TaxTMI 
TaxTMI 
2026 (10) TMI 1096
X X X X Extracts X X X X
X X X X Extracts X X X X
....of being heard 2. The CIT(A) violated the basic principles of natural justice by not providing an opportunity of hearing in person through video conference facility to the Appellant in spite of the specific request made in this behalf. 3. The CIT(A) failed to consider the submissions made by the Appellant in the appeal proceedings. As regards validity of Reassessment proceedings 4. The learned CIT(A) was wrong in not adjudicating and deciding on the specific ground raised by the Appellant regarding initiation of reassessment proceedings under section 147 of the Act. 5. Without prejudice to the above, the CIT(A) erred in confirming the additions of Rs. 18,51,92,272 made in the reassessment order passed u/s 147 by the AO, even though there was no escapement of income by the appellant. 6. The CIT(A) erred in confirming the reopening made beyond the period of four years from the end of the assessment year, without adjudicating and discussing as to how the conditions/requirements of the first proviso to the section 147 of the erstwhile law were satisfied in the case. 7. The CIT(A) failed to consider that the reassessment was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....grounds of appeal are independent of and without prejudice to one another. Relief sought: Your Appellant prays that the reassessment order: i) Be declared null and void and quashed; or alternatively The reassessment order be modified by: ii) Allowing exemption u/s 11(1)(d) in respect of Corpus donations aggregating to Rs. 18,09,00,000; ⅲ) Allowing application of income of Rs. 37,15,492 u/s 11(1)(a) on account of purchase of immovable property; iv) Restoring the total income of the appellant to Rs. 1,81,500 as declared in the return of income; v) Deleting interest levied u/s 234B, 234D and 244A. 15. Without prejudice to the above, while holding that the donations are not exempt as Corpus donation, the CIT(A) erred in not directing the allowance of exemption of 15% of such donations as accumulation u/s 11(1)(a). "Grounds of Appeal in ITA 5138/MUM/2025, 1. The Commissioner of Income Tax (Appeals) ('CIT(A)') erred in confirming the additions of Rs. 40,43,07,688 made by the AO in the assessment order passed u/s. 143(3) of the Act. Denial of opportunity of being heard....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r passed by the AO be modified by: i) Allowing exemption u/s 11(1)(d) in respect of Corpus donations aggregating to Rs. 21,52,56,985; ii) Allowing accumulation of income of Rs. 18,90,50,703 u/s 11(2); iii) Interest levied u/s 234B be deleted Additional Grounds of appeal in ITA 5138/MUM/2025 12.Without prejudice to the above, while holding that the donations are not exempt as Corpus donations, the CIT(A) erred in not directing the allowance of exemption of 15% of such donations as accumulation u/s 11(1)(a). Your Appellant craves leave to add to, alter, modify or delete any of the above grounds, if and when required. The above grounds of appeal are independent of and without prejudice to one another. 3. Since both these appeals pertain to the same assessee, involve identical issues, facts and circumstances, they were heard together and are being disposed of by this common order. First, we shall be taking the assessee's appeal in ITA No. 5139/MUM/2025 for A.Y. 2013-14 as the lead case. 4. The brief facts of the case are, that the assessee is a trust, had filed its return of income for AY 2013-14 on 25.03.2013 by decl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Swadhyaya Parivar' of various locations/cities instead of individual donors. A query was raised, if individual donor's names were not mentioned, then how such donation can fall within the definition of Corpus donation, to treat them exempt u/s 11(1)(d) of the Act. The assessee has responded to aforesaid queries on ld. A.O., which were placed on record. The assessee trust has submitted copies of pages of register and copies of receipt, which according to A.O. are not authentic for certain reasons such as (1) there is no title of register, format of pages are different, (2) the serial no. in the register are not in continuity, (3) there were over writings in the serial no. of the register, (4) many receipt are without date and few are even without signature, (5) certain receipt nos. did not appear in the register and (6) PAN details and bank details of donors were not found. 5. With the aforesaid observations, the ld. A.O. referred, as specifically mentioned by the Ld. CIT(E) vide order u/s 263 of the Act that in the list at many places donors name is mentioned as 'Swadhyaya Parivar' and no individual name has been mentioned, itself means, that such donation cannot fall within the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....272/- 7. Being aggrieved with the aforesaid addition the assessee preferred an appeal before the Ld. CIT(A), however remain unsuccessful to convince qua the aforesaid two additions made by the A.O. The appeal of the assessee, therefore, was dismissed by the Ld. CIT(A) with the following observations: "DECISION 7. I have examined the assessment order, the submissions made by the appellant and the judicial decisions cited by the parties. All grounds of appeal have been discussed together. The present appeal is directed against the assessment order dated 24.09.2021 passed under section 147 read with section 144B of the Act by the National Faceless Assessment Centre, New Delhi, assessing the total income of the appellant at 18,51,92,272/, as against the returned income of Rs. 1,81,504/-. The assessment was reopened following the order passed under section 263 by the CIT(Exemptions) on 29.03.2019, whereby it was found that substantial donations claimed as corpus were not supported by valid direction letters and that the exemption under section 11(1)(d) was allowed without proper verification. 8. In the reassessment proceedings, the Ld. Assessing Officer fou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for nearly a decade from the time of purchase was not credible. In the absence of proof that the property was used for charitable purposes during the year under consideration, the Ld. Assessing Officer was justified in disallowing the claim of application under section 11(1)(a) in respect of this amount. 11. The appellant's contentions during appellate proceedings largely reiterated the submissions made during the assessment proceedings. Additional evidence in the form of affidavits and letters from some donors was filed with a prayer for admission under Rule 46A, citing the inability to collect such material earlier due to volume and logistical constraints. However, it is pertinent to note that the claim for exemption under section 11(1)(d) for such a substantial amount imposes a corresponding obligation on the assessee to maintain and produce primary documentary evidence contemporaneously. Failure to do so cannot be cured through post-facto justifications, especially when the assessment process involved repeated and specific requisitions for these documents. 12. Moreover, while the appellate authority has wide powers under section 250(4), such discretion mu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the said investment had been made out of the accumulations of the past and is an expenditure incurred towards the objects of the trust. b) In the present case, originally, assessment order dated 26.02.2016 had been passed under section 143(3) of the Act. Further, the present reassessment proceedings have been initiated by issuance of notice dated 05.03.2020 which is after the period of four years from the end of the relevant assessment year being 2013-14 which expired on 31.03.2018. In such circumstances, based on proviso below section 147 of the Act, it is essential that the AO further fulfills the conditions of there being a failure on the part of the petitioner to disclose fully and truly all material facts necessary for the purposes of its assessment. In the present case, no such failure has been alleged or shown. A bare perusal of reasons recorded before reopening the assessment shows that the AO has formed his belief with respect to escapement of income based only on the assessment record. c) In the present case, no new material has come to the notice of the AO after the passing of the assessment order. Further, both the aforesaid issues being receipt of c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....buted as corpus donations to the Appellant. Once the individual donor has contributed the amount to the Pariwar, then the manner of utilization of those funds is the prerogative of the persons managing the affairs of the respective Pariwar. The said individual donor holds no interest in the funds after having donating the same to the Pariwar. In such circumstances, the funds belonged to the Swadhyay pariwar and its manner of utilization towards the activity of the respective pariwar or for contribution as corpus donation to the Appellant naturally has to be by the persons managing its affairs. Hence, the conditions relating to expression of interest by the donor being the Swadhyay Pariwar is fulfilled in the present case. It is respectfully submitted that, the Pariwar being an amorphous or unregistered body should not make any difference. The concept of Swadhyay Pariwar has been in existence for more than six decades in the past. 10. Regarding the assessee's claim for utilization of funds for the property purchase at Thane to be allowed as application of fund by the assessee, within the meaning of Section 11(1)(a) of the Act. The ld. Counsel have furnished a detailed submission,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....position has been upheld by the CIT(A) in his appellate order. 7. It requires consideration that the purposes of accumulation as per the resolution dated 09.07.2017 is not general but specific. None of these purposes are a reproduction of the objects of the trust, but are specific projects, which the trust proposes or intends to undertake on a large scale at a large number of places all over India. Further, reliance is also placed on judgment of the jurisdictional High Court in the case of Sir Jamshetjee Jeejebhoy Charity Fund ((2025) 180 taxmann.com 401 (Bombay High Court)] and the Gujarat High Court in the case of CIT v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [(2019) 409 ITR 591(Guj.)], which stands approved by the Supreme Court in (2019) 105 taxmann.com 97.With the aforesaid submissions, it was prayed that the grounds of appeal raised by the assessee may please be allowed. 12. Per contra, the Ld. CIT DR representing the Revenue vehemently supported the orders of Revenue Authorities and have submitted that the assessee has furnished certain additional evidence before the Ld. CIT(A), which were not there before the A.O. therefore such post-facto su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the assessee had been specifically alleged therein. It was, therefore, contended that, in the absence of satisfaction of the condition prescribed by the proviso to section 147, the assumption of jurisdiction for reopening the assessment was invalid. 14.2 The second contention is that the reopening was based on the very issues which had already been examined during the course of the original assessment proceedings. It was submitted that the issues relating to the assessee's claim regarding receipt of corpus donations and the utilisation of accumulated income towards acquisition of the immovable property, being a flat at Thane, had been considered by the Ld. AO during the original assessment proceedings. According to the assessee, in the absence of any fresh tangible material coming to the notice of the Ld. AO subsequent to the completion of the original assessment, the subsequent formation of belief amounted to a mere change of opinion, which could not furnish a valid basis for reopening the assessment. 14.3 The third contention is that the reopening was initiated pursuant to the opinion formed by the Ld. PCIT while exercising revisionary jurisdiction under section 263 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cordingly submitted that the reopening was founded upon material and enquiries available to the Ld. AO and was in accordance with the statutory requirements governing assumption of jurisdiction under section 147. 14.8 We have thoughtfully considered the rival submissions and perused the material available on record, inter alia the reasons recorded by the Ld. AO for reopening the assessment. As regards the objection based on the proviso to section 147 of the Act, we find that the reasons recorded by the Ld. AO specifically advert to the particulars and material which, according to the Ld. AO, had not been fully and truly disclosed by the assessee in the course of the original assessment proceedings. Thus, the requisite jurisdictional condition relating to failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment has been addressed in the reasons recorded. The objection of the assessee in this regard, therefore, does not merit acceptance. 14.9 As regards the plea of change of opinion, it is evident from the material placed before us that the Ld. AO, while recording reasons for reopening, considered the assessment records and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erial available on record, we do not find merit in the contentions raised by the assessee challenging the assumption of jurisdiction under section 147 of the Act. The objections founded upon the proviso to section 147, change of opinion, borrowed satisfaction, and alleged fishing and roving enquiry, therefore, do not warrant interference with the reopening of the assessment. Accordingly, Grounds No. 4 to 7 raised by the assessee, stands rejected. 15. Adverting to Ground Nos. 8 to 11 of the present appeal, assails the issue of denial of exemption of corpus donations u/s 11(1)(d) of the Act. As per facts on record, the assessee claimed corpus donation to the tune of Rs. 18,09,00,000/- which was denied by the Ld. AO with the observation that claiming of exemption u/s 11(1)(d) of the Act requires, not only the donation received are corpus donations but even the donors to provide specific directions that such donations given by them are corpus donations. Since the claim of exemption u/s 11(1)(d) is not backed by direction letters of corpus donations even during the assessment proceedings the assessee failed to substantiate its claim of exemption u/s 11(1)(d). It is further clarified ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 3,12,48,164/-. He further explains that there is no dispute that necessary directions letters from such donors expressing their intention that donations towards corpus of the trust have been duly received, therefore to the said extent its claim may be accepted. Further regarding balance amount of Rs. 14,97,42,621/-, it is submitted that the amounts were paid by Swadhyaya Parivar of different locations and the letters are issued confirming the donations to be towards corpus funds. It is submitted that the whole dispute revolves around whether such intention comes from the donors to Swadhyaya Parivar for which it is clarified that the individual donors have made donations to Swadhyaya Parivar for its general activities, the person managing the affairs of Parivar may receive certain amount from individuals with the understanding that such amounts are utilized for functions of Parivar and the surplus may be contributed as corpus donations to the assessee. It is further submitted, that under such circumstances the funds belong to Swadhyaya Parivar, thus manner of utilization towards activity of respective Parivar or for contribution as corpus donation to the assessee naturally has to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed or deposited in one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus (emphasis supplied) 15.3 While going through the aforesaid provisions specifying the pre-conditions for the corpus donations, which are to be treated exempt u/s 11(1)(d) of the Act, the aforesaid provision states that the income in the form of voluntary contribution made with the specific direction that they shall form part of the corpus of trust or institution, subject to the conditions that such voluntary contributions are invested or deposited in one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus. The first and foremost requirement for any donation to become corpus u/s 11(1)(d) is that such voluntary contribution should be received by the charitable organization/assessee along with specific directions that they shall form part of the corpus of trust/institution. While applying such conditions in the facts of the present case, we find that the assessee has submitted direction letters from individual amounting to Rs. 3,12,48,164/- with clear expression regarding their intention that the donations are toward....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he corpus does not, on the material presently available, establish an unconditional and specific direction by the respective donors that their contributions were to form part of the corpus. The character of the contribution is required to be determined with reference to the intention and direction of the donor and not merely by the manner in which the recipient subsequently proposes to appropriate or classify the surplus. Accordingly, in the absence of material demonstrating that the requisite specific direction was given by the individual donors themselves, we find that the statutory precondition for treating the aforesaid amount as corpus eligible for exemption under section 11(1)(d) has not been established. To this extent, the assessee's claim under section 11(1)(d) is not substantiated on the material available on record. 15.6 Herein we clarify that, the voluntary contribution received by a trust or institution can qualify as a corpus donation under section 11(1)(d) of the Income-tax Act, 1961, where such contribution is made with a specific direction by the donor that the same shall form part of the corpus of the trust or institution. The essential requirement, therefore, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ence of material establishing such authority, a direction subsequently issued by the managing persons, without reference to the individual donors, would require careful examination as to whether it fulfils the statutory requirement of a specific direction by the donor under section 11(1)(d). 15.8 Moreover, If the donation is received for general activities, with a stipulation that any surplus may subsequently be transferred to or used as corpus, the character of the receipt requires distinction between the original contribution and any subsequent appropriation. 15.9 Under section 11(1)(d), the statutory requirement is that the voluntary contribution itself must be received with a specific direction from the donor that it shall form part of the corpus. Therefore, where the donor has contributed the amount for the general activities of the trust, subject to a rider that the surplus, if any, may be transferred to corpus, the original contribution would prima facie retain its character as a general voluntary contribution, and the subsequent decision of the assessee to appropriate an unspent balance towards corpus would not, by itself, satisfy the requirement of section 11(1)(d). ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pose of trust. An agreement of purchase placed at page no. 119 to 144 of the assessee's paper book, according to which the flat was purchased by the assessee "Sanskruti Vistarak Sangh Mumbai - Swadhyaya Parivar" dated 24th August, 2012. Further, the Ld. Counsel of assessee has furnished certain more documents like photograph of the flat, copy of municipal bills which are in the name of Mr.Vijay Purshottam Kharkar and Mrs. Pratibha Kharkar, electricity bills in the name of Sanskruti Vistarak Sangh through Arun C Shaha, register showing details of meeting, functions held at the said premises at page no.179 to 181. 16.1 It is submitted that in view of aforesaid documents, facts and circumstances, the property was utilized towards the objects of the trust. Therefore, the assessee should not be denied the statutory exemption u/s 11(1)(a). 16.2 The Ld. CIT DR on the other hand submitted that the utilization of flat could not be substantive by the assessee to be undertaken for the purpose of objects of the assessee trust, therefore, the Ld. AO has rightly denied the exemption which was further sustained by the Ld. CIT(A). 16.3 We have considered the rival submissions and perused ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e purchase documents and source of funds utilised for acquisition of the flat, and the contemporaneous records evidencing its actual utilisation, including the relevant register, resolutions, books of account and other supporting material furnished by the assessee. The assessee shall be afforded reasonable opportunity to substantiate its claim. The Ld. AO shall thereafter record a specific finding as to whether the acquisition and subsequent utilisation of the flat were in conformity with the purpose for which the income was accumulated under section 11(2) and had the requisite nexus with the charitable objects of the assessee. The issue is accordingly restored to the file of the Ld. AO for fresh verification and adjudication in accordance with law. Ground no. 12 of assessee's appeal thus is partly allowed for statistical purposes 17. Additional Ground: Without prejudice to the aforesaid claim, the Ld. Counsel for the assessee submitted that, even if the amount claimed as corpus donation under section 11(1)(d) is held not to qualify for exemption thereunder, the assessee would nevertheless be entitled to the benefit of the statutory accumulation of 15% contemplated under section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by us in Ground Nos. 4 to 7 of the assessee's appeal for AY 2013-14 in ITA No. 5139/Mum/2025, wherein the issue has been examined at length. Since, the facts and circumstances giving rise to the present grounds are at parity with those considered in the aforesaid appeal, our findings and decision therein shall apply, mutatis mutandis, to the present case. Accordingly, following our decision in ITA No. 5139/Mum/2025, Ground Nos. 4 to 7 of the present appeal are partly allowed. 23. Ground Nos. 8 to 10 are regarding disallowance of accumulation u/s 11(2). On this aspect, the Ld. Counsel of the assessee submitted that the disallowance of accumulation for Rs. 18,90,50,703/- was made by the Ld. AO whereas the assessee has made all the conditions specified u/s 11(2) of the Act. In this regard, Ld. AR drew our attention to page no.96 of the paper book placing Form No.10 for the AY 2017 dated 16.10.2017 specifying therein that the details/purpose for which amount is being accumulated or set apart is as per result passed at trustee meeting. Ld. AR also shown us the copy of resolution passed at meeting of the trustees held on 09.07.2017 specifying therein the objects and purposes for wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lfilled section 11(2) r.w.r 17 and entitled the trust to examine its re-assessment in its issue solely on the ground of insufficient specificity in Form 10 cannot be the sole reason for disallowance u/s 11(2) of the Act. Particularly in the present case, where the assessee has specified all the purposes which are extracted as under: "1. To create, maintain, upkeep Socio- Economic Centers in villages and small tow., The people will offer their services selflessly In these centers creating harmony within human being irrespective of religion, caste, creed, community. 2. To undertake the projects of Well Recharging and Rain Water Harvesting. To identify such areas and undertake projects of Construction of Bore Wells as well as of Well Recharge and Rain Water Harvesting by applying the technique of diverting the rain water into open wells or bore wells. 3. To construct the soak pits and make them available for discharging the domestic soiled water. To construct Toilets for men and women. To educate the people about hygienic habits. To create awareness about health realted issue and simple technique for well being. 4 To establish educational and vocati....