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2015 (10) TMI 1078 - ITAT CHENNAI

2015 (10) TMI 1078 - ITAT CHENNAI - TMI - Penalty under section 271(1)(c) - undisclosed donation receipts - assessee is an educational and charitable trust enjoying registration under section 12AA - Held that:- In the present case, the assessee has explained before the Assessing Officer that the amounts received by it are voluntary donation and certain details are not available. Therefore, the extent of details not available are worked out by the assessee and offered for taxation. We find that b .....

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ind 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 the case of CIT v. Balraj Sahani [1979 (2) TMI 61 - BOMBAY High Court ] held that the findings in quantum proceedings are not binding in penalty proceedings and the Tribunal .....

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cted against the order of the ld. Commissioner of Income Tax (Appeals) (C) II, Chennai, dated 15.11.2013 passed under section 271(1)(c) of the Income Tax Act. 2. Brief facts of the case are that the assessee Sri Balaji educational and Charitable Public Trust is a trust registered under section 12AA of the Income Tax Act. The trust is mainly engaged in running educational institutions for conducting various professional courses such as Engineering, MBBS, Nursing and other Paramedical courses, etc .....

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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 ₹ 12,94,74,800/- from August, 2008 to March, 2009. However, the assessee has admitted cash donations by way of cash only at ₹ 4,73,20,000/- in the return of income for the financial year 2008-09 leaving a balance of ₹ 8,21,54,800/- has not recorded in their re .....

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of cash declared in the books of accounts Difference 2008-09 129,474,800 47,320,000 82,154,800 3. While giving the answer to the question No. 17, Mr. Rajagopalan agreed that Sri Balaji Educational & Charitable Trust declared receipt of ₹ 7,94,12,000/- on account of voluntary contribution from the students which includes ₹ 3,20,92,000/- received in demand draft and the balance of ₹ 4,73,20,000/- received in cash. But from the above table it is apparent that the assessee rec .....

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he cash received as voluntary contribution was recorded in the cash book but while preparing the ledger of voluntary contribution they booked some cash expenditure made directly from the said cash received. Thus, the total receipt of voluntary contributions showed lesser amount to the tune of ₹ 3,86,48,000/- and the difference was not ₹ 8,21,54,800/- as claimed by the Department. In support of the claim, the assessee has produced books of accounts. On verification of the vouchers of .....

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d not produce the details of the donors. Accordingly, assessment was completed by treating the disputed amount of ₹ 3,86,48,000/- as anonymous donation as disclosed by the assessee under section 115BBC(3) of the Act. 5. Thereafter, the Assessing Officer has initiated penalty proceedings and called explanation from the assessee as to why penalty proceedings under section 271(1)(c) of the Act should not initiated. In response to the above, the assessee vide letter dated 02.01.2012, the asses .....

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ed 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 ₹ 3,86,48 .....

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d the penalty order passed by the Assessing Officer under section 271(1)(c) of the Act. 7. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. 8. (i) The ld. Counsel for the assessee has submitted that the assessee is running charitable educational institution and the donation received by the assessee are not taxable because the assessee is enjoying registration under section 12AA of the Act. (ii) The ld. Counsel for the assessee has further submitted that all the .....

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ived was due to some expenditure made directly from the said cash receipts, the amount as found by the Assessing Officer of ₹ 8,21,54,800/- is not correct and accepted that it is only ₹ 3,86,48,000/-. It was also submitted before the ld. CIT(A) that the Assessing Officer himself, based on the seized materials came to a conclusion that the amount received by the assessee is a voluntary donation by way of cash. When the assessee was asked to produce details about the donation, the asse .....

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he explanation and prayed 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 exten .....

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nded 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 amounting to ₹ 12,94,74,800/- from August, 2008 to March, 2009. However, the assessee has admitted a cash donation by way of cash only at ₹ 4,73,20,000/- in the return of income for the assessment year under consideration. According to the Assessing Officer, .....

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- received in cash. But, according to the Assessing Officer, the amount received by the assessee is ₹ 12,94,74,800/-. The assessee was asked o explain in the context of seized material i.e. ANN/VN/B&D/IMP/5. It was submitted by the assessee that all the cash received are voluntary contribution and was recorded in the cash book. But while preparing ledger of the voluntary contribution, they booked some cash expenditure made from the cash received. Thus, the total receipt of voluntary co .....

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Officer that there are some unverifiable donation which comes to the tune of ₹ 3,86,48,000/- and they wanted to disclose ₹ 3,86,48,000/- under section 115BBC(3) of the Act as anonymous donation as it could not produce the details of the donors. In so far as difference pointed out by the Assessing Officer based on the seized materials, it was explained before the Assessing Officer by producing books of accounts that the voluntary donations received by the assessee is only ₹ 7,9 .....

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ll the donation receipts on its own and thereafter it was found that donation receipts to the extent of ₹ 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 pr .....

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mply rejected by saying that he ought to have been offered the above amount in the original return filed. It is not the case of the Assessing Officer that the explanation given by the assessee was found either false or not bonafide. The ld. CIT(A), without examining these fundamental facts, simply came to a conclusion that the anonymous donation received by the assessee is taxable under the Income Tax Act and confirmed the order of the Assessing Officer. We find that the assessee has received vo .....

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Officer came to a conclusion that the amount offered by the assessee is anonymous donation. In fact, in the assessment order, the Assessing Officer came to a conclusion based on the seized materials in ANN/VN/B&D/IMP-5 the assessee has received voluntary donation by way of cash amount to ₹ 12,94,74,800/- and the managing trustee has submitted that the amount is only ₹ 7,94,12,000/-. When the assessee gave an explanation by stating that all the donations received by the assessee .....

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mitted a detailed explanation before the Assessing Officer. Thereafter, it is the duty of the Assessing Officer to establish that the assessee has either concealed the income or filed inaccurate particulars. In the present case, the Assessing Officer has accepted the amount offered by the assessee for 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 .....

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w 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 A .....

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Supreme Court in Civil Appeal No.9772 of 2013, dated 30.10.2013 (Mak Data P. Ltd., vs. Commissioner of Income Tax-II), the Hon'ble Supreme Court while considering the Explanation to Section 271(1), held that the question would be whether the assessee had offered an explanation for concealment of particulars of income or furnishing inaccurate particulars of income and the Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer b .....

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explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. In the instant case, such onus which shifted on the department has not been discharged. In the circumstances, we do not find that there is any ground for this Court to substitute our interfere with the finding of the Tribunal on the aspect of the bonafides of the conduct of the assessee." 15. In the present case, the assessee has expl .....

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orrect 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 D .....

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Explanation 1 w.e.f. 1st April, 1976. The previous Explanation used the expression "deemed to have concealed the particulars of his income or furnish inaccurate particulars of such income for the purpose of clause (c) of this sub-section". While the present Explanation 1 reads: "such income shall be deemed to represent the income in respect of which particulars have been concealed." In effect, this makes explicit what was implicit in the previous Explanation and the Hon'b .....

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case of CIT v. Balraj Sahani 119 ITR 36, the Hon'ble Bombay High Court has observed as under: "The proceedings for penalty against the assessee were taken under s. 271 (l)(c). Under that provision, before the ITO can exercise his jurisdiction to make an order by way of penalty, he has to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. The gravamen of the charge against the assessee was that he had concealed t .....

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to the question as to whether the assessee had in fact received the said sum from the producer. While dealing with that question the Tribunal has exhaustively dealt with the evidence and has found that the producer was an unreliable witness. The Tribunal has also taken into consideration the fact that no finding against the assessee could be reached on the basis of account books which the assessee did not have any opportunity to see or study and in respect of which the assessee did not have any .....

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