TMI Blog2021 (10) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... T, CC-8 (1) , MUMBAI [ 2021 (7) TMI 442 - ITAT MUMBAI] as held the payee was duly approved when the payment was done. By no stretch of imagination it can be said that the assessee could have done the impossible and known that subsequently the approval will be withdrawn.the payee was duly approved when the payment was done. - Decided in favour of assessee. - I.T.A. No. 550/Mum/2020 - - - Dated:- 5-10-2021 - Shri Shamim Yahya (AM) And Shri Pavankumar Gadale (JM) For the Assessee : Shri Rajiv Khandelwal For the Department : Shri Garbinder Singh ORDER PER SHAMIM YAHYA (AM) :- This appeal by the assessee is directed against the order of learned CIT(A)-dated 13.11.2019 pertains to assessment year 2012-13. 2. The grounds of appeal read as under :- The following grounds of appeal are independent of, and without prejudice to, one another: 1. The Commissioner of Income-tax (Appeals) - 20, Mumbai (hereinafter referred to as the CIT(A)) erred in upholding the action of the Deputy Commissioner of Income-tax-12(3)(1), Mumbai (hereinafter referred to as the Assessing Officer) in issuing notice under section 148 of the Act. The appellants contend that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the Assessing Officer reopened the assessment u/s. 147 of the Act after obtaining approval from Pr. Commissioner of Income Tax-12, Mumbai and issued a notice u/s. 148 of the Act on 30.03.2018. The Assessing Officer also provided the reasons recorded for reopening to the assessee. By its letter dated 09.05.2018, the assessee objected to the reopening of the assessment. The Assessing Officer passed an order dated 14.06.2018 rejecting the objections raised by the assessee. On 21.06.7018, the assessee filed its return of income in response to the notice u/s. 148 declaring total income at ₹ 4,48,03,340/- which was declared in the original return of income. Thereafter, Assessing Officer issued notice u/s. 143(2) of the Act on 25.09.2018. Thereafter, the Assessing Officer passed an order u/s.143(3) r.w.s. 147 of the Act on 29.10.2018 determining the total income of the assessee at ₹ 4,83,14,850/-. In that order, the Assessing Officer rejected the claim of deduction u/s.35(l) of the Act and added the same to the total income of the assessee. 4. Aggrieved, by the said order, the assessee has filed this appeal. Before learned CIT(A) the assessee challenged both the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Therefore, the AO had the reason to believe that income of ₹ 35,00,000/- had escaped assessment. The appellant's contention that the AO did not make enquiry before reopening the assessment is not tenable because under the Scheme of the Act the AO has little power to make enquiry when proceedings are not pending before him. 4.4.2 The appellant has contended that the AO did not provide the statements on which he had placed reliance and did not give opportunity to the appellant to cross examine the persons who made those depositions. The appellant's contention has no merit because the Act does not envisage giving opportunity to the assesses to rebut the evidences before the assessment is reopened. 4.43 The appellant has also contended that before the reopening the assessment, the AO ought to have established that the donation paid had been received back by the appellant. This contention of the appellant is not correct. For reopening the assessment, it is not necessary for the AO to conclusively prove that income had actually escaped assessment. Mere existence of reason to believe that income has escaped is sufficient for the AO to reopen the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation to the said facts to prove that its contribution, was out of genuine concern for scientific research unlike the hundreds of others who merely made the payment to get the benefit of a certificate of donation to claim the deduction .The assessee had in reply vide letter dated 9th July 2018 provided the receipt of the donation and other supporting, including the registration for exemption u/s.80G(5)(vi) and u/s 12AA and the publication made in the Gazette of India. The assessee also enclosed copies of two judgment rendered by the Kolkata with respect to the donation to the very same organization. However notwithstanding the fact that the decisions are not of the Jurisdictional ITAT and consequently not binding, the ITAT is a fact finding Authority also and the Honorable ITAT may have in that case found the appellant to be a genuine philanthropist and having a scientific concern etc and may have decided in favor of the appellant. Besides the documents created for the sole purpose of defeating the intention of the Government cannot in itself be the final evidence to absolve the payment made by the assessee to be different from that explained by the Founder Director of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 5.4.4 Thus, I find that the so called receipt is acknowledgment of appellant's letter dated 29.03.2012 and not a receipt for money. Thus, I find that the appellant has failed to furnish the receipt in support of its claim of donation. A mere letter acknowledging a correspondence regarding donation cannot be treated as proof of donation. Therefore, no deduction u/s35(l)(ii) can be allowed on the basis of the said letter. 5.4.5 The case laws cited by the appellant mentioned in para 5.3.1 above does not help appellant s cause because the appellant had failed to produce a valid receipt. 12. Against the above order the assessee is in appeal before us. 13. We have heard both the parties and perused the records. Learned Counsel of the assessee submitted that the issue is duly covered in favour of the assessee by several decisions as under :- 1 Chotatingrai Tea (2002) 258 ITR 529 (SC) 2 National Leather Cloth Manufacturing Co (2000) 241 ITR 482 (Bom) 3 Urnish Jewellers ITA No. 1583/Mum/20I9 (Mum-Trib) 4 Shirish Lakhamshi Keniya (HUF) ITA No. 5385/Mum/2018 (Mum-Trib) 5 Thakkar Govindbhai Ganpatlal (HUF) Tax Appeal No 881 of 2013 (Guj) 6 Raj da Polymers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Hence, it is a fit case for issue of notice u/s. 148 of the I.T, Act, 1961. 16. We note that the assessee has made following submission the Assessing Officer in its objection to reopening :- The assessee, on receipt of the recorded reasons, hereby raises its formal objection on disputing the re-opening of the completed assessment and erroneous issue of notice u/s.148 of the Act on understated reasons:- a. In the reasons recorded for re-opening the assessment, it is merely stated that Kolkata Directorate of Investigation has given information of an institution viz. Herbicure Healthcare Bio-Herbal Research Foundation (HHBRF), which was providing accommodation entries to beneficiaries, and it is alleged that the assessee Company is one of the beneficiaries. There is no supporting document provided to the assessee, for which we request your good selves to serve the relevant document on the assessee Company. Further we submit that the case is being reopened by just merely relying on the report of the investigation department without making any independent inquiries which is bad in law. b. We further would like to submit that how a payment , through banking channels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Hence, in lieu of the above submissions and in the said circumstances, the re-opening of the said case is bad in law. A humble prayer is made to drop the re-assessment proceeding for which the assessee shall ever remain grateful and oblige. Hope the above information is to your full satisfaction. 17. In disposing off the objection the Assessing Officer only mentioned to the modus operandi found by the investigation wing in the case of said entity. There is no whisper that anything specific was found with reference to this particular assessee. The Assessing Officer has inferred the following in the case of assessee :- The assessee was also found to have given such purported donations of ₹ 20 lacs and from the return of income it was seen that it had claimed deduction u/s. 35(l)(ii) of ₹ 35 lacs on such bogus donation which has been given the colour of contribution towards the noble cause of scientific research. The earlier and subsequent returns of the assessee did not indicate and such consistent philanthropic activity. 18. The Assessing Officer also disposed off the objection that earlier the assessment was completed under section143(3) by holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, The School of Human Genetics and Population Health u/s.133A of the Act on 27.01.2015 and it was observed by the survey team that this institute in connivance with donors, brokers and accommodation entry providers has indulged in a duvious scheme of tax evasion, under which bogus donations were received from donors and money used to be returned back to the donors in lieu of commission, even while the donor availed of deductions u/s.35(1)(ii) of the Act. The registration of the institution was cancelled by the Government of India with retrospective effect and it was held that the institution has misused the exemption. However, under similar facts and circumstances, various coordinate benches have taken the view that mere admission on the part of the office bearers of the body/trust, the assessee cannot be penalized and the amount of donations claimed by the assessee on account of payment to the said school cannot be denied. In the case of Narbheram Vishram Qua, ITA No.42 43/Kol/2018, order dated 27.07.2018, the Kolkata Bench of the Tribunal under similar circumstances and facts has held as under:- 13 we have given a careful consideration to the rival submissions and perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Institutions were admittedly registered under section 12A of the Income Tax Act, 1961. We note that both of the said two Institutions viz, Matrivani and SHG , are Scientific Research Association approved as such by Central Government under section 35(l)(ii) of the Income Tax Act, 1961 vide Notification, bearing No. 229/2007 (F.N0.203/135/2007/ITA-II) dated 21.08.2007 and Notification No. 4/2010 (F. No. 2B/A/2009,/ITA-II dated 28.01.2010 respectively, published in Official Gazette of India. The assessee categorically denied that it ever received back the amounts of donations in cash or in kind from the said Institutions and from any person whatsoever in lieu of the various amounts donated to these two institutions, we note that in the statements, of key persons and alleged brokers recorded by the Investigation Wing in course of survey proceedings, in their cases and the extracts of which was provided to the assesses in the show cause notice, the name of the assessee firm does not appear anywhere. It is to be noted that none of those persons implicate the assessee to have made bogus donations and that cash was paid to the donors assessee in lieu of the alleged bogus donation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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, we cannot sustain the order of the authorities below. Therefore, we set aside the impugned order and direct the AO to allow the deduction of ₹ 26,28,500/- u/s. 35(l)(ii) of the Act. 15. Now, we deal with the arguments of Id DR for the Revenue. We note that the solitary grievance of the Id DR for the Revenue is that since the registration had been cancelled by the CBDT, with retrospective effect that is, with effect from 1sl April 2007, by issuing notification dated 06.09.2016, for both the institutions viz: 'Matrivani' and 'The School of Human Genetics and Population Health', therefore these institutions are not entitled to claim benefit under section 35 (1) (ii) of the Act. We note that the withdrawal of recognition u/s 35(l)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assesses herein for claim of weighted deduction u/s 35(1 )(ii) of the Act, for that we rely on the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Population Health'. Accordingly, the Grounds 1 to 4 raised by the assessee for A.Y. 2013-14 and the Grounds 1 to 5 raised by the assessee for A. Y. 2014-15 are allowed. 9. Similarly in various other decisions the issue has been decided by the Tribunal in favour of the assessee by disregarding the revenue's contentions that the registration of the school has been cancelled by the CBDT with retrospective effect by issuing Notification and, therefore, the assessee is not entitled to benefit u/s.35(1)(ii) of the Act. The facts before us being materially same involving the same school, namely, The School of Human Genetics and Population Health , we, therefore, respectfully following the decisions of the coordinate benches of the Tribunal, hold that the deduction u/s. 35(1)(ii) of the Act cannot be denied to the assessee. Accordingly, we direct the AO to grant deduction u/s. 35(1)(ii) of the Act. Appeal of the assessee for the assessment year 2013-2014 (ITA No.6672/Mum/2017) is hereby allowed. 12. We note that facts in the present case are identical. The withdrawal of the approval to the payee has taken place subsequent to the payment by the assessee. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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