NANDLAL TOLANI CHARITABLE TRUST,MUMBAI V. INCOME TAX OFFICER (EXEMPTION), 2(1), MUMBAI

ITA 6358/MUM/2025

AI Insights

The case involves Nandlal Tolani Charitable Trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2019-20. The primary contention was the addition of Rs. 10,00,000 as a donation to another charitable trust, which was deemed bogus based on statements from officials of the recipient trust during a search operation. The Tribunal examined whether these additions were justified, considering the lack of corroborative evidence and the procedural lapses in the reassessment proceedings under Sections 147 and 144B of the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790910 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 07-10-2025
• Other Referred Cases: Commissioner of Income Tax V. Harjeev Aggarwal, PCIT v. Best Infrastructure (India) (P) Ltd., Andaman Timber Industries v. CCE, CIT Vs. Chotatingrai Tea, CIT Vs. Stellar Investment, PCIT Vs. Abhisar Buildwell, DCIT Vs. Divya Yog Mandir Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV SHANKAR KADAM
• Assessee Lawyers: SATYAPRAKASH SINGH
• Keywords: Reassessment proceedings; Corroborative evidences; Document seized; Documents seized; Search and seizure; Accommodation entries; Charitable institution; Bogus
• Section: 147; 11; 132; 12A; 69C; 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 6358/Mum/2025 (Assessment Year: 2019-20) Nandlal Tolani Charitable Trust 10-A, Bakhtawar, Nariman Point, Mumbai-400021 Vs. Income Tax Officer (Exemption), 2(1) Room No.618, 6th Floor, Cumballa Hill MTNL Te Building, Pedder Road, Dr Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai-400026 PAN/GIR No. AAATN0043Q (Applicant) (Respondent) Assessee by Shri Satyaprakash Singh Revenue by Shri Rajiv Shankar Kadam, SR. DR. Date of Hearing 06.11.2025 Date of Pronouncement 01.12.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee arises out of order dated 24.09.2025 passed u/s 147 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2019- 20. The assessee has raised the following grounds of appeal: Printed from counselvise.com 2 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust 1. Invalid Reassessment Proceedings. The Learned CIT(A) erred in upholding the Assessment Order passed under Section 147 r.w.s. 144B, which is bad in law and void ab initio, as the order under Section 148A(d) was passed without disposing of the objections raised by the Appellant, without furnishing copies of seized material/statements, and in violation of the mandatory procedure under Section 144B (non- issuance of draft order). 2. Addition Based Solely on Statements Without Corroboration The Learned CIT(A) erred in confirming the addition of Rs.10,00,000 towards donation based only on statements recorded during search proceedings, without any corroborative evidence. It is well settled that uncorroborated statements have no evidentiary value. 3. Genuineness of Donation Established The Learned CIT(A) erred in not appreciating that the donation was genuine and supported by: Valid 80G certificate and 12A registration of the Donee Trust, Donation receipt, Bank statement evidencing payment through banking channels, and Proper disclosure in books of account. In the absence of adverse findings or cancellation of the Donee Trust's exemption, the addition under Section 69C is unjustified and contrary to law. 4. Non-consideration of CBDT Circular The Learned CIT(A) and Learned A.O. erred failed to consider CBDT Circular No. 1132 dated 05.01.1978, which clarifies that a donation by one charitable trust to another is to be treated as proper application of income for charitable purposes. Printed from counselvise.com 3 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust 5. General Ground The Appellant craves leave to add, alter, amend, or withdraw any grounds of appeal at the time of hearing 2. Firstly we take up ground No. 2 to 4, as these grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in confirming the additions of Rs. 10 lakhs towards donations made by the assessee trust to All India Social Educational Charitable Trust, thereby making additions u/s 69C of the Act, therefore we have decided to adjudicate these grounds through the present consolidated order. 3. We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that AO got information to the effect that the assessee had given bogus donation of Rs. 10 lakhs to All India Social Educational Charitable Trust on which search and seizure action u/s 132 of the Act was under taken on 02.02.2021. 4. As per the order of assessment, during the search proceedings in the case of All India Social Educational Charitable Trust Mr. Ram Bhawan Ojha and Tribhawan Ram Kalp Ojha were running the said trust and they admitted in their statement recorded on oath u/s 132(4) of Printed from counselvise.com 4 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust the Act that the trust was involved in providing accommodation entries and the amount of donation received were returned to the respective donors after deducting commission of 0.25% of the donation amount. Therefore the said amount of donation was disallowed in the case of the assessee by the AO and the same was added back to the income of the assessee Trust under Sec. 69C of the Act. 5. Ld. AR vehemently argued that the addition of Rs. 10 lakhs has been sustained by Ld. CIT(A) solely on the basis of search statement of third person without any seized material, documents, bank trail or corroborative evidence. It was further submitted that assessee was never been confronted with any such statements, nor was provided an opportunity for cross examination, despite specific request. It was further submitted that no seized documents evidencing any “cash back or accommodation entry” has been brought on record. It was also submitted that the said donation of Rs. 10 lakhs was made by the assessee trust to registered charitable trust holding valid 12A and 80G certificates through banking channels which was duly recorded in the books and supported by the receipt. . 6. Ld. AR further submitted that Sec. 69C of the Act only applies only when the source of the expenditure is Printed from counselvise.com 5 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust unexplained and lastly reliance was also placed upon the CBDT Circular No. 1132 dated 05.01.1978, wherein it was clarified that donation by one charitable trust to another registered trust is a valid application of income u/s 11 of the Act. 7. After having gone the entire facts and circumstance of the present case, we found that it is an undisputed fact that addition in the present case were sustained solely on the basis of statements of third person made during the search and in this regard “no seized material or documents have been relied upon”. There is nothing on record in the shape of bank trail or corroborative evidence to the effect that the donation made by assessee was returned back by the donor after deducting commission thereon. It would not be out of place to mentioned here that throughout assessment proceedings assessee was never confronted with any such statement of alleged Ram Bhawan Ojha and Tribhawan Ram Kalp Ojha despite specific request made by the assessee. It is a settled law that a statement recorded during the search, without supporting evidence has no independent evidentiary value and in this regard reliance is being placed upon the decision in the following cases. Commissioner of Income Tax V. Harjeev Aggarwal (2016) 290 CTR 263 Mere statements made during the course of the search, under Section 132 (4) of the Act, cannot be considered to be incriminating material Printed from counselvise.com 6 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust PCIT v. Best Infrastructure (India) (P) Ltd. (2017) 397 ITR 82 (Del) Uncorroborated statements cannot be the basis of addition. Andaman Timber Industries v. CCE (2015) 281 CTR 241 (SC) – Denial of cross-examination assessment. 8. It is also an admitted fact that there is no seized documents on record evidencing any “cash back” or any accommodation entry has been brought on record thus in this way the additions were sustained only on the basis of suspicion without any independent corroborative evidences. Whereas it is a settled law that suspicion how so ever strong may be, but cannot take place of proof beyond reasonable doubt. After evaluation the evidences placed on record, we also found that the donation in this case was made undisputedly to registered charitable trust holding valid 12A and 80G certificates, and the entire donation was paid through banking channels which has been duly recorded in books of accounts. All above mentioned documents had already been submitted during the course of assessment proceedings thus in our view the assessee had already discharged his onus by furnishing primary evidences therefore the burden shifts upon the department to prove that the transactions were not genuine but in this case nothing has been placed on record to prove that the transaction was not genuine. Reliance in this regard is bring placed upon the decision in the case of Printed from counselvise.com 7 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust CIT Vs. Chotatingrai Tea (SC), CIT Vs. Stellar Investment (SC) and PCIT Vs. Abhisar Buildwell. 9. We are also of the view that the provisions of Sec. 69C of the Act are attracted only when the source of the expenditure is unexplained whereas on the contrary as per the facts of the present case the source in this case is accounted bank funds Therefore Sec. 69C has no application. Lastly we have also considered the CBDT Circular No. 1132 dated 05.1.1998 which clarifies that donation by one charitable trust to another registered charitable trust is a valid application of money u/s 11 of the Act since the said circular is binding on the department and admittedly in the present case the donation was inter trust which has to considered as application of income. Thus no additions were warranted. In this regard reliance is being placed upon the decision in the case titled DCIT Vs. Divya Yog Mandir Trust, ITA No. 5612 (Del) 2015. 10. Therefore considering the totality of the facts and circumstances as discussed by us above, we are of the view that additions made by the AO and sustained by Ld. CIT(A) are bad in law and not sustainable. Thus we direct the same to be deleted. Consequently these grounds raised by the assessee stands allowed. Printed from counselvise.com 8 ITA No. 6358/Mum/2025 Nandlal Tolani Charitable Trust 11. Since we have deleted the additions by adjudicating Ground No. 2 to 4 therefore Ground No. 1 raised by the assessee needs no adjudication at this stage as the same has become academic in nature. 12. In the result, the appeal filed by the assessee stands partly allowed. Order pronounced in the open court on 01.12.2025 Sd/- Sd/- (GIRISH AGRAWAL) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 01/12/2025 आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण,मु\u0003बई/ DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/BY ORDER, स\u000eािपत ित //True Copy// उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai Printed from counselvise.com "