Income Tax Appellate Tribunal - Chandigarh
Assistant Commissioner Of Income Tax, ... vs Haryana State Agricultural Marketing ... on 17 March, 2026
1 IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON'BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM
1. आयकर अपील सं . / ITA No.614/CHANDI/2023 (िनधारण वष / Assessment Year: 2003-04) &
2. आयकर अपील सं . / ITA No.619/CHANDI/2023 (िनधारण वष / Assessment Year: 2004-05) &
3. आयकर अपील सं . / ITA No.629/CHANDI/2023 (िनधारण वष / Assessment Year: 2006-07) &
4. आयकर अपील सं . / ITA No.628/CHANDI/2023 (िनधारण वष / Assessment Year: 2008-09) ACIT (Panchkula Circle) Haryana State Agricultural Marketing Board Aaykar Bhawan, Bays No. 41-43 बनाम/ Mandi Bhawan,Sector-6 Panchkula, Sector -2 Panchkula - 134112 Vs. Haryana - 134109 थायीलेखासं ./जीआइआरसं ./PAN/GIR No. AAALH-0016-R (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे / Appellant by : Sh. Harish Nayyar (CA) - Ld. AR थ कीओरसे /Respondent by : Sh. Manav Bansal (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 17-02-2026 घोषणाकीतारीख /Date of Pronouncement : 17-03-2026 आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeals by revenue for captioned assessment years have identical facts as well as issues. First, we take up appeal for Assessment 2 Year (AY) 2003-04 which arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 14-08-2023 in the matter of an assessment framed by DCIT, Panchkula (Ld. AO) u/s 143(3) r.w.s. 254 of the Act on 17-12-2019. Having heard rival submissions, the appeal is disposed-off as under. The assessee is stated to be local authority which is engaged in carrying out activities of provisions of services for farmer community.
Chronology of Events 2.1 Initially, the assessee filed return of income on 01-12-2003 claiming exemption u/s 11 and 12. The income was assessed u/s 143(3) on 16-03- 2006 wherein Ld. AO denied exemption u/s 11(1) as claimed by the assessee and made three disallowances (Contribution to PF, on account of Kisan Uphar Yojna, on account of revenue income shown as capital income). The same was on the ground that the assessee did not maintain proper books of accounts. The Ld. AO referred to the statement of the Auditor Shri Rajiv Malhotra who was summoned u/s 131. In reply to one of the questions, he stated that the books of accounts of branches / units were not produced or made available to them.
2.2 The first appeal against this order stood dismissed by Ld. CIT(A) vide order dated 02-09-2006. The Tribunal, vide ITA No.831/Chd/2016 order dated 22-01-2008, in para-2, rendered following findings: -
.....Without going into much deliberation and specifically in the light of the argument advances during the arguments that statements of Branch offices are compiled / maintained at head office, the assessing officer is directed to examine the facts whether the assessee has compiled the entries at the head office maintained at various branches of the assessee. If it is found correct, the assessing officer is directed to decide as per provisions of law.....3
2.3 Pursuant to the same, another assessment was framed by Ld. AO on 24-12-2008. The assessee was directed to furnished books of Karnal office, Kaithal office and Head office. The Ld. AO pointed out various discrepancies in the same. In Para-5, it was admitted by Ld. AO that the assessee has maintained books at the branch offices. The expenses were compiled and summarized. However, in the absence of tax audit, the genuineness of the expenses could not be ascertained. Finally, the exemption claim was denied and the income was assessed at Rs.731.13 Lacs.
2.4 This order was subject matter of first appeal vide order dated 01-03-
2010 wherein the exemption was allowed by Ld. CIT(A) vide para 4.1 by relying on the first appellate orders for AYs 2005-06 and 2006-07. It was held that exemption u/s 11 could not be denied unless it was proved that the conditions as prescribed under the provisions were infringed. However, the disallowance of contribution to various pension / provident funds aggregating to Rs.284.15 Lacs was confirmed.
2.5 The revenue challenged this order before Tribunal vide ITA No.538/Chd/2010 order dated 07-06-2010 wherein the Tribunal upheld the exemption claim u/s 11 by relying on Tribunal order in assessee's own case ITA No.1014/Chd/2009 dated 31-12-2009 (this decision, in turn, relied on ITA No.1017/Chd/2008 dated 30-01-2009 and ITA No.577/Chd/2008 dated 19-08-2009). The revenue challenged this order before Hon'ble Punjab & Haryana High Court vide ITA No.110 of 2011 which stood disposed-off vide common order dated 20-02-2017 (the lead 4 order was passed by Hon'ble Court in ITA No.126 of 2009). It was directed by Hon'ble Court as under: -
8. Learned counsel for the revenue very emphatically submitted that the finding recorded regarding maintenance of books of account by the assessee are perverse and more so when in spite of taking several opportunities before this court as well, the learned counsel for the assessee was unable to substantiating these findings by producing the record in the High Court.
Thus, the finding recorded by the Tribunal is required to be verified and since the respondent- assessee has not been able to produce the books of account and the audit report, it is appropriate to set aside the impugned orders and remand the matter back to the Tribunal for fresh decision in accordance with law after hearing both the parties. As regards the additional substantial question of law raised in ITA No.588 of 2010, though no serious error was raised, since the matter is being remanded, the Tribunal shall look into this fact also.
9. In the result, all the appeals stand disposed of accordingly.
2.6 Pursuant to aforesaid directions of Hon'ble High Court, a common order was passed by Tribunal in revenue's appeal for AYs 2004-05, 2006- 07, 2003-04 and 2008-09 on 22-05-2018 vide ITA Nos.577/Chd/2008 & ors. At para-10, the matter was remanded back by Tribunal to Ld. AO with following directions: -
10. Having heard the arguments of both the parties and since the assessee has categorically submits that books of accounts have been duly maintained and can be produced for verification along with the audit reports and also the arguments of Ld. DR that if the books are maintained, they are required to be examined by the primary authority i.e; the Assessing Officer, we hereby remand the matter back to the file of the Assessing Officer for the limited purpose of passing an order denovo with regard to this ground only and with directions to the assessee to produce books of accounts promptly before to Assessing Officer.
2.7 In the meanwhile, the assessee also challenged first appeal order dated 01-03-2010 before Tribunal vide ITA No.452/Chd/2010 which stood disposed-off vide common order dated 21-12-2016. The Tribunal, in para-
49, held that the since the assessee was entitled for exemption u/s 11 & 12, no disallowance could be made. The appeal of the assessee was thus 5 allowed. This order was again challenged by revenue before Hon'ble High Court vide ITA No.553 of 2017 (O&M) which stood disposed-off by Hon'ble Court on 04-10-2018. The Hon'ble Court, considering its earlier order dated 20-02-2017 as well as the directions of the Tribunal in order dated 22-05-2018, remitted the matter back to the file of Ld. AO. 2.8 Pursuant to aforesaid directions, another assessment has been framed by Ld. AO on 17-12-2019 which is subject matter of present appeal before us. During the course of assessment proceedings, notices u/s 142(1) was issued by Ld. AO on 19-09-2019 wherein the assessee was inter-alia, directed to furnish tax audit report, financial statements etc. The assessee, vide reply dated 22-10-2019, furnished Audit Report and financial statements etc. and stated that mere observation of the tax auditor that the books were not examined by them could not lead to an inference that the books of account were not maintained by the Board. The Board being government organization could not function without maintaining complete and proper books of accounts. In support, the assessee furnished complete books of accounts of the Board for verification by Ld. AO. The assessee was again show-caused on 09-12- 2019 wherein the Ld. AO again alleged that though the books were produced, however, the books were not audited. Finally, the findings of assessment order dated 16-03-2006 were upheld. Aggrieved, the assessee preferred further appeal which was decided by Ld. CIT(A) in assessee's favor vide order dated 14-08-2023.
2.9 During first appeal, the assessee pointed out that it was a statutory board set up under The Punjab Agricultural Produce Markets Act, 1961 6 (PAPM Act) by the State Govt. of Haryana. The functions of the Board, its operation and manner of maintaining accounts and carrying out audit were prescribed under the Act itself. The annual accounts of the Board, after audit from AG, Haryana are placed before the Board and also before the committee of public undertaking. There are number of units from where Board undertakes its operations and independent set of books of accounts are maintained for all the units. These accounts are furnished to the Head Office for their merger with the accounts of the Board periodically. Therefore, the observation of the Auditor that the books were not examined during the course of audit could not lead to inference that the books of account were not maintained by the Board. The Board being a government organization could not function without maintaining complete and proper books of accounts. The assessee also furnished complete books of accounts of the Board. After due consideration of assessee's submissions, Ld. CIT(A) rendered following findings: -
5.2 Now before me in the appellate proceedings, written submission has been filed. I have gone through the written submission. It has been stated that the appellant is a Government authority, whose accounts are subject to audit by Auditor General of Haryana and books of accounts were duly maintained. The appellant filed one affidavit before the assessing officer on 18.12.2019. The copy of the affidavit has been filed in 2.4 of written submission. It is clear from the affidavit that the books of accounts are properly maintained by the Board and audited by the C&AG. It has been further written that the Chartered Accountant misreported the facts before the Assessing Officer that the books of accounts were not made available to him and hence not produced. I have gone through the written submissions. I agree with the view of the appellant that the books of accounts are maintained and duly audited by C&AG. Hence, the addition of the Assessing Officer is deleted and the appeal of the appellant is allowed.
Aggrieved as aforesaid, the revenue is in further appeal before us. Our findings and Adjudication
3. After going through the chronology of events as enumerated in preceding paras, it clearly emerges that the assessee is a statutory board 7 which is set up under The Punjab Agricultural Produce Markets Act, 1961 (PAPM Act) by the State Govt. of Haryana. The functions of the Board, its operation and manner of maintaining accounts and carrying out audit were prescribed under the Act itself. The annual accounts of the Board are required to be audited from AG, Haryana and thereafter, the same are placed before the Board and also before the committee of public undertaking. The assessee has number of units from where it undertakes its operations. The assessee has maintained independent set of books of accounts for all the units which are compiled and summarized at the head office levels. If the accounts are not maintained in such a manner, the annual accounts could not be finalized. The assessee has furnished books of accounts before Ld. AO who has primarily pointed out discrepancies in the same and got swayed by the statement of Auditor. However, the fact remains that the assessee has maintained the books of accounts and furnished the same before Ld. AO. It is also not the case of Ld. AO that the income of the assessee could not be ascertained from these books of accounts. The statement of auditor that the books of branches were not produced could not lead to an inference that the books of account were not maintained by the Board. The Board being a government organization could not function without maintaining complete and proper books of accounts. The assessee also furnished complete books of accounts of the Board. The Accountant General (Audit), Haryana has duly certified on 18- 08-2006 that the account and the Balance Sheet have been properly prepared and that the same represents true and proper picture of work situation. The assessee has also furnished an affidavit from Controller 8 (Finance and Accounts) affirming the fact that the books of accounts were properly maintained by the Board and audited by the C & AG. All these facts would lead us to endorse the findings of Ld. CIT(A). Accordingly, we see no reason to interfere in the findings of Ld. CIT(A). The appeal of the revenue stand dismissed.
4. It is admitted position that facts as well as issue in AYs 2004-05, 2006-07 and 2008-09 are pari-materia the same. The assessment orders as well as adjudication of Ld. CIT(A), for all these years, is on same lines. Therefore, taking the same view, we confirm the adjudication of Ld. CIT(A) in the respective orders.
Conclusion
5. All the appeals stand dismissed.
Order pronounced on 17th March, 2023.
-Sd- -Sd-
(RAJPAL YADAV) (MANOJ KUMAR AGGARWAL)
VICE PRESIDENT ACCOUNTANT MEMBER
Dated: 17-03-2026
आदे श की ितिलिप अ े िषत /Copy of the Order forwarded to :
1. अपीलाथ /Appellant
2. थ /Respondent
3. आयकरआयु /CIT
4. िवभागीय ितिनिध/DR
5. गाडफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH