Sar-La Education Trust, New Delhi V. ITO (Exemptions), New Delhi

ITA 2792/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52505 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: SHIKHA SHARMA
• Keywords: Benefit of exemption
• Section: 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI RAJPAL YADAV, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NOS. 2792 & 2793 (DEL) OF 2011 ASSESSMENT YEARS : 2006-07 & 2008-09. SARLA EDUCATION TRUST, TH E INCOME-TAX OFFICER, B 7 / 50, SAFDARJUNG ENCLAVE, VS. [EXEMPTION] TRUST WARD : 1, N E W D E L H I 110 029. N E W D E L H I. P A N / G I R NO. AACTS 8344K. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI AJAY VOHRA, ADV.; & MS. SHIKHA SH ARMA, C. A.; DEPARTMENT BY : MS. S. MOHANTY, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THESE TWO APPEALS BY THE ASSESSEE FOR ASSESSMENT Y EARS 2006-07 AND 2008-09 ARISE OUT OF SEPARATE ORDERS OF THE LD. CIT (APPEALS)-XXI, NEW D ELHI. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF, FOR THE SAKE OF CONVENIE NCE, BY THIS COMMON ORDER. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS :- I. T. APPEAL NO. 2792 (DEL) OF 2011 [ASSESSMENT YEAR : 200607 ] : 1. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN REASSESSING THE IN COME UNDER SECTION 147 / 143(1) OF THE 2 I. T. APPEAL NOS. 2792 & 2793 (DEL) OF 2011 INCOME TAX ACT, 1961 (THE ACT) AT RS.79,36,600/- AS AGAINST RETURNED INCOME OF RS. NIL; 2. THAT THE CIT (APPEALS) ERRED ON FACT S AND IN LAW IN UPHOLDING THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 / 148 OF THE ACT; 2.1 THAT THE CIT (APPEALS) ERRED ON FA CTS AND IN LAW IN NOT APPRECIATING THAT THE REASONS RECORDED BY ASSESSING OFFICER FOR RE-OP ENING THE PROCEEDINGS CANNOT BE REGARDED AS REASONS LEADING TO THE BELIEF OF E SCAPEMENT OF INCOME, WHICH IS A PRE-REQUISITE FOR INITIATING PROCEEDINGS UNDER SECT ION 147 OF THE ACT; 2.2 THAT THE CIT (APPEALS) ERRED ON FA CTS AND IN LAW IN NOT APPRECIATING THAT THE REASONS RECORDED DID NOT SHOW APPLICATION OF MIND BY THE ASSESSING OFFICER WHICH COULD LEAD TO HIS SATISFACTION THAT ANY INCOM E OF THE APPELLANT HAD ESCAPED ASSESSMENT; 3. THAT THE CIT (APPEALS) ERRED ON FACTS AND LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DENYING THE BENEFIT OF EXE MPTION UNDER SECTION 11 OF THE ACT MERELY ON THE GROUND THAT THE APPELLANT COULD NOT P RODUCE ITS BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS; 3.1 THAT THE CIT (APPEALS) ERRED ON FACTS AND LAW IN NOT APPRECIATING THAT THE BOOKS OF ACCOUNTS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER AS THE SAME WERE IMPOUNDED BY THE DGIT [E] UNDER SECTION 131(1) OF THE ACT; 4. THAT THE CIT (APPEALS) ERRED ON FACTS AND LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING 50 PER CENT OF THE ADMINISTRATIVE EXPENSES ON AN AD-HOC BASIS, ALLEGING THAT THE SAME COULD NOT B E VERIFIED DURING THE ASSESSMENT PROCEEDINGS IN THE ABSENCE OF BOOKS OF ACCOUNTS; 5. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING LEVY OF INTEREST UNDER SECTION 234-B, 234-D AND WITHDRAWAL OF INTEREST UNDER SECTION 244-A OF THE ACT. I. T. APPEAL NO. 2793 (DEL) OF 2011 [ASSESSMENT YEAR : 200809 ] : 1. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN REASSESSING THE INCOME UNDER SECTION 147 / 143(1) OF THE INCOME TAX ACT, 1961 (THE ACT) AT RS.1,71,89,697/ - AS AGAINST RETURNED INCOME OF RS. NIL; 2. THAT THE CIT (APPEALS) ERRED ON FAC TS AND LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DENYING THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT 3 I. T. APPEAL NOS. 2792 & 2793 (DEL) OF 2011 MERELY ON THE GROUND THAT THE APPELLANT COULD NOT P RODUCE ITS BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS; 2.1 THAT THE CIT (APPEALS) ERRED ON FA CTS AND IN LAW IN NOT APPRECIATING THAT THE BOOKS OF ACCOUNTS FOR THE PRECEDING ASSESS MENT YEARS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER AS THE SAME WERE IMPOU NDED BY THE DGIT [E] UNDER SECTION 131(3) OF THE ACT; 3. THAT THE CIT (APPEALS) ERRED ON FACTS AND LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING 50 PER CENT OF THE ADMINISTRATIVE EXPENSES ON AN AD-HOC BASIS, ALLEGING THAT THE SAME COULD NOT B E VERIFIED DURING THE ASSESSMENT PROCEEDINGS IN THE ABSENCE OF BOOKS OF ACCOUNTS; 4. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING ENTIRE EXPE NSES INCURRED ON SUPPORT OF OTHER EDUCATIONAL INSTITUTIONS / COLLEGES ALLEGING THAT T HE SAME COULD NOT BE VERIFIED DURING THE ASSESSMENT PROCEEDINGS IN THE ABSENCE OF BOOKS OF A CCOUNTS; 4.1 THAT THE CIT (APPEALS) ERRED ON FAC TS AND IN LAW IN NOT APPRECIATING THAT EXPENSES WERE CLEARLY VERIFIABLE ON THE BASIS OF BOOKS OF ACCOUNTS PRODUCED BY THE APPELLANT FOR THE RELEVANT ASSESSMENT YEAR; 5. THAT THE CIT (APPEALS) ERRED ON FA CTS AND IN LAW IN CONFIRMING LEVY OF INTEREST UNDER SECTION 234-B, 234-D AND WITHDRAW AL OF INTEREST UNDER SECTION 244-A OF THE ACT. 3. AT THE OUTSET, SHRI AJAY VOHRA, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BENEFIT OF EXEMPTION UNDER SECTION 11 HAS BEEN DISA LLOWED MAINLY ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ITS BOOKS OF ACCOUNTS DU RING THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED BY HIM THAT THE BOOKS OF ACCOUNTS COULD N OT BE PRODUCED BEFORE THE ASSESSING OFFICER AS THE SAME WERE IMPOUNDED BY DGIG [EXEMPTI ON] UNDER SECTION 131(3) OF THE ACT. IT WAS ALSO SUBMITTED THAT THE ASSESSEE TRUST IS REGISTERED UNDER SECTION 12-A OF THE INCOME TAX ACT VIDE REGISTRATION NO. DIT[E]/T-889 DATED 2/01/1 982. THE APPLICATION OF THE TRUST FOR NOTIFICATION UNDER SECTION 10(23)(6) WAS REJECTED B Y THE LD. DGIT [EXEMPTION] VIDE ORDER NO. DGIT[E]/10(23)C)/1322 DATED 19/12/2008 ON THE GROUN D THAT THE SOCIETY DID NOT SATISFY THE CONDITIONS MENTIONED UNDER SECTION 10(23)(C) OF THE ACT. DURING THE COURSE OF PROCEEDINGS UNDER SECTION 10(23)(VI) THE BOOKS OF ACCOUNTS OF T HE SOCIETY WERE ALSO SENT TO FORENSIC SCIENCE LABORATORY, HARYANA. THE FORENSIC SCIENCE LABORATORY VIDE REPORT DATED 17/12/2008 4 I. T. APPEAL NOS. 2792 & 2793 (DEL) OF 2011 HAD REPORTED THAT CASH BOOK, BANK BOOK AND GENERAL REGISTER HAVE NOT BEEN WRITTEN IN REGULAR COURSE OF TIME. IT WAS ALSO RECORDED THAT IT WAS N OT POSSIBLE TO EXPRESS A DEFINITE OPINION REGARDING ABSOLUTE / RELATIVE AGE OF THE WRITING. THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE LD. DGIT [EXEMPTION] HAD DENIED EXEMPTION ON TH E BASIS OF BOOKS OF ACCOUNTS FOR ASSESSMENT YEAR 2008-09. THE AR OF THE ASSESSEE FU RTHER SUBMITTED THAT THE ASSESSING OFFICER HAD DENIED THE BENEFIT OF SECTION 11 BASED ON THE D ECISION OF DGIT [EXEMPTION]. HE HAS FURTHER SUBMITTED THAT THE AO SHOULD HAVE OBTAINED THE BOOK S OF ACCOUNTS FROM DGIT [EXEMPTION] AND HAVE PASSED ASSESSMENT AFTER VERIFYING THE FACTS. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS DENIED THE BENEFIT OF SEC TION 11 OF THE INCOME TAX ACT ON THE GROUND THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED FOR VERIFICATION WITHOUT WHICH IT WAS NOT POSSIBLE TO VERIFY AS TO WHETHER THE EXPENSES C LAIMED HAVE BEEN INCURRED FOR THE PURPOSE FOR WHICH THE ASSESSEE TRUST HAS BEEN ESTABLISHED. THE ASSESSING OFFICER HAD ALSO NOTED THAT THE NATURE OF EXPENSES INCURRED REMAINED UN-SUBSTAN TIATED. IT IS A FACT THAT THE BOOKS OF ACCOUNTS WERE IMPOUNDED BY THE DGIT [EXEMPTION] UND ER SECTION 131(3) OF THE ACT AND WERE WITH HIM. WHEN THE BOOKS OF ACCOUNTS ARE IMP OUNDED OR RETAINED BY THE DEPARTMENT, IT WILL NOT BE POSSIBLE FOR THE ASSESSEE TO GET THE M RELEASED AND PRODUCE BEFORE THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES IT WAS THE DUTY OF THE ASSESSING OFFICER TO OBTAIN THE IMPOUNDED BOOKS OF ACCOUNTS FROM DGIT [EXEMPTION] A ND VERIFY THE FACTS OF THE CASE WHETHER INCOME WAS APPLIED BY THE ASSESSEE TRUST FO R THE OBJECTS OF THE TRUST. WE, THEREFORE, SET ASIDE BOTH THE APPEALS TO THE FILE OF THE ASSES SING OFFICER WITH THE DIRECTIONS THAT HE WILL OBTAIN THE BOOKS OF ACCOUNTS FROM THE DGIT [EXEMPTI ON] AND VERIFY WHETHER THE EXPENSES INCURRED BY THE ASSESSEE WERE UTILIZED FOR THE PURP OSE OF THE TRUST AND ALL OTHER CONDITIONS RELATING TO ALLOWABILITY OF DEDUCTION UNDER SECTION 11 WERE SATISFIED OR NOT. THE LD. AR OF THE ASSESSEE HAD GIVEN UNDERTAKEN THAT THE ASSESSEE WILL CO-OPERATE WITH THE ASSESSING OFFICER IN GETTING THE ASSESSMENT EXPEDITIOUSLY. THE ASSESSING OFFICER IS DIRECTED TO PASS ORDER ON 5 I. T. APPEAL NOS. 2792 & 2793 (DEL) OF 2011 MERITS AFTER PROVIDING SUFFICIENT OPPORTUNITY BEING HEARD TO THE ASSESSEE TO EXPLAIN ITS CASE. WE ORDER ACCORDINGLY. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 05 TH AUGUST, 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05 TH AUGUST, 2011. * MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.