CHROMEX,MUMBAI vs. DCIT -17(1), MUMBAI

PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 29.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds: 1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A), NFAC erred in upholding the decision of the Ld AO in respect of disallowance of deduction u/s 35(1)(ii) of the Income Tax Act, 1961 claimed towards contribution of Rs. 15,00,000/- made to School of Human Genet made as requ are wrong an made thereun 2. At the outset, pointed out delay of o order of the Ld. CIT( has been filed on 2 expiring on the Sun working day and ther of Explanation subm filed within the lim adjudication. 3. Briefly stated, fact in the business pharmaceuticals. For assessee filed its ret income of ₹15,53,930 was selected for scru tax Act, 1961 (in sho 3.1 During assessm a donation of ₹15,0 Population Health” deduction of ₹26,25, the notice issued u/ ITA tics & Population Health inspite of all com uired in the law and the reasons assign nd contrary to the provisions of Income nder. the Ld. Counsel submitted th one day in filing the appeal. She (A) was received on 29.05.2024 9.07.2024 for the reason that nday and appeal has been file refore there is no delay in filing mitted by the assessee, the appe mitation period and accordingly ts of the case are that the asse of trading in dye-inter r the assessment year under co turn of income on 01.11.2014 0/-. The return of income filed utiny and statutory notices und rt ‘the Act’) were issued and com ment, it was noticed that the ass 00,000/- to “School of Human (hereinafter SHG&PH) and cla ,000/- u/s 35(1)(ii) of the Act. s 133(6) to the donee institutio Chromex 2 A No. 3793/MUM/2024 mpliances being ned for doing so Tax and rules at Registry has e submitted that 4 but the appeal t limitation was ed on the next g appeal. In view eal is treated as y, admitted for essee is engaged rmediates and nsideration, the 4 declaring total by the assessee der the Income- mplied with. sessee had made n Genetics and aimed weighted On verification, on was returned unserved, and it furth to SHG&PH stood w dated 15.09.2016. T the deduction. 3.2 On appeal, the relying inter alia on Mills (P.) Ltd. v. DCI International Pvt. Ltd 07.03.2023, holding organised accommod contributions toward CIT(A) is reproduced “5.5 Further, appeals in ca in ITA "39. We are a been passed were upheld of the order Supreme Cou Research Tru been placed o identical mate case of Batan during the co post survey in Trustee of the Secretary, Sm Moumita Rag their statemen received in th ITA her transpired that the approva withdrawn by Government of In The Assessing Officer, accordin e learned CIT(A) confirmed th the coordinate Bench decision IT [(2018) 171 ITD 683 (Jaipur d. v. DCIT ITA No. 261/Kol/20 that donations to SHG&PH w dation entry arrangement an ds scientific research. The releva as under: the Hon'ble ITAT, 'A' Bench, Kolkata in a ase of Tarasafe International Private Lim 261/Kol/2020 dated 07.03.2023 a he decision of Hon'ble Supreme Court in Education & Research Trust had held as aware of the facts that a large number of in favour of the assessee by ITAT and s by Hon'ble High Courts also. We have e rs from Hon'ble Gujarat High Court. urt in the case of CIT vs. Batanagar E ust reported in 129 taxmann.com 30, who on the record by the Id. CIT(DR), has co terial, which has been placed before us nagar Education & Research Trust, the fa ourse of survey at the premises of SHG& nquiry statement of Shri Ramendra Lahi e assessee, i.e. Batanagar Society was re mt. Samadrita Mukherjee Sardar and Tre ghavan of SHG&PH have categorically nts that source of income of SHG&PH wa he form of donations from Corporate Bodie Chromex 3 A No. 3793/MUM/2024 al earlier granted ndia notification ngly, disallowed he disallowance, n in P.R. Rolling r)] and Tarasafe 020 order dated were part of an nd not genuine ant finding of ld a bunch of 13 mited Vs DCII and Others, n case of CIT under: f orders have ome of those extracted one The Hon'ble Education & ose copy has nsidered the also. In the facts are that &PH, and in iri, Managing ecorded. The easurer Smt. deposed in as the money es as well as from individua the brokers, conduit for re was to be individuals i Batanagar E commission in registration w exercising th upheld by th Court