TaxTMI 
TaxTMI 
2019 (9) TMI 1179
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....ned order is illegal and bad in law. 1.1 That the learned Principal CIT has erred in alleging that assessee had siphoned money from trust by booking bogus expenditure in form of mess charges and payment to contractors without conducting any independent inquiry and formed his opinion on the basis of suspicions, surmises and conjectures. 1.2 That the learned Principal CIT has erred in stating that assessee was diverting trust money in hands of trustees, family members on account of salaries, interest and rent paid to trustees solely on the basis of suspicion. 1.3 That the learned Principal CIT has erred in stating that trustees had obtained other benefits in the form of services of employees of trust. 1.4 That the learned Principal CIT has erred in facts in alleging that assessee trust has violated MCI Guidelines in admission of students without providing cogent reasons for the same and solely on suspicion and surmises. 1.5 That the learned Principal CIT has erred on facts and in law in concluding that AO has not conducted proper enquiries in respect of payment of salaries to teachers solely on the basis of suspicion, surmises and conjectu....
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....s, interest and rent paid to trustees solely on the basis of suspicion. 1.3 That the learned Principal CIT has erred in stating that trustees had obtained other benefits in the form of services of employees of trust. 1.4 That the learned Principal CIT has erred in facts in alleging that assessee trust has violated MCI Guidelines in admission of students without providing cogent reasons for the same and solely on suspicion and surmises. 1.5 That the learned Principal CIT has erred on facts and in law in concluding that AO has not conducted proper enquiries in respect of payment of salaries to teachers solely on the basis of suspicion, surmises and conjectures. 1.6 That learned Principal CIT has erred on facts and in law in alleging that vehicle purchased in the name of trustees has been used for siphoning of funds of assessee Trust and in violation of s. 13 ignoring the facts on record. 1.7 That learned Principal CIT has erred on facts in alleging that trustees have purchased vehicles from assessee trust at discounted value in violation of provisions of s. 13 of IT Act ignoring the facts on records. 1.8 That learned Principal CIT....
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....d on facts and in law in concluding that AO has not conducted proper enquiries in respect of payment of salaries to teachers solely on the basis of suspicion, surmises and conjectures. 1.6 That learned Principal CIT has erred on facts and in law in doubting the construction payments of Rs. 29,71,865/- to Tarsem Garg for mansonry work comprising PCC, PR masonry etc. at MMU Solan on the basis of suspicion, surmises and conjectures. 1.7 That learned Principal CIT has erred on facts and in law in alleging that vehicles purchased in the name of trustees has been used for siphoning of funds from assessee Trust and in violation of s.13 ignoring the facts on record. 1.8 That learned Principal CIT has erred on facts in alleging that trustees have purchased vehicles from assessee trust at discounted value in violation of provisions of s.13 of IT Act ignoring the facts on records. 1.9 That learned Principal CIT has erred on facts and in law in stating that funds of the trust have been diverted to the trustees and their relatives in the garb of rent of Santosh Hostel ignoring the facts on record. 2. That the learned PCIT has erred in ignoring the fa....
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....law in alleging that vehicle purchased in the name of trustees has been used for siphoning of funds of assessee Trust and in violation of s. 13 ignoring the facts on record. 1.7 That learned Principal CIT has erred on facts in alleging that trustees have purchased vehicles from assessee trust at discounted value in violation of provisions of s. 13 of IT Act ignoring the facts on records. 1.8 That learned Principal CIT has erred on facts and in law in stating that funds of the trust have been diverted to the trustees and their relatives in the garb of rent of Santosh Hostel ignoring the facts on record. 2. That the learned PCIT has erred in ignoring the facts that entire issues raised in 263 show cause notice has already been examined in detail as per record by learned DCIT (CC) Karnal and assessment had been completed by forming an opinion on all the issues now raised in the 263 order. 3. That the learned PCIT has erred in law in not adhering to the principles of natural justice by not providing the documents as per records of AO to establish the fact that entire issues raised in 263 show cause notice has been examined by DCIT (CC) during assessm....
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....s already been examined in detail as per record by learned DCIT (CC) Karnal and assessment had been completed by forming an opinion on all the issues now raised in the 263 order. 3. That the learned PCIT has erred in law in not adhering to the principles of natural justice by not providing the documents as per records of AO to establish the fact that entire issues raised in 263 show cause notice has been examined by DCIT (CC) during assessment proceedings." 6. In ITA No. 1599/Del/2019, the assessee has raised following grounds of appeal: "1. That the Principal CIT has erred on facts and in law in exercising revisionary powers u/s 263 of the Act without satisfying, the twin conditions of the assessment order being: (a) erroneous; and (b) prejudicial to the interests of Revenue and consequently, the impugned order is illegal and bad in law. 1.1 That the learned Principal CIT has erred in alleging that assessee had siphoned money from trust by booking bogus expenditure in form of mess charges and payment to contractors without conducting any independent inquiry and formed his opinion on the basis of suspicions, surmises and conjectures. 1.2 That ....
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....he learned Principal CIT has erred in invoking revisionary powers u/s 263 on issues regarding which no incriminating materials were found during the course of search u/s 132 conducted on 31-10-2014 in the present case." S. No. Assessment Year Effective Grounds 1. 2010-11 1. NRI quota 2. Payments or vehicle purchase 3. Salary to teachers 4. Other benefits to trustees 5. Construction Work- Tarsem Garg 6. Rent paid to trustees 7. Interest paid to trustees 8. Salary paid to trustees 9. Santosh Hostel 10. Bogus expendituremess charges 11. FDR -loan - IP Garg 7. A search & seizure operation u/s 132 and survey operation u/s 133A were conducted at the premises of M/s Maharishi Markandeshwar University Trust group of cases, Mullana and their trustees on 31.10.2014. 8. The following persons are trustees of the assessee trust: Sr. No. Name Designation PAN Address 1. Tarsem Kumar Garg President ADEPG1240P 55, Model Town, Ambala City 2. Sanjeev Garg Secretary ADEPG1215C 157, Jail Road, Ambala City 3. Vishal Garg Treasurer AJRPG5973E 55, Model Town, Ambala City 4. Santosh Kumar....
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....1 18.12.2014 9. Ms. Kirti Garg Sh. Tarsem Garg S/o Om Prakash Garq -do- -do- u/s 131 18.12.2014 10. Ms. Tanya Aggarwal Sh. Gopal Nath Aggarwal S/o Sh. Kartar Chand -do- -do- u/s 131 18.12.2014 11. Kanau Sehgal Sh. Ravinder Sehgal S/o Narender Nath -do- -do- u/s 131 18.12.2014 12. Ms. Shiwangi Mittal Sh. Suman Mittal S/o Brij Mohan Mittal -do- -do- u/s 131 18.12.2014 13. The examination of the parents in these cases u/s 131 showed that trust is admitting students in NRI quota without any NRI background of the students or their family members. 14. The ld. PCIT in the order passed u/s 263 of the Act held that, from the field inquiries it has been gathered about the fact that substantial amounts have been received by the assessee trust from the parents of students seeking admission in particular quotas in these colleges mainly in MBBS/MD/Dental branches. The assessee trust is violating the provisions of Medical Council of India, Delhi and the notification of Haryana Government no. 16/14/2014-6HB-TV, dated 30.05.2014 in this regard. 15. The ld. PCIT held that since the guidelines given by the....
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....dar's case - (2005) 6 SCC 537 in para 131 has held as under: "....A limited reservation of such seats, not exceeding 15%, may be made available to NRIs depending on the discretion off the management subject to two conditions. First, such seats should be utilized bonafide by NRIs only and for their children or wards. Second, within this quota, merit should not be given a complete go-by...." 19. When the question was posed to the Revenue as well as the ld. AR regarding any adverse finding by any regulatory authority or any sanctions levied by MCI, the reply from both the parties was negative. Similarly, they were no violations of RBI and the foreign currency received from the students admitted in NRI quota has been duly accounted in the P&L account. During the hearing, another specific query was raised to the Revenue as to how the admission to NRI ward or children in the absence of any documents or evidence regarding any unaccounted funds received by the trust will make the assessment completed by the Assessing Officer prejudicial to the interest of the Revenue. 20. The ld. DR strongly relied on the order of the ld. PCIT and submitted that the financials would not diff....
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....ficial purposes only. It was held that it is a make believe story and the above modus operandi was adopted to siphon the funds of the assessee trust in violation of the provisions of section 13 of the Act. On perusal of records and the bank statement of Sh. Tarsem Garg for OBC a/c no. 51822010000350 for the period 01.04.2014 to 31.03.2015, the ld. PCIT held that another Innova car bearing the same registration no. HR09F0006 has been purchased by Sh. Tarsem Garg on 18.06.2014 from M/s Global Automobile Pvt. Ltd. for which payment of Rs. 13,62,290/- was made. Hence, it was held that the confirmation of Sh. Tarsem Garg and the purported appointment letter is nothing but bogus evidences created only for the purpose of justifying the payments made by the trust for a vehicle which was purchased in individual name by the main trustee, Sh. Tarsem Garg. 23. The details of some other payments relating to the vehicle recorded in the bank statement of Sh. Tarsem Garg as taken into consideration by the ld. PCIT are listed as under: Date Nature of transaction Debit (Rs.) Credit (Rs.) Bank a/c no. 13.04.2011 Capital a/c Innova Insurance refund Chq no. 001353 9045 &nb....
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.... and argued that the assessee has failed to controvert evidence confronted. 27. Heard the arguments of both the parties and perused the material available on record. 28. We find that the ld. PCIT in the order passed u/s 263 (page 27) of the Act has mentioned about two cars with the same registration No. HR09F0006 which cannot be true as per the Motor Vehicle Registration Act. It was alleged that Sh. Tarsem Garg is maintaining three cars and questions its utility and also related the use of cars with the absence of driving license to Sh. Tarsem Garg. We find that the imputation of the ld. PCIT is devoid of merit and sans any reason. It was matter on record that the vehicle was purchased by Sh. Tarsem Garg by obtaining loan in his personal name and the installments paid by Sh. Tarsem Garg are being reimbursed by the assessee trust at regular intervals. The ledger copy of ICICI Innova loan in the books of MMU have been produced before us wherein it can be observed, the cheques have been issued at regular intervals, the vehicle is taken in the block of fixed assets of the trust and depreciation is also charged. Having or not having driving licence and purchase of vehicle cannot b....
