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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC -1’, NEW DELHI
ORDER PER S.V.Mehrotra, A.M.
This is an appeal filed by the Assessee against the order dated 23.10.2013 of the Ld. CIT(A)-XXI, New Delhi.
As per the report of registry, this appeal is time barred by 32 days. The assessee has filed a petition for condonation of delay wherein it is stated as under : “The office premises of the society at 10/4, East Punjabi Bagh, New Delhi-110026 belong to Mr. Nand Kishore Garg, President of the society who also conducts his personal activities from that office premises.
2 Vivek Gyan Uday Foundation During the period of last week of October, 2013, when the order was sent by the Office of CIT(A), very hectic activities were going on at the office and lot many people were gathering at that place as Mr. Nand Kishore Garg was one of the candidates contesting Elections to Delhi Assembly held in December, 2013. During that time, the order sent by the Office of CIT(A) through registered post/speed post was received by some unconcerned person who could not bring it to the notice of Mr. Garg at that time. The envelope got mixed up with election material. When the notice for recovery of dues was received from the department in second week of January 2014, enquiry was made by the society at the office of CIT(A) and at that point of time it learnt about the said order. Therefore the envelope containing the order was searched at the office and got located.”
After hearing both the parties, we are of the opinion that in view of the reasons stated in the petition, reproduced above, the assessee was prevented by reasonable cause from filing the appeal within time and, therefore, we condone the delay in filing the appeal and proceed to decide the appeal on merits. The assessee has raised following grounds of appeal -:
1. “The learned C.I.T.(A) erred on facts and under the law in sustaining the action of A.O. in imposing penalty of Rs. 1,85,400/- u/s 271(1)(c) of the Income Tax Act, 1961. Various observations made by the learned C.I.T.(A) while sustaining the penalty imposed are arbitrary, unjust and are not legally 3 Vivek Gyan Uday Foundation tenable. The facts circumstances and legal position as submitted were not properly appreciated.
2. The learned C.I.T.(A) erred on facts and under the law in sustaining the action of A.O. in imposing said penalty u/s 271(1)(c) and not properly appreciating the surrender of corpus donation made bythe assessee during assessment to buy peace and to avoid litigation. The surrender was made as the assessee was not able to submit the documents from the concerned donor and also could not ensure his personal attendance during assessment proceedings. Various observations made by the learned C.I.T.(A) while sustaining the penalty imposed are arbitrary, unjust and are not legally tenable. The facts, circumstances and legal position as submitted were not correctly appreciated.”
Brief facts apropos this issue are that assessee, registered u/s 12A of the Act vide order dated 26 October, 2004 no. DIT(E)/2004-05/V-596/04/980 filed its return showing nil income accompanied with audit report in Form no. 10B and form no. 10 for accumulation u/s 11(2) of IT Act, 1961. The Assessing Officer examined the claim of corpus donation / land and building fund aggregating to Rs. 46,58,000/- and corpus fund receipt during the year of Rs. 22,000/-. The assessee submitted list of corpus donors of Rs. 46,58,000/- and also submitted the evidence for it being corpus donations. However, as regards the corpus donation from Mr. Rajinder Singh, no confirmation was filed in course of assessment proceedings. As no confirmation was filed, the Assessing Officer required the assessee to produce Mr. Rajinder Singh by 21st December,
4 Vivek Gyan Uday Foundation 2010. On 21st December, 2010 the assessee appeared and filed following reply –: “Further to our letter dated 15.12.2010. The assessee has made and is still making all possible efforts to get the required information from Mr. Rajinder Singh and to ensure his personal attendance. The assessment proceedings are presently at the fag end and not much time is left for its statutory completion which is 31.12.2010. It is seeming unlikely that the information and personal attendance of Mr. Rajinder Singh could be arranged with in the left over time. More so, to avoid any legal confrontation and to by peace and harmony, the assessee wish to surrender the amount of corpus donation of Rs. 6,00,000/- received from Mr. Rajinder Singh. Please accept the same.”
The assessing officer concluded that the assessee was not able to prove the identity of individual from whom Rs. 6,00,000/- had been credited to the account of the assessee as no confirmation had been filed for the same. He further observed that since no confirmation of Rs. 22,000/- for corpus fund had been filed, therefore, it was not possible to establish the identity of contributors of Rs. 22,000/-. He, accordingly, invoked section 115BBC and taxed the sum of Rs. 6,22,000/- at maximum marginal rate. The Assessing Officer initiated penalty proceedings and, after considering various case laws on the issue of onus being on assessee to substantiate its claim, levied the penalty of Rs. 1,85,400/- for furnishing inaccurate particulars of its income. Ld. CIT(A) confirmed the penalty.
5 Vivek Gyan Uday Foundation 6. Ld. Counsel submitted that the corpus fund donation was received through account payee cheque and all details were submitted before the Assessing Officer. He submitted that inspite of best efforts of assessee, the confirmation could not be filed as donor was not available at the given address. He pointed out that assessee had given address before the AO vide its letter dated 15.12.2010 contained at page no. 18 of paper book, and further, vide letter dated 21.12.2010, contained at page no. 17 of paper book, surrendered the amount to avoid any legal confrontation and to buy peace and harmony. This was accepted by AO Ld. Counsel relied on following decisions in support of its contention that when assessee had furnished all the necessary details before AO and explanation offered by assessee was bona fide, then no penalty is leviable (a) CIT vs. S. Dhanabal [2009] 309 ITR 268 (Delhi) (b) CIT vs. Shahabad Co-op. Sugar Mills Ltd. [2010] 322 ITR 73 (P&H) (c) CIT vs. Ashim Kumar Agarwal & Another, 275 ITR 48 (Jharkhand) (d) CIT vs. S D Rice Mills 275 ITR 206 (P&H) (e) K C Builders vs. Asstt. CIT 265 ITR 562 (SC) (f) SPS Steel & Power Ltd. & 1414/Kol/2011.
Ld. DR relied on the order of CIT(A).
I have considered the submissions of both the parties and have perused the record of the appeal. The facts are not disputed. The only issue for consideration is whether the assessee’s claim was bona fide or not. It is pertinent to note that the assessing officer had called for the details of corpus donations aggregating to Rs. 46,58,000/- out of which the dispute centered only to Rs. 6,00,000/-.
6 Vivek Gyan Uday Foundation 8. As regards the sum of Rs. 6,00,000/- received by assessee, the assessee had given the details of Rajinder Singh vide letter dated 15.12.2010 ( Page 18 of Paper Book) on record and had fairly admitted vide letter dated 21.12.2010 (Page 17 of Paper Book ) that assessee was not in a position to obtain the confirmation as the assessment proceedings were at the fag end and not much time was left for completion of assessment by 31.12.2010. After getting details the assessing officer could obtain information u/s 133(6) but that was not done, probably because very short time was left for completion of assessment and, adverse conclusion was drawn by him that assessee had furnished inaccurate particulars of income. Considering the shortage of time left with the assessee, the bona fide of assessee in conceding the corpus donation as general donation cannot be doubted. The assessee’s explanation was not found false by assessing officer. The assessee had furnished all necessary details in regard to the individual. It is not disputed that amount was received by account payee cheque and, therefore, AO could call for information from bank also.
Under such circumstances, the observations of ld. CIT(A) that assessee made a false claim cannot be sustained. I, therefore, set aside the order of ld. CIT(A) sustaining the penalty.
In the result the assessee’s appeal is allowed. (Order Pronounced in the Court on 05/01/2016).