11, 13(1)(c), Additional Ground, AY 2013-14, In Favour of Assessee, Rule 46A, VISHAKAPATNAM TRIBUNAL
Section 11 आई टी ए टी विशाखापट्टनम ने 21 सितंबर 2020 को फैसला देते हुए कहा कि जब करदाता ने सारी डिटेल और एविडेंस आयकर अधिकारी को दे दिए और आयकर अधिकारी ने कोई चेक नहीं किया। उसी डिटेल और एविडेंस की अगर कमिश्नर अपील जांच करता है तो रूल 46A कि कोई अवेहलना नहीं होती। करदाता की अपील स्वीकार की गई और माना गया की करदाता धारा 11 में छूट पाने का अधिकारी है KANDULA LAKSHUMMA MEMOIAL EDUCATIONAL SOCIETY & ANR. Vs. DCIT. ITAT VISHAKAPATNAM AY 2013-14. In Favour of Assessee.
Facts
कंडोला लक्ष्मा मेमोरियल एजुकेशन सोसायटी ने 7,91,850 रुपए का लोन सोसायटी के एक मेंबर श्री के शिवानंदा रेडी से ले रखा था। एसेसमेंट ईयर 13-14 में यह ओपनिंग बैलेंस था और सोसाइटी में उसको ₹10 लाख वापस दिया। इस प्रकार रुपए 2,08,150 सोसाइटी ने ज्यादा दे दिया। कर अधिकारी ने सोसाइटी को धारा 11 की छूट देने से मना कर दिया क्योंकि ज्यादा रुपया देना धारा 13 (1)(c) का उल्लंघन है। सोसाइटी ने कहा की जो ज्यादा रुपया 2,08,150 दिया है वह सोसाइटी से कोई मांगता था उसको देने के लिए दिया है गलती से एकाउंट्स में शिवानंदा रैडी के नाम से एंट्री हो गई है। शिवानंदा रैडी ने जिस क्रेडिटर को रुपए दिए थे उसका वाउचर एवं कंफर्मेशन भी कर अधिकारी को प्रस्तु्त किया लेकिन कर अधिकारी ने धारा 11 की छूट नहीं देते हुए फैसला कर दिया। कमिश्नर अपील ने उस वाउचर एवं कंफर्मेशन को जांच करके सोसाइटी को धारा 11 की छूट अलाऊ कर दी। कर अधिकारी ने अपील की की रूल 46A के अंतर्गत कमिश्नर अपील को जांच के लिए भेजना चाहिए और जो कंफर्मेशन दी है वह रूल 46A का उल्लंघन है।
FULL Order
DEPUTY COMMISSIONER OF INCOME TAX & ANR. vs. KANDULA LAKSHUMMA MEMOIAL EDUCATIONAL SOCIETY & ANR.
IN THE ITAT VISHAKAPATNAM
- DURGA RAO, JM & D.S. SUNDER SINGH, AM.
ITA No. 179/Viz/2018 (Cross Objection No. 91/Viz/2018) Sep 21, 2020
Section 11 AY 2013-14
Decision in favour of: Assessee
On perusal of the orders lower authorities, we find that the assessee has furnished the details and the vouchers before the AO and he did not cause any enquiries to disprove the claim of the assessee. Since the details are made available to the AO, the AO ought to have made the enquiries with Shri K.Sreeramulu as per the powers vested in him u/s 133(6) or 131 of I.T.Act. When the assessee furnished the details and vouchers without causing any enquiry simply brushing side is unjustified. The Ld.CIT(A) called for the information and the assessee furnished the same information in the form of confirmation letter. There was no difference in the amount as per confirmation and the receipt, hence the simple confirmation letter cannot be held to be fresh evidence when the assessee has complied with the notices and filed the information before the AO. Therefore, we are in agreement with the finding of the Ld.CIT(A) that the AO did not make out a case of excess payment to the member Trustee for his personal benefit by the society. Hence there is no violation of the provisions of section 13(1)(c) of the Act. Therefore, we, hold that the Ld.CIT(A) has rightly directed the AO to grant exemption u/s 11, hence, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.
Counsel appeared: B.Rama Krishna, DR for the Revenue.: G.V.N. Hari, AR for the Assessee
- S. SUNDER SINGH, AM.
- This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Kurnool in ITA No.048/CIT(A)/KNL/2016-17 dated 16.02.2018 and cross objections are filed by the assessee in support of the order of the Ld.CIT(A).
- In this case, the revenue has filed the following grounds of appeal.
- The order of the Ld.CIT(A) is erroneous both on facts and in law.
- On the facts and in the circumstances of the case the CIT(A) has erred in stating that AO has not established that (i) the society is not genuine and misuses the benevolent legislation (ii) Not running the educational institution for which the society was formed (iii) the society is running for the purpose profit (iv) registration granted for genuine charitable/education, not withdrawn by the compete authority, which is not the requirement for invoking section 13(1)(c).
- On the facts and in the circumstances of the case, the CIT(A) has erred in allowing exemption u/s 11.
- On the facts and in the circumstances of the case, the CIT(A) has erred in not appreciating the fact that the assessee has made payment of Rs. 10,00,000/- to the trustee which falls in the ambit of section 13(1)(c).
- On the facts and in the circumstances of the case, the CIT(A) has erred in admitting additional evidence in the form of Confirmation Letters (which have not been mentioned by the Assessing Officer in the assessment order), copies of receipts without giving opportunity to the Assessing Officer in violation Rule 46A.
6 On the facts and in the circumstances of the case, the CIT(A) has erred in allowing deduction u/s.11 for undisclosed income of Rs. 1,03,65,000/- and income from undisclosed Bank Account of Rs. 7,79,514/-.
- Any other ground that maybe urged at the time of hearing of the case.
All the grounds of appeal are related to the denial of exemption u/s 11 of the Income Tax Act, 1961 (in short ‘Act’). The assessee is a Society engaged in running the educational institution, i.e. engineering college and maintenance of hostel filed its return of income for the A.Y.2013-14 on 19.08.2014, disclosing total income of Rs.Nil, after claiming the exemption u/s 11 of the Act. During the assessment proceedings, the Assessing Officer (AO) found that the Society has shown a loan of Rs.7,91,850/- against Sri K.Sivananda Reddy, a member of the society as opening balance as on 01.04.2012, in the books of accounts of KLM Educational Society (Hostel). The AO found that against the due of Rs.7,91,850/-, the assessee paid the amount of Rs.10 lakhs, thus it has paid the excess amount of Rs.2,08,150/- over and above the amount due to Sri K.Sivananda Reddy and not recorded the same in the books of accounts. In the ledger account of Corporation Bank, it was shown as Rs.7,91,850/- as against the actual payment of Rs.10 lakhs on 30.03.2013. Since the provisions of section 13(1)(c) are attracted, the AO called for the explanation of the assessee as to why the exemption u/s 11 should not be denied, since the excess amount was paid to the member of the society. In response to the notice, the assessee filed explanation stating that the assessee has paid the sum of Rs.10 lakhs towards the amount due to Sri K.Sivananda Reddy and also for settlement of dispute with regard to the liability for supplies made by one of the parties Shri Sreeramulu. Since the society intended to utilize the services of the member of the society, Shri K.Sivananda Reddy for settlement of the dispute, the said amount was paid through the member and no excess amount was paid by the assessee. As there was no excess amount paid to the member, over and above the actual amount due to him, the assessee submitted that there is no contravention of the provisions of section 13(1)(c) of the Act, hence, requested the AO not to deny exemption u/s 11 of the Act. The AO considered the explanation of the assessee, but not convinced, since, the said amount was not recorded in the books of accounts of the assessee and the assessee has not furnished any evidence except the receipt / vouchers from the trader. Therefore, the AO rejected the explanation of the assessee and the surplus income was treated as income of the assessee, denying the exemption u/s 11 of the Act. Apart from the denial of exemption, the AO also made addition of Rs.1,03,65,000/- in respect of caution deposits, Rs.7,79,514/- in respect of undisclosed bank accounts and Rs.80,62,870/- on account of disallowance of depreciation and the expenditure was disallowed to the extent of 10% amounting to Rs.11,05,053/-.
- Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) found from the details furnished by the assessee that there was no violation of provisions u/s 13(1)(c) of the Act and has paid the sum of Rs.7,91,850/- to Sri K.Sivananda Reddy and the amount of Rs.2,08,150/- was paid to Sri K.Sreeramulu. Thus, held that there is no violation of section 13(1)(c) of the Act, no justification for denying the exemption u/s 11 of the Act and accordingly directed the AO to allow the exemption. The Ld.CIT(A) allowed the appeal of the assessee.
- Against the order the of the Ld.CIT(A), the revenue has filed appeal before us. During the appeal hearing, the Ld.DR argued that the AO has rightly denied the exemption u/s 11 of the Act by invoking the provisions of section 13(1)(c) of the Act. It was found from the books of accounts of the assessee that an amount of Rs.7,91,850/- was due to Sri K.Sivananda Reddy, against which the assessee has paid the sum of Rs.10 lakhs, giving room for invoking the provisions of section 13(1)(c) of the Act. It is evident from the order of the AO that the assessee has never recorded the sum of Rs.2,08,150/- paid to Sri K.Sreeramulu. The assessee also has not furnished the details of transaction and Sri K.Sreeramulu and the rice supplied by him was also returned. The assessee has not furnished any evidence except submitting the receipts / vouchers to support the contention that the sum of Rs.2,08,150/- was paid to Sri K.Sreeramulu, but not to the member of the Trust. Therefore, argued that the AO has rightly denied the exemption claimed u/s 11 of the Act by invoking the provisions of section 13(1)(c) of the Act. Therefore, argued that the order of the Ld.CIT(A) needs to be set aside and the assessment order to be restored. The Ld.DR also submitted alternate argument that since the Ld.CIT(A) has entertained the fresh evidence, the case needs to be remitted back to the file of the AO, since no opportunity was given to the AO as required under Rule 46A of Income Tax Rules.
- Per contra, the Ld.AR submitted that the assessee has furnished the entire information which is clearly evident from the order of the AO. The Ld.AR further submitted that as per page No.2 of the assessment order, the assessee has submitted its explanation, stating that out of the payment of Rs.10 lakhs, Rs.7,91,851/- was paid to Sri K.Sivananda Reddy and the balance amount of Rs.2,08,149/- was paid towards the settlement of dues to Sri K.Sreeramulu, rice supplier. The Ld.AR submitted that there was a mistake in the ledger account, instead of writing the actual payments made to Sri K.Sreeramulu and Shri K.Sivananda Reddy the entire sum was taken in the name of Sri K.Sivananda Reddy. The Ld.AR further argued that it is incorrect to say that the assessee has not furnished the details to the AO. From the assessment order, it can be seen that the assessee has furnished the receipts, vouchers from the traders. Therefore, submitted that there is no fresh evidence, hence, there is no need to remit the matter back to the file of the AO. The Ld.AR argued that there is no violation of provisions of section 13(1)(c), hence, there is no case in denying the exemption. The Ld.AR further submitted that even after considering the caution deposit, the assessee has spent more than 85% of capital receipts, hence no interference is called in the order of the Ld.CIT(A).
- We have heard both the parties and perused the material placed on record. In this case, the reason for denial of exemption u/s 11 was the payment made to Sri K.Sivananda Reddy, member of the Trust. The assessee has paid the sum of Rs.10 lakhs to Sri K.Sivananda Reddy in a consolidated cheque representing the amounts due to Shri K.Sivananda Reddy and Shri K.Sreeramulu. The total amount due to Shri K.Sivananda Reddy was Rs.7,91,850/- and the amount paid towards the settlement of dues to Shri Sreeramulu was Rs.Rs.2,08,150/- . However in the books of the assessee, the payment was shown at Rs.7,91,850/-, whereas in the bank account it was shown as Rs.10 lakhs. The AO called for the explanation of the assessee and the assessee explained the transaction stating that Sri K.Sivananda Reddy was paid the actual sum of Rs.7,91,850/- and the balance amount was related to the amount due to Sri K.Sreeramulu who was a rice supplier, towards the settlement of a dispute with regard to supplies made. The assessee also furnished the ledger extracts, vouchers from Sri K.Sreeramulu. The AO did not make any enquiries with Sri K.Sreeramulu to find out the fact. Without examining the genuineness of the payment made to Sri K.Sreeramulu, The AO denied the exemption u/s 11 of the Act, presuming that the assessee has made excess payment to Sri K.Sivananda Reddy, thereby violated the provisions of section 13(1)(c) of the Act. We find from the order of the AO that the assessee has furnished the information and filed the explanation, produced vouchers, therefore, the burden of the assessee has been discharged and the AO failed to bring any evidence to show that the excess amount was paid to Sri K.Sivananda Reddy, member of the Trust.. The Ld.CIT(A) has called for the details and found that the sum of Rs.7,91,850/- was paid to Sri K.Sivananda Reddy and the balance amount of Rs.2,08,150/- was paid to Sri K.Sreeramulu. At the same time, the Ld.CIT(A) also observed that there was a dispute between the assessee and Sri K.Sreeramulu, the rice supplier, who was continuously pressing for the payment and the payment was finally settled through Sri K.Sivananda Reddy. Thus, the assessee has paid the sum of Rs.10 lakhs towards the amount due to Sri K.Sreeramulu and Sri K.Sivananda Reddy and no amount was paid to Sri K.Sivananda Reddy in excess for his own benefit. For the sake of clarity we extract, relevant part of the order of the Ld.CIT(A) which reads as under :
“From the details furnished by the appellant, it is clear that Sri Sivananda Reddy provided funds to the society. The balance due to Sri K Sivananda Reddy was Rs.7,91,850/- as on 31.03.2013. At the same time, an amount of Rs.2,08,150/- was due to Sri K Sreeramulu, who was insisting for payment of the amount due to him by the society. The society was disputing the payment on the ground that the rice supplied by Sri K Sreerarnulu was not up to the mark. Finally, the society prepared to pay the amount through Sri K.Sivananda Reddy. Therefore, the appellant paid Rs.10,00,000/- i.e. Rs.7,91,850/- due to Sri K Sivananda Reddy and Rs.2,08,150/- due to Sri K Sreeramulu. The payment made by the Society to Sri K Sivananda Reddy is not for the benefit of Sri K Sivananda Reddy. The provisions of Sec.13(l)(c) clearly indicate that the violation would come into play only if such payments were made for the personal benefit of the persons interested in the management of the society. In the case of the appellant, there is no such personal gain to Sri K Sivananda Reddy so as to enable the AO to apply the provisions of Sec.13(1)(c) of the I.T. Act and reject the claim for exemption u/s 11 of the Act. Further, the A0 has not established that (i) the society is not genuine and misuses the benevolent legislation (ii) not running the educational institution for which the society was formed (iii) the society is running for the purpose of profit (iv) registration granted for genuine charitable/ educational purpose, not withdrawn by the competent authority (v) members are getting any benefit of society and (vi) The payment ofRs.2,08,150/- was not due to Sri K.Sreeramulu and the amount of Rs.7,91,850/- was not due to Sri K.Sivananda Reddy. There may be an error in the accounting by the society. Keeping in view the aforementioned facts, I, hold that the appellant society is lawfully entitled for benevolent provision of sec.11 of the IT Act. The AO is, therefore, directed to grant exemption u/s 11 of the IT Act.”
On perusal of the orders lower authorities, we find that the assessee has furnished the details and the vouchers before the AO and he did not cause any enquiries to disprove the claim of the assessee. Since the details are made available to the AO, the AO ought to have made the enquiries with Shri K.Sreeramulu as per the powers vested in him u/s 133(6) or 131 of I.T.Act. When the assessee furnished the details and vouchers without causing any enquiry simply brushing side is unjustified. The Ld.CIT(A) called for the information and the assessee furnished the same information in the form of confirmation letter. There was no difference in the amount as per confirmation and the receipt, hence the simple confirmation letter cannot be held to be fresh evidence when the assessee has complied with the notices and filed the information before the AO. Therefore, we are in agreement with the finding of the Ld.CIT(A) that the AO did not make out a case of excess payment to the member Trustee for his personal benefit by the society. Hence there is no violation of the provisions of section 13(1)(c) of the Act. Therefore, we, hold that the Ld.CIT(A) has rightly directed the AO to grant exemption u/s 11, hence, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.
- The assessee filed cross objection with the delay of 7 days, but has not filed the condonation petition. Therefore, the cross objections are dismissed in limine.
- In the result, appeal of the revenue as well as the cross objections of the assessee are dismissed.
Order pronounced in the open court on 21st September, 2020.