has rev this order, registration t judgment, Ho outcome of th enquiry cond was an organ This judgmen judgment, a j case of Mack relied upon b Court has no Court, becaus case of Batan both the parti 40. The Id. C during the c rendered on Tax (Exemptio Hon'ble Supre 41. We find th donation of R of this donati Hon'ble High Batanagar Ed facts of that c donation to th nor it has re received by it High Court ha passed by t cancelled. In laying down a could be dra committed by ITA als. The assessee Batanagar Society was who have arranged the donations to SH eceiving the donations from SHG&PH. T returned back to those Corporate H in cash after layering the transactio Education & Research Trust would ncome for such an activity. On the basi was cancelled by the Id. Commissioner (Ex e powers under section 12AA(3). This he ITAT. However, on further appeal. H versed this order but Hon'ble Supreme Co in other words upheld the cancella to Batanagar Education & Research T on'ble Supreme Court has made refer he survey at SHG&PH coupled with the ucted upon Batanagar Society and sati nized fraud to misuse the status of a char nt has been pronounced on 02.08.202 judgment of the Hon'ble Calcutta High kaw Corporation has been passed, whic by the Id. Counsel, but in this decision, H ot considered the judgment of the Hon' se the judgment of the Hon'ble Supreme nagar Education & Research Trust was ies. Counsel for the assessee, Shri Soumitra course of argument submitted that in 26.04.2022 in the case of Commissione on), Kolkata vs.- Sanskriti Sagar, this jud eme Court was considered. hat in this case, the assessee was recipie Rs.85,000/- from Herbicure and on the ba ion, its registration was sought to be ca Court has propounded that the decision i ducation & Research Trust is not applic case because Sanskriti Sagar has neith his Trust and claimed deduction under se eturned the money in cash out of a sm t from Herbicure, a similar Trust to SHG& as held that Tribunal has rightly set asi the Id. Commissioner vide which regis our opinion, it is purely a fact-based deci any particular proposition of law, rather awn from it that if there is no eleme y an assessee, then such an assesse Chromex 4 A No. 3793/MUM/2024 s selected by HG&PH as a This donation Houses and on and the also retain is of that, its xemption) by s order was Hon'ble High ourt restored ation of the Trust. In this rence to the post survey isfied that it ritable entity. 1. After this Court in the ch has been Hon'ble High ble Supreme Court in the not cited by Chowdhury, the decision er of Income dgment of the ent of a small asis of receipt ancelled. The in the case of cable on the er given any ection 35(1)(ii) mall donation &PH. Hon'ble ide the order stration was ision without an inference ent of fraud ee does not deserve to b contentions of 42. It is also claiming ded 35(1)(ii) of the has disproved such donors which appar genuine. The offence agains 43. The bonaf demonstrated subsequent p such as Tata them has giv thousand in moment Asse assessee, the claim with c Commissione i.e. what was has been give the Corporate Management donations; wh the Institution 44. ⁠44. It Juri ictional gain claim ma issue has be (2022) 139 ta large numbe gain/loss. T search/surve certain compa the shape of a shell compan of the materia the premises in a group of for long-term has considere the Departme manipulating ITA e punished. This case cannot buttress f the appellants before us. o pertinent to note that it is not a sim duction on fulfillment of conditions un e Income Tax Act, rather it is a case wh d this claim and proved that, with a crim have layered their transaction in suc rently appears to be genuine, but in y took such a step to commit fraud, a st the economy of the country. fide of the assessees can be appreciated d that they have given the donations in periods to some Institution of national Research Centre, certain Hospitals, etc. ven such a donation except a small am the case of Abhilasha Tradecom Pvt. L essing Officers have dispelled onus disch en it was their duty to prove the genuine circumstantial evidence as pointed out r in the case of Tarasafe International s the purpose of the donation; whether su en to the School in the past or in the futu e Houses have discussed in the meet Committee passed the Resolution for hat influenced the assessee to give this n other than deduction under section 35(1 is also pertinent to observe that rece l High Court has examined the issue of b ade by a large number of assessees in K een examined in the case of Swati Baj axmann.com 352(Cal.) pronounced on 14 er of assessees have claimed long-t The Income Tax Department has y upon different entities, which une anies and professionals were providing s accommodation by manipulating the stoc ies. The Hon'ble Court has made a detai al found during the course of search an of third entities and set aside the orders appeals by holding that such claim by th capital gain was a bogus claim. The H ed the material collected by the Investiga ent on the premises of certain companie the stocks or indulging any accommo Chromex 5 A No. 3793/MUM/2024 s any of the mple case of nder section here Revenue minal mind all h a manner n reality not an economic d if they have n the past or importance, . but none of mount of few Limited. The arged by the eness of their t by the Id. Pvt. Limited, uch donation ure; whether ting and the r giving the s donation to )(ii) etc. ently Hon'ble bogus capital Kolkata. This jaj & Others 4.06.2022. A term capital carried out earthed that such claim in cks of certain iled analysis nd survey on s of the ITAT he assessees Hon'ble Court ating Wing of s, who were dation entry business. If w then it would is outcome o manipulators. fold of argum The appellant of the Income 5.6 In the in Rs.15,00,000 Health and c 35(1)(ii) of th approval gra Health vide n the return of appellant had year or su assessment Settlement Co 14 and 2014- research work the alleged d view of the ab following the considered vi merely an adj and concealm Therefore, the deduction of confirmed. A appellant is 4. Before us, learn (i) The decision Chotatingrai Tea once statutory held responsib institution, and prejudice the do ITA we apply the ratio of this judgment upon reveal that the benefit of claim under se of an organized fraud with the help . Therefore, we do not find any material ments raised by the Id. Counsels for the ts are not entitled for deduction under se Tax Act." nstant case, the appellant had made 0/- to School of Human Genetics and claimed weighted deduction of Rs.26,2 e Act. The Government of India had w nted to School of Human Genetics and notification dated 15.09.2016. Further, o income filed by the appellant, it is obser d not made any donation during previous ubsequent assessment year except year. Further, the said institution ommission for the assessment years 201 -15 had accepted that it did not carry ou k in the fields for which it was granted a onations received from the donors were bove facts and circumstances of the case, e decisions of Hon'ble ITAT (supra), I iew that the deduction claimed by the djustment entry availed by the appellant ment of income as pointed out by the AO e addition made by the AO by making dis Rs.26,25,000/- claimed u/s 35(1)(ii) o Accordingly, the ground of appeal rai dismissed.” ned Counsel for the assessee stro of the Hon’ble Supreme Co a [(2002) 258 ITR 529], wherein conditions are fulfilled, the d le for utilisation of donation d subsequent withdrawal of a onor. Chromex 6 A No. 3793/MUM/2024 these cases, ction 35(1)(ii) p of certain l in the first- e assessees. ction 35(1)(ii) donation of d Population 25,000/- u/s withdrawn its d Population on perusal of rved that the s assessment the current before the 12-13, 2013- ut significant approval and refunded. In , respectfully I am of the appellant is to evade tax in his order. sallowance of of the Act is ised by the ongly relied on: ourt in CIT v. it was held that onor cannot be by the donee approval cannot

(ii) The order of ITA
Shah ITA No.19
& others, whe
SHG&PH was a at the time of do
(iii) It was argued th was made wh deduction u/s 3
5. We have caref perused the material
5.1. It is an admitted by the prescribed au
15.09.2016. Further and noticed in the institution had it accommodation entri in cash after retainin one of genuine scient
5.2. The Jaipur Benc
DCIT (171 ITD 683) demonstrates, throu mere accommodation establish genuinenes
ITA

AT Mumbai in ACIT v. Ashitku
914/Mum/2024, and in Ravind ere deduction u/s 35(1)(ii) on allowed since the institution had onation.
hat the assessee had acted bon hen approval was subsisting,
35(1)(ii) could not be denied.
fully considered the rival su available on record.
d position that the approval gran uthority stood withdrawn by No r, as recorded by the Settleme
Tarasafe International (supra self admitted that it was ies, refunding donations to the s ng commission. Thus, the trans tific research but part of an orga ch of the Tribunal in P.R. Rolling has categorically held that on ugh cogent material, that the d n entry, the onus shifts to t ss of the transaction. Failure to d
Chromex
7
A No. 3793/MUM/2024
umar Gunvantrai dra Reshamwala n donations to d valid approval na fide, donation and therefore ubmissions and nted to SHG&PH otification dated ent Commission a) decision, the s engaged in so-called donors saction was not anised fraud.
g Mills (P.) Ltd. v.
nce the Revenue donation was a the assessee to do so disentitles the assessee from w
Tarasafe Internationa
Supreme Court’s dec
Trust [129 taxmann.
SHG&PH were taint deduction.
5.3. As regards relian
(supra), we find tha
Chotatingrai Tea, the under section 35CC accommodation entr withdrawal of appr donation. In the pr investigation, adm
Commission, and th
Batanagar Education called donations wer device to launder u
Chotatingrai Tea (sup
5.4. Likewise, relian deduction is mispla benefit of the Sup
Education & Resear
ITA weighted deduction u/s 35(1)(i al Pvt. Ltd. (supra), after analys ision in CIT v. Batanagar Educa
.com 30], the Tribunal held th ted by fraud and could not b nce placed by the assessee on C t the ratio of that case is dist e assessee had fulfilled all statu
CA and there was no findin ry. The issue there was wheth roval could retrospectively aff resent case, however, material issions of SHG&PH befo he decision of the Hon’ble Sup n & Research Trust clearly estab re not genuine but were part unaccounted money. Therefor pre) does not advance the assess nce on certain ITAT Mumbai aced, as those decisions eithe preme Court’s pronouncement rch Trust or were rendered on Chromex
8
A No. 3793/MUM/2024
ii). Similarly, in sing the Hon’ble ation & Research hat donations to be the basis for Chotatingrai Tea tinguishable. In utory conditions ng of fraud or her subsequent ffect a genuine l unearthed by ore
Settlement preme Court in lish that the so- of a systematic e, the ratio of see’s case.
orders allowing r did not have t in Batanagar n different fact- situations where no Court has upheld can the ground of orga decision cannot be a made enquiry u/s 1
retuned back unse knowledge of the as establish genuinenes
AO also brought to return of cash to the 6. In view of the ab coordinate Bench of t
(supra) and the Kolk
(supra), we hold th
SHG&PH was not research but part mechanism.
6.1 Accordingly, the made by the Assessin is upheld. The gro dismissed.

ITA adverse material was available ncellation of registration of such nised fraud, any contrary co applied. Moreover, in the insta
133(6) for verification of the d rved. When this fact was b ssessee, the onus shifted to t ss of the transaction, particula notice of assessee that donee donors including the assessee.
bove discussion, and respectful the Jaipur Tribunal in P.R. Rolli kata Bench in Tarasafe Interna hat the donation made by th a genuine contribution tow t of an organised accomm e disallowance of deduction o ng Officer and confirmed by the ounds raised by the assessee
Chromex
9
A No. 3793/MUM/2024
. Once the apex h institutions on ordinate Bench ant case the AO done but notice brought to the the assessee to arly when the ld e itself admitted lly following the ing Mills (P.) Ltd.
ational Pvt. Ltd.
he assessee to wards scientific modation entry of ₹26,25,000/- e learned CIT(A) e fail and are 7. In the result, th
Order pronoun (SANDEEP SING
JUDICIAL M
Mumbai;
Dated: 28/08/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

ITA he appeal of the assessee is dism ced in the open Court on 28/0
/-
S
GH KARHAIL)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

Chromex
10
A No. 3793/MUM/2024
missed.
08/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai