Income Tax Appellate Tribunal - Cuttack
Social Action For Rural Developmet ... vs Dcit, Berhampur Circle, Berhampur on 13 April, 2017
1
ITA No. 343/CT K/ 2016
Asse ssment Year :20 10- 201 1
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK
'SMC' BENCH, CUTTACK
BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER
ITA No. 343/CTK/2016
Assessment Year :2010-2011
Social Action for Rural Vs. DCIT, Berhampur Circle,
Development (SAFRD), At: AT/PO: Berhampur, Dist:
Kumbharkupa, PO: Ganjam
Mallikapadi, Dist: Kandhamal
PAN/GIR No. AAHTS 4185 P
(Appellant) .. ( Respondent)
Assessee by : Shri P.K.Mikshra, AR
Revenue by : Shri D.K.Pradhan, DR
Date of Hearing : 12 /04/ 2017
Date of Pronouncement : /04/ 2017
ORDER
This is an appeal filed by the assessee against the order of CIT(A)-3, Bhubaneswar, dated 3.5.2016, for the assessment year 2010-2011.
2. The first issue involved in this appeal is that the ld CIT(A) erred in treating the differential cost of Rs.33,50,068.00 in purchase of plot u/s.69 of the Act.
3. I have heard the rival submissions and perused the orders of lower authorities and materials available on record. In the instant case, the 2 ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1 undisputed facts of the case are that the assessee is a charitable society registered under section 12AA of the Act. It is also not in dispute that the income of the society in the year under consideration is eligible for exemption u/s.11 of the Act. During the year under consideration, the assessee claimed to have purchased a plot of land of Rs.7,90,000/- for the purpose of constructing orphan hostel for Scheduled Tribe students and incurred Rs.4,35,932/- towards development expenses of land aggregating to Rs.12,25,932/-. The said plot of land was purchased vide three registered sale deeds. On going through the registered sale deeds, the Assessing Officer observed that as per the sale deed, the sale consideration paid for the said plots of land was Rs.45,76,000/-. Thus, he observed that the investment in the purchase of land and development was Rs.12,25,932/- and that inestment to the extent of Rs.35,40,068/- was not recorded in the books of account by the appellant society. He, therefore, added the same to the income of the appellant on the ground that no satisfactory explanation about the source of the said investment was furnished by the assessee.
4. On appeal, the CIT(A) confirmed the action of the Assessing Officer.
5. Before me, ld Authorised Representative of the assessee pointed out that the affidavits of three sellers of the land in question were filed before the CIT(A). In the affidavits, all the three sellers have duly admitted in the sworn statement that although the consideration amount stated in the sale deed were stated at the market value of the land but as the land was to be 3 ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1 used for orphan hostel of Schedule Tribe students, they accepted the lesser amount as consideration of the land and handed over the possession to the assessee for lesser consideration. As per the affidavits, the amount of actual consideration received by them were as under:
Sl.No. Name of the seller Market value Actual
consideration
received
1. Sh. Jaya Prakash Nayak 13,75,000 1,90,000
Plot No.1474, Kh.No.72
2. Sh. Frankline Naik, Plot 18,48,000/-
No.1474, Khata No.695 6,00,000/-
13,53,000/-
4. Cost of land development 4,35,932/-
45,76,000/- 12,25,932/-
6. Ld A.R. explained that no defect in the said affidavits could be pointed out by the CIT(A) after due verification of the same. No material has been brought on record except the registered sale deed to show that the assessee actually paid even a single rupee more than the amount disclosed by the assessee in its audited account. He explained that as the stamp duty was payable on the market value of the land and, therefore, for that purpose only the market value was stated as the amount of consideration in the registered sale deed, otherwise, the registered authority would not have registered the same. When the seller has in the sworn statement admitted that they have not received more than what was disclosed in the return of income, the CIT(A) was not justified in above circumstances in 4 ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1 holding that the assessee actually invested more amount without bringing any other material on record.
7. He also pointed out that the CIT(A) has held that Rs.45,76,000/-, which represented the consideration amount mentioned in the registered sale deed as actual application for charitable purposes by the assessee. Therefore, he alternatively argued that even if the difference amount of Rs.33,50,068/- in question is treated as donation by three sellers to the assessee society and, therefore, income of the assessee society then also as the said amount was utilised for charitable purposes, the same will not have any effect on the taxable income of the assessee.
8. On the other hand, ld D.R. supported the orders of lower authorities.
9. I find that in the affidavits, three sellers have categorically admitted that they have actually received aggregate amount of Rs.7,90,000/- in place of Rs.45,76,000/- stated in the registered sale deed. The assessee also explained the reason and circumstances in which the amount of Rs.45,76,000/- was mentioned in the sale deed whereas the actual consideration paid by the appellant was Rs.7,90,000/- only. I find that no material has been brought on record by the revenue to controvert the above material brought on record by the assessee.
