TaxTMI 
TaxTMI 
2021 (6) TMI 446
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....ty. 3. At the first instance both the parties argued the appeal of the Department in ITA No. 27/Chd/2020 for the A.Y. 2013-14. Following grounds have been raised in this appeal: "i. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding the salary payments to the specified persons under section 13(3) as reasonable and justified when the assessee had failed to provide evidence of what work these specified persons were doing and had failed to justify the salaries paid to these specified persons. ii. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding that the onus to prove the excessiveness of the salary/remuneration paid to the specified persons lies on the Revenue Authorities contrary to the decision of the Hon'ble Supreme Court in the case of Commissioner Of Customs (Import), Mumbai vs M/S. Dilip Kumar And Company dated 30 July, 2018 in CIVIL APPEAL NO. 3327 OF 2007, wherein the Hon'ble Apex Court held that the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification, overruling....
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.... viii. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding the interest on unsecured loans paid to the specified persons @ 12% as justified when the Assessing Officer had clearly brought out that the assessee had given out funds to the specified persons under section 13(3) in the form of excessive salary, rent and this was the source of income of these specified persons and also the source of unsecured loans and therefore, it was rightly noted that the funds of the assessee were given out to the specified persons and then a part of it was taken back and interest was paid on this money. ix. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding the interest on unsecured loans paid to the specified persons @ 12% as justified without appreciating the fact that the assessee was paying interest for its own funds and had these funds not been diverted to the specified persons in the first place, there would not be any need for unsecured loans. x. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding the order of the Assessing Officer not right because the ....
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.... operational during 2007-08 and other two schools were operational since long and are recognised with CBSE. Salaries paid to the Sh. G S Sardana, Sanjay Sardana and Sandeep Sardana during the last three years and the current year is as below: Financial Year Sh G S Sardana / Per month Sh Sanjay Sardana/ Per month Sh Sandeep Sardana/ Per month 2010-11 120000.00 186877.00 186877.00 2011-12 156667.00 217583.00 217583.00 2012-13 201333.00 304656.00 304656.00 Sh. G S Sardana is looking after the affairs of the Manav Mangal Schools/Society as its Chairman / Manager and is responsible for the overall conduct of affairs of the Society and its schools. Sh. Sanjay Sardana & Sandeep Sardana are the two directors of four schools of the Manav Mangal Society viz. Manav Mangal Schools located in Chandigarh, Panchkula and Mohali and also of the upcoming school at Zirakpur Dist. Mohali School at Mohali became functional in the F. Y 2007-08. Other two schools as stated above were functional prior to the period 2006-07. Total receipts of the Society and the three schools for the last six years are as below: Financia....
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.... Level. Consolidated list of the awards & appreciations received by Sh. Sanjay Sardana and also by Sh. Sandeep Sardana during the period 2002 to 2015 is enclosed for ready reference. Sh. Sanjay Sardana and Sh. Sandeep Sardana are Principals of Manav Mangal High Schools Sector 21 C Chandigarh and Manav Mangal School Sector 11 Panchkula respectively and were drawing the following salary from the respective schools Particulars of monthly salary Sanjay Sardana FY 2011-12 Sanjay Sardana FY 2012-13 Increase in salary over previous year In percentage terms Basic Pay 51850 53410 1560 3% Grade Pay 12000 12000 0 0 DA 28733 39246 10513 15% increase in DA Total 92583 104656 12043 13% The increase in salary of the Sanjay Sardana & Sandeep Sardana was nominal and comparable to annual increase in salary as in Government service. Increase in Dearness allowance was granted to these two persons as was granted to other employees of these schools. As such there was no abnormal enhancement in salary of the Principals of these two schools who have more than 25 years of experience in the field of education. ....
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.... FY 2010- 11 to Rs. 12,75,69,625/-. The increase in receipts was of Rs. 2,62,33,407/- which was an increase of 25.89% over the previous year. It may thus be noted that Societies total receipts increased from 17,99,89,339/- in 2010-11 to 22,65,47,770/- which give an increase of Rs. 4,65,58,431/- which gave an increase of25.96% over the previous year. It was keeping in view this stellar performance of the three schools that Directors of these schools were granted an increase of salary of Rs. 8334/- per month and the salary as Director increased from Rs. 41,666/- to Rs. 50,000/- per month against the demand of increase to Rs. 75,000/-per school per month. Since both the Directors were further assigned the task of planning the opening of a new state of the art school at Zirakpur, they were given salary of Rs. 50,000/- each by the society for the said purpose. The efforts made by them under the able guidance of Chairman / Manager of the Society have been able to develop this project from drawing board stage and this school is ready for academic session w.e.f 1.4.2016, the admissions for which are already in progress. Had anybody else from outside been....
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.... valid reason that when receipts of the society will increase then salary or other remunerations will also increase simultaneously, if it is an intention then where is charity. These facts show that the members of the society doing efforts for themselves only, not for charity. The details of individual ITR of members show that they are earning income from society through various modes of income as salary, rent, interest etc. The income details of these members are as under- Sr. No. Name A.Y. 2011-12 A.Y. 2012-13 A.Y. 2013-14 1. Arshi Manchanda D/o Shri G.S. Sardana, # 3085 Sector 21 -D, Chandigarh Salary Rent Interest Salary Rent Interest Salary Rent Interest 5,17,407 4,29,000 93,441 6,53,562 4,29,00 0 93,559 7,42,699 4,53,072 1,34,533 2. Ajay Manchanda S/o Late Shri Amir Chand Manchanda, # 3085 Sector -21 .D, Chandigarh Salary Rent Interest Salary Rent Interest Salary Rent Interest 2,40,000 51,655 2,95,000 3,27,500 3. Monica Sardana D/o shri Gian Chaudhary, # 3085 Sector 21 D, Chandigarh Salary ....
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....ncome against the investments and then again invested the same into the society. The chart shows that numbers of the society have diverted 7% revenue from the total receipts of the trust in their hands in this A.Y. 2013-14. This trend is continuing from last many years. This shows that increasing in the salary nothing only for capital investments into their personal hands and society. It is also a fact that salary paid to directors of the trust is high compared to other salaried employees. So reply in this regard is not accepted and payments to these persons are not reasonable and liable for disallowance u/s 13 (l)(c) r.w. 13(3) of I. T. Act, 1961 and taxed u/s 164 (2) of I. T. Act. 4.3 Assessee's reply regarding section 13 (2) and various case laws regarding this duly considered but not accepted because assessee has failed to prove that the amounts paid to specified persons are reasonable and should be allowed u/s 13 (2) of I.T.Act,1961. All these persons are not getting genuine and reasonable salary or payments against the services. The details of the salary paid is as under- Sr. No. Name of the Member AY. 2011-12 A.Y. 2012-13 Increasing A.Y. 2013-1....
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....only was liable for addition not the entire surplus could be brought to tax. The assessee also furnished the chart and track record of salary of the related persons in the following manner: Name of Person Date of Joining Designation Qualifications Experience Sh.G.S. Sardana, Father [13(3)(a)] April 01, 1968 Founder: Chairman M.A.(English), M.A. (Hindi) Retired After serving for approximately 50 years Mrs. Usha Sardana, Mother (13(3)(a)]- author of the founder April 01, 1968 Founder: Staff Welfare Officer Hons. In Hindi (Prabhakar), Intermediate Examination in English from Panjab University Retired After serving for approximately 48 years Mr. Sanjay Sardana [13(3)(d)] August 01, 1986 Principal: Manav Mangal High School, Chandigarh & Director: Manav Mangal Group of Schools M.SC(Gold Medalist), M.Phil. M.Ed 33 Years Mr. Sandeep Sardana [13(3)(d)] October 14, 1988 Principal: Manav Mangal High School. Chandigarh & Director: Manav Mangal Group of Schools B.E.(Hons), PGDCA (Gold Medalist) 31 Years Mrs. Anjali Sardana [13(3)(d)] November 01, 1990 Vice-Principal M.Sc, M.Phil., B.Ed 29 Years Mrs. Mon....
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.... Approximate strength Staff Strength April 1968 Manav Mangal School, Sector-9 Chandigarh May 1975 School Site allotted by UT Chandigarh April 1979 Manav Mangal High School, Sector -21C, Chandigarh 1530 61 December 1988 School site allotted by HUDA April 1993 Manav Mangal School Sector-11, Panchkula 2550 92 August 2005 School site bought from PUDA April 2007 Working of Manav Mangal Smart School Sector-64 SAS Nagar, Mohali begins 3700 145 February 2012 School site purchased from Shipra Estate Ltd on installment basis April 2012 to August 2014 (a) Payment of instatllments to Shipra Estates Ltd. (b) Planning & seeking approvals from GMADA for construction of School Building September 2014 to March 2016 Construction of School building in Shipra Estate Ltd. Zirakpur April 2016 Working of Manav Mangal SMART WORLD, Nagla, Zirakpur begins 2300 97 September 2013 School site bought from DLF, New Chandigarh in installments September 20....
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.... and not benefits. b) AO has not placed on record any comparison that how salary being paid is excessive. The onus lies on AO (Daulat Ram Rawatmull: Page 81) c) As per us the salary is being paid as per experience, qualifications and work profile. AO is not in a position of the management to decide that what is a reasonable salary (Dalmia Cement Bharat Ltd. Page 75) d) On one hand AO is saying that the increase of salary is excessive and then himself disallowing the entire salary thus contradicting himself 6.2. It was submitted that in earlier years, the assessment had been framed U/s 143(3) of the Act and the expenses incurred under the head "salary, rent and interest" had been allowed year after year by the various AO's, therefore, the principle of consistency needs to be applied and the revenue should not have taken 'U' turn all of a sudden. The assessee also relied on the observations made by the revenue/department in the assessment orders of the earlier years which have been incorporated by the ld. CIT(A) at page Nos. 17 to 20 of the impugned order, for the cost of repetition, the same are not reproduced herein. The assessee also furnished a wr....
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.... 11- Commissioner (Appeals) as well as Tribunal opined that having regard to fair market value of property, rent paid was not excessive-Moreover, rent had been valued as per prevailing rate fixed for purpose of stamp duty- According, disallowance made by Assessing Officer was deleted- High Court upheld order passed by Tribunal- Whether on facts, SLP filed against deduction of High Court was to be dismissed- Held, yes in favour of assessee.' The copy of the judgement is enclosed at pages 1 to 3 of the paper book. 3. In fact, in the Assessment Year, the Assessing Officer has disallowed the entire rent being claimed as deduction and denied the exemption u/s 11, which is contrary to the facts and circumstances, when on similar facts and circumstances, the issue have been decided in favour of Assessee in the earlier years in the order u/s 143(3) and now there is a binding judgment of the Hon'ble Apex Court. 4. Your goodself's attention is invited to the judgement of 'Hon'ble Apex Court' in the case of Queen's Educational Society V/s CIT as reported in [20151 55 taxmann.com 255 (SO, in which, it has been held as under: '....
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.... no incriminating material was found during the search that any excess salary was paid to the Chairman, the addition was deleted as per finding given in para-17 pages 46 to 48 of the judgement. In view of the above said facts and circumstances, these submissions may, please be considered and oblige. 2. We have substantiated and filed a paper book before your goodseif that in the similar schools, there has been Administrator, Director and Principal and other Posts as well and their justification for the same has been submitted to your goodself and, now, we are submitting herewith the following evidences of the schools at Chandigarh and adjoining areas i.e. at Mohali, where there are schools, where different persons have been appointed i.e. Chairman, Managing Director, Director, Administrator, Vice Principal and which evidences are as under:- 1. Doon International School. Chandigarh There Is post of Director Education and Managing Director Apart from Principal 1-4 2. Smart Wonder School, Mohali There is post of Director and Principal 5 3. Ashiana Public School, Chandigarh 6-7 There is post of Director and Principal ....
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....he salary would have to be paid but it was thought advisable to give Sh Sanjay Sardana and Sandeep Sardana additional duties as they were found to be dependable and responsible which required their lot of time and energy in order to achieve the objects of the Society. In view of the above said facts and circumstances and evidences of the comparable cases, our submissions may, please be accepted and oblige. 6. From the above said facts, it is very clear that starting from the school at residential premises by Sh. G.S. Sardana and Smt. Usha Sardana and due to the far sightedness and planning of both of them, coupled with the planning and execution by Sh. Sanjay Sardana and Sh. Sandeep Sardana in the later years, 'Manav Mangal Society' has built its own goodwill and reputation over the years in Chandigarh, Mohali, Panchkula and at Zirakpur and as on the date, the Society can boast of having 10080 children, 395 teachers in all the four schools put together. With this background, the following further issue-wise submissions may, please, be considered, which are in continuation of earlier submissions as made before your goodself's predecessors over a period ....
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....9.2016 and even no adverse material was found during the course of such survey operations, which was carried out for about two days and further all the four persons namely Sarvashi Sanjay. Sandeep, Anjali & Monika were present in the school and even the evidence of other related persons were furnished and these submissions are contained in our reply, dated May 23, 2017, page No. 12 to 14 and reply (in parad) Point No. Hi and no adverse comments have even been given by the Assessing Officer in this regard. iv. It is also worthwhile to mention here that in all the other schools, where the salary of Rs. 2 lacs or more to the Principal has been offered and they have experience of Rs. 10 years/7 years has been mentioned and, whereas, Sh. Sanjay Sardana and Sh. Sandeep Sardana are having experience of 33 years and 31 years respectively. Thus, in whatever way, we look whether by virtue of past history of the case or by comparable cases, there is a complete justification of salary. III. SALARY AS DIRECTOR TO SH. SANJAY SARDANA AND SH. SANDEEP SARDANA i. It is submitted that two schools were in existence one at Chandigarh and another at Panchkula and no director h....
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....akpur' started operations in the year 2007 & 2016 respectively. iii. It is further submitted that this appointment of director in the school has never been a new phenomenon and, rather in the various schools, besides the post of Principal, there are posts of Vice Principal, Estate Manager and even there are different directors appointed for different fields, like Director Academic, Director Admin, Director Activities and Director HR, apart from other post like 'Estate Manager' for Managing and procuring supply of various furniture and fixture requirements or the Administrative Officers/ Managers for managing the administrative assignments and educational Advisors for curriculum designing etc. This is proved by the various documentary evidences, which are being furnished in the paper book and, therefore, in this case, if the Society had appointed other persons, then the salaries of those persons would have to be charged as expense in the expenditure account, at much higher rate, than in the present case, therefore, the Directors salary is fully justified, coupled with the fact that in the earlier years, the same has been allowed u/s 143(3) and the said salary as....
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....ies common for all the schools.] * Arranging supply of furniture and fixtures on demand/ as per need to all the schools. vi. It is further submitted that Shri G.S. Sardana has been 'Founder Chairman' along with Smt. Usha Sardana since 1968 and due to their hard efforts and planning, the Manav Mangal Society has attained goodwill and reputation in the field of education and still, they are actively associated with it and as such, the salary being paid to Sh. G.S. Sardana and Smt. Usha Sardana, being the founder members of the society, who have toiled hard over the years and, as such, the salary paid to them is fully justified. They are source of inspiration and guidance to the Principal/ Directors and of all the staff working in the four schools. It is further submitted that only Shri G.S. Sardana, is the 'Member' of the Society and they are rendering the services to the Society, for which they are receiving the salary on month to month basis as a normal employee. It is submitted that no extra benefit has been given to the related persons since, they have been found to be rendering services to the Society and, as such, the section 13(3) of the Act w....
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....n raised by the Assessing Officer. Thus, the addition of surplus as made by the Assessing Officer is totally devoid of any valid reasons reliance is also being placed on the following judgements - i. Director of Income Tax (Exemptions) Vs. Sheth Mafatial Gagal Bhai foundation Trust (2001) 249 ITR 533, Bombay High Court ii. CIT Vs. Fr. Mullers Chartiable Institutions (2014) 363 ITR 230, Karnataka High Court iii. The above said view is further fortified by the Circular No.387, dated 6th of July, 1999, in which,it has been held as under:- Therefore, under such circumstances, taxing of entire surplus as per income and expenditure account is not proper as these circulars are binding upon all the Officers of the department. In view of the above said facts and circumstances and case laws, the addition as made by the Assessing Officer may, please, be deleted and oblige. 1.1 Salary to Chairman and Directors 1.1.1. One of the members of the society, Sh. G.S. Sardana [M.A. (English) -Delhi University, M.A. (Hindi) - Punjab University] joined the society in April, 1968 (i.e. over 45 years of experience) and is currently serving as ....
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....al High School Sector-21-C Chandigarh 41667 50000 8333 20% Manav Mangal School Sector 11 Panchkula 41666 50000 8334 20% Manva Mangal Smart School Mohali 4166 50000 8334 20% Manav Mangal Society Sector 21 Chandigarh (For opening of new school at Zirakpur) Total 125000 200000 Particulars of monthly Director salary per month Sandeep Sardana FY 2011-12 Sandeep Sardana FY 2012-13 Increase compared Last Year Increase in % terms Manav Mangal High School Sector 21-C, Chandigarh 41667 50000 8333 20% Manav Mangal School Sector 11 Panchkula 41686 50000 8334 20% Manav Mangal Smart School Mohali 41666 50000 8334 20% Manav Mangal Society Sector 21 Chandigarh (For opening of new school at Zirakpur) - 50000 First Year Total 125000 200000 1.1.3. The total receipts of the society during FY 2011-12 increased by 4.6 crores i.e. 25.9% approximately against receipts in FY 2010-11. Keeping in view the stellar performance of the schools under the society for the year ending M....
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....ol & Panchkula School respectively was on the same lines as was granted to other teaching staff of the school (increase in Basic salary being at 3% and increase in DA being granted at 15%). As such there was no abnormal enhancement in salary of the Principals. Mistake apparent from record - A very important factual mistake apparent from the order of the Learned AO is that he has alleged in the order that the above mentioned increase of 3% and 15% was only offered to the Principal. However, it is clarified before your Honor that the increase in salary was across the board offered to all the teachers in the school 1.1.6 The Learned AO has not even discussed as to what the commensurate salary payable to persons of such experience and stature should be paid and has wholly disallowed the salary paid to members and relatives terming it as unreasonable. 1.1.7 The member and relatives, apart from their role as educators are also handling administrative functions on behalf of the schools and are therefore eligible to the reasonably remunerated for the same. The Learned AO's action of disproving the entire payment of salary to the above persons is bad in law an....
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....in the ambit of section 13(2)(c) of the Act. 1.9 Relying on the ruling by the Hon'ble Andhra Pradesh HC in the case of Chirec Education Society (supra), the Appellant contends that the Learned AO has erred in making disallowance under section 13(1)(c) of the Act, especially where in his own judgement the Learned AG has questioned 'reasonability' of the payments made by the Appellant to the interested persons. 2. Amount paid to related persons not reasonable 2.1 The Learned AO has alleged in the impugned assessment order that - (i) Amounts paid by the Appellant to its members are not reasonable; (ii) Qualification of person is not a valid ground for determining remuneration; (iii) Increase in receipts of the society is not relevant for determining remuneration; (iv) Salary paid to directors is higher than teachers employed by the Appellant; There is no increment in the salary of other employees; (v) Providing rent free accommodation to Directors is not allowed in the Act. While the allegations of the Learned AO have been rebutted by the Appellant in the following paragraphs, it is p....
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....tured incorrectly by the Learned AO; (iv) The relevant provisions of the Act for disallowance of gratuity payment has not been provided; (v) The computation of tax demand arrived at Rs. 91,49,290/- as per notice of demand under section 156 is not provided. 1. Deviation from consistency by the Learned AO 1.4 This action of the Learned AO, completely violates the principles of consistency, appreciated by the Hon'ble Courts in various decisions, extracts for which are discussed hereunder:- a) CIT Vs. Dalmia Dadri Cement Lid. [1970] 77 ITR 410 (P&H) b) Berger Paints India Ltd. vs. CIT [2004] 266 ITR 99 (SC) ] c) DCIT V/s United Vanaspati Ltd. [2005] 275 ITR 124 (AT)(TM) d) Radhasoami Satsang Vs. CIT[1992] 193 ITR 321 (SC e) CIT V/s Arthus Andersen & Co. [2009] 318 ITR 229 (Bom) f) Commissioner of Income Tax V/s Leader Valves Ltd [2007] 295 ITR 273 (P&H) 2. Intervention into matters of commercial expediency by the Learned A.O. 2.1 Notwithstanding the Appellant's contention that the Learned AO's impugned action to disallow the payments made to interested persons was not....
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....er 85% of the total receipts) towards the advancement of its objectives and the Learned AO's remarks on bona fide expenses is without any good cause 6.4. The ld. CIT(A) pointed out that a survey was conducted on the business premises of the assessee and the survey report was given vide letter dated 21/3/2017 for the comments. The gist of the said report has been reproduced in para 5.1.2 of the impugned order and the reply of the assessee on the said report is reproduced in para 5.1.3 of the impugned order. For the cost of repetition, the same are not reproduced herein. The ld. CIT(A) after considering the submissions of the assessee, survey report of the A.O. and the rebuttal to the said survey report by the assessee, allowed the claim of the assessee for the salary by observing in para 5.2.2 to para 5.2.9 of the impugned order which read as under: 5.2.2. As per section 2(15) of the Act "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of gene....
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....uthor, founder, person, [member, trustee or manager] as aforesaid, and (vi) any concern in which any of the persons referred to in clauses above has a substantial interest (voting share exceeding 20%). The definition of person seems exhaustive enough to cover the trustees, directors, promoters, their relatives and main contributors under its ambit. It is the second limb of the definition which is more relevant to the instant case wherein the scope is limited only to those cases where payment of such salary and allowance is in excess of what may be 'reasonably' paid for such services. In other words the legislature has not put restrictions on payment of salary or allowance for services rendered by 'persons' (referred above) where amounts paid are construed as 'reasonable' for such payment. 5.2.3. It is apparent that the Act has not defined or provided guidance as to what is reasonable. This gap has been filled by various judicial pronouncements. The Hon'ble ITAT, Chandigarh Bench in the case of Young Scholars Educational vs. ITO (2011) 12 ITR 640 (Chandigarh) has observed that Salary paid to the principal, a member of the society cannot ....
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....47 (URO). The Hon'ble Karanataka High Court in CIT vs. CMR Jnanadhara Trust [2015) 92 CCH 396 (Kar), on reasonably of the remuneration paid to interested persons has held that the payments of the remuneration to the trustees, out of the Trust amount, is not in dispute. The Tribunal has clearly set out the services rendered by these trustees for the Trust end thereafter it has come to the conclusion that the said amount paid, are reasonable and not excessive. When the Trust is availing the services of these trustees and on account of the services rendered by them, there is a substantial growth in the Trust and its activities, then the payments made for such services rendered, it cannot be said that it contravenes Section 13(1)(c) of the Act Consequently there is no justification for denying the benefit under Section 11 of the Act. The Hon'ble ITAT, Chandigarh Bench, in the case of M/s Indo Soviet Friendship College for Pharmacy Managing Committee, in ITA No.478 & 479/CHD/2013 dated 2.6 09.2015 has held that the vehicle running expenses and depreciation on car disallowed by the AO u/s 13(2)(b) of the Act are not sustainable, since the car was being used by the Chairm....
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....visions of Section 13 of the Act have been violated. !t is in this juxtaposition of provisions of Income Tax Act, 1981 and judicial pronouncements that the facts and circumstances of the instant case are to be adjudicated. 5.2.4 The Aims & Objects of Manav Mangal Society are (i) To promote the cause of national integration, (ii) To propagate higher social values, (iii) To help the younger generation to have a healthy growth; mental, physical and intellectual, (iv) To work for bringing about better standards of education, and (v) To establish a Manav Mangal School/ Schools to achieve the objects mentioned above. 5.2.5. The first and foremost aspect that needs to be appreciated is that out of the eight persons whose salary has been questioned and disallowed by the AO, only Sh. GS Sardana is the founder Chairman/Manager of the Appellant Society and all other parties are though his family members but they are the directors/ employees in the schools run by the Society Mere fact that the society has paid remuneration or interest or rent to the members/ relatives of members is not sufficient to invoke the provisions of section 13(1)(c) r.w. Section 13(3) of the Act. ....
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.... ensure that the existing schools also do not suffer as a result of the division in time. Ld. AR has filed various details from where it is observed that such posts of Directors/Administrators etc are engaged by various reputed schools like Doon International School Chandigarh, Smart Wonder School, Mohali, Ashiana Public School, Chandigarh, Mount Carmel School, Chandigarh, YPS School Mohali, St. Kabir Public School, Chandigarh, Manav Rachna International School, Mohali, Chitkara International School, Chandigarh, St. Joseph's Senior Secondary School Chandigarh and Strawberry Fields High School etc. The salary has been paid to Director starting from A. Y.2007-2008 and was also being allowed by the department after due verification, because of additional responsibilities i.e. planning, designing and opening of new school one after another at Mohali and Zirakpur, which required a lot of time and energy as submitted by the appellant in its various submissions. Further, during the course of survey, nothing was found for disallowing the salary paid to the above persons or to the other related persons, however the total disallowance of salary was made in AYs 2013-2014 to 2015-16. it is fou....
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....vely involved in day to day working of schools and for uplifting of the infrastructure and goodwill of the schools. The qualifications, experience and performance of the directors, namely Sh. Sanjay Sardana M.Sc. (Gold Medalist), M.Phil., M.Ed, and Sh. Sandeep Sardana: B E . (Hons.), PGDCA (Gold Medalist) who have been found actively involved in day to day working of the school for the past more than 25 years is unquestionable. The two founders and advisors to the schools namely Sh. G.S. Sardana and Mrs. Usha Sardana, who are corner stone of 'Manav Mangal School' since 1968 are undisputedly highly qualified. Sh. Sanjay Sardana, the director in answer to question No.5 'Please provide attendance report of Sh. G.S. Sardana replied that 'Since Sh. G.S. Sardana is involved in policy matters of the society as manager, the policy decisions made by the executive body of the society is get implemented in all the four branches with the help of two directors. Since these three individuals, Sh. G.S. Sardana and other two directors i.e. Mr. Sanjay Sardana and Sh. Sandeep Sardana are involved in the working and growth of all the four schools, their attendance is not marked at a p....
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.... way of referring to any adverse evidence brought on record. 5.2.7. Education in the present times is one of the most competitive sectors as the teachers and the schools are expected to keep up and maintain high standards in order to ensure safety policies and constantly endeavour to create an ideal learning environment for the students. Not only this, the teachers who are being engaged in the schools have to be motivated for latest techniques and methods in education by way of organizing trainings etc. and all this requires the Management and the Head of the school to be on their toes all the time. Thus, the role of a good management in case of running educational institutions can never be over estimated. It is observed from the record that the Directors of the Schools have time and gain won various Awards and Appreciations over a period of time from the State and other high dignitaries at the state level and all India Level in appreciation of the services provided by them towards the field of education and setting up of infrastructure for imparting quality education. That befits them to be in the key roles assigned to them by the Society. To say that members of ....
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....he other hand the assertions made by the AO in his assessment order are nothing more than abstract statements. The A.O. in various parts of his order has stated that the salaries being paid to the members is excessive and beyond reasonable limits, however, he has not brought on record a single instance for comparison to prove that what could have been reasonable salary for these persons. It is not the case of the AO that these persons had not rendered any services to the Society/schools or have not worked for the benefit of the Society/schools. Moreover, the fact that these persons whose salary has been questioned and disallowed by the AO have in fact been found to be actively engaged in rendering their respective services as is proved from the fact that during the course of survey on the assessee and the post survey enquiries, ail these parties have given their statements vis-a- v i s the salary being drawn by them from the Society and the services being rendered to the Society and no defect/ shortcoming could be pointed out by the AO even during the survey and in the assessment in previous/subsequent years. The A.O. has failed to apply his/her mind that on the one hand he himself....
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....vations made in the assessment order. It was further submitted that the payment of salary to the trustee / members and the specified persons U/s 13(3) of the Act was unreasonable for the following reasons: * Sh. G.S. Sardana is founder member of the Society and was a member of the Executive Committee of the society. As per Memorandum of Association, he had the responsibility of managing the education institutions of the society and he could not charge any remuneration for this function, as he had to work in honorary capacity. * The non-specified persons as principals of other schools under the assessee society were getting much less salary for the same work as compared to Sh. Sanjay Sardana and Sh. Sandeep Sardana. * Sh. Sanjay Sardana and Sh. Sandeep Sardana had been stated to have been working as Principals of the Schools, which itself is a full time job till 5.00 pm, and on the other hand they had been paid salary as Directors simultaneously. Further, it is on record (Page 31 of the Id. CIT(A)'s order) that both these specified persons were paid salary as Director for the same work. * Furthermore if both these family members would....
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....aper book which is the copy of the memorandum of society wherein it was mentioned that all the three office bearers namely President, Vice President and Manager would work as honorary member. He, therefore, submitted that Shri G.S. Sardana being the founder manager was not allowed to have remuneration. It was also stated that the salary paid to the Principals was excessive which attracts provisions of Section 13(2)(c) of the Act and the disallowance made by the A.O. was justified. As such, the ld. CIT(A) wrongly deleted the disallowance made by the A.O. 9. In his rival submissions, the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the schools run by the assessee society have been making contribution in the field of education for the last 50 years and the details of the students as well as staffs during the past few years is as under: STUDENT AND STAFF STRENGTH (AY 2007-08 TO 2019-20) S.NO ASSESSMENT YEAR NO. OF SCHOOLS TOTAL STRENGTH TOTAL STAFF (Excluding Outsourced Staff) 1 2007-08 2 4446 157 2 2008-09 3 5624 209 3 2009-10 3 6102 236 4 201....
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....21 and 523 of Paper Book Volume-ll which are copies of resolution of Executive body of the society dated 05.11.2005. 9.1. Ld. Counsel for the assessee furnished a chart showing qualifications of members of the assessee society, Sh. Sanjay Sardana and Sh. Sandeep Sardana and other 'specified persons' alongwith their designation as under: Name of the Person Date of Joining Designation Qualifications Experience Sh. G S Sardana April 01, 1968 Founder: Chairman M.A (English), M.A (Hindi) Retired After serving for approximately 50 years Mrs. Usha Sardana April 01, 1968 Founder: Staff Welfare Officer Hons.in Hindi (Prabhakar), Intermediate Examination in English from Panjab University Retired after serving for approximately 48 years Mr. Sanjay Sardana August 01, 1986 Principal: Manav Mangal high school, Chandigarh & Director: manav mangal group of schools M.Sc (Gold Medalist), M.Phil., M.Ed 33 Years Mr. Sandeep Sardana October 14, 1988 Principal: Manav Mangal school, Panchkula & Director: Manav Mangal group of schools B.E (Hons.), PGDCA (Gold Medalist) 31 Years Mrs. Anjali Sardana November 01,1990 ....
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.... had been accepted by the A.O. while framing the assessment since the assessment year 1997-98 to 2012-13 U/s 143(3) of the Act after examining the issue in detail. Reference was made to the page Nos. 178 to 277 of the assessee's paper book which are the copies of the assessment orders passed U/s 143(3) of the Act for the earlier years. It was stated that the issue had been examined threadbare year after year by the A.O. after raising specific queries with regard to justification of the salary to the specified persons, the salary had been allowed as claimed, year after year and that the case for the assessment year 2010-11 had earlier been framed U/s 143(3) of the Act after examining all the issues. It was stated that for the first time in the regular proceedings for the assessment year 2013-14, the A.O. had disallowed the payment of salary to the specified persons by mentioning in para 4.1 of the assessment order that the salary to the Members and specified persons was not reasonable and undue benefit had been given to the related persons but while passing the order, the entire salary paid to the specified persons had been added back. It was contended that while giving the reply fo....
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....r had discussed about the reasonableness of the salary and other allowances and held that when a specified person serves in two capacities first as a member and secondly as an employee and he received salary alongwith allowances as an employee, the nominal benefit given to the employee as salary or allowance should not be treated as excessive. It was stated that none of the specified persons was member of the society, they were directors/employees in the schools run by the assessee society and therefore, merely the society had paid salary and rent there could not be any disallowance automatically particularly when there had been tremendous growth of number of students only due to continuous efforts made by the specified persons alongwith other teachers and that the schools have attained goodwill as well as reputation over the years which is evident from this fact that the strength of the students in schools had risen from 100 to 10500 which justified the payment of director's salary to Shri Sanjay Sardana and Shri Sandeep Sardana for opening of smart schools at Mohali and Zirakpur. It was stated that the ld. CIT(A) at page Nos. 29 and 30 of the impugned order had compared the salar....
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....made to the specified persons whereas the payment had been made in the assessee's case against rendering the services, therefore, the case relied upon by the ld. CIT-DR is distinguishable on facts. Reliance was placed on the decision of ITAT Chandigarh bench dated 03/12/2020 in the case of Heritage Educational Society in ITA No. 1060 to 1071/Chd/2020, copy of the same was furnished which is placed on record. Reliance was also placed on the following case laws: (i) Anand Education Society Vs. Asstt. DIT(E) ITA No. 761/Del/2013 & ITA No. 1005/Del/2013 (Delhi Trib) order dated 15/07/2016. (ii) CIT Vs Idicula Trust Society 104 DTR 0009 P&H HC (iii) CIT Exemptions Vs CMR Jnanadhara Trust 55 taxmann.com 516 Kar-HC (iv) Young Scholars Educational Society Vs ITO 25 taxmann.com 422 Chd-Trib (v) Dr. D.Y. Patil Pratisthan Vs Dy.CIT 39 taxmann.com 138 ITAT Pune Bench (vi) CIT(Exempt) Vs Bholaram Educational Society 101 taxmann.com 193 (SC) (vii) Pinegrove International Charitable Trust Vs DCIT ITA No. 567/Chd/2019 dated 31/08/2020/ (viii) CIT Vs Foundation for Social Care 94 DTR 298 All-HC (ix) CCIT Vs St. Peter's....
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....ined the assessee society on 01/09/1992 having the degree of B.Com and B.ED. She is also working as Vice Principal of the school at Panchkula. She is having total experience of about 27 years. Smt. R.C. Manchanda is also having degree of BSc., B.ED and course of Fundamentals of Electronics Data Processing and Programming. She is working as Head of the Primary school at Chandigarh. She joined on July 01st 1989 having the total experience of about 30 years. Another specified person is Mr. Ajay Manchanda who joined on April, 1998 working as Transport Manager and having the degree of B.A. From the aforesaid details, it would be clear that all the specified persons are having the educational qualifications required for the job assigned to them and they are whole time employees of the assessee society for achieving the object of education for which the assessee society had been formed and are not carrying on any other business/profession. Sarvshri Sanjay Sardana and Sandeep Sardana apart from working as Principals of the schools at Chandigarh and Panchkula respectively are also having additional assignment of Directors of all the schools. The remunerations paid to the specified persons w....
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....rial is brought on record to substantiate that how and in what manner, the salary paid to the specified persons considering their qualifications and the duty assigned to them was not reasonable since no comparable case was brought on record by the A.O. In the present case, the A.O. did not doubt the services rendered and qualifications of the specified persons, he disallowed the salary by observing that it was not reasonable, however, nothing is brought on record to suggest how and in what manner, it was not reasonable or was excessive. 10.2 On a similar issue, the ITAT Chandigarh Bench "B" in the case of Young Scholars Educational Society Vs ITO (Supra) held as under: " that the assessee contended that 'V was M.B.A. (Marketing) and he possessed requisite qualification in the field of advertisement. The Assessing Officer as well as the Commissioner (Appeals) failed to bring any cogent and credible evidence demonstrating non-genuineness of the payment in the face of submissions filed by the assessee in the form of various evidences indicating rendering of services by 'V'" It has further been held that "the qualification of 'S' was indicated as M.A....
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....Anand Education Society Vs Asstt.DIT(E) (supra) wherein it has been held as under: "25 In the present case, it is an admitted fact that the relatives of the trustees were appointed as Principal, Vice-Principal and Administrative Director. However, their appointments were not illegal as the same were done by following the proper procedure, an advertisement was published in the National Newspaper for the post of Principal and Vice-Principal. In response to the said advertisement, the applications were received from the eligible person and after a proper scrutiny, those persons who fulfilled the requisite qualification and having the experience, persons were called for an interview. The Selection Board who conducted the interview included, two nominees of the Education Department of the Government and selection was done on merit. The remuneration paid was in accordance with the pay scale fixed by the Directorate of Education for the similar post. It is not the case of the AO that the remuneration paid was in excess of what may be reasonably paid for such services. It is also not the case that the expenses relating to telephone etc. were not incurred for furtherance of the obj....
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.... 13(l)(c). Consequently, there is no justification for denying the benefit under section 11." 10.9 In the present case also, as we have already pointed out in the former part of this order that the assessee trust was availing the services of the specified persons and there was substantial growth in the functioning and activities of the assessee society, therefore, it cannot be said that the payments made on account of salary to the specified persons contravene the provisions of Section 13(1)(c) of the Act, as such, the A.O. was not justified in making the disallowance and the ld. CIT(A) rightly deleted the same. We, therefore, considering the totality of the facts and the ratio laid down by the various Hon'ble High Courts as well as different Benches of the ITAT, as referred to above, are of the view that the ld. CIT(A) rightly deleted the disallowance made by the A.O. We do not see any valid ground to interfere with the findings given by the ld. CIT(A) on this issue. 11. The next issue vide grounds No. vi and vii relates to deletion of disallowance made by the A.O. on account of rent paid to the specified persons by invoking provisions of Section 13(3) of the Act. 12.....
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....r. It is also not out of way to mention here that Sh. Sanjay Sardana & Sh. Sandeep Sardana were using the part of the accommodation for official purposes also as they have to do a lot of work relating to the duties assigned to them as Directors of the four schools as the school premises are closed at 5.00 PM although the school timings are upto 2.30 PM only. Normally both these work upto 5.00PM in the respective schools and thereafter attend to management work of other schools, Society affairs and planning for future expansions are attended to at the offices they are maintaining at their residence which are provided to them by the School Administration." 12.1 It was further submitted as under: "(a) It is submitted that H. No. 3084, Sector-2ID, Chandigarh, is owned by Director Sh. Sandeep Sardana and his wife Smt. Monica Sardana. This house is partially built. The school has taken this house on rent for providing rent free accommodation to him. This is perquisite given by the society to its Director, this is not excessive payment under section 13(3), as if the director was provided rent free accommodation by hiring another house the monthly rent would have been ....
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....assessee carried the matter before the ld. CIT(A) and submitted as under: "I. JUSTIFICATION OF RENT BEING PAID TO SH. SANJAY SARDANA/ SANDEEP SARDANA As regards for the payment of rent, the following are the brief facts and all such facts have been mentioned to the Assessing Officer during the course of assessment proceedings for A. Y. 2013-14. i. Sh. Sanjay Sardana, besides getting the salary was provided 'Rent Free Accommodation' and for providing the rent free accommodation, a lease agreement was entered into for the H. No. 3085, Sector-21-D @Rs. 30000/- per month in the year 2001 with a stipulation that there would be 5% increase on the basis rent in every year and the said lease agreement was for five years. The house is owned by Sh. Sanjay Sardana and Mrs. Anjali Sardana. ii. This agreement was then renewed again in August 2006, for a further period of five years and the rent was agreed to the tune of Rs. 40000/- per month with 5% increase every year on the basic rent year after year. iii. Again on 01.09.2011, the lease agreement was revised for 5 years and for that Fair Rental Valuation' was not made from the 'Govt....
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.... this house, the lease agreement was entered into on Aug 13, 2010 at a monthly rent of Rs. 20000/- for five years with increase of 5% every year of the basic rent. Such income has been duly disclosed by Sh. Sandeep Sardana and Smt Monika Sardana in their return of income and even Sh. Sandeep Sardana had disclosed perquisite value while filing his return of income each year. Even, we are filing documentary evidences, wherein various schools are allowing 'Rent Free Accommodation' to the Principals and, thus, it is a trade practice and not a new phenomenon. Such evidences are being enclosed in the paper book in case of some schools like Ishori International School: Chirawa, Bal Bharti Public School: GAndhar, S.B. Sharma World School: Jamnagar, Salwan Public School, Ghaziabad, Dunlod Public School: Lucknow, S.D. Jain Modern School, Surat, The Sirsa School: Sirsa, The Star Global School: Rohtak, Delhi Public School: Ferozepur: Surmount International School: Gorakpur. viii. It is submitted that said rent has already been allowed by the department previously in the various orders passed u/s 143(3) of the Society and there has been no dispute, either during all such years ....
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....me Court, Punjab and Haryana High Court and IT AT, Chandigarh Bench, Chandigarh. We rely upon the recent judgement in the case of Smt. Amarjit Kaur, which is the latest judgement on account of consistency wherein, the judgements of Hon'ble Apex Court in the case of Berger Paints and Leader Values have been followed." 13.1 The Ld. CIT(A) pointed out that there was a survey conducted U/s 133A of the Act on the business premises of the assessee society. The gist of survey report was given to the assessee for comments by the then CIT(A)which read as under: "6. Assessee is paying rent to their members against the premise letting out by the members to the assessee. And it is an interesting fact that in these premises the members are residing and they are owner of the same building against the same they are getting rent from the society. Reply of the assessee that it is requirement for the society and their directors/ members is not accepted. Because assessee is paying rent to the owners of the property, in which the same owners of the property residing. During the assessment proceedings, it has found that trust is not providing this service to their any other emp....
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....e that it is requirement for the society and their directors/ members, is not accepted. Because assessee is paying rent to the owners of the property in which owners of the property residing. During the assessment proceedings, it has found that trust is not providing this service to their any other employees, which shows discretion between other employees or directors of the society. It is beyond understand that why assessee is providing special treatment to their members. In the above facts, it shows that these members have used their own property for their personal use and getting the rent against the same, which is not allowable u/s 13(1)(c) r.w.s. 13(3) of I.T. Act, 1961." 13.2 In response, the assessee submitted that the A.O. disregarded the accepted past history of the case wherein all the assessments of earlier years on the same issue i.e; the payment of rent had been accepted year after year in the orders passed U/s 143(3) of the Act and that the payments had been made through account payee cheques every month after deducting TDS. 13.3 The ld. CIT(A) after considering the submissions of the assessee, deleted the disallowance made by the A.O. by observing as under: ....
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....In his rival submissions, the ld. Counsel for the assessee submitted that the valuation of the houses was not doubted by the A.O. and the accommodations provided to the specified persons were considered as perquisites in their individual hands which was added to their income and accepted by the department in their individual hand, therefore, there was no justification in making the disallowance. It was further submitted that a lease agreement was entered into by the assessee society with the owners of the premises, copies of which are placed at page Nos. 393 to 415 of the assessee's paper book. The rent on the basis of lease agreement was being paid regularly through banking channel which was shown by the owner in their respective returns and the specified persons had shown the value of the rent as perquisites in their hands and paid due taxes. It was further submitted that the Directors were also working from their residential premises and the A.O. had not raised any objection and stated that the rent paid was more than normal market rent, further this practice of providing rent free accommodation to the senior management employees as perquisites was being followed in other school....
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....eir respective hands. Therefore, the ld. CIT(A) rightly deleted the disallowance made by the A.O. particular when the rent paid for the same accommodation has been accepted in the preceding years. We, therefore, considering the totality of the facts do not see any valid ground to interfere with the findings given by the ld. CIT(A) on this issue. 18. The next issue vide ground No. viii and ix relates to deletion of disallowance made by the A.O. on account of interest on unsecured loans paid to the specified persons. 19. Facts related to this issue in brief are that the A.O. asked the assessee to justify the payments made to the specified persons on account of interest. The assessee submitted as under: "With regard to the Interest paid on loans raised from the persons covered under section 13(3) it is respectfully submitted that the same has been paid @12% per annum. The interest paid to these persons is at the same rate at which interest is being paid to banks. While raising loans from banks, adequate security has been taken by banks for advancing these loans. However in the case of these persons there was not any security given by the society and such loans were unse....
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....o the chairman and their family members against the unsecured loan. During the survey and post survey proceedings it has found that there are huge amounts have received by these persons in their personal hands from the society and invested the same in properties. The details of unsecured loans are as under:- On perusal of the above, it is seen that there is huge increase in the unsecured loan from A.Y. 2013-14 to A.Y. 2016-17 and the sources are from the society only. The money has diverted through society to individuals and then individuals to individuals and against to the society. Against the same then these persons are getting interest income. 20.1 In response, the assessee submitted as under: 6. Regarding salary, rent and interest, which according to the Assessing Officer have gone back to the School in the form of loan is not correct observation, because of the following facts:- i) All the payments of salary, interest or rent have been paid by account payee cheques as per due dates every month after deducting TDS and no cash payments have been made to any of the related persons. ii) All the persons are well qualified and most of....
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....tgaged their personal assets and also given personal sureties and with no outsider ready to lend money to the society, the related persons had to part their personal 'taxed income' in the Society, so that the aims and objects for rendering the quality education could be achieved. 7. Had the related persons not advanced the funds to be Society, no super structure which is existing now could be created and, as such, the very purpose of formation of society for rendering quality education would have been defeated. Against such advancement of amount, a nominal rate of interest of 12% is being charged by the persons and with no guarantee from the society. 8. We are submitting further the following facts which would prove beyond any doubt that there was requirement of funds to the society for achieving the objects of the Society and members and related persons have been extending loan to the society so that its growth does not get hampered at any stage due to financial constraints. Obviously, it is Society's interest and not the interest income that has been their primary consideration. a) Funds were required by the society for raising infr....
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....rent paid b y the Society Against, a sum of Rs. 2,55,04,046/- received by these persons from thei r other sources/ savings, an amount of Rs. 2,04,50,000/- has been advanced to the society as unsecured loans. f) Investing money to earn interest is not the only option available. For lucrative return, one can invest in diversified mutual funds, debentures of companies, property, etc. Sale of property by Mrs. Anjali Sardana and Mrs. Monica Sardana during the financial year 2012-13 which gave them more than 30% return per annum after answering their income tax liability says it all (page 36 & 37 of Paper Book V) 9. Thus, from the above facts highlighting the requirement of funds which had to be provided to the society from the sources of the members/ related persons, as no outsider was willing to lend the funds to the society and the source from the bank had already been exhausted and, thus, it was left to the members of the society, only to provide the funds at a very reasonable rate of interest, which was lower than the rate of interest of the bank, which is to be tune of 13%. All these funds were required as already stated for achieving the aims and objects of the s....
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.... of the Act. During the course of appellate proceedings, the Ld. AR for the appellant reiterated the submissions as made before the AO. The appellant has further submitted that the AO has wrongly alleged that rotation of the funds received by the members from the society in the form of salary etc. is being done as unsecured loans to earn interest income whereas the fact of the matter is that these parties have made advances of their own funds to the society for the purpose of the needs of the society. It is a fact on record that two houses of Shh Sanjay Sardana and Shri Sandeep Sardana (both Directors) have in fact been given as collateral security with the Karnataka Bank for the purpose of raising loans for the society. THUS, the Directors have even risked their personal assets to address the needs of the society. It is also to be seen that these people could have easily fetched similar or higher returns exceeding 12% if they would have deployed their funds elsewhere. The Ld. AR of the appellant has also brought my attention to the Chart forming part of the paper book wherein the sources of funds of the members other than the salary, interest and rent drawn from the society are ta....
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....he specified persons had not insisted that any security and all the interest was being paid through normal banking channel on which TDS had been deducted and the recipient had disclosed the same in their respective returns of income. It was stated that there was no rotation of funds received by the Members of the society in the form of salary but such funds had been advanced for the reason that the society needs funds to achieve its objects of education and even Sarvshri Sanjay Sardana and Sandeep Sardana had mortgaged their properties to the bank for raising loan. Reference was made to page Nos. 110 to 113 of the assessee's paper book. It was stated that the ld. CIT(A) had very rightly hold that if the funds were payable by the specified persons to some other entity, they could have earned more interest. Therefore, the arbitrary disallowance made by the A.O. was rightly deleted by the ld. CIT(A). 24. We have considered the submissions of both the parties and perused the material available on record. In the present case, it appears that the assessee society required the funds to expand its activities and raised the loans from the banks as well as from its Members and the spec....
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....r making huge profit, satisfies all the features of 'business' i.e. it involves reciprocal activity between two parties, large number of recurring transactions consideration and profit motive. In a view of the above, it is seen that the assessee has receipts arising out of activity in the nature of business or commerce and accordingly section 11 (4A) is applicable in this case. When there is no business activity other than imparting education by way of running four schools, then there is no question of invoking section 11 (4A) of the Act and to maintain separate books of accounts pertaining to income from the so called business. AO has no where pointed out any specific defects in the books of accounts of the appellant, nor did he reject the books of accounts of the appellant. Invoking provisions of proviso to section 2(15) is a farfetched assumption of the AO. Imparting education is itself a charitable activity u/s 2(15) of the Act. AO has to establish its premise on solid incriminating evidence that appellant is indulged in commercial activities. So far as the investment in fixed assets is concerned, on careful perusal of record and financial statements, it is observed tha....
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....n School. Ld. AR has provided list of concession holders for the financial year 2013-14 at Chandigarh School-33 students, Panchkula School-49 students and Evening School having 188 Students placed at page no 14 to 17 of the Paper Book. AO has not rebutted these facts." 13.2.10. It is not the case of the AO that significant surplus funds are parked in the FDRs. Facts do not give credence to this premise. In AY 2011-12, the facts about FDRs is as follows: FDR (Chandigarh School)- Rs. 4.5/- Lakh. FDR (Panchkuia School)-Rs. 5.72/- Lakh, and FDR (Mohali School)-Rs. 1.32/- Lakh only, in the AY 2013-14, FDR (Chandigarh School)-Rs. 45,000/-, FDR Society-Rs. 4.75 Crore. in Assessment Year 2014-15, there is No FDR. !n AY 2015-16 & 2016-17, FDR (Mohali School)-Rs. 5.21/- Lakh, FDR (Panchkula School)-Rs. 7.55/- Lakh, and FDR (Chandigarh School)- Rs. 6.44 Lakh. No adverse inference can be drawn from these facts. 13.2.11. In the year under consideration, on perusal of assessment record, it emanates that Ld. AO issued show-cause to the assessee vide letter dated 29.01.2016 without any specific defects in the books or any evidence culled out from the survey proceedings or submissions made....
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....nefit of its trustees, managers, directors, beneficiaries or related persons, Section 13 provides for an anti-abuse mechanism. The Section includes a mechanism to allow the authorities to withdraw AND in some cases, cancel the exemption, in the event of abuse. 13.2.13. It is further rightly submitted by the appellant that the real cause of schools' growth ranging from 8 % to 43 % during the AY 2008-09 to AY 2016-17 is not being run on commercial grounds. The fact is that 'Mohali School factually started from financial year 2007-08 (AY-2008-09). Being a reputed name and the first "Tech-smart school of the Region", it proved to be a great attraction for the parents. With the result that there was a substantial increase in the number of students for FY- 2007-08. With this substantial growth of students came the substantial increase of receipts. The growth is not because of any commercial activity, as alleged by AO but on account of popularity of the schools in the areas, where they are located and confidence of the parents in getting the admissions of their wards at a very reasonable fee. The increase in receipts of the schools fees is on account of higher intake of s....
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....ly the society could offer services to 7983 students and had staff strength of 335 during AY 2016-17. in AY 2017-18, the society came up with yet another initiative by coming up with Region's First Green School in Zirakpur and during AY 2018-19 the society had 4 branches with 9475 students and 421 staff members. In other words, in just 12 years the number of students has more than doubied and same is true for the staff members who have been employed in the 4 branches of the school that has undisputedly increased the receipts of the society. Manav Mangal Society has, year after year ploughed back the entire surplus as is presented at para 13,2.8 supra and placed at Pages 84 to 91 of Paper Book-X. It is pertinent to mention here that the investment of surplus in capital to achieve the aims and objectives of the society have already found favour of CIT(A), Hon'ble ITAT, Chandigarh, Hon'ble High Court and Hon'ble Supreme Court in the case of the assessee during AY 2003-04. The same issue came up during AY 2006-07 and that too was in favour of the assessee before C!T (A) and Hon'ble ITAT. It is submitted by the Ld.AR that the department did not carry the matter furth....
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....ational Institution v. Additional Commissioner of Income Tax, (1977) 224 ITR 310, the Apex Court while construing the predecessor Section, namely, Section 10(22) of the Income Tax Act, held that after meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to make profit. The decisive or acid test is whether on an overall view of the matter, the object is to make profit, (C) American Hotel & Lodging Assn. Educational Institute v. CBDT, (2008) 301 ITR 86, the Apex Court dealt with section 10(23C)(vi) and has held that the purpose would not lose its character merely because some profit arises from the activity That, it is not possible to carry on educational activity in such a way that the expenditure exactly balances the income and there is no resultant profit, for, to achieve this, would not only be difficult of practical realization but would reflect unsound principles of management, in order to ascertain whether the institute is carried on with the object of making profit or not, it is the duty of the prescribe....
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.... Surat Art Silk Manufacturers Association case and Aditanar Educational institution case as follows the fact that the Petitioner has a surplus of income over expenditure for the three years in question cannot by any stretch of logical reasoning lead to the conclusion thai the Petitioner does not exist solely for educational purposes or, as that Chief Commissioner held that the Petitioner exists for profit. The test to be applied is as to whether the predominant nature of the activity is educational. In the present case, the sole and dominant nature of the activity is education and the Petitioner exists solely for the purposes of imparting education. An Incidental surplus which is generated, and which has resulted in additions to the fixed assets is utilized as the balance-sheet would indicate towards upgrading the facilities of the college including for the purchase of library books and the improvement of infrastructure. With the advancement of technology, no college or institution can afford to remain stagnant. The Income-tax Act, 1961 does not condition the grant of an exemption under section 10(23C) on the requirement that a college must maintain the status-quo, as it were, in r....
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.... the trustee and the specified persons in the shape of huge salary to all family members; salary as Directors to the family members; interest on the unsecured loans raised from the family members; and providing rent free accommodation to the Principals (family members). The society money was diverted to the family members and again brought into the society. With this intention, the assessee society has increased fees of the students and this increase was not with the motive to provide "education" but to generate income to diversify the same to the family members under various heads. Thus, the society was working with a profit motive and hence exemption claimed u/s 11 has to be denied. There had been increase of 10 to 11% annually in the fee per students whereas the increase in the salary as Principal was 13% and as Director 20%. Thus the increase in the students fee was with the motive to generate the funds to divert the same to the trustees and their family members which shows that the assessee society was running its schools with the commercial intent to earn more profits and since the profit generated from educational activities was not solely for the purposes of achieving the o....
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....by the Directors, although, no specific disallowance was made relating to the running expenses of the Mercedes cars. With regard to that observation of the A.O., the submissions of the ld. CIT-DR were that the assessee provided Mercedes cars to the Memberscum- Directors which was not even provided to the Vice Chancellors of the Universities. 31. In his rival submissions, the ld. Counsel for the assessee submitted that the Mercedes Cars provided to the Directors namely Sarvshri Sanjay Sardana and Sandeep Sardana were used for the business purposes because they were required to meet the various officials at Delhi, Chandigarh and Mohali. It was also stated that nothing was brought on record to substantiate that the cars were being used for personal purposes by the Directors and further perquisite value of the cars was being disclosed by the Directors in their individual returns as per law which was accepted by the department. Reliance was placed on the decision of ITAT Chandigarh Bench in the case of Indo Soviet in ITA Nos. 478 & 479/Chd/2013 order dated 28/09/2015. 32. We have considered the submissions of both the parties and perused the material available on record. In the pr....
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....ter completion of original assessment and, thus, it amounts to merely a change of opinion on the part of the Assessing Officer, which is not permitted in law. 6. That the Ld. CIT(A) has brushed aside the binding judgments of the Apex Court and others and his reliance on some of the judgments is not proper. 7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 36. From the aforesaid grounds, it would be clear that only grievance of the assessee relates to confirmation of the action of the A.O. in reopening the case U/s 147 of the Act. 37. The facts related to this issue in brief are that the assessee society is registered under the Societies Registration Act XXI of 1860 having registration No. 45 dated 31/05/1969. The assessee was also registered U/s 12AA of the Act with the CIT, Patiala vide registration dated 03/10/1994. The assessee filed the return of income on 30/09/2010 declaring NIL income. Later on, the case was reopened U/s 147 and the notice U/s 148 of the Act was issued on 28/03/2017. The A.O. provided copy of reasons recorded on 23/06/2017 which read as under: On pe....
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....ts are collected from the students under the various heads & shown the same as admission fee, tuition Fee Reed., Development fund Reed., Computer Fee, Transport charges & Misc Fee, etc. Assessee is showing the fees under the heads admission & Registration fees, tuition Fees and claiming various kind of huge expenses against the receipt also show that assessee is doing activities on commercial basis and earning huge profits and also accumulate the same in its books and not fulfilling conditions of section 11(1) r.w. 2(15) of I. T. Act. Assessee has shown amount of Rs. 2,91,56,429/- as net income against the total income of Rs. 14,11,60,203/- which is 20.65% of total income. Which shows that assessee is earning huge profits and accumulates the same in banks and enjoying huge interest income. It is also mentioned here that when depreciation amount of Rs. 1,77,63,831/- as per Kerala High Court judgement in case of M/s Lissie Medical Institution Vs CIT, Kochi and disallowance of Rs. 1,09,12,261/- u/s 13(l)(c) r.w. 13(3) of I.T. Act added into net income then the total surplus will be Rs. 5,78,32,518/- which is 40.96% of total income. These all facts show that assessee has failed to spen....
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....under:- 1. The Assesses Society has been filing its returns of income year after year very regularly and assessments have been made either under section 143(1) or under motion 143(3) of IT Act. Most of the Assessments for and from AY 1997-98 onwards have been made under section 143(3} and the assessments were framed after due application of mind on each and every issue. 2. That the assessment for the assessment year 2010-11 had been framed u/s 143(3) vide order dated 26/02/2013 by the Asstt. Commissioner of Income Tax, Circte-3 (1), Chandigarh and all payments including salary, rent, interest and capital expenditure were found to be true and genuine and the said data was accepted as correct for all intents and purposes While passing the order, she had excluded the depreciation of Rs,1,77,63,831/- from the application of income and also made some small disallowance of Vehicle expenses on estimate basis. (Pages 1 to 3). 3. That we had filed an appeal against the order of the Assessing Officer before the Worthy Commissioner of Income Tax (Appeals) and the Id, CIT (A) Gurgaon in appeal No.304/2/2015-16 for Asstt Year 2010*11, vide order dated 27.03.2017 has h....
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....as been subject matter of a detailed scrutiny U/s. 143(3) of the Income Tax Act. 7. Your good self's attention is invited to the settled law by the Hon'ble Supreme Court in various judgments, which lay down that formation of belief on the basis of escapement of income based on re-appreciation of material already on record is nothing but change of opinion and this view has been taken in the following latest judgments.- a). Commissioner of Income Tax V /s Hindustan Zinc Ltd [2007] 393 ITR 264 -RAJHC. In the above judgment, the Hon'ble Rajasthan High Court has relied on the following celebrated judgments:- i). CIT Vs Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) ii). Calcutta Discount Co. Ltd. vs. ITO [1961) 41 ITR 191 (SC). iii). S. Narayanappa Vs CIT[1967] 63 ITR 219 (SC) iv). ITO Vs Lakhmani Mewal Dass [1976] 103 ITR 437 (SC) v). S. Ganga Saran and Sons P. Ltd. Vs ITO [1981] 130 ITR 1(SC) vi). Sri Krishna P. Ltd. V. ITO [1996] 221 ITR 538 (SC). b). The Hon'ble Delhi High Court in the case of Director of Income Tax Vs. Rolls Royce Industrial Power India Ltd. has held as under: 8.....
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....e had made payments of Rs. 1,09,12,261/- to its members under various heads as salary, rent and interest." Then, your goodself has observed that the above payment of salary and interest are not genuine and reasonable u/s 13 (2) and there is violation of section 13(1)(c) read with section 13{3) of the Act. b) "It is also seen from the Income and expenditure account for the under consideration year that there are huge amounts collected from the students under the various heads and shown the same as Admission Fee, Tuition Fee Regd., Development Fund Regd., Computer fee. Transport charges and Misc. Fee etc. The Assessee is showing fees under the heads Admission and Registration Fees, Tuitions Fees and claiming various kind of huge expenses against She receipts also show that assessee is doing activities on commercial basis and earning huge profits and also accumulated the same in its hooks and not fulfilling conditions of section 11 (1) r.w. 2(15) of I.T. Act, Assessee has shown amount of Rs. 2,91,56,426/- as net income against the total income of Rs. 14,11,60,203/- which is 20 65% of total income which shows that assessee is earning huge profits and....
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.... Please file details of payments made to specified persons in last two years as well as in the year under consideration. Please file details of investments made and also confirm the Investment have been made in the specified assets mentioned in section 11 of the I. T. Act. Q.No.8 of the questionnaire dated 13.07.2012 given during scrutiny u/s 143(3) of the AY 2010-11. "Please give the details of surplus/deficit for the past five years and show as how the accumulated surplus has been utilized in subsequent years. Please certify that the accumulated income has been utilized within the time period allowed for the same and for the purpose in accordance with the provisions of section 11 of the I. T. Act. Submit a chart thereof for the last five years as under:- Year of accumulation To be used up to Purpose Date of Utilization Evidence thereof Please also furnish copy of acknowledgement of submission of Form No. 10 to the AO with respect to each year and the copy of resolution passed for the above purpose for the last five years." Q.No.12 of the questionnaire dated 13.07.2012 given during scrutiny u/s 143(3) of the AY 2010-11. ....
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....d for the three previous years were asked for, utilization of accumulated surplus, copies of bank accounts and complete books of accounts were also required to be produced and the same were submitted to the department, In our detailed reply furnished in the original proceedings, we had in response to question No. 12, submitted the details of capital expenditure of Rs. 336.15 Lakhs which is enclosed as Pages 67 to 68. vi) So far as surplus is concerned, it is submitted herewith that the Assessing Officer while recording the reasons, has not considered or taken into consideration may be deliberately, the complete details of the utilization of surplus by considering the capital expenditure. In our original Income tax return and further a detailed reply furnished in the scrutiny proceedings, we had in response to question No. 12, submitted the details of capital expenditure of Rs. 336.15 Lakhs {already enclosed as Page 10). This has completely been Ignored by the Assessing Officer at the time of recording the reasons and only surplus as per profit and loss account have been considered to the tune of Rs. 2,91,56,426/-. Thus wrong facts have been mentioned in the reasons, ignori....
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....is proved beyond any iota of doubt that this information as being alleged to be stated to have come to the notice of the Assessing Officer at the time of survey is totally falsified. That the Reassessment Proceedings are thus a result of change of opinion which is not permissible in law. Reference may be made to the following judgments:- a) CIT Vs. Kalvinator of India Ltd. 320 ITR 561. b). Orient News Prints Ltd. V/s Deputy Commissioner of Income Tax [2007] 393 ITR 527 - GUJ-HC 13. Besides that, we rely on the following judgments on the same issuea) BBF Industries vs JCIT of Income Tax (OSD) in ITA No. 1162/Chd/2012 Chandigarh Bench, {Pages 1-51, Relevant page 12-13 of judgment set) b) Gujarat Lease Financing Ltd. V/s Deputy Commissioner of Income Tax 360 ITR 496 GUJ-HC (Pages 52-57, relevant page 53 of judgment set) c) General Motors India Pvt. Ltd. V/s Deputy Commissioner of Income Tax 360 ITR 527 GUJ-HC (Pages 59-62, relevant page 59 of judgment set) d) Jashan Textile Mills (P) Ltd. V/s Deputy Commissioner of Income Tax 284 ITR 542 BOM-HC (Pages 63-67, relevant page 64 of judgment set) e) G N Shaw (Wine) (P)....
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.... T. Act has been made. In view of above said position of law and the factual facts and circumstances, the basis of reopening of our case for the AY 2010-11 u/s 148, both on facts and on legal position as enumerated in different Judgments of Hon'ble Supreme Court and others is totally devoid of any valid reasoning. It is requested that the reopening being bad in law and the same is deserved to be quashed." 38.1 The ld. CIT(A) after considering the submissions of the assessee, observed that the A.O. had duly recorded the reasons for reopening the assessment U/s 148 of the Act which were provided to the assessee who raised objections and the same were duly disposed off by a speaking order passed by the A.O. He further observed that the A.O. had right to reopen a completed assessment in two situations, firstly, a completed assessment can be reopened either if there was omission of failure on the part of the assessee to disclose fully and truly all material and relevant facts and the A.O. must have in his possession before he issues notice some material on which he can reasonably form a belief that there has been escapement of income due to some failure or omission on th....
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....matter of the completed assessment proceedings. The argument that the production of the account books and other documentary evidence relevant for assessment must imply a full and true disclosure of all material facts, must be rejected out of hand in the light of provisions of Explanation (i) to Section 147 of the Act, according to which the mere production of books of account or other evidence from which the A.O. could have with due diligence, discovered the material evidence, does not necessarily amount to disclosure within the meaning of the proviso. According to the ld. CIT(A), the submission that even when the order of the assessment does not record any explicit opinion on the aspect sought to be examined in reassessment, it must be presumed that those aspects were present in the mind of the A.O. and had been held in the favour of the assessee, could not be accepted and that the principle that a mere change of opinion cannot be a basis for reopening completed assessments would be applicable only to the situation where the A.O. had applied his mind and taken a conscious decision on a particular matter in issue and it would have no application where the order of assessment did no....
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....es of the assessment orders U/s 143(3) of the Act for the various assessment years. It was stated that the department after raising specific queries with regard to payment of salary, rent and interest to the specified persons had accepted the fact that such payments were being made on the basis of services being offered by the specified persons. It was further stated that there was no tangible material on record which came into the possession of the assessee after completion of the assessment U/s 143(3) of the Act and further the assessee had disclosed all primary facts before the department with regard to salary, rent and interest as such made full and true disclosure. It was reiterated that the issue had specifically been enquired into by the A.O. by way of questionnaire which was replied in different years by the assessee, thus, it was merely a change of opinion which is not permitted by law. It was submitted that for the year under consideration, the original assessment had been framed U/s 143(3) of the Act vide order dated 26/02/2013, there was no failure on the part of the assessee to disclose full & true particulars of income and that there was no tangible material on record....
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....d." Copies of the aforesaid assessment order dated 20/02/2001 is placed at page Nos. 193 to 195 of the assessee's paper book-II. 40.1 It was also stated that there was another note with regard to fact that the assessee had spent requisite amount for achieving all the objects of the assessee society and no funds had been diverted for personal use. Reference was made to page No. 194 of the assessee's paper book. It was contended that even for the later assessment year 2012-13, the claim of the assessee for payment of salary, rent and interest to the specified persons was allowed while framing the assessment U/s 143(3) of the Act which clearly shows that there was a complete application of mind by the A.O. on the issue which had been made the basis for reopening the proceedings U/s 148 of the Act. It was further stated that in the reasons recorded (copy of which is placed at page Nos. 120 to 122 of the assessee's paper book) it had been mentioned that "perusal of record" and then it had been mentioned about the survey proceedings on 28 & 29/09/2016 in the case of the assessee, without pointing out any adverse material found during the course of survey and no addition had been made ....
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....one of the above conditions applies to the assessee's case as neither there was information nor any material in possession of the A.O., although, there was survey conducted on the assessee on 28/29th September, 2016 but this fact of payment of salary, rent and interest was in the knowledge of the A.O. for the past 10 years especially for this year as the questionnaire was raised and the reply was furnished by the assessee during the course of assessment proceedings, therefore, the finding of the ld. CIT(A) in para 5.1.2 at page No. 13 of the impugned order that the A.O. noticed the payment of salary, rent and interest to the tune of Rs. 1,09,12,261/- during the course of survey was totally against the factual facts and circumstances of the case. A reference was made to the orders for different assessment years copies of which are placed at page No. 178 to 277 of the assessee's paper book. It was further stated that the facts of the case relied by the ld. CIT(A) i.e. the case of S. Narayanappa reported in 263 ITR 219 were not applicable to the facts of the assessee's case as there was no fresh material with the A.O. as was in the said case. It was further submitted that the findings....
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.... 6. Prasad Multi Services Pvt. Ltd V/s DCIT, 423 ITR 542 (GUJ) 7. Kapadia Money Changers Pvt. Ltd. Vs. Asstt. CIT, 423 ITR 633 (GUJ) 8. Niranjan Chimanlal Jani Vs. Deputy CIT, 425 ITR 162 (GUJ) 9. B. Kasi Viswanath Vs. ITO, 425 ITR 538 (MAD) 10. Arun Munshaw HUF Vs. ITO, 425 ITR 79 (GUJ) 11. Asian Tubes Pvt. Ltd. Vs. Deputy CIT, 425 ITR 613 (GUJ) 12. R. Kantilal and Co. Vs. ITO, 424 ITR 92 (GUJ) 13. CIT Vs. India Cements Ltd., 424 ITR 410 (MAD) 14. Dr. Rajivraj Ranbir Singh Chaudhary Vs. Assistant CIT, [2017] 79 taxmann.com 152 (GUJ) 15. Blue Coast Infrastructure Development P. Ltd. Vs. Deputy CIT, 81 ITR (Tribunal) 419 (CHD- TRIB) 16. Skyview Consultant Pvt. Ltd V/s ITO and Another, 423 ITR 645 (DLEHI) 17. Mitsubishi Electric Automotive India (P.) Ltd V/s Union of India, 377 ITR 266 (P&H) 18. State Bank of Patiala V/s Commissioner of Income Tax, 375 ITR 109 (P&H) 19. Commissioner of Income Tax V/s ITW India Ltd., 377 ITR 195 (P&H) 20. Commissioner of Income Tax V/s Kelvinator of India Ltd, 320 ITR 561(SC) 21. Pr. Commissioner Of Income Tax V/s....
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....lease file copy of trust Deed/instruments/memorandum of association with which the trust/society was created and subsequent modification to the deed/instrument/memorandum of association. Q2. Please file a readable copy of registration u/s 12A duly attested by the person authorized to sign the return. You are also requested to produce original certificate for verification. Q3. Whether the trust/society is notified u/s 80G of the I. T. Act or is notified u/s 10(23c). If, yes, please file a certified copy by the person authorized to sign the return. Q4. If any assessment u/s 143(3)/144/147 have been framed in your cases in earlier years, please furnish a copy of latest assessment order. Q5. Please furnish name, complete address and assessment particulars along with PAN of each trustee. Q6. Please furnish a note of the activities of your institution/trust. Whether there are any activities which are not as per trust deed. Q7. Please furnish copies of any resolution passed by the trust/institution in the year under consideration. Q8. Please give the details of surplus/deficit for the past five years and show as to how the acc....
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....p; Q17. Please give details of any loan borrowed or repaid during the last three years including the year under consideration. Q18. Also produce ITR statements of the trustees Please note that the above information has been called for u/s 142(1) of the Income Tax Act, 1961 which should be furnished duly verified and as provided in Rule 14 of the Income Tax Rules and each page should be signed by the person authorized to sign the return. Notice u/s 142(1) is enclosed herewith and your case is fixed for hearing on 06.08.2012. Yours faithfully Sd/- (Kanika Aggarwal) Asstt. Commissioner of Income Tax Circle 3(1), Chandigarh." From the aforesaid reason, it would be clear that the A.O. vide question No. 9 specifically asked the assessee to furnish the details of payments made to the specified persons and vide question No. 12, the details were asked relating to the total receipts as well as the expenditures. The A.O. vide Q.No. 17also asked the details of loans borrowed or repaid, therefore, it is clear that the A.O. asked the assessee specific informations. 42.1 In response, the assessee furnished the reply and ....
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....e A.O. after framing the assessment U/s 143(3) of the Act, reopened the assessment by recording the following reasons: 42.4 From the aforesaid reasons recorded by the A.O., it is clear that the A.O. considered the expenses relating to the salary to the specified persons amounting to Rs. 1,09,12,261/- as non-genuine. However, the same were considered to be genuine while framing the assessment U/s 143(3) of the Act, so it was a change of opinion. Similar was the position with regard to the rent and the interest. Now the question arises as to whether the assessment can be reopened on the basis of change of opinion. 42.5 On the same issue, the Hon'ble Apex Court in the case of NDTV Vs DCIT (supra) held that "there being no failure on part of the assessee to disclose all material facts, notice issued to assessee after a period of four years was to be quashed and set aside." In the present case also, there was no new material which came to the knowledge of the A.O. after framing the original assessment U/s 143(3) of the Act, therefore, the reopening was not valid. 42.6 Similarly in the case of ACIT Vs Marico Ltd. (supra), the Hon'ble Apex Court dismissed the SLP against the orde....
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....efore passing the assessment order under section 143. Proceedings were initiated under section 154 before the issuance of a notice under sections 147 and 148 but the proceedings were dropped holding that it was a debatable issue. Therefore, the notice under sections 147 and 148 were clearly based only on a mere change of opinion which was not permissible." 42.9 In the present case also, the A.O. not only asked the assessee to furnish the details relating to the payment made to the specified persons on account of salary, rent and interest but also examined those and thereafter framed the assessment U/s 143(3) of the Act, therefore, the issuance of the notice U/s 148 r.w.s. 147 of the Act, on the basis of the same issue was a mere change of opinion which was not permissible. 42.10 Similarly, the Hon'ble Jurisdictional High Court in the case of State Bank of Patiala Vs CIT (2015) 375 ITR 109 (P&H) held as under: "that the reasons for reopening the assessments which had already been concluded did not show that there was any failure on the part of the assessee to disclose fully and truly all the material facts and thus, it was merely a change of opinion and in vi....
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....Y. 2011-12 in ITA No. 03/Chd/2020 are identical to the facts involved for the A.Y. 2010-11 in ITA No. 02/Chd/2020(supra), therefore, our findings given for the A.Y. 2010-11 shall apply mutatis mutandis for the A.Y. 2011- 12. 44. In the result, all the appeals of the assessee are allowed and all the appeals of the department are dismissed. (Order pronounced in the court on 27/05/2021). ============= Document 1 Sr. Name of the AY No. Member 1 Ms. Anjali given 61,00.000 2013-14 AY 2013-14 A.Y 2014-15 AY 2014-15 AY 2015-16 AY 2015-16 AY 2016-17 AY 2016-17 TR given Unsecured loardncome shown Unsecured loan income shown Unsecured loan income shown Unsecured loan income shown TR given TR giver ITR 65,26,144/ 86,00,000 28,01,754 30,30,320 54,00,000 54,00.000A 36.54,944/ Sardana 2 Ms. Arshi 14,00,000/- Manchanda 3 Ms. Monika 71,00,000/- Sardana 14 Ms. Usha 70,00,000/- Sardana 5 Sh. Sandeep 30,00,000/- 44,45,594/ 51,14,007A Sardana 16 Sh. Sandeep 7,50,000 12,76,890 13,37,978 17,37,762 15.01,657 16,00,....
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....00,000/- Mrs. Monica Sardana Sale of Plot 1879/ Sector 28 Panchkula 3900,000/- Other Sources 8.10.000 Muthoot Finance: Debentures 13.25 66,250/- 47,76,250/- 40,50,000 Mrs. Arshi Manchanda Rent from TATA Tele Services GRAND TOTAL 4.11.836/- 5,00,000/- 2,55,04,046/ 2,04,50,000 Document 3Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py", line 19, in from google_doc_api import process_single_document File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\google_doc_api.py", line 345 elif mime_type in ["image/gif"]: IndentationError: expected an indented block after 'if' statement on line 341 Document 4 Reasons for Re-opening u/s 147 of I.T. Act in case of M/s Manav Mangal Society, Sector 21C, Chandigarh, PAN - AAAAM0564C for the A.Y. 2010-11 Return of income was filed on 30.09.2010 showing NIL Income. The assessee has filed Return of Income in ITR-5, in which there is no claim of exemptions. The case was assessed u/s 143 (3) of I.T. Act on 26.02.2013. During the assessment proc....