M/S. Everest Education Society v. Assistant Commissioner Of Income Tax,Exemption Circle, Aurangabad

1 ITA / 7 / 2023 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO. 7 OF 2023WITHCIVIL APPLICATION NO. 11883 OF 2023 M/s. Everest Education Society,C/o. Seema Nursing Home,Roshan Gate, Aurangabad – 431 001 .. Appellant Versus Assistant Commissioner of Income Tax,Exemption Circle, Aurangabad .. Respondent ... Advocate for the appellant : Mr. S.S. KaziStanding Counsel for respondent : Mr. Alok Sharma... CORAM : MANGESH S. PATIL & SHAILESH P. BRAHME, JJ. RESERVED ON : 20 OCTOBER 2023PRONOUNCED ON : 05 DECEMBER 2023 ORDER (MANGESH S. PATIL, J.) : This is an assessee’s appeal under section 260A of theIncome Tax Act, 1961 (Act). 2.The appellant which is a trust primarily engaged in runningeducational institutions, is impugning the order of the Income TaxAppellate Tribunal (ITAT) passed in the appeal preferred by theRevenue under section 253 of the Act. 3.We have heard the learned advocate Mr. Kazi for theappellant and Mr. Sharma for the revenue. 2 ITA / 7 / 2023 4.Needless to state at the outset that this being an appealunder section 260-A of the Act, the appellant has to demonstrate thatthe matter involves some substantial question of law. Bearing in mindthis limitation, we shall now advert to the arguments. 5.The appellant having failed to file the returns, was servedwith a notice under section 142(1) of the Act. In response, it filed areturn disclosing 7145 individual donors from whom it had receivedcash donation in aggregate to the tune of Rs.2,89,20,955/-. Afterconducting hearing, the assessment officer by the order dated27-03-2014 concluded that these cash donations were anonymous ascontemplated under section 115 BBC. The appellant challenged theorder before the first appellate authority. By referring to the orderspassed by different income tax appellant tribunals, it was concluded bythe first appellate authority that these were not the anonymousdonations and held that only the donations to the tune of Rs.82,600/-were anonymous. 6.The revenue challenged the order of the first appellateauthority before the ITAT. The appellant also preferred a cross-appeal,however, beyond the period of limitation. By the common order whichis under challenge in this appeal, the ITAT has allowed the revenue’s appeal and refused to consider the appellant’s appeal on merits beingbarred by limitation. 7. Going by the prayer clause in this appeal, the appellant ismerely putting up a challenge to the impugned order to the extent itallows revenue’s appeal. It has not challenged the order refusing tocondone the delay in the appeal preferred by it and refusing to decide iton merits. 8.Mr. Kazi would submit that the assessment is not fair andproper, verification of only some of the donors was undertaken whichconstituted barely less than 1% of the total donors. The appellant wasunder an obligation to maintain only a list of the donors containing theirnames and addresses. It was not under any obligation to furthersubstantiate their identity. Section 115 BBC could not have beeninvoked. The assessment officer had failed to examine this aspectwhich error was corrected by the first appellate authority. According tohim, following substantial questions of law would arise : (1)Whether the notice u/sec. 143(2) of the I.T.A. 1961 dt. 3.2.2014 issued by the A.O. is bad in law?3.2.2014 issued by the A.O. is bad in law? (2)Whether the notice u/sect. 143(2) issued by the A.O. is in violation of the instruction no. 10 and 13 of 2013 issued bythe CBDT ?violation of the instruction no. 10 and 13 of 2013 issued bythe CBDT ? (1)Whether the notice u/sec. 143(2) of the I.T.A. 1961 dt. 3.2.2014 issued by the A.O. is bad in law?3.2.2014 issued by the A.O. is bad in law? (2)Whether the notice u/sect. 143(2) issued by the A.O. is in violation of the instruction no. 10 and 13 of 2013 issued bythe CBDT ?violation of the instruction no. 10 and 13 of 2013 issued bythe CBDT ? (3)Whether the enquiries conducted by the A.O. before3.3.2014 (date on which notice was issued under sec.143(2) of the I.T.A. is bad in law as the same wasconducted without any jurisdiction / Authority ?3.3.2014 (date on which notice was issued under sec.143(2) of the I.T.A. is bad in law as the same wasconducted without any jurisdiction / Authority ? 4 ITA / 7 / 2023 (4)Whether the A.O. was justified in holding that, theAssessee / appellant had received anonymous donationas define under u/ssec. 115 BBC of the I.T. Act 1961 ?Assessee / appellant had received anonymous donationas define under u/ssec. 115 BBC of the I.T. Act 1961 ? (5)Whether as per the provisions of sec. 115 BBC (3) thereceiver only has the obligation to mantain the identityindicating the name and address of the donor’s only ?receiver only has the obligation to mantain the identityindicating the name and address of the donor’s only ? (6)When the assessee / appellant has properly maintainedthe name and address of the donor’s then can thedonations be termed as anonymous donation u/sec. 115BBC of the Act ?the name and address of the donor’s then can thedonations be termed as anonymous donation u/sec. 115BBC of the Act ? (7) Whether, the Ld. Income Tax Appellate Tribunal, Pune isjustified in confirming the addition to the extent ofRs.2,87,88,955/- U/Section 115 BBC of the Income TaxAct ?justified in confirming the addition to the extent ofRs.2,87,88,955/- U/Section 115 BBC of the Income TaxAct ? (8)Whether, the Ld. Tribunal failed to interpret Section 115BBC of the Act in proper perspective ?BBC of the Act in proper perspective ? (9)The Ld. Appellate Court after considering the remandreport and the evidence available on record had come tothe conclusion that, the entire donation cannot be treatedas anonymous donation as the assessee had fullycomplied with the requirement of law. In suchcircumstances discarding such findings of the appellateauthority by the Ld. Tribunal that too without there beinghaving any contrary evidence on record is perverse ?report and the evidence available on record had come tothe conclusion that, the entire donation cannot be treatedas anonymous donation as the assessee had fullycomplied with the requirement of law. In suchcircumstances discarding such findings of the appellateauthority by the Ld. Tribunal that too without there beinghaving any contrary evidence on record is perverse ? (10)Whether the ITAT and the A.O. were justified in holdingthat, the trust received anonymous donation, when thesociety is a registered society under the Provisions ofSection 12 AA of the Act, it enjoyed the exemption asprovided U/sec. 11 of the Act. The registration of societyhas not been withdrawn even on account of the finding thedonor’s are not genuine ?that, the trust received anonymous donation, when thesociety is a registered society under the Provisions ofSection 12 AA of the Act, it enjoyed the exemption asprovided U/sec. 11 of the Act. The registration of societyhas not been withdrawn even on account of the finding thedonor’s are not genuine ? (11)When the assessee had discharged his burden by leadingevidence then, in such circumstances, whether the findingrecorded by the Ld. Tribunal regarding rebuttal isperverse?evidence then, in such circumstances, whether the findingrecorded by the Ld. Tribunal regarding rebuttal isperverse? (12)Whether the ITAT could go beyond the remand reportsubmitted by the A.O.?submitted by the A.O.? (11)When the assessee had discharged his burden by leadingevidence then, in such circumstances, whether the findingrecorded by the Ld. Tribunal regarding rebuttal isperverse?evidence then, in such circumstances, whether the findingrecorded by the Ld. Tribunal regarding rebuttal isperverse? (12)Whether the ITAT could go beyond the remand reportsubmitted by the A.O.?submitted by the A.O.? (13)Whetehr the tribunal was justified in confirming theassessment order only on the basis of letter issued to 70donors out of 7145 donors i.e. 98% ?assessment order only on the basis of letter issued to 70donors out of 7145 donors i.e. 98% ? 5 ITA / 7 / 2023 9.Per contra, Mr. Sharma for the revenue submitted that theinstructions no. 10 and 13 are not applicable to the facts andcircumstances of the case. Besides, these are merely administrativeinstructions and will not go to the root of the jurisdiction of theassessment officer particularly when the appellant had failed to file anyreturn at the first instance. 10.Mr. Sharma would then submit that by virtue of section 68read with rule 46A, the burden was on the appellant to substantiategenuineness of these donations which were enormous. Only a samplecheck was undertaken by the assessment officer. The appellant oughtto have led sufficient and cogent evidence disclosing genuineness ofthese donations, for failure of which no fault can be found with theobservations and conclusions of the assessment officer as also theITAT, in treating these donations as anonymous donations. He wouldsubmit that to the extent possible, wherever some confirmation couldbe had from the donors, the assessment has been reduced to thatextent. All these factors were taken into consideration by ITAT. Hewould submit that no substantial question of law arises and the appealbe dismissed. 11.We have carefully considered the rival submissions andperused the papers. 6 ITA / 7 / 2023 12.Bearing in mind the inherent limitations in the light of theprovisions of section 260A of the Act, it is to be noted at the outset thatthe issue regarding the exemption being claimed under section 11cannot be said to be pure question of law which could be agitated inan appeal under section 260A. 13.As regards the factual dispute is concerned, we find nohesitation in concurring with the observations in the impugnedjudgment and order of the ITAT and the submissions of Mr. Sharmathat by virtue of section 68 read with rule 46A, the onus is on theassessee to substantiate that the donations received by it are notanonymous donations. 14.Once having borne in mind this aspect, it is quite apparentthat at no point of time, the appellant was able to discharge this onus.Apart from the fact that it had even failed to file the returns, it had madesome attempt to furnish some record and revenue had volunteered toverify genuineness by a sample check. Barring few instances, identityof the donors could not be confirmed in view of section 133(6).Pertinently, after the appeal was preferred before the first appellateauthority a new set of donors’ list was furnished stating that the first listwas submitted erroneously and still the enquiry did not result inidentification of the donors. 7 ITA / 7 / 2023 15.The appellant had pointed out about having received cashdonations to the tune of Rs.2,89,20,955/- from 7145 donors. The resultof the verification undertaken by the assessment officer to verify fromsome of the donors seeking confirmation did not yield results.Consequently the appellant had miserably failed to discharge the onus. 16.Pertinently, during verification, 8 donors who werecontacted denied to have paid any donation to the appellant. 7 ITA / 7 / 2023 15.The appellant had pointed out about having received cashdonations to the tune of Rs.2,89,20,955/- from 7145 donors. The resultof the verification undertaken by the assessment officer to verify fromsome of the donors seeking confirmation did not yield results.Consequently the appellant had miserably failed to discharge the onus. 16.Pertinently, during verification, 8 donors who werecontacted denied to have paid any donation to the appellant. 17.In the backdrop of the afore-mentioned circumstances, theITAT has observed that all these donations were received in cash from7145 persons. Those were not found to have been deposited in thebank account. The letters issued under section 133(6) were returnedunserved with the remarks “address not found”, “insufficient address”,“addressee left”. The inspection report mentioned about donors havingnot found on the given address. There were incomplete and vagueaddresses. It has drawn adverse inference against the appellant andhas concluded that the decision of the assessment officer holding thedonations to be anonymous under section 115 BBC of the Act wasjustified on facts and in law. In our considered view, there is no erroror irregularity much less giving rise to any substantial question of law. 18.The appeal is dismissed. 8 ITA / 7 / 2023 19.Pending civil application is disposed of. [ SHAILESH P. BRAHME ] JUDGE [ MANGESH S. PATIL ] JUDGE arp/