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TMI Blog2012 (7) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... on of cooperative group housing society laws and bye laws. Consequently, a survey u/s 133A was carried out in the office premises of the society on 14.12.2005. it was found that books of account and other documents were already impounded by CB-CID, Meerut in connection with certain criminal investigations about the alleged irregularities. The remaining papers were seized during the course of survey. 148 notices were issued accordingly. Assessee filed its returns of income based on copies of audited accounts. In view of various complaints, IT authorities appointed Special Auditor M/s Pary & Co. to conduct of special audit which was carried out. The Special Auditor reported that various documents were in the custody of the CB-CID for which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the respective orders. (iv) The assessments were framed accordingly raising the demand for all these years. 2.1. Aggrieved, assessee preferred first appeals where learned CIT(A) upheld the Assessing Officer's contention that the assessee has failed to satisfy the basis of mutuality on various grounds which inter-alia included that proper bye laws were not furnished to demonstrate the existence of complete identity between the cooperative society and the members. The affairs of the society were not carried out in the manner as prescribed under the Act. In the absence of bye laws and record, it was not possible to ascertain the claim about ingredients of principle of mutuality. This ground of the assessee was rejected in all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refusing to allow this claim of applicability of principle of mutuality. Apropos the quantum addition, it is contended that the addition retained by CIT(A) is excessive and unjust. 4. The learned DR, on the other hand, vehemently argues that the burden to prove the existence of mutuality i.e. complete identity between members and society lies squarely on the assessee. The same cannot be assumed on mere contentions or general impressions. The assessee has failed to produce the complete set of bye laws and the cooperative society act and rules to demonstrate the ingredients of mutuality. Assessee has filed only copies of relevant pages of bye laws without any authenticity, therefore, assessee has failed to discharge its burden to prove the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned DR, on the other hand, argued that it is assessee's own admission that all his account books, vouchers and records have been impounded by CB-CID. Therefore, the allegation that Assessing Officer has failed to prove them as bogus is not borne out by record. By assessee's own admission, the expenditure incurred by the assessee is not verifiable. It is further pleaded that learned CIT(A) has failed to observe that interest income received by the assessee is from FDRs and other bank deposits. The interest is earned on the surplus funds and is distinct in taxable under the head "income from other sources". Therefore, interest income should be treated as income from other sources and balance receipts should be taxed without giving an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account, it emerges that the expenditure incurred by the assessee far exceeds the other receipts. In our view, it will be a distorted view to disallow all the expenditure only because the record is seized. Since a fair and reasonable estimate of income has to be made, in our view, the reasonable expenditure is to be allowed to the assessee in all these years. Looking at the quantum of other receipts, the expenditure incurred clearly outweighs the receipts in P&L A/c, therefore, in our considered view the other income of the society shall be estimated at nil. In consideration of all the facts, we decide the issues about quantum in these years as under:- (i) The benefit of mutuality cannot be allowed to the assessee. (ii) The interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant that since the appeal of the GDS in High court is pending, the compensation received is not final and the same is not taxable in the hands of the appellant, it is now clearly established that the compensation is to be taxed on receipt basis. In this case, though the GDS has filed appeal before the Honourable High Court which is pending but the appellant has actually received the amount of additional compensation, which the AO has rightly brought to tax on the basis of actual receipt. The same laws relied upon by the appellant are clearly distinguishable to the facts of the appellant's case. As regards the taxability of interest component, it is stated that the relevant evidences regarding the nature of receipt has not been furn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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