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Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI
Before: SHRI SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the ITO(Exemption), Ward-1(3), New Delhi against the order of the ld CIT(A)-40, New Delhi dated 07.12.2015 for Assessment Year 2009-10, wherein, the addition made by the ld AO in order u/s 143(3) of the Act dated 30.12.2011 of Rs. 11,13,54,150/- was deleted. Therefore, the AO is aggrieved and has raised the following three grounds of appeal:- “
1. The Ld CIT(Appeal) has erred in ignoring the fact that the accounts of the assessee were defective as the assessee failed to incorporate receipts from “ Government grant account” to the extent of Rs. 25,60,92,254/- in the Income & expenditure A/c;
2. The Ld CIT(Appeal) has failed to appreciate that the assessee has shown expenditure of Rs. 23,76,20,704/- against specified grants out of which an amount of Rs.21,20,71,634/- has been shown as liability payable to own branches
3. The Ld CIT(A) has overlooked the fact that accounts maintained by the respective branches doesn’t reflect corresponding amount receivable from the Head Office and Assessing Officer has made addition of Rs. 11,13,54,150/- being difference in the books as maintained by the branches and Head Office and further as the assessee has failed to offer any details/ proof of expenditure.”
The brief facts of the case shows that the Assessee is a charitable trust registered u/s 12A of the Act. It filed its return of income on 29.09.2009 at Rs. Nil. The relevant form No. 10B and the balance sheet and annual accounts were also filed.
The Assessee object is that it received grant from Department of Women & Child Development, Ministry of Tribal Affairs and Central Welfare Board etc. It maintains a central office account. 4. During the course of assessment proceedings it was found that the Assessee has declared income of Rs. 49,58,711/-. However, in the central office account grand received from Govt. of India did not reflect. The Assessee on question submitted a balance sheet consolidation of Govt grant account showing the total income of Rs. 25,60,92,254. The ld AO noted that this is undisclosed income of the Assessee not shown in the income and expenditure account. The Assessee submitted that such grant is never brought under income of the trust but is distributed to the various branches of the trust. The Assessee submitted the total list of 65 branches. The ld AO noted that the account of the some of the branches are not added. Therefore, the ld AO held that the Assessee should have submitted true and correct account in the return of income but not submitted the major portion of accounts along with return of income. Thus, Assessee has violated fundamental conditions of registration u/s 12A of the Act. The ld AO noted that expenditure to the extent of Rs. 10,24,54,014/- and Rs. 89,00,136/- on the head office account are created by the mere transfer entry by crediting the branch account without corresponding expenditure in the branch account. The same cannot be allowed as genuine expenditure. Therefore, the sum of Rs. 11,13,54,150/- was disallowed. The ld AO further proposed to the Director of Exemption proposal for withdrawal of registration u/s 12A of the Act. The assessment order u/s 143(3) was passed on 30.12.2011 5. The Assessee preferred an appeal before the ld CIT(A) who deleted the above addition and therefore, the AO is aggrieved. 6. The ld DR vehemently supported the order of the ld AO and stated that the addition has been deleted without appreciating the facts of the case. 7. The ld AR submitted a detailed paper book referred to the copy of the letters of sanction of the grant and copy of utilization certificate. He referred to the page No. 48 of the paper book being the letter of Deputy Secretary of Govt. of India dated 18.11.2008 which stated that welfare scheme run by the Assessee were transferred to Central Social Welfare Board on temporary basis till same enquiries are completed as complaint against the Assessee is pending. He further referred to Page | 2