Bhartiya Kissan Charitable Club Trust, Roorkee V. ITO (Exemption), Dehradun

ITA 10/DDN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1355 (ITAT-DEHRADUN)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 03-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 13

Judgement Text

INCOME TAX APPELLATE TRIBUNAL [DEHRADUN BENCH] BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO 10 /DEL/2017 A Y 20 13 - 14 APPELLANT RESPONDENT BHARTIYA KISSAN CHARITABLE CLUB TRUST VIIL. SULTAUR SABATWALLI ROORKEE 247667 PAN AABTB6963G VS. THE INCOME TAX OFFICER EXEMPTIONS DEHRADUN ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: - 28/02/2020 DATE OF ORDER: - 13/05/2020 O R D E R PER PRASHANT MAHARISHI, A.M.: 01 THIS APPEAL IS FILED BY THE ASSESSEE, TRUST, AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), [ THE LD CIT - A] BY ORDER DATED 22/2/2019 IN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE INCOME TAX OFFICER (EXEMPTION), DEHR ADUN [ THE LD AO] UNDER SECTION 143 (3) OF THE INCOME TAX ACT 1961 [ THE ACT] FOR ASSESSMENT YEAR 2013 14 DATED 14 MARCH 2016 , WHEREIN THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 02 THE ASSESSEE IS A CHARITABLE TRUST FORMED AS PER TRUST DEED DATED 9/ 7/2009 WITH AN INITIAL CONTRIBUTION OF 1000. THE ASSESSEE FILED RETURN OF INCOME. HOWEVER ON PERUSAL OF THE BALANCE SHEET OF ASSESSEE, THE LEARNED ASSESSING OFFICER NOTED THAT ASSESSEE HAS INTRODUCED CAPITAL FUND OF RS. 2279062/ , ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE INTRODUCTION OF CAPITAL. ASSESSEE COULD NOT EXPLAIN THE CREDIT ENTRY OF THE INTRODUCTION OF THE CAPITAL FUND, HENCE THE LEARNED AO MADE THE ADDITION OF THE ABOVE SUM BY REDUCING THE INITIAL CONTRIBUTION OF 1000. THE INCOME AND EXPE NDITURE ACCOUNT ALSO DISCLOSED A DONATION OF 15 LAKHS RECEIVED BY THE ASSESSEE DURING THE YEAR. ON VERIFICATION OF THE DONATION RECEIVED, THE LEARNED AO NOTED THAT THERE ARE NO COMPLETE ADDRESSES OF THE DONORS. THEREFORE THE AR OF THE ASSESSEE WAS ASKED TO FILE THE COMPLETE ADDRESS. AR FURNISHED ADDRESS WHICH WERE PERTAINING TO VILLAGES. THE AO ISSUED SUMMONS TO THE VARIOUS SELECTED DONORS HOWEVER SUCH SUM MONS WERE RECEIVED BACK UN SERVED. LD AR SUBMITTED THE CONFIRMATION OF DONORS. LD AO REFUSED T O CONSIDER THEM . THEREFORE , AR WAS ASKED TO PRODUCE SUCH PERSONS. SUCH PERSONS WERE PRODUCED AND THE STATEMENT ON OATH WAS RECORDED AND THE IDENTITY OF SUCH DONOR WAS ALSO VERIFIED . LEARNED AO NOTED THAT ASSESSEE HAS NOT MAINTAIN ED THE RECORD OF IDEN TITY OF THE DONORS INDICATING THE COMPLETE ADDRESS OF SUCH DONORS , HENCE, ABOVE DONATION IS AN ANONYMOUS DONATION THEREFORE SAME IS REQUIRED TO BE TAXED UNDER SECTION 115BBC OF THE ACT THUS THE ADDITION OF 15 LAKHS WAS MADE AND TOTAL INCOME OF THE A SSESSEE WAS ASSESSED AT 3 695262/ AGAINST THE RETURNED DEFICIT OF EXCESS OF IN COME OVER EXPENDITURE OF OF 82800/ . THE AO PASSED AN ORDER UNDER SECTION 143 ( 3 ) OF THE ACT WHICH WAS CHALLENGED BY THE ASSESSEE BEFORE THE LEARNED CIT A WHO CONFIRMED THE ADDITION OF RS 2278062 AND DELETED THE ADDITION PARTIALLY OF 15 LAKHS BEING ANONYMOUS DONATION BY GIVING DIRECTION TO THE AO TO GRANT RELIEF OF DONATIONS RANG ING FROM 1100 4500 OF THE DONORS WHICH WERE VERIFIED BY THE LD AO. THUS, THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED CIT A IS IN APPEAL BEFORE US CHALLENGING THE ADDITION CONFIRMED BY HIM. 03 THE TWO ISSUES INVOLVED IN THIS APPEAL ARE (1 ) ADDITION OF RS. 2278062/ AND ( 2 ) DONATIONS RECEIVED OF RS. 15 LAKHS. 04 ON BEHALF OF THE ASSESSEE , SHRI HEMANT ARRORA CA AND ON BEHALF OF THE REVENUE SHRI BHOPAL SINGH , SR DR, WERE HEARD . 05 BRIEFLY STATED FACTS, ASSESSEE IS A CHARITABLE TRUST ESTABLI SHED WITH AN OBJECT TO CREATE AWARENESS AMONG THE FARMERS, TO DEVELOP SMALL - SCALE INDUSTRIES IN RURAL AREAS AND TO ENABLE THE FARMERS BY GIVING THEM TRAINING TO MAKE PESTICIDES BY AN ORGANIC PROCESS AND TO CREATE IMPORTANCE OF AGRICULTURAL ACTIVITIES, TO MOTIVATE AND TRAIN YOUNGER GENERATION FOR THE PURPOSE OF SELF - EMPLOYMENT AND BUSINESS OF PESTCIDIES IN AGRICULTURAL ACTIVITIES . THUS IT WAS FORMED TO CREATE AWARENESS AMONG THE FARMERS IN RURAL AREAS ABOUT THE AGRICULTURAL ACTIVITIES INCLUDING WATE R CONSERVATION, LAND CONSERVATION AND POLLUTION FREE ENVIRONMENT. IN ORDER TO ACHIEVE THIS OBJECTS OF THE TRUST , SO THAT THEY DO NOT MIGRATE TO CITIES IN SEARCH OF EMPLOYMENT, ONE SHRI KARTAR SINGH, WHO IS ALSO THE SECRETARY OF THE TRUST AND ALONG WITH H IS BROTHER, WHO IS ALSO THE MEMBER OF THE TRUST BOARD, CONTRIBUTED THEIR BELONGINGS SUCH AS LAND AND BUILDING AND OTHER FIXED ASSETS VALUED AT RS. 2278062/ TO THE TRUST THAT HELPS IN PRODUCING THE ORGANIC AGRICULTURAL PRODUCTS. THE FIXED ASSETS WAS A BUILDING CO NSTRUCTED BY THE TRUSTEES ON LAND AREA OF 6.75 BIGHAS OWNED BY BOTH OF THEM. SUCH LAND ALONG WITH THE BUILDING WAS ESTIMATED AT A MARKET PRICE OF 15 LAKHS ALONG WITH CERTAIN OTHER ASSETS AMOUNTING TO RS. 7 78062/ WAS CONTRIBUTED BY THEM TO THE APPELLANT TRUST. THUS, IN THE BOOKS OF THE TRUST, THE ADDITIONS OF THE FIXED ASSETS WAS SHOWN AND CONSEQUENTLY THE ABOVE AMOUNT WAS DISCLOSED AS INTRODUCTION OF CAPITAL FUND. THE LEARNED AO MADE THE ADDITION AS ASSES SEE COULD NOT SUBMIT THE COMPLETE DETAILS. ON APPEAL BEFORE THE LEARNED CIT A , THE ADDITION WAS CONFIRMED IN ABSENCE OF ADEQUATE INFORMATION. HOWEVER , THE FACT IS NOT DENIED THAT ASSESSEE TRUST IS HAVING THE LAND AND BUILDING AS WELL AS THE PLANT AND M ACHINERY. THE ONLY REASON FOR ADDITION IS THAT ADDITION IN THE BOOKS OF THE TRUST IN THE FIXED ASSETS AS WELL AS ITS DISCLOSURE AS INTRODUCTION OF CAPITAL FUND WAS MADE MERELY BY A BOOK ENTRY. AS, THE OWNERSHIP OF THE ASSETS NAMELY LAND AND BUILDING AS WEL L AS THE NECESSARY PLANT AND MACHINERY, OWNED BY THE TRUSTEES WAS TRANSFERRED TO THE ASSESSEE TRUST , IS ACCEPTED BY THE TRUSTEES , WHO ARE ALSO THE DONOR OF THE ABOVE SUM, THERE IS NO REASON TO DENY THE FACT THAT ABOVE ASSETS HAVE BEEN RECEIVED BY THE ASS ESSEE TRUST. THE DONOR IN THE PRESENT CASE ARE ALSO IDENTIFIED AS SECRETARY AND HIS BROTHER. THE ONLY DISPUTE FOR WHICH THE ADDITION HAS BEEN MADE IS THAT THE ENTRY OF THE DONATION AS WELL AS THE INTRODUCTION OF THE FIXED ASSETS HAS BEEN MADE BY A BOOK ENT RY ONLY. IN THE PRESENT CASE, THE DONORS ARE IDENTIFIED, THE ASSETS ARE IDENTIFIED AS IT HAS BEEN RECEIVED BY THE ASSESSEE TRUST, THE ONLY ISSUE THAT REMAINS TO BE VERIFIED IS THE VALUATION OF SUCH ASSETS. BEFORE THE LEARNED ASSESSING OFFICER THE DONORS C ONFIRMED BY WAY OF AN AFFIDAVIT THAT THEY HAVE DONATED THEIR IDENTIFIED LAND AND BUILDING AS WELL AS PLANT AND MACHINERY TO THE ASSESSEE TRUST. THE AO DESPITE HAVING THE ABOVE INFORMATION COULD NOT SHOW THAT, THE DONORS ARE NOT EXISTING OR THE ASSETS ARE N OT EXISTING. IT IS MERELY A CASE OF DONATION OF ASSETS TO THE ASSESSEE TRUST WHERE THE ASSETS AND THE DONORS BOTH ARE IDENTIFIED. THE AO COULD HAVE VERIFIED THE LAND DOCUMENTS WHETHER IT STANDS IN THE NAME OF THE DONORS OR NOT AND WHETHER SAME HAS BEEN DO NATED BY THEM TO THE TRUST OR NOT. THIS FACTOR COULD ALSO BEEN VERIFIED BY EXAMINING THE EXISTENCE OF THE TRUST PROPERTIES AND ACTIVITIES CARRIED ON IT. THE ASSESSEE COULD ALSO HAVE SHOWN THE DOCUMENTS OF THE LAND IN THE NAME OF BOTH THE DONORS AND HOW THE SAME HAS BEEN EXECUT ED /TRANSFERRED IN THE NAME OF THE ABO VE TRUST. SIMILAR IS THE SITUATION WITH RESPECT TO THE PLANT AND MACHINERY AMOUNTING TO RS 778062/ - . AS THIS INFORMATION HAS NOT BEEN VERIFIED BY THE ASSESSING OFFICER, THIS GROUND OF APPEAL WI TH RESPECT TO THE ADDITION OF RS. 2278062/ IS SET ASIDE TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SHOW THE EXISTENCE OF THE LAND IN THE NAME OF THE DONORS AND SAME IS USED BY THE TRUST FOR ITS ACTIVITIES. THE ASSESSE E IS DIRECTED TO PRODUCE THE RELEVANT EVIDENCE BEFORE THE ASSESSING OFFICER ALONG WITH THE NECESSARY EXPLANATION WHICH MAY BE CONSIDERED BY THE LEARNED ASSESSING OFFICER AND ISSUE MAY BE DECIDED AFRESH. ACCORDINGLY , THIS ISSUE IS ALLOWED WITH ABOVE DIREC TION. 06 WITH RESPECT TO THE SECOND ADDITION OF 15 LAKHS WHERE THE AO HAS MADE THE ADDITION IN THE HANDS OF THE ASSESSEE TRUST AS ANONYMOUS DONATION, THE FACT SHOWS THAT ASSESSEE HAS SHOWN THE NAME AND ADDRESSES OF THE DONORS. THE ASSESSEE HAS ALSO PRODUCE D THEM BEFORE THE ASSESSING OFFICER. THE LEARNED AO MADE THE ADDITION FOR THE ONLY REASON THAT SUMMONS WERE ISSUED TO THOSE DONORS BUT THOSE SUMMONS COULD NOT BE SERVED AND RETURN ED BACK TO THE AO. THE LEARNED CIT A ALSO CONFIRMED THE ADDITION STATING T HAT ASSESSEE FAILED TO SHOW PROPER EVIDENCES ON RECORD DURING THE ASSESSMENT AND REMAND PROCEEDINGS. HOWEVER THE LEARNED CIT A ASKED THE LEARNED AO TO GRANT RELIEF WITH RESPECT TO THE DONORS WHO WERE VERIFIED BY THE ASSESSING OFFICER. ON CAREFUL CONSIDER ATION OF THE ISSUE , IT IS APPARENT TO NOTE THAT DEFINITION OF THE ANONYMOUS DONATION IS PROVIDED UNDER SUBSECTION 3 OF SECTION 115BBC OF THE ACT. IT PROVIDES THAT WITH RESPECT TO THE VOLUNTARY DONATION , IF THE PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSONS MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED, THEN SUCH DONATION CAN BE CONSIDERED AS ANONYMOUS DONATION . IN THE PRESENT CASE , THERE IS NO INFOR MATION THAT ANY SUCH OTHER PARTICULARS HAS BEEN PRESCRIBED AS MENTIONED IN SUBSECTION 3. THUS , THE ONLY CONDITION IS THAT ASSESSEE MUST MAINTAIN A RECORD OF IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION. IN THE PRESENT CASE THE ASSESSEE HAS PRODUCED SUCH PERSONS WHO MADE VOLUNTARY CONTRIBUTION TO THE ASSESSEE. THEY ALSO CONFIRMED BY THE STATEMENT ON OATH BEFORE THE LD AO. BASED ON THIS THE AO HIMSELF STATED THAT THE IDENTITY OF SUCH PERSONS WERE OBTAINED. WHEN THE ASSES SEE HAS SUCCESSFULLY DEMONSTRATED THE NAME AND ADDRESS OF THE PERSONS BY PRODUCING THEM BEFORE THE ASSESSING OFFICER ALONG WITH THEIR STATEMENT, THE ADDITION SHOULD NOT HAVE BEEN MADE A S AN ANONYMOUS DONATION . NATURALLY THE NAME AND IDENTITY OF SUCH PERS ONS HAVE BEEN SHOWN BY THE ASSESSEE. EVEN OTHERWISE IN THE ASSESSMENT ORDER ITSELF THE LEARNED AO HAS MENTIONED THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS GIVEN THE COMPLETE CONFIRMATION OF THOSE PARTIES. THE AO MERELY DOUBTED THAT WHEN SUMMONS WERE NOT SERVED ON THOSE PARTIES, THE LETTERS CONTAINING THE CONFIRMATION FROM THE DONORS SHOULD HAVE BEEN RECEIVED BY THE AO HIMSELF AND IT SHOULD NOT HAVE COME THROUGH THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE. THIS ISSUE MAY ARISE IN CASE OF VERIFI CATION OF THE GENUINENESS OF THE DONATION. HOWEVER THE GENUINENESS OF THE DONATION CANNOT BE CONSIDERED WHILE DETERMINING WHETHER THE DONATION IS ANONYMOUS OR NOT. THE ONLY REQUIREMENT AS IT APPEARS IN THE ACT TODAY IS JUST TO MAINTAIN A RECORD OF THE ID ENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION. IN THE PRESENT CASE , THE ASSESSEE HAS DEMONSTRATED THE IDENTITY OF THE DONORS UNDENIABLY. THE LEARNED CIT A CONFIRMED THE ADDITION FOR THE SAME REASONS AS MENTIONED BY THE AS SESSING OFFICER. HOWEVER THE LOWER AUTHORITIES UNJUSTIFIABLY INCORPORATED ADDITIONAL CONDITIONS TO MAKE THE ADDITION AS ANONYMOUS DONATION WHICH WERE NOT FOUND IN THE INCOME TAX ACT. IN VIEW OF THIS , ADDITION MADE BY THE LEARNED ASSESSING OF FICER OF 15 LAKHS AND CONFIRMED BY THE LEARNED CIT A DESERVES TO BE DELETED. THE ORDERS OF THE LOWER AUTHORITIES DESERVES TO BE REVERSED. IN THE RESULT, GROUND RELATING TO THE ADDITION OF 15 LAKHS AS ANONYMOUS DONATION IS ALLOWED. 07 IN THE RESULT APPEAL OF THE A SSESSEE IS ALLOWED SETTING ASIDE THE ISSUE OF ADDITION OF RS. 2278062 BACK TO THE FILE OF THE ASSESSING OFFICER AND DELETING THE ADDITION OF 15 LAKHS AS ANONYMOUS DONAT ION IN THE HANDS OF THE ASSESSEE. O RDER PRONOUNCED IN THE OPEN COURT ON 13/05/2020 - SD/ - - SD/ - (SUDHANSHU SRIVASTAVA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13/05/2020 COPY FORWARDED TO 1 . APPELLANTS; 2 . RESPONDENTS; 3 . CIT; 4 . CIT (APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT,