The Ahmadabad bench of the Income Tax Appellate Tribunal ( ITAT ) rejected the deduction claimed under Section 35(1)(ii) of the Income Tax Act, 1961, citing that the trust was involved in issuing bogus bills for donations.
ITAT rejected the deduction claimed under Section 35(1) (ii) of the Income Tax Act, 1961, citing that the trust was involved in issuing bogus bills for donations.
The counsel for the assessee M.K. Patel argued that the Assessment Order itself was legally flawed, as the initiation of reassessment proceedings disregarded provisions of law and settled principles applicable to Section 147 proceedings of the Income Tax Act, 1961. Furthermore, it was asserted that both the Assessing Officer and the Commissioner of Income Tax ( Appeals ) failed to properly consider the assessee’s submissions and wrongly reopened the assessment.
The counsel emphasized that the School of Human Genetics and Population Health was legally registered in Assessment Years 2013-14 and 2014-15, supported by income tax certificates related to the renewal of approval issued by the Ministry of Science and Technology, Government of India. It was further highlighted that all evidence related to the donation amount and its receipt was submitted to the Assessing Officer, with no malicious intent on the part of the assessee.
Additionally, it was noted that the Central Board of Direct Taxes ( CBDT ) approved the institute for Clause (ii) of Sub-section (1) of Section 35 of the Income Tax Act, 1961. The counsel asserted that the assessee donated Rs. 5 lakhs, evidenced by bank statements and donation receipts submitted to the Assessing Officer.
The counsel for the revenue Sanjay Jain relied on the Assessment Order and the decision of the Commissioner of Income Tax ( Appeals ). Additionally, it was argued that the certificate issued by the Department pertains only to Assessment Year 2011-12, and thus, the assessee has not provided evidence regarding the renewal of this approval for Assessment Years 2013-14 and 2014-15.
Furthermore, it was asserted that the donee admitted that the institute in question is involved in issuing bogus bills for donations and that funds are routed back to donors through various channels disguised as purchases.
The single member bench of the tribunal comprising Sujithra Kamble ( Judicial member ) observed that it was evident from the statement provided by the Director of the School of Human Genetics and Population Health Institute that the institute engaged in issuing bills disguised as donations, with funds subsequently funneled back to donors through various channels in the guise of purchases.
Regarding the reopening of proceedings, the objections raised by the assessee were duly considered by the Assessing Officer, and there were no discrepancies noted by the assessee concerning the reopening of the case. It was noteworthy that the renewal documents for the School of Human Genetics and Population Health for Assessment Years 2013-14 and 2014-15 were never submitted by the assessee to any Revenue Authorities. Furthermore, the receipt attached on page 57 of the Paper Book indicates that the exemption was only valid until Assessment Year 2011-12.
Hence, appeal filed by the assessee for A.Y. 2014-15 was dismissed.
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