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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-I, NEW DELHI
ORDER
PER N.K.SAINI, AM :
This is an appeal by the Assessee agaisnt the order dated 21/09/2015 of the CIT(A)-Ghaziabad. Following grounds have been raised in this appeal :
C.P.Arya Public School Samiti “1. Because, the order of ld. Lower authority is bad in law and agaisnt the facts and circumstances of the case and hence is unsustainable.
2. Because, the ld. Commissioner of Income Tax (appeals) grossly erred in upholding, the addition of Rs. 906,000/- u/s 115BBC being the 95% amount of loans from four parties made u/s 68, are neither credited in the current year nor they are donations recd. during the year hence order is defeating the specific provisions of law.
Because, in addition of abvoe, ld. CIT(A) erred in not appreciating the undisputed facts on the record that institution is regd. u/s 12A, confirmation of loans is filed and more than 85% of income is utilized for charitable purposes and hence addition u/s 68 is not sustainable in terms of law pronounced by hon’ble courts.
4. Because the ld. Commissioner of income tax (appeals) grossly erred in upholding the Disallowance of Depreciation Rs. 46015/- agaisnt the settled law.”
First issue in this appeal relates to the sustenance of addition of Rs. 9,06,000/- made by the AO u/s 115BBC read with section 68 of the Income Tax Act, 1961 (hereinafter referred to as the “ act” ) 3. The facts related to this issue in brief are that the assessee filed the return of income on 01.03.2011 declaring nil income. Later on, the case was selected for scrutiny. The AO during the course of assessment proceedings noticed that the assessee had received loans from following persons. : “ 1. Ankur Gupta Rs. 4,44,000/- 2. Baldeep Singh Rs. 1,20,000/- 3. Devendra Singh Rs. 2,42,000/- 4. Sobhit Raghav Rs. 2,00,000/-”
The AO asked the assessee to file complete details with confirmation and all supporting documents in respect of the aforesaid loans. The AO observed that the assessee had given only C.P.Arya Public School Samiti copy of confirmation of account in its books of accounts and copy of Adhar Card / PAN Card but no confirmation from the lenders or any proof regarding source of loan was provided by the assessee. The AO was of the view that mere giving the name of the parties from whom unsecured loan were claimed to be taken and mentioning that those did not pertain to the current year, did not qualify as the transaction to be genuine. The AO made the addition u/s 68 of the Act.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and furnished the written submissions which have been incorporated in para 4 of the impugned order and read as under :
“ Addition of Unexplained loan u/s 68 of Income Tax Act : A. The AO has made the addition as detailed below : 1. Ankur Gupta Rs. 4,44,000/- 2. Baldeep Singh Rs. 1,20,000/- 3. Devendra Singh Rs. 2,42,000/- 4. Sobhit Raghav Rs. 2,00,000/-” B. We are enclosing the statements of A/c which were submitted to AO in which it is very much clear that loan was taken in earlier years. No amount has been taken during the financial year in question. C. The reliance is placed in case of CIT vs. Hanumandas Maheshwari (1975) Tax Lr 109 (Ori) and CIT vs. Ashok Timber Industries (1980) 125 ITR 336 (Cal) in which it was held: “ where any sum is found credited in the books of an assessee maintained at any previous year, and the assessee offers no explanation about the nature & source thereof or the explanation offered by him is not, in the opinion of the (assessing) officer,
C.P.Arya Public School Samiti satisfactory, the sum so credited may be charged to income tax as income of the assessee of that previous year.” D. Since no amount has been credited during the previous yea in question, so no addition can be made during this year as sec. 68 itself says.”
The ld. CIT(A) after considering the submissions of the assessee confirmed the addition by observing in para 5.2 of the impugned order which read as under : “ As regards claim of the appellant that unsecured loans of Rs. 10,06,000/- with respect to which addition was made u/s 68, pertained to earlier years and that similar claim was made before the AO. The report was sought from the A.O. as regards genuineness of this claim. The A.O. vide his letter dated 03.07.2015 has reported that the assessee had only submitted confirmation of account of letters in its books and copy of Aadhar Card / PAN Card. The A.O. has reported that merely saying that unsecured loans do not pertain to current year does not qualify the transactions to be genuine when no confirmations were received from the lenders in response to letters issued u/s 133(6) of the I.T.Act. Despite several opportunities, the appellant has not offered any comments on the report of the A.O. Finally notice dated 03.09.2015 fixed for hearing on 16.09.2015 was received unserved with remarks “ unclaimed”. It is significant that the appellant has nothing more to say in the matter. In these facts, I find that the claim of the appellant that the said loans do not pertain to current year is not proved. Merely saying that loans do not pertain to current years does not suffice. The appellant has to adduce relevant evidences including information about the year to which these loans pertain and mode and date of receipts. Since such unsecured loans reflected in the balance sheet of the appellant are not proved to pertain to earlier years, action of the A.O. in holding that they are not genuine calls for no interference. However, in my considered opinion unproved/unsecured loans in the case of the appellant could be given
C.P.Arya Public School Samiti the same treatment as anonymous or bogus donations as assessee is registered u/s 12A and its income is exempted u/s 11. Therefore, invoking provisions of Section 115BBC, I treat them to be bogus donations. As per provisions of section 115BBC anonymous donations in excess of higher of Rs. 1 lac or 5% of total donations are subject to taxation. The total unproved receipts of the appellant amount to Rs. 10,06,000/- whose 5% come to Rs. 50,300/-. According to provisions of Section 115BBC, anonymous donation in excess of Rs. 1,00,000/- is taxable at the rate of 30%. Therefore, addition of Rs. 9,06,000/- to be taxed at the rate of 30% is confirmed and balance addition of Rs. 1,00,000/- is deleted. The ground of appeal is partly allowed.”
Now, the assessee is in appeal 6. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that no new loans were received by the assessee. A reference was made to page no. 4 of the assessee’s paper book which is the list of unsecured loans as on 31.03.2010. He also referred to page no. 6A of the assessee’s paper book which is the list of unsecured loans as on 31.3.2009 and submitted that there is no change in the amount of the loans received from Shri Ankur Gupta, Shri Baldeep Singh, Shri Devendra Singh and Shri Sobhit Raghav at Rs. 4,44,000/-, Rs. 1,20,000/-, Rs. 2,42,000/- and 2,00,000/- respectively totaling to Rs. 10.76 lakh. It was accordingly submitted that when no loan was received during the year under consideration, therefore, the addition u/s 68 was not justified. In his rival submissions, the ld. DR supported the orders of the authorities below.
C.P.Arya Public School Samiti 7. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admittd fact that the AO made the addition u/s 68 of the Act in respect of those loans which were brought forward from the earlier year and not received in the previous year, relevant to the assessment year under consideration, thereofre, the action of the AO was not inaccordance with law and the Ld. CIT(A) was not justified in confirming the said action. In my opinion, when the assessee had not received any fresh loan or deposit during the year under consideration and the loans which were brought forward from the earlier years had been accepted as genuine at the time of receipt since no addition has been made in the year of receipt. Therefore, the same loans cannot be considered as non-genuine for the year under consideration. Accordingly, the addition made by the AO and sustained by the ld. CIT(A) is deleted.
The next issue vide ground no. 4 relates to the disallowance of depreciation amounting to Rs. 46,015/- claimed by the assessee and disallowed by the AO by observing that as the cost of asset has been allowed as deduction by way of application of income then depreciation of the same asset cannot be allowed. The ld. CIT(A) sustained the disallowance made by the AO. Now the assessee is in appeal.
The ld. Counsel for the assessee submitted that the depreciation was claimed in respect of the written down value of the assets which C.P.Arya Public School Samiti were brought forward from the earlier years and no assets were purchased in the year under consideration. A reference was made to page no. 4A of the assessee’s paper book which is the copy of the details of the fixed assets and depreciation thereon. It was also submitted that the issue is squarely covered by the order dated 05.04.2016 of the ITAT, Delhi Bench G, New Delhi in in the case of M/s Kesar Charitable Trust, Lohia Nagar, Ghaziabad vs. Additional CIT, Range 1 Ghaziabad (copy of the said order was furnished which is placed on record). In his rival submissions, the ld. DR supported the orders of the authorities below.
I have considered the submissions of both teh parties and carefully gone through the material available on record. In the present case, the details furnished by the assessee in respect of fixed assets and depreciation chart as on 31.3.2010 (copy of which is placed at para no. 4A of the assessee’s paper book) revealed that the depreciation amounting to Rs. 46,015/- was claimed by the assessee on the written down value of the assets brought forward as on 01.04.2009 which clearly shows that no depreciation has been claimed in respect of any assets purchased during the year under consideration. Therefore, the disallowance made by the AO and sustained by the ld. CIT(A) was not justified. Accordingly the same is deleted.
In the result, appeal of the assessee is allowed. (Order Pronounced in the Open Court on 27. 05.2016.)