KIRIT GORDHANDAS SHAH, MUMBAI V. ITO-26(2)(1), MUMBAI

ITA 4329/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2979 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Keywords: Business income; Revised return
• Section: 80G

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri Shamim Yahya (AM) I.T.A. No. 4329/Mum/2019 (A.Y. 2014-15) Kirit Gordhandas Shah B-1601, Lake Castle Hiranandani Gardens Powai, Mumbai-400 076. PAN : AAIPS9216J Vs. ITO-26(2)(1) Bandra Kurla Complex Bandra East Mumbai-400 051. (Appellant) (Respondent) Assessee by None Department by Shri Pravin Salunkhe Date of Hearing 30.03.2022 Date of Pronouncement 05.05.2022 O R D E R This appeal by the assessee is directed against the order of learned CIT(A) dated 17.1.2019 pertains to A.Y. 2014-15. 2. The issue raised is disallowance of payment of Rs. 1,00,000/- under section 80GGA(2) of the I.T. Act. 3. Brief facts are that the Assessing Officer noted that the assessee has made a donation of Rs 1,00,000/- to M/s School of Human Genetics & Population Health ("SHG&PH"), Kolkata. Against this donation, assessee has claimed a deduction of Rs 1,75,000/-, being 175% of the paid amount, as per the provisions of Section 35 of the IT Act, 1961. Thus, in terms of Section 35, the assessee has claimed to have made an expenditure on scientific research to a research association which has its object the undertaking of scientific research. In his original return of income filed on 26.07.2014 assessee claimed expenses of Rs. 1,75,000/- under the head ‘business income’ and deducted as current year loss from ‘Business’ under the head ‘Income from House Property’. The assessee revised his return of income and claimed deduction Kirit Gordhandas Shah 2 under section 80GGA of Rs.1,00,000/- as donation and withdrawn Rs. 1,75,000/- claimed as deduction under section 35(1)(i) of the Act. The Assessing Officer made the disallowance by observing as under : “On perusal of the Return of income filed by you, it is seen that you had claimed deduction under section 35(1)(i) of Rs. 1,75,000/- on account of donation paid to ‘School of Human Genetics and Population Health in your original return of income while in revised, it had claimed deduction of Rs. 1,00,000/- under section 80GGA of the I.T. Act. In this regard, assessee was required to furnish the documentary evidence of the claim of deduction u/s.35(l)(i) and deduction claimed u/s.80GGA of the I.T. Act. Further, as per the investigation report of the Income Tax Department. It is revealed that "School of Human Genetics and Population Health" is not engaged in any activity and is being used to provide accommodation entries and bogus weighted deduction. The assessee was requested to show cause why the donation of Rs.1,75,000/- made to "School of Human Genetics and Population Health" should not be disallowed and added back to your total income and also deduction claimed u/s. 80GGA of Rs.1,00,000/- should not be disallowed and added back to the total income in absence of any documentary evidences. The assessee claimed that he has given donation of Rs.1,00,000/- to "School of Human Genetics and Population Health" is a recognized organization approved by the Central Government for the purpose of clause (ii) of sub-section (1) of Section 35 of the I.Tax Act, 1961. Thus, the donation made to "School of Human Genetics and Population Health" is eligible for deduction u/s.35(l)(i) for the assessee's having income from business and profession and u/s.8OGGA if the assessee does not have income from business and profession and u/s.8OGGA if the assessee does not have income from business and profession. The assessee has originally claimed deduction u/s. 35(l)(i) @ 175% on the donation of Rs. 1,00,000/-. However, later on when he released that there is no business income, he filed revised return and where in claimed the deduction u/s.8OGGA and thereby reversed the original deduction. The AO also recorded the statement of the assessee on 26.09.2016 u/s.131 of the IT Act. The AO observed that the assessee is receiving remuneration from M/s. Fortune Fine Insurance & Financial Solutions Pvt. Ltd. and income from house property. The assessee has also confirmed that he has claimed expenses of Rs. 1,75,000/- under the head Business Income and deducted as current year loss from business under the head income from house property in the original return of income and in the revised return of income, the assessee has claimed deduction u/s.80GGA of Rs.1,00,000/- as donation and withdrawn Rs.1,75,000/- claimed as deduction u/s.35(l)(i). The appellant agreed that he has given donation to School of Human Genetics and Population Health. The assessee also agreed to produce the details of donation made by the assessee as well as his family members. The donation made was bonafide and in good faith and was donated by me and my family members as the institution was into public welfare like education, medical relief and specialty into cancer affected families. He also informed that he did not give the donation based on the names and credentials of trustees and the donation was made on the basis of Kirit Gordhandas Shah 3 activities and the information that the assessee got from surfing of website. The donation was made by cheque and sent by post to School of Human Genetics and Population Health. The assessee was in receipt of donation made by him as well as the family members. The AO considered the contention of the assesses but found the same to be not acceptable. (iii) In view of the above discussion, it is clear that the assessee has made non-genuine donation to School of Human Genetics and Population Health with the sole motive to avail of a higher deduction for the purpose of tax evasion. This has been corroborated by the survey action and post survey inquiries as well as the no production of any donation receipts/confirmation. As a result of the survey action, the said trust had refused to cooperate with the assessee to cooperate with the assessee to confirm the genuineness of the donation. Assesses failed to submit the receipt/confirmation from School of Human Genetics and Population Health. 5.5 The AO relying on the principle of preponderance of probabilities stated that the assessee made non-genuine donation. The assessee has no obvious connection with School of Human Genetics and Population Health and has failed to provide clear details of associates through whom the assessee came in contact with School of Human Genetics and Population Health, There are inconsistencies in assessee's submissions on this. The donation is made to a trust based in Kolkata, where the assessee otherwise has no presence and such donation is not in line with other donations made by the assessee which is based in Mumbai Region or nearby areas. 5.6 The assessee has made a large sum of donation to a field of which it has very little knowledge. The AO concluded that the large weighted deduction u/s. 35(l)(i) was the dominating factor while making this donation, rather than the genuine activities being performed by the trust. This is further established from the fact that the assessee was neither aware of the trustees and officer bearers of School of Human Genetics and Population Health, nor did any serious follow-up enquiries about the use of its funds. Thus, the donation has been made against normal prudent business practices. 5.7 The office bearers of the trust have admitted to being a party in the bogus tax evasion scheme as mentioned in preceding paragraphs. Further, the money received by the trust from the assessee has been transferred to bogus parties perfectly in line with the admitted modus operand. Therefore, the donation of Rs.1,00,000/- is held to be bogus and the deduction claimed u/s. 35(l)(i) is hereby disallowed. However, in the revised return filed on 04.09.2015, assessee withdrew the deduction of Rs.75,000/- and claimed Rs.1,00,000/- u/s. 80GGA of the I.T. Act. Hence, the AO disallowed the deduction claimed u/s.80GGA.” 4. Upon assessee’s appeal learned CIT(A) confirmed the addition. 5. Against the above order assessee is in appeal before ITAT. Kirit Gordhandas Shah 4 6. I have heard learned Departmental Representative and perused the record. I find that in this case assessee has originally claimed deduction under section 80GGA(2) of the Act for a sum of Rs. 1,00,000/-. Later on assessee revised the claim to deduction under section 80G of the Act. I note that the authorities below have noted that the assessee has not produced any evidence in the form of receipt/acknowledgment from the donee for the donation made. Moreover assessee is himself unaware whether the payment is for scientific research or plain donation. Hence, I do not find any infirmity in the orders of authority below in rejecting the uncertain claim of the assessee. 7. In the result, assessee’s appeal is dismissed. Order pronounced in the open court on 05.05.2022. Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : 05/05/2022 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. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai