M/S CRESCENT ORGANICS PVT. LTD., Mumbai V. DCIT 14 (1)(2), Mumbai

ITA 1252/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1563 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 06-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Principle of natural justice; Retrospective amendment; Difference of opinion; Accommodation entries; Cancellation of registration; Change of opinion; Set aside
• Section: 143(3); 133A; 12A; 201; 143(2); 13; 131; 27; 148; 154

Judgement Text

ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NOS.1252 & 1253/MUM/2019 (ASSESSMENT YEARS: 2011 - 12 & 2012 - 13) M/S CRESCENT ORGANICS PVT. LTD. WINDSOR,2 ND FLOOR, CST ROAD, KALINA,SANTACRUZ (EAST), MUMBAI 400 098 VS. DY. COMMISSIONER OF INCOME TAX 14(1)(2), AAYAKAR BHAVAN, MUMBAI 400 020 PAN AAACC1690D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PIYUSH C HHAJED, A.R RESPONDENT BY: MS. SHREEKALA PARDESHI, D.R DATE OF HEARING: 10.12.2020 DATE OF PRONOUNCEMENT: 14 .12.2020 O R D E R PER RAVISH SOOD, JM THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A) - 22, MUMBAI DATED 11.12.2018 FOR A.Y. 2011 - 12 AND A.Y. 2012 - 13. AS THE ISSUES INVOLVED IN THE CAPTIONED APPEALS ARE INEXTRICABLY INTERLINKED OR IN FA CT INTERWOVEN, THEREFORE, THE SAME ARE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12 WHEREIN THE IMPUGNED ORDER HAS BEEN ASSAILED ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ASSESSING OFFICER'S ACTION OF ISSUING NOTICE U/S.148 DATED 02.03.2017 FOR AY 2011 - 12 WHICH IS BAD IN LAW SINCE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) ON 30.03.2014. ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER'S WITHOUT APPRECIATING THAT THE AO FAILED TO PROVIDE THE COPY OF APPROVAL NOTE/SATISFACTION FROM THE PRINCIPAL - CIT BEFORE THE ISSUANCE OF THE NOTICE U/S.148 DATED 02.03.2017. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN PASSING THE ORDER WITHOUT APPRECIATING THAT THE ASSESSING OFFICER FAILED TO PROVIDE THE COPIES OF STATEMENTS RECORDED FROM THIRD PARTY AND NO OPPORTUNITY GIVEN TO THE APPELLANT COMPANY TO CROSS - EXAMINE AND HENCE THE PROCESS OF NATUR AL JUSTICE WAS NOT FOLLOWED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ID. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 WITHOUT ISSUANCE OF NOTICE U/S 143(2). 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME A) FAILED TO APPRECIATE THAT AT THE TIME WHEN THE DONATION OF RS.60,00,000 / - WAS MADE BY THE APPELLANT COMPANY, THE PROPER APPROVALS/EXEMPTIONS WERE IN FORCE AND IN FAVOUR OF THE SAID TRUS T I.E. HERBICURE HEALTHCARE BIO - HERBAL RESEARCH FOUNDATION (HHBRF). 6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN PASSING THE ORDER WITHOUT APPRECIATING THAT THE CANCELLATION OF APPROVAL OF 12A IN THE SUBSEQUENT YEAR WHICH WAS EARLIER GRANTED TO THE TRUST U/S. 35(1)(II) TO AVAIL EXEMPTION OF DONATION MADE BY THE APPELLANT COMPANY DOES NOT AFFECT THE AVAILABILITY AND GENUINENESS OF THE CLAIM MADE BY THE APPELLANT COMPANY AS HELD BY HON SUPREME COU RT IN CASE OF CHOTATINGRAI TEA & ORS ETC., 258 ITR 529. THE APPELLANT COMPANY CRAVES THE LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT/OR BEFORE THE TIME OF HEARING. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF A CONSIGNMENT AGENT, INDENTING AGENT AND TRADING IN CHEMICALS HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 201 1 - 1 2 ON 31.08.201 1 , DECLARING ITS TOTAL INCOME AT RS. 16,62,71,740/ - . ORIGINAL ASSESSMENT WAS FRAMED BY THE A.O V IDE HIS ORDER PASSED U/S 143(3), DATED 30.03.2014 A ND THE INCOME OF THE ASSESSEE COMPANY WAS ASSESSED AT AN RS. 17,21,52,510/ - . FURTHER, ON THE BASIS OF A RECTIFICATION ORDER PASSED U/S 154 OF THE ACT, DATED 25.09.2017 THE ASSESSED INCOME OF THE ASSESSEE W AS SCALED DOWN TO AN AMOUNT OF R S . 16,64,58,212/ - . OBSERVING, THAT THE MINISTRY OF FINANCE VIDE ITS NOTIFICATION NO. 279/2016/F.NO.203/135/2007/ITA.II, DATED 06.09.2016 HAD WITHDRAWN THE APPROVAL THAT WAS EARLIER GRANTED U/S 35(1)(II) OF THE ACT ON 14.03.2 008 TO M/S HERBICURE HEALTHCARE BIO - HERBAL RESEARCH FOUNDATION (FOR SHORT HHBRF), ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 3 THE A.O FOR THE PURPOSE OF WITHDRAWING THE DEDUCTION OF RS.1,05,00,000/ - THAT WAS CLAIMED BY THE ASSESSEE U/S 35(1)(II) IN RESPECT OF A DONATION OF RS. 60 LAC STATED TO HAV E BEEN GIVEN TO HHBRF REOPENED ITS CASE U/S 147 OF THE ACT. IN COMPLIANCE TO THE NOTICE ISSUED U/S 148 OF THE ACT IT WAS REQUESTED BY THE ASSESSEE THAT ITS ORIGINAL RETURN OF INCOME FILED ON 28.09.2011 MAY BE TREATED AS THE RETURN FILED IN COMPLIANCE THERE OF. ACCEPTING THE AFORESAID REQUEST OF THE ASSESSEE THE A.O PROCEEDED WITH AND ISSUED NOTICES U/SS. 143(2)/142(1) TO THE ASSESSEE. ON RECEIPT OF THE COPY OF THE REASONS TO BELIEVE ON THE BASIS OF WHICH ITS CASE WAS REOPENED THE ASSESSEE VIDE ITS LETTER DAT ED 06.09.2017 FILED OBJECTIONS WITH THE A.O. HOWEVER, THE A.O NOT FINDING FAVOUR WITH THE OBJECTIONS RAISED BY THE ASSESSEE THEREIN REJECTED THE SAME VIDE HIS ORDER DATED 26.10.2017. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD IN ITS COMPUTATION OF INCOME CLAIMED DEDUCTION OF RS. 1.05 CRORE UNDER SEC. 35(1)(II) OF THE ACT. ON A PERUSAL OF THE RECORDS, IT WAS NOTICED BY HIM THAT THE ASSESSEE HAD PAID A DONATION OF RS. 60 LAC TO A KOLKATA BASED RESEAR CH INSTITUTION, VIZ. M/S HERBICURE HEALTHCARE BIO - HERBAL RESEARCH FOUNDATION AND HAD CLAIMED DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT @ 175% ON RS. 60 LAC WHICH WORKED OUT TO RS.1. 0 5 CRORE. ON BEING CALLED UPON TO SUBSTANTIATE THE BASIS FOR CLAIM OF SUCH D EDUCTION IT WAS STATED BY THE ASSESSEE THAT THE DONATION TO THE AFORESAID PARTY WAS GENUINE AND WAS GIVEN ON THE BASIS OF EXEMPTION CERTIFICATES ISSUED BY THE INCOME TAX DEPARTMENT. HOWEVER, THE ASSESSEE NEITHER PRODUCED ANY OF THE PARTIES/PERSONS FOR VERIFICATION NOR APPEARED PERSONALLY FOR EXAMINATION. ACCORDINGLY, SUMMONS U/S 131 WERE ISSUED BY THE A.O ON 16.11.2007 TO BOTH THE DIRECTORS OF THE ASSESSEE COMPANY FOR VERIFYING THE GENUINENESS AND VERACITY OF THE AFORESAID DONATIONS. BUT THEN, THE ASSES SEE FAILED TO COMPLY WITH THE AFORESAID SUMMONS AND DID NOT PUT UP AN APPEARANCE BEFORE THE A.O. ANOTHER OPPORTUNITY GIVEN TO THE ASSESSEE TO PRODUCE THE DIRECTORS FOR EXAMINATION WAS ALSO NOT AVAILED ON THE GROUND THAT ONE OF THE DIRECTOR SHRI. G.D SHAH, WAS AN OLD PERSON AND THUS, IT WAS REQUESTED THAT IN HIS PLACE THE OTHER ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 4 DIRECTOR, VIZ. SHRI. ASHIT SHAH MAY BE EXAMINED. AT THE SAME TIME, IT WAS STATED THAT AS SHRI. ASHIT SHAH WAS TRAVELLING ABROAD FROM 21 ST TO 27 TH NOVEMBER, THEREFORE, SOME FURTHER TIM E MAY BE ALLOWED FOR PUTTING UP OF AN APPEARANCE BY THE LATTER. IN THE BACKDROP OF THE AFORESAID FACTS THOUGH THE A.O IN ALL FAIRNESS ADJOURNED THE MATTER TO 29.11.2007, HOWEVER, ADOPTING A NON - COOPERATIVE ATTITUDE EVEN ON THE SAID DATE THE ASSESSEE FAILED TO COMPLY WITH THE AFORESAID DIRECTION OF THE A.O. OBSERVING THAT THE ASSESSEE BY ADOPTING A LACKADAISICAL APPROACH HAD EVADED PUTTING UP AN APPEARANCE BEFORE HIM AND ALSO FAILED TO CORROBORATE THE GENUINENESS OF THE IMPUGNED DONATION GIVEN TO HHBRF, THE A.O HELD A CONVICTION THAT AUTHENTICITY OF THE AFORESAID TRANSACTION HAD REMAINED UNPROVED. ALSO, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE COMPANY AND ITS DIRECTORS HAD MADE DONATIONS TO ALLEGED TRUSTS DURING SIMILAR PERIOD WHICH BY NO MEANS COULD BE H ELD TO BE A COINCIDENCE. IT WAS FURTHER OBSERVED BY THE A.O THAT A SURVEY OPERATION WAS CONDUCTED BY THE DIRECTORATE OF INVESTIGATION (KOLKATA) UNDER SEC. 133A OF THE ACT ON 27.01.2015 AT THE REGISTERED/ADMINISTRATIVE OFFICES OF HHBRF, WHICH REVEALED, THAT THE SAID INSTITUTION HAD INDULGED INTO PROVIDING ACCOMMODATION ENTRIES OF BOGUS DONATIONS TO THE DONORS THROUGH A NETWORK OF BROKERS AND ACCOMMODATION ENTRY PROVIDERS . A S OBSERVED BY THE DIT(INV.) THE BOGUS DONATIONS WERE BEING TAKEN VIDE CHEQUES/RTGS AND THE SAME AFTER DEDUCTION OF COMMISSION WERE ROUTED BACK TO DONOR IN THE FORM OF CASH VIDE 3 TO 4 LAYERS OF BOGUS BILLING S OR ACCOMMODATION ENTRIES. IT WAS NO T ICED IN T H E COURSE OF THE INVESTIGATIONS THAT WHILE FOR THE SHARE OF THE EXEMPTED ORGANIZATION , V IZ. HHBRF WAS 8 TO 10 PERCENT , THAT OF THE BROKER OR INTERMEDIARIES FACILITATING THE SAID ARRANGEMENT WAS 2 TO 8 PERCENT. IT WAS GATHERED BY THE A.O THAT SHRI. SWAPAN RANJAN DASGUPTA, FOUNDER DIRECTOR OF HHBRF HAD IN HIS STATEMENT RECORDED ON 27.01.2015 IN THE COURSE OF THE SURVEY PROCEEDINGS ADMITTED THAT UNDER THE COMPELLING CIRCUMSTANCES OF NON - AVAILABILITY OF FUNDS THE INSTITUTION HAD TO YIELD TO THE PREVALENT PRACTICE OF PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT BENEFICIARIES IN THE GARB OF DONATI ON RECEIPTS . IT WAS FURTHER ADMITTED BY HIM THAT WITH THE SERVICES OF BROKERS AND ACCOMMODATION ENTRY PROVIDERS ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 5 THE AMOUNT OF DONATIONS WOULD BE RETURNED BACK TO THE DONORS BY WAY OF BOGUS BILLING AFTER DEDUCTING COMMISSION OF 5%. FURTHER, IT WAS STATED BY HIM THAT THE LETTERS ISSUED TO THE DONORS WERE BACK DATED AND THE AMOUNTS RECEIVED BY WAY OF DONATIONS AFTER DEDUCTION OF COMMISSION WOULD THEREAFTER FIND ITS WAY BACK TO THE POCKET OF THE ALLEGED DONORS IN THE FORM OF ADVANCES TOWARDS PURCHASES EXPENSES. IT WAS ALSO ADMITTED BY HIM THAT ALL THE MEMBERS OF THE GOVERNING BODY OF THE ASSESSEEE INSTITUTION WERE FULLY AWARE OF THE FUNCTIONS AND MODUS OPERANDI OF SUCH RAISING OF FUNDS BY THE ASSESSEE ORGANISATION. ON THE OTHER HAND, SMT. SUJATA GHOSH DASTIDAR, DIRECTOR OF HHBRF IN HER STATEMENT HAD CLAIMED THAT SHE HAD SIGNED THE PAPERS ON THE INSTRUCTIONS OF S/SH. SWAPAN RANJAN DASGUPTA AND TAPAN RANJAN DASGUPTA. IT WAS ADMITTED BY HER THAT THE DONATIONS RECEIVED FROM SOME OF THE PARTIES WERE RETURNED TO THEM W ITH THE HELP OF SOME BROKERS THROUGH PAPER COMPANIES. FURTHER, IT WAS GATHERED BY THE A.O THAT ONLY NINE PERSONS WERE WORKING IN THE RESEARCH ORGANIZATION, VIZ. HHBRF AND MOST OF THEM WERE APPOINTED IN JUNE, 2014. IT WAS NOTICED BY THE A.O THAT DURING THE COURSE OF THE SURVEY PROCEEDINGS NO STOCK OF CHEMICALS AND OTHER RESEARCH MATERIAL WAS FOUND FROM THE PREMISES OF THE HHBRF. IN THE BACKDROP OF THE AFORESAID FACTS, THE A.O WAS OF THE VIEW THAT THE RESEARCH ACTIVITIES CARRIED OUT BY HHBRF WERE NOT COMMENSU RATE WITH THE FUNDS RECEIVED BY IT. ADVERTING TO THE FACT OF WINDOW DRESSING OF THE ACCOUNTS OF THE AFORESAID RESEARCH ORGANIZATION, VIZ. HHBRF, IT WAS OBSERVED BY THE A.O THAT THE LATTERS AUDITOR HAD ADMITTED THAT HE HAD PREPARED THE AUDIT REPORT ON THE B ASIS OF THE TRIAL BALANCE AND THE BILLS & VOUCHERS WERE CHECKED BY HIS BOYS OR ASSISTANTS/INTERNS WITHOUT OBTAINING ANY CONFIRMATION FROM ANY OF THE DONORS AND THE OTHER PARTIES. FURTHER, SHRI. MANOJ KUMAR KOTHARY, CA OF THE HHBRF WHO WAS MAINTAINING THE B OOKS OF ACCOUNTS OF THE RESEARCH ORGANIZATION AT HIS OFFICE HAD STATED THAT THE CODED LIST AND BROKER WISE LIST WAS BEING MAINTAINED ON THE INSTRUCTIONS OF SHRI. SWAPAN RANJAN DASPUTA, FOUNDER DIRECTOR OF HHBRF. IT WAS FURTHER OBSERVED BY THE A.O THAT ONE SHRI ANAND KRISHAN MAITIN, FORMER DIRECTOR OF HHBRF WAS QUERIED AS REGARDS THE REASONS FOR ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 6 HAVING RESIGNED AFTER SERVING FOR THE PERIOD 2003 TO 2011. IN REPLY, IT WAS STATED BY HIM THAT HE HAD RESIGNED FOR THE REASON THAT THE RESEARCH ORGANISATION WAS CARR YING OUT CERTAIN UNETHICAL PRACTICES .FURTHER, IT WAS OBSERVED BY THE A.O THAT SHRI. KALIPADA BHATTACHARAYA, AUDITOR OF HHBRF HAD STATED THAT THEY HAD NEVER TAKEN ANY INDEPENDENT THIRD PARTY CONFIRMATION AND MOST OF THE AUDIT WAS DONE ON THE BASIS OF THE BA NK STATEMENT ITSELF. FURTHER, AS STATED BY HIM NO PHYSICAL VERIFICATION OF STOCK WAS CARRIED OUT AND THE SAME WAS TAKEN ON ITS FACE VALUE AS PROVIDED BY THE MANAGEMENT. INTERESTINGLY, THE AUDITOR ON BEING CONFRONTED WITH THE FACT THAT MOST OF THE EXPENSES PARTIES WERE FOUND TO BE BOGUS, IN REPLY, HAD STATED THAT IF BOTH THE PARTIES CONNIVED TO FORGE THE DOCUMENTS, THEN, THE AUDITOR HAS LITTLE OPTION LEFT. IN THE BACKDROP OF THE AFORESAID FACTS, IT WAS OBSERVED BY THE A.O THAT SIMILAR TAX EVASION WAS ALSO UN EARTHED IN THE CASE OF THE OTHER INSTITUTES, VIZ. (I). M/S SCHOOL OF HUMAN GENETICS & POPULATION HEALTH; (II). M/S MATRIVANI INSTITUTE OF EXPERIMENTAL RESEARCH & EDUCATION; AND (III). M/S BIOVED RESEARCH SOCIETY. ON THE BASIS OF THE AFORESAID DELIBERATIONS , IT WAS OBSERVED BY THE A.O THAT THE AFORESAID RESEARCH ORGANIZATION WAS ONLY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS DONATIONS . OBSERVING, THAT THE CBDT, NEW DELHI VIDE ITS ORDER, VIZ. F.NO. 203/09/2015/ITA - II, GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI, DATED 15.09.2016 HAD WITHDRAWN THE NOTIFICATION U/S 35(1)(II) FOR THE AFORESAID RESEARCH ORGANIZATION, VIZ. HHBRF, THE A.O HELD A CONVICTION THAT THE AFORESAID RESEARCH ORGANIZATION, VIZ. HHBRF HAD NO T CARRIED OUT ANY GENUINE ACTIVITIES AND WAS ONLY ENGAGED IN THE BUSINESS OF ISSUING BOGUS DONATION RECEIPTS U/S 35(1)(II) OF THE ACT. ACCORDINGLY, IT WAS OBSERVED BY THE A.O THAT THE AFORESAID RESEARCH ORGANIZATION, VIZ. HHBRF HAD RECEIVED HUGE NUMBER OF DONATIONS ON WHICH IT HAD EARNED SERVICE CHARGES AND AFTER DEDUCTING THE SAME HAD REFUNDED THE BALANCE IN CASH TO THE DONORS. ALSO, IT WAS OBSERVED BY THE A.O THAT AS THE ASSESSEE HAD FAILED TO COMPLY WITH THE SUMMONS WHICH WERE ISSUED TO THE DIRECTORS U/S 131 OF THE ACT, THEREFORE, IT HAD FAILED TO PROVE THE GENUINENESS OF THE IMPUGNED DONATIONS GIVEN TO HHBRF. IN THE TOTALITY OF THE ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 7 AFORESAID FACTS THE A.O DISALLOWED THE ASSESSEES CLAIM FOR DEDUCTION U/S 35(1)(II) OF RS. 1.05 CRORE AND ADDED BACK THE SAM E TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). APART FROM ASSAILING THE ASSESSMENT ORDER ON MERITS THE ASSESSEE CHALLENGED THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O WHILE FRAMING THE REASSESSMENT U/S 147 OF THE ACT. IT WAS INTER ALIA STATED BY THE ASSESSEE THAT AS IT HAD DISCLOSED ALL THE MATERIAL FACTS IN ITS RETURN OF INCOME AND FURNISHED THE DOCUMENTS SUPPORTING THE DONATIONS GIVEN TO HHBRF IN THE COURSE OF THE REGULAR ASSESSME NT THAT WAS FRAMED BY THE A.O VIDE HIS ORDER PASSED U/S 143(3), DATED 30.03.2014, THEREFORE, THE A.O HAD WRONGLY ASSUMED JURISDICTION U/S 147 OF THE ACT AFTER LAPSE OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. ALSO, THE ASSESSEE ASSAILED THE VALIDITY OF THE REASSESSMENT ON THE GROUND THAT THE SAME WAS BASED ON A MERE CHANGE OF OPINION WHICH WAS NOT PERMISSIBLE UNDER LAW. HOWEVER, THE CIT(A) NOT FINDING ANY MERIT IN THE CONTENTIONS ADVANCED BY THE ASSESSEE IN CONTEXT OF THE VALIDIT Y OF THE JURISDICTION ASSUMED BY THE A.O U/S 147 OF THE ACT, THEREIN , REJECTED THE SAME. ON MERITS, THE CIT(A) WAS NOT IMPRESSED WITH THE CLAIM OF THE ASSESSEE THAT ON A WITHDRAW A L OF EXEMPTION OF THE AFORESAID RESEARCH ORGANIZATION, VIZ. HHBFR THE ASSESSE ES CLAIM FOR DEDUCTION U/S 35(1)(II) COULD BE DISLODGED. IT WAS OBSERVED BY THE CIT(A) THAT THE KEY PERSONNEL OF THE RESEARCH ORGANIZATION, VIZ. HHBRF HAD IN THEIR STATEMENTS RECORDED ON OATH ADMITTED IN THE COURSE OF THE SURVEY PROCEEDINGS CONDUCTED AGAI NST THE RESEARCH ORGANIZATION THAT THE LATTER WAS INVOLVED IN THE BOGUS DONATION SCAM FOR EARNING COMMISSION. IT WAS FURTHER NOTICED BY THE CIT(A) THAT THE FACTUM OF THE RESEARCH ORGANIZATION, VIZ. HHBRF BEING INVOLVED IN A BOGUS DONATION RACKET WAS FURTHE R CORROBORATED BY THE FACT THAT THE STATEMENTS RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS WERE NEVER REBUTTED BY THE KEY PERSONNEL AT ANY STAGE BEFORE ANY AUTHORITY. ALSO, IT WAS OBSERVED BY THE CIT(A) THAT THE RESEARCH ORGANIZATION HAD THEREAFTER IN THE COURSE OF THE PROCE E DINGS BEFORE THE SETTLEMEN T COMMISSION ADMITTED ITS INVOLVEMENT IN THE ORGANISED BOGUS ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 8 DONATION RACKET BY PRODUCING AN AFFIDAVIT ON ITS OWN. LASTLY, IT WAS OBSERVED BY THE CIT(A) THAT THE VERY FACT THAT THE CBDT HAD WITHDRAWN THE APPROVAL GRANTED TO THE RESEARCH ORGANIZATION, VIZ. HHBRF, THEREIN EVIDENCED THAT THE INSTITUTE HAD MISUSED THE APPROVAL THAT WAS GRANTED TO IT U/S 35(1)(II) OF THE ACT. OBSERVING, THAT THE A.O HAD SUFFICIENT, COGENT, TANGIBLE, RELIABLE AND AUTHENTICATED PROOF TO CONCLUDE THAT THE DONATION BOOKED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT DURING THE YEAR WAS BOGUS TO EVADE TAXES AND LAUNDER MONEY THE CIT(A) UPHELD THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION U/S 35(1)(II) OF RS. 1.05 CRORES . ACCORDINGLY, THE ASSESSEES APPEAL WAS DISMISSED BY THE FIRST APPELLATE AUTHORITY. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSES SEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL ASSAILED THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O U/S 147 OF THE ACT. IT WAS SUBMITTED BY THE LD. A.R THAT REGULAR ASSESSMENT IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION I.E A. Y 2011 - 12 WAS EARLIER FRAMED BY THE A.O VIDE HIS ORDER PASSED U/S 143(3), DATED 30.03.2014. IT WAS STATED BY THE LD. A.R THAT AS IT HAD DISCLOSED ALL THE MATERIAL FACTS IN ITS RETURN OF INCOME AND FURNISHED THE DOCUMENTS SUPPORTING THE DONATIONS GIVEN TO H HBRF IN THE COURSE OF THE REGULAR ASSESSMENT THAT WAS FRAMED BY THE A.O VIDE HIS ORDER PASSED U/S 143(3), DATED 30.03.2014, THEREFORE, THE A.O HAD WRONGLY ASSUMED JURISDICTION IN REOPENING ITS CASE U/S 147 BY ISSUIN G A NOTICE U/S 148, DATED 02.03.2017 I.E AFTER LAPSE OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, DESPITE THE FACT , THAT NO INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. AS SUCH, THE ASSESSEE ASSAILED THE VERY ASSUMPTION OF JURISDICTION BY THE A.O U/S 147 OF THE ACT. ON MERITS, IT WAS AVERRED BY THE LD. A.R THAT AT THE TIME WHEN THE ASSESSEE HAD GIVEN THE DONATION TO THE AFORESAID RESEARCH INSTITUTION VIZ. HHBRF , THE LATTER HAD A VALID REGISTRATION CERTIFICATE GRANTED UNDER THE ACT. ACCORDINGLY, IT WAS THE ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 9 CLAIM OF THE LD. A.R THAT THE SUBSEQUENT CANCELLATION OF THE REGISTRATION CERTIFICATE WOULD NOT INVALIDATE THE ASS ESS E ES CLAIM FOR DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT. IN ORDER TO DRIVE HOME HIS AFORESAID CLAIM, IT WAS SUBMITTED BY THE LD. A.R THAT FROM A PERUSAL OF THE EXPLANATION TO SEC. 35(1)(II) OF THE ACT, IT COULD SAFELY BE GATHERED THAT A BENEFIT TAKEN UNDER THE SAID SECTION COULD NOT BE DENIED ON ACCOUNT OF A SUBSEQUENT WITHDRAWAL OF APPROVAL GRANTED TO THE INSTITUTION. IN SUPPORT OF HIS AFORESAID CONTENTION THE LD. A.R HAD PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. CHOTATINGRAI TEA (2003) 126 TAXMAN 399 (SC). APART FROM THAT, IT WAS SUBMITTED BY HIM, THAT THE ISSUE PERTAINING TO DONATIONS MADE TO THE SAME INSTITUTION AND ALSO ANOTHER SIMILARLY PLACED INSTITUTION, VIZ. SCHOOL OF HUMAN GENETICS & POPULATION HEALTH WHEREIN IDENTICAL FACTS WERE INVOLVED, HAD BEEN HELD AS ALLOWABLE FOR DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT IN A HOST OF JUDICIAL PRONOUNCEMENTS BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL, AS UNDER: 1. ACIT, MUMBAI VS. SHIRISH LAKHAMSHI KENIYA ITA 5385/MUM/2018, A.Y. 2013 - 14, ITAT MUMBAI, DATED 29.01.2020. 2. M/S POOJA HARDWARE PVT. LTD VS. ASSISTANT COMMISSIONER OF INCOME, MUMBAI, ITA 3712/MUM/2018, A.Y. 2012 - 13, DATED 28.10.2019. 3. MAHESH C THAKKAR VS. ACIT, MUMBAI ITA 5121 5122/MUM/2018, A. Y.2012 - 13 AND 2014 - 15, DATED 21.08.2019. 4. BORSAD TOBACCO CO. PVT. LTD. VS. DCIT CEN CIRCLE 8(1), MUMBAI ITA 2040/MUM/2018, A.Y. 2014 - 15, DATED 17.06.2019. 5. URNISH JEWELLERS VS. ASST. CIT, MUMBAI, ITA 1583/MUM/2019, A.Y. 2012 - 13, DATED 22.05.2019. 6. M/ S MOTILAL DAHYABHAI JHAVERI & SONS VS. ASST. CIT, MUMBAI ITA 3453/MUM/2018 AND 1584/MUM/2019, AY.2013 - 14 AND 2014 - 15, DATED 24.04.2019 7. KITCHEN ESSENTIAL VS. ACIT, THANE, ITA 6672 & 6673/MUM/2013, A.Y. 2013 - 14 AND 2014 - 15, DATED 15.01.2019. 8. M/S AVIS L IFE CARE PVT. LTD .VS. DCIT, JAIPUR, ITA 989/JP/2018, AY 2014 - 15, DATED 20.06.2019. 9. NARBHERAM VISHRAM VS. DCIT CENTRAL CIRCLE, KOLKATA, ITA 42 & 43/KOL/2018, AY. 2013 - 14 AND 2014 - 15, DATED 27.07.2018 10. DCIT, KOLKATA VS. M/S MACO CORPORATION (INDIA) PV T. LTD. ITA 16/KOL/2017, AY.2013 - 14, DATED 14.03.2018. 11. RAJDA PLOYMERS VS. DCIT KOLKATA, ITA 333/KOL/2017, AY. 2013 - 14, DATED 08.11.2017 ALSO, RELIANCE WAS PLACED BY THE LD. A.R ON A HOST OF CERTAIN OTHER JUDICIAL PRONOUNCEMENTS FORMING PART OF THE ASS ESSEES PAPER BOOK (FOR SHORT APB) TO WHICH OUR ATTENTION WAS DRAWN DURING THE COURSE OF HEARING OF THE APPEAL. ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 10 ACCORDINGLY, IT WAS AVERRED BY THE LD. A.R THAT AS THE ISSUE INVOLVED IN THE PRESENT APPEAL WAS SQUARELY COVERED BY THE AFORESAID ORDERS OF TH E CO - ORDINATE BENCHES OF THE TRIBUNAL, THEREFORE, THE LOWER AUTHORITIES WERE IN ERROR IN DISLODGING THE ASSESSES CLAIM FOR DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT SINCE THE RESEARCH INSTITUTION I.E HHBRF TO WHICH DONATION WAS GIVEN BY THE ASSESSEE WAS FOUND TO BE A BOGUS INSTITUTION THAT WAS NOT DOING ANY RESEARCH ACTIVITY BUT WAS IN FACT LAUNDERING ILL - GOTTEN MONEY OF THE DONOR S , THEREFORE, THE A.O/CIT(A) HAD RIGHTLY DECLINED THE ASSESSE S CLAIM FOR DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT. ALSO, IT WAS SUBMITTED BY THE LD. D.R THAT SUBSEQUENTLY THE APPROVAL GRANTED TO THE SAID RESEARCH INSTITUTION WAS ALSO WITHDRAWN BY THE CBDT . IN ORDER TO FORTIFY HIS AFORESAID CLAIM THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT THE LD. D.R TOOK US THROUGH THE STATEMENTS OF THE DIRECTORS/EX - DIRECTOR/AUDITORS OF THE RESEARCH INSTITUTI ON, VIZ. HHBRF, WHEREIN THE FACT THAT THE INSTITUTION WAS INVOLVED IN THE RACKET OF PROVIDING BOGUS DONATIONS WAS CLEARLY ADMITTED BY THEM. ALSO, IT WAS SUBMITTED BY THE LD. D.R THAT THE FACT THAT THE AFORESAID RESEARCH INSTITUTION, VIZ. HHBRF HAD IN THE C OURSE OF THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION ADMITTED ITS INVOLVEMENT IN THE ORGANISED BOGUS DONATION RACKET BY PRODUCING AN AFFIDAVIT ON ITS OWN THEREIN PROVED TO THE HILT THAT THE LATTER WAS PROVIDING ACCOMMODATION ENTRIES IN THE GARB OF B OGUS DONATIONS. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THEM. ADMITTEDLY, THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION HAD DONATED AN AMOUNT OF RS. 60 LAC TO HHBRF . ON THE BASIS OF THE AFORESAID DONATION , THE ASSESSEE HAD IN ITS RETURN OF INCOME CLAIMED A WEIGHTED DEDUCTION U/S 35(1)(II) OF RS.1. 0 5 CRORE I.E AN AMOUNT EQUAL TO 175% OF THE AMOUNT OF DONATION OF RS. 60 LAC. AS IS DISCERNIBLE FROM THE RECORDS, IT IS AN ADMITTED FACT ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 11 THAT AT THE TIME OF MAKING OF SUCH DONATION HHBRF WAS HAVING A VALID APPROVAL GRANTED UNDER THE ACT BY THE CBDT. IN THE BACKDROP OF THE AFORESAID FACTS , WE SHALL HE REIN EXAMINE AS TO WHETHER OR NOT THE SUBSEQUENT CANCELLATION OF REGISTRATION OF HHBRF U/S 35(1)(II) BY THE CBDT VIDE ITS ORDER DATED 15.09.2016 VIZ. F.NO. 203/09/2015/ITA - II, GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DEL HI, DATED 15.09.2016 CAN INVALIDATE THE ASSESSE E S CLAIM OF DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT. FOR A FAIR APPRECIATION OF THE ISSUE UNDER CONSIDERATION WE WOULD HEREIN CULL OUT THE EXPLANATION TO SEC. 35(1)(II) OF THE ACT, WHICH IN OUR CONSIDERED VIEW WILL HAVE A STRONG BEARING ON THE ADJUDICATION OF THE ISSUE AND READS AS UNDER: 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 C LAUSE (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; NOW, IN THE CASE BEFORE US, WE FIND THAT THE AFORESAID RESEARCH INSTITUTION I.E HHBRF , AS ON THE DATE OF GIVING OF DONATION BY THE ASSESSEE WAS HAVING A VALID APPROVAL GRANTED UNDER THE ACT. ON A PERUSAL OF THE AFORESAID EXPLA NATION TO SEC. 35(1)(II) OF THE ACT, IT CAN SAFELY BE GATHERED THAT A SUBSEQUENT WITHDRAWAL OF SUCH APPROVAL CANNOT FORM A REASON TO DENY DEDUCTION CLAIMED BY THE DONOR. BY WAY OF AN ANALOGY, WE MAY HEREIN OBSERVE THAT THE HONBLE SUPREME COURT IN THE CAS E OF CIT VS. CHOTATINGRAI TEA (2003) 126 TAXMAN 399 (SC) WHILE DEALING WITH SEC. 35CCA OF THE ACT, HAD CONCLUDED, THAT A RETROSPECTIVE WITHDRAWAL OF AN APPROVAL GRANTED BY A PRESCRIBED AUTHORITY WOULD NOT LEAD TO INVALIDATION OF THE ASSESSE E S CLAIM OF DED UCTION. ON A SIMILAR FOOTING, WE FIND, THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF NATIONAL LEATHER CLOTH MFG. CO. VS. INDIAN COUNCIL OF AGRICULTURAL RESEARCH (2000) 100 TAXMAN 511 (BOM) WHILE DEALING WITH AN IDENTICAL ISSUE OF DENIAL OF DEDUCTION UNDER SEC.35(1)(II) OF THE ACT DUE TO A SUBSEQUENT WITHDRAWAL OF APPROVAL WITH RETROSPECTIVE EFFECT, HAD OBSERVED, THAT SUCH RETROSPECTIVE CANCELLATION OF REGISTRATION WILL HAVE NO EFFECT UPON THE ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 12 DEDUCTION CLAIMED BY THE DONOR SINCE SUCH DONATION WAS GIV EN ACTING UPON THE REGISTRATION WHEN IT WAS VALID AND OPERATIVE. ON A PERUSAL OF THE AFORESAID STATUTORY PROVISION I.E SEC. 35(1)(II) OF THE ACT, AS WELL AS THE RATIO LAID DOWN IN THE AFORESAID JUDICIAL PRONOUNCEMENTS IT CAN SAFELY BE CONCLUDED THAT IF THE ASSESSEE ACTING UPON A VALID REGISTRATION/APPROVAL GRANTED TO AN INSTITUTION HAD DONATED THE AMOUNT FOR WHICH DEDUCTION IS CLAIMED, THEN, SUCH DEDUCTION CANNOT BE DISALLOWED IF AT A LATER POINT OF TIME THE REGISTRATION IS CANCELLED . . WE HAVE PERUSED THE AFORESAID JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE LD. A.R AND ARE PERSUADED TO SUBSCRIBE TO HIS CLAIM THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE VIEW TAKEN BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE ABOVEMENTIONED CASES. RECENTLY, A CO - ORDINATE BENCH OF TRIBUNAL I.E ITAT MUMBAI BENCH C, MUMBAI IN THE CASE OF M/S POOJA HARDWARE PVT. LTD. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX - 13(1)(1), MUMBAI [ITA NO. 3712/MUM/2018 DATED 28.10.2019] HAD AF TER RELYING ON THE EARLIER ORDERS OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL ON THE ISSUE PERTAINING TO THE ALLOWABILITY OF DEDUCTION UNDER SEC. 35(1)(II) OF THE ACT IN RESPECT OF A DONATION GIVEN TO A SIMILARLUY PLACED INSTITUTION BEFORE THEM, VIZ. SCHOOL OF HUMAN GENETICS & POPULATION HEALTH HAD VACATED THE DISALLOWANCE OF THE ASSESSES CLAIM FOR DEDUCTION UNDER SEC.35(1)(II) OF THE ACT BY OBSERVING AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE PARTIES. IN THE CASE OF MAHESH C. THAKKER VS. ACIT (SUPRA), THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSE HOLDING AS UNDER: - 6. IN VIEW OF THE ABOVE SUBMISSIONS, IT WAS CLAIMED THAT EXACTLY ON IDENTICAL ISSUES THE CO - ORDINATE BENCH OF THIS TRIBUNAL B BENCH KOLKATA IN THE CASE OF DCIT VS. MACO CORPORATION (INDIA) PVT. LTD. IN ITA NO. 16/KOL/2017 VIDE ORDER DATED 14.03.2018 FOR AY 2013 - 14 HAS CONSIDERED THE ISSUE IN REGARD TO VERY SAME TRUST I.E. SGHPH AND HOLDS THAT PRIOR TO THE DATE OF DONATION UNDER CANCELLATION OF REGISTRATION HAS HAPPENED AND THERE IS ABSOLUTELY NO PROVISION OF WITHDRAWAL OF RECOGNITION UNDER SECTION 35(1)( II) OF THE ACT. HENCE, ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING IN PARA 8.1 AND 8.5 AS UNDER: - 8.1. THE BRIEF FACT PERTAINING TO SGHPH ARE AS UNDER: - A) SGHPH WAS RECOGNIZED VIDE GAZETTE NOTIFICATION DATED 28.1.2009 ISSUED BY THE CENTRAL BOARD O F DIRECT TAXES (CBDT IN SHORT), MINISTRY OF FINANCE (DEPARTMENT OF ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 13 REVENUE), GOVERNMENT OF INDIA, U/S 35(1)(II) OF THE ACT. B) SGHPH WAS ALSO RECOGNIZED AS A SCIENTIFIC INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY MINISTRY OF SCIENCE & TECHNOLOGY, GOVERNMENT OF INDIA. THE RENEWAL OF RECOGNITION AS SIRO BY THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH UNDER THE SCHEME ON RECOGNITION OF SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION , 1988 WAS MADE FOR THE PERIOD FROM 1.4.2010 TO 31.3.2013 VIDE COMMUNIC ATION IN F.NO. 14/473/2007 - TU - V DATED 17.6.2010. 8.2. AT THE OUTSET, WE FIND THAT THE TAXATION LAWS (AMENDMENT) ACT, 2006 WITH RETROSPECTIVE EFFECT FROM 1.4.2006 HAD INTRODUCED AN EXPLANATION IN SECTION 35 OF THE ACT WHICH READS AS UNDER: - 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, S UBSEQUENT 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. HENCE THE AFORESAID PROVISIONS OF THE ACT ARE VERY CLEAR THAT THE PAYER (THE ASSESSEE HEREIN) WOULD NOT GET AFFECTED IF THE RECOGNITION GRANTED TO THE PAYEE HAD BEEN WITHDRAWN SUBSEQUENT TO THE DATE OF CONTRIBUTION BY THE ASSESSEE. HENCE NO DISALLOWANCE U/S 35(1)(II) OF THE ACT COULD BE MADE IN THE INSTANT CASE. 7. SIMILARLY, THE ANOTHER CO - ORDINATE BENCH OF THIS TRIBUNAL, JAIPUR BENCH, IN THE CASE OF P.R. ROLLING MILLS PVT. LTD. VS. DCIT IN ITA NO. 529/JP/2019 VIDE ORDER DATED 05.07.2018 FOR AY 2014 - 15 HAS CONSIDERED THE SAME TRUST/ INSTITUTE I.E. SHG&PG AND ALLOWED THE CLAIM OF THE ASSESSEE. THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL IN THE PRESENT CASE ALSO, RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH, WE ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 35(1)(II) OF THE ACT. 8. SIMILAR, ARE THE FACTS IN AY 2014 - 15, HENCE TAKING A CONSISTENT VIEW WE ALLOW THE CLAIM OF ASSESSEE IN THIS YEAR ALSO. 7. THE ISSUE INVOLVED IN THE PRESENT CASE IS IDENTICAL TO THE ISSUE INVOLVED IN THE CASE OF MAHESH C. THAKKER VS. ACIT. SINCE, THIS ISSUE HAS BEEN DEC IDED BY THE COORDINATE BENCH IN FAVOUR OF THE ASSESSEE IN THE AFORESAID CASE, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW FROM THE VIEW ALREADY TAKEN BY THE COORDINATE BENCH. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH RENDERE D IN THE CASE OF MAHESH C. THAKKER VS. ACIT (SUPRA), WE ALLOW GROUND NO 6 & 7 OF THE ASSESSEES APPEAL AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS , AND THE FACT , THAT THE ISSUE INVOLVED IN THE PRE SENT APPEAL IS SQUARELY COVERED BY THE AFORESAID ORDERS OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL, WE FINDING NO JUSTIFIABLE REASON TO TAKE A DIFFERENT VIEW RESPECTFULLY FOLLOW THE SAME. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND VACATE THE DIS ALLOWANCE OF THE ASSESSES CLAIM FOR DEDUCTION UNDER SEC.35(1)(II) OF RS.1, 05 ,00,000/ - . THE GROUND S OF APPEAL NO. 1 AND 2 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 14 7. AS WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS AND HAD VACATED THE DIS ALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION U/S 35(1)(II) OF RS. 1.05 CRORES, THEREFORE, WE REFRAIN FROM ADVERTING TO THE CONTENTIONS ADVANCED BY THE LD. A.R AS REGARDS THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR FRAMING THE ASSESSMENT U/S 143(3) R.W.S 147, DATED 02.12.2017, WHICH HAVING BEEN RENDERED AS ACADEMIC IN NATURE ARE THUS LEFT OPEN. THE GROUNDS OF APPEAL NOS. 1 TO 4 ARE DISPOSED OFF IN TERMS OF OUR AFORESAID OBSERVATIONS. 8. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 1253/MUM/2019 A.Y 2012 - 13 . 9. WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y 2012 - 13. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ASSESSING OFFICER'S ACTION OF ISSUING NOTICE U/S.148 DATED 02.03.2017 FOR AY 201 2 - 1 3 WHICH IS BAD IN LAW SINCE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143( 3) ON 18.03.2015 . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN PASSING THE ORDER WITHOUT APPRECIATING THAT THE ASSESSING OFFICER FAILED TO PROVIDE THE COPIES OF STATEMENTS RECORDED FROM THIRD PARTY AND NO OPPORTUNITY GIVEN TO THE APPELLANT COMPANY TO CROSS - EXAMINE AND HENCE THE PROCESS OF NATURAL JUSTICE WAS NOT FOLLOWED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ID. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 WITHOUT ISSUANCE OF NOTICE U/S 143(2). 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME A) FAILED TO APPRECIATE THAT AT THE TIME WHEN THE DONATION OF RS. 15 ,00,000 / - WAS MADE BY THE APPELLANT COMPANY, THE PROPER APPROVALS/EXEMPTIONS WERE IN FORCE AND IN FAVOUR OF THE SAID TRUST I.E. SCHOOL OF HUMAN GENETICS AND POULATION HEALTH (SHG&PH). 5 ) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN PASSING THE ORDER WITHOUT APPRECIATING THAT THE CANCELLATION OF APPROVAL OF 12A IN THE SUBSEQUENT YEAR WHICH WAS EARLIER GRANTED TO THE TRUST U/S. 35(1)(II) TO ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 15 AVAIL EXEMPTION OF DONATION MADE BY THE APPELLANT COMPANY DOES NOT AFFECT THE AVAILABILITY AND GENUINENESS OF THE CLAIM MADE BY THE APPELLANT COMPANY AS HELD BY HON SUPREME COURT IN CASE OF CHOTATINGRAI TEA & ORS ETC., 258 ITR 529. THE APPELLANT COMPAN Y CRAVES THE LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT/OR BEFORE THE TIME OF HEARING. 10. BRIEFLY STATED, THE ASSESSEE COMPANY HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2012 - 13 ON 29.09.2012, DECLARING ITS TOTAL INCOME AT RS.6,88,14,580/ - . ORIGINAL ASSESSMENT WAS FRAMED BY THE A.O VIDE HIS ORDER PASSED U/S 143(3), DATED 18.03.2015 AND THE INCOME OF THE ASSESSEE COMPANY WAS ASSESSED AT AN RS. 6,92,51,860/ - . OBSERVING, THAT THE MINISTRY OF FINANCE VIDE ITS NOTIFICAT ION NO. 82/2016/F.NO.203/64/2009/ITA.II, DATED 15.09.2016 HAD WITHDRAWN THE APPROVAL THAT WAS EARLIER GRANTED U/S 35(1)(II) OF THE ACT ON 28.01.2010 TO M/S SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH (FOR SHORT S H G&PH), THE A.O FOR THE PURPOSE OF WITH DRAWING THE DEDUCTION OF RS.26,25,000/ - THAT WAS CLAIMED BY THE ASSESSEE U/S 35(1)(II) IN RESPECT OF A DONATION OF RS. 15 LAC STATED TO HAVE BEEN GIVEN TO S H G&PH REOPENED ITS CASE U/S 147 OF THE ACT. IN COMPLIANCE TO THE NOTICE ISSUED U/S 148 OF THE ACT IT WAS REQUESTED BY THE ASSESSEE THAT ITS ORIGINAL RETURN OF INCOME FILED ON 29.09.2012 MAY BE TREATED AS THE RETURN FILED IN COMPLIANCE THEREOF. ACCEPTING THE AFORESAID REQUEST OF THE ASSESSEE , THE A.O , THEREIN PROCEEDED WITH AND ISSUED NOTICES U/SS. 143(2) /142(1) TO THE ASSESSEE. ON RECEIPT OF THE COPY OF THE REASONS TO BELIEVE ON THE BASIS OF WHICH THE CASE WAS REOPENED THE ASSESSEE VIDE ITS LETTER DATED 06.09.2017 FILED OBJECTIONS WITH THE A.O. HOWEVER, THE A.O NOT FINDING FAVOUR WITH THE OBJECTIONS RAISE D BY THE ASSESSEE THEREIN REJECTED THE SAME VIDE HIS ORDER DATED 26.10.2017. 11 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD IN ITS COMPUTATION OF INCOME CLAIMED DEDUCTION OF RS. 26,25,000/ - UNDER SEC . 35(1)(II) OF THE ACT. ON A PERUSAL OF THE RECORDS, IT WAS NOTICED BY HIM THAT THE ASSESSEE HAD PAID A DONATION OF RS. 15 LAC TO A KOLKATA BASED INSTITUTION, VIZ. M/S SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH AND HAD CLAIMED DEDUCTION UNDER SEC. 35(1 )(II) OF THE ACT @ 175% ON ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 16 RS. 15 LAC WHICH WORKED OUT TO RS. 26,25,000/ - . ON BEING CALLED UPON TO SUBSTANTIATE THE BASIS FOR CLAIM OF SUCH DEDUCTION , IT WAS STATED BY THE ASSESSEE , THAT THE DONATION TO THE AFORESAID PARTY WAS GENUINE AND WAS GIVEN ON THE BASIS OF EXEMPTION CERTIFICATES ISSUED BY THE INCOME TAX DEPARTMENT. HOWEVER, THE ASSESSEE NEITHER PRODUCED ANY OF THE PARTIES/PERSONS FOR VERIFICATION NOR APPEARED PERSONALLY FOR EXAMINATION. ACCORDINGLY, SUMMONS U/S 131 WERE ISSUED BY THE A.O ON 16.11.20 07 TO BOTH THE DIRECTORS OF THE ASSESSEE COMPANY FOR VERIFYING THE GENUINENESS AND VERACITY OF THE AFORESAID DONATIONS. BUT THEN, THE ASSESSEE FAILED TO COMPLY WITH THE AFORESAID SUMMONS AND DID NOT PUT UP AN APPEARANCE BEFORE THE A.O. ANOTHER OPPORTUNITY GIVEN TO PRODUCE THE DIRECTORS FOR EXAMINATION WAS ALSO NOT AVAILED ON THE GROUND THAT SHRI. G.D SHAH, DIRECTOR WAS AN OLD PERSON AND IT WAS REQUESTED THAT IN HIS PLACE THE OTHER DIRECTOR, VIZ. SHRI. ASHIT SHAH MAY BE EXAMINED. AT THE SAME TIME, IT WAS STA TED THAT AS SHRI. ASHIT SHAH WAS TRAVELLING ABROAD FROM 21 ST TO 27 TH NOVEMBER, THEREFORE, SOME FURTHER TIME MAY BE ALLOWED FOR PUTTING UP OF AN APPEARANCE BY THE LATTER. IN THE BACKDROP OF THE AFORESAID FACTUAL CIRCUMSTANCES THOUGH THE A.O IN ALL FAIRNESS ADJOURNED THE MATTER TO 29.11.2007, HOWEVER, ADOPTING A NON - COOPERATIVE ATTITUDE EVEN ON THE SAID DATE THE ASSESSEE FAILED TO COMPLY WITH THE AFORESAID DIRECTION OF THE A.O. OBSERVING THAT THE ASSESSEE BY ADOPTING A LACKADAISICAL APPROACH HAD EVADED PUTTIN G UP AN APPEARANCE BEFORE HIM AND ALSO FAILED TO CORROBORATE THE GENUINENESS OF THE IMPUGNED DONATION GIVEN TO S H G&PH , THE A.O HELD A CONVICTION THAT AUTHENTICITY OF THE AFORESAID TRANSACTION HAD REMAINED UNPROVED. ALSO, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE COMPANY AND ITS DIRECTORS HAD MADE DONATIONS TO SUCH ALLEGED TRUSTS DURING SIMILAR PERIOD WHICH BY NO MEANS COULD BE HELD TO BE A COINCIDENCE. IT WAS FURTHER OBSERVED BY THE A.O THAT A SURVEY OPERATION WAS CONDUCTED BY THE DIRECTORATE OF INVESTIG ATION (KOLKATA) UNDER SEC. 133A OF THE ACT ON 27.01.2015 AT THE REGISTERED/ADMINISTRATIVE OFFICES OF S H G&PH , WHICH REVEALED, THAT THE SAID INSTITUTION HAD INDULGED INTO PROVIDING ACCOMMODATION ENTRIES OF BOGUS DONATIONS TO THE DONORS THROUGH A NETWORK OF B ROKERS AND ACCOMMODATION ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 17 ENTRY PROVIDERS. IT WAS GATHERED BY THE A.O THAT SMT. SAMADRITA MUKHERJEE SARDAR, SECRETARY, HAD ADMITTED IN HER STATEMENT THAT WAS RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS ON 27.01.2015 UNDER SEC. 131(1) OF THE ACT, THAT T HE AFORESAID INSTITUTION I.E SHG&PH IN LIEU OF COMMISSION WAS PROVIDING ACCOMMODATION ENTRIES OF BOGUS DONATIONS THROUGH A NETWORK OF MARKET BROKERS. ALSO, IT WAS NOTICED BY THE A.O THAT SHRI PINAKI PAL, ACCOUNTANT OF SHG&PH IN THE COURSE OF THE SURVEY PRO CEEDINGS WAS FOUND TO BE IN POSSESSION OF A NUMBER OF MESSAGES FROM THE BROKERS REGARDING BOGUS DONATIONS AND BOGUS BILLING. APART FROM THAT, IT WAS ALSO OBSERVED BY HIM THAT SHRI PINAKI PAL, HAD ADMITTED, THAT SOMETIMES THEY WOULD IN LIEU OF THE EXCESS BO GUS BILLING RECEIVE BACK THE SURPLUS AMOUNT IN CASH FROM THE BOGUS SUPPLIERS. AFTER REFERRING TO THE STATEMENTS OF THE AFOREMENTIONED PERSONS THE A.O CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY ITS CLAIM FOR DEDUCTION U/S 35(1)(II) OF THE ACT OF RS. 26,25,000/ - (175% OF RS. 15 LAC) MAY NOT BE WITHDRAWN AND SUBJECTED TO TAX. OBSERVING, THAT THE CBDT, NEW DELHI VIDE ITS ORDER, VIZ. F.NO. 203/09/2015/ITA - II, GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI, DATED 15.09. 2016 HAD WITHDRAWN THE NOTIFICATION U/S 35(1)(II) FOR THE AFORESAID RESEARCH ORGANIZATION, VIZ. SHG&PH, THE A.O, WAS OF THE VIEW THAT THE AFORESAID RESEARCH ORGANIZATION, VIZ. SHG&PH HAD NOT CARRIED OUT ANY GENUINE ACTIVITIES AND WAS ONLY ENGAGED IN THE BU SINESS OF ISSUING BOGUS DONATION RECEIPTS U/S 35(1)(II) OF THE ACT. ACCORDINGLY, IT WAS OBSERVED BY THE A.O THAT THE AFORESAID RESEARCH ORGANIZATION, VIZ. SHG&PH HAD RECEIVED HUGE NUMBER OF DONATIONS ON WHICH IT HAD EARNED SERVICE CHARGES AND AFTER DEDUCTI NG THE SAME HAD REFUNDED THE BALANCE IN CASH TO THE DONORS. ALSO, IT WAS OBSERVED BY THE A.O THAT AS THE ASSESSEE HAD FAILED TO COMPLY WITH THE SUMMONS WHICH WERE ISSUED TO IT U/S 131 OF THE ACT, THEREFORE, IT HAD FAILED TO PROVE THE GENUINENESS OF THE IMP UGNED DONATIONS GIVEN TO SHG&PH. IN THE TOTALITY OF THE AFORESAID FACTS THE A.O DISALLOWED THE ASSESSEES CLAIM FOR DEDUCTION U/S 35(1)(II) OF RS. 26,25,000/ - AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IT WAS FURTHER OBSERVED BY THE A.O, THAT AS PER THE INFORMATION SHARED BY THE ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 18 DDIT(INV.),KOLKATA, THE AFORESAID INSTITUTION VIZ. SHG&PH HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSION, KOLKATA BENCH, WHEREIN IT HAD ADMITTED THAT IN CONSIDERATION OF SERVICE CHARGES THEY HAD INDULGED IN PROVIDING OF ACCOMMODATION ENTRIES OF BOGUS DONATIONS. AS SUCH, IT WAS OBSERVED BY THE A.O THAT SHG&PH IN ITS AFORESAID PETITION HAD ADMITTED OF HAVING EARNED SERVICE CHARGES FOR PROVIDING ACCOMMODATION ENTRIES OF BOGUS DONATIONS TO THE DONORS. ALSO, IT WA S GATHERED BY THE A.O, THAT THE AFORESAID APPLICATION OF THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION HAD THEREAFTER BEEN DECIDED, VIDE ITS ORDER DATED 01.04.2015. ON THE BASIS OF THE AFORESAID FACTS, IT WAS OBSERVED BY THE A.O THAT SHG&PH HAD ADMITTED BE FORE THE SETTLEMENT COMMISSION OF ITS EARNING OF ADDITIONAL INCOME BY PROVIDING OF ACCOMMODATION ENTRIES OF BOGUS DONATIONS DURING THE YEARS 2011 - 12, 2012 - 13 AND 2013 - 14. IT WAS ALSO NOTICED BY THE A.O THAT THE CBDT VIDE ITS LETTER DATED F. NO. 203/09/2015 /ITA (II), DATED 25.09.2016 HAD WITHDRAWN THE NOTIFICATION GRANTING APPROVAL UNDER SEC.35(1)(II) OF THE ACT TO SHG&PH. ON THE BASIS OF THE AFORESAID FACTS, THE A.O WAS OF THE VIEW THAT THE ASSESSEE IN CONNIVANCE WITH SHG&PH HAD MISUSED THE PROVISION S OF SE C. 35(1)(II) AND AS A BENEFICIARY HAD OBTAINED ACCOMMODATION ENTRIES IN THE GUISE OF DONATION. IT WAS NOTICED BY THE A.O THAT DUE TO EXTENSIVE EFFORTS OF THE INVESTIGATION WING THE MODALITIES OF THE TRANSACTIONS CARRIED OUT BY THE AFORESAID INSTITUTION WER E COMPLETELY EXPOSED. ALSO, IT WAS NOTICED BY HIM THAT BEFORE THE SETTLEMENT COMMISSION, KOLKATA THE AFORESAID INSTITUTION VIZ. SHG&PH HAD ADMITTED THAT THEY HAD INDULGED IN PROVIDING ACCOMMODATION ENTRIES IN THE GUISE OF BOGUS DONATIONS AND HAD ALSO ELABO RATED UPON THE MODUS OPERANDI THAT WAS ADOPTED BY THEM. ON THE BASIS OF HIS AFORESAID OBSERVATIONS, THE A.O HELD A CONVICTION THAT THE SOLE INTENTION AND OBJECT OF THE INSTITUTION WAS NOT TO PROMOTE ANY SCIENTIFIC ACTIVITY BY PEGGING THE DONATION AT A REAL ISTIC LEVEL BUT TO BRING IN THE AMOUNT OF UNACCOUNTED FUNDS IN THE GUISE OF BOGUS DONATIONS. IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS THE A.O DISALLOWED THE ASSESSES CLAIM OF WEIGHTED DEDUCTION UNDER SEC. 35(1)(II) OF RS. 26,25,000/ - . ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 19 12 . AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). APART FROM ASSAILING THE ASSESSMENT ORDER ON MERITS THE ASSESSEE CHALLENGED THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR DISLODGING THE CONCLUDED ASSESSMENT THAT WAS EARLIER FRAMED BY HIM U/S 143(3), DATED 18.03.2015 BY REOPENING ITS CASE U/S 147 OF THE ACT. HOWEVER, THE CIT(A) NOT FINDING ANY MERIT IN THE CONTENTIONS ADVANCED BY THE ASSESSEE IN CONTEXT OF THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O U/S 147 OF THE ACT , THEREIN REJECTED THE SAME. ON MERITS, THE CIT(A) WAS NOT IMPRESSED WITH THE CLAIM OF THE ASSESSEE THAT ON THE BASIS OF A RETROSPECTIVE WITHDRAWAL OF EXEMPTION OF THE AFORESAID RESEARCH ORGANIZATION, VIZ. SHG&PH THE ASSESSEES CLAIM FOR DEDUCTION U/S 35(1 )(II) COULD BE DISLODGED. IT WAS OBSERVED BY THE CIT(A) THAT THE KEY PERSONNEL OF THE RESEARCH ORGANIZATION, VIZ. SHG&PH HAD IN THEIR STATEMENTS RECORDED ON OATH ADMITTED IN THE COURSE OF THE SURVEY PROCEEDINGS CONDUCTED AGAINST THE RESEARCH ORGANIZATION T HAT THE LATTER WAS INVOLVED IN THE BOGUS DONATION SCAM FOR EARNING COMMISSION. IT WAS FURTHER NOTICED BY THE CIT(A) THAT THE FACTUM OF THE RESEARCH ORGANIZATION, VIZ. SHG&PH OF BEING INVOLVED IN BOGUS DONATION RACKET WAS FURTHER CORROBORATED BY THE FACT TH AT THE STATEMENTS RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS WERE NEVER REBUTTED BY THE KEY PERSONNEL AT ANY STAGE BEFORE ANY AUTHORITY. ALSO, IT WAS OBSERVED BY THE CIT(A) THAT THE RESEARCH ORGANIZATION HAD THEREAFTER IN THE COURSE OF THE PROCEEDING S BEFORE THE SETTLEMENT COMMISSION ADMITTED ITS INVOLVEMENT IN THE ORGANISED BOGUS DONATION RACKET BY PRODUCING AN AFFIDAVIT ON ITS OWN. LASTLY, IT WAS OBSERVED BY THE CIT(A) THAT THE VERY FACT THAT THE CBDT HAD WITHDRAWN THE APPROVAL GRANTED TO THE RESE ARCH ORGANIZATION, VIZ. SHG&PH , THEREIN EVIDENCED THAT THE INSTITUT ION HAD MISUSED THE APPROVAL THAT WAS GRANTED TO IT U/S 35(1)(II) OF THE ACT. OBSERVING, THAT THE A.O HAD SUFFICIENT, COGENT, TANGIBLE, RELIABLE AND AUTHENTICATED PROOF TO CONCLUDE THAT THE DONATION BOOKED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT DURING THE YEAR WAS BOGUS TO EVADE TAXES AND LAUNDER MONEY THE CIT(A) UPHELD THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION U/S 35(1)(II) OF RS. 26,25,000/ - . ACCORDINGLY, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 20 13 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT WAS AVERRED BY THE LD. A.R THAT EXCEPT FOR THE FACT THAT THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION I. E A.Y 2012 - 13 WAS REOPENED U/S 147 WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, THE REMAINING FACTS AND THE ISSUE INVOLVED IN THE CASE REMAINED THE SAME AS WAS THERE BEFORE US IN ITS CASE FOR THE IMMEDIATELY PRECEDING YEAR I.E A.Y 201 1 - 12. LD. D.R DID NOT CONTROVERT THE SAID CLAIM OF THE COUNSEL FOR THE ASSESSEE. 14 . AS THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL REMAINS THE SAME AS WERE THERE BEFORE US IN ITS APPEAL FOR THE IMMEDIATELY PRECEDING YEAR I.E IN ITA NO. 1252/MU M/2019 FOR A.Y 2011 - 12, THEREFORE, OUR ORDER THEREIN PASSED SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE PRESENT APPEAL. ACCORDINGLY, IN TERMS OF OUR OBSERVATIONS RECORDED WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE FOR A.Y 2011 - 12 IN ITA NO. 1252/MUM/2019, WE HEREIN VACATE THE DISALLOWANCE OF THE ASSESSEES CLAIM OF DEDUCTION U/S 35(1)(II) OF RS. 26,25,000/ - . THE GROUNDS OF APPEAL NOS. 4 & 5 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. AT THE SAME TIME, AS WE HAVE VACATED THE D ISALLOWANCE ON MERITS, THEREFORE, WE REFRAIN FROM ADVERTING TO THE CONTENTIONS ADVANCED BY THE LD. A.R AS REGARDS THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR FRAMING THE ASSESSMENT U/S 147 OF THE ACT, WHICH , THUS, IS LEFT OPEN. THE GROUNDS OF A PPEAL NOS. 1 TO 3 ARE DISPOSED OFF IN TERMS OF OUR AFORESAID OBSERVATIONS. 15. RESULTANTLY, THE APPEALS OF THE ASSESSEE FOR A.Y 2011 - 12 IN ITA NO. 1252/MUM/2019 AND A.Y 2012 - 13 IN ITA NO. 1253/MUM/2019 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /12/2020 . SD/ - SD/ - ( M. BALAGANESH ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 14 . 12 .2020 P S : ROHIT ITA NO. 1252 & 1253 /MUM/201 9 - A.Y. 201 1 - 12 & A.Y 2012 - 13 M/S CRESCENT ORGANICS PVT. LTD. VS. DCIT 14(1)(2), MUMBAI. 21 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI