Shanti Niketan Trust, Delhi V. Addl. CIT, Ghaziabad

ITA 4109/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7860 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: K P GARG
• Keywords: Depreciation; Charitable institution
• Section: 133(6); 80G; 12AA; 68; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE VICE PRES IDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.-4109/DEL/2015 ( ASSESSMENT YEAR: 2010-11) SHANTI NIKETAN TRUST M/S. P.K. SINGHAL & CO., CAS, E-24A, IIND FLOOR, JAWAHAR PARK, LAXMI NAGAR, DELHI PAN : AAHTS6683C VS . ADDL. CIT RANGE-1 GHAZIABAD APPELLANT RESPONDENT ASSESSEE BY: SH. K.P.GARG, CA REVENUE BY: SHRI G JOHNSON, SR.DR ORDER PER SUDHANSHU SRIVASTAVA, J.M.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER DATED 03.03.2015 PASSED BY THE LD. CIT (APPEALS), MUZAFFA RNAGAR FOR ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY WHICH WAS GRANTED REGISTRATION U/S. 12AA OF THE INC OME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) VIDE ORDER DATED 17.04.2009 WITH EFFECT FROM 01.05.2008. THE ASSESSEE SOCIETY ALSO E NJOYS DATE OF HEARING 0 9 .10.2018 DATE OF PRONOUNCEMENT 07 . 01 .201 9 2 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) RECOGNITION U/S 80G OF THE ACT. AS PER THE MEMORAND UM, THE ASSESSEE SOCIETY HAS BEEN ESTABLISHED TO RUN COLLEG ES WITH AN OBJECT TO ENHANCE THE STANDARD OF EDUCATION. THE RE TURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED DECLARIN G NIL INCOME. SUBSEQUENTLY, THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS REQUIRED TO FURNISH INFORMATION REGARDING DONATIONS RECEIVED ALONG WITH NAMES, ADDRESSES, BANK ACCOUNTS AND COPY OF CO NFIRMATIONS FROM THE DONORS. THE ASSESSEE SUBMITTED DETAILS OF THE DONORS/ DONATIONS. HOWEVER, AS SOME DETAILS AS DESIRED BY T HE ASSESSING OFFICER (AO) WERE NOT FILED, THE AO PROCEEDED TO IS SUE NOTICES U/S 133(6) OF THE ACT TO THE VARIOUS DONORS TO CONFIRM THE DONATIONS. HOWEVER, MOST OF THE NOTICES WERE RETURNED UN-SERVE D. THEREAFTER, THE ASSESSEE WAS ASKED TO PRODUCE THE DONORS BUT TH E ASSESSEE DID NOT PRODUCE THE DONORS. ACCORDINGLY, THE AO CONCLUD ED THAT THE DONATIONS WERE NEITHER GENUINE NOR VOLUNTARY. THE A O PROCEEDED TO HOLD THE DONATIONS AS BEING FICTITIOUS AND UNEXP LAINED CASH CREDITS AND PROCEEDED TO ADD AN AMOUNT OF RS. 99,50 ,000/- TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT IN VIEW TH E DEEMING PROVISIONS OF SECTION 115 BBC OF THE ACT. IN ADDITI ON, THE AO ALSO MADE IN ADDITION OF RS. 45,44,814/- BEING DEPRECIAT ION SAID TO BE CLAIMED BY THE ASSESSEE. THE ASSESSEES APPEAL BEFO RE THE LD. CIT 3 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) (APPEALS) WAS ALSO DISMISSED. NOW, THE ASSESSEE IS BEFORE THE ITAT AND HAS CHALLENGED THE ACTION OF THE LOWER AUTHORIT IES IN TREATING THE IMPUGNED DONATIONS AS ANONYMOUS DONATION U/S 11 5BBC OF THE ACT. THE ASSESSEE IS ALSO CHALLENGING THE ACTIO N OF THE LOWER AUTHORITIES IN ADDING BACK THE DEPRECIATION OF RS. 45,44,814/- TO THE INCOME OF THE ASSESSEE. 