We Have Heard Mr. Om Narayan Rai, Learned Standing Counselalong With Mr. Soumen Bhattacharjee, Learned Advocate For Theappellant/Revenue v. Assessee On The Basis Of The Payment To An Approved Society Undersection 35Cca Of The Act

OD – 5 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/153/2023IA NO: GA/2/2023PRINCIPAL COMMISSIONER OF INCOME TAX 5,KOLKATAVSJ P FINANCIAL SERVICES PVT. LTD. BEFORE:- THE HON'BLE THE CHIEF JUSTICE T. S. SIVAGNANAM -A N D-HON'BLE JUSTICE HIRANMAY BHATTACHARYYADATE : 2[nd] AUGUST, 2023. Appearance :Mr. Om Narayan Rai, Adv.Mr. Soumen Bhattacharjee, Adv.…for appellant The Court :- This appeal by the revenue filed under Section260A of the Income Tax Act, 1961 (the Act) is directed against theorder dated November 13, 2019 in ITA No. 07/Kol/2019 as well as theorder in M.A. No. 4/Kol/2021 dated May 27, 2022 for the assessmentyear 2015-16. The revenue has raised the following substantial questions oflaw for consideration :- A.Whether the Learned Income Tax Appellate Tribunal hascommitted substantial error in law in allowing thedeductions claimed under Section 35(1)(ii) of the Act by theassessee company for donation to the M/s. HerbicureHealthcare Bio-Herbal Research Foundation is perversecommitted substantial error in law in allowing thedeductions claimed under Section 35(1)(ii) of the Act by theassessee company for donation to the M/s. HerbicureHealthcare Bio-Herbal Research Foundation is perverse considering that there were ample evidence on the contraryand placed on record where it is clearly evident that suchtransactions were carried out by the assessee firm were Ithe nature of bogus donations made with the sole intentionto evade taxes ? B.Whether the Learned Income Tax Appellate Tribunal hascommitted substantial error in law in giving relief to theassessee by allowing the claim of bogus donations underSection 35(1)(ii) by stating that the CBDT had recognizedsuch bogus entry providing concerns namely M/s.Herbicure Healthcare Bio-Herbal Research Foundationunder section 35(1)(ii) whereas on the contrary suchapproval and recognition had been withdrawn by the CBDTvide Gazettee Notification S.O. 2882(E) dated 6[th] September,2016 and O.M. vide F. No. 203/09/2015/ITA.II dated 21[st]September, 2016 considering the nature of unscrupulousactivities carried on by these donee concerns ? We have heard Mr. Om Narayan Rai, learned standing counselalong with Mr. Soumen Bhattacharjee, learned Advocate for theappellant/revenue. The short issue which falls for consideration in this appeal iswhether the Tribunal was right in allowing the deductions claimed bythe assessee under Section 35(1)(ii) of the Act for the donation to aorganization who initially enjoyed a registration under Section 35(1) ofthe Act, which was subsequently withdrawn with retrospective effect. We have heard Mr. Om Narayan Rai, learned standing counselalong with Mr. Soumen Bhattacharjee, learned Advocate for theappellant/revenue. The short issue which falls for consideration in this appeal iswhether the Tribunal was right in allowing the deductions claimed bythe assessee under Section 35(1)(ii) of the Act for the donation to aorganization who initially enjoyed a registration under Section 35(1) ofthe Act, which was subsequently withdrawn with retrospective effect. The learned Tribunal followed the decision of a co-ordinate Bench ofthe Tribunal dated 27.07.2018 in the case of Narbheram Vishram inI.T.A. Nos. 42&43/Kol/2018. Apart from certain factual similaritiesthe Tribunal in the said decision has also taken note of the decisionsof the Hon’ble Supreme Court holding that there is no provision forwithdrawal of recognition under Section 35(1)(ii) of the Act. The viewtaken by the learned Tribunal in the impugned order is supported bythe decision of the Hon’ble Division Bench of this Court in the case ofCommissioner of Income Tax Versus General Magnets Ltd. ; (2002) 256ITR 471 wherein the Court after taking note of various decisionsnamely CIT v. Ethelbari Tea Co.(1931) Ltd., [2002] 256 ITR 470 (Cal),B.P. Agarwalla and Sons Ltd. v. CIT [1994] 208 ITR 863 (Cal), K.M.Scientific Research Centre v. Lakshman Prasad [1998] 229 ITR 23,Seksaria Biswan Sugar Factory Ltd.v. IAC [1990] 184 ITR 123, CIT v.Bhartia Cutler Hammer Co.[1998] 232 ITR 785, Chotatingrai Tea EstatePvt. Ltd. v. CIT [1999] 236 ITR 644, held that for the mistakecommitted by the department the assessee should not suffer. Thewithdrawal of approval to the society for retrospective effect is itselfbad and no assessee should suffer for the mistake of the department.The department has power of withdrawal but in such caseswithdrawal can be only with prospective effect. Further it was heldthat if the donation to the approved society is genuine, in that casewithdrawal with retrospective effect does not affect the right of theassessee for deduction of the amount which has accrued to the assessee on the basis of the payment to an approved society underSection 35CCA of the Act. In the light of the above, the order passed by the learnedTribunal does not call for any interference. In the result, the appeal is dismissed and the substantialquestions of law are answered against the revenue. The stay application being GA/2/2023 is also dismissed. (T. S. SIVAGNANAM) CHIEF JUSTICE SN/GH. (HIRANMAY BHATTACHARYYA,J.)