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2022 (8) TMI 299 - AT - Income TaxAssessment of trust - Disallowing sum while finalizing the assessment of the assessee trust - expenditure shown by the assessee is on higher side/ excessive - As per CIT-A appellant has not been able to prove with the help of documentary evidences that entire revenue expenses debited the income and expenses account were incurred wholly and exclusively for the purpose of Trust - HELD THAT:- It is not disputed by the both the parties that there is not a single instance observed in the original assessment proceeding and in the remand proceeding about the correctness and completeness of the records maintained by the assessee. We also found force in the argument of assessee that when the income of the assessee is exempt from tax what it will make a difference about the claim of the expenditure this is also confirmed by the AO, on page 3 of the assessment order the wherein the AO has observed that “As the ‘A’ Trust is registered u/s. 10(23C(vi) income earned during the year under consideration is exempt and hence assessed at Rs. Nil”. We also found force in the argument of ld AR of the assessee that assessee has discharged its complete onus producing and appearing in both the proceedings. Not only that the entire addition has been made purely on the basis of the assumptions and surmises is purely devoid of any merit. Even the CIT(A) also did not consider the contentions of the assessee on merit despite the submission and remand report placed before him by submitting the written contentions and ld CIT(A) also chose to remain silent while dealing with the appeal of the assessee. As not disputed that the assessee has maintained regular books of accounts, which are audited by an independent Charted Accountant, in his report the auditor nowhere discussed any defects in the set of records maintained by the assessee, the books were presented before the AO in original as well as in remand proceeding, no specific defect or bogus vouchers/bills are observed. Whatever arguments made by the Ld DR in the hearing has also been dealt with convincing answer and on that there are no further comments required after considering the submission of the ld. AR of the assessee. We find that the claim of the assessee is supported bills and vouchers recorded in the books of accounts which are audited as per requirement of the act and auditor has specifically reported that all the expenses incurred by the assessee is per the object of the society. CIT(A) as well as AO has not pointed out any single defects in the records maintained by the assessee while making an adhoc disallowance neither the AO nor the ld. CIT(A) before arriving at such a finding, recorded specific finding highlighting particular expenditure which accordingly to him is not allowable, a general observation for all the expenditure disallowance of lump sum out of all expenses cannot be disallowed. The observations of AO in the remand proceeding is duly explained in the arguments and considering the explanations the ld. DR has not pointed out any strong rebuttal on the version of the ld AR of the assessee in respect of each of expenses. In the remand proceeding, the reasons for disallowance of lumpsum amount is also missing in this case. The AO failed to prove even in the remand proceeding that why and what count a sum of Rupees 50,00,000/- which is 11 % as per his version in remand proceeding should sustain. In the instant case, it is palpably clear that neither the AO nor ld CIT(A) observed any specific expenditure as excess or unreasonable, and their action of confirming lump sum disallowance at Rs. 50,00,000/- out of all the expenses cannot be sustained on a Lum sump amount in the eyes of law considering the findings and observations made hereinabove and thus, the same is hereby deleted and ground of the assessee’s appeal is allowed.
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