Golden Public School Samiti, Ghaziabad V. ITO (Exemptions), Ghaziabad

ITA 899/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4019 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Assessee Lawyers: SHIVAM BANSAL
• Keywords: Depreciation; Opportunity of being heard; Capital expenditure
• Section: 133(6); 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.899/DEL./2016 (ASSESSMENT YEAR : 2010-11) GOLDEN PUBLIC SCHOOL SAMITI, VS. ADDL. CIT, RANGE 1, D BLOCK, MAIN ROAD, GHAZIABAD. PRATAP VIHAR, GHAZIABAD. (PAN : AABHG1905R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHIVAM BANSAL, CA REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 02.01.2018 DATE OF ORDER : 25.01.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, GOLDEN PUBLIC SCHOOL SAMITI (HEREIN AFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 27.11.2015 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS), GHAZIABAD QUA THE ASSESSMENT YEAR 2010-11 CONFIRMING THE PENALTY LEVI ED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT T HE ACT) ON THE GROUNDS INTER ALIA THAT :- ITA NO.899/DEL/2016 2 L. THE ORDER PASSED BY THE A.O. IS IN BAD IN LAW A ND AGAINST THE CANNON OF TAXATION. 2. THE A.O. HAS IGNORED OF LAW AND INTERPRETED WRON GLY. 3. THE A.O. HAS VITIATED BY THE FACT, FINDING AND R EACHED ON ASSESSMENT ONLY ON THE PRESUMPTION AND ASSUMPTIONS AND NOT BASED ON ANY RELEVANT EVIDENCES OR CIRCUMSTANCES. 4. THE FOLLOWING ADDITIONS MADE BY AO HAVE BEEN SUS TAINED BY THE COMMISSIONER OF INCOME TAX TAX(APPEALS) I. RS. 7,82.465/- ON ACCOUNT OF HONORARIUM II. RS. 4,54,300/- ON ACCOUNT OF SALARY PAID U/S 13(3) III. R .1,64,715/- ON ACCOUNT OF DEPRECIATION IV. RS.51,000/- ON ACCOUNT OF INTEREST V. RS.2,04,757/- ON ACCOUNT OF SURPLUS OF INCOME ORDER EXPENDITURE 5. THE A.O. AS WELL AS CIT-(A) BOTH HAS DECIDED THE PENALTY ON THE BASIS OF ASSUMPTION & SURMISES. 6. THERE WAS NO CONCEALMENT REGARDING ANY ADDITION. FULL DISCLOSURE IN AUDITED FINANCIAL STATEMENTS I.E. INC OME & EXPENDITURE ALE AND BALANCE SHEET WERE MADE. ALL TH E FACTS / DOCUMENTS WERE ALSO PRODUCED BEFORE A.O. THE A.O WA S NOT AGREED WITH OUR EVIDENCES / EXPLANATION BUT IT IS N OT CONCEALMENT. ADDITION OF RS.7,82,465/- ON ACCOUNT OF HONORARIUM 7. WE HAVE SUBMITTING THE LIST OF PERSON'S ALONGWIT H THEIR NAME, ADDRESS AND IDENTITY. WE HAVE FILED THE CONFI RMATORY LETTER ALSO. INSPITE OF ALL THESE EVIDENCES THE A.O. HAS I GNORED THESE EVIDENCES AND STARTED TO POINT OUT TECHNICAL ERROR IN THE CONFIRMATION LETTERS. IF THE A.O. WAS IN DOUBT HE C AN CONFIRM THE RELATED PERSONS BY INVOKING SECTION 133(6) OF THE I NCOME TAX ACT,1961. 8. THERE WAS NO TDS LIABILITY ATTRACTS ON PAYMENTS AS THE AMOUNT WAS BELOW RS.20,000/- TO EACH PERSON DURING THE YEAR. ADDITION OF RS.4,54,300/- ON ACCOUNT OF SALARY PAID U/S 13(3): 9. WE HAVE FURNISHED THE LIST OF SALARY PAID OF RS. 17,18,590. THESE WERE THE PEOPLE WHICH ARE NOT RELATED TO SAMI TI. WE HAVE FURNISHED DETAILS OF SALARY DURING ASSESSMENT PROCE EDINGS IN WHICH WE HAVE MENTIONED SALARY PAID TO PERSONS SPEC IFIED U/S 13(3) OF RS.4,54,300/-. ITA NO.899/DEL/2016 3 THUS, TOTAL AMOUNT UNDER THE HEAD SALARY COMES TO RS.21,72,800/- WHICH TALLIED WITH INCOME & EXPENDIT URE ACCOUNT. 10. WE HAVE PAID SALARY TO SPECIFIED PERSONS U/S 1 3(3) AS UNDER:- A. R. K. GUPTA RS. 1,38,000/- B.A. B. KIRAN GUPTA RS. 1,12,800/- B.ED., POST GRADU ATE C. ROHIT GUPTA RS. 1,23,700/- B.ED. D. NIDHI GUPTA RS. 79,800/- B.ED. 11. SECTION 13(2)(C) STANDS AS UNDER:- 'IF ANY AMOUNT IS PAID BY WAY OF SALARY, ALLOWANCE OR OTHERWISE DURING THE PREVIOUS YEAR TO ANY PERSON REFERRED TO IN SUB SECTION (3) OUT OF THE RESOURCES OF THE TRUST OR INSTITUTIO N FOR SERVICES RENDERED BY THAT PERSON TO SUCH TRUST OR INSTITUTIO N AND THE AMOUNT SO PAID IS IN EXCESS OF WHAT MAY BE REASONAB LY PAID FOR SUCH SERVICES.' 12. WE HAVE NOT PAID EXCESS SALARY. KEEPING THE VIE W IN MIND THAT PRINCIPAL AND PRESIDENT OF SOCIETY SMT. KIRAN GUPTA IS FETCHING SALARY OF RS.1,12,800/- PER ANNUM ONLY HAV ING STRENGTH OF 1030 STUDENTS .. THE OTHER PERSON SH. R.K. GUPTA , SECRETARY OF THE SOCIETY, WHO IS LOOKING AFTER ALL THE LIASIONIN G WORK AND OVERALL WORK AT SCHOOL I.E. SUPERVISION AND CONTROL LING OF CONSTRUCTION AND REPAIR OF BUILDING, PURCHASING AND REPAIRING OF OTHER ASSETS OF SOCIETY, VISITING TO GHAZIABAD DEVE LOPMENT AUTHORITY, CBSE BOARD AND OTHER DEPARTMENTS. THE SA LARY PAID TO SH. RX. GUPTA IS VERY LOW AND REASONABLE. LASTLY , SHREE ROHIT & NIDHI GUPTA ARE WELL QUALIFIED AND TAKING SALARY AT VERY NOMINAL EVEN LOWER THAN NORMAL RATES. THUS, THERE I S NO EXCESS PAYMENT MADE TO THEM PARTICULARLY KEEPING THE WORK AND DUTY PERFORMED BY THEM. AS FAR AS QUESTION OF SALARY PAID TO SPECIFIED PERS ONS ARE CONCERN, NO WORK OR INSTITUTION CAN RUN WITHOUT PUTTING PERS ONAL EFFORTS BY SOME DEDICATED PERSONS. NO PERSON OTHER THAN TRUSTE E CAN DO THE BEST FOR ATTAINMENT OF OBJECT OF THE SOCIETY. AS FAR AS OBJECTION REGARDING PAYMENT TO SPECIFIED PERSONS IS NOT MADE AT REGULAR INTERVAL, IN THIS CONCERN THE PAYME NT HAS BEEN MADE AS PER AVAILABILITY OF FUNDS / DEMAND OF THE S PECIFIED PERSON. BUT IN NO CASE, EXTRA AMOUNT HAS BEEN PAID TO SPECIFIED PERSONS. IN ASSESSMENT PROCEEDING OF A Y -2012-13 A O HAS ALLOWED THE SALARY PAID TO PERSONS SPECIFIED U/S 13 (3) OF INCOME TAX ACT-1961. ITA NO.899/DEL/2016 4 13. THE CIT (APPEAL) HAS ERRED IN CONFIRMING THE AD DITIONAL OF SALARY PAID TO SPECIFIC PERSON U/S 13(3) MENTION ING THE NATURE OF SERVICES RENDERED BY THESE PERSONS ARE NOT GIVEN WHILE IN THE SAME ORDER THE CIT (APPEAL) AT PAGE 9 PARAGRAPH 2 P OINT NO. 5 HAS MENTIONED THE NATURE OF SERVICES. ADDITIONS ON ACCOUNT OF DEPRECIATION (RS.1,64,715/- ) AND INTEREST OF RS.51,000/-:- 14. WE ARE RUNNING INTERMEDIATE SCHOOL UNDER GOLDEN PUBLIC SCHOOL. FOR THE VARIOUS PURPOSE OF WORKING OF THE S CHOOL. SOMEONE HAS GONE OUTSIDE THE SCHOOL I.E. CONSTRUCTI ON ACTIVITIES, LIASIONING WITH DIOS AND CBSE BOARD. MANY TIMES WE HAVE TO GO TO RECEIVE GUESTS OF DIFFERENT EVENTS I.E. 15 AU GUST, 26 JANUARY, 2 OCTOBER, FOUNDATION DAY, SPORTS SEMINAR AND OTHER ACTIVITIES. SOME TIME WE HAVE GO TO DOCTOR/HOSPITAL TAKING THE STUDENTS OR STAFF ALSO. SO ALL THESE VEHICLES ARE N ECESSARY AND FOR SOCIETY PURPOSE. WE HAVE INCURRED NOMINAL CHARGES DURING THE YEAR. T OTAL EXPENDITURE ON CAR ALONGWITH OTHER TRAVELING & CONV EYANCE EXPENSES COMES TO RS. 61,730/- (29,540/-+ 32,190/-) KEEPING THE RECEIPTS RS.43,27,675/- OF THE SCHOOL THESE ARE VER Y NOMINAL EXPENSES. 15. THE AMOUNT GIVEN TO M/S DEV PACKAGING OF RS.11,00,000/- AND SH. SANJIV GUPTA RS.4,00,000/- F OR THE PURCHASE OF PROPERTY BY THE SOCIETY. THE CIT (APPEA L) HAS REDUCED THE INTEREST FROM RS.1,70,000/- TO RS.51,00 0/- SO INTEREST LEVIED BY AO IS AGAIN THE LAW. EXCESS OF INCOME OVER EXPENDITURE:- 16. THE CIT (APPEAL) HAS SUSTAINED THE ADDITION TO THE TUNE OF RS.2,04,757/- ON THE BASIS THAT OF NO DETAILS HA VE BEEN GIVEN OF CAPITAL EXPENDITURE IN THE CONSTRUCTION AND OTHER A SSETS. THESE ADDITIONS WERE SHOWN IN OUR AUDITED BALANCE SHEET. THE A.O. AS WELL AS CIT (APPEAL) HAS NOT ASKED ABOUT THE DETAIL S OF CAPITAL EXPENDITURE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS A SOCIET Y REGISTERED UNDER SECTION 12AA OF THE ACT RUNNING A SCHOOL IN THE NAM E OF GOLDEN PUBLIC SCHOOL. ON THE BASIS OF ASSESSMENT DATED 28. 03.2013 ITA NO.899/DEL/2016 5 COMPLETED U/S 143 (3) AT RS.30,15,950/-, PENALTY PR OCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT ON THE GROUND TH AT OUT OF THE GROSS RECEIPT OF RS.43,27,675/-, THE ASSESSEE HAS CLAIMED SALARY OF RS.21,72,890/-, BUT INCOME AND EXPENDITURE ACCOUNT SHOWS THAT APART FROM SALARY EXPENDITURE, THE ASSESSEE HAS ALS O SHOWN PAYMENT OF RS.7,82,465/- TO 52 PERSONS IN CASH UNDE R THE HEAD HONORARIUM EXPENSES RANGING FROM RS.9,000/- TO RS .16,000/-. CLAIM OF THE ASSESSEE AS TO MAKING SALARY OF RS.4,5 4,300/- TO ITS FAMILY MEMBERS AND MANAGEMENT OF THE SOCIETY WAS AL SO DISALLOWED AND DEPRECIATION OF RS.6,34,909/- CLAIME D BY THE ASSESSEE HAVING BEEN PAID TO M/S. DEV PACKAGING HA S ALSO BEEN DISALLOWED. DISALLOWANCE OF RS.1,70,000/- WAS ALSO MADE ON ACCOUNT OF INTEREST ON THE AMOUNT OF RS.4,00,000/- PAID TO SANJAY GUPTA, ONE OF THE TRUSTEE, IS ALSO DISALLOWED. AO FOUND THE AFORESAID CLAIM OF THE ASSESSEE SOCIETY AS DELIBERA TE CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS OF I NCOME AND THEREBY LEVIED PENALTY OF RS.9,31,929/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL B Y RESTRICTING THE PENALTY ON THE AMOUNT OF RS.16,57,237/-. FEELING AG GRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY CHALLEN GING THE IMPUGNED ORDER PASSED BY LD. CIT (A) . ITA NO.899/DEL/2016 6 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD. CIT (A) VIDE IMPUGNED ORDER BY PARTLY AL LOWING THE APPEAL FILED BY THE ASSESSEE AFFIRMED THE LEVY OF P ENALTY BY RESTRICTING THE TOTAL ADDITION OF RS.16,57,237/- AS AGAINST THE TOTAL QUANTUM OF RS.30,15,950/- ON WHICH PENALTY HAS BEEN LEVIED BY THE AO BY MAKING FOLLOWING OBSERVATIONS :- IN VIEW OF ABOVE DISCUSSION, ON THE GIVEN FACTS, PE NALTY IS CONFIRMED IN PRINCIPLE, IN MY CONSIDERED OPINION, T HE APPELLANT IS LIABLE FOR PENALTY IN RESPECT OF SUSTAINED ADDIT IONS AS LISTED BELOW:- 1. ADDITION OF RS. 782465/- ON ACCOUNT OF HONORARI UM 2. ADDITION OF RS. 454300/- ON ACCOUNT OF SALARY PA ID U/S 13(3) 3. ADDITION OF RS. 164715/- ON ACCOUNT OF DEPRECIAT ION & RS.51000/- INTEREST ON LOAN & ADVANCES. 4. ADDITION ON ACCOUNT OF SURPLUS OF RS.2,04,757/- THE A.O. IS ACCORDINGLY DIRECTED TO RESTRICT THE PE NALTY ONLY W.R.T. ADDITIONS OF RS. 782465/- + RS. 454300/ - + RS. 164715/- + 51000/- + RS.204757/- = RS. 16,57,237/- AS DISCUSSED ABOVE. 6. NOW, THE LD. AR FOR THE ASSESSEE BY PLACING ON R ECORD ORDER DATED 18.12.2017 PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.897/DEL/2016 FOR AY 2010-11 PASSED IN THE QUANTUM PROCEEDINGS FROM WHICH PENALTY PROCEEDINGS HAVE BEE N EMANATED ITA NO.899/DEL/2016 7 VIDE WHICH ISSUE AS TO ADDITION OF RS.7,82,465/- ON ACCOUNT OF HONORARIUM AND ADDITION OF SURPLUS OF RS.2,04,757/- HAVE BEEN SET ASIDE TO THE FILE OF AO TO DECIDE AFRESH AFTER PROV IDING AN OPPORTUNITY OF BEING HEARD. HOWEVER, THE COORDINAT E BENCH OF THE TRIBUNAL IN THE AFORESAID ORDER (SUPRA) DELETED THE ADDITION OF RS.4,54,300/- ON ACCOUNT OF SALARY PAID U/S 13 (3); ADDITION OF RS.1,64,715/- ON ACCOUNT OF DEPRECIATION AND RS.51, 000/- ON ACCOUNT OF INTEREST ON LOAN AND ADVANCES. IN THESE CIRCUMSTANCES, PENALTY LEVIED BY THE AO AND AFFIRMED BY THE LD. CI T (A) IS NOT SUSTAINABLE, HENCE PENALTY LEVIED BY THE AO AND AFF IRMED BY THE LD. CIT (A) IS ORDERED TO BE DELETED AND AO TO PASS AFR ESH ORDER CONSEQUENT UPON THE DECISION ON THE ISSUES WHICH HA VE BEEN SET ASIDE TO HIM FOR DECIDING AFRESH. CONSEQUENTLY, TH E APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF JANUARY, 2018. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF JANUARY, 2018 TS ITA NO.899/DEL/2016 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.