Srijan Charitable Trust Vs ITO (Exemption) (ITAT Kolkata)
Background
Srijan Charitable Trust, registered u/s 12A, filed return of income for AY 2011-12 declaring nil income. The case was reopened u/s 147 based on a survey u/s 133A (27.01.2015) in the case of Herbicure Health Care Bio-Herbal Research Foundation, whose director admitted that donations given by it were bogus accommodation entries.
The assessee trust had received a corpus donation of ₹20 lakh from Herbicure, which the AO treated as non-genuine, disallowing exemption u/s 11(1)(d) and taxing it at maximum marginal rate. The AO also noted that cancellation of trust’s registration u/s 12A was under process and that the trustee, Shri Ramnaresh Agarwal, had disclosed the same amount under the Income Disclosure Scheme (IDS), 2016 and paid due taxes.
CIT(A)) dismissed the appeal, mainly because the assessee failed to appear despite several opportunities. Addition of ₹20 lakh was thus confirmed.
Arguments Before ITAT
Assessee: Since the trustee had already disclosed the donation under IDS and paid tax, the same amount could not be taxed again in hands of the trust.
Revenue: Supported lower authority’s order, relying on Herbicure’s director’s admission that the donation was bogus.
Tribunal’s Observations/ Decision
- Trust was validly registered u/s 12A as on the relevant period.
- The ₹20 lakh donation was admittedly offered to tax by trustee under IDS and tax was duly paid.
- Once income is taxed under IDS, the same amount cannot be taxed again in the trust’s hands.
- Relying on Supreme Court in Mahaveer Kumar Jain vs CIT (19.04.2018) – no income can be taxed twice.
- ITAT set aside CIT(A)’s order.
- Directed AO to delete the addition of ₹20 lakh.
Double taxation not permissible – once disclosed and taxed under IDS, the same amount cannot again be assessed. Even if donor admitted bogus donation, taxing same receipt twice (trust + trustee under IDS) violates settled principle of law. Registration u/s 12A (till cancellation) safeguards trust from arbitrary denial of exemption.
