SHRI TEJAS ASHOK SHAH,DHRANGADHRA vs. THE INCOME TAX OFFICER, WARD-3,, SURENDRANAGAR

The matter relates to disallowance of bogus donation and the interest income. The assessee made donation/contribution of Rs. 3,67,505/- during the previous year relevant to A.Y. 2011-12 and claim

At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the issue is squarely covered in favour of the assessee by and under several judgments passed by the Hon’ble Tribunal in ITA No. 2318/Ahd/2017 for A.Y. 2014-15 and also the judgment passed by the Juri ictional High Court in R/Tax Appeal No. 881 of 2019 copies whereof have also been submitted before us.

Heard the parties, perused the records including the order passed by the Hon’ble Co-ordinate Bench and also the Hon’ble Juri ictional High Court for which it appears that the deduction under section 35(1)(ii) has been allowed in respect of the donation and/or contribution to the same institution. The relevant portion of the order passed by the Juri ictional High Court is reproduced as under:-

The assessee filed its return of income for the year under consideration on 09.09.2014 declaring total income at Rs. 31,23,870/-. A notice was issued dated 29.09.2016. The receiver foundation shall not be confirming the same unless the amount has been utilized for scientific research. The onus has been discharged by the appellant. In the circumstances, it cannot be concluded that the foundation was involved in 100% bogus activity in A.Y.2014-15 which was much before the cancellation notification issued by CBDT u/s. 35 (1) (ii). The grounds of appeal are allowed."

The Revenue carried the matter before the Tribunal. After considering the facts and findings given by the CIT (Appeals), relying upon the decision in the case

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):- "

In the first ground of appeal, the grievance of the assessee is tha t 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.

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.

The ld. DR, on the other hand, contended that in the investigation it came to know about bogus affairs by the donee. Hence, these donationsare rightly been treated as addition is rightly made.

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,

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 returned back in cash.

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.” Respectfully relying upon the judgment passed by the Hon’ble Juri ictional High Court we allow the donation claim by the assessee under section 35(1)(ii) of the Act. The AO is directed to grant relief to the assessee in terms of the above observation.

In the combined results, both the appeals are allowed for statistical purpose. This Order pronounced in Open Court on 28/02/2020 (WASEEM AHMED) JUDICIAL MEMBER Dated 28/02 /2020 Tanmay Datta, Sr. PSITA Nos.294 & 295/RJT/2018 A.Ys.2011-12 & 2012-13 आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : अपीलाथ" / The Appellant

"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण,राजोकट/DR,ITAT, Rajkot 5. गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.