The Commissioner Of Income Tax vs M/S Hps Social Welfare Foundation
2010 Latest Caselaw 2327 Del

             THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Judgment delivered on: 03.05.2010


+            ITA 424/2010 & CM.3907/2010


THE COMMISSIONER OF INCOME TAX                             ... Appellant


                                     - versus -


M/S HPS SOCIAL WELFARE FOUNDATION                        ... Respondent

Advocates who appeared in this case:

For the Appellant       : Ms Prem Lata Bansal
For the Respondent      : None

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

V.K. JAIN, J (ORAL)

1. This is an appeal against the order of Income Tax Appellate

Tribunal dated 29.08.2008 whereby the appeal filed by the Revenue being

ITA No. 3612/Del./2007 against the order dated 18.05.2007 passed by

Commissioner of Income Tax (Appeals), in respect of A.Y.2003-04, was

dismissed. Since there was delay of 224 days in filing the appeal.

CM.3907/2010, for condonation of delay in filing the appeal has also been

filed.

2. The impugned order having been received by the appellant on

04.11.2008, the period of limitation prescribed for filing the appeal expired

on 04.03.2009, whereas the appeal has been filed on 14.10.2009. A perusal

of the application would show that on 23.02.2009 DGIT(E) approved filing

of appeal and sent the file to the Assessing Officer on 24.02.2009. The

Assessing Officer, who was required to comply with the order, proceeded on

leave on 27.02.2009 without sending the file to the office of Senior Standing

Counsel of the Department for the purpose of drafting the appeal. He joined

the office on 16.03.2009 but continued to forget that appeal was to be filed

in this case. He was transferred on 17.06.2009 and handed over the charge

to the new officer. It has been stated in the application that on receiving the

copy of the order passed by the Tribunal, in the case of this very assessee for

the assessment year 2006-06, the Assessing Officer noted on 20.08.2009 that

the Tribunal had relied upon its earlier order passed for the assessment year

2003-04 and he then realized that the appeal had not been filed in respect of

assessment year 2003-04 and sent the file to the Senior Standing Counsel on

21.08.2009.

3. We are not satisfied with the explanation given by the appellant

for the delay in filing the appeal. We fail to appreciate how the Assessing

Officer, who received the file from the DGIT(E) on 24.02.2009 could have

continued to forget, till the time he was transferred, that he had to send the

file to the office of Senior Standing Counsel, for drafting the appeal in terms

of the approval given by DGIT(E) on 23.02.2009. There has to be some

system in the office of the Assessing Officer, which would ensure

compliance of such time bound orders. When the Assessing Officer was

transferred on 17.06.2009 and he handed over the charge to the new officer,

he was expected to bring it to the notice of his successor that the appeal in

terms of the approval dated 23.02.2009 was required to be filed in this case.

In any case, he must have handed over all the files to his successor, while

relinquishing charge of the office held by him. The new incumbent was

required to examine atleast urgent and time bound files, received by him

from his predecessor. Had he done so, he would have come to know that the

appeal required to be filed in this case had already been delayed and,

therefore, he should immediately send the file to the office of the Senior

Standing Counsel for the purpose of drafting the appeal. We, therefore, find

it difficult to condone so much delay in filing of this appeal.

4. We have also examined the appeal on merits. The assessee

foundation was setup in order to provide fees, books, equipments and

scholarship, etc. to needy students, to help mentally retarded, crippled and

other physically handicapped children in their rehabilitation, to render

assistance to indigent persons for their medical treatment, etc. and to conduct

education in public health. The Chairman and Directors are stated to be

mostly retired bureaucrats and other persons, who have worked for

upliftment of the needy and poor. During assessment of the respondent for

the assessment year 2003-04 the Assessing Officer noted that the assessee

had received donation of Rs 2 Crores, besides corpus donation of Rs 1 Crore

from HCL Perot System and had given donations amounting to Rs

2,07,65,600/- to various institutions and NGOs. On being required by the

Assessing Officer, the respondent assessee submitted a list of 76

institutions/NGOs to whom donations were given by it. Confirmation from

64 such institutions were also submitted. The Assessing Officer was of the

view that the donations had been given at the sweet will of the assessee and

had been used for the personal benefits. He concluded that the assessee was

a tool in the hands of HCL Perot System, where donations were being used

for personal benefits. Accordingly he denied benefit of exemption under

Section 11 and 12 of the Income Tax Act, 1961 to the assessee and

determined its taxable income at Rs2,61,78,450/-.

5. On appeal filed by the assessee, Commissioner of Income Tax

(Appeals) deleted the additions except in respect of two donations, one made

to Gandhi Smarak and the other to Kaivalya Charities. He was of the view

that the assessee had genuinely carried out activities in accordance with its

objects as enumerated in its Memorandum of Association and that since

there was no material on record to suggest that the assessee had infringed the

provisions of Section 13(1) of the Act, there was no reason to deny benefit

of exemption to the trust. Confirmation from 10 more donees were filed

before Income Tax Commissioner (Appeals) and thus the assessee filed

confirmation from 74 out of 76 parties to which donations were given by it.

The addition made in respect of two institutions namely Gandhi Smarak and

Kaivalya Charities were, however, upheld.

6. During the course of hearing before the Tribunal, it was pointed

out that the Chairman of the assessee was former Cabinet Secretary whereas

the other Directors were retired IAS officers or IFS officers and no one had

ever utilized the funds of the assessee for his personal purpose.

7. The Tribunal noted that the organizations to which donations

were given were charity organizations such as Blind Welfare Hostel, Delhi

Councils for Children Welfare Association, etc. and the Assessing Officer

had not pointed out any circumstance to show that these donations were not

made for the purpose of charity. It was further noted that the Assessing

Officer had not pointed out the personal element stated to be involved in

giving these donations. It was also noted that the donations had been given

though payee's account cheques. The Tribunal found that no circumstance

had been pointed out by the Assessing Officer to show that the donations

had been used for personal benefit of Directors of HCL Perot System. The

Tribunal accordingly maintained the finding recorded by Commissioner of

Income Tax (Appeals).

8. Section 13 of Income Tax Act stipulates the circumstances in

which the income of a trust will not be exempted from its income. In the

present case, as noted by Commissioner of Income Tax (Appeals), the

Assessing Officer has not pointed out violation of any provision of Section

13 of the Act by the assessee. The finding recorded by Commissioner of

Income Tax (Appeals) in this regard has been confirmed by the Income Tax

Appellate Tribunal and there is no material before us to indicate that the

finding recorded by Commissioner of Income Tax (Appeals) and the

Tribunal is perverse in any manner.

9. Commissioner of Income Tax (Appeals) as well the Income Tax

Appellate Tribunal, both have found that the organizations to which

donations were given by the assessee during assessment year in question

were genuine charity organizations. There was no evidence before the

Assessing Officer to show that these were not genuine organizations or were

not engaged in social and charitable activities. The Assessing Officer

attributed personal elements to these donations without even indicating any

circumstance which could give rise to such an inference. The order passed

by the Assessing Officer does not show that the Directors of HCL Perot

Systems were connected with these organizations or were managing their

affairs. The payments to all the organizations were made by account payee

cheques. Confirmations from 74 out of 76 organizations were submitted by

the assessee. Deletion in respect of remaining two donations were

confirmed by CIT(A) and have not been interfered with by the ITAT. If the

Assessing Officer doubted any particular donation, he could have summoned

the officer bearers of the organization which received that donation. That

having not been done, he could not have disputed the genuineness of the

donations.

10. There was absolutely no material before the Assessing Officer to

show that the funds given to these NGOs/institutions were used for personal

benefit of HCL Perot System or any of its Directors. Therefore, it cannot be

said that the finding of fact recorded by Commissioner of Income Tax

(Appeals) and Income Tax Appellate Tribunal upholding genuineness of the

donations is perverse, calling for intervention by this Court. No

contravention of Section 13 of Income Tax Act having been made out and

the genuineness of the donations having been accepted by Commissioner of

Income Tax(Appeals) as well as by the Income Tax Appellate Tribunal,

there is no ground for interference by this Court under Section 260A of

Income Tax Act. No substantial question of law arises for our consideration

in this case. The appeal as well as CM 3907/2010 for condonation of delay

are hereby dismissed.

(V.K. JAIN) JUDGE

(BADAR DURREZ AHMED, J) JUDGE MAY 03, 2010 Ag