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ASSISTANT COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE), BAREILLY vs VARUNARJUN TRUST, LUCKNOW | BharatTax

ASSISTANT COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE), BAREILLY vs. VARUNARJUN TRUST, LUCKNOW

ITA 620/LKW/2024Status: DisposedITAT Lucknow07 August 2025AY 2016-17Bench: SHRI ANADEE NATH MISSHRA (Accountant Member), SHRI SUBHASH MALGURIA (Judicial Member)74 pages

AI SummaryAllowed

Facts

The Revenue filed appeals against the orders of CIT(A) deleting additions made by the Assessing Officer for AYs 2015-16 and 2016-17. The AO had treated donations received by the assessee trust as bogus and made additions, alleging they were the assessee's own unaccounted income. The AO's reasoning was based on statements of third parties, which were later retracted.

Held

The Tribunal noted that the original assessment had accepted the donations after due verification. Furthermore, the primary evidence for the addition (statements of third parties) was retracted and lacked corroboration. Following judicial precedents, the Tribunal held that the reassessment proceedings were initiated without sufficient grounds and the additions were not sustainable.

Key Issues

Whether the reassessment proceedings were validly initiated after expiry of four years without proper reasons and whether the donations were genuine or bogus.

Sections Cited

147, 148, 133(6), 143(3), 151, 10(23C), 2(24), 68, 115BBE, 13(1), 11, 12, 13, 139, 142, 234A, 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH ‘A’, LUCKNOW

Before: SHRI ANADEE NATH MISSHRA & SHRI SUBHASH MALGURIA

For Appellant: Shri R. K. Agarwal, CIT (D.R.)

The facts of the case, in brief, are that the assessment order dated 26/03/2022 was passed by the Assessing Officer wherein the income of the assessee was assessed at Rs.3,75,00,000/- as against returned income of Page 1 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 nil. In the aforesaid assessment order, an addition of Rs.3,75,00,000/- was made by the Assessing Officer holding that the assessee trust had received its own unaccounted and undisclosed income by way of donations. The aforesaid amount of Rs.3,75,00,000/- consisted of Rs.75,00,000/- from Anandilal & Ganesh Podar Society, Rs.50,00,000/- from Podar Education & Sports Trust, a further amount of Rs.1,50,00,000/- from Podar Education & Sports Trust and Rs.1,00,00,000/- from Podar Education Trust. The Assessing Officer had conducted inquiry u/s 133(6) of the Act with aforesaid three entities. All the three entities furnished their reply and confirmed having paid donations to the assessee. The aforesaid three entities have also provided copies of bank account to the Assessing Officer. The Assessing Officer disbelieved the confirmations from the aforesaid three entities, on the ground that the entities could not provide any substantive evidence for their claim. The Assessing Officer further took the view that the assessee trust and the aforesaid three entities had failed to prove the authenticity of the transactions. However, there is no mention in the assessment order showing what further substantive evidences were required from the end of the aforesaid three entities and the assessment order is also silent as to on what basis the conclusion was arrived that the assessee trust and the aforesaid four entities had failed to prove authenticity of the transactions. The Assessing Officer’s conclusion that the assessee trust had accepted its own unaccounted and unexplained money in the garb of donation is based on her finding that the aforesaid Anandilal & Ganesh Podar Society was also running educational institutions and according to the Assessing Officer, the aforesaid Anandilal & Ganesh Podar Society should have rather spent the fund to develop the infrastructure of its own institute. There is no adverse comment in the assessment order in respect of other

Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in subsection (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution : Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or established) or a trust for charitable purposes or a charitable institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3) in so far as such use or application relates to any period before the 1st day of June, 1970; Page 20 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 (d) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any period during the previous year— (i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in subsection (5) of section 11 continue to remain so invested or deposited after the 30th day of November, 1983; or (iii) any shares in a company, other than— (A) shares in a public sector company; (B) shares prescribed as a form or mode of investment under clause (xii) of sub-section (5) of section 11, are held by the trust or institution after the 30th day of November, 1983 95-96[, to the extent of such deposits or investments referred to in sub-clauses (i), (ii) and (iii)]: Provided that nothing in this clause shall apply in relation to— (i) any assets held by the trust or institution where such assets form part of the corpus of the trust or institution as on the 1st day of June, 1973; (ia) any accretion to the shares, forming part of the corpus mentioned in clause (i), by way of bonus shares allotted to the trust or institution; (ii) any assets (being debentures issued by, or on behalf of, any company or corporation) acquired by the trust or institution before the 1st day of March, 1983; (iia) any asset, not being an investment or deposit in any of the forms or modes specified in sub-section (5) of section 11, where such asset is not held by the trust or institution, otherwise than in any of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year

(2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub- section (3),— (a) if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub- section (3) for any period during the previous year without either adequate security or adequate interest or both; (b) if any land, building or other property of the trust or institution is, or continues to be, made available for the use of any person referred to in sub-section (3), for any period during the previous year without charging adequate rent or other compensation; (c) if any amount is paid by way of salary, allowance or otherwise Page 22 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services; (d) if the services of the trust or institution are made available to any person referred to in sub-section (3) during the previous year without adequate remuneration or other compensation; (e) if any share, security or other property is purchased by or on behalf of the trust or institution from any person referred to in sub-section (3)during the previous year for consideration which is more than adequate; (f) if any share, security or other property is sold by or on behalf of the trust or institution to any person referred to in sub-section (3) during the previous year for consideration which is less than adequate; (g) if any income or property of the trust or institution is diverted during the previous year in favour of any person referred to in sub-section (3):

"From a combined review of the judgments of this Court, it follows that an Income-tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Page 30 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 Since, the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income-tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if one the basis of subsequent information, the Income-tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment."

"It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under section 147 (a). First, he must have reason to believe that the income of the assessee has escaped Page 31 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The important words under section 147 (a) are "has reason to believe" and these words are stronger than the words "is satisfied". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income Tax Officer in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147 (a). It there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to he struck down as invalid." Hon'ble Jurisdictional Allahabad High Court in the case of CIT vs. Mirza International Ltd ITA 749 and 750/ Lkw/2010.

6. We have heard the rival parties and have gone through the material placed on record. First we take appeal in for assessment year 2009-10. In this case it is an undisputed fact Page 37 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 that the assessment was completed u/s 143(3) of the Act vide order dated 27/12/2011 which is placed at pages 10 to 17 of the paper book. It is also an admitted fact that the assessment year involved is 2009-10 and therefore, as per the first proviso to section 147 the reassessment proceedings in this case can be initiated after the expiry of four years only if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment or failure on the part of the assessee to make a return u/s 139 or failure on the part of the assessee to respond to notice issued under sub section (1) of section 142 or section 148. Out of these three conditions i.e. the failure on account of non filing of return u/s 139 and no response to notice u/s 142 and 148 is not applicable. Therefore, we have to only examine the third exception that whether there was a failure on the part of the assessee to disclose truly and fully all material facts necessary for his assessment for that assessment year as admittedly a period of four years had passed since the end of the relevant assessment year i.e. assessment year 2009- 10. The relevant period of four years expired on 31/03/2014 and notice u/s 148 has been issued on 27/03/2015. From the reasons recorded, as placed in pages 6 to 8 of the paper book, the Assessing Officer has not brought out anything to substantiate that there was a failure on the part of the assessee to disclose truly and fully all the material facts required for completion of assessment. In fact during original assessment proceedings the Assessing Officer vide query letter dated 21/10/2011, placed in paper book pages 72 & 73, required the assessee vide para 7 to file complete details of bank accounts along with the relevant statement of bank accounts. The assessee in his reply vide letter dated 09/11/2011 placed at pages 18 to 19 of the paper book, submitted the required information vide para 7 and submitted the details of bank accounts as per Annexure-6 placed at page No. 20 of the paper book. The examination of details of bank account submitted by the assessee as per page No. 20 of the paper book and examination of reasons recorded, reveals that assessee had submitted details of bank account number which the Assessing Officer mentioned in the reasons recorded. For example, the bank account No.62205129846 belonging to M/s IshanImpex noted by Assessing Officer finds mention in the details of bank Page 38 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 account submitted by the assessee at Sr.No. 5 of the paper book page 20. Similarly bank account No.62205129781 mentioned by Assessing Officer in his reasons recorded finds mention in the detail of bank account submitted by the assessee at Sr.No. 4 available at page 20 of the paper book. Therefore, in this case the assessee had even supplied the whole information as required by the Assessing Officer and there was no failure on the part of the assessee to disclose truly and fully all material facts for making the assessment. The examination of reasons recorded along with the query letter raised by Assessing Officer and its reply, we come to conclusion that the reasons recorded do not mention even a word about the failure on the part of the assessee to file truly and fully all material facts and in fact during assessment proceedings on a specific query from the Assessing Officer, the assessee had filed all the details of bank accounts and the same bank accounts have been used by the Assessing Officer to reopen the completed assessment of the assessee which is not permitted under the law as decided by various Hon'ble courts including Hon'ble Delhi High Court in the case of Unitech Ltd. (supra), Hon'ble Bombay High Court in the case of Nirmal Bang Securities Pvt. Ltd. and by various other decisions as relied on by Learned A. R., the copies of which are placed in pages 1 to 203 of the paper book. For the sake of completeness, the findings of……………………………………………………………………… A bare reading of the reasons would ex-facie show that there was not even an allegation in the said reasons that there was any failure on the part of the petitioner to disclose any material fact, let alone the details thereof, which led to any income escaping assessment. Moreover, even on a holistic reading of the reasons recorded it cannot be said that it suggests any failure on the part of the petitioner to disclose truly and fully all material facts necessary for assessment.

