TMI Blog2015 (8) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court that it is not in dispute that the objects and activities of the assessee were charitable in nature and it was duly registered u/s 12A of the Act, then in the situation of full disclosure of income by the assessee and also application of the donations for charitable purposes entitles the assessee to obtain benefit of exemption u/s 11 of the Act. In the present case, the assessee had not only disclosed the donations but also submitted names, confirmations along with PAN No., address of the donors before the AO during the assessment proceedings. However, the AO and the CIT(A) concluded that the creditworthiness of the donation could not be established, therefore, the impugned amount was added u/s 68 of the Act. At the same time, it cannot be ignored that the assessee is enjoying registration u/s 12A of the Act and the AO has not brought out any fact to controvert that the objects of the assessee charitable trust are charitable in nature and the assessee applied more than 85% of its income including impugned donations towards charitable purposes during the financial period under consideration. In this situation, the CIT(A) was right in following the ratio laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the CIT(A) and the first appellate authority upheld the addition of ₹ 75 lakh u/s 68 of the Act. However, the CIT(A) while dealing ground no. 3, 4 and 5 of the assessee in the first appellate proceedings observed that section 11 of the Act requires compulsory application of income for charitable purpose to the extent of 85% of total income and the application by the assessee exceeds 85% of the total income of the assessee, therefore, assessee s claim is justified and allowable. The CIT(A) finally directed the AO to consider the amount of impugned addition as a part of total income applied towards charitable objects. Now, the aggrieved revenue is before this Tribunal in this second appeal with the sole ground as reproduced hereinabove. 5. We have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. DR submitted that the ld. CIT(A) has erred in directing the AO that the provisions of section 68 of the Act could not be applied to the anonymous donations of ₹ 75 lakh received by the assessee and these donations be considered as part of total income for application of charitable objects. Ld. DR strenuously contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made by the AO u/s 68 of the Act was upheld by the CIT(A) with following observations:- 6.4 The submission given by the appellant and the objections of the Assessing Officer have been considered. It is seen that despite repeated requests by the Assessing Officer, the appellant was unable to produce th7 parties/their directors. In the absence of the production of the parties/their directors, the genuineness of these donations could not be established. All the parties were engaged in the business of hawala i.e. providing accommodation entries. In view of the evidence on record, I uphold the addition of ₹ 75 lacs u/s 68 of the Income Tax Act. 8. We further observe that the CIT(A) while dealing with the alternative ground no. 3, 4 and 5 of the assessee allowed the same and granted relief to the assessee with following observations and conclusion:- 7. Grounds No. three, Four and Five are taken together. These are the alternative grounds to the effect that even assuming that the addition of ₹ 75 lacs is upheld, the application of income during the year far exceeded 85% of the statutory limit required to be applied for charitable purposes. According to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or determined. 7.5 This, position has only been altered w.e.f. 01104/2007 with the introduction of section 115BBC. Since this pertained to assessment year 2003-04 section 115BBC is not applicable. 7.6 Section 11 requires compulsory application of income on charitable purposes to the extent of 85% of the total income. The application by the appellant of the income far exceeds 85% of the total income of the appellant as recomputed in the impugned assessment order. I find that the appellant's claim is justified and accordingly the Assessing Officer is directed to consider the addition of ₹ 75 lacs as part of the total income for application of charitable objects. The appellant therefore succeeds on this ground. 9. Firstly, we respectfully note the dicta laid down by the Jurisdictional High Court in the case of DIT(Exemption) vs Keshav Social and Charitable Foundation (2005) 278 ITR 152 (Delhi) wherein their lordships held as under:- To obtain the benefit of the exemption u/s 11, the assessee is required to show that the donations were voluntary. In the present case, the assessee had not only disclosed its donations, but had also submitted a list o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes, confirmations along with PAN No., address of the donors before the AO during the assessment proceedings. However, the AO and the CIT(A) concluded that the creditworthiness of the donation could not be established, therefore, the impugned amount was added u/s 68 of the Act. At the same time, it cannot be ignored that the assessee is enjoying registration u/s 12A of the Act and the AO has not brought out any fact to controvert that the objects of the assessee charitable trust are charitable in nature and the assessee applied more than 85% of its income including impugned donations towards charitable purposes during the financial period under consideration. In this situation, the CIT(A) was right in following the ratio laid down by the Hon ble Jurisdictional High Court of Delhi in the case of DIT(E) vs Keshav Social and Charitable Foundation (supra) and we are unable to see any ambiguity, perversity or any other valid reason to interfere with the same, accordingly ground no. 1 and 2 of the revenue being devoid of merits is dismissed. ITA No.1963/Del/11 12. Ld. counsel of the assessee reiterating its submissions in the brief synopsis/brief submissions dated 10.8.2015 su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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