Maa Jagat Janani Seva Trust, Nambira V. ACIT (Exemption Circle), Bhubaneswar

ITA 249/CTK/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0925 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-07-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 17-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Tangible material; Reason to believe; TDS
• Section: 147; 68; 143(3); 194J

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE MANISH AGARWAL Maa Jagat Janani Seva Trust, At- Bamebari, PS: Joda, Dist: Keonjhar PAN/GIR No (Appellant Per Bench This is an appeal filed by the assessee against the ord CIT(A), NFAC, Delhi for the assessment year 2. Shri P.K.Mishra, Kumar, ld CIT 3. It was submitted by ld AR that the assessee submission that the return of income for the relevant assessment year came to be filed by the assessee originally on 27.9.2014. The return of income IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL AND MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Maa Jagat Janani Seva -Nambira, PO: Bamebari, PS: Joda, Dist: Vs. Asst. Commissioner of Income Tax, Exemption Circle, Bhubaneswar PAN/GIR No.AADTM 1575 H (Appellant) .. ( Respondent Assessee by : Shri P.K.Mishra, Revenue by : Shri Sanjay Kumar, CIT Date of Hearing : 16/0 Date of Pronouncement : 16/0 O R D E R This is an appeal filed by the assessee against the ord CIT(A), NFAC, Delhi dated 7.6.2023 in Appeal No.NFAC/2013 for the assessment year 2014-15. P.K.Mishra, ld AR appeared for the assessee and Shri Kumar, ld CIT DR appeared for the revenue. It was submitted by ld AR that the assessee is a Trust. It was the submission that the return of income for the relevant assessment year came to be filed by the assessee originally on 27.9.2014. The return of income Page1 | 19 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER , ACCOUNTANT MEMBER 2015 Asst. Commissioner of Income Tax, Exemption Circle, Bhubaneswar Respondent) P.K.Mishra, Adv : Shri Sanjay Kumar, CIT DR 07/2024 /07/2024 This is an appeal filed by the assessee against the order of the ld NFAC/2013-14/10180318 the assessee and Shri Sanjay is a Trust. It was the submission that the return of income for the relevant assessment year came to be filed by the assessee originally on 27.9.2014. The return of income ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page2 | 19 filed by the assessee came to be processed and assessment came to be completed u/s.143(3) of the Act on 27.12.2016. It was the submission that in the impugned assessment order, which is assessment order u/s.147/144B of the Act, the Assessing Officer has mentioned that the original assessment order has been passed on 22.2.2016 which is an error. It was the further submission that when completing the original assessment u/s. 143(3) of the Act, the Assessing Officer has categorically mentioned that the books of account including bank accounts and same were examined and the bills/vouchers were produced for verification and the same were verified. It was the submission that subsequently on 25.3.2021, notice u/s.148 of the Act came to be issued, wherein, reasons were recorded as follows: “On verification of the income and expenditure account for the F.Y. 2013- 14 relevant to A.Y. 2014-15, it is seen that the assessee has received donation of Rs.43,16,39,378/- out of which a sum of Rs.22,67,194/- was unrealized during the said period as per minute of the meeting of the trust dated 4.4.2014. Hence, balance amount of donation of Rs.75,55,001/- (Rs.43,16,39,378 – (total credits of Rs.42,18,17,183 + Rs.22,67,194) appears to be anonymous donation in nature. ii. On perusal of 26AS of the donor, M/s. Essar Steel India Ltd., an amount of Rs.5,55,558/- was deducted u/s.194J for payments made to the assessee, which also indicates that there is no donation element involved in the transactions between the assessee and the donor. The receipts covered under section 194J are made against the specific services rendered as mentioned thereto. It is professional fees, hence amount of Rs.,5,00,00,000/- received from M/s. Essar Steel India Ltd., are not donation receipts in nature. Furthermore, no return is found to have been filed by M/s. Essar Steel for the A.Y. 2014-15. Hence, receipts of Rs.5,00,00,000/- is to be taxed as business/professional income. 3. The assessee has received Rs.5,00,00,000/- from A.V. Birla, a trust. However, the purpose of the trust and its registration is not furnished by the assessee. it is also found that no return is filed by M/s. A.V. Birla. Hence, amount receipts of Rs.5,00,00,000/- is to be taxed as business/professional income. ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page3 | 19 1. As per return of M/s. Essel Mining for the A.Y. 2014-15, no donation is given to the assessee. However, the assessee has claimed to have received donation of Rs.23,83,65,596/- from it. Hence, the transaction does not appear to be genuine and the same is unexplained cash credit within the meaning of section 68 of the Income tax Act, 1961. 1. Out of fund transfer of Rs.5,18,62,600/-, major payments were made to the following parties: Sl.No. Name of the party Amount in Rs. 1. Raghunath Mohapatra 50,00,000 2. Ashok Kumar Mahakud 80,00,000 3. Ranjit Kumar Barik 60,00,000 4. Bhaktabandhu Mohanta 55,00,000 5. Jethuram Mahanta 50,00,000 6. Rajendra Barik 25,00,000 7. Ranjan Mahakud 25,00,000 8. M/s. Thriveni Earth Motors Pvt Ltd. 15,79,000 9. M/s. Biraja Chemical 11,70,000 10. M/s. A.K.Traders 22,00,000 11. Barbil Cricket Association 8,00,000 12. Ashok Leyland 13,99,000 4,16,48,000 Out of the above party, Ashok Kumar Mahakud, Ranjit Kumar Barik and Jethuram Mahanta are related to the trustee or other organization of Shri Sanatan Mahakud, the Managing Trustee. Hence, transaction with the above parties appears to be not for the purposes of the trust. Rs.8,00,000/- is paid to Barbil Cricket Association, however, Rs.35,90,000/- has been claimed towards social/cultural project. Hence, there is excess claim of Rs.27,90,000/-. Rs.13,99,000/- is paid to Ashok Leyland which appears to be paid for acquisition of assets. However, Rs.71,82,265/- has been claimed towards acquisition of assets. Hence, acquisition of asset and depreciation claimed appears to be doubtful. Nature of payment to M/s. Thriveni Earthmovers Pvt Ltd., a donor of Rs.15,79,000/- appears to be not for the purpose of charity. Further, most of the expenses are found to be incurred in cash and no document is provided by the assessee with regard to payment to poor. The genuineness is doubtful which do not come under charitable purpose as per section 2915) of the I.T.Act. Hence, I have a reason to believe that the amount of Rs.36,92,89,597/- (anonymous donation of Rs.75,55,001 + payment u/s.194J of Rs.5,00,00,000 + donation from A.V. Birla of Rs.5,00,00,000 +donation from Esser Steel of Rs.23,83,65,596/- + payments to Ashok Kumar Mahakud, Ranjit ZKumar Barik and jethuram Mahanata of Rs.1,90,00,000 + excess claim towards social/cultural project of Rs.27,90,000 +payment not in the nature of charity of Rs.15,79,000 ) has escaped assessment within the meaning of section 147 of the Income tax Ac, 1961.” ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page4 | 19 4. It was the submission that consequently, approval had been obtained from the Joint Commissioner of Income Tax (JCIT) and the concerned Commissioner of Income Tax (CIT). Ld CIT DR has placed before us the copy of the approval u/s. 151 of the Income tax Act, 1961, which consists of 10 pages, which are as follows: ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page5 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page6 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page7 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page8 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page9 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page10 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page11 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page12 | 19 ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page13 | 19 5. It was the submission by ld AR that the proposal for reopening had been sent by the Assessing Officer on 22.3.2021 to JCIT (Exemption), Range, Bhubaneswar, who had approved the reopening on 22.3.2021 itself and recorded the satisfaction. It was the submission that the ld ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page14 | 19 CIT(Exemption), Hyderabad at Bhubaneswar had given the approval on 23.3.2021 being immediately succeeding day for the purpose of reopening. It was the submission that the approval given clearly shows non-application of mind. It was the submission that clearly the reopening was bad in law. It was the further submission that a perusal of reasons recorded also shows that the reopening has been done beyond four years period from the end of the relevant assessment year and in view of the proviso to section 147 of the Act, the Assessing Officer has not given any finding that there was failure on the part of the assessee to disclose truly and fully all materials facts necessary for its assessment originally. It was the submission that in view of the decision of the Hon’ble Supreme Court in the case of CIT v. Kelvinator of India Ltd.: 320 ITR 561(SC), the reopening is liable to be quashed and consequent assessment is also liable to be annulled. 6. In reply, ld CIT DR submitted that the assessee trust is a brain child of one Shri Sanatana Mahakud. It was the submission that said Sanataka Mahakud is a politician, who has started his career as a politician in Congress Party, then shifted to Independent and later on to Biju Janata Dal. It was the submission that said Sanatana Mahakud had captured few acres ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page15 | 19 of government land, put up a temple under the name of Maa Jagat Janani and had also used part of the land for building his palace house. It was the submission that subsequently through litigation and government action, illegal encroachment was removed by which time he had opened the impugned trust under the name of Maa Jagat Janani Seva Trust. It was the submission that under the guise of the trust, the said Sanatana Mahakud used to collect money and the same were used for his personal benefits and the benefits of his near and dear ones. It was the submission that said Managing Trustee of the assessee trust has been searched by the various Government Authorities and during the year 2023, he was also searched by the Income tax Department. It was the submission that search assessments are still pending. It was the submission that under these circumstances, the past records of the assessee were also examined and on account of said search in 2023, evidences have come into forefront that the assessee is using the impugned trust for carrying out illegal activities. It was the submission that the reopening has been done after obtaining necessary approval and just as the Tribunal is disposing off more than 5-8 appeals in a day, it was very much possible for the JCIT and CIT to examine the files of the assessee and given approval within a day. It was the submission that failure of the assessee to provide all the details was evident from the fact that many of the donors had not claimed the donation given to the assessee trust in their returns of ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page16 | 19 income or many of them have not filed their returns of income. It was the submission that the reopening is liable to be upheld. 7. We have considered the rival submissions. At the outset, a perusal of page 6 para 4 of the approval u/s.151 of the Act as provided by ld CIT DR shows that the enquiries made by the Assessing Officer as the sequel of the information collected/received is remarked as not applicable. Thus, clearly, there is no action done by the Assessing Officer in regard to collection of information for the purpose of reopening. A perusal of the reasons recorded as stated in para 6 of the said approval and which has been extracted above, clearly shows that the said reopening is on the basis of verification of the income and expenditure account. This income and expenditure account was very much with the Assessing Officer in the course of original assessment. The second evidence which has been considered by the Assessing Officer is 26AS of the donor Essar Steel India Ltd. This evidence was also available in the course of original assessment proceedings. This is excluding the reasons that just because Essar Steel India Ltd., has not filed its return of income or claimed the same as the donation, responsibility cannot be put on the assessee. Another reason given by the Assessing Officer is that TDS has been deducted by Essar Steel India Ltd., u/s.194J. The assessee has claimed TDS in his original return and this information was very much available in the original assessment proceedings. The third reason mentioned by the Assessing Officer is in ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page17 | 19 regard to amount of Rs.5,00,00,000/- received by A.V.Birla Trust and the details of the same had not been provided by the assessee nor the said trust has filed in its return. These are also reasons not associated to the assessee or under the control of the assessee. The other reason mentioned by the Assessing Officer is that payments had been made to various persons who are allegedly related to Sanatana Mahakud, the Managing Trustee of the assessee trust. What is the relationship is not coming out and as mentioned earlier, the Assessing Officer has not done any investigation as he has himself agreed in para 4 of the proforma for approval. Thus, clearly, some reasons have been raked up for the purpose of reopening. Further, it may be mentioned here that page 2 para 2 of the proforma talks of investigation report having been received in the assessment years 2013-14 & 2014-15 and clearly it is this investigation report which has raised the said allegation which have been borrowed by the Assessing officer as reasons recorded for the purpose of reopening. 8. Now, coming to the satisfaction as recorded by the JCIT, there is nothing available or discernible from the said satisfaction recorded by the JCIT or by ld CIT(E), Hyderabad at Bhubaneswar which gives indication that either of them have verified the records much less examined the issues before granting the satisfaction or the sanction for reopening. This view of ours that the reopening is not permissible on the basis of borrowed satisfaction of the Investigation Wing finds support from the decision of ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page18 | 19 Hon’ble Delhi High Court in the case of Sarthak Securities Pvt Ltd., vs ITO, 329 ITR 110 (Del). 9. A perusal of the decision of Hon’ble Supreme court in the case of Kelvinator of India Ltd (supra) has categorically held that after 1.4.1989, Assessing Officer has power to re-open the assessment, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment and such reasons must have a live link with the formation of the belief. As mentioned earlier, in the present case, at the cost of repetition, the reasons recorded are borrowed from the Investigation Reports, the Assessing Officer himself categorically admits in para 4 that there are no enquiries made by the Assessing Officer as a sequel to the information collected/received. A perusal of the investigation report provided by the Investigation Wing as has been recorded by the Assessing Officer also does not point out any tangible material having live link with the assessee much less on the failure on the part of the assessee. This being so, for both the reasons mentioned above, the reassessment as done by the Assessing officer by issuance of notice u/s.148 of the Act stands quashed. Consequently, the assessment order passed u/s.147/144B of the Act also stands quashed. ITA No. 249/CTK/2023 Assessment Year : 2014-2015 Page19 | 19 10. In the result, appeal of the assessee stands allowed. Order dictated and pronounced in the open court on 16/07/2024. (Manish Agarwal) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 16/07/2024 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, CUTTACK 1. The Appellant : Maa Jagat Janani Seva Trust, At-Nambira, PO: Bamebari, PS: Joda, Dist: Keonjhar 2. The Respondent: Asst. Commissioner of Income Tax, Exemption Circle, Bhubaneswar 3. The CIT(E), Hyderabad 4. Pr.CIT, Bhubaneswar 5. DR, ITAT, 6. Guard file. //True Copy//