2021 (2) TMI 956 - AT - Income Tax

Disallowance u/s 35(1)((ii) - claim of donation made to one School of Human Genetics Population Health (SHG PH) Kolkata on the ground that the said institution is engaged in providing entry and indulged in laundering unaccounted money of the appellant - HELD THAT -Appellant has made payment of Rs. 15, 00, 000/- as donation for the A.Y. 2014-15 to the institution i.e. School of Human Genetics Population Health (SHG PH) when the said institution has valid registration u/s 35(1)(ii) by and under Notification No. 35/2008/F. No. 203/135/2007/ITA II dated 14.03.2018. The said donee School of Human Genetics Population Health is also a registered institution under Section 12AA of the Act and certificate of exemption under Section 80G(5) of the Act by the Commissioner of Income Tax (Exemption) Kolkata under letter dated 03.02.2005. It is the case of the appellant that since the registration of that institution was cancelled by the Ministry of Finance on 06.09.2016 at the time of making donation by the appellant the said institution was holding the genuine registration under Section 35(1)(ii) of the Act. And therefore on that score alone the disallowance holding the said institution engaged in laundering of unaccounted money is not sustainable in the eye of law taking into consideration the date of cancellation of registration of the said institution as on 06.09.2016. Appeal filed by the assessee by deleting the disallowance made by revenue 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 - Assessee s appeal is allowed.

Summary

Issues Involved:
Addition on account of disallowance under Section 35(1)((ii) of the Income Tax Act for a claim of donation made to an institution accused of laundering unaccounted money.
Validity of disallowance of donation claimed under Section 35(1)(ii) and denial of benefit under Section 80G of the Act.
Applicability of judicial precedents in similar cases to support the assessee's claim.

Analysis:
The judgment pertains to an appeal against the order passed by the Commissioner of Income Tax (Appeals) concerning the disallowance of a donation claimed under Section 35(1)((ii) of the Income Tax Act. The appellant's claim of donation to a specific institution was challenged on the grounds of alleged money laundering activities by the said institution. The Assessing Officer (AO) rejected the claim based on a survey report indicating the institution's involvement in bogus donations and laundering unaccounted money. The Commissioner of Income Tax (Appeals) upheld the AO's decision, considering it a case of laundering unaccounted money. The appellant also argued for the benefit of donation under Section 80G of the Act, which was not granted. The appeal before the Appellate Tribunal challenged these decisions.

During the hearing, the appellant's counsel cited judicial precedents where similar issues were decided in favor of the assessee. The counsel relied on judgments from the Hon'ble Jurisdictional High Court and the Tribunal of Mumbai Bench in support of the appellant's case. The appellant contended that the disallowance was not sustainable in law, emphasizing the institution's valid registration under Section 35(1)(ii) at the time of donation. The appellant highlighted the cancellation of the institution's registration after the donation was made, arguing that the disallowance based on the institution's alleged money laundering activities was unjustified.

The Tribunal analyzed the judicial precedents cited by the appellant and found the issue to be squarely covered in favor of the assessee. Referring to a similar case where the genuineness of donations was doubted based on a survey report, the Tribunal concluded that the appellant's case aligned with the precedent, warranting the deletion of the disallowance. The Tribunal allowed the appeal, ruling in favor of the assessee and deleting the disallowance of the donation claimed. The judgment emphasized the importance of valid registration at the time of donation and the lack of evidence to support the disallowance based on subsequent developments regarding the institution's registration status.

In conclusion, the Tribunal's decision favored the appellant, highlighting the significance of valid registration under the Income Tax Act and the application of judicial precedents to support the assessee's claim. The judgment underscored the need for concrete evidence to justify disallowances and upheld the appellant's appeal by deleting the disallowance related to the claimed donation.