Punjab-Haryana High Court
Mayor Foundation vs Commissioner Of Income Tax, ... on 15 November, 2023
Neutral Citation No:=2023:PHHC:148915-DB
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Neutral Citation No. 2023:PHHC:148915 -DB
121 ITA-151-2023
Decided on : 15.11.2023
Mayor Foundation C/o Mayor World School through Mr.Rajesh Mayor,
Urban Estate-1, Jalandhar, Punjab
....Appellant(s)
Versus
Commissioner of Income Tax, Aayakar Bhawan, Jalandhar, Punjab
.... Respondent(s)
CORAM : HON'BLE MR.JUSTICE G.S. SANDHAWALIA
HON'BLE MRS.JUSTICE SUDEEPTI SHARMA
Present: Mr.Sunil Kumar Mukhi, Advocate, for the appellant.
*****
G.S. Sandhawalia, J. :-
1. The present appeal filed under Section 260A of the Income
Tax Act, 1961 (for short the 'Act') is directed against the order dated
20.12.2022 (Annexure A-5) passed by the Income Tax Appellate Tribunal,
Amritsar Bench for the assessment year 2014-15.
2. The Tribunal has upheld the addition of Rs. 8 lakhs under
Section 68 of the Act which is sought to be agitated as substantial
questions of law. The said questions read as under:
"A. Whether the Income Tax Appellate Tribunal, is justified in
concurring with the findings of CIT (A) and in confirming the
impugned income of Rs.8,00,000/- under the provisions of
115BBC, section 68 read with section 115BBE of the Income Tax
Act, 1961 being perverse and against the statutory provisions and
as upheld in catena of judgments?
1 of 7
Neutral Citation No:=2023:PHHC:148915-DB
ITA-151-2023
B. Whether the orders of the authorities below are illegal,
erroneous, without jurisdiction and thus perverse?"
3. The reasoning which prevailed with the Tribunal was that the
corpus donation had been received by the petitioner-Company and the said
entities had been struck off the record of the registered companies and
therefore, they had to be treated as shell companies. Having been struck
off the registration of companies under Section 248 of the Companies Act,
2013, the identity of the party was stated to be in question and the
existence of the corporate body having been duly rejected by the Registrar
of Companies, weighed with the Tribunal. Keeping in view the fact that
the existence of the donors itself was questioned and the assessee was
unable to produce any document in support of their action to restore the
Company before a Judicial authority, the order of the Commissioner of
Income Tax dated 11.01.2018 (Annexure A-3) had been upheld.
4. Mr.Mukhi has tried to convince us that there was sufficient
material produced on record to show that the three companies existed and
had been filing returns at the time of making the corpus donation. He has
relied upon the documents appended in support of the communication that
the amounts had been received by way of cheque. It is submitted that the
companies were incorporated in the year 1992 and even if they were no
longer registered at the time when the matter was inquired, there was no
such reason why addition should have been made. He, accordingly,
submits that requisite communication had been made by the said
companies with the Revenue and the details of the ledger copy of the
accounts and the Income Tax Returns for the year 2014-15 and the bank
statements had been sent in November, 2016. Vide separate
communications dated 25.11.2016 and 28.11.2016, Burlington Mercantile
2 of 7
Neutral Citation No:=2023:PHHC:148915-DB
ITA-151-2023
(P) Ltd. and BKN Consultancy Services (P) Ltd., both situated in West-
Bengal and dated 26.11.2016 by Pentium Capital Management (P) Ltd.
based in Mumbai, the amounts received from the said three companies are
Rs.2 lakhs, Rs.3 lakhs and Rs.3 lakhs, respectively which fact had been
acknowledged.
5. A perusal of the paperbook would go on to show that the
return had been filed by the appellant-assessee on 30.09.2014 by showing
nil income. The case having been picked up for scrutiny under CASS,
notice had been issued on 31.08.2015 and a questionnaire had been issued.
The details of documents having been checked along with the Books of
Accounts and vouchers-sheet that corpus donation of Rs.1,43,40,039/- had
been shown and the assessee was a public charitable trust registered under
Section 12A of the Act and under Section 80G of the Act. It was running
only one educational institution under the name and style of M/s Mayor
World School, Urban Estate Phase-I, Jalandhar City. The list of names
and addresses of the donors were sought to be verified and random notices
had been issued under Section 133(6) of the Act. Resultantly, 14 persons
could be verified and 7 persons were found not genuine and their identities
were in doubt. Resultantly, a sum of Rs.53 lakhs was the amount which
was found not to be genuine transactions and the donors' identity was
doubtful and the provisions of Section 115BBC of the Act were invoked
vide notice dated 23.11.2016.
6. The response was given on 07.12.2016 and it was admitted that
the institute was trying to contact the said persons to provide them with their
due replies and more time was sought to establish contact and obtain due
replies. More time was given and the matter was fixed for 16.12.2016 and
written submissions had also been filed. The plea taken
3 of 7
Neutral Citation No:=2023:PHHC:148915-DB
ITA-151-2023
was that the donations were received through bank accounts. It was noticed
that the two companies at West Bengal had sent replies by post from
Mumbai (MS GPO) and there was a doubt about the genuineness of the
parties. Written submissions were again filed and an opportunity for
producing the persons was also given on 23.12.2016. Apparently no such
persons were produced which led to the Assessing Officer coming to the
conclusion that the confirmation having been received from the addresses in
Mumbai in two cases whereas the offices were situated related to Kolkata
based companies, the genuineness was further clouded by noting as under:
M/s 51, 2,00,000/- Notices issued 06-10-2016, but received
Burligton Muktara back with remarks not known or
Mercantiles m Babu addressee moved and again notice
Pvt. Ltd. Street, issued on 09-11-2016 not received back.
Kolkata- Reply has received on 15.12.2016 by
700006, post. But letter has sent from Mumbai.
West Present status of company in ROC is
Bengal strike off. No director and office bearer
are working at present. Assessee has
also failed to produce the director and
shareholders of this company. These
facts established that payment from this
company is not genuine and identity and
creditworthiness are not confirmed.
M/s 109, A.S. 3,00,000/- Notices issued 06-10-2016 received
Pentium Dias back un-served and again notice issued
Capital Building, on 09-11-2016, Served. Reply from the
Managem- 268/272, same has received on 09.12.2016 by
ent Pvt. 1st Floor, post. Present status of company in ROC
Ltd. Dr. C.H. is dormant. No director and office
Street, bearer are working at present. Assessee
Near has also failed to produce the director
Marine and shareholders of this company. These
Lines, facts established that payment from this
Mumbai- company is not genuine and identity and
4 of 7
Neutral Citation No:=2023:PHHC:148915-DB
ITA-151-2023
40002 creditworthiness are not confirmed.
M/s BKN 63, 3,00,000/- Notices issued 06-10-2016 received
Consultan- Radha back unserved and again notice issued
cy Services Bazar on 09-11-2016. Reply received on
Pvt. Ltd. Street, 3rd 19.12.2016 by post from GPO, Mumbai.
Floor, Present status of company in ROC is
Kolkata, strike off. No director and office bearer
West are working at present. Assessee has
Bengal- also failed to produce the director and
700001 shareholders of this company. These
facts established that payment from this
company is not genuine and identity and
creditworthiness are not confirmed.
7. It was in such circumstances, the Assessing Officer came to
the conclusion that huge donations had been made to the assessee and the
sources of income were not genuine and the companies were not working
and the genuineness, identity, sources and creditworthiness of these
companies had not been proved. Resultantly, the additions had been
made. It is pertinent to notice that apart from the three companies there
was additions of Rs.40 lakhs, Rs.8 lakhs and Rs.5 lakhs which had also
been made by the Assessing Officer vide the impugned order and a total
amount of Rs.53 lakhs had been added and accordingly proceedings had
been initiated under Section 271(1)(c) of the Act for furnishing inadequate
proof of income.
8. In appeal, the assessee had been successful to the extent that
another sum of Rs.45 lakhs from two donees were considered genuine as
their copies of the ITRs were produced and creditworthiness were also
seen and they were NRIs and the donations had been given in Indian
Rupees. The activity of giving the donations by corporate entities located
at Kolkata and Mumbai to an institute based at Jalandhar was accordingly
5 of 7
Neutral Citation No:=2023:PHHC:148915-DB
ITA-151-2023
not accepted on account of any relationship between the two. Accordingly
their whereabouts not being produced by way of documents or in the
appellate proceedings and the companies being defunct the additions was
sustained to the tune of Rs.8 lakhs out of the total of Rs.53 lakhs made by
the Assessing Officer. Section 68 of the Act provides that if the assessee
provides no explanation for the sum credited in his books of account to the
nature and source of the amounts having been mentioned and the
explanation offered is not satisfactory in the opinion of the Assessing
Officer, the amount can be charged as Income Tax.
9. The background as discussed would go on to show that the
companies at West Bengal had sought to give the details of the donations
from Mumbai and it was in such circumstances the Assessing Officer
came to the conclusion that the explanation given was not bona fide.
Opportunity was given to produce the Directors which was not done due
to which the authorities below have noted that companies are no longer
functional and are defunct and struck off by the Registrar of Companies.
Nothing was brought on record that they were actually functioning at the
time of donations and when they were struck off. In such circumstances,
we are of the considered opinion that the genuineness, identity and
creditworthiness of these companies was rightly doubted by the Assessing
Officer and in such circumstances, the additions had been made. The
matter had also been taken before the Appellate Authority and the
Commissioner had duly granted the benefit by thoroughly enquiring into
the matter qua the other donations that had been received.
10. The question of law thus which is sought to be framed does
not arise keeping in view the above facts and circumstances as before the
authorities the appellant could not produce sufficient material to dispel the
6 of 7
Neutral Citation No:=2023:PHHC:148915-DB
ITA-151-2023
suspicion which had been raised about the donations received from the
companies which were not even based geographically close to the
educational institution and the reason to grant the donation was never
properly explained.
11. In such circumstances, we are of the considered opinion that
there is no merit in the present appeal and the same is liable to be
dismissed. Ordered accordingly.
(G.S. SANDHAWALIA)
JUDGE
15.11.2023 (SUDEEPTI SHARMA)
sailesh JUDGE
Whether speaking/reasoned : Yes
Whether Reportable : Yes
Neutral Citation No:=2023:PHHC:148915-DB
7 of 7
