TMI Blog2014 (2) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of ‘any income’ means the same is exempt provided the educational institution solely exists for educational purpose and not for the purpose of profit. The assessee society is exiting solely for purpose of carrying on educational activities, through its institutions - When such educational institution is approved by the prescribed authority and when the assessee also applies its income for the income or accumulates the same for subsequent application, wholly and exclusively for its objects, the institution is entitled for exemption in respect of any income – The decision in ACIT V/s. Muslim Educational Society [2009 (3) TMI 900 - ITAT COCHIN] followed – thus, there was no justification for the additions made by the Assessing Officer. Applicability of section 115BBC of the Act – Held that:- The assessee contended that the right from the beginning that it has been maintaining regular books of account, and has maintained record as to the identity of donors and the relevant details, and consequently provisions of S.115BBC are not applicable – the contentions of the assessee have not been controverted by the Revenue with any supportive material – The decision in Hans raj Samara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and above the sale consideration mentioned in the sale deed. The Assessing Officer provided the copies of the statements of Shri P.Manender and Shri P.Krishna alongwith the relevant information available with him to the assessee for its comments/explanation. Assessee contended before the Assessing Officer that it did not have any dealings with P.Krishna, who was neither a seller nor a broker. It was claimed by the assessee that P.Mahender has been paid a total amount of Rs.25,45,000 on 22/24.10.2007, through a bearer cheque by individuals, on behalf of the society, due to nonavailability of cash with the society, for the land admeasuring 15 acres. The vendor registered land admeasuring Ac.12.36 Guntas on 22.10.2007, for which the value adopted was Rs.19,35,000 and the registration expenditure worked out to Rs.1,83,920, with the total working out to Rs.21,18,920, which was adjusted from the amount paid by the individuals as mentioned above. The vendor, according to the assessee, not willing to refund back the remaining amount, registered further land admeasuring Ac.2.08 guntas the value therefor being Rs.3,65,000 and registration charges being Rs.61,080, with the total working out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vendor had never given any receipt either at the time of receiving the amount as recorded in the sale deed or on receiving the bearer cheques. It was claimed that the amount of Rs.10 lakhs paid on 26.12.2007 was not in addition to the payment of Rs.25,45,000. The assessee submitted that he had been paid Rs.13 lakhs by the cheque, by one cheque for Rs.1 lakh from Smt.S.Vijaya Kumari; two cheques of Rs.6,50,000 and Rs.5,50,000 from Shri S.S.Prasad on 24.10.2007, with a request to return back the post dated cheques for Rs.10 lakhs as shown in the sale deed and the balance Rs.3 lakhs towards sale consideration of land of Ac.2.00 to be registered in the name of S.S.Prasad. However, due to some misunderstanding and after negotiations, the receipt of cash of Rs.10 lakhs was signed on 26.12.2007. 7. The Assessing Officer observed that the assessee had tried to justify that there was no additional payment, though there were variations in the letters, wherein initially it was stated that the vendor was paid Rs.25,45,000 through bearer cheques, after adjusting the cost and the registration charges totaling to Rs.21,18,000 relating to land of Ac.12.36 gts. registered to the society, the vend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any material evidence. Further, K.Bikshapathi, a middleman/real estate dealer had also confirmed, by his letter dated 18.12.2010 that there was on-money paid on the said transaction and the sale price was Rs.99 lakhs. Even though he had later filed an affidavit dated 29.12.2010 stating that he had no knowledge of land transaction, he had not mentioned anything therein about the agreement letter impounded during the survey. Accordingly, the Assessing Officer concluded that the assessee society had made payment of amounts over and above the recorded consideration of Rs.19,35,000 and the statements of P.Mahender and P.Krishna, corroborated by the income-tax return filed subsequently, established that the society had paid Rs.99,23,520 beside incurring further expenditure of Rs.1,83,920, towards stamp duty and registration charges for acquiring the land, whereas sources to the extent of Rs.21,18,920 only were available in the books of the assessee. Accordingly, he held that the difference of Rs.79,88,520 stood unexplained and invested outside the books of account. The Assessing Officer further noted that the payment made through bearer cheques and further surplus attributable to the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction. 6.1 In the light of the above facts, therefore, it is clear that the appellant has not been able to establish that the consideration of Rs. 19,35,000/- recorded in the sale deed dtd. 22.10.2007 was only and the total payment made by the appellant for the purchase of the impugned land. On the-other hand, the finding regarding payment of consideration over and above the recorded consideration of Rs. 19,35,00/- is firstly directly evidenced by the payments discussed above. Besides, the fact of payment of 'on-money' is further supported by the findings during the course of survey u/s. 133A in the case of Sri P. Krishna on 21.2.2008. It was in the course of the said survey that it was found that the total consideration of the land was Rs. 99,23,250/-. In fact, besides, a paper containing the details of payments made by the appellant, photo copies of bearer cheques stated above of Rs. 25,45,000/- were also found. It was admitted by Sri P. Mahinder, the GP Holder and the Vendor that Sri P. Krishna had been authorised by him to carry on the Real Estate Business in his name. In view of the paper and the photo copies mentioned above, Sri P. Krishna, owned up the transaction and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be made by any entity unless commensurate returns / profits are expected from the investment. Therefore, the appellant does not satisfy the primary conditions of exemption u/s.10(23C)(iiiad). 6.6 Even otherwise, as has been argued by the appellant if the above investment of Rs. 79,88,5201- is considered as 'anonymous credits', the total receipts of the appellant would exceed Rs. 1 crore, thereby making it mandatory to have the approval u/s. 10(23C)(vi) of the Act. Since the appellant does not have any such approval, its case cannot be considered for exemption even under the said section. 6.7 In the absence of exemption either u/s.10(23C9iiiad) or u/s. 10(23c)(vi of the Act, the profits of the appellate are to be determined in a commercial manner. The Assessing Officer is, therefore, directed to recompute the total income of the appellant on the above lines after taking into consideration the unaccounted investment of Rs.79,88,520/- 10. Aggrieved by the order of the CIT(A), assessee filed further appeal before us. 11. Effective grounds raised by the assessee in this appeal read as follows- 1. The order of the Hon ble CIT(A) is erroneous in law as well as on facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication and therefore there was no scope to make the addition of Rs.79,88,520/-. 12. The Hon'ble CIT(A) ought to have observed that even assuming that the society was in receipt of income of Rs.79,88,520/- over and above the income and expenditure statement the same would not come within the purview of taxable income as the same was deemed to have applied for the purpose of meeting the objects of the society i.e. purchase of land. 13. The Hon'ble CIT(A) ought to have observed that the presumptive receipts of the assessee, if any, were deemed to have been used for the purpose of attaining the aims and objects of the society and therefore in view of various legal decisions the same would not constitute income from undisclosed sources of the assessee and the addition ought to have been deleted. 14. The Hon'ble CIT(A) ought to have struck down the observation 1 presumption of the assessing officer that the alleged on money paid was from anonymous donations and therefore provisions of section 115BBC would be apply as the same is without any basis. 15. The Hon'ble CIT(A) erred in arriving at the conclusion that the appellant did not satisfy the primary conditions of exemption u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas during the course of survey action on the premises of one P.Krishna, who is stated to be brother-in-law of one Mahender, who is the G.P. holder of the land owners, a piece of paper containing certain scribblings relating to various land transactions, stating to be the land purchased by the assessee was unearthed. It is the case of the Revenue that according to the scribbling on the said paper, the consideration for the land purchased by the assessee was Rs.99,23,520 and not Rs.19,35,000 as revealed in the registered sale deed. In the first place, we find that survey action has taken place in the premises of P.Krishna, and not on the premises of the assessee. Whatever material is impounded, it is from the premises of P.Krishna, who was neither the owner of the property nor a person, with whom the assessee had any dealing in relation to the purchase of the property in question. Further, the assessee by letter dated 23.12.2010 requested for cross-examination of Mahender, who is the power of attorney holder. However, such an opportunity was not provided to the assessee by the Revenue authorities. Merely based on the statement made by a third party in the course of survey, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Learned Departmental Representative in the course of arguments, it was submitted that wrongly area of 523 guntas was stated as rate in the statement. We are unable to understand how, when the statement was recorded wrongly, the same can be relied upon by the Revenue, so as to make a huge addition. Coming to the document impounded during the survey, as stated earlier, the document does not have any date nor it contains any signature. None of the entries therein also contained any match with the features of the transaction of the society. First of all, the document indicates that it pertains to a transaction of Ac.13 and 03 Guntas. Assessee purchased Ac.12 and 36 Guntas. It does not tally. Moreover, there are two different prices of Rs.19,120 and Rs.18,929 stated in the document. There is no clarity as to which rate is adopted. Below the entries, it is mentioned, one P.Krishna is having 484 guntas and Shri Sriram Venkatesham is having 39 guntas. Even though Shri Sriram Venkatesham is mentioned as one of the AGPAs in the ultimate sale document, the supporting agreement-cum- General power of Attorney Document placed in the paper-book does not indicate Shri Sriram Venkatesham as a AGP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer should be on the material gathered at the time of survey. In the present case, as already noted above, survey action is not in the premises of the assessee, but on the premises of a third party, and statements recorded were of that third party and another person related to him. The material impounded was a loose paper containing certain scribbling, without any signatures, allegedly with regard to real estate transactions, and not any document having evidentiary value. 17. In this behalf, we are supported by the decision of Hyderabad Bench of the Tribunal in the case of B.Ramakrishnaiah V/s. ITO(134 TTJ 600), wherein it has been held as follows- 8.1. Without prejudice to the above, further we are of the opinion that statement recorded u/s 131 of the IT Act consequent to the survey action cannot be sole basis for addition unless there is a material to support the departmental case. In the survey, the department is not able to find out any corroborative evidence regarding the exact income earned by the assessee in these assessment years. The case of department hinges only and only on the surrender statement. It is well settled law that an addition, in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 133A of the IT Act shall not have any evidentiary value. It could not be said solely on the basis of the statement given by assessee that the disclosed income was assessable as lawful income of the assessee. 9. In view of the above judgements of various courts and in view of the CBDT instructions, the Sec.133A of the IT Act does not empower any authority to examine any person on oath, any such statement has no evidentiary value and any admission made during such statement, cannot, by itself, be made the basis for addition unless the assessing officer have corroborative material in hand to make such additions. If there is any unaccounted investment, the same should have been brought to tax as undisclosed income and not on the basis of MoU or on the basis of unsubstantiated statements recorded either from the assessee or from the third parties. 9.1. Further, the assessee taken ground before us that there is gross violation of principles of natural justice. The assessing officer relied on the books of accounts of M/s Bharathi Estates Ltd. to make addition and these books of accounts never put to the assessee for comments and the opportunity of cross examination not provided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n opportunity of cross examining the parties concerned and also comments on the statements and books of accounts to be relied upon by the Revenue authorities. This will enable assessee to prove the incorrectness or incompleteness of those books of accounts. The opportunity would therefore necessarily carrying with it right to examine witness and that would include the right to cross examine the witness examined by the Revenue authorities. .. 18. As for the statement of Bikshapathi, contained in his letter dated 18.12.2010, we find that the very same person, as noted even by the Assessing Officer, retracted from the said statement, through his affidavit dated 29.12.2010 filed before the Assessing Officer during the course of assessment proceedings, stating categorically that he was not aware of the contents of the letter dated 18.12.2010 obtained from him and also that the sale price per acre was Rs.1.50 lakhs to Rs.1.650 lakhs and the sale consideration was paid only through cheques. He also affirmed in the said affidavit that he did not receive any commission as he was not an agent in the said transaction, and he was only a witness to the sale deed on the date of registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration sought to be added, was paid by the assessee from out of the anonymous donations collected by the assessee. Apart from the fact that no corroborative evidence has been brought on record by the Revenue authorities to support this inference drawn by them, it has been the contention of the assessee right from the beginning that it has been maintaining regular books of account, and has maintained record as to the identity of donors and the relevant details, and consequently provisions of S.115BBC are not applicable to its case. These contentions of the assessee have not been controverted by the Revenue even before us with any supportive material. That being so, in view of consistent view taken by various Tribunal in similar matters, following Delhi Bench decision of the Tribunal in the case of Hans raj Samarak Society v. ADIT(E)" [2011] 16 Taxmann.com 103(Delhi), we agree with the learned counsel for the assessee that since the assessee has maintained record of the donations with relevant details as to the identity of the donors, the provisions of S.115BBC are not applicable to the facts of the present case. 21. In the light of the foregoing discussion, we set aside the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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