M/s BNM Charities, Bangalore V. DDIT, Bangalore

ITA 253/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63748 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIII
• Assessee Lawyers: GURUSWAMY ITP
• Section: 143(3); 12A

Judgement Text

PAGE 1 OF 8 ITA NO.253 /BANG/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.253/BANG/2012 (ASST. YEAR 2007-08) M/S BNM CHARITIES, PO BOX NO.7087, 12 TH MAIN, 27 TH CROSS, BANASHANKARI II STAGE, BANGALORE70. PA NO.AAATB5970A VS THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS), CIRCLE- 17(1), BANGALORE-1. (APPELLANT) (RESPONDENT) DATE OF HEARING : 22.10.2012 DATE OF PRONOUNCEMENT : 26.10.2012 APPELLANT BY : SHRI GURUSWAMY, ITP RESPONDENT BY : SHRI ETWA MUNDA, CIT-III OR DER PER GEORGE GEORGE K : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, BENGALURU DATED 13/09/2010. THE RELEVANT ASSESSMENT YEAR IS 2007-2008. 2. THE SOLITARY ISSUE THAT ARISE FOR OUR CONSIDERAT ION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.2,11,57,000/- BEING ADDITION MADE UNDER SECTION 115BBC OF THE ACT. PAGE 2 OF 8 ITA NO.253 /BANG/2012 2 3. THERE IS A DELAY OF 489 DAYS IN FILING THIS APPEA L. THIS APPEAL OUGHT TO HAVE BEEN FILED ON OR BEFORE 19/10/2010, B UT THE SAME WAS FILED ONLY ON 22/2/2012. AN APPLICATION IS FILED UNDER SE CTION 253(3) OF THE ACT ALONG WITH AN AFFIDAVIT OF THE SECRETARY OF THE ASSE SSEE TRUST FOR CONDONATION OF DELAY. IT WAS SUBMITTED IN THE AFFI DAVIT, THE DEPONENT (SRI NARAYAN RAO MAANAY, THE SECRETARY OF THE TRUST), WHO I S THE KEY PERSON LOOKING AFTER THE AFFAIRS OF THE ASSESSEE TRUST WAS SUFFERING FROM HEART AILMENT AND COULD NOT FILE THE APPEAL WITHIN THE PR ESCRIBED TIME LIMIT. A CERTIFICATE FROM THE MEDICAL SUPERINTENDENT OF SRI JAYADEVA INSTITUTE OF CARDIOVASCULAR SCIENCES & RESEARCH WAS ALSO PRODUCE D, WHEREIN IT WAS STATED THAT SRI NARAYAN RAO MAANAY (SECRETARY OF THE ASSESSEE TRUST) WAS UNDER CARDIAC CARE AND TREATMENT IN SRI JAYADEVA INS TITUTE OF CARDIOVASCULAR SCIENCES & RESEARCH FROM SEPTEMBER, 2010 TO FEBRUARY, 2011. IT WAS FURTHER SUBMITTED IN THE AFFIDAVIT TH AT FROM FEBRUARY, 2011, SRI NARAYAN RAO MAANAY WAS UNDER MEDICAL REST AND COU LD NOT ATTEND THE DAY-TO-DAY AFFAIRS OF THE TRUST TILL FEBRUARY, 2012. IT WAS PRAYED THAT THE DELAY OF 16 MONTHS IN FILING THE APPEAL IS NEITHER D ELIBERATE NOR INTENTIONAL BUT FOR BONAFIDE REASONS AND THE ASSESSEE WAS PREVE NTED BY SUFFICIENT CAUSE. IN THIS CONTEXT, THE LEARNED COUNSEL FOR TH E ASSESSEE RELIED ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF C OLLECTOR, LAND ACQUISITION V MST. KATIJI REPORTED IN 167 ITR 471. 3.1 THE LEARNED DR PRESENT OPPOSED THE CONDONATION OF DELAY. 3.2 IN THIS CASE A CERTIFICATE FROM THE MEDICAL SU PERINTENDENT OF SRI JAYADEVA INSTITUTE OF CARDIOVASCULAR SCIENCES & RESEARCH HAS BEEN PRODUCED BY THE ASSESSEE WHEREIN IT WAS STATED THAT THE ASSESSEE WAS UNDER PAGE 3 OF 8 ITA NO.253 /BANG/2012 3 THE TREATMENT IN THE HOSPITAL FROM SEPTEMBER, 2010 TO FEBRUARY, 2011. IN THE AFFIDAVIT OF SRI NARAYAN RAO MAANAY, IT IS STATED THAT HE WAS UNDER MEDICAL REST FROM FEBRUARY, 2011 TILL FEBRUARY, 2012 AND DID NOT ATTEND THE DAY-TO-DAY AFFAIRS OF THE ASSESSEE TRUST. THE HONBL E APEX COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION V MST. KATIJI H AD LAID DOWN THE GUIDELINES IN ADJUDICATING THE ISSUE CONCERNING THE DELAY IN PR ESENTING THE APPEAL BEYOND THE PRESCRIBED TIME. THE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE APEX COURT REFERRED SUPRA IS REPRODUCED BEL OW:- THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING SECTION 5 OF THE LIMITATION ACT, 19 63 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTIC ES TO PARTIES BY DISPOSING OF MATTERS ON MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COUR TS TO APPLY THE LAW IN A MEANINGFUL MANNER, WHICH SUB-SERV ES THE ENDS OF JUSTICES THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT IS COMM ON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING JUSTIFIAB LY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COUR T. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN HIERARCHY. AND SUCH LIBERAL APPROACH IS ADOPTED ON PRINCIPLE AS IT IS REALIZED THAT:- I) ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL/PETITION LATE. II) REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. III) WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION IS PITTED AGAINST EACH OTHER, THE PAGE 4 OF 8 ITA NO.253 /BANG/2012 4 CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. IV) THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALAFIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT, HE RUNS A SERIOUS RISK. V) IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE O N TECHNICAL GROUNDS, BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 3.3 IN THE INSTANT CASE, WE ARE OF THE OPINION THA T THE DELAY IN FILING THE APPEAL WAS NEITHER DELIBERATE NOR INTENT IONAL, BUT IT WAS FOR BONAFIDE REASONS AND THE ASSESSEE TRUST WAS PREVENT ED BY SUFFICIENT CAUSE IN FILING THE APPEAL ON TIME. THEREFORE, FOR ADVA NCEMENT OF SUBSTANTIAL JUSTICE, THE MATTER HAS TO BE CONSIDERED ON MERITS AND HENCE, WE CONDONE THE DELAY IN FILING THE APPEAL AND PROCEED TO DISPOS E OFF THE CASE ON MERITS. 4. THE RELEVANT FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE IS A TRUST RUNNING SEVERAL EDUCATION INSTITUTIONS. IT IS CONSTITUTED FOR PROVIDING EDUCATION FROM MONT ESSORI TO COLLEGE LEVEL. THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT VIDE ORDER DATED 18/9/1975. THE TRUST FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 23.3.2009 DECLARING NIL I NCOME. THE ASSESSING OFFICER COMPLETED SCRUTINY ASSESSMENT UNDE R SECTION 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.2,11,57, 000/- AS AGAINST THE DECLARED NIL INCOME. THE REASON FOR THE ADDITION W AS THAT, THE ASSESSING PAGE 5 OF 8 ITA NO.253 /BANG/2012 5 OFFICER ON PERUSAL OF INCOME AND EXPENDITURE STATEM ENT, NOTICED THAT THE ASSESSEE HAD RECEIVED THE FOLLOWING AMOUNTS:- A) DEVELOPMENT FUND RS. 32,87,000.00 B) DEVELOPMENT FUND (BNMIT) RS.1,78,70,000.00 TOTAL RS.2,11,57,000.00 4.1 THE CONSOLIDATED AMOUNT TO THE TUNE OF RS.2,11 ,57,000/- WAS TREATED AS ANONYMOUS DONATION AND THE SAME WAS SUBJE CT TO TAX UNDER SECTION 115BBC OF THE ACT. THE ASSESSING OFFICER H ELD THAT THE ASSESSEE TRUST COULD NOT PRODUCE ANY DETAILS REGARDING THE AL LEGED RECEIPTS AND OFFERED THE SAME FOR TAXATION VOLUNTARILY. 4.2 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY. 4.3 IT WAS SUBMITTED BEFORE THE FIRST APPELLATE AU THORITY THAT THE ASSESSING OFFICER HAS NOT PROVIDED SUFFICIENT AND A DEQUATE OPPORTUNITY FOR PRODUCING THE DETAILS AND THE ASSESSING OFFICER HAS MISDIRECTED HIMSELF TO HOLD THAT THE ASSESSEE TRUST HAD OFFERED THE ALLEGE D RECEIPTS FOR TAXATION. 4.4 THE CIT(A) CONFIRMED THE ADDITION MADE BY THE A SSESSING OFFICER ON THE GROUND THAT THE AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE TRUST COULD NOT PROVE THE IDENTIFY OF THE PERSONS WH OSE NAMES WERE RECORDED IN THE REGISTER TO SUPPORT THE DONATION RE CEIVED. THE CIT(A) FURTHER HELD THAT THE AR OF THE ASSESSEE TRUST WAS NOT IN A POSITION TO FURNISH ANY DETAILS BEYOND THE DONATION REGISTER AND HENCE, THE APPEAL OF THE ASSESSEE DESERVES TO BE DISMISSED. PAGE 6 OF 8 ITA NO.253 /BANG/2012 6 4.5 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US . 4.6 THE LEARNED AR SUBMITTED THAT THE ASSESSING OF FICER DID NOT GIVE REASONABLE OPPORTUNITY TO PRODUCE NECESSARY PROO F SINCE THE ONLY OPPORTUNITY OF HEARING WAS GIVEN ON 31.12.09 AND THE ORDER WAS PASSED ON THE VERY SAME DATE. IT WAS FURTHER SUBMITTED THAT T HE ASSESSEE TRUST HAD NOT AGREED VOLUNTARILY TO ASSESS THE SAME AS ITS INC OME. IT WAS SUBMITTED THAT THE NECESSARY DETAILS WITH REGARD TO THE RECEIP TS OF DONATION WAS AVAILABLE WITH THE ASSESSEE SINCE THESE DONATIONS W ERE RECEIVED FROM MANY OF THE STUDENTS ADMITTED INTO THE EDUCATION INSTITU TION AND THEREFORE, THE IDENTIFY OF THESE STUDENTS IS NOT DIFFICULT. IT WA S FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 115BBC OF THE ACT WERE NO T APPLICABLE TO THE VOLUNTARY CONTRIBUTIONS RECEIVED PRIOR TO 1/4/2007 A S THE SAID PROVISION IS APPLICABLE FROM 1/4/2007 ONWARDS. 4.7 THE LEARNED DR SUPPORTED THE ORDER OF THE INCO ME TAX AUTHORITIES. 4.8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. IN THE INSTANT CASE, IT WAS SUBMITTED T HAT THE RECEIPT BOOK/DONATION REGISTER MAINTAINED BY THE ASSESSEE TR UST CLEARLY DEPICTS THE IDENTITY AND THE NAMES AND ADDRESS OF THE DONORS AS REQUIRED UNDER SUB SECTION 3 OF SECTION 115BBC OF THE ACT. WE NOTICED FROM THE ASSESSMENT ORDER THAT ONLY ONE HEARING WAS AFFORDED TO THE ASSE SSEE TRUST AND HENCE, IT WAS NOT IN A POSITION TO FURNISH THE DETAILS WITH R EGARD TO THE IDENTITY OF THE DONORS. THE FIRST APPELLATE AUTHORITY STATED THAT T HE ASSESSEE TRUST WAS NOT IN A POSITION TO FURNISH ANY FURTHER DETAILS APA RT FROM THE DONATION PAGE 7 OF 8 ITA NO.253 /BANG/2012 7 REGISTER. THE LEARNED AR PRESENT BEFORE US HAD STA TED THAT THE IDENTITY OF THE DONORS, WHO ARE NONE OTHER THAN THE STUDENTS OF THE EDUCATION INSTITUTION, CAN EASILY BE IDENTIFIED AND PRAYED THAT IN THE INTEREST OF JUSTICE AND EQUITY, ONE MORE OPPORTUNITY MAY BE GRA NTED. WE FEEL THE ASSESSEE TRUST SHOULD BE GRANTED ONE MORE OPPORTUNI TY TO PROVE THE IDENTITY OF THE DONORS IN THE INTEREST OF SUBSTANTIAL JUSTIC E AND EQUITY. THEREFORE, THE ISSUE IS RESTORED TO THE ASSESSING OFFICER AND THE ASSESSEE TRUST IS DIRECTED TO COOPERATE WITH THE DEPARTMENT FOR EXPED ITIOUS DISPOSAL OF THE MATTER AND SHALL NOT SEEK UNNECESSARY ADJOURNMENT WI THOUT ANY VALID REASONS. 4.9 BEFORE PARTING, WE WOULD LIKE TO STATE THAT TH E ASSESSEES CONTENTION THAT PROVISIONS OF SECTION 115BBC OF THE ACT ARE NOT APPLICABLE TO THE VOLUNTARY CONTRIBUTION RECEIVED PRIOR TO 1/4/200 7 IS WITHOUT ANY MERIT. THE SECTION WAS INTRODUCED BY FINANCE ACT, 2006 W.E. F. 1/4/2007 AND HENCE, THE ASSESSEE WAS AWARE OF THE RELEVANT PROVISIONS W HEN THE FINANCE BILL WAS INTRODUCED AND WHEN IT WAS ENACTED IN MAY, 2006. S INCE THE SECTION 115BBC WAS INTRODUCED W.E.F. 1/4/2007, THE SAME WILL HAVE APPLICATION FOR AND FROM THE ASSESSMENT YEAR 2007-08. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF OCTOBER, 2012 SD/- SD/- (JASON P BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER PAGE 8 OF 8 ITA NO.253 /BANG/2012 8 COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.