The ACIT,Patan Circle, Patan V. Shree Panchasara Parshwanathji Jain Derasar, Patan

ITA 1958/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6732 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Assessee Lawyers: S N SOPARKAR
• Keywords: Bonafide belief; Revised return; Bonafide mistake; Capital expenditure
• Section: 143(3); 234B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI D K TYAGI,JM & SHRI A N PAHUJA, AM ITA NO.1958/AHD/2009 (ASSESSMENT YEAR:-2005-06) ASSISTANT COMMISSIONER OF INCOME-TAX, PATAN CIRCLE, PATAN V/S SHREE PANCHASARA PARSHWANATHJI JAIN DERASAR, HEMCHANDRACHARYA ROAD, PIMPALA SHERI, PATAN PAN: AABTS 3777 R [APPELLANT] [RESPONDENT] ITA NO.2024/AHD/2009 (ASSESSMENT YEAR:-2005-06) SHREE PANCHASARA PARSHWANATHJI JAIN DERASAR, HEMCHANDRACHARYA ROAD, PIMPALA SHERI, PATAN V/S INCOME-TAX OFFICER (TDS) PATAN RANGE, PATAN [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI RAJIB JAIN, DR ASSESSEE BY:- SHRI S N SOPARKAR, AR O R D E R A N PAHUJA: THESE CROSS APPEALS AGAINST AN ORDER DATED 31-03- 2009 OF THE LD. CIT(APPEALS), GANDHINAGAR FOR THE ASSESSMENT YEAR 2005-06, RAISE THE FOLLOWING GROUNDS: ITA NO.1958/AHD/2009[REVENUE] 1 THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.16,55,386/- BEING THE EXPENDITURE APPLIED FOR NO N-CHARITABLE PURPOSE. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3 IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEAR NED CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE E XTENT. ITA NOS.1958 & 2024/AHD/2009 2 ITA NO.2024/AHD/2009 [ ASSESSEE] 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE DONATIONS OF RS.15, 59,858/- RECEIVED BY THE SWARNA JAYANTI MAHOTSAV SAMITI WAS INCOME OF THE TRUST FROM VOLUNTARY CONTRIBUTION AND NOT TOWARDS C ORPUS FUND AS CLAIMED BY THE APPELLANT TRUST. BOTH THE LOWER AUTH ORITIES HAVE NOT APPRECIATED THE FACT THAT THE DONATIONS RECEIVED BY THE AUTHORIZED SAMITI WERE TOWARDS THE CORPUS FUND AS PER THE DESI RE OF THE DONOR CLEARLY MENTIONED IN THE RECEIPTS ISSUED. LD. CIT ( A) OUGHT TO HAVE HELD THE DONATIONS RECEIVED BY THE SAMITI TOWARDS C ORPUS FUND OF THE TRUST AND NOT AS VOLUNTARY CONTRIBUTIONS FORMIN G PART OF INCOME OF THE TRUST. 2. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING THE CLAIM TO CONSIDER THE CAPITAL EXPENDITURE OF RS .30,76,915/- AS EXPENDITURE APPLIED TOWARDS THE OBJECT OF THE TRUST THAT REQUIRED TO BE REDUCED FROM THE INCOME UNDER THE PROVISIONS OF SECTION 11(2) OF THE ACT, LEARNED CIT (A) HAS ERRONEOUSLY HELD THAT SINCE THE SAID CLAIM WAS NOT MADE BEFORE AO EITHER IN ORIGINAL RET URN OR IN THE REVISED RETURN, THE SAME COULD NOT BE MADE IN THE A PPELLATE PROCEEDINGS EITHER AS A REGULAR GROUND OR AS AN ADD ITIONAL GROUND. LD. CIT (A) OUGHT TO HAVE HELD THE CAPITAL EXPENDIT URE AS ALLOWABLE EXPENDITURE U/S 11 OF THE ACT. 3. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN NO T ADJUDICATING GROUND # 4 RAISED BY THE APPELLANT IN THE APPEAL BE FORE HIM TO CONSIDER THE CAPITAL EXPENDITURE OF RS.30,76,915/- AS EXPENDITURE APPLIED FOR THE OBJECT OF THE TRUST AND TO REDUCE T HE SAME FROM THE INCOME OF THE TRUST AS PER THE PROVISIONS OF SECTIO N 11 OF THE ACT. THE APPELLANT HAS MOVED AN APPLICATION BEFORE THE C OMMISSIONER ON JUNE 22, 2009 ALONG WITH FORM # 10 AND RESOLUTIO N PASSED BY THE TRUSTEES TO THE EFFECT THAT CONSIDERING THE ORD ER OF THE CIT(A) WHEREBY THE DONATIONS ARE TO BE TREATED AS GENERAL DONATIONS, THE APPELLANT BE PERMITTED TO ACCUMULATE THE TRUST INCO ME U/S 11(2) OF THE ACT. 4 INITIATION OF LEVY OF INTEREST U/S 234A, 234B & 2 34D OF THE ACT IS NOT JUSTIFIED . THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. ADVERTING FIRST TO GROUND NO.1 IN APPEAL OF THE REVENUE AS ALSO GROUND NO.1 IN THE APPEAL OF THE ASSESSEE, FA CTS, IN BRIEF, AS ITA NOS.1958 & 2024/AHD/2009 3 PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING I NCOME OF RS.34,301/- FILED ON 27-10-2005 BY THE ASSESSEE-TR UST, CREATED ON 16-01-1953 FOR RELIGIOUS PURPOSES AND ADMINISTRATIO N OF DERASAR I.E. JAIN TEMPLE AND ITS ASSETS, AFTER BEING PROCESSED O N 17-03-2006 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REF ERRED TO AS THE ACT], WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ON 19.10.2006.DURING THE COURSE O F ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER[AO IN SHORT] NOTICED ON PERU SAL OF DETAILS THAT THE ASSESSEE HAD SHOWN CORPUS DONA TIONS OF RS.15,59,858/- UNDER THE HEAD OF 'SUVARNA JAYANTI M AHOTSAV FUND' (SCHEDULE 1) AND RS.16,55,386/- AS APPLICATION OF I NCOME FOR THE PURPOSE OF OBJECTS (SCHEDULE 5). TO A QUERY BY THE AO, THE ASSESSEE REPLIED VIDE LETTER DATED 10/10/2007 THA T A SEPARATE COMMITTEE WAS CONSTITUTED FOR THE CELEBRATION OF 50 YEARS OF SHRI PANCHASARA PARSHWANATH FROM THE JAIN MEMBERS OF THE PATAN. THE COMMITTEE SEPARATELY COLLECTED THE AMOUNT AND INCURRED EXPENSES FOR THE SAME PURPOSE. AFTER THE COMPLETION OF A MAHOTSAV, THE COMMITTEE FURNISHED THE FIGURE OF INCOME AND EXPENSES TO THE MAIN BODY OF THE TRUST AND THAT FIG URE WAS SHOWN IN THE YEAR UNDER THE HEAD 'PANCHASARA PARSHWANATH SWARNA JAYAN TI MAHOTSAV'. NO OTHER EVIDENCE SUCH AS RECEIPT BOOKS, VOUCHERS ETC. WERE MAINTAINED AND THEREFORE COULD NOT BE PRODUCED, IT WAS SUBMITTED ON BEHALF OF THE TRUST. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE ITSELF STATED THAT AMOUNT OF RS.15,59,858 /- HAD BEEN COLLECTED AND THUS, THE TRUST RECEIVED INCOME. IN THE ABSENCE OF ANY EVIDENCE THAT THE SAID AMOUNT WAS TOWARDS CORPUS OF THE TRUST, THE AO TR EATED THE AMOUNT OF RS.15,59,858/- AS VOLUNTARY CONTRIBUTION UNDER THE HEAD 'INCOME FROM THE OTHER SOURCES' . MOREOVER, DESPITE REQUEST MADE BY THE AO ,THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF APPLICATION OF AN AMOUNT OF RS.16,55,386/- OUT OF TOTAL AMOUNT OF RS. 25,89,820/-.ACCORDINGLY, ONLY AN AMOUNT OF RS.9,34,434/- ( 25,89,820 LESS 16,55,3 86 ) WA S CONSIDERED AS APPLICATION FOR THE PURPOSE OF THE OBJECTS OF THE T RUST. ITA NOS.1958 & 2024/AHD/2009 4 3. ON APPEAL, THE LD. CIT(A) DEALT WITH THE ISSUE A FTER HAVING A REMAND REPORT FROM THE AO , IN THE FOLLOWING TERMS:-- 2.4 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E APPELLANT'S AUTHORIZED REPRESENTATIVE HAS STRONGLY ARGUED ON TH E POINT. TO FULLY APPRECIATE THEIR POINT OF VIEW, THE RELEVANT EXTRAC T OF THE WRITTEN SUBMISSIONS IS REPRODUCED BELOW: '(1) GROUND NO. 1 RELATES TO DISALLOWANCE OF CORPUS DONATION OF RS.15,59,858/- HOLDING THE SAME AS REGULAR INCOME. (2) THE FACTS ARE AS UNDER: THE APPELLANT IS A RELIGIOUS TRUST ASSESSED TO INCO ME TAX SINCE MANY YEARS PAST. DURING THE PREVIOUS YEAR F.Y. 2004 -05, THE APPELLANT TRUST CARRIED OUT THE CELEBRATION OF 50 Y EARS OF THE DERASAR. WITH A VIEW TO CELEBRATE THE GOLDEN JUBILE E, A SEPARATE COMMITTEE IN THE NAME OF SHREE PANCHASARA PARSHWNAT H SUVARNA JAYANTI MAHOTSAV SAMITI WAS FORMED UNDER WHICH CORP US DONATIONS WERE RECEIVED FROM VARIOUS DONORS. THE SAMITI MAIN TAINED ITS SEPARATE BOOKS OF ACCOUNT AND ALSO MAINTAINED ITS S EPARATE RECEIPT BOOK ACKNOWLEDGING THE DONATIONS. THE SAMITI ALSO I NCURRED VARIOUS EXPENDITURE IN ITS NAME FOR WHICH SEPARATE BILLS / VOUCHERS WERE OBTAINED BY THE SAMITI. THE SEPARATE BOOKS OF ACCOUNTS, RECEIPTS, BILLS / VOUCHERS, BANK ACCOUNT ETC WERE A UDITED ALONG WITH THE AUDIT OF THE APPELLANT TRUST AND DONATION RECEI VED AND EXPENDITURE INCURRED HAVE BEEN COMPILED IN THE AUDI TED INCOME & EXPENDITURE A/C AND BALANCE SHEET OF THE TRUST. THE ASSESSMENT PROCEEDINGS U/S. 143(3) WERE INITIATED ON 17-3-2006 . IN THE ASSESSMENT PROCEEDINGS, REPRESENTATIVE OF THE APPEL LANT TRUST MISS NIMISHA L.PARIKH ATTENDED AND FILED THE DETAILS CAL LED FOR AND PRODUCED BOOKS OF ACCOUNT ETC. IN THE ASSESSMENT PR OCEEDINGS SHE WAS ASKED TO PRODUCE COPIES OF DONATION RECEIPTS IN RESPECT OF DONATION CREDITED UNDER THE HEAD 'SUVARNA JAYANTI M AHOTSAV SAMITI' AND ALSO BILLS VOUCHERS FOR THE EXPENDITURE DEBITED UNDER THE HEAD SUVARNA JAYANTI MAHOTSAV' IN THE AUDIT REPORT OF THE TRUST. SHE EXPLAINED THAT A SEPARATE COMMITTEE WAS CONSTIT UTED FOR THE CELEBRATION OF 50 YEARS OF SHRI PANCHASARA PARSHWNA TH TEMPLE FROM THE JAIN MEMBERS OF THE PATAN AND A COMMITTEE FORME D HAS SEPARATELY COLLECTED THE AMOUNT AND MADE EXPENSES A ND AFTER COMPLETION OF MAHOTSAV THE COMMITTEE HAS PASSED FIG URES OF INCOME AND EXPENDITURE TO THE MAIN BODY OF THE TRUS T WHICH IS SHOWN IN THE AUDIT REPORT UNDER THE HEAD PANCHASARA PARSHWNATH SUVARNA JAYANTI MAHOTSAV. WHEN THE ID. AO ASKED TO PRODUCE THE RECEIPTS AND THE VOUCHERS OF EXPENDITURE THE REPRESENTATIVE OF THE TRUST UNDERSTOOD THAT THE ID. AO WANTS TO PR ODUCE RECEIPTS ISSUED BY THE MAIN TRUST AND THE VOUCHERS OF EXPEND ITURE OBTAINED BY THE MAIN TRUST. SINCE THE DONATION RECEIPTS WERE ISSUED AND ITA NOS.1958 & 2024/AHD/2009 5 VOUCHERS OF EXPENDITURE WERE OBTAINED BY THE SUVARN A JAYANTI MAHOTSAV SAMITI, SHE EXPLAINED THAT RECEIPT BOOK VO UCHERS ARE NOT MAINTAINED AND THEREFORE CAN NOT BE PRODUCED. AT NO POINT OF TIME ANY LETTER OR SHOW CAUSE NOTICE WAS GIVEN TO EXPLAI N THE FUNCTION OF APPELLANT'S SUVARNA JAYANTI MAHOTSAV SAMITI. THE RE PRESENTATIVE IN GOOD FAITH WAS UNDER THE BONAFIDE BELIEF THAT THE A O WAS ASKING FOR THE RECEIPTS AND BILLS IN THE NAME OF THE TRUST OTH ERWISE SHE WOULD HAVE PRODUCED THE SEPARATE RECEIPT BOOKS, BILLS/VOU CHERS MAINTAINED BY THE SUVARNA JAYANTI MAHOTSAV SAMITI. THE APPELLANT'S REPRESENTATIVE HAS CLARIFIED THE ABOVE FACTS IN THE AFFIDAVIT MADE BY HER, A COPY WHEREOF IS SUBMITTED HEREWITH. 