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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
ITA No.384/VIZ/2017 filed by the Revenue and Commissioner of Income Tax (Appeals)-3, Visakhapatnam, both dated 17/04/2017 for the Assessment Years 2013-14 & 2014-15. C.O. No. 86/VIZ/2017 filed by the assessee in ITA No.384/VIZ/2017 2. Facts of the case in brief are that assessee M/s.G.S.L. Educational Society is engaged to promote/ establish and maintain educational and other institutions to impart education. There was a search and seizure operations carried in the group of GSL Society on 25/07/2013 and assessee was covered u/sec. 132 of the Act. The assessment proceedings u/sec. 143(3) r.w.s. 153A were completed on 29/02/2016 by accepting the income filed by the assessee. Subsequently, the Assessing Officer has initiated penalty proceedings u/sec. 271AAB of the Income Tax Act, 1961. In the penalty order, the Assessing Officer has noted that during the course of search operation conducted at the residence of Shri Adapa Rambabu, Accountant of the assessee, some incriminating 3 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) material in the form of loose sheets were found and seized vide Annexures-A/ARB/1&2 evidencing receipt of certain amounts from the students and also payments to various Doctors. During the course of search proceedings, Dr. Ganni Bhaskara Rao, Secretary & Correspondent of the society has owned-up the contents of the incriminating material found and on the basis of such material, admitted an undisclosed income of Rs.25.00 crores in his statement recorded u/sec. 143(4) of the Act on 26/07/2013. However, he sought time to furnish the bifurcation of the undisclosed income year-wise and head-wise. When questioned about the amounts received from the students, Dr. Ganni Bhaskara Rao has stated that during the F.Y. 2012-13 & 2013-14, the society had received anonymous donations from various persons for upliftment of the activities of the society. It was further submitted that the said donations received for the betterment of activities of the society only, and the persons who have contributed such donations were not willing to disclose their names/identity and submitted that due to this reason the society was handicapped in recording their names and identity. As all such contributions made by different persons par-take the character of anonymous donations submitted that all the anonymous donations received were utilised for upliftment of the 4 ITA Nos. 384/VIZ/2017 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) activities of the society. The relevant statement recorded on 31/10/2013 is reproduced as under:- “Q4. You are aware that Search & Seizure operations u/sec. 132 were conducted in the group of GSL Educational Society and during the course of which a statement u/sec. 132(4) was recorded from you on 19/09/2013 (P.O. Operation). Vide question No.7, where you have been asked to furnished the details of break-up of undisclosed income admitted by you. You have replied that you are in the process of analyzing the seized material and you will furnish all the required details by 21/09/2013 positively. Please furnish the details as promised by you. A. After analysing the seized material, to cover-up all the discrepancies in the material seized by the department, we are herewith giving the following disclosures on our group assessees. GSL Educational Society During the F.Ys. 2012-13 & 2013-14, the Society has received anonymous donations from various persons for up-liftment of activities of the Society, the same has been admitted u/sec. 115BBC of the I.T. Act in the name of the Society. The total amount received during the F.Y. 2012-13 (A.Y. 2013-14) is Rs. 20,13,18,001/- and in the F.Y. 2013-14 (A.Y. 2014-15) is Rs. 49,40,000/-. Therefore, the total amount received under anonymous donations is Rs. 20,62,58,001/-.....“
From the above, the Assessing Officer has come to a conclusion that assessee has disclosed the above income of Rs.20,13,18,001/- as anonymous donations in the return of income and admitted in the statement u/sec. 132(4) of the Act. Since search and seizure operations were conducted u/sec. 132 and assessee admitted the undisclosed income, the Assessing Officer has issued notice u/sec. 274 r.w.s. 271AAB on 29/02/2016 5 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) to show-cause as to why an order imposing penalty should not be made u/sec. 271AAB of the Act. In response, the assessee has submitted that in the present case, the assessee has not admitted any undisclosed income and has admitted the donations u/sec. 115BBC which are form part of the books of account. Though, the search has not conducted, the assessee could admit the receipts at the time of filing of the return since due date of filing of return of income is 31/10/2013 and submitted that penalty may be dropped. However, the Assessing Officer has not agreed with the explanation of the assessee and observed that assessee has admitted the undisclosed income only after search proceedings and it was never voluntarily. Without conducting search and seizure action u/sec. 132 of the Act, the details of the cash received and from whom received would never come into light of the day. It was found during the course of search that these cash receipts were not recorded in its books of account or other documents maintained in the normal course relating to F.Y. 2012-13, which is on or before the date of search i.e. 25/07/2013. Hence, this income clearly falls under the definition of ‘undisclosed income’ as defined in Explanation (c)(i)(A) to section 271AAB and he has rejected for dropping penalty proceedings. He further noted that section 271AAB prescribed a lesser rate of penalty i.e.
6 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) 10% of the undisclosed income where the assessee has admitted the undisclosed income u/sec. 132(4) of the Act and also has paid the tax and filed the return of income before the specified date. In the present case, a search was conducted on 25/07/2013 and the due date of filing of the return for the A.Y. 2013-14 u/sec. 139(1) (specified date) was 31/10/2013. The assessee was not filed the return of income u/sec. 139 on or before 31/10/2013. Notice u/sec. 153A was issued on 23/07/2014 requiring the assessee to furnish the return of income within 20 days of receipt of the notice. However, the assessee has furnished the return on 03/11/2014 i.e. much after the specified date. Thus, it is seen that although the assessee has admitted undisclosed income, it has failed to file the return of income within the specified date so as to get the relaxation in the matter of quantum of penalty leviable in terms of section 271AAB(1)(a). Not only that, the assessee has failed to specify the manner in which the income was derived and also substantiate the same. In view of the above, the Assessing Officer has levied penalty at 30% u/sec. 271AAB of the Act.
On appeal, ld. CIT(A) has observed that the case of the assessee is covered u/sec. 271AAB(1)(a) of the Act and therefore directed the Assessing Officer to re-compute the penalty at 10% 7 ITA Nos. 384/VIZ/2017 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) instead of 30% by giving finding that the due date of filing of the return was 30/09/2013. However, for the A.Y. 2013-14 the due date of filing of the return is extended to 31/10/2010 by CBDT vide F.NO. 225/117/2013/ITA.II, dated 24/10/2013. The assessee has filed the return of income within the specified date, therefore the ld. CIT(A) considered that the assessee has substantiated the manner in which undisclosed income was arrived and the return of income was filed within the specified date. Therefore, assessee’s alternative plea is accepted and directed the Assessing Officer to re-compute the penalty at 10%.
Being aggrieved, the Revenue is in appeal before this Tribunal.
Ld.DR has submitted that assessee has admitted the undisclosed income during the course of search and, therefore, the Assessing Officer has levied penalty u/sec. 271AAB of the Act. In the present case, the Assessing Officer has imposed penalty u/sec. 271AAB(c) for the reason that the assessee has failed to substantiate the income derived and therefore submitted that the Assessing Officer is justified in rejecting the request of the assessee to impose penalty at 10% u/sec. 271AAB(1)(a) and submitted that penalty order passed by the Assessing Officer may be sustained.
8 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) 7. On the other hand, ld.AR submitted that the assessee has filed its return of income on 31/10/2013 as per the time extended by the CBDT vide F.No. 225/117/2013/ITA.II, dated 24/10/2013. He further submitted that the finding of the Assessing Officer in rejecting the claim of the assessee and imposing penalty at 30% is not correct. He further submitted that the case of the assessee comes under the purview of section 271AAB(1)(a), therefore penalty if at all leviable is at 10% and not at 30%. He further submitted that as per sub-sections (2) & (3) of section 115BBC any anonymous donations received by any trust or institution does not maintain record of the identity indicating the name, address of the persons making such contributions and such other persons may be prescribed and submitted that as per the above clause, the assessee need not maintain identity of the person contributed, address and other particulars and submitted that the assessee has already submitted before the Assessing Officer that he has received contributions for specific purpose and therefore he has already fulfilled the conditions as per section 271AAB(1)(a) and therefore penalty has to be levied only at 10% not at 30%.
9 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) 8. We have heard both the sides, perused the material available on record and orders of the authorities below 9. In this case, there is a search conducted on 25/07/2013. The assessee has submitted before the authorities that income found is anonymous donations received and filed the return of income on 30/10/2013. Before the Assessing Officer the assessee has submitted that he has admitted the income during course of search and the same is offered for tax, the return was filed in time, therefore, penalty may be imposed @10%. However, the Assessing Officer not accepted the request of the assessee on the ground that the assessee has not filed return of income on or before 31/10/2013 and only filed on 03/11/2014 which is much after specified date. Accordingly, he levied penalty under sub-clause (c) to sub-section (1) to u/sec. 271AAB at 30%. On appeal, ld.CIT(A) gave a categorical finding that the assessee has filed the return of income on 31/10/2013, this is within the due date as extended by the CBDT F.No. 225/117/2013/ITA.II, dated 24/10/2013 and further observed that the assessee has filed the return of income within the specified date and admitted income and was offered for taxation, therefore the case of the assessee was covered by section 271AAB(1)(a) and directed the Assessing Officer to re-compute 10 ITA Nos. 384/VIZ/2017 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) the penalty at 10%. Insofar as the date of filing of the return is concerned, we find that the assessee had filed the return of income on 31/10/2013 for the A.Y. 2013-14 which is placed in paper book at page No. 41, therefore the Assessing Officer is not correct in rejecting the plea of the assessee on the ground that the assessee has not filed the return of income as per specified date. Insofar as application of section 271AAB(1)(a) is concerned, we find that during the course of assessment proceedings as well as penalty proceedings, the assessee has explained before the Assessing Officer that the society had received anonymous donations from various persons for upliftment of the activities of the society. It is also submitted that the said donations received for the betterment of the activities of the society and the persons who have contributed such donations were not anonymously disclosed their names/identify and submitted that due to this reason the society was handicapped in recording their names and identity. Ld.DR has pointed out that the assessee has failed to substantiate the manner in which the undisclosed income is derived. So far as this aspect is concerned, as per section 115BBC, any trust or institution received anonymous donations, is not necessary to mention identity/address and other particulars in the books. Therefore, once the assessee has explained the way in 11 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) which he derived income and also the purpose for which it is utilized, it is not necessary for the assessee being an educational society to substantiate further with the source of the income received in view of section 115BBC(2) & (3) of the Act. Therefore, in view of the facts and circumstances of the case, we find that the assessee has fulfilled all the conditions laid down in section 271AAB(1)(a), therefore penalty at 10% is leviable in this case. In view of the above, we find no infirmity in the order passed by the ld. CIT(A). Thus, this appeal filed by the Revenue is dismissed. C.O.No. 86/VIZ/2017 10. Cross Objection filed by the assessee is concerned, it is only supportive to the order of the ld. CIT(A). As we have already dismissed the appeal of the Revenue, no separate adjudication is required, therefore same is dismissed.
There is a delay of 137 days in filing the appeal. The assessee has filed an affidavit along with medical certificate by stating as under:- “Whereas, for the A.Y.20 14-15, 1 received the order passed by the Commissioner of Income Tax(A), Rajahmundry on 31st August 2017. As I was aggrieved with the orders passed by the commissioner of Income Tax(A), Rajahmundry, approached CA C.Subrahmanyam, FCA on 24th Oct' 2017 for filling an appeal. He informed that the appeal is 12 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) to be filed on or before 30th October 2017 before the Hon'ble ITA and he required some relevant papers to file the appeal. I was well prepared to file the appeal and made all the required papers ready to submit to my consultant, C.Subrahmanyam. But, in the intervening time, I had undergone prostate gland operation. I was hospitalized for few days from dt.27th Oct' 2017 to 10th Nov' 2017 and further advised to take bed rest. After rescue, the filing of appeal lost, sight and issue went out of my mind. However, on 2"d Mar' 2018, I received a telephone call from IT department enquiring about certain tax dues. Then, I realized that the subject appeal which was to be filed on or before 30th October 2017 was not filed and immediately took steps by handing over the papers to C.Subrahmanyam, FCA on 8th Mar' 2018. He worked on the file and accordingly, appeal was filed 016th March 2018, this causing a delay of 137 days. Whereas, there was no malafide intention in not filing the appeal within the due date except for the reasons and circumstances stated herein above.”
We have gone through the affidavit and find that there is a sufficient cause to condone the delay. Accordingly, delay is condoned.
So far as merits of the case is concerned, the ld. CIT(A) gave a finding that the case of the assessee pertains to A.Y. 2014-15, the due date of filing of the return is 30/09/2014. The assessee filed the return of income on 29/11/2014 which was beyond the specified date and confirmed the order of the Assessing Officer by rejecting the plea of the assessee and in levying penalty at 10%. We find no reason to interfere with the order passed by the ld.CIT(A). Thus, this appeal filed by the assessee is dismissed.
13 & 65/VIZ/2018 C.O.No. 86/VIZ/2017 (G.S.L. Educational Society) 13 In the result, appeals filed by the Revenue and the assessee are dismissed and the cross objection filed by the assessee is also dismissed. Order Pronounced in open Court on this 26th day of Feb., 2020.
Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated: 26th February, 2020. vr/- Copy to:
1. 1. The Assessee - G.S.L. Educational Society, G.S.L. Medical College Campus, NH-5, Rajahmundry.