Gahoi Vaishya Kalyan Samiti Vs ITO (ITAT Lucknow)
The appeal before the ITAT Lucknow arose from the order of the CIT(A), NFAC, which had upheld an assessment framed under Sections 147 and 148 for AY 2015-16. The assessee challenged the validity of the reassessment proceedings as well as the addition of Rs. 4,00,16,602, contending that the amount represented deemed application under clause (2) of Explanation (1) to Section 11(1) and was not required to be disclosed in Schedule-I of ITR-7.
The Assessing Officer reopened the assessment on the belief that the assessee had made unexplained investment of Rs. 3,96,06,150 in immovable property. During assessment proceedings, the AO observed that the assessee had accumulated Rs. 4,00,16,602 under clause (2) of Explanation (1) to Section 11(1) in AY 2014-15 but had not disclosed the amount in Schedule-I of the ITR for AY 2015-16. The assessee explained that Schedule-I applies only to income accumulated under Section 11(2) and not to deemed application under Explanation (1) to Section 11(1). The AO rejected this explanation, relying on the ITR instructions, and added the amount to the assessee’s income.
Before the CIT(A), the assessee submitted that the purchase of immovable property had been made from the deemed application already disclosed in AY 2014-15 and reflected in its audited accounts. It also stated that Form No. 10B had disclosed the deemed application, that Form No. 10 had initially been filed manually and later online after obtaining condonation of delay from the CIT (Exemption), and that objections to the reopening had been filed but were not disposed of before completion of assessment. The CIT(A) rejected these submissions, holding that both accumulated income and deemed application were required to be reported in Schedule-I and that the omission amounted to non-compliance with statutory requirements. The appeal was accordingly dismissed.
