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Facts
The assessee, a trust, filed its return of income claiming exemption under Section 11. The AO disallowed an amount for not producing evidence of investment in securities as required by Section 11(5). The CIT(A) dismissed the appeal, holding that the assessee failed to produce the necessary evidence.
Held
The Tribunal accepted the additional evidence of FDRs filed by the assessee. However, since this evidence was not verified by the AO, the issue was remanded back to the AO for verification and allowing the claim in accordance with law.
Key Issues
Whether the assessee's failure to produce FDRs before the lower authorities warrants a remand for verification of additional evidence submitted before the Tribunal.
Sections Cited
11, 11(2), 11(5), 143(2), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI K. NARASIMHA CHARY & SHRI MADHUSUDAN SAWDIA
ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Guru Nanak Mission Trust (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 31.07.2024 for the A.Y. 2018-19.
The assessee has raised the following grounds :
“1. The order of learned Commissioner of Income-tax Appeals (appeals) is contrary to law and facts and circumstances to the case.
2. The learned Commissioner of Income-tax erred in not appreciating the fact that the learned assessing officer erred in adding a sum of Rs.59,79,270 towards disallowance under section 11(2) of the Income-tax Act on the facts and circumstance of the case.
3. The learned Commissioner of Income-tax erred in not appreciating the fact that the entire sum of Rs.99,79,270 stood invested in securities listed under section 11 (5) of the Income-tax Act on the facts and circumstance of the case.
The learned Commissioner of Income-tax erred in not accepting that the amount clearly shown in the balance sheet under fixed deposits with Punjab National Bank as evidence of having invested the accumulated amount in securities listed under section 11(5) of the Income-tax Act on the facts and circumstance of the case.
5. The learned Commissioner of Income-tax erred in not appreciating the fact that the balance sheet, duly audited, was accepted for the purpose of the appellant's assessment on the facts and circumstances of the case.
6. The learned Commissioner of Income-tax erred in confirming the addition merely because the appellant did not submit any document or bank account copy relating to the term deposits with Punjab National Bank on the facts and circumstances of the case.
7. The Commissioner of Income-tax erred in not appreciating the fact that the appellant was under honest impression that filing of the balance sheet which clearly showed the fixed deposit with Punjab National Bank and which is also accepted for the purpose of assessment was sufficient evidence for investment and its was not necessary to file copies of the actual deposit receipts on the facts and circumstances of the case.
The appellant craves leaves to add to, alter or amend any of the aforesaid grounds as advised on or before the date hearing.”
The brief facts of the case are that the assessee is a trust, filed its Return of Income (“ROI”) on 13.09.2018 declaring total income at Rs.Nil after claiming exemption u/s.11 of the Income Tax Act, 1961 ('the Act') for Rs.1,39,27,871/-. The case of the assessee was selected for complete scrutiny under CASS and accordingly, notice u/s.143(2) of the Act was issued to the assessee on 23.09.2019. During the assessment proceedings, the Learned Assessing Officer (“Ld. AO”) found that the assessee has accumulated Rs.99,79,270/- u/s.11(2) of the Act and therefore, the assessee was required to invest the amount of Rs.99,79,270/- in the mode specified u/s.11(5) of the Act. Before the Ld. AO, the assessee could not produce evidence in support of investment of Rs.59,79,270/- towards the investment made under the more specified u/s.11(5) of the Act. Accordingly, the Ld. AO added Rs.59,79,270/- to the total income of the assessee and completed the assessment u/s.143(3) of the Act on 26.04.2021.
4. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). However, before the Ld. CIT(A) also, the assessee could not produce the said evidences with regard to Rs.59,79,270/-. Accordingly, the Ld. CIT(A) dismissed the appeal of the assessee.
Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, the assessee had submitted the copy of audited balance sheet before the revenue authority, wherein investment of Rs.2.09 Crores in FDRs were reflected, which is covered under the specified mode prescribed u/s.11(5) of the Act. The assessee was under the bona fide belief that the submission of audited balance sheet is sufficient to substantiate the amount of deposit in FDRs. Therefore, the assessee could not produce the copy of bank FDRs before the revenue authority. There was no mala fide intention on the part of the assessee qua not filing of copy of FDRs before the revenue authority.
5.1 The Ld. AR filed the copy of bank FDR before us as additional evidence with a request to accept the same. The Ld. AR further submitted before the bench that, the assessee has deposited Rs.2,35,00,052/- in FDR, however, he was only required to deposit an amount of Rs.99,79,270/-. Accordingly, the assessee has deposited more than the amount required to be deposited under the mode specified u/s.11(5) of the Act. Finally, the Ld. AR prayed before the bench to allow their appeal.
The Learned Department Representative (“Ld. DR”) made objection for allowability of the appeal of the assessee and submitted that, the assessee has been given sufficient opportunity by the Revenue Authority to file the evidence. However, the assessee could not file the evidence before the revenue authority. Hence, the appeal of the assessee is liable to be dismissed.
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. There is no dispute about the fact that the assessee was required to deposit Rs.99,79,270/- in the mode specified u/s.11(5) of the Act. As submitted by the Ld. AR, the assessee has deposited Rs.23,50,00,52/- as against the amount of Rs.99,79,270/- required to be deposited. However, under the bona fide belief, the assessee could not produce the evidence in support of such deposit in FDR before the revenue authority. Now the assessee has produced the copy of bank FDR before us with a request to accept the same as additional evidence. In the interest of justice, we accept the additional evidence submitted by the assessee. However, the additional evidence submitted by the assessee has not been verified at the end of the Ld. AO. Therefore, we deem it proper to remand the issue to the file of Ld. AO. Accordingly, we set aside the issue to the file of the Ld. AO with a direction to verify the copy of FDR and allow the claim of the assessee in accordance with law. Needless to say, the Ld. AO shall provide an opportunity of being heard to the assessee before passing order. Appeal of the assessee is disposed off accordingly.