DCIT (EX) - 1(1), MUMBAI vs. THE LOHAR CHAWL DAWOODI BOHRA MERCHANTS ASSOCIATION, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 3635/Mum/2018 (A.Y. 2012-13)

The Dy. Commissioner of The Lohar Chawl Dawoodi Income Tax (EX) -1(1) Bohra Merchants’ Association Room No. 506, 5 th Floor, Piramal Chambers, 56/62, Chandabai Bldg., Vs. Lalbaug, Parel, 2nd Floor, Mangaldas Road, Lohar Chawl, Mumbai-400 012 Mumbai-400 002 PAN No. AAATL0024D Appellant .. Respondent

Revenue by : Ms. Surabhi Sharma, CIT DR Assessee by : Shri Deepak Tralshawala, Advocate Date of hearing : 16.12.2021 Date of Pronouncement: 19.01.2022

ORDER PER PRASHANT MAHARISHI, AM:

01 This appeal is filed by The Joint Commissioner Of Income Tax (Exemption) – 1(1), Mumbai (The Learned Assessing Officer/ AO ) against the order passed by The Commissioner Of Income Tax

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 (Appeals) – 5, Mumbai [ The ld CIT (A) ] dated 26/2/2018 for assessment year 2012 – 13 raising following grounds of appeal:-

“1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in admitting additional evidences without giving the reasons for 46A of the I. T. Rules, 1962 despite the fact that the Assessing Officer in his Remand Report has categorically opposed their admission on the ground that adequate opportunity was given to the assessee to submit the evidence during the assessment proceedings.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 c) The assessee has not taken statutory permission of Charity Commissioner required for such borrowings u/s. 36A of the Bombay Public Trust Act, 1950; d) The borrowings and the transactions in the Bank Account were not even reflected in the Balance Sheet/ Income & Expenditure Account filed before the Charity Commissioner or Audit Report in Form 10 B. 3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 15,95,82,806/- made u/s. 69A & 69B of the Income-tax Act, 1961, mainly on the basis of additional evidence and Remand Report though the admission of additional evidence is not in accordance with the Rule 46A of I. T. Rules, 1962.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 exemption u/s. 11 was denied on the ground that in reality, the actual beneficiaries were only of a particular religious community, which is hit by application of section 1 3(1)(b) of the I. T. Act, in view of the decisions of Hon'ble Supreme Court in the case of Sole Trustees, Loka Skikshana Trust Vs. Commissioner Income Tax (1975) 101 ITR 234 (SC) and Dawoodi Bhora Jamat in SLP No. 9004 of 2010. (Para 46 and while Ld. CIT(A) has decided issues considering Para Nos. 49 & 50 of the judgment in isolation), specifically, when before the AO, the assessee failed to bring details of any beneficiaries of other communities.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 and no consolidated Balance Sheet or Audited reports were submitted either in the form prescribed in I. T. Law or Bombay Charitable Trust Law..

02 The brief facts of the case shows that assessee is a trust. It is registered u/s 12 A of The Income Tax Act [The Act] and also with the charity commissioner Mumbai under The Bombay Public Trust Act, 1950 [The BPT ACT]. It filed its return of income on 7/9/2012 along with income and expenditure account, balance sheet and audit report in form number 10B declaring its total income of Rs. Nil. Case of the assessee was picked up for scrutiny.

03 During the course of assessment proceedings, the learned AO raised several issues.

i. He observed that the assessee trust had taken interest free loan of ₹1,79,97,000/- which are repayable. The learned AO also asked the assessee to produce permission taken from the Charity Commissioner in accordance with the provisions of the Bombay Public Trust Act, 1950. Assessee submitted that it did not have any such permission. Therefore, the learned AO noted that assessee has violated the provisions of Section 36A of the Bombay Public Trust Act and noted that though the object of the trust are “ Quardan Hasana” , but the assessee is required to take the permission from the Charity Commissioner. Therefore, according to the Assessing Officer it was in violation of the provisions of Section 11 of the Income Tax Act and hence, he rejected the exemption to the assessee under that Section.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 ii. The learned AO further examined balance-sheet of the assessee and observed that assessee has maintained various bank accounts however, on verification of the details, it was observed that there were certain cash deposits in the Axis Bank Account of the assessee of ₹1,631,180/– as per Annual Information Return [AIR] information. Therefore, the assessee was asked to produce complete details of cash deposits and sources of the same. Copy of the AIR information was also given to the assessee. In response to that, assessee submitted the details of their activities and note on cash deposit in Axis Bank Account No. 8433. The AO noted that assessee has also maintained another account in the name of the trust itself in the same bank i.e. Axis bank, which was also not disclosed in the return of income in the balance sheet provided. Therefore, he came to conclusion that assessee has two undisclosed bank accounts, not only with Axis Bank but also two more undisclosed accounts with Standard Chartered bank. When questioned, the assessee submitted that these accounts were though not disclosed in the return of income filed and same on verification was found to be correct, these accounts remained undisclosed because of sheer oversight. It was stated that in those bank accounts, contributions are received from the members of the trust and self-help loans are given to the members of the trust. It was further stated that the surplus in those bank accounts continues to be Nil as the contribution in all the above accounts have been fully utilized towards the object of the trust and the very nature of the utilization of the funds clearly shows that trust operates on the principle of mutuality. Assessee also contested that there has been no escapement of income and all the loans given and the repayment thereof are by the account payee cheques only. The learned assessing officer rejected the contention of the assessee. He was of the view that it is clear that

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 there are undisclosed bank accounts admitted by the trust, hence, assessee is engaged in the activities which are not genuine. Thus according to him, activities of trust are not in accordance with the object of the trust. Therefore, he made a proposal for withdrawal of registration u/s 12 A of the Income Tax Act to the Principal Commissioner of Income Tax (Exemptions), Mumbai. With respect to the taxability of the amount deposited in the undisclosed accounts where 4 (four) accounts not taken into account at the time of preparation of the balance-sheet and income and expenditure account which are audited, he issued a show cause notice on 13/3/2015 asking the assessee that why the benefit of Section 11 of the Act should not be withdrawn and the amount involved in those bank accounts should not be regarded as undisclosed income and taxed accordingly. He also proposed to apply the provisions of Section 145 (3) of the Act. Assessee submitted a reply on 23/3/2015. The main contention of the assessee is that the amount received in the said bank accounts are contribution and subscriptions received from the members and against the same the assessee trust is providing loans and other charities to the needy members of the trust itself therefore, those are not undisclosed receipts. It was also pleaded that exemption u/s 11 of the Act cannot be denied. Assessee submitted the complete list of contributions received from the members along with the confirmation of accounts for the loan given by the trust to the various members of the trust. Assessee also submitted that it works towards the object of the trust, it is covered by “Quardan Hasana” and neither interest is charged and nor interest is paid, therefore, there is no income arising out of that. Assessee also submitted that for the same bank accounts separate books of accounts maintained and the balance sheets are drawn, every contribution in disbursement is accounted for.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 Assessee submitted entire members’ contribution and payments made along with the balance sheet and receipts and payments of those bank accounts are reconciled.

iii. The learned assessing officer on perusal of four bank accounts, two each in Axis bank and in Standard Chartered bank held that it is crystal-clear that the assessee has failed to disclose all true and correct material facts in respect of the income of the assessee trust in the return of income. He noted that a sum of ₹12,49,18,348 and ₹1,97,24,158 are deposited in two bank accounts with Axis Bank whereas ₹83,20,150 and ₹66,20,150/- are deposited into banks accounts of the Standard Chartered bank. Assessee also submitted before him five box files containing the individual Ledger account of the members and bank accounts of the above for undisclosed bank accounts along with Xerox copy of receipts and payments duly audited on 1/8/2012 however without audit report in form number 10 B and also without audit report under the Bombay Public Trust Act, 1950. The learned Assessing Officer examined the same and noted that audit report in form number 10 B dated 1/8/2012 filed with the return of income did not reconcile with the details now submitted in respect of these four bank accounts therefore, he did not take into consideration documents of receipts and payments pertaining to those bank accounts. He further noted that assessee has also not filed any revised return to incorporate those data hence, same are not considered. He also noted that the data submitted by the assessee are merely printouts from the computer database and therefore assessee trust has intentionally kept these accounts separate and failed to disclose in the return of income filed. He therefore, held that the total deposit amounting to ₹15,95,82,806/– are not disclosed in the audit report and in

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 form number 10 B . Therefore, he treated four undisclosed bank accounts deposits as covered under the provisions of Section 69A and 69B as unexplained money and amount of investment not fully disclosed in the accounts of the assessee as per provisions of the law.

iv. He also considered the explanation of the assessee of mutual concern. He noted that assessee is providing interest free loan to its members and also to non-members and therefore, relying on the decision of the Hon'ble Supreme Court in case of Bangalore club Vs. CIT (Civil Appeal No. 124 of 2007) dated 14.01.2013, he held that the principle of the mutuality is not satisfied for the reason that (1) there is no complete identity between the contributors and participants , (2) it is not in furtherance of the object of the trust and (3) there must not be any scope of profiteering or the transaction should not be tainted with commerciality.

v. He further held that there is a violation of the provisions of Section 13 (1) (b) of the Act as the advances were given for the benefit of a particular community. He further held that there is a violation of provisions of Section 13 (1) (C) and 13 (2) of the Act in respect of direct benefits to the trustees for the reason that assessee submitted that the persons referred to in Section 13 (3) of the Act are also eligible to the loan as those are also members of the society and no distinction can be made amongst them. Assessee also submitted that those persons have also availed the loan facility in the last three years.

04 In the nutshell, he treated the assessee trust as an Association of person denying exemption u/s 11 of the Act and thereafter applying provisions of Section 145 (3) of the Act and rejected the books of

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 account. Further, in the circumstances that he had made a proposal for withdrawal of registration u/s 12 A of the Act to the Principal Commissioner of Income Tax (Exemption), Mumbai he determined the total income of the assessee wherein addition of ₹ 15,95,82,806/– was made u/s 69A and 69B of the Act. Thus he passed an assessment order u/s 143 (3) of the Act on 30 March 2015 determining the total income of the assessee at ₹195,107,730/-.

05 Assessee aggrieved with the order of the learned AO preferred an appeal before the learned CIT (A) who passed an order on 26/02/2018. The learned Commissioner of Income Tax (Appeals) on consideration of the submission of the assessee obtained the Remand Report from the learned Assessing Officer and thereafter held that the assessee has not violated any of the provisions of Section 36A of the Bombay Public Trust Act. He accepted the explanation of the assessee and the remand report of the assessing officer wherein, the learned AO has accepted that no loans were taken by the trust during the relevant year and no property of the trust has been utilized for the advantage of the trustees. He further accepted that the trustees are entitled to self- help like any other member, which is one of the objects of the trust. He further accepted that that Assessing Officer was not justified in rejecting the exemption u/s 11 of the Income Tax Act for the reason that assessee has not violated the provisions of the Bombay Public Trust Act. With respect to the addition of ₹15,95,82,806/- u/s 69A and 69B of the Act, after considering the submission of the assessee and also the remand report submitted by the learned Assessing Officer held that those sum are deposited in the bank account never had any element of income and therefore, provisions of Section 69A and 69B of the Act does not arise. He reached such a conclusion for the reason that assessee has been following Quranic provisions and a principle where one of the main objects of the assessee trusts is self-help. The

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 amounts were collected in small installments from various members and those were distributed by way of self-help amongst the needy members. Those persons who have obtained the self-help loan are required to repay the same in the prescribed installment and no interest was either charged or paid. He further noted that assessee was separately maintaining books of accounts of these self-help schemes were also audited separately. Unfortunately, assessee could not incorporate the above accounts of self-help schemes in its books of accounts produced before the Income-tax authorities, as since inception, same were not included. He further noted that during the appellate proceedings for the Financial Years 2007 – 08 to 2013 – 14, assessee has submitted additional evidences in the form of confirmation from all the members of the activities of the trust. Those additional evidences were sent to the assessing officer for remand report. On perusal of the remand report the learned CIT(A) noted that assessee has submitted the copy of the bank statements of those four bank accounts and reconciled them with the books of accounts, the learned AO verified all the debit and credit entries in those four bank accounts and further, reopened the assessment u/s 147 of the Act for Assessment Years 2008 – 09 and 2009 – 10, the learned Assessing Officer summoned 78 persons on a random basis, who appeared before him, their statements were recorded and the learned AO reconciled the transactions of these members with the debit and credit entries in those undisclosed bank accounts. He further referred to paragraph number 16 of the remand report that clearly states that no income has accrued to the assessee from this self-help activity and there are no profits derived in monetary terms, which can be considered chargeable to tax. He also accepted the submissions of the assessee that for Assessment Year 2014-15 completed u/s 143 (3) of the Income Tax Act, the returned income of the assessee has been accepted at Rs Nil. Therefore, as the learned Assessing Officer has

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 accepted the genuineness of the deposits of ₹15,95,82,806/– and has also confirmed in the remand report that there was no element of income in such deposits which are liable to tax, he deleted the addition of ₹15,95,82,806/–. He agreed that that the activity of self-help would satisfy the test of charitable purpose as defined u/s 2 (15) of the Income-tax Act and therefore, he held that self-help activities are charitable in nature and are as per the objects of the trust. With respect to the applicability of Section 13 (1) (b) of the Act that the above trust exists for the purpose of a particular community, he held that the membership of the trust was open to any person who carries on any business or commercial activity in Lohar Chawl, Mumbai. He therefore relying upon the decision of the Hon'ble Supreme Court in case of CIT Vs. Dawoodi Bohra Jamat 364 ITR 31 held that the trust is not created for the benefit of any particular religious community but the trust membership is available to the public at large and therefore there is no relation of provisions of Section 13 (1) (b) of the Act. With respect to the applicability of the provisions of Section 13 (1) (C) of the Act, he held that no income of the trust is applied either directly or indirectly for the benefit of persons referred to in subsection (3) because the above activity of self-help did not have any income and further as held by the learned Assessing Officer himself while assessing the u/s 147 of the Act for assessment years 2008 – 09 and 2009 – 10 and further, u/s 143 (3) of the Act for assessment year 2014-15 which were all passed after the impugned order of the Assessing Officer, accepting the claim of the assessee therefore, the learned assessing officer is not justified in denying the exemption u/s 11 of the Act stating that the provisions of Section 13 (1) (c) of the Act are violated. Accordingly, he allowed the appeal of the assessee.

06 The learned AO is aggrieved with the order of the learned CIT (A) and has preferred this appeal before us. The learned CIT DR ,

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 Departmental Representative took us to the assessment order passed by the learned Assessing Officer stating that the learned Assessing Officer has held that there is a violation of the provisions of the Bombay Public Trust Act, 1950, four bank accounts were not disclosed in the regular books of accounts wherein, substantial cash was deposited, on being questioned and confronted, assessee submitted that these are the mutual concerns and therefore out of sheer ignorance were not included in the regular books of accounts. The Assessing Officer examined the provisions of the Act along with the documents provided by the assessee and found that there is a clear- cut violation of the provisions of Section 13 (1) (b) & (c) of the Act and therefore, the benefit of Section 11 and 12 of the Income Tax Act were not given to the assessee. He further referred to the remand report and stated that the loan contributions made by the persons of all the accounts were not verified by the Assessing Officer. He further stated that ignorance could not be a plea, which can be accepted when such huge transactions were not disclosed to the Income Tax Officer. He further submitted that the contributions are not part of the corpus and the additional evidences submitted by the assessee were merely on the computation point and not for the justification and genuineness of the above contribution. He further submitted that the learned CIT (A) has failed to justify or adjudicate that how the provisions of Section 145 (3) of the Act are not applicable in the present case when assessee has not submitted four bank accounts and it were found to be undisclosed and not incorporated in the regular books of accounts. He further submitted that only on the basis of the remand report , inquiry in which does not t relate only to Assessment year for which the appeal was pending before the learned CIT(A), he came to a conclusion for the impugned assessment year. In view of this, he submitted that that the order of the learned CIT (A) is not sustainable in law.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 07 Countering the submission of the learned Departmental Representative, ld AR referred to 2 paper books filed by him, 1 containing the factual documents and 2 containing the decisions of Hon'ble Supreme Court in 364 ITR 31, 82 ITR 704 and of Coordinate Bench in 199 TTJ 447. He submitted that the remand report submitted by the learned Assessing Officer dated 30.05.2016 clearly clinches the issue in favour of the assessee. He referred to paragraph number 3 for admission of additional evidences by the learned CIT(A) and submitted that the learned CIT(A) is perfectly within his right to admit the additional evidences and further, he referred to the order of the learned Assessing Officer whereas, several box files were submitted before him. He referred to page number 19 wherein, paragraph number 4, the learned Assessing Officer has completely verified and enquired the information for the period from financial years 2007 – 08 to 2011 – 12 therefore, assessment year 2012 – 13 was also verified by him and therefore, it is not proper to say that the data for the relevant assessment year were not verified. He further referred to paragraph number 5 of the remand report where the learned Assessing Officer admitted that activity of self-help did not result any profit or loss to the assessee. He submitted for that reason the assessee did not include the same in its regular books of accounts submitted before the Assessing Officer. He further referred to page number 21 of the paper book wherein in paragraph number 8 that there were around 1600 members involved in the mutual health help activity and confirmation have been filed from the said members regarding the transactions made during the year. He therefore submitted that complete information was duly confirmed submitted before the assessing officer. He further referred to paragraph number 9 wherein, during the reassessment proceedings for assessment year 2008 – 09 the learned assessing officer summoned u/s 131 of the Act to 78 members randomly who appeared and filed confirmation of the transactions with

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 the trust and the statement were also recorded of those parties confirming the same. He further submitted that in the same paragraph the learned Assessing Officer confirmed that he has verified the information for financial years 2007 – 08 to 2011 – 12. He further referred to the several judicial precedents cited before the learned Assessing Officer during the remand proceedings and coming to paragraph number 13 where the Assessing Officer has confirmed that considering all the facts in totality it is seen that the activity conducted by the assessee trust of self-help is in the nature of mutuality wherein all contributors and beneficiaries are the same and there is a complete identity of the contributors and beneficiaries. He further referred to paragraph number 16 of the remand report where the learned Assessing Officer has confirmed that the predominant object of the assessee is to provide service to its members and there is no profit derived in monetary terms or otherwise which can be considered to be chargeable to tax. He further stated that in paragraph number 16 the learned Assessing Officer has confirmed that the assessee can be allowed after detailed verification that the receipt and payment in the said bank account belongs to various members of the trust and no income has accrued to the assessee from the said activity. He therefore submitted that the when learned assessing officer has completely accepted the claim of the assessee during the course of remand proceedings, there is nothing left with the CIT (A) to decide against the assessee. He therefore submitted that the learned CIT (A) has correctly deleted the addition under 69A and 69B of the Act. He emphatically referred to the order of the learned CIT (A) starting from page number 34 – 52 of his order. He further referred to page number 24 – 26 of the paper book which is an assessment order passed u/s 143 (3) of the Act for assessment year 2016 – 17, page number 27 – 28 of the paper book which is an assessment order for assessment year 2014 – 15 and page number 29 – 36 being the assessment order for

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 assessment year 2008 – 09 which is passed u/s 143 (3) of the Act read with Section 147 of the Act. He submitted that all these orders have been passed after the impugned assessment order in case of the assessee accepting claim of the assessee under similar circumstances and facts. He further referred to page number 37 where the penalty proceedings for assessment year 16-17 were also dropped. He therefore submitted that there is no violation of the provisions of Section 13 (1) (b) and (c) of the Act as no benefits has accrued to the trustees. He therefore vehemently supported the order of the learned CIT (A).

08 In the rejoinder, the learned Departmental Representative vehemently supported that each assessment year is separate and therefore the findings given by the learned Assessing Officer in the earlier and subsequent assessment years cannot help the claim of the assessee. He submitted that there is a contradiction in the statement of the assessee that whether these bank accounts were already disclosed or not. He further submitted that when there is undisclosed cash deposited in the bank account, the addition deserves to be upheld. He further referred to the remand report and submitted that it does not speak about for the impugned assessment year, which is in appeal before the Coordinate Bench. In the end, she submitted that it is related to a particular community and these facts are required to be proved by the assessee, otherwise, before the assessing officer. She therefore submitted that the order of the learned Assessing Officer deserves to be sustained.

09 We have carefully considered the rival contention and perused the orders of the lower authorities as well as the several judicial precedents cited before us. As the facts culled out from the orders lies in a narrow compass. The assessee is a trust registered with the

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 Bombay Public Trust Act as well as with the Commissioner of Income Tax u/s 12 A of the Act. During the course of examination of the accounts of the assessee, it was found that the assessee trust has four different bank accounts, which are not incorporated in the regular account submitted before the Assessing Officer. The assessee submitted that these bank accounts were never disclosed before the Income Tax Department, since beginning. However, despite this fact, those bank accounts pertain to the self-help activities of the assessee which is stated to be a charitable purpose u/s 2 (15) of the Act. These activities were shown to the learned Assessing Officer by submitting the amount of contribution received from the members and amount of loan in the form of self-help given to various persons. No interest was charged from the borrowers and no interest is paid to the contributors. During the course of remand proceedings and with respect to the assessment proceedings of the earlier and subsequent years, all the confirmations were submitted by the assessee and it were examined by the learned Assessing Officer reconciling the same with those bank accounts. In some of the years the learned Assessing Officer issued summons u/s 131 of the Income Tax Act to the various contributors who confirmed by submitting confirmation and also making a statement before the learned Assessing Officer. The remand report submitted by the learned Assessing Officer which is placed at page number 18 – 23 of the paper book is pertaining to assessment year 2012 – 13 and submitted in response to the direction of the learned CIT(A) dated 26.10.2015. Thus, it clearly shows that whatever stated in the remand report by the learned Assessing Officer is pertaining to the impugned assessment year also, if not exclusively.

10 First ground of appeal is against the admission of additional evidences by the LD CIT (A). The learned Assessing Officer with respect to the admission of the additional evidence by the learned CIT (A) did not

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 raise any serious objection and did not mention that these additional evidences should not have been admitted by the learned CIT (A). The learned Departmental Representative could not show us that why the CIT(A) is not within his rights to admit the additional evidences with respect to the Rule 46A of the Income Tax Rules, 1962. This so, because of the reason that the learned CIT (A) has given the complete opportunity to the learned Assessing Officer to examine the same and thereafter LD AO submitted his remand report on those additional evidences. When, technicalities are pitted against the merits of the case, generally, the merit should be granted precedence, unless there are warranting and compelling circumstances otherwise. We do not find that any such circumstances exist in this case where the additional evidences should not have been admitted. Even otherwise, the learned Assessing Officer was supplied with complete details by the assessee. Coming to page number 29 of the order of the learned and CIT (A) wherein the assessee submitted during the course of appellate proceedings the copy of confirmation from all the members and made a request for admission of this evidences. The assessee also pleaded that during the course of assessment proceedings the assessee was not given sufficient opportunity to present these evidences. Those evidences were merely supporting the original claim of the assessee that there is no activity generating any profit/income to the assessee or were a mutual concern exists for mutual benefit of contributors and the beneficiaries. In the remand report, objecting to the admission of the additional evidence merely stated that the assessee was given an opportunity from January 2015 to substantiate claims but assessee did not submit the same till the conclusion of reassessment proceedings in the month of March. We find that the show cause notice was issued to the assessee only on 13.03.2015, which was replied by the assessee on 23.03.2015, there after it is evident that, when the assessment order was passed on 31.03.2015,

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 the assessee did not have any sufficient opportunity to produce those confirmations. Therefore, we find that there is no error on the part of the learned CIT (A) in admitting that confirmation which are merely supporting evidences in admitting them in deciding the same after giving the learned Assessing Officer opportunity to examine the same. Accordingly, ground number 1 of the appeal of the learned Assessing Officer is dismissed.

11 The ground number 2 is with respect to the denial of exemption to the assessee u/s 11 of the Income Tax Act as assessee has violated the provisions of Section 36A (3) of the Bombay Public Trust Act. The learned CIT (A) clearly noted that the assessee trust has taken a returnable interest free loans of ₹1,79,97,000/-. The claim of the AO is that the assessee should have taken a permission of the charity commissioner and as it has violated the provisions of the Bombay Public Trust Act, the assessee should be denied exemption u/s 11 of the Income Tax Act. Learned Assessing Officer in the remand report accepted that no loans were taken by the trust during the relevant year and no property of the trust has been utilized for the advantage of the trustees. Thus, in absence of any contrary evidence produced before us, we do not find any reason to not to agree with the order of the learned CIT (A) that assessee has not violated provisions of Section 36A of the Bombay Public Trust Act. Therefore, ground number 2 of the appeal is dismissed.

12 Coming to ground numbers 3-4 of the appeal with respect to the addition of ₹15,95,82,806/- made u/s 69A and 69B of the Income Tax Act by the learned Assessing Officer, We find that the assessee has though deposited sums in the bank account, However, such sums deposited were found to be pertaining to the self-help activities of the assessee where the contribution is made by the members of the trust

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 of its self-help activities and the self-help amount is disbursed also to the members. There is no contribution from any outsider and there is no advance of loan to any outsider. During the course of remand proceedings the amount of cash deposited as contribution in those bank accounts were confirmed by the contributors. In some of the reassessment and assessment proceedings for earlier and subsequent years, the learned Assessing Officer examined the contributors by issuing summons u/s 131 of the Act, who confirmed the transaction. Before us, it was not shown that any of the sums deposited in the bank account of the assessee where the contributors are not identified and the contribution made by any person is not genuine. It is also not shown to us that the any amount of self-help loan given to the beneficiaries is also not genuine. The assessee produced before the learned Assessing Officer during the course of remand proceedings the separate books of accounts for self-help activities and it were audited separately. From the self-help activity, no income is generated as assessee neither charges interest and nor pays any interest. The learned Assessing Officer verified all the debit and credit entries in the books of accounts with respect to those bank accounts. Further, in the reassessment proceedings for assessment years 2008 – 09 and 2009 – 10 and as well as in the regular assessment proceedings for assessment year 2014 – 15 and as well as in the other subsequent years, the identical claim of the assessee has been accepted by the learned assessing officer after due verification. Thus, it is clear that there was no unexplained money, where the assessee was found to be the owner was found. The assessee gave explanation about the nature, source of such bank deposits, which was examined by the learned Assessing Officer, and no irregularity was found. Therefore, with respect to the contributions deposited in those bank accounts the provisions of Section 69A of the Act has been wrongly applied by the learned Assessing Officer, more so after the complete verification

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 during the course of remand proceedings. Therefore, with respect to the contribution deposited in the bank account the learned CIT (A) has correctly held that same cannot be added u/s 69A of the Income Tax Act and hence, deleted. With respect to the applicability of Section 69B of the Act, we find that assessee has given self-help loan to the members of the trust and given the details of such money utilized for the purposes of that activity which is returnable to the assessee without any interest. These details were also verified by the learned Assessing Officer during the course of remand proceedings and based on that the learned CIT (A) has correctly deleted the addition u/s 69B of the Act. Accordingly, ground number 3 and 4 of the appeal of the learned Assessing Officer are dismissed.

13 Coming to ground number 5 wherein, the learned Assessing Officer was of the view that that the trust exists only for a specified community, We find that this aspect has been dealt with by the learned CIT(A) as per paragraph number 8.3 of his order. The categorical finding was given that the membership of the trust was given to any person who carries on any business or commercial activity in a particular area irrespective of any caste etc. The learned CIT(A) following the decision of the Hon'ble Supreme Court in 364 ITR 331 has clearly come to conclusion that the assessee trust was not created for the benefit of any particular religious community but was open to public at large carrying on any trade or commerce in a particular area. Therefore, in absence of any contrary evidence placed before us, we hold that the learned CIT (A) is correct that the provisions of Section 13 (1) (b) of the Income Tax Act are not attracted in the case of the assessee. Accordingly, ground number 5 of the appeal is dismissed.

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 14 Coming to ground number 6 of the appeal, where there is a violation of the provisions of Section 13 (1) (C) and Section 13 (2) of the Act was challenged, we find that the activity of the self-help where the loan is given by assessee without interest to the needy members of the society. Such needy persons may be the trustees of the trust also. The loan was also given to the trustees on the same terms and conditions as it was given to any other members of the society. Therefore, no special benefits were given to the trustees. Furthermore, the identical issue has been accepted by the learned Assessing Officer in the reassessment proceedings for earlier years and assessment proceedings for subsequent years, the learned and CIT(A) has held that no income of the trust was applied for the benefit of the trustees. In view of this, we do not find any infirmity in the order of the learned CIT(A) in holding that there is no violation of the provisions of Section 13 (1) (C) and Section 13 (2) of the Act and therefore, the exemption u/s 11 of the Act cannot be denied to the trust. Accordingly, ground number 6 of the appeal is dismissed.

15 Coming to the ground number 7, where, AO has challenged the action of the learned and CIT (A) in not adjudicating the rejection of the books of account u/s 145 of the Act, despite the fact that four undisclosed bank accounts were found, we find that naturally when the bank accounts were found which were not recorded in the books of accounts there is no infirmity in the order of the learned Assessing Officer in invoking the provisions of Section 145 of the Income Tax Act. It is also an accepted fact that the learned CIT(A) has not adjudicated whether the learned Assessing Officer has correctly assumed the powers u/s 145 of the Income Tax Act or not. However, in view of our decision on the earlier grounds, wherein we have held that the assessee is entitled to the exemption u/s 11 of the Act on the accounting entries covered in those bank accounts also which were not disclosed before the

ITA No. 3635/Mum/2018 The Lohar Chawl Dawoodi; AY 12-13 learned Assessing Officer, we find that this ground becomes merely academic in nature and the learned CIT (A) is correct in not adjudicating the same. Accordingly, we dismiss ground number 7 of the appeal.

16 Ground number 8 and 9 of the appeal are merely supportive in nature and therefore in view of our decision in the earlier grounds, same are dismissed.

17 In the result, appeal filed by the learned Assessing Officer is dismissed.

Order pronounced on 19/01/2022

Sd/- Sd/- (MS SUCHITRA KAMBLE) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER)

Mumbai, Dated: 19.01.2022 Sudip Sarkar, Sr. PS Copy of the Order forwarded to:

BY ORDER, Assistant Registrar ITAT, MUMBAI