Delhi High Court
Commissioner Of Income Tax vs Shri Vishwa Vigyan Telugu ... on 6 March, 2012
Author: Sanjiv Khanna
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : 6th March, 2012.
+ ITA 17/2010
COMMISSIONER OF INCOME TAX ..... Appellant
Through Mr. Abhishek Maratha, sr. standing
counsel with Ms. Anshul Sharma, Adv.
versus
SHRI VISHWA VIGYAN TELUGU LINGUISTIC
MINORITY EDUCATION SOCIETY ..... Respondent
Through Mr. V K Rao, Sr. Adv. with Mr.
Manoj V. George, Adv.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
SANJIV KHANNA,J: (ORAL)
The present appeal filed by the Revenue under Section 260A of
the Income Tax Act, 1961(„Act‟, for short) pertains to the assessment
year 2003-04 in the case of Shri Vishwa Vigyan Telugu Linguistic
Minority Educational Society. By the impugned order dated
13.4.2009, the Income Tax Appellate Tribunal („Tribunal‟, for short)
had deleted the addition of `88,32,845/- made by the Assessing
Officer holding, inter alia, that the aforesaid amount by virtue of
Section 2(24)(iia) was already included in the income of the assessee
and therefore, addition as income from undisclosed sources is not
justified.
2. Having heard counsel for the parties we frame the following
substantial question of law: -
"Whether Income Tax Appellate Tribunal was right in
deleting the addition of `88,32,845/- made by the
Assessing Officer and holding that Section 68 is not
applicable?"
3. As we heard counsel for the parties we will proceed to
pronounce our decision on the aforesaid question of law.
4. The respondent-assessee claiming itself to be a charitable
society filed its return of income for the assessment year 2003-04 on
5.9.2003 declaring Nil income. The Assessing Officer vide
assessment order dated 20.3.2006 made addition of `88,32,845/-
under Section 68 of the Act after noticing that the assessee had
allegedly received donation of `49,00,000/- from CGS Maini
Charitable Trust and another amount of `7,17,145/- from Mrs.
Larissa Mani, a Non Resident Indian.
5. The aforesaid addition was affirmed by CIT(Appeals), but has
been deleted by the tribunal. To consider the contentions raised, we
reproduce the factual findings, recorded by the Assessing Officer,
which read: -
"During the year under consideration, the assessee
claimed to have received corpus donation of
Rs.39,27,845/- as per the copy of the balance sheet as on
31-3-2003. The audited balance sheet of the earlier
Assessment Year (2002-03) available in the record was
also examined. The same is reproduced here under: -
Balance sheet as on 30-3-2002
Liabilities Amount Assets Amount
Corpus Fund 5000000 Cheques in hand
Opening Balance 0
Add: Addition 5005000 Balance with Andhra Bank 4690
5005000 General Fund
Over income
----------- ----------
5005000 5005000
---------- -----------
In the balance sheet as on 31-3-2003 the assessee
has shown the opening balance of corpus fund at
Rs.49,05,000/-. Bank statement of the assessee obtained
from the Andhra Bank reflects no such credits of cheques
amounting to Rs.50,00,000/- as shown by the assessee in
the earlier years balance sheet. When asked about the
discrepancy, the assessee vide its letter stated that the
previous year cheques in hand of Rs.50 lacs has been
returned back to the party in this year. It means the
assessee has received corpus donation of Rs.88,32,845/-.
(sic.) during this year only. The assessee was asked to
furnish the details of corpus donation with supporting
evidence vide note sheet entry dt.22.12.2005. Shri
Sharat Chandra, trustee alongwith the counsel appeared
but the information called for was not furnished. The
assessee was once again reminded to furnish the
information vide note sheet entry dated 18-1-2006. The
assessee appeared on 27-1-2006 furnished copy of Bank
statement copy of instrument through which the property
was acquired, but no information/confirmation/details
furnished in respect of addition of Rs.88,32,845/- in the
corpus fund. The assessee was again asked to furnish
the details of corpus donation with evidence and the case
was adjourned for 13-2-2006. None appeared on that
date, nor any application was moved for adjournment.
Notices u/s 143(2) & 142(1) were issued asking the
assessee to furnish the following information :-
1. Details of addition to corpus fund during the year,
giving the Name, complete address, amount, mode of
payment of receipt etc.
2. Confirmation giving PAN, Ward No.etc. in respect
of the above at (1).
3. Copy of cash book for the relevant period."
5. Thereafter, the Assessing Officer held that the assessee did not
choose to produce its the books of accounts for verification and
accordingly, the assessment was completed on the basis of the
available record. Bank statement obtained from Andhra Bank was
referred to. He recorded that the total amount credited from the
opening till 31.3.2003 was `61,52,545/- including `4,00,000/-
deposited in cash. He further observed that the credit amount of
`61,52,545/- did not explain the corpus donation of `88,32,845/- and
also did not explain the source of payment for the purchase of land
and the expenses incurred towards professional payment. The
Assessing Officer recorded that the bank statement of M/s CGS Mani
Charitable Trust had been obtained. He observed that they did not
have sufficient funds and an amount of `49,39,926/- was received by
way of pay order dated 2.7.2002 and an amount of `49,00,000/- was
allegedly paid as donation to the respondent-assessee on the same
date. Summons under Section 131 was issued to M/s CGS Mani
Charitable Trust for verification but no one appeared nor any
information was furnished. The source, therefore, remained
unverified.
6. The Tribunal in the impugned order has recorded as under: -
"1. We have heard the parties and considered the rival
submissions. The entire sum of Rs.88,32,845 which has
been the corpus fund of the trust was offered as income
as is evident form (sic.) the income and expenditure
account of the trust. It was by virtue of section 2(24)(iia)
of the Act and, therefore, adding the same amount again
as income from undisclosed sources is not justified and
that too stating that the assessee had not explained the
sources for the acquisition of property. The source of the
acquisition of the property is the corpus donation which
has been offered by the assessee as income u/s 2(24)(iia)
of the Act and which has also been assessed to tax. In
these circumstances, in our opinion, section 68 has no
application and the addition is to be deleted. The case of
the assessee also seems to be covered by the decision of
the Hon'ble Delhi High Court in the case of DIT(E) vs.
Keshav Social & Charitable Foundation cited in 278
ITR 152 (Del.) in which it was held as under:
"To obtain the benefit of the exemption u/s 11, the
assessee is required to show that the donations were
voluntary. In the present case, the assessee had not only
disclosed its donations, but had also submitted a list of
donors. The fact that the complete list of donors was not
filed or that the donors were not produced, does ITA
No.3950/Del./2007 (A.Y.2003-04) not necessarily lead to
the inference that the assessee was trying to introduce
unaccounted money by way of donation receipts. This is
more particularly so in the facts of the case where
admittedly more than 75 per cent of the donations were
applied for charitable purposes. Section 68 has no
application to the facts of the case because the assessee
had in fact disclosed the donations of Rs.18,24,200 as its
income and it cannot be disputed that all receipts, other
than corpus donations, would be income in the hands of
the assessee. There was, therefore, full disclosure
income by the assessee and also application of the
donations for charitable purposes. It is not in dispute
that the objects and activities of the assessee were
charitable in nature, since it was duly registered under
the provisions of s. 12A. For these reasons, there is no
merit in the appeal. No substantial question of law
arises."
7. The judgment in the case of Keshav Social & Charitable
Foundation (supra) is only one aspect which the Tribunal has to keep
in mind. Several other aspects, which have been referred to by the
Assessing Officer, have not been examined by the Tribunal. We
may also record that the Revenue has filed before us copy of the
income-expenditure account as on 31.3.2003, which read as under: -
"Expenditure Amount Income Amount
By Excess of Expenditure
_________ ________
_________ ________"
The balance sheet of the respondent as on 31.3.2003 filed
before the Assessing Officer was as under: -
"Liabilities Amount Assets Amount
Corpus Fund Fixed Assets
Opening Balance 4905000 Land A/c. 8080300
Add: Addition 3927845 8832845 Professional Payment for 145000
Construction
Cash & Bank Balances
Andhra Bank 606585
General Fund
Add: Excess of Expenditure
Over income 650 960
_______
________ _______
8832845 8832845
_______ _______"
8. The findings recorded by the Tribunal in the impugned order,
which has been quoted above are therefore, partly factually incorrect
and cannot be sustained. As noticed above the order of the tribunal is
bereft of reasoning, consideration and is cryptic. In view of the above
position we allow the present appeal and answer the aforesaid question
in negative i.e. in favour of the appellant-Revenue and against the
respondent-assessee. We accordingly pass an order of remit to the
Tribunal to pass a fresh decision. We clarify that we have not
expressed any view on merits. It will be open to the parties to move an
appropriate application in case they want to file documents/additional
documents. The parties shall appear before Assistant Registrar of the
Tribunal on 16th April, 2012 when a date of hearing will be fixed. No
costs.
SANJIV KHANNA, J.
R.V.EASWAR, J.
March 06, 2012/vld
