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2022 (1) TMI 890 - AT - Income TaxExemption u/s. 11 denied - violation of provisions of section 36A(3) of the Bombay Public Trust Act, 1950 - activities are illegal and non-genuine and/or not in accordance with the objects - AO treated the assessee trust as an Association of person denying exemption u/s 11 of the Act and thereafter applying provisions of Section 145 (3) and rejected the books of account - admission of additional evidences by the LD CIT (A) - HELD THAT:- In the remand report, objecting to the admission of the additional evidence merely stated that the assessee was given an opportunity from January 2015 to substantiate claims but assessee did not submit the same till the conclusion of reassessment proceedings in the month of March. We find that the show cause notice was issued to the assessee only on 13.03.2015, which was replied by the assessee on 23.03.2015, there after it is evident that, when the assessment order was passed on 31.03.2015, the assessee did not have any sufficient opportunity to produce those confirmations. Therefore, we find that there is no error on the part of the learned CIT (A) in admitting that confirmation which are merely supporting evidences in admitting them in deciding the same after giving the learned Assessing Officer opportunity to examine the same. Accordingly, ground number 1 of the appeal of the learned Assessing Officer is dismissed. Violation of the provisions of Section 36A (3) of the Bombay Public Trust Act - CIT (A) clearly noted that the assessee trust has taken a returnable interest free loans - claim of the AO is that the assessee should have taken a permission of the charity commissioner and as it has violated the provisions of the Bombay Public Trust Act, the assessee should be denied exemption u/s 11 of the Income Tax Act. Learned Assessing Officer in the remand report accepted that no loans were taken by the trust during the relevant year and no property of the trust has been utilized for the advantage of the trustees. Thus, in absence of any contrary evidence produced before us, we do not find any reason to not to agree with the order of the learned CIT (A) that assessee has not violated provisions of Section 36A of the Bombay Public Trust Act. Therefore, ground number 2 of the appeal is dismissed. Addition u/s 69A and 69B - There was no unexplained money, where the assessee was found to be the owner was found. The assessee gave explanation about the nature, source of such bank deposits, which was examined by AO, and no irregularity was found. Therefore, with respect to the contributions deposited in those bank accounts the provisions of Section 69A of the Act has been wrongly applied by the learned Assessing Officer, more so after the complete verification during the course of remand proceedings. Therefore, with respect to the contribution deposited in the bank account the learned CIT (A) has correctly held that same cannot be added u/s 69A of the Income Tax Act and hence, deleted. With respect to the applicability of Section 69B of the Act, we find that assessee has given self-help loan to the members of the trust and given the details of such money utilized for the purposes of that activity which is returnable to the assessee without any interest. These details were also verified by the learned Assessing Officer during the course of remand proceedings and based on that the learned CIT (A) has correctly deleted the addition u/s 69B of the Act. Accordingly, ground number 3 and 4 of the appeal of the learned Assessing Officer are dismissed. Trust exists only for a specified community - The categorical finding was given that the membership of the trust was given to any person who carries on any business or commercial activity in a particular area irrespective of any caste etc. The learned CIT(A) following the decision of M/S. DAWOODI BOHARA JAMAT [2014 (3) TMI 652 - SUPREME COURT]has clearly come to conclusion that the assessee trust was not created for the benefit of any particular religious community but was open to public at large carrying on any trade or commerce in a particular area. Therefore, in absence of any contrary evidence placed before us, we hold that the learned CIT (A) is correct that the provisions of Section 13 (1) (b) of the Income Tax Act are not attracted in the case of the assessee. Accordingly, ground number 5 of the appeal is dismissed. Violation of the provisions of Section 13 (1) (C) and Section 13 (2) - We find that the activity of the self-help where the loan is given by assessee without interest to the needy members of the society. Such needy persons may be the trustees of the trust also. The loan was also given to the trustees on the same terms and conditions as it was given to any other members of the society. Therefore, no special benefits were given to the trustees - identical issue has been accepted by the learned Assessing Officer in the reassessment proceedings for earlier years and assessment proceedings for subsequent years, the learned and CIT(A) has held that no income of the trust was applied for the benefit of the trustees. In view of this, we do not find any infirmity in the order of the learned CIT(A) in holding that there is no violation of the provisions of Section 13 (1) (C) and Section 13 (2) of the Act and therefore, the exemption u/s 11 of the Act cannot be denied to the trust. Accordingly, ground number 6 of the appeal is dismissed. Not adjudicating the rejection of the books of account u/s 145 - in view of our decision on the earlier grounds, wherein we have held that the assessee is entitled to the exemption u/s 11 of the Act on the accounting entries covered in those bank accounts also which were not disclosed before the learned Assessing Officer, we find that this ground becomes merely academic in nature and the learned CIT (A) is correct in not adjudicating the same. Accordingly, we dismiss ground number 7 of the appeal. Revenue appeal dismissed.
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