ACIT (E), Ghaziabad V. M/s. Uttranchal Welfare Society, Ghaziabad

ITA 180/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5427 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Depreciation; Charitable institution
• Section: 143(3); 80G; 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 180 /DEL/201 5 A.Y. : 2010-11 ASSTT. COMMISSIONER OF INCOME TAX, EXEMPTION, CIRCLE, CGO-1, HAPUR ROAD, GHAZIABAD VS. M/S UTTRANCHAL WELFARE SOCIETY, B-249, PATEL NAGAR-II, GHAZIABAD (PAN: AAATU1374P) (ASSESSEE) (RESPONDENT) REVENUE BY : SH. RAVI KANT GUPTA, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMP UGNED ORDER DATED 08.10.2014 OF THE LD. CIT(A), GHAZIABAD RELEVA NT TO ASSESSMENT YEAR 2010-11. 2. THE FOLLOWING ARE THE GROUNDS RAISED BY THE REVEN UE:- 1. THAT THE LD. CIT(A) HAS WRONGLY DELETE THE PENALTY U/S. 271(1)(C) OF THE I.T. ACT, 1961 AMOUNTING TO RS. 22,29,600/- IGNORING THE FACT THE ASSESSEE HAS NOT UTILIZED APPLICATION OF 85% OF THE INCOME. 2 2. THE ORDER OF THE LD. CIT(A) IN THIS ISSUE MAY KINDLY BE CANCELLED AND THE ORDER OF AO BE RESTORED. 3. APPELLANT CRAVES LEAVE TO MODIFY / AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE SOCI ETY WAS REGISTERED WITH THE REGISTRAR OF SOCIETY, UTTAR PRADES H AND RENEWAL WAS GRANTED VIDE NO. 1578/2010-11 F.NO. I-8618D DATE D 29.03.2011 FOR THE PERIOD FROM 26.03.2011 TO FIVE YE ARS. THE SOCIETY HAS BEEN GRANTED REGISTRATION U/S. 12AA OF I.T . ACT, 1961 BY THE THEN LD. COMMISSIONER OF INCOME TAX, MEERUT VIDE ORDER C.NO. 40(L4)/REGISTRATION/GZB/1998-99110505 DATED 09.10.19 98. THE SOCIETY HAS ALSO BEEN GRANTED EXEMPTION U/S 80G OF LT . ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX, GHAZIABAD VID E ORDER F.NO. 58(93)/TAX EXEMPTION/CIT-GZB/2011-1211473A DATED 26 .07.2011. IN THIS CASE ASSESSMENT WAS COMPLETED ULS 143(3) OF I .T. ACT ON 04.03.2013. IN THE ASSESSMENT ORDER IT HAS BEEN HELD THAT THE APPLICATION OF INCOME WAS LESS THAN 85% BY AN AMOUN T OF RS. 2,66,57,046/-. THE ASSESSING OFFICER MENTIONED T HAT AN AMOUNT OF RS. 2,66,57,046/- HAS BEEN SET APART AND GIVING SE T OFF OF THIS AMOUNT TAXABLE INCOME WAS ASSESSED AT NIL. HOWEVER, IN REALITY AN AMOUNT OF RS. 19443759/- ONLY WAS ACCUMULATED / SET A PART BY THE SOCIETY AS PER FORM NO. 10 U/S. 11(2) OF THE ACT. T HE ASSESSING OFFICER HELD THAT THE ASSETS CREATED OUT OF CORPUS FU ND WERE NOT ELIGIBLE FOR DEPRECIATION AND THAT RUNNING OF HOSTELS A ND BUSES DID NOT FORM PART OF CHARITABLE PURPOSES. HOLDING THUS, T HE ASSESSING OFFICER DEDUCTED RECEIPTS AND EXPENDITURE PERTAINING TO RUNNING OF BUSES AND HOSTELS OUT OF TOTAL RECEIPTS AND EXPENDITURE . THUS NET 3 RECEIPTS WAS TAKEN TO BE RS. 23,93,15,463/-. THEN THE ASSESSING OFFICER COMPUTED 85% OF THIS FIGURE AT RS. 21,26,58,41 7/- WHICH WAS REQUIRED TO BE APPLIED FOR CHARITABLE PURPOSES. THE ASSESSEE HAD DECLARED APPLICATION OF FUNDS AT RS. 20,96,38,61 1/-. DEDUCTING DEPRECIATION AND THE EXPENSES OF HOSTEL AND BUSES AN D ADDING CAPITAL APPLICATION OF RS. 8,78,23,913/-, HE ARRIVE D AT A FIGURE OF RS, 21,26,58,417/- AS APPLIED FOR CHARITABLE PURPOSES. THE DEFICIT WAS WORKED OUT AT RS. 2,66,57,046/- AND INCOME WAS ASSES SED AT THIS FIGURE. HOWEVER, MENTIONING THAT 'SURPLUS EXEMPTU/S 1 1(2) O/IT ACT 1961 AS ACCUMULATED AND SET APART AND TO BE UTILIZED IN SUBSEQUENT YEAR AS CLAIMED IN FORM (AS DISCUSSED IN PARA-6 ABO VE): RS. 2,66,61,046/- ', TOTAL TAXABLE INCOME WAS MENTIONED T O BE RS. NIL. HOWEVER THERE IS NO SUCH 'PARA 6' IN THE ASSESSMENT OR DER. IN THE IMPUGNED PENALTY ORDER, IT IS MENTIONED THAT ONLY RS. 1,94,43,759/- HAD BEEN ACCUMULATED U/S 11(2) AND STILL THERE WAS S URPLUS OF RS. 72,17,287/- WHICH WAS NOT ACCUMULATED OR SET APART. PE NALTY WAS IMPOSED OF AMOUNT OF TAX SOUGHT TO BE EVADED OF RS. 22,28,905/- ON THE ABOVE STATED SURPLUS AMOUNT OF RS. 72,17,287/- . IN THE PENALTY ORDER THE ASSESSING OFFICER HAS PLACED RELI ANCE ON THE CASE OF GOLD COIN HEALTH PVT. LTD. 304 ITR 308 (SC) HOLDING THAT PENALTY COULD BE IMPOSED EVEN IN A CASE WHERE THE ASSESSME NT RESULTS IN LOSS AND IMPOSED THE PENALTY IN DISPUTE VIDE ORDER D ATED 25.3.2013. AGAINST THE AFORESAID PENALTY ORDER DA TED 25.3.2013, ASSESSEE APPEALED BEFORE THE LD. CIT(A), GHAZIABAD WHO VIDE HIS IMPUGNED ORDER DATED 08.10.2014 HAS ALLOWED THE APPE AL OF THE ASSESSEE AND DELETED THE PENALTY IN DISPUTE. AGGRIEV ED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEF ORE THE TRIBUNAL. 4 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WA S SENT BY THE REGISTERED AD POST BUT NOBODY PRESENT ON BEHALF OF THE ASSESSEE AND NOR ANY APPLICATION FOR ADJOURNMENT HAS BEEN FILE D. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW T HAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AG AIN TO THE ASSESSEE ON THE SAME ADDRESS, THEREFORE, WE ARE DECI DING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEARING T HE LD. DR AND PERUSING THE RECORDS. 6. WE HAVE HEARD LD. DR AND PERUSED THE RELEVANT RECO RDS, ESPECIALLY THE IMPUGNED ORDER. WE FIND THAT AO IN TH E ASSESSMENT ORDER HAS ERRONEOUSLY MENTIONED THAT RS. 2,66,61,046 /- HAVE BEEN SET APART U/S. 11(2) OF THE ACT. THE CORRECT FIGURE WAS RS. 1,94,44,294/-. THUS THERE WAS NO DOUBT THAT SUR PLUS TO BE SET APART IS SHORT BY RS. 72,17,287/- AS HAS BEEN WORKE D OUT IN PENALTY ORDER. WE ALSO NOTE THAT THIS SHORT FALL IS ON ACCOUNT OF DEPRECIATION BEING DISALLOWED. THEREFORE, THE MAIN POINT TO BE D ECIDED HERE IS WHETHER THE SHORTFALL SO COMPUTED BY DISALLOWING DEPRE CIATION CLAIMED ATTRACTS PENALTY OR NOT. IN THE PRESENT CA SE, THE DECISION OF THE ISSUE WHETHER DEPRECIATION HAS BEEN DISALLOW ED RIGHTLY OR WRONGLY IS NOT BEING VENTURED INTO. HOWEVER, IN OUR CONSIDERED OPINION, IF DISALLOWANCE OF DEPRECIATION AND TREATING THE INCOME / EXPENDITURE OF HOSTEL AND RUNNING OF BUSSES SEPARATEL Y ARE JUSTIFIED, THE SHORTFALL IN APPLICATION OF INCOME SO ARRIVED DOES NOT ATTRACT PENALTY U/S. 271(1) AND THEREFORE, THE LD. CIT(A) BY RELYING UPON THE JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA I N THE CASE OF 5 CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 I TR (SC) HAS RIGHTLY DELETED THE PENALTY IN DISPUTE, WHICH DOES NO T NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE ACTI ON OF THE LD. CIT(A) IN DELETING THE PENALTY IN DISPUTE AND REJECT TH E GROUND RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ORDER PRO NOUNCED ON 26/04/2018. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 26/04/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHE S