1971 (4) TMI 9 - HC - Income Tax

Offerings made at the feet of the Satguru - whether exemption can be given u/s 4(3)(ii) of Indian Income-tax Act 1922

Summary

Issues Involved:
1. Whether the offerings made at the feet of 'Satguru' were personal income liable to income-tax or income of Sant Nirankari Mandal exempt under section 4(3) of the Income-tax Act, 1922.

Detailed Analysis:

Issue 1: Taxability of Offerings Made at the Feet of 'Satguru'

Facts and Background:
The assessee, Shri Baba Avtar Singh Nirankari, is the religious head of the Nirankari sect. Followers offer monetary gifts at his feet, separate from donations made to Sant Nirankari Mandal, a registered body for propagating the Nirankari cult and charitable purposes. The Income-tax Officer considered these offerings as personal income of the assessee and issued notices under section 34(1)(a) of the Income-tax Act, 1922, and section 139(2) of the Income-tax Act, 1961, for various assessment years.

Tribunal's Findings:
The Income-tax Appellate Tribunal found that:
1. The assessee had no personal interest in the offerings; they belonged to the institution.
2. Receipts for offerings explicitly stated they were for Sant Nirankari Mandal.
3. Offerings were intended for the Mandal, not for personal use.
4. Separate accounts for offerings did not clarify ownership but indicated the ultimate destination was the Mandal.

Legal Arguments:
- For the Assessee:
- The Tribunal's factual findings are binding, and the High Court must accept them. The Supreme Court's decisions in Commissioner of Income-tax v. Imperial Chemical Industries (India) (P.) Ltd. and other cases support this view.
- The offerings should be exempt under section 4(3)(ii) of the Income-tax Act, 1922, as they were meant for a charitable institution.

- For the Revenue:
- The Tribunal's findings were not positive findings of fact but mere reproductions of the assessee's statements.
- The offerings were used for personal expenses, indicating they were personal income.
- The Tribunal's reliance on the receipt's language was misplaced as it was an ex post facto document.

Court's Analysis:
The court held:
- The Tribunal's findings of fact, supported by evidence, cannot be set aside unless expressly challenged under sections 66(1) or 66(2) of the Act.
- The Tribunal had the right to accept the assessee's statements and receipts as evidence.
- The court cannot reject the Tribunal's findings unless there is no evidence supporting them.

Relevant Case Law:
- Commissioner of Income-tax v. Imperial Chemical Industries (India) (P.) Ltd.: High Court must accept Tribunal's findings of fact.
- M. Ganapathi Mudaliar and Great Western Railway v. Bater: Tribunal's factual findings are binding if supported by evidence.
- Gouri Prasad Bagaria v. Commissioner of Income-tax: Statements by the assessee can be material evidence.
- Shree Meenakshi Mills Ltd. v. Commissioner of Income-tax: Cumulative effect of facts must be considered.

Conclusion:
The court concluded that the offerings made at the feet of the Satguru were meant for Sant Nirankari Mandal and were exempt under section 4(3) of the Income-tax Act, 1922. The Tribunal's decision was upheld, and the question was answered in favor of the assessee. The offerings were to be treated as the income of Sant Nirankari Mandal, exempt from income tax.

Final Observations:
The court noted that while the offerings in this case were exempt, the taxing authorities should examine similar facts in future cases to determine tax liability. The matter was decided in favor of the assessee, with no order as to costs.