Patel Education and Welfare Society, Indore V. DCIT (Central)- !, Bhopal

ITSSA 66/Ind/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5258 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 04-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Set aside
• Section: 132; 143(3); 153A; 12AA

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A No.66/Ind/2020 Assessment Year: 2015-16 Patel Education & Welfare Society Indore PAN No.AAAAP7793G : Appellant V/s DCIT(Central)-1 Bhopal : Respondent Appellant by S/Shri Anil Kamal Garg & Arpit Gaur, CAs Respondent by Shri P.K. Mitra, CIT-DR Date of Hearing 20.01.2022 Date of Pronouncement 07.02.2022 O R D E R PER MANISH BORAD, A.M.: The above captioned appeal filed at the instance of the Assessee is directed against the order of Commissioner of Income Tax (Appeals) (in short CIT(A)-3 Bhopal dated 13.02.2020 which is Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 2 arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 13.02.2020 by ACIT(Central)-1,Bhopal. 2. This appeal was filed on 05.06.2020 and Registry has informed that this appeal is time-barred by 49 days. Ld. counsel for the assessee submitted that due to current pandemic, the delay occurred which may be condoned in view of guidelines of Govt. of India and Hon’ble Supreme Court. On the other hand, Ld. Sr. DR submitted that delay should not be condoned. We find that vide Gazette “CG-DL-E-29092020-222110 No.63 New Delhi, 29/2020 issued by Secretary to Govt. of India, it has been directed that in computing the period of limitation for any appeal, the period for 20.3.2020 till 31.12.2020 or 31.3.202, as the case may be, shall stand excluded. Further, the Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 dated 08.3.2021 has issued directions that in computing the period of limitation for any suit/appeal, the period for 15.3.2020 till 14.3.2021 shall stand excluded. Considering the same, we condone the delay in filing the assessee’s appeal and admit the same for hearing. 3. Brief facts of the case as culled out from the records are that the assessee is a charitable society created on 01.04.2008 and Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 3 registered with M.P. Societies Registrikaran Adhiniyam 1973 w.e.f 26.10.2007, mainly engaged in imparting technical education for weaker students. The assessee society is also granted registration u/s 12AA of the Act vide registration no.23/09-10 w.e.f. 01.04.2008. Return of income for A.Y. 2015-16 filed on 28.09.2015 declaring ‘NIL’ income. Search action u/s 132 of the Act was conducted on 07.01.2016 on Shivhare Group and its associates. Assessee is also part of the group and was subjected to search notice u/s 153A of the Act were duly served from A.Y. 2010-11 to A.Y. 2015-16 and in the instant appeal related to A.Y.2015-16 return of income u/s 153A of the Act was filed on 13.02.2017. During the course of assessment proceedings Ld. AO observed that there was a negative cash balance in the cash book of the assessee during the year. Though it was contended by the assessee that Annexure referred by the Ld. AO contained certain apparent mistake and secondly the society is running various colleges and institutions and Ld. AO has referred only to the negative balance appearing in the same cash book but over all cash balance of the society is positive. But the submission of the assessee was not found acceptable and ld. AO made the addition for negative cash of Rs.30,49,837/- observing as follows: Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 4 The submission of the assesse has been considered and found not acceptable for following reasons: Assessee could not produce any valid evidence to substantiate how the balance be negative in cash book. Negative balance indicates assessee has done unaccounted transactions from unrecorded sources. Assessee failed to provide the same. The assessee’s cashbook cannot be accepted at assessment stage as the same was not produced during the time of search and assessee also could not explain the reason for cash being negative in books. Further assessee could not explain why the books were not maintained in day to day basis, and why the cash balances of all the institutes are maintained together. Assessee himself are saying that cash balances are then finalized on year to year basis. This points to be fact that books are manipulated in the end of the year according to the requirement of the institute. Further special auditor in the report has also reached to similar conclusion regarding the same. Hence cashbook production is an afterthought. 4. Ld. AO also disallowed the loss incurred in exchange of old car amounting to Rs.2,15,708/- for lack of documentary evidences. Accordingly income assessed at Rs. 32,65,545/-. Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 5 5. Aggrieved assessee preferred an appeal before the Ld. CIT(A) but failed to succeed and now the assessee is in appeal before this Tribunal raising various grounds but the contentions are mainly focused towards addition made for negative cash of Rs. 30,49,837/- and disallowance of loss of exchange of car at Rs. 2,15,708/-. Ld. counsel for the assessee vehemently argued and referred to the written submissions filed before Ld. CIT(A) and other documentary evidences and judicial precedents placed in paper book dated 17.01.2022 containing 121 pages. 6. Per contra Ld. DR vehemently argued supporting the order of both lower authorities. 7. We have heard rival contentions, perused the records placed before us. First issue raised by the assessee relates to addition for including cash balance of Rs.30,49,837/-. On perusal of the documentary evidences and the facts placed before us we find that the assessee appears three cash books one for the appellant society and two for the colleges namely Malwa Institute of Science & Technology and Malwa Institute of Science of Management but the entire cash inflow and outflow is in control of one single cashier. The consolidated cash balance statement gives the details of cash Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 6 balance as per cash books of all three units on the relevant dates It is contended that special Auditor while reporting negative cash had only referred to cash balance of society and one institution but failed to consider the cash in hand of the second institution. If the special auditor had referred to the cash balance on the very same date with the cash book of remaining institution it would have been revealed that in total there was no negative cash balance. 8. We on perusing the paper book pages 111 to 121 find that date wise cumulative cash balance statement has been prepared which contains the daily cash balance of the two institutions as well as the assessee society and the same shows that the negative cash balance is only in the cash book of the society but if the total cash in hand of the society is added with the cash in hand of both colleges then there is no negative cash balance on any day. 9. Since both the colleges are owned and controlled by the society, Ld. CIT(A) should have considered the total cash in hand of all the colleges of the society and had this exercise been carried out then there would have been no basis to make addition for the alleged negative cash balance. We therefore, find merit in the submissions of the Ld. counsel for the assessee that since the commutation cash balance on each day is positive, Ld. AO erred in making Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 7 addition for negative cash balance appearing in the cash book of the society. Thus, finding of Ld. CIT(A) is set aside and addition for the negative cash balance of Rs.30,49,837/- is deleted. Relevant grounds raised by the assessee against this addition of Rs.30,49,847/- stands allowed. 10. As regards the second issue relating to disallowance of loss on exchange of car at Rs. 2,15,708/- we on perusal of the submission find that the assessee purchased a car at Rs.8,56,400/- bearing registration No.MP09-CN-6049. It is claimed that this car met accident and since the insurance also could not be renew and the car was sold almost in the condition of scrap and due to which assessee incurred loss of Rs. 2,15,708/-. This loss was claimed against purchase of new car during the year. Ld. AO disallowed this loss for want of necessary documents. We, however, looking to the regular activities being carried out by the assessee, books of account being audited and overall the society is deriving income at Rs.93,31,77,368/- do not find any reason to doubt the genuineness of loss claimed on exchange of car at Rs.2,15,708/-. We, thus set aside the finding of Ld. CIT(A) and delete the disallowance/additions for loss of exchange of car at Rs.2,15,708/- and allow relevant grounds raised by the assessee on this issue. Patel Education and Welfare Society IT(SS)A No.66/Ind/2020 8 11. In the result, Assessee’s appeal IT(SS)ANo.66/Ind/2020 is allowed. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 07.02.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 07.02.2022 Patel/Sr. PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore