CHANDRAKANT AMRUTLAL DAVEY,CHENNAI vs. ACIT NON CORPORATE CIRCLE 4(1), CHENNAI

PER BENCH: The above assessees filed these appeals against the orders of the Commissioner of Income Tax (Appeals)-5, Chennai, in 103, 112, 115, 114, 109, 108, 111, 110, 102 & 101/CIT(A)-5/2016-17 dated 12.09.2017, respectively, for the AYs 2013-14 & 2014-15. Since the issue involved in these appeals are common, they are clubbed together and are being disposed off together for the sake of convenience.

Aggrieved, these assessees filed the above appeals challenging each of the order of the CIT(A), supra.

The relevant portion is extracted as under:

“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 AC 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.OO 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 AC for re-adjudication. The AC 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 AC 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 AC for re-adjudication after granting the assessee adequate opportunity to prove the genuineness of the donation.”

above. Since, the right to exemption must be established by those who seek it, the onus therefore, lies on them. In order to claim the exemption from payment of income tax, the assessee had to put before the Income Tax authorities proper materials which would enable them to come to a conclusion. (35 ITR 312 (SC). Hence, the AO shall require each of the above assessee; to establish who, with whom, how and in what circumstances the impugned sums were donated etc., to prove that the impugned donations are actual donations and not accommodation entries, the Healthcare Bio-Herbal Research Foundation is eligible for claiming deduction u/s. 35 etc. Each of the above assessee shall comply to the AO’s requirements as per law. On appreciation of all the above aspects, the AO would decide the matter in accordance with law. The AO is also free to conduct appropriate enquiry as deemed fit, but shall furnish adequate opportunity to the assessee on the material etc to be used against it and decide the matter in accordance with law.

Orders pronounced in the Open Court on May 28, 2018, in Chennai.