2013 (7) TMI 983 - AT - Income Tax

Summary

Issues Involved:
1. Justification of addition made u/s 68 of the I.T. Act, 1961.
2. Justification of sustaining interest charged u/s 234B and 234C of the I.T. Act, 1961.
3. Contention regarding the assessee being a registered educational society u/s 12A and its income being exempt u/s 11.

Summary:

Issue 1: Justification of Addition Made u/s 68 of the I.T. Act, 1961
The assessee, a registered educational society u/s 12A, questioned the addition of Rs. 140 lacs made by the A.O. u/s 68 of the I.T. Act, 1961, in respect of donations received. The A.O. was not satisfied with the details provided by the assessee, including names, addresses, PAN, and confirmations from donors, and thus made the addition. The CIT(A) upheld this addition. The Tribunal, however, found that the assessee had disclosed the donations and provided a list of donors. It was held that the inability to verify some donors does not imply that the assessee was introducing unaccounted money. The Tribunal cited several precedents, including DIT(E) Vs Keshav Social & Charitable Foundation, where it was held that Section 68 does not apply if donations are disclosed and used for charitable purposes. Consequently, the Tribunal directed the A.O. to delete the addition of Rs. 140 lacs.

Issue 2: Justification of Sustaining Interest Charged u/s 234B and 234C of the I.T. Act, 1961
The assessee also contested the interest charged u/s 234B and 234C, arguing that it could not have anticipated the additions while estimating the current income. The Tribunal noted that this issue is consequential and does not require independent adjudication.

Issue 3: Contention Regarding the Assessee Being a Registered Educational Society u/s 12A and Its Income Being Exempt u/s 11
The assessee argued that it is a registered educational society u/s 12A and that its income is exempt u/s 11 as it fulfills all the conditions of the said section. The Tribunal acknowledged that the assessee is duly registered and that the donations were applied for charitable purposes, thus supporting the assessee's contention.

Conclusion:
The Tribunal allowed the appeal of the assessee, directing the deletion of the Rs. 140 lacs addition made u/s 68 and noting that the interest charged u/s 234B and 234C is consequential. The order was pronounced in July 2013.