TaxTMI 
TaxTMI 
2025 (4) TMI 391
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....s. 3. Briefly stated, facts of the case are that the assessee is a trust engaged in running of educational institution(s) in remote areas. For AY 2011-12, the assessee filed its return of income on 10.12.2012 disclosing surplus of Rs. 4,01,183/- which was claimed as exempt. In the statement of total income in Schedule F of the return, the assessee showed the entire amount of receipt as applied towards the charitable or religious purposes in India. The case was selected for scrutiny. Accordingly, notices u/s. 143(2) and 142(1) were issued and served upon the assessee which were responded by filing of the submissions / part submissions by the assessee from time to time. During the assessment proceedings, the Ld. Assessing Officer ("AO") found that the assessee trust has claimed exemption u/s.11 of the Income Tax Act, 1961 (the "Act") by filing Form No. 10B. But the trust is granted registration u/s.12A of the Act only w.e.f. 01.04.2012 which does not cover the AY 2011-12 under consideration. The Ld. AO proceeded to complete the assessment of the assessee trust as an AOP denying the assessee's claim of donation/contribution received from farmers as corpus/capital receipts for the r....
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....ic Charitable Trust. ii) The appellant-trust filed return of income for A.Y. 2011-12 on 10.12.2012 in Form No.ITR-7 showing surplus of Rs. 4,01,183/ which, however, was claimed as exempt as the objects were educational in nature. The trust claimed exemption u/s.11 and 12 of the Act in view of facts that applied for registration us, 12AA and it was presumed that such registration would be granted by the CIT-1, Kolhapur with retrospective effect after condoning the delay from the date of creation of the trust. Accordingly, the accounts were audited. The audit report in Form No IOB was filed alongwith the accounts and return claiming its income as exempt us. 11 of the Act. iii) The Assessing Officer while completing the assessment found that the trust had tame exemption u/s.11 of the Act and filed Form No.I0B but as the registration u/s.12A was granted to the trust w.e.f. 01.04.2012, the period covered from 01.04.2010 to 31.03.2011 i.e. the relevant assessment year should not be considered for qualifying exemption u/s., 11 and 12 of the Act. He therefore, proceeded to complete the assessment as an AOP on the income/receipt shown by the trust. The Assessing Officer de....
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....g Officer considered it fit to disallow the entire expenditure claimed by the appellant-trust and taxed the entire receipts shown by the appellant of Rs. 24,82,619/- vii) The Assessing Officer was not justified and patiently erred in taxing the entire receipts for the following reasons:- The trust is running Higher Secondary School having VII th to Xth standards. The strength of the students studying in above classes is 86. The school is situated in a small village having 2000 to 2200 population with no Government facilities and banking facilities. a) The accounts were audited by the Auditor who confirmed that there were receipts in the form of donations from the donors/contributors and also there were expenses simultaneously which were supported by necessary bills and vouchers. Only the issue that, there was no confirmations from the donors/contributors, the receipt shown by the appellant was considered as receipts but for the reasons that the affidavits were filed by the teaching and non- teaching staff for the reasons recorded in the affidavit quoted above, it cannot be said that such expenditure was not incurred by the appellant-trust at all. ....
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....avits and not only one that no salary was given and there was no expenditure. In other words, when the Assessing Officer considered the statement given in the affidavits that no salary was given and hence there was no expenses, he should have considered the other statement in the affidavits given that no donations were received from any persons. This was a patent mistake committed by the Assessing Officer in the assessment order while taxing the receipts of the trust but not allowing the expenses. e) There was an educational institution which ran throughout the year. There were teaching and non-teaching staff who worked throughout the year. Payments were given to them by cash duly enclosed in the cash book. Expenses pertaining to running of the educational institution were also incurred out of the Income/funds of the trust in cash (As in that village there was no Bank). Therefore, without verification of cash book etc, the Assessing Officer would not have taken the view that no expenditure was incurred by the appellant-trust for running the educational institution throughout the year. The Assessing Officer did not raise the question as to how the said educational Instituti....
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....efully. I find that during this relevant assessment year under consideration, the appellant was not registered u/s. 12A of the Act nor it obtained registration u/s. 12AA of the Act. The registration u/s. 12AA granted by the Hon'ble CIT-1, Kolhapur, on 19/06/2013 wel. 01/04/2012. meaning there by the appellant could take all the benefit of sections 11 to 13 for and from the assessment year 2012-13 only. In other words, the appellant is not entitled to benefit of exemption u/s. 11 of the Act for AY 2011-12 i.e. this relevant assessment year under consideration. The AO, therefore, had rightly held that the appellant trust could not be considered for exemption u/s. 11 as claimed by it. As regards the status of the appellant trust, the same would be Association of Persons (AOP) for the purpose of assessment for this year and since the beneficiaries of the assessee are indeterminate and unknown, the surplus/income before allowing the benefit of deduction u/s. 11 of the Act. As to be taxed at the maximum marginal rate u/s. 164(2) of the Act. I, therefore, agree with the contention of the AO in this regard also. 5.3.1 Regarding appellants claim of voluntary donations credited ....
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....as corpus donations. 5.3.2 Now, the AO has treated the said receipts as appellant's unexplained credits u/s. 68 of the Act, which the appellant had allegedly claimed as voluntary contributions. I find that the AO had legally taken the recourse in this regard. The appellant had filed two Affidavits, one from non-teaching staff and the other from the teaching staff as detailed above. From both the Affidavits which were given solemnly on oath by the persons who signed the Affidavit that neither any contributions were received from the villagers nor any such expenditure as debited on account of salary paid to them had been incurred by the appellant trust. Therefore, it is evident and explicit from such Affidavit that there were neither any transactions affected on account of "voluntary contributions", nor there were any transactions relating to "payment of salary" The appellant, however, to make it a show that income/contributions were received and so also salary was paid to the teaching and non-teaching staff, had made the entries in the books of accounts, thereby showing all such entries both for receiving the voluntary contributions from the villagers and paying the sal....
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....he sake of convenience, the section 115BBC is reproduced as below: - "[Anonymous Donations to be taxed in certain cases: 115BBC (1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of- [(i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received, in excess of the higher of the following namely":- (A) five per cent of the total donations received by the assessee, or (B) one lakh rupees, and [(ii) the amount of income-tax with which the assessee would have been chargeable had his total Income been reduced by the aggregate of anonymous donations re....
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..... 24,82,619/- as deemed income u/s.68 of the Act should be taxed as anonymous donation as per the rate prescribed u/s. 115BBC of the Act. The AO is directed to do so. In other words, the AO is directed to compute the tax of the appellant u/s. 115BBC of the Act. 5.3.5 The appellant in the written submission after stating the facts of the case of the appellant claimed the benefit of exemption of its income u/s 10(23C)(iiad) of the Act contending that the appellant existed solely for educational purposes and not for purposes of profit and its aggregate receipts had not exceeded the prescribed limit (i.e. Rs. 1,00,00,000/-) and therefore it was eligible for exemption u/s. 10(23C)(iiiad) of the Act. I find the contention of the appellant is devoid of merit for the reason (i) never before such claim was made by the appellant either in the return of income or before the AO and therefore such a fresh claim at this stage is not acceptable; (ii) the appellant could not adduce/produce any such evidences either in the form of copy of trust deed/memorandum of association or details regarding the objects for which it was created or any supporting documents that it was created solely for....
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.... the Act. It be held accordingly. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in making about turn in his approach that the A. O. should have considered the donations to the extent of Rs. 24,82,619/- added by him under S. 68 that the donations received were anonymous and S. 115BBC applied. The careful perusal of the donations received would reveal that the receipts issued were in name of the donors, their address and were clearly mentioned in the books of account. In such circumstances as per law, cannot be called anonymous donations to attract S. 115BBC of the Act. The Ld. CIT(A) held against assessee without properly appreciating the provisions of law and concerned circular. The Ld. CIT's action is against the law. 4. On the facts and in the circumstances of the case and in law the A. O. made additions under S. 68 of the Act. The Ld. CIT(A) changed this decision of the A. O. and abruptly held the provisions of S. 115BBC attracted being anonymous donations. The Ld. CIT(A) was under bounden duty to issue show cause notice to the assessee trust and also should have called for Remand Report from the A. O. with....
