ITO (E), New Delhi V. M/s Radiant Educational Trust, New Delhi

ITA 4293/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6810 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: SONAKSHI GUPTA
• Keywords: Income from undisclosed sources; Maximum Marginal Rate; Valuation report; Competent authority
• Section: 201; 68; 6; 12; 11

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4293/DEL/2016 (ASSESSMENT YEAR: 2012-13) ITO(E), WARD-2(4), NEW DELHI VS. RADIANT EDUCATIONAL TRUST, H. NO. 26A, C-BLOCK, VIKASPURI, NEW DELHI PAN: AABTR5403R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SURENDER PAL, SR. DR ASSESSEE BY: MS. SONAKSHI GUPTA, ADV DATE OF HEARING 29/07 / 201 9 DATE OF PRONOUNCEMENT 2 3 / 10 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A), ROHTAK DATED 30.05.2016 FOR THE ASSESSMENT YEAR 201 2-13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSE SSEE HAS SOME SOURCE OF INCOME WHICH HAVE NOT BEEN DISCLOSED TO THE DEPA RTMENT AND SAME IS BEING UTILIZED IN CONSTRUCTION OF BUILDING. 3. THE FACTS OF THE CASE SHOWS THAT ASSESSEE IS A REGI STERED TRUST U/S 12 AA OF THE INCOME TAX ACT. DURING THE YEAR IT HAS RECEIVE D A DONATION OF LAND OF REGISTERED VALUE OF INR 4,800,000 BUT THE SAME HAS BEEN ENTERED IN THE BOOKS OF ACCOUNT AT RS. 28852500/ AS PER VALUATION REPORT DATED 15/1/2011. FURTHER IT WAS ALSO NOTED ON EXAMINATIO N OF THE VALUATION REPORT THAT THE ASSESSEE HAS A BUILDING OF INR 1271 6396/ ON 15/1/2011 WHEREAS AS PER BOOKS OF ACCOUNTS THE SAME HAS BEEN SHOWN AT INR 3 830573/ ON 31/3/2011. THEREFORE THE LEARNED ASSES SING OFFICER REACHED AT THE CONCLUSION THAT THE ASSESSEE HAS INCOME FROM SO ME SOURCES WHICH HAS NOT BEEN DISCLOSED TO THE DEPARTMENT WHICH IS BEING UTILISED IN CONSTRUCTION OF BUILDING. THEREFORE THE SURPLUS SHOWN BY THE AS SESSEE OF INR 4025929/ ITO(E)\ VS RADIANT EDUCATIONAL TRUST ITA NO. 4293/DEL/2016 (ASSESSMENT YEAR: 2012-13) PAGE | 2 WAS BROUGHT TO TAX AT MAXIMUM MARGINAL RATE TREATIN G THE ASSESSEE AS INCOME OF ASSOCIATION OF PERSON. FURTHER THE ASSES SEE HAS RECEIVED CONTRIBUTION FROM TRUSTEE OF RS. 2175000/- AS WELL AS DONATION FROM CERTAIN OTHER PERSONS OF RS. 5569000/-. THE LEARNED ASSESS ING OFFICER NOTED THAT PRIOR TO GIVING DONATION/CONTRIBUTION TO THE ASSESS EE, ALL THESE PERSONS HAVE DEPOSITED CASH IN THEIR BANK ACCOUNT. THEREFORE, T HE LEARNED ASSESSING OFFICER MADE AN ADDITION OF RS. 2175000/ OUT OF TH E CONTRIBUTION BY THE TRUSTEE AND AN ADDITION OF INR 4099000/ OUT OF THE TOTAL DONATION RECEIVED OF INR 5569000/. FURTHER, WITH RESPECT TO THE UNS ECURED LOAN THE ADDITION OF INR 800,000/- WAS MADE. THUS THE TOTAL INCOME O F THE ASSESSEE WAS ASSESSED AT RS. 11099930/ AS PER ORDER U/S 143 (3) OF THE INCOME TAX ACT ON 23/3/2015. 4. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED AS SESSING OFFICER PREFERRED AN APPEAL BEFORE THE LEARNED CIT A. THE LEARNED CIT APPEALS HELD THAT THE EXCESS OF INCOME OVER THE EXPENDITURE CANNOT BE DEN IED THE BENEFIT OF SECTION 11 OF THE INCOME TAX ACT MERELY FOR THE REA SON THAT BECAUSE OF THE VALUATION THERE IS A DIFFERENCE IN THE VALUE OF BUI LDING IN THE BOOKS OF ACCOUNTS AND THE VALUATION REPORT PREPARED BY THE R EGISTERED VALUE. THE ASSESSEE HAS SUBMITTED THAT THE VALUATION WAS MADE FOR THE PURPOSE OF GETTING FINANCE FROM BANK AT MARKET RATE FOR EXPANS ION OF THE ACTIVITIES OF THE TRUST. THE LEARNED CIT A HELD THAT IT CANNOT BE SAID TO BE VALID GROUND FOR DENIAL OF BENEFIT OF SECTION 11 IF THE AO HAD A NY COGENT MATERIAL THAT ESTABLISHES THAT THE TRUST IS HAVING INCOME FROM UN DISCLOSED SOURCES, EVEN THEN THE BENEFIT ALLOWED U/S 11 CANNOT BE DENIED BY THE AO BUT WAS, SHE CAN RECOMMEND TO THE COMPETENT AUTHORITY TO WITHDRA W THE REGISTRATION OF THE TRUST WHICH HAS NOT BEEN DONE. THEREFORE THE A DDITION MADE BY THE LEARNED ASSESSING OFFICER WAS DELETED BY GRANTING B ENEFIT OF SECTION 11 AND 12 TO THE ASSESSEE TRUST. WITH RESPECT TO THE CONTR IBUTION RECEIVED FROM TRUSTEE OF RS. 2175000/- AND DONATION RECEIVED FROM VARIOUS OTHER PERSONS OF INR 4099000/- THE APPELLANT TRUST HAD ALREADY SH OWN THE ABOVE RECEIPT IN THE COMPUTATION OF THE TAXABLE INCOME AND THEREF ORE THEY CANNOT BE 1 GAIN ADDED TO THE TOTAL INCOME OF THE ASSESSEE. TH EREFORE, THIS ADDITION WAS ALSO DELETED. THE ADDITION OF UNSECURED LOAN OF IN R 800,000/- WAS ALSO ITO(E)\ VS RADIANT EDUCATIONAL TRUST ITA NO. 4293/DEL/2016 (ASSESSMENT YEAR: 2012-13) PAGE | 3 DELETED AS ACCORDING TO THE LEARNED CIT(A) APPELLAN T HAS DISCHARGED ITS ONUS REGARDING THE SOURCE OF THE FUNDS. ACCORDINGLY, AP PEAL OF THE ASSESSEE WAS PARTLY ALLOWED. THE REVENUE AGGRIEVED WITH THE ORD ER OF THE LEARNED CIT(A) HAS PREFERRED THIS APPEAL BEFORE US. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY RELIED UPON THE ORDER OF THE LEARNED ASSESSING OFFICER AND SUBMITTED THAT THERE IS A VAST DIFFERENCE BETWEEN THE VALUE OF BUILDING ENTERED INTO THE BOOK S OF ACCOUNTS AND THE VALUATION REPORT VALUE. HE SUBMITTED THAT THAT LEA RNED ASSESSING OFFICER HAS CLEARLY STATED THAT THERE IS AN UNDISCLOSED INCOME ON BY THE ASSESSEE SOCIETY SOURCE OF WHICH HAS NOT BEEN DISCLOSED. WITH RESPE CT TO THE LOANS/CONTRIBUTIONS AND DONATION HE SUBMITTED THAT ALL THESE DEPOSITORS HAVE DEPOSITED CASH IN THEIR BANK ACCOUNT AND FROM THAT BANK ACCOUNT A MADE RTGS TO THE ACCOUNT OF THE ASSESSEE. HE SUBMI TTED THAT THOUGH THE AMOUNT OF DONATION HAS BEEN CREDITED IN THE BOOKS O F ACCOUNT AND ASSESSEE HAS SHOWN SAME AS INCOME OF THE ASSESSEE TRUST HOWE VER WHEN THE SOURCE OF THE SOURCE HAS NOT BEEN PROVED BY THE ASSESSEE T RUST, THE LEARNED ASSESSING OFFICER HAS CORRECTLY MADE ADDITION. 6. THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON T HE ORDER OF THE LEARNED CIT CAPITAL AND SUBMITTED THAT IT IS MERELY A DIF FERENCE IN THE VALUE OF BUILDING RECORDED IN THE BOOKS OF ACCOUNTS AND AS D ETERMINED BY THE REGISTERED VALUE OF FOR WHICH THE BANK FINANCE WAS TO BE OBTAINED. THEREFORE ACCORDING TO OUR OPINION TO OBTAIN THE BANK FINANCE THE MARKET VALUE OF THE LAND AND BUILDING IS REQUIRED TO BE DETERMINED FOR THE SECURITY TO THE BANK. SHE SUBMITTED THAT THERE IS NO EVIDENCE AVAILABLE W ITH THE LEARNED ASSESSING OFFICER THAT ASSESSEE HAS EARNED ANY INCOME WHICH I S OUTSIDE THE BOOKS OF ACCOUNTS. WITH RESPECT TO THE DONATION AND THE CON TRIBUTION IT WAS SUBMITTED THAT SAME IS ALSO BEEN SHOWN AS INCOME IN THE INCOME AND EXPENDITURE ACCOUNT THEREFORE IT CANNOT BE ONCE AGA IN ADDED TO THE INCOME OF THE ASSESSEE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION A ND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ON PLAIN READING OF THE ORD ER OF THE LEARNED ASSESSING OFFICER IT IS AMPLY CLEAR THAT THE ADDITION HAS BEE N MADE IN THE HANDS OF THE ASSESSEE BY DENYING THE BENEFIT OF SECTION 11 AND 1 2 OF THE ACT FOR THE SOLE ITO(E)\ VS RADIANT EDUCATIONAL TRUST ITA NO. 4293/DEL/2016 (ASSESSMENT YEAR: 2012-13) PAGE | 4 REASON THAT ASSESSEE HAS A LAND AND BUILDING WHICH WAS VALUED BY THE REGISTERED VALUE AT HIGHER VALUE THAN THE VALUE WHI CH IS RECORDED IN THE BOOKS OF ACCOUNTS. THERE IS NO REAL INCOME ACCRUIN G TO THE ASSESSEE. THE VALUATION WAS MADE AT THE MARKET RATE BY THE REGIST ERED VALUE FOR THE PURPOSE OF OBTAINING THE BANK FINANCE AND SECURITY TO THE BANKERS. THERE IS NO INFLOW OF THE FUNDS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESSEE WAS DENIED BENEFIT OF SECTION 11 AND 12 OF THE ACT FOR THE SOLE REASON THAT THERE IS A DIFFERENCE BETWEEN THE MARKE T VALUE OF THE ASSETS OWNED BY THE ASSESSEE THEN WHAT IS RECORDED IN THE BOOKS OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER HAS CLEARLY FAILED TO NOTE THAT THE VALUE RECORDED IN THE BOOKS OF ACCOUNT IS ACTUAL COST, WH EREAS THE VALUE SHOWN IN THE VALUATION REPORT OF THE REGISTERED VALUE IS THE MARKET VALUE OF THE PROPERTY FOR THE PURPOSE OF OBTAINING THE BANK FINA NCE. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT( A) IN ALLOWING ASSESSEE THE BENEFIT OF SECTION 11 AND 12 OF THE ACT. 8. WITH RESPECT TO THE CONTRIBUTION OF THE TRUSTEES AN D DONATION RECEIVED FROM SEVERAL PERSONS, ASSESSEE HAS ALREADY RECORDED THES E DONATIONS AS INCOME OF THE ASSESSEE IN THE INCOME AND EXPENDITURE ACCOUNT. THE LEARNED ASSESSING OFFICER HAS NOT INVOKED THE PROVISIONS OF SECTION 6 8 OF THE INCOME TAX ACT. THE LEARNED ASSESSING OFFICER HAS ALSO NOT VERIFIED SOURCE OF MONEY RECEIVED BY THESE PERSONS FOR WHICH THE DONATION HAS BEEN GI VEN TO THE ASSESSEE TRUST. IN FACT ASSESSEE HAS ALREADY OFFERED THIS S UM AS ITS INCOME. IT IS FOR THOSE DONORS TO SHOW THE SOURCE OF CASH DEPOSITED I N THEIR BANK ACCOUNT. THE LEARNED ASSESSING OFFICER COULD ALSO HAVE INVOK ED THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. SAME HAS NOT BEE N INVOKED. FURTHER IT IS ALSO NOT THE CASE OF THE AO, THAT DONATION RECEIVED BY ASSESSEE IS AN ANONYMOUS DONATION, BECAUSE ASSESSEE HAS CLEARLY ST ATED THE NAME OF SUCH DONORS AND THE BANK ACCOUNT OF SUCH DONORS ARE AVAI LABLE WITH THE ASSESSING OFFICER. IN VIEW OF THIS, WE DO NOT FIND ANY REASON TO UPSET THE ORDER OF THE LEARNED CIT(A). EVEN THE GROUNDS OF AP PEAL SUBMITTED BEFORE US CLEARLY ALLEGES THAT ASSESSEE HAS SOME SOURCE OF IN COME WHICH HAS NOT BEEN DISCLOSED TO THE DEPARTMENT AND SAME IS BEING UTILI SED IN CONSTRUCTION OF BUILDING. SUCH STATEMENT HAS BEEN MADE BY THE LEAR NED ASSESSING OFFICER ITO(E)\ VS RADIANT EDUCATIONAL TRUST ITA NO. 4293/DEL/2016 (ASSESSMENT YEAR: 2012-13) PAGE | 5 WITHOUT FINDING ANY EVIDENCE WITH RESPECT TO THE EA RNING OF ANY UNACCOUNTED INCOME BY THE ASSESSEE. IF THE LEARNED ASSESSING OF FICER WANTED TO SUBSTANTIATE HIS ORDER, HE SHOULD HAVE CARRIED OUT FURTHER ENQUIRY TO FIND OUT THE EXISTENCE OF ALLEGATION LEVELED BY HIM. TH E ASSESSING OFFICER HAS FAILED TO DO ANY ENQUIRY ON THE MATERIAL AVAILABLE BEFORE HIM. THUS THE ORDER OF THE LEARNED ASSESSING OFFICER CANNOT BE SU STAINED AND NO INFIRMITY HAS BEEN FOUND IN THE ORDER OF THE LEARNED CIT(A). 9. IN VIEW OF THIS THE APPEAL FILED BY THE LEARNED ASS ESSING OFFICER IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/2019. SSD SD/- SD/- /- (AMIT SHUKLA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23/10/2019 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI