M/S KRISHI UPAJ MANDI SAMITI CHHABR, Jaipur V. ITO, BARAN

ITA 189/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87558 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAGHAV BAJAJ; NIKHIL TOTUKA
• Keywords: Business income; Depreciation; Opportunity of being heard; Additional evidence; Benefit of exemption; Revised return; Capital expenditure
• Section: 143(3); 234B; 12A; 12AA; 10B; 147; 148; 11; 12

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 189/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2006-07 KRISHI UPAJ MANDI SAMITI, CHHABRA, DISTRICT- BARAN. CUKE VS. THE I.T.O. BARAN. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABTK 0633 L VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAGHAV BAJAJ (ADV.) & SHRI NIKHIL TOTUKA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK ( ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 04/03/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 29/12/2011 PASSED BY THE LEARNED CIT (A), KOT A FOR A.Y. 2006-07. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UND ER:- ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 2 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) KOTA IS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECATION AMOUNTING TO RS. 96,447/-. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN :- I. DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE APPELLANT TO THE EXTENT OF RS. 97,41,567/- AND UPHOLDING THE COMPUTATION OF INCOME BY THE A.O. TO SUCH EXTENT. II. HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 11(2) OF THE INCOME TAX ACT, 1961 AND TO SUCH EXTENT THE ORDER OF THE LEARNED CIT(A), KOTA IS BAD IN LAW. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A, 234B AND 234C. 2. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE A SSESSEE IS A KRISHI UPAJ MANDI SAMITI PROVIDING SERVICES TO THE FARMERS. THE ASSESSEE FILED RETURN OF INCOME AS NIL AFTER SETTIN G OFF OF BROUGHT FORWARD BUSINESS LOSS OF RS. 5115020/- AND BROUGHT F ORWARD DEPRECIATION OF RS. 3438808/- AND ALSO CLAIMING EXE MPTION U/S 11(1)(A) FOR THE SURPLUS OF RS. 1223130/- ULTIMATELY REMAINE D. THE ASSESSEE IS A KRISHI UPAJ MANDI SAMITI, WHICH WAS ENJOYING EXEMPTIO N OF ITS INCOME ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 3 U/S 10(20) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). THERE WAS AMENDMENT IN IT LAW WITH EFFECT FROM THE ASSESSMENT YEAR 2003-04, THIS EXEMPTION WAS NOT AVAILABLE TO TH E KRISHI UPAJ MANDI SAMITIS. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE SAMITI CONTINUED TO CLAIM EXEMPTION OF ITS INCOME U /S 10(20) AND ALTERNATIVELY U/S 11 AND 13 OF THE ACT, THOUGH THE ISSUE OF GRANTING OF REGISTRATION U/S 12A TO THE ASSESSEE SAMITI WAS NOT FINALLY DECIDED. THE ASSESSING OFFICER RECORDED THE REASONS FOR REOPENIN G THE CASE U/S 147 AND ISSUED NOTICE U/S 148 OF THE ACT, WHICH WAS RESPO NDED BY THE ASSESSEE. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE ACT. IT WAS CLAIMED BY THE APPELLANT THAT THE BOOKS OF ACCOUNT OF THE SAMITI HAD NOT BEEN MAINTAINED AS PER ANY FORMAL ACCOUNT STANDARD. NO BALANCE SHEET OF SAMITI HAS BEEN PREPARED AS ON 31/10/2006. ONLY INCOME AND EXPENDITURE ACCOUNT HAS BEEN PREPARED AND THAT, TOO , HAS NOT BEEN PREPARED ON THE BASIS OF PROPER FORMAL ACCOUNTING P RACTICES. IT WAS ALSO FOUND THAT THE AUDIT REPORT U/S 44AB OF THE AC T HAD BEEN FURNISHED IN FORM NO. 3CA, BUT IT WAS NEITHER SUPPORTED BY PRO PERLY AUDITED INCOME AND EXPENDITURE ACCOUNT AS PER NORMS AND REQ UIREMENTS OF THE RAJASTHAN AGRICULTURAL PRODUCE MARKET ACT NOR A BAL ANCE SHEET AS ON ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 4 31/3/2006 WAS DRAWN AND ANNEXED TO THE AUDIT REPORT. IN THE AUDIT REPORT, THE AUDITORS MADE FOLLOWING COMMENTS:- (A) THE UN-AUDITED INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED ON 31/3/2006. (B) AS PER NORMS AND REQUIREMENTS OF THE RAJASTHAN AGRICULTURAL PRODUCE MARKET ACT, 1961 ONLY INCOME A ND EXPENDITURE ACCOUNT IS PREPARED WHICH IS YET TO BE AUDITED BY T HE DEPARTMENT OF LOCAL FUND AND AS PER THEIR NORMS NO SUCH BALANCE S HEET AS ON 31/3/2006 IS DRAWN AND AUDITED. (C) DOCUMENTS DECLARED BY THE SAID ACT COULD NOT B E ANNEXED TO THE INCOME AND EXPENDITURE ACCOUNT AND BALANCE S HEET BEING THE AUDIT IS YET TO BE CARRIED BY THE DEPARTMENT. (D) ON REQUEST OF THE MANDI SAMITI THE AUDIT UNDER THE PROVISIONS OF SECTION 12AA OF THE IT ACT IS ALSO CAR RIED AND SIGNED ON THE EVEN DATE BY US. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD, WHICH WAS AVAILED BY THE ASSESSEE. IT HAS BEEN STATED BEFORE THE ASSESSING OFFICER THAT THE CLAIM OF RS. 12,23,130/- U/S 12A OF THE ACT FOR EXEMPTION OF INCOME U/S 11 OF THE ACT WAS RIGHTL Y BEEN MADE AS THE ASSESSEE IS ENTITLED FOR EXEMPTION OF INCOME BECAUS E THE SAMITI IS HAVING VALID REGISTRATION U/S 12AA OF THE ACT ISSUE D BY THE LEARNED CIT, ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 5 KOTA ON THE DIRECTION OF THE ITAT, JAIPUR AND REQUES TED THAT THE ASSESSMENT SHOULD BE COMPLETED IN THE LIGHT OF THE SAID REGISTRATION AND BENEFIT/ALLOWANCES OF EXPENDITURE SHOULD BE CONSIDER ED IN THE LIGHT OF THE SAID REGISTRATION. THE ASSESSEES WRITTEN REPLY H AS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE NO. 4 TO 12. THE AP PELLANT ALSO FILED THE REPLY ON CONTRIBUTION EXPENSES OF RS. 29,34,344 /- ON PAGE NOS. 12 AND 13, THE FARMERS WELFARE FUND AMOUNTING TO RS. 4, 16,528/-, WORK EXPENSES AMOUNTING TO RS. 30,284/-, PAYMENT TO XEN BARAN FOR REPAIRS OF ROAD, BUILDINGS AMOUNT RS. 3507003/-, DETAILS OF BANK ACCOUNTS, DETAILS OF EXPENSES CLAIMED INCOME AND EXPENDITURE ACCOUNT, JUSTIFICATION FOR DEPRECIATION CLAIMED IN INCOME AN D EXPENDITURE ACCOUNT, RENT OF SHOPS, INCOME FROM INTEREST AND OT HER INCOME. AFTER CONSIDERING THE ASSESSEES REPLY AND THE CASE LAWS C ITED BY IT, IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT AMENDMENT I N SECTION 2(15) WAS BROUGHT THROUGH FINANCE ACT, 2008 WITH THE INTENT ION FOR CHECKING MISUSE OF THIS PROVISION BY CLAIMING EXEMPTION OF I NCOME U/S 10(20) OF THE ACT BY SOME INSTITUTIONS. IT HAS BEEN HELD THAT THE ASSESSEE SAMITI IS NOT A CHARITABLE INSTITUTE AS THE NECESSARY ELEMENT OF ALTRUISM IS MISSING FROM ITS ACTIVITIES. ACCORDINGLY, HE HELD THAT THE SAMITIS INCOME IS TAXABLE. HE FURTHER HELD THAT THE ITATS ORDER FOR D IRECTING TO GRANT ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 6 REGISTRATION U/S 12AA OF THE ACT IS ALSO CHALLENGED BEFORE THE HONBLE RAJASTHAN HIGH COURT, WHICH IS PENDING AND MATTER HA S NOT BEEN GOT ITS FINALITY. HE FURTHER ANALYSED SECTION 2(15) OF THE ACT. THE LEARNED ASSESSING OFFICER FURTHER HELD THAT RENTAL INCOME C LAIMED BY THE SAMITI AS BUSINESS INCOME IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY ON THE BASIS OF NATURE OF RECEIPT. H E FURTHER HELD THAT THE ASSESSEE FILED BELATED AUDIT REPORT, WHICH IS AL SO NOT SUPPORTED WITH THE ANNEXURES AND PROPER DOCUMENTS. THEREFORE, HE AU DITED THE EXPENSES DEBITED IN THE INCOME AND EXPENDITURE ACCO UNT. THE APPELLANT HAD DEBITED EXPENSES OF RS. 29,34,344/- UNDER THE H EAD CONTRIBUTION EXPENSES, WHICH IS, AS PER THE ASSESSING OFFICER, N OT DEDUCTABLE. FURTHER THE SAMITI CLAIMED RS. 4,16,528/- ON ACCOUN T OF FARMERS WELFARE FUND, THE LEARNED ASSESSING OFFICER HELD THAT THE PROVISION OF SECTION 11 DOES NOT APPLY IN THE CASE OF SAMITI. FURTHER, T HE APPELLANT WAS NOT ABLE TO FURNISH ANY SUCH EVIDENCE, WHICH PROVES THAT THE ASSESSEE WAS ENTITLED FOR EXEMPTION FOR ITS INCOME U/S 11 OF THE ACT EXCEPT GRANTING REGISTRATION U/S 12AA OF THE ACT. THEREFORE, THE SAM E WERE ADDED BACK IN THE INCOME OF THE ASSESSEE. THE ASSESSEE MADE PA YMENT TO XEN BARAN AT RS. 35,07,003/- AND WORK EXPENSES AT RS. 30 ,284/-, THUS IN TOTAL RS. 35,37,287/- WERE FOUND CAPITAL INCOME IN N ATURE AND NOT ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 7 ALLOWED AS EXPENDITURE. HE FURTHER DISALLOWED DEPRECI ATION ON AUCTION PLATFORM FROM 15% CLAIMED BY THE ASSESSEE TO 10% AL LOWED BY HIM. THE DIFFERENCE OF RS. 96,647/- WAS ADDED BACK IN THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE ALSO FILED REVISED RETUR N ON 29/10/2010 ALONGWITH REVISED COMPUTATION, BY WHICH THE ENTIRE RE CEIPTS HAVE BEEN WIPED OUT BY CLAIMING EXPENSES AS CLAIMED BY THE ASS ESSEE IN ITS EARLIER RETURN AND FURTHER CLAIMING CAPITAL EXPENDITURE OF RS. 7784924/-. IT HAS BEEN OBSERVED THAT, SINCE THE RETURN ON 29/10/2010 IN THE SHAPE OF REVISED RETURN IS NOT A VALID REVISED RETURN AND HE NCE NO COGNIZANCE OF THE SAME IS TAKEN. ACCORDINGLY, THE LEARNED ASSESS ING OFFICER FINALLY ASSESSED TOTAL TAXABLE INCOME AT RS. 16938355/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL PARTLY BY OBSERVING THAT THE ASSESSEE HA S ALLOWED REGISTRATION U/S 12AA OF THE ACT, THERE IT IS ENTIT LED TO GRANT EXEMPTION U/S 12 OF THE ACT BUT THE ASSESSEE HAD NOT CLAIMED THAT AUDIT U/S 44AB WAS CARRIED OUT AND PROFIT AND LOSS ACCOUNT AND BALA NCE SHEET WERE PREPARED. IT WAS ALSO NOT CLAIMED THAT AUDIT AS PER RAJASTHAN AGRICULTURE PRODUCE MARKETS ACT WERE CARRIED OUT. THE REFORE, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON EXE MPTION AND ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 8 EXPENDITURE CLAIMED ON THE BASIS OF INCOME AND EXPE NDITURE ACCOUNT. THE LEARNED CIT(A) ACCEPTED THE RENTAL INCOME UNDER THE HEAD BUSINESS INCOME AND DIRECTED TO THE ASSESSING OFFICER TO ASS ESSEE THE RENTAL INCOME AS SUCH FOR CONTRIBUTION MADE TO THE MARKETI NG BOARD. THE LEARNED CIT(A) FOLLOWED THE DECISION OF HONBLE ITAT I N ITA NO. 560/JP/2010, ACCORDINGLY, ALLOWED THE ASSESSEES APP EAL. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF MA NDI AND OFFICE RUNNING EXPENSES WAS MADE WITHOUT ANY SPECIFIC DEFECT . ACCORDINGLY, HE DELETED THE ADDITION. ON FARMER WELFARE FUND, THE L EARNED CIT(A) HELD THAT IN CASE OF CIT VS. KRISHI UPAJ MANDI SAMITI, GA JSINGHPUR 227 CTR 79, THE HONBLE RAJASTHAN HIGH COURT HAS ALLOWED THE EXPENSES, WHICH IS MANDATORY ON PART OF THE APPELLANT AS PER DIRECT ION OF THE RAJASTHAN AGRICULTURAL MARKETING BOARD, ACCORDINGLY, HE ALLOWE D THE APPEAL. THE LEARNED CIT(A) HAS CONFIRMED THE DISALLOWANCE OF DEPRECIATION ON AUCTION PLATFORM @ 10%, WHICH WAS CL AIMED BY THE ASSESSEE @ 15%. THE INTEREST ON SAVINGS ACCOUNT WITH B ANKS AND MISCELLANEOUS RECOVERY WERE TREATED BY THE ASSESSING OFFICER INCOME FROM OTHER SOURCES BUT THE LEARNED CIT(A) TREATED T HIS AS AN INCOME FROM BUSINESS AND NOT TO BE TAXED THEM SEPARATELY. ACCORDINGLY, HE ALLOWED APPEAL ON THIS GROUND. THE LEARNED CIT(A) FURT HER HELD THAT AS ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 9 PER INCOME AND EXPENDITURE, A SUM OF RS. 97,41,567/ - HAS SHOWN AS SURPLUS. IN THE AUDIT REPORT, THE AUDITOR HAS NOT M ENTIONED IN ACCUMULATION OR SETTING A PART OF ANY SUM FOR SPECI FIED PURPOSES U/S 11(2) OF THE ACT. MOREOVER, IT IS SEEN THAT THAT TH E ASSESSEE HAS NOT GIVEN ANY NOTICE TO THE ASSESSING OFFICER IN PRESCR IBED FORM AND MANNER AS PRESCRIBED U/S 11(2) (A) OF THE ACT. ACCORDINGLY , HE HAS NOT GIVEN BENEFIT OF SECTION 11(2) OF THE ACT TO THE ASSESSEE AND CONFIRMED COMPUTING THE INCOME BY TAKING SURPLUS AS PER THE I NCOME AND EXPENDITURE ACCOUNT AT RS. 97,41,567/- 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED A.R. FOR THE ASSESSEE SUBMITTED AS UNDER:- 1. THAT THE ALLEGATION OF THE LEARNED CIT(A) THAT T HE BOOKS OF ACCOUNT OF THE APPELLANT SAMITI WERE NOT AUDITED UND ER SECTION 11AB IS ERRONEOUS AND AGAINST THE FACTS. IT IS HUMBLY SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE DU LY AUDITED BY THE AUDITOR OF THE APPELLANT SAMITI AND THE RELEVANT AUDIT REPORTS IN FORM 3CA WERE FURNISHED BE FORE THE LEARNED A.O. AS HAS BEEN RECORDED IN HIS ORDER AS WELL AT PAGE NO. 2 OF THE RELEVANT ASSESSMENT ORDERS. 2. FURTHER, THE ALLEGATION OF THE LEARNED CIT(A) THA T PROPER BOOKS OF ACCOUNTS WERE NOT MAINTAINED BY THE APPELLA NT ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 10 SAMITI IS ERRONEOUS. THE PROVISIONS OF MAINTENANCE O F BOOKS OF ACCOUNT AND AUDIT OF SUCH BOOKS OF ACCOUNT ARE COVERED U/S 44AA AND 44AB OF THE ACT RESPECTIVELY. THE RELEVANT EXTRACTS OF SECTION 44AA AND 44AB OF THE A CT ARE REPRODUCED BELOW FOR READY REFERENCE. 44AA. MAINTENANCE OF ACCOUNTS BY CERTAIN PERSONS CARRYING ON PROFESSION OR BUSINESS. 1. (2) EVERY PERSON CARRYING ON BUSINESS OR PROFESSIO N NOT BEING A PROFESSION REFERRED TO IN SUB-SECTION (1)]S HALL,- (I) IF HIS INCOME FROM BUSINESS OR PROFESSION EXCEEDS ONE LAKH TWENTY THOUSAND RUPEES OR HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSIESS OR PROFESSION EXCEED OR EXCEEDS TEN LAKH RUPEES IN ANY ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR; OR (II) (III) KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. AUDIT OF ACCOUNTS OF CERTAIN PERSONS CARRYING ON B USINESS OR PROFESSION. 44AB. EVERY PERSONS,- (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS FORTY LAKH RUPEES IN ANY PREVIOUS YEAR; OR ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 11 (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS RECE IPTS IN PROFESSION EXCEED TEN LAKH RUPEES IN ANY PREVIOUS YEAR; OR (C) . GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FOR M DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED:. AS PER THE PROVISIONS DISCUSSED ABOVE, IT IS EVIDEN T THAT THE REQUIREMENT OF MAINTAINING BOOKS OF ACCOUNTS AS PER SECTION 44AA AND AUDIT U/S 44AB IS APPLICABLE ONLY IF THE A SSESSEE IS CARRYING A BUSINESS OR PROFESSION. HOWEVER, IN THE C URRENT CASE, THE APPELLANT SAMITI IS REGISTERED AS A CHARITABLE ORGANIZATION U/S 12A AND THUS THE ACTIVITIES UNDERTAKEN BY THE APPEL LANT ARE CHARITABLE IN NATURE AND CANNOT BE CONSTRUCTED AS C ARRYING A BUSINESS OR PROFESSION. FURTHER IT HAS ALREADY BEEN STATED THAT THE APPELL ANT SAMITI IS GOVERNED BY THE MARKET ACT. THE APPELLANT SAMITI THUS, MAINTAINS ITS BOOKS OF ACCOUNT AS PER THE PROFESSIO NS OF THE MARKET ACT. THE AUDITOR IN HIS AUDIT REPORT IN FORM 10B HAS ALSO CONFIRMED THAT THE APPELLANT SAMITI HAS DULY MAINTA INED ITS BOOKS OF ACCOUNTS AS REQUIRED UNDER THE MARKET ACT. THE RE LEVANT AUDIT REPORTS IN FORM 10B FOR A.Y. 2006-07 AND 2008-09 AR E AVAILABLE IN THE PAPER BOOK AT PAGE NO. 4 AND 147 RESPECTIVEL Y. IN THE LIGHT OF THE ABOVE DISCUSSION, IT IS EVIDEN T THAT THE APPELLANT SAMITI HAS MAINTAINED PROPER BOOKS OF ACC OUNT AS REQUIRED UNDER THE MARKET ACT AND GOT THEM DULY AUD ITED. ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 12 HENCE, THE ALLEGATION OF THE LEARNED CIT(A) THAT THE BOOKS OF ACCOUNT CANNOT BE RELIED UPON IS WITHOUT ANY MERITS AND DESERVES TO BE QUASHED. 5. THE LEARNED CIT DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 6. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND, WHI CH IS REPRODUCED AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN DENYING THE BENEFI T OF EXEMPTION U/S 11 AND 12 OF THE ACT TO THE APPELLANT ON THE GROUND THAT THE APPELLANT DID NOT COMPLY WITH THE RE QUIREMENTS OF SECTION 11(2) RELATING TO SUBMISSION OF FORM 10, WITHOUT APPRECIATING THE FACT THAT THE INCOME AND EXPENDITU RE ACCOUNT AND OTHER RELEVANT DOCUMENTS WERE AVAILABLE WITH THE LEARNED CIT(A), KOTA TO ESTABLISH THE FACT THAT PROVISIONS O F SECTION 11(2) WERE NOT APPLICABLE ON APPELLANT. 7. AS THE ASSESSEE HAD TAKEN ADDITIONAL GROUND ON N ON-SUBMISSION OF AUDIT REPORT IN FORM NO. 10B, IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE A.R. THAT IT IS A LEGAL GROUND GOING TO THE ROOT OF THE ASSESSMENT AND FIRST APPELLATE PROCEEDING. THERE WAS NO WILLFUL O MISSION OF THE ABOVE GROUND ON FORM OF APPEAL FILED BY THE APPELLA NT, THE SAME MAY BE ADMITTED. ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 13 8. AT THE OUTSET, THE LEARNED CIT DR OPPOSED THE AS SESSEES ADDITIONAL GROUND ON THE GROUND THAT THE ASSESSEE H AS NOT CLAIMED BENEFIT OF EXEMPTION U/S 11 OF THE ACT ON THE BASIS OF NO NOTICE IN FORM NO. 10 GIVEN BY THE ASSESSING OFFICER. THE LEARNED C IT(A) RIGHTLY REJECTED THE EXEMPTION U/S 11 AND 12 OF THE ACT IN ABSENCE OF FORM NO. 10. SHE FURTHER RELIED ON THE CASE LAW REFERRED BY THE LEARNED CIT(A) ON PAGE NO. 16 I.E. DECISION OF THE HONBLE MADRAS HIG H COURT IN THE CASE OF DIT (EXEMPTION) VS. SPIC EDUCATION FOUNDATION 257 ITR 46 AND THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. HARDEODAS AGARWAL 198 ITR 511. 9. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAS GOT AN AUDIT REPORT AFTER THE ORDER OF THE LEARNED CIT(A) ON 16/07/2014 FOR THE YEAR ENDED ON 31/3/2004 FROM M/S SPARK AND ASSOCIAT ES, A C.A. FIRM, INDORE. AS VARIOUS HONBLE HIGH COURTS AS WELL AS BO ARD CIRCULAR, HELD THAT A PROCEDURAL PROVISION COULD NOT BE CONSTITUTE AS MANDATORY IF THE DEFECTS IN THE ACT DONE IN PURSUANCE OF IT CAN BE C URED BY PERMITTING THE PROPER RECTIFICATION TO BE CARRIED OUT AT THE S UBSEQUENT STAGE. THEREFORE, WE ADMIT THE ASSESSEES ADDITIONAL GROUND OF APPEAL, CLAIM ON AUDIT REPORT DATED 16/07/2016 GOT DOWN FROM M/S S PARK ASSOCIATES ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 14 LATER. THE ASSESSEE HAS SUBMITTED ADDITIONAL EVIDENC E UNDER RULE 29 OF THE INCOME TAX RULES, 1962 IN PAPER BOOK. ACCORDINGL Y, THE ISSUE OF EXEMPTION U/S 11 AND 12 OF THE ACT IS SENT BACK TO THE CIT(A) TO RECONSIDER THE AUDIT REPORT AND DECIDE THE CASE AS PER LAW. IT IS IMPORTANT TO MENTION HERE THAT IT IS NOT DES IRABLE ON THE PART OF THE ASSESSEE IN SUBMITTING OF AUDIT REPORT IN 20 14 FOR THE YEAR ENDED ON 31/3/2004. IT IS ADMINISTRATIVE LAPSE ON THE PAR T OF SECRETARY OF MANDI SAMITI, WHO HAS NOT TAKEN OUT DUE COMPLIANCE O F LAW FOR CLAIMING OF EXEMPTION U/S 10(20) OF THE ACT. BEING A GOVERNM ENT BODY, WE ALLOW THE ADDITIONAL EVIDENCE IN FORM OF AUDIT REPORT IN THE INTEREST OF JUSTICE. BEING A PECULIAR NATURE OF THE CASE, IT WOULD BE PR OPER TO MENTION HERE THAT THESE FINDINGS WOULD NOT BE TAKEN AS PRECEDENC E FOR OTHER YEARS OF THE ASSESSEE AND ALSO FOR OTHER CASES. 10. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWE D FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR ITA 189/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 15 FNUKAD @ DATED:- 04 TH MARCH, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- KRISHI UPAJ MANDI SAMITI, CHHABRA, DISTRICT- BARAN. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., BARAN. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 189/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR