TMI Blog2023 (1) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... was taken by Chennai Tribunal in Veeraval Trust [ 2021 (7) TMI 1084 - ITAT CHENNAI ] holding that where assessee trust charitable trust was not registered under section 12AA, voluntary donation received by it with a specific direction to be formed part of corpus of trust would fall within the ambit of Income of trust. In the result, ground No.2 of the appeal is dismissed. Addition of unexplained unsecured loan - HELD THAT:- We find that, though the assessee has proved the identity of the lenders and their capacity by filing the record of agriculturists holding, showing sufficient land holding in their names. However, the entire transaction of unsecured loan is received in cash. Not a single instance of receiving loan through banking transaction is shown to us, the assessee has shown alleged unsecured loan on daily basis. From the figure of unsecured loan ranging from Rs. 10,000/- to 19,000/- on more than 50 occasions is shown only to avoid the rigorous of section 269SS, therefore, such transaction dos not inspire our confidence, hence, we are in agreement with the submission of ld. CIT-DR for the revenue that the genuineness of transaction is doubtful. Thus, all three conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case as well in law, both the lower authorities have grievously failed to appreciate that the detailed explanations with cogent, authentic and believable evidences placed on the records for the expenses claimed towards the objects of the trust and hence, the adhoc disallowance at the rate of 10% to total expenses made/confirmed is without jurisdiction, arbitrary, baseless, perverse, unwarranted o facts, bad in law and hence, deserves to be deleted. 5. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. 2. Brief facts of the case as gathered from the orders of the lower authorities are that the assessee is a Public Charitable trust, registered under the provisions of Bombay Public Trust Act, on 08.07.2009. The assessee-trust is not having registration under section 12AA of Income-tax Act. The assessee-trust filed its return of income for the Assessment Year (A.Y.) 2013-14 on 17/11/2013 declaring income of Rs.6,82,500/-. The return was selected for scrutiny. The Assessing Officer while making assessment issued various notices under Section 142(1) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee for the corpus funds. To avail the benefits of Section 11, 12 and 13 of the Act, all conditions, as mentioned in Section 12A must be fulfilled including of getting registration under Section 12AA of the Act. Accordingly, the Assessing Officer was not allowed benefit under Section 11 and 12 of the Act and added Rs. 8,34,700/- in the income of assessee. 4. The Assessing Officer further noted that there was a fresh and unsecured loan as evident from the balance sheet furnished to the Charity Commissioner. The Assessing Officer made following details showing increase in unsecured loan: Sr. Name of the lender Closing balance as on 31/3/2013 Closing Balance as on 31/3/2012 Increase in closing balance during AY 2013-14 1. Ajitsinh M Thakkar 5,00,000 57,000 4,43,000 2. Bhanjubhai M Gavit 5,00,000 50,000 4,50,000 3. Vijaysinh G Parwar 10,03,257 1,35,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Charity Commissioner and before the Assessing Officer, the assessee stated that the audit report furnished before Charity Commissioner is final and correct audited statement which is collected directly by the Assessing Officer by issuing notice under Section 133(6) of the Act. The assessee-trust due to oversight, filed projected balance sheet which has actually been prepaid to submit before the banker for future financial need. There is no case of different balance sheet as on 31/3/2012 as presumed by Assessing Officer. From the balance sheet as on 31/3/2012, filed before the Charity Commissioner, it is evident that there is no increase in the corpus donation during the year, it is shown as a balance as per last balance sheet for Rs. 5.00 lacs. The Assessing Officer failed to consider the same in a proper perspective and addition made is not tenable. The Assessing Officer has not seen the books of account placed before him which clearly shows that the liability as per Annexure-D as on 31/3/2012 in aggregate amount of Rs. 52,37,093/- and cash in hand as on 31/3/2012 of Rs. 77/- has been carried forward as opening balance as on 01/4/2012 in the audited books of account. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by taking a view that creditworthy and genuineness of transaction is not proved. However, on the disallowance of 10% of total expenses, the ld. CIT(A) granted substantial relief to the assessee by taking a view that except the expenses shown at serial number 1 to 9, 18 and 20 are by in cash and some of the expenses were paid by cheque. The expenses shown at serial number 1,4,5,6,7, are paid in cash are verifiable and do not call for any disallowance. The expenses shown at serial number 9 and 18 to 20 are not fully verifiable. Accordingly, the ld. CIT(A) restricted 10% of disallowance only on these items of expenses thereby worked out total expenses under serial number 8,9 and 18 to 20 of Rs. 32,43,550/- and 10% of which was worked out at Rs. 3,24,355/- and remaining disallowance was deleted thereby granted relief of Rs. 10,77,780/-. Further aggrieved, the assessee has filed by the present appeal before this Tribunal. 11. We have heard the submissions of the learned authorised representative (Ld. A.R) of the assesse and the learned Commissioner of Income Tax/Departmental Representative (CIT- DR) for the revenue and have gone through the orders of the authorities below. Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and on comparison of both the audited balance sheets filed before the Charity Commissioner i.e. for the A.Y. 2012-13 and 2013-14, the Assessing Officer was of the view that there was increase in the corpus fund. As no detail was furnished by the assessee, therefore, in absence of any detail, the Assessing Officer made addition of Rs. 8.34 lacs by denying the exemption under Section 11 of the Act. The ld. CIT(A) upheld the addition with similar view in the corpus fund. Before us, the ld. AR of the assessee vehemently submitted that the audited balance sheet filed before the Charity Commissioner, Valsad is true and correct audited balance sheet and that the receipt of corpus donation is not taxable. We find that the assessee has taken a stand before ld CIT(A) that there is no increase in the corpus donation. The ld CIT(A) rejected the submissions of the assessee that here is no increase in the corpus donation. The ld. CIT(A) held the balance sheets for the year ending on 31.03.212 and 31.03.2013 shows the increase of corpus fund by Rs. 8,34,700/-. Before, us the assessee has again raised the ground against the addition and ld AR argued that the corpus donation is not taxable. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 52 53 of the paper book and shown us the entry in cash ranging from Rs. 10,000/- to 19,000/- on more than 50 occasions. Similar transaction in cash of unsecured loan from Ajitsinh M. Thakkar, Bhanubhai M Gavit and Vijaysinh Gandabhai Parmar received in cash. Details of which are available at page No. 93, 94, 96 and 97 of the paper book respectively. The ld. CIT-DR submits that all the entries of unsecured loans are sham transaction received by way of other than banking mode. The circumstances of cash transaction are suspicious and cannot be treated as genuine. All the entries of the alleged loan are shown in cash. Thus, from the entries neither the creditworthy nor genuineness of transaction is proved. 17. We have considered the rival contentions of both the parties and have gone the entries of the loan received in cash. We find that, though the assessee has proved the identity of the lenders and their capacity by filing the record of agriculturists holding, showing sufficient land holding in their names. However, the entire transaction of unsecured loan is received in cash. Not a single instance of receiving loan through banking transaction is shown to us, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 it is transportation expenses of Rs. 4,85,900/- is some time in cash and some time by way of cheque. The ld. CIT(A) further find that the expenses shown at serial number 1 is accountant salary of Rs. 74,000/-, at serial number 4 is salary to filed assistant of Rs. 48,000/-, at serial No. 5 is labouring salary of Rs. 18,000/-, serial No. 6 is electricity bills expenses of Rs. 26,350/- and at serial No. 7 is office rent expenses of Rs. 48,000/- though paid in cash but verifiable and do not call for any disallowance. The expenses shown at serial No. 8 Misc. expenses of Rs. 46,356/-, serial No. 9 printing and stationary of Rs. 12,526/-, serial No. 18 is travelling expenses of Rs. 1,78,574/- and at serial No. 19 is transportation expenses of Rs. 4,85,900/- and serial No. 20 labour expenses of Rs. 25,20,200/- are not fully verifiable and accordingly, the ld. CIT(A) restricted the disallowance @ 10% only of these expenses thereby granted substantial relief to the assessee of Rs. 10,77,780/-. 21. Before us, the ld. AR of the assessee urged that the disallowance of 10% on limited item are on higher side and may be reasonably restricted. We have perused each and every item of expenses, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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