Dy. Director of Income-tax Exemptions-I, Hyderabad V. Social action for Rural Education, Health & Loving Life of Abundance Society, Hyderabad

ITA 147/HYD/2014

• Counselvise Citation: 14722514 RSA 2014
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RURAL EDUCATION HEATH
• Assessee Lawyers: RAJAT MITRA MR K C DEVDA
• Keywords: Additional evidence
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.147/HYD/2014 ASSESSMENT YEAR 2008-09 THE DIT(EXEMPTIONS)-1, HYDERABAD 500 004. VS. SOCIAL ACTION FOR RURAL EDUCATION, HEATH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERABAD 500 029. PAN AADTS1409C (APPELLANT) (RESPONDENT) FOR REVENUE : MR. RAJAT MITRA FOR ASSESSEE MR. K.C. DEVDAS DATE OF HEARING : 14.01.2015 DATE OF PRONOUNCEMENT : 21.01.2015 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE DEPARTMENT IS AGAINST THE ORDE R DATED 29.11.2013 PASSED BY THE LD. CIT(A)-IV, HYDER ABAD FOR THE A.Y. 2008-2009. 2. THE DEPARTMENT IS AGGRIEVED WITH THE DECISION O F THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED UNDE R SECTION 271(E) OF THE ACT. THE EFFECTIVE GROUND RAISED BY T HE DEPARTMENT ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE P ENALTY OF RS.21,18,920/- LEVIED BY THE ADDL. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD UNDER SECTION 271E OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WHEN THE ASSESSEE HAS NOT PRODUCED ANY NEW CASH 2 ITA.NO.147/HYD/2014 SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERAB AD. BOOK DURING THE COURSE OF PENALTY PROCEEDINGS, THE LD. CIT(APPEALS) ERRED IN DIRECTING THE ASSESSEE TO PRO DUCE BOTH SET OF BOOKS OF ACCOUNTS, THEREBY ENTERTAINING THE ADDITIONAL EVIDENCE, WITHOUT GIVING OPPORTUNITY TO THE ASSESSING AUTHORITY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE PENALTY OF RS.21,18,920 LEVIED BY THE ADDL. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD UNDER SECTION 271E OF THE INCOME TAX ACT, 1961. 3. BRIEFLY THE FACTS ARE ASSESSEE, A SOCIETY IS REGISTERED UNDER SECTION 12AA OF THE ACT. FOR THE Y EAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME AT NIL AFTER CLAIMING EXEMPTION UNDER SECTIO N 10(23) (IIIAD) OF THE ACT. THE ASSESSEE SOCIETY RUNS TWO N URSING SCHOOLS VIZ., M/S. SUPRIYA SCHOOL OF NURSING AT KAK INADA AND M/S. ST. MARYS COLLEGE OF NURSING AT VISAKHAPATNAM . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FOR THE IMPUG NED ASSESSMENT YEAR IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAD PURCHASED LAND ADMEASURING AC.12.36 GTS., AT MA DDUR (V), SHABAD (M), RANGA REDDY DISTRICT FROM MR. NARASIMHA REDDY AND THREE OTHERS FOR A SUM OF RS.21,18,920 INCLUDIN G REGISTRATION AND OTHER COSTS. IT WAS NOTICED BY THE A.O., THE PURCHASE CONSIDERATION OF THE LAND WAS PAID BY MR. S.S. PRASAD AND SMT. S. VIDYAKUMARI FROM THEIR INDIVIDUA L ACCOUNTS ON BEHALF OF THE SOCIETY AS THE SOCIETY DI D NOT HAVE SUFFICIENT FUNDS. HE FURTHER NOTICED, ASSESSEE-SOCI ETY REPAID THE LOAN TO THE CONCERNED PERSONS IN CASH INSTEAD O F ACCOUNT PAYEE CHEQUE/DRAFT IN VIOLATION OF THE PROVISIONS O F SECTION 269T OF THE ACT THEREBY, ATTRACTING THE PENALTY PRO VISIONS OF SECTION 271E OF THE ACT. AS THE ADDL. DIT(E), HYDER ABAD WAS HAVING JURISDICTION TO IMPOSE PENALTY UNDER SECTION 271E, THE A.O. REFERRED THE MATTER TO THE AUTHORITY HAVING JU RISDICTION FOR 3 ITA.NO.147/HYD/2014 SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERAB AD. IMPOSING PENALTY. THE ADDL. DIT(E) ACCORDINGLY, ISS UED NOTICE DIRECTING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENA LTY SHALL NOT BE IMPOSED FOR VIOLATION OF THE PROVISIONS OF S ECTION 269T OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUE D BY THE OFFICER CONCERNED, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAS NOT TAKEN ANY LOAN OR DEPOSIT FROM THE CONCERNED PE RSONS. HENCE, THE REPAYMENT OF ANY LOAN OR DEPOSIT DOES NO T ARISE. THEREFORE, THE PROVISION OF SECTION 269T OF THE ACT ARE NOT APPLICABLE. ALTERNATIVELY, IT WAS SUBMITTED BY THE ASSESSEE THAT EVEN ASSUMING THE AMOUNT ADVANCED BY THE CONCERNED PERSONS ARE LOANS, REPAYMENT OF THE AMOUNT BY THE A SSESSEE TO THESE PERSONS WERE NOT IN CASH, AS ALLEGED BY THE A .O., BUT THROUGH ACCOUNT PAYEE CHEQUES. IT WAS SUBMITTED BY THE ASSESSEE THAT BECAUSE OF SOME CLERICAL MISTAKE THE PAYMENTS WERE WRONGLY SHOWN AS MADE IN CASH IN THE BOOKS O F ACCOUNTS. IN SUPPORT OF SUCH CONTENTION, ASSESSEE F URNISHED LEDGER ACCOUNT COPIES ALONG WITH BANK STATEMENT OF M/S. SUPRIYA SCHOOL OF NURSING, KAKINADA BEARING S.B.A/C . NO.11117303661. ASSESSEE ALSO SUBMITTED CONFIRMATIO N LETTERS FROM THE RECIPIENTS TO ESTABLISH ITS CLAIM. THE ADD L. DIT(E), HOWEVER, WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE OBSERVED THAT THE REPAYMENT OF LOAN CL AIMED TO HAVE BEEN MADE IN CASH IS DIFFERENT FROM THE REPAYM ENT OF LOANS MENTIONED IN THE LEDGER ACCOUNTS SUBMITTED DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. HE OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED ANY RECONCILIATION EXPLA NATION IN RESPECT OF LOAN REPAYMENT OF RS.21,18,920. HE ALSO WAS NOT CONVINCED WITH ASSESSEES EXPLANATION THAT PAYMENTS MADE IN CHEQUE WERE WRONGLY SHOWN AS CASH PAYMENTS IN THE B OOKS OF ACCOUNTS DUE TO CLERICAL MISTAKE, SINCE THE BOOKS O F ACCOUNTS OF THE ASSESSEE WERE AUDITED BY A CHARTERED ACCOUNT ANT. HE 4 ITA.NO.147/HYD/2014 SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERAB AD. FURTHER, OBSERVED THAT THE COPIES OF THE LEDGER ACC OUNTS OF THE INDIVIDUALS SHOWING CHEQUE PAYMENT OF RS.8,75,000 O N 22.01.2008 AND RS.9,22,108 AND RS.5,27,308 TOTALLIN G TO RS.22,75,000 FURNISHED BY THE ASSESSEE DURING THE P ENALTY PROCEEDINGS ARE NOT SUPPORTED BY THE AUDITED BOOKS OF ACCOUNTS. HE THEREFORE, DISBELIEVED ASSESSEES CLAI M THAT THE REPAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE. ACCORDINGLY, ADDL. DIT(E) HAVING HELD THAT THE ASSE SSEE HAS VIOLATED THE PROVISIONS OF SECTION 269T OF THE ACT PROCEEDED TO PASS AN ORDER IMPOSING PENALTY OF RS.21,18,920 UNDE R SECTION 271E OF THE ACT. BEING AGGRIEVED OF THE PENALTY ORD ER, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 4. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSES SEE PRODUCING THE AUDITED BOOKS OF ACCOUNTS AS WELL AS THE CORRECTED BOOKS OF ACCOUNTS RECONCILED THE MISTAKE IN THE AUDITED BOOKS OF ACCOUNTS. ASSESSEE ALSO PRODUCED S TATEMENT OF ACCOUNTS OF THE STATE BANK OF INDIA, KAKINADA BR ANCH IN THE NAME OF M/S. SUPRIYA SCHOOL OF NURSING AS WELL AS T HE CONFIRMATIONS OBTAINED FROM AXIS BANK, HIMAYATNAGAR BRANCH, CERTIFYING THAT CHEQUES ISSUED BY THE ASSESSEE AMOU NTING TO RS.8,75,000, RS.9,00,000 AND RS.5,00,000 WERE CREDI TED TO THE BANK ACCOUNT OF SMT. VIJAY KUMARI AND MR. S.S. PRAS AD 22.01.2008 AND 27.03.2008 RESPECTIVELY. THE LD. CIT (A) ON CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND GOI NG THROUGH THE EVIDENCES PRODUCED BY THE ASSESSEE, FOUND THAT THE BANK STATEMENT OF STATE BANK OF INDIA RELATING TO THE AC COUNT OF M/S. SUPRIYA NURSING HOME AS WELL AS CERTIFICATE IS SUED BY AXIS BANK, HIMAYATNAGAR BRANCH CLEARLY ESTABLISH TH AT THE REPAYMENT OF LOAN TO THE CONCERNED PERSONS WERE THR OUGH CHEQUE. SHE, THEREFORE, WAS OF THE VIEW, AS THE BAN K 5 ITA.NO.147/HYD/2014 SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERAB AD. STATEMENTS ARE PRIMARY DOCUMENTS WHICH FORM THE BAS IS OF THE ENTRIES IN THE BOOKS OF ACCOUNTS, IF THERE IS A CON FLICT BETWEEN THE ENTRIES IN THE PRIMARY DOCUMENTS AND THOSE OF T HE BOOKS OF ACCOUNTS, CREDENCE MUST BE GIVEN TO THE PRIMARY DOC UMENTS. LD. CIT(A) ALSO DISAPPROVED THE OBSERVATIONS OF THE ADDL. CIT THAT REPAYMENTS MADE THROUGH CHEQUES RELATE TO A SE PARATE LOAN AND NOT THE LOAN WHICH IS SUBJECT MATTER OF PE NALTY PROCEEDING. ACCORDINGLY, LD. CIT(A) DELETED THE PEN ALTY IMPOSED BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES A S WELL AS OTHER MATERIALS ON RECORD. ON CONSIDERATION OF FACT S AND MATERIALS PLACED ON RECORD, WE DO NOT FIND ANY DISP UTE TO THE FACT THAT THE AMOUNT UTILIZED FOR PURCHASE OF THE C ONCERNED LAND WERE RECEIVED FROM TWO INDIVIDUALS I.E., MR. S .S. PRASAD AND SMT. S. VIJAY KUMARI. IT IS ALSO NOT DISPUTED T HAT THE ASSESSEE HAS REPAID THE AMOUNT IN QUESTION TO THE C ONCERNED PERSONS. THE ONLY DISPUTE IS WITH REGARD TO MODE OF REPAYMENT. THE ADDL. CIT RELYING UPON THE ENTRIES MADE IN THE AUDITED BOOKS OF ACCOUNTS HAS PROCEEDED TO IMPOSE PENALTY U NDER SECTION 271(E) WHEREAS, IT IS THE CONTENTION OF THE ASSESSEE THAT THE LOAN WAS ACTUALLY REPAID THROUGH ACCOUNT P AYEE CHEQUES BUT DUE TO A CLERICAL MISTAKE IT WAS WRONGL Y SHOWN AS CASH PAYMENTS IN THE AUDITED BOOKS OF ACCOUNTS. THO UGH, BEFORE THE ADDL. CIT ASSESSEE HAS SUBMITTED THE BAN K STATEMENTS AND REVISED LEDGER ACCOUNT COPY TO ESTAB LISH THE FACT THAT THE REPAYMENT TO THE CONCERNED PERSONS WE RE THROUGH ACCOUNT PAYEE CHEQUES BUT THE ADDL. CIT HAS REJECTE D THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT ASSES SEE HAS TAKEN TWO SEPARATE LOANS AND REPAYMENT THROUGH CHEQ UES 6 ITA.NO.147/HYD/2014 SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERAB AD. RELATE TO A DIFFERENT LOAN THAN WHAT HAS BEEN SHOWN IN THE AUDITED BOOKS OF ACCOUNTS. HOWEVER, AS CAN BE SEEN FROM THE EVIDENCE ON RECORD AS WELL AS DISCUSSIONS MADE BY T HE FIRST APPELLATE AUTHORITY, ASSESSEE HAS TAKEN LOAN OF RS. 8,75,000 FROM MR. S.S. PRASAD AND RS.14,00,000 FROM SMT. S. VIJAY KUMARI WHICH WERE REPAID THROUGH ACCOUNT PAYEE CHEQ UES ISSUED FROM THE BANK ACCOUNT OF M/S. SUPRIYA SCHOOL OF NURSING OF STATE BANK OF INDIA THROUGH THREE ACCOUN T PAYEE CHEQUES NUMBERED AS 154071, 154072 AND 154073. THE AFORESAID FACT IS CLEARLY ESTABLISHED FROM THE BANK STATEMENT OF STATE BANK OF INDIA AS WELL AS THE CONFIRMATION ISS UED BY AXIS BANK, HIMAYATHNAGAR BRANCH, CERTIFYING THAT THE SAI D CHEQUES AMOUNTING IN TOTAL TO RS.22,75,000 WAS CREDITED TO THE RESPECTIVE BANK ACCOUNTS OF MR. S.S. PRASAD AND SMT . S. VIJAY KUMARI. THEREFORE, WHEN THERE IS NO EVIDENCE BEFORE THE A.O. THAT THE ASSESSEE HAS AVAILED TWO SEPARATE LOANS FR OM THESE PERSONS, ON MERE PRESUMPTION AND SURMISES, HE CANNO T REJECT THE EXPLANATION OF THE ASSESSEE WHICH WERE SUPPORTE D BY COGENT EVIDENCE. FURTHER, ASSESSEES CONTENTION THA T REPAYMENTS THROUGH CHEQUES WERE WRONGLY MENTIONED A S CASH PAYMENTS AS A RESULT OF CLERICAL MISTAKE IS BELIEVA BLE BECAUSE, AS FOUND BY THE LD. CIT(A), WITHDRAWALS MADE FROM S TATE BANK OF INDIA ACCOUNT OF M/S. SUPRIYA SCHOOL OF NURSING THROUGH CHEQUES WERE WRONGLY MENTIONED IN THE BOOKS OF ACCO UNTS AS CASH WITHDRAWALS. THEREFORE, ON OVERALL EXAMINATION OF FACTS AND MATERIALS ON RECORD, IT IS VERY MUCH EVIDENT TH AT THE REPAYMENT OF LOAN BY THE ASSESSEE TO MR. S.S. PRASA D AND SMT. S. VIJAY KUMARI WERE THROUGH ACCOUNT PAYEE CHEQUES. HENCE, THERE IS NO VIOLATION OF PROVISIONS CONTAINED UNDER SECTION 269T OF THE ACT THEREBY, ATTRACTING THE PENAL PROVI SION OF SECTION 271(E). IN THE AFORESAID FACTS AND CIRCUMST ANCES, WE DO 7 ITA.NO.147/HYD/2014 SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, HYDERAB AD. NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT( A) IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(E). WE, THERE FORE, UPHOLD THE ORDER OF THE LD. CIT(A). 6. THOUGH, THE DEPARTMENT HAS ALSO RAISED THE IS SUE OF LD. CIT(A) ENTERTAINING ADDITIONAL EVIDENCE WITH OUT GIVING OPPORTUNITY TO THE ASSESSING AUTHORITY, BUT, AT THE TIME OF HEARING NEITHER THE LEARNED D.R. COULD POINT-OUT WH AT ARE THOSE EVIDENCES ENTERTAINED BY THE LD. CIT(A) WHICH CAN BE CONSIDERED TO BE IN THE NATURE OF ADDITIONAL EVIDEN CE NOR ON EXAMINATION OF THE FACTS AND MATERIALS ON RECORD, W E COULD FIND ANYTHING TO PROVE THE ALLEGATION OF THE DEPARTMENT TO BE CORRECT. HENCE, THE GROUND RAISED DOES NOT MERIT CO NSIDERATION. THE GROUND RAISED IS THEREFORE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.01.2015 SD/- SD/- (B.RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 21 ST JANUARY, 2015 VBP/- COPY TO 1. DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)-I, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. SOCIAL ACTION FOR RURAL EDUCATION, HEALTH & LOVING LIFE OF ABUNDANCE SOCIETY, FLAT NO.401, BALAJI ENCLAVE, BAC KSIDE OF GANDHI BHAVAN, NAMPALLY, HYDERABAD. 3. COMMISSIONER OF INCOME TAX-IV, HYDERABAD. 4. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD.