Deputy Commissioner of Income Tax (Exemption), Lucknow V. Ranju Singh Educational Society, Varanasi

ITA 662/LKW/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5549 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 12-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Set aside
• Section: 68; 12AA; 22

Judgement Text

I.T.A. NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 DY.C.I.T.(EXEMPTIONS), LUCKNOW. VS. M/S RANJU SINGH EDUCATIONAL SOCIETY, LEDHUPUR, ASHAPUR, SARNATH, VARANASI. PAN:AAAAR 6660 E (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A), VARANASI DATED 08/08/2018 PERTAINING TO ASS ESSMENT YEAR 2015- 2016. THE ONLY GROUND TAKEN BY THE REVENUE IS REPR ODUCED BELOW: 1. LD. CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION/DISALLOWANCE MADE U/S 68 OF THE I.T.ACT, 1 961 AMOUNTING TO RS.2,25,57,797/-, IGNORING THE FACT TH AT THE ASSESSEE DID NOT PRODUCE ANY CONCLUSIVE EVIDENCE IN RESPECT OF 'SECURITY DEPOSIT FROM STUDENTS' AND THE LD. CIT(A) HAS ALSO NOT MADE ANY ENQUIRIES EITHER HIMSELF OR BY CALLING FOR A REMAND REPORT FROM THE AO ON THIS ISSUE. 2. AT THE OUTSET, LEARNED D. R. SUBMITTED THAT LEAR NED CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE WITHOUT CALLING FOR REMAND REPORT FROM THE APPELLANT BY SMT. ALKA SINGH, D.R. RESPONDENT BY DR. O. P. SHUKLA, ADVOCATE DATE OF HEARING 22/08/2019 DATE OF PRONOUNCEMENT 22 /0 8 /2019 I.T.A. NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 2 ASSESSING OFFICER ON THE ISSUE AND THEREFORE, IT WA S PRAYED THAT THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. LEARNED A. R., ON THE OTHER HAND, SUBMITTED THAT THERE WAS NO ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE LE ARNED CIT(A) THEREFORE, THE QUESTION OF GETTING REMAND REPORT FROM THE ASSE SSING OFFICER DOES NOT ARISE. LEARNED A. R. IN THIS RESPECT SUBMITTED THA T THE FINDINGS OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT FILED A NY EVIDENCE IN RESPECT OF SECURITY DEPOSIT IS NOT CORRECT AS IS APPARENT FROM THE ORDER OF THE ASSESSING OFFICER HIMSELF WHERE HE HAS REPRODUCED THE REPLY O F THE ASSESSEE DATED 29/11/2017. IT WAS SUBMITTED THAT FROM THE SAME DO CUMENT THE LEARNED CIT(A) HAS MADE A FINDING OF FACT THAT OUT OF RS.2, 25,57,797/-, AN AMOUNT OF RS.2,13,16,997/- WAS OPENING BALANCE AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PARA 8 OF THE ORDER OF LEARNED CIT(A ). OUR ATTENTION WAS ALSO INVITED TO PAGE 34 OF THE PAPER BOOK WHERE A COPY O F BALANCE SHEET OF THE ASSESSEE FOR THE YEAR ENDING 31/03/2014 WAS PLACED AND WHEREIN THE SECURITY DEPOSIT FROM STUDENTS EQUIVALENT TO RS. 2, 13,16,997/- WAS MENTIONED IN THE BALANCE SHEET. LEARNED A. R. ARGU ED THAT NO FRESH DOCUMENT WAS FILED BEFORE LEARNED CIT(A) AND LEARNE D CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE BY RECORDING HIS CLEAR FINDI NGS. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE IS A SOCIE TY REGISTERED U/S 12AA OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN SECURITY DEPOSIT F ROM STUDENTS. THE QUERY OF THE ASSESSING OFFICER IS REPRODUCED BELOW: 2. IN THE BALANCE SHEET FOR THE YEAR ENDING 31.03. 2015 THERE IS 'SECURITY DEPOSIT FROM STUDENTS' AMOUNTING TO RS. 2,25,57,797/-. PLEASE EXPLAIN WITH CONCLUSIVE EVIDE NCE THE SOURCE OF SUCH DEPOSITS, OTHERWISE IT WILL BE CONSI DERED AS I.T.A. NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 3 UNEXPLAINED CASH CREDIT AND ADDED U/S 68 OF THE INC OME TAX ACT, 1961. 3. YOU ARE ALSO REQUESTED TO PROVIDE COMPLETE BOOK S OF ACCOUNTS WITH BILLS AND VOUCHERS.' THE REPLY FURNISHED BY THE ASSESSEE IS REPRODUCED B Y THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDE R: MOST HUMBLY AND RESPECTFULLY, AS REQUIRED BY YOUR GOOD OFFICE, WE ARE SUBMITTING HEREWITH FOLLOWING DOCUMENTS FOR YOUR KIND PERUSAL. 1) CASH BOOK 2) LEDGER 3) BANK ACCOUNTS 4) COPY OF SECURITY DEPOSIT RECEIVED FROM CHILDRE N(LEDGER) 5) COPY OF FIXED ASSETS ACCOUNTS TRANSFER TO THE INTERNAL ACCOUNTS(LEDGER) FURTHER, WE HAVE RECEIVED SECURITY DEPOSIT FROM STU DENTS OF RS. 2,25,57,797/- (TWO CRORES TWENTY FIVE LAKHS FIFTY S EVEN THOUSANDS SEVEN HUNDRED NINETY SEVEN ONLY AS ON DAT ED 31.03.2015). SIMULTANEOUSLY DEPOSITED INTO FIXED DE POSIT ACCOUNT MAINTAINED WITH THE UNION BANK OF INDIA AND UCO BANK, VARANASI. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE CO NTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS NOT ABLE TO FILE CON CLUSIVE EVIDENCE IN RESPECT OF SECURITY DEPOSIT FROM STUDENTS WHEREAS T HE ASSESSEE HAD FILED CASH BOOK, LEDGER, BANK ACCOUNT, COPY OF SECURITY D EPOSIT LEDGER ETC. TO ASSESSING OFFICER AND THEREFORE, THE FINDINGS OF TH E ASSESSING OFFICER THAT THE ASSESSEE DID NOT FILE CONCLUSIVE EVIDENCE IN RE SPECT OF SECURITY DEPOSIT FROM STUDENTS IS NOT CORRECT. THE FACT OF OPENING BALANCE IN RESPECT OF SECURITY DEPOSITS FROM STUDENTS AMOUNTING TO RS.2,1 3,16,997/- IS ALSO SUPPORTED BY THE COPY OF BALANCE SHEET OF THE PREVI OUS YEAR PLACED AT PAGE 34 OF THE PAPER BOOK. BEFORE LEARNED CIT(A) NO FRE SH DOCUMENT WAS FILED BY THE ASSESSEE THEREFORE, THE GROUND TAKEN BY THE REVENUE IS NOT MAINTAINABLE. FOR THE SAKE OF COMPLETENESS, WE REP RODUCE THE FINDINGS OF LEARNED CIT(A), AS CONTAINED FROM PARA 8 TO 10 OF H IS ORDER: I.T.A. NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 4 8. IT IS SEEN THAT THE ASSESSEE HAS CLEARLY SUBMIT TED BEFORE THE ASSESSING OFFICER THAT THE SECURITY DEPOSIT FRO M THE STUDENT HAS BEEN RECEIVED AMOUNTING TO RS.2,25,57,797/-. F URTHER THE SAID AMOUNT HAS BEEN DEPOSITED INTO FD ACCOUNT MAIN TAINED WITH UNION BANK OF INDIA AND UCO BANK. FURTHER IT IS ALS O SEEN THAT THE SECURITY DEPOSIT ACCOUNT CONTAINS OPENING BALAN CE OF RS.2,13,16,997/- WHICH CANNOT BE ADDED DURING THE Y EAR UNDER CONSIDERATION. FURTHER THE DETAILS OF SECURITY DEP OSIT RECEIPT DURING THE YEAR AMOUNTING TO RS.13,65,800/- ONLY HA S BEEN RECEIVED AND A SUM OF RS.1,25,000/- HAS BEEN REFUND ED TO THE STUDENTS OUT OF SECURITY DEPOSITS. THE DETAILED ST ATEMENT OF SECURITY DEPOSITS WAS ALSO SUBMITTED BEFORE THE ASS ESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IF TH E ASSESSING OFFICER HAS ANY DOUBT ABOUT THE CORRECTNESS OF THE LEDGER ACCOUNT OF SECURITY DEPOSIT ACCOUNT, HE SHOULD HAVE ASKED FOR THE ORIGINAL FEE RECEIPT AND REFUND VOUCHER FOR VERIFIC ATION. WITHOUT EXAMINING THE SAME, THE ASSESSING OFFICER HAS MADE AN ADDITION NOT ONLY OF THE AMOUNT RECEIVED DURING THE YEAR BUT ALSO THE OPENING BALANCE IN THIS ACCOUNT AND MADE TOTAL ADDI TION OF RS.2,25,57,797/-. THE APPELLANT HAS BEEN ABLE TO P ROVE THAT SECURITY DEPOSIT HAS BEEN RECEIVED FROM THE STUDENT S. FURTHER THE SECURITY DEPOSITS RECEIVED HAVE BEEN UTILIZED I N MAKING DEPOSITS IN UNION BANK OF INDIA AND UCO BANK AS PER PROVISIONS OF THE ACT. 9. THE APPELLANT HAS FURTHER SUBMITTED THAT THE ASS ESSING OFFICER HAS DISALLOWED SECURITY DEPOSITS AND ADDED THE SAME TO THE INCOME OF THE APPELLANT BUT THE BENEFIT OF APPL ICATION HAS NOT BEEN GIVEN. IT WAS SUBMITTED THAT THE APPELLANT SO CIETY HAS ALREADY BEEN GRANTED REGISTRATION U/S 12AA OF THE I .T. ACT AND ACCUMULATION OF FUND U/S 11(1)(A) WHICH HAS DULY BE EN BROUGHT FORWARD FOR EARLIER YEAR BE APPLIED FOR APPLICATION OF FUND. THE APPLICATION OF FUND HAS BEEN SHOWN AS UNDER: 1. THAT THE LEARNED ASSESSING OFFICER HAS DISALLOWED T HE SECURITY DEPOSIT OF RS.22557797.00 BUT THE APPLICAT ION OF THE SAME HAS NOT GIVEN. THE APPELLANT HAS ALREA DY GRANTED REGISTRATION U/S 12AA AND ACCUMULATION OF F UND U/S 11(1)(A) WHICH HAS DULY BEEN BROUGHT FORWARD F ROM EARLIER YEAR BE APPLIED FOR APPLICATION OF FUND. T HE COMPUTATION OF INCOME OF THE SAME IS AS UNDER: RECEIPT AS PER COMPUTATION OF INCOME RS.47073794.00 I.T.A. NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 5 ADD:DISALLOW SECURITY DEPOSIT U/S RS.22557797.00 TOTAL RECEIPTS RS.69631591.00 LESS:APPLICATION OF FUND AS PER RS.46898642.00 COMPUTATION OF INCOME APPLICATION OF FUND OF TOTAL RECEIPTS AFTER DISALLOWANCE OF SECURITY DEPOSIT OF RS.22557797.00 AND ADDED IN THE RECEIPT TOTAL RS.69631591.00 OF 85% RS.59186852.00 THE APPELLANT HAS APPLIED THE FUND AS PER COMPUTATION OF INCOME RS.46898642.00 THE APPELLANT TO BE APPLIED THE EXPENDITURE AFTER ADDITION U/S 68@85% NET SURPLUS AFTER ADDITION (59186852-46898642) RS.(-)10488210.00 APPELLANT IS ELIGIBLE FOR TAKEN APPLICATION OF FUND UPTO RS.59186852.00 TAX AFTER DEDUCTION NIL 10. IN VIEW OF THESE FACTS, IT IS CLEAR THAT THE AP PELLANT HAS BEEN ABLE TO SHOW THAT SECURITY DEPOSITS HAVE IN FA CT BEEN RECEIVED BY THE STUDENTS AND ACCORDINGLY, THE SAME CANNOT BE INCLUDED IN THE INCOME OF THE APPELLANT U/S 68 OF T HE I.T. ACT. IN ANY CASE, THE ENTIRE AMOUNT HAS BEEN APPLIED AS PER THE PROVISIONS OF THE ACT. IN VIEW OF THE ABOVE, THERE REMAINS NO GROUND FOR ADDITION, ACCORDINGLY, THE ADDITION OF RS.2,25,57,979/- MADE BY THE ASSESSING OFFICER IS D ELETED AND THE APPEAL IS ALLOWED. THE ABOVE FINDINGS OF LEARNED CIT(A) ARE QUITE EXHA USTIVE WHEREIN WE DO NOT FIND ANY INFIRMITY. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE STANDS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 22/08/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:22/08/2019 *SINGH I.T.A. NO.662/LKW/2018 ASSESSMENT YEAR:2015-16 6 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 ASSISTANT REGISTRAR