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2017 (2) TMI 725 - ITAT DELHI

2017 (2) TMI 725 - ITAT DELHI - TMI - Addition u/s 69C - assessee had actually admitted undisclosed income at the time of search and has also made surrender to that extent on the based on the seized documents - CIT(A) deleted addition - assessee trust got registration under section 12A - receipt of corpus donations - Held that:- As from notes of accounts forming part of balance sheet as on 31.03.2009 mentions that the assessee trust receive voluntarily contributions and corpus donations represen .....

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then it cannot be held that voluntarily contributions received by the assessee with specific directions does not form part of corpus donations. Hence, first allegation of the AO is not sustainable. - As find from the copy of the assessment order (for AY 2009-10 placed at pages 235 to 257 of APB) it is clear that the assessing officer has not made any addition pertaining to voluntary contributions to the assessee trust and thus it is presumed that the same AO has accepted fact of voluntary co .....

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he assessee trust for the purpose of construction of building then the amount which has been surrendered in the case of M/s Goel International Pvt. Ltd. and all due taxes and interest etc. has been paid by the said company then the source of expenditure incurred by the assessee trust on construction of building has to be held as explained and the same amount which was surrendered and taxed in the hands of M/s Goel International Pvt. Ltd. cannot be taxed again in the hands of assessee trust under .....

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because when it is explaining the source of expenditure incurred in the construction of building that the amount was received from M/s Goel International Pvt. Ltd. with specific directions as corpus fund then plea of then the plea of amount of peak may be relevant for M/s Goel International Pvt. Ltd. but not in the case of present assessee therefore this allegation of the AO does not have lags to stand on the justified basis. - When the assessee has explained source of the funds incurred as .....

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nds which were used for expenditure as to held as explained in the hands of donee assessee trust and provisions of section 69C of the Act cannot be invoked for making addition on account explained expenditure - Decided in favour of assessee - ITA No. 2652/Del/2013, ITA No. 2653/Del/2013 - Dated:- 6-2-2017 - Shri P. K. Bansal, Accountant Member And Shri. C. M. Garg, Judicial Member Appellant by : Sh. A.K. Saroha, CIT (DR) Respondent by : Sh. Amol Sinha, Advocate, Sh. Ashok Jain & Ashu Goel, C .....

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e based on the seized documents." Sole ground of Revenue for AY 2010-11 reads as follows. Whether on the facts and in the circumstances of the case the Ld. CIT(A) was right in deleting the addition of ₹ 3,21,88,455/-, u/s 69C of the I.T. Act, 1961 when the assessee had actually admitted undisclosed income at the time of search and has also made surrender to that extent on the based on the seized documents." 2. We have heard arguments of both the sides and carefully perused the ma .....

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the basis of seized documents. The Ld. DR further contended that as per page A-12 & 15 of Revenue s Paper Book RPB) no building has shown in the balance sheet on 22.6.2009 and as per A-1 and 2 (RPB) building has been shown to the tune of ₹ 2,87,91,723/- on 9.12.2011. The Ld. DR vehemently pointed out that before date of search balance sheet was showing no building on 22.6.2009 and after search (on 7.7.2009) and in the Balance Sheet on was showing building as on 31.3.2009 which clearly .....

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. He further pointed out that from the copies of the seized documents placed at part-c of proper book-1 (RPB) page 68 and assessee s paper book page 171 the dates and figures are nothing which again support the allegation of the unexplained investment. The Ld. DR also pointed out that the page C-80 (RPB-I) and page 170 (APB) are nothing and amounts have been used for unexplained investments. The Ld. DR also submitted that the corpus donors creditworthiness has not been established thus it has to .....

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f section 13 of the Act. He further pointed out that as per page A- 11 (RPB-1) no activities were undertaken by the trust during the year thus subsequently creation of building the balance sheet drawn subsequent to search clearly established the fact of unexplained investment which attracts provisions of section 69C of the Act. Placing reliance on the decisions of Hon ble Bombay High Court in the case of B.R. Banisi vs. CIT 83 ITR 223 (Bombay), Hon ble High Court of Delhi in the case of Moolchan .....

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income and not for deemed income. He lastly submitted that the baseless order of CIT(A) may be set aside by restoring that of the AO. 5. Replying to the above contentions, the Ld counsel of the assessee submitted that assessee is a trust created for charitable objects and thus it has been granted registration u/s 12 A of the Act. Assessees premise is situated at village Dinarpur and the Goel group is in village Taroli. He further pointed out that the showing the source of Land and Funds used for .....

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Act. The Ld. Counsel vehemently pointed out that the documents A-1 to A-5 as relied by the Ld. DR for supporting the stand of the AO, were recovered from Goel Brothers in Taroli and these were not recovered from the assessees trust premises. The Ld. Counsel vehemently pointed out that as per assessment order for AY 2009-10 (assessees paper book page 235-257) there was no addition in the case of Goel International Pvt. Ltd., no addition has been made by the same AO on this issue thus in the case .....

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the assessee trust and specially took us on page 111 middle para and submitted that he source of investment on building is clearly explained thus the CIT (A) was correct in dismissing the addition. He also drew our attention to paras 8.3 to 8.5 of the first appellate order and contended that the CIT(A) granted relief to the assessee on justified and correct reasons thus the same was kindly be upheld. He also placed reliance on the decision of Hon ble Delhi High Court in the case of DIT (E) vs. .....

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the facts before CIT (A) and thus he misunderstood the facts and consequently ignored the contradictions in the previous B/s of 22.06.2009 and subsequent Balance Sheet prepared on 9.12.2011 after the search. He lastly pointed out that for making addition u/s 69C of the Act no head of income is required thus addition made by the AO must be sustained. 8. On careful consideration of above noted rival submissions at the outset we note that the CIT (A) granted relief to the assessee with following o .....

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t. The seized document A-12 is placed from pages 50 to 120 of the PB. Perusal of the same makes it clear that the expenditure is towards construction activity in as much as expenditure has been debited to Dumper, driver, crusher, Plant-operator, unloading cement, general repairs etc. At some pages viz. page 57, it is also written as 'Rice Account where ₹ 2700/- has been credited on 9.12.2008. Similarly page 59 shows for instance debit of ₹ 2,50,000/-to Shri Vinod Goel on 14.12.20 .....

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orming part of the Balance Sheet as on 31.3.2009' which mentions about voluntary contributions received. It was stated that corpus donation represent acquisition of assets (land, building and others) on behalf of the trust by the trustees. Corpus funds is also seen to have been received by the promoters (page 199 of the PB) from Shri Devi Chand, Vinod Goel, Vijay Goel, Krisnhan Goel, Raj Bala, Rajni Goel, Seema Goel and corpus donation received in kind/cash with specific direction. Aside, as .....

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this case at hand money received has been applied for purposes of the trust, as is evident from the audit report (revised) ending on 31.3.2009. This audit report was also submitted before the AO during the course of hearing and no adverse inference has been drawn either. At this juncture, I am drawn to the jurisdictional High Court decision in*the case of C1T vs. Market Committee, Pipli (P&H) (2011) 238 ITR (P&H) 103, wherein at para 6, it has been elucidated as under: We have considered .....

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o understood, then we have to take the accounts of the assessee with reference to the receipts and deduct therefrom the expenses necessary for earning or looking after that income. The net amount that remains would be available for distribution or application for charitable purpose. In applying the income for charitable purposes, even capital expenditure may be incurred. Therefore, the nature of the expenditure in the hands of the entity which receives the money is not criterion. So long as the .....

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is only the balance that would require examination for finding out whether the assessee has complies with the rule of accumulation to the extent of ₹ 10,000/- or 25 per cent of the income, whichever is higher. "In fact wherever the statute contemplated the income being computed in the manner set out in the provisions of the act, appropriate words are used. For instance, in section 80E, which was considered by the Supreme Court in Cambay Electric Supply Industrial Co. Ltd CIT1978 CTR .....

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the Act cannot be imported into section 11(1). The tribunal has in a way mixed up the notion of total income in understanding the expression 'income from property held under trust'. Section 14 occurs in the chapter 'Computation of total income'. It provides that all income for the purposes of charge of income - tax and computation of total income be classified under certain heads. Therefore, the computation under the difference categories or heads arises only for the purposes of .....

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ed in making an addition u/s 69C. Therefore, the assessee succeeds in ground of appeal no 3. 9. First of all, we may point out that Section 69C of the Act provides as follows: 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as .....

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xpenditure made on behalf of M/s Galaxy Global Educational Trust by M/s Goel International Private Limited (IV) there is no entry of ₹ 6,09,80,178/- in the books of accounts of the assessee hence expenditure mentioned in the seized documents from the premises of the assessee remained unexplained. 11. Before we proceed to analysis the fact of the case in the light of provisions of section 69C of the act and other relevant provisions it would be necessary to consider the ratio of the decisio .....

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, 1998 w.e.f 01.04.1999 not with standing anything contained in any other provisions of the Act, such un explained expenditure which is deem to be the income of the assessee shall not be allowed as a deduction under any head of income. Thus, benefit of the ratio of these decisions is not available for the assessee in the present case having different provision of section 69C of the Act as invoked by the AO and demolish by the CIT(A). 12. Undisputedly assessee trust was formed on 11.04.2008 and r .....

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hall not be included in the total income of the previous year of the persons in receipt of such income. In the present case from the copies of the letters placed at revenue paper book-II pages 94 to 96 it is clear that the assessee submitted confirmations of the corpus donors i.e. M/s Goel International Private Limited that the company made voluntarily donation to the assessee trust in cash of ₹ 2,87,91,723/- during FY 2008-09 and ₹ 3,21,88,455/- during FY 2009-10 pertaining to AY 20 .....

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11(1)(d) of the Act, cannot be labelled against the assessee. we may also observed that from page 197 (APB) in the notes of accounts forming part of balance sheet as on 31.03.2009 mentions that the assessee trust receive voluntarily contributions and corpus donations represents acquisitions of assets i.e. land building etc. on behalf of the trust by the trustee s. Page 199 of the (APB) further manifest that the assessee trust also received corpus fund from Shri Devi Chand, Vinod Goel, Vijay Goel .....

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de by the AO is that the assessee could not explained, the source of expenditure incurred on construction of building. On this issue as we have noted earlier that the assessee by way of confirmation letters of the donors placed at revenues papers book page 94 and 95 established that the impugned voluntarily contributions were made by donor M/s Goel International Pvt. Ltd. with specific directions that they shall be used for the construction of building thus it has to be held that, it shall form .....

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also point out that from the copy of the assessment order (for AY 2009-10 placed at pages 235 to 257 of APB) it is clear that the assessing officer has not made any addition pertaining to voluntary contributions to the assessee trust and thus it is presumed that the same AO has accepted fact of voluntary contributions by the said company to the assessee trust and this amount was given by the donor to the assessee trust with specific directions that the same should be used for construction of bui .....

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n this issue we of the consider view that the search was conducted on Goel Group including M/s Goel International Pvt. Ltd., Goel Overseas and assessee trust wherein Goel Group declared and surrendered huge amounts and also paid tax and interest thereon after filing return of income in response to the notice of the AO under section 153A of the Act. When the donor M/s Goel International Pvt. Ltd. is surrendering huge amounts including the amounts which were voluntarily contributed and donated to .....

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r section 69C of the Act, and obviously it would amount to double taxation on the same amount which is not permissible as per well accepted principle of the tax jurisprudence. 15. So far as third allegation of the AO that the assessee never took the plea that the amount of peak has been incurred on expenditure made on behalf of M/s Galaxy Global Educational Trust by M/s Goel International Private Limited is concerned we are of the view that this plea was not relevant to be taken by the assessee .....

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is concerned and the expenditure mentioned in the seized documents recovered from the premises of the assessee trust is concerned we are of the view of that when the assessee has explained source of the funds incurred as expenditure on construction of building that the corpus funds was received from M/s Goel International Pvt. Ltd. which was also search then the amounts which were recorded in the seized material pertaining to M/s Goel International Pvt. Ltd. and the same amount which was record .....

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