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TMI Blog2019 (5) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;, New Delhi (hereinafter referred to as "the Tribunal") in ITA No. 777/DEL/2016, for the assessment year 2011-12, claiming the following substantial questions of law:- I. Whether on examining Schedule 7 List III Entry 25, 28 of Constitution of India, can the deeming fiction of law be utilized to the detriment of the applicant charitable society fulfilling the 'test of predominant object', by treating the explained transactions as cash credit u/s 68 to increase the limit specified (1 cr), for denial of exemption u/s 10(23C)(iiiad) r.w. Rule 2BC of the Income Tax Act, 1961, Income Tax Rules 1962? II. Whether the Tribunal order is unreasonable while concurring with the findings of CIT(A) that the issue in dispute 'is not cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was not entitled to claim exemption under Section 10(23C)(iiiad) of the Act. Feeling aggrieved by the order, Annexure A-3, the assessee filed an appeal on 30.4.2014 (Annexure A-4) before the Commissioner of Income Tax (Appeals) [for brevity "the CIT(A)"]. The assessee also furnished written pleadings dated 15.5.2015 and 25.6.2015 (Annexure A-5 Colly) before the CIT(A). Pursuant thereto, the CIT(A) sought remand report from the Assessing Officer who issued notice dated 6.8.2015 (Annexure A-6), wherein the Assessing Officer had called 6 of the unsecured loanees to record their statements to verify the genuineness of the cash transactions. It was recorded in the remand report that in response to summons to these persons, the assessee p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts from fees and interest, the gross annual receipts amounted to Rs. 1,40,03,382/- (Rs. 67,75,000/- + Rs. 72,28,382/-) which exceeded Rs. 1 crore. Consequently, a notice dated 24.3.2014 was issued to the assessee to show cause as to why the exemption claimed under Section 10(23C)(iiiad) of the Act be not disallowed and excess of income over expenditure be taxed, as the gross receipts of the assessee were exceeding Rs. 1 crore and the assessee had not taken prior approval from the Chief Commissioner of Income Tax, Panchkula under Section 10(23C)(iiiad) of the Act. The said exemption was disallowed to the assessee and the excess of income over expenditure of Rs. 7,89,745/- along with the unexplained unsecured loan of Rs. 67,75,000/- was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been sought, the AO was correct in not allowing the claim of expenditure. The addition of Rs. 7,89,745/- is confirmed." 6. The Tribunal while confirming the addition of Rs. 67,75,000/- made on account of unsecured loan received, had noticed that the lenders of funds have not, at any stage, discharged their onus in furnishing documentary evidence in respect of cash deposits made in their accounts and against which loans were advanced to the assessee. The creditworthiness of the lenders and the genuineness of the transaction was not clear and even the lenders summoned by the Assessing Officer had not submitted their income tax returns. Therefore, the addition made by the Assessing Officer under Section 68 of the Act was rightly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the contentions raised in the written submissions filed by the Ld. DR and the case laws cited therein. We find that a sum of Rs. 67,65,000/- has been added on account of unsecured loan received. We further find that after perusing the assessment records, appellate order and the Remand Report, it is apparent that the lenders of funds have not, at any stage, discharged their onus in furnishing documentary evidence in respect of cash deposits made in their accounts and against which loans were advanced to the assessee. We further note that in this case the creditworthiness of the lenders and the genuineness of the transaction is not clear. Moreover, the lenders who were summoned by the AO have not submitted their Income Tax Returns. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gross receipts of the society are exceeding Rs. One crore and the society has not taken prior approval from the Ld. CCIT, Panchkula u/s 10(23C)(vi) of the Income Tax Act, 1961 which is mandatory for claiming exemption. In response, the society filed its written reply stating therein that receipt of our school should be kept at Rs. 72,28,382/- which is prescribed limit explained in Section 10(23C)(iiiad) of the Income Tax Act, 1961. This contention of the assessee is not genuine because, the gross annual receipts of the society exceeding Rs. One crore and society has not taken prior approval from the Ld. CCIT, Panchkula. Therefore, the society is not eligible for exemption u/s 10(23C)(iiiad) of the Act, hence, the same exemption was withd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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