TaxTMI 
TaxTMI 
2019 (7) TMI 738
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.... appeal for the Assessment Year 2006-07. In the appeal filed by the assessee, following grounds have been raised:- I. "On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax {CIT (A)} is bad, both in the eye of law and on facts. II. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the order under Section 147 read with Section 148, ignoring the fact that the same was bad in the eye of law as the conditions and procedure prescribed under the statute have not been satisfied and complied with. III. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. IV. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the addition made on the basis of the material collected at the back of the assessee with....
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....an amount of Rs. 10,716/- on account of electricity expenses. XII. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the disallowance of an amount of Rs. 19,965/- on account of car insurance expenses. XIII. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming addition of an amount of Rs. 56,700/- made by A.O. holding the same to be undisclosed work in progress. XIV. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the disallowance of an amount of Rs. 17,91,779/- made by A.O. Invoking the provision of Section 40(a)(ia) of the Act. XV. (i) On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the disallowance of an amount of Rs. 4,91,171/- made by A.O. on account of penalty. (ii) That the AO had disallowed the above amount ignoring the fact that the said amount does not pertain to penalty related to infraction of nay statutory law. XVI. On the facts and circumstances of the case, the ld. CIT(A) has ....
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....h deposit Rs. 1,21,06,000/- VII. The order of Ld. CIT (A) be cancelled and the order of the AO be restored. 4. First we will take up the appeal filed by the assessee, being ITA No.3674/Del/2017. 5. Ground No. 1 & 22 are general in nature and hence need no adjudication. On ground No. 2 to 5, no arguments were addressed by the Ld. Counsel for the assessee and therefore, same are considered dismissed as not pressed. 6. The brief facts and background are that the assessee is an educational society registered with the Registrar of Firms, Societies and Chits, Uttar Pradesh, vide registration dated 08.09.1994. Looking to the fact that assessee society was carrying out educational activities which fell within charitable activities u/s 2(15) of the Act, it was granted registration under section 12A vide certificate dated 01.10.1999 issued by the Commissioner of Income Tax, Meerut. It has been running various educational institutions. The assessing officer had received information alongwith Balance Sheet & Income and Expenditure Account from the Bank, whereby it transpired that the society has filed these statement affairs as collateral securities before Syndicate Bank, Sha....
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....xamining the books of accounts, submitted its special audit report to the AO on 31.03.2012 with their observations and comments. Based on the observations and comments made by the Special Auditor in its audit report, the assessing officer issued questionnaire to the assessee to explain the various contentions and the issues pointed out by the special auditor in their audit report. After taking into consideration above facts and the observation made in the special audit report, the assessing officer computed the income of the society as Rs. 10,47,71,546. The assessing officer further disallowed the benefit of the exemption under section 11 on the reasoning that assessee society has not filed the return as required under section 139(4A) reads with section 12A(b) of the Income Tax Act in time. Accordingly, the income was assessed as income from business/profession in the status of AOP. 8. Aggrieved by the order of the AO, assesse filed appeal before the CIT (A). In the first appeal, the assessee raised various grounds of appeal challenging the order of the AO. The assessee objected to the reopening of the assessment and also denial of exemption under section 11 in respect of the In....
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....its objects as well as the activities carried out by it which again is not in dispute. Accordingly, its income is to be computed in accordance with the provision of section 11 of the Act which provides the method for computation of income of a charitable society. He submitted that, as per section 11, income to the extent which is applied towards charitable purposes is not to be included in the total income of the previous year including such income which is accumulated or set apart for application to such purposes to the extent the income so accumulated or set apart is not in excess of 15% of the income. 10. The Ld. Counsel submitted that there is no condition in section 11 to the effect that income will not be computed under this section if return is not filed in time. He further submitted that it does not make any difference whether such income is being computed in regular assessment or an assessment being made consequent to reopening of assessment under section 148. In this regard he invited our attention to the provisions of section 148, whereby the return filed in response to notice issued under section 148, is considered as if such return was a return required to be fur....
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.... this section 80-AC was further widened by Finance Act, 2007 to deny exemption under section 80-ID and section 80-IE in case return is not filed before the due date prescribed under section 139(1). 12. It was submitted that there was no such condition in section 11 during the relevant period and it was only the amendment made by the Finance Act, 2017 with effect from A.Y. 2018-19 that such condition has been clearly spelt for claiming exemption under this section 11, by inserting clause (ba) in section 12A. The amendment made by the Finance Act is an extension of the objects sought to be achieved of getting the return filed in time. This clause having been inserted by the Finance Act, 2017, effective from A.Y- 2018-19 making it pre-requisite of filing return in time for claiming exemption under section 11 or 12 of the Act, the same cannot be applied to the assessment years under consideration. In support of the above contention, Ld. Counsel placed reliance on the judgment of ITAT Chandigarh in the case of Genius Education Society v. ACIT -ITA No. 238/Chd/2018 dated 20.08.2018, wherein similar issue has come up. 13. In counter, the Ld. CIT DR supported the order passed by the ....
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....im made by the assessee under either of the said sections; (d) an order made under section 163 treating the assessee as the agent of a non-resident: (e) an order under sub-section (2) or sub-section (3) of section 170; (f) an order under section 171, (g) any order under clause (b) of sub-section (1) or under sub-section (2) or sub-section (3) or sub-section (5) of section 185 2°{***] 21[in respect of any assessment for the assessment year commencing on or before the 1st day of April, 1992]; (h) an order cancelling the registration of a firm under sub-section (1) or under sub-section (2) of section 186 22{***] 23[in respect of any assessment for the assessment year commencing on or before the 1st day of April, 1992]; (i) an order under section 201; (j) an order under section 216 in respect of any assessment for the assessment year commencing on the 1st day of April, 1988 or any earlier assessment year; (k) an order under section 237; (l) an order imposing a penalty under- (i) section 221, or (ii) section 271, section 271A, section 271B, 24[***]25 section 272A, section 272AA or sect....
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....ental principles of law. If the principles of natural justice are to be excluded, the Parliament could have said so expressly. The hearing given is only in terms of section 1 42(3) which is limited only to the findings of the special auditor. The order of assessment would be based upon the findings of the special auditor subject of course to its acceptance by the Assessing Officer. Even al that stage the assessee cannot put forward a case that power under section 142(2A) of the Act had wrongly been exercised and he has unnecessarily been saddled with a heavy expenditure. An appeal against the order of assessment, as noticed hereinbefore, would not serve any real purpose as the appellate authority would not go into such a question since the direction issued under section 142(2A) of the Act is not an appellate order." The order of Hon'ble Supreme Court in the case of Rajesh Kumar (Supra) is also followed by Hon'ble ITAT Jodhpur Bench in the case of ACIT v. Badri Ram Choudhary 355 ITR 223 (Jodhpur) order dated 25.10.2007 (copy enclosed). In this order Hon'ble ITAT has discussed in a great length the jurisdiction of Tribunal to examine the validity of section 142(2A) whi....
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....nt in the case of Sahara India (Firm) (supra), which is reproduced as under: "When the matter was taken up, the. learned counsel for the petitioner placed reliance on a decision of this Court in Rajesh Kumar v. Dy. CIT [2006] 206 CTR (SC) 175 : [2006] 287 ITR 91 (SC). According to the learned counsel for the petitioner, before any direction can be issued under Ss. 142(2A) of the IT Act, 1961 for special audit of the account of the assessee, there has to be a pre-decisional hearing and an opportunity has to be granted to the assessee for the purpose. A close reading of the decision shows that the observations in this regard appear to have been made in the context of the assessments in terms of s. 158BC (block assessment) of the Act. Such assessments are relatable to a case when raid has been conducted at the premises of an assessee. Had that been so, limited to the facts involved in that case, we would have negative the contentions of the learned counsel for the petitioner. But certain observations of general nature have been made. The effect of these observations appears to be that in every case where the AO issues a direction in terms of s. 142(2A) of the Act, the a....
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....n fact, our humble view is that it cannot do so." 3.5.iv In view of the above discussion, it is amply clear that the Tribunal being a much inferior authority is bound by the observations of the Supreme Court, even if these are obiter and hence cannot look into the validity of order passed under s. 142(2A) as has been held in the case of Rajesh Kumar (supra). The scope of examining the issues by the Tribunal has been spelt in s. 253. The orders under the sections, which are not brought within the purview of s. 253 cannot be considered and adjudicated upon by the Tribunal. There are various sections, the orders under which are not appealable. To cite a few, the order passed by the CIT under s. 264 is not appealable before the Tribunal. Similarly, the order passed for transfer of case under s. 127 is also precluded from examination by the Tribunal. All such orders are outside the ambit of the Tribunal's jurisdiction. Our view is fortified by the recent decision in the case of Smt. Jaswinder Kaur Kooner v. CIT [2007] 211 CTR (P&H) 200 : [2007] 291 ITR 80 (P&H). In this case the assessee raised a plea that the order of transfer of It is further observed "If....
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....upereme Court has held that "The sufficiency of the grounds which induced the ITO to act is not a justifiable issue. It is of course open for the assessee to contend that the ITO did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief." Further in the case of BawaAbhai Singh v. DCIT 117 Taxmann 12 Hon'ble High Court of Delhi has held that "After 1-4-1989 the position is somewhat different. Section 147 with effect from 1-4-1989 provides that where the Assessing Officer has reasons to believe that any income chargeable to tax has escaped assessment for any assessment year, he may apply the provisions of sections 148 to 153. He may assess or reassess the income which has escaped assessment. it is to be noted that section 147 as it stands with effect from 1-4-1989 not only merges clauses (a) and (b) of the pre-amended section 147 but also brings about a significant change in the preliminary requirement of certain conditions mandatory in character before reassessment proceedings should be initiated in the pre-amended section. Conditions pr....
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....r the revenue to assume valid jurisdiction u/s 148 is the existence of cogent material that would lead a person of normal prudence, acting reasonably, to an honest belief as to the escapement of income from assessment." In the case of Raymond Woolen Mills Ltd. 236 ITR 34 Hon'ble Supereme Court has held that- "We have only to see whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency of correctness of the material is not a thing to be considered at the stage of notice u/s 148." C. In the case of DIT vs. Spic Educational Foundation 257 ITR 46 order of High Court of Madras has held that "in the case of Section 12A(b) requires the trust which claims the benefit of sections 17 and 12, when it files a return of income, to file along with that return the report of the audit for that year in the Form prescribed under rule 17B of the Income-tax Rules, 1962. To the extent the return is not accompanied by that audit report in Form No. 10B, the assessee will not be eligible to claim the benefit of sections 11 and 12". (Copy enclosed) D. In the case of Coimbatore Spinning....
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....sion may on 02.05.2019. During the course of hearing on 02.05.2019 the Ld. AR of the appellant has mainly pleaded ground no. 6 & 7 of the appeal and requested the Bench to set aside the cases to the jurisdiction of AO to give the benefit of section 11 & 12 in the light of the amendment in the Act and insertion of section 12A(ba) which is w.e.f. A.Y. 2018-19. During the course of hearing a strong objection was taken by the Revenue on this issue as the appellant has never filed the return of income u/s 139(4A) and not entitled for grant of registration u/s 12A(b) of the Act. On this, Hon'ble Members has directed for the clarification on the issue of introduction of section 12A(ba) in the Act which is w.e.f. A.Y. 2018-19. This written submission is with regard to this clarification which is as under:- The taxation of charitable trusts is governed by Chapter III of the Income-tax Act which contains sections 11, 12, 12A, 12AA and 13. Section 12A/12AA contains the provisions concerning the Registration and the Registration Procedure under the Income-tax Act. Sections 11 and 12 contains the provisions concerning the condition to be fulfilled by the charitable trusts in o....
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.... at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA;] (b) where the total income of the trust or institution as computed under this Act without giving effect to [the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year], the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the pres-cribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed;] [(ba) the person in receipt of the income has fu....
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....exemption under sections 11 and 12 are required to file their return of income for each year within the time prescribed under section 139. Here it is pertinent to point out that in cases where the total income of the institution exceeds Rs. 50,000 in any previous year, its accounts are required to be audited by a qualified chartered accountant and the report obtained in the prescribed Form No. 10B. While in the case of institutions whose accounts are not required to be audited the due date for filing of return is 31st July of each year, in case of institutions whose accounts are to be audited, the due date is 31st October of each assessment year. Clarification on the issue of insertion of section 12A(ba) of the Act- During the course of appellate proceedings on 02.05.2019 it was argued by the Ld. AR that the registration cannot be denied on the ground of non-filing of return by the trust as this provision was inserted u/s 12A w.e.f. 01.04.2018 and the case of the appellant has been completed much before this date. The plea of Ld. AR is not acceptable as section 12A(1)(b) and section 139(4a) was there in the statute and the appellant has violated these provisions. ....
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....1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years." 3. Additionally, an excerpt of circular 02/2018 dated 15.02.2018 "Explanatory Notes to the Provisions of the Finance Act, 2017" on insertion of clause (ba) in Sub section (1) of section 12A is quoted as under: 'the entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139 of the Income -tax Act, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. Amendment to section 12A of the Income-tax has been made so as to provide for additional condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Income -tax Act." 3. Thus, for a trust registered U/s 12AA of the Act to avail the benefit of exemption u/s 11 shall inter- alia file its return of income within the time allowed u/s 139 of the Act. Accordingly, orders u/s 143(1)(a) in those cases in which demand has been raised on this issue may please be rectifi....
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....e provision of section 11 and 12 - In order to claim the benefit of section 11 and 12, the trust must comply with the provisions of section 12A(b) requiring furnishing of an audit report in prescribed form along with the return of income. The fact is that assessee never filed return as per the stipulated legal provisions given u/s 139(4A) of the Act and it is only after the proceeding's u/s 147/148 of the Act that the Appellant eventually was forced to file the return. Thus, non-filing of Return is in itself a sufficient ground to deny the benefit u/s 11 & 12 of the Act which exacerbated and magnified by the fact that not only did the Appellant did not file the return which eventually happened only after issuance of Notice u/s 148 of the Act. In this case the Assessee has not even filed the return the Appellant and then went on rampantly flouting the law by doctoring the Balance sheet and submitting to the Syndicate Bank for obtaining loan. There is a clear and contumacious disregard of law in this case." The CIT (A) has relied upon the decision of Director of Income tax (Exemptions) v. Spic Educational Foundation, (2002) 257 ITR 46, 47, 48 (Mad.) in whic....
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....ection 143(3) and the issue of notice under section 148 is only to call for the return of income and assessee having filed the return along with the audited balance sheet and profit and loss account, the assessment order has to be passed under section 143(3). In fact the order passed by the AO also states that this has been passed under section 148/143(3) and if that be so, the income has to be computed in accordance with the provisions of the Act which includes section 11. In the absence of any specific provision being applicable for the assessment year under consideration no new condition can be read into. 17. The Ld. Counsel further submitted that the reliance placed by the Ld. DR on the judgment of Sun Engineering Works Pvt. Ltd. (Supra) is misplaced. In fact, that judgment supports the case of the assessee. In the case of Sun Engineering, the assessee intended to re-agitate a claim which was denied in the original assessment in the re-assessment proceeding under section 148 of the Act. On these facts it was held that it was not open to the assessee to seek a review of the concluded item, unconnected with the escapement of income. In the present case, firstly there is no ori....
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....CHUNCHUNGIRI KSHETRA NAGAMANGALA TALUK MANDYA - ITA NO. 384 OF 2016. 19. We have heard the rival submissions and perused the relevant findings given in the impugned order. The core issues here is, whether the computation of income of the assessee society should be in accordance with section 11 or not; and whether, the filing of audit report alongwith the return filed in response to notice u/s 148 will entitle the assessee for benefit of computation of section 11. The AO has denied to compute the income in accordance with the provisions of section 11 of the Act on the reasoning that assessee has not filed the return under section 139 (4A) reads with section 12A (b) of the Act. Thus, what we have to adjudicate is, whether assessing officer was right in not applying the provisions of section 11 while computing income of the assessee. It is an admitted fact that the assessee is a society, who has been granted registration under section 12A of the Act by CIT looking to its objects of charitable purpose, i.e., it is engaged in imparting education and running various educational institutions. Thus, the registration u/s 12A is fait accompli and consequently the computation of income has....
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....hich will include sub section (4A) of section 139. Once, such return is treated as return filed under section 139, then all the provisions of Act shall apply which will, include section 11 of the Act. The phrase "so far as may be" in section 148, has to be interpreted in the manner that wherever conditions of applicability of any procedure prescribed in any section of the Act is required, then same has to be applied. If a return has been filed under section 148, then the relevant provisions of section 139 has to be applied and also the procedure of assessment and computation of income; and it cannot be interpreted in a restrictive manner to exclude any procedure. The Hon'ble Apex Court, way back in the case of R Dalmia & Anr vs. CIT, reported in (1999) 236 ITR 480, has clarified the interpretation of the phrase "so far as may be" used in section 148 in the following manner:- "13. By reason of s. 148, after a notice thereunder has been served on the assessee containing the requirements which must be included in a notice under s. 139(2), "the provisions of this Act shall so far as may be applied accordingly as if the notice were a notice issued under that sub-section". What ....
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....an assessment consequent to issue of notice under section 148, not only the procedure of return as given in section 139 has to be applied, but also such the income has to be computed on the basis of such return in accordance with the provision of the Act, which of course will be subject to any specific provision in the Act which itself bars a claim or an exemption. Thus, section 148 provides that all the provision of the Act has to apply on such return furnished in response to notice under section 148. The Ld. CIT DR has referred to the words 'so far as may be' to canvass the proposition that all the provision will not apply. This contention of the Ld. DR is not correct in view of our reasoning given above. The meaning of these words 'so far as may be' will not mean to exclude provision of section 11 of the Act. It is only such provision which are inconsistent with the provision of section 148 as compared to section 139 regarding procedure for assessment will not be applicable so far as may be. As regards the reliance placed by the Ld. DR on the judgment in the case of Commissioner of Income-tax v. Sun Engineering Works (P.) Ltd. 198 ITR 297 (SC), we are not in agreement with the c....
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....e view is supported by the judgment of the Chandigarh bench of the ITAT in the case of Genius Education Society v. ACIT ITA No.238/Chd/2018 dated 20.08.2018 wherein the Tribunal has held as under:- "...10. Undoubtedly the requirement of filing of return of income and the report of audit have been specified for being eligible for claiming exemption u/s 11 & 12 of the Act, alongwith the grant of registration u/s 12AA of the Act. In the case of the assessee, we find, that the return of income has been filed in response to notice u/s 148 of the Act. Therefore the condition of filing of return of income stands fulfilled. The section, we find, nowhere prescribes the filing of return by any due date, therefore the findings of the CIT(A) that the assessee having not filed its return within the prescribed time it had failed to comply with the requirement prescribed, is not tenable. As for the requirement of filing report of audit in the prescribed form, the said condition has been held by courts to be merely procedural and therefore directory in nature and not mandatory for the purpose of claiming exemption u/s 11 & 12 of the Act. The Hon'ble Jurisdictional High Court in the case o....
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....he Circular dt. 9th Feb., 1978, reproduced in the earlier part of the judgment. As per this circular, it is not mandatory under. s. 12A(b) to file the audit report along with return of income. Normally, a charitable religious trust or institution is expected to file auditor's report along with the return but in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report, the ITO, for reasons to be recorded, has been authorised to condone the delay in furnishing the auditor's report and accepting the same at a belated stage. It has been clarified that the exemption available to the trust under s. 11 may not be denied merely on account of delay in furnishing the auditor's report. The word "shall" occurring in s. 12A cannot, under the circumstances, be read as a "must" making it mandatory for the trust to furnish the auditor's report along with the filing of the return. If for certain unavoidable circumstances, the assessee is unable to furnish the auditor's report along with the return then the same can be furnished at a later date with the permission of the AO who may permit the assessee to do so after recording its reasons for so doi....
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....is of which AO has completed the assessment under section 148/143(3). Thus, the audit report was before the AO. 25. Our above view gets further supported from the amendment made by the Finance Act, 2017 whereby a further clause (ba) has been inserted imposing a further condition that such return of income is to be furnished in terms of section 139(4A), within the time allowed under that section. Firstly, this requirement was not there before this amendment; and secondly, this insertion of additional clause clearly shows that such condition was not there in existing clause (b) of section 12A. Had such condition being there in clause (b) itself, then there was no need to insert a further clause (ba) by the Legislature for denying benefit of section 11 & 12 in case return is not filed in time as per provision of section 139 (4A) of the Act. It is relevant to note that clause (b) has not been amended, but a new clause (ba) which has been inserted to put a further condition w.e.f 1.04.2018, which was not there for the assessment years under consideration. It is also important to note that this condition of furnishing the return within the time allowed under section 139(4A) has been m....
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....airs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lexprospicit non respicit : law looks forward not backward. As was observed in Phillips v. Eyre (1870) LR 6 QB 1, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 32. The obvious basis of the principle against retrospectivity is the principle of 'fairness', which must be the basis of every legal rule as was observed in the decision reported in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co.Ltd (1994) 1 AC 486. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former l....
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....n, and thus could be displaced by out weighing factors." The above judgment has been followed by the Karnataka High Court in its judgment dated 28.06.2016 in the case of PR. COMMISSIONER OF INCOME TAX VERSUS SRI. DICHUNCHUNAGIRI SHIKSHANA TRUST ADICHUNCHUNGIRI KSHETRA NAGAMANGALA TALUK MANDYA BEING ITA NO. 384 OF 2016, While interpreting the amendment made by the Finance Act No. 2 of 2014 whereby section 11 (6) was inserted so as to exclude such assets while computing depreciation in respect of which deduction has been allowed as an application of income under section 11 of the Act. 27. In view of the above, we hold that AO was not justified in denying the benefit of the exemption under section 11 of the Act and we direct the AO to compute the income in accordance with the provision of section 11 of the Act. Ground no.6 is accordingly allowed. 28. Ground No. 7 to 10 in assessee appeal are regarding computation of income by the AO on the basis of the Balance Sheet and Income & Expenditure account submitted to the Syndicate Bank for the purpose of obtaining loan facilities. From the perusal of the assessment order, it is seen that the assessing officer got information along ....
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....n note of the contention of the assessee at page 11 of his order to the effect that the AO was wrong in assuming the financials with the Syndicate Bank as correct financials without verification and corroboration with the material available with him without there being any evidence to establish the correctness of the various figures of the income/expenditure, assets and liabilities stated therein. The CIT (A) has also taken note of the contention of the assessee that the AO on the one hand has taken surplus from the financials with the Syndicate Bank but on the other hand has made disallowances/addition on the basis of the financials as submitted by the appellant. He submitted that the CIT(A) however, has arbitrarily rejected the contention of the assessee merely on the ground that it is not the duty of the AO to prove the financials submitted to the Syndicate Bank are correct rather it was duty of the assessee to prove as to why the financial statement filed by the assessee are to be ignored. The CIT(A) has also ignored the alternative contention of the assessee that in case the AO was of the view that the financials with the Syndicate Bank were the correct financials then the inc....
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....nspired that the financial statements submitted to the Syndicate Bank are by the Society itself. Since, there were wide differences in the two financials, the AO referred the matter to the special auditor. In the show cause notice issued to the assessee dated 18.12.2011, it has been stated by the Assessing Officer that the special audit is required as there are two set of profit and loss account and balance sheet and under these circumstances there is a complexity and at this stage income, surplus as well as application cannot be worked out correctly and hence, it is necessary to get the special audit done under section 142(2A) of the Act. The special auditor after examination of the books of accounts have stated in their report that the balance sheet and the profit and loss account are in agreement with the books of accounts subject to the comments given in the annexure. Further, the Special Auditor has also certified that the balance sheet and the profit and loss account give a true and fair view subject to the observation stated in the audit report. The AO having referred the matter to the special auditor and having obtained the special auditor report on the financials statement....
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....ew of the above reasoning, we are of the view that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor should be the basis for computing income as per provision of section 11 and 12 of the Act. We direct the AO accordingly. 35. As regards the alternative contention of the Ld. Counsel that in case balance sheet and income and expenditure account submitted with the Syndicate Bank as collateral security for obtaining bank loan is to be considered as the correct financial of the assessee society, we are of the view then the same has to be considered in entirety. The AO cannot pick and choose certain figures from the financials which have been audited and certain figures from the balance sheet with Syndicate Bank. However, since, we have held that the balance sheet and income and expenditure account which has been audited by the special auditor shall be the basis for computation of income, this alternative contention become academic in nature. Ground nos.7 to 10 are accordingly allowed. 36. Ground No.11 is regarding disallowance of Rs. 10,716/- on account of electricity expenses in the absence of supp....
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....lication of income. Following the same reasoning we direct the AO that this amount instead of making addition as income needs to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 38. Ground no.13 is regarding an addition of Rs. 56,700/- made by the AO in respect of work-in-progress. The AO has made the addition of this amount and the CIT (A) has confirmed the same. In the absence of any supporting evidence, the disallowance made by the CIT (A) is upheld. However, as held above in ground no.11 while considering disallowances in the absence of supporting evidence that the income of the society is to be computed in terms of section 11 of the Act and accordingly such amount need to be excluded while computing total application of income. Following the same reasoning we direct the AO that this amount instead of making addition as income needs to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 39. Ground no.14 is regarding disallowance of an amount of Rs. 17,91,779/-, by invoking the provisions of section 40(....
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....Explanation to section 37 of the Act. On going through the facts stated in the assessment order it is apparent that this amount has not been paid for any purpose which is an offense or which is prohibited by law. As per Explanation -1 to section 37 such expenditure which is incurred for any purpose which is an offense or which is prohibited by law cannot be allowed as deduction while computing income. Even otherwise Explanation 1 to section 37, under which this amount has been disallowed, falls in Chapter IV-D for computation of profits and gains of business or profession. As we have held while adjudicating ground no.14 hereinabove, that the provisions of Chapter IV-D, i.e., section 28 to 44 D are applicable while computing income of business or profession and these provisions are not applicable in respect of the charitable institution whose income is to be computed under section 11 and 12 of the Act falling under Chapter-III. Accordingly, this amount cannot be added by invoking provision of section 37 which falls in Chapter-IV-D not a Chapter-III. Accordingly, we direct the AO to consider this amount as application of income while computing income of the assessee society in terms ....
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....pecial auditors is arising from the FDRs recorded in the books of accounts itself. It is not the case of the Special Auditor that FDRs have not been recorded in the books of accounts. The special audit report mentions that FDR of Rs. 1,02,53,000/- got matured out of Rs. 1,43,41,000/- during the year. Thus, FDR of Rs. 1,43,41,000/- is appearing in the books of accounts and has been accounted for. The Special audit report also states that out of this FDR of Rs. 1,43,41,000/-, FDR of Rs. 1,02,53,000/- got matured during the year. The difference of this Rs. 1,43,41,000/-and Rs. 1,02,53,000/- is Rs. 40,88,000/- and this amount of Rs. 40,88,000/- is appearing in the balance sheet as on 31.03.2006. Thus, there cannot be any assumption that amount of Rs. 1,43,41,000/- and amount of Rs. 40,88,000/- are undisclosed investment. Accordingly, the addition made on this account is on incorrect appreciation of facts. As regards the observation of the special auditor in respect of the interest on matured FDR, it is seen that the assessee has accounted for the interest of Rs. 6,13,853/-. As regards the interest on the closing balance of FDR of Rs. 40,88,000/- the same having not been received during....
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.... of section 28 to 44 D of the Act. 46. Ground No.21 is regarding not considering capital expenditure incurred during the year as application of income towards charitable purposes while computing income of the assessee society. As per section 11 income of a eligible institution to the extent of which such income is applied to charitable purposes in India is not be included in the total income. The application of the income towards charitable purposes include application towards acquisition of assets i.e. capital expenditure. As we have already held hereinabove that income of the society is to be computed in accordance with the provision of section 11 and 12 of the Act, we direct the AO to consider capital expenditure incurred during the year as application of income towards charitable purposes while computing income under section 11 of the Act. Ground no.21 is accordingly allowed. 47. Now we take up the appeal filed by the Revenue being ITA No.4392/Del/2017. 48. In Ground no.1 the Revenue is challenging the action of the AO in deleting the addition of Rs. 3,96,327/- on account of processing charges. The assessee has paid this processing fee to Delhi Board and All India Coun....
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....3,86,670/- is the capital expenditure and further, for Rs. 20,31,456/- the assessee has submitted bills and vouchers. Accordingly, the CIT (A) deleted these amounts and confirmed the balance Rs. 60,577/-. Since, the disallowance has been deleted by the CIT (A) after considering the additional evidences and the remand report submitted by the AO we find no reason to interfere with the order of the CIT (A) and this ground of the Revenue is accordingly dismissed. 53. Ground No.5 in Revenue's appeal is regarding deletion of addition of Rs. 26,15,272/- out of the total disallowance of Rs. 27,88,053/- made by the AO on account of the depreciation. The AO has made the disallowance of depreciation on the reasoning that the building was under construction as on 31.03.2006 and hence no depreciation can be allowed. During the remand proceeding before the AO, it was explained by the assessee opening balance has also been wrongly considered by the AO while computing disallowance of the depreciation. The CIT (A) after examination the same has upheld the disallowance of depreciation in respect of the building under construction on which depreciation claimed was Rs. 1,72,781/- and has deleted th....
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.... 3. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. 4. On the facts and circumstances of the case, the ld. CIT (A) has erred, both on facts and in law in confirming the addition made on the basis of the material collected at the back of the assessee without providing copy of the same & providing opportunity to rebut the same. 5. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the action of the AO in referring the case for the special audit under Section 142(2A) of the Act without there being any basis for the same. 6. (i) On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the action of the AO in denying exemption under Section 11 of the Act . (ii) On the facts and circumstance of the case, the learned CIT (A) ....
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.... (ii) That the disallowance was made ignoring the fact that the said amount does not pertain to penalty related to infraction of any statutory law. 15. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the addition of Rs. 3,40,399/- on account of investment in FDR under section 68 of the Act. 16. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the addition of Rs. 6,35,842/- on account of depreciation on building. 17. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the action of the A.O. in computing the income by applying provisions of section 28 to 44 D for computing profits and gains from business and profession, ignoring the fact that the assessee is a charitable institution and its income is to be computed on the basis of the provision of sections 11 and 12 of the Act. 18. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the action of the A.O. in not computing the income in acco....
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....round nos.7 to 10 of this appeal. As we have already decided the appeal for assessment year 2006-07 vide ITA No.3674/Del/2017 and, for the detailed discussion in that appeal we have held that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor should be the basis for computing income as per provision of section 11 of the Act. Following the same reasoning we hold that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor shall be the basis for computing the income of the society in accordance with the provisions of section 11 of the Act. We direct the AO accordingly. Further, as regards the alternative contention of the Ld. AR that in case balance sheet and income and expenditure account submitted with the Syndicate Bank as collateral security for obtaining bank loan is to be considered as the correct financial of the assessee society, we are of the view then the same has to be considered in entirety. The AO cannot pick and choose certain figures from the financials which have been audited and certain figures from the balance....
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.... The facts in this year being identical to facts of the A.Y. 2006-07, therefore, we direct the AO delete this addition while computing income of the assessee society. Accordingly, this ground of appeal is allowed. 65. Ground no.15 is regarding addition of Rs. 3,40,399/- on account of investment in FDRs. The AO made an addition of Rs. 14,57,064/- on the basis of the observation by the Special Auditor that assessee has made investment in FDR of Rs. 54,75,000/- whereas the assessee has disclosed investment of Rs. 40,17,936/-. On this basis an addition of Rs. 14,57,064/- was made by the AO. The CIT (A) after calling the remand report held that there was investment in FDR of Rs. 51,34,661/- with AICTE which has been wrongly confused with another FDR of Rs. 40,17,936/- . On this basis the CIT (A) restricted the addition to Rs. 3,40,339/-. 66. On going through the facts we note that there are two FDRs one is of Rs. 40,17,936/- whereas another FDR is of Rs. 51,34,661/- with AICTE. The CIT (A) has considered this FDR of Rs. 51,34,661/- and has confirmed the balance amount of Rs. 3,40,339/- ignoring the other FDR appearing in the schedule of investment of Rs. 40,17,936/-. If we take in....
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....ation towards acquisition of assets i.e. capital expenditure. Following the same reasoning we direct the AO to consider capital expenditure incurred during the year as application of income towards charitable purposes while computing income under section 11 of the Act. Ground no.19 is accordingly allowed. Revenue's Appeal A.Y. 2007-08 70. Now we take up the appeal filed by the Revenue being ITA No.4393/Del/2017. In the appeal filed with the Revenue it has raised following grounds of appeal:- 1. The Ld. CIT (A) has erred in law and facts in deleting the amount in depreciation on building Rs (34,34,751 - 6,35,842/-) Rs. 27,98,909/- 2. The Ld. CIT (A) has erred in law and facts in deleting the amount for unexplained investment in FDRs and interest earned thereon Rs. (14,57,064 - 3,40,339/-) Rs. 11,16,725/- 3. The Ld. CIT (A) has erred in law and facts in deleting the amount in addition audit report of Rs. (36,94,577 - 15,69,149/-) Rs. 21,25,428/-. 4. The Ld. CIT (A) has erred in law and facts in deleting the amount in expenditure Rs. (2,61,197- 22,812) Rs. 2,38,385/-. 5. The Ld. CIT (A) has erred in law and facts in disallowance of un....
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....remand report we are of the view that the CIT (A) was justified in deleting this addition. Accordingly, the finding of the CIT (A) on this issue is upheld and ground no.3 of Revenue's appeal is accordingly dismissed. 74. Ground No. 4 is regarding deletion of addition of Rs. 2,38,385/- out of the total addition of Rs. 2,61,197/- made by the AO on the ground that the assessee did not file any supporting document in support of its claim. The CIT (A) has deleted the addition of Rs. 2,38,385/- out of the Rs. 2,61,197/- as the assessee has submitted additional evidences in respect of these payments which has not been rebutted in the remand report by the AO. The Assessee having submitted evidences and nothing adverse being brought on record by the AO in the remand report, we are of the view that the CIT (A) was justified in deleting this addition. Accordingly, the finding of the CIT (A) on this issue is upheld and ground no.4 of Revenue's appeal is dismissed. 75. Ground No. 5 in Revenue's appeal is regarding deletion of addition of Rs. 15,84,503/- out of the total disallowance of Rs. 29,33,699/- made by the AO on the ground of unsupported expenditure. In the remand proceedings the a....
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.... circumstances of the case, the learned CIT (A) has erred, both on facts and in law in confirming the proceedings under Section 147, read with Section 148, ignoring the fact that the same was bad in the eye of law as the conditions and procedure prescribed under the statute have not been satisfied and complied with. 3. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. 4. On the facts and circumstances of the case, the ld. CIT (A) has erred, both on facts and in law in confirming the addition made on the basis of the material collected at the back of the assessee without providing copy of the same & providing opportunity to rebut the same. 5. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the action of the AO in referring the case for the special audit under Section 142(2A) of the Act without ....
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....h on facts & in law in confirming the disallowance an amount of Rs. 3,61,855/- on the account of various expenses on the basis of special audit report. 15. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts & in law in confirming the disallowance of an amount of Rs. 56,45,698/- invoking the provision of section 40(a)(ia) of the Act. 16. (i) On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the disallowance of an amount of Rs. 5,81,493/- on account of penalty. (ii) That the disallowance was made ignoring the fact that the said amount does not pertain to penalty related to infraction of any statutory law. 17. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the addition of Rs. 3,03,354/- on account of depreciation on building. 18. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the action of the A.O. in computing the income by applying provisions of section 28 to 44 D for computing profits and gains from busi....
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....earing before us, both the parties agreed that these grounds raised and the facts in this appeal is identical to the facts and ground nos. 7 to 10 raised in appeal for assessment year 2006-07 vide ITA No.3674/Del/2017. Therefore, both the parties fairly stated that the outcome of the appeal in ITA No.3674/Del/2017 for assessment year 2006-07 would be squarely applicable to these ground Nos. 8 to 11 of this appeal. 85. We have already decided the appeal for assessment year 2006-07 vide ITA No.3674/Del/2017 and, for the detailed discussion in that appeal we have held that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor should be the basis for computing income as per provision of section 11 of the Act. Following the same reasoning we hold that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor shall be the basis for computing the income of the society in accordance with the provisions of section 11 of the Act. We direct the AO accordingly. Further, as regards the alternative contention of the Ld. AR that in case balan....
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....rding disallowance of an amount of Rs. 5,81,493/- on account of penalty. This ground is identical to the ground no.15 in assessee's appeal for A.Y. 2006-07. In the said appeal we have deleted this disallowance holding that Explanation to section 37 is not applicable while computing income of charitable institution under section 11 of the Act and further amount paid to bank will not fall within the meaning of expenditure for any purpose which is an offence or which is prohibited by law. The facts in this year being identical to facts of the A.Y. 2006-07, accordingly, we direct the AO delete this addition while computing income of the assessee society in terms of section 11 of the Act. This ground of appeal is allowed. 89. Ground no.17 is regarding disallowance of depreciation of Rs. 3,03,354/-. This ground is identical to ground no.18 of assessee's appeal for the A.Y. 2006-07. In the said appeal we have held that this amount need to be excluded while computing income in terms of section 11 of the Act as assessee society has not been able to substantiate its contention before the AO and the CIT(A). Following the same reasoning we direct the AO that this amount instead of making ad....
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....expenses as capital in nature. 3. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 13,20,948/- on account of unsupported expenditure as assessee has also failed to substantiate the expenses with proper bills/vouchers. 4. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,83,98,749/- on account of unsupported expenditure as assessee has failed to substantiate the expenses. 5. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 65,69,360/- on account of various expenses on the basis of special audit report as the assessee has not submitted any documentary evidence to prove the genuineness the transaction. 6. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,59,90,244/- on account of investment in FDR under section 68 of the Act as the assessee has failed to submit the source of investment in FDR. 7. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,30,68,467/- on account of depreciation on building as the assessee was unable to file any document in support of its claim of the de....
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....unt of unsupported expenditure. During the appellate proceedings, the assessee submitted additional evidences along with details of each of the expenditure incurred by it. The CIT (A) on the basis of the additional evidences submitted by the assessee called for the remand report. The first remand report was submitted by the AO on 28.02.2013. In response thereto assessee filed a rejoinder. The CIT (A) called for a further remand report. In the remand proceedings the assessee again appeared before the AO and submitted various details and evidences and the AO submitted its second remand report dated 15.07.2013. The assessee again submitted a rejoinder to this second remand report. On the basis of the rejoinder the CIT (A) again called for the remand report. In response thereto assessee again attended the proceedings before the AO and further remand report was submitted by the AO on 18.08.2015. The assessee during the remand proceeding produced all evidences. The assessee has also produced evidences in respect of the various expenses incurred. The CIT (A) after considering the remand report submitted by the AO and after examination of the document and evidences submitted by the assesse....
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....n account of investment in FDR. This addition has been made by the AO by making a reference to the report of the special auditor. However, while making the addition the AO picked up the figure from the balance sheet with the Syndicate Bank rather than the balance sheet as per the books of accounts. During the appellate proceeding before the CIT(A), the assessee brought to the notice that the observation of the special auditor which nowhere points out that assessee has made any investment outside the books of accounts. The observation of the special auditor was with reference to accrual of interest and the details thereof. The submission of the assessee were forwarded by the CIT (A) to the AO and AO in his remand report has not controverted the contention of the assessee and has simply reiterated what was stated in the assessment order. The CIT (A) has taken into consideration the rejoinder submitted by the appellant pointing out that the AO has wrongly interpreted the finding of the special auditor and in fact special auditor has not mentioned any investment outside the books of accounts. After perusing the order passed by the AO and the CIT (A) and also after going through the sub....
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....y adverse observation about the cash deposited in the bank. We are of the view that in the absence of any mismatch being pointed out by the special auditor about the amount shown in the books of account and the amount credited in the bank account the AO was not justified in making this addition. From the assessment order it is evident that the AO has made the addition merely on the ground that cash has been deposited in the bank ignoring the fact that assessee receives tuition fees etc. from the students and mere deposit in the bank account cannot be a ground for making addition. The deposit in the bank account having been made out of the books of accounts the same cannot be considered to be unexplained deposits in the bank account and accordingly we upheld the order of the CIT (A) and dismiss this ground of appeal. 100. Ground nos. 9 and 10 of Revenue's appeal are general in nature and hence need no adjudication. 101. In the result, appeal of the assessee is partly allowed for statistical purposes and appeal of the Revenue is dismissed. A.Y. 2009-10 ITA No.2734/Del/2018 and ITA No.4564/Del/2018 102. First we take up the appeal of the assessee being ITA No.2734/Del/2....
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....ancials and determining the income on the basis of such figures without ascertaining the correctness of such finding. 10. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in ignoring the balance sheet and income and expenditure account prepared by the assessee and relying on the balance sheet submitted to the bank. (ii) In the absence of any supporting evidence, it was not justified in relying upon the balance sheet and Income and expenditure account filed before the bank. 11. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in ignoring the fact that having got the accounts audited from the special auditor there was no justification to take into consideration the figure stated in the balance sheet submitted to the bank, to be the basis of assessment. 12. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of Rs. 14,86,474/- on account of unsupported expenditure. 13. On the facts and circumstances of the case the learned CIT(A) has erred bot....
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....sidering the capital expenditure incurred during the year while computing income of the assessee. 23. The appellant craves leave to add, amend or alter any of the grounds of appeal. 103. Again Ground Nos. 1 & 23 are general in nature and hence need no adjudication; and ground Nos. 2 to 5, no arguments were addressed by the Ld. Counsel for the assessee and the same are considered as not pressed and hence, dismissed. 104. Ground Nos. 6 & 7 are regarding denial of exemption under section 11 of the Act while computing income of the society. At the time of hearing before us, both the parties fairly agreed that this ground raised and the facts in this appeal is identical to the facts and ground no.6 raised in appeal for assessment year 2006-07 vide ITA No.3674/Del/2017. Therefore, both the parties fairly stated that the outcome of the appeal in ITA No.3674/Del/2017 for assessment year 2006-07 would be squarely applicable to grounds no.6 & 7 of this appeal. 105. We have already decided the appeal for assessment year 2006-07 vide ITA No.3674/Del/2017 and, for the detailed discussion in that appeal we have held that AO was not justified in denying the benefit of the exempt....
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....he special auditor shall be the basis for computation of income, this alternative contention become academic in nature. Ground nos.8 to 11 are accordingly allowed. 109. Ground nos.12 & 14 are in assessee's appeal is regarding confirmation of disallowance of an amount of Rs. 14,86,474/- and Rs. 2,15,519/- respectively on account of unsupported expenditure. These grounds are identical to the ground no.11 in assessee's appeal for the A.Y. 2006-07 whereby we have upheld the disallowance of expenditure in respect of which assessee has not been able to submit evidences. However, as the assessee's income is to be computed in accordance with the provisions of section 11 of the Act, we have directed the same be excluded while computing income in terms of section 11 of the Act. Following the same reasoning as the assessee has not produced cogent evidence about these expenses of Rs. 14,86,474/- and Rs. 2,15,519/- respectively, we direct the AO that this amount instead of making addition as income need to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 110. Ground no.13 and 15 are regarding disallowa....
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....rted the contention of the assessee and has simply reiterated what was stated in the assessment order. The CIT (A) has taken into consideration the rejoinder submitted by the appellant pointing out that the AO has wrongly interpreted the finding of the special auditor and in fact special auditor has not mentioned any investment outside the books of accounts. However, the CIT(A) instead of deleting the entire addition surprisingly took into consideration the income and expenditure account with the Syndicate Bank and on that basis after deducting income shown therein has confirmed the balance amount as unexplained investment. After perusing the order passed by the AO and the CIT(A) and also after going through the submission and the details submitted by the assessee we are of the opinion that the CIT(A) has gone wrong in drawing adverse inference on the basis of the balance sheet and income and expenditure account with Syndicate Bank ignoring the balance sheet and income and expenditure account which has been subject matter of special audit. In fact the AO has incorrectly interpreted the observation of the special auditor. In the special audit report there is no allegation of any inv....
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....about the amount shown in the books of account and the amount credited in the bank account the CIT(A) was not justified in confirming this addition. Had there been a mismatch between the books of accounts and the bank statement, the special auditor would have stated so. From the assessment order it is evident that the AO has made the addition merely on the ground that cash has been deposited in the bank ignoring the fact that assessee receives tuition fees etc. from the students and mere deposit in the bank account cannot be a ground for making addition. The deposit in the bank account having been made out of the books of accounts the same cannot be considered to be unexplained deposits in the bank account and we direct the AO to delete this addition. This ground of appeal is accordingly allowed. 115. Ground nos.20 and 21 are regarding computation of income in accordance with the provision of section 11 and 12 of the Act and not in accordance with the provisions of section 28 to 44 D of the Act. These grounds are identical to ground no.19 and 20 of assessee's appeal for A.Y. 2006-07. There we have held that income of the assessee society is to be computed in accordance with the ....
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.... unsupported expenditure as documents and vouchers filed by assessee have failed to pass the test of veracity. 5. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,40,64,916/- on account of payment made to M/s Ansal Housing Construction. However, the assessee has failed to substantiate the genuineness of the transaction. 6. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,59,321/- on account of cash received from Campus Business School as the assessee has not submitted any documentary evidence to prove the genuineness the transaction. 7. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 4,28,693/- as some of the bills of expenditure were in the name of other concern as the assessee has failed to substantiate the expenses claimed. 8. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 13,51,97,096/- on account of investment in FDR under section 68 of the Act as the assessee failed to substantiate the source of income. 9. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,07,61,....
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....d have not been claimed in the income and expenditure account and CIT(A) has rightly deleted the addition after examination in the remand proceeding. The expenditure having been not claimed in the income and expenditure account the same cannot be added. Accordingly, this ground of Revenue's appeal is dismissed. 120. Ground nos.3 and 4 are regarding deletion of addition of Rs. 17,44,403/- and Rs. 67,06,750/- made by the AO on account of unsupported expenditure. During the appellate proceedings, the assessee submitted additional evidences along with details of each of the expenditure incurred by it. The CIT (A) on the basis of the additional evidences submitted by the assessee called for the remand report. The first remand report was submitted by the AO on 28.02.2013. In response thereto assessee filed a rejoinder. The CIT(A) called for the further remand report from the AO. Consequent, thereto the assessee again appeared before the AO in the remand proceedings and submitted various details and evidences. The AO submitted second remand report dated 15.07.2013. The assessee thereafter again submitted a rejoinder. On the basis of the rejoinder the CIT (A) again called for the remand....
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....d no.7 in Revenue's appeal is regarding deletion of addition of Rs. 4,28,693/-.The AO has made this addition on the ground that the amount has been debited under a wrong head. During the remand proceedings the assessee has explained that it was a inadvertent error whereby the amount has been debited to a wrong head but the fact remains that the expenditure has been incurred. The CIT (A) has deleted the addition on the reasoning that mere wrong posting of an entry of expenditure in the books of accounts cannot be a ground to disallow the same. We are of the view the expenditure having been actually incurred the same cannot be disallowed merely because it has been debited under a different head of the expenditure. The CIT (A) accordingly was right in deleting the addition and this ground of appeal is accordingly dismissed. 124. Ground no.8 in Revenue's appeal is regarding deletion of addition of Rs. 13,51,97,096/- on account of investment in FDR. This ground is common with ground no.17 of assessee's appeal where part addition were sustained by the CIT(A). While adjudicating ground no.17 of the assessee's appeal we have held that addition made on the basis of the balance sheet with....