9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 890 - AT - Income TaxExemption u/s. 11 denied - violation of provisions of section 36A(3) of the Bombay Public Trust Act 1950 - activities are illegal and non-genuine and/or not in accordance with the objects - AO treated the assessee trust as an Association of person denying exemption u/s 11 of the Act and thereafter applying provisions of Section 145 (3) and rejected the books of account - admission of additional evidences by the LD CIT (A) - HELD THAT - In the remand report objecting to the admission of the additional evidence merely stated that the assessee was given an opportunity from January 2015 to substantiate claims but assessee did not submit the same till the conclusion of reassessment proceedings in the month of March. We find that the show cause notice was issued to the assessee only on 13.03.2015 which was replied by the assessee on 23.03.2015 there after it is evident that when the assessment order was passed on 31.03.2015 the assessee did not have any sufficient opportunity to produce those confirmations. Therefore we find that there is no error on the part of the learned CIT (A) in admitting that confirmation which are merely supporting evidences in admitting them in deciding the same after giving the learned Assessing Officer opportunity to examine the same. Accordingly ground number 1 of the appeal of the learned Assessing Officer is dismissed. Violation of the provisions of Section 36A (3) of the Bombay Public Trust Act - CIT (A) clearly noted that the assessee trust has taken a returnable interest free loans - claim of the AO is that the assessee should have taken a permission of the charity commissioner and as it has violated the provisions of the Bombay Public Trust Act the assessee should be denied exemption u/s 11 of the Income Tax Act. Learned Assessing Officer in the remand report accepted that no loans were taken by the trust during the relevant year and no property of the trust has been utilized for the advantage of the trustees. Thus in absence of any contrary evidence produced before us we do not find any reason to not to agree with the order of the learned CIT (A) that assessee has not violated provisions of Section 36A of the Bombay Public Trust Act. Therefore ground number 2 of the appeal is dismissed. Addition u/s 69A and 69B - There was no unexplained money where the assessee was found to be the owner was found. The assessee gave explanation about the nature source of such bank deposits which was examined by AO and no irregularity was found. Therefore with respect to the contributions deposited in those bank accounts the provisions of Section 69A of the Act has been wrongly applied by the learned Assessing Officer more so after the complete verification during the course of remand proceedings. Therefore with respect to the contribution deposited in the bank account the learned CIT (A) has correctly held that same cannot be added u/s 69A of the Income Tax Act and hence deleted. With respect to the applicability of Section 69B of the Act we find that assessee has given self-help loan to the members of the trust and given the details of such money utilized for the purposes of that activity which is returnable to the assessee without any interest. These details were also verified by the learned Assessing Officer during the course of remand proceedings and based on that the learned CIT (A) has correctly deleted the addition u/s 69B of the Act. Accordingly ground number 3 and 4 of the appeal of the learned Assessing Officer are dismissed. Trust exists only for a specified community - The categorical finding was given that the membership of the trust was given to any person who carries on any business or commercial activity in a particular area irrespective of any caste etc. The learned CIT(A) following the decision of M/S. DAWOODI BOHARA JAMAT 2014 (3) TMI 652 - SUPREME COURT has clearly come to conclusion that the assessee trust was not created for the benefit of any particular religious community but was open to public at large carrying on any trade or commerce in a particular area. Therefore in absence of any contrary evidence placed before us we hold that the learned CIT (A) is correct that the provisions of Section 13 (1) (b) of the Income Tax Act are not attracted in the case of the assessee. Accordingly ground number 5 of the appeal is dismissed. Violation of the provisions of Section 13 (1) (C) and Section 13 (2) - We find that the activity of the self-help where the loan is given by assessee without interest to the needy members of the society. Such needy persons may be the trustees of the trust also. The loan was also given to the trustees on the same terms and conditions as it was given to any other members of the society. Therefore no special benefits were given to the trustees - identical issue has been accepted by the learned Assessing Officer in the reassessment proceedings for earlier years and assessment proceedings for subsequent years the learned and CIT(A) has held that no income of the trust was applied for the benefit of the trustees. In view of this we do not find any infirmity in the order of the learned CIT(A) in holding that there is no violation of the provisions of Section 13 (1) (C) and Section 13 (2) of the Act and therefore the exemption u/s 11 of the Act cannot be denied to the trust. Accordingly ground number 6 of the appeal is dismissed. Not adjudicating the rejection of the books of account u/s 145 - in view of our decision on the earlier grounds wherein we have held that the assessee is entitled to the exemption u/s 11 of the Act on the accounting entries covered in those bank accounts also which were not disclosed before the learned Assessing Officer we find that this ground becomes merely academic in nature and the learned CIT (A) is correct in not adjudicating the same. Accordingly we dismiss ground number 7 of the appeal. Revenue appeal dismissed.
Issues Involved:
1. Admission of additional evidence by CIT(A) under Rule 46A. 2. Denial of exemption under Section 11 of the Income Tax Act due to alleged violation of Section 36A(3) of the Bombay Public Trust Act. 3. Addition of ?15,95,82,806/- under Sections 69A and 69B of the Income Tax Act. 4. Applicability of Section 13(1)(b) regarding benefit to a particular religious community. 5. Applicability of Sections 13(1)(c) and 13(2) regarding benefits to trustees. 6. Rejection of books of accounts under Section 145 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Admission of Additional Evidence by CIT(A) under Rule 46A: The CIT(A) admitted additional evidence submitted by the assessee, which included confirmations from members regarding transactions. The AO did not raise any serious objections to the admission of these evidences. The Tribunal found that the CIT(A) was within his rights to admit additional evidence, especially since the AO was given an opportunity to examine the same, and the evidence supported the original claim of the assessee. Thus, the Tribunal upheld the CIT(A)'s decision to admit the additional evidence. 2. Denial of Exemption under Section 11 of the Income Tax Act Due to Alleged Violation of Section 36A(3) of the Bombay Public Trust Act: The AO denied the exemption under Section 11, claiming that the assessee violated Section 36A(3) of the Bombay Public Trust Act by taking interest-free loans without the Charity Commissioner’s permission. However, the CIT(A) found that no loans were taken during the relevant year and no property of the trust was utilized for the advantage of the trustees. The Tribunal agreed with the CIT(A) that there was no violation of Section 36A(3) and upheld the exemption under Section 11. 3. Addition of ?15,95,82,806/- under Sections 69A and 69B of the Income Tax Act: The AO added ?15,95,82,806/- under Sections 69A and 69B, attributing it to undisclosed bank accounts. The CIT(A) found that these sums were related to self-help activities of the trust, where contributions were made by members and loans were given to members without interest. The AO, in the remand report, confirmed that these activities did not generate any income. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the contributions and loans were genuine and verified. 4. Applicability of Section 13(1)(b) Regarding Benefit to a Particular Religious Community: The AO argued that the trust benefited a specific religious community, violating Section 13(1)(b). The CIT(A) found that the trust’s membership was open to any person carrying on business in a specific area, irrespective of caste. Relying on the Supreme Court’s decision in the case of Dawoodi Bohra Jamat, the Tribunal upheld the CIT(A)'s finding that the trust did not benefit a particular religious community and thus did not violate Section 13(1)(b). 5. Applicability of Sections 13(1)(c) and 13(2) Regarding Benefits to Trustees: The AO claimed that the trust violated Sections 13(1)(c) and 13(2) by providing benefits to trustees. The CIT(A) found that loans were given to trustees on the same terms as other members, with no special benefits. The Tribunal upheld the CIT(A)'s decision, noting that the self-help loans did not generate income and were provided equally to all members, including trustees, without any special benefit. 6. Rejection of Books of Accounts under Section 145 of the Income Tax Act: The AO rejected the books of accounts under Section 145 due to undisclosed bank accounts. The CIT(A) did not specifically adjudicate this issue. The Tribunal found that since the exemption under Section 11 was upheld and the contributions were verified, the rejection of books of accounts became academic. Thus, the Tribunal dismissed this ground. Conclusion: The Tribunal dismissed the appeal filed by the AO, upholding the CIT(A)'s order in favor of the assessee on all grounds. The exemption under Section 11 was allowed, and the additions under Sections 69A and 69B were deleted. The Tribunal also found no violation of Sections 13(1)(b), 13(1)(c), and 13(2).
|
