Debi Kamal Trust Estate, Kolkata V. I.T.O (E) - II,kolkata, Kolkata

CO 68/KOL/2013

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2976 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 30-08-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 29-05-2013
• Court: TRIBUNAL
• Department Lawyers: R P NAG
• Assessee Lawyers: ANIMESH MUKHERJEE; ANINDRANATH CHATTERJEE
• Keywords: Search and seizure; Charitable institution; Condonation of delay
• Section: 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAI NI, AM ./ ITA NO.862/KOL/2013 ( / ASSESSMENT YEAR:2004-05) ITO(E)-II KOLKATA 5 TH , 10B, MIDDLETON ROW, KOLKATA-700071 VS. DEBI KAMAL ESTATE TRUST, 7, QUEENS PARK, KOLKATA-700020 ./ ./PAN/GIR NO.: AAATD 7600 F ( /APPELLANT ) .. ( / RESPONDENT ) CROSS OBJECTION NO.68/KOL /2013 ARISING OUT OF ITA NO. 862/ KOL/2013 ( / ASSESSMENT YEAR:2004-05) DEBI KAMAL ESTATE TRUST, 7, QUEENS PARK, KOLKATA-700020 VS. ITO(E)-II KOLKATA 5 TH , 10B, MIDDLETON ROW, KOLKATA-700071 ./ ./PAN/GIR NO.: AAATD 7600 F ( /APPELLANT ) .. ( / RESPONDENT ) REVENUE BY : SHRI R.P.NAG, JCIT, SR.DR ASSESSEE BY : SHRI ANIMESH MUKHERJEE, FCA & SHRI ANINDRANATH CHATTERJEE, FCA / DATE OF HEARING : 10/01/2017 /DATE OF PRONOUNCEMENT 05/04/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE, PERTAINING TO THE ASSESSMENT YEAR 2004-2005, ARE DIRECTED AGAINST THE ORDER PASSED BY LD. COMMISSION ER OF INCOME TAX (APPEALS)-JALPAIGURI, IN APPEAL NO.83/CIT(A)-XIV/20 09-10, DATED 13.02.2013, WHICH IN TURN ARISES OUT OF AN ORDER PA SSED BY THE DDIT (E )- 1, KOLKATA UNDER SECTION 144/147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED, 09.07.2 009 ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 2 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 ON DATED 31.03.2005 DECLARING TOTAL INCOME AT NIL. THE RETURN OF INCOME OF THE ASSESSE WAS PROCESSED U/S 143(1) ON DATED 18.03.2007. SUBSEQUEN TLY, IT WAS FOUND BY THE ASSESSING OFFICER THAT AS PER TDS CERTIFICA TES ATTACHED WITH THE RETURN THE ASSESSE RECEIVED INTEREST FROM SYNDICATE BANK AMOUNTING TO RS.2,29,48,404. BUT FROM THE INCOME & EXPENDITURE A CCOUNT FILED ALONG WITH THE RETURN, IT WAS SEEN THAT THE ASSESSE DISCL OSED INTEREST INCOME TO THE TUNE OF RS.12,68,226/- ONLY. AS PER ASSESSING O FFICER, SINCE IT WAS GROSS SUPPRESSION OF INCOME, THEREFORE, THE CASE WA S REOPENED U/S 147 OF THE I.T. ACT BY ISSUING A NOTICE U/S 148 OF THE I.T.ACT. THE ASSESSING OFFICER OBSERVED THAT TDS CERTIFICATE SHOWS THAT TH E GROSS INTEREST INCOME FOR THE A.Y. 2004-05 IS RS.2,29,48,404/-. HOWEVER, THE ACCUMULATED INTEREST AS PER THE BALANCE SHEET FIGURE COME TO RS . 2,51,33,855/-. SINCE THE ASSESSE HAS DISCLOSED INTEREST INCOME IN THE A. Y.2004-05 AMOUNTING TO RS.12,68,226/-, THE BALANCE INTEREST OF RS.2,38, 65,620/- IS TREATED AS SUPPRESSED INTEREST INCOME AND ADDED TO THE TOTAL I NCOME OF THE ASSESSE AS INCOME FROM OTHER SOURCES. 3. AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE FIL ED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED THE ADDITION MADE BY AO PARTLY OBSERVING THE FOLLOWINGS :- 5. CONCLUSION- BEFORE ANALYSING THE SUBMISSIONS OF ASSESSEE VIS-A-VIS THE FACTS OF THE CASE, IT IS IMPORTANT TO LOOK INTO THE BACKGROUND OF THE CASE. THERE WAS A SEARCH AND SEIZURE OPERATION BY THE INC OME TAX DEPARTMENT ON THE ASSESSEE IN 1980. AFTER THE SEARCH, THE ACCO UNTS OF THE ASSESSEE IN VARIOUS BANKS WERE ATTACHED. THE DETAILS ABOUT T HE FINDINGS OF SEARCH ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 3 AND THE RESULT OF THE ASSESSMENTS AFTER THE SEARCH ARE NOT THE SUBJECT MATTER OF THE EITHER ASSESSMENT PROCEEDINGS BEFORE AO OR APPELLATE PROCEEDINGS BEFORE UNDERSIGNED. THE ACCOUNTS REMAIN ED FROZEN FOR ABOUT 23 YEARS. ASSESSEE FILED A WRIT BEFORE THE HON. HIG H COURT KOLKATA AND THE HON. COURT VIDE ITS ORDER DATED 18-06-2003 REVO KED THE ATTACHMENT. THE ASSESSEE COULD NOT HAVE ACCESS TO ITS ACCOUNTS AS LATE AS 2009 AS THE BANKS COULD NOT PROVIDE THE STATEMENTS DUE TO T ECHNICAL REASONS. THE TECHNICAL REASON CITED BY BANKS IS THE INTRODUCTION OF CORE BANKING SYSTEM. THE ASSESSEE COULD GET COMPLETE DETAILS OF ACCOUNTS AFTER 2009 I.E. MUCH LATER THAT THE DUE DATE OF FILING RETURNS FOR AY 2004-05. FOR AY 2005-06, THE DETAILS HAVE BEEN FILED DURING THE APP ELLATE PROCEEDINGS BEFORE CIT(A) AND THE CIT(A) HAS ACCEPTED THE RECO NCILIATION OF INTERESTS DONE BY THE ASSESSEE AFTER RECEIPT OF BANK STATEMEN TS. 5.1- AS SUBMITTED BY THE ASSESSEE, THE CBDT HAS CLA RIFIED IN CIRCULAR NO. 100 DATED 24TH JANUARY 1973; THE REPAYMENT OF LOAN ORIGINALLY TAKEN TO FULFILL ONE OF THE OBJECTS OF THE TRUST WOULD BE TR EATED AS APPLICATION OF INCOME. ACCORDINGLY, AO IS DIRECTED TO TREAT THE RE PAYMENT OF LOAN TO THE EXTENT OF RS.84,44,684/- AS EXPENDITURE AS WELL AS APPLICATION OF INCOME. THE ACTIVITIES OF THE ASSESSEE DURING THE YEAR WERE FOUND TO BE CHARITABLE. THEREFORE, THE AO IS DIRECTED TO ALLOW EXEMPTION U/ S 11 (1}(A). 5.2- ASSESSEE HAS FILED FORM NUMBER 10 ALONGWITH TH E APPLICATION FOR CONDONATION OF DELAY AND PLEADED TO GIVE EXEMPTION U/S 11(2). THERE IS NO PROVISION FOR FILING THE FORM NUMBER 10 DURING T HE APPELLATE PROCEEDINGS. THE TIME LIMITS FOR FILING THE FORM 10 HAS BEEN LAID DOWN BY THE HON. SUPREME COURT IN THE NAGPUR HOTEL OWNERS A SSOCIATION CASE (247 ITR 201) ACCORDING TO WHICH THE FORM NUMBER 10 CAN BE FILED BEFORE THE COMPLETION OF ASSESSMENT BY AO. IN VIEW OF THIS , THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED AND THIS GROUND OF APPE AL IS DISMISSED. 5.3 THIS GROUND DEALS WITH CHARGE OF INTEREST U/S 2 34A & B. NO SUBMISSIONS HAVE BEEN GIVEN ON THIS POINT. IN ANY C ASE CHARGING OF INTERESTS U/S 234A & B ARE OF CONSEQUENTIAL NATURE AND THE OF CHARGING THESE INTERESTS BY AO CANNOT BE DISPUTED IN APPEAL. THIS GROUND IS THEREFORE DISMISSED AS INFRUCTUOUS. 5.4 REGARDING THE WRONG DISCLOSURE OF INTEREST IN T HE RETURN OF INCOME, THE ASSESSEE HAS SUBMITTED THAT IT WAS BEYOND HIS CONTR OL TO HAVE GIVEN THE CORRECT VALUE OF INTEREST AS THE ACCOUNTS WERE ATTA CHED BY THE INCOME TAX DEPARTMENT. FOR THE AY 2005-06 ALSO, THE ASSESSEE H AD GIVEN THE EXACT FIGURES OF INTEREST EARNED DURING THE PERIOD IN PRO CEEDINGS BEFORE CIT(A). THE CIT(A) HAD DIRECTED TO CONSIDER THE FIGURES SUB MITTED BEFORE HIM TO BE TAKEN AS ACTUAL INTEREST INCOME EARNED. DURING T HE PROCEEDINGS BEFORE THE UNDERSIGNED, THE ASSESSEE HAS GIVEN THE ACTUAL FIGURES OF INTEREST EARNED IN THE PERIOD RELEVANT TO AY 2004-05 DULY SU PPORTED BY COPIES OF THE BANK STATEMENT AND TDS CERTIFICATES. AS PER THE DETAILS SUBMITTED, THE INTEREST EARNED DURING THE PERIOD RELEVANT TO AY 20 04-05 IS RS. 68,99,280/- ASSESSEE HAD DISCLOSED THE INTEREST INCOME OF RS. 1 2,69,268 IN THE RETURN OF INCOME. AO IS THEREFORE, DIRECTED TO TAKE RS. 68 ,99,280 AS INTEREST INCOME FOR AY 2004-05 AND CALCULATE TOTAL INCOME AF TER ALLOWING THE EXEMPTION U/S.11(1)(A). 6. APPEAL IS PARTLY ALLOWED. ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 4 4. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE REVENUE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE, THE LD. CIT (A)/XIV HAD ERRED IN ACCEPTING THE PLEA OF THE ASSE SSEE THAT IT WAS BEYOND THE CONTROL OF THE ASSESSEE TO SUBMIT CO RRECT VALUE OF INTEREST INCOME. THE FACT OF THE MATTER IS THAT INTEREST INCOME AMOUNTING TO RS.2,30,41,124/- WAS CLEARLY REFLECTED FROM THE TDS CERTIFICATES FURNISHED BY THE ASSESSEE ALONG WI TH THE RETURN OF INCOME AND ANALYSIS OF THE BALANCE SHEETS OF A.Y 2004-05 AND 2003-04 OF THE ASSESSEE REFLECTED AN INTEREST I NCOME OF RS.2,38,65,629/-. THE NATURE OF PAYMENT AND THE PER IOD IT RELATED TO WERE MENTIONED CLEARLY IN ALL THE CERTIF ICATES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) /XIV HAD ERRED IN ACCEPTING THE REPAYMENT O F LOAN BY THE ASSESSEE AS AN APPLICATION OF INCOME. THE FACT OF THE MATTER IS THAT ASSESSEE WAS NOT ABLE TO ESTABLISH THE NATU RE AND UTILIZATION OF THE LOANS EITHER AT THE TIME OF ASSE SSMENT OR AT THE TIME OF APPEAL PROCEEDINGS. 5. THE FIRST GROUND RAISED BY THE REVENUE RELATES TO T HE ISSUE THAT INTEREST INCOME AMOUNTING TO RS.2,30,41,124/-, WRON GLY DELETED BY THE LD.CIT(A), WHICH WAS CLEARLY REFLECTED FROM THE TDS CERTIFICATES FURNISHED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. 5.1 LD DR FOR THE REVENUE HAS SUBMITTED BEFORE US T HAT INTEREST INCOME AMOUNTING TO RS.2,30,41,124/-, HAS BEEN WRONGLY DEL ETED BY THE LD CIT(A). THE LD CIT(A) DID NOT GIVE PROPER JUSTIFICA TION TO DELETE THE SAME. THE SAID INTEREST INCOME WAS CLEARLY REFLECTED FROM THE TDS CERTIFICATES FURNISHED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME AND ANALYSIS OF THE BALANCE SHEETS OF A.Y 2004-05 AND 2003-04 OF TH E ASSESSEE REFLECTED AN INTEREST INCOME OF RS.2,38,65,629/-. T HE LD CIT(A) ACCEPTED THE INTEREST INCOME AT RS. 68,99,280/- WHEREAS THE TOTAL ACCRUED INTEREST SHOWN BY THE ASSESSE IN THE BALANCE SHEET IS AT RS. 2,38,65,629/-. THIS ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 5 WAY, THE LD DR FOR THE REVENUE HAS PRIMARILY RELIED ON THE STAND TAKEN BY THE ASSESSING OFFICER. 5.2 ON THE OTHER HAND, THE LD AR FOR THE ASSESSE HA S VEHEMENTLY SUBMITTED THAT WHAT IS ACCRUED INCOME FOR THE A.Y.2 004-05 CAN BE OFFERED BY THE ASSESSE FOR TAXATION PURPOSE AND NOT THE ACC UMULATED INTEREST OF THE PRECEDING PREVIOUS YEARS WHICH IS SHOWN IN THE BALANCE SHEET OF THE ASSESSE FOR THE A.Y.2004-05. THAT IS, THE BALANCE S HEETS OF A.Y 2004-05 AND 2003-04 OF THE ASSESSEE REFLECTED AN INTEREST I NCOME OF RS.2,38,65,629/- WHICH BELONGED TO PRECEDING PREVIO US YEARS CANNOT BE TAXED IN THE A.Y.2004-05. FOR THE ASSESSMENT YEAR U NDER CONSIDERATION THE INTEREST INCOME OF RS. 68,99,280/- IS RELEVANT, WHICH IS ACCRUED FOR THE A.Y. 2004-05 AND THE ASSESSE HAS OFFERED THE SAME F OR TAXATION PURPOSES. THEREFORE, THE INTEREST INCOME OF RS.2,38 ,65,629/- PERTAINS TO PRECEDING PREVIOUS YEARS AND IS NOT LIABLE TO TAX I N THE ASSESSMENT YEAR UNDER CONSIDERATION. 5.3 HAVING HEARD THE RIVAL SUBMISSIONS, PURSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN T HE SUBMISSIONS OF THE ASSESSE, AS THE PROPOSITIONS CANVASSED BY THE LD AR FOR THE ASSESSE ARE SUPPORTED BY THE FACTS NARRATED BY HIM. AS LD AR FO R THE ASSESSEE HAS POINTED OUT THAT THE INTEREST INCOME OF RS.2,38,65, 629/- PERTAINS TO PRECEDING PREVIOUS YEARS AND IS NOT LIABLE TO TAX I N THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ACCRUED INTEREST PERTAINS TO A.Y 2004-05, IS AT RS. 68,99,280/- AND THE SAME HAS BEEN OFFERED BY TH E ASSESSE FOR ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 6 TAXATION PURPOSES, THEREFORE, THE ORDER PASSED BY T HE LD CIT(A) IS A REASONED ORDER AND DOES NOT REQUIRE INTERFERENCE. T HEREFORE, WE CONFIRM THE ORDER PASSED BY THE LD CIT(A). 5.4 IN THE RESULT, THE APPEAL FILED BY THE REVENUE ON GROUND NO.1, IS DISMISSED. 6. THE GROUND NO. 2 RAISED BY THE REVENUE RELATES TO REPAYMENT OF LOAN BY THE ASSESSEE AS AN APPLICATION OF INCOME FO R CHARITABLE PURPOSE. 6 .1 THE LD DR FOR THE REVENUE HAS STATED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAD ERRE D IN ACCEPTING THE REPAYMENT OF LOAN BY THE ASSESSEE AS AN APPLICATION OF INCOME. THE FACT OF THE MATTER IS THAT ASSESSEE WAS NOT ABLE TO ESTA BLISH THE NATURE AND UTILIZATION OF THE LOANS EITHER AT THE TIME OF ASSE SSMENT OR AT THE TIME OF APPEAL PROCEEDINGS. THE LD. CIT(A) HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSE BLINDLY AND ORDER PASSED BY HIM IS NOT PROP ER AND JUSTIFIABLE. THE ASSESSE DID NOT PROVE HOW AND WHEN THE LOAN IN QUES TION WAS AVAILED. MORE IMPORTANTLY THE MANNER IN WHICH THE AMOUNTS BO RROWED WERE USED FOR CHARITABLE PURPOSE. THE ASSESSE ALSO DID NOT PR ODUCE ANY BILL, VOUCHER, AND EXPENSE DETAILS TO SHOW THAT EXPENSES WERE INCURRED BY HIM TO CARRY OUT THE CHARITABLE ACTIVITIES. THE LD CIT (A) HAS BLINDLY PROVIDED THE RELIEF TO THE ASSESSE BASED ON THE CIR CULAR NO. 100 DATED 24- 01-1973 ISSUED BY CBDT WITHOUT VERIFYING THE EVIDEN CES. THIS CIRCULAR SAYS THAT THE REPAYMENT OF LOAN ORIGINALLY TAKEN T O FULFIL ONE OF THE OBJECTS OF THE TRUST WOULD BE TREATED AS APPLICATION OF INC OME, BUT ALL THE LOANS TAKEN BY THE TRUST AND REPAID BY THE TRUST WERE NOT FOR CHARITABLE PURPOSE, ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 7 HENCE THESE LOANS WERE NOT UTILIZED FOR THE OBJECTS OF THE TRUST. THE ASSESSE DID NOT PRODUCE ANY EVIDENCE IS RESPECT OF CHARITABLE ACTIVITIES DONE BY IT AND APPLICATION OF LOAN. THIS CIRCULAR W ILL BE APPLICABLE ONLY WHEN THE ASSESSEE PROVES WITH DOCUMENTARY EVIDENCES THAT THE AMOUNT WAS UTILISED FOR CHARITABLE PURPOSES AND REPAYMENT OF LOAN TAKEN ORIGINALLY TO FULFIL OBJECTS OF THE TRUST. IN ORDE R TO AVAIL THE BENEFIT OF THE SAID CIRCULAR THE ASSESSE SHOULD PROVE WITH DOCUMEN TARY EVIDENCE THAT LOANS TAKEN BY THE TRUST AND UTILIZATION THEREOF WE RE FOR THE OBJECTS OF THE TRUST BUT THE ASSESSE HAD NOT PROVED THESE WITH DOC UMENTARY EVIDENCES BEFORE THE LD CIT(A). MOREOVER, THE LD CIT (A) FAIL ED TO ASK THE ASSESSE TO PRODUCE THESE DOCUMENTARY EVIDENCES THEREFORE THE O RDER PASSED BY THE LD CIT(A) IS NOT JUSTIFIABLE. THE ASSESSE HAS FAILE D TO ESTABLISH WITH DOCUMENTARY EVIDENCE THAT WHETHER HE HAS FULFILLED OBJECTS OF THE TRUST, THAT IS, WHAT OBJECTS OF THE TRUST HAVE BEEN FULFIL LED BY THE ASSESSE HAVE NOT BEEN ESTABLISHED BY ANY DOCUMENTARY EVIDENCE TH EREFORE THE SAID CIRCULAR DOES NOT APPLY TO THE ASSESSEE. IN FACT TH E FAMILY MEMBERS AND RELATIVES WERE UTILISING THE TRUST FUNDS UNLAWFULLY . AS ALREADY STATED THAT THE ASSESSEE HAS CLEARLY ADMITTED BEFORE THE INCOM E TAX AUTHORITIES, ON ITS INABILITY TO PRODUCE EVIDENCE TO PROVE BORROWIN G AND THAT THE LOANS BORROWED WERE SPENT FOR CHARITABLE ACTIVITIES AND N ATURE OF THOSE CHARITABLE ACTIVITIES. THE MERE ASSERTION OF THE AS SESSEE IN THIS REGARD WITHOUT EVIDENCE CANNOT BE THE BASIS TO UPHOLD THE CLAIM OF THE ASSESSEE IN THIS REGARD. ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 8 IN ADDITION TO THIS THE LD DR FOR THE REVENUE HAS R ELIED ON THE FOLLOWING JUDGMENT OF ITAT IN ASSESSEE`S OWN CASE VIZ: DEVI KAMAL TRUST ESTATE KOLKATA, ITA NO. 137/KOL/ 2009, KOLKATA, DATED 16.1 2.2015, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 19. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. IN SO FAR AS GR.NO.1 RAISED BY THE REV ENUE IS CONCERNED, IT IS A FACT THAT THE ASSESSEE DID NOT F ILE RETURN OF INCOME BEFORE AY 2002-03. IT IS NOT THE CASE OF THE ASSESS EE THAT THE ACCUMULATED DEFICIT WAS DETERMINED IN ASSESSMENTS C OMPLETED AFTER AY 2002-03 WHEN FROM THE ASSESSEE STARTED FIL ING RETURN OF INCOME. THE ACCUMULATED DEFICIT IS CLAIMED ON THE B ASIS OF BALANCE SHEET AS ON 31.3.1996 IN WHICH LOANS AND ADVANCES R ECEIVED IN CASH OR KIND IS SHOWN AT RS.9,29,50,000/-. AS TO WH AT IS THE OPENING BALANCE AS ON 1.4.1995 IS ALSO NOT FOUND IN THIS BA LANCE SHEET. THE ACCUMULATED DEFICIT AS PER THIS BALANCE SHEET IS SH OWN AT RS.8,63,10,133/-. THE ACCUMULATED DEFICIT IS THEREA FTER CARRIED FORWARD FROM AY 96-97 TO AY 2004-05 AND STANDS REDU CED TO RS.8,54,16,519 AS ON 31.3.2005 WHICH IS SOUGHT TO B E SET OFF AGAINST THE INCOME OF AY 2005-06. IT IS ALSO PERTIN ENT TO NOTE THAT THE AFORESAID CLAIM WAS NOT MADE IN THE RETURN OF I NCOME FILED BY THE ASSESSEE NOR IN THE PROCEEDINGS BEFORE THE AO. THE CLAIM WAS MADE FOR THE FIRST TIME BEFORE CIT(A). THE CIT(A)'S FINDINGS ON THIS ASPECT HAVE ALREADY BEEN GIVEN IN THE EARLIER PART OF THIS ORDER. THE EVIDENCE REFERRED TO IN THE FINDINGS OF CIT(A) ARE RELEVANT ONLY WITH REGARD TO THE CLAIM OF THE ASSESSEE THAT RS.4,54,11 ,300/- WAS REPAYMENT OF LOANS WHICH HAD BEEN TAKEN BY THE ASSE SSEE IN THE EARLIER AYS AND USED FOR CHARITABLE PURPOSE AND REP AID DURING THE PY. THERE IS NO MATERIAL ON RECORD TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE THAT A SUM OF RS.8,54,26,519/- WAS ACCUMUL ATED DEFICIT. ADMITTEDLY SUCH ACCUMULATED DEFICIT HAS NOT BEEN DE TERMINED IN ANY ASSESSMENT PROCEEDINGS AND THEREFORE THE CLAIM OF THE ASSESSEE IN THIS REGARD WAS WRONGLY ALLOWED BY THE CIT(A). GR.NO.1 RAISED BY THE REVENUE IS ACCORDINGLY ALLOWE D. 20. AS REGARDS GROUNDS NO.2 TO 5 RAISED BY THE REVE NUE, THE ISSUE IS WITH REGARD TO THE CLAIM OF THE ASSESSEE THAT DU RING THE PREVIOUS YEAR IT HAD REPAID LOANS OF RS.4,54,11,300/- TAKEN BY IT IN THE PAST AYS FOR THE PURPOSE OF CARRYING OUT THE CHARITABLE OBJECTS OF THE TRUST AND HAD IN FACT APPLIED LOANS FOR CHARITABLE PURPOSES IN THE PAST AYS. THE ASSESSEE CLAIMED THAT THE REPAYMENT O F LOANS DURING THE PREVIOUS YEAR OF LOANS SO TAKEN IN THE PAST AYS WOULD AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE PURPOSE AND EXEMPTION U/S.11 OF THE ACT OUGHT TO BE ALLOWED TO THE ASSESS EE TO THE EXTENT OF REPAYMENT OF LOANS. THERE IS NO DISPUTE THAT REP AYMENT OF LOAN TAKEN FOR CHARITABLE PURPOSES HAD TO BE TREATED AS APPLICATION OF ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 9 INCOME FOR CHARITABLE PURPOSES. THE EVIDENCE ON REC ORD INDICATES THAT THERE ARE LOAN CONFIRMATIONS BY THE FOLLOWING PERSONS FOR THE FOLLOWING AMOUNTS: 1. JADAVLAL TRUST ESTATE RS.96,00,000 2. DEVI LACHMI DEBOTTAR ESTATE RS.14,00,000 3. SMT.ANITA BANERJEE (DECD) RS.4,80,00,000 4. SRI KESHAB NARAYAN BANERJEE RS.1,66,00,336 5. SRI.SUBHASHIS BANDOPADHYAY RS.5,04,000 6. SRI.DEBASHIS BANERJEE RS.5,04,000 7. SMT.MAITREE MUKHERJEE RS.5,04,000 ADVANCES DUBRAJPUR RICE MILLS PVT.LTD. RS.86,24,940 JADAVLAL TRUST ESTATE RS.12,00,000 -------------- RS.8,69,47,276 --------------- A MATCHING OF LOAN AND CHARITABLE ACTIVITIES DONE B Y THE TRUST DURING THE LAST 23 YEARS W.E.F. FROM THE DATE OF SEARCH IN 1980 AND TO THE DAY OF RELEASE IN 2003 BY FILING EVERY YEAR BALANCE SHEETS WAS ALSO FILED. IT WAS SUBMITTED THAT THE CHARITABLE ACTIVIT IES DONE LONG BACK AND IT WAS NOT POSSIBLE TO PRESERVE THE DOCUMENTARY RECORDS FOR THESE CHARITABLE ACTIVITIES FOR A LONG PERIOD AS TH E RECORDS ARE WEEDED OUT EVERY 10 YEARS FOR PAUCITY OF SPACE TO P RESERVE THE SAME. AT PAGE-26 TO 29 IS THE LEDGER ACCOUNT OF ADV ANCE/LOANS RECEIVED FROM 1.4.2004 TO 31.3.2005. PERUSAL OF THE SAME SHOWS THAT THE OPENING CREDIT BALANCE WAS RS.8,69,47,276 AND THE ASSESSEE HAS REPAID LOANS TO THE EXTENT OF RS.4,54, 11,300 TO THE FOLLOWING PERSONS DURING THE PREVIOUS YEAR: 1. K.N.BANERJEE RS.1,29,69,500 2. D.BANERJEE RS.1,12,87,000 3. S.BANERJEE RS.1,06,04,800 4. M.MUKHERJEE RS.1,05,50,000 RS.4,54,11,300 THE BALANCES IN ALL THESE CONFIRMATIONS ARE OPENING BALANCE. THESE DO NOT PROVE HOW AND WHEN THE LOAN IN QUESTIO N WAS AVAILED. MORE IMPORTANTLY THE MANNER IN WHICH THE A MOUNTS BORROWED WERE USED FOR CHARITABLE PURPOSE. THE LOAN S WERE STATED TO BE AVAILED BETWEEN THE YEAR 1980 TO JUNE, 2003 WHEN THE ASSESSEE DID NOT HAVE FUNDS TO CARRY OUT CHARIT ABLE ACTIVITIES. IN THE YEAR IN WHICH THE LOANS WERE AVA ILED, THERE WAS NO SCRUTINY ASSESSMENT. IN FACT THE ASSESSEE HAS ST ARTED FILING RETURNS OF INCOME ONLY AFTER AY 2002-03. THEREFORE THE FACTUM OF BORROWING AND THE UTILIZATION OF THE FUNDS BORRO WED WERE NEVER SUBJECTED TO SCRUTINY IN THE PAST. THERE IS N O EVIDENCE FILED BY THE ASSESSEE IN THIS REGARD. THE CIT(A) HA S REFERRED TO THE FOLLOWING EVIDENCE IN UPHOLDING THE CLAIM OF TH E ASSESSEE ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 10 VIZ., (A) DETAILS OF EXPENSES ALONG WITH EVIDENCE; (B) LOAN CONFIRMATION; (C) BALANCE SHEET FOR LAST EIGHT YEAR S; (D) BANK STATEMENTS; ( E) LIST OF REPAYMENT OF LOAN, (F) WRI TE-UP ON PURPOSE FOR ACQUIRING LOANS. AS ALREADY STATED THE ASSESSEE HAS CLEARLY ADMITTED BEFORE THE CIT(A) ON ITS INABI LITY TO PRODUCE EVIDENCE TO PROVE BORROWING AND THAT THE LOANS BORR OWED WERE SPENT FOR CHARITABLE ACTIVITIES AND NATURE OF THOSE CHARITABLE ACTIVITIES. THE MERE ASSERTION OF THE ASSESSEE IN T HIS REGARD WITHOUT EVIDENCE CANNOT BE THE BASIS TO UPHOLD THE CLAIM OF THE ASSESSEE IN THIS REGARD. WE THEREFORE DO NOT AGREE WITH THE CONCLUSIONS OF THE CIT(A) IN THIS REGARD. WE THEREF ORE REVERSE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF TH E AO IN THIS REGARD. 6.2. ON THE OTHER HAND, THE LD. AR FOR THE ASSESSE E HAS SUBMITTED BEFORE US THAT THE ASSESSE TRUST TOOK THE LOAN TO RUN THE CHARITABLE ACTIVITIES. AS SUBMITTED BY THE ASSESSE BEFORE THE LD CIT(A) THAT THE CBDT HAS CLARIFIED IN CIRCULAR NO. 100 DATED 24TH JANUARY 1973; THAT T HE REPAYMENT OF LOAN ORIGINALLY TAKEN TO FULFILL ONE OF THE OBJECTS OF T HE TRUST WOULD BE TREATED AS APPLICATION OF INCOME. THEREFORE, THE REPAYMENT OF LOAN TO THE EXTENT OF RS.84,44,684/- IS AN EXPENDITURE AS WELL AS APPLICA TION OF INCOME. 6.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT I N THE SUBMISSIONS OF LD. DR FOR THE REVENUE, AS THE PROPOSITIONS CANVASSED B Y THE LD. DR FOR THE REVENUE ARE SUPPORTED BY JUDGMENT CITED BY HIM IN A SSESSE`S OWN CASE, IN ITA NO. 137/KOL/ 2009, KOLKATA, DATED 16.12.2015 , DEBI KAMAL ESTATE TRUST (SUPRA). AS LD DR FOR THE REVENUE HAS POINTE D OUT THAT AS PER TRIBUNAL JUDGMENT CITED (SUPRA), THE ORIGINAL LOANS TAKEN BY THE ASSESSE WERE NOT FOR CHARITABLE PURPOSE, HOW REPAYMENT OF T HESE SAID LOANS CAN BECOME CHARITABLE PURPOSE. MOREOVER, THE ASSESSE D ID NOT SUBMIT BEFORE CIT(A), ANY DOCUMENTARY EVIDENCES FOR APPLICATION O F INCOME. JUST TO CITE ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 11 THE CIRCULAR OF THE CBDT IS NOT SUFFICIENT, THE ASS ESSE NEEDS TO EXPLAIN WITH DOCUMENTARY EVIDENCES THAT MONEY HAS BEEN UTIL IZED FOR CHARITABLE PURPOSE AND OBJECTS OF THE TRUST HAVE FULFILLED. BE SIDES, THIS IS AN ADDITIONAL GROUND RAISED BY THE ASSESSE BEFORE THE LD CIT(A) WHICH WAS NEVER DEALT WITH BY THE ASSESSING OFFICER, IN HIS O RDER, UNDER SECTION 147/148 ( FOR WHICH THE ASSESSE WAS IN APPEAL BEFOR E THE LD CIT(A) ). IN ADDITION TO THIS, ASSESSEE WAS NOT ABLE TO ESTAB LISH THE NATURE AND UTILIZATION OF THE LOANS EITHER AT THE TIME OF ASSE SSMENT OR AT THE TIME OF APPEAL PROCEEDINGS, THEREFORE LD CIT(A) WAS NOT JUS TIFIED IN DIRECTING THE AO TO ALLOW EXEMPTION TO THE ASSESSE UNDER CONSIDER ATION U/S 11 (1) (A) OF THE ACT. THE CBDT CIRCULAR NO.100 DATED 24.01.19 73 CLEARLY STATES THAT THE REPAYMENT OF LOAN ORIGINALLY TAKEN TO FULFILL O NE OF THE OBJECTS OF THE TRUST WOULD BE TREATED AS APPLICATION OF INCOME. BUT WHAT WE HAVE OBSERVED IN ASSESSEE`S CASE UNDER CONSIDERATION IS THAT ORIGINA L LOAN ITSELF WAS NOT UTILIZED FOR THE OBJECTS OF THE TRUST THEREFORE HOW THE REPAYMENT OF THE SAID LOAN CAN BECOME FOR THE OBJECTS OF THE TRUST AND FO R THE PURPOSE OF CHARITABLE ACTIVITIES. THEREFORE, RESPECTFULLY FOL LOWING THE JUDGMENT CITED BY LD DR FOR THE REVENUE, IN ASSESSE`S OWN CASE, IN ITA NO. 137/KOL/ 2009, KOLKATA, DATED 16.12.2015, DEBI KAMAL ESTATE TRUST (SUPRA), WE ALLOW THE GROUND NO. 2 RAISED BY THE REVENUE. WE TH EREFORE REVERSE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE AO IN THIS REGARD. 6.4. IN THE RESULT, APPEAL FILED BY THE REVENUE ON GROUND NO. 2, IS ALLOWED. ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 12 7. THE CROSS OBJECTIONS RAISED BY THE ASSESSE IN CO . NO.68/KOL/2013 READ AS UNDER: 1. FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCU MSTANCES, THE LD CIT(A) WAS JUSTIFIED IN DIRECTING TO TAKE THE INTER EST INCOME OF RS.68,99,280/- IN ACCORDANCE WITH THE RELATED PERIO D BANK STATEMENTS AND TDS CERTIFICATES. 2. FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMS TANCES, THE LD CIT(A) WAS JUSTIFIED IN ACCEPTING THE REPAYMENTS OF LOANS AS GENUINE. 3. FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMS TANCES, THE LD CIT(A) WAS JUSTIFIED IN DIRECTING TO ALLOW THE REPA YMENT OF LOAN AS EXPENDITURE AND ALLOW THE EXEMPTION U/S 11(1) (A). REGARDING CROSS OBJECTION NO. 1 RAISED BY THE ASSES SEE, AS WE HAVE ALREADY DISMISSED THE GROUND NO. 1 RAISED BY THE AS SESSE IN PARA NO.6.4 OF THIS ORDER THEREFORE, WE ALLOW THE CROSS OBJECTI ON FILED BY THE ASSESSEE. REGARDING CROSS OBJECTION NOS. 2 AND 3 RAISED BY TH E ASSESSEE, AS WE HAVE ALREADY ALLOWED THE GROUND NO. 2 RAISED BY THE REVENUE IN PARA NO.7.4 OF THIS ORDER THEREFORE, WE DISMISS THE CROS S OBJECTIONS NOS. 2 AND 3 FILED BY THE ASSESSEE. 7.1 IN THE RESULT, THE CROSS OBJECTIONS FILED BY TH E ASSESSEE, ARE PARTLY ALLOWED. 7.2 IN THE RESULT, THE APPEAL FILED BY THE REVENUE, IS PARTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05/0 4/2017. SD/ - (S.S.VISWANETHRA RAVI) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 05/04/2017 ' $%& /PRAKASH MISHRA , 0 . / PS ITA NO.862/KOL/2013 CO.NO.68/KOL/2013 DEBI KAMAL ESTATE TRUST 13 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) % & , / ITAT, 1. / THE APPELLANT-DEBI KAMAL ESTATE TRUST 2. / THE RESPONDENT.- DCIT, CIRCLE-7(1), KOLKATA 3. 1 ( ) / THE CIT(A), KOLKATA. 4. 1 / CIT 5. 23 4 0056 , 56 , / DR, ITAT, KOLKATA 6. 4 78 / GUARD FILE. 2 0 //TRUE COPY//