Sugati Beach Resort Pvt. Ltd., Ahmedabad V. DCIT, Circle-4(1)(1), Ahmedabad

ITA 2284/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0680 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 20-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Section: 143(3); 133A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (CONDUCTING THROUGH VIRTUAL COURT) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 2284/AHD/2018 (ASSESSMENT YEAR: 2014-15) SUGATI BEACH RESORT PVT. LTD. SUZLON-5, SHRIMALI SOCIETY, NR. SHRI KRISHNA CENTRE, NAVRANGPURA, AHMEDABAD VS. DCIT CIRCLE-4(1)(1), AHMEDABAD [PAN NO. AACCS1152Q] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI TUSHAR HEMANI, SR. ADV., WITH SHRI P. B. PARMAR, A.R. RESPONDENT BY: SHRI L. P. JAIN, SR. D.R. DATE OF HEARING: 01/06/2021 DATE OF PRONOUNCEMENT: 15/07/2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL IS FILED BY THE ASSESSEE DIRECTE D AGAINST THE ORDER DATED 24.10.2018 PASSED BY THE LD. CIT (APPEALS)-8, AHMED ABAD ARISING OUT OF THE ORDER DATED 29.09.2016 PASSED BY THE DCIT, CIRCLE-4(1)(1) , AHMEDABAD UNDER SECTION 143(3) OF THE INCOME ACT, 1961 (HEREINAFTER REFERRE D AS TO THE ACT) FOR A.Y. 2014-15. 2. THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEDUCTION UNDER SECTION 35(1)(II) OF THE ACT TO THE TUNE OF RS. 26,25,000/- IN RESPECT OF DONATION MADE TO ONE HERBICURE HEALTH CARE BIO-HERBAL RESEARCH FOUN DATION (HHEBRH IN SHORT). THE IMPUGNED DISALLOWANCE HAS BEEN MADE ON THE COUNT THAT AS PER INFORMATION RECEIVED BY THE DDIT (INVESTIGATION), K OLKATA A SURVEY UNDER SECTION - 2 - ITA NO.2284/AHD/2018 SUGATI BEACH RESORT PVT. LTD. V S. DCIT A.Y. 2014-15 133A WAS CARRIED OUT IN THE CASE OF THIS PARTICULAR ORGANIZATION NAMELY HERBICURE HEALTH CARE BIO-HERBAL RESEARCH FOUNDATION ON 27.01 .2015 AND IT WAS FOUND THAT DONORS/BENEFICIARIES IN CONNIVANCE WITH DONEE AND W ITH ACTIVE HELP OF CERTAIN BROKERS, ENTRY OPERATORS/BOGUS BILLERS WERE ENGAGED IN ARRANGING THESE ENTRIES OF BOGUS DONATION. AS THE CASE MADE OUT BY THE REVENU E THIS WAS ON THE BASIS OF THE STATEMENT MADE BY CERTAIN PERSONS RECORDED IN THE S AID SURVEY PROCEEDING. THE ASSESSEE HAS DONATED 15,00,000/- ON 28.02.2014 TO T HE SAID ORGANIZATION ENGAGED IN SCIENTIFIC RESEARCH ACTIVITY AND CLAIMED WEIGHTED D EDUCTION AMOUNTING TO RS. 26,25,000/- UNDER SECTION 35(1)(II) OF THE ACT @ 1 75% OF THE OF THE DONATION MADE. HOWEVER, SUCH CLAIM OF THE ASSESSEE HAS BEEN REJECTED BY THE AUTHORITIES BELOW. HENCE, THE INSTANT APPEAL BEFORE US. 3. IT IS THE CASE OF THE REVENUE THAT THE CERTIFICA TE FOR RECEIVING DONATION OF THAT INSTITUTION WAS CANCELLED ON 06.09.2016 AND THEREFO RE, THE ASSESSEES CLAIM IS BOGUS. IN RESPONSE WHEREOF THE ASSESSEE SUBMITTED THAT THE DONATION RECEIVED FROM THE ASSESSEE HAS BEEN UTILIZED FOR ACTIVITIES PERTA INING TO SCIENTIFIC RESEARCH. FURTHERMORE, THERE IS NO EVIDENTIARY VALUE ON THE S TATEMENT MADE DURING THE SURVEY PROCEEDING ON THE BASIS OF WHICH THE ADDITION HAS B EEN MADE. IN THIS ASPECT, THE LD. AR RELIED UPON THE JUDGMENT PASSED BY THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. KHADER KHAN SON, REPORTED IN 25 TAXMANN. COM 413 (SC). APART FROM THAT THE ASSESSEE WAS NEVER CONFRONTED WITH THE INF ORMATION FORWARDED BY THE DDIT (INV.), KOLKATA. SINCE NO ANOTHER MATERIAL WA S CONFRONTED TO THE ASSESSEE IT WOULD NOT CONSTITUTE AS ADMISSIBLE EVIDENCE AND T HEREFORE, ANY ADDITION MADE ON SUCH BASIS IS LIABLE TO BE DELETED AS SUBMITTED BY THE LD. SR. COUNSEL APPEARING FOR THE ASSESSEE. IN THIS REGARD, THE JUDGMENT PASSED IN THE MATTER OF ANDAMAN TIMBER INDUSTRIES VS. CCE, REPORTED IN (2015) 62 TAXMANN.C OM 3 (SC) WAS RELIED UPON BY THE LD. AR CONTENDING THAT NO CROSS-EXAMINATION HAS BEEN AFFORDED TO THE ASSESSEE - 3 - ITA NO.2284/AHD/2018 SUGATI BEACH RESORT PVT. LTD. V S. DCIT A.Y. 2014-15 IN THE ABSENCE OF WHICH NO ADDITION COULD HAVE BEEN MADE BASED ON SUCH STATEMENT. FINALLY THE CERTIFICATE OF THE INSTITUT ION WAS CANCELLED AND WITHDRAWN BY THE CBDT ONLY ON 06.09.2016 MUCH AFTER THE DONATION WAS MADE ON 28.02.2014. IT WAS FURTHER SUBMITTED BEFORE US BY THE LD. AR TH AT IN IDENTICAL MATTERS THE HONBLE JURISDICTIONAL HIGH COURT AND THE CO-ORDINA TE BENCH PASSED JUDGMENTS DELETING SUCH ADDITIONS MADE IN RESPECT OF THE DONA TION MADE TO THE SAME ORGANIZATION IN THE ABSENCE OF ANY SPECIFIC EVIDENC E THAT THE DONEE HAS DEPOSED THAT DONATIONS RECEIVED FROM THE ASSESSEE WAS PAID BACK IN CASH AFTER DEDUCTING COMMISSION. ON THE BASIS OF GENERAL INFORMATION CO LLECTED FROM THE DONEE, THE DONATION MADE BY THE ASSESSEE CANNOT BE DOUBTED. T HUS, THE IMPUGNED ADDITION IS LIABLE TO BE DELETED AS THE PRAYER MADE BY THE LD. AR. 4. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DER PASSED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES, AND WE HAVE ALSO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD INCLUDING JUDGMENTS AS NARRATED BY THE LD. AR. 6. THE SUBMISSION MADE BY THE LD. AR HAS BEEN DULY CONSIDERED BY US. IN FACT, THE CASE MADE OUT BY THE ASSESSEE HAS EARLIER BEEN TAKEN INTO CONSIDERATION BY THE CO-ORDINATE BENCH IN IDENTICAL ISSUE IN ITA NO. 2318/AHD/2017 IN THE MATTER OF ACIT VS. M/S. THAKKAR GOVINDBHAI GANPATLAL HUF . IN THAT PARTICULAR JUDGMENT THE JUDICIAL PRONOUNCEMENT IN THE MATTER O F S.G. VAT CARE PVT. LTD. VS. ITO IN ITA NO. 1943/AHD/2017 HAS BEEN TAKEN INTO CO NSIDERATION WHERE THE FACT WAS IDENTICAL IN NATURE. THE RELEVANT PORTION OF T HE SAID IS AS FOLLOWS:- 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. IN THE CASE OF S.G.VAT CARE P.LTD. (SUPRA), THE TRIBUNAL HAS RE CORDED THE FOLLOWING FINDING: - 4 - ITA NO.2284/AHD/2018 SUGATI BEACH RESORT PVT. LTD. V S. DCIT A.Y. 2014-15 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 AC COUNT OF ALLEGED BOGUS DONATION TO HERBICURE HEALTHCARE 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 SCRUTIN Y OF THE ACCOUNTS, IT REVEALED THAT THE ASSESSEE-COMPANY HAS GIVEN DONATION TO HERBICURE HE ALTHCARE BIO-HERBAL RESEARCH FOUNDATION, CALCUTTA. A SURVEY ACTION WAS CARRIED O UT AT THE PREMISES OF THE DONEE WHEREIN IT REVEALED TO THE REVENUE THAT THIS CONCER N WAS MISUSING THE BENEFIT OF NOTIFICATION ISSUED BY THE INCOME TAX DEPARTMENT. I T 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 REPOR T REGISTRATION GRANTED TO ITS FAVOUR WAS CANCELLED. ON THE BASIS OF THE OUTCOME OF THAT SURV EY REPORT, THE LD.AO CONSTRUED THE DONATION 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 CONTE NDED THAT DONATIONS WERE GIVEN ON 25.3.2014. AT THAT POINT OF TIME, DONEE WAS NOTIFIE D AS ELIGIBLE INSTITUTION AND FALL WITHIN THE STATUTORY ELIGIBILITY CRITERION. CERTIFICATE FO R RECEIVING DONATION WAS CANCELLED ON 5.9.2016. THERE IS NO MECHANISM WITH THE ASSESSEE T O 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 TREATED 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 INFORMATION SUPPLIED BY THE S URVEY TEM OF CALCUTTA. HE HAS NOT SPECIFICALLY RECORDED STATEMENT OF REPRESENTATIVES OF THE DONEE. HE HAS NOT BROUGHT ON RECORD A SPECIFIC EVIDENCE WHEREIN DONEE HAS DEPOSE D THAT DONATIONS RECEIVED FROM THE ASSESSEE WAS PAID BACK IN CASH AFTER DEDUCTING COMM ISSION. 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 CROSS-EXAMINATION, NOR ANY SPECIFIC REPLY DEPOSING THAT SUCH DONATION WAS NOT RECEIVED, OR IF RECEIVED THE SAME WAS REPAID IN CASH, HAS BEEN BROUGHT ON RECORD. IN THE ABSENCE OF SUCH CIRCUMSTANCES, DONATION GIVEN BY THE ASSESSEE TOTHE DONEE, ON WHIC H THE ASSESSEE NO MECHANISM TO CHECK THE VERACITY, CAN BE DOUBTED, MORE PARTICULARLY, WH EN CERTIFICATE TO OBTAIN DONATION HAS BEEN CANCELLED AFTER TWO YEARS OF THE PAYMENT OF DO NATION. IT IS FACT WHICH HAS BEEN UNEARTHED SUBSEQUENT TO THE DONATIONS. THEREFORE, T HERE CANNOT BE ANY DISALLOWANCE ON THIS ISSUE. WE ALLOW THIS GROUND. 6. THERE IS NO DISPARITY ON THE FACTS. ON THE BASIS SAME SURVEY REPORT, THE GENUINENESS OF THE DONATION HAS BEEN DOUBTED IN THE CASE OF THE ASSESS EE ALSO. THEREFORE, THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. RESPECT FULLY FOLLOWING THE ORDER OF THE ITAT IN THE CASE OF S.G.VAT CARE P.LTD., WE DO NOT FIND ANY MER IT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. - 5 - ITA NO.2284/AHD/2018 SUGATI BEACH RESORT PVT. LTD. V S. DCIT A.Y. 2014-15 IT APPEARS FROM THE AFORESAID OBSERVATION MADE BY THE CO-ORDINATE BENCH ON THE IDENTICAL CASE THAT THE LD. TRIBUNAL ADDRESSED ALL THAT ISSUES AS RAISED BY THE LD. AR BEFORE US. RESPECTFULLY RELYING UPON THE SAME W E FIND THAT THE ADDITION MADE MERELY ON THE BASIS OF THE STATEMENT MADE DURING TH E SURVEY PROCEEDING AND IN THE ABSENCE OF ANY EVIDENCE SHOWING THE DONATION RECEIV ED BY HHBRF RETURNED BACK IN CASH TO THE ASSESSEE AFTER TAKING COMMISSION THE SAID TRANSACTION CANNOT BE HELD TO BE BOGUS. MORESO, WITHDRAWAL OF APPROVAL BY THE CBDT AS WAS GRANTED TO THE SAID HHBRF WAS ONLY ON 06.09.2016 I.E. MUCH AFTER T HE DONATION MADE BY THE ASSESSEE. PRINCIPALLY, EVEN IF SUBSEQUENTLY FOR AN Y REASON IF APPROVAL GRANTED IS WITHDRAWN THE DEDUCTION CLAIMED CANNOT BE DENIED. WE, THUS, ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE MADE UNDER SECTION 35(1)(II) OF THE ACT IS NOT SUSTAINABLE IN THE EYE OF LAW AND HENCE QUASHED . IN THE RESULT, THE ADDITION MADE BY THE AUTHORITIES IS HEREBY DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 15 / 0 7 /20 21 SD/- SD/- (WASEEM AHMED) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/07/2021 TANMAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE PCIT- AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD