The Ancient Pattern Pentecostal Church, Visakhapatnam V. THE DCIT, CIRCLE - 4(1), Visakhapatnam

ITA 83/VIZ/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8918 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1994-1995
• Appeal Filed On: 10-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K DEVA RATHNA KUMARCIT
• Keywords: Charitable institution; Opportunity of being heard; Condonation of delay; Revenue expenditure; Capital expenditure
• Section: 12A; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 81 TO 86 & 88/VIZ/2014 (ASST. YEAR : 1992-93 TO 1997-98 & NIL) THE ANCIENT PATTERN PENTECOSTAL CHURCH, RAILWAY NEW COLONY, VISAKHAPATNAM. V. DCIT, CIRCLE-4(1), VISAKHAPATNAM. PAN NO. AAATT 7285 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADVOCATE. DEPARTMENT BY : SHRI K. DEVA RATHNA KUMARCIT DR DATE OF HEARING : 18/04/2017. DATE OF PRONOUNCEMENT : 28/04/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE ARE THE APPEALS FILED BY THE SAME ASSESSEE AGAINST THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM, EACH DATED 10/09/2013 FOR THE ASSESSMENT YEARS 1992-93 TO 1997-98. SINCE, FACTS ARE IDENTICAL AND ISSUES ARE SAME, THEY ARE CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO.81/VIZ/2014 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 1992-93 BY DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DONATIONS RECEIVED AS EXEMPTION WITHOUT HAVING REGISTRATION 2 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT'). THE ASSESSEE HAS SHOWN THAT IT HAS RECEIVED RS.5,46,409/- DURING THE YEAR TOWARDS CORPUS FUND OF THE SOCIETY, OUT OF WHICH RS.1,00,208/- WAS UTILIZED AND THE BALANCE AMOUNT OF RS. 4,07,139/-. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE DID NOT HAVE REGISTRATION UNDER SECTION 12A OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT AND REOPENED THE ASSESSMENT. THEREAFTER, ASSESSING OFFICER AFTER FOLLOWING DUE PROCEDURE, COMPLETED THE ASSESSMENT BY DETERMINING THE TOTAL INCOME OF RS. 5,62,420/-. ON APPEAL, LD. CIT(A) DELETED THE ENTIRE ADDITION. IN DEPARTMENTAL APPEAL, THE ITAT, VISAKHAPATNAM VIDE ITS ORDER DATED 17/01/2006 IN ITA NO. 456/V/2003, SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMITTED THE MATTER BACK TO THE ASSESSING OFFICER FOR EXAMINING THE ISSUE AFRESH IN THE LIGHT OF DECISION OF THE HYDERABAD BENCH IN THE CASE OF M/S. NIRMAL AGRICULTURAL SOCIETY VS. ITO (71 ITD 152), AFTER PROVIDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3 . IN PURSUANCE OF THE ORDER PASSED BY THE ITAT, THE ASSESSING OFFICER CALLED THE ASSESSEE TO PRODUCE EVIDENCE IN THE FORM OF BOOKS OF ACCOUNT, BILLS AND VOUCHERS IN RESPECT OF ITS CLAIM OF CAPITAL EXPENDITURE AS WELL AS REVENUE EXPENDITURE. THE COUNSEL FOR THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER, BUT COULD NOT PRODUCE THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS AND SUBMITTED THAT THE FOUNDER MEMBER OF THE SOCIETY MR. K. DAVID RAJU WAS DIED AND BOOKS ARE NOT TRACEABLE. IN VIEW OF THE SUBMISSIONS MADE BY THE ASSESSEES COUNSEL, THE 3 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) ASSESSING OFFICER BY CONSIDERING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. NIRMAL AGRICULTURAL SOCIETY (SUPRA), HAS NOTED THAT THE ASSESSEE HAS FAILED TO FURNISH THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS, THE CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE AND ASSESSED THE ENTIRE DONATION OF RS. 5,62,420/- AS ASSESSEES INCOME. 4. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 5,62,420/- AS A CORPUS FUND AND IT CANNOT BE TREATED AS INCOME OF THE SOCIETY AND CANNOT BE TAXED. IT IS ALSO THE SUBMISSION OF ASSESSEE BEFORE THE LD. CIT(A) THAT THE FOUNDER MEMBER OF THE SOCIETY MR. K. DAVID RAJU HAS DIED AND BOOKS OF ACCOUNT ARE NOT LOCATED. THEREFORE, THE DONATIONS RECEIVED BY THE ASSESSEE MAY BE TREATED AS CORPUS DONATIONS. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, DIRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME OF THE ASSESSEE AS AN AOP AT 75% OF THE GROSS RECEIPTS FOR THE YEAR. 5. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE- SOCIETY HAS RECEIVED CORPUS DONATIONS FOR A SPECIFIC PURPOSE, WHICH CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE-SOCIETY. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS NOT ABLE TO SUBMIT BOOKS OF ACCOUNT, BILLS AND VOUCHERS DUE TO DEATH OF THE FOUNDER MEMBER MR. K. DAVID RAJU, THEREFORE, HE PRAYED THAT DONATIONS RECEIVED BY THE ASSESSEE-SOCIETY HAS TO BE TREATED AS CORPUS DONATIONS. 4 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) 7 . PER CONTRA , LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS RECEIVED DONATIONS AND HAD NOT FILED ANY DETAILS, THE PURPOSE FOR WHICH DONATIONS ARE RECEIVED, AS TO HOW EXPENDITURE HAS BEEN INCURRED, THEREFORE, THE DONATIONS RECEIVED BY THE ASSESSEE HAS RIGHTLY BEEN TREATED AS INCOME OF THE ASSESSEE SUBMITTED THAT APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE REGISTRATION OF SOCIETIES ACT, FOR THE ASSESSMENT YEAR 1992-93, THE ASSESSEE DID NOT HAVE A REGISTRATION UNDER SECTION 12A OF THE ACT. THE MAIN OBJECT OF THE SOCIETY AS PER THE MOA IS AS UNDER:- (A) THE PROGRAMME OF THIS BODY SHALL FIRST AND FOREMOST INCLUDE THE SPREADING OF SPIRITUAL AND MORAL PREACHING AND ALSO SPIRITUAL EDUCATIONS AND SOCIAL SERVICE PROVIDED TO THE EXCEIPIENTS NO CHARGE TO THEM IRRESPECTIVE OF CASTE, RELIGION AND CREED, ARE FOLLOWS:- (I) SPIRITUAL AND MORAL SERVICE TO THE MASSES (II) TO EXTEND AND ESTABLISH AND ALSO TO RUN SCHOOLS, ORPHANAGES, WIDOWS HOMES AND OTHER CHARITABLE INSTITUTIONS. (III) SHELTER HOMES FOR THE AGED AND HOMELESS (IV) ANY OTHER SERVICES WHICH MIGHT TO NEEDED FOR BETTERMENT OF THE PEOPLE. (A) VARIOUS METHODS AND PROGRAMMES SHALL BE EMPLOYED AND INSTITUTIONS MIGHT TO BE ESTABLISHED FOR THEM MOST EFFECTIVE PRACTICAL FULFILLMENT FOR THESE PURPOSES AND OBJECTIVES AND TO THE HIGHEST EXALTATION OF THE LORD JESUS CHRIST AND MORAL STANDARDS OF THE MASSES. (B) PROGRAMME AND SERVICE INSTITUTIONS SHALL BE GIVEN PRIORITY IN THE MISSION IN PROPORTION OF THEIR CONTRIBUTION TOWARDS FULFILLMENT OF THE ABOVE STATED PURPOSE OBJECTIVES AND SHALL NOT BE PERMITTED TO BECOME ENDS IN THEMSELVES. (C) THE MESSAGE OF THE 'THE ANCIENT PATTERN PENTECOSTAL CHURCH' SHALL CONSTITUTE THE DOCTRINAL POSITION OF THE NEW GOSPELL PATTERN, FOR GUIDANCE. 10 . THE CASE OF THE ASSESSEE IS THAT HE RECEIVED SUBSTANTIAL DONATIONS FROM ABROAD, WHICH ARE IN THE NATURE OF CORPUS DONATIONS. WHEN ASSESSING OFFICER ASKED, ASSESSEE IS NOT FILED ANY BOOKS OF 5 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) ACCOUNT AND DETAILS IN RESPECT OF DONATIONS RECEIVED. THEREFORE, ASSESSING OFFICER HAS REJECTED THE CLAIM OF THE ASSESSEE FOR THE REASON THAT ASSESSEE FAILED TO PROVE THE DONATIONS RECEIVED ARE CORPUS DONATIONS. THE ASSESSEE ALSO CLAIMED THAT HE HAS INCURRED AN AMOUNT OF RS. 1,00,208/- WHICH ARE IN THE NATURE OF REVENUE, HOWEVER, NOT FILED ANY DETAILS OF THE EXPENDITURE INCURRED. THEREFORE, THE ASSESSING OFFICER HAS TREATED THE ENTIRE DONATIONS RECEIVED BY THE ASSESSEE OF RS.5,62,420/- AS INCOME OF THE ASSESSEE. 11 . SO FAR AS THE DECISION IN THE CASE OF M/S. NIRMAL AGRICULTURAL SOCIETY (SUPRA), THE ASSESSING OFFICER AS WELL AS LD. CIT(A) HAS CONSIDERED THE DECISION AND OBSERVED THAT THE FACTS ARE ENTIRELY DIFFERENT IN THE CASE ON HAND. WE HAVE ALSO CONSIDERED THE CASE OF M/S.NIRMAL AGRICULTURAL SOCIETY (SUPRA), WHICH HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. IN THIS CASE, THE ASSESSEE IS NOT ABLE TO FILE ANY BOOKS OF ACCOUNT TO SHOW THAT THE PURPOSE FOR WHICH DONATIONS ARE RECEIVED. THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE DONAR HAD SENT THE DONATIONS FOR SPECIFIC PURPOSE. THE LD. CIT(A) HAS ALSO CONSIDERED THE FORM FC-3 FILED UNDER THE FOREIGN CONTRIBUTION ACT AND GAVE A FINDING THAT THERE IS NO INFORMATION IN THESE REPORTS THAT THE CONTRIBUTION WAS RECEIVED FOR THE PURPOSES SPECIFIED BY THE DONAR. EVEN BEFORE US, THE ASSESSEE IS NOT ABLE TO FILE ANY EVIDENCE TO SHOW THAT THE CONTRIBUTIONS RECEIVED BY THE ASSESSEE ARE CORPUS IN NATURE AND ALSO HE IS NOT ABLE TO FILE ANY EVIDENCE TO SHOW THAT HE HAS INCURRED SOME EXPENDITURE FOR THE PURPOSE OF RUNNING ASSESSEE-SOCIETY. THE LD. CIT(A) BY CONSIDERING ALL 6 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) THE SUBMISSIONS OF THE ASSESSEE, PASSED A DETAILED ORDER. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREUNDER:- 5.5 1 HAVE CAREFULLY CONSIDERED THE DETAILS FLED IN THE FORM OF PAPER-BOOK AND OTHER SUBMISSIONS MADE. THE APPELLANT IS A SOCIETY REGISTERED UNDER THE REGISTRATION OF SOCIETIES ACT. FOR THE RELEVANT YEAR E, THE PREVIOUS RELEVANT FOR ASSESSMENT YEAR 1992-93 IT DID NOT HAVE REGISTRATION U/S. 12A OF THE I.T. ACT. THE OBJECTIVES OF THE SOCIETY AS PER THE MOA IS AS UNDER: (A) THE PROGRAMME OF THIS BODY SHALL FIRST AND FOREMOST INCLUDE THE SPREADING OF SPIRITUAL AND MORAL PREACHING AND ALSO SPIRITUAL EDUCATIONS AND SOCIAL SERVICE PROVIDED TO THE EXCEIPIENTS NO CHARGE TO THEM IRRESPECTIVE OF CASTE, RELIGION AND CREED, ARE FOLLOWS:- (I) SPIRITUAL AND MORAL SERVICE TO THE MASSES (II) TO EXTEND AND ESTABLISH AND ALSO TO RUN SCHOOLS, ORPHANAGES, WIDOWS HOMES AND OTHER CHARITABLE INSTITUTIONS. (III) SHELTER HOMES FOR THE AGED AND HOMELESS (IV) ANY OTHER SERVICES WHICH MIGHT TO NEEDED FOR BETTERMENT OF THE PEOPLE. A) VARIOUS METHODS AND PROGRAMMES SHALL BE EMPLOYED AND INSTITUTIONS MIGHT TO BE ESTABLISHED FOR THEM MOST EFFECTIVE PRACTICAL FULFILLMENT FOR THESE PURPOSES AND OBJECTIVES AND TO THE HIGHEST EXALTATION OF THE LORD JESUS CHRIST AND MORAL STANDARDS OF THE MASSES. B) PROGRAMME AND SERVICE INSTITUTIONS SHALL BE GIVEN PRIORITY IN THE MISSION IN PROPORTION OF THEIR CONTRIBUTION TOWARDS FULFILLMENT OF THE ABOVE STATED PURPOSE OBJECTIVES AND SHALL NOT BE PERMITTED TO BECOME ENDS IN THEMSELVES. C) THE MESSAGE OF THE 'THE ANCIENT PATTERN PENTECOSTAL CHURCH' SHALL CONSTITUTE THE DOCTRINAL POSITION OF THE NEW GOSPELL PATTERN, FOR GUIDANCE. 5.6 IT WAS REPRESENTED THAT THE SOCIETY HAD RECEIVED SUBSTANTIAL DONATIONS FROM ABROAD SAID TO BE FROM THE DONOR GOSPEL TO THE UNREACHED MILLIONS. IT WAS CONTENDED THAT THESE WERE TIED UP FUNDS AND WERE SENT FOR SPECIFIC PURPOSES WHICH ARE CHARITABLE IN NATURE LIKE MAINTENANCE OF ORPHANAGES, LEPROSY HOMES, SHELTER FOR AGED, SUPPORT TO WIDOWS. IT WAS ALSO CONTENDED THAT THE DECISION OF THE HONBLE ITAT, HYDERABAD IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY WAS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. IT WAS SUBMITTED THAT THE BOOKS OF ACCOUNTS AND OTHER RELEVANT PAPERS ROUND NOT HE SUBMITTED DUE TO THE DEATH OF THE FOUNDER MR. DAVID RAJU AND DUE TO THE LITIGATION BETWEEN HIM AND OTHER GROUP WITHIN THE SOCIETY. IT WAS FURTHER CONTENDED THAT THE AUDITED INCOME AND EXPENDITURE STATEMENT AND BALANCE-SHEET FLIED AND THE REPORT SUBMITTED IN F&3 UNDER THE FOREIGN CONTRIBUTION ACT ARE EVIDENCE TO SHOW THAT THE APPELLANT HAD CARDED ON CHARITABLE ACTIVITIES, AND THAT THE DONATIONS RECEIVED WERE UTILIZED FOR THE PURPOSE FOR WHICH IT WAS RECEIVED . 53 THE PRINCIPAL CONTENTION OF THE AR WAS THAT THE DECISION IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY WAS SQUARELY APPLICABLE TO THEM AND ON THAT BASIS IT WAS ARGUED THAT AS COULD NOT ASSESS THE CORPUS DONATION TO TAX. IT MAY BE SEEN THAT IN THAT CASE THE HN'BLE LFAT, HYDERABAD TOOK THE FOLLOWING VIEW:- . 'THE ASSESSEE HAS NOT BEEN GRANTED REGISTRATION UNDER S.12A, AS THE CIT, THOUGHT IT FIT TO REFUSE TO CONDONE THE LONG DELAY CAUSED BY THE ASSESSEE IN 7 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) APPLYING FOR THE REGISTRATION. THEREFORE, THE AO HAD NO OTHER GO BUT TO COMPLETE THE ASSESSMENTS IN THE STATUS OF AOP AND ALSO CLOSING HIS EYES TOWARDS S.11 AND S.13. TO THAT EXTENT HE HAS ACTED ONLY ACCORDING TO WILL OF LAW. EVEN WHEN THE ASSESSEE HAS BEEN ASSESSED AS AOP DEPRIVED OF S.11 BENEFITS, THE AO COULD ASSESS ONLY NET INCOME OF THE ASSESSEE AND NOT GROSS RECEIPTS AS FAR AS THE ASSESSEE IS CONCERNED, CONSTRUCTION OF HOUSES, RECLAMATION OF LAND, ETC ARE PART OF AS REGULAR ACTIVITIES. HOUSES ARE BUILT ON THE LAND OF POOR AGRICULTURISTS. THE ASSESSEE-SOCIETY HAS NO LEGAL TITLE OR RIGHT OVER THE LAND OR HOUSES OF THOSE VILLAGERS/AGRICULTURISTS WHO ARE THE BENEFICIARIES. THE PURPOSE AND ACTIVITY OF THE ASSESSEE SOCIETY IS TO ENGAGE IN SUCH CHARITABLE ACTIVITIES. WHATEVER AMOUNT HAS BEEN SPENT ON THOSE PROGRAMMES /PREVIOUSLY THEY WERE SPENT IN THE USUAL COURSE OF CARRYING ON ITS ACCLAIMED OBJECTS THEREFORE, THERE IS NO BASIS WHATSOEVER, FACTUAL OR LEGAL TO HOLD THAT THE AMOUNTS SPENT BY THE ASSESSEE IS CONSTRUCTING HOUSES OR RECLAIMING LAND ARE CAPITAL EXPENDITURE. AS FAR AS THE ASSESSEE CONCERNED, THOSE EXPENSES ARE REVENUE EXPENSE. THE ASSESSEE HAS NO RIGHT OR TITLE OVER THOSE PROPERTIES THOSE EXPENSES WERE INCURRED AS PART OF ITS NORMAL ACTIVITIES FOR WHICH THE SOCIETY WAS FORMED THEREFORE, THE MONEY SPENT BY THE ASSESSEE- SOCIETY IN CONSTRUCTING HOUSES, RECLAIMING THE LAND, FOR NON FORMAL EDUCATION ETC HAS TO BE ALLOWED AS DEDUCTION IN THE COMPUTATION OF INCOME. 5.8 THE AR'S ARGUMENT WAS THAT THE DECISION OF THE HONBLE ITAT IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY IS APPLICABLE TO THE PRESENT CASE AS THE ITPT HELD THAT TIED UP GRANTS RECEIVED FROM THE DONOR WILL BE TAKEN OUT OF THE COMPUTATION OF INCOME FROM THE INCOME SIDE. 5.9 BEFORE GOING FURTHER INTO THIS ARGUMENT, IT IS NECESSARY TO ADVERT TO THE DIRECTION GIVEN BY THE HONBLE ITAT, VISAKHAPATNAM IN THE APPELLANT'S CASE IN ITA NOS. 99,153,244,245&246/VIZAG/2003. THE HONBLE ITAT OBSERVED AS UNDER:- 'THE FACTS WHICH IS NOT DISPUTED IS THAT THE ASSESSEE DID NOT HAVE REGISTRATION UNDER SECTION 12A OF THE ACT FOR ALL YEARS UNDER CONSIDERATION. HENCE IT IS CLEAR THAT THE ASSESSEE COULD NOT CLAIM EXEMPTION AS PROVIDED FOR UNDER SECTIONS 11TO 13 OF THE ACT. THE ASSESSING OFFICER ASSESSED THE ENTIRE GROSS RECEIPTS WITHOUT ALLOWING ANY DEDUCTION, WHICH MEANS THAT THE ASSESSING OFFICER DID NOT VERIFY THE CLAIM OF AMOUNT SPENT. WE NOTICE THAT THE LEARNED CIT(A) HAS SIMPLY ACCEPTED THE VERSION OF THE ASSESSEE AND IT IS NOT BORNE OUT OF RECORD WHETHER ANY VERIFICATION OF THE CLAIMS OF EXPENDITURE WAS MADE BY HIM. THE LEARNED D.R. ALSO CONTENDS THAT THE DECISION OF HYDERABAD BENCH OF ITAT IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY IS DISTINGUISHABLE AND HIS CONTENTION ALSO NEEDS PROPER EXAMINATION. HENCE WE ARE OF THE VIEW THAT THE ENTIRE ISSUE NEEDS TO BE EXAMINED IN THE LIGHT OF THE DECISION RENDERED BY THE HYDERABAD BENCH IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY, (SUPRA). ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) IN ALL THESE YEARS AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE EXPENDITURE CLAIM OF THE ASSESSEE IN THE LIGHT OF DECISION OF HYDERABAD BENCH IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY (SUPRA) AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5.10 IN THE LIGHT OF THE ABOVE OBSERVATION OF THE HON'BLE ITAT, THE AO IS MANDATED TO EXAMINE THE EXPENDITURE CLAIM OF THE APPELLANT. IT HAS BEEN THE CONTENTION OF THE AR THROUGHOUT THAT THE APPELLANT HAD RECEIVED CORPUS FUNDS AND THAT THE FUNDS HAVE BEEN UTILIZED FOR THE SPECIFIC PURPOSES. BUT THE APPELLANT COULD NOT PRODUCE ANY IOTA OF EVIDENCE TO SHOW THAT THE DONOR HAD SENT THE DONATION FOR A SPECIFIED PURPOSE. WHAT WAS THE SPECIFIC DIRECTION OR CONDITION LAID DOWN BY THE DONOR ON THE CONTRIBUTIONS MADE BY IT HAS NOT BEEN BROUGHT ON RECORD. NOT ONLY THAT NO DOCUMENTATION WAS FILED AS TO THE STATED PURPOSE OF THE DONATION WAS RECEIVED BY THE DONOR, THE APPELLANT ALSO FAILED TO SPECIFY THE PURPOSE FOR WHICH THE SO CALLED CORPUS DONATION WAS RECEIVED. IT WAS MERELY ARGUED THAT THE DONATION WAS RECEIVED 8 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) FOR CARRYING CHARITABLE ACTIVITIES AND WAS SENT FOR CHARITABLE PURPOSE SUCH AS CONTRIBUTION TO WIDOW DESTITUTE, MAINTENANCE OF ORPHANAGES ETC., WITHOUT ANY DOCUMENTARY SUPPORT. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE THE CLAIM THAT THE DONATIONS RECEIVED WAS TIED UP FUND AND WAS RECEIVED AND UTILIZED FOR PURPOSES SPECIFIED BY DONOR REMAIN UNSUBSTANTIATED AND NOT PROVED. THERE IS NO MATERIAL OR INFORMATION AVAILABLE ON RECORD TO INDICATE THAT THE DONATION WAS MADE BY THE DONOR FOR A SPECIFIC PURPOSE OR WITH CERTAIN CONDITIONS FOR SPENDING THE AMOUNT. HENCE THE ARGUMENT THAT THE DONATIONS ARE TIED UP FUND AND CONSTITUTE CORPUS HAS NO BASIS AND IS WITHOUT MERIT. 5.11 THE AR ARGUED THAT THE FORM FC-3 FILED UNDER THE. FOREIGN CONTRIBUTION WOULD GO TO SHOW THAT THE DONATIONS RECEIVED WERE TIED UP FUNDS. THE PRESIDENT K. ESTER RANI ALSO FILED AN AFFIDAVIT STATING THAT THE FUNDS WERE TIED UP FUNDS. I HAVE GONE THROUGH THE DETAILS FILED. IT IS SEEN THAT AS PART OF THE PAPER-BOOK COPIES OF FORM FC-3 RELATING TO THE YEARS 1994-95 AND 1995-96 WERE FILED. THESE FORMS WERE NOT FILED FOR THE OTHER ASSESSMENT YEARS IN APPEAL. A PERUSAL OF THE FORMS SHOW THAT IT WAS A REPORT SUBMITTED BY THE SOCIETY UNDER THE FOREIGN CONTRIBUTION ACT AS TO THE AMOUNT OF FOREIGN CONTRIBUTION RECEIVED DURING THE YEAR, THE AMOUNT UTILIZED FOR VARIOUS ACTIVITIES AND THE AMOUNT THAT REMAIN UNUTILIZED. THERE IS NO INFORMATION IN THESE REPORTS THAT THE CONTRIBUTION WAS RECEIVED FOR PURPOSES SPECIFIED BY THE DONOR. THERE IS NO INDICATION IN THESE TERMS THAT THE DONOR HAS MADE THE CONTRIBUTION FOR A PARTICULAR PURPOSE, AND THERE IS NOTHING TO INFER THAT THE CONTRIBUTION REPRESENT TIED UP FUNDS. THE AFFIDAVIT FILED BY THE PRESENT PRESIDENT K. ESTER RANI CANNOT BE GIVEN MUCH CREDENCE AS THE AFFIRMATION MADE BY HER IS NOT OUT OF HER PERSONAL OR DIRECT. KNOWLEDGE NOR WAS IT BASED ON CERTAIN DOCUMENTS OR INFORMATION IN HER POSSESSION. THEREFORE IT IS CONCLUDED THAT AS THERE IS NO MATERIAL EVIDENCE TO SHOW THAT THE DONATION RECEIVED WERE FOR A SPECIFIC PURPOSE OR THAT THE AMOUNTS REPRESENT TIED UP FUNDS OR TOWARDS CORPUS, THESE RECEIPTS WOULD PARTAKE THE CHARACTER OF INCOME UNDER SECTION 12 OF THE I.T.ACT. 5.12 NOW REVERTING TO THE ARGUMENT THAT THE DECISION IN NIRMAL AGRICULTURAL SOCIETY IS SQUARELY APPLICABLE, I FIND THAT THE FACTS AND ISSUES INVOLVED IN NIRMAL AGRICULTURAL SOCIETY ARE DIFFERENT AND IS NOT SQUARELY APPLICABLE TO THE FACTS OF THE CASE. THE SOCIETY IN THAT CASE WAS INVOLVED IN GIVING AID TO POOR AGRICULTURISTS FOR HOUSE CONSTRUCTION AND LAND RECLAMATION. IT HAD ALSO RECEIVED FOREIGN AID WHICH HAD TO BE UTILIZED IN THE MANNER SUGGESTED BY THE DONOR. THE AO, NOTING THAT SOCIETY DID NOT HAVE REGISTRATION U/S 12 ASSESSED IT AS AOP AND HAS INCLUDED REIGN GRANT ALSO AS PART OF ITS TOTAL INCOME. ON THE EXPENSES HE PAID ONLY REVENUE EXPENSES AND HAS NOT ALLOWED THE EXPENSES INCURRED FOR HOUSE CONSTRUCTION, RECLAMATION OF LAND ETC. IN THIS CONTEXT, THE HON'BLE ITAT, HYDERABAD GAVE A FACTUAL FINDING THAT THE SOCIETY THEREIN WAS REGULARLY INVOLVED IN CONSTRUCTION OF HOUSES, RECLAMATION OF LAND AS PART OF REGULAR CHARITABLE ACTIVITIES AND THEY ARE TO BE TREATED AS REVENUE EXPENSES, AND THEREFORE THERE IS NO BASIS TO HOLD THAT THE AMOUNTS SPENT IN CONSTRUCTING HOUSES, RECLAMATION OF [AND ARE OF CAPITAL EXPENDITURE. AS REGARDS THE FOREIGN AID IT WAS FOUND THAT THE GRANT WAS RECEIVED FOR A SPECIFIC PURPOSE AND HENCE IT WAS HELD TO BE NOT IN THE NATURE OF INCOME. IT IS TO BE NOTED THAT IN THAT CASE THERE WAS NO DISPUTE AS TO THE CORPUS NATURE OF THE FOREIGN AID. ON THE OTHER HAND IN THE APPELLANT'S CASE, THE ENTIRE RECEIPTS ARE BY WAY OF DONATION FROM ABROAD; AND THERE IS NO EVIDENCE TO SHOW THAT THE DONATIONS WERE GIVEN WITH A SPECIFIC DIRECTION BY THE DONAR TO SPEND FOR A PARTICULAR PURPOSE. THE ASSESSEE-APPELLANT HAD TREATED SOME PART OF THE DONATION AS REVENUE RECEIPT AND SOME AS CORPUS FUND, AND THERE IS NO MATERIAL BASIS FOR SUCH DISTINCTION AND TREATMENT. AS IT IS NOT PROVED THAT THESE CONTRIBUTIONS ARE MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS AT THE TRUST, THE ENTIRE AMOUNT WOULD TAKE THE CHARACTERISTICS OF INCOME IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 12 OF THE I.T.ACT AND WOULD FORM OF TOTAL INCOME UNLIKE IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY AND AS A RESULT, THE ISSUE OF NATURE OF EXPENDITURE WHETHER REVENUE EXPENDITURE OR CAPITAL EXPENDITURE ARISES, WHICH DISTINGUISHES THE APPLICABILITY OF THE DECISION IN NIRMAL AGRICULTURAL SOCIETY TO 9 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) THE PRESENT CASE. 5.13 IT IS IN THIS CONTEXT THAT THE HON'BLE ITAT, VISAKHAPATNAM IN THE ASSESSEES CASE DIRECTED THE P0 TO EXAMINE THE EXPENDITURE CLAIMED IN THE LIGHT OF THE DECISION IN NIRMAL AGRICULTURAL SOCIETY. IF THE EXAMINATION OF THE BOOKS OF ACCOUNT AND OTHER EVIDENCE SHOW CONTRIBUTIONS RECEIVED TO CORPUS IN THE NATURE OF EXCEPTION PROVIDED IN SECTION 12, THEN SUCH RECEIPTS WOULD NOT BE CONSIDERED AS INCOME OF THE SOCIETY AND ACCORDINGLY THE CORRESPONDING EXPENSES WOULD ALSO BE OUT OF THE TAX COMPUTATION. AS THE ASSESSEE FAILED TO PROVE THAT IT HAD RECEIVED DONATIONS FOR SPECIFIC PURPOSE AS PER THE DIRECTION OF THE DONOR, ALL THE RECEIPTS WOULD PARTAKE THE NATURE OF INCOME AS PER THE PROVISIONS CONTAINED IN SECTION 12 OF THE ITACT, AND THEREFORE THE AO IS JUSTIFIED IN INCLUDING THE A4RE RECEIPTS FOR THE PURPOSE OF TAX COMPUTATION. 5.14 THE NEXT ISSUE FOR CONSIDERATION WOULD BE WHETHER THE AO IS JUSTIFIED IN TAXING GROSS RECEIPT AS INCOME OF THE ASSESSEE. IT COULD B SEEN THAT ASSESSEE FAILED TO GIVE ANY EVIDENCE FOR THE EXPENSES LECTURED, AND AS A RESULT, THE AO WAS NOT IN A POSITION TO EXAMINE THE NATURE AND QUANTUM OF EXPENSES, AND ALSO AS TO THE EXPENSES INCURRED FOR THE PURPOSE OF CHARITABLE ACTIVITY. THEREFORE, THE AO HAD SUBJECTED THE ENTIRE GROSS RECEIPTS TO TAX. IT IS NOTED THAT IN THE PAPER-BOOK, THE ASSESSEE HAS FILED CERTAIN INFORMATION IN THE FORM OF HT OF PERSONS TO WHOM RS.100/ HAS BEEN PAID AND WAS SAID TO BE CONTRIBUTION TO WIDOWS. IT IS SEEN THAT THESE CONTRIBUTIONS WERE MADE IN OCTOBER AND NOVEMBER, 2006, AND WOULD NOT CONSTITUTE PROOF FOR THE EXPENDITURE INCURRED FOR THE SUBJECT ASSESSMENT YEARS I.E. A.Y. 1992-93 TO 1997 98. BESIDES, THE APPELLANT FILED CERTAIN NEW PAPER CUTTING IN SUPPORT OF ITS ACTIVITIES, AND ALSO VOUCHERS FOR SOME EXPENSES FOR PAYMENT TO N.K. TIMOTHY AND ONE PRATYUSH RANJAN SAHU OF RS. 19,015/- AND RS. 49,350/- AND WHICH RELATED TO THE YEAR 1991-92. ONLY SOME PALTRY EVIDENCE HAS BEEN FURNISHED FOR EXPENSES RELATING TO A.Y.1992-93. THUS EVEN DURING THE APPELLATE PROCEEDINGS THE APPELLANT FAILED TO PRODUCE ANY WORTHWHILE EVIDENCE AS TO THE EXPENSES CLAIMED BY IT FOR ALL THE ASSESSMENT YEARS IN APPEAL. THE AR EXPLAINED THAT IN VIEW OF THE DEATH OF THE FOUNDER AND OTHER LITIGATIONS IT COULD NOT PRODUCE ANY BOOKS OF ACCOUNT OR VOUCHERS. WHATEVER BE THE REASONS GIVEN THE FACT REMAINS THAT THE APPELLANT FADED TO PRODUCE ANY EVIDENCE TO PROVE ITS EXPENSES. IT IS PERTINENT TO NOTE THAT THE SOCIETY WAS CONTROLLED BY TWO BROTHERS NAMELY DR.K.A.PAUL AND DR. K.DAVID RAJU AND THEIR BROTHER-IN-LAW MR.YESUPADAM. THERE WERE DISPUTES BETWEEN THEM AND ONE OF THE BROTHERS NAMELY D.K,DAVID RAJU WAS MURDERED. IT APPEARS VARIOUS LITIGATIONS ARE PENDING TO RESOLVE OWNERSHIP TO PROPERTIES AND CONTROL OVER ASSETS. THUS THERE IS EVERY INDICATION THAT THE SOCIETY WAS NOT MEANT AND RUN WHOLLY FOR CHARITABLE ACTIVITIES OR RELIGIOUS ACTIVITIES. THE SOCIETY DID NOT HAVE REGISTRATION U/S.12A FOR THE SUBJECT ASSESSMENT YEAR. THEREFORE THE AO IS JUSTIFIED IN ASSESSING THE SOCIETY AS AN AOP. FURTHER TAKING INTO ACCOUNT THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, AND THE NATURE OF INFORMATION FILED IN THE PAPER-BOOK AND MATERIALS AVAILABLE IT WOULD BE REASONABLE TO ESTIMATE THE INCOME OF THE SOCIETY AT 75% OF ITS GROSS RECEIPTS. ACCORDINGLY, THE AO IS DIRECTED TO ASSESS THE INCOME OF THE APPELLANT AS AN AOP AT 75% OF ITS GROSS RECEIPTS FOR THE YEAR. 12 WE FIND THAT THE FACTS ARE REMAIN SAME THAT THE ASSESSEE IS NOT ABLE TO POINT OUT ANY MISTAKE/WRONG IN THE ORDER PASSED BY THE LD.CIT(A). WE ALSO FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). THUS, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 10 ITA NOS.81 TO 86 & 88/VIZ/2014 (THE ANCIENT PATTERN PENTECOSTAL CHURCH) ITA NO. 82 TO 86/VIZ/2014 13. THE FACTS IN ITA NO.81/VIZ/2014 ARE SIMILAR TO THE FACTS IN ITA NOS. 82TO86/VIZ/2014, HENCE, OUR FINDING GIVEN IN PRECEDING PARAGRAPH SHALL APPLY MUTATIS MUTANDIS TO THESE APPEALS ALSO. ITA NO. 88/VIZ/2014 14. SO FAR AS ITA NO. 88/VIZ/2014 IS CONCERNED, THE ASSESSEE HAS FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT WITH CONDONATION OF DELAY APPLICATION. THE LD. CIT REJECTED TO CONDONE THE DELAY ON THE GROUND THAT ASSESSEE IS NOT EXPLAINED JUSTIFICATION FOR DELAY. BEFORE US, ASSESSEE HAS NOT FILED APPLICATION FOR CONDONATION OF DELAY. THEREFORE, THIS APPEAL IS NOT MAINTAINABLE. THUS, THIS APPEAL FILED BY THE ASSESSEE IS ALSO DISMISSED. 15. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF APRIL, 2017. SD/- SD/- (G. MANJUNATHA) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH APRIL, 2017. VR/- COPY TO: 1. THE ASSESSEE - THE ANCIENT PATTERN PENTECOSTAL CHURCH, RAILWAY NEW COLONY, VISAKHAPATNAM. 2. THE REVENUE - DCIT, CIRCLE-4(1), VISAKHAPATNAM. 3. THE CIT-2, VISAKHAPATNAM. 4. THE CIT(A), VISAKHAPATNAM. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BY ORDER