KAILASWASI NARAYAN ALIAS BAPU PATIL SHIKSHAN PRASARAK MANDAL,KOLHAPUR vs. INCOME-TAX OFFICER, WARD 1(2), KOLHAPUR
आयकर अपीलीय अधिकरण “ए”न्यायपीठ पुणे में ।
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE
BEFORE SHRI R.K. PANDA, VICE PRESIDENT
AND MS. ASTHA CHANDRA, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.620/PUN/2020
Assessment Year : 2011-12
Kailaswasi Narayan alias Bapu Patil
Shikshan Prasarak Mandal,
A/p Aakurde, Tal. Shahuwadi,
Kolhapur - 416215
Maharashtra.
PAN: AAATK8795Q
Vs.
ITO, Wd. 1(2),
Kolhapur
अपीलार्थी /Appellant
प्रत्यर्थी / Respondent
Assessee by :
CA Supriya Powar
Department by :
Shri Ramnath P. Murkunde
Date of hearing :
31-12-2024
Date of Pronouncement :
11-03-2025
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated
10.06.2024 of the Ld. Commissioner of Income Tax (Appeals)-2 Kolhapur,
[“CIT(A)”] pertaining to the Assessment Year (“AY”) 2012-13. 2. This is the second round of appeal. In the first round, the Coordinate bench of the Pune Tribunal had dismissed the appeal of the assessee on account of delay in filing of the appeal without dwelling into the merits of the case, vide its order dated 01.03.2023. The assessee challenged the said order of the Tribunal before the Hon’ble Bombay High court in ITA(L) No. 29393 of 2023 and the Hon’ble High Court condoned the said delay with a direction to the Tribunal to decide the appeal on merits. Hence, this present appeal before us.
Briefly stated, facts of the case are that the assessee is a trust engaged in running of educational institution(s) in remote areas. For AY 2011-12, the assessee filed its return of income on 10.12.2012 disclosing surplus of Rs.4,01,183/- which was claimed as exempt. In the statement of total income in Schedule F of the return, the assessee showed the entire amount of receipt as applied towards the charitable or religious purposes in India. The case was 2 AY 2011-12
selected for scrutiny. Accordingly, notices u/s. 143(2) and 142(1) were issued and served upon the assessee which were responded by filing of the submissions / part submissions by the assessee from time to time. During the assessment proceedings, the Ld. Assessing Officer (“AO”) found that the assessee trust has claimed exemption u/s.11 of the Income Tax Act, 1961 (the “Act”) by filing Form No. 10B. But the trust is granted registration u/s.12A of the Act only w.e.f. 01.04.2012 which does not cover the AY 2011-12 under consideration. The Ld. AO proceeded to complete the assessment of the assessee trust as an AOP denying the assessee’s claim of donation/
contribution received from farmers as corpus/capital receipts for the reason that confirmations from the respective donors/ farmers were not submitted by the assessee and also for the reason that the assessee was not registered u/s.
12A and hence the said receipts could not be considered for claim of exemption u/s.11 & 12 of the Act. The Ld. AO, therefore added the entire donation of Rs.24,82,619/- as revenue receipts taxable u/s.68 of the Act since the genuineness of the transactions remained unproved by the assessee. Further, the Ld. AO disallowed the entire expenditure claimed by the assessee relying upon the affidavits of the teaching and non- teaching staff of assessee trust wherein it was stated that no donations were received from any person and they did not get any salary from the trust. Consequently, the assessment was completed on 26.03.2014 u/s.143(3) of the Act assessing income of the assessee trust as an AOP by making addition of Rs.24,82,619/- u/s. 68 of the Act.
Aggrieved, assessee filed an appeal before the Ld. CIT(A) challenging the taxability of the entire donations of Rs.24,82,619/- received by the assessee trust and also for non- consideration of the expenses of Rs.20,66,948/- claimed by the assessee while applying the provision of the sections of the 68 of Act. Without prejudice to the above, the assessee therefore raised an alternate claim that the income only to the tune of Rs.4,01,183/- can be brought under the purview of taxation. The assessee filed its detailed submissions before the Ld. CIT(A) in support of the above contentions which are incorporated in para. 5.2 of his appellate order, reproduced below: “2. The appellant filed an appeal before your honour against the assessment order passed by the ITO Ward-1(2), Kolhapur in the case of the above appellant for the A.Y 2011-12 determining total income of Rs.24,82,619/- 143(3) of the Act, on 26.03.2014 against the income declared by the Appellant at NIL. The facts of the case alongwith the submission made by the appellant trust as under may kindly be considered for disposal of the appeal:- i) The appellant trust was created by Deed of Trust dated 02.06.2001 duly registered under the B.P.T. Act wet. 02.06.2001. The objects of the trust were solely educational in nature enclosed). The trust applied for registration u/s.
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12AA of the Act and obtained the same from the CIT-1, Kolhapur w.e.f.
01.04.2012, treating itself as a Public Charitable Trust.
ii) The appellant-trust filed return of income for A.Y. 2011-12 on 10.12.2012 in Form No.ITR-7 showing surplus of Rs.4,01,183/ which, however, was claimed as exempt as the objects were educational in nature. The trust claimed exemption u/s.11 and 12 of the Act in view of facts that applied for registration us, 12AA and it was presumed that such registration would be granted by the CIT-1,
Kolhapur with retrospective effect after condoning the delay from the date of creation of the trust. Accordingly, the accounts were audited. The audit report in Form No IOB was filed alongwith the accounts and return claiming its income as exempt us. 11 of the Act.
iii) The Assessing Officer while completing the assessment found that the trust had tame exemption u/s.11 of the Act and filed Form No.I0B but as the registration u/s.12A was granted to the trust w.e.f. 01.04.2012, the period covered from 01.04.2010 to 31.03.2011 i.e. the relevant assessment year should not be considered for qualifying exemption u/s., 11 and 12 of the Act. He therefore, proceeded to complete the assessment as an AOP on the income/receipt shown by the trust. The Assessing Officer denied the appellant's claim of donation/contribution received from farmers as not corpus/Capital receipts since there were no such confirmations from the respective donors/farmers and moreover the trust was not registered u/s, 12A so that it could be considered u/s.11 and 12 of the Act.
iv) The Assessing Officer, therefore, held that the entire receipts shown of Rs.24,82,619/-was duly confirmed by the donors/contributors and therefore the genuineness of the transactions remained unproved. He, therefore, added the entire donation as revenue receipts and taxed the same u/s.68 of the Act.
v) The Assessing Officer, however, did not allow any expenses as claimed by the appellant though for the receipts shown of Rs.24,82,619/-, the total expenditure for runing the educational Institution was incurred by the appellant at Rs.20,66,948/- and further expenditure carried forward was shown at Rs.
16,65,765/-. For not allowing such expenses, the Assessing Officer relied on the two affidavits filed by the teaching and non-teaching staff of the educational institution run by the society wherein they said as under:-
"R/e the undersigned are the non-teaching staff in Kailasvasi Narayan alias
Bapu Patil Shikshan Prasarak Mandal, Mangaon and working in Shri.
Siddheshwar Madhyamik Vidyalaya, Shivare Mangaon, Tai Shahuwadi, Dist.
Kolhapur The said school is unaided and since we were unemployed we requested the founders of the said school to start it. Since the institution was unaided we had agreed to work without salary. Whereas since it was necessary to sow that we had received salary for determination of teachers we suggested names of certain people from the village and showed that donations were received from these persons and also showed that salary was received by us.
Actually no donations were received from any persons and we have not taken salary also. This we are stating on solemnly oath."
(Though there were separate affidavits filed by both the teaching and nonteaching staff quoted by the AO in the assessment order, since the submission in the affidavits was similar in nature, the only one submission is quoted above).
vi) Relying on the aforesaid submission wherein it was stated by the teaching and non-teaching staff that actually no donations were received from any persons and they did not get any salary, the Assessing Officer considered it fit to disallow the entire expenditure claimed by the appellant-trust and taxed the entire receipts shown by the appellant of Rs.24,82,619/- vii) The Assessing Officer was not justified and patiently erred in taxing the entire receipts for the following reasons:-
The trust is running Higher Secondary School having VII th to X th standards. The strength of the students studying in above classes is 86. The school is situated in 4
AY 2011-12
a small village having 2000 to 2200 population with no Government facilities and banking facilities.
a) The accounts were audited by the Auditor who confirmed that there were receipts in the form of donations from the donors/contributors and also there were expenses simultaneously which were supported by necessary bills and vouchers. Only the issue that, there was no confirmations from the donors/contributors, the receipt shown by the appellant was considered as receipts but for the reasons that the affidavits were filed by the teaching and non- teaching staff for the reasons recorded in the affidavit quoted above, it cannot be said that such expenditure was not incurred by the appellant-trust at all.
b) The affidavits were given by the teaching and nonteaching staff being misguided and with the presumption that in case such affidavits are given, the facts would be established that there had neither been any receipt by the appellant-trust nor any expenses and, accordingly, it could be easier for the completion of the assessment proceedings without jeopardizing the interest of both teaching and non-teaching staff as well as the trust. On the basis of such misguided affidavits, it cannot be said that there were no receipts and no expenditure. How the teaching and non-teaching staff had worked throughout the year without receiving any remuneration/salary was never questioned by the Assessing Officer before taking the affidavits at face-value. None of the teaching staff was interrogated by the A.O. to establish the aforesaid facts. Therefore, merely the affidavits filed by the teaching and non-teaching staff could not be considered at face-value for disallowing the expenses as claimed by the appellant-trust, duly certified and audited by the Auditor.
c) How and why the provisions of Section 68 of the Act was applied by the Assessing Officer is not at all dear. The receipts were entirely shown in the accounts and return filed. On the basis of such receipts expenditure was claimed as incurred. How than the said amount could be considered as unexplained cash credit u/s 68 of the Act has not been conspicuously stated in the assessment order d) Though the Assessing Officer was justified in assessing the trust in the status as an AOP because of not getting its registration u/s 12A of the Act for this relevant assessment year, there was no reason or basis for treating the entire receipts for the purpose of taxation without allowing the expenditure. When the affidavits pertaining to the teaching and nonteaching staff were considered wherein they stated that they did not receive the salary and also actually no donations were received from any persons, as mentioned in the affidavits, how the Assessing Officer could consider that there were donations received but no expenditure was incurred. When in the affidavits given by the teaching and non- teaching staff both the statement was given that there were no donations from any persons and also they did not receive any salary, the Assessing Officer should have considered both the contentions in the affidavits and not only one that no salary was given and there was no expenditure. In other words, when the Assessing Officer considered the statement given in the affidavits that no salary was given and hence there was no expenses, he should have considered the other statement in the affidavits given that no donations were received from any persons. This was a patent mistake committed by the Assessing Officer in the assessment order while taxing the receipts of the trust but not allowing the expenses.
e) There was an educational institution which ran throughout the year. There were teaching and non-teaching staff who worked throughout the year. Payments were given to them by cash duly enclosed in the cash book. Expenses pertaining to running of the educational institution were also incurred out of the Income/funds of the trust in cash (As in that village there was no Bank).
Therefore, without verification of cash book etc, the Assessing Officer would not have taken the view that no expenditure was incurred by the appellant-trust for running the educational institution throughout the year. The Assessing Officer did not raise the question as to how the said educational Institution was run at all.
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AY 2011-12
The facts that the objects of the trust were solely educational in nature has been written by the AO in the assessment order (para-4). When the objects were solely educational in nature and its income was shown below Rs.1 Crore, the Assessing
Officer was required to consider the educational institution as established solely for educational purpose and not for purpose of profit (as otherwise the A.O. could not prove that the society/educational institution created for the purpose of profit) within the provisions of Section 10(23C)(iiiad) of the Act which speaks as under:
“10(23C)(iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed; or g) As there was no violation of the said provisions by the appellant-trust, the entire income should have been treated as exempt u/s. 10(23C)(iiiad) of the Act, when the appellant's claim of exemption u/s.11 has been denied by the Assessing Officer for the reason of not getting 12A registration for the relevant period. The Assessing Officer should have considered for its legitimate application of the provisions of Section 10(23C)(iiiad) of the Act. Therefore, the entire income is required to be treated as exempt u/s. 10(23C)(iiiad) of the Act.
In view of above, it is humbly submitted to your kind honour to consider theaforesaid facts and the submission of the appellant and direct the Assessing Officer consider the case within the provisions of Section 10(23C) (iiiad) of the Act, which is the legitimate claim being made by the appellant- trust before your kind honour”
Further, vide its written submissions made before the Ld. CIT(A), the assessee inter-alia claimed the benefit of exemption of its income u/s.10(23C)(iiiad) of the Act for the first time. After considering the findings of the Ld. AO and the submissions made by the assessee, the Ld. CIT (A) upheld the order of the Ld. AO by confirming the addition of Rs.24,82,619/- to the returned income of the assessee. The relevant observations and findings of the Ld. CIT(A) are reproduced below:
“5.3 I have perused the assessment order and the submission made by the appellant as above carefully. I find that during this relevant assessment year under consideration, the appellant was not registered u/s. 12A of the Act nor it obtained registration u/s. 12AA of the Act. The registration u/s. 12AA granted by the Hon'ble CIT-1, Kolhapur, on 19/06/2013 wel. 01/04/2012. meaning there by the appellant could take all the benefit of sections 11 to 13 for and from the assessment year 2012-13 only. In other words, the appellant is not entitled to benefit of exemption u/s. 11 of the Act for AY 2011-12 i.e. this relevant assessment year under consideration. The AO, therefore, had rightly held that the appellant trust could not be considered for exemption u/s. 11 as claimed by it. As regards the status of the appellant trust, the same would be Association of Persons (AOP) for the purpose of assessment for this year and since the beneficiaries of the assessee are indeterminate and unknown, the surplus/income before allowing the benefit of deduction u/s. 11 of the Act. As to be taxed at the maximum marginal rate u/s. 164(2) of the Act. I, therefore, agree with the contention of the AO in this regard also.
3.1 Regarding appellants claim of voluntary donations credited to Balance Sheet as Corpus, I find that the appellant claimed initially that such donations were received from the villagers of the vicinity wherein the appellant and also the school run by it namely Shri Siddheshwar Madhyamic Vidyalaya had made the donation. However, neither at initial stage before the AO nor in any subsequent stage or even nor any stage of appellate proceedings, the appellant could furnish the confirmations from the donors, contributors. The appellant had furnished only
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the names, without even the addresses of the persons who the appellant claimed to have made the donations. There was even no scope of verification on the part of the AO in absence of details of such donations shown in the list, in the form of address, evidences of identification, sources of such donations and non- transaction through banking channel i.e. cash transaction only shown in the books of accounts. Therefore, voluntary donations, if so claimed, have to be first proved by the appellant that such donations were not anonymous donations, which could not be held as anonymous donation within the provisions of section 115BBC of the Act. Since the appellant could neither prove the identity of the donors and least to say the credit worthiness of the donors and genuineness of the transactions, the said alleged claim of donations/voluntary donations ab- initio is required to be rejected. When the appellant could not prove the genuineness of donation, it is an absurd claim of the appellant that such donations credited to the capital account as corpus donation is entitled to exemption u/s. 11(1)(d) of the Act. As has been rightly stated by the AO that section 12 states about voluntary contributions which is the income of a trust and such voluntary contributions if directed for a specific purpose to form the part of the corpus of the trust, the same would be exempt from the total income u/s.
11(1)(d). Therefore, both the conditions of registration u/s. 12AA for the relevant year as well as the direction of the donors that the donation would form part of the corpus are essential and mandatory pre-conditions for not treating the voluntary donations as income or rather to allow the exemption of such donations u/s. 11(1)(d). The appellant failed on both the accounts. Therefore, the AO had rightly denied the appellant's claim of the contributions to the extent of Rs.
24,82,619/- as corpus donations.
3.2 Now, the AO has treated the said receipts as appellant's unexplained credits u/s. 68 of the Act, which the appellant had allegedly claimed as voluntary contributions. I find that the AO had legally taken the recourse in this regard. The appellant had filed two Affidavits, one from non-teaching staff and the other from the teaching staff as detailed above. From both the Affidavits which were given solemnly on oath by the persons who signed the Affidavit that neither any contributions were received from the villagers nor any such expenditure as debited on account of salary paid to them had been incurred by the appellant trust. Therefore, it is evident and explicit from such Affidavit that there were neither any transactions affected on account of "voluntary contributions", nor there were any transactions relating to "payment of salary" The appellant, however, to make it a show that income/contributions were received and so also salary was paid to the teaching and non-teaching staff, had made the entries in the books of accounts, thereby showing all such entries both for receiving the voluntary contributions from the villagers and paying the salary to non-teaching and teaching staff, in cash. The appellant could not furnish any vouchers or documents or evidences so as to ensure its claim of voluntary donations received from villagers and so also expenses incurred in the form of salary out of such voluntary donations. The books of accounts therefore were cooked up or in other words the bogus and false entries were made in the books of accounts, rendering the AO to validly ask as to why the same should not be rejected. Despite the AO had asked the appellant on 12/03/2014 to explain the above and the case was adjourned to 19/03/2014, none appeared nor any written explanation was given. It is further seen that the AO has stated that the appellant trust had filed return of income voluntarily on two dates showing receipts of Rs. 24,82,619/-. Again the accounts were audited for the same year by two different Auditors and audit reports in Form no 10B were filed. When the facts as stated in the Affidavits by the non-teaching and teaching staff as detailed above revealed that there was neither any income, receipt as voluntary contributions nor there were any expenses in the form of salary, how the Auditors had accomplished the auditing of the accounts of the appellant and how the audit reports were filed, without pointing any discrepancy as stated in the Affidavit and without any bills/vouchers, is not beyond suspicion and question. In other words, since the amount credited as voluntary donation towards corpus of Rs, 24,82,619/- by the appellant were not supported by the identity of donors, least to say credit worthiness of the donors and genuineness of transaction, the AO had rightly treated the said receipts credited in appellant's books of accounts as unexplained
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credit u/s. 68 of the Act, thereby treating the same as appellant's assessed income.
3.3 Having said so, I find that the AO had restricted his findings of taxing the income of the appellant at the maximum marginal rate only. The fact that the appellant had credited "anonymous donation of anonymous receipts in its accounts is a proven fact from the discussion made as above and further detailed discussion made by the AO in the assessment order. Therefore, such claim of the appellant that it received voluntary donations, in absence of any identity of donors should have been taxed by the AO u/s. 115BBC of the I. T. Act, 1961. For the sake of convenience, the section 115BBC is reproduced as below: - "[Anonymous Donations to be taxed in certain cases: 115BBC (1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of- [(i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received, in excess of the higher of the following namely”:- (A) five per cent of the total donations received by the assessee, or (B) one lakh rupees, and [(ii) the amount of income-tax with which the assessee would have been chargeable had his total Income been reduced by the aggregate of anonymous donations received in excess of the amount referred to in sub- clause (A) or sub-clause (B) of clause (i), as the case may be.]
(2) The provisions of section (1) shall not apply to any anonymous donation received by-
(a) any trust or institution created or established wholly for religious purpose;
(b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation that such donation is for any university or other educational Institution or any hospital or other medical institution run by such trust or institution.
(3) For the purpose of this section, "anonymous donation" means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed.]
5.3.4 From the above sub-section (2) of section 115BBC, it is clear that two exceptions have been provided under the Act for which the provisions of sub- section (1) shall not apply to any anonymous donation received by "(a) any trust or institution created or established wholly for religious purposes; (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institutions or any hospital or other medical; institutions run by such trust or institutions." Therefore, the plain meaning of the aforesaid section (2) is that when a trust is created or established wholly for religious purposes, the provisions of section 115BBC(1) would not apply so as to tax the anonymous donation and so also if a trust is created or established wholly for religious and charitable purposes, if the anonymous donations are not made with a specific direction that such donation is for 8
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particular educational or medical purposes or such institutions, such anonymous donations would be outside of the ambit of the provisions of section 155BBC(1) of the Act for taxing such anonymous donation under the said section. Therefore, from the plain reading of section 115BBC and from the facts of the case of the appellant, it would be obvious that the income assessed by the AO of Rs.
24,82,619/- as deemed income u/s.68 of the Act should be taxed as anonymous donation as per the rate prescribed u/s. 115BBC of the Act. The AO is directed to do so. In other words, the AO is directed to compute the tax of the appellant u/s.
115BBC of the Act.
5.3.5 The appellant in the written submission after stating the facts of the case of the appellant claimed the benefit of exemption of its income u/s 10(23C)(iiad) of the Act contending that the appellant existed solely for educational purposes and not for purposes of profit and its aggregate receipts had not exceeded the prescribed limit (i.e. Rs. 1,00,00,000/-) and therefore it was eligible for exemption u/s. 10(23C)(iiiad) of the Act. I find the contention of the appellant is devoid of merit for the reason (i) never before such claim was made by the appellant either in the return of income or before the AO and therefore such a fresh claim at this stage is not acceptable; (ii) the appellant could not adduce/produce any such evidences either in the form of copy of trust deed/memorandum of association or details regarding the objects for which it was created or any supporting documents that it was created solely for educational purposes as provided in section 10(23C)(iiiad) and there were no other objects which are charitable in nature within the provisions of section 2(15) of the Act; (iii) the appellant was registered by the CIT-1. Kolhapur as a public charitable trust u/s. 12AA of the Act, and (iv) no such facts and figures and explanations were furnished during appellate stage demonstrating that it was eligible to exemption u/s. 10(23C)(iiiad) of the Act. Accordingly, such claim of the appellant is hereby rejected.
5.3.5.1 Without prejudice to the above, assuming and presuming but not accepting that the appellant is eligible for exemption of its income u/s.10(23C)(iiiad) of the Act, the facts relating to taxing the anonymous donation of Rs. 24,82,619/- which the AO had added as deemed income u/s. 68 of the Act, in my considered opinion, in any circumstances, cannot be held as exempt u/s. 10/23C)(iiiad) of the Act for the detailed reasons given by me in this appellate order above.
5.3.6 In view of above, I do not find any reason to interfere with the order of the AO, subject to my findings given regarding applicability of the provisions of section 115BBC of the Act. The addition made of Rs. 24,82,619/- is hereby confirmed. Ground Nos. 1, 2, 3 & 4 raised by the appellant are accordingly dismissed.”
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal.
“1. On the facts and in the circumstances of the case and in law the A.O. ignored the provisions of law and directions of the Board that the registration granted to the Trust u/s 12A in one year the earlier assessment year to A. Y. 2012-13 i.e.
2011-12 in appeal is also to be treated as registered trust and having all benefits enshrined in S. 11 and 12 of the Act. In view of this the addition made u/s 68 of Rs. 24,82,619/- and confirmed by Ld. CIT(A) albeit on different consideration is not justified. The addition be deleted and it be treated that more than 85% of the income of the Trust was applied towards the objects of the trust. The addition be deleted.
On the facts and in the circumstances of the case and in law the Education Trust was granted registration u/s 12A w.e.f. 01-04-2012. It is also treated as registered for earlier year that is for A. Y. 2011-12 under appeal and was entitled to benefit enshrined in Ss. 11 & 12 of the Act. It be held accordingly.
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On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in making about turn in his approach that the A. O. should have considered the donations to the extent of Rs. 24,82,619/- added by him under S. 68 that the donations received were anonymous and S. 115BBC applied. The careful perusal of the donations received would reveal that the receipts issued were in name of the donors, their address and were clearly mentioned in the books of account. In such circumstances as per law, cannot be called anonymous donations to attract S. 115BBC of the Act. The Ld. CIT(A) held against assessee without properly appreciating the provisions of law and concerned circular. The Ld. CIT's action is against the law.
On the facts and in the circumstances of the case and in law the A. O. made additions under S. 68 of the Act. The Ld. CIT(A) changed this decision of the A. O. and abruptly held the provisions of S. 115BBC attracted being anonymous donations. The Ld. CIT(A) was under bounden duty to issue show cause notice to the assessee trust and also should have called for Remand Report from the A. O. with a view to give opportunity in the matter. The Ld. CIT(A) breached the principles of natural justice. His decision has not legal sanctity. The appeal order is not sustainable. Both the orders be quashed and set aside granting relief to the assessee.
On the facts and in the circumstances of the case and in law and in the alternative, if it is presumed that the trust is not registered u/s 12A, then in that case the income is required to be computed an commercial principles. The net income arrived at Rs. 4,01,183/- would become taxable which will then be the real Income. It be held accordingly.
On the facts and in the circumstances of the case and in law the assessee sanstha engaged in the running of educational Institute in remote area could not file its appeal in time. Thereafter, due to Lockdown position and fear of Corona - Covid-19 virus there were clamped restrictions on the movement of people intra district. The situation was beyond the control of the assessee. The assessee was unable to get the stamps for executing the affidavit. The delay is attributable to this. The assessee would file its affidavit duly sworn-in later on. In the circumstances it is requested to condon the delay occurred in filing of the appeal and admit the appeal for hearing to do complete justice to the assessee.
The appellant craves to leave, add/amend or alter any of the above grounds of appeal.”
At the outset of the hearing, the Ld. AR brought to the notice of the Bench that the assessee has filed additional grounds of appeal along with certain additional evidence(s) in support of its claim which could not be produced earlier before the Ld. AO/ CIT(A) vide its letter dated 05.09.2024. The assessee has raised the following additional grounds : “FACTS-
The basic facts of the case as mentioned in paper submission dated 27-Feb-2023, we wish to bring the following additional facts on record that are relevant for the disposal of the Appeal:
The Learned Commissioner (Appeals) applied the provisions of S. 115BBC of the Income Tax Act, 1961 and directed the AO to compute the tax of the appellant u/s. 115BBC of the Act. There was no further order passed by the Learned AO in the matter. [Para 5.3.3 and 5.3.4, page 10-11 of the order of Commissioner (Appeals)] 2. Claim for benefit of exemption of Section 10(23)(iiiad) of Income Tax Act 1961, was rejected by the commissioner appeals for the following reasons: i. Not claimed exemption before AO and in the return of Income ii. And not produced copy of Trust deed/MOA.
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iii.
Appellant was registered by CIT-1 Kolhapur as a Public charitable Trust u/s 12AAof the Income Tax Act 1961. iv.
No such facts and figures and explanation were furnished during appellate stage, demonstrating that it was eligible for exemption under S. 10(230)(iliad).
[Para 5.3.5, page 12 of the order of Commissioner (Appeals)]
Hon'ble ITAT Bench A, Pune on 24-11-2020, vide its order in ITA no. 620/PUN/2020 (AY 2011-12) dated 01/03/2023 dismissed the appeal on the ground that the appellant has failed to explain properly the delay of 193 days in filing of the appeal.
Aggrieved by the said order of the ITAT, the Appellant filed an appeal before Hon'ble High court of Judicature at Bombay, Civil Appellate Juri iction. The Hon'ble High court Mumbai, vide its Income Tax Appeal (L) No. 29393 of 2023 order dated 23-02-2024 condoned the delay in filing the appeal and impugned order date 01-03-2023 was quashed and set aside and reminded back to the ITAT.
GROUNDS OF APPEAL (Before ITAT)
G-1. The Learned Commissioner (Appeals) was not justified and patently erred in the applying provisions of Section 115BBC.
G-1.1. The Learned Commissioner has considered the entire receipts as shown in the Income and Expenditure Account as anonymous donation. And erred in the applying section 115BBC.
Provisions of Section115 BBC(3) are reproduced below for easy reference:
"For the purpose of this Section, "anonymous donation"
means any voluntary contribution referred to in sub-clause
(iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed."
The Appellant had submitted list of donors to the Assessing Officer and maintained records that contained details of donors like name, address and KYC details. However, the Authorised Representative of the Appellant did not communicate this requirement to the Trustees and hence, the same was not produced before the Assessing Officer/ Commissioner (Appeals). Thus, the donations were not "anonymous donations" within the meaning of S.
115BBC(3) of the Income Tax Act, 1961. Furnishing of names and address of the donors is sufficient for avoiding the inference of anonymous donations. Where donors have been identified, there can be no inference of anonymous donations.
List of donors, containing names, addresses and KYC details available with the Appellant are enclosed herewith as Exhibit-1. The Appellant can produce all documents related to doners and can provide identity proofs of the donors.
G-1.2. The Commissioner (Appeals) has further erred in considering the total receipts of the Trust amounting to ₹ 24,82,619/- an "anonymous donations". The total receipts of the Trust consist of-
Nature
Amount (₹)
Voluntary Contributions
24,07,000
Interest
22,549
Donations in kind
20,500
Membership Contribution from Trustees
4,000
Scholarships
26,055
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Reversal of bank commission
45
SSC Board fees received from Students
470
School donations received
2,000
Total Receipts
24,82,619
Thus, as evident from the above table (as extracted from the Income and Expenditure Account of the Trust), the amounts qualifying as donations are ₹24,09,000/- only.
G-1.3. Without prejudice to the earlier submission, the Appellant submits that the Learned commissioner has not taken any steps to verify whether the said donations were anonymous tested on the provisions enshrined in Sec.2(24)(ii-a) read with S. 115BBC of the Act. The Learned commissioner has hurriedly made the addition of Rs. 24,82,619/-invoking Sec. 115BBC of the Act that too without properly appreciating of facts and law. The decision of the Learned
Commissioner is solely based on the affidavits made by teaching/non-teaching staff and the facts behind submission of the affidavits have already been submitted in Para (vii)(b) (page 10) of submission dated 27-Feb-2023. 0-2. The Learned Commissioner denying the exemption under Section 10(23C)(iiiad) of the Income Tax Act, 1961
0-2.1. Claim for benefit of exemption of Section 10(23)(liiad) of Income Tax
Act 1961, was rejected by the commissioner appeals for the following reasons:
a.
Not claimed exemption before AO and in the return of Income b.
Not produced any such evidence either in the form of copy of Trust deed/ MOA or details regarding the objects for which it was created or any supporting documents that it was created solely for educational purpose, as provided in S.
10(23C)(iliad) and there were no other objects which are charitable in nature within the provisions of S. 2(15) of the Act.
c.
Appellant was registered by CIT -1 Kolhapur as a Public charitable Trust u/s 12AAof the Income Tax Act 1961. d.
No such facts and figures and explanation were furnished during appellate stage, demonstrating that it was eligible for exemption under S. 10(23C)(iiiad). [Para 5.3.5, page 12 of the order of Commissioner (Appeals)]
G-2.2. Our submission in respect of each of the reasons quoted by the Learned Commissioner (Appeals) is as follows:
a.
Not claimed exemption before AO and in the return of Income: An assessee is entitled to make a fresh claim for deduction or relief before the appellate authorities, during the course of the appellate proceedings, irrespective of the claim not being made by revising the return of income or before the assessing officer during the course of the assessment proceedings.
We rely on the judicial pronouncement of the Hon'ble
Supreme Court in the case of Jute Corporation of India Ltd. v.
CIT [1991] 187 ITR 688 (Copy of the decision is enclosed as Exhibit 2). While dealing with the powers of the Appellate
Assistant
Commissioner.
the Hon'ble
Supreme
Court observed that:
"An appellate authority has all the powers, which the original authority may have in deciding the question before it, subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the 12
AY 2011-12
absence of any statutory provision, the appellate authority is vested with all the plenary powers, which the subordinate authority may have in the matter.
There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer.”
The Appellant further draws attention of the Hon'ble Bench that there is an old Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955. It states:
"Officers of the Department must not take advantage of ignorance of an assessee as tohis rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department.
Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should
(a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled, but which they have omitted to claim for some reason or other,
(b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs,"
The Appellant also relies on the following judicial pronouncements in this regard:
Thomas Kurian v. Assistant Commissioner of Income
Tax [TS-5350-ITAT-2006(COCHIN)-O) AO being a quasi-judicial authority, once having noted in the assessment order that assessee had export turnover, was duty bound to ask the assessee as to why he had not claimed deduction under section 80HHC. The matter was remanded to the AO to decide Assessee’s claim for deduction under section 80HHC.
Chicago Pneumatic India Ltd. v. Deputy Commissioner of Income Tax [TS-5164-ITAT-2007(MUMBAI)-O] It has been held that even though the assessee did not revise its claim under sections80HH and 80-1, in the revised return, the IT authorities were obliged to consider the revised figures placed before them during assessment.
Thus, the reason quoted by the Learned Commissioner
(Appeals) is wrong and not applicable in the instant matter.
b.
Not produced copy of Trust deed/ MOA or any other evidence:
The fact that the Trust is granted registration under S.
12A and 80G of the Income Tax Act, 1961 was accepted by both the Learned Assessing Officer and the Learned Commissioner (Appeals). It is well-known fact that theregistrations cannot be granted without producing necessary documents, which include copies of Trust Deed/MOA. There was no reason for the Appellant for not producing the Trust Deed/ MOA. The Appellant reiterates that the Authorised
Representative did not communicate the requirement
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and hence, the same was not produced. Copy of the Trust Deed is enclosed herewith as Exhibit 3. The Fact that the Appellant was running a school was known to both the learned authorities and there was no evidence to prove that the Appellant was engaged in any other activity.
The Learned AO, in his assessment order dated
26/03/2014, in Para 4 of the order, has accepted the fact that in the submission made on 07/03/2014, it was submitted that the Trust was registered as a Public
Charitable
Trust under BPT
Act w.e.f.
02/06/2001. The objects of the Trust are educational in nature and the Trust is in receipt of recognition u/s.
12AA of the IT Act from the CIT-I, Kolhapur.
Further, the Learned AO has also referred to the affidavits submitted by teaching and non-teaching staff members. Teaching and non-teaching staff members are associated with educational institutions only. A close reading of the affidavits reveals that the staff members were working for Siddheshwar
Madhyamik Vidyalaya, Shivare Mangaon.
The financial statements of the Appellant were available to the Learned AO and these did not reflect any item that suggested that the Appellant was carrying on any other activity, other than education.
One of the items of income reported in the Income and Expenditure Account of the Appellant is "SSC Board
Fees" and "Scholarships", which are peculiar to an educational Institute only.
Copies of the receipts were also produced before the Learned AO, which clearly stated that the amount was received for running a school in the village,
From the above points, it is clear that the Appellant was running a school and in the absence of any other evidence to the contrary, the fact was clearly known to the Learned AO and the Learned Commissioner (Appeals).
c. Appellant was registered by CIT-1 Kolhapur as a Public charitable Trust u/s 12AA of the Income Tax Act 1961. Even though Appellant was registered under S. 12AA, the registration was granted from 01.04.2012 and that is the basis applied for denying benefit of exemption under S. 11 of the Income
Tax Act. Thus, for the relevant assessment year (2011-12), the Appellant had no exemption benefit available due to this registration and hence, this cannot be a valid reason for rejecting other benefits available to the Appellant viz. S. 10(230).
G.-2.3. The provisions of S. 10(23C) (iiiad) are reproduced below for easy reference:
"any income received by any person on behalf of (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed;"
The limit prescribed for the purpose of this Section and applicable for the relevant assessment year was ₹1crore. The Appellant squarely fits in the criteria laid down in the Section and thus, is eligible for the benefit of exemption.
G-3. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.
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PRAYER
In view of what is stated hereinabove, the Appellant most respectfully prays that the Hon’ ble Tribunal may be pleased:
(i)
To set aside and quash the impugned order passed by the Respondent and declare the same to be illegal, arbitrary, without juri iction, unauthorised by law and hence non-eat in law;
(ii)
To assess the net surplus of the Appellant in accordance with the provisions applicable to the relevant assessment year;
(iii)
To allow the claim of the appellant for exemption under S. 10(23C)(iiiad) of the Income Tax Act, 1961
(iv)
To summon the records of the lower authorities;
(v)
To grant early hearing of the appeal;
(vi)
To pass such other or orders as the Hon'ble Tribunal may deem fit and proper having regard to the facts and circumstances of the case.
For which act of kindness, the appellant shall, as in duty bound, ever pray,”
1 In view of the above additional grounds raised by the assessee before the Tribunal in this second round of appeal for the very first time, the Ld. AR requested the Bench for admission of the additional grounds and additional evidence(s) and that the matter may be set aside to the file of Ld. AO/ CIT(A) to decide the issues afresh on merits of the case.
The Ld. DR had no objection to the above proposition of the Ld. AR.
We have heard the Ld. Representative of the parties and perused the material on record. The facts of the case are not disputed. We find the Ld. AO denied the assessee’s claim of exemption u/s. 11/12 of the Act as the assessee was not a registered trust u/s. 12A in AY 2011-12 and brought to tax the entire receipts of donations to tax under the provisions of section 68 of the Act mainly for the reason that the assessee failed to substantiate the said receipts by filing confirmations from the donors due to which the genuineness of the transactions(s) remained unproved. The Ld. AO also denied the expenses claimed by the assessee for the reasons recorded above. The Ld. CIT(A) confirmed the action of the Ld. AO observing that the donations were anonymous and applied the provisions of section 115BBC of the Act for the reasons reproduced in the preceding paragraph. We also observe that during the appellate proceeding before the Ld. CIT(A), the assessee made its alternate claim for exemption u/s.10(23C)(iiiad) of the Act which the Ld. CIT(A) rejected mainly for the reason that no such claim was earlier made before the Ld. AO and in the return of income filed by the assessee and also on account of lack of any supporting documents furnished by the assessee in support thereof. Before us, the Ld. AR submitted that the assessee has filed additional grounds of appeal along with additional evidences in respect of its alternate claim for exemption u/s.10(23C)(iiiad) of the Act which goes to the root of the matter and hence requested for admission of the same. He further submitted that given an 15 AY 2011-12
opportunity, the assessee is in a position to substantiate its case before the lower authorities by furnishing the requisite supporting documentary evidences in support of its claim. He therefore made a request to set aside the matter to the file of the Ld. AO/ CIT(A) for adjudication afresh on merits in the light of these additional grounds/additional evidences filed by the assessee. We find some force in the above arguments of the Ld. AR. On Perusing the additional grounds/evidences filed by the assessee, we find that the same goes to the root of the matter and in the absence of any contrary material brought on record and any objection raised by the Revenue to the above proposition of the Ld. AR, we deem it fit to admit the additional grounds/evidences filed by the assessee.
Hence, the additional grounds/ evidences raised by the assessee are hereby admitted.
1 Having held so, since the additional evidence field by the assessee needs verification, considering the totality of the facts and in the circumstances of the case enumerated above and in the interest of the justice and fair play and without going into the merits of the case, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the Ld. AO to decide the issues afresh on merits in light of the additional grounds and additional evidences filed by the assessee after allowing the reasonable opportunity of being heard to the assessee who shall provide the requisite support in terms of submitting the relevant documents/evidences as may be required/ called upon. We direct and order accordingly. The grounds raised by the assessee are therefore allowed for statistical purposes.
In the result, the appeal of assessee is treated as allowed for statistical purpose.
Order pronounced in the open court on 11th March, 2025. (R.K. Panda)
JUDICIAL MEMBER
पुणे / Pune; दिन ांक / Dated : 11th March, 2025. रदि
आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to :
अपील र्थी / The Appellant.
16
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प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File.
//सत्य दपि प्रदि////
आिेश नुस र / BY ORDER,
िररष्ठदनजीसदचि / Sr. Private Secretary
आयकरअपीलीयअदिकरण ,पुणे/ ITAT, Pune