THE ITO-EXEMPTION, INDORE vs. M/S VAJDI EDUCATIONAL SOCIETY, INDORE

Assessment Year: 2012-13 ITO(Exemption) M/s. Vajdi Educational Society, Indore बनाम/ F-12, Jhoomer Ghat Rau, Vs. Indore (Revenue) (Respondent) PAN:AAAAC1063F Revenue by Shri R. S. Ambedkar Sr. DR Respondent by Shri S.S. Deshpande, CA Date of Hearing: 03.06.2019 Date of Pronouncement: 04.06.2019 आदेश / O R D E R PER MANISH BORAD, A.M: This appeal at the instance of revenue pertaining to Assessment Year 2012-13 is directed against the order of Ld. Commissioner of Income Tax(Appeals)-II, Indore, (in short ‘CIT(A)’), dated 22.03.2018 which is arising out of the order u/s 271(1)(c) of the Income Tax Act 1961(hereinafter Vajdi Educational Society ITANo.582/Ind/2018 called as the ‘Act’) framed on 30.03.2017 by ITO, Exemption Indore. The revenue has raised following grounds of appeal: “(1) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty holding that the quantum appeal has been set aside by the Income Tax Appellate Tribunal, even though the quantum appeal for the relevant A.Y. has not yet been decided.”

2. At the outset, ld. counsel for the assessee submitted that the instant appeal of Revenue challenging the deletion of penalty u/s 271(1)(c) of the Act deserves to be dismissed as the Hon'ble Tribunal vide its order dated 28.03.2018 has set aside the issues relating to quantum addition to the file of Ld. Assessing Officer( in short AO) for deciding afresh and Ld. CIT(A) has rightly followed the order of the Tribunal and deleted the penalty u/s 271(1)(c) of the Act. Copy of the order of the Tribunal dated 20.03.2018 vide ITANo.574/Ind/2016 pertaining to A.Y. 2010-11 placed on record.

3. Per contra Learned Departmental Representative (in short Ld. DR) failed to controvert the submissions made by the ld. counsel for the assessee.

Vajdi Educational Society ITANo.582/Ind/2018 4. We have heard rival contentions and perused the records placed before us. The revenue’s sole substantive ground is against the deletion of penalty levied u/s 271(1)(c) of the Act by the Ld. CIT(A). We find that the assessee is an Association of Person (Trust). It filed its income tax return on 28.09.2012 declaring loss of Rs.3,13,683/-. Case was selected for scrutiny through CASS. Assessment u/s 143(3) of the Act was framed on 27.03.2015 after making additions of Rs.97,79,116/-.

s are dismissed.”

9. There is no dispute with regard to the fact that similar additions was made in the A.Y. 2010-11 as well and the Tribunal in ITANo.653/Ind/2013 pertaining to A.Y. 2010-11 has decided as under: “13. The contention of the assessee is that the opinion of AO these companies belong to Lunkad Group. The assesse had filed the confirmations from the creditors, the balance sheet, the copy of bank statement and copy of income tax return of the said creditors. It is contended on behalf of the assessee that the companies do not belong to Lunkad Group. The confirmation along with balance sheet and the income tax returns with the bank statement were filed in the case of M/s. K.K. Patel Finance Ltd. and M/s. Jayant Securities Finance ltd. and if the Ld. counsel drew our attention to paper book page nos. 62 to 68 and 95 to 99 in support of this contention. There is no dispute with regard to the fact that the law is well settled. The assessee is required to prove identity of the creditors genuineness of transactions and creditworthiness of the creditors. In the present case, the revenue has doubted about the genuineness of the transactions. It is stated by the Ld. counsel for the assessee that the company from whom loan was taken does not belong to the Lunkad Group which was involved into the business of entry providing. The counsel for the assessee has demonstrated that the companies were having sufficient amount for giving such loans, however, we find that the Ld. CIT(A) doubted the 4 Vajdi Educational Society ITANo.582/Ind/2018 genuineness of the transactions, on the basis that the assessee had no requirement of loan as the assessee itself having sufficient fund available with it. In our view this suspicion of the Ld. CIT(A) is justified, no sane person would take loan thus make himself liable for interest expenditure when he is himself having sufficient fund, however, contention of the assessee is that was required for construction of building. We therefore, considering the totality of the fact, deem it proper to set aside this issue to the file of the AO to verify whether the companies for which loan has been taken belong to Lunkad Group and give a specific finding whether the transactions in the question were executed through circuitous route suggesting that money belonging to the assessee is routed through the channel of loan. With these observations the issue is restored to the file of the AO for decision afresh. The ground nos. 4 to 4.2 are allowed for statistical purposes. We therefore, taking a consistent view restore the issues raised in there grounds to the file of AO and decide the same afresh in the light of the above direction in ITANo.653/Ind/2013(supra).

7. From perusal of the finding of the Tribunal mentioned above we find that the quantum additions on which the penalty of Rs.28,70,000/- stands levied u/s 271(1)(c) of the Act has been set aside for deciding afresh to the file of the Ld. AO. Penalty u/s 271(1)(c) of the Act is leviable on the additions confirmed in the hands of assessee. In the instant case since the quantum addition has been deleted because the relevant issues have been set aside to the file of Ld. AO to deciding afresh, therefore, at this stage, penalty u/s 271(1)(c) of the Act cannot be levied. Therefore, 5 Vajdi Educational Society ITANo.582/Ind/2018 Ld. CIT(A) has rightly deleted the penalty by following the decision of the Tribunal setting aside the quantum issues to the file of the Ld. AO for examining afresh. However, the Ld. AO will be at liberty to initiate the penalty proceedings afresh in respect of the issues restored to him.