RAWAT BAL VIDHA NIKETAN SAMITTEE, JAIPUR V. ACIT CEN CIR 2, JAIPUR

ITA 660/JPR/2024

• Counselvise Citation: [2024] 103 COUNSELVISE.COM (IT) 3932 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 09-05-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Assessee Lawyers: ANOOP BHATIA
• Keywords: Opportunity of being heard; Unexplained expenditure; Unexplained investment; Income from undisclosed sources; Principle of natural justice; Charitable institution; Maximum Marginal Rate
• Section: 148; 143(3); 143(2); 11; 12AA; 131; 22; 12A; 133A; 20

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh]U;kf; dlnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 659 & 660/JPR/2024 fu/kZkj.k o"kZ@Assessment Year :2015-16 & 2017-18 Rawat Bal Vidha Niketan Samittee Vivek Vihar, Sodala, Shyam Nagar, Jaipur. cuke Vs. ACIT, Central circle-2, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABTR1522K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Anoop Bhatia (C.A.) jktLo dh vksjls@Revenue by: Shri Anil Dhaka (CIT) lquokbZ dh rkjh[k@Date of Hearing : 04/07/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 02/09/2023 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. These two appeals are filed by assessee and is arising out of the order of the Learned Commissioner of Income Tax (Appeals)-4, Jaipur both dated 20.03.2024 [herein after “CIT(A)”] for assessment years 2015-16 & 2017-18 respectively. 2. Since the issues involved in these appeals of the assessee for both years are almost identical, are common, both these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 2 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee 3. At the outset, the ld. AR has submitted that the matter pertaining to Rawat Bal Vidha Niketan Samittee in ITA No. 659/JPR/2024 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 659/JPR/2024 is taken as a lead case. In ITA No. 659/JPR/2024, the assessee has raised following grounds:- “1. On facts and in the circumstance of the matter Ld. CIT(A) has grossly erred in deciding the appeal ex-parte, without affording adequate opportunity of being heard. Appellant prays that such ex-parte dismissal of appeal being against the principles of natural justice, the order deserves to be quashed; 1.1 That Ld. CIT(A) has further grossly erred in dismissing the appeal ex- parte without acknowledging the actual matrix of the case, in so far as when older appeals on the same issues, that cropped up after a search operation conducted in the case of appellant, were pending disposal before Ld. CIT(A). Appellant prays that such dismissal of appeal, merely on the grounds that no submissions could be made on time, when factually submissions made in earlier years had remained un-touched/un-attended for more than a year, has indulged in repetitive cycles of filing appeals before various judicial authorities on issues which are inter- connected and well in knowledge of Ld. CIT(A). The order passed deserves to be set-aside. Without prejudice to above and on merits:- 2. The appellant prays to raise all the grounds challenged before Ld. CIT(A) before the Hon’ble bench on merits.” 3 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee 4. Brief facts of the case are that the assessee filed its return of income on 29.09.2015 for the AY 2015-16 declaring a total income at Rs. NIL and the AO completed the assessment u/s 143(3) of the Act vide order dt. 22.09.2017 at a total income at Rs. NIL. Later on, on the basis of information gathered during the course of survey conducted on 16.03.2017 case was reopened after recording reasons and taking approval of the competent authority. The AO issued a notice u/s 148 of the Act to the appellant on 22.03.2019. In response to notice, assessee filed its return of income on 28.06.2019. AO issued a notice u/s 143(2) of the Act to the assessee on 04.09.2019. Finally, the AO completed the assessment vide order dated 30.12.2019 at a total income of Rs. 4,45,07,230/- It was further submitted that Society has been indulging in non-genuine activities and its books of accounts are also not genuine. The funds/income of the society have not been used as per objects of the Society and its income did not endure for the benefit of the public. Cash payments were made from the income of the Society including far construction at house of the trustee and his relatives. Thus, provision of section 13(1)(3) and 13(1)(d) of the Act are violated. Further, benefit of trust exemption u/s 11 of the Act denied by the ld. AO and case of the assessee was assessed as AOP at maximum Marginal Rate (MMR) as per proviso to section 164 of the Act. 4 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee Finally, the AO completed the assessment u/s 143(3) of the Act vide order dated 30.12.2019 at a total income of Rs. 4,45,07,229/- in the manner as under:- Particulars Amount Surplus as per original income and expenditure account 1,58,91,657/- Add- undisclosed investment in building as per para 5.3 Rs. 85,31,400/- Add-out of books cash payment to Shri Nathulal Kumawat and his sons Sh. Mukesh & Sh. Nemichand as per para 6 Rs. 1,23,84,572/- Add out of the books payment-unexplained expenditure as per para-7 Rs. 76,99,600/- Gross total income Rs. 4,45,07,229/- Rounded off to Rs. 4,45,07,230/- 5. Being aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) observed that various notices were issued to the assessee and requiring the assessee to file the details in support of grounds taken by the assessee. Since the assessee has not complied with the notices issued the ld. CIT(A) dismissed the appeal of the assessee ex-parte order. The extract of the finding of the ld. CIT(A) is reproduced as under:- “ Ground No. 1 5.2 I have considered the observations/findings of the AO in the assessment order for the year under consideration. During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. The facts in assessment order remain uncontroverted. 5 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee A survey u/s 133A of the Income-tax Act, 1961 was conducted on 16.03.2017 at the premises of the Samittee by the investigation wing on the allegation that the group had deposited unaccounted cash in various bank accounts post demonetization, and the assessee group is engaged in unaccounted purchases and sale of land and unaccounted investment in construction on large scale. During the course of Survey various incriminating documents were found and impounded. The impounded documents show that there is huge unaccounted investment in construction of school building and houses of trustees. Payments for construction was made in cash. Considering the evidences filed during the course of survey proceedings that huge undisclosed investment has been made in school building, the matter was referred to Valuation Officer AO's letter dated 23-09-2019 u/s 142A of the Act. A copy of this reference was also given to the assessee also. The valuation officer submitted report dated 08-11-2019. Valuation officer estimated investment in construction in F.Y. 2014-15 in school building situated at Pratap Nagar at Rs.85,31,400/-. During the course of assessment proceedings the assessee Society filed revised income and Expenditure account as well as revised balance sheet. As per said revised balance sheet filed also, the investment is Rs. 78,65,005/-. However as per original balance sheet it was nil. Therefore, vide AO's letter dated 26-11-2019 the assessee was required to explain the difference. In response to the same the assessee furnished reply dated 2-12-2019 as under- As compared to the construction work of Rs. 78,65,005/- appearing in the books of assesse Samittee, the valuation offered by the Valuation Officer being of Rs.85,31,400/- we would like to mention that such different is negligible as it even does not exceed 10% of the value appearing the books of the Samitte. It would not be irrelevant to mention that the valuation of construction work is not a matter of precision since it is an estimate only therefore the variation made by the Valuation Officer may be different to the amount shown in the books of the assessee but difference: being insignificant invites no; addition or fault on the part of assessee. The assessee has offered no explanation in respect difference in the investment as per original balance sheet vis-a-vis shown in revised balance sheet. Explanation has been offered only in respect of difference between investment shown in revised balance sheet and valuation done by the valuation officer. The explanation furnished is only self- serving. Considering the fact that the assessee has shown different figures of investment in building in balance sheets submitted at different, confirms that the assessee's books of accounts are not genuine. As a matter of fact, both the balance sheet is audited. Assessee 6 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee has comes out with a new balance sheet only to cover up the faults found during the course of Survey. Accordingly, the difference of Rs. 85,31,400/- (valuation done by Valuation Officer Rs. 85,31,400/- and Rs. nil / Investment shown in the Original Balance Sheet) as added back to the total income of the assessee by the Id. AO is hereby upheld. Accordingly, this Ground of Appeal is dismissed. Ground No. 2 6.2 I have considered the observations/findings of the AO in the assessment order for the year under consideration. During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. The facts in assessment order remain uncontroverted. During the course of survey proceedings, various incriminating documents were impounded from the premises. From the perusal of the incriminating documents (page no. 13 to 25 of annexure-1 and page no. 21 of annexure-2), it has been observed that during the year under consideration cash payment was made to Shri Nathu Lai Kumawat and his sons Shri Mukesh & Shri Nemi Chand (Babloo) towards construction of school at Vivek Vihar and residence of Shri B. S. Rawat at Sidharath Nagar. That means the payments in cash to contractors towards construction work of school building as well as residente of trustee were made out of the funds generated by the Semittee which were not entered in regular books of accounts. It is noted from the assessment order that page number 14 is in the hand writing of Sh Bachan Singh Rawat. The entries mentioned in this page are found in the page number 23, 24, 25 also as above. Basically page 14 reflects some confirmation of receipt of payments in cash by Shri Nathu Lai Kumawat, Mukesh and Bablu (Nemichand). These payments were made for the purpose of construction at Pratap Nagar, Schools situated at Vivek Vihar and House No. 414, Sidharth Nagar, Jaipur to the aforesaid parties during various financial years. The aggregate value of cash payments to aforesaid parties in this year works out to Rs. 1,23,00,000/-. It is seen that as per Page No. 24 & 25 from 09.06.2012 to 07.02.2013 payment of Rs. 1,19,21,000/- was made out of which Rs. 19, lakhs as paid vide cheque. Remaining amount of Rs. 1,00,21,000/- for the period 09.06.2012 to 07.02.2013 as per page no. 24 7 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee &25 was paid in cash. Similarly, as per page 23 and 24 from 25.01.2013 to 19.03.2015 Rs. 207,01,100/- was paid in cash. Total unaccounted cash transaction being Rs. 3,07,22,100 (1,19,21,000 less 19,00,000 (in cheque) 207,01,100) This cheque payment was from the account of Samittee. This clearly establishes that the said cash payments as mentioned in the same impounded documents also pertain to the Samittee and not to the Individual Shri Bachan Singh Rawat. The appellant offered Rs.1.88 crore for tax after taking into consideration cheque payment of Rs.19 lakhs from the gross amount of Rs. 2.07 crore. However, by mistake the gross amount was wrongly taken as Rs. 2.07 crore (in initial notice) whereas the correct gross amount of unaccounted cash transaction is Rs. 3,07,22,100. Further, as per page 21 of Annexure also payments were also made in cash Accordingly, in this year Rs.Rs.84,572-/ was also paid in cash, which is also not recorded in the books of accounts. The Assessee Society has admitted that Cash payments were made to Sh. Nathulal and his sons and have now been shown to the extent of Rs 78,65,005/- in the said revised accounts. However, it has not accepted the total amount of cash payment made to Sh Nathulal and his sons. It is noteworthy that the cash payments in question were accepted as unexplained by Sh. Rawat in his reply to question no 20 of his statements. Out of Rs. 3,07,22,100 as discussed above, during the during the year Rs 1,23,00,000/- was paid. This payment was made towards construction work of school building at Pratap Nagar, home and boundary wall of other properties. The same has not been accounted for in the books of accounts as admitted by Shri B. S. Rawat, Secretary, in his statement vide reply to question no. 20 recorded during the course of survey proceedings u/s 133A of the IT Act on 16.03.2017. The details of payments were found at the premises of the Society. The payments were made from the unaccounted income of the Society. Apparently, activities of the Society have been generating income which is not accounted for in the regular books of accounts and also not applied for charitable purposes. As a matter of fact ga per original balance sheet investment of Rs nil is reflecting. Sh. Bachan Singh Rawat vide his statement recorded u/s 131 during the course of survey admitted that he made payment to Shri Nathu Lal. However, the money belongs to the Society. He admitted the payment out of his own unaccounted income to protect the Society from getting its registration u/s 12A cancelled. As a matter of fact, the money belongs to the Society which has not accounted for these receipts in its books. It is also important to mention that notice u/s 148 was also given to Sh. Bachan Singh for AY 2015-16. In response to the notices ROI was filed by him in Circle-1, Jaipur wherein nо such undisclosed expenditure was disclosed by him. 8 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee There is absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities. In view of the above discussion, this expenditure of Rs.3.07 crores (3.26- 0.19creres paid through cheque) which was added by the Id. AO to the income of the appellant in different years as unexplained expenditure incurred by the Sociery which is not recorded in regular books of accounts out of which the cash payment of Rs 1,23,00,000/- pertains to the year under appeal and this addition is hereby upheld. Further, as stated above as per page 21 of Annexure 2 Rs 84,572/- was also made in cash. As per reply filed, assessee has not been able to prove that such payments were made from explained sources and were not made in cash. Therefore addition of Rs 84572/- made on account of cash payment out of books of is also hereby upheld. Accordingly, this Ground of Appeal is dismissed. Ground No. 3 7.2 I have considered the observations/findings of the AO in the assessment ender for the year under consideration. During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO, It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. The facts in assessment order remain uncontroverted. As per documents impounded during the course of survey u/s 133A of the I.T. Act, 1961 conducted on 16.03.2017 it is also noticed that unaccounted payments were also made in cash from F.Y. 2011-12 to 2016-17 totaling to Rs. 3,29.13.600/- (as per page no.15 to 22 of annexure -Al & page no. 9-10 of annexure-2, page 3 of annexure-3, page no. 4-5,8 & 9 of annexure A-4). In A.Y. 2015-16, payment of Rs.76,99,600/- was made. Apparently, payment was made from unaccounted income. Vide letter dated 27-11-2109 the assessee was required to explain. In response to the same vide reply dated 03-12-2019 the assessee submitted evasive reply instead of reconciling the entries in the books of accounts, in absence of books of accounts verification could not be made. The entries remain unexplained even during the appeal proceedings. Therefore considering the facts, the addition of Rs Rs.76,99,600/- to the income of the appellant which is cash payments made out of books as unexplained expenditure is hereby upheld. Accordingly, this Ground of Appeal in dismissed.” 9 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee 6. As the assessee did not receive any relief from the order of the ld. CIT(A), assessee preferred the present appeal before us. The ld. AR for the assessee has filed a detailed submissions in support of the grounds so raised and is reproduced hereinbelow:- “Briefly stating the assessee is a charitable institution registered u/s 12AA of the IT Act, 1961. A survey u/s 133A of the Act was conducted on the Rawat group on 16.03.2017 and on the basis of information gathered a notice u/s 148 of the Act was issued for AYs 2012-13 to 2016-17, and AY 2017-18 was selected for scrutiny. Assessments were completed for all the 6 Ays and additions were made on the basis of certain documents found during survey. The assessee preferred appeals before the First appellate authority against all the orders. The table below shows the details of such appeals filed by the assessee and their status:- AY Assessment completed u/s Appeal before CIT(A) Written submission filed before CIT(A) Status of Appeal CIT(A) 2012-13 147 r.w.s. 143(3) 27.01.2020 12.10.2021 07.02.2024 Pending 2013-14 147 r.w.s. 143(3) 29.01.2020 19.10.2021 07.02.2024 Pending 2014-15 147 r.w.s. 143(3) 29.01.2020 20.11.2021 27.02.2024 Pending 2015-16 147 r.w.s. 143(3) 25.01.2020 None Order passed ex- parte 2016-17 143(3) r.w.s. 147 04.09.2021 None Pending 2017-18 143(3) 27.01.2020 None Order passed ex- parte It is submitted that addition made in all the years were made on the same footing, based on the same material and thus the decision taken for any one AY would stand same for all the remaining years as well. The appeals for both the Ays under consideration (i.e AY 2015-16 and 10 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee 2017-18) were decided ex- parte by Ld. CIT(A), for the reason that the submissions could not be filed on the required dates. Further, since the additions made in the AYs under consideration are on the same footing as earlier AYs that are pending before Ld. CIT(A), it is prayed that the appeals may please be referred back to the file of Ld. CIT(A), so that a consistent view may be taken for all the similar additions made in all six years and oblige. It is also submitted that, all additions made in all the six years in the case of assessee have been made in the hands of the Trustee Shri Bachhan Singh Rawat (PAN AAZPR2494J) as well and again on substantive basis. The appeals for all 6 years in case of the trustee are also pending before Ld. CIT(A), and therefore it is humbly prayed that the matters under consideration may kindly be restored to the file of Ld. CIT(A), so that a consistent view may be taken in all the years after hearing the cases on merits and oblige.” 6.1 During the course of hearing, the ld. AR for the assessee prayed that the Id. CIT(A) has passed the ex-parte order and the assessee was not provided adequate opportunity of being heard. Thus, the assessee may be provided one more opportunity to advance his arguments/submissions before the ld. CIT(A) in the interest of equity and justice. 7. Per contra, the ld. DR relied on the order of the ld. CIT(A) and submitted that the assessee is not serious about pursuing his case even though sufficient opportunity was granted and therefore, the order should be sustained and the appeal is restored back, it should be with cost. 8. After hearing both the parties and perusing the materials available on record, it is noted that the assessee has not filed any submissions and evidences relating to 11 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee the above case before the ld. CIT(A) and thus the ld.CIT(A) has no other alternative except to confirm the action of the AO. It is also noted that the ld. AR of the assessee prayed for one more chance to contest the case before the ld.CIT(A) while the ld. DR relied on the order of the ld. CIT(A). The Bench feels that one more chance be given to the Assessee to contest the case before the ld.CIT(A) and the appeal is restored to the file of the ld. CIT(A) for afresh adjudication and the assessee directed to submit the necessary documents / evidences concerning the issue. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes. 9. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by ld. CIT(A) independently in accordance with law. 10. The Bench feels that the fact in the case Rawat Bal Vidha Niketan Samittee in ITA No. 660/JPR/2024 is exactly the similar to the fact ITA No. 659/JPR/2024 and therefore, it is not imperative to repeat the fact in ITA No. 660/JPR/2024. The 12 ITA No. 659 & 660/JPR/2024 Rawat Bal Vidha Niketan Samittee decision taken by us in ITA No. 569/JPR/2023 shall apply mutatis mutandis to ITA No. 660/JPR/2023. In the result, the appeals of the assessee are allowed for statistical purpose. Order pronounced in the open court on 02/09/2024. Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 02/09/2024 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Rawat Bal Vidha Niketan Samittee, Jaipur. 2. izR;FkhZ@ The Respondent- ACIT, Central Circle-2, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZQkbZy@ Guard File (ITA No. 659 & 660/JPR/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar