TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 1179
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....he 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 conjectures. 1.6 That learned Principal CIT has erred on facts and in law in alleging....
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....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 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 ....
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.... 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 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....
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....ue 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 assessment proceedings." 5. In ITA No. 1598/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....
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....e 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 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 a....
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....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 Kumari Member AAWPG9894J 55, Model Town, Ambala City 5. Meenakshi Garg Member ADPPG1352H 55, Model Town, Ambala City 6. Inderpal Garg Member AGDPP3796P 59, Sector-9, Ambala City 7. Anuradha Garg Member AJRPG5971G 55, Model Town, Ambala City 9. The family tree of trustees. 10. Assessment order u/s 143(3) r.w.s. 153A(l)(b) was passed by the Assessing Officer on 30.12.2016 allowing benefit of deduction u/s ll(l)(a) and also allowed deduction on account of fixed assets considered as applied towards income from properties held for charitable purpose....
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....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 State have been violated, and the Assessing Officer has not obtained the list of students during the assessments nor conducted proper enquiries about violation of MCI guidelines, the assessment order is liable to be set aside on this ground. 16. Before us, during the hearing, the ld. AR has repeated the arguments taken before the Assessing Officer and the ld. PCIT. The ld. DR has filed written submissions on this issue vide para 5 and argued that the statements of the parent of the students were recorded u/s 131(1) of the Act which proved that the students admitted in NRI quota were without NRI status of any off the family members. He has taken us to the statements of the students at page no. 282 to 341 of the paper book. ....
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....ing 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 differ much but, any action in the part of the trust which against any other rule would make it ineligible for the benefits accorded by the Government. We find that it was not in dispute that the foreign exchange received has been duly credited in the books or not. 21. Keeping in view, the facts that the Assessing Officer has duly examined the issue and there is nothing on record regarding receipt of any unaccounted monies, and as per the MCI guidelines which allow the wards of the NRIs to be admitted under the NRI quota and keeping in view the fact, that anything prejudicial to the interest of Revenue has been brought by the ld. PCIT, we hereby hold that no action u/s 263 of the Act is called for on this ground. Payments for vehicles 22. The ld. PCIT held that as ....
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....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 OBC-010 16.07.2011 Cheque no. 001755 received from the New India Assurance Co. Ltd. claim of HR-37B- 8342 5820 OBC-010 26.03.2012 Repair & maintenance The New India Assurance Co. Ltd. claim of HR- 09F-0006 8690 OBC-010 14.09.2012 Excess amount of Audi car insurance paid to the New India Assurance refund through NEFT 72639 - OBC-010 14.09.2012 Excess amount of Audi car insurance paid to the New India Assurance refund through NEFT 2329 - OBC-010 22.10.2012 Chq no. 446199 Excess of Insurance amount wrongly received in SB1 instead of MMU 74968 OBC-010 15.03.2013 Repair & maintenance- NEFT The New India Assurance 172144 OBC-010 15.03.2013 Insurance Innova 0006 Chq. No. 905952 19626 O....
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....edger 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 be matter of revenue concern as long as no unaccounted income is determined or tax evasion is pointed out, which is absent in the order of the ld. PCIT. Hence, it cannot be said that Sh. Tarsem Garg in any way benefited by the trust in purchase of the vehicle in his own name. We hereby hold that the order u/s 263 of the Act cannot be upheld on this ground. Salary to Teachers: 29. The entire portion of the ld. PCIT's order on this issue is as under: "5.4 Salary paid to the teachers: The AO has not conducted proper enquiries in respect of payment of salaries as mentioned in para 6.4 to 6.14 of the questionnaire dated 29.11.2016 issued by him. He has merely obtained the submissions of the assessee trust in the matter and kept it on record." 30. During arguments before us, the ld. AR submitted his arguments in writing which are as under: "The learned PCIT ha....
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....own 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 Further, based on information gathered during the course of search & seizure and information received from the MCI, Punjab summons have been issued by this office to 24 doctors for personal attendance, whose are associated with the your trust/group as Assistant Professor/Professor. The name of the faculties, whom summons were issued by Investigation Wing 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. Gurdeep Singh 9, Hem Bagh, Patiala, Punjab 22.01.2016 Reply received 3 Dr. Chander Mohini 58, Ajit Nagar, Patiala, Punjab 22.01.2016 Reply received 4 Dr. Devinder Jit Singh Walia Dr. Walia's Clinic, Pakhowal Road, Green Field, Ludhiana 22.01.2016 Statement recorded on 09.02.2016 5 Dr. Rajeev Aggarwal 1-E, New Lai Bagh Colony, Opp. Polo Groun....
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....ab 22.01.2016 Statement recorded on 05.02.2016 2 Dr. Devinder Jit Singh Walia Dr. Walia's Clinic, Pakhowal Road, Green Field, Ludhiana 22.01.2016 Statement recorded on 09.02.2016 3 Dr. Rajeev Aggarwal 1-E, New Lai Bagh Colony, Opp. Polo Ground, The Mall, Patiala 22.01.2016 Statement recorded on 05.02.2016 4 Dr. Kulwant Singh 11-D, Kichlu Nagar, Ludhiana, Punjab 22.01.2016 Statement recorded on 25.02.2016 5 Dr. Shyam Sunder Sood H.No. 930, Sector 40-A, Chandigarh 22.01.2016 Statement recorded on 02.02.2016 6 Dr. Dinesh Kumar Sharma H.No. 9760, UCO Bank Street, Ludhiana 22.01.2016 Statement recorded on 01.02.2016 7 Dr. Amit Kapila 8, Malwa Colony, Patiala, Punjab 22.01.2016 Statement recorded on 02.02.2016 8 Dr. Rajeev Kumar Jain H.No. 1157-C/32-B, Chandigarh 03.02.2016 Statement recorded on 29.02.2016 9 Dr. Rupinder Singh 62/10-A, Chandigarh 03.02.2016 Statement recorded on 15.02.2016 10 Dr. Praveen Mohan H.No. 1886-A, Sector-21 (Partill) Behind Alchemist Hospital, Panchkula 03.02.2016 Statement recorded on 15.02.2016 11 Dr. Ajata Shatru Ka....
