Suvidha Education Trust, Mehsana V. ITO (Exemption), Palanpur

ITA 2409/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4952 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 12-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained investment; Charitable institution; Principle of natural justice; Capital expenditure
• Section: 143(3); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 2409/AHD/2018 / ASSTT. YEAR: 2009-2010 SUVIDHA EDUCATION TRUST, 7 MAHESHWERI SOCIETY, OPP. JYOTI PETROL PUMP, MEHSANA. PAN: AADTS4483N VS. I.T.O,(EXEMPTION) PALANPUR. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVATIA, A.R REVENUE BY : SHRI VIRENDRA OJHA, CIT.D.R /DATE OF HEARING : 25/08/2021 /DATE OF PRONOUNCEMENT: 27/09/2021 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), GANDHINAGAR, DATED 05/09/2018 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2009-2010. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.2409/AHD/2018 ASSTT. YEAR 2009-10 2 1.1 THE ORDER PASSED U/S.250 ON 5-9-2018 FOR A.Y.2009-10 BY CIT(A)-GNR , ABAD UPHOLDING THE ADDITION OF RS.8,64,967/-AS UNEXPLAINED INVESTMENTS MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED ADDITION. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE I APPELLANT TRUST HAD MADE EXPENDITURE TOWARDS BUILDING CONSTRUCTION OF RS. 13,58,001/- AND THE SOURCE OF RS. 8,64,967/- WAS NOT PROVED. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES 'OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THAT THE APPELLANT TRUST HAD MADE EXPENDITURE TOWARDS BUILDING CONSTRUCTION OF RS.13,58,001/- AND THE SOURCE OF RS. 8,64,967/- WAS NOT PROVED AND THEREBY UPHOLDING ADDITION OF RS. 8,64,967/-. IT IS, THEREFORE, PRAYED THAT THE ADDITION OF RS. 8,64,967/- UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 3. THE ONLY INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT- A ERRED IN UPHOLDING THE ADDITION OF 8,64,967.00 REPRESENTING THE CONTRIBUTION TO THE BUILDING FUND ON THE REASONING THAT THE SOURCE OF THE SAME WAS NOT EXPLAINED. 3.1 THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PUBLIC CHARITABLE TRUST AND ENGAGED IN THE ACTIVITY OF EDUCATION. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS PRESENTED ADDITION OF 13,58,001.00 IN THE BUILDING FUND ACCOUNT SHOWN ON THE SIDE OF THE LIABILITY OF ITS BALANCE SHEET AS ON 31 MARCH 2009. ON PERUSAL OF SUCH ADDITION, THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS INCURRED CAPITAL EXPENDITURE TO THE TUNE OF 13,58,001.00 ONLY FOR THE BUILDING CONSTRUCTION. BUT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE EXPENDITURE INCURRED BY IT (THE ASSESSEE) TOWARDS THE CONSTRUCTION OF THE BUILDING. THUS THE AO WAS OF THE OPINION THAT THE AMOUNT OF 13,58,001.00 SHOULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY, THE AO HAS ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). ITA NO.2409/AHD/2018 ASSTT. YEAR 2009-10 3 5. THE ASSESSEE BEFORE THE LEARNED CIT (A) SUBMITTED THAT THE VOLUNTARY CONTRIBUTION RECEIVED UNDER THE HEAD BUILDING FUND HAS WRONGLY BEEN ASSUMED BY THE AO AS AN EXPENDITURE TOWARDS THE BUILDING CONSTRUCTION. AS SUCH, THE AMOUNT OF CONTRIBUTION RECEIVED UNDER THE BUILDING FUND REPRESENTS THE CORPUS DONATION RECEIVED BY IT (THE ASSESSEE) WHICH IS NOT CHARGEABLE TO TAX AS PER THE PROVISIONS OF SECTION 11(1)(D) OF THE ACT. 5.1 THE LEARNED CIT-A AGREED WITH THE CONTENTION OF THE ASSESSEE THAT THE AO HAS WRONGLY TREATED THE AMOUNT OF BUILDING FUND AS EXPENDITURE TOWARDS THE BUILDING CONSTRUCTION. AS SUCH, THE ASSESSEE WAS TO JUSTIFY THE SOURCE OF CONTRIBUTION RECEIVED UNDER THE BUILDING FUND BUT THE ASSESSEE FAILED TO JUSTIFY THE SAME EXCEPT FOR A SUM OF RS. 4,93,034.00 ONLY. ACCORDINGLY, THE LEARNED CIT (A) HELD THAT THE AMOUNT OF DIFFERENCE FOR 8,64,967.00 (1358001- 493034) HAS NOT BEEN VERIFIED. THEREFORE, TO THIS EXTENT THE ADDITION WAS CONFIRMED. THUS THE LEARNED CIT (A) ALLOWED THE GROUND OF APPEAL OF THE ASSESSEE IN PART. 6. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 60 AND ASSAILED THE FINDING OF THE LEARNED CIT (A) ON VARIOUS GROUNDS. I. ALL THE NECESSARY DETAILS IN SUPPORT OF THE CORPUS FUND RECEIVED DURING THE YEAR UNDER CONSIDERATION FOR 13,58,001.00 WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS. FOR THIS PURPOSE THE LEARNED AR DREW OUR ATTENTION ON PAGES 22-24 OF THE PAPER BOOK WHERE THE LIST OF DONORS WAS PLACED. LIKEWISE, THE LEARNED AR ALSO FILED THE RECEIPTS ISSUED AGAINST THE AMOUNT OF CORPUS DONATION RECEIVED FROM THE VARIOUS PARTIES WHICH ARE PLACED ON PAGES 26-60 OF THE PAPER BOOK. II. THE AO HAS WRONGLY ASSUMED THAT THE AMOUNT SHOWN UNDER THE HEAD BUILDING FUND WAS INCURRED TOWARDS THE BUILDING EXPENDITURE FOR THE PURPOSE OF CONSTRUCTION. THERE WAS ONLY AN INCREASE OF 1,96,223.00 IN ITA NO.2409/AHD/2018 ASSTT. YEAR 2009-10 4 THE FIXED ASSETS WHEREAS BUILDING FUND WAS CREDITED BY 13,58,001 ONLY. THUS THE ENTIRE FOUNDATION OF ADDITION WAS BASED ON WRONG ASSUMPTION OF FACTS. III. THE LEARNED AR ALSO CONTENDED THAT THE PRESENT PROCEEDINGS WERE INITIATED BY ISSUING A NOTICE UNDER SECTION 148 OF THE ACT TO VERIFY THE SOURCE OF CASH DEPOSITS IN THE BANK FOR RS. 46,60,725.00 WHEREAS THE ISSUE ON HAND RELATES TO THE AMOUNT SHOWN UNDER THE HEAD CORPUS FUND. AS SUCH THE AO CANNOT TRAVEL BEYOND THE SCOPE SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT AFTER RECORDING THE REASONS TO BELIEVE. 8. ON THE OTHER HAND THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE SIDES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE CONTROVERSY IN THE CASE ON HAND REVOLVES WHETHER THE AMOUNT RECEIVED UNDER THE BUILDING FUND REMAINS UNVERIFIED TO THE TUNE OF 8,64,967.00 AND THEREFORE THE SAME WAS LIABLE TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN THIS REGARD WE FIND THAT THE ASSESSEE HAS FURNISHED LIST OF DONORS ALONG WITH THEIR ADDRESSES AND THE AMOUNT OF DONATION WHICH IS PLACED ON PAGES 22-24 OF THE PAPER BOOK. BESIDES THE ABOVE, THERE ARE RECEIPTS ISSUED BY THE ASSESSEE AGAINST THE CORPUS DONATION RECEIVED BY IT WHICH ARE PLACED ON PAGES 26 TO 60 OF THE PAPER BOOK. BUT THERE WAS NO ENQUIRY CONDUCTED BY THE AUTHORITIES BELOW TO VERIFY THE GENUINENESS OF THE CORPUS DONATION RECEIVED BY THE ASSESSEE IN THE UNDER CONSIDERATION. IN OTHER WORDS, WITHOUT VERIFYING OR CONDUCTING THE NECESSARY ENQUIRIES WITH RESPECT TO THE DONATION SHOWN BY THE ASSESSEE, THE SAME CANNOT BE TREATED AS UNEXPLAINED AS ALLEGED BY THE REVENUE. THUS, NO ADDITION OF WHATSOEVER IS REQUIRED TO BE MADE BY TREATING THE AMOUNT OF DONATION AS UNEXPLAINED. THUS WITHOUT GOING INTO THE OTHER DETAILS/ARGUMENTS ADVANCED BY THE LEARNED AR AT THE TIME OF HEARING, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED ON THE PRELIMINARY ISSUE THAT NECESSARY VERIFICATION WAS NOT CARRIED OUT WITH RESPECT ITA NO.2409/AHD/2018 ASSTT. YEAR 2009-10 5 TO THE DETAILS FURNISHED BY THE ASSESSEE IN SUPPORT OF THE CORPUS DONATION AS DISCUSSED ABOVE. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 27/09/2021 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 27/09/2021 MANISH