Asstt.C.I.T., Circle-3,, Gwalior v. Shri Chitragupta Shikha Prasar Samiti, Datia

ITA 426/AGR/2010 | 2007-2008
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 42620314 RSA 2010
Assessee PAN AAATC6909J
Bench Agra
Appeal Number ITA 426/AGR/2010
Duration Of Justice 1 year(s) 13 day(s)
Appellant Asstt.C.I.T., Circle-3,, Gwalior
Respondent Shri Chitragupta Shikha Prasar Samiti, Datia
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-11-2011
Date Of Final Hearing 18-11-2011
Next Hearing Date 18-11-2011
Assessment Year 2007-2008
Appeal Filed On 11-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO. 424/AGRA/2010 ASSTT. YEAR : 2007-08 SHRI CHITRAGUPTA SKHIKSHA PRASAR SAMITI VS. INCOM E-TAX OFFICER C/O M/S. ANIL KUMAR MANISH KUMAR SHIVPURI DAL BAZAR GWALIOR. (PAN : AAATC 6909 J) ITA NO. 426/AGRA/2010 ASSTT. YEAR : 2007-08 A.C.I.T. CIRCLE 3(1) VS. SHRI CHITRAGUPTA SKHIKS HA PRASAR SAMITI GWALIOR BHADER DISTRCT DATIA (M.P.) (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MANOJ GOYAL C.A. FOR REVENUE : SHRI A.K. SHARMA JR. D.R. DATE OF HEARING : 18.11.2011 DATE OF PRONOUNCEMENT : 25.11.2011 ORDER PER BENCH: THESE CROSS APPEALS HAVE BEEN FILED BY THE ASSESS EE AND THE REVENUE AGAINST THE IMPUGNED ORDER DATED 23.08.2010 PASSED BY THE L EARNED CIT(A) GWALIOR. THE GROUNDS RAISED BY ASSESSEE IN ITS APPEAL ARE AS UND ER : THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE FOLLOWING ACTIONS OF THE ASSESSING OFFICER 2 1. IN HOLDING THE VALIDITY OF THE ASSESSMENT EVEN THOU GH NOTICES U/S. 143(2) OF THE ACT WERE NOT ISSUED; 2. IN CONFIRMING THE ORDER PASSED AS FIXED BY THE ASSE SSING OFFICER SHIVPURI EVEN THOUGH HE HAD NO JURISDICTION TO ASSE SS THE CASE. 3. IN PARTLY CONFIRMING THE ADDITION ON ACCOUNT OF UNS ECURED LOANS TREATING THE SAME AS ASSESSABLE INCOME FROM UNDISCL OSED SOURCE EVEN THOUGH THE APPELLANT IS A TRUST HAVING NO BUSI NESS ACTIVITY. ALL THE ABOVE ACTIONS BEING ARBITRARY UNLAWFUL AND UNTENABLE MUST BE QUASHED. 2. THE GROUNDS RAISED IN THE APPEAL OF THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN HOLDING THE EXEMPTION CLA IMED U/S 11& 12 OF THE INCOME TAX ACT 1961 VALID DESPITE ON THE FA CT THAT THE ASSESSEE HAS VIOLATED PROVISIONS OF SECTION 13(1)(C) AND 13( 2)(G) OF THE I.T. ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT (APPEALS) HAS ERRED IN HOLDING THAT THE PROPERTY PU RCHASED THE NAME OF TRUSTEE BELONGS TO SAMITI WHICH IS IN VIOLATION OF BENAMI TRANSACTION ACT. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED DELETING THE ENTIRE SURPLUS OF RS. 1 13 47 320/- BESIDES THE FACT THAT THE ASSESSEE HA S FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 11 & 12 OF THE INCOM E TAX ACT. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 10 00 000/- U/S 68 OF THE INCOME TAX ACT 1961. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (APPEALS) HAS ERRED IN HOLDING ADDITION OF RS. 29 4 5 000/U/S 68 AS CONFIRMED MERGES WITH TOTAL INCOME OF THE APPELLAN T ARE TREATED AS EXEMPTED U/S 11 OF THE INCOME TAX ACT 1961 REGARDLE SS OF THE FACT THAT PROVISIONS SECTION 11 12 & 13 ARE VIOLATED. 3 3. DURING THE COURSE OF HEARING THE LD. COUNSEL FO R THE ASSESSEE DID NOT PRESS GROUNDS NOS. 1 & 3 RAISED IN THE ASSESSEES APPEAL. THERE BEING NO OBJECTION BY THE LD. DR GROUNDS NOS. 1 & 3 IN ASSESSEES APPEALS AR E THEREFORE DISMISSED AS NOT PRESSED. 4. AS FAR AS GROUND NO. 2 IN ASSESSEES APPEAL IS C ONCERNED THE ASSESSEE HAS AGITATED THE ORDER OF THE LD. CIT(A) WITH REGARD TO THE JURISDICTION OF THE ASSESSING OFFICER WHO HAS PASSED THE ASSESSMENT ORDER. AFTER GOING THROUGH THE ORDER OF THE REVENUE AUTHORITIES WE ARE OF THE CONSIDERED OPINI ON THAT THE LD. FIRST APPELLATE AUTHORITY HAS PASSED A VERY REASONED ORDER THAT THE ASSESSING OFFICER AFTER TAKING APPROVAL FROM CCIT BHOPAL VIDE LETTER DATED 16.09. 2008 NOTICE U/S. 143(2) HAS BEEN ISSUED BY ACIT CIRCLE 3 ON 18.09.2008 FIXING THE CASE FOR 10.10.2008. THIS IS EVIDENT FROM THE ORDER SHEET ENTRY OF THE ASSESS MENT RECORD. THE INCOME-TAX OFFICER SHIVPURI HAS ISSUED THE FIRST NOTICE ON 08 .10.2009 AFTER THE ORDER U/S. 127 HAS BEEN PASSED ON 15.09.2009. THEREFORE THE LD. F IRST APPELLATE AUTHORITY HAS RIGHTLY DISMISSED THE GROUND PERTAINING TO JURISDIC TION RAISED BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER ON THIS COU NT. THUS THE GROUND NO. 2 IN ASSESSEES APPEAL IS ALSO DISMISSED. 5. AS REGARDS THE APPEAL FILED BY THE REVENUE THE LD. DR RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND STATED THAT THE LD. FIRST APPELLATE AUTHORITY HAS 4 WRONGLY GIVEN EXEMPTION U/S. 11 AND 12 OF THE INCOM E-TAX ACT DESPITE THE FACT THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13(1)(C) AND 13(2)(G) OF THE ACT. 6. ON THE CONTRARY THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE BEFORE US. IT IS UNDISPUTED FACT THAT THE ASSESSEE- SOCIETY IS RUNNING VARIOUS EDUCATIONAL INSTITUTIONS IN THE NAME OF R.D. MEMORI AL AYURVEDIC COLLEGE & HOSPITAL R.D. MEMORIAL COLLEGE OF NURSING AND R.D. MEMORIAL COLLEGE OF PHARMACY AND THE TOTAL RECEIPTS OF RS.3 29 12 060/- HAS BEEN DECLARED OUT OF WHICH RS.3 26 73 713/- HAVE BEEN SHOWN AS EXPANDED TOWARDS EDUCATION PURPOSES. NET SURPLUS OF RS.1 13 47 320/- HAS BEEN DECLARED AS PER INCOME AND EXPENDITURE ACCOUNT. THE ASSESSEE HAS NOT FILED PART I & II OF ANNEXURES TO THE AUDIT REPORT ALONGWITH THE RETURN AND THE ASSESSING OFFICER OBSE RVED THAT THE LAND HAS BEEN PURCHASED BY SHRI HEMANT SINGH CHAUHAN WHO WAS THE CHAIRMAN OF THE SOCIETY AND THE FUNDS FOR PURCHASE OF LAND ALONGWITH REGIST RATION EXPENSES HAD BEEN WITHDRAWN FROM THE OFFICE OF THE SOCIETY. THE AO OB SERVED THAT THERE IS CLEAR VIOLATION OF SECTION 13(1)(C) & 13(2)(G) OF THE ACT BUT ACCORDING TO THE ASSESSEE AN AFFIDAVIT OF SHRI HEMANT SINGH CHAUHAN WAS FILED CONFIRMING THAT DUE TO A MISTAKE THE SALE DEED HAD BEEN REGISTERED IN HIS N AME BUT IN FACT THE LAND BELONGED 5 TO THE SOCIETY AND WAS IN POSSESSION OF THE SOCIETY . THE ENTIRE EXPENDITURE ON PURCHASE OF LAND HAD BEEN INCURRED BY THE SOCIETY. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEW OF THE LD. CIT(A) THAT THE AO HAS JUST MISUNDERSTOOD THE RECITALS OF TWO PROVISIONS AS CITED BY HIM AS ALSO THE SCHEME OF TAXATION OF TRUSTS. IT IS OPEN TO A PERSON HOLDING A CERTAIN PROPERTY T O SET IT ON TRUST AND FOR THE TRUST TO FUNCTION UNINHIBITED UNHINDERED AND UNOBSTRUCTED T HEREAFTER PROVIDED THE SETTING UP OF THE PROPERTY ON TRUST IS IRREVOCABLE. THE NEE D FOR THE TRUST PROPERTY TO BE STANDING IN THE NAME OF THE TRUST IS NO CONDITION. THE FACTUM OF THE TRUST PROPERTY STANDING IN THE NAME OF THE TRUST CANNOT STAND IN T HE WAY OF EXEMPTION OF THE TRUST U/S. 11 AND 12 OF THE ACT. IN FACT SECTION 11 & 12 OF THE ACT DO NOT ENVISAGE THE HOLDING OF EVERY TRUST PROPERTY IN THE NAME OF THE TRUSTEES. SO LONG AS THE PROPERTIES HELD IN TRUST SUB-SERVE THE OBJECTIVES O F THE TRUST AND NOT UTILIZED FOR THE BENEFIT OF THE SPECIFIED PERSONS THE EXEMPTION CANN OT BE NEGATED. RELIANCE HAS RIGHTLY BEEN PLACED ON THE DECISION IN THE CASE OF BTM EDUCATION TRUST VS. ACIT (2006) 6 SOT 716 WHEREIN IT WAS HELD THAT FOR THE M ERE FACT THAT THE PROPERTY STOOD REGISTERED IN THE NAME OF THE SPECIFIED PERSON THE TRUST COULD NOT BE DISQUALIFIED. WHAT WAS IMPORTANT IS WHETHER ANY INCOME OR OTHER B ENEFIT DIRECT OR INDIRECT FLOWED TO THE SPECIFIED PERSON. IF THERE IS NONE SU CH THE EXEMPTION OF THE TRUST U/S. 11 AND 12 COULD NOT BE DISTURBED. THE DECISION OF H ONBLE BOMBAY HIGH COURT IN 6 THE CASE OF CIT VS. JAMUNA LAL BAJAJ SEVA TRUST (19 88) 171 ITR 568 (BOM) IS NOT IN RESPECT OF VIOLATIONS IN SECTION 13(1)(C) OF THE ACT. THE SAID DECISION IS BASED ON AN INTERPRETATION OF SECTION 13(4) OF THE ACT WHICH IS INAPPLICABLE IN THE FACTS OF THE CASE IN HAND. SO THE CITATION RELIED UPON BY THE A O HAS NO RELEVANCE IN THE GIVEN CIRCUMSTANCES OF THE CASE. WE ALSO CONCUR WITH THE FINDING OF THE LD. CIT(A) THAT THERE IS NO VIOLATION OF SECTION 13(1)(C) AND 13(2) (G) OF THE ACT. THE ACTION OF THE AO IN REFUSING THE EXEMPTION U/S. 11 AND 12 OF THE ACT IS MISCONCEIVED ERRONEOUS AND ILLEGAL AND THEREFORE THE SAME MERITS TO BE A NNULLED. IN SUBSTANCE THE ACT OF THE AO IN CONSTRUING CERTAIN AMOUNTS AS INCOME AND TAXING THE SAME AT THE MAXIMUM MARGINAL RATE IS ALSO ERRONEOUS AND ILLEGAL . THE COMPUTATION OF INCOME HAD TO BE DONE IN THE MANNER VISUALIZED U/S. 11 OF THE ACT AND NOT ON GROSSING UP BASIS AT MAXIMUM MARGINAL RATE OF TAXATION. 9. MOREOVER THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE NOT BEEN REJECTED AND THEY HAVE BEEN ACCEPTED DURING THE ASSESSMENT PROCE EDINGS AND NO DEFECTS OF WHATSOEVER KIND HAS BEEN POINTED OUT BY THE AO. TH EREFORE THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADHOC DISALLOWANCE WITHO UT BRINGING ANY CONTRARY MATERIAL ON RECORD. THE BOOKS OF ACCOUNTS ARE AUDIT ED AND NO DISCREPANCIES HAVE BEEN POINTED OUT BY THE AUDITOR IN HIS AUDIT REPORT . THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS IN DISPUTE I.E. THE SURPLUS OF RS.1 13 47 320/- AND RS.39 45 000/- U/S. 68 OF THE ACT MADE BY THE ASSE SSING OFFICER. 7 10. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DISCUSSION ABOVE WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER OF THE LD. FIRST APPELLA TE AUTHORITY. THUS GROUNDS NOS. 1 TO 5 OF REVENUES APPEAL DESERVE TO BE REJECTED. 11. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEE AND THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/11/2-11. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH NOVEMBER 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY