Income Tax Appellate Tribunal - Delhi
Sant Vivekanand Education & Welface ... vs Assessee on 3 June, 2005
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ' G ' NEW DELHI)
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
And
SHRI B. C. MEENA, ACCUNTANT MEMBER
ITA No.3567/ Del/ 2012
(Assessment Year 2005-06 )
Sant Vivekanand Education & Vs. Addl. CIT,
Welfare Society, Range 2, Ghaziabad
33-34 Km. Milestone
Delhi Hapur Road,
Jindal Nagar, Ghaziabad
PAN : AAAJS2418J
(Appellant) (Respondent)
Assessee by: Shri Ved Jain & Shri A K Agarwal, CA
Revenue by: Shri Sanjay Pandey, Sr. DR
ORDER
PER I. C. SUDHIR, JUDICIAL MEMBER:
The assessee has questioned the first appellate order on the following grounds:
"1. That in vie of the facts and circumstances of the case the CIT(A) has erred on facts and in law in upholding the assessment order passed by the Addl. Commissioner I T, Range 2, Ghaziabad ad also in upholding the additions made by the A.O.
2. That in view of the facts and circumstances of the case the CIT(A) has erred on facts and in law in upholding the assessment order assessing the income at Rs.1,40,00,000/- as against Nil returned income.
3. That on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in upholding and the A.O. have erred in making an addition under section 68 of the Act of 1,40,00,000/- in respect of donations received. The addition made is illegal and bad in law.
4. That on the facts and circumstances of the case and in law the Ld. CIT(A) and the A.O. have erred in observing that Section 11, 12 and 12A would be of no relevance to the appellant in the present case.
5. That the CIT(A) has failed to appreciate the fat that the appellant has discharged its burden of proof as required under the law and the additions are totally illegal, bad in law and based on guesswork and surmises and conjectures.
6. That without prejudice the CIT(A) has failed to appreciate that the assessee is a registered education society u/s 12A and the income of the same is exempt u/s 11 as it fulfill all the conditions of the said section.
7. That the various observations made by the A.O. and CIT(A) against the appellant are illegal, bad in law and contrary to facts, evidence and material on record.
8. That the evidence and explanation given by the appellant and the material available on record have not been properly considered and judiciously interpreted.
9. That the additions have been made on basis of mere surmises and conjectures and guesswork and contrary to facts and evidence on record and cannot be justified by any material on record.
10. That in any case the additions are unjust, unlawful and highly excessive and the income has been wrongly and illegally assessed at Rs1,40,00,000/-.
11. That the interest u/s 234B and 234C have been wrongly and illegally charged. The appellant has not committed any default of payment of advance tax as it could not have anticipated such additions while estimating the current income. In any case the interest charged has been wrongly worked out and is excessive."
2. We have heard and considered the arguments advanced by the parties in view of the orders of the orders of authorities below, material available on record and the decisions relied upon. In the grounds, the issue involved are as to whether Ld. CIT(A) was justified in upholding the addition made u/s 68 of the I. T. Act, 1961. at Rs.140 lacs, in respect of the donations received and secondly, as to whether Ld. CIT(A) was justified in sustaining the interest charged u/s 234B and 234C of the I. T. Act, 1961. In the alternative to the first issue, a contention has also been raised vide ground No.6 that the assessee has failed to appreciate that the assessee is a registered educational society u/s 12A and the income of the same is exempt u/s 11 as it fulfills all the conditions of the said section.
3. The brief facts are that the assessee society is duly registered under the Societies Registration Act, 1860 runs an educational institute namely Shri Vivekanand Institute of Technology situated at Jindal Nagar, Ghaziabad. The institute is offering two courses of B. Tech and MBA. The society was granted registration u/s 12A of the Act by the then CIT, Ghaziabad on 03.06.2005. It was also granted exemption u/s 80-G w.e.f. 17.01.2005 to 31.03.2008 vide order dated 03.06.2005 of CIT, Ghaziabad. The A.O. has made addition of Rs.140 lacs on account of anonymous donations u/s 115BBC as unexplained cash credit u/s 687 of the Act out of the figure of RS.140 Lacs and Rs.44,24,000/-. The A.O. had asked the assessee to submit the details of corpus donations received at Rs.1,9,86,101/- and unsecured loan of Rs.1,16,51,080/- raised during the year. In response to the query raised in this regard by the A.O., the assessee filed relevant details like names and addresses, confirmation etc. of the donors and lenders. But the A.O. was not satisfied with the claim of the assessee and in the result, the above stated additions u/s 68 of the Act have been made. This action of the A.O. was questioned b the assessee before Ld. CIT but it has not succeeded.
4. While reiterating the submissions before the authorities below, the Ld. A.R. pointed out that while accepting the donations, the assessee has taken the details of the donors including their names, addresses, PAN, their copies of ITR containing details of their respective A.O.s etc. The assessee had also taken the declaration form of donors that the amount being paid is on account of donations. The assessee had also kept copies of cheques/pay orders /DDs by which the donations were paid. All the donations have bee paid through banking channel. In response to the notice u/s 137(6)/131 of the Act issued to the donors, some of them also furnished bank statements, account opening forms, other transactions details filed by the respective bankers and donors as well as their confirmations. The Ld. A.R. submitted that so far as the source of these donations at the end of the donors is concerned, it is beyond the reach of the assessee to explain the same. The assessee could at the most has got their A.O.'s details and details of bankers which the assessee has duly collected and submitted before the A.O. The Ld. A.R. submitted further that the donations made were voluntary and the assessee had not only disclosed the donations but also submitted list of donors. The fact that donors were not produced, does not lead to the inference that he assessee was trying to introduce unaccounted money by way of donations receipt. It cannot be held that the amount was received with a profit motive. In the inquiry conducted by the A.O. there is only corpus donation of Rs.159 lacs inclusive of loan of Rs.44,24,000/- has also figured as it forms the basis for invoking adverse inference u/s 115BBC and Section 68 of the I. T. Act, 1961. The total amount raised/obtained during the year on account of corpus donations / loans is much higher and the assessee had submitted similar types of evidence for loan/donations as admitted by the A.O. The Ld. A.R. referred to pages No.191-392 of the paper book filed on behalf of the assessee before the tribunal with this certificate that the documents were filed before Ld. CIT(A). He also referred to pages No.37-169 of the paper book which are the copies of details of donations of corpus funds and the evidence to one part donation and also 17 donors furnished before the A.O. At pages 191-392 have been placed even submitted copies of written statement dated 19.10.2011 filed before the Ld. CIT(A) containing details of corpus donors and evidence relating to corpus donations collected from the ROC website. The Ld. A.R. placed reliance on the following decisions:
i) DCIT Vs New Anand Education Society, I.T.A. No. /Del/2009 dated 09th Oct., 2009 for the assessment year 2003-04.
ii) DIT(E) Vs Pran Nath Educational Medical Society in I.T.A. No. 3846/Del/2009 assessment year 2000-01 dated 12.05.2010.
iii) DIT(E) Vs Moti Bagh Mutual Aid Education (2008) 298 ITR 90 Del.
iv) DIT (E) Vs Keshav Social & Charitable Foundation (2005) 278 ITR 152 Del.
5. Ld. D.R. on the other hand relied on the orders of authorities below on the issue. He submitted that all the confirmations were received in stereotyped letters having the same pattern. None of the so called confirmation letters were bearing any telephone number. Most of the donations were shown have been received from Delhi and in most of the cases, the notices issued u/s 133(6) were returned unserved. Copies of the income tax returns were pertaining to other than relevant previous years. The bank accounts furnished were incomplete and in most of the cases, the returned income as per the return of income were below Rs.2 lacs. He drew our attention to the definition of the income provided u/s 2(24) of the I. T. Act, 1961 with the submission that voluntary contribution is required to be made. He also referred to section 12(1) of the Act wherein also voluntary contribution is required to be made. He submitted that corpus donations form part of the voluntary contribution and donation is always given with direction of its use in a particular way. He submitted that further this non verifiable income is to be taxed u/s 56 of the Act.
6. In rejoinder, the Ld. A.R. submitted that the details of donations given with confirmation of the donors were filed before the A.O. but the A.O. did not make sincere effort for its verification.
7. Having gone through the decisions relied upon by the Ld. A.R., we find that in the case of DIT(E) Vs Keshav Social & Charitable Foundation (supra), before the Hon'ble Delhi High Court, the charitable institution made disclosure of donations along with list of donors. There was no dispute that more than 75% of the donations were applied for charitable purposes. It was held that the facts that complete list of donors was not filed or that the donors were not produced, does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts and Section 68 has no application to the facts of the case as the assessee had in fact disclosed the donations as income. The Hon'ble Delhi High Curt approved the decision of the Tribunal that addition u/s 68 was not correct and exemption u/s 11 cannot be denied.
8. Again, in the case of DIT(E) VS Motibagh Mutual Aid Education (supra), before Hon'ble High Court, the assessee received 'guptdaan' which was shown as unsecured loan by mistake. Some other donations were also there. The donations were utilized for construction of school building. It was held that when there is no deviation of funds there are minor contradictions or deviation in the accounts, this by itself cannot substantiate the allegation that the assessee exists for profit motive, therefore, exemption u/s 10(22) of the Act cannot be denied to the assessee. It was held that he amount of guptdaan is a receipt and not an outflow from the corpus of the assessee. Therefore, the question in this regard is whether the amount was received by was of a loan or by way of guptdaan. In either case, it cannot be said that the amount was received with a profit motive, unless it was not meant for utilization for educational purpose for which there is no evidence on record. It was held further that even if donors were not produced, it was not necessarily lead to an inference that the assessee was trying to introduce unaccounted money by way of donation receipts. The donations were utilized for construction of school building, is clearly an educational /charitable purpose. But at no stretch of imagination it can be said that the donations were received with some profit motive as held by Hon'ble Delhi High Court.
9. In the case of DCIT(E) VS New Anand Education Society (supra) before Delhi Bench of the Tribunal, the dispute was raised against the donation receipt of RS.7,65,467/-. The assessee trust duly registered u/s 12A(a) of the Act has furnished details of donations received. The A.O. held that these were only accommodation entries as per the report of the Investigation Wing. He accordingly subjected the said donation receipts for charge of tax at maximum marginal rate. Ld CIT(A) deleted the same. The tribunal upheld the first appellate order on the issue with this finding that to obtain benefit of exemption u/s 1`1, the assessee is required to show that the donations were voluntary. It was observed that the assessee had not only disclosed the donations but had also submitted list of donors. It was held that the fact that complete list of donors were not filed and the donors were not produced, does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts. The Tribunal respectfully followed the ratio laid down by the Hon'ble Delhi High Court in the case of Keshav Social and Charitable Foundation (supra) and declined to interfere with the first appellate order on the issue.
10. In view of the ratio laid down in the above cited decisions of Hon'ble Delhi High Court when we examined the orders of authorities below, we do not find justification in the action in sustaining the addition of Rs.140 lacs u/s 68 of the Act only because some of the donors could not be verified when there is no dispute that the assessee had made disclosure of donations along with list of donors, the amount so received in donations were applied for charitable purposes. It is pertinent to mention over here that during the year, the assessee had received corpus donations of Rs.1,99,86,101/- and it had collected RS.3,51,76,220/- as per income and expenditure account that the total amount available with the assessee from these two accounts was Rs.5,51,62,321`/- against which it had spent Rs.4,03,76,796/- of fixed assets and Rs.3,09,80,493/- on recurring expenses. Thus, after depreciation of Rs.63,08,433/-, the total application of funds comes to Rs.6,50,48,856/-. Thus, there is no dispute that the amount in question was applied for educational purposes, the act that some donations remained unverifiable due to non availability of donors at the addresses given in their confirmations does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts. We, therefore, respectfully following the decision of Hon'ble Delhi High Court in the case of Keshav Social & Charitable Foundation (supra), hold that the assessee is not required to show that eh donations were voluntary. In the present case before us, the assessee had not only disclosed the donations but had also submitted the list of donors. Thus, the provision of Section 68 of the Act has no application to the facts of the present case. There is also no dispute that the objects and activities of the assess ewer charitable in nature and it was duly registered under the provisions of Section 12A of the I. T. Act, 1961. We thus direct the A.O. to delete the addition of Rs.140 lacs u/s 68 of the Act in question made upheld by the authorities below in the absence of justification thereto. The grounds No.1-10 are thus allowed in favour of the assessee.
11. In ground No.11, the appellant has questioned charging of interest u/s 234B and 234C of the Act which is consequential and does not need independent adjudication.
12. In the result, appeal of the assessee stands allowed.
13. Order pronounced in the open court on ........ July, 2013.
(B. C. MEENA) (I. C. SUDHIR) Accountant Member Judicial Member