ITO, Mysore V. Sri. Durga NImishamba Trust, Mysore

ITA 407/BANG/2011

• Counselvise Citation: 40721114 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-06-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAVANAN B JT
• Assessee Lawyers: B P SACHIN KUMAR
• Keywords: Charitable institution
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NOS. 407 & 408/BANG/2011 ASSESSMENT YEARS : 2000-01 & 2001-02 THE INCOME TAX OFFICER, WARD 1(3), MYSORE. VS. SRI DURGA NIMISHAMBA TRUST, NO.1158, 1 ST FLOOR, IST MAIN, ROAD, ARAVINDANAGAR, MYSORE. PAN : AABTS 4917M APPELLANT RESPONDENT APPELLANT BY : SHRI SARAVANAN, B., JT.CIT(DR) RESPONDENT BY : SHRI B.P. SACHIN KUMAR, C.A. DATE OF HEARING : 28.06.2012 DATE OF PRONOUNCEMENT : 04.07.2012 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THESE ARE TWO APPEALS BY THE REVENUE AGAINST THE COMMON ORDER DATED 31.01.2011 OF THE CIT(APPEALS), MYSORE RELATI NG TO ASSESSMENT YEARS 2000-01 & 2001-02. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN BOTH THE APPEALS ARE WITH REGARD TO THE ACTION OF THE CIT(APPEALS) I N ALLOWING EXEMPTION U/S. 11 OF THE INCOME-TAX ACT, 1961 [THE ACT] TO THE A SSESSEE. ITA NOS.407 & 408/BANG/2011 PAGE 2 OF 6 3. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2000-01 DECLARING A NIL INCOME IN THE STATUS OF A TRUST. I N THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD COME INTO EXISTENCE ON 28.04.1997 AS A PUBLIC CHARITABLE TRUST AND IMMEDIATELY ON ITS FORMATION, THE ASSESSEE APPLIED FOR REGISTRA TION U/S. 12AA AND SECTION 80G OF THE ACT, WHICH WAS GRANTED. THE AO WAS OF THE VIEW THAT THE TRUST WAS NOT GENUINE AND WAS NOT CARRYING ON C HARITABLE ACTIVITIES. IN THE ORDER OF ASSESSMENT THE AO HAS REFERRED TO THE FACT THAT IN THE A.YS. 1998-99 & 1999-2000, SCRUTINY ASSESSMENTS WERE DONE IN THE CASE OF THE ASSESSEE. IN THOSE YEARS, THE FINDING OF THE AO WA S THAT THERE WAS NO GENUINE TRUST IN THE NAME OF THE ASSESSEE CARRYING ON PUBLIC CHARITABLE ACTIVITIES AS DEFINED U/S. 2(15) OF THE ACT. THE F URTHER FINDING OF THE REVENUE WAS THAT THE ACTIVITIES ALLEGED TO BE CARRIED ON BY THE ASSESSEE WERE IN FACT THE ACTIVITIES OF SHRI HARSHA V. SHASTRY, WHO WAS C ARRYING ON THE PROFESSION OF PROPHESYING. IN THOSE ASSESSMENT YEARS, THE ENT IRE INCOME WAS BROUGHT TO TAX IN THE STATUS OF AOP IN THE ASSESSEES CASE. THE SAME WAS ALSO BROUGHT TO TAX IN THE HANDS OF SHRI H.V. SHASTRY IN HIS INDIVIDUAL CAPACITY. THE AO RELIED ON THE FINDINGS FOR THE A.YS. 1998-99 IN COMING TO THE CONCLUSION THAT THE ASSESSEE TRUST WAS NOT GENUINE AND WAS NOT CARRYING ON PUBLIC CHARITABLE ACTIVITIES. 4. APART FROM THE ABOVE, THE AO RELIED ON THE ENQUI RIES MADE IN THE PRESENT ASSESSMENT YEAR WHICH REVEALED THAT NO OTHE R TRUSTEE, EXCEPT ONE SHRI RAVINDRA PRAKASH COULD BE TRACED. THE AO ALSO RELIED ON THE FACT THAT THE ADDRESS OF THE ASSESSEE GIVEN AS 1087, IST FLOO R, LALITHADRI ROAD, KUVEMPUNAGAR, MYSORE, DID NOT HAVE THE OFFICE OF TH E ASSESSEE AND THAT ITA NOS.407 & 408/BANG/2011 PAGE 3 OF 6 SHRI H.V. SHASTRY AND HIS FAMILY HAD SHIFTED FROM M YSORE TO RAJARAJESHWARI NAGAR, BANGALORE. THE ASSESSEE HAD INFORMED THAT T HE TRUST HAS SHIFTED ITS OFFICE AT NO.1158, IST FLOOR, 1 ST MAIN, ARAVINDANAGAR, MYSORE-23, AND EVEN IN THIS ADDRESS, ONLY THE FAMILY MEMBERS OF SHRI H. V. SHASTRY WERE RESIDING. 5. ON THE APPLICATION OF INCOME BY THE ASSESSEE FOR PUBLIC CHARITABLE PURPOSES, THE AO RELIED UPON THE FINDINGS GIVEN IN THE A.YS. 1998-99 & 1999-2000 WHEREIN THE REVENUE HAD HELD THAT NO PUBL IC CHARITABLE ACTIVITIES WERE CARRIED ON BY THE ASSESSEE. APART FROM THE AB OVE, THE ASSESSEE ALSO FOUND THAT THE TOTAL INCOME SHOWN BY THE ASSESSEE W AS RS.17,71,360 AND VARIOUS EXPENSES HAD BEEN CLAIMED AS APPLICATION OF INCOME FOR CHARITABLE ACTIVITIES. ONE SUCH HEAD WAS ANNADHANA EXPENSES. IN SUPPORT OF THE AFORESAID EXPENSES, VOUCHERS HAD BEEN FILED BY THE ASSESSEE WHICH, SHOWED PURCHASE OF PROVISIONS WERE MADE FROM ONE TR UPTI ENTERPRISES. ACCORDING TO THE AO, SUCH A BUSINESS ENTITY WAS NOT FOUND AT THE ADDRESS GIVEN IN THE BILLS OF TRUPTI ENTERPRISES PERTAINING TO THE CALENDAR YEAR 1999 FILED BY THE ASSESSEE BEFORE THE AO. SIMILARLY, DONATION OF AMBULANCE VAN TO ANOTHER CHARITABLE INSTITUTION WAS RETURNED BY THE DONEE AND THEREFORE THE AO HELD THAT THERE WAS NO APPLICATION OF INCOME. EXPENDITURE ON ACCOUNT OF RENT WAS PAID AND THE AO ON ENQUIRY C AME TO KNOW THAT THE PREMISE WAS NOT OCCUPIED BY THE TRUST AND THEREFORE THIS WAS NOT CONSIDERED AS APPLICATION OF INCOME. EVEN IN RESPE CT OF TRAVELLING EXPENSES, SIMILAR CONCLUSIONS WERE DRAWN BY THE AO BECAUSE OF THE ABSENCE OF GENUINE ACTIVITIES OF THE TRUST. APART FROM THE ABOVE, ADVANCES WERE GIVEN FOR PURCHASE OF LAND. THE TRANSACTION O F PURCHASE COULD NOT BE COMPLETED. THE AO WAS OF THE VIEW THAT THE AMOUNT OF ADVANCE GIVEN ITA NOS.407 & 408/BANG/2011 PAGE 4 OF 6 UNDER THE AGREEMENT WOULD HAVE EARNED INTEREST @ 10 % AND ON THAT BASIS, THE AO ADDED A SUM OF RS.2,40,000 TO THE TOTAL INCO ME OF THE ASSESSEE. 6. ON APPEAL BY THE ASSESSEE, THE LD. CIT(APPEALS) FOUND THAT THE FINDINGS FOR THE A.YS. 1998-99 & 1999-2000 HAVE ALR EADY BEEN REVERSED BY THE TRIBUNAL IN ITA NOS. 23 & 24/BNG/06 AND THAT THE HONBLE HIGH COURT HAD ALREADY CONFIRMED THE ORDER OF THE TRIBUNAL. A PART FROM THE ABOVE, THE LD. CIT(A) ALSO FOUND THAT VARIOUS EXPENSES OF THE ASSESSEE RELATING TO NOT CARRYING ON OF CHARITABLE ACTIVITIES AS WELL AS THE INSTANCES OF NON- APPLICATION OF INCOME AS ALLEGED BEFORE THE AO IN T HE ORDER OF ASSESSMENT WERE FINDINGS WHICH COULD NOT BE SUSTAINED. FOR EX AMPLE IN THE CASE OF ANNADHANA EXPENSES WHICH WAS DISBELIEVED BY THE AO FOR THE REASON THAT THE PROVISIONS PURCHASED FROM TRUPTI ENTERPRISES CO ULD NOT BE PROVED BECAUSE OF THE ABSENCE OF THE SAID ENTITY IN THE AD DRESS OF BILLS FILED BY THE ASSESSE. THE LD. CIT(A) HELD THAT THE NON-AVAILABI LITY OF THE VENDOR IN THE SAID ADDRESS AFTER FOUR YEARS OF THE TRANSACTION CA NNOT BE PROOF TO HOLD THAT THE PURCHASES WAS NOT GENUINE. THE CIT(A) ALSO FOU ND THAT IN THE SHOW CAUSE NOTICE ISSUED BY THE AO IN THE COURSE OF ASSE SSMENT PROCEEDINGS REGARDING THE AFORESAID EXPENSES THE AO HAS NOT DOU BTED DISTRIBUTION OF FOOD BUT IN THE ORDER OF ASSESSMENT HAD TAKEN A DIF FERENT STAND. SIMILARLY, THE OTHER FINDINGS OF THE AO WITH REGARD TO THE DIS ALLOWANCE OF RENT AND DONATION OF AMBULANCE VAN AND TRAVELLING & SALARY E XPENSES WERE ALSO NOT ACCEPTED BY THE LD. CIT(A). THE LD. CIT(A) THUS HE LD THAT THE ASSESSEE WAS CARRYING ON CHARITABLE ACTIVITIES AND APPLYING ITS INCOME FOR CHARITABLE PURPOSES AND HENCE WAS ENTITLED TO EXEMPTION U/S. 1 1 OF THE ACT. ITA NOS.407 & 408/BANG/2011 PAGE 5 OF 6 7. IN THE A.Y. 2001-02, SIMILAR FINDINGS WERE GIVEN BY THE AO AS WELL AS THE LD. CIT(A). 8. AT THE TIME OF HEARING OF THESE APPEALS, IT WAS SEEN THAT THE ISSUES RAISED BY THE REVENUE IN THESE APPEALS HAVE ALREADY BEEN CONCLUDED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.YS. 1998-00 & 1999-2000 IN ITA NO.23 & 24/BANG/06 ORDER DATED 1 1.5.2007. THOSE FINDINGS OF THE TRIBUNAL HAVE SINCE BEEN CONFIRMED BY THE HONBLE HIGH COURT OF KARNATAKA IN ITA NO.779 OF 2007 AND ITA NO.443 OF 2009 DATED 15.04.2008 AND 05.09.2011 RESPECTIVELY. WE ARE ALSO IN AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) THAT THE CONCLUSION OF THE AO WITH REGARD TO THE INSTANCES OF NON-APPLICATION OF INCOME FOR CHAR ITABLE PURPOSE CITED BY THE AO IN THE ORDER OF ASSESSMENT CANNOT BE SUSTAIN ED AS THE SAME WERE CONTRARY TO THE STAND OF THE AO IN THE COURSE OF AS SESSMENT PROCEEDINGS OR WERE BASED ON INSUFFICIENT ENQUIRES OR BASED ON EVI DENCE WHICH WAS NOT CONFRONTED TO THE ASSESSEE. WE THEREFORE CONFIRM THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) AND DISMISS BOTH THESE APPEALS OF THE REVENUE. 9. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF JULY, 2012. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASUDEVAN ) VICE PRESIDENT JUDICIAL MEMB ER BANGALORE, DATED, THE 4 TH JULY , 2012. DS/- ITA NOS.407 & 408/BANG/2011 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.