Director of Income Tax vs Lala Bhagwan Dass Educational Trust

The challenge in this appeal under Section 260-A of the Income Tax Act 1961 (''Act'') is to an order dated 15th January 2014 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 3494/Del/2013 (AY-2004-05).

The brief facts relevant for the purposes of this appeal are that the Respondent Assessee is running an educational institution and is also registered under Section 12-AA of the Act. For the Assessment Year (AY) 2004-05, by an order dated 29th December 2010, the Assessing Officer (AO) added back to the income of the Assessee a sum of Rs. 1,31,13,000 being the sum received as corpus donation on the ground that the Assessee was unable to satisfy the AO about the identity, genuineness and creditworthiness of the donors. Thus the benefit of Section 11 of the Act was denied to the Assessee for the AY in question. The order of the AO was affirmed by the Commissioner of Income Tax (Appeals) by order dated 18th February 2013. The Assessee then appealed to the ITAT.

In its impugned order dated 15th January 2014 the ITAT noted that the CIT (A) had got an enquiry conducted to verify the genuineness and creditworthiness of the donors and a remand report was called from the AO. From the remand report, it was clear that four of the donors made themselves available before the AO for recording their statements. 13 others had replied to the queries of the AO but had not appeared before the AO. The ITAT concluded that the AO had not placed the correct facts before the CIT (A). Further, the ITAT itself examined the documents placed on record which contained the details of the addresses, telephone numbers and PAN numbers of the donors. The ITAT also noted that in the assessments made for the subsequent AYs 2005-06, 2007-08 and 2010-11, the Assessee had not been denied the benefit of Section 11 of the Act. The assessment for AY 2010-11 had in fact been made on 27th March 2012 i.e. subsequent to the AO''s order for AY 2004-05. The ITAT perused the accounts of the Assessee which showed that there was sufficient capital expenditure during the year which was much more than the corpus donation received by it. Accordingly the ITAT found no justification in denying the benefit of Section 11 to the Assessee.

At the first hearing of this appeal on 22nd September 2014, this Court had made it clear that since the impugned order of the ITAT was being challenged on the ground of perversity, but without enclosing the relevant papers, "the Appellant should ensure that the relevant papers and documents when findings of fact are challenged on the ground they are perverse, are enclosed." The Court specifically requested either the CIT or the Director of Income Tax to state on affidavit whether he had examined the relevant papers and documents "when challenge is made on the ground of perversity."

It was, therefore, incumbent on the Appellant, in terms of the order passed by this Court on 22nd September 2014, to enclose with its affidavit copies of the relevant documents and in particular the confirmation letters/responses filed by 13 of the donors before the AO in the remand proceedings confirming that they had made donations to the Assessee.

The affidavit dated 26th November 2014 of the CIT filed pursuant to the above order has been perused by the Court. The said affidavit does not enclose the relevant response/confirmation letters of the 13 donors filed before the AO and also does not indicate why those letters do not satisfy the requirement of the law. Mr. Kamal Sawhney, learned Senior Standing Counsel for the Appellant, did not dispute that the said relevant documents were not enclosed with the affidavit. He, however, sought some more time for that purpose. Considering that since 22nd September 2014 there have been three adjournments granted to the Appellant to comply with the order, the Court is not prepared to grant any further indulgence.

The Appellant has been unable to persuade the Court that impugned order of the ITAT suffers from perversity.

The appeal is accordingly dismissed.