Nishan Multitrade Pvt. Ltd., Ahmedabad V. The DCIT, Circle-3(1)(1), Ahmedabad

ITA 897/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7969 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 10-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Assessee Lawyers: A C SHAH
• Keywords: Retrospective amendment; Accommodation entries
• Section: 133A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) [THROUGH VIRTUAL COURT] ITA. NO: 897/AHD/2018 (ASSESSMENT YEARS: 2014-15) NISHAN MULTITRADE PVT. LTD., B-204, KRISHNA COMPLEX, OPP. DEVAASHISH SCHOOL, BODAKDEV, AHMEDABAD-380061 PAN NO. AADCK 5903E V/S THE D.C.I.T., CIRCLE-3(1)(1), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A. C. SHAH, A.R. RESPONDENT BY : SHRI S. S. SHUKLA, SR. D.R. ( )/ ORDER DATE OF HEARING : 09-07-2021 DATE OF PRONOUNCEMENT : 24-08-2021 PER MAHAVIR PRASAD, J.M. 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) VIDE APPEAL NO. CIT(A)-9/10783/DCIT. CIR-3(1)(1)/2016-17 ORDER DATED ITA NO. 897/AHD/2018 . A.Y. 2014-15 2 09/03/2018 ARISING OUT OF ASSESSMENT ORDER DATED 14/10/2016. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE CLAIM OF RS. 87,50,000 UNDER SECTION 35(L)(II) ON THE BASIS OF INFORMATION RECEIVED FROM DDIT (INVESTIGATION) KOLKATA IN AS MUCH AS THE ENTIRE CONCLUSION IS ON PRESUMPTION, CONJUNCTURE AND SURMISES AND THERE ARE NO EVIDENCES THAT THAT THE ASSESSEE HAS RECEIVED BACK ANY CASH. 1.1 THE APPELLANT SAYS AND SUBMITS THAT THE AO HAS RELIED UPON THE INFORMATION RECEIVED FROM DDIT (INVESTIGATION) KOLKATA WITHOUT MAKING ANY INQUIRY BY AO HIMSELF. 1.2 THE LEARNED CIT(A) HAS ERRED IN RELYING ON THE CANCELLATION OF CERTIFICATE GRANTED BY CBDT WITH RETROSPECTIVE EFFECT IN AS MUCH AS THE ASSESSEE HAD GIVEN A DONATION DURING THE RELEVANT PERIOD AND THAT THE CERTIFICATE GRANTED UNDER SECTION 35(L)(II) WAS VALID AT THE TIME OF DONATION. 2. BRIEF FACTS OF THE CASE THAT IN COMPUTATION OF TOTAL INCOME ASSESSEE COMPANY CLAIMED DEDUCTION U/S. 35(1)(II) OF RS. 87,50,000/- BEING 175% OF RS. 50,00,000/- DEBITED TO PROFIT & LOSS ACCOUNT TOWARDS DONATION TO HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION. 3. IN SUPPORT OF ITS CONTENTION, ASSESSEE SUBMITTED DETAILS OF DEDUCTION U/S. 35(1)(II) SUCH AS APPEAL FOR DONATION LETTER OF HHBRF DATED 01/03/2014 RECEIPT OF DONATION AND COPY OF REGISTRATION 12AA AS WELL AS COPY OF NOTIFICATION NO. 35/2008 DATED 14/03/2008 REGARDING RENEWAL OF RECOGNITION OF SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION BY MINISTRY OF SCIENCE AND TECHNOLOGY DATED 13.08.2012. 4. IN THIS CASE, INFORMATION WAS RECEIVED FROM DDIT(LNV.), CALCUTTA THROUGH A SURVEY ACTION U/S 133A CARRIED OUT BY THE DEPARTMENT IN THE CASE OF HHBRF. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT DONOR/BENEFICIARIES IN CONNIVANCE WITH HHBRF WITH THE ACTIVE HELP OF BROKERS, ENTRY OPERATORS/BOGUS BILLERS WERE ENGAGED IN BOGUS DONATION SYNDICATE AND THE DONATIONS WERE RETURNED BACK TO THE DONORS IN LIEU OF COMMISSION. 5. AND BOGUS DONATIONS WERE BEING TAKEN VIDE CHEQUE/RTGS AND THEREAFTER AFTER TAKING COMMISSION, THE SAME WAS ROUTED BACK TO THE DONOR IN THE FORM OF CASH VIDE ITA NO. 897/AHD/2018 . A.Y. 2014-15 3 3-4 LAYERS AFTER BOGUS BILLING OR OTHER ACCOMMODATION ENTRIES IN THE BOOKS OF THESE INSTITUTES. 6. THE INFORMATION SUPPLIED BY THE INVESTIGATION WING, CALCUTTA, LD. A.O. ISSUED NOTICED TO THE ASSESSEE BUT ASSESSEE REFUSED TO SAY THAT THESE WERE GENUINE DONATION NOT WERE BOGUS. BUT LD. A.O. DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND MADE DISALLOWANCE OF DEDUCTION U/S. 35(1)(II) OF RS. 87,50,000/-. 7. AGAINST THE ORDER OF THE ASSESSING OFFICER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT IT HAS BEEN CATEGORICALLY PROVED DURING THE COURSE OF SURVEY IN THE CASE OF HHBRF THAT HHBRF WAS ONLY PROVIDING ACCOMMODATION ENTRY FOR VARIOUS DONORS AND RETURNED BACK CASH TO THOSE DONORS AFTER DEDUCTING CERTAIN COMMISSION. AND ALSO HELD THAT APPELLANT HAS NOT PROVED THE BASIS ON WHICH IT IDENTIFIED HHBRF AS A GENUINE RESEARCH ORGANIZATION. 8. NOW APPELLANT HAS COME BEFORE US BY WAY OF SECOND STATUTORY APPEAL FOR REDRESSAL OF HIS GRIEVANCE AGAINST THE ORDERS OF LOWER AUTHORITIES. 9. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND RELEVANT RECORD. NOW QUESTION BEFORE US IS WHETHER DEDUCTION OF RS. 87,50,000/- U/S. 35(1)(II) ARE BEING CLAIMED ARE GENUINE OR NOT. UNDOUBTEDLY, SURVEY WAS CARRIED OUT BY THE REVENUE AND ONE OF THE OFFICIAL OF HHBRF HAS CATEGORICALLY STATED THAT HHBRF HAS GIVEN BOGUS ENTRY AND RETURNED BACK MONEY TO THE DONORS. 10. ON THE OTHER HAND, IT IS WELL SETTLED PRINCIPLE THAT A STATEMENT GIVEN DURING THE COURSE OF SURVEY CANNOT BE RELIED UPON UNLESS IT IS CROSS EXAMINED BY THE AGGRIEVED PERSON. THE ASSESSEE HAS FILED A CERTIFICATE DULY ISSUED BY THE MINISTRY OF SCIENCE AND TECHNOLOGY WHICH WAS APPLICABLE ON THE DATE OF THE DONATION. ITA NO. 897/AHD/2018 . A.Y. 2014-15 4 11. APART FROM THAT ASESSEE HAS ALSO FILED A CIRCULAR OF CBDT NO. 79/2016 F. NO. 203/135/2007/ITA.II WHEREIN WITH FOLLOWING DIRECTIONS: S.O. 2882(E)- IN EXERCISE OF THE POWERS CONFERRED UNDER CLAUSE (II) OF SUB-SECTION (1) OF SECTION 35 OF THE INCOME-TAX ACT, 1961 READ WITH RULES 5C AND 5E OF THE INCOME-TAX RULES, 1962, THE CENTRAL GOVERNMENT HEREBY RESCINDS THE NOTIFICATION OF THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE35/2008 DATED 14 TH MARCH, 2008 PUBLISHED IN THE GAZETTE OF INDIA, PART II SECTION 3, SUB SECTION (III\) VIDE S.O. 798 DATED 14 TH MARCH, 2008 WITH EFFECT FROM 1 ST APRIL, 2007 AND SHALL BE DEEMED THAT THE SAID NOTIFICATION HAS NOT BEEN ISSUED FOR ANY TAX BENEFITS UNDER THE INCOME TAX ACT, 1961 OR ANY OTHER LAW OF THE TIME BEING IN FORCE. [NOTIFICATION NO. 79/2016/F. NO. 203/135/2007/ITA.II] 12. IT IS EVIDENT THAT ON THE DATE OF THE DONATION, CBDT CIRCULAR WAS EFFECTIVE IN SUCH CASE. 13. THE APPELLANT HAS ALSO RELIED AN ORDER OF THE ITAT BENCH WHEREIN DONATIONS WERE GIVEN TO THE HHBRF HELD TO BE GENUINE BY THE CO-ORDINATE BENCH WITH FOLLOWING OBSERVATIONS: 3. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 35(1)(II) AT RS.96,25,000/- ON THE GROUND THAT IT HAS INCURRED THIS EXPENDITURE TOWARDS DONATION. HE OBSERVED THAT DONATIONS WERE GIVEN TO HERBICURE HEALTH CARE BIO-HERBAL RESEARCH FOUNDATION ('HERBICURE' FOR SHORT). ACCORDING TO THE AO A SURVEY UNDER SECTION 133A WAS CONDUCTED BY THE DDIT(INVESTIGATION) UNIT-1 & 2, KOLKATTA ON 27.1.2015 AT 'HERBICURE' FOUNDATION. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT DONORS/BENEFICIARIES IN CONNIVANCE WITH DONEE AND WITH ACTIVE HELP OF CERTAIN BROKERS, ENTRY OPERATORS/BOGUS BILLERS WERE ENGAGED IN ARRANGING THESE ENTRIES OF BOGUS DONATION. ACCORDING TO THE AO AFTER AN INQUIRY, 'HERBICURE' WAS PROHIBITED FROM RECEIVING DONATION. ON THE STRENGTH OF THIS REPORT OF SURVEY TEAM, THE AO HAS TREATED THIS DONATION AS BOGUS AND DISALLOWED THE CLAIM OF DONATION MADE BY THE ASSESSEE. ON APPEAL, THE LD.CIT(A) HAS DELETED THE DISALLOWANCE. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT SIMILAR DONATIONS WERE GIVEN BY S.G. VAT CARE P.LTD. IT WAS DISALLOWED TO THE ASSESSEE, BUT THE TRIBUNAL HAS DELETED THE DISALLOWANCE. HE PLACED ON RECORD COPY OF THE TRIBUNAL'S ORDER ITA NO. 897/AHD/2018 . A.Y. 2014-15 5 PASSED IN ITA NO.1943/AHD/2017. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. ON THE OTHER HAND, THE LD.DR WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. IN THE CASE OF S.G.VAT CARE P.LTD. (SUPRA), THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDING: 2. IN THE FIRST GROUND OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.8,75,000/- ON ACCOUNT OF ALLEGED BOGUS DONATION TO HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 20.11.2014 DECLARING TOTAL INCOME AT RS.4,47,910/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED THAT THE ASSESSEE-COMPANY HAS GIVEN DONATION TO HERBICURE HEALTHCARE BIO- HERBAL RESEARCH FOUNDATION, CALCUTTA. A SURVEY ACTION WAS CARRIED OUT AT THE PREMISES OF THE DONEE WHEREIN IT REVEALED TO THE REVENUE THAT THIS CONCERN WAS MISUSING THE BENEFIT OF NOTIFICATION ISSUED BY THE INCOME TAX DEPARTMENT. IT HAS BEEN GETTING DONATIONS FROM VARIOUS SOURCES, AND AFTER DEDUCTING CERTAIN AMOUNT OF COMMISSION, THESE DONATIONS WERE REFUNDED IN CASH. ON THE BASIS OF THAT SURVEY REPORT REGISTRATION GRANTED TO ITS FAVOUR WAS CANCELLED. ON THE BASIS OF THE OUTCOME OF THAT SURVEY REPORT, THE LD.AO CONSTRUED THE DONATION GIVEN BY THE ASSESSEE AS BOGUS. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT DONATIONS WERE GIVEN ON 25.3.2014. AT THAT POINT OF TIME, DONEE WAS NOTIFIED AS ELIGIBLE INSTITUTION AND FALL WITHIN THE STATUTORY ELIGIBILITY CRITERION. CERTIFICATE FOR RECEIVING DONATION WAS CANCELLED ON 5.9.2016. THERE IS NO MECHANISM WITH THE ASSESSEE TO VERIFY WHETHER SUCH DONEE WAS A GENUINE INSTITUTE OR NOT, WHICH CAN AVAIL DONATION FROM THE SOCIETY. 5. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT IN THE INVESTIGATION IT CAME TO KNOW ABOUT BOGUS AFFAIRS CONDUCTED BY THE DONEE. HENCE, THESE DONATIONS ARE RIGHTLY BEEN TREATED AS BOGUS, AND ADDITION IS RIGHTLY MADE. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. THE AO IS HARPING UPON AN INFORMATION SUPPLIED BY THE SURVEY TEM OF CALCUTTA. HE HAS NOT SPECIFICALLY RECORDED STATEMENT OF REPRESENTATIVES OF THE DONEE. HE HAS NOT BROUGHT ON RECORD A SPECIFIC EVIDENCE WHEREIN DONEE HAS DEPOSED THAT DONATIONS RECEIVED FROM THE ASSESSEE WAS PAID BACK IN CASH AFTER DEDUCTING COMMISSION. ON THE BASIS OF A GENERAL INFORMATION COLLECTED FROM THE DONEE, THE DONATION MADE BY THE ASSESSEE CANNOT BE DOUBTED. NEITHER REPRESENTATIVES OF THE DONEE HAVE BEEN PUT TO CROSS-EXAMINATION, NOR ANY SPECIFIC REPLY DEPOSING THAT SUCH DONATION WAS NOT ITA NO. 897/AHD/2018 . A.Y. 2014-15 6 RECEIVED, OR IF RECEIVED THE SAME WAS REPAID IN CASH, HAS BEEN BROUGHT ON RECORD. IN THE ABSENCE OF SUCH CIRCUMSTANCES, DONATION GIVEN BY THE ASSESSEE TO THE DONEE, ON WHICH THE ASSESSEE NO MECHANISM TO CHECK THE VERACITY, CAN BE DOUBTED, MORE PARTICULARLY, WHEN CERTIFICATE TO OBTAIN DONATION HAS BEEN CANCELLED AFTER TWO YEARS OF THE PAYMENT OF DONATION. IT IS FACT WHICH HAS BEEN UNEARTHED SUBSEQUENT TO THE DONATIONS. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE ON THIS ISSUE. WE ALLOW THIS GROUND.' 6. THERE IS NO DISPARITY ON THE FACTS. ON THE BASIS SAME SURVEY REPORT, THE GENUINENESS OF THE DONATION HAS BEEN DOUBTED IN THE CASE OF THE ASSESSEE ALSO. THEREFORE, THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT IN THE CASE OF S.G.VAT CARE P.LTD., WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 14. SO IN VIEW OF THE ABOVE OBSERVATION AND PARITY WITH THE CO-ORDINATE BENCH ORDER, WE ALLOW APPEAL OF THE ASSESSEE. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 24- 08- 2021 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 24/08/2021 RAJESH COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD