I.T.O.-2(1), Agra V. M/s Lala Ram Champa Devi, Agra

ITA 391/AGR/2010

• Counselvise Citation: 39120314 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Rejection of books of accounts; Depreciation; Deemed to accrue or arise in india; Corroborative evidences
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 391/AGRA/2010 ASSTT. YEAR : 2006-07 INCOME-TAX OFFICER, VS. M/S. LALA RAM CHAMPA DE VI SHIKSHA SAMITI, 2(1), AGRA. SIKANDARA ENCLAVE, SIKANDARA, AGRA . (PAN : AAATL 2074 M) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. D.R. FOR RESPONDENT : SHRI MRADUL PATHAK, C.A. DATE OF HEARING : 17.11.2011 DATE OF PRONOUNCEMENT : 22.11.2011 ORDER PER BENCH: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER DATED 02.06.2010 PASSED BY THE LD. CIT(A)-II, AGRA, ON THE FOLLOWING GROUNDS : 1. THAT THE CIT(A)-II, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.11,630/- MADE ON ACC OUNT OF INCOME FROM SALE OF DIARIES ETC., WITHOUT APPRECIATING THE FACT OF THE CASE THAT THE ASSESSEE HAS FAILED TO PROVE THE PROFIT ON SALE OF DIARIES, BELTS ETC. 2. THAT THE CIT(A)-II, AGRA HAS ERRED IN LAW AND O N THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.8,88,696/-- MADE ON ACC OUNT OF INCOME FROM BUS OPERATION WITHOUT APPRECIATING THE FACT THAT THE AS SESSEE HAS FAILED TO PROVE THE INCOME FROM BUS OPERATION. 3. THAT THE ORDER OF THE CIT(A)-II, AGRA IS ERRON EOUS IN LAW AND ON FACTS OF THE CASE AND THAT THE ORDER OF THE A.O. BE RESTO RED. 2 2. THE ASSESSEE SOCIETY IS REGISTERED WITH THE REGI STRAR OF SOCIETIES AND FILED ITS RETURN OF INCOME ON 30.11.2006 DECLARING NIL INCOME AFTER C LAIMING EXEMPTION U/S 10(23C)(IIIAD). THE MAIN OBJECT OF THE SOCIETY IS TO IMPART EDUCATION. THE EDUCATIONAL INSTITUTIONS NAMELY HOLY NURSERY PUBLIC SCHOOL AND HOLY PUBLIC SECONDARY S CHOOL ARE RUNNING UNDER THE SOCIETY. IN RESPONSE TO NOTICE U/S 143(2) AND 142(1) THE ASSESS EE FILED WRITTEN REPLY, BOOKS OF ACCOUNTS, BILLS, VOUCHERS ETC. THE ASSESSEE ALSO FILED AUDITED BALAN CE SHEET AND INCOME & EXPENDITURE ACCOUNT ALONG WITH THE RETURN. AFTER EXAMINING THE SAME, TH E ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS INCLUDING THE ADDITIONS IN DISPUTE. THE ASSESSING OFFICER DISALLOWED EXEMPTION U/S. 10(23C)(IIIAD) OF THE ACT TO THE ASS ESSEE BY HOLDING THAT THE ASSESSEE IS NOT ESTABLISHED MERELY FOR THE EDUCATION PURPOSES AND A PPLIED THE FLAT RATE OF 30%. AGGRIEVED BY THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, T HE ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW THE REVENUE HAS FILED THE APPEALS AGAINST THE IMPUGNED ORDERS. 3. AT THE TIME OF HEARING, THE LD. DR RELIED UPON T HE ORDER PASSED BY THE ASSESSING OFFICER AND STATED THAT THE ADDITIONS IN DISPUTE HAVE WRONG LY BEEN DELETED BY THE LD. FIRST APPELLATE AUTHORITY, WHICH IS CONTRARY TO LAW AND FACTS ON TH E FILE. THEREFORE, THE IMPUGNED ORDER MAY BE CANCELLED AND THE ORDER OF ASSESSING OFFICER MAY BE RESTORED. 4. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED SMALL PAPER BOOK CONTAINING PAGE NO. 1 TO 32 IN WHICH HE HAS ATTACHED WRITTEN S UBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. 3 FIRST APPELLATE AUTHORITY, COPY OF REPLY FILED BEFO RE THE ASSESSING OFFICER IN RESPONSE TO THE QUERY ALONG WITH ITR, COMPUTATION AND AUDITED FINANCIAL S TATEMENTS, COPY OF CITS ORDER GRANTING REGISTRATION U/S 12A, COPY OF SOCIETY REGISTRATION CERTIFICATE, OBJECTS, BYE-LAWS AND LIST OF OFFICE BEARERS OF THE SOCIETY AND ENGLISH TRANSLATION OF T HE OBJECTS OF THE SOCIETY. HE STATED THAT KEEPING IN VIEW ALL THE EVIDENCE FILED BY THE ASSESSEE BEFO RE THE ASSESSING OFFICER, CIT(A) AS WELL AS BEFORE THIS BENCH IN THE SHAPE OF PAPER BOOK, THE I MPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY MAY BE UPHELD BY DISMISSING THE APPEAL OF THE REVENUE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. AS REGARDS THE FIRST ISSUE IN VOLVED IN THIS APPEAL RELATING TO ADDITION OF RS.11,630/- MADE ON ACCOUNT OF INCOME FROM SALE OF DIARIES ETC., THE LD. AO HAS REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) ON THE GROUND THAT THE NO SEPARATE BOOKS OF ACCOUNTS OR OTHER SUPPORTING EVIDENCES ARE MAINTAINED REGARDING SALE OF DIARIES ETC., HE HAS APPLIED THE PROVISIONS OF SECTION 44AF OF THE IT ACT AND TREATED THE ACTIV ITY OF SALE OF DIARIES AS RETAIL TRADE AND ESTIMATED THE SALES OF DIARIES AT RS.2,32,600/- BY ESTIMATING THE NET PROFIT OF RS.11, 630/- AT THE RATE OF 5% ON GROSS RECEIPTS OF RS.2,32,600/-. THE AO HAS MADE ADDITION OF RS.11630/- BY WORKING GROSS RECEIPTS OF RS.2,32,600/- BY ASSUMING SALE PRICE OF RS.200/- PER STUDENT FOR 1163 STUDENTS. THE RECEIPT ON ACCOUNT OF DIARY AND ITS P URCHASES WERE DULY REFLECTED IN THE INCOME & EXPENDITURE ACCOUNT OF THE SOCIETY. THE RECEIPT OF DIARY OF RS.21,725/- AND RS.15,850/- HAS BEEN INCLUDED IN FEES ACCOUNT UNDER INCOME & EXPENDITURE ACCOUNT OF HOLY PUBLIC SCHOOL AND HOLY PUBLIC SECONDARY SCHOOL RESPECTIVELY. EXPENS ES OF DIARY HAVE BEEN DEBITED TO PRINTING & STATIONERY ACCOUNT OF RESPECTIVE SCHOOLS UNDER INCO ME & EXPENDITURE ACCOUNT. THUS, THE RECEIPT AS WELL AS EXPENSES AGAINST THE DIARY ARE DULY SHOW N IN THE INCOME & EXPENDITURE A/C OF THE 4 SOCIETY. THUS, THE FINDING REACHED BY THE AO ABOUT NON-MAINTENANCE OF SEPARATE ACCOUNTS FOR DIARIES RECEIPTS ETC. IS NOT TENABLE ON THE FACTS O F THE CASE. THE DIARY RECEIPTS IS DULY INCLUDED IN THE REGULAR FEES RECEIPT OF EACH STUDENT IN ALL THE EDUCATIONAL INSTITUTIONS. THEREFORE, THE LD. A.O. HAS WRONGLY APPLIED THE PROVISIONS OF SECTION 145(3) AND WRONGLY ESTIMATED THE PROFIT U/S 44AF OF THE ACT. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS COUNT. 6. THE SECOND GROUND IS IN RESPECT OF DELETION OF A DDITION OF RS. 8,88,696/- MADE ON ACCOUNT OF INCOME FROM BUS OPERATION. A PERUSAL OF ASSESSM ENT ORDER REVEALS THAT THE A.O WHILE PASSING ASSESSMENT ORDER HAS OBSERVED THAT EXPENSES ON REPA IR AND MAINTENANCE OF BUS HAS BEEN CLAIMED AT RS. 56049/- AND DEPRECIATION ON BUS AT RS. 1,40 ,406/-. THE EXPENDITURE ON RUNNING OF BUSES HAS BEEN SHOWN AT RS.3,54,849/-. THUS, THE TOTAL EX PENSES OF RS. 5,51,304/- HAVE BEEN CLAIMED. THE A.O HAS ESTIMATED THE BUS INCOME ON THE ASSUMPT ION THAT AT LEAST 100 STUDENTS WERE USING SERVICES OF EACH BUS AND RS. 300/- WERE BEING CHARG ED FROM EACH CHILD AND HAS WORKED OUT THE GROSS RECEIPT FROM BUS OPERATION AT RS. 14,40,000/- . AFTER ALLOWING THE BUS EXPENSES OF RS. 5,51,304/-, AN INCOME OF RS. 8,88,696/- HAS BEEN W ORKED OUT AS PROFIT AND ADDITION HAS BEEN MADE ACCORDINGLY. A PERUSAL OF THE RECORD REVEALS T HAT THAT THE ADDITION HAS BEEN MADE MERELY ON ESTIMATE BASIS WITHOUT ANY SUPPORTING EVIDENCES AGA INST THE SOCIETY. IT WAS FOUND THAT THE RECEIPTS AND EXPENSES ON THIS ACCOUNT WERE DULY REF LECTED IN THE AUDITED INCOME & EXPENDITURE ACCOUNT OF THE SOCIETY. THE LD. A.O. HAS GROSSLY ER RED ON FACTS IN REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING THE INCOME FROM BUS OPERATIONS. THE LD. CIT(A) FURTHER HELD THAT EVEN IF SUCH DEEMED INCOME WAS ADDED TO THE TOTAL RECEIPTS OF S OCIETY, THE TOTAL RECEIPTS WOULD STILL REMAIN LESS THAN RS.1 CRORE, AND THE ASSESSEES CASE WOULD STILL BE COVERED BY THE PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE ACT AND HENCE THERE WOULD BE NO REVENUE IMPLICATION. IT IS ALSO NOTABLE THAT 5 THE REVENUE HAS NOT ASSAILED THE EXEMPTION U/S. 10( 23C)(IIIAD) ELIGIBLE TO THE ASSESSEE IN THE PRESENT APPEALS. NO CONTRARY EVIDENCE IS BROUGHT ON RECORD TO REBUT THE FINDINGS REACHED BY THE LD. CIT(A) ON THIS COUNT. WE, THEREFORE, FIND NO RE ASON TO INTERFERE IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WHICH DESERVES TO BE CONFIRMED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.11.2011. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND NOVEMBER, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY