Highway Multiple Charitable Trust, ... vs Department Of Income Tax

JCIT vs. Highway Multiple Charitable Trust Range-2, 16, Vivek Vihar CGO-2, Hapur Road, Hapur Ghaziabad (PAN AADFH3226N) (Appellant) (Respondent)

Appellant by :Shri V.S. Rastogi, AR Respondent :Shri Satpal Singh, Sr. DR

ORDER

PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER

This is an appeal filed by the revenue directed against the order of

Commissioner of Income Tax Ghaziabad dated 13.3.2013.

2. Facts in brief : This is the case of a Trust which was running a school in the

name of 'City Academy' at Babugarh Cant. The return of income for Asstt. year

2006-07 was filed on 31.10.2006 declaring "nil" income. As per the statement of

taxable income enclosed with the return, the assessee declared net assessable loss

of Rs. 1,06,062/-. Copies of audited accounts were enclosed with the return. These

show receipt of donation of Rs. 9,55,000/- and unsecured loans of Rs. 29,78,500/-.

In the Income and Expenditure Account of 'City Academy' , total receipts have been

shown at Rs. 14,63,650/- from school fees and rent. There are three balance sheets

enclosed. One is of the school "City Academy" . Here a loan of Rs. 11,48,500/- was

shown. The other balance sheet is of 'Highway Multiple Charitable Trust' . Here ITA. No.3602/Del/2013 AY 2006-07 JCIT vs. M/s Highway Multiple Charitable Trust

receipt of donations of Rs. 9,55,000/- and unsecured loans of Rs. 18,30,000/- was

shown. The third balance sheet is consolidation of both the above referred balance

sheets. As per information in the assessment record, for A.Y. 2005-06, for which

assessment was made u/s 143(3) on 27.12.2007, assessee has already declared

receipt of unsecured loans of Rs. 23,30,000/- before the period ended 31.3.2005.

Therefore in F.Y. 2005-06 relevant to A.Y. 2006-07 new loans are to the tune of Rs.

6,48,500/- only.

3. The assessment was made on income computed as under :-

(i) Unproved unsecured loans Rs. 6,48,500/-

(ii) Unproved donations Rs. 9,55,000/-

(iii) Receipts over expenditure of school Rs. 98,782/-

________________ Rs. 17,02,282/- _________________

4. Aggrieved the assessee carried the matter in appeal. The first appellate

authority granted the relief.

5. Aggrieved by this order the revenue is in appeal by the following grounds :-

1. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case, in deleting the addition of Rs. 6,48,500/- made on account of unapproved unsecured loans as creditworthiness of lenders could not be established.

2. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case, in deleting the additions of Rs. 9,55,000/- made on account of unproved donation.

3. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case, in deleting the addition of Rs. 98,782/- made on account of receipts over expenditure of school.

2 ITA. No.3602/Del/2013 AY 2006-07 JCIT vs. M/s Highway Multiple Charitable Trust

4. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case, in accepting the additional evidences when the conditions of Rule 46A(1) of the I.T. Rules, 1962 are not satisfied whereas the assessee has been provided sufficient opportunity by the AO to adduce the evidence.

5. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case, in not giving sufficient opportunity to the AO u/s 250(4) of the Act to conduct further inquiries / verification on the additional evidences submitted by the assessee.

6. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case, in not forwarding the comments of the assessee on the remand report of the AO, for his comments, when the remand report of the AO has been confronted to the assessee by the Ld. CIT(A) to provide the AO a reasonable opportunity.

6. We have heard Shri Satpat Singh, Sr. DR on behalf of the revenue and Shri

Neeraj Jain. Ld. Counsel for the assessee.

7. On a careful consideration of the facts and circumstances of the case and a

perusal of the papers on record and the orders of the authorities below we hold as

follows :-

7.1. Ld. First appellate authority admitted additional evidence on an application

made by the assessee under rule 46A. The remand report was called for. The first

appellate authority at para 8.1 held as follows :-

"8.1 The appellant is a charitable Society and is running school in the village for the poor students and the receipts from the school have been declared in the Income and Expenditure account of the school run under the name of City Academy at village Babugarh, Tehsil Hapur. There is excess of expenditure over the receipts declared at Rs. 14,63,650/- resulting in to loss of Rs. 35,287/- in the school set of account. This fact has been admitted by the AO in the order and there is no dispute on this point. The appellant has enclosed with the return, separate Income and Expenditure account of society where an amount of Rs. 68,699/- as bank interest and Rs. 2,075/- as bank charges have been debited making the total loss at Rs. 1,06,061/50 for the financial year ending 31.3.2006."

3 ITA. No.3602/Del/2013 AY 2006-07 JCIT vs. M/s Highway Multiple Charitable Trust

8. On the additions of Rs.6,48,500/- u/s 68 the Ld. First Appellate authority

observed that these very parties advanced loans to the assessee for the earlier asstt.

years and no addition was made in that year, though a scrutiny assessment order

was passed. These parties were Smt. Harjeet Kaur, Shri Gurjeet Singh and Shri

Surjeet Singh. After considering remand report of the AO and the documentary

evidence given by the assessee, the first appellate authority came to the conclusion

that on examination of all the documents and details furnished, no addition is called

for. He deleted the addition. Ld. DR could not controvert these factual findings of the

first appellate authority. Similarly on an addition of Rs.9,55,000/- being donations,

on examination of evidence, the first appellate authority came to the conclusion that

the addition cannot be sustained for the reason that the assessee had produced all

documentary evidences in support of its claim, whereas the AO has not conducted

any investigation or collected any evidence to controvert the evidence furnished by

the assessee. He held that the reasons given by the AO are casual in nature. We see

no reason to interfere with this ground.

9. Vide Ground No. 3 the appellant has objected to an addition of Rs. 1,34,070/-

to the income of the Trust in respect of expensed debited to the receipt and

expenditure statement of the school by the name of "City Academy" thereby treating

the same as not allowable expenditure.

10. The assessing Officer has not given any comment on this ground of submission

made by the appellant in the remand proceedings. In view of the detailed

submission made by the appellant, the addition of Rs. 98,782/- made to the income

has deleted by the Ld. CIT(A).

4 ITA. No.3602/Del/2013

AY 2006-07 JCIT vs. M/s Highway Multiple Charitable Trust

11. We find no infirmity in the same. In the result we uphold the order of the first

appellate authority and dismiss the appeal of the revenue.

Order pronounced in the Open Court on 5th January, 2015.

sd/- sd/- (A.T. VARKEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 5th January, 2015 'veena' Copy of the Order forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File By Order Deputy Registrar

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