ITO, PURI WARD, PURI, PURI vs. M/S. GHANSYAM HEMLATA VIDYAMANDIR SOCIETY, PURI

Per Pavan Kumar Gadale, JM

This is an appeal filed by the revenue and cross objection filed by the

assessee against the order of CIT(A)II, Bhubaneswar, dated 30.3.2013, for

the assessment year 2008-09.

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“ 1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in allowing exemption u/s.11 to the assessee when the assessee did not maintain proper books of account and there were violations u/s. 11 (5) and u/s. 13(1 )(d).

under the Societies Registration Act, 1860 on 23.5.1995 at New Delhi and

subsequently was shifted to Puri. During the financial year, the assessee

being an Association of Persons (AOP) has income from other sources

aggregating to Rs.6,96,23,140/- and filed the Return of income for the

assessment year 2008-09 on 29.9.2008 and claimed expenditure of

Rs.5,22,27,868/-. Subsequently, the case was selected for scrutiny and

notices under section 143(2) and 142(1) were issued. The Ld A.R. in

compliance to notices appeared before the Assessing Officer from time to

time and the assessee being an AOP also obtained Audit report u/s.12A(b)

of the Act and furnished alongwith the Return of income. The Assessing

Officer perused the income and expenditure and balance sheet and found

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that the assessee has made advance payments to various parties and also

incurred expenditure in respect of mess and fooding expenses and ld

Assessing Officer relied on provisions of section 11 & 12 of the Act and

application of section 13(1)(d)of the Act. Subsequently, the Assessing

Officer issued notices under section 133(6) of the Act to persons for

transaction in work in progress and vehicle hire charges expenses and the

Assessing Officer has received confirmations and information of the parties

and discussed in the assessment order on the investments made by the

assessee with the various parties and dealt independently on each

expenses and interest income and made addition of unexplained

investment u/s.69 for fixed deposits and assessed total income at

Rs.2,36,57,710 vide order u/s.143(3) on 30.12.2010.

In the appellate proceedings, ld A.R. of the assessee appeared and filed

written submissions of four volumes and the CIT(A) has sent the paper

books/written submissions to the Assessing Officer for remand report. The

Remand Report was received by the CIT(A) and a copy was submitted to

the assessee to file rejoinder on the comments of the Assessing Officer.

The ld A.R. also submitted that in assessee’s own case for the assessment

year 2004-05 in ITA No.342/CTK/2011 order dated 21.10.2011, the

Tribunal has decided the similar issue. The CIT(A) considered the

assessee’s own case for the assessment year 2004-05 and voluminous

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documents filed by the assessee, examined the remand report and judicial

decisions. The CITA) was of the opinion that the society was registered

under section 12A of the Act by the Director of Income Tax (Exemption),

New Delhi and was granted registration dated 11.1.1996 w.e.f. 23.5.1995.

The Return of income for the assessment year 1996-07 was filed for the

first time claiming exemption u/s.11 of the Act. The Assessing Officer made

a scrutiny assessment and on certain conjectures and surmises denied the

exemption u/s.11 of the Act. The CIT(A) has granted exemption and

whereas on appeal by the revenue for the assessment year 1996-97, the

Tribunal upheld the order of the CIT(A) in granting exemption. For the

assessment years 1997-98 to 2003-04, the assessee was enjoying the

benefit of exemption u/s.11 of the Act without any interruption from the

department but for the assessment year 2004-05, the Assessing Officer

observed that there are no proper books of account maintained and

whereas voluminous information was submitted alongwith leger accounts

in relation to 41 parties on whom the Assessing officer had made certain

adverse observations in the original assessment. The then CIT(A)

confirmed the order of the Assessing Officer and the assessee aggrieved

by the order filed appeal before the ITAT. The ITAT in ITA

No.342/CTK/2011 order dated 21.10.2011 referred at pages 6 to 12 of

the ITAT order allowed the assessee’s appeal.

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the assessee was enjoying the benefit of exemption u/s.11 of the Act and

there was no dispute whereas for the assessment year 2008-09, the

Assessing Officer issued scrutiny notice and after verifying the records has

made elaborate discussion referred at para 4 of the order of the CIT(A).

Whereas the CIT(A) found that the Assessing Officer has resorted to an

assessment which was similar for assessment year 2004-05, made also

similar observations for the current assessment year. Whereas the CIT(A)

has discussed at paras 6 and 7 of the order in respect of findings of the

Assessing Officer and also on grant of benefit u/s.11 of the Act, which reads

as under:

“7.1. The only point for discussion is whether there was evidence to show that provision of sec. 11 (5) were not complied v/ith and hence the appellant was guilty of violation of sec.13(1)(d) of the I.T. Act. In his long order, the AO has devoted only one small paragraph (paragraph-5) for this discussion. It has been observed that Rs.36,88,927/- which was shown in the balance sheet as advances to supplies/parties, represented the sum total of debit balances of 11 parties. The appellant had explained each of these advances regarding the purposes. However, instead of examining the purposes, the AO has emphasized on the fact that he did not receive any confirmation from 2 parties u/s.133(6() and one party (A.K. Pattnaik) confirmed closing balance at Nil instead of Rs.12 lakh shown in the appellant’s books. In my view these accounts also suffer from lack of conciliation of ledger accounts rather than violation of sec.11 (5). The account of r. A.K. Pattnaik has since been reconciled during the remand. Only because there was no response from some parties to the letters u/s. 133(6) or there was no reconciliation for the account of one party for the closing balance, the appellant cannot be held guilty of violation of sec.13(1)(d). Accordingly, I do not find any case for denial of benefit u/s.11 to the appellant on such an allegation.”

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Accordingly, the CIT(A) unable to accept the allegation and findings of the

Assessing Officer and allowed the appeal of the assessee.

with the Tribunal. At the time of hearing, ld D.R. argued that the CIT(A)

was not justified in allowing exemption to the assessee irrespective of the

fact that the Assessing Officer has made an elaborate discussion and

findings in respect of the defects in the bank deposits and the CIT(A) is not

justified in considering the contention of the assessee and voluminous

paper books and prayed to set aside the order of the CIT(A). Contra, ld

A.R. relied on the order of the CIT(A) and the earlier order of the Tribunal

in assessee’s own case.

authorities and materials available on record. The assessee is a registered

society and granted exemption u/s.11 from the assessment year 1996-97

and in assessment year 2004-05, the Tribunal on similar set of issues

granted relief to the assessee. On a query from the Bench to ld D.R. why

the Revenue has not disputed the relief allowed for the assessment years

2005-06, 2006-07 and 2007-08, there was no satisfactory and convincing

answer from the Revenue. Prima facie, on the facts, it appears that the

revenue has accepted the financial statements from the assessment years

1996-97 and for the assessment year 2004-05 based on ITAT order and

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there is no dispute in respect for the assessment years 2005-06 to 2007-

income tax and the objects of the society which is not disputed by the

Assessing Officer. We are of the opinion that the CIT(A) has discussed

elaborately and forwarded the four volumes of the written submissions to

the Assessing officer and remand report was obtained from the Assessing

Officer and copy was forwarded to the assessee for filing the rejoinder.

Prima facie, the CIT(A) has considered the observations of the Assessing

Officer and opined that the assessee has not contravened the provisions of

section 13(1)(d) of the Act. We, in the interest of justice, following the

judicial precedence in assessee’s own case for the assessment year 2004-

05,wherein, the Tribunal has allowed the appeal of the assessee granting

exemption u/s.11 of the Act. Accordingly, are not inclined to the interfere

with the order of the CIT(A), who has considered the facts, provisions of

law, remand report of the Assessing Officer and Allowed exemption u/s.11

of the Act and hold the same and dismiss the ground of appeal of the

Revenue

the CIT(A). Since we have upheld the findings and the order of the CIT(A),

in revenue’s appeal, the cross objection filed by the assessee has become

infructuous and is dismissed.

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9 In the result, appeal filed by the revenue and cross objection filed by

the assessee is dismissed.

Order pronounced on 31 /05/2017 Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 31 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Income Tax Officer, Puri Ward, Puri 2. The Respondent. /s. Ghanshyam Hemalta Vidyamandir society, Baliapanda, Puri 3. The CIT(A)-II, Bhubaneswar 4. Pr.CIT-II, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

SR.PRIVATE SECRETARY ITAT, Cuttack