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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘SMC’
Before: SHRI RAJPAL YADAV, VICE-
सुनवाई क� तार�ख/Date of Hearing : 08/11/2021 घोषणा क� तार�ख /Date of Pronouncement : 9/11/2021 O R D E R
Present appeal is directed at the instance of assessee against order of ld.CIT(A), Ahmedabad-5 dated 26.04.2018 for Asstt.Year 2011-12.
Assessee has raised as many as nine grounds of appeal. But core issue involved in all these grounds is that the ld.CIT(A) has erred in upholding order of the ld.AO in disallowing claim of donation under section 35(1)(ii) of the Income Tax Act, 1961 of Rs.1,75,000/-
3. Facts in brief are that the assessee derives income of from salary, business and income from other sources. He has filed return of income on 22.07.2011 declaring total income at Rs.9,29,090/-. The return was - 2 – processed under section 143(1) of the Act and thereafter selected for scrutiny assessment under section 143(3) of the Act. During the assessment proceedings, the ld.AO AO noticed that the assessee has given donation of Rs.1.00 lakh to one Herbicure Health Care Bio Herbal Research Foundation and claimed deduction under section 35(1)(ii) @ 175% of Rs.1.75 lakhs. In this connection, a survey under section 133A of the Act was carried out, and on the basis of the survey carried out by the Investigation wing of the Department at some of the institutions, the department has received an information from DDIT(Invt), Ahmedabad, that assessee was one of the beneficiaries indulged in giving bogus donations to Herbicure Health Care Bio Herbal Research Foundation, Kolkata in F.Y.2011-12. This concern was misusing the benefit of notification issued by the Income Tax Department and getting donations from various sources, and after deducting certain amount of commission, these donations were returned in cash after deducting commission charge and provided accommodation entries. As per the information, the donation made by the assessee to the above Institution in the financial year 2011-12 relevant to Asstt.Year 2012-13 were bogus, and claim of weighted deduction under section 35(1)(ii) of the Act at Rs.1.75 was also bogus. During the survey, a statement was recorded on oath of the concerned person by the survey team. On the basis of that survey report registration granted to its favour was cancelled. On the basis of the outcome of that survey report, and statement on oath of the concerned person, it was revealed that the assessee has taken the accommodation entry in form of giving bogus donation, and accordingly the ld.AO construed that the donation given by the assessee - 3 – was bogus. Appeal to the ld.CIT(A) did not bring any relief to the assessee.
4. Before us, at the outset, it has been pleaded in the written submissions by the ld.counsel for the assessee that the similar issue of donation so made to the institutions based in Kolkata has been decided by the ITAT, Ahmedabad in other cases of the assessees viz. in the case of Bimal Kirtikar Shab Vs. ITO, and decision in the case of S.G.Vat Care P.Ltd. Vs. ITO, ITA No.1943/Ahd/2017, and therefore, since issue involved in the present case also similar, the claim of the assessee should be allowed. It has been further submitted in the submission that the donation has been made to the above institution during the financial year 2010-11 relevant to the Asstt.Year 2011-12. The said foundation i.e. donee is a charitable trust registered under section 12A of the Act and the certificate of exemption was granted under section 12AA of the Act. In other words, the Institution was holding valid registration as on the date of payment of donation by the assessee to the donee. However, the Government of India has cancelled the registration vide notification dated 6th September, 2016. Therefore, at the time of making donation in the financial year 2010-11, there was no such notification dated 6th Sept., 2016 existed, and therefore, rightly not applicable to the assessee’s case.
The ld.DR, on the other hand, contended that in the investigation it came to know about bogus affairs conducted by the donee, and it was a typical case of laundering of unaccounted money. The assessee has failed to furnish specific queries raised during the assessment - 4 – proceedings. Hence, these donations are rightly treated as bogus, and addition is rightly made.
We have duly considered rival contentions and gone through the record carefully. We have also gone through the decision of the Tribunal in the cases of other assesses, cited by the ld.counsel for the assessee. We also take into account recent judgment of Hon’ble Gujarat in the case of PCT Vs. Thakkar Ganpatlal HUF, wherein Hon’ble High Court has dealt with the similar issue, and while allowing the claim of the assessee, referred to the decision of ITAT, Ahmedabad Bench in the case of S.G. Vat Care P.Ltd. Vs. ITO, order dated 15.01.2019, which was authored by one of us. In this The Hon’ble Gujarat High Court noted the observation and finding of the Tribunal on this issue, and recorded the same in page no.3 to 5 of the High Court’s order, and thereafter came to the conclusion that the onus placed on the assessee has been discharged and no interference in the order of the ITAT is required. The Hon’ble Court, thus allowed claim of donation made to M/s.Herbicure Healthcare Bio-Herbal Research Foundation). For the consideration of the issue on hand, it is imperative upon us to reproduce the relevant part of the Hon’ble Gujarat High Court’s order as under:
“6. Learned Senior Advocate Mr.M.R.Bhatt for the appellant submitted that there no appeal is filed by the Revenue against the decision of the Tribunal in the case of S.G.Vat Care Private Limited (Supra). It would therefore be germane to refer to the following findings, given by the Tribunal in the case of S.G.Vat Care Private Limited (Supra):- "2. In the first ground of appeal, the grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs.8,75,000/- on account of alleged bogus donation to Herbicure Heathcare Bio-Herbal Research Foundation.
ITA No.843/Ahd/2018 - 5 –
Brief facts of the case are that the assessee has filed return of income on 20.11.2014 declaring total income at Rs.4,47,910/-. On scrutiny of the accounts, it revealed that the assessee-company has given donation to Herbicure Healthcare Bio-Herbal Research Foundation, Calcutta. A survey action was carried out at the premises of the donee wherein it revealed to the Revenue that this concern was misusing the benefit of notification issued by the Income Tax Department. It has been getting donation from various sources, and after deducting certain amount of commission, these donation were refused in cash. On the basis of that survey report registration granted to its favour was cancelled. On the basis of the outcome of that survey report, the ld.AO construed the donation given by the assessee as bogus. Appeal to the ld.CIT(A) did not bring any relief to the assessee.
Before us, the ld. Counsel for the assessee contended that donations were given on 25.03.2014. At that point of time, donee was notified as eligible institution and fall within the statutory eligibility criterion. Certificate for receiving donation was cancelled on 6.9.2016. There is no mechanism with the assessee to verify whether such donee was a genuine institute or not, which can avail donation from the society. 5. The ld. DR, on the other hand, contended that in the investigation it came to know about bogus affairs conducted by the donee. Hence, these donations are rightly been treated as bogus, and addition is rightly made.
6. We have duly considered rival contentions and gone through the record carefully. The AO is harping upon an information supplied by the survey tern of Calcutta. He has not specifically recorded statement of representative of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received the same was repaid in cash, has been brought on record. In the absence of such circumstances, donation given by the assessee to the donee, on which the assessee no mechanism to check the veraci, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue. We allow this ground."
In the facts of the present case, the CIT(Appeals) has given the finding of the fact that the amount of donation was transferred to the Herbicure through Bank channel and there is no evidence that the same is returned back in cash.
- 6 – 8. It is also found that the Herbicure Foundation has confirmed that the amount has been utilized for scientific research vide confirmation dated 29.09.2016. Accordingly, the onus placed upon the assessee was discharged.
In view of the aforesaid findings of the fact given by both the authorities below, no interfere in the impugned order passed by the Tribunal is required to be made. No substantial question of law arise from the order of the Tribunal. Therefore, the appeal fails and is hereby, dismissed.”
There is nothing before us as to how the issue on hand differs from the issues raised in the cases cited (supra), so as to take a different view on the issue. Therefore, since the issue on hand being squarely covered, following the principle of consistency, I find merit in the submissions of the assessee and allow the claim of deduction under sections 35(1)(ii) of the Act. 7. In the result, the appeal of the assessee is allowed. Pronounced in the Open Court on 9th November, 2021.