TMI Blog2012 (4) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and 2004-05 which all have been on the merit of quantum additions sustained by the learned CIT(A) are to be considered individually. 4. Since issues are common in their respective appeals filed by the Revenue as well as the assessee and the Cross objections, all these were heard together and are being disposed of by this common order for the sake of convenience and brevity. 5. The Revenue s assertion that the search proceedings have clarified the stand of the assessee not entitled for claiming exemption u/s.11 on findings as brought on record by the learned Counsel for the assessee when the purported cancellation of registration/s.12AA was subsequent to the date of search and appealed against before the Tribunal when the Tribunal was pleased to adjudicate the issue of allowing the assessee to be continued with the registration and was further challenged by the Revenue before the Hon ble High Court u/s.260A. 6. We have heard the rival contentions of the parties and perused the material available on record. Considering the facts and circumstances of the case, we are inclined to consider the rival contentions of both the parties at length and have perused the material on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt u/s 153A was completed in the following cases 1. Dr. Bhabani Charan Rath, 2. Smt. Sarmistha Rath, 3. Sri Subrat Prassana Mishra, 4. Smt. Sanghamitra Mishra. 5. Orissa Computer Academy, Apart from the above there are some cases where assessments u/s 153C were completed. There were allegations that the society used to collect capitation fees, donations from the students who got admission to different schemes of engineering and management courses under management quota, the money so collected not having been accounted for in the books of account of the society and utilized by the President and the Directors for their personal gains. During the search- -seizure operation some documents were seized by the department. The circumstantial evidences collected by the assessing officer and the inferences drawn by the assessing officer enabled the AO to come out with the finding that the assessee was not entitled to the benefit of the provision of section 11 of the IT Act for not fulfilling conditions as stipulated in section 13 of the IT Act. The assessing officer based his decision on the findings as follows: 1. Improper maintenance of books of account. The assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accurately accounted for and therefore the correct income has not been shown by the assessee. Under these circumstances reliance cannot be placed on the profit-a-loss account/income-expenditure of the assessee. As per section 11, the assessee is to apply 85% of its income for the objectives of the society. When the income is not accurately determined and when a part of the income has been received in cash and not entered in the cash books, it is deduced that the assessee has earned more than the amount it had shown and the application of income is much less than 85%. Thus the society does not fulfill the conditions laid down u/s 11 of IT Act 1961. 2. Control and Management: The society is totally controlled and managed by the founder and his family members who have been searched. It is stated that the director of OCA who is the founder, Mr. B.C. Rath, shall open an account in any bank / post office and operate this account on behalf of the organization and is entitled to withdraw and deposit money on behalf of the organization. The director wilt sign all documents related to finance such as bank loan, fixed deposit etc. on behalf of the organization. It is also stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total withdrawal amounts to ₹ 1,08,00,000. It is stated that all the cash deposits represent training-aplacement fees received from students of KEC and the deposit of ₹ 30 lakhs and ₹ 34 lakhs are amounts transferred from SB A/C of Sri B.C. Rath in ICICI Bank. Similarly, it is explained that the cash withdrawals of ₹34 lakhs are amounts transferred from SB A/C of Sri B.C. Rath in ICICI Bank. The group, through other family members, have also invested in M/s Pallavi, a retail outlet of readymade garments and in M/s Spectra Vision, a retail outlet of household electronic goods and domestic appliances where survey u/s 133(A) was done. The managing partner of the concern, M/s Patlavi is Sri Saktikanta Rath who is the brother of Sri B.C. Rath and also the Asst. Ex. Director of the society whereas Sri Devraj Rath, brother of Sri B.C. Rath and Asst. Ex. Director of the society is the managing partner of M/s Spectra Vision. Sri B.C. Rath, Director of the society has made large-scale investments in acquisition of land and building in the name of self, spouse and family members. From the seized documents it is found that Sri B.C. Rath owns different plots totali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Odisha (BCR-36, BCR-37 and bcr-38). The excess money received in cash is nothing but capitation fee. The Assessing Officer has analyzed this aspect in a very clarificatory manner in Para 5.1 to 5.5.6 of the Assessment Order for A.Y. 2006-07 in the case of the assessee. (Annexure-5). The ratio of the decision of Hon ble ITAT Hyderabad Bench (B) in the case of Vodithala Education Society Vrs Asst. Director of Income Tax [20 SOT 353 (Hyd.)], 2008 (Annexure -6) is fairly applicable to the present case. The Hon ble Bench held that since the assessee had collected money over and above that prescribed by the concerned authority for admission of students, such an amount was to be classified as capitation fee and it could be said that it was a clear case of sale of education by the assessee and therefore it could not be considered as a Charitable Institution u/s 2(15) of the I.T. Act,1961. 8. The learned Counsel for the assessee supported the order of the learned CIT(A) on the issues raised by the Revenue and on the submissions of the learned CIT-DR, he submitted that while passing the order, the learned CIT(A) allowed the benefit u/s.11 of the Act with a direction to the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a registered society. It was submitted that -- 1. The appellant had received the aforesaid unsecured loan from few of the employees friends and relatives, the details of which is enclosed as Annexure-1 of the PB. 2. All the receipts were through bank and all the lenders are genuine persons. 3. It may be mentioned here that the income of the appellant is not taxable as per the provision of Section 11 of the Income Tax Act. 4. Hence, it is never advisable to suppress regular income and bring there back through irregular manner 5. The AO s contention that the funds are out of unaccounted income of the Appellant is out of place because having exemption of income from taxation does not justify creating unaccounted income. 6. Moreover, during the entire search proceedings not a single document was found substantiating the claim of the Ld. A.O. for generating unaccounted income. 7. Not complying to certain queries raised by the Ld. AO cannot lead to conclusion that the loans are not genuine. 8. It is always very difficult to produce persons before I.T. Authorities and that too after 7 years. 9.1. For the Assessment Year 2002-03, the learned CIT(A) confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have considered the submission of Mr. Pani and the order of the A.O. from the assessment order, it is found that the appellant was requested to furnish the name and confirmation regarding unsecured loan of ₹ 30,77,000 by the AO but the appellant kept mum i.e. did not submit any reply. Now before me, it is not known from where Mr. Pani has submitted a list of 35 persons and has requested for time on the ground that these persons have left the services at Bhubaneswar. Mr. Pani has also not specified the time required for furnishing the confirmation from these persons. Thus, it is clear that the appellant has availed ample time to prove the genuineness of the unsecured loan appearing in the balance sheet. Accordingly, the addition made by the AO of ₹ 30,77,000 as unexplained cash credit is confirmed. I would like to mention here that it is not the income/ deemed income derived from the property held under the trust/ institution, accordingly it is not entitled for any benefit u/s II of the I.T. Act,1961. 10.1. For the Assessment Year 2002-03, the learned CIT-DR referred to the facts of the issue which was adjudicated by the learned CIT(A) in Para 6 of his order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhubaneswar. In view of the above fact, the AO treated the aforesaid expenditure as a bogus and added in the income. The learned CIT-DR fully supported the same. 11. After hearing the rival parties at length and perusing the impugned orders of the authorities below and the material brought on record before the Tribunal, we are inclined to uphold the order of the learned CIT(A) insofar as the Revenue s appeals are concerned. The capitation fees have been brought to tax under the provisions of Section 153A r.w.s. 143(3) on the premise that the search documents revealed earning of such income which had not been rendered to tax. The assessee continues to enjoy the exemption insofar as it was not the case of the Assessing Officer to correlate the earning of income other than as declared by the assessee on assumptions and presumptions. The learned CIT(A) therefore, proceeded to consider the case of the assessee when he, after taking into cognizance of the totality of the circumstances , held that there was no material evidence in the hands of the AO for further addition of receipts of the capitation fees. The Assessing Officer on the basis of some discriminating paper found during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. On the assessee s appeals for the AYs 2001-02, 2002-03 insofar as the learned CIT(A) has confirmed the unsecured loans remaining unexplained and the learned CIT-DR supporting the contention of the learned CIT(A), the learned Counsel for the assessee was not able to further explain the helplessness or correlating as to how the same could not be taxed u/s.153A inspite of the learned CIT(A) acceding to the finding that the assessee was entitled for claiming exemption u/s.11 and 13 of the Act. We are unable to satisfy ourselves to the contention of the learned Counsel for the assessee on the issue of unsecured loans remaining unexplained amounting to ₹30.77 lakhs in the Assessment Year 2001-02, ₹6 lakhs in the AY 2002-03 even now which, we are inclined to confirm as per the order of the learned CIT(A) and also as pointed out by the learned CIT-DR supporting the observations of the learned CIT(A). 13. However, the learned Counsel for the assessee has pointed out the reasons for the learned CIT(A) deleting the addition on account of expenditure disallowed u/s.40A(3) which only fortified the assessee s contention for availing exemption u/s.11 of the Act was predomin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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