Jt. CIT (OSD), (E), C-2, Chandigarh V. Ch. Lekh Raj Educational & Charitable Trust, Yamunanagar

ITA 717/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4418 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANDRAJIT SINGH CIT DR
• Keywords: Charitable institution; Deemed to accrue or arise in india; Revenue expenditure; Capital expenditure; TDS
• Section: 133(6); 13; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 717/CHD/2019 / ASSESSMENT YEAR : 2012-13 THE JCIT(OSD), (EXEMPTIONS) CIRCLE -2, CHANDIGARH ! SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, 111, SANTPURA, MODEL TOWN, YAMUNANAGAR ' # ./PAN NO: AAATC9657M '$/ APPELLANT &' '$ /RESPONDENT ()*+ /ASSESSEE BY : SHRI ROHIT GOEL, CA *+ / REVENUE BY : SHRI CHANDRAJIT SINGH, CIT DR , -*) .# /DATE OF HEARING : 11.11.2019 /0 *) .# / DATE OF PRONOUNCEMENT : 29.01. 2020 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 15.2.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA [HEREINAFTER REFERRED TO AS CIT (A)]. 2. THE REVENUE IN THIS APPEAL HAS TAKEN THE FOLLOWI NG GROUNDS OF APPEAL:- 2 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (APPEALS) HAS ERRED IN LAW IN ALLOWING THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITIONS OF RS. 9,10,37,838/- MADE BY THE AO AFTER PROPER VERIFICATIONS. 2. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (APPEALS) HAS ERRED IN LAW IN ALLOWING THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION AMOUNTING TO RS. 3,21,33,538/- ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS IGNORING THE FACT THAT THE UNSECURED LOANS AMOUNTING TO RS. 3,21,33,538/- REMAINED UNEXPLAINED EVEN AFTER ASSESSMENT & REMAND PROCEEDINGS. 3. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (APPEALS) HAS ERRED IN LAW IN DELETING THE ADDITION AMOUNTING TO RS. 5,89,04,300/- OF UNEXPLAINED CORPUS FUND RELYING ON THE HON'BLE ITAT ORDER IN ASSESSEE'S OWN CASE FOR A.Y. 2010-11 IN ITA NO. 436/CHD./2015 EVEN WHEN THE FACTUAL POSITION OF THE PRESENT CASE IS DIFFERENT IN RESPECT OF CORPUS FUND AS THE AO PROVIDED ENOUGH OPPORTUNITY TO EVERY DONOR FOR VERIFICATION OF DONATIONS IN PRESENT CASE. 4. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (APPEALS) HAS ERRED IN LAW IN ACCEPTING THE PLEA OF THE ASSESSEE THAT EVEN IF THE CORPUS DONATION IS TREATED AS NORMAL DONATION AND THE UNSECURED LOANS ARE DISALLOWED, THE APPLICATION TOWARDS THE OBJECTS REMAIN MORE THAN 85% OF THE TOTAL RECEIPTS, THEREBY NOT AFFECTING THE TAXABILITY OF THE ASSESSEE TRUST. 5. THAT THE APPELLANT CRAVES TO LEAVE, ADD OR AMEND ANY GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD OR DISPOSED OF. 3 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR 3. GROUND NO. 1 GROUND NO.1 IS GENERAL IN NATURE AS THROUGH THIS GROUND THE REVENUE HAS CONTESTED THE ACTION OF THE CIT(A) IN DELETING THE TOTAL ADDITION OF RS. 9,10,37,838/- MADE BY THE ASSESSING OFFICER. HOWEVER, THE AFORESAID TOTAL ADDITION MADE BY THE A SSESSING OFFICER, OUT OF THE ACTION OF THE CIT(A) IN DELETING THE ADDITI ON OF RS. 3,21,33,538/- HAS BEEN SEPARATELY CONTESTED VIDE GROUND NO.2 AND THE REMAINING ADDITION OF RS. 5,89,04,300/- HAS BEEN SEPARATELY C ONTESTED VIDE GROUND NO.3 OF THE APPEAL. HENCE, OUR ADJUDICATION IN RESP ECT OF GROUND NOS. 2 & 3 WILL AUTOMATICALLY COVER GROUND NO.1. THEREFORE , GROUND NO.1 DOES NOT NEED SEPARATE ADJUDICATION. GROUND NO. 3 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE ISSUE RAISED VIDE GROUND NO.3 OF THE APPEAL IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL DATED 22. 12.2015 PASSED IN THE CASE OF THE ASSESSEE IN ITA NO.436/CHD/2015 FOR EAR LIER ASSESSMENT YEAR 2010-11 5. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THAT AN AMOUNT OF RS.5,89,04,330/- WAS SHOWN BY THE ASSESSEE AS CORPU S FUND RECEIVED DURING THE YEAR. THE ASSESSEE WAS ASKED TO FURNISH THE NAMES AND ADDRESSES OF THE PERSONS ALONGWITH THE AMOUNT OF DO NATION FROM WHOM 4 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR THE SUM OF RS.5,89,04,330/- WAS RECEIVED. THE ASSES SEE SUBMITTED THE NAMES OF THE PERSONS WHO MADE THE CORPUS DONATIONS BY CHEQUE. HOWEVER, NO DETAILS LIKE ADDRESS, PAN ETC. HAVE BEE N SUBMITTED FOR VERIFICATION. AS REGARD TO CASH DONATIONS, THE ASSE SSEE HAS MERELY SUBMITTED THE CORPUS DONATION ACCOUNT AS APPEARING IN HIS OWN BOOKS OF ACCOUNT. EVEN NAME OF THE PERSONS WHO HAD GIVEN CAS H DONATIONS IN CORPUS WAS NOT MENTIONED. THE ASSESSING OFFICER AS KED THE ASSESSEE TO PROVIDE IDENTITY OF THE DONORS, THEIR CREDITWORTHIN ESS AND MODE OF TRANSACTION BUT THE ASSESSEE HAD ONLY PROVIDED A LI ST OF DONORS WITH NO ADDRESS, NO CREDITWORTHINESS. THE ASSESSING OFFICER OBSERVED THAT ONLY PROVIDING OF LIST OF DONORS WOULD NOT ESTABLISH THE GENUINENESS OF THE TRANSACTIONS. HE HELD THAT THE ASSESSEE WAS NOT ABL E TO PROVE THE GENUINENESS OF THE DONATIONS. ACCORDINGLY, THE ASSE SSING OFFICER MADE ADDITION OF RS.5,89,04,300/- TO THE INCOME OF THE A SSESSEE AS DEEMED INCOME U/S 68 OF THE ACT. IN APPEAL, THE LD. CIT(A), HOWEVER, DELETED THE ADD ITIONS SO MADE BY THE ASSESSING OFFICER WHILE RELYING UPON THE DEC ISION OF THE TRIBUNAL DATED 22.12.2015 (SUPRA) IN THE OWN CASE OF THE AS SESSEE. THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL FOR THE SAKE OF C ONVENIENCE IS REPRODUCED AS UNDER:- 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT A LIST CONTAINING NAME, ADDRESS AND 5 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR AMOUNT OF 78 PERSONS CLAIMED TO HAVE GIVEN CORPUS DONATION WAS PROVIDED BY THE ASSESSEE TO THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER CHOSE TO CALL ONLY 18 PERSONS OUT OF THESE 78 PERSONS. ON THE BASIS OF INTERPRETATION OF STATEMENTS OF THESE PERSONS, THE ASSESSING OFFICER HAS DRAWN INFERENCE AGAINST ALL THE 78 PERSONS AND MADE ADDITION UNDER SECTION 68 OF THE ACT, WHICH GOT CONFIRMED BY THE LEARNED CIT (APPEALS). WITHOUT GETTING INTO THE MERITS OF THE INTERPRETATION OF STATEMENTS OF THESE PERSONS, FIRS T OF ALL, WE DO NOT APPRECIATE THE WAY ASSESSING OFFICER HAS MADE ADDITION OF THE WHOLE AMOUNT OF CORPUS DONATION RECEIVED BY THE ASSESSEE. AS PER SECTION 68 OF THE ACT, THE ADDITION CAN BE MADE BY THE ASSESSING OFFICER IF HE IS NOT SATISFIED AS TO THE IDENTITY AND CREDITWORTHINESS OF THE PERSON GIVING MONEY AS WELL AS THE GENUINENESS OF THE TRANSACTION, WITH REGARD TO ANY AMOUNT CREDITED IN THE BOOKS OF THE ASSESSEE. HOWEVER, THIS SECTION DOES NOT GIVEN POWER TO THE ASSESSING OFFICER TO MAKE ADDITION BASED ON HIS INFERENCE DRAWN ON A SAMPLE TRANSACTIONS. OUT OF 78 PERSONS, THE ASSESSING OFFICER PREFERRED TO CALL ONLY 18 PERSONS, OUT OF THESE 18 PERSONS, 9 PERSONS HAVE ACCEPTED THE FACT OF GIVING DONATION. HOW CAN A CONCLUSION BE DRAWN THAT SINCE 9 PERSONS OUT OF 18 PERSONS HAVE DENIED GIVING DONATION. EVEN OUT OF REMAINING 60 PERSONS, 30 PERSONS WOULD HAVE DENIED IF THEY WERE CALLED. THIS IS STRETCHING THE POWER OF INVESTIGATION GIVEN TO THE ASSESSING OFFICER, TOO FAR. THE ASSESSING OFFICER CANNOT MAKE ADDITION UNDER SECTION 68 OF THE ACT IN SUCH A CASUAL MANNER. IT HAS BEEN HELD IN THE CASE OF CIT VS P.K.NOORJAHAN 237 ITR 570(SC) THAT THE ADDITION CANNOT BE MADE BY THE ASSESSING OFFICER JUST FOR THE SAKE OF MAKING ADDITION. THEREFORE, I N THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DONATION RECEIVED FROM THE PERSONS WHO WERE NOT CALLED AND THE PERSONS WHO WERE CALLED AND ACCEPTED THE FACT OF GIVING DONATION, CANNOT BE SAID TO BE NOT GENUINE. AS REGARDS THE PERSONS WHO HAD COME AND DENIED BEFORE THE ASSESSING 6 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR OFFICER THE FACT OF GIVING DONATION, WE OBSERVE THA T CERTAIN FALLACIES WERE POINTED OUT BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, WHICH HAVE NOT BEEN DEALT WITH BY EITHER THE ASSESSING OFFICER OR THE LEARNED CIT (APPEALS). FURTHER, CROSS EXAMINATION OF THESE PERSONS WAS SPECIFICALLY ASKED BY THE ASSESSEE, WHICH WAS NOT PROVIDED TO IT. IN THIS VIEW, THE ADDITION EVEN ON THESE ACCOUNTS CANNOT BE MADE. 6. THE LD. CIT(A) WHILE RELYING UPON THE ABOVE DECI SION OF THE TRIBUNAL FURTHER OBSERVED THAT FOR THE YEAR UNDER C ONSIDERATION, THE ASSESSEE HAD SUBMITTED THE LIST OF CORPUS DONORS W ITH NAMES AND ADDRESSES AND THE AMOUNT RECEIVED WHICH WAS NOT TAK EN INTO COGNIZANCE BY THE ASSESSING OFFICER. THE LD. CIT(A) HAS FURTHE R NOTED THAT OUT OF THE IMPUGNED SUM, AN AMOUNT OF RS. 2.48 CORERS WAS RECEIVED THROUGH CHEQUES. HE HAS FURTHER OBSERVED THAT SINCE THE REC EIPTS WERE ALLOWED AS CORPUS FUNDS CONTRIBUTED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11, VIDE DECISION OF THE TRIBUNAL ORDER DATED 22.12.2015 (SUPRA), THEREFORE, THE FACTS AND ISSUE BEING IDENTICAL, THE SAME ARE LIABLE TO BE ALLOWED. 7. THE LD. DR COULD NOT BRING ANY DISTINGUISHING FA CTS OR PROPOSITION OF LAW JUSTIFYING OUR INFERENCE IN RESPECT OF THE A BOVE FINDINGS OF THE LD. CIT(A). IN VIEW OF THIS, THERE IS NO MERIT IN G ROUND NO.3 OF THE APPEAL AND THE SAME IS ACCORDINGLY DISMISSED. 7 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR 8. GROUND NOS. 2 & 4: NOW COMING TO GROUND NO.2 OF THE APPEAL. SO FAR AS THE ACTION OF THE CIT(A) IN DELETING THE ADDITION AMOUNTING TO RS. 3,21,33,538/- ON ACCOUNT OF UNEXPLAINED UNSECUR ED LOANS IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS DISCUS SED THIS ISSUE IN PARA 7 OF THE IMPUGNED ORDER. THE ASSESSING OFFICER NOTE D THAT ASSESSEE HAS RAISED UNEXPLAINED LOANS AMOUNTING TO RS. 6,76,12,3 13/- FROM MANY PEOPLE. ON BEING ASKING TO EXPLAIN THE SOURCE, THE ASSESSEE PROVIDED IDENTITY, ITRS AND BANK ACCOUNT STATEMENTS OF SOME OF THE LENDERS. HOWEVER, THE ASSESSING OFFICER DID NOT GET SATISFIE D IN RESPECT OF THE DETAILS SUBMITTED OF 17 PERSONS. HE, THEREFORE, MAD E THE ADDITION OF RS. 6,76,12,313/- IN RESPECT OF THE UNEXPLAINED LOANS R ECEIVED FROM 17 PERSONS TREATING THE SAME AS INCOME IF THE ASSESSEE FROM UNDISCLOSED SOURCES. 8.1 BEFORE THE CIT(A), THE ASSESSEE FURNISHED ADDI TIONAL EVIDENCES, WHERE UPON REMAND REPORT WAS CALLED FROM THE ASSES SING OFFICER. AFTER CONSIDERING THE REMAND REPORT AS WELL AS SUBMISSION S OF THE ASSESSEE, THE LD. CIT(A) NOTED THAT THE ASSESSING OFFICER ACC EPTED THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF SEVE N PERSONS OUT OF THE SAID 17 PERSONS FROM WHOM LOAN WAS RECEIVED TOTALI NG RS. 2,41,89,776/- . THE LD. CIT(A), THEREFORE, DELETED THE ADDITION O F AMOUNT OF RS. 2,41,89,776/- IN RESPECT OF WHICH THE ASSESSING OF FICER HAD ACCEPTED THAT THE ASSESSEE HAD BEEN ABLE TO PROVE THE IDENTI TY, SOURCE AND CREDITWORTHINESS OF THE LENDERS. HOWEVER, IN RESPE CT OF THE LOAN 8 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR RECEIVED FROM THE REMAINING 10 CREDITORS, THE LD. C IT(A) AFTER CONSIDERING THE VARIOUS DETAILS SUBMITTED BY THE A SSESSEE OBSERVED THAT ASSESSEE HAD BEEN ABLE TO PRODUCE THE EVIDENCE IN R ESPECT OF THE LOANS RECEIVED FROM SIX PERSONS TOTALING RS. 3,48,33,922/ -. HOWEVER, IN RESPECT OF THE REMAINING FOUR PERSONS, THE LD. CIT( A) OBSERVED THAT THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN ABOUT THE IDENTITY, CREDITWORTHINESS OF THE LENDERS AND THE GENUINENESS OF THE TRANSACTIONS. THE RELEVANT PART OF THE ORDER OF THE CIT(A), FOR T HE SAKE OF READY REFERENCE, IS REPRODUCED AS UNDER:- IN RESPONSE TO THE ABOVE REMAND REPORT, IN REJOINDER T HE AR OF THE APPELLANT HAS FURTHER FURNISHED HIS EXPLANATION WIT H REGARD TO THE TEN CREDITORS WHICH IS BEING REPRODUCED AND DISCUSS ED, TAKING INTO ACCOUNT THE DOCUMENTARY EVIDENCES FILED, AS BELOW: 1. SH. GURINDER PAL SINGH - DEPOSIT OF RS. 13,50,000/- . IT IS SUBMITTED THAT AS PER THE COMMENTS OF AO AS W ELL AS THE LD. DCIT; THE AFORESAID PERSON HAD SUBMITTED HI S CONFIRMATION AS WELL AS COPIES OF HIS PAN CARD AND AADHAR CARD. SINCE HE WAS A NRI WORKING IN UAE AT T HE TIME OF GIVING THE AFORESAID LOAN; HE DID NOT FILE HIS ITR. HERE WE WOULD LIKE TO DRAW YOUR KIND ATTENTION TOWA RDS THE CASE OF KRISHAN CHAND JOGINDER PAUL V. ACIT [20 01] 114 TAXMAN 127 (CHD.)(MAG.) WHEREIN THE HON'BLE BEN CH HELD THAT FOR PURPOSES OF CASH CREDITS, THE ASSESSE E WAS REQUIRED TO PROVE THREE THINGS, VIZ., IDENTITY OF T HE CREDITOR, CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTIONS. IN THIS CASE, ALL THE ABOVE PARAMETERS ARE FULFILLED HENCE THE ADDITION ON ACCO UNT OF LOAN RECEIVED IN THIS ACCOUNT MAY BE DELETED. IT IS NOTED THAT THE APPELLANT HAS FAILED TO PROVID E COPY OF BANK STATEMENT FROM THIS CREDITOR FOR ESTABLISHING HIS C REDIT WORTHINESS. FURTHER, IT HAS BEEN STATED THAT FOR THE YEAR UNDER CONSIDERATION, 9 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR THE CREDITOR HAS NOT FILED HIS RETURN OF INCOME AS HE WAS WORKING IN UAE. NO OTHER EVIDENCE TO PROVE THE CREDIT WORTHINE SS OF THE CREDITOR HAS BEEN PRODUCED BY THE APPELLANT. NO EXP LANATION HAS BEEN GIVEN FOR NOT BEING ABLE TO PRODUCE THE BANK S TATEMENT OF THE CREDITOR TO PROVE THE GENUINENESS OF THE TRANSACTIO N. THEREFORE, THE GENUINENESS OF THE TRANSACTION AS WELL AS THE CREDI T WORTHINESS OF THE CREDITOR REMAINS UNEXPLAINED. 2. SH. INDER PAL SINGH - RS.L,66,50,000/-. ALLEGEDLY THE AMOUNT ADVANCED BY THE AFORESAID PERSON TO THE ASSE SSEE WAS RECEIVED AND WITHDRAWN ON THE SAME DAY. IT IS RESPECTFULLY SUBMITTED THAT THE AFORESAID PERSON HA D RECEIVED THE ABOVE AMOUNT THROUGH BANKING CHANNEL A ND ADVANCED. THE ABOVE PERSON DID NOT DEPOSIT CASH AND ADVANCED TO THE ASSESSEE. ONE CAN'T EXPECT SUCH HUG E FUNDS TO BE LYING IDLE. THE FUNDS WERE TRANSFERRED FROM THE COMPANY AVJ LNFRADEVELOPER (P) LTD., DELHI; A COMPA NY INDULGING IN THE ACTIVITY OF MINING AND PRESENTLY T HE FATHER AND BROTHER OF AFORESAID SH. INDER PAL SINGH ARE DIRECTORS THEREIN. A COPY OF BALANCE SHEET OF THE AFORESAID COMPANY FOR THE YEAR ENDED ON 31.03.2012 IS SUBMITTED ALONGWITH. HENCE, THE COMMENT OF LD. DCIT THAT THE AFORESAID AMOUNT IS NOT VERIFIABLE HAS NO LEGS TO STAND ON AND THE ADDITION ON ACCOUNT OF LOAN RECEIV ED IN THIS ACCOUNT MAY ALSO BE DELETED. WE ARE RESUBMITTI NG BANK STATEMENT FOR YOUR KIND PERUSAL. IT IS OBSERVED THAT ITR, CONFIRMATION AND COPY OF B ANK ACCOUNT HAS BEEN SUBMITTED AND THE ONLY DEFECT POINTED OUT BY T HE AO IN THE REMAND REPORT IS THAT ON PERUSAL OF THE BANK STATEM ENTS OF THE CREDITOR IT IS OBSERVED THAT RS. 1,65,00,000/- HAS BEEN RECEIVED IN THE BANK ACCOUNT ON THE SAME DAY WHEN IT HAS BEEN T RANSFERRED TO THE APPELLANT. THE APPELLANT HAS EXPLAINED THAT THE MONEY WAS RECEIVED IN THE BANK ACCOUNT OF THE CREDITOR NOT BY CASH BUT BY BANK TRANSFER FROM M/S AVJ INFRADEVELOPERS PRIVATE LIMIT ED, DELHI, WHERE THE FATHER AND BROTHER OF THE CREDITOR ARE DI RECTORS. I FIND THAT SIMPLY CREDIT AND DEBIT ENTRIES BEING ON THE S AME DATE IS NOT A SUFFICIENT CAUSE TO DOUBT THE GENUINENESS OF THE TR ANSACTION MADE THROUGH BANK TRANSFERS, ESPECIALLY CONSIDERING THE FACT THAT THE APPELLANT HAS OFFERED THE EXPLANATION REGARDING THE SAME ALONGWITH 10 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR DOCUMENTARY EVIDENCES, WHICH THE AO HAS NOT BEEN AB LE TO REBUTT. THEREFORE, ADDITION IS NOT REQUIRED TO BE MADE ON A CCOUNT OF THIS CREDITOR. 3. SH. SANDEEP JAIN - RS. 10,00,000/-. THE AMOUNT HAS BEEN LISTED UNDER THE HEADING UNVERIFIED BY THE LD. DCIT FOR THE REASONS BEST KNOWN TO HIM. THE AO HAD WRITT EN THAT ONLY CONFIRMATION WAS NEEDED WHICH WAS ALLEGED LY NOT FILED BEFORE HIM HENCE HE ADDED BACK THE AFORES AID SUM. THE CONFIRMATION WAS RESUBMITTED BEFORE THE LD . DCIT BUT HE MARKED THE AFORESAID AMOUNT AS UNVERIFI ABLE. SINCE THE THREE POINT TEST FOR ESCAPING ADDITIONS U /S 68 WAS PASSED BY THE ASSESSEE; THE ABOVE ADDITIONS MAY ALSO BE DELETED. IT IS NOTED THAT THE APPELLANT HAS PROVIDED CONFIRM ATION, ITR AND COPY OF BANK STATEMENT IN RESPECT OF THIS CREDITOR WHICH THE AO SEEMS TO HAVE IGNORED. THEREFORE, THE GENUINENESS O F THE TRANSACTION AS WELL AS THE CREDIT WORTHINESS OF THE CREDITOR HAS BEEN SUFFICIENTLY EXPLAINED. THEREFORE, THE ADDITION OF RS. 10,00,000/- IS NOT REQUIRED TO BE MADE ON THIS ACCOUNT. 4. SH. SANJEEV KUMAR - RS.27,09,449/-. THE AFORESAID PERSON HAD DEPOSITED CASH FROM HIS CURRENT INCOME A S WELL AS FROM HIS SAVINGS AND PAID THE SAME TO THE ASSESSEE. IT IS NOTED THAT THE APPELLANT HAS FAILED TO PROVID E CONFIRMATION AND COPY OF ITR IN RESPECT OF THIS CREDITOR. FURTHER, I T WAS NOTED BY THE AO IN THE ASSESSMENT ORDER FROM THE COPY OF BANK ST ATEMENT, THAT THERE ARE CREDIT ENTRIES IN THE BANK ACCOUNT OF THE CREDITOR IMMEDIATELY PRIOR TO THE ABOVE MENTIONED DEBIT ENTR IES. THE APPELLANT HAS FAILED TO PROVIDE THE CONFIRMATION FROM THE CRE DITOR AND HAS ALSO NOT PROVIDED ANY EXPLANATION FOR THE CASH DEPOSITS MADE IN THE ACCOUNT OF THE CREDITOR JUST BEFORE THE LOAN WAS AD VANCED TO THE APPELLANT. THEREFORE, THE GENUINENESS OF THE TRANSA CTION AS WELL AS THE CREDIT WORTHINESS OF THE CREDITOR REMAINS UNEXP LAINED. 5. SH. SATPAL SINGH - RS.56,00,000/-. WE FAIL TO UNDERSTAND AS TO HOW THE LD. DCIT FAILED TO ACCEPT THE 11 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR ENTRY AMOUNTING TO RS.56,00.000/- WHICH AMOUNT WAS DEPOSITED BY THE AFORESAID PERSON OUT OF THE PROCEE DS OF THE FLAT AT MUMHAI. IN FACT WE HAD SUBMITTED A COPY OF NOTICE ISSUED BY ITO, WARD-3, YAMUNA NAGAR U/S 133( 6) TO THE AFORESAID PERSON SEEKING INFORMATION ABOUT T HE SALE OF FLAT AT MUMBAI; THE PROCEEDS OF WHICH WERE DEPOSITED BY SH. SAT PAL SINGH WITH THE ASSESSEE TR UST. TO DISBELIEVE THE DOCUMENTS OF THE DEPARTMENT BY TH E LD. DCIT IS BEYOND OUR UNDERSTANDING. WE ARE SUBMITTING ALONGWITH A COPY OF SALES DEED AS WELL F OR YOUR KIND CONSIDERATION. MOREOVER, THE AFORESAID PE RSON HAS PASSED THE THREE STEP TEST OF SECTION 68; HENCE NO ADDITIONS ARE WARRANTED. IT IS NOTED THAT THIS CREDITOR HAS ADVANCED A SUM O F RS. .1,32,39,000/- TO THE APPELLANT. ON PERUSAL OF THE LEDGER FILED BY THE APPELLANT WHICH HAS BEEN CONFIRMED BY THE LENDE R, IT IS OBSERVED THAT THE SAID LOAN WAS EXTENDED IN THREE E NTRIES OF RS.34,00,000/- DATED 01.08.2011, RS.56,00,000/-DATE D 03.01.2012 AND RS.42,39,000/- DATED 22.03.2012. DURING THE REM AND PROCEEDINGS, THE AO HAS ACCEPTED THE EXPLANATION IN REGARD TO THE LOANS OF RS.34,00,000/- & RS.42,39,000/- AND SUBM ITTED THAT THE LOANS OF THESE AMOUNTS HAVE BEEN VERIFIED. HOWEVER, WITH RESPECT TO THE ENTRY OF RS. 56,00,000/-, IT HAS BEEN REMARK ED THAT THE SAID ENTRY IS NOT REFLECTED IN THE BANK STATEMENT OF THE APPELLANT. ALONG WITH THE REJOINDER TO THE REMAND REPORT, THE APPELL ANT HAS SUBMITTED A COPY OF SALE DEED WHICH SHOWS THAT THE LENDER, SH. SATPAL SINGH, HAD SOLD THE PENTHOUSE AT THANE FOR A TOTAL CONSIDERATION OF RS.67,00,000/- ON 30.12.2011, OUT OF WHICH RS.56,00,000/- WAS RECEIVED BY THE LENDER VIDE DEMA ND DRAFT DATED 28.12.2011. THE SAID AMOUNT IS SHOWN TO HAVE BEEN LENT TO THE APPELLANT JUST A FEW DAYS LATER ON 03.01.2012. FURTHER, THE APPELLANT HAS FILED A COPY OF LETTER ISSUED TO THE LENDER BY THE INCOME TAX OFFICER, WARD-4, YAMUNANAGAR, CALLING FO R INFORMATION U/S 133(6) ABOUT THE SALE OF SAID FLAT. IT IS ALSO OBSERVED THAT THE SAID AMOUNT OF RS.56,00,000/- HAS BEEN TRANSFERRED THROUGH BANK TRANSFER VIDE RTGS NO.UTIBH12003017624. IN VIEW OF ABOVE, IT IS SEEN T HAT THE APPELLANT HAS PROVIDED SUFFICIENT DOCUMENTARY EVIDE NCE TO PROVE 12 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR THE GENUINENESS OF THE UNSECURED LOAN RECEIVED BY I T. THEREFORE, ADDITION IS NOT REQUIRED TO BE MADE ON ACCOUNT OF T HIS CREDITOR. 6. SH. SMARTYPAL SINGH - RS.4,00,000/-. THE AMOUNT HAS BEEN LISTED UNDER THE HEADING UNVERIFIED BY THE LD. DCIT FOR THE REASONS BEST KNOWN TO HIM. THE AO HAD WRITTEN THAT CONFIRMATION AND ITR WAS NEEDED WHICH WAS ALLEGEDLY NOT FILED BEFORE HIM HENCE HE ADDED BACK THE AFORESAID SUM. THE CONFIRMATION AND ITR WERE RESUBMITTED BEFORE THE LD. DCIT BUT HE MARKED THE AFORESAID AMOUNT AS UNVERIFIABLE. SINCE THE THR EE POINT TEST FOR ESCAPING ADDITIONS U/S 68 WAS PASSED BY THE ASSESSEE; THE ABOVE ADDITIONS MAY ALSO BE DELET ED. IT IS NOTED THAT THE APPELLANT HAS PROVIDED CONFIRM ATION AND COPY OF ITR IN RESPECT OF THIS CREDITOR. ON PERUSAL OF T HE LEDGER FILED BY THE APPELLANT WHICH HAS BEEN CONFIRMED BY THE LENDE R, IT IS ALSO OBSERVED THAT AN AMOUNT OF RS.2,00,000/- HAS BEEN T RANSFERRED VIDE RTGS ON 20.03.2012 AND ANOTHER AMOUNT OF RS.2, 00,000/- HAS BEEN TRANSFERRED VIDE RTGS ON 22.03.2012. THE C REDITOR HAS ALSO STATED IN THE CONFIRMATION THAT THE SAID TRANS FERS HAVE BEEN MADE FROM HIS SAVINGS BANK ACCOUNT NO.5138065229 MA INTAINED WITH CITI BANK LTD. THEREFORE, THE GENUINENESS OF T HE TRANSACTION AS WELL AS THE CREDIT WORTHINESS OF THE CREDITOR HA S BEEN SUFFICIENTLY EXPLAINED. THEREFORE, THE ADDITION OF RS.4,00,000/- IS NOT REQUIRED TO BE MADE ON THIS ACCOUNT. 7. SH. SUBHASH CHAND - RS.6,47,484/-. THE AFORESAID PERSON HAD ADVANCED A SUM OF RS.6.00 LAKHS IN EARLI ER YEARS AND AS ON 01.04.2011; THE OPENING BALANCE WAS CREDIT RS.5,99,200/- WHICH WAS RETURNED TO HIM ALON GWITH INTEREST ON 31.05.2011 AND WAS RECEIVED BACK ON 15.06.2011. THE INTEREST WAS BEING PAID TO HIM AS P ER TERMS AFTER DEDUCTION OF TDS AND THE ABOVE BALANCE WAS OUTSTANDING AS ON 31.03.2012. HENCE TO CLASSIFY THE SAME UNDER UNVERIFIED IS AGAIN NOT FAIR AND ADDITION MAD E ON THIS ACCOUNT IS ALSO WRONG AND ILLEGAL. THE SAME IS VERIFIABLE FROM THE COPY OF ACCOUNT OF THE AFORESAI D ASSESSEE. 13 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR I FIND THAT THE APPELLANT HAS FAILED TO PROVIDE CON FIRMATION FROM THE CREDITOR, HIS ITR AND COPY OF BANK STATEMENT IN RES PECT OF THIS CREDITOR. THEREFORE, THE GENUINENESS OF THE TRANSAC TION AS WELL AS THE CREDIT WORTHINESS OF THE CREDITOR REMAINS UNEXP LAINED. 8. SH. TEJINDER PAL SINGH - RS.25,247/-. THE ASSESSEE TOOK A LOAN OF RS.20.00 LAKHS FROM ABOVE PERSON ON INTEREST ON 05.01.2012. THIS AMOUNT OF RS.25,247/- IS THE INTEREST (AFTER TDS). THE LD. DCIT FAILED TO CONSIDER THE SAME AND TERMED THE SAME AS UNVERIFIAB LE. I FIND THAT THE ASSESSING OFFICER HAS ACCEPTED THE GENUINENESS OF THIS LOAN OF RS.20 LAKHS BUT NOT ACCEPTED THE AMOUN T OF RS.25,247/- . THE APPELLANT HAS CLARIFIED THAT THIS AMOUNT OF R S.25,247/- IS THE INTEREST (AFTER DEDUCTING TDS) ON THE LOAN AND FILE D COPY OF LEDGER ACCOUNT. THE EXPLANATION SUBMITTED BY THE APPELLANT HAS MERIT AND THEREFORE THE ENTIRE LOAN OUTSTANDING OF RS.20,25,4 47/- IN RESPECT OF THIS CREDITOR IS TREATED AS EXPLAINED. THEREFORE , ADDITION IS NOT REQUIRED TO BE MADE ON ACCOUNT OF THIS CREDITOR. 9. SMT. SUNITA MANGLA - RS.19,475/-. THE ASSESSEE TOOK A LOAN OF RS.15.00 LAKHS FROM ABOVE PERSON ON INTER EST ON 17.02.2012. THIS AMOUNT OF RS. 19,475/- IS THE INTEREST (AFTER TDS). THE LD. DCIT FAILED TO CONSID ER THE SAME AND TERMED THE SAME AS UNVERIFIABLE. I FIND THAT THE ASSESSING OFFICER HAS ACCEPTED THE LOAN OF RS.15 LAKHS AS GENUINE BUT NOT ACCEPTED THE AMOUNT OF RS.19,475 /-. THE APPELLANT HAS CLARIFIED THAT THIS AMOUNT OF RS.19,4 75/- IS THE INTEREST (AFTER DEDUCTING TDS) ON THE LOAN AND FILED COPY OF LEDGER ACCOUNT. THE EXPLANATION SUBMITTED BY THE APPELLANT HAS MERI T AND THEREFORE THE ENTIRE LOAN OUTSTANDING OF RS.15,19,475/- IN RE SPECT OF THIS CREDITOR IS TREATED AS EXPLAINED. THEREFORE, ADDITI ON IS NOT REQUIRED TO BE MADE ON ACCOUNT OF THIS CREDITOR. 10. H.P. SHREE LAXMI OIL, YAMUNA NAGAR - RS.38,81,683/-. THE ASSESSEE TOOK LOAN AMOUNTING TO RS. 3 7.00 LAKHS FROM ABOVE PERSON ON INTEREST ON VARIOUS DATES AND A SUM OF RS.20.00 LAKHS WAS RETURNED IN DUE COURSE. AN AMOUNT OF RS. 181.683/- 14 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR WAS CREDITED IN THE ACCOUNT BEING THE INTEREST (AFT ER TDS). THE LD. DCIT FAILED TO CONSIDER THE SAME. IT IS NOTED THAT THE APPELLANT HAS FAILED TO PROVID E CONFIRMATION, ITR AND COPY OF BANK STATEMENT IN RESPECT OF THIS C REDITOR EVEN IN PROCEEDINGS BEFORE THE UNDERSIGNED. THEREFORE, THE GENUINENESS OF THE TRANSACTION AS WELL AS THE CREDIT WORTHINESS OF THE CREDITOR REMAINS UNEXPLAINED. 7.1 THUS, TO SUM UP, I CONSIDER THAT THE APPELLANT HAS EXPLAINED WITH SUFFICIENT DOCUMENTARY EVIDENCES IN THE FORM O F NAME, ADDRESS, ITR AND BANK DETAILS TO PROVE THE GENUINEN ESS OF UNSECURED LOANS IN RESPECT OF FOLLOWING SIX OUT OF TEN CREDITORS IN RESPECT OF WHOM UNSECURED LOANS HAD BEEN HELD TO BE UNEXPLAINED BY THE ASSESSING OFFICER IN THE REMAND REPORT DATED 15.06.2018. THE DETAIL OF THESE SIX CREDITORS IS AS UNDER: SERIAL NO AT PARA NAME OF LENDER AMOUNT OF UNSECURED 4 OF THE LOAN ASSESSMENT ORDER 3 SH. INDER PAL SINGH RS. 1,66,50,000/- 5 SH. SANDEEP JAIN RS. 10,00,000/- 7 SH. SATPAL SINGH RS. 1,32,39,000/- 8 SH. SMARTYPAL SINGH RS. 4,00,000/- 12 SH. TEJINDER PAL SINGH RS. 20,25,447/- 14 SMT. SUNITA MANGLA RS. 15,19,475/- TOTAL RS. 3,48,33,922/- THE GENUINENESS OF UNSECURED LOANS FROM THESE PERSO NS TOTALING RS.3,48,33,922/- ARE CONSIDERED TO BE EXPLAINED SAT ISFACTORILY AND NO ADDITION IS CALLED FOR IN THEIR RESPECT. 7.2 HOWEVER, THE APPELLANT HAS BEEN UNABLE TO SAT ISFACTORILY EXPLAIN THE UNSECURED LOANS GIVEN TO THE REMAINING LENDERS AS GIVEN BELOW: SERI AL NO AT PARA 4 OF THE ASSESSMENT ORDER NAME OF LENDER AMOUNT OF UNSECURED LOAN 2 SH. GURINDER PAL SINGH RS.13,50,000/- 15 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR 6 SH. SANJEEV KUMAR RS.27,09,449/- 10 SH. SUBHASH CHAND RS.6,47,484/- 16 M/S H.P. SHREE LAXMI OILS RS.38,81,683/- TOTAL RS.85,88,616/- THEREFORE, THE ABOVE UNSECURED LOANS TOTALING RS.85 ,88,616/- ARE HELD TO BE UNEXPLAINED AND THE ACTION OF THE AO IN HOLDING THESE LOANS AS UNEXPLAINED IS UPHELD IN RESPECT OF THE AB OVE FOUR CREDITORS. THEREFORE, THE ADDITION ON ACCOUNT OF UNEXPLAINED LOANS OF AN AMOUNT OF RS. 5,90,23,698/- (6,76,12,31 4 - 85,88,616) IS DELETED. THE GROUND OF APPEAL NO. 2 IS PARTLY ALLOWED. 9. WE FIND THAT THE LD. CIT(A) HAS ELABORATELY DI SCUSSED THE EVIDENCES PRODUCED IN RESPECT OF 6 PERSONS AS DETAI LED AT S.NOS. 3,5,7, 8, 12 & 14 . THE LD. DR COULD NOT POINT OUT ANY DIS CREPANCY IN THE FINDINGS OF THE CIT(A) ON THIS ISSUE. IN VIEW OF TH IS, THERE IS NO MERIT IN GROUND NO.2 OF THE APPEAL AND THE SAME IS HEREBY D ISMISSED. GROUND NO. 4 10. THE LD. CIT(A) HAS OBSERVED THAT EVEN IF THE LO ANS RECEIVED BY THE ASSESSEE IN RESPECT OF THE ABOVE MENTIONED REMAININ G FOUR PERSONS IS TO BE HELD AS UNEXPLAINED INCOME OF THE ASSESSEE AND THE SAME IS ADDED U/S 68 OF THE ACT, EVEN THEN, THE SAME WOULD STILL BE EXEMPT FROM TAXATION AS THE APPLICATION OF INCOME FOR CHARITABL E PURPOSES FOR THE YEAR IN THE FORM OF REVENUE EXPENDITURE WAS ADDED AT RS. 15.69 CRORES AND CAPITAL EXPENDITURE OF RS. 43.76 CRORES WHICH WOUL D FAR EXCEED 85% OF 16 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR THE REVENUE RECEIPTS OF THE ASSESSEE. THE RELEVANT PART OF THE ORDER OF THE CIT(A) IS REPRODUCED AS UNDER:- 7.3 HOWEVER, THE AFORESAID OBSERVATIONS AND DECISION OF THE HON'BLE TRIBUNAL (SUPRA) IS ALSO APPLICABLE IN RESPECT OF THE ABOVE UNEXPLAINED UNSECURED LOANS. THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT REPRODUCED IN PARA 6 ABOVE, EVEN IF THE LOANS ABOVE ARE HELD TO BE UNEXPLAINED AND ARE TREATED AS UNDISCLOSED INCOME AND AN ADDITION U/S 68 OF THE ACT IS MADE OF THE ABOVE AMOUNT OF RS.85,88,616/-, WHEN ADDED TO GROSS RECEIPTS OF THE APPELLANT FOR THE YEAR, THE AMOUNT WILL STILL BE EXEMPT FROM TAXATION AS THE INCOME AND EXPENDITURE ACCOUNT OF THE APPELLANT SHOWS THAT DURING THE YEAR, THE APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE FORM OF REVENUE EXPENDITURE OF RS. 15.69 CRORES AND CAPITAL EXPENDITURE OF RS. 43.76 CRORES WOULD FAR EXCEED 85% OF THE REVENUE RECEIPTS OF THE ASSESSEE EVEN IF ALL THE ABOVE UNSECURED LOANS ARE DISALLOWED AND TREATED AS INCOME FOR THE YEAR BECAUSE THE AO HAS NEITHER DENIED THE APPELLANT THE EXEMPTION U/S 11 O F THE IT ACT NOR CAST ANY DOUBTS ON THE APPLICATION O F FUNDS FOR CHARITABLE PURPOSES. THE GROUND OF APPEAL NO.3 IS ALLOWED., 11. HOWEVER, WE DO NOT AGREE WITH THE ABOVE FINDING S OF THE CIT (A). THE OBSERVATIONS MADE BY THE TRIBUNAL IN THE CIRCUM STANCES OF THE CASE OF THE ASSESSEE IN RESPECT OF SOME OF THE UNEXPLAIN ED CORPUS DONATIONS CAN NOT BE APPLIED IN RESPECT OF UNEXPLAINED LOANS. IN A LOAN CASE, THE ASSESSEE HAS TO ESTABLISH BEYOND REASONABLE DOUBT T HE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. APPLICATION OF INCOME DOES NOT CHANGE THE CHARACTER OF RECEIPT. IF THE 17 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR RECEIPT IS NOT FROM THE PROPERTY HELD FOR CHARITABL E PURPOSES, THE SAME WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11, IRRESPEC TIVE OF ITS APPLICATION FOR CHARITABLE PURPOSES OR OTHERWISE. IN VIEW OF TH IS, THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF ALLEGED LOAN S RECEIVED FROM REMAINING FOUR PERSONS AT SERIAL NO. 2, 6, 10 AND 1 6 AS GIVEN ON THE CHART AS REPRODUCED ABOVE FORMING PART OF THE ORDER OF CIT(A) AMOUNTING TO RS. 85,88,616/- IS CONFIRMED. GROUND NO. 4 IS PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2020. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 29.01. 2020 .. 2*&)3454) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 &)8 , . 8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE 18 ITA NO.717-CHD/2019 SHRI LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR