DCIT (Exemption), New Delhi V. M/s. Maharaja Agrasen Technical Education Society, New Delhi

ITA 5245/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6827 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 21-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AND CROSS OBJECTION
• Assessee Lawyers: AGAINST IMPUGNED DATE D DCI
• Keywords: Charitable institution
• Section: 143(3); 12AA; 131; 68; 12; 10; 11

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO.:- 5245/DEL/2015 ASSESSMENT YEAR: 2011-12 C.O. NO. 375/DEL/2015 ASSESSMENT YEAR 2011-12 MAHARAJA AGRASEN TECHNICAL EDUCATION SOCIETY, 10/4, EAST PUNJABI BAGH, NEW DELHI 110 026 PAN AABTD1286A VS. DCIT(EXEMPTION) CIRCLE 1(1) NEW DELHI. (APPELLANT) (RESPONDENT) O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE A ND CROSS OBJECTION BY THE ASSESSEE AGAINST IMPUGNED ORDER DATE D 9.6.2015, DCIT(E) CIRCLE-1(1) NEW DELHI. VS. MAHARAJA AGRASEN TECHNICAL EDUCATION SOCIETY, 10/4, EAST PUNJABI BAGH, NEW DELHI-110 026 PAN AABTD1286A (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI SUJIT KUMAR, SR.DR ASSESSEE BY : SHRI R.S. SINGHVI, CA DATE OF HEARING 05/07/2018 DATE OF PRONOUNCEMENT 17/07/2018 2 PASSED BY LD. CIT (APPEALS) 40 (EXEMPTION) NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSES SMENT YEAR 2011-12. IN THE GROUNDS OF APPEAL REVENUE HAS RAISE D FOLLOWING GROUNDS:- 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE SO CAL LED DONATIONS DOES NOT FALL IN THE CATEGORY OF ANONYMOUS DONATION IN TERMS OF PROVISIONS OF SECTION 115BBC(1) AND WILL NOT BE LIA BLE TO TAX U/S 115BBC OF THE ACT, 1961.. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSE E HAS DISCHARGED ITS ONUS BY FILLING RELEVANT DETAILS AND DOCUMENT IGNORING THAT A FACADE OF PAPER IDENTITY IS CREATED WITH A FALSE MOTIVE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT JUST FILIN G OF ITR DETAILS INCLUDING P&L A/C AND BALANCE SHEET IS SUFFICIENT T O PROVE THE IDENTITY AND GENUINENESS OF THE DONOR IN TERMS OF P ROVISIONS OF SECTION 115BBC OF THE ACT.'. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE TRUST HAS BEE N RUNNING MANAGEMENT AND ENGINEERING COLLEGES AND SINCE IT WAS CARRYING EDUCATIONAL ACTIVITIES WHICH WAS COVERED WITHIN THE DE FINITION OF CHARITABLE PURPOSES AS DEFINED U/S 2(15), IT WAS GR ANTED REGISTRATION U/S 12AA VIDE ORDER DATED 26.4.2007. RESULTANTLY, AS SESSEES INCOME WAS TO BE COMPUTED U/S 11 & 12 AND BENEFIT OF EXEMPTI ON AND THE CONSEQUENTIAL BENEFITS WERE ALLOWABLE TO THE ASSESSEE. THE AO NOTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED DONATIONS FOR SUMS AGGREGATING TO RS.2,05,00,000/-, THE DETAILS OF WHICH ARE AS UNDER :- 3 (I) KRAC SECURITIES (P) LTD. RS. 12 ,00,0000/- (II) MAYFAIR INFOSOLUTIONS(P) LTD. RS. 11,0 0,000/- (III) SHRI BHAWANI INDIA (P) LTD. RS. 20,00,000/- & RS. 21,00,000/- (IV) ACUMAN COMPUSOFT (P) LTD. RS. 7,00,000/- (V) RADHA MADHAV AGROTECH (P) LTD. RS. 25,00,000/ - & RS. 21,00,000/- (VI) S.K.M INDIA (P) LTD. RS. 15,00,000/- (VII) ANUPAM BUILDMART (P) LTD. RS. 11,00,0 00/- (VIII) SAPPHIRE COMMERCIALS (P) LTD. RS. 31,00, 000/- (IX) ZOOM BUILDING MATERIAL (P) LTD. RS. 25,00,000/- & RS. 6,00,000/- TOTAL AMOUNT OF ABOVE DONATIONS RS. 2,05,00,000 /- 3. LD. AO CARRIED OUT INQUIRES TO FIND OUT WHETH ER THE DONATIONS WERE ANONYMOUS OR NOT IN TERMS OF SECTION 115BBC. IN R ESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE HAS FILED CONFIRMATI ON FROM ALL THE ABOVE COMPANIES ALONGWITH THE OTHER REQUISITE DETAILS LIKE BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND COPY OF INCOME TAX RETURNS ETC. HOWEVER THE AO REQUIRED THE ASSESSEE TO PRODUCE THE DIR ECTORS OF ALL THE COMPANIES WHICH ASSESSEE COULD NOT PRODUCE. THERE AFTER SUMMONS U/S 131 WERE ISSUED TO THE DIRECTORS AND INSPE CTOR OF INCOME TAX WAS ALSO DEPUTED TO SERVE THE SUMMONS. HOWE VER, AS NOTED BY THE AO, THE ITI COULD NOT SERVE THE SUMMONS O N ANY OF THESE COMPANIES AS THEY WERE NOT FOUND TO BE FUNCTIONING AT TH E GIVEN ADDRESSES. WHEN CONFRONTED WITH THIS FACT, THE ASSESSEE PROVIDED NEW ADDRESSES OF SOME OF THE COMPANIES AND AGAIN SUMMON WERE ISSUED BY THE AO BUT THE SAID SUMMONS COULD NOT BE SERVED AS THEY WERE NOT FOUND ON THE ADDRESSES SO PROVIDED. ALL THE DETAILS O F ENQUIRY CONDUCTED HAVE BEEN NOTED BY THE AO IN PARA 3.1 OF TH E ORDER. 4 THEREAFTER, THE LD. AO OBSERVED THAT THESE 9 COMPANIES WERE NOTHING BUT FRONT COMPANIES OF ACCOMMODATION ENTRY OPERATORS AND ALSO DISCUSSED HOW THE ACCOMMODATION ENTRY OPERATORS OPERATE THROUGH SUCH COMPANIES. HE FURTHER NOTED THAT THE AOS OF THESE COMPANIES WERE REQUESTED TO SEND COPIES OF ITRS AND THE DOCUME NTS, HOWEVER IT WAS REPORTED TO HIM THAT NONE OF THESE COMPANIES WERE S UBJECTED TO SCRUTINY AND ONLY THE COPIES OF THEIR RETURNS WERE FIL ED ONLINE. AS REQUIRED BY THE AO, THE ASSESSEE FILED COPIES OF BALA NCE SHEET PROFIT AND LOSS ACCOUNT AND OTHER DOCUMENTS. THE AO FROM SUC H DOCUMENTS NOTED THAT THE DONORS HAVE DIRECTLY REDUCED DONATIONS FRO M THE CAPITAL OR RESERVES INSTEAD OF FROM THEIR PROFIT AND LOSS ACCO UNT. HE HAD ALSO EXAMINED INDEPENDENT BANK STATEMENTS AND THE VARIOUS ENTR IES OF DEBIT AND CREDIT AND THEREAFTER AFTER DETAILED DISCUSS ION HE HELD THAT ALL THE DONATIONS ARE ANONYMOUS DONATIONS FALL WITHIN THE AMBIT OF SECTION 115BBC. ACCORDINGLY, HE MADE THE ADDITION AFTE R OBSERVING AND HOLDING AS UNDER:- 3.9. I AM THEREFORE, CONSTRAINED TO HOLD THAT AS SESSEE HAS NOT MAINTAINED NECESSARY RECORDS INDICATING THE IDENTIT Y OF THE DONORS IN RESPECT OF DONATIONS OF RS. 2,05,00,000/- IN TER MS OF SECTION 115BBC OF THE INCOME TAX ACT, 1961. DURING THE YEAR THE ASSESSEE HAS RECEIVED TOTAL DONATIONS OF RS. 11,91, 69,600/-. FIVE PERCENT OF TOTAL DONATIONS COME TO RS. 59,58,480/- AND ANONYMOUS DONATIONS OF RS. 2,05,00,000/- ARE IN EXC ESS OF THIS AMOUNT BY RS. 1,45,41,520/-. THEREFORE, ANONYMOUS D ONATIONS OF RS. 1,45,41,520/- ARE CHARGEABLE TO TAX U/S 115BBC R/W SECTION 13(7) OF THE INCOME TAX ACT, 1961. 4. LD. CIT (A) HAS DELETED THE ADDITION AFTER OB SERVING AND HOLDING AS UNDER:- 5 4.4 I HAVE CONSIDERED THE ORDER OF THE AO AND TH E SUBMISSIONS OF THE ASSESSEE. IT IS APPARENT THAT THE ASSESSEE H AS CLAIMED THE RECEIPT TO THE EXTENT OF RS. 11,91,69,600/- FROM 12 0 PARTIES OUT OF WHICH THE AO HAS TREATED THE DONATION FROM 9 PARTIE S AS ANONYMOUS DONATIONS TO THE EXTENT OF RS. 2,05,00,00 0/- MERELY ON THE GROUND THAT THE AO COULD NOT GET THE CONFIRMATI ON FROM THE ABOVE 9 PARTIES AND HAS MADE THE ADDITION U/S 115BB C(1). THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT TH E AO IS NOT JUSTIFIED TO INVOKE THE PROVISION OF SECTION 115BBC (1) AS ALL THE RELEVANT DETAILS AND DOCUMENTS OF THE DONORS WERE S UBMITTED BEFORE THE AO AND AS SUCH THE SAME CANNOT BE TREATE D AS ANONYMOUS DONATION AND AS SUCH THE AO IS NOT JUSTIF IED TO MAKE THE ADDITION U/S 115BBC(1) 4.5 HOWEVER, SINCE THE AO HAD MADE THE NECESSARY EN QUIRIES AND THE WHEREABOUTS OF THE DONORS COULD NOT BE CONF IRMED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AS SUCH THE AO WILL BE JUSTIFIED TO MAKE THE ADDITION U/S 68 AS THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY BUT AT THE SAME TIME THE ASSESSEE WILL BE ELIGIBLE FOR EXEMPTION U/ S 11(1) AS THE INCOME HAS BEEN APPLIED FOR CHARITABLE PURPOSES AND THIS VIEW IS SUPPORTED BY THE CASES RELIED ON BY THE ASSESSEE. 4.6 AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM OF THE VIEW THAT THE ADDITION MADE BY THE AO IS JUSTIFIED AND IS CONFIRMED U/S 68 ONLY BUT AT THE SAME TIME THE ASSE SSEE WILL BE ELIGIBLE FOR EXEMPTION U/S 11(1) AS THE SAME HAS BE EN APPLIED FOR CHARITABLE PURPOSES AND AS SUCH THE APPEAL OF THE A SSESSEE IS ALLOWED PARTLY. 5. BEFORE US, LD. SR. DR SUBMITTED THAT AO HAS VER Y EXHAUSTIVELY DISCUSSED THAT, NOT ONLY THESE COMPANIES WERE FOUND TO BE 6 UNTRACEABLE ON THE GIVEN ADDRESSES BUT ALSO THE ENTIRE TR ANSACTION BEAR THE TRUE CHARACTERISTICS OF ACCOMMODATION ENTRY GI VEN BY SUCH COMPANIES OPERATED BY ACCOMMODATION ENTRY OPERATORS. A O HAS ALSO EXAMINED PATTERN OF AMOUNT AND THE MANNER IN WHICH TH E AMOUNTS HAVE BEEN ROUTED IN THE BANK STATEMENT OF THESE COMPANI ES AND THE AMOUNT WHICH WAS GIVEN AS DONATION IN FAVOUR OF THE AS SESSEE. THOUGH THE AMOUNTS HAVE BEEN RECEIVED FROM VARIOUS BA NK ACCOUNTS INTO THE ACCOUNT OF THESE COMPANIES FROM WHERE CHEQUES HAVE BEEN ISSUED IN FAVOUR OF THE ASSESSEE. HOWEVER, THE ENTRIES SHOW THAT THEY ARE TYPICALLY MANAGED BY ENTRY OPERATORS. THUS, AO HA S RIGHTLY TAXED THE DONATION U/S 115BBC. 6. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT, TO FALL WITHIN THE MISCHIEF OF SECTION 115BBC FOR TAXING THE A NONYMOUS DONATION IS THAT, THE PERSON RECEIVING THE VOLUNTARY C ONTRIBUTION DOES NOT MAINTAIN A RECORD OF IDENTIFY INDICATING THE NAME AN D ADDRESS OF PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTIC ULARS AS MAY BE PRESCRIBED. HERE IN THIS CASE THE ASSESSEE HAS PRO VIDED ALL THE DETAILS OF THE CONCERNED PARTIES, NAME, IDENTITY, PAN N OS., COPY OF AUDITED BALANCE SHEET, INCOME TAX RETURNS AND COPY OF RESOLUTION OF THE BOARD OF DIRECTORS. THUS, IT CANNOT BE SAID THAT THE DONATION HAS GIVEN FROM ANONYMOUS DONORS. LD. CIT (A) IN THE IMP UGNED ORDER HAS NOTED THAT AT THE MOST THIS ADDITION COULD HAVE BEEN MADE U/S 68 BUT AS LONG AS ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 (1) IF THE AMOUNT HAS BEEN APPLIED FOR CHARITABLE PURPOSE, THEN THE SAME COULD NOT HAVE BEEN ADDED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE PROVISION OF SECTION 115 BBC UNDER WHICH THE AFORESAID DONATIONS RECEIVED FROM NIN E CORPORATE ENTITIES WHICH HAVE BEEN ADDED, READS AS UNDER:- 7 115BBC. (1) WHERE THE TOTAL INCOME OF AN ASSESSEE, BEING A PERSON IN RECEIPT OF INCOME ON BEHALF OF ANY UNIVER SITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE ( IIIAD) OR SUB- CLAUSE (VI) OR ANY HOSPITAL OR OTHER INSTITUTION RE FERRED TO IN SUB- CLAUSE (IIIAE) OR SUB-CLAUSE (VIA) OR ANY FUND OR I NSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR ANY TRUST OR INST ITUTION REFERRED TO IN SUB-CLAUSE (V) OF CLAUSE (23C) OF SECTION 10 OR ANY TRUST OR INSTITUTION REFERRED TO IN SECTION 11, INCLUDES ANY INCOME BY WAY OF ANY ANONYMOUS DONATION, THE INCOME-TAX PAYABLE S HALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCO ME BY WAY OF ANY ANONYMOUS DONATION, AT THE RATE OF THIRTY PER C ENT; AND (II) THE AMOUNT OF INCOME-TAX WITH WHICH THE ASSESS EE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDU CED BY THE AMOUNT OF INCOME REFERRED TO IN CLAUSE (I). [THE FOLLOWING CLAUSES (I) AND (II) SHALL BE SUBSTI TUTED FOR THE EXISTING CLAUSES (I) AND (II) OF SUB-SECTION (1) OF SECTION 115BBC BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4-2010:] (I) THE AMOUNT OF INCOME-TAX CALCULATED AT THE RATE OF THIRTY PER CENT ON THE AGGREGATE OF ANONYMOUS DONATIONS RECEIV ED IN EXCESS OF THE HIGHER OF THE FOLLOWING, NAMELY: (A) FIVE PER CENT OF THE TOTAL DONATIONS RECEIVED B Y THE ASSESSEE; OR (B) ONE LAKH RUPEES; AND (II) THE AMOUNT OF INCOME-TAX WITH WHICH THE ASSESS EE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEE N REDUCED BY THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY TO ANY ANONYMOUS DONATION RECEIVED BY (A) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS PURPOSES; (B) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS AND CHARITABLE PURPOSES OTHER THAN ANY AN ONYMOUS DONATION MADE WITH A SPECIFIC DIRECTION THAT SUCH D ONATION IS FOR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION RUN BY SUCH TRUST OR INST ITUTION. (3) FOR THE PURPOSES OF THIS SECTION, ANONYMOUS DO NATION MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB -CLAUSE (IIA) OF CLAUSE (24) OF SECTION 2, WHERE A PERSON RECEIVI NG SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDEN TITY INDICATING 8 THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONT RIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. 8. THE AFORESAID SECTION PROVIDES THAT ANY INCOME BY WAY OF ANONYMOUS DONATION SHALL BE TAXED IN THE MANNER PROVI DED IN CLAUSE (I) AND (II) OF SUB SECTION (I). SUB SECTION (3) MAIN LY PROVIDES THE MEANING OF ANONYMOUS DONATION WHICH HAS BEEN DEFIN ED AS VOLUNTARY CONTRIBUTION, WHERE THE PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN ANY RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUC H OTHER PARTICULARS AS MAYBE PRESCRIBED. OSTENSIBLY IN THE PRE SENT CASE THE ASSESSEE HAS GIVEN THE IDENTITY BY GIVING THE NAME AND ADDRESS OF THE CORPORATE OF THE COMPANIES WHO HAVE GIVEN THE DONATION S AND NOT ONLY THAT, THEIR COPY OF THE AUDITED BALANCE SHEETS, PROFIT A ND LOSS ACCOUNT, INCOME TAX RETURN, BANK STATEMENT, ETC., HAS BEEN PROVIDE D OF ALL THE 9 CORPORATE ENTITIES AND THEIR RETURN BEFORE THE REGISTRAR O F THE COMPANIES. HENCE THE CONDITIONS WHICH HAVE BEEN LAID DOWN IN SUB SECTION 3 AND ONUS WHICH IS CAST UPON THE PERSON RECE IVING THE DONATION HAS BEEN FULLY DISCHARGED. THE ENTIRE CASE OF THE AO IS THAT THE DONATION RECEIVED BY THE ASSESSEE TRUST BY THESE COMP ANIES WERE IN FACT WERE OPERATED BY ACCOMMODATION ENTRY PROVIDER S AND THEY DO NOT HAVE MUCH INCOME AND THE BANK STATEMENT REVEALED THAT THE AMOUNTS EVEN COME IN THEIR BANK ACCOUNT FROM VARIOUS BANK ACCOUNTS WHICH HAS BEEN INFERRED BY THE AO THAT ASSESSEE MUST HA VE ROUTED ITS UNACCOUNTED MONEY THROUGH VARIOUS DONORS IN ORDER TO G ET DONATION. SUCH OBSERVATION PERHAPS WOULD HAVE BEEN RELEVANT IF THE SAME WOULD HAVE BEEN SCRUTINISED U/S 68. HERE THE PROVISION CLEA RLY STATES ONLY THE ANONYMOUS DONATION SHOULD BE TAXED AND IF THE DONA TIONS HAVE BEEN COME FROM KNOWN SOURCES, THEN IT CANNOT BE TREATE D AS ANONYMOUS DONATIONS, THEREFORE, THE LD. CIT(A) HAS RI GHTLY HELD THAT 9 THE DONATION RECEIVED BY THE ASSESSEE CANNOT BE TAXED U/ S 115BBC(I) . THE OTHER OBSERVATION OF THE LD. CIT (A) WAS THAT AO I S JUSTIFIED FOR MAKING SUCH ADDITION U/S 68, HOWEVER STILL THE ASSESSE E WILL GET EXEMPTION U/S 11, BECAUSE THE SAME HAVE BEEN APPLIED FOR CHARITABLE PURPOSE. THIS FINDING HAS BECOME PURELY ACADEMIC WH ICH DOES NOT REQUIRE ANY ADJUDICATION. 9. IN THE RESULT APPEAL OF THE REVENUE IS DISM ISSED ON THE REASONS GIVEN ABOVE. CROSS OBJECTION NO. 375/DEL/15 IN VIEW OF THE FINDING GIVEN ABOVE, THE CR OSS OBJECTION OF THE ASSESSEE IS TREATED AS INFRUCTUOUS. THE SAME IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JULY 2018. SD/- SD/- (L.P. SAHU) (AMI T SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17/07/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI