TMI Blog2019 (7) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... ed between April, 2010 and June, 2010. Admissions taken place during June-July. The assessee has claimed these advances received, as and when the admission is processed, the same have been recorded into the regular books. If the admission is not taken, the amount is returned. It is for the assessee to tally the accounts. There are 214 entries in the said diary. It is not an impossible task to identify the student with the admission and to identify to whom the money has been returned if the admission has not been taken. The Revenue would not be able to identify from the seized diary who is the student and who is not the student because the admission details are also not available in the said diary nor their addresses - if the assessee is able to identify and specify the students, they can be questioned for proving the amounts are not capitation fee paid by such students or parents of such students. In the absence of such identification, the factum of taking capitation fee would stand established against the assessee. Cash Receipts - What stopped the assessee from recording these amounts in the regular books of the assessee. Why were the amounts taken in cash? The law does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order is passed u/s.143(3) or whether it is passed u/s.144 at the present point of time have no consequences as the assessee has been held to be not eligible for the benefit of deduction u/s.10(23C)(vi). Here, we must make it clear that had the assessee challenged the said order of the DGIT(Inv.) passed on 18.11.2014 withdrawing the approval and if the same had gone in favour of the assessee, then admittedly there would have been room to maneuver in respect of the claim of deduction u/s.10(23C)(vi) for the AYs 2010-11 2011-12. In the absence of such, appeals or challenge to the said order withdrawing the approval u/s.10(23C)(vi) it cannot be held that the assessee is entitled to claim of deduction u/s.10(23C)(vi) for the AYs 2010-11 2011-12. - ITA Nos.637, 638 & 370/Chny/2017 Assessment Years: 2010-11, 2011-12 & Nil - - - Dated:- 27-5-2019 - Shri George Mathan, Judicial Member And Shri Inturi Rama Rao, Accountant Member Appellant by : Mr.R.Vijayaraghavan, Adv. Respondent by : Mr. Sailendra Mamidi, PCIT ORDER George Mathan, ITA Nos.637 638/Chny/2017 are the appeals filed by the assessee against the Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 2. The CIT (A) erred in confirming the contents of the asst. order passed by AO which has overlooked the provisions of sec 11 and Sec 10(23C)(vi) which were duly available at the time of passing of asst. order. The CIT(A) ought to have appreciated that the AO does not have jurisdiction to ignore the provisions of sec 11 and Sec 10(23C)(vi), therefore, the asst. order is void-ab-initio. 3. The entire first appellate proceedings took almost Four years to complete from the date of institution of appeal and delayed intentionally to allow the proceedings by DGIT(lnv.) on the cancellation of sec.10(23C)(vi) retrospectively and for the cancellation of sec.12A(a) by PCIT to complete thus the relief under both sections can be denied which is most clandestine way discharging a judicial authority vested in CITA. The CIT(A) ought to have appreciated that any proceeding initiated should be completed within a reasonable time, even if the law does not prescribe any time limit. 5. The learned CIT(A) erred in placing reliance on the cancellation order passed by DGIT(lnv.) which itself was passed overlooking the fundamental facts and the provisions of law and unaut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts operation from the academic year 2001. 2. A search was conducted by the Income Tax Department at the premises of the trust on 02.07.2010, under section 132 of the Act. Subsequently, the assessment was completed for the asst years 2010-11 U/s.143(3) r.w.s 153A and 2011-12 U/s.143(3) vide orders dt.28.03.2013. 3. Notwithstanding specific provisions under the Income Tax, the AO passed the assessment order U/s.143(3) on 22.4.2013 without considering the relief under section 10(23C)(vi)/11 of Income Act. 4. The assessee filed appeal before the first appellate authority against both the above referred orders on 22.04.2013 agitating various issues involved in the asst order. 5. Subsequently, the Income tax department has attached the bank account of the assessee during Dec 2014 for nonpayment of tax demands, against which writ petition was filed immediately before the High Court of Madras seeking quashing of bank attachment and one of the contention put forth before the Hon'ble High Court is that Officer as per the first proviso to section 143(3) which was inserted by the Finance Act, 2002, w.e.f. 1-4-2003, no order making an assessment sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of corrigendum is as under: 1. Corrigendum to the Assessment order issued nearly two years after the asst. order as an afterthought: Pursuant to assessment order dated 28.03.2013, for the assessment year 2010-11 under Section 143(3) read with Section 153A of the Act, the AO by corrigendum, dated 22.01.2015, (nowhere the corrigendum specified under which provision of Income Tax Law it has drawn the support for issuing such a corrigendum which has huge ramification on the asst. orders and in a nutshell the issuance of Corrigendum is tax extremism) stated that while passing the assessment order for the assessment year 2010-11 in the preface column (10) the section and sub-section under which The assessment is made , it was erroneously mentioned as Section 143(3) read with Section 153A of the Act instead of Section 144 of the Act, as the assessment was actually made under Section 144 of the Act, as brought out in para 4 of the assessment year. In this connection, the appellant makes the following submission. The first proviso to Section 143(3) of the Act makes it clear that no order making an assessment shall be made by the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant ought to have been issued a notice under Section 154(3) of the Act and then opportunity of being heard ought to have been given to the Appellant The appellant has cooperated and submitted the details called for during original asst proceedings. The following chronological events of Income tax notices and the response made by the assessee trust will clearly show that the appellant has made available to AO, the necessary records and details to complete the asst. Sl. No. Asst. Year Particulars Remark Action by the Trust 1 2010-11 Notice u/s.153A dt.17.10.2011 To prepare and furnish true and correct return Income tax return filed in response to the notice 2 2010-11 Notice u/s.143(2) dt.17.19.2012 To attend for personal hearing Revised at the old address and come to the knowledge of the Trust much later. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- Therefore, it is submitted that the corrigendum issued post various legal actions taken by the appellant is only an afterthought, contrary to the facts, and liable to be deleted. 2. Further on the alleged violation of Sec 13 by referring to the mobilisation advance paid of ₹ 6 crs. in connection with the construction of buildings in the college premises, the following grounds were raised before CIT(A). The AO has, in the asst order, without any detailed discussion/factual demonstration that the appellant has violated provisions of sec 13, merely alleged that the assessee trust has paid ₹ 6 crores to M/s.PASPL Constructions wherein the trustees are having substantial interest and no interest has been charged on such loan/advance given, though the trust itself has paid substantial interest of ₹ 2.35 crores and ₹ 2.58 crores during asst years 2010-11 and 2011-12 respectively on the loans taken from financial institutions. In this connection, the assessee submits that The Educational Institution run by the assessee Trust was in need of additional infrastructure to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not discussed. 12. Therefore along with other issues which were not discussed in the above referred ITAT order, the assessee raised the ground of corrigendum and sec.144 in the Miscellaneous petition (page no.2 of MP) filed in MP Nos.186 to 188/2018. The ITAT while disposing the Misc Petition vide its order dt.13.03.2019, has directed to consider the issue of validity of corrigendum (Page No. 3 of the MP order). 13. Therefore, it is kindly requested to.... i) As the High Court has directed to consider correctness of the impugned corrigendums as a part of the appeal, the correctness of the corrigenda is to be decided in the appeal. ii) The CIT(A) had held against the Assessee and the ITAT has not decided the specific ground raised and the ITAT has specifically mentioned this ground requires to be decided, the same is to be decided in this appeal. iii) As rectification of section under which the original assessment order was passed, from 143(3} to sec.144, was without notice, without adducing reasons and without any basis the corrigenda require to be quashed as invalid. iv) Once the Assessment is held to be u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA from 22.10.2002 and the assessee had also been granted approval u/s.10(23C)(vi) from 30.04.2008. It was a submission that there was a search on the premises of the assessee trust on 02.07.2010. It was a submission that consequent to the search, assessments came to be completed. It was a submission that in the course of the search certain documents were found which were in respect of the advance fee collected from students. It was a submission that the said advances were adjusted against the regular fee as and when the students were admitted to the course. The amounts were recorded in the note books of the assessee, for the purpose of keeping accounts properly, the advances were recorded in the note book which was seized in the course of search and the advance fee collected was kept in cash with the Managing Trustees. It was a submission that the assessee had also transferred substantial portion of the funds to M/s.PASPL Construction i.e. M/s.Prathyusha Associates Shipping Pvt. Ltd. Construction (In short M/s.PASPL ). It was a submission that the said M/s.PASPL was engaged in constructing the College building. It was a submission that Assessment Order had originally bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by ACIT rejecting the petition for Stay of collection of tax. 10 15.05.2013 Stay Application filed before Joint Commissioner of Income-tax Central- Range II. 11 18.11.2014 Order passed by DGIT (lnv) u/s.10(23C)(vi) withdrawing the approval from assessment Year 2010-11 onwards. 12 01.12.2014 Rectification Petition filed u/s. 154 of the Act before DCIT (lnv) pointing out the lack of reasonableness of opportunity to the Petitioner and non-appreciation of certain vital facts. 11.12.2014 13 19.12.2014 Order passed by the Hon'ble High Court in W.P. No. 33376 and 33377 of 2014 directing the JCIT, Central Range II, to pass a speaking order on the stay application dt 13.05.2014 after affording an opportunity of Personal hearing. 14 22.01.2015 Nearly after 2 years Corrigendum issued to assessment order passed u/s/s 143(3) r.w. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the seized material representing the advance fee received by the assessee, which was also recorded in the books of the assessee when the admission was granted to the respective students. It was a submission that retrospective cancellation of the registration u/s.12AA and u/s.10(23C)(vi) was not permissible as there was no violation of any of the provisions of the registration u/s.12AA or the recognition u/s.10(23C)(vi) of the Act. It was a submission that for the AY 2010-11 2011-12, the assessee may be granted the benefit of the deductions under the provisions of Sec.10(23C)(vi) of the Act as also the benefit of Sec.12AA of the Act. It was also a submission that the assessee s registration u/s.12AA may be restored in its entirety right from the AY 2010-11. In respect of the specific query from the Bench, whether the assessee has filed any appeal against the order passed by the DGIT (Investigation) dated 18.11.2014 withdrawing the approval u/s.10(23C)(vi) from the AY 2010-11 onwards, it was fairly agreed by the Ld.AR that no appeal has been filed till date against the said order. 7. In reply, the Ld.DR submitted that the issue had already been decided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case in the light of the above ratios, it is clear that the assessee trust has carried its activities which invited the search and seizure action by the Revenue, which resulted in unearthing of evidences, inter alia, that the assessee collected huge amount of ₹ 1,57,42,700/- from students, in cash, without issuing any receipts and without entering them in the regular books of accounts maintained by the trust. When the assessee, a public charitable trust, has not kept clear and accurate accounts of the trust-property and failed to furnish with full and accurate information as to the impugned amount and state of the trust property, a finding was arrived that the impugned sum was lying with the Managing Trustee and others during the said period, which have not been used for the objects of the assessee trust. These facts have not been disproved. All these activities violate the provisions of the Indian Trusts Act, the Income Tax Act etc and hence the assessee's case clearly falls within the mischief of all the above clauses of Section 4 of the Indian Trust Act, supra. An assessee which claims to be a Trust existing for Publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is diary would not have seen the light of the day. A perusal of the said diary which has been extracted by the PCIT in his order dated 07.12.2016 cancelling the registration u/s.12AA shown amounts having been collected from various students towards various branches of engineering. A perusal of the dates shows that the same has been collected between November, 2009 and June, 2010, substantial portions having been collected between April, 2010 and June, 2010. Admissions taken place during June-July. The assessee has claimed these advances received, as and when the admission is processed, the same have been recorded into the regular books. If the admission is not taken, the amount is returned. It is for the assessee to tally the accounts. There are 214 entries in the said diary. It is not an impossible task to identify the student with the admission and to identify to whom the money has been returned if the admission has not been taken. The Revenue would not be able to identify from the seized diary who is the student and who is not the student because the admission details are also not available in the said diary nor their addresses. Further, only if the assessee is able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that the order has been passed by the PCIT on 07.12.2016 cancelling the registration u/s.12AA with retrospective effect from the AY 2010-11 onwards. Admittedly, this registration has been cancelled on account of the fact that the search on the assessee on 02.07.2010 brought out the evidences in the form of the incriminating documents which showed that the assessee Trust was being run for the purpose of profit and not solely for educational purpose as also on account of the fact that the cash which had been collected in the form of capitation fee had been misappropriated by the Trustees for purposes other than the objects of the Trust and the trustees are unable to show how the funds were used only for attaining the objects of the Trust. In these circumstances, the order passed by the PCIT, Central-2, Chennai, cancelling the registration u/s.12AA of the Act vide its order dated 07.12.2016 stands upheld. 12. In the result, the appeal filed by the assessee in ITA No.370/Chny/2017 stands dismissed. For ITA Nos.637 638/Chny/2017 for the AYs 2010-11 2011-12: 13. In respect of the appeals in ITA Nos.637 638/Chny/2017, the main crux of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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