MADHAVI RAKSHA SANKALLP, MUMBAI V. ITO WD 2(1), MUMBAI

ITA 7600/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9539 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 28-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Onus to prove
• Section: 271(1)(c); 143(3); 12A; 11

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO.7600/MUM/2016 ASSESSMENT YEAR: 2010-11 MADHVI RAKSHA SANKALP, NIRAMI NIKETAN, 2 ND DR. BHAJREKAR STREET, MUMBAI-400004 / VS. INCOME TAX OFFICER(E), WARD-2(1), MUMBAI ( #$%&' ( /ASSESSEE) ( * / REVENUE) P.A. NO.AAATM7188H #$%&' ( / ASSESSEE BY SHRI RAJESH P. SHAH * / REVENUE BY SHRI S. K. MISHRA-DR + $*, - ( . / DATE OF HEARING : 19/12/2018 - ( . / DATE OF PRONOUNCEMENT 19/12//2018 / O R D E R PERJOGINDER SINGH (VICE PRESIDENT) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 08/10/2016 OF THE FIRST APPELLATE AUTHORITY, MUMBAI , UPHOLDING THE PENALTY OF RS.1,15,18,242/- IMPOSED U NDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HERE INAFTER THE ACT). ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 2 2. DURING HEARING, SHRI RAJESH P. SHAH, LD. COUNSE L FOR THE ASSESSEE CONTENDED THAT THE TRIBUNAL VIDE O RDER DATED 26/04/2017 (ITA NO.2476/MUM/2014) REMANDED TH E QUANTUM ADDITION FOR VERIFICATION TO THE FILE OF TH E LD. ASSESSING OFFICER WITH A DIRECTION TO PROVIDE ADEQU ATE OPPORTUNITY OF BEING HEARD, THEREFORE, THE PENALTY APPEAL MAY ALSO BE SET-ASIDE TO THE FILE OF THE LD. ASSESS ING OFFICER. ON THE OTHER HAND, THE LD. DR, SHRI S. K. MISHRA, T HOUGH DEFENDED THE PENALTY BUT DID NOT OBJECT OF SENDING THE PENALTY APPEAL TO THE FILE OF THE LD. ASSESSING OFF ICER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER OF THE TRIBUNAL DATED 26/04/2017 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 2746/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 10 TH FEBRUARY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)- 1, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE A SSESSMENT YEAR 2010-11, THE APPELLATE PROCEEDINGS BEFORE THE LEARN ED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 22 ND MARCH, 2013 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLE D THE AO) U/S 143(3) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALL ED THE ACT). ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 3 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS )-1, {CIT(APPEALS)} ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER (AO) OF DISALLOWING THE APPELLANT'S CLAIM O F RECEIPT OF CORPUS DONATIONS OF RS.2,42,26,508/- 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE ACT ION OF THE AO OF TREATING CORPUS DONATIONS RS.2,42,26,508/- AS ANONY MOUS DONATIONS, TAXABLE U/S 115BBC OF I.T. ACT. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE ACT ION OF THE AO OF INVOKING THE PROVISIONS OF SECTION 115BBC OF I.T. A CT, WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E. 4. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE ACT ION OF THE AO OF NOT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND EXPLANATIONS OFFERED IN SUPPORT OF THE APPELLANT'S CLAIM OF CORPUS DONATIONS. 5. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE ORD ER OF THE AO, OF HOLDING THAT THE OPTION EXERCISED IN RESPECT OF UNS PENT INCOME OF RS.1,35,70,000/- IS NOT IN CONFORMITY WITH THE PROV ISIONS OF EXPLANATION 2 BELOW SECTION 11 (1) OF I.T. ACT. 6. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN NOT APPRECIATING THE FACTS AND CIRCUMSTANCES AND THE EXPLANATIONS OFFERED IN REGAR D TO THE OPTION EXERCISED U/S 11(1) OF I T ACT, IN RESPECT OF THE U NSPENT INCOME OF RS.1,35,70,000/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A TRUST REGISTERED AS A CHARITABLE ORGANIZATION WITH DIT (E ), MUMBAI U/S 12A OF 1961 ACT VIDE REGISTRATION NO. TR/25225 AND THE ASSESSEE IS ALSO REGISTERED WITH CHARITY COMMISSIONER, MUMBAI V IDE REGISTRATION NO. E-10395, MUMBAI. THE ASSESSEEE TRUST HAS CLAIME D THAT IT IS ENGAGED IN CHARITABLE ACTIVITIES IN THE FIELD OF ED UCATION AND MEDICAL RELIEF AND IS THUS ENTITLED FOR EXEMPTION U/S 11 OF 1961 ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W .S. 143(2) OF 1961 ACT, THE A.O. OBSERVED THAT THE ASSESSEE TRUST HAD SHOWN ADDITION TO CORPUS OF RS.2,42,26,508/- DURING THE Y EAR AND OPENING BALANCE OF CORPUS IS AT RS. 23,82,41,105/-. THE ASS ESSEE WAS ASKED TO FURNISH THE FOLLOWING INFORMATION:- ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 4 A) COPY OF LETTERS FROM DONORS SHOWING SPECIFIC DI RECTION THAT THE DONATIONS ARE TOWARDS CORPUS SHOWING. (B) COPIES OF RECEIPTS ISSUED TO DONORS W.R.T TO CO RPUS DONATIONS. (C) PAN & PROOF OF ADDRESS OF DONORS . (D) SPECIFY MODE OF PAYMENT VIZ CHEQUE/CASH. WHEREV ER THE DONATIONS ARE CLAIMED TO HAVE BEEN RECEIVED IN CASH , FURNISH FRESH CONFIRMATIONS FOR THESE CORPUS DONATIONS. THE ASSESSEE TRUST IN REPLY SUBMITTED THAT THE TRUS T RECEIVED DONATIONS TOTALING RS. 2,42,26,508/- TOWARDS ITS CO RPUS FROM ABOUT 6500 DONORS. ALL THESE DONATIONS WERE ACCOMPANIED B Y LETTERS OF DIRECTIONS OF THE DONORS THAT THE DONATIONS SHALL F ORM PART OF CORPUS FUND. THE ASSESSEE ENCLOSED DIRECTION LETTERS FROM THE DONORS. THE ASSESSEE ALSO DREW THE ATTENTION OF THE A.O. TO THE ORDER U/S 264 DATED 22.03.1996 PASSED BY THE THEN DIRECTOR OF INC OME TAX (EXEMPTIONS) IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1992-93 , WHEREBY THE LD. DIT (EXEMPTIONS) HAD ALLOWED THE PETITION U/S 264 OF THE ACT WHICH WAS FILED AGAINST THE ASSESSMENT O RDER WHEREIN AO TREATED DONATION OF RS. 22,83,688/- AS VOLUNTARY DO NATIONS RATHER THAN CORPUS DONATIONS AS CLAIMED BY THE ASSESSEE TR UST BY VIRTUE OF WHICH IT WAS DEDUCTIBLE U/S 11(1)(D) OF 1961 ACT. T HE RELEVANT PARA OF THE ORDER U/S 264 IS REPRODUCED BELOW:- IN ORDER TO UNDERSTAND THE MODALITIES OF THE DONAT ION IN THIS CASE, THE ACTIVITY OF THE TRUST HAS TO BE SEEN. IT IS A U NIQUE WAY OF CREATING IMPERSONAL WEALTH. IN A VILLAGE, LIKE MINDED FARMER S GET TOGETHER AND CULTIVATE LAND AND PRODUCE WEALTH IN THE SERVIC E OF GOD AND SUCH WEALTH IS UTILISED FOR THE UPLIFTMENT OF THE V ILLAGE AS WELL AS FOR DONATION TO THE TRUST WHICH IN TURN IS AGAIN UTILIS ED FOR CHARITABLE PURPOSE. A GROUP OF PEOPLE WHO ARE DEVOTED TO THE C ONCEPT PROPAGATED BY THE TRUST JOIN TOGETHER AND OUT OF TH AT SOMEONE CONTRIBUTES LAND ANOTHER CONTRIBUTES SEEDS ANOTHER CONTRIBUTES IRRIGATION AND ANOTHER CONTRIBUTES LABOUR AND SO ON AND CULTIVATE THE LAND JOINTLY TO PRODUCE WEALTH OUT OF WHICH PART IS UTILISED FOR CHARITABLE PURPOSE AT THE VILLAGE LEVEL AND PART OF WHICH IS DONATED TO TRUST BY WAY OF CORPUS DONATION. THEREFORE INDIV IDUAL SHARES IN THE PRODUCE IS AN UNIDENTIFIED EVEN AMONGST THEMSEL VES AND THEREFORE, THE CERTIFICATE OF THE REPRESENTATIVE OF THAT GROUP IS SUFFICIENT ENOUGH AND ACCEPTABLE TO TREAT IT AS COR PUS DONATION. THESE ACTIVITIES ARE TAKEN TURN BY TURN FROM ONE VI LLAGE TO ANOTHER IN SUBSEQUENT YEAR AND THIS ACTIVITY GOES ON. IN THESE CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE THAT IT IS A CORPUS DONAT ION IS IN ORDER AND IS ACCEPTABLE AND THE AO IS DIRECTED TO TREAT AS CO RPUS DONATION. WHEREVER DIRECTIONS LETTERS WERE NOT FILED, THEY AR E AVAILABLE WITH THE ASSESSEE WHICH MAY BE OBTAINED AND PLACED ON RE CORD. THE ASSESSEE HAS PRODUCED THE SAMPLE COPIES OF RECE IPTS ISSUED TO THE DONORS IN RESPECT OF CORPUS DONATIONS. THE ASSE SSEE ALSO SUBMITTED DIRECTION LETTERS FOR THE PERIOD FOR VERI FICATION. THE ASSESSEE HAS ALSO SUBMITTED PAN WHICH WERE REFLECTE D IN THE RESPECTIVE DIRECTION LETTERS OF THE DONORS. IT WAS ALSO SUBMITTED THAT ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 5 ALL THE DONATIONS WERE RECEIVED BY ACCOUNT PAYEE CH EQUES OR DEMAND DRAFTS AND NOTHING WAS RECEIVED IN CASH. THE ASSESSEE CONTENDED THAT ALL THE CORPUS DONATIONS WERE SUPPOR TED BY CONFIRMATORY LETTERS FROM THE DONORS THAT THEY ARE TOWARDS CORPUS AND AS SUCH THEY ARE EXEMPT UNDER SECTION 11(1)(D) OF 1961 ACT. THE A.O. OBSERVED THAT ALL DONATION LETTERS TOTALIN G 6584 IN NUMBER FURNISHED BY THE ASSESSEE TRUST WERE IN THE SAME FO RMAT AND EACH LETTER CARRIED NAMES OF 3-4 VILLAGERS WHO WERE CLAI MED TO BE THE DONORS. IT WAS OBSERVED BY THE ASSESSING OFFICER TH AT IN EACH CASE NAME OF VILLAGE , TALUKA , DISTRICT IS GIVEN BUT CO MPLETE ADDRESS IS NOT GIVEN AND CLAIM OF THE ASSESSEE CANNOT BE VERIF IED IN THE ABSENCE OF ADDRESS. IT WAS ALSO OBSERVED THAT NONE OF THE LETTERS BEAR PAN OF THE DONORS AS CLAIMED BY THE ASSESSEE T RUST. UNDER THESE CIRCUMSTANCES, THE A.O. REJECTED THESE DIRECT ION LETTERS AS AN EVIDENCE IN SUPPORT OF IDENTITY AND ADDRESS OF DONO RS AS MANDATED U/S 115BBC OF 19611 ACT AND HELD THAT EXEMPTION U/S 11(1)(D) OF THE ACT IS NOT ADMISSIBLE TO THE ASSESSEE. THE ASSE SSING OFFICER HELD THAT THE RECEIPTS WHICH WERE CLAIMED TO BE TRE ATED AS VOLUNTARY CONTRIBUTION ARE LIABLE TO BE TAXED U/S 115 BBC OF 1961 ACT AS ANONYMOUS DONATIONS. THE A.O. AFTER GOING THROUGH T HE OBJECT CLAUSES OF THE ASSESSEE TRUST OBSERVED THAT THE ASS ESSEE TRUST IS NOT A RELIGIOUS TRUST . THE A.O. HELD THAT THE ASSE SSEE FAILED TO ESTABLISH THE IDENTITY AND ADDRESS OF DONORS AND TH E AO INVOKED PROVISIONS OF SECTION 115 BBC OF THE ACT AND DENIED EXEMPTION TO THE ASSESSEE U/S 11 OF 1961 ACT AND TAXED THE SAME UNDER SECTION 115BBC OF 1961 ACT. FURTHER, IT WAS OBSERVED BY THE AO THAT THE ASSESSE E HAS EXERCISED ITS OPTION MU/S 11(1) OF 1961 ACT FOR AN UNSPENT AM OUNT OF RS. 1,35,70,000/- DURING THE YEAR , WHEREBY THE ASSESSE WAS SHOW CAUSED AND ASKED TO EXPLAIN AS TO WHY THE EXERCISE OF SAID OPTION U/S 11(1) OF 1961 ACT SHOULD NOT BE TREATED AS INVA LID AS THE ASSESSEE HAS NOT SPECIFIED ANY REASON FOR EXERCIS E OF THIS OPTION, WHICH IS MANDATORY IN LAW AND IN THE ABSENCE OF WHI CH BENEFIT OF THIS OPTION IS NOT AVAILABLE AS PER THE AO. THE ASSESSEE SUBMITTED THAT AN UNSPENT AMOUNT OF RS . 13570000/- WILL BE SPENT DURING THE NEXT FINANCIAL YEAR RELEVA NT TO THE ASSESSMENT YEAR 2011-12 AND ALSO THE ASSESSEE TRUST WAS ACTIVELY CONSIDERING LAUNCHING OF PROJECTS IN CONFORMITY WIT H THE OBJECTS OF THE TRUST, WHICH REQUIRES MORE PLANNING , TIME AND FUNDS.IT WAS SUBMITTED THAT THE PROJECT COULD BE LAUNCHED ONCE T HE PLANS ARE FINALIZED AND FUNDS ARE AVAILABLE FOR UTILIZATION . THE ASSESSEE SUBMITTED REVISED OPTION LETTER CONTAINING SPECIFIC REASONS FOR EXERCISING THE OPTION. THE A.O. OBSERVED THAT AS PER EXPLANATION (2) TO SE CTION 11(1) OF 1961 ACT, IF IN THE PREVIOUS YEAR, THE INCOME APPLI ED TO CHARITABLE OR RELIGIOUS PURPOSES FALLS SHORT OF 85% OF THE INCOME DERIVED DURING THAT YEAR FOR TWO REASONS NAMELY (I) FOR THE REASON THAT THE WHOLE OR ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 6 ANY PART OF THE INCOME HAS NOT BEEN RECEIVED DURING THE YEAR , OR (II) FOR ANY OTHER REASONS , THE BENEFIT UNDER EXPLANATI ON 2 TO SECTION 11(1) OF 1961 ACT SHALL BE AVAILABLE. THE AO RECEIV ED THAT CLAUSE (I) IS NOT APPLICABLE AS THE ASSESSEE DULY RECEIVED THE SAID INCOME WHILE CLAUSE (II) IS APPLICABLE AND THE ASSESSEES EXERCISE OF OPTION U/S 11(1) OF 1961 ACT VIDE LETTER DATED 22.09.2010 , READS AS UNDER:- RE:- ASSESSMENT YEAR 2010-11 PAN AAATM7188H OPTION EXERCISED U/S 11 OF THE INCOME TAX ACT, 1961 WITH REFERENCE TO ABOVE, WE HAVE TO INFORM YOU THAT IS UNSPENT AMOUNT FOR THE ASSESSMENT YEAR 2010-11. WE, THEREFORE HEREBY EXERCISE THE OPTION GIVEN U/S 11(1) OF THE INCOME TAX ACT, 1961 THAT THE UNSPENT AMOUNT OF RS. 13570000 WILL BE SPENT DURING THE NEXT FINANCIAL YEAR RELATING TO ASSESSMENT YEAR 2011-12 WHICH MAY BE PLEASE BE NOTED. THANKING YOU, YOURS FAITHFULLY, FOR MADHAVI RAKSHA SANKALPA THE A.O. DENIED THE EXEMPTION ON THE GROUND THAT TH E EXERCISE OF OPTION IS INVALID AS THE ASSESSEE HAS NOT SPECIFIED ANY REASON FOR EXERCISE OF THIS OPTION, WHICH IS MANDATORY IN LAW AND IN THE ABSENCE THEREOF THE ASSESSEE IS NOT ENTITLED FOR BE NEFIT OF THIS OPTION AND HENCE AN UNSPENT AMOUNT OF RS.1,35,70,000/- DUR ING THE YEAR WAS TAXED AS INCOME UNDER THE HEAD INCOME FROM OTH ER SOURCES BY THE AO VIDE ASSESSMENT ORDER DATED 22-03-2013 PA SSED BY THE AO U/S 143(3) OF 1961 ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 22-03-20 13 PASSED BY THE DDIT (EXEMPTION)-1(1) I.E. THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO REJECTED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE THIRD PARTY VERIFIC ATION OF DONORS WAS NOT POSSIBLE BY THE A.O. DUE TO INCOMPLETE IDEN TITY AND ADDRESS OF THE DONORS WHICH WAS VAGUE AND GENERAL . THE LD. CIT(A), THEREFORE, HELD THAT THE CORPUS DONATIONS OF RS. 2, 42,26,508/- RECEIVED BY THE ASSESSEE TRUST DURING THE YEAR WAS ASSESSEES INCOME IN THE ABSENCE OF IDENTITY AND ADDRESS OF TH E DONORS BEING NOT VERIFIABLE AS GENUINENESS OF THE TRANSACTION RE MAINED UNPROVED , AND HENCE THE SAME COULD NOT BE CONSIDERED AS COR PUS DONATION , THUS KEEPING IN VIEW PROVISIONS OF SECTION 13(7) OF 1961 ACT , THE SAID ANONYMOUS DONATIONS ARE LIABLE TO BE TAXED U/S 115 BBC OF THE ACT . SIMILARLY, THE AO DENIED THE EXEMPTION AMOUNT OF RS. 1,35,70,000/- AS THE ASSESSEE HAS NOT SPECIFIED THE REASON FOR EXERCISE OF SUCH UNUTILIZED AMOUNT OF INCOME, WHICH IS MANDATORY AND IN THE INSTANT CASE THE ASSESSEE FAILED TO SPEC IFY THE REASONS FOR ACCUMULATION OF INCOME . THE OPTION GIVEN IN TH E OPINION OF LEARNED CIT(A) WAS GENERAL REASONS AND ARE NOT A SP ECIFIED REASONS AS PLANS OF THE PROPOSED EXPENDITURE WERE N OT FINALIZED AND HENCE IT IS AN UNSPECIFIED ACCUMULATION FOR UNC ERTAIN/CONTINGENT PROJECT WHICH IS NOT IN FULFILLMENT OF NOTICE IN FO RM NO. 10 OF THE ACT ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 7 PRESCRIBED IN THIS BEHALF. IN NUTSHELL, THE LD. CIT (A) CONFIRMED BOTH THE ADDITIONS, VIDE APPELLATE ORDERS DATED 10-02-20 14 PASSED BY LEARNED CIT(A). 5. AGGRIEVED BY THE APPELLATE ORDER DATED 10-02-201 4 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DONATIONS WERE RECEIVED BY THE ASSESSEE AGAINST THE CORPUS FU ND AND THEY ARE NOT ANONYMOUS DONATIONS. IT IS SUBMITTED THAT A LL THE DONATIONS WERE ACCOMPANIED BY LETTERS OF DIRECTIONS OF THE DO NORS THAT THEY SHALL FORM PART OF CORPUS FUND. IT WAS SUBMITTED TH AT AUTHORITIES BELOW ERRED IN REJECTING THE CLAIM OF THE ASSESSEE AND BRINGING TO TAX THE SAID CORPUS DONATIONS AS ANONYMOUS DONATION S UNDER SECTION 115BC OF 1961 ACT . THE LEARNED COUNSEL SUB MITTED THAT IDENTITY, PAN AND ADDRESSES OF THE DONORS WILL BE S UBMITTED IF ONE MORE OPPORTUNITY IS PROVIDED TO THE ASSESSEE. HOWEV ER, THE LD. COUNSEL SUBMITTED THAT IF AN OPPORTUNITY IS GIVEN T O THE ASSESSEE, THE ASSESSEE CAN PRODUCE THE SAID DONORS BEFORE THE A.O. AND ALSO FURNISH THE PAN AND ADDRESS OF ALL THE DONORS. SIMI LARLY, WITH RESPECT TO GROUND NO. 5 AND, IT IS SUBMITTED THAT T HE ASSESSEE TRUST IS A REGISTERED TRUST UNDER SECTION 12A OF 1961 ACT . IT WAS SUBMITTED THAT 85% OF THE AMOUNT OF INCOME RECEIVED WAS SPENT AND ONLY 15% OF THE INCOME RECEIVED WAS ACCUMULATED FOR BEING SP ENT DURING THE NEXT YEAR. IT WAS SUBMITTED THAT NO SPECIFIC PURPOS E WAS GIVEN BUT THE UN-SPENT AMOUNT IS ACCUMULATED TO BE SPENT FOR PURPOSES OF THE TRUST. THE LEARNED COUNSEL DREW OUR ATTENTION TO NE WLY INTRODUCED FORM NO 9A WHICH IS TO BE SUBMITTED FOR ACCUMULATIO N U/S 11(1) OF 1961 ACT WHILE OUR ATTENTION WAS DRAWN TO FORM NO 1 0 WHICH IS FOR ACCUMULATION U/S 11(2) OF 1961 ACT. THE LD. COUNSEL DREW OUR ATTENTION TO FORM 9A WHEREBY THERE IS NO REQUIREMEN T TO SPECIFY THE PURPOSE OF RETAINING THE AMOUNT UNSPENT AND IT WAS CLAIMED THAT THE SAME CAN BE SPENT IN THE NEXT YEAR FOR THE PURPOSES OF THE TRUST. 7. THE LD. D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE- TRUST IS REGISTERED U/S 12A OF 1961 ACT WITH DIT(E) , MUMBAI BEARING NO. TR/25225 AND ALSO REGISTERED WITH CHARITY COMMI SSIONER , MUMBAI. WE HAVE OBSERVED THAT THE ASSESSEE HAS SHOW N ADDITIONS TO CORPUS DONATIONS TO THE TUNE OF RS. 2,42,26,508/ - . THE ASSESSEE HAS SUBMITTED IN PAPER BOOK FILED WITH THE TRIBUNAL COPIES OF SOME OF SUCH DIRECTION LETTERS OF DONATION ISSUED BY THE DO NORS WHEREBY INSTRUCTIONS ARE ISSUED BY THE DONORS THAT THE DONA TIONS SHALL FORM PART OF THE CORPUS OF THE TRUST. THE SAID LETTERS O F DONATIONS ARE PLACED IN PAPER BOOK PAGE 35-123. THE NAMES OF THE DONORS WERE GIVEN IN THE SAID LETTERS BUT THE ADDRESSES AND PAN OF THE DONORS WERE NOT GIVEN. THESE ARE STANDARD LETTERS WHICH AR E IDENTICAL FOR ALL THE DONORS. THE SAID LETTERS CONTAINED THE NAME OF VILLAGE/TALUKA/DISTRICT AND STATE OF THE DONOR BUT THE ADDRESSES, ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 8 FATHERS NAME AND PAN OF THE DONORS ARE NOT THERE. ANOTHER PECULIAR FEATURE IS THAT IT IS A COMMON DIRECTION L ETTER ISSUED BY MULTIPLE DONORS RANGING FROM 2-5 DONORS AND DEMAND DRAFT/PAY ORDER MENTIONED IN SAID COMMON DONATION LETTER ARE ALSO SAME BEING CONSOLIDATED AMOUNT COVERED FOR THE DONATION IN THE SAID LETTER AS DONATED BY 2-5 DONORS. WE FIND THAT ASSES SEE IS NOT A RELIGIOUS TRUST HENCE THE AMOUNT IS HIT BY PROVISIO NS OF SECTION 115 BBC OF THE ACT AND THE ONUS IS ON THE ASSESSEE TO P ROVE THAT IT IS COVERED BY EXCEPTIONS TO CHARGEABILITY TO TAX AS IS PROVIDED BY PROVISIONS OF SECTION 115BBC OF 1961 ACT, NAMELY TH AT THE ASSESSEE MAINTAINED A RECORD OF THE IDENTITY INDICA TING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED OR ELSE IT IS A RE LIGIOUS TRUST. SECTION 115BBC OF 1961 ACT IS REPRODUCED HEREUNDER: [ANONYMOUS DONATIONS TO BE TAXED IN CERTAIN CASES . 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-CL AUSE (IIIAD) OR SUB-CLAUSE (VI) OR ANY HOSPITAL OR OTHER INSTITU TION REFERRED TO IN SUB-CLAUSE (IIIAE) OR SUB-CLAUSE (VIA) OR ANY FUND OR INSTITUTION REFERRED TO IN SU B-CLAUSE (IV) OR ANY TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) OF CLAUSE (23C) OF SECTION 10 OR ANY TRUST OR INSTITUTION REF ERRED TO IN SECTION 11, INCLUDES ANY INCOME BY WAY OF ANY ANONY MOUS DONATION, THE INCOME-TAX PAYABLE SHALL BE THEAGGREG ATE OF (I) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCO ME BY WAY OF ANY ANONYMOUS DONATION, AT THE RATE OF THIRT Y PER CENT; 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 SUBSTITUTED FOR THE E XISTING 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 RE CEIVED 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 BEEN REDU CED BY THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY TO ANY ANONYMOUS DONATION RECEIVED BY ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 9 (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 T RUST OR INSTITUTION. (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 R ECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKIN G SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED.] THE ASSESSEE IN THE INSTANT CASE COULD NOT PROVIDE ADDRESSES, FATHERS NAME AND PAN OF THE DONORS AND THE ASSESSE E IS ALSO NOT A RELIGIOUS TRUST TO BE COVERED UNDER EXCEPTION. THE ASSESSEE HAS COME FORWARD WITH A REQUEST THAT IF AN OPPORTUNITY IS GIVEN TO THE ASSESSEE, THE ASSESSEE CAN PRODUCE THE DONORS BEFOR E THE AO AS DIRECTED BY THE AO. IT IS ALSO SUBMITTED THAT PAN A ND ADDRESSES OF ALL THE DONORS FOR VERIFICATION BY THE A.O. WILL ALSO B E FURNISHED FOR VERIFICATION BY THE AO. CONSIDERING THE FACTUAL MAT RIX OF THE CASE , KEEPING IN VIEW THE PROVISIONS OF SECTION 115BBC OF 1961 ACT AND IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE ARE OF CO NSIDERED VIEW THAT THIS MATTER NEEDS TO BE SET ASIDE AND RESTORED TO THE FI LE OF THE A.O FOR NECESSARY ENQUIRY AND VERIFICATION OF THE SAID DONA TIONS SO RECEIVED BY THE ASSESSEE AS TO GENUINENESS AND ALSO FOR VERI FYING COMPLIANCE OF THE RELEVANT SECTION 115BBC OF 1961 ACT. THE ONU S AS WELL BURDEN OF PROOF IS ENTIRELY ON THE ASSESSEE TO PROVIDE TO THE AO ALL RELEVANT DETAILS AS CONTEMPLATED UNDER SECTION 115BBC OF 196 1 ACT TO THE SATISFACTION OF THE AO AS TO COMPLIANCE OF SECTION 115BBC OF 1961 ACT AND AS TO GENUINENESS OF THE SAID DONATION. THE ASSESSEE IS DIRECTED TO FURNISH PAN , ADDRESSES AND ALL OTHER R ELEVANT DETAILS OF ALL THE SAID DONORS BEFORE THE AO TO SATISFY MANDAT E OF SECTION 115BBC OF 1961 ACT. THE ASSESSEE IS DIRECTED TO PRO DUCE BEFORE THE AO DONORS , 25% IN NUMBERS FOR DONATION UP-TO RS 20 ,000/- AND 10% IN NUMBER FOR DONATIONS ABOVE RS.20,000/- TO SATISF Y THE AO ABOUT COMPLIANCE OF MANDATE OF SECTION 115BBC OF THE ACT AND GENUINENESS OF THE SUCH DONATIONS. THE SELECTION OF DONORS SHALL BE ON RANDOM BASIS AT THE SOLE DISCRETION OF THE AO , WHICH SHORT LISTED LIST OF DONORS SHALL BE SUPPLIED BY THE AO TO THE A SSESSEE FOR NECESSARY COMPLIANCE AS PER OUR ABOVE DIRECTIONS. I F SO REQUIRED FOR ENSURING COMPLIANCE OF SECTION 115BBC OF 1961 ACT A ND FOR ESTABLISHING GENUINENESS OF THE SAID DONATIONS OF R S. 2,42,26,508/-, THE AO CAN ENHANCE THE NUMBER OF PERSONS TO BE PROD UCED BY THE ASSESSEE BEFORE HIM HIGHER THAN MINIMUM STIPULATED BY US AS ABOVE. SIMILARLY, WITH RESPECT TO THE DENIAL OF THE EXEMPT ION AMOUNT TO THE TUNE OF RS. 1,35,70,000/- FOR 15% OF INCOME BEING S ET ASIDE FOR ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 10 ACCUMULATION TO BE SPENT FOR CHARITABLE PURPOSES IN THE NEXT YEAR AS PROVIDED U/S 11(1) OF 1961 ACT. THE ASSESSEE HAD ST ATED THAT THE TRUST WAS ACTIVELY CONSIDERING LAUNCHING OF PROJECT S IN THE NEXT YEAR AFTER PLANS ARE FINALIZED AND THE AMOUNT SO ASIDE W AS SPENT IN THE NEXT YEAR. IN OUR CONSIDERED VIEW AND IN THE INTERE ST OF JUSTICE AND FAIR PLAY, THIS CLAIM OF THE ASSESSEE THAT THE SAID AMOU NT WAS KEPT FOR LAUNCHING OF PROJECT NEXT YEAR AFTER PLANS ARE FINA LIZED AND WAS SPENT IN THE NEXT YEAR ACCORDINGLY ALSO NEED VERIFICATION AND AS SUCH THE MATTER IS SET ASIDE AND RESTORED TO THE FILE OF THE A.O. FOR PROPER VERIFICATION WITH RESPECT TO THE CONTENTIONS OF THE ASSESSEE TO BE DECIDED BY THE AO IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD SHAL L BE PROVIDED BY THE AO TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLE S OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. THE EVIDENCES AND C ONTENTIONS OF THE ASSESSEE IN ITS DEFENSE SHALL BE ADMITTED BY THE AO IN SET ASIDE PROCEEDINGS IN THE INTEREST OF JUSTICE. WE ORDER AC CORDINGLY. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 2746/MUM/2014 FOR ASSESSMENT YEAR 2010-11 IS ALLOWE D FOR STATISTICAL PURPOSES AS INDICATED ABOVE. 2.2. WE NOTE THAT WHILE ANALYZING THE QUANTUM ADDITION IN THE CASE OF THE ASSESSEE, THE TRIBUNAL VIDE AFORESAID ORDER DATED 26/04/2017 OBSERVED THAT THE MATTER NEEDS VERIFICATION WITH RESPECT TO THE DONATIONS, R ECEIVED BY THE ASSESSEE AND ITS GENUINENESS AND ALSO FOR VERIF YING COMPLIANCE OF SECTION 115BBC OF THE ACT, THE BURDEN IS ENTIRELY UPON THE ASSESSEE. THE ASSESSEE STATED THA T THE TRUST WAS ACTIVELY CONSIDERING LAUNCHING OF PROJECT S IN THE NEXT YEAR AFTER THE PLANS ARE FINALIZED AND THE AMO UNT SO SET-ASIDE WAS SPENT IN THE NEXT YEAR. THE TRIBUNAL AFTER CONSIDERING THE FACTUAL MATRIX REMANDED THE MATTER BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR VERIFICAT ION. THE ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 11 PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPO SED ON THE BASIS OF THE ABOVE FACTUAL MATRIX. THUS, SINCE, THE QUANTUM ADDITION HAS BEEN SET-ASIDE TO THE FILE OF THE LD. ASSESSING OFFICER, THEREFORE, THE PRESENT PENALTY W ILL BE DEPENDENT UPON THE OUTCOME OF THE SAID ASIDE PROCEE DINGS, THEREFORE, WE DEEM IT APPROPRIATE TO SET-ASIDE THIS PENALTY APPEAL ALSO TO THE FILE OF THE LD. ASSESSING OFFICE R AND THUS ALLOWED FOR STATISTICAL PURPOSES. THE ASSESSEE BE G IVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH NECESSARY EVIDENCE, IF ANY, IN SUPPORT OF ITS CLAIM . FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 19/12/2018. SD/- (M. BALAGANESH) SD/- (JOGINDER SINGH) / ACCOUNTANT MEMBER / VICE PRESIDENT + , MUMBAI; 1$ DATED : 19/12//2018 F{X~{T? P.S/. #$. . ITA NO.7600/MUM/2016 MADHAVI RAKSHA SANKALP ASSESSMENT YEAR-2010-11 12 !'#$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. 234 / THE APPELLANT 2. 5634 / THE RESPONDENT. 3. 7! 7 + 8( , ( 2 ) / THE CIT, MUMBAI. 4. 7! 7 + 8( / CIT(A)- , MUMBAI 5. :*;5#(#$% , 7! 2.2%! , + / DR, ITAT, MUMBAI 6. <&= / GUARD FILE. !' / BY ORDER, / (DY./ASSTT.REGISTRAR) , + / ITAT, MUMBAI