THE GATE OF HOPE CHARITABLE TRUST,CHENNAI vs. ITO (EXEMPTIONS) WARD-2,, CHENNAI

आयकर अपीलीय अिधकरण, ’सी’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी जगदीश, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकरअपीलसं./ITA No.1372 & 2006/Chny/2024
िनधारणवष/Assessment Years: 2010-11 & 2011-12

The Gate of Hope Charitable Trust,
142/4, 3rd Street, Kamaraj Nagar,
Chengalpattu-603 001. v.
The ITO (Exemptions),
Ward-2,
Chennai.
[PAN: AAATT 7636 B]

(अपीलाथ/Appellant)

(यथ/Respondent)

अपीलाथ क ओर से/ Appellant by :
Ms. T.V.Muthu Abirami,
Advocate
यथ क ओर से /Respondent by :
Ms. Anitha, Addl.CIT
सुनवाईकतारीख/Date of Hearing
:
07.01.2025
घोषणाकतारीख /Date of Pronouncement
:
05.03.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

These appealshave been preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC,
(hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 20.03.2024 &
20.06.2024 for the Assessment Years(hereinafter referred to as ‘AY‘)2010-11 &2011-12. 2. In both these appeals, the sole issue involved is the denial of exemption claimed by the assessee trust u/s 11 of the Act and taxing its income in status of AO registered charitable tr religious activities and incurred towards its ch action of the AO was al raised various grounds
5] dated 06.10.2024, c grounds as well. At the attention to the legal is u/s. 147/148 of the Inc
"Act") of the AO has be inclined to adjudicate f there is merit on the reassessment order fram
3. We first take up
2010-11. The brief facts registered u/s.12AA of as ‘the Act‘) vide order the Act vide order d regime/amendment in registration u/s.12AB a granted vide order dat
ITA No.1372
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P on the ground that, though the a rust u/s 12AA of the Act, but it h therefore the expenses claimed haritable objects was disallowed b so confirmed by the Ld. CIT(A). Th of appeal and has also filed addition challenging the action both on meri outset itself, the Ld. AR of the ass ssue that has been raised wherein come-tax Act, 1961 (hereinafter ref een challenged by the assessee, the first the legal issue raised before e legal issue then it goes to th med pursuant to reopening itself.
the appeal in ITA No. 1372/Chny s are that, the assessee is a Charita the Income Tax Act, 1961 (hereina dated 03.01.2001 and is also appro dated 18.07.2011. Thereafter, u law, the Trust again applied f s well as u/s.80G of the Act, both ed 01.10.2021. Further, it is also 2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust assessee was a had carried out to have been y the AO. The e assessee has nal grounds [1- ts and on legal essee drew our n the reopening ferred to as the erefore, we are us, because if he root of the y/2024 for AY ble Trust and is after referred to oved u/s.80G of nder the new for renewal of of which were noted that the assessee is registered w
Contributions Regulatio dated 31.10.2002. 4. From the objects the purpose of serving physic, cognitive, econo was involved in vario
Development Programs the Trust. The relevant noted to be as follows - a) To promote the int and economically dow b) To evolve and health-oriented progr of the Society includi drug addicts, urban a economic wellbeing.
c) To create environm general public to wor forestry, tree planting d) To promote the ov e) To establish institu and all other needy.
f) To help people to ecology and environm to take up action prog g) To develop leaders h) To hold, organiz seminars, symposia,
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with the Ministry of Home Affairs un on Act, 2010 vide Registration No of the Trust, it is noted that, it prim under privileged children in the are omic and social through sponsorship us charitable activities, more pa for the welfare of children as per t objects for which the Trust was terest and overall welfare of socially, educa wntrodden people of India implement educational, cultural, econom rams for the underprivileged and weaker s ng women, youth, handicapped, working c and rural poor to enhance their social, cultu mental awareness and educate and motiv k for the environmental equilibrium such a g, waste land management etc.
erall welfare or the victims of leprosy.
utional care for the children, youth, aged, o o acquire skills and knowledge to safegu ment, to keep their locality clean and beaut grams in this field.
ship qualities among the youth.
e and arrange meetings, lectures, discu conferences, competitions, debates, exh

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust der the Foreign o.075 820 253
marily exists for ea of education, p. The assessee rticularly Child the Objects of registered are ationally mic and sections children ural and vate the as social orphans ard the tiful and ussions, hibitions etc., in the fields o education.
i) To conduct and development, environ j) To collect, organiz and environment.
5. For the relevant income (RoI) on 20.09
time period expired for originally, no scrutiny a income filed by ass
Subsequently, the case
Act dated 30.03.2017 o by the AO as under:
“As per the informat
07.03.2017, it is se received by the asse
Trust" from M/s. Ca religious activities. T
Charitable Trust, by activities, and the sam
The Gate of Hope
"Ayanavaram Child D
Ayanavaram, Chenna
Chengalpet.
The assessee trust M registered for Charita the order of the C.No:2039(58)/2000- granted approval u/
dated 18.07.2011. The assessee Trust
20.9.2010 admitting u/s.143(1) on 02.02
(as per the Income a ITA No.1372
(AYs 2
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of socio- economic problems, environme engage in research in the fields o nment and education.
e and disseminate knowledge relating to AY 2010-11, the assessee has file
.2010 admitting ‘NIL’ income. On 3
issuance of notice u/s. 143(2) of the assessment was framed. Therefore sessee stood accepted by the e was re-opened by issuing notice on the strength of the following re tion received from DCIT(Exemptions) Che een that an amount of Rs.1,00,15,671
essee trust, M/s The Gate of Hope of Ch aruna Bala Vikas, during the year, to c
The fund was provided to M/s Gate of H
Compassion International, USA, also for r me has been utilized for religious activities of Charitable Trust" under the project
Development Centre", the place of projec ai and "Chengalpattu Child Development C
M/s. The Gate of Hope charitable trust is able purposes u/s.12AA of the IT Act, 19
e
Commissioner of Income tax,
TN
-01/TN-V dated 02.01.2001. The assessee
/s.80G vide order in DIT(E) No.2039(58
filed the return of income for A.Y.2010
g NIL income and the same was pro
.2012. The Gross Receipts of the assesse and Expenditure Account) for the A.Y. 201

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust ent and of rural ecology ed its return of 30.09.2011 the e Act, therefore e, the return of e
Department.
u/s.148 of the asons recorded nnai on 1/- was aritable carryout
Hope of religious by M/s.
names ct being
Centre", a trust
61 vide
N-V in e is also )/00-01
0-11 on ocessed ee Trust
10-11 is Rs.1,04,33,790/- The of Caruna Bala Vikas"
interest. The major towards child develop programme under 1
1,00,18,456/-, the a towards the above activity. The amount
But, as per the info contribution of Rs.1,0
Bala Vikas to carry o religious activities.
Thus, the assessee t being a Charitable tru expenditure of Rs.1
Receipts. Hence, app the claim of depreciat
The return of the inco and therefore the oc fund was not availabl
In view of the above, to tax has escaped as Sec.147 of the Incom
6. In the course of r after enquiry denied assessee as AOP and Aggrieved, the assesse was pleased to dismiss
7. Since the assess juri iction before the have to look into the se that, before the AO ass the conditions laid dow
ITA No.1372
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e same consists of "Foreign Contributions
" of Rs.1,00,18,456/-, and Local account an claim of expenditure of the assessee tru pment centres under 3 projects and child project. Out of the foreign contribution assessee has applied a sum of Rs. 90,6
said projects, which are claimed as ch applied exceeds 90% of the foreign receipt ormation received from the DCIT (Exem
00,15,671/- has been received from M/s.
ut religious activities and also has been sp trust, M/s. The Gate of Hope of Charitable ust, has carried out religious activities invol
,00,15,671/-, amounting to 99% of its plication to the tune of Rs.90,71,612/- ex tion should be disallowed and brought to ta ome for AY 2010-11 was not selected for s ccasion to examine the purpose of utiliza e.
I have reasons to believe that income cha ssessment for A.Y.2010-11, within the mea me tax Act, 1961. reassessment, the AO issued statuto exemption u/s.11 of the Act an d re-computed its income at R ee preferred an appeal before the it. Now the assessee is in appeal be see has raised the legal issue c
AO to have been re-opened the a ettled position of law on the legal is sumes juri iction to re-open, it is n in the said section 147 has to be 2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust
- Grant nd Bank ust was survival of Rs.
6,711/- aritable ts.
ptions),
Caruna pent for e Trust, lving an s Gross xcluding ax.
scrutiny ation of argeable aning of ory notices and nd treated the Rs.91,80,690/-.
Ld.CIT(A) who fore us.
challenging the assessment, we sue. It is noted necessary that e satisfied viz.,

AO should record "reas for that assessment yea satisfied at the first p assumed juri iction u consideration is whethe he could have validly re as to whether the AO
[which he had indicated holding a belief that inc is important to rememb to be evaluated on a st be made or assumed, w of juri iction u/s. 147
case of Hindustan Le
332], has, inter alia, o the reasons are require substitution or deletion reasons. No inference c not recorded. It is for t reasons recorded by h
Lordships added that "
and should not keep th
ITA No.1372
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son to believe" that the income cha ar has escaped assessment. If this lace, then it cannot be said the /s. 147 of the Act. Therefore, th er on the basis of the reasons recor eopened the assessment. For that it on the basis of whatever materi d in his "reasons recorded"] had re ome chargeable to tax has escaped ber that the reasons recorded by AO tand-alone basis and no addition/ex while adjudicating the legal issue of A of the Act. The Hon’ble Bombay Hig ever Ltd. vs. R.B. Wadkar [(20
bserved that "………. It is needless t d to be read as they were recorded is permissible. No additions can be can be allowed to be drawn on the b the AO to disclose and open his mi im. He has to speak through the The reasons recorded should be s e assessee guessing for reasons. R

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust argeable to tax condition is not AO has validly he question for ded by the AO, has to be seen ial before him, easons warrant assessment. It O to reopen has xtrapolation can
AO's usurpation gh Court, in the 004) 268 ITR to mention that d by the AO. No made to those basis of reasons ind through the reasons."Their self-explanatory
Reasons provide link between conclusion to be examined only as the notice.
8. Moreover, the Pa assessment, if the cond and not otherwise. It assessment is governe acquires a right as to th assessment is the Fun opening of assessment juri iction by CIT unde in its wi om has prov assessment juri iction providing condition assumption/usurpation assessment, the reas juri ictional fact and revisional juri iction th prejudicial to the revenu the AO or the CIT can juri iction respectively reopening u/s. 147 of ITA No.1372
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n and the evidence….". Therefore, t they were recorded by the AO befo arliament has given power to AO dition precedent as discussed abov should be kept in mind that t ed by the time-barring rule and he finality of proceedings. Queitus of damental Rule and exception to t by AO under section 147 or exercis er section 263 of the Act. Therefore, vided safeguards for exercise of th n to AO; and revisional juri ict precedent which is sine q of juri iction. In the case of on to believe escapement of i law (mixed question of fact and he order of the AO should be errone ue. Unless the condition precedent exercise their reopening juri ictio y. The legislative history is that in f the Act, the Parliament by Di

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust the reasons are ore the issue of to reopen the ve are satisfied, the concept of the assessee f the completed this rule is Re- se of Revisional the Parliament he reopening of ion of CIT by qua non for reopening of ncome is the d law) and for eous as well as is not satisfied, on or revisional respect to the rect Tax Laws

(Amendment) Act 1987
believe escapement of writing, is of the opinio the AO was later subst income'', by he Direct
Apex Court as well as other Hon'ble High Cou of a prudent person ins and law (mixed ques escapement of income (
9. The AO, who is a the completed assessme believe escapement of c fact & law and sine qua assessment. It must be foundation based on inf is foundation based on holding the belief that in It has to be kept in m
Saran & Sons P. Ltd.
expression "reason to b expression "if satisfied"
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7 w.e.f. 01.04.1989 had substituted income" to “for reasons to be reco n'' which gave unbridled subjective tituted back to “reason to believe
Tax Laws (Amendment) Act, 198
the Hon'ble juri ictional High Co rts have already held in plethora of structed in law in understanding ju stion of fact and law) the reas
(supra).
a quasi-judicial authority is empow ent only in a given case wherein the chargeable income to tax which is th non to assume juri iction to reope e kept in mind that reasons to bel formation and belief based on reaso information there must be some ncome chargeable to tax has escape mind that the Hon'ble Supreme C
Vs. ITO (1981) 130 ITR 1 (SC elieve" occurring in sec. 147 "is stro and such requirement has to be m

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust d "for reason to orded by him in e satisfaction to escapement of 9. The Hon'ble ourt as well as f cases the test ri ictional fact son to believe ered to reopen ere is reason to he juri ictional en a completed ieve postulates n. Even if there reason warrant ed assessment.
ourt in Ganga
) held that the onger" than the et by the AO in the reasons recorded be It must be kept in min may trigger "reason to reasonable enquiry to c there is in fact an esca event, then proceed to because reason to belie
Act, and not the reaso distinction should be b raised by assessee.
10. It is also to be ke of income should be t because then it will be a of India i.e., the Rule of reopening juri iction o the reason to believe assumption of juri icti law, because assumptio borrowed satisfaction.
11. The above laid do the Hon’ble Supreme
ITA No.1372
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efore usurping the juri iction u/s.
nd that information adverse agains o suspect"then the AO is duty b collect material which would make apement of income.And on satisfact reopen the assessment and not bef eve is the juri iction requirement on to suspect escapement of incom borne in mind while adjudicating ept in mind that, the reason to belie hat of AO, and not that of any o against one of the basic feature of t f Law, wherein the Parliament has e only to that of Assessing Officer and escapement of income is not th ion to re-open, is vitiated; and res on of juri iction to reopen will be own proposition finds support from e Court in the case of ACIT

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust
147 of the Act.
st the assessee bound to make him belief that tion of such an fore that event, u/s 147 of the me. This subtle the legal issue eve escapement other authority, the Constitution empowered this d that is why if hat of AO, the sultantly bad in on the basis of the decision of Vs Dhariyal

Construction Co. (32
given by the DVO is onl material for the purpos the Income-tax Act, 1
Assessing Officer has collected and must form had escaped assessmen the Hon'ble Delhi High C
Ltd (357 ITR 330) wh holding as under: -
"7. We may poin into the question of the proceeding essence, held tha were entirely va available materia believe that inc
Tribunal held tha were invalid.
8. The Tribuna proceedings unde to the said reaso reproduced: --
"In the case at h we find that the A Director of Incom that the above na entries/transactio unexplained incom that the assesse material facts and the assessee co
ITA No.1372
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8 ITR 515) wherein it was held t ly his opinion and that per se canno ses of reopening assessment under 961. The Hon’ble Supreme Court to apply his mind to such inform m his own reasons to believe there nt. We may also gainfully refer to Court in the case of CIT Vs Insect hich upheld the order of the ITAT t out at this juncture itself that the Tribun of merits. It only examined the question o gs under Section 147 of the said Act. The at the purported reasons for reopening the ague and devoid of any material. As s al, no reasonable person could have an come had escaped assessment. Conse at the proceedings under Section 147 of l gave detailed reasons for concludin er Section 147 were invalid. Instead of add ons, we think it would be appropriate if t hand, as is seen from the reasons recorde
AO has merely stated that it has been info me-tax (Inv.), New Delhi, vide letter dated amed company was involved in giving and ons during the relevant year, which me of the assessee company. The AO has f ee company has failed to disclose fully d source of these funds routed through ban ompany. In the reasons recorded, it 2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust that, the report ot be a tangible section 147 of held that, the mation, if any, on that income the decision of ticides (India)
Delhi Bench by nal did not go of the validity e Tribunal, in assessments such, on the ny reason to quently, the the said Act ng that the ding anything the same are d by the AO, ormed by the d 16.06.2006
taking bogus is actually further stated and truly all nk account of is nowhere mentioned as to assessee or to transactions. It i through which m the assessee. W
Income-tax (Inv.
been mentioned
16.06.2006 of th been given. The A he had received f the facts mentio informations gath was involved in represented unse unexplained inco informed by the dated 16.06.2006
taking bogus entr
AO did not me unexplained inco basis of which th undoubtedly vag sufficient and re person could hav
In other words, scanty and ambig
13 clear and un recorded by the nature and amou taken by the asse
AO also do not d the bogus entries
From the reasons nature of bogus e in the relevant ye already noted abo the AO for initiat or examined for the Act. The reas the AO. No subs made to those r mentioned in the addition has been the reasons reco mentioned in the ITA No.1372
(AYs 2
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o who had given bogus entries/transac whom the assessee had given bogus s also nowhere mentioned as to on whic mode the bogus entries and transactions w
What was the information given by the ), New Delhi, vide letter dated 16.06.2006
. In other words, the contents of the he Director of Income-tax (Inv.), New De
AO has vaguely referred to certain commun from the DIT(Inv.), New Delhi; the AO did ned in the said communication except th hered by the DIT (Inv.), New Delhi that giving and taking accommodation entri ecured money of the assessee company ome of the assessee company or that Director of Income-tax (Inv.), New Delh
6 that the assessee company was involved ries/transactions during the relevant financ ention the details of transactions that me of the assessee company. The inform he AO has initiated proceedings u/s 147 o gue and uncertain and cannot be cons elevant material on the basis of which a e formed a belief that income had escaped the reasons recorded by the AO are to guous. They are not Shri Udit Kumar Dug nambiguous but suffer from vagueness.
AO do not disclose the AO's mind as to w unt of transaction or entries, which had b essee in the relevant year. The reasons rec disclose his mind as to when and in what s or transactions were given or taken by t s recorded, nobody can know what was the entries or transactions given and taken by ear and with whom the transaction had tak ove, it is well settled that only the reasons ing proceedings u/s 147 of the Act are to sustaining or setting aside a notice issue sons are required to be read as they were stitution or deletion is permissible. No add reasons. Therefore, the details of entrie e assessment order and in respect of wh n made by the AO, cannot be made a basi rded by the AO were with reference to th assessment order. The reasons recorded b

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust ctions to the s entries or ch dates and were made by e Director of 6 has also not letter dated elhi have not nications that d not mention hat from the the assessee ies only and y is actually it has been hi vide letter in giving and cial year. The represented mation on the of the Act are strued to be a reasonable assessment.
otally vague, ar, AY 2012-
The reasons what was the been given or corded by the mode or way the assessee.
e amount and the assessee ken place. As s recorded by be looked at ed u/s 148 of e recorded by dition can be s or amount hich ultimate is to say that hose amounts by the AO are totally silent with transactions and place. In this r juri ictional Delh
ITR 383, in whi initiating proceed capital gain and whom the transa absolutely no d extremely scanty
Juri ictional Delh of the Act by the recent decision of Signature Hotels above."
12. Before us the Ld that, in the present ca completed u/s 143(3) o of reopening of an intim stringent condition was for the Revenue to dem some tangible material absence of original asse
Hon’ble Supreme Court
Brokers P. Ltd. (291
the assessee’s counsel juri ictional High Co taxmann.com 155)an should be based on ITA No.1372
(AYs 2
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h regard to the amount and nature of bogu the persons with whom the transaction espect, we may rely upon the decision hi High Court in the case of CIT v. Atul Jai ich case the information relied upon by dings u/s 147 of the Act did indicate the s nobody knew which shares were transac action has taken place and in that case details available and the information s y and vague and in that light of those facts hi High Court held that initiation of proceed e AO was not valid and justified in the eye f Hon'ble juri ictional High Court of Delhi i
(P.) Ltd. (supra) also supports the view w d. DR appearing for the Revenue ase before us, there was no origin of the Act and therefore, according mation u/s 143(1) of the Act, the a s not applicable and that there is n monstrate that the reasons recorded as there is no material available on essment. For this, she relied upon t in the case of ACIT v. Rajesh
ITR 500). Against, such a conten l drew our attention to the decis ourt in the case of TANMAC d contented that formation of “reas some tangible material which co

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust s entries and ns had taken n of Hon'ble n [2000] 299
y the AO for source of the ted and with e there were supplied was s, the Hon'ble dings u/s 147
s of law. The in the case of e have taken had contended nal assessment to him, in case bove discussed no requirement were based on n record due to the decision of Jhaveri Stock ntion of Ld DR, sion of Hon’ble v. DCIT (78
sons to believe”
omes into the possession or knowledg there is escapement of cannot under any circ forming “reasons to be like in the present case
Act.We observe that the Court in the case of TA occasion to consider u/s.143(1)(a) of the Ac tangible material avail regarding escapement u/s.143(1) of the Act i have considered the de
P. Ltd. (supra), and r
Bench of the Hon’ble De
Ltd (354 ITR 536). In no assessment order is Section 143(1) and an However,the Hon’ble Hi in Asstt. CIT v. Rajes held that, even where taken with reference
ITA No.1372
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ge of the AO for him to come to f income from assessment.Accordi cumstance bypass the essential p elieve” before reopening any asses e only an intimation was issued u/s e Division Bench of the Hon’ble jur
ANMAC v. DCIT (78 taxmann.com a case of re-opening of an inti ct wherein it was held that in the a lable with the AO to form the of income, the re-opening of ass s bad in law. The Hon’ble High Co ecision ofACIT v. Rajesh Jhaveri S rendered its view by concurring wi elhi High Court in the case of CIT v n this case also, the Court held that passed when the return is merely p intimation to that effect is sent to igh Court observed that, the Supre h Jhaveri Stock Brokers (P). Ltd proceedings under Section 147 ar to an intimation framed earlier

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust conclusion that ng to her, one pre-requisite of ssment, even if s 143(1) of the ri ictional High m 155) had an mation passed absence of any requisite belief sessment made ourt is noted to Stock Brokers ith the Division v. Orient Craft t, it is true that processed under o the assessee.
eme Court itself d. (supra) had e sought to be under Section 143(1), the ingredients
High Court observed th no distinction between intimation issued under adopt different standard
The ingredient is that t chargeable to tax has e the requirement of "re with reference to an in categorically observed basis of a mere guess, needs to give a schema failing which, section 1
Officer to reopen asses reopen. The Court thus reopened when only an for the assessee to co
"change of opinion" is reopening on the groun that the alleged reason belief that income cha decided case, the Hon’b
ITA No.1372
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s of Section 147 have to be fulfille hat, the language employed in Sect an order passed under section 1
r section 143(1) and hence it is not ds while interpreting the words "reas there should exist "reason to believ escaped assessment. The High Court eason to believe" cannot be dispen ntimation under Section 143(1). T that, an assessment cannot be re suspicion, gossip or rumour. It was atic interpretation to the words "rea
147 would give arbitrary powers to ssments, which otherwise are not v held that even where assessment intimation u/s 143(1) was issued, ntend that notwithstanding that th s not available to him, he would nd that there was either no reaso to believe is not relevant for the fo argeable to tax has escaped asses ble High Court noted that, there wa

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust ed. The Hon’ble tion 147 makes
143(3) and the t permissible to son to believe”.
ve" that income t thus held that nsed with even
The High Court eopened on the s held that, one ason to believe"
o the Assessing valid reasons to is sought to be it shall be open he argument of challenge the n to believe or ormation of the ssment. In the s no whisper in the reasons recorded, possession of the Ass intimation to exercise o
Act, and therefore quas to be bad in law.
13. From the aforesa hand, we have to exam whether the condition juri iction can be disce
AO in the instant case standalone basis the assessment, which has noted that, the AO at P from the DCIT (Exemp observed that, an am assessee Trust from M
‘M/s.CBV‘) to carry out to the assessee by the religious activities and t purpose under the proje at Chennai as well
Chengalpattu. This is ITA No.1372
(AYs 2
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of any tangible material which sessing Officer subsequent to the of the power conferred under sect shed the notice issued u/s 148 of th aid understanding of law governin mine the reasons already set out a precedent necessary to usurp t erned from perusal of the reasons r
(supra). For doing that we have to reasons recorded by the AO t s already been extracted at Para
Para No.1 has taken note of inform ptions), Chennai, on 07.03.2017 f mount of Rs.1,00,15,671/- was re
M/s.Caruna Bala Vikas (hereinafter religious activities; and that the fun
Compassion International, USA [C that has been utilized by the assess ect name “Ayanavaram Child Develo as “Chengalpattu Child Develop simply noted to be the sweepi

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust came to the e issue of the tion 147 of the e Act holding it g the issue at above and test the re-opening recorded by the o examine on a to reopen the 5 above. It is mation received from which he eceived by the referred to as nd was provided
CI,USA] also for see for the said opment Centre”
ment Centre”, ng information received from the offic opinion on the matter.
reference to the purpor
Trust basis which it w diverted for religious p particular religion was the utilization at the ch as religious activities.
14. In the second pa registered u/s.12AA of approval also u/s.80G notes that the assess
20.09.2010 admitting ‘N
Act on 02.02.2012 and tune of Rs.1,04,33,790
M/s.CBV of Rs.1,00,18,
These observations ar background facts of the 15. Thereafter, accord
Trust was under one pr in the recorded reasons
ITA No.1372
(AYs 2
The Gate of H
::16 ::

e of DCIT (Exemptions), Chennai
The aforesaid observation does n rted religious activities carried out b was being alleged that the charitab purposes. It is also not discernibl being propagated and in which ma hild development centers was being ragraph, the AO notes that the as the Act as a Charitable Trust in 200
in the year 2011. In the third para ee Trust had filed its RoI for A NIL’ income which was processed u/
the gross receipts of the assessee T
/- which consists of foreign contrib
,456/- as well as local account and re noted to be general in natu assessee trust.
ding to the AO, the major claim o roject, but again no details of such s. The AO further observes that, ou

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust giving their/his not contain any by the assessee ble funds were le as to which anner and why baldly inferred sessee Trust is 01 and granted agraph, the AO
AY 2010-11 on /s.143(1) of the Trust was to the butions granted d bank interest.
ure giving the of the assessee project is given t of the foreign contributions of Rs.1,0
Rs.90,66,711/- towards charitable activity and receipts. These observa facts concerning the ass return and that they con these observations re suggests income escapi
16. In the next para received from the D
Rs.1,00,15,671/- has b activities and also has s i.e. Para No.5, the A charitable Trust has expenditure of Rs.1,00, and hence, he was o
Rs.90,71,612/- excludin and brought to tax. A belief that income char from the JCIT/CIT(E), h
ITA No.1372
(AYs 2
The Gate of H
::17 ::

00,18,456/-, the assessee has app s the above said projects which a that the amount exceeds 90%
ations are again noted to be the co sessee, which are discernible from ntain nothing adverse against the as eferring to any material or info ng assessment.
a 4, the AO again goes back to t
CIT(E) which stated that the c een received from M/s.CBV, to car spent for religious activities. And i
AO concludes that, the assessee carried out religious activities
,15,671/-, amounting to 99% of its of the opinion that application to ng the claim of depreciation should ccording to him therefore, there w rgeable to tax for AY 2010-11 and e re-opened the assessment.

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust plied a sum of are claimed as of the foreign ntemporaneous the income-tax ssessee nor are rmation which the information contribution of ry out religious n the next part
Trust being a involving the s gross receipts o the tune of d be disallowed was a reason to after approval

id reasons recorded by AO it is evid rmation given by DCIT(E),and the ted himself after preliminary enqui e time of recording reasons to come n that "income of the assessee t appears that the AO never bother received from DCIT(E) but simply f to us, the information given by DC gger and be the starting point to e tion of DCIT(E) can be termed as a f spect" and not “reason to believe”
ri ictional fact & law required to en ri iction to reopen as envisaged u pt in mind that the 'reasons to n to suspect'. 'Reason to suspect r an enquiry so that it can be foun or material to substantiate that th ed by the DCIT(E) and after post e dent decision whether to re-open t of repetition, we say that the AO sh thority like in this case from DCIT(E atisfaction of the juri ictional fact

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust dent that other re is no other ry which could e to a conscious e has escaped red to apply his followed it as a CIT(E) can only enquire; and at foundation only escapement of nable the AO to u/s. 147 of the believe' is not t' based on an nd out whether here is merit in enquiry the AO the assessment hould not act on E) because then
& law which is not permitted by law juri iction by AO to reo
18. In the present c reveals that, the core a given to it by M/s.CB purposes rather than fo body of the reasons rec the funds given to asse propagation of a partic mentioned as to the ma purposes and as to how was being inferred as r be lacking any tangible
Apart from relying on th the assessee had utiliz reasons so recorded do which the belief was fo assessment.
19. The language us suggest that he is also Section 11 is also avail
ITA No.1372
(AYs 2
The Gate of H
::19 ::

w and consequently vitiate the open u/s. 147 of the Act.
case, reading of the aforesaid rea allegation is that, the assessee uti
BV& M/s. Compassion Internationa or charitable purposes. However, n corded, the AO has stated to have a essee has been used for advancem cular religion and its tenets. It has anner in which the funds were divert w the monies spent had child develo religious activity. We find the reaso e material or evidence in this rega he letter received from DCIT(E) bald zed charitable funds for religious es not speak out the relevant tangi ormed that income chargeable to ta ed in the recorded reasons by th o not aware that, the benefit of ex able to religious trusts. It is necess

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust assumption of asons recorded lized the funds al for religious nowhere in the alleged whether ent, support or s also not been ted for religious opment centers ons recorded to rd whatsoever.
dly alleging that purposes, the ble material on ax had escaped he AO appears xemption under sary to keep in mind that, Section 1
Charitable as well as Re all religions are equal in public religious purpose a Trust was for “the p religion, then it may fa provides that nothing c
“any part of income” f religious purpose whic
However, as noted fro noted that there is no w the reasons recorded, activities, which fell foul
20. It is a common kn activities and right to fre of the Constitution of Rights] of the Constitu u/s.11 of the Act for ch activity falls in the mis income of a Trust or Ins religion, community or income derived from th
ITA No.1372
(AYs 2
The Gate of H
::20 ::

1 exemptions can be claimed b eligious Trust; and as per the Consti n the eyes of law; and income dona es enjoys exemption u/s.11 of the A promotion and aiding” of the work all under the mischief of Section contained in Section 11 shall oper from the property held under a Tr h doesn’t endure for the benefit m reading of the reasons recorde whisper/allegation neither in the info to link assessee with any part l of Section 13(1)(a) of the Act.
nowledge that in India there are dif eedom of religion is granted as per A India which comes under Part-III ution of India. As noted, the exem haritable or religious Trust would be schief of section 13 of the Act is stitution is applied for the benefit o caste. Section 11 of the Act allows he property held under Trust wholly

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust by both Public itution of India, ated/applied for Act. But, only if of a particular
13(1)(a) which rate to exempt rust for private of the public.
ed by AO, it is ormation nor in icular religious fferent religious
Article 25 to 28
I [Fundamental mption granted e denied only if only when the f any particular s exemption for y for charitable or religious purposes.
Trust has utilized/appl religion, community or claimed u/s 11 for regi this case, there is no applying its income for violation of Section 13
information stated in P nexus whatsoever basis law could draw a link material that there is a tune of Rs.90,71,612/-.
on the basis of the lett there is an escapemen satisfy the juri ictional of the Act. The AO simp the satisfaction without warrant holding a beli assessment. Just becau
AO cannot reopen the 143(1) of the Act.
ITA No.1372
(AYs 2
The Gate of H
::21 ::

Unless, the AO had information tha ied its income for the benefit of caste, the question of disallowing stered trust u/s.12A of the Act doe whisper in the recorded reasons a the benefit of any particular religi
3(1)(a) of the Act. Even the ref
Para No.1 and conclusion thereafte s which any prudent person proper age that the AO was in possessi an escapement of income from asse
At the cost of repetitions, we note ter from DCIT(E) has jumped into t of income which is erroneous sin l fact and law for reopening as envi ply taking note of the DCIT(E) lette t independent application of mind t ief that income chargeable to tax se a letter has been received from t assessment even if original assess

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust at the assessee any particular the exemption es not arise. In about assessee ous or caste in ference to the er, has got no rly instructed in ion of tangible essment to the that AO simply conclusion that nce it does not isaged u/s. 147
r has borrowed to form reason x has escaped the DCIT(E) the sment was u/s.

discussed above, in our conside
O does not stand the test as laid discussed above which is sine qua he Act, therefore, in the light of the the case as discussed, we find th o justify reopening the assessment ery assumption of juri iction to e AO failed to validly assume juri mption of juri iction by him to oram non judice and, therefore, es of law and therefore, we quash sessment order framed by him this legal issue. The appeal of the a d.
up the appeal of the assessee
AY 2011-12. It is noted that, the is argely similar to that of AY 2010-1
e reasons recorded for reopening e Assessee s. The Gate of Hope charitable trust is a trust re s u/s. 12AA of the IT Act, 1961 vide the orde me tax, TN-V in C.No:2039(58)/2000-01/TN-

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust ered view, The by plethora of non to assume aforesaid facts at the reasons t u/s. 147 fails o reassess the diction u/s. 147
o re-open the all subsequent h the reopening
.The assessee assessee for AY in ITA No.
ssue involved in 1, as discussed of assessment, egistered er of the -V dated

ssee is also granted approval u/s.80G vide
0-01 dated 18.07.2011. The assessee Trust f
Y.2011-12 on 06-07-2011 admitting NIL income u/s.143(1) on 17-07-2012. During the yea ssee had admitted a gross receipts of Rs. 99,4
t of Rs. 1,10,58,707/- under Section 11 of the ormation received:
en received from the DCIT(Exemptions), Chenn nformation/2016-17 dated 02-02-2017, that M e Trust, had received funds during the FY 2010-
, a society registered u/s. 12AA of the Income ects viz., (a)Ayanavaram Child Development and (b) Chengalpatu Child Development the assessee, M/s. The Gate of Hope Charitab ligious activities as against its charitable obje nformation is as under:
al Vikas, is a society registered under Section x Act and assessed in this office. The assessee l Vikas was referred to Special Audit u/s. 142(2A
2013-14. During the course of Special Audit, it mpassion International is transferring funds as, the funds are given to many channel par igious activities.
As directed by M/s.Com nd M/s. Caruna Bal Vikas, the entire funds a anel partners for the purpose of carrying out a es of M/s. Compassion International which is reli at M/s. The Gate of Hope Charitable Trust had e AYs. 2010-11 to 2014-15. The Gate of Hope Charitable Trust, it appea igious activities as against its charitable objects
O & Basis of forming reason to believe and ome
Return of Income filed for the AY 2011-12, a gross receipts of Rs. 99,40,812/-, which inclu s. Caruna Bal Vikas. The Statutory Audit had o had incurred expenses towards the Religious a f M/s.Caruna Bal Vikas. It is pertinent to ment registered as a Charitable Trust under Section d out religious activity and incurred the exp ctivity. Therefore, the expenses claimed as ap itable activity has to be disallowed and brought e provisions of section 147/ 151 to the fact f income was filed for the year under considera t u/s 143(3) of the Act was made. Accordingly ment to initiate proceeding u/s 147 is reason to d above (refer paragraphs).

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust order in filed the e and the ar under 40,812/- e Income nai, vide
M/s. The -11 from Tax Act
Centre,
Centre, ble Trust ects. The 12AA of society,
A) of the t is seen to M/s.
rtners to mpassion re to be activities igious.
received ars thus
...."
d details that the udes the observed activities tion here
12AA of penditure pplication to tax.
ts of the ation but y, in this o believe

It is pertinent to mentio income for the year un
2(40) of the Act was m
143(1) of the Act. In vie
2 to section 147 are ap under consideration dee escaped assessment.
In view of the above, I has escaped assessmen the Income tax Act, 196
the end of assessme approval may please be 12 under Section 147 of 23. Following the lega above, we accordingly p
2011-12 as to whether opening juri iction can recorded by the AO. It information & backgrou
2011-12. The relevant observed that, in Para he received from the said DCIT(E) observed
M/s.Caruna Bal Vikas ( projects at “Ayanavaram
“Chengalpattu Child Dev
DCIT(E) of the donor, t
Audit and that it was transferring funds to M/
ITA No.1372
(AYs 2
The Gate of H
::24 ::

on here that in this case the assessee has filed r nder consideration but no assessment as stipul made and the return of income was only proce ew of the above, provisions of clause (b) of exp pplicable to facts of this case and the assessm emed to be a case where income chargeable to have reasons to believe that income chargeab nt for A.Y.2011-12, within the meaning of Se
61. In this case, more than four years have laps ent year under consideration. Therefore, ne e accorded for reopening of the case for the A f the Act and to issue notice u/s 148 of the Act.
al position of law, as laid down in proceed to test the above recorded the condition precedent necessary t n be discerned from perusal of the is observed that, the Para 1 conta und facts concerning the assessee paras to be examined are Paras
No.2, the AO takes note of the info
DCIT(E), Chennai dated 02.02.201
that, the assessee Trust had receiv hereinafter referred to as ‘M/s.CBV m Child Development Centre” at Che velopment Centre”, Chengalpattu. A the accounts of M/s CBV was refer gathered that M/s. Compassion I
/s. CBV, which in turn is giving the 2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust return of ated u/s ssed u/s planation ent year o tax has le to tax c.147 of sed from ecessary
AY 2011-
Paras 7 to 12
reasons for AY to usurp the re- above reasons ins the general e’s case for AY s 2 & 3. It is ormation which 17 wherein the ved funds from V‘) to carry out ennai as well as According to the rred for Special
International is funds to many channel partners to carr
M/s CBV thus is noted assessee Trust would against its charitable ob findings for forming chargeable to tax had simply accepted the afo and relying on same, t trust had incurred expe directions of M/s. CBV a 24. Thereafter, in Par there was no scrutiny the only requirement of the Act was that the A income. And thereafter believe that income c assessment for which h opening of the case is assessment year. Ho
Department doesn’t sh authority. Since, at pre
ITA No.1372
(AYs 2
The Gate of H
::25 ::

ry out religious activities. The DCIT( to have suspected that the funds r have been used to carry out reli bjects. The AO in Para 3 is noted to purported “reasons to believe”
escaped assessment. The AO is oresaid letter of DCIT(E) of M/s CBV he AO straightaway observed that, enses towards the Religious activit and therefore such expenses was to ra No.4, the AO is noted to have assessment u/s.143(3) of the Act f law before re-opening the assessm
AO should have reason to believe r, in the last para, he states that he chargeable to tax for AY 2011-12
he has to take necessary approval beyond four years from the end owever, the copy produced befo ow any endorsement/approval of esent, we are not looking into the leg

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust
(E) of the donor received by the gious activities have given his
” that income noted to have as gospel truth
, the assessee ties as per the be disallowed.
observed that, and therefore, ment u/s.147 of escapement of e has reason to 2 has escaped s since the re- of the relevant ore us by the the competent gality of the re- opening for want of ap required to be summone
25. Again, we note th and vague lacking any t the fact, as discernible
M/s CBV had conducted unable to countenance t auditor would have add by M/s CBV to the ass purposes. This material only on borrowed satis of mind.
26. Further, it is note in the case of donor (n
The AO is noted to ha applied his own mind to reopening the assessme received from M/s CBV development centers a reasons that these child these child developmen
ITA No.1372
(AYs 2
The Gate of H
::26 ::

pproval by the CIT(E) for which t ed, we leave this legal issue open.
hat, the reasons recorded by the A tangible material or evidence. We fi from the recorded reasons that, d special audit for AY 2013-14. Acco the AO’s observation that, in this sp uced material or evidence that the d sessee Trust in AY 2011-12 was al fact alone shows that the reasons faction without AO’s own independ d that, the purported report of an a not the assessee) has been taken a ave not made any preliminary enq o the said report, before recording ent. The AO has himself observed by the assessee were utilized by th nd there is no allegation levelled i d development centers are only a fa t centers, the assessee is conductin

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust he records are AO were scanty rst take note of the DCIT(E) of ordingly, we are pecial audit, the donations given so for religious were recorded dent application auditor received as gospel truth.
uiry himself or the reasons for that, the funds e latter at child n the recorded
çade or that, in ng any activities for a particular religion
Only because, the spec receiving funds from M for religious purposes, of funds in India was incumbent upon the A record through the rec could arrive at a reason by the assessee which w had been diverted for purposes. However, it is in the above extracted reasons recorded, the A to how or in which ma used for advancement, its tenets. The reasons but is vague and genera
27. Moreover, as alrea
Section 11 is also avail only when a Trust is f particular religion, then which provides that no ITA No.1372
(AYs 2
The Gate of H
::27 ::

or caste in violation of Section 13(1
cial auditor of M/s CBV found that M/s Compassion International, whic it cannot be presumed that the fu also for religious purposes. If that AO at least bring some material o corded reasons basis which any p nable belief that, the funds received were meant to be utilized for its cha r propagation of any particular re s noted that, there is no such whisp d recorded reasons. Nowhere in th
AO or Special Auditor has stated to h anner was the funds given to asse support or propagation of a particu recorded on this aspect is noted t al in nature.
ady noted (supra), the benefit of ex able to both charitable & religious for “the promotion and aiding” of it may fall under the mischief of S othing contained in Section 11 sh

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust
1)(a) of the Act.
t M/s CBV was ch was existing rther utilization t be so, it was or evidence on prudent person from the donor aritable objects, eligion/religious per or allegation he body of the have alleged as essee has been ular religion and to lack specifics xemption under trusts and that the work of a ection 13(1)(a) hall operate to exempt “any part of in private religious purpos recorded by AO, it is no the information nor in particular religious activ
28. We further note f that the AO has taken assessee for AY 2011-1
receipts of Rs.99,40,81
Audit [may be Special incurred expenses for r ex-facie evident that, t collected any material expenses for religious receipt of the informati
M/s CBV for AY 2013-1
that assessee Trust had the expenses must hav disallowable. Such a co and surmise, because, enquiry and collected re that there was in fact an ITA No.1372
(AYs 2
The Gate of H
::28 ::

ncome” from the property held und e. However, as noted from reading oted that there is no whisper/allega the reasons recorded, to link asse vities.
from perusal of Para No.3 of the re n note of the contents of the Ro
12 and observes that assessee has 12/- and then notes the observatio
Auditin the case of M/s CBV] that religious purpose, which has to be d the AO has not carried out any s to form a belief that assessee activities, rather, the AO has si ion from the DCIT(E) pursuant to s
14, [not even the relevant year i.e d received funds from M/s.CBV and ve been incurred for religious activ onclusion is noted to be based pure evidently the AO has not made a elevant material to transform his sus n escapement of income.

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust der a Trust for g of the reasons ation neither in essee with any asons recorded
I, filed by the s shown gross- on of Statutory assessee had disallowed. It is uch enquiry or e had incurred mply acted on special-audit of e. AY 2011-12]
concluded that vities, which is ely on suspicion any reasonable spicion to belief

Order pronounced (जगदीश)
(JAGADISH)
लेखासद /ACCOUNTANT
ITA No.1372
(AYs 2
The Gate of H
::29 ::

easons, we therefore hold that, t quirement of law to validly reopen t to be bad in law.As held above, the cial Audit of donor, M/s CBV and t uth and has reopened the assessm without independently applying hi g his own view, which is found abse formation given by the DCIT(E) can d not “reason to believe” escapem e of any tangible material or enqui pplying the propositions of law laid al of AY 2010-11, we have no other ning of the assessment for AY 2011
quash the impugned reopening pr ment. The appeal of the assessee fo
, the appeals of the assessee are all d on the 05th day of March, 2025, in MEMBER
(एबीटी.
(ABY T. VA

याियकसदय/JUDI

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust he AO did not the assessment e AO had taken that too for AY ment based on is mind to the ent in this case.
at best trigger ment of income ry as discussed d down (supra) r alternative but -12 is also bad roceedings and or AY 2011-12, lowed.
n Chennai.
/-
वक
)
ARKEY)
CIAL MEMBER

चेई/Chennai,
दनांक/Dated: 05th March,
TLN, Sr.PS
आदेशक ितिलिपअेिषत/Copy

ITA No.1372
(AYs 2
The Gate of H
::30 ::

2 & 2006/Chny/2024
2010-11 & 2011-12) ope Charitable Trust