Sri. Harsha V. Shastry, Bangalore V. ITO, Bangalore

CO 39/BANG/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5683 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-02-2011
• Assessment Year: misc
• Appeal Filed On: 10-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI; G V GOPALA RAO CIT IDR
• Keywords: Gift; Charitable institution
• Section: 260A; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS. 568 & 569/BANG/2010 ASSESSMENT YEARS : 2000-01 & 2001-02 THE INCOME TAX OFFICER, WARD 2(3), BANGALORE. : APPELLANT VS. SHRI HARSHA V. SHASTRY, NO.294/C, 17 TH MAIN ROAD, IDEAL HOME TOWNSHIP, RAJARAJESHWARI NAGAR, BANGALORE 560 098. : RESPONDENT C.O. NOS. 39 & 40/BANG/2010 (IN ITA NOS. 568 & 569/BANG/2010) ASSESSMENT YEARS : 2000-01 & 2001-02 SHRI HARSHA V. SHASTRY, NO.294/C, 17 TH MAIN ROAD, IDEAL HOME TOWNSHIP, RAJARAJESHWARI NAGAR, BANGALORE 560 098. : CROSS OBJECTOR VS. THE INCOME TAX OFFICER, WARD 2(3), BANGALORE. : APPELLANT IN APPEAL ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 2 OF 15 REVENUE BY : SHRI G.V. GOPALA RAO, CIT-I(DR) & SMT. JACINTA ZIMIK VASHAI, ADDL.CIT(DR) ASSESSEE BY : SHRI SACHIN KUMAR, C.A. O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THESE ARE FOUR APPEALS INSTITUTED (I) TWO APPEAL S BY THE REVENUE AS WELL AS (II) TWO CROSS OBJECTIONS OF THE ASSESSE E ARE DIRECTED AGAINST THE ORDERS OF THE LD. CIT (A)-I, BANGALORE IN ITA N OS: 14 /W-2(3)/A-I/07-08 & 8 /W-2(3)/A-I/07-08 DATED: 20.1.2010 & 22.01.2020 FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 RESPECTIVELY IN THE CASE OF HARSHA V.SHASTRY OF BANGALORE. ITA NO: 568/10 A.Y 2000-01 BY THE REVENUE : 2. THE REVENUE IN ITS GROUNDS OF APPEAL HAD RAISED SIX GROUNDS, OUT OF WHICH, GROUND NOS.1, 4 & 6 BEING GENERAL AND NO SPECIFIC ISSUES INVOLVED, THEY HAVE BECOME NON-CONSEQUENTIAL. IN T HE REMAINING GROUNDS, THE SUBSTANCES OF THE ISSUES RAISED ARE REFORMULATE D, FOR THE SAKE OF CLARITY, AS UNDER: (I) THE CIT(A) HAD ERRED IN HOLDING THAT THE ADDITION O F RS.17.71 LAKHS CANNOT BE SUSTAINED SINCE THE SAME WAS ASSESS ED IN THE HANDS OF THE TRUST WITHOUT APPRECIATING THE FACTS O F THE ISSUES; & (II) THAT THE CIT (A) ALSO ERRED IN DELETING THE ADDITIO NS OF RS.2.4 LAKHS AND RS.1.1 LAKHS ON THE GROUND THAT THE SAID SUMS WERE NOT FOUND A PLACE IN THE RECORDING OF THE REASONS FOR R E-OPENING OF THE ASSESSMENT WITHOUT APPRECIATING THE FACT THE AOS ACTION IN BRINGING THE SAME TO TAX WAS IN ACCORDANCE WITH LAW . ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 3 OF 15 ITA NO: 569/10 A.Y 2001-02 BY THE REVENUE : 3. FOR THIS AY TOO, THE REVENUE IN ITS GROUNDS OF APPEAL HAD RAISED FIVE GROUNDS, IN WHICH, GROUND NOS.1, 4 & 5 BEING GENERAL IN NATURE, THEY DO NOT SURVIVE FOR ADJUDICATION. IN T HE REMAINING GROUNDS, THE SUBSTANCE OF THE ISSUE IS CONFINED TO THE FACT THAT - (I) THE CIT(A) HAD ERRED IN DELETING THE ADDITION OF R S.13.4 LAKHS BEING GIFTS RECEIVED FROM DONORS ABROAD ON THE GROU ND THAT THAT THE SAME HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE TRUST WITHOUT APPRECIATING THE FACTS OF THE ISSUES; (II) - THAT THE CIT(A) ERRED IN NOT APPRECIATING THE FAC T THAT THE AO HAD CONSIDERED SOME OF THE DONATIONS RECEIVED AS GE NUINE AND ONLY WHEREVER DISCREPANCIES WERE NOTICED, THE CLAIM WAS REJECTED. CO NO: 39/10 A.Y 2000-01 BY THE ASSESSEE: 4. IN HIS CROSS OBJECTIONS, THE ASSESSEE HAD RAISE D THE FOLLOWING ISSUES: (I) THE ORDER OF THE LD. CIT (A) IS CORRECT IN LAW; (II) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD SUBMITTED THAT THE PROFESSIONAL RECEIPTS SOUGHT TO BE TAXED IN HIS HANDS HAD ALREADY BEEN CONSIDERED IN THE HANDS OF T HE TRUST AND, THUS, THERE WAS NO ESCAPEMENT OF INCOME; - THAT THE AVERMENT OF THE ASSESSEE HAS SINCE BEEN UP HELD BY THE CIT(A) ON APPEAL; & - THE LD. CIT (A) ALSO HELD THAT THE INTEREST ON DEPO SIT AND AIR TICKET AMOUNT WAS NOT DISCUSSED IN THE ASSESSMENT O RDER AND ALSO DID NOT FIND A PLACE IN THE REASONS RECORDED. CO NO: 40/10 A.Y 2001-02 BY THE ASSESSEE: 5. LIKEWISE FOR THIS AY TOO, THE ASSESSEE HAD RAIS ED THE FOLLOWING OBJECTIONS: (I) THE ORDER OF THE LD. CIT (A) IS CORRECT IN LAW; (II) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE HAD SUBMITTED A LIST OF PERSONS FROM WHOM GIFTS WERE RE CEIVED THROUGH ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 4 OF 15 BANKING CHANNELS AS GURUPADA KANIKE; THAT DECLARATI ONS FROM SUCH DONORS WERE FURNISHED WHICH EXHIBIT THAT SUCH DONORS WERE IN EXISTENCE; & - THAT THE LD. CIT (A) ALSO HELD THAT THE ADDITIONS MADE BY THE AO WAS UNWARRANTED AND, ACCORDINGLY, DELETED THE SAME. 6. AS THE ISSUES RAISED BY THE RIVAL PARTIES BEING INTER-LINKED PERTAINING TO THE SAME ASSESSEE, FOR THE SAKE OF CO NVENIENCE AND COHESION, THESE APPEALS WERE HEARD, CONSIDERED TOGE THER AND DISPOSED OFF IN THIS COMMON ORDER. A.Y 2000-01 BY THE REVENUE : 7. THE ISSUE, IN BRIEF, WAS THAT, THE ASSESSEE, AN INDIVIDUAL - BEING A CONSULTANT ON VEDANTHA AND SPIRITUAL FEATUR E - FURNISHED HIS RETURN OF INCOME, ADMITTING AN INCOME OF RS.1102/- FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. FOR THE REASONS SET-OUT IN HER IMPU GNED ORDER, THE AO HAD REOPENED THE ASSESSMENT OF THE ASSESSEE AND AFTER M UCH DELIBERATIONS HELD THAT THAT THE PROFESSIONAL RECEIPTS OF RS.17.7 1 LAKHS, ACCRUED INTEREST OF RS.2.4 LAKHS AND AIR TICKET AMOUNT RECEIVED FROM RAJEEV OF RS.1.1 LAKH WAS THE INCOME OF THE ASSESSEE AND CONCLUDED THE AS SESSMENT ACCORDINGLY. 8. AGITATED, THE ASSESSEE HAD CARRIED THE ISSUES B EFORE THE LD. CIT (A) FOR RELIEF. AFTER CONSIDERING THE VARIOUS CONTENTIONS PUT FORTH BY THE ASSESSEE, THE LD. CIT (A), AMONG OTHERS, HAD OBSER VED THUS 12. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE FINDINGS OF THE AO AND THE SUBMISSIONS MADE BY THE ASSESSEE. THE ASSE SSMENT HEREIN, HEAVILY RELIED UPON THE AOS FINDING IN THE ASSESSMENT OF A Y 1998-99 AND 1999- 2000 AND CIT (A)S ORDER THEREON DATED 28.10.2005 W HEREIN THE LEARNED ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 5 OF 15 CIT (A) SUPPORTED THE ARGUMENT OF THE AO MADE IN TH E ASSESSMENT ORDER THAT THE TRUST WAS NOT CARRYING ON ANY CHARITABLE A CTIVITY AND, THEREFORE, NO EXPENSES IS ALLOWABLE AND ALSO THE INCOME EARNED BY THE TRUST WAS ACTUALLY GIFTS RESULTING FROM PROFESSIONAL EFFICIENCY OF THE FOUNDER MEMBER TRUSTEE, SRI HARSHA V.SHASTRY. ON THE BASIS OF SUCH SUPPORT IVE DECISION OF CIT (A) IN AYS. 1998-99 AND 1999-2000, IN THIS ASSESSMENT YEAR THE AO TOOK THE VIEW THAT THERE IS NO GENUINE TRUST IN EXISTENCE. WHILE FRAMING THE ASSESSMENT OF THE TRUST FOR THIS YEAR, HE CONCLUDED THAT THE RECE IPTS OF THE TRUST DOES NOT ACTUALLY BELONG TO THE TRUST BUT TO THIS ASSESSEE. HE EVEN PROCEEDED TO TAX CORPUS DONATIONS APART FROM TAXING THE NET INCOME O F THE TRUST. THE AO ALSO DENIED EXEMPTION U/S 11 OF THE INCOME-TAX ACT. 13. BUT THE ABOVE ANALYSIS OF THE CIT (A)S ORDER DATED 28.10.2005 IS TOTALLY A MISTAKEN UNDERSTANDING OF THE FINDING OF CIT(A) B Y THE AO. IN FACT THE ORDER OF CIT (A) HAS BEEN APPRECIATED BY THE LEARNE D ITAT VIDE ITS ORDER IN ITA NO.23 & 24/B/2006 (AYS 1998-99 AND 1999-2000) D ATED 11 TH MAY 2007 AND ALSO MP NO.88(BNG)/08 DATED 9.4.2009. IN THESE DECISIONS THE ORDER OF CIT (A) THAT DONATIONS BEING PART OF CORPUS FUND OF THE ASSESSEE TRUST HAS TO BE TREATED AS INCOME OF THAT TRUST AND HAS TO ENJOY THE EXEMPTION U/S 12A OF I.T. ACT EVEN IF AO DISCOVERS THAT THE TRUST IS NOT CARRYING ON ANY CHARITY UNLESS AND UNTIL THE REGISTRATION U/S 12A IS NOT CA NCELLED OR WITHDRAWN BY THE CIT HAS BEEN UPHELD. SUCCINCTLY, THE INCOME IN TENDED TO BE TAXED HEREIN HAS ALREADY BEEN TAXED IN THE HANDS OF THE TRUST SU BSTANTIVELY. ONCE INCOME IS ASSESSED IN THE HANDS OF THE TRUST ON A SUBSTANT IVE BASIS, FOR WHATEVER REASON THE SAME CANT BE CONSIDERED IN ANY OTHER HA ND. THUS, THE INCOME THAT IS SOUGHT TO BE TAXED NOW IN THE HANDS OF THE ASSESSEE HAS ALREADY BEEN BROUGHT TO TAX IN THE HANDS OF THE TRUST. 14. THEREFORE IN THE LIGHT OF THE ABOVE DISCUSSION , THE ACTION OF THE AO IN BRINGING TO TAX THE SUM OF RS.17,71,360/- IN THE HA NDS OF THE ASSESSEE CANNOT BE SUSTAINED. 15. COMING TO OTHER TWO AMOUNTS OF RS.2,40,000/- A ND THE SUM OF RS.1,10,000/- BEING ACCRUED INTEREST ON 24 LAKHS AN D THE AIR TICKET AMOUNT RECEIVED FROM SRI RAJIV RESPECTIVELY THERE IS NOT M UCH OF A DISCUSSION IN THE ORDER OF ASSESSMENT. THESE TWO ITEMS DO NOT FIND A PLACE IN THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT EITHER. IT APPEARS THAT THE SUM OF RS.2,40,000/- IS THE AMOUNT BELONGING TO THE TRUST AND THEREFORE ACCRUED INTEREST THEREON CANT BE TAXED IN THE HANDS OF THE ASSESSEE. SIMILARLY, THE SUM OF RS.1,10,000/- APPEARS TO HAVE BEEN RECORDED BY THE TRUST AND ACCOUNTED IN ITS BOOKS OF ACCOUNTS. THEREFORE, THE SE TWO AMOUNTS ALSO CANT BE TAXED IN HANDS OF THE APPELLANT. ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 6 OF 15 9. AGGRIEVED, THE REVENUE HAS COME UP WITH THE PRE SENT APPEAL. THE GRIEVANCE OF THE REVENUE WAS REVOLVED AROUND AGAINST THE STAND OF THE LD. CIT (A) THAT - HE HAD ERRED IN HOLDING THAT THE ADDITION OF RS.1 7.71 LAKHS CANNOT BE SUSTAINED SINCE THE SAME HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE TRUST, WITHOUT APPRECIATING THE CIRCUMSTANCES UNDER WHICH THE AO HAD CONSIDERED SUCH RECEIPTS IN THE HANDS OF THE ASSESSEE; - HE HAD FURTHER ERRED IN DELETING THE ADDITIONS OF RS.2.40 LAKHS AND RS.1.1 LAKHS MAINLY ON THE GROUND THAT THE SAID SUMS HAVE NOT BEEN FOUND A PLACE IN THE RECORDING OF THE REASONS FOR RE-OPENING OF T HE ASSESSMENT AND IN HOLDING THAT THE SUMS WERE NOT TAXABLE IN THE HANDS OF THE ASSESSEE, WITHOUT APPRECIATING THE FACT THAT THE AOS ACTION IN BRING ING THE SUMS TO TAX WAS IN ACCORDANCE WITH LAW. 9.1. IT WAS, THEREFORE, FERVENTLY PLEADED THAT THE ORDER OF THE AO REQUIRES TO BE RESTORED. 9.2. ON THE OTHER HAND, THE LD. A R CAME UP WITH A SPIRITED DEFENSE, AMONG OTHERS, THAT - THE AO HAD HELD IN THE CASE OF SRI DURGA NIMISHAMB A TRUST WAS NOT GENUINE AND WAS NOT ELIGIBLE FOR EXEMPTION U/S 11 O F THE ACT, AND, ACCORDINGLY, CONCLUDED THE ASSESSMENTS FOR THE AYS. 1998.99 AND 99-00 TAXING THE ENTIRE RECEIPTS AS INCOME OF THE TRUST; THAT THE ENTIRE INCOME WAS TO BE TAXED IN THE HANDS OF HARSHA V SHASTRY (THE A SSESSEE) ON PROTECTIVE BASIS; - HOWEVER, ON AN APPEAL, THE LD. CIT (A), MYSORE HE LD THAT IT WAS NOT THE PREROGATIVE OF THE AO TO QUESTION THE REGISTRATION U/S 12A OF THE ACT, BUT, OF THE CIT, MYSORE AND, THUS, RULED THAT THE CORPUS DONATIONS OF THE TRUST CANNOT BE BROUGHT TO TAX. HOWEVER, THE CIT (A) CON FIRMED THE ORDER OF THE AO, HOLDING THAT THERE WAS NO APPLICATION OF INCOME OF THE TRUST AND, THUS, TAXED THE OTHER RECEIPTS; - AGGRIEVED, THE REVENUE TOOK UP THE ISSUE WITH THE HONBLE TRIBUNAL WHICH WAS DISMISSED BY THE HONBLE BENCH VIDE ITS ORDER I N ITA NOS: 23 & 24/B/2006 DT.:11.5.07; ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 7 OF 15 - THAT SINCE THE DONATIONS FOR THE AY UNDER DISPUTE WERE ALSO BEEN RECEIVED BY THE TRUST, THE TAXABILITY HAS TO BE CONSIDERED O NLY IN THE HANDS OF THE TRUST, BUT, NOT IN THE HANDS OF THE ASSESSEE; - THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CONFIRMATION LETTERS WERE FURNISHED ,BUT, THOSE CONFIRMATION LETTERS HAV E NOT BEEN DULY CONSIDERED TO FIND OUT THE VERACITY OF SUCH A CLAIM AND EVEN ON THIS COUNT ALSO THE ORDER OF THE CIT(A) IS LIABLE TO BE CONFIR MED; - COUNTERING THE REVENUES PLEA FOR REMIT BACK THE ISSUE TO THE AO FOR A FRESH LOOK, THE ASSESSEES PLEA THAT THE DONATIONS WERE RECEIVED MORE THAN A DECADE AGO AND MOST OF THE DONORS WOULD HAVE SHIFTE D THEIR PLACES OF STAY AND IT WOULD BE UNWISE TO RECONFIRM THE RECEIPT OF SUCH DONATIONS AS THE DONORS WERE ABROAD WHILE THE DONATIONS WERE RECEIVE D; - WITH REGARD TO THE ADDITION OF RS.2.4 LAKHS, IT W AS THE CASE OF THE ASSESSEE THAT THE AO HAD MADE THE ADDITION ON A NOTIONAL BAS IS ON THE GROUND THAT THE FUNDS OF THE TRUST HAD BEEN DIVERTED FOR THE PU RPOSES OTHER THAN THE OBJECTS OF THE TRUST. AS THE NOTIONAL INCOME WHICH HAD NEVER BEEN ACCRUED OR DEEMED TO HAVE BEEN ACCRUED TO THE ASSESSEE, THE SAME CANNOT BE ASSESSED IN HIS HANDS: - RELIES ON (I) JAWALA PRASAD RADHA KRISHNA V. CIT 198 ITR 415 (ALL) (II) HIGHWAYS CONSTRUCTION V. CIT 199 ITR 702 (GAUH) - IN RESPECT OF THE ADDITION OF RS.1.1 LAKHS BEING TRAVEL EXPENDITURE OF THE ASSESSEE, IT WAS EXPLAINED DURING THE COURSE OF ASS ESSMENT PROCEEDINGS OF THE TRUST THAT EVEN IF IT WAS TO BE INCLUDED IN THE TOTAL RECEIPTS, IT HAD TO BE TREATED AS APPLICATION OF INCOME. TURNING DOWN THE ASSESSEES REQUEST, THE AO TREATED THE SAME AS INCOME OF THE TRUST ON THE G ROUND THAT IT DID NOT FIND A PLACE IN THE TOTAL RECEIPTS; THAT WITHOUT ANY DIS CUSSION, THE AO TREATED THE SAME AS INCOME IN THE HANDS OF THE TRUST AS WELL AS IN THE HANDS OF THE ASSESSEE, THAT THIS WAS ONLY AN EXPENDITURE OF THE ASSESSEE WHICH WAS INCURRED BY HIS DEVOTEE AND, THUS, IT CANNOT BE TRE ATED AS INCOME IN THE HANDS OF THE ASSESSEE. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS, METICULOUSLY PERUSED THE RELEVANT CASE RECORDS. 10.1. ON A CRITICAL PERUSAL OF THE CIT(A)S FINDIN G IN THE CASE OF SRI DURGA NIMISHAMBA TRUST [FOR THE AYS 1998-99 & 99-00 ]- IN WHICH THE ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 8 OF 15 ASSESSEE APPEARS TO BE ASSOCIATED CITED SUPRA, TH E CIT (A)S HAD HELD THAT (PG. 86 OF PAPER BOOK) 11.2IT IS NECESSARY TO ADD HERE THAT WHILE SUP PORTING THE VIEW HELD BY THE AO TO THE EXTENT THAT ADEQUATE MATERIAL S ARE NOT ESTABLISHED WITH REGARD TO EXISTENCE OF AUTHENTIC ACTIVITIES TO AVAIL EXEMPTION U/S 11 OF THE ACT, BUT, I CANNOT LEGALLY PLACE MY FINDINGS FO R HOLDING THAT GENUINE TRUST IS NOT EXISTENT. AS ALREADY MENTIONED IN TH E BEGINNING OF THIS ORDER, THE APPELLANT TRUST HAS BEEN ACCORDED A REGISTRATIO N U/S 12A BY MY COLLEAGUE, THE COMMISSIONER OF INCOME-TAX, MYSORE. THIS ADMINISTRATIVE POWER IS VESTED WITH THE SAID AUTHORITY ONLY AND AS AN APPELLATE AUTHORITY I CANNOT STEP IN (INTO) THE SHOES OF THIS AUTHORITY A ND PASS A JUDGMENT ON THE ISSUE. TO MAKE A DECISION WHETHER THERE IS A GENU INE TRUST EXISTENT OR NOT IS IN THE COMMISSIONERS DOMAIN ONLY. HENCE, TO TH IS I HOLD THAT THE AO IS NOT RIGHT IN HIS DECISION FOR BRINGING THE CORPU S DONATION INTO THE TAX BASKET. 10.1.1. AGGRIEVED BY THE ABOVE FINDING OF THE CIT( A), THE REVENUE TOOK UP THE ISSUE WITH THE TRIBUNAL FOR A S OLACE. HOWEVER, THE HONBLE BENCH IN ITS WISDOM, IN ITA NOS: 23 & 24/B/ 2006 DATED: 11.5.2007 AND ALSO AFTER MUCH DELIBERATIONS AND BY PLACING RE LIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS AS DETAILED IN THE SAID ORD ER, OBSERVED THAT (PG. 11 OF THE PB) 6. IN VIEW OF THE DECISIONS OF VARIOUS HIGH COURT S WHICH ARE SPECIFIC ON THE SUBJECT MATTER OF APPEAL, VIZ., COR PUS FUND COULD NOT BE TREATED AS INCOME OF THE ASSESSEE, WE ARE OF THE OP INION THAT THE ORDER OF THE CIT (A) IS JUSTIFIED. 10.1.2. NOT TO TAKE THE ABOVE FINDING LYING DOWN, THE REVE NUE HAD AGAIN APPROACHED THE TRIBUNAL WITH A MISC. PETITION [ON BEING DIRECTED BY THE HONBLE JURISDICTIONAL HIGH COURT ON AN APPEAL BY THE REVENUE U/S 260A OF THE ACT]. TAKING CUE FROM THE OBSERVATION OF THE HONBLE COURT, THE HONBLE BENCH HAD, IN M.P.NO.88/BANG/08 DATED: 9.4.2009, AFTER ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 9 OF 15 EXTENSIVELY QUOTING THE RULING OF THE HONBLE SUPRE ME COURTS IN THE CASE OF R.B.SHREERAM RELIGIOUS AND CHARITABLE TRUST V.CIT R EPORTED IN 233 ITR 53 (SC), OBSERVED THUS (PG. 117 OF PB) 5.HOWEVER, FOR CLARITY, WE ARE INCLINED TO HOLD THAT THE DECISION OF THE HONBLE SUPREME COURT SOUGHT TO BE BROUGHT FOR CONSIDERATION AS WAS THE SOLE CONTENTION BEFORE THE JURISDICTIONAL HIGH COURT AS WELL BECOMES A DECISION RATHER LEANS IN FA VOUR THE ASSESSEE ON THE FACTS CONSIDERED BY THE TRIBUNAL THEREFORE BECO MES APPARENT AND DOES NOT REQUIRE ANY FURTHER DELIBERATION. IN VIEW THER EOF, THIS MISC. PETITION STANDS DISMISSED. 10.1.3. THUS, THE FINDING OF THE LD. CIT (A) HAD B ECOME FINAL. 10.2. LET US NOW TURN OUR ATTENTION TO THE FINDIN G OF THE LD. CIT (A) FOR THE AY UNDER CHALLENGE IN THE CASE OF T HE PRESENT ASSESSEE. WE QUOTE THE RELEVANT PORTION OF HIS FINDINGS ( OF COURSE, AT THE COST OF REPETITION ) HERE-BELOW: 13. BUT THE ABOVE ANALYSIS OF THE CIT (A)S ORDER DATED 28.10.2005 IS TOTALLY A MISTAKEN UNDERSTANDING OF THE FINDING OF CIT(A) BY THE AO. IN FACT THE ORDER OF CIT (A) HAS BEEN APPRECIATED BY THE LE ARNED ITAT VIDE ITS ORDER IN ITA NO.23 & 24/B/2006 (AYS 1998-99 AND 199 9-2000) DATED 11 TH MAY 2007 AND ALSO MP NO.88(BNG)/08 DATED 9.4.2009. IN THESE DECISIONS THE ORDER OF CIT (A) THAT DONATIONS BEING PART OF C ORPUS FUND OF THE ASSESSEE TRUST HAS TO BE TREATED AS INCOME OF THAT TRUST AND HAS TO ENJOY THE EXEMPTION U/S 12A OF I.T.ACT EVEN IF AO DISCOVERS THAT THE TR UST IS NOT CARRYING ON ANY CHARITY UNLESS AND UNTIL THE REGISTRATION U/S 12A I S NOT CANCELLED OR WITHDRAWN BY THE CIT HAS BEEN UPHELD. SUCCINCTLY, THE INCOME INTENDED TO BE TAXED HEREIN HAS ALREADY BEEN TAXED IN THE HANDS OF THE TRUST SUBSTANTIVELY. ONCE INCOME IS ASSESSED IN THE HAND S OF THE TRUST ON A SUBSTANTIVE BASIS, FOR WHATEVER REASON THE SAME CAN T BE CONSIDERED IN ANY OTHER HAND. THUS, THE INCOME THAT IS SOUGHT TO BE TAXED NOW IN THE HANDS OF THE ASSESSEE HAS ALREADY BEEN BROUGHT TO TAX IN THE HANDS OF THE TRUST. 14. THEREFORE IN THE LIGHT OF THE ABOVE DISCUSSION, THE ACTION OF THE AO IN BRINGING TO TAX THE SUM OF RS.17,71,360/- IN THE HA NDS OF THE ASSESSEE CANNOT BE SUSTAINED. ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 10 OF 15 10.3. ON A CRITICAL ANALYSIS OF THE ASSESSMENT ORD ER FOR THE AY UNDER CHALLENGE IN THE CASE OF THE TRUST [SOURCE: P .20 -30 OF PB AR], THOUGH IT HAS BEEN MENTIONED, PERHAPS INADVERTENTLY , AS PROTECTIVELY (ON PAGE 8 OF THE ASSESSMENT ORDER) BY TREATING THE TRU ST AS AOP AND BROUGHT TO TAX EVEN THE CORPUS DONATIONS APART FROM TAXING THE NET INCOME OF THE TRUST AND CHARGED THE INCOME AT MAXIMUM MARGINAL RA TE. THE STAND OF THE AO WAS QUITE CONTRAST TO THE FINDING OF THE LD. CIT (A), MYSORE IN THE CASE OF THE TRUST FOR THE AYS 1998-99 & 99-00 WHICH HAS BEEN UPHELD BY THE HONBLE TRIBUNAL. AS HIGHLIGHTED BY THE LD. CIT (A ) IN THE CASE OF THE PRESENT ASSESSEE WHICH IS UNDER DISPUTE, THE INCOME WHICH WAS SOUGHT TO BE TAXED NOW IN THE HANDS OF THE ASSESSEE HAS ALREA DY BEEN TAXED IN THE HANDS OF THE TRUST CITED SUPRA, WE ARE OF THE CONSI DERED VIEW THAT THE LD. CIT (A) WAS WITHIN HIS REALM TO PRONOUNCE THAT THE SUM OF RS.17.71 LAKHS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE CANNOT BE SUSTAINED. IT IS ORDERED ACCORDINGLY. 10.4. THE OTHER GRIEVANCE OF THE REVENUE WAS THAT THE CIT (A) ERRED IN DELETING THE ADDITIONS OF RS.2.4 LAKHS AND RS.1.1 LAKHS ON THE GROUND THAT THESE SUMS WERE NOT FINDING A PLACE IN THE RECORDING OF THE REASONS FOR RE-OPENING OF THE ASSESSMENT WITHOUT AP PRECIATING THAT THE AOS ACTION IN BRINGING THOSE SUMS TO TAX NET WHICH WAS, ACCORDING TO THE REVENUE, IN ACCORDANCE WITH LAW. HOWEVER, ON A GLI MPSE OF THE IMPUGNED ORDER OF THE AO, WE FIND THAT THERE WAS NO DISCUSSI ON WORTH THE NAME AT ALL, EXCEPT A BRIEF THAT IN VIEW OF THE ABOVE STATED REASONS, I HOLD THE PROFESSIONAL RECEIPTS OF RS.17,71,360/- ALONG WITH ACCRUED INTEREST OF RS.2,40,000 ON 24 LAKHS AND AIR TICKET AMOUNT RECEI VED FROM SRI RAJEE OF ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 11 OF 15 RS.1,10,000 AS INCOME OF SRI HARSHA V SHASTRY AND A DD TO HIS TOTAL INCOME 10.4.1. TO BE PRECISE, THERE WAS NO DISCUSSION WHA TSOEVER TO JUSTIFY THE STAND OF THE AO TO ADD THOSE AMOUNTS TO THE ASSESSEES KITTY AS HIS INCOME. 10.4.2. WE ARE OF THE FIRM VIEW THAT THERE MUST BE A SOUND REASONING BACKED WITH DOCUMENTARY EVIDENCE WHILE MA KING AN ADDITION TO THE INCOME OF AN ASSESSEE. ADDITION CANNOT BE MADE FOR THE SAKE OF MAKING ADDITION IN A ROUTINE MANNER. AS THESE ADDI TIONS HAVE NOT BEEN MADE ON A SOUND FOOTING AND THAT THE BASIS ON WHICH SUCH ADDITIONS MADE IS NOT ADVANCED EVEN AT THIS STAGE, WE ARE IN AGREE MENT WITH THE FINDING OF THE LD. CIT (A) ON THIS COUNT. IT IS ORDERED ACCOR DINGLY. A.Y 2001-02 BY THE REVENUE: 11. THE LONE GRIEVANCE OF THE REVENUE WAS THAT THE CIT (A) WAS WRONG IN DELETING THE ADDITION OF RS.13.4 LAKHS MAD E BY THE AO, MAINLY ON THE GROUND THAT THE DONORS HAVE NOT FURNISHED THE P ARTICULARS OF THE MODE OF PAYMENTS, THEIR RESIDENTIAL ADDRESSES ETC., AS THE REASONS SET-OUT IN HER IMPUGNED ORDER. 11.1. ON DUE CONSIDERATION OF THE CLAIM AND COUNTE R CLAIM OF THE RIVAL PARTIES, THE LD. CIT (A) HAD FRAMED UP HIS VI EW THUS 11. I HAVE CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MOHANAKALA 291 ITR 278 WHEREIN IT WAS HELD THAT THE ATTENDANT CIRCUMSTANCES HAVE TO BE SAME AS TO WHETHER IT WOUL D BE A GENUINE GIFT. IT IS NOT DISPUTED THAT THE ASSESSEE IS A SPIRITUAL GURU. IT IS UNDISPUTED FACT THAT THE AO HIMSELF (SIC) HERSELF HAD ACCEPTED RS.7,00,0 00/- AS GURUPADA KANIKE ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 12 OF 15 AND HAS, FURTHER, ACCEPTED THAT RS.11,50,000/- HAS BEEN CREDITED TO ASSESSEES BANK ACCOUNT. 12. THE HONBLE ITAT, BANGALORE B BENCH IN THEIR O RDER IN ITA NOS.23 & 24/B/2006 DATED: 11 TH MAY, 2007 IN THE CASE OF SRI DURGA NIMISHAMBA TRUST, IN WHICH THE ASSESSEE IS A TRUSTEE HAVE HELD THAT CORPUS FUND COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. WHILE ARRIVI NG AT THIS DECISION, THE HONBLE TRIBUNAL HAS RELIED ON JUDGMENTS OF VARIOUS COURTS. I AM THEREFORE OF THE OPINION THAT THE ADDITION MADE BY THE AO IS UNWARRANTED AND, ACCORDINGLY, I DELETE THE ADDITION MADE. 11.2 AT THE OUTSET, WE WOULD LIKE TO POINT OUT THA T THE AO HAD HONESTLY CONCEDED IN HER IMPUGNED ORDER THAT THE AS SESSEE HAD FURNISHED CONFIRMATIONS LETTERS, BUT, VIEWED THAT THOSE WERE ON PLAIN PAPERS AND WERE ALL IN A COMMON FORMAT, CONTAINING ALMOST THE SAME PROSE ETC. IN THIS CONNECTION, WE WOULD LIKE TO CLARIFY THE POINT THAT THE CONFIRMATION LETTERS BEING ON PLAIN PAPERS WITH STANDARDIZED PROFORMA OR FORMAT ALONE CANNOT BE A SOLE REASON TO VIEW OR PUT THE VERY BONA FIDE OF SUCH CONFIRMATION UNDER A SCANNER. WHILE EXAMINING/APPROACHING AN IS SUE, ONE SHOULD HAVE A CLEAR MIND WHICH SHOULD NOT BE ALLOWED TO BE INFL UENCED WITH ANY PRE- DETERMINED CONCLUSION. IT HAS NOT BEEN PRESCRIBED UNDER ANY LAW OF THE LAND OR BY ANY AUTHORITY THAT THE CONFIRMATION LETT ER SHOULD BE IN A PARTICULAR MANNER OR IN A STANDARDIZED WAY. AS A MATTER OF FA CT, THE ASSESSEE WOULD HAVE HASTENED TO OBTAIN THE CONFIRMATION LETTERS TO BEAT THE DEADLINE SET BY THE AO TO FURNISH THE SAME. WHAT WAS REQUIRED TO B E SEEN PRIMARILY WAS - WHETHER THE TRANSACTION WAS GENUINE OR OTHERWISE? THIS VITAL ISSUE SHOULD NOT BE ALLOWED TO LOSS SIGHT OF BY CLINGING TO A PR OCEDURAL WRANGLE. 11.2.1. AS RIGHTLY HIGHLIGHTED BY THE LD. CIT (A), THE AO HAD NOT DISPUTED THE VERY FACT THAT THE MONIES HAVE COM E TO THE ASSESSEES ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 13 OF 15 BANK ACCOUNT THROUGH NORMAL BANKING CHANNELS AND T HE AO HAD ANY DOUBT WITH REGARD TO THE BONA-FIDE OF THE ASSESSEES CLA IM, SHE COULD HAVE CROSS-VERIFIED THE SAME WITH CENTURION BANK WHICH W AS WITHIN HER ARMS LENGTH. 11.2.2. REVERTING BACK TO THE MAIN ISSUE THAT THE ASSESSEE HAD FURNISHED THE CONFIRMATION LETTERS DURING THE C OURSE OF ASSESSMENT PROCEEDINGS WHICH HAS BEEN ACKNOWLEDGED BY THE REVE NUE AND, THUS, THE ASSESSEE HAD FURNISHED THE NAMES AND ADDRESSES OF THE DONORS WHEREBY HE HAD DISCHARGED HIS ONUS BY PLACING THE SAME AT T HE DOORSTEP OF THE REVENUE. WE ARE, THEREFORE, OF THE FIRM VIEW THAT THE ASSESSEE WAS NOT AT FAULT. 11.2.3 TURNING TO THE SUBMISSION OF THE LD. D R DU RING THE COURSE OF HEARING THAT THE MATTER BE REMITTED BACK ON THE FIL E OF AO FOR FRESH CONSIDERATION, WE ARE OF THE CONSIDERED VIEW, AS RI GHTLY POINTED OUT BY THE LD. AR, THAT IT WOULD LEAD TO A FUTILE EXERCISE, IN THE SENSE THAT THE ALLEGED TRANSACTIONS APPEARS TO HAVE TAKEN PLACE WAY BACK I N 2000 AND MOST OF THE DONORS WOULD HAVE SHIFTED THEIR PLACES OF STAY TO E LSEWHERE BY NOW. 11.3. IN AN OVER CONSIDERATION OF THE FACTS OF THE ISSUE AS DELIBERATED UPON IN THE FORE-GOING PARAGRAPHS AND I N PARTICULAR THE REVENUE HAD FAILED TO BRING ON RECORD ANY CLINCHING DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE CLAIM OF THE ASSESSEE OF G URUPADA KANIKE WAS NOTHING BUT A VOCATIONAL RECEIPT, AS PROJECTED BY T HE AO, WE ARE IN TOTAL AGREEMENT WITH THE FINDING OF THE LD. CIT (A) ON TH IS ISSUE. IT IS ORDERED ACCORDINGLY. ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 14 OF 15 CO NOS: 39 & 40/10 A.YS. 2000-01 & 2001-02 BY THE ASSESSEE: 12. LET US NOW TURN OUR ATTENTION TO ADDRESS TO T HE CROSS OBJECTIONS RAISED BY THE ASSESSEE FOR THE BOTH THE ASSESSMENT YEARS UNDER CHALLENGE. 12.1. AT THE OUT-SET, WE WOULD LIKE TO POINT OUT THAT SINCE WE HAVE, IN THE FORE-GOING PARAGRAPHS, UPHELD THE FINDINGS O F THE LD. CIT (A) FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION, THE CROSS OBJECTIONS RAISED BY THE ASSESSEE FOR THE AYS. 2000-01 AND 2001-02 HAVE BECOME SUPERFLUOUS AND, ACCORDINGLY, THEY HAVE NOT BEEN ADDRESSED TO. 13. IN THE RESULT : (I) THE REVENUES APPEALS FOR THE ASSESSMENT YEARS 2000 -01 AND 2001-02 ARE DISMISSED; & (II) THE CROSS OBJECTIONS OF THE ASSESSEE FOR THE AYS 2000-01 AND 2001-02 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF MARCH, 2011. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 10 TH MARCH, 2011. DS/- ITA NOS. 568 & 569/B/10 & CO NOS.39 & 40/B/10 PAGE 15 OF 15 COPY TO: 1. REVENUE 2. ASSESSEE 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.