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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 12/05/2023, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“ learned CIT(A)”], for the assessment year 2010-11.
In this appeal, the assessee has raised the following grounds:-
“1. The Re-assessment proceedings-initiated u/s 147 and reassessment order dated 26-12-17 passed u/s 143(3) r.w.s. 147 are bad in law, for the following reasons-
Rabi Narayan Bastia ITA no.2115/Mum./2023 a) The Ld. AO ACIT 20(3) has no jurisdiction to initiate the re-assessment proceedings and the Hon. Pr. CIT-20 approving the re-assessment proceedings was not the jurisdictional Pr. CIT. b) The Re-assessment proceedings are based on information received from DCIT Central Circle-2(1), Mumbai. The Ld.AO ACIT 20(3) without making any independent inquiry initiated with re-assessment proceedings on borrowed satisfaction. c) The AO neither shared any documents/evidences in its possession nor provided the opportunity to cross examine the concerned person. d) After filing the return of income on 21-11-2017 in response to notice u/s 148, No notice u/s 143(2) was served. Relief Claimed - The impugned Order be declare as null and void.
2. The Hon. CIT(A) NFAC has erred in law and facts in confirming the disallowance of donation claimed under section 80GGA of Rs. 5,00,000 paid to Navjeevan Charitable Trust, on the basis of the following is incorrect and untenable- a) The appellant has not denied that he is a beneficiary and has become the party of the bogus syndicate. b) The claim made of deduction of donation in the return of income are facts which serves as evidence proving that the appellant had taken benefit from the bogus syndicate. Relief Claimed- The AO be directed to allow claim u/s 80GGA in respect of donation of Rs. 5,00,000/-.
3. The Hon. CIT(A) NFAC has erred in law and facts has failed to appreciate that reasons for re-opening, evidence relied upon by the AO/CIT(A) does not establish that the appellant was a beneficiary of scheme of bogus donation run by donee trust. Relief Claimed- The AO be directed to allow claim u/s 80GGA in respect of donation of Rs. 5,00,000/-.
4. The appellant prays for your leave to add, alter, amend the ground(s) of appeal.”
During the hearing, the learned Authorised Representative (“learned AR”) submitted that if the issue is decided on merits then it would not be Page | 2
Rabi Narayan Bastia ITA no.2115/Mum./2023 necessary to go into the jurisdictional issues raised in the present appeal. Accordingly, in view of the submissions of the learned AR, we, at the outset, are considering the issue raised on merits.
The issue arising in grounds No. 2 and 3, raised in assessee’s appeal, pertains to disallowance of deduction claimed under section 80-GGA of the Act in respect of donation made by the assessee.
The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and for the year under consideration filed its return of income on 22/06/2010 declaring a total income of Rs. 1,06,67,608 after claiming deduction under section 80-GGA in respect of donation of Rs. 5,00,000 to the Navjeevan Charitable Trust. Subsequently, on the basis of information received from the DCIT, Central Circle-2(1), Mumbai that Navjeevan Charitable Trust has accepted donations in cheque, which was later on returned in cash to the donor after deducting the commission and the assessee is one of the beneficiaries who has claimed deduction of the donation made to Navjeevan Charitable Trust, proceedings under section 147 of the Act were initiated and notice under section 148 of the Act was issued on 31/03/2017. The Assessing Officer (“AO”) vide order dated 26/12/2017 passed under section 143(3) read with section 147 of the Act disallowed the deduction claimed under section 80-GGA of the Act of Rs. 5,00,000 claimed by the assessee and added the same to the total income of the assessee. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue. Being aggrieved, the assessee is in appeal before us.
Rabi Narayan Bastia ITA no.2115/Mum./2023 6. We have considered the submissions of both sides and perused the material available on record. As per the assessee, Navjeevan Charitable Trust was approved as an eligible trust under section 35-AC vide notification dated 12/01/2009 issued by the Ministry of Finance for three financial years beginning from 01/04/2008. Subsequently, the National Committee (Approval Authority) after satisfying that the said eligible project is executed properly extended the approval for a further three years vide notification dated 27/04/2011, which was in force when the assessee made a donation of Rs. 5,00,000 in the financial year 2009-10 to Navjeevan Charitable Trust. Subsequently, the aforesaid notifications were withdrawn vide notification dated 30/11/2016. As per the assessee, in view of Explanation to section 35- AC(2) of the Act the deduction to which the assessee is entitled in respect of any sum paid shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee the approval so granted or the notification has been withdrawn. Thus, it was submitted that the deduction under section 80-GGA of the Act cannot be denied merely on the basis of the subsequent withdrawal of the notifications on 30/11/2016 under section 35-AC of the Act.
Before proceeding further, it is pertinent to note the provisions of the Act which are relevant for the adjudication of the issue at hand. The provisions of section 80-GGA of the Act, relevant to the present case, are reproduced as under:-
“80GGA. (1) ……… (2) ………
Rabi Narayan Bastia ITA no.2115/Mum./2023 (bb) any sum paid by the assessee in the previous year to a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme :
Provided that the assessee furnishes the certificate referred to in clause (a) of sub-section (2) of section 35AC from such public sector company or local authority or, as the case may be, association or institution.
Explanation 1.— The deduction, to which the assessee is entitled in respect of any sum paid to a public sector company, or to a local authority or to an association or institution for carrying out the eligible project or scheme referred to in section 35AC, shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee,—
(a) the approval granted to such association or institution has been withdrawn; or (b) the notification notifying the eligible project or scheme referred to in section 35AC carried out by the public sector company, or local authority or association or institution has been withdrawn.
Explanation 2.—For the purposes of this clause, the expressions "National Committee" and "eligible project or scheme" shall have the meanings respectively assigned to them in the Explanation to section 35AC;”
Therefore, under section 80-GGA of the Act, the assessee is entitled to claim a deduction in respect of any sum paid in the previous year to a public sector company, local authority, association, or institution approved by the National Committee for carrying out any eligible project or scheme under section 35-AC of the Act. Further, Explanation-1 to section 80-GGA(2)(bb) of the Act further provides that the deduction to which the assessee is entitled of any sum paid to the aforesaid authority shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee the approval granted has been withdrawn or the notification notifying the eligible project or scheme referred to in section 35-AC has been withdrawn.
Section 35-AC of the Act provides that expenditure incurred by an assessee by way of payment of any sum to a public sector company or a local Page | 5
Rabi Narayan Bastia ITA no.2115/Mum./2023 authority or to an association or institution approved by the National Committee for carrying out any eligible project or scheme be allowed as a deduction. Further, we find that sub-sections (4) and (5) to section 35-AC of the Act provide that the approval so granted by the National Committee under sub-section (1) can be subsequently withdrawn if the project or the scheme is not being carried on in accordance with all or any of the conditions subject to which approval was granted or such an association or institution, to which approval has been granted, has not furnished a report in such form and setting forth such particulars within such time as may be prescribed. Further, the Explanation to section 35-AC(2) of the Act, placed reliance upon by the assessee, reads as under:
“Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a public sector company or a local authority or to an association or institution for carrying out the eligible project or scheme referred to in this section applies, shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee,—
(a) the approval granted to such association or institution has been withdrawn; or (b) the notification notifying the eligible project or scheme carried out by the public sector company or local authority or association or institution has been withdrawn.”
From the perusal of the aforesaid Explanation, at the outset, it is evident that the same has been worded similar to Explanation-1 to section 80- GGA(2)(bb) of the Act. Thus, from the perusal of the Explanation to section 35-AC(2) of the Act as well as Explanation-1 to section 80-GGA(2)(bb) of the Act, it is evident that the legislature has specifically provided that subsequent withdrawal of approval granted to association or institution or subsequent withdrawal of notification notifying the eligible project or scheme cannot be the Rabi Narayan Bastia ITA no.2115/Mum./2023 sole basis for disentitling the assessee to claim deduction in respect of payment made to the said association or institution.
Undisputedly, in the present case, the assessee made a donation of Rs. 5,00,000 to Navjeevan Charitable Trust during the relevant financial year in respect of which deduction under section 80-GGA of the Act has been claimed by the assessee. Further, there is also no material on record to dispute the claim of the assessee that at the time of making of aforesaid donation Navjeevan Charitable Trust was duly approved under section 35-AC of the Act. Since the relevant provisions of the Act, applicable to the present case, specifically debars denial of deduction claimed by the assessee merely on the ground of subsequent withdrawal of approval or notification under section 35- AC of the Act, therefore we find no merits in denial of deduction under section 80-GGA of the Act in the present case. Further, even though the Revenue has claimed that Navjeevan Charitable Trust has been involved in a bogus transaction of accommodation entry and the learned CIT(A) has also made various allegations against the assessee in the impugned order, however in the present case the impugned addition is based on the denial of deduction under section 80-GGA of the Act merely on the basis of subsequent withdrawal of notification under section 35-AC of the Act and there is no material available on record to support the findings of the learned CIT(A). Accordingly, the impugned order upholding the denial of deduction claimed under section 80- GGA of the Act is set aside. As a result, grounds no. 2 and 3 raised in assessee’s appeal are allowed.
Rabi Narayan Bastia ITA no.2115/Mum./2023 12. In view of the submissions of the learned AR, ground no.1 raising the jurisdictional issue is kept open.
In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 20/12/2023