DCIT, Circle - Nadia, Nadia V. The Roman Catholic Diocese of Krishnagar, Nadia

ITA 2162/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7984 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-12-2009
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: ANURADHA CHOWDHURY
• Keywords: Opportunity of being heard; Additional evidence
• Section: 12AA; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : KOLKATA [BEFORE HONBLE SHRI G.D.AGRAWAL, SMT. DIVA SINGH, JM] I.T. A. NO. 2162/KOL/2009 ASSESSMENT YEAR 2005-06 D.C.I.T., CIRCLE, -VS- THE ROMAN CATHOLIC DIOCE SE OF NADIA KRISHNANAGAR PAN : AAATR 2600 K (APPELLANT) (RESPONDENT) I.T. A. NO. 68/KOL/2010 ASSESSMENT YEAR 2005-06 THE ROMAN CATHOLIC DIOCESE OF -VS- D.C.I.T., CI RCLE KRISHNANAGAR NADIA (APPELLANT) (RESPONDENT) DEPARTMENT BY : SMT. JYOTI KUMARI ASSESSEE BY : SHRI SUBASH AGARWAL & SMT.ANURADHA CHOWDHURY O R D E R PER SMT. DIVA SINGH, JM THESE ARE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-XXXVI, KOLKATA DATED 29.10.2009 PERTA INING TO A.YR.2005-06. 2. THE SOLE GROUND RAISED BY THE REVENUE READS AS U NDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.16,11,508/- ON THE BASI S OF REVISED INCOME AND EXPENDITURE A/C. AND BALANCE-SHEET PRODUCED AT THE TIME OF APPELLATE STAGE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFF ICER. 2.1. ON THE OTHER HAND THE GROUND AGITATED BY THE A SSESSEE READS AS UNDER :- 1. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING THE ACTION OF THE AO IN TREATING THE INVESTMENTS AMOUNTING TO RS.50,00,0 00/- IN MUTUAL FUNDS AS THE 2 INCOME OF THE ASSESSEE BY HOLDING THAT THE SAID INV ESTMENTS DO NOT FALL UNDER THE INVESTMENTS PERMISSIBLE U/S 11(5). 2. FOR THAT THE LD. CIT(A) ERRED IN NOT ADJUDICATIN G GROUND NO.5 SPECIFICALLY. 3. FOR THAT THE LD. CIT(A) OUGHT TO HAVE CONSIDERE D THE REVISED COMPUTATION OF INCOME OF THE ASSESSEE SOCIETY AND HELD THAT THE DE FICIT OF THE ASSESSEE-SOCIETY IS RS.88,9,991/-. 4. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ADJUDICATING THE ADDITIONAL GROUND OF APPEAL RAISED BEFORE HIM. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 3. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT TH E ASSESSEE IS A CHARITABLE AND RELIGIOUS SOCIETY REGISTERED WITH GOVT., OF WEST BE NGAL 1976 AND IT GOT REGISTERED U/S 12AA OF THE IT ACT 1961 ON 28.10.1976 RETURN OF INC OME FOR A LOSS OF RS.89,19,711/- AS PER THE INFORMATION AVAILABLE IN THE ASSESSMENT ORDER NOTICE U/S 148 WAS SERVED TO THE ASSESSEE IN REGARD TO INVESTMENT IN DIFFERENT M UTUAL FUNDS WHICH WERE NOT REFLECTED IN THE AUDITED ACCOUNTS OF THE ASSESSEE. ACCORDINGL Y THE ASSESSEE WAS PUT TO NOTICE AS TO WHY THE ASSESSEE HAD NOT DECLARED TOTAL INVESTME NT IN THE BALANCE SHEET AS ON 31.3.2005 OF THE FOLLOWING AMOUNTS : F) THAT THE TOTAL AMOUNT OF INVESTMENT MADE NOT DE CLARED IN THE BALANCE SHEET AS ON 31,03.2005 AS SUCH : I) MUTUAL FUND : RS.71,29,411 II) TIME DEPOSIT : RS. 1,40,000 III)KOTAK MAHINDRA BANK : RS. 71,598 TOTAL RS.73,41,009 3.1. SINCE THERE WAS NO REPLY ON BEHALF OF THE ASSE SSEE THE AO GAVE THE FOLLOWING REASONS FOR MAKING THE ADDITIONS :- 5. ASSESSING OFFICERS VIEW (I)(A) DURING THE FINANCIAL YEAR 2004-05, THE ASSES SEE SOCIETY TRANSFERRED RS.50,00,000/- FROM AMERICAN EXPRESS BANK TO KOTAK MAHINDRA BANK WHICH WAS NOT DECLARED IN THE AUDITED BALANCE SHEET ENCLO SED WITH THE RETURN OF INCOME. 3 (B) THE ASSESSEE SOCIETY EVEN HAD WITHDRAWN EXCESS AMOU NT FROM THE KOTAK MAHINDRA BANK ON DIFFERENT DATES. FOR EXAMPLE ON 29 .12.2004 THE ASSESSEE SOCIETY OVERDRAWN RS.18,16,148/- FOR INVESTMENT IN MUTUAL FUNDS. AT THE END OF THE YEAR THAT IS ON 31.03.2005, THE ASSESSEE SOCIETY HAD CLOSING BALANCE OF RS.71,508/- IN KOTAK MAHINDRA BANK AND R S.71,29,411/- IN MUTUAL FUNDS (AS PER COST OF INVESTMENT). (C) AS PER PROVISION OF SECTION 11(3)(B) OF THE IT ACT, ANY INCOME REFERRED TO IN SUB-SECTION (2) WHICH CEASES TO REMAIN INVESTED OR DEPOSITED IN ANY OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5), SH ALL BE DEEMED TO BE THE INCOME OF SUCH PERSON OF THE PREVIOUS YEAR IN WHICH IT IS SO APPLIED OR CEASES TO BE SO ACCUMULATED OR SET APART OR CEASES TO REMAIN SO INVESTED OR DEPOSITED OR CREDITED OR PAID OR AS THE CASE MAY BE , OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE EXPIRY OF THE PERIOD AFOR E SAID. (D) SO THE ENTIRE AMOUNT OF RS.50,00,000/- IS CHARGED T O TAX FOR THE FINANCIAL YEAR 2004-05. (II) THE INCOME FROM THE FUND SO TRANSFERRED OF ACC UMULATED NOT TREATED AS APPLICATION OF FUND AND IS TO BE TAXED IN THE YEAR IN WHICH SUCH INCOME IS MADE OUT OF ACCUMULATED INCOME/FUND. SO INCOME FROM MUTU AL FUND AS STATED ABOVE TO A SUM OF RS.23,41,009/- IS CHARGED TO TAX. (III) THE EXEMPTION U/S 11(1)(A) IS AVAILABLE ONLY IF AT LEAST 85% OF THE INCOME IS APPLIED FOR CHARITABLE/RELIGIOUS PURPOSES IN IND IA DURING THE YEAR AND THE REMAINING AMOUNT IS INVESTED IN THE FORMS/MODES SPE CIFIED UNDER SECTION 11(5). THUS, BOTH THE REQUIREMENTS WILL HAVE TO BE FULFILL ED BEFORE THE TRUST CLAIM AND AVAIL OF THE EXEMPTION U/S. 11(1)(A) OF THE IT ACT. IN THE INSTANT CASE THE ASSESSEE SOCIETY FULFILLED THE SAID CONDITIONS. EXC EPT THE TRANSFER OF RS.50,00,000/- TO KOTAK MAHINDRA BANK SUPPRESSING T HE FACT IN THE AUDITED ACCOUNT ENCLOSED WITH THE RETURN OF INCOME. 3.2. CONSIDERING THE ABOVE THE AO CHARGED THE MAXIM UM MARGINAL RATE FOR THE ENTIRE AMOUNT OF RS.73,41,010/- OBSERVING AS UNDER :- G) (I) THUS TOTAL ESCAPEMENT WAS 23,41,009/- (RS.7 3,41,009-RS.50,000.00) WHICH THE ASSESSEE EARNED FROM INVESTMENT IN MUTUAL FUND. THIS AMOUNT OF RS.23,41,009/- IS LIABLE TO BE CHARGED TO INCOME TA X WHICH THE ASSESSEE EARNED APART FROM CHARITABLE ACTIVITY. 3.3. AGGRIEVED BY THIS THE ASSESSEE AGITATED BEFORE THE FIRST APPELLATE AUTHORITY ON VARIOUS GROUNDS. AS PER PAGE 4 OF THE IMPUGNED ORDE R IT IS SEEN THAT IT WAS EXPLAINED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE SOCIETY HAD ENTRUSTED THE TASK OF LOOKING AFTER THE INVESTMENT IN MUTUAL FUNDS TO A PERSON WH O LEFT THE JOB. ACCORDINGLY IN THE CIRCUMSTANCES THE DETAILS RELATING TO THE INVESTMEN T COULD NOT BE INCORPORATED IN THE 4 FINAL ACCOUNTS. IT IS ALSO BORNE OUT FROM THIS THAT IT WAS ALSO POINTED OUT THAT THE AO HIMSELF RECORDS THE FACT THAT THE FIXED DEPOSIT OF RS.6,63,502/- WAS SHOWN WITH AMERICAN EXPRESS BANK IN THE PLACE OF RS.56,63,502/ -. IT WAS THIS SUM OF RS.50,00,000/- WHICH WAS TRANSFERRED FROM THE SAID BANK TO KOKAT MAHINDRA BANK MUTUAL FUNDS. AS SUCH THE SOURCE IT WAS SAID WAS PR OVED, AND THERE WAS ONLY AN ERROR IN THE DISCLOSURE OF SOCIETY UNDER THE CORRECT HEAD . IT WAS ALSO CLARIFIED BEFORE THE CIT(A) THAT THE ASSESSEE HAD REVISED ITS FINAL ACCO UNTS INCORPORATING THE APPROPRIATE CHANGES AND THE SAME HAD BEEN CERTIFIED BY THE AUDI TOR WHO HAD ALSO SUBMITTED HIS REPORT IN FORM NO.10B. 3.4. REFERRING TO THIS AUDITED REPORT IT WAS REQUES TED BY THE ASSESSEE THAT THE SAME MAY BE ADMITTED AS FRESH EVIDENCE U/R 46A. ON THE BASIS OF THESE FINAL ACCOUNTS THE ASSESSEE MADE ITS SUBMISSIONS BEFORE THE LD. CIT(A) . CONSIDERING WHICH IN REGARD TO THE ADDITION OF RS.50,00,000/- THE ADDITIONS STOOD UPHELD BY THE LD. CIT(A) AND IN THE CONTEXT OF THE ADDITION OF RS.23,41,009/- THE ADDIT ION WAS SUSTAINED TO THE EXTENT OF RS.7,89,502/- . 3.5. AGGRIEVED BY THIS THE ASSESSEE AND THE DEPARTM ENT ARE IN APPEAL BEFORE THE TRIBUNAL. 4. WHEREAS THE SUBMISSIONS OF THE LD. DR IN REGARD TO THE DEPARTMENTAL GROUND ARE THAT FRESH EVIDENCE HAS BEEN CONSIDERED BY THE LD. CIT(A) WITHOUT OBTAINING THE REMAND REPORT OR GIVING THE AO AN OPPORTUNITY OF BE ING HEARD AS SUCH THE SAID ACTION WAS STATED TO BE NOT SUSTAINABLE UNDER LAW. 5. THE ARGUMENTS OF THE LD. AR ON BEHALF OF THE ASS ESSEE WERE THAT WHILE CONSIDERING THE ARGUMENTS IN THE CONTEXT OF THE ADD ITION OF RS.50,00,000/- THE LD. CIT(A) HAS NOT TAKEN COGNIZANCE OF SUB-CLAUSE (XII ) OF SECTION 11(5) OF THE IT ACT AND RULE 17C WHICH GOVERNS IT. IT WAS STATED THAT THE S PECIFIC MUTUAL FUND IS REFERRED TO IN SECTION 10(23D) AND AS SUCH IT WAS PRAYED THAT THE ISSUE MAY BE RESTORED BACK WITH THE DIRECTION THAT THE SAME MAY BE DECIDED IN ACCORDANC E WITH THE PROVISIONS OF LAW. 5 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE LIGHT OF THE ARGUMENTS ADVANCED BEFO RE THE BENCH AND THE FACTS AVAILABLE ON RECORD WE ARE OF THE VIEW THAT THE DEPARTMENTAL GROUND DESERVES TO BE ALLOWED. IT IS SEEN THAT THE ACTION OF THE LD. CIT(A) WAS IN DIRE CT CONTRAVENTION OF THE REQUIREMENTS OF RULE 46A OF THE IT ACT. SUB-RULE 3 OF RULE 46A SPECIFICALLY FORBIDS SUCH AN ACTION AND REQUIRES A CERTAIN PROCEDURE TO BE FOLLOWED SO AS TO AFFORD THE AO AN OPPORTUNITY TO ADDRESS THE FACTS. THE SAID PROCEDURE HAS NOT BE EN FOLLOWED. FOR READY REFERENCE WE REPRODUCE THE SUB-RULE 3 OF 46ARULE AS UNDER :- (3) THE DEPUTY COMMISSIONER (APPEALS) [OR AS THE C ASE MAY BE, THE COMMISISONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] H AS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXA MINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. 6.1. ACCORDINGLY SINCE IT IS EMINENTLY BORNE OUT TH AT NO SPECIFIC OPPORTUNITY WAS GRANTED TO THE AO BY THE LD. CIT(A) BEFORE ADMITTIN G FRESH EVIDENCE AND NO REMAND REPORT CONSEQUENTLY WAS ENTERTAINED WE ARE OF THE V IEW THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES IT IS APPROPRIATE TO RESTORE THE ISS UE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO CONSIDER THE FRESH EVIDENCE RELIED UPO N BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEAR D. 6.2. ACCORDINGLY THE DEPARTMENTAL GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 6.3. COMING TO THE ASSESSEES APPEAL IN THE CONTEXT OF THE ARGUMENTS ADVANCED IN THE COURSE OF THE HEARING WE ARE OF THE VIEW THAT IN TH E CIRCUMSTANCES IT WOULD BE APPROPRIATE TO RESTORE THE SAID ISSUE ALSO BACK TO THE FILE OF THE AO. AS EVIDENTLY BASED ON THE REVISED ACCOUNTS THE RELEVANT PROVISIONS OF LAW WHICH WILL APPLY TO THE FACTS IS AN EXERCISE WHICH IS REQUIRED TO BE DONE. IT IS SEE N THAT THE AO NEEDS TO EXAMINE AND CONSIDER THE APPLICABILITY OF SECTION 11(5), SUB-CL AUSE (XII) AND RULE 17C WHICH 6 GOVERNS IT. KEPING IN MIND THE ARGUMENTS ADVANCED O N BEHALF OF THE ASSESSEE THAT THE SAID MUTUAL FUNDS IS COVERED U/S 10(23D) OF THE IT ACT AS SUCH THE MUTUAL FUND IS STATED TO BE REGISTERED UNDER THE SEBI AD. NEEDLESS TO SAY THAT THE SAID ISSUE SHALL BE DECIDED BY THE AO IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT THE APPEALS OF THE ASSESSEE AND TH E DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12.02.2010. SD/- SD/- (G.D.AGRAWAL) (DIVA SINGH) VICE PRESIDENT JUDICIAL MEMB ER DATED : 12.02.2010. COPY OF THE ORDER IS FORWARDED TO :- 1) THE ROMAN CATHOLIC DIOCESE OF KRISHNAGAR, BISHOPS HOUSE, DON BOSCO ROAD, P.O.KRISHNAGAR, DIST. NADIA. 2) D.C.I.T., CIRCLE-NADIA 3) CIT (A)-XXXVI, KOLKATA (4) CIT - KOL KATA. 5) D. R., I.T.A.T., KOLKATA. (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, (RG) I.T.A.T., KOLKATA.