Usha Foundation, New Delhi V. DCIT, New Delhi

ITA 4795/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3777 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 18-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K RAVI RAM CHANDRAN
• Keywords: Bogus purchase; Income from undisclosed sources; Charitable institution; Accommodation entries; Bogus loan
• Section: 12A; 131; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) SHRI R.P. TOLANI, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4795/DEL./2009 (ASSESSMENT YEAR : 2002-03) M/S. USHA FOUNDATION, VS. DCIT, CENTRAL CIRCLE 9 , B-II/100, MOHAN CO-OPERATIVE INDL. ESTATE, NEW DEL HI. BADARPUR, NEW DELHI. (PAN : AAATU0868Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. INDRA BANSAL, CA REVENUE BY : SHRI K. RAVI RAMCHANDRAN, CIT DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF CIT (APPEALS)-II, NEW DELHI DATED 30.09.2000 FOR THE ASSESSMENT YEAR 2002-03. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN UPHOLDING THE ACTION OF ASSESSING OFFICER FOR TREAT ING CORPUS DONATION OF RS.1,01,00,000/- RECEIVED BY THE APPELL ANT TO BE IN THE NATURE OF INCOME WITHOUT APPRECIATING THE FACT THAT VOLUNTARY CONTRIBUTION MADE WITH THE SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION, IS NOT INCLUDIBLE IN THE TOTAL INCOME AS PER THE PROVISIONS OF SECTION 1 1(1)(D) OF INCOME-TAX ACT, 1961. THE SAME IS LIABLE TO BE ASSE SSED AS CORPUS DONATION AND IS LIABLE TO BE EXCLUDED FROM I NCOME OF THE APPELLANT. ITA NO.4795/DEL./2009 2 2.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERR ED IN CONFIRMING THE FINDING OF THE ASSESSING OFFICER THA T M/S PARBATI FORGINGS PRIVATE LIMITED IS A BOGUS COMPANY INVOLVE D IN GIVING ENTRIES ONLY WITHOUT BRINGING ANY MATERIAL ON RECOR D AND WITHOUT APPRECIATING THE FACT THAT IT IS A REGULAR INCOME T AX ASSESSEE WITH ADDL. COMMISSIONER OF INCOME TAX, RANGE-6, KANPUR. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERR ED IN CONFIRMING ASSESSING OFFICER HAS ERRED IN HOLDING T HAT M/S MA GAYATRI DEVI TRUST IS A BOGUS CONCERN INVOLVED IN G IVING ENTRIES ONLY WITHOUT APPRECIATING THE FACT THAT IT IS PUBLI C CHARITABLE TRUST AND IS A REGULAR INCOME TAX ASSESSEE WITH ADD L. DIRECTOR OF INCOME TAX(EXEMPTION), RANGE-I, DELHI AND IS HAVING INCOME TAX PERMANENT ACCOUNT NUMBER AAATM7306A. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR MODI FY ANY OF THE ABOVE GROUNDS OF APPEAL. 2. THE ASSESSEE HAS BEEN REGISTERED IN THE STATUS O F PUBLIC CHARITABLE TRUST AND AS RECORDED BY THE ASSESSING OFFICER, THE ASSES SEE IS RUNNING EDUCATIONAL INSTITUTE FOR UNDER GRADUATE AND POST GRADUATE COUR SES IN THE NAME OF NIILM WHICH IS BEING RUN FROM B-II/66, SHER SHAH SURI MAR G, NEW DELHI-110 044. THE RETURN OF INCOME WAS FILED DECLARING INCOME AT NIL ON 28.03.2003. DURING THE YEAR, THE ASSESSEE HAS SHOWN RECEIPT OF CORPUS DONATION OF RS.1,01,00,000/- FOR THE SAID PURPOSE. THESE TWO D ONATIONS WERE RECEIVED FROM M/S. PARBATI FORGINGS PRIVATE LIMITED (HEREINA FTER REFERRED TO AS PARBATI) AND MA GAYATRI DEVI TRUST (HEREINAFTER R EFERRED TO AS MA GAYATRI) OF RS.61 LACS AND RS.40 LACS RESPECTIVELY. ITA NO.4795/DEL./2009 3 3. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 AND ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF INCOME-TAX ACT. DURI NG THE RELEVANT PERIOD, THE ASSESSEE WAS RUNNING EDUCATIONAL INSTITUTION PR OVIDING MANAGEMENT EDUCATION. THE RETURN WAS FILED FOR NIL INCOME AND THE EXCESS OF INCOME OVER EXPENDITURE OF RS.25,88,749/- WAS CLAIMED AS EXEMPT ED U/S 11. DURING THE YEAR, THE ASSESSEE ALSO RECEIVED CORPUS DONATION OF RS.1,01,00,000/-. CORPUS DONATION WAS RECEIVED FROM MA GAYATRI BY CHEQUE DAT ED 23.12.2001 OF RS.40 LACS DRAWN ON INDIAN OVERSEAS BANK, LOK KALA MANCH, NEW DELHI AND SIMILARLY, THE CORPUS DONATION WAS RECEIVED FROM PA RBATI BY TWO CHEQUES DATED 24.12.2011 OF RS.61 LACS (RS.51 LACS + RS.10 LACS) DRAWN ON INDIAN OVERSEAS BANK, EXTENSION COUNTER, GOLF LINK, NEW DE LHI. THE CONFIRMATION FROM THE DONORS MENTIONING DATE OF ISSUE OF CHEQUE, CHEQUE NUMBER, AMOUNT, THEIR ADDRESS, INCOME-TAX PERMANENT ACCOUNT NUMBER AND COPY OF ACKNOWLEDGEMENT NUMBER IN SUPPORT OF THE FILING OF RETURN OF INCOME WERE SUBMITTED ALONG WITH BALANCE SHEET AND PROFIT & LOS S ACCOUNT. SHE ALSO SUBMITTED THAT IN RESPONSE TO THE SUMMONS ISSUED U/ S 131 OF THE INCOME-TAX ACT, BOTH THE PARTIES WERE PRODUCED BEFORE THE ASSE SSING OFFICER ALONG WITH BOOKS OF ACCOUNT SHOWING THE TRANSACTION THEREIN. THE STATEMENT OF DIRECTOR OF PARBATI WAS ALSO RECORDED BY THE ASSESSING OFFIC ER. SIMILARLY, MA GAYATRI, A CHARITABLE-* TRUST WAS ALSO REPRESENTED BY ITS AC COUNTANT BEFORE THE ITA NO.4795/DEL./2009 4 ASSESSING OFFICER AND FILED THE CONFIRMATION OF LET TERS AND THE PROOF OF FILING THE INCOME-TAX RETURN. SHE SUBMITTED THAT THE CIT (A) WAS NOT JUSTIFIED IN CONFIRMATION THE ACTION OF THE ASSESSING OFFICER. SHE SUBMITTED THAT THE CIT (A) WAS ALSO NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER BY HOLDING THAT THE PARBATI IS A BOGUS COMPANY INVOLVE D IN GIVING BOGUS ENTRIES. SHE SUBMITTED THAT THE COMPANY IS AN EXISTING INCOM E TAX ASSESSEE AND HAVING ITS REGISTERED OFFICE AT 13/392, CIVIL LINES, KANPU R (U.P.). THE CIT (A) WAS ALSO NOT JUSTIFIED IN HOLDING THAT PARBATI HAS GIV EN DONATION OUT OF ADVANCES RECEIVED FROM CUSTOMERS WHICH REMAIN OUTSTANDING FO R MORE THAN ONE YEAR. SIMILARLY, MA GAYATRI WAS ALSO HELD TO BE NON-GENUI NE AND A DEVICE TO SIPHON OF THE FUNDS FROM ONE CONCERN TO ANOTHER BY SERIES OF TRANSACTIONS. SHE ALSO SUBMITTED THAT THE CIT (A) WAS NOT JUSTIFIED IN HOL DING THAT WHAT IS APPARENT IS NOT REAL AND HE HAS HELD THAT THE CORPUS DONATION R ECEIVED TOWARDS THE PURPOSES WAS NOT REAL AND GENUINE TRANSACTION AND S HE PLEADED TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. 4. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. LD. DR ALSO SUBMITTED THAT THE TRUST BELONG S TO THE USHA GROUP WHERE A SEARCH WAS CONDUCTED ON 14.2.2001 AND SEIZURE OF VALUABLE ASSETS OF OVER RS.166 CRORES WAS EFFECTED AS UNACCOUNTED ASSETS. THE GROUP WAS MAINTAINING TWO SECRET OFFICES AT E-58 & E-127, SAR ITA VIHAR, NEW DELHI UNDER THE OVERALL CONTROL AND SUPERVISION OF SHRI V INAY RAI THROUGH HIS ITA NO.4795/DEL./2009 5 EMPLOYEES, SHRI S.K. MITTAL, SHRI J.R. GUPTA, DR. M .C. GUPTA, SHRI S.C. AGGARWAL, SHRI V.P. GUPTA, SHRI G.D. GOYAL AND SHRI G.G. RAJAN. FROM THESE SECRET OFFICES, 250 BOGUS FRONT COMPANIES WER E FLOATED AND MORE THAN RS.1200 CRORES WERE SIPHONED OFF BY THE GROUP. THE MODUS OPERANDI OF THE GROUP IN ORDER TO EVADE TAX AND SIPHON OFF MONEY FR OM HIS FLAGSHIP CONCERN IS AS UNDER :- (A) THE GROUP CONCERN DESIROUS OF INFLATING ITS EX PENSES, PLACES ORDERS OF PURCHASE OF CERTAIN ITEMS ON COMPA NIES FLOATED FOR THIS PURPOSE BY EITHER SUCH PERSONS WHO ARE IN THE BUSINESS OF PROVIDING SUCH ENTRIES ON COMMISSION BASIS OR TH ROUGH FRONT COMPANIES FLOATED BY THE GROUP THROUGH THEIR PRESEN T OF EX- EMPLOYEES/DIRECTORS OR OTHER INTERESTED PERSONS. (B) SUCH PAPER COMPANIES ISSUE BILLS TO THE GROUP C ONCERN FOR THE ITEMS PROPOSED TO BE SUPPLIED. (C) THE CHEQUES ISSUED BY THE GROUP CONCERN IN FAVO R OF THE PAPER/FRONT COMPANIES FOR THE ALLEGED PURCHASE IS D EPOSITED IN THE BANK ACCOUNT OF THE SAID FRONT COMPANY. (D) THE MONEY IS ROTATED THROUGH VARIOUS BANK ACCOU NTS AND IS GENERALLY ROUTED BACK IN A GROUP CONCERN AS EQUI TY IN THE NAME OF THE PAPER/FRONT CONCERNS. AT TIMES, CASH IS WITH DRAWN AT THE END OF SUCH ROTATION FOR PERSONAL USE BY OWNER-DIRE CTORS. (E) THE GROUP USES THE HELP OF PERSONS ENGAGED IN P ROVIDING ACCOMMODATION ENTRIES, TO SIPHON OFF FUNDS FOR THE PERSONAL USE OF ITS OWNER/PROMOTERS. THESE ENTRIES ARE IN THE FO RM OF BOGUS LOANS OR BOGUS PURCHASES, WHERE SUCH PERSONS RECEIV ED CASH IN LIEU OF THE CHEQUE ISSUED BY THE GROUP CONCERN. THE MAIN FLAGSHIP CONCERNS OF THE GROUP ARE: 1. M/S. USHA INDIA LTD. 2. M/S. MALVIKA STEEL LTD. 3. M/S. USHA ISPAT LTD. ITA NO.4795/DEL./2009 6 4. M/S. INFORMATION TECHNOLOGIES INDIA LTD. 5. M/S. GORDON HERBERT LTD. 6. M/S. BURR BROWN ADVERTISING LTD. 7. M/S. SARP HOTEL LTD. 8. M/S. ORPHIC RESORTS LTD. 9. M/S. KOSHIKA TELECOM LTD. AND THE MAIN CONTROLLING PERSONS ARE: 1. SH. KULWANT RAI, 2. MRS. BIMLA RAI, 3. SH. VINAY RAI, 4. MRS. SADHNA RAI, 5. SH. ANIL RAI, 6. MRS. MALVIKA RAI, 7. SH. AMIT RAI, 8. SH. VARON RAI IN ASSESSEES CASE, SHRI KULWANT RAI IS SETTLER AND VINAY RAI & ANIL RAI ARE TRUSTEES. THE REGISTERED OFFICE OF THE TRUST IS TH E SAME AS THE ADDRESS OF THE SETTLER AND THESE TWO TRUSTEES AS 12, AURANGZEB ROA D, NEW DELHI. HE ALSO SUBMITTED THAT CLAUSE 9 OF TRUST DEED PROVIDES THAT KULWANT RAI SHALL BE CHAIRMAN OF BOARD DURING HIS PLEASURE AND SHALL NOT BE LIABLE TO BE REMOVED. SIMILARLY, THE VINAY RAI AND ANIL RAI SHALL BE TRUS TEE FOR LIFE LONG. THE SO- CALLED DIRECTOR OF PARBATI WAS A PETTY EMPLOYEE OF USHA GROUP. HE FURTHER PLEADED THAT THE PAID UP CAPITAL OF PARBATI IS ONLY OF RS.4200/- AS ON 31.3.2001 AS WELL AS ON 31.3.2002. OUT OF THE CURR ENT LIABILITIES OF RS.10,73,10,588/- AS ON 31.3.2002, LIABILITIES OF R S.10,34,70,000/- WAS ADVANCE FROM MYSTRY TRADING (P) LIMITED, RS.37,35,0 00/- FROM M/S. AKASH METALLURGICAL (P) LTD. AND RS.1 LAC IS FROM M/S. UN IFIN INVESTMENT (P) LTD. ITA NO.4795/DEL./2009 7 THE LIABILITIES FROM MYSTRY TRADING (P) LTD. AND UN IFIN INVESTMENT (P) LTD. WERE CARRIED FORWARD FROM PRECEDING YEAR. THE NEW ADVANCE WAS RECEIVED DURING THE YEAR WAS FROM AKASH METALLURGICAL (P) LT D. OF RS.37,35,000/- (PAGE 57 OF PAPER BOOK). IN THE UTILIZATION OF THE FUND, RS.3,27,10,471/- HAS BEEN GIVEN AS LOAN AND ADVANCES AND RS.46,59,625/- WERE SHOWN AS AN INVESTMENT. THE REMAINING AMOUNT HAS BEEN SHOWN AS CARRIED FROM THE LOSS OF P&L ACCOUNT WHICH IS MAINLY ON ACCOUNT OF GIVING DONATION OF RS.7,76,00,000/- AND OUT OF THIS DONATION, RS.61 L ACS CLAIMED TO BE GIVEN TO THE ASSESSEE TRUST. THE FUND RECEIVED THROUGH ADVA NCES HAS BEEN SHOWN AS UTILIZED FOR DONATIONS. IT IS STRANGE THAT ADVANCE S WHICH ARE TO BE RETURNED BACK HAVE BEEN UTILIZED FOR MAKING DONATIONS WHIC H ARE GIVEN FOREVER. IT IS UNBELIEVABLE THAT MOST OF THE AMOUNT RECEIVED AS AD VANCES COULD BE GENUINELY UTILIZED FOR VOLUNTARY DONATIONS TO VARIOUS PERSONS INCLUDING THE ASSESSEE TRUST. IT IS HIGHLY IMPROBABLE THAT THE COMPANY IS TAKING HUGE RETURNABLE ADVANCES FOR MAKING THE DONATIONS FOR CHARITY WHERE THE SHARE CAPITAL OF THE COMPANY IS ONLY RS.4,200/-. IT IS PLEADED THAT PAR BATI IS ONE OF THE BOGUS CONCERN INVOLVED IN GIVING BOGUS ACCOMMODATION ENTR IES TO SIPHON OF THE MONEY. THE CORPUS DONATION SHOWN TO ASSESSEE WAS A LSO SUCH ACCOMMODATION ENTRY. THE RECEIPT BY BANKING CHANNE LS AND CONFIRMATION ARE ONLY FAADE TO CONCEAL THE REAL AND THE TRUE COLOUR OF THE TRANSACTION. THESE ARE SOPHISTICATED DEVICES TO GIVE A COLOUR OF GENUI NENESS TO THE UNREAL ITA NO.4795/DEL./2009 8 TRANSACTIONS ENTERED INTO TO SIPHON OF MONEY AND TO EVADE TAXES. SIMILARLY, MA GAYATRI TRUST SHOWS AS ONE OF THE DONOR IS ALSO BELONGING TO THE USHA GROUP. THE OPENING CORPUS FUND AT BEGINNING OF THE YEAR OF MA GAYATRI WAS RS.96,000/- ONLY WHICH IS EVIDENT FROM THE BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT FILED IN PAPER BOOK PLACED AT P AGES 39 & 40 OF THE PAPER BOOK. DURING THE YEAR, THE MA GAYATRI HAS SHOWN A RECEIPT OF RS.14,22,00,000/- AS CORPUS DONATION AND OUT OF THI S, RS.6,75,05,000/- HAS BEEN SHOWN AS A DONATION GIVEN. NO DETAILS OF HUGE DONATIONS RECEIPT OF RS.14,22,00,000/- WERE FILED BEFORE ASSESSING OFFIC ER AND CIT (A). THE ADDRESS OF ASSESSEE AND THIS DONOR IS SAME WHICH IS EVIDENT FROM PAGES 33 & 34 OF THE PAPER BOOK. ALTHOUGH IT IS CLAIMED THAT RS.13,96,427/- HAVE BEEN SPENT ON CHARITY BUT THE INCOME AND EXPENDITURE ACC OUNT FOR THE YEAR (PAGE 40 OF PAPERBOOK) SHOWS THAT NO CHARITABLE ACTIVITIES H AVE BEEN CARRIED OUT BY THE TRUST. TOTAL SALARY & WAGES DEBITED ARE OF RS.18,0 00/- ONLY. THE MAIN EXPENDITURE DEBITED IN INCOME & EXPENDITURE ACCOUNT IS FOR FOREIGN TRAVELING OF RS.4,25,405/-. THE GARDENING EXPENDITURE DEBITE D IS OF RS.33,321/-. THE INCOME & EXPENDITURE ACCOUNTS SHOWS THAT NOTHING HA VE BEEN SPENT ON CHARITY. THE HUGE RECEIPT OF DONATIONS AND THEN FU RTHER DONATIONS ARE APPARENTLY ACCOMMODATION ENTRIES TO SIPHON FUNDS AS IS THE MODUS OPERANDI OF THE GROUP. THEREFORE, THE CORPUS DONATION CLAIM ED IN THIS CASE IS NOT REAL. THE FACTS AND CIRCUMSTANCES SHOW THAT THE FAADE HA VE BEEN CREATED TO SIPHON ITA NO.4795/DEL./2009 9 MONEY AND EVADE TAXES. IT IS A DEVICE TO SIPHON OF F FUNDS FROM ONE CONCERN TO ANOTHER CONCERN BY SERIES OF FICTITIOUS TRANSACTION WHICH IS A MODUS OPERANDI OF THIS GROUP. HE PLEADED TO SUSTAIN THE ORDER OF CIT (A). 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REC ORDS CAREFULLY. FIRSTLY, WE WOULD LIKE TO ANALYZE THE FINANCIAL STA TEMENTS OF BOTH THE DONORS TO KNOW THEIR CAPACITY TO DONATE FOR CHARITY. THE ANALYSIS OF THE BALANCE SHEET OF MA GAYATRI DEVI TRUST (PLACED AT PAGE 39 OF PAPE RBOOK) SHOWS THAT THE CORPUS FUND AVAILABLE WITH THE TRUST AT THE BEGINNI NG OF THE YEAR WAS ONLY RS.96,000/. DURING THE RELEVANT FINANCIAL YEAR, TH E CORPUS DONATION HAS BEEN SHOWN AS RECEIVED OF RS.14,22,96,000/-, OUT OF IT R S.6,75,05,000/- HAS BEEN SHOWN AS GIVEN AWAY AS DONATIONS. THE DETAILS OF D ONATIONS RECEIVED BY DONOR HAVE NOT BEEN FILED BEFORE AUTHORITIES BELOW. THE ANALYSIS OF THE INCOME & EXPENDITURE ACCOUNT OF MA GAYATRI (PLACED AT PAGE 40 OF PAPER BOOK) SHOWS THAT THE INCOME OF THE TRUST IS AS FOLL OWS :- MISC. INCOME RS. 225000/- PROFIT ON SALE OF INVESTMENT RS.1171427/- THE EXPENDITURE SIDE OF INCOME & EXPENDITURE ACCOUN T SHOWS THAT SALARY AND WAGES OF ONLY RS.18,000/-, BANK CHARGES OF RS.475/- , CONVEYANCE EXPENSES OF RS.4,453/-, FOREIGN TRAVELING OF RS.4,25,405/-, FRE IGHT & CARTAGE OF RS.530/-, GARDENING EXPENDITURE OF RS.33,321/-, OFFICE MAINTE NANCE OF RS.5,680/-, ITA NO.4795/DEL./2009 10 PRINTING & STATIONERY OF RS.41,303/-, REPAIR & MAIN TENANCE OTHERS OF RS.5,209/-, REPAIR & MAINTENANCE VEHICLES OF RS.4 ,108/-, REPAIR & MAINTENANCE D.G. SET OF RS.9,208/-, STAFF WELFARE OF RS.65/-, TELEPHONE EXPENDITURE OF RS.4/- AND TRAVELING EXPENDITURE OF RS.11,500/- HAVE BEEN DEBITED IN THE ACCOUNT. THE EXCESS OF INCOME HAS B EEN CARRIED FORWARD TO BALANCE SHEET. THUS MAIN EXPENDITURE WAS TOWARDS F OREIGN TRAVEL. THESE EXPENSES DEBITED IN INCOME & EXPENDITURE ACCOUNT AP PARENTLY SHOWS THAT THERE WAS NO EXPENDITURE TOWARDS THE CHARITABLE ACT IVITIES AS CLAIMED IN BALANCE SHEET. THE MAIN ACTIVITY APPARENT FROM THE ANALYSIS OF BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT SEEMS TO BE RECEIP T OF FUNDS AND TRANSFER THEIR OFF AS DONATIONS. THE BALANCE SHEET OF THE T RUST SHOWS THAT THE HUGE AMOUNT OF DONATION HAS BEEN RECEIVED AS CORPUS FUND AND ONLY PART OF IT HAVE BEEN INVESTED IN THE LAND AND MUTUAL FUNDS. HOWEVE R, THE FINANCIAL STATEMENT SHOWS AN UNUSUAL ACTIVITY OF RECEIPT OF HUGE CORPUS DONATION AND GIVING AWAY HUGE DONATIONS WHICH APPARENTLY CANNOT BE SAID TO B E NORMAL AND PROBABLE ACTIVITY. SIMILARLY, BALANCE SHEET (PAGE 53 OF PAP ER BOOK) OF PARBATI AS ON 31.3.2002 SHOWS THAT THE PAID UP SHARE CAPITAL WAS ONLY RS.4,200/- WHICH WAS CARRIED FORWARD FROM THE PRECEDING YEAR. IN THE PR OFIT AND LOSS ACCOUNT OF THE YEAR ENDING 31.3.2002 (PAGE 54 OF PAPER BOOK), THE INCOME WAS SHOWN ONLY FROM INVESTMENT ON SHARE AND EXPENDITURE SIDE HAS S HOWN THE FOLLOWING EXPENSES :- ITA NO.4795/DEL./2009 11 FILING FEE RS. 3,600/- AUDIT FEE RS. 788/- BALANCE W/OFF RS. 2/- BANK CHARGES RS. 3,330/- DEMAT CHARGES RS. 24,328/- DONATION RS.77,600,000/- RENT RS. 2,400/- ADVERTISEMENT EXPENSES RS. 2,800/- PRELIMINARY EXPENSES W/OFF RS. 346/- THIS SHOWS THAT EXCEPT THE AMOUNT OF DONATION, THER E IS NO OTHER EXPENDITURE WHICH COULD SUGGEST THAT THE COMPANY IS ENGAGED IN ANY OTHER SUBSTANTIAL ACTIVITIES. SIMILARLY, THE EXPENDITURE DEBITED AS ON 31.3.2002 ALSO SHOWS THAT THERE WERE NO BUSINESS ACTIVITIES DURING THE YEAR. THE CURRENT LIABILITY AS ON 31.3.2002 ARE RS.10,73,10,588/-, OUT OF IT, RS.10,3 4,70,000/- ARE ADVANCES FROM MYSTRY TRADING (P) LIMITED. THUS, THE DONATIO NS ARE MAINLY COMING OUT OF ADVANCES RECEIVED WHICH WERE CARRIED FORWARD FRO M PRECEDING YEAR. ALTHOUGH THE ASSESSEE HAS FILED CONFIRMATIONS FROM THESE BOTH SO-CALLED DONORS AND THE RECEIPT HAS BEEN SHOWN THROUGH THE B ANKING CHANNELS, HOWEVER, THE FACTS AND CIRCUMSTANCES AND FINANCIAL STATEMENT OF THESE DONORS SHOW THAT THESE WERE NOT GENUINE DONATIONS. IN THE CASE OF MA GAYATRI, THE TRUST HAS SHOWN RECEIPT OF DONATION OF RS.14,22,00, 000/- (NO DETAILS SUBMITTED) AND OUT OF WHICH RS.6,75,05,000/- SHOWN AS GIVEN AWAY AS DONATION. THE INCOME & EXPENDITURE ACCOUNT OF THE TRUST SHOWS THAT NO CHARITABLE ACTIVITY WAS CARRIED OUT BY THE TRUST. IN THE CASE OF PARBATI, THE PAID UP CAPITAL OF THE COMPANY WAS ONLY RS.4,200/-. THE PROFIT & LOSS ACCOUNT SHOWS THAT NO SUBSTANTIAL ACTIVITY IS CARRI ED OUT BY THE COMPANY AND ITA NO.4795/DEL./2009 12 THE DONATIONS HAVE BEEN MADE OUT OF THE ADVANCES WH ICH WERE MAINLY CARRIED FORWARD FROM THE PRECEDING YEAR. THESE FACTS SHOW THAT THE CLAIM OF THE DONATION RECEIPT IS AGAINST THE HUMAN PROBABILITIES . THE TAXATION LAW HAS MORAL SECTION BEHIND IT. THE SOPHISTICATED DEVICE TO EVADE THE TAX BY WAY OF TRANSACTIONS THROUGH BANKING CHANNEL WHICH MAY GET THE APPROVAL OF THE JUDICIAL PROCESS SHALL NOT MAKE THE TRANSACTIONS RE AL. THE SURROUNDING CIRCUMSTANCES CLEARLY ESTABLISH THAT THE DEVICE HAS BEEN ADOPTED TO GIVE A COLOUR OF GENUINENESS TO THESE DONATIONS. BOTH THE DONORS WERE NOT IN A POSITION TO MAKE SUCH HUGE GENUINE DONATIONS FROM T HEIR SOURCES. THE MONEY RECEIVED AS ADVANCES AND CORPUS DONATIONS HAVE BEEN SHOWN AS UTILIZED TO MAKE THESE DONATIONS WHICH ARE APPARENTLY AGAINST T HE HUMAN PROBABILITIES. THE SURROUNDING CIRCUMSTANCES AND THE ANALYSIS OF F INANCIAL STATEMENT OF BOTH THE DONORS ESTABLISH THAT WHAT IS SHOWN IS NOT A RE AL. THE APPARENT IS NOT THE REAL. THE CONFIRMATIONS AND AFFIDAVITS SUBMITTED A LONG WITH THE OTHER DOCUMENTS BY THE ASSESSEE ARE THE SELF SERVICING RE CITALS IN DOCUMENTS. THE ASSESSEE HAS FAILED TO ESTABLISH THE TRUTHFULNESS O F THESE RECITALS. THE GENUINENESS OF THE DONATIONS CANNOT BE DETERMINED W ITHOUT LOOKING INTO THE FINANCIAL CAPACITY OF THE DONORS. IN FACT, THESE T RANSACTIONS ARE AGAINST THE HUMAN PROBABILITIES. ONE OF THE DONORS HAS SHOWN T HE RECEIPT OF THE HUGE CORPUS DONATIONS FOR WHICH NO CONFIRMATION WAS FILE D BEFORE THE AUTHORITIES BELOW AND MONEY SO RECEIVED HAD BEEN SHOWN AS UTILI ZED FOR MAKING THE ITA NO.4795/DEL./2009 13 DONATIONS. SIMILARLY, IN THE CASE OF OTHER DONOR, THE HUGE DONATIONS HAVE BEEN SHOWN AS MADE OUT OF ADVANCES RECEIVED. BOTH THESE SITUATIONS ARE AGAINST THE HUMAN PROBABILITIES. NO PRUDENT, EVEN THE ORDINARY PERSON SHALL MAKE THE HUGE DONATIONS FROM THE ADVANCES RECEIVED WHICH ARE TO BE REPAID. SIMILARLY, A TRUST IS SHOWING RECEIPT OF HUGE DONAT IONS WHERE NO CHARITABLE ACTIVITY WAS CARRIED OUT. IN OUR CONSIDERED VIEW, THESE ARE THE DEVICES ADOPTED TO EVADE THE TAXES AND SIPHON OF THE MONEY. IN VIEW OF THESE, THE REVENUE IS JUSTIFIED IN PIERCING THE VEIL TO EXPOSE THE SOPHISTICATED DEVICES ADOPTED TO EVADE THE TAX WHICH THE ASSESSEE HAS ADO PTED. IN SUCH CIRCUMSTANCES, WE HAVE NO HESITATION TO CONFIRM THE ORDER OF CIT (A) TREATING DONATION AS NON-GENUINE AND INCOME FROM UNDISCLOSED SOURCES. WE UPHOLD THAT APPARENT IS NOT REAL. THE DONATIONS ARE NOT G ENUINE. ASSESSEE SHALL NOT BE ENTITLED FOR BENEFIT OF SECTION 11(1)(D) OF THE INCOME-TAX ACT, 1961. 6. IN THE RESULT, ALL THE GROUNDS RAISED BY THE ASS ESSEE STAND DISMISSED. WE UPHOLD THE ORDER OF CIT (A). APPEAL OF THE ASSE SSEE IS DISMISSED ON ALL THE GROUNDS RAISED. ORDER PRONOUNCED IN OPEN COURT ON THIS 17 TH DAY OF JUNE, 2011. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 17 TH DAY OF JUNE, 2011 TS ITA NO.4795/DEL./2009 14 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-II, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.