TMI Blog2011 (4) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the incomes under any of these various heads, will not be attracted in the case of deemed income which are covered under the provisions of sections 69, 69A, 69B and 69C of the Act in view of the scheme of those provisions. - IT APPEAL NOS. 237 & 238 (HYD.) OF 2010 - - - Dated:- 21-4-2011 - G.C. GUPTA, CHANDRA POOJARI, JJ. K.E. Sunil Babu for the Appellant. P. Murali Mohan Rao for the Respondent. ORDER Chandra Poojari, Accountant Member. These two appeal preferred by the Revenue is directed against the common order passed by the CIT(A) -I, Hyderabad dated 20-12-2007 and pertains to the assessment years 2004-05 2005-06. Since issues involved in these two appeals are common in nature, they are clubbed, heard and disposed of together vide this common order for the sake of convenience. 2. The main common grievance of the Revenue in its appeals in ITA Nos.237 238/H/2010 are that the CIT(A) erred in allowing exemption under section 10(23C)(vi) of the IT Act. Though as claimed, the assessee is eligible for exemption under section 10(23C)(iiad) if its gross receipts are less than 1 crore, such claim can bona fidely be claimed when the affairs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed on 10-11-2005 after the date of survey. In the return filed in response to the notice under section 153C for the assessment year 2004-05, the assessee filed revised receipt and payment account, wherein it had increased the receipt to the extent of unaccounted expenditure on rent and had correspondingly increased the expenditure on rent. In course of the assessment proceedings, the assessee filed a letter dated 17-11-2007 wherein it was submitted that theirs was an education institution which comes under the provision of section 10(23C)(iiiad). Since the gross receipts of the institutions for all the years covered under assessment was below Rs. 1 Crore the income of the institution was exempt under the aforesaid provision. The assessee submitted that the receipts and payments account was modified showing the actual payment of rent out of correct receipts of the year and the revised returns have been filed voluntarily duly supported by audit report. It was also submitted that section 10(23C) (iiiad) gives a blanket exemption of the income of the institution since the gross receipts does not exceed Rs. 1 crore and the institutions exists solely for the purpose of education. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent to the survey action, under section 133A of the IT Act. Consequent to Survey, notice under section 153C dated 10-8-2006 was issued calling for return of income for the assessment years 2000-01 to 2005-06. This survey was w.r.t. search under section 132 of the Act was carried out on the residential premises of Mr. B. Mallesh Yadav who is the land lord of the assessee. The assessee originally filed the return of income for the assessment year 2004-05 on 30-10-2004 and for the assessment year 2005-06 on 1-8-2005. Consequent to Notice under section 153C, the assessee filed revised return on 25-8-2006 for the assessment years 2004-05 and 2005-06. In the revised return, the assessee has taken into consideration the non-accounting of rental payments to landlords. The Assessing Officer was of the opinion that this is an after thought and considered the impugned cash payment of rent as unexplained income under section 69C of the IT Act. Admittedly, there is a lapse on the part of the assessee to account the cash payment of rent as follows: Shri C.P. Mallesh Yadav F.Y. 2003-04 (AY 2004-05) Rs. 6,03,092 FY 2004-05 (AY 2005-06) Rs. 6,72,06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the original return. The department detected these cash payments in the course of survey action and thereafter issued notice under section 153C. After receipt of the notice, the assessee has filed revised return disclosing the impugned cash payment of rent which is nothing but an afterthought. In our opinion, inclusion of cash payment of rent in the revised return is of no help to the assessee. The assessee was not able to explain how the cash payment of rent has escaped from accounting. The impugned cash payment was detected by the department consequent which the assessee has filed the revised return. These payments would not have been disclosed to the department, had the department has not detected the same. The assessee admitted the unexplained payments of rent in the revised return and this action of the assessee does not make any difference for treating the same as unexplained expenditure by the Assessing Officer. In our opinion, the addition made by the Assessing Officer under section 69C of the Act was justified and we confirm the same. Accordingly, we reverse the order of the CIT(A) on this issue. 8. The other contention of the assessee's counsel is that the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from 'other sources' which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions/exemption under the provisions of the Act which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfactory explanation being given, then these provisions of sections 69, 69A, 69B and 69C will not apply in which event, the provisions regarding deductions, etc. applicable to be relevant head of income under which such income falls will automatically be attracted. 8.2 T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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