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TMI Blog2014 (1) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... dusInd., Preet Vihar 13.12.2004 5,00,000/- 735515 Shree Packers - do - The assessee has shown corpus donation received during the year of Rs.1,31,13,000/-. This also includes the amount of Rs.8,50,000/- which was alleged to have been accommodation entries. The Assessing Officer denied the benefit of sections 11 & 12 of the Act in respect of corpus donation and added the same to the income of the assessee. The CIT (A) confirmed this addition by holding as under :- " The assessee has shown to have received Corpus Donation of Rs.1,31,13,000/- which is inclusive of amounts received from entry operators. Moreover as the donations have not been routed through income and expenditure account so there is no question of double addition as stated by the assessee in his reply dated 18/02/2013. The assessee could not prove the genuineness of the transaction either before the Assessing Officer or during the appellate proceedings copies of bank statement by not producing the genuineness of the transaction hence source was not explained was not proved and in others. In spite of the summons being issued the parties never appeared before the A.O. as stated in the Remand report. As assessee has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re missing. (ii) Without prejudice to the above and in the alternative learned CIT (A) has erred both on the facts and in law in giving a contradictory finding to the effect that the income does not belong to the assessee trust and at the same time assessing it. 5. That the orders passed by learned CIT (A) and learned Assessing Officer are against the principles of natural justice. 6. That the appellant craves leave to add, to alter, to withdraw, to amend any of the above grounds of appeal before or at the time of the hearing of the appeal." 4. Ground Nos.1, 5 & 6 are general in nature and do not require any adjudication, hence dismissed. Ground Nos.2(i) to 2 (iii) are related to reopening the proceedings u/s 147 of the Income-tax Act, 1961. The same were not pressed, hence the same are dismissed as not prosecuted. 5. Ground Nos.3, 3(i) to 3(iv) and 4(i) & 4(ii) are with regard to not allowing exemption u/s 11 of the Act and addition u/s 68 of the Income-tax Act, 1961. 6. While pleading on behalf of the assessee, ld. AR submitted that once the Trust is registered u/s 12AA of the Act by the CIT then this registration certificate cannot be ignored by Assessing Officer by adopti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aunaq Education Foundation - 294 ITR 76 (Delhi) : For the proposition that where the assessee is entitled to exemption u/s 10(22) of the Income-tax Act, 1961 can claim the benefit thereof for the purpose of income deemed to be chargeable to tax u/s 68 of the Income-tax Act, 1961. He submitted that it is now a well settled principle of law that although the exemption provisions are to be construed strictly as regards the applicability thereof to the case of the assessee once it is found that the same is applicable, the same are required to be interpreted liberally. He also submitted that it is also trite law that an exemption is to be granted unless it is expressly taken away. (iv) Director of Income-tax (Exemption) vs. Keshav Social & Charitable Foundation - 278 ITR 152 (Delhi) : For the proposition that the assessee is a charitable trust has disclosed donations received by it as its income and spent 75% of the amount for charitable purposes and on failure of assessee to furnish details of donations, Assessing Officer treated that amount as cash credit u/s 68 and benefit u/s 11 was denied. In these facts, when the complete list of donors was not filed or that donors were not pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 lacs from Shree Packers vide cheque no.735515 dated 13.12.2004. The Assessing Officer issued notice u/s 148 after recording the reasons. The Assessing Officer issued letters u/s 133(6) of the Income-tax Act, 1961 to these two persons from whom the assessee has shown the receipts. These letters were returned with the remarks "incomplete address". The Assessing Officer also issued summons u/s 131 for requisitioning the bank accounts of these two persons. On the basis of these enquiries, the Assessing Officer held that total corpus donation of Rs.1,31,13,000/- inclusive of the aforesaid two amounts were from entry providers, therefore, benefit u/s 11 & 12 to that extent was not allowed and the amounts were added to the income. The CIT (A) got enquiry conducted to verify the genuineness and creditworthiness of the donors and a remand report was called. From this remand report, it is clear that four of the donors were made themselves available before the Assessing Officer for recording the statement and 13 persons have replied to the query raised by the Assessing Officer in the remand proceedings. Since the assessee has complied with the requirements of Assessing Officer during the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f registration under section 12AA of the Act, denotes, as per the Legislative scheme, that the conditions laid down under section 12A of the Act, stand fulfilled. The effect of such a certificate of registration under section 12AA of the Act, therefore, cannot be ignored or wished away by the AO by adopting a stand that the trust or institution is not fulfilling the conditions for applicability of sections 11 and 12 of the Act. It is, thus, absolutely clear that the AO is not entitled to go into the issue whether the trust fulfils the conditions for the applicability of sections 11 and 12 of the Act. It may be clarified here that once registration has been granted by the CIT under section 12AA of the Act to a trust / institution, the same can be cancelled only by the CIT under the provisions of section 12AA(3) of the Act and the AO has absolutely no power to deny the benefits of sections 11 and 12, to the trust / institution, during the continuance of the aforesaid registration under section 12AA of the Act. It is, thus, clearly established that there is a major flaw in the impugned assessment order passed by the AO for the AY 2004-05. 2. Besides, the AO has not treated the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. On appeal before the High Court, dismissing the appeal of the Department, it was held that to obtain the benefit of exemption under section 11 of the Act, the assessee was required to show that the donations was voluntary. In the present case, the assessee had not only disclosed its donations, but it also submitted a list of donors. The fact that the complete list of donors had not been filed or that the donors had not been produced did not necessarily lead to the inference that the assessee had tried to introduce unaccounted money, by way of donation receipts. Section 68 of the Act had no application to the facts of the case, because the assessee had in fact disclosed donation of Rs.18,24,200 as its income. (iv) DIT(E) Vs Sri Belimatha Mahasamsthana Socio Cultural and Educational Trust [2011] 336 ITR 694 (Karn) It was, inter alia, held in this case that the assessee had received corporate donations, but failed to furnish names and addresses of donors. The donations had been utilized for charitable purpose and therefore, the assessee was entitled to the benefit of deduction under section 11 of the Act. In the light of the aforesaid legal precedents, the AO could not have rej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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