10. It is a settled position of law that a plausible explanation given by the assessee cannot be rejected by the revenue without bringing any positive material on record to show why the plausible explanation was incorrect . 5
ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1 In the instant case, I find that no positive material has been brought on record after verification to show that the assessee made actual payment of any amount more than Rs.7,90,000/- for acquisition of land and Rs.4,35,932/- towards development expenses for acquiring the land in question. In the light of my above view, the alternative argument of the assessee is not required to be adjudicated. In the circumstances, the addition made u/s.69 of the Act of Rs.30,50,068/- is untenable . Hence, I delete the addition of Rs.30,50,068/- and allow the ground of appeal of the assessee.
11. The second issue is that the CIT(A) erred in confirming the action of the Assessing Officer in making addition of Rs.7,78,162/- in the hands of the assessee by applying section115BBC of the Act.
12. I have heard the rival submissions and perused the orders of lower authorities and materials available on record. In the instant case, the Assessing Officer found that the assessee has claimed to have received donation & subscription of Rs.7,78,162/-. In order to verify the same from documentary evidence, the Assessing Officer required photo identity proof of the donors. The assessee filed list of donors with name and address. On verification of the list, the Assessing Officer repetition of donation by same persons in many cases. He also found that the registration number and date of registration u/s.80G(5)(vi) of the I.T.Act, 1961, etc are not mentioned in donation receipt voucher. Therefore, he added Rs.7,78,162/- 6
ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1 as anonymous donation and taxed the same as per provisions of section 115BBC of the Act.
13. Before the CIT(A), the assessee submitted that the alleged sum was received from persons of different corners of the society voluntarily for construction of orphan hostel building and name of the donors and the amount of donation by each donor could not be explored.
14. The CIT(A) after considering the submission of the assessee held that the assessee has not furnished identity of the donors with complete address and that the contention of the assessee that donation was with the specific direction for construction of hostel building was also not subject to verification as no evidence has been filed. Therefore, he confirmed the action of the Assessing Officer.
15. Before me, ld Authorised Representative of the assessee relied on the decision of this Bench of the Tribunal in the case of Sahanubhu vs ACIT in ITA No.40/CTK/2013 for assessment year 2010-2011 order dated 6th November, 2015, wherein, the Tribunal held that the provisions of section 115BBC requires that names and address of the donors are to be recorded. On examination of audited income and expenditure account, it is found that the assessee has recorded the name and address of the donors and the same was furnished before the lower authorities. From the above, the Tribunal inferred that the assessee filed documents to prove the identity of the donors, amount of donations, hence, it cannot be called to be anonymous and deleted the addition.
7
ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1
16. Therefore, he contended that the facts in the present case are identical to the facts before the Tribunal in the case of Sahanubhuti (supra) and, therefore, following the same, he prayed for deletion of the addition.
17. On the other hand, ld Departmental Representative relied on the orders of lower authorities.
18. I find that the Assessing Officer by applying provisions of section 115BBC of the Act, added Rs.7,78,162/- as anonymous donation on the ground that the identity of the donors has not been proved by the assessee. I find from the order of the Assessing Officer and the CIT(A) that the assessee has provided the names together with address of the donors. Thus, it is the claim of the assessee that the identity of the donors was established before the Assessing Officer and the CIT(A). On similar facts and circumstances of the case, I find that this Bench of the Tribunal in the case of Sahanubhuti(supra), the Tribunal held that where the names and address of the donors are given to the Assessing Officer, the said donation cannot be treated as anonymous donation under the provisions of section 115BBC of the Act. As the facts in the present case are identical to the facts in the case of Sahanubhuti (supra), respectfully following the same, I set aside the orders of lower authorities and vacate the disallowance of Rs.7,78,162/- made by the Assessing Officer u/s.115BBC of the Act as anonymous donation to the assessee and allow this ground of appeal. 8
ITA No. 343/CT K/ 2016 Asse ssment Year :20 10- 201 1
19. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 13 /04/2017 in the presence of parties.
Sd/-
(N.S Saini)
ACCOUNTANT MEMBER
Cuttack; Dated 13 /04/2017
B.K.Parida, SPS
Copy of the Order forwarded to :
1. The appellant : Social Action for Rural
Development (SAFRD), At: Kumbharkupa,
PO: Mallikapadi, Dist: Kandhamal
2. The Respondent. DCIT, Berhampur Circle,
AT/PO: Berhampur, Dist: Ganjam
3. The CIT(A)-3, Bhubaneswar
4. Pr.CIT, Bhubaneswar.
5. DR, ITAT, Cuttack BY ORDER,
6. Guard file.
//True Copy//
SR.PRIVATE SECRETARY
ITAT, Cuttack