M/S P. R. ROLLING MILLS P. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, JAIPUR

ITA 529/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6378 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA J DHK
• Assessee Lawyers: O P AGARWAL
• Keywords: Principle of natural justice; Opportunity of cross examination; Bonafide belief; Source of fund; Retrospective amendment; Accommodation entries; Competent authority; Cancellation of registration
• Section: 133A; 80G; 12A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 529/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 M/S P.R. ROLLING MILLS PVT. LTD., C-5, SAWAI MANSINGH HIGHWAY, BANIPARK, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCP 4072 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) & SHRI O.P. AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/06/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 05/07/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 21/03/2018 FOR THE A.Y. 2014- 15. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED IN THE YEAR 1997 UNDER THE COMP ANIES ACT, 1956 AND IS MAINLY ENGAGED IN MANUFACTURING OF ROLLED ST EEL PRODUCTS WHICH IS CALLED AS HOT ROLLING OF STEEL. RETURN OF INCOME FO R THE YEAR UNDER APPEAL WAS FILED ELECTRONICALLY ON 26.09.2014 DECLARING TOT AL INCOME AT RS. ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 2 3,19,04,990 /-. THE CASE WAS SELECTED FOR SCRUTINY AND DETAILS AND EXPLANATIONS SOUGHT BY THE AO WERE PROVIDED AND ASSE SSMENT WAS COMPLETED VIDE ORDER DATED 26.12.2016 BY MAKING DIS ALLOWANCE OF WEIGHTED DEDUCTION CLAIMED U/S 35(1)(II) OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT) TOWARDS THE DONATION OF RS. 1.00 CROR E MADE TO A SOCIETY ENGAGED IN SCIENTIFIC RESEARCH AND THEREBY DETERMIN ING TOTAL INCOME AT RS.4,94,04,990/-. THE LD. CIT(A) HAS CONFIRMED THE AC TION OF THE ASSESSING OFFICER. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS. 1,7 5,00,000/- MADE BY WAY OF DISALLOWANCE OF DEDUCTION U/S 35 OF THE I .T. ACT, 1961 ARBITRARILY AND MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. THUS, THE ADDITION OF RS. 1,75,00,000 /- DESERVES TO BE DELETED. 1.1 THAT, THE LD. CIT(A) HAS FURTHER ERRED IN HOLDI NG THAT THE DONATION GIVEN BY APPELLANT AS ACCOMMODATION ENTRY SOLELY ON THE BASIS OF STATEMENTS OF CERTAIN PERSONS RECORDED BEHIND THE B ACK OF THE ASSESSEE BY SOME OTHER OFFICER, WITHOUT EVEN ALLOWI NG THE OPPORTUNITY TO CROSS-EXAMINE SUCH PERSONS IN SPITE OF SPECIFIC REQUESTS BEING MADE BY APPELLANT. THUS, THE ADDITIO N OF RS. 1,75,00,000/- DESERVES TO BE DELETED. 1.2 THAT, THE AO HAS FURTHER ERRED IN IGNORING THE FACT THAT THE APPROVAL GRANTED TO THE SAID INSTITUTION U/S 35(1)( II) OF THE ACT WAS IN EXISTENCE AS ON THE DATE WHEN DONATION WAS GIVEN BY THE APPELLANT, AND WAS RESCINDED BY CBDT IN SUBSEQUENT ASSESSMENT YEARS, AND THEREFORE DID NOT AFFECT THE DEDUCTABILI TY OF THE ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 3 PAYMENT MADE BY APPELLANT PREVIOUS TO SUCH RESCISSI ON. THUS, THE ADDITION OF RS. 1,75,00,000/- DESERVES TO BE DELETE D. 1.3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN RELYIN G UPON THE SETTLEMENT PETITION FILED BY THE INSTITUTE WHICH IN NO WAY HAS ANY BEARING ON THE CASE OF THE APPELLANT, THUS SUCH OBSERVATION OF THE LD.CIT(A) DESERVES TO BE IGNORED AND EXCLUDED. 1.4 THAT THE LD.CIT(A) HAS FURTHER ERRED AND BASED HIS FINDING ON THE ORDER OF ITSC IN THE CASE OF THE INSTITUTE WITHOUT PROVIDING OPPORTUNITY TO THE APPELLANT TO REBUT THE SAME, THU S THE SAME IS IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AN D THE CONSEQUENT ORDER BASED ON SUCH VIOLATION DESERVE TO BE QUASHED . 2. THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF APPEAL. 4. GROUNDS NO. 1 TO 1.4 OF THE APPEAL ARE INTERLINK ED AND THE MAIN ISSUE INVOLVED IN THE APPEAL IS CONFIRMING THE ADDI TION OF RS. 1,75,00,000/- MADE BY WAY OF DISALLOWANCE OF DEDUCTION U/S 35 OF TH E ACT BY THE LD. CIT(A). THE LD. CIT(A) HAS DEALT THE ISSUE IN PARAGRAP H NO. 3.1.2 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: 3.1.2 DETERMINATION : (I) THE BRIEF FACTS OF THE CASE ARE THAT THE APPEL LANT COMPANY WAS ENGAGED IN MANUFACTURING OF ROLLED STEEL PRODUCTS WHICH IS CAL LED AS HOT ROLLING OF STEEL. IT FILED ITS RETURN OF INCOME FOR THE YEAR U NDER CONSIDERATION DECLARING TOTAL INCOME AT RS. 3,19,04,990/- AND THE ASSESSMEN T WAS COMPLETED WHEREIN THE DEDUCTION OF RS. 1.75 CRORE CLAIMED U/S 35(1)(II) WAS DISALLOWED AND THE TOTAL INCOME WAS DETERMINED AT RS. 4,94,04, 990/-. DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD MADE DONATIO N OF RS. 1 CRORE TO SCHOOL OF HUMAN GENETICS & POPULATION HEALTH (M/S SHG & PH), WHICH WAS NOTIFIED BY THE CBDT FOR CLAIMING DEDUCTION U/S 35(1) (II). A SURVEY U/S ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 4 133A OF THE ACT WAS CONDUCTED AT THE SAID INSTITUTE ON 27.01.2015 AND IT WAS FOUND THAT THE SAID INSTITUTE WAS PROVIDING ACC OMMODATION ENTRIES AND ACCORDINGLY, CBDT, VIDE NOTIFICATION NO. 82/2016 (F N 203/64/2009/ITA.II) DATED 15.09.2016 HAS RESCINDED THE NOTIFICATION NUM BER 4/2010 DATED 28.01.2010. DURING THE APPELLATE PROCEEDINGS, THE A PPELLANT HAS REFERRED TO THE PROVISIONS OF SECTION 35 OF THE ACT AND SUBMITT ED THAT THE AO HAS NEITHER DENIED THE FACT OF PAYMENT OF DONATION BY T HE APPELLANT, NOR HAS RAISED ANY OBJECTION REGARDING APPROVAL STATUS OF S AID INSTITUTE AT THE TIME WHEN THE PAYMENT WAS MADE BY THE ASSESSEE TO THE SA ID SOCIETY AND THUS THERE WAS NO REASON TO DISALLOW THE DEDUCTION CLAIM ED BY IT. (II) IT WAS SUBMITTED BY THE APPELLANT THAT VARIOUS SUB SECTIONS OF SECTION 35 PROVIDE TAX CONCESSIONS FOR SCIENTIFIC RESEARCH. SE CTION 35(1)(II) IN PARTICULAR, PROVIDES DEDUCTION IN CASE OF ASSESSEE WHO ARE NOT ENGAGED IN CARRYING OUT RESEARCH WORK ON THEIR OWN AND RATHER CONTRIBUTE TO SOME OTHER SCIENTIFIC RESEARCH ORGANIZATION HAVING ITS MAIN OBJECT OF UND ERTAKING SCIENTIFIC RESEARCH OR TO A UNIVERSITY, COLLEGE, OR OTHER INST ITUTION TO BE USED FOR SCIENTIFIC RESEARCH. IT WAS FURTHER SUBMITTED THAT PROVISO TO SECTION 35(1 )(II) PROVIDES THAT SUCH INSTITUTION, UNIVERSITY, COLLEGE , OTHER INSTITUTION HAS TO BE 'APPROVED FOR SUCH PURPOSES BY PRESCRIBED AUTHORIT Y. THUS, BEFORE MAKING CONTRIBUTION, AN ASSESSEE HAS TO ENSURE THAT INSTIT UTION IS APPROVED BY PRESCRIBED AUTHORITY, AND THEN SUM PAID AS DONATION WOULD ELIGIBLE FOR DEDUCTION IN ACCORDANCE WITH SECTION 35(1)(II). THU S, A COMMON PERSON/ ENTITY, WHO WISHES TO AVAIL THE BENEFIT OF SECTION 35(1)(II) BY CONTRIBUTING A SPECIFIED SUM, IS NOT SUPPOSED TO AND IN FACT IS NO T EQUIPPED WITH SO MUCH TOOLS TO VERIFY GENUINENESS OF THE ACTIVITIES OF SU CH INSTITUTION. IT IS BONAFIDE BELIEF THAT ONCE APPROVAL IS GRANTED BY CBDT, CONTR IBUTION CAN BE SAFELY MADE TO SUCH INSTITUTION MORE PARTICULARLY WHEN SUC H INSTITUTION IS NOT RELATED AT ALL AND ASSESSEE HAS NO CONTROL WHATSOEV ER OVER SUCH ACTIVITY OF SUCH INSTITUTION IN ANY MANNER. IT WAS ALSO STATED THAT IN THE INSTANT CASE ALSO, THE APPELLANT HAS ACTED UNDER BONAFIDE BELIEF THAT INSTITUTION TO WHICH ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 5 DONATION IS BEING MADE, IS ENGAGED IN RESEARCH ACTI VITY AS PER ITS OBJECTS, AS OBVIOUSLY AFTER DETAILED ENQUIRIES REPORTING INVEST IGATION ETC. THE CBDT MUST HAVE ISSUED NOTIFICATION NO. 4/2010 DATED 28.0 1.2010 TREATING THE INSTITUTE TO BE COVERED FOR SEC. 35(1 )(II). THUS, DEDUCTION CLAIMED BY ASSESSEE IS ABSOLUTELY IN ACCORDANCE WITH LAW AND D ESERVES TO BE ALLOWED. (III) IT WAS FURTHER SUBMITTED THAT DONATION OF RS . 1.00 CRORE WAS PAID BY ASSESSEE COMPANY THROUGH PAYEES ACCOUNT CHEQUE, WH ICH WAS DULY DEBITED IN ITS ACCOUNTS TO SCHOOL OF HUMAN GENETICS & POPU LATION HEALTH IN TERMS OF THE RECEIPT ISSUED BY THE SAID SOCIETY. HOWEVER, THE SAME HAS BEEN DENIED BY LD. AO SOLELY ON THE BASIS OF STATEMENTS OF SMT. MOUMITA RAGHWAN [TREASURER] AND SMT. SAMADRITA MUKHERJEE SA RDAR [SECRETARY], OF THE INSTITUTE RECORDED DURING THE COURSE OF SURVEY. IT WAS FURTHER SUBMITTED BY THE APPELLANT THAT FROM THE PERUSAL OF THE STATE MENTS OF ABOVE EXECUTIVES, IT WAS NOTICED THAT THERE ARE CONTRADIC TIONS AND ANOMALIES IN THE STATEMENTS AND THUS, IT CANNOT BE CONCLUSIVELY SAID THAT THE SOCIETY WAS NOT ENGAGED IN THE RESEARCH WORK AND HAD NOT ACTUAL LY RECEIVED THE DONATION FOR THE RESEARCH ACTIVITY ACTUALLY CARRIED OUT BY THEM. IT WAS FURTHER SUBMITTED THAT AT NO STAGE, THEY HAD ACCEPT ED THAT THE SOCIETY WAS SOLELY INDULGED IN THE ISSUE OF BOGUS DONATION RECE IPTS AS AGAINST WHICH, ACTUALLY THE SOCIETY WAS ENGAGED IN REGULAR RESEARC H WORKS WHICH IS EVIDENT FROM THE STATEMENT OF SMT. MOUMITA RAGHWAN (Q. NO. 20) AND SMT. SAMADRITA MUKHERJEE SARDAR (Q. NO. 8). IT WAS THE C ONTENTION OF THE APPELLANT THAT NOWHERE IN THE STATEMENTS, ANY OF TH E OFFICE BEARERS HAVE STATED THAT THEY HAD ISSUED ANY BOGUS DONATION RECE IPTS TO THE APPELLANT COMPANY AND THEY HAVE NOT ADMITTED THAT THEY HAD RE FUNDED THE DONATION AMOUNT RECEIVED BY THE SOCIETY TO THE APPELLANT COM PANY IN CASH OR BY ANY OTHER MODE AND THERE WAS NO SUCH DOCUMENTARY EVIDEN CE ALSO. IT WAS ALSO STATED THAT NO SUCH OPPORTUNITY OF CROSS EXAMINATIO N WAS PROVIDED BY THE AO THOUGH SPECIFIC REQUEST WAS MADE IN THIS RESPECT . ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 6 (IV) IT WAS SUBMITTED BY THE APPELLANT THAT IT IS EVIDENT THAT IN THE YEAR UNDER CONSIDERATION WHEN IT HAD MADE THE DONATION, THE SO CIETY WAS HAVING A VALID APPROVAL FROM THE APPROPRIATE AUTHORITIES ACC ORDING TO WHICH THE CLAIM OF THE APPELLANT COULD NOT BE DENIED BASED ON ANY EVENT HAVING OCCURRED SUBSEQUENTLY I.E. IN NEXT FINANCIAL YEAR. (V) IN VIEW OF THE ABOVE SUBMISSIONS, IT WAS PRAYE D BY THE APPELLANT THAT THE DEDUCTION CLAIMED BY IT WAS DULY SUPPORTED BY A VAL ID APPROVAL THROUGH GAZETTE NOTIFICATION OF THE GOVERNMENT OF INDIA WHI CH WAS NOT WITHDRAWN IN THE YEAR UNDER CONSIDERATION. THEREFORE, IN VIEW OF THE EXPLANATION TO SECTION 35(II), DISALLOWANCE MADE BY AO IN THE YEAR UNDER CONSIDERATION DESERVES TO BE DELETED. (VI) I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. THERE IS NO DISP UTE THAT AT THE TIME OF MAKING DONATION BY THE APPELLANT TO M/S SHG & PH, I T WAS APPROVED BY THE CBDT U/S 35(1 )(II), WHICH WAS SUBSEQUENTLY RESCIND ED BY NOTIFICATION DATED 15/09/2016 W.E.F. 01/04/2007. IT IS TO BE NOTED THA T AFTER SURVEY PROCEEDINGS CONDUCTED BY THE INCOME TAX DEPARTMENT IN THE CASE OF M/S SHG & PH, M/S SHG & PH HAS FILED AN APPLICATION BEF ORE THE HONBLE INCOME TAX SETTLEMENT COMMISSION, KOLKATA OFFERING ADDITIONAL INCOME OF RS. 15.75 CRORE FOR THE AY 2012-13, 2013-14 AND 201 4-15 AND THE SAME HAS BEEN ADMITTED U/S 245D(1) OF THE ACT BY THE HONBLE ITSC ON 25.03.2015. IT WOULD BE APPROPRIATE TO REPRODUCE THE RELEVANT EXTR ACTS FROM THE ABOVE REFERRED ORDER OF HONBLE ITSC AS UNDER: 9. THE ADDITIONAL INCOME WORKED OUT YEAR WISE AND DISCLOSED BEFORE THE SETTLEMENT COMMISSION IS AS UNDER: FINANCIAL YEAR ASSESSMENT YEAR AMOUNT 2011-12 2012-13 1,95,00,000 2012-13 2013-14 4,00,00,000 2013-14 2014-15 15,75,00,000 ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 7 10. IT WAS FINALLY SUBMITTED BY THE LD. AO THAT AS THE FACTS HAVE BEEN FULLY AND TRULY DISCLOSED IN THE SETTLEMENT APPLICATION B Y WAY OF SERVICE CHARGES EARNED BY THE APPLICANT BY PROVIDING ACCOMMODATION ENTRIES FOR DONATIONS RECEIVED AND REFUNDING AMOUNTS AFTER DEDUCTING SUCH SERVICE CHARGES, THE APPLICANT HAD PAID TAXES AND INTERESTS ON THE ADDIT IONAL INCOME WITH FEES OF RS. 500/-, ALONG WITH THE INTIMATION MADE TO THE AO UNDER SECTION 245C, IT WAS PRAYED, THAT THE SETTLEMENT APPLICATION SUBMITT ED U/S 245C BE ADMITTED FOR THE AFORESAID YEARS U/S 245D(1) OF THE I.T. ACT. 11. WE HAVE CONSIDERED THE ABOVE FACTS CAREFULLY. THE FACTS OF THIS CASE ARE RATHER PECULIAR IN AS MUCH AS THE ABOVE ENTITY IS A REGISTERED SOCIETY AS NOTED IN PARA 2 ABOVE. REGISTRATION UNDER SECTION I 2A HAS BEEN GRANTED BY THE 171 (EXEMPTION) ON 27,10.2004. REGISTRATION U/S HOG WAS INITIALLY GRANTED ON 27.10.2004 WAS THEREFORE ALSO AVAILABLE TO IT SINCE 12,10.2011 TILL WITHDRAWN. SIMILARLY, REGISTRATION UNDER SECTI ON 10(230) HAD BEEN GRANTED ON 27.2.2004, WHICH HAD BEEN RENEWED ON 16. 1.2014, A GAZETTE NOTIFICATION NO.4/2010 DATED 28.1.2010 HAD ALSO BEE N ISSUED BY THE CBDT IN THE MINISTRY OF FINANCE UNDER SECTION 35(1) (II) OF THE ACT. WE HAVE NOTED THAT THOUGH THE OBJECTS OF THE APPLICANT SOCIETY AR E INDEED LAUDABLE AND ENJOYED EXEMPTION FROM TAXATION, IT HAS MISUSED ITS EXEMPT STATUS UNDER DIFFERENT PROVISIONS OF LAW. AS VARIOUS APPROVALS F OR REGISTRATION ARE MANDATED BY THE PROVISIONS TO BE GRANTED BY DIFFERE NT AUTHORITIES UNDER THE LAW, THEREFORE, AT THE OUTSET, WE WOULD LIKE TO POI NT OUT THAT WE WOULD BE REFRAINING FROM DISTURBING ANY ORDER THAT THE AUTHO RITY IS EMPOWERED FOR GRANTED TO IT FOR VARIOUS YEARS, INCLUDING THE YEAR S BEFORE US. SUBJECT TO THESE REMARKS, WE ALSO FIND THAT, THOUGH SUCH INCOM E EARNED WAS IN CONTRAVENTION OF THE RELEVANT PRECISIONS OF THE ACT , PRIMA FADE, THE APPLICANT SOCIETY HAS MADE FULL AND TRUE DISCLOSURE OF ITS INCOME NOW TAXABLE IN THE RELEVANT YEARS. ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 8 12. BE THAT AS IT MAY, WE ALSO FIND THAT THE INCO ME DECLARED FOR THE ASSESSMENT YEARS RESULTS IN ADDITIONAL TAX PAYABLE WHICH EXCEEDS THE PRESCRIBED LIMITS U/S. 245C THE APPLICATION HAS PAI D FEE OF RS.500/-. THE ADDITIONAL TAX AND INTEREST OF RS.6,47,00,000/- HAS ALSO BEEN FULLY PAID IN RESPECT OF THE PROCEEDINGS PENDING OF THE ASSESSMEN T YEARS 2012-13, 2013- 14 AND 2014-15. THEREFORE,, THE APPLICATION IS ALLO WED TO BE PROCEEDED WITH U/S. 245D(LJ OF INCOME TAX ACT FOR ASSESSMENT YEARS 2012-13,2013-14 & 2014-15.' (VII) IT IS PERTINENT TO MENTION THAT M/S SHG & PH HAS ALSO PAID TAXES INCLUDING INTEREST TO THE TUNE OF RS. 6.47 CRORE ON THE INCOM E DISCLOSED BEFORE THE HONBLE ITSC. THE ABOVE INCOME WAS OFFERED FOR TAXA TION ON THE BASIS OF COMMISSION CHARGES EARNED BY M/S SHG & PH ON THE BO GUS DONATIONS RECEIVED BY IT. (VIII) IT IS TO BE NOTED THAT DURING THE SURVEY PR OCEEDINGS, THE STATEMENTS OF THE OFFICE BEARERS OF THE SAID INSTITUTE WERE RECORDED ON OATH, WHEREIN SMT. MOUMITA RAGHVAN, TREASURER OF M/S SHG & GH SINCE 20 02 AND AUTHORIZED SIGNATORY OF M/S SHG & PH STATED THAT: Q-10 PLEASE EXPLAIN IN DETAIL THE SOURCES OF INCO ME AND MAJOR HEADS OF EXPENSES OF YOUR ORGANIZATION. ANS. THE SOURCES OF INCOME OF THIS ORGANIZATION IS MAINLY OUT OF DONATION FROM CORPORATE BODIES AS WELL AS FROM INDIVIDUALS. IN FACT, WE RECEIVE DONATIONS THROUGH CHEQUES. RTGS AND SIMULTANEOUSLY WE ISSUE CHEQUES IN THE NAME OF SOME COMPANIES AND IN THIS PROCESS OUR ORGANIZATION ORIGINALLY RECEIVES @ 7% TO 8% OF THE DONATION AMOUNT. THE TOT AL PROCESS HAS BEEN MAINTAINED BY BROKERS WHOSE DETAILS ARE GIVEN AS BE LOW: I) SHRI NAVIN KUMAR CHOUCHARIA - HIS OFFICE IS AS C ENTRE POINT, 2 FLOOR, OPPOSITE GREAT EASTERN HOTEL, KOLKATA. HIS CONTACT NOS. ARE 9831498341, 8478972771. ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 9 II) SHRI MAKHAN LAI SATNANIWALA - HIS OFFICE IS AT BENTINCK STREET. 1 ST FLOOR, BESIDE HALDIRAM SHOP. HIS CONTACT NO. IS 9331023766 . III) SHRI VIJAY AGARWAL - HIS OFFICE IS AT ROOM NO. 48B. 2ND FLOOR, 207, MAHARSHI DEVENDRA ROAD. KOLKATA-7. HIS CONTACT NOS. 9051726402, 9007118177, 9051726425. IV) SHRI AMIT GUPTA - HIS OFFICE ADDRESS IS NOT KNO WN TO ME. HIS CONTACT NO IS 9804359206. V) SHRI MADAN GUPTA - HE IS BROTHER OF SHRI AMIT GU PTA. HIS OFFICE ADDRESS IS ALSO NOT KNOWN TO ME. HIS CONTACT NO. IS 8282967 343. VI) SHRI AVIJIT SINHAROY - HIS OFFICE IS AT GRANT L ANE. KOLKATA AND HIS CONTACT NOS. ARE 9674111333, 9830777757. VII) SHRI SAILESH GUPTA - HIS OFFICE ADDRESS IS NOT KNOWN TO ME. HIS CONTACT NO. IS 8013142439, 9903546784, 8017002888. VIII) SHRI YOGES AGARWAL HIS OFFICE IS AT 27. WESTO N STREET, TOP FLOOR, KOLKATA. HIS CONTACT NO. IS 9831683393. IX) SHRI GOVIND CHOUDHURI - HIS OFFICE IS NOT KNOWN TO ME. HIS CONTACT NO. IS 9831631716, 9830030496. Q. 11 HOW THE ABOVE PERSONS, AS YOU MENTIONED IN YO UR ANSWER TO QUESTION NO. 10, CAME TO KNOW THAT THEY CAN GET THIS TYPE OF SERVICES FROM YOUR ORGANIZATION, I.E. THEY CAN DONATE THEIR MONEY TO Y OU AND ROUTE BACK THEIR MONEY THROUGH YOUR ORGANIZATION? ANS. AS OUR ORGANIZATION IS ENTITLED TO RECEIVE DON ATION WHICH ARE EXEMPTED U-S.SOG AND U/S.35, THE BROKERS. SHRI AVIJIT SINHAR OY, SHRI VIJAY AGARWAI SHRI AMIT GUPTA AND SHRI MADAN GUPTA, WHO GATHERED THIS INFORMATION FROM MARKET SOURCES AND CAME TO US. PRIMARILY, THEY OFFE RED TO RECEIVE THEIR MONEY IN THE GUISE OF DONATION EXEMPTED US. 80G & U /S.35 AND THEY WILL RETURN BACK THEIR MONEY AFTER PROVIDING US ACTUAL D ONATION @ 30%. BUT FACTUALLY, WE GOT AT 3% OF TOTAL AMOUNT DURING THE FIRST YEAR WHICH HAS BEEN ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 10 RAISED TO 8% AS ON DATE. AS OUR ORGANIZATION DESPER ATELY NEEDS MONEY FOR ITS RESEARCH AND DEVELOPMENT ACTIVITIES, WE ACCEPTED TH EIR PROPOSAL. Q. 12 HOW DO YOUR ORGANIZATION ADJUST THE REFUND OF SAID AMOUNT AND IN WHAT FORM? ANS. THE DONATIONS ARE MADE MAINLY IN THE FORM OF R TGS AND A FEW OF THEM ARE IN THE FORM OF CHEQUE. THE AMOUNTS ARE RETURNED WITHIN 2 DAYS IN THE NAMES OF VARIOUS COMPANIES PROVIDED BY THE DONOR AL TER DEDUCTING THE AMOUNT OF ACTUAL DONATION (A 8%. THE RECORDS HAVE B EEN MANAGED BY ISSUING NORMALLY BACK-DATED APPEAL LETTERS TO THE D ONORS.' (IX) IT MAY FURTHER BE MENTIONED THAT THE ABOVE REF ERRED STATEMENT OF SMT. MOUMITA RAGHVAN WAS AGREED TO BY SMT. SAMADRITA MUK HERJEE SARDAR, THE FOUNDER MEMBER OF M/S SHG & PH AND SECRETARY OF M/S SHG & PH SINCE 1999, IN HER STATEMENT RECORDED ON OATH DURIN G THE COURSE OF SURVEY. THE RELEVANT EXTRACTS OF HER STATEMENT IS BEING REP RODUCED AS UNDER: Q.7 PLEASE GO THROUGH THE STATEMENT RECORDED OF SU IT. MOUMITA KAGHAVAN. TREASURER OF YOUR ORGANIZATION WHICH HAS BEEN RECORDED IN YOUR PRESENCE. DO YOU AGREE WITH THE REPLIES GIVEN IN SUIT. MOUMITA RAGHAVAN IN HER STATEMENT? ANS. YES SIR, I FULLY AGREE WITH THE STATEMENT MAD E BY SMT. MOUMITA RAGHAVAN WHICH HAS BEEN RECORDED IN MY PRESENCE. Q.I0 DURING THE COURSE OF SURVEY, NO BOOKS OF ACCOU NTS OF SOUR ORGANIZATION W.E.F. 01.04.2014 TILL DATE HAS BEEN FOUND IN YOUR OFFICE EITHER MANUALLY OR IN COMPUTERIZED FORM. WHERE DO YOU KEEP THE BOOKS OF ACCOUNTS FOR THIS PERIOD? ANS. SIR, AS I HAVE MENTIONED EARLIER, WE HAVE TO A DJUST OUR ACCOUNTS FOR THE SAID DONATIONS RECEIVED AND AS SUCH, THE DATA I N TALLY SOFTWARE IN ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 11 THE COMPUTER OF THE OFFICE IS ENTERED AT THE END OF THE FINANCIAL YEAR AFTER RECEIVING ALL THE BOGUS BILLS WHICH SUPPORTS THE BOGUS EXPENSES MADE AND REFLECTED IN OUR ACCOUNTS. THE BILLS FOR T HE SAID PERIOD HAS NOT BEEN FINALIZED AND SO NO ACCOUNTS HAS BEEN PREP ARED FOR THIS YEAR. Q.11. PLEASE EXPLAIN IN DETAIL THE SOURCES OF INCOM E AND MAJOR HEADS OF EXPENSES OF YOUR ORGANIZATION. ANS. THE SOURCES OF INCOME OF THIS ORGANIZATION IS MAINLY OUT OF DONATION FROM CORPORATE BODIES AS WELL AS FROM INDIVIDUALS. IN FACT, WE RECEIVE DONATIONS THROUGH CHEQUES, RTGS AND SIMULTANEOUSLY WE ISSUE CHEQUES IN THE NAME OF SOME COMPANIES AND IN THIS P ROCESS OUR ORGANIZATION ORIGINALLY RECEIVES COMMISSION @ 7% TO 8% OF THE DONATION AMOUNT. THE TOTAL PROCESS HAS BEEN MAINTAI NED BY THE BROKERS WHOSE DETAILS ARE GIVEN AS BELOW: I) SHRI NAVIN KUMAR CHOUCHARIA - HIS OFFICE IS AT C ENTRE POINT 2ND FLOOR, OPPOSITE GREAT EASTERN HOTEL. KOLKATA. HIS CONTACT NOS. ARE 9831498341, 847897277). II) SHRI MAKHAN LAI SATNANIWALA - HIS OFFICE AT BEN TINCK STREET. 1 ST FLOOR, BESIDE HALDIRAM SHOP. HIS CONTACT NO. IS 93 31023766. III) SHRI VIJAY AGANVAL - HIS OFFICE IS AT ROOM NO. 48 B, 2 ND FLOOR, 207, MAHARSHI DEVENDRA ROAD, KOLKATA-7. HIS CONTACT NOS. 9051726402, 9007118177, 9051726425. IV) SHRI AMIT GUPTA - HIS OFFICE ADDRESS IS NOT KNO WN TO ME. HIS CONTACT NO. IS 9804359206. V) SHRI MADAN GUPTA - HE IS BROTHER OF SHRI AMIT GU PTA. HIS OFFICE ADDRESS IS ALSO NOT KNOWN TO ME. HIS CONTACT NO. IS 8282967343. VI) SHRI AVIJIT SINHAROY - HIS OFFICE IS AT GRANT L ANE, KOLKATA AND HIS CONTACT NOS. ARE 9674111333, 9830777757. ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 12 VII) SHRI SAILESH GUPTA - HIS OFFICE ADDRESS IS NOT KNOWN TO ME. HIS CONTACT NO. IS 8013142439. 9903546784. 8017002888. VIII) SHRI YOGES AGARWAL HIS OFFICE IS AT 27. WESTO N STREET, TOP FLOOR, KOLKATA. HIS CONTACT NO. IS 9831683393. IX) SHRI GOVIND CHOUDHURI - HIS OFFICE IS NOT KNOWN TO ME. HIS CONTACT NO. IS 9831631716, 983003045. Q. 12 HOW THE ABOVE PERSONS, AS YOU MENTIONED IN YO UR ANSWER TO QUESTION NO, 10, CAME TO KNOW THAT THEY CAN GET THI S TYPE OF SERVICES FROM YOUR ORGANIZATION, I.E., THEY CAN DONATE THEIR MONEY TO YOU AND ROUTE BACK THEIR MONEY THROUGH YOUR ORGANIZATION? ANS. AS OUR ORGANIZATION IS ENTITLED TO RECEIVE DON ATION WHICH ARE EXEMPTED U/S.80G AND U/S.35, THE BROKERS, SHRI AVIJ IT SINHAROY, SHRI VIJAY AGARWAL. SHRI AMIT GUPTA AND SHRI MADAN GUPTA , WHO HAVE THIS INFORMATION FROM THEIR OWN SOURCE AND PROPOSE US TO RECEIVE AMOUNTS AS DONATION THROUGH RTGS OR CHEQUE, WHICH H AS TO BE RETURNED BACK TO THEM AND IN TURN, THEY WILL GIVE U S COMMISSION. PRIMARILY, THEY OFFERED TO RECEIVE THEIR MONEY IN T HE GUISE OF DONATION EXEMPTED U/S.80G & U/S.35 AND THEY ASSURED US THAT THEY RETURN BACK THEIR MONEY AFTER PROVIDING US ACTUAL DONATION @ 30%, BUT FACTUALLY, WE GOT @ 3% OF TOTAL AMOUNT AS COMMISSIO N DURING THE FIRST YEAR WHICH HAS BEEN RAISED .TO 8% AS ON DATE. AS OUR ORGANIZATION DESPERATELY NEEDS MONEY FOR ITS RESEAR CH AND DEVELOPMENT ACTIVITIES, WE ACCEPTED THEIR PROPOSAL. Q.13 HOW DO YOUR ORGANIZATION ADJUST THE REFUND OF SAID AMOUNT AND IN WHAT FORM? ANS. THE DONATIONS ARE MADE MAINLY THROUGH RTGS AND A FEW OF THEM ARE IN CHEQUE. THE AMOUNTS ARE RETURNED WITHIN 1 DAYS I N THE NAMES OF VARIOUS COMPANIES PROVIDED BY THE DONOR AFTER DEDUC TING THE AMOUNT ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 13 OF ACTUAL DONATION TO 8%. THE RECORDS HAVE BEEN MAN AGED BY-ISSUING NORMALLY BACK-DATED APPEAL LETTERS TO THE DONORS, ( HE MONEY WHICH HAS BEEN RETURNED BACK TO THEM IS SHOWN AS EXPENSES IN OUR BOOKS OF ACCOUNTS MAINLY UNDER THE HEAD R&D EXPENSES. (X) IT IS TO BE NOTED THAT IT HAS BEEN OBSERVED BY THE AO IN THE ASSESSMENT ORDER THAT THE CONTRIBUTION OF THE SAID INSTITUTE TO SCIE NTIFIC RESEARCH WAS NEGLIGIBLE IN CONTRAST TO THE KIND OF DONATIONS RECEIVED BY IT . IN FACT, THE RESEARCH FACILITIES LIKE INSTRUMENTS, LAB, SKILLED STAFF, ST ORAGE FACILITIES ETC. ARE ALMOST NEGLIGIBLE AT THE INSTITUTE. (XI) IT HAS ALREADY BEEN STATED EARLIER THAT THE AP PELLANT WAS ENGAGED IN THE BUSINESS OF ROLLED STEEL PRODUCTS WHICH IS CALLED A S HOT ROLLING OF STEEL AND IT HAS MADE DONATION TO SCHOOL OF HUMAN GENETICS & PO PULATION HEALTH' I.E. THERE IS NO CONNECT BETWEEN THE TWO. THOUGH THERE I S NO BAR ON MAKING DONATION TO ANY ENTITY NOT RELATED WITH THE BUSINES S OF THE APPELLANT, BUT IT IS TO BE NOTED THAT IF A DONATION IS MADE TO A SCIENTI FIC RESEARCH INSTITUTE, IT IS A NORMAL TENDENCY TO KEEP IN MIND WHAT ADVANTAGE WOUL D A PERSON WOULD BE DERIVING FROM DONATION TO SUCH RESEARCH INSTITUTE, WHETHER IT WOULD BE HELPFUL IN INVENTING A NEW PROCESS OR METHOD WHICH MAY BE B ENEFICIAL TO THE INDUSTRY OR BUSINESS OF THE PERSON CONCERNED ETC. THE APPELL ANT HAS NOT BROUGHT ON RECORD WHY SUCH DONATION WAS MADE TO THE SAID INSTI TUTE AT KOLKATTA AND HOW DID IT COME TO KNOW ABOUT THE ACTIVITIES OF M/S SHG & PH. IT IS NOTED THAT THE AMOUNT OF DONATION APPEARS TO BE RECEIVED BY M/S SH G & PH THROUGH SHRI AMIT GUPTA, A BROKER AND THE NAME OF THE APPELLANT COMPANY WAS APPEARING IN THE LIST OF BOGUS DONATION ENTRIES OBTAINED THRO UGH THE SAID BROKER. THE APPELLANT HAS NOT BROUGHT ON RECORD, ABOUT THE IDEN TITY OF SHRI AMIT GUPTA, ITS ASSOCIATION WITH THE APPELLANT COMPANY ETC. IN FACT , THE APPELLANT HAS NOT STATED ANYTHING ABOUT SHRI AMIT GUPTA AT ANY STAGE OF PROCEEDINGS SO FAR. (XII) IT IS NOTED FROM THE OFFICIAL WEBSITE OF THE INCOME TAX DEPARTMENT (HTTPS://WWW.INCOMETAXINDIA.GOV.IN/PAGES/UTILITIES/ NOTIFIED-SCIENTIFIC ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 14 RESEARCH.ASPX) THAT A NUMBER OF RESEARCH INSTITUTES HAVE BEEN APPROVED U/S 35 (1)(II) OF THE ACT, WHICH ARE LOCATED ONLY AT JA IPUR AND IN RAJASTHAN, SOME OF THEM ARE AS UNDER: * BIRLA SCIENCE & TECHNOLOGY CENTRE, JAIPUR * M/S INDIAN INSTITUTE OF HEALTH MANAGEMENT RESEAR CH, JAIPUR * SOCIAL POLICY RESEARCH INSTITUTE, JAIPUR * INDIAN INSTITUTE OF MARWARI ENTERPRENEURSHIP, JA IPUR * JAIN VISHVA BHARATI, LADNUN, RAJASTHAN, (XIII) THE APPELLANT HAS NOT STATED ANYTHING WHY IT HAD MADE SUCH HUGE DONATIONS TO M/S SHG & PH AT SUCH A FAR OFF PLACE AND WHETHER IT HAS VERIFIED ABOUT THE GENUINENESS OF ITS ACTIVITIES BEFORE MAKING SUCH HU GE DONATION. I FAIL TO UNDERSTAND WHY THE APPELLANT DID NOT CHOOSE TO MAKE DONATIONS TO THE RESEARCH INSTITUTES LOCATED AT JAIPUR OR IN THE STA TE OF RAJASTHAN. IT IS PERTINENT TO MENTION HERE THAT THE APPELLANT HAS MA DE DONATION OF RS. 1 CRORE EACH IN THREE FINANCIAL YEAR I.E. 2011-12, 20 12-13 AND 2013-14 AND HAS CLAIMED DEDUCTION OF RS. 1.75 CRORE IN EACH OF THES E YEARS. THESE FACTS CANNOT BE IGNORED. (XIV) THE APPELLANT HAS ALSO RELIED UPON EXPLANATIO N TO SECTION 35(II) & (III) OF THE ACT, WHICH READS AS UNDER: EXPLANATION- THE DEDUCTION TO WHICH ASSESSEE IS E NTITLED IN RESPECT OF ANY SUM PAID TO A [RESEARCH ASSOCIATION], UNIVER SITY, COLLEGE OR OTHER INSTITUTION TO WHICH CLAUSE(II) OR CLAUSE(III ) APPLIES, SHALL NOT BE DENIED MERELY ON THE GROUND THAT, SUBSEQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESSEE, THE APPROVAL GRANTED TO T HE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER ASSOCIATION, UNIVERSIT Y, COLLEGE OR OTHER INSTITUTION REFERRED TO IN CLAUSE(II) OR CLAUSE(III ) HAS BEEN WITHDRAWN.] [EMPHASIS SUPPLIED] (XV) IT IS TO BE NOTED THAT THE ABOVE EXPLANATION IS OF NO HELP TO THE APPELLANT AS THE DEDUCTION WAS NOT DISALLOWED BY THE AO TO THE A PPELLANT COMPANY MERELY ON THE GROUND THAT SUBSEQUENT TO SUCH PAYMEN T, THE APPROVAL GRANTED WAS WITHDRAWN BY THE COMPETENT AUTHORITY. I N FACT, IT IS THE SPECIFIC ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 15 ADMITTANCE OF THE AUTHORIZED SIGNATORIES OF M/S SHG & PH IN UNEQUIVOCAL TERMS THAT THE SAID INSTITUTE WAS USED FOR PROVIDIN G ACCOMMODATION ENTRIES OF DONATIONS TO VARIOUS PERSONS ON COMMISSION BASIS @ 8% OF SUCH AMOUNT. FURTHER, THEIR ADMISSION IN THEIR STATEMENTS WAS FO LLOWED BY FILING APPLICATION BEFORE THE HONBLE ITSC, WHEREIN THE IN COME FROM SUCH COMMISSION WAS OFFERED FOR TAXATION, AS DISCUSSED E ARLIER IN THIS ORDER AND HAS PAID THE HUGE TAXES THEREON, AS IS EVIDENT FROM THE ORDER OF HONBLE ITSC PASSED U/S 245D( 1) OF THE ACT. (XVI) THE CONTENTION OF THE APPELLANT THAT OPPORTUN ITY OF CROSS EXAMINATION WAS NOT PROVIDED TO IT BY THE AO IS DEVOID OF ANY MERIT . IT IS TO BE NOTED THAT THE AO HAS PROVIDED THE COPIES OF THE STATEMENTS RECORD ED DURING THE COURSE OF SURVEY AS RELIED UPON, TO THE APPELLANT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS I.E. IT HAS CONFRONTED THESE STATEMENTS . THE APPELLANT COULD NOT STATE WHO WAS AMIT GUPTA, WHO WORKING AS A BROKER FOR ARRANGING THE BOGUS DONATION ENTRIES AND WHY ITS NAME APPEARED IN THE LIST OF BOGUS DONATIONS ARRANGED BY HIM AND HOW DOES THE APPELLAN T HAS COME INTO CONTACT WITH HIM. FURTHER, IT IS TO BE NOTED THAT T HE STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS. IT MAY BE MENTIONED THAT THE AO IS NOT DEBARRED FROM RELYING ON PRIVATE SOURCES OF INFORMATION, WHICH HE MAY NOT DISCLOSE TO THE ASSESSEE AT ALL. BUT, WHEN HE PROPOSES TO USE THE SAME AGAINST THE ASSESSEE, THE RESULT OF ANY PRIVAT E INQUIRY, HE SHOULD COMMUNICATE TO THE ASSESSEE, THE SUBSTANCE OF SUCH INFORMATION SO AS TO PUT THE ASSESSEE IN POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND SHOULD FURTHER GIVE HIM SUFFICIENT OPPO RTUNITY TO MEET IT. ON A PERUSAL OF ASSESSMENT ORDER THAT THE AO HAS CONFRON TED TO THE APPELLANT GIST OF THE ENQUIRIES MADE AND REQUIRED IT TO EXPLA IN WHY THE DONATION TO M/S SHG & PH SHOULD NOT BE TREATED AS BOGUS. THERE IS NO DOUBT THAT AO MUST PLACE BEFORE THE ASSESSEE ALL EVIDENCE GATHERE D FROM PRIVATE SOURCES BUT HE IS NOT REQUIRED BY LAW IN EACH & EVERY CASE, TO GIVE TO THE ASSESSEE THE RIGHT TO CROSS-EXAMINE THE PARTIES FROM WHOM TH E EVIDENCE WAS ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 16 GATHERED. IN FACT, HE NEEDS NOT EVEN DISCLOSE THE N AMES OF THE PARTIES BECAUSE IN THAT EVENT CONFIDENTIALITY OF THE NAMES OF THE PARTIES WOULD NOT BE MAINTAINED. IF THE PARTIES WHO HAVE GIVEN EVIDEN CE ARE TO BE ASSURED CONFIDENTIALITY, THE QUESTION OF CROSS-EXAMINATION WOULD NOT ARISE. SUCH AN ASSESSMENT WOULD BE VALID IN LAW, SO LONG AS THE AS SESSEE HAS BEEN CONFRONTED WITH EVIDENCE GATHERED BY THE ASSESSING OFFICER FROM PRIVATE AND CONFIDENTIAL SOURCES AND THE ASSESSEE IS GIVEN THE OPPORTUNITY OF MEETING THE CASE MADE OUT IN THE ASSESSMENT ORDER. FURTHER, THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AS DECID ED IN NATH INTERNATIONAL SALES VS. UOI, AIR 1992 (DEL) 295 WHEREIN HONBLE C OURT HAS ALSO HELD THAT THE RIGHT OF HEARING DOES NOT NECESSARILY INCLUDE R IGHT OF CROSS EXAMINATION. THE RIGHT OF CROSS EXAMINATION MUST DEPEND UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED (STATE OF J& K VS. BAKSHI GULAM MOHAMMAD AIR 1967 SC 122). THE QUESTION, WHETHER TH E ASSESSEE IS ENTITLED TO CROSS EXAMINATION IS A QUESTION WHICH M AY LARGELY DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE (SHYAMLAL B IRI MERCHANT VS. UOI (1993) 68 ELT 548, 551 (ALL.) IN THE PRESENT CASE N O SUCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM A CCOMMODATION ENTRIES WERE PROVIDED BY THE M/S SHG & GH CONTAINS THE NAME OF THE APPELLANT AND THE NAME OF THE BROKER WHO ARRANGED SUCH BOGUS TRANSACTION AND THE CATEGORICAL ADMITTANCE OF THE AUTHORIZED SIGNATORIE S OF M/S SHG & GH, AS DISCUSSED EARLIER IN THIS ORDER. THE APPELLANT IS T RYING TO USE THIS SHIELD OF ABSENCE OF OPPORTUNITY OF CROSS-EXAMINE OF THE PE RSONS WHO WERE MANAGING THE SHOW. BUT THAT WILL BE MISCARRIAGE OF JUSTICE IF ASSESSEE BE GIVEN BENEFIT ON THIS ACCOUNT. EVEN, IT IS ALSO NOT POSSIBLE TO ALLOW OPPORTUNITY OF CROSS-EXAMINATION OF EACH OF THE SHA RE BROKER, ASSOCIATED CONCERN ETC. TO ALL THE BENEFICIARIES OF THE ACCOMM ODATION ENTRIES IN VIEW OF THE WIDE SPREAD OF THE BENEFICIARIES THROUGHOUT IND IA. FURTHER, THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAMESHWAR LAI M ALI VS. CIT 256 ITR 536(RAJ.) HAS HELD THAT 'THERE IS NO PROVISION FOR PERMITTING THE CROSS ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 17 EXAMINATION OF THE PERSONS WHOSE STATEMENTS WERE RE CORDED DURING SURVEY.' IT IS FURTHER NOTED THAT THE REQUIREMENT O F THE STATUTE FOR A VALID ASSESSMENT WOULD BE MET IF THE APPELLANT IS CONFRON TED WITH THE MATERIAL WHICH IS TO BE USED AGAINST THE ASSESSEE WHILE FRAM ING THE ASSESSMENT ORDER. IT MAY BE MENTIONED THAT THE APPELLANT HAS N OT BROUGHT ON RECORD ANY MATERIAL WHICH MAY INDICATE THAT THE PERSONS WH OSE STATEMENT WERE STATED IN THE ASSESSMENT ORDER AND RELIED UPON BY T HE AO, HAVE RETRACTED THEIR STATEMENTS. (XVII) IT IS PERTINENT TO MENTION HERE THAT IN THE WRITTEN SUBMISSIONS, THE APPELLANT HAS HARPED UPON THE LEGAL ISSUES ONLY AND NOT EVEN A SINGLE WORD HAS BEEN STATED ABOUT THE FINDINGS OF THE AO AS REC ORDED IN THE ASSESSMENT ORDER, REGARDING THE JUSTIFICATION FOR MAKING DONAT ION TO M/S SHG & PH EXCEPT STATING THAT M/S SHG & PH WAS APPROVED BY TH E COMPETENT AUTHORITY U/S 35 OF THE ACT. (XVIII) THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND LOOKING TO THE PARTICULARS FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THA T THE AO WAS JUSTIFIED IN NOT ALLOWING DEDUCTION OF RS. 1.75 CRORE CLAIMED BY THE APPELLANT U/S 35(1)(II) OF THE ACT AND HENCE, THE SAME IS HEREBY SUSTAINED. HENCE, THIS GROUND OF APPEAL IS HEREBY REJECTED. 5. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS SUBMITTED AS UNDER: ALL THESE GROUNDS OF APPEAL RELATE TO DISALLOWANCE OF WEIGHTED DEDUCTION CLAIMED BY ASSESSEE U/S 35(1)(II) OF THE INCOME TAX ACT, 19 61 ON THE CONTRIBUTION MADE OF RS. 1.00 CR AND ARE INTERLINKED, THUS THE SAME ARE CANVASSED TOGETHER FOR THE SAKE OF CONVENIENCE. FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CO NSIDERATION, ASSESSEE HAD MADE DONATION OF RS.1,00,00,000/- TO SCHOOL OF HUMAN GE NETICS & POPULATION HEALTH ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 18 (IN SHORT SHGPH) AN INSTITUTE ENGAGED IN SCIENTIFI C RESEARCH AND NOTIFIED BY CENTRAL BOARD OF DIRECT TAXES IN TERMS OF SECTION 3 5(1)(II) OF THE INCOME TAX ACT, 1961 (THE ACT) VIDE NOTIFICATION NO.4/2010 DATED 28 .01.2010 (F NO. 203/64/2009/ITA.II) WHICH WAS VERY WELL IN EXISTENC E AND WAS VALID DURING F.Y. 2013-14 RELEVANT TO A.Y. 2014-15 IN WHICH ASSESSEE MADE DONATION TO THE INSTITUTE (APB 25). HOWEVER, IT WAS AS LATE AS IN F.Y. 2016-17 I.E. VID E ORDER DATED 15.09.2016 THAT THE SAID NOTIFICATION WAS RESCINDED BY THE CBDT, VIDE NOTIFICATION NO.82/2016 (F N 203/64/2009/ITA.II). MOREOVER SAME WAS ORDERED TO BE DONE WITH RETROSPECTIVE EFFECT FROM 1.04.2007 (APB-39) ON THE BASIS OF SOME ENQUIRIES DONE IN THE CASE OF THE INSTITUTE I.E. SHGPH. ACCOR DINGLY, LD. AO DISALLOWED THE WEIGHTED DEDUCTION CLAIMED U/S 35(1)(II) ON THE DON ATION OF RS.1,00,00,000/-, WHICH DISALLOWANCE HAS BEEN CONFIRMED BY LD.CIT(A). AT THE OUTSET, KIND ATTENTION OF YOUR GOODSELF IS I NVITED TO PROVISIONS OF SECTION 35(1)(II), WHICH READS AS UNDER: EXPENDITURE ON SCIENTIFIC RESEARCH. 35. (1) IN RESPECT OF EXPENDITURE ON SCIENTIFIC RESEARC H, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED (I).. (II) [AN AMOUNT EQUAL TO [ONE AND THREE-FOURTH] T IMES OF ANY SUM PAID] TO A [RESEARCH ASSOCIATION] WHICH HAS AS ITS OBJECT TH E UNDERTAKING OF SCIENTIFIC RESEARCH OR TO A UNIVERSITY, COLLEGE OR OTHER INSTI TUTION TO BE USED FOR SCIENTIFIC RESEARCH : [ PROVIDED THAT SUCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION FOR THE PURPOSES OF THIS CLAUSE (A) IS FOR THE TIME BEING APPROVED , IN ACCORDANCE WITH THE GUIDELINES, IN THE MANNER AND SUBJECT TO SUCH CONDITIONS AS MAY BE PRE SCRIBED; AND (B) SUCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTH ER INSTITUTION IS SPECIFIED AS SUCH, BY NOTIFICATION IN THE OFFICIAL GAZETTE, BY THE CENTRAL GOVERNMENT ;] IT IS SUBMITTED THAT VARIOUS SUB SECTIONS OF SECTIO N 35 PROVIDE TAX CONCESSIONS FOR SCIENTIFIC RESEARCH. SECTION 35(1)(II) IN PARTICULA R, PROVIDES DEDUCTION IN CASE OF ASSESSES WHO ARE NOT ENGAGED IN CARRYING OUT RESEAR CH WORK ON THEIR OWN AND RATHER CONTRIBUTE TO SOME OTHER SCIENTIFIC RESEARCH ORGANIZATION HAVING ITS MAIN OBJECT OF UNDERTAKING SCIENTIFIC RESEARCH OR TO A U NIVERSITY, COLLEGE, OR OTHER INSTITUTION TO BE USED FOR SCIENTIFIC RESEARCH. ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 19 PROVISO TO SECTION 35(1)(II) PROVIDES THAT SUCH INS TITUTION, UNIVERSITY, COLLEGE, OTHER INSTITUTION HAS TO BE APPROVED FOR SUCH PURPOSES BY PRESCRIBED AUTHORITY. THUS, BEFORE MAKING CONTRIBUTION, AN ASSESSEE HAS TO ENSU RE THAT INSTITUTION IS APPROVED BY PRESCRIBED AUTHORITY, AND THEN SUM PAID AS DONAT ION WOULD ELIGIBLE FOR DEDUCTION IN ACCORDANCE WITH SECTION 35(1)(II). IT IS NOTEWORTHY THAT WEIGHTED DEDUCTION EQUAL TO 1 75% OF DONATION IS AVAILABLE TO ASSESSEE IF IT: (I) PAYS DONATION TO A RESEARCH INSTITUTION HAVING OBJECT OF UNDERTAKING SCIENTIFIC RESEARCH; AND (II) WHICH IS APPROVED AS WELL AS NOTIFIED FOR THE PURPOSES OF THIS SECTION IN ACCORDANCE WITH GUIDELINES PRESCRIBED. YOUR GOODSELF WOULD APPRECIATE THAT LOWER AUTHORITI ES HAVE: - NEITHER DENIED THE FACT OF PAYMENT OF DONATION BY ASSESSEE; - NOR HAVE RAISED ANY OBJECTION REGARDING APPROVAL STATUS OF SAID INSTITUTE AT THE TIME WHEN THE PAYMENT WAS MADE BY THE ASSESSEE TO T HE SAID SOCIETY. IN THIS SCENARIO, THERE IS NO REASON TO DISALLOW TH E DEDUCTION CLAIMED BY ASSESSEE WHICH WAS LEGITIMATELY AVAILABLE TO IT SINCE IT HAD COMPLIED ALL THE CONDITIONS ENUMERATED THEREIN FOR CLAIMING SUCH WEIGHTED DEDUC TION. IT IS SUBMITTED THAT CBDT IN EXERCISE TO POWER CONF ERRED UPON IT, ISSUES NOTIFICATIONS, GRANTS APPROVALS WHEREVER REQUIRED B Y THE ACT. BEFORE ISSUING SUCH NOTIFICATIONS/ GRANTING APPROVALS, CBDT MAKES NECES SARY ENQUIRIES, INVESTIGATION ETC. TO ENSURE THE GENUINENESS OF SUCH INSTITUTIONS AND AFTER ANALYSIS OF THE OBJECTS, ACTIVITIES, PERSONNEL (WHETHER THEY HOLD R EQUISITE QUALIFICATION OR NOT) ETC. NOTIFIES SUCH ORGANIZATION FOR THIS PURPOSE AND PUB LISHES IN OFFICIAL GAZETTE OF GOVERNMENT OF INDIA. THUS, A COMMON PERSON/ ENTITY, WHO WISHES TO AVAIL THE BENEFIT OF SECTION 35(1)(II) BY CONTRIBUTING A SPEC IFIED SUM, IS NOT SUPPOSED TO AND ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 20 IN FACT IS NOT EQUIPPED WITH SO MUCH TOOLS TO VERI FY GENUINENESS OF THE ACTIVITIES OF SUCH INSTITUTION. IT IS BONAFIDE BELIEF THAT ONCE A PPROVAL IS GRANTED BY CBDT, CONTRIBUTION CAN BE SAFELY MADE TO SUCH INSTITUTION MORE PARTICULARLY WHEN SUCH INSTITUTION IS NOT RELATED AT ALL TO THE ASSESSEE A ND ASSESSEE HAS NO CONTROL WHATSOEVER OVER THE ACTIVITIES OF SUCH INSTITUTION IN ANY MANNER. IN THE INSTANT CASE ALSO, ASSESSEE HAS ACTED UNDER BONAFIDE BELIEF THAT INSTITUTION (SHGPH) TO WHICH DONATION IS BEING MADE, IS ENGAGED IN RESEARCH ACTIVITY AS PER ITS OBJECTS, AS OBVIOUSLY AFTER DETAILED ENQUIRIES, REP ORTING, INVESTIGATION ETC. THE CBDT MUST HAVE ISSUED NOTIFICATION NO. 4/2010 DATED 28.01.2010 TREATING SHGPH TO BE COVERED FOR SEC. 35(1)(II). MERELY FOR THE R EASON THAT SUCH NOTIFICATION HAS BEEN RESCINDED AFTER THE EXPIRY OF MORE THAN 2 YEAR FROM THE END OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APPEAL ( PRE CISELY ON 15.09.2016) (APB 39) THAT TOO WITH RETROSPECTIVE EFFECT FROM 01.04.2007, THE LD. AO HAS MADE THE DISALLOWANCE. ACCORDINGLY, IT IS VERY MUCH CLEAR AND EVIDENT THAT APPROVAL GRANTED TO SHGPH WAS VERY MUCH IN FORCE AT THE TIME WHEN ASSESSEE MADE D ONATION TO IT AND ASSESSEE HAD NO REASON TO DISBELIEVE THE OPERATION OF APPROV AL AND NOTIFICATION OF THE SHGPH AT THE RELEVANT TIME AND THUS DEDUCTION WAS R IGHTLY CLAIMED BY ASSESSEE. THE APPROVAL AND NOTIFICATION CONTINUED TO BE IN FO RCE EVEN TILL THE END OF PREVIOUS YEAR RELEVANT TO PRESENT ASSESSMENT YEAR. DISALLOWI NG DEDUCTION BY LD. AO, ON THE BASIS OF THE SUBSEQUENT NOTIFICATION THROUGH WHICH THE CBDT HAS RESCINDED THE APPROVAL, IS UNJUST AND UNLAWFUL, AS NOT ONLY ON TH E DATE OF GIVING DONATION BUT EVEN AFTERWARDS TILL THE END OF PREVIOUS YEAR, THE NOTIFICATION OF GRANTING APPROVAL WAS IN FORCE. IF AT ALL SOME RETROSPECTIVE ACTION W AS TO BE TAKEN AGAINST SHGPH, IT SHOULD ADVERSELY AFFECT THE SOCIETY AND CANNOT AND SHOULD NOT AFFECT THE OTHER PERSONS INCLUDING THE ASSESSEE COMPANY WHO ACTED IN BONAFIDE MANNER. IT IS SETTLED PROPOSITION OF LAW THAT ANY AMENDMENT IN ST ATUTE WITH RETROSPECTIVE OPERATION CANNOT BE MADE WHICH HAD THE EFFECT OF AD DITIONAL TAX BURDEN MEANING ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 21 THEREBY ANY LEVY OF TAX WITH RETROSPECTIVE OPERATIO N CANNOT BE MADE WHICH IS AGAINST THE SPIRIT OF LAW. IT HAS BEEN HELD BY HONBLE SUPREME COURT IN THE CA SE OF HITENDRA VISHNU THAKUR VS. STATE OF MAHARASHTRA, AIR 1994 S.C. 2623 (CASE LAW PB 46-63) THAT A PROCEDURAL STATUTE SHOULD NOT GENERALLY SPEAKING BE APPLIED RETROSPECTIVELY, WHERE THE RESULT WOULD BE TO CREATE NEW DISABILITIES OR O BLIGATIONS, OR TO IMPOSE NEW DUTIES IN RESPECT OF TRANSACTIONS ALREADY ACCOMPLIS HED. FURTHER, A STATUTE WHICH NOT ONLY CHANGES THE PROCEDURE BUT ALSO CREATES NEW RIGHTS AND LIABILITIES SHALL BE CONSTRUED TO BE PROSPECTIVE IN OPERATION, UNLESS OT HERWISE PROVIDED, EITHER EXPRESSLY OR BY NECESSARY IMPLICATION. THE HONBLE APEX COURT IN THE CASE OF CIT (CENTRAL-1) DELHI VS. VATIKA TOWNSHIP PVT. LTD. REPORTED IN 367 ITR 466 (RELEVANT PARA 30-37) (CASE LAW PB 17-45) HAS HELD THAT THE BENEFICIAL AMENDMENT WHICH EFFECT THE PUBLIC GENERA LLY AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEG ISLATORS OBJECT, THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVIN G IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVEN RETROSPECTIVE EFFECT. HONBLE COURTS HAVE HELD THAT ANY RETROSPECTIVE CHA NGES OR ORDERS HAVING RETROSPECTIVE EFFECT HAVE TO BE PASSED IN RAREST CA SES WHERE IT IS VERY MUCH WARRANTED. MOREOVER THE SCOPE OF RETROSPECTIVE ORDE R IS LIMITED TO THE PERSON/ ENTITY CONCERNED (HERE IN THIS CASE THE SOCIETY I.E . SHGPH). THIS RETROSPECTIVE EFFECT CANNOT IN ANY WAY BE EXTENDED TO THIRD PARTI ES AND DOING SO WOULD NOT ONLY BE AGAINST THE SETTLED POSITION OF LAW BUT WOULD AL SO BE CLEARLY DOING UN-JUSTICE TO THIRD PARTIES WHO ACTED IN BONAFIDE MANNER. THUS FU RTHER ADVERSE ACTION IN THE HANDS OF THIRD PARTIES (LIKE THAT OF ASSESSEE) ON A CCOUNT OF RETROSPECTIVE NOTIFICATION PASSED IN THE CASE OF INSTITUTE BE HEL D AS UNJUST AND UNLAWFUL. IN FACT, THE FACT OF CANCELLATION OF NOTIFICATION W AS NOT IN THE KNOWLEDGE OF ASSESSEE TILL THE TIME IT WAS CONVEYED BY LD. AO DU RING ASSESSMENT PROCEEDINGS. THUS, ASSESSEE WAS UNDER BONAFIDE BELIEF THAT SHGPH HAS A VALID APPROVAL IN TERMS ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 22 OF THE ABOVE STATED GAZETTE NOTIFICATION AVAILABLE WITH IT WHO AFTER EXAMINING THE LEGALITY OF THE SAID APPROVAL HAS MADE THE CONTRIBU TION AND CLAIMED THE DEDUCTION. APART FROM THE ABOVE SUBMISSION, KIND ATTENTION OF THE HONBLE BENCH IS INVITED TO EXPLANATION TO SECTION 35(II) & (III), WHICH READS AS UNDER: [ EXPLANATION- THE DEDUCTION TO WHICH ASSESSEE IS ENT ITLED IN RESPECT OF ANY SUM PAID TO A [RESEARCH ASSOCIATION], UNIVERSITY, COLLE GE OR OTHER INSTITUTION TO WHICH CLAUSE(II) OR CLAUSE(III) APPLIES, SHALL NOT BE DENIED MERELY ON THE GROUND THAT, SUBSEQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESS EE, THE APPROVAL GRANTED TO THE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER AS SOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION REFERRED TO IN CLAUSE(II) OR CLAU SE(III) HAS BEEN WITHDRAWN . ] [EMPHASIS SUPPLIED] ON PERUSAL OF ABOVE, IT IS EVIDENT THAT IN THE YEAR UNDER CONSIDERATION WHEN THE ASSESSEE COMPANY HAD MADE THE DONATION I.E. ON 13.0 1.2014, SHGPH WAS HAVING A VALID APPROVAL FROM THE APPROPRIATE AUTHORITIES AND ACCORDING TO THIS EXPLANATION THE CLAIM OF THE ASSESSEE COULD NOT BE DENIED BASED ON ANY EVENT HAVING OCCURRED SUBSEQUENTLY AFTER MORE THAN TWO YEARS. THE HONBLE KOLKATA ITAT IN THE CASE OF M/S MACO CORPORATION (INDIA) PVT. LTD. ITA NO.16/KOL/2017 (CASE LAW PB 82-91) HAS ALLOWED RELIEF TO ASSESSEE IN THE IDENTICAL CIRCUMSTANCES WHERE DEDUCTION ON ACCOUNT OF DONATION TO SAME INSTITUTE I.E. SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH (SHGPH) WAS DISALLOWED BY LD. AO, BY HOLDING THAT AT THE OUTSET WE FIND THAT TAXATION LAWS (AMENDMENT) ACT 2006 HAS INTRODUCED EXPLANATION TO SECTION 35(1)(II ) OF THE ACT. THE PROVISIONS OF THE ACT, IN VIEW OF THE EXPLANATION, ARE VERY CLEAR THAT PAYER (THE ASSESSEE) WOULD NOT GET AFFECTED IF THE RECOGNITION GRANTED TO THE PAYEE HAD BEEN WITHDRAWN SUBSEQUENT TO THE DATE OF CONTRIBUTION BY THE ASSES SEE. HENCE NO DISALLOWANCE U/S 35(1)(II) OF THE ACT COULD BE MADE IN THE INSTANT C ASE. IT WAS FURTHER OBSERVED BY THE HONBLE TRIBUNAL THA T THERE IS ABSOLUTELY NO PROVISION FOR WITHDRAWAL OF RECOGNITION U/S 35(1)(I I) AND CASE OF ASSESSEE FALLS ON MUCH BETTER FOOTING THAN THE FACTS BEFORE HONBLE A PEX COURT IN THE CASE OF ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 23 INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION ( GWALIOR) M.P. LTD. VS CIT GWALIOR AS IN THAT CASE, THE POWER OF CANCELLATION OF REGIS TRATION U/S 12A OF THE ACT WAS CONFERRED BY THE ACT ON THE LD. CIT W.E.F. 01.1 0.2004 AND THE HONBLE APEX COURT HELD THAT PRIOR TO THAT DATE, CANCELLATION OF REGISTRATION COULD NOT HAPPEN. BUT IN THE INSTANT CASE, THERE IS ABSOLUTELY NO PRO VISION FOR WITHDRAWAL OF RECOGNITION U/S 35(1)(II) OF THE ACT. MOREOVER IT W AS ALSO HELD THAT THE WITHDRAWAL OF RECOGNITION U/S 35(1)(II) OF THE ACT IN THE HAND S OF THE PAYEE ORGANIZATIONS WOULD NOT AFFECT THE RIGHTS AND INTERESTS OF THE AS SESSEE HEREIN FOR CLAIM OF WEIGHED DEDUCTION U/S 35(1)(II) OF THE ACT. THUS, DEDUCTION CLAIMED BY ASSESSEE IS ABSOLUTELY I N ACCORDANCE WITH LAW AND DESERVES TO BE ALLOWED. IT IS FURTHER SUBMITTED THAT WHILE CONFIRMING THE O RDER OF LD. AO, LD. CIT(A) HAS FURTHER OBSERVED THAT : - THE DONEE INSTITUTE I.E. SHGPH HAS FILED AN APPLI CATION BEFORE HONBLE SETTLEMENT COMMISSION , KOLKATA OFFERING ADDITIONAL INCOME OF RS.15.75 CRORES FOR A Y 2012- 13, 2013-14 AND 2014-15 AND THE SAME HAS BEEN ADMIT TED. - WHY ASSESSEE HAS MADE SUCH HUGE DONATIONS TO SUCH A FAR OFF PLACE - RIGHT TO CROSS EXAMINATION IS NOT ABSOLUTE IN THIS REGARD, IT IS SUBMITTED THAT MERELY BECAUSE SUCH DONE (SHGPH), WHO IS COMPLETELY UNRELATED TO THE ASSESSEE, ACCEPTS CERTA IN INCOME SUBSEQUENT TO RECEIVING SUCH DONATION FOR THE ERRORS AND WRONGDOI NG ON ITS PART, THE SAME CANNOT BE A REASON TO DENY THE ASSESSEE FROM A VALI D DEDUCTION AVAILABLE TO IT. ALSO APPELLANT WAS NOT CONFRONTED WITH ANY SUCH PETITION AS STATED TO HAVE BEEN FILED BY THE DONEE INSTITUTE (SHGPH) BEFORE THE HONBLE S ETTLEMENT COMMISSION, BY LD. CIT(A) NOR ANY ORDER OF THE HONBLE SETTLEMENT COM MISSION WAS PROVIDED TO THE APPELLANT. SUCH CONTENTION OF ASSESSEE IS SUPPORTED BY FOLLOWING DECISION: ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 24 HONBLE KOLKATA ITAT IN THE CASE OF RAJDA POLYMERS VS. DCIT IN ITA NO. 333/KOL/2017 (CASE LAW PB 96-102) , WHEREIN HONBLE BENCH HAS OBSERVED THAT .. MERELY BECAUSE THE DONEE GOES TO HONBLE SETTLEMENT COMMISSION AND DECLARES SOME ADDITIONAL INCOME THEREON, IT DOES NO T AUTOMATICALLY IMPLEAD THE ASSESSEE HEREIN ON THE NEGATIVE SIDE AND THE EXPRES S PROVISIONS OF THE ACT CANNOT BE IGNORED THEREON. THERE CANNOT BE ANY MALAFIDE TH AT COULD BE ATTRIBUTED ON THE ASSESSEE HEREIN. WE FIND THAT THE ASSESSEE WAS UNDER THE BONAFIDE BE LIEF AND HAD MADE PROPER DUE DILIGENCE BEFORE GRANTING DONATION TO HHBRF WHICH WAS DULY RECOGNIZED U/S 35(1)(II) OF THE ACT AT THE TIME OF GIVING DONATION. WE HOLD THAT IF THE SUBSEQUENT NOTIFICATION CANCELLED THE REGISTRAT ION U/S 35(1)(II) OF THE ACT, THE SAME DOES NOT ATTRACT THE DONATION MADE BY THE ASSE SSEE WHEN THE SAID NOTIFICATION WAS IN FORCE. THE BONAFIDE BELIEF OF A SSESSEE DONOR AT THE TIME OF GRANTING DONATION TO AN INSTITUTE ON THE BASIS OF R ECOGNITION THEN AVAILABLE, CANNOT BE DISTURBED BY SUBSEQUENT EVENT. THIS IS MORE CLEA RLY SPELT OUT IN THE PROVISIONS OF THE ACT ITSELF BY WAY OF EXPLANATION TO SECTION 35( 1) OF THE ACT. HENCE EVEN AS PER THE PROVISIONS OF THE ACT, THE DENIAL OF DEDUCTION U/S 35(1)(II) OF THE ACT IS NOT IN ORDER. THE LD. CIT(A) WHILE CONFIRMING THE DISALLOWANCE, H AS ALSO ALLEGED THAT WHEN THERE WERE OTHER NOTIFIED INSTITUTIONS IN JAIPUR ALSO, TH EN WHY ASSESSEE HAS DONATED SUCH HUGE AMOUNT TO AN INSTITUTION LOCATED OUTSIDE JAIPU R. IN THIS REGARD IT IS SUBMITTED THAT IT IS THE OUTLOOK OF ASSESSEE AS TO WHICH INST ITUTION IT WISHES TO DONATE AND AO OR OTHER AUTHORITY CANNOT ASK TO MAKE THE DONATION TO ANY SPECIFIED INSTITUTE. IT IS ALSO RELEVANT TO STATE THAT THE INSTITUTE TO WHOM A SSESSEE HAS MADE THE DONATION HAD A VALID APPROVAL IN FORCE AT THE TIME OF MAKING DONATION. IN THIS REGARD, RELIANCE IS PLACED ON DECISION OF HONBLE KOLKATA ITAT IN THE CASE OF RAJDA POLYMERS VS DCIT , IN ITA NO.333/KOL/2017 , (CASE LAW PB 96-102) WHEREIN HONBLE BENCH IN PARA 5.6 AT PAGE 7 OF THE ORDER HA S CATEGORICALLY OBSERVED THAT IT IS WELL SETTLED THAT IT IS ALWAYS THE PREROGATIVE O F THE ASSESSEE TO GIVE OR NOT TO GIVE ANY DONATION TO A PARTICULAR INSTITUTION, WHICH WIS DOM CANNOT BE QUESTIONED BY ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 25 THE REVENUE. THE QUESTION OF BUSINESS EXPEDIENCY OF AN EXPENDITURE HAD TO BE VIEWED FROM THE POINT OF VIEW OF THE BUSINESSMAN AN D NOT FROM THE VIEW POINT OF THE REVENUE. IT IS FURTHER SUBMITTED THAT WHILE MAKING DISALLOWA NCE, LD. AO SOLELY RELIED UPON THE STATEMENTS OF SMT. MOUMITA RAGHWAN [TREASURER] AND SMT. SAMADRITA MUKHERJEE SARDAR [SECRETARY], OFFICE BEARER OF SHGP H WHICH WERE RECORDED DURING THE COURSE OF SURVEY CONDUCTED AT ITS PREMISES ON 2 7.01.2015 WHEREIN THEY HAVE STATED TO HAVE ACCEPTED THAT SHGPH IS NOT WORKING F OR THE RESEARCH ACTIVITY AND IS MAINLY ISSUING THE DONATIONS RECEIPTS ON COMMISSION BASIS. COPIES OF THE SAME WERE SUPPLIED TO THE ASSESSEE (APB 27-38). FROM THE PERUSAL OF THE STATEMENTS OF ABOVE SAID EXECUTIVES SUPPLIED BY LD.AO, IT COULD B E NOTICED THAT THERE WERE CONTRADICTIONS AND ANOMALIES IN THE STATEMENTS AND THUS IT COULD NOT BE CONCLUSIVELY SAID THAT THE SOCIETY WAS NOT ENGAGED IN THE RESEARCH WORK AND HAD NOT ACTUALLY RECEIVED THE DONATION FOR THE RESEARCH ACTIVITY ACTUALLY CARRIED OUT BY THEM. IT IS FURTHER SUBMITTED THAT AT NO STAGE, THE Y HAD ACCEPTED THAT SHGPH IS SOLELY INDULGED IN THE ISSUE OF BOGUS DONATION RECE IPTS AS AGAINST WHICH ACTUALLY THE SOCIETY WAS ENGAGED IN REGULAR RESEARCH WORKS W HICH IS EVIDENT FROM THE ANSWER TO QUESTION NO. 20 OF THE STATEMENTS OF SMT. MOUMITA RAGHWAN (APB 31) WHICH IS REPRODUCED AS UNDER: Q.20 PLEASE STATE IN DETAIL ALL THE ACTIVITIES DON E BY YOUR ORGANIZATION SINCE LAST FOUR YEARS. ANS 20. I AM SUBMITTING THE DETAILS OF RESEARCH PUB LICATIONS MADE BY OUR ORGANIZATION DURING LAST FEW YEARS SEPARATELY. OUR ORGANIZATION ALSO EXTENDS ITS CHARITABLE ACTIVITIES SUCH AS DEVELOPMENT OF HEALTH CONSCIOUSNESS AMONG DOWNTRODDEN PEOPLE, STRENGTHENING BASIC PUBLIC HEAL TH SYSTEM, INTERVENING TO COMBAT HIV / AIDS EPIDEMIC ETC. SIMILARLY IN THE STATEMENT RECORDED ON OATH U/S 133 A SAMADRITA MUKHERJEE SARDAR (APB 33) IN REPLY TO QUESTION NO. 8 HAS CLEARLY STATED THE ACTIVITY OF SHGPH AND ALSO IN REPLY TO QUESTION NO. 16 (APB 35) STATED THE DETAILS OF THE RESEARCH SCIENTISTS ASSOCIATED WITH SHGPH. ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 26 IT IS FURTHER SUBMITTED THAT NOWHERE IN THE STATEME NT ANY OF THE OFFICE BEARERS HAVE STATED THAT THEY HAD ISSUED ANY BOGUS DONATION RECEIPTS TO THE ASSESSEE COMPANY. MOREOVER NONE OF THE OFFICE BEARER ANY WHE RE ADMITTED THAT THEY HAD REFUNDED THE DONATION AMOUNT RECEIVED BY THE SOCIET Y TO THE ASSESSEE COMPANY IN CASH OR BY ANY OTHER MODE. HOWEVER, A REFERENCE OF SOME AMIT GUPTA, STATED AS A MIDDLEMAN IS MADE BUT NEITHER ANY STATEMENTS OF AMI T GUPTA, IF ANY, WERE PROVIDED NOR ANY ENQUIRY REPORT, IF ANY, WAS PROVID ED AND ALSO NO OPPORTUNITY TO CROSS EXAMINE HIM WAS ALLOWED. IT IS ALSO SUBMITTED THAT NO EVIDENCES / MATERIAL HAS BEEN BROUGHT ON RECORD BY LD. AO, FROM WHICH IT COULD BE ESTABLISHED THAT THE ASSESSEE COMPANY HAD EITHER MADE A BOGUS DONATION O R HAD RECEIVED BACK THE DONATION AMOUNT IN CASH OR IN ANY OTHER MODE. THUS THE ALLEGATION OF THE BOGUS DONATION IS SOLELY BASED ON THE PRESUMPTIONS WITHOUT ANY COGENT MATERIAL AGAINST THE ASSESSEE CO MPANY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A REQUEST WAS MADE BEFORE L D. AO TO PROVIDE OPPORTUNITY FOR CROSS EXAMINATION OF THE OFFICE BEA RERS (APB 19-24) OF WHOSE STATEMENTS HAVE RECORDED BEHIND THE BACK OF ASSESSE E AND MADE BASIS FOR MAKING ADDITION IN THE HAND OF ASSESSEE, HOWEVER NO SUCH O PPORTUNITY WAS PROVIDED BY LD.AO. MOREOVER, IT WAS ALSO REQUESTED TO THE LD. A O TO EXAMINE OTHER OFFICE BEARERS OF THE SOCIETY AND THE RESULTS OF THE EXAMI NATION PLEASE BE INTIMATED TO ASSESSEE FOR REBUTTAL BY ASSESSEE COMPANY. HOWEVER, LD. AO FAILED TO EXAMINE ANY OTHER OFFICE BEARER AND THUS ACTED ONLY ON HALF BAK ED INFORMATION / PRESUMPTIONS. EVEN LD.CIT(A) CONFIRMED SUCH ACTION OF LD. AO IN D ENYING OPPORTUNITY OF CROSS EXAMINATION BY SIMPLY OBSERVING THAT STRICT RULES O F EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS AND THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT BY PLACING RELIANCE ON SOME JUDICIAL PRONOUNC EMENTS, HOWEVER SUCH JUDGEMENTS HAVE BEEN PASSED IN DIFFERENT SET OF FAC TS AND FURTHERMORE HAVE BEEN SUPERSEDED BY HONBLE APEX COURT JUDGEMENT IN THE C ASE OF ANDAMAN TIMBER INDUSTRIES (324) ELT 641 WHICH NOW GOVERNS THE FIELD WHEREIN IT HAS BEEN HEL D AS UNDER (CASE LAW PB 13-16) : ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 27 ASSESSMENT NATURAL JUSTICE DENIAL OF OPPORTUNI TY TO CROSS-EXAMINE WITNESSES DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAM INE THE WITNESSES WHOSE STATEMENTS WERE MADE THE SOLE BASIS OF THE ASSESSME NT IS A SERIOUS FLAW RENDERING THE ORDER A NULLITY IN AS MUCH AS IT AMOUNTED TO VI OLATION OF PRINCIPLES OF NATURAL JUSTICE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL IS SET ASIDE. FURTHER, RELIANCE IS PLACED ON THE JUDGMENT OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CCE VS. SHYAM TRADERS REPORTED IN 2016 (333) ELT 389 WHEREIN, THE JUDGMENT OF SUPREME COURT IN ANDAMAN TIMBER INDUSTR IES WAS FOLLOWED AND THE REQUIREMENT OF ALLOWING CROSS-EXAMINATION OF WITNES SES WAS HELD AS IN- DISPENSABLE FOR ADJUDICATION. RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISIONS: - P.S. ABDUL MAJEED VS. AGRICULTURAL INCOME TAX & SAL ES TAX OFFICER(R) & ORS. REPORTED IN (1994) 209 ITR 0821 RELIANCE ON THE AUCTIONEERS' RECORDS AND TREATING THEM AS IF THEY WERE CONCLUSIVE AND AS GOSPEL TRUTH IS DOING VIOLENCE TO THE PRINCI PLES OF THE NATURAL JUSTICE. PETITIONER HAD IN FACT QUESTIONED THE CORRECTNESS O F THOSE RECORDS AND STATED THAT HE HAD NOT SOLD ANY CARDAMOM TO THE EXTENT OF 241 K GS. SUGGESTED BY THE ASSESSING AUTHORITY THROUGH AUCTIONEERS. HE DENIED THE SALES IN TOTO. HE ALSO PRAYED FOR AN OPPORTUNITY TO CROSS-EXAMINE THE AUCTIONEERS. WHEN SUCH A REQUEST WAS MADE IT WAS INCUMBENT ON THE OFFICER TO AFFORD OPPORTUNITY TO THE ASSESSEE TO CROSS- EXAMINE THE AUTHORS OF THOSE BOOKS. WHEN SUCH A REQ UEST WAS MADE IT WAS INCUMBENT ON THE OFFICER TO AFFORD OPPORTUNITY TO T HE ASSESSEE TO CROSS-EXAMINE THE AUTHORS OF THOSE BOOKS AS WAS LAID DOWN BY THIS COU RT IN SHADULI VS. STATE OF KERALA (1972) 29 STC 44, WHICH WAS CONFIRMED BY THE SUPREM E COURT IN STATE OF KERALA VS. SHADULI (1977) 39 STC 478. CIT VS. EASTERN COMMERCIAL ENTERPRISES (1994) 210 I TR 0103 AS A MATTER OF FACT, THE RIGHT TO CROSS-EXAMINE A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUNITY OF SUCH CROSS-EXAMINATION IS ONE OF THE CORNER-STONES OF NATURAL JUSTICE. CIT VS. D.M. JOSHI & ORS (1999) 239 ITR 0315 THE TRIBUNAL AFTER CONSIDERING ALL THE RELEVANT MA TERIAL ON RECORD, HELD THAT THE AO OUGHT NOT TO HAVE RELIED UPON THE AFFIDAVIT OF J .C. DAVE MADE ON 11TH JUNE, ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 28 1988, WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSES SEE OF CROSS-EXAMINING J.C. DAVE AND THAT RELIANCE PLACED ON THE AFFIDAVIT WITH OUT GIVING THE ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE J.C. DAVE AT THE TIME WHEN HE WAS ALIVE, WAS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. IT IS FURTHER SUBMITTED THAT CONCLUSIONS REACHED OR INFERENCES DRAWN UPON INCOMPLETE EXAMINATION / ENQUIRY OF THE FACTS TANTA MOUNT TO INFRINGEMENT OF THE FUNDAMENTAL RIGHT OF EQUALITY OF THE PETITIONER GUA RANTEED UNDER ARTICLE 14 OF THE CONSTITUTION OF INDIA. VERY RECENTLY, HONBLE SUPREME COURT IN THE CASE OF CIT VS SUNITA DHADDA (CASE LAW PB 1-12) AFTER CONSIDERING ALL THE JUDGEMENTS INCLUDING OF A NDMAN TIMBER HAS AGAIN AFFIRMED THE IMPORTANCE OF CROSS EXAMINATION AND HELD THAT IF THE AO WANTS TO RELY UPON DOCUMENTS FOUND WITH THIRD PARTIES, TH E PRESUMPTION U/S 292C AGAINST THE ASSESSEE IS NOT AVAILABLE. AS PER THE P RINCIPLES OF NATURAL JUSTICE, THE AO HAS TO PROVIDE THE EVIDENCE TO THE ASSESSEE & GRANT OPPORTUNITY OF CROSS- EXAMINATION. SECONDARY EVIDENCES CANNOT BE RELIED O N AS IF NEITHER THE PERSON WHO PREPARED THE DOCUMENTS NOR THE WITNESSES ARE PR ODUCED. THE VIOLATION OF NATURAL JUSTICE RENDERS THE ASSESSMENT VOID. THE DE PT CANNOT BE GIVEN A SECOND CHANCE. IT IS FURTHER SUBMITTED THAT SUCH PERSONS WHOSE STA TEMENT WERE RELIED UPON FOR MAKING DISALLOWANCE WERE NEITHER SUMMONED DURING AS SESSMENT PROCEEDINGS NOR ANY COMMISSION WAS ISSUED TO THE COMPETENT AUTHORIT IES FOR THEIR EXAMINATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE COMING TO THE CONCLUSION THAT THE DONATION MADE BY THE ASSESSEE COMPANY WAS NOT G ENUINE. IN FACT NO MATERIAL WAS BROUGHT ON RECORD BY LD. AO SO AS TO PROVE THAT HOW THE DONATION PAID BY ASSESSEE WAS RECEIVED BACK EXCEPT THE SO CALLED STA TEMENTS OF SOME OFFICE BEARERS RECODED DURING THE COURSE OF SURVEY AT THE PREMISES OF THE SOCIETY. RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE KOLKATTA ITAT D BENCH IN THE CASE OF SAIMED INNOVATION VS. ITO IN ITA NO. 2231/KOL/20 16 ORDER DATED 13.09.2017 (CASE LAW PB 92-95) WHEREIN UNDER IDENTICAL FACTS, THE HONBLE BENCH ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 29 HAS ALLOWED THE WEIGHTED DEDUCTION CLAIMED U/S 35(1 )(II) BY HOLDING THAT THE STATEMENTS RECORDED ON OATH DURING THE SURVEY CANNO T BE RELIED UPON. FURTHER HELD THAT WHEN OPPORTUNITY FOR CROSS EXAMINATION TH E THIRD PARTY WAS NOT GIVEN, NO ADDITION COULD BE MADE ON THE BASIS OF SUCH STATEME NTS. YOUR GOODSELF WOULD APPRECIATE THAT ASSESSEE HAS FU LFILLED ALL THE CONDITIONS SPECIFIED FOR CLAIMING DEDUCTION U/S 35(1)(II) AND ON THE OTHER HAND, LD.AO HAS NOT DISCHARGED HIS ONUS OF PROVING IT OTHERWISE BY BRIN GING ON RECORD ANY EVIDENCES ON THE BASIS OF INDEPENDENT ENQUIRIES MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE CIRCUMSTANCES IT IS SUBMITTED THAT THE DEDUC TION CLAIMED BY THE ASSESSEE COMPANY IS DULY SUPPORTED BY A VALID APPROVAL THROU GH GAZETTE NOTIFICATION OF THE GOVERNMENT OF INDIA WHICH WAS NOT WITHDRAWN IN THE YEAR UNDER CONSIDERATION, WHEN THE ASSESSEE MADE THE DONATION TO SHGPH. THERE FORE IN VIEW OF THE EXPLANATION TO SECTION 35(1) (II), DISALLOWANCE OF WEIGHTED DEDUCTION ON THE DONATION OF RS.1,00,00,000/- DESERVES TO BE DELETED . - B.P. AGARWALLA & SONS LTD. VS. CIT (CAL.) 208 ITR 863 (CASE LAW PB 78-81) - CIT VS. GENERAL MAGNETS LTD. (CALCUTTA) 253 ITR 4 71(CASE LAW PB 72-74) - JAI KUMAR KANKARIA VS. CIT (CALCUTTA) 251 ITR 707 (CASE LAW PB 75-77) - K.M. SCIENTIFIC RRESEARCH CENTRE VS. LAXMAN PRASA D (ALLAHABAD) - SEKSARIA BISWAN SUGAR FACTORY LTD. VS. IAC (BOMBA Y) 184 ITR 123 - CHOTATINGRAI TEA ESTATE PVT. LTD. VS. CIT (GUAHAT I) 236 ITR 644 - ITO VS. M.C. PONNOOSE (SC) 118 ITR (ST.)32 6. ON THE OTHER HAND, THE LD CIT DR HAS RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW. 7. THE BENCH HAVE HEARD BOTH THE SIDES ON THE ISSUES RAISED IN APPEAL, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND AL SO CONSIDERED THE CASE LAWS RELIED UPON. THE ASSESSEE IS A PRIVATE LIMITED C OMPANY ENGAGED IN ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 30 MANUFACTURING OF ROLLED STEEL PRODUCTS. RETURN OF I NCOME WAS FILED ELECTRONICALLY ON 26/09/2014. THE ASSESSEE HAS CLAIM ED WEIGHTED DEDUCTION U/S 35(1)(II) OF THE ACT. THE ASSESSEE HAD MADE DONATION TO A INSTITUTE ENGAGED IN SCIENTIFIC RESEARCH. THE AUTHOR ITIES BELOW HAS NOT ALLOWED THE DEDUCTION. THE ASSESSEE HAD MADE DONATION OF RS. 1,00,00,000/- TO SCHOOL OF HUMAN GENETICS & POPULAT ION HEALTH, AN INSTITUTE ENGAGED IN SCIENTIFIC RESEARCH AND NOTIFI ED BY THE CENTRAL BOARD OF DIRECT TAXES IN TERMS OF SECTION 35(1)(II) OF THE AC T VIDE NOTIFICATION NO. 4/2010 DATED 28/01/2010. THE INSTITUTE, WHOM THE DON ATION WAS MADE WAS IN EXISTENCE AND NOTIFIED DURING THE F.Y. 2013-1 4 WHEN THE ASSESSEE HAS MADE DONATIONS. THE CBDT HAS RESCINDED NOTIFICATI ON ON 15/9/2016. ALTHOUGH, IT HAS BEEN MADE RETROSPECTIVE EFFECT FRO M 01/4/2007. THIS INSTITUTE WAS VALIDLY RECOGNIZED BY THE CBDT ON THE D ATE OF DONATION MADE BY THE ASSESSEE. THE APPROVAL GRANTED TO THE INSTIT UTE WAS VERY MUCH IN FORCE AT THE TIME OF DONATION MADE BY THE ASSESSEE. THE ASSESSEE HAD NO REASON TO DISBELIEVE THE OPERATION OF APPROVAL AND NOTIFICATION OF THE INSTITUTE. IN SUCH A SITUATION, THE DEDUCTION CLAIM ED BY THE ASSESSEE IS JUSTIFIED. THE SUBSEQUENT NOTIFICATION BY THE CBDT R ESCINDING THE APPROVAL RETROSPECTIVELY SHALL NOT OR SHOULD NOT AFFECT THE CLAIM OF THE ASSESSEE. THERE WAS NO INFORMATION WITH THE ASSESSEE REGARDING NON-GENUINITY OR NOT OBSERVING THE STANDARD FIXED BY THE CBDT FOR MAK ING ELIGIBLE ITSELF FOR ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 31 DEDUCTION U/S 35 OF THE ACT. THE ASSESSEES ACT WAS I N A BONAFIDE MANNER. IT IS WELL SETTLED PROPOSITION OF LAW THAT NO ADDITI ONAL TAX BURDEN CAN BE PUT ON THE ASSESSEE BY MAKING RETROSPECTIVE OPERATI ONS OF CERTAIN NOTIFICATIONS OR WITHDRAWAL OF NOTIFICATIONS. IN THE CASE OF HITENDRA VISHNU THAKUR VS. STATE OF MAHARASTRA (SUPRA), THE HON'BLE SUPREME COURT HAS HELD THAT A PROCEDURAL STATUTE SHOULD NOT GENERALLY SPEAKING BE APPLIED RETROSPECTIVELY, WHERE THE RESULT WOULD BE TO CREATE NEW DISABILITIES OR OBLIGATIONS, OR TO IMPOSE NEW DUTIES IN RESPECT OF T RANSACTIONS ALREADY ACCOMPLISHED. FURTHER, A STATUTE WHICH NOT ONLY CHA NGES THE PROCEDURE BUT ALSO CREATES NEW RIGHTS AND LIABILITIES SHALL BE CON TINUED TO BE PROSPECTION IN OPERATION, UNLESS OTHERWISE PROVIDED, EITHER EXPR ESSLY OR BY NECESSARY IMPLICATIONS. SIMILARLY IN THE CASE OF CIT(CENTRAL-1 ), DELHI VS VATIKA TOWNSHIP PVT. LTD. (SUPRA), THE HON'BLE SUPREME COURT HAS HELD THAT THE BENEFICIAL AMENDMENT WHICH EFFECTS THE PUBLIC GENER ALLY AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISL ATORS OBJECT, THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVING IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVEN RETROSPECT IVE EFFECT. THUS THE RETROSPECTIVE EFFECT CAN BE GIVEN ONLY FOR THE BENE FICIAL AMENDMENTS BUT NOT TO PUT THE ADDITIONAL BURDEN THAT TOO ON THIRD PARTY. FURTHER THE EXPLANATION TO SECTION 35(1) OF THE ACT ALSO PROVID ES THAT DEDUCTION TO WHICH ASSESSEE IS ENTITLED IN RESPECT OF ANY SUM PAI D TO A (RESEARCH ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 32 ASSOCIATION), UNIVERSITY, COLLEGE OR OTHER INSTITUT ION TO WHICH CLAUSE (II) OR CLAUSE (III) APPLIES, SHALL NOT BE DENIED MERELY ON THE GROUND THAT, SUBSEQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESS EE, THE APPROVAL GRANTED TO THE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION, REFERRED TO IN CLAUSE (II) OR CLAUSE (III) HAS BEEN WITHDRAWN. THE ASSESSEE HAS MADE DONATI ON I.E. ON 13/01/2014, THE INSTITUTE WAS HAVING A VALID APPROVA L FROM THE APPROPRIATE AUTHORITIES AND THE ASSESSEES CLAIM CANNOT BE DENI ED. THE COORDINATE BENCH OF KOLKATA ITAT IN THE CASE OF M/S MACO CORPOR ATION (INDIA) PVT. LTD. IN ITA NO. 16/KOL/2017, COPY OF WHICH HAS BEEN PLACED AT PAGE NOS. 82 TO 91 OF THE PAPER BOOK, WHEREIN THE DONATION WAS MADE TO THE SAME INSTITUTE I.E. SCHOOL OF HUMAN GENETICS AND POPULAT ION HEALTH, WAS HELD THAT IN VIEW OF EXPLANATION TO SECTION 35(1)(II) OF THE ACT, WOULD NOT BE WITHDRAWN SUBSEQUENTLY WHEN RECOGNITION HAS BEEN RESCI NDED. SIMILARLY THE COORDINATE BENCH OF KOLKATA ITAT IN THE CASE OF SAIMED INNOVATION VS. ITO IN ITA NO. 2231/KOL/2016 ORDER DATED 13/09/2017 HAS HELD THAT WEIGHTED DEDUCTION CLAIMED U/S 35(1)(II) OF THE ACT CANNOT BE DENIED ON THE BASIS OF STATEMENT RECORDED DURING THE SURVEY A ND NO OPPORTUNITY WAS PROVIDED TO CROSS EXAMINE THE THIRD PARTY, WHO HAS G IVEN SUCH STATEMENT. FURTHER IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CCE VS. SHYAM TRADERS 2016 (333) ELT 389 AND THE D ECISION OF HON'BLE ITA 529/JP/2018_ M/S P.R. ROLLING MILLS P. LTD. VS DCIT 33 SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRI ES (324) ELT 641 AND THE VARIOUS OTHER CASE LAWS RELIED UPON BY THE L D. A.R., WE FIND THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DENYING C LAIM OF DEDUCTION U/S 35(1)(II) OF THE ACT TO THE ASSESSEE, HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/07/2018. SD/- SD/- FOT; IKY JKO FOT; IKY JKO FOT; IKY JKO FOT; IKY JKO HKKXPAN HKKXPAN HKKXPAN HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05 TH JULY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S P.R. ROLLING MILLS PVT. LTD., JAI PUR. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 529/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR