THE UNITED CHURCH OF NORTHERN INDIA TRUST ASSOCIATION ,MUMBAI vs. ITO (E) 1 (1), MUMBAI

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the addition made in the sum of Rs.14,37,000/- being an amount of re-investment in bonds of HDFC Bank in the facts and circumstances of the instant case.

We have heard rival submissions and perused the materials available on record. We find that assessee is a public charitable trust duly registered u/s.12A of the Income Tax Act and also registered with Charity Commissioner, Mumbai. It is not in dispute that assessee is entitled for exemption u/s.11 of the Act. The return of income for the A.Y.2006-07 was filed by the assessee trust alongwith audited balance sheet, income and expenditure account and audit report declaring total income of Rs.Nil after claiming exemption u/s.11 of the Act. The ld. AO received computer based AIR information regarding the transaction carried out by the assessee in the sum of Rs.14,37,000/-. Accordingly, the assessment of the assessee was sought to be reopened by issue of notice u/s.148 of the Act on 25/03/2013. The assessee did not file any return in response to notice u/s.148 of the Act. Despite that the assessee was given reasons for reopening the assessment by the ld. AO. The ld. AO observed that AIR information reflected the transaction of investment of Rs.14,37,000/- made by the assessee was not explained by the assessee, hence, he added the same to the total income of the assessee and completed the assessment. The assessee pleaded before the ld. CIT(A) that the information furnished by the assessee explaining the AIR details were not considered by the ld. AO and detailed submissions were made before the ld. CIT(A) also. The ld. CIT(A) without appreciating the contentions of the assessee confirmed the action of the ld. AO. Aggrieved by which, the assessee is in appeal before us.

The United Church of Northern India Trust Association 3.1. At the outset, AIR information transaction of Rs.14,37,000/- represent amount invested in HDFC bonds by the assessee. This transaction of investment in HDFC bonds is already duly reflected in the audited balance sheet of the assessee trust. The audited financial statements for the year under 31/03/2006 together with the audit report thereon are enclosed from pages 4-13 of the paper book file. We find that assessee had furnished the Bank of Baroda statement during the assessment proceedings and this bank account maintained with Bank of Baroda is a disclosed bank account as is evident form page 11 of the paper book in the Schedule for bank balances from the audited financial statements. The assessee also made detailed submissions before the ld. AO by enclosing the bank statements of Bank of Baroda from where various cheques for making investment in HDFC bank were reflected out of existing bank funds together with HDFC bond certificates issued by HDFC bank for making investment in bonds totalling to Rs.14,37,000/-. All these documents were duly enclosed before the ld. AO. These documents are enclosed form pages 26-36 of the paper book filed. Hence, it is abundantly clear that this transaction of Rs.14,37,000/- represent investment made in Government notified bonds which is an approved investment contemplated u/s.11 (5) of the Act and the said investment of Rs.14,37,000/- has been already duly reflected in the books of accounts of the assessee trust. The sources for making that investment also stand proved beyond doubt. We also find that the ld. CIT(A) in page 5 para 6.3 of the order had also stated that the investment made in the past by the assessee got matured and the same has been re-invested during this year. If this is so, where is the need to treat the fresh investment made by the assessee as unexplained ? Hence, there is no scope for making any addition towards unexplained investment. Accordingly, the grounds raised by the assessee are allowed.

In the result, appeal of the assessee is allowed.