HIREN M SHAH, MUMBAI V. ASST CIT 17(2), MUMBAI

ITA 6672/MUM/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5901 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 14-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Retrospective amendment; Cancellation of registration
• Section: 143(3); 142(1); 12A; 131

Judgement Text

, ,, , IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ./ ITA NOS.6672 & 6673/MUM/2013 ( / ASSESSMENT YEARS :2013-2014 & 2014-2015) KITCHEN ESSENTIALS, GALA NO.10, 12 KUNAL INDUSTRIAL ESTATE, GAURAIPADA, NEAR STATE BANK OF INDIA, VASAI (EAST), THANE-401208 VS. ACIT, CIRCLE-4, THANE ./PAN NO. : AAGFK 2728 K ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI FIROZE B. ANDHYARUJINA & SHRI KIRIT SANGHVI, AR /REVENUE BY : SHRI MANOJ KUMAR SINGH, CITDR / DATE OF HEARING : 01/01/2019 /DATE OF PRONOUNCEMENT 15/01/2019 / O R D E R PER SHRI RAJESH KUMAR, AM : THESE APPEALS BY ASSESSEE ARISE OUT OF THE ORDER OF THE CIT(A) 3, MUMBAI, BOTH DATED 21.09.2017, WHICH IN TURN HAS AR ISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 2013-2014 & 2014- 2015. 2. SINCE THE ASSESSEE HAS RAISED SIMILAR GROUNDS OF APPEAL IN BOTH THE AFORESAID APPEALS, EXCEPT DIFFERENT FIGURES, THEREF ORE, BOTH THE APPEALS OF THE ASSESSEE HAVE BEEN HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, FI RST, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2013 -2014 IN ITA NO.6672/MUM/2017 AND THE FACTS MENTIONED THEREIN AR E TAKEN INTO ITA NO.6672&6673/17 2 CONSIDERATION IN DECIDING BOTH THE APPEALS, WHEREIN THE GROUNDS RAISED BY THE ASSESSEE READ ARE AS UNDER :- 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW THE LEARNED CIT (A) ERRED IN NOT ASSIGNING REAS ONS FOR REJECTING THE SUBMISSIONS OF THE APPELLANT MADE BEF ORE HIM, AND THEREBY FAILED IN PASSING A SPEAKING ORDER. 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT T HE DENIAL BY THE AO TO THE DEMAND MADE BY THE APPELLANT FOR CROS S EXAMINATION OF THE PARTIES ON WHOSE STATEMENT THE A O WAS PLACING RELIANCE FOR MAKING THE IMPUGNED DISALLOWAN CE, RESULTED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE RENDERING THE IMPUGNED ORDER INVALID IN LAW. 3) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) WAS JUSTIFIED IN CONFIRMING DISA LLOWANCE OF THE CLAIM OF THE APPELLANT MADE UNDER S.35(1)(II) T HE I.T.ACT, 1961 FOR RS.87,50,000/- BY UPHOLDING THE CONCLUSION OF THE AO THAT THE CONTRIBUTION OF RS.50,00,000/- TO SCHOOL O F HUMAN GENETICS & POPULATION HEALTH WAS NOT GENUINE 4) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) WAS JUSTIFIED IN ACCEPTING THE T HEORY OF THE AO BASED ON THE OF PREPONDERANCE OF PROBABILITY AND THUS MAKING THE ADDITIONS PURELY ON THE BASIS OF PRESUMP TIONS , SURMISES AND CONJECTURES. 5) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) WAS JUSTIFIED IN DRAWING FROM TH E INSTANCES THAT ARE IRRELEVANT TO THE ISSUES INVOLVED IN THE A PPEAL, AN INFERENCE THAT THE CONTRIBUTION MADE BY THE APPELLA NT WAS NON GENUINE. 3. AT THE OUTSET, LD. AR DID NOT PRESS THE GROUNDS NO.1 & 2 AND ARGUED THE GROUNDS NO.3 TO 5 IN BOTH THE APPEALS. ACCORDIN GLY, WE DISMISS THE GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN BOTH THE APPEALS AS NOT PRESSED AND PROCEED TO DECIDE THE GROUNDS NO.3 TO 5 IN THE ENSUING PARAS. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND EXPORTING OF STAINLESS STEEL UTENSILS AND OTHER KITCHENWARE ITEMS AND ITA NO.6672&6673/17 3 FILED ITS RETURN OF INCOME ON 29.10.2013 DISCLOSING TOTAL INCOME AT RS.54,34,460/-, WHICH WAS PROCESSED U/S.143(1) OF T HE ACT. THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDE R CASS AND NOTICE U/S.143(2) & 142(1) OF THE ACT WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO NOTICED THAT THE ASSESSEE HAD MADE DONATION OF RS.50,00,000 /- TO M/S. SCHOOL OF HUMAN GENETICS & POPULATION HEALTH (SHG & PH), KOLK ATA. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.87,50,000/-, B EING 175% OF THE PAID AMOUNT. THE AO AFTER RECEIVING INFORMATION FR OM THE INVESTIGATION WING THAT THE SAID ASSESSEE IS ENGAGED IN ACCEPTING BOGUS DONATIONS U/S.35(1)(II) OF THE ACT. A SURVEY U/S.133A CARRIE D OUT ON 27.01,2015 AT THE OFFICE PREMISES OF SHG&PH. DURING SURVEY PROCEE DINGS, STATEMENTS OF SECRETARY/TREASURER/PRESIDENT AND OTHER PERSONS WERE RECORDED WHEREIN THEY ADMITTED TO BE ENGAGED IN PROVIDING B OGUS DONATIONS ENTRIES TO DONORS AND DESCRIBED IN DETAILS THE MOD US OPERANDI FOLLOWED. DURING SURVEY PROCEEDINGS, SURVEY TEAM CONCLUDED TH AT THE WHOLE PURPOSE WAS TO RECEIVE DONATIONS VIA CHEQUES/RTGS A ND AFTER DEDUCTING COMMISSION, THE MONEY USED TO BE RETURNED. SUMMONS U/S 131 WERE ISSUED TO VARIOUS PERSONS , WHOSE STATEMENTS FORM P ART OF THE ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE FILED EVIDENCES, WHICH INCLUDED STATEMENTS OF TREASURER, SECRETARY, COPY OF SETTLEMENT COMMISSION ORDER AND OTHER BILLS AND VOU CHERS INCLUDING DUPLICATE RECEIPTS OF DONATIONS ISSUED, BANK STATEM ENTS, LETTERS OF SGH & PH ASKING FOR DONATIONS, COPIES OF DOCUMENTS INDICA TING APPROVAL GRANTED ITA NO.6672&6673/17 4 TO SHG & PH FOR ELIGIBILITY TO ACCEPT DONATIONS. AC CORDINGLY, THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO WHICH THE ASSESSEE REPLIED, HOWEVER, THE AO DID ACCEPT THE EXPLANATION OF THE ASSESSEE FOR THE VARIOUS REASONS STATED IN THE ASSESSMENT ORDER AND DISALLOWED THE CLAIM OF DEDUCTION OF DONATION OF RS.87,50,000/- BY HOLDING THAT THE ENTIRE ACTIVITIES OF THE TRUST ARE SHAM AND NOT GEN UINE BY RELYING ON THE DECISION IN THE CASE OF JANKINATH SARANGI VS. STATE OF ORISSA, UNION OF INDIA , ANR. VS..P.K. ROY & ORS. AND SUMATI DAYAL V S. COMMISSIONER OF INCOME TAX (1995) 80 TAXMAN 89 AND FRAMED THE ASSES SMENT U/S.143(3) OF THE ACT, DATED 30.12.2016. 5. BEING AGGRIEVED WITH THE ASSESSMENT ORDER PASSED BY THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), HOWEVE R, THE CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE AO. 6. LD. AR BEFORE US SUBMITTED THAT THE ISSUE INVOLV ED IN THE PRESENT CASE IS SQUARELY COVERED BY THE VARIOUS DECISIONS O F THE COORDINATE BENCHES OF THE TRIBUNAL, WHEREIN THE COORDINATE BEN CHES HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. LD. AR ALSO RE FERRED TO THE DECISION OF KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF NARBHE RAM VISHRAM VS. DCIT, ITA NOS.42&43/KOL/2018 FOR THE ASSESSMENT YEA R 2013-2014 & 2014-2015. LD. AR SUBMITTED THAT IN THIS CASE THE F ACTS ARE IDENTICAL AS THE DONATION WAS ALSO MADE TO THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH, WHICH IS AN INSTITUTION APPROVE D BY THE CENTRAL GOVERNMENT VIDE NOTIFICATION DATED 2009 FOR THE PUR POSE OF EXEMPTION U/S.35(1)(II) OF THE ACT. LD. AR FURTHER SUBMITTED THAT IN THE PRESENT CASE ITA NO.6672&6673/17 5 ALSO THE ASSESSEE HAS MADE DONATIONS TO THE SAME TR UST WHICH WERE CLAIMED U/S.35(1)(II) OF THE ACT TO THE TUNE OF RS. 87,50,000/- AGAINST THE CONTRIBUTION OF RS.50,00,000/-. TO SUPPORT HIS CONT ENTIONS, LD. AR ALSO RELIED ON THE FOLLOWING DECISIONS :- I) ZENITH CREDIT CORPORATION VS. ITO, ITA NO.718/KO L/2018, ORDER DATED 20.07.2018; II) TUSHAR CHAWDA VS. ITO, ITA NO.2362/KOL/2017, OR DER DATED 21.03.2018; III) DCIT VS. MACO CORPORATION INDIA (P) LTD. ITA NO.378/KOL/2017, ORDER DATED 13.04.2018; AND IV) M/S P.R.ROLLING MILLS PVT. LTD. VS. DCIT, ITA NO.529/JP/2018, ORDER DATED 07.07.2018. LD. AR SUBMITTED THAT SINCE THE FACTS IN THESE CASE S ARE QUITE COMMON AND SIMILAR, THEREFORE, FOLLOWING THE SAID DECISION S THE APPEAL OF THE ASSESSEE SHOULD BE ALLOWED. 7. LD.DR, ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF AUTHORITIES BELOW AND SUBMITTED THAT APPROVAL GRANTED U/S 35(1) (II) TO THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH WAS WITHDRAW N BY THE GOVERNMENT OF INDIA WITH RETROSPECTIVE EFFECT WHEN IT WAS FOUND THAT THE SAID INSTITUTION WAS ENGAGED IN HAWALA OPERATIONS AND MISUSED THE EXEMPTION. THE DR FURTHER SUBMITTED THAT THE OFFIC E BEARERS OF THE TRUST HAVE CATEGORICALLY ADMITTED THAT THE TRUST WAS INVO LVED IN THE BOGUS TAX EVASION SCHEMES AND, THEREFORE, THE ORDER OF CIT(A) NEEDS TO BE UPHELD. MOREOVER, THE SAID INSTITUTION HAS APPROACHED THE S ETTLEMENT COMMISSION AND THE REQUEST OF THE TRUST WAS REJECTED BY THE S ETTLEMENT COMMISSION BY OBSERVING THAT THE SAID INSTITUTION HAS MISUSED THE EXEMPTION GRANTED ITA NO.6672&6673/17 6 TO ACCEPT DONATION U/S 35(1)(II) , AND, THEREFORE, THE ORDER OF CIT(A) NEEDS TO BE CONFIRMED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISIONS CITED BY THE LD. AR. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS MADE DONATIONS OF RS.50 L AKHS TO THE THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH AN D CLAIMED DEDUCTION U/S.35(1)(II) OF THE ACT EQUAL TO RS.87,5 0,000/- BEING 175% OF THE AMOUNT PAID. A SURVEY WAS CONDUCTED AT THE OFFI CE PREMISES OF THE SCHOOL NAMELY, THE SCHOOL OF HUMAN GENETICS AND P OPULATION HEALTH U/S.133A OF THE ACT ON 27.01.2015 AND IT WAS OBSERV ED BY THE SURVEY TEAM THAT THIS INSTITUTE IN CONNIVANCE WITH DONORS, BROKERS AND ACCOMMODATION ENTRY PROVIDERS HAS INDULGED IN A DUV IOUS SCHEME OF TAX EVASION, UNDER WHICH BOGUS DONATIONS WERE RECEIVED FROM DONORS AND MONEY USED TO BE RETURNED BACK TO THE DONORS IN LI EU OF COMMISSION, EVEN WHILE THE DONOR AVAILED OF DEDUCTIONS U/S.35(1 )(II) OF THE ACT. THE REGISTRATION OF THE INSTITUTION WAS CANCELLED BY TH E GOVERNMENT OF INDIA WITH RETROSPECTIVE EFFECT AND IT WAS HELD THAT THE INSTITUTION HAS MISUSED THE EXEMPTION. HOWEVER, UNDER SIMILAR FACTS AND CIR CUMSTANCES, VARIOUS COORDINATE BENCHES HAVE TAKEN THE VIEW THAT MERE AD MISSION ON THE PART OF THE OFFICE BEARERS OF THE BODY/TRUST, THE ASSESS EE CANNOT BE PENALIZED AND THE AMOUNT OF DONATIONS CLAIMED BY THE ASSESSEE ON ACCOUNT OF PAYMENT TO THE SAID SCHOOL CANNOT BE DENIED. IN THE CASE OF NARBHERAM VISHRAM GUA, ITA NO.42&43/KOL/2018, ORDER DATED 27. 07.2018, THE ITA NO.6672&6673/17 7 KOLKATA BENCH OF THE TRIBUNAL UNDER SIMILAR CIRCUMS TANCES AND FACTS HAS HELD AS UNDER :- 13 WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE N OTE THAT THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF WEIGHTED DE DUCTION OF RS.4,81,25,000/- FOR A.Y. 2013-14 AND DISALLOWANCE OF WEIGHTED DEDUCTION OF RS.10,50,00,000/-, FOR A.Y. 2014-15, C LAIMED BY HIM UNDER SECTION 35(L)(II) OF THE ACT IN RESPECT OF TH E AMOUNTS OF DONATIONS MADE TO TWO INSTITUTIONS VIZ. 'MATRIVANI INSTITUTE EXPERIMENTAL RESEARCH & EDUCATION' (HEREINAFTER REF ERRED TO AS 'MATRIVANI') AND 'THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH' (HEREINAFTER REFERRED TO AS 'SHG ; ). THE ASSESSEE FIRM IN A.Y. 2014-15, MADE DONATION OF RS,2,00,00,000/ TO M ATRIVANI AND RS,4,00,00,000/ TO SHG AND CLAIMED WEIGHTED DEDUCTI ON OF RS.10,50,00,000 UNDER SECTION 35(L)(II) OF THE INCO ME TAX ACT, 1961, BEING 175% OF THE AGGREGATE SUM OF RS.6,00,00 ,000/- (RS,2,00,00,000 + RS,4,00,00,000) DONATED TO THESE TWO INSTITUTES WHICH WERE APPROVED BY THE CENTRAL GOVERNMENT FOR T HE PURPOSES OF SECTION 35(L)(II) OF THE ACT READ WITH RULE 5C A ND SE OF THE INCOME TAX RULES, 1962. IN THE ASSESSMENT YEAR 2013 -14, THE ASSESSEE CLAIMED WEIGHTED DEDUCTION OF RS.4,81,25,0 00/- UNDER SECTION 35(1) (II) OF THE ACT, WHICH IS 175% OF THE AMOUNT OF DONATION BEING THE SUM OF RS.2,75,00,000/- IN RESPE CT OF THE DONATION GIVEN TO 'THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH'. WE NOTE THAT THE NOTIFICATIONS TO THIS EFF ECT, THAT THESE TWO INSTITUTIONS VIZ; 'MATRIVANI' AND 'SHG', WERE APPRO VED BY THE CENTRAL GOVERNMENT FOR THE PURPOSE OF SECTION 35(1)(II) OF THE ACT, WAS PUBLISHED IN THE GAZETTE OF INDIA. HOWEVER, THE DED UCTION CLAIMED BY THE ASSESSEE WAS DENIED BY THE ASSESSING OFFICER ON THE BASIS OF THE ALLEGATIONS CONTAINED IN THE REPORT OF THE I NVESTIGATION WING OF KOLKATA THAT THE SAID DONATIONS WERE BOGUS. THE REASONS STATED THEREIN, IN SHORT, WERE THAT STATEMENTS OF SOME KEY PERSONS OF THESE TWO DONEE INSTITUTIONS WERE RECORDED BY THE I NVESTIGATION AUTHORITY IN COURSE OF SURVEY PROCEEDINGS IN THEIR CASES. THE SAID KEY PERSON, IN THEIR STATEMENTS, ACCEPTED TO HAVE R ECEIVED DONATIONS FROM VARIOUS ENTITIES IN LIEU OF CASH RET URNED TO THEM AFTER DEDUCTING COMMISSION THERE FROM. 14.WE NOTE THAT, DURING THE COURSE OF HEARING, BEFO RE US, THE ID COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THE SUMS P AID TO 'MATRIVANI 1 AND 'SHG, WERE GENUINE DONATIONS AND BOTH OF THE INSTITUTIONS WERE ADMITTEDLY REGISTERED UNDER SECTI ON 12A OF THE INCOME TAX ACT, 1961. WE NOTE THAT BOTH OF THE SAID TWO INSTITUTIONS VIZ, 'MATRIVANI' AND 'SHG', ARE SCIENTIFIC RESEARCH ASSOCIATION APPROVED AS SUCH BY CENTRAL GOVERNMENT UNDER SECTIO N 35(L)(II) OF THE INCOME TAX ACT, 1961 VIDE NOTIFICATION, BEARING NO. 229/2007 (F.NO.203/135/2007/ITA-II) DATED 21.08.2007 AND NOT IFICATION NO. 4/2010 (F. NO. 2B/A/2009,/ITA-II DATED 28.01.2010 R ESPECTIVELY, PUBLISHED IN OFFICIAL GAZETTE OF INDIA. THE ASSESSE E CATEGORICALLY DENIED THAT IT EVER RECEIVED BACK THE AMOUNTS OF DO NATIONS IN CASH ITA NO.6672&6673/17 8 OR IN KIND FROM THE SAID INSTITUTIONS AND FROM ANY PERSON WHATSOEVER IN LIEU OF THE VARIOUS AMOUNTS DONATED T O THESE TWO INSTITUTIONS, WE NOTE THAT IN THE STATEMENTS, OF KE Y PERSONS AND ALLEGED BROKERS RECORDED BY THE INVESTIGATION WING IN COURSE OF SURVEY PROCEEDINGS, IN THEIR CASES AND THE EXTRACTS OF WHICH WAS PROVIDED TO THE ASSESSEE IN THE SHOW CAUSE NOTICE, THE NAME OF THE ASSESSEE FIRM DOES NOT APPEAR ANYWHERE. IT IS TO BE NOTED THAT NONE OF THOSE PERSONS IMPLICATE THE ASSESSEE TO HAV E MADE BOGUS DONATIONS AND THAT CASH WAS PAID TO THE DONORS ASSE SSEE IN LIEU OF THE ALLEGED BOGUS DONATION AFTER DEDUCTING THEIR CO MMISSION. WE NOTE THAT THE STATEMENTS OF THE VARIOUS PARTIES AND PERSONS WERE RECORDED BEHIND THE BACK OF THE ASSESSEE AND T HE ASSESSING OFFICER DID NOT ALLOW OPPORTUNITY OF CROSS EXAMINAT ION. WE NOTE THAT IN ABSENCE OF OPPORTUNITY OF CROSS-EXAMINATION NO R ELIANCE COULD BE MADE ON SUCH STATEMENTS TO DRAW ANY ADVERSE INFEREN CE AGAINST THE ASSESSEE FIRM. THE ASSESSEE FIRM DENIED ITS KNO WLEDGE OF THE STATEMENTS MADE BY THESE INSTITUTES WHICH WERE RELI ED ON BY THE INVESTIGATION WING AND THE ASSESSING OFFICER. WE NO TE THAT NOT PROVIDING THE OPPORTUNITY OF CROSS-EXAMINATION IS A GAINST THE PRINCIPLE OF NATURAL JUSTICE AND FOR THAT WE RELY O F-THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DHA RAM PAL PRERN CHAND LTD. [2007] 295 ITR 105, 108 (DEL).WE NOTE TH AT ON IDENTICAL FACTS, THE SIMILAR PROPOSITION WAS UPHELD BY THE CO ORDINATE BENCH OF KOLKATA IN THE CASE OF RAJDA POLYMERS, ITA NO.33 3/KOL/2017,FOR ASSESSMENT YEAR 2013-14 WHEREIN IT WAS HELD AS FOLL OWS: '10. ....THUS WE NOTE FROM THE ENTIRE FACTS AND CIR CUMSTANCES, THAT THE AO GOT SWAYED AWAY WITH THE STATEMENT RECO RDED ON OATH OF MR. SWAPAN RANJAN DASGUPTA DURING SURVEY CO NDUCTED AT THE PREMISES OF M/S. HERBICURE. WE HAVE REPRODUC ED QUESTION NO. 22 AND 23 AND ANSWERS GIVEN BY SHRI SW APAN RANJAN DASGUPTA, WHEREIN HE ADMITS TO PROVIDE ACCOM MODATION ENTRIES IN LIEU OF CASH. THIS INFORMATION WE SHOULD SAY CAN BE THE TOOL TO START AN INVESTIGATION WHEN THE ASSESSE E MADE THE CLAIM FOR WEIGHTED DEDUCTION. THE GENERAL STATEMENT OF SHRI SWAPAN RANJAN DASGUPTA AGAINST DONATION MADE THE CL AIM OF ASSESSEE FOR DEDUCTION SUSPICIOUS. HOWEVER, WHEN TH E AO INVESTIGATED, SHRI SWAPAN RANJAN DASGUPTA HAS CONFI RMED THAT M/S. HERBICURE WAS IN RECEIPT OF THE DONATION AND I T HAS NOT GIVEN ANY REFUND IN CASH, THEN THE SOLE BASIS OF DI SALLOWANCE OF CLAIM AS A MATTER OF FACT DISAPPEARED. IT SHOULD BE REMEMBERED SUSPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OF EVIDENCE. THE CONFIRMATION FROM SHRI SWAPAN RANJAN DASGUPLA F ORTIFIES THE CLAIM OF THE ASSESSEE FOR WEIGHTED DEDUCTION U/ S. 35(1)(II) OF THE ACT. THE SOLE BASIS OF THE ADDITION/DISALLOWANC E BASED ON STATEMENT RECORDED ON OATH DURING SURVEY CANNOT BE ALLOWED AS HELD BY HON'BLE SUPREME COURT IN KADER KHAN & SONS (SUPRA). MOREOVER, WE NOTE THAT IF THE AO WAS HELL BENT DETE RMINED TO DISALLOW THE CLAIM OF THE ASSESSEE, THEN HE SHOULD HAVE GRANTED AN OPPORTUNITY TO CROSS EXAMINE SHRI SWAPAN RANJAN DAS GUPTA AND SHRI KISHAN BHAWASINGKA AS HELD BY HON'BL E SUPREME COURT IN ANDAMAN TIMBER (SUPRA). ITA NO.6672&6673/17 9 11. IN THE LIGHT OF THE AFORESAID FACTS AND CIRCUMS TANCES, WE CANNOT SUSTAIN THE ORDER OF THE AUTHORITIES BELOW. THEREFO RE, WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THE AO TO ALLOW THE D EDUCTION OFRS.26,28,500/- U/S. 35(L)(II) OF THE ACT. 15. NOW, WE DEAL WITH THE ARGUMENTS OF ID DR FOR TH E REVENUE. WE NOTE THAT THE SOLITARY GRIEVANCE OF THE ID DR FOR T HE REVENUE IS THAT SINCE THE REGISTRATION HAD BEEN CANCELLED BY THE CB DT, WITH RETROSPECTIVE EFFECT THAT IS, WITH EFFECT FROM 1 SL APRIL 2007, BY ISSUING NOTIFICATION DATED 06.09.2016, FOR BOTH THE INSTITU TIONS VIZ: 'MATRIVANI' AND 'THE SCHOOL OF HUMAN GENETICS AND POPULATION HE ALTH', THEREFORE THESE INSTITUTIONS ARE NOT ENTITLED TO CL AIM BENEFIT UNDER SECTION 35 (1) (II) OF THE ACT. WE NOTE THAT THE WITHDRAWAL OF RECOGNITION U/S 35(L )(II) OF THE ACT IN THE HANDS OF THE PAYEE ORGANIZATIONS WOULD NOT AFFE CT THE RIGHTS AND INTERESTS OF THE ASSESSEE HEREIN FOR CLAIM OF W EIGHTED DEDUCTION U/S 35(1 )(II) OF THE ACT, FOR THAT WE RE LY ON THE JUDGMENT OF THE COORDINATE BENCH, KOLKATA, IN THE CASE OF M/ S MACO CORPORATION INDIA (P) LTD, ITA NO.L6/KOL/2017, FOR ASSESSMENT YEAR 2013-14, WHEREIN IT WAS HELD AS FOLLOWS: '29. ALL THE THREE HIGH COURTS AFTER EXAMINING THE ISSUE, IN THE LIGHT OF THE OBJECT OF SECTION 12A OF THE ACT AND S ECTION 21 OF THE GENERAL CLAUSES ACT HELD THAT THE ORDER OF THE CIT PASSED UNDER SECTION 12A IS QUASI JUDICIAL IN NATURE. SECO ND, THERE WAS NO EXPRESS PROVISION IN THE ACT VESTING THE CIT WITH POWER OF CANCELLATION OF REGISTRATION FILL 01.10.2004; AN D LASTLY. SECTION 21 OF THE GENERAL CLAUSES ACT HAS NO APPLIC ATION TO THE ORDER PASSED BY THE CIT UNDER SECTION 12A BECAU SE THE ORDER IS QUASI JUDICIAL IN NATURE AND IT IS FOR ALL THESE REASONS THE CIT HAD NO JURISDICTION TO CANCEL THE REGISTRAT ION CERTIFICATE ONCE GRANTED BY HIM UNDER SECTION_12A TILL THE POWER WAS EXPRESSLY CONFERRED ON THE CIT BY SECTION I2AAC3) OF THE ACT W. E.F. 01.10.2004. WE HOLD THAT THE RATIO DECIDENDI OF THE AFORESAID J UDGEMENT OF THE HON'BLE APEX COURT WOULD SQUARELY BE APPLICABLE TO THE FACTS OF THE INSTANT CASE. IN FACT THE ASSESSEE'S C ASE HEREIN FALLS ON A MUCH BETTER FOOTING THAN THE FACTS BEFOR E THE HON'BLE APEX COURT. IN THE CASE BEFORE HON'BLE APEX COURT, THE POWER OF CANCELLATION OF REGISTRATION US 12A OF THE ACT W AS CONFERRED BY THE ACT ON THE ID CIT W.E.F. 1.10.2004 AND THE H ON'BLE APEX COURT HELD THAT PRIOR TO THAT DATE , NO CANCELLATIO N OF REGISTRATION COULD HAPPEN. BUT IN THE INSTANT CASE, THERE IS ABSOLUTELY NO PROVISION FOR WITHDRAWAL OF RECOGNITI ON U/S 35(L)(II) OF THE ACT. HENCE WE HOLD THAT THE WITHDR AWAL OF RECOGNITION U/S 35(L)(II) OF THE ACT IN THE HANDS O F THE PAYEE ORGANIZATIONS WOULD NOT AFFECT THE RIGHTS AND INTER ESTS OF THE ASSESSEE HEREIN FOR CLAIM OF WEIGHTED DEDUCTION U/S 35(1 )(H) OF THE ACT.' ITA NO.6672&6673/17 10 16.1N VIEW OF THE AFORESAID FINDINGS IN THE FACTS A ND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE DIRECT THE I D AO TO GRANT DEDUCTION U/S 35(1)(II) OF THE ACT, IN THE SUM OF R S. 4,81,25,000/- FOR A.Y, 2013-14 AND IN THE SUM OF RS.10,50,00,000/-, F OR A.Y. 2014- 15, AS CLAIMED BY HIM UNDER SECTION 35(L)(II) OF TH E ACT IN RESPECT OF THE AMOUNTS OF DONATIONS MADE TO TWO INSTITUTIONS V IZ. 'MATRIVANI INSTITUTE EXPERIMENTAL RESEARCH & EDUCATION' AND TH E SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH'. ACCORDINGLY, THE GROUNDS 1 TO 4 RAISED BY THE ASSESSEE FOR A.Y. 2013-14 AND THE GROUNDS 1 TO 5 RAISED BY THE ASSESSEE FOR A.Y. 2014-15 ARE AL LOWED. 9. SIMILARLY IN VARIOUS OTHER DECISIONS THE ISSUE H AS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE BY DISREGARD ING THE REVENUES CONTENTIONS THAT THE REGISTRATION OF THE SCHOOL HAS BEEN CANCELLED BY THE CBDT WITH RETROSPECTIVE EFFECT BY ISSUING NOTIFICAT ION AND, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO BENEFIT U/S.35(1)(II) O F THE ACT. THE FACTS BEFORE US BEING MATERIALLY SAME INVOLVING THE SAME SCHOOL, NAMELY, THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH, WE, THER EFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES O F THE TRIBUNAL, HOLD THAT THE DEDUCTION U/S.35(1)(II) OF THE ACT CANNOT BE DENIED TO THE ASSESSEE. ACCORDINGLY, WE DIRECT THE AO TO GRANT DE DUCTION U/S.35(1)(II) OF THE ACT. APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2013-2014 (ITA NO.6672/MUM/2017) IS HEREBY ALLOWED. 10. NOW, WE SHALL TAKE UP APPEAL OF THE ASSESSEE FO R THE ASSESSMENT YEAR 2014-2015 IN ITA NO.6673/MUM/2017, WHEREIN THE ISSUE INVOLVED IS IDENTICAL TO ONE AS DECIDED BY US IN APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2013-2014 IN ITA NO.6672/MUM/2017 B Y HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.35(1)(II) OF THE ACT. THEREFORE, THE FINDINGS GIVEN BY US IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2013-2014 IN ITA NO.6672/MUM/2017 SHALL APPLY MUTATIS MUTANDIS ITA NO.6672&6673/17 11 TO THE PRESENT APPEAL OF THE ASSESSEE FOR ASSESSMEN T YEAR 2014-2015 IN ITA NO.6673/MUM/2017 AS WELL. ACCORDINGLY, THIS APP EAL OF THE ASSESSEE IS ALSO ALLOWED. 11. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/01/2019. SD/- (RAM LAL NEGI) SD/- (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 15/01/2019 . . /PRAKASH KUMAR MISHRA , SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPELLANT- 2. / THE RESPONDENT- 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//