M/S HYPACK INDUSTRIES, Mumbai V. ACIT 26 (1), Mumbai

ITA 5713/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2017 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Retrospective amendment; Reassessment proceedings
• Section: 133A; 13; 148

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 5713 / / 2019 (%. 2012-13 ) . 5714 / / 2019 (%. 2014-15 ) ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) M/S. HYPACK INDUSTRIES, 1301/B, 13 TH FLOOR, DOSTI ELITE, NEAR CHAMPAKLAL ESTATE,OPP. SIES COLLEGE, SION EAST, MUMBAI 400 022 PAN-AACFH-0517-K ...... ' / APPELLANT % VS. ASSTT. COMMISSIONER OF INCOME TAX-26(1), KAUTILYA BHAWAN, BKC, BANDRA(E),MUMBAI 400 051 ..... ()/ RESPONDENT '*/ APPELLANT BY : SHRI PIYUSH CHHAJED ()*/ RESPONDENT BY : SHRI SUSHIL KUMAR MISHRA %+) / DATE OF HEARING : 01/04/2021 ,-. +) / DATE OF PRONOUNCEMENT : 15/06/2021 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-38, MUMBAI [I N SHORT 'THE CIT(A)] FOR THE ASSESSMENT YEARS 2012-13 AND 2014-15. BOTH THE IMP UGNED ORDER ARE OF EVEN DATE I.E. 02/01/2018. SINCE, GROUNDS RAISED BY THE ASSE SSEE IN BOTH THE APPEALS ARE IDENTICAL THEY ARE TAKEN UP TOGETHER FOR ADJUDICATI ON AND ARE DECIDED BY THIS COMMON ORDER. 2 ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) ITA NO.5713/MUM/2019- A.Y.2012-13: 2. SHRI PIYUSH CHHAJED APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT ASSESSEE IN GROUND NO.1 OF APPEAL HAS ASSAILED REOPENING OF ASSESSMENT. THE ASSESSEE DOES NOT WANT TO PRESS THIS LEGAL GROU ND. 3. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSE E SUBMITTED THAT GROUND NO.2 TO 4 OF APPEAL ARE ON MERITS OF ADDITION. THE SOLITARY ISSUE RAISED IN THIS APPEAL BY THE ASSESSEE IS AGAINST DISALLOWANCE OF DONATION OF RS.2,00,000/- MADE TO SCHOOL OF HUMAN GENETICS & POPULATION HEALTH, KOLKATA. THE L D.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAD MADE DONAT ION TO THE AFORESAID TRUST ON 21/02/2012 AND CLAIMED BENEFIT OF DEDUCTION UNDER SECTION 35(1)(II) OF INCOME TAX ACT,1961 ( IN SHORT 'THE ACT'). THE SAME WAS ALLOWE D TO THE ASSESSEE. THEREAFTER, THE ASSESSMENT FOR ASSESSMENT YEAR 2012-13 IN THE CASE OF ASSESSEE WAS REOPENED TO DISALLOW THE ASSESSEES CLAIM OF DEDUCTION UNDER SE CTION 35(1)(II) OF THE ACT ON THE GROUND THAT DURING THE COURSE OF SURVEY ACTION IN THE CASE OF SCHOOL OF HUMAN GENETICS & POPULATION HEALTH, IT WAS FOUND THAT THE AFORESAID INSTITUTION HAD INDULGED IN MONEY LAUNDERING ACTIVITIES. IT WAS AL LEGED THAT THE ASSESSEE IS ONE OF THE BENEFICIARY FROM MONEY LAUNDERING ACTIVITIES C ARRIED OUT BY THE AFORESAID INSTITUTION. THE LD.AUTHORIZED REPRESENTATIVE OF T HE ASSESSEE VEHEMENTLY SUBMITTED THAT THERE IS NO EVIDENCE ON RECORD TO SUGGEST THA T THE DONATION MADE BY THE ASSESSEE TO SCHOOL OF HUMAN GENETICS & POPULATION HEALTH WAS A BOGUS TRANSACTION. ON THE DATE OF DONATION THE SAID INST ITUTION WAS HAVING VALID APPROVAL FOR EXEMPTION. THE SURVEY UNDER SECTION 133A OF T HE ACT TOOK PLACE IN THE CASE OF SCHOOL OF HUMAN GENETICS & POPULATION HEALTH ON 27/ 01/2015 I.E. MUCH AFTER THE DATE OF DONATION ON 21/02/2012 IN THE PERIOD RELE VANT TO ASSESSMENT YEAR 2012- 13. THE APPROVAL UNDER SECTION 35(1)(II) OF THE A CT WAS WITHDRAWN BY GOVERNMENT IN RESPECT OF ABOVE INSTITUTION VIDE O.M DATED 21/0 9/2016. THE ASSESSMENT IN THE CASE OF ASSESSEE WAS REOPENED ON 27/10/2016.THE LD.AUTHORIZED REPRESENTATIVE 3 ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) OF THE ASSESSEE CONTENDED THAT THE REVENUE HAS ERR ED IN DISALLOWING ASSESSEES CLAIM OF DEDUCTION ON DONATION RETROSPECTIVELY ON THREE COUNTS: (I) ON THE DATE OF DONATION, SCHOOL OF HUMAN GENET ICS & POPULATION HEALTH WAS HOLDING VALID APPROVAL ; (II) THE REVENUE HAS NOT BROUGHT ON RECORD ANY EV IDENCE TO SHOW THAT TRANSACTION BETWEEN THE ASSESSEE AND SCHOOL OF HUMAN GENETICS & POPULATION HEALTH IS BOGUS; AND (III) THE STATEMENT RECORDED DURING SURVEY ACTION IN THE CASE OF SCHOOL OF HUMAN GENETICS & POPULATION HEALTH ON THE BASIS OF WHICH BENEFIT OF DEDUCTION UNDER SECTION 35(1) OF THE ACT HAS BEEN WITHDRAWN WAS NE VER PROVIDED TO THE ASSESSEE. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE I N SUPPORT OF HIS CONTENTIONS PLACED RELIANCE ON VARIOUS DECISIONS I NCLUDING: (I) CIT VS CHOTATINGRAI TEA & ORS, 258 ITR 529(S C) (II) VORA FINANCE SERVICES (P)LTD. 96 TAXMANN.COM 88(MUMBAI-TRIB) (III)NATIONAL LEATHER CLOTH MANUFACTURING CO., VS. INDIAN COUNCIL OF AGRICULTURAL RESEARCH, 241 IT R 0482(BOM) (IV) SEKSARIA BISWAN SUGAR FACTORY LTD., VS. INSPE CTING ASSISTANT COMMISSIONER, 184 ITR 123(BOM) (V) BHANUMATI MALRAJ KABALI VS. ITO, 102 TAXAMMAN .COM 332(BOM) 4. ON THE OTHER HAND, SHRI SUSHIL KUMAR MISHRA REPR ESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ACTION OF CIT(A) IN UPHOLDI NG DISALLOWANCE OF DONATION MADE BY ASSESSEE TO SCHOOL OF HUMAN GENETICS & POPU LATION HEALTH. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT A SUR VEY ACTION WAS CARRIED OUT IN THE CASE OF SCHOOL OF HUMAN GENETICS & POPULATION H EALTH AND IT WAS FOUND THAT THE INSTITUTION IS ENGAGED IN PROVIDING BOGUS DONATION ENTRIES. THE ASSESSEE IS ONE OF THE BENEFICIARIES OF SUCH BOGUS ENTRIES. THE APPROVAL GRANTED UNDER SECTION 35(1)(II) OF 4 ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) THE ACT TO SCHOOL OF HUMAN GENETICS & POPULATION HE ALTH WAS WITHDRAWN IMMEDIATELY AFTER THE RACKET WAS UNEARTHED. THE LD .DEPARTMENTAL REPRESENTATIVE PRAYED FOR REJECTING APPEAL OF THE ASSESSEE AND U PHOLDING ORDER OF CIT(A). 5. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. THE SOLITARY ISSUE RAISED IN THE PRESENT APPEAL IS DISALLOWANCE OF WEI GHTED DEDUCTION UNDER SECTION 35(1) OF THE ACT TO THE ASSESSEE. THE ASSESSEE HAD MADE DONATION OF RS.2,00,000/- ON 21/02/2012 TO SCHOOL OF HUMAN GENETICS & POPU LATION HEALTH AND HAS CLAIMED WEIGHTED DEDUCTION OF RS.3,50,000/- UNDER SECTION 35(1) OF THE ACT IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13. ON 27/01/201 5 A SURVEY ACTION WAS CARRIED OUT IN THE CASE OF SCHOOL OF HUMAN GENETICS & POPU LATION HEALTH, CONSEQUENTLY, APPROVAL UNDER SECTION 35(1)(II) OF THE ACT ALLOWED TO SCHOOL OF HUMAN GENETICS & POPULATION HEALTH WAS WITHDRAWN BY THE DEPARTMENT O N 21/09/2016. UNDISPUTEDLY, ON THE DATE OF DONATION INSTITUTE WAS HOLDING VAL ID APPROVAL UNDER SECTION 35(1)(II) OF THE ACT. THE ASSESSEE HAS MADE DONATION TO T HE INSTITUTE THROUGH BANKING CHANNEL AGAINST RECEIPT. THE ASSESSEES CLAIM OF DE DUCTION IN RETURN OF INCOME WAS ACCEPTED BY THE DEPARTMENT. THE WITHDRAWAL NOTIFIC ATION BY THE REVENUE IN 2016 WOULD NOT OPERATE RETROSPECTIVELY TO DISALLOW ASSES SEES CLAIM OF DEDUCTION UNDER SECTION 35(1) OF THE ACT IN A.Y.2012-13. HENCE, TH E ASSESSEE WOULD BE ELIGIBLE FOR BENEFIT OF WEIGHTED DEDUCTION UNDER SECTION 35(1)( II) OF THE ACT IN ASSESSMENT YEAR 2012-13. SUBSEQUENT WITHDRAWAL OF APPROVAL UNDER SECTION 35(1)(II) OF THE ACT FROM THE INSTITUTION BY THE DEPARTMENT WOULD NOT PREJUDI CE THE ASSESSEES CLAIM OF DONATION IN THE IMPUGNED ASSESSMENT YEAR. 6. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE O F CIT VS. CHOTATINGRAI TEA & ORS.(SUPRA), WHERE THE ASSESSEE HAD CLAIMED DEDUCT ION UNDER SECTION 35CCA OF THE ACT AND THE SAME WAS WITHDRAWN BY THE DEPARTMENT ON THE GROUND THAT APPROVAL GRANTED BY THE PRESCRIBED AUTHORITY TO THE SOCIETY TO WHOM ASSESSEE HAD MADE DONATIONS WAS WITHDRAWN WITH RETROSPECTIVE EFFECT, THE HONBLE COURT DISMISSING 5 ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) REVENUES APPEAL CONCURRED WITH THE REASONING OF H ONBLE HIGH COURT WHEREIN IT WAS HELD THAT, ONCE IT WAS FOUND THAT THE ASSESSEES HAD FULFILLED ALL THE CONDITIONS WHICH HAD BEEN LAID DOWN UNDER SECTION 35CCA OF THE ACT FOR CLAIMING DEDUCTION OF THE AMOUNT DONATED BY IT, THERE WAS NO OBLIGATION ON THE PART OF THE ASSESSEE TO SEE THAT THE AMOUNT WAS UTILISED FOR THE PURPOSE FOR WHIC H IT WAS DONATED. FURTHERMORE, THE DEDUCTION WAS ALLOWED ON THE CERTIFICATE FURNISHE D AND IT WAS NOT FOR THE ASSESSEE TO SHOW WHETHER THE INSTITUTION TO WHICH THE MONEY H AD BEEN DONATED WAS CARRYING, ON THE RURAL DEVELOPMENT WORK, AS ENVISAGED UNDER SECTI ON 35CCA OF THE ACT. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF NATIONAL LEATHER CLOTH MANUFACTURING CO., VS. INDIA N COUNCIL OF AGRICULTURAL RESEARCH(SUPRA), SEKSARIA BISWAN SUGAR FACTORY LTD. , VS. INSPECTING ASSISTANT COMMISSIONER(SUPRA) AND BHANUMATI MALRAJ KABALI VS. ITO(SUPRA). THE TRIBUNAL HAS ALSO BEEN TAKING CONSISTENT VIEW ON THIS ISSUE IN A LLOWING ASSESSEES CLAIM OF DEDUCTION WHERE ON THE DATE OF DONATION THE DONEE I NSTITUTE WAS HAVING VALID APPROVAL. 7. THUS, IN THE LIGHT OF FACTS OF THE CASE AND TH E LAW EXPOUNDED BY HONBLE APEX COURT, THE FINDINGS OF CIT(A) ON ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 35(1) OF THE ACT ARE SET-ASIDE AND GROUND NO.2 TO 4 OF THE APPEAL ARE ALLOWED. 8. IN GROUND NO.1 OF APPEAL, THE ASSESSEE HAS CHA LLENGED VALIDITY OF NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE LD. AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE MADE A STATEMENT AT BAR THAT HE IS NOT P RESSING GROUND NO.1 OF THE APPEAL. AS A RESULT, GROUND NO.1 OF ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ITA NO.5714/MUM/2019- A.Y. 2014-15: 10. BOTH SIDES ARE UNANIMOUS IN STATING THAT THE FA CTS IN ASSESSMENT YEAR 2014-15 ARE IDENTICAL TO FACTS IN 2012-13. THE ASSESSEES CLAIM UNDER SECTION 35(1)(II) OF THE 6 ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) ACT HAS BEEN DISALLOWED FOR IDENTICAL REASON. IN TH E PERIOD RELEVANT TO ASSESSMENT YEAR 2014-15, THE ASSESSEE HAD MADE DONATION OF RS. 2,00,000/- TO MATRIVANI INSTITUTE OF EXPEPRIMENTAL RESEARCH & EDUCATION ON 30/01/2014 THROUGH CHEQUE. THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 35( 1)(II) OF THE ACT WAS DISALLOWED IN REASSESSMENT PROCEEDINGS FOR SIMILAR REASONS. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE H AD MADE A STATEMENT THAT HE IS NOT PRESSING GROUND NO.1 OF THE APPEAL CHALLE NGING VALIDITY OF NOTICE ISSUED UNDER SECTION 148 OF THE ACT. 11. SINCE, THE FACTS GERMANE TO WITHDRAWAL OF ASSES SEES CLAIM OF WEIGHTED DEDUCTION UNDER SECTION 35(1)(II) OF THE ACT IN BOT H THESE APPEALS ARE IDENTICAL, THE FINDINGS GIVEN WHILE DECIDING APPEAL OF THE ASSESSE E IN ASSESSMENT YEAR 2012-13 WOULD MUTATIS MUTANDIS APPLY TO THE PRESENT APPEAL. FOR THE DETAILED R EASONS GIVEN WHILE DECIDING APPEAL OF THE ASSESSEE FOR ASS ESSMENT YEAR 2012-13; THE PRESENT APPEAL IS PARTLY ALLOWED. 12. TO SUM UP, APPEALS OF THE ASSESSEE FOR 2012-13 AND 2014-15 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, TH E 15 TH DAY OF JUNE, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 0%/ DATED 15/06/2021 VM , SR. PS (O/S) 7 ITA NO.5713/MUM/2019(A.Y 2012-13) ITA NO.5714/MUM/2019(A.Y 2014-15) COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. () / THE RESPONDENT. 3. 1) ( )/ THE CIT(A)- 4. 1) CIT 5. 23()% , . . . , / DR, ITAT, MUMBAI 6. 34567 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI