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2016 (4) TMI 914 - ITAT DELHI

2016 (4) TMI 914 - ITAT DELHI - TMI - Eligibility of exemption u/s 11 and 12 - income deemed to be chargeable to tax u/s 68 - Held that:- A perusal of the statement recorded from Dr.Mahalingam specifically answers to question no.13, 19 in the statement recorded on 21st August,2006 and the question recorded in the subsequent statement dt. 25th August,2006 demonstrate that the disclosure of Dr.Mahalingam is based on the material Annexure A-2 to A-10. This is the very seized material based on which .....

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be brought to tax once again in the hands of the Trust. This would amount to double taxation of the same income. The Ld.D.R. before us could not demonstrate as to how the seized material could be said as evidence of income being earned by the Trust.

Even otherwise as observed by the Ld.CIT(A) as the alleged unexplained receipts is aggregating to ₹ 1,70,23,219/- and the alleged unexplained expenditure is much above the same i.e. aggregating to ₹ 2,25,02,116/-. When the inc .....

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to ₹ 4,22,48,338/-, no amount can be brought to tax, as the deemed application u/s 11(1) would be ₹ 5,44,75,960/- and the application of income in respect of capital expenditure would be ₹ 12,69,84,028/- totalling to ₹ 18,14,59,988/-. This results in a net deficit of ₹ 3,07,03,982/-. Thus looking at the issue from another angle, we have to uphold the order of the First Appellate Authority and dismiss this appeal of the Revenue. - Decided in favour of assessee. - ITA .....

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2006-07 and ITA 1477/Del/11 for the A.Y. 2007-08 are appeals filed by the Revenue directed against separate orders of the Ld.Commissioner of Income Tax (Appeals) (CIT(A) -XXI, New Delhi. 1.1. ITA 311/Del/08 is an appeal filed by the assessee against refusal of DG(Exemptions) to grant recognition u/s 80G of the Income Tax Act, 1961 (the Act). As the issues arising in all the Revenue appeals are similar, for the sake of convenience they are heard together and disposed of by way of this common ord .....

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ithdrawn till date. The Trust has been claiming and was allowed the benefit of exemption u/s 11 of the Act for the A.Y. 2002-03 in an order passed u/s 143(3) of the Act on 28.3.2005. 2.2. Also for the A.Y. 2008-09 and 2009-10, the assessee s claim for exemption u/s 11 was accepted by the A.O. vide his orders of assessment u/s 143(3) of the Act dt. 21.12.2010 and 13.12.2010 respectively. 2.3. The Trust is running medical college and para-medical courses at Ghaziabad and Chennai. The list of such .....

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Trust Dr.P.Mahalingam. Statement of the Chairman was recorded an oath on 21.8.2006 and 25.8.2006 respectively. Statement of Shri Kamal Kannan, Accounts Officer was recorded on the date of survey itself i.e. 10.8.2006. Mr.Kamal Kannan stated that he was not an authorised person. To further questions he stated that the fee structure of students of management quota and government quota was the same. It is contended by the assessee, that its Chairman, in order to keep mental peace and avoid unnecess .....

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nil income. Based on the material found during the course of survey the Assessing Officer (AO) in his order u/s 143(3) dt. 28.12.2006 came to the following conclusion. To summarise, the assessee issues unnumbered unbound receipts to students of the management quota by its own admission, the bills/vouchers and receipts for entries in the project work account were not produced, receipts of fees for project work is not recorded in the students register produced in the assessment proceedings, the u .....

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not been produced as discussed. earlier in the order. Therefore the books results of the assessee cannot be accepted. Therefore I am not satisfied with the correctness and completeness of the accounts of the assessee. As per reply dated 8.12.2006 filed during assessment proceedings the number of seats in management quota is 21 in MBBS course and 20 in BDS, The only specific information available on record regarding fees received under the head Project Works available on seized annexure - 9 whic .....

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work from MBBS students is estimated at 21 x 15 lakhs = 3,15,00,000/- which is fees over and above that accounted by the assessee. So far as the BDS students are concerned fees on account of project work are estimated at 6 lakhs { considering pw component out of 12 lakhs total fees) per student i.e. 20*6 lakhs = 1.20 crores. Since the assessee has shown an amount of ₹ 3.02 crores out of project work receipts as fees the total addition on this accounts works out to ₹ 3.15+1.20-3.02 cr .....

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ach Chennai on 26.12.2004 and we are unable to provide the same. Since the receipts of assessee are not fully accounted for in its books of accounts, income from property held under trust to that extent has been diverted for purposes other than to meet the objects of the trust. In addition, in this case, even expenditure of ₹ 5,82,94,052/- through books for building under construction is unvouched. It may be mentioned that in assessment proceedings it has been stated that the income of Rs, .....

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onal Trust, M/s Santosh Hospitals (P) Ltd. I will be given the copies of returns filed by all these institutions. In view of the same the Addl declaration in the current financial year should be taken to cover my personal Income Tax Assessments, M/s Mabaraji Educational Trust and M/s Santosh Hospital Pvt, Ltd. as well. In view of the detailed discussion and after denying the benefit of exemption u/s 11. Income is computed as under : Surplus as per I&E A/c Rs.2,04,12,921 Addition on Ale of un .....

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rded single entry in respect of fees received from the students and for that matter, any other entry in respect of any expenditure because the entire amount realised from the students are reflected in the account books under the head Project Work, which was transferred to Fee A/c and the same has been accepted by the Assessing Officer as correct. Therefore, there is no reason for the Assessing Officer for estimating the fee received from all the medical students of both MBBS and BDS Courses and .....

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t of exemption u/s. 11 of the Act and further the addition made on account of undisclosed fees to the extent of ₹ 1,33,00,000/- and therefore, not sustainable. Accordingly, the entire addition of ₹ 3,37,12,921/- made to the returned version is hereby deleted. I also allow exemption u/s. 11 of the Act to the appellant. 3.2. Aggrieved the Revenue is in appeal before us on the following grounds. 1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting th .....

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e by the AO on account of the unaccounted fee received by the assessee from the MBBS and BDS course students on the basis of the material found during the course of survey u/s 133A of the Act. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in observing that the AO has failed to invoke the provisions of s.145(3) of the Act or pin point any unrecorded single entry in respect of the fees especially when the assessee failed to produce the complete books of accounts and .....

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the assessee. On a careful consideration of the facts and circumstances of the case, perusal of material on record, orders of lower authorities, case laws cited, we hold as follows. 5. After hearing rival contentions, we find that, the addition made by the A.O. is not sustainable, as it is based on guess work and extrapolation. It is not based on evidence. There was no documents found during the course of survey, which supports such an addition. There was no enquiry or investigation conducted by .....

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rust are in accordance with its objectives. There is no adverse finding on this aspect by the A.O. in his orders. 5.3. We have gone through the case laws relied upon before us. These are extracted for ready reference. i. DIT(E) vs. Raunaq Education Foundation 249 ITR 76 (Del) ii. DDIT vs. Shanti Devi Progressive Education Society 340 ITR 320 (Del) iii. ITO vs. Baba Dhall Educational Society of India 27 SOT 391 (Del.) iv. CIT vs. Geetanjali Education Society 174 Taxman 440 (Raj.) v. ACIT vs. Shri .....

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ase laws to the facts of the case, we find no infirmity in the order of the Ld.CIT(A) in granting exemption u/s 11 of the Act to the assessee and also in deleting the addition made on inferences, specifically when the registration u/s 12 continues and when Sec.11 exemption was granted both in earlier as well as later years. 5.5. The A.O. had also made an observation that the expenditure on construction of a building in Chennai could not be verified as relevant books were not produced. The assess .....

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under the head of project are not vouched, the assessee has demonstrated by filing an additional evidence that such vouchers were destroyed in tsunami which is apparent from the certificate filed during the appellant proceedings from the Competent Authority. On this ground also exemption u/s 11 cannot be denied. 5.6. We find no infirmity in this finding. We also do not find any merit in the objection of the A.O. to the admission of additional evidence under Rule 46A by the Ld.CIT(A) which was in .....

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, we uphold the order of the First Appellate Authority and dismiss the appeal of the Revenue. 6. ITA 2404/Del/2008 A.Y. 2005-06:- The Revenue has filed this appeal on the following grounds. 1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of ₹ 6,46,65,262/- by allowing the benefit of s.11 and 12 of the Income Tax Act, 1961 (the Act) even when it was established on the basis of the material found during the course of survey u/s 133A of t .....

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.2007 and enhanced the surplus (excess of income over expenditure) from ₹ 4,56,95,467/- declared in the original return to ₹ 6,46,65,262/- in the revised return. Thus excess surplus amounting to ₹ 1,89,69,795/- was declared. 6.1. The A.O. in this A.Y. rejected the claim for exemption u/s 11 of the Act by observing as follows. In the instant case, during certain enquiries, it came into notice, that the assessee Institution is taking capitation fee from the students over and abov .....

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enue is in appeal. 6.3. After hearing rival submissions, we find that the registration granted u/s 12A and u/s 10(23)(C)(vi) continue. There is no dispute during the year about the correctness of the income declared by the assessee. When the objections of the assessee is to provide education , it does not fall under the Proviso to S.2(15) of the Act. Under these circumstances we have to uphold the order of the First Appellate Authority that the assessee is entitled to exemption u/s 11 of the Act .....

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tion for approval u/s 10(23)(C)(vi) of the Act. The application was rejected on the ground that the Educational Institution run by the assessee was generating surplus out of their gross receipts year after year. On a Writ Petition held that the rejection of the application is solely on the ground that there has been some profit was not justified. 6.6. As already stated, the A.O. has allowed exemption u/s 11 of the Act to the assessee for the A.Y. 2004-05 as well as for the A.Y. 2008-09 and A.Y. .....

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n made. 6.8. Hence we uphold the order of the First Appellate Authority and dismiss this appeal of the Revenue. 7. ITA 896/Del/09 A.Y. 2006-07:- This appeal of the Revenue is filed on the following grounds. 1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of ₹ 6,46,65,262/- by allowing the benefit of s.11 and 12 of the Income Tax Act, 1961 (the Act) even when it was established on the basis of the material found during the course of sur .....

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or the A.Y. 2005-06. 7.2. Consistent with the view taken by us for the A.Y. 2005-06 in ITA 2404/Del/08, we uphold the order of the First Appellate Authority and dismiss this appeal of the Revenue. 8. ITA 1477/Del/11 A.Y. 2007-08 :- This is a Revenue s appeal for the A.Y. 2007-08 on the following grounds. 1. In the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the benefit of s.11 and 12 of the Income Tax Act, 1961 (the Act) as the assessee was involved in commerc .....

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h the identity of the persons who made such donations. 4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 8.1. The A.O. in his order u/s 143(3) of the Act, considered the material found during the course of survey and made an addition u/s 69C of the Act, as well as, u/s 68 of the Act. The A.O. made the addition on the basis of Annexure A-2 and A-10 found from the possession of Dr.P.Mahalingam. A statement of Dr.P.Mahalingam was recor .....

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ins to the assessee and under such circumstances no addition can be made in the hands of the assessee based on this seized material. The A.O. on the other hand concluded as follows. 3.3. Conclusion: Now the issue is to draw inference on the notings available in the said Annexure. It is humanly impossible to have an accurate idea of the nature of entries in the absence of clear cut description. The onus to furnish and prove the nature of transactions was upon the assessee as the said annexure was .....

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ch page of the annexure. Therefore, in the absence of detailed clarification coming from the assessee, it can only be possible to draw a reasonable view. While doing so explanations given by the Counsel of the assessee are also taken into consideration and to the best of my judgement. 8.2. Thereafter he made an addition of ₹ 2,50,74,146/- u/s 69C of the Act and ₹ 1,70,23,290/- u/s 68 and a further addition of ₹ 1,50,970/- u/s 69C of the Act. 8.3. Aggrieved the assessee carried .....

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However the AO can add either the unexplained expenditure or unexplained cash credit u/s 68 whichever is higher. The peak of the two has to be added to the income because, the unrecorded out goings have been incurred from the unrecorded in flow of cash. Thus, there is no justification in adding both the credit and debit entries. In this case the unexplained expenditure is ₹ 2,50,74,146/- and ₹ 1,50,970/- thus the unexplained expenditure is aggregating to ₹ 2,52,25,116/- and th .....

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0812006 Dr P Mahalingam chairman of the Maharaji Edicational Trust has state that "Considering the totality of the circumstances I hereby declare as an additional income of ₹ 3 Crores (three crores) for the current financial year is FY 2006-07 relevant to the assessment year 2007-08 for which I shall be paying taxes as per law this will be my additional income which will be over and above the normal returned income declared approx. 6 lakhs. Since I have totally co-operated with the De .....

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the Assessment Year 2007-08 on a returned income of ₹ 3,03,82,035/-. The appellant has stated that the amount of ₹ 3 Crores disclosed as his individual income under, the head "income from other sources" was on account of disclosure made as a result of the survey. 5.4 Thus it is seen that Dr P Mahalingam has already offered this amount for taxation in his return of income which has been duly accepted by the Income Tax Department, hence, the question of taxing the same amoun .....

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46/-, ₹ 1,70,23,219/- and ₹ 1,50,970/- is hereby deleted, since it has already been taxed in the hands of Dr P Mahalingam. It is also observed that instead of an unrecorded amount of ₹ 2,52,25,116/-, Dr. P Mahalingam has surrendered an amount of ₹ 3 Crores and therefore these amounts cannot be again added in the hands of the appellant. As such the addition of ₹ 4,22,48,335/- (Rs.2,50,74,146/- + ₹ 1,70,23,219/- + 1,50,970/-) is hereby deleted. 8.5. Aggrieved th .....

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ds of the assessee. We have asked the assessee to file photo copies of this material, he did so by way of a paper book. We have verified the same and found that the contentions of the Ld.Counsel for the assessee is correct. 8.8. Once the income is relatable to particular material found during the course of survey and when the same is offered to and assessed to tax in the hands of Dr.Mahalingam in his individual capacity, then the same income cannot be brought to tax once again in the hands of th .....

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