MAA JAGAT JANANI SEVA TRUST,NAMBIRA vs. ACIT (EXEMPTION CIRCLE), BHUBANESWAR

Shri P.K.Mishra, P.K.Mishra, ld AR appeared for the assessee and Shri the assessee and Shri Sanjay Kumar, ld CIT Kumar, ld CIT DR appeared for the revenue.

3. It was submitted by ld AR that the assessee It was submitted by ld AR that the assessee is a Trust. It was the is a Trust. It was the submission that the return of income for the relevant assessment year came submission that the return of income for the relevant assessment year came submission that the return of income for the relevant assessment year came to be filed by the assessee originally on 27.9.2014. The return of income to be filed by the assessee originally on 27.9.2014. The return of income to be filed by the assessee originally on 27.9.2014. The return of income

The assessee has received Rs.5,00,00,000/- from A.V. Birla, a trust. However, the purpose of the trust and its registration is not furnished by the assessee. it is also found that no return is filed by M/s. A.V. Birla. Hence, amount receipts of Rs.5,00,00,000/- is to be taxed as business/professional income. P a g e 2 | 19

As per return of M/s. Essel Mining for the A.Y. 2014-15, no donation is given to the assessee. However, the assessee has claimed to have received donation of Rs.23,83,65,596/- from it. Hence, the transaction does not appear to be genuine and the same is unexplained cash credit within the meaning of section 68 of the Income tax Act, 1961. 1. Out of fund transfer of Rs.5,18,62,600/-, major payments were made to the following parties: Sl.No. Name of the party Amount in Rs. 1. Raghunath Mohapatra 50,00,000 2. Ashok Kumar Mahakud 80,00,000 3. Ranjit Kumar Barik 60,00,000 4. Bhaktabandhu Mohanta 55,00,000 5. Jethuram Mahanta 50,00,000 6. Rajendra Barik 25,00,000 7. Ranjan Mahakud 25,00,000 8. M/s. Thriveni Earth Motors Pvt Ltd. 15,79,000 9. M/s. Biraja Chemical 11,70,000 10. M/s. A.K.Traders 22,00,000 11. Barbil Cricket Association 8,00,000 12. Ashok Leyland 13,99,000 4,16,48,000 Out of the above party, Ashok Kumar Mahakud, Ranjit Kumar Barik and Jethuram Mahanta are related to the trustee or other organization of Shri Sanatan Mahakud, the Managing Trustee. Hence, transaction with the above parties appears to be not for the purposes of the trust. Rs.8,00,000/- is paid to Barbil Cricket Association, however, Rs.35,90,000/- has been claimed towards social/cultural project. Hence, there is excess claim of Rs.27,90,000/-. Rs.13,99,000/- is paid to Ashok Leyland which appears to be paid for acquisition of assets. However, Rs.71,82,265/- has been claimed towards acquisition of assets. Hence, acquisition of asset and depreciation claimed appears to be doubtful. Nature of payment to M/s. Thriveni Earthmovers Pvt Ltd., a donor of Rs.15,79,000/- appears to be not for the purpose of charity. Further, most of the expenses are found to be incurred in cash and no document is provided by the assessee with regard to payment to poor. The genuineness is doubtful which do not come under charitable purpose as per section 2915) of the I.T.Act. Hence, I have a reason to believe that the amount of Rs.36,92,89,597/- (anonymous donation of Rs.75,55,001 + payment u/s.194J of Rs.5,00,00,000 + donation from A.V. Birla of Rs.5,00,00,000 +donation from Esser Steel of Rs.23,83,65,596/- + payments to Ashok Kumar Mahakud, Ranjit ZKumar Barik and jethuram Mahanata of Rs.1,90,00,000 + excess claim towards social/cultural project of Rs.27,90,000 +payment not in the nature of charity of Rs.15,79,000 ) has escaped assessment within the meaning of section 147 of the Income tax Ac, 1961.”

It was the submission that consequently, approval had been obtained from the Joint Commissioner of Income Tax (JCIT) and the concerned Commissioner of Income Tax (CIT). Ld CIT DR has placed before us the copy of the approval u/s. 151 of the Income tax Act, 1961, which consists of 10 pages, which are as follows:

It was the submission by ld AR that the proposal for reopening had been sent by the Assessing Officer on 22.3.2021 to JCIT (Exemption), Range, Bhubaneswar, who had approved the reopening on 22.3.2021 itself and recorded the satisfaction. It was the submission that the ld P a g e 13 | 19 CIT(Exemption), Hyderabad at Bhubaneswar had given the approval on 23.3.2021 being immediately succeeding day for the purpose of reopening. It was the submission that the approval given clearly shows non-application of mind. It was the submission that clearly the reopening was bad in law. It was the further submission that a perusal of reasons recorded also shows that the reopening has been done beyond four years period from the end of the relevant assessment year and in view of the proviso to section 147 of the Act, the Assessing Officer has not given any finding that there was failure on the part of the assessee to disclose truly and fully all materials facts necessary for its assessment originally. It was the submission that in view of the decision of the Hon’ble Supreme Court in the case of CIT v. Kelvinator of India Ltd.: 320 ITR 561(SC), the reopening is liable to be quashed and consequent assessment is also liable to be annulled.

In reply, ld CIT DR submitted that the assessee trust is a brain child of one Shri Sanatana Mahakud. It was the submission that said Sanataka Mahakud is a politician, who has started his career as a politician in Congress Party, then shifted to Independent and later on to Biju Janata Dal. It was the submission that said Sanatana Mahakud had captured few acres

We have considered the rival submissions. At the outset, a perusal of page 6 para 4 of the approval u/s.151 of the Act as provided by ld CIT DR shows that the enquiries made by the Assessing Officer as the sequel of the information collected/received is remarked as not applicable. Thus, clearly, there is no action done by the Assessing Officer in regard to collection of information for the purpose of reopening. A perusal of the reasons recorded as stated in para 6 of the said approval and which has been extracted above, clearly shows that the said reopening is on the basis of verification of the income and expenditure account. This income and expenditure account was very much with the Assessing Officer in the course of original assessment. The second evidence which has been considered by the Assessing Officer is 26AS of the donor Essar Steel India Ltd. This evidence was also available in the course of original assessment proceedings. This is excluding the reasons that just because Essar Steel India Ltd., has not filed its return of income or claimed the same as the donation, responsibility cannot be put on the assessee. Another reason given by the Assessing Officer is that TDS has been deducted by Essar Steel India Ltd., u/s.194J. The assessee has claimed TDS in his original return and this information was very much available in the original assessment proceedings. The third reason mentioned by the Assessing Officer is in P a g e 16 | 19 regard to amount of Rs.5,00,00,000/- received by A.V.Birla Trust and the details of the same had not been provided by the assessee nor the said trust has filed in its return. These are also reasons not associated to the assessee or under the control of the assessee. The other reason mentioned by the Assessing Officer is that payments had been made to various persons who are allegedly related to Sanatana Mahakud, the Managing Trustee of the assessee trust. What is the relationship is not coming out and as mentioned earlier, the Assessing Officer has not done any investigation as he has himself agreed in para 4 of the proforma for approval. Thus, clearly, some reasons have been raked up for the purpose of reopening. Further, it may be mentioned here that page 2 para 2 of the proforma talks of investigation report having been received in the assessment years 2013-14 & 2014-15 and clearly it is this investigation report which has raised the said allegation which have been borrowed by the Assessing officer as reasons recorded for the purpose of reopening.

Now, coming to the satisfaction as recorded by the JCIT, there is nothing available or discernible from the said satisfaction recorded by the JCIT or by ld CIT(E), Hyderabad at Bhubaneswar which gives indication that either of them have verified the records much less examined the issues before granting the satisfaction or the sanction for reopening. This view of ours that the reopening is not permissible on the basis of borrowed satisfaction of the Investigation Wing finds support from the decision of P a g e 17 | 19 Hon’ble Delhi High Court in the case of Sarthak Securities Pvt Ltd., vs ITO, 329 ITR 110 (Del).

A perusal of the decision of Hon’ble Supreme court in the case of Kelvinator of India Ltd (supra) has categorically held that after 1.4.1989, Assessing Officer has power to re-open the assessment, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment and such reasons must have a live link with the formation of the belief. As mentioned earlier, in the present case, at the cost of repetition, the reasons recorded are borrowed from the Investigation Reports, the Assessing Officer himself categorically admits in para 4 that there are no enquiries made by the Assessing Officer as a sequel to the information collected/received. A perusal of the investigation report provided by the Investigation Wing as has been recorded by the Assessing Officer also does not point out any tangible material having live link with the assessee much less on the failure on the part of the assessee. This being so, for both the reasons mentioned above, the reassessment as done by the Assessing officer by issuance of notice u/s.148 of the Act stands quashed. Consequently, the assessment order passed u/s.147/144B of the Act also stands quashed.

In the result, appeal of the assessee stands allowed.