Kaustubhbhai Dhirajlal Patel, Ahmedabad V. DCIT, Circle-4(2), Ahmedabad

ITA 210/AHD/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1796 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Assessee Lawyers: S N DIVETIA
• Keywords: Charitable institution; Accommodation entries; Cancellation of registration
• Section: 143(3); 80G; 12A; 12AA; 48; 13; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 210/AHD/2019 (ASSESSMENT YEAR: 2014-15) KAUSTUBHBHAI DHIRAJLAL PATEL 4, DAJI COLONY, NARANPURA, AHMEDABAD VS. DCIT CIRCLE-4(2), AHMEDABAD PAN NO. AEHPP4236R ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S. N. DIVETIA, AR RESPONDENT BY : SHRI R. R. MAKWANA, SR. DR DATE OF HEARING 13 . 01 .20 2 1 DATE OF PRONOUNCEMENT 23 . 0 2 . 20 2 1 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 27.12.2018 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)-4, AHMEDABAD ARISING OUT OF THE ORDER DATED 27.06.2017 PASSED BY THE DCIT, CIRCLE-4(2), AHMEDABAD UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FO R ASSESSMENT YEAR 2014- 15. 2. THE MATTER RELATES TO ADDITION ON ACCOUNT OF DIS ALLOWANCE UNDER SECTION 35(1)((II) OF THE ACT TO THE TUNE OF RS. 26 ,50,000/- IN RELATION TO A CLAIM OF DONATION MADE TO ONE SCHOOL OF HUMAN GENET ICS & POPULATION ITA NO.210/AHD/2019 KAUSTUBHBHAI DHIRAJLAL PATEL VS. DCIT ASST.YEAR 2014-15 - 2 - HEALTH (SHG&PH) KOLKATA ON THE GROUND THAT THE SAID INSTITUTION IS ENGAGED IN PROVIDING ENTRY AND INDULGED IN LAUNDERI NG UNACCOUNTED MONEY OF THE APPELLANT. THE ALLEGATION LEVELED AGAINST T HE ASSESSEE IS THIS THAT THE ASSESSEE HAS ACCOMMODATION ENTRY IN RESPECT OF DONA TION OF RS. 15,00,000/- MADE TO THE SCHOOL OF HUMAN GENETICS & POPULATION H EALTH (SHG&PH) AND THEY CLAIMED RS. 26,50,000/- UNDER SECTION 35(1 )(II) OF THE ACT WHEREUPON A NOTICE DATED 20.02.2017 UNDER SECTION 1 48 WAS ISSUED. THE APPELLANT FURNISHED THE REPLY SUBMITTING THAT THE S AID INSTITUTION HOLD VALID CERTIFICATE UNDER SECTION 35(1)(II) ON THE DATE OF DONATION; THE RECEIPT AND CERTIFICATE WERE ISSUED, PAYMENT WERE MADE BY CHEQU ES ETC. THE SAID CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO ON THE BASIS OF THE OUTCOME OF THE SURVEY ACTION CARRIED OUT BY INVESTIGATION WING, KO LKATA ON 27.01.2015 IN THE OFFICE OF THE SAID INSTITUTION AND ON THE MODUS OPERANDI OF THE SAID INSTITUTION WHICH IS APPEARING AT PARAGRAPH 4 OF TH E ORDER PASSED BY THE LD. AO. THE CRUX OF THE OBSERVATION OF THE LD. AO IS T HIS THAT THE INSTITUTION HAS ACCEPTED THAT THEY ARE ENGAGED IN BOGUS DONATIO N UNDER SECTION 35(1)(II) OF THE ACT THROUGH VARIOUS BROKERS IN LIE U OF COMMISSION. THIS DONATIONS ARE TAKEN BY CHEQUE/RTGS AND UPON TAKING COMMISSION, THE SAME IS ROUTED BACK TO THE DONOR IN THE FORM OF CAS H VIDE 3-4 LAYERS AFTER BOGUS DEALING OR OTHER ACCOMMODATION ENTRIES IN THE BOOKS OF THE SAID INSTITUTION. THE LD. CIT(A) AFFIRMED SUCH ORDER HO LDING IT A TYPICAL CASE OF LAUNDERING OF UNACCOUNTED MONEY. THE APPELLANT HAS ALTERNATIVELY SUBMITTED AN ADDITIONAL GROUND THAT BENEFIT OF DONA TION TO THE CHARITABLE TRUST UNDER SECTION 80G OF THE ACT SHOULD BE GIVEN AS INSTITUTION HAVING REGISTRATION UNDER SECTION 12A OF THE ACT. NEEDLES S TO MENTION THE SAME ITA NO.210/AHD/2019 KAUSTUBHBHAI DHIRAJLAL PATEL VS. DCIT ASST.YEAR 2014-15 - 3 - HAS ALSO NOT DECIDED IN FAVOUR OF THE ASSESSEE. HE NCE, THE INSTANT APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LD. ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE CASE IS SQUARELY COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. M/S. THAKKAR GOVINDBHAI GANPATLAL-HUF REPORTED IN T AX APPEAL NO. 881 OF 2019 IN CASE OF AN IDENTICAL ISSUE. FURTHER THA T THE ISSUE IS ALREADY BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY THE LD. TRIBUN AL OF MUMBAI BENCH IN ITA NO. 2224/MUM/2019 FOR A.Y. 2014-15 IN THE CASE OF M/S. GUJARAT AGROCHEM PVT. LTD. VS. ACIT. APART FROM THAT THE LD. COUNSEL APPEARING FOR THE ASSESSEE RELIED UPON THE JUDGMENT PASSED BY THE CO-ORDINATE BENCH I N ITA NO. 1149/AHD/2018 IN THE MATTER OF BIPIN PRABHUDAS SHAH -HUF VS. ITO FOR A.Y. 2014-15 WHEREIN THE IDENTICAL ISSUE HAS BEEN D ECIDED IN FAVOUR OF THE ASSESSEE WERE THE DONATION WAS MADE TO THE SAME INS TITUTION AS HAS BEEN DONE BY THE APPELLANT BEFORE US A COPY OF EACH OF T HE JUDGMENT PASSED BY THE HONBLE SUPREME COURT AND THE LD. TRIBUNAL HAS BEEN DULY SUBMITTED BEFORE US. 4. THE LD. DR HAS BEEN FAILED TO CONTROVERT THE CON TENTION MADE BY THE LD. AR IN RELATION TO THE ISSUE INVOLVED IN THE MAT TER DECIDED IN FAVOUR OF THE ASSESSEE. 5. IT IS RELEVANT TO MENTION THAT THE APPELLANT HAS MADE PAYMENT OF RS. 15,00,000/- AS DONATION FOR THE A.Y. 2014-15 TO THE INSTITUTION I.E. SCHOOL OF ITA NO.210/AHD/2019 KAUSTUBHBHAI DHIRAJLAL PATEL VS. DCIT ASST.YEAR 2014-15 - 4 - HUMAN GENETICS & POPULATION HEALTH (SHG&PH) WHEN TH E SAID INSTITUTION HAS VALID REGISTRATION UNDER SECTION 35(1)(II) OF T HE INCOME TAX ACT BY AND UNDER NOTIFICATION NO. 35/2008/F. NO. 203/135/2007/ ITA II DATED 14.03.2018. FURTHER THAT THE SAID DONEE SCHOOL OF HUMAN GENETICS & POPULATION HEALTH IS ALSO A REGISTERED INSTITUTION UNDER SECTION 12AA OF THE ACT AND CERTIFICATE OF EXEMPTION UNDER SECTION 80G( 5) OF THE ACT BY THE COMMISSIONER OF INCOME TAX (EXEMPTION) KOLKATA UNDE R LETTER DATED 03.02.2005. IT IS THE CASE OF THE APPELLANT THAT S INCE THE REGISTRATION OF THAT INSTITUTION WAS CANCELLED BY THE MINISTRY OF FINANC E ON 06.09.2016 AT THE TIME OF MAKING DONATION BY THE APPELLANT THE SAID I NSTITUTION WAS HOLDING THE GENUINE REGISTRATION UNDER SECTION 35(1)(II) OF THE ACT. AND, THEREFORE, ON THAT SCORE ALONE THE DISALLOWANCE HOLDING THE SA ID INSTITUTION ENGAGED IN LAUNDERING OF UNACCOUNTED MONEY IS NOT SUSTAINABLE IN THE EYE OF LAW, TAKING INTO CONSIDERATION THE DATE OF CANCELLATION OF REGISTRATION OF THE SAID INSTITUTION AS ON 06.09.2016. 6. WE HAVE HEARD THE RESPECTIVE PARTIES AND WE HAVE ALSO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. 7. UPON PERUSAL OF THE JUDICIAL PRONOUNCEMENT AS RE LIED UPON BY THE LD. COUNSEL APPEARING FOR THE ASSESSEE IT APPEARS THAT THE ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE. WHILE DEALING WITH THE ISSUE THE COORDINATE BENCH IS OBSERVED AS FOLLOWS:- 6. WE HAVE ALSO CAREFULLY CONSIDERED THE JUDGMENT PASSED BY THE LD. TRIBUNAL IN ITA NO. 2318/AHD/2017 FOR A.Y. 2014-15, THE RELE VANT PORTION DEALING WITH THE ISSUE IS AS FOLLOWS:- ITA NO.210/AHD/2019 KAUSTUBHBHAI DHIRAJLAL PATEL VS. DCIT ASST.YEAR 2014-15 - 5 - 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. IN THE CASE OF S.G. VAT CARE P.L TD. (SUPRA), THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDING: 2.IN THE FIRST GROUND OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 8,75,000/- ON ACCOUNT OF ALLEGED BOGUS DONATION TO HERBICURE HEA LTHCARE BIO- HERBAL RESEARCH FOUNDATION. 3.BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED RETURN OF INCOME ON 20.11.2014 DECLARING TOTAL INCOME AT RS. 4,47,910/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED THAT THE AS SESSEE-COMPANY HAS GIVEN DONATION TO HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION,CALCUTTA. A SURVEY ACTION WAS CARRIED O UT AT THE PREMISES OF THE DONEE WHEREIN IT REVEALED TO THE R EVENUE THAT THIS CONCERN WAS MISUSING THE BENEFIT OF NOTIFICATION I SSUED BY THE INCOME TAX DEPARTMENT. IT HAS BEEN GETTING DONATIONS FROM VARIOUS SOURCES, AND AFTER DEDUCTING CERTAIN AMOUNT OF COMMISSION, THESE DONATIONS WERE REFUNDED IN CASH. ON THE BASIS OF THAT SURVEY REPORT REGISTRATION GRANTED TO ITS FAVOUR WAS CANCELLED. ON THE BASIS OF THE OUTCOME OF THAT SURVEY REPORT, THE LD.AO CONSTRUED THE DONATI ON GIVEN BY THE ASSESSEE AS BOGUS. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONT ENDED THAT DONATIONS WERE GIVEN ON 25.3.2014. AT THAT POINT O F TIME, DONEE WAS NOTIFIED AS ELIGIBLE INSTITUTION AND FAL L WITHIN THE STATUTORY ELIGIBILITY CRITERION. CERTIFICATE FOR RECEIVING D ONATION WAS CANCELLED ON 5.9.2016. THERE IS NO MECHANISM WITH THE ASSESS EE TO VERIFY WHETHER SUCH DONEE WAS A GENUINE INSTITUTE OR NOT, WHICH CAN AVAIL DONATION FROM THE SOCIETY. 5.THE LD. DR, ON THE OTHER HAND, CONTENDED THAT IN THE INVESTIGATION IT CAME TO KNOW ABOUT BOGUS AFFAIRS CONDUCTED BY THE DONEE. HENCE, THESE DONATIONS ARE RIGHTLY BEEN TR EATED AS BOGUS, AND ADDITION IS RIGHTLY MADE. 6.WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE AO IS HARPING UPON AN INFORM ATION SUPPLIED BY THE SURVEY TEM OF CALCUTTA. HE HAS NOT SPECIFIC ALLY RECORDED STATEMENT OF REPRESENTATIVES OF THE DONEE. HE HAS NOT BROUGHT ON RECORD A SPECIFIC EVIDENCE WHEREIN DONEE HAS DEPOS ED THAT DONATIONS RECEIVED FROM THE ASSESSEE WAS PAID BACK IN CASH A FTER DEDUCTING COMMISSION. ON THE BASIS OF A GENERAL INFORMATION COLLECTED FROM THE DONEE, THE DONATION MADE BY THE ASSESSEE CANNOT BE DOUBTED. NEITHER REPRESENTATIVES OF THE DONEE HAVE BEEN PUT TO CROS S-EXAMINATION, NOR ANY SPECIFIC REPLY DEPOSING THAT SUCH DONATION WAS NOT RECEIVED, OR IF RECEIVED THE SAME WAS REPAID IN CASH, HAS BEEN BRO UGHT ON RECORD. ITA NO.210/AHD/2019 KAUSTUBHBHAI DHIRAJLAL PATEL VS. DCIT ASST.YEAR 2014-15 - 6 - IN THE ABSENCE OF SUCH CIRCUMSTANCES, DONATION GIV EN BY THE ASSESSEE TO THE DONEE, ON WHICH THE ASSESSEE NO ME CHANISM TO CHECK THE VERACITY, CAN BE DOUBTED, MORE PARTICULARLY, W HEN CERTIFICATE TO OBTAIN DONATION HAS BEEN CANCELLED AFTER TWO YEARS OF THE PAYMENT OF DONATION. IT IS FACT WHICH HAS BEEN UNEARTHED SUBS EQUENT TO THE DONATIONS. THEREFORE, THERE CANNOT BE ANY DISALLO WANCE ON THIS ISSUE. WE ALLOW THIS GROUND. 6. THERE IS NO DISPARITY ON THE FACTS. ON THE BASI S SAME SURVEY REPORT, THE GENUINENESS OF THE DONATION HAS BEEN DOUBTED IN THE CASE OF THE ASSESSEE ALSO. THEREFORE, THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT IN THE CASE OF S.G. VAT CARE P. LTD., WE DO NOT FIND ANY MERIT IN THE APPEA L OF THE REVENUE. IT IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. FROM THE ABOVE JUDGMENTS IT APPEARS THAT THE CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND IN THE ABSENCE OF ANY CH ANGED FACTS AND CIRCUMSTANCES OF THE CASE WE FIND IT FIT TO ALLOW THE APPEAL PREFERR ED BY THE ASSESSEE. THUS, ADDITION IS HEREBY DELETED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THUS, RESPECTFULLY RELYING UPON THE SAME WE DO NOT HESITATE TO ALLOW THE APPEAL FILED BY THE ASSESSEE BY DELETING THE DI SALLOWANCE MADE BY REVENUE TO THE TUNE OF RS. 26,50,000/- RELATING TO THE CLAIM OF DONATION MADE BY THE ASSESSEE TO SCHOOL OF HUMAN GENETICS & POPULATION HEALTH(SHG&PH). WE, THEREFORE, DELETE SUCH DISALLO WANCE MADE BY REVENUE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/02/2021 SD/- SD/- SD/- SD/ (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/02/2021 TRUE COPY TANMAY, SR. PS TRUE COPY ITA NO.210/AHD/2019 KAUSTUBHBHAI DHIRAJLAL PATEL VS. DCIT ASST.YEAR 2014-15 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD