Sh. Makhan Singh Mukh Sewadar, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 440/ASR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73213 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Capital asset; Gift; Business income; Depreciation; Business expenditure; Charitable institution; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 80C; 142(1); 234B; 80G; 194C; 12AA; 32; 131; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.440(ASR)/2012 ASSESSMENT YEAR:2009-10 PAN :BBFPS2614A SH. MAKHAN SINGH MUKH SEWADAR, VS. THE INCOME TAX O FFICER, DERA SANT AMIR SINGH, WARD 2(1), BAZAR SATTOWALA, AMRITSAR. KATRA KARAM SINGH, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.PADAM BAHL, CA RESPONDENT BY:SH. MAHAVIR SINGH, DR DATE OF HEARING: 08/01/2014 DATE OF PRONOUNCEMENT:28/01/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 18.10.2012 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1 THAT WORTHY CIT(A), AMRITSAR HAS GROSSLY ERRED I N CONFIRMING THE ACTION OF INCOME TAX OFFICER, WARD 2(1), AMRITS AR IN NOT APPRECIATING THAT THE ASSESSEE HAD DUAL STATUS, ONE BEING HIS ITA NO.440(ASR)/2012 2 PROFESSIONAL STATUS AS A RELIGIOUS PREACHER/KATHA V ACHAK AND OTHER AS A CARETAKER/MUKH SEWADAR OF DERA SANT AMI R SINGH JI A TAKSAL UNDER THE AEGIS OF GURU GOBIND SINGH J I. 2. THAT BOTH THE LD. CIT(A) AND ITO WARD 2(1) HAVE GROSSLY ERRED IN TREATING THE VOLUNTARY CONTRIBUTIONS MADE BY T HE GENERAL PUBLIC/DEVOTEES TO DERA SANT AMIR SINGH AS PROFE SSIONAL INCOME OF THE ASSESSEE AND IN MAKING ADDITION OF RS.1,21,62,318/-. 3. THAT BOTH THE LD. CIT(A) AND ITO WARD 2(1) HAVE FAILED TO APPRECIATE THAT VOLUNTARY CONTRIBUTIONS COLLECTED AND DEPOSITED IN SAVING ACCOUNTS MAINTAINED WITH CITI B ANK, HDFC BANK, PUNJAB & SIND BANK, STATE BANK OF INDIA WERE TOWARDS A SPECIFIC PROJECT TO DONATE A GOLD CHATTE R TO GURUDWARA SHRI HAZUR SAHIB AND TO CARRY OUT OTHER CHARITABLE AND RELIGIOUS ACTIVITIES INVOLVING FREE LANGARS, MA RRIAGES OF POOR PEOPLE, RELIGIOUS PROCESSIONS AND KARSEWA ETC . 4. THAT BOTH THE LD. CIT(A) AND ITO WARD 2(1) HAVE GROSSLY ERRED IN CONDUCTING THAT BENEFIT OF SET OFF OF UTILIZATIO NS TOWARDS CHARITABLE/RELIGIOUS ACTIVITIES CAN ONLY BE GIVEN T O TRUSTS REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961. 5. THAT BOTH THE LD. CIT(A) AND ITO WARD 2(1) HAVE FAILED TO APPRECIATE THAT EVEN CAPITAL EXPENDITURE INCURRED F OR RELIGIOUS AND CHARITABLE ACTIVITIES IS ALLOWABLE AS APPLICATI ON OF INCOME TOWARDS THE OBJECTS OF THE DERA. 6. THAT BOTH THE LD. CIT(A) AND ITO WARD 2(1) HAVE GROSSLY ERRED IN DISALLOWING EXPENSES OF RS.7,42,848/- U/S 40(A)( IA) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT INCOME OF A SSESSEE WAS BUSINESS INCOME & NO TDS HAD BEEN DEDUCTED. 7. THAT WORTHY CIT(A) HAS GROSSLY ERRED IN CONFIRM ING THE ACTION OF THE ITO, WARD 2(1), AMRITSAR IN CHARGING INTERES T U/S 234A, 234B & 234C OF THE INCOME TAX ACT, 1961. ITA NO.440(ASR)/2012 3 2. THE BRIEF FACTS AS ARISING IN PARA 4 OF CIT(A) S ORDER ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: RETURN DECLARING INCOME OF RS.2,10,870/- FILED ON 31.3.10 WAS PROCESSED U/S 143(1) . LATER ON, THE CASE WAS SELEC TED FOR SCRUTINY UNDER CASS. AFTER ISSUING INITIAL STATUTORY NOTICE U/S ON 28.8.10 THE SAME WAS FOLLOWED BY NOTICES U/S 139C(1)/139(D)(C) OF THE ACT AND IN RESPONSE TO IT, THE ASSESSEE CATEGORICALLY FILED COPY OF HIS INCOME & EXPENDITURE A/C & OTHER DOCUMENTS BUT STATED THAT N O BANK ACCOUNT IS MAINTAINED BY HIM IN HIS OWN NAME. IN RESPONSE TO SUBSEQUENT NOTICES U/S 142(1)/142(2), THE AO CONSIDERED ASSESS EES REPLY DT. 15.6.11 WITH DECLARATION, BY INCORPORATING THE SAME IN HIS ASSTT. ORDER. ASSESSEES REPRESENTATIVE WAS CONFRONTED WITH SB A/ C WITH HDFC BANK, GOLDEN TEMPLE, AMRITSAR, IN WHICH HUGE CASH W AS DEPOSITED AND WAS ASKED TO EXPLAIN THE SOURCE OF SUCH CASH D EPOSITS AND IN RESPONSE THERETO, THE ASSESSEE REPLIED VIDE HIS LET TER DT. 29.7.11 STATING THEREIN THAT THE ASSESSEE IS A SEWADAR OF OLD HISTO RIC DERA AND IS ENGAGED IN CHARITABLE AND RELIGIOUS ACTIVITIES WHIC H CARE BEING CARRIED WITH THE HELP OF FUNDS/DONATIONS COLLECTED FROM GEN ERAL PUBLIC AND ARE DEPOSITED IN THE BANK ACCOUNT. VIDE SUPPLEMENTARY R EPLY DATED 25.6.2011 IT WAS STATED THAT THE BANK ACCOUNT OF S ANT BABA MAKHAN SINGH AS SEWADAR OF DERA SANT AMIR SINGH JI ARE MAI NTAINED WITH CITY BANK, HDFC BANK, P & S BANK AND SBI. DURING T HE YEAR UNDER CONSIDERATION, HE HAD UNDERTAKEN A PROJECT TO DON ATE GOLD CHHATTAR TO GURDWARA SHRI HAZUR SAHIB. CONSEQUENTLY THE AO ISSU ED A DETAILED QUESTIONNAIRE ALONG WITH NOTICE U/S 142(1) DT. 12.1 0.2011 FIXING THE CASE FOR 24.1P.11, WHICH STAND INCORPORATED IN THE AOS ASSTT. ORDER ITSELF AND THE ASSESSEES REPLY FILED IN RESPONSE THERETO STANDS INCORPORATED IN THE AOS ASSTT. ORDER ITSELF. IT W AS FOLLOWED BY SUPPLEMENTARY EXPLANATION DT. 3.11.2011 BESIDES RE ITERATING HIS EARLIER STAND, ADDED THAT IN THE LIGHT OF CONFIRMAT ION LETTERS FROM THE DONORS, THE FACT THAT THE DONATIONS RECEIVED WERE D ULY DEPOSITED INTO THE BANKS CONFIRMATION OF THE JEWELER, M/S. SALIG R AM KISHAN CHAND FOR MAKING OF GOLD, CONTENDED THAT THE PRIMARY ONUS STANDS DISCHARGED BY HIM AND THUS THE ONUS NOW STANDS SHIF TED ON THE DEPTT. TO PROVE THE CONTRARY WITH EVIDENCE. WHEN SPECIFICA LLY ASKED TO EXPLAIN AS TO WHY APPELLANTS INCOME MAY NOT BE COM PUTED IN ACCORDANCE WITH PROVISIONS OF SECTION 28 TO 43, THE APPELLANTS COUNSEL FILED SUPPLEMENTARY SUBMISSIONS DT. 17.11.1 1 CONTENDING ITA NO.440(ASR)/2012 4 THEREIN THAT SINCE THE APPELLANT IS NOT ENGAGED IN ANY BUSINESS AND ALSO BY PLACING RELIANCE ON THE CASE OF LAW OF THE HONB LE SUPREME COURT IN THE CASE OF CST VS. SAI PUBLICATION FUND, URGED THAT SINCE THE DEPARTMENT COULD NOT BE ABLE TO ESTABLISH THAT ANY BUSINESS ACTIVITIES CARE CARRIED OUT BY THE APPELLANT WITH PROFIT MOT IVE AND SINCE THE FUNDS COLLECTED HAVE BEEN UTILIZED FOR THE PURPOSES FOR WHICH THESE ARE COLLECTED THE BENEFIT OF SET OF TOTAL UTILIZATION/ APPLICATION OF FUNDS AGAINST THE COLLECTION HAS TO BE ALLOWED TO THE APP ELLANT. THE APPELLANTS EXPLANATION DID NOT FIND FAVOAUR WITH T HE AO. THEREAFTER, THE APPELLANT WAS CONFRONTED WITH THE NOMINATION MA DE IN THE BANK ACCOUNT OPENING FORM VIDE NOTICE DT. 17.11.11 AND I N REPLY DT. 6.7.11 THE COUNSEL OF THE APPELLANT EXPLICITLY EXPRESSED HIS UNAWARENESS TO THE ABOVE FACT. IT HAS ALL ALONG BEEN THE STAND OF THE APPELLANT THAT SINCE THE FUNDS OF THE SO-CALLED DERA ARE BEING UTI LIZED AT HIS SWEET WILL AND SINCE AFTER DEATH OF THE SELF STYLED SEWAD AR, MR. MAKAHN SINGH, THE FUNDS OF THE DERA ARE LIKELY TO BE SHIFT ED TO HIS BLOOD RELATION, SON ( AS IS APPARENT AND EVIDENT FROM THE BANK OPENING FORM NOMINATION, ALREADY CONFRONTED TO THE APPELLANT). I T WAS POINTED OUT TO THE APPELLANT DURING THE ASSTT. PROCEEDINGS, THE APPELLANT DERA HAS NOT BEEN REGISTERED U/S 12AA WITH THE APPROPRIATE AUTHORITY SO AS TO QUALIFY TO CLAIM BENEFITS U/S 11. FURTHER, AS REGAR DS THE SO CALLED CORPUS THE SAME HAS NOT BEEN FULLY SUBSTANTIATED. N O CERTIFICATE U/S 80G(5) PRODUCED SO AS TO ESTABLISH ITS DONATIONS E LIGIBLE FOR DEDUCTION U/S 80G. NOR IT IS THE APPELLANTS CASE T HAT THE APPELLANT HAS SPENT 85% OF THE CORPUS FUNDS AND AS SUCH QUALIFY F OR DEDUCTION U/S 11 ETC. THE COLLECTION OF THE DERA EXCEEDED THE LIM IT PRESCRIBED U/S 44AB BUT THE ACCOUNTS ARE NEITHER GOT AUDITED NOR S UPPORTED BY ANY AUDIT REPORT. EVEN VARIOUS CONFIRMATIONS FURNISHED BEFORE THE AO ARE STEREO-TYPE ONES INDICATING CASH DONATAIONS RANGING FROM RS.100, RS.2000, RS.3100, RS.5000, RS.5100, RS.10,000/-, RS .11,000, RS.15,000, RS.21,000. FURTHER, IT IS NOT THE APPELL ANTS CASE THAT ITS ANNUA THE APPELLANTS PLEA THAT HE IS A PREACHER PERFORMING KATHA/KIRTAN DARBAR/RELIGIOUS CELEBRATIONS AND FUND S WERE COLLECTED FROM TIME TO TIME BY PURSUING THE PUBLIC, PARTICIPA NTS, AUDIENCE TO MAKE DONATIONS/CONTRIBUTIONS DID NOT FIND FAVOUR WI TH THE AO AS HE WAS OF THE CONFIRMED VIEW THAT IT CONSTITUTES INCOM E FROM BUSINESS PROFESSION OR VOCATION AS DEFINED IN SECTION2 (36) OF THE ACT BY REBUTTING THE CASE LAWS RELIED BY THE APPELLANTS C OUNSEL LIKE CST V. SAI PUBLIC FUND (2002) 4 SCC 57 (SC) AND DIRECTOR O F INCOME TAX (EXEMPTION) VS. INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (2011) ITA NO.440(ASR)/2012 5 202 TAXMAN 138 (DELHI H/COURT) AS INAPPLICABLE BEIN G DISTINGUISHABLE ON FACTS AND PLACING HEAVY RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KRISHNA MENON (P) V. CIT (1959) 35 ITR 48 (SC, THE AO REJECTED THE APPELLAN TS CONTENTIONS AND PROCEEDED T ASSESSEE THE APPELLANTS INCOME UND ER THE HEAD INCOME FROM PROFIT/GAINS. WHILE DOING THIS, THE AO HAD MADE FOLLOWING ADDITIONS/DISALLOWANCES; (1) RS.13,35,658 /- TREATING THE SAME AS CAPITAL EXPENDITURE NOT ELIGIBLE FOR TREATI NG AS REVENUE EXPENDITURE U/S 28 TO 40 SUBJ. TO ALLOWANCE TO DEP . U/S 32 THEREON. II) FOR NON-PRODUCTION OF TDS U/S 194C ON EXPENDIT URE OF RS.742848/-(COMPRISING OF RS.264000 AS ADVERTISEME NT, RS.264000 ADVERTISEMENT PTC CHANNEL AND RS.211000 AS JOB CHAR GES PAID) ADDED BACK U/S 40A(IA). III) RS.511046 AS INSURANCE INCLUDING RS.331575 PAI D TO BIRLA SUN LIFE, RS.42895/- PAID TO LIC FOR PURCHASE OF PERSON AL INSURANCE POLICIES AND IN RESPECT OF THE BALANCE FOR WANT OF RELEVANT DETAILS, ADDED BACK BEING NOT PERTAINING TO THE APPELLANTS BUSINESS OR PROFESSION/VOCATION, SUBJECT TO ALLOWANCE OF DEDUC TION U/S 80-C AS PER LAW. IV) DONATION OF RS.1,39,85,512/- REPRESENTING DONA TION OF GOLD CHATTAR WEIGHING 12 K 670 GMS TO SRI HAZUR SAHIB SU PPORTED BY A CERTIFICATE/RECEIPT NO.7302 DT. 2/11/2008 FROM TAKH AT SACHKHAND SRI HAZUR ABCHAINAGAR SAHIB, NANDED, MAHARASHTRA ENJOYI NG DEDUCTION U/S 80G, TREATING THE SAME BEING NOT ALLOWABLE EXP ENDITURE ON ACCOUNT OF CHARITY SUBJECT TO DEDUCTION U/S 80G. V) DISALLOWANCES OF RS.7091/-, RS.77597/- AND RS.1 6,990/- ON A/C OF TELEPHONE, VEHICLE EXPENSES AND TRAVELING EXPENS ES WHEREIN THE PERSONAL ELEMENT ON THE PART OF THE APPELLANT CANNO T BE RULED OUT. TAKING INTO ACCOUNT THE ABOVE ADDITIONS/DISALLOWAN CES, THE NET ASSESSABLE BUSINESS INCOME OF RS.1,23,73,192/- HAS BEEN DETERMINED AS AGAINST THE RETURNED INCOME OF RS.2,10,874/-. AG GRIEVED BY THE AOS ABOVE ACTIONS INCLUDING VARIOUS ADDITIONS/DIS ALLOWANCE, THE APPELLANT HAS PREFERRED THE APPEAL UNDER CONSIDERAT ION. ITA NO.440(ASR)/2012 6 3. BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE SU BMISSIONS, WHICH WERE SENT TO THE AO AND THE REMAND REPORT WAS TAKEN WHI CH IN TURN WAS GIVEN TO THE ASSESSEE FOR COMMENTS. THE LD. CIT(A) AFTER CON SIDERING THE REMAND REPORT OF THE AO AND THE COMMENTS OF THE ASSESSEE C ONFIRMED THE ACTION OF THE AO AND THE RELEVANT FINDINGS FOR THE SAKE OF CO NVENIENCE ARE REPRODUCED AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE APPELLANTS WRI TTEN SUBMISSIONS, REBUTTALS TO AOS REMAND REPORT AND HAVE GONE INTO AOS ASSESSMENT ORDER UNDER APPEAL AS WELL AS COMMENTS GIVEN IN THE REMAND REPORT OF THE PRESENT AO. THE PRESENT APPEAL IS HEREBY DISPOS ED BY GIVING GROUND OF APPEAL WISE ADJUDICATION AS UNDER: 8. GROUNDS OF APPEAL NO. 1 TO 12 EXCEPT GROUND OF A PPEAL NO.10 BEING INTER-CONNECTED, CO-RELATED WITH EACH OTHER A RE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. THE FIRST AND PRIMARY QUESTION TO BE DECIDED AS TO WHETHER THE 100 YEARS OLD INSTITUTIO N UNDER THE NAME & STYLE OF DERA SANT AMIR SINGH MANAGED BY A MUKH SEWADAR/CARETAKER CAN BE TREATED AS REGARDED AS PUR ELY CHARITABLE OR RELIGIOUS TRUST. THIS OFFICE IS ONLY CONCERNED WITH THE RELEVANT PROVISIONS OF SECTION ALLOWING THE BENEFIT OF EXEM PTION FOR THE PURELY CHARITABLE/RELIGIOUS TRUSTS. IT IS A MATTER OF REC ORD THAT NEITHER ANY TRUST DEED, SPECIFYING ITS CONSTITUTION, MEMBERS, C ONSTITUENTS GURUDWARAS, CO-SPONSORED & AFFILIATED WITH PARENT T RUST, DIFFERENT AIMS AND OBJECTS, WAYS & MEANS AND UTILIZATION OF I TS CORPUS FUNDS AND ANNUAL DONATIONS/CONTRIBUTIONS RECEIVED FROM T IME TO TIME. IT IS UNDENYING AND ADMITTED FACTS ON RECORD. (1) THAT NO REGULAR TRUST DEED HAS BEEN PRODUCED EI THER BEFORE AO OR BEFORE THE UNDERSIGNED, FALLING AND COVERED UNDE R THE DEFINITION OF SEC. 2(24)(IIA) OF THE ACT. VIDE GROUND OF APPEAL N O.4, THE APPELLANT HAS HIMSELF ADMITTED TO BE AN UNREGISTERED INSTITU TION. (2) THAT ADMITTED THE INSTITUTION THOUGH 100 YEARS OLD IS NOT REGISTERED AS REGISTERED SOCIETY OR REGISTERED AS C HARITABLE/RELIGIOUS TRUST U/S 12AA WITH THE CIT CONCERNED. ITA NO.440(ASR)/2012 7 (3) THAT THE ABOVE INSTITUTION ALSO DOES NOT HOLD A NY QUALIFYING CERTIFICATE U/S 10(23C)(VI) ABOUT PERFORMING EXCLUS IVELY RELIGIOUS, CHARITABLE, EDUCATIONAL, SPORTS, WOMAN WELFARE TRUS T, CHILDREN WELFARE TRUST, CHARITY TO POOR, NEED HANDICAPPED, ORPHANS , PINGALWARA, GAUSHALA ETC. (4) IT IS ALSO A WELL ESTABLISHED FACT THAT IS ACCO UNTS ARE ADMITTEDLY NEVER GOT AUDITED AND AS TO WHETHER EXPENDITURE UPT O 85% OF ITS INCOME HAVE BEEN SPENT TOWARDS ITS SPECIFIED AIMS AND OBJECTS OF LARGER PUBLIC UTILITY OF CHARITY OR RELIGIOUS IN OR DER TO QUALIFY FOR THE CLAIMED EXEMPTION U/S 11. (5) IN ORDER TO QUALIFY ITS RECEIPT OF VARIOUS DONATIONS/COLLECTIONS/CONTRIBUTIONS, NO CERTIFICATE FROM THE PRESCRIBED AUTHORITY U/S 80G(5) IS FORTHCOMING. (6) ENTIRE COLLECTIONS OF THE DERA ARE SOLELY MANAG ED AND CONTROLLED BY ONE MUKH SEWADAR ACCORDING TO HIS OWN WILL AND WISH, AND EVEN THE COLLECTION CERTIFICATES/CONFIRMATIONS ARE STEREO-TYPED WITHOUT BEARING ANY AUTHENTIFICATION, COMPLETE PAR TICULARS LIKE PAN ETC. EVEN NO ATTEMPT WAS MADE TO PRODUCE ANY OF THE SO-CALLED DONORS CATEGORICALLY CONFIRMING THE DONATIONS BY INDICATIN G THE SOURCE THEREOF, CAPACITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. (7) EVEN THE VARIOUS BANK ACCOUNTS ARE IN THE SOLE NAME OF MUKH SEWADAR, MAKHAN SINGH WITHOUT INDICATING ANY ALTER NATIVE BANK HOLDER OR CO-BANK ACCOUNT HOLDER IN THE EVENT OF A NY ADVERSE EVENTUALITY AND EVEN THE NOMINATIONS ARE EXECUTED IN FAVOUR OF HIS OWN SON BY MR. MAKHAN SINGH LEADING TO THE CLEAR IN DICATION AND SAFE PRESUMPTION THAT DUE TO ANY UNFORESEEN UNPLEASANT M IS-HAP WITH THE MUKH SEWADAR, THE CREDIT BANK BALANCES ARE LIKELY T O BE NOT GOING IN THE BOOKS OF THE DERA BUT IN THE INDIVIDUAL HANDS O F MUKH SEWADARS SON, LEGAL SUCCESSOR. 8. DURING THE APPELLANT PROCEEDINGS, THE LD. COUNSE L FAILED TO SUBSTANTIATE THE CLAIM THAT THE DERA WAS VIRTUALLY FUNCTIONING FOR THE BETTERMENT OF POOR, NEEDY, IN GENERAL AND THAT DERA IS CARRYING OUT VARIOUS CHARITABLE & RELIGIOUS ACTIVITIES LIKE RELI GIOUS PROCESSIONS, KARSEWA ETC. BY UTILIZING THE DONATIONS CONTRIBUTED BY GENERAL PUBLIC/SANGAT AT LARGE, WHICH ARE ITS SPECIFIED AIM S AND OBJECTIVES LAID DOWN IN ANY ARTICLES OF ASSOCIATION ETC. IT IS NOT THE CASE THAT THE DERA IS AFFILIATED WITH RESPECTABLE & HONBLE SGPC; SRI HARMINDER SAHIB, SRI TAKHAT HAZUR SAHIB, SRI HEM KUND SAHIB AND SON ON. ITA NO.440(ASR)/2012 8 8 EVEN THE AO HAS ESTABLISHED THE FACT THAT THE FUN DS OF THE DERA ARE MAN TIMES HAVE BEEN DIVERTED FOR MEETING THE PE RSONAL ENDS OF MUKH SEWADAR AS EVIDENT FROM NUMEROUS PERSONAL WITH DRAWALS. THE LD. AR EXCEPT FURNISHING THE PEDICTREE HISTORY OF T HE DERA HAS FAILED TO FURNISH ANY ORDER OF ANY IT AUTHORITY WHEREBY TH E DERA HAS EVER BEEN ALLOWED EXEMPTION UNDER THE ACT. 9) EVEN AS HELD BY THE AO, BANK WITHDRAWALS ALSO RE PRESENTED APPELLANTS INVESTMENT IN PURCHASING HIS PERSONAL LI FE INSURANCE POLICIES AND TOWARDS PURCHASE OF GAS CONNECTIONS/CY LINDERS ETC AND THIS CASE IS NOT FREE FROM DIVERSION OF THE SO CALL ED TRUSTS FUNDS FOR MEETING OUT APPELLANTS PERSONAL ENDS AND PURPOSES. IT IS OBSERVED THAT THE AO HAS ALREADY GIVEN DUE WE IGHTAGE TO THE DONATION OF GOLD CHATTAR TO SRI TAKHAT HAZUR SAHIB , NANDED THEREBY ALLOWING AND GRANTING THE DUE DEDUCTION U/S 80G(THO UGH NOT CLAIMED). 8. SINCE THE BASIC REQUIREMENTS AND INGREDIENTS FOR ESTABLISHING THE DERA TRUST FOR PURELY CHARITABLE/RELIGIOUS PURP OSES AND FOR THE POOR OR NEEDY OBJECTS AND WITHOUT BRINGING ON RECO RD ANY EXEMPTION CERTIFICATE HAVING BEEN ISSUED BY THE APPROPRIATE I NCOME TAX AUTHORITY, I AM OF THE CONSIDERED OPINION THAT THE AO WAS WELL WITHIN HIS JURISDICTION RIGHTS TO DENY EXEMPTION CLAIMED S OUGHT TOWARDS THE SO-CALLED CHARITABLE AND RELIGIOUS PURPOSES/OBJECTI VES. SHOWING UTMOST REGARD TO THE CASE LAW RELIED UPON BY THE LD . AR THAT THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CT VS. SANT BABA MOHAN SINGH, REPORTED AT 118 ITR 1015 (ALL.) BUT IN MY OPINION, THE SAME IS OF LITTLE HELP TO THE APPELLANT AS THE SAME IS DISTINGUISHABLE AND AT VARIANCE THAN THE PECULIAR FACTS & CIRCUMSTA NCES OF THE INSTANT CASE, DISCUSSED SUPRA. I FIND THAT THE AO HAS PASSE D THE WELL-REASONED ASSTT. ORDER BY ALLOWING REASONABLE OPPORTUNITIES O F BEING HEARD (FORTHCOMING FROM PERUSAL OF THE AOS ORDER) BY TAK ING INTO CONSIDERATION VARIOUS SUBMISSIONS AND CONTENTIONS R AISED BEFORE HIM, BY ASSESSING THE APPELLANTS INCOME UNDER THE HEAD INCOME FROM BUSINESS/PROFESSION BY ACCURATELY COMPUTING THE AP PELLANTS BUSINESS INCOME BY FIRSTLY ADJUSTING THE LOSS CLAIM, ALLOWIN G DEPRECIATION ON ITS ASSETS, ALLOWING DEDUCTION U/S 80G OF THE ACT AND A LSO MAKING THE FOLLOWING ADDITIONS: A) RS.13,35,658/- ON A/C OF CAPITAL EXPENDITURE B) RS.7,42,848/- U/S 40(A)(IA) FOR NON DED. OF TDS U/S 194C ITA NO.440(ASR)/2012 9 C) RS.1,39,85,512/- DONATIONS NOT FORMING BUSINESS EXP. D) RS.5,11,046/- INSURANCE BESIDES, THE AOS ABOVE ACTION, THE ABOVE ADDITIONS HAVE BEEN FOUND TO BE MADE ON SOUND FOOTING REQUIRING NO INTERFEREN CE THEREIN AND THUS DESERVE TO BE CONFIRMED LEGALLY AS WELL AS ON MERIT S. IN THE TOTALITY OF FACTS & CIRCUMSTANCES, DISCUSSED SUPRA, ALL THE ABO VE MENTIONED ADDITIONS AMOUNTING TO RS.13,35,656/-, RS.7,42,848/ -, RS.1,39,85,512/-, STAND FULLY CONFIRMED. ACCORDING LY GROUNDS OF APPEAL NO. 1 TO 12 (EXCEPT GR. OF APPEAL NO.10) ARE HEREBY REJECTED. 8.1.1. IT WOULD BE QUITE PERTINENT TO HOLD THAT WHI LE COMPUTING THE APPELLANTS TAXABLE INCOME, THE AOS ACTION ADDING BACK DECLARED IN THE RECEIPT PAYMENT ACCOUNT AMOUNTING TO RS.37,09,0 90/- IS ALSO LIABLE TO BE CONFIRMED, SINCE THE APPELLANTS ENTIRE INCO ME IS TAXABLE, THEREFORE, THE QUESTION OF ALLOWING SET OFF OF DECL ARED LOSS OF RS.37,09,090/- AS CLAIMED BY THE APPELLANT BECOMES IRRELEVANT AND QUESTION IN THIS REGARD DOES NOT ARISE AND AS SUCH THE GROUND OF APPEAL NO.2 IS HEREBY REJECTED ACCORDINGLY. 8.2. HOWEVER, AS FAR AS DISALLOWANCE MADE @ 1/5 TH OF CERTAIN HEADS OF EXPENSES FOR UNDENYING PERSONAL ELEMENT INVOLVED THEREIN, IT WOULD BE IN THE FITNESS OF THINGS, IN ALL FAIRNESS AND IN ORDER TO MEET THE ENDS OF JUSTICE, IT WOULD SUFFICE BY RESTRICTING THE RAT E OF DISALLOWANCE FROM 20% TO 1/6 TH AS THE DEDUCTION MADE BY THE AO @ 1/TH SEEMS TO BE SOMEWHAT ON THE HIGHER SIDE. IN THIS WAY, THE APPEL LANT WOULD BE ENTITLED TO A RELIEF AS WORKED OUT BELOW NO. EXP.HEAD EXP.CLAIMED 1/5 TH DISALLOW RESTRICTED @ 1/6TH RELIEF ALLOWED 1. TELEPHONE [phone] 1182 2. VEH. EXPS. 387985 77597 64664 12933 3. TRAVELLING 84953 16990 14159 2831 TOTAL RELIED ALLOWED 16946 THIS DISPOSES OF GROUND OF APPEAL NO.10 PARTLY IN F AVOUR OF THE APPELLANT. ITA NO.440(ASR)/2012 10 8.3. FURTHER, IT IS SEEN THAT SINCE THE ASSESSMENT HAS BEEN MADE IN THE INDIVIDUAL STATUS OF THE APPELLANT, HOWEVER, TH E AO OUGHT TO HAVE SUO MOTO ALLOWED DEDUCTION U/S 80C AS HAS BEEN ADMI TTEDLY ACCEDED BY HIM VIDE PARA 12 OF HIS IMPUGNED ASSTT. ORDER, W HICH APPEARS TO HAVE OMITTED TO BE ALLOWED PERHAPS INADVERTENTLY UN DER MISTAKEN BELIEF/OMISSION. NOW THE AO IS DIRECTED TO ALLOW DE DUCTION ALLOWABLE AS PER THE PROVISIONS OF SECTION 80-C UNDER CHAPTER VI OF THE ACT SUO MOTO AT HIS OWN LEVEL WITHOUT WAITING ANY SPECIFIC REQUEST FROM THE APPELLANT. ACCORDINGLY, SUBJECT TO THE ABOVE RIDER, GROUND OF APPEAL NO. 1 TO 12 ARE DISPOSED PARTLY IN FAVOUR OF THE AP PELLANT. 9. AS REGARDS GROUND OF APPEAL NO.13 PERTAINING TO THE APPELLANTS GRIEVANCE OVER CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE IT ACT, 1961, THE SAME BEING CONSEQUENTIAL IN NATUR E, IN MY OPINION, THE SAME DOES NOT REQUIRE ANY COMMENTS. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , CA SUBMITTED THE WRITTEN SUBMISSIONS AND ARGUED ON THE SAME LINES, W HICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCED AS UNDER: IT IS SUBMITTED THAT THE ITO WARD 2(1) , AMRITSAR HAD MADE AN ADDITION OF RS.1,21,67,653/- IN THIS CASE BY TREATI NG THE BANK DEPOSITS IN THE ACCOUNT OF THE ASSESSEE AS HIS INCOME FROM P ROFESSION & VOCATION. THE SAME HAS BEEN CONFIRMED BY THE WORTHY CIT(A), AMRITSAR. IT IS SUBMITTED THAT THE AO AND THE LD. CIT(A) HAD FAILED TO APPRECIATE THAT THE DUAL CAPACITY OF THE ASSESSEE, ONE AS A PR EACHER AND THE OTHER AS MUKH SEWADAR OF DERA SANT AMIR SINGH TAKSAL. IT IS SUBMITTED THAT THE ASSESSEE IS THE MUKH SEWAD AR/CARETAKER OF AN OLD HISTORIC DERA OF ABOUT 100 YEARS OLD. THE DERA NAMELY DERA SANT AMIR SINGH TAKSAL JI IS BEING MANAGED UNDER T HE SPIRITUAL GUIDANCE OF MUKH SEWADAR SANT MAKAHAN SINGH JI. ITA NO.440(ASR)/2012 11 IT IS SUBMITTED THAT THE DERA SANT AMIR SINGH JI IS MORE THAN 100 YEARS OLD DERA AND INHERITS ITS SIGNIFICANCE FROM G URU GOBIND SINGH JI, THE TENTH GURU. THE HISTORY OF THE DERA AS DO WN LOADED FROM THE INTERNET IS ENCLOSED FOR YOUR KIND PERUSAL (PAGES 3 & 4 OF PB) & IT ORIGINATED FROM SH. MANI SINGH JI TAKSAL. THIS DERA IS CARRYING OUT VARIOUS CHARITABLE AND RE LIGIOUS ACTIVITIES SUCH AS RELIGIOUS PROCESSIONS AND KARSEWA ETC. BY U TILIZING THE DONATIONS CONTRIBUTED BY GENERAL PUBLIC/SANGAT AT L ARGE. THE DONATIONS RECEIVED BY SANT MAKHAN SINGH MUKH SEWADAR ARE ALSO DEPOSITED IN BANK ACCOUNTS. ALTHOUGH THESE BAN K ACCOUNTS ARE IN THE NAME OF SANT MAKHAN SINGH BUT THE SAME ARE I N FACT BANK ACCOUNTS OF DERA SANT AMIR SINGH. THIS FACT IS AL SO MENTIONED IN THE BANK ACCOUNT ITSELF. THE ASSESSEE, SANT MAKHAN SINGH IS MERELY OPERATING THE BANK ACCOUNT TO UNDERTAKE AND PERFORM THE DUTIES OF THE DERA AS A CARETAKER. THIS IS EVIDENT FROM THE COPI ES OF BANK ACCOUNTS FILED IN THE PAPER BOOK AT (PAGES 6 TO 34) . IT IS SUBMITTED THAT THE AO AND THE LD. CIT(A) HAVE NOT APPRECIATED ABOUT THE DUAL STATUS OF THE ASSESSEE. ONE AS A PRE ACHER AND OTHER AS MUKH SEWADAR/CARETAKER OF DERA SANT AMIR SINGH . THE ASSESSEE HAS FILED HIS INCOME TAX RETURN SEPARATELY AS A PRE ACHER I.E. FOR INCOME EARNED FROM KIRTAN DARBARS, KATHAS ETC. YOUR KIND ATTENTION IS INVITED TO THE DECISION OF A LLAHABAD HIGH COURT IN MAHANT INDRESH CHARAN DASS VS. STATE OF UTTAR PR ADESH 81 ITR 435 (ALL.) WHERE IT WAS HELD THAT PROPERTY HELD BY THE CHIEF OF THE UDASI SECT WAS HELD UNDER THE LEGAL OBLIGATION WHO LLY FOR RELIGIOUS AND CHARITABLE PURPOSES. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. BABA AVTAR SINGH REPORTED IN 83 ITR 738 (DELHI) WHERE IT WAS HELD THAT WHERE OFFERINGS WERE MADE AT THE FEET OF RELIGIOUS HEAD AND HE CLAIMED THAT HE HAD NO IN TEREST IN THE SAME AND THESE BELONGED TO THE INSTITUTION, THE SAME CAN NOT BE TREATED AS INCOME OF THE ASSESSEE. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SANT BABA MOHAN SINGH REPORTED AT 118 ITA NO.440(ASR)/2012 12 ITR 1015(ALL) WHERE IT WAS HELD THAT WHERE INCOME F ROM GURUDWARA AND ATTACHED SHOPS WAS SPENT ON RELIGIOUS AND CHARI TABLE PURPOSES AND GURUDWARA WAS MANAGED BY A MANAGER A SHEBAIT, I T WAS HELD THAT THE INCOME WAS EXEMPT AS ALL PROPERTY WAS GUR UDWARA PROPERTY HELD BY MANAGER UNDER A LEGAL OBLIGATION. NO NORMAL DEED IS NECESSARY FOR CREATING A RELIGIOUS OR CHARITABLE TR UST. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION IN THE CASE OF VIDYAVARUTHI THIRTHA VS. BALUSWANI AYYAR AIR 1922 P C 123 WHERE IT WAS HELD THAT PROPERTY OF THE MATH DOES NOT VEST IN THE MAHANT, HE IS ONLY THE MANAGER AND CUSTODIAN THEREOF. THE DONATIONS RECEIVED BY SH. MAKHAN SINGH AS MUKH SEWADAR/CARETAKER OF DERA SANT AMIR SINGH JI HAVE BEEN SEPARATELY DEPOSITED IN SEPARATE BANK ACCOUNTS AND THE SAME HAVE BEEN UTILIZED ONLY TOWARDS KARSEWA AND OTHER RELIGI OUS/CHARITABLE ACTIVITIES OF THE DERA. IT IS SUBMITTED THAT THESE DONATIONS FROM SANGAT/GE NERAL PUBLIC COULD NOT BE TREATED AS INCOME FROM BUSINESS, VOCATION A ND PROFESSION OF THE ASSESSEE, PARTICULARLY WHEN IT WAS SPECIFICALLY POINTED OUT TO THE AO THAT THESE DONATIONS WERE CORPUS DONATIONS IN NATURE. IN FACT DURING THAT PERIOD OF PROJECT OF DONATING A GOLD C HHATTAR TO GURDWARA HAZUR SAHIB WAS BEING UNDERTAKEN BY THE A SSESSEE IN HIS CAPACITY AS MUKH SEWADAR OF THE DERA. THE ASSESSEE IN HIS CAPACITY AS MUKH SEWADAR OF THE DERA ALSO CARRIED OUT SEVE RAL RELIGIOUS AND CHARITABLE ACTIVITIES SUCH AS RELIGIOUS PROCESSIONS , FREE LANGAR, MARRIAGES OF POOR PEOPLE AND KARSEWA ETC. IT WILL BE APPRECIATED THAT THE ENTIRE MONEY WITHDR AWN FROM THE BANK ACCOUNTS UNDER CONSIDERATION WAS UTILIZED FOR THE O BJECTS ENUMERATED ABOVE. THIS IS EVIDENT FROM THE RECEIPTS AND PAYMEN TS A/C FILED BY THE ASSESSEE BEFORE THE A.O. A COPY OF THE SAME IS ALSO ATTACHED AT PAGE 1 & 2 PAPER BOOK. THE AO HAD RECORDED THE STATEMENT OF M/S. SALIG RAM KISHAN CHAND KATRA MOHAR SINGH, AMRITSAR U/S 131 OF THE ACT WHO HAD CHARGED LABOUR FOR MAKING THE GOLD CHATTER. THE ASSESSEE HA D ALSO FILED A CERTIFICATE FROM TAKHAT SACHKHAND SRI HAZUR ABCHALA NGAR SAHIB, NANDED, MAHARASHTRA IN WHICH IT WAS CONFIRMED THAT THE ASSESSEE ITA NO.440(ASR)/2012 13 HAD DONATED ONE BIG CHABBA OF GOLD APPROX. WEIGHT 1 2K 670 GMS. VIDE RECEIPT NO.7302 DATED 02.11.2008 ( PAGE 35 OF THE PAPER BOOK). THE VALUE OF THIS GOLD CHATTER WAS RS.1,39,85,812/ -. THE DONEE TRUST WAS REGISTERED U/S 80G OF THE ACT. THE BANK ACCOUN T SHOWS PAYMENTS MADE TO HDFC BANK FOR PURCHASE OF GOLD FROM HDFC BA NK AND PAYMENTS MADE TO JEWELLER FIRMS. THE DETAILS OF AMO UNT SPENT ON GOLD CHATTER ARE ENCLOSED TO THE WRITTEN SUBMISSION. THE ABOVE EVIDENCE CLEARLY SHOWS THAT THE ASSESSEE IN HIS CAPACITY OF MUKH SEWADAR OF DERA HAD MADE APPEAL TO THE SANGAT TO MAKE DONATIONS FOR THE ABOVE NOTED PROJECT OF DONATING GOLD CHATTER AT SHIR HAZUR SAHIB, NANDED. THIS FACT IS CORROBORATE D BY VARIOUS ADVERTISEMENTS ISSUED BY THE ASSESSEE AS MUKH SEWA DAR TO THE SANGAT IN THIS REGARD. A SUM OF RS.2,67,848/- WAS C LAIMED AS ADVERTISEMENT EXPENSES PAID TO PTC CHANNEL. A SUM OF RS.2,64,000/- WAS ALSO SPENT AS ADVERTISEMENT. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAD ALSO FILED SEVERAL CERTIFICATES GIVEN BY THE DONORS CERTIFYING THAT TH EY HAD GIVEN DONATIONS TO THE ASSESSEE AS MUKH SEWADAR OF THE DERA FOR THE AFORESAID PROJECT. THE COPIES OF THE DONORS CERTIF ICATES TO THIS EFFECT APPEAR AT PAGES 36 & 42 TO 140. THE AO AND CIT(A) HAVE REJECTED THE DUAL CAPACITY O F THE ASSESSEE ON THE GROUND THAT THE BENEFIT OF SET OFF OF TOTAL UTI LIZATIONS/APPLICATIONS AGAINST THE COLLECTIONS CANNOT BE ALLOWED BECAUSE T HE SAID PRINCIPLE IS APPLICABLE ONLY IN CASE OF RELIGIOUS AND CHARITABLE TRUSTS/SOCIETIES, WHICH HAVE BEEN CREATED UNDER THE RELEVANT LAWS AND REGISTERED WITH THE APPROPRIATE AUTHORITY U/S 12AA OF THE ACT. THE AO AND CIT(A) HAVE REFUSED TO ALLOW THE SET OFF OF UTILIZATION/APPLICATION AGAINST THE RECEIPTS ON THE GROUND THAT DERA WAS NOT REGISTERED AS TRUST AND ALSO THAT IT WAS NO T REGISTERED U/S 12AA OF THE ACT. IT IS SUBMITTED THAT THESE FINDINGS OF THE AO & CIT (A) ARE LEGALLY UNTENABLE. THE PROVISIONS OF SEC. 2(24) (IIA) READ AS UNDER: VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATE D WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTI TUTION ESTABLISHED ITA NO.440(ASR)/2012 14 WHOLLY OR PARTLY FOR SUCH PURPOSES ( OR BY AN ASSO CIATION OR INSTITUTION REFERRED TO IN CLAUSE (21) OR CLAUSE (2 3) OR BY A FUND OR TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (IV ) OR SUB CLAUSE (V) (OR BY A FUND OR TRUST OR INSTITUTION REFERRED TO IN SU B-CLAUSE (IIIAD) OR SUB-CLAUSE (VI) OR BY ANY HOSPITAL OR OTHER INSTITU TION REFERRED TO IN SUB-CLAUSE (IIIAE) OR SUB-CLAUSE (VIA) OR CLAUSE (2 3C) OR SEC. 10( OR BY AN ELECTORAL TRUST). EXPLANATION FOR THE PURPOSES OF THIS SUB-CLAUSE TRUST INCLUDES ANY OTHER LEGAL OBLIGATION. YOUR HONOUR WILL KINDLY OBSERVED THAT THE EXPLANATI ON TO SEC. 2(24)IIIA) CLEARLY PROVIDES THAT TRUST INCLUDES A NY OTHER LEGAL OBLIGATION. IT IS, THEREFORE, SUBMITTED THAT WHERE A LEGAL OBLIGATION IS CAST ON A PERSON HE BECOMES A TRUSTEE. THE CASE OF THE ASSESSEE BEING MUKH SEWADAR OR DERA SANT AMRIT SINGH JI WAS A POSITION WHERE HE WAS UNDER A LEGAL OBLIGATION. SUCH A LE GAL OBLIGATION NEED NOT BE IN WRITING. IT IS TO BE INFERRED FROM T HE CONDUCT OF THE PARTIES. IT IS SUBMITTED THAT THE CONDUCT OF THE ASSESSEE CL EARLY ESTABLISHES BEYOND ANY DOUBT THAT HE HAD BEEN COLLECTING CORPU S DONATIONS TOWARDS THE FULFILLMENT OF THE PROJECT FOR DONATIO N OF GOLD CHATTAR AT HAZUR SAHIB WHICH IN ITSELF WAS A LEGAL OBLIGA TION. IT IS FURTHER SUBMITTED THAT THE DONATIONS WERE REC EIVED BY THE ASSESSEE FOR A SPECIFIC PROJECT & WITH A SPECIFI C DIRECTION TO USE THE SAME FOR THE PROJECT FOR DONATION OF GOLD CHAT TER AT HAZUR SAHIB. IT IS, THEREFORE, SUBMITTED THAT THE ASSESSEE WAS A DEEMED TRUST BEING UNDER A LEGAL OBLIGATION TO UTILIZE THE CO RPUS DONATIONS TOWARDS THE SPECIFIC OBJECT. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF HYDERABAD TRIBUNAL IN THE CASE OF SOCIETY FOR INTEGRATED DEV ELOPMENT IN URBAN & RURAL AREA (SIDUR) VS. DY. CIT REPORTED AT 90 ITD 493 (HYD- TRIB.) A COPY OF THE DECISION IS ENCLOSED. THE TRIBUNAL HELD THOUGH BY VIRTUE OF SECTION 2(24 )(IIA) VOLUNTARY CONTRIBUTIONS ARE INCOME, TO OUR MIND THIS BY ITSEL F DOES NOT ENTITLE THE ITA NO.440(ASR)/2012 15 TAX GATHERER TO IGNORE ALL OTHER WELL SETTLED PRINC IPLES OF TAXATION AND GENERAL LAW AND LEVY TAX ON GROSS RECEIPTS WITHOUT CONSIDERING THE CLAIM FOR DEDUCTIONS. PRINCIPLES SUCH AS CAPITAL VE RSUS REVENUE, DOCTRINE OF OVERRIDING TITLE FORM VERSUS SUBSTANCE, INTERPRETATION OF DEEMING PROVISIONS ETC., HAVE TO BE APPLIED WHEREVE R NECESSARY. ONLY THE SURPLUS OR PROFIT CAN BE BROUGHT TO TAX AND THE SAME HAS TO BE COMPUTED IN THE MANNER LAID DOWN IN THE ACT APPLYIN G THE NORMAL PRINCIPLES OF ACCOUNTANCY AND TAXATION LAWS. THE TRIBUNAL QUOTED THE PRINCIPLE OF VOLUNTARY CONT RIBUTION TAXABILITY HAS PROVIDED IN THE LAW AND PRACTICE OF INCOME TAX 8 TH EDITION BY KANGA AND PALKHIVALA, WHICH IS GIVEN BELOW:- ALL CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION T HAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST ARE CAPITAL RE CEIPTS IN THE HANDS OF THE TRUST. THEY ARE NOT INCOME EITHER UNDE R THE GENERAL LAW OR U/S 2(24)(IIA) RIGHTLY CONSTRUED (SEE U/S 2( 24)(IIA), VOLUNTARY CONTRIBUTIONS RECEIVED BY CHARITY). SECTION 2(24)(IIA) DEEMS REVENUE CONTRIBUTIONS TO B E INCOME OF THE TRUST. IT THEREBY PREVENTS THE TRUST FROM CLAIMING EXEMPTION UNDER GENERAL LAW ON THE GROUND THAT SUCH CONTRIBUTIONS STAND ON THE SAME FOOTING AS GIFTS AND ARE THEREFORE NOT TAXABLE. SECTION 12 GOES ONE STEP FURTHER AND DEEMS SUCH REV ENUE CONTRIBUTION TO BE INCOME DERIVED FROM PROPERTY HELD UNDER TRUS T. IT THEREBY MAKES APPLICABLE TO SUCH CONTRIBUTIONS ALL THE CONDITIONS AND RESTRICTIONS UNDER SECTIONS 11 AND 13 FOR CLAIMING EXEMPTIONS. SECTION 11(1)(D) SPECIFICALLY GRANTS EXEMPTION TO C APITAL CONTRIBUTIONS TO MAKE THE FACT OF NON-TAXABILITY CLEAR BEYOND DOU BT. BUT IT PROCEEDS ON THE ERRONEOUS ASSUMPTION THAT SUCH CONTRIBUTIONS ARE OF INCOME NATURE INCOME IN THE FORM OF VOLUNTARY CONTRIBUT IONS. THIS ASSUMPTION SHOULD BE DISREGARDED. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. GIR DHARI LAL SHOWNARAIN TANTIA TRUST 199 ITR 215 (CAL.) WHERE IT WAS HELD THAT INCOME COMPUTED U/S 11 MUST BE IN ACCORDANCE WITH T HE REAL INCOME CONCEPT AND NOT UNDER THE INCOME TAX ACT. ITA NO.440(ASR)/2012 16 THE FOLLOWING DECISIONS RELIED UPON IN THE SUBMISSI ONS EARLIER ARE REITERATED AGAIN: 1) MAHANT INDERSH CHARAN DASS VS. STATE OF U.P. 81 ITR 435 (ALL.) 2) CIT VS. BABA AVTAR SINGH 83 ITR 738 (DEL.) 3) CIT VS. BABA MOHAN SINGH 118 ITR 1015 (ALL) IN OTHER WORDS, IT IS THE NET INCOME WHICH HAS TO B E COMPUTED AND CONSIDERED. IT IS THEREFORE, SUBMITTED THAT THE ASSESSEE HAS TO BE TREATED AS A TRUST BEING A LEGAL OBLIGATION THOUGH UNREGISTERED U/S 12 AA OF THE ACT. HOWEVER, EVEN FOR TRUSTS WHERE EXEMPTION U/S 11 TO 13 IS NOT ALLOWED, THE ENTIRE APPLICATION OF INCOME HAS TO BE ALLOWED AS A DEDUCTION. THE CORPUS DONATIONS WHICH ARE IN THE NATURE OF TIED U P FUNDS CANNOT BE TREATED AS INCOME. THIS PRINCIPLE HAS BEEN ACCEPTED BY THE HYDERABAD BENCH OF ITAT IN THE DECISION RELIED UPON ABOVE. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF SUKHDEO CHARITY ESTATE 149 ITR 470 (RAJ) WHERE IT WAS HELD THAT A PROJECT GRANT COULD NOT BE TREAT ED AS VOLUNTARY CONTRIBUTION. IT IS THEREFORE SUBMITTED THAT SINCE THE ASSESSEE W AS ALSO A DEEMED TRUST BEING A LEGAL OBLIGATION IT HAD TO BE TREATED AS AN UNREGISTERED TRUST AND THE ENTIRE RECEIPTS CANNOT BE TAKEN AS INCOME. THE CORPUS RECEIPTS/DONATIONS MADE WITH A SPECIFIC DIRECTION HAVE TO BE EXCLUDED FROM THE INCOME. IT IS FURTHER SUBMITTED THAT TOTAL UTILIZATION/APPL ICATION MADE UNDER THE LEGAL OBLIGATION TOWARDS THE PURPOSES/OBJECTS FOR WHICH DONATIONS WERE GIVEN HAVE TO BE ALLOWED AS A DEDUCTION. THE DECISI ON OF HYDERABAD TRIBUNAL REFERRED TO ABOVE IS RELIED UPON TO CLAIM THE SET OFF AS INCOME APPLIED. IT IS FURTHER SUBMITTED THAT THE DOCTRINE OF OVER RIDING TITLE IS ALSO FULLY APPLICABLE TO THE FACTS OF THIS CASE. THE FUNDS CON TRIBUTED BY THE DONORS WERE SADDLED WITH LEGAL OBLIGATION AND HAD TO BE UT ILIZED BY THE ASSESSEE AS A MUKH SEWADAR TOWARDS PURPOSES FOR WHICH THESE WERE CONTRIBUTED. ITA NO.440(ASR)/2012 17 YOUR KIND ATTENTION IS INVITED TO THE DECISION OF S UPREME COURT IN THE CASE OF CIT VS. TRAVANCORE SUGARS & CHEMICALS LTD. REPORTED AT 88 ITR 1(SC) WHERE IT WAS HELD THAT WHERE INCOME STOOD DIV ERTED BY PARAMOUNT TITLES, THE SAME COULD NOT BE TAXED AND EXPENSE HAD TO BE ALLOWED AS REVENUE EXPENDITURE. YOUR KIND ATTENTION IS INVITED TO THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF RAJKOT DISTT. GOPALAK CO-OPERATIVE MILK PRODUCERS UNION LTD. REPORTED AT 204 ITR 590 (GUJ) WHERE IT WAS HE LD THAT THE TRUE TEST IN DECIDING WHETHER INCOME HAS BEEN DIVERTED BY OVE RRIDING TITLE IS TO SEE WHETHER THE AMOUNT SOUGHT TO BE DEDUCTED IN TRUTH, NEVER REACHED THE ASSESSEE AS HIS INCOME. AS SUCH, THE DONATIONS RECEIVED BY THE ASSESSEE AS MUKH SEWADAR OF DERA SANT AMIT SINGH JI COULD NOT BE TREATED AS PE RSONAL COLLECTIONS OF THE ASSESSEE ON ACCOUNT OF CARRYING OUT OF PROFESS ION OR VOCATION AS THESE WERE SADDLED WITH A LEGAL OBLIGATION AND H E WAS BOUND TO SPEND THESE FOR PROJECT OF GOLD CHHATAR. IT IS FURTHER SUBMITTED THAT NO DISTINCTION IS TO B E MADE BETWEEN REVENUE EXPENDITURE AND CAPITAL EXPENDITURE WHILE DEALING W ITH THE INCOME APPLIED BY A TRUST (LEGAL OBLIGATION) TOWARDS ITS O BJECTS. AS SUCH THE EXPENDITURE INCURRED BY THE ASSESSEE AS MUKH SEWAD AR OF THE DERA TOWARDS CAPITAL EXPENDITURE AMOUNTING TO RS.13,35,6 58/- ON CAR A/C , TV & GENERATOR ETC. HAS TO BE ALLOWED AS INCOME APP LIED. THESE ASSETS WERE USED FOR AUGMENTING COLLECTIONS F OR THE PROJECT AND FOR USE OF SANGAT AT THE DERA. YOUR KIND ATTENTION IS INVITED TO THE FOLLOWING DEC ISIONS WHERE CAPITAL EXPENDITURE INCURRED BY A TRUST TOWARDS ITS PURPOSE S WAS ALLOWED AS INCOME APPLIED. 1. SATYA VIJAY PATEL HINDU DHARAMSHALA TRUST VS. CIT 8 6 ITR 683 (GUJ.) 2. CIT VS. GEROGE FORANA CHURCH 170 ITR 62 (KER.) 3. CT. M TIRUPPANI TRUST VS. CIT 230 ITR 636 (SC) ITA NO.440(ASR)/2012 18 IT IS, THEREFORE, SUBMITTED THAT THE SUM OF RS.13,3 5,658/- IS ALSO AMOUNT APPLIED/UTILIZED TOWARDS THE PURPOSES OF THE TRUST/ LEGAL OBLIGATION & THE SAME IS ALLOWABLE AS A DEDUCTION AGAINST THE RECEIP TS. IT IS FURTHER SUBMITTED THAT SINCE THE ASSESSEE WAS A DEEMED TRUST/LEGAL OBLIGATION THE RELIGIOUS ACTIVITIES CARRIED OUT BY HIM COULD NOT BE TERMED AS A BUSINESS & PROFESSION. HE WAS UNDER NO OBLIG ATION TO GET ITS ACCOUNTS AUDITED U/S 44AB OF THE ACT. AGAIN, THE PR OVISIONS OF SEC. 40(A)(IA) WERE ALSO NOT APPLICABLE TO THE ASSESSEE AND THE EXPENSES INCURRED ON ADVERTISEMENT AT RS.2,67,848/- AND RS.2 ,64,000/- & EXPENSES INCURRED ON JOB CHARGES AT RS.2,10,000/- COULD NOT BE DISALLOWED, BECAUSE THIS IS THE FIRST YEAR IN WHICH ACCOUNTS CO ULD BE SAID TO SUBJECT OF AUDIT. THE DISALLOWANCE COULD NOT MADE U/S 40A(IA). IT IS SUBMITTED THAT SINCE HE WAS CARRYING OUT RELI GIOUS/CHARITABLE ACTIVITIES UNDER A LEGAL OBLIGATION , THE PROVISION S OF SEC. 28 TO 43 WERE NOT APPLICABLE TO THE ASSESSEE. IT IS THEREFORE SUBMITTED THAT THE EXPENDITURE INCU RRED ON CAPITAL ASSETS, EXPENDITURE ON WHICH TDS WAS NOT DEDUCTED AND DONAT ION OF GOLD CHATTER AT SHRI HAZUR SAHIB WERE ALSO TO BE TREATED AS AMO UNT UTILIZED/APPLIED TOWARDS DONATIONS/RECEIPTS UNDER A LEGAL OBLIGATION AND ONLY THE NET RECEIPTS, IF ANY, COULD BE TREATED AS INCOME. THE WORTHY CIT(A) HAS NOT DEALT WITH ANY OF THE LEG AL CASES RELIED UPON BY THE ASSESSEE BY STATING THAT THE SAME ARE DISTIN GUISHABLE. THE AO AND CIT(A) HAVE COMPLETELY MISDIRECTED THEMS ELVES IN REJECTING THE DUAL STATUS OF THE ASSESSEE AND IN REFUSING TO TREAT THE ASSESSEE BEING MUKH SEWADAR OF DERA AS A TRUST/LEGAL OBLIGATIO N (UNREGISTERED) AND TO ALLOW THE DEDUCTION FOR ALL THE EXPENSES UTI LIZED/APPLIED FOR RELIGIOUS/CHARITABLE PURPOSES AGAINST THE CORPUS RE CEIPTS/DONATIONS AND OBLIGE. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , CA FILED A COPY OF THE CERTIFICATE DATED 31.12.2013 ISSUED BY SHRI GU RBACHAN SINGH, JATHEDAR ITA NO.440(ASR)/2012 19 OF SRI AKAL TAKHAT SAHIB, AMRITSAR FOR ADMISSION OF ADDITIONAL EVIDENCE, WHICH READS AS UNDER: ENGLISH TRANSLATION OF CERTIFICATE NO.3551 DATED 3 1.12.2013 ISSUED BY SH. GURBACHAN SINGH, JATHEDAR SRI AKAL TAKHAT SA HIB, AMRITSAR. IT IS CERTIFIED THAT DERA SANT AMIR SINGH JI, BAZA R SATTOWALA, KATRA KARAM SINGH, AMRITSAR IS A SAMPRADAI TAKSAL O F SHAHEED BHAI MANI SINGH JI STARTED BY THE DASAM GURU GOBIND SING H JI. IT WAS STARTED FOR PROVIDING TEACHINGS OF SRI GURU GRANTH SAHIB AND IS MORE THAN 100 YEARS OLD. IT IS LIGHTED BY GURU GRANTH SAHIB JI & TEACHINGS OF GURU GRANTH SAHIB ARE TAUGHT HERE. THOUSANDS OF STUDENTS HAVE BEEN TAUGHT HERE THE TRUE MEANING OF GURU GRANTHS SAHIB BANI A ND THEY HAVE SERVED THE SIKH PANTH AND ARE STILL SERVING. PANTH RATTAN BHAI SAHIB, BHAI VEER SINGH JI WAS AL SO A STUDENT OF THIS TAKSAL. SIKHS & SHRIMONI GURUDSWARA PRABHAN DAK COMMITTEE ARE PROUD OF THIS PLACE. PRESENTLY, THIS PLACE IS B EING MANAGED BY SANT MAKHAN SINGH JI. SD/- GURBACHAN SINGH JATHEDAR, SRI AKAL TAKHAT SAHIB, AMRITSAR. 6. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AS UNDER: ENCLOSED PLEASE FIND HEREWITH A CERTIFICATE NO.355 1 DATED 31.12.2013 ISSUED BY SH. GURBACHAN SINGH, JATHEDAR SRI AKAL TAKHAT SAHIB, SRI AMRITSAR, PUNJAB INDIA ALONGWITH A COPY OF ENGLISH TRANSLATION. THE ABOVE CERTIFICATE HAS BEEN ISSUED BY JATHEDAR S RI AKAL TAKHAT SAHIB ON THE REQUEST OF THE ASSESSEE TO CONFIRM TH AT DERA SANT AMIR SINGH JI IS A GURUDWARA BECAUSE PRAKASH OF SRI GU RU GRANTH SAHIB JI IS THERE AT THE DERA. THE CERTIFICATE IS SELF EXPLANATORY. ITA NO.440(ASR)/2012 20 YOUR HONOUR WILL KINDLY APPRECIATE THAT THIS CERTIF ICATE ESTABLISHES AN IMPORTANT FACT WHICH GOES TO THE ROOT OF THIS CASE. THIS PARTICULAR FACT HAS BEEN OMITTED TO BE CONSIDERED AT ALL AS IT NEVE R CAME ON RECORD. HOWEVER, THE FACT REMAINS THAT DERA SANT AMIR SINGH WAS ALWAYS A GURUDWARA BECAUSE OF THE PRAKASH OF GURU GRANTH SA HIB JI THERE ALL THE TIME. YOUR HONOUR ARE REQUESTED TO KINDLY ADMIT THIS CERT IFICATE AS ADDITIONAL EVIDENCE AS IT GOES TO THE ROOT OF THIS CASE WHILE ADJUDICATING THE APPEAL. YOUR KIND ATTENTION IS ALS O INVITED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SH RIMONI GURUDWARA PRABANDHAK COMMITTEE VS. SOM NATH DASS & OTHERS WHERE THE HONBLE SUPREME COURT HAS HELD THAT THE SHRI GURU GRANTH SAHIB IS THE CENTRAL OBJECT OF WORSHIP IN ALL GURUD WARAS AND HAVE FURTHER HELD SRI GURU GRANTH SAHIB TO BE A JURISTIC PERSONS. WHILE DECIDING THIS ISSUE THE SUPREME COURT REVERSED THE FINDINGS OF PUNJAB & HARYANA HIGH COURT . A COPY OF THE JUDGMENT DATED 29.03.2000 IS ENCLOSED. IT IS THEREFORE SUBMITTED THAT IN VIEW OF THE CERTI FICATE FILED ABOVE AND THE DECISION OF HONBLE SUPREME COURT READ TOGETHER THE STATUS OF DERA SANT AMIR SINGH JI BECOMES THAT OF A JURISTIC PERSON INDEPENDENT OF THE INDIVIDUAL STATUS OF MUKH SEWADAR SANT MAKHA N SINGH JI. THE ASSESSEE HAS BEEN REPEATEDLY MAKING THIS SUBMISSION BEFORE THE ITO AND WORTHY CIT(APPEALS) REGARDING THE DUAL CAPACITY IN WHICH THE ASSESSEE HAS BEEN WORKING. IT IS THEREFORE, SUBMITTED THAT THE DONATION MADE B Y THE SANGAT FOR THE PURPOSE OF PROVIDING GOLD CHATTAR AT GURUDWARA NAND ER SAHIB WERE NOT MADE TO ASSESSEE IN HIS PERSONAL CAPACITY BUT T O DERA SANT AMIR SINGH JI AS A JURISTIC PERSON INDEPENDENT OF THE SA ID MAKHAN SINGH JI. YOUR KIND ATTENTION IS ALSO INVITED TO THE FOLLOWIN G DECISIONS (COPY ENCLOSED). I) CIT VS. RAMDEO SAMADHI 160 IT 179 (RAJ) II) CIT VS. GOPALA NAICKER BANGARU 344 ITR 297 (MAD.) ITA NO.440(ASR)/2012 21 IT WAS HELD IN THESE CASES THAT DONATIONS WERE NOT MADE TO THE INDIVIDUAL BUT TO THE JURISTIC PERSON AND THESE SUP PORTS THE CASE OF THE ASSESSEE. IT IS FURTHER SUBMITTED THAT THE BANK ACCOUNT HAVE TO BE OPERATED BY THE MUKH SEWADAR. THE OBSERVATION OF THE AO THAT THE NO MINATION OF THE BANK ACCOUNTS WAS IN THE NAME OF SON OF SANT MAKHAN SINGH DOES NOT MAKE ANY DIFFERENCE BECAUSE THE NOMINEE DOES NO T BECOME THE LEGAL OWNER. YOUR HONOURS ARE REQUESTED TO KINDLY ADMIT THE ADDI TIONAL EVIDENCE AND DECIDE THE APPEAL AFTER CONSIDERING THE ABOVE S UBMISSIONS AND OBLIGE. 7. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , IN FACT, ARGUED THAT THE WRITTEN SUBMISSIONS LACED ON RECORD BY CONSIDE RED AND BE TAKEN AS HIS ARGUMENTS FOR DECIDING THE GROUNDS OF APPEAL OF TH E ASSESSEE. 8. THE LD. JCIT (DR), MR. MAHAVIR SINGH, ON THE OTH ER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW AND WRITTEN SUBMISSIONS WHICH ARE REPRODUCED HEREUNDER: IT IS CONSIDERED IMPERATIVE TO DELINEATE THE FACTU AL MATRIX OF THE CASE BEFORE MAKING COUNTER SUBMISSIONS ON THE ASSESSEES WRITTEN SUBMISSION FILED BEFORE THE HONBLE BENCH ON 16.07. 2013. THE FACTUAL MATRIX IS LIKE THAT THE ASSESSEE HAS CONFRONTED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS WITH THE SAVING BANK ACCOUNT OF THE ASSESSEE WITH HDFC BANK, GOLDEN TEMPLE, AMRITSAR WHERE HUGE CASH HAD BEEN DEPOSITED AND THE ASSESSEE WAS ASKED TO EXPLAI N THE SOURCE OF DEPOSIT OF THE SAME.THE ASSESSEE DECLINED THE OWNER SHIP OF ANY PERSONAL SAVING BANK ACCOUNT IN HIS NAME. THE ASSES SEE DECLINED THE OWNERSHIP OF ANY PERSONAL SAVING BANK ACCOUNT IN HI S NAME. IT WAS STATED THAT THE ASSESSEE IS A RELIGIOUS PREACHER A ND HEAD SEWADAR OF OLD HISTORIC DERA AND IS ENGAGED IN CHARITABLE AND RELIGIOUS ACTIVITIES. ITA NO.440(ASR)/2012 22 SUCH ACTIVITIES ARE BEING CARRIED OUT WITH THE HELP OF FUNDS/DONATIONS COLLECTED FROM GENERAL PUBLIC AND ARE DEPOSITED IN THE BANK ACCOUNT. THE ASSESSEE HAD FURTHER INFORMED THAT THE BANK AC COUNTS AS MUKH SEWADAR OF DERA SANT AMIR SINGH JI ARE MAINTAINED WITH CITY BANK, PUNJAB & SIND BANK AND STATE BANK OF INDIA AND THAT DURING THE YEAR UNDER CONSIDERATION HE HAD UNDERTAKEN A PROJECT TO DONATE THE GOLD CHHATTER TO GURDWARA SHRI HAZUR SAHIB. IT WAS THUS CLAIMED THAT THE DEPOSITS IN THE SAID ACCOUNTS WERE DONATIONS RECEIV ED BY DERA SANT AMIR SINGH AND THE DEPOSITS WERE NOT HIS PERSONAL I NCOME. IN PROOF OF THIS FACT, THE ASSESSEE FURNISHED A CERTIFICATE FRO M ONE S. DALJIT SINGH RANDHAWA WHO HAS CONFIRMED IN HIS CERTIFICATE THAT THE LOANED AMOUNTS TO DERA SANT AMRIT SINGH AND THOSE AMOUNT A RE DEPOSITED IN THE SAID BANK ACCOUNT WHICH BEING TO DERA AND WHIC H ARE UNDER QUESTION. THE ASSESSEE ALSO FILED A RECEIPT FROM GU RUDWARA HAZUR SAHIB IN TOKEN OF HAVING MADE DONATION OF GOLD CHHA TTER. AS REGARDS THE INCOME DECLARED BY HIM IN HIS RETURN OF INCOME, IT WAS STATED BY HIM THAT THE SAID INCOME HAS BEEN EARNED BY HIM FRO M KATHA AT VARIOUS KIRTAN DARBARS/RELIGIOUS CELEBRATIONS. THE AO, HOWEVER, TRASHED THE CONTENTION OF THE ASSESSEE ON TAKING CO GNIZANCE OF THE FOLLOWING VITAL FACTS: I) ALL THE BANK ACCOUNTS ARE IN THE NAME OF S. MAKHAN SINGH AS INDIVIDUAL HAVING PAN BEFPS2614A. II) THAT THE ASSESSEE PURCHASED A VEHICLE SCORPIO FOR RS.932958/- IN HIS NAME OUT OF GROSS RECEIPTS. III) THE ASSESSEE PURCHASED INDIVIDUAL INSURANCE POLICIE S 1) LIC OF INDIA FOR RS.42,895/- II) BIRLA SUNLIFE RS.3 31575/- IV) THERE ARE NUMEROUS SELF WITHDRAWALS FROM THE BANK ACCOAUANTS. V) IN THE ACCOUNT OPENING FORM WITH CITY BANK, THE ASS ESSEE HAD NOMINATED HIS OWN SON SH. AMANDEEP SINGH WHICH SHOWED THE ACCOUNT WAS A PERSONAL ACCOUNT OF THE ASSESSEE. AS REGARDS THE ASSESSEES CLAIM THAT THE DONATIONS RECEIVED BY HIM WERE DONATIONS MEANT FOR THE DERA, THE AO HAS RECOR DED THAT THE ASSESSEE HAD NOT SOUGHT ANY REGISTRATION U/S 12AA A ND HAS NOT EVEN CREATED ANY TRUST OR SOCIETY FOR THE SAID PURPOSE. THE LD. CIT(A) HAS LARGELY UPHELD THE ORDER OF THE AO. ITA NO.440(ASR)/2012 23 THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS BEFORE THE HONBLE BENCH ON 16.07.2013 IN WHICH HE HAS RELIED UPON VAR IOUS JUDGMENS BUT WITH REGARD TO FACTS, HE HAS ONLY STATED THAT: A) THE ASSESSEE HAS DUAL CAPACITY ; ONE AS A PREACHER AND THE OTHER AS MUKH SEWADAR OF DERA SANT AMIR SINGH. B) THE DERA IS CARRYING OUT VARIOUS CHARITABLE AND REL IGIOUS ACTIVITIES SUCH AS RELIGIOUS PROCESSIONS AND KARSEW A ETC. BY UTILIZING THE DONATIONS CONTRIBUTED BY GENERAL PUBL IC/SANGAT AT LARGE. C) THE BANKS ACCOUNTS IN THE NAME OF SANT MAKHAN SINGH , MUKH SEWADAR ARE IN FACT BANK ACCOUNTS OF DERA SANT AMIR SINGH. D) THE ASSESSEE IS ONLY PERFORMING THE ROLE OF A CARET AKER OF THE SAID DERA. E) THE ASSESSEE HAS FILED HIS PERSONAL INCOME TAX RETU RN SEPARATELY WHEREIN HE HAS DECLARED HIS PERSONAL INC OME FROM KATHA AS A PREACHER. F) THE DONATIONS RECEIVED WERE CORPUS DONATIONS. THE ASSESSEE AS MUKH SEWADAR OF THE DERA ALSO CARRIED O UT SEVERAL RELIGIOUS AND CHARITABLE ACTIVITIES SUCH AS RELIGIOUS PROCESSIONS, FEE LANGAR, MARRIAGES OF POOR PEOPLE A ND KARSEWA ETC. G) THE ENTIRE MONEY WITHDRAWN FROM THE BANK ACCOUNTS U NDER CONSIDERATION WAS UITILIZED FOR THE OBJECTS ENUMERA TED ABOVE. THIS IS EVIDENT FROM THE RECEIPTS AND PAYMEN TS A/C FILED BY THE ASSESSEE BEFORE THE AO. H) THE ASSESSEE HAD DONATED GOLD CHHATTAR TO TAKHAT SACHKHAND SRI HAZUR ABCHALNGAR SAHIB, NANDED, MAHARASHTRA AND FURNISHED A RECEIPT IN TOKEN OF HAV ING MADE THE DONATIONS. I) THE ASSESSEE HAD MADE APPEAL TO THE SANGAT TO MAKE DONATIONS FOR DONATION OF GOLD CHHATTAR. A SUM OF RS.2,67,848/- WAS PAID TO PTC CHANNEL FOR ADVERTISE MENT AND RS.2,64,000 ON OTHER ADVERTISEMENT. J) DONATIONS CONFIRMATION HAD BEEN FILED TO THE EFFECT THAT THE DONATIONS TO THE ASSESSEE WERE AS MUKH SEWADAR OF T HE DERA FOR THE AFORESAID PROJECT. K) THE DONATIONS RECEIVED HAVE NOT NECESSARILY TO BE B Y A TRUST AS DEFINITION OF TRUST INCLUDES ANY OTHER LEGAL OBL IGATION AS PER SECTION 2(24)(IIA) OF THE ACT. ITA NO.440(ASR)/2012 24 L) THE ASSESSEE WAS A DEEMED TRUST/LEGAL OBLIGATION TH E RELIGIOUS ACTIVITIES CARRIED OUT BY HIM COULD NOT B E TERMED AS A BUSINESS & PROFESSION AND HE WAS UNDER NO OBLI GATION TO GET ITS ACCOUNTS AUDITED U/S 44AB OF THE ACT. M) SINCE HE WAS CARRYING OUT RELIGIOUS/CHARITABLE ACTI VITIES UNDER A LEGAL OBLIGATION, THE PROVISIONS OF SECTION 28 TO 43 WERE NOT APPLICABLE TO THE ASSESSEE. IN THIS REGARD, IT IS SUBMITTED THAT THE WRITTEN SU BMISSIONS, THE ASSESSEE HAS NO WHERE CONTROVERTED ANY OF THE F ACTUAL FINDINGS RECORDED BY THE AO WHICH CLEARLY PROVE TH AT THE DEPOSITS IN THE BANK ACCOUNTS REPRESENTED ASSESSEE S OWN INCOME FROM HIS PROFESSION OF PREACHER. IN SUCH A SITUATION, IT IS CLEAR, IT IS CLEAR THAT ALL THE CONTENTIONS OF THE ASSESSEE REMAIN UNSUBSTANTIATED. NONETHELESS, ALL THE CONTENTION RAISED BY THE ASSES SEE AS ENUMERATED FROM (A) TO (N) ABOVE ARE DISCUSSED AND SHOWN AS TOTALLY UNTENABLE AS NO EVIDENCE IN SUPPORT THEREOF HAS BEEN FILED. (A) THE ASSESSEE CLAIMS DUAL CAPACITY ONE AS A PRE ACHER AND OTHER AS A MUKH SEWADAR OF DERA SANT AMIR SINGH AND CLAIMS THAT THOUGH THERE WAS NO FORMAL TRUST BUT HE HAD B EEN RUNNING THE AFFAIRS OF THE SAID DERA AS A LEGAL OBLIGATION AS DEFINED U/S 2(24)(IIA) OF THE ACT. IN THIS REGARD, IT IS SUBMIT TED THAT FOR THE ASSESSEE TO ASSUME THE ROLE OF A MUKH SEWA DAR, IT IS A LEGAL IMPERATIVE THAT THE DERA WHICH IS CLAIMED TO BE 100 YEARS OLD, ITS MUKH SEWADAR MUST BE APPOINTED (GADDI NASHIN) B Y THE SANGAT (FOLLOWERS OF THE DERA). THE ASSESSEE HAS PR ODUCED NO SUCH DOCUMENT OF HIS BEING APPOINTED AS GADDI NASIN /MUKH SEWADAR OF THE SAID DERA. THEREFORE, ALL HIS CLAIM OF DUAL CAPACITY REMAINS WHOLLY UNSUBSTANTIATED. B) THE ASSESSEES CLAIM THAT THE DERA IS CARRYING O UT VARIOUS CHARITABLE AND RELIGIOUS ACTIVITIES IS NOT RELEVANT TO HIS PERSONAL CASE. ITA NO.440(ASR)/2012 25 C) THE ASSESSEES HAS FAILED TO PROVE WITH EVIDENCE HIS CLAIM THAT THE BANK ACCOUNTS IN HIS NAME WERE IN FA CT BANK ACCOUNTS OF DERA SANT AMIR SINGH. SUCH ACCOUNTS ARE OPENED ON THE BASIS OF DOCUMENT OF GADDI NASHIN AND IN THE EVENT OF DEMISE OF THE GADDI NASHIN, THE MANTLE OF OPERATING SUCH ACCOUNT, FALLS ON THE INCOMING GADDI NASHIN. NO SUC H DOCUMENT HAS BEEN FURNISHED TO THE BANK AT THE TIME OF OPENING OF THE BANK ACCOUNTS. THE BANK ACCOUNTS CLEARLY SHO W THAT THE SAME HAVE BEEN OPENED IN THE PERSONAL NAME OF THE ASSESSEE.THE ASSESSEES HAS NOT SAID EVEN A SYLLABA LE AS TO WHY THE NOMINEE IN THE BANK ACCOUNT IS HIS OWN SON AND NOT ANY SUBSEQUENT GADDI NASHIN OF THE SAID DERA. THEREFORE , THIS DEMOLISHES THE WHOLE THEORY OF DUAL CAPACITY OF THE ASSESSEE. D) IT IS SELF SERVING CLAIM OF THE ASSESSEE THAT HE IS PERFORMING THE ROLE OF A CARETAKER OF THE SAID DERA . THE ASSESSEE HAS BROUGHT ON RECORD NO DOCUMENT OF HIS B EING APPOINTED AS CARETAKER OF THE SAID DERA. THEREFORE, THIS SELF SERVING CLAIM CANNOT BE ACCEPTED. E) THE INCOME ASSESSED BY THE AO IS ASSESSEES PERS ONAL INCOME EARNED FROM THE PROFESSION OF PREACHER. F) SINCE THE ASSESSEES CONTENTION THAT IT WAS ACTI NG AS CARETAKER OF DERA SANT AMIR SINGH JI IS ABSOLUTELY WITHOUT ANY EVIDENCE AND AS SUCH THE ASSESSEES CLAIM THAT THE DONATIONS RECEIVED WERE CORPUS DONATIONS IS COMPLETELY IRRE LEVANT AND NO COGNIZANCE OF THE SAME CAN BE TAKEN. G), H),(I) & (K) CARRYING OF CHARITABLE ACTIVITIE S BY ANY INDIVIDUAL IS APPLICATION OF INCOME. SO IT IS NOT R ELEVANT AS TO WHETHER THE ASSESSEE HAS ENGAGED HIMSELF IN ANY SUC H ACTIVITY OR NOT. IN THE WRITTEN SUBMISSIONS, IT HAS BEEN ADM ITTED THAT NO TRUST, FUND, INSTITUTION AS CONTEMPLATED IN SECTION 2(24)(IIA) IS IN EXISTENCE BUT HAS CLAIMED THAT AS PER THE EXPLANAT ION TO SAID SECTION TRUST INCLUDES ANY OTHER LEGAL OBLIGATION . THE ASSESSEES CLAIM OF THEIR BEING A LEGAL OBLIGATION IS THAT HE HAD BEEN RECEIVING CORPUS DONATIONS FOR GOLD CHHATTAR T O BE OFFERED AT HAZUR SAHIB IN NANDED, MAHARASHTRA. ITA NO.440(ASR)/2012 26 IT MAY BE MENTIONED THAT THE ASSESSEE IN A DESPERA TE BID TO SAVE HIMSELF FROM THE LEVY OF TAX IS TAKING CONF LICTING STANDS. ONE THE ONE HAND, HE SAYS THAT HE IS THE HEAD SEWAD AR (GADDI NASHIN) OF 100 YEARS OLD DERA SANT AMIR SINGH AND T HE DONATIONS WERE MADE BY THE SANGAT TO THE DERA. ON THE OTHER HAND, HE IS CLAIMING THAT HE IS THE DEEMED TRUST UNDER A LEGAL OBLIGATION. HE HAS PROVED NONE OF THESE CLAIMS. AS REGARDS THE FIRM CLAIM OF BEING HEAD SEWADAR OF THE SAID DERA, HE HAS (I) BRIGHT NO EVIDENCE ON RECORD THAT HE IS THE HEAD SE WADAR OF THE SAID DERA (II) NO EVIDENCE HAS BEEN BROUGHT ON RECO RD THAT HE WAS APPOINTED AS HEAD SEWADAR BY THE SANGAR. HE HAS ONLY SUBMITTED A COPY OF TAKSAL LINEAGE BUT THAT IS ONLY A SELF SERVING SEWADAR AND THERE IS NO MENTION IN HE ACCOU NTING FORM OF BANK A/CS THAT THE SAID ACCOUNTS HAVE BEEN OPENE D QUA THE MUKH SEWADAR OF DERA SANT AMIR SIGH ON THE AUTHORIT Y OF ANY RESOLUTION OF THE SANGAT APPOINTING HIM AS MUKH SEW ADAR. THE ACCOUNTS HAVE BEEN OPENED IN HIS PERSONAL NAME AND ONLY THE ADDRESS HAS BEEN GIVEN OF DERA SANT AMIR SINGH. (II I) HAS NOT CONTROVERTED THE FINDING OF THE AO AS ENUMERATED AT PAGE 1 AT PARA (I) TO (V). FURTHER, AS REGARDS THE SECOND CLA IM, THE ASSESSEE CANNOT TREAT HIMSELF AS DEEMED TRUST FOR THE SAME VERY REASONS AS DISCUSSED ABOVE AT PAGE 1 AT P ARA (I) TO(V) ABOVE. THIS CLEARLY PROVES THAT ALL THE DEPOS ITS IN HIS BANK ACCOUNTS WERE HIS PERSONAL EARNINGS AND DONATION OF GOLD CHHATTAR WAS IN THE FORM OF DONATION BY THE ASSESSE E. (1) & (M) THE ASSESSEE HAS BROUGHT NOTHING ON RECOR D TO PROVE THAT THERE HAD BEEN CAST ANY LEGAL OBLIGATION UPON HIM U/S 2(24)(IIA) OF THE ACT. NONETHELESS, IT IS NO CONSEQ UENCE AS INCOME OF ANY LEGAL OBLIGATION FOR THE PURPOSES OF CHARGING SECTION 14 HAS BEEN INCLUDED IN THE INCOME. ANY EXE MPTION EVEN UNDER LEGAL OBLIGATION HAS TO PASS THE REST OF SECT ION 12AA OF THE ACT. IT IS FURTHER SUBMITTED THAT NONE OF THE JUDGMENTS RELIED UPON BY THE ASSESSEE IS APPLICABLE TO THE FACTS OF THE CASE WHICH ARE DISCUSSED HEREUNDER: MATANT INDERASH CHARAN DASS VS. STATE OF UP 81 ITR 435 ITA NO.440(ASR)/2012 27 IN THIS CASE, THE MANAGEMENT OF THE ENDOWMENT HAD D EVOLVED UPON THE MAHANT IN THE TRADITION FROM GURU TO CHELA AND NO ACCESSION TO THE GADDI THE MAHANT SEVERED HIS RELA TIONS AND CONNECTIONS WITH THE FAMILY. THE MAHANT WAS ELECTED BY SIKH CHIEFS IN PANCHAYAT FROM AMONG THE CHELAS OF THE L AST GURU. THE PROPERTY BELONGED TO THE INSTITUTION AND THE MA HANT WAS MERELY ITS ADMINISTRATOR. IN THE CASE OF THE ASSESSEE, NO SUCH DEVOLVING OF G ADDI HAS BEEN CLAIMED. NO EVIDENCE HAS BEEN BROUGHT ON RECOR D THAT HE HAD BEEN APPOINTED AS A MAHANT/MUKH SEWADAR AND FUR THER THE ASSESSEE HAD BEEN USING THE ALLEGED PROPERTY AS HIS OWN PROPERTY.IN FACT, DONATIONS WERE MADE TO THE MUKH S EWADAR IN THE EXERCISE OF HIS VOCATION AND ARE ASSABLE IN HIS OWN HANDS AS PER THE JUDGMENTS RELIED UPON BY THE AO IN HIS ORDE R AT PAGE 4 OF THE ASSESSMENT ORDER. CIT VS. BABA AVTAR SINGH 83 ITR 738 (DEL) IN THIS CASE, DONATIONS WERE MADE TO NIRANKARI MAND AL AND THE RECEIPTS FOR THE OFFERINGS WERE ISSUED BY THE SAID MANDAL BUT IN THE CASE OF THE ASSESSEE NO SUCH CLAIM HAS BEEN MAD E MUCH LESS SUBSTANTIATING THE SAME. THEREFORE, THIS JUDGMENT I S NOT RELEVANT TO THE FACTS OF THE CASE. SANT BABA MOHAN SINGH 118 ITR 1015 IN THIS CASE, ALL INCOME HAD BEEN SPENT FOR RELIGIO US AND CHARITABLE PURPOSES AND THE INCOME WAS OF GURUDWAR A AND THE ATTACHED SHOPS. BUT THIS IS NOT SO IN THE CASE OF THE ASSESSEE AS HE HAD MADE THE SEVERAL WITHDRAWALS FOR THE PERSONA L PURPOSES AS ESTABLISHED BY THE AO IN HIS ASSESSMENT ORDER. T HEREFORE, THIS DECISION IS NOT APPLICABLE. SOCIETY FOR INTEGRATED DEVELOPMENT IN URBAN AND RUR AL AREAS VS. DCIT 90 ITD 493 (HYD). THIS JUDGMENT IS IN FACT IN FAVOUR OF THE REVENUE. THE DEPARTMENT HAS NOT TAXED GROSS RECEIPTS. IT HAS ALL OWED THE DEDUCTION TO THE ASSESSEE WHICH THE ASSESSEE HAS CL AIMED LIKE ITA NO.440(ASR)/2012 28 ADVERTISEMENT EXPENSE AND EXPENSE ON ACCOUNT OF TE LEPHONE, VEHICLE AND TRAVELING EXPENSES AND OTHER EXPENSE. T HUS, THIS JUDGMENT IS ALSO NOT APPLICABLE. SUKHDEO CHARITY ESTATE VS. CIT 149 ITR 1 (SC) SINCE THE ASSESSEE HAS TREATED ALL DONATIONS AS HAV ING BEEN MADE TO HIM AS PREACHER AND NO RECEIPT OF DERA SANT AMIR SINGH HAS BEEN ISSUED, THEREFORE, THE DONATIONS REC EIVED CANNOT BE SAID TO HAVE BEEN MADE FOR ANY SPECIFIC PURPOSE. THE ASSESSEE USING THE DONATIONS FOR PERSONAL PURPOSE CLEARLY INDICATES THE CONDUCT OF THE ASSESSEE THAT HE HAD B EEN TREATING THE SAME AS HIS OWN INCOME AND NOT THE INCOME OF TH E DERA OR UNDER ANY LEGAL OBLIGATION AS IN THAT EVENT THE ASS ESSEE WOULD NOT HAVE MADE SEVERAL WITHDRAWALS FOR HIS OWN USE A ND FOR BUYING CAPITAL GOODS FOR HIS OWN COMFORTS AND BUYIN G INSURANCE POLICY ON HIS OWN LIFE AND FOR OTHER FACT S AS DISCUSSED ABOVE. CIT VS. TRAVANCORE SUGAR AND CHEMICALS LTD. 88 ITR 1 (SC) THIS JUDGMENT IS ALSO NOT APPLICABLE FOR THE REASO NS AS ENUMERATED ABOVE. THE CONDUCT OF THE ASSESSEE SHOWS THAT HE BROOKED NO LEGAL OBLIGATION ON THE DONATIONS RECEIV ED. RAJKOT DISTRICT GOPALAK CO-OPERATIVE MILK PRODUCERS UNIONS VS. CIT 204 ITR 590 (GUJ). SINCE THE ASSESSEE HAS BY HIS CONDUCT BROOKED NO L EGAL OBLIGATIONS AS SUCH THIS JUDGMENT IS ALSO NOT APPLI CABLE. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS CLEAR THAT THERE IS NO MERIT IN THE ASSESSEES APPEAL AND THE SAME MAY KINDLY BE REJECTED. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS WITH DRAWN GROUNDS NO.1,4,6,7 11 & 12 WHICH CLEARLY SHOWS THAT THE ASSESSEE ADMITS THAT THE ISSUES RAISED IN THESE GRO UNDS ARE THE ONES WHICH HE CANNOT PROVE BEFORE THE HONBLE BENCH AND ITA NO.440(ASR)/2012 29 WHICH IMPACTS THE WHOLE SUBJECT MATTER OF APPEAL. T HEREFORE, THE ASSESSEE HAS CLEARLY NO MERIT IN HIS CASE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY TRUST- DEED BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN B EFORE US AND THE ASSESSEE HAS ADMITTED BEFORE THE AUTHORITIES BELOW THAT IT IS AN UNREGISTERED INSTITUTION. THOUGH, IT IS 100 YEARS OLD BUT NOT EV EN REGISTERED AS REGISTERED SOCIETY OR NOT REGISTERED AS CHARITABLE OR RELIGIO US TRUST UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. THERE IS NO CERTIFICAT E UNDER SECTION 10(23C)(IV) BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US. THE ACCOUNTS HAVE BEEN ADMITTED, NOT TO HAVE BEEN AUDIT ED UNDER ANY LAW. NO 80G(5) APPROVAL FROM THE PRESCRIBED AUTHORITY HAS BEEN TAKEN AND HAS NOT BEEN PLACED ON RECORD. 9.1. WE CONCUR WITH THE FINDINGS OF THE LD. CIT(A) THAT THE ENTIRE COLLECTIONS OF DERA ARE SOLELY MANAGED AND CONTROL LED BY ONE MUKH SEWADAR ACCORDING TO HIS OWN WILL AND WISH AND EVEN THE COLLECTION CERTIFICATES ARE STEREO-TYPED WITHOUT BEARING ANY A UTHENTICATION, COMPLETE PARTICULARS LIKE PAN ETC. NO ATTEMPT HAS BEEN MAD E TO PRODUCE ANY OF THE SO-CALLED DONORS CONFIRMING THE DONATIONS. THE PERT INENT POINT WHICH IS ON RECORD BEFORE BOTH THE AUTHORITIES BELOW AND AS POI NTED OUT BY THE LD. DR ITA NO.440(ASR)/2012 30 THAT VARIOUS BANK ACCOUNTS ARE IN THE SOLE NAME OF MUKH SEWADAR, MR, MAKHAN SINGH, WITHOUT INDICATING ANY ADVERSE EVENTU ALITY AND EVEN THE NOMINATIONS ARE EXECUTED IN FAVOUR OF HIS OWN SON BY MR. MAKHAN SINGH LEADING TO THE CLEAR INDICATION AND SAFE PRESUMPTIO N THAT DUE TO ANY UNFORESEEN UNPLEASANT MISHAP WITH THE ASSESSEE, TH E CREDIT BALANCE BALANCES WILL GO TO ASSESSEES OWN SON BEING LEGAL SUCCESSOR AND NOT TO THE DERA. NOTHING HAS BEEN BROUGHT ON RECORD AND NOTHING HAS BEEN PROVED BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US THA T THE DERA SO CLAIMED AS TRUST I.E. CHARITABLE TRUST IS FUNCTIONING FOR THE CHARITABLE PURPOSE AND NO ACTIVITIES AS PRESCRIBED UNDER SECTION 2(15) OF TH E ACT ARE BEING CARRIED ON BY THE ASSESSEE, HAS BEEN PLACED ON RECORD. THE DER A OR TRUST AS CLAIMED IS NOT AFFILIATED TO ANY CHARITABLE INSTITUTION. 9.2. IT IS PERTINENT TO MENTION, AS MENTIONED IN T HE ORDERS OF THE AUTHORITIES BELOW THAT THE FUNDS OF THE DERA ARE BEING DIVERTE D FOR MEETING OUT THE PERSONAL EXPENSES OF MUKH SEWADAR AS IS EVIDENT FRO M THE NUMEROUS PERSONAL WITHDRAWALS. THE FURNISHING OF PEDICTREE HISTORY OF THE DERA HAS FAILED TO FURNISH ANY ORDER OF THE INCOME TAX AUTHO RITY WHEREBY THE DERA HAS EVER BEEN ALLOWED EXEMPTION UNDER THE INCOME TA X ACT, 1961. THE PURCHASING OF LIC, GAS CONNECTION, CYLINDERS ETC. C LEARLY INDICATE THAT THE FUNDS OF THE SO-CLAIMED TRUST ARE BEING DIVERTED FO R MEETING OUT THE PERSONAL ITA NO.440(ASR)/2012 31 EXPENSES OF THE ASSESSEE. THE AO TIME AND AGAIN HAS GIVEN SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE AND T HEREFORE, THERE CANNOT BE ANY CASE OF THE ASSESSEE FOR NOT PROVIDING ANY OPP ORTUNITY. THE LD. CIT(A) HAS THEREFORE, RIGHTLY CONFIRMED VARIOUS DISALLOWAN CES MADE BY THE A.O. AMOUNTING TO RS.13,35,658/- ON ACCOUNT OF CAPITAL E XPENDITURE, RS.7,42,848/- UNDER SECTION 40(A)(IA) FOR NO DEDUCT ION OF TDS U/S 194C AND RS.1,39,85,512/- BEING DONATIONS NOT FORMING PART OF BUSINESS EXPENSES. 9.3. WE ALSO CONFIRM THE ACTION OF THE AO IN NOT ALLOWING SET OFF OF DECLARED LOSS OF RS.37,09,090/- ACCORDINGLY. THE LD . CIT(A) IS FURTHER JUSTIFIED AND HAS PASSED A REASONABLE ORDER DUE TO UNDENYING PERSONAL ELEMENT, WHO HAS RIGHTLY RESTRICTED THE DISALLOWANC E TO 1/6 TH AS CLAIMED BY THE ASSESSEE ON ACCOUNT OF TELEPHONE, VEHICLE AND T RAVELING EXPENSES. THE AO HAS RIGHTLY BEEN DIRECTED TO ALLOW DEDUCTION UND ER SECTION 80C UNDER CHAPTER VI OF THE ACT. 9.4. AS REGARDS THE ARGUMENTS MADE AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE KEEPING INTO CONSIDERATION THE ARGUMENTS MADE BY THE LD. DR AND WRITTEN SUBMISSIONS SUBMITTED BY THE LD. DR, WE ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD. DR THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENT BEING APPOINTED AS MUKH SEWADAR OF THE S AID DERA AND THEREFORE, THE CLAIM OF THE ASSESSEE IN DUAL CAPACI TY REMAINED WHOLLY ITA NO.440(ASR)/2012 32 UNSUBSTANTIATED. AS MENTIONED HEREINABOVE, NO CHARI TABLE ACTIVITY HAS BEEN SUBSTANTIATED BY THE ASSESSEE AND THERE IS NO REGIS TRATION U/S 12AA, U/S 10 AND U/S 80G OR ANY OTHER PROVISIONS OF THE ACT. IT HAS NOT BEEN SUBSTANTIATED BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US THAT THESE BANK ACCOUNTS IN THE NAME OF THE ASSESSEE WERE, IN FACT, THE BANK ACCOUNTS OF DERA SANT AMIR SINGH JI OR THESE WERE OPENED ON THE BASI S OF SOME DOCUMENTS OF GADDI NASHIN. THE BANK ACCOUNTS CLEARLY SHOW THAT T HE SAME HAVE BEEN OPENED IN THE PERSONAL NAME OF THE ASSESSEE. MOREOV ER, THE LD. COUNSEL FOR THE ASSESSEE THROUGHOUT THE ARGUMENTS HAS NOT MADE ANY SUBMISSION AS TO WHY THE SON OF THE ASSESSEE HAS BEEN APPOINTED AS T HE NOMINEE IN THE BANK ACCOUNT OPENED IN THE NAME OF THE ASSESSEE. SIMPLY ARGUING THAT THE BANK ACCOUNT IS BEING OPERATED TO UNDERTAKE AND PERFORM THE DUTY OF THE DERA AS CARE-TAKER WILL NOT SUFFICE AND CANNOT PROVE THE D UAL STATUS OF THE ASSESSEE, AS CLAIMED. ACCORDINGLY, THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, CANNOT BE MADE APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. ALSO, THE DOCUMENT OF BEING APPOINTED AS CARE-TAKER IS SELF SERVING DOCUMENT AND CANNOT HELP THE ASSESSEE. AS R EGARDS THE DONATIONS, AS CLAIMED TO HAVE BEEN RECEIVED AS CORPUS DONATIONS CAN NOT HELP THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE, IN PARTICULAR, THE ASSESSEE IS NOT REGISTERED UNDER ANY OF THE PROVISIONS OF THE INCOME TAX ACT,1 961. WHEN THE ASSESSEE ITA NO.440(ASR)/2012 33 IS NOT REGISTERED UNDER SECTION 12AA OF THE ACT THE N EVEN IF THE CORPUS DONATIONS CANNOT BE ALLOWED AS DEDUCTION AND CANNOT TAKE SHELTER OF SECTION 11(1)(D) IN VIEW OF AMENDMENT BY THE DIRECT TAX LAW S (AMENDMENT) ACT, 1989 W.E.F. 1.4.1989. THEREFORE, DEFINITELY, THE SA ID DONATIONS CLAIMED TO BE CORPUS DONATIONS HAVE TO BE INCLUDED IN THE INCOME OF THE ASSESSEE. AS REGARDS THE EXPLANATION TO SECTION 2(24)(IIA) REGAR DING DEEMED TRUST UNDER A LEGAL OBLIGATION , THE ASSESSEE HAS NOT PROVED AN Y OF ITS CLAIM. FOR EXAMPLE, HE HAS NOT BROUGHT ANY EVIDENCE THAT HE IS THE HEAD SEWADAR OF THE SAID DERA. SUBMISSION OF THE COPY OF TAKSAL LINEAGE IS A SELF-SERVING DOCUMENT. THERE IS NO MENTION IN THE ACCOUNTING FORM OF BANK ACCOUNT THAT THE SAID ACCOUNTS HAVE BEEN OPENED QUA THE MUKH SEWADAR OF D ERA SANT AMIR SINGH JI ON THE RESOLUTION OF THE SANGAT APPOINTING HIM A S MUKH SEWADAR. THE ACCOUNTS HAVE BEEN OPENED IN HIS PERSONAL NAME AND ONLY THE ADDRESS HAS BEEN GIVEN OF DERA SANT AMIR SINGH JI, CANNOT HELP THE ASSESSEE TO CLAIM AS A CHARITABLE TRUST. ACCORDINGLY, THE ASSESSEE CANNO T CLAIM THE SAME AS DEEMED TRUST. WHAT IS THE LEGAL OBLIGATION ON THE ASSESSEE, HAS NOT BEEN PROVED. THE LD. DR HAS RIGHTLY DISTINGUISHED THE D ECISIONS OF VARIOUS COURTS OF LAW RELIED UPON BY THE LD. COUNSEL FOR THE ASSES SEE, AS REPRODUCED HEREINABOVE. ACCORDINGLY, THE ADDITIONAL EVIDENCE S UBMITTED BY THE LD. ITA NO.440(ASR)/2012 34 COUNSEL FOR THE ASSESSEE FOR ADMISSION HAS NO RELEV ANCE AND FOR THE REASONS MENTIONED HEREINABOVE, WE REJECT THE SAME AND THE S AME IS NOT ADMITTED. 9.5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. THE ORDER PASSED BY THE LD. CIT(A) IS REASONED ONE AND ACCORDINGLY ALL THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ARE DI SMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.440(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH JANUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH JANUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.MAKHAN SINGH, DERA SANT AMIR SINGH JI, AMRITSAR. 2. THE ITO WARD 2(1), ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR