TaxTMI 
TaxTMI 
2015 (9) TMI 1709
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....peals are decided as under. ITA 478/2013 : A.Y. 2004-05 (Departmental Appeal) 4. The revenue on ground No. 1 challenged the order of ld. CIT(Appeals) in deleting disallowance made on account of vehicle running expenses and depreciation of car in terms of Section 13(2)(b) of the Income Tax Act. The Assessing Officer noted that provisions of Section 13(2)(b) and (c) applies in the case of the assessee and that disallowance out of salary, allowances or otherwise paid to the trustees out of the resources of the institution for services rendered by such persons to such institution need to be disallowed if there is any excess amount of what may be considered as reasonable payment for such services. The assessee trust maintained luxury cars such as Skoda, Ford Icon and Sonata. However, above cars were being used by Shri Anoop Garg, Chairman of the trust. The Assessing Officer noted that trust has no requirement to maintain such luxury cars. Cars have been used by the Chairman, therefore, Assessing Officer noted that the vehicle running expenses and depreciation must have been used for the benefit of trust as well and accordingly disallowed 50% of the expenses and addition was made i....
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....y for educational purposes or that it exist partly for profit motive." The ld. CIT(A) noted that providing of car, whatever be the model, to the Chairman, who devoted full time to the trust, cannot be said to be unreasonable. It was also noted that depreciation is a statutory allowance, therefore, disallowance should not be made. The ld. CIT(Appeals), accordingly, set aside the order of the Assessing Officer and deleted the additions. The Assessing Officer has not brought any material on record as to how he has given his finding that the cars have been purchased for the benefit of the Chairman. The Assessing Officer was also not justified in holding that the assessee trust has no requirement to maintain luxury car. The expenses should be considered from the point of view of the assessee and not for the point of view of the Assessing Officer. In the absence of any material brought on record against the assessee, the order of the Assessing Officer could not be sustained. Further, it is not in dispute that Shri Anoop Garg, Chairman is looking after the activities of the assessee trust whole time and has to visit various Government Departments in connection with the activities of the a....
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....any specific defect, made the addition. The accounts of the assessee are maintained in a computer software known as Tally and in the said software, entries are passed for a particular financial year. Whenever we get the print out of the trial balance, the software would given the print out of whole period. It was submitted that difference in two trial balances could not be treated as undisclosed income of the assessee. The incomplete trial balance was because of the error on the part of the accountant. The submissions of the assessee were forwarded to the Assessing Officer and the Assessing Officer in the remand report, submitted that opportunity was given at the assessment stage but differences were not reconciled by the assessee. The assessee in the rejoinder, reiterated the same facts. The assessee also filed complete details and submitted that when comparison is made of the incomplete trial balances and complete trial balances, there would be no defect. 9. The ld. CIT(Appeals) in his findings noted that Assessing Officer has not rebutted the submissions of the assessee. The assessee was asked to prepare a chart from the ledger account which was available with the department ....
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....ee prepared the balance sheet on the basis of complete data available in the trial balances, the figure came to more as compared to the lesser figure taken by the Assessing Officer from the incomplete trial balance. Therefore, this itself would show that there were no basis what-so-ever for making addition against the assessee. It was merely a mistake in not making certain entries in incomplete trial balance, thus could not be termed as undisclosed income of the assessee. The ld. CIT(Appeals) on proper appreciation of facts and reconciliation statement filed before him, was justified in deleting the addition. We, therefore, do not find any merit in this ground of appeal of the revenue. The same is accordingly dismissed. 12. In the result, departmental appeal is dismissed. ITA 444/2013 (A.Y. 2006-07) (Assessee's Appeal) 13. The assessee in this appeal has challenged the addition of Rs. 5 lacs on account of disallowance of salary paid to Shri Anoop Garg, Chairman under section 13(2)(b)(c) of the Income Tax Act. The Assessing Officer applied provisions of Section 13(2)(b)(c) of the Act for making disallowance because the amount so paid to the Chairman was excess of what m....
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.... at Panchkula and the distance is very wide between them, therefore, Chairman has to visit several places and various government authorities in connection with the activities of the assessee trust, therefore, salary paid to Chairman was reasonable. 16. On the other hand, ld. DR relied upon orders of the authorities below and submitted that no basis have been given for paying Rs. 10 lacs as salary to the Chairman. 17. We have considered rival submissions. The ld. CIT(Appeals) noted in the findings that no incriminating material was found during the course of search regarding payment of salary to the Chairman. The ld. CIT(Appeals) also noted in his findings that no specific reasons have been given for sudden rise and sudden fall in the payment of salary and the Assessing Officer has also not worked out how he came to the conclusion that reasonable salary to be paid to the Chairman should be worked out to Rs. 5 lacs only. The ld. CIT(Appeals) ultimately dismissed this ground of appeal of the assessee. Section 13(2)(c) of the Income Tax Act provides that the income or the property of the trust shall be deemed to have been used or applied for the benefit of person referred in sub ....
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....fore, set aside the orders of authorities below and delete the addition of Rs. 5 lacs. 19. In the result, appeal of the assessee is allowed. ITA 445/2913 (A.Y. 2007-08) (Assessee's Appeal) 20. In this appeal, assessee challenged the addition of Rs. 6 lacs on account of disallowance of salary paid to Shri Anoop Garg, Chairman under section 13(2)(b)(c) of the Act. In this year, Chairman has been paid salary of Rs. 11 lacs. The Assessing Officer found Rs. 5 lacs as reasonable salary and made addition of Rs. 6 lacs. The ld. CIT(Appeals) confirmed the addition. Both the parties stated that issue is same as is considered in assessment year 2006-07 in ITA 444/2013. Following the reasons for decision in ITA 444/2013 (supra) in the case of the same assessee, we set aside the orders of authorities below and delete addition of Rs. 6 lacs. 21. In the result, appeal of the assessee is allowed. ITA 446/2014 (A.Y. 2008-09) (Assessee's Appeal) & ITA 479/2013 (A.Y. 2008-09) (Departmental Appeal) 22. Before we may take up the main ground of appeal in both the cross appeals, it would be relevant to take up the issues which have already been decided in other appeals decide....
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....iation furnished, the Assessing Officer concluded that the assessee was receiving capitation fees from the students over and above the normal fees and in the bargain, the assessee had violated the provisions of Section 2(24)(ii) of the Income Tax Act. The Assessing Officer by referring to copy of the seized paper and list of 59 students in the assessment order found that several receipts are not accounted for by the assessee and accordingly, made addition of Rs. 4 Crores on account of undisclosed receipts of the assessee. 29. The addition was challenged before ld. CIT(Appeals) and written submissions of the assessee is reproduced in the appellate order in which the assessee briefly explained that diaries were seized from the premises of Shri Anoop Garg, Chairman of the trust which are estimated amount of the fees to be received from the students during the whole course which runs for four years in BDS and three years in case of MDS. The fees are regularly recorded by the assessee trust in its books of account. The assessee filed details student-wise as per the list mentioned in the assessment order. Diaries found during the course of search from the residence of the Chairman did....
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....ing the course of search, documents relating to Management quota seats were found and addition was made on the basis of estimation. The Tribunal held, "There is nothing on record to co-relate between any such reality of life to which the Assessing Officer is pointing to who prevented the Assessing Officer to record the statements of the students or their wards. On simple conjectures and surmises, no addition can be made under Income Tax Act. We, therefore, confirm order of the ld. CIT(Appeals) in deleting the addition of Rs. 5.37 Cr." It was submitted that addition cannot be made as proposed by the Assessing Officer. The Chairman of the Trust has already made surrender in his own case, therefore, the addition made by the Assessing Officer would be covered by the surrender made by the Chairman in his personal case. 31. The written submission of the assessee was forwarded to the Assessing Officer for filing remand report in which the Assessing Officer similarly stated that diary was found from the residence of Shri Anoop Garg. The diary record the capitation fees received from the students for which no reconciliation have been filed. The Assessing Officer scrutinized the evidences....
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....me of the remand proceedings and claim of assessee is given below. 1 SI. no as per assessment order 2 Name of the student 3 Amount for which addition has been made by the AO in assessment order 4 Benefit after remand proceedings 5 Students who have not taken admission during the year 6 Out of the balance amount which has been recorded in books 7 Balance amount left which is the estimation of Anoop Garg 1 Suraj Kumar Bains 25000 25000 0 2 Pranjal Tanwar 850000 643732 206268 3 Puneet Sekhar 1650000 1000000 578580 71420 4 Pooja Singla 500000 200000 300000 5 Shiwangi Chanana 540000 540000 0 6 Mangi Ahuja 1115000 665000 450000 7 Anureet Sandhu 703900 300000 200000 203900 8 Shiwangi Gupta 1460000 460000 200000 800000 9 Divya Malik 550000 550000 0 10 Isha Gupta ....
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.... 400000 0 46 Aafreen 250000 250000 0 47 Priyanka 150000 150000 0 48 Dr Kanwaldeep 800000 800000 0 49 Nitika Gupta 300000 300000 0 50 Dr. Alka 500000 500000 0 51 Deepak 1000000 1000000 0 52 Richa Dewan 225000 225000 0 53 Mehak 300000 300000 0 54 Manashi 600000 600000 0 55 Shivangi Channa 1160000 540000 620000 56 Ruby 440000 340000 100000 0 57 Dimple 560000 560000 0 58 Chander Mohan 930000 930000 0 59 Dr. Sethi 1300000 1300000 0 Total 4,06,99,900 1,31,86,080 28,25,000 1,66,40,072 80,48,748 On a perusal of the above chart, the following situation emerges: Column 4 1. Sis. 5,35,36,41,42,43,44,45,46,47,49 and 57 pertain to duplicate en....
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....Counselling of general category held on 13.07.2007. PB-11 is the approved list of admissions for assessment year under appeal. PB-1 is the list of 60 students admitted in academic session 2007-08 as per Counselling done from13.07.2007 to 27.09.2007. On the date of search, there were no admissions of the students. None of the students or their parents have been examined by Assessing Officer. Protective assessment was made in the case of Shri Anoop Garg of the same amount which clearly show that the diary only belong to the Chairman Shri Anoop Garg. He has submitted that ld. CIT(Appeals) correctly deleted the additions which pertain to duplicate entries or the amounts recorded in the books of account. He has submitted that when students have not been admitted in the institution of the assessee trust, there is no question of charging any fees. The amounts already recorded in the books of account should not be added in the hands of the assessee. He has submitted that out of amount of Rs. 1,66,40,072/- of column 6 of the chart prepared by ld. CIT(Appeals), Rs. 1,27,73,280/- was recorded in the books of account till the time of the search which is evident from the seized record which is ....
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....addition was deleted by ld. CIT(Appeals) and that too on the basis of comments received from the Assessing Officer during remand proceedings. The ld. DR during the course of arguments, have not been able to point out any infirmity in the order of ld. CIT(Appeals) in deleting the addition of Rs. 38,80,000/-. On going through the material on record, we find that ld. CIT(Appeals) was justified in deleting the addition in respect of duplicate entries/double additions made by the Assessing Officer and part of the amount which was not recorded. 36(i) From the above discussion in the light of the findings of the ld. CIT(Appeals), we do not find any justification to interfere with the order of ld. CIT(Appeals). The departmental appeal, thus, stands dismissed on ground Nos. 1 & 2. 37. As far as the appeal of the assessee is concerned, the assessee on ground Nos. 1 to 3, challenged the addition of Rs. 2,68,13,920/- on the same issue based on rough notings in the seized diaries. It is not in dispute that diary in question was recovered from the residence of Shri Anoop Garg which contained entries in his own writing. The statement of Shri Anoop Garg was recorded on 15.07.2008 i.e. the da....
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....assessee trust or have given actual picture of the alleged amount received by the assessee trust. The finding of fact recorded by the ld. CIT(Appeals) in deleting substantial addition itself casts doubt on the authenticity and reliability of the recovery of the diary in question. Further, the authorities below have not examined any student or their parent, either during the course of search or at the assessment stage to corroborate the entries stated to be mentioned in seized diary. Thus, the entries contained in the diary itself are not corroborated by any material or evidence on record. The ld. CIT(Appeals) also in his findings in column No. 5, as reproduced above, has mentioned that the students who have not taken admission during the year but maintained addition of Rs. 28,25,000/- on the reasons that the remand report mentioned specific dates with amount against the students. The findings of the authorities below are wholly unjustified because when the students whose names have been mentioned in column No. 5 as per the seized diary have admittedly not taken admission in the institution of the assessee trust, where is the question of those students in paying any amount by way of....
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....count. The assessee has prepared a chart based on the seized record to show that out of amount of Rs. 1.66 Cr, the assessee has recorded the amount of Rs. 1,27,73,280/- in the books of account till the time of search and the balance of Rs. 38,66,792/- have been recorded in the books of account after the date of search. Therefore, the amounts, even if do not match with the seized diary, when have been recorded in the regular books of account even prior to the search, there was no justification for the authorities below to make the addition of Rs. 1,66,40,072/-. Similarly, the students who have not admitted to the assessee trust, there is no question of receipt of fees of Rs. 28,25,000/- from them, therefore, addition of Rs. 28,25,000/- was wholly unjustified. For the sake of argument, even if it is believed that Shri Anoop Garg has received any alleged amount but there is no evidence on record to prove that Shri Anoop Garg has handed over the alleged amount to the assessee trust. 37(iii) It may also be noted here that Shri Anoop Garg has surrendered Rs. 75.80 lacs in his individual case and this amount was accepted by the revenue department in his case for assessment year under a....
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....ion to explain the entry, he has stated that Rs. 15 lacs was received in cash from Dr. Bhalla and later on, cash was returned back. The amount was taken on return basis. There is no entry of Dr. Bhalla. Rs. 4 lacs in cash. 6 lacs through cheque were received from Dr. Jattana but this entry is reflected in the books. The assessee also filed explanation at assessment stage to say that these amounts are in thousands and pertain to petty job work. The Assessing Officer noted that in case of Jattana, Rs. 4 lacs was received in cash and Rs. 6 lacs through cheque, but full amount is not recorded in the books of account. The assessee also failed to prove identity of the creditor, credit worthiness and accordingly, made addition of Rs. 1.67 Cr under section 68 of the Act. 42. The assessee challenged addition before ld. CIT(Appeals) and written submission of the assessee is reproduced in the appellate order in which assessee briefly explained that these entries includes few loans which were taken by assessee Trust and have been recorded in the books of account and rest were planned to avail in near future but was never done. The amounts have been received through cheques and have been ent....
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....wever for the rest of the amount, addition was confirmed. Findings of the ld. CIT(Appeals) in para 8.4 of the appellate order are reproduced as under : "8.4 . I have considered the submissions of the assessee, the remand report as well as the rejoinder. I find that para 5.3 of the impugned order deals with this issue wherein scanned copies of the two pages have been placed. These two papers largely correspond to each other. On confronting, the Chairman of the assessee- trust in the statement orded u/s 132(4) admitted to cash receipts from one Dr Bhalla of Rs. 15 lakhs and Rs. 10 Lakhs from Dr Jatana of which Rs. 6 Lakhs was in cheque and Rs. 4 Lakhs in cash. The contents thereof therefore cannot be dismissed as rough notings or estimates, as they corroborate to a large extent with the statement u/s 132(4) referred to above and dates and names as well as the figures are unmistakable. The assessee in the course of appeal has further advanced that the entries were future budgetary projections for development of the institution for which loans were being taken/funds proposed to be raised and that such loans were mostly received in cheques and were duly recorded. This argument ....
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....ings to treat only the amounts of Rs. 45 lakhs and Rs. 8 lakhs as pertaining to its term loan liability as explained. The further contention is that this seized document was a liability "dena" so the addition u/s 68 was not tenable. The Chairman of the trust in whose possession the documents were found and who is in the know of the entries should have furnished the necessary explanations. Be that as it may, some of the entries are found corresponding with the assessee' s audited accounts while some are just not accounted for. So in the absence of any corroboration, the balance entries to the extent of Rs. 1.14 crores out of Rs. 1.67 crores is confirmed. The assessee partly succeeds in this ground. 44. The ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that in the seized paper, there is no mention of any lacs or crores against the figures of 167. Whatever loans were received by assessee, have been entered into the books of account pertaining to Jattana, Anand, Pudda and the bank and have been shown in the balance sheet as on 31.03.2007. The ld. CIT(Appeals) gave benefit of bank entries of Rs. 53 lacs only but was n....
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.... pay in instalments. The ld. CIT(Appeals) was, therefore, justified in deleting the addition of Rs. 53 lacs in respect of the bank entry particularly, when the same entry also falls in preceding assessment year 200708 because the balance sheet of the assessee for earlier years shows the same entries of the bank. Therefore, no addition could be made in assessment year under appeal. For the rest of the amount in respect of other persons mentioned in the seized paper, assessee explained that these entries are just estimation and no loans have been taken from these persons. The Assessing Officer, however, inferred that assessee has taken loan from these persons. There is no mention of any date against these names. Even no name of assessee is mentioned in seized paper. The statement of the Chairman Shri Anoop Garg was recorded in which also he has not made any allegation against assessee trust of taking any loan or passing the same loan to the assessee trust. There are no entries of the said loans recorded in the books of account of the assessee. The addition under section 68 of the Act could be made if any sum is found credited in the books of account of the assessee maintained for any....