TMI Blog2019 (9) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... ics and Population Health - HELD THAT:- 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 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). 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 - SC ORDER] . 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. - IT(SS)A No.24-25/Kol/2017 & ITA No.1313-1314/Kol/2017 C.O. No.79-82.Kol/2017, IT(SS)A No.07/Kol/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s favour as under:- 5. I have considered the findings of the AO in the assessment order and the written submission as well as different case laws brought on record by the AR. The main argument of the AR is that additions made by the AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/papers seized during the search operation. The AR has brought on record many case laws decided by the Jurisdictional Kolkata bench of ITAT and Jurisdictional Calcutta High Court on this issue. Calcutta High Court has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material. Some of the recent decision of the Hon'ble jurisdictional High Court are discussed hereunder. PCIT-2. Kolkata Vs. Salasar Stock Broking Limited (ITAT No. 264 of 2016) dated 24.08.2016: (Calcutta) In this case, the Honorable High Court observed that the Ld. I.TAT. Kolkata was of the opinion that the assessing officer had no jurisdiction u/s 153A of the I.T. Act to reopen the concluded cases when the search seizure did not disclose any incriminatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law-Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search-Held, present appeals concerned AYs,2002 03, 2005 06 and 2006 07-On the date of the search the said assessments already stood completed-Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed-Question framed by the Court was answered in favour of the assessee and against the Revenue-Revenue's appeal dismissed. 6. I further find that In this regard the Hon'ble ITAT Kolkata has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material and any deviation from the same would render the assessment order invalid. Some of the recent decision of the Hon'ble Jurisdictional Tribunal is discussed here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deemed dividend. Hence it cannot be the subject matter of addition in 153C proceedings in respect of completed assessments. We hold that when an addition could not be made as per law in section 153C proceedings, then the said order cannot be construed as erroneous warranting revision jurisdiction u/s 263 of the Act. Shri. Manish Mundhra Vs. ACIT-CC-XXX in ITA-469-470/Ko1!2013 Dt. 16.12.2015 (ITAT Kolkata) ; We also are of the view that in the light of the admitted fact that no incriminating material was found in the course of search the impugned addition could not have been made in the proceedings u/ s 153A of the Act. The decision of the ITAT} Delhi Bench in the case of ACIT vs M/ s. Delhi Hospital Supply Pvt. Ltd. (supra) followed the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra) supports the plea of the assessee in this regard ..... ACIT-CC-XXVII Vs Kanchan Oil Industries Ltd. in ITA-725/Kol/2011 Dt. 09.12.2015 (ITAT Kolkata ); In view of the aforesaid findings and judicial precedent relied upon, we hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 153A of the Income Tax Act. No contrary decision was brought to our knowledge by the ld. D.R. In view of the aforesaid discussion and the decision of the Hon'ble Special Bench, Bombay High Court, as well as Hon'ble Delhi High Court, we confirm the order of the CIT(Appeals) deleting the addition made in each of the assessment years as we hold that the Assessing Officer was not correct in law in making the addition in the assessment made under section 153A read with section 143(3) when no incriminating material was found during the course of the search in respect of the addition made by him. We accordingly partly allowed the Cross Objections taken by the assessee. ACIT Vs. Shanti Kumar Surana Ors. in IT(SS}A Nos. 12 to 20 and CO Nos. 13 to 20 (reported in 44 CCH 241) order dt. 22.06.2015(ITAT Kolkata) In view of the facts in. entirety and the legal principles enunciated by Hon'ble Bombay High Court In the case of Continental Warehousing Corporation (Nhava Sheva) Ltd., supra, of Hon'ble Allahabad High Court In the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Global Logistics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to search action. The Special Bench of the Tribunal in the case of All Cargo Global Logistics Limited vs. DCIT (2012) 137 ITD 217 (SB)(Mum.) has also held to the same extent . In view of the foregoing discussion, we are of the considered opinion that no exception can be found to the view taken by CIT(Appeals} for deciding this issue in assessee's favour . Before parting with this matter, we want to make it clear that our decision is based in the backdrop of the facts that the deduct ion under sect ion 80IB could not have been tinkered with because no incriminating material was found during the course of search on this issue when original assessment amounting deduct ion on this issue was completed under section 143(3). We have not expressed any opinion on the merits of the case about the allowability or otherwise of deduct ion under section BOIB on interest income arising the present facts and circumstances. In the result, the appeal filed by the Revenue stands dismissed . LMJ International Ltd Vs. DCIT(2008) 119 TTJ (Kot) 214. (ITAT Kolkata) ; Where nothing incriminating is found in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573(Del) Search and seizure-New scheme of assessment in search cases- Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s153A(1) was issued to assessee and thereafter he filed returns-As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1),assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies- AO declined to rectify the assessments- CIT also held that addition need not be restricted only to the seized material-ITAT on appeal however deleted addition on grounds that the additions made for relevant AY's u/s 2(22)(e} were not based on any incriminating material found during search operation and same was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not based on any incriminating documents/papers seized during the search operation under identification mark SBLP-4. There was neither any search nor survey in this case. It would also not be out of context to mention here that in this case, on the date of search, no assessment for this year was pending. Therefore, keeping in view the ratio decided by the Jurisdictional bench of Kolkata Tribunal in cases referred above and the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDT's decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex Court's decision to dismiss SLP on similar issue in the case of Pr CIT vs Kurele Paper Mills Pvt Ltd : SLP (C) No.34554 of 2015 dt.07-12-2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessee's appeal on grounds no 1 and 2 are allowed. 5. It has come on record that there was no incriminating material found or seized during the course of the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel fair statement made at the bar during the course of hearing. 8. We now come to the taxpayer s appeal IT(SS)A No.07/Kol/2017 raising the latter issue of disallowance of sec. 35(1)(ii) deduction on account of its contribution made to the School of Human Genatics and Population Health . Both the lower authorities hold the above recipient organisation to be engaged in accommodation entry providing business than carrying out any scientific research and development. Learned CIT-DR refers to the lower authorities respective findings in seeking to confirm the impugned disallowance. We find no substance in Revenue s instant plea since this tribunal s co-ordinate bench decision in ITA No.s 341-342/Kol/2019 M/s Shyam Sunder Co. Jewellers vs. ACIT, Circle-2(2), Kolkata decided on 26.04.2016 deletes the very disallowance in case of the above stated recipient itself in assessment years 2013-14 and 2014-15 as under:- 6. Ground No.2 to 4 for the Assessment Year 2013-14 and Ground No.2 to 4 for the Assessment Year 2014-15 are on the issue of disallowance of claim of deduction u/s 35(1)(ii) of the Act of donations given to SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scientific research is eligible for weighted deduction equal one and three fourth times of any sum paid. However, the Ministry of Finance (Department of Revenue ) (Central Board of Direct Taxes) Vide Notification No. 82/2016/F.No. 203/64/2009/IT A.I1 dated 15.09.2016 in The Gazette of India: Extra Ordinary had rescinded the Notification granting approval by the Central Government to the appellant for the purpose of clause (ii) of sub section (1) of section 35 of the I.T. Act, 1961, read with Rule 5C and 5E of the Income tax Rule, 1962. The Notification reads as follows: ' Ministry of Finance, (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, the 15th September, 2016, S.O. 2961(E)-In exercise of the powers conferred under clause (ii) of subsection (1) of section 35 of the Income-tax Act, 1961 read with Rule 5e and 5E of the Income-tax Rules, 1962, the Central Government hereby rescinds the notification of the Government of India, Ministry of Finance, Department of Revenue number 4/2010 dated 28.01.2010 published in Gazette of India , Part 11, Section 3, Sub-section (ii) dated 28.01.2010 vide S.O. 348 with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2 The Tribunal in the case of Rajda Polymers vide ITA No.333/Kol/2017 order dated 08.11.2017 at page 7 has held as follows:- 5.6. We find that the ld CITA had made an observation which has been heavily relied upon by the ld DR that the assessee s line of business has got nothing to do even remotely with the healthcare or herbal healthcare industry much less in the area of research thereon and accordingly there was no need for the assessee 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) ), dt. 23/02/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the Act ), relating to Assessment Year 2014-15, on the following grounds:- 1. For that the Ld. CIT(Appeals) was wrong and unjustified in confirming the disallowance of deduction u/s 35(1)(ii) of ₹ 3,50,000/- on the donation of ₹ 2,00,000/- made to School of Human Genetics Pollution Health without properly appreciating the submission of the appellant. The court decisions cited by the Ld. CIT(Appeals) are not applicable in the facts of the appellant s case. 2. For that the appellant craves leave to alter, amend, modify any of the grounds and/or take additional ground before or at the time of hearing of this appeal. 2. Heard both the parties. The ld. Counsel for the assessee submits that from the statement recorded and relied upon by the Assessing Officer of Shri Avijit Sinha Roy, it is clear that he stated that after February, 2011, he left this activity of providing bogus donations for commission. He drew the attention of the Bench to page 3 para 6.6. of the assessment order and submitted that the donation in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement recorded from Shri Avijit Sinha Roy u/s 131 of the Act, on 13/04/2015 he states that after the month of February, 2011, he left this bogus donation work. On the other hand, he has signed a declaration on 30/07/2015. The list prepared by the revenue was signed with a remark that he has seen the list. There is a contradiction in these two. In such circumstances, it has to be seen as to which is correct. No opportunity of cross-examining Shri Avijit Sinha Roy has been provided to the assessee. Hence the declaration as well as the statement cannot be the basis of addition. Similarly, the statement of the key persons of the trust cannot be the basis of addition as no cross-examination of witness was provided. No proof of money being returned is available with the revenue. 3.2. Similar view was taken by the B Bench of the Tribunal in the case of DCIT vs. M/s. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017; Assessment Year 2013-14, order dt. 14/03/2018. 4. Consistent with the view taken therein, we allow this appeal of the assessee and direct the Assessing Officer to grant the necessary deductions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and to question no. 15 as whether the partners have visited the office of M/s. Herbicure to which the partners answered that they had visited the premises of M/s. Herbicure on two occasions and for question no. 16 as to whether the partners were satisfied with the work of scientific research carried on by the said 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. However, the information as submitted above may please recorded as my witness. 10. Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee 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 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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