TMI Blog2006 (2) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: 2. The assessee is a registered trust. The assessee was issued a certificate under s. 12A(a) of the Act on 26th March, 1996, to have effect from 15th June, 1995. For the asst. yrs. 1996-97 to 2000-01, the assessee filed a return of income on 20th Aug., 2001. The provisions of s. 139(4A), read as follows: "(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-cl. (iia) of cl. (24) of s. 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 1999 for treatment for severe subarchnoid haemorrhage with CAD. The AO, however, rejected the plea of the assessee of reasonable cause. The AO has observed that the accounts of the trust were duly audited by a chartered accountant for all the assessment years well before the due date. The AO, therefore, found that the trust has been carrying on its normal activity and has duly maintained books of account and duly got them audited. In the circumstances, the plea of illness of Mrs. Iqbal Malik could not be accepted as a reasonable cause for the assessee's failure. 2.3 Aggrieved by the order of the AO, the assessee preferred appeals before the CIT(A). Besides reiterating the plea as was putforth before the AO, the assessee also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he moment the receipt of income derived from property held under trust or voluntary contributions exceeds the taxable limit, an assessee is supposed to file the return of income in respect of that assessment year. A perusal of the income and expenditure account and the balance sheet filed by the appellant during the course of appellate proceedings shows that the excess of expenditure over income during the year is Rs. 26,124. However, voluntary contributions (donations) received during the year are Rs. 82,155 which have not been shown in the income and expenditure account and have directly been taken to the balance sheet as corpus fund. As per s. 11, certain incomes of the trust are not to be included in the total income. These incomes are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of ss. 11 and 12 for the purpose of determining an assessee's liability to file return of income, the voluntary contributions even if they form a part of the corpus of the trust will have to be taken into account to find out whether a trust is liable to file its return of income or not. In the present case, the voluntary contributions even though taken to be the corpus fund by the appellant have to be considered in order to determine appellant's liability to file its return of income. Since in the present case, voluntary contributions are Rs. 82,155 which is more than the maximum amount which is not liable to tax, the provisions of s. 139(4A) are attracted in the appellant's case and the appellant is supposed to file its return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the conclusion of the AO that there was no reasonable cause only goes to show that this plea raised by the assessee has not been substantiated. 2.7 With regard to the plea of bona fide belief that the assessee was not under an obligation to file a return of income as the total income was below the taxable limit, we find some substance in the plea raised by the assessee in this regard. It is seen that there was an excess of expenditure over income in all the five assessment years. The complaint of the CIT(A) appears to be that there was some voluntary contributions received during the year which were not reflected in the income and expenditure account, but had been directly taken to the balance sheet as corpus fund. It is no doubt true t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gence and ordinary prudence. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead an ordinary, prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. A claim should not be rejected unless it is frivolous. Hon'ble Bombay High Court in the case of CIT vs. Schell International (2006) 200 CTR (Bom) 243 : (2005) 278 ITR 630 (Bom) held that ignorance of law is no excuse, but there is no presumption that everyone knows the law. The Bombay High Court in the context of penalty provisions accepted the plea of an assessee of ignorance. Considering the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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