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....(iiiad) of Income Tax Act 1961, was rejected by the commissioner appeals for the following reasons: i. Not claimed exemption before AO and in the return of Income ii. And not produced copy of Trust deed/MOA. iii. Appellant was registered by CIT-1 Kolhapur as a Public charitable Trust u/s 12AAof the Income Tax Act 1961. iv. No such facts and figures and explanation were furnished during appellate stage, demonstrating that it was eligible for exemption under S. 10(230)(iliad). [Para 5.3.5, page 12 of the order of Commissioner (Appeals)] 3. Hon'ble ITAT Bench A, Pune on 24-11-2020, vide its order in ITA no. 620/PUN/2020 (AY 2011-12) dated 01/03/2023 dismissed the appeal on the ground that the appellant has failed to explain properly the delay of 193 days in filing of the appeal. 4. Aggrieved by the said order of the ITAT, the Appellant filed an appeal before Hon'ble High court of Judicature at Bombay, Civil Appellate Jurisdiction. The Hon'ble High court Mumbai, vide its Income Tax Appeal (L) No. 29393 of 2023 order dated 23-02-2024 condoned the delay in filing the appeal and impugned order date 01-03-2023 was q....
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....ncome and Expenditure Account of the Trust), the amounts qualifying as donations are Rs.24,09,000/- only. G-1.3. Without prejudice to the earlier submission, the Appellant submits that the Learned commissioner has not taken any steps to verify whether the said donations were anonymous tested on the provisions enshrined in Sec.2(24)(ii-a) read with S. 115BBC of the Act. The Learned commissioner has hurriedly made the addition of Rs. 24,82,619/-invoking Sec. 115BBC of the Act that too without properly appreciating of facts and law. The decision of the Learned Commissioner is solely based on the affidavits made by teaching/non-teaching staff and the facts behind submission of the affidavits have already been submitted in Para (vii)(b) (page 10) of submission dated 27-Feb-2023. 0-2. The Learned Commissioner denying the exemption under Section 10(23C)(iiiad) of the Income Tax Act, 1961 0-2.1. Claim for benefit of exemption of Section 10(23)(liiad) of Income Tax Act 1961, was rejected by the commissioner appeals for the following reasons: a. Not claimed exemption before AO and in the return of Income b. Not produced any such evidence either in....
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....sessee as tohis rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled, but which they have omitted to claim for some reason or other, (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs," The Appellant also relies on the following judicial pronouncements in this regard: • Thomas Kurian v. Assistant Commissioner of Income Tax [TS-5350-ITAT-2006(COCHIN)-O) AO being a quasi-judicial authori....
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....nts of the Appellant were available to the Learned AO and these did not reflect any item that suggested that the Appellant was carrying on any other activity, other than education. • One of the items of income reported in the Income and Expenditure Account of the Appellant is "SSC Board Fees" and "Scholarships", which are peculiar to an educational Institute only. • Copies of the receipts were also produced before the Learned AO, which clearly stated that the amount was received for running a school in the village, From the above points, it is clear that the Appellant was running a school and in the absence of any other evidence to the contrary, the fact was clearly known to the Learned AO and the Learned Commissioner (Appeals). c. Appellant was registered by CIT-1 Kolhapur as a Public charitable Trust u/s 12AA of the Income Tax Act 1961. Even though Appellant was registered under S. 12AA, the registration was granted from 01.04.2012 and that is the basis applied for denying benefit of exemption under S. 11 of the Income Tax Act. Thus, for the relevant assessment year (2011-12), the Appellant had no exemption benefit available du....
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....case are not disputed. We find the Ld. AO denied the assessee's claim of exemption u/s. 11/12 of the Act as the assessee was not a registered trust u/s. 12A in AY 2011-12 and brought to tax the entire receipts of donations to tax under the provisions of section 68 of the Act mainly for the reason that the assessee failed to substantiate the said receipts by filing confirmations from the donors due to which the genuineness of the transactions(s) remained unproved. The Ld. AO also denied the expenses claimed by the assessee for the reasons recorded above. The Ld. CIT(A) confirmed the action of the Ld. AO observing that the donations were anonymous and applied the provisions of section 115BBC of the Act for the reasons reproduced in the preceding paragraph. We also observe that during the appellate proceeding before the Ld. CIT(A), the assessee made its alternate claim for exemption u/s.10(23C)(iiiad) of the Act which the Ld. CIT(A) rejected mainly for the reason that no such claim was earlier made before the Ld. AO and in the return of income filed by the assessee and also on account of lack of any supporting documents furnished by the assessee in support thereof. Before us, the Ld. ....