ACIT (E), Ghaziabad V. M/s St. Thomas Orthodox Church Society (Regd.), Ghaziabad

ITA 3665/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5614 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 05-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: VIPIN GARG
• Keywords: Charitable institution
• Section: 12; 11; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO.3665/DEL./2015 (ASSESSMENT YEAR : 2010-11) ACIT, VS. ST. THOMAS ORTHODOX CHURCH SOCIETY (RE GD.), CIRCLE (EXEMPTIONS), SECTOR IV, LAJPAT NAGAR, GHAZIABAD. SAHIBABAD, GHAZIABAD. (PAN : AABTS8844F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIPIN GARG, ADVOCATE REVENUE BY : MS. ASHIMA NEB, SENIOR DR DATE OF HEARING : 11.12.2018 DATE OF ORDER : 01.02.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, ACIT, CIRCLE (EXEMPTIONS), GHAZIABAD (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILI NG THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 11.03.2015 PASSED BY LD. CIT (APPEALS), GHAZIABAD QUA THE ASS ESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA THAT :- 1. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.80,00,000/- SINCE THE ASSESSEE HAS APPLIED THIS INCOME FOR PURC HASE OF RESIDENTIAL HOUSE IN THE NAME OF CHAIRMAN OF THE SO CIETY AND HENCE VIOLATED THE SECTION 13(1)(C) OF THE ACT, BEI NG BENEFIT TO ITA NO.3665/DEL./2015 2 RELATED PARTY U/S 13(3). THIS IS IN CONTRAVENTION TO THE PROVISIONS OF SECTION 13(3) READ WITH 13(1)(C)(II) OF IT ACT. 2. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.1,37,37,011/- MADE ON ACCOUNT OF DISALLOWING THE CARRY FORWARD OF ACCUMULATION UNDER VARIOUS HEADS AS THES E FUNDS HAVE NOT BEEN UTILIZED TILL THE END OF 31.03.2010 W HICH IS EVIDENT FROM THE STATEMENT OF ACCUMULATION OF FUNDS BY THE ASSESSEE ON THE GROUND THAT THE EXEMPTION U/S 11 & 12 BE DENIED ON THE PREVIOUS POINT AND THE ASSESSEE BE TREATED AS AOP. 3. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.1,18,98,495/- MADE ON ACCOUNT OF SURPLUS (EXCESS OF INCOME OVER EXPENDITURE) AS THE ASSESSEE WAS DISQUALIFIED FOR AVAILING BENEFITS OF SECTION 11 & 12 OF THE ACT. 4. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.8,28,531/- AS THERE WAS UNEXPLAINED NEGATIVE CASH BALANCE APPE ARING IN CASH BOOK OF ASSESSEE IN THE MONTHS OF DECEMBER AND FEBRUARY. 5. THE ORDER OF LD. CIT(A) BE CANCELLED AND THE OR DER OF THE AO BE RESTORED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE SOCIETY BEING RE GISTERED WITH THE REGISTRAR OF SOCIETIES, UTTAR PRADESH, HAS BEEN GRA NTED REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961, FIL ED RETURN OF INCOME DECLARING NIL INCOME. DURING THE SCRUTINY P ROCEEDINGS, ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVI DE DETAILS OF INCOME ACCUMULATED AND ITS APPLICATION. AO NOTICED THAT THE AMOUNT OF RS.80,00,000/- WAS ACCUMULATED DURING FY 2009-10 RELEVANT TO AY 2010-11 THE YEAR UNDER ASSESSMENT, F OR PURCHASE OF ITA NO.3665/DEL./2015 3 RESIDENTIAL FLAT FOR CHAIRMAN OF THE SOCIETY AND OU T OF THE SAID AMOUNT, FLAT OF RS.75,28,480/- HAS BEEN PURCHASED I N THE NAME OF SRI SHAJI MATHEWS. AO, BY INVOKING THE PROVISIONS CONTAINED U/S 13(1)(C)(II) OF THE ACT, TREATED THE APPLICATION OF INCOME OF RS.75,28,400/- FOR PURCHASE OF RESIDENTIAL HOUSE FO R THE CHAIRMAN NOT FOR CHARITABLE PURPOSE, HENCE DISALLOWED THE SA ME. AO ALSO PROCEEDED TO HOLD THAT THE ASSESSEE SOCIETY IS NOT QUALIFIED FOR EXEMPTION U/S 11 & 12 OF THE ACT. AO FURTHER TREAT ED THE AMOUNT OF RS.4,71,600/- AS SURPLUS ONE AND THIS ACCUMULATE D AMOUNT CANNOT BE CARRIED FORWARD ON THE GROUND THAT THE EX EMPTION U/S 11 (2) OF THE ACT HAS BEEN DENIED AND CONSEQUENTLY MAD E ADDITION OF RS.80,00,000/-. 3. AO FURTHER MADE ADDITION OF RS.1,37,37,011/- AS ACCUMULATED FUNDS UNDER THE HEADS BUILDING FUND, SCHOOL BUS AND AUDIO VISUAL SYSTEM (RS.1,05,00,000/-, RS.31, 38,640/- & RS.98,371/- RESPECTIVELY) ON THE GROUND THAT THESE FUNDS HAVE NOT BEEN UTILIZED TILL THE END OF 31.03.2010 AND SINCE EXEMPTION U/S 11 & 12 OF THE ACT HAS BEEN DENIED THE SAME CANNOT BE ALLOWED TO CARRY FORWARD THE ACCUMULATED INCOME. 4. AO ALSO MADE ADDITION OF RS.1,18,98,495/- AS ACC UMULATED SURPLUS AS THE SOCIETY HAS FAILED TO QUALIFY FOR AV AILING THE BENEFIT OF SECTIONS 11 & 12 OF THE ACT. AO ALSO MADE ADDIT ION OF ITA NO.3665/DEL./2015 4 RS.8,28,531/- ON ACCOUNT OF UNEXPLAINED NEGATIVE CA SH BALANCE APPEARING IN THE CASH BOOK OF THE ASSESSEE. 5. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS ALLOWED THE APPEAL. FEELING AG GRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF F ILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 7. UNDISPUTEDLY, THE ASSESSEE SOCIETY HAS BEEN ASSE SSED AS A CHARITABLE SOCIETY ALLOWING BENEFITS UNDER SECTIONS 11 & 12 OF THE ACT IN THE PRECEDING AS WELL AS SUCCEEDING YEARS. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE SOCIETY HAS PURCHASED THE FLAT BEARING PROPERTY HOUSE NO.27, SINGLE STOREY, THA, SECTOR 4, GHAZIABAD FOR A SALE CONSIDERATION OF RS.70,00,000/- ON 18.01 .2010, PAID RS.4,90,000/- AS STAMP DUTY AND REGISTRATION CHARGE S OF RS.10,060/- AS LEGAL FEE AND DEED WRITER CHARGES. IT IS ALSO N OT IN DISPUTE THAT THE PERUSAL OF THE SALE DEED, AVAILABLE AT PAGES 27 TO 57 OF THE PAPER BOOK, SHOWS THAT THE PROPERTY IN QUESTION HAS BEEN PURCHASED IN THE NAME OF ST. THOMAS ORTHODOX CHURCH (SOCIETY) REGD. THROUGH ITS ITA NO.3665/DEL./2015 5 CHAIRMAN, FR. SHAJI MATHEWS. IT IS ALSO NOT IN DIS PUTE THAT IN THE SALE DEED IN QUESTION, PAN : AABTS8844F OF ASSESSEE SOCIETY HAS BEEN MENTIONED. IT IS ALSO NOT IN DISPUTE THAT IN THE APPELLATE PROCEEDINGS, REMAND REPORT, AVAILABLE AT PAGES 131 & 132 OF THE PAPER BOOK, WAS CALLED BY LD. CIT (A). 8. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT , WHEN WE EXAMINE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY HI GHLIGHTED BY AO AT PAGE 7 OF THE ASSESSMENT ORDER VIZ. CONDUCTING DISPENSARIES, SCHOOLS, HOSTELS, MEETING HALLS, CENTERS OF SOCIAL WELFARE, SEMINARS, CONFERE NCES AND OTHER ACTIVITIES FOR THE PROPAGATION OF THE FAI TH OF THE ABOVE CHURCH AND CHRISTIAN PRINCIPLES GENERALLY WHICH ARE IN HARMONY WITH THE SAME, IN THE CITY OF GHAZIABAD; 'TO PURCHASE , LEASE, HIRE, EXCHANGE OR OTHERWISE ACQUIRE ANY MOVABLE OR IMMOVABLE PROPERTY IN THE CITY OR GHAZIABAD AND IT SUBURBS AND TO LEAS E , MORTGAGE , DISPOSE OF, EXCHANGE, IMPROVE , MANAGE, DEVELOP, INVEST, WITHDRAW, REINVEST AND OTHER WISE DEAL WITH ,9NY STOCKS, SHARES. BONDS MONIES, SECURITIES AND ALL KINDS OF MOVABLE OR IMMOVABLE PROPERTY FOR ALL OR ANY OF THE ABOVE OBJECTS', IT IS BEYOND DOUBT THAT IN ORDER TO CARRY OUT THE AFORESAID CHARITABLE ACTIVITIES, THE ASSESSEE SOCIETY IS ALSO AUTHORIZED TO PURCHASE, LEASE, HIRE, EXCHANGE OR OTHERWISE ACQUIRE ANY MOVABLE OR IMMOVABLE PROPERTY IN THE CITY OR GHAZIABAD OR SUBURBS. 8. IN THE INSTANT CASE, AO IN ORDER TO DENY THE EXE MPTION U/S 11 (2) OF THE ACT MISSTATED THE FACT THAT THE PROPERTY IN QUESTION HAS BEEN PURCHASED IN THE NAME OF FR. SHAJI MATHEWS, CH AIRMAN OF THE ITA NO.3665/DEL./2015 6 SOCIETY, WHEREAS IT IS NOT THE CASE, RATHER THE PRO PERTY WAS PURCHASED IN THE NAME OF THE SOCIETY BUT THROUGH IT S CHAIRMAN. WE ARE OF THE CONSIDERED VIEW THAT IN ORDER TO CARRY O UT THE CHARITABLE ACTIVITIES, THE CHAIRMAN OF THE ASSESSEE SOCIETY NE EDS ACCOMMODATION OTHERWISE HE WOULD HAVE TO PUT IN REN TED ACCOMMODATION. 9. FURTHERMORE, LD. AR FOR THE ASSESSEE BROUGHT ON RECORD EVIDENCE, AVAILABLE AT PAGES 58 TO 73 OF THE PAPER BOOK, TO PROVE THE FACT THAT THE PROPERTY IN QUESTION HAS NOT ONLY BEEN USED FOR RESIDENTIAL PURPOSE OF THE CHAIRMAN OF THE SOCIETY BUT HAS BEEN EXTENSIBLY USED FOR CONDUCTING WORKSHOP BY THE FACU LTY MEMBERS, FOR CONDUCTING HINDI WORKSHOP, TO CONVENE MEETINGS OF THE ACADEMYS CORE COMMITTEE ETC., AND THESE FACTS GO T O PROVE THAT THE PROPERTY IN QUESTION WAS ALSO BEING USED IN ORDER TO CARRY OUT THE CHARITABLE ACTIVITIES BY THE SOCIETY. SO, WE ARE O F THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS RIGHTLY DELETED THE A DDITION OF RS.80,00,000/- BY HOLDING THAT THE ASSESSEE SOCIETY IS ELIGIBLE FOR BENEFIT OF SECTIONS 11 & 12 OF THE ACT. SO, GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 10. AO MADE ADDITION OF RS.1,37,37,011/- BEING THE AMOUNT ACCUMULATED IN EARLIER YEARS UNDER SECTION 11(2) OF THE ACT MERELY ITA NO.3665/DEL./2015 7 ON THE GROUND THAT SINCE EXEMPTION UNDER SECTIONS 1 1 AND 12 OF THE ACT TREATING THE ASSESSEE AS AOP HAS BEEN DECLINED ACCUMULATED INCOME HAS BEEN TREATED AS SURPLUS FOR ASSESSMENT Y EAR 2010-11. LD. CIT(A) AFTER THRASHING THE ISSUE IN DETAIL AND BY RELYING ON THE VARIOUS DECISIONS RENDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL ON THE ISSUE IN QUESTION REACHED THE CONC LUSION THAT WHEN THE ASSESSEE IS HELD TO BE ELIGIBLE FOR BENEFIT OF SECTIONS 11 AND 12, THE ASSESSEE SOCIETY CANNOT BE TREATED AS AOP. SO, IN THESE CIRCUMSTANCES, SINCE THE ASSESSEE IS HELD TO BE ELI GIBLE FOR GETTING BENEFIT UNDER SECTIONS 11 AND 12 OF THE ACT, THE TI ME IS AVAILABLE WITH IT FOR USE OF ACCUMULATED FUND OF EARLIER YEAR S, HENCE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION OF RS.1,37,37, 011/-. SO, GROUND NO.2 IS DETERMINED AGAINST THE REVENUE. GROUND NO.3 11. AO MADE FOR THE ADDITION OF RS.1,18,98,495/- ON ACCOUNT OF DISALLOWANCE OF CLAIM OF THE ASSESSEE QUA ACCUMULAT ION OF SURPLUS UNDER SECTION 11(2), AGAIN ON THE SAME GROUND THAT SINCE THE BENEFITS OF SECTIONS 11 AND 12 ARE NOT AVAILABLE TO THE ASSESSEE SOCIETY, THE SAME IS TREATED AS AOP. AGAIN WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE IS HELD TO B E ELIGIBLE FOR EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT AS PE R OUR FINDINGS ON GROUND NO.1 AND HAS APPLIED UNDER SECTION 11(2) OF THE ACT FOR ITA NO.3665/DEL./2015 8 ACCUMULATION OF FUNDS VIDE LETTER DATED 07.07.2010 IN THE PRESCRIBED FORM NO.10 ADDRESSED TO CONCERNED ADDITI ONAL CIT, THE ADDITION IS NOT SUSTAINABLE. SO, THE LD. CIT(A) HA S RIGHTLY DELETED THE ADDITION, HENCE GROUND NO.3 IS DETERMINED AGAIN ST THE REVENUE. GROUND NO. 4 12. AO MADE ADDITION OF RS.8,28,531/- ON ACCOUNT OF NEGATIVE CASH BALANCE IN THE MONTH OF DECEMBER AND FEBRUARY, AO NOTICED FROM THE CASH BOOK THAT IN DECEMBER AND FEBRUARY, N O CASH WAS CREDITED IN THE CASH BOOK BUT EXPENSES WAS SHOWN PA ID OF RS.1,76,436/- AND RS.6,52,095/- IN THE MONTH OF DEC EMBER 2009 AND FEBRUARY 2010 RESPECTIVELY. IT IS THE CASE OF THE ASSESSEE BEFORE THE LD. CIT (A) AND BEFORE THE BENCH THAT TH IS CONFUSION OCCURRED DUE TO MISPRINTING IN THE CASH BOOK BY COM PUTER, CREDIT ENTRIES OF THE CASH BOOK WERE NOT PRINTED AND THE C REDIT IN THE CASH BOOK IS PRIMARILY ON ACCOUNT OF CASH WITHDRAWAL FRO M THE BANK WHICH IS VERIFIABLE FROM THE BANK STATEMENT OF THE INDIAN BANK. 13. ASSESSEE HAS FURNISHED DETAILS OF THE CASH CRED IT WHICH WERE NOT SHOWN IN THE CASH BOOK BY MISTAKE, WHICH HAVE B EEN EXTRACTED BY LD. CIT (A) ON PAGE 25 OF THE IMPUGNED ORDER, AN D FINDING THE SAME CORRECT ON FACTUAL VERIFICATION FROM THE BANK STATEMENT AS WELL AS LEDGER ACCOUNT, FOUND THAT NO NEGATIVE CASH BALANCE AND THE ITA NO.3665/DEL./2015 9 IMPUGNED CASH EXPENDITURE WERE OUT OF WITHDRAWALS FROM THE BANK ACCOUNTS AND OTHER CASH RECEIPTS. SO, IN THESE CIRC UMSTANCES, THERE IS NO SCOPE TO INTERFERE IN THE FINDINGS RETURNED B Y THE LD. CIT(A) DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF NEGATIVE CASH BALANCE IN THE MONTHS OF DECEMBER AND FEBRUARY. SO GROUND NO.4 IS DETERMINED AGAINST THE REVENUE. GROUNDS NO.5 & 6 14. GROUNDS NO.5 & 6 NEED NO FINDINGS BEING GENERAL IN NATURE AND HAVING NOT BEEN PRESSED BY THE LD. AR FOR THE T AXPAYER. 15. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 1 ST DAY OF FEBRUARY , 2019 . SD/- SD/- (ANADEE NATH MISSHRA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 1 ST DAY OF FEBRUARY , 2019 TS ITA NO.3665/DEL./2015 10 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.