Krishi Upaj Mandi Samiti, RAWLA V. ITO, SURATGARH

ITA 404/JODH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7979 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Charitable institution; Opportunity of being heard; Revised return
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBE AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO.404/JU/2011 ASSESSMENT YEAR: 2008-09 KRISHI UPAJ MANDI SIMITI, VS. THE ITO, RAWLA SURATGARH PAN NO. AABTK0473C ITA NO.405/JU/2011 ASSESSMENT YEAR: 2008-09 KRISHI UPAJ MANDI SIMITI, VS. THE ITO, ANOOPGARH SURATGARH PAN NO. AABTK0476H ITA NO.406/JU/2011 ASSESSMENT YEAR: 2008-09 KRISHI UPAJ MANDI SIMITI, VS. THE ITO, GHARSANA SURATGARH PAN NO. AABTK0466B ITA NO.407/JU/2011 ASSESSMENT YEAR: 2008-09 KRISHI UPAJ MANDI SIMITI, VS. THE ITO, JETSER SURATGARH PAN NO. AABTK0475E ITA NO.413/JU/2011 ASSESSMENT YEAR: 2008-09 KRISHI UPAJ MANDI SIMITI, VS. THE ITO, SRI BAJAYNAGAR SURATGARH PAN NO. AABTK0474F 2 & ITA NO. 03/JU/2012 ASSESSMENT YEAR: 2008-09 KRISHI UPAJ MANDI SIMITI (F&V), VS. THE ITO, WARD- 2, SRI GANGANAGAR SURATGARH PAN NO. AABTK0297Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GUPTA RESPONDENT BY : SHRI A.K.KHANDELWAL DATE OF HEARING : 12.12.2012 DATE OF PRONOUNCEMENT : 18.12.2012 ORDER PER N.K. SAINI ALL THESE APPEALS (EXCEPT ITA NO. 03/JU/2012) BY TH E ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 19. 9.2011 OF THE LD CIT(A), BIKANER WHILE ITA NO. 03/JU/2012 IS DIRECTED AGAINS T THE ORDER DATED 21.10.2011 OF CIT(A), BIKANER. 2. SINCE THE ISSUES INVOLVED IN ALL THESE APPEALS A RE COMMON AND APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. GROUND NO.1 IN ALL THE APPEALS (EXCEPT IN ITA NO .03/JU/2012) IS GENERAL IN NATURE, SO DO NOT REQUIRE ANY SPECIFIC C OMMENTS ON OUR PART. 3 4. GROUND NO.2 IN ALL THE APPEALS AND GROUND NO.1 I N ITA NO. 03/JU/2012 RELATES TO EXEMPTION OF 15% OF THE GROSS RECEIPTS. 5. AS REGARDS TO THIS ISSUE, THE LD. COUNSEL FOR TH E ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS COVERED BY THE EAR LIER DECISION OF THIS BENCH OF THE TRIBUNAL DATED 23.11.2012 IN ITA NOS. 438/JU /2011 & OTHERS FOR ASSESSMENT YEAR 2008-09 IN THE CASE OF KRISHI UPAJ MANDI SIMITI, DHAN MANDI, KESRISINGHPUR AND OTHERS VS. ITO, WARD-2, SR I GANGANAGAR. A COPY OF THE SAID ORDER WAS FURNISHED. 6. IN HIS RIVAL SUBMISSIONS, THE LD. DR ALTHOUGH CO ULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE ASSESSEE, HOWEVER, SUBM ITTED THAT AS PER RULE 17 OF THE INCOME TAX RULES, THE ASSESSEE IS REQUIRED T O GIVE THE NOTICE IN FORM NO.10 BUT NO SUCH EXERCISE WAS DONE BY THE ASSESSEE . IT WAS FURTHER STATED THAT THE SURPLUS AMOUNT WAS TO BE KEPT IN A SPECIF IED ACCOUNT TO CLAIM THE SET OFF BUT THIS WAS NOT DONE BY THE ASSESSEE, THER EFORE, THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING SET OFF OF ACCUMULATED EXCESS OF EXPENDITURE OVER I NCOME. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- A) CIT VS NAGPUR HOTEL OWNERS ASSOCIATION 247 ITR 201(BOM.) B) DIRECTOR OF INCOME TAX (EXEMPTION) VS TRUSTEE OF SINGHANIA CHARITABLE TRUST (1003) 199 ITR 819 7. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT THIS ISSUE HAS BEEN SENT BACK TO THE LD 4 CIT(A) VIDE AFORESAID REFERRED TO ORDER DATED 23.1 1.2012 AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 8 OF THE ORDER, WH ICH READ AS UNDER:- 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND MATERIAL ON RECORD, IT IS NOTICED THAT THE LD. CIT( A) WHILE ADJUDICATING THE ISSUE AGITATED BY THE ASSESSEE REFERRED TO SECT ION 11(2) OF THE ACT WHEREAS THE CLAIM OF THE ASSESSEE IS THAT EXEMPTION WAS CLAIMED UNDER SECTION 11(1)(A) OF THE ACT. IN THE INSTANT CASE, THE FACTS ARE NOT CLEAR BECAUSE THERE IS CONTRADICTION IN THE STAND TAKEN B Y BOTH THE PARTIES, AS THE CLAIM OF THE ASSESSEE IS THAT EXEMPTION WAS CLA IMED UNDER SECTION 11(1)(A) OF THE ACT WHILE THE LD. CIT(A) HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11(2) OF THE ACT. WE, THEREFORE, DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) TO BE ADJUDICATED AFRESH IN ACCORDAN CE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED T O ORDER DATED 23.11.2012 IN ITA NO. 438/JU/2011 & OTHERS FOR THE ASSESSMENT YEAR 2008-09 IN THE CASE OF KRISHI UPAJ MANDI SIMITI, KESRISINGHPUR AND OTHERS VS. ITO, SRI GANGANAGAR (SUPRA), THIS ISSUE IS SENT BACK TO THE FILE OF THE LD CIT(A). 8. VIDE GROUND NO.3 IN ALL THE APPEALS AND GROUND N O.2 IN ITA NO. 03/JU/012, THE GRIEVANCE OF THE ASSESSEE RELATES TO SET OFF OF ACCUMULATED EXCESS OF EXPENDITURE OVER INCOME OF EARLIER YEARS AGAINST SURPLUS OF CURRENT YEAR. 5 9. REGARDING THIS ISSUE, LD. COUNSEL FOR THE ASSESS EE AT THE VERY OUTSET SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE VIDE ORDER DATED 23.11.2012 IN ITA NO. 438/JU/2011 FOR THE ASS ESSMENT YEAR 2008-09 (SUPRA). THE LD. DR IN HIS RIVAL SUBMISSIONS RELIE D ON THE ORDERS OF THE AUTHORITIES BELOW. 10. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT AN IDENTICA L ISSUE HAS ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL VIDE ORDE R DATED 23.11.2012 IN ITA NO. 438/JU/2011 FOR THE ASSESSMENT YEAR 2008-09 IN THE CASE OF KRISHI UPAJ MANDI SIMITI, DHAN MANDI, KESRISINGHPUR & OTH ERS VS. ITO, WARD-2, SRI GANGANAGAR (SUPRA) AND THE RELEVANT FINDINGS HA S BEEN GIVEN IN PARAS 12 & 13 OF THE SAID ORDER, WHICH READS AS UNDER:- 12. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND MATERIAL ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HA VING SIMILAR FACTS HAS ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE T RIBUNAL IN THE ABOVE REFERRED TO ORDER DATED 1.9.2009 WHEREIN THE RELEVANT FINDING HAS BEEN GIVEN IN PARAS 6 & 7 OF THE SAID ORDER WHI CH READ AS UNDER:- 6. WE HAVE HEARD THE PARTIES AND HAVE CAREFULLY PE RUSED THE MATERIAL ON RECORD WITH REFERENCE TO SUB-RULE (6) O F RULE 18 OF APPELLATE TRIBUNAL RULES, 1963 AND THE PRECEDENTS C ITED AT BAR. THE HON'BLE APEX COURT IN GOETZE (INDIA) LTD (SUPRA) HA S CLARIFIED THAT THE ISSUE AS REGARDS MAKING OF FRESH CLAIM FOR DEDU CTION OTHERWISE THAN FILING REVISED RETURN IS LIMITED TO THE POWERS OF ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL U/S 254 OF IT ACT. FOLLOWING THIS RATIO, WE ARE SATISFIED T HAT WHEN THE APPELLATE AUTHORITY INCLUDING THE LD. CIT(A), ENTER TAINS A NEW CLAIM AS SUCH, THE JUDGMENT RENDERED BY HON'BLE APEX COUR T IN GOETZE (INDIA) LTD (SUPRA) DOES NOT IMPINGE ON HIS POWER T O ENTERTAIN THE CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING REVISE D RETURN BEFORE THE ASSESSING AUTHORITY. THE LD. CIT(A), THEREFORE, CAN NOT BE SAID TO HAVE 6 COMMITTED ANY ERROR IN ENTERTAINING THE CLAIM FOR D EDUCTION MADE BEFORE HIM AS SUCH. 7. AS REGARDS DIRECTION GIVEN BY THE LD. CIT(A) TO ALLOW SET OFF OF ACCUMULATED EXCESS OF EXPENDITURE OVER INCOME OF TH E YEAR UNDER CONSIDERATION, THE FACTS IN THE PRESENT APPEALS ARE AKIN TO THE FACTS AS WERE AVAILABLE BEFORE THE HIGH COURT OF JUDICATURE OF RAJASTHAN IN THE CASE OF CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION (SUPRA) WHEREIN IT HAS CLEARLY BEEN LAID DOWN THAT THE DEFICIT ARISING OUT EXCESS OF EXPENDITURE OVER INCOME IN THE PRECEDING YEAR SHOULD BE SET OFF AGAINST SURPLUS OF SUBSEQUENT YEAR, COMP UTING TAXABLE INCOME. IN THIS VIEW OF THE MATTER, THE JUDGMENT RE NDERED BY HON'BLE RAJASTHAN HIGH COURT IN SUBSEQUENT DECISION IN THE CASE OF SHRI AKHEY RAM ISHWARI PRASAD TRUST VS CIT (SUPRA)BEING AT VARIANCE, IS NOT APPLICABLE IN AS MUCH AS IN THAT THE CASE THE ASSESSEE WAS SEEKING EXEMPTION U/S 11(1)(A) OF IT ACT EVEN THOUG H HE HAD INCURRED EXCESSIVE EXPENDITURE OVER HIS INCOME FOR THE RELEV ANT ASSESSMENT YEAR IN WHICH SUCH EXEMPTION WAS BEING SOUGHT. THE REVENUE IS NOT PRECISELY ABLE TO SHOW THAT EXEMPTION U/S 11(1)(A) OF IT ACT STANDS DENIED IN EARLIER YEARS WHERE ASSESSEE CLAIMS TO HA VE INCURRED EXCESSIVE EXPENDITURE OVER ITS INCOME. SINCE THE LD . CIT(A) ACTED WITHIN THE REALM OF POWERS VESTED IN HIM AND ISSUE AT HAND IS COVERED BY JUDGMENT RENDERED BY HON'BLE RAJASTHAN HIGH COUR T IN MAHARANA OF MEWAR CHARITABLE FOUNDATION (SUPRA) NO INFIRMITY CAN BE SAID TO HAVE BEEN COMMITTED BY HIM IN ALLOWING S ET OFF OF ACCUMULATED EXCESS OF EXPENDITURE OVER INCOME OF YE AR UNDER CONSIDERATION IN ALL THE APPEALS BEFORE THE TRIBUNA L. GROUND RAISED BY REVENUE IN ALL THE APPEALS, THEREFORE, STANDS RE JECTED. 13. SO RESPECTFULLY FOLLOWING THE ABOVE REFERRED TO ORD ER DATED 1.9.2009 IN ITA NO.385/JU/2009 AND OTHERS FOR ASSESSMENT YEAR 2 006-07 IN THE CASE OF ITO, WARD 2, SRI GANGANAGAR AND OTHERS VS. KRISH I UPAJ MANDI SAMITI, RIDMALSAR AND OTHERS, THIS GROUND OF THE AS SESSEE IS ALLOWED. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED T O ORDER, THIS ISSUE IS ALLOWED IN FAVOUR OF THE ASSESSEE. 11. GROUND NO.4 IN ALL THE APPEALS (EXCEPT IN ITA N O.03/JU/2012, WHEREIN THIS ISSUE IS RAISED VIDE GROUND NO.3) RELA TES TO THE DENIAL OF THE 7 AMOUNT DEEMED TO BE APPLIED DURING THE PREVIOUS YEA R AS PER CLAUSE (2) OF EXPLANATION TO SECTION 11(1) OF THE ACT. 12. TO RESOLVE THIS CONTROVERSY, THE FACTS IN ITA N O. 406/JU/2011 IN THE CASE OF KRISHI UPAJ MANDI SIMITI GHARSANA ARE DISCU SSED, WHICH IN BRIEF ARE THAT THE ASSESSEE CLAIMED THAT AMOUNT OF RS. 28,8 7,708/- DEEMED TO BE APPLIED DURING THE PREVIOUS YEAR AS PER CLAUSE (2) OF THE EXPLANATION TO SECTION 11(1) OF THE ACT. THE ASSESSING OFFICER DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HA D NOT FILED FORM NO.10 U/S 11(2) READ WITH RULE 17(5) OF THE ACT, THEREFOR E, THE EXEMPTION CLAIMED BY THE ASSESSEE WAS NOT ALLOWED AND RS. 28,87,708/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 13. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A ) AND SUBMITTED THAT AS PER SECTION 11(1)(A) AND (B) OF THE ACT, A TRUST CL AIMING EXEMPTION WAS ALLOWED TO ACCUMULATE UP 15% OF ITS INCOME FOR APPL ICATION OF CHARITABLE OR RELIGIOUS PURPOSES IN INDIA AND IF THE ASSESSEE AC CUMULATE A LARGER AMOUNT THAN THE SPECIFIED LIMIT, WHAT WOULD BE CHARGEABLE TO TAX WAS THE EXCESS OVER THE EXEMPTION LIMIT AND NOT THE ENTIRE ACCUMUL ATION INCLUDING THE EXEMPTION PORTION. IT WAS FURTHER STATED THAT A TR UST COULD HAVE CLAIMED EXEMPTION UP TO 85% OF ITS INCOME U/S 11(2) BY COMP LYING TO THE CONDITIONS LAID DOWN THEREIN. THUS, THE TRUST COULD CLAIM THE EXEMPTION FOR THE ENTIRE INCOME ACCUMULATED IN A YEAR AND RESTRICTION ON APP LICATION U/S 11(1)(A) AND (B) OF THE ACT WERE NOT DEEMED TO APPLY FOR THE PAR T OF THE ACCUMULATION TO 8 WHICH SECTION 11(2) APPLIED AND VICE VERSA AND THAT BOTH THE SECTIONS COULD BE APPLIED SIMULTANEOUSLY. ACCORDINGLY, IT WAS SUB MITTED THAT WHAT WAS NEEDED TO BE INVESTED IN THE SPECIFIED MODES WAS, T HEREFORE, ONLY THE EXCESS OF 15% OF INCOME. RELIANCE WAS PLACED ON THE JUDGM ENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MA HARANA OF MEWAR CHARITABLE FOUNDATION (164 ITR 439) ALONGWITH THE F OLLOWING CASE LAWS:- CIT VS SHRI PLOT SWATEMBER MURTI PUJAK JAIN MANDAL (211 ITR 293) DEWAT INSTITUTE OF DAWOOD AND BOHRA COMMUNITY VS. I TO (116 TTJ 673) ITAT MUMBAI 14. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT A CHARITABLE INSTITUTION WAS OBLIGED TO APPLY 85% OF ITS INCOME IF IT COULD NOT BE APPLIED IN THE YEAR, THE ASSESSEE COULD OPT FOR ACCUMULATION U/S 11(2) OF THE ACT AND THE CHARITABL E INSTITUTION WOULD BE ENTITLED TO EXEMPTION PROVIDED THAT THE REQUIREMENT S IN SECTIONS 11 TO 13 OF THE ACT WERE FULFILLED. HE FURTHER OBSERVED THAT S UCH TRUST / CHARITABLE INSTITUTION WOULD BE ALLOWED TO ACCUMULATE OR SET A PART THE INCOME PROVIDED THE CONDITION SPELT OUT IN SECTION 11(2) READ WITH RULE 17 AND FORM NO.10. ARE FULFILLED. THE LD CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD NOT ACTED IN ACCOARDANCE WITH THE ABOVE SUCH PROVISIONS AND N O OPTION HAD BEEN EXERCISED IN WRITING TO ACCUMULATE OR SET APART ANY INCOME, THEREFORE, THE ISSUE OF SPECIFYING OF PARTICULAR OBJECTS FOR WHICH ACCUMULATION OR SETTING APART OF INCOME WAS SOUGHT, DID NOT ARISE. HE FURT HER OBSERVED THAT THE ACCUMULATED OR INCOME SET APART WAS NOT MAINTAINED IN A SEPARATE ACCOUNT 9 AND EVEN OTHERWISE, THE ACCUMULATION OR THE SET APA RT INCOME WAS NOT INVESTED AS PRESCRIBED U/S 11(5) OF THE ACT. HE TH EREFORE, CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE RE LIANCE WAS PALED ON THE FOLLOWING CASE LAWS.:- A) CIT VS NAGPUR HOTEL OWNERS ASSOCIATION 247 ITR 2 01 (SC) B) DIRECTOR OF INCOME TAX (EXEMPTION) VS TRUSTEE OF SINGHANIA CHARITABLE TRUST (1003) 199 ITR 819 C) CIT VS STATED BANK OF INDIA 169 ITR 298 (BOM.) NOW, THE ASSESSEE IS IN APPEAL. 15. THE LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT IF THE INCOME APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES DURING THE PREVIOUS YEAR FALLS SHORT OF 85% OF THE INCOME DERIVED DURING THE YEAR BY ANY REASONS, THE CHARTABLE TRUST HAS BEEN GIVEN THE OPTION TO SPEND SUCH INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES DURING THE PREVIOU S YEAR IMMEDIATELY FOLLOWING PREVIOUS YEAR IN WHICH THIS INCOME WAS DE RIVED. IT WAS FURTHER STATED THAT FOR AVAILING THE BENEFIT TO EXTENDED TI ME BEFORE THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS TO EXERCISE THE OPT ION IN WRITING UNDER EXPLANATION 2 TO SECTION 11(1) OF THE ACT WITHIN TH E TIME LIMIT U/S 139(1) FOR FURNISHING THE RETURN OF INCOME AND THE INCOME APPLIED TO SUCH PURPOSES DURING THE EXTENDED TIME WILL BE DEEMED TO HAVE BEE N APPLIED TO SUCH PURPOSES DURING THE PREVIOUS YEAR IN WHICH IT WAS D ERIVED. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD EX ERCISED THIS OPTION, IN COMPUTATION OF TOTAL INCOME IN WRITING, APPENDED TO THE RETURN OF INCOME 10 FILED AS NO SPECIFIC FORMAT IS PRESCRIBED IN THIS R EGARD IN THE INCOME TAX ACT / INCOME TAX RULES. HOWEVER, NEITHER THE ASSES SING OFFICER NOR THE LD CIT(A) HAD ACCEPTED THE VERSION OF THE ASSESSEE AN D EVEN DID NOT VERIFY AS TO WHETHER THE AMOUNT HAD BEEN APPLIED FOR CHARITAB LE PURPOSES DURING THE EXTENDED PERIOD OR NOT. IT WAS SUBMITTED THAT THE AMOUNT OF RS. 28,87,708/- MAY BE CONSIDER AS DEEMED APPLICATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. 16. IN HIS RIVAL SUBMISSIONS, THE LD DR REITERATED THE OBSERVATIONS MADE BY THE LD CIT(A) AND STRONGLY SUPPORTED THE IMPUGNE D ORDER PASSED BY THE LD CIT(A). 17. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE ASSESSEE AVAILED THE BENEFIT OF EXTENDED PERIOD BEYOND THE RELEVANT PREVIOUS YEAR AS PER EXPLANATION 2 TO SECTION 11(1) OF THE ACT. HOWEVER , NEITHER THE ASSESSING OFFICER NOR THE LD CIT(A) HAD VERIFIED FROM THE REC ORD. ON THE CONTRARY, THE CONTENTION OF THE LD DR WAS THAT THE ASSESSEE HAD NOT SPECIFIED THE AMOUNT AND DID NOT COMPLY THE CONDITIONS SPELT OUT IN SECTION 11(2) OF THE ACT. FROM THE ABOVE CONTENTION OF BOTH THE PARTIES , IT IS CLEAR THAT THE CONTRARY STAND HAS BEEN TAKEN. THE CASE OF THE ASS ESSEE IS THAT OPTION WAS AVAILED AS PROVIDED UNDER EXPLANATION 2 TO SECTION 11(1) OF THE INCOME TAX ACT, 1961 BUT NEITHER THE ASSESSING OFFICER NOR THE LD CIT(A) VERIFIED FROM THE RECORD THAT THE ASSESSEE HAD APPLIED THE AMOUNT FOR CHARITABLE PURPOSES 11 DURING THE EXTENDED PERIOD OR NOT. WE, THEREFORE, DEEM IT FIT AND APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FIL E OF THE LD CIT(A) TO BE DECIDED AFRESH AFTER PROPER VERIFICATION FROM THE R ECORD IN ACCORDANCE WITH LAW AND BY PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 18. IN ALL OTHER APPEALS, THE FACTS ARE SIMILAR, TH E ONLY DIFFERENCE IS IN THE AMOUNT, THEREFORE, THE AFORESAID FINDINGS SHALL APP LY FOR ALL THE APPEALS. 19. ANOTHER ISSUE VIDE GROUND NO.5 IN ALL THE APPEA LS (EXCEPT IN ITA NOS. 104/JU/2011 AND 03/JU/2012) RELATES TO HE ADDITION MADE U/S 11(3) OF THE ACT. 20. TO DEAL WITH THIS ISSUE, THE FACTS IN BRIEF REL ATED TO ITA NO. 405/JU/2011 IN THE CASE OF KRISHI UPAJ MANDI SIMITI , ANOOPGARH VS. ITO, SURATGARH, IN BRIEF, ARE THAT THE ASSESSEE HAD CASH AND BANK BALANCE AS ON 1.4.2007 AMOUNTING TO RS. 88,38,985/- AND AS ON 31. 