9911796707
TMI Blog2014 (1) TMI 1685X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorities below or even before us. The accounts have been admitted, not to have been audited under any law. No 80G(5) approval from the prescribed authority has been taken and has not been placed on record. We concur with the findings of the ld. CIT(A) that the entire collections of Dera are solely managed and controlled by one Mukh Sewadar according to his own will and wish and even the collection certificates are stereo-typed without bearing any authentication, complete particulars like PAN etc. No attempt has been made to produce any of the so-called donors confirming the donations. The pertinent point which is on record before both the authorities below and as pointed out by the Ld. DR that various bank accounts are in the sole name of Mukh Sewadar, Mr, Makhan Singh, without indicating any adverse eventuality and even the nominations are executed in favour of his own son by Mr. Makhan Singh leading to the clear indication and safe presumption that due to any unforeseen unpleasant mishap with the assessee, the credit balance balances will go to assessee s own son being legal successor and not to the DERA. Nothing has been brought on record and nothing has been proved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Act. It has not been substantiated before any of the authorities below or even before us that these bank accounts in the name of the assessee were, in fact, the bank accounts of Dera Sant Amir Singh Ji or these were opened on the basis of some documents of Gaddi Nashin. The Bank accounts clearly show that the same have been opened in the personal name of the assessee. Moreover, the ld. counsel for the assessee throughout the arguments has not made any submission as to why the son of the assessee has been appointed as the nominee in the Bank account opened in the name of the assessee. Simply arguing that the Bank account is being operated to undertake and perform the duty of the Dera as Care-taker will not suffice and cannot prove the dual status of the assessee, as claimed. As regards the explanation to section 2(24)(iia) regarding deemed trust under a legal obligation , the assessee has not proved any of its claim. - Decided against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... e same was followed by notices u/s 139C(1)/139(D)(C) of the Act and in response to it, the assessee categorically filed copy of his income & expenditure a/c & other documents but stated that no bank account is maintained by him in his own name. In response to subsequent notices u/s 142(1)/142(2), the AO considered assessee's reply dt. 15.6.11 with declaration, by incorporating the same in his asstt. order. Assessee's representative was confronted with SB A/c with HDFC Bank, Golden Temple, Amritsar, in which huge cash was deposited and was asked to explain the source of such cash deposits and in response thereto, the assessee replied vide his letter dt. 29.7.11 stating therein that the assessee is a Sewadar of old historic dera and is engaged in charitable and religious activities which care being carried with the help of funds/donations collected from general public and are deposited in the bank account. Vide supplementary reply dated 25.6.2011 it was stated that the bank account of Sant Baba Makhan Singh as Sewadar of Dera Sant Amir Singh Ji are maintained with City Bank, HDFC Bank, P & S Bank and SBI. During the year under consideration, he had undertaken a project to donate gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts u/s 11. Further, as regards the so called corpus the same has not been fully substantiated. No certificate u/s 80G(5) produced so as to establish its donations eligible for deduction u/s 80G. Nor it is the appellant's case that the appellant has spent 85% of the corpus funds and as such qualify for deduction u/s 11 etc. The collection of the Dera exceeded the limit prescribed u/s 44AB but the accounts are neither got audited nor supported by any audit report. Even various confirmations furnished before the AO are stereo-type ones indicating cash donataions ranging from ₹ 100, ₹ 2000, ₹ 3100, ₹ 5000, ₹ 5100, ₹ 10,000/-, ₹ 11,000, ₹ 15,000, ₹ 21,000. Further, it is not the appellant's case that its annua The appellant's plea that he is a preacher performing katha/kirtan darbar/religious celebrations and funds were collected from time to time by pursuing the public, participants, audience to make donations/contributions did not find favour with the AO as he was of the confirmed view that it constitutes income from business profession or vocation as defined in section2 (36) of the Act by rebutting the case laws relied by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or comments. The Ld. CIT(A) after considering the remand report of the AO and the comments of the assessee confirmed the action of the AO and the relevant findings for the sake of convenience are reproduced as under: "7. I have carefully considered the appellant's written submissions, rebuttals to AO's remand report and have gone into AO's assessment order under appeal as well as comments given in the remand report of the present AO. The present appeal is hereby disposed by giving ground of appeal wise adjudication as under: 8. Grounds of appeal No. 1 to 12 except ground of appeal No.10 being inter-connected, co-related with each other are taken up together for the sake of convenience. The first and primary question to be decided as to whether the 100 year's old institution under the name & style of "Dera Sant Amir Singh" managed by a Mukh Sewadar/Caretaker can be treated as regarded as purely charitable or religious trust. This office is only concerned with the relevant provisions of Section allowing the benefit of exemption for the purely charitable/religious trusts. It is a matter of record that neither any trust deed, specifying its constitution, members, constituents Gurudwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sewadar's son, legal successor. 8. During the appellant proceedings, the ld. counsel failed to substantiate the claim that the Dera was virtually functioning for the betterment of poor, needy, in general and that Dera is carrying out various charitable & religious activities like religious processions, karsewa etc. by utilizing the donations contributed by general public/sangat at large, which are its specified aims and objectives laid down in any articles of association etc. It is not the case that the Dera is affiliated with respectable & Hon'ble SGPC; Sri Harminder Sahib, Sri Takhat Hazur Sahib, Sri Hem Kund Sahib and son on. 8 Even the AO has established the fact that the funds of the Dera are man times have been diverted for meeting the personal ends of Mukh Sewadar as evident from numerous personal withdrawals. The Ld. AR except furnishing the pedictree history of the Dera has failed to furnish any order of any IT authority whereby the Dera has ever been allowed exemption under the Act. 9) Even as held by the AO, bank withdrawals also represented appellants investment in purchasing his personal life insurance policies and towards purchase of gas connections/cylinders etc a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be quite pertinent to hold that while computing the appellant's taxable income, the AO's action adding back declared in the receipt payment account amounting to ₹ 37,09,090/- is also liable to be confirmed, since the appellant's entire income is taxable, therefore, the question of allowing set off of declared loss of ₹ 37,09,090/- as claimed by the appellant becomes irrelevant and question in this regard does not arise and as such the ground of appeal No.2 is hereby rejected accordingly. 8.2. However, as far as disallowance made @ 1/5th of certain heads of expenses for undenying personal element involved therein, it would be in the fitness of things, in all fairness and in order to meet the ends of justice, it would suffice by restricting the rate of disallowance from 20% to 1/6th as the deduction made by the AO @ 1/th seems to be somewhat on the higher side. In this way, the appellant would be entitled to a relief as worked out below No. Exp.Head Exp.claimed 1/5th disallow Restricted @ 1/6th Relief allowed 1. Telephone 35463 7092 5910 1182 2. Veh. Exps. 387985 77597 64664 12933 3. Travelling 84953 16990 14159 2831 Total relied allowed 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onations contributed by general public/sangat at large. The donations received by "Sant Makhan Singh Mukh Sewadar" are also deposited in Bank Accounts. Although these Bank Accounts are in the name of Sant Makhan Singh but the same are in fact bank accounts of "Dera Sant Amir Singh". This fact is also mentioned in the Bank Account itself. The assessee, Sant Makhan Singh is merely operating the Bank account to undertake and perform the duties of the Dera as a Caretaker. This is evident from the Copies of Bank Accounts filed in the paper book at (pages 6 to 34). It is submitted that the AO and the ld. CIT(A) have not appreciated about the dual status of the assessee. One as a preacher and other as Mukh Sewadar/caretaker of "Dera Sant Amir Singh" . The assessee has filed his income tax return separately as a preacher i.e. for income earned from Kirtan Darbars, Kathas etc. Your kind attention is invited to the decision of Allahabad High Court in Mahant Indresh Charan Dass vs. State of Uttar Pradesh 81 ITR 435 (All.) where it was held that property held by the Chief of the udasi sect was held under the legal obligation wholly for religious and charitable purposes. Your kind attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tsar u/s 131 of the Act who had charged labour for making the gold chatter. The assessee had also filed a certificate from Takhat Sachkhand Sri Hazur Abchalangar Sahib, Nanded, Maharashtra" in which it was confirmed that the assessee had donated one big Chabba of Gold approx. weight 12K 670 Gms. Vide Receipt No.7302 dated 02.11.2008 ( page 35 of the paper book). The value of this gold chatter was ₹ 1,39,85,812/-. The donee trust was registered u/s 80G of the Act. The Bank Account shows payments made to HDFC Bank for purchase of Gold from HDFC Bank and payments made to Jeweller firms. The details of amount spent on gold chatter are enclosed to the written submission. The above evidence clearly shows that the assessee in his capacity of Mukh Sewadar of Dera had made appeal to the Sangat to make donations for the above noted "Project of donating gold chatter at Shir Hazur Sahib, Nanded". This fact is corroborated by various Advertisements issued by the assessee as "Mukh Sewadar" to the Sangat in this regard. A sum of ₹ 2,67,848/- was claimed as Advertisement Expenses paid to PTC Channel. A sum of ₹ 2,64,000/- was also spent as Advertisement. It is further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf was a "legal obligation". It is further submitted that the donations were received by the assessee for a "specific project" & with a "specific direction" to use the same for the "Project for donation of gold chatter at Hazur Sahib". It is, therefore, submitted that the assessee was a "Deemed trust" being under a "legal obligation" to utilize the "Corpus Donations" towards the "specific object". Your kind attention is also invited to the decision of Hyderabad Tribunal in the case of Society for integrated Development in Urban & Rural Area (SIDUR) vs. Dy. CIT reported at 90 ITD 493 (Hyd- Trib.) A copy of the decision is enclosed. The Tribunal held "though by virtue of section 2(24)(iia) voluntary contributions are income, to our mind this by itself does not entitle the tax gatherer to ignore all other well settled principles of taxation and general law and levy tax on gross receipts without considering the claim for deductions. Principles such as capital versus revenue, doctrine of overriding title form versus substance, interpretation of deeming provisions etc., have to be applied wherever necessary. Only the surplus or profit can be brought to tax and the same has to be com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as income. This principle has been accepted by the Hyderabad Bench of ITAT in the decision relied upon above. Your kind attention is also invited to the decision of Rajasthan High Court in the case of Sukhdeo Charity Estate 149 ITR 470 (Raj) where it was held that a "Project grant" could not be treated as "Voluntary Contribution". It is therefore submitted that since the assessee was also a deemed trust being a legal obligation it had to be treated as an unregistered trust and the entire receipts cannot be taken as income. The "corpus receipts/donations" made with a specific direction have to be excluded from the "Income". It is further submitted that total utilization/application made under the "legal obligation towards the purposes/objects for which donations were given have to be allowed as a deduction. The decision of Hyderabad Tribunal referred to above is relied upon to claim the set off as Income applied. It is further submitted that the doctrine of over riding title is also fully applicable to the facts of this case. The funds contributed by the donors were saddled with legal obligation and had to be utilized by the assessee as a Mukh Sewadar towards purposes for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the assessee and the expenses incurred on Advertisement at ₹ 2,67,848/- and ₹ 2,64,000/- & expenses incurred on job charges at ₹ 2,10,000/- could not be disallowed, because this is the first year in which Accounts could be said to subject of Audit. The disallowance could not made u/s 40a(ia). It is submitted that since he was carrying out religious/charitable activities under a legal obligation , the provisions of Sec. 28 to 43 were not applicable to the assessee. It is therefore submitted that the expenditure incurred on capital assets, expenditure on which TDS was not deducted and donation of gold chatter at Shri Hazur Sahib were also to be treated as "amount utilized/applied" towards donations/receipts under a legal obligation and only the net receipts, if any, could be treated as Income. The worthy CIT(A) has not dealt with any of the legal cases relied upon by the assessee by stating that the same are distinguishable. The AO and CIT(A) have completely misdirected themselves in rejecting the dual status of the assessee and in refusing to treat the assessee being "Mukh Sewadar" of "Dera" as a Trust/legal obligation (unregistered) and to allow the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Hon'ble Supreme Court in the case of Shrimoni Gurudwara Prabandhak Committee vs. Som Nath Dass & Others where the Hon'ble Supreme Court has held that "the Shri Guru Granth Sahib is the central object of worship in all gurudwaras and have further held Sri Guru Granth Sahib to be a juristic persons". While deciding this issue the Supreme Court reversed the findings of Punjab & Haryana High Court . A copy of the judgment dated 29.03.2000 is enclosed. It is therefore submitted that in view of the certificate filed above and the decision of Hon'ble Supreme Court read together the status of Dera Sant Amir Singh Ji becomes that of a juristic person independent of the individual status of Mukh Sewadar Sant Makhan Singh Ji. The assessee has been repeatedly making this submission before the ITO and worthy CIT(Appeals) regarding the dual capacity in which the assessee has been working. It is therefore, submitted that the donation made by the Sangat for the purpose of providing Gold Chattar at Gurudwara Nander Sahib were not made to assessee in his personal capacity but to Dera Sant Amir Singh Ji as a juristic person independent of the said Makhan Singh Ji. Your kind attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its in the said accounts were donations received by Dera Sant Amir Singh and the deposits were not his personal income. In proof of this fact, the assessee furnished a certificate from one S. Daljit Singh Randhawa who has confirmed in his certificate that the loaned amounts to Dera Sant Amrit Singh and those amount are deposited in the said bank account which being to Dera and which are under question. The assessee also filed a receipt from Gurudwara Hazur Sahib in token of having made donation of Gold Chhatter. As regards the income declared by him in his return of income, it was stated by him that the said income has been earned by him from Katha at various Kirtan darbars/religious celebrations. The AO, however, trashed the contention of the assessee on taking cognizance of the following vital facts: i) All the bank accounts are in the name of S. Makhan Singh as individual having PAN BEFPS2614A. ii) That the assessee purchased a vehicle 'Scorpio' for ₹ 932958/- in his name out of Gross Receipts. iii) The assessee purchased individual insurance policies 1) LIC of India for ₹ 42,895/- ii) Birla Sunlife ₹ 331575/- iv) There are numerous self withdrawals from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other legal obligation as per section 2(24)(iia) of the Act. l) The assessee was a deemed trust/legal obligation the religious activities carried out by him could not be termed as a business & profession and he was under no obligation to get its accounts audited u/s 44AB of the Act. m) Since he was carrying out religious/charitable activities under a legal obligation, the provisions of section 28 to 43 were not applicable to the assessee. In this regard, it is submitted that the written submissions, the assessee has no where controverted any of the factual findings recorded by the AO which clearly prove that the deposits in the bank accounts represented assessee's own income from his profession of preacher. In such a situation, it is clear, it is clear that all the contentions of the assessee remain unsubstantiated. Nonetheless, all the contention raised by the assessee as enumerated from (a) to (n) above are discussed and shown as totally untenable as no evidence in support thereof has been filed. (a) The assessee claims dual capacity one as a preacher and other as a Mukh Sewadar of Dera Sant Amir Singh and claims that though there was no formal trust but he had been runn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iia) is in existence but has claimed that as per the Explanation to said section trust includes any other 'legal obligation'. The assessee's claim of their being a legal obligation is that he had been receiving corpus donations for gold chhattar to be offered at Hazur Sahib in Nanded, Maharashtra. It may be mentioned that the assessee in a desperate bid to save himself from the levy of tax is taking conflicting stands. One the one hand, he says that he is the Head Sewadar (Gaddi Nashin) of 100 years old Dera Sant Amir Singh and the donations were made by the Sangat to the Dera. On the other hand, he is claiming that he is the 'deemed trust' under a legal obligation. He has proved none of these claims. As regards the firm claim of being Head Sewadar of the said Dera, he has (i) bright no evidence on record that he is the Head Sewadar of the said Dera (ii) no evidence has been brought on record that he was appointed as Head Sewadar by the Sangar. He has only submitted a copy of Taksal lineage but that is only a self serving Sewadar and there is no mention in he accounting form of bank a/cs that the said accounts have been opened qua the Mukh Sewadar of Dera Sant Amir Sigh on the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, all income had been spent for religious and charitable purposes and the income was of Gurudwara and the attached shops. But this is not so in the case of the assessee as he had made the several withdrawals for the personal purposes as established by the AO in his assessment order. Therefore, this decision is not applicable. Society for Integrated Development in Urban and Rural Areas vs. DCIT 90 ITD 493 (Hyd). This judgment is in fact in favour of the revenue. The department has not taxed gross receipts. It has allowed the deduction to the assessee which the assessee has claimed like advertisement expense and expense on account of telephone, vehicle and traveling expenses and other expense. Thus, this judgment is also not applicable. Sukhdeo Charity Estate vs. CIT 149 ITR 1 (SC) Since the assessee has treated all donations as having been made to him as preacher and no receipt of Dera Sant Amir Singh has been issued, therefore, the donations received cannot be said to have been made for any specific purpose. The assessee using the donations for personal purpose clearly indicates the conduct of the assessee that he had been treating the same as his own income and not the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as pointed out by the Ld. DR that various bank accounts are in the sole name of Mukh Sewadar, Mr, Makhan Singh, without indicating any adverse eventuality and even the nominations are executed in favour of his own son by Mr. Makhan Singh leading to the clear indication and safe presumption that due to any unforeseen unpleasant mishap with the assessee, the credit balance balances will go to assessee's own son being legal successor and not to the DERA. Nothing has been brought on record and nothing has been proved before any of the authorities below or even before us that the Dera so claimed as Trust i.e. Charitable Trust is functioning for the charitable purpose and no activities as prescribed under section 2(15) of the Act are being carried on by the assessee, has been placed on record. The Dera or Trust as claimed is not affiliated to any charitable institution. 9.2. It is pertinent to mention, as mentioned in the orders of the authorities below that the funds of the Dera are being diverted for meeting out the personal expenses of Mukh Sewadar as is evident from the numerous personal withdrawals. The furnishing of pedictree history of the Dera has failed to furnish any order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account opened in the name of the assessee. Simply arguing that the Bank account is being operated to undertake and perform the duty of the Dera as Care-taker will not suffice and cannot prove the dual status of the assessee, as claimed. Accordingly, the decisions relied upon by the ld. counsel for the assessee, cannot be made applicable in the present facts and circumstances of the case. Also, the document of being appointed as Care-taker is self serving document and cannot help the assessee. As regards the donations, as claimed to have been received as corpus donations can not help the assessee in the absence of any evidence, in particular, the assessee is not registered under any of the provisions of the Income Tax Act,1961. When the assessee is not registered under section 12AA of the Act then even if the corpus donations cannot be allowed as deduction and cannot take shelter of Section 11(1)(d) in view of amendment by the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1.4.1989. Therefore, definitely, the said donations claimed to be corpus donations have to be included in the income of the assessee. As regards the explanation to section 2(24)(iia) regarding 'deemed trust' und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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