KAUSTUBHBHAI DHIRAJLAL PATEL,AHMEDABAD vs. DCIT, CIRCLE-4(2), AHMEDABAD

The matter relates to addition on account of disallowance under Section 35(1)((ii) of the Act to the tune of Rs. 26,50,000/- in relation to a claim of donation made to one School of Human Genetics & Population Asst.Year –2014-15 Health (SHG&PH) Kolkata on the ground that the said institution is engaged in providing entry and indulged in laundering unaccounted money of the appellant. The allegation leveled against the assessee is this that the assessee has accommodation entry in respect of donation of Rs. 15,00,000/- made to the School of Human Genetics & Population Health (SHG&PH) and they claimed Rs. 26,50,000/- under Section 35(1)(ii) of the Act whereupon a notice dated 20.02.2017 under Section 148 was issued. The appellant furnished the reply submitting that the said institution hold valid certificate under Section 35(1)(ii) on the date of donation; the receipt and certificate were issued, payment were made by cheques etc. The said claim of the assessee was rejected by the AO on the basis of the outcome of the survey action carried out by Investigation Wing, Kolkata on 27.01.2015 in the office of the said institution and on the modus operandi of the said institution which is appearing at Paragraph 4 of the order passed by the Ld. AO. The crux of the observation of the Ld. AO is this that the institution has accepted that they are engaged in bogus donation under Section 35(1)(ii) of the Act through various brokers in lieu of commission. This donations are taken by cheque/RTGS and upon taking commission, the same is routed back to the donor in the form of cash vide 3-4 layers after bogus dealing or other accommodation entries in the books of the said institution. The Ld. CIT(A) affirmed such order holding it a typical case of laundering of unaccounted money. The appellant has alternatively submitted an additional ground that benefit of donation to the charitable trust under Section 80G of the Act should be given as institution having registration under Section 12A of the Act. Needless to mention the same Asst.Year –2014-15 has also not decided in favour of the assessee. Hence, the instant appeal before us.

At the time of hearing of the instant appeal the Ld. Advocate appearing for the assessee submitted before us that the case is squarely covered by the Hon’ble Juri ictional High Court in the case of PCIT vs. M/s. Thakkar Govindbhai Ganpatlal-HUF reported in Tax Appeal No. 881 of 2019 in case of an identical issue. Further that the issue is already been settled in favour of the assessee by the Ld. Tribunal of Mumbai Bench in ITA No. 2224/Mum/2019 for A.Y. 2014-15 in the case of M/s. Gujarat Apart from that the Ld. Counsel appearing for the assessee relied upon the judgment passed by the Co-ordinate Bench in ITA No. 1149/Ahd/2018 in the matter of Bipin Prabhudas Shah-HUF vs. ITO for A.Y. 2014-15 wherein the identical issue has been decided in favour of the assessee were the donation was made to the same institution as has been done by the appellant before us a copy of each of the judgment passed by the Hon’ble Supreme Court and the Ld. Tribunal has been duly submitted before us.

The Ld. DR has been failed to controvert the contention made by the Ld. AR in relation to the issue involved in the matter decided in favour of the assessee.

It is relevant to mention that the appellant has made payment of Rs. 15,00,000/- as donation for the A.Y. 2014-15 to the institution i.e. School of Kaustubhbhai Dhirajlal Patel vs. DCIT Asst.Year –2014-15 Human Genetics & Population Health (SHG&PH) when the said institution has valid registration under Section 35(1)(ii) of the Income Tax Act by and under Notification No. 35/2008/F. No. 203/135/2007/ITA II dated 14.03.2018. Further that the said donee School of Human Genetics & Population Health is also a registered institution under Section 12AA of the Act and certificate of exemption under Section 80G(5) of the Act by the Commissioner of Income Tax (Exemption) Kolkata under letter dated 03.02.2005. It is the case of the appellant that since the registration of that institution was cancelled by the Ministry of Finance on 06.09.2016 at the time of making donation by the appellant the said institution was holding the genuine registration under Section 35(1)(ii) of the Act. And, therefore, on that score alone the disallowance holding the said institution engaged in laundering of unaccounted money is not sustainable in the eye of law, taking into consideration the date of cancellation of registration of the said institution as on 06.09.2016. 6. We have heard the respective parties and we have also perused the relevant materials available on record.

Upon perusal of the judicial pronouncement as relied upon by the Ld. Counsel appearing for the assessee it appears that the issue is squarely covered in favor of the assessee.

Before us, the ld.counsel for the assessee contended that donations were given on 25.3.2014. 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 5.9.2016. 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 tem of Calcutta. He has not specifically recorded statement of representatives 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 a 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. Asst.Year –2014-15 In the absence of such circumstances, donation given by the assessee to the donee, on which the assessee no mechanism to check the veracity, 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.”

There is no disparity on the facts. On the basis same survey report, the genuineness of the donation has been doubted in the case of the assessee also. Therefore, the issue in dispute is squarely covered in favour of the assessee. Respectfully following the order of the ITAT in the case of S.G. Vat care P. Ltd., We do not find any merit in the appeal of the Revenue. It is dismissed.

In the result, appeal of the Revenue is dismissed.” From the above judgments it appears that the case is squarely covered in favour of the assessee and in the absence of any changed facts and circumstances of the case we find it fit to allow the appeal preferred by the assessee. Thus, addition is hereby deleted.

In the result, assessee’s appeal is allowed.”

In the result, assessee’s appeal is allowed. This Order pronounced in Open Court on 23/02/2021 (AMARJIT SINGH) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/02/2021TANMAY, Sr. PS Asst.Year –2014-15 आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त(अपील) / The CIT(A)-

"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file.