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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI INTURI RAMA RAO, AM & SHRI S. S. VISWANETHRA RAVI, JM
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 2, Kolhapur (‘CIT(A)’ for short) dated 11.10.2019 for the assessment year 2016-17.
The appellant raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case and in law, the Learned C.I.T. [A] erred in confirming the observation and findings of the Ld. Assessing Officer in assessing the total income of the appellant trust at Rs. 2,17,20,000/-, as against the income declared by the appellant in the return of income at Rs. Nil in the return of income. The addition so made being arbitrary, illegal and bad-in-law be deleted.
2. On the facts and in the circumstances of the case and in law, the Learned C.I.T. [A] erred in confirming the observation and findings of the Ld. Assessing Officer in assessing the total income of the appellant trust at Rs. 2,17,20,000/-, as against the income declared by the appellant in the return of income at Rs. Nil, thereby adding the voluntary donations received by the Rs. 2,17,30,000/- as appellant’s anonymous donations within the provisions of section 115BBC of the I. T. Act, 1961, without appreciating the facts that the donors were of different rural villages who were the well-wishers of the appellant trust and made donations for fulfilment of the educational activities of the appellant trust and without allowing proper and reasonable opportunity of being heard to the appellant, merely on the basis of the enquiries made in respect of only 20 donors whose addresses were and identification were also provided to the Assessing Officer, arbitrarily holding that the donations received from 133 donors were anonymous donations in the assessment order. The additions made in respect of all such donations received by the appellant from 133 donors without making any necessary enquiry and proving the same as anonymous within the provisions of section 115BBC of the said Act by the Ld. Assessing Officer and in turn confirming the same by the Ld. CIT(A) in the appellate order since as arbitrary, illegal and bad-in-law be deleted.
3. On the facts and in the circumstances of the case and in law, the Learned C.I.T. [A] erred in confirming the observation and findings of the Ld. Assessing Officer in making addition of Rs. 2,17,33,000/- as anonymous donations received by the appellant u/s. 115BBC despite the facts that the appellant had furnished some of the details and confirmations of the donors along with their identification before the Ld. Assessing Officer and without affording sufficient opportunity to the appellant trust registered u/s. 12A of the I. T. Act, 1961, for obtaining and furnishing such confirmations of donations from the donors, merely on the basis of a partial inquiry made in respect of some of the donors out of a number of donors. The addition so made therefore being arbitrary, illegal and bad-in-law be deleted.
4. On the facts and in the circumstances of the case and in law, the Learned C.I.T. [A] erred in confirming the observation and findings of the Ld. Assessing Officer in respect of addition made of Rs. 2,17,20,000/- as anonymous donation u/s. 115BBC of the Act in spite of the facts that all such donors have necessary identification in the form of PAN Card/ Aadhaar Card/ Voter Card and the donors were not unidentified or anonymous and each and every donor could furnish the confirmations in support of the appellant’s claim of the voluntary donations received by it from the said donors u/s. 2(24)(iia) of the Act and, therefore, in no case the said donations could be held as anonymous donations, as has been held by the lower authorities, without appreciating the facts of such donations and without allowing the appellant to prove the same by providing adequate opportunity during the assessment proceedings. The addition so made u/s. 115BBC of the Act being arbitrary, illegal and bad-in-law be deleted.
5. Without prejudice to the above the appellant contests the addition on the following grounds i. On the facts and in the circumstances of the case and in law, the Learned C.I.T. [A] erred in confirming the observation and findings of the Ld. Assessing Officer without appreciating the facts that the appellant is an educational trust and substantially financed by the Government and therefore its income was qualified for exemption u/s. 10(23C)(iiiab) of the I. T. Act, 1961 and therefore, even if any addition was made, the same also had qualified for exemption under the said section. Therefore, if this aspect had been considered by the lower authorities, neither any addition could be made nor the same was required to be confirmed. The appellant prays for considering the above and delete the addition. ii. On the facts and in the circumstances of the case and in law, the Learned C.I.T. [A] erred in confirming the observation and findings of the Ld. Assessing Officer Without appreciating the facts that the appellant is a charitable trust registered u/s. 12A of the I. T. Act, 1961 by the Commissioner of Income Tax and it has been carrying out the educational activities by running educational institutes in most rural areas in the District of Sangli and the donations were given by a number of well-wishers of the appellant residing in the rural areas who are either farmers or small traders and therefore one sufficient opportunity was provided to the appellant to furnish the necessary confirmations/proofs of identification by the lower authorities of the donors, the appellant could furnish the same and also produce the donors before the lower authorities to substantiate its claim that the donations were genuinely made by them for the cause of the appellant. Therefore, the additions made being arbitrary, illegal and bad-in-law be deleted.
6. The appellant craves leave to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal
, if deemed necessary at the time of hearing of the appeal.”
3. Briefly, the facts of the case are as under :- The appellant is a trust duly registered under the Bombay Public Trust Act, 1950. It was formed for the purpose of promoting of the educational objects. The appellant trust is also duly registered u/s 12AA of the Income Tax Act, 1961 (‘the Act’). The return of income for the assessment year 2016- 17 was filed on 31.03.2017 declaring Nil income. Against the said return of income, the assessment was completed by the Income Tax Officer, Exemption Ward, Kolhapur (‘the Assessing Officer’) vide order dated 27.12.2018 u/s 143(3) of the Act at a total income of Rs.2,17,30,000/-. While doing so, the Assessing Officer brought to tax a sum of Rs.2,17,75,000/- being the donations received during the year under consideration as “anonymous donations”. According to the Assessing Officer, the assessee had failed to prove the genuineness of the donations received as well as the identity and creditworthiness of the donors, accordingly, held that donations are anonymous u/s 115BBC of the Act.
4. Being aggrieved by the above addition, an appeal was preferred before the ld. CIT(A), who vide impugned order considering the information filed during the assessment proceedings held that the appellant society had failed to prove the identity of the donors and, accordingly, upheld the addition u/s 115BBC of the Act.
Being aggrieved, the appellant before us in the present appeal.
It is submitted that the appellant society had discharged the onus cast upon him by filing the necessary details of the donors such as name, address and amount of donations etc. It is further contended that the appellant trust had maintained the record as required under law and information as called for was filed before the lower authorities. Thus, it is contended that the ld. CIT(A) is not justified in upholding the order of the Assessing Officer.
On the other hand, ld. Sr. DR submitted that in the absence of complete details as to the name, address and identity of the donors it was not possible for the Assessing Officer to examine the veracity of the genuineness of the donations received. He further submitted that the information filed by the appellant before the Assessing Officer is just before the assessment was getting time barred. He further submitted that the notices u/s 133(6) of the Act issued to some of the donors have returned un-served with the remarks “Address not found”. He further submitted that the assessee had not filed the complete details, so as to enable the Assessing Officer to carry out necessary verification. He further submitted that during the course of remand proceedings pursuant to the direction of this Tribunal, the appellant trust had filed new set of the information. Therefore, he prayed that the order of the lower authorities should be sustained and no interference is called for.
We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the taxability or otherwise of donations received during the year under consideration. The undisputed facts of the case are that the appellant is a society registered under the Bombay Public Trust Act, 1950 and also registered u/s 12AA of the Act. The appellant trust is set-up with the object of promoting of educational objects. During the year under consideration, the appellant trust had received donations aggregating to Rs.2,17,30,000/- from total 4851 donors an identical amount of Rs.4,501/- was received from each person. Needless to mention that the onus lies upon the assessee to prove the genuineness of the donations received as well as identity of donors.
On perusal of the assessment order, it is clear that the appellant society had not complied with the questionnaire issued u/s 142(1) on 11.09.2018, 26.09.2018. It is only in response to the show-cause notice issued on 03.12.2018 assessee filed certain details before AO. On receipt of the above information, the Assessing Officer attempted to verify the genuineness of the donations by issuing notice u/s 133(6) of the Act on 26 persons/donors on random basis and most of the notices were returned un- served with the remarks “Incomplete address or persons not known”. The assessee was called upon to explain the discrepancies by issue of show-cause notice dated 24.12.2018. In response to which, the assessee had merely stated that for want of sufficient time could not reach the concerned persons and pleaded inability to produce the donors cause personal appearance before the AO. Further, one person/donor, by name Shri Babasaheb Raghunath Dhas, Sangli had appeared before the Assessing Officer in response to summons u/s 131 of the Act who had denied to have made any donation to the appellant society and copy of the statement was also supplied to the appellant society for which no explanation was filed. In these circumstances, the Assessing Officer was constrained to make addition of donations received of Rs.2,17,30,000/- as anonymous donations u/s 115BBC of the Act.
On appeal before the ld. CIT(A) nothing is discernable to show that the appellant society had made any attempt to prove the genuineness of the donations as well as the identity and creditworthiness of the donors. In the circumstances, ld. CIT(A) confirmed the action of the AO.
Even before us, the appellant society had not filed any information stating that the information is so voluminous that it cannot be filed physically in the present pandemic situation. During the course of proceedings before us, we attempted to verify the veracity of information filed before the Assessing Officer by calling for remand report from the Assessing Officer on the following lines :- “(i) The ld. Sr. CIT-DR is requested to furnish the remand report from the Assessing Officer as to (i) whether the assessee trust had maintained the prescribed record in respect of the donations received by it during the financial year 2015-16 ? (ii) Whether the details of donations filed before the Assessing Officer during the assessment proceedings are tallying with the information contained in the record ? (iii) Whether the details contained in the record is complete or not ?”
The Assessing Officer submitted that the assessee had created a new set of record different from one filed during the course of original assessment proceedings. The AO also made remark that information on the assessment records tallies with the record maintained by the appellant society. We are unable to discern the implication of this remark. The allegation of the AO that a new set of record different from the original record was produced before Assessing Officer in remand proceedings remain uncontroverted. The following material facts of case are note worthy :- (i) The appellant society had adopted dilatory tactics during the course of assessment proceedings by not responding to the earlier notices issued u/s 142(1) but filing information just before the assessment was getting time barred. (ii) Improbability of receiving identical amount of donation of Rs.4501/- from 4851 persons. (iii) On random verification carried out by the AO by exercise of power u/s 133(6) of the Act, all the notices have returned un- served with the remarks “Address incomplete/persons not known”. (iv) The appellant society had failed to discharge the onus of rebuttal of the material with which he was confronted before the AO. (v) No attempt was made either before the ld. CIT(A) or before the Tribunal to discharge the onus of proving the transaction of receipt of donations is genuine.
The above facts would show that the transaction of the receipt of the donations is not normal and genuine and militate about the claim of appellant society the transaction of receipt of donations is genuine. It is settled position of law that the burden of proving the genuineness of transaction of receipt of donation is always on the assessee. This burden can be discharged by him be leading necessary evidence or from the circumstantial evidence. In the absence of any positive evidence from the assessee, the AO as well as the appellate authority would be justified applying the test of human probabilities and can draw an adverse inference against the assessee. The reference can be made to the judgement of the Hon’ble Supreme Court in the case of (i) CIT vs. Daulat Ram Rawatmull, 87 ITR 349, (ii) CIT vs. Durga Prasad More, 72 ITR 807 and (iii) CIT vs. P. Mohanakala, 291 ITR 278. In present case, it is highly improbable that an organization can receive donation of identical amount of Rs.4,501/- from total 4851 persons. Therefore, it is fit case to apply the test of human probabilities. No pleadings were made before us as to how it was prevented from filing the correct details before the lower authorities as well as before us. The only plea made before us was that in view of the voluminous of record the information cannot be filed in physical form. Only in order to verify this genuineness of this claim we had called for a remand report from the Assessing Officer pursuant to which the appellant society had filed a new set of information different from what was filed at the time of original assessment proceedings. This conduct of the assessee made us to believe that the information filed during the original assessment proceedings is not correct or incomplete.
Thus, on consideration of the totality of the circumstances of the case, we are of the considered opinion that the transaction of receipt of donation is a sham, a make believe story, a device adopted by the appellant society to bring on record the undisclosed income of the appellant society. Therefore, we do not see any reason to interfere with the orders of the lower authorities.
Perhaps, our view would have been to remand the matter to the AO, had the appellant society not adopted any dilatory tactics before the AO during the course of remand proceedings. We are inclined to believe that the appellant society deliberately adopted the dilatory tactics before the assessing authority with a view to not to enable the AO to carry out the verification so as to satisfy himself about genuineness of the donations received. It is settled principle of law that the assessee-company cannot be given a second innings to make good its case. Reliance can be placed on the following decisions of the Tribunal :- i. Asstt. CIT v. Anima Investment Ltd.[2000] 73 ITD 125 (Delhi) (TM); ii. Asstt. CIT v. Arunodoi Apartments (P.) Ltd. [2002] 123 Taxman 48 (Gauhati) The Courts have held that appeals are not to be decided for giving 'one more innings' to the lower authorities in the appellate jurisdiction. i. Rajesh Babubhai Damania v. CIT[2001] 251 ITR 541/[2002] 122 Taxman 614 (Guj.) ii. CIT v. Harikishan Jethalal Patel[1987] 168 ITR 472/33 Taxman 217 (Guj.)Remand not for the benefit of the party seeking it to fill up gaps.
Even the Hon'ble Karnataka High Court in the case of Karnataka Wakf Board v. State of Karnataka, reported in AIR 1996 Kar.55 at pages 63 & 64 held as under: "Where the party had an opportunity of adducing evidence in the case but with open eyes failed to adduce that evidence, the case should not be remanded to give a second chance to the party to adduce that evidence. The policy of the law is that once that matter has been fairly tried between the parties, it should not, except in special circumstances, be reopened and retrieved. In a recent decision their Lordships of the Supreme Court laid down that power to order retrial after remand, where there had already been a trial on evidence before the court of first instance, cannot be exercised merely because the Appellate Court is of the view that the parties who could lead better evidence in the Courts of first instance have failed to do so."