ITO, NEW DELHI vs. SARTI DEVI CHARITABLE TRUST, NEW DELHI

From the facts on record and above grounds of appeal, the dispute which needs adjudication in this appeal is with respect to deletion of following additions made by the Assessing Officer :

Briefly stated, the facts are that the assessee is a trust not registered u/s. 12A of the Act. The main object of the assessee trust is stated to promote the classical Sanskrit Language and hence, the assessee started publishing a Sanskrit Newspaper in the name of ‘Vijayate”, which stood discontinued due to lack of patronage from the public. As stated by the ld. CIT(A), the Trust was promoted by Prof. R.K. Rathi, whos is a Sanskrit Scholar. The assessee filed its return of income on 28.09.2011 declaring total loss at Rs.39,480/-. The assessee declared net sale of Sanskrit Newspaper at Rs.47,53,030/- and receipt of Rs.3,60,200/- from advertisement and sponsorship. The ld. Assessing Officer observed that there was difference in the sale of newspaper shown by the assessee in its annual return filed before the Registrar of Newspapers for India (RNI) and that shown in Income & Expenditure account submitted before the Assessing Officer, inasmuch as the sale shown before RNI was at Rs.80,21,880/- as against the sale shown in Income & Expenditure

The Assessing Officer further noticed that in Annexure-X submitted to RNI, the assessee had shown the income from sale consideration of newspaper and income from advertisement in the ratio of 80% : 20% of the total income. The Assessing Officer therefore, worked out the income from advertisement at Rs.20,05,470/- as against Rs.3,60,000/- admitted by the assessee. He, therefore, made addition of difference of Rs.16,45,270/- to the income of the assessee. In appeal, the ld. CIT(A) after considering the contentions of the assessee and the adhoc nature of additions, allowed the appeal of the assessee vide impugned order. Aggrieved, the Revenue is in appeal before the Tribunal.

The ld. DR submitted that the ld. CIT(A) was not justified in deleting the impugned additions without considering the details of sale and advertisement furnished to RNI, as rightly considered by the Assessing Officer. He, therefore, urged for restoration of the assessment order and to sustain the impugned addition.

The ld. AR of the assessee reiterating the submissions made before the ld. CIT(A), submitted that the ld. CIT(A) was justified in deleting the impugned additions made by the Assessing Officer without any material on record. This was the first year of publication that too in a specific language, i.e., Sankrit, which was not patronized by the public resulting into closure of publication. Therefore, it is not proper to determine the sale receipt of such newspaper at ITA No. 4290/Del./2015 4 their MRP as declared in the return filed with RNI. He, therefore, submitted that impugned additions made on the basis of details furnished to RNI are not justified at all.

We have considered the rival submissions and have gone through the entire material available on record. A perusal of the assessment order reveals that the material, which led the Assessing Officer to make the impugned additions, is the details furnished by the assessee in its Annual Return filed with RNI. Now, the question arises as to whether the details furnished by the assessee to third party would be justified to be considered for the purpose of assessment proceedings by the Income-tax Authorities. In this context, we are of the opinion that the assessee’s income is to be assessed by the Assessing Officer on the basis of the material which is required to be considered for the purpose of assessment and ordinarily not on the basis of the statements which the assessee may have given to a third party unless there is material to corroborate such details given to a third party. The mere fact that the assessee had declared such other details to some other department/third party, by itself cannot be treated as having resulted in an irrefutable presumption against the assessee. In such scenario, the burden of showing that the assessee has undisclosed income is on the revenue, which in our opinion cannot be said to be discharged merely referring to the statement or details furnished by the assessee to a third party in connection with the transaction, thereby making such details to be the sole foundation for a finding that the assessee has not declared its true income. In the instant case, it is not in dispute that the assessee trust tried to promote the classical language Sanskrit by launching a newspaper in that language. Such a newspaper in Sanskrit Language is not ordinarily supposed to be patronized by public at large and ITA No. 4290/Del./2015 5 this was the reason that the assessee had to discontinue its publication in the year under consideration itself. It is also a thing of common knowledge that when a publication is started to publish a new newspaper even in well versed language, the publishers usually give substantial discounts in the subscription thereof on the MRP of newspapers so as to get patronage from the public, whereas in the instant case the impugned newspaper launched by the assessee was in Sanskrit Language, which is not well versed to the public at large. In such state of affairs, in our considered opinion, the Assessing Officer was not justified to determine and enhance the sale consideration of newspaper at its MRP as shown by the assessee in annual return furnished to RNI, particularly when he has not referred to any other material to belie the sale consideration declared by the assessee in its income & expenditure account. Similar is the position with respect to the income from advertisement shown by the assessee. The ratio of such income applied by the Assessing Officer is based only on the details furnished by assessee to RNI. Moreover, the advertisement income cannot be supposed to be earned on a particular ratio, but it depends on the receipt of advertisements to be published. There being no material on record to discard such income shown by the assessee in its books of account, we do not find it justified to sustain income determined by the Assessing Officer under this head. The assessee has given the reason as to why he furnished the hypothetical details before the RNI, but the Assessing Officer has not considered the same in right perspective, rather the Assessing Officer has laid much emphasis on the provisions of Press and Registration of Books Act and Registration of Newspapers (Central) Rules. In view of the above discussion, we are of the opinion, that the ld. CIT(A) has rightly deleted the impugned additions, holding them to be made on adhoc basis. We,