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TMI Blog2015 (10) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... d a detailed questionnaire was also issued to the assessee. Subsequently, a survey under section 133A of the Act was conducted on 20.11.2009. In the assessment order, the Assessing Officer has observed that from the materials impounded during the course of survey from Mahatma Gandhi Medical College & Research Institute, Pondicherry vide Annexure ANN/VN/B&D/IMP-5 PAGE 1-33, it was found that the assessee has received voluntary donations by way of cash amounting to Rs. 12,94,74,800/- from August, 2008 to March, 2009. However, the assessee has admitted cash donations by way of cash only at Rs. 4,73,20,000/- in the return of income for the financial year 2008-09 leaving a balance of Rs. 8,21,54,800/- has not recorded in their regular books of accounts maintained either in their college or in their trust office. Based on the impounded material and statement of Mr. M.K. Rajagopalan, Chairman, recorded in the trust office of Ashok Nagar on the date of survey i.e. 20.11.2009, while answering to question No. 17 and 24, the voluntary contribution collected by way of cash which was not disclosed to the Department is quantified as under: F.Y. Voluntary contribution received by way of cash V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not initiated. In response to the above, the assessee vide letter dated 02.01.2012, the assessee has given a detailed explanation to the Assessing Officer and requested that the penalty proceedings may be dropped. In the penalty proceedings, the Assessing Officer, after considering the explanation of the assessee, has observed that the assessee's submission cannot be accepted since the assessee has not disclosed the above said amount in the return originally filed. During the survey operation, the Chairman of the trust accepted the fact that some undisclosed cash donation was received and they did not came up with details at the initial stage of the assessment proceedings. It was only during assessment proceedings, the assessee has left with no other choice but to accept the same. Considering the above facts, the Assessing Officer came to conclusion that the assessee has wilfully failed to discharge its duty to disclose all its income in the return originally filed and held that it is a clear case of concealment of income and the total undisclosed amount of Rs. 3,86,48,000/- attracts penalty under section 271(1)(c) of the Act. 6. The assessee carried the matter in appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayed that the penalty may be deleted. 9. On the other hand, the ld. DR strongly relied on the decision in the case of Mak Data (P) Ltd. v. CIT [2013] taxmann.com 448 (SC) and supported the orders passed by the authorities below. The ld. DR further submitted that the assessee knows that the donations received by the assessee is not voluntary donations and the Assessing Officer has pointed out the nature of donation, the assessee has accepted the donation received to the extent of Rs. 3,86,48,000/- as anonymous donations. 10. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee is an educational and charitable trust enjoying registration under section 12AA of the Act. There was a survey under section 133A conducted on 20.11.2009. The assessee has also filed return of income for the year under consideration on 30.09.2009 admitting NIL income. During the course of survey, certain materials we impounded in respect of Mahatma Gandhi Medical College & Research Institute vide Annexure ANN/VN/B&D/IMP/5 page 1 to 33. From the seized materials, it was found that the assessee has received voluntary donation by way of cash am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Assessing Officer by stating that during the course of examination of the donations received in the case by the trust, it was found that certain donations received did not have complete details of the donors as contemplated under section 115BBC(3) of the Act. The trust authorities, therefore, examined all the donation receipts on its own and thereafter it was found that donation receipts to the extent of Rs. 3,86,48,000/- do not contain complete details of the donors. The assessee himself has offered the above amount for taxation during assessment proceedings. In the penalty order, the Assessing Officer, after considering the explanation of the assessee, came to a conclusion that the assessee has to offer the above amount in the return originally filed and not at the stage of assessment proceedings. Therefore, the explanation of the assessee was not accepted. We find that the Assessing Officer has failed to understand that the assessee has filed nil return of income for the reason that the income received by the assessee is not liable to be taxed for that the assessee being a charitable institution and not liable to pay any tax. Therefore, the assessee filed a nil return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r taxation and levied penalty without doing any enquiry or investigation to disprove that the explanation given by the assessee either false or not bonafide, penalty cannot be levied. The above view has been endorsed by the Hon'ble Andhra Pradesh High Court in the case of CIT v. Chennupati Tyre & Rubber Products [2014] 90 CCH 0181 APHC. 13. We find that the assessee has failed to handle the donations received by them in appropriate manner. Therefore, the assessee offered the very same amount for taxation. Under these facts and circumstances of the case, we are of the opinion that the assessee has neither concealed the income nor furnished inaccurate particulars. In so far as case law relied on by the ld. DR is concerned, in the case of Mak Data (P) Ltd. v. CIT (supra), in that case, the assessee has not given any explanation before the Assessing Officer. In the present case, the assessee has given a detailed explanation and the explanation given by the assessee was accepted to certain extent and only in respect of donations received and details of the donors not filed, the Assessing Officer has considered those donations are anonymous donations. It is not the case of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given by the assessee is neither correct nor bonafide. Therefore, the ld. CIT(A) is not correct in upholding the penalty order passed by the Assessing Officer by following the above decision of the Hon'ble Supreme Court without considering the explanation given by the assessee. 16. The Hon'ble Gujarat High Court in the case of National Textiles v. CIT 249 ITR 125 has held that the Explanation 1 to section 271(1)(c) is to the effect that where in respect of any fact or material for purposes of his assessment, an assessee offers an explanation which is found by the AO or the Dy. CIT(A) to be false or where the assessee is unable to substantiate his explanation, then the amount added to his income shall be deemed to represent his concealed income. The newly introduced Explanation 1 considerably reduces, but does not altogether remove the Department's onus to prove concealment in assessment based on unexplained cash credit or unexplained investment and like. There has not been any significant difference by the introduction of new Explanation 1 in place of original Explanation 1 w.e.f. 1st April, 1976. The previous Explanation used the expression "deemed to have concealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the producer. The producer has been found to be an unrealiable witness, whose relations with the assessee were strained. The original cash book or account books were not anywhere to be seen. Not only did they remain unproved, but they were, in fact, not produced at all. If this was the only material to show that the assessee had received the said amount and the material was found to be wholly unreliable, no burden shifted to the assessee which he was called upon to discharge. There was, therefore, no question of drawing any adverse inference because his case throughout had been that he had not received the said amount. The assessee could not really be asked to prove the negative. The Tribunal has found as a fact that the assessee did not receive the said amount at all. On that finding, no charge of concealment could possibly arise. The Tribunal was, therefore, justified in setting aside the order of penalty." 18. The Hon'ble Bombay High Court in the above case has concluded that the findings in quantum proceedings are not binding in penalty proceedings and the Tribunal, or consideration of unreliable state of evidence regarding concealment, was justified in deleting penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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