TMI Blog2017 (11) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... ool-proof records on the identity of the donors, we are of the opinion that the principle of adhocism adopted by CIT(A) is the only method available in this case for taxing donations as “Anonymous Donations”. As such, the CIT(A) fairly restricted such charge of taxation only to 10% of the entire donations in both the years. All the verifiable identity of the donors, if any will fall in the balance 90% of the entire donors in both the years. From this point of view, we are of the opinion, order of the CIT(A) is fair and reasonable and it does not call for any interference. AO initiated the enquiry into the said donations. He also gathered the adverse evidence against the assessee from a donor named Shri Balu Shivaji Pawar vide letter dated 26.12.2012. Therefore, the counsel’s argument before us regarding the creation of new source by the CIT(A) for the first time in his order of enhancement of the assessment, is not sustainable. Accordingly, the only ground raised by the assessee in both the C.O’s are dismissed. - ITA Nos.843 & 844/PUN/2015 And C.O Nos.34 & 35/PUN/2017 - - - Dated:- 22-9-2017 - SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi), the Cochin Bench of the Tribunal in the case of ACIT vs. Muslim Education Society 1 ITR 527 were cited by the CIT(A) in para 12.4 of his order. Eventually, the CIT(A) held that the assessee is entitled to deduction u/s.10(23C)(v) in respect of income added u/s.68 of the Act. 4. Further, the CIT(A) made other disallowance too out of the donations invoking the provision of section 115 BBC of the Act. This issue shall be discussed when dealing with the Cross Objection by the assessee. 5. Aggrieved with the said relief given to the assessee, the Revenue filed the main appeal. Further, aggrieved with the invoking of the provisions of section 115 BBC of the Act, the assessee filed the Cross Objection before us. 6. In connection with the issue raised in the main appeal, Ld.D.R for the Revenue relied on the order of the AO and requested for reversing the finding of the CIT(A) on the issue of providing exemption/deduction u/s.10(23C)(v) of the Act in respect of the additions made u/s.68 of the Act. In the process, he relied on the decision of Hyderabad Bench of the Tribunal and fairly mentioned that it is a case of granting exemption/deduction in respect of the additions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f; The words used in the section is any income received by any trust is exempt. Therefore, the income of the appellant trust assessed by the A.O. by making addition u/s 68 shall also qualify for exemption. This proposition of law is supported by following decisions. i) Sri Krishna Educational and Social Trust Vs. ITO (2013) 351 ITR 178 (Mad) In this case it has been laid down that addition u/s.68 is not possible when the assessee s income was exempt u/s 10(22) of the Act, unless the Commissioner granting the exemption has withdrawn the same. ii) DIT Vs. Raunaq Education Foundation (2007) 294 ITR 76 (Del) The Hon'ble High Court has concluded that the word income as occurring in section 10(22) cannot be given restrictive meaning and must be given its natural meaning or the meaning ascribed to it in section 2(24) and therefore, the use of the word income in sub-section (22) of section 10 is wide enough to include deemed income under section 68 of the Act. The Hon'ble Court has held as under:- 6. We find that the words derived from (or some other similar words) do not occur in s. 10(22) of the Act and, therefore, the word income as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant trust was not meeting the conditions given in section 10(23C)(v) of the I.T. Act, 1961. In the assessment order for subsequent A.Y. i.e. 2012-13 AO has not denied exemption u/s 10(23C)(v) where facts are identical. Further, section 10(23C) starts with any income . The case laws relied upon by appellant suggest that any income also includes deemed income added u/s 68 or 69 of the I.T. Act, 1961. As long as the appellant trust enjoys exemption u/s 10(23C)(v), I am of the opinion that any addition made by the AO on account of unexplained cash credits u/s 68 of the Act would also be eligible for exemption u/s 10(23C)(v) of the I.T.Act, 1961. Further, it is also clear that the appellant trust has used the unsecured loans towards the objects of the trust. It has also been evident from the financial statements of the appellant trust the income even after addition results in deficit. As the AO s assessment orders dated 25/03/2013 and 25/03/2014 clearly mention that there was no dispute to the fact that the trust was notified under the provision of section 10(23C)(v) of the Act, I am of the considered opinion that the above referred judicial pronouncements including Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er these appeal memos to our Chartered Accountant Mr. Yogesh Punde, this delay of 26 days has been occurred in filing these cross objections 11. On considering the above reasons given by the assessee in the affidavit filed by the Chairman of Trust dated 17.06.2017, we are of the opinion the Cross Objection is required to be admitted. Consequently the same is taken for adjudication. 12. The Cross Objection raised by the assessee reads as under: 1. On the facts and in the circumstances of the case Ld.CIT(A) has erred in directing the Assessing Officer to consider 10% of the donations as anonymous and tax the same u/s 115BBC as such direction is not within the powers of the Ld. CIT(A) because it amounts to assessing new source of income. 13. The background facts relating to the above said Cross Objection includes that the assessee received donations from various donors. The Assessing Officer investigated into the identity of the said donors. AO invoked various provisions of the Act for investigating the same. Eventually, in the process, few donors denied having given any donations to the Trust. However, in the assessment, for unknown reasons, AO did not make any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enquiry was conducted by the CIT(A). Accordingly, the CIT(A) invoked the provisions of section 115 BBC of the Act and taxed 10% of the donations in both years applying the tax rate of 30%. 15. Aggrieved with the above order of CIT(A), assessee filed Cross Objection with the ground extracted above. 16. Before us, Ld.Counsel for the assessee Shri Piyush Bafna submitted that, in taxing 10% of the donations as anonymous donation, the CIT(A) exceeded his jurisdiction by creating new source of income for the assessee and same is not permissible under the provisions relating to the enhancement of the assessment. Relying on various Supreme Court judgments, Ld.Counsel submitted that the CIT(A) is prevented from assuming such a jurisdiction. Referring to the provisions of section 115 BBC of the Act, Ld.Counsel submitted that the definition given to the Anonymous Donations does not apply to the donations under consideration as assessee dutifully maintained the record of the identity indicating the name and addresses and such other particulars. For this, the facts of conducting enquiries by the CIT(A) using such names and addresses was relied upon by the Ld.AR before us. Further, Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e names and addresses taken for verification on test check basis, goes to cast of doubt about the genuineness of the such records, name of donors, donations etc., From that point of view, considering the assessee s failure to maintain the fool-proof records on the identity of the donors, we are of the opinion that the principle of adhocism adopted by CIT(A) is the only method available in this case for taxing donations as Anonymous Donations . As such, the CIT(A) fairly restricted such charge of taxation only to 10% of the entire donations in both the years. All the verifiable identity of the donors, if any will fall in the balance 90% of the entire donors in both the years. From this point of view, we are of the opinion, order of the CIT(A) is fair and reasonable and it does not call for any interference. 20. Regarding the argument of the counsel for the assessee that revolves around the creation of a new source of income by the CIT(A) for the first time, we are of the opinion Ld.Counsel for the assessee ignored the fact that AO scrutinized the issue of donors and donations during the assessment proceedings. The same is evident from the contents of para 14. The relevant port ..... X X X X Extracts X X X X X X X X Extracts X X X X
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