Bombay High Court
M/S Everest Education Society, ... vs Asst. Commissioner Of Income Tax, ... on 5 December, 2023
Author: Mangesh S. Patil
Bench: Mangesh S. Patil
2023:BHC-AUG:25410-DB
1 ITA / 7 / 2023
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
INCOME TAX APPEAL NO. 7 OF 2023
WITH
CIVIL APPLICATION NO. 11883 OF 2023
M/s. Everest Education Society,
C/o. Seema Nursing Home,
Roshan Gate, Aurangabad - 431 001 .. Appellant
Versus
Assistant Commissioner of Income Tax,
Exemption Circle, Aurangabad .. Respondent
...
Advocate for the appellant : Mr. S.S. Kazi
Standing Counsel for respondent : Mr. Alok Sharma
...
CORAM : MANGESH S. PATIL &
SHAILESH P. BRAHME, JJ.
RESERVED ON : 20 OCTOBER 2023
PRONOUNCED ON : 05 DECEMBER 2023
ORDER (MANGESH S. PATIL, J.) :
This is an assessee's appeal under section 260A of the
Income Tax Act, 1961 (Act).
2. The appellant which is a trust primarily engaged in running
educational institutions, is impugning the order of the Income Tax
Appellate Tribunal (ITAT) passed in the appeal preferred by the
Revenue under section 253 of the Act.
3. We have heard the learned advocate Mr. Kazi for the
appellant and Mr. Sharma for the revenue.
2 ITA / 7 / 2023
4. Needless to state at the outset that this being an appeal
under section 260-A of the Act, the appellant has to demonstrate that
the matter involves some substantial question of law. Bearing in mind
this limitation, we shall now advert to the arguments.
5. The appellant having failed to file the returns, was served
with a notice under section 142(1) of the Act. In response, it filed a
return disclosing 7145 individual donors from whom it had received
cash donation in aggregate to the tune of Rs.2,89,20,955/-. After
conducting hearing, the assessment officer by the order dated
27-03-2014 concluded that these cash donations were anonymous as
contemplated under section 115 BBC. The appellant challenged the
order before the first appellate authority. By referring to the orders
passed by different income tax appellant tribunals, it was concluded by
the first appellate authority that these were not the anonymous
donations and held that only the donations to the tune of Rs.82,600/-
were anonymous.
6. The revenue challenged the order of the first appellate
authority before the ITAT. The appellant also preferred a cross-appeal,
however, beyond the period of limitation. By the common order which
is under challenge in this appeal, the ITAT has allowed the revenue's
3 ITA / 7 / 2023
appeal and refused to consider the appellant's appeal on merits being
barred by limitation.
7. Going by the prayer clause in this appeal, the appellant is
merely putting up a challenge to the impugned order to the extent it
allows revenue's appeal. It has not challenged the order refusing to
condone the delay in the appeal preferred by it and refusing to decide it
on merits.
8. Mr. Kazi would submit that the assessment is not fair and
proper, verification of only some of the donors was undertaken which
constituted barely less than 1% of the total donors. The appellant was
under an obligation to maintain only a list of the donors containing their
names and addresses. It was not under any obligation to further
substantiate their identity. Section 115 BBC could not have been
invoked. The assessment officer had failed to examine this aspect
which error was corrected by the first appellate authority. According to
him, following substantial questions of law would arise :
(1) Whether the notice u/sec. 143(2) of the I.T.A. 1961 dt.
3.2.2014 issued by the A.O. is bad in law?
(2) Whether the notice u/sect. 143(2) issued by the A.O. is in
violation of the instruction no. 10 and 13 of 2013 issued by
the CBDT ?
(3) Whether the enquiries conducted by the A.O. before
3.3.2014 (date on which notice was issued under sec.
143(2) of the I.T.A. is bad in law as the same was
conducted without any jurisdiction / Authority ?
4 ITA / 7 / 2023
(4) Whether the A.O. was justified in holding that, the
Assessee / appellant had received anonymous donation
as define under u/ssec. 115 BBC of the I.T. Act 1961 ?
(5) Whether as per the provisions of sec. 115 BBC (3) the
receiver only has the obligation to mantain the identity
indicating the name and address of the donor's only ?
(6) When the assessee / appellant has properly maintained
the name and address of the donor's then can the
donations be termed as anonymous donation u/sec. 115
BBC of the Act ?
(7) Whether, the Ld. Income Tax Appellate Tribunal, Pune is
justified in confirming the addition to the extent of
Rs.2,87,88,955/- U/Section 115 BBC of the Income Tax
Act ?
(8) Whether, the Ld. Tribunal failed to interpret Section 115
BBC of the Act in proper perspective ?
(9) The Ld. Appellate Court after considering the remand
report and the evidence available on record had come to
the conclusion that, the entire donation cannot be treated
as anonymous donation as the assessee had fully
complied with the requirement of law. In such
circumstances discarding such findings of the appellate
authority by the Ld. Tribunal that too without there being
having any contrary evidence on record is perverse ?
(10) Whether the ITAT and the A.O. were justified in holding
that, the trust received anonymous donation, when the
society is a registered society under the Provisions of
Section 12 AA of the Act, it enjoyed the exemption as
provided U/sec. 11 of the Act. The registration of society
has not been withdrawn even on account of the finding the
donor's are not genuine ?
(11) When the assessee had discharged his burden by leading
evidence then, in such circumstances, whether the finding
recorded by the Ld. Tribunal regarding rebuttal is
perverse?
(12) Whether the ITAT could go beyond the remand report
submitted by the A.O.?
(13) Whetehr the tribunal was justified in confirming the
assessment order only on the basis of letter issued to 70
donors out of 7145 donors i.e. 98% ?
5 ITA / 7 / 2023
9. Per contra, Mr. Sharma for the revenue submitted that the
instructions no. 10 and 13 are not applicable to the facts and
circumstances of the case. Besides, these are merely administrative
instructions and will not go to the root of the jurisdiction of the
assessment officer particularly when the appellant had failed to file any
return at the first instance.
10. Mr. Sharma would then submit that by virtue of section 68
read with rule 46A, the burden was on the appellant to substantiate
genuineness of these donations which were enormous. Only a sample
check was undertaken by the assessment officer. The appellant ought
to have led sufficient and cogent evidence disclosing genuineness of
these donations, for failure of which no fault can be found with the
observations and conclusions of the assessment officer as also the
ITAT, in treating these donations as anonymous donations. He would
submit that to the extent possible, wherever some confirmation could
be had from the donors, the assessment has been reduced to that
extent. All these factors were taken into consideration by ITAT. He
would submit that no substantial question of law arises and the appeal
be dismissed.
11. We have carefully considered the rival submissions and
perused the papers.
6 ITA / 7 / 2023
12. Bearing in mind the inherent limitations in the light of the
provisions of section 260A of the Act, it is to be noted at the outset that
the issue regarding the exemption being claimed under section 11
cannot be said to be pure question of law which could be agitated in
an appeal under section 260A.
13. As regards the factual dispute is concerned, we find no
hesitation in concurring with the observations in the impugned
judgment and order of the ITAT and the submissions of Mr. Sharma
that by virtue of section 68 read with rule 46A, the onus is on the
assessee to substantiate that the donations received by it are not
anonymous donations.
14. Once having borne in mind this aspect, it is quite apparent
that at no point of time, the appellant was able to discharge this onus.
Apart from the fact that it had even failed to file the returns, it had made
some attempt to furnish some record and revenue had volunteered to
verify genuineness by a sample check. Barring few instances, identity
of the donors could not be confirmed in view of section 133(6).
Pertinently, after the appeal was preferred before the first appellate
authority a new set of donors' list was furnished stating that the first list
was submitted erroneously and still the enquiry did not result in
identification of the donors.
7 ITA / 7 / 2023
15. The appellant had pointed out about having received cash
donations to the tune of Rs.2,89,20,955/- from 7145 donors. The result
of the verification undertaken by the assessment officer to verify from
some of the donors seeking confirmation did not yield results.
Consequently the appellant had miserably failed to discharge the onus.
16. Pertinently, during verification, 8 donors who were
contacted denied to have paid any donation to the appellant.
17. In the backdrop of the afore-mentioned circumstances, the
ITAT has observed that all these donations were received in cash from
7145 persons. Those were not found to have been deposited in the
bank account. The letters issued under section 133(6) were returned
unserved with the remarks "address not found", "insufficient address",
"addressee left". The inspection report mentioned about donors having
not found on the given address. There were incomplete and vague
addresses. It has drawn adverse inference against the appellant and
has concluded that the decision of the assessment officer holding the
donations to be anonymous under section 115 BBC of the Act was
justified on facts and in law. In our considered view, there is no error
or irregularity much less giving rise to any substantial question of law.
18. The appeal is dismissed.
8 ITA / 7 / 2023
19. Pending civil application is disposed of.
[ SHAILESH P. BRAHME ] [ MANGESH S. PATIL ]
JUDGE JUDGE
arp/
