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Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW
A.Y. 2017-18 M/s Drishti Ek Pahal Samajik ITO, Sanstha, Vijaulia Road, Near College vs. Exemption Ward, Field, Nawabganj, Bareilly -243001 Bareilly PAN:AABAD7406P (Appellant) (Respondent) Assessee by: Sh. B.P. Yadav, Advocate Revenue by: Sh. Sunil Kumar Rajwanshi, Addl CIT DR Date of hearing: 29.08.2024 Date of pronouncement: 25.10.2024 O R D E R
PER SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER:
This is an appeal against the order of the ld. CIT(A) dated 15.12.2022, passed under section 250 of the Income Tax Act, wherein the ld. CIT(A) has dismissed the appeal of the assessee against the order of the ITO (Exemption), Ward-Bareilly, passed under section 144 of the I.T. Act, on 18.11.2019. The grounds of appeal
preferred are as under:- “1. The Learned Income Tax Officer, Exemption ward, Bareilly erred on facts and in law in passing the present assessment order which is null and void on the ground that the selection of the case of the appellant was made under CASS for scrutiny assessment in gross violation of the guidelines laid down by the CBDT for selection of the cases under scrutiny assessment.
2. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as the Ld. CIT(A)] erred 1 A.Y. :2017-18 M/s Drishti Ek Pahal Samajik Sanstha on facts and in law confirming the addition of Rs. 17,17,652/-made by the Learned Assessing Officer by wrongly holding that the details of donors submitted by the appellant were not complete.
3. On the undernoted facts the Ld. CIT(A) was not at all justified in confirming the addition of Rs.17,17,652/-made by the Assessing Officer to the returned income of the appellant. Because the appellant furnished complete details of the donors of aggregating to Rs. 17,17,652/- and hence there was no occasion at all to treat the donations as anonymous donation as provided u/s 115 BBC of the Act. Because in case the Ld. CIT(A) was of the opinion that the details of the donors were not complete, he/she should have confronted query in this regard to the appellant. Because the Income Tax Authority including the office of the Ld. CIT(A) are empowered with the provisions of section 133(6) /131 of the Act and the genuineness of the donations could have verified by way of issuing notice u/s 131/133(6) of the Act to the donors before treating the donation as anonymous donations. Because the gross receipts of Rs. 17,17,652/-except surplus of Rs.30,782/-were utilized wholly and exclusively for the purposes of the educational / charitable activities being carried on by the appellant and there has not been any contrary findings on the utilization of the receipts in the assessment order.
4. Without prejudice to the grounds no 1 to 3 above, While confirming the addition of Rs.17,17,652/-, the Ld. CIT(A) was not at all justified by not appreciating the fact and the law that only the surplus amount of Rs.30,782/-would liable to be taxed in the hands of the appellant on the ground that the utilization of the receipts have been accepted by the assessing officer as genuine and incurred and paid wholly and exclusively for the purposes of the activities being carried on by the appellant as there has not been any contrary finding in the assessment order, even if the appellant society is not registered u/s 12A of the Act.
A.Y. :2017-18 M/s Drishti Ek Pahal Samajik Sanstha 5. The Ld. A.O. erred on facts and in law in charging interest u/s 234A, 234B and 234C of the I.T.Act, 1961 which are exorbitant and arbitrary.
The Ld. CIT(A) erred on facts and in law in not providing the appellant reasonable opportunity to have his say and to make compliance of the reasons being relied upon by him while creating tax demand against the assessee.
7. The appellant reserves his right to advance such other grounds before or at the time of hearing which he may consider fit and appropriate, for which he craves leaves to amend, alter or otherwise modify the grounds appearing hereinabove with kind permission of the Hon'ble Bench.”
The facts of the case are that the assessee filed a return of income for the assessment year 2017-18, declaring a total income of Nil, after claiming exemption under section 10(23C)(iv) and section 11 of the Income Tax Act, 1961. An online audit report was filed on 5.10.2018. In the return of income, the assessee claimed that the registration under section 12A was granted to the society on 2.02.2018. The case was selected for scrutiny and relevant notices were issued. During the course of scrutiny assessment, it emerged that no registration under section 12AA of the Act had been granted to the society. The ld. AO observed that during the year under consideration, the assessee had shown an excess of income over expenditure in its income and expenditure account to the extent of Rs. 30,782/-. The assessee had also shown receipts from, “donation and subscription” of Rs.17,17,652/-. The ld. AO observed that the activity of the society was providing computer training to the weaker section of the society and creating awareness regarding education via camps, posters and other campaigns, as also distribution of cloths to the needy persons. It was further submitted that the assessee had claimed exemption under section 11 of the Act. The ld. AO observed that the assessee had not furnished the list of donors along with donation slips / ID proof as requested by the ld. AO. Therefore, the ld. AO issued a show cause notice, as to why donation shown in the A.Y. :2017-18 M/s Drishti Ek Pahal Samajik Sanstha income and expenditure account to the tune of Rs.17,17,652/- , may not be added back to its income, as anonymous donations under the provisions of section 115BBC of the Income Tax Act. The assessee did not make any compliance and therefore, the ld. AO added the said amount to the income of the assessee and brought it to tax. Penalty notice under section 270A was also issued.
Aggrieved by this addition, the assessee filed an appeal before the ld. CIT(A). Before the ld. CIT(A), it was submitted that the assessee was an Association of Persons, engaged in the activity of providing computer training to the weaker section of the society. It was registered with the Registrar of Society, U.P. vide registration certificate no. B-42231. Along with the Form No. 35, the assessee submitted a list of donors, from which it had received the donations of Rs.17,17,652/- and when the notice under section 250 was issued to it, it submitted a reply stating that it had already submitted the documents for this appeal. The ld. CIT(A) observed that this list only contained a name and an amount, with incomplete address of alleged donors, without the PAN number and without the mode of receipt of donation. No receipts / acknowledgement of these donations were filed, so as to see whether these were genuine or not. The list submitted by the assessee was not amenable to verification and therefore, the ld. CIT(A) concluded that the entire exercise appears to be fabricated, so as to substantiate the claim which cannot be accepted, until these are backed with some authentic or concrete evidence. Accordingly, he dismissed the appeal of the assessee and confirmed the addition of Rs. 17,17,652/-.
The assessee is aggrieved at this decision of the ld. CIT(A). It was again claimed, that it was claiming exemption under section 10(23C)(iv) of the Income Tax Act, 1961. It was submitted that the assessee could not provide the details before the ld. AO, because it was in the process of compilation of details and, in the meanwhile, the assessment order was passed on 18.11.2019. It was, therefore, A.Y. :2017-18 M/s Drishti Ek Pahal Samajik Sanstha submitted that the appellant had not been provided with the reasonable opportunity to provide the details of donations. It was further submitted that being aggrieved by the said order, the assessee had filed an appeal with the ld. CIT(A) and during the course of appeal proceedings, it had filed a complete details of donors. But the ld. CIT(A) had confirmed the addition by holding that the details were not complete.
Shri. B.P. Yadav, Advocate (hereinafter referred to as the “ld AR”) appearing on behalf of the assessee took us through the grounds of appeal
and pointed that there was no reason to take the donations as anonymous donations under section 115BBC of the Act. It was submitted that, if the ld. CIT(A) felt that the details of the donors were not complete, he could have confronted the query in this regard to the appellant and he could have made further verification, by way of issue of notice under section 131/133(6) of the Income Tax Act. It was submitted that the entire receipts of Rs.17,17,652/- except the surplus of Rs.30,782/-, was being utilized wholly and exclusively for the purposes of educational and charitable activities being carried out by the assessee and, there had not been any contrary findings on utilization of receipts in the assessment order. It was, therefore, submitted that only the surplus amount of Rs.30,782/-, was liable to be taxed as surplus in the hands of the assessee since the remaining amount had been incurred on activities wholly and exclusively for the purposes of the objective of the assessee society. The ld. Advocate also challenged the imposition of interest under section 234A, 234B & 234C which he held to be exhorbitant and arbitrary. Finally, it was submitted that the ld. CIT(A) had not provided the assessee reasonable opportunity to have his say and make compliance of the reasons being relied upon him, before dismissing his appeal.
6. On the other hand, Shri. Sunil Kumar Rajwanshi, ld. Sr. DR (hereinafter referred to as the “ld. DR) submitted that ample opportunities had been provided to the assessee by both the ld. AO and the ld. CIT(A), but the assessee had not availed A.Y. :2017-18 M/s Drishti Ek Pahal Samajik Sanstha these opportunities. Therefore, considering that the assessee has first claimed exemption and then only come up with the truth during the course of scrutiny, further opportunity was not desirable and the addition should be confirmed.
We have duly considered the facts and circumstances of the case. We observe that the ld. AO has not, at any point of time, stated that the funds of the society were not being spent on account of providing computer education to weaker sections or promoting educational awareness, distribution of cloths and masses etc,. The only point of addition was the fact that the ld. AO, on 24.10.2019, had asked the assessee to submit the details of donors and since the assessee was unable to submit the details within the given time frame, had added back the donations applying the provisions of section 115BBC of the Income Tax Act, 1961. We also observe that along with the grounds of appeal
to the ld. CIT(A), the assessee had furnished a list of donors, along with the amounts and when was issued a notice by the ld. CIT(A) stated that it had already submitted the documents. It appears that the ld. CIT(A) did not feel it worthwhile to ask the assessee to furnish further details, which would make the information submitted by it verifiable. Instead he dismissed the appeal. In view of the assessee’s plea, that if the details were insufficient, it should have been served with a notice pointing out the insufficiency and given an opportunity to rectify the shortcoming , we restore the matter back to the file of the ld. CIT(A) with a direction to the assessee, to furnish the complete details of donations including name, PAN / Aadhar number of donors, complete address, details of mode of receipt of donation and amount of donation received from each party, so that the ld. CIT(A) may cause enquiry on the matter and decide the issue on merits. We would like to caution the assessee that, in the event of any failure to make compliance in accordance with the aforesaid terms, the ld. CIT(A) would be justified in concluding that the assessee had no further information to offer and accordingly the donations would be liable to be brought to tax under section 115BBC of the Income Tax Act, 1961. As we have restored the matter back to the file of the ld. CIT(A) for a fresh 6 A.Y. :2017-18 M/s Drishti Ek Pahal Samajik Sanstha decision in the interest of justice, the appeal of the assessee is deemed to be allowed for statistical purposes.
8. In the result, the appeal of the assessee is allowed statistical purposes. Order pronounced on 25.10.2024 at Allahabad, U.P.