TMI Blog2017 (11) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... ared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon'ble Supreme Court in Kader Khan & sons (2013 (6) TMI 305 - SUPREME COURT). Moreover, we note that if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri Kishan Bhawasingka as held by Hon'ble Supreme Court in Andaman Timber (2015 (10) TMI 442 - SUPREME COURT). - Decided in favour of assessee - I.T.A No. 333/Kol/2017 - - - Dated:- 8-11-2017 - Hon'ble Shri M.Balaganesh, AM Shri S.S.Viswanethra Ravi, JM For the Appellant : Shri Miraj D. Shah, AR For the Respondent : Shri Saurabh Kumar, Addl. CIT (DR) ORDER Per M.Balaganesh, AM 1. This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-10, Kolkata [in short the ld CIT(A)] in Appeal No.301/CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part of the amount as commission through layers of concerns of brokers, entry operators, beneficiaries of other accommodation entries. 4.1. The assessee herein, paid a sum of ₹ 14,00,000/- to HHBRF and claimed weighted deduction of 175% of the sum paid amounting to ₹ 24,50,000/- (1400000 * 175% = 2450000) , u/s 35(1)(ii) of the Act in the return of income for the Asst Year 2013-14 filed on 20.9.2013. During the survey operation , statement of Shri Swapan Ranjan Dasgupta (Founder Director of HHBRF) was recorded on oath u/s 131 of the ITA No.333/Kol/2017 Rajda Polymers A.Yr.2013-14 Act, wherein he admitted to engage in providing accommodation entries. Based on the statement of Shri Swapan Ranjan Dasgupta, the ld AO was of the opinion that the claim u/s 35(1)(ii) of the Act made by the assessee was bogus, and therefore, proceeded to disallow the claim in the sum of ₹ 24,50,000/- in the assessment. This action of the ld AO was upheld by the ld CITA. Aggrieved, the assessee is in appeal before us on the following grounds:- 2. For that the additions were made on statement and evidences which were collected behind the back of the assessee and no opportunity of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the directors of HHBRF. We find from the perusal of the assessment order, that the ld AO had denied the cross examination and by placing reliance on the statement given by directors of HHBRF , proceeded to frame the assessment u/s 143(3) of the Act in the hands of the assessee by disallowing the deduction claimed u/s 35(1)(ii) of the Act. Hence it could be safely concluded that there was no cross examination of the adverse witnesses. 5.2. We find that on the other hand, the assessee had submitted all the documents pertaining to the claim of deduction u/s 35(1)(ii) of the Act before the ld AO. The undisputed fact before us is that the assessee had paid a sum of ₹ 14,00,000/- vide Cheque No. 786400 dated 28.11.2012 drawn on Canara Bank, Brabourne Road Branch, Kolkata to HHBRF, which has been acknowledged vide letter dated 6.12.2012. This payment of ₹ 14,00,000/- was duly reflected in the bank statement of the assessee. Hence the source for making this payment stood clearly explained and is not in dispute before us. We find that the entire assessment is based upon the statement of directors of HHBRF. It is an undisputed fact that neither a copy of the statement was sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various High Courts supra , we hold that there was no material available with the reveneue on the basis of which it could justify its action of disallowing the claim of deduction u/s 35(1)(ii) of the Act. 5.5. Moreover, we find that the provisions of Explanation to section 35(1)(ii) of the Act also comes to the rescue of the assessee. For the sake of convenience, the said Explanation is reproduced below:- Section 35(1)(ii) - Explanation The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn. In the instant case, the ld DR argued that the recognition u/s 35(1)(ii) of the Act was withdrawn in the case of HHBRF by the CBDT with retrospective effect. In response to this, the ld AR argued that on the date on which donation was given, the notification u/s 35(1)(ii) of the Act was in force and valid and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to give donation of ₹ 14,00,000/- to HHBRF . We find that this aspect has been duly addressed by the assessee by stating that one Cardiologist Doctor had introduced the assessee to HHBRF and donations were given after due satisfaction of the assessee based on personal visits to the two research centres of HHBRF and activities carried on by them. Moreover, it is well settled that it is always the prerogative of the assessee to give or not to give any ITA No.333/Kol/2017 Rajda Polymers A.Yr.2013-14 donation to a particular institution, which wisdom cannot be questioned by the revenue. The question of business expediency of an expenditure had to be viewed from the point of view of the businessman and not from the view point of the revenue. The businessman knows his interest best. However, it cannot be denied that this donation paid to HHBRF is free from any suspicion. It definitely leads to further probe by the revenue, which has been carried out by the revenue by summoning the Director of HHBRF . The said Director Shri Swapan Ranjan Dasgupta, though could not appear in person before the ld AO for cross-examination (which was sought by the assessee) but had confirmed in wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences by itself. This decision of Hon'ble Madras High Court was affirmed by the Hon'ble Apex Court in the case of CIT vs S Khader Khan Sons reported in 352 ITR 480 (SC) , wherein their Lordships of Supreme Court held as under:- Heard Counsel on both the sides. Leave granted. The civil appeal filed by the department pertains to Assessment Year 2001-02. In view of the concurrent findings of fact, this civil appeal is dismissed. We find that the sole basis of ld AO making this disallowance of deduction u/s 35(1)(ii) of the Act was on the basis of statement recorded during survey from the Director of HHBRF which does not have any evidentiary value. Hence respectfully following the aforesaid decision of the Hon'ble Madras High Court affirmed later by the Hon'ble Apex Court supra, we hold that there is no case made out by the ld AO for making this disallowance u/s 35(1)(ii) of the Act. 5.8. We also find that similar issue came up before the co-ordinate bench of this tribunal in the case of Saimed Innovation vs ITO in ITA No. 2231/Kol/2016 for Asst Year 2013- 14 dated 13.9.2017, wherein it was held as under:- ITA No.333/Kol/2017 Rajda Polymers A.Yr.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Herbicure, the partners of the assessee firm had replied that during their visit at Pailan and Baral they were satisfied with the scientific research work and for question no. 17 the partners replied that they had seen the certificate issued by Govt. of India and also have gone through the research paper of the people working there. For question no. 20 they have given the name of the doctor who was a Cardiologist who introduced them to M/s. Herbicure. We note that the AO enquired about Dr. Bhuban Chakraborty's address for which the partner replied that the doctor resides at Kshudiram Sarani, Rathtala, Kolkata. For question no. 21 as to whether they knew about the Directorate of Investigation, Kolkata carried out survey u/s. 133A and that its investigation is found that the activities were not genuine, the partners replied that they were not aware of the survey, however, they added that after their visit of the two centers they were on a bonafide belief that M/s. Herbicure was a competent institute and based on the recommendation of the Cardiologist Dr. Bhuban Chakrabrty they ITA No.333/Kol/2017 Rajda Polymers A.Yr.2013-14 made donation to the said concern. We also note tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confirmed that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot ITA No.333/Kol/2017 Rajda Polymers A.Yr.2013-14 take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon'ble Supreme Court in Kader Khan sons (supra). Moreover, we note that if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri Kishan Bhawasingka as held by Hon'ble Supreme Court in Andaman Timber (supra). 11. In the light of the aforesaid facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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