DDIT(E), New Delhi V. New Anand Education Society, New Delhi

ITA 3037/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0947 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 07-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 01-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: RAVI GUPTA
• Keywords: Gift; Charitable institution; Maximum Marginal Rate; Accommodation entries; Benefit of exemption
• Section: 12A; 68; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT AN D SHRI C.L. SETHI : JUDICIAL MEMBER ITA NO. 3037/DEL/09 ASSTT. YR: 2003-04 DY. DIRECTOR OF INCOME-TAX (E), VS. NEW ANAND EDU CATION SOCIETY INV. CIR. II, NEW DELHI. 485, SAINIK VIHAR, NEW DELHI. PAN/ GIR NO. AAATSN2664D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI H.K. LAL DR . RESPONDENT BY : SHRI RAVI GUPTA ADV. O R D E R PER G.E. VEERABHADRAPPA, V.P : THIS APPEAL, BY THE DEPARTMENT, ARISES OUT OF ORDER DATED 13-4-2009 OF THE CIT(APPEALS) FOR THE A.Y. 2003-04. 2. THE ASSESSEE IS A TRUST, WHICH IS DULY REGISTERE D U/S 12A(A) OF THE INCOME-TAX ACT, 1961 AND IS GRANTED EXEMPTION. DISP UTES WERE RAISED AS TO THE DONATIONS RECEIPT OF RS. 7,65,467/-. THE ASSESS EE HAD FURNISHED DETAILS OF THE DONATIONS RECEIVED. ACCORDING TO THE ASSESSING OFFICER, THESE WERE ONLY ACCOMMODATION ENTRIES AS PER THE REPORT OF THE INVE STIGATION WING. THEREFORE, THE ASSESSING OFFICER SUBJECTED THE SAID DONATION RECEIPT FOR CHARGE OF TAX AT MAXIMUM MARGINAL RATE. THE CIT(APP EALS) HAS DISPOSED OFF THE ISSUE AND DELETED THE ADDITION BY MAKING FOLLOW ING OBSERVATION: 5.5. I HAVE CONSIDERED THE WRITTEN SUBMISSION, FAC TS BROUGHT ON RECORD BY THE AO IN THE ASSESSMENT ORDER. THE ACTION OF TH E ASSESSING OFFICER IS ITA 3037/DEL/09 NEW ANAND EDUCATION SOCIETY 2 NOT CORRECT. THE APPELLANT IS A CHARITABLE SOCIETY REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT. THE LAW IS SETTLED THAT IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE TRANSACTION WHICH RESULTS IN CASH CREDITS IN THE BOOKS OF ACCOUNT [SREELEKHA BANERJEE VS. CIT (1963) 49 ITR 112(SC)]. SUCH PROOF INCLUDES PROOF OF THE IDENTITY OF THE CREDITOR, THE CAPACITY OF SUCH CREDITOR TO LOAN OR GIFT THE MONEY AND LASTLY, THE GENUINENESS OF THE TRANSACTION. THE INITIAL BURDEN SQUARELY LIES UPON THE ASSESSEE TO EXPLAIN THE CREDIT ENTRY (KALE KHAN MOH D. HANIF VS. CIT (1963) 50 ITR 1). SINCE THE APPELLANT HAS DISCHARGE D ITS ONUS BY PROVING GENUINENESS OF AMOUNT OF DONATION OF RS. 765467/- ( DONATION OF RS. 708300/-, MEMBERS SUBSCRIPTION RS. 7000/- & BANK IN TEREST ON FDR RS. 50,167/- TREATING THE SAME AS INCOME FROM UNDISCLOS ED SOURCES AND ADDED TO THE INCOME OF THE APPELLANT U/S 68 OF THE INCOME TAX ACT BY THE AO SEEMS TO BE UNJUSTIFIED. 5.6. THUS, LOOKING TO THE FACTS OF THE CASE AND IN VIEW OF THE SUBMISSIONS MADE AND THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE, THE AO HAS ERRED IN MAKING THE ADDITION AND ASSESSING T HE INCOME AT RS. 765467/- AFTER DISALLOWING THE BENEFIT OF SECTION 1 1 & 12 OF THE INCOME TAX ACT. I, THEREFORE, DELETE THE ADDITION OF RS. 7 65467/- MADE U/S 68 AN CHARGING OF INTEREST OF RS. 140440/-. SINCE THE APP ELLANT HAS PROVED THAT THE DONATION RECEIVED HAS BEEN UTILIZED FOR THE OBJ ECT OF THE SOCIETY, I ALLOW THE BENEFIT OF SECTION 11 & 12 OF INCOME TAX ACT. 3. THE LEARNED DR STRONGLY SUPPORTED THE FINDINGS I N THE ORDER OF THE ASSESSING OFFICER AND THE ASSESSEE DREW SUPPORT FR OM THE DECISION OF THE SUPREME COURT IN THE CASE OF S.RM.M.CT.M. TIRUPANI TRUST VS. CIT (1998) 230 ITR 636; AND DIRECTOR OF INCOME-TAX (EXEMPTION) VS. KESHAV SOCIAL AND CHARITABLE FOUNDATION (2005) 278 ITR 152(DEL.). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE RECORDS. AS HELD BY THE JURISDICTIONAL HIGH COURT O F DELHI, TO OBTAIN BENEFIT OF EXEMPTION U/S 11 THE ASSESSEE IS REQUIRED TO SHO W THAT THE DONATIONS WERE VOLUNTARY. IN THE PRESENT CASE, THE ASSESSEE HAD NO T ONLY DISCLOSED THE ITA 3037/DEL/09 NEW ANAND EDUCATION SOCIETY 3 DONATION BUT ALSO SUBMITTED LIST OF DONORS. THE FAC T THAT COMPLETE LIST OF DONORS WAS NOT FILED OR THE DONORS WERE NOT PRODUCE D, DOES NOT NECESSARILY LEAD TO THE INFERENCE THAT THE ASSESSEE WAS TRYING TO INTRODUCE UNACCOUNTED MONEY BY WAY OF DONATION RECEIPTS. THIS IS MORE PAR TICULARLY SO ON THE FACTS OF THE CASE WHERE MORE THAN 70% OF THE DONATIONS WE RE APPLIED FOR CHARITABLE PURPOSES. THE FACTS OF THIS CASE ARE ALM OST IDENTICAL TO THE FACTS, WHICH WERE CONSIDERED BY THE DELHI HIGH COURT IN TH E CASE OF KESHAV SOCIAL & CHARITABLE FOUNDATION (SUPRA). THEREFORE, RESPECTFULLY FOLLOWING THE RATIO OF DECISION OF JURISDICTIONAL HIGH COURT WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THE ISSUE IN QUESTION. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 9-10-2009. SD/- SD/- ( C.L. SETHI ) ( G.E. VEERABHADRAPPA ) JUDICIAL MEMBER VICE PRESIDENT DATED: 9 TH OCT. 2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR