Income Tax Officer-(Exemptions), Lucknow V. Awasiya Shiv Ram Singh Educational Society, Barabanki

ITA 446/LKW/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100442 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARE AS UNDER SHRI AMIT NIGAM
• Keywords: Unexplained cash credit; Unexplained investment; Value adopted by valuation officer
• Section: 68; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.446/LKW/2015 ASSESSMENT YEAR:2010-11 INCOME TAX OFFICER(EXEMPTIONS) LUCKNOW. VS. AWASIYA SHIV RAM SINGH EDUCATIONAL SOCIETY, VILLAGE-PALHRI, POST-BARAIL, ZAIDPUR ROAD, BARABANKI. PAN:AABAA4989L (APPELLANT) (RESPONDENT) ITA NO.477/LKW/2015 ASSESSMENT YEAR:2010-11 AWASIYA SHIV RAM SINGH EDUCATIONAL SOCIETY, VILLAGE-PALHRI, POST-BARAIL, ZAIDPUR ROAD, BARABANKI. PAN:AABAA4989L VS. INCOME TAX OFFICER(EXEMPTIONS) LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A)-IV, LUCKNOW DA TED 26/02/2015 FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY REVENUE ARE AS UNDER: REVENUE BY SHRI AMIT NIGAM, D. R. ASSESSEE BY SHRI YOGESH AGRAWAL, ADVOCATE DATE OF HEARING 23/09/2015 DATE OF PRONOUNCEMENT 29/10/2015 2 7. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN DELETING OF RS.2,63,000/- OU T OF TOTAL ADDITION OF RS.5,26,000/- MADE BY THE ASSESSI NG OFFICER U/S 68 OF THE INCOME TAX ACT. 8. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING OF RS.52,36,697/- O UT OF TOTAL ADDITION OF RS.1,22,63,525/- MADE BY THE ASSE SSING OFFICER AS UNEXPLAINED INVESTMENT U/S 69B ON THE BA SIS OF DVO REPORT AND FAILED TO APPRECIATE THE FACT THAT T HE REPORT OF THE DVO WAS OBTAINED U/S 142A AFTER DULY REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 9. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,79,913/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF SURPLUS. 10. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS OF THE CASE, IN HOLDING THAT TH E ASSESSEE IS ENTITLED TO EXEMPTION U/S 10(23C)(IIIAD ) OF THE INCOME TAX ACT AND HAS FAILED TO APPRECIATE THE FAC TS DISCUSSED BY THE ASSESSING OFFICER THAT THE ASSESSE E CANNOT BE CONSIDERED AS EXISTING SOLELY FOR EDUCATI ONAL PURPOSES. 11. THE ORDER OF LD. CIT(A) BE CANCELLED AND THE OR DER OF THE AO RESTORED. 3. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: I. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-4, LUCKNOW [HERE-IN-AFTER REFERRED TO AS THE LD. CIT (APPEALS)] GROSSLY ERRED ON FACTS AND IN LAW IN NOT FOLLOWING THE ORDER OF THE HON'BLE TRIBUNAL IN THE APPELLANT'S OWN CASE FOR A.Y. 2009-10 WHEREIN THE I SSUE INVOLVED IN BOTH THE APPEALS WAS COMMON AS PART ADDITION WAS MADE IN A.Y. 2009-10 AND PART ADDITION IN THE CURRENT YEAR WHICH WAS DELETED BY THE LD. PREDECESSOR CIT (APPEALS) AND DEPARTMENTAL APPEAL W AS DISMISSED BY THE HON'BLE ITAT WHICH SUCH ORDER WAS BINDING ON HIM AND SHOULD BE FOLLOWED UNRESERVEDLY AND 3 THUS THE ADDITIONS SO CONFIRMED MAY KINDLY BE ORDER ED TO BE DELETED AND ORDER SO PASSED BE QUASHED. NOTWITHSTANDING AND WITHOUT PREJUDICE TO GROUND NO. I TAKEN ABOVE :- II. THE LD. CIT (APPEALS) FURTHER GROSSLY ERRED ON FAC TS AND IN LAW IN CONFIRMING THE REFERENCE TO THE DEPARTMEN TAL VALUATION OFFICER FOR ASCERTAINING THE COST OF INVE STMENT IN THE SCHOOL BUILDING WITHOUT THE AO POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS OF THE APPELLANT S OCIETY FOR THIS PARTICULAR YEAR AND THUS AS THE ORDER ITSE LF IS BASED ON AN ILLEGAL ACTION THE SAME MAY KINDLY BE ORDERED TO BE QUASHED. III. IN PARTLY CONFIRMING THE ADDITIONS MADE BY THE A.O. THE LD. CIT (APPEALS) FAILED TO APPRECIATE OR RATHER CH OSE TO IGNORE THE FACT THAT THE APPELLANT SOCIETY IS DERIV ING INCOME ONLY AS PER WHAT HAS BEEN SHOWN AND STATED I N THE BOOKS OF ACCOUNTS AND THAT THERE COULD BE NO OT HER INCOME AS HAS BEEN SOUGHT TO BE ADDED. IV. THE LD. CIT (APPEALS) FURTHER GROSSLY ERRED ON FACTS AND IN LAW IN PARTLY CONFIRMING THE ADDITION MADE U/S 6 9B OF THE I.T. ACT, 1961 OF RS.72,89,828/- TO THE INCOME OF THE APPELLANT AS ALLEGED UNEXPLAINED INVESTMENT IN BUIL DING AND AS THE ADDITION MADE TO THE INCOME IS WHOLLY UNJUSTIFIED, BAD-IN-LAW AND VOID-AB-INITIO THE SAME MAY KINDLY BE ORDERED TO BE DELETED. IV. THE LD. CIT (APPEALS) FURTHER GROSSLY ERRED ON FACTS IN STATING THAT THE AO HAS TIMELY FORWARDED THE OBJECT IONS OF THE APPELLANT TO THE DVO AND THAT THE DVO HAS RE PLIED TO THE OBJECTIONS IN GREAT DETAIL POINT WISE WHICH SUCH FINDING IS TOTALLY WRONG AS THE DVO HAD ONLY ONCE R EPLIED TO THE OBJECTIONS ON 16-12-2011 DURING THE COURSE O F ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10 WHICH TOO W AS ONLY A CURSORY REPLY TO THE EXHAUSTIVE OBJECTIONS R AISED AND THUS THE VALUATION SO MADE COULD NOT BE RELIED UPON BEING BIASED, ILLEGAL AGAINST THE SETTLED NORMS AND THUS THIS ADDITION BEING DEVOID OF MERIT MAY KINDLY BE O RDERED TO BE DELETED. 4 V. IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.7 2,89,828/- THE LD. CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONSIDERING THE COST OF INVESTMENT AT ONLY RS.19,47 ,037/- DESPITE THE FACT THAT THE TOTAL COST SO DISCLOSED W AS RS.79,80,745.30 TILL DATE OF INSPECTION I.E. 14-10- 2011 AND FURTHER IN NOT CONSIDERING THE DEDUCTION OF THE COST INCURRED IN CONSTRUCTION OF THREE CLASS ROOMS VALUI NG RS.7,34,000/- WHICH WERE CONSTRUCTED BY THREE DONOR S WHO HAD GOT THEM CONSTRUCTED IN MEMORY OF THEIR RELATIVES THUS TOTALING RS.87,14,745.30. VI. THE LD. CIT (APPEALS) AGAIN GROSSLY ERRED ON FA CTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.2,63,000/- AS ALLEGED UNEXPLAINED CASH CREDIT U/S 68 OF THE I. T. ACT, 19 61 AS THE ENTIRE RECEIPTS WAS FROM THE MEMBERS ETC. AND T HE SOURCE WITH EVIDENCES WAS FURNISHED BEFORE THE AO A ND COPIES FILED BEFORE THE LD. CIT (APPEALS) WHO CHOSE TO IGNORE THE SAME AND HAS CONFIRMED 50% ADDITION ON FLIMSY GROUNDS AND CONFUSING IT WITH THE SPONSORSHI P OF ROOMS WHICH IS NOT THE ISSUE IN THE YEAR UNDER CONSIDERATION AND THUS THE ADDITION SO CONFIRMED TO THE EXTENT OF RS.2,63,000/- IN GROSS VIOLATION OF ALL T HE SETTLED PRINCIPLES OF LAW MAY KINDLY BE ORDERED TO BE DELET ED. VII. IN CONFIRMING THE ADDITION OF RS.2,63,000/- AS ALLEGED UNEXPLAINED CASH CREDIT THE LD. CIT (APPEALS) GROSS LY ERRED ON FACTS AND IN LAW IN BEING GUIDED BY INCORR ECT AND IRRELEVANT CONSIDERATIONS AND HOLDING THAT NO DETAI LS WERE FURNISHED AND THUS THE ORDER BASED ON WHIMS AND FAN CIES AND WITHOUT ANY COGENT MATERIAL ON RECORD MAY KINDL Y BE QUASHED. 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSES SMENT ORDER WHEREAS IT WAS SUBMITTED BY LEARNED A. R. OF THE AS SESSEE THAT THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 09-10 IS AVAILABLE ON PAGE NO. 1 TO 25 OF THE PAPER BOOK. THEREAFTER, HE SUBMITTED THAT ON THE BASIS OF SAME D.V.O. REPORT, ADDITION OF RS.53,91,6 60/- WAS MADE IN ASSESSMENT YEAR 2009-10 AND ADDITION OF RS.1,22,63, 525/- WAS MADE IN THE PRESENT YEAR. HE SUBMITTED THAT IN ASSESSMENT YEAR 2009-10, THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN DELETED BY L EARNED CIT(A) AND WHEN 5 THE REVENUE CARRIED THE MATTER BEFORE THE TRIBUNAL, THE TRIBUNAL AS PER ITS ORDER DATED 08/01/2015 IN I.T.A. NO. 176/LKW/2013 C ONFIRMED THE ORDER OF LEARNED CIT(A). HE SUBMITTED THAT ACCORDINGLY IN T HE PRESENT YEAR ALSO, THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER SHOUL D BE DELETED AS AGAINST PART RELIEF ALLOWED BY LEARNED CIT(A). REGARDING T HE SECOND ISSUE BEING ADDITION OF RS.5.26 LAC U/S 68 WHICH WAS PARTLY CON FIRMED BY LEARNED CIT(A) TO THE EXTENT OF RS.2.63 LAC, HE REITERATED THE SAM E CONTENTIONS WHICH WERE MADE BEFORE LEARNED CIT(A). REGARDING THE THIRD IS SUE BEING ADDITION OF RS.2,79,913/- DELETED BY LEARNED CIT(A), HE SUPPORT ED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE PRESENT CROSS APPEALS, THERE ARE THREE ISSUES INVOLVED. ON TWO ISSUES, PART RELIEF WAS ALLOWED BY LEARNED CIT(A) AND THEREFORE, ON THESE T WO ISSUES, BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US AND ON THIRD ISSUE, THE ENTIRE AMOUNT WAS DELETED BY LEARNED CIT(A) AND THEREFORE, THE REVENUE IS IN APPEAL. 6. FIRST WE DEAL WITH THE THIRD ISSUE, WHICH WAS FU LLY DELETED BY LEARNED CIT(A). THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT (A) AS PER PARA 10 ON PAGES 22 & 23 OF HIS ORDER, WHICH ARE REPRODUCED BE LOW FOR THE SAKE OF READY REFERENCE: BY THIS GROUND, APPELLANT HAS CONTESTED THE ADDITI ON OF SURPLUS AND DISALLOWED CLAIM OF EXEMPTION U/S 10(23C)(IIIAD ) OF THE ACT, STATING THAT IT IS PROFIT MAKING ENTITY. ON THIS IS SUE AFTER CONSIDERING ALL FACTS AND THE DECISION OF HON'BLE I TAT IN ORDER DATED 08.01.2015 IN APPELLANT'S CASE IN AY 2009-10, I DO NOT FIND ANY MERIT IN THE DISALLOWANCE MADE BY THE A.O. THE CASE OF QUEENS EDUCATIONAL TRUST OF UTTARAKHAND HIGH COURT HAS ALSO BEEN REVERSED BY THE HON'BLE SUPREME COURT. THEREFO RE THIS ADDITION CANNOT BE SUSTAINED AND HENCE DELETED. GRO UND OF APPEAL IS ALLOWED. 6 7. WE FIND THAT CIT(A) HAS DECIDED THIS ISSUE BY FO LLOWING THE TRIBUNAL ORDER DATED 08/01/2015 IN ASSESSEES OWN CASE FOR A SSESSMENT YEAR 2009- 10. 8. LEARNED D. R. OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND THEREFORE, WE FIND NO REASON TO TAKE A CO NTRARY VIEW IN THE PRESENT YEAR. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 9. REGARDING THE SECOND ISSUE I.E. ADDITION OF RS.5 .26 LAC U/S 68 IN WHICH CIT(A) HAS ALLOWED PART RELIEF BY DELETING 50% OF A DDITION TO THE EXTENT OF RS.2.63 LAC, WE FIND THAT IT IS NOTED BY ASSESSING OFFICER IN PARA 7 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAD SHOWN RECEIP T OF RS.5.26 LAC FROM MEMBERS AS BUILDING FUND BUT HE DID NOT FILE ANY CO PY OF THE RETURN, SOURCE OF INCOME AND COPY OF KHASRA & KHATAUNI. THEREAFTE R, THE ASSESSING OFFICER HAS NOTED THE NAMES AND AMOUNTS OF 37 PERSONS WHO M ADE CONTRIBUTION AS PER THE CLAIM OF THE ASSESSEE AND AS PER THE SAME, WE FIND THAT ONLY IN ONE CASE OF SHIV PATI DEVI, THE AMOUNT IS RS.65,000/-. THE SECOND HIGHEST AMOUNT IS RS.40,000/- IN THE CASE OF SHYAM LAL. TH E THIRD HIGHEST AMOUNT IS RS.25,000/- WHICH IS SHOWN AGAINST TWO PERSONS RAM RAJ AND RADHEY SHYAM YADAV. THEREAFTER, THE AMOUNTS AGAINST EACH PERSON IS RANGING BETWEEN RS.3,000/- TO RS.20,000/-. IN OUR CONSIDERED OPINI ON, FOR SUCH SMALL AMOUNTS, INSISTING FOR FILING COPY OF RETURN, SOURC E OF INCOME AND COPY OF KHASRA & KHATAUNI ETC. OF CONTRIBUTOR IS NOT JUSTIF IED IN THE FACTS OF THE PRESENT CASE. HENCE, IN OUR CONSIDERED OPINION, SU CH ADDITION IS NOT JUSTIFIED AND THEREFORE, WE DELETE THE ENTIRE ADDITION OF RS. 5.26 LAC. THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. 10. THE THIRD ISSUE IS REGARDING ADDITION OF RS.1,2 2,63,525/- AGAINST WHICH PART RELIEF WAS ALLOWED BY CIT(A) BY DELETING THE P ART ADDITION OF 7 RS.52,36,697/- AND HE CONFIRMED THE BALANCE PART AD DITION OF RS.72,89,828/-. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10. I N THAT YEAR, IT WAS HELD BY THE TRIBUNAL THAT THE ADDITION IS NOT JUSTIFIED. THE RELEVANT PARA OF THE TRIBUNAL ORDER IN THAT YEAR IS PARA NO. 15 AVAILABL E ON PAGES 21 & 22 OF THE PAPER BOOK, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 15. WHEREAS THE LD. CIT(A) HAS EXAMINED EACH AND E VERY OBJECTIONS RAISED BY THE ASSESSEE AND ADJUDICATED T HE SAME IN THE LIGHT OF EVIDENCE PLACED BEFORE HIM. WE HAVE A LSO CAREFULLY EXAMINED PHOTOGRAPHS AND THE EVIDENCE FILED BEFORE US WITH REGARD TO THE QUALITY OF CONSTRUCTIONS OF THE BUILD ING AND ROOMS CONSTRUCTED BY CERTAIN DONORS AND IT IS QUITE EVIDE NT FROM THE PHOTOGRAPHS THAT THE QUALITY OF CONSTRUCTION WAS NO T AS SUGGESTED BY THE DVO IN HIS REPORT WHICH IS AVAILAB LE ON RECORD. MOST OF THE WALLS ARE NOT EVEN PLASTERED AND THE FL OORS ARE ALSO MADE OF BRICKS. WE HAVE ALSO CAREFULLY EXAMINED THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD AND WE ARE OF THE VIE W THAT THE LD. CIT(A) HAS EXAMINED EACH AND EVERY ASPECT AND QUALI TY OF CONSTRUCTION AND AFTER GIVING CREDIT OF SELF-SUPERV ISION CHARGES, ETC., THE LD. CIT(A) DID NOT FIND MUCH DIFFERENCE I N THE VALUATION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) D ELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WE CO NFIRM THE SAME. 10.1 FROM THE ABOVE PARA FROM THE TRIBUNAL ORDER FO R ASSESSMENT YEAR 2009-10, IT IS SEEN THAT THE TRIBUNAL HAS NOTED THA T FROM THE PHOTOGRAPHS, THE QUALITY OF CONSTRUCTION WAS NOT AS SUGGESTED BY THE DVO IN HIS REPORT WHICH IS AVAILABLE ON RECORD. IN THE PRESENT YEAR ALSO, THE REPORT OF D.V.O. IS AVAILABLE ON PAGES 75 TO 83 OF THE PAPER BOOK, WHIC H IS THE SAME D.V.O. REPORT WHICH WAS CONSIDERED BY THE TRIBUNAL IN ASSE SSMENT YEAR 2009-10 AND FINDING WAS GIVEN THAT THE QUALITY OF CONSTRUCTION SHOWN IN THE D.V.O. REPORT IS NOT MATCHING WITH THE PHOTOGRAPHS BROUGHT ON REC ORD. THEREFORE, RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER FOR ASSES SMENT YEAR 2009-10 IN 8 ASSESSEES OWN CASE, WE HOLD THAT NO PART OF THE AD DITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF D.V.O. REPORT IS SUSTAINABLE IN THE PRESENT CASE. THE ISSUE IS ALSO DECIDED IN FAVOUR OF THE A SSESSEE. 11. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED WHEREAS THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:29/10/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT . REGISTRAR