9911796707
TMI Blog2015 (9) TMI 1709X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in a sum of Rs. 8,84,410/-. 5. The ld. CIT(App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 assessee trust. No incriminating material was found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 being part of the seizure to compare the two trial balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 may be reasonably paid for such services. The Assessing Officer no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section (3) if any amount is paid by way of salary, allowances or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 decided above in the case of the same assessee. In assessee's appeal, ground Nos. 8, 9 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 not belong to the assessee trust. Shri Anoop Garg could have maintained any diary for his own conven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal 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 furnished by assessee alongwith seized documents. The Assessing Officer enclosed Annexure-A to his remand report with regard to clarification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition 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 560000 560000 0 11 Urvi Sharma 650000 650000 0 12 Divya Batra 350000 350000 0 13 Arshwinder Singh 500000 500000 0 14 Nikita Gupta 300000 233200 66800 15 Sukhbandan Kaur 500000 500000 0 16 Somya Bagga 350000 350000 0 17 Sampada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion emerges: Column 4 1. Sis. 5,35,36,41,42,43,44,45,46,47,49 and 57 pertain to duplicate entries of names. For instance at SI 5 and 55 is Shiwangi Chanana; at SI 35 and 16 is Somya Bagga etc. 2. Sls.25, 26, 30, 32, 33, 55 and 58 pertain to amounts recorded in the books. 3. Sls. 18,19,20,21 and 27 pertain to double additions. 4. Sls. 3,7,8, 23 and 56 where part of the sum are not recorded. * Benefit to the assessee works out to Rs. 1,31,86,080/-. Column 5. In respect of sis 48, 50, 51, 52 and 53, it is the claim of the assessee that these students did not take admission during the year. However the remand report mentions specific dates with amounts against these students, so the contention that these were written on estimate basis and the same had not been received does not hold strength. The ostensible approved registered list of students were part of the additional evidence but the same are in-house list, so no credence can be given. Column 6. The sums in this column are claimed by the assessee as recorded in the books. However on remand, the AO has after due verification, categorically stated that the dates appearing in the seized books do not either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also clear from column No. 6 of the chart prepared on the basis of the seized material and Rs. 38,66,792/- is the amount which was recorded in the books of account after the date of search which is clear from column 10 of the chart prepared and filed on record. He has, therefore, submitted that the entire addition was wholly unjustified. The entries in the seized diary are the estimated amount of the fees to be received from the students for whole of the course which runs for 4 years in case of BDS and three years in case of MDS. He has also submitted that the dates corresponding to the entries in the diaries are mostly for the month of July,2007 and August,2007. Sample copies of the pages are filed on record but the Counselling of the students to be admitted for the course were actually till September,2007. He has submitted that after completion of the Counselling Session and on receipt of the approved list, the students were admitted. He has, therefore, submitted that entire addition is unjustified in the hands of the assessee trust. 35. On the other hand, ld. DR relied upon orders of the authorities below. 36. We have considered the rival submissions and perused the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search. Copy of the same is placed on record. Several questions were asked to him during his examination seeking explanation with regard to entries contained in the diary. He has, however, did not make any statement against the assessee trust with regard to receipt of any capitation fees/extra fees received on behalf of the assessee trust. According to the statement of the assessee, the entries found in the seized diary are the estimated amount of fees to be received from the students during the whole course because the course runs for three to four years. The assessee in the Paper Book has filed the Admission Counselling held by the University for admission in the Institution of the assessee trust and also filed approved list of the students to be admitted. The Counselling has been held from 13.07.2007 to 27.09.2007. Thus, the fees would have been received by the assessee trust after approval of the list by the university. There is no question of receipt of any fees by the assessment trust later on i.e. date of search 15.07.2008. The date of search is 15.07.2008 and as such revenue should have proved the nexus of the entries contained in the seized diary with the amount received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion fees or fee to the assessee trust. Therefore, there was no justification to make addition of such students who have not taken admission in the Institution of the assessee trust merely because their names were mentioned in the seized diary. The addition of Rs. 28,25,000/- is liable to be deleted. 37(ii) The ld. CIT(Appeals) (in column No. 6) has confirmed the addition of Rs. 1,66,40,072/- in respect of the amount, "out of the balance amount which have been recorded in the books.". When the findings of the ld. CIT(Appeals) based on the remand report of the Assessing Officer says that the amount of Rs. 1.66 Cr has been recorded in the books of account of the assessee trust, where is a question of making addition against the assessee trust. The ld. CIT(Appeals), on the basis of the remand report noted that the dates appearing in the seized diary do not match with the ledger account, therefore, addition was made. As is noted above, since seized diary was the estimated figures made by the Chairman Shri Anoop Garg, therefore, there is no question of matching the dates with the entries contained in the regular books of account maintained by the assessee. Since the diary was found fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeals of Shri Anoop Garg which were heard together with these appeals, the ld. counsel for the assessee seek permission to withdraw the same appeals and vide separate orders, the same have been dismissed as withdrawn. The amount of Rs. 75.80 lacs, once accepted by Shri Anoop Garg of his own, therefore, same can not come to the assessee in any manner and therefore, the balance amount of Rs. 80.48 Cr in the hands of the assessee in respect of column No. 7 which is balance amount left, which is the estimation by Shri Anoop Garg, could not be added in the hands of the assessment trust. This amount could only be considered in the case of Shri Anoop Garg, Chairman of the assessee trust and sine surrendered amount of Rs. 75.80 lacs has already been made in the case of Chairman and his appeals have been dismissed separately, there was no justification to make double addition of Rs. 80.48 lacs in the hands of the assessee trust. 38. Considering the totality of the facts and circumstances and above discussion, we do not find any justification for ld. CIT(Appeals) to sustain the addition of Rs. 2,68,13,920/- out of the total addition of Rs. 4 Cr. We, accordingly, set aside the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f account. He has relied upon decision of Gujrat High Court in the case of Radhe Developers India Ltd. 329 ITR 1 in which it was held that "where the addition made on the basis of figures in the loose paper has been deleted by the Tribunal after appreciating evidence on record found that the said figures were projected estimates and no actual transactions had taken place and no evidences on record to indicate to contrary is found, no interference is called for in the order of the Tribunal." He has also relied upon decision of the Gujrat High Court in the case of CIT V Maulik Kumar K. Shah 307 ITR 137 in which it was held that "When no other evidence had been shown to justify that these amounts were received from the purchasers, the concurrent finding was that on the basis of these loose papers, no addition was justified." The assessee also filed explanation regarding details noted in these diaries which is noted at page 19-20 of the appellate order in which the assessee explained that as regards the entry of Jattana, Anand and Pudda, these we4re unsecured loans taken by the assessee trust for its objectives which are reflected in the books of account and could be verified from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he figures represent estimates cannot be accepted. I am afraid these assertions appear to my mind to be after thoughts to fit into the judicial decisions being relied upon. During the remand proceedings the AO had vehemently stated that the claim of the assessee that an amount of Rs. 82,00,000/- out of the addition of Rs. 1.67 crores had been received and duly recorded should not be accented as no corroborative documentary evidence had been filed. 1 find that the assessee in PB 249-269 had furnished copy of Balance Sheet of BRS Institute of Medical Sciences for AY 2007-08 wherein in at page 151 in the List of unsecured loans as on 31.3.2007, the names of Dr. (Mrs)Bhupinder Kaur Padda (Rs. 18,00,000/0; jatana (Rs. 6,00,000/-) and Anand (Rs. 5,00,000/-) are reflected. These three names as well as the amounts correspond to the names in the seized documents though in the case of Jatana, the figure in the document is Rs. 10 lakhs instead of Rs. 6 lakhs. Similarly in the List of secured loans at page 151, there is an entry of PNBTL-293800NF00191380 (TL) and bank interest is also found debited in the P/L account. A bank certificate dated 01.02.2013 of PNB intimating the availing of te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same basis. Since the four loans pertain to assessment year 2007-08, therefore, no addition could be made in assessment year under appeal 2008-09. Even otherwise, provisions of Section 68 would not apply in the case of the assessee because for rest amount there is no entry in the books of account. Shri Anoop Garg admitted in his statement that he has taken some loan in cash and there is no evidence on record to connect the assessee trust with any loan taken by him in his personal capacity. He has submitted that it may be an estimate of the Chairman and referred to certificate of Punjab National Bank (PB-1099 and balance sheet as on 31.3.2007 PB-252). He has, therefore, submitted that entire addition is liable to be deleted. On the other hand, ld. DR relied upon orders of the authorities below. 45. We have considered rival submissions. The assessee filed balance sheet as on 31.3.2007 and the certificate of the Punjab National Bank intimating the availing of term loan by the assessee trust. The assessee also in the written submissions specifically explained that the assessee trust has taken loan of Rs. 6 lacs from Jattana Rs. 5 lacs from Anand and Rs. 18 lacs from Pudda and those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer as satisfactory, the sum so credited could be charged to income tax as income of the assessee of that previous year. Since there is no sum found credited in the books of account of the assessee in assessment year under appeal and no reliable evidence was found during the course of search, that these were genuine loans taken by assessee in assessment year under appeal, no addition could be made with the help of Section 68 of the Act of the rest of amount. 45(i) It may also be noted here that when the ld. CIT(Appeals) deleted the addition in respect of the loans mentioned in preceding assessment year of the bank, the ld. CIT(Appeals) should not have sustained the addition of Rs. 29 lacs in respect of three unsecured loans recorded in bla and balance sheet of the assessee as on 31.3.2007. The Hon'ble Delhi High Court in the case of Girish Chaudhry 163 Taxman 608 held that, "There is no basis as to how the Assessing Officer came to the conclusion that 48 was Rs. 48 lacs. No material is there to support such finding of the Assessing Officer. It is a dumb document. Add ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