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....us salary. Of course ghost teachers are one of such methods through which the bogus expenditure (in the shape of salary) has been claimed. In this regard, this office collected information (refer to above table) wherein the MMUT has paid salaries, to such doctors who have been identified by the PMC as ghost teachers working in various private Medical Colleges. vi. As per the information of PMC, narrated in the above noted table, some of the doctors have denied having worked for the group (i.e. MMUT) vii. During the course of statement before this office some of the doctors have admitted that they have not taken any classes in the relevant periods, but they have received salary. viii. In some of the cases even they are also not aware of the terms and condition of their appointment. Most of the doctors are also residing in their home town i.e. 70 to 100 KM away from Mullana/Kumarhatti. Keeping in view of the above detailed discussion regarding issue of ghost teachers, it is clear that you have manipulated the expenditure by way of bogus/excess salary paid to ghost teacher/doctors. In this connection, you are requested to explain it with substantial documentary evidence, i....
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....t is surprised to note that the Doctors working in Mullana (Ambala) and Solan (H.P.) are declared as ghost faculty only on the basis of fact that they are registered with Punjab Medical Council. It is not mandatory for the faculty to have registration with each State Branch of Medical Council if they are already registered with one State branch. It is also a point of question that in case, any faculty member resigns from MM Medical College & Hospital at Kumarhatti- Solan and joins MM Institute of Medical Sciences and Research, Mullana, is he required to have registration with Haryana Medical Council before joining without getting NOC from Himachal Pradesh Medical Council or not? Is he required to have registration time and again with each State Medical Council at every instance of joining in every state or he can join in other state immediately after submitting request to have registration with the new State Medical Council without waiting for issuance of registration certificate? Further, most of the faculty members are retired from Govt, sector and residing at the College campus. Only on the basis that they are registered with Punjab Medical Council are considered as gho....
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....the money through bank transfer in his SBI saving account. Copy of PAN, qualification, relieving letter, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page no .1.6.3Rajeev Aggarwal, S/o late Dr. N.D. Aggarwal, aged 61years, R/o 1-E, The Maill, Opp. Polo Ground, Patiala With reference to payments made to doctor Rajeev Aggarwal, who had been working in MM Institutes of Medical Science and Research Mullana as professor in orthopaedics department since 2008 to November 2014. His statement was recorded by Investigation Wing on 09.02.2016. In reply to question no 10, he has admitted that he has worked for MMU group till Nov. 2014 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 detail has been shown in his bank statements. Copy of PAN, qualification, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page no.1.6.4 Kulwant Singh, S/o Sh. Sardar Pratap Singh, aged 57years, R/o 11/D, Kitchlu Nagar, Ludhiana With reference to payments made to doctor Kulwant Singh, who had been working in MM Medical College....
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.... sheet of the above said faculty is attached at page no .1.6.7Amit Kapila, S/o Sh. A.K. Kapila, aged 38years, R/o 8, Malwa Colony, Patiala With reference to payments made to doctor Amit, who has been working for MM Institute of Medical and Research, Mullana as assistant professor/ associate professor in the department of Orthopedics from 18.08.2009 to 19.01.2015. His statement was recorded by Investigation Wing on 09.02.2016. In reply to question no 10, he has admitted that he was working in orthopedics department, MMU, Mullana from August 2009 to January 2015, which is same as per our books and records. Copy of PAN, qualification, relieving letter, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page no . 1.6.8 Rajeev Kumar Jain, S/o Sh. Ratan Lai Jain, aged 41years, R/o 1157-C, Sector-32B, Chandigarh With reference to payments made to Doctor Rajeev Kmar Jain, who has worked in MM Institute of Medical Science & Research Mullan, as assistant professor from 16.05.2011 to 20.05.2012 and as associate professor from 21.05.2012 to 30.06.2015 resigned from his duties w.e.f. 30.6.2015. His statement was recorded by Investigati....
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....rom 01.01.2013 to 30.06.2015 and has resigned from his duties w.e.f. 30.06.2015. His statement was recorded by Investigation Wing on 09.02.2016. In reply to question no 10, he has admitted that he was working in MMU, Mullana from 01.01.2013 to 30.06.2015, which is same as per our books and records. Copy of PAN, qualification, relieving letter, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page no . 1.6.12 Vishal Kharbanda, S/o Sh. Narender Kumar Kharbanda, aged 43years, R/o H.No. 25A, Bharpur Garden, Opp. New Moti Bagh Palace, Patiala With reference to payments made to doctor Vishal Kharbanda, who has worked in MM Medical College & Hospital Kumarhatti, Solan as a assistant professor form 01.01.2014 and resigned from his duties w.e.f. 01.07.2015. 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, Kumarhatti Solan from 01.01.2014 to 30.06.2015, which is same as per our books and records. Copy of PAN, qualification, relieving letter, Form 16 (Salary Certificate) and copy attendance sheet of the above said faculty is attached at page n....
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....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 . 1.6.17 With reference to payments made to doctor Anand Kumar Jindal S/o Sh Bhagat Ram Jindal r/o H No 1, Sector, Jail Land, Ambala City, who has been working in MM Institutes of Medical Science & Research Mullana as an assistant professor from 01.07.2010 to 31.12.2015 and again joined his job w.e.f 01.08.2016. He has already submitted his reply to department as also mention in para 6.11 of your questionnaire. 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 . 1.6.18 With reference to payments made to doctor Naresh Garg S/o Sh Prem Paul Garg r/o H No 7, Dhillon Marg Town, Patiala, who has been working in MM Institutes of Medical Science St Research Mullana as senior resident / assistant professor from 01.12.2010 to 31.01.2015. He has already submitted his reply to Investigation Wing as al....
