Lal Bhagwan Dass Educational Trust, Delhi V. ITO (Exemptions), Delhi

ITA 3494/DEL/2013

• Counselvise Citation: 349420114 RSA 2013
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Keywords: Charitable institution; Accommodation entries; Benefit of exemption; Capital expenditure
• Section: 143(3); 133(6); 80G; 12A; 12AA; 147; 131; 68; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) SHRI JOGINDER SINGH, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3494/DEL./2013 (ASSESSMENT YEAR : 2004-05) LALA BHAGWAN DASS EDUCATIONAL TRUST, VS. ITO (EXEM PTIONS), A 52, JITAR NAGAR, OPP. KOTHI NO.299, TRUST WAR D IV, GAGAN VIHAR, DELHI 110 092. (PAN : AATPL1870H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RANJAN CHOPRA, CA REVENUE BY : SHRI S.N. BHATIA, DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS)-XII, NEW DELHI DATED 18.02.2013. 2. THE ASSESSEE IS RUNNING EDUCATIONAL INSTITUTIONS . THE ASSESSEE SOCIETY WAS FORMED IN 2002. THE ASSESSEE SOCIETY ALSO GOT R EGISTERED U/S 12AA OF THE INCOME-TAX ACT, 1961 VIDE ORDER NO.2001-02/L-396/48 7 DATED 02.07.2002. ON THE BASIS OF THE INFORMATION RECEIVED FROM DIREC TOR OF INCOME-TAX (INVESTIGATION), NEW DELHI VIDE ITS LETTER DATED 02 .03.2006, THE NOTICE U/S 148 WAS ISSUED. THE INFORMATION WAS THAT ASSESSEE HAS R ECEIVED ACCOMMODATION ITA NO.3494/DEL./2013 2 ENTRIES IN ITS BANK ACCOUNT WITH ORIENTAL BANK OF C OMMERCE, FARIDABAD AND THE FOLLOWING AMOUNTS WERE CLAIMED TO HAVE BEEN REC EIVED :- DATE AMOUNT/CHEQUE NO. NAME OF ENTRY PROVIDER BANK OF ENTRY PROVIDER 27.09.2003 3,50,000/- 216018 RUDHRA TEA P. LTD . INDUSIND., PREET VIHAR 13.12.2004 5,00,000/- 735515 SHREE PACKERS - DO - THE ASSESSEE HAS SHOWN CORPUS DONATION RECEIVED DUR ING THE YEAR OF RS.1,31,13,000/-. THIS ALSO INCLUDES THE AMOUNT OF RS.8,50,000/- WHICH WAS ALLEGED TO HAVE BEEN ACCOMMODATION ENTRIES. THE ASS ESSING OFFICER DENIED THE BENEFIT OF SECTIONS 11 & 12 OF THE ACT IN RESPE CT OF CORPUS DONATION AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE C IT (A) CONFIRMED THIS ADDITION BY HOLDING AS UNDER :- THE ASSESSEE HAS SHOWN TO HAVE RECEIVED CORPUS DO NATION OF RS.1,31,13,000/- WHICH IS INCLUSIVE OF AMOUNTS R ECEIVED FROM ENTRY OPERATORS. MOREOVER AS THE DONATIONS HAVE NOT BEEN ROUTED THROUGH INCOME AND EXPENDITURE ACCOUNT SO THERE IS NO QUESTION OF DOUBLE ADDITION AS STATED BY THE ASSESSEE IN HIS REPLY DATED 18/02/2013. THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION EITHER BEFORE THE ASSESSING OFFICER OR DURING THE APPELLATE PROCEEDINGS COPIES OF BANK STATEMENT BY N OT PRODUCING THE GENUINENESS OF THE TRANSACTION HENCE SOURCE WAS NOT EXPLAINED WAS NOT PROVED AND IN OTHERS. IN SPITE OF THE SUMMONS BEING ISSUED THE PARTIES NEVER APPEARED BEFORE THE A.O. AS STATED IN THE REMAND REPORT. AS ASSESSEE HAS FAILED TO PRO VE THE THREE INGREDIENTS OF SECTION 68 HENCE THE ENTIRE DONATION S AMOUNTING TO RS.1,31,13,000/- U/S 68 IS UPHELD. 3. NOW, THE ASSESSEE IS IN APPEAL BEFORE US BY TAKI NG THE FOLLOWING GROUNDS :- ITA NO.3494/DEL./2013 3 1. THAT THE ORDER OF LEARNED CIT (A) SUSTAINING TH E ORDER OF THE LEARNED ASSESSING OFFICER IS BAD IN LAW AND ON FACTS AND IS LIABLE TO BE SET-ASIDE. 2.(I) THAT LEARNED CIT(A) HAVE ERRED IN LAW AND ON FACTS IN HOLDING THAT THE LEARNED AO HAS RIGHTLY MADE THE AS SESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 WITHOUT ANY PROPER BASIS AND HAS ERRED IN NOT ACCEPTING THE CONTENTION OF THE AP PELLANT. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E REASSESSMENT PROCEEDING IS BAD BOTH IN LAW AND ON F ACTS AS THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DOES NOT MEET THE REQUIREMENTS OF THE SECTION 147 OF THE ACT. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS BAD BOTH IN THE EYE OF LAW AND ON FACTS, AS THE ASSESSING OFFICER HAS TRAV ELLED BEYOND THE REASONS RECORDED FOR REOPENING THE ASSESSMENT. 3.(I) THAT HAVING REGARD TO THE FACTS AND CIRCUMST ANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. ASSESSING OFFICER BY DISALLOWING THE EXEMPTION CLAIMED U/S 11 OF THE INCOME TAX ACT, 1961. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN DISAL LOWING THE EXEMPTION UNDER SECTION 11 DESPITE THE ASSESSEE FUL FILLING ALL CONDITIONS AND BEING ELIGIBLE FOR THE SAME. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN MAKIN G THE ABOVE- SAID DISALLOWANCE IGNORING THE FACT THAT THE EXEMPT ION UNDER SECTION 11 IS AVAILABLE TO AN ELIGIBLE ASSESSEE WIT H RESPECT TO THE APPLICATION OF INCOME AND NOT ON THE SOURCE OF INCO ME. (IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LE ARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT COMPU TING THE INCOME OF THE ASSESSEE TRUST IN ACCORDANCE WITH THE PROVISIONS OF THE SECTION 11 (1A) OF THE ACT WHEREBY INCOME TO TH E EXTENT IT IS APPLIED TOWARDS CHARITABLE PURPOSES IS EXEMPT. ITA NO.3494/DEL./2013 4 4.(I) THAT LEARNED CIT(A) HAVE ERRED IN LAW AND ON FACTS IN TREATING THE ENTIRE AMOUNT OF RS.1,31,13,000/-, REC EIVED ON ACCOUNT OF CORPUS DONATION, AS INCOME FROM UNDISCLO SED SOURCES U/S 68 OF THE ACT MORE SO WHEN NECESSARY INGREDIENT S OF THAT SECTION ARE MISSING. (II) WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTE RNATIVE LEARNED CIT (A) HAS ERRED BOTH ON THE FACTS AND IN LAW IN GIVING A CONTRADICTORY FINDING TO THE EFFECT THAT THE INCO ME DOES NOT BELONG TO THE ASSESSEE TRUST AND AT THE SAME TIME A SSESSING IT. 5. THAT THE ORDERS PASSED BY LEARNED CIT (A) AND LE ARNED ASSESSING OFFICER ARE AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER , TO WITHDRAW, TO AMEND ANY OF THE ABOVE GROUNDS OF APPE AL BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. 4. GROUND NOS.1, 5 & 6 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION, HENCE DISMISSED. GROUND NOS.2(I) TO 2 (III) ARE RELATED TO REOPENING THE PROCEEDINGS U/S 147 OF THE INCOME-TAX ACT, 1961. THE SAME WERE NOT PRESSED, HENCE THE SAME ARE DISMISSED AS N OT PROSECUTED. 5. GROUND NOS.3, 3(I) TO 3(IV) AND 4(I) & 4(II) ARE WITH REGARD TO NOT ALLOWING EXEMPTION U/S 11 OF THE ACT AND ADDITION U /S 68 OF THE INCOME-TAX ACT, 1961. 6. WHILE PLEADING ON BEHALF OF THE ASSESSEE, LD. AR SUBMITTED THAT ONCE THE TRUST IS REGISTERED U/S 12AA OF THE ACT BY THE CIT THEN THIS REGISTRATION CERTIFICATE CANNOT BE IGNORED BY ASSESSING OFFICER BY ADOPTING A STAND THAT THE TRUST OR INSTITUTION IS NOT FULFILLING THE CONDITIO NS FOR THE APPLICABILITY OF SECTIONS 11 AND 12 OF THE ACT. HE FURTHER SUBMITTED THAT ASSESSEE HAS MADE ITA NO.3494/DEL./2013 5 CAPITAL EXPENDITURE TO THE TUNE OF RS.4,30,00,000/- APPROXIMATELY IN THE RELEVANT FINANCIAL YEAR AND THIS FACT WAS EVIDENT F ROM THE SCHEDULE OF FIXED ASSETS AS ON 31.03.2004. THIS EXPENDITURE WAS INCUR RED ON THE CONSTRUCTION OF BUILDING, PURCHASE OF LAB EQUIPMENT, LIBRARY BOOKS, ETC. THE ABOVE SAID EXPENDITURE HAS BEEN ACCEPTED AS BEING EXPENDITURE INCURRED ON THE OBJECTS OF THE TRUST. AFTER TAKING INTO CONSIDERATION THIS CAP ITAL EXPENDITURE, THERE WILL BE LESS AMOUNT OF THE APPLICATION OF INCOME WITH RE GARD TO CAPITAL EXPENDITURE. IN VIEW OF THIS, THE INCOME OF THE TR UST WAS COMPUTED AT NIL IN THE RETURN OF INCOME. THE ASSESSEE SUBMITTED CONFIR MATORY LETTERS FROM THE DONORS WHEREIN THE DONATIONS HAVE BEEN EARMARKED TO WARDS THE CORPUS OF THE TRUST. THESE EVIDENCES ARE PLACED AT PAGES 35 TO 10 8 OF THE PAPER BOOK WHERE THE DONORS HAD GIVEN UNDERTAKING THAT THEY HAVE MAD E THE DONATIONS TOWARDS THE CORPUS OF THE TRUST. THEIR PAN ALONG WITH INCOM E-TAX DETAILS WERE ALSO SUBMITTED. ALL THESE DONATIONS WERE RECEIVED BY CH EQUES. THE PHOTOCOPIES OF THE CHEQUES BY WHICH THE CORPUS DONATIONS RECEIV ED WERE ALSO SUBMITTED. EVEN IN THE REMAND REPORT SUBMITTED BY THE ASSESSIN G OFFICER, THE ASSESSING OFFICER HAS CONFIRMED THAT CERTAIN DONORS WERE PROD UCED BEFORE HIM AND THEIR STATEMENTS WERE ALSO RECORDED. MANY OF THE DONORS H AVE ALSO FILED REPLY TO THE ASSESSING OFFICER. THEREFORE, MAKING THE ADDITION OF WHOLE OF THE AMOUNT OF THE DONATIONS RECEIVED BY ASSESSEE WAS COMPLETELY U NJUSTIFIED. THE CIT (A) CONFIRMED THE ADDITION WITHOUT GIVING ANY SPECIFIC FINDINGS WITH REGARD TO ITA NO.3494/DEL./2013 6 THESE DONATIONS AND WITHOUT CONSIDERATION THE DOCUM ENTS SUBMITTED. HE ALSO RELIED ON THE FOLLOWING DECISIONS OF VARIOUS COURTS :- (I) ACIT VS. SURAT CITY GYMKHANA 300 ITR 214 (SC ) : FOR THE PROPOSITION THAT SECTION 12A OF THE INCOME- TAX ACT, 1961 IS RELEVANT TO CHARITABLE AND RELIGIOUS TRUST WHERE REGISTRATION U/S 12A IS A FAIT ACCOMPLI TO HOLD THE ASSESSING OFFICE R BACK FROM FURTHER PROBE INTO THE OBJECTS OF THE TRUST. (II) HIRALAL BHAGWATI VS. CIT 246 ITR 188 (GUJ.) : FOR THE PROPOSITION THAT ONCE REGISTRATION U/S 12A WAS GRANTED, BENEFIT TO ASSESSEE UNDER SECTION 80G COULD NOT BE DENIED. (III) DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCATION FOUNDAT ION 294 ITR 76 (DELHI) : FOR THE PROPOSITION THAT WHERE THE ASSESSEE IS ENTI TLED TO EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT, 1961 CA N CLAIM THE BENEFIT THEREOF FOR THE PURPOSE OF INCOME DEEMED TO BE CHARGEABLE TO TAX U/S 68 OF THE INCOME-TAX ACT, 196 1. HE SUBMITTED THAT IT IS NOW A WELL SETTLED PRINCIPLE O F LAW THAT ALTHOUGH THE EXEMPTION PROVISIONS ARE TO BE CONSTRU ED STRICTLY AS REGARDS THE APPLICABILITY THEREOF TO THE CASE OF TH E ASSESSEE ONCE IT IS FOUND THAT THE SAME IS APPLICABLE, THE SAME A RE REQUIRED TO BE INTERPRETED LIBERALLY. HE ALSO SUBMITTED THAT IT IS ALSO TRITE LAW ITA NO.3494/DEL./2013 7 THAT AN EXEMPTION IS TO BE GRANTED UNLESS IT IS EXP RESSLY TAKEN AWAY. (IV) DIRECTOR OF INCOME-TAX (EXEMPTION) VS. KESHAV SOCIA L & CHARITABLE FOUNDATION 278 ITR 152 (DELHI) : FOR THE PROPOSITION THAT THE ASSESSEE IS A CHARITAB LE TRUST HAS DISCLOSED DONATIONS RECEIVED BY IT AS ITS INCOME AN D SPENT 75% OF THE AMOUNT FOR CHARITABLE PURPOSES AND ON FAILUR E OF ASSESSEE TO FURNISH DETAILS OF DONATIONS, ASSESSING OFFICER TREATED THAT AMOUNT AS CASH CREDIT U/S 68 AND BENEFIT U/S 11 WAS DENIED. IN THESE FACTS, WHEN THE COMPLETE LIST OF DONORS WAS N OT FILED OR THAT DONORS WERE NOT PRODUCED, DID NOT NECESSARILY LEAD TO INFERENCE THAT ASSESSEE WAS TRYING TO INTRODUCE UNACCOUNTED M ONEY BY WAY OF DONATION RECEIPTS. (V) ITAT, AGRA BENCH DECISION IN THE CASE OF SUDITI GLOBAL ACADEMY VS. DEPARTMENT OF INCOME TAX DATED 12.07.20 13 ITA NO.63/AGRA/2013 FOR ASSESSMENT YEAR 2009-10: HE ALSO SUBMITTED THAT THE CAPITAL EXPENDITURE INCU RRED ON THE OBJECTS OF THE TRUST IS ALSO CONSIDERED AS AN APPLICATION TOWARDS THE OBJECTS OF THE TRUST AND, THEREFORE, THE SAME IS ENTITLED TO THE BENEFIT OF D EDUCTION U/S 11(1)(A) OF THE ACT. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWI NG DECISIONS : ITA NO.3494/DEL./2013 8 (I) SATYA VIJAY PATEL HINDU DHARAMSHALA TRUST VS. CIT [1972] 86 ITR 683 (GUJ.); (II) CIT VS. KANNIKA PARAMESWARI DEVASTHANAM & CHARITIES [1982] 133 ITR 779 (MAD.); (III) CIT VS. ST. GEORGE FORANA CHURCH [1988] 170 ITR 6 2 (KER.); (IV) S. RM. M.CT. M. TIRUPPANI TRUST VS. CIT [1998] 230 ITR 636 (SC); AND (V) CIT VS. MOOL CHAND SHARBATI DEVI HOSPITAL TRUST [ 2010] 41 DTR 153 (ALL.). HE ALSO SUBMITTED THAT PRIOR TO INSERTION OF SECTIO N 115BBC OF INCOME-TAX ACT, 1961 INTRODUCED BY FINANCE ACT, 2006 FROM ASSE SSMENT YEAR 2007-08, THERE WAS NO REQUIREMENT ON THE PART OF THE ASSESSE E TO MAINTAIN DETAILS IN RESPECT OF DONORS. THE CONCEPT OF ANONYMOUS DONATIO N WAS BROUGHT IN THE ACT THROUGH THE INSERTION OF SECTION 115BBC AS WELL AS SECTION 13(7) OF THE ACT WHICH IS APPLICABLE FROM ASSESSMENT YEAR 2007-08 WH ILE THE ASSESSEES CASE PERTAINS TO ASSESSMENT YEAR 2004-05. 7. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSING OFFICER ISSUED LET TERS U/S 133(6) OF THE INCOME-TAX ACT, 1961 TO VERIFY THE GENUINENESS OF T RANSACTIONS BUT SOME OF THEM RETURNED BACK UNSERVED BY POSTAL AUTHORITIES W ITH THE REMARKS INCOMPLETE ADDRESS. THIS FACT WAS CONFRONTED WITH THE ASSESSEE AND ASKED TO PRODUCE THE DONORS ALONG WITH THEIR IDENTITIES & CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS BUT ASSESSEE FAILED TO PROVE GENUINENESS OF ITA NO.3494/DEL./2013 9 TRANSACTIONS, IDENTITY AND CREDIT WORTHINESS OF THE DONORS. HE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE A SSESSING OFFICER RECEIVED INFORMATION FROM DIRECTOR OF INCOME-TAX (I NVESTIGATION) WITH REGARD TO TWO AMOUNTS RECEIVED AS ACCOMMODATION ENTRIES BY CHEQUE, I.E., RS.3,50,000/- FROM RUDHRA TEA P. LTD. VIDE CHEQUE N O.216018 DATED 27.09.2003 AND RS.5 LACS FROM SHREE PACKERS VIDE CH EQUE NO.735515 DATED 13.12.2004. THE ASSESSING OFFICER ISSUED NOTICE U/S 148 AFTER RECORDING THE REASONS. THE ASSESSING OFFICER ISSUED LETTERS U/S 1 33(6) OF THE INCOME-TAX ACT, 1961 TO THESE TWO PERSONS FROM WHOM THE ASSESS EE HAS SHOWN THE RECEIPTS. THESE LETTERS WERE RETURNED WITH THE REMA RKS INCOMPLETE ADDRESS. THE ASSESSING OFFICER ALSO ISSUED SUMMONS U/S 131 F OR REQUISITIONING THE BANK ACCOUNTS OF THESE TWO PERSONS. ON THE BASIS OF THESE ENQUIRIES, THE ASSESSING OFFICER HELD THAT TOTAL CORPUS DONATION O F RS.1,31,13,000/- INCLUSIVE OF THE AFORESAID TWO AMOUNTS WERE FROM EN TRY PROVIDERS, THEREFORE, BENEFIT U/S 11 & 12 TO THAT EXTENT WAS NOT ALLOWED AND THE AMOUNTS WERE ADDED TO THE INCOME. THE CIT (A) GOT ENQUIRY CONDUC TED TO VERIFY THE GENUINENESS AND CREDITWORTHINESS OF THE DONORS AND A REMAND REPORT WAS CALLED. FROM THIS REMAND REPORT, IT IS CLEAR THAT F OUR OF THE DONORS WERE MADE THEMSELVES AVAILABLE BEFORE THE ASSESSING OFFICER F OR RECORDING THE STATEMENT AND 13 PERSONS HAVE REPLIED TO THE QUERY RAISED BY THE ASSESSING OFFICER IN ITA NO.3494/DEL./2013 10 THE REMAND PROCEEDINGS. SINCE THE ASSESSEE HAS COMP LIED WITH THE REQUIREMENTS OF ASSESSING OFFICER DURING THE REMAND PROCEEDINGS FOR FURTHER INVESTIGATION. THE ASSESSING OFFICER WAS NOT JUSTI FIED IN NOT PUTTING THE CORRECT FACTS BEFORE THE CIT (A). WE HAVE PERUSED T HE PAPER BOOK WHERE CONFIRMATION COPIES OF DONORS TOWARDS THE CORPUS DO NATION WERE PLACED AT PAGES 35 TO 108 OF THE PAPER BOOK. PAGE 36 IS THE C ONFIRMATION FROM SHREE PACKERS AND ADDRESS IS GIVEN AS 26, 33 FT. ROAD, SH IV VIHAR, KARAWAL NAGAR, DELHI-1100094 AND TELEPHONE NO.22025345 IS ALSO MEN TIONED ON THE CONFIRMATION LETTER. AS PER THIS CONFIRMATION, SHRE E PACKERS IS ALLOTTED A PAN AGJPG0434F AND THE DETAILS OF THE WARD IN WHICH THE INCOME-TAX ASSESSMENT IS BEING DONE IS ALSO PROVIDED AS WARD 46(4). SIMIL ARLY, IN OTHER CONFIRMATIONS ALSO, THE ADDRESSES OF THE DONORS HAV E BEEN PROVIDED. THE ASSESSEE TRUST IS STILL CONTINUING AND ENJOYING THE BENEFIT OF REGISTRATION U/S 12A. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATIO N WAS FINALIZED BY THE ASSESSING OFFICER ON 29.12.2010. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WAS MADE U/S 147/143 ON 19.12.2008. THEREAF TER, THE ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08 U/S 143(3) WAS MADE ON 15.06.2009. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 U/S 143( 3) WAS MADE ON 27.03.2012. IN ALL THESE THREE YEARS, THE ASSESSEE HAS BEEN GRANTED THE BENEFIT OF SECTION 11 OF THE INCOME-TAX ACT, 1961. THERE IS NO ALLEGATION AGAINST THE ASSESSEE THAT THE ASSESSEE IS NOT CONDUCTING ITS BU SINESS AS PER THE AIMS AND ITA NO.3494/DEL./2013 11 OBJECTS OF THE SOCIETY. FURTHER, WE DO NOT FIND ANY MERITS IN THE OBSERVATION OF THE AUTHORITIES BELOW THAT DONATIONS WERE NOT FOR C ORPUS DONATION. THE ACCOUNT FOR THE ASSESSEE TRUST SHOWS THAT THERE WAS SUFFICIENT CAPITAL EXPENDITURE DURING THE YEAR WHICH IS MUCH ABOVE THE CORPUS DONATION RECEIVED BY THE ASSESSEE. IN VIEW OF THESE FACTUAL MATRIX, WE FIND NO JUSTIFICATION IN DENYING THE BENEFIT OF SECTION 11 TO THE ASSESSEE. WE ALSO GOT SUPPORT FROM VARIOUS DECISIONS RELIED UPON BY THE A SSESSEE WHEREIN SUCH ISSUES HAVE BEEN CONSIDERED AND DECIDED :- (I) ACIT VS SURAT CITY GYMKHANA [200SJ 300 ITR 214 (SC) IT WAS HELD IN THIS CASE BY THE APEX COURT THAT THE REGISTRATION OF A TRUST UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 , ONCE DONE IS A FAIT ACCOMPILI AND THE AO CAN NOT, THEREAFTER, MAKE FURTHER PROBE INTO THE OBJECTS OF THE TRUST. (II) AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS DY.DI T (E) [2011] 335 ITR 575 (GUJ) IT WAS HELD IN THIS CASE THAT THE GRANTING OF REGIS TRATION UNDER SECTION 12AA OF THE ACT, DENOTES, AS PER THE LEGISLATIVE SC HEME, THAT THE CONDITIONS LAID DOWN UNDER SECTION 12A OF THE ACT, STAND FULFILLED. THE EFFECT OF SUCH A CERTIFICATE OF REGISTRATION UN DER SECTION 12AA OF THE ACT, THEREFORE, CANNOT BE IGNORED OR WISHED AWA Y BY THE AO BY ADOPTING A STAND THAT THE TRUST OR INSTITUTION IS N OT FULFILLING THE CONDITIONS FOR APPLICABILITY OF SECTIONS 11 AND 12 OF THE ACT. IT IS, THUS, ABSOLUTELY CLEAR THAT THE AO IS NOT EN TITLED TO GO INTO THE ISSUE WHETHER THE TRUST FULFILS THE CONDITIONS FOR THE APPLICABILITY OF SECTIONS 11 AND 12 OF THE ACT. IT MAY BE CLARIFIED HERE THAT ONCE REGISTRATION HAS BEEN GRANTED BY THE CIT UNDER SECTION 12AA OF THE ACT TO A TRUST / INST ITUTION, THE SAME CAN BE CANCELLED ONLY BY THE CIT UNDER THE PROVISIO NS OF SECTION 12AA(3) OF THE ACT AND THE AO HAS ABSOLUTELY NO POW ER TO DENY THE BENEFITS OF SECTIONS 11 AND 12, TO THE TRUST / INST ITUTION, DURING THE ITA NO.3494/DEL./2013 12 CONTINUANCE OF THE AFORESAID REGISTRATION UNDER SEC TION 12AA OF THE ACT. IT IS, THUS, CLEARLY ESTABLISHED THAT THERE IS A MA JOR FLAW IN THE IMPUGNED ASSESSMENT ORDER PASSED BY THE AO FOR THE AY 2004-05. 2. BESIDES, THE AO HAS NOT TREATED THE IMPUGNED DON ATIONS AS CORPUS DONATION. IN THIS REGARD ALSO, THE CONCLUSION OF THE AO IS TO TALLY ERRONEOUS AND WITHOUT ANY JUSTIFICATION, WHATSOEVER. IN THIS REGARD, IT HAS TO BE STATED THAT THERE IS N O PROVISION UNDER SECTIONS 11 OR 12 THAT A TRUST / INSTITUTION WOULD BE REQUIRED TO ESTABLISH THE IDENTITY OF A DONOR BY PROVIDING HIS NAME, ADDRESS, ETC. IN THIS CONTEXT, IT HAS TO BE STATED THAT IN CASE O F A CHARITABLE TRUST / INSTITUTION, THE SOURCE FROM WHICH THE MONIES ARE R ECEIVED IS NOT OF MUCH CONSEQUENCE. WHAT IS RELEVANT IS THE APPLICATI ON OF INCOME. IN SUPPORT OF THE AFORESAID STAND, RELIANCE IS PLACED ON THE FOLLOWING LEGAL PRECEDENTS: (I) TRUSTEES OF VANITA VISHRAM VS CIT [2006] 280 I TR 345 (BOM) IT WAS HELD IN THIS CASE THAT IT IS OBVIOUS THAT GR ANTING EXEMPTION TO THE INCOME OF THE EDUCATIONAL INSTITUTIONS IS TO EN ABLE SUCH INSTITUTIONS TO UTILIZE THE MONIES AVAILABLE WITH T HEM FOR THE PURPOSE OF RUNNING THE EDUCATIONAL INSTITUTIONS. THE SOURCE FROM WHICH THE MONIES ARE RECEIVED IS OF NO CONSEQUENCE, WHAT IS R ELEVANT IS THE APPLICATION OF INCOME. SO LONG AS THE INCOME OF THE INSTITUTION, WHICH SOLELY EXISTS FOR EDUCATIONAL PURPOSE AND NOT FOR E ARNING PROFIT, IS APPLIED FOR THE EDUCATIONAL PURPOSE, SUCH INCOME OF THE INSTITUTION IS ENTITLED TO EXEMPTION FROM TAX. (II) S.H. GOWDA CHARITABLE TRUST [2006] 285 ITR 327 (KARN) THE ISSUE BEFORE THE HON. HIGH COURT IN THIS CASE W AS GRANT OF REGISTRATION TO A CHARITABLE TRUST, UNDER SECTION 1 2AA OF THE ACT. IT WAS, INTER ALIA, HELD IN THIS CASE THAT THE AUTH ORITIES ARE REQUIRED TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF THE ACT IVITIES OF THE TRUST AND HOW INCOME DERIVED FROM TRUST PROPERTY IS APPLI ED TO CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF THE ACTI VITY BY WHICH THE INCOME WAS DERIVED BY THE TRUST. ITA NO.3494/DEL./2013 13 (III) DIT(E) VS KESHAV SOCIAL AND CHARITABLE FOUNDA TION [2005] 278 ITR 152 (DEL) IN THIS CASE, THE ASSESSEE HAD FURNISHED THE LIST O F DONORS. THE AO DISALLOWED THE CLAIM OF EXEMPTION UNDER SECTION 11, STATING THAT THE ASSESSEE COULD NOT FURNISH DETAILS REGARDING THE DO NORS AND THAT IT WAS JUST A WAY OF INTRODUCING UNACCOUNTED MONEY INTO TH E BOOKS OF THE ASSESSEE TRUST AND THUS, TREATED THE AMOUNT AS CASH CREDIT UNDER SECTION 68 OF THE ACT. THE TRIBUNAL HELD THAT BECAUSE MORE THAN 75% OF THE DONATIONS RECEIVED BY THE ASSESSEE WAS SPENT FOR CHARITABLE P URPOSES, THE ADDITION WAS NOT JUSTIFIED. ON APPEAL BEFORE THE HIGH COURT, DISMISSING THE APP EAL OF THE DEPARTMENT, IT WAS HELD THAT TO OBTAIN THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT, THE ASSESSEE WAS REQUIRED TO SHOW THAT THE DONATIONS WAS VOLUNTARY. IN THE PRESENT CASE, THE A SSESSEE HAD NOT ONLY DISCLOSED ITS DONATIONS, BUT IT ALSO SUBMITTED A LIST OF DONORS. THE FACT THAT THE COMPLETE LIST OF DONORS HAD NOT BEEN FILED OR THAT THE DONORS HAD NOT BEEN PRODUCED DID NOT NECESSARILY LE AD TO THE INFERENCE THAT THE ASSESSEE HAD TRIED TO INTRODUCE UNACCOUNTED MONEY, BY WAY OF DONATION RECEIPTS. SECTION 68 OF THE ACT HAD NO APPLICATION TO THE FACTS OF THE CASE, BECAUSE THE ASSESSEE HAD IN FACT DISCLOSED DONATION OF RS.18,24,200 AS ITS INCOME. (IV) DIT(E) VS SRI BELIMATHA MAHASAMSTHANA SOCIO CU LTURAL AND EDUCATIONAL TRUST [2011] 336 ITR 694 (KARN) IT WAS, INTER ALIA, HELD IN THIS CASE THAT THE ASSE SSEE HAD RECEIVED CORPORATE DONATIONS, BUT FAILED TO FURNISH NAMES AN D ADDRESSES OF DONORS. THE DONATIONS HAD BEEN UTILIZED FOR CHARITA BLE PURPOSE AND THEREFORE, THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 11 OF THE ACT. IN THE LIGHT OF THE AFORESAID LEGAL PRECEDENTS, THE AO COULD NOT HAVE REJECTED THE CLAIM OF THE TRUST THAT THE IMPUGNED D ONATIONS WERE CORPUS DONATIONS, IN THE FACE OF THE FACTS THAT THE AO HAD, ON HIS OWN, TREATED SUCH DONATIONS AS VOLUNTARY CONTRIBUTIONS I N THE ASSESSMENT ORDER AND SECONDLY, THE TRUST HAD FURNISHED BEFORE HIM LETTERS FROM THE DONORS, IN SUPPORT OF THE AFORESAID CLAIM. ITA NO.3494/DEL./2013 14 IN VIEW OF THESE FACTS AND RATIO LAID DOWN IN THE A BOVE STATED DECISIONS OF HIGH COURTS WHEN WE EXAMINE THE ORDERS OF AUTHORITI ES BELOW, WE DO NOT FIND JUSTIFICATION IN THE ACTION IN SUSTAINING THE ADDIT ION U/S 68 OF THE ACT, ONLY BECAUSE MEMBERS OF THE DONORS COULD NOT BE VERIFIED WHEN THERE IS NO DISPUTE THAT THE ASSESSEE HAD DISCLOSED THE DONATIONS WITH THE LIST OF DONORS, THE AMOUNT WAS PAID BY CHEQUES AND DONATIONS WERE APPLI ED FOR CHARITABLE PURPOSE. IT IS PERTINENT TO NOTE THAT SOME OF THE DONORS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND MANY DONORS REPLIED TO TH E QUERY OF ASSESSING OFFICER, ONE OF THE MAJOR DONATIONS OF RS.45 LACS W AS RECEIVED FROM SICPA INDIAS PVT. LTD., 308 312, MERCANTILE HOUSE, M 15, K.G. MARG, NEW DELHI HAVING PAN IS AADCS6121L. THE CONFIRMATION W AS FILED FROM THE DONOR. THE AMOUNT WAS RECEIVED BY CHEQUE AND FRESH CERTIFICATE OF INCORPORATION WITH MINISTRY OF CORPORATE AFFAIRS WA S ALSO FILED PLACED AT PAGE 45 OF PAPER BOOK. ALL THESE FACTS SHOW THAT ASSESS EE HAD COMPLIED THE REQUIREMENT OF ASSESSING OFFICER WITH REGARD TO DON ORS. IN VIEW OF THIS FACTUAL MATRIX, WE SET ASIDE THE ORDERS OF THE AUTH ORITIES BELOW ON THIS ISSUE. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF JANUARY, 2014. SD/- SD/- (JOGINDER SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 15 TH DAY OF JANUARY, 2014 TS ITA NO.3494/DEL./2013 15 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.