Cosmos Engitech Pvt. Ltd. Vs ACIT (ITAT Ahmedabad)
Bogus Research Donation: Bona Fides No Defence, Claim Crumbles After CBDT Withdrawal from retrospective effect
Assessee appealed against the order of CIT(A)/NFAC sustaining the reopening u/s 147 & disallowance of Rs.52,50,000/- claimed u/s 35(1)(ii) on donation of Rs.30,00,000/- to M/s Bioved Research Society, along with weighted deduction. Assessee argued that the claim was genuine, donation was made through banking channels in March 2015 & valid approval under section 35(1)(ii) existed at that time as per the receipt issued by the donee institution. Assessee also contended that reopening was bad in law since the issue was examined earlier during original assessment u/s 143(3).
Tribunal noted that CBDT Notification No.3/2019 dated 25.01.2019 had withdrawn approval of Bioved Research Society with retrospective effect from 01.04.2011 because the institution was involved in providing accommodation entries & bogus weighted deduction claims. Tribunal held that this constituted fresh tangible material for the AO to reopen the assessment. Hence, reopening u/s 147 was valid.
On merits, Tribunal relied upon its own earlier decisions in Brightech Valves & Controls Pvt. Ltd. & Joshi Technologies International Inc where similar bogus research-donation claims were disallowed on the ground that institutions like Arvindo Institute and Bioved Research Society had no valid approval during the relevant years & had misused section 35(1)(ii) to issue forged certificates. Tribunal reiterated that eligibility depends on actual legal approval, not on bona fide belief of Assessee or genuineness of payment. Since approval stood rescinded with effect from 01.04.2011, no deduction or weighted deduction could be allowed.
