M/s. Ideal Education and Welfare Society, Ghaziabad V. Addl.CIT, Ghaziabad

ITA 3480/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2199 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VED JAIN SH KISHAYA PA RASHAR
• Keywords: Unexplained cash credit; Charitable institution
• Section: 142(1); 12AA; 68; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBE R ITA NO. 3480/DEL/2015 A.Y. 2010-11 IDEAL EDUCATIONAL AND VS. ADDL. CIT, RANGE-1 WELFARE SOCIETY, GHAZIABAD B-49, RAMPRESTHA GHAZIABAD (PAN: AAAT14155J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VED JAIN, ADVOCATE, SH. KISHAYA PA RASHAR, ADVOCATE & SH. RISHABH JAIN, CA DEPARTMENT BY : SH. AMIT KATOCH, SR. DR. O R D E R PER H.S. SIDHU, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 18.3.2016 OF THE LD. CIT(A), MUZAFFARNAGAR RELEVANT TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) H AS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDIT ION OF RS. 85,92,500/- MADE BY THE AO ON ACCOUNT OF DONATION RE CEIVED 2 TREATING AS FICTITIOUS / ANONYMOUS AND UNEXPLAINED CASH CREDITS BY INVOKING THE PROVISIONS OF SECTION 68 IN CONJUNCTION WIT H SECTION 115BBC OF THE INCOME TAX ACT. 2(II). THE ABOVE ADDITION HAS BEEN CONFIRMED BY THE LD. CIT(A) IGNORING THE FACT THAT ASSESSEE HAS MAINTAINED PROPER RECO RDS OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PE RSON MAKING SUCH CONTRIBUTION AS REQUIRED BY SUB-SECTION (3) OF SECTION 115BBC. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE CONTENTION OF THE APPELLANT THAT NO ADDITIONS UNDER SECTION 68 OF THE ACT CAN BE MAD E ON ACCOUNT OF DONATIONS RECEIVED AS DONATION PER SE IS INCOME ACCORDING TO THE DEFINITION OF INCOME UNDER SECTION 2(23 )(IIA). 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS E RRED BOTH ON FACTS AND IN LAW IN NOT APPRECIATING THE PROV ISION OF SECTION 11 OF THE ACT WHEREBY EXEMPTION IS TO BE PROVIDED TO THE EXTENT WHICH INCOME OF THE TRUST IS APPLIED TO CHARITABLE OR RE LIGIOUS PURPOSES IN INDIA. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF A O IN NOT GIVING BENEFITS OF PROVISION OF SECTION 11 READ WITH SECT ION 12 OF THE ACT DESPITE THE ASSESSEE FULFILLING ALL THE CONDITION S AND BEING ELIGIBLE FOR THE SAME. 6. THAT THE CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE SAME DESPITE THE FACT THAT THE SOCIETY IS DULY REGISTE RED UNDER SECTION 12AA OF THE ACT. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SOCIETY FILED ITS RETURN OF INCOME ON 30.9.2010 DECLARING NIL INCOME. THE CAS E OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CBDT NORMS. ACCORDINGLY, THE NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) DAT ED 20.9.2011 WAS ISSUED AND SERVED UPON THE ASSESSEE. SUBSEQUENTLY, NOTICES U/S. 142(1) OF THE ACT WERE ALSO ISSUED FROM TIME TO TIME. THE A.R . OF THE ASSESSEE ATTENDED THE PROCEEDINGS ON BEHALF OF THE ASSESSEE AND FI LED THE DETAILS AS REQUIRED FROM TIME TO TIME. DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE SOCIETY HAS RECEIVED DONATION OF RS. 7,15,000/- AN D ALSO RECEIVED CORPUS FUND OF RS. 86,30,000/-. THE ASSESSEE HAS FURNISHED LIST OF 491 PERSONS SHOWING NAME AND ADDRESS OF THE DONOR AND AMOUNT CONTRIBUTED BY EACH PERSON. THE ASSESSEE HAS SPENT A SUM OF RS. 60,66,231/ - FOR ACQUISITION OF VARIOUS FIXED ASSETS DURING THE YEAR OUT OF THE CORPUS FUND OF THE SOCIETY TOWARDS THE APPLICATION OF ITS CORPUS FUNDS. TH E ASSESSING OFFICER PASSED THE ASSESSMENT ORDER DATED 25.3.2013 U/S. 1 43(3) OF THE ACT IN WHICH HE HAS MADE THE ADDITION OF RS. 89,92,500 /- TREATING THE DONATION AS ANONYMOUS DONATION U/S. 115BBC AND UNEXPL AINED CREDIT U/S. 68 OF THE ACT. AGAINST THE ORDER OF THE AO, THE ASSE SSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 2 .3.2015 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY CORRECTING THE ARIT HMETICAL ERROR IN COMPUTING THE ANONYMOUS DONATION BY THE AO AND CONFIRM ED THE ADDITION OF RS. 85,92,500/- INSTEAD OF RS. 89,92,500/- AND GAVE RELIED OF RS. 4,00,000/-. AGGRIEVED WITH THE ORDER OF THE LD. CI T(A), ASSESSEE APPEALED BEFORE THE TRIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED T HAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE ORDER OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR AY 2006-07 DATED 14.1.2011 IN ITA NO. 1376/D EL/2011 WHEREIN THE TRIBUNAL HAS REMITTED THE ISSUE IN DISPUTE TO THE FILE OF THE AO. IN THE ALTERNATIVE, HE SUBMITTED THAT IT WOULD BE THE CASE OF GENERAL DONATION 4 AGAINST WHICH 85% IS TO BE APPLIED TOWARDS CHARITABLE PURPOSE. IN FACT THE ASSESSEE HAS APPLIED MORE THAN 85% OF THE IF THE CORPUS D ONATION ARE TREATED AS GENERAL DONATION FOR WHICH DETAILED CALCULA TIONS HAVE BEEN ARE SUBMITTED IN SEPARATE ANNEXURE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RDS, ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE TRIBUNALS ORDER DATE D 14.10.2011 IN ASSESSEES OWN CASE FOR AY 2006-07 PASSED IN ITA NO. 1376/DEL/2011 AND ALSO STATEMENT OF NET TAXABLE INCOME OF THE ASSESSEE. WE FIND CONSIDERA BLE COGENCY IN THE CONTENTION OF THE ASSESSEES COUNSEL THAT THE ISSUE IN DISPU TE IS SQUARELY COVERED BY THE AFORESAID TRIBUNALS ORDER DATED 14.10. 2011 WHEREIN, THE TRIBUNAL HAS HELD AS UNDER:- 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT THE PROPOSITION MADE BY THE LD. COUNSEL OF THE ASSESSEE IS COGENT ENOUGH, THE SAME IS DULY SUPPORTED THE HONBLE JURISDICTIONAL HIGH COURT DECISION CITED ABOVE. HENCE, IN OUR CONSIDERED OPINION, INTEREST OF JUSTICE WILL BE SERVED, IF THE MATTER REMITTED TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ISSUE AS TO WHETHER AFTER TAKING INTO ACCOUNT THE DONATIONS AS THE INCOME OF THE ASSESSEE 85% HAS BEEN UTILIZED FOR CHARITABLE PURPOSES OR NOT. IF MORE THAN 85% HAS BEEN UTILIZED FOR CHARITABLE PURPOSES, ASSESSEE SHALL BE ENTITLED TO BENEFIT U/S. 11 OF THE IT ACT. IN THAT CASE THE ADDI TION OF THE DONATIONS AS UNEXPLAINED DEPOSITS WILL BE LIAB LE TO BE SET ASIDE. ACCORDINGLY, ISSUE STANDS REMITTED TO THE FILES OF THE ASSESSING OFFICER. 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 5.1 RESPECTFULLY FOLLOWING THE PRECEDENT AS AFORESAID, T HE ISSUE IN DISPUTE IS REMITTED BACK TO THE FILE OF THE AO TO CONSIDER THE I SSUE AS TO WHETHER AFTER TAKING INTO ACCOUNT THE DONATIONS AS THE INCOME OF THE ASSESSEE 85% HAS BEEN UTILIZED FOR CHARITABLE PURPOSE OR NOT. IF THE MORE T HAN 85% HAS BEEN UTILIZED FOR CHARITABLE PURPOSES, ASSESSEE SHALL BE ENTITLED TO BENE FIT U/S. 11 OF THE I.T. ACT. IN THAT CASE THE ADDITION OF THE DONATIONS AS UNEXP LAINED CASH CREDITS U/S. 68 OF THE ACT WILL BE LIABLE TO BE SET ASIDE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 16-11-2018. SD/- SD/- [N.K. BILLAIYA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:16/11/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES