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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’: NEW DELHI
Before: SHRI J.S. REDDY, & SHRI CHANDRA MOHAN GARG
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal filed by the Revenue is directed against the order of the CIT(A)-Meerut, dated 20/07/2012 passed in first appeal No. 273/11-12 for A.Y 2009-10.
The Revenue has raised the following grounds of appeal:
“1. Whether in the facts and circumstances of the case the Ld. CIT (A) has erred in law in deleting the addition of Rs.42,76,709/- made by the A.O. u/s 68 read with section 115BBC of the IT Act, 1961 ignoring the following facts and law in particular that:- (a) the inquiry notices sent by the AO u/s 133(6) of the IT Act, 1961 were received back unserved with postal remarks “incomplete address”, even one of the donors denied to have made any donation and in none of these cases no independent confirmation was received by the AO and in all these cases identity, genuineness and creditworthiness of the alleged donors remained unproved.
(b) The AO in the remand proceedings asked the assessee to produce the alleged donors for examination but the assessee declined to produce the donors, despite which the Ld. CIT(A) deleted the addition without examining the donors on his own and without satisfying any of the 3 ingredients viz. identity creditworthiness and genuineness of alleged donors.
(c) Reliance is placed on the following case laws:-
CIT Vs. Ashok Timber Industries (Cal) 125 ITR 336 I. Basantipur Tea Co. (P) Ltd. Vs. CIT (Cal) 180 ITR 261 II. CIT v/s Korlay Trading Co. Ltd. (Cal.) 232 ITR 820. III.
“Krishan Kumar Jhanb v/s ITO and Anr (Punjab & Haryana) IV. 17 DTR 249” M/s Sejai International Ltd v/s CIT Meerut (AH.) Appeal V. No.306 of 2010. CIT Vs Durga Prasad More, 82 ITR 540(SC) VI. CIT Vs P. Mohnakala, 291 ITR 278 (SC) VII. VIII. CIT Vs Sumati Daval, 214, ITR 801 (SC) ITO Vs Diza Holdings Pvt. Ltd. 255 ITR 573 (Kerla) IX. CIT Vs. Precision Finance Pvt. Ltd. (Cal.) 208 ITR 465 X. V.I.S.P Pvt. Ltd. Vs. CIT (MP) 265 ITR 202 XI.
Further, the case law of DIT (Exemption) Vs. Keshav Social and Charitable Foundation (2005) 146 Taxman 569 (Delhi) quoted in CIT (A) order pertained to even prior to insertion of sec.ll5BBC of the IT Act, 1961 in the Statute by the Finance Act 2006 w.e.f. 01/04/2007 .
2. Whether in the facts and circumstances of the case the Ld. CIT (A) has erred in law in holding that the section 115 BBC of the I.T. Act 1961 inserted by the Finance Act 2006 w.e.f. 01/04/2007 was not applicable to the case under the pretext that the donations were declared in terms of section 11,12 and 13 of the I.T. Act 1961 despite clear mandatory provisions contained therein to tax entire such amount.
3. Whether in the facts and circumstances of the case the Ld. CIT (A) has erred in law in deleting the addition of Rs. 12,70,000/- made by the A.O. u/s 68 of the IT Act, 1961 ignoring
the fact that the assessee failed to discharge the primary onus cast upon it by the statute and could not justify the creditworthiness and genuineness of alleged unsecured loans amounting to Rs. 12,70,000/-. Reliance is again placed on the judgments mentioned in ground no.1”..
Ground Nos. 1 and 2 involve same issue. Hence these are being taken up for adjudication together.
Briefly stated, the facts as emanating from the orders of the authorities below are that during the course of assessment proceedings, the AO noticed that donations amounting to Rs. 68,77,206/- were received by the assessee. The AO issued notices u/s 133(6) of the Income-tax Act, 1961 [hereinafter referred to as, ‘the Act’] to all the 55 donors. Confirmation was received from 11 donors amounting to Rs. 3,09,701/-, but these persons did not file the copy of bank account or copy of ITR. Notices issued u/s 133(6) of the Act to 11 other persons amounting to Rs. 4,34,000/- were returned back with the remarks incomplete address’. 28 donors did not confirm the amount of Rs. 35,33,000/- as having been donated by them. Not satisfied with the explanation tendered by the assessee, the AO held those donations to be ingenuine and accordingly the donation of Rs. 42,76,701/- was added to the total income of the assessee as unexplained cash credits u/s 68 of the Act.
Aggrieved, the assessee went in appeal before the ld. CIT(A) against this addition made by the AO and made various submissions. The ld. CIT(A), after considering the submissions of the ld. AR, arrived at the following conclusion: “I have gone through the order of AO as well as the remand report sent by AO and considered the written submissions, paper book, rejoinders and arguments of the AR carefully. I have also gone through the case laws referred to by the AR. I find that the appellant had disclosed the donation of Rs.68,77,206/- as its income. There was thus full disclosure of income, and the section 68 of the Income-tax Act, 1961 had no application on the facts of the case of appellant, because the appellant had in fact disclosed the donation of Rs.68,77,206/- as its income. In the remand report, the AO has not commented anything on the plethora of evidences/written submissions/case laws submitted by the AR. The appellant has kept complete details of donors such as name, address, PANos., etc. The AR also relied on the provisions of sections 11 of the Income- tax Act. In his submissions, he stated that the trust was granted the exemption u/s 12A and 80G of the Income-tax Act. The Trust received the funds and used as per law. A certificate of M/s V.K. Rekhi & Associates, Chartered Accountants was filed wherein it is certified that the trust has utilized more than 99% of the receipts towards the objects of the Trust and thereby complied with the basic requirements of section 11(2) of the Income-tax Act.
I have carefully considered the facts of the case and the submissions of the ld. AR and also gone through the judgments relied upon by the AR. I have also considered the provisions of section 11, section 12A and section 80G of the Income Tax Act, 1961. In view of the facts of the case and the plethora of evidences/case laws relied upon by the AR, it is held that the appellant has brought enough evidence of records to prove the genuineness of donations. Moreover, the appellant made application of more than 85% of receipts including donation. The addition of Rs.42,76,701/- is not sustainable and is accordingly deleted.”
Before us, the both the rival representatives reiterated their stand taken before the authorities below. The ld. DR relied on the orders of the assessing authority and submitted that the ld. CIT(A) was not justified in giving relief to the assessee. On the other hand, the ld. AR relied on the order the ld. CIT(A) and his submissions made before him.
Having heard the rival submissions and perused the relevant material available on record, we find that when the donors’ details and genuineness of the donations was established by way of filing sufficient evidence on record, then these donations cannot be held as anonymous donations and thus the provisions of section 115BBC of ht Act can be applied. Moreover, when 85% of the amount of donations received was utilize for the purpose and objects of the trust, then no disallowance can be made. Accordingly, finding no merit in the submissions of the ld. DR, we dismiss Ground Nos. 1 and 2 raised by the Revenue.
Coming to Ground No. 3, the brief facts are that during the course of assessment proceedings, it was noticed by the AO that the assessee had received unsecured loan from the following parties:
(i) Shri J.L. Vats Rs. 500000/- (ii) Shri P.K. Bhardwaj Rs. 700000/- (iii) Shri Vivek Sharma Rs. 70000/- (iv) Shri Atul Bhardwaj Rs. 2000000/- The assessee was asked to furnish confirmations, copy of ITR and copy of bank statements of lenders of unsecured loans. The assessee filed confirmations which were incomplete. They did not reflect the nature and source from where these loans were given. Even when the assessee was specifically asked to produce complete bank statements, it failed to do so. In the case of Shri Atul Bhardwaj who had provided a loan of Rs. 20 lakhs, only photocopy of cheque book was given to show that the payment was made by cheque. Accordingly, not satisfied with the explanation tendered by the assessee, the AO added Rs. 32,70,000/-. Aggrieved, the assessee went in appeal before the ld. CIT(A) who deleted the addition of Rs. 32,70,000/-.
Before us also, the rival representatives reiterated the submissions made before the authorities below.
We have heard the rival submissions and have perused the relevant material on record. We find that the ld. CIT(A) has gone through the order of the AO and after considering the written submissions, arguments of both the sides and case laws cited by the AO and the ld. AR came to the conclusion that the AO himself in the remand report has stated that the details as required have been file and he has also stated that he has nothing else to state in the matter of unsecured loans. The AO has thus accepted the unsecured loans. Accordingly the AO deleted the addition of Rs. 32,70,000/-. We also find no infirmity in the finding of the ld. CIT(A) which is quite justified. In the absence of any merits in the ground of appeal raised by the Revenue, we dismiss ground No. 3.
In the result, the appeal of the Revenue stands dismissed. The order is pronounced in the open court on 07.01.2016.