JADSTONE TRADING PRIVATE LIMITED,MUMBAI vs. ITO 10(2)(1), MUMBAI

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ITA 6628/MUM/2018Status: DisposedITAT Mumbai12 June 2019AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the donation was made through banking channels and there was no evidence of the amount being received back by the assessee. Therefore, the addition was based on surmise and conjecture and was not sustainable.

What were the facts?

The assessee claimed donations to a charitable trust. A survey on the trust revealed it booked bogus expenditure, leading the Assessing Officer to believe the donations were not genuine. The Assessing Officer reopened the assessment and made additions based on this information.

What were the issues?

Whether the addition of donations made to a charitable trust is sustainable solely based on the finding that the trust incurred bogus expenditure, without any evidence of the donation being returned to the assessee.

Which sections of the Income-tax Act were involved?

Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Shamim Yahya (AM)

For Appellant: Shri Umang Shah
For Respondent: Shri Chaitanya Anjaria
Hearing: 10.6.2019Pronounced: 12.6.2019

Heard together (2 matters)

I.T.A. No. 7143/Mum/2018
I.T.A. No. 6628/Mum/2018

Read from the judgment's own cause title. This page is filed under one of them.

O R D E R These are appeals by the assessee against respective orders of learned Commissioner of income tax appeals for assessment years 2013- 14 and 2014- 15 respectively wherein in learned Commissioner of income tax has sustained the addition of Rs. 500,000 each, being donation said to be bogus.

2.

Brief facts of the case are that there was a survey action under section 132 of the income tax act on Naujeevan Charitable Trust on 27/10/2014. In the search action it was found that the said trust was booking bogus expenditure. One of the trustees has also accepted the same. Assessee was found to have given donation to the said trust. Upon this information the assessing officer reopened the assessment of the assessee. It was held that assessee has given donation to the said concern which was not genuine. Initially one of the director’s of the firm accepted the same to be bogus. However later on the same was retracted. However the assessing officer relying upon the finding of the investigation wing in the case of the said charitable trust made the impugned addition of Rs. 500,000 each which was claimed by the assessee as donation. Up on assessee’s appeal learned CIT-A confirmed the addition.

3.

Against this order assessee is in appeal before the ITAT.

4.

I have heard both the counsel and perused the records. Assessee has challenged the addition on various grounds. However the main issue remains that the challenge to the addition of Rs.500,000 being given to charitable trust as donation on the ground that on the search of the said charitable trust it has been found that it has been incurring only bogus expenditure. This led to the presumption of the assessing officer that the said sum of Rs.500,000 has actually come to the assessee clandestinely. In my considered opinion it is undisputed that assessee has submitted the receipt for the donation. The same has been paid by banking channel. There is no evidence on record that the same amount has been received back by the assessee from the said charitable trust. In these circumstances in my considered opinion this addition is solely based on surmise and conjecture and not sustainable in law. Accordingly I set aside the order’s of authorities below and delete the addition.

5.

In the result, the assessee’s appeal stands allowed

Order has been pronounced in the Court on 12.6.2019.

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