TMI Blog2020 (4) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 [ 2015 (10) TMI 442 - SUPREME COURT] We cannot sustain the order of the authorities below. Therefore, we set aside the impugned order and direct the AO to allow the deduction u/s. 35(1)(ii) - Decided in favour of assessee. - I.T.A. No. 2414/KOL/2019 - - - Dated:- 31-1-2020 - Shri Satbeer Singh Godara, Judicial Member For the Appellant : Shri M.D Shah For the Respondent : Smt. Ranu Biswas, Addl. CIT, Sr. D.R. ORDER 1. This assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,00,000/- to HHBRF I.T.A. No. 2346/Ko1l20 18 Raj Karan Dassani Assessment Year: 2013-14 on 06.03.2013 by cheque No.339348 drawn on Citi Bank, Kolkata, in response to an appeal for donation. The recipient of the donation i.e. HHBRF, issued a certificate to the assessee enabling him to claim deduction u/s 35(1)(ii) of the Act. 4. The Income-Tax Authorities conducted a survey u/s 133A of the Act on HHBRF. A statement was recorded from Shri Swapan Ranjan Dasgupta, Founder Director of HHBRF. The Revenue alleged that Shri Swapan Ranjan Dasgupta admitted that they had received such donation and thereafter returned these donations in cash through some operators, to the donor, in lieu of a commission. The Revenue alleged that he had given a list of beneficiaries. A statement was recorded from Mr. Kishan Bhawsinghka, one of the broker. It was alleged that he also confessed to the similar modus operandi of returning the money taken as a donation. Further a statement was recorded from Smt. Sujata Ghosh Dastidar, one of the research directors of HHBRF. It is alleged that she also had admitted to the same modus operandi. After referring to the statement of these three persons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a settled proposition of law that the income tax liability is to be ascertained on the basis of the material available on record, the surrounding circumstances, human conduct and the preponderance of probabilities. The material available on record for the Ld AO were the statements and confessions of the recipient of the donations, which have not been rebutted by the appellant-firm or its partners. The behaviour of the appellant is therefore to be measured against the norms of human conduct. Similarly in the appeal stage the appellant has submitted certain documents which are mere self-serving recitals, and therefore they do not have any evidentiary value. Therefore on the preponderance of probability, I find that the Id. A.O has rightly disallowed the alleged donation and claim of deduction thereon as inadmissible, and added back the same to the returned income of the appellant. In view of the above discussion, I find no infirmity in the orders of the Id. A.O, and I accordingly confirm the same. The Grounds taken by the appellant are dismissed. Raj Karan Dassani, Kolkala vs 110, Ward - 36(1), Kolkala on 8 May, 2019 6. Aggrieved, the assessee is in appeal before us. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government of India was in force in the Assessment Year for the organization u/s 35(l)(ii) of the Act, the donations made to that organization shall be entitled to deduction in the hands of donor. He relied on certain other case laws which we will refer to as and when necessary. 9. The Id. Departmental Representative, on the other hand, submitted that the entire registration, donation and claim of deduction to HHBRF was a organized LT.A. No. 23461K0V2018 Raj Karan Dassani Assessment Year: 2013-14 racket of money laundering and this was proved by the evidence collected by the Revenue in the form of numerous statements. He submitted that the statements of Shri Swapan Ranjan Dasgupta, Founder Director of HHBRF and statement of Smt. Sujata Ghosh Dastidar, one of the directors and research directors of HHBRF shows that money taken as donation was returned to those donors in cash through brokers. He also referred to the statements of Mr. Kishan Bhawasingka and Shri Shanker Kumar Khetan, entry operators and relied on the same, as evidence, in supporting the additions. He relied on the order of the Assessing Officer as well as Id. CIT(A) and submitted that human behavio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ING WSYA 504010047038 H.B. Sarani Bank Branch 2 HDFC Bank 03821570006926 G.C. Avenue Branch 3 YES Bank Not remember Stephen House at present time Branch Q.10 How do you know and associated with the company Herbicure Healthcare Bio-Herbal Research Foundation (HHBRF)? Ans. I know this company through some common contract from last four years. Then I met the key person of the company Sri S.R. Dasgupta. The, he asked me help in donation for his company u/s 35( I )(ii). I used to send him donors. The donors used to give me ₹ 2000 to 10000 per donation depending on the quantum. Q.11. How many donors you sent to HHBRF? What is total quantum of donation done by them and brokerage earned by you? Ans. I don't have any record of the donors and quantum. I have earned around ₹ 1 00000. Q.12 Kindly go through the statement of Shri S.R. Dasgupta taken on 27.01.20 15. Read question no.23 and the answer. Offer your comment? Ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. 13. I now examine the statement recorded for Shri Swapan Ranjan Dasgupta. In response to question no.23, he states that bogus donations were received by cheque and RTGS through bank accounts and thereafter payments were made to paper/bogus companies on account of bogus purchase on the advice of Mr. Kishan Bhawasingka and that after the amount passes through in 2 to 3 layers of companies the same was returned back in cash to the original donors after deducting commission. The name of 1. T.A. No. 23461K0V20 18 Raj Karan Dassani Assessment Year: 2013-14 the assessee is not mentioned in this statement. He states that the broker Mr. Kishan has done these transactions. Mr. Kishan denied the same. So nothing much turns on this statements. 14. Now, I come to the statement of Smt. Sujata Ghosh Dastidar, one of the directors of HHBRF. In her statement of Smt. Sujata Ghosh Dastidar alleges that Mr. Kishan Bhawasingka was the key man who has organized the entire operation of receiving donation and thereafter returning cash to those persons. This allegation, as already stated, are denied by Mr. Kishan Bhawasingka. In response to question no.18, Smt. Dastidar states that she has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had explained about its commercial objective for association with such an accredited institution apart from getting an immediate tax benefit via weighted deduction for any donation made to the institution. We find that when the Id AO informed the assessee that Director of HHBRF had given some statement before the Investigation wing as per which the donation made by the assessee was to be held as a bogus transaction and assessee would be invited with consequential disallowance thereon, the assessee asked for all the adverse materials which the Id AO proposed to rely upon and also sought an opportunity to cross examine the directors of HHBRF. We find from the perusal of the assessment order, that the Id 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Id AO did not provide the material rather he merely allowed the assessee to read the statement. This, in our considered opinion, was not justified. The assessee cannot be expected to give reply to the statement without going through the same in detail and prepare its counter thereon. Hence it could be safely concluded that in the instant case, the Id AO did not provide the relevant materials to the assessee. Further despite request for cross examination being made by the assessee, the same was not allowed by the Id AO and hence respectfully following the aforesaid decisions of the Hon'ble Supreme Court and various High Courts supra, we hold that there was no material available with the revenue on the basis of which it could justify its action of disallowing the claim of deduction uJs 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, colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l High Court in the cases of B.P.Agarwalls Sons Ltd vs CIT reported in 208 ITR 63 (Cal) and Jai Kumar Kankaria vs CIT reported in 251 ITR 707 (Cal) had held that there was no power to cancel the registration retrospectively. Hence even on this count, the deduction claimed U/S 35( I )(ii) of the Act by the assessee deserves to be allowed. 5.6. We find that the Id CITA had made an observation which has been heavily relied upon by the Id 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 ₹ 14,00,0001- 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 quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n admission is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the person, who made it, to show it has incorrectly been made and the person, making the statement should be given proper opportunity to show that it does not show the correct state of facts. It was further held that the materials found in the course of survey could not be the basis for making any addition in the assessment. The word may used in section I 33A(3)(iii) of the Act makes it clear that the material collected and statement recorded during the survey U/S 133A of the Act are not conclusive piece of evidences 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(\)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the partners of the assessee firm and has recorded their statement on oath on 28.12.2015. We note for question no. 14 as to how the partner knew about Mls. Herbicure, the partner of the assessee firm has answered that Dr. Bhuban Chakraborty, a Cardiologist friend introduced them to Mls. Herbicure and to question no. 15 as whether the partners have visited the office of M/s. I.T.A. No. 2346/Ko1l20 18 Raj Karan Dassani Assessment Year: 2013-14 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 Mls. 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 Chak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be waived on compassionate ground. I am attaching the current medical prescription/advice along with MRI reports for your kind record. 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 confmned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel appearing on behalf of the appellant is that the High Court's final observation that the order of the tribunal remanding the matter for decision would stand quashed and that the assessees were entitled to claim deduction was beyond the jurisdiction of the High Court. The learned counsel for the appellant may be technically correct but what has been observed by the High Court was as a necessary corollary to the answer on the referred question which was merely spelt out by the High Court. 7. We, accordingly, dismiss, the appeals without any order as to costs. 18. The similar view has been taken by Kolkata 'B' Bench of the Tribunal in ITA No.16/Kol/2017 in the case of DC IT vs. M/s Maco Corporation (India) Pvt. Ltd. order dated 14.03.2018. I.T.A. No. 23461K01l2018 Raj Karan Dassani Assessment Year: 2013-14 18. Applying the proposition of law laid down in the case laws to the facts of this case and also on evaluating the evidence relied upon by the parties, we uphold the contention of the assessee that he is entitled to deduction U/S 35(1 )(ii) of the Act. We direct the Assessing Officer grant the same. Ground No.4 5 is allowed. I ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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