Nehru Yuva Avam, Mainpuri V. Addl.C.I.T., Range-2, Farrukhabad

ITA 248/AGR/2013

• Counselvise Citation: 24820314 RSA 2013
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: DEEPENDRA MOHAN
• Keywords: Charitable institution
• Section: 11; 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 248/AGRA/ 2013 ASSESSMENT YEAR: 2007-08 NEHRU YUVA AVAM GRAMIN SEWA VS. ADDL. COMMISSIONER OF INCOME TAX, SANSTHAN, FRIENDS COLONY, RANGE-2, FARRUKHABAD. NEW BASTI, BEWAR, MAINPURI. (PAN AAATN 3509 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPENDRA MOHAN, C.A. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 16.12.2013 DATE OF PRONOUNCEMENT : 20.12.2013 ORDER PER PRAMOD KUMAR, ACCOUNTANT MEMBER: THIS APPEAL IS DIRECTED AGAINST ORDER DATED 10 TH APRIL, 2013, PASSED BY THE COMMISSIONER (APPEALS), MUZAFFARNAGAR IN THE MATTER OF ASSESSMENT U/S 143(3)OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2 007-08. 2. GRIEVANCE RAISED BY THE ASSESSEE APPELLANT IS AS FOLLOWS :- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSIN G OFFICER TO DISALLOW 60% OF THE TOTAL EXPENSES DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT ON ADHOC BASIS AND FURTHER WENT WRONG ON FA CTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER TO R EFUSE EXEMPTION TO THE SOCIETY AS CLAIMED UNDER SECTION 11 OF THE INCO ME TAX ACT 1961. THE ORDER HAS BEEN PASSED WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ASSESSMENT FRAMED AND THE SAME ITA NO.248 /AGRA/2013 A.Y. 2007-08 2 CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 3. THE ASSESSEE SOCIETY IS A CHARITABLE INSTITUTION REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961. IT IS SAID TO BE ENGAGED IN S OCIAL WORK AND RUNNING OF A SCHOOL. IT APPEARS THAT THE ASSESSING OFFICER RECE IVED INFORMATION FROM INCOME TAX OFFICER, WARD 2(4), KANNAUJ RAISING DOUBTS ABOU T BONAFIDES OF THE ASSESSEES ACTIVITIES IN VIEW OF THE FACT THAT ONE SABIR KHAN, WHO HAD CLAIMED DEDUCTION U/S 80G ON THE STRENGTH OF DONATION RECEIPT ISSUED BY T HIS ASSESSEE, IS SAID TO HAVE ACCEPTED THAT THE DONATION CLAIM WAS BOGUS. THIS C ONFESSION WAS MADE IN THE COURSE OF SABIR KHANS ASSESSMENT FOR THE ASSESSMEN T YEAR 2007-08. IT WAS IN THIS BACKDROP THAT, DURING THE SCRUTINY ASSESSMENT PROCE EDING OF THIS ASSESSEE THAT ASSESSING OFFICER REQUIRED THE ASSESSEE TO SHOW CAU SE AS TO WHY NOT ALL THE DONATION RECEIPTS BE TREATED AS BOGUS. 4. ON THE COURSE OF THESE PROCEEDING, THE ASSESSEE SUBMITTED EXPENSE VOUCHERS AND DONATION RECEIPTS BUT THE ASSESSING OFFICER REJ ECTED THE SAME AND OBSERVED AS FOLLOWS :- ON 15.12.2009 SHRI S.K. SINGH AND MR. DEVANAND ADV OCATE PRODUCED BILLS AND VOUCHERS OF EXPENDITURE WHICH AR E PRODUCED IN TWO FILES CONTAINING 229 AND 274 PAGES. FROM PERUS AL OF BILLS AND VOUCHERS IT IS SEEN THAT VOUCHERS ARE SELF MADE IN HURRY, IN ONE HANDWRITING, NONE OF THE VOUCHER HAS REVENUE STAMP AFFIXED ON IT. THEY ALL APPEAR NEWLY MADE. AS FAR AS THE BILLS AR E CONCERNED THEY ARE ALL NEW, MOSTLY ARE CASH BILLS WITHOUT NAME OF THE PARTY MENTIONED ON THEM. EVEN THOSE BILLS ON WHICH THE NAME OF THE PARTY IS MENTIONED THE SERIAL NUMBER OF BILL IS NOT MENTIONED WHICH IS QUITE STRANGE. CONSIDERING THE NATURE OF BILLS AND VOUCHERS AS DES CRIBED ABOVE. I AM IMPOUND THESE BILLS AND VOUCHERS IN TWO FILE AS UNDER :- A. FROM PAGE NUMBER 1 TO 229 AND B. FROM PAGE NUMBER 1 TO 274 UNDER SECTION 131(3) OF THE IT ACT, 1961 WHEN CONFR ONTED WITH THESE FINDINGS SHRI S.K. SINGH STATED THAT HE HAD NOTHING TO SAY ON THIS ISSUE. ITA NO.248 /AGRA/2013 A.Y. 2007-08 3 CONSIDERING THE VERY REASON ON THE BASIS OF WHICH T HE CASE WAS SELECTED FOR SCRUTINY I.E. ALLEGATION OF BOGUS DONA TION AND THE NATURE OF BILLS AND AVOUCHES PRODUCED BY THE ASSESSEE IT I S CONCLUDED BEYOND ANY IOTA OF DOUBT THAT ASSESSEES IN INDULGING IN V ARIOUS MAL PRACTICES IN THE GARB OF CHARITY. THE ACCOUNTS ARE NOT MAINT AINED PROPERLY. THE EXPENDITURE INCURRED ARE NOT SUPPORTED BY GENUINE B ILLS AND VOUCHERS. THEREOF I HAVE NOT HESITATION IN CONCLUDING THAT AS SESSEE IS NOT INDULGING IN ANY CHARITABLE ACTIVITY. FURTHER CONS IDERING THE NATURE OF BILLS, VOUCHERS, AS HAS BEEN MENTIONED ABOVE I A M SATISFIED THAT BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE DO NOT REFLECT THE TRUE PICTURE OF TRANSACTIONS OF ACTIVITIES OF THE SOCIET Y. THEREFORE I REJECT THESE BOOKS OF ACCOUNT U/S 145(3) OF THE I.T. ACT, 1961 AND DISALLOW 60% OF ITS. SINCE ASSESSEE IS NOT INDULGING ANY CHARITABLE ACTI VITY ITS INCOME SHALL NOT BE EXEMPT U/S 11 OF IT ACT, 1961. THE INCOME OF THE ASSESSEE SHALL BE COMPUTED IN NORMAL COMMERCIAL MAN NER. PENALTY PROCEEDING U/S 271(1)(C) ALSO INITIATED FOR BOGUS N ATURE OF EXPENSES. AFTER DISCUSSION INCOME OF THE ASSESSEE IS CALCULAT ED AS UNDER :- TOTAL RECEIPTS AS PER INCOME/EXPENDITURE A/C RS.15 ,79,241/- ACCUMULATION ALLOWED 15% OF INCOME RS.2,36,886/- SHOULD HAVE APPLIED RS.13,42,354/- APPLIED BY ASSESSEE RS.15,54,660./- LOESS:- DISALLOWED 60% OF ABOVE RS.9,32,796/- RS.6,21,864/- BALANCE (1342354 621864) RS.7,20,490/- 5. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN SECOND APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. ITA NO.248 /AGRA/2013 A.Y. 2007-08 4 7. WE FIND THAT THERE IS AN INHERENT CONTRADICTION IN THE APPROACH OF THE ASSESSING OFFICER THAT ON ONE HAND HE TREATS ALL DO NATIONS AS A BOGUS AND YET HE INCLUDES ENTIRE DONATIONS AS INCOME OF THE ASSESSEE SOCIETY. IN CASE THESE DONATIONS WERE INDEED BOGUS, THE INFERENCE WHICH CO ULD BE REASONABLY DRAWN IS THAT THE FAKE DONATION EVIDENCES WERE GIVEN FOR A C ONSIDERATION AND ONLY SUCH AN ALLEGED CONSIDERATION COULD HAVE BEEN BROUGHT TO TA X, AND NOT THE ENTIRE AMOUNT OF DONATION RECEIPTS. EVEN SUCH A COURSE OF ACTION, H OWEVER, WOULD HAVE BEEN REVENUE NEUTRAL BECAUSE THE ASSESSING OFFICER HIMSE LF HAS ALLOWED 40% OF EXPENDITURE CLAIMED BY THE ASSESSEE AND THE CONSIDE RATION FOR ALLEGED BOGUS RECEIPTS WOULD NOT HAVE, BY ANY, STRETCH OF LOGIC, EXCEEDED 40%. ONCE THE ASSESSING OFFICER ACCEPTS GENUINENESS OF EXPENDITUR E TO THE EXTENT OF 40%, IT CANNOT BE SAID THAT NO CHARITABLE WORK WAS DONE. Y ET, HE ALSO HOLDS THAT THE ASSESSEE WAS NOT ENGAGED IN ANY CHARITABLE ACTIVITY . THIS APPROACH OF THE ASSESSING OFFICER IS LEGALLY UNSUSTAINABLE. IN ANY EVENT, THERE IS NO REASON TO HOLD EVEN DONATION RECEIPTS BEING BOGUS SAVE AND EXCEPT FOR STATEMENT BELIEVED TO HAVE BEEN MADE BY SABIR KHAN, WHICH IS NOT ON RECORD ANY WAY, FOR A SUBSEQUENT ASSESSMENT YEAR. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD GRIEVANCE OF THE ASSESSEE AND D ELETE IMPUGNED ADDITIONS/DISALLOWANCE MADE IN THE ASSESSMENT ORDER . THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 8. IN THE RESULT, THE APPEAL IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2013) SD/- SD/- (BHAVNESH SAINI) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 20.12.2013 PBN/* ITA NO.248 /AGRA/2013 A.Y. 2007-08 5 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY