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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The assessee has filed an appeal against order of Commissioner of Income-tax (Appeals), Salem, dated 31.12.2013 in for the assessment year 2007-2008 passed u/s.143(3) and 250 of the Income Tax Act, 1961.
ITA No.453/Mds/2014. :- 2 -:
The assessee trust has raised the following grounds of 2. appeals:-
‘’2. The CIT (Appeals) erred in partly sustaining the order of assessment in making addition of unanimous donations u/s 115 BBC of the Act in the computation of taxable total income without assigning proper reasons and justification.
The CIT (Appeals) failed to appreciate that having accepted the fact of the maintenance of the basic record incorporating name of the donors and full address of such donors, the partial sustenance of the assessment of such donations invoking section 115 BBC of the Act was wrong, erroneous, unjustified, incorrect and not sustainable in law.
The CIT (Appeals) failed to appreciate that having impliedly accepted the argument on the error in interpolating the provisions in section 68 of the Act into section 115 BBC of the Act and having verified the availability of the donors' name & full address independently in the assessment proceedings, the partial sustenance of the assessment of such donations invoking section 115 BBC of the Act was wrong, erroneous, unjustified, incorrect and not sustainable in law.
5. The CIT (Appeals) failed to appreciate that the decision cited in para 4.7 would in fact support the case of the Appellant and misreading of the said decision while partly sustaining the assessment of donations u/s 115 BBC of the Act would vitiate his action in this regard.
6. The CIT (Appeals) went wrong in recording the findings in this regard in para 4.8 of the impugned order without assigning proper reasons and justification.
The CIT (Appeals) failed to appreciate that in any event the donations received were shown and admitted as income for computation purposes within the scope of sections 11 to 13 of the Act and further failed to appreciate that having not ITA No.453/Mds/2014. :- 3 -:
questioned the computation of the receipts and application, the separate addition invoking section 115 BBC of the Act was erroneous and invalid.
8. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing the impugned order and any order passed in violation of the principles of natural justice is nullity in law.
The Brief facts of the case that the assessee is registered 3. trust vide No. 250/2005, Dated 5.12.2005 and granted Registration u/Sec. 12AA of the Income Tax Act No.C.No.9755(71) SLM/2005-2006, Dated 19.06.2006 and the assessee filed return of income for assessment year 2007-2008 on 12.10.2007 declaring nil income.
Subsequently, the case was selected for scrutiny through CASS and accordingly notice u/s.143(2) of the Act was issued. In the course of assessment proceedings, the ld.AR of the assessee filed details of activities of the trust, byelaws, and also submitted information from time to time in respect of acquisition of assets, Building construction works and bank account details for verification. In the assessment proceedings, the ld. Assessing Officer has called for books of accounts, vouchers, copy of the 12AA registration certificate and also examined income and expenditure account and called for and the details of hostel rent, student fees, Bank accounts details, TDS returns. The ld. Authorised Representative and the trustees of the trust filed Building
ITA No.453/Mds/2014. :- 4 -: construction plan and produced expenditure pertaining to electrical fittings, Air Conditoners, furniture and lab fittings. The ld. Assessing Officer having verified the information’s has called for inquiry enquiry in respect of donations collected by the Trust during the financial year 2006-2007 for building construction. The assessee in compliance to the directions of ld. Assessing Officer furnished List of donors, receipt books, postal address of Donors. The ld. Assessing Officer had issued letters to the donors to confirm the donation amount and also the source of amount for donation. The information called from the various sources in respect of donors. Most of the donors confirmed and some donors could not confirmed due to change of address and place and letter of confirmation received by the donors but not sent before assessment date. The ld. Assessing Officer came to the unilateral conclusion that the donations are unanimous donations u/sec. 115BC of the Act and made an addition of �1,07,63,000/- and raised the demand. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld. Commissioner of Income Tax (Appeals).
In appellate proceedings, the assessee emphazised 4. statement of facts and grounds raised in respect of additions of donations. The assessee has also filed documents and stated
ITA No.453/Mds/2014. :- 5 -: reasons on each additions alongwith confirmation letters and proof of residence of the donors. The ld. Commissioner of Income Tax (Appeals) relied on the findings of the Assessing Officer and also legal decisions without considering the genuiness of the trust and donations for construction of building for the welfare of the general public and to achieve its objects. The ld. Commissioner of Income Tax (Appeals) overlooked the submissions and made a categorical findings and allowed part relief only to the extent of identified donors and confirmed the Assessing Officer order without considering the confirmation receipts and documents filed. The assessee aggrieved by the order of the ld.CIT(A) filed an appeal before the Tribunal.
The ld. Authorised Representative has submitted that genuiness of the trust is not disputed but Additions are duly supported with evidences and all the donors can be identified and creditworthiness can be proved. The ld. Commissioner of Income Tax (Appeals) sustained the order of the Assessing Officer on unanimous donations u/sec 115BBC without proper reasons and justification though the ld. Commissioner of Income Tax (Appeals) accepted the arguments and satisfied with the names and address of the donors has not passed a reasonable order and institution being educational trust undertakes educational programmes to the society and there was no ITA No.453/Mds/2014. :- 6 -:
proper opportunity was provided by the ld. Commissioner of Income Tax (Appeals) before disposal of appeal and prayed the Tribunal to delete the additions made by the Assessing Officer on merits.
On the other hand, the ld. Departmental Representative relied on the orders of the lower authorities and vehemently argued for dismissal of the appeal.
We have heard the rival submissions of both the parties, 7. perused the materials on record and orders of the lower authorities and judicial decisions cited are of the opinion that there is no dispute about the functioning, activities and genuiness of the trust. The ld. Authorised Representative has rightly pointed out the trust is serving the society by accomplishing their objectives and comply with the social responsibility and the main issue of construction of building is for the benefit of students to persue educational activities. The trust appreciated the donors who came forward and made gracious donations for the construction of the building. But the Assessing Officer on suspicion and surmises has made certain disallowances without verifying the genuiness of the donations and also no proper opportunity was provided before the appellate proceedings to explain each transactions due to several donors residing at different places. It
ITA No.453/Mds/2014. :- 7 -: is also apparent from the facts of the case that assessee has filed detailed submissions and details of donors and in view of this the matter be re-examined and therefore we set aside the order of the Commissioner of Income Tax (Appeals) as there was no proper examination by Assessing Officer and accordingly remit the entire issue back to the file of Assessing Officer with direction to verify genuiness and credit worthiness of the donors after giving opportunity of being heard to the assessee and decide the issue on merits.
In the result, the appeal of the assessee in is partly allowed for statistical purposes.
Order pronounced on Wednesday, the 16th day of December, 2015, at Chennai.