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TMI Blog2013 (10) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... estrained from taking any coercive steps to effect recovery. In view of the agreement between counsel for the parties, the writ petition is disposed of by directing the Tribunal to decide the appeal within one month from today. During the period of one month, the revenue shall not take any coercive measures to effect recovery but in case the petitioner has already given any undertaking with respect to payment, the petitioner would be obliged by the same. Sd/- (Rajive Bhalla) Judge Sd/- (Dr.Bharat Bhushan Parsoon) Judge September 19,2013." 2. The aforesaid order of the Hon'ble High Court received by this Bench on 09.10.2013 and in compliance of the same, this Bench issued necessary instructions to the office to fix the appeals filed by the assessee on 14.10.2013 by issuing a notice dated 10.10.2013 on the address mentioned by the assessee in Form No.36 (Col. No.10) i.e. Sh. Kulwant Rai Jain, Advocate, 77- Hall Bazar, Amritsar, which was taken note personally by Sh.K.R.Jain, Advocate, the ld. counsel for the assessee on 10.10.2013. In compliance of the directions of Hon'ble High Court, the aforesaid cases came up for hearing before the Bench on 14.10.2013. Sh. K.R.Jain, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT has not appreciated the facts that the appellant is constituted under the provisions of Punjab Town Improvement Act, 1922 with the object to provide public utility services by way of roads, sewerage, water supply, electricity supply system etc. besides providing housing plots for all section of the society. Hence, the observation of the ACIT that the appellant is engaged in business is wrong and without justification. 5. That the Ld. ACIT has erred in law and on facts while making an addition of Rs.3,57,59,054/- on account of valuation of closing stock. The Ld. ACIT has not appreciate the system of accounting regularly employed by the appellant and facts of the case. 6. That the Ld. ACIT has erred in law and on facts while making an addition of Rs.3,91,71,643/-. The Ld. ACIT has not appreciated the fact that receipts of Rs.9,67,38,200/- has been worked out on the basis of accounting method regularly employed upon by the assessee. 7. That the Ld. ACIT has not appreciated the facts that no addition is called for in view of principle of consistency. 8. That the Ld. ACIT has erred in law and on facts while making an addition of Rs.1,64,599/- for the alleged violation of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the status of 'AOP" whereas the appellant has filed the return in the status of charitable trust. 4 That the Ld. ACIT has not appreciated the facts that the appellant is constituted under the provisions of Punjab Town Improvement Act, 1922 with the object to provide public utility services by way of roads, sewerage, water supply, electricity supply system etc. besides providing housing plots for all section of the society. Hence, the observation of the ACIT that the appellant is engaged in business is wrong and without justification. 5. That the Ld. ACIT has erred in law and on facts while making an addition of Rs.11,53,23,006/-. 6. That the Ld. ACIT has erred in law and on facts in selecting the case for compulsory scrutiny which is not in accordance to instruction for selection of case for scrutiny. 7. That the Ld. ACIT has erred in law and on facts while not treating the trust eligible for exemption u/s 11 of the Act." 8. In ITA No.409(Asr)/2013, for the A.Y. 2005-06 the assessee has raised following grounds of appeal: "1. That the Ld. DCIT, Circle-1, Bathinda has erred in law and on facts while imposing the penalty of Rs.1,39,85,883/- under section 271(1)(c). Likewise th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for fresh adjudication and the same was pending when the assessment was completed. 12. The ld. CIT(A), Bathinda vide its order dated 19.03.2013 observed that the ITAT vide its order dated 18.12.2012 has dismissed the appeal of the assessee for grant of registration u/s 12AA of the Act. After considering the submissions of the assessee, it was observed that there was no impact on the present case of the submissions and the decision relied upon by the assessee and therefore, the ld. CIT(A) rejected the ground of the assessee and confirmed the status of an AOP. 13. As regards the claim of the assessee with regard to the activities relating to public welfare and claimed that the A.O. has wrongly observed that the assessee has carried out business activities. The Ld. CIT(A) vide page 3 of his order in this regard observed that the appeal of the assessee for grant of registration u/s 12AA of the Act, has been dismissed vide order dated 18.12.2012 of ITAT, Amritsar Bench (supra), especially the ITAT in para 7.6 at page 16 held that the assessee-trust has been involved in carrying on business activities which are in the nature of trade, commerce or business and that it has not done any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the perusal of the said audit report, it transpired that as per Internal Audit Report, the income of the assessee for the year under consideration was Rs.13,59,09,843/- while as per audited Income and Expenditure Account, the income was shown at Rs.9,67,38,200/-. Thus, there was a difference of Rs.3,91,71,643/-. In this regard, it was explained by the assessee to the AO that the internal audit report is a 'Cash Flow Statement' having both capital and revenue receipts whereas the special audit report was in consonance with the Income Tax Provisions. However, neither the Internal Audit Report was furnished during assessment proceedings despite the requisition made in this regard by the AO nor any other positive documentary evidence in support of its version was furnished. Accordingly, the AO made an addition of Rs.3,81,71,643/- to the income returned. 17. The Ld. CIT(A) observed at page 5 of his order that the assessee has not produced Internal Audit Report either before the A.O. or before him and no supporting evidence that it has consistently been following the same method of accounting has been furnished. In the absence of any evidence that the assessee has been following consis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity." 7.1. Keeping in view the aforesaid provisions, the charitable purpose include relief to the poor, education, medical relief and advancement of any other object of general public utility. In the present case, we found that the assessee-trust is carrying on various activities in the nature of trade, commerce or business and rendering its services for the purpose of trade, commerce and business because as stated above, the assessee-trust is charging huge fees on account of various facts, as mentioned above. No doubt, the assessee has given some explanation for charging fees for the afore-mentioned activities by stating that the assessee-trust is charging fees as per rules framed by the Punjab Local Bodies Govt. which is clearly the admission by the assessee-trust that the assessee-trust is doing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque to PWD (B&R) for public use. (o) Grant of Rs.1.25 lakhs to "Deaf and Dumb School" Bathinda vide Resolution No.11 dated 14.04.2007 for the welfare of such handicap students. (p) Land reserved for 'Yatri Niwas' in Bathinda near to New Bus Stand in 49.5 Acre (free of cost). (q) Land provided for 'Approach Road' nearly 60 wide 382.4 sq. mtr. Construction cost is nearly Rs.23.67 lacs approved vide Resolution No.21 dated 11.10.2007 (free of cost)." 7.2. After perusing the aforesaid activities, we are of the view that the ld. first appellate authority has rightly held that the land of the assessee trust is in the same category of other real estate products available in the market offered by the private colonizers and real estate agents. Because the assessee advertised this value added product widely in print as well as electronic media so as to attract a large number of customers/clients from all the general public including the financially sound persons from the public. 7.3. It is a matter of record that the assessee-trust sells off all these plots by organizing a public auction, where through the bidding process and the competition generated in it, the prices of their land ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied that the activities of the assessee-trust are not genuine and not being carried out in accordance with the objects of the assessee-trust, as discussed above. 7.5. The Ld. counsel for the assessee has also not established before us that the assessee-trust is carrying out any charitable activities for the relief of poor, education, medical relief or for any other object of general public utility. 7.6. The ld. counsel for the assessee has cited the various judgments in the case of Welham Boy's School Society vs. Central Board of Direct Taxes And Another (2006) 285 ITR 74 (Uttranchal), Chaturvedi Har Prasad Educational Society vs. CIT (2010) 134 TTJ (Lucknow) 781, Kailashanand Mission Trust vs. ACIT (2004) 83 TTJ (Del) 418 and Punjab Urban Planning & Development Authority vs. CIT (2006) 103 TTJ (Chd) 988, which are not relevant and applicable to the facts and circumstances of the present case. In these decisions, there is no adjudication of the amended provisions of section 2(15) substituted by the Finance Act, 2008 w.e.f. 01.04.2009 as well as section 12AA(3) of the Act. As per Finance (No.2) Act, 2004 there is an amendment introduced by the said Act w.e.f. 01.10.2004 in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A). Thus, ground No.4 of the assessee is also dismissed. 19.3. As regards grounds No. 5 & 6, the AO made an addition of Rs.3,57,59,054/- on account of under valuation of closing stock., the observation made by the AO, that the total amount of development is worked out at Rs.4,25,87,033, whereas the assessee has shown valuation of opening and closing stock at RS.24,90,00,000/- and Rs.20,90,78,000/- respectively meaning thereby that 83.967% of the oepnign stock remained with the assessee as closing stock. Therefore, Rs.3,57,59,054/- being 83.967% of development expenses were not apportioned by the assessee in valuing closing stock, which tentamount to under-valuation of closing stock has rightly been confirmed by the ld. CIT(A) and we find no infirmity in his order. Accordingly, Grounds No. 5 & 6 of the assessee are dismissed. 19.4. As regards ground No.7 with regard to consistency, the ld. CIT(A) has rightly rejected the contentions of the assessee and has rightly confirmed the order of the AO that assessee has not produced any supporting evidence with reference to consistency and we find no infirmity in his order. Thus, ground No.7 of the assessee is dismissed. 19.5. As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before any of the authorities below and therefore, ground No.6 of the assessee is dismissed. In view of the above discussions, appeal of the assessee in ITA No. 417(Asr)/2013 is dismissed. 23. Now, we take up appeal of the assessee in ITA No.409(Asr)/2013 for the A.Y. 2005-06. The brief facts of the case are that the assessee has filed his income tax return on 27.01.2006 declaring a loss of Rs.10,13,770/-. While framing the assessment u/s 143(3) of the Act, the A.O. has observed that the assessee has wrongly claimed the status of Charitable Trust as Regn. u/s 12AA was refused by the Ld. C.I.T. Bathinda and the rejection of refusal was upheld by the ITAT, Amritsar Bench, Amritsar. Further, while completing the assessment u/s 143(3) of the Act on 02.07.2010 an addition of Rs.3,91,71,643/- was made on account of understatement of receipts. Thus, the total receipts of assessee worked out to Rs.13,59,09,843/-. The amount applied for charitable purposes i.e. main activities and administrative expenses have been shown at Rs.5,79,14,150/-. In this way, the assessee has applied only 42.61% of its receipts for its activities. As the assessee is enjoying the benefits of sections 11 & 12 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of CIT vs. British Paints India Limited reported at 188 ITR 44 (SC). Hence, the closing stock was re-worked out, inter alia, after inclusion of development expenses incurred and the said development expenses were proportionately apportioned to the sales and closing stock. In this way, the value of closing stock was worked out by the AO at Rs.36,72,40,895 as against Rs.33,31,25,000/- shown by the assessee. Difference of Rs.3,41,15,895/- on account of under-valuation of closing stock was added to the income returned and inter alia for concealing the particulars of income to the said extent, penalty u/s 271(1)(c) has also been imposed. B) Receipt of Land Sold & Other Receipts: In the Income and expenditure account, the sale receipts were shown at RS.3,98,89,561/- while in the details furnished during assessment proceedings, the same were shown at Rs.4,44,05,449/-. With regard to the difference in the receipts to the tune of Rs.45,15,888/-, it was explained by the assesse that the same could be on account of some cheques having been bounced. The assessee also filed Internal Audit and Inspection report of the trust from April,2004 to March, 2005 in which the rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures as per audit report and as appearing in the income and expenditure account. D Difference in Bank Balances: During assessment proceedings, the AO noticed that the bank balances did not match with the balances available in the account books. On comparison of various balances, the following position emerged: Name of bank Balance as per ledger Balance as per bank SBOP, Grain Market, Bathinda 1,16,27,283.11 1,31,79,283.11 OBC A/c No.8592 72,44,772.48 70,13,038.48 Post Office A/c No.3128864 789.00 Not available SBBJ a/c No.7212 12,913.14 Not available SBI, ADB, Bathinda. 4,84,380.00 50,19,999.00 SBOP, Bathinda Cantt. 9,24,000.00 62,00,000.00 Thus, there was a difference of Rs.1,10,17,714/-. In this regard, it was explained by the assessee that the difference could be on account of cheques issued but not cleared and/or cheques received but not encashed. The assessee accordingly filed a reconciliation chart and as per the said chart, there still existed a difference of Rs.4,38,659/-. Accordingly, an addition of Rs.4,38,659/- was made by the AO holding the same an unexplained bank deposits and investments having been made outside the books of account. Subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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