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TMI Blog2024 (11) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ging to tax of Rs. 10,74,513/- being the amount of excess of income over expenditure. 2) That in any view of the matter and in any case action of Ld. CIT(A) in denial the benefit of exemption u/s 11 & 12 is bad in law and against the facts and circumstances of the case. 3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in making enhancement of income of an aggregate amount of Rs. 58,84,070/- on account of amalgamation fund and building fund received during the year claimed as capital receipts and more so when such power could not be exercised by him in the facts and circumstances of the present case. 4) That in any view of the matter and in any case action of Ld. CIT(A) in making enhancement of income of Rs. 58,84,070/- is bad in law and against the facts and circumstances of the case. 5) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in enhancing the income u/s 251(1)(a) of the Act, denial the benefit of exemption u/s 11 & 12 and making the addition on account of amalgamation fund and building fund received during the year under new source of income contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied any relief towards taxability of surplus of Rs. 10,74,513/- having regard to absence of registration available under s. 12AA of the Act. While adjudicating the appeal of the assessee, the CIT(A) also found that the assessee trust has inter alia received Rs. 2,68,480/- and Rs. 56,15,590/- which have been directly credited in the balance sheet under the head 'Building funds' and 'Amalgamation funds' and thus, treated as capital receipt by the assessee and consequently not chargeable to tax. The CIT(A) concluded that such receipts aggregating to Rs. 58,84,070/- are in the nature of revenue receipts chargeable to tax. The CIT(A), in exercise of enhancement powers conferred upon him under s. 251(1)(a) of the Act, enhanced the taxable income by Rs. 58,84,070/- on account of money received for designated purposes in Building Fund and Amalgamation Fund. 7. Aggrieved by the denial of relief on the additions made by the AO towards issue of taxability of surplus income and further enhancement of chargeable income, the assessee preferred appeal before the Tribunal. 8. When the matter was called for hearing, Mr. Pavan Ved, the Ld. Counsel for the assessee vociferously countered the upho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (distinguishable from expression 'Trust' under s. 13(3)(cc)). The CIT(A) has eventually deleted the additions made by the AO towards land advance given to Pradeep Sood and Naveen Sood. It was submitted that making unwarranted and incorrect observations towards applicability of mischief of s. 13 on transactions admittedly relating to different years and also falling outside the ambit of s. 13(3) on non surviving additions, is outside the scope of powers conferred on CIT(A). The CIT(A) is not entitled to make extraneous comments on applicability of s. 13 for the transactions unrelated to the AY 2015-16 in question. 8.4 We shall deal with various pleas raised on lack of jurisdiction as well as on other aspects in the succeeding paras where considered expedient. 9. The CIT-DR, on the other hand, supported the respective orders passed by the AO and the first appellant authority. 10. We have carefully considered the rival submissions and perused the material referred to and relied upon and case law cited. The denial of benefit available under s. 11 and further enhancement of income by the CIT(A) in first appeal is under challenge. 10.1. It is the case of the assessee that the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) while reversing the additions on the ground that the transaction do not belong to the year under considerations, however, simultaneously observed that the advances given to the parties are specified under Section 13(3) of the Act. The assessee has placed strong objections to such averments. In the context, the plea of the assessee are three fold (i) the observations made towards applicability of Section 13 to transactions carried out in other years are wholly unnecessary and outside the scope of powers conferred under Section 251 of the Act (ii) The observations of the CIT(A) with reference to Section 13 are generic without specification of particular sub-clause of Section 13 (3). The recipients of the loans/ advances namely Naveen Sood and Pradeep Sood are spouses of the Principal or Administrator of school held in Trust. The assessee has taken support of the judgment rendered by Hon'ble Supreme Court in Thanthi Trust to submit that the expressions 'Trust' and 'Institutions' referred in Section 13(3)(cc) and elsewhere are differently constituted and are not the same. The assessee also refers to the decision of the co-ordinate bench in the case of ACT vs. Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case. The assessee broadly contented that; (a) The powers of enhancement means there should be some base addition. The expression enhancement cannot be equated with expression 'additions'. All the additions made by the AO have either been deleted by the CIT(A) or are covered in favour of the assessee by the decisions of the Tribunal and, therefore, in the absence of any substantive taxable income, the enhancement of taxable income could not arise (b) In view of Section 250(6A), the CIT(A) is under duty to pass the first appellate order within one year from the end of the financial year of filing appeal. Where the order under Section 250(6) has been passed beyond this guiding time limit, the powers of enhancement stands forfeited. Despite the time limit set out in Section 250(6A) to fast track the disposal of an appeal, being recommendatory in nature, the powers of enhancement can not permitted to be exercised to the detriment of the assessee after such definite period assigned by taking advantage of its own wrong/ delay in disposal by the CIT(A). The enhancement powers exercised after a long gap of period will tantamount to granting indefeasible right of enhanceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of business of the assessee, it was not open to the first appellate authority to direct the AO to conduct enquiry about source of investment by assessee. The Hon'ble Delhi High Court noted the decision rendered in the case of Shapoorji Pallonji Mistry, Rai Bahadur Hardutroy Motilal chamaria, Jute Corporation of India Ltd., Nirbheram Deluram and other decisions rendered by the Hon'ble Supreme Court to hold that while the first appellate authority is invested with wide powers under Section 250(1)(a) of the Act and his competence is not restricted to examine only those aspects of the assessment about which the assessee made a grievance but ranges over the whole assessment to correct the AO not only with regard to matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the AO and determined in the course of assessment. However, there is significant limitation to the power of enhancement i.e. it is not open to the CIT(A) to introduce in the assessment, a new source of income and the assessment has to be confined to only those items of income which were subject matter of original assessment. Applying the principle of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1368/Del/2020: A.Y. 2015-16 - Children Welfare Society 19. The captioned appeal has been filed by the assessee society against the First Appellate Order of the Ld. Commissioner of Income Tax (Appeals), Faridabad dated 28.02.2020 arising from the Assessment Order dated 29.12.2017 passed by the Assessing Officer (hereinafter referred to as 'AO') under Section 143(3) of the Income Tax Act, 1961 (the Act) for Assessment Year 2015-16. 20. The grounds of appeal raised by the assessee reads as under: "1) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in denying the benefit of exemption u/s 11 & 12 and bringing to tax of Rs. 65,30,315/- being the amount of excess of income over expenditure. 2) That in any view of the matter and in any case action of Ld. CIT(A) in denial the benefit of exemption u/s 11 & 12 is bad in law and against the facts and circumstances of the case. 3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in making enhancement of income of an aggregate amount of Rs. 61,68,381/- on account of amalgamation fund and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO. * Amount received towards Building Fund, Rs. 57,96,381/- and Amalgamation Fund Rs. 3,72,000/- aggregating to Rs. 61,68,381/-. * The CIT(A), as per para 23 of the First Appellate Order, also advised the AO to consider the facts relating to A.Y. 2015-16 in question and invoked suitable measures, if required, for A.Y. 2013-14 and A.Y. 2014-15 albeit after application of mind and considering the facts of the case independently. 23. Aggrieved by the enhancement action carried out under Section 251(1) of the Act and observations made in relation to A.Y. 2013-14 and A.Y. 2014-15, the assessee preferred appeal before the Tribunal. 24. As pointed out on behalf of the assessee, denial of exemption under Section 11/12 of the Act and thereby treating excess of income over expenditure of Rs. 65,30,315/- as taxable income was made on allegedly on the premise that the assessee has acted in infringement of Section 13 of the Act is devoid of any legally sound basis. For the purposes of such enhancement, the CIT(A) noted that the assessee society had advanced a total sum of Rs. 3,00,00,000/- to one Sh. Navin Sood and Sh. Pradeep Sood for purchase of purchase of certain land parce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of the trust shall apply mutatis mutandis to the assessee society herein. Consequently, enhancement made to the tune of Rs. 61,68,381/- is set aside and quashed. 28. We now advert to third limb of objection raised on behalf of the assessee on account of advise made to the Assessing Officer which led to enhancement of income for unrelated A.Y. 2013-14 and A.Y. 2014-15 which were not subject matter of appeal before the CIT(A). While we look into the impugned objection, it may be pertinent to reproduce the so called advise given by the CIT(A) in first appellate order: "23. It is further noted that the facts of the case of the appellant are similar for the assessment years 2013-14 and 2014-15 to the facts of the case of the appellant for assessment year 2015-16 with the following particulars: Assessment Year Excess of income over expenditure (Rs.) Building fund received during the year (Rs.) Amalgamation fund received during the year (Rs.) 2013-14 68,47,049 69,86,278/- 6,75,200/- 2014-15 62,64,353/- 80,96,999/- 8,59,800/- Therefore, the AO is advised to consider the above facts and decide suitable measures, if required, for assessment years 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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