TMI Blog2018 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 11 and 12 of the Act shall apply in respect of any income derived from property held under the trust of any assessment year preceding the assessment year immediately following the financial year in which the application for registration is made (on or after 01.06.2007), for which, assessment proceedings are pending before the AO as on the date of registration and the objects and activities of the trust remain the same for such preceding assessment year. In the assessee’s case, though the application for registration was initially rejected, the Tribunal restored the matter to the ld. CIT, vide order dated 05.02.2014. The CIT granted registration by allowing that very application. It is also undisputed that the objects and activities, which are educational in nature, remain unchanged. As such, the aforesaid proviso to section 12A(2) is squarely applicable. Therefore, as rightly held by the ld. CIT(A), the AO should have granted the benefit of sections 11 and 12 of the Act to the assessee. Addition on account of deemed interest on advance - Held that:- Since the AO did not bring anything on record to establish that the assessee had actually earned interest on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Since for the year under consideration registration u/s 12AA of the IT Act was not available to the Assessee Society, the AO assessed the assessee s net surplus of income over expenditure of ₹ 42,94,078/-. The AO had also added a sum of ₹ 19,90,604/- towards unverifiable sundry creditors. Further, a sum of ₹ 8,75,368/- was added by the AO as interest on advance of ₹ 35,81,000/- at the rate of 12% per annum. Thus in the aforesaid manner, the AO had completed the assessment in the assessee's case at a total income of ₹ 71,60,050/-. 4. While making the addition of ₹ 19,90,604/-, the AO observed as follows: During the course of assessment proceedings the assessee has not produced books of accounts. Vide order sheet entry dated 10.02.2014, the assessee was required to produce confirmation of sundry creditors along with complete address. The assessee has not furnished copy of account of sundry creditors, complete address. In absence of books of accounts and complete bills vouchers, complete address and confirmation the sundry creditors for ₹ 28,64,504/-, the sundry creditors are not acceptable. During last year the assessee has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- on the ground that the assessee has not furnished copy of account of sundry creditors and complete address and confirmation. Your honours kind attention is drawn to the written submissions made before the A.O. vide letter dated 03.02.2014 (copy enclosed) whereby the assessee has submitted the details of sundry creditors and other trade creditors along with their complete addresses. It was also requested that the same made kindly be admitted under rule 46A of the Act. The copy of written submission along with the reply dated 03.02.2014 had been sent to the A.O. for his comments in the remand report. The A. O. has, however, not uttered a single word about, anything found contrary to the evidences placed on record by the assessee even in remand proceedings. He has not made any further enquiry and has not brought on record any adverse material against the submissions made by the Assessee in his remand report. At the cost of repetition, the sundry creditors are explained as under :- 1. ₹ 40632/- Amar Traders; as per copy of account the opening credit balance on 01.04.2010 was ₹ 140632/- and after making payment of ₹ 1,00,000/- vide cheque no. 686 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been shown at ₹ 70,742/- from whom the purchase of iron was made and the payments on different dates were made. The total purchases were of ₹ 6,24,726/- and the payment by cheque was of ₹ 5,53,994/- leaving the balance at ₹ 70,742/- which has been shown as trade creditors. 7. Sikarwar Electricals ₹ 71868/-. Opening balance was ₹ 2,21,868/- and the payment of ₹ 150000/- has been made on 31.07.2010 by cheque no. 694671 drawn on Karnataka Bank A/c No. 7301 and after that closing balance of ₹ 71,868/- has been drawn. Therefore, there was no justification to disbelieve the closing balance of said trade creditor. 8. Tyagi Ply Board ₹ 19930/-. Total purchases were made of ₹ 57,372/- out of which the payment of ₹ 37,422/- has been made by cheque and the closing balance has been drawn at ₹ 19,930/-. Since the payment is made through banking channel there was no reason to disbelieve the closing balance of trade creditor i.e. accepting the credit debit side and disbelieving the closing balance. 9. Upadhyay Cement Store ₹ 17,500/-. The total purchases of cement made during the year were of ₹ 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndly any application for admission of additional evidence has to be supported by reasons for which the appellant could not produce such evidence before the AO during assessment proceedings. I have already held that assessment under section 144 is justified. The appellant has though requested for admission of additional evidence, but no reasons have assigned for not producing such evidence before the AO. The rejoinder has been submitted after receipt of remand report from the AO with further request of admission of additional evidence. I find that it is not permissible under law. The AO has been effectively denied opportunity of examination of evidence and find the genuineness thereof. I therefore, have no option, but to refuse the evidence submitted by the appellant and dismiss the relevant ground of appeal. 10. The assessee contends that it had furnished written submissions dated 03.02.2014 (supra) (APB 37-44) before the AO in compliance to notice (APB 34-35) issued u/s 142(1) of the IT Act, dated 31.08.2012, query no. 14. Attention has been drawn to APB page 41, i.e., the details of the sundry creditors as furnished to the AO. 11. The ld. DR has drawn attention to APB pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission before the AO. 16. Since the factum of the assessee having filed the details of sundry creditors by way of written submissions (supra) dated 03.02.2014 before the AO stands accepted by the AO himself, there is no question of the assessee having improved its case at the stage of rejoinder to the AO s remand report. The ld. CIT(A) has clearly gone wrong in rejecting such details at the threshold without verifying/getting verified the same. The AO at the first instance, had erred in not verifying these details before making the addition. 17. This issue is, thus, remitted to the AO for deciding it afresh in accordance with law, on making necessary verification of the sundry creditors as claimed by the assessee. The assessee shall be afforded adequate opportunity of hearing by the AO. All pleas available under the law shall remain so available to the assessee. The assessee shall, no doubt, co-operate in the fresh proceedings before the AO. Ordered accordingly. I.T.A No. 264/Agra/2016 18. This is Department s appeal for A.Y. 2011-12, taking the following grounds: 1. The Ld. CIT(Appeals) has erred in law and on facts in deleting the addition made as surplus of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on 01.10.2014 or after this date and assessment proceedings be pending; that the Ld. CIT(Appeals) has ignored the fact that the original application dated 21.09.2011 for grant of registration u/s 12AA was rejected by the Ld. Chief CIT (OSD), Agra vide her order dated 26.03.2012 and the benefits as laid down in the first and second provisos of section 12A(2) of the Act cannot be extended to the assessee trust. 21. The ld. Counsel for the assessee has relied on the impugned order. 22. We have heard the parties and have perused the material on record. The ld. CIT(A) has observed as follows: 6.9 Thus, irrespective of the fact that registration u/s 12AA of the Act has been granted on 05.02.2014 with effect from 01.04.2013, the fact of the matter is that as on date of assessment the assessee's trust application for registration u/s 12AA was pending, as the Hon'ble ITAT restored back the matter of granting registration to the Ld. CIT, who in turn vide her order dated 05.02.2014 granted the registration to the assessee (appellant) w.e.f. 01.04.2013. In the process of grant of registration, the shortfall if any was made good by the appellant trust by suitably am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the contrary has been cited before us. The assessee was granted registration w.e.f. 01.04.2013. As per the said proviso to section 12A(2), in such a case, the provisions of section 11 and 12 of the Act shall apply in respect of any income derived from property held under the trust of any assessment year preceding the assessment year immediately following the financial year in which the application for registration is made (on or after 01.06.2007), for which, assessment proceedings are pending before the AO as on the date of registration and the objects and activities of the trust remain the same for such preceding assessment year. 24. In the assessee s case, though the application for registration was initially rejected, the Tribunal restored the matter to the ld. CIT, vide order dated 05.02.2014. The CIT granted registration by allowing that very application. It is also undisputed that the objects and activities, which are educational in nature, remain unchanged. As such, the aforesaid proviso to section 12A(2) is squarely applicable. Therefore, as rightly held by the ld. CIT(A), the AO should have granted the benefit of sections 11 and 12 of the Act to the assessee. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , have been made in the books of account. 28. The CIT(A) further held that since the assessee had not debited any expenditure on account of interest in the Income Expenditure Account, no addition for deemed interest could be made, unless it was proved that the assessee had earned any interest on deposits; and that therefore, the addition made by the AO for making addition on account of deemed interest without bringing any material on record that the assessee had earned any interest on advances could not be sustained. 29. The ld. DR has contended that the ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 8,75,368/-, ignoring the fact that despite giving ample opportunities to the assessee, no relevant details or documents were filed, nor any books of account were produced during the course of the entire proceedings; and that the ld. CIT(A) has also erred in ignoring the fact that one of the reasons for rejection of original application dated 21.09.2011 for grant of registration u/s 12AA vide rejection order u/s 12AA dated 26.03.2012 was that the funds of the trust were given on loan/advances in violation of section 13(1)(d)(1) read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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