M/s Anandalok, Kolkata V. JCIT, (Exemption), Kolkata, Kolkata

ITA 792/KOL/2014

• Counselvise Citation: 79223514 RSA 2014
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Charitable institution; Peak credit; Benefit of exemption
• Section: 12; 11

Judgement Text

I.T.A. NO. 792/KOL./ 2014 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 792/KOL./ 2014 ASSESSMENT YEAR : 2009-2010 M/S. ANANDALOK,.................................... ............APPELLANT DK-7/3, SALT LAKE CITY, KOLKATA-700 091 [PAN :AAATA 5320 P] -VS.- JOINT DIRECTOR OF INCOME TAX (EXEMPTION),........ ........RESPONDENT 10, MIDDLETON ROW, KOLKATA-700 016 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, FOR THE ASSESSEE SMT. MADHU MALTI GHOSH, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JULY 16, 2014 DATE OF PRONOUNCING THE ORDER : JULY 18, 2014 O R D E R PER GEORGE MATHAN: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA I N APPEAL NO. 145/CIT(A)-XIV/2012-13 DATED 28.02.2014 FOR THE ASS ESSMENT YEAR 2009- 10. 2. SHRI S.M. SURANA, ADVOCATE, REPRESENTED ON BEHAL F OF THE ASSESSEE AND SMT. MADHU MALTI GHOSH, LD. JCIT, SR. D.R., REP RESENTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LD. A.R. THAT THE ASSESS EE IS A TRUST, WHICH IS RUNNING HOSPITAL, CARRYING OUT SOCIAL AND CHARIT ABLE ACTIVITIES. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT, IT WAS NOTICED THAT THERE WAS A LEDGER A/C. IN THE NAME OF SHRI SARAF DEO KUM AR. IN THE SAID I.T.A. NO. 792/KOL./ 2014 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 5 ACCOUNT, THERE WERE SUBSTANTIAL CASH DEPOSITS AND W ITHDRAWALS. IT WAS THE SUBMISSION THAT AS THE ASSESSING OFFICER WAS NOT SA TISFIED WITH THE METHOD OF ACCOUNTING AND THE MAINTENANCE OF BOOKS O F ACCOUNT BY THE ASSESSEE, THE ASSESSING OFFICER HAD DIRECTED FOR SP ECIAL AUDIT VIDE AN ORDER DATED 27.12.2011. SPECIAL AUDIT WORK WAS COND UCTED AND IT WAS PROVIDED BY THE PRESCRIBED CHARTERED ACCOUNTANT ON 22.06.2012. 4. IT WAS THE SUBMISSION THAT IN THE SPECIAL AUDIT UNDER SECTION 142(2A) CERTAIN REMARKS WERE MADE BY THE SPECIAL AU DITOR IN ANNEXURE A TO HIS SPECIAL AUDIT REPORT. THE ASSESSING OFFI CER AFTER OBTAINING THE SPECIAL AUDIT REPORT PROCEEDED TO COMPLETE THE ASSE SSMENT, WHEREIN HE DID NOT MAKE ANY ADDITION ON THE BASIS OF THE SPECI AL AUDIT REPORT. HOWEVER, AS THERE WERE CASH DEPOSITS AND WITHDRAWAL S UNDER THE ACCOUNT NAMELY SHRI SARAF DEO KUMAR, THE ASSESSING OFFICER ADDED THE PEAK CREDIT IN THE SAID A/C. WHICH WAS DRAWN AS ON 27.10.2008 F OR AN AMOUNT OF RS.1,38,46,790/-. IT WAS THE SUBMISSION BY THE LD. A.R. THAT IN THE COURSE OF ASSESSMENT, IT WAS SUBMITTED TO THE ASSESSING OF FICER THAT THE SAID LEDGER ACCOUNT WAS MAINTAINED IN THE NAME OF SHRI D .K. SARAF, TREASURER AND THE PERSON WHO WAS RUNNING THE CHARITABLE TRUST , ANANDALOK. IT WAS SUBMITTED THAT AS THE FUNDS WERE REQUIRED FOR PURCH ASES OF VARIOUS EQUIPMENTS AND FOR VARIOUS CHARITABLE ACTIVITIES, F UNDS WERE DRAWN AS AND WHEN REQUIRED THROUGH THE SAID LEDGER ACCOUNT A ND AS AND WHEN THE SURPLUS WAS AVAILABLE IT WAS DEPOSITED IN THE SAID ACCOUNT. IT WAS THE SUBMISSION THAT AS THE ASSESSEE HAD BEEN ADVISED BY ITS AUDITORS THAT WITHDRAWALS OF FUNDS BY TRUSTEE/ TREASURER FROM THE TRUST COULD BE A VIOLATION OF THE PROVISIONS UNDER SECTIONS 11, 12 A ND 13 OF THE INCOME TAX ACT. SHRI D.K. SARAF HAD MADE A DEPOSIT MORE SO A LOAN TO THE ASSESSEE-TRUST AND THE SAID AMOUNT AS AND WHEN REQU IRED FOR THE CHARITABLE ACTIVITIES WERE WITHDRAWN FROM THE SAID A/C. THE WITHDRAWALS NEVER EXCEEDED THE LOAN AMOUNT. LD. A.R. DREW OUR A TTENTION TO THE BALANCE-SHEET OF THE ASSESSEE-TRUST FOR THE ASSESSM ENT YEAR 2008-09 AT PAGE 4 OF THE PAPER BOOK, WHEREIN THE UNSECURED LOA N HAS BEEN SHOWN AT I.T.A. NO. 792/KOL./ 2014 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 5 RS.2,35,75,004/-. THE BREAK-UP OF THE SAID UNSECURE D LOANS WERE SHOWN AT PAGE 18A WHEREIN THE ACCOUNT OF SHRI D.K. SARAF IS SHOWN AT RS.1,26,75,004/-. HE FURTHER DREW OUR ATTENTION TO THE BALANCE-SHEET FOR THE ASSESSMENT YEAR 2009-10 BEING THE YEAR UNDER AP PEAL AT PAGE 24 OF THE PAPER BOOK TO SHOW THAT THE SAID UNSECURED LOAN A/C. WAS SHOWN AT RS.1,99,32,119/- AND THE BREAK-UP THEREOF AT PAGE 4 9 WHERE THE ACCOUNT OF SHRI D.K. SARAF WAS SHOWN AT RS.67,82,119/-. HE FURTHER DREW OUR ATTENTION TO PAGES 36 TO 41 OF THE PAPER BOOK, WHIC H WAS THE SUB-LEDGER OF THE UNSECURED LOANS ACCOUNT IN THE NAME OF SHRI D.K. SARAF, WHEREIN THE OPENING BALANCE WAS SHOWN AT RS.1,26,75,004/- AS ON 01.04.2008. 5. LD. A.R. FURTHER DREW OUR ATTENTION TO PAGES 6 T O 10 OF THE ASSESSMENT ORDER, WHICH WAS THE COPY OF THE RECEIVA BLE & ADVANCES A/C. UNDER THE HEAD SARAF DEO KUMAR. LD. A.R. TALLIED THE ENTRIES WITH THE SAID UNSECURED LOANS ACCOUNT OF SHRI D.K. SARAF, SU B-LEDGER WITH THE SAID ENTRIES AS RECORDED IN THE ASSESSMENT ORDER TO TALL Y THE SAID FIGURE. IT WAS THE SUBMISSION THAT IN THE ASSESSMENT ORDER, THE AS SESSING OFFICER HAS TAKEN THE TRANSACTIONS FROM 16.04.2008 AND HAD LEFT THE TRANSACTIONS FROM 01.04.2008, WHEREIN THE OPENING BALANCE OF RS. 1,26,75,004/- WAS AVAILABLE. IT WAS THE SUBMISSION THAT CONSEQUENTLY, THE ASSESSING OFFICER WITHOUT CONSIDERING THE OPENING BALANCE HAD PROCEED ED TO COMPUTE THE PEAK CREDIT. IT WAS THE SUBMISSION THAT IF THE PEAK CREDIT WAS COMPUTED BY TAKING THE OPENING BALANCE, THEN THERE WOULD NEV ER BE A NEGATIVE FIGURE TO SHOW THAT SHRI D.K. SARAF HAD DRAWN ANY A MOUNT FROM THE ASSESSEE-TRUST MORE SO THAT THE ASSESSEE TRUST HAD GIVEN ANY FUNDS TO SHRI D.K. SARAF IN THE FORM OF ANY LOAN OR ADVANCE. IT WAS THE SUBMISSION THAT THE VIOLATION OF SECTION 13(1)(C) OF THE ACT R EAD WITH SECTION 13(2) WAS NOT THERE AT ALL IN SO FAR AS NO FUND HAD BEEN GIVEN THAT BELONGED TO THE TRUST TO ANY INTERESTED PERSON BEING SHRI D.K. SARAF. IT WAS THE SUBMISSION THAT THE DENIAL OF EXEMPTION UNDER SECTI ON 11 AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) MAY BE CANCELLED AND THE ASSESSEE BE GRANTED THE BENEFIT OF EXEMPTIO N UNDER SECTION 11 OF I.T.A. NO. 792/KOL./ 2014 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 5 THE ACT. IT WAS THE SUBMISSION BY THE LD. A.R. THAT THE LD. CIT(APPEALS) HAD ONLY COPIED THE ASSESSMENT ORDER, SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER AND WITHOUT CONSIDERING ANY OF THE SUBMISSIONS MADE BY THE ASSESSEE HAD UPHELD THE ASS ESSMENT ORDER IN PARAS 6.7 AND 6.8 OF HIS ORDER. IT WAS THE PRAYER T HAT THE ASSESSEE MAY BE GRANTED THE BENEFIT OF EXEMPTION UNDER SECTION 11 O F THE ACT. 6. IN REPLY, LD. SR. D.R. SUBMITTED THAT PROPER ACC OUNTS WERE NOT BEING MAINTAINED BY THE ASSESSEE. IT WAS THE SUBMISSION T HAT IN THE COURSE OF SPECIAL AUDIT, CERTAIN DISCREPANCIES WERE POINTED O UT IN ANNEXURE A OF THE SPECIAL AUDIT REPORT. IT WAS THE SUBMISSION THA T THE DENIAL OF EXEMPTION UNDER SECTION 11 WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER MORE SPECIFICALLY THE PAGES 6 TO 1 0 WHICH IS EXTRACTED OF THE RECEIVABLE & ADVANCES A/C. IN THE NAME OF SA RAF DEO KUMAR CLEARLY SHOWS THAT THIS IS THE EXTRACT OF THE SUB-LEDGER IN THE NAME OF SHRI D.K. SARAF UNDER THE HEAD UNSECURED LOANS. THE TRANSAC TIONS AS RECORDED IN THE SUB-LEDGER AND AS EXTRACTED BY THE ASSESSING OF FICER ARE IDENTICAL. HOWEVER, THE ENTRIES IN RESPECT OF THE OPENING BALA NCE ARE NOT FOUND IN THE EXTRACT AS MADE IN THE ASSESSMENT ORDER. THE SA ID UNSECURED LOAN RECORDED IN THE SUB-LEDGER IN THE NAME OF D.K. SARA F WAS FOUND IN THE LIABILITY SIDE OF THE BALANCE-SHEET OF THE ASSESSEE . IN FACT, EVEN IN THE SPECIAL AUDIT REPORT UNDER SECTION 142(2A) THERE IS NO COMMENT SHOWN OF ANY AMOUNT DUE FROM D.K. SARAF TO THE ASSESSEE-T RUST. A PERUSAL OF ANNEXURE A SHOWS THAT ONLY A FEW TRANSACTIONS IN THE BOOKS AS BEING QUESTIONED BY THE SPECIAL AUDITOR, THE FIRST ONE RE PRESENTING DEBIT VOUCHER IN RESPECT OF THE PAYMENT OF RS.3,96,350/- TO M/S. BARIK DISTRIBUTORS. THE AUDITORS COMMENTS ON THIS ISSUE THAT SUPPORTING DOCUMENTS WERE NOT MADE AVAILABLE TO PROVE SUCH PAY MENT. THE SECOND DEFECT POINTED OUT BY THE SPECIAL AUDITOR IS IN RES PECT OF NON-DEDUCTION OF I.T.A. NO. 792/KOL./ 2014 ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 5 TDS ON THE TOTALLING CREDITS MADE ON THE BILLS RAIS ED TO AN EXTENT OF RS.43,00,000/- BY THE CONTRACTORS OTHER ARE SUCH SI MILAR DEFECTS. THERE IS NO OBSERVATION BY THE SPECIAL AUDITOR IN RESPECT OF ANY PAYMENT BEING MADE TO SHRI D.K. SARAF OR OF ANY LOAN OUTSTANDING FROM SHRI D.K. SARAF. THE FACT THAT EVEN THE SPECIAL AUDIT HAS NOT BROUGH T OUT ANY SUCH DEFECT CLEARLY GOES IN FAVOUR OF THE ASSESSEE. IN THESE CI RCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO VIOLATION OF THE PROVISIO NS OF SECTION 13(1)(C) READ WITH SECTION 13(2) TO ANY INTERESTED PERSON RE FERRED TO SECTION 13(3). CONSEQUENTLY WE ARE OF THE VIEW THAT THE DEN IAL OF EXEMPTION UNDER SECTION 11 HAS BEEN WRONGLY DONE IN THE CASE OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER IS DIREC TED TO GRANT ASSESSEE THE BENEFIT OF EXEMPTION UNDER SECTION 11 AS CLAIME D. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2014. SD/- SD/- SHAMIM YAHYA GEORGE MATHAN (ACCOUNTANT MEMBER) (JU DICIAL MEMBER) KOLKATA, THE 18 TH DAY OF JULY, 2014 COPIES TO : (1) M/S. ANANDALOK, DK-7/3, SALT LAKE CITY, KOLKATA-700 091 (2) JOINT DIRECTOR OF INCOME TAX (EXEMPTION), 10, MIDDLETON ROW, KOLKATA-700 016 (3) COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.