M/s. Khalsa Montessory Sr. Secondary School, Bulandshahr V. Addl. CIT, Bulandshahr

ITA 927/DEL/2012

• Counselvise Citation: 92720114 RSA 2012
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 24-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISEILLA SINGSITDR
• Keywords: Assessment record
• Section: 12AA; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI D BENC H BEFORE SHRI RAJPAL YADAV , JM & SHRI A.N. PAHUJA, AM ITA NO.927/DEL./2012 ASSESSMENT YEAR : 2008-09 KHALSA MONTESSORY SENIOR. SECONDARY SCHOOL, NEAR EXHIBITION GROUND, BULANDSHAHR V/S . ADDL. CIT, RANGE-BULANDSHAHR, INCOME-TAX OFFICE, TEACHER COLONY, BULANDSHAHR [PAN :AAAAK 2826 P] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI M.P. RASTOGI, AR REVENUE BY MS. PRISEILLA SINGSIT,DR DATE OF HEARING 18-10-2012 DATE OF PRONOUNCEMENT 09-11-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 24.02.2012 BY THE ASSESSEE AGA INST AN ORDER DATED 28.12.2011 OF THE LD. CIT(A)-MEERUT, RAISES T HE FOLLOWING GROUNDS:- 1. THAT THE CIT(A) AND AO HAS ERRED ON FACTS UNDER THE LAW IN DENYING THE EXEMPTION U/S 10(23C)(IIIAD) AS CLAIMED BY THE APPELLANT FOR THE YEAR UNDER APPEAL. 2. THAT THE CIT(A) AND AO HAS ERRED UNDER THE LAW IN DENYING THE EXEMPTION U/S 10(23C)(IIIAD) FOR THE YEAR UNDER APPEAL, WHICH IS AN INDEPENDENT YEAR, ON THE BASIS OF ASSES SING OFFICERS FINDING IN AY 2007-08, NOT CONCLUSIVE AND NOT APPLICABLE TO THE YEAR UNDER APPEAL. 3. THAT WITHOUT PREJUDICE TO GROUND NO.1 AND 2 THE ASSESSEE DENIED ITS ACTIVITY ARE UNDER THE MANAGEMENT COMMIT TEE OF GURUDWARA BUT CONTROLLED BY THE ELECTED MANAGEMENT COMMITTEE AND EXECUTIVE COMMITTEE AS PER THE MEMORANDUM OF SOCIETY DULY POINTED OUT TO CIT(A), A ND ITA NO.927/DEL./2012 2 CONSEQUENTLY THE DENIAL OF EXEMPTION CLAIMED IS ARB ITRARY, UNJUST AND BAD IN LAW. 4. THAT IN THE ABSENCE OF REASONABLE OPPORTUNITY TO REFUTE THE CHARGES LEVELED BY AO FOR AY 2007-08, THE DENIAL OF EXEMPTION U/S 10(23C)(IIIAD) BY THE CIT(A) FOR THE YEAR UNDER APPEAL, WHICH IS AN INDEPENDENT YEAR, IS ARBITRARY, UNJUST AND NOT ACCORDANCE WITH LAW. 5. THAT IN THE ABSENCE OF ALLEGATION FOR YEAR UNDE R APPEAL THAT ITS ACTIVITY ARE NOT SOLELY FOR EDUCATION THE DENIA L OF EXEMPTION U/S 10(23C)(IIIAD) AS MADE BY THE AUTHORI TY BELOW IS ARBITRARY, UNJUST AND BAD IN LAW. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R WITHDRAW ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING . 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T THE RETURN DECLARING NIL INCOME FILED ON 31 ST MARCH, 2009 BY THE ASSESSEE SOCIETY, REGISTERED U/ S 12AA OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT]W.E.F 23.1.2007, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOT ICE U/S 143(2) OF THE ACT, ISSUED ON 22.09.2009. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE I S RUNNING AN EDUCATIONAL INSTITUTION UPTO 12 TH STANDARD . TO A QUERY BY THE AO, SEEKING BOOKS OF ACCOUNTS, THE ASSESSEE DID NOT PRODUCE ANY BOOKS OF ACCOUNT E XCEPT SALARY REGISTER, ELECTRICITY BILLS AND EVIDENCE OF DEPOSITING EMPLOY EES PF. THE ASSESSEE EXPLAINED THAT DUE TO DISPUTE IN MANAGEMENT COMMITT EE, BOOKS OF ACCOUNTS WERE IN THE CUSTODY OF CA, BROTHER OF SHRI UPENDRAJEET S INGH, TREASURER OF THE SOCIETY AT THAT TIME AND THE MATTER IS PENDING BEFORE HONB LE ALLAHABAD HIGH COURT IN CWP NO.17458 OF 2010. IN THESE CIRCUMSTANCES WHEN THE EXPENDITURE CLAIMED IN THE INCOME AND EXPENDITURE WAS NOT VERIFIABLE, T HE AO DISALLOWED AN AMOUNT OF ` `1 LAC. BESIDES, THE ASSESSEE REFLECTED INCOME OF ` ` 98,82,539.52 AND CLAIMED EXCESS OF INCOME OVER EXPENDITURE OF ` ` 35,35,998/-. SINCE EXCESS OF INCOME OVER EXPENDITURE EXCEEDED 15% AND THE ASSESS EE DID NOT FILE PRESCRIBED FORM NO.10, THE AO DENIED CLAIM FOR EXEMPTION U/S 10(23C) OF THE ACT, INTER ALIA, ON THE GROUND THAT ACTIVITIES OF THE ASSESSEE WERE UNDER THE MANAGEMENT ITA NO.927/DEL./2012 3 COMMITTEE OF GURUDWARA AND WERE NOT SOLELY FOR EDUC ATIONAL PURPOSES AS FOUND IN THE PRECEDING ASSESSMENT YEAR .ACCORDINGLY, INCO ME WAS DETERMINED AT ` 36,36,000/-. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE FINDINGS O F THE AO IN THE FOLLOWING TERMS:- 6.3. DECISION AND REASONS THEREFOR: I HAVE CONSIDERED THE AO'S ORDER AND THE AR'S SUBM ISSIONS CAREFULLY. FOR VERIFICATION OF FACTS I ALSO CALLED FOR THE ASSESSMENT RECORDS OF THE APPELLANT FOR THE IMMEDIATELY PRECED ING ASSESSMENT YEAR I.E. A.Y. 2007-08. THE AR'S SOLE EMPHASIS IS T HAT THE INCOME OF THE SOCIETY IS TOTALLY EXEMPT UNDER SECTION 10(2 3C)(IIIAD) OF THE INCOME-TAX ACT, 1961. THE PROVISIONS OF SECTION 10( 23C)(IIIAD) REQUIRE THAT THE UNIVERSITY OR OTHER EDUCATIONAL IN STITUTION TO DESERVE EXEMPTION SHOULD EXIST SOLELY FOR EDUCATIONAL PURPO SES AND NOT FOR THE PURPOSES OF PROFIT AND ITS AGGREGATE ANNUAL REC EIPTS SHOULD BE LESS THAN RS. L CRORE. IN THE CASE OF THE APPELLANT THE AO HAD MADE DETAILED INVESTIGATIONS DURING THE ASSESSMENT PROCE EDINGS FOR A.Y. 2007-08. THE RESULTS OF THE INVESTIGATION CAST A SE RIOUS DOUBT ON THE FACT OF APPELLANT'S EXISTENCE BEING SOLELY FOR THE PURPOSE OF EDUCATION. THE AO HAD FOUND THAT THE APPELLANT HAD DIVERTED A SUM OF RS.33 LAKHS IN THE NAME OF GURUDWARA SHRI GURU G OVIND SINGH SABHA. A HALL WAS CONSTRUCTED ON THEIR LAND AND WIT HIN THE PREMISES OF THE GURUDWARA. DURING THE YEAR THE ASSE SSEE WROTE OFF THE ADVANCE OF RS.33 LAKHS IN THE NAME OF THE GURUD WARA AND UNAUTHORIZEDLY INCLUDED THE VALUE OF HALL ON THE LA ND OF THE GURUDWARA IN ITS ASSETS. THE AO CATEGORICALLY HELD THAT THE ASSESSEE DIVERTED ITS FUNDS FOR THE PURPOSES OTHER THAN EDUCATION, AND, THEREFORE, IT COULD NOT BE SAID THAT IT EXISTE D SOLELY FOR THE PURPOSE OF EDUCATION. THE AO., THEREFORE, DENIED TH E EXEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAD). THE AR DURING THE APPELLATE PROCEEDINGS HAS NOT AD DUCED ANY ARGUMENT OR EVIDENCE TO REFUTE THE FINDINGS OF THE AO DURING THE LAST ASSESSMENT YEAR. ON THESE FACTS, I HOLD TH AT THE EXISTENCE OF THE SOCIETY SOLELY FOR THE PURPOSE OF EDUCATION IS NOT PROVED. I. THEREFORE. UPHOLD THE ORDER OF THE AO. THE INCOME OF THE ASSESSEE TREATED AS BUSINESS INCO ME WITHIN THE MEANING OF SECTION 28 IS UPHELD. ITA NO.927/DEL./2012 4 THE APPELLANT'S GROUND IS DISMISSED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).AT THE OUTSET, TO A QUER Y BY THE BENCH, THE LD. AR ON BEHALF OF THE ASSESSEE REPLIED THAT THEIR APPEAL IN THE PRECEDING AY 2007-08 WAS STILL PENDING BEFORE THE LD. CIT(A). SINCE THE FI NDINGS OF LD. CIT(A) IN THE YEAR UNDER CONSIDERATION WERE BASED ON INVESTIGATION CON DUCTED BY THE AO IN THE PRECEDING ASSESSMENT YEAR, WHEREIN IT WAS NOTICED T HAT FUNDS OF ` 33 LACS WERE DIVERTED IN THE NAME OF GURUDWARA SRI GURU SINGH SABHA WHILE A HALL WAS CONSTRUCTED ON LAND WITHIN THE PREMISES OF GURUDWAR A, TO A FURTHER QUERY BY THE BENCH, THE LD. AR REPLIED THAT MATTER MAY BE RESTOR ED TO THE FILE OF THE LD. CIT(A) FOR RE-ADJUDICATION IN THE LIGHT OF OUTCOME OF THEI R APPEAL IN THE AY 2007-08.THE LD. DR DID NOT OPPOSE THESE SUBMISSIONS OF THE LD. AR. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, EXEMPTION U/S 10(23C)(IIIAD) O F THE ACT WAS DENIED IN THE PRECEDING AY 2007-08 WHEREIN AN AMOUNT OF ` ` 33 LACS IS STATED TO HAVE BEEN DIVERTED IN THE NAME OF GURDWARA SHRI GURU GOVIND S INGH SABHA AND A HALL WAS CONSTRUCTED ON THE LAND WITHIN THE PREMISES OF GUR DWARA. THE LD. CIT(A) BASED HIS DECISION IN THE YEAR UNDER CONSIDERATION SOLEL Y ON THE BASIS OF INVESTIGATION CONDUCTED BY THE AO IN THE AY 2007-08 WITHOUT RECOR DING HIS FINDINGS ON THE FACTS FOUND BY THE AO IN THE YEAR UNDER CONSIDERATI ON. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE ASSESSEE DID NOT PRODUCE RELEVA NT BOOKS OF ACCOUNTS EITHER BEFORE THE AO OR THE LD. CIT(A),WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR DECIDING THE AFORESAID ISSUES, AFRESH IN ACCORDANCE WITH LAW, I N THE LIGHT OF HIS FINDINGS IN THE APPEAL FOR THE AY 2007-08 AND OF CO URSE, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES . NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LD. CIT(A) SH ALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MA NDATE OF ITA NO.927/DEL./2012 5 PROVISIONS OF SEC. 250(6) OF THE ACT. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER RELEVA NT MATERIAL BEFORE THE LD. CIT(A).THE LD. CIT(A) IS FREE TO UND ERTAKE ANY INDEPENDENT ENQUIRIES, IF FOUND NECESSARY ,IN THE F ACTS AND CIRCUMSTANCES OF THE CASE. WITH THESE OBSERVATIONS, GROUND NOS. 1 TO 5 IN THE APPEAL ARE DISPOSED OF. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND IN THE APPEAL, ACCORDINGLY THIS G ROUND IS DISMISSED. 7. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 8. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STATIST ICAL PURPOSES. SD/- SD /- (RAJPAL YADAV) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1 APPELLANT 2. ADDL. CIT RANGE-BULANDSHAHR,INCOME-TA X OFFICE,TEACHER COLONY, BULANDSHAHR 3. CIT CONCERNED 4. CIT(A), MEERUT 5 . DR, ITAT,D BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT