2024 (6) TMI 822 - HC - Income Tax

Maintainability of a review application u/s 114 of the Code of Civil Procedure - assessment of anonymous donations received by a trust u/s 115 BBC - HELD THAT - The reasoning resorted to by us while dismissing the applicant s appeal was on the ground that this Court had inherent limitations while deciding the appeal preferred u/s 260-A of the Act. The exemption being claimed by the application under section 11 of the Act was not a pure question of law which alone could have been gone into in the appeal. By virtue of section 68 of the Act read with Rule 46A of the Income Tax Rules 1962 the onus was on the applicant to satisfy that the donations received by it were not anonymous. It had failed to discharge the onus. It had not even filed any return. Only an attempt was made to furnish some record. Exercise of verifying genuineness by sample check was resorted to. Except few the donors could not be identified. We had also observed that in the light of section 133 (6) of the Act donors list was produced before the CIT (A) in the appeal under the pretext that the first list produced by it was erroneous still enquiry was undertaken by resorting to sample check to identify the donors. Identity of the donors could not be established. Eight donors flatly denied to have paid any donation. Notices / letters sent to many of the donors from the list furnished by the applicant u/s 133 (6) had returned unserved with the remarks address not found insufficient address addressee left . Consequently we held that the decision of the ITAT of holding the conclusion drawn by the Assessment Officer being plausible no substantial question of law was being raised and the appeal was dismissed. Assessment of Donations - As we have demonstrated it cannot be an appeal in disguise which precisely seems to be the case in the matter in hand. We avoid to burden this order by citing several decisions on this aspect of the matter. Suffice for the purpose to observe that the powers of review are circumscribed by well settled norms. It is only an error which can be rectified. If as is being submitted on behalf of the applicants every point is to be decided afresh it would tantamount to re-hearing of the appeal. The whole attempt on behalf of the applicant seems to be to point out as to how this Court had committed illegality in deciding the appeal rather than making any attempt to point out any error apparent on the fact of the record. Suffice for the purpose to refer to the decision in the matter of Shanti Conductors Pvt. Ltd. V. Assam State Electricity Board and others 2019 (12) TMI 1513 - SUPREME COURT wherein it has been observed that the scope of review is limited and a party cannot be permitted to re-agitate and re-argue a question under the guise of review. The error should be evident and if it requires a process of reasoning to be undertaken to detect it it can hardly be said to be an error apparent on the face of record. As laid down in the matter of Arun Dev Upadhyaya Vs. Integrated Sales Services Ltd 2023 (7) TMI 1411 - SUPREME COURT an error on the face of the record must be such an error which merely looking at the record should strike and it should not require any long drawn procedure on the points where there may be two opinions. Bearing in mind these principles the whole submissions made by Mr. Deshmukh on behalf of the applicant would clearly demonstrate that every attempt has been made to re-argue the appeal which cannot be permitted to be done. As admitted that no concrete record of the donors was produced. Even a list which was initially produced was subsequently replaced and that was not even a complete list of donors as is being submitted on behalf of the applicant. If such is the state-of-affairs when the ITAT has for the elaborate reasons demonstrated as to how the applicant had not been able to discharge the burden by producing independent material in respect of the 7145 donors who had in aggregate paid the donations to the tune of Rs. 2, 89, 20, 955/- and when even an attempt to resort to random check had grossly failed and 8 of the donors even denied to have paid any donation we had dismissed the appeal by pointing out as to how the observations and the conclusion of the ITAT was a plausible one and as to now no substantial question of law was arising.

Summary

Issues:
Application for review of an order passed in an Income Tax Appeal under section 260-A of the Income Tax Act, 1961.

Analysis:

1. The applicant, a trust running educational institutions, filed a review application challenging the order passed by the High Court in its Income Tax Appeal. The assessment officer concluded that donations received by the trust were anonymous under section 115 BBC of the Act. The Commissioner of Income Tax (Appeal) modified the decision, but the ITAT refused to condone the delay in the applicant's appeal, leading to the dismissal of the appeal by the High Court.

2. The High Court dismissed the appeal as it found inherent limitations in deciding the appeal under section 260-A. The onus was on the applicant to prove that the donations were not anonymous, but it failed to do so. Despite producing a donors' list, many donors could not be identified, and notices sent to them returned unserved, leading to the affirmation of the ITAT's decision.

3. The applicant argued that it was entitled to benefit from circulars issued by the CBDT, but the High Court found that the circulars did not apply to the case. The High Court also noted discrepancies in the list of donors produced by the applicant, leading to doubts about the authenticity of the donations received.

4. The High Court rejected the applicant's contention that the High Court had the power to review the order under section 260-A based on various legal precedents cited by the applicant. The respondent raised objections regarding the maintainability of the review application, emphasizing that the court's review power is limited to correcting errors and not re-hearing the appeal.

5. Ultimately, the High Court held that the applicant's submissions were aimed at re-arguing the appeal rather than pointing out any error apparent on the face of the record. The court found no sufficient grounds for exercising the review jurisdiction and rejected the application.

6. The High Court's decision was based on the principle that the review jurisdiction is limited to rectifying errors that are evident on the face of the record and not to re-hear the appeal. The court emphasized that the burden of proof was on the applicant to establish the authenticity of the donations received, which it failed to do adequately, leading to the dismissal of the appeal.