M/S ALIMAAN CHARITABLE TRUST,MUMBAI vs. CIT ( EXEMPTION), MUMBAI

ITA No. 1689/Mum/2020 A.Y. 2015-16 1 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA No.1689 /MUM/2020 (Assessment Year: 2015-16) M/s Alimaan Charitable Commissioner of Income Trust, 206, Rewa Chambers, Vs. Tax (Exemptions),R. No. New Marine Lines, 617, 6th Floor, Piramal Mumbai – 400 020 Chambers, Lal Baug,Parel,Mumbai – 400 012 PAN No. AAATA2536P (Assessee ) (Revenue) Assessee by : Shri FirojAndhyaruzina, Senior Advocate Revenue by : Shri Rajeev Harit, CIT D.R Date of Hearing: 28/05/2021 Date of pronouncement: 21/06/2021

ORDER PER RAVISH SOOD, J.M:

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Exemptions), Mumbai (for short „CIT‟) under Sec. 263 of the Income Tax Act,1961 (for short „Act‟), dated 20.03.2020. The assessee has assailed the impugned order on the following grounds of appeal before us:

“1. The CIT erred in law and the facts in holding that the order of the assessing officer under Sec.143(3) of the income tax act is erroneous and prejudicial to the interest of revenue and accordingly the assumption of jurisdiction of CIT u/s 263 of the act is not valid justified and is contrary to the established case laws under Sec. 263 of the income tax act as held by the supreme court and various high courts including jurisdictional high courts. 2. The CIT on the facts and the circumstances of the case and in law has grossly erred in invoking jurisdiction under Sec.263. When the case was selected for complete scrutiny there was proper application of the mind by the assessing officer and details were given which were sought for and clarified during the assessment proceedings under Sec.143(3) of the income tax act.

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(b) There is lack of application of mind by the AO in completing the assessment proceedings. The receipt of Rs.12.84 crores include foreign contribution of Rs.11.90 crores. But no clarification was sought regarding details of the donors or any correspondence with them, and the foreign contribution was accepted as such, merely by accepting Form FC 6 filed.” In reply, the assessee vide its letter dated 29.01.2020 tried to impress upon the CIT that the assessment was framed by the A.O after making necessary verifications qua both the aforesaid issues and due application of mind. It was submitted by the assessee that in the course of the assessment proceedings the requisite details as regards the assessee‟s claim of expenditure of Rs.11.88 crores were called for and accepted only after necessary verificationsthat were carried out by the A.O to his satisfaction. As regards the contributions of Rs.12.84 crores that were claimed to have been received during the year under consideration, it was submitted by the assessee that the same comprised of foreign donations of Rs.11,90,32,941/- and local donations of Rs.80,91,848/-. It was the claim of the assessee that the „Form FC-6‟that was filed in the course of the assessment proceedings revealed the complete profile of the foreign donors, viz. their names, addresses and purpose of the donation. Apart from that, it was submitted by the assessee that it had furnished the party wise details of the donors in the course of assessment proceedings. In sum and substance, it was the claim of the assessee before the CIT that it was incorrect on his part to say that the A.O in the course of the assessment proceedings had not verified the assessee‟s claim of expenses, and also, the details pertaining to the donations. Backed by the aforesaid contentions, it was the claim of the assessee that now when the A.O after making necessary verifications in context of the aforesaid issues had only after being satisfied framed the assessment, therefore, the exercise of jurisdiction by the CIT u/s 263 of the Act was clearly ousted. It was further submitted by the assessee that for invoking of the revisional jurisdiction under Sec.263 of the Act, the

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twin conditions therein envisaged, viz. that the order is erroneous and prejudicial to the interest of the revenue were required to be cumulatively satisfied. It was further the claim of the assessee that now when the A.O had recognized the assessee‟s right to exemption of income being a charitable institution, thus,in the absence ofany prejudice cause to the revenue, the CIT was precluded from exercising his revisional jurisdiction. However, the CIT after deliberating on the contentions advanced by the assessee was not persuaded to subscribe to the same. Observing, that the A.O had failed to carry out necessary verifications both as regards the assessee‟s claim of expenses, and also, the substantial amount of donations that were claimed to have been received, both foreign and local, therefore, held a conviction that the assessment order passed by the A.O was erroneous insofar it was prejudicial to the interest of the revenue. Accordingly, on the basis of his aforesaid observations the CIT in exercise of his revisional jurisdiction u/s 263 of the Act therein set-aside the order passed by the A.O under Sec. 143(3), dated 28.06.2017, with a direction to pass a fresh assessment order after affording sufficient opportunity of being heard to the assessee.

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some relaxation in the lockdown, therefore, the assessee without loosing any further time immediately filed the appeal. In support of his aforesaid claim the ld. A.R had taken us through the „affidavit‟ of Mr. Alireza A. Bundeally, trustee of the assessee trust,wherein the aforesaid facts were deposed. It was further submitted by the ld. A.R that in March, 2020, the Hon‟ble Supreme Court taking suo motto cognizance of the impact of Covid-19 restrictions on the compliances that were to be made within limitation periods, vide its order passed in Writ Petition (Civil) No. 3 of 2020, dated 23.03.2020 had extended the limitation periods from 15th March, 2020 until further orders. Accordingly, on the basis of the aforesaid facts it was submitted by the ld. A.R that the delay in filing of the aforementioned appeal which was for reasons beyond the control of the assessee may therein be condoned.

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the A.O under Sec. 142(1), dated 04.01.2017 wherein specific queries as regards donations received, and also, the expenses incurred were raised by him. It was submitted by the ld. A.R that in compliance to the aforesaid query letter the assessee had furnished the requisite details vide its letter dated 16.01.2017. Our attention was drawn by the ld. A.R towards the objects of the assessee trust. It was submitted by the ld. A.R that the assessee trust was registered with the DIT(exemption), vide the latters order under Sec. 12A(a), dated 29.03.1991. The ld. A.R further took us through the copy of the return of income of the assessee;computation of its income; and the report of the auditor relating to accounts of the assessee trust audited under sub-section (2) of Sec. 33 & 34 and Rule 19 of the Bombay Public Trust Act. Our attention was also drawn by the ld. A.R to the application of its income by the assessee trust during the year under consideration. It was further submitted by the ld. A.R that during the year under consideration no corpus donation was received by the assessee trust. The ld. A.R further took us through “Form FC 6” that was filed with the Secretary to the Government of India, Ministry of Home Affairs, New Delhi, divulging the donorwise receipt of foreign contributions by the assessee trust during the year under consideration. The ld. A.R also took us through the certificate dated 28.11.2015 issued by a Chartered accountant, wherein he had inter alia certified the foreign contributions that were received by the assessee as per manner specified in Sec.13 of the Foreign Contribution (Regulation) Act, 1976 r.w. sub-rule (1) of Rule 8 of the Foreign Contribution (Regulation) Rules 1976. Our attention was also drawn by the ld. A.R to the „balance sheet‟ of the assessee trust as on 31.03.2015 and the annexures enclosed alongwith the same. The ld. A.R took us through the bank account Number 750061001006139 that was held by the assessee trust with Kokan Mercantile Cooperative

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Bank Limited, Branch :Govandi. The ld. A.R further took us through the reply dated 14.06.2017 that was filed by the assessee with the A.O, wherein it was submitted that though as per the FCRA return the amount totalled to Rs.11,97,48,585.05, however, after considering the interest and the income tax refund that formed part of the aforesaid amount the foreign donations received by the assessee amounted to Rs.11,90,32,941.65. It was further stated in the reply that the assessee during the year under consideration had also received local donations of Rs.80,91,848/-. In its aforesaid reply it was further stated by the assessee that the amount of Rs.11,88,29,498/- was incurred towards furtherance of the objects of the trust, viz. education, medical, natural calamities and marriage aid to the poor i.e kanyadaan. The ld. A.R further took us through the copies of the ledger accounts, viz. Foreign donation A/c: Rs.11,90,32,941.65; Local cheques donation A/c: Rs.67,03,352/-; and Local donations A/c :Rs.13,88,496.36. On the basis of his aforesaid contentions, it was submitted by the ld. A.R that the A.O in the course of the assessment proceedings had carried out necessary verifications as regards the expenses that were incurred by the assessee trust,and also, the donations, both foreign and local, that were received by the trust during the year under consideration. Adverting to the validity of the jurisdiction assumed by the CIT u/s 263 of the Act, it was submitted by the ld. A.R that the CIT could validly exercise his revisional jurisdiction only where the order passed by the A.O is found to be both erroneous and prejudicial to the interest of the revenue. It was, thus, the claim of the ld. A.R that both the aforementioned conditions viz. (i) that the order is erroneous; and (ii) prejudicial to the interest of the revenue are indispensably required to be cumulatively satisfied in order to vest jurisdiction with the CIT under Sec. 263 of the Act. In support of his aforesaid claim the ld. A.R had relied on the judgment

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of the Hon‟ble Supreme Court in the case of Malabar Industrial Company Ltd. Vs. CIT(2000) 109 taxman.com 66 (SC). It was further submitted by the ld. A.R that where the A.O in exercise of his quasi judicial powers had arrived at a possible view, the same cannot be termed as erroneous simply because the CIT was not satisfied with the view that was drawn by the A.O. In support of his aforesaid contention reliance was placed by the ld. A.R on the order of the Hon‟ble High Court of Delhi in the case of ITO Vs. D.G. Housing Projects Limited (2012) 343 ITR 329 (Del). Further, drawing support from the order of the ITAT, Indore in the case Rakesh Khandelwal Vs. Pr. CIT, ITA No. 204/Ind/2019; dated 29.01.2020, it was submitted by the ld. A.R that the CIT in the course of the proceedings under Sec. 263 is obligated to establish by conducting necessary inquiries that the order passed by the A.O is erroneous.It was further submitted by the ld. A.R that the ITAT, Mumbai in the case of Shree Bhagwati Enterprises Vs. PCIT, Mumbai ITA No. 525/Mum/2016, dated 07.07.2017 by drawing support from the judgment of the Hon‟ble High Court of Bombay in CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom), had observed, that an order to be erroneous should be one which was not in accordance with the law or had been passed by the A.O without making any enquiry in undue haste. Drawing support from the aforesaid judicial pronouncements, it was submitted by the ld. A.R that in a case where two views are possible and the A.O had taken one of the possible view with which the CIT does not agree, the same on the said standalone basis cannot be treated as an erroneous order and brought within the realm of Sec. 263 of the Act. Ld. A.R further relied on the order of the Hon‟ble High Court of Allahabad in the case of M/s Meerut Flour Mills Pvt. Ltd. Vs. CIT & Anr., ITA No. 223 of 2013; dated 14.08.2019. It was submitted by the ld. A.R that the Hon‟ble High Court in its aforesaid order had observed that a mere non-discussion

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and non-mentioning of the reply filed by the assessee in the order of the assessing officer would not lead to an assumption that there was no application of mind and the order therein passed was erroneous. It was submitted by the ld. A.R that as per the settled position of law, the CIT, while assuming jurisdiction under Sec. 263 of the Act cannot merely state that the A.O had failed to conduct a complete enquiry but remained under a statutory obligation to conduct an independent enquiry on his own, failing which, the order passed by the A.O could not be held to be erroneous. It was, thus, submitted by the ld. A.R that as in the present case the A.O during the course of the assessment proceedings was satisfied with the details that were furnished by the assessee quaboth the issues in question, therefore, it was incumbent upon the CIT to conduct his own independent inquiry before stamping the order passed by the A.O as erroneous. It was submitted by the ld. A.R that as the A.O in the course of the assessment proceedings had made necessary verifications as regards the assessee‟s claim for expenditure, and also, the donations, both foreign and local, that were received by the assessee during the year in question, and only after finding the same to be in order had accepted the same, therefore, the order passed by him u/s 143(3), dated 23.06.2017 could not be held to be erroneous within the meaning of Sec. 263 of the Act, for the reason, that the CIT was not satisfied with the view taken by the A.O. It was, thus, submitted by the ld. A.R that as the order passed by the CIT u/s 263 was not as per the mandate of law, therefore, the samewas liable to be set aside.

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(i). that the assessee trust had received substantial amount of foreign donations;and (ii). that the assessee trust had claimed to have incurred huge amounts on charity. It was submitted by the ld. D.R that as the A.O without carrying out any verifications qua the aforesaid issues which formed the very foundation for selection of its case for scrutiny assessment, andhad summarily accepted the returned income of the assessee, therefore, the CIT had rightly assumed jurisdiction u/s 263 and set-aside the assessment order, with a direction,that a de novo assessment be framed after affording sufficient opportunity of being heard to the assessee. Rebutting the reliance that was placed by the assessee‟s counsel on “Form FC 6” that was filed with the Secretary to the Government of India, Ministry of Home Affairs, New Delhi, wherein the details with respect to the foreign donors as claimed by the assessee‟s counsel were divulged, it was submitted by the ld. D.R that the said details so filed were for the limited purpose for the necessary verification by the Reserve Bank of India (for short „RBI‟) as per the provisions of the Foreign Exchange Management Act (for short „FEMA‟). It was submitted by the ld. A.R that the powers vested with the A.O for verifying the genuineness and veracity of the amounts received by an assessee are separate and distinct as against those contemplated under the FEMA. It was submitted by the ld. D.R that a perusal of the “Form FC 6” that was heavily relied upon by the assessee‟s counsel for driving home his claim that the complete donor wise details of the foreign contributions were furnished in the course of the assessment proceedings revealed a different story. Taking us through the copy of “Form FC 6” forming part of the APB, it was submitted by the ld. D.R that a perusal of the same revealed beyond any scope of doubt that the complete details of the donors could not be gathered therefrom. It was submitted by the ld. D.R that in majority of the cases only the country of the donors

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was mentioned. It was further submitted by the ld. D.R that the simpliciter fact that the payments were received by the assessee through cheques could not be taken as sacrosanct for establishing the genuineness of the aforesaid transactions in question. In support of his aforesaid contention the ld. D.R had relied on the certain judicial pronouncements, viz. (i). Naresh K. Pahuja Vs. ITAT (2015) 375 ITR 526 (Bom); (ii). CIT vs. Saravana Construction (P) Ltd. (2012) 72 DTR 258 (Kar); and (iii). CIT Vs. P. Mohankala & Ors. (2007) 291 ITR 278 (SC). It was further submitted by the ld. D.R that the reconciliation of the bank statements of the assessee with the internal ledger accounts was just a part of its internal auditing and the same would by no means prove the genuineness of the transactions in question. Adverting to the judicial pronouncements that were pressed into service by the ld. Senior Counsel for the assessee, it was submitted by the ld. D.R that the same were distinguishable on facts.In order to fortify his aforesaid claim the ld. D.R took us through the respective judicial pronouncements that were relied upon by the assessee‟s counsel. On facts, it was submitted by the ld. D.R that as the assessee had not furnished the requisite details as were called for by the A.O qua the donations received, both foreign and local, as well as the huge amount of expenditure that was claimed to have been incurred, therefore, the CIT had rightly invoked his revisional jurisdiction and had held the order passed by the A.O u/s 143(3), dated 28.06.2017 as erroneous insofar it was prejudicial to the interest of the revenue u/s 263 of the Act. In order to buttress his aforesaid contention, it was submitted by the ld. D.R that the failure on the part of the assessee to furnish the complete details as were specifically called for by the A.O could safely be gathered from the fact that out of the local donations of Rs.80,91,848/- received by the assessee during the year under consideration, details of donations were furnished only to the tune of

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Rs.13,88,496/-. It was submitted by the ld. D.R that the A.Ohad summarily accepted the details furnished by the assessee without making the requisite verifications as regards the balance local donations. On a specific query by the bench that in the „Show cause‟ notice (for short „SCN‟) there was no reference qua the issueof local donations and the assessment order was sought to be revised by the CIT only on two grounds, viz. (i). that no verification, cross checks or even test checkswere made by the A.O with respect to the expenditure of Rs.11.88 crores; and (ii). that the receipt of foreign contributions of Rs.11.90 cores claimed by the assessee to have been received during the year under consideration were summarily accepted on the basis of „Form FC 6‟ that was filed by the assessee;it was submitted by the ld. D.R that in the course of the revisional proceedings before the CIT the assessee was specifically afforded an opportunity to explain as to why the assessment order may not also be revised for the reason that the A.O had failed to make necessary verificationsas regards the local donations. It was further submitted by the ld. D.R that the assessee despite specific directions by the A.O had failed to furnish the complete details of the foreign donations in the course of the assessment proceedings. As regards the assessee‟s claim of having incurred an expenditure of Rs.11.88 crores, it was submitted by the ld. D.R that the same too was summarily accepted by the A.O while framing the assessment without making any verifications, cross checks or even test checks. Apart from that, it was submitted by the ld. D.R that certain specific details that were called for by the A.O with respect to the expenditure of Rs.11.88 crores were never furnished by the assessee. It was, thus, submitted by the ld. D.R that in the backdrop of aforesaid facts the CIT had rightly assumed jurisdiction u/s 263 of the Act and observing that the order passed by the A.O u/s 143(3), dated 28.06.2017 was erroneous insofar it was prejudicial to

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the interest of the revenue, had thus,rightly set-aside the assessment order with a direction to the A.O to frame a de novo assessment focusing on the aforesaid issues in question.

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exercise of his revisional jurisdiction u/s 263 of the Act had clearly traversed beyond the scope of jurisdiction therein conferred, and had in the garb of the powers vested with him u/s 263 had sought to dislodge apossibleview taken by the A.O by seeking to dictate the terms on the basis of which the order ought to have been passed. It was, thus, submitted by the ld. A.R that CIT in exercise of the powers vested with him u/s 263 cannot seek substitution of his view as against a possible view that was arrived at by the A.O while framing the assessment. As regards the judgments that were relied upon by the ld. counsel for the department, it was submitted by the ld. A.R that the same were distinguishable on facts, and thus, were not applicable to the case of the assessee. It was, thus, submitted by the ld. A.R that as the CIT by wrongly assuming jurisdiction u/s 263 of the Act had set-aside the assessment order passed by the A.O u/s 143(3), dated 28.06.2017, therefore, the same be vacated and the order passed by the A.O be restored.

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amounts were paid, and for what purpose; and (ii) that the receipt of Rs.12.84 crores including foreign contributions of Rs.11.90 crores were summarily accepted by the A.O by merely accepting “Form FC 6” that was filed by the assessee with the Secretary, Government of India, Ministry of Home Affairs and with the RBI,and without seeking details as regards the donors or any correspondence of the assessee with them. It is the claim of the ld. A.R that the A.O had in the course of the assessment proceedings called for the requisite details and made necessary verifications with respect to both the aforesaid issues in question. It was averred by the ld. A.R that as the A.O had only after perusing to his satisfaction the material placed on record by the assessee, found the aforesaid respective claims of the assessee in order, and thus,arrived at a possible view and accepted the same, therefore, the CIT in the garb of his revisional jurisdiction u/s 263 could not have sought for substitution of his view as against that arrived at by the A.O. Apart from that, it was the claim of the ld. A.R that in case the A.O had made inquiries qua the issues in question, though inadequate, the same would not on the said count justify holding the order passed by him as erroneous unless the same is found to be in violation of law. Before proceeding any further, we may herein observe that the case of the assessee was selected for scrutiny assessment under CASS for two fold reasons, viz. (i). that the assessee trust was in receipt of large foreign donations; and (ii).that the assessee had claimed to have incurred substantial amount on its charitable activities. As such, the limited purpose for selection of the assessee‟s case for scrutiny assessment was to facilitate examination of the aforementioned twin issues, viz. receipt of donations; and incurring of expenditure by the trust on its charitable activities. It is in the backdrop of the aforesaid facts, we shall hereinafter advert to the sustainability of the view taken by the CIT that dehors the necessary

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verifications qua the issues in question, the order passed by the A.O u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act.

“7. Details of Corpus/Non-Corpus Donation received during the year, if any, in the following format : Name. Address & Amount Mode of Payment Nature of PAN No. of Donor involved in (Cheque/DD No. & donation (Rs.) Bank if) (Corpus or Non-Corpus) 8-14............................................................................................................ 15. Party wise details of foreign donation received, if any. Also furnish a copy of FCRA registration, form FC-3 & audit report in case donations are received during the year.” In reply, the assessee vide its letter dated 16.01.2017 only furnished the copy of the FCRA return which was stated to be accompanied with the details of all the donations. It was further stated by the assessee that non-corpus donation was received during the year. As regards the details of the non-corpus donations, it was submitted that the details as regards the same would be submitted on the next hearing. The reply filed by the assessee in context of the aforesaid specific queries that was raised by the A.O are reproduced as under:

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“7. There is no Corpus donation has been received.The details of non corpus donation which will be submitted on the next hearing. 8–14. ................................................................................................................. 15. FCRA return is enclosed with all the donation.” Further, the assessee vide its reply dated 14.06.2017 had interalia submitted before the A.O that it had during the year under consideration received foreign donations of Rs.11,90,32,941/-. It was further stated by the assessee that it had also received local donations of Rs.80,91,848.36. Alongwith its aforesaid reply, the assessee had also placed on record copies of the „Foreign donation a/c‟; „Local cheques donation a/c‟; and „ Local donations a/c‟ as were appearing in its books of accounts for the year under consideration. As observed by us hereinabove, and also so observed by the CIT in his order passed u/s 263, the A.O in his notice issued u/s 142(1), dated 04.01.2017, vide Query no. 7 had specifically directed the assessee to furnish the details ofcorpus/non-corpus donations received during the year, if any, in a tabular format. Also, the A.O vide his Query No. 15 had directed the assessee to furnish party wise details of foreign donations received during the year, if any. As such, the assessee was in unequivocal terms directed to furnish certain specific details qua each donation, viz. name, address andPAN number of the donor; amount of donation; mode of payment (cheque/DD No.& bank); and nature of donation (corpus or non-corpus). In reply, it was stated by the assessee that it had not received any corpus donation during the year under consideration. As regards furnishing of the requisite details qua the non-corpus donations that were received during the year, the assessee vide its reply dated 16.01.2017 had sought some further time for furnishing the same.Thereafter, the assessee had vide its reply dated 14.06.2017 stated that it had during the year received foreign donations of Rs.11,90,32,941/-; and local donations of Rs.80,91,848/-. Alongwith its aforesaid reply the assessee had placed

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on record the copy of „Foreign donation a/c‟ as was appearing in its books of account. Insofar the details qua the foreign donationswere concerned, it was submitted by the assessee that the details of the foreign donors were mentioned in the FCRA Form (copy of which was enclosed alongwith its reply dated 16.01.2017). As regards the local donations of Rs.80,91,848/- the assessee failed to furnish the details of the donors in the specified format and instead placed on record a copy of the „Local donations a/c‟ (Rs.13,88,496/-); and „Local Cheques donation a/c‟ (Rs. 67,03,352/-). On a perusal of the “Form FC 6” that was furnished by the assessee alongwith its reply dated 16.01.2017, we find that the samecomprises of two parts, viz. (a). Institutional donors; and (b). Individual donors. As is discernible from the details of the Institutional donors in “Form FC 6”, a trust, viz. „Sajdiya Trust‟ isfound to be the main donor whose name was listed as regards 40 donations (out of total 51 donations) that were received during the year by the assessee trust. However, except for the name of the aforesaid donor, viz. „Sajdiya trust‟ no other details, viz. address of the said donor trust could be gathered from the “Form FC 6”. On a perusal of the „Foreign donations a/c‟, we find, that though it can be gathered from the narration of the journal entries that the aforesaid donor, viz. „Sajdiya trust‟ was based in Ontario, Canada, however, for the reasons best known to the assessee the complete details as regards the said donor were neither furnished in the course of the assessment proceedings nor in the course of the revisional proceedings before the CIT. As regards the details qua the remaining three Institutional donors, we find that on a conjoint perusal of the“Form FC 6” and the “Foreign donation a/c” only the details as regards the country/city where two of such donors were based could therein be gathered, viz. (i). Orphan Welfare Trust, Mumbai; and (ii). Lady Fatemah (A.S). Ch. Trust, U.K. As regards the third Institutional

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donor, viz. Al Yousuf LLC, its address could be gathered from a perusal of the „Foreign donation a/c‟, viz. Al Yousuf LLC, P.O Box 25, Dubai, UAE. As regards the Individual donors, we find, that the “Form FC 6” that was heavily relied upon by the assessee in support of its claim that the requisite details of the donors as was called for by the A.O were duly furnished in the course of the assessment proceedings, the same, as observed by the CIT, and rightly so, only divulged the details as regards the respective countries of the said donors. In fact, a perusal of the „Foreign donation a/c‟ did not reveal a better picture and in case of majority of the individual donors only their respective countries were mentioned in the narration to the journal entries, except for in cases where the donations were received from certain donors based in Dubai, U.A.E, where their respective P.O Boxes were mentioned. In the backdrop of the aforesaid facts, as observed by the CIT in his order u/s 263, and rightly so, the addresses of the aforesaid donors could not be gathered from the details filed by the assessee. At this stage, we may herein observe, that not only the assessee in the course of the assessment proceedings had defied the directions of the A.O andfailed to divulge the complete details of the donors as were called for by him, but even in the course of the revisional proceedings no effort was made on its part to dispelall doubts and irrefutably substantiate the identity of the donors to the hilt. In fact, the assessee, as in the course of the assessment proceedings had in the revisional proceedings too merely harped on the fact that the details of the donors could be gathered from the “Form FC 6”. However, as observed by us hereinabove, from a conjoint perusal of the details of the donors as can be gathered from “Form FC 6” r.w “Foreign donation a/c”, it can safely or in fact inescapably be gathered that the identity of donor‟squa both the Institutional and Individual donors was not discernible therefrom. At this stage, it would be pertinent to point out

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that when the aforesaid fact was brought to the notice of the assessee in the SCN u/s 263 of the Act, it was stated by the assessee that as all the details as regards the donors alongwith their addresses and purpose of the respective donations was discernible from the Form FC 6 hence, no further verification was required. As observed by us hereinabove, as the case of the assessee was flagged for scrutiny assessment inter alia on the ground that it was in receipt of large foreign contributions during the year in question, therefore, the A.O was obligated to have made the requisite verifications as regards such foreign contributions. In the course of the proceedings u/s 263, we find, that the assessee had placed on record receipts that were issued to some of the individual foreign donors wherein in most of such cases the addresses mentioned against the donors were their post box numbers only. In the backdrop of the aforesaid factual position, we find, that it remains as a matter of fact that not only the assessee had failed to divulge the complete details as were specifically called for by the A.O in the course of the assessment proceedings in order to establish the identity of the aforesaid foreign donors, but in fact, as observed by the CIT, and rightly so, the A.O in the course of the assessment proceedings had adopted a perfunctory approach, and merely goingby the incomplete details that were furnished by the assessee and dispensing with the requisite verifications,had accepted the same. On a perusal of the records, we find, that despite the fact that the assessee had not complied with the specific directions of the A.O and had not placed on record the requisite details qua the foreign donations as were called for by him vide his notice u/s 142(1), dated 04.01.2017, the A.O, however, dispensing with the said details which he himself was of the view were required to be looked into and verified, had thereafter abandoned the verification process that was triggered by him by calling for the requisite details and hadsummarily accepted

ITA No. 1689/Mum/2020 A.Y. 2015-16 21 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

the foreign donations on the basis of the “Form FC 6” filed by the assessee. At this stage, it would be relevant to point out that as observed by the CIT, and rightly so, the details as were called for and required by the A.O for carrying out the necessary verifications could not at all be deciphered from the “Form FC 6” that was filed by the assessee.In our considered view, de hors the furnishing of the requisite details as were called for by the A.O in the course of the assessment proceedings, the acceptance of the foreign donations by the A.O speaks for itself that the same had been accepted without carrying out necessary verifications. Although we concur with the ld. Senior Counsel that an inadequate inquiry on the part of an A.O cannot form a basis for assumption of jurisdiction by the CIT u/s 263 of the Act, however, the facts as have unfolded in the case before us do not lead to a case of an inadequate inquiry, but clearly points out to a case of no verification qua the issue in question by the A.O.It is not a case where the CIT had sought to dictate the manner in which the A.O ought to have verified the facts qua the issue in question, viz. foreign donations received by the assessee, but is a case where the A.O vide his Notice u/s 142(1), dated 04.01.2017 after calling for certain details in order to verify the foreign donations in question, had thereafterabandoned his verifications, and despite non-furnishing of the requisite details and information by the assessee, had summarily accepted itsaforesaid claim. In our considered view, acceptance of the issue qua the foreign donations that were claimed by the assessee to have been received during the year, in absence of details which the A.O vide his notice u/s 142(1), dated 04.01.2017 was of the view were required for verifying the same, leads to the solitary view that the foreign donations had been accepted by him without making any verification. In the totality of the facts of the present case, we concur with the view taken by the CIT that the A.O had failed to carry out

ITA No. 1689/Mum/2020 A.Y. 2015-16 22 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

even the most basic investigation that was required qua the aforesaid issue. Also, we find that the assessee even in the course of the proceedings u/s 263 had not placed on record the requisite details as regards the foreign donationsthat were received by it during the year under consideration. Rather, as is discernible from the order passed by the CIT u/s 263, we find, that even in the course of the revisional proceedings it was the claim of the assessee that the complete details of the donors including their respective addresses and the purpose of donations was provided in the “Form FC 6” and no further verification was required. In the totality of the aforesaid facts, we are of a strong conviction, that as observed by the CIT in his order u/s 263, and rightly so, it is a clear case of failure on the part of the A.O to carry out necessary verifications as regards the foreign donations received by the assessee during the year under consideration. Our aforesaid view is further fortified by the fact that as the case of the assessee was flagged for scrutiny assessment under CASS, inter alia, for the reason that it had received large amount of foreign donations, thus, a heavy obligation was castupon the A.O to have carried out the necessary verifications, which would not hesitate to observe he had absolutely failed to do. We, thus, are of the considered view that the CIT had rightly observed that as the A.O had failed to carry out the necessary verifications as regards the foreign donations received by the assessee during the year under consideration, thus, the assessment order passed by him to the said extent was erroneous insofar it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act.

ITA No. 1689/Mum/2020 A.Y. 2015-16 23 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

Notice u/s 142(1), dated 04.01.2017 directed the assessee to furnish the requisite details as regards the corpus/non-corpus donations that were received by it during the year under consideration, viz. name, address & PAN of the donors; amount of donation received; mode of payment (cheque/DD No.& Bank); nature of donation (corpus or non- corpus). On a perusal of the records, we find, that though the assessee had submitted before the A.O that it had received local donations of Rs.80,91,848/- during the year under consideration, however, the details of the local donors as was called for by the A.O in the specified format were not provided by it. As is discernible from the records, the assessee had vide its replydated 14.06.2017 filed with the A.O copies of the “Local cheques donation a/c” (Rs.67,03,352/-); and (ii) “Local donations a/c”(Rs.13,88,496.36). On a perusal of the “Local donation a/c”, we find that there is not a whisper as regards the names of the persons from whom the donations are claimed to have been received, what to talk about their addresses; PAN nos; or the mode of receipt of donation etc. Insofar the “Local cheques a/c” is concerned, we find that though the names of the donors alongwith cheque numbers are therein mentioned, however, there is no mention of their addresses; and PAN Nos.It remains as a matter of fact borne from the records that the requisite details that were called for by the A.O to verify the aforesaid local donations, viz. addresses of the donors; PAN of the donors etc. had not been provided by the assessee for the reasons best known to it. Even in the course of the revisional proceedings the assessee had not furnished the requisite details which would have irrefutably proved the identity of the local donors.In the absence of the aforesaid details that were specifically called for by the A.O vide his notice u/s 142(1), dated 04.01.2017, it can safely be concluded that it was impossible for the A.O to have verified the aforesaid local donations. Interestingly, we find, that despite the fact that the specific

ITA No. 1689/Mum/2020 A.Y. 2015-16 24 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

details that were called for by the A.Ovide Notice u/s 142(1), dated 04.01.2017 in order to verify the local donations were not filed by the assessee, the A.O, however,abandoned the process of verification that was triggered by himby calling for the requisite details from the assessee and summarily accepted the local donations aswere shown by the assessee. On a perusal of the aforesaid facts, we are of a strong conviction, that now when the A.O had himself called for certain details in order to verify the local donations, therefore, accepting the aforesaid donations despite failure on the part of the assessee to place on record the requisite detailsthat were called for by the A.O can only be brought within the realm of acceptance of an unverified claim by abandoning the process of verification, and summarily accepting the claim as projected by the assessee. We, thus, in the backdropof our aforesaid deliberations are unable toagree with the ld. A.R that the aforesaid claim of the assessee was accepted only after carrying out necessary verifications by the A.O.In sum and substance, when the details called for by the A.O in itself were not provided by the assessee, it would be beyond comprehension to concludethat the necessary verifications qua the issue in question had been carried out by the A.O. In the backdrop of the aforesaid facts, we are of the considered view that the summarily acceptance of the local donations received by the assessee dehors filing of the requisite details by the assessee, specifically when the same were called for by the A.O, can only lead to the conclusion that there had been an absolute failure on the part of the A.O to carry out necessary verifications qua the issue in question. We are afraid, that the failure on the part of the A.O to carry out the aforesaid verifications by no means would fall within the realm of an inadequate inquiry, but is a clear case of having failed to carry out any verification. We, thus, in the backdrop of our aforesaid deliberations concur with the view taken by the CIT that as the A.O had failed to

ITA No. 1689/Mum/2020 A.Y. 2015-16 25 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

carry out verifications as regards the local donations of Rs.80,91,848/- stated to have been received by the assessee during the year under consideration, therefore, the order passed by him u/s 143(3), dated 28.06.2017 was erroneous insofar it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act.

ITA No. 1689/Mum/2020 A.Y. 2015-16 26 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

copies of the respective ledger accounts only to the extent of Rs.2,64,22,363/-, as under :

Sr. No. Particulars Amount 1. Education expenses Rs. 54,83,016/- 2. Medical expenses Rs. 46,12,347/- 3. Natural calamity Rs. 1,27,41,000/- 4. Marriage aid/Kanyadaan Rs. 36,86,000/- Total Rs. 2,64,22,363/-

Further, a perusal of the ledger accounts filed by the assessee reveals that the identity of the recipients in the absence of theirrespective addresses could not be gathered therefrom. We, thus, find that though the A.O had specifically directed the assessee to furnish the details of expenses which were incurred by it towards furtherance of its objects, however, the assessee in compliance thereto had furnished only part reply and placed on record half baked details from which the complete details of the recipients could not be gathered. However, the A.O despite failure on the part of the assessee to furnish the details that were specifically called for by him vide his Notice u/s 142(1), dated 04.01.2017 summarily accepted the aforesaid claim of expenses of the assessee. In our considered view, not much is required to be said about the verification carried out by the A.O in context of the aforesaid issue in question, specifically when the details that were called for by him itself had not been furnished by the assessee. We hold a strong conviction that in a case where the A.O in order to satisfy himself about the genuineness and veracity of a claim raised by the assessee had raised a query and called for certain details/information, then, the acceptance of such claim dehors furnishing of the reply and the requisite details that were called for by the A.O, can only be stamped as acceptance of the claim without making any verification. We are of a strong conviction that in the totality of the facts pertaining to the

ITA No. 1689/Mum/2020 A.Y. 2015-16 27 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

verification of the assessee‟s claim of expenses as had been narrated by us hereinabove, it can safely or in fact inescapably be gathered that it is not a case of an inadequate verification as had been canvassed by the ld. A.R, but a case where the assessee‟s claim had been accepted without carrying out any verification. In the totality of the aforesaid facts, we are unable to persuade ourselves to subscribe to the claim of the ld. A.R that the CIT had exceeded his jurisdiction, and thus, had wrongly observed that as the A.O had accepted the assessee‟s claim for expenditure of Rs.11.88 crores without making necessary verifications, therefore, the order passed by him u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. We, thus, in the backdrop of our aforesaid deliberations concur with the view taken by the CIT that as the A.O had failed to carry out verifications as regards the expenditure of Rs. 11.88 crores claimed by the assessee to have been incurred towards furtherance of its objects, therefore, the order passed by him u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act.

ITA No. 1689/Mum/2020 A.Y. 2015-16 28 M/s Alimaan Charitable Trust Vs. Commissioner of Income Tax (Exemptions)

assessee is devoid and bereft of any merit, and thus, cannot be accepted.

Dy./Asst.Registrar ITAT, Mumbai.