2.2 THE APPELLANT SUBMITS AS UNDER: A. THE CORPUS DONATION OF RS.15,59,858/- IS CONSIDE RED AS INCOME ON THE ONLY GROUND THAT THE REPRESENTATIVE O F THE APPELLANT HAS STATED THAT NO RECEIPT ARE AVAILABLE. B. THERE WAS MISUNDERSTANDING COMMITTED BY THE REPRESENTATIVE WHO ATTENDED IN THE ASSESSMENT PROCE EDINGS IN AS MUCH AS SHE UNDERSTOOD TO PRODUCE THE DONATIO N RECEIPTS OF RS.15,59,858/- ISSUED BY THE TRUST AND SINCE THE DONATION RECEIPTS WERE ISSUED BY THE MAHOTSAV SAMIT I, SHE STATED THAT RECEIPT BOOKS , ARE NOT MAINTAINED AND THEREFORE CAN NOT BE PRODUCED. C. THE REPRESENTATIVE HAS STATED IN HER STATEMENT T HAT A SEPARATE COMMITTEE WAS CONSTITUTED FOR THE CELEBRAT ION OF 50 YEARS OF SHREE PANCHASARA PARSHWANATH, THE COMMITTE E HAS SEPARATELY COLLECTED THE AMOUNT AND MADE EXPENSES F OR THE 50 YEARS CELEBRATION AFTER THE COMPLETION OF MAHOTS AV THE COMMITTEE HAS PASSED THE FIGURE OF INCOME AND EXPEN SES TO THE TRUST AND THAT FIGURE IS SHOWN IN THE AUDIT REP ORT FOR THE YEAR UNDER THE HEAD PANCHASRA PARSHWNAT SUVARNA JAY ANTI MAHOTSAV. SHE HAS, AFTER THE RECEIPT OF COPY OF ASS ESSMENT ORDER UNDERSTOOD THE MISTAKE COMMITTED BY HER AND C LARIFIED THESE FACTS IN AFFIDAVIT SWORN IN BY HER ON 22/01/2 008. D. THE APPELLANT IS REGULARLY ASSESSED TO INCOME TA X AND ITS BOOKS OF ACCOUNT ARE AUDITED EVERY YEAR. A COPY OF AUDIT REPORT IS FILED WITH THE INCOME TAX RETURN WHICH IS COMPILED IN THE PAPER BOOK. E. PANCHASARA PARSHWNATH SUVARNA JAYANTI MAHOTSAV S AMITI WAS FORMED UNDER A RESOLUTION PASSED BY THE APPELLA NT TRUST. A COPY OF THIS RESOLUTION IS COMPILED IN THE PAPER BOOK. F. THE PARSHWANATH SUVARNA MAHOTSAV SAMITI THEREAFT ER PLANNED AND CELEBRATED 50 YEARS MAHOTSAV. IT HAS PA SSED ITA NOS.1958 & 2024/AHD/2009 6 VARIOUS RESOLUTIONS FOR THE WORKING DONE BY IT. A C OPY OF RESOLUTIONS PASSED BY THE MAHOTSAV SAMITI IS COMPIL ED IN THE PAPER BOOK. G. IT HAS PUBLISHED INVITATION CARD WHEREIN THE NAM E OF VARIOUS DONORS WERE MENTIONED. A COPY OF THIS INVITATION CA RD AND A LIST OF THE DONATIONS RECEIVED AND COPY OF THE DONA TION RECEIPTS ARE COMPILED IN THE PAPER BOOK. H. THE APPELLANT SUBMITS THAT ITS INCOME AND EXPEND ITURE HAVE BEEN VERIFIED BY THE AUDITOR WHO HAS MADE THE AUDIT AND THE CORPUS DONATION OF RS.15,59,858/- AND THE EXPENSES OF RS.16,55,386/- ARE COMPILED IN THE AUDIT REPORT OF THE APPELLANT. THE AUDITOR HAS NOT POINTED OUT ANY ADVE RSE REMARK IN THE AUDIT REPORT FOR NON PRODUCTION OF AN Y DONATION RECEIPTS OR ANY VOUCHERS FOR EXPENDITURE. I. THE APPELLANT SUBMITS THAT AT THE TIME OF AUDIT OF THE BOOKS OF ACCOUNT OF THE TRUST, THE BOOKS OF ACCOUNT, DONATIO N, RECEIPTS AND VOUCHERS FOR EXPENDITURE OF SHRI PANCHASARA PAR SHVNATH SUVARNA JAYANTI MAHOTSAV SAMITI HAVE ALSO BEEN AUDI TED BY THE AUDITOR WHO HAS COMPILED THE INCOME AND EXPENDI TURE OF THE SUVARNA JAYANTI MAHOTSAV SAMITI IN THE AUDIT RE PORT. THE AUDITOR HAS NOT POINTED OUT ANY ADVERSE REMARK IN T HE AUDIT REPORT FOR NON PRODUCTION OF ANY DONATION RECEIPTS OR ANY VOUCHER OF EXPENDITURE. A COPY OF AUDIT REPORT ALON G WITH COMPUTATION OF INCOME IS COMPILED IN THE PAPER BOOK . J. SHRI PANCHASARA PARSHWANATH SUVARNA MAHOTSAV SAM ITI HAS COLLECTED CORPUS DONATION OF RS.15,59,858/-. XEROX COPY OF CORPUS DONATION OF OVER RS.10,000/- AND 15 RECEIPTS EACH FROM 3 DONATION BOOKS OF DONATIONS RECEIVED BELOW RS.10,000/- ARE COMPILED IN THE PAPER BOOK. K. IT IS THEREFORE VERY RESPECTFULLY URGED THAT THE DONATION OF RS.15,59,858/- MAY KINDLY BE HELD EXEMPT AS CORPUS DONATION AND SO THE SAME MAY KINDLY BE EXCLUDED FRO M THE ASSESSED INCOME OF THE TRUST. (3) THE SECOND GROUND OF APPEAL IS AGAINST THE DISA LLOWANCE OF RS.16,55,386/- FROM THE EXPENDITURE CLAIMED U/S. 11 OF THE IT ACT. 3.1 THE EXPENDITURE OF RS.16,55,386/- IS DISALLOWED ON THE BASIS OF STATEMENT OF THE REPRESENTATIVE NIMISHA L. PARIK H THAT VOUCHERS ARE NOT MAINTAINED AND THEREFORE, CAN NOT BE PRODUC ED. THE APPELLANT SUBMITS AS UNDER: ITA NOS.1958 & 2024/AHD/2009 7 (A) AS SUBMITTED ABOVE IN DETAIL DUE TO MISUNDERSTA NDING OF THE REPRESENTATIVE THAT THE ID. A.O. WAS ASKING TO PROD UCE VOUCHERS IN THE NAME OF TRUST SHE MADE THE STATEMENT THAT NO VOUCHE RS ARE MAINTAINED. (B) IN FACT SUVARNA MAHOTSAV SAMITI HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR ITS INCOME AND EXPENDITURE. IT HAS ISSU ED RECEIPTS FOR THE DONATION RECEIVED AND IT HAS OBTAINED VOUCHERS FOR THE EXPENDITURE OF RS.16,55,386/-. THIS ACCOUNTS, DONATION RECEIPTS AN D VOUCHERS HAVE BEEN AUDITED AT THE TIME OF AUDIT OF THE APPELLANT TRUST AND COMPILED IN THE AUDIT REPORT. XEROX COPY OF THE VOUCHERS OF THE EXPENDITU RE OF RS.16,55,386/- ARE COMPLIED IN THE PAPER BOOK. (C) IT IS THEREFORE VERY RESPECTFULLY URGED THAT TH E DISALLOWANCE OF RS.16,55,386/- OUT OF EXPENDITURE MAY KINDLY BE DEL ETED AND TO THAT THE EXPENDITURE MAY KINDLY BE ALLOWED MORE.' 2.5. SINCE THE APPELLANT WAS TAKING A STAND TOTALLY DIFFERENT FROM WHAT HAD BEEN TAKEN BEFORE THE ASSESSING OFFICER AND WAS SUPPORTING ITS STAND BY FILING AN AFFIDAVIT OF THE CONCERNED AUTHORIZED REPRESENTATIVE, THE MATTER WAS REMANDED TO THE ASSESSING OFFICER U/S.25 0(4) VIDE LETTER DATED 23/07/2008 ON THE FOLLOWING GROUNDS: '2. IN VIEW OF THE ABOVE STAND OF THE APPELLANT, TH E MATTER IS BEING REMANDED BACK TO YOU U/S. 250(4) TO REINVESTI GATE THE CASE. THE REINVESTIGATION SHALL INCLUDE - (I) OBTAINING THE AFFIDAVIT AND PLACING IT ON RECOR D. (II) EXAMINING IN DETAIL MS. NAMISHA PARIKH, BOTH W ITH RESPECT TO THE ORDER SHEET NOTINGS RELIED UPON IN THE ASSESSME NT ORDER AS ALSO HER AVERMENT IN THE AFFIDAVIT SUBMITTED BEF ORE ME. (III) TO EXAMINE ON SAMPLE BASIS SOME OF THE PERSON S IN WHOSE NAME THE DONATIONS HAVE BEEN SHOWN IN THE PAPER BOO K FILED BEFORE ME. (IV) TO EXAMINE THE AUDITORS AND TO ASK FOR THE BAS IC RECORDS IN THEIR POSITION TO SUPPORT THE STAND TAKEN BY THEM I N THE CONTEXT. 3. BESIDES ABOVE, SINCE THE CASE IS BEING REMANDED BACK TO YOU U/S. 250(4), YOU WILL HAVE ALL SUCH POWERS AS A T THE TIME OF THE ORIGINAL ASSESSMENT TO COLLECT ANY OTHER MATERIAL R ELATED TO THE CONTEXT TO SUPPORT YOUR CASE. PAPER BOOK (IN TWO VO LUMES) IS BEING FORWARDED. ' 2.6. THE ASSESSING OFFICER TOOK HIS TIME INVESTIGAT ING THE MATTER AND AFTER A NUMBER OF REMINDERS HAS SUBMITTE D HIS REPORT DATED 13/03/2009, WHICH IS AS FOLLOWS: '2. DURING THE COURSE OF ASSESSMENT, THE REPRESENTA TIVE MS. NIMISHA L PARIKH SUBMITTED THAT EVIDENCE IN THE FOR M OF RECEIPT ITA NOS.1958 & 2024/AHD/2009 8 BOOKS VOUCHER ETC. WERE MAINTAINED. SUBSEQUENTLY DU RING THE APPEAL PROCEEDINGS ASSESSEE HAS PRODUCED CERTAIN E VIDENCES. IT IS REQUESTED THAT THIS FRESH EVIDENCE MAY NOT BE ACCEP TED UNDER RULE 46A OF THE IT. RULES, 1962, BY THE CIT(A). 3. WITHOUT PREJUDICE TO THE ABOVE IT IS SUBMITTED T HAT THE RECEIPT BY SUVARNA JAYANTI SAMITI CAN NOT BE TREATED AS COR PUS DONATION FROM THE ASSESSEE'S SUBMISSION TO ACIT, PATAN DATED 22/01/2008 IT IS NOTICED THAT THE SUVAMA JAYANTI MOHOSTAV SAMITI STARTED MAINTAINING SEPARATE BOOKS OF ACCOUNT FROM 01/12/20 04 AND BANK ACCOUNT WAS OPENED ON 03/12/2004 THE ENTIRE CELEBRA TION OF THE SUVARNA JAYANTI MOHOSTAV WAS OVER BY 30/12/2004 EFF ECTIVELY THE THE SUVARNA JAYANTI MOHOSTAV SAMITI OPERATED FOR ON E MONTH ONLY IN THAT CASE THE DONATION RECEIVED BY SUVARNA JAYAN TI MOHOSTAV SAMITI BY NO STRETCH OF IMAGINATION CAN WE CALLED A S CORPUS FUND. THE VERY NATURE OF FORMATION OF THE COMMITTEE AND A LSO ITS FUNCTIONING WAS FOR TEMPORARY AND BRIEF PERIOD IN T HAT CASE IT CAN NOT BE ACCEPTED THAT IT RECEIVED CORPUS DONATION WHICH IS PERMANENT FUND. SECONDLY THE AMOUNT WAS ALSO SPENT BY THE SAM ITI DURING THE PERIOD OF ONE MONTH ITSELF. THIS ALSO SHOWS THAT TH E RECEIPT CAN NOT TAKE THE FORM OF CORPUS FUND. THE SAMITI IS NOT EVE N AUTHORIZED TO RECEIVE CORPUS FUND. THE TRANSLATION OF RELEVANT PO RTION OF RESOLUTION OF THE TRUST (FOR FORMATION OF SUVARNA JAYANTI SAMI TI) IS REPRODUCED AS UNDER: DATED: 01/11/2004. RESOLUTION NO.2. TO RECEIVE THE DONATION FOR THE SUVARNA JAYANHI MAH OTSAV A NEW ACCOUNT WILL BE OPENED IN THE BANK. RESOLUTION NO.4. SUVARNA JAYANTI MAHOTSAV COMMITTEE WILL MONITOR THE INCOME AND EXPENDITURE. IN CASE THERE WOULD BE ANY NEED OF MON EY (SUM) THEY WILL RECEIVE FROM SHRI PANCHASARA PARSHWANAT H DERASAR TRUST AND IF ANY EXCESS MONEY(SUM) FOUND AFTER MAKING EXP ENDITURE IT WILL BE DEPOSITED TO SHRI PANCHASARA PARSHWANATHJI DERAS AR HAVE AGREED IN THIS REGARD. DATED: 12/06/2 005. RESOLUTION NO.2. THE COMMITTEE HAS SUBMITTED THE ACCOUNTS BEFORE TRU STEES AND COMMITTEE MEMBERS AND TRUSTEES HAS DISCUSSED AND TH EY AGREE TO PASS AN ADJUSTMENT ENTRY OF EXCESS MONEY. THEY DIRE CTED MUKESHBHAI SHAH, MANAGER, BEFORE FINALIZING THE ACC OUNTS OF PANCHASARA PARSHWANATH DERASAR TO MAKE NECESSARY AD JUSTMENT ENTRY AND TO MAKE AUDIT AS PER LAW. FROM THE ABOVE, IT IS CLEAR THAT THE SAMITI ACTED F OR A TEMPORARY PERIOD WITH THE SPECIFIC OBJECT OF CELEBRATION OF SUVARNA JAYAN TI. HENCE IT IS SUBMITTED THAT DONATION RECEIVED BY SAMITI FOR THE CELEBRATIO N SHOULD NOT BE TREATED AS CORPUS DONATIONS, AND THE ENTIRE AMOUNT OF RS.32 .15.244/- (15,59,858 + ITA NOS.1958 & 2024/AHD/2009 9 16,55,386} SHOULD BE TREATED AS INCOME OF THE TRUST AND THE ADDITION MADE MAY KINDLY BE ENHANCED TORS.32,15,244/-. 4. WITHOUT PREJUDICE TO THE ABOVE, BASED ON THE DIR ECTION BY THE CIT(A) U/S.250(4), THE GENUINENESS OF THE DONATION WERE EX AMINED ON RANDOM BASIS. THE DONORS, IN SOME CASES PRODUCED BANK STAT EMENTS EVIDENCING THE ISSUE OF THE CHEQUES, FROM SOME OTHER CASES WHO M CASH DONATION WERE MADE THE DETAILS OF RETURN OF INCOME FILED BY DONORS WERE PRODUCED. HOWEVER, IT HAS TO BE METIONED HERE THAT THE DONORS HAVE MADE THE DONATION TOWARDS 'CORPUS FUND'. IF THAT IS THE CASE , ASSESSEE IS NOT ENTITLED TO SPEND ANY AMOUNT FROM THE CORPUS. HOWEVER, THE A SSESSEE HAS SUBMITTED THAT THE 'SUVARNA JAYANTI MAHOTSAV SAMITI ' HAS TRANSFERRED THE NET SURPLUS (AFTER EXPENSES THE AMOUNT OF RS.16,55, 386/-) TO THE TRUST. SINCE SUCH EXPENDITURE IS NOT ALLOWED OUT OF THE CO RPUS FUND, THE EXPENDITURE SHOULD BE NOT TREATED AS EXPENDITURE MA DE FOR THE OBJECT OF THE TRUST. HENCE, IT IS REQUESTED THAT THE DISALLOW ANCE OF RS.16,55,386/- MAY BE SUSTAINED. ' 2.7. THE ABOVE REFERRED REPORT HAS BEEN FORWARDED B Y THE CONCERNED JT. CIT WITH THE FOLLOWING REMARKS: 'THE AO HAS SUBMITTED THE REMAND REPORT IN THE CASE OF SHRI PANCHASARA PARSHWANATHJI JAM DERASAR. THE AO HAS OB JECTED TO THE ADMISSION OF FRESH EVIDENCE U/R 46A, AS FAR AS THE EVIDENCES SUBMITTED BY THE REPRESENTATIVE IN THE FORM OF RECE IPT BOOKS, VOUCHERS ETC. ARE CONCERNED. 2. WITHOUT PREJUDICE TO THE ABOVE, THE AO HAS SUBMI TTED THAT THE PURPOSE OF FORMATION OF SUVARNA JAYANTI MAHOTSA V SAMITI BY THE TRUST IS SHORT-LIVED AND THE SAME WAS FORMED FOR TH E SPECIFIC PURPOSE OF CELEBRATION OF GOLDEN JUBILEE OF THE TRU ST. FROM THE TRANSLATION OF THE RESOLUTION PASSED BY THE TRUST, IT IS OBSERVED THAT THE SUVARNA JAYANTI MAHOTSAV SAMITI WAS NOT AUTHORI ZED TO RECEIVE ANY CORPUS DONATION. IT WAS AUTHORIZED TO RECEIVE A ND SPEND FUNDS ONLY FOR THE PURPOSE OF CELEBRATION OF THE GOLDEN J UBILEE OF THE TRUST. IT COULD BE SEEN FROM THE RECEIPTS THAT THE SUVARNA JAYANTI MAHOTSAV SAMITI RECEIVED DONATIONS FROM VARIOUS IND IVIDUALS AND ISSUED RECEIPTS WITH A STAMP 'TOWARDS CORPUS FUND'. HOWEVER, IT IS SUBMITTED THAT THE APPARENT IS NOT REAL. THE AO HAS INSISTED THAT THE NATURE AND PURPOSE OF THE RECEIPT SHOULD BE CONSIDE RED, INSTEAD OF JUST SEEKING WHAT IS MENTIONED IN THE RECEIPTS. THE VERY NATURE OF THE RECEIPT OF THE ABOVE FUND AND EXPENDITURE OF TH E SAME WITHIN A SHORT SPAN OF TIME INDICATES THAT THE FUNDS COULD N OT HAVE BEEN RECEIVED TOWARDS CORPUS DONATION. THE AO HAS REQUES TED FOR ENHANCEMENT OF THE ADDITION MADE IN PARA NO. 3 OF H IS SUBMISSION. 3. WITHOUT PREJUDICE TO THE ABOVE, THE AO HAS ALSO SUBMITTED THAT SINCE THE EXPENDITURE OF RS.16,55,386/- WAS MA DE OUT OF ITA NOS.1958 & 2024/AHD/2009 10 CORPUS FUND AND THE EXPENDITURE WAS NOT TOWARDS THE OBJECT OF THE TRUST, THE DISALLOWANCE OF RS.16,55,386/- MAY BE SU STAINED. ' 2.8. SINCE THE REPORT OF THE ASSESSING OFFICER AND THE REMARKS OF THE JT. CIT WERE ADVERSE TO THE APPELLAN T, A COPY WAS FORWARDED TO IT FOR ITS COMMENTS, IF ANY. THE A PPELLANT'S AUTHORIZED REPRESENTATIVE HAS COMMENTED VIDE REPORT DATED 24/03/2009 ON THE MATTER, WHICH IS ALSO BEING REPRO DUCED BELOW: '(1) REG.: REMAND REPORT (A) THE ID. AO. HAS STATED THAT EVIDENCE PRODUCED I N APPEAL PROCEEDING MAY NOT BE ACCEPTED U/R. 46A. (A. 1) THE APPELLANT SUBMITS AS UNDER: - (1) IT WAS ONLY DUE TO MISUNDERSTANDING OF APPELLAN T'S REPRESENTATIVE MISS. NIMISHA L. PARIKH THAT THE EVI DENCE IN THE FOAM OF RECEIPTS ISSUED BY SUVARNA JAYANTI MAHOTSAV SAMITI AND THE VOUCHERS FOR EXPENDITURE INCURRED BY SUVARNA JA YANTT MAHOTSAV SAMITT COULD NOT BE PRODUCED BEFORE THE ID. A.O. IN THE ASSESSMENT PROCEEDING (2) THIS WAS A BONAFIDE MISTAKE COMMITTED BY OUR REPRESENTATIVE AND SHE HAS DECLARED THESE FACTS IN THE AFFIDAVIT SWORN ON 07-01-2008. A COPY OF THIS AFFIDAVIT IS FI LED BEFORE YOUR HONOR. (3) IN THE REMAND PROCEEDINGS THE ID. AC. HAS RECOR DED ON 10- 10-2008 STATEMENT ON OATH OF MS. NIMISHA L. PARIKH. A COPY OF THE STATEMENT IS FILED ALONG WITH OUR LETTER DATED 23-L -09.IN REPLY TO QUESTION NO. 7 OF HER STATEMENT SHE HAS EXPLAINED I N DETAIL THE CIRCUMSTANCES IN WHICH MISUNDERSTANDING WAS MADE BY HER. THE ORIGINAL AFFIDAVIT IS FILED BEFORE THE AC. IN REMAN D PROCEEDING. THE ID AC. HAS NOT ASSIGNED ANY ADVERSE REMARKS FOR THE FA CTS MENTIONED IN THE AFFIDAVIT AS CAN BE SEEN FROM HIS REMAND REP ORT. THIS MEANS THAT HE HAS ACCEPTED THE FACTS CONTAINED IN THE AFF IDAVIT. (4) THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE BEFORE THE ID. AC. AND THERE FORE U/R. 46A(L)(B)(C) THE EVIDENCE PRODUCED BEFORE YOUR HONO UR MAY KINDLY BE CONSIDERED IN DECIDING THE APPEAL. (B) RECEIPTS BY SUVARNA JAYANTI MAHOTSAV SAMITI CAN NOT BE TREATED AS CORPUS DONATION FOR THE FOLLOWING REASONS (1) THE SUVARNA JAYANTI MAHOTSAV SAMITI OPERATED FO R ONE MONTH ONLY. IN THAT CASE THE DONATION RECEIVED BY S UVARNA JAYANTI ITA NOS.1958 & 2024/AHD/2009 11 MAHOTSAV SAMITI BY NO STRETCH OF IMAGINATION CAN BE CALLED AS CORPUS FUND. THE VERY NATURE OF FORMATION OF THE CO MMITTEE WAS TEMPORARY AND BRIEF PERIOD AND IT CAN NOT BE ACCEPT ED THAT IT RECEIVED CORPUS DONATION. (2) THE AMOUNT WAS ALSO SPEND BY THE SAMITI DURING THE PERIOD OF ONE MONTH WHICH SHOWS THAT THE RECEIPT CAN NOT T AKE THE FORM OF CORPUS FUND. (3) THE SAMITI IS NOT EVEN AUTHORIZED TO RECEIVE CO RPUS FUNDS AS PER RESOLUTION DATED 1-11-2004 AND RESOLUTION DATED 12-6-2005. (4) DONATION RECEIVED BY SAMITI SHOULD NOT BE TREAT ED DONATION AND THE ENTIRE AMOUNT OF RS.3215244/- (RS.1559858/- + RS.1655386/-) SHOULD BE TREATED AS INCOME AND ADDIT ION MAY BE ENHANCED TO RS.3215244/-. (B-L) THE APPELLANT SUBMITS AS UNDER (1) SUVARNA JAYANTI MAHOTSAV SAMITI WAS FORMED ON 2 8-12-03 BY THE APPELLANT TRUST. THIS WAS AS GOOD AS TRUST O FFICE FUNCTIONING FROM MUMBAI BECAUSE MAJORITY OF THE FOLLOWERS OF TH E APPELLANT TRUST RESIDE IN MUMBAI. (2) THE SAMITI PASSED ITS RESOLUTION ON 20-1-2004, 5-4-2004, 15- 6-2004, 20-9-2004, 1-11-2004 AND 12-6-2005. THUS TH E SUVARNA JAYANTI MAHOTSAV SAMITI WAS IN EXISTENCE FOR ABOUT 18 MONTHS. COPY OF ALL THESE RESOLUTIONS ARE FILED ON PAGE NO. 13 TO 17 OF THE PAPER BOOK. (3) THE LITERALLY TRANSLATION OF RESOLUTION NO.2 DA TED L-11-2004 IS AS UNDER. IT IS DECIDED TO OPEN A BANK ACCOUNT FOR THE DONATIONS RECEIVED IN SUVARNA JAYANTI MAHOTSAV' (4) THE LITERALLY TRANSLATION OF RESOLUTION NO.4 DA TED 1-11-2004 IS AS UNDER:- 'MAHOTSAV SAMITI WILL MANAGE THE INCOME AND EXPENDI TURE IN RESPECT OF SUVARNA JAYANTI MAHOTSAV AND IF MONEY RE QUIRED THEN TO TAKE MONEY FROM SHRI PANCHASARA PARSHWNATHJI DERASA R TRUST AND IF INCOME IS MORE THEN EXPENDITURE THEN TO DEPOSIT IN SHRI PANCHASARA PARSHWNATHJI DERASAR TRUST. THE TRUSTEES OF PANCHAS ARAJI DERASAR HAVE CONSENTED.' (5) THE LITERALLY TRANSLATION OF RESOLUTION NO. 2 D ATED 12-6-05 IS AS UNDER:- 'SAMITI PRESENTED ACCOUNTS OF SUVAMA JAYANTI MAHOTS AV BEFORE TRUSTEE MANDAL. SAMITI MEMBERS AND TRUSTEE MANDAL U PON ITA NOS.1958 & 2024/AHD/2009 12 DISCUSSION IN THIS BEHALF UNANIMOUSLY PASSED (ACCOU NTS) AND DECIDED TO GIVE BALANCE AMOUNT BY HAVALA (ADJUSTMEN T ENTRY) IN SHRI PANCHASARA PARSHWNATHJI DERASAR TRUST AND DECIDED T O INFORM MANAGER MUKESHBHAI SHAH TO PASS PROPER ADJUSTMENT E NTRIES AT THE TIME OF FINALIZING THE ACCOUNTS AND IT IS ALSO DECI DED TO GET ITS AUDIT AS PER LAW. (6) IT IS NOT CORRECT THAT SUVARNA JAYANTI MAHOTSAV SAMITI OPERATED FOR ONE MONTH ONLY. AS CAN BE SEEN FROM TH E COPY OF RESOLUTIONS FILED, THE SAMITI STARTED FUNCTIONING F ROM 2001-04 TILL 12- 06-05 I.E. FOR ABOUT 18 MONTHS. THE SAMITI CONSISTE D OF 11 MEMBERS OUT OF WHICH FOLLOWING 6 MEMBERS ARE TRUSTEES OF TH E APPELLANT:- (1) VIRERDRABHAI B. NAGARSHETH, (2) CHINUBHAI N. SH AH, (3) KIRTIBHAI G. SHAH, (4) KIRTIBHAI M SHAH, (5) SURESH BHAI A. SHAH AND (6) HARNISHBHAI F. SHAH. (7) AS THE MAJOR FOLLOWERS OF THE APPELLANT TRUST D ERASAR RESIDE IN MUMBAI THE TRUST OFFICE IN THE FOAM OF MAHOTSAV SAMITI WAS STARTED IN WHICH MAJORITY OF THE MEMBERS ARE TRUSTE ES OF THE APPELLANT TRUST. AS CAN BE SEEN OF THE VARIOUS RESO LUTIONS, SAMITI WORKED INTENSIVELY FOR CELEBRATION OF SUVARNA JAYAN TI MAHOTSAV AND BECAUSE OF ALL THESE EFFORTS THE DONORS HAVE MADE C ORPUS DONATION TO THE TRUST THROUGH SAMITI. THE SAMITI HAS NO SEPA RATE ENTITY BUT IT IS PART AND PARCEL OF THE APPELLANT TRUST. THEREFOR E THE INFERENCE DRAWN BY THE ID. AO THAT BY NO STRETCH OF IMAGINATI ON THE DONATION RECEIVED BY THE SAMITI CAN BE CALLED AS CORPUS DONA TION, IS INCORRECT. (8) THE ID. A. O. HAS EXAMINED SOME OF THE DONORS O N OATH AND THEIR STATEMENTS ARE RECORDED. THESE DONORS HAVE CA TEGORICALLY STATED THAT THEY HAVE MADE CORPUS DONATION AND HAVE ALSO PRODUCED DONATION RECEIPT. A COPY OF THESE STATEMEN TS ARE FILED ALONG WITH OUR LETTER DATED 23-1-2009. THERE IS NOT HING IN LAW TO DISBELIEVE THE DONORS WHO SAY THAT THEY HAVE MADE C ORPUS DONATION. (9) THE REASONING OF THE ID. AO THAT THE AMOUNT WAS SPEND BY SAMITI DURING ONE MONTH, THE RECEIPT CAN NOT TAKE T HE FORM OF CORPUS FUND IS NOT CORRECT. IT IS SUBMITTED THAT THE RECEI PT OF CORPUS DONATION IS CONNECTED WITH THE DESIRE OF THE DONOR, SUCH DES IRE CAN BE GATHERED FROM THE RECEIPTS PRODUCED, STATEMENTS REC ORDED OF SOME OF THE DONORS, THE BOOKS OF ACCOUNT AND THE AUDIT R EPORT. IT IS CLEAR FROM THIS EVIDENCE THAT THE SAMITI HAS RECEIVED COR PUS DONATION. (10) THE REASONING OF THE ID. A.O. THAT THE SAMITI IS NOT AUTHORIZED TO RECEIVE CORPUS FUNDS AS PER RESOLUTION DATED 1-1 1-2004, IS NOT CORRECT. THE SAMITI IS NOTHING BUT PART AND PARCEL OF THE TRUST. THERE ITA NOS.1958 & 2024/AHD/2009 13 IS NOTHING IN THE RESOLUTION NO,2 & 4 OF 1-11-04 WH ICH RESTRICT OR PUT BAN ON SAMITI NOT TO COLLECT CORPUS DONATION. (11) THE INFERENCE OF THE ID. AO THAT DONATION RECE IVED BY SAMITI SHOULD NOT BE TREATED CORPUS DONATION AND THE ENTIR E AMOUNT OFRS.3215244/- (RS.1559858/- + RS.L655386/- ) SHOUL D BE TREATED AS INCOME AND ADDITION MAY BE ENHANCED TO RS.321524 4/- IS NOT CORRECT. THE ID. AO HAS NOT PROPERLY UNDERSTOOD THE FACTS. THE FACTS ARE THAT THE SAMITI HAS COLLECTED TOTAL CORPUS DONA TION OF RS.1559858/- AND THE SAMITI HAS INCURRED TOTAL EXPE NDITURE OF RS.1655386/-. IT APPEARS THAT THE ID. A0 FEELS THAT TOTAL CORPUS DONATION OF RS.3215244/- IS RECEIVED BY THE SAMITI FROM WHICH EXPENDITURE OF RS.1655386/- IS INCURRED. THIS IS IN CORRECT. THERE IS NO QUESTION OF ENHANCEMENT. (C) THE EXPENDITURE SHOULD NOT BE TREATED AS EXPEND ITURE MADE FOR THE OBJECT OF THE TRUST FOR THE FOLLOWING REASONS - (1) THE GENUINENESS OF THE DONATION WERE EXAMINED O N RANDOM BASIS. THE DONORS IN SOME CASES PRODUCED BANK STATE MENTS EVIDENCING THE ISSUE OF THE CHEQUES. IN SOME OTHER CASES DONATION -WERE MADE IN CASH, THE DETAILS OF RETURN OF INCOME FILED BY DONORS WERE PRODUCED. (2) HOWEVER, IT HAS TO BE MENTIONED THAT THE DONORS HAVE MADE THE DONATION TOWARDS 'CORPUS FUND'. IF THAT IS THE CASE ASSESSEE IS NOT ENTITLED TO SPEND ANY AMOUNT FROM THE CORPUS. (3) HOWEVER, THE ASSESSEE HAS SUBMITTED THAT THE SU VARNA JAYANTI MAHOTSAV SAMITI HAS TRANSFERRED THE NET SUR PLUS. (AFTER EXPENSES THE AMOUNT OF RS.1655386/-) TO THE TRUST. (4) SINCE SUCH EXPENDITURE IS NOT ALLOWED OUT OF TH E CORPUS FUNDS THE EXPENDITURE SHOULD BE NOT TREATED AS EXPE NDITURE MADE FOR THE OBJECT OF THE TRUST. HENCE T IS REQUESTED T HAT THE DISALLOWANCE OF RS.1655386/- MAY BE SUSTAINED . (C-L) THE APPELLANT SUBMITS AS UNDER: (1) THE ID. A.O. SUPPORTS THE SUBMISSION OF THE APP ELLANT THAT THE DONORS ARE GENUINE WHO HAVE GENUINELY MADE CORP US DONATION. (2) THE ID. A.O. ACCEPTS THAT DONORS HAVE MADE THE DONATION TOWARDS CORPUS FUNDS. HOWEVER, THE ID. A.O. IS OF T HE VIEW THAT THE APPELLANT IS NOT ENTITLED TO SPEND ANY AMOUNT FROM THE CORPUS. IT IS SUBMITTED THAT THE VIEW OF THE ID. A.O. IS NO T CORRECT THE HON. I.T.A.T (DELHI) IN THE CASE OF DHARAM PRATISHTHANAM V. ITO REPORTED ITA NOS.1958 & 2024/AHD/2009 14 AS 11 ITD PAGE 40. IT IS SPECIFICALLY HELD BY HON. TRIBUNAL IN PARA 8 AS UNDER:- PARA 8:- THAT LEAVES US WITH THE QUESTION WHETHER ANY AMOUNT RECEIVED TOWARDS CORPUS CAN BE SPENT FOR RUN NING EXPENSES AND IF SO SPENT, WHETHER IT LOSES THE EXEM PTION FROM THE LEVY OF TAX. WE HAVE READ THE RELEVANT SEC TION CAREFULLY AND WE FIND NOTHING IN THOSE SECTIONS EVE N REMOTELY SUGGESTING THE ABOVE VIEW. SECTION 2(24)(IIA) WHEN IT PROVIDED THAT THE VOLUNTARY CONTRIBUTIONS SHOULD BE MADE WITH THE SPECIFIC DIRECTION THAT THEY SHALL FORM PA RT OF THE CORPUS OF THE TRUST OF INSTITUTION, IN ORDER THAT I T IS NOT TO BE TREATED AS INCOME IT WAS LAYING EMPHASIS ON THE WIS H, WILL AND DESIRE OF THE DONOR. THE DONOR MUST GRANT IT WI TH A DIRECTION THAT IT SHALL FORM PART OF THE CORPUS. TH E SECTION DID NOT EITHER BY IMPLICATION, OR OVERTLY OR OTHERWISE, ENJOIN UPON THE TRUST THAT THE TRUSTEE SHALL RETAIN IT FOR EVER AS CORPUS, EVEN IF WHEN AN OCCASION ARISES THAT IN ORDER TO KE EP THE TRUST LIVE AND TO PREVENT IT FROM FAILURE, IT SHOUL D NOT SPEND ANY AMOUNT OUT OF IT. IF A DONOR DONATION MONEY WIT H A SPECIFIC DIRECTION THAT IT SHALL FORM PART OF THE C ORPUS, THE TRUSTEE IS EXPECTED TO HONOUR THE WISH OF THE DONOR . BUT IF THE TRUSTEES UTILIZES IT FOR A DIFFERENT PURPOSE, THEN IT IS A SIMPLE CASE OF BREACH OF TRUST FOR WHICH DELINQUENCY, THE TRUSTEE CAN BE PROCEEDED AGAINST UNDER THE INDIAN TRUST ACT, 19 82, OR OTHER APPROPRIATE UNDER THE ACT. THIS KIND OF INFLE XIBILITY, AS CONTENDED FOR BY THE, REVENUE, IS DIFFICULT TO SEE OR COMPREHENDED FROM THE LANGUAGE OF SECTION 2(24) (II A) OR SECTION 12. THE REQUIREMENT OF SECTION 2(24)(IIA) I S THAT THE VOLUNTARY CONTRIBUTION, WHEN RECEIVED, SHOULD CONTA IN A STIPULATION THAT IT SHALL FORM PART OF CORPUS . THE TRUSTEE CANNOT POSSIBLY INFLUENCE THE DONOR AT THAT TIME, E XCEPT THAT THE TRUSTEE SHOULD ACT IN ACCORDANCE WITH THE CONFI DENCE REPOSED IN HIM BY THE DONOR. TAKE AN EXAMPLE, WHERE A MAKES VOLUNTARY CONTRIBUTION OF RS.1 LAKH TO A TRUS T CREATED WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE AND IT H AS NO OTHER INCOME. THE OBJECT OF THE TRUST IS TO PROMOTE EDUCA TION OR RELIEF OF POOR. HOW CAN THE TRUSTEE UTILIZE THIS WI THOUT BUYING THE BOOKS, IF IT IS FOR THE PURPOSE OF EDUCATION, O R NECESSARY UTENSILS OR PROVISIONS, IF IT IS FOR PROVIDING RELI EF TO THE POOR BY WAY OF PROVIDING FOOD AND IF THE MONEY IS SPENT OUT OF THE DONATION OF RS.1 LAKH FOR THE PURCHASE OF BOOKS, UT ENSILS, ETC. WOULD IT MEAN THAT THE SUM OF RS.1 LAKH WOULD BECOM E TAXABLE AS INCOME OF THE TRUST ? WE DO NOT THINK TH AT THIS IS THE OBJECT OF THE LEGISLATION. IN ANY CASE, THIS IS CONTRARY TO WHAT IS RECOMMENDED BY THE DIRECT TAXES ENQUIRY COMMITTEE, WHICH WAS ACCEPTED BY THE GOVER NMENT. WHAT IS EARMARKED FOR CORPUS IS NOT TO BE TREATED AS INCOME NOT BECAUSE IT IS SPORT FOR THE PURPOSE OF THE TRUS T BUT ITA NOS.1958 & 2024/AHD/2009 15 BECAUSE THAT FORMS THE FUND OF THE TRUST. IT IS NOW HERE LAID DOWN THAT THE FUNDS OF THE TRUST SHALL BE INVESTED IN SUCH A WAY AS TO PRODUCE INCOME AND ONLY THE INCOME SHALL BE SPENT FOR THE PURPOSE OF THE TRUST. EVEN SO, IF A D EPARTURE IS MADE BY THE TRUSTEE IN THE IMPLEMENTATION OF THIS W ISH OF THE DONOR, THE TRUSTEE IS TO BE PENALIZED AND NOT THE T RUST. LOOKED AT FROM ANY ANGLE, WE FIND IT DIFFICULT TO S UBSCRIBE TO THE VIEW SO FORCEFULLY PUT FORWARD BEFORE US BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND SO EXPLAINED IN THE ORDERS OF THE AUTHORITIES BELOW. A COPY OF THIS JUDGMENT I S SUBMITTED HEREWITH . (3) THE OBSERVATION OF THE ID. A.O. THAT THE SAMITI HAS TRANSFERRED THE NET SURPLUS (AFTER EXPENSES THE AMO UNT OF RS.1655386/-) TO THE TRUST IS NOT CORRECT. THE APPE LLANT HAS NEVER SUBMITTED THAT THE SAMITI HAS TRANSFERRED THE NET S URPLUS OF RS.1559858/- TO THE TRUST THE APPELLANT HAS SUBMITT ED THAT AS CAN BE SEEN FROM THE AUDIT REPORT IN SCHEDULE NO. 1 THA T TOTAL CORPUS DONATION OF RS.1559858/- IS CREDITED UNDER THE HEAD SUVARNA JAYANTI MAHOTSAV FUND AND AS CAN BE SEEN FROM SCHED ULE NO- 5 OF THE AUDIT REPORT EXPENDITURE OF RS.1655386/- IS INC URRED UNDER THE HEAD SUVARNA IAYANTI MAHOTSAV FOR THE OBJECT OF THE TRUST. (4) THE OBSERVATION OF THE ID. A.O. THAT EXPENDITUR E OF RS.1655386/- IS NOT ALLOWABLE FOR THE OBJECT OF THE TRUST BECAUSE IT IS INCURRED OUT OF THE CORPUS FUND IS NOT CORRECT. IT IS VERIFIABLE FROM THE AUDIT REPORT THAT THE CORPUS DONATION OF RS.1559858 /- IS CREDITED IN CORPUS FUND OF THE TRUST UNDER THE HEAD SUVARNA JAY ANTI MAHOTSAV FUND AND THE EXPENDITURE OF RS.1655386/- IS DEBITED IN THE EXPENDITURE OF THE TRUST FOR THE OBJECT OF THE TRUS T. THUS THE GROSS AMOUNT OF DONATION AND GROSS AMOUNT OF EXPENDITURE ARE COLLECTED AND SPEND BY THE TRUST. WITHOUT PREJUDICE TO THE AB OVE, IT IS SUBMITTED THAT THERE IS NO PROVISION IN THE I.T. AC T, WHICH PROVIDE THAT EXPENDITURE CAN NOT BE MADE FROM THE CORPUS FU ND. (5) THE ID. A.O HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE OF RS.1655386/-. BUT HIS ONLY OBJECTION IS ABOUT SPENDING FROM CORPUS FUND. THE ID. AO HAS NOT APPRE CIATED THAT TOTAL RECEIPTS AND TOTAL EXPENDITURE ARE ACCOUNTED IN THE ACCOUNTS OF THE TRUST AND THEREFORE IT CAN NOT BE SAID THAT THE EXPENDITURE IS INCURRED FROM THE CORPUS FUND. WITHOUT PREJUDICE TO THE ABOVE SUBMISSION IT IS SUBMITTED THAT EVEN IF EXPENDITURE IS INCURRED FORM CORPUS FUND IT CAN NOT BE DISALLOWED AS HELD BY HON . ITAT IN THE CASE CITED SUPRA. (D) THE ID. ADDL. C.I. T, HAS OBSERVED AS FOLLOWS:- (1) SUVARNA JAYANTI MAHOTSAV SAMTI FORMATION IS SHO RT-LIVED. ITA NOS.1958 & 2024/AHD/2009 16 (2) FORM THE TRANSLATION OF RESOLUTION PASSED BY TH E TRUST IS OBSERVED THAT IS WAS NOT AUTHORIZED TO RECEIVE CORP US DONATION. IT WAS AUTHORIZED TO RECEIVE AND SPEND FUNDS FOR THE P URPOSE OF CELEBRATION OF THE GOLDEN JUBILEE. (3) SAMITI RECEIVED DONATIONS FROM VARIOUS INDIVIDU ALS AND ISSUED RECEIPTS WITH A STAMP 'TOWARDS CORPUS FUND'. HOWEVER IT IS SUBMITTED THAT THE APPELLANT IS NOT REAL. (4) THE AO HAS INSISTED THAT THE NATURE AND PURPOSE OF THE RECEIPT SHOULD BE CONSIDERED INSTEAD OF JUST SEEKIN G WHAT IS MENTIONED IN THE RECEIPTS. THE VERY NATURE OF THE R ECEIPTS OF THE ABOVE FUND AND EXPENDITURE OF SAME WITHIN A SHORT S PAN OF TIME INDICATES THAT THE FUNDS COULD NOT HAVE BEEN RECEIV ED TOWARDS CORPUS DONATION. (5) THE ID. AO HAS REQUESTED FOR ENHANCEMENT OF THE ADDITION AS PER PARA 3 OF HIS SUBMISSION. (6) WITHOUT PREJUDICE, THE ABOVE EXPENDITURE OF RS. 1655386/- WAS MADE OUT OF CORPUS FUND AND THE EXPENDITURE WAS NOT FOR THE OBJECT OF THE TRUST THE DISALLOWANCE OF RS.1655386/ - MAY BE SUSTAINED. (D-L) THE APPELLANT SUBMITS AS UNDER: - (1) AS SUBMITTED IN DETAILS IN B.I(L) THE FORMATION OF SUVARNA JAYANTI MAHOTSAV SAMITI WAS NOT SHORT-LIVED BUT FOR ABOUT 18 MONTHS. (2) SUVARNA JAYANTI MAHOTSAV SAMITI WAS PART AND PA RCEL OF THE TRUST AS CAN BE SEEN FROM THE FACT THAT IT HAS NO S EPARATE ENTITY AND OUT OF THE TOTAL 9 TRUSTEES OF THE TRUST, 6 TRUSTEE S ARE THE MEMBERS OF THE SAMITI. TOTAL DONATION RECEIVED RS.1559858/- AN D TOTAL EXPENDITURE INCURRED RS.1655386/- IS ACCOUNTED FOR IN THE ACCOUNTS OF THE APPELLANT TRUST. RESOLUTION NO.2 DATED 12-6- 05 SUPPORTS THIS FACT. THERE IS NO QUESTION OF AUTHORIZING SUVARNA J AYANTI MAHOTSAV SAMITI TO RECEIVE CORPUS DONATION SINCE THE SAMITI REPRESENTS THE APPELLANT TRUST ONLY. IT IS NOT CORRECT THAT THE SA MITI WAS NOT AUTHORIZED TO RECEIVE AND SPEND FUNDS FOR THE CELEB RATION OF THE GOLDEN JUBILEE. THE READING OF THE RESOLUTIONS PASS ED BY SAMITI DURING 20-1-04 TO 01-11-04 SUPPORTS THE FACT THAT I T HAS ACTED AS PART AND PARCEL OF THE APPELLANT TRUST. (3) SAMITI HAS ISSUED RECEIPTS TO THE DONORS FOR CO RPUS DONATION. THE DONATION WAS FOR THE CORPUS FUNDS IS INDICATED BY THE STAMP AFFIXED ON RECEIPTS. THIS IS THE NORMAL PROCEDURE F OLLOWED AND THERE IS NO JUSTIFICATION FOR THE OBSERVATION THAT THE AP PARENT IS NOT REAL ITA NOS.1958 & 2024/AHD/2009 17 BECAUSE THE DONORS WHO HAVE BEEN CORPUS DONATIONS A RE EXAMINED ON OATH WHO HAVE CONFIRMED THAT THEY HAVE MADE CORP US DONATION AND THEY HAVE ALSO PRODUCED DONATION RECEIPTS BEFOR E THE A. O (4)THE APPELLANT ALSO SUBMITS THAT THE NATURE AND P URPOSE OF THE RECEIPTS SHOULD BE CONSIDERED. THE NATURE AND THE P URPOSE OF DONATION RECEIPTS SHOW THAT THE DONORS HAVE MADE TH E DONATION TOWARDS CORPUS FUND. IT IS SETTLED POSITION IN LAW THAT THE INTENSION OF THE DONOR TO MAKE CORPUS DONATION CAN NOT BE QUESTI ONED AS TO WHY THE DONOR HAS MADE THE CORPUS DONATION. (5) THE ID. A.O. HAS WRONGLY UNDERSTOOD THAT TOTAL DONATION OF RS.3215244/- IS RECEIVED. IN FACT THE SAMITI HAS RE CEIVED TOTAL CORPUS DONATION OF RS.1559858/-. THUS THERE IS NO Q UESTION FOR ENHANCEMENT OF THE ADDITION MADE. (6) THE A.O. HAS NOT SUBMITTED IN PARA 4 THAT THE E XPENDITURE OF RS.1655386/- IS NOT TOWARDS THE OBJECT OF THE TRUST . BUT THE A.O. HAS STATED THAT SINCE THE EXPENDITURE OF RS.1655386/- I S MADE FROM THE CORPUS FUND THE DISALLOWANCE MAY BE SUSTAINED . (E) THE APPELLANT RESPECTFULLY SUBMITS THAT:- (1) SUVARNA JAYANTI MAHOTSAV SAMITI IS PART AND PAR CEL OF THE TRUST. OUT OF THE 9 TRUSTEES OF THE TRUST, 6 TRUSTE ES ARE THE MEMBERS OF THE SAMITI. THE SAMITI HAS NO SEPARATE ENTITY. I T IS LIKE A MANAGING COMMITTEE FOR SPECIFIC WORK. THE SAMITI LA STED FOR ABOUT 18 MONTHS DURING WHICH VARIOUS MEETINGS WERE HELD A ND ACCORDINGLY DONATIONS WERE RECEIVED CORPUS FUND. TO TAL CORPUS DONATION RECEIVED WAS RS.1559858/-WHICH IS ACCOUNTE D FOR IN THE TRUST ACCOUNTS UNDER THE CORPUS FUND. THE EXPENDITU RE OF RS.1655386/- WAS INCURRED WHICH IS ALSO ACCOUNTED F OR IN THE ACCOUNTS OF THE TRUST UNDER THE HEAD EXPENDITURE CO ULD BE OBJECT TO THE TRUST. (2) IN THE ASSESSMENT, THE CORPUS DONATION IS CONSI DERED AS VOLUNTARY CONTRIBUTION FOR WANT OF VERIFICATION OF DONATION RECEIPTS. NOW THE DONATION RECEIPTS ARE PRODUCED. SOME OF THE DONORS ARE ALSO EXAMINED ON OATH. ALL THESE EVIDENCE PROVE THA T THE DONATION WAS RECEIVED IN CORPUS FUND. THIS IS ALSO SUPPORTED BY THE AUDIT REPORT OF THE CHARTERED ACCOUNTANT DATED 22-10-05FI LED WITH THE RETURN OF INCOME. (3) IN THE ASSESSMENT, THE EXPENDITURE OF RS.165538 6/- IS DISALLOWED FOR WANT OF VOUCHERS. NOW XEROX COPY OF ALL THE VOUCHERS ARE FILED IN THE PAPER BOOK AND THE SAME W ERE ALSO PRODUCED BEFORE THE ID. AO. BUT THE ID. AO HAS NOT POINTED OUT ANY DEFECT IN THE VOUCHERS. THE EXPENDITURE INCURRED RS .1655386/- IS ITA NOS.1958 & 2024/AHD/2009 18 FOR THE OBJECT OF THE TRUST AS SUPPORTED BY THE AUD IT REPORT OF THE CHARTERED ACCOUNTANT DATED 22-10-05 FILED WITH THE RETURN OF INCOME. (4) IN THE CASE OF DHARAM PRATISHTHANAM REPORTED AS 11 ITD 40, IT IS DISCUSSED AT LENGTH WHAT SHOULD BE THE NATURE OF CORPUS DONATION AND WHAT CONSTITUTE CORPUS DONATION AND IT IS HELD THAT THERE IS NO BAR IN INCOME TAX LAW THAT DAY TODAY EX PENDITURE OF THE TRUST CAN NOT BE INCURRED FROM THE CORPUS FUND. (F) IT IS THEREFORE VERY RESPECTFULLY URGED THAT (1) THE ADDITION OF RS.15598/- IN THE INCOME AS VOL UNTARY CONTRIBUTION MAY KINDLY BE DELETED AND THE SAME MAY KINDLY BE ACCEPTED AS CORPUS DONATION. (2) THE DISALLOWANCE OF RS.1655386/- FROM THE EXPEN DITURE FOR THE OBJECT OF THE TRUST MAY KINDLY BE DELETED AND T HE SAME MAY KINDLY BE ALLOWED AS EXPENDITURE INCURRED FOR THE O BJECT OF THE TRUST. ' 2.9. THE MATTER HAS BEEN CONSIDERED CAREFULLY. THE FACT THAT THE APPELLANT'S AUTHORIZED REPRESENTATIVE HAD GIVEN A S TATEMENT BEFORE THE ASSESSING OFFICER WHICH WAS NOT CORRECT, IS MORE OR LESS ESTABLISHED AND IS ALSO IMPLICITLY ACCEPTED BY THE ASSESSING OFFICER I N HIS REPORT. WHETHER IT WAS DUE TO ANY MISUNDERSTANDING ON THE PART OF THE AUTHORIZED REPRESENTATIVE REGARDING THE QUERY RAISED BY THE AS SESSING OFFICER OR ON THE PART OF ASSESSING OFFICER AS TO WHAT IS UNDERST OOD BY HIM AND HENCE RECORDED OR IT WAS A CASE OF LACK OF INFORMATION WI TH THE AUTHORIZED REPRESENTATIVE OR IT WAS A CASE OF PURE MISREPRESEN TATION, SHALL NEED TO BE DECIDED SEPARATELY. FOR THE PURPOSE OF ASSESSMEN T OF INCOME, THE ASSESSING OFFICER HAS TO BASE ITSELF ON THE TRUE ST ATE OF AFFAIRS. FOR THE PURPOSE OF PRESENT ADJUDICATION, THE FACTS WHICH CO ME OUT CLEARLY ARE THAT THE SWARNA JAYANTI MAHOTSAV SAMITI WAS FORMED AS A SEPARATE UNIT FOR THE CONCERNED CELEBRATION AND WAS IN OPERATION FOR ABOU T 18 MONTHS. THE COMMITTEE OPERATED A SEPARATED BANK ACCOUNT AND COL LECTED SEPARATE DONATION FOR THE PURPOSE AND MADE THE RELEVANT EXPE NDITURE. ONE NEED NOT GO INTO THE DEBATE AS TO WHETHER THE COMMITTEE WAS FOR A SHORT DURATION OR LONG DURATION, BUT THE FACT THAT MONEY WAS COLLECTED FOR THE CENTENARY CELEBRATION WOULD ITSELF SHOW THAT THE SA ME WERE NOT FOR THE CORPUS DONATION TO THE TRUST. AS HAS BEEN HELD BY V ARIOUS JUDICIAL AUTHORITIES AND VARIOUS COMMENTATORS, 'CORPUS FUND' THOUGH NOT DEFINED IN THE ACT, OBVIOUSLY MEANS SOMETHING WHICH IS LONG LA STING AND FORMS THE BASIS TO SUSTAIN THE WORKING OF THE TRUST. THE DON ATIONS OBTAINED FOR THE SWARNA JAYANTI FUNCTION COULD NOT BE CALLED THE DON ATIONS FOR SUSTAINING THE TRUST; THESE COULD, AT BEST, BE FOR RUNNING DAY -TO-DAY AFFAIRS OF THE TRUST. 2.10. SECONDLY, IF FOR WHATEVER REASONS THE APPELLA NT HAS BEEN UNABLE TO PRODUCE THE RECEIPTS DURING THE ASSESSMENT STAGE BE FORE THE ASSESSING ITA NOS.1958 & 2024/AHD/2009 19 OFFICER, FOR WHICH DUE OPPORTUNITY WAS GIVEN, PRODU CING SUCH RECEIPTS AT A MUCH LATER STAGE BEARING THE WORDS THAT THE DONATIO N IS FOR THE PURPOSE OF CORPUS, CANNOT BE CALLED CONTEMPORANEOUS EVIDENCE, TO DECIDE THE FATE OF THE ASSESSMENT FRAMED. 2.11. ON THE OTHER HAND, IN ALL THESE EXERCISES OF THE ASSESSMENT AND REMAND PROCEEDINGS AND THE CHANGE IN STAND ON THE P ART OF THE ASSESSEE, THE ASSESSING OFFICER HAS AT NO STAGE DOUBTED THE F IGURE RETURNED BY THE APPELLANT AS FAR AS THE RECEIPTS ARE CONCERNED. ONC E THE RECEIPTS ARE ESTABLISHED AND ITS QUANTUM ACCEPTED, IT IS DIFFICU LT ON THE PART OF THE ASSESSING OFFICER TO THEN NOT ACCEPT THE APPLICATIO N OF INCOME. IT HAS NOT BEEN PROVED THAT THE FUNDS CLAIMED TO HAVE BEEN SPE NT WERE NOT SPENT AND ARE STILL IN THE POSSESSION AND THE CONTROL OF THE APPELLANT DIRECTLY OR INDIRECTLY OR THROUGH THE SAMITI. IF THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE, BY LOGICAL EXTENSION, THE FUNCTION TO CELEB RATE THE CENTENARY MAHOTSAV HAS TO BE PART OF THE OBJECTS OF THE TRUST AND THEREFORE THE EXPENDITURE INCURRED BY THE TRUST IN THE CONTEXT SH ALL HAVE TO BE TREATED AS THE EXPENDITURE FOR THE PURPOSE OF THE TRUST AND HE NCE APPLICATION OF INCOME TO THAT EXTENT. 2.12. HENCE, TO SUM UP, THE ADDITION OF RS.15,59,85 8/- IS TREATED AS VOLUNTARY CONTRIBUTION FORMING PART OF THE TOTAL IN COME AND HENCE THE ASSESSING OFFICER'S ACTION IS CONFIRMED TO THAT EXT ENT. HOWEVER, THE ASSESSING OFFICER'S ACTION IN NOT TREATING THE SUM OF RS.16,55,386/- AS THE EXPENDITURE IS NOT AGREED TO. HE IS DIRECTED TO GIV E DEDUCTION TO THAT EXTENT. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A) IN ALLOWING TH E CLAIM FOR DEDUCTION OF RS.16,55,386/- WHILE THE ASSESSEE IS IN APPEAL AGAINST THE UPHOLDING OF FINDINGS OF THE AO FOR THE SUM OF RS.15,59,858/- AS VOLUNTARY CONTRIBUTIONS BUT NOT T OWARDS CORPUS FUND AS CLAIMED BY THE ASSESSEE TRUST. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF T HE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CI T(A) WHILE RELYING UPON THE DECISIONS OF THE ITAT DELHI BENCH IN THE C ASE OF MAHILA SIDH NIRMAN YOJNA VS. IAC [1994] 50 ITD 472 (DELHI) AND DHARMA PRATHISHTHANAM VS. ITO (1985) 11 ITD 40 (DEL). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORECITED DECISIONS. THE FIRST ISSUE THAT ARISES FOR ITA NOS.1958 & 2024/AHD/2009 20 OUR CONSIDERATION IS WHETHER THE DONATIONS RECEIVED BY THE SUVARNA JAYANTI MAHOTSAV SAMITI ON BEHALF OF THE TRUST CAN BE TREA TED TO BE EXEMPT UNDER SECTION 11(1)(D) OF THE ACT, INSERTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989, WITH EFFECT FROM 1-4-1989. HERE WE MAY HAVE A LOOK AT THE RELEVANT PROVISIONS, WHICH READ AS UNDER : 11(1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME- (A)... (B)... (C)... (D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS M ADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUS T OR INSTITUTION. 5.1 INDISPUTABLY, THE AFORESAID SAMITI WAS CONSTITUTED BY THE MANAGEMENT OF THE TRUST FOR A SPECIFIC PURPOSE IN ORDER TO CELEB RATE 50 YEARS OF SHRI PANCHASARA PARSHAWNATH TEMPLE. THE SAID SAMITI WAS AUTHORIZED TO COLLECT THE FUNDS IN TERMS OF VARIOUS RESOLUTIONS PASSED BY THE MANAGEME NT OF THE TRUST. THE ISSUE BEFORE US IS AS TO WHETHER SUCH DONATIONS COLLECTE D BY THE SAMITI WERE TOWARDS CORPUS OF THE TRUST ?THE TERM 'CORPUS ' HAS NOT BEE N DEFINED IN THE ACT. THE CORPUS IS GENERALLY CONSIDERED TO BE THE CAPITAL OF THE TRUST OR INSTITUTION WHICH SHOULD BE KEPT INTACT. IT MAY BE UTILISED FOR THE P URCHASE OF ASSETS SUCH AS LAND, BUILDINGS, FURNITURE, FITTINGS, EQUIPMENT ETC. OR I T MAY BE INVESTED OR DEPOSITED AS PER SECTION 11(5) OF THE ACT, AND THE INCOME ARISIN G THEREFROM MAY BE UTILISED FOR THE OBJECTS SPECIFIED BY THE DONOR TO THE CORPUS FU ND. THE PROVISIONS OF THE ACT REQUIRE THE DONOR TO GIVE A DIRECTION FOR TREATIN G THE DONATION AS CORPUS. THERE IS NO STIPULATION IN THE ABOVE SECTION THAT THE SPECIF IC DIRECTIONS SHOULD BE IN WRITING. THEREFORE, IT HAS TO BE ASCERTAINED FROM THE FACTS AND CIRCUMSTANCES OF THE CASE AS TO WHETHER OR NOT A SPECIFIC DIRECTION OF THE DONOR WAS THERE , EVEN WHERE THERE WERE NO WRITTEN DIRECTIONS ACCOMPANYING THE D ONATIONS. THE SPECIFIC DIRECTION HAS TO BE THAT OF THE DONOR AND NOT OF TH E DONEE. IN OTHER WORDS, IT WILL NOT BE SUFFICIENT FOR THE DONEE ALONE TO DECLARE TH AT THE VOLUNTARY CONTRIBUTIONS ITA NOS.1958 & 2024/AHD/2009 21 WERE BEING ALLOCATED TO THE CORPUS. THERE SHOULD BE EVIDENCE TO SHOW THAT THE DIRECTION CAME FROM THE DONOR. IN THE CASE OF N.A. RAMACHANDRA RAJA CHARITY TRUST V. FIRST ITO [1985] 14 ITD 230 (MAD.), THE AS SESSEE-TRUST RECEIVED DONATIONS AND ON THE COUNTER-FOILS OF THE RECEIPTS THE WORDS 'TOWARDS CORPUS ONLY' WERE RUBBER STAMPED. AT THE SAME TIME, CERTIF ICATES WERE PRODUCED FROM THE DONORS CORROBORATING THE STATEMENTS IN THE RECE IPTS. IT WAS IN THESE CIRCUMSTANCES THAT THE TRIBUNAL HELD THAT IT HAD TO BE CONSTRUED THAT THE DONATIONS WERE MADE WITH THE SPECIFIC DIRECTION THAT THEY SHA LL FORM PART OF THE CORPUS OF THE TRUST. HOWEVER, IN THE PRESENT CASE, THERE WERE NO SUCH CORROBORATIONS FROM THE DONORS IN RESPECT OF THE VOLUNTARY CONTRIBUTIONS C OMPRISED IN THE DISPUTED SUM. IN THE ASSESSMENT PROCEEDINGS BEFORE THE AO, THE AS SESSEE DID NOT PRODUCE ANY EVIDENCE THAT THESE DONATIONS WERE TOWARDS CORPUS O F THE TRUST. ON APPEAL, DURING REMAND PROCEEDINGS, THE AO RECORDED STATEME NTS OF FOUR DONORS ONE DONATED AN AMOUNT OF RS.2,500/- & AND THE OTHER THR EE RS.5,100/- EACH. THUS,I N THE PRESENT CASE, THERE ARE NO AFFIDAVITS OR EVEN L ETTERS FROM THE DONORS, CONFIRMING THAT DONATIONS COLLECTED BY AFORESAID S AMITI WERE TOWARDS CORPUS OF THE TRUST WHILE THE LD. THE CIT(A) OBSERVED IN RESP ECT OF COPY OF RECEIPTS PRODUCED BEFORE HIM THAT THESE WERE NOT CONTEMPORANEOUS EVI DENCE. 5.2 IN VIEW OF THE FOREGOING ,ESPECIALLY WHEN TH E ASSESSEE TRUST DID NOT PRODUCE ANY EVIDENCE BEFORE THE AO IN THE ASSESSMENT PROCEE DINGS THAT VOLUNTARY CONTRIBUTIONS OF RS.15,59,858/- COLLECTED BY SAMITI FROM VARIOUS DONORS WERE TOWARDS CORPUS OF THE TRUST WHILE THE LD. CIT(A) DI D NOT RECORD HIS SPECIFIC FINDINGS AS TO WHETHER OR NOT THE ASSESSE E PLACED ANY MATERIAL BEFORE HIM, REVEALING SPECIFIC DIRECTION OF EACH OF THE DONORS THAT THE VOLUNTARY CONTRIBUTIONS MADE BY THEM WER E TOWARDS CORPUS OF THE TRUST, APPARENTLY, THE ORDER PASSED BY THE LD. CIT (A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATU RAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUTHORITY MUST PASS RE ASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHOR ITY TO THE ISSUES/POINTS RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE INCOME TAX ACT ,1961 MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE IN WRITING AND ITA NOS.1958 & 2024/AHD/2009 22 SHALL STATE THE POINTS FOR DETERMINATION, THE DECIS ION THEREON AND THE REASON FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REAS ONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CO NCEPT OF FAIR PROCEDURE. THE REQUIREMENT OF RECORDING OF REASONS BY THE QUASI-JU DICIAL AUTHORITIES IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION-MAKING PROCESS. WE MA Y REITERATE THAT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS . STATE OF PUNJAB,(1995)1SCC 760(SC)]. AS IS APPARENT, THE IMPUGNED ORDER SUFFER S FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING , ESPECIALLY WHEN THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER ON THE ISSUE RAISE D IN GROUND NO.1 IN THE APPEAL OF THE ASSESSEE, WE CONSIDER IT FAIR AND APP ROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FIL E FOR DECIDING THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPO RTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, T HE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MA NDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT, BRINGING OUT CLEARLY AS TO WHET HER OR NOT THERE WAS ANY MATERIAL, REVEALING SPECIFIC DIRECTION OF EACH OF THE DONORS THAT THE VOLUNTARY CONTRIBUTIONS MADE BY THEM WERE TOWARDS CORPUS OF THE TRUST . WITH THESE OBSERVATIONS, GROUND NO. 1 IN THE APPEAL OF THE ASSESSEE IS DISPOSED OF. 6. AS REGARDS, ISSUE RAISED IN GROUND NO.1 IN THE A PPEAL OF THE REVENUE, WHICH RELATES TO APPLICATION OF AN AMOUNT OF RS.16, 55,386/- , THE LD. CIT(A) CONCLUDED THAT ONCE THE RECEIPTS ARE ESTABLISHED A ND ITS QUANTUM ACCEPTED, IT IS DIFFICULT ON THE PART OF THE ASSESSING OFFICER NOT TO ACCEPT THE APPLICATION OF INCOME TO CELEBRATE THE CENTENARY MAHOTSAV, WHICH W AS PART OF THE OBJECTS OF THE TRUST . IN DHARMA PRATHISHTHANAM VS. ITO (1985) 11 ITD 40 (DEL), THE ITAT CONCLUDED THAT VOLUNTARY CONTRIBUTIONS RECEIVED TOW ARDS THE CORPUS OF THE TRUST BUT USED BY THE TRUST FOR MEETING ITS RUNNING EXPEN SES WOULD NOT CONSTITUTE INCOME UNDER S. 2(24)(IIA) AND WOULD NOT LOSE EXEMP TION U/S. 11 OF THE ACT. THE BENCH CONCLUDED IN THE FOLLOWING TERMS: ITA NOS.1958 & 2024/AHD/2009 23 8. THAT LEAVES US WITH THE QUESTION WHETHER ANY AMOUNT RECEIVED TOWARDS CORPUS CAN BE SPENT FOR RUNNING EXPENSES AND IF SO SPENT, WHETHER IT LOSES THE EXEMPTION FROM THE LEVY OF TAX. WE HAVE READ THE RE LEVANT SECTIONS CAREFULLY AND WE FIND NOTHING IN THOSE SECTIONS EVEN REMOTELY SUGGESTING THE ABOVE VIEW. SECTION 2(24)(IIA) WHEN IT PROVIDED THAT THE VOLUNTARY CONTRIBUTIONS SHOULD BE MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION, IN ORDER THAT IT IS NO T TO BE TREATED AS INCOME, IT WAS LAYING EMPHASIS ON THE WISH, WILL AND DESIRE OF THE DONOR. THE DONOR MUST GRANT IT WITH A DIRECTION THAT IT SHALL FORM PART O F THE CORPUS. THE SECTION DID NOT EITHER BY IMPLICATION, OR OVERTLY OR OTHERWISE, ENJ OIN UPON THE TRUST THAT THE TRUSTEE SHALL RETAIN IT FOR EVER AS CORPUS, EVEN IF WHEN AN OCCASION ARISES THAT IN ORDER TO KEEP THE TRUST ALIVE AND TO PREVENT IT FROM FAILURE, IT SHOULD NOT SPEND ANY AMOUNT OUT OF IT. IF A DONOR DONATES MONE Y WITH A SPECIFIC DIRECTION THAT IT SHALL FORM PART OF THE CORPUS, THE TRUSTEE IS EXPECTED TO HONOUR THE WISH OF THE DONOR. BUT IF THE TRUSTEE UTILISES IT FOR A DIFFERENT PURPOSE, THEN IT IS A SIMPLE CASE OF BREACH OF TRUST FOR WHICH DELINQUENC Y, THE TRUSTEE CAN BE PROCEEDED AGAINST UNDER THE INDIAN TRUSTS ACT, 1882 , OR OTHER APPROPRIATE LEGISLATION BUT THAT IS NOT TO SAY THAT FOR THE MIS BEHAVIOUR OF THE TRUSTEE, THE TRUST LOSES EXEMPTION UNDER THE ACT. THIS KIND OF I NFLEXIBILITY, AS CONTENDED FOR BY THE REVENUE, IS DIFFICULT TO SEE OR COMPREHEND F ROM THE LANGUAGE OF SECTION 2(24)(IIA) OR SECTION 12. THE REQUIREMENT OF SECTIO N 2(24)(IIA) IS THAT THE VOLUNTARY CONTRIBUTION, WHEN RECEIVED, SHOULD CONTA IN A STIPULATION THAT IT SHALL FORM PART OF CORPUS. THE TRUSTEE CANNOT POSSIBLY IN FLUENCE THE DONOR AT THAT TIME, EXCEPT THAT THE TRUSTEE SHOULD ACT IN ACCORDA NCE WITH THE CONFIDENCE REPOSED IN HIM BY THE DONOR. TAKE AN EXAMPLE, WHERE A MAKES A VOLUNTARY CONTRIBUTION OF RS. 1 LAKH TO A TRUST CREATED WHOLL Y FOR CHARITABLE OR RELIGIOUS PURPOSES AND IT HAS NO OTHER INCOME. THE OBJECT OF THE TRUST IS TO PROMOTE EDUCATION OR RELIEF OF POOR. HOW CAN THE TRUSTEE UT ILISE THIS MONEY WITHOUT BUYING THE BOOKS, IF IT IS FOR THE PURPOSE OF EDUCA TION, OR NECESSARY UTENSILS OR PROVISIONS, IF IT IS FOR PROVIDING RELIEF TO THE PO OR BY WAY OF PROVIDING FOOD AND IF THE MONEY IS SPENT OUT OF THE DONATION OF RS. 1 LAK H FOR THE PURCHASE OF BOOKS, UTENSILS, ETC. WOULD IT MEAN THAT THE SUM OF RS. 1 LAKH WOULD BECOME TAXABLE AS INCOME OF THE TRUST? WE DO NOT THINK THAT THIS I S THE OBJECT OF THE LEGISLATION. IN ANY CASE, THIS IS CONTRARY TO WHAT IS RECOMMENDE D BY THE DIRECT TAXES ENQUIRY COMMITTEE, WHICH WAS ACCEPTED BY THE GOVERN MENT. WHAT IS EARMARKED FOR CORPUS IS NOT TO BE TREATED AS INCOME NOT BECAUSE IT IS SPENT FOR THE PURPOSE OF THE TRUST BUT BECAUSE THAT FORMS THE FUND OF THE TRUST. IT IS NOWHERE LAID DOWN THAT THE FUNDS OF THE TRUST SHOUL D NEVER BE SPENT FOR THE PURPOSES OF THE TRUST UNLESS IT IS A DIRECTION OF T HE DONOR THAT THE FUND SHALL BE INVESTED IN SUCH A WAY AS TO PRODUCE INCOME AND ONL Y THE INCOME SHALL BE SPENT FOR THE PURPOSES OF THE TRUST. EVEN SO, IF A DEPARTURE IS MADE BY THE TRUSTEE IN THE IMPLEMENTATION OF THIS WISH OF THE D ONOR, THE TRUSTEE IS TO BE PENALISED AND NOT THE TRUST. LOOKED AT FROM ANY ANG LE, WE FIND IT DIFFICULT TO SUBSCRIBE TO THE VIEW SO FORCEFULLY PUT FORWARD BEF ORE US BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND SO EXPLAINED IN THE ORDERS OF THE AUTHORITIES BELOW. ITA NOS.1958 & 2024/AHD/2009 24 6.1 IN THE LIGHT OF VIEW TAKEN IN THEIR AFORESAI D DECISION BY A CO- ORDINATE BENCH WHILE THE REVENUE HAVE NOT CONTROVER TED THE FINDINGS OF THE LD. CIT(A) NOR PLACED BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, W E ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 7. GROUND NOS.2 & 3 IN THE APPEAL OF THE ASSESSEE REL ATE TO NON- ADJUDICATION OF THEIR CLAIM FOR APPLICATION OF CAPI TAL EXPENDITURE OF RS.30,76,915/- TOWARDS THE OBJECTS OF THE TRUST TH AT REQUIRED TO BE REDUCED FROM THE INCOME UNDER THE PROVISIONS OF SEC TION 11(2) OF THE ACT. THERE IS NO DISCUSSION ON THESE ASPECTS IN TH E ASSESSMENT ORDER. THE LD. CIT(A) ADJUDICATED THE ISSUE IN THE FOLLOWING TERMS:- 3. THE APPELLANT'S THIRD EFFECTIVE GROUND OF APPEA L IS AGAINST THE ASSESSING OFFICER NOT CONSIDERING THE CAPITAL EXPEN DITURE OF RS.30,76,915/- AS EXPENDITURE APPLIED FOR THE OBJECT OF THE TRUST. 3.1. APPARENTLY, THIS ISSUE WAS NEVER RAISED BEFORE THE ASSESSING OFFICER AND CONSEQUENTLY NEVER DISCUSSED IN THE ASS ESSMENT ORDER. DURING THE APPELLATE PROCEEDINGS, THE AUTHORIZED REPRESENT ATIVE HAS ALSO TRIED TO RAISE IT AS AN ADDITIONAL GROUND, ALTHOUGH THERE WA S NO NEED FOR THE SAME. IT HAS ALSO TRIED TO JUSTIFY THE STAND IN THE FACE OF JUDICIAL DECISION OF SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT 284 ITR 323. THE SUBMISSION OF THE AUTHORIZED REPRESENTATIVE IS REPR ODUCED BELOW FOR PROPER APPRECIATION: '(1) THE ONLY GROUND RELATED TO ALLOW THE EXPENDITU RE OF RS.3076915/- AS EXPENDITURE U/S 11 FOR THE OBJECT OF THE TRUST. THE FACTS ARE AS UNDER:- (A) DURING THE YEAR THE APPELLANT TRUST HAS INCURRE D EXPENDITURE OF RS.3076915/- TOWARDS THE CONSTRUCTION OF YATRIK BHAVAN. THIS IS VERIFIABLE FROM SCHEDULE NO. 10 OF AUDIT REPORT FIL ED WITH THE RETURN. (B) IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ID. A.O HAS VERIFIED THIS EXPENDITURE ALSO AND ALSO INQUIRED IN TO TDS PAID TO LABOUR CONTRACTORS FOR THE PAYMENTS MADE AND DEBITE D TO YATRIK BHAVAN. (C) THE CAPITAL EXPENDITURE IN THE FORM OF YATRIK B HAVAN IS FOR THE OBJECT OF THE TRUST. ITA NOS.1958 & 2024/AHD/2009 25 (D) IT IS TRUE THAT IN THE COMPUTATION OF INCOME PR EPARED BY THE CHARTERED ACCOUNTANT THIS EXPENDITURE IS NOT DEDUCT ED AS EXPENDITURE U/S. 11. BUT WHILE FINALIZING THE ASSES SMENT THE ID. AO SHOULD HAVE POINTED OUT TO THE APPELLANT THAT THE E XPENDITURE OF RS.3076915/- IS ALLOWABLE U/S. 11 OF THE IT ACT AND HE SHOULD HAVE ALLOWED THIS EXPENDITURE FROM THE INCOME OF THE APP ELLANT TRUST THIS FINDS SUPPORT FROM THE CBDT CIRCULAR NO.14(XL.35) D ATED 11-4-55. A COPY OF THIS CIRCULAR SUBMITTED HEREWITH. (E) IT IS TRUE THAT THE SUPREME COURT OF INDIA IN T HE CASE OF GOETZE (INDIA) LTD. V. CIT 284 ITR 323 HAS HELD THA T THE DEDUCTION CLAIMED OTHERWISE THEN BY WAY OF REVISED RETURN CAN NOT BE ENTERTAINED. BUT IN THE CASE OF THE APPELLANT THE E XPENDITURE IS SHOWN IN THE AUDIT REPORT AND THE A.O. HAS ALSO EXA MINED THE EXPENDITURE AND INQUIRED ABOUT TDS. IT WAS THE DUTY OF THE ID. AO TO ALLOW THE EXPENDITURE IN COMPUTING THE INCOME. THE ABOVE SUPREME COURT DECISION IS DISTINGUISHED BY THE HON. PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V. RAMCO INTERNATIONAL REPORTED AS 221 CTR PAGE 491. IN THAT CASE IT IS HELD THAT IN VIEW OF EVIDENCE FILED DURING ASSESSMENT PR OCEEDINGS THE CLAIM OF ASSESSEE WAS ALLOWABLE. IN THE CASE OF THE APPELLANT THE EXPENDITURE INCURR ED FOR YATRIK BHAVAN RS.3076915/- IS SHOWN IN THE AUDIT REPORT FI LED WITH THE RETURN. IN THE ASSESSMENT PROCEEDINGS THE A.O. INQU IRED FOR TDS MATTERS. THE HON. GUJARAT HIGH COURT IN THE CASE OF S.R KOSH TI V/S. CIT HAS HELD IN PARA 18 AS UNDER:- THE POSITION IS THEREFORE THAT REGARDLESS OF WHETHE R THE REVISED RETURN WAS FILED OR NOT ONCE AN ASSESSES IS IN A POSITION TO SHOW THAT THE ASSESSEE HAS BEEN OVER AS SESSED UNDER THE PROVISIONS OF THE ACT, REGARDLESS OF WHET HER THE OVERASSESSMENT IS AS A RESULT OF ASSESSEE'S OWN MIS TAKE OR OTHERWISE THE CIT HAS THE POWER TO CORRECT SUCH AN ASSESSMENT U/S. 264(1) OF THE ACT. A WORD OF CAUTION. THE AUTHORITIES UNDER THE ACT AR E UNDER AN OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN B E COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UND ER A MISTAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INS TRUCTED, IS OVERASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQ UIRE TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAX DUE ARE COLLECTED. THIS COURT, IN AN UNREPORTED DECISION IN CASE OF VINAY CHANDULAL SATIA V. N.O. PAREKH, CIT, SPL. CIV IL. APPLN. NO. 622 OF 1981, RENDERED ON 20-8-1081, HAS LAID DO WN THE ITA NOS.1958 & 2024/AHD/2009 26 APPROACH THAT THE AUTHORITIES MUST ADOPT IN SUCH MA TTERS IN THE FOLLOWING TERMS: 'THE SUPREME COURT HAS OBSERVE IN NUMEROUS DECISION S, INCLUDING, RAMLAL & ORS. V. REWA COAFFIELDS LTD. AI R 1965 SC 361; THE STATE OF WEST BENGAL V. THE ADMINISTRAT E, HOWRAH MUNICIPALITY & ORS. AIR 1972 SC 749, AND BAB UTMAL RAICHAND OSWAL V. LAXMIBAI R. TARTE AIR 1975 SC 129 7, THAT THE STATE AUTHORITIES SHOULD NOT RAISE TECHNIC AL PLEAS IF THE CITIZENS HAVE A LAWFUL RIGHT AND THE LAWFUL RIG HT IS BEING DENIED TO THEM MERELY ON TECHNICAL GROUNDS, THE STA TE AUTHORITIES CAN NOT ADOPT THE ATTITUDE WHICH PRIVAT E LITIGANTS MIGHT ADOPT.' A COPY OF THIS JUDGMENTS ARE FILED HEREWITH. (F) IT IS THEREFORE VERY RESPECTFULLY URGED THAT TH E EXPENDITURE OFRS.3076915/- MAY KINDLY BE ALLOWED U/S. 11(2) OF THE IT ACT AS INCURRED FOR THE OBJECT OF THE TRUST. ' 3.2. THE MATTER HAS BEEN CONSIDERED. THE POSITION A S EXPOUNDED BY THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS VERY CLEAR, NAMELY IF A CLAIM HAD TO BE MADE BEFORE THE ASSESSING OFFICER WHICH HAS NOT BEEN MADE IN THE ORIGINAL RETURN FILED, THE SAME CAN BE DONE ONLY THROUGH A REVISED RETURN. WHETHER THE ASSESSING OFF ICER, AS A QUASI- JUDICIAL OFFICER, COULD HAVE BROUGHT THE FACT OF EL IGIBLE CLAIM TO THE NOTICE OF THE ASSESSEE OR IT COMES TO KNOW OF IT ON ITS OWN, IS NOT MATERIAL TO THE ISSUE. FURTHER, AS THE COURTS AND TRIBUNALS HAVE AG AIN AND AGAIN HELD, WHAT CAN BE DONE BY THE ASSESSING OFFICER CAN BE DO NE BY THE CIT(A) AND WHAT CANNOT BE DONE BY THE ASSESSING OFFICER CANNOT BE DONE BY THE CIT(A) ALSO. IN THE FACE OF THIS CONCEPT OF CO-TERM INUS OF POWERS, OBVIOUSLY IF THE ASSESSING OFFICER WAS NOT ALLOWED BY THE LAW TO ENTERTAIN A CLAIM WITHOUT FILING A REVISED RETURN OF INCOME, SUCH A C LAIM COULD NOT HAVE BEEN MADE BEFORE THE CIT(A) ALSO (EITHER AS A REGULAR GR OUND OF APPEAL OR AS AN ADDITIONAL GROUND OF APPEAL). THEREFORE, WITHOUT GO ING INTO THE MERITS OF THIS CLAIM, THE APPELLANT'S GROUND OF APPEAL IS NOT ACCEPTED AND HENCE TECHNICALLY REJECTED. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).LEARNED AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SINCE THE CLAIM WAS NOT MADE BEFORE THE AO EITHER I N ORIGINAL RETURN OR IN THE REVISED RETURN, THE SAME COULD NOT BE MAD E IN THE APPELLATE PROCEEDINGS EITHER AS A REGULAR GROUND OR AS AN ADD ITIONAL GROUND. THE LEARNED AR FURTHER SUBMITTED THAT THE LD. CIT(A ) OUGHT TO HAVE ITA NOS.1958 & 2024/AHD/2009 27 ADJUDICATED THE ISSUE ON MERITS. THE LEARNED AR AL SO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD. [2008] 306 ITR 42 (DELHI ), WHEREIN IT HAS BEEN HELD THAT THERE WAS NO PROHIBITION ON THE POWE RS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH AC CORDING TO THE TRIBUNAL AROSE IN THE MATTER AND FOR THE JUST DECIS ION OF THE CASE. THE LEARNED AR ALSO RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF S R KOSHTI VS. CIT [2005] 276 ITR 165 (GUJ).THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE LEARNED CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LD. CIT(A) DID NOT A DJUDICATE THE ISSUES RAISED IN GROUND NO.4 OF THE APPEAL BEFORE HIM ON THE BASIS OF DECISION IN GOETZE (INDIA) LTD. V. CIT [2006] 284 ITR 323 (SC) .WE FIND THAT IN GOETZE INDIA LTD.(SUPRA), DEDUCTION CLAIMED BY WAY OF A LETTER BEFORE ASSESSI NG OFFICER, WAS DISALLOWED ON THE GROUND THAT THERE WAS NO PROVISION UNDER THE AC T TO MAKE AMENDMENT IN THE RETURN WITHOUT FILING A REVISED RETURN. APPEAL TO T HE SUPREME COURT, AS THE DECISION WAS UPHELD BY THE TRIBUNAL AND THE HIGH CO URT, WAS DISMISSED MAKING CLEAR THAT THE DECISION WAS LIMITED TO THE POWER OF ASSESSING AUTHORITY TO ENTERTAIN CLAIM FOR DEDUCTION OTHERWISE THAN BY REVISED RETUR N, AND DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. WE FIND THAT IN THE CASE OF CHICAGO PNEUMATIC INDIA LTD. VS. DY. CIT (2007) 15 SOT 252 (MUMBAI), THE TRIBUN AL AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) HELD THAT THE AO WAS OBLIGED TO GIVE DUE RELIEF TO THE ASSESSEE OR ENTERTAIN ITS CLAIMS IF ADMISSIBLE AS PER LAW EVEN THOUGH THE ASS ESSEE HAD NOT FILED REVISED RETURN. IN THEIR DECISION, THE HON'BLE APEX COURT HAVE NOT BARRED THE ASSESSEE, RAISING ITS LEGAL CLAIM BEFORE APPELLATE AUTHORITIE S, THE APEX COURT ITSELF CLARIFYING THAT THE ISSUE IN THAT CASE WAS LIMITED TO THE POW ER OF THE ASSESSING AUTHORITY AND DID NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE ACT . SINCE THE LD. CIT(A) R EJECTED THE CLAIM OF THE ASSESSEE MERELY ON TECHNICAL CONSIDERATIONS WITHOUT GOING IN TO MERITS OF THE CLAIM , WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE O RDER OF THE LD. CIT(A) AND RESTORE ITA NOS.1958 & 2024/AHD/2009 28 THE ISSUE RAISED BY THE ASSESSEE IN GROUND NOS.2 & 3 IN THEIR APPEAL TO HIS FILE FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH L AW, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES AND KEEPING IN VIEW THE VARIOUS JUDICIAL PRONOUNCEMENTS, INCLUDING THOSE REFERRED TO ABOVE . NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PAS S A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT . WITH THESE OBSERVATIONS, GROUND NOS. 2 & 3 IN THE APPEAL ARE D ISPOSED OF. 10. GROUND NO.4 IN THE APPEAL OF THE ASSESSEE RELA TES TO LEVY OF INTEREST U/S 234A, 234B AND 234D OF THE ACT. THE LD . AR ON BEHALF OF THE ASSESSEE DID NOT MAKE ANY SUBMISSIONS ON THIS GROUN D. THE LEVY OF INTEREST U/S 234A & 234B OF THE ACT BEING MANDATORY [COMMISSIONE R OF INCOME TAX. VS ANJUM M. H. GHASWALA AND OTHERS,252 ITR 1(SC), AFFI RMED BY HON'BLE APEX COURT IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC) ], THESE GROUNDS ARE DISMISSED. HOWEVER, THE AO MAY A LLOW CONSEQUENTIAL RELIEF ,IF ANY, WHILE GIVING EFFECT TO THIS ORDER. AS REGARDS THE ISSUE OF CHARGING OF INTEREST U/S 234D OF THE ACT, WE FIND THAT THIS IS SUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT SPECIAL BENCH I N THE CASE OF ITO V EKTA PROMOTERS (P) LTD. (2008) 113 ITD 719 (D ELHI) (SB) , IN WHICH THE SPECIAL BENCH OF THIS TRIBUNAL HAS CLEARL Y HELD THAT SECTION 234D WHICH HAS BEEN BROUGHT ON THE STATUTE FROM 01-06- 2003 CANNOT BE APPLIED TO THE ASSESSMENT YEAR 2003- 04 AND EARLIER YEARS BUT IT WILL HAVE APPLICATION ONLY WITH EFFECT FROM ASSESSMENT YEAR 2004-05. IN THE LIGHT OF VIEW TAKEN THE AFORE SAID DECISION OF THE SPECIAL BENCH OF ITAT AND NO CONTRARY DECISION HAVING BEEN BROUGHT TO OUR NOTICE, WE HAVE NO ALTERNATIVE BUT T O REJECT THE GROUND NO.4 IN THE APPEAL 11. GROUND NOS.2 AND 3 IN THE APPEAL OF THE REVENU E BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJU DICATION NOR ANY SUBMISSIONS HAVING BEEN MADE ON THESE GROUNDS WHIL E NO ADDITIONAL GROUND HAS BEEN RAISED BEFORE IS IN TERM S OF RESIDUARY ITA NOS.1958 & 2024/AHD/2009 29 GROUND IN THE APPEAL OF THE ASSESSEE, ACCORDINGLY T HESE GROUNDS ARE DISMISSED. 12 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D WHILE THAT OF THE ASSESSEE IS PARTLY ALLOWED, BUT FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 6-05-2011 SD/- SD/- (D K TYAGI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 6 -05-2011 COPY OF THE ORDER FORWARDED TO: 1. SHREE PANCHASARA PARSHWANATHJI JAIN DERASAR, HEMCHANDRACHARYA ROAD, PIMPALA SHERI, PATAN 2. THE ACIT, PATAN CIRCLE, PATAN 3. CIT CONCERNED 4. CIT(A), GANDHINAGAR 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD