ASHVIN PARSOTTAMBHAI SARDHARA,AHMEDABAD vs. THE ACIT, CIRCLE-4(1)(1), AHMEDABAD

The learned CIT(Appeals) / NATIONAL FACELESS APPEAL CENTRE [NFAC] has grievously erred both in law and on facts in dismissing Ground No: 1 & 2 of the appeal challenging the validity of reassessment order. On the facts and in view of the submissions made, the order passed being untenable in law ought to be quashed. It be quashed now.

Without prejudice to the above ground, the Id CIT (Appeals)/NFAC further erred in law and on facts in not properly considering the grounds No: 3 to 8 and elaborate submissions thereon and dismissing the same by a cryptic order. It be so held now and grounds on merits of disallowance be allowed in favour of appellant now.

The Id CIT(Appeals )/NFAC further grievously erred both in law and on facts in not following the decisions on identical facts of the higher forum including the judgment by Juri ictional High Court and Co ordinate benches furnished to him and not even commenting on the legal position emerging there from. It be so held now and in view of settled legal position, the deduction of Rs. 17,50,000/- claimed be directed to be allowed now.

The Id CIT(Appeals) / NFAC grievously erred in law and ofacts in holding that the disallowance u/s 35(1)(ii) made on the basis of retrospective withdrawal of approval when the appellant had satisfied all conditions of genuine donation at the time of making donation and evidences thereof were filed with submissions. It be so held now and order passed by authorities below be set aside and deduction be directed to be allowed as claimed.

The Id CIT(Appeals)/ NFAC patently went wrong in not properly considering submissions, following the decisions cited and copies furnished to him fully and in passing the order in violation of principles of natural justice and audi alterem partem deserves to be set aside. It be set aside now.

The Id CIT(Appeals)/ NFAC ought to have allowed the appeal in toto.

The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing. Asst.Year –2013-14 - 3–

The only effective issued raised by the assessee is that the learned CIT(A)/NFAC erred in confirming the disallowance of the weighted deduction under section 35(1)(ii) of the Act for Rs.17,50,000/-

The brief facts of the case are that the assessee had claimed deduction u/s 35(1)(ii) of the Act for having given donation to M/s Bioved Research Society. Allahabad of Rs 17,50,000/- (175% of actual donation). According to the AO, the CBDT vide Circular No F.No 203/31/2018-ITA(II) dated 28.02.2019, it was clarified that the Central Government had withdrawn the Notification No 5 of 2008 dated 01.02.2008 issued to M/s Bioved Research Society, Allahabad which was approved u/s 35(1)(ii) of the Act after it was found that the said institution misused the benevolent provision of the Act. The said notification issued earlier was rescinded w.e.f. 01.04.2011 vide Notification No 3 of 2019 dated 02.01.2019. The circular also stated that M/s Bioved Research Society. Allahabad had grossly misused the provision of Section 35(1)(ii) of the Act by allegedly providing accommodation entries to the donors in the name of research activities and which enabled the donors to claim a false weighted deduction under the Act. As the said notification was rescinded w.e.f. 01.04.2011, the AO held that the appellant was not eligible for claiming of deduction of Rs.17,50,000/- for the impugned A.Y. As the assessee did not respond to the show cause notice issued by the AO, the AO disallowed the said deduction claimed. Asst.Year –2013-14 - 4–

Aggrieved assessee preferred an appeal before the Ld.CIT(A), who dismissed the appeal of the assessee.

The Ld. Counsel for the assessee placed reliance on various judicial precedents which are as follows:

On this issue, we have examined the order of the Ld.CIT(A). For the sake of completeness and ready reference, the relevant part of the adjudication of the Ld.CIT(A) is reproduced as under: “…Ground No 1 is relating to reopening of assessment u/s 147 of the Act. As it is claimed by the appellant that there is no valid reasons to believe as envisaged in section 147 of the Act. The AO has observed in the assessment order that the CBDT vide Circular No F.No 203/31/2018-ITA(II) dated 28.02.2019, it was clarified that the Central Government had withdrawn the Notification No 5 of 2008 dated 01.02.2008 issued to M/s Bioved Research Society, Allahabad which was approved u/s 35(1)(ii) of Asst.Year –2013-14 - 5–

Ground No 2 to 8 are relating to the disallowance of the claim of the deduction made by the appellant u/s 35(1)(ii) of the Act. As all these grounds are related to the same issue, they are being adjudicated together. The brief facts of the case are that the appellant had claimed deduction u/s 35(1)(ii) of the Act for having given donation to M/s Bioved Research Society, Allahabad of Rs 17,50,000/- (175 of actual donation). According to the AO, the CBDT vide Circular No F.N 203/31/2018-ITA(II) dated 28.02.2019, it was clarified that the Central Governme had withdrawn the Notification No 5 of 2008 dated 01.02.2008 issued to M/s Bioved Research Society, Allahabad which was approved u/s 35(1)(ii) of the Act after it was found that the said institution misused the benevolent provision of the Act. The said notification issued earlier was rescinded w.e.f. 01.04.2011 vide Notification No 3 of 2019 dated 02.01.2019. The circular also stated that Mis Bioved Research Society. Allahabad had grossly Asst.Year –2013-14 - 6–

1 The appellant has placed reliance on the decision of Hon'ble ITAT. Ahmedabad in the case of Inspiron Engineering P Ltd v/s DCIT (ITA No 968/Ahd/2018 dated 19.03.2020). In the said case, the AO had disallowed the donation given by the assessee u/s 35(1)(ii) of the Act on the basis of the investigation report of DIT (Inv) Kolkata. The contention of the appellant in that case was that he was not given any opportunity of cross-examination of the persons who had given statements before the Income Tax Department that they were providing accommodation entries for claiming deduction u/s 35 of the Act. In the facts of the said case, the Hon'ble ITAT held that unless the persons on whose statements the additions were made were not made available for cross-examination by the appellant, the statements of such persons cannot be read against the appellant. But in the instant case, the disallowance has not been made on the basis of the report of the Investigation Wing or on the basis of statements of any persons. The disallowance has been made on the basis of notification issued by the Central Government that the approval given to the institution in question has been rescinded w.e.f. 01.04.2011. As a result of the said notification, there was no deduction available to the appellant during the impugned AY. Accordingly, the disallowance made by the AO of Rs 17,50,000/- is sustained. Ground No 1 to 8 are dismissed…”

On going through the order of the Ld.CIT(A), we find that the case of the assessee has been rightly re-opened based on the tangible information of the donee providing accommodation entries and also keeping in view the fact that the approval given by the Central Government stands rescinded, the issue of cross- Asst.Year –2013-14 - 7–

In the result, the appeal filed by the assessee is dismissed.

अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent. 3. संबंिधत आयकर आयुᲦ / Concerned CIT 4. आयकर आयुᲦ(अपील) / The CIT(A)- 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडᭅ फाईल / Guard file.