H.N. MEHTA CORPORATION,AHMEDABAD vs. DCIT, CIRCLE-1(2), AHMEDABAD

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ITA 1315/AHD/2018Status: DisposedITAT Ahmedabad13 January 2020AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer could not doubt the donation solely on the basis of general information from a survey report. There was no specific evidence or cross-examination of the donee's representatives to prove the donation was bogus or repaid in cash.

What were the facts?

The assessee claimed a deduction of Rs. 5,25,000/- for donations made to Herbicure Healthcare Bio-Herbal Research Foundation. The Assessing Officer treated the donation as bogus based on a survey report of the donee, which indicated a practice of refunding donations in cash after deducting commission.

What were the issues?

Whether the donation made by the assessee to a notified institution can be treated as bogus based on subsequent findings about the donee's activities, without specific evidence against the assessee?

Which sections of the Income-tax Act were involved?

Section 35(1)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD - BENCH ‘C’

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Appellant: Shri Mukesh Khandwala, CA
For Respondent: Shri L.P.Jain, Sr.DR
Hearing: 10/01/2020

PER RAJPAL YADAV, JUDICIAL MEMBER:

1.

Assessee is in appeal before the Tribunal against order of ld.CIT(A)-10, Ahmedabad dated 22.3.2018 passed for the Asstt.Year 2014-15.

2.

Only effective ground raised in this appeal of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs.5,25,000/- on account of donation made by the assessee to Herbicure Healthcare Bio- Herbal Research Foundation.

2 3. Facts in brief are that the assessee has e-filed return of income on 18.9.2014 declaring total income at Rs.49,20,280/-. As per the information received from DDIT(Invt), Ahmedabad, assessee was one of the beneficiaries indulged in giving bogus donation to one Herbicure Health care Bio Herbal Research Foundation, Kolkatta in the F.Y.2013- 14 relevant to the asstt.Year 2014-15. During the year under consideration assessee has made donation of Rs.3 lakhs to the said foundation, and claimed deduction of Rs.5,25,000/- i.e. 175% of the donated amount, under 35(1)(ii) of the Income Tax Act. 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 donations from various sources, and after deducting certain amount of commission, these donations were refunded 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.

4.

Before us, the ld.counsel for the assessee contended that donations were given on 25.2.2014. 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,

3 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 team of Kolkatta. He has not specifically recorded statement of representatives of the donee. He has not brought on record any 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 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.

7.

In the result, appeal of the assessee is allowed. Order pronounced in the Court on 13th January, 2020 at Ahmedabad.

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