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....r the purpose of verification. A perusal of reply of Punjab Medical Council, Mohali reveals that they have found as per their criteria that only 21 doctors are genuine employees of your group working regularly and drawing salaries. In case of these doctors, they have issued 'NOC'. The Punjab Medical Council has observed shortcomings, by this way or that way, in case of rest of the doctors. There are such doctors who have been drawing hefty salaries as full time faculty from your trust. The rules and regulations of MCI prescribed that the doctors can either accept whole time employment as medical professionals/teaching faculty or they can indulge in private practice as medical professional. Thus, the ghost doctors are violating the norms and rules of regulations of MCI by working as teaching faculty while simultaneously also running their medical practice. Some of such doctors were being shown on the rolls of your trust, but who were actually working and practicing in different places hundreds of kilometers away. As per findings of PMC, Mohali, the list of doctors who have been identified as non genuine teachers working with your trust marked as Annexure -C. 6.11 Fu....
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....kula 03.02.2016 Statement recorded on 15.02.2016 19 Dr. Ajata Shatru Kapoor H.No. 12-A, Ranbir Marg, Model Colony, Patiala, Punjab 03.02.2016 Statement recorded on 15.02.2016 20. Dr. Meena Garg 7-Dhillon Marg, Model Town, Patiala Punjab 03.02.2016 Reply received 21 Dr. Vishal Kharbanda 25-A, Bharpur Garden, Opposite New Moti Bagh, Palace 03.02.2016 Statement recorded on 16.02.2016 22 Dr. Sarita Aggarwal 1-E, New Lai Bagh, Opposite Appolo Ground, Patiala, Punjab 03.02.2016 Statement recorded on 16.02.2016 23. Dr. Kalpna Flat No. 5, Mansa Cottage, Lower Kaithu, Shimla 03.02.2016 Not attended 24 Dr. Barinder Pal Singh 410-R, Model Town, Ludhiana, Punjab 03.02.2016 Reply received 6.12 In response to above summons, only 13 doctors were attended and their statements were also recorded, name of the doctors are as under:- Sr. No. Name Address Date of Summon Remarks 1 Dr. Rakesh Arora 46/2, Passy Road, Patiala, Punjab 22.01.2016 Statement recorded on 05.02.2016 2 Dr. Devinder Jit Singh W....
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.... Wing, it is found that the your trust is showing on its rolls even those doctors which are not actually working for it. The independent enquiries-conducted by the PMC, Mohali have authenticated and proved that the enquiries conducted by the Investigation Wing are correct. An analysis of the above paras following conclusion comes:- i. Most of the doctors are belongs to Ludhiana, Patiala, Chandigarh, Panchkula and Mohali and these places are located from 70 to 100 KM away from Mullana/Kumarhatti. ii. Most of the doctors have their established hospitals/clinics. They are showing handsome professional income- from his hospital/clinics. Therefore, it is not possible to them to attend the classes to Mullana/Kumarhatti on regular basis. iii. As per the finding of PMC, some doctors have parallel entries of the same month from two different sources of work in two different towns. The Department has also collected information, as per which the doctors have multiple addresses. Some of the addresses are at faraway places, from where, it is not generally possible to take up to and from journey in a day. iv. The MCI does not allow part time faculty. The PMC h....
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.... 27.01.2016. In reply to question no 3, question no 5 and question no 6, she has admitted that she is working with trust from 2011 and receiving salary on monthly basis in her bank account which is same as per our books and records. The perusal of above statement clearly proves the genuineness of the doctor that he is actually working as senior lecturer. The payments were received in bank only. We are unable to find anything wrong in the statement still if your honor feels that there is something wrong in the statement, Trust would like to cross examine Prinka as the statement recorded by Investigation Wing was at the back of MMUT and no opportunity was allowed for cross examination. 1.5 Employment of ghost teacher by private medical colleges With reference to para 6.8, para 6.9 and para 6.10, your honor has relied on the on the findings of Punjab Medical Council, the Doctors working in MM Institute of Medical Sciences & Research Mullana and MM Medical College and Hospital Kumarhatti Solan, have been identified by the PMC as not being the genuine teachers only on the basis of facts that they have registered with only Punjab Medical Council. The a....
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....ctors are suspicious. The fact of statements of doctors is as under: 1.6.1 Dr. Rakesh Arora S/o Dr. Sh. Dharamveer, aged 53years, R/o 46/2, Passi Road, Patiala With reference to payments made to doctor Mr. Rakesh Arora S/o Sh Dharam veer who had been working in MM Institute of Medical Sciences St Research Mullana as Senior Resident from 01.06.2008 to 30.11.2012 and as an Assistant Professor from 01.12.2012 to 31.01.2015 and has resigned on 31.01.2015. His statement was recorded by Investigation Wing on 05-02-2016 and in his statement he has admitted as under: In reply to question no 10, he has admitted that he is working with trust since Oct 2008 and receiving salary on monthly basis which is same as per our books and records. In reply to Q No. 11 he has stated that he got the money from MM in bank account only and the same is duly reflected by in his bank statements. Copy of PAN, qualification, relieving letter, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page no. 1.6.2 Devinder Singh Walia, S/o Dr. Sh. Dharamveer, aged 53years, R/o 46/2, Passi Road, Patiala With reference to ....
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....Suresh Kumar Sood, R/o 930, Sector-40A, Chandigarh With reference to payments made to doctor Shyam Sunder Sood, who has been working as associates professor in department of obstetrics and gynecology of MM Institutes of Medical Science & research Mullana from 05.04.2010 to 31.12.2013 and as a Professor from 01.01.2014 to 20.06.2016 and has resigned on 20.06.2016 from his service. His statement was recorded by Investigation Wing on 09.02.2016. In reply to question no 10, he has admitted that he has been working for MMU Mullana from 04.04.2010 to till date (i.e 09.02.2016 date of statement) which is same as per our books and records. In reply to Q. No. 11 he has stated that he got the money in his bank account and has form-16 also with him which would be submitted to your office by 10.02.2016. Copy of PAN, qualification, relieving letter, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page no .1.6.6Dinesh Kumar, S/o Sh. Nand Kumar Sharma, aged 43years, R/o 9706, UCO Bank Street, Habowal Kalan, Ludhiana With reference to payments made to doctor Dinesh kumar, who has been working in MM college....
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....arhatti Solan as an Associate professor in radio diagnosis department from 25.02.2013 to 30.06.2015. His statement was recorded by Investigation Wing on 09.02.2016. In reply to question no 11, he has admitted that he has worked for MMU, Solan and also submitted form-16 issued by Solan has already been submitted to your office for verification. In reply to Q No. 13 he admitted that he was an Associate Professor in MMU Solan, which is same as per our books and records. Copy of PAN, qualification, relieving letter and copy attendance sheet of the above said faculty is attached at page no . 1.6.10 Praveen Mohan, w/o Sh. Harsh Mohan, aged 63years, R/o H.No. 1886A, Sector-21, Behind Alchemist Hospital, Panchkula With reference to payments made to doctor Praveen M.ohan, who has been working in MM Institutes of Medical Science & Research Mullana as professor & head in the department of OBG from 01.03.2013 to 30.06.2015 and resigned from her duties w.e.f. 30.6.2015. Her statement was recorded by Investigation Wing on 09.02.2016. In reply to question no 10, she has admitted that she has worked for MMU Mullana from 01.03.2013 to 30.06.2015, which i....
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....d for MMU, Mullana from 01.01.2008 to 30.11.2014, which is same as per our books and records. Copy of PAN, qualification, appointment letter, relieving letter, Form 16 (Salary Certificate) and copy of ledger of salary register of the above said faculty is attached at page no. 1.6.14 With reference to payments made to doctor Chander Mohini D/o Shri Om Parkash r/o Ajit Nagar Patiala, who has been working in MM Institutes of Medical Science fit Research Mullana as senior resident/ assistant professor from 01.12.2010 to 31.01.2015 and resigned from her duties w.e.f. 31.01.2015. She has already submitted her reply to Investigation Wing as also mention in para 6.11 of your questionnaire. Affidavit from above doctor regarding working with /AMU, Copy of PAN, qualification, copy of joining report, relieving letter, Form 16 (Salary Certificate) and copy of attendance sheet of the above said faculty as per our books and records is attached at page no . 1.6.15 With reference to payments made to doctor Vikram Jeet Singh Dhingra S/o Sh Surinder Singh r/o J 2/11, Gobind Colony, Rajpura, Distt Patiala, who has been working in MM Institutes of Medical Science & R....
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....himla, who has been working in MM Medical College & Hospital Kumarhatti, Solan as professor from 15.04.2013 to 31.05.2013 and again joined as on 02.05.2016. Affidavit from above doctor regarding working with MMU, Copy of PAN, qualification, copy of joining report, relieving letter, Form 16 (Salary Certificate) and copy of attendance sheet of the above said faculty as per our books and records is attached at page no . 1.6.20 With reference to payments made to doctor Surinder Kumar Gupta S/o Sh Barkat Ram r/o H no 99P, Mansa Devi Complex, Sector 4, Panchkula, who has been working in MM Medical College & Hospital Kumarhatti, Solan as an assistant professor from 01.04.2014 to 31.07.2015. Affidavit from above doctor regarding working with v.v.U. Copy of PAN, qualification, copy of joining report, relieving lette' rorm 16 (Salary Certificate) and copy of attendance sheet of the abc-e : faculty as per our books and records is attached at page no 1.6.21 With reference to payments made to doctor Meena Garg D/o Sh Naresh Garg r/o H No 7, Dhillown Marg, Patiala, who has been working in MM Medical College Et Hospital Kumarhatti, Solan as an assistant pro....
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....rmed for the Trust. The payments were received in bank only. We are unable to find anything wrong in the statement still if your honor feels that there is something wrong in the statement, Trust would like to cross examine these doctors as their statements were recorded by Investigation Wing at the back of MMUT and no opportunity was allowed for cross examination. In view of the above and perusal of the statement of the persons given before Investigation Wing and affidavits of other faculties now submitted for your perusal and verification, it is quite evident salary to the doctors are paid for their actual working with trust. That all asked doctors were residing at Mullana campus or Solan campus or were commuting on daily basis from their residence by college bus or own conveyance within the distance permissible by MCI. A para wise reply to observations under Para 6.14 is as under: i. In reference to your observations that most of the doctors are residing in Ludhiana etc. it is submitted that complete details of all the doctors were filed at Annexure where it is quite evident that most of the doctors were residing in college campus at Mullana or Kumarhat....
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....s part time practice after college hours then he is a part time faculty which is not correct. That most of the state Governments of the country have permitted Government employed doctors for practice after Government working hours. Moreover, MCI do not restrict practice after college working hours. However, MMUT do not maintain such records of private practice carried out by any of the faculties, at the same time MMUT do not debar its faculties. v. With reference to bogus expenditure of salary of doctors as identified by PMC, it is submitted that during the course of search and post search enquiries your office has recorded statement of large number of doctors and each of them has confirmed the receipt of salary and all payments made to employees by MMUT is through bank transfer of salary. That due taxes has been deducted at sources and all the employees have shown the salary as part of their Income in Income Tax returns filed as per records. The question of bogus salary is totally a baseless and false allegation on MMUT. It is also not understood that a Doctors working in the college, received salary in bank, filing his Income Tax returns and still is a ghost. The same is....
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....00KM. It is once again reiterated that knowledge of terms and conditions by a particular person cannot be commented as no such details is made available to us. Moreover, residence of doctors at a distance of 70- 100 KM has been explained under para i) above. It is surprised to note that the Doctors working in Mullana (Ambala) and Solan (H.P.) are declared as ghost faculty by PMC and Department only on the basis of fact that they are registered with Punjab Medical Council. It is also relevant to mention that both Medical College Mullana and Soan are subject to regular inspections by Medical Council of India, State Governments and Ministry of Health." 35. From the above, we find that the directions u/s 263 of the Act cannot be given as there is no infarction of law as per Explanation 2 to Section 263 of the Act. 36. The ld. PCIT's directions were mainly based on the belief that the Doctors registered in one State cannot work in other State which is not a valid ground. On the records, we find that some Doctors have been employed and their subjects start from fourth year onwards and these Doctors pertained the duties of wards and regular hospital rounds. Hence, as per th....
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.... have been duly perused in detail. 39. We have gone through the statements of the persons and also the reply of the ld. AR which is as under: "Regarding the other Benefits Taken by Trustees from Trust Your honor has observed that during the course of search there are number of servants at the residence of Tarsem Garg, Sanjeev Garg and Vishal Garg. Under para 3.5 of your show cause, you have observed that servants are employees of the Trust as such the same is in violation of the provisions of the Income Tax Act. i. Kuldeep Singh son of Chadta Ram resident of village Tandwal who draws a salary of Rs. 8000/- per month and is being paid by Vishal Garg as his personal expenditure and he was not paid from the funds of Maharishi Markandeshwar University. In reply to QNo.2 of his statement recorded on 1/11/2014 he has confirmed that he was paid salary by Vishal Garg in Cash and Since no part of salary was paid by Trust as such there is no justification of any adverse finding in this respect. There is no finding on basis of statement or otherwise that salary of Kuldeep Singh is paid by MMUT. ii. Kuldeep Singh son of Bachchan Singh who is a driver of Maharishi ....
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....ndividually. As such no benefit drawn by the Trustee. That no specific question was raised by Investigation Wing about salary received for house working. An affidavit from Som Nath was filed before AO and copy of the same attached at page 462. vi. Sanjay Kumar son of Prahlad He acts as a helper in kitchen at Medical College and draws a salary of Rs. 5,000/- per month from College. As per facts, around 15 persons had assembled at the residence of Tarsem Garg cum office of Trust. The search lasted for 4 days as such Sanjay Kumar was being called to attend Income Tax Staff during their stay of 4 days. It was not possible for the ladies of the family to attend around 10-15 persons including police personnel. As such his temporary shifting to the residence was not for the benefit of Tarsem Garg rather to assist the team of Income Tax officials. There is no benefit derived from Sanjay Kumar by any Trustee as he is deputed at college. This was confirmed by Sanjay Kumar in his statement. He acts as a helper in kitchen at Medical College and draws a salary of Rs. 5,000/- per month from College. He further clarified in reply to QNo.4 that he acts as care taker to s....
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....n work and Boulder Packing work. The work order has been perused and the profits earned thereof have been determined u/s 44AD of the Act. This issue has been dealt by this Tribunal in the case of Sh. Tarsem Garg in ITA No. 2479/Del/2019 for the assessment year 2011-12. Since, the facts reminds same no action u/s 263 of the Act is called for on this ground. Rent paid to trustees 42. The detail of rent paid by MMU Trust to individuals i.e. trustees and their family member are as under: Name of the persons A.Y. 2009- 10 A.Y. 2010- 11 A.Y. 2011- 12 A.Y. 2012- 13 A.Y. 2013-14 A.Y. 2014-15 A.Y. 2015-16 Total Sh. Tarsem Garg 4,80,000 4,80,000 4,80,000 4,80,000 4,80,000 4,80,000 4,80,000 33,60,000 Sh. Vishal Garg 3,60,000 2,60,000 2,40,000 1,16,000 0 0 0 9,76,000 Smt. Deepika Garg 0 2,20,000 2,40,000 0 0 0 0 4,60,000 Smt. Santosh Kumari 4,20,000 4,20,000 4,20,000 4,20,000 4,20,000 4,20,000 0 25,20,000 Total 12,60,000 13,80,000 13,80,000 10,16,000 9,00,000 9,00,000 4,80,000 73,16,000 43. On perus....
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....d as only special persons/guests of M.M. Education Trust stay here and they also stay at here occasionally." 45. Ld. PCIT purported that from the above statement, it is clear that this premise is not being used by the assessee trust. This premise is residence of Sh. Tarsem Garg & Smt. Santosh Garg and their daughter. The rent is being paid by trust. Same condition was found in case of Smt. Deepika and Sh. Vishal Garg. They are showing rental income from the trust for letting out their H.No. 127, Sector-1, Jail Land, Ambala City. During the search of this premise it as found that this was occupied by them only. There was no evidence of letting out this building to the trust. Hence, directed that the issue be taken up in the fresh assessment proceeding. 46. The ld. AR relied on the submissions made before the Assessing Officer and the ld. PCIT while ld. DR has argued that the rent payment for letting out of H.No. 55 is huge and it was proved during the search by the way of statement of Sh. Tarsem Garg that the premises is not been used by the trust. He also argued that the payments made to H.No. 127 was also excessive compared to the prevailing rates. 47. Heard the arguments....
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....1,55,881 84,827 0 0 0 2,84,270 Sh. Sanfeeu Garg 0 0 1,44,658 1,34,610 0 1,03,500 0 3,82,768 Smt. Deepika Garg 3,51,457 4,38,700 2,76,377 1,05,520 0 0 0 11,72,054 Smt. Meenakshi Garg 0 26,137 1,73,748 10,704 0 0 0 2,10,589 Smt. Seema Garg 0 0 0 27,525 0 0 0 27,525 Smt. Santosh Kumari 0 0 51,082 0 0 0 0 51,082 Total 3,51,457 19,34,426 32,23,054 4,69,380 0 1,03,500 0 60,81,817 "On perusal of the above details of interest paid to trustees by MMU Trust, it is clear that trust is paying huge amount to trustees against the payments made to trust by trustees. It is clear that trust is diverting its income in the form of interest to trustees." 50. The ld. PCIT held that the assessee has paid 15% rate of interest to the trustees of the society on the loans received which is in excess of the interest paid to bank on term loan @12.75%. 51. We find that the allegation of the ld. PCIT cannot be held to be valid for two reasons. 1. Assessing Officer examined the issue vide notice dated 06.10.2016 fo....
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....ediately adjusted against the SBl Term Loan Installment of Rs. 65,00,000/-. During the year interest of Rs. 3,51,457/- was paid to Vishal Garg and the same was included in her Income Tax return. Vishal Garg: In AY 2010-11 a sum of Rs. 10,00,000 /- was received from him on 15-12-2009 and the same was deposited in OBC Account No. 51822011002927 and the same was immediately adjusted against the opening balance of Rs. 68,57,116.90 payable to bank. During the year Interest of Rs. 39,206/- was paid to Vishal Garg and the same was included in his Income Tax return. Meenakshi Garg: In AY 2010-11 a sum of Rs. 6,00,000/- was received on 15-12-2009 and the same was deposited in OBC Account No. 51822011002927 and the same was immediately adjusted against the opening balance of Rs. 68,57,116.90 payable to bank. During the year Interest of Rs. 23,526/- was paid to Vishal Garg and the same was included in his Income Tax return and copy of return of Income is attached at page with payments of Rs. 3,00,000/- on 6-4-2010 adjusted against outstanding OD on that date and Rs. 4,00,000/- on 26-8-2010 against outstanding OD of Rs. 1,85,55, 360.06/-. It is also relevant to menti....
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....3,60,000 63,60,000 63,60,000 3,41,50,000 Sh. Vishal Garg 14,25,000 17,75,000 18,00,000 18,00,000 18,00,000 18,00,000 18,00,000 1,22,00,000 Sh. Sanjeev Garg 0 0 0 0 18,00,000 18,00,000 18,00,000 54,00,000 Smt. Deepika Garq 4,65,060 5,17,724 5,80,858 6,28,740 8,43,755 13,46,274 14,58,114 58,40,525 Smt. Meenakshi Garq 11,25,000 15,00,000 15,00,000 15,00,000 15,00,000 15,00,000 15,00,000 1,01,25,000 Total 54,15,060 67,42,724 72,40,858 1,02,88,740 1,23,03,755 1,28,06,274 1,29,18,114 6,77,15,525 54. The ld. PCIT held from the perusal of the above salary chart, that the assessee trust is paying huge salary to trustees. Some of the trustees are getting huge salary without doing any work for trust. Smt. Deepika W/o Sh. Vishal Garg is getting huge salary without an....
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.... The letter from the Deputy Registrar of MMU has been submitted wherein it was mentioned that the biometric attendance system has been adopted for all the employees of the university. The biometric attendance status report has also been filed before us showing her regular attendance in the college. Similarly, the salary paid to Vishal Garg who is a Ph.d holder and CFO, Sh. Sanjeev Garg who is the Secretary of the University, Smt. Meenakshi Garg who is also a Ph.d holder and SAP analyst cannot be said to be excessive. The ld. PCIT observation that the payments are not genuine is not established by way of the material or investiagion or by any cogent reasoning. These individuals have shown their income received as salary in their individual returns also. Hence, keeping in view the evidences, we hold that the conclusion of the ld. PCIT is not on true appreciation of the facts. 59. Regarding the salary paid to Sh. Tarsem Garg, the comparative chart salary of Vice-Chancellor and Chancellor are as under: AY Salary Paid to Satyaram Damle (Vice Chancellor) Salary Paid to Tarsem Garg (Chancellor) 2010-11 27,14,400 29,50,000 2011-12 27,60,400 31,10,000 2012-1....
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....ared a tentative P&L a/c and balance sheet as per which an amount of Rs. 16.73 crore has been invested in construction of hostel whereas total receipt of hostel rent from these hostels by 3 co-owner trustees for the period starting from FY 2009-10 to FY 2014-15 is about Rs. 30.02 crore, which is quite disproportionate considering the amount of investment. The rate ot return on the investment is varying from 30-40% per year. It was also noted that the co-owners of Santosh Hostel have given only the buildings on rent whereas the facilities of wi-fi, electricity, purified water, furniture such as table, chair, almirah and bed, security facilities and mess etc. are being borne by the trust. Further, as per the information provided during the assessment proceedings, the co-owners are not incurring even a single paisa expenditure on repair and maintenance of the 4 hostel buildings, which is apparently being borne by the assessee trust. Further, a term loan of Rs. 7.50 crore has been sanctioned to the co-owners for construction of hostel buildings. One of the terms & conditions of the said credit facility is that an MOU was to be entered into between the co-borrowers and MMU trust whereby....
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....o evidence that the repair expenditure is included in the cost incurred on hostel. Hostel no. 13 was constructed by the assessee trust during FY 2012-13 & 2013-14. After completion of construction it may be noted that during FY 2014-15 relevant to AY 2015-16, the cost incurred on the hostel building remained same at Rs. 16 73 crore as that in AY 2014- 015 indicating that no expenditure was incurred on repair at least during FY 2014-15. The assessee has also not furnished any confirmation from the SBI that the credit of Rs. 7.5 crore was extended without any agreement being signed between the co-owners and the assessee trust and the same being given to them as a requirement for extending the loan. Further, it is noted that rent of about Rs. 1.60 crore was received directly by the co-owners from the assessee trust which is against the submissions made by the AR that rent was received by the co-owners from the students directly and no rent was received from the trust at any point of time. It is also noted that the amount paid as rent to the coowners is significantly more than the amount charged as fees by the assessee trust for bearing all the expenses on facilities such as wi-fi, ele....
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.... 13, has jumped by more than 500. The findings above can be summarized as under: "a. The return on investment is ranging between 30-40%, which totally unrealistic. An amount of Rs. 16.73 crore has been invested in construction of hostel whereas total receipt of hostel rent from these hostels by 3 co-owner trustees for the period starting from FY 2009-10 to FY 2014-15 is about Rs. 30.02 crore, which is quite disproportionate. b. The co-owners are charging room rent from the students which is varying between Rs. 25.000- Rs. 32.000 p.a. per student (on triple sharing basis) whereas the fees charged by the MMUT for allied services such as wi-fi, electricity, purified water, furniture such as table, chair, almirah and bed, security facilities and mess etc. is much lesser amount varying between Rs. 18,000- Rs. 28,000 p.a. per student. c. No confirmation was furnished from the SBI that the credit of Rs. 7.5 crore was extended without any agreement being signed between the co-owners and the assessee trust and the same was given to the bank as a requirement for extending the loan. Further, it may also be noted that rent of about Rs. 1.60 crore was received by the ....
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....l rent for the benefits of the trustees and their relatives in violation of section 13 of the Act." 63. Santosh Hostel is owned by Sh. Santosh Garg, Smt. Deepika Garg and Smt. Seema Garg. The Santosh Hostel consists of four blocks namely, hostel No. 10, 11, 12 & 13. The total investment as per page no. 691 of the paper book was Rs. 16.73 crores under the head purchase of land and construction of building, repair & maintenance. The details of the fees received directly from the students has been reflected at page no. 692 to 721 amounting to approximately 1.60 crores. 64. Before us, the ld. AR argued that the details of investments in construction, repair and renovation have been duly enquired by the Assessing Officer and by the ld. PCIT and no discrepancy have been filed by both the authorities. Hence, it cannot be said that the order is erroneous as even the ld. PCIT could not point out the leakage of revenue on this issue. Further, he also led us to page no. 722 of the paper book wherein the statement of fees charges from Santosh Hostel and expenses incurred by MMUT has been placed which showed that return and investment ranged from 1.91% to 31.89%. Page no. 724 shows that t....
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.... action u/s 263 of the Act. Regarding the reconciliation of gross deposits, we find that Assessing Officer has raised these issues and similar queries have been raised by the Assessing Officer and no discrepancies suggesting leakage of revenue have been brought out by the Revenue authorities. Regarding the high return of 30% to 40%, we find that the profit varied from 1.9% to 31% and has been offered to tax at maximum marginal rate. Thus, the observation of the ld. PCIT that the profits were 30% to 40% is factually incorrect and since the higher profits were also offered to tax fully the interest of the Revenue is not compromised. Hence, no action u/s 263 of the Act arises on this issue. Further, we find that MMUT has also earned profit of 25 to 30%, there is no exaggeration of profits by the Santosh Hostel. Regarding the confirmation of the loan from SBI, we find that the loan in question was sanctioned for construction of building and not against rent agreement. The loan secured against land and building in question and also collaterally secured against the properties SCF4, Vikas Vihar Ambala City owned by Smt Santosh Garg, LPG Godown village Jandli owned by Vishal Garg and Santo....
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....010-11 A.Y. 2011-12 A.Y 2012-13 A.Y. 2013-14 A.Y. 2014-15 Total Mess Contractors 3,46,10,773 3,90,56,625 5,27,12,397 6,33,31,386 8,46,12,784 9,83,53,839 37,26,77,804 The above table shows that the assessee has claimed Rs. 37.26 crores as mess expenses to contractors. The search proceedings and post search enquiries have established that out of this amount of Rs. 37.26 crores, Rs. 8.20 crores are bogus expenses. The evidences gathered which lead to this conclusion are enumerated below: 1. The address provided by these concerns in ITRs/Bills/TDS returns was found to be non-genuine. No existence of these parties was found during the search and post-search enquiries. 2. They had claimed the entire TDS deducted by MMUT as refund in their ITRs. 3. These contractors work only for MMUT and none else. 4. The analysis of fresh statements in these cases showed that the entire amount paid by cheque by MMUT has been withdrawn in cash on the same date. 5. The introducers of these persons in the bank are the employees of MMUT. 6. All bank accounts are in the same bank branch in which MMUT group m....
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....bsp; 55 6 -- 9 7 8 85 1.3 The investigations, statements etc. in details are as follows: During the course of search action, the assessee was asked to produce relevant documents, bills & vouchers relating to payment/expenditure in those cases. Inspite of repeated opportunities, the assessee could not produce any supporting document, bills, vouchers etc. during search operation. The relevant extracts of the statement of Sh. Tarsem Garg, President of MMU Trust recorded u/s 132 of the I.T. Act, 1961 on 02.11.2014 is reproduced as under: "Q. 13 As per the information obtained during the course of search, Sh. Dinesh Chand S/o Sh. Prem Lai, who is residing at Hostel No. 1, MMU Campus, Mullana, is one of the persons who is providing contractual services and running mess no. 1 in MMU Campus. As per his statement recorded on oath, he has mentioned that he has not been maintaining any books of accounts regarding expenditure incurred for providing contractual services. Further, he has stated to have been staying in the hostel without paying any rent. He is also not declaring any income on the business being run by him. Since, he has no....
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....2.2014. A reply was received explaining the transactions with MMU Trust on 19.01.2015 by post. On perusal of the reply, it was found that M/s B.S. Construction has not submitted any bills/vouchers regarding the payments received from MMU Trust. To further investigate the issue, the Inspector of this office, Sh. Mohammad Salim was sent to the above-mentioned premises. His report is as "As per your directions I visited house no. 211 Harbanspura, Yamuna Nagar to serve the summon u/s 131 of the Income Tax Act, 1961 in respect M/s B.S. Construction. The firm or its partners were not present at the given address. It was revealed from local enquiries that at present no such firm exists at this address." From the perusal of the above report of Inspector regarding the genuineness and existence of the above-mentioned persons-Sh. Rajeev Kumar, Sarwan Singh, Ramesh Chand and Azad Builders and M/s B.S. Construction, it is evident that the above-mentioned persons are not existing and the transactions between MMUT and the above-mentioned persons are not genuine. So, the payments made to them by MMUT are bogus and need to be disallowed. Out of the above list, only 3 pers....
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....tements u/s 131 of I.T. Act, 1961, it was revealed that the above labourers didn't know about their income details, they also didn't know that how much income-they were showing in their ITRs. They have also failed to recognize their address mentioned in their ITRs. From their statements, it is clear that the address in their ITRs relates to Sh. Harish Bansal, ex-employee of MMU Trust. Further, all these persons resided at the business premises of MMU Trust. From the above facts, it is clear that the claim of contractual expenditure of Rs. 8.20 Cr. (7.35 Cr. + 0.85 Cr.) out of Rs. 37.26 Cr. (total payments of mess expenses) by assessee MMU Trust is bogus." 70. The ld. PCIT further held that payment of Rs. 735 lakh to 6 mess contractors and Rs. 85 lakh to 3 construction contractors were identified as bogus/inflated by the Investigation Directorate for the reasons mentioned in the notice. 71. Dinesh Chand: In his reply the AR of the assessee has selectively quoted from the statement and produced certain mess bills and affidavit to submit that genuineness of such expenses cannot be doubted. The AR has not submitted any reply in respect of evidences gathered and conclusion drawn w....
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....d at the address provided which is 67, Pooja Vihar. In respect of Sh. Sarwan Singh, the AR claimed to produce copies of certain bills and aadhar card. Copy of aadhar card was not found in the documents submitted by him. Further, on perusal of the bills it is seen that some of the bills are signed in English by Sarwan Singh, which create doubt about genuineness of such bills. 75. Rajeev Kumar: As mentioned in the show cause Rajeev Kumar could not be traced at the address provided which is 67, Pooja Vihar. In respect of Sh. Rajeev Kumar, the AR claimed that he was a construction contractor and did earth filling work and supplied building material such as sand etc. The payments mentioned in the show cause are not tallying with the ledger account filed by filed by the AR. The AR has also not submitted all the bills and prima facie the genuineness of the bills appears to be doubtful. 76. Jagga Singh: In his reply the AR of the assessee has selectively quoted from the statement and produced certain mess bills and affidavit to submit that genuineness of such expenses cannot be doubted. In answer to question no. 4 he has stated that he got the money from Sh. Sanjeev Garg for various ....
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.... 3. Jagga Singh - 4,00,000 4. Jeet Singh - 3,65,792 5. Dinesh - 3,50,000 Total 1,30,31,685 11,15,792 82. The ld. PCIT held that the AO has not made any enquiry in respect of the above issue. We hereby hold that any excess payment by Bhagwati Gas Agency to Sh. Sanjeev Garg, Sh. Vishal Garg and Smt. Seema Garg is a subject matter of proceedings in the case of Bhagwati Gas Agency. Further, it is to be seen whether the amounts received from Bhagwati Gas Agency have been duly offered to tax or not has to be examined in the case of the receipents only. 83. For the querites raised by the ld. PCIT, the AR replied as under: 84. Dinesh Chand S/o Sh. Prem Lai Permanent r/o Village Pokhri, post office pokhri, distt. Pori Garhwal, Uttaranchal presently resident of Mess No. 1, MM University Campus, Mullana, Distt. Ambala, Haryana having PAN: AUNPC8913F. 85. Statement of Dinesh Chand recorded on 1/11/2014 u/s 132 during the course of search and is lying at page 298-304, another statement of Dinesh Chand is recorded by Investigation Wing on 30/12/2014 u/s 131 and placed at 305-310. These statemen....
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....Jit Singh son of Sh. Bhagat Ram, was working as a mess contractor since 2009 in Mess No.3 catering to app. 165 students. Jit Singh is neither related to any of the trustee or any of their relative nor any financial transaction between them had ever taken place. 92. His statement was recorded by then DDIT as a part of post search inquiries on 30-12-2014. (Copy attached at Page 357-364). Once again it is submitted that please read the statement as a whole. 93. In reply to QN.2 Jit Singh has confirmed that he gets food prepared and serve the same to the students in MMU Mess no. 3 and he is working here since 8 years. In reply to QNo3. he has clarified that before here, he is working in mess at Govt. College, Near Jawahar Nagar, Hisar and worked there for 6 years. In reply to Q No. 4 he has stated that he got the money from MM through cheque for various expenditure such milk, vegetables etc, when he got the money from bank till that he borrow the items from the shopkeepers. He further confirmed that his educational qualification is 5th Standard. In reply to question no 6 and 9 of statement, he has admitted that he was having team of 6 workers and further explained the salary paid....
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....Garg issues cheque to Mess contractor and he went to bank and withdraw the cash. This fact was clarified by Jit Singh in his affidavit placed at page 371-372 wherein he para 2-4 he has clarified the issue in question. That after the above affidavit there is no ambiguity left. 96. Ramesh Chand son of Kanshi Ram permanent resident of village Nangda Tehsil and District Una (Himachal Pardesh) having PAN: AKNPC8883C 97. Ramesh Chand, was working as mess contractor during AY 2009-10 to AY 2011-12 in mess no 3 of trust which was catering to about 149 students residing in Hostel no.3. 98. He had left the job of Mess Contractor AY 2011-12 and the last payment made to him was made on 16-12-2010 after adjusting his Mess Security as evident from his copy of account attached at Page 293-299. 99. The learned PCIT has observed that Ramesh Chand could not found at his address of 67, Pooja Vihar and copy of aadhar also not found. In fact during proceedings before PCIT it was alleged that address 67, Pooja Vihar do not exist and in order to support the same copy of Aadhar Card of Harish Bansal Advocate who has filed the return of Ramesh Chand and has given his address in the return of In....
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....ny of their relative nor any financial transaction between them had ever taken place. 101. That during the course of post search inquiries by then DDIT, his statement was recorded on 30-12-2014 (copy attached at page 391-398). In the statement so recorded he has confirmed that he is working as Mess contractor, giving number of students being served by him, source of procurement of ration and vegetables, milk, gas etc required for running of Mess, name of workers, salary paid by them to their workers. There is nothing unusual in their statement if read as a whole. The learned PCIT has tried to pick a word or a line from a sentence and tried to create a hype around that word. It is a settled law that a document is to be read as a whole. 102. With reference to Mess No. 1 allotted to Dinesh Chand and Jagga Singh both it is submitted that Mess No.1 was run by Jagga Singh for an intervening period from October 2011 as evident from page No. 416 & 419 after death of Sarwan Singh and thereafter from August 2012 Dinesh Chand was allotted Mess No.1 That the key highlights of his statement is as detailed hereunder: 103. In reply to QN.2 Jagga Singh has confirmed that he is doing wo....
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....n reply to QNo. 29 of statement, he has admitted that he has received the amount through cheque from trust and has made withdrawal from his bank for payment to vendors of vegetables and cereals etc (kiryana). In reply to QNo.30 of statement, he has admitted that he had received the tender for serving mess services in trust without any reference and he was continuing the same. In reply to Q.No 24 & 31 of statement, he has admitted that Sh. Harish Bansal, Advocate has filed his Income Tax Return. 104. That during the course of assessment proceeding and on receipt of show cause notice, the assessee has also obtained an affidavit from Jagga Singh (copy attached at page 404-405) Anuj Kumar son of Suresh Kumar resident of Balmiki Basti village Barara District Ambala having PAN: BZRPK2319H 105. It is submitted that Anuj Kumar s/o Sh Suresh Kumar was a Man power contractor who provided approximately 25 sweepers to MM Institute of Medical Science and Research running under MMU Trust beginning from AY 2012-13 for housekeeping service. As per practice being followed by AAMUT, it did not recruit class 4 staff directly on their roll but instead it took these services on contract basis ....
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....to M/s B.S. Construction (PAN AAFFB4872L & assessed with ITO Ward-2, Yamunanagar) having Regd. Office at 211, Harbanspura, Near ITI, Yamuna Nagar, it is submitted that it is a Partnership firm and Mr. Sudershan Kumar R/o B6/1504, Model Town Colony, Near ITI, Yamuna Nagar and Mr. Balraj Sethi S/o Sh. Bansi Lai Sethi R/o 211, Ward No. 22, Harbanspura, Yamuna Nagar are the two partners in the firm. The said firm was providing construction service to the MMU trust from AY 2009-10 and had worked in the construction of the building of University block, School Block and Engineering block of MMU Trust during the period of AY 2009-10 and AY 2010-11. However, such firm was not related to any of the trustees and neither any financial transaction was entered with the firm by any of the trustees. 109. It is submitted that all the payments to such firm were made by cheque only from trust after making appropriate deductions on account of TDS. Furthermore, such payments were only made on the basis of the bills received from the said firm and after approval of such bills by the Chairman of the Board of the trust. A copy of ledger account for AY 2009- 10 & 2010-11, bills received and approval let....
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....ilitate siphoning of money. In the statement nowhere it was stated that the business of Mess contractors were managed by Sanjeev Garg, in fact Mess operations on behalf of MMUT is managed and controlled by Sanjeev Garg. 114. We also find that the Assessing Officer has issued show cause notice dated 06.10.2016 on the similar issues raised by the ld. PCIT. The reply of the assessee dated 05.12.2016 before the Assessing Officer has also been perused. It contains the complete details of hostel and mess charges received from the students and paid to the contractor. The mess expenses constitute about 25% of the gross mess receipts which have been duly filed before the Assessing Officer during the assessment proceedings. 115. The ld. DR has also filed the investigation conducted by the Revenue and argued that the siphoning of funds can be determined based on the statements of the mess workers, contractors recorded during the such proceedings. 116. We find that if the statements are read as a whole, no evidence of siphoning is determinable on the basis of these statements. Selective picking of the statement, disregarding the entire context is against the settled law which directs ....
