ASHA DEEP FOUNDATION,NEW DELHI vs. ITO (E), WARD- 1(1), NEW DELHI
What did the Tribunal hold?
The Tribunal held that the CIT(A) erred by requiring the assessee to prove a negative, which is impossible. The Tribunal set aside the CIT(A)'s order and remanded the matter back for a fresh decision.
What were the facts?
The assessee, Asha Deep Foundation, appealed the denial of exemption under Sections 11 and 12 of the Income-tax Act. The denial was based on the receipt of donations from an organization alleged to have religious objectives, leading to the conclusion that the assessee was involved in religious promotion.
What were the issues?
Whether the assessee's receipt of funds from a donor with religious objectives disqualified it from exemption under Sections 11 and 12, and whether the CIT(A) correctly placed the onus on the assessee to prove the negative.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
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- CIT v. Dawoodi Bohra Jamat83 citing364 ITR 31 · 2014 · SC
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI
Hearing conducted via Webex ORDER
The present appeal has been filed by the assessee wherein the correctness of the order dated 22.02.2019 of CIT(A)-40, Delhi pertaining to 2010-11 assessment year is assailed on the following grounds:
“1. That on the facts and in the circumstances of the case, the impugned order of the CIT (A) is prima facie erroneous, based upon incorrect appreciation of facts, without appreciating that the assessment under section 147 itself was erroneous being based upon change of opinion, bad in law and void ab initio.
That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law' in confirming the AO's action in denying exemption under sections 11 and 12 of the Income-tax Act, 1961 (‘‘the Act”) to the Appellant.
3. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law' in concluding that exemption under section 11 could not be allowed to the Appellant in view of section 13(1 )(b) of the Act. without appreciating that section 13(l)(b) of the Act denies exemption to a trust or institution ‘created or established for the benefit of any particular religious community or caste’ and that the Appellant evidently did not fall under that category.
Asha Deep Foundation vs. ITO(E)
4. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law in affirming the AO’s erroneous assumption that having received donation from Caruna Bal Vikas, which is alleged to have the objective of religious activities, the Appellant got covered under ejection 13(1)(b) of the Act.
5. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law in not appreciating that the Appellant received donations from various other sources and that the donation from Caruna Bal Vikas constituted a mere 10 per cent of the donations received and the said Donor’s objective does not alter the purposes for which the Appellant works. 6. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law7 in in not appreciating that the funds were utilized for betterment of children from extremely deprived section of society belonging to different religions and not for the benefit of Christian children, as alleged. 7. That on the facts and in the circumstances of the case, the CIT(A) erred on facts and in law in ignoring the evidence of utilization of funds including complete details of identity of the beneficiaries, and while alleging that the Appellant failed to bring anything on record to show' that fund received from Caruna Bal Vikas was not spent for religious purpose. 8. The CIT(A) erred on facts and in law in not appreciating that no one can be asked to prove the negative, and that the AO’s assertion that the Appellant had utilized funds for religious activities, was based on totally flimsy grounds. 9. The CIT(A) erred on facts in law in confirming the denial of depreciation to the Appellant. The Appellant craves leave to add to, alter, amend or vary from the aforesaid grounds of appeal
at of before the time of hearing.”
2. Both the parties were heard. The Ld. Authorized Representative relying upon para 2.2 of the impugned order submitted that the detailed evidence of the activities carried out by the assessee foundation etc. in Para 2.4 from pages 3 to11 though have been reproduced, however, have not been considered while arriving at the conclusion. The finding arrived at, it was submitted, was contrary to the facts on record.
2.1 Referring to the submissions already on record, it was his argument that the assessee is engaged in various activities wherein children from marginalized section of society etc.; rag pickers children etc. were identified for activities to balance their minds etc. It was submitted that no religious promotion was done. Page 2 of 6
Asha Deep Foundation vs. ITO(E)
The Ld. Sr. DR, on the other hand, drew specific attention of the Bench to the facts as set out in the assessment order. Emphasis was laid on the fact that the funds have been transferred by M/s. Compassion International having its office at Colorado Springs, Colorado-USA where specific purposes were specified and mandates were clear.
3.1 Referring to para 4.2 of the assessment order, it was further submitted that it has been noticed that the understanding while granting funds were that “Compassion International is a Christian Organization that exists as an advocate for children to release from their spiritual, economic, social and physical poverty and enable them to become responsible and fulfilled Christian Adults.
The governing body of Compassion International is named as Ministry and has brought out a blue print for the child sponsorship across the Globe.”
(emphasis supplied)
3.2 Referring to para 4.3, emphasis was further laid by him on the fact that as per the Mutual Commitment to Outcomes to Mutual Support Agreement, entered into by the assessee with them the assessee was to bring a Child, Sponsor and Church Partners were mandatorily required to achieve the mutually agreed upon goals which had been referred to in para 4.4 by the AO.
The same reads as under:
“4.4 Further, in the agreement is specifically mentioned that - purpose of this agreement was to foster a close working relationship between Caruna Bal Vikas and Asha Deep Foundation such that our cooperation efforts and ministers to needy children and their families may be carried out with maximum effectiveness and understanding. Because of the common belief that God has called the Chruch to minister to the needs of poor children and their families,
Asha Deep Foundation vs. ITO(E)
Caruna Bal Vikas and Asha Deep Foundation agree to use our joint financial and other resources in the Chruches projects with the aim of giving the children involved, the opportunity to become spiritually mature and financially independent adults, using methods agreed upon by both the parties. On perusal of the details submitted during the course of assessment proceedings, it is also worthy to mention here that assessee has incurred Rs. 1,89,611/- on spiritual events including the quiz and, drawing competition on Bible and to provider gifts on Chrismas. This also reiterates that the assessee was involved in religious activities for a particular religion during the year under consideration.”
3.3 In the said back ground it was his submission that the finding of fact by CIT(A) may be upheld as clearly religious promotion has been done exclusively.
The ld. AR relying on his submissions submitted that humanitarian efforts have been done the matter may be remanded back for proper consideration in the light of the decision of the Apex Court in the case of CIT Vs Dawood Bohara Jamaat (2014) 364 ITR 31 (S.C.).
I have heard the submissions and perused the material available on record. On a consideration thereof I am of the view that the finding arrived at cannot be upheld. The reason for coming to the said conclusion is based on the fact that the ld. CIT(A) has approached the entire issue in a manner which cannot be given judicial recognition. A perusal of para 4.1. shows that the ld. CIT(A) required the assessee to prove the negative. The specific observation mentioned in the order of the ld. Commissioner was ;
“The appellant has on the other hand brought nothing on record to show that the fund received from Caruna Bal Vikas was not spent for religious purposes.” (emphasis supplied)
Asha Deep Foundation vs. ITO(E)
5.1 Such a rationale for confirming the order cannot be upheld. It goes without saying that no evidence can be placed on record by a party to prove the negative. The issue is well settled. To prove the negative is against the basic rules of evidence as it is impossible to perfom. A party cannot be compelled and held accountable for not performing the impossible; something which was impossible to do so. Negative can be proved by a party only by a denial or at best a denial on an Affidavit. The onus cast upon a party to prove the negative flouts common sense let allow the rules of evidence and common law. The impugned order, accordingly, is set aside back to the file of CIT(A) with the directions to address the facts and evidence and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is directed to ensure full and proper participation before the Appellate Authority and place on record whatever evidences there are in support of the activities etc. carried out. Said order was pronounced at the time of virtual hearing itself in the presence of the parties Webex.
In the result, both appeals of the assessee are allowed for statistical purposes.
Order pronounced on 09th September, 2021.
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