2014 (1) TMI 1685 - AT - Income Tax

Appeal dismissed, assessee's claims unsubstantiated. AO and CIT(A) actions upheld.

Sh. Makhan Singh Mukh Sewadar Versus The Income Tax Officer, Ward 2 (1), Amritsar

Sh. Makhan Singh Mukh Sewadar Versus The Income Tax Officer, Ward 2 (1), Amritsar - TMI Issues Involved:1. Dual Status of the Assessee2. Treatment of Voluntary Contributions3. Utilization of Contributions for Specific Projects4. Set-off of Utilizations towards Charitable/Religious Activities5. Allowability of Capital Expenditure for Charitable/Religious Activities6. Disallowance of Expenses under Section 40(a)(ia)7. Charging of Interest under Sections 234A, 234B, and 234CDetailed Analysis:1. Dual Status of the Assessee:The assessee claimed dual status as a Religious Preacher/Katha Vachak and as a Caretaker/Mukh Sewadar of 'Dera Sant Amir Singh Ji.' The Tribunal found no evidence supporting the claim of dual status. The assessee failed to provide any trust deed or registration under Section 12AA, nor did he produce any document appointing him as Mukh Sewadar. The bank accounts were in the personal name of the assessee, with nominations in favor of his son, indicating personal control over the funds.2. Treatment of Voluntary Contributions:The assessee argued that the voluntary contributions received were for the Dera and should not be treated as his professional income. The Tribunal noted that the assessee did not provide any evidence of the Dera being a registered trust or society. The contributions were deposited in personal bank accounts, and there was no documentation proving that these were corpus donations for specific charitable purposes.3. Utilization of Contributions for Specific Projects:The assessee claimed that the contributions were for a specific project to donate a 'Gold Chatter' to Gurudwara Shri Hazur Sahib and other charitable activities. The Tribunal observed that the funds were diverted for personal expenses, including purchasing life insurance policies and other personal items. The assessee failed to substantiate that the funds were used exclusively for charitable purposes.4. Set-off of Utilizations towards Charitable/Religious Activities:The Tribunal upheld the AO's and CIT(A)'s decision that the benefit of set-off of utilizations towards charitable/religious activities could only be given to trusts registered under Section 12AA. Since the Dera was not registered, the set-off was disallowed.5. Allowability of Capital Expenditure for Charitable/Religious Activities:The assessee argued that capital expenditure incurred for religious and charitable activities should be allowable. The Tribunal noted that the assessee did not provide evidence of the Dera being a registered charitable trust. Consequently, the capital expenditure was not allowable as a deduction.6. Disallowance of Expenses under Section 40(a)(ia):The AO disallowed expenses of Rs. 7,42,848 under Section 40(a)(ia) on the ground that no TDS had been deducted. The Tribunal confirmed this disallowance, noting that the assessee was not registered as a charitable trust and thus, the provisions of Section 28 to 43 were applicable to the assessee.7. Charging of Interest under Sections 234A, 234B, and 234C:The Tribunal noted that the charging of interest under Sections 234A, 234B, and 234C was consequential and did not require separate comments. The interest was upheld as per the provisions of the Income Tax Act.Conclusion:The Tribunal dismissed the appeal filed by the assessee, confirming the actions of the AO and CIT(A). The assessee's claims regarding dual status, voluntary contributions, and utilization of funds for charitable purposes were found to be unsubstantiated. The disallowances and additions made by the AO were upheld, and the assessee's appeal was dismissed.