Darshanika Foundation, Bangalore V. DDIT(E), Bangalore

ITA 1458/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51330 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Revised return
• Section: 143(1); 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS. 1458 & 1459/BANG/2010 ASSESSMENT YEARS : 2004-05 & 2005-06 M/S. DARSHANIKA FOUNDATION REP. BY ITS TRUSTEE MR. N.V. KRISHNAMURTHY, NO.85, 1 ST FLOOR, 1 ST EAST BLOCK, BYRASANDRA MAIN ROAD, JAYANAGAR, BANGALORE 560 011. PAN : AAATD 5463G VS. THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS), CIRCLE 17(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI N.V. KRISHNAMURTHY, TRUSTEE RESPONDENT BY : SMT. PREETI GARG, CIT(DR) DATE OF HEARING : 31.10.2011 DATE OF PRONOUNCEMENT : 31.10.2011 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS EACH DATED 12.10.2010 OF THE CIT(AP PEALS)-V, BANGALORE. ITA NO.1458 & 1459/BANG/2010 PAGE 2 OF 5 2. COMMON GROUNDS HAVE BEEN RAISED IN BOTH THESE AP PEALS AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DIS POSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST, WE WILL DEAL WITH ITA NO.1458/B/2010, WHE REIN THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE ORDER OF THE CIT(A) THAT THE TRUST HAS COLLE CTED THE AMOUNT IN THE GUISE OF DONATION AND NOT UTILIZING T HE SAME FOR CHARITABLE ACTIVITY IS ERRONEOUS. 3. THE TRUST HAD UTILIZED THE AMOUNT COLLECTED FOR CHARITABLE PURPOSE. IT HAD ORGANIZED MORE THAN 15 FUNCTIONS A ND DISTRIBUTED STRETCHERS, WHEEL CHAIRS, TRI-CYCLES, S TICKS FOR THE BLINDS, TWO WHEELERS FOR HANDICAPPED, HOUSES FO R DISABLED VILLAGERS AT KUNDAPURA, DISTRIBUTED STAINL ESS TELL MEAL PLATES, TUMBLERS TO RURAL SPREADS, MATS TO OLD AGE ORPHANAGE HOMES. THESE ACTIVITIES WERE CARRIED ON BY THE DONATIONS COLLECTED. THEREFORE THE FINDING OF CIT(APPEALS) IS ERRONEOUS. 4. THE COMPUTATION OF INCOME ON THE BASIS OF RS.53, 91,560/- IS ERRONEOUS. 5. THE FINDING ARRIVED AT WITHOUT THE RECORDS ARE E RRONEOUS. THE RECORDS ARE SEIZED BY THE POLICE AND MANY RECOR DS ARE DESTROYED BY THE SO CALLED DEPOSITORS. 6. WITHOUT THERE BEING ANY BASIS FOR THE COMPUTATIO N THE ORDER IS BAD-IN-LAW. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED THE RETURN OF INCOME ON 1.1.2004 DECLARING TOTAL INCOME AT NIL ON THE GROUND THAT THE AMOUNT WAS DEEMED TO HAVE BEEN APPLIED FOR CHARITAB LE PURPOSES U/S. 11 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT IN SHORT]. THE SAID RETURN WAS PROCESSED U/S. 143(1) OF THE AC T ON 17.3.2005, ITA NO.1458 & 1459/BANG/2010 PAGE 3 OF 5 THEREAFTER THE ASSESSEE FILED REVISED RETURN OF INC OME ON 31.3.2005. IN THE SAID REVISED RETURN ALSO, THE TOTAL INCOME WAS DECL ARED AT NIL ON THE SAME GROUND THAT THE AMOUNT WAS DEEMED TO HAVE BEEN APPL IED FOR CHARITABLE PURPOSES U/S. 11 OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER FRAMED ASSESSMENT U/S. 144 OF THE ACT. WHILE FRAMING THE ASSESSMENT THE AO HELD THAT THE DEPOSITS IN THE GUISE OF DONATION HAD NOT BEEN REFUNDED TO THE PERSONS, SO, IT WAS TREATE D AS ASSESSEES OWN INCOME. THE AO POINTED OUT THAT THE ASSESSEE HAD S TATED THAT IT SHALL PRODUCE THE EVIDENCE OF THE BOOKS SEIZED BY POLICE DEPARTMENT, BUT HAD NOT FURNISHED ANY EVIDENCE. THE AO DISALLOWED THE EXPENDITURE CLASSIFIED AS PROGRAMME EXPENSES AMOUNTING TO RS.28,18,551 AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AND THE INCOME WAS CO MPUTED AT RS.53,91,560. 5. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A PPEALS), WHO CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDE R: 5. BEFORE ME THE A.R. OF THE TRUST AND THE TRUSTEE S SUBMITTED THAT THE BOOKS OF A/C ARE UNDER THE POLICE CUSTODY. I AM IN AGREEMENT WITH THE A.O. AS HE HAS RIGHTLY BROUGHT T HE INCOME TO TAX. IN VIEW OF THIS, THE ADDITION MADE BY THE A.O. AMOUNTING TO RS.53,91,560/- IS HEREBY CONFIRMED. 6. NOW THE ASSESSEE IS IN APPEAL. THE TRUSTEE, MR. N.V. KRISHNAMURTHY, APPEARING FOR THE TRUST SUBMITTED TH AT THE BOOKS OF ACCOUNTS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER SINCE THOSE WERE IN THE POLICE CUSTODY. IT WAS FURTHER STATED THAT THE LD. CIT(A) HAD PASSED A NON- SPEAKING ORDER, WHILE CONFIRMING THE ADDITION MADE BY THE AO. ITA NO.1458 & 1459/BANG/2010 PAGE 4 OF 5 7. IN HIS RIVAL SUBMISSIONS, THE LD. CIT(DR) STRONG LY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND THE MATERIAL ON RECORD. IN THE PRESENT CASE, IT IS NOT ICED THAT THE ASSESSING OFFICER FRAMED THE ASSESSMENT EX PARTE U/S. 144 OF THE ACT. HE MADE THE ADDITIONS FOR THE REASONS THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS. WHILE DOING SO, HE DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE BOOKS OF ACCOUNTS WERE SEIZED BY THE POLICE DEPARTMENT. IT IS ALSO NOTICED THAT THE LD. CIT(A) WHILE CONFIR MING THE ACTION OF THE AO HAD NOT DISCUSSED THE SUBMISSIONS OF THE ASSESSEE W HICH WERE MADE BEFORE HIM AND ALSO NO REASON HAS BEEN GIVEN WHY AN D HOW HE WAS IN AGREEMENT WITH THE OBSERVATIONS OF THE AO. 9. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESS EE WAS PREVENTED BY SUFFICIENT CAUSE IN NOT PRODUCING THE BOOKS OF ACCO UNTS, BECAUSE THOSE WERE IN THE CUSTODY OF POLICE, AS SUCH IT WAS BEYON D THE CONTROL OF THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE TH E AO. IN THE PRESENT CASE, IT SEEMS THAT NO EFFORTS WERE MADE BY THE DEP ARTMENT TO REQUISITION THE BOOKS, WHICH WERE IN THE CUSTODY OF THE POLICE, IT APPEARS THAT A REASONABLE OPPORTUNITY OF BEING HEARD HAD NOT BEEN GIVEN TO THE ASSESSEE TO DEFEND ITS CASE. IT IS WELL SETTLED THAT NOBODY SHOULD BE CONDEMNED UNHEARD, BUT IN THE PRESENT CASE, THE AO FRAMED THE ASSESSMENT EX PARTE U/S. 144 OF THE ACT AND THE LD. CIT(A) ALSO CONFIRM ED THE ACTION OF THE AO BECAUSE THE BOOKS WERE NOT PRODUCED BY THE ASSESSEE . WE THEREFORE, CONSIDERING THE TOTALITY OF FACTS, ARE OF THE VIEW THAT THE ASSESSEE DESERVES AN OPPORTUNITY OF BEING HEARD. IN OUR OPINION, DUE AND REASONABLE ITA NO.1458 & 1459/BANG/2010 PAGE 5 OF 5 OPPORTUNITY OF BEING HEARD HAD NOT BEEN PROVIDED BY THE DEPARTMENT TO THE ASSESSEE. WE, THEREFORE, DEEM IT APPROPRIATE TO SE T ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND REMAND THE ISSUE BACK TO THE FILE OF THE AO, TO BE DECIDED AFRESH AFTER PROVIDING DUE AND RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. IN ITA NO.1459/BANG/2010 IDENTICAL GROUNDS HAVE BEEN RAISED, AS WERE IN ITA NO.1458/BANG/2010, EXCEPT THE AMOUNT ME NTIONED IN GROUND NO.4. SINCE THE FACTS ARE SIMILAR IN BOTH THE YEA RS, THEREFORE, OUR FINDINGS GIVEN WHILE ADJUDICATING THE APPEAL IN ITA NO.1458/ BANG/2010 FOR THE A.Y. 2004-05 (SUPRA) SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL IN ITA NO.1459/BANG/2010 FOR THE A.Y. 2005-06. 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF OCTOBER, 2011. SD/- SD/- ( SMT. P. MADHAVI DEVI ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST OCTOBER, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.