MADHAVI RAKSHA SANKALP, MUMBAI V. DDIT (E) I(1), MUMBAI

ITA 3612/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8057 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: RAJESH P SHETH
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Onus to prove; Revised return
• Section: 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3612/M/2015 ASSESSMENT YEAR: 2011-12 MADHAVI RAKSHA SANKALP, NIRMAL NIKETAN, 2 ND FLOOR, DR. BHAJEKAR STREET, MUMBAI-400 004 PAN: AAATM 7188H VS. THE DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)- 1(1), PIRAMAL CHAMBERS, LALBAUGH, MUMBAI - 400012 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJESH P. SHETH, A.R. REVENUE BY : SHRI T.A. KHAN, D.R. DATE OF HEARING : 22.09.2017 DATE OF PRONOUNCEMENT : 11.12.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 20.03.2015 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CHARITABLE ORGANIZATION REGISTERED U/S 12A OF THE ACT. THE AS SESSEE FILED THE RETURN OF INCOME ON 27.09.12 DECLARING TOTAL INCOME OF RS.1,44,218/-. DURING THE YEAR THE ASSESSEE HAD RE CEIVED DONATIONS ITA NO.3612/M/2015 MADHAVI RAKSHA SANKALP 2 TOWARDS CORPUS FUNDS FROM VARIOUS PARTIES. THE SAID DONATIONS WERE RECEIVED THROUGH CHEQUES / DEMAND DRAFTS ISSUED BY BANKS. ALL THESE DONATIONS WERE ACCOMPANIED BY THE LETTERS OF DIRECT IONS BY THE DONORS. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAS APPLIED THE PROVISIONS OF SECTION 115BBC AND ACCORD INGLY DISALLOWED THE CLAIM OF THE ASSESSEE FOR EXEMPTION IN RESPECT OF THE RECEIPTS OF SUCH CORPUS DONATIONS, WHILE TREATING T HE SAME AS ANONYMOUS DONATIONS U/S 115BBC. FURTHER, THE ASSESS EE ALSO FILED REVISED RETURN OF INCOME ON 27.09.2012 WHEREIN RS.1 ,82,75,000/- HAD BEEN SHOWN AS ACCUMULATED U/S 11(2) IN THE PLAC E OF THE OPTION EXERCISED U/S 11(1) IN THE ORIGINAL RETURN OF INCOM E. AO, HOWEVER, HAS NOT GRANTED THE BENEFIT CLAIMED BY THE ASSESSEE U/S 11(2). THE AO HAS HELD THAT THE ASSESSEE IS NOT ENTITLED FOR T HE BENEFIT OF SEC 11(2). DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE LD. A.R. SUBMITTED THAT IN ITA NO.2746/M/2014 THE TRIBUNAL HAS RESTORED THIS MATTER BACK TO THE FILE OF AO AND THEREFORE, T HIS MATTER MAY ALSO BE RESTORED TO THE FILE OF THE AO. 3. THE LD. D.R. HAS NO OBJECTION. 4. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL IN ITA NO.2746/M/2014 WHEREIN THE TRIBUNAL HAS RESTORED TH IS MATTER OF THE ASSESSEE FOR ASSESSMENTS YEAR 2010-11 BY OBSERVING AS UNDER: 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE-TRUST IS REGISTERED U/S 12A OF 1961 ACT WITH DIT(E) , MUMBAI BEARING NO. TR/25225 AND A LSO REGISTERED WITH CHARITY COMMISSIONER , MUMBAI. WE HAVE OBSERVED THAT THE AS SESSEE HAS SHOWN ADDITIONS TO CORPUS DONATIONS TO THE TUNE OF RS. 2,42,26,508/ - . THE ASSESSEE HAS SUBMITTED IN PAPER BOOK FILED WITH THE TRIBUNAL COPIES OF SOME O F SUCH DIRECTION LETTERS OF ITA NO.3612/M/2015 MADHAVI RAKSHA SANKALP 3 DONATION ISSUED BY THE DONORS WHEREBY INSTRUCTIONS ARE ISSUED BY THE DONORS THAT THE DONATIONS SHALL FORM PART OF THE CORPUS OF THE TRUST. THE SAID LETTERS OF DONATIONS ARE PLACED IN PAPER BOOK PAGE 35-123. THE NAMES OF THE DONORS WERE GIVEN IN THE SAID LETTERS BUT THE ADDRESSES AND PAN OF THE DONORS WERE NOT GIVEN. THESE ARE STANDARD LETTERS WHICH ARE IDENTICAL FOR ALL THE DONORS. THE SAID LETTERS CONTAINED THE NAME OF VILLAGE/TALUKA/DISTRICT AND S TATE OF THE DONOR BUT THE ADDRESSES, FATHER'S NAME AND PAN OF THE DONORS ARE NOT THERE. ANOTHER PECULIAR FEATURE IS THAT IT IS A COMMON DIRECTION LETTER ISS UED BY MULTIPLE DONORS RANGING FROM 2-5 DONORS AND DEMAND DRAFT/PAY ORDER MENTIONE D IN SAID COMMON DONATION LETTER ARE ALSO SAME BEING CONSOLIDATED AMOUNT COVE RED FOR THE DONATION IN THE SAID LETTER AS DONATED BY 2-5 DONORS. WE FIND THAT ASSESSEE IS NOT A RELIGIOUS TRUST HENCE THE AMOUNT IS HIT BY PROVISIONS OF SECTION 11 5 BBC OF THE ACT AND THE ONUS IS ON THE ASSESSEE TO PROVE THAT IT IS COVERED BY EXCE PTIONS TO CHARGEABILITY TO TAX AS IS PROVIDED BY PROVISIONS OF SECTION 115BBC OF 1961 ACT, NAMELY THAT THE ASSESSEE MAINTAINED A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED OR ELSE IT IS A RELIGIOUS TRUST. SECTION 115BBC OF 1961 ACT IS REPRODUCED HEREUNDER: '[ANONYMOUS DONATIONS TO BE TAXED IN CERTAIN CASES. 115BBC. (1) WHERE THE TOTAL INCOME OF AN ASSESSEE, BEING A PERSON IN RECEIPT OF INCOME ON BEHALF OF ANY UNIVERSITY OR OT HER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAD) OR SU B-CLAUSE (VI) OR ANY HOSPITAL OR OTHER INSTITUTION REFERRED TO IN SUB-CLAUSE (III AE) OR SUB-CLAUSE (VIA) OR ANY FUND OR INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR ANY TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) OF CLAUSE (23C) OF SECTION 10 OR ANY TRUST OR INSTITUTION REFERRED TO IN SECTION 11 , INCLUDES ANY INCOME BY WAY OF ANY ANONYMOUS DONATION, THE INCOME-TAX PAYABLE SHALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCO ME BY WAY OF ANY ANONYMOUS DONATION, AT THE RATE OF THIRTY PER CENT; AND (II) THE AMOUNT OF INCOME-TAX WITH WHICH THE ASSESS EE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME REFERRED TO IN CLAUSE (I). THE FOLLOWING CLAUSES (I) AND (II) SHALL BE SUBSTIT UTED FOR THE EXISTING CLAUSES (I) AND (II) OF SUB-SECTION (1) OF SECTION 115BBC BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4-2010 : (I) THE AMOUNT OF INCOME-TAX CALCULATED AT THE RATE OF THIRTY PER CENT ON THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED IN EXCESS OF THE HIGHER OF THE FOLLOWING, NAMELY:-- (A) FIVE PER CENT OF THE TOTAL DONATIONS RECEIVED B Y THE ASSESSEE; OR (B) ONE LAKH RUPEES; AND (II) THE AMOUNT OF INCOME-TAX WITH WHICH THE ASSESS EE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED. ITA NO.3612/M/2015 MADHAVI RAKSHA SANKALP 4 (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY TO ANY ANONYMOUS DONATION RECEIVED BY-- (A) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS PURPOSES; (B) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS AND CHARITABLE PURPOSES OTHER THAN ANY ANONYMOUS DO NATION MADE WITH A SPECIFIC DIRECTION THAT SUCH DONATION IS FOR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OT HER MEDICAL INSTITUTION RUN BY SUCH TRUST OR INSTITUTION. (3) FOR THE PURPOSES OF THIS SECTION, 'ANONYMOUS DO NATION' MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB-CLAUSE (I IA) OF CLAUSE (24) OF SECTION 2 , WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES N OT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE P RESCRIBED.]' THE ASSESSEE IN THE INSTANT CASE COULD NOT PROVIDE ADDRESSES, FATHER'S NAME AND PAN OF THE DONORS AND THE ASSESSEE IS ALSO NOT A RE LIGIOUS TRUST TO BE COVERED UNDER EXCEPTION. THE ASSESSEE HAS COME FORWARD WITH A REQ UEST THAT IF AN OPPORTUNITY IS GIVEN TO THE ASSESSEE, THE ASSESSEE CAN PRODUCE THE DONORS BEFORE THE AO AS DIRECTED BY THE AO. IT IS ALSO SUBMITTED THAT PAN A ND ADDRESSES OF ALL THE DONORS FOR VERIFICATION BY THE A.O. WILL ALSO BE FURNISHED FOR VERIFICATION BY THE AO. CONSIDERING THE FACTUAL MATRIX OF THE CASE , KEEPING IN VIEW TH E PROVISIONS OF SECTION 115BBC OF 1961 ACT AND IN THE INTEREST OF JUSTICE AND FAIR PL AY, WE ARE OF CONSIDERED VIEW THAT THIS MATTER NEEDS TO BE SET ASIDE AND RESTORED TO T HE FILE OF THE A.O FOR NECESSARY ENQUIRY AND VERIFICATION OF THE SAID DONATIONS SO R ECEIVED BY THE ASSESSEE AS TO GENUINENESS AND ALSO FOR VERIFYING COMPLIANCE OF TH E RELEVANT SECTION 115BBC OF 1961 ACT. THE ONUS AS WELL BURDEN OF PROOF IS ENTIR ELY ON THE ASSESSEE TO PROVIDE TO THE AO ALL RELEVANT DETAILS AS CONTEMPLATED UNDER SECTION 115BBC OF 1961 ACT TO THE SATISFACTION OF THE AO AS TO COMPLIANCE OF SECTION 115BBC OF 1961 ACT AND AS TO GENUINENESS OF THE SAID DONATION. THE ASSESSEE IS D IRECTED TO FURNISH PAN , ADDRESSES AND ALL OTHER RELEVANT DETAILS OF ALL THE SAID DONORS BEFORE THE AO TO SATISFY MANDATE OF SECTION 115BBC OF 1961 ACT. THE ASSESSEE IS DIRECTED TO PRODUCE BEFORE THE AO DONORS , 25% IN NUMBERS FOR DONATION UP-TO RS 20,000/- AND 10% IN NUMBER FOR DONATIONS ABOVE RS.20,000/- TO SATISFY T HE AO ABOUT COMPLIANCE OF MANDATE OF SECTION 115BBC OF THE ACT AND GENUINENESS OF THE SUCH DONATIONS. THE SELECTION OF DONORS SHALL BE ON RANDOM BASIS AT THE SOLE DISCRETION OF THE AO , WHICH SHORT LISTED LIST OF DONORS SHALL BE SUPPLIED BY TH E AO TO THE ASSESSEE FOR NECESSARY COMPLIANCE AS PER OUR ABOVE DIRECTIONS. IF SO REQUI RED FOR ENSURING COMPLIANCE OF SECTION 115BBC OF 1961 ACT AND FOR ESTABLISHING GENUINENESS OF TH E SAID DONATIONS OF RS. 2,42,26,508/-, THE AO CAN ENHANCE THE NUMBER OF PERSONS TO BE PRODUCED BY THE ASSESSEE BEFORE HIM HIGHER THAN MINIMUM STIPULA TED BY US AS ABOVE. SIMILARLY, WITH RESPECT TO THE DENIAL OF THE EXEMPTION AMOUNT TO THE TUNE OF RS. 1,35,70,000/- FOR 15% OF INCOME BEING SET ASIDE FOR ACCUMULATION TO BE SPENT FOR CHARITABLE PURPOSES IN THE NEXT YEAR AS PROVIDED U/S 11(1) OF 1961 ACT. THE ASSESSEE HAD STATED THAT THE TRUST WAS ACTIVELY CONSIDERING LAUN CHING OF PROJECTS IN THE NEXT YEAR AFTER PLANS ARE FINALIZED AND THE AMOUNT SO ASIDE W AS SPENT IN THE NEXT YEAR. IN OUR CONSIDERED VIEW AND IN THE INTEREST OF JUSTICE AND FAIR PLAY, THIS CLAIM OF THE ITA NO.3612/M/2015 MADHAVI RAKSHA SANKALP 5 ASSESSEE THAT THE SAID AMOUNT WAS KEPT FOR LAUNCHIN G OF PROJECT NEXT YEAR AFTER PLANS ARE FINALIZED AND WAS SPENT IN THE NEXT YEAR ACCORDINGLY ALSO NEED VERIFICATION AND AS SUCH THE MATTER IS SET ASIDE AND RESTORED TO THE FILE OF THE A.O. FOR PROPER VERIFICATION WITH RESPECT TO THE CONTENTIONS OF THE ASSESSEE TO BE DECIDED BY THE AO IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE AO TO THE ASSE SSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. THE EVIDENCES AND CONTENTIONS OF THE ASSESSEE IN ITS DEFENSE SHALL BE ADMITTED BY THE AO IN SET ASIDE PROCEEDINGS IN THE INTEREST OF JUSTICE. WE ORDER ACCORDINGLY. 5. RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THIS MATTER BACK TO THE FILE OF AO. 6. IN THE RESULT, APPEAL IS ALLOWED AS INDICATED AB OVE. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 11.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.