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Income Tax Appellate Tribunal, ‘A’ SMC BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN
आदेश /O R D E R
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -1, Trichy, dated 10.01.2019 and pertains to assessment year 1999-2000.
Shri N. Vijay Kumar, the Ld. representative for the assessee, submitted that the only issue arises for consideration is addition of ₹8 lakhs which is said to be received towards corpus fund.
According to the Ld. representative, the assessee received ₹8 lakhs from 33 persons towards corpus of the Society. According to the Ld. representative, the assessee-society is not registered as charitable institution under Section 12AA of the Income-tax Act, 1961 (in short 'the Act'). Even though it was not registered as a charitable institution under Section 12AA of the Act, according to the Ld. representative, the corpus fund received by the assessee cannot be treated as income in view of the decision of the Pune Bench of this Tribunal in ITO (Exemptions) v. Serum Institute of India Research Foundation (2018) 90 taxmann.com 229. Moreover, according to the Ld. representative, the same amount was received in the year 1998 and shown as opening amount in the balance sheet. Therefore, the same cannot be treated as income of the assessee during the year under consideration.
On the contrary, Shri K. Hari Govind, the Ld. Departmental Representative, submitted that it is not the case of the assessee that the corpus fund was received for specific object. Referring to the decision of Pune Bench of this Tribunal in Serum Institute of India Research Foundation (supra), the Ld. D.R. submitted that the Pune Bench referred to the decision of this Bench of the Tribunal in Indian Society of Anaesthesiologists v. ITO (2014) 47 taxmann.com
This Bench of the Tribunal specifically found that even though the trust was not registered under Section 12AA of the Act, when the funds were received for specific object, such funds would be used only for that purpose / object, therefore, the corpus fund received by the trust cannot form part of total income. In this case, according to the Ld. D.R., the confirmation letters said to be filed by the respective donors do not say that it is for specific object or purpose. Therefore, according to the Ld. D.R., it cannot be said that the so-called donation said to be received by the assessee is for corpus purpose, hence excluded from taxation.
Having heard the Ld. representative for the assessee and the Ld. D.R. and perused the material available on record and the impugned orders of both the authorities below, this Tribunal finds that it is not in dispute that the assessee-society is not registered under Section 12AA of the Act as charitable institution. The assessee claims that the amount received in 1998 was shown as opening balance in the balance sheet for the year under consideration. The exact date of receipt is not available on record. If the funds were received after 1st April, 1998, then naturally the receipt would fall during the year under consideration. In other words, the amount received between 1st April, 1998 and 31st March, 1999, which is the relevant financial year for the assessment year 1999-2000, has to be necessarily considered as receipt during the year under consideration. Since the date of actual receipt of funds is not available on record, this Tribunal is of the considered opinion that the Assessing Officer has to re-examine the matter and bring on record the actual date of the receipt of amount from the respective persons. It also needs to be examined and brought on record whether donation was given for a particular purpose / object or not. Since these details are not available on record, this Tribunal is of the considered opinion that the matter needs to be re- examined by the Assessing Officer.
Now coming to the grounds of appeal with regard to reopening of assessment and completion of assessment under Section 144 of the Act.
6. Even though grounds were raised, no argument was advanced by the Ld. representative for the assessee during the course of hearing. Moreover, the amount to the extent of ₹8 lakhs received as donation escaped assessment as observed by the Assessing Officer. Therefore, the Assessing Officer rightly issued notice under Section 148 of the Act on 18.07.2003. The service of notice is not in dispute. Since the assessee had not responded to the notice issued under Section 148 of the Act, the Assessing Officer issued notice under Section 142(1) of the Act on 29.08.2004. Even though the assessee requested time till 12.10.2004, there was no response from the assessee. When the Assessing Officer called for reasons why excess of income over expenditure and donations should not be assessed, the assessee could not file any explanation or material other than filing the memorandum of the Society. In those circumstances, this Tribunal is of the considered opinion that the Assessing Officer has rightly passed assessment order under Section 144 of the Act.
In the result, the appeal filed by the assessee is allowed for statistical purposes.