Sh. Sant Baba Sunder Singh, Barnala V. ITO, Barnala

ITA 1064/CHANDI/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9914 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Unexplained investment; Charitable institution; Onus to prove
• Section: 12A; 68; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1064/CHD/2013 ASSESSMENT YEAR: 2008-09 SH. SANT BABA SUNDER SINGH VS. THE ITO, CANADIAN CHARITABLE TRUST, WARD BARNALA VILL. TULLEWAL, TEHSIL BARNALA PAN NO. AAETS83522P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJIV SALDI RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 08/04/2016 DATE OF PRONOUNCEMENT : 14/06/2016 ORDER PER ANNAPURNA GUPTA, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), PATIALA DT. 23/09/2013. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. A.O. AS WELL AS LD. CIT(APPEALS) WE RE NOT JUSTIFIED IN NOT ALLOWING THE EXEMPTION U/S 10(23C)(IIIAD) DESPITE THE FACT T HAT THE CLAIM FOR THE SAME WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED BY IT. 2. THAT THE LD. A.O. AS WELL AS LD. CIT(APPEAL) FAI LED TO BRING OUT TRUE AND WELL SETTLED LAW THAT PROVISIONS OF SUB SECTION (IIIAD) AND SUB SECTION (VI) OF SECTION 10(23C) ARE SEPARATELY APPLICABLE TO EACH INSTITUTE AND THE RECEIPTS OF DIFFERENT INSTITUTES OF SAME ASSESSEE CANNOT BE CLUBBED, WHIL E ARRIVING AT THE FIGURE OF ANNUAL RECEIPTS OF THE INSTITUTE. 3. THAT WITHOUT PREJUDICE TO ABOVE THE LD. CIT(APPE AL) HAS ERRED IN REJECTING THE CLAIM OF ASSESSEE U/S 11 OF THE I.T. ACT, 1961 ALTH OUGH THE APPELLANT IS REGISTERED U/S 12A VIDE SR. NO. 254-S DATED 01.04.2002 AND THE LD. A.O. ADMITTED IN HIS ASSESSMENT ORDER AT PAGE 3. 4. THAT THE CLAIM OF EXEMPTION U/S 11 OF THE I.T. A CT, 1961 WAS NOT ALLOWED BY THE LD. A.O. AND THE LD. CIT(A) HAVE ERRED IN CONFIRMIN G HIS ACTION BY WRONGLY INTERPRETING THAT THE 85% OF THE TOTAL INCOME OF TH E TRUST WAS NOT APPLIED FOR THE OBJECTS OF THE TRUST DURING THE YEAR WHICH IS FACTL Y WRONG. 5. THAT THE LD. CIT(APPEAL) WAS NOT JUSTIFIED IN UP HOLDING THE ADDITION OF RS. 4,16,784/- AS UNEXPLAINED INVESTMENT OF THE INSTITU TE. 2 6. WITHOUT PREJUDICE TO ABOVE, THE LD. A.O. HAS FAI LED TO CALCULATE THE ACTUAL AMOUNT OF TAX AS HE FAILED TO ALLOW THE EXEMPTION A VAILABLE TO THE ASSESSEE U/S 11(I)(A) OF THE INCOME TAX ACT. 3. GROUND NO. 1 AND 2 RAISED BY THE ASSESSEE ARE AG AINST THE DENIAL OF EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 10( 23C)(IIIAD). 4. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE IS A TRUST CREATED ON 22/03/1996 AND REGISTERED UNDER SOCIETY REGISTRATIO N ACT 1860. THE TRUST IS RUNNING A SCHOOL IN THE NAME OF AKAL ACADEMY, VILLA GE TALLEWAL AND A B.ED COLLEGE IN THE NAME OF BRAKKAT COLLEGE OF EDUCATION AT VILL TALLEWAL. DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE SHOWED EXCES S OF INCOME OVER EXPENDITURE AT RS. 32,69,558/- WHICH WAS CLAIMED EX EMPT UNDER SECTION 10(23C)(IIIAD)/VI OF THE INCOME TAX ACT. DURING ASS ESSMENT PROCEEDINGS THE ISSUE OF ADMISSIBILITY OF EXEMPTION UNDER SECTION 10(23C) (IIIAD) WAS EXAMINED AND THE ASSESSEE WAS DENIED THE SAME, SINCE AS PER THE AO T HE GROSS RECEIPT OF THE TRUST DURING THE IMPUGNED PERIOD EXCEEDED RS. 1 CRORES, T HE PRESCRIBED LIMIT FOR CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. F URTHER EXEMPTION UNDER SECTION 10(23C)(VI) WAS DENIED SINCE THE ASSESSEES APPLICATION FOR APPROVAL UNDER THE SECTION WAS REJECTED BY CCIT , NWR, CHAN DIGARH VIDE HIS ORDER DT. 13/04/2009 AND THE ASSESSEES WRIT PETITION AGAINST THE AFORESAID ORDER OF THE CCIT WAS DISMISSED BY THE HONBLE PUNJAB & HARYANA HIGH COURT. 5. AGGRIEVED BY THE SAME THE ASSESSEE FILED AN APPE AL BEFORE THE LD. CIT(A), RAISING GROUND AGAINST THE WITHDRAWAL OF EX EMPTION UNDER SECTION 10(23C)(VI) ONLY. THE LD. CIT(A) REJECTED THIS GROU ND RAISED BY THE ASSESSEE AND UPHELD THE ORDER OF THE AO SINCE IT WAS FOUND THAT THERE WAS NO APPROVAL GRANTED TO THE ASSESSEE UNDER SECTION 10(23C)(VI). 6. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US AGITATING AGAINST THE DENIAL OF EXEMPTION UNDER SEC TION 10(23C)(IIIAD). 3 7. BEFORE US LD. AR PLEADED THAT THE ASSESSEE HAD C LAIMED THE DEDUCTION OF EXEMPTION UNDER SECTION 10(23C)(IIIAD) IN ITS RETUR N OF INCOME AND WAS ENTITLED TO THE SAME SINCE THE GROSS RECEIPT IN THE TWO EDUC ATIONAL INSTITUTE RUN BY IT DID NOT EXCEED ONE CRORE INDIVIDUALLY. LD. AR PLEADED T HAT FOR THE PURPOSE OF GRANTING EXEMPTION UNDER SECTION 10(23C)(IIIAD) THE GROSS RECEIPT OF INDIVIDUAL INSTITUTES RUN BY THE TRUST HAD TO BE CONSIDERED WH ETHER THEY EXCEEDED THE PRESCRIBED LIMIT OR NOT. LD. AR PLACED RELIANCE ON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT & ANOTHER VS. CHILDRE NS EDUCATION SOCIETY (2013) 358 ITR 373 IN THIS REGARD. 8. LD. DR ON THE OTHER HAND POINTED OUT THAT THIS G ROUND WAS NOT RAISED BEFORE THE LD. CIT(A) AND HAS THEREFORE NOT BEEN AD JUDICATED UPON AT THAT STAGE. EVEN OTHERWISE LD. DR STATED THAT FOR THE PU RPOSE OF GRANTING EXEMPTION UNDER SECTION 10(23C)(IIIAD) THE GROSS RECEIPT OF T HE TRUST CONSIDERING ALL THE INSTITUTE BEING RUN BY IT HAS TO BE TAKEN INTO CONS IDERATION. 9. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL ON RECORD PLACED BEFORE US. 10. WE FIND THAT THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 10(23C)(IIIAD) IN ITS RETURN OF INCOME WHICH WAS DI SALLOWED BY THE AO FOR THE REASON THAT THE GROSS RECEIPT OF THE ASSESSEE TRUST EXCEEDED RS. 1 CRORES. BEFORE THE LD. CIT(A) THE ASSESSEE HAD NOT RAISED THIS GRO UND OF APPEAL AT ALL AND THEREFORE THIS ISSUE HAS NOT BEEN DEALT WITH BY THE LD. CIT(A). IN VIEW OF THE SAME THE ENTIRE FACTS RELATING TO THE ISSUE ARE NOT BEFO RE US AND THEREFORE WE CONSIDER IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF LD. CIT(A) TO BE ADJUDICATED UPON AFRESH IN ACCORDANCE WITH LAW AND AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. THIS GROUND OF APPEAL IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 4 12. GROUND NO. 3 & 4 RAISED BY THE ASSESSEE ARE AGA INST THE REJECTION OF THE CLAIM OF THE ASSESSEE OF EXEMPTION UNDER SECTION 11 OF THE ACT. 13. BRIEFLY STATED DURING ASSESSMENT PROCEEDINGS TH E ASSESSEE HAD ULTIMATELY CLAIMED EXEMPTION OF ITS INCOME FROM TAX UNDER SECT ION 11 OF THE ACT WHICH WAS DENIED BY THE AO FOR THE REASON THAT THE ASSESSEE H AD NOT CLAIMED THE SAME IN THE RETURN OF INCOME AND EVEN ON MERITS SINCE THE A SSESSEE TRUST HAD NOT APPLIED 85% IF ITS RECEIPT FOR CHARITABLE PURPOSE, THE CLAIM WAS NOT ADMISSIBLE. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (A) WHO DENIED THE CLAIM FOR THE REASON THAT THE SAME HAD NOT BEEN CLAIMED IN TH E RETURN OF INCOME. 14. BEFORE US THE LD. AR STATED THAT ALTHOUGH THE A SSESSEE HAD NOT CLAIMED EXEMPTION UNDER SECTION 11 IN THE RETURN OF INCOME IT HAD CLAIMED THE SAME DURING THE ASSESSMENT PROCEEDINGS VIDE ITS LETTER D T. 1/11/2010 WHICH HAS BEEN CONFIRMED BY THE LD. AO ALSO IN ITS ASSESSMENT ORDE R AT PARA 1.3. LD. AR STATED THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UND ER SECTION 12A OF THE ACT AND IS THEREFORE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF ITS INCOME. LD. AR STATED THAT THE LD. CIT(A) HAD ERRED IN REJECTIN G THE CLAIM OF THE ASSESSEE MERELY FOR THE REASON THAT THE SAME HAD NOT BEEN CL AIMED IN THE RETURN OF INCOME WHEN ACTUALLY THE ASSESSEE HAD CLAIMED THE S AME DURING ASSESSMENT PROCEEDINGS. 15. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF LD. CIT(A). 16. WE FIND THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT. IT IS ALSO NOT I N DISPUTE THAT THE ASSESSEE HAD NOT CLAIMED EXEMPTION UNDER SECTION 11 IN ITS RETUR N OF INCOME BUT AT THE SAME TIME IT IS ALSO UNDISPUTED THAT THE CLAIM HAD BEEN MADE BY THE ASSESSEE BEFORE THE AO DURING ASSESSMENT PROCEEDINGS VIDE ITS LETTE R DT. 01/11/2010 WHICH IS MENTIONED IN THE ASSESSMENT ORDER AT PARA 1.3 WHERE IN THE AO HAS STATED 5 FURTHER DEDUCTION UNDER SECTION 11/12A AS CONTESTE D IN THE REPLY DT. 01/11/2010 IS ALSO NOT ADMISSIBLE AS DISCUSSED ABOVE. IN VIEW OF THE ABOVE THE ISSUE TO BE ADJUDICATED UP ON IS WHETHER THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 11 OF THE A CT, EVEN IF THE SAME HAD NOT CLAIMED IN THE RETURN OF INCOME BUT WAS CLAIMED DUR ING ASSESSMENT PROCEEDING. WE ARE OF THE CONSIDERED VIEW THAT THE CLAIM OF THE ASSESSEE OUGHT TO HAVE BEEN ENTERTAINED. IN VIEW OF THE FACT THAT THE ASSE SSEE HAD BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT IT CANNOT BE DENIED THAT THE ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 & 12 OF THE ACT SUBJECT TO FULFILLMENT OF THE CONDITIONS STATED THEREIN. SINCE THE ASSESSEE WAS OF THE BELIEF THAT ITS INCOME WAS EXEMPT FROM TAX BY VIRTUE OF TH E PROVISION OF SECTION 10(23C)(IIIAD), WHICH IT CLAIMED IN ITS RETURN OF I NCOME, IT LOGICALLY DID NOT CLAIM EXEMPTION U/S 11 OF THE ACT. IT WAS ONLY DURING ASS ESSMENT PROCEEDINGS WHEN EXEMPTION U/S 10(23C)(IIIAD) WAS PROPOSED TO BE DEN IED THAT THE ASSESSEE ALTERNATIVELY CLAIMED EXEMPTION U/S 11 OF THE ACT. DENYING THIS EXEMPTION FOR THE REASON THAT IT WAS NOT CLAIMED IN THE RETURN IS AN ABSURD REASONING SINCE AS STATED ABOVE THERE WAS NO OCCASION FOR THE ASSESSEE TO CLAIM ALTERNATE EXEMPTION UNDER SECTION 11 WHEN IT HAD ALREADY CLAI MED EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. THEREFORE WE HOLD THAT T HE DENIAL OF EXEMPTION U/S 11 OF THE ACT FOR THE REASON THAT IT WAS NOT CLAIMED I N THE RETURN OF INCOME IS CORRECT. THE ASSESSEE WAS LEGALLY ENTITLED TO CLAIM THE SAME AND HAD RIGHTLY DONE SO WHEN ITS INITIAL CLAIM OF EXEMPTION U/S 10( 23C)(IIIAD) HAD BEEN PROPOSED TO BE DENIED. THERE IS NO PROVISION IN THE INCOME TAX ACT WHICH REQUIRES TO ASSESSEE TO COMPULSORY CLAIM BENEFIT UN DER ALL SECTION OF THE ACT ALTERNATIVELY AVAILABLE. MOREOVER EVEN THE CBDT CIR CULAR NO. 14(XL-35) DT. 11/04/1955 MANDATES ASSESSING OFFICER TO ASSIST TAX PAYEES IN EVERY REASONABLE 6 WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SEC URING RELIEFS AND FURTHER DIRECTS ASSESSING OFFICER TO TAKE THE INITIATIVE IN GUIDING TAX PAYEES IN THIS REGARD. IN VIEW OF THE SAME WE HOLD THAT THE LD. CIT(A) HAD ERRED IN REJECTING THE CLAIM OF THE ASSESSEE FOR GRANT OF EXEMPTION UNDER SECTIO N 11 MERELY FOR THE REASON THAT THE CLAIM HAD NOT BEEN MADE IN THE RETURN OF I NCOME. WE THEREFORE HOLD THAT IN VIEW OF THE REGISTRATION GRANTED UNDER SECT ION 12A THE ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 AND SI NCE THE SAME HAS NOT BEEN EXAMINED BY THE LD. CIT(A), THE ISSUE OF CLAIM OF E XEMPTION UNDER SECTION 11 IS BEING RESTORED BACK TO FILE OF LD. CIT(A) TO BE DEA LT WITH IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSE SSEE. 17. THIS GROUND OF APPEAL IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 18. GROUND NO. 5 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION OF RS. 4,16,784/- MADE TO THE INCOME OF THE ASSESSEE AS UN EXPLAINED INCOME OF THE INSTITUTION. 19. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE HAD INTRODUCED FRESH UNSECURED LOANS OF RS. 3,37,000/- IN THE BOOK S OF AKAL ACADEMY AND RS. 79,784/- IN THE BOOKS OF BRAKKAT COLLEGE OF EDUCATI ON. THESE LOANS HAD BEEN INTRODUCED IN CASH IN THE NAME OF MOHTOM GURUDWARA SAHIB SANT BABA SUNDER SINGH JI CANADIAN VILLAGE TALLEWAL. DURING THE COUR SE OF ASSESSMENT THE ASSESSEE SUBMITTED THAT THE ADVANCE HAD BEEN MADE OUT OF GO LAK MAINTAINED BY THE GURUDWARA FOR DAILY CASH OFFERING BY THE DEVOTEES. THE AO REJECTED, THE CONTENTION OF THE ASSESSEE SINCE IT HAD FAILED TO P ROVE THE GENUINENESS OF TRANSACTION, IDENTITY OF THE CREDITOR AND CAPACITY OF THE CREDITOR. DURING APPELLATE PROCEEDINGS THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AO THAT THESE LOANS WERE ACCOMMODATING LOANS MADE O UT OF GOLAK OF GURUDWARA. LD. CIT(A) REJECTED THE CONTENTION OF TH E ASSESSEE AND UPHELD THE ORDER OF THE AO BY STATING THAT ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS TO PROVE 7 THE GENUINENESS OF THE TRANSACTION AND THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITOR. 20. BEFORE US LD. AR REITERATED THE CONTENTION MADE BEFORE THE LOWER AUTHORITIES AND FURTHER STATED THAT EVEN IF THE ADD ITION IS MADE THE SAME IS LIABLE TO EXEMPTION UNDER 11 OF THE ACT TO WHICH THE ASSES SEE IS ELIGIBLE HAVING BEEN GRANTED REGISTRATION UNDER SECTION 12A THE ACT. 21. LD. AR PLACED RELIANCE ON THE DECISION OF THE K ARNATAKA HIGH COURT IN THE CASE OF DIT(EXEMPTION) & ANOTHER VS. SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL AND EDUCATIONAL TRUST (2011) 336 ITR 694. 22. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF LD. CIT(A). 23. WE FIND THAT THE ISSUE ARISING IN THIS GROUND B EING ADDITION MADE U/S 68 OF THE ACT, IS EFFECTED BY THE ELIGIBILITY OF THE ASSE SSEE TO EXEMPTION UNDER SECTION 11 OF THE ACT. SINCE THE ISSUE OF CLAIM OF THE ASSE SSEE OF EXEMPTION U/S 11 OF THE ACT HAS BEEN RESTORED BACK TO THE FILE OF THE LD CI T(A) IN PARA 16 OF OUR ORDER, WE RESTORE THIS ISSUE ALSO BACK TO THE FILE OF THE LD. CIT(A) TO BE ADJUDICATED UPON IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESS EE DUE OPPORTUNITY OF HEARING . 25. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14/06/2016. SD/- SD/- (H.L. KARWA) (ANNAPURNA GUPTA) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 14/06/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR