I.T.O.-2(1), Agra V. M/s Haresh & Smt. Tara Shiksha Samiti, Agra

ITA 392/AGR/2010

• Counselvise Citation: 39220314 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; Unexplained investment; Depreciation; Corroborative evidences; Tax effect
• Section: 142(1); 12A

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. 392/AGRA/2010 ASSTT. YEAR : 2006-07 INCOME-TAX OFFICER, VS. M/S. SHRI HARESH & SMT. TARA SHIKSHA SAMITI, 2(1), AGRA. (OLD NAME HOLI PUBLIC SHIKSHA SAM ITI) SECTOR-4, AVAS VIKAS COLONY, AGRA. (PAN : AAATH 2150 C) (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.13,730/- ON ACCOUNT OF INCOME FROM SALE OF DIARIES ETC., WITHOUT APPRECIATING THE FACT OF THE CASE THA T THE BOOKS OF ACCOUNTS OF THE ASSESSEE REJECTED UNDER SECTION 145(3) OF THE I.T. ACT. 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.2,96,427/- MADE ON ACCO UNT OF DISALLOWANCE OF INCOME FROM BUS OPERATION, WITHOUT APPRECIATING THE FACTS OF THE CASE THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE REJECTED UNDER SECTION 145( 3) OF THE I.T. ACT. 3. THAT THE CIT(A)-II, AGRA HAS ERRED IN LAW AND O N THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,81,630/- ON ACCOUNT O F UNEXPLAINED INVESTMENT MADE OUT OF BOOKS IN CONSTRUCTION OF SCHOOL BUILDING WI THOUT APPRECIATING THE FACTS THAT DVO ESTIMATED THE VALUE OF CONSTRUCTION AT RS.5,67, 798/- AS AGAINST DISCLOSED INVESTMENT OF RS.3,86,168/-, THE DIFFERENCE OF DVO S ESTIMATED INVESTMENT AND ASSESSEES DISCLOSED INVESTMENT COMES TO RS.1,81,63 0/- WHICH CANNOT BE SAID TO BE WITHIN TOLERANCE AS PER THE PREVALENT JUDICIAL OPTI ONS. 2 4. 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. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR DELET E OR ALTER OR MODIFY ANY GROUND DURING APPEAL PROCEEDINGS. 6. APPEAL ON THE SAME ISSUE HAS BEEN FILED IN THE A SSESSMENT YEAR 2005-06 IN WHICH TAX EFFECT IS MORE THAN 2 LAKHS. APPEAL IN TH IS YEAR IS BEING PREFERRED TREATING THE ORDER OF CIT(A)-II, AGRA AS COMPOSITE ORDER. 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 PUBLIC GIRLS SCHOOL AND HOLY PUBLIC JUNIOR COLLEG E ARE RUNNING UNDER THE SOCIETY. THE ASSESSEE SOCIETY HAS ALSO BEEN GRANTED REGISTRATION U/S 12A W.E.F., 01.04.2003. IN RESPONSE TO NOTICE U/S 143(2) AND 142(1) THE ASSESSEE FILED WRI TTEN REPLY, BOOKS OF ACCOUNTS, BILLS, VOUCHERS ETC. THE ASSESSEE ALSO FILED AUDITED BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT ALONG WITH THE RETURN. AFTER EXAMINING THE SAME, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS INCLUDING THE ADDITIONS IN DISPUT E. THE ASSESSING OFFICER DISALLOWED EXEMPTION U/S. 10(23C)(IIIAD) OF THE ACT TO THE ASSESSEE BY H OLDING THAT THE ASSESSEE IS NOT ESTABLISHED MERELY FOR THE EDUCATION PURPOSES AND APPLIED THE F LAT RATE OF 30%. AGGRIEVED BY THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER PARTLY ALLOWED TH E APPEAL OF THE ASSESSEE. NOW THE REVENUE HAS FILED THE APPEALS AGAINST THE IMPUGNED ORDER. 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 3 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 42 IN WHICH HE HAS ATTACHED WRITTEN S UBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. 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 DGITS ORDER U/S 10(2 3C)(VI) OF THE INCOME TAX ACT, 1961 AND COPY OF SOCIETY REGISTRATION CERTIFICATE, OBJECTS, BYE-LAWS AND LIST OF OFFICE BEARERS OF THE SOCIETY. HE STATED THAT KEEPING IN VIEW ALL THE EVIDENCE FIL ED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, CIT(A) AS WELL AS BEFORE THIS BENCH IN THE SHAPE OF PAPER BOOK, THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY MAY BE UPHELD BY DISMISSING THE APPEAL OF THE REVENUE. 5. WE HAVE HEARD THE BOTH PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. AS REGARDS THE FIRST ISSUE INVOLVED IN THIS APPEALS RE LATING TO ADDITION OF RS.13,730/- 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 A PPLIED THE PROVISIONS OF SECTION 44AF OF THE IT ACT AND TREATED THE ACTIVITY OF SALE OF DIARIES AS RETAIL TRADE AND ESTIMATED THE SALES OF DIARIES AT RS.2,74,600/- AND ESTIMATED A NET PROFIT OF RS.13,7 30/- BY APPLYING A NET PROFIT RATE OF 5% ON GROSS RECEIPTS OF RS.2,74,600/-. THE AO HAS MADE A DDITION OF RS.13730/- BY WORKING GROSS RECEIPTS OF RS.2,74,600/- BY ASSUMING SALE PRICE OF RS.200/- PER STUDENT FOR 1373 STUDENTS. THE 4 RECEIPT ON ACCOUNT OF DIARY AND ITS PURCHASES WERE DULY REFLECTED IN THE INCOME & EXPENDITURE ACCOUNT OF THE SOCIETY. THE RECEIPT OF DIARY OF RS. 17,550/- AND RS.13,550/- HAS BEEN INCLUDED IN FEES ACCOUNT UNDER INCOME & EXPENDITURE ACCOUNT OF HOLY PUBLIC JR. COLLEGE AND HOLY PUBLIC GIRLS SCHOOL RESPECTIVELY. EXPENSES OF DIARY HAVE BEEN DEBITED TO PRINTING & STATIONERY ACCOUNT OF RESPECTIVE SCHOOL UNDER INCOME & EXPENDITURE ACC OUNT IN THE EARLIER YEARS. THUS, THE RECEIPT AS WELL AS EXPENSES AGAINST THE DIARY ARE FOUND DUL Y SHOWN IN THE INCOME & EXPENDITURE A/C OF THE SOCIETY. THEREFORE, THE FINDINGS REACHED BY THE AO ABOUT NO RECEIPT FROM DIARIES ETC AND NON-MAINTENANCE OF ACCOUNTS OF DIARIES ETC ARE NO T TENABLE ON THE FACTS OF THE CASE. THE DIARY RECEIPTS IS DULY INCLUDED IN THE REGULAR FEES RECE IPT OF EACH STUDENT IN ALL THE EDUCATIONAL INSTITUTIONS. THEREFORE, THE LD. A.O. HAS WRONGLY A PPLIED THE PROVISIONS OF SECTION 145(3) AND WRONGLY ESTIMATED THE PROFIT U/S 44AF OF THE ACT. W E, 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. 2,96,427/- 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. 28,725/- AND DEPRECIATION ON BUS AT RS. 34, 848/-. THUS, THE TOTAL EXPENSES OF RS. 63,573/- HAVE BEEN CLAIMED. THE A.O HAS ESTIMATED THE BUS IN COME ON THE ASSUMPTION THAT AT LEAST 100 STUDENTS WERE USING SERVICES OF EACH BUS AND RS. 30 0/- WERE BEING CHARGED FROM EACH CHILD AND HAS WORKED OUT THE GROSS RECEIPT FROM BUS OPERATION AT RS. 3,60,000/-. AFTER ALLOWING THE BUS EXPENSES OF RS. 63,573/- AN INCOME OF RS. 2,96,427/ - HAS BEEN WORKED OUT AS PROFIT AND ADDITION HAS BEEN MADE ACCORDINGLY. A PERUSAL OF THE RECORD REVEALS THAT THAT THE ADDITION HAS BEEN MADE MERELY ON ESTIMATE BASIS WITHOUT ANY SUPPORTING EVI DENCES AGAINST THE SOCIETY. IT WAS FOUND THAT 5 THE RECEIPTS AND EXPENSES ON THIS ACCOUNT WERE DULY REFLECTED IN THE AUDITED INCOME & EXPENDITURE ACCOUNT OF THE SOCIETY. THE LD. A.O. HA S GROSSLY ERRED ON FACTS IN REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING THE INCOME FROM BUS OPER ATIONS. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH DESERVES TO BE UP HELD ON THIS ISSUE. 7. AS FAR AS THE DELETION OF ADDITIONS MADE ON ACCO UNT OF UNEXPLAINED INVESTMENTS OF RS.1,81,630/- IS CONCERNED, WE FIND THAT FROM FROM F.Y 2001-2002 TO 14.11.2007, THE DISCLOSED INVESTMENT IS RS. 84,67,097/-. THE ASSESSING OFFICE R REFERRED THE MATTER TO THE DVO U/S. 142A OF THE ACT AND THE REPORT OF THE DVO WAS PROVIDED TO T HE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS ACCORDING TO WHICH THE VALUE ESTIMATED STOOD AT RS.1,24,49,500/-. WE ALSO FIND THAT THE ASSESSEE RAISED CERTAIN OBJECTIONS ON THE DVOS REPORT BY SUBMITTING THE COMMENTS OF THE REGISTERED VALUER ON THE SAID REPORT IN SUPPORT. AS PER THE REGISTERED VALUER, THE COST OF CONSTRUCTION COMES TO RS.90,66,194. IN PRESENCE OF THESE FACTS, THE LD. CIT(A), AFTER CONSIDERING THE INVESTMENTS DISCLOSED BY THE ASSESSEE, REPORT O F THE DVO AND THE REGISTERED VALUER AS WELL AS THE OBJECTIONS TO THE DVOS REPORT, HAS HELD THAT T HE DIFFERENCE BETWEEN THE DISCLOSED INVESTMENT AND ESTIMATE OF REGISTERED VALUER COMES TO ABOUT RS .6,00,000/- WHICH HAS BEEN TREATED AS WITHIN THE TOLERABLE LIMIT. FOR THIS, THE LD. CIT(A) HAS R ELIED ON THE FOLLOWING DECISIONS K.P . VARGHESE VS.ITO 131 ITR 597(SC) CIT VS. ABEESON HOTELS (P) LTD. 191CTR 263 ACIT, CIRC.1 BHATINDA VS. DD COTTON (P) LTD.155 TAX MAN 219 SMT. SAROJ GUPTA VS. ITO 106 TTJ 1073 TITT , DELHI B BENCH ITO VS. RAM NATH AGARWAL 132 TAXMAN 178 8. THE LD. CIT(A) FURTHER HELD THAT EVEN IF SUCH DE EMED INCOME WAS ADDED TO THE TOTAL RECEIPTS OF RS.70,26,522/-, THE TOTAL RECEIPTS WOUL D STILL REMAIN LESS THAN RS.1 CRORE, AND THE ASSESSEES CASE WOULD STILL BE COVERED BY THE PROVI SIONS OF SECTION 10(23C)(IIIAD) OF THE ACT AND 6 HENCE THERE WOULD BE NO REVENUE IMPLICATION. IT IS ALSO NOTABLE THAT THE REVENUE HAS NOT ASSAILED THE EXEMPTION U/S. 10(23C)(IIIAD) ELIGIBLE TO THE A SSESSEE 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 REASON TO INTERFERE IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WHICH DESERVES TO BE CONFIRMED. 9. 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