Assistant Commissioner of Income-tax, V. Gurudatta Shikshan Sanstha, Nashik

ITA 843/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7474 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ACHAL SHARMAADDL
• Keywords: Unexplained cash credit; Charitable institution; Earning of tax free income; Deemed to accrue or arise in india; Question of law; Assessment record; Benefit of exemption
• Section: 12A; 68; 69; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , ! #!$,% ! & BEFORE SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWAST HY, JM . / ITA NOS.843 & 844/PUN/2015 %' ( )( / ASSESSMENT YEARS: 2010-11 & 2011-12 THE ASST. COMMISSIONER OF INCOME-TAX, (EXEMPTION) CIRCLE, AURANGABAD .. APPELLANT VS. GURUDATTA SHIKSHAN SANSTHA, C/O.DHONDU BALIRAM PAWAR, CHAITALI NIWAS, GANESH NAGAR, KALWAN DIST. NASIK. .. RESPONDENT C.O NOS.34 & 35/PUN/2017 %' ( )( / ASSESSMENT YEARS: 2010-11 & 2011-12 GURUDATTA SHIKSHAN SANSTHA, C/O.DHONDU BALIRAM PAWAR, CHAITALI NIWAS, GANESH NAGAR, KALWAN DIST. NASIK. .. APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX, (EXEMPTION) CIRCLE, AURANGABAD .. RESPONDENT ASSESSEE BY : SHRI PIYUSH BAFNA DEPARTMENT BY : SHRI ACHAL SHARMA(ADDL.CIT) DATE OF HEARING : 21-09-2017 DATE OF PRONOUNCEMENT : 22-09-2017 / ORDER PER D.KARAUNAKARA RAO, AM : THESE ARE THE TWO MAIN APPEALS FILED BY THE REVENUE AGAIN ST THE ORDER OF CIT(A)-3, NASHIK DATED 30.04.2015 FOR THE DIFFERENT A.YS 2010-11 & 2011-12. ASSESSEE FILED TWO CROSS OBJECTIONS FOR THE SAID A.YS TOO. WE SHALL TAKE UP THE APPEAL FILED BY THE REVENUE AND THE CRO SS OBJECTION FILED BY THE ASSESSEE FOR THE A.Y. 2010-11. 2 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 ITA NO.843/PUN/2015 BY REVENUE C.O.NO.34/PUN/2017 BY THE ASSESSEE 2. ITA NO.843/PUN/2015 IS FILED BY REVENUE IN THE ASSESSME NT YEAR 2010-11. ASSESSEE FILED CROSS OBJECTION VIDE C.O.NO.34/PUN/2017. IN THE APPEAL, REVENUE RAISED SOLITARY ISSUE GROUND ON T HE SAME READS AS UNDER: 1. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD.CIT(A) WAS RIGHT IN HOLDING THAT THE ADDITIO NS MADE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 WOULD BE ENTITLE D TO EXEMPTION UNDER SECTION 10(23C) WITHOUT APPRECIATING THE FACT THA T UNEXPLAINED DEEMED INCOME CANNOT FORM PART OF EXEMPT INCOME? 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE FILE D THE RETURN OF INCOME DECLARING TOTAL INCOME NIL. ASSESSEE IS A TRUST AND ENGAGED IN EDUCATIONAL ACTIVITIES. IN RESPECT OF ITS INCOME, ASSESSEE C LAIMED EXEMPTION U/S.10(23C) R.W.S 12A OF THE ACT. AT THE END OF THE ASSES SMENT PROCEEDINGS ASSESSING OFFICER MADE VARIOUS ADDITIONS AND DE TERMINED THE ASSESSED INCOME AT RS.1,09,79,320. DURING THE FIRST APPELLATE PROCEEDINGS, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, THE CIT(A) HE LD THAT THE ADDITIONS MADE BY THE AO U/S.68 IN BOTH THE YEARS ARE S USTAINABLE. THE CONTENTS OF PARA 11 ARE RELEVANT IN THIS REGARD. HOWEV ER, ON FINDING THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION/EXEMPTION U/S .10(23C)(V) OF THE ACT AND ALSO ON FINDING AO DENIED SUCH A DEDUCTION TO TH E ASSESSEE IN BOTH THE YEARS, THE CIT(A) GRANTED SUCH BENEFIT OF DEDUCTION/EX EMPTION U/S.10(23C)(V) OF THE ACT IN RESPECT OF SUCH ADDITIONS U/S.6 8 OF THE ACT. THE CIT(A) RELIED HEAVILY ON VARIOUS JUDICIAL PRONOUNCEMENTS WHILE GRANTING THE EXEMPTION IN RESPECT OF THE ENTIRE ENHANCE D INCOME WHICH INCLUDES ADDITIONS MADE U/S.68 OF THE ACT. THE MADRAS HIGH COURT 3 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 JUDGMENT IN THE CASE OF SRI KRISHNA EDUCATIONAL AND SOCIAL TRUST 351 ITR 178 MADRAS, THE DELHI HIGH COURT JUDGMENT IN THE CASE OF RAUNAQ EDUCATION FOUNDATION 294 ITR 76 (DELHI), THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MUSLIM EDUCATION SOCIETY 1 ITR 527 WERE CITED BY THE CIT(A) IN PARA 12.4 OF HIS ORDER. EVENTUALLY, THE CIT(A) HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.10(23C)(V) IN RESPECT OF INCOME ADDED U/S.68 OF THE ACT. 4. FURTHER, THE CIT(A) MADE OTHER DISALLOWANCE TOO OUT OF T HE DONATIONS INVOKING THE PROVISION OF SECTION 115 BBC OF THE ACT. THIS ISSUE SHALL BE DISCUSSED WHEN DEALING WITH THE CROSS OBJECTION BY THE ASSESSEE . 5. AGGRIEVED WITH THE SAID RELIEF GIVEN TO THE ASSESSEE, THE REVENUE FILED THE MAIN APPEAL. FURTHER, AGGRIEVED WITH THE INVOKING OF TH E PROVISIONS OF SECTION 115 BBC OF THE ACT, THE ASSESSEE FILED THE CROSS OBJECTION BEFORE US. 6. IN CONNECTION WITH THE ISSUE RAISED IN THE MAIN APPEAL, LD.D.R FOR THE REVENUE RELIED ON THE ORDER OF THE AO AND REQUESTE D FOR REVERSING THE FINDING OF THE CIT(A) ON THE ISSUE OF PROVIDING EXEMPTION/DEDU CTION U/S.10(23C)(V) OF THE ACT IN RESPECT OF THE ADDITIONS MADE U/S.68 OF THE A CT. IN THE PROCESS, HE RELIED ON THE DECISION OF HYDERABAD B ENCH OF THE TRIBUNAL AND FAIRLY MENTIONED THAT IT IS A CASE OF GRANTING EXEMPTION/DEDUCTION IN RESPECT OF THE ADDITIONS MADE U/S.6 9C OF THE ACT. HOWEVER, LD.COUNSEL FOR THE ASSESSEE RELIED HEAVILY ON TH E DISCUSSION GIVEN BY THE CIT(A) IN PARA 11, 12.4, 12.5 & 12.6 OF THE ORDER OF THE CIT(A). 4 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 7. ON HEARING BOTH THE PARTIES, WE PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE DECISION CITED BY THE CIT(A) WHILE GRANTING R ELIEF TO THE ASSESSEE U/S.10(23C)(V) OF THE ACT. WE FIND THE GROUND RA ISED BY THE REVENUE REVOLVES AROUND THE CORRECTNESS IN GRANTING EX EMPTION U/S.10(23C) OF THE ACT IN RESPECT OF THE ADDITIONS MADE U/S .68 OF THE ACT. IN OUR VIEW, THE SAID ISSUE IS ELABORATELY DISCUSSED BY T HE CIT(A) IN HIS SPEAKING ORDER IN THE ABOVE REFERRED PARAGRAPHS. FOR T HE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE SAID PARAGRAPH S 12.4 TO 12.6 AND THE SAME READ AS UNDER: 12.4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NO TICED THAT THE APPELLANT TRUST IS REGISTERED U/S.12A, U/S.80G AND IS ALSO NO TIFIED BY HON'BLE CHIEF COMMISSIONER OF INCOME-TAX, NASHIK U/S 10(23C)(V) O F THE ACT VIDE ORDER DATED 3/12/2007. THE SAID NOTIFICATION GRANTING EX EMPTION U/S 10(23C)(V) OF THE ACT IS IN FORCE TILL DATE AND HAS NOT BEEN CANC ELLED BY HON'BLE CHIEF COMMISSIONER OF INCOME-TAX, NASHIK. A PERUSAL OF TH E ASSESSMENT ORDER DATED 20/02/2015 FOR A.Y. 2012-13 REVEALS THAT THE AO HAS NOT INITIATED ANY ACTION FOR REVOCATION OR CANCELLATION OF EXEMPT ION GRANTED TO THE APPELLANT U/S 10(23C)(V) OF THE ACT IN THE LIGHT OF HUGE ADDITIONS U/S 68 OF THE ACT. IN FACT, HE HAS CERTIFIED THAT THE TRUST HAS COMPLIED WITH THE RELEVANT PROVISIONS OF SEC. 10(23C)(V) OF THE ACT. THE PROV ISIONS OF SECTION 10(23C)(V) OF THE ACT ARE TO BE FOLLOWED FOR DECIDING THE ISSUE U NDER APPEAL AND HENCE THE SAME ARE REPRODUCED BELOW: 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YE AR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWS CLAUSE S SHALL NOT BE INCLUDED. (23C)-ANY INCOME RECEIVED BY ANY PERSON ON BEHALF O F (V) ANY TRUST (INCLUDING ANY OTHER LEGAL OBLIGATIO N) OR INSTITUTION WHOLLY FOR PUBLIC RELIGIOUS PURPOSES OR WHOLLY FOR PUBLIC RELIGIOUS AND CHARITABLE PURPOSES, [WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY], HAVING REGARD TO THE MANNER IN WHICH TH E AFFAIRS OF THE TRUST OR INSTITUTION ARE ADMINISTERED AND SUPERVISE D FOR ENSURING THAT THE INCOME ACCRUING THERETO IS PROPERLY APPLIED FOR THE OBJECTS THEREOF; THE WORDS USED IN THE SECTION IS ANY INCOME RECEI VED BY ANY TRUST IS EXEMPT. THEREFORE, THE INCOME OF THE APPELLANT TRU ST ASSESSED BY THE A.O. BY MAKING ADDITION U/S 68 SHALL ALSO QUALIFY FOR EXEMP TION. THIS PROPOSITION OF LAW IS SUPPORTED BY FOLLOWING DECISIONS. I) SRI KRISHNA EDUCATIONAL AND SOCIAL TRUST VS. ITO (2 013) 351 ITR 178 (MAD) IN THIS CASE IT HAS BEEN LAID DOWN THAT ADDITION U/ S.68 IS NOT POSSIBLE WHEN THE ASSESSEES INCOME WAS EXEMPT U/S 10(22) OF THE ACT, UNLESS THE COMMISSIONER GRANTING THE EXEMPTION HAS WITHDRAWN TH E SAME. 5 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 II) DIT VS. RAUNAQ EDUCATION FOUNDATION (2007) 294 ITR 76 (DEL) THE HON'BLE HIGH COURT HAS CONCLUDED THAT THE WORD INCOME AS OCCURRING IN SECTION 10(22) CANNOT BE GIVEN RESTRICTIVE MEANING AND MUST BE GIVEN ITS NATURAL MEANING OR THE MEANING ASCRIBED TO IT IN SE CTION 2(24) AND THEREFORE, THE USE OF THE WORD INCOME IN SUB-SECTION (22) OF SECTION 10 IS WIDE ENOUGH TO INCLUDE DEEMED INCOME UNDER SECTION 68 OF THE AC T. THE HON'BLE COURT HAS HELD AS UNDER:- 6. WE FIND THAT THE WORDS DERIVED FROM (OR SOME O THER SIMILAR WORDS) DO NOT OCCUR IN S. 10(22) OF THE ACT AND, THEREFORE, T HE WORD INCOME AS OCCURRING IN S. 10(22) CANNOT BE GIVEN RESTRICTIVE MEANING AND MUST BE GIVEN ITS NATURAL MEANING OR THE MEANING ASCRIBED T O IT IN S. 2(24) OF THE ACT. 7. IT IS WELL-SETTLED THAT EXEMPTION PROVISION MUST BE STRICTLY CONSTRUED BUT WHEN IT IS FOUND THAT AN EXEMPTION IS AVAILABLE THEN IT MUST BE GIVEN ITS FULL PLAY. THIS HAS RECENTLY BEEN HELD B Y THE SUPREME COURT IN P.R.PRABHAKAR VS. CIT (2006) 204 (SC) 27 : (2006 ) 284 ITR 548 (SC) IN THE FOLLOWING WORDS: IT IS NOW A WELL-SETTLED PRINCIPLE OF LAW THAT ALT HOUGH THE EXEMPTION PROVISIONS ARE TO BE CONSTRUED STRICTL.YU AS REGARDS THE APPLICABILITY THEREOF TO THE CASE OF ASSESSEE, ONCE IT IS FOUND THAT THE SAME IS APPLICABLE, THE SAME ARE REQUIRED TO BE INTERPRETED LIBERALLY. [SEE TATA IRON & STEEL. CO. LTD. VS. STA TE OF JHARKHAND (2005) 4 RC 641; (2005) 4 SCC 272; 5 RC 379; (2005) 7 SCC 396 AND CCE VS. HIRA CEMENT (2006) 6 RC 219; (2006) 2 J T 369 (SC)]. IT IS ALSO TRITE LAW THAT AN EXEMPTION IS TO BE GRA NTED UNLESS IT IS EXPRESSLY TAKEN AWAY. [SEE ADITYAPUR INDUSTRIAL ARE A DEVELOPMENT AUTHORITY VS. UNION OF INDIA (2006) 5 S CALE 321] 8. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRM ITY IN THE DECISION OF THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES FO R CONSIDERATION. III) ACIT VS. MUSLIM EDUCATION SOCIETY (2010) 1 ITR 527 (COCHIN-TRIB) IN THIS CASE THE ASSESSEES INCOME WAS SUBJECT TO E XEMPTION U/S.10(23C)(V) BEING EDUCATIONAL INSTITUTION. THE A.O. HAS MADE A DDITIONS U/S.68 ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THE HON'BLE I TAT HAS FOLLOWED THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DIT VS. RAUNAQ EDUCATION FOUNDATION (207) 294 ITR 76 AND HAS HELD THAT WHAT IS ENTITLED FOR EXEMPTION U/S.10(23C) IS ANY INCOME; THE WORD INCOME CANNO T BE GIVEN RESTRICTIVE MEANING BUT ITS NATURAL MEANING, THEREFORE THE ASSE SSEE IS ENTITLED TO BENEFIT U/S. 10(23C) EVEN IN RESPECT OF INCOME COVERED U/S. 68 OF THE ACT. 12.5 I FIND FROM THE RECORDS THAT NO ACTION HAS BE EN INITIATED BY THE AO TO RECOMMEND WITHDRAWAL OF EXEMPTION GIVEN TO TH E APPELLANT U/S 10(23C)(V) OR CANCELLATION ITS REGISTRATION U/S 12A OF THE ACT IN THE LIGHT OF ADDITIONS U/S 68 OF THE I.T. ACT, 1961. THE APPELL ANT TRUST ENJOYS THE BENEFIT OF EXEMPTION U/S 10(23C)(V) FOR ASSESSMENT YEARS UN DER APPEAL IS AN UNDISPUTED FACT. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL SUGGESTING THAT THE APPELLANT TRUST WAS NOT MEETING THE CONDIT IONS GIVEN IN SECTION 10(23C)(V) OF THE I.T. ACT, 1961. IN THE ASSESSMEN T ORDER FOR SUBSEQUENT A.Y. I.E. 2012-13 AO HAS NOT DENIED EXEMPTION U/S 10(23C )(V) WHERE FACTS ARE IDENTICAL. FURTHER, SECTION 10(23C) STARTS WITH A NY INCOME. THE CASE LAWS 6 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 RELIED UPON BY APPELLANT SUGGEST THAT ANY INCOME ALSO INCLUDES DEEMED INCOME ADDED U/S 68 OR 69 OF THE I.T. ACT, 1961. A S LONG AS THE APPELLANT TRUST ENJOYS EXEMPTION U/S 10(23C)(V), I AM OF THE OPINION THAT ANY ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDI TS U/S 68 OF THE ACT WOULD ALSO BE ELIGIBLE FOR EXEMPTION U/S 10(23C)(V) OF THE I.T.ACT, 1961. FURTHER, IT IS ALSO CLEAR THAT THE APPELLANT TRUST HAS USED THE UNSECURED LOANS TOWARDS THE OBJECTS OF THE TRUST. IT HAS ALSO BEEN EVIDENT FROM THE FINANCIAL STATEMENTS OF THE APPELLANT TRUST THE INCOME EVEN A FTER ADDITION RESULTS IN DEFICIT. AS THE AOS ASSESSMENT ORDERS DATED 25/03 /2013 AND 25/03/2014 CLEARLY MENTION THAT THERE WAS NO DISPUTE TO THE FA CT THAT THE TRUST WAS NOTIFIED UNDER THE PROVISION OF SECTION 10(23C)(V) OF THE ACT, I AM OF THE CONSIDERED OPINION THAT THE ABOVE REFERRED JUDICIAL PRONOUNCEMENTS INCLUDING DIRECTOR OF IT(EXEMPTION) V. RAUNAQ EDUCATION FOUND ATION (SUPRA) SUPPORT THE APPELLANTS CASE. 12.6 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE ABOVE REFERRED DECISIONS , I HOLD THAT THE APPELLANT IS ENTITLED TO EXEMPTION U/S. 10(23C) IN RESPECT OF ADDITIONS OF RS.1,09,79,321/- FOR A.Y. 2010-11 AND RS.1,71,00,00 0/- FOR A.Y.2011-12 MADE U/S 68 OF THE I.T. ACT, 1961. THE A.O. IS DIR ECTED ACCORDINGLY. GROUND NO.2 IS ALLOWED. 8. CONSIDERING THE ABOVE, WE ARE OF THE VIEW THAT THE DE CISION CITED BY THE LD.DR FOR THE REVENUE IS DISTINCTLY ON DIFFERENT FACTS A ND ALSO ON THE DIFFERENT PROVISIONS OF THE ACT. THEREFORE, THE SAME ARE NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE FACTS ARE NOT HOMOLO GUES OF THE FACTS IN THE PRESENT CASE. THEREFORE, WE ARE OF THE OPINION THE O RDER OF CIT(A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. IN THE RESULT, THE SOLITARY GROUND RAISED BY THE REVENUE IN THE APPEALS ARE DISMISSED. 9. IN THE RESULT, REVENUE APPEAL IS DISMISSED. C.O.NO.34/PUN/2017 FOR A.Y 2010-11 BY THE ASSESSEE. 10. THIS CROSS OBJECTION IS FILED BY THE ASSESSEE BEFORE T HE TRIBUNAL IN CONNECTION WITH THE APPEAL IN ITA NO.843/PUN/2015. THE SAID CROSS OBJECTION IS FILED WITH THE DELAY OF 25 DAYS. ASSESSEE FILED T HE AFFIDAVIT 7 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 EXPLAINING THE REASONS FOR DELAY AND NARRATED THE SUFFICIENT CAUSE. FOR THE SAKE OF COMPLETENESS, THE PARA 4 BEING RELEVANT IS EXTRACTED AS UNDE R: 4. THAT THE APPEAL MEMOS OF THE TRIBUNAL ADMITTEDL Y WERE RECEIVED ON 23-04-2017 AND DURING THAT PERIOD OUR SCHOOL WAS CL OSED FOR SUMMER VACATION. THE STAFF WORKING IN THE OFFICE WERE ALS O GIVEN LEAVE BECAUSE OF SUMMER VACATION. DURING THE SUMMER VACA TION INSTITUTE CARRIES ON THE NECESSARY REPAIRS AND MAINTENANCE OF SCHOOL BUILDING, MESS BUILDING, ADMINISTRATIVE OFFICE ETC AND MOSTLY THESE ARE LOOKED AFTER BY THE PEONS AND SECURITY STAFF. THE STAFF W ORKING IN THE ADMINISTRATION AND ACCOUNTS DEPARTMENTS ARE ALSO GI VEN VACATION FOR 2-3 WEEKS SO THAT REPAIR WORKS CAN BE CARRIED OUT W ITHOUT ANY OBSTRUCTION. THE ENVELOPES CONTAINING THE APPEAL MEMOS WERE COL LECTED BY THE SECURITY GUARD/PEON AND REMAINED WITH HIM FOR AROUN D 25 DAYS. THEREAFTER THE TRUSTEES ON RECEIVING THE APPEAL MEM OS FROM SECURITY GUARD TOOK SOME MORE TIME IN KNOWING THE NATURE OF THESE APPEAL MEMOS AND BY THE TIME THEY HANDED OVER THESE APPEAL MEMOS TO OUR CHARTERED ACCOUNTANT MR. YOGESH PUNDE, THIS DELAY O F 26 DAYS HAS BEEN OCCURRED IN FILING THESE CROSS OBJECTIONS 11. ON CONSIDERING THE ABOVE REASONS GIVEN BY THE ASSE SSEE IN THE AFFIDAVIT FILED BY THE CHAIRMAN OF TRUST DATED 17.06.2017, WE A RE OF THE OPINION THE CROSS OBJECTION IS REQUIRED TO BE ADMITTED. C ONSEQUENTLY THE SAME IS TAKEN FOR ADJUDICATION. 12. THE CROSS OBJECTION RAISED BY THE ASSESSEE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD.CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER 10% OF THE DONATIONS AS ANONYMOUS AND TAX THE SAME U/S 115BBC AS SUCH DIREC TION IS NOT WITHIN THE POWERS OF THE LD. CIT(A) BECAUSE IT AMOUNTS TO ASSE SSING NEW SOURCE OF INCOME. 13. THE BACKGROUND FACTS RELATING TO THE ABOVE SAID CROS S OBJECTION INCLUDES THAT THE ASSESSEE RECEIVED DONATIONS FROM VARIOU S DONORS. THE ASSESSING OFFICER INVESTIGATED INTO THE IDENTITY OF THE SAID D ONORS. AO INVOKED VARIOUS PROVISIONS OF THE ACT FOR INVESTIGATING THE SAME. EVENTUALLY, IN THE PROCESS, FEW DONORS DENIED HAVING GIVEN ANY DONATIONS TO THE TRUST. HOWEVER, IN THE ASSESSMENT, FOR UNKNOWN REASONS, AO DID 8 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 NOT MAKE ANY DISALLOWANCE IN THIS REGARD. THE CONTENTS O F PARA 14 OF THE ORDER OF CIT(A) ARE RELEVANT. TAKING A CLUE FROM AOS INVES TIGATION INTO THE DONATIONS, THE CIT(A) NOTED THAT ASSESSEE RECEIVED DONAT IONS OF RS.1,03,59,525/- FROM 565 PERSONS IN THE A.Y. 2010-11. THE INDIVIDUAL DONATIONS ARE BELOW RS.20,000/- EACH. SIMILARLY, ASSESSEE R ECEIVED DONATION OF RS.64,68,820/- FROM 367 PERSONS IN THE A.Y.2011- 12 AGAINST WHICH ALL ARE BELOW RS.20,000/- EACH. CIT(A) ISSUED A NOTICE OF ENHANCEMENT OF THE ASSESSMENT BEFORE INVESTIGATING INTO THIS ISSUE FURTHER. 14. ON PERUSAL OF THE ASSESSMENT RECORD AND ON FINDING TH E AO DID NOT TAKE THIS INVESTIGATION INTO THE LOGICAL CONCLUSION, THE CIT(A ) ISSUED LETTERS TO 26 PERSONS RANDOMLY FOR THE A.Y. 2010-11 AND ALSO TO ANOTHER SET OF 25 PERSONS FOR A.Y.2011-12. THIS EXERCISE RESULTED IN TH E FOLLOWING REMARKS I.E. SOME DONORS CONFIRMED, NO RESPONSE FROM SOME OTHERS, SOME PEOPLE WANTED FURTHER TIME ETC., FURTHER, SHRI RAGHUNATH JADHAV FLATLY DENIED HAVING GIVEN ANY DONATION TO THE TRUST. CONSIDERIN G THE DISCREPANCIES AND ANOMALIES, THE CIT(A) ISSUED A NOTICE OF E NHANCEMENT OF ASSESSMENT AS REQUIRED U/S.251 OF THE ACT AND ON ADHOC BASIS, THE CIT(A) PROPOSED TO MAKE DISALLOWANCE OF 10% OF THE DONATIONS REC EIVED IN BOTH THE A.YS. HE PROPOSED TO TREAT THE SAME AS ANONYM OUS DONATIONS AS DEFINED IN SECTION 115 BBC OF THE ACT. FURTHER, CIT(A) INT ERPRETED THE SAID PROVISIONS AND OBTAINED THE REPLY FROM THE ASSESSEE VIDE ASSESSEES LETTER DATED 28.04.2015. HE PROCEEDED TO DISALLOW 10% OF THE SUC H DONATIONS AND APPLIED THE PROVISIONS OF SECTION 115 BBC OF THE ACT. THE CONTENTS OF PARA 14 AT PAGE NO.37 TO 42 OF THE ORDER OF THE CIT(A ) ARE RELEVANT. CIT(A) IS OF THE VIEW THAT, THE UNVERIFIABLE OF THE DONORS ANTECEDE NTS CONSTITUTES ANONYMOUS DONATIONS. THUS, THE DONATIONS REFLECTED IN THE BOOKS OF 9 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 ACCOUNTS MADE BY SUCH UNVERIFIABLE DONORS CONSTITUTES TH E ANONYMOUS DONATIONS AS DEFINED IN SUB-SECTION (3) OF 115 BBC OF THE A CT. THE EXHAUSTIVE DEFINITION GIVEN TO ANONYMOUS DONATIONS MEANS ANY VOLUNTARY CONTRIBUTION AS SPECIFIED THEREIN IN THE SA ID SUB-SECTION (3) WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAI N THE RECORD OF THE IDENTITY, INDICATING THE NAME AND ADDRESS OF A PERSON , SUCH PERSON AS PRESCRIBED. IN THE INSTANT CASE, THOUGH THE NAMES AND ADDRESSES ARE MENTIONED, THE SAME ARE UNVERIFIABLE WHEN THE ENQUIRY WAS CONDUCTED BY THE CIT(A). ACCORDINGLY, THE CIT(A) INVOKED THE PROVISIONS OF SECTION 115 BBC OF THE ACT AND TAXED 10% OF THE DONATIONS IN BOTH Y EARS APPLYING THE TAX RATE OF 30%. 15. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), ASSESSEE FILED CROSS OBJECTION WITH THE GROUND EXTRACTED ABOVE. 16. BEFORE US, LD.COUNSEL FOR THE ASSESSEE SHRI PIYUSH BAFN A SUBMITTED THAT, IN TAXING 10% OF THE DONATIONS AS ANONYMOUS DONATIO N, THE CIT(A) EXCEEDED HIS JURISDICTION BY CREATING NEW SOURCE OF INCOME FOR THE ASSESSEE AND SAME IS NOT PERMISSIBLE UNDER THE PROVISIONS RELATING T O THE ENHANCEMENT OF THE ASSESSMENT. RELYING ON VARIOUS SUP REME COURT JUDGMENTS, LD.COUNSEL SUBMITTED THAT THE CIT(A) IS PREVENT ED FROM ASSUMING SUCH A JURISDICTION. REFERRING TO THE PROVISIONS O F SECTION 115 BBC OF THE ACT, LD.COUNSEL SUBMITTED THAT THE DEFINITION GIVE N TO THE ANONYMOUS DONATIONS DOES NOT APPLY TO THE DONATIONS UNDER CONSIDERATION AS ASSESSEE DUTIFULLY MAINTAINED THE RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESSES AND SUCH OTHER PARTIC ULARS. FOR THIS, THE FACTS OF CONDUCTING ENQUIRIES BY THE CIT(A) USING SUCH NAMES AND 10 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 ADDRESSES WAS RELIED UPON BY THE LD.AR BEFORE US. FURTH ER, LD.AR MENTIONED THAT CERTAIN DONATIONS WHICH WERE CONFIRMED BY DONORS WERE ALSO CONSIDERED WHILE ESTIMATING 10% OF THE ENTIRE DONATION S FOR BOTH THE YEARS. 17. PER CONTRA, LD.DR FOR THE REVENUE RELIED HEAVILY ON TH E ORDER OF CIT(A) ARGUED VEHEMENTLY STATING THAT MERE MENTIONING OF THE NAMES AND ADDRESSES OF THE DONORS IS NOT ADEQUATE. THE SAID DETA ILS SHOULD STAND TEST OF SCRUTINY BY THE AUTHORITIES. IN THE INSTANT CASE, THE ASSESSEE DID NOT BOTHER TO FILE CONFIRMATION LETTERS OF ALL DONORS OR TO PROD UCE DONORS OR THE REVISED ADDRESSES. IN SUCH CIRCUMSTANCES, THE DONATIONS MADE BY SUCH DONORS CONSTITUTE THE ANONYMOUS ONES. THEREFORE, THEY WILL FALL WITHIN THE AMBIT THE ANONYMOUS DONATIONS AS DEFINED IN SUB-SECTION (3) OF SECTION 115 BBC OF THE ACT. 18. WE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE ORDER OF THE REVENUE AND THE PAPER BOOK FILED BEFORE US. WE HAVE ALSO PERUSED THE DECISIONS CITED BY THE BOTH PARTIES. TO START WITH WE E XTRACT THE PROVISIONS OF SECTION 115 BBC AND THE DEFINITION GIVEN TO ANONYMOUS D ONATION IN SUB-SECTION (3). THE SAME READ AS UNDER : (3) FOR THE PURPOSES OF THIS SECTION, ANONYMOUS DONATI ON MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB-CLAUSE (I IA) OF CLAUSE (24) OF SECTION 2, WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE P RESCRIBED.] 19. WE FIND THE ABOVE SECTION IS BROUGHT INTO STATUTE WITH FINANCE ACT 2002 W.E.F 01.04.2003 AND THE SAME APPLY TO THE A.Y 2011- 12 UNDER CONSIDERATION. ACCORDING TO THE SAID PROVISIONS, THE ANON YMOUS 11 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 DONATION IS DEFINED IN SUB-SECTION (3). ACCORDING TO THE SU B-SECTION (1), 30% OF THE AGGREGATE OF THE ANONYMOUS DONATION RECEIVED IN EXCESS OF THE HIGHER OF THE SPECIFIED AMOUNTS, CONSTITUTES TAX IN CERTA IN CASES. THE MEANING GIVEN TO THE ANONYMOUS DONATIONS IS EXHAUSTIVE. THE MAINTENANCE OF RECORD REGARDING THE IDENTITY OF THE DONOR S ASSUMES SIGNIFICANCE IN THE DEFINITION. WHEN THE PROVISION SPECIFY DIRE CTING THE ASSESSEE TO MAINTAIN THE RECORD REGARDING THE IDENTITY O F SUCH DONATION, IT IMPLIES THAT RECORD OF THAT IDENTITY OF THE DONOR SHOULD ST AND THE TEST OF SCRUTINY BY ASSESSING AUTHORITIES. MERELY WRITING SOME NA MES AND THEIR ADDRESSES, IN OUR OPINION, FALLS SHORT OF THE LEGAL REQUIREMENT. THEREFOR E, IN OUR VIEW, THE NAMES AND ADDRESSES TAKEN FOR VERIFICATION O N TEST CHECK BASIS, GOES TO CAST OF DOUBT ABOUT THE GENUINENESS OF TH E SUCH RECORDS, NAME OF DONORS, DONATIONS ETC., FROM THAT POINT OF VIEW, CO NSIDERING THE ASSESSEES FAILURE TO MAINTAIN THE FOOL-PROOF RECORDS ON T HE IDENTITY OF THE DONORS, WE ARE OF THE OPINION THAT THE PRINCIPLE OF ADHOCISM ADOPTED BY CIT(A) IS THE ONLY METHOD AVAILABLE IN THIS CASE FOR TAXING D ONATIONS AS ANONYMOUS DONATIONS. AS SUCH, THE CIT(A) FAIRLY REST RICTED SUCH CHARGE OF TAXATION ONLY TO 10% OF THE ENTIRE DONATIONS IN BOTH T HE YEARS. ALL THE VERIFIABLE IDENTITY OF THE DONORS , IF ANY WILL FALL IN THE BALANCE 90% OF THE ENTIRE DONORS IN BOTH THE YEARS. FROM THIS POINT OF VIEW, WE ARE OF THE OPINION, ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND IT DOE S NOT CALL FOR ANY INTERFERENCE. 20. REGARDING THE ARGUMENT OF THE COUNSEL FOR THE ASSES SEE THAT REVOLVES AROUND THE CREATION OF A NEW SOURCE OF INCOME BY THE CIT(A) FOR THE FIRST TIME, WE ARE OF THE OPINION LD.COUNSEL FOR THE ASSESSEE IGN ORED THE FACT THAT AO SCRUTINIZED THE ISSUE OF DONORS AND DONATIONS D URING THE 12 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 ASSESSMENT PROCEEDINGS. THE SAME IS EVIDENT FROM THE CONTENTS O F PARA 14. THE RELEVANT PORTIONS FROM THE SAID PARA OF 38 VOUCHES FO R THE SAME. THE RELEVANT LINES ARE EXTRACTED AS UNDER : 14. DONATIONS:- IT IS SEEN THAT THE APPELLANT HAS RECEIVED DONATION S OF RS.1,03,59,525/- ALL BELOW RS.20,000/- EACH FROM 56 5 PERSONS IN A.Y. 2010- 11 AND RS.64,68,820/- AGAIN ALL BELOW RS.20,000/- E ACH FROM 367 PERSONS IN A.Y. 2011-12. A PERUSAL OF ASSESSMENT FOLDERS R EVEALED THAT AN ENQUIRY WAS MADE IN THIS REGARD BY THE AO CONCERNED. IT WA S ALSO FOUND THAT WHILE SOME OF THE LETTERS SENT TO THE ALLEGED DONORS WERE RETURNED UNSERVED, SHRI BALU SHIVAJI PAWAR VIDE LETTER 26/12/2012 HAS CLEAR LY DENIED HAVING GIVEN ANY DONATION TO GURUDATTA SHIKSHAN SANSTHA. HIS RE PLY IS REPRODUCED AS UNDER:- IN CONNECTION WITH ABOVE REFERRED SUBJECT I WOULD L IKE TO STATE AND DECLARE AS UNDER:- THAT I DO NOT CONCERNED WITH THE ABOVE SANSTHA. B ESIDES I HAVE NOT GIVEN ANY DONATION EITHER BY CHEQUE OR BY BANK CHEQ UE/DD OR ANY OTHER KIND. I AM SURPRISED TO KNOW THAT WHY THIS SANSTHA HAS IN FORMED YOU THAT I HAVE GIVEN DONATION TO THEM. I THEREFORE AGAIN STATE AND DECLARE THAT I HAVE NOT GIVEN ANY DONATION TO GURUDATTA SHIKSHAN SANSTHA EITHER IN KIND OR IN CASH / DD AND AVAILED DEDUCTION U/S 80G. PLEASE TAKE THE NOTE OF MY CONFIRMATION ON YOUR REC ORDS AND DO THE NEEDFUL. I HAVE ENCLOSED HEREWITH THE COPIES OF MY RETURNS A ND COMPUTATIONS FOR LAST THREE YEARS FOR YOUR PERUSAL. 21. FROM THE ABOVE, IT IS EVIDENT THAT THE AO INITIATED TH E ENQUIRY INTO THE SAID DONATIONS. HE ALSO GATHERED THE ADVERSE EVIDE NCE AGAINST THE ASSESSEE FROM A DONOR NAMED SHRI BALU SHIVAJI PAWAR VIDE LETTER DATED 26.12.2012. THEREFORE, THE COUNSELS ARGUMENT BEFORE US REGARDING THE CREATION OF NEW SOURCE BY THE CIT(A) FOR THE FIRST TIME IN HIS ORDER OF ENHANCEMENT OF THE ASSESSMENT, IS NOT SUSTAINABLE. ACCO RDINGLY, THE ONLY GROUND RAISED BY THE ASSESSEE IN BOTH THE C.OS ARE DISMISSED. 22. IN THE RESULT, THE APPEAL OF REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 13 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 ITA NO.844/PUN/2015 & C.O. NO. 35/PUN/2017 23. AT THE OUTSET, BOTH THE COUNSELS FOR THE ASSESSEE A S WELL AS REVENUE SUBMITTED THE GROUNDS RAISED BY THE REVENUE AS WELL AS THE OBJECTION RAISED BY THE ASSESSEE AMOUNT INVOLVED IN THE ADDITIONS, A RGUMENTS, COUNTER ARGUMENTS ON THE SAID GROUNDS/OBJECTIONS ARE SIMILAR TO THE ONCE ALREADY ADVANCED IN CONNECTION WITH THE APPEAL IN ITA NO.8 43/PUN/2015 & C.O.NO.34/PUN/2017. 24. CONSIDERING THE COMMONNESS OF THE GROUNDS/OBJECTIONS ARGUMENTS AND COUNTER ARGUMENTS ETC,. WE FIND THE FACTS ARE IDENTICA L. THEREFORE, THE DECISION GIVEN BY US IN CONNECTION WITH APPEAL OF THE REVEN UE AND CROSS OBJECTION OF THE ASSESSEE FOR THE A.Y.2010-11 APPLIES EQU ALLY TO THE APPEAL/CROSS OBJECTION UNDER CONSIDERATION I.E. A.Y.2011-12. ACCORDINGLY, THE REVENUES APPEAL IS DISMISSED AND THE CROSS OBJECTIO N BY THE ASSESSEE IS ALSO DISMISSED. 25. TO SUM UP, BOTH THE APPEALS OF THE REVENUE ARE DISM ISSED AND BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALSO DISMISSED. ORDER PRONOUNCED ON 22 ND DAY OF SEPTEMBER, 2017. SD/- SD/- (# !$ /VIKAS AWASTHY) (. /D.KARUNAKARA RAO) % !/ JUDICIAL MEMBER !/ ACCOUNTANT MEMBER / PUNE; / DATED : 22 ND SEPTEMBER, 2017 S S . . G G A A N N G G A A D D H H A A R R A A R R A A O O 14 ITA NO.843 & 844/PUN/2015 C.O.NOS: 34 & 35/PUN/2017 * - .%/0# 1#)/ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)-III, NASHIK. 4. / THE CIT, NASHIK. 5. , ! , #$% , / DR, ITAT, A BENCH, PUNE. 6. '( / GUARD FILE. / BY ORDER, / / TRUE COPY / / .. % / SR. PRIVATE SECRETARY, ! , / ITAT, PUNE