3. THE LD. AUTHORISED REPRESENTATIVE, APPEARING ON BEHALF OF THE ASSESSEE, DREW OUR ATTENTION TO THE PROVISIONS OF S ECTION 115BBC OF THE INCOME TAX ACT AND SUBMITTED THAT AS PER SUB SECTION (3), DONATION CAN BE CALLED ANONYMOUS ONLY WHEN THE PERS ON RECEIVING THE CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKIN G SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE P RESCRIBED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS DULY MA INTAINED PARTICULARS OF THE NAMES AND ADDRESSES OF THE DONOR S AND THE SAME HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. IT WAS ALSO SUBMITTED THAT NO OTHER PARTICULARS HAVE SO FAR BEE N PRESCRIBED BY THE ACT. IT WAS ALSO SUBMITTED THAT APART FROM THIS NO OTHER ONUS WAS TO BE DISCHARGED BY THE ASSESSEE IN THIS REGARD . HE ALSO DREW OUR ATTENTION TO THE INCOME AND EXPENDITURE ACCOUNT OF THE SOCIETY AND POINTED OUT THAT THE ASSESSEE HAS DULY SHOWN TH E DONATIONS AS INCOME AND THE EXPENDITURE AS APPLICATION OF INCOME . IT WAS ALSO 4 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) EMPHASIZED THAT THE DONATIONS WERE NOT FROM BOGUS E NTITIES AS ALL THE DONOR COMPANIES WERE REGISTERED COMPANIES WHICH WERE ON THE ROLL OF THE REGISTRAR OF THE COMPANIES. 3.1 WITH RESPECT TO THE DEPRECIATION, WHICH HAS BEE N ADDED BACK BY THE LOWER AUTHORITIES, IT WAS SUBMITTED THAT THI S ACTION WAS INCORRECT AS THE ASSESSEE HAD NOT CLAIMED THE DEPRE CIATION AMOUNT AS APPLICATION OF INCOME AND, THEREFORE, THE AMOUNT OF DEPRECIATION COULD NOT HAVE BEEN ADDED BACK. 4. IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENT ATIVE, WHILE PLACING RELIANCE ON THE CONCURRENT FINDINGS OF THE LOWER AUTHORITIES, SUBMITTED THAT THE FACT REMAINED THAT THE DONORS WE RE NOT PRODUCED BEFORE THE ASSESSING OFFICER AND, THEREFOR E, THE AO WAS CORRECT IN ADDING BACK THE AMOUNT TO THE INCOME OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT T HE AO HAS INVOKED SECTION 68 OF THE ACT READ WITH SECTION 115BBC TO H OLD THAT THE DONATIONS WERE ANONYMOUS. IN OUR CONSIDERED VIEW, S ECTION 68 OF THE ACT HAS NO APPLICATION TO THE FACTS OF THE ASSE SSEE BECAUSE THE ASSESSEE HAS DULY DISCLOSED THE DONATIONS AS ITS IN COME. THERE WAS, THUS, A FULL DISCLOSURE OF INCOME BY THE ASSES SEE AND ALSO THE APPLICATION OF THE DONATIONS FOR CHARITABLE PURPOSE S. IT IS NOT IN DISPUTE THAT THE OBJECTS AND ACTIVITIES OF THE ASSE SSEE ARE CHARITABLE 5 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) IN NATURE SINCE IT IS DULY REGISTERED UNDER THE PRO VISIONS OF SECTION12A. FURTHER, THE AO HAS INVOKED PROVISIONS OF SECTION 115BBC TO HOLD THAT THE IMPUGNED DONATIONS WERE ANO NYMOUS. HOWEVER, THE HONBLE DELHI HIGH COURT IN THE CASE O F DIT (EXEMPTIONS) VS. KESHAV SOCIAL & CHARITABLE TRUST ( 278 ITR 152) OBSERVED THAT THE FACT THAT COMPLETE LIST OF DONORS WAS NOT FILED OR THAT THE DONORS WERE NOT PRODUCED, DOES NOT NECESSA RILY LEAD TO THE INFERENCE THAT THE ASSESSEE WAS TRYING TO INTRODUCE UN-ACCOUNTED MONEY BY WAY OF DONATION RECEIPTS. THE HONBLE COUR T FURTHER OBSERVED THAT AS THE ASSESSEE HAD DISCLOSED THE DON ATION AS INCOME, THE PROVISIONS OF SECTION 68 CANNOT BE APPL IED. 5.1 THE HYDERABAD BENCH OF THE ITAT IN THE CASE OF M/S. VAISHNAVI EDUCATIONAL SOCIETY VERSUS THE DEPUTY CIT CENTRAL CIRCLE, TIRUPATI REPORTED IN 2014 (11) TMI 350 - IT AT HYDERABAD HELD THAT WHERE THE NAMES OF THE DONORS ALONG WITH THEIR ADDRESSES WERE FURNISHED BEFORE THE INVESTIGATION WING OF THE DEPARTMENT AND WERE ALSO RECORDED IN THE BOOKS PRODUCED BY THE ASS ESSEE BEFORE THE AO, SUCH DONATIONS CANNOT BE CLASSIFIED AS ANON YMOUS DONATIONS AS PER THE PROVISIONS OF SECTION 115BBC(3 ) OF THE ACT. IT WAS FURTHER HELD THAT THE ONLY REQUIREMENT U/S. 115 BBC (3) IS THAT THE NAMES AND ADDRESSES OF THE DONOR SHOULD BE MAIN TAINED. 6 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) 5.2 IN THE PRESENT APPEAL, THE ASSESSEE HAD NOT ONL Y DISCLOSED ITS DONATIONS, BUT HAD ALSO SUBMITTED A LIST OF DONORS. THE AO PROCEEDED TO TREAT THE SAME AS ANONYMOUS DONATIONS ONLY FOR THE REASON THAT THE NOTICES U/S 133(6) OF THE ACT WERE RETURNED UN- SERVED AND THE ASSESSEE DID NOT PRODUCE THE DONORS WHEN IT WAS CALLED UPON TO DO SO. HOWEVER, SINCE THE DONATIONS WERE DULY TREATED AS INCOME BY THE ASSESSEE, SECTION 68 COULD NOT HAVE BEEN INVOKED IN VIEW OF THE JUDGMENT OF THE HONBLE DELH I HIGH COURT IN THE CASE OF DIT (EXEMPTIONS) VS. KESHAV SOCIAL & CH ARITABLE TRUST (SUPRA). FURTHER, THE ASSESSEES CASE ALSO DOES NOT FALL IN THE MISCHIEF OF SECTION 115BBC BECAUSE AS PER SUB SECTI ON (3), ANONYMOUS DONATIONS ARE THOSE DONATIONS FOR WHICH N O DETAILS OF THE DONORS ARE MAINTAINED BY THE ASSESSEE. THUS, IT FOLLOWS THAT IF THE DETAILS ARE MAINTAINED, THE DONATIONS CANNOT BE CALLED ANONYMOUS DONATION AND PROVISIONS OF SECTION 115BBC CANNOT BE INVOKED. IN THE INSTANT APPEAL, UNDISPUTEDLY, THE D ETAILS WERE MAINTAINED BY THE ASSESSEE BUT THE ADDITION WAS MAD E ON ACCOUNT OF NON-FURNISHING OF CONFIRMATION LETTERS/NON-PRODU CTION OF THE DONORS BEFORE THE AO. WE ARE OF THE CONSIDERED VIEW THAT SINCE THE ASSESSEE HAS MAINTAINED THE DETAILS OF DONORS, THE DONATIONS CANNOT BE CALLED ANONYMOUS AND PROVISIONS OF SECTIO N 115 BBC CANNOT BE INVOKED IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE. 7 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) IF PROVISION OF SECTION 115BBC CANNOT BE INVOKED, T HE IMPUGNED ADDITION CANNOT BE SUSTAINED. ACCORDINGLY, WE SET A SIDE THE ORDER OF THE LD. CIT (A) ON THE ISSUE AND DIRECT THE AO TO D ELETE THE ADDITION. 5.3 AS FAR AS THE SECOND ISSUE REGARDING ADDING BAC K OF DEPRECIATION IS CONCERNED, WE NOTE THAT THE AVERMEN T OF THE LD. AR IS CORRECT THAT DEPRECIATION HAS NOT BEEN CLAIMED A S AN APPLICATION OF INCOME BY THE ASSESSEE AND, THEREFORE, THERE IS NO QUESTION OF ADDING BACK THE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSEE SUCCEEDS ON THIS GROUND ALSO AND WHILE SETTING ASID E THE ORDER OF THE LD. CIT (A) ON THIS ISSUE, WE DIRECT THE AO TO DELETE THIS ADDITION ALSO. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.01.2019. SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SR IVASTAVA) VICE PRESIDENT JUDICIA L MEMBER DATED: 07.01.2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY 8 ITA N O. 4109/DEL/2015 (SHANTI NIKETAN TRUST) ASSISTANT REGISTRAR ITAT NEW DELHI