Dahyabhai Chotalal Charity Foundation, Ahmedabad V. The DDIT(Exmp.), Ahmedabad

ITA 2083/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9116 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 30-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Section: 10AA; 80G; 12AA; 12; 10; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' (BEFORE SHRI P K BANSAL ACCOUNTANT MEMBER) ITA NO.2083/AHD/2009 (ASSESSMENT YEAR: 2004-05) DAHYABHAI CHHOTALAL CHARITY FOUNDATION, PRAFUL NIVAS, PANCHVATI, AHMEDABAD V/S THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS), AHMEDABAD (APPELLANT) (RESPONDENT) PAN NO.: AAATD 1092 L APPELLANT BY :- SHRI DEEPAK SONI, CA RESPONDENT BY:- SHRI GOVIND SINGHAL, SR. DR O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(A) DATED 02-04-2009. GROUND NO.1 A ND 2 SINCE NOT PRESSED BY THE ASSESSEE STAND DISMISSED, AS NOT PRESSED. THE FOLLOWING GROUNDS SURVIVE AFTER NOT PRESSING GROUND NOS.1 AND 2: 3.0 THE ASSESSING OFFICER ERRED IN INVOKING PROVIS IONS OF SECTION 12 AND MAKING ASSESSMENT OF INCOME OF RS.4,66,103/- . THE APPELLANT SUBMITS THAT ALL THE CONDITIONS WERE FULFILLED AND THEREFORE THE ADDITION OF RS.4,66,103/- MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) IS ILLEGAL AND CONTRARY TO THE FACTS. THE AD DITION BE DELETED. 3.1 THE APPELLANT WITHOUT PREJUDICE TO ABOVE SUBMIT S THE ENTIRE INCOME IS ENTITLED TO EXEMPTION U/S 11 AND NO INCOM E IS CHARGEABLE TO TAX. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2 4. THE ASSESSING OFFICER ERRED IN RAISING DEMAND OF RS.1,17,365. THE APPELLANT SUBMITS THAT THE DEMAND RAISED BY THE ASSESSING OFFICER IS ERRONEOUS AND CONTRARY TO THE FACTS. THE ASSESSI NG OFFICER ERRED IN INVOKING PROVISIONS OF SECTION 234B, 234C AND 234D AND CHARGING INTEREST THEREUNDER. THE APPELLANT SUBMITS THAT INT EREST CHARGED BY THE ASSESSING OFFICER BEING ERRONEOUS BE DIRECTED TO BE DELETED. 2 THE BRIEF FACTS RELATING TO GROUND NO.3.0 AND 3. 1 ARE THAT THE ASSESSEE SUBMITTED THE RETURN DECLARING NI L INCOME ALONG WITH THE AUDIT REPORT U/S 12A(B) IN FORM NO.10B. TH E TRUST RECEIVED DONATION AMOUNTING TO RS.4,66,103/- FOR RE LIEF TO EARTHQUAKE VICTIMS IN GUJARAT STATE TO WHICH THE PR OVISIONS OF SECTION 80G(2)(D0 ARE APPLICABLE. AS PER SECTION 80 G(5C) READ WITH SECTION 12(3) THE ASSESSEE WAS REQUIRED TO FUR NISH AUDIT REPORT IN FORM NO.10AA UNDER RULE 18AAAA OF THE INC OME-TAX RULES, 1962 TO THE PRESCRIBED AUTHORITY ON OR BEFOR E 30-06-2004. THE PRESCRIBED AUTHORITY IS THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION. THE ASSESSEE TRUST IS REGISTERED U/S 12 AA. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SUBMI TTED THE COPY OF AUDIT REPORT IN FORM NO.10AA ON 29-06-2004 IN TH E OFFICE OF THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION), AHME DABAD AND NOT TO THE OFFICE OF THE DIRECTOR GENERAL OF INCOME -TAX (EXEMPTION). THE ASSESSING OFFICER TOOK THE VIEW TH AT SINCE THE ASSESSEE HAS NOT SUBMITTED THE AUDIT REPORT AS PER RULE 18AAAA TO THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION) O N OR BEFORE 30-06-2004, THEREFORE, HE INVOKED THE PROVISIONS OF SECTION 12(3) AND TOOK THE VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR THE EXEMPTION OF INCOME AND THE DONATIONS SO RECEIVED W ERE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER MERELY BY WRITING THAT AFTER A C AREFUL STUDY 3 OF THE ASSESSMENT ORDER, GROUNDS OF APPEAL AND WRIT TEN SUBMISSION, I AM INCLINED TO AGREE WITH THE ASSESSI NG OFFICER;. 3 THE LEARNED AR, AT THE OUTSET, CONTENDED THAT TH ERE WAS MERELY A TECHNICAL BREACH ON THE PART OF THE AS SESSEE. THE ASSESSEE HAS SUBMITTED THE AUDIT REPORT IN FORM NO. 10AA BEFORE 31-3-2004 BEFORE THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION) AHMEDABAD. THE PROVISIONS OF SECTION 12(3) SHOULD H AVE NOT BEEN APPLIED IN SUCH CASE. 4 THE LEARNED DR, ON THE OTHER HAND, CONTENDED BY REFERRING TO THE LETTER DATED 29-6-2004 THAT THE LE TTER HAS BEEN ADDRESSED TO THE DIRECTOR GENERAL OF INCOME-TAX (EX EMPTION), AHMEDABAD WHILE THERE IS NO SUCH AUTHORITY IN AHMED ABAD. THE ASSESSEE IS WELL AWARE OF THE FACT THAT THE DIRECTO R GENERAL OF INCOME-TAX (EXEMPTION) SITS AT CALCUTTA. THE SUBMIS SION OF FORM NO.10AA BEFORE THE DEPUTY DIRECTOR OF INCOME-TAX (E XEMPTION), AHMEDABAD IS NOT SUFFICIENT COMPLIANCE WITH THE PRO VISIONS OF SECTION 80G(5C)(V) OF THE ACT READ WITH RULE 18AAAA . THE AO WAS RIGHT IN APPLYING THE PROVISIONS OF SECTION 12( 3) OF THE ACT. 5 I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. I HAVE ALSO GONE THROUGH THE O RDER OF THE TAX AUTHORITIES BELOW. I FIND THAT THE ASSESSEE TRU ST IS REGISTERED U/S 12AA OF THE ACT. THE ASSESSEE RECEIVED DONATION AMOUNTING TO RS.4,66,103/- DURING 26-01-2001 TO 31-03-2003 FO R RELIEF TO THE EARTHQUAKE VICTIMS IN GUJARAT STATE TO WHICH TH E PROVISIONS OF SECTION 80G(2)(D) WERE APPLICABLE. SECTION 80G(5 C) LAYS DOWN VARIOUS CONDITIONS IN RESPECT OF DONATIONS REF ERRED TO IN CLAUSE (D) OF SUB-SECTION (2) OF SECTION 80G TO BE COMPLIED WITH BY THE ASSESSEE. SUB CLAUSE (V) OF SECTION 80G(5C) REQUIRES SUCH 4 TRUST TO RENDER INCOME AND EXPENDITURE ACCOUNT TO S UCH AUTHORITY AND IN SUCH MANNER AS MAY BE PRESCRIBED ON OR BEFOR E 30 TH DAY OF JUNE, 2004. UNDER RULE 18AAAA FOR THE PURPOSE OF S UB-SECTION (5C) OF SECTION 80G, PRESCRIBED AUTHORITY IS DIREC TOR GENERAL OF INCOME-TAX (EXEMPTION). SUB-RULE (2) OF RULE 18AAA A REQUIRES SUCH TRUST TO MAINTAIN SEPARATE ACCOUNTS O F INCOME AND EXPENDITURE FOR PROVIDING RELIEF TO THE VICTIMS OF EARTHQUAKE IN GUJARAT STATE AND GET SUCH ACCOUNTS AUDITED BY A CH ARTERED ACCOUNTANT AS DEFINED IN EXPLANATION TO SECTION 288 (2) AND FURNISH THE REPORT OF SUCH AUDIT, DULY SIGNED AND V ERIFIED BY SUCH ACCOUNTANT, TO THE DIRECTOR GENERAL OF INCOME-TAX ( EXEMPTION) IN FORM NO.10AA. THIS RULE FURTHER STATES THAT SUC H AUTHORITY ON RECEIPT OF THE ACCOUNTS IN THE SAID FORM, SHALL GIVEN FINDING AS TO WHETHER THE DONATION RECEIVED FOR THE PURPOSE OF PROVIDING RELIEF TO THE VICTIMS OF THE EARTHQUAKE IN GUJARAT STATE ARE CHARGEABLE TO TAX IN THE HANDS OF THE TRUST OR THE FUND OR THE INSTITUTION UNDER CLAUSE (23C) OF SECTION 10 OR 12 OR NOT, AS THE CASE MAY BE AND DETERMINE THE EXTENT THEREOF. SUB- RULE (4) OF RULE 18AAAA ALSO STATES THAT THE DIRECTOR GENERAL O F INCOME- TAX (EXEMPTION) SHALL BRING HIS FINDING TO THE KNOW LEDGE OF THE CONCERNED ASSESSING OFFICER WITHIN ONE MONTH OF MAK ING SUCH FINDING. SECTION 12(3) STATES THAT ANY AMOUNT OF D ONATION RECEIVED BY THE TRUST OR INSTITUTION U/S 80G(2)(D) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 11, IN RESPECT OF WHI CH ACCOUNTS OF INCOME AND EXPENDITURE HAVE NOT BEEN RENDERED BY TH E ASSESSEE TO THE PRESCRIBED AUTHORITY U/S 80G(5C)(V) IN THE M ANNER SPECIFIED IN THAT CLAUSE OR WHICH HAS BEEN UTILIZED FOR THE PURPOSE OTHER THAN PROVIDING RELIEF TO THE VICTIMS OF EARTHQUAKE IN GUJARAT STATE OR WHICH REMAINS UNUTILIZED IN VIE W OF SECTION 80G(5C) AND NOT TRANSFERRED TO THE PRIMA MINISTERS NATIONAL 5 RELIEF FUND ON OR BEFORE THE 31 ST DAY OF MARCH, 2004, SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR AND SH ALL ACCORDINGLY BE CHARGED TO TAX. THE ASSESSEE IN THI S CASE HAS SUBMITTED THE INCOME AND EXPENDITURE ACCOUNTS IN FO RM NO.10AA AS AUDITED BY THE CHARTERED ACCOUNTANT BEFO RE THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION), AHMEDABA D. NOW THE QUESTION BEFORE ME IS WHETHER SUBMISSION OF THE ACCOUNTS OF INCOME AND EXPENDITURE AS AUDITED IN FORM NO.10AA B Y THE ASSESSEE BEFORE THE DEPUTY DIRECTOR OF INCOME-TAX ( EXEMPTION) IS SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF SEC TION 80G(5C)(V) OF THE ACT OR NOT. IN CASE IT IS NOT SU FFICIENT COMPLIANCE, THE DONATION SO RECEIVED SHALL BE DEEME D TO BE THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION. RULE 18AAAA(1) SPECIFIES THE PRESCRI BED AUTHORITY TO BE THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION). NO PARTICULAR LOCATION OR THE PLACE OF DIRECTOR GEN ERAL OF INCOME-TAX (EXEMPTION) HAS BEEN PRESCRIBED. SECTION 2(21) OF THE ACT DEFINES DIRECTOR GENERAL OF INCOME-TAX AS UNDER:- 21 DIRECTOR GENERAL OR DIRECTOR MEANS A PERSON APPOINTED TO BE A DIRECTOR GENERAL OF INCOME-TAX OR , AS THE CASE MAY BE, A DIRECTOR OF INCOME-TAX, UNDER SUB-SE CTION (1) OF SECTION 117, AND INCLUDES A PERSON APPOINTED UNDER THAT SUB-SECTION TO BE [AN ADDITIONAL DIRECTOR OF I NCOME- TAX OR] A [JOINT] DIRECTOR OF INCOME-TAX OR AN ASSI STANT DIRECTOR [OR DEPUTY DIRECTOR] OF INCOME-TAX;] FROM THE PLAIN READING OF THIS SECTION IT IS APPARE NT THAT THE DIRECTOR GENERAL OF INCOME-TAX ALSO INCLUDES A DEPU TY DIRECTOR OF INCOME-TAX. SINCE THE DEPUTY DIRECTOR OF INCOME- TAX IS ALSO INCLUDED WITHIN THE DEFINITION OF THE DIRECTOR GEN ERAL OF INCOME-TAX, IN MY OPINION, NO ILLEGALITY HAS BEEN CAUSED IF THE 6 ASSESSEE HAS SUBMITTED THE INCOME AND EXPENDITURE A CCOUNTS AUDITED BY THE CHARTERED ACCOUNTANT IN FORM NO.10AA BEFORE THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION). THIS , IN MY OPINION, WILL BE SUFFICIENT COMPLIANCE WITH THE PRO VISIONS OF SECTION 80G(5C)(V) OF THE ACT. FROM THE READING OF RULE 18AAAA(4) WE NOTED THAT IT IS AN ESSENTIAL ON THE P ART OF THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION) TO BRING THE FINDING TO THE KNOWLEDGE OF THE CONCERNED ASSESSING OFFICER WITHIN ONE MONTH OF MAKING SUCH FINDING. SUB-RULE (2) OF RULE 18AAAA ALSO REQUIRES THE PRESCRIBED AUTHORITY TO GIVE THE FINDING AS TO WHETHER THE DONATION RECEIVED FOR THE PURPOSE OF PR OVIDING RELIEF TO THE VICTIMS OF EARTHQUAKE IN GUJARAT ARE CHARGEA BLE TO TAX IN THE HANDS OF THE TRUST OR THE FUND OR THE INSTITUTI ON UNDER CLAUSE (23C) OF SECTION 10 OR U/S 12 OR NOT AS THE CASE MA Y BE AND DETERMINE THE EXTENT THEREOF. THE LEARNED DR POINT ED OUT THAT THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION) SITS ONLY AT CALCUTTA, THEREFORE, THE PURPOSE OF FILING THE INCO ME AND EXPENDITURE ACCOUNTS IN FORM NO.10AA WITH THE DEPUT Y DIRECTOR OF INCOME-TAX (EXEMPTION), AHMEDABAD WILL NOT BE SU FFICIENT COMPLIANCE AND THE REVENUE WILL NOT HAVE ANY OPPORT UNITY TO EXAMINE FORM NO.10AA AS IT WAS TREATED TO BE AN ILL EGAL ACTION ON THE PART OF THE ASSESSEE. I, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR-PLAY TO BOTH THE PARTIES, SET-ASIDE THE OR DER OF THE CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER WITH THE DIRECTION THAT THE ASSESSING OFFICER WILL FORWARD THE COPY OF FORM NO.10AA AS FILED BY THE ASSESSEE BEFOR E THE DEPUTY DIT (EXEMPTION) TO THE DIRECTOR GENERAL OF I NCOME-TAX (EXEMPTION) AND WAIT THE FINDING OF THE DIRECTOR GE NERAL OF INCOME-TAX (EXEMPTION) ON THE AUDIT REPORT DULY SIG NED BY THE CHARTERED ACCOUNTANT IN FORM NO.10AA AS WELL AS ON THE INCOME 7 AND EXPENDITURE ACCOUNTS OF THE ASSESSEE UPTO THREE MONTHS FROM THE RECEIPT OF THIS ORDER AND IN CASE HE DOES NOT G ET ANY FINDING FROM THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION) IN ACCORDANCE WITH RULE 18AAAA(4), HE SHOULD ALLOW THE EXEMPTION TO THE ASSESSEE IN RESPECT OF THESE DONAT IONS AND SHOULD NOT APPLY THE PROVISIONS OF SECTION 12(3) OF THE ACT. IN CASE HE FINDS ANY ADVERSE FINDING FROM THE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION), HE SHOULD PASS AN ORDER IN ACCORDANCE WITH LAW. 6 IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 11-09-2009 SD/- DATE: 11-09-2009 (P K BANSAL) ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO : 1. DAHYABHAI CHHOTALAL CHARITY FOUNDATION, PRAFUL N IVAS, PANCHVATI, AHMEDABAD 2. THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION), AHMEDABAD 3. THE CIT CONCERNED 4. THE CIT(A)-XXI, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, ITAT, AHMEDABAD