Sopia Educatiaon & Charitable Trust, Cuttack V. ACIT, Cuttack

ITA 26/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61555 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2012
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: SUNIL MISHRA
• Keywords: Unexplained cash credit; Charitable institution; Initiation of penalty proceedings; Assessment record; Bonafide mistake
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM, AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 36/CTK/2012 (ASSESSMENT YEAR 2008 - 09) SOPHIA EDUCATIONAL & CHARITABLE TRUST, LINK ROAD, CUTTACK. PAN: AAHTS 4478 D VERSUS A SST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SUNIL MISHRA, AR FOR THE RESPONDENT SHRI A.BHATTACHARJEE, DR DATE OF HEARING : 14.03.2012 DATE OF PRONOUNCEMENT : 02.04.2012 ORDER SHRI K .S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.17.11.2011 FOR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOL LOWING ISSUES IN ITS GROUNDS OF APPEAL. 1 . FOR THAT THE ORDERS OF FORUMS BELOW IN MAKING ADDITION U/S 68 OF THE L.T. ACT IS PURELY BASED ON SURMISES AND CONJECTURE AND AS SUCH IS NOT SUSTAINABLE IN THE EYES OF LAW, DISCHARGING OF ONUS CASTED ON THE APPELLANT BY FURNISHING CONFIRMATION INDICATING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION, AS SUCH THE DISALLOWANCE TO THIS EFFECT DESERVES TO BE DELETED AS PER THE SETTLED LAW. 2 . FOR THAT THE ORDERS OF THE FORUM BELOW ARE BAD IN LAW AS STATU TORY EXEMPTION UIS.1O (23C) (VI) OF THE ACT HAS NOT BEEN ALLOWED, EVEN THOUGH THE APPELLANT UNDISPUTEDLY AND ADMITTEDLY FULFILLS ALL THE CR ITERIA PRESCRIBED UNDER THE STATUTE. 3 . FOR THAT THE FORUMS BELOWS ACTION IN DEPRIVING THE EXEMPTION IS EQUALLY ARBITR ARY AND ERRONEOUS ON THE FACE OF THE FACT THAT, THE VERY SELF SAME ASSESSING AUTHORITY HAS ALLOWED THIS EXEMPTION IN THE SUCCEEDING YEAR OF ASSESSMENT AND NO REASON BEING ASCRIBED BY THE APPELLATE ITA NO.36/CTK/2012 2 AUTHORITY EVEN THOUGH THE SAME WAS ONE OF THE GROUNDS BEFOR E HIM, EXCEPT THE OBSERVATION THAT, THE CASE LAW CITED BY THE APPELLANT IS DISTINGUISHABLE. 4 . FOR THAT THE ORDERS OF THE FORUMS BELOW ARE ILLEGAL AND MOTIVATED ONE AS MUCH AS THE SAME DEPRIVES THE APPELLANT FROM ITS ENTITLEMENT TO OBTAIN THE CREDIT OF PREP AID TAXES. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE RESPECTIVE APPEALS AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE TRUST WAS CONSTITUTED ON 1.12.2004. SHRI MANIDRA NATH MITRA WAS THE SETTLER WHILE THE TRUSTEES ARE DR. SATYAPRIYA MOHANTY, SRI KAPILAS PRTASAD DASH, SRI PUNYA SOLKA MIT RA, SHRI DEVASIS JENA, SRI STAYABRATA MOHANTY AND SRI ANUP NARAYAN MOHANTY. THE ASSESSEE TRUST IS RUNNING A JUNIOR COLLEGE DURING THE PERIOD UNDER CONSIDERATION. IT FILED ITS RETURN OF INCOME ON 28.10.2009 SHOWING PROFIT FROM BUSINESS AT 3,279 AND INCOME FROM OTHER SOURCES AT 59,000 AND CLAIMING EXEMPTION ON THE WHOLE AMOUNT U/S.10(23C)(IIIAD), IN FORM NO.ITR 7. THIS RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND AFTER ISSUING STATUTORY NOTICES AND CONSIDERING THE CONTENTIONS OF THE AR OF THE ASSESSEE T HE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER ON 22.12.2010 U/S.143(3) REJECTING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S.10(23C)(IIIAD) OF THE I.T.ACT AN COMPUTING THE TOTAL INCOME AT 24,60,280 AND ALSO WITH AN OBSERVATION FOR INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T.ACT,1961. 5. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIALS MADE AVAILABLE ON THE ASSESSMENT RECORD HAS PASSED THE IMPUGNED ORDE R ITA NO.36/CTK/2012 3 DT.17.11.2011 AFTER TAKING INTO CONSIDERATION THE VIEWS OF THE ASSESSING OFFICER AS WELL AS THE VARIOUS JUDICIAL PRONOUNCEMENT RELIED ON BY BOTH THE PARTIES AS MENTIONED IN THE IMPUGNED ORDER CONFIRMED THE COMPUTATION OF INCOME AT 24,62,280, WHICH INCLUDES ADDITION OF 24,00,000 MADE U/S.68 OF THE I.T.ACT,1961. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS CONTENDED INTER ALIA THAT THE ASSESSEE IS A TRUST R EGISTERED UNDER THE SOCIETY REGISTRATION ACT WITH THE SOLE OBJECTIVE TO ESTABLISH COLLEGES AND INSTITUTION FOR IMPARTING TECHNICAL, NON - TECHNICAL AND VOCATIONAL EDUCATION OF HIGH STANDARD. IT STARTED BY ESTABLISHING A COLLEGE IN THE NAME OF M/S.SOPHIA JUN IOR COLLEGE IN A RENTED HOUSE AT LINK ROAD, CUTTACK. THER EAFTER IT FELT THE NECESSITY OF EXPANDING THE SCOPE BY ESTABLISHING A COLLEGE ON ITS OWN PURCHASED LAND. AS PER THE NORMS , EDUCATIONAL DEPARTMENT OF GOVERNMENT OF ORISSA AND AICTE, ACCREDITATION ARE ISSUED ONLY TO THOSE COLLEGES WHICH OWNS LANDED PROPERTY OVER WHICH THE PROPOSED COLLEGE WOULD BE BUILT. AS A RESULT THE ASSESSEE HAS PURCHASED THE LAND IN THE NAME OF THE COLLEGE BY A RESOLUTION BY THE EXECUTIVE BODY ON 1.4.2005 AND 4.4.2007 AUTHORIZING TO TAKE FUNDS FOR PURCHASING THE LAND FROM M/S.SOPHIA STUDY CIRCLE, THE TRUSTIES AND THEIR FRIENDS AND RELATIONS AND TO RETURN THE S AME AFTER THE FINANCIAL POSITION OF THE TRUST BECOME SOUND. ACCORDINGLY, THE ASSESSEE HAS PROCURED FUNDS IN CASH WITHIN THE ALLOWABLE WAYS OF THE I.T.ACT FROM THE NEAREST AND DEAREST TO THE EXTENT OF THE VALUE OF THE LAND. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, INSISTED FOR CLARIFICATION ABOUT THE SOURCES OF FUND FOR PURCHASING THE LAND. THE ASSESSE E CLARIFIED STATING THAT THE BORROWED FUNDS WERE FROM M/S.SOPHIA STUDY CIRCLE, TRUSTEES AND THEIR FRIENDS AND RELATIVES ON VARIOUS DATES TO MEET THE REQUIREMENTS OF THE ASSESSEE. IT HAS ALSO PLACED BEFORE THE ASSESSING OFFICER THE RESOLUTION OF THE ITA NO.36/CTK/2012 4 TRUST A ND CONFIRMATIONS FROM THE LENDERS , BUT THE ASSESSING OFFICER HAVING NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE, DISALLOWED THE CLAIM OF THE ASSESSEE AND ADDED 24,00,000 DAS UNEXPLAINED CASH CREDITS. THE ASSESSEE HAS PLACED BEFORE THE ASSESSI NG OFFICER THE LIST OF LENDERS AND CONFIRMATION OF THE CONTRIBUTORS AND LENDERS AND THEIR IDENTITIES AND CREDITWORTHINESS. WITHOUT FINDING THE CORRECTNESS OF THESE, THE ASSESSING OFFICER HAS REACHED TO ITS CONCLUSION BY TAKING INTO ACCOUNT THE MINUTES, THE LIST, THE CONFIRMATION AND PLEA OF PERSONAL LOANS ARE FALSE AND AFTERTHOUGHT. WHILE DOING SO, THE ASSESSING OFFICER HAS NOT AT ALL CONSIDERED THE FACT AND THE FOLLOWING JUDICIAL PRONOUNCEMENTS. 1 . ORIENT TRADING CO. V. CIT (49 ITR 723), 2 . CIT V. BEDDY AND CO. PVT. LTD.[230 ITR 580 (SC)], 3 . SRILEKHA BANERJEE V. CIT [49 ITR 273 (MAD)], 4 . SURMA ELECTRICAL CO. V. CIT [152 ITR 507 (DELHI)], 5 . KANPUR STEEL COMPANY LTD V. CIT (32 ITR 56), 6 . DEVMANI ATHA V. CIT [112 ITR 837 (ORI)], 7 . D.YESHODAMAA V. CIT [70 ITR(AT) 515], 8 . BHAGWAT I PRASAD MISHRA V. CIT [35 ITR 97 (ORI)] THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY RELIED ON THESE ABOVE CITATIONS AND REITERATED THAT THE ASSESSING OFFICERS ALLEGATION THAT HE IS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE IS COLOURABLE EXERCISE OF POWER TO MAKE THE ADDITION IN THE SAKE OF ADDITION WHICH IS BEYOND EXPECTATION OF STATUTE AND SUCH ADDITION HAS BEEN CONFIRMED BY THE LEARNED CIT(A) BY ACCEPTING THE PLEA OF THE ASSESSING OFFICER. ACCORDINGLY, HE SOUGHT FOR DELETION OF THE ADD ITION AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). 7. APART FROM THAT THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE ASSESSEE IS A TRUST DULY REGISTERED UNDER THE SOCIETY REGISTRATION ACT AND HE ITA NO.36/CTK/2012 5 FILED THE COPY OF BYE LAW BEFORE THE ASSESSING OFFICER. AS PER THE SAID BYE - LAW THE OBJECT OF THE ASSESSEE IS TO RENDER ITS SERVICES IN THE LINE OF EDUCATION AND ITS DEVELOPMENT BY ESTABLISHING COLLEGES, TRAINING INSTITUTIONS OF TECHNICAL, VOCATIONAL BASE AND THEREFORE, ITS RECEIPT OVER EXPENDITURE IS EXEMPT U/S.10(23C)(IIIAD) OF THE I.T.ACT. BUT UNFORTUNATELY, THROUGH INADVERTENCE, THE ASSESSEE HAD FILED ITS RETURN ADMITTING ITS RECEIPT OVER EXPENDITURE AS INCOME CHARGEABLE TO TAX. HAVING NOTICED SUCH A BONAFIDE MISTAKE, THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS, REQUESTED THE ASSESSING OFFICER NOT TO TREAT THE RECEIPTS OVER EXPENDITURE AS INCOME. BUT THE ASSESSING OFFICER WHILE OBSERVING IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS NOT AN EDUCATIONAL INSTITUTION BUT A TRUST R UNNING EDUCATIONAL INSTITUTION IS ONE OF ITS ACTIVE UNIT. THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THE SALE DEED THROUGH WHICH THE ASSESSEE TRUST SOLD ITS LAND TO THE TECHNICAL INSTITUTION NAMELY SOPHIA JUNIOR COLLEGE. THUS, THE ASSESSING OFF ICER WAS MISLED RATHER CONFUSED WITH THE FACTS OF THE CASE. THUS CONTENDING, THE LEARNED AR OF THE ASSESSEE SOUGHT FOR DELETION OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CONFIRMED BY THE LEARNED CIT(A) BY ALLOWING THE APPEAL OF THE ASSESSEE. 8. CON TRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE IMPUGNED ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES CONTENDING INTER ALIA THADT AS THE ASSESSEE HAS NOT FILED COGENT EVIDENCE TO ESTABLISH THE CLAIM OF EXEMPTION U/S.10(23C)(IIIAD) OF TH E I.T.ACT AND THAT IS WHY THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION THAT WAS CONFIRMED BY THE LEARNED CIT(A), AFTER CAREFUL CONSIDERATION OF THE MATERIALS PLACED BEFORE HIM AND CONSIDERING THE CONTENTIONS AS WELL AS THE EVIDENCES PRODUCED BY THE ASSESSEE. THEREFORE, THERE IS NO INFIRMITY IN THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES REQUIRING ANY INTERFERENCE. HENCE, HE SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEAL OF THE ASSESSEE. ITA NO.36/CTK/2012 6 9. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDERS PAS SED BY THE DEPARTMENTAL AUTHORITIES AND MATERIAL MADE AVAILABLE T THE TRIBUNAL, WE FIND THAT AFTER EXAMINING THE MATERIAL PLACED BY THE ASSESSEE IN RESPECT TO THE QUERIES ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF ASESSENT PROCEEDINGS, THE ASSESS ING OFFICER HAS PASSED THE IMPUGNED ORDER AFTER THREAD - BARE CONSIDERING THE FACTUAL ASPECTS AS WELL AS THE EVIDENCES AND THE MATERIAL PRODUCED BY THE ASSESSEE BEFORE HIM AN CAME TO THE CONCLUSION THAT THE ASSESSEE IS NOT ABLE TO ESTABLISH THE CLAIM OF EXEM PTION U/S.10(23C)(IIIAD) OF THE I.T.ACT AND HENCE, HE MADE THE ADDITION OF 24,00,000 U/S.68 OF THE I.T.ACT HOLDING THE SAME AS UNEXPLAINED CASH CREDITS. THIS ADDITION IS MADE BY THE ASSESSING OFFICER WAS ULTIMATELY CONFIRMED BY THE LEARNED CIT(A) AFTER TH OROUGH CONSIDERATION OF THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THEREFORE, WE ARE OF THE VIEW THAT THOUGH THE ASSESSEE HAS RELIED ON VARY MANY JUDICIAL PRONOUNCEMENTS STATED SUPRA TO GAIN SUPPORT OF THOSE JUDICIAL PR ONOUNCEMENTS, THE ASSESSEE COULD NOT PRODUCE THE REQUIRED MATERIAL. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) ARE WELL REASONED AND THEY ARE NOT INFIRMED IN ANY WAY REQUIRING ANY INTERFERENCE. HENCE, THE SAME ARE UPHELD BY DISMISSING THE APPEAL FILED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 02.04.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.36/CTK/2012 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SOPHIA EDUCATIONAL & CHARITABLE TRUST, LINK ROAD, CUTTACK. 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.