Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, LUCKNOW BENCH ‘A’, LUCKNOW
Before: SHRI A. D. JAIN & SHRI T. S. KAPOOR
PER T. S. KAPOOR, A.M.
This is an appeal filed by the Revenue against the order of learned CIT(A), Varanasi dated 08/08/2018 pertaining to assessment year 2015- 2016. The only ground taken by the Revenue is reproduced below:
“1. Ld. CIT(A) has erred in law by deleting the addition/disallowance made u/s 68 of the I.T.Act, 1961 amounting to Rs.2,25,57,797/-, ignoring the fact that the assessee did not produce any conclusive evidence in respect of "security deposit from students" and the Ld. CIT(A) has also not made any enquiries either himself or by calling for a remand report from the AO on this issue.”
At the outset, Learned D. R. submitted that learned CIT(A) has allowed relief to the assessee without calling for remand report from the
I.T.A. No.662/Lkw/2018 Assessment Year:2015-16 2
Assessing Officer on the issue and therefore, it was prayed that the order of CIT(A) be set aside and that of the Assessing Officer be restored.
Learned A. R., on the other hand, submitted that there was no additional evidence filed by the assessee before learned CIT(A) therefore, the question of getting remand report from the Assessing Officer does not arise. Learned A. R. in this respect submitted that the findings of the Assessing Officer that the assessee had not filed any evidence in respect of security deposit is not correct as is apparent from the order of the Assessing Officer himself where he has reproduced the reply of the assessee dated 29/11/2017. It was submitted that from the same document the learned CIT(A) has made a finding of fact that out of Rs.2,25,57,797/-, an amount of Rs.2,13,16,997/- was opening balance and in this respect our attention was invited to para 8 of the order of learned CIT(A). Our attention was also invited to page 34 of the paper book where a copy of balance sheet of the assessee for the year ending 31/03/2014 was placed and wherein the security deposit from students equivalent to Rs. 2,13,16,997/- was mentioned in the balance sheet. Learned A. R. argued that no fresh document was filed before learned CIT(A) and learned CIT(A) has allowed relief to the assessee by recording his clear findings.
We have heard the rival parties and have gone through the material placed on record. We find that assessee is a society registered u/s 12AA of the Act. During the course of assessment proceedings the Assessing Officer required the assessee to explain security deposit from students. The query of the Assessing Officer is reproduced below:
“2. In the Balance sheet for the year ending 31.03.2015 there is 'Security Deposit from students' amounting to Rs. 2,25,57,797/-. Please explain with conclusive evidence the source of such deposits, otherwise it will be considered as
I.T.A. No.662/Lkw/2018 Assessment Year:2015-16 3
unexplained cash credit and added u/s 68 of the Income Tax Act, 1961. 3. You are also requested to provide complete books of accounts with bills and vouchers."
The reply furnished by the assessee is reproduced by the Assessing Officer in his assessment order which is reproduced as under:
“Most humbly and respectfully, as required by your good office, we are submitting herewith following documents for your kind perusal. 1) Cash Book 2) Ledger 3) Bank Accounts 4) Copy of security deposit received from children(Ledger) 5) Copy of fixed assets accounts transfer to the internal accounts(Ledger) Further, we have received security deposit from students of Rs. 2,25,57,797/- (Two crores twenty five lakhs fifty seven thousands seven hundred ninety seven only as on dated 31.03.2015). Simultaneously deposited into fixed deposit account maintained with the Union Bank of India and UCO Bank, Varanasi.”
The Assessing Officer however did not accept the contention of the assessee and held that the assessee was not able to file conclusive evidence in respect of security deposit from students whereas the assessee had filed cash book, ledger, bank account, copy of security deposit ledger etc. to Assessing Officer and therefore, the findings of the Assessing Officer that the assessee did not file conclusive evidence in respect of security deposit from students is not correct. The fact of opening balance in respect of security deposits from students amounting to Rs.2,13,16,997/- is also supported by the copy of balance sheet of the previous year placed at page 34 of the paper book. Before learned CIT(A) no fresh document was filed by the assessee therefore, the ground taken by the Revenue is not maintainable. For the sake of completeness, we reproduce the findings of learned CIT(A), as contained from para 8 to 10 of his order:
I.T.A. No.662/Lkw/2018 Assessment Year:2015-16 4
“8. It is seen that the assessee has clearly submitted before the Assessing Officer that the security deposit from the student has been received amounting to Rs.2,25,57,797/-. Further the said amount has been deposited into FD account maintained with Union Bank of India and UCO Bank. Further it is also seen that the security deposit account contains opening balance of Rs.2,13,16,997/- which cannot be added during the year under consideration. Further the details of security deposit receipt during the year amounting to Rs.13,65,800/- only has been received and a sum of Rs.1,25,000/- has been refunded to the students out of security deposits. The detailed statement of security deposits was also submitted before the Assessing Officer during the course of assessment proceedings. If the Assessing Officer has any doubt about the correctness of the ledger account of security deposit account, he should have asked for the original fee receipt and refund voucher for verification. Without examining the same, the Assessing Officer has made an addition not only of the amount received during the year but also the opening balance in this account and made total addition of Rs.2,25,57,797/-. The appellant has been able to prove that security deposit has been received from the students. Further the security deposits received have been utilized in making deposits in Union Bank of India and UCO Bank as per provisions of the Act.
The appellant has further submitted that the Assessing Officer has disallowed security deposits and added the same to the income of the appellant but the benefit of application has not been given. It was submitted that the appellant society has already been granted registration u/s 12AA of the I.T. Act and accumulation of fund u/s 11(1)(a) which has duly been brought forward for earlier year be applied for application of fund. The application of fund has been shown as under:
That the learned Assessing Officer has disallowed the security deposit of Rs.22557797.00 but the application of the same has not given. The appellant has already granted registration u/s 12AA and accumulation of fund u/s 11(1)(a) which has duly been brought forward from earlier year be applied for application of fund. The computation of income of the same is as under:
Receipt as per computation of income Rs.47073794.00
I.T.A. No.662/Lkw/2018 Assessment Year:2015-16 5
Add:Disallow security deposit u/s Rs.22557797.00 Total receipts Rs.69631591.00 Less:Application of fund as per Rs.46898642.00 computation of income Application of fund of total receipts after disallowance of security deposit of Rs.22557797.00 and added in the receipt total Rs.69631591.00 of 85% Rs.59186852.00 The appellant has applied the fund as per computation of income Rs.46898642.00 The appellant to be applied the Expenditure after addition u/s 68@85% Net surplus after addition(59186852-46898642) Rs.(-)10488210.00 Appellant is eligible for taken application of fund upto Rs.59186852.00 Tax after deduction NIL
In view of these facts, it is clear that the appellant has been able to show that security deposits have in fact been received by the students and accordingly, the same cannot be included in the income of the appellant u/s 68 of the I.T. Act. In any case, the entire amount has been applied as per the provisions of the Act. In view of the above, there remains no ground for addition, accordingly, the addition of Rs.2,25,57,979/- made by the Assessing Officer is deleted and the appeal is allowed.”
The above findings of learned CIT(A) are quite exhaustive wherein we do not find any infirmity. In view of the above, the appeal of the Revenue stands dismissed.
In the result, the appeal of the Revenue stands dismissed.
(Order pronounced in the open court on 22/08/2019)
Sd/. Sd/. ( A. D. JAIN ) ( T. S. KAPOOR ) Vice President Accountant Member
Dated:22/08/2019 *Singh
I.T.A. No.662/Lkw/2018 Assessment Year:2015-16 6
Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow
Assistant Registrar