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TMI Blog2022 (4) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... availed the benefit of Vivad Se Vishwas Act, 2020 and have been issued form No.3 on 8th February, 2021 and therefore, assessee withdraw the appeal. 03. The learned DR did not raise any objection to the same. In view of the above application of the assessee the appeal of the assessee is treated as dismissed as withdrawn. 04. For Assessment Year 2010-11 in ITA No.1475/Mum/2019, the facts are also identical. 05. The assessee is a firm who filed its original return of income declaring income of Rs. 4,02,80,040/- on 26th September, 2010. The return of income was processed under section 143(3) of the Act. The notice under section 148 of the Act was issued on 16th March, 2016. The basis of the reopening of the assessment was that a search under section 132 of the Act was conducted on Navjivan Trust on 27th October, 2014. During the course of search it was found that all the expenses of the Trust were merely book entries and no genuine expenses were made by the Trust for section 35AC of the Act. One of the trustee also accepted that all these expenses are bogus and donations received in cheques were returned in cash to all the doners after ongoing normal commission. The assessee was iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in some of the cases the deduction under section 35AC of the Act is allowed. Further, after the decision of the Supreme Court as stated above, the order of the learned CIT(A) cannot be found fault with. 011. We have carefully considered the rival submissions and perused the orders of the lower authorities. The learned CIT(A) has dealt with this issue at pages No. 20-30 of the above issue as under:- "4.2.1 Finding of the Investigation Wing in case of M/s. Navjeevan Charitable Trust: A Search & Seizure operation u/s.132 of the Act was carried out in case of M/s. Navjeevan Charitable Trust on 27.10.2014. The investigation of the financial transaction of the Trust revealed that the trust had received donation of about Rs. 80 crores in last 5 financial years. It was further revealed that the said amount was transferred to 20 parties as expenses The verification and investigation of the bank accounts also revealed that, after receipt of cheque, parties were withdrawing the same amount in cash. The associated persons were not filing return of income. Many of these persons were non-traceable and wherever the persons could be traceable, they were not doing any business and living in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. Shri Amish Modi was the broker, who co-ordinate this nefarious financial manipulation between the Trustees and interested parties. The statement of number of associated persons were recorded u/s. 131 of the Act. 4.2.3 Arguments during the Appellate proceeding: During the appellate proceeding, various arguments have been taken which are summarized as under: a. It has been contended that the prescribed authority had issued certificate to Navjivan Charitable Trust and the project "Shree Navjivan" notified under section 35AC vide Notification No. SO 121(E) dated 12.01.2009 issued from File No. NC-274/17/2008 and submitted that donation of Rs. 15,00,000/- in aggregate made during the year to Navjivan Charitable Trust in good faith are genuine and not bogus as alleged. b. It has been contended that the no addition can be made when no independent enquiry is conducted by the A.O. c. It has been contended that no addition can be made when the A.O. does not provide any opportunity to confront and cross-examine the evidence obtained by him. d. It was submitted that no proof was brought on record that money was returned to the appellant in support of the AO's contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfessed by Mr.Kadam that no genuine philanthropic activity was being carried out by the trust and bogus expenditures were booked to camouflage the philanthropic activity. In this background, the claim of the appellant that it is responsible only to the extent that at the time of giving donation, whether trust was an approved trust or not is a very weak argument having no legal basis. It is a kind of an argument that the appellant was not at all concerned with the money which is being given as a donation for its utilization. Mr. Manish Shah has himself admitted that he was not only fully aware, rather he has utilized trust for booking bogus claim of deduction u/s.35AC of the Act. He himself has explained the modus operandi, how he used to receive cash of equivalent amount after allowing nominal commission to the trust. In fact he has minutely discussed the process of collecting all the cheques and taking back the money in cash. In the background of above facts and analysis, the argument that the appellant is only concerned with the approval at the time of giving donation and not with the subsequent withdrawal of approval. It is a part of a scam and it has been duly acknowledged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to donation of Rs. 15,00,000/- to Navjeevan Trust is genuine with supporting documentary evidences at any time either during the assessment proceedings or during the appellate proceedings. Once the initial onus is discharged by the appellant, then only the onus shifts to the A.O. However, the appellant had failed to do so. Hence, this contention of the appellant is rejected. 4.2.4 Retraction of a statement: The statement of Shri Manish M. Shah, recorded on oath u/s.131 is claimed to have been retracted subsequently through an affidavit. After affidavit copy of affidavit has been filed during appellate proceeding. An attempt was made unsuccessfully to get it examined by the AO through Remand. However, by virtue of power entrusted in me by provisions of rule 46A(4), I proceed to examine the affidavit. The contention of the affidavit can be summarized as under. The contention of the affidavit can be summarized as under: a) It was communicated to Mr.Manish M.Shah that investigation has proved that M/s Navjeevan Charitable Trust is not a genuine Trust and has not carried out any genuine charitable activity. On the basis of finding in M/s. Navjeevan Charitable Trust, the premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving lakhs and lakhs of donation, not in one year, but continuously three years without carrying out any due diligence and asking the donee trust whether any charitable activity has actually been done or not. In usual course, company would like to project themselves or their brand when huge amounts are being invested for the purpose of Philanthropic/charitable work. Specific details are mentioned during the course of statement such as how the cheques have been handed over to Mr. Ashok Bagaria, how the cash has been given back after deducting commission and above all, Mr. Manish Shah has minutely explained the utilization of cash for factory set up at Chincholi, MIDC. Sholapur. From the earlier para, the statement of Mr. Manish Shah has been referred he has submitted that the labourers and contractors of that area refused to accept cheque as they were from the unorganized set up and he could not have taken out cash from his books of account. As a result of this, he utilized the route of accommodation entry from M/s. Navjeevan Charitable Trust. Not a word has been mentioned in the affidavit regarding what has been explained during statement. Admission on oath is an integral part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is a superficial approach to the problem. The matter has to be considered in the light of human probabilities......................................Similarly the observation ....................that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available ...........In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably". I will be superficial in my approach in case I do not examine the claim of the assessee on the basis of documents and affidavits filed by the assessee and overlook clear the unusual pattern in the documents. filed by the assessee and pretend to be oblivious of the ground realities. As Hon'ble Supreme Court has observed, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133A covering the main player of the scam, no trace of any documents, no books of accounts has been found which can indicate any actual charitable activity by the Trust. iv. The crucial finding of the investigation wing, that so-called donation deposited by cheque has ultimately been withdrawn in cash, has not at all been rebutted. V. The specifics given by the associates explaining how the cheque was given, cash was accepted and its subsequent utilization has not been retracted either during the investigation carried out by the Investigation wing, Mumbai or during the assessment proceeding or during the appellate proceeding. In view of the above, it is held that the appellant is part and parcel of scam of non-genuine donation in order to claim deduction u/s.35AC of the Act. The candid confession by Mr.Manish M.Shah and ultimate withdrawal of deduction under section 35AC forthe year under consideration, have not been disapproved then, I have no reasons to interfere with the findings of the AO. The denial of deduction u/s.35AC of the Act is upheld and an amount of Rs. 15,00,000/- claimed as deduction and added to the total income is confirmed. The ground of appeal filed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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