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2016 (8) TMI 1134 - AT - Income TaxDisallowance of loan - misuse of funds - assessee submitted that Government of India granted approval under Section 35(1)(iii) and when the statutory provision allows deduction for the donation given by the assessee, the same cannot be disallowed by the Assessing Officer on the ground that the recipient-society misused the funds Held that:- The Axis Bank at Kolkata opened a fictitious account to give credit to this kind of transactions and subsequently the same was transferred to various other institutions and persons. In one such transaction, a Division Bench of this Tribunal found one credit in the fictitious account opened in the Axis Bank by way of donation was, in fact, transferred to real account maintained by the Society itself in State Bank of India. Therefore, it is obvious that the so-called Society for Welfare of Handicapped Persons, Durgapur, West Bengal is also a party to the fraudulent transaction for receiving donation. On identical set of facts, this Tribunal remitted back the matter to the file of the Assessing Officer to examine the matter further and to find out the action taken against the officials of the Axis Bank for opening such fraudulent account at Kolkata. The Assessing Officer was also directed to give an opportunity to the assessee to cross-examine the persons who are In-charge of Society at the relevant point of time and find out how they were able to receive such kind of donation and transfer the same to other institutions. The Assessing Officer also needs to examine when the funds were credited in the so-called fictitious account, how this money credited into such fictitious account was transferred to real account maintained by the Society for Welfare of Handicapped Persons. These facts are not examined by the Assessing Officer. The chain of transactions, which happened to credit the large amount of funds with fictitious account opened by Axis Bank at Kolkata, the role played by the officials of Axis Bank and the receipt of society need to be examined. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined.
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