Loading judgment…
Facts
The assessee, a charitable trust, was subjected to additions by the AO regarding depreciation on assets treated as application of funds and cash deposits in the bank account. The CIT(A) confirmed a part of the cash deposit addition.
Held
The Tribunal acknowledged that donations might be received in cash and bank and reflected in separate books. However, verification was needed to ensure all receipts tallied. The Tribunal remanded the case to the AO for verifying the reflection of all donations in the receipt/payment account.
Key Issues
Whether the disallowance of depreciation and addition of cash deposits as unexplained money were justified, and whether the CIT(A) erred in treating certain documents as additional evidence.
Sections Cited
Sec 250, Sec 12A, Sec 11(6), Sec 69A, Sec 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA BENCH” PATNA
Appearances by: Assessee represented by : Sh. D.V. Pathy, Adv. Department represented by : Sh. Rinku Singh, CIT- DR Date of concluding the hearing : 19.12.2024 Date of pronouncing the order : 01.01.2025
ORDER PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal emanates from the order u/s 250 of the Income Tax Act, 1961 (hereafter ‘the Act’), passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 07.02.2024.
1.1 In this case, the assessee is a charitable trust registered u/s 12A of the Act through an order dated 27.12.2019. The Ld. AO made the following two additions:
(i) depreciation Rs. – 61,27,941/- 1.2. It is seen that the addition on account of depreciation has been made due to the fact that certain depreciable assets have been treated as application of funds on which depreciation was also charged. Regarding the cash deposit in bank account, it was found that there was allegedly a discrepancy between the cash book and the deposits found in the bank account.
2.1 Aggrieved with this action, the assessee approached the Ld. CIT(A) through a single ground challenging the additions made by the Ld. AO. The assessee submitted documents before the Ld. CIT(A) in support of his claim and a remand report was called from the Ld. AO under rule 46A of the Income Tax Rules. The remand report was shared with the assessee for replies/rebuttal. Admittedly, the assessee did not respond in this regard. The Ld. CIT(A), thereafter, found that Rs. 31,78,100/- was still not reconciled and hence he confirmed the addition made by the Ld. AO to this extent.
Further, aggrieved with this action of Ld. CIT(A), the assessee has filed the present appeal with the following grounds of appeal:
“1. For that the grounds of appeal hereto are without prejudice to each other.
2. For that the order of the learned Commissioner of Income Tax (Appeals) and also the learned assessing officer is bad both in law and on facts.
3. For that the order of the learned Commissioner of Income Tax (Appeals) and also the learned assessing officer is based on presumption, surmises and conjectures.
4. For that the learned assessing officer has erred in disallowing a sum of 61,27,941 on account of depreciation merely on the ground that the appellant had computed income with claim of depreciation in respect of assets which has been claimed as application under the same year or the same is not allowable in terms of Section 11 (6) of the Act notwithstanding the fact that the prescription in the said sub Section is limited to the computation of application of income for charitable purposes to the extent stated in the Act and does not call for any disallowance unless the prescription in the Section as mandated is not satisfied.
5. For that the learned assessing officer has erred in adding a sum of 31,78,100 on account of cash deposits in bank on different dates as unexplained money 2 Gurudwara Bal Leela Maini Sangat Trust under Section 69A read with Section 115 BBE of the Act notwithstanding the fact that the same were deposited in the bank account by several devotees outside the State of Bihar and were recorded in the bank book by debiting the bank account and crediting the donation account and that Section 69 A of the Act has no application.
6. For that the learned Commissioner of Income Tax (Appeals) has erred in treating the cash book and the bank book submitted/uploaded in course of appellate proceeding as additional evidence without consideration of the fact that the same was filed before the assessing officer in course of assessment proceeding and are adequately the reproduced and considered at internal page 3, 4 and 5 of the order of assessment.
7. For that other various reasons that will be urged at the time of hearing.” 3.1 Before us, the Ld. AR argued that the assessee is one of the holiest places of worship for the Sikh community and receives donation from around the world. Some of the donations are received directly in the bank account, whereas other donations are received in cash also. It has been averred that the bank book is maintained separately from the cash book and the Ld. AO erred in finding the said discrepancy even when all such receipts have been duly accounted for. The Ld. AR further stated that the authorised representative mistakenly did not respond to the opportunity provided by the Ld. CIT(A) for a rebuttal of the Ld. AO’s remand report.
3.2 The Ld. DR vehemently argued that in para 5.1 of the impugned order, it is clearly mentioned that an opportunity was given to the assessee for rebutting the contents of the remand report. The Ld. DR supported the order of Ld. CIT(A) and said that the assessee has not been able to explain the discrepancy between the deposits shown in bank account and the cash receipts as reflected in the cash book.
We have heard the rival contentions and gone through the documents placed before us. We are persuaded by the arguments of the Ld. AR to the extent that there may be several books maintained and donations received in cash etc, may be reflected in the cash book and there may be a separate bank book for receipts in the Bank. To this extent there is a possibility that the total receipts under the head “donations” could be Gurudwara Bal Leela Maini Sangat Trust worked out by tallying the figures available in two separate account books. However, the two sets of figures should tally with the total receipts shown by the assessee. In case, the total receipts incorporate the donations received by whatever means then the claim of the assessee would be genuine. However, at this stage, such verification or calculation cannot be done here. Accordingly, we deem it fit to remand this case back to the Ld. AO for verifying that the donations received by whatever means and from whatever source are duly reflected in the receipt/payment account. The Ld. AO is directed accordingly. We may hasten to add that the assessee would do well to present his case in light of our observations so that the correct factual position emerges from the exercise to be undertaken by the Ld. AO.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 01.01.2025
Sd/- Sd/- [Sonjoy Sarma] [Sanjay Awasthi] Judicial Member Accountant Member Dated: 01.01.2025. AK, PS Copy of the order forwarded to: 1. Gurudwara Bal Leela Maini Sangat Trust 2. DC/AC, Exemption Circle, Patna 3. CIT(A)- 4. CIT- 5. CIT(DR)