DDIT (E) I(1), MUMBAI V. ROYAL HIGHER EDUCATION SOCIETY, MUMBAI

ITA 5759/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70939 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIPAK RAI POTE
• Keywords: Bonafide belief; Earning of tax free income
• Section: 143(3)

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 5759/M/2010 ( / ASSESSMENT YEAR : 2006 - 20 07 ) DCIT(E) - I(1), R.NO. 504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI - 12. / VS. ROYAL HIGHER EDUCATION SOCIETY , GRIHA NIRMAN BHAVAN, BANDRA (E), MUMBAI - 51. ./ PAN : ABATR 5242 F ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DIPAK RAI POTE, DR / RESPONDENT BY : SHRI PRAKASH PANDIT / DATE OF HEARING : 2 2 .8.2013 / DATE OF PRONOUNCEMENT : 4.9 .2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 16.7.2010 IS AGAINST THE ORDER OF CIT (A) - 1, MUMBAI DATED 22.3.2010 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT THERE WAS LESSER TIME AVAILABLE WITH THE ASSESSEE TO FURNISH THE DETAILS WITH RESPECT TO CORPUS DONATIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT (A) ERRED IN HOLDING THAT A BONAFIDE BELIEF ON PART OF THE ASSESEE THAT OFFERING CORPUS DONATION AS INCOME SINCE THERE IS NO TAX LIABILITY ARISING OUT OF IT. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT DURING THE YEAR, THE ASSESS EE RUNS VARIOUS SCHOOLS AND COLLEGES IN THE NAME OF ROYAL HIGHER EDUCATION SOCIETY . ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL. DURING THE ASSESSMENT PROC EEDINGS U/S 143(3) OF THE ACT, AO NOTICED THAT THE ASSESSEE DISCLOSED AN AMOUNT OF RS. 28,25,000/ - UNDER THE HEAD CORPUS DONATION IN THE INCOME AND EXPENDITURE STATEMENT . AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF COR PUS FUND RECEIVED BY THE TRUST. IN RESPONSE, ASSESSEE PREFERRED TO 2 FURNISH A REVISED STATEMENT OF IN COME BY SHOWING THE IMPUGNED SUM OF RS. 28,25,000/ - AS AN ADDITION AND BY THIS REVISIONS, THE ORIGINAL LOSS IS REDUCED FROM RS. 43,01,246/ - TO RS. 14,76,246/ - . ASSESSMENT WAS ACCORDINGLY COMPLETED. HOWEVER, DURING THE PENALTY PROCEEDINGS, IT WAS CONTENDED THAT NO PENALTY CAN BE LEVIED U/S 271(1) OF THE ACT WHEN THERE IS REDUCTION IN LOSS . T O PUT IT DIFFERENTLY , EVEN AFTER ADDITION, THE INCOME ARRIVED IS NEGATIVE. IN THIS REGARD, ASSESSEE RELIED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS. V . PRITHIPAL SINGH & CO (2011) 118 TAXMAN 330 AND ALSO THE JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. V.N. KRISHNAN (1999) 240 TAXMAN 197 (KER.). AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE AFORESAID DECISIONS ARE TOTALLY MISPLACED AS AFTER THOSE DECISIONS , SUFFICIENT WATER HAS BEEN FLOWN UNDER THE BRIDGE INASMUCH AS THE LEGISLATIVE HAS SUBSTITUTED EXPLANATION 4 TO SECTION 271(1)(C) OF THE ACT. CONSIDERING THE ASSESSEES INABILITY TO FURNISH THE DETAILS REGARDING T HE IMPUGNED SUM OF RS. 28,25,000/ - , AO LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT WHICH WORKED OUT TO RS. 19,57,890/ - @ 200% OF CONCEALED INCOME VIDE THE ORDER ON 22.6.2009. AGGRIEVED WITH THE ABOVE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE TH E FIRST APPELLATE AUTHORITY. 4. DURING THE FIRST APPELLATE PROCEEDINGS, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CIT (A) ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE . PARA 8 AND 9 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD WHICH READ AS UNDER: 8. I HAVE PERUSED THE PENALTY ORDER AS WELL AS TAKEN NOTE OF THE APPELLANT TRUSTS WRITTEN SUBMISSIONS DEPICTED AS ABOVE. I HAVE ALSO TAKEN NOTE OF A/R ARGUMENT MADE DURING THE APPELLANT PROCEEDINGS. I CONSIDERED THE AOS ORDER AND THE APPELLANT TRUSTS WRITTEN SUBMISSIONS AND ARGUMENTS AND CAME TO THE CONCLUSION THAT THE APPELLANT TRUST HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME, WHILE FILING THE RETURN OF INCOME. THE FACT THAT THE CORPUS DONATION OF RS. 28,25,000/ - WAS DULY DISCLOSE D AT THE TIME OF FILING OF RETURN OF INCOME. THE APPELLANT TRUSTS A/R ARGUED THAT AS THERE WAS VERY LESSER TIME AVAILABLE, AND THE APPELLANT TRUST WAS ADVISED THAT EVEN IF THE CORPUS DONATION IS OFFERED AS INCOME, IT WILL NOT ATTRACT ANY TAX LIABILITY. ACCORDINGLY , THE APPELLANT TRUST FILED A LETTER TO THE DEPARTMENT. 9. BESIDES THAT, THE SAME ACT WAS DONE UNDER BONAFIDE BELIEF, ON THE ADVICE O F THE C.A. BY APPELLANT TRUST. HAVING TAKEN NOTE OF ALL THESE FACTS, I AM OF THE CONSIDERED VIEW THAT HE APPELLA NT TRUST HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FILED ANY INACCURATE PARTICULARS OF INCOME. THUS, I HOLD THAT THE AO WAS NOT JUSTIFIED IN IMPOSING THE PENALTY. ACCORDINGLY, I HEREBY CANCELLED THE PENALTY ORDER IMPOSED BY THE AO. 4.1. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENU E IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 3 5. DURING THE PROCEEDINGS BEFORE US LD DR MENTIONED THAT BY FILING OF REVISED STATEMENT TOOK PLACE ONLY AFTER THE ISSUE WAS POINTED OUT BY TH E AO . THEREFORE, DISCLOSURE OR FURNISHING OF RELEVANT DETAILS CAN NOT ALTER THE SITUATION OF CONCEALMENT. THEREFORE , IT IS A CASE OF CONCEALMENT OF PARTICULARS AND HE RELIED ON THE PENALTY ORDER OF THE AO. 6. ON THE OTHER HAND, SHRI PRAKASH PAND IT, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE PAGE 3 OF THE PAPER BOOK AND MENTIONED THAT THE SUM OF RS. 28,25,000/ - IS THE CORPUS DONATION OF THE TRUST, WHICH IS THE SUBJECT MATTER OF THE ADDITION AND IT WAS DULY DISCLOSED IN THE RETURN OF INCOME AND FILED A REVISED COMPUTATION TO THAT EXTENT REDUCING THE DEFICIT FROM RS. RS. 43,01,246/ - TO RS. 14,76,246/ - . AO LEVIED THE PENALTY ON THE DIFFERENCE RELATABLE TO THE SUM OF RS. 28,25,000/ - WHICH CAN BE DECIPHERED FROM THE SCHEDULE - VIII OF THE F INANCIAL STATEMENT WHICH IS PLACED IN THE PAPER BOOK. HE RELIED ON THE CONCLUSIONS GIVEN BY THE CIT(A) IN HIS ORDER . 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. IT IS A FACT THAT THE ASSESSEE HAS INCURRED AN AMOUNT OF RS. 3,53,14,312/ - ON THE OBJECT S OF THE TRUST. IN THE FINANCIAL STATEMENT IT WAS SHOWN THAT A CORPUS DONATION UNDER THE CORPUS FUND OF RS.28,25,000/ - WAS RECEIVED BY THE ASSESSEE. IT WAS EXPLAINE D BY THE ASSESSEE BEFORE THE CIT (A) THAT DUE TO LACK OF SUFFICIENT TIME TO DEAL WITH THE ISSUE WITH THE AO, THE TRUST SIMPLY ADMITTED AND FILED REVISED STATEMENT OF INCOME BY SHOWING THE SAID SUM OF RS 28,25,000/ - AS THE INCOME OF THE TRUST AND THEY BY RE DUCING THE DEFICIT OF THE TRUST. OTHERWISE, THE DETAILS OF THE SAID CORPUS DONATION WERE AVAILABLE AND THE SAME WERE SUBMITTED BEFORE HIM. WE HAVE ALSO NOTICED THAT THE ASSESSEE FILED THE PAPER BOOK CONTAINING THE CONFIRMATION LETTERS FROM THE DONORS AFFI RMING THE DONATING THE SUM TO THE ASSESSEES CORPUS VIDE PAGE 4 TO 19 OF THE PAPER BOOK. ON PERUSAL OF THE DOCUMENTS, WE FIND THE IMPUGNED ADMITTED SUM OF RS 28,25,000/ - CONSTITUTES EXEMPT RECEIPTS ON MERITS. IN FACT, THE AO HAS NOT DISPROVED THAT THE SAME IS NOT THE EXEMPT INCOME OF THE ASSESSEE. ASSESSEE REVISED THE INCOME AND EXPENDITURE STATEMENTS ONLY TO AVOID THE LITIGATION IF ANY ON THE TAXABLE NATURE OF THE SAID SUM. THUS, THE ASSESSEE CANNOT BE FOUND DEFAULTER OF 4 DISCLOSURE OF REQUISITE PARTICULARS AND THE IMPUGNED SUMS OF RS 28,25,000/ - ARE NOT CONCLUSIVELY PROVED TO BE THE NON EXEMPT INCOME OF THE TRUST. CONSIDERING THE MATERIAL AVAILABLE BEFORE US WE ARE OF THE OPINION THAT THE CIT (A)S ORDER OF DECIDING THE MATTER IN FAVOUR OF THE ASSESSEE IS R EASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOU NCED IN THE OPEN COURT ON 4 TH SEPTEMBER , 2013. SD/ - SD/ - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 4. 09 .2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI