Sri Balaji Educational & Charitable Public Trust, CHENNAI V. ACIT, CHENNAI

ITA 349/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68785 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S K TYAGI
• Keywords: Charitable institution; Principle of natural justice
• Section: 80HHC; 133A; 234B; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 349/MDS/2013 (ASSESSMENT YEAR: 2009-10) SRI BALAJI EDUCATIONAL & CHARITABLE PUBLIC TRUST, JAI DURGA COMPLEX, 3 RD FLOOR, 60, 1 ST AVENUE, ASHOK NAGAR, CHENNAI-600 083. PAN:ABCTS1386D VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III(4), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.K.TYAGI, ADVOCA TE RESPONDENT BY : MR. N.MADHAVAN JCIT DATE OF HEARING : 22 ND OCTOBER, 2013 DATE OF PRONOUNCEMENT : 25 TH OCTOBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNA I DATED 21.12.2012 FOR THE ASSESSMENT YEAR 2009-10. THE ONL Y GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT D ELETING THE INTEREST OF ` 43,35,030/- LEVIED UNDER SECTION 234B OF THE ACT. ITA NO.349/MDS//2013 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER SECTION 12AA OF T HE ACT AND IS MAINLY ENGAGED IN RUNNING EDUCATIONAL INSTITUTIO NS FOR CONDUCTING VARIOUS PROFESSIONAL COURSES SUCH AS ENGINEERING, MBBS, NURSING AND OTHER PARAMEDICAL CO URSES ETC. THERE WAS A SURVEY UNDER SECTION 133A OF THE A CT ON 20.11.2009 IN THE PREMISES OF VARIOUS EDUCATIONAL I NSTITUTIONS RUN BY THE ASSESSEE. FROM THE MATERIALS IMPOUNDED D URING THE COURSE OF SURVEY, FROM ONE OF THE INSTITUTIONS OF THE ASSESSEE, NAMELY MAHATMA GANDHI MEDICAL COLLEGE & RESEARCH INSTITUTE, PONDICHERRY, IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED VOLUNTARY DONATIONS BY WAY OF CASH AMOUNTING TO ` 12,94,74,800/-, THE ASSESSEE HAD ADMITTED CASH DONATIONS OF ` 4,73,20,000/- IN THE RETURN OF INCOME FOR THE FINANCIAL YEAR 2008-09 LEAVING A BALANCE OF ` 8,21,54,800/-. IN THE COURSE OF HEARING BEFORE THE ASSESSING OFFICER , THE ASSESSEE CAME UP WITH A FRESH CHART P REPARED ON THE BASIS OF NARRATIONS RECORDED IN THE SAID IMPOU NDED MATERIAL CLAIMING THAT ALL THE CASH RECEIVED WERE V OLUNTARY CONTRIBUTION RECORDED IN THE CASH BOOK BUT WHILE PREPARING ITA NO.349/MDS//2013 3 LEDGER OF VOLUNTARY CONTRIBUTION, THEY HAVE RECORDE D SOME CASH EXPENDITURE MADE DIRECTLY FROM THE SAID CASH R ECEIVED. ACCORDING TO THE ASSESSEE, THE TOTAL AMOUNT OF VOLU NTARY CONTRIBUTIONS WHICH WERE SHOWN LESS IS ONLY TO THE TUNE OF ` 3,86,48,000/- AND THE DIFFERENCE IS NOT ` 8,21,54,800/- AS CLAIMED BY THE REVENUE. THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS IN SUPPORT OF ITS CLAIM. ON VERIFYING THE VOUCHERS OF VOLUNTARY CONTRIBUTIONS, IT WAS FOUND THAT MANY VOU CHERS DID NOT HAVE THE REQUISITE DETAILS OF THE DONORS. THE ASSESSEE WAS ASKED TO PRODUCE DETAILS OF DONORS FOR VERIFICA TION. AT THIS STAGE, THE ASSESSEE HAD FILED A LETTER STATING THAT IT WANTED TO DISCLOSE ` 3,86,48,000/- AS ANONYMOUS DONATIONS UNDER SECTION 115BBC(3) OF THE ACT, AS IT COULD NOT PRODU CE THE DETAILS OF THE DONORS. THUS, THE ASSESSMENT WAS CO MPLETED BY THE ASSESSING OFFICER BY ADDING THE ANONYMOUS DO NATIONS AS INCOME OF THE ASSESSEE. WHILE COMPUTING THE TAX PAYABLE, THE ASSESSING OFFICER CHARGED INTEREST UNDER SECTIO N 234B OF THE ACT AT ` 43,35,030/-. THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGIN G THE LEVY OF INTEREST UNDER SECTION 234B OF THE ACT STAT ING THAT THE ITA NO.349/MDS//2013 4 ADDITIONAL INCOME OFFERED BY WAY OF ANONYMOUS DONAT IONS BY THE ASSESSEE IS ONLY VOLUNTARY AND IT IS ONLY TO PU RCHASE PEACE WITH THE DEPARTMENT NOT TO LEVY PENALTY INTER EST. EVEN THOUGH THE PARTICULARS OF THE DONORS ARE AVAILABLE WITH THE ASSESSEE, IT COULD NOT PRODUCE COMPLETE PARTICULARS AT THAT POINT OF TIME. THE ASSESSEE CONTENDED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THAT IT IS ONL Y A VOLUNTARY ADMISSION OF INCOME BY THE ASSESSEE AND S INCE IT IS AN ADDITIONAL OFFER MADE BY THE ASSESSEE NOT TO CHA RGE ANY INTEREST / PENALTY, NO INTEREST UNDER SECTION 234B OF THE ACT IS LIABLE TO BE CHARGED. IT WAS CONTENDED THAT THE ASS ESSING OFFICER FAILED TO APPRECIATE THAT IN VIEW OF THE VO LUNTARY DISCLOSURE OF THE INCOME ON ACCOUNT OF THE INCOME O FFERED AS ANONYMOUS DONATIONS, ON ACCOUNT OF MINOR DEFECTS RE LATING TO NAMES & ADDRESSES OF DONORS, LIBERAL VIEW AS REGARD S LEVY OF INTEREST SHOULD BE ADOPTED. THE COUNSEL IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF T.P.INDRAKUMAR VS. ITO (322 ITR 544) .THE COMMISSIONER OF INCOME TAX (APPE ALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND ITA NO.349/MDS//2013 5 VARIOUS CASE LAWS RELIED ON THE ISSUE INCLUDING THE DECISIONS RELIED ON BY THE COUNSEL HELD THAT THE ASSESSING OF FICER HAS RIGHTLY LEVIED INTEREST UNDER SECTION 234B OF THE A CT ON THE ASSESSED INCOME. AGGRIEVED, THE ASSESSEE IS IN APPE AL BEFORE US. 3. THE COUNSEL FOR THE ASSESSEE REITERATED HIS SUBM ISSIONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ). 4. THE DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE CASE LAWS RELIED ON BY THE PART IES. FROM THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OF FICER WHILE COMPLETING THE ASSESSMENT REQUIRED THE ASSESS EE TO RECONCILE CASH DONATIONS RECORDED IN THE BOOKS OF A CCOUNT IN RESPECT OF THE SEIZED MATERIALS FROM ONE OF ITS IN STITUTIONS I.E. MAHATMA GANDHI MEDICAL COLLEGE & RESEARCH INSTITUTE AT PONDICHERRY. THE ASSESSEE COULD RECONCILE ONLY TO C ERTAIN ITA NO.349/MDS//2013 6 EXTENT BUT COULD NOT RECONCILE TO THE EXTENT OF ` 3,86,48,000/-, WHICH ULTIMATELY WAS BROUGHT TO TAX BY THE ASSESSIN G OFFICER. THOUGH THE ASSESSEE CONTENDS THAT IT IS ONLY A VOLU NTARY OFFER MADE BY IT, IT DOES NOT APPEAR SO, AS THERE WAS A S URVEY IN THE PREMISES OF THE ASSESSEES INSTITUTIONS AND CE RTAIN MATERIALS WERE SEIZED INDICATING THAT THE ASSESSEE HAD RECEIVED DONATIONS BY WAY OF CASH AMOUNTING TO ` 12,94,74,800/- AND OUT OF THESE CASH AMOUNTS, THE A SSESSEE COULD NOT EXPLAIN THE DONATIONS TO THE EXTENT OF ` 3,86,48,000/-. THEREFORE, THE SAID AMOUNT OF ANONYM OUS DONATION WAS TREATED AS INCOME OF THE ASSESSEE. TH E SUBMISSIONS OF THE ASSESSEE WERE ELABORATELY CONSID ERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) INCLUDING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. ANJUM M.H.GHASWALA (252 ITR 1) AND AFFIRMED THE LEV Y OF INTEREST UNDER SECTION 234B OF THE ACT. WHILE AFFIR MING THE ORDER OF THE ASSESSING OFFICER IN CHARGING INTEREST UNDER SECTION 234B OF THE ACT, THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED AS UNDER:- 5 . I HAVE CAREFULLY CONSIDERED THE FACTS OF THE ITA NO.349/MDS//2013 7 CASE AND THE SUBMISSIONS OF THE APPELLANT . THE ONLY ISSUE IS LEVY OF INTEREST U/S . 234B AMOUNTING TO ` 43,35,030/- . THE APPELLANT HAS RELIED ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF T. P . LNDRAKUMAR (SUPRA) AND HAS ARGUED THAT IN ABSENCE OF ANY CONTRARY DECISION, THE RATIO I S BINDING ON ALL APPELLATE AUTHORITIES . IN THE SAID CASE THE ASSESSEE HAD OFFERED RS.10 LAKHS AS AN ADDITIONAL INCOME TO BUY PEACE WITH THE DEPARTMENT . THE HIGH COURT HELD THAT HAVING ACCEPTED THE SAME, IT CANNOT BE HELD THAT THE ASSESSEE HAD DEFAULTED IN PAYMENT OF INSTALMENTS OF ADVANCE-TAX AND THEREFORE THE LEVY OF INTEREST WAS NOT JUSTIFIED. THE FACTS OF THE ABOVE DECISION ARE DIFFERENT FROM THE FACTS OF THE APPELLANT ' S CASE. IN THE PRESENT CASE, A SURVEY WAS CONDUCTED U/S 133A OF THE ACT AND THE AO QUANTIFIED THE DIFFERENCE BETWEEN THE VOLUNTARY CONTRIBUTION RECEIVED IN CASH AND THE VOLUNTARY CONTRIBUTION DISCLOSED IN THE BOOKS OF ACCOUNT . HE CONFRONTED THE ASSESSEE ON THIS ISSUE DURING THE ASSESSMENT PROCEEDINGS . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSSESSEE, THE AO ARRIVED AT A CONCLUSION THAT ` 3,86 , 48,000/ WAS THE AMOUNT OF UNVERIFIABLE DONATIONS BY THE TRUST . THEREAFTER , THE ASSESSEE CAME UP WITH AN OFFER OF ` 3,86 , 48,000/- AS ANONYMOUS DONATION U/S.115BBC(3) OF THE ACT. HENCE, THE EXISTENCE OF THE UNDISCLOSED INCOME AS WELL AS ITS QUANTIFICATION WAS DONE BY THE AO HIMSELF. SINCE ITA NO.349/MDS//2013 8 THE FACTS ARE DIFFERENT, THE RATIO OF THE DECISION CANNOT BE APPLIED TO THE INSTANT CASE. 5 . 1 LET US NOW DISCUSS THE SCOPE OF SECTION 234B . INTEREST U/S 234B IS PAYABLE WHEN AN ASSESSEE WHO IS LIABLE TO PAY ADVANCE - TAX U/S 208, (I) FAILS TO PAY THE ADVANCE - TAX OR (II) WHERE THE ADVANCE - TAX PAID U/S 210 IS LESS THAN 90% OF THE ASSESSED TAX. AS PER AMENDMENT OF EXPLANATION 1 TO SECTION 234B BY THE FINANCE ACT, 2001 , RETROSPECTIVELY W . E . F . 01.04 . 1989, INTEREST U/S. 234B IS CHARGEABLE ON INCOME ASSESSED BY THE A.O. AND NOT ON INCOME DECLARED IN THE RETURN BY THE ASSESSEE . RELIANCE IS PLACED ON THE DECISION IN THE CASE OF PRAKASH AGRO INDUSTRIES V. DCIT 170 TAXMANN 479 (P&H) ' , THE PROVISIONS OF SE C TI ON 234A , 234B & 234C ARE NOT PENAL IN NATURE AND THEY HAVE BEEN HELD TO BE CONSTITUTIONALLY VALID BY THE HON'BLE SUPREME COURT IN THE CASE OF CLT V . RANCHI CLUB LTD . 1 14 TAXMAN 414(SC) . IN THE CASE OF CIT VS . ANJUM M . H.GHASWALA 252 1TR 1 , THE HON'BLE SUPREME COURT HAS HELD THAT SECTIONS 234A , 234B & 234C IN CLEAR TERMS IMPOSE A MANDATE TO COLLECT INTEREST AT THE RATE STIPULATED THEREIN . THE EXPRESSION 'SHALL' USED IN THE SAID SECTIONS CANNOT BY ANY STRETCH OF IMAGINATION BE CONSTRUED AS 'MAY' . THIS IS CLEAR FROM THE FACT THAT PRIOR TO THE AMENDMENT BROUGHT ABOUT BY THE FINANCE ACT,1987. THE ITA NO.349/MDS//2013 9 LEGISLATURE IN THE CORRESPONDING SECTION PERTAINING TO IMPOSITION OF INTEREST USED THE EXPRESS I ON 'MAY ' THEREBY GIVING A DISCRETION TO THE AUTHORITIES CONCERNED TO EITHER REDUCE OR WAIVE I NTEREST . THE CHANGE BROUGHT ABOUT BY THE AMENDING ACT (FINANCE ACT.1987) IS A CLEAR INDICATION OF THE FACT THAT THE INTENTION OF THE LEGISLATURE WAS TO MAKE THE COLLECTION OF STATUTORY INTEREST MANDATORY. ONCE A DEFAULT WITHIN THE MEANING OF SECTION 234B AND 234C TAKES PLACE, LEVY OF PENAL INTEREST IS AUTOMATIC AND THERE IS NO SCOPE FOR APPLYING THE PRINCIPLES OF EQUITY OR RULE S OF NATURAL JUSTICE [CIT V . UPPER INDIA STEEL MANUFACTURING & ENGG . CO . LTD . 141 TAXMANN 492 (P&H)] . 5 . 2 THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V . COMPUTER GRAPHICS LTD. 285 ITR 84 (MAD) HAS ALSO HELD THAT INTEREST U/S 234B IS MANDATORY . THE RELEVANT PART OF THE ORDER IS REPRODUCED HEREUNDER FOR READY REFERENCE: SECTION 234B IS OPERATIVE WITH EFFECT FROM APRIL 1 , 1989, AND IT MAKES PROVISIONS FOR CHARGING OF INTEREST , FOR NON-PAYMENT OR SHORT PAYMENT OF ADVANCE TAX AND IT IS ALSO MANDATORY IN NATURE . IT IS ONLY COMPENSATORY IN NATURE AND HAS NO ELEMENT OF PENALTY I N I T . I T IS SUFFICIENT THAT LEVYING OF INTEREST I S MENTIONED IN THE ORDER OF THE ASSESSMENT .. . ' THE RATIO OF THE ABOVE DECISION IS APPLICABLE TO THE PRESENT CASE. IT MAY FURTHER BE STATED THAT ITA NO.349/MDS//2013 10 THE HONBE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JACOB EXPORT HOUSE VS. CIT 330 ITR 53 (P &H) HAS HELD THAT THE ASSESSEE CANNOT AVOID INTEREST ON SHORT FALL U/S. 234B. IN THE SAID CASE, THE ASSESSED INCOME WAS MORE THAN THE INCOME REPORTED BY THE ASSESSEE. THE DIFFERENCE WAS EXPLAINED TO BE A BONA FIDE BELIEF ON THE PART OF THE ASSESSEE THAT IT WAS ENTITLED TO RELIEF U/S 80HHC AND 80-IB. BUT THE BELIEF WAS FOUND TO BE INCORRECT. THE HON'BLE COURT HELD THAT THE ASSESSEE CANNOT AVOID INTEREST ON SHORTFALL U/S.234B MERELY BECAUSE OF SUCH BONA FIDE BELIEF . 5 . 4 IN VIEW OF THE ABOVE FACTS AND THE PRECEDENTS ON THE ISSUE, I AM OF THE CONSIDERED OPINION THAT THE A . O RIGHTLY LEVIED INTEREST U/S 234B ON THE ASSESSED INCOME. IT MAY FURTHER BE STATED THAT THE DECISION OF THE HON'BLE SUPREME COURT BECOMES ' THE LAW OF THE LAND AND IS BINDING ON ALL COURTS AND TRIBUNALS IN VIEW OF THE ARTICLE 141 OF THE CO N STITUTION . HENCE , FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ANJUM M.H . GHASWALA (SUPRA) AND THE OTHER DECISIONS CITED SUPRA, THE LEVY OF INTEREST U/S . 234B I S CONFIRMED AND THE GROUND IS DISMISSED. 6. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS) , WE DO NOT FIND ANY GOOD REAS ON TO INTERFERE WITH THE DECISION IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN CHARGING INTEREST OF ` 43,35,030/- UNDER SECTION 234B OF THE ACT. THE CASE LAW RELIED ON BY THE ITA NO.349/MDS//2013 11 COUNSEL FOR THE ASSESSEE IN THE CASE OF T.P.INDRAKU MAR VS. ITO (SUPRA), ACIT VS. JINDAL IRRIGATION SYSTEMS LT D. (56 ITR 164 (HYD) AND OTHER DECISIONS RELIED ON BY THE COUN SEL AT PAGE 6 OF THE PAPER BOOK ARE DISTINGUISHABLE AND H AVE NO APPLICATION TO THE FACTS OF THE ASSESSEES CASE. WE , THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) AND REJECT THE GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , T HE 25 TH DAY OF OCTOBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 25 TH OCTOBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.