TaxTMI 
TaxTMI 
2015 (12) TMI 1832
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....r under consideration, it filed its return of income on 15.10.2010 declaring nil income claiming its entire income as exempt under section 11 of the Act. The Assessing Officer, during the assessment proceedings, noted that an amount of Rs. 3,52,45,500/- was shown by the assessee as corpus fund received during the year. A list of 78 persons involving donation of Rs. 2,00,00,000/- was furnished by the assessee containing names, addresses, date of donation and amount of donation received. The Assessing Officer picked up seven persons randomly out of 78 persons and after calling them recorded their statements in order to ascertain their identity and creditworthiness and genuineness of the donation. The Assessing Officer in his order noted that ....
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.... 50% only on the basis of total 18 persons out of total 78 persons from whom the donations have been received, is not as per law. Further, it was stated that the amount added under section 68 of the Act was a part of corpus donation and the same cannot be treated as income of the previous year by any stretch of imagination as the corpus fund is never an income, hence cannot be treated as income at the whims and fancies of the Assessing Officer. Without prejudice, it was submitted that even if for the sake of arguments, the corpus fund is treated as the income of the assessee, the better course would have been to induct it as donations as the expenditure was much more than the prescribed limit of 85% as the Assessing Officer had not been abl....
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....ssing Officer cannot take adverse inference with regard to the whole amount of the corpus donation only on the basis of statements of 9 persons, giving the fact that the donation was received from as many as 78 persons. Further, his main argument was that even if for the sake of argument, the corpus donation amounting to Rs. 1,00,00,000/- is considered to be the income of the assessee, the application of income being more than 85%, exemption under section 11 of the Act is available to it. By drawing attention to various pages of the Paper Book, it was submitted that the gross revenue receipts of the assessee were 716.19 lacs, whereas the revenue expenditure it self is 726.05 lacs. Additionally, the capital expenditure was Rs. 1425.12 lacs.....
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....n be made by the Assessing Officer if he is not satisfied as to the identity and creditworthiness of the person giving money as well as the genuineness of the transaction, with regard to any amount credited in the books of the assessee. However, this section does not given power to the Assessing Officer to make addition based on his inference drawn on a sample transactions. Out of 78 persons, the Assessing Officer preferred to call only 18 persons, out of these 18 persons, 9 persons have accepted the fact of giving donation. How can a conclusion be drawn that since 9 persons out of 18 persons have denied giving donation. Even out of remaining 60 persons, 30 persons would have denied if they were called. This is stretching the power of inves....