The Director of Income tax(Exemption), Ahmedabad V. K.Verma Charitable Trust, Ahmedabad

ITA 449/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5503 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 07-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JYOTISH M SHAH
• Keywords: Charitable institution
• Section: 80G; 201; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 26/07/2010 DRAFTED ON: 26/0 7/2010 ITA NO.449/AHD/2008 ASSESSMENT YEAR : 2004-05 DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS) AHMEDABAD VS. K.VERMA CHARITABLE TRUST HARIOM AVENUE 31-B, GOVERNMENT SERVANTS COLONY NEAR MUNICIPAL MARKET NAVRNAGPURA AHMEDABAD-380 009 PAN/GIR NO. : AAATK 8143 L (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI K. MADHUSUDAN, SR. D.R. RESPONDENT BY: SHRI JYOTISH M. SHAH O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS)-XXI AHME DABAD DATED 07/11/2007 AND THE ONLY SUBSTANTIVE GROUND READS AS FOLLOWS:- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION MADE ON ACCOUNT OF THE RECEIPT OF DONATION FOR EARTHQUAKE RELIEF U/S.12(3) OF THE INCOME-TAX ACT AMOUNTING TO RS.18,70,003/-. 2. REASON FOR DENIAL OF EXEMPTION AS ASSIGNED B Y THE ASSESSING OFFICER VIDE IMPUGNED ORDER PASSED U/S.143(3) OF THE I.T. A CT, 1961 DATED ITA NO.449/AHD/ 2008 DY.DIRECTOR OF I.T.(E) VS. K.VERMA CHARITABLE TRUST ASST.YEAR 2004-05 - 2 - 26/12/2006 WERE THAT THE ASSESSEE WAS REQUIRED TO F ILE AUDIT ACCOUNTS BY 30 TH JUNE-2004 IN FORM NO.10AA TO THE DGIT(E) IN RESPEC T OF DONATION AMOUNT RECEIVED AND UTILIZED BUT THE SAID CONDITION WAS NOT FULFILLED BY THE ASSESSEE. THEREFORE, ACCORDING TO ASSESSING OF FICER SINCE THE ASSESSEE HAS NOT SATISFIED ONE OF THE CONDITIONS AS PRESCRIBED U/S.80G(5C) PERTAINING TO THE AMOUNT OF DONATION FOR EARTHQUAKE , THEREFORE, THE BENEFITS PRESCRIBED U/S.12(3) OF THE I.T. ACT, 1961 COULD NOT BE GRANTED TO THE ASSESSEE. WITH THE RESULT, BY INVOKING THE DE EMING PROVISIONS OF SECTION 12(3) OF THE I.T. ACT, 1961 THE AMOUNT OF D ONATION OF RS.18,70,003/- WAS TAXED IN THE HANDS OF THE ASSESS EE. WHEN THE ISSUE WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, T HE SAME WAS ALLOWED AS PER THE FOLLOWING PARAGRAPH:- I HAVE CONSIDERED THE FACT OF THE CASE, THE FINDIN G OF THE A.O. & THE SUBMISSION OF THE APPELLANT TRUST. IN THE LIG HT OF DECISIONS OF THE VARIOUS HIGH COURTS CITED AS UNDER: I. CIT VS. GUJARAT OIL & ALLIED INDUSTRIES 201 ITR 325 (GUJ) II. CIT VS. MAYUR FOUNDATION 274 ITR 562 (GUJ) III. CIT VS. HARDEODAAS AGRAWALLA TRUST 198 ITR 511 (CAL ) IV. CIT VS. ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION 285 ITR 147 (AP) WHEREIN THE VARIOUS COURTS HAVE HELD THAT FILING OF AUDIT REPORT ALONGWITH RETURN FOR CLAIMING DEDUCTION U/S.80G IS DIRECTORY BUT NOT MANDATORY AND HENCE, IT CAN BE FILED BEFORE THE COMPLETION OF ASSESSMENT BEFORE THE A.O. IN VIEW OF THE ABOVE, I T CAN BE CLEARLY AND FAIRLY INTERPRETED THAT THE PURPOSE OF FILING O F AUDIT REPORT IN FORM NO.10AA, BEFORE THE DGIT IS TO VERIFY WHETHER THE AMOUNT OF DONATION RECEIVED FRO PROVIDING RELIEF TO THE EARTH QUAKE VICTIMS IS SPENT FOR SUCH PURPOSE. ONCE IT IS FOUND THAT SUCH INTENT AND ITA NO.449/AHD/ 2008 DY.DIRECTOR OF I.T.(E) VS. K.VERMA CHARITABLE TRUST ASST.YEAR 2004-05 - 3 - PURPOSE HAS BEEN FULFILLED BEFORE THE COMPLETION OF ASSESSMENT, IT SHOULD BE TREATED AS VALID. PROVISIONS OF SECTION 80G(5C) OF SECTION 80G SHOULD BE READ TOGETHER AND NOT IN ISOL ATION. COPY OF AUDIT REPORT IS SUBMITTED BEFORE THE A.O. AT THE TI ME OF ASSESSMENT AS WELL AS BEFORE THE A.O. AT THE TIME OF ASSESSMEN T AS WELL AS BEFRE THE UNDERSIGNED DURING THE COURSE OF APPELLAT E PROCEEDINGS AND EVIDENCE OF THE FACT THAT THE SAME WAS SENT TO DGIT (EXEMPTION) DELHI IS ALSO ENCLOSED IN THE FORM OF U PC ACKNOWLEDGEMENT. IT IS ALSO NOTED THAT THE UTILIZA TION OF EARTHQUAKE RELIEF FUND IS NOT QUESTIONED BY THE A.O , HE HAS SIMPLY MENTIONED IN HIS ORDER THAT AUDIT REPORT WAS TO BE SUBMITTED AT DGIT (EXEMPTION) KOLKATTA. THUS, TO SUM UP, THE AP PELLANT HAS FULFILLED THE CONDITIONS LAID DOWN UNDER THE PROVIS IONS OF SECTION 80G (5C) OF THE ACT, AND HENCE, THERE IS NO CASE FO R INVOKING SECTION 12(3) OF THE ACT. THEREFORE, THIS GROUND O F APPEAL IS ALLOWED. 3. ON HEARING THE RIVAL SUBMISSIONS, WE HAVE NOTICE D THAT AS FAR AS THE QUESTION OF FURNISHING OF THE AUDIT REPORT WAS CONC ERNED, THE ASSESSING OFFICER HAS MADE A REMARK IN PARAGRAPH NO.1 OF THE IMPUGNED ASSESSMENT ORDER THAT THE RETURN WAS FILED ON 26/10 /2004 ALONGWITH AUDITORS REPORT U/S.12A(B) OF THE I.T. ACT, 1961 O N FORM NO.10B. NOT ONLY THIS, THE ASSESSEE HAS ALSO SPECIFICALLY PLACE D THE INFORMATION OF SUBMITTING OF FORM NO.10AA BEFORE THE ASSESSING OFF ICER AS PER THE FOLLOWING PARAGRAPH: IN THIS REPLY THE ASSESSEE STATED THAT HE HAD FILE D THE FORM NO.10AA WITH DGIT(E), NEW DELHI ON 24/06/2004 AND A COPY OF UPC DATED 24/06/2004 HAS ALSO BEEN FILED WITH THE A BOVE WRITTEN REPLY. HOWEVER, THE DGITS OFFICE AT THAT POINT O F TIME WAS SITUATED AT CALCUTTA AND THEREFORE THE EVIDENCE PRO DUCED BY THE ASSESSEE THAT HE SENT THE FORM NO.10AA BY UPC, APPE ARS TO BE FICTITIOUS AND HAS GOT NO EVIDENTIARY VALUE AS THE SAME CANNOT BE SAID TO BE AN ACKNOWLEDGEMENT. AGAIN AS PER THE PR OVISIONS OF THE SECTION 80G(5C)(V) OF I.T. ACT THE ASSESSEE HAD TO SUBMIT THE ITA NO.449/AHD/ 2008 DY.DIRECTOR OF I.T.(E) VS. K.VERMA CHARITABLE TRUST ASST.YEAR 2004-05 - 4 - ACCOUNTS BY 30/06/2002, 30/06/2003 & ALSO BY 30/06/ 2004 AND IF THERE IS ANY DELAY ON ACCOUNT OF FILING THE AUDITED ACCOUNTS IN FORM NO.10AA, THE ASSESSEE MUST OBTAIN THE CONDONAT ION LETTER FROM THE DG. 4. IN VIEW OF ABOVE REFERRED ADMITTED POSITION, AS WELL AS FOLLOWING THE VERDICT OF SOME OF THE DECISIONS, VIZ. (I) CIT VS. GUJARAT OIL & ALLIED INDUSTRIES 201 ITR 325 (GUJ), (II) CIT VS. MAYUR FO UNDATION 274 ITR 562 (GUJ), (III)CIT VS. HARDEODAAS AGRAWALLA TRUST 198 ITR 511 (CAL) AND (IV) CIT VS. ANDHRA PRADESH STATE ROAD TRANSPOR T CORPORATION 285 ITR 147 (AP), WE FIND NO FALLACY IN THE VERDICT OF LEARNED CIT(APPEALS). DURING THE COURSE OF ARGUMENT, A QUESTION HAS ALSO BEEN RAISED FROM THE SIDE OF THE REVENUE THAT SINCE THE CLAIM WAS REJECT ED BY THE ASSESSING OFFICER IN LIMINE, THEREFORE, THE VERACITY OF THE CHARITABLE ACTIVITY COULD NOT BE VERIFIED AT THE ASSESSMENT STAGE. IN RESPO NSE, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS PLACE D CERTAIN ORDERS OF THE TRIBUNAL TO DEMONSTRATE THAT IN ASSESSMENT YEAR 200 1-02 EARLIER AN ORDER WAS PASSED IN ASSESSEES OWN CASE BEARING ITA NO.87 0/AHD/2003 DATED 09/03/2007, THROUGH WHICH THE MATTER WAS RESTORED B ACK TO THE STAGE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE WHETHER T HE DONATIONS COULD BE HELD AS INCOME OF THE ASSESSEES TRUST OR ELIGIBLE FOR DEDUCTION. IN THE SECOND ROUND, AGAIN THE MATTER HAD REACHED UPTO THE TRIBUNAL FOR ASSESSMENT YEAR 2001-02 WHEREIN THE REVENUES APPEA L WAS DISMISSED IN ITA NO.1806/AHD/2009 VIDE ORDER DATED 04/09/2009 BY RESPECTED CO-ORDINATE B BENCH AND HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.11 OF THE I.T. ACT, 1961. ITA NO.449/AHD/ 2008 DY.DIRECTOR OF I.T.(E) VS. K.VERMA CHARITABLE TRUST ASST.YEAR 2004-05 - 5 - 5. IN THE LIGHT OF ABOVE BACKGROUND, HARDLY ANY SCO PE HAS LEFT FOR OUR INTERFERENCE AT THIS STAGE, THEREFORE, WE FIND NO F ORCE IN THE GROUND OF THE REVENUE, HENCE, DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/ 07 /2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/ 07 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XXI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD