Vildirect: IncomeTax-caselaws-1981-VIL-21-ITAT-JAI

1981-VIL-21-ITAT-JAI

Equivalent Citation: (1981) 12 TTJ (Jp) 245

Income Tax Appellate Tribunal JAIPUR

ITA No. 1816 (JAI)/1979; ITA No. 1817 (JAI)/1979

Date: 29.04.1981

INCOME TAX OFFICER

MALIRAM POORANMAL CHARITABLE TRUST

S. S. Ruhela, for the Appellant
N. M. Ranka, for the Respondent

BENCH

OM PRAKASH and RAM RATTAN, JJ.

JUDGMENT

OM Prakash, J.M.-

These are appeals by the Revenue relating to the asst. yrs. 1973-74 and 1974-75 against the combined order of the AAC accepting the case of the assessee that the donations made to the assessee-Trust were to form part of the corpus of the Trust. The facts are that a Trust Deed giving rise to the assessee-Trust was executed by the settlors, namely, Shyam Mohan Rawat, Shri Gopichand Rawat and Shri Ram Mohan Rawat. They are the partners of a firm, known as M/s. Maliram Pooran Mal. The settlors set apart Rs. 5,000 each for the corpus of the Trust. They themselves were the trustees of the assessee Trust. The Trust Deed was executed on 1st Jan., 1972 and that was registered in the office of the Commr. under s. 12A of the IT Act, 1961. M/s Mali Ram Pooranmal donated a sum of Rs. 45,000 by cheques to the Trust as under :

1.	Rs. 20,000 on 8.1.1973
2.	Rs. 10,000 on 24.1.1973
3.	Rs. 15,000 on 28.4.1973

Similarly, M/s. Rawat Jewellers, a sister concern of M/s. Maliram Pooranmal, donated a sum of Rs. 17,175 by cheque dt. 13th Nov. 1972. Also, M/s. Maliram Pooranmal donated a sum of Rs. 1,18,386 by cheque dt. 13th Nov., 1972 to the assessee. Donations made to the assessee-Trust for the asst. yr. 1973-74 aggregated to Rs. 48,358,86 and for the asst. yr. 1974-75 to Rs. 15,000. This amount was not shown as income by the assessee-Trust in the returns filed for the years under appeal. Also, the donations were not carried to the Profit & Loss account by the assessee. The question arise whether the donations were made with a specific direction that they shall form part of the corpus of the trust within the meaning of s. 12, which was amended w.e.f. 1st April, 1973. The donations, forming part of corpus of the trust, are not to be treated as income under s. 12 of the IT Act 1961. The ITO called upon the assessee to give the details of the donations and information whether they were made with any specific direction that they shall form part of the corpus. Sri M.C. Ranka, the counsel for the assessee appeared before the ITO and he stated that donations were without any specific direction. On the basis of such statement of the counsel, the ITO treated the donations as income of the assessee. The dispute was carried in appeal to the AAC by the assessee and then to the Tribunal. The Tribunal set aside the order of the AAC admitting certain evidence and then the question was redecided by the AAC. On second round, the AAC accepted the contention of the assessee that donations were given with a specific direction that they shall form part of the corpus under s. 12 of the IT Act, 1961.

2. Aggrieved, the Revenue has come up in appeal for both the years. The only question for consideration in this appeal is whether the donations made by M/s. Maliram Pooranmal and its sister concern, M/s. Rawat Jewellers were with a specific direction that they will form part of the corpus. Sh. M.C. Ranka filed an affidavit at the appellate stage stating that he made the statement before the ITO that the donations were without specific direction, without consulting the assessee and without referring to the assessee's case. He says that no instruction was sought by him from the assessee about the existence or non-existence of any specific direction as contemplated by s. 12. It is obvious that the ITO simply acted upon the statement of Sh. M.C. Ranka, Advocate, who deposed that no correct statement had been made by him before the ITO. The statement of Shri M.C. Ranka is the only hindrance in this case. If the assessee succeeds in showing that the statement of Sh. Shri M.C. Ranka is really no hindrance then there is enough evidence on record to show that the donations were made to the trust with a specific direction that they shall form part of the corpus and, therefore, they will not be treated as income of the assessee. The question is whether the affidavit of Shri M.C. Ranka Advocate is reliable piece of evidence. Undisputedly, Sri M.C. Ranka, Advocate has not been cross-examined by the ITO and, thus, his affidavit remained unrebuted. In these circumstances, we think that the affidavit of Shri M.C. Ranka has to be believed. In this connection, we may usefully refer the famous decision in the case of Meha Pareekh & Co. By the Supreme Court, as reported in (1956) 30 ITR 181(SC). We, therefore, hold that the conclusion of the ITO solely based on the statement of Sh. M.C. Ranka Advocate, cannot be sustained.

3. The next question is what is the evidence on record deposed that the donations had been made to form part of the corpus of the trust. The same fact was stated in the letters sent by M/s. Mali Ram Pooranmal and M/s. Rawat Jewellers. Resolution dt. 10th Nov., 1972 passed by the trustees also shows that the trustees decided to receive more an more donations to raise the corpus of the Trust. This evidence clearly proves that the donations were made towards the corpus of the Trust. We agree with the reasoning of the AAC that as no specific mode of giving the direction is prescribed by the state, the direction can be gathered from the facts and circumstances of the case. The partners of the firm M/s. Mali Ram Pooranmal are also the settlors and the trustees of the Trust. The donations having been made by the firms it can be said that the partners are also the donors. In these circumstances, the affidavits of the partners are very important ans noteworthy point is that they have not been cross-examined by the revenue and, thus, the affidavits remained unrebutted on record. Therefore, there is no reasons to ignore the affidavits of the partners. The whole argument of the Revenue was that the entire evidence was filed before the AAC after the negative statement was made by Shri. M.C. Ranka, Advocate. Filing of the evidence after the statement made by Shri M.C. Ranka, cannot be capitalised by the revenue, because the assessee was not given any opportunity by way of notice under s. 143 (2) to file evidence by the ITO and needful could have been done by the assessee only before the Appellate Authority. We, therefore, hold that there is ample evidence on record to show that the donations were with the specific direction that they shall form part of the corpus. The donations will, therefore not be included in the income of the assessee in view of s. 12 of the IT Act, 1961. For the reasons, we uphold the combined order of the AAC and reject the contentions of the revenue.

4. Both the appeals are dismissed.

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.