned year before us is A.Y 2015-16. The Advisory issued by the CBDT in December-2018 brought this fact to the notice of all its Field Officers. Therefore, the fact on record was that the said Institute was not approved for receiving donations u/s. 35(1)(ii) of the Act during the impugned year. 15. In the light of the above fact there can be no two views that when the assessment order was passed by the AO, assessees claim to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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