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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI R. K. PANDA & SHRI SUDHANSHU SRIVASTAVA
This appeal has been filed by the assessee against order dated 4.12.2014 passed by the Ld. CIT(A) Meerut wherein the Ld. CIT(A) has Kamal Shiksh Sanstan vs. ACIT held that the assessee was not covered u/s 10(23C)(iiiad) of the Income Tax Act, 1961.
The brief facts of the case are that the assessee is a trust registered under the Indian Registration Act, 1908. The return of income was filed declaring NIL income and, thereafter, the case was selected for compulsory scrutiny. During the course of assessment proceedings, the AO observed that although the assessee had claimed to have established educational institution in the name of Kamal Institute of Technology, the assessee had not carried out any charitable activity towards its objects and had shown only purchase of land and building. The AO also noted that the trust came into existence on 22.12.2009. It was further observed that the assessee had received donations / contributions of Rs. 39,51,653/- during the year under consideration from six persons. The assessee filed copies of ITRs of the donors before the AO. However, the AO was of the opinion that although the identity and genuineness of the donations/contributions was not doubted, the capacity of the donors to make the donation was not proved. It was also noted by the AO that no declaration had been filed by the donors to prove that the contributions had been made towards the corpus of the trust. The AO went on to hold that the assessee was not entitled for exemption of these contributions Kamal Shiksh Sanstan vs. ACIT u/s 11 (1)(d) or Section 10(23C) of the Act and also held that since no educational activity was carried out during the year, in absence of any activity, it could not be held that the assessee trust existed solely for educational purposes. The AO proceeded to add the amount of Rs. 39,51,653/- to the income of the assessee.
2.1 On appeal before the Ld. CIT(A), the Ld. CIT(A) held that the assessee was not running the educational institution during the year under consideration, and, therefore the voluntary contribution included by the AO in terms of section 2(24)(iia) of the Act under taxable income was in order. Now, the assessee has approached the ITAT and has challenged the confirmation of AO’s action by the Ld. CIT (A).
The Ld. Authorised representative submitted that the trust has received registration u/s 12AA of the Act vide order dated 18th June, 2015 w.e.f 1st April, 2014. Our attention was drawn to copy of the same in the paper book. It was further submitted that both the lower authorities had not recorded a finding that the assesse had not utilised the donation for purposes which were not charitable in nature and, therefore, the donation received for the corpus fund could not be disallowed. It was also submitted that no independent inquiry was made by the AO to substantiate that the donation received for the corpus was 3 Kamal Shiksh Sanstan vs. ACIT not genuine. It was also submitted that the view taken by the AO that the assessee could not prove the source and the creditworthiness of the donors was against the settled law as the assessee is not required to prove source of source.
Ld. Sr. DR, in response, placed reliance on the concurrent findings of both the lower authorities and submitted that the issue did not require any further adjudication as the findings given by the lower authorities could not be successfully negated by the assessee.
We have heard the rival submissions and have perused the material on record. It is not in dispute that the assessee had received donations from six persons whose identity has not been doubted by the AO. Further, the AO also does not doubt the genuineness of the transactions. The point of difference between the assessee and the department is that the assessee claims that the donations were made towards the corpus of the trust whereas the contention of the department is that no evidence was filed to prove that the contributions were made towards the corpus of the trust. Thus, the only question which remains is whether or not the donations were in the nature of corpus donations. A perusal of the AO’s order shows that this issue has not been decided by the AO in a proper manner and the facts have not 4 Kamal Shiksh Sanstan vs. ACIT been appreciated in the judicial manner. The Ld. CIT (A) has also decided the issue in haste by passing a cryptic order which is not sustainable. It is seen that the Ld. CIT (A) has not properly considered the submissions and facts of the case and has simply followed the AO’s conclusion and dismissed the assessee’s appeal. Although, the Ld. Sr. DR has supported the order of the Ld. CIT (A), he raised no serious objection if the appeal was restored to the file of the first appellate authority. Therefore, in the interest of justice we deem it fit to restore the grounds of appeal raised by the assessee to the file of Ld. CIT (A) for fresh adjudication after providing proper opportunity to the assessee and without being prejudice with the earlier impugned order. The assessee shall be at liberty to file whatever documents it deems necessary in this regard and it will be in the fitness of things that the Ld. CIT (A) obtains a remand report from the AO before passing the final order.
In the final result appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20.11.2017 .