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TMI Blog2018 (8) TMI 1630X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case. 2. That the additions on account of unsecured loan Rs. 11,42,000/- by the CIT (Appeals) out of total additions of unsecured loan of Rs. 60,58,018/- to the appellant case since the Appellant is registered under section 12A of the Income tax Act, 1961 and obtaining approval of exemption under section 10(23C)(v) & (vi) of the Income Tax Act, 1961 is illegal, unjustified in the eyes of law and prejudicial to the principles of natural justice. 3. That the Appellant craves leave to add or amend any grounds of appeal and put-forth evidences and argue other ground during the course of hearing. 4. PRAYER:- That the Appellant prays that the additions on account of unsecured loan of Rs.l 1,42,000/-may kindly be deleted and levy of interest may kindly be deleted in the interest of justice for which the Appellant shall as in duty bound ever pray. 3. Brief facts of the case are that assessee is a Society registered under Society Act, 1860. The assessee has registered U/s 12AA of the Income Tax Act, 1961 and the Chief Commissioner of Income Tax, Orissa has approved exemption on activities in the provisions of section 10(23C) of the Income Tax Act, 1961. Besides, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate sheet enclosed in paper book at page 41 to 44. 3.4 A.O stated in his order that out of 31 unsecured loan creditors, some cases the letter were written back as un-served and some cases no reply has been received. From the above observation it is submitted that most of the cases they have changed their address and some cases out fear from Income Tax Department they have not received the letters, but as far as possible on the part of the assessee we herewith submit the affidavit from the persons as per detail submitted in the separate statement enclosed in the paper Book page No 41 to 44 and affidavits are also herewith submitted in the paper book at page 45 to 68 for your perusal consideration to prove identity, genuineness and creditworthiness of transaction. 3.5 That it is submitted that the amount of loans taken has been utilized towards the activities of the trust and the operation of the activities of 12 units in different places and its utilization have already been submitted during the Assessment proceeding. When there is utilization there must be a fund and sources of funds has been shown in the audited statement of accounts. But as regards to the persons examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing balance 254950 6. Closing Balance 4566668 3.10 But the A.O. has added an amount of Rs. 11,42,000/- including the repayment made during the year relating to this assessment year for an amount of Rs. 2,84.500/- which is not sustainable in the eyes of law. Therefore, this addition is also not sustainable in the eyes of law. Hence it should be deleted. 3.11 As regards to Unsecured loan account of the current year after repayment it is submitted that the balance amount was repaid in subsequent years. Secondly it is supported by an affidavit that the loans were paid by the respective loan creditors namely Smt Smurti Rekha Mohanty, Dr. Ajit Kumar Rout and Sri Amresh Koanr and others the details are as follows: - Sl.No Name of the loan Creditors Amount Borrowed during the year 2009-10 (Rs.) Repayment made during the Year 2009-10 (Rs) Affidavit attached In paper Book at Page 1 Smt. Smurti Rekha Moahanty 160000 57000 55 2 Dr. Ajit Kumar Rout 200000 77000 57 5 Sri Purna Chandra Swain 248500 73500 4 Smt. Nirmala Pani 145000 39000 5 Sri Amersh Koanr 130000 38000 68 6 Sri Subash Ch Sahoo 13500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he object and activities of the assessee are charitable. 8. The assessee has relied the following decisions of supreme court and High courts to support the Appellant's case as detailed below:- a) Sri S.RM.M.CT.M. Triruppani Trust Vs. CIT 230 ITR 636 (SC.)(1998), enclosed in the paper Book at page-78 to 80. b) CIT Vs. Uttaranchal Welfare Society 364 ITR 398 (All.)(2014) enclosed, in the paper Book at page-81 to 84. c) DIT (Exemption) Vs. Keshav Social & Charitable Foundation 278 ITR 152 (Delhi) (2005) enclosed in the Paper Book at page-85 to 88. d) Dy. CIT vs. Agarwal Charitable Trust vide ITAT Appeal No 236 & 237/IND/2011, enclosed in the paper Book at page-89 to 112 9. The Honourable SC Court held that U/s 11(1) every charitable or religious trust is entitled to deduction of certain income from its total income of the previous year. The income so exempt is the income which is applied by the charitable or religious trust to its charitable or religious purposes in India. This is of course, subject to accumulation up to a specified maximum which was 25 %. In that case it was found as in the present case that the assessee had applied more than 75% of the Loan amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hart provided in the written submission at page 4, where name of seven loan creditors have been mentioned, however, affidavits with regard to loan credited to the society only three creditors have confirmed, i.e. i) Smt. Smruti Rekha Mohanty of Rs. 1,60,000/-, ii) Dr. Ajit Kumar Rout of Rs. 2,00,000/- and iii) Sri Amresh Koanr of Rs. 1,30,000/-, aggregating to Rs. 4,90,000/-. It was not disputed that the expenditure incurred during the relevant assessment year and earlier years is on fund raised through unsecured loan and purchases were made on credit was declared in the income and expenditure account as expenses in the hands of assessee. It is also not in dispute that the object and activities of the assessee are charitable. Ld. AR further submitted that the CIT(A) has confirmed addition to the extent of 7 loan creditors and these loan creditors are existing from earlier assessment years and also in subsequent assessment years loans have been obtained and repaid and in assessment year 2011-2012 these facts were also filed with the Income Tax Department. Considering the submissions of the assessee and findings of lower authorities and the charitable activities of the assessee socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee is appearing. Thus, the said statement cannot be a basis to draw an adverse inference against the assessee. Thus, we find that in the instant case, the initial onus which was on the assessee was duly discharged by the assessee and, thereafter the department could not bring any cogent material on the basis of which, the addition or disallowance made could be sustained. We, therefore, delete the addition of Rs. 1,82,00,000/- made u/s.68 of the Act and consequently, we also delete the disallowance of interest of Rs. 3,70,000/-. Thus, the grounds of appeal of the assessee are allowed." We respectfully follow the judicial precedent and considering the activities of the society, objects and the utilization of the funds of the society, we are of the substantive opinion that the addition in respect of three loan creditors namely, Smt. Smruti Rekha Mohanty, Dr. Ajit Kumar Rout and Sri Amresh Koanr, aggregating to Rs. 4,90,000/- cannot be sustained. Accordingly, we delete the addition to the extent of Rs. 4,90,000/- and balance addition of Rs. 6,52,000/- is confirmed. Thus, the ground of appeal of the assessee is partly allowed. 9. In the result, appeal of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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