DDIT(E), New Delhi V. M/s. Angika Development Society, New Delhi

ITA 2295/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3607 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Income from undisclosed sources; Charitable institution; Accommodation entries; Onus to prove
• Section: 68; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH A DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D. RA NJAN, AM I. T. APPEAL NO. 2295 (DEL) OF 2010 ASSESSMENT YEAR : 2005-06. DY. DIRECTOR OF INCOME-TAX, M/S. A NGIKA DEVELOPMENT SOCIETY, [EXEMPTION]; INV. CIRCLE : 1 VS. 5 / 7, SARVA PRIYA VIHAR, N E W D E L H I. N E W D E L H I 110 025. P A N / G I R NO. AAE CA 8615 N. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI R. S. SINGHVI, C. A.; DEPARTMENT BY : SHRI A. K. MONGA, SR. D. R. ; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)XXI, NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS :- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE TO THE TUNE OF RS.95,00,000/- BY DELETING THE ADDITION MADE UNDER SECTION 68 OF THE ACT DESPITE THERE BEING CLEAR CUT INCRIMINATING EVIDENCE AGAINST THE ASSESS EE SOCIETY. LD. CIT (A) HAS ERRED IN HOLDING THAT CAPACITY OF M/S. LEARN [THE E NTITY STATED TO HAVE MADE THE DONATION TO CORPUS FUND] TO PAY THE ALLEGED AMOUNT OF DONATION WAS CLEARLY ESTABLISHED WHEN, IN FACT, THE DENIAL OF PAYMENTS B Y LEARN WAS CLEAR CUT EVIDENCE THAT IT DID NOT HAVE THE CAPACITY TO PAY T HE ALLEGED DONATION OF RS.95 LAKHS. LD. CIT (A) HAS COMPLETELY IGNORED TH E FACT THAT THE CHARTERED 2 I. T. APPEAL NO. 2295 (DEL) OF 2010 ACCOUNTANT AT GHAZIABAD HAD, IN FACT, MISUSED THE B ANK ACCOUNT OF LEARN WITHOUT THE KNOWLEDGE OF ANY OF THE OFFICE BEARERS OF LEARN AND HENCE, NEITHER THE GENUINENESS OF THE TRANSACTION [IN THE WAKE OF DENIAL BY CHAIRMAN OF LEARN] NOT THE CREDITWORTHINESS OF THE DONOR [IN THE LIGHT OF FACT THAT THE DONOR ITSELF WAS STARVED OF FUNDS AND ALSO THAT ITS OWN ACCOUNT S DID NOT REFLECT ANY SUCH PAYMENT TO THE ASSESSEE] IS ESTABLISHED EVEN IF THE IDENTITY OF LEARN IS ESTABLISHED; 2. ALTERNATIVELY, ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE, WHETHER IT WOULD BE JUDICIOUS IF THE MATTER IS RESTORED BAC K TO THE FILE OF THE LD. CIT (APPEALS) FOR FRESH ADJUDICATION IN THE LIGHT OF TH E FACT THAT PROCEEDINGS BEFORE THE CIT (A) ARE AN EXTENSION OF ASSESSMENT PROCEEDI NGS AND HENCE LD. CIT (A) CAN HIMSELF EXAMINE THE CHAIRMAN OF THE DONOR ENTITY AN D ALSO PROVIDE OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE IN ORDER TO ESTAB LISH THE TRUTH OR THE CASE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER IN ORDER TO AFFORD OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE. 3. THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO DELETING THE ADDITION OF RS.95,00,000/- MADE UNDER SECTION 68 OF THE I. T. ACT, 1961 [HEREI NAFTER REFERRED TO AS THE ACT]. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE FILED RE TURN OF INCOME DECLARING INCOME OF RS.20,166/- ON 17/10/2005 ALONG WITH AUDIT REPORT FOR THE PERIO D ENDED ON 31 ST MARCH, 2005. THE ASSESSEE IS REGISTERED UNDER SOCIETIES ACT VIDE REGISTRATION S/ 49871/2004 DATED 16/07/2004 AND UNDER SECTION 12-A OF THE ACT VIDE REGISTRATION NO. 916 D ATED 15/10/2004. 4.1 DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E HAD SHOWN RECEIPT OF RS.1,08,46,000/- IN CORPUS FUND. THE ASSESSEE DID NOT HAVE ANY CORP US FUND AS ON 1/04/2004 I.E. BEGINNING OF THE ACCOUNTING YEAR. BESIDES CORPUS DONATIONS THE ASSE SSEE HAD ALSO RECEIVED MEMBERSHIP FEE OF RS.17,002/- DURING THE YEAR. THE ASSESSEE HAD MADE INVESTMENTS DURING THE YEAR OUT OF CORPUS FUND IN COMPUTER RS.1,04,000/-, CAPITAL WORK IN PRO GRESS RS.2,00,000/-, FIXED DEPOSIT WITH ICICI BANK RS.1,05,00,000/- AND BALANCE WITH ICICI BANK R S.1,11,795/-. THUS THE CORPUS DONATIONS RECEIVED DURING THE YEAR HAVE BEEN UTILIZED IN MAKI NG FIXED DEPOSITS WITH THE BANK PARTLY IN PROCURING FIXED ASSETS I.E. COMPUTERS AND WORK IN P ROGRESS. THE ASSESSING OFFICER IN ORDER TO VERIFY GENUINENESS OF CORPUS DONATION ASKED THE ASS ESSEE TO EXPLAIN THE GENUINENESS OF CORPUS DONATION. IT WAS SUBMITTED THAT THE SOCIETY WAS EN GAGED IN RUNNING A SCHOOL IN THE NAME OF DELHI PUBLIC SCHOOL IN BHAGALPUR AND WAS ALSO RUNNING B.E D. COURSES FOR THE STUDENTS THERE. THE 3 I. T. APPEAL NO. 2295 (DEL) OF 2010 DETAILS FILED REGARDING CORPUS DONATIONS REVEALED T HAT MAJOR DONATIONS AMOUNTING TO RS.95,00,000/- WAS RECEIVED FROM ANOTHER SOCIETY, N AMELY, LOCUS FOR EDUCATIONAL & ACADEMIC RESEARCH NETWORK [LEARN] OF PARALYZED ACADEMY COMPL EX, MOIRANGKOM, IMPHAL. REST OF DONATIONS WERE RECEIVED FROM VARIOUS PERSONS IN DEN OMINATION OF RS.25,000/- ON AN AVERAGE. LETTERS WERE WRITTEN TO 5 DONORS INCLUDING LEARN ON 8/8/2007 REQUESTING THE DONORS TO CONFIRM THE PAYMENT OF DONATIONS TO THE ASSESSEE SOCIETY AN D CERTAIN OTHER DETAILS REGARDING THE DONATIONS MADE. REPLIES WERE RECEIVED FROM THREE DONORS INCL UDING LEARN. HOWEVER, REPLIES FROM SHRI AJIT JALAN AND J. K. CHARITABLE TRUST, WHO HAD REPO RTEDLY MADE DONATIONS OF RS.2,00,000/- AND RS.1,11,000/- WERE RECEIVED. CHAIRMAN, LEARN IN HI S LETTER DATED 21 ST AUGUST, 2007 STATED THAT THE ASSESSEE SOCIETY [ANGIKA DEVELOPMENT SOCIETY] WAS NOT KNOWN TO HIM AND THEY HAD NOT PAID CERTAIN DONATIONS TO THE SAID SOCIETY. THE AS SESSEE WAS CONFRONTED WITH THE ABOVE SITUATION. THE ASSESSEE SUBMITTED COPIES OF CONFIRMATION LETTE RS STATING THE FACT THAT THE LEARN HAD MADE DONATION OF RS.95,00,000/- TOWARDS CORPUS OF ASSESS EE TRUST. COPY OF RETURN FILED BY LEARN FOR FINANCIAL YEAR 2003-04, COPY OF NOTIFICATION ISSUED UNDER SECTION 35-AC, COPY OF MEMORANDUM & STATEMENT SHOWING THE DONATED AMOUNT, THE ASSESSI NG OFFICER EXAMINED THE CONTENTION OF THE ASSESSEE, THE LETTER OF CHAIRMAN DATED 21 ST AUGUST, 2007 WAS TOTALLY DISAGREEING WITH THE FACT S BROUGHT OUT BY THE ASSESSEE. COPY OF RETURN OF LEA RN WAS FILED FOR AY 2003-04 WHEREAS THE YEAR UNDER CONSIDERATION WAS ASSESSMENT YEAR 2005-0 6. THE COPY OF BANK STATEMENT FILED IN SUPPORT OF THE ASSESSEES CLAIM THAT THE DONATIONS HAD BEEN GENUINELY PAID RAISED THE FOLLOWING QUERIES :- 1. THE BANK ACCOUNT WAS FOUND TO BE MADE IN BANK O F INDIA IN GHAZIABAD BRANCH WHEREAS LEARN WAS OPERATING FROM IMPHAL WHICH WAS T HOUSANDS OF MILES FAR FROM GHAZIABAD; AND 2. IT WAS FOUND THAT PARALLEL CASH CREDIT ENTRIES WERE THERE IMMEDIATELY PRIOR TO MAKING OF DONATION TO THE SOCIETY; 4.2 UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER WROTE ANOTHER LETTER TO SHRI KARAM SURJAKANTI SINGH, THE CHAIRMAN OF LEARN ON 24 TH OCTOBER, 2007 AND WAS REQUESTED TO CLARIFY THE SUBMISSIONS MADE BY THE ASSESSEE. HE WAS ALSO REQUESTED TO CLARIFY AS TO HOW HE HAD MADE A 4 I. T. APPEAL NO. 2295 (DEL) OF 2010 DECLINING STATEMENT IN HIS LETTER DATED 21/08/2007. THE ASSESSING OFFICER ALSO WROTE LETTER TO BANK OF INDIA, GHAZIABAD AND OBTAINED COPY OF ACCOU NT OPENING FORM AND STATEMENT OF ACCOUNT. THE BANK IN ITS REPLY DATED 30 TH OCTOBER, 2007 CONFIRMED THAT THERE WAS CASH DEPOSI T IMMEDIATELY PRIOR TO PAYMENT OF DONATION TO THE ASS ESSEE SOCIETY. FROM THE BANK STATEMENT IT WAS ALSO NOTED THAT FROM 13 TH SEPTEMBER, 2004 TO 11/12/2004 THERE WERE CASH DEPO SITS WORTH RS.2,14,80,000/- IN THE ACCOUNT WHICH WERE USUALLY FOUND DEBITED AFTER DEPOSITS WERE MADE. THE ASSESSING OFFICER, THEREFORE, WAS OF THE VIEW THAT IN ALL LIKELIHOOD THE ACCOUNT WAS MAINTAINED FOR PROVIDING ACCOMMODATION ENTRIES. FURTHER INVESTIGA TIONS REVEALED THAT THE SAID ACCOUNT WAS MAINTAINED IN THE JOINT NAMES OF SHRI KARAM SURJAKA NTI SINGH, THE CHAIRMAN AND SHRI MAYANGLAMVAM PRAFULLO SINGH, SECRETARY OF LEARN. M EANWHILE ANOTHER LETTER WAS RECEIVED FROM SHRI KARAM SURJAKANTI SINGH, THE CHAIRMAN OF L EARN DATED 6/12/2007 WHEREIN HE REITERATED THAT LEARN HAD NOT MADE ANY DONATION TO THE ASSESSEE SOCIETY. THE CONTENTS OF LETTER DATED 6/12/2007 WRITTEN BY SHRI KARAM SURJAK ANTI SINGH ARE REPRODUCED AS UNDER :- PLEASE REFER TO YOUR LETTER DATED 24.10.2007, AD DRESSED TO THE UNDERSIGNED ON THE ABOVE SUBJECT. AS FOR YOUR KIND INFORMATION OUR ORGANIZATION GOT EXEMPTION ON TAX UNDER SECTION 35-AC OF THE INCOME TAX ACT 1961 VIDE ORDER NO. S. O. 839 (E) DATE THE 24 TH JULY 2003 FOR ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 I.E. FOR THREE YEARS BY THE MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA. THIS IS FOR THE CON STRUCTION OF SCHOOL BUILDING, INFRA STRUCTURE DEVELOPMENT AND RUNNING OF THE PROJ ECT. DURING THE YEAR OF WHICH IT IS SAID THAT A DONATION RECEIVED BY ANGIKA DEVELOPMENT SOCIETY FROM OUR SIDE THROUGH OUR TREASURER, WE WERE IN SEARCH OF DO NATIONS FROM DIFFERENT SOURCES FOR THE ABOVE MENTIONED PURPOSE AND AFTER M UCH TIME HAD BEEN SPENT FRUITLESSLY WE CAME ACROSS A CHARTERED ACCOUNTANT O F WHOSE OFFICE IS SITUATED NEAR THE SAID BANK OF INDIA, GHAZIABAD (U.P.). AS P ER HIS PROMISE TO MAKE NECESSARY ARRANGEMENTS FOR THE REQUIRED DONATION FO R US, HE OPEN AN ACCOUNT IN THE NAME OF OUR SOCIETY WITH HIS OWN MONEY AND ASK US TO GIVE A CHEQUE BOOK SIGNED BY US FOR THEIR NECESSARY ARRANGEMENTS AND W HICH WE DID IT. ALSO THEY DEMANDED LETTER HEAD OF THE SOCIETY. AFTER MUCH TI ME AWAITED IT PROVE TO BE FRUITLESS AGAIN AND LOSING HOPE OF GETTING ANY DONA TIONS ON DUE TO SHORTAGE OF FINANCE IN PUTTING UP OUT THE STATE FOR A LONG TIME , WE LEFT THE PLACE AND CAME BACK. AS FOR THE CASE OF THE ACCOUNT, WE DID NOT T AKE MUCH NOTICE AS IT WAS OPENED BY THEIR OWN MONEY. AFTER THAT I RECEIVE YO UR LETTER AND I WAS SHOCKED TO HEAR THE NEWS OF OUR DONATION TO ANGIKA. FURTHERMO RE, THE EXECUTIVE COMMITTEE OF OUR SOCIETY PERMITS ONLY THE CHAIRMAN AND THE SE CRETARY TO RECEIVE DONATIONS AND THEREBY SIGNED THE RELEVANT DOCUMENTS. THE TRE ASURER IS NOT AUTHORIZED TO DO SO AND THAT TOO FOR RECEIVING ONLY NOT FOR GIVING D ONATIONS. ABOVE ALL, WE ARE NOT 5 I. T. APPEAL NO. 2295 (DEL) OF 2010 IN ANY POSITION GIVE DONATIONS TO ANY ORGANIZATIONS SINCE OUT NEEDS ARE YET TO BE FULFILLED. AGAIN THE SIGNATURE OF THE TREASURER AS SEEN IN THE DOCUMENT IS NOT THE SAME AS THE ORIGINAL SIGNATURE OF OUR TREASURER, AN D ALSO IT DOES NOT HAVE THE SEAL AND THE ROUND SEAL OF OUR SOCIETY. THUS I THINK YOUR KIND SELF CAN UNDERSTAND TH E SITUATION OF THE CASE AND AS FAR AS OUR SOCIETY IS CONCERNED I HAVE WRITTEN THE REAL ITY. THANKING YOU IN ANTICIPATION. YOURS FAITHFULLY, SD/- KARAM SURJAKANTI SINGH CHAIRMAN LEARN. 4.3 SINCE THE CHAIRMAN OF LEARN HAD CATEGORICALLY D ENIED THAT THEY HAVE NOT GIVEN ANY DONATION, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.95,00,000/- AS INCOME FROM UNDISCLOSED SOURCES BROUGHT INTO THE BOOKS IN THE GARB OF CORPU S DONATION. 5.1 BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED B Y THE ASSESSEE THAT THE ASSESSEE IS A REGISTERED SOCIETY UNDER SECTION 12-A AND ALL THE O BJECTS OF THE SOCIETY ARE CHARITABLE IN TERMS OF SECTION 2(15) OF THE ACT. THE SOCIETY IS MERELY PU RSUING EDUCATIONAL ACTIVITIES AND THE ENTIRE INCOME OF THE SOCIETY QUALIFIES FOR EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. THE ASSESSING OFFICER HAS ACCEPTED BENEFIT UNDER SECTIONS 11 AND 12. THEREFORE, IT IS IMPLICIT THAT THE ASSESSEE SOCIETY HAS CARRIED OUT ACTIVITIES IN ACCORDANCE WI TH ITS OBJECTS AND THERE WAS NO CASE OF ANY UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY UNDISCLOSED SOURCE WHICH MAY HAVE RESULTED IN ANY UNDISCLOSED INCOME O R RECEIPT. THE ASSESSEE HAD FILED COMPLETE INFORMATION IN SUPPORT OF CORPUS DONATION AND THE S AME IS SUFFICIENT TO DISCHARGE THE ONUS. THE AO HAD DRAWN ADVERSE INFERENCE ON THE BASIS OF MERE COMMUNICATION FROM CHAIRMAN OF THE SOCIETY LEARN WITHOUT PROPER ENQUIRY, INVESTIGATION AND APPRECIATION OF DOCUMENTS ON RECORD AND OPPORTUNITY FOR CLARIFICATION AND CROSS EXAMINA TION. IT WAS ALSO SUBMITTED THAT THERE IS NO MATERIAL AGAINST THE ASSESSEE TO DISPUTE CORRECTNES S OF DONATION. THE ASSESSING OFFICER HAD 6 I. T. APPEAL NO. 2295 (DEL) OF 2010 ADMITTED THAT IN SPITE OF SERIOUS EFFORTS NO ADVERS E MATERIAL HAS BEEN OBTAINED TILL DATE AND INVESTIGATIONS WERE STILL UNDER-WAY. THEREFORE, IT WAS CLEAR THAT THE ADDITION WAS MADE ON MECHANICAL BASIS IN TOTAL DISREGARD TO LEGAL PRINCI PLES AND FACTS ON RECORD. THE DONATION WAS RECEIVED FROM THE BANK ACCOUNT OF THE SOCIETY LEARN , WHICH HAS BEEN OPERATED BY OFFICE BEARERS OF THE SOCIETY. THE CONFIRMATION OF THE SO CIETY LEARN IS ON RECORD AND THERE IS NO DISPUTE IN RESPECT OF THE SAME. THE ASSESSING OFFI CER HAS BEEN CARRIED AWAY BY THE ALLEGED COMMUNICATION FROM THE CHAIRMAN IN RESPECT OF WHICH NO PROPER ENQUIRY OR INVESTIGATION HAD BEEN CARRIED OUT OR CONCLUDED AND THE ALLEGED COMMU NICATION ITSELF IS CONTRADICTORY AND AS SUCH, COMMUNICATION ITSELF IS NO BASIS TO MAKE PRESUMPTIO N PARTICULARLY WHEN CHAIRMAN HIMSELF HAS NOT DISPUTED THAT THE DONATION WAS FROM THE BANK AC COUNT, WHICH BELONGED TO THE SOCIETY. THE SO-CALLED LETTER FROM THE CHAIRMAN WAS MERELY FOR P ERSONAL REASONS AND HAD NO BEARING TO THE CORRECTNESS OF THE DONATION. FURTHER ENTRIES OF MO RE THAN RS.3 CRORES EMANATED FROM THE SAME ACCOUNT OF THE SOCIETY AND AS SUCH, CORRECTNESS OF THE ACCOUNT IS NOT IN DOUBT OR DISPUTE. THEREFORE, IT WAS SUBMITTED THAT THE ASSESSING OFFI CER WAS NOT JUSTIFIED IN TREATING THE DONATION FROM M/S. LEARN AS UNDISCLOSED INCOME. 5.2 THE LD. CIT (APPEALS) EXAMINED THE PROVISIONS O F LAW AND VARIOUS DECISIONS ON THE SUBJECT. HE ALSO OBTAINED REMAND REPORT FROM THE A SSESSING OFFICER AND HAD CONSIDERED THE SAME. THE LD. CIT (APPEALS) OBSERVED THAT THE ASSESSEE HA D FILED FOUR CONFIRMATION LETTERS DATED 1/10/2004, 4/10/2004 AND 11/12/2004 RECEIVED BY THE ASSESSEE FROM LEARN STATING THE FACT THAT THE LEARN WAS HAPPY TO INFORM THE ASSESSEE THAT IT HAD DECIDED TO MAKE DONATION OF RS.95,00,000/- TOWARDS CORPUS OF THE TRUST ALONG WI TH THE COPY OF RETURN FILED BY LEARN FOR ASSESSMENT YEAR 2004-05, COPY OF NOTIFICATION ISSUE D UNDER SECTION 35-AC, COPY OF MEMORANDUM AND BANK STATEMENT SO IN DEBIT OF THE DO NATED AMOUNT. THUS THE ASSESSEE HAD DISCHARGED ITS ONUS UNDER SECTION 68 OF THE ACT. I T IS A SETTLED PRINCIPLE OF LAW THAT THE ONUS TO PROVE THAT THE APPARENT IS NOT REAL LIES ON THE PER SON WHO MAKES THE ALLEGATION. THE ASSESSING OFFICER HAD ALLEGED THAT THE DONATION OF RS.95,00,0 00/- WAS AN ACCOMMODATION ENTRY. THEREFORE, IT WAS FOR THE ASSESSING OFFICER TO PROVE HIS ASSER TION. THE LD. CIT (APPEALS) FURTHER OBSERVED THAT THE ASSESSING OFFICER WAS REQUESTED TO AFFORD AN OPPORTUNITY TO EXAMINE SHRI KARAM SURJAKANTI SINGH, WHICH WAS NOT ALLOWED. THE LD. CIT (APPEALS) IN THE LIGHT OF VARIOUS 7 I. T. APPEAL NO. 2295 (DEL) OF 2010 DECISIONS HELD THAT THE ASSESSING OFFICER HAD NOT B ROUGHT ON RECORD ANY EVIDENCE THAT THE SOCIETY WAS NOT CARRYING ON CHARITABLE / EDUCATIONAL ACTIVI TIES AS PER ITS AIMS AND OBJECTS OR FUNDS WERE MIS-UTILIZED / DIVERTED. THE ASSESSEE CONTINUE TO ENJOY EXEMPTION UNDER SECTION 12-A OF THE ACT. THE DONATIONS REPRESENT THE BOGUS CASH CREDIT, HAS NOT BEEN ESTABLISHED BY THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.95,00,000/-. THE LD. CIT (APPEALS) ACCORDINGLY DELETED THE ADDITION. 6. BEFORE US THE LD. SR. DR SUBMITTED THAT SHRI KAR AM SURJAKANTI SINGH IN HIS LETTER HAS DENIED TO HAVE GIVEN ANY MONEY TO THE ASSESSEE TRUS T. IT HAS BEEN STATED BY HIM THAT LEARN WAS HAVING SHORTAGE OF FUNDS AND, THEREFORE, IT WAS NOT POSSIBLE FOR THEM TO DONATE FUNDS TO THE ASSESSEE TRUST. IT WAS ALSO SUBMITTED THAT ONE CHA RTERED ACCOUNTANT HAS OBTAINED BLANK SIGNATURES ON CHEQUE BOOK AND ACCOUNT IN THE NAME O F M/S. LEARN WAS OPENED AND MONEY HAS BEEN DEPOSITED IN THAT ACCOUNT BY THE CHARTERED ACC OUNTANT. THEREFORE, NO DONATION HAS BEEN GIVEN BY LEARN. THE LD. CIT (A) IS, THEREFORE, NOT JUSTIFIED IN DELETING THE ADDITION OF RS.95,00,000/- MADE TOWARDS CORPUS OF ASSESSEE TRUS T. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS REGISTERED AS EDUCATIONAL SOCIETY, WHICH WAS CONSTITUTED ON 16 TH JULY, 2004. THE SOCIETY WAS REGISTERED UNDER SECT ION 12-A ON 15/10/2004 AND HAS BEEN GRANTED EXEMPTION UNDER SECTION 80-G OF THE ACT. T HE ASSESSEE SOCIETY IN ORDER TO PURSUE VARIOUS OBJECTS RECEIVED CORPUS DONATION THROUGH AC COUNT PAYEE CHEQUE AND COMPLETE DETAILS THEREOF WERE FURNISHED BEFORE THE AO. IT HAS ALSO BEEN SUBMITTED THAT THE AO HAD RAISED DOUBT ABOUT CORRECTNESS OF CORPUS DONATIONS ON THE BASIS OF SHRI KARAM SURJAKANTI SINGH, THE CHAIRMAN OF LEARN. HE FURTHER SUBMITTED THAT THERE IS NO DI SPUTE THAT THE DONATIONS HAVE BEEN RECEIVED THROUGH BANKING CHANNELS. THE CONTENTION OF SHRI K ARAM SURJAKANTI SINGH IS CONTRARY TO THE FACTS. THEREFORE, THE LD. CIT (A) IS JUSTIFIED IN DELETING THE ADDITION. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAD ALLEGED TO HAVE RECEIVED DONATIONS OF RS.95,00,000/- FROM LOCUS FOR EDUCATIONAL & ACADEMIC RESEARCH NETWORK [LEARN] OF PARALYZED ACAD EMY COMPLEX, MOIRANGKOM, IMPHAL. M/S. LEARN IS REGISTERED UNDER SECTION 35-AC OF THE INCOME-TAX ACT, 1961. THE SHORT ISSUE FOR 8 I. T. APPEAL NO. 2295 (DEL) OF 2010 CONSIDERATION REVOLVES AROUND THE FACT WHETHER THE RECEIPT OF RS.95,00,000/- FROM M/S. LEARN IS GENUINE OR IT IS A CASE OF INTRODUCTION OF THE FUNDS IN GARB OF DONATIONS. THE ASSESSEE HAD PRODUCED CONFIRMATIONS FROM M/S. LEARN THAT THE AMO UNT OF RS.95,00,000/- WAS RECEIVED FROM M/S. LEARN. THE ASSESSEE HAD FILED COPY OF THE RES OLUTION OF MEETING OF THE EXECUTIVE MEMBERS OF THE ORGANIZATION HELD ON 29 TH AUGUST, 2004 FOR THE PURPOSE OF OPENING AND OPERATIONS OF CURRENT ACCOUNT WITH THE BANK OF INDI A, GHAZIABAD BRANCH. THE ASSESSEE HAS FILED COPIES OF LETTERS DATED 1/10/2004 SENDING THE DONAT ION BY WAY OF DEMAND DRAFT OF RS.20,00,000/- & RS.25,00,000/-; DATED 4/10/2004 FOR RS.30,00,000/ - AND 11/12/2004 FOR RS.20,00,000/-. THESE LETTERS HAVE BEEN SIGNED BY KONSOM ROSIE DEVI. THE SAID DEMAND DRAFTS ARE DRAWN ON BANK OF INDIA. ON THE OTHER HAND, SHRI KARAM SURJAKANTI SI NGH HAS INFORMED THE ASSESSING OFFICER THAT M/S. LEARN HAS NOT GIVEN ANY DONATIONS AS THEY WERE IN NEED OF MONEY. M/S. LEARN IS REGISTERED UNDER SECTION 35-AC. IT IS NOT UNDERSTO OD UNDER WHAT CIRCUMSTANCES AN INSTITUTION GETTING REGISTRATION UNDER SECTION 35-AC WOULD PASS ON THE HUGE AMOUNT TO ANOTHER INSTITUTION BY WAY OF DONATIONS SINCE THE CHAIRMAN OF M/S. LEARN H AS DENIED TO HAVE GIVEN ANY DONATIONS. THE ISSUE IS NOT FREE FROM DOUBTS. THE ASSESSING O FFICER CARRIED OUT ENQUIRIES FROM BANK OF INDIA, GHAZIABAD. THE BANK VIDE ITS LETTER DATED 3 0/10/2007 HAD CONFIRMED THAT THERE WERE CASH DEPOSIT ENTRIES IMMEDIATELY PRIOR TO PAYMENT OF DON ATION TO THE ASSESSEE SOCIETY. AS PER THE BANK STATEMENT FOR THE PERIOD FROM 13/9/2004 TILL 1 1/12/2004 THERE WERE CASH DEPOSITS WORTH RS.2,14,80,000/- IN THE BANK ACCOUNT OF M/S. LEARN. SINCE THE ISSUE OF SOURCE OF DEPOSIT IN THE BANK ACCOUNT ARE IN DOUBT AND SHRI KARAM SURJAKANTI SINGH, THE CHAIRMAN OF M/S. LEARN HAD DENIED TO HAVE GIVEN ANY DONATIONS TO THE SOCIETY A ND ACCORDING TO HIM, ONE CHARTERED ACCOUNTANT WHO APPROACHED M/S. LEARN IN HELPING TO GET DONATIONS MIGHT BE BEHIND THE ENTIRE ACTIVITIES. THEREFORE, IN OUR CONSIDERED OPINION, F URTHER INVESTIGATIONS IN THE MATTER ARE REQUIRED TO BE CONDUCTED WITH REFERENCE TO ACTIVITIES OF T HE ASSESSEE SOCIETY. THE ASSESSING OFFICER SHOULD EXAMINE THE PAYING SLIPS FOR DEPOSITING THE CASH IN THE BANK ACCOUNT, THE APPLICATION FOR MAKING DEMAND DRAFTS, EXAMINING THE PERSONS MAKING DEPOSITS IN THE BANK ACCOUNT AND OBTAINING THE DEMAND DRAFTS FROM THE BANK. THE BALANCE SHEET OF M/S. LEARN HAS TO BE INVESTIGATED WHETHER THEY HAVE SHOWN THE BANK ACCOUNT WITH BANK OF INDIA GHAZIABAD AND THE DEPOSITS IN THE BANK ACCOUNT AS THEIR RECEIPTS AND HAD APPLIED THE INCOME BY WAY OF DONATIONS. SINCE INVESTIGATION HAD NOT BEEN CARRIED OUT BY THE ASSES SING OFFICER IN ORDER TO ARRIVE AT THE CORRECT DECISION, WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE 9 I. T. APPEAL NO. 2295 (DEL) OF 2010 DIRECTIONS TO EXAMINE THE CASE FURTHER IN THE LIGHT OF THE ABOVE OBSERVATIONS. THE ASSESSING OFFICER WILL CONDUCT THOROUGH ENQUIRIES FROM M/S. L EARN IN THE MATTER AND DECIDE THE ISSUE AFTER PROVIDING THE ASSESSEE A REASONABLE OPPORTUNI TY OF BEING HEARD. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 15 TH JULY, 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JULY, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.