MET PRO CHEMICALS , MUMBAI V. ITO 17 (2)(5), MUMBAI

ITA 1511/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7976 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHARAT ANDHDLE
• Keywords: Charitable institution; Principle of natural justice; Retrospective amendment; Cancellation of registration; Reassessment proceedings
• Section: 143(3); 72; 131

Judgement Text

ITA NO. 1511/MUM/2019 ASSESSMENT YEAR: 2010 - 11 PAGE 1 OF 4 INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH, MUMBAI [CORAM: JUSTICE P.P BHATT (PRESIDENT)] AND PRAMOD KUMAR (VICE PRESIDENT)] ITA NO. 1511/MUM/2019 ASSESSMENT YEAR: 2010 - 11 MET PRO CHEMICALS .. APPELLANT 208, ALANKAR BUILDING, SAMUEL STREET, MASJID BANDER, MUMBAI 400003 [PAN: AABFM0950E] VS. INCOME TAX OFFICER 17 (2)(5) MUMBAI. .. RESPONDENT APPEARANCES: MANOJ PANDIT FOR THE APPELLANT BHARAT ANDHDLE FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : DECEMBER 24, 2021 DATE OF PRONOUNCEMENT : MARCH 0 3 , 2021 O R D E R PER PRAMOD KUMAR, VP: 1. THIS APPEAL, FILED BY THE ASSESSEE, CALLS INTO QUESTION THE CORRECTNESS OF THE ORDER DATED 18 TH DECEMBER 2018 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2010 - 11. 2. G ROUND NO. 1 TO 4 THE ASSESSEE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCES: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN LAW AND IN FACTS IN TREATING DONATION OF RS. 5,00,000 PAID TO NAVJEEVAN TRUST ON 17/03/2010.THE TRUST WAS REGISTERED U/S 3SAC VIDE NOTIFICATION NO. SO 121(E) DTD.12.01.2009 ISSUED FROM FILE NO. NC - 274/17/2008 AT THE ESTIMATED COST OF RS.39.11 CR. FOR FINANCIAL YRS.2008 - 09,2009 - 10 AND 2010 - 11. HOWEVER, THE CANCELLATION OF REGISTRATION OF SAID TRUST WAS DONE ON 20/12/2016 I.E AFTER THE PAYMENT FOR DONATION WAS MADE TO THE TRUST ON 11.03.2010. I.E A LMOST AFTER A PERIOD OF 5 YEARS AND 9 MONTHS. THE ASSESSES HAS GIVEN DONATION TO ABOVE TRUST BY A/C PAYEE CHEQUE ONLY. ITA NO. 1511/MUM/2019 ASSESSMENT YEAR: 2010 - 11 PAGE 2 OF 4 2. 35 AC: IT HAS BEEN CLARIFIED BY WAY EXPLANATION THAT THE DEDUCTION SHALL NOT BE DENIED MERELY ON THE GROUND THAT SUBSEQUENT TO THE P AYMENT OF SUCH SUM BY THE ASSESSES, THE APPROVAL GRANTED TO SUCH PROGRAM OF RURAL DEVELOPMENT OR TO THE ASSOCIATION OR INSTITUTION HAS BEEN WITHDRAWN. HOWEVER DEDUCTION CANNOT BE DISALLOWED BECAUSE OF LACK OF RESPONSE FROM PAYEE INSTITUTION TO NOTICES UNDE R SECTION 131 AND ON CONSEQUENT PRESUMPTION THAT THESE INSTITUTIONS WERE NONEXISTENT. 3. PROVISIONS DOES NOT SPECIFICALLY PROVIDE FOR THE WITHDRAWAL OF THE AUTHORIZATION. POWER TO GRANT APPROVAL IMPLIES POWER TO WITHDRAW APPROVAL. HOWEVER SUCH WITHDRAWAL OF APPROVAL CAN ONLY BE PROSPECTIVELY AND CANNOT GIVE RETROSPECTIVE EFFECT. 4. HENCE IT IS URGED THAT THE DONATION PAID BY THE COMPANY BE ALLOWED AS REGISTRATION IS CANCELLED / WITHDRAWN ON LATER DATE. 3. LEARNED REPRESENTATIVE FAIRLY AGREED THAT THI S ISSUE IS COVERED BY THE DECISION OF TRIBUNAL IN THE CASE OF ASSESSEE SISTER CONCERN I.E. BHAVITA CHEMICALS PVT. LTD., IN FAVOUR OF THE ASSESSEEE. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER THE ORDERS OF THE AUTHORITIES BELOW. 4. WE FIND THAT IN THE CASE OF THE BHAVITA CHEMICALS PVT. LTD., VS ITO IN (ITA NO. 3665/MUM/2019) ORDER DATED 01.12.2020. THIS TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: - 4. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW PERUSED. THE ASSESSEE MADE DONATI ON OF RS.5,00,000/ - TO NCT IN MARCH, 2010 AND CLAIMED THE BENEFIT OF DEDUCTION UNDER SECTION 35AC OF THE ACT IN ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010 - 11. SUBSEQUENTLY, SEARCH ACTION WAS CARRIED OUT IN THE CASE OF NCT AND IT WAS FOUND THAT THE TRUST WAS ISSUING BOGUS DONATION RECEIPTS. ON THE BASIS OF SEARCH ACTION, THE ASSESSEE'S CLAIM OF DEDUCTION IN ASSESSMENT YEAR 2010 - 11 WAS DISALLOWED IN REASSESSMENT PROCEEDINGS. THE CONTENTION OF THE REVENUE IS THAT THE DONATION AMOUNT PAID BY THE ASSESSEE TO NCT HAS FLOWN BACK TO THE ASSESSEE. I FIND THAT NO POSITIVE EVIDENCE IS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT ON THE DATE OF DONATION MADE BY THE ASSESSEE, NCT WAS NOT HOLDING VALID REGISTRATION CERTIFICATE. ON THE CONTRARY, THE ASSESSEE HAS FILED EVIDENCE TO SHOW THAT NCT WAS HOLDING VALID REGISTRATION CERTIFICATE FROM THE DEPARTMENT ON THE DATE OF DONATION AND THE SAME WAS SUBSEQUENTLY RENEWED IN 2011. THIS FACT IS EVIDENT FROM NOTIFICATION ISSUED BY MINISTRY OF FINANCE DATED 30/11/2010 AT PAGE 70 TO 72 OF THE PAPER BOOK. IT IS FURTHER OBSERVED THAT ON THE BASIS OF STATEMENT/EVIDENCE COLLECTED AT THE BACK OF ASSESSEE, THE CLAIM OF DEDUCTION UNDER SECTION 35AC OF THE ACT HAS BEEN DISALLOWED IN PROCEEDINGS UNDER SECTION 147 R.W.S. 148 OF THE ACT. IT IS A WELL SETTLED LAW THAT ANY EVIDENCE COLLECTED AT THE BACK OF ASSESSEE IF NOT PUT TO THE ASSESSEE FOR CROSS - EXAMINATION WOULD RESULT IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IN THE INSTANT CASE THE ASSESSEE ASKED FOR CROSS - EXAMINATION OF THE TRUST EE , HOWEVER, THE SAME WAS REJECTED BY THE ASSESSING OFFICER.THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF ANDMAN TIMBER INDUSTRIES VS. CCE, 62 TAXMANN.COM 3 HAS HELD THAT NOT PROVIDING OPPORTUNITY TO CROSS - EXAMINE THE WITNESS IS A SERIOUS FLAW WHICH R ENDERS THE ORDER NULLITY. THE ITA NO. 1511/MUM/2019 ASSESSMENT YEAR: 2010 - 11 PAGE 3 OF 4 IMPUGNED ORDER IS LIABLE TO BE QUASHED ON THIS GROUND ALONE. IT IS FURTHER OBSERVED THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SUBSTANTIATE THAT THE DONATION MADE BY ASSESSEE THROUGH BANKING CHANNEL H AS BEEN RECEIVED BACK BY ASSESSEE IN CASH. THE ASSESSMENT ORDER AND THE IMPUGNED ORDER HAS BEEN PASSED PURELY ON ASSUMPTIONS AND PRESUMPTIONS. 5. THE CO - ORDINATE BENCH IN THE CASE OF JADSTONE TRADING PVT. LTD., (SUPRA), DELETED THE ADDITION MADE FOR SIMIL AR REASONS IN RESPECT OF DONATION MADE TO NCT, HOLDING THAT IN THE ABSENCE OF ANY EVIDENCE ON RECORD THAT THE AMOUNT HAS BEEN RECEIVED BACK BY THE ASSESSEE FROM THE CHARITABLE TRUST, THE ADDITION IS SOLELY BASED ON SURMISES AND CONJECTURES AND, HENCE, IS U NSUSTAINABLE. I FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE, HENCE, SAME ARE ACCEPTED AND THE IMPUGNED ORDER IS QUASHED. 5. WE SEE NO REASONS TO TAKE ANY VIEW OF THE MATTER TH A N THE VIEW SO TAKEN BY THE TRIBUNAL. RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE PLEA OF THE ASSESSEE AND DELETE THE IMPUGNED DISALLOWANCE OF RS RS.5,00,000/ - 6. GROUNDS NO 1 TO 4 ARE THUS ALLOWED IN THE TERMS INDICATED ABOVE. 7. GROUND NO. 5 THE ASSESSEE APPEL LANT HAS RAISED FOLLOWING GRIEVANCE: - 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS.), ERRED IN LAW AND IN FACTS IN NOT ALLOWING MOTOR CAR EXPENSE AMOUNTING TO RS. 39,358/ - EVEN THOUGH ASSESSES SUO MOTO HAD DISALLOWED 20% OF RS. 98,396 (OUT OF TOTAL MOTOR CAR EXPENSE) AS PER PAST PRACTICE AND RS. 78,716 WAS CLAIMED AS EXPENSE, OF WHICH LEARNED C1T(A) DISALLOWED RS. 39,358 / - RESULTING IN TOTAL DISALLOWANCE OF 60%. HEN CE ASSESSEE MUST GET RS. 39,358/ - FURTH ER CREDIT FOR CAR EXPENSE (MOTOR CAR EXPENSES/ PETROL BILLS) DISALLOWED EXCESSIVELY. 8. LEARNED COUNSEL FOR THE ASSESEEE HOWEVER, DID NOT PRESSED THIS GRIEVANCE ON ACCOUNT OF SMALLNESS OF AMOUNT AND LEFT THE MATTER TO US. WE THEREFORE DISMISS THE GROUND HAS NOT PRESSED. GROUND NO 5 IS THUS DISMISSED. 9. I N THE RESULT APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 0 3 R D MARCH , 2021. S D / - S D / - JUSTICE P.P BHATT PRAMOD KUMAR ( PRESIDENT ) (VICE PRESIDENT) MUMBAI, DATED THE 0 3 R D DAY OF MARCH 2021. ITA NO. 1511/MUM/2019 ASSESSMENT YEAR: 2010 - 11 PAGE 4 OF 4 COPIES TO: (1) THE APPLICANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI