M/s The Gurukul Trust, New Delhi V. ADIT(E), New Delhi

ITA 1602/DEL/2010

• Counselvise Citation: 160220114 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 22-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 09-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS Y KAKKAR SENIOR
• Assessee Lawyers: ANOOP SHARMA; M K GIRI S
• Keywords: Income from undisclosed sources; Charitable institution; Onus to prove
• Section: 68; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I : NEW DELHI) SMT. DIVA SINGH, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1602/DEL./2010 (ASSESSMENT YEAR : 2002-03) M/S. THE GURUKUL TRUST, VS. ADIT (E), TRUST CIRC LE-IV D-251, COUNTRY CLUB ROAD, NEW DELHI. NEB SARAI, NEW DELHI-110 041. (PAN : AAATT3993R) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI ANOOP SHARMA & M.K. GIRI, ADV OCATES REVENUE BY : MRS. Y. KAKKAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-XI, NEW DELHI DATED 02.03.2010 FOR THE ASSESSMENT YEAR 2002 -03. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.51 LACS REPRESENTING DONATIONS RECEIVED IN AGGREGATE FROM SEVEN DONORS U/S 68 OF THE ACT, 1961 . 2. THAT THE LD. CIT(A) ERRED IN EQUATING THE CASE O F DONATION IN THE CASE OF A TRUST WITH THAT OF A LOAN / CREDIT / DEPO SIT WHILE APPLYING SECTION 68 OF THE ACT AND UPHOLDING THE ADDITION. 3. THAT THE CORPUS DONATIONS WERE RECEIVED BY THE A SSESSEE, BURDEN OF PROOF WITH NECESSARY EVIDENCE STOOD DISCHARGED A ND ADDITION U/S 68 ON FACTS IS UNJUSTIFIED. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTER, AMEND OR VARY ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.1602/DEL./2010 2 2. THE ASSESSEE IS A TRUST INCORPORATED ON 12.05.20 00 FOR EDUCATIONAL PURPOSES. THE TRUST HAS SET UP A SCHOOL IN DEHRADUN BY THE NAME T HE SELAQUI WORLD SCHOOL. THE ASSESSEE TRUST HAD SHOWN DONATIONS RECEIVED TOWARDS THE CORPUS OF RS.2,34,10,800/-. THE ASSESSING OFFICER ASKED TO ADDUCE THE EVIDENCE TO P ROVE THE GENUINENESS OF DONATIONS AND TO PROVE CREDITWORTHINESS OF DONORS AND CONFIRMATIO N FROM DONORS. THE ASSESSING OFFICER DIS-BELIEVED SOME OF THESE CORPUS DONATIONS AND ADD ED RS.51,00,000/- IN RESPECT OF THE FOLLOWING:- S.NO. NAME & ADDRESS AMOUNT GIVEN AS DONATION RS. REMARKS 1. MITTAL ADVERTISING PVT. LTD. 20-C, POCKET 1, PHASE II, MAYUR VIHAR, DELHI-110096 6,00,000 AS PER INSPECTORS REPORT NO SUCH PERSON EXISTED THERE AND SUMMONS COULD NOT BE SERVED. FLAT WAS IN OCCUPATION OF ONE SH. R.L. ROHILA 2. TOSHNA INVESTMENT PVT. LTD. 6, PUSA ROAD, KAROL BAGH, NEW DELHI. 8,00,000 LETTER SENT BY SPEED POST WAS RECEIVED BACK UNSERVED. 3. S.J. HOSIERY PVT. LTD., D-112, GANGA VIHAR, DELHI 8,00,000 THOUGH THE SUMMONS WERE SERVED ON SH. MUKESH KUMAR, DIRECTOR AT HIS NEW ADDRESS TRACED BY INSPECTOR HE DID NOT PRODUCE EVIDENCE OR CONFIRMATION FOR HIS CREDIT WORTHINESS 4. S.P.D. ELECTRICALS PVT. LTD., 573/5, GALI NO.4, VIJAY PARK, DELHI-110053 2,00,000 AS PER INSPECTOR REPORT NO SUCH PERSON EXISTED AT THE GIVEN ADDRESS 5. R.S.G. MARKETING PVT. LTD., 575-5, GALI NO.4, VIJAY PARK, MAUJPUR, 15,00,000 AS PER INSPECTORS REPORT NO SUCH PERSON EXISTED AT THE GIVEN ADDRESS. ITA NO.1602/DEL./2010 3 DELHI-110096. 6. PROFAN FINANCE & INVESTMENT PVT. LTD., 1756, IIND FLOOR, NAYA BAZAR, NAI BASTI, DELHI-110006. 2,00,000 SERVICE SERVED THROUGH AFFIXTURE BUT NO COMPLIANCE. 7. DEEPAK GUPTA, 1756, IIND FLOOR, NAYA BAZAR, NAI BASTI, DELHI-110006. ------ SERVICE SERVED THROUGH AFFIXTURE BUT NO COMPLIANCE. 8. AMBA ALLOYS PVT. LTD., 1756, IIND FLOOR, NAYA BAZAR, NAI BASTI, DELHI-110006. 10,00,000 SERVICE SERVED THROUGH AFFIXTURE BUT NO COMPLIANCE. ASSESSING OFFICER MADE ADDITION BY HOLDING AS UNDER :- 5. VIDE ORDERSHEET ENTRY DATED 03/03/05 SH. RAKESH AGGARWAL, C.A WAS CONFRONTED WITH THE ABOVE FACT THAT EVIDENCE AS TO THE GENUINENESS AND CREDIT WORTHINESS OF THE AFOREMENTIONED PERSONS WHO HAD ALLEGEDLY CONTRIBUTED CORPUS DONATION AMOUNTING TO RS.51 LAKH S HAD NOT BEEN ADDUCED AND AS SUCH WHY THIS AMOUNT OF RS.51 LAKH B E NOT TREATED AS INCOME FROM UNDISCLOSED SOURCES - FOUND DEPOSITED I N ASSESSEES BOOKS OF ACCOUNTS, KEEPING IN VIEW THE RATIONALE OF SECTI ON 68 OF THE I.T ACT,1961. THE ONUS WAS ON THE ASSESSEE TO PROVE T HAT THE AMOUNT HAS BEEN RECEIVED FROM GENUINE PERSONS IN A BONAFIDE MA NNER. ASSESSEE SUBMITTED THAT THE AMOUNT HAD BEEN RECEIVED THROUGH CHEQUES/DRAFTS DRAWN ON VARIOUS BANKS. THE ASSESSEE ALSO SUBMITTED THE EXTRACTS OF FACTS RELATING TO AFOREMENTIONED PERSONS COLLECTED AS A R ESULT OF INSPECTION OF ROC GIVING DETAILS OF DIRECTORS AND REGISTERED OFFI CE OF THE COMPANY, WHICH INTER-ALIA REVEALED THAT ONE SH. DEEPAK GUPTA , HAVING ADDRESS AS 1756, NAI BASTI, NAI BAZAR, DELHI 10006 AND SH. PAR DEEP KUMAR, R/O 573/5, GALI NO.4, VIJAY PARK, DELHI, RAJ KUMAR & PR AVEEN JAIN WERE SHOWN TO HAVE BEEN DIRECTORS OF VARIOUS COMPANIES. SH. DEEPAK GUPTA WHO WAS SHOWN TO BE A DIRECTOR OF M/S. S.P.D ELECTR ICAL PVT. LTD & AMBA ALLOYS PVT. LTD. & WHOSE ADDRESS WAS ALSO THE ADDRESS OF PROFAN FINANCE & INVESTMENT PVT. LTD, AS MENTIONED ABOVE S UMMONS WERE ISSUED TO SH. DEEPAK GUPTA ALSO THROUGH AFFIXTURE B UT HE DID NOT COMPLY. ON MAKING INQUIRIES FROM THE NEIGHBORHOOD, IT WAS R EPORTED THAT SH. DEEPAK GUPTA WAS A MAN OF SMALL MEANS AND WAS JUST DOING THE BUSINESS OF NAME LENDING FOR A SMALL CHARGE AND LOT MANY PEO PLE COME TO LOOK FOR HIM FROM TIME TO TIME. HE WAS OCCUPYING SMALL ROOM FOR HIS OPERATIONS. SH. MUKESH KUMAR OF M/S. S.J. HOSIERY PVT. LTD. TO WHOM SUMMONS WERE SERVED PERSONALLY BY INSPECTOR OF THIS CIRCLE WAS ALSO REPORTED TO BE MAN OF LITTLE MEANS. THOUGH THE ASSESSEE WAS CONFRO NTED WITH THESE FACTS AND AS THE ASSESSEE HAD NOT DISCHARGED THE BURDEN P LACED ON HIM AS TO THE GENUINENESS AND CREDIT WORTHINESS OF THE PERSON WHO HAVE ALLEGEDLY' GIVEN DONATION TOTALING RS.51 LAKHS, THIS AMOUNT WI LL BE TREATED AS ITA NO.1602/DEL./2010 4 INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AS IT WAS FOUND CREDITED/DEPOSITED IN HIS BOOKS OF ACCOUNTS. MERELY FILING CONFIRMATIONS/EXTRACTS OF INSPECTION REPORT FROM RO C DID NOT ABSOLVE THE ASSESSEE OF THE BURDEN TO PROVE SOURCE OF SUCH HUGE WHICH HAS BEEN FOUND TO BE DEPOSITED/CREDITED INTO ITS BOOKS OF AC COUNTS. 3. IN ALL THE GROUNDS OF APPEAL, THE ISSUE INVOLVED IS THE SUSTENANCE OF DISALLOWANCE OF RS.51 LACS FROM SEVEN DONORS U/S 68 OF THE INCOME-T AX ACT. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS A CHARITABLE TRUST. THE ASSES SING OFFICER HIMSELF HAS RECORDED THAT THE SCHOOL HAS NOT BEGIN OPERATIONS TILL 31.3.2002. TH E BUILDING WAS ALSO NOT COMPLETED BY THAT TIME. THE ASSESSEE HAS DULY DISCLOSED ALL THE RECEIPTS IN INCOME AND EXPENDITURE ACCOUNT. THIS FACT HAS BEEN DULY RECORDED BY THE A SSESSING OFFICER IN PARA 2 OF HIS ORDER. THE TOTAL CORPUS DONATION RECEIVED WERE OF RS.2,34, 10,800/-. THE ASSESSING OFFICER DIS- BELIEVED THE ASSESSEES EXPLANATION WITHOUT ANY BAS IS. LEARNED AR SUBMITTED THAT ALL THESE PERSONS WERE IN EXISTENCE WHICH IS PROVED FROM THE DETAILS DOWNLOADED FROM THE OFFICIAL WEBSITE OF MINISTRY OF COMPANY AFFAIRS, GOVERNMENT OF INDIA AND ONCE THE ASSESSEE HAS PROVED THE IDENTITY OF THE CORPUS DONORS THEN THE O NUS IS ON THE REVENUE TO DIS-PROVE THE SAME. THE AMOUNT WAS RECEIVED THROUGH THE DRAFTS/P AY ORDERS DRAWN ON VARIOUS BANKS. THE DETAILS COLLECTED FROM THE WEBSITE FROM THE REG ISTRAR OF COMPANIES GAVE THE DETAILS OF THE DIRECTORS AND REGISTERED OFFICE OF THE COMPANIE S. IT IS NOT FOR THE ASSESSEE TO PROVE THE SOURCE OF SOURCE. FURTHER, THE AMOUNT SO RECEIVED WAS INVESTED AS PER THE PROVISIONS OF SECTION 11 OF THE INCOME-TAX ACT. THE CONFIRMATION WAS ALSO SUBMITTED FROM THESE PERSONS. THEREFORE, THE CIT (A) WAS NOT JUSTIFIED IN SUSTAINED THE ADDITION. HE PLEADED TO SET ASIDE THE ORDER OF AUTHORITIES BELOW. 4. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO FILE ANY MATERIAL EVIDENCE ON RECORD TO ESTABLISH THAT THE D ONORS WERE IN EXISTENCE. ASSESSEE ALSO FAILED TO PROVE THAT THE DONORS WERE HAVING CREDITW ORTHINESS TO DONATE SUCH AN AMOUNT. THE GENUINENESS OF THE TRANSACTION IS ALSO NOT ESTA BLISHED. HOW PERSONS OF SMALL OR ITA NO.1602/DEL./2010 5 MEAGER MEANS CAN DONATE SO MUCH OF AMOUNT. THE A SSESSEE HAD NOT PROVIDED EVEN THE PAN NUMBER OF THESE PERSONS. THE ROC DETAILS ITSEL F SHOW THAT THESE PERSONS WERE OF NO MEANS. IN THE CASE OF M/S. RSG MARKETING PVT. LTD. (ONE OF THE SO-CALLED DONORS), IN THE CONFIRMATION, A CONDITION HAS BEEN WRITTEN THAT THE ASSESSEE WILL OBLIGE THEM BY FAVOURABLY CONSIDERING THE CHILDREN RECOMMENDED BY THEM FOR AD MISSION TO THE SCHOOL WHEN IT BECOMES FUNCTIONAL. SHE ALSO PLEADED THAT ALL THES E AMOUNTS WERE RECEIVED BY PAY ORDER IN A SHORT DURATION WHILE THESE COULD HAVE BEEN VERY W ELL RECEIVED BY CHEQUES. THE ASSESSEE FAILED TO PROVE THAT THESE PAY ORDERS WERE MADE FRO M DONORS ACCOUNT. SHE ALSO SUBMITTED THAT IN THE CASE OF M/S. SJ HOSIERY PVT. LTD., THE PAID UP CAPITAL OF THE COMPANY IS ONLY RS.200/-. IN THE CASE OF PROFAN FINANCE & INVESTME NT PVT. LTD., M/S. MITTAL ADVERTISING PVT. LTD. AND M/S. TOSHNA INVESTMENTS PVT. LTD., TH E PAID UP CAPITAL IS NIL. FURTHER, THE RELEVANT BALANCE SHEET OF M/S. MITTAL ADVERTISING P VT. LTD. WAS NOT AVAILABLE FOR THE YEAR CONCERNED WITH THE ROC. IN THE CASE OF M/S. AMBA A LLOYS PVT. LTD. AND M/S. SJ HOSIERY, NO DONATION IS REFLECTING IN THE PROFIT AND LOSS AC COUNT FILED AS PER THE INSPECTOR REPORT WHICH IS EVIDENT FROM PAGE 18 OF THE PAPER BOOK. A SSESSEE SHOULD HAVE FILED THE PROFIT & LOSS ACCOUNT TO PROVE OTHERWISE. FURTHER IN THE CA SE OF M/S. SPD ELECTRICALS PVT. LTD., THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE CON CERNED YEAR WAS NOT AVAILABLE WITH THE ROC. IN THE CASE OF M/S. PROFAN FINANCE & INVESTM ENT PVT. LTD., THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE RELEVANT PERIOD IS NO T AVAILABLE WITH THE ROC. THESE DONATIONS ARE SHOWN AS RECEIPT BY THE PAY ORDER. I N THE CASE OF M/S. AMBA ALLOYS AND M/S. RSG MARKETING, THESE PAY ORDERS WERE MADE FROM JAI LAKSHMI CO-OPERATIVE BANK LIMITED WITHIN A SPAN OF 10 DAYS. SIMILARLY, THE OTHER PAY ORDERS IN THE NAMES OF M/S. SJ HOSIERY, M/S. MITTAL ADVERTISING AND M/S. PROFAN FINANCE WER E ALSO MADE DURING THAT PERIOD. IN THE VERIFICATION MADE BY THE ASSESSING OFFICER, NONE OF THESE DONORS HAD CONFIRMED THE TRANSACTION. SHE ALSO PLEADED THAT THE DONATIONS R ECEIVED BY ANY PERSON ARE COMPLETELY ON ITA NO.1602/DEL./2010 6 DIFFERENT FOOTING THAN THE SHARE CAPITAL. THE INVE STMENT IN THE SHARES IS MADE FOR THE RETURN LIKE DIVIDEND AND APPRECIATION IN THE VALUE OF SHAR ES BUT IN THE CASE OF CORPUS DONATIONS TO A TRUST WHICH CLAIMING THE EXEMPTION UNDER THE INCO ME-TAX ACT, 1961, THESE DONATIONS MUST BE IN THE FORM OF VOLUNTARY CONTRIBUTION MADE WITH A SPECIFIC DIRECTION. IN THE ASSESSEES CASE, NONE OF THESE SO CALLED DONORS HAV E COME FORWARD TO SHOW THAT THE DONATION WAS A VOLUNTARY CONTRIBUTION WITH A SPECIF IC PURPOSE TO FORM THE PART OF THE CORPUS. INVESTIGATIONS HAVE FOUND THAT THERE WERE NO SUCH PERSONS. THUS, HOW IT CAN BE PROVED OR ESTABLISHED THAT IT WAS A VOLUNTARY CONTR IBUTION AND QUALIFY FOR EXAMINATION U/S 11 OF THE INCOME-TAX ACT. SHE ALSO SUBMITTED THA T THE APPRAISAL OF THE DOCUMENTS OBTAINED FROM ROC WEBSITE SUBMITTED BY THE ASSESSEE AND ALSO THE FACTS AND CIRCUMSTANCES OF CASE SHOW THAT THE APPARENT IS NOT REAL. THE AS SESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION, TO PROVE FINANCIAL STRENGTH OR THE CREDITWORTHINESS OF THESE DONORS FOR SUCH HUGE DONATIONS. ALL THE CONFIRMATI ONS ARE SELF SERVING STATEMENTS. A LITTLE PROBE WAS SUFFICIENT TO ESTABLISH THAT THESE TRANSA CTIONS ARE NOT THE REAL TRANSACTIONS OF DONATIONS FOR CORPUS FUND OF ASSESSEE. THE SURROUN DING CIRCUMSTANCES ESTABLISHED THAT THE REALITY OF THESE RECITALS IN CONFIRMATION IS NOT CO RRECT. SHE FINALLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND PLEADED TO SUSTAIN THE SA ME. 5. WE HAVE HEARD BOTH THE SIDES. AFTER HEARING AND CONSIDERING ALL THE RELEVANT FACTS AVAILABLE IN THE RECORD AND CASE LAWS RELIED UPON, WE HOLD THAT THE INCOME WHICH IS CLAIMED TO BE EXEMPTED UNDER SECTION 11(1)(D) OF THE INCOME -TAX ACT HAS TO BE A VOLUNTARY CONTRIBUTION MADE WITH A SPECIFIC DIRECTION THAT TH E AMOUNT SHALL FORM THE PART OF THE CORPUS OF THE TRUST. IN THIS CASE, THE ASSESSEE HA D FAILED TO ESTABLISH THE FACT THAT THESE DONATIONS WERE RECEIVED VOLUNTARILY WITH A SPECIFIC DIRECTION TO FORM THE PART OF THE CORPUS OF THE TRUST. THE EVIDENCES DOWNLOADED FROM THE WE BSITE OF MINISTRY OF COMPANY AFFAIRS SUBMITTED BY ASSESSEE ARE ALSO NOT SUFFICIENT TO DI SCHARGE THE ONUS BY THE ASSESSEE. ITA NO.1602/DEL./2010 7 ASSESSEE MUST ESTABLISH FROM POSITIVE EVIDENCE THAT THESE ARE GENUINE DONATIONS MADE VOLUNTARY TO FORM THE CORPUS FUND OF THE TRUST. TH E INSPECTORS REPORT WHICH IS AVAILABLE AT PAGES 17 TO 19 OF THE PAPER BOOK ALSO SHOWS THAT TH ESE DONORS HAVE NOT FILED RELEVANT ACCOUNTS WITH THE MINISTRY OF COMPANY AFFAIRS. EVE N IN SOME OF THE CASES THESE TRANSACTIONS WERE NOT REFLECTING IN THEIR PROFIT AN D LOSS ACCOUNT FILED WITH ROC. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, W E SET ASIDE THE ISSUE TO BE LOOKED INTO AFRESH AT THE LEVEL OF ASSESSING OFFICER. WE ORD ER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 5 TH DAY OF AUGUST, 2011. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 5 TH DAY OF AUGUST, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.