Prajna Pratisthan Trust, Hyderabad V. DIT (Exemptions), Hyderabad

ITA 867/HYD/2013

• Counselvise Citation: 86722514 RSA 2013
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Keywords: Unexplained cash credit; Charitable institution; Opportunity of being heard; Peak credit
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND S HRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.867/HYD/2013 PRAJNA PRATISTHAN TRUST, -V- DIRECTOR OF INCOME-TAX, BEGUMPET, HYDERABAD. (EXEMPTIONS), HYDERABAD. PAN:AAATP5699Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K.C. DEVDAS RESPONDENT BY SHRI P. S OMASEKHAR REDDY (CIT DR) DATE OF HEARING 18 - 12 - 2013 DATE OF PRONOUNCEMENT 12 - 02 - 2014 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 14-3-2013 PASSED BY THE DIRECTOR OF INCOME-T AX (EXEMPTIONS) (DIT (E), HYDERABAD REJECTING ASSESSEE S APPLICATION FOR RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT. 2. BRIEFLY THE FACTS ARE THE ASSESSEE IS A TRUST RE GISTERED U/S 12A OF THE ACT. THE ASSESSEE WAS ALSO GRANTED APPROVAL U/S 80G(5) AND THE LAST RENEWAL OF APPROVAL WAS MADE ON 31-3-2004 FOR A PERIOD OF 2 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. THREE YEARS. BEFORE EXPIRY OF THE AFORESAID PERIOD OF 3 YEARS, THE ASSESSEE MADE AN APPLICATION IN FORM NO.10G ON 16-3 -2007 SEEKING RENEWAL OF APPROVAL U/S 80G (5) OF THE ACT. THE DI T (E) HOWEVER REJECTED THE APPLICATION FOR RENEWAL OF APPROVAL BY HOLDING THAT CLAUSE-7 OF THE TRUST DEED GIVES UNBRIDLED POWER AN D CONTROL TO THE TRUSTEES TO APPLY FUNDS AND INCOME OF TRUST IN THE UNCONTROLLED DISCRETION OF THE TRUSTEES. HE FURTHER WAS OF THE VIEW THAT CLAUSE 6(B) OF THE TRUST DEED AUTHORISES TO USE THE TRUST PROPERTIES AND ITS INCOME INCLUDING FEES, CHARGES ETC., IN THE MANNER TRUSTEES THINK FIT. HE FURTHER NOTED THAT OBJECTS MENTIONED IN SUB CLA USES (F),(K) & (S) OF CLAUSE-2 ARE OF NON CHARITABLE NATURE. THIS ORD ER OF THE DIT (E) WAS CHALLENGED BEFORE INCOME-TAX APPELLATE TRIBUNAL . THE INCOME- TAX APPELLATE TRIBUNAL VIDE ORDER DATED 15-7-2008 IN ITA NO.1110/HYD/07 DATED 15-7-2008 REMITTED THE MATTER BACK TO THE DIT (E) BY OBSERVING THAT WITHOUT BRINGING TO THE N OTICE OF THE ASSESSEE THE DEFECTS AS NOTED BY THE DIT (E), HE CO ULD NOT HAVE REJECTED THE APPLICATION. THE TRIBUNAL THEREFORE D IRECTED THE DIT (E) TO DECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE KEEPING IN VIEW THE DEC ISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF UMAID CHARITABLE TRUST VS. UNION OF INDIA. PURSUANT TO THE DIRECTION OF T HE INCOME-TAX APPELLATE TRIBUNAL, THE DIT (E) AGAIN INITIATED THE PROCEEDINGS BY ISSUING A NOTICE TO THE ASSESSEE. IN RESPONSE TO T HE NOTICE ISSUED BY THE DIT (E), AS IT APPEARS FROM RECORD, THE ASSE SSEE APPEARED AND FURNISHED VARIOUS DETAILS AS CALLED FOR AS WELL AS SUBMITTED A NOTE ON THE ACTIVITIES CARRIED OUT BY THE TRUST DUR ING DIFFERENT FINANCIAL YEARS AS WELL AS THE DETAILS OF BENEFICI ARIES. THE ASSESSEE ALSO PRODUCED THE BOOKS OF ACCOUNTS AND AN AMENDED TRUST DEED. IT WAS CONTENDED BY THE ASSESSEE THAT THE TRUST DEED W AS AMENDED BY 3 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. BRINGING SPECIFIC PROVISIONS TO REMOVE AMBIGUITIES IF ANY, WHICH WERE POINTED BY THE DIT (E) EARLIER KEEPING ITS BAS IC FABRIC OF CHARITABLE OBJECT INTACT. IT WAS ALSO SUBMITTED THA T THE TRUST DEED AMENDMENT WAS REGISTERED WITH SUB-REGISTRAR OFFICE, VALLABH NAGAR, HYDERABAD. 3. IT WAS SUBMITTED BY THE ASSESSEE THAT THE DEFIC IENCY/DEFECTS POINTED OUT BY THE DIT (E) WITH REGARD TO EARLIER C LAUSE-7 AND SUB- CLAUSES (A) (B) AND (C) OF CLAUSE 6, IT WAS SUBMITT ED THAT THIS CLAUSE AS FORMING PART OF THE TRUST DEED CANNOT BE CONSTRU ED TO MEAN THAT IT GIVES UNBRIDLED POWER TO TRUSTEES TO APPROPRIAT E THEIR FUNDS AS THEY THINK FIT. SO FAR AS THE ALLEGATION OF THE DI T (E) IN HIS EARLIER ORDER THAT SOME OTHER CLAUSES AS APPEARING IN THE O BJECT CLAUSE-2 BEING OF NON CHARITABLE NATURE IT WAS SUBMITTED TH AT ALL SUCH SUB- CLAUSES IDENTIFY THE ACTIVITIES WHICH LEAD TO THE A CHIEVEMENT OF THE OBJECTS OF THE TRUST. THE DIT (E) AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE NOTED THAT AS PER THE DETAILS OF DO NATIONS PAID DURING THE FINANCIAL YEARS 2007-08 TO 2010-11 AND C ONSIDERING THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) BILL, 2009 CLARIFIED VIDE CIRCULAR NO.7/2010 (F.NO.19/21/2010-ITA-I) DATED 27 -10-2010, THE TRUST CANNOT BE GRANTED APPROVAL U/S 80G(5)(VI) OF THE ACT. THE DIT (E) FURTHER NOTED THAT FROM THE COPIES OF THE A CCOUNTS OF THE ASSESSEE FURNISHED FOR DIFFERENT FINANCIAL YEARS IT WOULD BE NOTICED THAT THE ASSESSEE HAS MOSTLY PAID DONATIONS TO DIFF ERENT INSTITUTIONS WHEREAS AS PER THE OBJECTS OF THE TRUST DEED EXECU TED ON 29/4/1993 AND THE SUBSEQUENT AMENDED DEED, THERE IS NO STIPULATION FOR MAKING DONATION TO OTHER INSTITUTIO N. THEREFORE, HE WAS OF THE VIEW THAT DONATIONS MADE TO DIFFERENT IN STITUTION WAS STRICTLY NOT IN ACCORDANCE WITH TRUST. HE OPINED T HAT IN VIEW OF THE 4 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. AMENDMENT MADE IN SECTION 80G(5)(VI) OF THE ACT BY FINANCE (NO.2)ACT, 2009 READ WITH EXPLANATORY MEMORANDUM T O FINANCE (NO.2) ACT, 2009 CLARIFIED VIDE CIRCULAR NO.7/2010 (F. NO.197/21/ 2010-ITA-1) DATED 27-10-2010, THE TRUST CANNOT BE GRANTED APPROVAL U/S 80G(5)(VI) OF THE ACT. 4. THE DIT (E) FURTHER NOTED THAT FROM THE COPIES O F THE ACCOUNTS OF THE ASSESSEE FURNISHED FOR DIFFERENT FINANCIAL Y EARS, IT WOULD BE NOTED THAT THE ASSESSEE HAS NOT TRUTHFULLY MAINTAIN ED ITS RECEIPTS AND EXPENDITURE DURING DIFFERENT YEARS. HE FURTHER MENTIONED THAT AS PER THE DETAILS OF DONATIONS PAID DURING THE YEA R 2009-10, THE ASSESSEE HAS PAID ONLY SINGLE DONATION OF RS.15,000 /- TO ONE MS. P. KHAIROON VIDE CHEQUE NO.343285 DATED 11-3-2010 WHER EAS FROM THE BANK ACCOUNT STATEMENT OF THE ASSESSEE IN AXIS BANK LIMITED, FOR THE PERIOD FROM 1-4-2009 TO 31-3-2010, IT WAS NOTED THAT THE ASSESSEE HAS ALSO PAID A SUM OF RS.30,000/- TO ONE AKSHARA FOUNDATION. HE FURTHER NOTED THAT THE ASSESSEE HAS PAID RS.1,03,000/- TO THE SAID AKSHARA FOUNDATION ON 2 0-3-2010 THROUGH CHEQUE AS PER THE SAID BANK STATEMENT. HE N OTED THAT THE ASSESSEE HAD MADE A TOTAL AMOUNT OF RS.1,33,000/- T O AKSHARA FOUNDATION TO WHOM IT HAD EARLIER PAID DONATIONS O F RS.4,000/- DURING FINANCIAL YEAR 2007-08. HE NOTED THAT THE S AID AMOUNT PAID TO THAT INSTITUTION HAS NOT BEEN SHOWN IN THE STATE MENT OF DONATION FURNISHED BY THE ASSESSEE FOR THE YEAR 2009-10 AND THEY ARE ALSO NOT REFLECTED IN THE BALANCE-SHEET OF THE ASSESSEE AS ON 31-3-2010. HE THEREFORE CONCLUDED THAT THE ASSESSEE HAS NOT TR UTHFULLY RECORDED ALL ITS RECEIPTS AND EXPENDITURE DURING DIFFERENT A CCOUNTING YEAR. HE WAS THEREFORE OF THE VIEW THAT AS ASSESSEE HAS NOT SATISFIED THE CONDITION STIPULATED IN CLAUSE (IV) OF SECTION 80G (5), IT CANNOT BE 5 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. GRANTED APPROVAL. THE DIT (E) FURTHER NOTED THAT IN THE SUBSEQUENT FINANCIAL YEAR 2010-11 ALSO THE ASSESSEE WAS FOUND TO HAVE PAID DONATION TO AKSHARA FOUNDATION ON TWO INSTANCES I.E ., 3-11-2010 RS.25,000/- AND ON 8-11-2010 RS.20,000/-. HOWEVER, THE BANK ACCOUNT STATEMENT OF THE ASSESSEE IN AXIS BANK INDI CATE THAT IN ADDITION TO THE AFORESAID TWO AMOUNTS, THE ASSESSEE HAS PAID A MAJOR AMOUNT OF RS.5 LAKHS TO AKSHARA FOUNDATION ON 28-3-2011. HE FURTHER OBSERVED THAT THE SAID AMOUNT HAS BEEN P AID AFTER CREDIT OF A SUM OF RS.10 LAKHS FROM PRAJNA TECHNOLOGIES & SERVICES PVT. LIMITED IN THAT ACCOUNT. HE OBSERVED THAT WHEN THE ASSESSEE HAS SHOWN PAYMENT OF TWO DONATIONS TO AKSHARA FOUNDATIO N CLAIMING TO BE CHARITABLE ORGANISATION, IT IS NOT KNOWN AS TO H OW AND UNDER WHAT CIRCUMSTANCES SUCH MAJOR AMOUNT OF RS.5 LAKHS WAS PAID TO THAT INSTITUTION WHICH IS NOT SHOWN IN THE STATEMENT FIL ED DURING THE PROCEEDINGS. HE FURTHER NOTED THAT THE SAID AMOUNT HAS BEEN SHOWN UNDER LOANS AND ADVANCES IN THE BALANCE-SHEET OF THE ASSESSEE AS ON 31-3-2011. HE THEREFORE WAS OF THE VIEW THAT SIN CE THE ASSESSEE HAS MADE SUCH PAYMENT AFTER OBTAINING LOAN FROM P RAJNA TECHNOLOGIES & SERVICES PVT. LIMITED WHICH IS NOT R EFLECTED IN THE DETAILS OF DONATIONS MADE DURING THAT YEAR, IT SHOW S THAT THE ASSESSEE WAS ADVANCING LOAN TO OTHERS AFTER BORROW ING BY ITSELF. HE THEREFORE FINALLY CONCLUDED THAT THE ASSESSEE C ANNOT BE CONSIDERED AS FULLY CHARITABLE ORGANISATION THEREFO RE HAVING REGARD TO THE PROVISIONS CONTAINED UNDER CLAUSE (IV) OF SE CTION 58G(5), THE ASSESSEE CANNOT BE GRANTED APPROVAL U/S 80G(5)(VI) OF THE ACT. ACCORDINGLY, HE REJECTED THE ASSESSEES APPLICATION FOR RENEWAL OF APPROVAL. 6 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. 5. THE LEARNED AR REFUTING THE ALLEGATIONS MADE BY THE DIT (E) TO THE EFFECT THAT THE ASSESSEE TRUST HAS NOT MAINT AINED ITS ACCOUNTS TRUTHFULLY SUBMITTED BEFORE US THAT THE ASSESSEE IS NOT ONLY MAINTAINING REGULAR BOOKS OF ACCOUNTS BUT ALL ITS A CCOUNTS ARE AUDITED. IT WAS SUBMITTED THAT THE DETAILS OF ACTU AL DONATIONS AMOUNTING TO RS.3,20,160/- HAVE BEEN MENTIONED IN T HE INCOME AND EXPENDITURE ACCOUNT OF THAT YEAR. IN THIS CONTEXT, THE LEARNED AR DREW OUR ATTENTION TO SUMMARY OF SUCH DETAILS TAKEN FROM THE AUDITED INCOME AND EXPENDITURE ACCOUNT SHOWING THE EXPENDITURE OF RS.3,20,160/-. HE FURTHER SUBMITTED THAT THE I NCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED ON 31-3-2010 WHICH IS PART OF THE AUDITED BALANCE SHEET IN FINANCIAL YEAR 2009 -10 SHOWS THE AMOUNT OF RS.30,000/- PAID TO AKSHARA FOUNDATION ON 18-2-2010 AND FURTHER AMOUNT OF RS.1,05,000/- PAID ON 20-32-2 010 TOTALLING RS.1,35,000/- TOWARDS FELLOWSHIP. THE DETAILS OF SUCH PAYMENT MADE WERE SUBMITTED BEFORE US. HE FURTHER SUBMITTE D THAT AKSHARA FOUNDATION IS A CHARITABLE TRUST REGISTERED U/S 12A A OF THE ACT AND HENCE AMOUNTS PAID AS DONATION TO AKSHARA FOUNDATIO N IS ALSO AN APPLICATION OF INCOME TOWARDS CHARITABLE PURPOSES. IN THIS CONTEXT, THE LEARNED AR RELIED UPON A DECISION OF INCOME-TAX APPELLATE TRIBUNAL, HYDERABAD BENCH IN CASE OF YVS BHANUMURT HY & VIJAYALAKSHMI CHARITABLE TRUST IN ITA NO.169/HYD201 0 DATED 1-7- 2010. THE LEARNED AR SUBMITTED THAT THE AMOUNT OF RS.4000/- PAID AS DONATION TO AKSHARA FOUNDATION DURING THE FINANC IAL YEAR 2007-08 IS ALSO REFLECTED IN THE LIST OF DONATION/CHARITY. WITH REGARD TO THE ALLEGATION MADE BY THE DIT (E) THAT THE AMOUNTS PAI D TO AKSHARA FOUNDATION HAS NOT BEEN SHOWN IN THE STATEMENT OF D ONATIONS FURNISHED BY THE ASSESSEE FOR THE YEAR 2009-10 AND NOT REFLECTED IN THE BALANCE-SHEET AS ON 31-3-2010, IT WAS SUBMITTED BY THE LEARNED 7 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. AR THAT SUCH ALLEGATION IS TOTALLY UNFOUNDED AS T HE TOTAL DONATION/CHARITY AMOUNTING TO RS.3,20,160 IS INCLUD ED IN THE INCOME AND EXPENDITURE ACCOUNT WHICH IS A PART OF THE AUDI TED BALANCE SHEET. IT WAS SUBMITTED THAT THE DONATIONS MADE BY THE ASSESSEE TO AKSHARA FOUNDATION ARE PART OF TOTAL DONATIONS OF RS.1,71,900/- MADE DURING THE FINANCIAL YEAR 2010-11 WHICH IS ALS O REFLECTED IN THE INCOME AND EXPENDITURE STATEMENT AND BALANCE-SH EET FOR THE YEAR 2010-11. 6. SO FAR AS THE ALLEGATION OF DIT (E) THAT THE ASSESSEE HAS ADVANCED LOAN OF RS.5 LAKH TO AKSHARA FOUNDATION IS CONCERNED, THE LEARNED AR SUBMITTED THAT THE AMOUNT OFRS.5 LAKH WA S PAID AS PER THE REQUEST FROM AKSHARA FOUNDATION WHICH WAS SANCT IONED BY THE ASSESSEE TRUST WITH THE CONDITION THAT THE SAME WOU LD BE UTILISED ONLY FOR THE PURPOSE IT WAS GRANTED WITHIN 90 DAYS OF RELEASE. A FURTHER CONDITION WAS THERE TO THE EFFECT THAT IN T HE UNLIKELY EVENT OF THE AMOUNT BEING NOT UTILISED, AKSHARA FOUNDATION SHOULD REFUND THE SAME WITHIN 90 DAYS AND IT SHOULD NOT UTILISE T HE SAME FOR ANY OTHER PURPOSES. SINCE AKSHARA FOUNDATION WAS NOT A BLE TO UTILISE THE AMOUNT OF RS.5 LAKHS FOR DESIGNATED PURPOSES WI THIN THE STIPULATED PERIOD OF 90 DAYS, THE AMOUNT OF RS.5 LA KHS WAS RETURNED BACK TO THE ASSESSEE. THEREFORE, THE DIT (E) COMPL ETELY MISDIRECTED HIMSELF IN CONSIDERING THE TEMPORARY A DVANCE FOR DONATION AS A BUSINESS ADVANCE. THE LEARNED AR CON TENDED THAT CLAUSE-G OF THE OBJECT CLAUSE OF THE TRUST DEED AUT HORISES THE ASSESSEE TRUST TO MAKE DONATION TO ANOTHER TRUST HE NCE THE ALLEGATION OF DIT (E) THAT THERE IS NO STIPULATION IN THE TRUST DEED IS WITHOUT ANY BASIS. THE LEARNED AR SUBMITTED THAT S INCE THE ASSESSEE HAS SATISFIED ALL CONDITIONS OF SECTION 80 G(5), RENEWAL OF 8 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. APPROVAL U/S 80G(5) CANNOT BE DENIED. IT WAS FURTH ER SUBMITTED THAT IN THE ABSENCE OF ANY FINDING THAT THE ASSESSE E ACTIVITY IS NOT COMING WITHIN THE MEANING OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT WHEN THE ASSESSEE CONTINUE S TO BE REGISTERED U/S 12A OF THE ACT, THE REJECTION OF ITS APPLICATION FOR RENEWAL OF APPROVAL IS TOTALLY UNTENABLE. 7. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE DIT (E). 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD. AS CAN BE SEEN FROM MATERIALS ON RECORD IN THE EARLIER ROUND, THE RENEWAL OF APPROVAL WAS REJECTED ON THE GROUND THAT CLAUSE-7 OF THE TRUST DEED GIVES UNBRIDLED POWER T O THE TRUSTEES TO APPLY FUNDS AND INCOME OF THE TRUST ACCORDING TO T HEIR OWN DISCRETION. IT WAS FURTHER HELD THEREIN THAT SOME OF THE ACTIVITIES IN THE OBJECT CLAUSE ARE OF NON CHARITABLE NATURE. IT IS A FACT ON RECORD THAT THE ASSESSEE THEREAFTER HAS MADE AMENDMENTS TO CLAUSE-7 AND ALSO MADE SOME OTHER AMENDMENTS TO TRUST DEED WHI CH HAS BEEN REGISTERED WITH THE SUB-REGISTRAR. AS CAN BE SEEN FROM THE IMPUGNED ORDER OF THE DIT (E) THE GROUNDS ON WHICH THE DIT (E) EARLIER REJECTED THE APPLICATION APPEARS TO HAVE BE EN REMOVED AS THE DIT (E) HAS NOT REFERRED TO THOSE DEFECTS/DEFI CIENCIES WHILE REJECTING THE APPLICATION FOR SEEKING RENEWAL OF AP PROVAL. AS CAN BE CULLED OUT FROM THE ORDER OF THE DIT (E), THE ASSES SEES APPLICATION IN FORM 10G HAS BEEN REJECTED BROADLY ON THE FOLLOW ING REASONS:- I) THERE IS NO STIPULATION FOR MAKING DONATION TO OTHE R INSTITUTIONS IN THE TRUST DEED. SINCE THE ASSESSEE HAS 9 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. MADE DONATIONS TO OTHER INSTITUTIONS, IT IS NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. II) THE ASSESSEE HAS NOT TRUTHFULLY MAINTAINED ITS REC EIPTS AND EXPENDITURE DURING DIFFERENT YEARS AS THE DONAT ION MADE TO AKSHARA FOUNDATION HAS NOT BEEN REFLECTED I N ITS ACCOUNTS WHICH IN VIOLATION OF SUB-CLAUSE (IV) OF S ECTION 80G(5). III) THE ASSESSEE HAS ADVANCED A LOAN OF RS.5 LAKH TO AK SHARA FOUNDATION BY ITSELF OBTAINING A LOAN OF RS.10 LAKH FROM PRAJNA TECHNOLOGIES & SERVICES PVT. LIMITED WHICH I S NOT SHOWN IN THE STATEMENT OF DONATIONS, THEREBY THE ASSESSEE CANNOT BE CONSIDERED AS FULLY CHARITABLE ORGANISATION HAVING REGARD TO THE PROVISIONS CONTAI NED IN CLAUSE (IV) OF SECTION 80G(5) OF THE ACT. 9. SO FAR AS THE FIRST OBJECTION OF THE DIT (E) IS CONCERNED, IT IS TO BE NOTED THAT HE DOES NOT DISPUTE THE FACT THAT D ONATIONS WERE MADE TO AKSHARA FOUNDATION WHICH IS A CHARITABLE TR UST REGISTERED U/S 12A OF THE ACT. THEREFORE, DONATION GIVEN TO AN OTHER CHARITABLE TRUST IS AN APPLICATION OF INCOME FOR CHARITABLE PU RPOSES AS HELD BY THE CO-ORDINATE BENCH IN CASE OF YVS BHANUMURTHY VS . DIG (SUPRA). THEREFORE, DONATION GIVEN TO ANOTHER REGISTERED CHA RITABLE TRUST CANNOT BE A GROUND FOR NOT GRANTING APPROVAL U/S 80 G (5)(VI) OF THE ACT. A READING OF SECTION 80G MAKES IT CLEAR THAT A PPROVAL U/S 80G(5) IS TO BE GRANTED TO A CHARITABLE TRUST OR IN STITUTION IF IT FULFILS THE CONDITION ENUMERATED IN CLAUSE(I) TO(V) OF SECT ION 80G(5). IN THE PRESENT CASE, THE DIT (E) HAS HELD THAT THE ASS ESSEE HAS NOT FULFILLED SUB-CLAUSE (IV) OF SECTION 80G(5). CLAUS E (IV) OF SECTION 80G(5) READS AS UNDER:- 10 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. (IV) THE INSTITUTION OR FUND MAINTAINS A REGULAR AC COUNTS OF ITS RECEIPTS AND EXPENDITURE; 10. THE PLAIN READING OF THE ABOVE CLAUSE MAKES IT CLEAR THAT IT SPEAKS OF MAINTENANCE OF ACCOUNTS OF RECEIPTS AND E XPENDITURE. AS CAN BE SEEN FROM MATERIALS ON RECORD THAT THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE MAINTAINS ITS ACCOUNTS WHI CH ARE ALSO AUDITED. THE ALLEGATION OF THE DIT (E) IS THAT CE RTAIN DONATIONS AMOUNTING TO RS.1.35 LAKHS HAS NOT BEEN SHOWN IN TH E STATEMENT OF DONATIONS FURNISHED BY THE ASSESSEE FOR THE ASSESSM ENT YEAR 2009- 10 AND ALSO NOT REFLECTED IN THE BALANCE-SHEET OF T HE ASSESSEE AS ON 31-3-2010. HOWEVER, ON A PERUSAL OF THE SUMMARY O F DONATIONS SUBMITTED CLEARLY SHOWS THAT THE AMOUNT OF RS.1,35, 000 HAS INDEED BEEN SHOWN AS EXPENDITURE TOWARDS FELLOWSHIP WHICH ALSO FINDS PLACE IN THE DETAILS OF DONATIONS AS TAKEN FROM TH E AUDITED INCOME AND EXPENDITURE ACCOUNTS. THOUGH OF COURSE INSTEAD OF MENTIONING THE NAME OF AKSHARA FOUNDATION, NAME OF BENEFICIARI ES HAS BEEN MENTIONED. THEREFORE, THE ALLEGATION OF DIT (E) AP PEARS TO BE UNFOUNDED. SIMILARLY, SO FAR AS THE ALLEGATION THA T IT HAS NOT BEEN REFLECTED IN THE BALANCE-SHEET IS CONCERNED, THE SA ME IS ALSO NOT CORRECT AS IT COULD NOT HAVE BEEN MENTIONED IN THE BALANCE-SHEET SINCE THE AMOUNT HAS BEEN DEBITED TO THE PROFIT & L OSS A/C. SO FAR AS THE THIRD ALLEGATION OF THE DIT (E) WITH REGARD TO THE ADVANCE OF RS.5 LAKHS TO AKSHARA FOUNDATION IS CONCERNED, WE A RE OF THE VIEW THAT THE DIT (E)S CONCLUSION IS BASED ON PRESUMPTI ONS AND SURMISES. IT IS VERY MUCH EVIDENT FROM THE ORDER O F THE DIT (E), HE HIMSELF ADMIT THAT THE AMOUNT OF RS.5 LAKH HAD BEEN SHOWN IN THE BALANCE-SHEET AS ADVANCE TO AKSHARA FOUNDATION. THE REFORE, WHEN 11 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. THE AMOUNT OF RS.5 LAKH HAS BEEN REFLECTED IN THE I NCOME AND EXPENDITURE ACCOUNT WHICH FORMS PART OF BALANCE-SHE ET IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT MAINTAINED REGULAR A CCOUNTS OF ITS RECEIPTS AND EXPENDITURE IN TERMS OF CLAUSE(IV) OF SECTION 80G(5). LAW IS WELL SETTLED BY JUDICIAL PRECEDENTS THAT AT THE TIME OF GRANTING APPROVAL U/S 80G(5)(IV) THE AUTHORITY CONC ERNED IS ONLY REQUIRED TO EXAMINE WHETHER THE TRUST AND INSTITUTI ON HAS FULFILLED THE CONDITIONS ENUMERATED UNDER CLAUSE (I) TO (V) O F SECTION 80G(5). THEREFORE, THE DIT (E) HAS TO RESTRICT HIMSELF WITH IN THE LIMITATION OF STATUTORY MANDATE AND CANNOT TRAVEL BEYOND IT. IN THE PRESENT CASE, NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS ENUMERATED IN CLAUSE (I) TO (V) OF SECTION 80G(5). 11. SO FAR AS THE DIT (E)S ALLEGATION THAT THE AS SESSEE HAS VIOLATED THE CLAUSE(IV) OF SECTION 80G(5) BY NOT TR UTHFULLY MAINTAINING THE RECEIPTS AND EXPENDITURE, THE SAME IS WITHOUT ANY BASIS. THE MATERIAL ON RECORD CLEARLY PROVES THAT THE ALLEGED DONATION HAD BEEN REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THAT APART IT IS NOT DISPUTED THAT THE ASSESSEE TRUST CO NTINUES TO BE REGISTERED U/S 12A OF THE ACT WHICH PRE-SUPPOSES, I TS OBJECTS ARE WITHIN THE MEANING OF CHARITABLE PURPOSE AS DEFIN ED IN SECTION 2(15) OF THE ACT. IN THE AFORESAID CIRCUMSTANCES, THE CONCLUSION REACHED BY THE DIT (E) THAT THE ASSESSEE TRUST CANN OT BE HELD TO BE A FULLY CHARITABLE ORGANISATION IS TOTALLY UNSUBSTA NTIATED AND BASED ON MERE IMAGINATION THAN FACTS. IN AFORESAID VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE DIT (E) WAS NOT CORR ECT IN REJECTING THE ASSESSEES APPLICATION FOR RENEWAL OF APPROVAL U/S 80G(5). 12 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. ACCORDINGLY, WE DIRECT THE DIT (E) TO RENEW THE APP ROVAL GRANTED EARLIER U/S 80G (5) OF THE ACT TO THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH FEB.2014. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 12 TH FEBRUARY, 2014. JMR* COPY TO:- 1) PRAJNA PRATISTHAN TRUST, UNIT NO.17, 1 ST FLOOR, AMRUTHA MALL, BEGUMPET, HYDERABAD. 2) DIRECTOR OF INCOME-TAX (EXEMPTIONS), HYDERABAD. 3) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 13 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. ITA NO.370/HYD/2011 THE ONLY ISSUE IN THIS APPEAL OF THE DEPARTMENT IS WITH REGARD TO DELETION OF ADDITION OF RS.86,25,000/- MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CR EDIT. X. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD. THIS ISSUE IS IDENTICAL TO THE ISSUE RAISE D IN GROUND NO.3 OF DEPARTMENTS APPEAL IN ITA NO.369/HYD/11. AS CAN BE SEEN FROM HE ASSESSMENT ORDER, THE ASSESSING OFFICE R NOTICED DATE WISE CASH CREDITS DURING THE YEAR TOTALLING TO RS.86,25,000/- WHEREAS TOTAL REPAYMENTS ARE RS.47,5 0,000. AS IN THE CASE OF ASSESSMENT YEAR 2004-05 THE ASSES SING OFFICER ADDED THE AMOUNT OF RS.86,25,000/- AS UNEXP LAINED CASH CREDIT. THE CIT (A) HELD THAT WHEN THERE ARE BOTH CASH CREDITS AND REPAYMENTS, THE ASSESSING OFFICER CANNO T CONSIDER THE CASH CREDITS ALONE IGNORING THE REPAYMENTS. HE HELD THAT IN THAT SITUATION ONLY THE PEAK CREDIT CAN BE CONSIDER ED FOR PEAK CREDIT WAS FOUND TO BE RS.47,50,000/-, THE CIT (A) HELD THAT ONLY AMOUNT OF RS.47.50,000/- CAN BE CONSIDERED FO R ADDITION. THE CIT (A) FURTHER HELD THAT SINCE IN THE PREVIOUS ASSESSMENT YEAR PEAK CREDITS OF RS.50,00,000/- WAS ADDED TO TH E INCOME OF THE ASSESSEE, THE SAID AMOUNT IS AVAILABLE FOR ASSE SSMENT YEAR 2005-06. ACCORDINGLY, THE CIT (A) DELETED THE ENTI RE ADDITION. ON A PERUSAL OF THE STATEMENT SHOWING RECEIPTS AND REPAYMENTS AT PAGE 35 OF THE PAPER BOOK, IT IS TO BE NOTED THA T PEAK CREDITS 14 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. AS ON 8-6-2004 IS RS.47,50,000. THEREFORE, WHEN TH ERE ARE BOTH RECEIPTS AND PAYMENTS ONLY RECEIPTS CANNOT BE CONSIDERED TOTALLY IGNORING THE REPAYMENTS. IN SUCH SITUATION ONLY THE PEAK AMOUNT IS TO BE CONSIDERED. FURTHER, IT IS A F ACT THAT PEAK CREDITS OF RS.50 LAKHS ADDED TO THE INCOME OF THE A SSESSEE IN THE ASSESSMENT YEAR 2004-05 WAS AVAILABLE WITH THE ASSESSEE FOR TELESCOPING. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY REASON TO INTERFERE WITH THE J FINING OF THE CIT (A ) WHICH IS ACCORDINGLY CONFIRMED. ITA NOS. 373/HYD/11 & 838/HYD/11 THERE IS A DELAY OF 61 DAYS IN FILING THE APPEAL OF THE ASSESSEE. THESE CROSS APPEALS ARE AGAINST THE ORDER OF THE CI T (A) SUSTAINING THE ADDITION OF RS.40,95,000/-. WHILE T HE DEPARTMENT HAS CHALLENGED THE ORDER OF THE CIT (A) FOR NOT SUSTAINING THE ENTIRE ADDITION, THE ASSESSEE IS AGG RIEVED BY THE ADDITION BEING SUSTAINED BY CIT (A). X. WE HAVE HEARD THE PARTIES. ON PERUSAL OF THE MA TERIALS ON RECORD AS WELL AS ORDERS OF THE REVENUE AUTHORITIES WE FIND THAT FACTS INVOLVED AND ISSUES RAISED IN THESE TWO APPEA LS ARE IDENTICAL TO ITA NO.369/HYD/11 AND 837/HYD/11. IN T HE IMPUGNED YEAR ALSO THE ASSESSING OFFICER HAS ADDED THE ENTIRE RECEIPTS OF RS.1,08,05,000/- IGNORING THE REPAYME NTS OF 15 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. RS.55,65,000/-. DURING THE APPEAL PROCEEDINGS, THE CIT (A) NOTICED THAT THE PEAK CREDITS FOR THE RELEVANT PREV IOUS YEAR J WAS RS.90,95,000. CONSIDERING THE FACT THAT PEAK C REDITS OF RS.50 LAKHS WAS ADDED AS INCOME FOR THE ASST. YEAR 2004-05, THE CIT (A) DIRECTED THE ASSESSING OFFICER TO RETA IN THE BALANCE PEAK CREDITS OF RS.40,95,000/- AS INCOME OF THE YEA R UNDER CONSIDERATION. IN VIEW OF OUR FINDING IN ITA NO.36 9/HY7D/11 AND 837/HYD/11, WE DO NOT FIND ANY INFIRMITY IN THE AFORESAID DIRECTION OF THE CIT (A) WHICH IS ACCORDINGLY CONFI RMED. X. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. HAS BEEN SHOWN IN THE NAME OF SRI VENKATEWARA FILMS . THE ASSESSEE EXPLAINED THAT THE AMOUNT SHOWN IN BOO KS IS IN REGULAR COURSE OF BUSINESS WITH SRI VENKATESW ARA FILMS AND THEY HAVE A RUNNING ACCOUNT WHICH APPEARS IN THE BOOKS OF ACCOUNTS OF BOTH THE FIRMS. IT WAS TH EREFORE SUBMITTED THAT SINCE THE TRANSACTION IS GENUINE, TH E AMOUNT OF RS.24,50,000/- CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT. THE ASSESSING OFFICER HOW EVER REJECTED THE EXPLANATION OF THE ASSESSEE BY APPLYIN G THE SAME REASONS ON WHICH SIMILAR ADDITIONS WERE MADE IN THE EARLIER ASSESSMENT YEARS. HOWEVER, THE ASSESSI NG OFFICER NOTED THAT SINCE IN TERMS WITH THE OFFER MA DE AT THE TIME OF RECORDING OF STATEMENT U/S 132(4), THE ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS.50 LA KHS FOR THE YEAR UNDER DISPUTE, NO SEPARATE ADDITION IS REQUIRED TO BE M ADE. ACCORDINGLY, THE ASSESSING OFFICER 16 ITA NO.867 OF 2013 PRAJNA PRATISTHAN TRUST, HYD. ACCEPTED THE INCOME RETURNED BY THE ASSESSEE AND COMPLETED THE ASSESSMENT. X. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER PASSED BY PREFERRING AN APPEAL BEFORE THE CIT (A) . IN COURSE OF HEARING OF APPEAL BEFORE CIT (A) , THE AS SESSEE CONTENDED THAT