C.P. Arya Public School Samiti, Ghaziabad V. Addl. CIT, Ghaziabad

ITA 889/DEL/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7649 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 24-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Depreciation; Charitable institution
• Section: 133(6); 12A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SH. N.K. SAINI, AM ITA NO. 889/DEL/2016 ASSTT. YEAR 2010-11 C.P. ARYA PUBLIC SCHOOL SAMITI C/O. AKHILESH KUMAR, ADVOCATE, CHAMBER NO. 206-207, ANSAL SATYAM, RDC RAJ NAGAR GHAZIABAD VS. ACIT RANGE (1) GHAZIABAD (APPELLANT) (RESPONDENT) PAN NO. AAATC9149G APPELLANT BY : SH. AKHILESH KUMA R, ADV. RESPONDENT BY : SH. V.R. SONBHADR A, SR. DR DATE OF HEARING : 2 4 .05.2016 DATE OF PRONOUNCEMENT: 27 .5.2016 ORDER PER N.K.SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAISNT THE ORDE R DATED 21/09/2015 OF THE CIT(A)-GHAZIABAD. FOLLOWING GROUN DS HAVE BEEN RAISED IN THIS APPEAL : 2 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI 1. BECAUSE, THE ORDER OF LD. LOWER AUTHORITY IS BA D IN LAW AND AGAISNT THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE I S UNSUSTAINABLE. 2. BECAUSE, THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) GROSSLY ERRED IN UPHOLDING, THE ADDITION OF RS. 906,000/- U /S 115BBC BEING THE 95% AMOUNT OF LOANS FROM FOUR PARTIES MADE U/S 68, ARE NEITHER CREDITED IN THE CURRENT YEAR NOR THEY ARE DONATIONS RECD. DURING THE YEAR HENCE ORDER IS DEFEATING THE SPECIFIC PROVISIO NS OF LAW. 3. BECAUSE, IN ADDITION OF ABVOE, LD. CIT(A) ERR ED IN NOT APPRECIATING THE UNDISPUTED FACTS ON THE RECORD THAT INSTITUTION IS REGD. U/S 12A, CONFIRMATION OF LOANS IS FILED AND MORE THAN 85% OF INCOME IS UTILIZED FOR CHARITABLE PURPOSES AND HENCE ADDITION U/S 68 I S NOT SUSTAINABLE IN TERMS OF LAW PRONOUNCED BY HONBLE COURTS. 4. BECAUSE THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIATION RS. 46015/- AGAISNT THE SETTLED LAW. 2. FIRST ISSUE IN THIS APPEAL RELATES TO THE SUSTENAN CE OF ADDITION OF RS. 9,06,000/- MADE BY THE AO U/S 115BBC READ WITH SECTION 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT ) 3. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 01.03.2011 DECLARING NIL IN COME. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HA D RECEIVED LOANS FROM FOLLOWING PERSONS. : 1. ANKUR GUPTA RS. 4,44,000/- 2. BALDEEP SINGH RS. 1,20,000/- 3. DEVENDRA SINGH RS. 2,42,000/- 4. SOBHIT RAGHAV RS. 2,00,000/- THE AO ASKED THE ASSESSEE TO FILE COMPLETE DETAILS WITH CONFIRMATION AND ALL SUPPORTING DOCUMENTS IN RESPEC T OF THE AFORESAID LOANS. THE AO OBSERVED THAT THE ASSESSEE HAD GIVEN ONLY 3 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI COPY OF CONFIRMATION OF ACCOUNT IN ITS BOOKS OF ACC OUNTS AND COPY OF ADHAR CARD / PAN CARD BUT NO CONFIRMATION FROM THE LENDERS OR ANY PROOF REGARDING SOURCE OF LOAN WAS PROVIDED BY THE ASSESSEE. THE AO WAS OF THE VIEW THAT MERE GIVING THE NAME OF THE PARTIES FROM WHOM UNSECURED LOAN WERE CLAIMED TO BE TAKEN AND ME NTIONING THAT THOSE DID NOT PERTAIN TO THE CURRENT YEAR, DID NOT QUALIFY AS THE TRANSACTION TO BE GENUINE. THE AO MADE THE ADDITION U/S 68 OF THE ACT. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATT ER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS WHICH HAVE BE EN INCORPORATED IN PARA 4 OF THE IMPUGNED ORDER AND READ AS UNDER : ADDITION OF UNEXPLAINED LOAN U/S 68 OF INCOME TA X ACT : A. THE AO HAS MADE THE ADDITION AS DETAILED BELOW : 1. ANKUR GUPTA RS. 4,44,000/- 2. BALDEEP SINGH RS. 1,20,000/- 3. DEVENDRA SINGH RS. 2,42,000/- 4. SOBHIT RAGHAV RS. 2,00,000/- B. WE ARE ENCLOSING THE STATEMENTS OF A/C WHI CH WERE SUBMITTED TO AO IN WHICH IT IS VERY MUCH CLEAR THAT LOAN WAS TAKEN IN EARLIER YEARS. NO AMOUNT HAS BEEN TAKEN DURING THE FINANCIA L YEAR IN QUESTION. C. THE RELIANCE IS PLACED IN CASE OF CIT VS. HANUMANDAS MAHESHWARI (1975) TAX LR 109 (ORI) AND CIT VS. ASHO K TIMBER INDUSTRIES (1980) 125 ITR 336 (CAL) IN WHICH IT WAS HELD: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED AT ANY PREVIOUS YEAR, AND THE ASSESSEE O FFERS NO EXPLANATION ABOUT THE NATURE & SOURCE THEREOF OR TH E EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE (ASSES SING) OFFICER, 4 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. D. SINCE NO AMOUNT HAS BEEN CREDITED DURING THE PREVIOUS YEA IN QUESTION, SO NO ADDITION CAN BE MADE DURING THIS YE AR AS SEC. 68 ITSELF SAYS. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE CONFIRMED THE ADDITION BY OBSERVING IN PARA 5.2 OF THE IMPUGNED ORDER WHICH READ AS UNDER : AS REGARDS CLAIM OF THE APPELLANT THAT UNSECURED LOANS OF RS. 10,06,000/- WITH RESPECT TO WHICH ADDITION WAS MADE U/S 68, PERTAINED TO EARLIER YEARS AND THAT SIMILAR CLAIM W AS MADE BEFORE THE AO. THE REPORT WAS SOUGHT FROM THE A.O. AS REGARDS GENUINENESS OF THIS CLAIM. THE A.O. VIDE HIS LETTER DATED 03.07.20 15 HAS REPORTED THAT THE ASSESSEE HAD ONLY SUBMITTED CONFIRMATION OF ACC OUNT OF LETTERS IN ITS BOOKS AND COPY OF AADHAR CARD / PAN CARD. THE A .O. HAS REPORTED THAT MERELY SAYING THAT UNSECURED LOANS DO NOT PERT AIN TO CURRENT YEAR DOES NOT QUALIFY THE TRANSACTIONS TO BE GENUIN E WHEN NO CONFIRMATIONS WERE RECEIVED FROM THE LENDERS IN RES PONSE TO LETTERS ISSUED U/S 133(6) OF THE I.T.ACT. DESPITE SEVERAL OPPORTUNITIES, THE APPELLANT HAS N OT OFFERED ANY COMMENTS ON THE REPORT OF THE A.O. FINALLY NOTICE D ATED 03.09.2015 FIXED FOR HEARING ON 16.09.2015 WAS RECEIVED UNSERV ED WITH REMARKS UNCLAIMED. IT IS SIGNIFICANT THAT THE APPELLANT HAS NOTHING MORE TO SAY IN THE MATTER. IN THESE FACTS, I FIND THAT THE CLAIM OF THE APPELLANT THAT THE SAID LOANS DO NOT PERTAIN TO CURRENT YEAR IS NOT PROVED. MERELY SAYING THAT LOANS DO NOT PERTAIN TO CURRENT YEARS DOES NOT SUFFICE. THE APPELLANT HAS TO ADDUCE RELEVANT EVIDE NCES INCLUDING INFORMATION ABOUT THE YEAR TO WHICH THESE LOANS PER TAIN AND MODE AND DATE OF RECEIPTS. SINCE SUCH UNSECURED LOANS RE FLECTED IN THE BALANCE SHEET OF THE APPELLANT ARE NOT PROVED TO PE RTAIN TO EARLIER YEARS, ACTION OF THE A.O. IN HOLDING THAT THEY ARE NOT GENUINE CALLS FOR NO INTERFERENCE. HOWEVER, IN MY CONSIDERED OPINION UNPROVED/UNSECURED LOANS IN THE CASE OF THE APPELLA NT COULD BE GIVEN 5 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI THE SAME TREATMENT AS ANONYMOUS OR BOGUS DONATIONS AS ASSESSEE IS REGISTERED U/S 12A AND ITS INCOME IS EXEMPTED U/S 1 1. THEREFORE, INVOKING PROVISIONS OF SECTION 115BBC, I TREAT THEM TO BE BOGUS DONATIONS. AS PER PROVISIONS OF SECTION 115BBC ANON YMOUS DONATIONS IN EXCESS OF HIGHER OF RS. 1 LAC OR 5% OF TOTAL DON ATIONS ARE SUBJECT TO TAXATION. THE TOTAL UNPROVED RECEIPTS OF THE APPELL ANT AMOUNT TO RS. 10,06,000/- WHOSE 5% COME TO RS. 50,300/-. ACCORDI NG TO PROVISIONS OF SECTION 115BBC, ANONYMOUS DONATION IN EXCESS OF RS. 1,00,000/- IS TAXABLE AT THE RATE OF 30%. THEREFORE, ADDITION OF RS. 9,06,000/- TO BE TAXED AT THE RATE OF 30% IS CONFIRMED AND BALANCE A DDITION OF RS. 1,00,000/- IS DELETED. THE GROUND OF APPEAL IS PART LY ALLOWED. NOW, THE ASSESSEE IS IN APPEAL 6. LD. COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NO NEW LOANS WERE RECEIVED BY THE ASSESSEE. A REFERENCE WA S MADE TO PAGE NO. 4 OF THE ASSESSEES PAPER BOOK WHICH IS THE LIS T OF UNSECURED LOANS AS ON 31.03.2010. HE ALSO REFERRED TO PAGE NO . 6A OF THE ASSESSEES PAPER BOOK WHICH IS THE LIST OF UNSECURE D LOANS AS ON 31.3.2009 AND SUBMITTED THAT THERE IS NO CHANGE IN THE AMOUNT OF THE LOANS RECEIVED FROM SHRI ANKUR GUPTA, SHRI BALD EEP SINGH, SHRI DEVENDRA SINGH AND SHRI SOBHIT RAGHAV AT RS. 4,44,0 00/-, RS. 1,20,000/-, RS. 2,42,000/- AND 2,00,000/- RESPECTIV ELY TOTALING TO RS. 10.76 LAKH. IT WAS ACCORDINGLY SUBMITTED THAT WHEN NO LOAN WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION, THERE FORE, THE ADDITION U/S 68 WAS NOT JUSTIFIED. IN HIS RIVAL SUBMISSIONS, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT IS AN ADMITTD FACT THAT THE AO MAD E THE ADDITION U/S 68 OF THE ACT IN RESPECT OF THOSE LOANS WHICH WERE BROUGHT FORWARD FROM THE EARLIER YEAR AND NOT RECEIVED IN THE PREVI OUS YEAR, RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THEREOF RE, THE ACTION OF THE AO WAS NOT INACCORDANCE WITH LAW AND THE LD. CI T(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAID ACTION. IN MY OPIN ION, WHEN THE ASSESSEE HAD NOT RECEIVED ANY FRESH LOAN OR DEPOSIT DURING THE YEAR UNDER CONSIDERATION AND THE LOANS WHICH WERE BROUGH T FORWARD FROM THE EARLIER YEARS HAD BEEN ACCEPTED AS GENUINE AT T HE TIME OF RECEIPT SINCE NO ADDITION HAS BEEN MADE IN THE YEAR OF RECE IPT. THEREFORE, THE SAME LOANS CANNOT BE CONSIDERED AS NON-GENUINE FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 8. THE NEXT ISSUE VIDE GROUND NO. 4 RELATES TO THE DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS. 46,015/- CLAIMED BY T HE ASSESSEE AND DISALLOWED BY THE AO BY OBSERVING THAT AS THE COST OF ASSET HAS BEEN ALLOWED AS DEDUCTION BY WAY OF APPLICATION OF INCOM E THEN DEPRECIATION OF THE SAME ASSET CANNOT BE ALLOWED. T HE LD. CIT(A) SUSTAINED THE DISALLOWANCE MADE BY THE AO. NOW THE ASSESSEE IS IN APPEAL. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE DEPRECIATION WAS CLAIMED IN RESPECT OF THE WRITTEN DOWN VALUE OF THE ASSETS WHICH 7 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI WERE BROUGHT FORWARD FROM THE EARLIER YEARS AND NO ASSETS WERE PURCHASED IN THE YEAR UNDER CONSIDERATION. A REFERE NCE WAS MADE TO PAGE NO. 4A OF THE ASSESSEES PAPER BOOK WHICH IS T HE COPY OF THE DETAILS OF THE FIXED ASSETS AND DEPRECIATION THEREO N. IT WAS ALSO SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER DATED 05.04.2016 OF THE ITAT, DELHI BENCH G, NEW DELHI IN ITA NO. 5632/DEL/2015 IN THE CASE OF M/S KESAR CHARITABLE T RUST, LOHIA NAGAR, GHAZIABAD VS. ADDITIONAL CIT, RANGE 1 GHAZIA BAD (COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD ). IN HIS RIVAL SUBMISSIONS, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH TE H PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, THE DETAILS FURNISHED BY THE ASSESSEE IN RESPECT OF FIXED ASSETS AND DEPRECIATION CHART AS ON 31.3.2010 (COPY OF WHICH IS PLACED AT PARA NO. 4A OF THE ASSESSEES PAPER BOOK) REVEALED THAT THE DEPRECIATION AMOUNTING TO RS. 46,015/- WAS CLAIMED BY THE ASSESSEE ON THE WRITTEN DOWN VALUE OF THE ASSETS BROUGHT FOR WARD AS ON 01.04.2009 WHICH CLEARLY SHOWS THAT NO DEPRECIATION HAS BEEN CLAIMED IN RESPECT OF ANY ASSETS PURCHASED DURING T HE YEAR UNDER CONSIDERATION. THEREFORE, THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCO RDINGLY THE SAME IS DELETED. 8 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLO WED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27. 05.2016. ) SD/- (N.K.SAINI) ACCOUNTANT MEMBER DATED : 27/05/2016 *B.RUKHAIYAR* COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR 9 ITA NO. 889/DEL/2016 C.P.ARYA PUBLIC SCHOOL SAMITI DATE INITIAL 1. DRAFT DICTATED ON 2 5.05.2016 2. DRAFT PLACED BEFORE AUTHOR 25.05.2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.