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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLEShri Manoj Pandit Shri. Ashish Kumar Deharia
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 18.08.2022 for the A.Y.2012-13.
(A.Y: 2012-13) M/s. Met Pro Chemicals 2. Brief facts of the case are, assessee filed its return of income for the A.Y 2012-13 on 25.09.2012 declaring total income of ₹.12,13,202/-. The Assessing Officer received information from DDIT(Inv), Unit-7(4), Mumbai wherein it was stated that as per information received from Directorate of Investigation, Kolkata the Institution M/s. Herbicure Healthcare Bio Herbal Research Foundation (HHBRF) registered office at Sonarpur Kolkata vide a network of the brokers is engaged in the bogus donation u/s.35(1)(ii) of Income-tax Act, 1961 (in short “Act”). Accordingly, Assessing Officer reopened the case u/s.147 of the Act and issued notice u/s.148 which was duly served on the assessee. In response to the notice assessee submitted its submissions, after considering the submissions of the assessee Assessing Officer completed the assessment based on the findings unearthed by the investigation wing, Kolkata and proceeded to make addition of ₹.8,00,000/- and ₹.40,000/- towards bogus donation and commission on such bogus donation respectively, and he disallowed the same.
Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and after considering the detailed submissions, Ld.CIT(A) sustained the additions made by the Assessing Officer and dismissed the grounds raised by the assessee.
(A.Y: 2012-13) M/s. Met Pro Chemicals 4. Aggrieved assessee is in appeal before us raising following grounds in its appeal: - “1. On facts and in law the Order passed by the learned Commissioner of Income Tax (Appeals) from NATIONAL FACELESS APPEAL CENTRE (NFAC) is bad in laws and deserves to be set aside.
2. The learned Commissioner of Income Tax (Appeals) from NATIONAL FACELESS APPEAL CENTRE (NFAC), erred in law and in facts in treating donation of Rs. 8,00.000 paid to M/s. Herbicure Healthcare Bio Herbal Research Foundation (HHBRF) given on 07.03.2012. The assesse has donated to the above trust by A/C Payee Cheque only. That the assessee had discharged the onus put on him by submitting the Bank Statements, Donation Certificate, and Donation Receipt. However the Ld. AO on the basis of uncorroborated statements made by the trustee without providing opportunity of cross examination had added the amount of donation in the hands of the Appellant without establishing the onus of the basis on which the allegation made by AO are correct. The Orders are against the principals of natural justice and established process of law as the AO had used the evidences collected behind the back of appellant without providing cross examination. The Ld. CIT (A) also failed to provide the opportunity of cross examination at appellate stage and confirmed the additions. Hence it is urged that the donation paid by the company be allowed. [Tax effect Rs 2,40,000 approx]
3. The learned Commissioner of Income Tax (Appeals.), erred in law and in facts in confirming the addition of Rs. 40,000 as unexplained expenditure being 5% of the Donation amount. That the appellant had not claimed any such expenditure and question of disallowing the same does not arise. However following own standpoint the AO had added this amount as unexplained expenditure and Ld. CIT (A) has erred in confirming the same. Hence the addition made without cogent reasons and without authority of law deserves to be deleted. [Tax effect Rs. 12,000 approx]
4. The Ld. CIT (A) erred in not deleting the consequential interest and penalty proceedings.
5. Each of the above grounds of appeal are independent to each other.
6. The appellant craves to add, alter and /or amend any of the above grounds of.”
(A.Y: 2012-13) M/s. Met Pro Chemicals 5. At the time of hearing, Ld. AR of the assessee submitted that the assessment was reopened relating to A.Y.2012-13 and it is fact on record that it is beyond four years. Therefore, Assessing Officer has not recorded requisite satisfaction as required u/s. 151(2) of the Act. Further, he brought to our notice Page No. 61 of the Paper Book and he brought to our notice the receipt of donation issued by the Trust for an amount of ₹.8,00,000/- Further, he brought to our notice Page No. 60 of the Paper Book wherein bank statement declaring the details of payment of donation to the trust. Therefore, the assessee has paid the donation in good faith and the same donation cannot be treated as bogus. In this regard, he relied on the following case laws: - a. Seksaria Biswan Sugar Factor v. Inspecting Assistant commissioner (1990) 184 ITR 123. b. CIT v. Chotatingrai Tea & Others (2002) 258 ITR 529. c. Bhavita Chemicals Pvt. Ltd., v. Income Tax Officer in ITA.No. 3665/Mum/2019 dated 01.12.2020 d. Kiran Aluminum India Pvt. Ltd., v. ACIT in ITA.No. 7429/Mum/2018 dated 06.01.2020.
On the other hand, Ld. DR relied on the orders of the lower authorities and he argued that the funds given to the Trust is only a bogus and it is found that trust was never carried any activities.
(A.Y: 2012-13) M/s. Met Pro Chemicals 7. Considered the rival submissions and material placed on record, we observe that assessee has made the donation on 07.03.2012 and assessee has submitted all the relevant information with regard to payment of donation and all these donations were made through banking channels. On the similar facts on record, the Coordinate Bench in the case of Shri Mrunal H. Shah v. ACIT in ITA.No. 4878/Mum/2019 dated 24.05.2021 dealt with the similar issue and held as under: - “4. During assessment proceedings, it transpired that the assesse made donation of Rs.15 Lacs to a Trust namely Navjeevan Charitable Trust and claimed deduction u/s 80GGA against the same. However, there was a search action u/s 132 on trust on 27/10/2014 wherein it was found that the trust was involved in the activities of providing accommodation entries by way of donation. The donation received in cheque were stated to be returned in cash after deducting commission of 3%. Relying upon the admission made by the Trustees during search, Ld. AO proceeded to disallow the deduction so claimed by the assessee. The assessee defended the claim by submitting that the donations were paid through cheque against valid receipt. However, not convinced, Ld. AO denied the deduction to the assessee.
During appellate proceedings the assessee submitted that the trustee had not named the assessee as recipient of cash and there was no substantiated statement that the appellant received the cash back from the trust. However, in the light of search findings, Ld. CIT(A) confirmed the stand of Ld. AO. Aggrieved, the assessee is in further appeal before us.
6. After going through documents on record, it could be seen that the assessee had given donation on 21/06/2004 against valid receipt issued by the Trust. The donation was made through cheque which got cleared from assessee’s bank account. The assessee was issued requisite Form No.58A by the trust. The trust had valid registration at the time of making of donation. The approval was withdrawn only subsequently vide notification dated 30/11/2016. Further, it is evident from the assessment order that the deduction has been denied to the assessee only in the basis of allegations that the donations were bogus donations and the amount so donated has flown back to the assessee. However, except for statement of trustee of the society, we find that there is no positive evidence on record to substantiate the same. There is nothing on record which would show that on the date of donation, the trust did not have valid registration or its registration stood withdrawn. It was only subsequently that the approval (A.Y: 2012-13) M/s. Met Pro Chemicals was withdrawn. This being so, the deduction could not be denied to the assessee since Ld. AO failed to conduct any inquiry before making disallowance and except for mere allegations, he did not brought on record any fact to establish that donation given by the assessee was subsequently returned back in cash. The assessee, in our opinion, has duly discharged the onus casted upon him and it was incumbent upon Ld. AO to refute the same. However, no such inquiry has been conducted and the deduction has been denied more on mere allegations. Therefore, the deduction could not be denied to the assessee as held by this very bench in the case of Devajyoti N. Bhattacharya V/s ACIT (ITA No. 5051/Mum/2018 order dated 12/03/2020). Our observations therein were as follows: - 4. Upon due consideration, we find that the assessee was denied aforesaid deduction, in more or less similar factual matrix, in AYs 2009-10, 2012-13 & 2014-15 which was agitated before this Tribunal vide common order dated 30/09/2019. The coordinate bench, vide para-7, held that that the assessee had adduced evidence to establish that payment of donation to Navjivan Charitable Trust and the onus had shifted to Ld.AO. However, Ld. AO failed to conduct any inquiry before making disallowance and did not brought on record any fact to establish that donation given by the assessee was subsequently returned back in cash except mere allegations. Reliance was placed on the decision of Hon’ble Delhi High Court in CIT V/s A and A Bakery P. Ltd. (2008 302 ITR 51) to support the conclusions. Finally, the disallowance was deleted. We find that fact to be pari-materia the same in this year. The assessee has duly discharged the onus casted upon him and it was incumbent upon Ld. AO to refute the same. However, no such inquiry has been conducted and the disallowance has been made on mere allegations. Therefore, respectfully following the earlier order, we delete the disallowance as made by Ld. AO. Therefore, we direct Ld. AO to grant the deduction u/s 80GGA and recompute assessee’s income.”
Respectfully following the above said decision, we are inclined to decide the issue in favour of the assessee and therefore deduction could not be denied to the assessee. Accordingly, we allow the ground raised by the assessee.
(A.Y: 2012-13) M/s. Met Pro Chemicals 9. With regard to Ground No. 3, the addition of commission, which is presumed to be incurred by the assessee is also relating to donation made by the assessee to M/s. Herbicure Healthcare Bio Herbal Research Foundation. As the ground relating to the donation made by the assessee is allowed in Ground No. 2, we deem it fit and proper to delete this addition also which was based on the statement given by Mr. Swapan ranjan Das Gupta Director of M/s. Herbicure Healthcare Bio Herbal Research Foundation. However, there is no evidence brought on record to prove that the assessee has paid the above said commission and also the donation has came back to the assessee. Accordingly, Ground No.3 is allowed in favour of the assessee.
In the result, appeal filed by the assessee is partly allowed.