Nilraj Marketing Pvt. Ltd, Ahmedabad V. ITO, Ward-3(1)(1), Ahmedabad

ITA 1844/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8357 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Section: 271(1)(c); 80G; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.1844/AHD/2018 / ASSTT. YEAR: 2014-15 NILRAJ MARKETING P.LTD. 210, SAKAR-3 NR. INCOME TAX CIR. ASHRAM ROAD AHMEDABAD. PAN : AABCN 3444 M VS. ITO, WARD-3(1)(1) AMBAWADI AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PARIMAL SINGH B. PARMAR REVENUE BY : SHRI L.P.JAIN, SR.DR ! / DATE OF HEARING : 21/01/2020 '#$ ! / DATE OF PRONOUNCEMENT: 22/01/2020 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-9, AHMEDABAD DATED 20.6.2018 PASSED FOR T HE ASSTT.YEAR 2014-15. 2. THOUGH THE ASSESSEE HAS RAISED AS MANY AS SIX GR OUNDS, BUT ONLY ISSUE INVOLVED IN THESE GROUNDS OF APPEAL IS THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.2,16,300/- LEVIED BY TH E AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF DISALLOWANCE OF DONATION OF RS.7.00 LAKHS MADE UNDER SECTION 35(1)( II) OF THE ACT. ITA NO.1844/AHD/2018 2 3. WE WOULD TAKE NOTE OF BRIEF FACTS FROM MATERIAL AVAILABLE ON RECORD. THAT THE ASSESSEE IS A COMPANY ENGAGED IN MARKETING. IT HAS FILED ITS RETURN OF INCOME ON 24.9.2014 DECLARING T OTAL LOSS OF RS.11,41,301/-, WHICH WAS SUBSEQUENTLY REVISED ON 2 8.4.2016 DECLARING LOSS OF (-)RS.4,31,169/-. AS PER THE INFORMATION R ECEIVED FROM DIRECTORATE OF INVESTIGATION (KOLKATTA) ASSESSEE HA S INDULGED IN GIVING BOGUS DONATION TO ONE SCHOOL OF HUMAN GENETICS & PO PULATION HEALTH TO EXTENT OF RS.7.00 LAKHS. BASED ON THIS INFORMATION , THE AO REOPENED THE ASSESSMENT BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. IT WAS EXPLAINED BY THE ASSESSEE THAT DONATION WAS GIV EN TO THAT INSTITUTION BASED ON THE CERTIFICATE OF REGISTRATIO N ISSUED BY WEST BENGAL GOVERNMENT. IN SUPPORT OF ITS CLAIM, THE ASSESSEE HAS FURNISHED FOLLOWING DOCUMENTS TO PROVE THAT DONATION MADE BY THE ASSESSEE WAS ON THE BASIS OF GENUINE DOCUMENTS: A) COPY OF DONATION RECEIPT B) REQUEST FOR THE DONATION BY THE INSTITUTE C) CERTIFICATE OF REGISTRATION OF THE SOCIETY BY WE ST BENGAL GOVT. D) LETTER OF EXEMPTION ISSUED TO THE SOCIETY U/S.12 A BY THE DIRECTOR OF INCOME-TAX (EXEMPTION) E) RENEWAL OF APPROVAL BY THE DIRECTOR OF INCOME-TA X (EXEMPTION- KOLKATA) F) COPY OF OFFICIAL GAZETTE, GOVERNMENT OF INDIA FO R SUCH EXEMPTION G) LETTER OF MINISTRY OF SCIENCE AND TECHNOLOGY FOR THE RENEWAL OF THE RECOGNITION OF SCIENTIFIC AND INDUSTRIAL RESEARCH O RGANIZATION DTD.1.4,2013 GRANTING RENEWAL UPTO 31.3.2016. H) COPY OF PAN OF THE INSTITUTE 4. CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY T HE AO AND HELD THAT THAT THE INSTITUTION TO WHOM ASSESSEE HAS MADE THE ALLEGED DONATION WAS A NON-GENUINE, AND THEREFORE, THE DONA TION GIVEN BY THE ASSESSEE WOULD NOT QUALIFY FOR DEDUCTION UNDER SECT ION 35(1)(II) OF THE ACT. THEREAFTER, THE LD.AO INITIATED PENALTY PROCE EDINGS AND IMPOSED PENALTY OF RS.7,00,000/- UNDER SECTION 271(1)(C) OF THE ACT. AGAINST THIS ORDER, ASSESSEE PREFERRED APPEAL BEFORE THE LD .FIRST APPELLATE ITA NO.1844/AHD/2018 3 AUTHORITY, WHICH DID NOT YIELD ANY RELIEF TO THE AS SESSEE, HENCE, THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LD.COUSNEL FOR THE ASSESSEE REITE RATED SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES. HE FURT HER SUBMITTED THAT DONATION WAS MADE TO THE DONEE ON THE BASIS OF THE DOCUMENTS FURNISHED, AND PAYMENT OF DONATION WAS MADE THROUGH RTGS. AT THE TIME OF PAYMENT OF DONATION, DONEE WAS STATED TO BE ELIGIBLE INSTITUTION AND FALL WITHIN THE STATUTORY ELIGIBILITY CRITERION , AND THEREFORE, THERE WAS NO REASON FOR THE ASSESSEE TO DOUBT THE CREDIBILITY OF THE DONEE- INSTITUTION. IT IS THEREFORE PRAYED THAT SINCE THE IMPUGNED DONATION WAS MADE ON THE BASIS OF SOME CREDIBLE DOCUMENTS, IMPOS ITION OF PENALTY IS UNWARRANTED AND LIABLE TO BE CANCELLED. ON THE OT HER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. WE FIND THAT THE ASSESSEE HAS M ADE THE ALLEGED DONATION BASED ON DOCUMENTS FURNISHED TO IT, WHICH CANNOT BE SAID TO BE MALA FIDE . THE REGISTRATION UNDER SECTION 80G OF THE ACT OF THE DONEE WAS CANCELLED AFTER FILING OF THE RETURN OF I NCOME, WHEN THE ASSESSEE HAS PAID THE DONATION AND CLAIMED DEDUCTIO N IN THE RETURN. AT THAT POINT OF TIME, THE DONEE WAS IN EXISTENCE LEGA LLY WITH ALL ELIGIBLE CONDITIONS. THEREFORE, THE ASSESSEE COULD NOT FORE SEE THE FACT THAT THIS DONATION WOULD BE TERMED AS BOGUS. THE DEPARTMENT HAS MADE INVESTIGATION AFTER THE CLAIM WAS MADE BY THE ASSES SEE, AND MORE SO, IT IS A FACT REVEALED TO THE AO BY THE INVESTIGATION W ING OF THE DEPARTMENT AT KOLKATTA. NOTHING WAS CONFRONTED WIT H THE ASSESSEE NOR ANYBODY FROM THE DONEE WAS CONFRONTED TO THE ASSESS EE. THERE IS NO INVESTIGATION AT THE END OF THE REVENUE TO PIN POIN T THAT THESE AMOUNTS WERE ROUTED BACK TO THE ASSESSEE. THUS, THE EXPLAN ATION OF THE ASSESSEE WAS NOT FOUND TO BE FALSE. DURING THE COU RSE OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD CO PY OF THE ORDER ITA NO.1844/AHD/2018 4 PASSED BY THE ITAT IN ITA HO.2318/AHD/2017 IN THE C ASE OF ACIT VS. M/S.THAKKAR GOVINDBHAI GANPATLAL (HUF). IN THIS CA SE THE TRIBUNAL HAS UPHELD THE ALLOWANCE OF DEDUCTION OF SUCH DONATION IN THE QUANTUM. THUS WHAT TO TALK OF PENALTY, EVEN QUANTUM ADDITION HAS BEEN DELETED BY THE REVENUE AUTHORITIES, AND SUCH DELETION HAS B EEN UPHELD. IN VIEW OF THE ABOVE, THE IMPUGNED PENALTY IS DELETED AND G ROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 22 ND JANUARY, 2020 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 22/01/2020