Budhuvir Educational Trust, Bartoli V. DCIT, Rourkela Circle, Rourkela

ITA 332/CTK/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1531 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-06-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 18-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: DAMODAR PATI
• Section: 12A; 13

Judgement Text

, . . , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH , CUTTACK , BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ./ ITA NO. 332 / CTK /20 1 9 ( / ASSE SSMENT YEAR : 20 11 - 20 12 ) SRI BUDHUVIR EDUCATIONAL TRUST, VILL - BARTOLI, PO - JABAGHAR, VIA - JHILPANI,SUNDARGARH, ODISHA - 769042 VS. DCIT, ROURKELA CIRCLE, ROURKELA, UDITNAGAR, DIST - SUNDARGARH / PAN NO. : A AATB 8001 A ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI DAMODAR PATI, AR /REVENUE BY : SHRI S.C.MOHANTY, DR / DATE OF HEARING : 28 / 06 /20 2 1 / DATE OF PRONOUNCEMENT 30 / 06 /20 2 1 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.08.2019 , PASSED BY THE CIT(A), SAMBALPUR FOR THE ASSESSMENT YEAR 2011 - 2012 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN EDUCATIONAL TRUST DERIVES INCOME FROM RUNNING A N INSTITUTION IN THE NAME OF BUDHUVIR INDUSTRIAL TRAINING CENTRE AT BARTOLI, JABAGHAT, BISRA, SUNDARGARH PROVIDING INDUSTRIAL TRAINING TO STUDENTS. THE ASSESSEE TRUST WAS REGISTERED VIDE REGISTRATION NO.842 ON 30/10/1997 AND RECONSTITUTED ITS INSTRUMENT VI DE NO.727 ON 12.12.2007. THE ASSESSEE TRUST IS ALSO REGISTERED UNDER SECTION 12A OF THE ACT. THE ASSESSEE TRUST FILED ITS RETURN OF INCOME ON 30.03.2013 DECLARING TOTAL INCOME AT RS.NIL, WHICH WAS PROCESSED U/S.143(1) OF THE ACT . DURING THE COURSE OF ASSES SMENT ITA NO. 3 3 2 /CTK/20 1 9 2 PROCEEDINGS, ON VERIFICATION OF BOOKS OF ACCOUNTS OF THE ASSESSEE, THE AO FOUND THAT THERE ARE FIVE ENTRIES ON 31.03.2011 AS DONATION RECEIVED IN LEDGER ACCOUNT AMOUNTING TO RS.18,97,271/ - AND THE SAME ARE ALSO NOT REPORTED IN AUDIT REPORT. IT WAS AL SO FOUND BY THE AO THAT THERE ARE NO ENTRIES REGARDING THE DETAILS OF DONOR(S) IN THE LEDGER ACCOUNT. IN REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE SUBMITTED THAT AMOUNT OF RS.18,97,271/ - WITH REGARD TO DONATION ENTRY WAS WRONGLY MADE BY THE ACCOUNTANT OF THE ASSESSEE IN THE DCR REGISTER, CASH BOOK AND LEDGER BOOK ON 31.03.2011. ACCORDINGLY, THE AO DID NOT CONVINCE WITH THE EXPLANATION OF THE ASSESSEE AND TAXED THE SAME U/S.115BBC OF THE ACT HOLDING THE SAME AS ANONYMOUS DONATION RECEIVED BY THE TRUST AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT THE DONATIONS RECEIVED BY THE ASSESSEE TRU ST HAVE COME FROM UNDISCLOSED SOURCES AND ARE NOT FROM THE PARENTS OF THE STUDENTS. ACCORDINGLY, THE CIT(A) WENT WITH THE FINDINGS OF THE AO TAXING THE SAME U/S.115BC OF THE ACT AS ANONYMOUS DONATION. 4. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TR IBUNAL WITH THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ORDER PASSED BY THE LEARNED BELOW FORUM, SUFFERS VICE OF ILLEGALITY AND ARBITRARINESS; 2. FOR THAT THE ADDITION OF RS.18,97,270/ - UNDER SECTION 115BBC OF I.T.ACT IS ILLEGAL AND ARBITRARY AS SU CH AMOUNT HAS NOT EXACTLY6 RECEIPT BY THE APPELLANT: ITA NO. 3 3 2 /CTK/20 1 9 3 3. FOR THAT THE AMOUNT ALLEGED TO HAVE BEEN RECEIVED HAS NOT BEEN ACTUALIZED AND DOES NOT HAVE THE ATTRIBUTES OF ANONYMOUS DONATION; 4. FOR THAT OTHER GROUNDS, IF ANY, SHALL BE URGED AT THE TIME OF HEA RING. 5. LD. AR OF THE ASSESSEE BEFORE US FILED HIS WRITTEN NOTES SUBMISSION, WHEREIN IN PARA 2, LD. AR STATED THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS, CASH BOOK, LEDGER, BILLS AND VOUCHERS, WHICH WERE DULY VERIFIED BY THE AO. WITH REGARD TO QUERY OF AO IN RESPECT OF ANONYMOUS DONATION, THE LD. AR SUBMITTED THAT THERE WAS A WRONG ENTRY AND THE ASSESSEE HAS NOT RECEIVED DONATIONS AND THE DONATIONS WERE NOT REALIZED AND THE ENTRY OF DONATIONS HAS BEEN CANCELLED. IT WAS ALSO SUBMITTED BY THE LD. AR THAT THE NAME AND ADDRESS OF THE DONORS WERE MENTIONED IN THE RECEIPTS AND MERE MENTION OF THE DONATIONS IN THE MONEY RECEIPTS DOES NOT AMOUNT TO COLLECTION AS THE MONEY RECEIPTS WERE NOT ISSUED TO ANYBODY. FURTHER THE LD. AR SUBMITTED THAT WHEN THE E NTRIES HAVE BEEN REVERSED TO THE ACCOUNT, THE ADDITION CANNOT BE MADE UNDER SECTION 115BBC OF THE ACT. IT WAS ALSO THE CONTENTION OF THE LD. AR THAT ALTHOUGH THE MONEY RECEIPTS DISCLOSES DIFFERENT DATES BUT SUCH AMOUNTS WERE NOT REALIZED. THE SAID AMOUNTS HAVE BEEN CREDITED IN DCR ON 31.03.2011 AND ALSO CONTRA ENTRY WAS MADE ON SAME DAY I.E. ON 31.03.2011. ACCORDINGLY, THE AMOUNT STANDS NULLIFIED DUE TO REVERSAL ENTRIES. THEREFORE, THE LD. AR SUBMITTED THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE C IT(A) DESERVES TO BE DELETED. 6. LD. COUNSEL OF THE ASSESSEE DREW OUR ATTENTION TOWARDS ASSESSEES PAPER BOOK PAGE NOS.21 TO 28 AND SUBMITTED THAT INITIALLY THERE WAS NEED ITA NO. 3 3 2 /CTK/20 1 9 4 OF FUNDS, THEREFORE, IT WAS DECIDED TO RECEIVE DONATIONS FROM THE STUDENTS AND ACCOR DINGLY DONATION RECEIPTS WERE PREPARED AND LEDGER ENTRY IN THE BOOKS OF ACCOUNTS WAS MADE BUT IMMEDIATELY AFTER MAKING ENTRIES IN THE BOOK OF ACCOUNTS, THE MANAGEMENT NOTICED THAT SINCE THE STUDENTS ARE FROM ECONOMICALLY WEAKER SECTIONS AND BELONGED TO TRI BAL AREA, THEREFORE, THEY MAY FACE HARDSHIPS IN GIVING SUCH DONATIONS, THEREFORE, IDEA WAS DROPPED AND ON THE VERY SAME DAY A REVERSE ENTRY WAS MADE IN THE BOOKS OF ACCOUNTS AND ALL RECEIPTS WERE CANCELLED ON THE VERY SAME DATE. LD. COUNSEL FURTHER SUBMIT TED THAT FROM THE COPIES OF THE CANCELLED RECEIPTS AVAILABLE AT PAGES 27 TO 297 OF THE ASSESSEES PAPER BOOK CLEARLY REVEALS THAT ALL RECEIPTS PREPARED BY THE ACCOUNTS DEPARTMENT HAVE BEEN CANCELLED AND ARE AVAILABLE IN THE RECORDS OF THE TRUST ALONG WITH THEIR RESPECTIVE COUNTERFOIL, THEREFORE, IT CANNOT BE PRESUMED THAT THE IMPUGNED AMOUNT WAS ACTUALLY RECEIVED BY THE TRUST. LD. COUNSEL VEHEMENTLY POINTED OUT THAT THESE ALL FACTS AND RELEVANT DOCUMENTS AND ENTRIES OF THE BOOKS OF ACCOUNTS WERE SHOWN TO TH E AUTHORITIES BELOW AND WERE NOT INCLUDED IN THE AUDITED REPORT BUT THESE FACTS WERE NOT RIGHTLY APPRECIATED BY THE AUTHORITIES BELOW IN THE RIGHT PERSPECTIVE, THEREFORE, THE IMPUGNED ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE WITHOUT ANY JUSTIFIE D REASON AND BASIS. LD. COUNSEL ALSO SUBMITTED THAT THE AO ONLY TOOK NOTE OF CREDIT ENTRY MADE REGARDING PROPOSED RECEIPTS OF DONATION BUT DID NOT PAY ANY HEED OR ATTENTION TO THE COUNTER ENTRY ON THE DEBIT SIDE WHEN THE IDEA WAS DROPPED BY THE OFFICE BEAR ER OF THE TRUST FOR RECEIVING DONATIONS FROM TRUST STUDENTS. LD. COUNSEL STRENUOUSLY CONTENDED THAT IT IS THE DUTY OF THE REVENUE AUTHORITIES TO CONSIDER WHOLE MATERIAL PLACED BEFORE THEM ITA NO. 3 3 2 /CTK/20 1 9 5 IN THE FORM OF DOCUMENTARY EVIDENCE AND BOOKS OF ACCOUNTS, ONLY SOME PART OF THE SAME IS CONSIDERED FOR MAKING ADDITION LEAVING ASIDE THE OTHER RELEVANT PARTS WHICH NULLIFIES THE ADDITION IS NOT FAIR ON THE PART OF THE REVENUE AUTHORITIES. LD. COUNSEL ALSO SUBMITTED THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT (A) HAS NO LEGS TO STAND IN VIEW OF THE ABOVE NOTED FACTUAL POSITION, THEREFORE, THE SAME KINDLY BE DELETED. 7 . REPLYING TO THE ABOVE, LD. DEPARTMENTAL REPRESENTATIVE(DR) STRONGLY SUPPORTED THE ASSESSMENT AS WELL AS FIRST APPELLATE ORDER AND SUBMITTED THA T THE LEDGER ENTRY SUBMITTED BY THE ASSESSEE BEFORE THIS BENCH WAS DIFFERENT FROM THE LEDGER PRODUCED BEFORE THE AUDITOR, THEREFORE, THIS WAS NOT NOTICED BY THE AUDITOR AND THE SAID IMPUGNED AMOUNT HAS NOT BEEN MENTIONED IN THE AUDITED REPORT. LD. DR ALSO SUBMITTED THAT THE AO HAS RIGHTLY MADE ADDITION U/S.115BBC OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), WHICH CANNOT BE DELETED OR DISTURBED IN ANY MANNER, THEREFORE, THE APPEAL OF THE ASSESSEE MAY KINDLY BE DISMISSED. 8 . PLACING REJOINDER TO THE ABO VE, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT SINCE THE TOTAL RECEIPTS OF THE ASSESSEE TRUST AS PER INCOME AND EXPENDITURE ACCOUNT AVAILABLE AT PAGE NO.6 OF THE PAPER BOOK WAS ONLY RS.59,27,060/ - OUT OF WHICH THE TRUST INCURRED EXPENDITURE AND MADE COMPLI ANCE REGARDING APPLICATION OF FUNDS LEAVING SURPLUS OF RS.5,47,497/ - HE ALSO SUBMITTED THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S.10(23) OF THE ACT AND IF THE IMPUGNED AMOUNT IS ALSO INCLUDED TO THE ACTUAL RECEIPTS THEN ALSO TOTAL AMOUNTS OF RECEIPT W OULD BE LESS THAN RS.1 CRORE, THEREFORE, THERE WOULD BE NO TAX IMPACT ON THE ASSESSEE AND IF THE ITA NO. 3 3 2 /CTK/20 1 9 6 IMPUGNED AMOUNT IS ALSO TAX FREE THEN WHAT IS THE GOOD REASON FOR THE TRUST TO HIDE THE DONATIONS WHICH HAS ACTUALLY RECEIVED BY IT. LD. COUNSEL SUBMITTED THAT NEITHER THE AO NOR THE LD. CIT(A) HAS MADE ANY EXERCISE TO VERIFY THESE FACTS FROM THE DONORS WHOSE NAMES AND ADDRESSES WERE AVAILABLE WITH THEM TO ENQUIRE AS TO WHETHER THEY ACTUALLY GAVE THE DONATIONS TO THE ASSESSEE TRUST OR NOT, THEREFORE, THE ACTION OF THE AUTHORITIES BELOW IS NOT ONLY UNREASONABLE BUT ALSO NOT SUSTAINABLE ON THE LEGAL FOOTINGS. LD. COUNSEL AGREED THAT THE REVENUE AUTHORITIES HAS POWER TO TAX THE AMOUNT OF ANONYMOUS DONATIONS RECEIVED BY ANY ASSESSEE OR ENTITY U/S.115BBC OF THE ACT BU T FOR TAXING SUCH AMOUNT WAS REQUIRED TO ESTABLISH OR DIG OUT ACTUAL RECEIPT OF ANONYMOUS DONATIONS AND WITHOUT SUCH EXERCISE NO ADDITION CAN BE MADE. 9 . ON CAREFUL CONSIDERATION OF THE ABOVE RIVAL SUBMISSIONS, I AM OF THE CONSIDERED OPINION THAT SINCE THE ASSESSEE TRUST IS ENJOINING REGISTRATION U/S.12A AS WELL AS U/S.80G(VI) OF THE ACT, WHICH ENTITLES THE TRUST EXEMPT FROM TAX U/S.11 TO 13 OF THE ACT AND ALSO BENEFIT OF SECTION 10(23) OF THE ACT. THIS FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY THE LD. DR APPEARED FOR THE DEPARTMENT. I AM ALSO SATISFIED THAT THE BOOKS OF ACCOUNTS INCLUDING LEDGER SHOWS ENTRY OF RECEIPT OF DONATIONS AND COUNTER ENTRY OF CANCELLATIONS OF TRANSACTIONS ON THE VERY SAME DATE AND ALL ORIGINAL RECEIPTS ALONG WITH COUNTERFOIL A RE ALSO AVAILABLE WITH THE TRUST IN ITS RECORD AND ORIGINAL PHOTOCOPY OF WHICH HAVE BEEN PLACED ON RECORD. I AM ALSO OF THE CONSIDERED VIEW THAT IF ANY DECISION HAS BEEN TAKEN BY THE TRUST IN THE INTEREST OF STUDENTS DROPPING ITS IDEA OF RECEIVING DONATION S FROM THE WEAKER SECTION OF THE SOCIETY LIVING IN THE TRIBAL AREA AND ITA NO. 3 3 2 /CTK/20 1 9 7 CONSEQUENTLY ENTRIES WERE MADE NEUTRALIZING AND NULLIFYING THE TRANSACTION OF RECEIPT OF THE DONATION, THEN IT HAS TO BE PRESUMED THAT NO AMOUNT WAS RECEIVED BY THE TRUST AND ENTRIES MA DE IN THE BOOKS OF ACCOUNTS AND AVAILABILITY OF THE ORIGINAL RECEIPTS ALONGWITH COUNTERFOIL ALSO SUPPORTS THE EXPLANATION AND STAND OF THE ASSESSEE. I AM ALSO OF THE CONSIDERED VIEW THAT DURING THE COURSE OF HEARING A SPECIFIC QUERY BY THE BENCH, LD. DR IN ALL FAIRNESS ACCEPTED THAT NEITHER THE AO NOR THE CIT(A) HAS MADE ANY EXERCISE TO VERIFY FROM THE SO - CALLED DONORS AS TO WHETHER THE Y ACTUAL LY GAVE ANY DONATION TO THE ASSESSEE TRUST OR NOT. WHEN THE ASSESSEE TRUST IS SUBMITTING ALL THE RECEIPTS, RELEVANT BOOKS OF ACCOUNTS AND DOCUMENTARY EVIDENCE BEFORE THE REVENUE AUTHORITIES AND WITHOUT VERIFYING THE SAME OBJECTIVELY SELECTING SOME ENTRIES AND LEAVING ASIDE THE OTHER ENTRIES AND DOCUMENTARY EVIDENCE EVEN WITHOUT VERIFYING THE ACTUAL RECEIPT OF DONATION FROM THE SO - CALLED DONORS, IF THE REVENUE AUTHORITIES PROCEEDS TO MAKE ANY ADDITION TREATING THE SAME AS ANONYMOUS U/S.115BBC OF THE ACT, THEN I HAVE NO HESITATION TO HOLD THAT THE ADDITION MADE IS WITHOUT ANY BASIS AND KEEPING ASIDE THE SOUND PRINCIPLES O F TAX JURISPRUDENCE, THE SAME CANNOT BE HELD AS SUSTAINABLE. ACCORDINGLY, GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED AND THE AO IS DIRECTED TO DELETE THE ADDITION. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON 30 / 06 / 20 2 1 . SD/ - ( CHANDRA MOHAN GARG ) / JUDICIAL MEMBER CUTTACK ; DATED 30 / 06 /20 2 1 . . / PKM , S R.P.S. ITA NO. 3 3 2 /CTK/20 1 9 8 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - . SRI BUDHUV IR EDUCATIONAL TRUST, VILL - BARTOLI, PO - JABAGHAR, VIA - JHILPANI, SUNDARGARH, ODISHA - 769042 2. / THE RESPONDENT - DCIT, ROURKELA CIRCLE, ROURKELA, UDITNAGAR, DIST - SUNDARGARH 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//