SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA, SANGLI V. ITO, EXCEMPTION, WARD, KOLHAPUR

ITA 213/PUN/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7164 (ITAT-PUNE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 07-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MALVIYA
• Assessee Lawyers: HARI KRISHAN
• Keywords: Charitable institution
• Section: 68; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.213/PUN/2020 / ASSESSMENT YEAR : 2016-17 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA, ATPADI, A/P. KARGANI, TAL. ATPADI, DIST. SANGLI 415301 PAN : AAFTS1067C VS. ITO (EXEMPTION WARD), KOLHAPUR APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 16-12-2019 PASSED BY THE CIT(A)-2, KOLHAPUR, IN RELATION TO THE ASSESSMENT YEAR 2016-17. 2. THE ONLY ISSUE PRESSED BY THE LD. AR IS AGAINST THE CONFIRMATION OF ADDITION OF RS.2,35,89,700/-. ASSESSEE BY SHRI HARI KRISHAN REVENUE BY SHRI ALOK MALVIYA DATE OF HEARING 07-09-2020 DATE OF PRONOUNCEMENT 07-09-2020 ITA NO.213/PUN/2020 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY REGISTERED U/S.12A OF THE INCOME-TAX ACT, 1961 (HER EINAFTER ALSO CALLED THE ACT) AND ALSO ENJOYING THE REGISTRATION U/S.80G OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE ASSESSING OFFICER (AO) THAT THE ASSESSEE RECEIVED DONATIONS OF RS.2,35,89,700/- IN THE YEAR UNDER CONSIDER ATION. ON BEING CALLED UPON TO FURNISH THE LIST OF DONORS, THE ASSESSEE SUBMITTED THE SAME WHICH CONTAINED NAMES OF SEVERAL DONORS EACH CONTRIBUTING BELOW RS.10,000/- IN CASH. IN ORDER TO VERIF Y THE GENUINENESS OF THE DONATIONS, THE AO ISSUED NOTICES U/S.133( 6) OF THE ACT TO 49 PERSONS FROM SUCH LIST AT THE ADDRESSES PROVID ED BY THE ASSESSEE. MOST OF THE NOTICES WERE RETURNED BY THE PO STAL AUTHORITIES WITH THE REMARKS ADDRESS INCOMPLETE/PERSON NOT KNOWN. IN THE REMAINING CASES, NO REPLY WAS RECEIVED U /S.133(6) OF THE ACT. THE ASSESSEE WAS CONFRONTED WITH THE SAME A ND REQUIRED TO PROVE THE CLAIM OF GENUINENESS OF DONATIONS TH ROUGH IDENTIFIABLE PERSONS, FAILING WHICH THE DONATIONS OF RS.2.35 CR ORE AND ODD WOULD BE TREATED AS `ANONYMOUS DONATIONS LIABLE FOR TAX U/S.115BBC OF THE ACT. THE ASSESSEE TENDERED AN EXPLAN ATION ON 24-12-2018 SUBMITTING THAT IT WAS LOCATED IN A DROUGHT-PRONE AREA ITA NO.213/PUN/2020 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA 3 SURROUNDED BY RURAL AND UNEDUCATED POPULATION. SOME MORE TIME WAS REQUESTED BY THE ASSESSEE FOR PRODUCING THE PERSON S. THE AO DID NOT ACCEPT THE CLAIM BY ASSIGNING THE DELAY IN THE SUBMISSIO N OF THE LIST OF DONORS ON THE ASSESSEE. HE, THEREFORE, M ADE ADDITION OF RS.2.35 CRORE U/S. 115BBC OF THE ACT BY TREATING THE SA ME AS `ANONYMOUS DONATION. THE LD. CIT(A) UPHELD THE ACTION OF THE AO IN THE IMPUGNED ORDER. IN ADDITION, HE FURTHER HELD THA T: `THE DONATIONS SO CLAIMED BY THE APPELLANT AND CREDITED IN THE BOOK S OF ACCOUNTS COULD VERY WELL BE TREATED AS UNEXPLAINED CASH CR EDIT U/S 68 OF THE I.T. ACT, 1961 AND THE ADDITION COULD ALSO BE M ADE ON THIS SCORE THEREBY TAKING THE INCOME U/S 115BBE OF THE SAID A CT. AGGRIEVED THEREBY, THE ASSESSEE HAS APPROACHED THE TRIBU NAL. 4. HAVING HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT A ND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE IS A CHARITABLE TRUST REGISTERED U/S.12A OF THE ACT. IT IS NOT THE CASE OF THE ASSESSEE THAT THE AMOUNT UNDER CONSIDERATIO N IS A CORPUS DONATION. THAT BEING THE POSITION, SUCH AN AMOUNT IS TO BE CONSIDERED AS VOLUNTARY CONTRIBUTIONS. SECTION 115BBC HAS BE EN INSERTED BY THE FINANCE ACT, 2006 W.E.F. 01-04-2007 WITH THE ITA NO.213/PUN/2020 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA 4 CAPTION: `ANONYMOUS DONATIONS TO BE TAXED IN CERTAIN CASES. THE LD. AR ARGUED THAT SINCE 85% OF THE TOTAL DONATIONS HAVE BEE N APPLIED FOR THE ADVANCEMENT OF THE OBJECTS, THERE WAS NO NE ED TO CONSIDER THE APPLICATION OF SECTION 115BBC. THE ARGUMENT OF THE LD. AR IS MISPLACED. APPLICATION OF 85% OR OTHERWISE IS AN ALTOGETHER DIFFERENT ASPECT. FOR AVAILING EXEMPTION U/S 11 ETC. , AN ASSESSEE NEEDS TO SEPARATELY PASS THE TEST U/S.115BBC SUBJE CT TO THE EXCEPTIONS. IF A PARTICULAR RECEIPT TURNS OUT TO BE ANO NYMOUS DONATIONS, THE SAME GETS CAUGHT WITHIN THE MISCHIEF OF SECTION 115BBC AND HENCE MARS THE EXEMPTION OF INCOME TO THAT EXTEN T NOTWITHSTANDING THAT THE ASSESSEE APPLIED 85% OF SUCH ANONYMO US DONATIONS FOR THE OBJECTS OF THE TRUST. SECTION 13(7) CLEARLY PROVIDES THAT NOTHING CONTAINED IN SECTION 11 OR SECTION 12 S HALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOU S YEAR OF THE PERSON IN RECEIPT THEREOF, ANY ANONYMOUS DONATION REFERRED TO IN SECTION 115BBC ON WHICH TAX IS PAYABLE IN ACCORDANCE WITH THE PROVISIONS OF THAT SECTION. 5. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS OBSERVED TH AT THE AO ISSUED NOTICES U/S.133(6) TO 49 PERSONS WHICH WERE EITHER ITA NO.213/PUN/2020 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA 5 NOT SERVED OR REMAINED UNRESPONDED. SHOW CAUSE NOTICE W AS ISSUED ON 11-12-2018 REQUIRING THE ASSESSEE TO PROVE THE CLAIM OF HAVING RECEIVED DONATIONS FROM IDENTIFIABLE PERSONS. THE AS SESSEE SUBMITTED REPLY ON 24-12-2018 REQUIRING SOME MORE TIME. SINCE THE ASSESSMENT WAS GETTING TIME BARRED ON 31-12-2018, THE ASSESSEE WAS NOT ALLOWED THE TIME AND THE ORDER WAS PASSE D ON 24- 12-2018 ITSELF. THE LIMITED CONTENTION OF THE LD. AR IN THIS REG ARD BEFORE THE TRIBUNAL IS THAT SINCE THE ASSESSEE WAS NOT ALLOWED ADEQUATE TIME TO PROVE THE GENUINENESS OF THE DONORS, THE SAME SHOULD BE PROVIDED. WE FIND THAT THE LD. CIT(A) UPHELD THE ACTION OF THE AO IN THE IMPUGNED ORDER TAXING THE AMOUNT U/S 115BB C OF THE ACT. IN ADDITION, HE FURTHER DIRECTED THE AO TO CONSIDER THE APPLICABILITY OF SECTION 68 OF THE ACT READ WITH SECTION 115BBE O F THE ACT. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDE RED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER IS SET-ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF AO. WE ORDER ACCORDINGLY AND DIRECT HIM TO EXAMINE THE C ASE AFRESH. THE LD. AR HAS UNDERTAKEN TO EXTEND ALL POSSIBLE COOPERATION BY PRODUCING NECESSARY EVIDENCE/DONORS AS THE AO MAY DESIRE. ITA NO.213/PUN/2020 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA 6 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 07 TH SEPTEMBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT-2, KOLHAPUR 4. 5. THE PR.CIT, KOLHAPUR , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.213/PUN/2020 SHRIRAM BAHUUDDESHIYA SEVABHAVI SANSTHA 7 DATE 1. DRAFT DICTATED ON 07-09-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 07-09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *