M/s Om Educational and Social Welfare Trust, Yamunanagar V. DCIT, Yamunanagar

ITA 684/CHANDI/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0448 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Loose papers; Opportunity of being heard; Deemed to accrue or arise in india
• Section: 69C; 133A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES B, CHANDIGARH !, ' # $ . .. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R.KUMAR, AM ITA 684/CHD/2015 ASSESSMENT YEAR: 2009-10 M/S OM EDUCATIONAL & VS THE DCIT, SOCIAL WELFARE TRUST, YAMUNA NAGAR. # 76, BYE PASS ROAD, KAMANI CHOWK, YAMUNA NAGAR. PAN : AAATO2033K APPELLANT RESPONDENT / ASSESSEE BY : SHRI TEJ MOHAN SINGH / REVENUE BY : SHRI MANJIT SINGH, SR.DR / DATE OF HEARING : 15.10.2018 / D ATE OF PRONOUNCEMENT : 28.11.2018 ')/ ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASS AILING THE CORRECTNESS OF THE ORDER DATED 14/05/2015 OF CIT(A) PAN CHKULA PERTAINING TO 2009-10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE A DDITION OF RS.22,50,000/- TREATING THE SAME AS DEEMED INCOME U NDER SECTION 69C OF THE ACT WHICH IS ARBITRARY & UNJUSTI FIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HA S FURTHER ERRED IN TREATING THE DONATIONS RECEIVED TO BE ANONYMOUS DONATIONS COVERED BY THE PROVISIONS AS ENUNCIATED IN SECTION 158BBC OF THE ACT WHICH IS AR BITRARY AND UNJUSTIFIED. 3. THAT DECISIONS AS RELIED UPON BY THE LD COMMISSIONE R OF INCOME TAX(APPEALS) ARE NOT APPLICABLE IN THE FA CTS OF THE INSTANT CASE AND AS SUCH THE ADDITION MADE OF RS.22,50,000/- IS ARBITRARY AND UNJUSTIFIED. 2. THE LD. AR REFERRING TO RECORD SUBMITTED THAT THE EXP LANATION OFFERED HAS NOT BEEN CONSIDERED BY THE CIT(A) THOUGH IT HAS BEEN REPRODUCE D. ITA/684/CHD/2015 PAGE 2 OF 5 3. THE LD. SR.DR THOUGH PLACED RELIANCE UPON THE IMPUGNED ORDER HOWEVER, HAD NO OBJECTION IF THE ISSUE IS REMANDED BACK FO R GRANTING THE ASSESSEE OPPORTUNITY OF BEING HEARD AS ADMITTEDLY ON TH E FACE OF THE RECORD IT APPEARED THAT ASSESSEE HAD NOT BEEN CONFRON TED WITH VIEW BEING TAKEN BY THE CIT(A) IN AS MUCH AS RELYING UPON SECTION 115 BBC. 4. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST M/S OM EDUCATIONAL & SOCIAL WELFARE TRUST YAMUNA NAGAR TRUST CRE ATED ON 01.11.2007 WAS SUBJECTED TO A SURVEY OPERATION UNDER S ECTION 133A OF THE INCOME TAX ACT, 1961ON 27/03/2009. THE STATED AIMS OF T HE ASSESSEE TRUST WERE TO ESTABLISH/MAINTAIN/DEVELOP AND RUN EDUCAT IONAL INSTITUTIONS TO PROVIDE EDUCATION IN DIFFERENT FIELDS OF LEARNING. THE ASSES SEE TRUST AS PER RECORD, HAS STARTED MANAGEMENT INSTITUTE UNDER TH E NAME AND STYLE OF M/S OM INSTITUTE OF MANAGEMENT AT VILLAGE LANDHORA TEHS IL JAGADHRI, DISTRICT YAMUNA NAGAR MANAGEMENT AND THE TRUST GOT AP PROVAL FROM ALL INDIA COUNCIL FOR TECHNICAL EDUCATION, KURUKSHETRA, DEPARTM ENT OF TECHNICAL EDUCATION, HARYANA FOR START OF THE COLLEGE FROM 2 00809. DURING THE COURSE OF SURVEY, SEVERAL LOOSE DOCUMENTS REG ARDING PAYMENT MADE TO A BUILDING CONTRACTOR ON ACCOUNT OF CONSTRUCTION OF BUILDING WERE FOUND WHICH WERE NOT FOUND RECORDED IN ITS REGULAR BOOKS OF ACCOUNTS. ACCORDINGLY, THE ASSESSEE AS PER RECORD HAD SURRENDER ED AN AMOUNT OF RS.22,50,000/- AS ADDITIONAL INCOME ON ACCOUNT OF UNDISCLOSED INVESTMENT MADE IN THE CONSTRUCTION OF BUILDING. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE CONSTRUCTION EXPENSES PERTA INED TO THE PRE- OPERATIVE PERIOD, THEY OBVIOUSLY COULD NOT HAVE BEEN MET FROM THE REGULAR RECEIPTS/INCOME OF THE TRUST AND THUS, REQUIRED THE ASSE SSEE TO EXPLAIN WHY IT SHOULD NOT BE ADDED AS UNDISCLOSED INCOME. ATTENTIO N OF THE ASSESSEE WAS INVITED TO THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF M/S FAKIR MOHAMMAD HAJI HASSAN VS CIT (247 ITR 290) . NOT ACCEPTING THE EXPLANATION, THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE CI T(APPEALS) ATTENTION WAS INVITED TO THE STATEMENTS RECORDED IN THE COURSE OF THE SEARCH. FOR READY REFERENCE THE RELEVANT EXTRACT FROM T HE IMPUGNED ORDER IS REPRODUCED HEREUNDER : 5. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE WRITTEN SUBMISSION FILED BY THE APPELLANT. IT IS NOTED THAT A SURVEY U/S 133 A OF THE ACT WAS CARRIED OUT AT THE APPELLANT'S PRE MISES ON ITA/684/CHD/2015 PAGE 3 OF 5 27.03.2009. CERTAIN DISCREPANCIES WERE FOUND BY THE SURVEY TEAM. DURING THE SURVEY, A STATEMENT OF SH. PANKAJ GOYAL S/O SH. RAJ KUMAR GOYAL WAS RECORDED ON OATH. SH. PANKAJ GO YAL WAS WORKING AS TREASURER IN OM EDUCATIONAL & SOCIAL WEL FARE TRUST. REGARDING THE QUERY ON CONSTRUCTION OF BUILDING HE REPLIED THAT BUILDING WAS GOT CONSTRUCTED THROUGH CONTRACTOR M/S A.R. EMPIRES PVT. LTD., PARWANOO. REGARDING THE PAYMENTS MADE TO THE CONTRACTOR AND THE COST OF BUILDING HE REPLIED THAT TOTAL PAYM ENT TO THE CONTRACTOR FOR CONSTRUCTION OF BUILDING HAS BEEN MA DE AT RS.69.00.000 - APPROXIMATELY AND THE TOTAL COST O F BUILDING AS PER BOOKS IS RS.69,29,634/-. THEREAFTER, IN REPLY TO AN OTHER QUERY, HE STATED AS UNDER :- 'Q. AS PER LOOSE PAPERS FOUND IN THE PREMISES TOTAL PAYMENT MADE TO M/S A.R. EMPIRE PVT. LTD. IS SHOWN AS RS.91,82,177/- AS AGAINST BILL AMOUNT OF RS.98,50,1 10/-. PLEASE EXPLAIN THE DIFFERENCE IN PAYMENT TO THE CON TRACTOR AS PER BOOKS AND THE LOOSE PAPER. ANS. THE DIFFERENCE OF RS. 22,52,543/- BEING THE DI FFERENCE IN PAYMENT TO THE CONTRACTOR AND AMOUNT OF BUILDING IS DUE TO THE REASON THAT THE TRUST RECEIVED CERTAIN D ONATION WHICH MAY NOT HAVE BEEN RECORDED IN THE BOOKS OF AC COUNTS AND WERE UTILIZED FOR CONSTRUCTION OF BUILDING. HOW EVER, TO AVOID ANY LITIGATION AND FOR PEACE OF MIND I DECLAR ED AN INVESTMENT OF RS. 22.52 LACS IN THE ACCOUNT OF BUIL DING OVER AND ABOVE THE COST OF CONSTRUCTION WHATEVER HAS BEE N SHOWN IN THE BOOKS OF ACCOUNT SUBJECT TO NO PENAL ACTION.' SUBSEQUENTLY, THE APPELLANT ISSUED A LETTER DATED 2 8.03.2009 ADDRESSED TO THE JOINT COMMISSIONER, YAMUNA NAGAR STATING THE REIN AS UNDER :- 'DURING THE COURSE OF SURVEY, SOME DISCREPANCIES WE RE NOTICED IN VALUE OF BUILDING AS PER BOOKS OF ACCOUN T AND LOOSE PAPERS. IN ORDER TO COVER UP THESE DISCREPANCIES AND TO BUY PEACE OF MIND I DECLARED A SUM OF RS.22.5 LACS AS INVESTMENT IN CONSTRUCTION O F BUILDING OVER AND ABOVE THE COST OF BUILDING AS PER BOOKS OF ACCOUNT SUBJECT TO NO PENAL ACTION. I AM ALSO HANDING OVER THE POST DATED CHEQUE FOR RS. 7.6 5 LACS TOWARDS ADVANCE TAX LIABILITY. THIS DECLARATIO N IS IRREVOCABLE. ' HOWEVER, IN THE RETURN OF INCOME THE APPELLANT CRED ITED THE ADDITIONAL SURRENDERED INCOME IN THE INCOME & EXPEN DITURE ACCOUNT AS MISCELLANEOUS INCOME. THE SURRENDERED AM OUNT WAS INCLUDED IN THE TOTAL RECEIPTS OF RS.45,95,266/- AN D AFTER CLAIM OF VARIOUS EXPENSES, THE EXCESS OF EXPENDITURE OF RS.2 ,83,234/- OVER THE INCOME WAS SHOWN. THIS SHOWS THAT THE ENTI RE ADDITIONAL INCOME SURRENDERED DURING THE COURSE OF SURVEY WAS SET OFF AGAINST EXPENSES. THE AO CONSIDERED THE ADD ITIONAL INCOME OF RS.22,50,000/- INVESTED IN CONSTRUCTION O F BUILDING AS DEEMED INCOME AND BROUGHT TO TAX U/S 69C OF THE ACT AFTER RELYING ON THE DECISION OF FAQIR MOHD. HAZI HASSAN (SUPRA). THE AO ALSO DISTINGUISHED ON FACTS THE DECISIONS RELIED UPON BY THE APPELLANT IN ITS ASSESSMENT ORDER WHICH WERE AGAIN RELIED UPO N DURING THE APPELLATE PROCEEDINGS. AFTER CONSIDERING THE VARIOU S SUBMISSIONS OF THE APPELLANT, THE AO CONCLUDED THAT ADDITIONAL INCOME OF RS,22,50,000/- SURRENDERED DURING THE COURSE OF SUR VEY IS ITA/684/CHD/2015 PAGE 4 OF 5 ASSESSABLE SEPARATELY AS PER PROVISIONS OF SECTION 69C OF THE ACT. 6. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE CIT( A) THOUGH IN THE SUBSEQUENT PARAS TOOK NOTE OF THE FACT THAT THE A SSESSEE AS PER THE STATEMENTS RECORDED SUBMITTED THAT THE DIFFERENCE WAS E XPLAINABLE FROM DONATIONS NOT RECORDED IN THE BOOKS, THE CIT(A) RELYING UPON SECTION 115 BBC CONCLUDED THE ISSUE HOLDING THAT THESE WERE ANONYMO US DONATIONS. THE LD. AR INVITING ATTENTION TO THE SAME HAS SUBMITTED T HAT AT NO STAGE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER REQUIRED THE ASSESSEE TO ADDRESS WHETHER THE NAMES OF THE DON ORS WERE AVAILABLE WITH THE ASSESSEE NOR HAS THE CIT(A) WHILE APPLYING THE P ROVISIONS OF SECTION 115 BBC HAS NOT CARE TO GIVE THE ASSESSEE ANY NOTICE TO ADDRESS THE SAME AND HAS STRAIGHTAWAY HELD THESE TO BE ANONYM OUS WHEREAS ON FACTS IT WAS HIS SUBMISSION THAT THE ASSESSEE HAS FULL DETA ILS OF THE PEOPLE WHO MADE THE DONATIONS AND THUS THESE ARE NOT ANONYMOUS DONATIONS. IT WAS HIS LIMITED PRAYER THAT THE FACT THAT THE AMOUNT HAS BEEN APPLIED TO THE CONSTRUCTION IS A MATTER OF FACT WHICH HAS NOT BEEN DISPUTED BY THE TAX AUTHORITIES AND THE FACT THAT THE SOURCES ARE EXPLA INED AS DONATIONS WHICH HAS BEEN THE STAND TAKEN BY THE ASSESSEE IN THE COURSE OF THE SURVEY ITSELF AND REPEATED AT THE STAGE OF ASSESSMENT A S WELL AS THE APPELLATE STAGE ALSO, ACCORDINGLY, IT WAS HIS SUBMISSION THAT IN CASE THE ISSUE HAS TO BE STILL ADDRESSED ON FACTS AS TO WHETHER THE LIST OF PEO PLE WHO HAVE DONATED, IS AVAILABLE WITH THE ASSESSEE, THEN THE ASS ESSEE WHO HAS THE LIST MAY BE PROVIDED AN OPPORTUNITY TO PLACE IT ON RECORD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. ADMITTEDLY, CONSISTENTLY DURING THE C OURSE OF THE SURVEY ITSELF THE ASSESSEE HAS STATED THAT THE DISCREPA NCIES IN THE CONSTRUCTION BILLS WERE EXPLAINABLE FROM THE DONATIONS RECE IVED BY THE ASSESSEE. ADMITTEDLY, IN THE COURSE OF THE ASSESSMENT PR OCEEDINGS ASSESSEE WAS NOT REQUIRED TO ADDRESS WHETHER THE ASS ESSEE WAS IN A POSITION TO ADDRESS WHO HAD MADE THE DONATIONS. EVEN ON A PERUSAL OF THE IMPUGNED ORDER, IT IS EVIDENT THAT CONCLUSIONS HAVE BEEN DRAWN WITHOUT PROVIDING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. A CCORDINGLY, ADDRESSING THE LIMITED PRAYER OF THE ASSESSEE QUA THE ISS UES AT HAND, WE DEEM IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER BAC K TO THE FILE OF THE CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW ITA/684/CHD/2015 PAGE 5 OF 5 AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SAID ORDER WAS PRONOUNCED AT THE TIME OF HEARING ITSELF IN THE PRESENCE OF THE PARTIES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL SENSE ORDER PRONOUNCED IN THE OPEN COURT ON 28.11. 2018. SD/- SD/- ( . .. . & ) ( ! ) (DR. B.R.R. KUMAR) (DIVA SINGH) '( #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER + , !'#$ %&#/ COPY OF THE ORDER FORWARDED TO : 1. %$''(/ THE APPELLANT - 2. )*'(/ THE RESPONDENT - 3. * * +/ CIT 4. * * + (%$')/ THE CIT(A) 5. #./* 0, * %$'* 0 , 234/5/ DR, ITAT, CHANDIGARH 6. /4 6'/ GUARD FILE / BY ORDER, 7* $8 / ASSISTANT REGISTRAR