TMI Blog2012 (3) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ons without application of mind and solely relying on the conclusions drawn by the ld. Assessing Officer framing the assessment for A.Y.2006-07. 4. That the order passed is against principles of natural justice and no reasonable opportunity was provided to the appellant to explain its case. 2. The assessee is a trust running nine educational institutions under various names catering to different kind of education like Management, Engineering, Medial Sciences, Nursing, Pharmacy, etc. It was granted registration u/s 12AA(2) of the Act by CIT, Panchkula vide his order dated 30th May, 2001 w.e.f. 26th November, 1993. A search was conducted at the official premises of the assessee as well as on the residential premises of its trustees on 7th September, 2005. During the course of search, unexplained assets as well as incriminating documents were seized on the basis of which ld. CIT has drawn a conclusion that the activities of the trust were not being carried out in accordance with the objects for which it was set up. Accordingly, he initiated proceedings u/s 12AA(3) of the Act and issued show cause notice to the assessee as to why the registration should not be cancelled. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 219 of the paper book. He submitted that in the same order ld. CIT has stated as follows:- 2. Satisfied about the genuineness of the Trust and of its present activities, the undersigned is registering the Trust u/s 12AA of the IT Act, 1961 and its registration has been recorded at Sr. No.1/JB/12AA/2008-09 in the Register of Application under Section 12AA maintained in this office. 3. As per provisions contained in 12A(2) of the IT Act, this registration shall have effect from Assessment Year 2008-09 onwards. 4. He further stated that in the impugned order ld. CIT has rejected the registration of the assessee on two grounds: firstly, regarding the payment of salary to the doctors aggregating to a sum of ₹ 45,66,372/-. He submitted that this issue was considered by the Tribunal for Assessment Year 2006-07 in the case of the assessee and the Tribunal vide its order dated 30th October, 2009 in ITA No.2489/Del/2008 (departmental appeal) has confirmed the deletion made by the CIT (A) and resultantly the departmental appeal was dismissed (refer to copy of order placed at pages 1-4 of the paper book). He referred to the following observations of the Tribunal fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure and added under section 69C of the Act. The learned CIT(A) held that the only basis for making this addition is the entries made in the seized documents and statements of Accountant and Principal recorded during search. However, both these persons have retracted from their statements by filing affidavit during assessment proceedings. Even during re-examination, they have stuck to their statements made in their affidavits. There are about 74 doctors employed by the trust. Out of them, statements of only two doctors were recorded. All these doctors have filed affidavits during assessment proceedings denying any cash payment. Therefore, there is no justification for making addition in respect of 72 doctors ignoring their affidavits. Though the statements recorded during search have evidentiary value but the statement was not that of the assessee himself but of the third parties. Therefore, admission by third parties when retracted, cannot be admitted in evidence. He accordingly deleted the addition. The revenue is in further appeal before us. 4. At the time of hearing we have heard Shri Rajesh Kedia, Sr. DR for the revenue and Shri Ashwani Kumar, CA for the assessee. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, to the extent the amount spent or applied for the charitable or religious purposes shall not form part of the total income of the assessee. The income of a trust is not computed under the various heads of income as prescribed in section 14 of the Act. Therefore, the Proviso to section 69C which bars allowability of deduction of such unexplained expenditure under any head of income will not apply in the case of an assessee being a trust whose income is to be computed under sections 11 12 of the Act. Thus the addition made under section 69C will be nullified by the expenditure incurred on the object of the trust and hence no further addition is called for. 5. He further referred to the assessment order for Assessment Year 2006-07 the copy of which has been placed at pages 124 to 151 of the paper book and showing the income computed therein it was submitted by him that the only addition made by the Assessing Officer to the returned loss of ₹ 22,03,50,033/- was a sum of ₹ 44,70,372/- reducing the loss of the assessee to ₹ 21,58,79,661/-. He submitted that the aforementioned addition of ₹ 44,70,372/- was out of the aforementioned amount of ₹ 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also filed income tax return and the audited balance sheet, wherein the sums have been shown as lying with respective assesses. As observed by the ld. CIT(A) no adverse inference has been taken in this regard i.e. with reference to the Accounts and return submitted by the MMET wherein these cash have been shown as lying with the assesses. 7.2 In the background of the aforesaid discussion and precedent, we do not find that as per the circumstances, it can not be concluded that the sums are unaccounted income of the assessees themselves. The revenue having accepted the return of MMET and the audited accounts therein displaying the fact that these cash belong to the trust and were lying with the assesses, cannot again subject to tax the same cash in the hands of the assessee as their undisclosed income. Accordingly, we do not find any infirmity or illegality in the order of the ld. CIT(A) . Hence, we affirm the same. 8. The next issue raised is that the ld. CIT(A) erred in deleting an addition of ₹ 60,780/- made by the AO on account of unexplained jewellery not disclosed. 7. Referring all these facts, it was submitted by him that both the grounds on which ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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