M/s Mahabir Educational Welfare Society, Ambala V. DCIT, Ambala

ITA 375/CHANDI/2015

• Counselvise Citation: 37521514 RSA 2015
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL VERMAN
• Assessee Lawyers: T N SINGLA
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Tangible material; Corroborative evidences; Reason to believe
• Section: 68; 148; 144; 139; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 374 TO 379/CHD/2015 A.Y. 2005-06 TO 2010-11 MAHABIR EDUCATIONAL VS THE DCIT, WELFARE SOCIETY, CIRCLE, VPO BULLANA, AMBALA. HISSAR ROAD, AMBALA. PAN: AABAM0255F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N.SINGLA RESPONDENT BY : SHRI SUSHIL VERMAN DATE OF HEARING : 16.11.2015 DATE OF PRONOUNCEMENT : 27.11.2015 O R D E R PER BHAVNESH SAINI,JM ALL THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST COMMON ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 27.02.2015 FOR ASSESSMENT YEAR 2005-06 TO 2010-11. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BEL OW AND MATERIAL ON RECORD. COMMON ISSUES ARE INVOLVED IN ALL THE APPEALS THEREFORE, ALL APPEALS WERE HEARD 2 TOGETHER AND WE DISPOSE OF THE SAME THROUGH THIS COMMON CONSOLIDATED ORDER. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE PREFERRED APPEALS AGAINST THE ASSESSMENT ORDERS PAS SED BY ASSESSING OFFICER UNDER SECTION 144/147 OF THE INCOME TAX ACT VIDE ORDER DATED 26.03.2013. THE ASSESSEE RAISED MANY GROUNDS OF APPEAL BEFORE LD. CIT(APPEALS) AND ALSO RAISED ADDITIONAL GROUND OF A PPEAL AS WELL AS MADE A REQUEST FOR ADMISSION OF THE ADDITIONAL EVIDENCE. 4. THE LD. CIT(APPEALS) NOTED THAT DESPITE GIVING SEVERAL OPPORTUNITIES DURING THE APPELLATE PROCEEDI NGS, ASSESSEE SOUGHT ADJOURNMENT ON DIFFERENT REASONS. THE ASSESSEE ALSO MADE A REQUEST FOR ADMISSION OF ADDIT IONAL EVIDENCE ON THE GROUND THAT ASSESSEE COULD NOT SUBM IT BOOKS OF ACCOUNT DUE TO DAMAGE OF RECORDS IN FLOODS IN AMBALA IN JULY,2010. THE LD. CIT(APPEALS), HOWEVER , NOTED THAT NO SUCH PLEA FOR NON SUBMISSION OF BOOKS OF ACCOUNT DUE TO DAMAGE IN FLOOD WAS TAKEN BEFORE ASSESSING OFFICER. ADDITIONAL EVIDENCE IN THE FORM OF CASH BOOK AND LEDGER WERE NOT ADMITTED BECAUSE THE ASSESSEE DID NOT QUALIFY UNDER RULE 46A OF THE IT R ULES FOR ADMISSION OF FRESH EVIDENCE. THE LD. CIT(APPEA LS) ALSO NOTED THAT SINCE THE ASSESSEE WAS PROVIDED SUFFICIENT OPPORTUNITY TO FILE EVIDENCE BEFORE ASSE SSING OFFICER AND WAS NOT PREVENTED BY ANY SUFFICIENT CAU SE, 3 THEREFORE, ADDITIONAL EVIDENCE CANNOT BE ACCEPTED. REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE WAS ACCORDINGLY, REJECTED. 5. IT IS ALSO NOTED IN THE IMPUGNED ORDER THAT BRIE F FACTS OF THE CASE ARE THAT AT THE TIME OF REGISTRAT ION PROCEEDINGS UNDER SECTION 12AA, THE ASSESSING OFFIC ER NOTICED THAT ASSESSEE HAD NEVER FILED ITS RETURN OF INCOME SINCE ITS INCEPTION IN THE YEAR 2002. THE ASSESSING OFFICER NOTED FROM THE FINANCIAL STATEMEN TS FILED ALONGWITH APPLICATION FOR REGISTRATION THAT T HE ASSESSEE WAS EARNING PROFIT CONSISTENTLY BUT NEVER FILED RETURN OF INCOME. THEREFORE, THE CASES OF THE ASSE SSEE WERE REOPENED UNDER SECTION 148 OF THE INCOME TAX A CT AFTER OBTAINING APPROVAL OF ADDL. CIT, AMBALA. IN RESPONSE TO THE NOTICE UNDER SECTION 148, THE ASSES SEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR UNDE R APPEALS ON 07.02.2013 AND 19.09.2012 DECLARING NIL INCOME. THE ASSESSING OFFICER NOTED THAT NO COMPLE TE INFORMATION ALONGWITH BOOKS OF ACCOUNT AND VOUCHERS ETC. HAVE BEEN SUBMITTED, THEREFORE, ASSESSING OFFI CER WAS LEFT WITH NO ALTERNATE EXCEPT TO COMPLETE ASSES SMENT UNDER SECTION 144 OF THE INCOME TAX ACT ON THE BASI S OF INFORMATION AVAILABLE ON RECORD. THE ASSESSING OFF ICER, THEREFORE, COMPLETED THE ASSESSMENTS UNDER SECTION 144 AT INCOME OF RS. 17,88,947/-, RS. 35,61,710/-, RS. 54,91,960/-, RS. 58,31,060/-, RS. 55,79,065/- AND R S. 54,40,860/- FOR ALL THE ASSESSMENT YEARS 2005-06 TO 4 2010-11 RESPECTIVELY ON THE BASIS OF INFORMATION ON RECORD. 6. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) T HAT ASSESSING OFFICER WRONGLY ISSUED NOTICE UNDER SECTI ON 148 OF THE ACT AS THE ASSESSEE WAS NOT REQUIRED TO FILE THE RETURN UNDER SECTION 139 OF THE ACT, AS THE ANN UAL RECEIPTS OF THE ASSESSEE WAS LESS THAN RS. 1 CR AS PER THE COPY OF THE BALANCE SHEET FILED WITH THE APPLIC ATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. TH E ASSESSING OFFICER HAD NO REASON TO BELIEVE THAT ASS ESSEE SOCIETY WAS HAVING RECEIPTS EXCEEDING RS. 1 CR DURI NG THE FINANCIAL YEARS UNDER APPEALS. THE NOTICE UNDE R SECTION 148 IS THEREFORE, ILLEGAL AND INVALID. THE ONLY MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WAS BALANCE SHEET OF THE INSTITUTE SUBMITTED WITH THE REGISTRATION APPLICATION. THE ASSESSING OFFICER, THEREFORE, DID NOT HAVE ANY REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH E CIT GRANTED REGISTRATION TO THE ASSESSEE AFTER VERI FYING THE FACTS THAT ASSESSEE IS AN EDUCATIONAL INSTITUTI ON THEREFORE, REGISTRATION WAS GRANTED W.E.F. 01.04.20 11 AS SUCH, THERE WERE NO MATERIALS WITH THE ASSESSING OF FICER TO REOPEN THE ASSESSMENTS FOR ASSESSMENT YEAR UNDER APPEALS. THE ASSESSING OFFICER HAS ACCEPTED THAT ANNUAL RECEIPTS OF THE ASSESSEE EDUCATIONAL SOCIETY WAS LESS THAN RS. 1 CR, THEREFORE, ITS INCOME WAS EXEMP T UNDER SECTION 10(23C)(IIIAD) OF THE ACT. THE ASSES SEE 5 SUBMITTED AUDITED ACCOUNTS AS WELL AS SEPARATE ACCOUNTS FOR EACH INSTITUTION AS WELL AS CONSOLIDAT ED BALANCE SHEET. 7. THE LD. CIT(APPEALS), HOWEVER, CONFIRMED THE RE- OPENING OF THE ASSESSMENT. THE LD. CIT(APPEALS) NO TED THAT APPLICABILITY OF PROVISIONS OF SECTION 10(23C) (IIIAD) IS SUBJECT TO FULFILLMENT OF THE NECESSARY CONDITIO NS, SUCH AS THE ASSESSEE COMPANY BEING AN EDUCATIONAL INSTITUTION AND THE INSTITUTION EXISTS SOLELY FOR EDUCATIONAL PURPOSES. SINCE ADDITIONAL EVIDENCE IS NOT ADMITTED, THEREFORE, CONDITIONS OF THESE PROVISIONS WOULD NOT BE SATISFIED AUTOMATICALLY. THE LD. CIT(APPEALS) FOUND THAT ASSESSING OFFICER HAS CORRE CTLY RECORDED REASONS FOR RE-OPENING OF ASSESSMENT AND H AVE BEEN RIGHTLY APPROVED BY THE ADDL. CIT. THE GROUND OF APPEAL OF ASSESSEE CHALLENGING RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 WAS ACCORDINGLY REJECT ED. 8. THE LD. CIT(APPEALS) WITH REGARD TO NON-PRODUCTI ON OF BOOKS OF ACCOUNT DUE TO DAMAGE OF THE RECORD IN HEAVY FLOODS IN AMBALA IN JULY,2010 NOTED THAT SUCH REASONS WERE NOT PROVIDED BEFORE AUTHORITIES BELOW AND NO EVIDENCE OF ANY CLAIM MADE BEFORE INSURANCE COMPANY OR OTHER AUTHORITY OR FILING OF FIR HAVE BE EN PRODUCED. THE JUDGEMENTS STATED OF ITAT FOR DELETI NG PENALTIES ON ACCOUNT OF FLOOD IN AMBALA IS NOT 6 APPLICABLE IN EACH AND EVERY CASE. THEREFORE, EX-PA RTE ASSESSMENT ORDER WAS HELD TO BE JUSTIFIED. 9. THE LD. CIT(APPEALS) ALSO CONSIDERED THE OTHER ISSUE OF ADDITIONS OF RS. 12,50,000/-, RS. 30 LACS, RS. 30,50,000/-, RS. 23 LACS AND RS. 28 LACS ON ACCOUNT OF UNEXPLAINED MONEY FOR ASSESSMENT YEARS 2006-07 TO 2010-11 RESPECTIVELY AND FOUND THAT ASSESSING OFFIC ER MADE THESE ADDITIONS BECAUSE DESPITE GIVING SEVERAL OPPORTUNITIES, ASSESSEE FAILED TO EXPLAIN THE AMOUN TS RECEIVED ON ACCOUNT OF BUILDING FUND WHICH WERE TRE ATED AS UNEXPLAINED UNDER SECTION 68 OF THE ACT. THE ASSESSEE REITERATED THE SAME FACTS BEFORE LD. CIT(APPEALS) THAT BUILDING FUND WAS RECEIVED AS COR PUS FUNDS AND NAMES AND ADDRESSES OF THE DONORS AND RECEIPTS WERE PROVIDED TO THE ASSESSING OFFICER, THEREFORE, CORPUS ADDITION CANNOT BE ADDED. THE LD . CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE BECAUSE NO SUPPORTING EVIDENCES HAVE BEEN PRODUCED. THE ADDITION UNDER SECTION 68 WAS ACCORDINGLY CONFIRMED IN ALL THE ABOVE YEARS 2006-0 7 TO 2010-11. 10. THE LD. CIT(APPEALS) ALSO CONSIDERED THE ADDITI ONS OF RS. 17,88,947/-, RS. 23,11,711/-, RS. 24,91,958/ -, RS. 27,81,060/-, RS. 32,79,065/- AND RS. 26,40,864/ - FOR ALL THE ASSESSMENT YEARS 2005-06 TO 2010-11 ON ESTIMATE BASIS. DURING THE ASSESSMENT PROCEEDINGS, THE 7 ASSESSING OFFICER NOTED THAT NEITHER ASSESSEE HAS FURNISHED THE REQUISITIONED INFORMATION NOR PRODUCE D BOOKS OF ACCOUNT ALONGWITH VOUCHERS IN ORDER TO DETERMINE CORRECT INCOME OF THE ASSESSEE DESPITE GI VING VARIOUS OPPORTUNITIES. THE ASSESSING OFFICER, THER EFORE, TREATED THE STATUS OF THE ASSESSEE TO BE AOP AND PROCEEDED WITH THE ASSESSMENT UNDER THE HEAD INCOM E FROM BUSINESS & PROFESSION BECAUSE NO BOOKS OF ACCOUNT WERE PRODUCED. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN EXCESS OF INCOME AT RS. 18,97,612/-, RS. 19,12,996/-, RS. 25,18,416/-, RS. 4,54,763/- WHICH ARE 23%, 27%, 26.65%, 24% AND 26.88% OF THE GROSS RECEIPTS OF RS. 51,11,278/-, RS . 17,95,998/- RS. 71,19,882/-, RS. 79,45,888/-, RS. 93,68,759/- AND RS. 75,45,326/- FOR ALL THE ASSESSM ENT YEARS RESPECTIVELY. THE ASSESSING OFFICER ESTIMATE D THE INCOME OF THE ASSESSEE @ 35% OF THE GROSS RECEIPTS AND MADE ADDITIONS ACCORDINGLY AND ASSESSED THE SAME AS TAXABLE INCOME. 11. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSING OFFICER HAS ACCEPTED ANNUAL RECEIPTS OF EDUCATIONAL INSTITUTIONS AS PER AUDITED ACCOUNTS, THEREFORE, THERE WERE NO REASONS TO ESTIMATE THE IN COME OF THE ASSESSEE AT 35% OF THE ANNUAL RECEIPTS WITHO UT ANY INCRIMINATING MATERIAL ON RECORD. THE TOTAL RE CEIPTS OF THE ASSESSEE WERE LESS THAN RS. 1 CR. THEREFORE, ADDITIONS ARE LIABLE TO BE DELETED. 8 12. THE LD. CIT(APPEALS) CONSIDERING THE FACT THAT NO BOOKS OF ACCOUNT PRODUCED, CONFIRMED THE REJECTION OF THE BOOK PROFITS AND JUSTIFIED THE ACTION OF THE AS SESSING OFFICER IN ESTIMATING THE INCOME BY APPLYING PROFIT RATE OF 35%. THE LD. CIT(APPEALS) WITH REGARD TO DENIAL OF EXEMPTION UNDER SECTION 10(23C) OF THE ACT AND TAKI NG STATUS OF ASSESSEE AS AOP NOTED THAT SINCE THE ASSE SSEE DID NOT PRODUCE BOOKS OF ACCOUNT AND VOUCHERS, THEREFORE, ASSESSING OFFICER DID NOT GRANT EXEMPTIO N UNDER SECTION 10(23C) OF THE ACT AND TAKEN THE STAT US OF THE ASSESSEE AS AOP AND COMPUTED THE INCOME UNDER NORMAL PROVISIONS OF BUSINESS. THE ASSESSEE SUBMIT TED BEFORE LD. CIT(APPEALS) THAT SINCE THE RECEIPTS OF THE ASSESSEE WERE LESS THAN RS. 1 CR, THEREFORE, ASSESS EE WAS ENTITLED FOR EXEMPTION UNDER THE ABOVE PROVISIO NS AND RELIED UPON DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CHILDRENS EDUCATION SOCIETY. THE LD. CIT(APPEALS), HOWEVER, REJECTED THE CLAIM OF THE ASSESSEE BECAUSE NO BOOKS OF ACCOUNT HAVE BEEN PRODUCED ALONGWITH VOUCHERS AND JUSTIFIED THE ACTIO N OF THE ASSESSING OFFICER IN DENYING EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. THE LD. CIT(APP EALS), ACCORDINGLY DISMISSED ALL THE APPEALS OF THE ASSESS EE. 13. THE ASSESSEE IN ALL THE APPEALS HAS CHALLENGED THE STATUS OF ASSESSEE AS AOP, ESTIMATING INCOME BY APPLYING PROFIT RATE OF 35%, CLAIMING EXEMPTION UND ER SECTION 10(23C) OF THE ACT. IN ADDITION TO THE ABO VE, IN 9 ASSESSMENT YEAR 2006-07 TO 2010-11, THE ASSESSEE AL SO CHALLENGED THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS OF CORPUS DONATIONS ON ACCOUNT OF BUILDING FUND. IN ASSESSMENT YEARS 2005- 06 AND 2006-07, ASSESSEE HAS ALSO FILED APPLICATION FO R ADMISSION OF THE ADDITIONAL GROUND CHALLENGING RE- OPENING OF THE ASSESSEE. IN ALL THE APPEALS, THE ASSESSEE ALSO MADE A REQUEST FOR ADMISSION OF ADDIT IONAL GROUND CHALLENGING THE ORDER OF LD. CIT(APPEALS) IN NOT CONSIDERING ADDITIONAL EVIDENCES I.E. REFUSING TO A DMIT ADDITIONAL EVIDENCE IN THE FORM OF BOOKS OF ACCOUNT AND LEDGER. 14. WE HAVE CONSIDERED RIVAL SUBMISSIONS. ALL THE ISSUES INVOLVED IN THE PRESENT APPEALS ARE DECIDED AS UNDER : RE-OPENING OF ASSESSMENT UNDER SECTION 148 15. THIS ISSUE ARISES IN ASSESSMENT YEAR 2005-06 AN D 2006-07. THIS ISSUE IS LEGAL IN NATURE AND ARISING OUT OF THE RECORD. THE LD. CIT(APPEALS) HAS ALSO DECID ED THIS ISSUE IN THE IMPUGNED ORDER. THE LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT INADVERTENTLY THIS GROUND C OULD NOT BE TAKEN IN THE MAIN GROUNDS OF APPEAL WHICH IS LEGAL IN NATURE THEREFORE, CONSIDERING THE ABOVE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF DECISIO N OF HON'BLE SUPREME COURT IN THE CASE OF NTPC LTD. 229 ITR 382, WE ADMIT THIS ADDITIONAL GROUND OF APPEAL WHIC H 10 GOES TO THE ROUTE OF THE MATTER. THE ASSESSEE HAS FILED COPY OF THE REASONS FOR RE-OPENING OF THE ASSESSMEN T UNDER SECTION 148 IN THE PAPER BOOK AT PAGE 33. SAM E READS AS UNDER : NAME & ADDRESS OF THE ASSESSEE : M/S MAHABIR EDUCA TIONAL WELFARE SOCIETY,VPO BULLANA HISSAR ROAD, AMBALA CITY. PAN NO. AABAM0255F ASSTT.YEAR 2005-06 RESONS FOR ISSUING NOTICE U/S 148 OF THE INCOME TAX ACT THE ASSESSEE IS AN EDUCATIONAL SOCIETY FUNCTIONING SINCE 04.12.2002. DURING THE COURSE OF REGISTRATION PROCEEDINGS U/S 12AA, IT WA S NOTICED THAT THE ASSESSEE HAD NEVER FILED ITS RETURN OF INCOME SINCE INCEPTION EX CEPT FOR THE A.Y.2011-12. ON PERUSAL OF THE FINANCIAL STATEMENTS OF THE ASSESSEE FOR THE F.Y.2005-06 ONWARDS FILED FOR REGISTRATION U/S 12AA, IT IS NOTI CED THAT THE ASSESSEE HAS BEEN EARNING PROFIT CONSISTENTLY, BUT HAS NOT FILED THE RETURN OF INCOME EXCEPT FOR A.Y.2011-12. THEREFORE ASSESSEE'S CASE HAVE BEEN RE OPENED FOR THE A.Y. 2006-07 ONWARDS. 2. SINCE THE ASSESSEE IS FUNCTIONING SINCE 04.12.20 02 THEREFORE I HAVE REASONS TO BELIEVE THAT ASSESSEE'S INCOME FOR THE A .Y. 2005-06 (F.Y. 2004-05) HAS ALSO ESCAPED THE ASSESSMENT. IN VIEW OF THE FACTS S TATE ABOVE, ISSUANCE OF NOTICE U/S 148 IN THE ABOVE NOTED CASE FOR THE ASSESSMENT YEAR 2005-06 IS RECOMMENDED. IT IS THEREFORE, REQUESTED THAT NECESSARY PERMISSION U /S 151 TO ISSUE NOTICE U/S 148 MAY KINDLY BE ACCORDED. SD/- ACIT 16. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSMENT WAS REOPENED ON THE BASIS OF MATERIAL PRODUCED AT THE STAGE OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND ON THE REASON THAT ASSESSEE NEVER FI LED ITS RETURN OF INCOME. HE HAS SUBMITTED THAT SECTIO N 11 139(4C)(E) WITH RESPECT TO CLAIM UNDER SECTION 10(23C)(IIIAD) HAS BEEN INSERTED IN THE ACT W.E.F. 01.04.2006. THEREFORE, ASSESSEE BEING AN EDUCATION AL SOCIETY WAS NOT REQUIRED TO SUBMIT RETURN OF INCOME EACH YEAR. THE COPIES OF INCOME & EXPENDITURE ACCO UNT FILED WITH THE REGISTRATION APPLICATION CLEARLY SHO WS THAT ASSESSEE IS AN EDUCATIONAL INSTITUTION AND ITS RECEIPTS ARE LESS THAN RS. 1 CR, THEREFORE, THE REA SONS ARE NON-EXISTENT AND AS SUCH THE ASSESSMENT IS NOT LEGALLY REOPENED. HE HAS SUBMITTED THAT APPROVAL I S NOT OBTAINED FROM THE ADDL. CIT BECAUSE THE COLUMN IS BLANK. HE HAS SUBMITTED THAT IN THE REASONS, ASSE SSING OFFICER HAS NOT RECORDED IF THE INCOME CHARGEABLE T O TAX HAS ESCAPED RS. 1 LAC AND MORE. HE HAS RELIED DECI SION OF ALLAHABAD HIGH COURT IN THE CASE OF AMAR NATH AGRAWAL VS CIT & ANR. 113 DTR 313 IN WHICH IT WAS H ELD AS UNDER : CONCLUSION : NOTICE WAS ISSUED AFTER FOUR YEARS AND THEREFORE REASONS RECORDED BY A.O. WERE NOT SUFFICIEN T TO INITIATE PROCEEDING UNDER S. 148 SINCE NO SUCH REASONS HAV E BEEN RECORDED TO THE EFFECT THAT THE ESCAPED INCOME IS LIKELY TO BE RS. 1 LAC OR MORE. 16(I) HE HAS ALSO RELIED UPON DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS ORIENT CRAFT LTD. 87 DT R 313 IN WHICH IT WAS HELD THAT, IN THE ABSENCE OF ANY TANGIBLE MATERIAL IN POSSESSION OF ASSESSING OFFICE R 12 SUBSEQUENT TO INTIMATION UNDER SECTION 143(1), RE-O PENING WAS NOT SUSTAINABLE. 16II) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSING OFFI CER CORRECTLY RECORDED THE REASONS FOR RE-OPENING OF TH E ASSESSMENT THEREFORE, RE-OPENING OF THE ASSESSMENT AFTER OBTAINING APPROVAL FROM ADDL. CIT IS JUSTIFIE D. 17. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY JUSTIFICATION FOR RE-OPENING OF THE ASSESSMENT IN ASSESSMENT YEAR 2005-06. THE ASSESSE E IS REGISTERED SOCIETY UNDER THE SOCIETIES REGISTRAT ION ACT W.E.F. 04.12.2002. COPY OF THE REGISTRATION CERTIF ICATE IS FILED AT PAGE 11 OF THE PAPER BOOK. THE ASSESSE E RUNS TWO EDUCATIONAL INSTITUTIONS IN ASSESSMENT YEAR UND ER APPEAL. THE A.O. IN REASONS ALSO NOTED ASSESSEE IS EDUCATIONAL INSTITUTION. THE ASSESSEE PRODUCED INCO ME & EXPENDITURE ACCOUNT AND BALANCE SHEET ALONGWITH REGISTRATION APPLICATION WHICH HAVE BEEN CONSIDERED BY CIT FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. THE CIT WAS SATISFIED THAT THE EXPLANATION OF ASSESSEE THAT ITS RECEIPTS ARE LESS THAN RS. 1 CR A ND ACCORDINGLY REGISTRATION WAS GRANTED TO ASSESSEE UN DER SECTION 12AA W.E.F. 01.04.2011. THESE PAPERS FILED ALONGWITH REGISTRATION APPLICATION WERE CONSIDERED BY ASSESSING OFFICER FOR RE-OPENING OF THE ASSESSMENT. THERE WERE NO OTHER MATERIAL WITH THE ASSESSING OFF ICER 13 TO JUSTIFY RE-OPENING OF THE ASSESSMENT BECAUSE ONC E ASSESSEE IS REGISTERED SOCIETY AND RUNS EDUCATIONAL INSTITUTION ONLY, THEREFORE, INCOME OF THE ASSESSEE WOULD BE EXEMPT UNDER SECTION 10(23C)(IIIAD) OF THE ACT. THERE WERE NO TANGIBLE MATERIAL AVAILABLE TO THE ASSESSIN G OFFICER TO REOPEN THE ASSESSMENT. THE ASSESSING OF FICER REOPENED THE ASSESSMENT BECAUSE ASSESSEE DID NOT FI LE RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL. HOWEVER, FOR EDUCATIONAL INSTITUTION, THE AMENDMENT WAS MADE IN SECTION 139(4C)(E) OF THE INCOME TAX AC T WHEREBY THE INSTITUTIONS CLAIMING EXEMPTION UNDER SECTION 10(23C)(IIIAD) WERE REQUIRED TO FILE RETURN OF INCOME W.E.F. 01.04.2006. THEREFORE, FOR ASSESSMEN T YEAR 2005-06, ASSESSEE WAS NOT REQUIRED TO FILE RE TURN OF INCOME. THEREFORE, THE REASONS AND GROUNDS NOTE D IN THE REASONS FOR RE-OPENING OF THE ASSESSMENT DOES N OT EXIST AND AS SUCH RE-OPENING WOULD NOT BE JUSTIFIED ON SUCH REASONS. WE RELY UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ATLAS CY CLE INDUSTRIES 180 ITR 319. SINCE ONLY CONSOLIDATED BAL ANCE SHEETS OF THE ASSESSEE WERE THERE WITH THE ASSESSIN G OFFICER WHICH CLEARLY SUGGEST ASSESSEE IS A SOCIETY RUNNING EDUCATIONAL INSTITUTION AND WAS NOT REQUIRE D TO FILE RETURN OF INCOME, THEREFORE, ASSESSING OFFICER WAS NOT JUSTIFIED IN RE-OPENING OF THE ASSESSMENT ON SU CH REASONS. THE RE-OPENING OF THE ASSESSMENT IN THE F ACTS AND CIRCUMSTANCES IS THEREFORE, WHOLLY UNJUSTIFIED AND THE RE-OPENING OF THE ASSESSMENT IS LIABLE TO BE 14 QUASHED. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN ASSESSMENT YEAR 2005-06 AND QUASH THE RE-ASSESSMENT PROCEEDINGS. RESULTANTLY, ALL ADDITIONS MADE IN ASSESSMENT YEAR 2005-06 ARE HEREB Y DELETED. APPEAL FOR A.Y. 2005-06 IS THEREFORE, ALL OWED. 18. AS FAR AS ASSESSMENT YEAR 2006-07 IS CONCERNED, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SAME REASON S WERE NOTED FOR RE-OPENING OF THE ASSESSMENT BUT THE ASSESSING OFFICER HAS NOT CHANGED EVEN THE ASSESSME NT YEAR IN THE REASONS. THE SAME COPY OF THE REASONS FOR ASSESSMENT YEAR 2005-06 HAVE BEEN KEPT IN FILE OF ASSESSMENT YEAR 2006-07. THE LD. DR HAVING RECORD WITH HIM, ALSO STATED THAT THERE ARE NO OTHER REASONS AV AILABLE IN THE FOLDER OF ASSESSMENT YEAR 2006-07 TO SHOW IF ANY SEPARATE REASONS HAVE BEEN RECORDED FOR 2006-07. I T IS, THEREFORE, CLEAR THAT NO SEPARATE REASONS HAVE BEEN RECORDED IN ASSESSMENT YEAR 2006-07 FOR RE-OPENING OF THE ASSESSMENT. THEREFORE, REASONS REPRODUCED IN ASSES SMENT YEAR 2005-06 ABOVE WOULD NOT SERVE ANY PURPOSE AND WOULD NOT JUSTIFY THE RE-OPENING OF THE ASSESSMENT IN SUB SEQUENT ASSESSMENT YEAR 2006-07. WE, ACCORDINGLY, HOLD THA T THERE ARE NO REASONS RECORDED FOR RE-OPENING OF THE ASSES SMENT IN ASSESSMENT YEAR 2006-07. THEREFORE, IT IS CLEAR VIO LATION OF SECTION 148(2) OF THE INCOME TAX ACT. WE, ACCORDIN GLY, DO NOT JUSTIFY RE-OPENING OF THE ASSESSMENT UNDER SECT ION 148 OF THE INCOME TAX ACT IN ASSESSMENT YEAR 2006-0 7. WE, SET ASIDE THE ORDERS OF AUTHORITIES 15 BELOW AND QUASH THE RE-OPENING OF THE ASSESSMENT. RESULTANTLY, ALL ADDITIONS MADE IN ASSESSMENT YEAR 2006-07 ARE ALSO DELETED. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IN ASSESS MENT YEAR 2006-07 IS ALLOWED. ADMISSION OF ADDITIONAL GROUND OF APPEAL TO CONSIDER THE ADDITIONAL EVIDENCE IN THE APPEAL 20. THE ASSESSEE IN ALL THE APPEALS HAS ALSO MADE A REQUEST TO ADMIT ADDITIONAL GROUND OF APPEAL CHALLE NGING THE ORDER OF LD. CIT(APPEALS) IN REJECTING THE REQU EST TO CONSIDER THE ADDITIONAL EVIDENCE IN THESE APPEALS. THE ASSESSEE MADE A REQUEST BEFORE LD. CIT(APPEALS) FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF CAS H BOOK AND LEDGER. THE LD. CIT(APPEALS) DID NOT ACCE PT REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE BECAUS E ASSESSEE DID NOT SATISFY REQUIREMENTS OF RULE 46A O F THE IT RULES. THE LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT DUE TO INADVERTENT MISTAKE, THIS GROUND COULD NOT BE TAKEN IN GROUND OF APPEAL. HE HAS SUBMITTED THA T DUE TO DAMAGE OF THE RECORD IN FLOODS IN AMBALA IN JULY,2010, THE BOOKS OF ACCOUNT AND LEDGER COULD NO T PRODUCED BEFORE THE ASSESSING OFFICER. HE HAS SUBMITTED THAT THE HARD-DISC OF COMPUTER WAS LATER ON RETRIEVED WITH DIFFICULTY AND ON THE BASIS OF THE S AME, THE BOOKS OF ACCOUNT WERE PREPARED LATER ON WHICH W ERE 16 PRODUCED BEFORE LD. CIT(APPEALS) BUT LD. CIT(APPEAL S) DID NOT ACCEPT THE SAME AS ADDITIONAL EVIDENCE. HE HAS SUBMITTED THAT THIS WOULD GO TO THE ROOT OF THE MAT TER, THEREFORE, LD. CIT(APPEALS) SHOULD HAVE ADMITTED TH E ADDITIONAL EVIDENCE IN THE FORM OF PRODUCTION OF CA SH BOOK AND LEDGER. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 21. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE ADDITIONAL GROUND NOW RAISED I N THE PRESENT APPEALS GO TO THE ROOT OF THE MATTER AND TH E ENTIRE ORDERS OF THE AUTHORITIES BELOW MAKING ADDIT IONS AGAINST THE ASSESSEE OF DIFFERENT NATURES AND DENYI NG EXEMPTION UNDER SECTION 10(23C) OF THE ACT WHOLLY DEPENDS UPON THE EXAMINATION OF THE BOOKS OF ACCOUN T AND LEDGER. THEREFORE, THE ADDITIONAL GROUND BEING RELEVANT TO THE MATTER IN ISSUE IS ADMITTED FOR HEA RING. 22. CONSIDERING THE FACTS OF THE CASE, IT IS CLEAR THAT ALL THE ADDITIONS AND DENIAL OF EXEMPTION WERE MADE IN ALL THE CASES OF ASSESSEE BECAUSE OF NON-PRODUCTION OF THE BOOKS OF ACCOUNT AND LEDGER. THE ASSESSEE PLEADED THAT DUE TO DAMAGE OF THE RECORD IN FLOODS IN AMBALA IN JULY,2010, THE BOOKS OF ACCOUNT COULD NOT BE PRODUC ED BEFORE THE ASSESSING OFFICER. THE LD. CIT(APPEALS), HOWEVER, NOTED THAT NO SUCH PLEA WAS MADE BEFORE ASSESSING OFFICER. THE ASSESSEE, ON THE OTHER HAND , EXPLAINED THAT LATER ON, ASSESSEE MANAGED TO RETRIE VE 17 THE DATA FROM THE COMPUTER DAMAGED IN THE FLOOD, FR OM WHICH BOOKS OF ACCOUNT ARE ALSO RETRIEVED AND AUDIT ED ACCOUNTS WERE SUBMITTED. THE LD. CIT(APPEALS), HOWEVER, DID NOT ADMIT THE ADDITIONAL EVIDENCE IN T HE FORM OF BOOKS OF ACCOUNT AND LEDGER BECAUSE NO EVID ENCE WITH REGARD TO CLAIM MADE BEFORE INSURANCE COMPANY OR OTHER AUTHORITY WAS PRODUCED. NO FIR HAS BEEN LODG ED. THE ORDER OF THE TRIBUNAL CANCELING THE PENALTY ON THE SAME REASON WAS ALSO NOT CONSIDERED FAVOURABLY. 23. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT SUBSCRIBE TO THE VIEW OF THE LD. CIT(APPEALS) I N REFUSING TO ADMIT ADDITIONAL EVIDENCE IN THE FORM O F CASH BOOK AND LEDGER. THE ASSESSEE HAS FILED PAPER REPO RT ABOUT FLOODS IN AMBALA AT PAGE 48-49 AND ALSO REFER RED TO ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF AN IL KUMAR ETC. IN ITA 141/2012 ETC. VIDE ORDER DATED 28.03.2012, THE TRIBUNAL ON THE SAME REASON OF HEAV Y FLOODS IN AMBALA REGION, CANCELLED THE PENALTY U/E 272B OF THE INCOME TAX ACT. THESE DOCUMENTS HAVE NOT BE EN REBUTTED THROUGH ANY EVIDENCE AND EVEN LD. CIT(APPE ALS) HAS NOT GIVEN ANY FINDINGS AGAINST THESE EVIDENCES FILED BY THE ASSESSEE. THEREFORE, FACT OF FLOODS IN 2010 IN AMBALA HAS NOT BEEN DISPUTED. THEREFORE, THE CONTEN TION OF THE ASSESSEE IS CORRECT THAT DUE TO DAMAGE OF TH E RECORD OF ASSESSEE IN FLOOD IN AMBALA, BOOKS OF ACC OUNT COULD NOT BE PRODUCED BEFORE ASSESSING OFFICER. FURTHER, ALL REMAINING ADDITIONS HAVE BEEN MADE 18 BECAUSE OF NON-PRODUCTION OF BOOKS OF ACCOUNT AND LEDGER. WHEN THE ASSESSEE HAS BEEN ABLE TO RETRIEV E SOME OF THE DATA FROM COMPUTER DAMAGED IN THE FLOOD AND BOOKS OF ACCOUNT WERE ALSO RETRIEVED, THE LD. CIT(APPEALS) SHOULD HAVE CONSIDERED THE SAME IN FAV OUR OF THE ASSESSEE BECAUSE THE BOOKS OF ACCOUNT AND LE DGER ACCOUNT WOULD GO TO THE ROOT OF THE MATTER TO DECID E THE ISSUE ONCE FOR ALL. THE BOOKS OF ACCOUNT AND LEDGE R ARE RELEVANT, NECESSARY AND VITAL DOCUMENTS FOR DECIDIN G THE ISSUES ON MERIT. 23(I) THE HON'BLE SUPREME COURT IN THE CASE OF TEK RAM 262 CTR 118 HELD THAT ADDITIONAL EVIDENCE ADMITTED AS RELEVANT AND REQUIRED TO BE LOOKED INTO. HON'BLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS MUKTA ME TAL WORKS 336 ITR 555 HELD AS UNDER : (II) THAT THE REPORT OF THE FORENSIC SCIENCES LABOR ATORY WAS A RELEVANT MATERIAL AND SO WAS THE AFFIDAVIT OF THE S EARCHED PERSON. THE ADDITIONAL EVIDENCE WAS NECESSARY FOR J UST DECISION OF THE MATTER. THE TRIBUNAL WAS NOT JUSTIFIED IN DECLINING TO CONSIDER THE ADDITIONAL EVIDENCE COMPR ISING THE OPINION OF THE LABORATORY OF THE GOVERNMENT EXAMINE R AND ALSO THE AFFIDAVIT OF THE AUTHOR OF THE DIARY, THOUGH TH E DOCUMENTS HAD A DIRECT BEARING ON THE ISSUE. 24. SINCE THE BOOKS OF ACCOUNT AND LEDGER PRODUCED BEFORE LD. CIT(APPEALS) BEING ADDITIONAL EVIDENCE, WERE NECESSARY FOR JUST DECISION IN THE MATTER, THEREFOR E, THESE ADDITIONAL EVIDENCES HAVE DIRECT BEARING ON T HE 19 MATTER IN ISSUE. THEREFORE, LD. CIT(APPEALS) WAS NO T JUSTIFIED IN REFUSING TO ADMIT THESE ADDITIONAL EVI DENCES AT FIRST APPELLATE STAGE. WE, ACCORDINGLY, SET ASI DE THE ORDER OF THE LD. CIT(APPEALS) AND ADMIT THE ADDITIO NAL EVIDENCES I.E. THE CASH BOOK AND LEDGER. THESE SHA LL HAVE TO BE LOOKED INTO BY THE ASSESSING OFFICER BEC AUSE THE SAME WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER. IN THIS REGARD, WE WILL DECIDE THE MATTER AFTER CONSIDERING THE ISSUES ON MERITS. THUS, ADDITIONAL GROUNDS OF APPEAL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 25. THE REMAINING GROUNDS ARE CHALLENGING STATUS AS AOP, COMPUTATION OF INCOME BY APPLYING PROFIT RATE AT 35%, DENIAL OF EXEMPTION UNDER SECTION 10(23C)(IIIA D) OF THE ACT AND ADDITIONS ON ACCOUNT OF CASH CREDITS/CO RPUS FUNDS. 25(I) ALL THESE GROUNDS WERE REJECTED BY THE AUTHOR ITIES BELOW BECAUSE OF THE NON-PRODUCTION OF THE BOOKS OF ACCOUNT AND LEDGER. ALL THESE GROUNDS DEPEND UPON EXAMINATION OF THE BOOKS OF ACCOUNT AND LEDGER ON WHICH WE HAVE ADMITTED THE ADDITIONAL EVIDENCE, THEREFORE, THE MATTER SHALL HAVE TO BE LOOKED INTO BY THE ASSESSING OFFICER BY EXAMINING THE BOOKS OF ACCOUNT AND LEDGER ACCOUNT. FURTHER, THE ASSESSEE IS REGISTERE D SOCIETY W.E.F. 04.12.2002 AS WAS REGISTERED WITH REGISTRAR OF SOCIETIES. ADMITTEDLY, THE TOTAL RECE IPTS OF 20 THE ASSESSEE WERE BELOW RS. 1 CR. FURTHER, IN THE C ASE OF CHILDRENS SOCIETY 358 ITR 373, THE HON'BLE KARNATA KA HIGH COURT HAS HELD THAT RECEIPT OF EACH INSTITUTI ON TO BE CONSIDERED. ADMITTEDLY, THE RECEIPTS OF THE AS SESSEE IN EACH INSTITUTION ARE LESS THAN RS. 1 CR, THEREFO RE, ASSESSEE SOCIETY CAN CLAIM EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE INCOME TAX ACT. IN THE SAME JUDGEMENT, HON'BLE KARNATAKA HIGH COURT HELD THAT SOCIETY IS A JUDICIAL PERSON, THEREFORE, TAKING STA TUS OF AOP WOULD NOT BE JUSTIFIED. FURTHER, THE LD. CIT WHILE CONSIDERING REGISTRATION UNDER SECTION 12AA HAS HEL D THAT ASSESSEE IS EDUCATIONAL SOCIETY AND EVEN IN TH E REASONS FOR RE-OPENING OF THE ASSESSMENT, ASSESSING OFFICER NOTED THAT ASSESSEE IS AN EDUCATIONAL SOCIE TY FUNCTIONING SINCE 04.12.2002. THEREFORE, THESE FAC TS CLEARLY SHOW THAT ASSESSEE IS REGISTERED SOCIETY AN D RUNNING EDUCATIONAL INSTITUTION, THEREFORE, ASSESSE E SOLELY EXISTS FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. THIS FACT IS ALSO CONSIDERED BY LD. CIT WHILE GRANTING REGISTRATION UNDER SECTION 12AA OF T HE ACT AND AS SUCH, ASSESSEE WOULD BE ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON DECISION O F DELHI HIGH COURT IN THE CASE OF CIT V ASSOCIATION O F FINANCIAL PLANNERS IN ITA 454 OF 2010 AND ITA 513 O F 2010 DATED 11.07.2011 COPY OF WHICH IS PLACED ON RECORD WHICH SUPPORT THE CLAIM OF THE ASSESSEE OF EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. THUS, 21 THERE WAS NO JUSTIFICATION TO ESTIMATE INCOME OF TH E ASSESSEE BY APPLYING PROFIT RATE OF 35%. SINCE ASS ESSEE EXIST SOLELY FOR EDUCATIONAL PURPOSES, THEREFORE, C ORPUS FUNDS IN THE NAME OF BUILDING FUND WOULD NOT BE ADD ED UNDER SECTION 68 OF THE ACT. HOWEVER, WITHOUT PREJ UDICE TO THE ABOVE, WE ARE OF THE VIEW SINCE THE BOOKS OF ACCOUNT AND LEDGER HAVE BEEN ADMITTED AS ADDITIONAL EVIDENCE AND ALL THESE ISSUES DEPEND UPON THE EXAMINATION OF THE BOOKS OF ACCOUNT AND LEDGER ACCO UNT, THEREFORE, IT WOULD BE REASONABLE AND PROPER TO RES TORE ALL THESE ISSUES TO THE FILE OF ASSESSING OFFICER W ITH DIRECTION TO RE-DECIDE THE SAME ON EXAMINATION OF T HE BOOKS OF ACCOUNT AND LEDGER IN THE LIGHT OF PROVISI ONS OF SECTION 10(23C)(IIIAD) OF THE INCOME TAX ACT. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BE LOW IN ASSESSMENT YEAR 2007-08, 2008-09, 2009-10 AND 2010- 11 AND RESTORE ALL THE ISSUES ON MERITS TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE ALL T HESE ISSUES ON MERITS STRICTLY IN ACCORDANCE WITH LAW BY GIVING REASONABLE, SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHALL PRODUCE BOOKS OF ACCOUNT AND LEDGER WITH ALL SUPPORTING DOCUMENTS BEFORE ASSESSING OFFICER FOR FINALIZATION OF THESE ISSUES. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE ASSE SSING OFFICER. 25(II) IN VIEW OF THE ABOVE, THESE GROUNDS OF APPE AL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 22 26. THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 TO 2010-11 ARE ACCORDINGLY, ALLOWED FOR STATISTICAL PURPOSES. 27. IN THE RESULT, APPEALS OF THE ASSESSEE IN ASSESSMENT YEAR 2005-06 AND 2006-07 ARE ALLOWED. HOWEVER, REMAINING APPEALS OF THE ASSESSEE IN ASSESSMENT YEAR 2007-08 TO 2010-11 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAI NI) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 27 TH NOVEMBER,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH