TaxTMI 
TaxTMI 
2018 (1) TMI 9
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.... produced before him which was subjected to remand report also. 3. That the A.O. has not made any objection about the admission of the evidence regarding trade creditors of Rs. 19,90,604.00 which goes to the root of the matter in the remand report and denial of admission of the same is illegal and is mere denial of justice. 4. That the CIT(A) has erred on facts and in law to sustain the addition of Rs. 19,90,604.00 which represent trade creditors and paid off subsequently." 3. The facts are that the assessee is a Society engaged in Educational activities. During the assessment stage, the AO had observed that the Assessee Society was granted registration under section 12AA of the Act by Ld. CIT -2, Agra on 05.02.2014 w.e.f. from 01.04.2013. Since for the year under consideration registration u/s 12AA of the IT Act was not available to the Assessee Society, the AO assessed the assessee's net surplus of income over expenditure of Rs. 42,94,078/-. The AO had also added a sum of Rs. 19,90,604/- towards unverifiable sundry creditors. Further, a sum of Rs. 8,75,368/- was added by the AO as interest on advance of Rs. 35,81,000/- at the rate of 12% per annum. Thus in th....
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....n the ground of non-verification of sundry creditors, I completely rely on the stand taken by the AO as despite affording ample opportunities to the appellant assessee, no relevant details or documents were filed nor any books of accounts were produced during the course of assessment proceedings in order to prove the genuineness of the sundry creditors. Therefore, in view of the said reasons, the addition may kindly be sustained and the ground of the appellant may be rejected." 8. The assessee filed the following rejoinder (impugned order page 18B to 20A), dated 29.03.2016 to the AO's remand report: "Disallowance of Rs, 19,90,604/- on account of sundry creditors. The A.O. has made addition Rs. 19,90,604/- on the ground that the assessee has not furnished copy of account of sundry creditors and complete address and confirmation. Your honours kind attention is drawn to the written submissions made before the A.O. vide letter dated 03.02.2014 (copy enclosed) whereby the assessee has submitted the details of sundry creditors and other trade creditors along with their complete addresses. It was also requested that the same made kindly be admitted under rule....
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....per copy of account of trade creditor enclosed, steel was purchase from him. The payment to the tune of Rs. 2,73,726/- out of the purchases made at Rs. 3,72,956/- has been made by cheque drawn on Karnataka Bank Account No. 7301 as per details given in the copy of ledger account. Since the payment have been made by cheque there was no reason to disbelieve the identity and the closing balance of Rs. 99,230/- which remained outstanding as on the close of the accounting year after accepting the payments made during the year and disbelieving the closing balance. 6. Shital Steel Corporation Rs. 70,742/-. Similar is the position in respect of Shital Steel Corp. where closing balance has been shown at Rs. 70,742/- from whom the purchase of iron was made and the payments on different dates were made. The total purchases were of Rs. 6,24,726/- and the payment by cheque was of Rs. 5,53,994/- leaving the balance at Rs. 70,742/- which has been shown as trade creditors. 7. Sikarwar Electricals Rs. 71868/-. Opening balance was Rs. 2,21,868/- and the payment of Rs. 150000/- has been made on 31.07.2010 by cheque no. 694671 drawn on Karnataka Bank A/c No. 7301 and after that closin....
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.... by the Ld. AR of assessee, have also been considered. While going through the order of the AO and the remand report on assessee's submissions as submitted by the AO, it is clear that the appellant at the assessment stage, did not file any details of sundry creditors. Now in the rejoinder submissions has improved its facts by filing additional details / evidences. However, such details of assessee trust cannot be entertained. 7.5 Firstly, rejoinder submission on the issue has to be rejected for the reason that the assessee cannot be allowed to keep its improving on fact from to time and that too at appellate stage. Secondly any application for admission of additional evidence has to be supported by reasons for which the appellant could not produce such evidence before the AO during assessment proceedings. I have already held that assessment under section 144 is justified. The appellant has though requested for admission of additional evidence, but no reasons have assigned for not producing such evidence before the AO. The rejoinder has been submitted after receipt of remand report from the AO with further request of admission of additional evidence. I find that i....
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....of the sundry creditors, wrongly observing that the assessee did not file any details of sundry creditors at the assessment stage; that the details were filed only in rejoinder to the remand report, with a request for admitting them as additional evidence, without giving any reason for not having furnished the details before the AO; and that the assessee had thereby improved its case by filing additional details/evidence, which was impermissible. Remarkably, by way of Ground No. 1 before the ld. CIT(A), the assessee had specifically apprised the ld. CIT(A) of the AO's acceptance of the fact that the assessee had filed its written submission before the AO. 16. Since the factum of the assessee having filed the details of sundry creditors by way of written submissions (supra) dated 03.02.2014 before the AO stands accepted by the AO himself, there is no question of the assessee having improved its case at the stage of rejoinder to the AO's remand report. The ld. CIT(A) has clearly gone wrong in rejecting such details at the threshold without verifying/getting verified the same. The AO at the first instance, had erred in not verifying these details before making the addit....
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....owed registration u/s 12AA of the Act vide order dated 05.04.2013; that as such, it did not enjoy registration for A.Y. 2011-12, i.e., the year under consideration; and that therefore, the claim for exemption under sections 11 & 12 of the Act was not allowable. The ld. CIT(A) allowed the exemption claimed. 20. The ld. DR states that the Ld. CIT(Appeals) has erred in law and on facts in deleting the addition made as surplus of Income over Expenditure, ignoring the fact that the amended proviso to section 12A(2) inserted by the Finance (No.2) Act, 2014, w.e.f. 01-10-2014 is to be construed as retrospective in the cases where registration has been granted on 01.10.2014 or after this date and assessment proceedings be pending; that the Ld. CIT(Appeals) has ignored the fact that the original application dated 21.09.2011 for grant of registration u/s 12AA was rejected by the Ld. Chief CIT (OSD), Agra vide her order dated 26.03.2012 and the benefits as laid down in the first and second provisos of section 12A(2) of the Act cannot be extended to the assessee trust. 21. The ld. Counsel for the assessee has relied on the impugned order. 22. We have heard the parties and have p....
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....isition of fixed assets and thus whole of surplus has been applied for its objects and purposes. Accordingly, in view of the aforesaid, the addition of Rs. 42,94,077/- as made by the AO cannot be sustained, and the same is therefore deleted. As a result, the Ground Nos. 2, 3, 4 & 5 of assessee are allowed." 23. The amendment to section 12AA of the IT Act, by way of introducing the first proviso in section 12A(2) by the Finance (No.2) Act 2014, has been held to be retrospective by the Kolkata ITAT in the case of 'Sree Sree Ramkrishna Samiti, Siliguri vs. DCIT' (supra). It is this decision which the CIT(A) has followed and, in our considered opinion, correctly so. No decision to the contrary has been cited before us. The assessee was granted registration w.e.f. 01.04.2013. As per the said proviso to section 12A(2), in such a case, the provisions of section 11 and 12 of the Act shall apply in respect of any income derived from property held under the trust of any assessment year preceding the assessment year immediately following the financial year in which the application for registration is made (on or after 01.06.2007), for which, assessment proceedings are pending before the AO....
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.... to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book- keeping, an entry is made about a "hypothetical income", which does not materialize. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." 28. The CIT(A) further held that since the assessee had not debited any expenditure on account of interest in the Income & Expenditure Account, no addition for deemed interest could be made, unless it was proved that the assessee had earned any interest on deposits; and that therefore, the addition made by the AO for making addition on account of deemed interest without bringing any material on record that the assessee had earned any interest on advances could not be sustained. 29. The ld. ....