TaxTMI 
TaxTMI 
2025 (5) TMI 510
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....he view of the AO that the donations of Rs. 1,94,82,506/- received for Covid relief were taxable as the income of the assessee u/s 56(2)(x) of the Act. 5. By way of an additional ground of appeal, the assessee has challenged the validity of the order u/s 175 of the Act claiming that the same deserves to be quashed. Since this additional ground goes to the root of the matter, the same is addressed first. 6. Representatives of both the sides were heard at length, case records carefully perused and the judicial decisions referred to and relied upon duly considered. 7. Briefly stated the facts of the case are that the assessee is a journalist and a columnist for the Washington Post newspaper. The AO was in the know of a complaint against the assessee with regard to the donation fund she raised in three separate campaigns in Ketto platform. The complaint was investigated by the investigation wing and a report was submitted which included the following:- "a. Ms. Rana Ayyub (the assessee) has received a total of Rs. 2,69,50,695/- as donations through 3 donation campaigns started on the platform "ketto". b. Out of the same Rs. 80,49,856/- have been received in fo....
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....mber as under:- in Rs. Total Withdrawal Campaign 1 Campaign 2 Campaign 3 Total Mohammed Ayyub Shaikh 85,92,063 66,74,082 7,61,677 1,60,27,822 Iffat Shaikh 37,15,07 - - 37,15,071 Rana Ayyub Shaikh - - 72,01,786 72,01,786 Total 1,23,07,134 66,74,082 79,63,463 2,69,44,679 8.2. It would be pertinent to mention here that Mohammed Ayyub Shaikh is the father of the assessee and Iffat Shaikh is the sister of the assessee. A substantial amount of donations were transferred from her father and sister's accounts to the account of the assessee as under:- in Rs. Transfers Total Receipt Transfer to Rana Transfer in Net Receipt Mohammed Ayyub Shaikh 1,60,27,822 -84,40,000 75,87,822 Iffat Shaikh 37,15,071 -36,40,000 75,071 Rana Ayyub Shaikh 72,01,786 1,20,80,000 1,92,81,786 Total 2,69,44,679 -1,20,80,000 1,20,80,000 2,69,44,679 8.3. The AO found that in spite of time spent of more than one year from the first campaign, the assessee has unutilized funds of approximately Rs. 2.4 Crores, for which no separate....
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....s (2), (3), (4), (5) and (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person as they apply in the case of persons leaving India." 10.1. It can be seen from the above that Section 175 of the Act has to be read and considered in the light of the provisions of sub-sections (2), (3), (4), (5) and (6) of section 174 of the Act, which read as under:- "Assessment of persons leaving India. 174. (1) Notwithstanding anything contained in section 4, when it appears to the [Assessing] Officer that any individual may leave India during the current assessment year or shortly after its expiry and that he has no present intention of returning to India, the total income of such individual for the period from the expiry of the previous year for that assessment year up to the probable date of his departure from India shall be chargeable to tax in that assessment year. (2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed....
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....1 of the Act for enquiry in this matter. The representation was made on 01/07/2021 whereas the first summon was issued on 15/06/2021. Moreover, this act of the assessee goes on to show that she was aware that as on date such funds received are taxable in her hands. Throughout the proceedings, the assessee took a stand that she is not a beneficiary of those funds but the same cannot be exhibited because the funds have been mixed up with her personal funds as no separate account was maintained. The stand of the assessee that, in case of Ketto, the beneficiary is clearly identified by Ketto to whom the funds are to be transferred, is also not acceptable as the funds have been transferred in the personal account of the assessee, her father and her sister. When the assessee was cornered by the Tax Department, she offered the entire donations raised from Ketto platform as "income from other sources". 12. Considering the facts of the case in totality, keeping in mind the transfer of funds, we have no hesitation to hold that provisions of Section 175 r.w. provisions of sub-sections (2), (3), (4), (5) and (6) of section 174 of the Act, squarely apply in case of the assessee and there is ....
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....irst proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account ^61[or through such other electronic mode as may be prescribed^62], on or before the date of agreement for transfer of such immovable property: Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections: ^63[Provided also that in case of property being referred to in the second proviso to sub-section (1) of section 43CA, the provisions of sub-item (ii) of item (B) shall have effect as if for the words "ten per cent", the words "twenty per cent" had been substituted;] (c) any pr....
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.... (XIII) by a member of the family of a deceased person,- (A) from the employer of the deceased person; or (B) from any other person or persons to the extent that such sum or aggregate of such sums does not exceed ten lakh rupees, where the cause of death of such person is illness related to COVID-19 and the payment is- (i) received within twelve months from the date of death of such person; and (ii) subject to such other conditions^70, as the Central Government may, by notification in the Official Gazette, specify in this behalf. Explanation.-For the purposes of clauses (XII) and (XIII) of this proviso, "family", in relation to an individual, shall have the same meaning as assigned to it in Explanation 1 to clause (5) of section 10:] ^71[Provided further that clauses (VI) and (VII) of the first proviso shall not apply where any sum of money or any property has been received by any person referred to in sub-section (3) of section 13.] ^72[Explanation.-For the purposes of this clause,- (a) the expressions "assessable", "fair market value", "jewellery", "relative" and "stamp duty value" shall have the ....
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....a journalist, it is clear that the as per the Foreign Contribution (Regulation) Act, 2010, she could not have received foreign contribution directly in her account. Therefore, she withdrew the amounts from Ketto platform in the accounts of her father and sister from where she had transferred it to her account. The assessee has not spent the money received for the purpose for which such funds were received but diverted the same for other purposes. 17. Considering the facts in totality, we are of the considered view that the donations collected were not just for Covid relief but also for other so-called purposes like funds for slum dwellers and farmers as also for relief work in different states for different purposes. But all the donations collected were parked in the savings bank account of the assessee and family members and no separate accounts were maintained. The funds were also used for personal purposes and also for investment in FDR and substantial amount of donation received remained un-utilized in spite of long time gap. The claim that the end use of these funds was initiated for charitable activities remains unproved. The manner in which the funds were collected, is al....