M/S GARIB NAWAJ MAHILA AVAM BALKALYAN SAMITI, AJMER V. INCOME TAX OFFICER (EXEMPTION), AJMER

ITA 385/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9664 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL CIT DHK
• Assessee Lawyers: FAZLUR REHMAN
• Keywords: Charitable institution; Corroborative evidences; Set aside
• Section: 143(3); 244A; 234B; 12AA; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B, JAIPUR JH JES'K LH- 'KEKZ] YS[KK LNL; ,O A H JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA-@ ITA NO. 385/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. M/S. GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, DARGAH BAZAR, AJMER. CUKE VS. THE INCOME TAX OFFICER (EXEMPTION), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.AAATG 4740 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADVOCATE) & SHRI FAZLUR REHMAN (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16.04.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 20/06/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 17.01.2018 OF LD. CIT (A), AJMER FOR THE ASSESSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE IN THE ORDER U/S 143(3) DATED 28.04.2016 ARE BAD IN LAW AND ON F ACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER RE ASONS AND HENCE THE SAME KINDLY BE DELETED. 2. RS. 87,55,751/- : THE LD. CIT (A) ERRED IN LAW A S WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS. 87,55,751/- [37% OF RS. 2,36,64,193/-] AS MADE BY T HE AO ON ESTIMATION BASIS. THE DISALLOWANCE SO MADE & CONFIR MED BY THE LD. CIT (A) IS CONTRARY TO THE PROVISIONS OF LAW AN D FACTS HENCE, KINDLY BE DELETED AND DIRECTED TO BE ALLOWED IN FUL L, AS CLAIMED. 2 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. 3. RS. 1,53,982/- : THE LD. CIT (A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS. 1,53,982/- [30% OF RS. 5,35,992/- AGAINST THE GRANT RECEIVED] AS MADE BY THE AO ON ESTIMATION BASIS. THE DISALLOW ANCE SO MADE & CONFIRMED BY THE LD. CIT (A) IS CONTRARY TO THE PROVISIONS OF LAW AND FACTS HENCE, KINDLY BE DELETE D AND DIRECTED TO BE ALLOWED IN FULL, AS CLAIMED. 4. RS. 58,167/- : THE LD. CIT (A) ERRED IN LAW AS W ELL AS ON THE FACTS OF THE CASE IN DENYING THE EXEMPTION OF RS. 5 8,167/- U/S 11(1) OF THE I.T. ACT AS MADE BY THE AO. THE DENIAL SO MADE & CONFIRMED BY THE LD. CIT (A) IS CONTRARY TO THE PRO VISIONS OF LAW AND FACTS HENCE, THE EXEMPTION BE DIRECTED TO BE AL LOWED IN FULL, AS CLAIMED. 5. THE LD. AO FURTHER ERRED IN LAW AS WELL AS ON TH E FACTS OF THE CASE IN CHARGING INTEREST U/S 234B & 234D OF THE AC T AND AS ALSO IN WITHDRAWING INTEREST U/S 244A OF THE ACT. THE A PPELLANT TOTALLY DENIES ITS LIABILITY OF CHARGING AND WITHDR AWAL OF ANY SUCH INTEREST. THE INTEREST SO CHARGED/WITHDRAWN, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 6. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO A DD, AMEND OR ALTER OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEF ORE THE DATE OF HEARING. 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 1 AND THE SAME M AY BE DISMISSED AS NOT PRESSED. THE LD. D/R HAS RAISED NO OBJECTION IF THE GROUND NO. 1 OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. ACCORDINGLY, G ROUND NO. 1 OF THE ASSESSEES APPEAL IS DISMISSED BEING NOT PRESSED. GROUND NO. 2 IS REGARDING DISALLOWANCE OF EXPENDITU RE INCURRED IN RESPECT OF OTHER INCOME. 3. THE ASSESSEE SOCIETY IS REGISTERED WITH THE REGI STRAR OF SOCIETIES SINCE 1980. THE ASSESSEE IS ALSO REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 VIDE 3 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. REGISTRATION NO. CIT(JUDL.)/SEC12A(A)/UDR/99-2000/1 995 DATED 15.03.2000. THE OBJECT OF THE TRUST IS DOING ACTIVITIES FOR WOMEN A ND CHILDREN DEVELOPMENT BY PROTECTING OF WOMEN FROM DOMESTIC VIOLENCE AND PROH IBITION OF CHILD MARRIAGE. THE SAMITI IS ALSO RUNNING GARIMA PROGRAMME FOR WOMEN H EALTH. THE SAMITI IS CREATING AWARENESS OF THE HARMFUL EFFECTS OF CHILD LABOUR ON THE DEVELOPMENT OF A CHILD AND RAISING OF PUBLIC AWARENESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS SHOWN A SUM OF RS. 2,37 ,39,466/- IN THE INCOME & EXPENDITURE ACCOUNT UNDER THE HEAD INCOME FROM OTHE R SOURCES. AGAINST THIS INCOME, THE ASSESSEE HAS SHOWN AN EXPENDITURE OF RS . 2,36,64,193/-. THE AO ASKED THE ASSESSEE TO GIVE THE SOURCE OF INCOME WHICH HAS BEEN CLASSIFIED UNDER THE HEAD INCOME FROM OTHER SOURCES AND ALSO ASKED TO SUBMIT THE DETAILS OF EXPENSES SO INCURRED AGAINST THE SAID INCOME. THE AO OBSERVED THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE ON VARIOUS HEADS IS EXCESSIVE IN HIS O PINION. ACCORDINGLY, THE AO PROPOSED TO DISALLOW 37% OF THE EXPENDITURE INCURRE D ON TRAINING AGAINST THE INCOME FROM OTHER SOURCES. FINALLY, THE AO HAS DISALLOWED 37% OF THE EXPENDITURE AMOUNTING TO RS. 87,55,751/- ON THE GROUND OF ABSEN CE OF EXAMINATION OF BOOKS OF ACCOUNTS AND ANY CONCRETE EVIDENCE IN SUPPORT OF TH E CLAIM. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE HAS DULY PRODUCED THE BOOKS OF ACCOUNT AND ALL OTHER SU PPORTING EVIDENCE BEFORE THE AO. HE HAS ALSO REFERRED THE REMAND REPORT AS WELL AS THE LETTER FILED BY THE ASSESSEE DURING THE REMAND PROCEEDINGS TO SHOW THAT THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT, THOUGH THE PARTY-WISE ACCOUNTS IN RESPECT OF THE TRAINING WERE NOT 4 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. MAINTAINED AS IT IS CONDUCTED AT DIFFERENT PLACES O F DIFFERENT DISTRICTS. HE HAS ALSO EXPLAINED THE REASONS FOR MAKING THE PAYMENT IN CAS H BECAUSE THE TRAINING WAS CONDUCTED AT DIFFERENT PLACES IN THE REMOTE AREAS A ND, THEREFORE, INSTANT PAYMENT ON THE SPOT WAS MADE IN CASH. THE LD. A/R HAS FURTHER CONTENDED THAT THE ASSESSEE IS DOING THE CHARITY WORK, WHICH ARE ASSIGNED BY THE S TATE GOVERNMENT OF RAJASTHAN AND ALL THE EXPENSES ARE BEING VERIFIED AT DIFFEREN T STAGES AND WERE ALSO INCURRED. THEREAFTER, THE SAME ARE REIMBURSED BY THE STATE GO VERNMENT. THUS THE EXPENSES ARE VERIFIED BY THE GOVERNMENT AUTHORITIES INCLUDIN G THE HEAD OF THE GEN GRAM PANCHAYAT, ACCOUNTANT OF CONCERNED GRAM PANCHAYAT. THE LD. A/R HAS REFERRED THE REMAND REPORT AND SUBMITTED THAT IN THE REMAND REPO RT THE AO HAS ACCEPTED THE FACT OF PRODUCTION OF BOOKS OF ACCOUNT ALONG WITH T HE BILLS AND VOUCHERS. THEREFORE, THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY TH E LD. CIT (A) IS CONTRARY TO THE RECORD AND FACTS. 5. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE EXPENDITURES WERE NOT SUBSTANTIATED BY VERIFIABLE SUPPORTING VOUCHERS. TH EREFORE, IN THE ABSENCE OF SUPPORTING EVIDENCE, THE AO HAS MADE A DISALLOWANCE BY ALLOWING THE REASONABLE EXPENDITURE FOUND TO BE INCURRED AGAINST EACH ITEM. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS DOUBTED THE CORRECTNESS OF THE C LAIM OF EXPENDITURES INCURRED BY THE ASSESSEE AGAINST THE WATERSHED DEVELOPMENT WORK DONE BY THE ASSESSEE ON BEHALF OF THE STATE GOVERNMENT. THE AO IN THE ASSES SMENT ORDER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED THE EXPENDITURE ON ACCOUNT OF FOOD @ RS. 75/- PER PERSON 5 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. WHEREAS IN THE OPINION OF THE AO THE FOOD WAS NOT M ORE THAN RS. 40/- PER PERSON. ACCORDINGLY, THE AO ESTIMATED THE EXPENDITURE ON LU NCH @ RS. 55/- PER PERSON. SIMILARLY, THE AO HAS ESTIMATED THE EXPENDITURE IN RESPECT OF STATIONARY AND OTHER ITEMS AND FINALLY DISALLOWED 37% OF THE TOTAL EXPEN DITURE SHOWN BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT IN CASE THE ASSESSEE HAS NOT PRODUCED THE SUPPORTING BILLS AND VOUCHERS, THEN THE SAME COULD HAVE BEEN VERIFIE D FROM THE CONCERNED PERSON TO WHOM THE ASSESSEE HAS PAID THE SAID AMOUNT ON VARIO US ITEMS. FURTHER, THE AO AS WELL AS THE LD. CIT (A) HAS ASSIGNED THE REASONS FO R DISALLOWANCE AS NON PRODUCTION OF BOOKS OF ACCOUNT WHEREAS THE ASSESSEE HAS CLAIME D THAT IT HAD PRODUCED BOOKS OF ACCOUNTS ALONG WITH THE AUDIT REPORT IN FORM NO. 10 B. THUS THERE ARE CONTRARY CLAIMS REGARDING PRODUCTION OF BOOKS OF ACCOUNT AND DESPITE THIS FACT IS MENTIONED IN THE REMAND REPORT, THE LD. CIT (A) AGAIN HELD THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT AND BILLS AND VOUCHERS IN SUPPORT OF THE EXPENSES CLAIMED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE MADE BY THE AO @ 37% OF THE EXPENDITUR E IS WITHOUT ANY PROPER BASIS AS THE AO HAS NOT APPLIED ANY REASONABLE CRITERIA O R ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS INFLATED THE EXPENDITURE. FURTHER, SI NCE THE ASSESSEE HAS CLAIMED TO HAVE PRODUCED THE BOOKS OF ACCOUNT ALONG WITH THE A UDIT REPORT, THEN THIS FACT IS ALSO REQUIRED TO BE VERIFIED. HENCE IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS ASPECT TO THE RECORD OF THE AO TO CONDUCT A PROPER ENQUIRY AND THEN DECIDE THE ISSUE AS PER LAW AND NOT TO RESORT IN MAKING SOME ADHOC DISALLOW ANCE WITHOUT ANY BASIS. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN AN OPPORTUNI TY OF HEARING. 6 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. GROUND NO. 3 IS REGARDING DISALLOWANCE OF EXPENDITU RE @ 30% AGAINST THE GRANT RECEIVED FROM THE STATE GOVERNMEN T. 7. THE ASSESSEE HAS SHOWN RECEIPT OF GRANT OF RS. 5 ,35,992/- AGAINST WHICH IT HAS CLAIMED AN EXPENDITURE OF RS. 5,10,940/-. THE A O ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND DETAILS OF EXPENDI TURE INCURRED SUPPORTED BY BILLS AND VOUCHERS. THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE SUPPORTING EVIDENCE. ACCORDINGLY, THE AO HAS MADE A DISALLOWANCE OF 30% OF THE EXPENDITURE AMOUNTING TO RS. 1,53,282/-. THE LD. CI T (A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE AO. 8. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE AO HAS MADE AN ADHOC DISALL OWANCE ON THE GROUND OF NON PRODUCTION OF BOOKS OF ACCOUNT AND SUPPORTING EVIDE NCE WHEREAS THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS DOING THE WORK UNDER THE WELFARE PROGRAMME OF THE STATE GOVERNMENT AND, THEREFORE, EACH AND EVERY EXP ENDITURE ARE SUBJECT TO VERIFICATION BY VARIOUS GOVERNMENT AUTHORITIES. THE BILLS AND VOUCHERS WERE ALSO SUBJECT TO VERIFICATION OF THE AUTHORITIES. THUS TH E DISALLOWANCE IS MADE ONLY ON THE SUSPICION WITHOUT GIVING A FINDING THAT THE CLAIM O F THE ASSESSEE IS BOGUS. SINCE WE HAVE ALREADY SET ASIDE THE ISSUE OF DISALLOWANCE OF EXPENDITURE AGAINST THE INCOME FROM OTHER SOURCES, THEREFORE, THE SIMILAR DISALLOW ANCE MADE BY THE AO ON IDENTICAL GROUND IS ALSO REQUIRED TO BE VERIFIED AND CONSIDER ED AFRESH ON THE SAME TERMS AS DIRECTED IN RESPECT OF GROUND NO. 2. THE ISSUE IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER. 7 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. GROUND NO. 4 IS REGARDING DENIAL OF EXEMPTION UNDER SECTION 11(1) OF THE IT ACT OF RS. 58,167/-. 9. THE AO NOTED THAT AS PER INCOME AND EXPENDITURE ACCOUNT, THE ASSESSEE HAS SHOWN THE RECEIPT OF RS. 2,42,36,448/- AND AN AMOUN T OF RS. 2,41,75,133/- IS APPLIED FOR CHARITABLE PURPOSES. THE BALANCE AMOUN T OF RS. 61,315/- WAS CLAIMED AS ACCUMULATION @ 15%. THE AO PROPOSED TO ALLOW THE AC CUMULATION @ 15% OF RS. 61,315/- AS AGAINST THE GROSS RECEIPTS. ACCORDINGLY , THE AO HAS MADE A DISALLOWANCE OF RS. 58,167/-. THE LD. CIT (A) HAS CONFIRMED THI S DISALLOWANCE MADE BY THE AO OF DEDUCTION UNDER SECTION 11(1) OF THE IT ACT. 10. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/ R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE AO HAS NOT DISPUTED THE GR OSS RECEIPT OF THE ASSESSEE BEING THE INCOME DERIVED FROM PROPERTY HELD UNDER THE SOC IETY AT RS. 2,42,36,448/-. THE AO HAS ALSO NOT DISPUTED THE APPLICATION OF INCOME FOR CHARITABLE PURPOSES AT RS. 2,41,75,133/-. THE SURPLUS OF RS. 61,315/- WAS CLA IMED BY THE ASSESSEE AS WITHIN THE LIMITATION OF 15% AS PER SECTION 11(1)(B) OF TH E IT ACT. WE FIND THAT THE AO HAS MIS-CONCEIVED THE PROVISIONS OF SECTION 11(1)(C) OF THE ACT. IF THE ACCUMULATION IS NOT IN EXCESS OF 15% OF GROSS INCOME, THE SAME CANN OT BE TREATED AS NON APPLICATION OF INCOME FOR CHARITABLE PURPOSES THOUG H THE ASSESSEE IS REQUIRED TO APPLY THE SAID ACCUMULATED AMOUNT WITHIN THE SPECIF IED PERIOD AS PER THE PROVISIONS OF SECTION 11 OF THE ACT. THE AO HAS ALLOWED THIS ACCUMULATION @ 15% ONLY ON THE SURPLUS AMOUNT WHICH IS NOT THE CORRECT INTERPRETAT ION OF THE PROVISIONS OF SECTION 11(1)(B) OF THE ACT. ACCORDINGLY, ONCE THE SAID AM OUNT OF RS. 61,315/- IS NOT EXCEEDING 15% OF THE GROSS INCOME EARNED FROM THE P ROPERTY HELD UNDER THE 8 ITA NO. 385/JP/2018 GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. SOCIETY, THEN NO DISALLOWANCE IS CALLED FOR FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ADDITION MADE BY THE AO IS DELETED . 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20/06/2 019. SD/- SD/- ( JES'K LH- 'KEKZ ) ( FOT; IKY JKWO (RAMESH C. SHARMA ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 20/06/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. GARIB NAWAJ MAHILA AVAM BAL KALYAN SAMITI, AJMER. 2. THE RESPONDENT THE ITO (EXEMPTIONS), AJMER. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 385/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR