DDIT (E), New Delhi V. Human Care Medical Charitable Trust, New Delhi

ITA 2333/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9936 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVNEET SAINI
• Assessee Lawyers: V K AGGARWAL
• Keywords: Unexplained cash credit; Charitable institution; Additional evidence
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F: NEW DELHI BEFORE SH G.E. VEERABHADRAPPA,VP & SH R.P.TOLANI ,JM I.T.A. NO. 2333/DEL OF 2009 ASSESSMENT YEAR: 2005-06 DY. DIRECTOR OF INCOME-TAX, HUMAN CARE M EDICAL CHARITABLE TRUST TRUST CIRCLE-II, NEW DELHI. VS SECTOR 5, DWARKA, PAPPAN KALAN, NEW DELHI. APPELLANT RESPONDENT APPELLANT BY: SHRI NAVNEET SAINI RESPONDENT BY: SHRI V.K. AGGARWAL ORDER PER R.P. TOLANI, JM: THIS IS REVENUE APPEAL. FOLLOWING GROUNDS ARE RAIS ED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A(1) AS THE ASSESSEE HAD FAILED TO PROVE THAT HE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE OR THE AO HAS REFUSED TO ADMIT ADDITIONAL EVIDENCE. THE ASSESSEE HAS ONLY MENTIONED THAT AO NEVER INDICATED THAT HE IS NOT SATISFIED WITH THE REPLY FILED, WHICH IS NOT A GROUND ON WHICH ADDITIONAL EVIDENCE CAN BE ADMITTED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DECIDING THE ISSUE ON THE BASIS OF ADDITIONAL EVIDENCE ADMITTED WRONGLY BY HIM AND WITHOUT FURNISHING AN OPPORTUNITY TO THE AO TO REBUT THE SAME IN CONTRAVENTION OF RULE 46A(3) ESPECIALLY WHEN THE AO HAD REQUESTED IN WRITING THAT SUCH OPPORTUNITY SHOULD BE GIVEN TO HIM. 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,24,03,547/- MADE U/S 68 REPRESENTING UNEXPLAINED CASH CREDIT. 2. LEARNED DR CONTENDS THAT THE AO WAS NOT GIVEN SU FFICIENT OPPORTUNITY BY CIT(A) TO COMMENT ON THE ADDITIONAL EVIDENCE FILED. 3. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, VEHEMENTLY SUPPORTS THE ORDER OF CIT(A) AND CONTENDS THAT AO H AS FAILED DURING THE COURSE OF ASSESSMENT AS WELL AS IN APPELLATE PROCEE DINGS TO APPLY HIS MIND PROPERLY AND DEAL WITH THE MATTER IN PROPER MANNER. REFERENCE WAS INVITED TO FOLLOWING OBSERVATIONS FROM CIT(A)S ORDER: 2. IN RESPONSE TO NOTICE OF HEARING, SHRI V.K. AGGARWAL, AR ATTENDED AND THE CASE WAS DISCUSSED WITH HIM. WRITTEN SUBMISSION ALONGWITH PAPER BOOK HAS ALSO BEEN FILED. HE HAS ALSO FILED AN APPLICAT ION UNDER RULE 46A, A COPY OF WHICH WAS FORWARDED TO THE AO VIDE LETTER NO.CIT(A)-XXI/2008-09/430 DATED 12.11.2008 FOR REMAND REPORT. THE AO DIDNT SEND ANY REMAND REPORT BUT VIDE LETTER NO.DDIT(E)/TC-II/2008-09/920 DT.16.1.2009 SOUGHT FURTHER TIME TO CONDUCT ENQUIRIES REGARDING GENUINENESS OF THE LOANS RAISED BY THE ASSESSEE DURING THE ASSESSMENT YEAR. HOWEVER, NO REMAND REPORT HAS BEEN RECEIVED SO FAR WHICH INDICATES THA T THE AO HAS NOTHING TO SAY IN THE MATTER AND, THEREFORE, APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL ON RECORD 3.5 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE ARGUMENTS OF THE LD. AR. AS PER SHOW CAUSE NOTICE DATED 19.12.2007, THE AO ASKED THE APPELLANT 3 TO FILE THE DETAILS OF TRUSTEES LOANS IN THE FORMA T BY MENTIONING DATE, AMOUNT, NAME AND ADDRESS OF THE PERSONS. HE ALSO ASKED THE APPELLANT TO FURNISH TH EIR IDENTIFICATION, GENUINENESS OF TRANSACTIONS AND THE IR CREDIT WORTHINESS. THE APPELLANT VIDE ITS REPLY DT. 26.12.2007 HAS FURNISHED ALL THE INFORMATION CALLED FOR. THE IDENTITY OF THE TRUSTEES WHO CONTRIBUTED FUNDS TO THE TRUSTS HAS BEEN CLEARLY ESTABLISHED BY FURNISHING NAME, ADDRESS, PROFESSION AND ACHIEVEMENTS. CONFIRMATIONS DULY NOTARIZED HAVE BEEN FILED. COPY OF BANK ACCOUNTS HAS ALSO BEEN FILED. IN FACT THE CONTRIBUTIONS HAVE BEEN MADE BY FOLLOWING FOUR TRUSTEES AS UNDER: A. RAKESH PASSI USD 2,20,000/- B. NIRMAL KUMAR USD 35,000/- C. ISH KUMAR USD 1,30,000/- D. SANJAY KHURANA USD 85,000/- ALL THESE TRUSTEES TRANSFERRED THE FUNDS FIRST TO T HE LOAN ACCOUNT OF SHRI SANJAY KHURANA BEARING NO.68271003215499 WITH BANK OF AMERICA, NEW YORK FROM WHICH THE FUNDS WERE TRANSFERRED TO THE ACCOUNT OF MRS. ARCHANA KHURAMA (MAGO) AND FINALLY TO THE BANK ACCOUNT NO.01000065159 OF THE APPELLANT WITH SBI, A-5, RING ROAD, SOUTH EXTENSION PART-I, NEW DELHI. THE CONFIRMATIONS BESIDES INDICATING DATE AND AMOUNT OF CONTRIBUTION ALSO INDICATE THE SOURCE OF INCOME AS WELL AS THEIR REFERENCE NO. UNDER WHICH IT RETURNS WERE FILED BY THEM IN USA. COPIES OF THEIR BANK ACCOUNTS CLEARLY INDICATE MOVEMENT OF FUNDS TO THE APPELLANT. MOREOVER, THE AO HAS GONE WRONG IN HOLDING THAT SHRI SANJAY KHURANA WHO HAS SIGNED THE CONSOLIDATED CONFIRMATION IS NOT ONE OF THE CONTRIBUTORS. THEREFORE, GENUINENESS OF TRANSACTIO NS AND THE CREDIT WORTHINESS OF THE CONTRIBUTORS ARE FULLY ESTABLISHED. 3.6 AS REGARDS THE ADDITION OF RS.11,36,804/-, THE CONFIRMATION AND THE INVOICES WERE ALREADY FILED 4 BEFORE THE AO, WHICH HE COMPLETELY IGNORED. THE CONFIRMATIONS CLEARLY AFFIRM THAT A TOTAL SUM OF US D 17,775 WAS PAID TOWARDS THE COST OF 79 BEDS EXPORTED TO THE APPELLANT. SINCE THE GENUINENESS OF TRANSACTION IS ESTABLISHED, THE AO WAS NOT JUSTIFIE D MAKING THIS ADDITION. 3.7 IN ASSTT. YEARS 2003-04 AND 2004-05, THERE ARE CONTRIBUTIONS FROM THE SAME TRUSTEES. THE AO REOPENED THESE ASSETS U/S 148 ON THE BASIS OF FINDINGS IN THE ASSESSMENT YEAR UNDER QUESTION. AS PER THE ORDER U/S 143(3)/147PASSED BY THE AO ON 18.12.2008 FOR THESE TWO YEARS, HE HAS NOT MADE ANY ADDITION ON ACCOUNT OF CONTRIBUTIONS BY THESE TRUSTEES. EVEN IN THE NEXT YEAR I.E. AYS 2006-07, THOUGH THERE ARE CONTRIBUTIONS FROM THE SAME TRUSTEES, NO ADDITION HAS BEEN MADE AND THE RETURNE D INCOME HAS BEEN ACCEPTED U/S 143(3). THEREFORE, TH E AO HAS MADE INVESTIGATION ABOUT THE GENUINENESS OF THE CONTRIBUTIONS FROM THESE TRUSTEES IN ALL THESE YEARS AND HAS NOT FOUND ANY FAULT WITH THE SAME. 3.8 IN VIEW OF FACTS AS DISCUSSED ABOVE, THE ADDITI ON OF RS.2,24,03,547/- IS HEREBY DELETED. IT WAS CONTENDED THAT THE DETAILS WERE FILED BY ASS ESSEE VIDE LETTER DATED 26.12.07 BEFORE AO, WHO PASSED THE ASSESSMENT ORDER IN HASTE ON THE SAME DAY AND DID NOT CONSIDER THE MATERIAL FILED. IN FI RST APPEAL, ASSESSEE POINTED OUT THIS FACT TO CIT(A) AND AS A MATTER OF ABUNDANT PRECAUTION FURTHER MADE AN APPLICATION UNDER RULE 46A BEFORE CIT(A), WHO IN RIGHT ERNEST FORWARDED THESE DOCUMENTS TO AO FOR REMAND REPORT ON 12.11.20 08. INSTEAD OF SENDING THE REMAND REPORT, AO ASKED FOR FURTHER TIME FOR CO MMENTS. CIT(A) LOOKING AT THE ATTITUDE OF AO PROCEEDED TO ADMIT THE ADDITI ONAL EVIDENCE AND DECIDED 5 THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING PR OPER PROCEDURE, IN VIEW THEREOF NO INFIRMITY CAN BE ATTRIBUTABLE TO THE ORD ER OF CIT(A). 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND MERIT IN THE ARGUMENT OF LEARNED C OUNSEL. CIT(A) HAS VALIDLY EXERCISED HIS POWER TO ADMIT ADDITIONAL EVI DENCE UNDER RULE 46A BY SENDING COPY THEREOF TO AO, WHO INSTEAD OF COMMENTI NG ON THE ADDITIONAL EVIDENCE FILED, SAT ON THE PROCEEDINGS. WE ALSO FIN D THESE EVIDENCES ARE FILED BEFORE AO ON 26.12.2007 AND THE SAME WAS NOT CONSID ERED AND THE ASSESSMENT ORDER WAS PASSED ON THE SAME DAY. IN OU R VIEW, NO VIOLATION OF RULE 46A CAN BE DISCERNED. IN VIEW THEREOF, WE UPHO LD THE ORDER OF CIT(A). 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST, 2009. (G.E. VEERABHADRAPPA) (R.P. TOLANI) VICE PRESIDENT JUDICIAL MEMBER DATED: 13 TH AUGUST, 2009 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XXI, NEW DELHI. 5. DR ASSISTANT REGISTRAR