Pracheen Shri Aggarwal Digamber Jain Panchayat vs ITO, Ward-62(1), Delhi

PER M. BALAGANESH, A. M.:

The appeal in ITA No.8142/Del/2025 for AY 2018-19, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 27.11.2025 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 06.04.2021 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as ‘ld. AO’).

Though the assessee has raised several grounds of appeal before us, the only effective issue to be decided in this appeal is as to whether the learned CIT(A) was justified in confirming the action of the learned AO in taxing the gross receipts of Rs 3,98,75,924 in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the materials available on record. The assessee is a registered society under the Societies Registration Act dated 1-9-1961. Prior to getting registered under the Societies Act, it was carrying on its religious and charitable activities under an unwritten constitution since last more than 500 years and has a historical importance. It was popularly known as Lal Mandir or as ‘Charitable Bird Hospital’ and is situated opposite to Red Fort, Delhi. The written constitution was executed on 8-10-1960. Copy of the certificate of registration under Societies Registration Act was duly placed on record. The said constitution however was revised on 28-3-1981 and since then it is carrying on its activities under the revised constitution dated 28-3-1981 till date.

The assessee society is engaged in managing old ancient temples, manuscripts, dharamshala, birds hospital, imparting naitik and sanskar shiksha in Delhi including Shri Lal Mandirji opposite Red Fort and a bhojanashala for the visitors and general public of whatever sect, caste or creed and existing since the dynasty rule of Aurangazeb in India. The main income of the society are from anonymous donations made in the donation boxes situated in various temples being managed by the society which amounts are exempt under the provisions of section 115BBC(2) of the Act. It is also selling books printed under the assessee Trust or otherwise on very nominal concessional prices occasionally besides other activities. It is also running a birds hospital at Chandni Chowk, Delhi opposite Red Fort and is also constructing a dharamshala for the benefit of visitors at Shri Mahavirji in Rajasthan. The income earned and the expenses incurred are stated in the income and expenditure account and receipts and payments account duly audited. It was submitted that the facilities are being maintained by the assessee are meant for the general public at large irrespective of any caste, creed or sect and person visiting the premises is permitted for the benefits of such activities. It was submitted that the activities are of charitable nature within the meaning of section 2(15) of the Act.

The assessee has been granted registration u/s 12AA of the Act on 28-2-2024 relating to assessment years 22-23 to 25-26 pursuant to an application in this regard made by the assessee on 21-01-2021. Prior to 21-01-2021, the assessee had not made any such application seeking registration under section 12AA of the Act since it had been held by the Learned AO in its respective orders of assessments that assessee’s income is exempt under section 10(23BBA) of the Act. Copy of the assessment order for the block period 1-4-1990 to 21-11-2000 dated 28-03-2005 was placed on record. Notice under section 148 of the Act stood issued to the assessee for assessment years 10-11 and 12-13 on 30-3-2017 and 30-3-2019 respectively. The assessee in complaince there to, filed returns of income for the said assessment years. The Learned AO framed assessments vide orders dated 21-12-2017 and 18-12-2019 respectively wherein it was held that there has been no escapement of any income. The assessee had not filed any return of income prior to the issuance of the said 148 notices . The receipts of the assessee society had been held not to be taxable by the Learned AO.

During the year under consideration, the total receipts of the assessee were Rs 3,98,75,924 and total expenses were Rs 3,68,64,735. The surplus of income over expenditure was Rs 30,11,189. The income and expenditure account is enclosed in Page 119 of the Paper Book. Nowhere the expenses debited in the income and expenditure account has been shown by the revenue as ingenuine. Out of the total receipts of Rs 3,68,64,735, a sum of Rs 2,78,12,593 represent anonymous donations which are exempt under section 115BBC(2) of the Act. Hence there would only be excess of expenditure over income of 2,48,01,404. Accordingly, no part of the income could be made taxable in the hands of the assessee for the year under consideration. The excess of expenditure over income would be available for carry forward to subsequent years as per the provisions of the Act. Accordingly, the grounds raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed.