DIRECTOR OF INCOME TAX Vs. CHARANJIV CHARITABLE TRUST

JUDGEMENT

(1.) All the three appeals have been filed by the revenue under Section 260A of the Income Tax Act, 1961. They challenge the impugned order of the Tribunal passed on 30.04.2012 in three appeals filed before it, two by the assessee relating to the assessment years 2006-07 and 2007-08 and one by the revenue relating to the assessment year 2006-07. In other words, in respect of the assessment year 2006-07, there were cross-appeals before the Tribunal and in respect of the assessment year 2007-08, it was the assessee which was in appeal. All the appeals were disposed of by a common.

(2.) The brief facts giving rise to the present appeals are as follows. The assessee is a Charitable Trust which was granted registration under section 12A of the Act on 28.05.1976. In respect of the assessment year 2006-07, it filed a return of income declaring Rs.Nil as its income. On 31.10.2006 this return was processed under Section 143(1). Subsequently a scrutiny of the return was initiated and notices under Sections 142(1) and 143(2) were issued. A sum of Rs.8,60,1600/- was shown by the assessee as the proceeds of the sale of assets, being land. It appears that M/s. Ansal Properties and Industries Ltd. (APIL) owned certain plots of land earmarked for schools, dispensaries, etc. The assessee in furtherance of its objects to open a school, entered into agreements with APIL on 18.03.2004 and 14.03.2004 for purchase of the land situated at Palam Vihar, New Delhi. In these agreements the assessee paid 95% of the price of the land to APIL and simultaneously obtained possession of the plots. It would appear that one of the conditions of the agreement was that in case the allotment of plots is cancelled later, the assessee will be liable for cancellation charges of 10% of the cost of plots. The advance paid by the assessee was recorded in books of accounts for the financial year 2004-05 and the amount so advanced was added to the list of fixed assets. In the assessee's books and as advances received in the books of APIL.

(3.) In April, 2005 the assessee cancelled the sale agreement and the monies paid to APIL were returned to the assessee in instalments. No cancellation charges were however levied by APIL. The entire amount of Rs.8,60,1600/- which was earlier paid was returned by APIL. In the course of the assessment proceedings, the AO doubted the genuineness of the transaction of projects of the plots. He noted the following features: -