3.2008 AT RS. 1,54,50,573/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ACCUMULATED INCOME OR SET APART INCOME OF THE ASSESSEE WAS NIL AND THAT NO SEPARATE ACCOUNTS FOR ACCUMULATED INCOME AND SET APART INCOME WERE MAINTAINED AND SEPARATE ACCOU NT FOR INCOME SET APART FOR EACH SPECIFIC PURPOSE WAS NOT MAINTAINED. HE F URTHER OBSERVED THAT NO RESERVE WAS CREATED FOR ACCUMULATED INCOME OR SET APART IN COME. ACCORDING TO ASSESSING OFFICER, THE BOOKS OF ACCOUN T MAINTAINED BY THE 12 ASSESSEE WERE DEFECTED SINCE BALANCE SHEET WAS NOT PREPARED AT THE END OF THE YEAR AND THE BOOKS OF ACCOUNT DID NOT REFLECT T HE TRUE PICTURE OF THE AFFAIRS OF THE ASSESSEE. HE FURTHER OBSERVED THAT OTHER GOVERNING BODY OF CHARITABLE INSTITUTION HAS PASSED RESOLUTION TO SET APART THE INCOME FOR SPECIFIED PURPOSES BUT FORM NO. 10 AS REQUIRED U/S 11(2) READ WITH RULE 17 HAD NOT BEEN FILED BY THE ASSESSEE IN EARLIER YEARS INCLUDING THE YEAR UNDER CONSIDERATION, THEREFORE, THE OPTION UNDER EXPLANAT ION 2 TO SECTION 11(1) HAD NOT BEEN EXERCISED BY THE ASSESSEE IN THE EARLI ER YEARS, THEREFORE, PROPOSE AND PERIOD OF ACCUMULATED INCOME OR SET APA RT INCOME WAS NOT CLEAR. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE MONEY SO ACCUMULATED OR SET APART WAS NOT INVESTED OR DEPOS ITED IN THE FORMS OR MODES SPECIFIED U/S 11(5) READ WITH RULE 17C, HE T HEREFORE, INVOKED THE PROVISIONS OF SECTION 11(3)(B) AND (C) OF THE INCOM E TAX ACT AND THE INCOME OF EARLIER YEARS ACCUMULATED OR SET APART AM OUNT TO RS. 88,38,985/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 21. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A ) AND SUBMITTED THAT THE ACCUMULATED CASH AND BANK BALANCE I.E RS. 88,3 8,985/- AS ON 1.4.2007 WERE THE FUNDS WHICH BELONGD TO EARLIER YEARS AND H AD NO RELEVANCY WITH THE CURRENT YEARS ASSESSMENT OF INCOME BECAUSE THIS AM OUNT WAS ACCUMULATED FUNDS WHICH WERE COVERED UNDER EXEMPTION LIMIT OF 1 5% OF GROSS TOTAL INCOME. IT WAS FURTHER STATED THAT THE ASSESSING O FFICER HAD OBSERVED THAT THE ASSESSEE HAD NOT EXERCISED THE OPTION FOR EARLI ER YEAR BUT HE ADDED THE AMOUNT TO THE TOTAL INCOME OF THE CURRENT YEARS, WH ICH WAS AGAINST THE 13 PRINCIPLES OF LAW BECAUSE IF THERE WAS ANY DEFICIEN CY IN SUBMITTING FORMS OR EXERCISING OPTIONS UNDER ANY EXPLANATION, THE SAME WAS SUBJECT MATTER OF THE RESPECTIVE ASSESSMENT YEARS AS THE ASSESSEE HAD NOT FILED RELEVANT FORMS IN THOSE RESPECTIVE YEARS. IT WAS FURTHER STATED TH AT THE ASSESSING OFFICER HAD ALREADY MADE THE ADDITION OUT OF CURRENT YEAR I NCOME OF RS. 66,11,588/- , THEREFORE, NO DOUBLE ADDITION WAS CALLED FOR. IT WAS ALSO STATED THAT THE PROVISIONS OF SECTION 11(3)(B) AND (C) OF THE ACT WERE NOT APPLICABLE IN THIS CASE. 22. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE COULD NOT CONTROVERT THE FACTUAL POSITION AS STATED BY THE ASSESSING OFFICER AND NO SATISFACTORY EXPLANATION COULD BE FURNISHED AS TO HOW THE PROVISIONS OF SECTION 11(3) (B) AND (C) OF THE ACT WERE NOT APPLICABLE TO THE ASSESSEES CASE. HE THE REFORE, CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW THE ASSESSEE I S IN APPEAL. 23. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ACCUMULATED CASH AND BANK BALANCE AMOUNTING TO RS. 88,38,985/- AS ON 1.4.2007 WERE FUNDS WHICH BELONGED TO THE EARLIER YEARS AND HAD N O RELEVANCY WITH THE CURRENT YEAR ASSESSMENT OF INCOME. IT WAS, FURTHER SUBMITTED THAT THIS INCOME WAS ACCUMULATED FUNDS OF THE ASSESSEE WHICH WERE COVERED UNDER EXEMPTION LIMIT OF 15% OF THE GROSS TOTAL INCOME. IT WAS STATED THAT IF THERE WAS ANY DEFICIENCY IN SUBMITTING THE FORMS OR EXERC ISING OPTIONS UNDER ANY 14 EXPLANATION, THE SAME WAS SUBJECT MATTER OF THE RES PECTIVE ASSESSMENT YEARS BUT NO ADDITION COULD HAVE BEEN MADE FOR THE YEAR U NDER CONSIDERATION. IT WAS FURTHER STATED THAT THE AMOUNT WAS DEPOSITED IN P.D. ACCOUNT AS PER THE PROVISIONS OF SUB SECTION 5 OF SECTION 11 OF THE AC T AND THE AMOUNT WAS ALSO UTILIZED IN THE EXTENDED PERIOD OF TIME, THERE FORE, NO ADDITION WAS CALLED FOR. 24. IN HIS RIVAL SUBMISSIONS, THE LD DR STRONGLY SU PPORTED THE ORDER OF THE AUTHORITIES BELOW. 25. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSING OFFICER HIMSELF WAS NOT CLEAR ABOUT THE P URPOSE AND PERIOD OF ABOVE SAID ACCUMULATED INCOME OR SET APART INCOME A ND THIS FACT HAS BEEN MENTIONED BY HIM AT PAGE NO.15 OF THE ASSESSMENT O RDER DATED 13.12.2010. IN THE PRESENT CASE, NEITHER THE ASSESSING OFFICER NOR THE LD CIT(A) HAS CONSIDERED THIS FACT THAT AMOUNT IN QUESTION WAS NO T RELATED TO THE YEAR UNDER CONSIDERATION AND HAD NO RELEVANCY WITH THE C URRENT YEARS INCOME. THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSEE IN SLIP SHOD MANNER. HE SIMPLY STATED THAT THE ASSESSEE COULD NOT CONTRO VERT THE FACTUAL POSITION AS STATED BY THE ASSESSING OFFICER. HOWEVER, NO CO MMENTS OR FINDING HAVE BEEN GIVEN ON THE SUBMISSIONS MADE BY THE ASSESSEE. THE LD CIT(A) SIMPLY STATED THAT THE ASSESSEE HAD NOT GIVEN SATIS FACTORY EXPLANATION AS TO HOW THE PROVISIONS OF SECTION 11(3)(B) & (C) WERE N OT APPLICABLE TO THE 15 ASSESSEES CASE AND REJECTED THE CLAIM OF THE ASSES SEE. IN OUR OPINION, THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE IS NOT A SP EAKING ORDER. WE, THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THIS IS SUE BACK TO THE FILE OF LD CIT(A) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. 26. IN THE RESULT, ALL THE APPEALS ARE PARTLY ALLOW ED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2012) SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 18 TH DECEMBER, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR