R.K. AGRAWAL TRADING CO (P). LTD.,AHMEDABAD vs. DCIT, CIRCLE-3(1)(2), AHMEDABAD

At the time of the hearing of the appeal, the Ld. Counsel appearing for the assessee submitted before us that rejection was made on the ground that by and under a notification being No. 79/2016 dated 06.09.2016 issued by CBDT the approval granted to such foundation has been withdrawn. Hence, it was held that the assessee is the beneficiary of such bogus donation under section 35(1)(ii) of the Income Tax Act. It was further contented by the Ld. AR that the assessee donated Rs. 10 lakhs to the said trust namely Herbicure Healthcare Bio Herbal Research Foundation (HHBRF) in F.Y. 2012-14 much before the cancellation dated 06.09.2016 by the CBDT towards the approval granted to such foundation.

Ld. Counsel appearing for the assessee also brought this fact into our notice that the issue is squarely covered by and under several judgments passed by the Co-ordinate Bench including one of dated 17.07.2019 passed in ITA 2318/Ahd/2017 for A.Y. 2014-15 in the matter of (ACIT vs. M/s. Thakkar Govindbhai Ganpatlal HUF). The said appeal preferred by the Revenue was rejected on the basis of the judgment passed in the matter of S. G. Vat Care Pvt. Ltd. vs. ITO passed by the Co-ordinate Bench in the identical issue. In that view of the matter he prays for similar relief before us.

Heard the parties, perused the relevant materials available on record including the order passed by the Co-ordinate Bench in ITA No. 2318/Ahd/2017 for A.Y. 2014-15 the relevant paragraph whereof is as follows:- Asst.Year –2014-15 “3. Brief facts of the case are that the assessee has filed its return of income on 9.9.2014 declaring total income at Rs.31,23,870/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has claimed deduction under section 35(1)(ii) at Rs.96,25,000/- on the ground that it has incurred this expenditure towards donation. He observed that donations were given to Herbicure Health Care Bio-herbal Research Foundation (“Herbicure” for short). According to the AO a survey under section 133A was conducted by the DDIT(Investigation) Unit-1 & 2, Kolkatta on 27.1.2015 at “Herbicure” foundation. During the course of survey, it was found that donors/ beneficiaries in connivance with donee and with active help of certain brokers, entry operators/bogus billers were engaged in arranging these entries of bogus donation. According to the AO after an inquiry, “Herbicure” was prohibited from receiving donation. On the strength of this report of survey team, the AO has treated this donation as bogus and disallowed the claim of donation made by the assessee. On appeal, the ld.CIT(A) has deleted the disallowance.

Before us, the ld.counsel for the assessee at the very outset submitted that similar donations were given by S.G. Vat Care P.Ltd. It was disallowed to the assessee, but the Tribunal has deleted the disallowance. He placed on record copy of the Tribunal’s order passed in ITA No.1943/Ahd/2017. According to the ld.counsel for the assessee, the issue in dispute is squarely covered in favour of the assessee. On the other hand, the ld.DR was unable to controvert this contention of the ld.counsel for the assessee.

We have duly considered rival contentions and gone through the record carefully. In the case of S.G.Vat care P.Ltd. (supra), the Tribunal has recorded the following finding:

In the first ground of appeal, the grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs.8,75,000/- on account of alleged bogus donation to Herbicure Healthcare 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 Asst.Year –2014-15 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 25.3.2014. 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.

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.

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. 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.”

R.K. Agarwal Trading Co. (P) Ltd. vs DCIT Asst.Year –2014-15

Since the donation has not been doubted by the Revenue in the case of the assessee, in the absence of any changed circumstances, respectfully relying upon the judgment passed by the Co-ordinate Bench we allow the appeal preferred by the assessee. Consequentially, the addition made by the authorities below is deleted.

In the result, the assessee’s appeal is allowed. This Order pronounced in Open Court on 20/09/2019 ( O. P. MEENA) ( Ms. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/09/2019 TANMAY, Sr. PSआदेश 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. आदेशानुसार/ BY ORDER,