Smt. Asharfi Devi Shiksha Samiti, Meerut v. ITO, Meerut

ITA 2388/DEL/2011 | 2005-2006
Pronouncement Date: 10-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 238820114 RSA 2011
Assessee PAN AAITS3698A
Bench Delhi
Appeal Number ITA 2388/DEL/2011
Duration Of Justice 9 month(s)
Appellant Smt. Asharfi Devi Shiksha Samiti, Meerut
Respondent ITO, Meerut
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 10-02-2012
Date Of Final Hearing 24-01-2012
Next Hearing Date 24-01-2012
Assessment Year 2005-2006
Appeal Filed On 10-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI. BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL I.T.A. NO.2388(DEL)/2011 ASSESSMENT YEAR: 2005-06 ASHARFI DEVI SHIKSHA SAMITI INC OME-TAX OFFICER C/O R.K. GARG VS. WARD 1(3) MEERUT. T-314 GANGA PLAZA MEERUT. PAN: AAITS3698A (APPLICANT) (RESPONDENT) APPELLANT BY : SHRI R.K. GARG & SHRI NITIN GARG ADVOCATES RESPONDENT BY : MR S. ANUSHA KHURANA SR. DR DATE OF HEARIN G: 24.01.2012 DATE OF PRONOUN CEMENT: 10.02.2012. ORDER PER K.G. BANSAL : A.M THE FACTS OF THE CASE ARE THAT THE ASSESSING OF FICER RECEIVED INFORMATION REGARDING DEPOSITS MADE BY THE AS SESSEE IN THE BANK ACCOUNT. IT WAS NOTICED THAT THE ASSESSEE HAD N OT FILED THE RETURN OF INCOME. THEREFORE BASED ON THE INFORMATION NO TICE U/S 148 DATED 31.03.2008 WAS SERVED ON THE ASSESSEE. THE RETUR N WAS NOT FILED IN TIME IN TERMS OF THIS NOTICE. THEREFORE A LETTER DATED 27.04.2009 WAS SERVED ON THE ASSESSEE REQUESTING IT TO FILE THE RETURN. THE ASSESSEE FILED THE RETURN ON 15.05.2009 DECLARING LOSS OF RS. 48 385/-. AS SESSMENT PROCEEDINGS ITA NO. 2388(DEL)/2011 2 WERE INITIATED BY ISSUING NOTICES U/S 143(2) AN D 142(1) OF THE INCOME- TAX ACT 1961 DATED 19.10.2009. THE ASSESSMENT WAS COMPLETED ON 18.12.2009 AT TOTAL INCOME OF RS. 16 28 510/-. 1.1 THE MAJOR ADDITION MADE IN THE ASSESSMENT IS IN RESPECT OF DEPOSITS AGGREGATING TO RS. 13 62 575/- MADE IN THE BANK ACCOUNT ON VARIOUS DATES BETWEEN 13.04.2004 AND 17.01.2005. THE DETAILS O F THE DEPOSITS HAVE BEEN FURNISHED ON PAGE 2 OF THE ASSESSMENT ORDER. IT IS SEEN THAT THE DEPOSITS HAVE BEEN MADE IN CASH AND ALSO BY WAY OF TRANS FER ENTRIES. THE DETAILS ARE AS UNDER:- S. NO. DATE AMOUNT DEPOSITED MODE 1 13.04.2004 1 000/- BY CASH 2 06.07.2004 38 000 BY S.B. 10003 3 06.07.2004 22 000 BY CASH 4 06.07.2004 17 000 BY CASH 5 06.07.2004 20 000/- BY S.B10007 6 06.07.2004 5 000/- BY S.B. 432 7 06.07.2004 10 000/- BY CASH 8 07.07.2004 1 00 000/- BY CASH 9 07.07.2004 50 000/- BY CASH 10 15.12.2004 1 40 000/- BY CASH 11 21.12.2004 1 00 000/- BY CASH 12 23.12.2004 2 20 000/- BY CASH 13 27.12.2004 1 00 000/- BY CASH 14 27.12..2004 1 00 000/- BY CASH 15 27.12.2004 2 00 000/- BY TRANSFER ITA NO. 2388(DEL)/2011 3 16 06.01.2005 99 575/- BY VCC-7331 17 12.01.2005 40 000/- BY CASH 18 17.01.2005 1 00 000/- BY CASH TOTAL: 13 62 575/- 1.2 THE SUBMISSION OF THE ASSESSEE BEFORE THE AO HAD BEEN THAT IT HAD OPENING BALANCE AS CASH-ON-HAND BROUGHT FORWARD FROM THE IMMEDIATELY PRECEDING YEAR. HOWEVER THE BOOKS OF ACCOUNT W ERE NOT PRODUCED AND EVIDENCE REGARDING OPENING BALANCE WAS ALSO NOT FILED. IN ABSENCE OF ANY SATISFACTORY EXPLANATION THE AMOUNT OF RS. 1 3 62 575/- WAS ADDED TO THE TOTAL INCOME BY INVOKING THE PROVISION CONTAIN ED IN SECTION 68 OF THE ACT. APART FROM THIS ADDITIONS WERE ALSO MADE IN RESPECT OF UNSECURED LOANS AGGREGATING TO RS. 1 71 225/- AND UNVERIFI ABLE SUNDRY CREDITORS AGGREGATING TO RS. 94 709/-. THE LOSS OF RS. 48 3 85/- CLAIMED IN THE RETURN OF INCOME WAS DISALLOWED AS THE BOOKS WERE NOT PRODUCED IN SUPPORT THEREOF. 2. THE ADDITIONS AND THE DISALLOWANCE WERE CHALLEN GED BEFORE THE CIT(A) MEERUT. IN THE COURSE OF HEARING ADDI TIONAL EVIDENCE WAS FILED IN RESPECT OF OPENING BALANCE STATED TO HAVE BE EN PRIMARILY ON ACCOUNT OF CORPUS DONATIONS RECEIVED IN THE IMMEDIATELY PR ECEDING YEAR. THE ADDITIONAL EVIDENCE WAS SUBMITTED TO THE AO FOR E NQUIRY. THE ENQUIRY WAS ITA NO. 2388(DEL)/2011 4 CONDUCTED AND A REMAND REPORT WAS SUBMITTED. TH IS REPORT WAS FURNISHED TO THE ASSESSEE FOR REBUTTAL. SUCH REBUTTAL WA S ALSO FURNISHED. AFTER CONSIDERING THE ASSESSMENT ORDER REMAND REPORT THE REBUTTAL THERETO AND THE EVIDENCE ON RECORD THE LD. CIT(APPEALS) UP HELD THE ADDITION. SINCE THE FACTS SUBMISSIONS AND CONCLUSION HAVE BE EN NARRATED IN A SUCCINCT MANNER IT WILL BE APPROPRIATE TO REPRODUCE HIS DECISION:- I HAVE CONSIDERED FACTS CAREFULLY. THE ARS ARG UMENT IS THAT ALL THE DEPOSITS WERE MADE OUT OF DONATIONS REC EIVED EARLIER WHICH WAS PART OF THE CORPUS OF THE APPELLANT AS ON 01.04.2004. SUCH DONATIONS WERE RECEIVED FROM 191 PERSONS AND LOAN FROM THREE PERSONS AMOUNTING TO RS. 1 7 1 225/-. IT IS STATED THAT CASH COLLECTED DURING F.Y. 2003-04 W AS DEPOSITED IN BANK ON VARIOUS DATES DURING F.Y. 2004-05 (BETW EEN 13.4.2004 AND 17.1.2005) BECAUSE THERE WAS NO BAN KING FACILITY AT THE PLACE WHERE THE SOCIETY WAS LOCATE D. THE AR CONTENDS THAT IT DISCHARGED ITS ONUS BY GIVING THE NAMES AND ADDRESSES OF THE DONORS AND THAT THE AO CO ULD NOT GO INTO THE SOURCE OF THE SOURCE IN VIEW OF HONBLE G UJARAT HIGH COURTS JUDGMENT IN THE CASE OF DCIT VS. ROHINI B UILDERS 256 ITR 360. THE AO CARRIED OUT ENQUIRIES TO SATISFY HIMSELF AB OUT THE IDENTITIES AND CREDITWORTHINESS OF THE DONORS AND THE GENUINENESS OF THE TRANSACTIONS. HE SENT LETTERS T O A NUMBER OF DONORS OUT OF WHICH 11 LETTERS CAME BACK TO HIM UNSERVED. FROM 12 PERSONS INCOMPLETE REPLIES WERE RECEI VED WITHOUT COPIES OF THE DONATION RECEIPTS WHICH WAS CALLED F OR. ALL THE 12 LETTERS WERE SENT BY ONE PERSON. THE AO FOUND T HAT THE DONORS HAD MEAGER INCOMES NOT ENOUGH TO ENABLE THEM TO MAKE THE DONATIONS OF AMOUNTS CLAIMED BY THE APPE LLANT. NO PAN ETC. WERE THERE IN RESPECT OF MOST OF THE DO NORS. IN FACT ONE DONOR VIZ. SHRI SATYA PRAKASH GUPTA ASSESS ED TO TAX BY ITO WARD 2(3) MEERUT CATEGORICALLY DENIED TO HA VE MADE ANY DONATION. DURING REMAND PROCEEDINGS FOUR DONATION ITA NO. 2388(DEL)/2011 5 RECEIPT BOOKS WERE PRODUCED WHICH WERE NEWLY BOUND AND FRESHLY WRITTEN. THE FACTS BROUGHT OUT BY THE AO OVERWHELMINGLY CAST A SERIOUS DOUBT ON THE GENUINENESS OF THE TRANSACTION S AND THE CREDITWORTHINESS OF THE DONORS AS CLAIMED. IN FAC T EVEN THE IDENTITIES OF MOST OF THE DONORS ARE NOT PROVEN. AS REGARDS A.RS RELIANCE ON ROHINI BUILDERS CASE IN MY CONSIDERED VIEW THE SAME DOES NOT HELP THE APPELLANT. THE AO HAS NOT TRIED TO GO INTO THE SOURCE OF THE SOURCE. HIS EN QUIRIES HAVE LED HIM TO A SITUATION WHERE HE FOUND THAT THE IDENTIT Y AND THE CREDITWORTHINESS OF THE SOURCE ITSELF AND THE GENU INENESS OF TRANSACTIONS CLAIMED ARE NOT PROVEN. IN THE LIGHT OF THE ABOVE MENTIONED FACTS AS BROU GHT OUT BY THE AO I HOLD THAT THE APPELLANT COULD NOT SATISFAC TORILY ACCOUNT FOR THE DEPOSITS IN THE BANK ACCOUNT WHICH IS TREATED AS APPELLANTS UNEXPLAINED MONEY. THE ADDITION MAD E BY THE AO IS CONFIRMED. 2.1 SIMILAR PROCEDURE WAS FOLLOWED IN RESPECT OF LOANS OF RS. 1 71 225/-AS ADDITIONAL EVIDENCE HAD BEEN FURNISHE D IN THIS MATTER ALSO. IT APPEARS THAT THE FACTS AND RIVAL SUBMISSIONS WE RE SIMILAR AS IN THE CASE OF DEPOSITS IN THE BANK ACCOUNT. RELYING ON HIS F INDING IN RESPECT OF DEPOSITS THIS ADDITION HAS ALSO BEEN UPHELD. 2.2 THE ADDITION IN RESPECT OF SUNDRY CREDITOR S HAS ALSO BEEN UPHELD BY MENTIONING THAT SATISFACTORY EXPLANATION COUL D NOT BE FURNISHED IN RESPECT THEREOF. SIMILARLY THE DISALLOWANCE OF T HE RETURNED LOSS HAS ALSO ITA NO. 2388(DEL)/2011 6 BEEN UPHELD BY MENTIONING THAT THE EXPENSES HAV E NOT BEEN PROPERLY EXPLAINED. 2.3 AGGRIEVED BY THIS ORDER THE ASSESSEE IS IN AP PEAL BEFORE US. IT HAS TAKEN UP EIGHT GROUNDS. GROUND NO. 1 IS GENERAL IN NATURE AND GROUND NO. 2 IS AGAINST VALIDITY OF NOTICE ISSUED U/S 148. THESE GROUNDS HAVE NOT BEEN PRESSED BEFORE US. THEREFORE THE GROUNDS ARE DIS MISSED. WE NOW PROCEED TO DECIDE OTHER GROUNDS HEREUNDER. 3. GROUND NOS. 3 AND 4 ARE AGAINST SUSTAINING TH E ADDITION OF RS. 13 62 575/- U/S 68. IT IS MENTIONED THAT THE LD . CIT(APPEALS) ERRED IN HOLDING THAT ADEQUATE OPPORTUNITY WAS GRANTED T O THE ASSESSEE IN THE COURSE OF ORIGINAL ASSESSMENT AND PREPARATION O F REMAND REPORT. IT IS FURTHER MENTIONED THAT NO SUM HAD BEEN FOUND CRED ITED IN THE BOOKS OF THE ASSESSEE THEREFORE THE ADDITION U/S 68 IS AR BITRARY UNJUST ETC. 3.1 THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE NOS. 5 TO 20 OF THE PAPER BOOK. THESE PAGES CONSTITUTE THE MEMORAND UM AND ARTICLES OF THE SOCIETY FORMED ON 20.02.2004. THE SOCIETY HAS BEEN REGISTERED BY THE REGISTRAR OF SOCIETIES ON 15.03.2004 AS SEEN FROM PAGE NO. 22 OF THE PAPER ITA NO. 2388(DEL)/2011 7 BOOK. THE SOCIETY HAS BEEN REGISTERED U/S 12A OF THE ACT ON 14.12.2009 ON THE BASIS OF APPLICATION FILED ON 02.06.2009. T HE CERTIFICATE OF REGISTRATION HAS BEEN PLACED IN THE PAPER BOOK ON P AGE NO. 21. THUS THE ASSESSEE-SOCIETY HAD NOT BEEN REGISTERED U/S 12A I N SO FAR AS THESE PROCEEDINGS ARE CONCERNED. IT MAY BE MENTIONED HERE THAT THE SOCIETY IS LOCATED IN VILLAGE BAHADURPUR TEHSIL SARDHANA D ISTRICT MEERUT. IT OPENED THE BANK ACCOUNT WITH SYNDICATE BANK BY DEPOSITIN G RS. 1 000/- ON 13.04.2004. THEREAFTER VARIOUS AMOUNTS HAVE BEEN DEPOSITED FROM 06.07.2004 AND ONWARDS. THE CASE OF THE LD. COUNS EL BEFORE US IS THAT VARIOUS AMOUNTS WERE RECEIVED AS CORPUS DONATION S IN FINANCIAL YEAR 2004-05 THE DETAILS OF WHICH HAVE BEEN PLACED BEFO RE US. IT IS SEEN THAT THE DONATIONS ARE CLAIMED TO HAVE BEEN RECEIVED BE TWEEN 04.02.2004 TO 28.03.2004. A SIGNIFICANT AMOUNT OF DONATIONS AR E SHOWN TO HAVE BEEN RECEIVED EVEN PRIOR TO FORMATION OF THE SOCIETY. THIS MEANS THAT A LARGER NUMBER OF DONATIONS ARE SHOWN TO HAVE BEEN RECEIVE D PRIOR TO THE REGISTRATION OF THE SOCIETY. 3.2 IN RESPECT OF THE REASON FOR KEEPING LARGE CASH AT HAND AND NOT DEPOSITING ANY AMOUNT IN THE BANK TILL 06.07.2004 IT IS SUBMITTED THAT THE ASSESSEE-SOCIETY IS SITUATED IN A VILLAGE WHERE B ANKING FACILITIES ARE NOT ITA NO. 2388(DEL)/2011 8 AVAILABLE. FURTHER WHEN QUESTIONED ABOUT NON-DE POSIT OF THE WHOLE OF THE DONATIONS IN THE BANK ACCOUNT ON 13.4.2004 WHEN THE BANK ACCOUNT WAS OPENED IT HAS BEEN SUBMITTED THAT THE MONEY WAS KEPT ON HAND AS IT WAS REQUIRED FOR PURCHASE OF LAND AND OTHER EXPENSES. THE MONEY WHICH WAS NOT REQUIRED WAS DEPOSITED IN THE BANK ACCOUNT F ROM 06.07.2004 ONWARDS. ALL THE DEPOSITS ARE OUT OF AFORESAID DONATIONS. IN THIS CONNECTION OUR ATTENTION HAS BEEN DRAWN TOWARDS THE BALANCE-SHEE T AS ON 31.03.2004 WHICH SHOWS CORPUS DONATION OF RS. 20.25 LAKH AS LIABILITY AND CASH ON HAND OF RS. 20 24 500/- AS ASSET. THE RECEIPT A ND PAYMENT ACCOUNT SHOWS EXPENDITURE OF RS. 500/- INCURRED IN RESPECT OF LE GAL MATTERS. FROM THIS BALANCE-SHEET THE AMOUNT OF RS. 20 24 500/- HAS B EEN CARRIED FORWARD TO 01.04.2004. IN THE CURRENT YEAR THE MONEY HAS B EEN EXPENDED ON LAND BUILDING FURNITURE AND FIXTURE AND LABORATORY EQUI PMENTS. A SUM OF RS. 5.00 LAKH HAS BEEN PLACED WITH RASHTRIYA SHIKSHAM A NUSANTHAN JAIPUR. THE ASSESSEE HAS ALSO SHOWN LOANS OF RS. 1 71 22 5/- FROM THE MEMBERS. 3.3 IT IS ALSO SUBMITTED THAT THE PROVISION CONTAI NED IN SECTION 68 IS NOT APPLICABLE IN RESPECT OF ADDITION OF RS. 13 62 57 5/- AS NO SUM HAS BEEN CREDITED IN THE BOOKS OF THE ASSESSEE FOR THIS YEAR . IN THIS CONNECTION THE FINDINGS OF THE AO AND THE LD. CIT(APPEALS) HAVE B EEN SUMMARIZED. THE ITA NO. 2388(DEL)/2011 9 ADDITION WAS MADE BY THE AO AS NEITHER THE BOO KS OF ACCOUNT NOR EVIDENCES FOR DONATION WERE PRODUCED BEFORE HIM. HOWEVER BOOKS WERE PRODUCED BEFORE THE LD. CIT(APPEALS) AND 191 CONFIRMATION LETTERS WERE ALSO FILED. THE AO WAS DIRECTED TO SUBMIT REMAND REPORT ON THIS ADDITIONAL EVIDENCE. HE DID NOT MAKE ANY WORTHWHILE ENQUIRY. PRIMARILY HIS FINDING IS THAT ONLY 12 RESPONSES WERE REC EIVED OUT OF ENQUIRIES MADE FROM 32 PERSONS. THESE RESPONSES DO NOT E STABLISH THAT THE DONATIONS ARE GENUINE. 11 LETTERS WERE RETURNE D BY THE POSTAL AUTHORITIES. ONE PERSON DENIED THE TRANSACTION. IN RESPECT OF OTHER LETTERS NO RESPONSE WAS RECEIVED. IT IS ARGUED THAT THE ENQ UIRIES DO NOT DISPLACE THE CASE OF THE ASSESSEE THAT THE AMOUNT DEPOSITED I N THE BANK ACCOUNT WAS OUT OF THE CORPUS DONATIONS RECEIVED IN THE IMMEDI ATELY PRECEDING YEAR. 3.4 IN REPLY THE LD. SENIOR DR SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE IS QUITE UNBELIEVABLE. A LARGE NUMBER O F THE DONATIONS ARE STATED TO HAVE BEEN RECEIVED PRIOR TO EVEN FORMATION OF THE SOCIETY. MERE FILING OF CONFIRMATION LETTERS DOES NOT DISCHARGE TH E ONUS CAST ON THE ASSESSEE. THE ENQUIRIES CONDUCTED BY THE AO SHOW THAT THE ALLEGED DONORS WERE PERSONS OF NO MEANS. THEREFORE EVEN WHERE CONFI RMATIONS ARE RECEIVED THE CAPACITY AND GENUINENESS OF TRANSACTION HAS NOT BEEN ESTABLISHED. IN ITA NO. 2388(DEL)/2011 10 OTHER CASES EVEN IDENTITY HAS NOT BEEN ESTABLI SHED. THEREFORE IT IS ARGUED THAT THE CONCURRENT FINDINGS OF LOWER AUT HORITIES MAY BE UPHELD. 3.5 BEFORE PROCEEDING FURTHER WE MAY DEAL WITH THE JURISPRUDENCE RELIED UPON BY THE RIVAL PARTIES. THE LD. COUNS EL RELIED ON THE DECISION IN THE CASE OF SMT. SHANTI DEVI VS. CIT (1988) 1 71 ITR 532. THE GIST OF THE DECISION IS THAT THIS PROVISION CONTAINED I N SECTION 68 PLACES EMPHASIS ON THE EXPRESSIONS BOOKS OF ACCOUNT AND THE WOR D ASSESSEE. THEREFORE WHERE A CREDIT IS FOUND IN THE BOOKS OF A PART NERSHIP FIRM IN THE NAME OF THE PARTNER THE BOOKS OF THE FIRM CANNOT BE TAKEN TO BE THE BOOKS OF THE PARTNER BEING INDIVIDUAL. THE REASON IS THAT A PARTNERSHIP FIRM IS A SEPARATELY ASSESSABLE ENTITY. THE BOOKS ARE NOT THOSE OF THE ASSESSEE. THEREFORE ADDITION CANNOT BE MADE U/S 68. THE CASE OF THE LD. COUNSEL IS THAT THE ACCOUNT MAINTAINED BY THE BANK IS IN THE BOOKS OF THE BANK AND NOT IN THE BOOKS OF THE ASSESSEE-SOCIETY. THEREFORE THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE. FURTHER RELIANCE HAS BE EN PLACED ON THE DECISION IN THE CASE OF CIT VS. BHAICHAND H. GANDHI (198 3) 141 ITR 67 (BOM.). IN THIS CASE IT HAS BEEN MENTIONED THAT THE PAS S BOOK SUPPLIED BY THE BANK TO ITS CLIENT CONTAINS THE RECORD OF TRANSACTIO NS FINDING PLACE IN THE BOOKS OF THE BANK. THE RELATIONSHIP BETWEEN THE BANK A ND THE CLIENT IS THAT OF ITA NO. 2388(DEL)/2011 11 DEBTOR AND CREDITOR AND NOT THAT OF TRUSTEE AND T HE BENEFICIARY. THEREFORE THE ENTRY MADE IN THE BOOKS OF THE BANK IS NOT THE ENTRY MADE IN THE BOOKS OF THE CLIENT. IF ANY OF SUCH ENTRY IS NOT MADE IN THE BOOKS OF THE ASSESSEE I.E. THE CLIENT THE PROVISION CONTAINED IN SECT ION 68 WILL NOT COME INTO PLAY. 3.6 IT MAY ALSO BE MENTIONED THAT THE LD. CIT(APP EALS) HAD DISTINGUISHED THE FACTS OF THE CASE OF DEPUTY CIT VS. ROHINI BUILDERS (2002) 256 ITR 360. THE GIST OF THIS JUDGMENT IS THAT WHILE THE ASSESSEE HAS TO FURNISH EXPLANATION IN REGARD TO NATURE AND SOURCE OF CRED IT IN HIS BOOKS HE IS NOT EXPECTED TO PROVE GENUINENESS OF THE CASH DEPOSI TS IN THE BANK ACCOUNT OF THE CREDITORS FROM WHERE THE CREDIT IN THE BOOKS OF THE ASSESSEE ORIGINATED. IN COMMON PARLANCE IT IS SAID THAT THE ASSESSEE IS NOT EXPECTED TO PROVE THE SOURCE OF THE SOURCE. THE FINDING OF THE LD. C IT(APPEALS) IS THAT THE AO HAS NOT ENQUIRED INTO THE SOURCE OF THE SOURCE. THE INITIAL BURDEN TO SATISFACTORILY EXPLAIN THE CREDITS IN THE BOOKS O F ACCOUNT OF THE ASSESSEE IS ON THE ASSESSEE. THIS BURDEN INCLUDES PRIMA FAC IE PROOF OF EXISTENCE AND CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE FACTS OF THE CASE DO NOT ESTABLISH EVEN ON A PRIMA FACIE BASIS THE CAPACITY OF THE ITA NO. 2388(DEL)/2011 12 DONOR WHICH HAS TO BE SEEN FROM HIS SOURCES O F INCOME AND THE DONATION. 3.7 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE DEP OSITED A SUM OF RS. 13 62 575/- IN ITS BANK ACCOUNT BETWEEN 13.04.2 004 AND 17.01.2005. BY AND LARGE THE DEPOSITS ARE BY WAY OF CASH. THER E ARE SOME TRANSFER ENTRIES ALSO. THE CASE OF THE ASSESSEE IS THAT IT HAD RECEIVED CORPUS DONATIONS OF RS. 20.25 LAKH IN THE IMMEDIATE PRE CEDING YEAR AND OUT OF THESE DONATIONS A SUM OF RS. 20 24 500/- WAS AVA ILABLE AS CASH-ON-HAND AS ON 01.04.2004. THE ASSESSEE HAS FILED CONFIR MATION IN RESPECT OF THE DONATIONS. THESE CONFIRMATIONS ARE SIMILARLY WORD ED AND ALL THE DONATIONS ARE IN CASH. THE AO MADE ENQUIRIES WITH 32 DO NORS. ONE PERSON DENIED THE DONATION. 12 PERSONS STATED THAT DONATIONS WERE MADE. 11 LETTERS WERE RECEIVED BACK BY THE AO WITH THE REMARK THAT NO SUCH PERSON EXISTED. THE CONCURRENT FINDING OF THE LOWER AUT HORITIES IS THAT THE ASSESSEE HAS NOT DISCHARGED ITS BURDEN TO PROVE THAT THE DONATIONS ARE GENUINE. THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE WA S IN POSSESSION OF A SUM OF ABOUT RS. 20.24 LAKH ON 01.04.2004. IN OTHER WORDS THEIR FINDING OF FACT IS THAT THE DEPOSITS MADE IN THE BANK ACCO UNT HAVE NOT BEEN EXPLAINED ITA NO. 2388(DEL)/2011 13 SATISFACTORILY AS TO THE SOURCE AND NATURE. THER EFORE THE ADDITION OF RS. 13 62 575/- HAS BEEN MADE. ON THE OTHER HAND TH E CASE OF THE LD. COUNSEL IS THAT THIS AMOUNT IS ONLY A PART OF THE CORPUS DONATIONS RECEIVED. THE BALANCE MONEY HAS NOT BEEN SUSPECTED BY THE L OWER AUTHORITIES. FURTHER THE PROVISION CONTAINED IN SECTION 68 IS NOT APP LICABLE TO THE FACTS OF THE CASE THEREFORE THE ADDITION COULD NOT HAVE BEE N MADE UNDER THIS PROVISION. WE MAY DEAL WITH THIS ARGUMENT AT THE OUTSET. IT IS QUITE TRUE THAT THE DEPOSIT WAS MADE IN THE BANK ACCO UNT. THE COPY OF PASS BOOK GIVEN BY THE BANK TO THE ASSESSEE IS NOT THE BOOK OF THE ASSESSEE. IT IS A COPY OF A PART OF ACCOUNTS OF THE BANK. SEE N IN THIS LIGHT THE PROVISION U/S 68 IS NOT APPLICABLE IN VIEW OF THE JURISPR UDENCE QUOTED BY THE LD. COUNSEL. HOWEVER THE FACT IS THAT REVENUE HAS B EEN ABLE TO PROVE THAT ON THE RESPECTIVE DATES OF CREDIT THE ASSESSEE W AS IN POSSESSION OF CASH OR ANY OTHER VALUABLE ARTICLE SAY CHEQUE OR DRAFT WHICH WAS CREDITED IN THE BOOKS. THEREFORE ONLY A VERBAL CHANGE IS REQUI RED NAMELY THAT THE ASSESSEE IS REQUIRED TO PROVE THE NATURE AND SOUR CE OF MONEY DEPOSITED IN THE BANK. THIS BURDEN IS MORE OR LESS THE SAME AS THE BURDEN U/S 68 ON THE FACTS OF THIS CASE. IN OTHER WORDS THE ASSESSEE HAS TO SUBSTANTIATE ITS EXPLANATION THAT IT WAS IN POSSESSION OF CASH O F ABOUT RS. 20.24 LAKH ON 1.4.2005. THE OTHER ARGUMENT IS THAT THE ASSESS EE HAD RECEIVED DONATIONS ITA NO. 2388(DEL)/2011 14 EXCEEDING RS. 13 62 575/-. THE AO HAS ACCEPTED T HE DONATIONS TO THE EXTENT OF ABOUT RS. 6 62 000/- I.E. EXCESS OF OVER RS. 13 62 575/-. THE ONLY THING WE CAN SAY IS THAT THE QUESTION BEFO RE US IS ONLY IN REGARD TO ADDITION OF RS. 13 62 575/- AND WE SHALL CONFINE OURSELVES TO THE GROUND RAISED BEFORE US. 3.8 WHEN WE LOOK AT THE FACTS OF THE CASE WE F IND THAT THE RETURN FOR ASSESSMENT YEAR 2004-05 WAS NOT FILED. THE RETURN WAS NOT FILED FOR THIS YEAR ALSO. THE CASE OF THE LD. COUNSEL IS THAT IT WAS NOT REQUIRED TO FILE THE RETURN. THE RETURN WAS FILED BELATEDLY U/S 148 AFTER THE AO ISSUED THE REMINDER TO THE ASSESSEE. THE ASSESSEE DID NOT FILE ANY EVIDENCE OF OPENING CASH BEFORE THE AO ALTHOUGH THE PROCEEDIN GS CONTINUED UP TO 18.12.2009 WHICH MEANS THAT IT HAD SUFFICIENT T IME TO PRODUCE WHATEVER EVIDENCE WAS THERE IN ITS POSSESSION BEFORE THE A O. THE EVIDENCE WAS FILED FOR THE FIRST TIME BEFORE THE LD. CIT(APPE ALS). THE SAMPLE ENQUIRY MADE BY THE AO SHOWED THAT SHRI SATYA PRAKASH GUP TA CATEGORICALLY DENIED HAVING MADE ANY DONATION ALTHOUGH HE IS STATED TO BE AN OFFICE- BEARER OF THE ASSESSEE-SOCIETY. 11 LETTERS COUL D NOT BE SERVED ON THE DONORS FOR LACK OF PROPER ADDRESS. REPLY FROM PER SONS WERE INCOMPLETE AND ALL THESE LETTERS WERE SENT BY ONE PERSON. IT MAY BE ARGUED THAT ITA NO. 2388(DEL)/2011 15 ENQUIRY OUGHT TO HAVE BEEN MADE WITH ALL THE DONOR S. HOWEVER THE PRACTICAL ASPECT OF MAKING SUCH ENQUIRY HAS TO BE KEPT IN MIND AS THERE WERE A LARGE NUMBERS OF DONORS. THE CONFIRMATION LETTERS ARE SIMILARLY WORDED WHICH MEANS THAT STANDARD PROFORMA WAS G IVEN TO THE DONORS FOR SIGNATURE. NORMALLY ONE EXPECTS DIFFERENT PERS ONS TO SEND CONFIRMATION IN HIS OWN LANGUAGE. THE FINANCIAL STATUS OF THE DONORS IS NOT SUCH THAT THEY WERE IN POSITION TO GIVE DONATIONS OF RS . 11 000/- AND RS. 21 000/-. THEREFORE THE CONFIRMATION LETTERS DO NOT ESTABL ISH THE CAPACITY OF THE DONORS. WE MAY CLARIFY THAT THE LD. CIT(APPEALS ) IS NOT LOOKING INTO THE SOURCE OF THE SOURCE BUT HE IS JUDGING THE CAPA CITY OF THE DONORS TO MAKE DONATIONS WHICH CAN BE DONE FOR EXAMINATION OF T HE EXPLANATION OF THE ASSESSEE U/S 68/69A. THAT APART HAVING RECEIVED DONATIONS IN FINANCIAL YEAR 2003-04 NO BANK ACCOUNT WAS OPENED TILL 13 .04.2004. ON THIS DATE ALSO THE ACCOUNT WAS OPENED BY DEPOSITING RS. 1 000/- ONLY. THE SECOND DEPOSIT OF RS. 58 000/- IS ON 06.07.2004. THE CASE OF THE ASSESSEE IS THAT BANKING FACILITY WAS NOT AVAILABLE IN THE VILLAGE. THEREFORE THE BANK ACCOUNT HAD TO BE OPENED ELSEWHERE. THAT DOES NOT EXPLAIN WHY EVEN AFTER OPENING THE ACCOUNT ON 13.04.2004 THE CASH AVAILABLE ON HAND WAS NOT DEPOSITED IN THE BANK ACCOUNT. EVEN DEPOSIT S AFTER 06.07.2004 ARE OF SMALL AMOUNTS WHICH LEAD TO AN INFERENCE THAT THE ASSESSEE WAS NOT IN ITA NO. 2388(DEL)/2011 16 POSSESSION OF THE WHOLE OF THE AMOUNT OF ABOUT RS . 20.24 LAKH ON 01.04.2004. IN THE LIGHT OF THESE FACTS WE AR E OF THE VIEW THAT THE BURDEN CAST ON THE ASSESSEE U/S 69A HAS NOT BEEN DISCHAR GED. ACCORDINGLY THE FINDINGS OF THE LD. CIT(APPEALS) ARE CONFIRMED. TH US GROUND NOS. 3 AND 4 ARE DISMISSED. 4. GROUND NO. 5 IS THAT THE LD. CIT(APPEALS) ERR ED IN CONFIRMING THE ADDITION OF LOAN OF RS. 1 71 225/-. IN THIS CONNEC TION IT IS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE SHOWED LOANS OF RS. 8 650/- FROM SMT. NIRMALA SUBHASH CHAND RS. 99 575/- FROM SHRI SUB HASH CHAND AND RS. 63 000/- FROM OTHERS TOTALING TO RS. 1 71 225/-. T HE ASSESSEE COULD NOT FILE ANY EVIDENCE IN RESPECT OF GENUINENESS OF THE LOANS THEREFORE THIS AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. BEFORE THE LD. CIT(APPEALS) IT WAS SUBMITTED THAT OUT OF THE LOANS OF RS. 1 71 225/- LOANS AGGREGATING TO RS. 1 62 575/- WERE RECEIVED THROUGH ACCOUNT PAY EE CHEQUES. ONLY A SUM OF RS. 8 650/- HAS BEEN RECEIVED IN CASH. THE CONFIRMED COPIES OF ACCOUNT OF THE LENDERS WERE FILED. THE DEPOSITOR S WERE THE TRUSTEE OR MEMBERS OF THE SOCIETY. ACCORDINGLY IT WAS AGIT ATED THAT THIS ADDITION MAY BE DELETED. THE LD. CIT(APPEALS) OBTAINED THE REMAND REPORT AND THE COMMENTS OF THE ASSESSEE ON THE REMAND REPORT. T HEREAFTER HE CAME TO THE ITA NO. 2388(DEL)/2011 17 CONCLUSION THAT THE FACTS ARE SIMILAR TO THE F ACTS IN RESPECT OF DONATIONS. THEREFORE THE ADDITION WAS CONFIRMED. 4.1 BEFORE US THE LD. COUNSEL REFERRED TO PAGE NOS . 238 TO 246 OF THE PAPER BOOK. THESE PAGES CONTAIN COPIES OF THE LE DGER ACCOUNT AND CONFIRMATION IN RESPECT OF SHRI SUBHASH CHAND NIRM ALA SUBHASH CHAND AND SHIV KUMAR. IT IS SEEN THAT LOAN FROM SHRI SUBH ASH CHAND IS BY WAY OF CHEQUE. LOANS ON TWO OCCASIONS FROM SMT. NIRMAL A SUBHASH CHAND ARE BY WAY OF CASH AND LOAN FROM SHIV KUMAR ON THREE OCCASIONS ARE BY WAY OF CHEQUES. IN THE CONFIRMATIONS ASSESSMENT PARTICULARS HAVE NOT BEEN FURNISHED. THE CASE OF THE LD. COUNSEL IS THAT I N VIEW OF THE CONFIRMATIONS THE LOANS SHOULD HAVE BEEN ACCEPTED AS GENUINE. O N THE OTHER HAND THE CASE OF THE LD. SENIOR DR IS THAT NO EVIDENCE OTH ER THAN CONFIRMATIONS HAS BEEN FILED. IN THE CASE OF CHEQUE PAYMENT THER E ARE TRANSFER ENTRIES FROM THE SAME BANK. THE BANK ACCOUNTS OF THE LENDER H AVE NOT BEEN FILED. HAVING CONSIDERED THE FACTS OF THE CASE WE AR E OF THE VIEW THAT THE INITIAL BURDEN IS ON THE ASSESSEE TO PROVE ON A PRIMA FA CIE BASIS THE IDENTITY OF THE LENDER THE CAPACITY TO LEND THE MONEY AND GEN UINENESS OF THE TRANSACTION. THE IDENTITY STANDS PROVED IN THIS CASE BUT OTHER INGREDIENTS HAVE NOT BEEN PROVED EVEN ON A PRIMA FACIE BASI S. THEREFORE IT IS HELD ITA NO. 2388(DEL)/2011 18 THAT THE LOWER AUTHORITIES WERE RIGHT IN TREAT ING THESE AMOUNTS AS THE INCOME OF THE ASSESSEE. 4.2 IN THE RESULT GROUND NO. 5 IS DISMISSED. 5. GROUND NO. 6 IS AGAINST ADDITION OF RS. 94 70 9/- IN RESPECT OF UNCONFIRMED SUNDRY CREDITORS. THE AO HAS MENTIO NED THAT THE CREDITS ARE IN RESPECT OF S.S. TRADING CO. MEERUT AND VENUS SAFE INDUSTRIES MEERUT OF RS. 55 759/- AND RS. 38 950/- RESPECTI VELY. THE ASSESSEE COULD NOT FURNISH CONFIRMED COPIES OF ACCOUNT. THEREF ORE THE AMOUNT WAS ADDED TO THE TOTAL INCOME. IN PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY THE PURCHASE BILLS AND COPY OF LEDGER ACCOUNTS WERE FILED. AFTER CONSIDERING THE REMAND REPORT OF THE AO AND THE COMMENTS OF THE ASSESSEE THE ADDITION HAS BEEN CONFIRMED. IN TH IS CONNECTION THE REMAND REPORT OF THE AO HAS BEEN ACCEPTED IN WHICH IT WA S SUBMITTED THAT LETTERS WERE ISSUED TO THE CREDITORS WHICH CAME BACK AS UNSERVED. 5.1 THE CASE OF THE LD. COUNSEL BEFORE US IS THAT THE ASSESSEE HAD PURCHASED LABORATORY EQUIPMENTS FROM S.S. TRADING CO. OF THE VALUE OF RS. 55 759/- IN MARCH 2005. THE PAYMENT WAS NOT MADE UP TO THE CLOSE OF THE ITA NO. 2388(DEL)/2011 19 FINANCIAL YEAR. THE ASSESSEE HAD ALSO PURCHASED FURNITURE FROM VEENUS SAFE INDUSTRIES IN MARCH 2005. IN THIS CASE A LSO THE PAYMENT COULD NOT BE MADE TILL THE END OF THE YEAR. THE BILLS FR OM S.S. TRADING CO. AND VEENUS SAFE INDUSTRIES HAVE BEEN FILED. IN THES E CIRCUMSTANCES WE DO NOT FIND ANY REASON TO MAKE ADDITION IN RESPECT OF THE CREDITS PENDING THE PAYMENT. 6. GROUND NO. 7 IS AGAINST DISALLOWANCE OF EXPEN DITURE OF RS. 48 385/-. IN THIS CONNECTION IT HAS BEEN MENTIONED IN THE A SSESSMENT ORDER THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED AND THEREFORE RETURNED LOSS OF RS. 48 385/- IS IGNORED. IN THE COURSE OF HEARING B EFORE THE FIRST APPELLATE AUTHORITY IT WAS SUBMITTED THAT THERE WAS NO PLA USIBLE REASON FOR IGNORING THE EXPENSES INCURRED BY THE ASSESSEE IN THIS YEA R. THE LD. CIT(APPEALS) DIRECTED THE AO TO MAKE ENQUIRY ONCE MORE INTO THE BOOKS AND THE BILLS. HOWEVER NONE ATTENDED BEFORE HIM ON 17.03.2011 AND 22.03.2011. IN ABSENCE THEREOF THE LD. CIT(APPEALS) CONFIRME D THE DISALLOWANCE OF THE LOSS. 6.1 BEFORE US THE LD. COUNSEL REFERRED TO THE PROFIT AND LOSS ACCOUNT AND SUBMITTED THAT THE EXPENSES WERE IN RESPECT OF BANK CHARGES -RS. 55/- ITA NO. 2388(DEL)/2011 20 LEGAL EXPENSES- RS. 43 265/- TRAVELING EXPENSES- RS. 5 150/- AND DEPRECIATION- RS. 7 103/-. IT IS HIS CLAIM THA T THESE ARE USUAL EXPENSES WHICH SHOULD BE ALLOWED. WE DO NOT FIND ANY P LAUSIBLE REASON FOR DISALLOWING BANK CHARGES AND TRAVELING EXPENSES. THE DEPRECIATION HAS BEEN CLAIMED ON FURNITURE AND FIXTURES AND LABOR ATORY EQUIPMENTS. THE ASSESSEE HAS NOT STARTED IMPARTING EDUCATION AND THEREFORE DEPRECIATION ON LABORATORY EQUIPMENTS IS NOT ADMISSIBLE. CONSEQUE NTLY IT IS HELD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION OF RS. 2 921 /- ONLY ON FURNITURE AND FIXTURES. THE DETAILS OF LEGAL EXPENSES HAVE NOT BEEN FURNISHED AND THEREFORE ONE CAN ONLY CONJECTURE ABOUT THE NAT URE OF EXPENSES. THE EXPENSES SEEM TO BE IN CONNECTION WITH SETTIN G UP OF THE SOCIETY AND ITS REGISTRATION. THESE ARE NOT EXPENSES INCURRED FOR EARNING ANY INCOME. THEREFORE THE DISALLOWANCE IS HELD TO BE IN ORDER. THUS THIS GROUND IS PARTLY ALLOWED. 7. GROUND NO. 8 IS AGAINST CHARGING OF INTEREST U NDER SECTIONS 234A AND 234B. THE CASE OF THE ASSESSEE IS THAT IT HA D FILED A LOSS RETURN AND THEREFORE THESE INTERESTS ARE NOT CHARGEABLE. W E ARE NOT ABLE TO ACCEPT THE SUBMISSION FOR THE REASON THAT INTEREST UNDER BOTH THE SECTIONS ARE CHARGEABLE ON THE BASIS OF ASSESSED TAX. HOWEVER THE CALCULATION OF THE ITA NO. 2388(DEL)/2011 21 INTEREST SHALL BE RE-DONE ON GIVING EFFECT TO THI S ORDER. THUS THIS GROUND IS PARTLY ALLOWED. 8. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. SD/- SD/- (I.P. BANSAL) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- ASHARFI DEVI SHIKSHA SAMITI MEERUT. ITO WARD 1(3) MEERUT. CIT(A) CIT THE D.R. ITAT NEW DELHI. ASSISTANT REGISTRAR.