"21. In the present case, admittedly, the assessment had been made under section 143(3) of the Act for the assessment year Page 40 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 2000-01. It is also admitted that the reassessment proceedings initiated for the assessment year 2000-01 was after the expiry of four years from the end of the said assessment year. In such a scenario, as per the first proviso to section 147 of the Act, no action for initiation of reassessment proceedings for the assessment year 2000-01 could have been taken unless the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment by reason of a failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment. As rightly submitted by Mr. Murlidharan, learned counsel appearing on behalf of the petitioner, there is not even an allegation in the said reasons that there was any failure on the part of the petitioner to disclose truly and fully any material fact, let alone the details thereof. In fact, on a perusal of the said reasons and as reproduced above, it is clear that the reason given for initiating reassessment proceedings under section 148 of the Act was that the exemption under section 10(33) of the Act, and which was amended retrospectively by the Finance Act, 2001 with effect from April 1, 2000, would not apply to any income arising from the transfer of units of a mutual fund. Since the assessee had earned dividend income from transfer of units of mutual funds, it was not entitled to exemption under section 10(33) of the Act. It was further mentioned in the said reasons that since the petitioner was trading in shares, the dividend income received was an integral part of trading goods and could not be segregated from the acquisition of the shares. It was for these reasons and these reasons only that respondent No. 1 opined that the dividend income so earned should have been charged to tax as a short- term capital gain and therefore he had reason to believe that income to the tune of Rs. 3,31,15,313.49 had escaped assessment for the assessment year 2000-01. In Haryana Acrylic Manufacturing Co. v. CIT [2008] 175 Taxman 262 (Delhi) it was held by the Hon’ble Delhi High Court as under: 19. Examining the proviso [set out above], we find that no action can be taken under section 147 after the expiry of four years

Page 41 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 from the end of the relevant assessment year if the following conditions are satisfied: -an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year; and unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee: •to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148; or •to disclose fully and truly all material facts necessary for his assessment for that assessment year. Condition (a) is admittedly satisfied inasmuch as the original assessment was completed under section 143(3) of the said Act. Condition (b) deals with a special kind of escapement of income chargeable to tax. The escapement must arise out of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148. This is clearly not the case here because the petitioner did file the return. Since there was no failure to make the return, the escapement of income cannot be attributed to such failure. This leaves us with the escapement of income chargeable to tax which arises out of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. If it is also found that the petitioner had disclosed fully and truly all material facts necessary for its assessment, then no action under section 147 could have been taken after the four year period indicated above. So, the key question is whether or not the petitioner had made a full and true disclosure of all material facts 20.In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment, is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the Page 42 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in WelIntertrade (P.) Ltd.'s (supra) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania (supra) that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated 29-3-2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 2-3- 2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above. Thus it can be seen from the above decision of the Hon’ble High Court that AO has failed to record and reasoned the failure on the part of the appellant to disclose truly and fully all material facts necessary for his assessment.

Hon’ble High Court of Bombay in case of Hindustan Lever ltd. Vs. R.B. Wadkar (writ petn. No. 1505 of 2003) dated Feb 25, 2004; 268 ITR 0332 has held that reasons recorded by AO nowhere stating that there was failure on the part of assessee to disclose fully and truly all material facts necessary for assessment, reopening of assessment made under s. 143(3) after expiry of four years from the end of the relevant assessment year was invalid. Hon’ble Supreme Court of India in case of New Delhi Television Ltd. Vs. DCIT, Civil Appeal no. 1008 of 202, Apr 3, 2020 has held that the revenue cannot take benefit of the extended period of limitation of 6 years if it is found that the assessee had fully and truly disclosed all material facts necessary for its assessment. Hon’ble Bombay High Court in case of Bhor Industries Ltd. Vs. ACIT & ORS., Writ Petn. No. 1909 of 2002, Feb 26, 2003 (264 Page 47 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 ITR 0180) has held that assessee having filed its annual report before the Assessing Officer indicating spread over of the expenditure incurred on voluntary retirement scheme over a period of 60 months and the AO having granted deduction to the extent of amount written off during the relevant year acting on that report, there was no failure on the part of the assessee to disclose fully and truly the material facts and, therefore, reopening of assessment after expiry of four years was not valid. Hon’ble High Court of Calcutta in case of Amiya Sales & Industries & ANR. vs. ACIT & ORS., Writ Petn. No. 291 of 2000, Sep 14, 2004; 274 ITR 0025 has held that in the absence of any omission or failure on the part of the assessee to disclose fully and truly all material facts, AO could not assume jurisdiction to reopen the assessment after expiry of four years from the end of relevant assessment years merely on the basis of incorrect interpretation of accounts by him at the time of original assessment under s. 143(3). Hon’ble High Court of Madras in case of CIT vs. Elgi Finance Ltd., (Appeal) Nos. 65 & 66 of 2003, Mar 14, 2006; 286 ITR 0674 has held that assessee-company having fully and truly disclosed all material facts necessary for working out the quantum of depreciation, notices under s. 148 issued after expiry of four years from the end of the relevant assessment years to withdraw the excess depreciation allowed to the assessee were barred by limitation and illegal. Delhi ITAT Bench in case of Richa Industries Ltd. Vs. ACIT, Mar 14, 2017 has held that reassessment proceedings u/s 147 r.w.s 148 of the Act cannot be initiated after expiry of 4 years from end of relevant assessment year unless there is failure on part of assessee to disclose fully and truly all material facts. Hon’ble Delhi High Court in case of WelIntertrade (P) Ltd. & Anr. vs. ITO (2009) 308 ITR 22 it was held that assessee having fully and truly disclosed all the material facts necessary for the assessment as required by the AO the precondition for invoking the proviso to S. 147 was not satisfied and therefore AO acted Page 48 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 wholly without jurisdiction in issuing notice u/s. 148 beyond four years period mentioned in S.

15. We have given a very careful consideration to the rival submissions. From the answer to question no.22 given by Shri Swapan Ranjan Dasgupta, founder director of HHBHRF at the time of survey in the business premises of HHBHRF, it is possible to entertain a doubt with regard to genuineness of the Page 59 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 donations given by HHBHRF. It can be a money launderings indulged by a third party, who gave donations to the assessee by using the middlemen connected with HHBHRF. So far as the assessee is concerned it received donation from HHBHRF a sum of Rs.5 lakh duly accounted the same in profit and loss account as corpus donation. There is no evidence whatsoever brought on record to show that the cash was paid by the assessee which in turn reached the hands of HHBHRF which was returned in the form of donation to the assessee after retaining the commission. As we have already observed that the answer to question no.22 given by Shri Swapan Ranjan Dasgupta referred to donations given in the financial year 2011- 12 as bogus donations. With regard to the donations received/given prior to 31.03.2011 there is no reference to such donations given or received by HHBHRF being in the nature of bogus donations. The assessee had received the donation from HHBHRF on 03.03.2011. It is therefore not possible to place reliance on the statement recorded at the time of survey and come to a conclusion that the assessee has been indulging in money laundering………………… 17. Apart from the above, the grounds for cancellation for registration u/s 12AA(3) is that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. We therefore are of the view that the cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed. The appeal of the assessee is accordingly allowed.

8.4 We also find that ld. AR has given the detailed profile of the assessee and its activities which are placed in its Annual Magazine with the name 'Dawn'. The transaction for the donation was made through banking channel and the Page 61 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 department failed to bring anything on record that the donation given by the assessee has come back to it in the form of the cash. At the most, in our considered view, the Revenue could have brought the amount of donation to the tax. In the instant case Shree GulabPincha (SGP for short) Mob. No.9831015157 was acting as conduit in providing a large amount of bogus donation received which was immediately returned back to the different parties in the guise of payments towards capital expenditure in building. However, no statement was SGP was recorded by the Revenue authorities by issuing any notice/summon u/s 133(6) / 131 of the Act. The managing trustee of BERT has accepted in his statement that SGP was involved in the aforesaid bogus donation transaction. Therefore, it was necessary for the Revenue Authorities to cross examine SGP to establish / ascertain how the money has returned back to the assessee-trust. In the instant case, the managing trustee of BERT has highlighted the name of 7 intermediaries used for returning the money of the donation and the name of the assessee trust is not appearing in that list. Similarly, the managing trustee of BERT has not mentioned the name of the assessee that the bogus donation was received. The managing trustee of BERT has mentioned very vaguely that major part of the donation was bogus without bringing the name of the donors on record. But he mentioned the name of SGP as the middle man for arranging such bogus donation. Thus in our considered view, the statement of SGP was necessary for establishing the fact that how the money has returned to assessee and whether the money was actually returned to the assessee-trust. As the statement of the SGP has not been recorded, the question of confronting the same to the assessee does not arise. As per question no. 14 of the statement of the managing trustee of BERT, it is clear that SGP was the only party to arrange all the bogus donations but his statement is missing which was crucial to unveil the chain of bogus donation.

and other relevant facts of the case. The ground wise discussion and decision are as under:- 6.1 Ground No. 1 : On the facts and circumstances of the case, the notice issued under section 148 by the learned AO is without jurisdiction, bad both in the eye of law and on facts. Page 65 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 Ground No. 2 : On the facts and circumstances of the case, the order passed by the learned AO is bad both in the eye of law and on facts. The order passed by Ld. AO needs be annulled. 6.2 I have carefully considered the submission made by the appellant. On the basis of information received on insight portal about the bogus donation received by the appellant trust amounting to Rs.3,75,00,000/- during the year under consideration from M/s Anandilal & Ganesh Podar Society, M/s Podar Education & Sports Trust and M/s Podar Education Trust, the reason has been recorded by the Assessing Officer for issuance of notice u/s 148 of the Act. The information available with the Assessing Officer was sufficient for recording of reason that income has escaped the assessment for issue of notice under Section 148 of the Act and did not require any independent inquiry and discretion was not exercised by the Assessing Officer under the direction or in compliance with some higher authorities’ instruction. The information available with the Assessing Officer has been thoroughly examined by him. The escapement of income being bogus donation, information has been marshaled properly. It is clear that the Assessing Officer has exercised his authority according to his own discretion. From the reason recorded for issue of notice u/s 148 of the Act, it is clear that the Assessing Officer has exercised his authority according to his own discretion and based on facts. The information available with the Assessing Officer was sufficient for recording the reason that income has escaped the assessment for issue of notice under Section 148 of the Act and did not require any independent inquiry and discretion was not exercised under the direction or in compliance with some higher authorities’ instruction.The reason clearly indicates that the Assessing Officer has applied his mind. 6.3 The facts of the case have been carefully examined. In this case the information was received on insight portal about the bogus donation received by the appellant trust amounting to Rs. 3,75,00,000/- during the year under consideration from M/s Anandilal & Ganesh Podar Society, M/s Podar Education & Sports Trust and M/s Podar Education Trust. Thus, at the time of Page 66 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 reopening of case u/s 147 there was prima facie enough material on basis of which the Assessing Officer has reopened the case. This ratio has been held by the Hon’ble Supreme Court of India in the case of Raymond Woollen Mills Ltd. v. Income-tax Officer in Civil Appeal Nos. 1972 and 1973 of 1992, ORDER Dated December 17, 1997, [1999] 236 ITR

6.4 In the case of Commissioner of Income-tax Vs Kelvinator of India Ltd., AY- 1987-88 [320 ITR 561], the Hon’ble Apex Court affirmed the order of Hon’ble High Court of Delhi. In this case it has been held that- (i)Whether even after amendment of section 147 with effect from 1-4-1989, a mere change in opinion would not confer jurisdiction upon Assessing Officer to initiate a proceeding under section 147 - Held yes (ii)Whether by reason of section 147 if ITO exercises its jurisdiction for initiating a proceeding for reassessment only upon mere change of opinion, same may be held to be unconstitutional - Held, yes (iii)Whether, however, if ‘reason to believe’ of Assessing Officer is founded on an information which might have been received by Assessing Officer after completion of assessment, it may be a sound foundation for exercising power under section 147, read with section 148 - Held, yes In this case the assessee filed its return of income along with computation of income, annual report, tax audit report, etc. The assessee did not claim certain expenses relating to rent, Page 68 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 depreciation, etc. So it filed revised return with a claim of rent and depreciation to be allowed under sections 30 and 32. The Assessing Officer determined the taxable income making additions and disallowances. Subsequently, the Assessing Officer issued a notice under section 148 and reopened the assessment under section 147 on the basis of under assessment. The assessee objected to the reopening of assessment. Though the assessment was reopened on the alleged ground of various disallowable claims, but except for the disallowance of a sum claimed in the revised return neither any claim was disallowed nor any addition was made. The Hon’ble Court of Delhi held that – “To confer jurisdiction under section 147(a ) two conditions were required to be satisfied, viz., (1 ) the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment; and (2) he must also have a reason to believe that such escapement occurred by reason of either (a) omission or failure on the part of the assessee to make a return of his income under section 139; or (b) omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. The aforementioned requirements of law must be held to be conditions precedent for invoking jurisdiction of the Assessing Officer to reopen the assessment under section 147. Both the conditions aforementioned are cumulative. It is also a well-settled principle of law that, in the event, it is found that any of the said two conditions is not fulfilled; the notice issued by the Assessing Officer would be wholly without jurisdiction. The expression ‘reason to believe’ mandates that before jurisdiction under section 147 is invoked by the Assessing Officer, he is to record his reasons for doing so or before issuing any notice under section 147. The formation of reason to believe and recording of reasons are imperative before the Assessing Officer can reopen a completed assessment. Since assessment had been reopened on 20-4-1990, section 147 as amended with effect from 1-4-1989 would apply.

8.2 In the assessment order, it has been noted by the Assessing officer that during the search/survey proceedings u/s 132/133A of the Act, in the case of M/s Anandilal&GanesanPodar Society, M/s Podar Education Trust, M/s PodarEducation & Sports Trust and other related group entities on 09.01.2018.The basic modus operandi of podar group was that Trusts belonging to Podar Page 74 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 group gave donations to other trusts who in turn returned back cash to Podar group after deducting commission which was then introduced into various entities of Podar group by layering through maze of dubious companies and bogus transactions with the help of known entry providers. 8.3 I have carefully considered the findings of the Assessing Officer in the assessment order, the submissions of the Appellant Trust and also perused the materials available on record on these grounds of appeal. The primary allegation against the assessee trust was that the donation amounting to Rs. 3,75,00,000/- received from M/s Anandilal& Ganesh Podar Society, M/s Podar Education Trust and M/s Podar Education & Sports Trust are bogusprimarily on the basis of statements recorded u/s 131 of the Act during the course of survey proceedings u/s 133A of the ActofShri KiritkumarDarsibhaiSuba, consultant charted accountant who stated that the donations were returned back to the Group in cash and statement of Shri Jogender Pal Gupta, the key person of DAG group recorded on oath u/s 132(4) of the Act who stated that he is an accommodation entry provider through various paper companies, wherein he is the director of those companies. A Search and Seizure operation was conducted on Shri Joginder Pal Gupta on 23.12.2019 in the case of DAG group. Shri Joginder Pal Gupta provided a list of entities (including companies and firms) controlled by him. The Four Companies namely M/s AnujBuildcon Pvt. Ltd. M/s AnupamBuilmart Pvt. Ltd., M/s Bell Indus Fibrecom Pvt. Ltd and M/s BijBuildcon (India) Pvt. Ltd are also in the said list who have made accommodation transactions with the appellant trust. During the year under consideration, the Assessing Officer has disallowed the exemption claimed u/s 10(23C) r.w.s. 2(24) in respect of donation received from Podar Group amounting to Rs.3,75,00,000/-. Thus, the statement of Shri Joginder Pal Gupta recorded u/s 132(4) of the Act is of no significance in the case of the appellant since no disallowance in respect of any donation received from the companies as stated by Shri Joginder Pal Gupta has been made in the assessment order for the year under consideration.

(iii) DCIT Vs Podar Education Trust ITA No s. 1876, 1877 to 1880, 1869/Mum/2021 (Heard vide consolidated order with (ii) above) 8.6.1 I have carefully gone through the judgment dated 10.03.2023 of Hon’ble ITAT, Mumbai in the case of DCIT Vs M/s Anandilal& Ganesh Podar Society and Group Concerns, in ITA Page 77 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 NOs. 1791, 1790, 1792 & 1889/MUM/2021& Other appeals. The brief facts of the case are as under: “There was a search and seizure action u/s. 132 of the Act in the case of M/s Anandilal& Ganesh Podar Society on 09.01.2018. A survey action under section 133A was also carried out on associated entities/individuals on the same date and subsequent dates. Later this assessment was reopened u/s 147 of the Act vide issuance of notice u/s 148 of the Act dated 26.03.2018. The return in response to notice u/s 148 of the Act was filed by the assessee on 22.11.2018 declaring total income of Nil after claiming exemption of Rs. 9,17,58,815/- u/s 10(23C)(vi) of the Act. The main allegation against the Podar Group is that donations made to the extent of 96.90 crores to various entities are bogus in nature in as much as that the donations have found their way back to the coffers of the Trust in the form of cash. The Assessing Officer has treated the donations as bogus primarily on the basis of statements recorded u/s 131 of the Act during the course of survey proceedings u/s 133A of the Act from Shri Kiritkumar D Suba and Shri N K Sodhani who stated that the donations were returned back to the Group in cash, which though were subsequently retracted by them. The Assessing Officer has completed the assessment by treating the donations as bogus denying exemption u/s 10(23C)(vi) of the Act. After considering the submissions made by the assessee, the Ld. CIT(A) has accorded relief stating that there is no conclusive or corroborative material on record of the Assessing Officer to hold that the donations have been returned back by those institutions in cash in exchange for commission. Aggrieved, the revenue is in appeal before us.”

43.

Even otherwise, the disallowance under Section 10(23C) of the Act, made by the learned Assessing Officer is pursuant to search dated 9 January 2018. The impugned assessment year before us is 2012- 13. Only evidence based on which the ld AO held that Rs 1 Cr of Donation is not eligible for exemption u/s 10 (23C) of The Act are the statements of those persons. For this year, original assessment is already completed under Section 143(3) of the Act on 27 March 2014 therefore, it clearly shows that impugned assessment is a concluded assessment at the time of search. Such retracted statement also cannot be said to be incriminating material found during the course of search, which can be used to enhance the income of assessee u/s 153A of the Act. Thus , there is no Page 82 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 incriminating material existing pursuant to search, which could have disturbed the concluded assessment in case of the assessee. Therefore, even on this ground, the exemption under Section 10(23C) of the Act, cannot be denied to the assessee. Accordingly, ground nos. 1 to 5 of the appeal of the learned Assessing Officer is dismissed and order of the learned CIT(A) is confirmed…………… 048. We have carefully considered the rival contentions and also per use the orders of the lower authorities. The learned assessing officer has made identically worded assessment orders wherein deduction is denied u/s 10 (23C) of the act to the assessee to the extent of donations made. The learned CIT - A has also passed in identically worded appellate order rejecting the denial of benefit of Section 10 (23C) of the act with respect to the above donations. As the facts are identical in all these years with respect to above donations as facts in the case for assessment year 2012 - 13, wherein we have given our reasons upholding the order of the learned CIT - A, same applies mutatis mutandis for Ay 2014 - 15 to 2017 - 18. Accordingly, we direct the learned assessing officer to grant benefit of Section 10 (23C) of the act to the assessee trust on the above donation.

8.8 It is absolutely clear that the re-assessment proceeding in the instant case were initiated against the assessee primarily on the basis of search & seizure operation carried on 09.01.2018 on the Podar Group. In the instant case, during the year under consideration donations to the tune of Rs. 3,75,00,000/- have been received from M/s Anandilal& Ganesh Podar Society, M/s Page 83 of 87 & 620/Lkw/2024 Assessment year:2015-16 & 16-17 Podar Education & Sports Trust and M/s Podar Education Trust by the appellant trust which have been disallowed by the Assessing Officer by treating them as bogus donations. Considering the overall facts of the case, it is also clear that the donations were treated as bogus primarily based on the statements of third parties who have later on retracted. The highest fact finding authority i.e. Hon’ble ITAT, Mumbai in the cases of M/s Anandilal& Ganesh Podar Society, M/s Podar Education & Sports Trust and M/s Podar Education Trust has upheld the orders of the Ld CIT(A) and dismissed the appeals of the revenue stating that there is no evidence that the donor trusts have received any cash in return and the additions were made solely on the basis of statements recorded which were subsequently retracted, thus, no disallowance in respect of donations were made in the hands of the donor trusts.Thus, vide the above mentioned judgment of Hon’ble ITAT, Mumbai has held the donations made by M/s Anandilal& Ganesh Podar Society, M/s Podar Education & Sports Trust and M/s Podar Education to various entities/trusts as genuine in absence of any corroboratory evidence. 8.9 In view of aforementioned discussion and judgment of Hon’ble ITAT, Mumbai in the cases of M/s Anandilal& Ganesh Podar Society, M/s Podar Education & Sports Trust and M/s Podar Education Trust from whom the donations were received by the appellant trust, I am of the considered view that Assessing Officer is not justified in bringing to tax the donation of Rs.3,75,00,000/- by treating the same as income 2(24) of the Act. Since the donations have been treated as genuine in the hands of the donor trusts by the Hon’ble ITAT, Mumbai, statement of Shri Kirit Kumar DarshibhaiSuba is a general third party statement which was subsequently retracted by him and no money trail or any corroboratory evidence has been identified by the Assessing Officer, thus, treating the donation received by the appellant trust as bogus donation is not justified. Therefore, the addition of Rs. 3,75,00,000/- made u/s 68 of the Act is hereby deleted. Thus, these grounds of appeal are hereby allowed.”