COMMISSIONER OF INCOME TAX Vs. THANTHI TRUST

JUDGEMENT

(1.) IT is a consolidated statement of the case both at the instance of the assessee as well as by the Revenue for the asst. yrs. 1965-66 to 1967-68 and the Tribunal has referred the following questions of law for the opinion of this Court :

(2.) THE first question referred by the Tribunal is at the instance of the assessee and the questions 2 and 3 are at the instance of the Department. It is not necessary to burden the judgment with all the facts as we intend to agree with the Tribunal on the issue arising out of the third question of law. During the previous assessment years relevant for 1965-66, 1966-67 and 1967-68, the assessee credited in its book towards the account of Adithanar Educational Institution and claimed that there was an application of income within the meaning of s. 11 of the IT Act, 1961. THE ITO, however, held that mere credit entry would not be sufficient and there was no application of income by the assessee. THE CIT(A) held that there was an application of income that the assessee was entitled to exemption under s. 11 of the Act. THE Revenue carried the matter in appeals before the Tribunal and the Tribunal following the earlier order of this Court rendered the assessee's own case and reported in CIT vs. Thanthi Trust (1982) 137 ITR 735 (Mad) : TC 23R.737 held that the crediting by the charitable institution on the facts of the case would amount to an application of income. As regards the verification of the figures, the Tribunal found that there was a thorough enquiry at the time of the original assessment, and in the absence of any information as to the actual mistake or omission on any particular amount being applied for charitable purposes, there can be no ground for reopening the assessment made by the ITO. THE Tribunal also found that the CIT(A) also found that there were actual withdrawals of the amount by the charitable institution during the relevant years and, therefore, the crediting of the amount in the accounts can be taken as the application of the income. THE Tribunal agreed with the views of the CIT(A) and held that income was applied for charitable purposes and the additions cannot be sustained. THE assessee has challenged the order of the Tribunal insofar as it upheld the validity of reassessment. THE Tribunal though upheld the action under s. 147(a) of the Act ultimately held that there was no escapement of income.