Oswal Education Trust, JAMNAGAR V. The Assistant Commissioner of Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 84/RJT/2013

• Counselvise Citation: 8424914 RSA 2013
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI DR
• Assessee Lawyers: J C RANPURA
• Keywords: Charitable institution; Bonafide belief; Tax effect
• Section: 12; 11; 143(3); 12A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NO. 84/RJT/2013 / ASSESSMENT YEAR : 2007-08 OSHWAL EDUCATION TRUST, HARIA SCHOOL BUILDING, INDIRA MARG, JAMNAGAR PAN : AAATO 0229 R ( / APPELLANT) ACIT, CIRCLE-1, JAMNAGAR / RESPONDENT ! ' #$ / ASSESSEE BY SHRI J.C. RANPURA, CA % ! ' #$ / REVENUE BY DR. JAYANT B. JHAVERI, DR # & ' ! ( / DATE OF HEARING 08.01.2014 ) ! ( / DATE OF PRONOUNCEMENT 09.01.2014 / ORDER .. , / T. K. SHARMA, J. M.: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 12.02.2013 OF LD. CIT(A) , JAMNAGAR CONFIRMING THE PENALTY OF RS. 12,81,560/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 ON ADDITION OF RS. 38,44,680/- MADE BY TREATIN G THE CORPUS DONATIONS RECEIVED AS VOLUNTARY CONTRIBUTIONS/DONATIONS FOR THE ASSESSMEN T YEAR 2007-08. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST, REGISTERED WITH THE CHARITY COMMISSIONER, JAMNAGAR AS WELL AS WITH THE COMMISSIONER OF INCOME- TAX, JAMNAGAR U/S 12A OF THE INCOME-TAX ACT, 1961. IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE-A PUBLIC CHARITABLE TRUST RECEIVED RS.1,08,80,765/- FROM DIFFERENT DONORS AS VOLUNTARY CORPUS DONATION RECEIVED OUT OF WHICH THE ASSESSING OFFICER TREATED RS.98,32,354/- AS INCOME U/S 12 OF THE ACT ON THE GROUND THAT THE SAID AMOUNT WERE NOT WITH SPECIFIC DIRECTIONS AS REQUIRED U/S 11(1)(D) OF THE ACT. ON APPEAL, THE LD. CIT(A) DIRECTED THE AS SESSING OFFICER TO TREAT THE AMOUNT OF RS.60,25,000/- AS VOLUNTARY CONTRIBUTION WITH SPECI FIC DIRECTION TO FORM PART OF THE CORPUS DONATIONS AND ELIGIBLE FOR EXEMPTION U/S 11(1)(D) O F THE ACT AND BALANCE AMOUNT OF RS.38,07,354/- WAS CONFIRMED. AGAINST THIS ORDER OF LD. CIT(A), THE REVENUE FILED APPEAL BEFORE THE ITAT, RAJKOT BENCH IN ITA NO.1068/RJT/20 10 WHICH WAS DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 15.12.2011. 84-RJT-2013 - OSHWAL EDUCATION TRUST 2 2. SUBSEQUENTLY, ON ADDITION OF RS.38,07,354/-, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF RS.12,81,560/-, REJECTING THE EXPL ANATION OF THE ASSESSEE. IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALT Y. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS T RIBUNAL. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, SHRI J. C. RANPURA, CA, APPEARED AND POINTED OUT THAT BOTH THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE ASSESSEE S DEFAULT WAS MERELY TECHNICAL IN NATURE AND THAT WHOLE CORPUS DONATION RECEIVED IS EXEMPT U/S 11(1)(D) OF THE ACT. THE LD. CIT(A) IN THE IMPUGNED ORDER FAILED TO APPRECIATE THAT IT IS NOT NECESSARY THAT VOLUNTARY CONTRIBUTION SHOULD BE MADE WITH A SPECIFIC DIRECTION TO TREAT AS CORPUS. IN SUPPORT O F THIS, THE LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE FROM FOLLOWING TWO JUDGMENTS:- I. DIT & ANR V. SRI RAMKRISHNA SEVA ASHRAM, 258 CTR 201 (KAR.) II. ITO V. MALIRAM POORANMAL CHARITABLE TRUST, 12 T TJ 245 (ITAT, JAIPUR) THE LD. COUNSEL OF THE ASSESSEE ALSO POINTED OUT TH AT THE ASSESSEE FILED AFFIDAVIT OF THE MANAGING TRUSTEE TO SUPPORT THAT THE INSTRUC TION WERE GIVEN BY THE DONORS THAT THE AMOUNT DONATED BY THEM SHALL FORM PART OF THE C ORPUS FUND OF THE TRUST. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS PVT. LTD., [2010] 322 ITR 158, HAS HELD THAT PROVISIONS OF SEC. 271(1)(C) OF INCOME-TAX ACT SUGGESTS THAT IN ORDER TO BE COVERED BY PENALTY PROVISION, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. IN THIS CASE, IN THE RETURN OF INCOME, THE ASSESSEE HAS SHOWN THE CORPUS DONATION AND CLAIMED DEDUCTIONS U/S 11 OUT O F GROSS TOTAL INCOME. PURELY ON TECHNICAL GROUND, THE ADDITION OF RS. 38,44,680/- W AS MADE AS THE ASSESSEE-TRUST WAS OF THE BONAFIDE BELIEF THAT THE ASSESSING OFFICER N OT NECESSARILY INSISTED UPON CONFIRMATION IN WRITING AND THEREFORE THE ASSESSEE- TRUST CONSIDERED THE SAID DONATION AS GENUINE CORPUS FUND DONATION AND REFLECTED IN THE R ETURN ACCORDINGLY. THUS, THIS IS PURELY A TECHNICAL DEFAULT WHICH IS NOT INTENTIONAL BUT BASED ON INTERPRETATION MADE BY THE TRUST AS HAPPENING OF PRECEDENCE WHICH WAS NEVE R OBJECTED IN EARLIER ASSESSMENT YEARS, WHICH WERE COMPLETED U/S 143(3) OF THE INCOM E-TAX ACT, 1961. THE LD. COUNSEL O THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE-TR UST NEVER MADE EFFORTS TO OBTAIN 84-RJT-2013 - OSHWAL EDUCATION TRUST 3 CONFIRMATION/CERTIFICATE FROM THE DONORS AND ALSO N OT FILED APPEAL AGAINST THE ORDER OF LD. CIT(A), JAMNAGAR BECAUSE THE NET TAX EFFECT WAS NEG ATIVE AFTER GIVING EFFECT OF DEDUCTIONS APPROVED BY LD. CIT(A), JAMNAGAR. THIS IS ALSO REFLECTED THE BONFIDE INTENTION TO AVOID THE UNWARRANTED LITIGATION AND E XTRA JUDICIARY BURDEN TO THE APPELLATE AUTHORITY. 4. FINALLY, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAS FULLY CO-OPERATED DURING THE COURSE OF ASSESSMENT PROCEED INGS, PROVIDED ALL DETAILS, NOTHING WAS HIDE AND BASED ON THE LEGAL INTERPRETATION AND PERCEPTION THAT NO SPECIFIC MODE OF GIVING THE DIRECTION IS PRESCRIBED BY THE STATUTE, AND CAN BE GATHERED FROM THE FACTS AND THE CIRCUMSTANCES AS MENTIONED IN ITO VS. MALIRAM POORANMAL CHARITABLE TRUST (1981) 12 TTJ 245. HE CONTENDED THAT MERELY BECAUSE THE CL AIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE BY ITSELF, WOULD NOT ATTR ACT PENALTY UNDER U/S 271(1)(C). IN EVERY CASE WHERE CLAIM WAS NOT ACCEPTED BY THE REVE NUE FOR ANY REASON, PENALTY U/S 271(1)(C) OF THE ACT DOES NOT BECOME ELIGIBLE. REL IANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF DI LIP N. SHROFF V. JT. CIT, 291 ITR 519 (SC), WHEREIN IT WAS OBSERVED THAT THE ONUS OF PROO F THE ASSESSEE HAS CONCEALED INCOME IS ON THE REVENUE AUTHORITIES. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT, 249 ITR 125 (GUJ.), WHERE IN IT IS HELD THAT IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTOR S MUST CO- EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTA NCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSES SEE'S INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT H AS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS, I.E., CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PART ICULARS ON THE PART OF THE ASSESSEE. TO SUM UP, THE LD. COUNSEL PLEADED THAT THIS IS NOT A FIT CASE TO LEVY THE PENALTY U/S 271(1)(C); THEREFORE, THE PENALTY CONFI RMED BY THE LD. CIT(A) BE CANCELLED. 5. ON THE OTHER HAND, DR. JAYANT B. JHAVERI, DR, AP PEARED FOR THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). THE D R POINTED OUT THAT IT IS MANDATORY FOR THE ASSESSEE TO OBTAIN THE LETTER FROM THE DONO RS DIRECTING THE ASSESSEE-TRUST TO TREAT THE DONATION AS CORPUS. IN THE ABSENCE OF SUCH DIR ECTION FROM THE DONORS, ON THE 84-RJT-2013 - OSHWAL EDUCATION TRUST 4 ADDITION OF RS. 38,44,680/-, WHICH IS CONFIRMED BY THE LD. CIT(A), THE PENALTY U/S 271(1)(C) IS LEVIABLE. 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF DIT & ANR V. SRI RAMKRISHNA SEVA ASHRAM, 258 CTR 201 (KAR.) AND ITAT JAIPUR BENCH IN THE CASE OF ITO V. MALIRAM POORANMAL CHARITABLE TRUST, 12 TTJ 2 45 (JAIPUR), HELD THAT IT IS NOT NECESSARY THAT THE VOLUNTARY CONTRIBUTION SHOULD BE MADE WITH A SPECIFIC DIRECTION TO TREAT AS CORPUS. BE THAT IT MAY BE, THE ASSESSEE WA S OF THE BONAFIDE BELIEF THAT IT CAN TREAT THE DONATION OF RS.1,08,80,765/- RECEIVED FRO M DIFFERENT DONOR AS CORPUS DONATION. THE ASSESSING OFFICER TREATED RS.98,32,354/- AS INC OME U/S 12 OF THE ACT. IN APPEAL, THE LD. CIT(A), JAMNAGAR ACCEPTED THE DONATION OF T HE ASSESSEE TO THE EXTENT OF RS.60,25,000/- AS VOLUNTARY CONTRIBUTIONS WITH A SP ECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS FUND AND IN RESPECT OF THE BALAN CE AMOUNT OF RS.38,07,354/-, HE LEVIED PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. THE CONSPICUOUS FACTS OF THE CASE, AS NARRATED BY THE ASSESSEE, CLEARLY INDICATE THAT THE ASSESSEE WAS OF THE BONAFIDE BELIEF THAT HE IS LEGALLY AND FACTUALLY CO RRECT IN TREATING THE ENTIRE DONATION OF RS. 98,32,354/- AS CORPUS DONATION. THEREFORE, WE A RE OF THE VIEW THAT ON PART OF THE DONATION, WHICH IS CONSIDERED AS INCOME U/S 12 OF T HE ACT, PENALTY U/S 271(1)(C) IS NOT LEVIABLE AS THE ASSESSEE HAS TRULY AND FULLY DISCLO SED ALL THE FACTS IN ITS RETURN OF INCOME. WE, THEREFORE, CANCEL THE PENALTY OF RS.12 ,81,560/- LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. THE VIEW TAKEN BY US IS ALSO SUPPORTED BY THE RATIO OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. RELI ANCE PETRO PRODUCTS PVT. LTD (SUPRA). 7. IN THE RESULT, THE PENALTY OF RS.12,81,560/- LEV IED U/S 271(1)(C) IS HEREBY CANCELLED AND THE APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- (B. R. JAIN) (T. K. SHARM A) $( #*% / ACCOUNTANT MEMBER #*% /JUDICIAL MEMBER *$+ ,*-/ ORDER DATE 09.01.2014 /RAJKOT *BT 84-RJT-2013 - OSHWAL EDUCATION TRUST 5 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- OSHWAL EDUCATION TRUST, INDIRA MARG, J AMNAGAR 2. /RESPONDENT- ACIT, CIRCLE-1, JAMNAGAR 3. #-2- & 3 / CIT, JAMNAGAR 4. & 3 - / CIT(A), JAMNAGAR 5 . 678 , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *$+ #$ / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.