DDIT (E), New Delhi V. Prayas Juvenile Aid Centre, Delhi

ITA 1711/DEL/2013

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2343 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 31-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Charitable institution; Source of fund
• Section: 80G; 12A; 143(2); 13

Judgement Text

1 ITA NO. 1711/DEL/2013 IN THE INCOME TAX APPE LLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. NO. 1711/DEL/20 13 (A.Y 2005-06) (THROUGH VIDEO CON FERENCING) DY. DIT (E) INVESTIGATION CIRCLE-II NEW DELHI (APPELLANT) VS PARAYAS JUVENILE AID CENTRES F-1-X, JAHANGIR PURI DELHI AAATP0449E (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER DATED 22/01/2013 PASSED BY CIT(A)-XXI, NEW DELHI FOR ASSESSMENT YEAR 2005-06. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT OUT OF T OTAL RECEIPTS AMOUNTING TO RS.6,70,82,812/-, ASSESSEE HAS REDUCED THE UNUTI LIZED GRANTS OF RS. 1,69,45,310/- DIRECTLY FROM THE TOTAL RECEIPTS, WHI CH IS NOT ACCEPTABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE I.D.CIT(A) HAS ERRED IN DELETING THE ADDITION, MADE BY THE AO, OF 25% OF APPELLANT BY SH. FARHAT KHAN, SR. DR RESPONDENT BY SH. SALIL AGGARWAL, ADV & SH. SHAILESH GUPTA, ADV DATE OF HEARING 21.06.2021 DATE OF PRONOUNCEMENT 29.06.2021 2 ITA NO. 1711/DEL/2013 THE EXPENDITURE OF RS.5,22,61,219/- IN ABSENCE OF B OOKS OF ACCOUNT AND OTHER DETAILS OF EXPENSES, DESPITE SEVERAL OPPORTUN ITIES WERE PROVIDED TO THE ASSESSEE. 3. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCI ETIES REGISTRATION ACT, 1860 ON 29/08/1989. THE ASSESSEE IS ALSO REGISTERE D WITH INCOME TAX U/S 12A (A)VIDE ORDER DATED 18/9/1991 AND WITH MINISTRY OF HOME AFFAIRS TO RECEIVE FOREIGN CONTRIBUTIONS VIDE FCRA NO. 2316506 81. THE ASSESSEE IS ALSO NOTIFIED U/S 80G (5)(VI) VIDE ORDER DATED 16/7/2004 AND NOTIFIED U/S 10(23C)(IV) OF THE INCOME TAX ACT, 1961 VIDE NOTIFI CATION NO. 77/2002 DATED 24/4/2002. THE SOCIETY IS ALSO AN APPROVED INSTITU TION NOTIFIED U/S 35AC OF THE INCOME TAX ACT, 1961 VIDE NOTIFICATION NO. 297- 2002/F NO. NC-90/2002 DATED 11/10/2002 BY THE GOVERNMENT OF INDIA, MINIST RY OF FINANCE AND COMPANY AFFAIRS. THE ASSESSEE SOCIETY FILED ITS RE TURN OF INCOME DECLARING NIL INCOME ON 27/10/2005. IN RESPONSE TO NOTICE U/S 14 2(1) AND 143(2) FROM TIME TO TIME THE SENIOR MANAGER FINANCE, TREASURER AND E XECUTIVE DIRECTOR ATTENDED THE PROCEEDINGS AND FILED ALL THE REQUISIT E DETAILS, INFORMATION AND EXPLANATIONS, WHICH IS ALREADY ON RECORD. THE ASSE SSEE SOCIETY IS WORKING IN THE NEGLECTED STREET AND WORKING CHILDREN IN DELHI, GURJRAT (BHUJ), ASSAM, ANDAMAN NICOBAR, BIHAR AND ARUNACHAL PRADESH. THE SOURCE OF FUNDING FOR THE VARIOUS PROJECTS RUN BY THE SOCIETY IS FROM GOV ERNMENT GRANTS, STATE GOVERNMENT GRANTS, FCRA FUNDS/CONTRIBUTIONS FROM VA RIOUS COUNTRIES AND DONATIONS ETC. THE ACCOUNTS OF THE ASSESSEE ARE SU BJECT TO STATUTORY AUDIT AND ALSO AUDIT BY THE GOVERNMENT AGENCIES LIKE AGCR AND BY THE AUDITORS APPOINTED BY THE FUNDING AGENCIES. THE GRANT/FUNDS RECEIVED FROM GOVERNMENT, VARIOUS MINISTRIES AND GRANTS FROM FORE IGN CONTRIBUTIONS/FUNDS ARE IN PURSUANCE TO AGREEMENTS/CONTRACTS AND IN TER MS THEREOF THE AMOUNT OF UNUTILIZED GRANTS IS LIABLE TO BE REFUNDED. THE ASS ESSING OFFICER WHILE PASSING AN ORDER U/S143(3) DISALLOWED RS. 1,30,65,305/- ON AD-HOC BASIS FROM THE EXPENSES INCURRED OR FUNDS APPLIED FOR CHARITABLE P URPOSES AND DENIED DEDUCTIONS U/S 11(1) TO THE SOCIETY. 3 ITA NO. 1711/DEL/2013 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN AL LOWING THE ASSESSEE TO REDUCE THE UNUTILIZED GRANTS OF RS. 1,69,45,310/- D IRECTLY FROM THE TOTAL RECEIPTS. THE LD. DR FURTHER SUBMITTED THAT THE CI T(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF 25% OF E XPENDITURE OF RS. 5,22,61,219/- IN ABSENCE OF BOOKS OF ACCOUNTS AND O THER DETAILS OF EXPENSES, DESPITE SEVERAL OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE. 6. THE LD. AR RELIED UPON THE ORDER AND THE ORDER O F THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE SOURCE OF FUNDING FOR THE VARIOUS PROJECTS RUN BY THE SOCIETY IS FROM GOVERNMENT GRAN TS, STATE GOVERNMENT GRANTS, FCRA FUNDS/CONTRIBUTIONS FROM VARIOUS COUNT RIES AND DONATIONS ETC. THE ACCOUNTS OF THE ASSESSEE ARE SUBJECT TO STATUTO RY AUDIT AND ALSO AUDIT BY THE GOVERNMENT AGENCIES LIKE AGCR AND BY THE AUDITO RS APPOINTED BY THE FUNDING AGENCIES. THESE FACTS WERE NOT DISPUTED BY THE ASSESSING OFFICER. THE GRANT/FUNDS RECEIVED FROM GOVERNMENT, VARIOUS MINIS TRIES AND GRANTS FROM FOREIGN CONTRIBUTIONS/FUNDS ARE IN PURSUANCE TO AGR EEMENTS/CONTRACTS AND IN TERMS THEREOF THE AMOUNT OF UNUTILIZED GRANTS IS LI ABLE TO BE REFUNDED. THE ASSESSING OFFICER WHILE PASSING AN ORDER U/S 143( 3) HAS WRONGLY CONSIDERED THE AMOUNT OF UNUTILIZED GRANT IN AID THAT OF RS.1, 69,45,310/- AS INCOME AND DISALLOWED RS. 1,30,65,305/- ON AD-HOC BASIS FROM T HE EXPENSES INCURRED OR FUNDS APPLIED FOR CHARITABLE PURPOSES. THE ASSESSI NG OFFICER HAS ALSO WRONGLY DENIED DEDUCTIONS U/S 11(1) TO THE SOCIETY WHICH IS NOT JUST AND PROPER ONCE, THE ASSESSEE SOCIETY HAS GIVEN THE DETAILS OF THE U NUTILIZED GRANT IN AID AND EXPENSES AND FULFILLS THE CRITERIA PRESCRIBED UNDER SECTION 11(1) OF THE ACT. THE CIT(A) HAS TAKEN A PROPER COGNIZANCE OF ALL THE REL EVANT FACTS THEREBY CALLING REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSE SSING OFFICER HAS NOT GIVEN ANY ADVERSE COMMENT IN RESPECT OF THE REMAND REPORT REGARDING THE ASSESSEES 4 ITA NO. 1711/DEL/2013 CONTENTIONS BEFORE THE CIT(A). THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JUNE, 2021. SD/- SD/- (G. S. PANNU) (SUCHITRA K AMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 29/06/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI