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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: S/SHRI WASEEM AHMED & T.R. SENTHIL KUMAR
आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद �यायपीठ आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण अहमदाबाद �यायपीठ अहमदाबाद �यायपीठ ‘A’ अहमदाबाद। अहमदाबाद �यायपीठ अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD (Conducted Through Virtual Court) ] ] BEFORE S/SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER
ITA No.465/Ahd/2019 Assessment Year : 2014-15 Vinod Chimanlal Modi The DCIT, Cir.1(2) B-1/2, L.R. Apartments Vs Ahmedabad. Opp: Police Commissioner’s Office Shahibaug Ahmedabad. PAN : AGQPM 1294 E अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri M.K. Patel, Advocate Revenue by : Shri Urjit Shah, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 15/02/2022 घोषणा क� तार�ख /Date of Pronouncement: 18/02/2022 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the assessee against order dated 31.12.2018 in appeal no. CIT(A)-6/221/18-19 passed by the Ld.Commissioner of Income-tax (Appeals)-5, Ahmedabad [for short “Ld.CIT(A)] relating to the assessment year 2014-15.
Grounds raised by the assessee as follows:
I. Assessment u/s 147 of the Act 1. The learned CIT (A) has erred in law and on facts in confirming the re-assessment proceedings u/s 147 of the Act on the basis of the observations/findings given in the appellate order.
ITA No.465/Ahd/2019 2 2. The learned CIT (A) has erred in law in upholding the impugned assessment order without appreciating the fact that notice u/s. 148 of the Act on the basis of which the proceedings have been reopened being itself bad in law and invalid since there is no escapement of income at all as defined in section 147 of the Act which is a condition precedent for issuing notice u/s. 148 of the Act.
The learned CIT (A) has erred in law and on facts in failing to consider the fact that the re-assessment proceedings has been initiated on the basis of the information received from some authority in a mechanical manner and without application of mind.
The learned CIT (A) has erred in law in failing to consider the fact that the appellant did object to the re- assessment proceedings initiated by the AO. Hence the re- assessment proceedings upheld by the CIT(A) on the observation that since the appellant had appeared in the assessment proceedings, the appellant is precluded from raising this objection during the appeal proceedings as per provisions of section 292BB of the Act deserves to be quashed.
In view of the above, notice issued u/s 148 of the Act as well as re-assessment proceedings in pursuance of such notice is bad in law and requires to be quashed.
II. Disallowance of deduction claimed u/s 35(1)(ii) in of the Act - Rs.12,25,000/- [Tax effect Rs.3,78,525/-]
The learned CTT(A) has erred in law and on facts in confirming the disallowance of deduction of Rs. 12,25,0007-, claimed by the appellant u/s 35(l)(ii) of the Act for the donation made to Herbicure Healthcare Bio Herbal Research Foundation during the year on the basis of the observations/findings given in the appellate order.
The learned CIT (A) has erred in law and on facts while confirming the addition failed to appreciate the fact that AO has disallowed the claim u/s 35(l)(ii) of the Act without bringing record any material/evidences which establishes that either donation given by the appellant is
ITA No.465/Ahd/2019 3 bogus or obtained in lieu of commission and as such not allowable as deduction from the income of the appellant.
The learned CIT (A) has erred in law and on facts in failing to consider the fact that the AO has not been able to provide the cross-examination of the director of the said institution whose statement has been relied upon for drawing adverse inference in the case of the appellant as on the given date of cross examination he did not turned up in response to the summons issued by the department. The appellant submits this being the case, the impugned addition made by the AO and as confirmed by the learned CIT(A) as per the settled law is against the principle of natural justice and equity and therefore deserves to be deleted.”
Brief facts of the case is that the assessee is an individual and Proprietor of Riddhi Infrastructure. The assessee has e-filed his return on income for A.Y. 2014-15 on 27/11/2014, declaring total income of Rs.81,86,450/-. An information was received from Addl. DIT(Inv), Unit-4(2), Ahmedabad, vide letter No. Addl. DIT/Unit- 4(2)/Bogus Donor/ 35(1)(ii)/2015-16 dated 11.02.2016 that a survey action was carried out by the Kolkata Directorate in the following cases - i) School of Human Genetics & Population Health (SHG&PH) ii) Herbicure Health Care Bio Herbal Research Foundation (HHBRF) iii) Matrivana Institute of Experimental research & Education (MEIR&E)
and it was found that they were involved in facilitating bogus donation u/s 35(1)(ii) of the I.T. Act. The above institutes have accepted that they have facilitated the bogus donation in lieu of commission. Further it has been stated in the said letter that Shri Vinod Chimanlal Modi, PAN-AGQPM1294E, was a beneficiary of the bogus donation syndicate and has donated Rs.7,00,000/- to Herbicure Health Care Bio Herbal Research on (HHBRF) in the F.Y.
ITA No.465/Ahd/2019 4 2013-14 relevant to the A.Y. 2014-15. Notice under section 148 of the Act was issued on 11.11.2016 and reassessment was completed disallowing donation made to Herbicure Health Care Bio Herbal Research Foundation, Kolkatta by the assessee as bogus and claim of the assessee on account of deduction under section 35(1)(ii) to the tune of Rs.12,25,000/- was disallowed. Aggrieved against re- assessment order, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) by a detailed order upheld action of the AO in disallowing deduction of Rs.12,25,000/- under section 35(1)(ii) of the Act, and thereby dismissed the appeal of the assessee. Aggrieved against the same, the assessee is in appeal before the Tribunal on two grounds, viz. (i) validity of reopening of the assessment, and (ii) disallowance of deduction under section 35(1)(ii) of the Act.
During the course of hearing, the assessee has not pressed ground no.1 viz. validity of reopening of the assessment under section 147 of the Act AND THE SAME IS DISMISSED AS “Not pressed”.
So far as second ground is concerned, the assessee has placed reliance on the decision of Co-ordinate Bench of the ITAT, Ahmedabad in ITA No.210/Ahd/2019 dated 23.2.2021 in the case of Kastubhbhai Dhirajlal Patel, wherein the Coordinate Bench allowed identical claim of the assessee by relying upon the judgment of jurisdictional High Court in the case of Thakkar Govindbhai Ganpatlal-HUF reported in Tax Appeal No.881 of 2019. Further, ITAT, Mumbai Bench in ITA No.2224/Mum/2019 in the case of Gujarat Agro-Chem Pvt. Ld. Vs. ACIT such donation made by the assessee was deleted.
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Per contra, the ld.DR has not seriously objected to the case laws cited by the assessee at Bar.
We have given thoughtful consideration and perused relevant material available on record. We find that on identical issue, Coordinate Bench of the ITAT, Ahmedabad in the case of Kaustubhai Dhirajlal Patel Vs. DCIT (supra) allowed similar claim of the assessee in respect of donation made under section 35(1)(ii) of the Act. The relevant discussion made by the Tribunal in this case is reproduced as follows: “7. Upon perusal of the judicial pronouncement as relied upon by the Ld. Counsel appearing for the assessee it appears that the issue is squarely covered in favor of the assessee.
While dealing with the issue the Coordinate Bench is observed as follows:-
“6. We have also carefully considered the judgment passed by the Ld. Tribunal in ITA No. 2318/Ahd/2017 for A.Y. 2014-15, the relevant portion dealing with the issue is as follows:-
“5. 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:
2.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.
3.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 donations from various sources, and after deducting certain amount of commission, these donations
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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.
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.
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, 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
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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.”
From the above judgments it appears that the case is squarely covered in favour of the assessee and in the absence of any changed facts and circumstances of the case we find it fit to allow the appeal preferred by the assessee. Thus, addition is hereby deleted.
In the result, assessee’s appeal is allowed.”
Thus, respectfully relying upon the same we do not hesitate to allow the appeal filed by the assessee by deleting the disallowance made by revenue to the tune of Rs. 26,50,000/- relating to the claim of donation made by the assessee to School of Human Genetics & Population Health(SHG&PH). We, therefore, delete such disallowance made by revenue.”
Thus, following the ratio of the above judgments, we allow the appeal filed by the assessee and delete addition of Rs.12,25,000/- made under section 35(1)(ii) of the Act.
In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 18th February, 2022 at Ahmedabad.
Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad, dated 18/02/2022
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