Social Action for Rural Developmet (SAFARD), Kandhamala V. DCIT, Berhampur Circle, Berhampur

ITA 343/CTK/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3870 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

1 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 343 /CTK/2016 ASSESSMENT YEAR : 2010 - 2011 SOCIAL ACTION FOR RURAL DEVELOPMENT (SAFRD), AT: KUMBHARKUPA, PO: MALLIKAPADI, DIST: KANDHAMAL VS. DCIT, BERHAMPUR CIRCLE, AT/PO: BERHAMPUR, DIST: GANJAM PAN/GIR NO. AAHTS 4185 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MIKSHRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 12 /04 / 2017 DATE OF PRONOUNCEMENT : /04 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3, BHUBANESWAR , DATED 3.5.2016 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT( A) ERRED IN TREATING THE DIFFERENTIAL COST OF RS.33,50,068.00 IN PURCHASE OF PLOT U/S.69 OF THE ACT. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE 2 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE SOCIETY REGISTERED UNDER SECTION 12AA OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT THE INCOME OF THE SOCIETY IN THE YEAR UNDER CONSIDERATION IS ELIGIBLE FOR EXEMPTION U/S.11 OF THE ACT. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE CLAIMED TO HAVE PURCHASE D A PLOT OF LAND OF RS.7,90,000 / - FOR THE PURPOSE OF CONSTRUCTING ORPHAN HOST EL FOR SCHEDULED TRIBE STUDENTS AND INCURRED RS.4,35,932/ - TOWARDS DEVELOPMENT EXPENSES OF LAND AGGREGATING TO RS.12,25,932/ - . THE SAID PLOT OF LAND WAS PURCHASED VIDE THREE REGISTERED SALE DEEDS. ON GOING THROUGH THE REGISTERED SALE DEEDS, THE ASSESSING OFFICER OBSERVED THAT AS PER THE SALE DEED , THE SALE CONSIDERATION PAID FOR THE SAID PLOT S OF LAND WAS RS.45,76,000/ - . THUS, HE OBSERVED THAT THE INVEST MENT IN THE PURCHASE OF LAND AND DEVELOPMENT WAS RS.12,25,932/ - AND THAT INESTMENT TO THE EXTENT OF RS.35,40,068/ - WAS NOT RECORDED IN THE BOOKS OF ACCOUNT BY THE APPELLANT SOCIETY. HE, THEREFORE, ADDED THE SAME TO THE INCOME OF THE APPELLANT ON THE GROUN D THAT NO SATISFACTORY EXPLANATION ABOUT THE SOURCE OF THE SAID INVESTMENT WAS FURNISHED BY THE ASSESSEE. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE POINTED OUT THAT THE AFFIDAVITS OF THREE SELLERS OF THE LAND IN QUESTION WERE FILED BEFORE THE CIT(A). IN THE AFFIDAVITS, ALL THE THREE SELLERS HAVE DULY ADMITTED IN THE SWORN STATEMENT THAT ALTHOUGH THE CONSIDERATION AMOUN T STATED IN THE SALE DEED WERE STATED AT THE MARKET VALUE OF THE LAND BUT AS THE LAND WAS TO BE 3 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 USED FOR ORPHAN HOSTEL OF SCHEDULE TRIBE STUDENTS, THEY ACCEPTED THE LESSER AMOUNT AS CONSIDERATION OF THE LAND AND HANDED OVER THE POSSESSION TO THE ASSESSEE F OR LESSER CONSIDERATION. AS PER THE AFFIDAVITS, THE AMOUNT OF ACTUAL CONSIDERATION RECEIVED BY THEM WERE AS UNDER: SL.NO. NAME OF THE SELLER MARKET VALUE ACTUAL CONSIDERATION RECEIVED 1. SH. JAYA PRAKASH NAYAK PLOT NO.1474, KH.NO.72 13,75,000 1,90,000 2. SH. FRANKLINE NAIK, PLOT NO.1474, KHATA NO.695 18,48,000/ - 13,53,000/ - 6,00,000/ - 4. COST OF LAND DEVELOPMENT 4,35,932/ - 45,76,000/ - 12,25,932/ - 6. LD A.R. EXPLAINED THAT NO DEFECT IN THE SAID AFFIDAVITS COULD BE POINTED OUT BY THE CIT(A) AFTER DUE VERIFICATION OF THE SAME. NO MATERIAL HAS BEEN BROUGHT ON RECORD EXCEPT THE REGISTERED SALE DEED TO SHOW THAT THE ASSESSEE ACTUALLY PAID EVEN A SINGLE RUPEE MORE THAN THE AMOUNT DISCLOSED BY THE ASSESSEE IN ITS AUDITED ACCOUNT. HE EXPLAINED THAT AS THE STAMP DUTY WAS PAYABLE ON THE MARKET VALUE OF THE LAND AND, THEREFORE, FOR THAT PURPOSE ONLY THE MARKET VALUE WAS STATED AS THE AMOUNT OF CONSIDERATION IN T HE REGISTERED SALE DEED, OTHERWISE, THE REGISTERED AUTHORITY WOULD NOT HAVE REGISTERED THE SAME. WHEN THE SELLER HAS IN THE SWORN STATEMENT ADMITTED THAT THEY HAVE NOT RECEIVED MORE THAN WHAT WAS DISCLOSED IN THE RETURN OF INCOME, THE CIT(A) WAS NOT JUSTI FIED IN ABOVE CIRCUMSTANCES IN 4 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 HOLDING THAT THE ASSESSEE ACTUALLY INVESTED MORE AMOUNT WITHOUT BRINGING ANY OTHER MATERIAL ON RECORD. 7. HE ALSO POINTED OUT THAT THE CIT(A) HAS HELD THAT RS.45,76,000/ - , WHICH REPRESENTED THE CONSIDERATION AMOUNT MENTIONE D IN THE REGISTERED SALE DEED AS ACTUAL APPLICATION FOR CHARITABLE PURPOSES BY THE ASSESSEE. THEREFORE, HE ALTERNATIVELY ARGUED THAT EVEN IF THE DIFFERENCE AMOUNT OF RS.33,50,068/ - IN QUESTION IS TREATED AS DONATION BY THREE SELLERS TO THE ASSESSEE SOCIETY AND, THEREFORE, INCOME OF THE ASSESSEE SOCIETY THEN ALSO AS THE SAID AMOUNT WAS UTILISED FOR CHARITABLE PURPOSES, THE SAME WILL NOT HAVE ANY EFFECT ON THE TAXABLE INCOME OF THE ASSESSEE. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER A UTHORITIES. 9. I FIND THAT IN THE AFFIDAVITS, THREE SELLERS HAVE CATEGORICALLY ADMITTED THAT THEY HAVE ACTUALLY RECEIVED AGGREGATE AMOUNT OF RS.7,90,000 / - IN PLACE OF RS.45,76,000/ - STATED IN THE REGISTERED SALE DEED. THE ASSESSEE ALSO EXPLAINED THE REASO N AND CIRCUMSTANCES IN WHICH THE AMOUNT OF RS.45,76,000/ - WAS MENTIONED IN THE SALE DEED WHEREAS THE ACTUAL CONSIDERATION PAID BY THE APPELLANT WAS RS.7,90,000 / - ONLY. I FIND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE ABO VE MATERIAL BROUGHT ON RECORD BY THE ASSESSEE. 10. IT IS A SETTLED POSITION OF LAW THAT A PLAUSIBLE EXPLANATION GIVEN BY THE ASSESSEE CANNOT BE REJECTED BY THE REVENUE WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORD TO SHOW WHY THE PLAUSIBLE EXPLANATION W AS INCORRECT . 5 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 IN THE INSTANT CASE, I FIND THAT NO POSITIVE MATERIAL HAS BEEN BROUGHT ON RECORD AFTER VERIFICATION TO SHOW THAT THE ASSESSEE MADE ACTUAL PAYMENT OF A NY AMOUNT MORE THAN RS.7,90,000/ - FOR ACQUISITION OF LAND AND RS.4,35,932/ - TOWARDS DEVELO PMENT EXPENSES FOR ACQUIRING THE LAND IN QUESTION. IN THE LIGHT OF MY ABOVE VIEW, THE ALTERNATIVE ARGUMENT OF THE ASSESSEE IS NOT REQUIRED TO BE ADJUDICATED. IN THE CIRCUMSTANCES, THE ADDITION MADE U/S.69 OF THE ACT OF RS.30,50,068/ - IS UNTENABLE . HE NCE, I DELETE THE ADDITION OF RS.30,50,068/ - AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 11. THE SECOND ISSUE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.7,78,162/ - IN THE HANDS OF THE ASSESSEE BY APPLYING SECTION115BBC OF THE ACT. 12. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED DONATION & SUBSCRIPTION OF RS.7,78,162/ - . IN O RDER TO VERIFY THE SAME FROM DOCUMENTARY EVIDENCE, THE ASSESSING OFFICER REQUIRED PHOTO IDENTITY PROOF OF THE DONORS. THE ASSESSEE FILED LIST OF DONORS WITH NAME AND ADDRESS. ON VERIFICATION OF THE LIST, THE ASSESSING OFFICER REPETITION OF DONATION BY SA ME PERSONS IN MANY CASES. HE ALSO FOUND THAT THE REGISTRATION NUMBER AND DATE OF REGISTRATION U/S.80G(5)(VI) OF THE I.T.ACT, 1961, ETC ARE NOT MENTIONED IN DONATION RECEIPT VOUCHER. THEREFORE, HE ADDED RS.7,78,162/ - 6 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 AS ANONYMOUS DONATION AND TAXED THE SA ME AS PER PROVISIONS OF SECTION 115BBC OF THE ACT. 13. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE ALLEGED SUM WAS RECEIVED FROM PERSONS OF DIFFERENT CORNERS OF THE SOCIETY VOLUNTARILY FOR CONSTRUCTION OF ORPHAN HOSTEL BUILDING AND NAME OF THE DONOR S AND THE AMOUNT OF DONATION BY EACH DONOR COULD NOT BE EXPLORED. 14. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT THE ASSESSEE HAS NOT FURNISHED IDENTITY OF THE DONORS WITH COMPLETE ADDRESS AND THAT THE CONTENTION OF THE ASSESSEE THAT DONATION WAS WITH THE SPECIFIC DIRECTION FOR CONSTRUCTION OF HOSTEL BUILDING WAS ALSO NOT SUBJECT TO VERIFICATION AS NO EVIDENCE HAS BEEN FILED. THEREFORE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 15. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELIED ON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF SAHANUBHU VS ACIT IN ITA NO.40/CTK/2013 FOR ASSESSMENT YEAR 2010 - 2011 ORDER DATED 6 TH NOVEMBER, 2015, WHEREIN, THE TRIBUNAL HELD THAT THE PROVISIONS OF SECTION 115BBC REQUI RES THAT NAMES AND ADDRESS OF THE DONORS ARE TO BE RECORDED. ON EXAMINATION OF AUDITED INCOME AND EXPENDITURE ACCOUNT, IT IS FOUND THAT THE ASSESSEE HAS RECORDED THE NAME AND ADDRESS OF THE DONORS AND THE SAME WAS FURNISHED BEFORE THE LOWER AUTHORITIES. FROM THE ABOVE, THE TRIBUNAL INFERRED THAT THE ASSESSEE FILED DOCUMENTS TO PROVE THE IDENTITY OF THE DONORS, AMOUNT OF DONATIONS, HENCE, IT CANNOT BE CALLED TO BE ANONYMOUS AND DELETED THE ADDITION. 7 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 16. THEREFORE, HE CONTENDED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF SAHANUBHUTI (SUPRA) AND, THEREFORE, FOLLOWING THE SAME, HE PRAYED FOR DELETION OF THE ADDITION. 17. ON THE OTHER HAND, LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF LOWER AUTHORITIES. 18. I FIND THAT THE ASSESSING OFFICER BY APPLYING PROVISIONS OF SECTION 115 BB C OF THE ACT, ADDED RS.7,78,162/ - AS ANONYMOUS DONATION ON THE GROUND THAT THE IDENTITY OF THE DONORS HAS NOT BEEN PROVE D BY THE ASSESSEE. I FIND FROM THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) THAT THE ASSESSEE HAS PROVIDED THE NAMES TOGETHER WITH ADDRESS OF THE DONORS. THUS, IT IS THE CLAIM OF THE ASSESSEE THAT THE IDENTITY OF THE DONORS WAS ESTABLISHED BEFORE TH E ASSESSING OFFICER AND THE CIT(A). ON SIMILAR FACT S AND CIRCUMSTANCES OF THE CASE, I FIND THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF SAHANUBHUTI (SUPRA), THE TRIBUNAL HELD THAT WHERE THE NAMES AND ADDRESS OF THE DONORS ARE GIVEN TO THE ASSESSING OFFIC ER, THE SAID DONATION CANNOT BE TREATED AS ANONYMOUS DONATION UNDER THE PROVISIONS OF SECTION 115BBC OF THE ACT. AS THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SAHANUBHUTI (SUPRA), RESPECTFULLY FOLLOWING THE SAME, I SET ASIDE T HE ORDERS OF LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF RS.7,78,162/ - MADE BY THE ASSESSING OFFICE R U/S.115BBC OF THE ACT AS ANONYMOUS DONATION TO THE ASSESSEE AND ALLOW THIS GROUND OF APPEAL. 8 ITA NO. 343/CTK/2016 ASSESSMENT YEAR :2010 - 2011 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 13 /04 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 13 /04 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SOCIAL ACTION FOR RURAL DEVELOPMENT (SAFRD), AT: KUMBHARKUPA, PO: MALLIKAPADI, DIST: KANDHAMAL 2. THE RESPONDENT. DCIT, BERHAMPUR CIRCLE, AT/PO: BERHAMPUR, DIST: GANJAM 3. THE CIT(A) - 3, BHUBANESWAR 4. PR.CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//