PIONEER MEDICAL SYSTEMS PVT LTD,CHENNAI vs. DCIT, CORP CIR 3(2), CHENNAI

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ITA 447/CHNY/2019Status: DisposedITAT Chennai16 September 2019AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO had taken upon himself the onus to disprove the genuineness of the donations without giving the assessee an adequate opportunity to prove them. Therefore, the issue was restored to the AO for re-adjudication.

What were the facts?

The assessee claimed deduction under Section 35(1)(ii) for donations made to a specific organization. The Assessing Officer (AO) disallowed this claim, treating the donations as bogus based on evidence collected during a survey.

What were the issues?

Whether the AO correctly disallowed the deduction for donations without providing the assessee an opportunity to prove their genuineness.

Which sections of the Income-tax Act were involved?

Section 35(1)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO

Pronounced: 16.09.2019

आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER:

1.

These two appeals are filed by the assessee against the separate Orders of the Commissioner of Income Tax (Appeals)-3 , Chennai, in dated 12.12.2018 for Assessment Year 2013-14, and in ITA No.141/2016-17/A-3 dated 12.12.2018 for Assessment Year 2014-15. & 448/Chny/2019 :- 2 -:

2.

Mr. D.Anand represented on behalf of the Assessee, and Mr.D.Divahar represented on behalf of the Revenue.

3.

It was submitted by ld.AR that the only issue in both the appeals of the assessee was against the action of the ld.CIT(A) in disallowing the assessee”s claim of deduction u/s.35(1)(ii) of the Act in respect of donations made to M/s.School of Human Genetics and Population Health, Kolkata (PAN:AABAS 4570 M) treating the same as bogus. Further, it was fairly agreed by both the sides that the issue raised in these appeals was squarely covered by the decision of Co-ordinate Bench of this Tribunal in the case of M/s.Prithvi Softech Ltd., in I.T.A.Nos.2414 & 2415/Chny/2017 for Assessment years 2012-13 & 2013-14 vide order dated 18-09-2018 wherein following the decision of Co-ordinate Bench of the Tribunal in the case of M/s.Megatrends Inc., Chennai Vs. The ACIT, Chennai in & 740/Chny/2017 vide order dated 05.03.2018, the issue had been restored to the file of Assessing Officer for re-adjudication.

4.

We have heard the submissions of both the sides and perused the material available on record. A perusal of the order of Co-ordinate Bench of this Tribunal in M/s.Megatrends Inc., Chennai referred to supra, shows that the Co-ordinate Bench of this Tribunal, after considering the & 448/Chny/2019 :- 3 -:

identical situation in respect of claiming deduction u/s.35(1)(ii) of the Act, has held as follows:-

“11. Coming to the issue of the donations in respect of which, the assessee has claimed weighted deduction u/s.35(1)(ii) of the Act, it is noticed that the AO has disbelieved the donations on the basis of statement recorded from one Mr.Swapan Ranjan Das Gupta, one of the major shareholders of HHBHRF and on account of a letter from CROSS and in respect of M/s.SHGPH on the basis of Survey Report. It is noticed that the onus of proving the genuineness of the donation rests on the assessee. However, the AO has taken up himself the onus to disprove the genuineness of the donation much before the assessee has proved the genuineness of the donation. When an assessee steps forward to give donations of Rs.1.25 Crs, Rs.25.00 lakhs, Rs.1.45 Crs. respectively, the assessee would have adequate reasons to give such donations. Here, it is noticed that the assessee has not been given any opportunity to prove the genuineness but the assessment has been made based on the evidences collected by the Revenue in the course of the survey conducted on the respective organizations. This is not permissible. This being so, in the interest of natural justice, the issue of the genuineness of the donations are restored to the file of the AO for re-adjudication. The AO must keep in mind that the onus of proving the donations are actually donations and not accommodation entries and that the said organizations were eligible for claiming deduction u/s.35(1)(ii) of the Act rests on the assessee. If the AO does have any evidence to the contrary, it is to be put to the assessee for his rebuttal. The assessee shall produce the recipients of the donation for examination along with the evidences to prove the receipt of the donation. The internal communications of the Revenue are evidences for drawing an opinion on possible wrong claims but they are not the final evidence. This being so, the issue of the donation in these appeals are restored to the file of the AO for re-adjudication after & 448/Chny/2019 :- 4 -: granting the assessee adequate opportunity to prove the genuineness of the donation.”

As it is noticed that the issue raised in assessee’s appeals is identical to the facts decided by the Co-ordinate Bench of this Tribunal in M/s.Megatrends Inc., Chennai referred to supra, and the issue has already been adjudicated, respectfully following the decision of Co-ordinate Bench of Chennai Tribunal referred to supra, the sole issue raised in both these appeals of the assessee is restored to the file of Assessing Officer for re-adjudication.

5.

In the result, both the appeals of assessee for assessment years 2013-14 & 2014-15 are partly allowed for statistical purposes.

Order pronounced in the open Court after conclusion of hearing on the 16th September, 2019 in Chennai.

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