ITO (E) Ward-2, Ahmedabad V. Shri Swaminarayan Shikshan Sanskar charitable Trust, Ahmedabad

ITA 565/AHD/2019

AI Insights

The case involves the Income Tax Department appealing against the decision of the Commissioner of Income Tax (Appeals) which had favored Shri Swaminarayan Shikshan Sanskar Charitable Trust. The primary issues were the disallowance of transportation charges amounting to Rs.20,19,151 and the addition of an unverifiable liability of Rs.1,61,07,162. The Tribunal found that the CIT(A) had correctly assessed the evidence and the accounts, leading to the dismissal of the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133532 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 02-04-2019
• Other Referred Cases: Parisar Trust Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Additional evidence; Corroborative evidences; TDS
• Section: 12

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R.SENTHIL KUMAR, JUDICIAL MEMBER ITA No.565/Ahd/2019 Assessment Year :2013-14 ITO(E) Ward-2 Vejalpur Ahmedabad. Vs. Shri Swaminarayan Shikshan Sanskar Charitable Trust 2, Sarvodaya Society Mandal Road, At: Sokali Viramgam Dist. Ahmedabad. PAN : AABTS 1716 Q (Applicant) (Responent) Assessee by : Shri S.N. Soparkar, Sr.Advocate Revenue by : Shri Rakesh Jha, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 0 2 / 0 2 / 2 0 2 3 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 1 9 / 0 4 / 2 0 2 3 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER This appeal has been filed by the Revenue against order passed by theld.Commissioner of Income Tax(A)-9, Ahmedabad dated 24.1.2019 passed under section 250(6) of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short]for the Asst.Year2013-14. 2. The ground no1. And 2, it was contended, related to the same issue of disallowance of transport charges made by the AO amounting to Rs.20,19,151/- which was deleted by the ld.CIT(A). The said grounds are reproduced as under: ITA No.565/Ahd/2019 2 “1. The ld.CIT(A) has erred in law and on facts in deleting the disallowance of transport charges paid to Shri Narendrabhai P Thakkar of Rs.20,19,151/- 2. On the facts and circumstances of the case, the ld.CIT(A) ought to have upheld the order of the AO disallowing the transportation charges for want of corroborative evidences.” 3. The facts relating to the issue, as noted in para-5.3 of the ld.CIT(A) ‘s order are as under: 1) The appellant is a registered charitable trust and enjoying the benefits as provided u/s.11 and 12 of the Act. It has been running a college and for providing transportation facilities to the students, it had owned three buses which were used for bringing the students from their residences to the college premises. Two buses were claimed to have been given for operation to one Shri Narendrabhai P. Thakkar who has been paid a sum of Rs.20,09,151/- and further amount of Rs.11,04,941/- to M/s Arvind Travels. Thus, total expenses on account of transportation were debited for Rs.32,21,911/- in the profit & loss account. 2) The A.O. noticed that the appellant did not deduct the tax at sources from the payments/credits and did not furnish the confirmation of .accounts, identity of these transporters with PAN details, contra accounts in spite of issuing specific notices in this regard as mentioned in the assessment order. He, therefore, proceeded to make the disallowance of Rs.32,21,911/- by holding that the appellant failed to furnish the required details of payments made to these contractors with details of separate payments made for diesel and also copies of agreements made with these contractors had not been furnished and thus failed to discharge its onus. Further, it has also been held that Shri Narendrabhai P. Thakkar did not comply with the notice u/s.133(6) of the Act and therefore the expenses were not found to be actually incurred and therefore he disallowed the whole amount of Rs.32,21,911/- being transportexpenses debited in the profit & loss account.” 4. Before the ld.CIT(A) the assessee furnished fresh evidence, which were admitted and examined. A report of the AO was also sought on the evidence so furnished. The assessee contended before the ld.CIT(A) that the evidences earlier could not be admitted since the notices were not received by the assessee as its office had been shifted to new address and the accountant handling the assessee income-tax matters had left job. It was further contended that all ITA No.565/Ahd/2019 3 payments to Narendrabhai P. Thakkar and Arvind Travel made through cheques, vouchers were furnished before the ld.CIT(A). It was also pointed out that Shri Narendrabhai had rendered services in the earlier years also. The assessee further pointed out that the transportation expenses had been debited in the books of accounts separately maintained for K.P. Thakkar Institute of Technology, which were one of the institutions run by the assessee-trust. Further, confirmation of Shri Narendrabhai Thakore was filed along with copy i.e. income-tax returns disclosing the transportation charges received by him. The ld.CIT(A) noted that the AO had nothing to state on the scrutiny of the documents presented before him, and he had verified entry-wise books of accounts. Accordingly, he held that the expenses incurred by the assessee on transportation amounting to Rs.32,21,911/- had been satisfactorily explained that the additional evidence which stood examined by the AO also in the remand proceedings. He accordingly directed the deletion of disallowance of expenses paid to the account of Narendrabhai amounting to Rs.20,09,151/-. The relevant finding of the ld.CIT(A) at para 5.4 of his order is as under: “5.4 In view of the above facts, it is found that the expenses of Rs.32,21,911/-incurred on account of insufficient details and appellant's failure to furnish satisfactory explanation is now amply stood explained with the support of additional evidences which have also been examined by the A.O. during the remand proceedings. Therefore, the disallowance of Rs.20,19,151- being the expenses incurred by way of transportation charges paid/credited in the account of Shri Narendrabhai P. Thakkar is directed to be deleted. The appellant gets relief on this account. Thus, ground no.2 in respect of disallowance of Rs.20,19,151/- is allowed. 5. Before us, the ld.counsel for the assessee pointed out thatthere was no infirmity in the order of the ld.CIT(A) since all evidences furnished by the assessee in support of its claim of transportation ITA No.565/Ahd/2019 4 charges were duly examined by the AO,and no infirmity found in the same. Nor any adverse inference was drawn by the AO in remand proceedings. He drew our attention to the finding of the ld.CIT(A) in this regard at page no.12, para-5 of the CIT(A)’s order as under: “5) In the remand report dated 28.03.2018, the A.O. has stated that nothing adverse has been noted by him on scrutiny of the documents presented before him and verified the entry-wise books of accounts. It has also been stated that there were no additional details which could have now been furnished by the appellant during the course of appellate proceedings. However, the A.O. could not find the inadequacy of details or irregularities crept in the accounts so maintained by the appellant trust and verified by him during the remand proceedings.” 6. He further drew our attention to the remand report of the AO reproduced at para-4.1 of the ld.CIT(A)’s order pointing out there from that the AO had mentioned the fact that “further ledger accounts of contractors have been verified but nothing adverse noted in it”. And also“in response vide letter dated 22/3/2018 assessee filed a submission and produced the original books of account in regard to fee received during the year in question. In addition to the cash book and ledger for the year 2012-13 that is A.Y. 2013-14. The same were scrutinized in detail.”. 7. The ld.DR was unable to controvert the above . 8. We have heard rival contentions, and we do not find any merit in the claim of the Revenue. As pointed out to us above from the order of the ld.CIT(A) itself, the additional evidences furnished by the assessee in support of its claim of transportation amounting to Rs.20,09,151/- paid to Shri Narendrabhai had been sent to the AO for his comments on the same, and AO in his remand report dated 28.3.2018 had categorically noted that he had verified all ledger ITA No.565/Ahd/2019 5 account of the contractors and also of documents presented before him, and found nothing adverse in it. Considering the admission of the AO himself as above, with regard to the assessee’s claim of transportation expenses being verified by him, and nothing adverse being found in it, there remains no grievance of the Revenue on this count. The deletion of disallowance of transportation expenses of Rs.20,09,151/- made by the AO accordingly upheld. The ground no.1 and 2 are dismissed. 9. Ground No.2 & 3 stated by the Revenue being the same, in respect of deletion of addition of unverifiable liability of the assessee of Rs.1,61,07,162/-. These grounds read as under: “3. The Id. CIT(A) has erred in law and on facts in deleting the additions of unverifiable liability of Rs.1,61,07,162/- appearing in the balance sheet for the year under consideration. 4. On the facts and circumstances of the case, the Id. CIT(Appeals) ought to have upheld the order of the Assessing Officer making addition of the liability of Rs. 1,61,07,162/- which had remained unverifiable even after giving ample opportunities to prove the same.” Both the grounds are taken for adjudication together. 10. The facts relating to the issue are that the AO had noted from the balance sheet of K.P. Thakkar Institute of Technology that there was huge liability of Rs.1,61,07,162/- outstanding. The same was explained by the assessee as pertaining to caution money received from students, andpertaining to financial year 2011-12. The assessee was asked to furnish ledger account of caution money for Asst.Year 2012-13 and also whether the caution money was refundable or non-refundable. The assessee replied that the caution money was refunded to the students. The AO however noted that no evidence in respect of this claim of the assessee was submitted to ITA No.565/Ahd/2019 6 him. In the absence of any details of caution money furnished by the assessee, pertaining to its receipt and refund, as also list of students from whom the same was received, the AO added back the entire amount of Rs.1,61,07,162/- as non-genuine liability. Before the ld.CIT(A)the assessee explained that theentire outstanding amount of liability of Rs.1,61,07,162/- did not pertain to caution money and that only Rs.1,33,41,150/- out of the same related to caution money outstanding. He further contended that openingbalance of caution money as at the beginning of the year was Rs.1,00,30,000/-, and during the year the assessee had received caution money of Rs.78,05,000/- and refunded Rs.44,90,850/-, thus leaving a balance of Rs.1,33,41,150/- as at the end of the year. Necessary evidence in this regard were all filed which were sent to the AO for his comments, which included the ledger account of caution money for the year,list of students from whom the caution money had been received Rs.1,33,41,150/- and liost of students repaid during the year. The ld.CIT(A) obtained comments of the AO and noted that he had nothing adverse to state with respect to the same, having examined all accounts presented before him, and having verified it with the books of accounts entry wise. He accordingly, therefore, deleted the addition of Rs.1,61,07,162/- made by the AO. His finding at para 7.3 of the order is as under: “7.3 I have carefully considered the contention of the appellant as well as the observation of the AO. The appellant has furnished the details in the form of additional evidences which have been admitted after considering the remand" report. The appellant has furnished the copy of ledger account of caution money for the financial year 2012- 13 which showed the opening balance of Rs,87,75,000/- and the list of students with caution money received @ Rs.40007- to Rs.7,000/- per student which has been repaid when the student left the college. During the year under consideration, the appellant has received ITA No.565/Ahd/2019 7 caution money of Rs.78,05,000/- and repaid an amount of Rs.1,33,44,150/- as per the list furnished during the course of appellate proceedings in the form of additional evidence. This list showed the opening balance of Rs.1,00,30,000/-. In the remand report, the A.O. has not objected to the details and opined that "I have examined all the documents presented before me and verified it with books of accounts entry-wise. Further ledger accounts of contractors have been verified but Nothing adverse noted in it." The appellant is found to be collecting the caution money from year to year right from A.Y.2009-10 and showing the same in the balance-sheets drawn in the case of the college for which separate accounts have been maintained. It has been contended in the written submission that the total amount of Rs.1,61,07,162/- of current liabilities as reflected in the balance sheet as 31.03.2013 was comprising of amounts of provision, TDS, unpaid prof tax and other payable amounts aggregating to Rs.23,59,585/- and liability on account of caution money was of Rs. 1,33,44,150/- which is the total sum of the caution money received in the year under consideration and also in earlier years and outstanding as on 31.03.2013. The appellant has also relied on the decision of Hon'ble ITAT, Ahmedabad in the case of Parisar Trust Vs. CIT rendered in ITA No.422/AHD/2006 wherein the identical issue had been examined. However, on careful perusal of the finding given by the Hon'ble ITAT, it is noticed that this issue had been restored back to the file of the Assessing Officer so as to verify as to whether the amount not refunded to the student who left the institute during the year under consideration and if so, that amount was to be taken as income of that trust. Thus, the facts of the appellant are not found to be fully fitted in the present appeal. However, there is force in the contention of the appellant that the caution money taken from the students who had been given admissions during the year under consideration and was refunded the amounts to those students who left the institution during the year under consideration. The A.O. did not bring out on record as to whether the amounts refunded to the students leaving the institution had given the amounts when they have taken admission and in what year and identified the amounts which were retained by the institution as received from the students and left the institution during the year under consideration. In absence of such vital finding which ought to have been given by the A.O. during the course of assessment proceedings/remand report proceedings, the contention now raised that the caution money received from the students was the liability which was rightly included in the balance-sheet with other amounts, has to be accepted. Considering this factual position of the appellant, the addition of Rs.1,61,07,162/- is directed to be deleted. Thus, the ground no.4 of the appeal is allowed.” ITA No.565/Ahd/2019 8 11. The ld.DR before us was unable to controvert the fact that the AO in his remand report had nothing adverse to state to the details furnished by the assessee with regard to caution money received and refunded during the year, and details of the opening and closing balance submitted by the assessee along with ledgers and books of accounts. In view of the same, since as per the AO himself, the assessee truly explained, nature of the amount outstanding as at the end of Rs.1,61,07,162/- as comprising of caution money of Rs.1,33,41,150/- and other pertaining to liability of staff and other payables of Rs.23,59,585/- and having also satisfied the AO with regard to the nature of caution money as being received as security from students to be refunded on their leaving school, and having demonstrated the said facts to the satisfaction of the AO as noted by him in his remand report, we find that there remains no grievance to the Revenue on this count. The order of the ld.CIT(A) therefore, deleting the addition of Rs.1,61,07,162/- is accordingly upheld. The ground nos.3 and 4 raised by the Revenue are dismissed. 12. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 19 th April, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 19/04/2023 vk*