The Income-tax Officer, Jammu V. Sant Manjit Singh Trust, Jammu

ITA 613/ASR/2011

• Counselvise Citation: 61320914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-07-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Gift; Charitable institution; Reasonable cause
• Section: 143(3); 12A; 12AA; 147; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.612 & 613(ASR)/2011 ASSESSMENT YEAR:2000-01 & 2001-02 PAN : NIL INCOME TAX OFFICER, VS. SANT MANJIT SINGH TRUST WARD 1(3), JAMMU. DIGIANA ASHRAM, DIGIANA, JAMMU. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. TARSEM LAL, DR ASSESSEE BY: SH. P.N.ARORA, ADV. DATE OF HEARING: 31/07/2014 DATE OF PRONOUNCEMENT:06/08/2014 ORDER PER B.P.JAIN, AM ; THESE TWO APPEALS OF THE REVENUE ARISE FROM THE CO NSOLIDATED ORDER OF THE CIT(A), JAMMU DATED 21.09.2011 FOR THE ASSE SSMENT YEARS 2000-01 & 2001-02.THE REVENUE HAS RAISED FOLLOWING SOLE GR OUND IN ITA NO.612(ASR)/2011 FOR THE A.Y.2000-01 AS UNDER:: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF OF RS.14,31,045/- ( RS.15, 01,221/- CORRECT FIGURE) IN CONTRAVENTION OF THE PROVISIONS OF SECTION 13(1)(C), 13(1)(A), 13(2)(B), 13(2)(D) & 13(2)(G) O F THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THAT THE AMOUNT OF RS. 25 LACS REPRESENTED SURPLUS OF THE ASSESSEE FOR THE RE LEVANT PERIOD. ITA NOS. 612 & 613(ASR)/2011 2 THE REVENUE HAS RAISED FOLLOWING SOLE GROUND IN IT A NO.613(ASR)/2011 FOR THE A.Y.2001-02 AS UNDER:: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF OF RS.14,31,045/- IN CONT RAVENTION OF THE PROVISIONS OF SECTION 13(1)(C), 13(1)(A), 13(2) (B), 13(2)(D) & 13(2)(G) OF THE INCOME TAX ACT, 1961 WITHOUT APPR ECIATING THAT THE AMOUNT OF RS. 35 LACS REPRESENTED SURPLUS OF THE ASSESSEE FOR THE RELEVANT PERIOD. 2. SINCE THE ISSUES IN BOTH THE APPEALS ARE IDENTIC AL ARISING FROM THE CONSOLIDATED ORDER OF THE LD. CIT(A), AS MENTIONED HEREINABOVE AND THEREFORE, WE TAKE UP BOTH THE APPEALS TOGETHER BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE LD. DR, MR. TARSEM LAL, AT THE OUTSET, RAIS ED PRELIMINARY OBJECTION THAT ASSESSEES APPEALS IN ITA NOS. 601 & 602(ASR)/2011 WERE HEARD ON 28.01.2014 AND PRONOUNCED ON 14.02.2014 BY THE ITAT, AMRITSAR BENCH, WHEREAS THE APPEALS OF THE REVENUE AND THAT OF THE ASSESSEE ARISING OUT OF THE SAME ORDER SHOULD HAVE BEEN HEARD TOGETH ER, IS A SETTLED PRINCIPLE AND THEREFORE, THE ORDER MADE BY THE ITAT, AMRITSAR BENCH DATED 14.02.2014 IN ITA NOS. 601 & 602(ASR)/2011 SHOULD B E RECALLED AND THE APPEALS OF THE ASSESSEE AND THAT OF THE REVENUE I.E . THE PRESENT APPEALS SHOULD BE HEARD TOGETHER. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA, ADVOCATE ON THE OTHER HAND, BROUGHT THE FACTS WITH REGARD TO THE PR ESENT APPEALS. HE INVITED ITA NOS. 612 & 613(ASR)/2011 3 OUR ATTENTION THAT ASSESSEES APPEALS IN ITA NOS. 6 01 & 602(ASR)/2011 WERE HEARD TOGETHER ON 28.01.2014 WHICH WERE PRONOUNCED ON 14.02.2014. AT THE TIME OF HEARING ON 28.01.2014, THERE WAS NO APPEAL OF THE REVENUE PENDING BEFORE THE ITAT, AMRITSAR BENCH. THE LD. COUNSEL FO R THE ASSESSEE, MR. P.N.ARORA, ADVOCATE INVITED OUR ATTENTION TO THE FA CTS THAT THE REVENUES APPEALS WERE DISMISSED ON 16.01.2013 WHICH WERE REC ALLED BY THE BENCH ON 06.06.2014. THEREFORE, THERE WAS NO OCCASION FOR TH E ITAT, AMRITSAR BENCH, TO CONSIDER THE DISMISSED APPEALS ALONGWITH ASSESS EES APPEALS. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THERE IS NO ER ROR IN DECIDING THE APPEALS OF THE ASSESSEE IN ITA NOS. 601 & 602(ASR)/2011 VI DE ORDER DATED 14.02.2014 BY THE ITAT, AMRITSAR BENCH. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE THAT ON THE DATE OF HEARING ASSESSEES APP EALS IN ITA NOS. 601 & 602(ASR)/2011 ON 28.01.2014, WHICH WERE PRONOUNCED ON 14.02.2014, THERE WAS NO APPEAL OF THE REVENUE PENDING, WHICH WAS IN FACT, DISMISSED ON 16.01.2013 AND RECALLED ON 06.06.2014. ACCORDINGLY, THE ARGUMENTS MADE BY THE LD. DR, MR. TARSEM LAL, ARE REJECTED AND WE FIND NO DEFECT IN HEARING THE APPEALS OF THE ASSESSEE IN ITA NOS. 601 & 602(ASR)/2011 ON ITA NOS. 612 & 613(ASR)/2011 4 28.01.2014 WHICH WERE PRONOUNCED ON 14.02.2014, IN THE ABSENCE OF ANY APPEAL OF THE REVENUE PENDING ON THE DATE OF HEARIN G OF ASSESSEES APPEALS.. 6. AS REGARDS, THE APPEALS OF THE REVENUE, THE ADDI TIONS BY THE AO WERE MADE FOR RS. 25 LACS FOR THE A.Y. 2000-10 & RS.35 LACS FOR THE A.Y. 2001- 02, WHICH WERE RESTRICTED AT RS.15,01,221/- AND RS. 14,31,045/- BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2000-01 & 2001-02 R ESPECTIVELY, SINCE THERE WAS VIOLATION OF PROVISIONS OF SECTION 13 AN D THERE WOULD BE NO APPLICATION OF SECTION 11 OF THE ACT AND ACCORDINGL Y, THE ADDITIONS TO THE TUNE OF RS.10,98,779/- AND RS.20,68,955/- WERE CON FIRMED FOR THE ASSESSMENT YEARS 20001-01 & 2001-02 RESPECTIVELY VI DE PARA 5.3 & 5.4 OF HIS ORDER. THE SAID ISSUES HAVE ALREADY BEEN DECIDE D IN ASSESSEES APPEALS BY THIS BENCH VIDE ORDER DATED 14.02.2014 IN ITA NO S. 601 & 602(ASR)/2011, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED HEREINBELOW: THESE TWO APPEALS OF THE ASSESSEE ARISE FROM THE CONSOLIDATED ORDER OF THE CIT(A), JAMMU DATED 21.09.2011 FOR THE ASSE SSMENT YEARS 2000-01 & 2001-02.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITA NO.601(ASR)/2011: 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING AN ADDIT ION OF RS.10,98,779/-. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE PLEA OF THE ASSESSEE THAT THE AMOUNT PAID WAS FOR SAFE CUSTODY AND PROVISIONS OF SECTION 13 OF THE I.T.ACT HAVE NOT BE EN VIOLATED. ITA NOS. 612 & 613(ASR)/2011 5 3. THAT THE AMOUNT LYING IN SAFE CUSTODY WAS NEITHE R AN INVESTMENT NOR A LOAN AND THEREFORE PROVISIONS OF S ECTION 11(5) HAVE NOT BEEN VIOLATED. 4. THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING T HE PLEA OF THE ASSESSEE THAT THE ASSESSMENT HAS BEEN MADE ON THE G ROUNDS OTHER THAN ON WHICH IT WAS REOPENED AND THEREFORE T HE ASSESSMENT IS BAD IN LAW AND ON FACTS OF THE CASE. 5. THAT THE AO HAD NOT COME TO ANY DEFINITE CONCLUS ION AS TO HOW AND WHICH PARTICULAR CAUSE OF SECTION 13 HAS BEEN V IOLATED AND THAT THE ORDERS OF THE CIT(A) IN NOT CONSIDERING TH IS ASPECT IS BAD. 6. THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING B ENEFIT OF RS.10,59,005/- APPLIED DURING THE YEAR. 7. THAT WHERE THE PROVISIONS OF SECTION 13 OF THE A CT ARE APPLIED, PROVISIONS OF SECTIONS 11 AND 12 ARE NOT APPLICABLE AND VOLUNTARY CONTRIBUTIONS ARE NOT TAXABLE. 8. IT IS PRAYED THAT THE TRUST BE ALLOWED EXEMPTION U/S 11 OF THE ACT AND ADDITIONS SUSTAINED BY LD. CIT(A) BE DELETE D. 9. THE ASSESSEE CRAVES LEAVE TO ADD OR AMEND GROUND S OF APPEAL BEFORE THESE ARE HEARD AND DISPOSED OFF. 2. THE ASSESSEE IN ITA NO.602(ASR)/2011 HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING AN ADDI TION OF RS.20,68,955/-. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE PLEA OF THE ASSESSEE THAT THE AMOUNT PAID WAS FOR SAFE CUSTODY AND PROVISIONS OF SECTION 13 OF THE I.T.ACT HAVE NOT BE EN VIOLATED. 3. THAT THE AMOUNT LYING IN SAFE CUSTODY WAS NEITHE R AN INVESTMENT NOR A LOAN AND THEREFORE PROVISIONS OF S ECTION 11(5) HAVE NOT BEEN VIOLATED. 4. THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING T HE PLEA OF THE ASSESSEE THAT THE ASSESSMENT HAS BEEN MADE ON THE G ROUNDS OTHER THAN ON WHICH IT WAS REOPENED AND THEREFORE T HE ASSESSMENT IS BAD IN LAW AND ON FACTS OF THE CASE. 5. THAT THE AO HAD NOT COME TO ANY DEFINITE CONCLUS ION AS TO HOW AND WHICH PARTICULAR CAUSE OF SECTION 13 HAS BEEN V IOLATED AND ITA NOS. 612 & 613(ASR)/2011 6 THAT THE ORDERS OF THE CIT(A) IN NOT CONSIDERING TH IS ASPECT IS BAD. 6. THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING B ENEFIT OF RS.29,00,000/- APPLIED DURING THE YEAR. 7. THAT WHERE THE PROVISIONS OF SECTION 13 OF THE A CT ARE APPLIED, PROVISIONS OF SECTIONS 11 AND 12 ARE NOT APPLICABLE AND VOLUNTARY CONTRIBUTIONS ARE NOT TAXABLE. 8. IT IS PRAYED THAT THE TRUST BE ALLOWED EXEMPTION U/S 11 OF THE ACT AND ADDITIONS SUSTAINED BY LD. CIT(A) BE DELETE D. 9. THE ASSESSEE CRAVES LEAVE TO ADD OR AMEND GROUND S OF APPEAL BEFORE THESE ARE HEARD AND DISPOSED OFF. 3. SINCE THE GROUNDS OF APPEAL ARE IDENTICAL IN BOT H THE APPEALS EXCEPT QUANTUM OF ADDITIONS AND THEREFORE, WE PROCE ED TO DECIDE THE APPEALS BY THIS CONSOLIDATED ORDER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A TRUST AND IT FILED ITS RETURN OF INCOME ON 30.03.2011 DECLARING THE INCOME AT NIL. THE TRUST WAS RUNNING AN EDUCATIONAL INSTITUTION NA MED MAHANT BACHITTER SINGH COLLEGE OF ENGINEERING AND TECHNOLO GY (MBS COLLEGE) AND SANT ROCHA SINGH DEGREE COLLEGE. THE A O AFTER RECORDING THE REASONS ISSUED A NOTICE U/S 148 OF TH E ACT ON 20.02.2006. THE REOPENING WAS RESORTED TO FOR THE R EASON THAT DURING THE YEAR UNDER CONSIDERATION THE TRUST WITHDREW A S UM OF RS. 25 LACS AND RS.35 LACS FOR ASSESSMENT YEAR 2001-02 FOR THE SOLE TRUSTEE FOR KEEPING IT AS SAFE CUSTODY DEPOSIT. THIS AMOUNT . A T THE YEAR END WAS SHOWN TO BE IN THE SAFE CUSTODY OF THE SOLE TRUST EE. THE AO TOOK IT AS VIOLATION OF PROVISIONS OF SECTION 13 OF THE ACT RE AD WITH SECTION 11(5) OF THE ACT, AS THE BENEFIT WAS PASSED ON TO THE TRU STEE. AFTER CONSIDERING THE REPLY OF THE ASSESSEE AS ADVANCED B EFORE HIM, THE AO DENIED THE EXEMPTION TO THE EXTENT OF RS.25,00,000/ - AND RS.35,00,000/- IN THE A.Y. 2000-01 & 2001-02 RESPE CTIVELY AND TAXED THESE AMOUNTS ACCORDINGLY. 5. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO AN D THE RELEVANT ORDER OF THE LD. CIT(A) IN PARA 2 TO 5.1 AT PAGES 2 TO 10 IS REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: ITA NOS. 612 & 613(ASR)/2011 7 2. IN THE APPEAL BEFORE LEARNED CIT(A), MY PROCES SOR THE MATTER WAS TAKEN UP. THE CIT(A) IN HIS ORDER IN APP EAL NO. A-496/06- 07 DATED 30.07.2008 HAD DISMISSED THE APPEAL OF ASS ESSEE. WHEN THE MATTER REACHED THE HON'BLE I.T.A.T. AMRITSAR, THE H ON'BLE BENCH HAS PASSED THE ORDER OF ITA NO. 520 AND 521(ASR)/2008 F OR ASSESSMENT YEAR 2001-01, SETTING ASIDE THE ORDER OF CIT(A) WIT H FOLLOWING DIRECTIONS: WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED TH E RELEVANT RECORDS AVAILABLE WITH US SPECIALLY THE IMPUGNED OR DERS. WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED FIRST APPEL LATE AUTHORITY HAS NOT GIVEN ANY FINDING ON THE ISSUE RAISED IN THE AF ORESAID GROUNDS. IT IS THEREFORE, VERY MUCH NECESSARY THAT A CORRECT DECIS ION IN THE CASE OF THE ASSESSEE MAY BE GIVEN. WE ARE NOT COMMENTING UP ON THE MERITS OF THE CASE, IT WILL PREJUDICE TO THE MINDS OF THE AUT HORITIES. WE ARE SETTING ASIDE THE ISSUE IN DISPUTE RAISED IN THE PR ESENT GROUNDS OF APPEAL (SUPRA) TO THE LEARNED FIRST APPELLATE AUTHO RITY TO DECIDE THE SAME AFRESH UNDER THE LAW AFTER GIVING OPPORTUNITY THE ASSESSEE. 2.1 THE APPEAL IS FILED FOR ASSESSMENT YEAR 2001-0 2 ALSO ON THE IDENTICAL ISSUE BUT WITH MINOR VARIATIONS IN AMOUNT INVOLVED. IN VIEW OF THIS FOR THE SAKE OF CONVENIENCE THE APPEALS FOR BOTH THE YEARS IS DECIDED THROUGH A CONSOLIDATED ORDER. 2.2 THE ABOVE IS THE GENESIS OF THIS APPEAL. BEFOR E ME SH. OMESH GUPTA, CA APPEARED AND FILED HIS WRITTEN SUBM ISSIONS AND ARGUED THE CASE. THE WRITTEN SUBMISSIONS OF ASSESSE E ARE REPRODUCED AS UNDER: THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR T HE ASSESSMENT YEAR ON 30.03.2001 AND FOR THE YEAR 2001-02 ON 31.03.200 2. IN BOTH THE CASE NOTICES U/S 148 WERE ISSUED DATED 30.05.2005. THE REASONS RECORDED WERE SIMILAR AND STATED: DURING THE YEAR UNDER CONSIDERATION THE TRUST WITH DREW A SUM OF RS. 25,00,000/- FOR SOLE TRUSTEE UNDER THE GARB OF SAF E CUSTODY DEPOSIT WITH SOLE TRUSTEE. AT THE END OF THE YEAR THIS AMO UNT HAS BEEN SHOWN AS LYING IN THE SAFE CUSTODY WITH SOLE TRUSTEE. THI S AMOUNT HAS BEEN SET APART IN CONTRAVENTION TO THE PROVISIONS OF SEC TION 11(5) OF THE ACT. THE PROVISIONS CONTAINED IN 3 RD PROVISO (A) AND (B) TO SECTION ITA NOS. 612 & 613(ASR)/2011 8 10(23)(C) HAVE ALSO BEEN VIOLATED. IN THIS CASE THE BENEFITS HAVE DIRECTLY PASSED ON TO THE AUTHOR OF THE TRUST OF TH E FOUNDER OF THE INSTITUTION THEREBY VIOLATING THE PROVISIONS OF SEC TION 13(1)(C) AND 13(2)(G) READ WITH SECTION 13(3) OF THE ACT. THE AM OUNT SO DISCUSSED HAS NOT BEEN APPLIED FOR EDUCATIONAL PURPOSES AND L IABLE TO BE TAXED AS INCOME OF THE TRUST. THE ASSESSEE SUBMITS SYNOPSIS OF SUBMISSIONS MADE A T THE TIME OF EARLIER HEARING BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS): I. THAT THE SOLE TRUSTEE MAHANT MAJIT SINGH JI IS A RELIGIOUS PREACHER AND MAHANT OF DERA NAANGLI SAHIB, BEING 20 0 YEARS OF LINEAGE AND AS PER CUSTOM DOES NOT MARRY OR HAVE PE RSONAL EFFECTS, BY RENOUNCING WORLDLY COMFORTS. II. THAT THE ASSESSEE FILED APPLICATION FOR REGISTR ATION U/S 12A AND THERE BEING NO ORDER IT IS DEEMED TO HAVE BEEN REGI STERED. III. THAT THE LEARNED COMMISSIONER OF INCOME TAX SO UGHT TO CANCEL THE REGISTRATION BUT ON FACTS AND CIRCUMSTANCES OF THE CASE VIDE HIS ORDERS DATED 24.03.2006 STATED IN VIEW OF THE ABOVE, IN MY OPINION, THERE IS NO REQUIREMENT FOR INVOKING THE PROVISIONS OF SECTI ON 12AA(3) OF THE I.T. ACT, 1961 IN THIS CASE. IV. THAT THERE WAS NO INVESTMENT AND THE AMOUNT WA S LYING WITH THE SOLE TRUSTEE FOR SAFE CUSTODY. IN SUPPORT THEREOF THE ASSESSEE HAD FILED AN AFFIDAVIT OF THE SOLE TRUSTEE STATING THAT THE AMOUNT WAS LYING WITH HIM FOR CUSTODY. THIS AFFIDAVIT HAS NOT BEEN C ONTROVERTED. THE LEARNED A.O. HAS ALSO NOT BROUGHT ON RECORD OR HELD THAT THE AMOUNT LYING WITH HIM HAS BEEN USED FOR PERSONAL PURPOSES. RELIANCE IS PLACED ON THE CASE GANJAM NAGAPPA & SONS TRUST VS D Y DIRECTOR OF INCOME TAX(EXEMPTIONS) (2005) 1 SOT 641 (BANG) IN THIS CASE AMOUNT WAS HELD BY THE TRUSTEE AS CASH IN HAND. HELD THAT THIS BY ITSELF WOULD NOT ATTRACT BAR OF S ECTION 13(2)(G). THERE BEING NO FINDING THAT CASH WAS DIVERTED FOR THE BEN EFIT OF THE TRUSTEE. THE ASSESSEES CASE IS SIMILAR TO THE ABOVE CASE. I T IS THEREFORE AMPLY CLEAR THAT PROVISIONS OF SECTION 13 ARE NOT APPLICA BLE. V. THAT THE LEARNED ASSESSING OFFICER HAS NOT COME TO ANY DEFINITE CONCLUSION AS TO HOW AND WHICH PARTICULAR PROVISION S OF SECTION 13 ITA NOS. 612 & 613(ASR)/2011 9 HAVE BEEN VIOLATED AND HOW THESE ARE APPLICABLE IN THE ASSESSEES CASE. VI. THAT THE SOLE TRUSTEE HAD CONTRIBUTED AN AMOUN T OF RS. 41.25 DURING THE YEAR PERTAINING TO ASSESSMENT YEAR 2000- 01 AND A SUM OF RS. 50 LACS IN THE EARLIER YEAR I.E. ASSESSMENT YEA R 1999-2000. BOTH THE AMOUNTS FROM PART OF THE CORPUS OF THE TRUST. IT IS SUBMITTED THAT CORPUS OF A TRUST IS NOT INCOM E OF THE TRUST AND THEREFORE PROVISIONS OF SECTION 11 ARE NOT APPLICAB LE THERETO. IT HAS BEEN SO HELD IN THE FOLLOWING CASES: CIT VS PUNYARPAN CHARITABLE TRUST 166 ITR 214 (CAL) CIT VS SHRI BILLESWRA CHARITABLE TRUST 145 ITR 29 ( MAD) CIT VS STHANAKVASI VARDMAN VAMAK JAIN SANGH 260 ITR 366(GUJ) DIRECTOR OF INCOME TAX (EXEMPTIONS) VS JAIPUR GOLDEN CHARITABLE CLINICAL LABORATORY 311 ITR 365 (DEL) SHREE MAHADEVI TIRATH SHARDA MA SEVA SANGH 133 TTJ 57(CHD) VII. THAT IF THE SOLE TRUSTEE WAS IN THE NEED OF FU NDS AS ALLEGED, HE COULD HAVE USED THE AMOUNT OUT OF RS. 41.25 LACS AN D PAID ONLY THE BALANCE AMOUNT. VIII. THAT THE AMOUNT LYING WITH THE SOLE TRUSTEE W AS NEITHER AN INVESTMENT NOR A LOAN AND THEREFORE PROVISIONS OF S ECTION 13 ARE NOT ATTRACTED. IN THIS REGARD RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS: ACME EDUCATIONAL SOCIETY 43 DTR 250(DEL) ASSESSEE SOCIETY HAD GIVEN A LOAN OF RS. 90,50,000/ - TO ANOTHER EDUCATION SOCIETY WHOSE PRESIDENT WAS BROTHER OF PR ESIDENT OF ASSESSEE SOCIETY. HELD THAT IT IS NOT AN INVESTMEN T OR DEPOSIT AND HENCE PROVISIONS OF SECTION 13(1)(D) ARE NOT APPLIC ABLE. DIRECTOR OF INCOME TAX (EXEMPTIONS) VS ALARIPPU 244 ITR 358 (DEL) ITA NOS. 612 & 613(ASR)/2011 10 ASSESSEE SOCIETY ADVANCED LOAN TO ANOTHER SOCIETY O N THE DIRECTIONS OF THE DONOR. HELD THAT THE ADVANCE WAS NOT AN INV ESTMENT OR DEPOSIT AND HENCE PROVISIONS OF SECTION 13(1)(D) ARE NOT APPLICABLE. IN THE PRESENT CASE ALSO IT CANNOT BE HELD THAT THE ASSESSEE HAS GIVEN ANY LOAN OR MADE ANY INVESTMENT. HENCE PROVISIONS O F SECTION 13 ARE NOT ATTRACTED AND APPLICABLE. MORE SO WHEN THE LEAR NED A.O. IS NOT SURE WHAT PARTICULAR SECTION HAS BEEN CONTRAVENED. IX. THAT THE INCOME OF THE ASSESSEE FOR THE YEAR E NDED 31.03.2000 WAS RS. 4,85,779/- (INCLUDING RS. 4,81,732/- AS VOL UNTARY CONTRIBUTION) AND APPLICATION RS. 10,59,005/- WITH A SURPLUS OF RS. 39,774/-. THEREFORE, NO AMOUNT OUT OF INCOME WAS LY ING WITH THE SOLE TRUSTEE. THE AMOUNT LYING WITH THE SOLE TRUSTEE WAS OUT OF RS. 41,25,000/- GIVEN BY HIM AS CORPUS DONATION. THE CO RPUS DONATION CANNOT BE CONSIDERED AS INCOME OF THE TRUST AND HEN CE PROVISIONS OF SECTION 13 ARE NOT VITIATED. COPY OF RECEIPTS AND P AYMENTS ACCOUNT IS ENCLOSED. X. SIMILARLY FOR THE YEAR ENDED ON 31.03.2001 THE R ECEIPTS WERE RS. 13,74,797/-(INCLUDING RS. 13,50,000/- AS VOLUNT ARY CONTRIBUTIONS) AND APPLICABLE WAS RS. 29,00,000/- AND THERE WAS A THUS A DEFICIT. XI. DURING THE ASSESSMENT YEAR 2001-02 THE ASSESSEE RECEIVED A SUM OF RS. 36,00,000/- FROM THE ENGINEERING COLLEGE FOR CUSTODY. OUT OF THIS A SUM OF RS. 35,00,000/- WAS GIVEN TO THE S OLE TRUSTEE FOR SAFE CUSTODY. THE AMOUNT DEPOSITED WITH THE SOLE TRUSTEE WAS OUT OF THIS RS. 36,00,000/-. THIS AMOUNT OF RS. 36,00,000/- CANNOT BE CONSIDERED AS INCOME OF THE TRUST AND HENCE PROVISIONS OF SECTION 13 ARE NOT VITIATED. COPY OF RECEIPTS AND PAYMENTS ACCOUNT IS ENCLOSED. XII. THAT VOLUNTARY CONTRIBUTIONS ARE INCOME ONLY W HERE PROVISIONS OF SECTION 11 OR 12 ARE APPLICABLE. IN THE CASE OF ASSESSEE SECTION 11 AND 12 HAVE NOT BEEN APPLIED AS EXEMPTION HAS BEEN DENIED AND THEREFORE VOLUNTARY CONTRIBUTIONS ARE NOT INCOME. XIII. THAT EVEN IF THE INCOME IS TO BE TAXED IT SHO ULD BE THE BALANCE AMOUNT OF INCOME AND NOT THE ALLEGED AMOUNTS PAID T O THE SOLE TRUSTEE. IN ADDITION TO THE SUBMISSIONS AS ABOVE, THE ASSESSEE RESPECTFULLY IN ADDITION SUBMITS AS UNDER: ITA NOS. 612 & 613(ASR)/2011 11 THE ASSESSEE SUBMITS THAT SECTION 2(24) DEFINES INC OME. SUB-CLAUSE (IIA) READS AS UNDER: VOLUNTARY CONTRIBUTIONS RECEIVED BY AN ASSESSEE CREATED WHOL LY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY A N INSTITUTIONS ESTABLISHED WHOLLY OR PARTIALLY FOR SUCH PURPOSE OR BY AN INSTITUTION ESTABLISHED WHOLLY OR PARTIALLY FOR SUCH PURPOSE OR BY AN THE ASSESSEE SEEKS TO REFER TO SUB-CAUSE (D) OF SECTIO N 11(1) WHICH READS AS UNDER: INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS O F THE TRUST OR INSTITUTION. SECTION 12(1) READS AS UNDER: ANY VOLUNTARY CONTRIBUTION RECEIVED BY A TRUST CREATED WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTI ON ESTABLISHED WHOLLY FOR SUCH PURPOSES (NOT BEING CONTRIBUTIONS M ADE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OR THE CORPUS OF THE TRUST OR INSTITUTION) THE ABOVE DEFINITIONS CORPUS DONATIONS ARE NOT THEI R INCOME AT ALL. IT IS THUS CLEAR THAT PROVISIONS OF SECTION 11, 12 AND 13 ARE NOT APPLICABLE IN THE CASE OF CHARITABLE TRUSTS. VOLUNTARY CONTRIBUTIONS ARE INCOME ONLY BECAUSE OF DEFINITIO N CONTAINED IN SECTION 2(24)(IIA) OF THE ACT. OTHERWI SE IN CASE OF OTHER PERSONS IT IS A GIFT AND NOT TAXABLE IN THAT YEAR A S PROVISIONS OF SECTION 56(V)/(VI)/(VII) OF THE ACT WERE BROUGHT IN THE ACT SUBSEQUENTLY. SECTION 2(24)(IIA), MAKES IT ABSOLUTELY CLEAR THAT VOLUNTAR Y CONTRIBUTIONS ARE INCOME ONLY IN CASE OF CHARITABLE TRUST. WHERE THE TRUST LOOSES EXEMPTION VOLUNTARY CONTRIBU TIONS ARE NOT INCOME OF THE SAID TRUST. THE ASSESSEE SUBMITS THAT THE REASONS RECORDED DOES NO T STATE THAT ANY INVESTMENT HAS BEEN MADE SO AS TO CONTRAVENE TH E PROVISIONS OF SECTION 11(5) OF THE ACT. THE ASSESSEE IS NOT CLAIM ING EXEMPTION U/S 10(23)(C) AND THEREFORE THE PROVISOS OF THAT SECTIO N ARE ALSO NOT APPLICABLE. THE LEARNED ASSESSING OFFICER HAS NOT APPLIED THE PROV ISIONS OF SECTION 13(2)(G) OF THE ACT AT THE TIME OF ASSESSME NT AND THEREFORE TO THAT EXTENT RECORDING OF REASONS ARE NOT IN ACCORDA NCE WITH LAW. COURTS HAVE HELD THAT IN CASE THE CASE IS RE-OPENED AND T HE ASSESSMENT IS MADE NOT ON THE BASIS OF THE RECORDED REASONS BUT ON OTHER ASPECTS OF THE CASE, THE REASSESSMENT IS BAD. IN THE ASSESSEES ITA NOS. 612 & 613(ASR)/2011 12 CASE ALSO THE ASSESSMENT HAS BEEN MADE ON THE GROUN DS OTHER THAN ON WHICH IT WAS RE-OPENED AND THUS THE ASSESSMENT IS B AD IN LAW. RELIANCE IS PLACED IN THE CASE OF A) JAY BHARAT MARUTI LTD VS. CIT 223 CTR 269 (DEL) B) CIT VS DR. DEVINDER GUPTA 336 ITR 59(RAJ) C) RANBAXY LABORATORIES LTD VS. CIT 336 ITR 136 (DE L) 3. THE A/R OF ASSESSEE ALSO FILED THE RECEIPTS AN D PAYMENT ACCOUNT COPY OF ORDER OF CIT, JAMMU PASSED ON 24.03 .2006 UNDER SECTION 12AA(3) OF I.T. ACT AND CERTAIN CASE LAWS I N SUPPORT. 3.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF ASSESSEE, ASSESSMENT ORDER, CASE LAWS AND MATERIAL ON RECORDS . 3.3 THE FIRST OBJECTION (THOUGH TAKEN IN LATER PAR TS OF THE WRITTEN SUBMISSIONS) IS THAT THE ASSESSMENT HAS BEEN MADE O N OTHER ASPECTS OF THE CASE THAT THE RECORDED REASONS. NO GROUND OF AP PEAL OR ANY ADDITION GROUND IS TAKEN TO RAISE SUCH OBJECTION. H OWEVER, IT IS CLEAR FROM THE REASONS RECORDED THAT THE SOLE REASON FOR RE-OPENING WAS ADVANCING AN AMOUNT OF RS. 25,00,000/- TO THE SOLE TRUSTEE FOR SAFE CUSTODY ( AS NARRATED IN THE BOOKS OF ASSESSEE) WHI CH WAS IN CONTRAVENTION TO SECTION 11(5) OF I.T. ACT WHICH SP ECIFIES FORMS AND MODES OF INVESTING THE MONEY REFERRED TO IN CLAUSE (B) OF SUB-SECTION (2). FURTHER, THE REASONS RECORDED MENTIONS THAT TH ERE WAS ALSO A VIOLATION OF SECTION 13(1)(C) AND 13(2)(G) READ WIT H SECTION 13(3) OF I.T. ACT, 1961. 3.4 THE PLEA OF ASSESSEE IN THE WRITTEN SUBMISSION THAT THE A.O. HAS NOT APPLIED THE PROVISIONS OF SECTION 13( 2)(G) OF I.T. ACT AT THE TIME OF ASSESSMENT IS NOT FACTUALLY CORRECT AS THE A.O. IN THE ASSESSMENT ORDER HAS ALREADY MENTIONED THERE WAS A VIOLATION OF SECTION 13(1)(C), 13(2)(A), 13(2)(B), 13(2)(D) AND 13(2)(G) OF THE I.T. ACT. 3.5 IN VIEW OF THE ABOVE IT IS QUITE CLEAR AND UNA MBIGUOUS THAT THE A.O. HAS NOT AT ALL DEVIATED FROM THE REASONS RECOR DED AND HAS NOT TRAVELLED IN OPPOSITE OR DIVERSE DIRECTIONS. THE OB JECTION OF ASSESSEE, THOUGH NOT TAKEN IN GROUNDS OF APPEAL IS STILL NOT SUSTAINABLE AND HENCE REJECTED. ITA NOS. 612 & 613(ASR)/2011 13 3.6 THE RELIANCE OF ASSESSEE ON THE ORDER PASSED U /S. 12AA(3) OF I.T. ACT BY CIT, JAMMU IS CAREFULLY CONSIDERED AND FOUND TO BE MISPLACED AS THE CIT, JAMMU, AFTER CONSIDERING THE FACTS OF THE CASE AND DISCUSSING THEM IN DETAILS FOUND THAT DENIAL OF EXEMPTION WAS BEYOND THE SCOPE AND EXTENT OF POWER U/S 12AA(3) OF I.T. ACT. THE ORDER OF CIT, JAMMU IS RELEVANT PARTS IS REPRODUCED AS UNDER: AS STATED ABOVE, CONTRAVENTIONS OF THE ABOVE REFER RED PROVISIONS OF SECTION 13(1)(C) AND 13(1)(D) READ WITH SECTION 13( 2)(B) INFERS THAT NOTHING CONTAINED IN SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME THE INCOME/AMOUNTS IN SUBJECT OF S UCH CONTRAVENTION. IT DOES NOT INCLUDE THE PROVISIONS OF SECTION 12AA OR 12AA(3) IN ITS AMBIT. EVEN THE SCOPE OF SECTION 12AA(3) IS LIMITED ONLY TO ACTIVITIES OF THE TRUST AND CAN BE INVOKED ONLY IF THE SAME AR E NOT GENUINE OR NOT BEING CARRIED QUIT IN ACCORDANCE WITH THE OBJECTS O F THE TRUST. THEREFORE, THIS MEANS THAT POWERS UNDER SECTION 12A A(3) CANNOT BE INVOKED IN AS FAR AS CONTRAVENTIONS OF SECTION 13 O F THE I.T. ACT, 1961 ARE CONCERNED. THE ONLY EFFECT OF THESE CONTRAVENTI ONS IS THAT THE TRUST FORFEITS EXEMPTION AVAILABLE TO IT UNDER SECTION 11 UP TO THE EXTENT OF INCOMES/AMOUNTS INVOLVED. HOWEVER, THE SAME IS BEYO ND THE SCOPE AND EXTENT OF POWERS UNDER SECTION 12AA(3) AND THE SAME IS HOWEVER, AVAILABLE TO THE A.O. WHICH CAN BE EXERCISED BY HIM AS PER THE PROVISIONS OF THE I.T. ACT, 1961 INDEPENDENTLY WITH OUT ANY REFERENCE OR APPROVAL FROM THIS OFFICE. 4. IN VIEW OF THE ABOVE IT IS QUITE CLEAR THAT BEF ORE THE CIT, JAMMU, THE LIMITED ISSUE OF APPLICATION OF SECTION 12AA(3) OF I.T. ACT WAS CONSIDERED. HENCE ON THIS COUNT ALSO THE ASSESS EE DOES NOT SUCCEED. 5. NOW COMING TO THE MAIN ISSUE AS TO WHETHER THE DEPOSIT OF RS. 25 LACS WITH SANT MANJIT SINGH, THE SOLE TRU STEE CLAIMED AS SAFE CUSTODY WAS HIT BY PROVISIONS OF SECTION 13(1)(C), 13(1)(D), 13(2)(A). THIS ISSUE IS CAREFULLY CONSIDERED AND I FIND THAT THE A.O. IN PARA NO. 11 TO 13 OF THE ASSESSMENT ORDER HAS DEALT IT IN DE TAILS. THE FINDING OF A.O. THAT ONCE THE PROVISIONS OF SECTION 11(5) WERE VIOLATED, THERE WAS NO ONUS ON THE REVENUE TO FURTHER PROBE WHETHER OR NOT SUCH FUNDS WERE ACTUALLY UTILIZED BY THE SOLE TRUSTEE FOR THE PROPOSAL BENEFIT AS TO HOW THEY WERE APPLIED, IS FOUND A CORRECT PROPOSITI ON IN VIEW OF THE ITA NOS. 612 & 613(ASR)/2011 14 LEGAL POSITION. THE A.O. HAS ALSO BROUGHT OUT IN TH E ASSESSMENT ORDER VERY CLEARLY THAT THE FUNDS ADVANCED AND DEPOSITED WITH THE SOLE TRUSTEE WERE WITHDRAWN FROM THE BANK ACCOUNT OF THE ENGINEERING COLLEGE AND THEN WERE ADVANCED TO SH. MANJIT SINGH TRUST WHERE FROM THE SAME WAS FURTHER EN-CASHED BY THE SOLE TRUSTEE. IN VIEW OF THE UNCONTROVERTED FINDINGS THE CLAIM THAT NO FUNDS WER E WITHDRAWN FROM THE APPELLANT TRUST IS ALSO NOT CORRECT. FURTHER, I WOULD LIKE TO REPRODUCE A PART OF PARA 14 OF THE ASSESSMENT ORDER WHICH WOULD CLARIFY THE ISSUE IN RIGHT EARNEST. IN HIS SUBMISSIONS THE ASSESSEE HAS TAKEN REFUGE U NDER THE PROCEEDINGS FOR REGISTRATION OF THE TRUST U/S 12A(A ) AND U/S 10(23C)(VI) OF ACT. IT IS STATED BY THE ASSESSEE TH AT THE THEN A.O. IN HIS REPORT TO THE CCIT, AMRITSAR HAD MENTIONED THAT THE SOLE TRUSTEE HAD MISUSED THE FUNDS FOR PURCHASE OF LAND WHICH WAS NO T THE CASE AND ALSO THAT CITING THESE REASONS HAD RECOMMENDED FOR SCRUTINY ASSESSMENT OF THE TRUST CASES BY ISSUE OF NOTICE U/ S 147 THE CASES WERE SELECTED. THE ASSESSEES CONTENTION IN THIS REGARD IS NOT CORRECT. AS HAS BEEN STATED ABOVE, THE REASONS RECORDED BY THE THEN A.O., A COPY OF WHICH WAS FURNISHED TO THE ASSESSEE, THERE IS NO MENTION OF THE FUNDS HAVING BEEN USED FOR PURCHASE OF LAND BY THE SOLE TRUSTEE. AS HAS BEEN EXPLAINED ABOVE, NOTICE U/S 147 WAS ISSUED FOR VIOLATION OF SECTION 11(5). AS PER PROVISIONS OF SECTION 13(1)(D )OF THE ACT, IF ANY FUNDS OF THE TRUST ARE INVESTED OR DEPOSITED OTHERW ISE THAN IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SECTION 11(5), THEN NO EXEMPTION U/S 11 SHALL BE AVAILABLE TO THE TRUST UP TO THE EXTENT OF SUCH SUM. IN THE INSTANT CASE THE TRUST DEPOSITED A SUM OF RS. 25 LACS WITH THE SOLD TRUSTEE AND ATTRACTED THE PROVISION OF 13( 1)(C), 13(1)(D) AND 13(2)(A) OF THE ACT AS NO IMMUNITY IS PROVIDED EVE N IN THE SHAPE OF REASONABLE CAUSE. THEREFORE, THE PLEA OF LEARNED COUNSEL THAT FUNDS WERE ALSO OTHERWISE REQUIRED TO BE KEPT WITH THE SO LE TRUSTEE WILL NOT MAKE ANY DIFFERENCE HEREDUE TO THE MANDATORY NATURE OF THIS CLAUSE. THIS CLEARLY ESTABLISHES THE FACT THAT THE TRUST DE POSITED FUNDS WITH THE SOLE TRUSTEE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 13(1)(D) OF THE ACT. FURTHER AS PER THE PROVISIONS OF SECTION 1 3(2)(D) OF THE ACT, IF ANY LAND/BUILDING/OTHER PROPERTY OF THE TRUST IS MA DE AVAILABLE TO ANY PERSON REFERRED TO IN SECTION 13(3) OF THE ACT WITH OUT ANY ADEQUATE COMPENSATION, IT SHALL BE DEEMED TO HAVE BEEN USED OR APPLIED FOR THE BENEFIT OF SUCH PERSON. THE SOLE TRUSTEE IS COVERED UNDER THE PROVISIONS SECTION 13(3) OF THE ACT. THE TERM OTHE R PROPERTY USED IN ITA NOS. 612 & 613(ASR)/2011 15 THIS CLAUSE INCLUDES ANY MOVABLE PROPERTY AS HAS BE EN HELD IN THE CASE OF AQUAPPA CHILD CENTRE V. CIT (1997) 226-ITR-211 ( KER.). AS HAS BEEN ADMITTED BY THE LEARNED COUNSEL THAT THE FUNDS WERE DEPOSITED IN THE SAFE CUTODY OF THE SOLE TRUSTEE WITHOUT ANY ADE QUATE COMPENSATION AND REMAINED TO BE HELD BY HIM OVER A PERIOD OF TWO YEARS. THOUGH SOME PARTS WERE RETURNED BACK PERIODI CALLY. QUESTION ARISES AS TO WHETHER SUCH DEPOSIT FALLS WITHIN THE MISCHIEF OF SECTION 13(2)(B) OF THE I.T. ACT, 1961. A SIMILAR QUESTION WAS DEALT BY THE HON'BLE KERALA HIGH COURT IN THE CASE MENTIONED (SU PRA). THE FACTS OF THE CASE WERE THAT IN THE ABSENCE OF TRUST HAVIN G COMPLETELY CONSTRUCTED BUILDING, THE TRUST PURCHASED A REFRIGE RATOR AND PLACE IT WITH THE MANAGING TRUSTEE WITHOUT EVEN THINKING OF CHARGING ANY ADEQUATE RENT OR OTHER COMPENSATION FROM HIM. THE H ON'BLE COURT HELD THAT THE CASE WOULD BE HIT BY THE PROHIBITION CONTAINED IN SECTION 13(2)(B) OF THE I.T. ACT, 1961 AND THE ASSESSEE TRU ST WOULD NOT BE ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE I.T. ACT, 1961. IN THE INSTANT CASE, THE TRUST DEPOSITED HUGE AMOUNTS OF C ASH WITH THE SOLE TRUSTEE TO BE RETURNED IN PARTS WITHOUT CHARGING AN Y ADEQUATE INTEREST OR OTHER COMPENSATION. THEREFORE, IN VIEW OF THE SA ME THE TRUST BY DOING SO, IS HIT BY THE PROHIBITION CONTAINED IN SE CTION 13(1)(C), 13(2)(B), 13(2)(D) AND 13(2)(G) OF THE I.T. ACT, 19 61 AND THE ASSESSEE TRUST WOULD NOT BE ENTITLED TO EXEMPTION UNDER SECT ION 11 OF THE I.T. ACT, 1961. IN VIEW OF THE ABOVE DISCUSSION, EXEMPTION TO THE E XTENT OF RS. 25 LACS IS DISALLOWED AND TREATED AS TAXABLE INCOME OF THE TRUST. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR FURNISH ING IN ACCURATE PARTICULARS OF INCOME AS DISCUSSED ABOVE. 5.1 THE CONTENTION TAKEN BY ASSESSEE THAT FOR THE YEAR ENDING 31.03.2000 THE INCOME OF TRUST WAS RS. 4,85,779/- A ND THE APPLICATION WAS RS. 10,59,005/-, HENCE NO AMOUNT OF INCOME WAS LYING WITH THE SOLE TRUSTEE IS ALSO NOT TENABLE IN VIEW OF THE FA CT THAT WHEN THE CONDITIONS FOR EXEMPTION AND APPLICATION AS PRESCR IBED ARE NOT MET, THE ENTIRE RECEIPTS LOST EXEMPTION AND THE INCOME A S SURPLUS SHOWN IN THE BOOKS LOST ITS MEANING. IT IS NOT THE SURPLUS A LONE WHICH CAN BE TAXED BUT THE AMOUNT WHICH RESULTS WITHOUT THE APPL ICATION OF PROVISIONS OF SECTION 11. ON THIS COUNT ALSO THE AS SESSEE DOES NOT SUCCEED. SECTION 13(1)(C)(II) IS VERY CLEAR AS IT R EADS AS UNDER: ITA NOS. 612 & 613(ASR)/2011 16 IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR THE INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DU RING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR TH E BENEFIT OF ANY PERSON REFERRED TO IN SUB-SECTION(3). 5.2 FURTHER I WOULD LIKE TO PRODUCE A PAR T OF AN ORDER OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF M/S SARDARNI UTTAM KAUR EDUCATIONAL TRUST VS. CIT, 220-CTR-601 W HEREIN IT WAS HELD AS UNDER: CHARITABLE TRUST-EXEMPTION UNDER S. 11- CONTRAVENT ION OF S. 13(1)(D)- FINDING OF FACT RECORDED BY CIT(A) AND TH E TRIBUNAL THAT THE AMOUNTS RECEIVED BY THE ASSESSEE SOCIETY BY WAY OF DONATIONS, WERE INVESTED IN THE BUSINESS CONCERN OF B FAMILY IN WHI CH THE TRUSTEES/MEMBERS OF THE SOCIETY HAD SUBSTANTIAL INT EREST- THUS, THERE WAS CONTRAVENTION OF PROVISION OF S. 13(1)(D)- ALS O, NO EVIDENCE WHATSOEVER HAS BEEN PRODUCED TO SHOW THAT THESE DON ATIONS WERE RECEIVED TOWARDS THE CORPUS- THEREFORE, TRIBUNAL WA S JUSTIFIED IN DENYING EXEMPTION UNDER SS. 11 AND 12 OF THE ASSESS EE SOCIETY. 5.3 IN VIEW OF THIS, THE TOTAL RECEIPT OF RS. 10,98,779/- IN ASSESSMENT YEAR 2000-01 (INCLUDING VOLUNTARY CONT RIBUTION AS NO EVIDENCE IS FILED TO SHOW THAT SAME IS TO BE TREATE D AS PART OF THE CORPUS) IS TAXABLE IN THE YEAR UNDER REFERENCE AS T HERE IS A VIOLATION OF VARIOUS PROVISIONS OF SECTION 13 AND THERE WILL BE NO APPLICABLE OF SECTION 11 OF I.T. ACT. THE ADDITION TO THE TUNE OF RS. 10,98,779/- IS CONFIRMED FOR THE ASSESSMENT YEAR 2000-01. 5.4 THE AMOUNT INVOLVED IS RS. 35,00,00 0/- FOR THE ASSESSMENT YEAR 2001-02. GOING BY THE SIMILAR LOGIC IN THE ASS ESSMENT YEAR 00- 01, RS. 20,68,955/- IS TAXABLE IN THIS ASSESSMENT Y EAR. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA, ADVOCATE, ARGUED THAT NO FUNDS OF WHATSOEVER KIND FROM THE TR UST, HAVE EVER BEEN USED BY SANT MANJIT SINGH FOR ANY OF THE PERS ONAL PURPOSE WHO WAS THE SOLE TRUSTEE EXCEPT FOR THOSE OF THE TRUST AND COLLEGE ESTABLISHED BY THE TRUST, THEREFORE, THERE WAS NO VIOLATION OF ANY SORT, AS CONTEMPLATED IN TERMS OF SECTION 11 AND 13 OF TH E INCOME TAX ACT, 1961 ( IN SHORT, THE ACT). IN THIS REGARD, AN AF FIDAVIT DATED ITA NOS. 612 & 613(ASR)/2011 17 10.01.2006 WAS FILED BY SANT MANJIT SINGH BEFORE TH E AO, COPY OF WHICH IS AVAILABLE AT PB-29. THE LD. COUNSEL FOR TH E ASSESSEE, MR. P.N.ARORA, ADVOCATE READ THE SAID AFFIDAVIT. THE SA ID AMOUNT WAS LYING IN THE CUSTODY AND SUPERVISIONS OF SANT MAN JIT SINGH, SOLE TRUSTEE OF THE TRUST, WHICH WAS RETURNED BACK TO TH E TRUST SHORTLY THEREAFTER DURING THE YEARS 2000-01 & 2001-02 AND N OTHING REMAINED WITH SANT MANJIT SINGH, THE SOLE TRUSTEE IN HIS PER SONAL CAPACITY. THE MONEY WAS HELD AS A TRUST AND NO BENEFIT OF WHATSOE VER NATURE WAS EVER DERIVED BY THE SAID SOLE TRUSTEE. A NOTICE WA S ISSUED BY THE LD. CIT, JAMMU VIDE LETTER DATED 20.12.2005 PROPOSING T O CANCEL REGISTRATION GRANTED U/S 12A(A), COPY OF THE SAME I S PLACED AT PB 21- 22. A REPLY DATED 13.01.2006 WAS DULY SUBMITTED BY THE ASSESSEE TO THE LD. CIT, JAMMU IN RESPONSE TO THE SAID NOTICE, COPY OF WHICH IS PLACED AT PB 23 TO 28. AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE, THE LD. CIT, JAMMU PASSED AN ORDER DATED 24.03.2006 U/S 12AA(3) OF THE ACT CAME TO THE CONCLUSION THAT THER E IS NO REQUIREMENT FOR INVOKING THE PROVISIONS OF SECTION 12AA(3) OF THE ACT AND THE RELEVANT PARA 6.8 OF THE ORDER OF THE LD. C IT, JAMMU WAS READ BY THE LD. COUNSEL FOR THE ASSESSEE AND IS REPRODUC ED AS UNDER: 6.8. AS REGARD THE OBSERVATION OF THE AO THAT THE AMOUNTS WITHDRAWN BY THE TRUST AND DEPOSITED WITH THE SOLE TRUSTEE WERE USED BY HIM FOR PURCHASE OF LAND ON 6.7.2001 FROM ONE SH . VINAY MAHAJAN IS NOT COMMENTED UPON AS THE ISSUE HAS ALREADY BEEN DEALT WITH BY THE INCOME TAX OFFICER, WARD 1(1), JAMMU AND ORDER UNDE R SECTION 143(3) HAS ALREADY BEEN PASSED WHICH IS SELF EXPL ANATORY IN NATURE AND NO NEXUS WITH THE AMOUNTS DEPOSITED BY THE TRUS T WITH THE SOLE TRUSTEE AND THE AMOUNT INVESTED IN THE PURCHASE OF ABOVE LAND BY THE SOLE TRUSTEE WAS ESTABLISHED BY HIM WHILE PASSING T HE ABOVE ORDER. 6.1 THE LD. COUNSEL FOR THE ASSESSEE AFTER READING THE SAID PARA 6.8 OF LD. CIT, JAMMU, INVITED OUR ATTENTION TO THE CO NCLUSION OF THE LD. CIT THAT THERE WAS NO NEXUS WITH THE AMOUNTS DEPOS ITED BY THE TRUST WITH THE SOLE TRUSTEE AND THE AMOUNT INVESTED IN T HE PURCHASE OF LAND BY THE SOLE TRUSTEE. THEREFORE, IT HAS TO BE PROVED THAT THE AMOUNT WAS LYING WITH THE SOLE TRUSTEE WHICH WAS NEVER USED BY THE SOLE TRUSTEE FOR HIS PERSONAL PURPOSES. THE AFFIDAVIT OF THE SOLE TR USTEE WAS NEVER CONTRADICTED BY THE DEPARTMENT, RATHER THE SAME WAS ACCEPTED BY THE DEPARTMENT IN TOTO. IT IS ALSO WORTH MENTIONING THA T THE AUTHORITIES BELOW DID NOT APPRECIATE THAT SANT MANJIT SINGH GA VE RS.50 LACS TO ITA NOS. 612 & 613(ASR)/2011 18 THE TRUST DURING THE ASSESSMENT YEAR 1999-2000 AND FURTHER RS.41,25,900/- DURING THE ASSESSMENT YEAR 2000-01 A S DONATION TO THE TRUST. THEREFORE, THERE IS NO REASON FOR THE DEPART MENT TO DOUBT THE BONAFIDE OF THE SOLE TRUSTEE SANT MANJIT SINGH, WHO HAS BEEN SO GENEROUS OF GIVING RS.91,25,900/- AS DONATION IN TWO YEARS AS MENTIONED HEREINABOVE FOR THE NOBLE CAUSE OF HUMANI TY. THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.2 5 LACS AND RS. 35 LACS AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFI RMING THE ACTION OF THE AO AND SUSTAINING THE ADDITION OF RS.10,98,779/ - AND RS.20,68,995/- FOR THE ASSESSMENT YEARS 2000-01 & 2 001-02 AND FURTHER NOT JUSTIFIED IN HOLDING THAT THE ENTIRE RE CEIPTS OF THE ASSESSEE LOOSE EXEMPTION. THE LD. COUNSEL FOR THE ASSESSEE FURTHER PRAYED TO REVERSE THE ORDERS OF THE AUTHORITIES BELOW AND DIR ECT THE AO TO DELETE THE ADDITIONS SO MADE. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. ON PERUSAL OF THE ORDER OF THE LD. CIT, J AMMU, IT IS OBVIOUS THAT THERE WAS PROPOSAL TO CANCEL REGISTRATION GRAN TED UNDER SECTION 12AA, WHICH IN FACT, WAS DROPPED AND THE REGISTRATI ON WAS NOT CANCELLED BY THE LD. CIT, JAMMU VIDE HIS ORDER DATE D 24.03.2006, WHICH IS ON RECORD. THE ALLEGATION OF THE AUTHORITI ES BELOW THAT THE AMOUNT HAS BEEN USED FOR THE PURCHASE OF LAND HAS N O MEANING IN VIEW OF THE FINDINGS OF THE LD. CIT, JAMMU IN THE C ASE OF THE ASSESSEE ITSELF THAT THERE IS NO NEXUS BETWEEN WITH THE AMOU NTS DEPOSITED BY THE TRUST WITH THE SOLE TRUSTEE AND THE AMOUNT INVE STED IN THE PURCHASE OF LAND BY THE SOLE TRUSTEE. THE SAID FINDING HAS N OT BEEN CONTROVERTED BY THE LD. DR. THERE IS NO OTHER FINDING OF THE AUT HORITIES BELOW THAT THE SOLE TRUSTEE HAS USED THE FUNDS ELSEWHERE FOR H IS PERSONAL USAGE. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANN OT BE SAID THAT SANT MANJIT SINGH USED THE SAID AMOUNTS OF RS. 25 LACS A ND RS.35 LACS FOR HIS PERSONAL PURPOSE. THE AFFIDAVIT SUBMITTED BY S ANT MANJIT SINGH HAS NOT BEEN CONTROVERTED, RATHER THE SAME HAS BEEN ACCEPTED BY THE AUTHORITIES BELOW AND NO OTHER COMMENTS HAVE BEEN PASSED BY ANY OF THE AUTHORITIES BELOW WITH REGARD TO THE SAID AFFID AVIT.. MOREOVER, SANT MANJIT SINGH HAS DONATED RS.91,25,900/- TO THE ASSESSEE TRUST AND THIS FACT CANNOT BE IGNORED . IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE ABSENCE OF ANY ADVERSE MATERIAL ON RECORD BY THE AUTHORITIES BELOW AGAINST THE ASSESSEE, WE ARE OF T HE VIEW THAT THERE ITA NOS. 612 & 613(ASR)/2011 19 WAS NO INVESTMENT BY THE ASSESSEE-TRUST IN ANY OF T HE SECURITIES OR ASSETS EXCEPT CASH-IN-HAND WAS HELD BY SANT MANJIT SINGH ON BEHALF OF THE ASSESSEE-TRUST AS IF IT IS HELD BY THE ASSESSEE -TRUST ITSELF. THEREFORE, THERE IS NO VIOLATION OF SECTION 13. THE ASSESSEE E NJOYS THE REGISTRATION UNDER SECTION 12A OF THE ACT, WHICH IS NOT WITHDRAW N AND ALSO ENJOYS EXEMPTION GRANTED UNDER SECTION 10(23C)(VI) BY THE CCIT AMRITSAR VIDE ORDER F.NO. CCIT/ASR/10(23C)(VI)/2007-08/3785 DATED 20.03.2008. IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, NO PART OF THE RECEIPT WHETHER IT IS CORPUS FUND OR OTHERWISE CAN BE TREATED AS INCOME OF THE ASSESSEE, AS WE FIND NO VIOLATION OF THE INCOME TAX ACT AND THE AO IS DIRECTED TO ACCEPT THE RETURNED INCOM E IN BOTH THE YEARS I.E. ASSESSMENT YEAR 2000-01 & 2001-02. THUS, ALL THE GROUNDS OF THE ASSESSEE IN BOTH THE IMPUGNED YEARS ARE ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E IN ITA NOS. 601 & 602(ASR)/20111 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH FEBR UARY, 2014. 7. SINCE THE ISSUES INVOLVED IN THE PRESENT APPEALS HAVE ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND ALL THE GROUN DS OF THE ASSESSEE HAVE BEEN ALLOWED, THEREFORE, AS HELD IN OUR ORDER DATED 14.02.2014 (SUPRA), THERE IS NO VIOLATION OF SECTION 13 AND OTHER FINDINGS IN OUR ORDER IN PARA 8 DATED 14.02.2014 (SUPRA). THE ARGUMENTS MADE BY THE LD. D R WITH REGARD TO APPLICABILITY OF SECTION 11(2) ARE IRRELEVANT SINCE NO INCOME HAS BEEN APPLIED FOR THE PURPOSE OTHER THAN CHARITABLE AND NO INCOME CEASES TO BE ACCUMULATED OR SET APART FOR APPLICATION THERETO. THERE IS NO STAY OF TRIBUNALS ORDER DATED 14.02.2014 (SUPRA) BY ANY HI GHER COURT AND NO MISC. APPLICATION HAS BEEN BROUGHT ON RECORD AGAINST THE SAID ORDER. THEREFORE, IN ALL THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE , OUR ORDER DATED ITA NOS. 612 & 613(ASR)/2011 20 14.02.2014 (SUPRA) SHALL BE IN OPERATION AND IS APP LICABLE TO THE REVENUES APPEAL AND ACCORDINGLY, THE GROUNDS OF THE REVENUE IN BOTH THE YEARS I.E. 2000-01 & 2001-02 STAND DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE I N ITA NOS. 612 & 613(ASR)/2011 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH AUGUST, 2014. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 6TH AUGUST, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SANT MANJIT SINGH TRUST, DIGIANA, JAMM U. 2. THE ITO WARD 1(3), JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR