COMMISSIONER OF INCOME TAX (EXEMPTION) vs. ALL INDIA KATARIA EDUCATION SOCIETY

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ITA/888/2016HC DelhiDLHC01267667201624 May 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Revenue's appeal, finding no substantial question of law. It noted the difficulty in re-examining statements from 2007 and that the tax effect was below the prescribed limit.

What were the facts?

The Assessing Officer treated voluntary donations for the Building Fund as compulsory extraction for pupil admission, based on statements from guardians recorded during a survey. The CIT(A) and ITAT set aside these additions, holding that evidence collected behind the assessee's back could not be used unilaterally.

What were the issues?

Whether statements recorded during a survey behind the assessee's back can be used to make additions without providing an opportunity to the assessee. Whether concurrent findings of fact by lower appellate authorities, where the tax effect is below the prescribed limit, warrant interference by the High Court.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 133A

AI-generated summary — verify with the full judgment below

$~2 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 888/2016

COMMISSIONER OF INCOME TAX (EXEMPTION)..... Appellant Through : Ms. Lakshmi Gurung, Advocate, for Reveneue.

versus

ALL INDIA KATARIA EDUCATION SOCIETY..... Respondent Through : Sh. Arvind Kumar and Sh. Harsh Vardhan Sharma, Advocates.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

24.05.2018

The Revenue’s appeal questions the deletion of amounts brought to tax by the Assessing Officer (AO). In the impugned order made under Section 143(3) of the Income Tax Act, 1961 [hereafter “the 1961 Act”], the AO was of the opinion that the amount reported, i.e. `46,30,000/- as voluntary donations for the Building Fund were, in fact, not through volition, but on account of a pattern of compulsory extraction, as a condition for the admission of pupils to the school. For so concluding, the AO has relied upon the statement of around 20 guardians/parents of pupils admitted to the assessee’s schools. These statements were recorded during the course of survey under Section 133A of the 1961 Act. As such they did not have Page 1 of 2

evidentiary value so as to be determinative of the issue. CIT(A) and the Income Tax Appellate Tribunal (ITAT) concurrently set aside those additions, holding that the evidence collected behind the back of the assessee could not be unilaterally used to complete the assessment. The Revenue places reliance upon the judgment of the Supreme Court in ITO v. M. Pirai Choodi 2011 (334) ITR 262. At best, the appellate authorities should have sought recourse to remand and provided the required opportunity.

This Court has considered the submissions. The amount in question is `46.3 lakhs. The statements in this case were recorded in 2007; in the given circumstances, it is highly improbable that the parents of the pupils would be available. In fact, almost all pupils who were admitted in the concerned academic year would have finished their schooling. Moreover, the tax effect in respect of addition is below the prescribed limited. Since these are concurrent findings of fact, the Court is of the opinion that no substantial question of law arises. The appeal is accordingly dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J MAY 24, 2018/ajk

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