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TMI Blog2018 (4) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commissioner of Income Tax (Appeal's) has erred in confirming the re-opening of the assessment U/s.148 without co-gent reason. 2. The learned Commissioner of Income Tax (Appeal's) has not considered the fact that as per the reason recorded in writing which states that the appellant has not filed the return of income, whereas the appellant had filed the return of income on 31.10.2005 and the proof the same was submitted to the Assessing Officer. 3. The learned Commissioner of Income Tax (Appeal's) has failed to appreciate the fact that the reason recorded in writing for verification of cash deposit does not attract the provision of section 148. 4. The learned Commissioner of Income Tax (Appeal's) was not justified in not considering the fact that the appellant had declared the cash of Rs. 34,68,000/-deposited in the bank as their income before issuing the notice U/s.148 of the Income Tax Act. 5. The learned Commissioner of Income Tax (Appeal's) was not justified in disallowing the expenditure of Rs. 67,48,467/- on the ground that the appellant trust is not registered U/S.12A as such the primary condition for availing exemption U/s.1 1 has rightly b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the provision of Section 147 of the Act wherein reasons for reopening of the concluded assessment were recorded by the AO , as under:- "Out of the list received i.e. list of non filers based on AIR Information, it is verified from the system that above mentioned assesses has not filed return of income for A. Y.2005-06 even though there is taxable income. In this case the AIR information is as follows: Assessee has deposited cash of Rs. 10 lakhs or more in SB A/c i.e. Rs. 34,68,000/- Therefore I have reason to believe that the income to the extent of Rs. 34,68,000/- to chargeable to tax in A. Y. 2005-06, as escaped assessment and I propose to re-open the assessment by invoking the provisions of section 147 of the Income Tax Act, 1961. Hence , notice U/s 148 of I T Act, 1961 is being issued to the assesses" Thus it is mainly based upon the list of the non filers of the return of income received by the AO based on AIR information that the assessee had deposited cash of Rs. 34,68,000/- in the saving bank account leading to formation of belief by the AO that the income of the assessee has escaped assessment within the meaning of Section 147 led to reopening of the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Police Department including physical fitness instruments and Ambulance Van. It was also submitted by assessee before the AO that the Economic Offence wing of CB-CID has stopped all the transactions in the bank account of the assessee. The AO rejected the contentions of the assessee by holding as under:- " I have considered the submission of the AR of the assessee trust as above carefully, however, the contention of the AR that the income and Expenditure has to be treated as business income and only the deduction u/s 11(2) is not allowed to the assessee in the absence of the certificate u/s 12A, the entire expenses cannot be disallowed simply on the trust is not registered u/s 12A is not tenable and acceptable due to the reasons as under:- Under the provisions of the Income Tax Act, 1961 as amended from time to time, whereas all the expenses wholly and exclusively incurred for the purpose of business of the assessee during the previous year relevant to assessment year under consideration are allowable expense, the expenses incurred for personal non-business and expenses of capital in nature are not deductable. i. It may be seen from the computation of Income filed on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that grounds mentioned for re-opening of the assessment was not correct as the appellant had already filed it's return of income on 31.10.2005 with ADIT(E)I(2) showing Nil income along with audited accounts. The above assessment was also re-opened for verification of cash deposits of Rs. 34,68,000/- in the bank account. The above reason does not indicate that the appellant income has not fully disclosed its true income. The same cannot be the reason to believe that income to the extent of Rs. 34,68,000/- chargeable to taxed has escaped assessment. Simply verification of deposit cannot be the basis for reopening of the assessment. The appellant relied on the order in ITA N0.3814/DEL/11 for A.Y.2008-09 passed by ITAT Delhi „A' Bench in the case of Bir Bahadur Singh Sijwali V/s. ITO wherein similar facts were considered by the honorable ITAT who has allowed the appeal by stating that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for re-opening of the assessment proceedings. From the above facts it is clear that the re-opening proceedings are based on wrong information. The Assessment Order passed U/s. 143(3)/147 is ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income has claimed its status as 'charitable trust' which is governed by special provisions contained under sections 11 to 13 of the Income Tax Act. In the computation of income filed alongwith the return it has claimed application of income u/s. 11(1)(a) @ 15%. Reliance in this regard is placed upon the judgment of Hon'ble Allahabad High Court in the case of Fateh Chand Charitable Trust, 36 Taxmann.com 67 wherein it was held that reopening of the assessment wherein no opinion was expressed by the AO regarding donation disclosed by the assessee trust was valid. Dealing with this issue Hon'ble Court observed as under : "17. At this stage, we may refer the judgement of the Apex Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316. The Apex Court has noted the difference in between the pre-existing section 147 prior to 1st of April, 1989 and its substitution thereafter. It has also considered that at the stage of notice as the case here is what is required is "reason to believe" but not the established fact of escapement of income. At this stage of issue of notice, the only question is whether ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed above grounds of appeal no. 1 to 3 are dismissed. iv. In grounds of appeal no. 4 to 7, the appellant has objected to disallowance of expenses. It was stated that the trust accounts were duly audited by the Chartered Accountant and were simply disallowed since it was not registered u/s. 12A. In this regard, it is mentioned that holding valid registration u/s. 12A is the primary condition for availing exemption u/s. 11 which has rightly been denied by the AO. Further, it is noted that the AO has taxed the appellant's income on commercial principles and has allowed deduction for administrative expenses and depreciation. Further, it is noted that the appellant could not produce complete books of accounts before AO. Further, it could not prove that the expenses of Rs. 59.86 lakhs were incurred for the purpose of business. It was also noted that the expenditure of Rs. 5.45 lakhs was capital in nature and the expenditure of Rs. 2.16 lakhs was for non-business purposes. These observations of the AO have not been rebutted even during the course of appellate proceedings. Accordingly, I have no reason to deviate from the findings given by the AO in his order. Grounds of appeal nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agdi Chawl, B.J. Marg, Byculla, Mumbai -400011. PAN I AADTS 8307 B Ward/Circle/Range ', ADIT (E)-ll(2), Mumbai. Status * Trust Assessment Year I 2005-2006 Whether Resident/Resident but not ordinarily resident/ Non resident ' Resident Method of Accounting ; Mercantile Previous Year : 31.05,2005 Dates(s) of hearing ! As per Order Sheet Noting Date of order ', 22/03/2013 Section and sub-section under which the assessment is made '- Assessed U/s 143(3) r w s 147 of the l.T.Act, 1961 ASSESSMENT ORDER This case has been received on transfer from I.T.O. 15(1)(2), Mumbai vide transfer memo received in this office dated 02.01.2013 for completing the assessment for the A.Y. 2005-06 u/s. 143(3) rws 147 of IT Act, 1961 recording the reasons as under:- "Out of the list received i.e. list of non filers based on AIR Information, it is verified from the system that above mentioned assessee has not filed return of income for A.Y. 2005-06 even though there is taxable income. In this case the AIR information is as follows: Assessee has deposited cash of Rs. 10 lakhs or more in SB A/c i.e. Rs. 34,68,000/- Therefore I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or not before reopening of the concluded assessment u/s 147 nor the assessee could obtain the said information under RTI Act,2005 and it is quite strange that the assessee is making allegations against the Revenue without any evidence on record . It is not disclosed by the assessee from where the assessee got the information as to the non obtaining of the requisite prior permission u/s 151 by the AO from the relevant authority. The assessee is alleging that revenue has not obtained the necessary requisite permissions u/s 151 and onus is on the assessee to bring some evidence to justify its allegations . The assessee is also contemplating at this stage that its donations were capital receipt and hence could not be brought to tax. These contentions are raised for the first time before the tribunal. The details of the said donation as to its nature is not emanating from the records. The assessee has to bring on record sufficient evidences to prove that these receipts are capital donations and that the same is not chargeable to tax within the provisions of the 1961 Act. The assessee is not registered u/s 12A. The onus is on the assessee to prove its contentions. Additional grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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