ADIT (E), New Delhi V. Pran Nath Educational & Medical Society, New Delhi

ITA 3610/DEL/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3005 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 15-05-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Charitable institution; Question of law; Validity of assessment
• Section: 12A; 147; 12; 11; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3610/DEL/2011 ASSESSMENT YEAR : 2001-02 ADIT (E), INV. CIR. II, NEW DELHI. VS. PRAN NATH EDUCATIONAL & MEDICAL SOCIETY, A-1/4, SHAKTI NAGAR EXT., NEAR LB COLLEGE, NEW DELHI. PAN : AAATP2644M (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ATIQ AHMAD, SR.DR ASSESSEE BY : SHRI ASHOK KR. JAIN, CA SHRI ASHU GOEL, CA DATE OF HEARING : 22-03-2018 DATE OF PRONOUNCEMENT : 23-03-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 10.05.2011 OF CIT(A)- XXI, NEW DELHI RELATING TO AS SESSMENT YEAR 2001-02. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER :- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE U/S.11 & 12 OF THE I.T. ACT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A SOCIETY REGISTERED U/S 12A OF THE I.T. ACT, 1961 W.E.F. 05.02.1998 BY DIT( E), NEW DELHI VIDE NO.DIT(E)/98-98/P-554/98/589 DATED 05.01.1999. DUR ING THE COURSE OF 2 ITA NO.3610/DEL/2011 ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAS RECEIVED DONATION OF RS.10,66,000/-. HE, THEREFORE , ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DONATION OF RS.10,66,000/- SH ALL NOT BE TREATED AS ITS INCOME. HE ALSO ASKED THE ASSESSEE TO FILE THE DET AILS REGARDING THE DONATION, DETAILS OF CHARITABLE ACTIVITIES, EXPLAIN AS TO WHY SECTION 2(15) IS NOT APPLICABLE, PRODUCE BANK STATEMENTS AND BOOKS OF ACCOUNTS. THE ASSESSEE FILED THE REQUISITE DETAILS. IT WAS SUBMITTED THAT THE ASSESSEE HAS IN CURRED A SUM OF RS.3,12,290/- FOR RELIEF GIVEN TO POOR, RS.36,200/- FOR RELIEF TO WIDOW AND WOMEN, RS.31,200/- FOR RELIEF TO POOR STUDENTS, RS.11,250/- FOR MEDICA L RELIEF TO POOR, RS.19,500/- FOR RELIEF TO HANDICAP, RS.65,300/- FOR AGED AND ORPHAN S, RS.36,280/- FOR GOU SHALLA EXPENSES. IT WAS SUBMITTED THAT THE SOCIETY IS INC URRING THE AMOUNT FOR THE CHARITABLE PURPOSES I.E. RELIEF TO POOR, MEDICAL RE LIEF AND FOR OTHER OBJECTS OF GENERAL PUBLIC UTILITY. HENCE, SECTION 2(15) OF TH E I.T. ACT IS NOT APPLICABLE TO THE SOCIETY. HOWEVER, THE ASSESSING OFFICER WAS NO T SATISFIED WITH THE ABOVE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE A SSESSEE FAILED TO ADDUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF WORK DONE FOR CH ARITABLE PURPOSES. THEREFORE, THE CLAIM OF THE ASSESSEE IS UNTRUE. FU RTHER, THE ENTIRE AMOUNT FOR CHARITABLE PURPOSE HAS BEEN PAID IN CASH. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER DENIED THE CLAIM OF EXEMPTION U/S 11(2) OF THE I.T. ACT. 3 ITA NO.3610/DEL/2011 4. IN APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF T HE ASSESSEE BY OBSERVING AS UNDER :- 7.1 I HAVE GONE THROUGH THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER WHEREIN, HE HAS DENIED THE BENEFIT OF SECTION 11 & 12 OF THE IT ACT TO THE ASSESSEE AND HAS MADE ADDITION OF RS.10,66,000/- U/S 68 OF THE IT AC T. IN THIS REGARD, THE LD. AR OF THE ASSESSEE HAS CHALLENGED THE ACTION OF THE AO BY REL YING ON VARIOUS CASE LAWS WHEREIN IT HAS BEEN HELD THAT EXEMPTION U/S 11 & 12 CANNOT BE DENIED, WHERE DONATION WAS VOLUNTARY AND HAS BEEN APPLIED FOR CHARITABLE PURPO SES. THE CASE LAW RELIED BY THE APPELLANT IN THE CASE OF DIT (EXEMPTION) VS. KESHWA V SOCIAL AND CHARITABLE FOUNDATION 278 ITR 152 (DELHI) IS CLEARLY ATTRACTED IN THIS CASE BECAUSE ASSESSEE HAS BEEN FOUND TO BE ENGAGED IN THE CHARITABLE ACTIVITY WITHIN THE MEANING OF SECTION 2(15) OF THE IT ACT AS IT IS RENDERING EDUCATION TH ROUGH SCHOOL. MY PREDECESSOR HAS ALSO HELD SIMILAR VIEW VIDE APPELLATE ORDER DATED 1 .612009 FOR ASSESSMENT YEARS 2000-01 AND 2003-04, WHEREIN HE HAS DECIDED THE ISS UE IN FAVOUR OF THE APPELLANT BY OBSERVING THAT THE OBJECTS AND ACTIVITIES OF THE AP PELLANT ARE CHARITABLE IN NATURE WITHIN THE MEANING OF SECTION 2(15) OF THE IT ACT A ND HENCE BENEFIT OF SECTION 11 & 12 OF THE IT ACT ARE ALLOWED. SINCE FACTS AND CIRCUMS TANCES ARE SIMILAR IN THIS YEAR ALSO, RESPECTFULLY FOLLOWING THE DECISION OF MY PREDECESS OR AND RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT(E) VS. KESHAV SOCIAL & CHARITABLE FOUNDATION (SUPRA), IT IS HELD THAT ASSESSEE IS ENT ITLED FOR EXEMPTION U/S 11 & 12 OF THE IT ACT. 7.2 WITH REGARD TO MAKING ADDITION OF RS.10,66,000/ - AS CASH CREDIT U/S 68 OF THE IT ACT AND RS.22,28,856/- U/S 69 OF THE IT ACT AND FURTHER ADDITION OF RS.4,10,382/- U/S 68 OF THE IT ACT. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND IDENTICA L ISSUE HAD COME BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE TRIBUNAL VIDE ITA NO.3846/DEL/2009, ORDER DATED 12.05.2010 HAS DECIDED THE ISSUE AND ALLOWED THE CLAIM OF EXEMPTION U/S 11 (1) BY OBSERVING AS UNDER :- 4 ITA NO.3610/DEL/2011 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMI SSIONS MADE BEFORE US. THE AMOUNT OF RS.8,91,000/- IS SHOWN BY THE ASSESSEE AS INCOME FROM PROPERTY HELD UNDER TRUST, BEING THE DONATIONS RECEIVED. THE WHOLE OF T HE AMOUNT HAS BEEN CONSIDERED AS INCOME AND THUS, WE ARE OF THE VIEW THAT EVEN IF ID ENTITY ETC. OF THE DONORS IS NOT PROVED, THE SAME DOES NOT MAKE ANY DIFFERENCE TO TH E INCOME OF THE ASSESSEE. THE ASSESSEE HAS DULY FILED FORM NO.10 BEFORE THE ASSES SING OFFICER. SINCE THE ASSESSEE IS A REGISTERED SOCIETY U/S 12A OF THE ACT, THE BENEFI T CANNOT BE DENIED TO IT. IN THE LIGHT OF THE ORDER OF THE ASSESSING OFFICER THAT THE BOOK S ETC. WERE NOT PRODUCED BEFORE HIM, THE ONLY ADVERSE CONCLUSION WHICH CAN BE DRAWN IS T HAT APPLICATION OF INCOME OF RS.6,245/- IS NOT PROVED AND, THEREFORE, IT CANNOT BE DEDUCTED FROM THE TOTAL INCOME U/S 11(1). HAVING COME TO THIS CONCLUSION WE MAY ST ILL REFER TO THE DECISION IN THE CASE OF KESHAV SOCIAL CHARITABLE FOUNDATION (SUPRA), IN WHICH THE HON'BLE COURT DISPROVED THE APPROACH OF THE ASSESSING OFFICER AND HELD THAT THE PROVISIONS OF SECTION 68 HAVE NO APPLICATION TO THE FACTS OF T HE CASE WHEN DONATIONS WERE SHOWN AS INCOME. FOR THE SAKE OF READY REFERENCE THE RELE VANT PORTION OF THE JUDGMENT IS REPRODUCED BELOW:- 'WE ARE AFRAID THAT IT IS NOT POSSIBLE FOR US TO AG REE WITH THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE AND WE ARE OF THE V IEW THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. IN S.RM. M. CT. M. TIRUPPANI TRUST VS. CIT (1998) 2 30 ITR 636 (SUPREME COURT), IT HAS BEEN HELD THAT U/S 11(1) OF THE ACT, EVERY CHARITABLE OR RELIGIOUS TRUST IS ENTITLED TO DEDUCTION OF CERTAIN INCOME FR OM ITS TOTAL INCOME OF THE PREVIOUS YEAR. THE INCOME SO EXEMPT IS THE INCOME W HICH IS APPLIED BY THECHARITABLE OR RELIGIOUS TRUST TO ITS CHARITABLE OR RELIGIOUS PURPOSES IN INDIA. THIS IS, OF COURSE, SUBJECT TO ACCUMULATION UP TO A SPECIFIED MAXIMUM WHICH, IN THE PRESENT CASE, WAS 25 PER CENT. IN THE APPEAL THAT WE ARE CONCERNED WITH, IT HAS BEEN FOUND AS A MATTER OF FACT THAT THE ASSE SSMENT HAD APPLIED MORE THAN 75 PER CENT OF THE DONATIONS FOR CHARITABLE PU RPOSES AS PER ITS OBJECTS. TO OBTAIN THE BENEFIT OF THE EXEMPTION U/S 11 OF TH E ACT, THE ASSESSEE IS REQUIRED TO SHOW THAT .THE DONATIONS WERE VOLUNTARY . IN THE PRESENT CASE, THE ASSESSEE HAD NOT ONLY DISCLOSED ITS DONATIONS, BUT HAD ALSO DISCLOSED ITS DONATIONS, BUT HAD ALSO SUBMITTED A LIST OF DONORS. THE FACT THAT THE COMPLETE LIST OF DONORS WAS NOT FILED OR THAT THE DONORS WER E NOT PRODUCED, DOES NOT NECESSARILY LEAD TO THE INFERENCE THAT THE ASSESSEE WAS TRYING TO INTRODUCE UNACCOUNTED MONEY BY WAY OF DONATION RECEIPTS. THIS IS MORE PARTICULARLY SO IN THE FACTS OF THE CASE WHERE ADMITTEDLY MORE THAN 75 PER CENT OF THE DONATIONS WERE APPLIED FOR CHARITABLE PURPOSES. SECTION 68 OF THE ACT HAS NO APPLICATION TO THE FAC TS OF THE CASE BECAUSE THE ASSESSEE HAD IN FACT DISCLOSED THE DONATIONS OF RS. 18,24,200/- AS ITS INCOME AND IF CANNOT BE DISPUTED THAT ALL RECEIPTS, OTHER THAN CORPUS DONATIONS, WOULD BE INCOME IN THE HANDS OF THE ASSESSEE. THERE WAS, THEREFORE, FULL DISCLOSURE OF INCOME BY THE ASSESSEE AND ALSO APPLICATION OF THE DONATIONS FOR CHARITABLE 5 ITA NO.3610/DEL/2011 PURPOSES. IT IS NOT IN DISPUTE THAT THE OBJECTS AND ACTIVITIES OF THE ASSESSEE WERE CHARITABLE IN NATURE, SINCE IT WAS DULY REGIST ERED UNDER THE PROVISIONS OF SECTION 12A OF THE ACT. FOR THESE REASONS, WE DO NOT FIND ANY MERIT IN THE APPEAL. NO SUBSTANTIAL QUESTION OF LAW ARISES. DISMISSED.' 3. THE LEARNED COUNSEL DID NOT PRESS THE CROSS OBJE CTION IN WHICH VALIDITY OF ASSESSMENT PROCEEDINGS U/S 147 WAS CHALLENGED. 4. THE RESULT OF AFORESAID DISCUSSION IS THAT THE A SSESSEE IS ENTITLED TO DEDUCTION U/S 11(1) OF ALL EXPENSES EXCEPT THE APPLICATION OF INC OME SHOWN AT RS.6,245/-. 7. IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSES SEES OWN CASE IN THE PRECEDING ASSESSMENT YEAR, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE GROUND RAISED BY THE REVE NUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF MARCH, 2018. SD/- SD/- (KULDIP SINGH) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23-03-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI