M/S RAJASTHAN SAMAJ TRUST,NEW DELHI vs. DCIT, GHAZIABAD

The present appeal has been preferred by the assessee against the order of Ld. CIT(A) Ghaziabad dated 01.12.2015 for the Assessment Year 2010-11, on the following grounds of appeal:

The brief facts of this case are as under: The Assessing Officer observed that the assessee is a trust registered u/s 12A of the I.T. Act, 1961 and had filed its return of income on 28.03.2011 declaring total income of Rs.40,710/-. He observed that the assessee had received unsecured loan of Rs.4.50 lacs during the year under consideration. The case of the assessee was selected for scrutiny and notice u/s 143(2) of ht Act was issued to the assessee. The assessee was called upon to produce details regarding unsecured loan and to prove the capacity, identity and creditworthiness of the lenders. The assessee filed its reply dated 18th Oct., 2012 which stated that the trust has not availed any unsecured loan during the year under consideration. 2.1 Accordingly, the Assessing Officer called upon the assessee to produce the narration of the bank entries with supporting documents. The assessee again filed a reply on 23.01.2013 submitting that he assessee trust intended to provide funds to another trust namely Seth Brijlal Nevatia Rajasthan Samaj Trust, which proposed to set up a community centre for the benefit of public at large. The assessee had submitted during the assessment proceedings that during the relevant period of transfer of 3 I.T.A.No.605./Del/2016 funds, the assessee had two FDRs with Punjab National Bank of Rs.1.50 lacs and Rs.4.50 lacs. It was submitted before the Assessing Officer that due to premature encashment of FDRs, assessee had faced loss of interest and had encashed the FDRs for a lower value and thus got Rs.1.59 lacs from its encashment. It was submitted by the assessee that instead of encashing the other FDR, arranged for a temporary loan of Rs.4.50 lacs from M/s. Signet Vyapar Pvt. Ltd. and repaid the said loan later on, out of maturity of FDR. The Assessing Officer directed the assessee to produce Principal Officer / Managing Director of M/s. Signet Vyapar Pvt. Ltd. along with their audited balance sheet, original books of accounts with bank statement for verification and creditworthiness of the lender. Accordingly, assessee submitted confirmation, copies of ITR as well as copies of its bank statement reflecting the said loan transactions. The Assessing Officer recorded that the bank statement also reflects availability of funds with the lender for disbursing loan. 2.2 Meanwhile, Assessing Officer sent a letter to the Principal Officer / Managing Director of M/s. Signet Vyapar Pvt. Ltd. to furnish the confirmation regarding these transactions, details of its business activities and copy of accounts of M/s. Rajasthan Samaj Trust in their books of accounts along with its bank statement for the Assessment Year under consideration. The assessee was confronted with the issue on this point to M/s. Signet 4 I.T.A.No.605./Del/2016 Vyapar Pvt. Ltd. which was received back unserved with the postal remarks “not known”. The assessee accordingly checked up the parties address and came to know that the registered office of the above company has been shifted, which was informed to Ld. Assessing Officer. Accordingly, the Assessing Officer sent a query to the new address of the company, from which reply was received by the Assessing Officer on 28.02.2014. The said reply from M/s. Signet Vyapar Pvt. Ltd. was accompanied with the return of income and the balance sheet for the year under consideration. On verification of details received from M/s. Signet Vyapar Pvt. Ltd., the Assessing Officer observed that there is no real generation of income in M/s. Signet Vyapar Pvt. Ltd. The Assessing Officer further observed that the reply to the 2nd letter sent to M/s. Signet Vyapar Pvt. Ltd. was posted from Nirman Vihar, New Delhi and the signatures of authorized signatory of M/s. Signet Vyapar Pvt. Ltd. did not tally with the signatures of authorized signatory on the confirmation letter filed by the assessee along with assessee’s reply dated 23.01.2013. 2.3 Assessing Officer made addition of Rs.4.50 lacs u/s 68 of the Act as the explanation offered by the assessee was not satisfactory.

Aggrieved by the order of Assessing Officer, assessee preferred appeal before Ld. CIT(A).

Ld. A.R. submitted that he reply received from M/s. Signet Vyapar Pvt. Ltd. Vide letter dated 28.02.2013 has not been confronted to the assessee by the Assessing Officer. He further submitted that the Assessing Officer has observed the difference in the signatures in the confirmation filed by the assessee vide its letter dated 23.01.2013 and the letter received from M/s. Signet Vyapar Pvt. Ltd. dated 28.02.2013. Ld. A.R. thus submitted that the issue needs to be sent back to the Assessing Officer for due verification of difference in signatures.

On the contrary, Ld. D.R. though supported the orders passed by the authorities below, did not object if the issue be set aside to the file of Assessing Officer for proper verification.

We have perused the orders passed by the authorities below and the arguments advanced by both the parties before us. We are of the considered opinion that the issue has not been properly verified by the Assessing Officer even after observing that there is difference in the signatures of authorized signatory of M/s. Signet Vyapar Pvt. Ltd. in the confirmation filed by 6 I.T.A.No.605./Del/2016 the assessee and that sent by M/s. Signet Vyapar Pvt. Ltd. To meet the ends of justice, it needs to be enquired in detail. 6.1 We, therefore, set aside the issue to the file the Assessing Officer for de novo verification. The Assessing Officer may carry out fresh enquiries after giving proper notice to the assessee. It is directed that the assessee may participate and would support the assessment proceedings by providing all the necessary details / information called upon by the Assessing Officer. Accordingly, the grounds raised