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....g 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 . 1.6.23 With reference to payments made to doctor Barinder Pal Singh S/o Sh Harbir Singh r/o H No 410 R, Model Town, Ludhiana, who has been working in MM Medical College & Hospital Kumarhatti, Solan as senior resident/ assistant professor from 01.03.2013 to 28.02.2015. He has already submitted his reply to Investigation Wing as also mention in para 6.11 of your questionnaire. 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 . 1.6.24 With reference to payments made to doctor Gurdeep Singh S/o Sh. Udham Singh, who has been working in MM Institute of Medical Sciences & Research Mullana as professor from 08.09.2008 to 30.04.2014. He has died and not possible to give his statement or affidavit to department. Copy Qualification, copy of PAN, copy of joining report, relieving letter, Form 16 (Salary Certif....
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....erence to observation of PMC that some doctors have parallel entries in the same month from two different sources of work in two different towns, that not even a single such instance was provided to us wherein a doctor is employed in two Colleges in the same month as such their no truth in the allegation. Further your honor has observed that department has 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 upto and from journey in a day. This is totally allegation and in contrary to your observation under para i) above wherein you have stated that some of the doctors are residing around 70-100Km from college campus. It is submitted that it is a normal practice adopted by the employees to daily commute for such a distance not only in Medical College rather in Income Tax Department and all other Government offices. There is no justification in such allegation. Though no specific instance was given where daily commutation is from a much larger distance, however it is important to mention that majority of faculties are residing at college campus, they have always two addre....
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....ply and depicted under sr. no. . vii. With reference to your observation that some of the doctors have admitted that they have not taken any classes in the relevant periods but they have received salary, it is strongly denied. Before commenting on this observation it is submitted that as a principle of interpretation it is neither expected nor desirable to pick certain phrases from a statement. The statement of any person has to accepted or read as a whole. Assessee understand that there is only one statement of Dr. Devinder Singh Walia recorded on 9.2.2016 by Investigation Wing who was employed at Medical College Solan in between 1-3-2013 to 27-10-2014 as Assistant Professor and Senior Resident from 28-10-2014 to 28-2- 2015 and after that he had resigned. In reply to Q.14 he has stated that "I have not taken any class since the medicine classes are supposed to be taken in the 4" year of MBBS but because the college has just started with the first year therefore no classes were required to be taken by me. However, he was regular in attending Hospital during the working in MMU Kumarhatti. Thus the concerned Doctor himself has clarified the context of not taking class in 1st year ....
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....ce of the doctors and their declaration the amounts received from the assessee trust by the doctors in their ITRs have all been submitted before the Revenue authorities. Considering all the facts, we hold that no case of the assessment order being erroneous so far as it is prejudicial the Revenue can be made on this ground. The Assessing Officer during the proceedings has had full application of mind before coming to the conclusion that no undisclosed income can be determined on this issue. Moreover, in the absence of any prima facie evidence that the amounts paid have been received back by the assessee trust, no action under the provisions of Section 263 of the Act is attracted. Other Benefits to trustees: 37. The entire portion of the ld. PCIT's order on this issue is as under: "5.2.5 Other benefits taken by trustees from MMU trust: During the search, it was found that there are number of servants working at the residence of Sh. Tarsem Garg, Sh. Sanjeev Garg & Sh. Vishal Garg. Their statements were recorded and it was found that most of the servants are employees of assessee trust but providing the services at the residences of the trustees. The AO has accepted the submissio....
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....and xi 19-9-2014 he was paid a salary of Rs. 3,307/- by the Trust and was relieved from MMU. Thereafter he joined at the residence of Sanjeev Garg and no salary thereafter was paid by MMU. In reply to QNo.2 Goverdhan Singh confirmed the above fact that for last 1 ½ month he was working with Sanjeev Garg and before that at MMU. A certificate from MMUT along with salary payment filed before AO during assessment proceedings is attached at page 460-461. No payment was made by MMU for working at residence of Sanjeev Garg as such no contravention to any provisions. iv. Suraj Kishan son of Charan Pass who is acting as a Driver and is being paid Rs. 7500/- per month. The salary paid to Suraj Kishan is personal expenditure of Sanjeev Garg. No payment to Suraj Kishan was paid by Maharishi Markandeshwar University. As such no benefit is derived on this account by Sanjeev Garg. A certificate from MMU that no salary is paid for Suraj Kishan is attached at page 461. v. Som Nath son of Kartar Ram In fact as per the statement of Som Nath who works as Mali at Maharishi Markandeshwar University where he draws a salary of Rs. 5,100/- per month. That apart from above he maintain flower....
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....t a person was called to assist Income Tax Staff and that too was used otherwise. Your attention is further invited to the fact a similar show cause notice was issued by AO under Para 5.4 page 25 of the questionnaire dated 6.10.2016 (copy attached at page 464) and in response to the same assessee has filed a detailed reply dated 25-10-2016 and 5-12- 2016 (copy attached at page1916-1939) and after considering the correct facts and explanation the learned officer has taken a one possible view." 40. From the above, on a concurrent reading of the questionnaire issued the Assessing Officer dated 06.10.2016 (page no. 159), reply of the assessee dated 05.12.2016 (page no. 239), statements of the driver, security guard and watchman, we find that the provisions of Section 263 of the Act and Explanation 2 of Section 263 of the Act are not applicable to this ground. Construction payment made to Sh. Tarsem Garg 41. The ld. PCIT held that the contractual payment of Rs. 29,71,865/- made to Sh. Tarsem Garg cannot be allowed as the payments received from the trust have been withdrawn immediately and also for the reason that Sh. Tarsem Garg is not a regular contractor but Chancellor of the ....
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.... monthly rent of Rs. 20,000/- (approx.) which is received through cheque. Two rooms of front side first floor and one room at Ground Floor (Front Side) is let out to M/s M.M. University Trust. Q. 41 In reply to question no. 37, you have stated that three rooms (two on first floor & one on ground floor) is let out to your university trust by you at your property situated at 55, Model Town, Ambala. But during physical search of these rooms, it is found that double-bed-exercise cycle (ground floor) and other house hold things are lying in these rooms. Please explain how these rooms are used by M.M. University Trust in these conditions? Ans. These rooms are used by M.M. Education Trust for staying of its guests. In one room Fax-Cum-Photo Copier- Cum-Phone machine is installed. Whenever any phone call or fax is received here, then Sh. Sanjay Kumar handle these things. Sh. Sanjay Kumar is employee of M.M. Education Trust. Q. 42 Please state how many guests usually stay here in a month (guest of M.M. Education Trust) and also state whether any record of this is being maintained or not? Ans. At present, it is not possible for me to tell how many guests of M.M. University Trust ....
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....nce, the arguments of the ld. DR that the rent paid was in excess of market rate cannot be held to be valid. Further, the rental premises leased from Ms. Santosh Garg were used as urban slum centres at Vikas Vihar, Ambala to MM Medical College. Under these circumstances, its futile to say that that the Assessing Officer has not inquired into the issue and hence the provisions of Explanation 2 to Section 263 of the Act are not applicable. Since, the premises found to have been let out as office cum guest house, residence of the Director General and urban slum centres, keeping in view, the fact that the rental income have been taxed duly, the perquisite value have been added to income of the occupant and also keeping in view that fact that District Immunization Officer has allotted Urban Slum Centre for the Vikas Vihar premises, we hereby hold that the order of the Assessing Officer is not erroneous so far as it is prejudicial to the interest of the Revenue on this ground. Interest paid to trustees 49. The entire part of the order of the ld. PCIT on this issue is 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. 2014-1....
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....s of MMUT is attached and a summarized as under: 7.2 Tarsem Garg: In AY 2010-11 a sum of Rs. 90,00,000/- was received from him on 3-4-2009 and the same was deposited in OBC Account No. 51822011002927 and the same was immediately used for repayment outstanding Loan totaling Rs. 1,47,10,000/-. Similarly Rs. 5,00,000/- and Rs. 15,00,000/- was received from him on 15-12-2009 which was again deposited in the same OBC Account and the same was adjusted against OD account immediately as on that date a sum of Rs. 68,57,116.90 was payable to bank. During the year Interest of Rs. 12,83,424/- was paid to Tarsem Garg and the same was included in his Income Tax return. In AY 2011-12 a sum of Rs. 8,00,000/- on 6-4-2010 was received and deposited in same OBC Account and the same was used in clearing different payments Outstanding. A sum of Rs. 7,00,000/- and Rs. 60,00000/- was received on 19-8- 2010 and the same was adjusted in outstanding OD of Rs. 2,29,88, 829.06/- from OBC Account. Deepika Garg: In AY 2009-10 a sum of Rs. 26,00,000/- was received from on 14-7-2008 and the same was deposited in SBI Account No. 30402893812 and the same was immediately adjusted against the SBl Term Loan Inst....
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....ding loan, adjustment against OD account, payment of outstanding dues, repayment of SBI term loan installment etc. Thus, it is proved that the loans have been taken from the trustees for meeting immediate purposes of the trust and meet up the impending financial requirements. Further, the ld. PCIT observation that depositors have not furnished their personal balance sheet in their assessment is also not correct, since, is source of deposit in bank account of these individuals stands examined by the Assessing Officer during the assessment proceedings. Hence, the ld. PCIT conclusion that the trustees have been benefited by way of receipt of higher interest cannot hold good. Hence, no action u/s 263 of the Act is called for on this ground. Salary paid to Trustees 53. The snap shot of the salaries is paid to the trustees is 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 Garq 24,00,000 29,50,000 33,60,000 63,60,000 63,60,000 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 1,2....
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....observations Fact Remarks 1. Ms. Deepika Garg is simply B.Tech She is B.Tech, M.Tech, PhD No question was put to Ms. Deepika Garg by revenue 2. Sh. Vishal Garg, He is B.Tech, M.Tech, PhD Working as CFO 3. Sh. Sanjeev Garg B.Tech Incharge of general administration and Secretary of the University 4. Smt. Meenakshi Garg She is MBA, M.Sc, Phd SAP analyst 5. Sh. Tarsem Garg Job-Chancellor Paid marginally higher than Vice Chancellor 58. In the case of Ms. Deepika Garg, the biometric attendance, time table of IT department in MM Engineering College has been submitted before the authorities which has been perused by us too. 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 observatio....
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....n details were submitted by the assessee vide reply dated 07.04.2015 for FYs 2009-10 to 2013-14, the summary of which is as under: These details are unverified details and no supporting documents were found or furnished during the proceedings. In reply the AR submitted that there are 1060 rooms in these 4 hostels which are known as Hostel no. 10, 11, 12 & 13. It was further submitted that the amount of Rs. 24.40 crore was offered in the hands of 3 co-owners for taxation under the head Income from House Property. On the basis of the bank accounts the assessee has prepared 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 a....
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.... 31,000 21,000 2014-15 32,000 28,000 2015-16 32,000 28,000 It was also submitted that if the depreciation is taken into account the return on investment will be lower. 5.6.2 The submission of the AR was considered. It is noted that even if allowance on account of depreciation is allowed to the assessee then also the return on investment is more than 30%, which is totally unrealistic. Further, there is no 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....
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....ostel fee during FY 2012-13 relevant to AY 2013-14 remained unexplained. Further, as per the details of mess charges furnished by the AR about 300 persons only are staying in hostel no. 13 during AY 2013-14 and AY 2014-15. But on perusal of the number of students in the table, it may be seen that number of students, on completion of hostel no. 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....
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....s rent receipt shown by the co-owners has no veracity. In view of the facts discussed as above, it is apparent that the hostel rent which has been transferred to the co-owners by the assessee trust did not reflect the true picture and the fund has been diverted by the assessee trust in garb of hostel 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 poin....
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....hat the cost of contruction has been altered against the interest of the revenue no action u/s 263 of the Act is invited. Not referring to DVO as suggested by the Investigation Wing in their report cannot make the assessment a subject matter of 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 a....
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....ng huge payments to various mess contractors and other contractors after deducting TDS. The details of total expenses claimed against mess contractors in the last six years are as under: Nature of Expenses A.Y. 2009-10 A.Y. 2010-11 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 i....
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.... 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 not been able to substantiate the genuineness of his....
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....t. 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 persons namely Jit Singh, Dinesh Chand, Jagga Singh attended this office in response to the summons issued. Their ....
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....dn'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 which are listed as 1 to 8 in para no. 1.1 of the show cause notice. In answer to question no. 13, 14 & 25 recorded on 30.12.2014, ....
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.... 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 expenditure. In answer to question no. 13 he has submitted that he has no idea about the income tax return filed by him. In answer to q....
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....bove 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 statements were confronted to Assessee by AO and assessee has obtained an affidavit from Dinesh Chand dated 8/11/2016 and filed to DCIT CC Karnal and copy attached at page 314- 315. 86. In fact, during search/post search statement of Mess contractors were recorded wherein they have....
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....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 to workers and the activity performed by them. He has given the names and permanent residence of these workers and in reply of QNo.9 and also detail of monthly salary paid to these workers were given which amounted to about Rs. 29,000/- per month. In Reply to QNo 14 he has provided ....
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....esh 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 Income of Ramesh Chand is attached at page 582. Late Sarwan Singh son of Hakam Ram VPO Dehlan Tehsil and District Una (Himachal Pardesh) having PAN: BHRPS7345M. With reference to payment to Mr Sarwan Singh, it is submitted that he was working as mess contractor during AY 2009-10 to AY 20....
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....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 working in MMU Mess no. 7 and prepared the food and serve to the students and he is working here since 2008. 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 15 years. In reply to Q No. 4 he has stated that he got....
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.... 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 from several contractors including Sh. Anuj Kumar. However, such person was not related to any of the trustees and neither any financial transaction was entered with him by any of the trustees. 106. A sweeper wise report of the sweepers supplied by Anuj Kumar and copy of bill for December 2013 and Jan....
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....i 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 letters of such payments for construction work for the AY 2009- 10 and AY 2010-11 is attached at page no 405-415 for your perusal. In last para at page 4 of your show cause notice it was admitted that notice issued to the said party was compiled and reply was received by the office of DDIT. 110. Moreover, such....
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....n 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 that a document has to be read as a whole. For example, the statement of Sh. Dinesh Chand confirms that he is running mess no. 1 having 234 students and getting Rs. 1700/- per month as mess charges per student to provide three meals a day. He explained that he employed 14 workers and the total salary expenses were a....
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....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 held that Sh. Inder Pal Garg had raised a bank loan of Rs. 3,50,00,000/- from the Bank of India against 3rd party guarantee of bank FDR owned by the assessee trust. The amount in question was advanced to Proview Estates Private Limited as unsecured loan by Sh. Inder Pal Garg. The major portion of loan has been re-paid on 01.03.2016 and the OD ....
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....nfirmed 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 - Whether though by virtue of section 2(24)(iia) voluntary contributions are income, but that by itself does not entitle tax authorities to ignore all other well-settled principles of taxation and general law and to levy tax on gross receipts without considering claim for deductions - Held, yes - Whether only surplus or profit can be brought to t....
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....te 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 Garg and interest income of Rs. 33.68 lakh & Rs. 49.28 lakh, accrued on the FDRs for AYs 2014-15 & 2015-16 respectively, given as guarantee by the trust, was shown as income of the assessee trust. 124. The AR also submitted that the conditions mentioned u/s 13 are not satisfied in this case as the property of the trust was not made available to Sh. Inder Pal Garg and no benefit ....
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....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 forms or modes specified in sub-section (5) of section 11; or (ii) any funds of the trust or institution invested or deposited38 before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 continue to remain so invested or deposited after the 30th day of November, 1983; or [(iii) any shares in a company, other than- (A) shares in a public sector company ; (B) shares presc....
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....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 any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services; (d) if the services of the trust or institution are made available to any person referred to in sub-section (3) during the previous year without adequate remuneration or other compensation; (e) if any share, security or o....
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....he 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 relation to any income other than the income arising to the trust or the institution from such assets, by reason only that the funds of the trust or the institution have been invested in such assets if such funds do not continue to remain so invested in such assets after the 31st day of March, 1992.] [(6) Notwithstanding anything contained in sub-section (1) or sub-section (2), but without prejudice to the provisions contained in sub-section (2) of section 12, in the case of a charitable or religious trust running an educational institution or a medical institution or a hospital, the exemption under section 11 or section 12 shall not be deni....
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....nd 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 without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub-section (3); (ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub-section (3) are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.]" 127. In the instant case, we find that the trustees have given personal guarantee for raising loans from the banks and also have mortgaged their residential property for the ....
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....PIL 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 by Assessing Officer was to be upheld. Hence, not applicable to the instant case. 128. Hence, keeping in view, the enquiries conducted by the Assessing Officer from the banks which shows full application of mind on the part of the Assessing Officer , the allegation of the ld. PCIT, the reply of the AR and the arguments of the ld. DR, provisions of the Act in the judgments quoted above, we hereby hold that in the absence of any loss to the trust or benefit to the trustee or loss of revenue, the order of the ld. PCIT cannot be upheld on this ground. Tarsem Garg 129. In ITA No. 2479/Del/2019, the assessee has raised following grounds of appeal: "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 of the asses....
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....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 ITA No. 2481/Del/2019, the assessee has raised following grounds of appeal: "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 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. 2.1 That the learned PCIT has erred in alleging that the rental receipts of 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. 3.1 That the learned....
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....y 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: "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 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. 2.1 That the learned PCIT has erred in alleging that the rental receipts of 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. 3.1 That the learned PCIT has erred in alleging that the receipts of Rs. 33,50,000/- disclosed under head "Income from other sources" were liable to be taxed as income from undisclosed....
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....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 construction receipts have been received for the first time from MMU to which he is the Chancellor. 3. No evidence for purchase of construction material were provided. 136. Before us, during the hearing, the ld. AR has repeated the arguments taken before the Assessing Officer and the ld. PCIT. The ld. DR submitted written arguments and judgments which were common for the appeals in the case of Sh. Santosh Garg (mentioned above in this order) and for that of the assessee. 137. Heard the arguments of both the parties and perused the material available on record. 138. From the records and the arguments, we find that the assessee executed construction contract for MMU Solan received receipt of Rs. 29,71,865/- through cheque made withdrawals of Rs. 28,90,000/- from bank and a surplus of Rs. 81,865/- whereas the returned income declared in the return @8% u/s 44AD of the Act was Rs. 237,749/-. 139. We find that the Assessing Officer vide notice dated 26.07.2016 at para no. 3 as inquired about the profit from busines....
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....ns 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 further deduction under those sections shall be allowed. [***] (3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. [(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1). (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose ....
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....s the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the [Assessing] Officer may condone the delay and treat the return as a valid return. Explanation.-For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely:- (a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in; (aa) [***] (b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return; [(bb) the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report;] (c) the return is accompanied by proof of- (i) the tax, if any, claimed to have been deducted [or collected] at source [***] and the advance tax and tax on self-assessment, if any, claimed to have been paid : [Provide....
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....rs were Nil and the creditors were Zero and the same has been duly mentioned in the return as "0". Hence, the allegation of the ld. PCIT is proved to be not correct. 2. 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. With regard to the withdrawals, it was explained that the same amount has been used for the purpose of execution of the contract works. 3. Assessee is not in the business of construction and the construction receipts have been received for the first time from MMU to which he is the Chancellor. It was submitted that the assessee before becoming the Chancellor of MMU, has been a Government contractor for about 20 years, hence, the allegation of the ld. PCIT is proved to be wrong and against the facts on record. 4. No evidence for purchase of construction material were provided. Since, no books of account need to be maintained for presumptive profits u/s 44AD @ 8%, the assessee has not maintained and withdrawals of amount, the running bills and the payments received adequately support the execution of the work. The ld. P....
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.... by the order of the Assessing Officer. Rental Receipts: (as per the chart at page nos. 104 & 105) 147. The issue is identical to the issue dealt in the case of Ms. Santosh Garg. Hence, the adjudication in the case of Ms. Santosh Garg is applicable mutatis mutandis. Professional Receipts: (as per the chart at page nos. 104 & 105) 148. The relevant portion of the order of the ld. PCIT pertaining to professional receipt is as under: "The assessee had shown Rs. 9,50,000/- under head income from other sources from M/s Nexgen Financial Solutions Pvt. Ltd. ('Nexgen') as per From 26AS u/s 194J of the Act on account of fees for professional & technical services. The said income shown by the assessee was not found to be genuine as per post-search enquiries conducted by the Investigation Directorate. It is pertinent to mention here that summons u/s 131 of the Act were issued to M/s Nexgen Financial Solutions Pvt. Ltd. by the DDIT(Inv.) for producing the bills & vouchers in support of genuineness of such fees for professional & technical services paid to the assessee which remained uncomplied with. Moreover, the assessee is not having any professional qualification/specialization i....
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....y the Assessing Officer while accepting the claim of the assessee and the consultancy fees received but nothing but an accommodation entry to augment the capital of the assessee. He vehemently argued that the amounts are ought to have been assessed u/s 69A of the Act and have to be rightly assessed to tax u/s 115BBE of the Act. 152. Heard the arguments of both the parties and perused the material available on record. 153. Section 69A reads as under: "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition o the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." 154. The issue is being examined with reference to the Explanation 2 of Se....
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....icer. It depends on the facts and circumstances of each case. Where the facts are just ordinary and prima facie there is nothing untoward the recorded transaction, in Such circumstances, the obtaining of the documents and the application of mind thereon, without a further outside enquiry, may mean that the Assessing Officer did conduct enquiry, leaving the question open as to whether it was a proper or an improper enquiry. But, where the factual scenario of a case prima facie indicates abnormalities and cry for looking deep into it, then a mere collection of documents cannot be held as conducting enquiry, leave aside, adequate or inadequate. In such later cases, only when the Assessing Officer, after collection of the initial documents, embarks upon further investigation, that it can be said that he initiated enquiry. Where the facts of a particular transaction cry hoarse about its non-genuineness and even a casual look at such facts, prima facie, divulges foul play, then the alarm bell must ring in the mind of the Assessing Officer for making further examination. Collection of papers on record in such circumstances cannot be construed as conducting a proper enquiry. If in such cir....
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....,600/- has been paid on account of service tax and only an amount of Rs. 916,872/- has been claimed by the assessee towards the expenses. 161. We find that the payee has deducted TDS @10% on this amount. The details of TDS are also filed before the Assessing Officer along with the confirmations of Nexgen. Further, the company Ajnara India Ltd. which has paid the commission on account of booking of flats has submitted before the DDIT(Inv.), the complete details of the project name, flat no., name of the flat owner for whom the assessee has extended the consultancy services and received the consultancy amount. It is also matter on record that the amount has been offered to tax at maximum marginal rate. The ld. PCIT has not given due consideration to the replies filed by the assessee before the Investigation Wing. The observation of the ld. PCIT that the summons issued to Nexgen, Ajnara remained un complied is also misplaced based on the facts on record wherein Nexgen has replied vide letter dated 05.01.2015 and Ajnara Group has replied vide letter dated 19.01.2015. 162. There is no primary evidence or proof before the ld. PCIT to come to a conclusion that the order is erroneous s....
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...., 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." 165. In ITA No. 2476/Del/2019, the assessee has raised following grounds of appeal: "1. That the PCIT has erred on facts and fin law in exercising revisionary powers u/s 253 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. 2.1 That the learned PCIT has erred in alleging that the rental receipts of 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. 3.1 That the learned PCIT has erred ....
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....e 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." S. No. Assessment Year Effective Grounds 1. 2012-13 Rental Receipts. 2. 2013-14 Rental receipts. IOS/69A/115BBE 3. 2014-15 Rental receipts. 4. 2015-16 Rental receipts. 168. Brief facts of the case are that a search operation u/s 132 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 ....
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....or-16, Chandigarh is a residential premises and could not be used for commercial purpose of liaisoning and promotion of sales as stated by Mr. Harish Gupta in his statement. The Assessing Officer did not carry out any enquiry from the tenant, Trishala or third parties to verify the fact that the premises was ever used by Trishala. The financial transaction between the assessee and Trishala appears to be an arrangement adopted by the assessee for capital accretion. It is strange to note that the tenancy is for the period starting from 01.06.2011 to 31.03.2012 and instead of making monthly payment, the entire rent was paid on 27.09.2011 by Trishala to the assessee. It is also noted that Trishala has paid commission to various persons of MMTU group and passed on entries of profit to the group in garb of buying back the flats. The AO has not made proper enquiries in respect of the transactions with Trishala. 170. From the perusal of the order of the ld. PCIT, it can be said that the decision was influenced by the following events: 1. The statement of Harish Gupta, MD of Trishala Group -the tenant 2. The Trishala group has rented some buildings to the assessee trust 3. Rent d....
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....r submitted that Explanation 2 has been inserted in Section 263 of I.T. Act by Finance Act 2015 w.e.f 01.06.2015 which is reproduced below: Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. The case of the assessee is squarely covered by above amendment since the order is passed without making inquiries or verification which should have been made and allowed relief without inquiring into the claim. In the above case, it is humbly sub....
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....& Haryana High Court. Hence, decision of CIT Vs Kabul Chawla is not squarely applicable. In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to validity of proceedings u/s 153A: 1. Satpal Goyal Vs CIT 2016-TIOL-2559-HC-P&H-IT (Copy Enclosed) where Hon'ble P&H High Court held that addition made u/s 68 towards unexplained credits deserves to be sustained, where the assessee has failed to prove the identity of the creditors, their capacity and genuineness of the transactions in the matter. The assessment was made u/s 153A 2. E.N. Gopakumar Vs CIT T20161 75 taxmann.com 215 (Kerala)/f20171 244 Taxman 21 (Kerala)/r2017l 390 ITR 131 (Kerala) (Copy Enclosed) where Hon'ble Kerala High Court held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a). The above order has been passed after considering cases of (i) CIT v. Kabul Chawla [20161 380 ITR 573/120151 2....
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....ns cannot be deleted without proving statements to be incorrect. Reliance is placed upon following judgments to show that additions can be made u/s 153A on the basis of incriminating statements: 1. Video Master Vs JCIT 66 taxmann.com 361 (SC)/[2015] 378 ITR 374 (SC)/[2016] 282 CTR 221 (Copy Enclosed) where Hon'ble Supreme Court held that where addition on account of undisclosed income was based on statement of partner of assessee-firm, it could not be said that addition was based on no evidence 2. B Kishore Kumar Vs CIT (62 taxmann.com 215, 234 Taxman 771) (Copy Enclosed) where Hon'ble Supreme Court dismissed SLP against High Court's order where it was held that since assessee himself had stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. B Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High Court confirmed (Copy Enclosed) 3. Bhagirath Aqqarwal Vs CIT (31 taxmann.com 274, 215 Taxman 229, 351 ITR 143) (Copy Enclosed) where Hon'ble Delhi High Court held that an addition in assessee's income relying on statements recorded during search operations can....
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....rd the arguments of both the parties and perused the material available on record. At the outset, the provisions of Section 263 of the Act stipulates The [Principal Commissioner or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. The fundamental principles underlying the provisions of this Section are that (a) there has to be error the order (b) and the error has to be prejudicial or leading to loss of revenue. 174. Not carrying suitable inquiries which may not carrying out proper inquiry while making the assessment which may lead to loss of revenue can also be a case for revision u/s 263 of the Act. All the decisions quoted by the ld. DR which are mentioned above have bee....
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....the question no. 35 during the statement recorded during the survey u/s 133A of the Act conducted as the business premises of Trishala Build Tech Pvt. Ltd. that their company had taken on rent a building at Chandigarh (owned by the assessee) and paid rent of Rs. 36,00,000/- through cheque and TDS has been duly deducted. The ld. PCIT observation that this rental payment is convoluted is influenced by the fact that the rent has been paid in lump sum which cannot be accepted as a reason for revision of the assessment order u/s 263 of the Act. Any kind of loss of Revenue or non examination of the issue by the Assessing Officer before allowing the claims has not been brought out by the ld. PCIT which was discussed above. Hence, we hereby hold that the order u/s 263 of the Act cannot be upheld on this ground. 175. We also find that the ld. PCIT in sub-para v of para 3.2 of the order ultimately held that "Annual Letting Value (ALV) of the property amounting to Rs. 880,000/- was required to be taxed under head "income from other sources" while holding that the rental income of Rs. 880,000/- shown in respect of the property let out to Trishala was found to be bogus does not stand on any l....
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....sulting into a profit of Rs. 50,00,000/-. 179. The ld. PCIT held that no documentary evidence in support of her claim was furnished by the assessee and the A.O. accepted the version of the assessee without making any further enquiry. In absence of any documentary evidence to prove the genuineness of the said transaction, the income of Rs. 50,00,000/- declared by the assessee should be considered as income from undisclosed sources and was required to be taxed u/s 69A read with Section 115BBE of the Act. 180. The ld. PCIT held that it can be inferred that the assessment order dated 23.12.2016 passed by the Assessing Officer for the assessment year 2013-14 is erroneous in so far as it is prejudicial to the interest of revenue in view of the provisions of Section 263 r/w Explanation 2 of the Act. 181. The ld. AR relied on the submissions given before the ld. PCIT while the ld. DR strongly supported the order of the ld. PCIT. 182. Heard the arguments of both the parties and perused the material available on record. 183. We find that the Assessing Officer vide notice dated 14.07.2016 at para no. 3 as inquired about the booking of plot for Rs. 50,00,000/- and asked to furnish th....
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....d by the ld. PCIT has brought in anything on record to prove the leakage to revenue to the exchequer in the assessment by the way of passing any erroneous order by the Assessing Officer. The facts of the case laws relied and its applicability to the instant case is as under: S.No. Case law Facts of the case Remarks 1. SC in Malabar Industrial Co. Ltd. Vs CIT [2000] 243 ITR 83 (SC) In the said case, the Hon'ble Supreme Court has laid down the law as to what would constitute erroneous order and prejudicial to revenue. The court categorized following orders as erroneous: a) Incorrect assumption of facts b) Incorrect application of law c) Without application of mind d) Without following principles of natural justice Further, the court held that an order would not be held to be prejudicial to revenue if the A.O. had taken a view permissible as per law. The said case law actually supports the case of assessee as neither of the 4 conditions of erroneous order have been shown to be satisfied by the PCIT. Neither there was any incorrect assumption of facts or law nor the principles of justice were violated. The AO has considered all materials held on record, app....
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....s incorrect and no enquiry was done by AO regarding the same, order u/s 263 was as per law. In the present case, the learned PCIT has not brought about any instance of assessee's claim being incorrect. Further, all issues raised by the PCIT were examined by the AO by way of separate show cause notices. As such, clearly this was not a case of no enquiry or incorrect claim, as in the case relied upon by the PCIT, as such the same is distinguishable on facts. Similar observations have been made by Hon'ble Delhi ITAT in Para 37 of its decision in the case of Airports Authority of India vs CIT, [2011] 12 ITR 482. 5. Madras HC in CIT vs Seshasayee Paper & Boards Ltd [2000] 242 ITR 490 (Mad.) In the said case, the CIT held that AO's order was erroneous and prejudicial to revenue as the AO had not conducted any enquiry regarding issues raised in the show cause notice and upon enquiry conducted by CIT himself he concluded that number of claims allowed to assessee were incorrect. The High court held that there had been proper application of mind by CIT and conclusions in 263 order were correct In the present case, the learned PCIT has not pointed out any instance wher....
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....The issue in the present case is not related to computation of any relief but regarding the view of the CIT on various issues raised by the AO during assessment proceedings. The PCIT has failed to show there had been any leakage of revenue in the present case and how the AO had formed an incorrect opinion or had not obtained any relevant detail. Therefore, the said case is clearly distinguishable on facts. 188. During the course of hearing before us, the learned DR has relied upon the following judicial decisions relating to various issues relevant to the present case: * Hon'ble Supreme Court in the case of Deniel Merchants Pvt Ltd. Vs ITO (Appeal No. 2396/2017) Dated 29.11.2017. * Malabar Industrial Co. Ltd. Vs CIT [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1 (SC). * Rajmandir Estate(P) Ltd. Vs PCIT [70 Taxmann.com 124(Calcutta)/[2016] 240 Taxman 306 (Calcutta)/[2016] 386 ITR 162 (Calcutta)/[2016] 287 CTR 512 * Rajamandir Estates (P) Ltd. Vs PCIT [2017] 77 Taxmann.com 285 (SC)/[2017] 245 Taxman 127 (SC) * SwarupVagetable Products Vs CIT [1991] 54 Taxman 175 (Allahabad) / [1991] 187 ITR 412 (Allahabad)/[1990] 90 CTR 113 (Allahabad) * C....
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....alcutta High Court judgment in Deniel Merchants in GA No. 599 of 2016, it is evident that the court has in turn relied upon some of its earlier decisions and held as under: "The assessee seeks to raise certain points of law in this appeal which were subject matters before this Court in four appeals already decided and in all the four appeals it was found that the questions raised were not substantial questions of law. These decisions are Rajmandir Estates Private Limited Vs. Principal Commissioner of Income Tax, Kolkata-lll reported in (2016) 386 ITR 162 (Kol.), M/s. Pragati Finance Management Private Limited Vs. CIT-II in ITAT No. 178 of 2016 which was decided on 7th March, 2017, Success Tours and Travels Private Limited & Anr. Vs. Income Tax Officer, Ward- 9(4) Kolkata & Ors. in ITAT No. 178 of 2015 which was decided on 23rd March, 2017 and M/s. AIM Fincon Pvt. Ltd. Vs. Commissioner of Income-tax, Kolkata-lll in ITAT No.137 of 2016 which is decided today itself." 191. We have examined one of such decisions in case of Rajmandir Estates Private Limited (supra). As per facts of the said case, the assessee company had received share application money from 39 other companies, maj....
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....ent proceedings which was adequate for the AO to have arrived at the conclusion that no additions were warranted on the said grounds. Therefore, clearly it was not the case where there was a lack of enquiry or examination by the AO. 194. Therefore, we hold that the decision of the Supreme Court would have any application in the present case in light of clear difference in the factual position. 195. The judgment of the Caclutta High Court in the case of Rajmandir Estates (supra) as well as subsequent dismissal of SLP by the Hon'ble Supreme Court has already been dealt with by us hereinabove and we it would not apply in the present case in light of difference in the factual position. 196. In the case of Swamp Vegetable Products(supra) relied upon by the learned DR. as per facts of the case as explained by the Hon'ble Court in second Para of the judgment, the assessee did not include excise duty refund as part of its income by claiming that the said amount was refundable to one of its clients, who had filed a suit in court regarding the same. The same was accepted by the AO without any further enquiry. The CIT however on noticing that the amount in question had not been ....