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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI SHRI BASKRAN BR, ACCOUNTANT MEMBER & MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER (A.Y. 2010-11) Ayyappa Seva Samgham Vs. CIT(A)-53 Mumbai Bombay Trust Room No. 631, 6 th Plot No. 185, Floor, Ayakar Shree Ayyappa Temple, Bhavan Churchgate Shree Ayyappa Temple Mumbai-400014 Road, Bangur Nagar, Goregaon (West), Mumbai-400104 PAN AAATA0312K (Appellant) (Respondent) Assessee by Shri S.C.Tiwari Department by Shri Manoj Sinha Date of Hearing 11.07.2022 Date of Pronouncement 07.10.2022 O R D E R PER KAVITHA RAJAGOPAL :-
This appeal has been filed by the assessee as against the Order of the CIT(A), Mumbai passed u/s 250 of Income-tax Act 1961 (herein referred to as Act) pertaining to assessment year 2010-11. The assessee has filed the present appeal on various grounds such as challenging the reopening of the assessment u/s 147 pursuant to notice u/s 148, denial of exemption u/s 11(1)(a), 11(2), restriction of deduction of expenditure, addition on cash deposits and on other consequential grounds.
The brief facts are that the assessee is a religious charitable trust registered u/s 12A since 24-06-1976 and runs a temple in the name of “Shree Ayyappa Temple” at Goregaon, Mumbai. The assessee trust filed its return of income for the impugned year dated 30-09-2010 declaring total income of Rs. 11,18,581/-. The assessee’s case was reopened by issuing notice u/s 148 of the Act dated 31-03-2017 for the reason that it was observed from the ITD system the assessee trust has deposited cash amounting to Rs. 1,07,15,347/- and that the impugned amount was not proportionate to the gross receipts filed by the assessee in its return of income. The A.O. upon reason to believe that income has escaped assessment reopened the assessee’s case and assessment order u/s 143(3) of the Act dated 19-12-2017 was passed by making certain disallowances/additions to the total income of the assessee. The assess was in appeal before the Ld. CIT(A) as against the order for the AO and the Ld. CIT(A) confirmed the said order passed by the AO.
The assessee is in appeal before us challenging the proceedings u/s 147 and on the disallowances/additions made by the AO and confirmed by the CIT(A). The Ld. AR for the assessee contended that the assessee’s case was reopened by the AO by furnishing reasons for reopening which in any way does not disclose there was failure on the part of the assessee to disclose fully and truly the material facts necessary for assessment. The Ld. AR relied on the decision of the Hon’ble Jurisdictional Bombay High Court in the case of Hindustan Lever Ltd. for the proposition that reopening is bad in law if the reasons for reopening do not disclose failure on the part of the assessee to disclose fully and truly the material facts necessary for the assessment. The Ld. AR further contended that the impugned amount on which addition was made are not gross receipts and he further stated that mere deposits in bank are not income per se. The Ld. AR submitted that the AO has wrongly interpreted the same as gross receipts. Further to this Ld. AR submitted that the AO has reopened the assessment on mere suspicion and not on reason to believe that income has escaped assessment. The Ld. AR relied on the decision of Hon’ble Apex Court in Lakhamani Niwaldas to substantiate this proposition of law.
The Ld. DR on the other hand contended that the assessee trust has deposited cash during demonetization and stated that the receipts shown by the assessee and that found by the Ld. AO does not match, thereby establishing the fact that income has escape assessment. The Ld. DR further stated the Ld. AO has reasonable material to reopen the assessment of assessee and that the mismatch of figure was sufficient reason for reopening the assessee’s case. As rejoinder the Ld. AR stated that the gross receipt shown in the return of income field by the assessee has been worked out as explained in annexure A where receipts of Rs. 48,41,502/- has been declared from other sources. The Ld. AR. further stated that the assessee trust has shown these receipts in the Income Expenditure Account and brought our attention to page no. 46 of the paper book filed by the assessee where annexure A has been enclosed. The Ld. DR relied on the order of lower authorities.
We have heard the rival submission and perused the materials on record. It is pertinent to first decide the legal issue raised by the assessee challenging the proceedings u/s 147 of the Act and notice u/s 148. As per the assessee’s submission it is observed that impugned receipts pertain to temple collection and collection under various other heads. The assessee trust as deposited cash of Rs. 3,18,09,117/- from 09-11-2016 to 30-12- 2016 and since the impugned cash deposits were not matching with the cash deposits of earlier year the survey action u/s 133A was conducted on 21-03-2017. During the impugned year from the ITS data the AO observed that the assessee has deposited cash of Rs. 1,07,15,347/- which did not match with gross receipts shown in the return of income. When confronted the assessee stated that the gross receipts shown in the return of income was Rs. 48,41,502/- which has been in annexure A and that these receipts are categorized as income from various sources. The assessee further submitted that the assessee trust is consistently into the practice of showing these receipts on different heads after the reducing direct expenses connected with these receipts. The assessee further stated that the impugned receipts are the net figures shown in the Income and Expenditure Account. The assessee also submitted that receipts of money are found to be in cash and cheque mode which are declared in the statement as either cash/cheque receipts. The assessee trust contented that it had more cash deposits which were duly accounted and audited on the Bombay Public Trust Act. The Audited Balance Sheet and Income Expenditure Account were said to be furnished by the assessee to the AO.
From the above observation it is evident that from the reasons for reopening of assessment it is evident that the AO had premised an opinion that due to difference in the cash receipts as per AIR and the gross receipts income must have escape assessment in the hands of the assessee trust. We would also like to place our reliance on the decision of the Hon’ble Apex Court in the case of Income-Tax Officer v/s Lakhamani Mewaldas (1976) 103 ITR 437 (SC) which held that to reopening an assessment after a lapse of many years is to be construed strictly were the AO should have “reason to believe” and not “reason to suspect” that income has escape assessment. The relevant extract of the said decision cited as under:
The power of the Income-Tax officer to reopen assessment, though wide, are not plenary. The words of the statute are “reasons to believe” and not “reason to suspect”. The reopening of the assessment after the laps of many ears is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi- judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied.
In the instant case we are of the view that the AO has reopened the assessment on the bases of suspicion only since all receipts need not be income. In any case, the assessee has reconciled the figure of the AO. From the facts and circumstances of the case and by respectfully following the above cited decisions it is observed that assessing officer’s action in reopening the assessment is based on suspicion and not on proper reasons. Accordingly, we hold that the assessing officer was not justified in reopening the assessment in the present case. The impugned notice is hereby quashed and set aside. The other ground of appeal becomes academic in nature and needs no adjudication
In the result of the appeal filed by the assessee is allowed.