TaxTMI 
TaxTMI 
2024 (7) TMI 1709
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.... provisions of Section 115BC and Section 68 are not attracted which renders the order illegal, arbitrary and unjustified. 3. That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the addition of Rs. 4,83,16,171/- treating the entire surplus to be taxable invoking the provisions of Section 13(1)(c) and 13(1)(d) r.w.s 13(3) of the Act which is arbitrary and unjustified. 4. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the submissions placed before him in respect of the imprest account maintained by the Chairman which has been the sole basis for invoking the provisions of Section 13(1)(c) and 13(1)(d) r.w.s 13(3) of the Act which is arbitrary and unjustified. 5. Without prejudice to the above and without any concession conceding, the benefit of exemption could at the most be denied only to the extent of alleged benefit provided which though has not been provided to the Chairman in the facts of the case. 6. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. 2. Appeal on Ground Nos. 1 and ....
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....y had made the donations, are nothing but self-serving proclamations not borne out by any permission from the regulating/affiliating authorities that the institutions had been authorized to collect such donations from the students. The affidavits are also an afterthought which may have the footprints of the students being cazoled to backtrack on their sworn statements under statutory provisions of the Act. The students in this case, who under oath conceded before the I.T authorities that they had not made any donations, are a hapless lot before the college authorities given the fact that their degrees and career were at stake. They simultaneously run the risk of their act partaking the characteristics of perjury. The AO's finding about anonymous donations (that partake actually the character of bogus & uncorroborated donations) would have a serious implication on the charitable character of the assessee particularly in light of Supreme Court's decision in the case of CIT (Exemptions) vs. Jagannath Gupta Family Trust in Civil appeal no. 1381 of 2019, wherein Apex Court overruled the decision of Kolkata High Court, holding it to be erroneous and contrary to plain lan....
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....orwarded to the Assessing Officer for comments but no remand report in this regard was filed before the CIT (A) on the additional evidence filed. Regarding statements recorded during the assessment proceedings, the Counsel of the Assessee submitted that the Assessee was not allowed to cross examine the witnesses by adjudicating authority though the statements of those witnesses were made the basis of the assessment order. In support of his arguments, the ld. Counsel of the Assessee cited many case laws some of which are as under: - 1. Geetanjali Educational Society [2008] 174 Taxman 440 (Rajasthan) 2. Anadaman Timber Industries 281 CTR 141 (SC) 6. The ld. DR relied mostly on the orders of the authorities below. Moreover, he argued vehemently that the affidavits filed by the Assessee are after thought and since the students have their carrier in the hands of the Institutions, therefore, they cannot go against the wishes of the administration of the institution. It is because of this reason that they have signed such affidavits. The ld. Counsel of the Assessee submitted that students whose statements were recorded by the Assessing Officer while passing the assess....
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....i.e., payment of donation and also not taking into consideration the affidavits filed by the Assessee, such act on the part of the CIT (A) is not justified. Therefore, the additions confirmed by the ld. CIT (A) on this ground cannot be sustained. Accordingly, appeal on ground Nos. 1 and 2 of the Assessee is allowed. 9. Appeal on Ground Nos. 3 to 5 are against upholding of addition of Rs. 4,83,16,171/- treating the entire surplus over expenditure to be taxable invoking the provisions of section 13(1)(c) and 13(1)(d) r.w.s 13(3) of the Act. The ld. CIT (A) has given his finding bringing out on record the facts discussed by the Assessing Officer in the assessment order as under:- "7.1 Brief facts of the case are that on perusal of balance sheet of the assessee, A.O. noticed that the assessee had shown an amount of Rs. 11,33,022/- to Sh. Anshu Kataria (Chairman of assessee trust) as imprest. During the assessment proceedings, the nature of this account and purpose of the same were asked from the assessee. In response, the assessee filed a copy of account of imprest with Sh. Anshu Kataria and bank statement of the same. On perusal of the same, AO observed....
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....o the college account. The balance amount of Rs. 11.33 lakhs; he kept in his account against his interest free loan of more than Rs. 50 lakhs given to college. As such adequate interest free security existed against the imprest account. Sh. Anshual Kataria has given a loan of Rs. 50 Lacs to the Society. In addition to this loan other bank loans were also raised by the society for building colleges. The banks have made a stipulation in the loan documents that during the tenure of their loans, No repayment of the unsecured loan to the member of the society shall be undertaken. The society was during the year looking for availment of more loans from the bank. The society could not afford to debunk the old loan conditions while asking for new loans. So they could not repay the loans taken from Sh. Anshu Kataria. So indirectly, when Sh. Anshu Kataria needed the funds out of the loan given by him, instead he was asked to use the college funds available in his account. So it was actually *his own funds which were kept by him in the imprest accounts not any college funds. As per above facts your Honour will realize that the amount of Rs. 11.33 lakhs wa....
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....a that the money could not be deposited in the trust's account is also highly preposterous. Coming to the issue of retaining Rs. 11.33 lakhs out of total fees of Rs. 18.78 lakhs collected by Chairman of assessee institution, the counsel contentions, that it was method adopted by the assessee to pay back the Chairman, the unsecured loans received from him, goes against the condition laid by the banks before advancing loans. This clearly depicts that the assessee had given indirect benefit to Chairman of assessee trust who is covered u/s 13(3) of the Act. The Act contains very stringent provisions barring the use of either the property or the income of a charitable or religious trust or institution in any manner whatsoever for the benefit of the author, founder, trustee, manager, a substantial contributor, or even a relative, rigour of the provisions guiding forfeiture of exemption needs to be well understood by assessee seeking exemption." 13. We have considered the findings of the Assessing Officer and the findings of the ld. CIT (A) on this issue. We have also considered the submissions filed by the ld. Counsel and ld. DR and the argument put during the proceeding....