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....Proview Estates Private Limited as unsecured loan. 1.1 It is also relevant to mention that interest charged on bank loan is the personal liability of Inder Pal Garg. However, the interest paid to Bank of India against this loan was not claimed in Income Tax Return against any other income because as per the understanding with the concerned company the entire amount paid to Bank is to be reimbursed by them as such the same stands recovered from such company with no profit/loss on account of this transaction. 1.2 Further, interest earned against FDR is not the income of Inder Pal Garg as the same is related to Maharishi Markandeshwar University Trust and is part of their income of respective year. A certificate from Bank of India in this respect is attached for your kind perusal at page 4. 1.3 With reference to your observation of source of deposit on 1-3-2016 amounting Rs. 2,00,00,000/- and Rs. 1,83,00,000/- it is submitted that amount in question was deposited in AY 2016-17 out of loan received back, advanced to Proview Estate Private Limited. A copy of loan account advanced to Proview Estates Private Limited is attached at page 1-3......" 119. It was ....
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....executive secretary, who were wife and j husband, had used FDRs of society for obtaining loans other than for society itself without compensation to society - Assessing Officer denied exemption on ground of violation of provisions of section 13(1)(c) and made assessment taxing all receipts of concerned year - On appeal, Commissioner (Appeals) confirmed action of Assessing Officer - Whether since secretary and executive secretary were not only founder-members of society but also were executive committee members and secretary herself had signed and pledged FDRs of society, they fell under class of persons specified in section 13(3) - Held, yes - Whether, therefore, provisions of section 13(l)(c) read with sections 13(2)(b) and 13(2)(cc) were attracted - Held, yes - Whether assessee-society had violated those provisions and, consequently, was not entitled to exemption under section 11- Held, yes Section 4, read with section 2(24) of the Income-tax Act, 1961 - Income - Chargeable as - Assessment year 1997-98 - On violation of section 13(l)(c), Revenue authorities denied exemption to assessee society given under section 11 and charged entire receipts of voluntary contribution to tax ....
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....nder Pal Garg as the same is related to Maharishi Markandeshwar University Trust and is part of their Income of respective year. 2. With reference to your observation of source of deposit on 1-3-2016 amounting Rs. 2,00,00,000/- and Rs. 1,83,00,000/- it is submitted that amount in question was deposited in AY 2016-17 out of loan received back, advanced to Proview Estate Private Limited." 122. Thus, we find that this issue has been duly inquired by the Assessing Officer during the assessment proceedings. 123. During the hearing, before us the AR of the assessee trust repeated the arguments that Sh. Inder Pal Garg along with his family members are the founder trustees of the assessee trust and the trustee family had donated some land for establishment of educational institutes under the trust at the time of its inception and also donated towards corpus of trust. Sh. Tarsem Kumar Garg, Smt. Santosh Garg, Sh. Vishal Garg & Sh. Sanjeev Garg have given personal guarantee for raising loans from the banks and Sh. Tarsem Garg & Smt. Santosh Garg and Sh. Vikas Garg have mortgaged their residential properties for the purpose. Interest on loan raised was paid by Sh. Inder Pal Gar....
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....of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution: Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or established) or a trust for charitable purposes or a charitable institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in subsection (3) in so far as such use or application relates to any period before the 1st day of June, 1970; [(d) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any period during the previous year- (i) any funds38 of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the for....
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....the benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before the 1st day of July, 1972, no regard shall be had to the amendments made to this section by section 7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act, 1972.] (2) Without prejudice to the generality of the provisions of clause (c) [and clause (d)] of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),- (a) if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub-section (3) for any period during the previous year without either adequate security or adequate interest or both; (b) if any land, building or other property of the trust or institution is, or continues to be, made available for the use of any person referred to in sub-section (3), for any period during the previous year without charging adequate rent or other compensation; (c) if ....
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....ern in which any of the persons referred to in clauses (a), (b), (c) [,(cc)] and (d) has a substantial interest. (4) Notwithstanding anything contained in clause (c) of subsection (1) [but without prejudice to the provisions contained in clause (d) of that sub-section], in a case where the aggregate of the funds of the trust or institution invested in a concern in which any person referred to in sub- section (3) has a substantial interest, does not exceed five per cent of the capital of that concern, the exemption under section 11 [or section 12] shall not be denied in relation to any income other than the income arising to the trust or the institution from such investment, by reason only that the [funds] of the trust or the institution have been invested in a concern in which such person has a substantial interest. [(5) Notwithstanding anything contained in clause (d) of sub-section (1), where any assets (being debentures issued by, or on behalf of, any company or corporation) are acquired by the trust or institution after the 28th day of February, 1983 but before the 25th day of July, 1991, the exemption under section 11 or section 12 shall not be denied in rela....
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....ve", in relation to an individual, means- (i) spouse of the individual; (ii) brother or sister of the individual; (iii) brother or sister of the spouse of the individual; (iv) any lineal ascendant or descendant of the individual; (v) any lineal ascendant or descendant of the spouse of the individual; (vi) spouse of a person referred to in sub-clause (ii), subclause (iii), sub-clause (iv) or sub-clause (v); (vii) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual.] Explanation 2.-A trust or institution created or established for the benefit of Scheduled Castes, backward classes, Scheduled Tribes or women and children shall not be deemed to be a trust or institution created or established for the benefit of a religious community or caste within the meaning of clause (b) of sub-section (1). Explanation 3.-For the purposes of this section, a person shall be deemed to have a substantial interest in a concern,- (i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or withou....
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....ot applicable to the instant case. • Agappa Child Centre (1997) 226 ITR 211 (Ker.)- In this case, the asset of the trust is being utilized by the trustee without any consideration. Hence, not applicable to the instant case. • Director of Income-tax (Exemption) Vs Charanjiv Charitable Trust (2014) 43 Taxman 300 (Del.)-In this case it held that the Assessing Officer noted that assessee in furtherance of its objects to open a school, entered into agreements with APIL for purchase of land and paid 95 per cent of price as advance money - However, even after lapse of more than one year from date of agreement to sell, sale was not completed and no registered document was executed - Assessing Officer took a view that real motive of assessee was to advance its surplus monies to APIL without charging any interest and since APIL was a prohibited person within meaning of section 13(3), provisions of section 13(1)(c)(ii) were attracted with result that assessee could not be allowed exemption under section 11 - Whether, on facts, and in absence of any explanation as to why sale agreement was cancelled after a long time of paying advance money, impugned finding recorded ....
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.....2 That the learned PCIT has erred in law and on facts in observing that the Annual Letting Value amounting Rs. 8,80,000/- of the property situated at House no. 526, Sector- 16, Chandigarh is to be taxed under head income from other sources. 3.1 That the learned PCIT has erred in alleging that the receipts of Rs. 9,50,000/- disclosed under head "Income from other sources" were liable to be taxed as income from undisclosed sources. 3.2 That the learned PCIT has erred in invoking revisionary powers u/s 263 in relation to the service receipts of Rs. 9,50,000/ 1gnoring that the said receipts had already been taxed at the maximum marginal rate and as such no prejudice was caused to the revenue. 4. That the learned PCIT has erred in invoking revisionary powers u/s 263 on issues regarding which no incriminating materials were found during the course of search u/s 132 conducted on 31-10-2014 in the present case. 5. That the learned PCIT has erred in stating that the AO did not carry out any enquiry in respect of issues mentioned in the show-cause notice u/s 263 ignoring the questionnaires issued during the course of assessment proceedings." 131. In IT....
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....nd forming his opinion on the basis of suspicions, surmises and conjectures. 2.2 That the learned PCIT has erred in law and on facts in observing that the Annual Letting Value amounting Rs. 9,60,000/- of the property situated at House no. 526, Sector- 16, Chandigarh is to be taxed under head income from other sources. 3. That the learned PCIT has erred in alleging that the receipts of Rs. 1,79,77,600/- disclosed under head "Profit or gains from Business and Profession" were liable to be taxed as income from undisclosed sources u/s 69A r.w. sec 115BBE without allowing deduction of expenses of Rs. 28,94,472/-. 4. That the learned PCIT has erred in invoking revisionary powers u/s 263 on issues regarding which no incriminating materials were found during the course of search u/s 132 conducted on 31-10-2014 in the present case. 5. That the learned PCIT has erred in stating that the AO did not carry out any enquiry in respect of issues mentioned in the showcause notice u/s 263 ignoring the questionnaires issued during the course of assessment proceedings." 133. In ITA No. 2483/Del/2019, the assessee has raised following grounds of appeal: "....
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....of the Act was carried out and the residential premises on 31.03.2014. Subsequently, notice u/s 153A of the Act was issued and the assessee filed return of income in due course which has been assessed by the DCIT, Central Circle, Karnal. 135. The ld. PCIT held that on perusal of assessment records for the assessment year 2011-12 of the assessee, it is observed that the assessee had shown business income on presumptive basis @ 8% u/s 44AD amounting to Rs. 2,37,749/- and shown gross receipts of Rs. 29,71,865/- from MM University, Solan as per Form 26AS. These receipts/income shown by the assessee appear to be dubious and an attempt to create artificial source of income. The ld. PCIT has given the following reasons to arrive at this conclusion: 1. The assessee did not furnish details of sundry debtors along with the return of income as required u/s 139(9) of the Act in respect of income declared u/s 44AD of the Act. As per the bank account no. 5182201000010/ OBC of the assessee the amounts received on account of construction work from MMU or withdrawn to the extent of Rs. 28,90,000/- on the same dates. 2. Assessee is not in the business of construction and the con....
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..... 44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession" : [Provided that this sub-section shall have effect as if for the words "eight per cent", the words "six per cent" had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.] (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no furt....
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....t of certain incomes" in the relevant assessment year; (b) "eligible business" means,- (i) any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and (ii) whose total turnover or gross receipts in the previous year does not exceed an amount of [two crore rupees].]" Sec. 139(9): [(9) Where the [Assessing] Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the 67[Assessing] Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return : Provided that where the assessee rectifies the defect after the expiry....
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.... member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals; (e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance sheet and the auditor's report [and, where an audit of cost accounts of the assessee has been conducted, under section 233B77 of the Companies Act, 1956 (1 of 1956), also the report under that section]; (f) where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year.]" 143. It was argued that as per the provisions the stipulation that details of the sundry debtors have to be filed is not mandated by the provisions of the Act. At the same time, the details of the sundry debtors and cre....
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....ny contractual work it is against the facts on record. The ld. PCIT has not given any finding regarding what is the error in the order of the Assessing Officer and not even approximately quantified or mention any possible loss of revenue by conducting independent enquires. The judgments quoted by the ld. PCIT are perused and found to be not applicable to the facts of this case. 145. The ld. PCIT's reliance on the judgment of CIT Vs Infosys Technologies Ltd. 341 ITR 293 wherein the Hon'ble High Court of Karnataka has held that provisions u/s 263 of the Act is intended to plug leakages to the revenue by the erroneous order passed by the lower authorities cannot be applicable and in the instant case as the ld. PCIT has not determined, proved any leakage to revenue on this issue of taxing profits u/s 44AD of the Act. 146. The action of the ld. PCIT directing the Assessing Officer to call for the details and make necessary enquiries in respect of the alleged contractual receipts cannot be held to be legally valid, as the details regarding the contractual receipts and profit thereon stood examined in the assessment proceedings and also keeping in view the fact that the ld. PCIT has....
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.... entire payment was received on 23.03.2012. The assessee failed to produce any evidence to prove that the services have been rendered by him. Further there is no basis for making the payment of Rs. 9,50,000/-. It is also to be noted that the assessee has no expertise to render services to Nexgen. It is an arrangement adopted by the assessee only for capital accretion." 149. The amount involved for all the periods is as under: S.No. Assessment Year Amount received Amount offered to tax Received from Date of filing of return Tax rate 1. 2012-13 950,000 950,000 Nexgen 18.04.2016 MMR* 2. 2013-14 900,000 900,000 Nexgen 18.04.2016 MMR 3. 2014-15 179,77,000 150,83,128** Nexgen, Ajnara 31.08.2015 MMR 4. 2015-16 33,50,000 33,50,000 Nexgen 31.08.2015 MMR *Maximum Marginal Rate ** Total receipt = 160,00,000 Service Tax = 19,77,600 Expenses = 916,872 150. For the sake of convenience, the assessment year 2014-15 is taken as the lead for the adjudication. 151. Before us, during the hearing, the ld. AR has repeated the arguments taken before the Ass....
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....has submitted as under: "With reference to expenses at Rs. 28,94,472/- against professional receipts copy of profit and loss account is attached at page 9. The copy of account of major expenses is attached at page 10-16. With reference to loan & advances to M/s Nexgen Financial Solutions Pvt. Ltd. it is submitted that this amount is outstanding amount against bill raised to party and no interest on this amount was charged. Copy of account of M/s Nexgen Financial Solutions Pvt. Ltd. is attached at page 17. Copy of bank accounts with narration of each entry is attached at page." 157. We find from record that the amounts have been received from Nexgen on 28.02.2014, 18.03.2014, 20.03.2014 and 30.03.2014 on account of introduction of client for raising funds and towards retainership fee. The service tax @12.36% has been duly paid on these amounts. We have also taken into consideration, the arguments of ld. DR, Sh. S. S. Rana, wherein he extensively quoted the judgments in the case of Subhalaxmi (ITAT Kol.) The relevant part of the orders is as under: "It is imperative for the Assessing Officer to conduct enquiry to satisfy himself about the genuineness of transacti....
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....s issue, we are fairly with the arguments of the ld. DR and does not dispute the relevance and validity of the provisions u/s 263 of the Act. 160. From the action of the Assessing Officer, we cannot hold that the Assessing Officer did not conduct any enquiries. In this case, the Assessing Officer after obtaining the details has examined the service tax payment and also the income tax paid on this receipt. The assessee has offered the entire amount received as consultancy to tax and has not claimed any deductions. The 12.6% service tax and 30% income tax paid on this transaction could not have rang any bell in the mind of the Assessing Officer to suspect anything contra. Further, in the case of Infosys Technologies the Hon'ble Court has held that the Commissioner can invoke provisions of Section 263 of the Act in case of erroneous approach of the Assessing Officer on merits where there was no enquiry has been conducted at all or the so-called enquiry conducted by the Assessing Officer is as good as no enquiry. We find such is not the position in the instant case. Further, we find that the ld. PCIT has not shown proper application of mind as it was directed that and amount of Rs. ....
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....T/Revenue to prove that the payee companies are not in existence or of no financial capability or involved in providing of any accommodation entry or any investigation leading to credence that these companies are aiding in fictitious capitalization, and keeping in view, the entire gamut of activities and evidences mentioned in the preceding paras, we hereby decline to hold that the ld. PCIT is legally correct in holding that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of Revenue and hence, the order u/s 263 of the Act is not sustainable. Santosh Garg 164. In ITA No. 2475/Del/2019, the assessee has raised following grounds of appeal: "1. That the PCIT has erred on facts and in law in exercising revisionary powers u/s 263 of the Act without satisfying the twin conditions off the assessment order being: (a) erroneous; and (b) prejudicial to the interests of Revenue and consequently, the impugned order is illegal and bad in law. 2.1 That the learned PCIT has erred in alleging that the rental receipts off Rs. 8,80,000/- were an arrangement devised by the assessee for capital accretion and forming his opini....
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....es issued during the course of assessment proceedings." 166. In ITA No. 2477/Del/2019, the assessee has raised following grounds of appeal: "1. That the PCIT has erred on facts and in law in exercising revisionary powers u/s 263 of the Act without satisfying the twin conditions off the assessment order being: (a) erroneous; and (b) prejudicial to the interests of Revenue and consequently, the impugned order is illegal and bad in law. 2.1 That the learned PCIT has erred in alleging that the rental receipts off Rs. 9,60,000/- were an arrangement devised by the assessee for capital accretion and forming his opinion on the basis of suspicions, surmises and conjectures. 2.2 That the learned PCIT has erred in law and on facts in observing that the Annual Letting Value amounting Rs. 9,60,000/- of the property situated at House no. 526, Sector-16, Chandigarh is to be taxed under head income from other sources. 3. That the learned PCIT has erred in invoking revisionary powers u/s 263 on issues regarding which no incriminating materials were found during the course off search u/s 132 conducted on 31.10.2014 in the present case." 167. In ITA No. 2478/Del/2019,....
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....ental income, certain other income etc. also reflected in the returns of these years appear to be dubious and shown with intent to create capital in the name of individual assessee. The bank accounts maintained by the assessee in several banks such as Oriental Bank of Commerce, Punjab National Bank etc. reflect the transactions in these assessment years which are mostly related with MMUT. The assessee during the assessment proceedings did not submit the statement of affairs and cash flow statement for any of the search assessment years. The assessee's request for providing the documents as mentioned in para 5 of the order during the course of proceedings u/s 263 shows that the material collected during the course of search proceedings was never confronted to the assessee despite the specific findings of the Investigation Wing. It is also noted that the Assessing Officer did not carry out any enquiry or raised any query in this regard. During the course of assessment proceedings u/s 263, the assessee was specifically asked to furnish all the evidences including electricity bill/house tax bill, rent agreement, receipts, correspondences etc. in support of premises given on rent to Tri....
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....p. The rental incomes have been duly offered to tax by the assessee for a period of four years even before the conduct of search. The ld. AR has argued that the rent deed and the rent receipts have already been submitted before the ld. PCIT vide letter dated 30.10.2018. He has submitted various documents to prove that the case has been examined at length by the Assessing Officer. Hence, no action u/s 263 of the Act is called for. 172. The ld. DR vide his written submission argued that no rent agreement, copy of the rent receipt could be furnished by the assessee and argued that the rental receipts were not genuine as there was no electricity consumption during the period. He argued that the claim of the assessee u/s 24A & 24B of the Act against the income from house property cannot be allowed. He referred to various case laws and argued relying on the explanation II of Section 263 of the Act. The written submissions are as under: "2. Despite opportunity, assessee did not submit statement of affairs and cash flow statement to the AO. In his order, PCIT (Central) has relied upon following judgments: 1. DIT (Exemption) Vs Charanjeev Charitable Trust 43 Ta....
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....iled inquiry. The relevant judgement of Hon'ble Calcutta High Court in this case is also enclosed. 2. Malabar Industrial Co. Ltd. Vs CIT f20001 109 Taxman 66 (SC)/r20001 243 ITR 83 (SC)/r20001 159 CTR 1 (SC) (Copy Enclosed) where Hon'ble Supreme Court held that where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any supporting material without making any enquiry, exercise of jurisdiction by Commissioner under section 263(1) was justified 3. Rajmandir Estates (P.) Ltd. Vs PCIT |70 taxmann.com 124 (Calcutta)/[2016] 240 Taxman 306 (Calcutta)/[2016] 386 ITR 162 (Calcutta)/[2016] 287 CTR 512] (Copy enclosed) Where Hon'ble Calcutta High Court held that where assessee with a small amount of authorised share capital, raised a huge sum on account of premium and chose not to go in for increase of authorised share capital merely to avoid payment of statutory fees and Assessing Officer passed assessment order without carrying out requisite enquiry into increase of share capital including premium received by assessee, Commissioner was justified in treating assessment order as erroneous and prejudicial t....
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....A. V. Sreekumar Vs CIT r20181 90 taxmann.com 355 (Kerala)/r2018l 253 Taxman 428 (Kerala)/r20181 404 ITR 642 (Kerala) (Copy Enclosed) where Hon'ble Kerala High Court held that where pursuant to search and enquiry unaccounted consideration from purchaser had been unearthed, it could not be said that other material already available with Department had been relied upon in proceedings. CIT Vs Kabul Chawla considered. 4. CIT Vs Raj Kumar Arora f2014l 52 taxmann.com 172 (Allahabad)/r20141 367 ITR 517 (Allahabad) where Hon'ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. 5. CIT Vs Kesarwani Zarda Bhandar Sahson Alld. flTA No. 270 of 20141 (Allahabad) where Hon'ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. 6. Kishore Kumar Vs CIT [2015] 62 taxmann.com 215 (SC)/[2015] 234 Taxman 771 (....
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.... under sec. 132(4) admitting that said gift was bogus, impugned addition was to be confirmed. 5. Smt Dayawanti Vs CIT T20161 75 taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/[2017] 390 ITR 496 (Delhi)/[2016] 290 CTR 361 (Delhi) (Copy Enclosed) where Hon'ble Delhi High Court held that where inferences drawn in respect of undeclared income of assessee were premised on materials found as well as statements recorded by assessee's son in course of search operations and assessee had not been able to show as to how estimation made by Assessing Officer was arbitrary or unreasonable, additions so made by Assessing Officer by rejecting books of account was justified 6. M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIQL- 238-SC-IT) (Copy Enclosed) where Hon'ble Supreme Court dismissed SLP challenging the judgment, whereby the High Court had held that statement made u/s 133A could be relied upon for purposes of assessment, in absence of any contrary evidence or explanation as to why such statement made was not credible. M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIOL- 188-HC-MUM-IT) Bombay High Court confirmed (Copy Enclosed....
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....leted the assessment, and allowed relief without inquiring into the claims cannot be accepted. The Assessing Officer has called for the details regarding rent, deductions u/s 24 of the Act, examined them properly and then only completed the assessment proceedings. The ld. PCIT has swayed away from the facts on record, keeping in view, the interest claimed by the assessee u/s 24(b) of the Act which laid to loss under the head "income from house property" on account of the property. The Assessing Officer has duly examined the rental receipt, details of the house property, bank accounts. The Assessing Officer also enquired about statement of affairs and cash flow statement for which it was submitted that the assessee was deriving income from house property and no books of account maintained by the assessee as they were not required to be maintained under any statutory provisions. It was also on record that the assessee has purchased 50% share in the residential house No. 526, Sector -16, Chandigarh for a consideration of Rs. 630,10,020/- out of which Rs. 6 crores the cost of land and Rs. 30,10,020/- is the cost of registration. The source was also inquired into for which the assessee ....
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.... of the property or b. Actual rent received 2. While Section 24(a) allows a standard deduction of 30% to all assessees, Section 24(b) allows deduction of interest paid for construction of house property from the annual value as per Section 22 r.w.s. 23. 176. As the property in question is not a self occupied property as such the provision of Section 23(4) of the Act will apply to this property. As per the summarized provisions of Sections 22-23, Income of such property is chargeable to tax which is higher value of rent received or expected rent. Assuming, but not conceding that the property in question is not let out, even in such case its annual letting value will be subjected to tax under Sections 22-24. Such annual value being undisputedly Rs. 8,80,000/-, full deduction u/s 24(a) of the Act of Rs. 2,64,000/- and Section 24(b) of Rs. 42,25,000/- will be allowable and the resulting loss under head house property of Rs. 36,09,000/- will be fully eligible for set off from other heads of income. Thus, the action of ld. PCIT would be a revenue in neutral exercise. 177. Thus, after examining the issue in detail, keeping in view the inquiries conducted by the Ass....
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....hich Rs. 7,00,000/- was paid as advance, and the above said property was sold on 13.12.2012 for Rs. 100,50,000/- resulting into a profit of Rs. 50,00,000/- which was disclosed in the return of income. 184. From the above questionnaire of the Assessing Officer and the reply of the assessee, we hold that the Explanation 2 of Section 263 of the Act is not applicable. 185. Regarding the prejudice caused to the Revenue, we find that the total income of the assessee is Rs. 160,06,950/- against the gross total income of Rs. 160,16,948/-. The tax has been paid at the maximum marginal rate. No deduction have been claimed by the assessee except Rs. 10,000/- under Chapter VIA. The assessment was completed on 23.12.2016 by which the provisions of Section 115BBE of the Act inserted by the Financial Act, 2012 w.e.f. 01.04.2013 are applicable wherein the tax is to be calculated on income referred in Section 68, 69, 69A, 69B, 69C & 69D of the Act is at the rate of 30%. Since, the assessee has paid tax at maximum marginal rate cannot said that there is any prejudice caused to the Revenue. 186. Since, the matter has been fully inquired into and no loss of revenue could be established and no....
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.... did not make any enquiries at all regarding issues dealt with by the CIT and during enquiries by CIT it was found that such non enquiry lead to loss to revenue. As such, the HC held that the CIT was correct in invoking powers u/s 263 as the AO had failed to seek any details/conduct any enquiry from assessee. In the present case, all issues raised by the PCI T were enquired upon by the AO during the course of assessment proceedings and as such the decision relied upon by PCIT which is related to a case of total lack of enquiry would be distinguishable on facts. The Delhi HC in case of DIT vs Jyoti Foundation [2013] 357 ITR 388 in Para 14 has held that decision in case of Gee Vee Enterprises (supra) would only apply in case of total lack of enquiry and has to be distinguished in other cases. 3. Delhi HC in CIT vs Toyota Motor Corpn [2008] 306 ITR 49 (Del) In the said case, the HC held that the penalty order of the AO merely mentioning that penalty proceedings were being dropped was cryptic and erroneous as it could not be seen from the assessment records that he had conducted due enquiries. It was held that the ITAT had itself assumed that AO had bonafide reasons for ....
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....ailable during assessment. Since, there is a lack of finding of order being erroneous and instead reliance is placed on suspicions of wrongdoing, it is submitted that case law relied upon by PCIT is distinguishable in the present case. 6. ITAT Kolkata in the case of Subhlakshmi Vanijya Pvt Ltd & Others vs CIT & Others, [2015] 43 ITR (Trib.) 489 (ITAT Kol) In the said case, assessment order u/s 147 of the AO was found to be erroneous by CIT as A.O. had only obtained confirmations fromk only 8 out of 21 shareholders to whom the assessee had issued share capital at huge premium of Rs. 490/- and because AO had not verified huge investment of 8 crores made by assessee in different private companies. The ITAT held that the AO had failed to conduct enquiries as to why assessee company had issued premium at huge amount and further invested same in different other companies and since the modus operandi was similar to the Bogus share capital scam, the order u/s 263 of CIT was correct as order of AO was passed in undue haste. The present case is of a trust the A.O. has raised all possible issues in his show cause notices and full compliance to same was made by assessee with ....
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....4 Taxman 21(Kerala)/[2017] 390 ITR 131 (Kerala) • DR. A.V. Sreekumar Vs CIT [2018]90 Taxmann.com 355 (kerala)/[2018] 253 Taxman 428 (Kerala)/[2018] 404 ITR 642 (Kerala) • CIT Vs Rajkumar Arora [014] 52 Taxmann.com 172 (Allahabad) / [2014] 36 ITR 517 (Allahabad) • CIT Vs Kesarwani Zarda Bhandar Sahson Alld. [ITA No 270 of 2014] (Allahabad) • Kishore kumar Vs CIT [2015] 62 Taxmann.com 215(SC) /[2015] 234 Taxman 771(SC) • Bhagirath Aggarwal Vs CIT [2013] 31 taxmann.com 274 (Delhi) / [2013] 215 Taxman 229 (Delhi) / [2013] 351 ITR 142 (Delhi) • Video Master Vs JCIT 66 Taxmann.com 361(SC)/[2015] 378 ITR 374 (SC)/[2016] 282 CTR 221 • B. Kishore Kumar Vs CUT (62 Taxmann.com 215, 234 Taxman 771 • Bhagirath Aggarwal Vs CIT ( 31 taxrnann.com 449) Madras High Court confirmed • CIT Vs M.S. Aggarwal [2018] 93 Taxmann.com 247 (Delhi) • Smt. Dayawanti Vs CIT [2016] 75 Taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/[2017] 390 ITR 493 (Delhi)/[2016] 290 CTR 361 (Delhi) • M/s Pebble Investment and Fiannce Ltd. Vs ITO (2017-TIOL-238-SCIT) • ....
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....proceeds of share issue. The AO did not examine or call on record any of the officials of said share subscribers and as such the High Court held as under in Para 24(d): "we are emboldened to say that the three requirements: (A) identity of the share-holders; (B) genuineness of the transaction and (C) the creditworthiness of the share-holders repeatedly impressed, by Mr. Poddar, upon us, have not been satisfied. Identity of the alleged share-holders is known but the transaction was not a genuine transaction. The transaction was nominal rather than real. The creditworthiness of the alleged share holders is also not established because they did not have any money of their own. Each one of them received from somebody and that somebody received from a third person. Therefore, prima facie, the share-holders are mere name lenders." 192. The court in Para 28 while holding the order of the CIT u/s 263 to be valid, made the following observations: "in the present case we have tabulated the evidence which was before the assessing officer which should have provoked him to make further investigation. The assessing officer did not attach any importance to that aspect of the ....
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.... AO had not made necessary enquiry regarding taxation of the excise refund, passed an order u/s 263. The Allahabad High Court while deeming the order of the CIT u/s 263 to be valid observed as under: "The Income-tax Officer had accepted the claim erroneously and that too without making proper enquiries." 197. However, we observe that in the present case, no observation regarding any erroneous claim of the assessee has been made by the learned PCIT. Further, the issues raised by the PCIT in his order had already been enquired upon by the AO and the PCIT has failed to point any error or falsity in such enquiry. Hence, this case law is not applicable of the instant case. 198. Referring to the decision of Hon'ble Supreme Court in the case of Amitabh Bachchan (supra), the learned DR has correctly mentioned that in the said case the Court laid down that the CIT while exercising powers u/s 263 is not bound to be confined to the issues stated in his show cause notice and that the mandate of the provisions of law is restricted to only giving an opportunity of being heard to the assessee. These observations can be found in Para 14 of the Hon'ble Court's judgment. ....