Sabarigiri Educational Cultural Society, Kollam V. DCIT, Kollam

CO 20/COCH/2006

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9258 (ITAT-COCHIN)
• Duration Of Justice: 7 year(s) 11 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2013
• Assessment Year: misc
• Appeal Filed On: 17-02-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Keywords: Capital asset; Income from undisclosed sources; Charitable institution; Competent authority; Non passing of speaking order; Capital receipt
• Section: 12A; 12; 11

Judgement Text

1 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) IT(SS)A NO.188/COCH/2005 (BLOCK PERIOD 01-04-1996 TO 28-05-2002) THE A.C.I.T., CENT.CIR. VS M/S SABARIGIRI EDUCAT IONAL KOLLAM & CULTURAL SOCIETY, ANCHAL KOLLAM PAN : AAATS6514R (APPELLANT) (RESPONDENT) C.O. NO.20/COCH/2006 (ARISING OUT OF IT(SS)A NO.188/COCH/2005) (BLOCK PERIOD 01-04-1996 TO 28-05-2002) M/S SABARIGIRI EDUCATIONAL & VS THE D.C.I.T., CE NT.CIR. CULTURAL SOCIETY, ANCHAL KOLLAM (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI K.K. JOHN ASSESSEE BY : SHRI CBM WARRIER DATE OF HEARING : 10-12-2013 DATE OF PRONOUNCEMENT : 31-01-2014 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF CIT(A)-I, KOCHI DATED 10-08-2005 FOR THE BLOCK PERI OD 01-04-1996 TO 28- 05-2002. 2 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF R.75,09,700. 3. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE ASS ESSEE SOCIETY OWNS TWO SCHOOLS. THE APPLICATION FILED BY THE ASSESSEE FOR REGISTRATION U/S 12A OF THE ACT WAS REJECTED BY THE COMMISSIONER OF INCO ME-TAX. THE ASSESSEE HAS NOT APPLIED FOR APPROVAL U/S 10(22) / U/S 10(23 C) OF THE ACT. THEREFORE, THE ASSESSEE SOCIETY WAS ALSO NOT APPROVED BY THE C OMPETENT AUTHORITY U/S 10(22) / U/S 10(23C) OF THE ACT; HENCE, THE ASS ESSEE IS NOT ELIGIBLE FOR EXEMPTION EITHER U/S 10(22) OR U/S 10(23C) OF THE A CT. ACCORDING TO THE LD.DR, FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 , ADMITTEDLY, THE GROSS RECEIPTS EXCEEDED RS.1 CRORE, THEREFORE, APPR OVAL BY THE COMPETENT AUTHORITY IS A PRE-CONDITION FOR CLAIMING EXEMPTION U/S 10(23C) OF THE ACT. IN RESPECT OF OTHER YEARS, THE ASSESSEE HAS TO SATI SFACTORILY EXPLAIN THAT THE SOCIETY DOES EXIST WITHOUT PROFIT MOTIVE. IN THIS CASE, ACCORDING TO THE LD.DR, THE ASSESSEE SOCIETY COLLECTED CAPITATION FE E FOR ADMISSION OF THE STUDENTS. THE CAPITATION FEE COLLECTED WAS NOT ACC OUNTED IN THE BOOKS OF ACCOUNT OF THE SOCIETY. THE ASSESSEE CLAIMED THAT THE CAPITATION FEE, VIZ. BUILDING FUND OR DEVELOPMENT FUND WAS RECEIVED THRO UGH AN INTERMEDIARY SOCIETY. ACCORDING TO THE LD.DR, THE AMOUNTS COLLE CTED BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT WERE DEPOSITED IN THE BANK ACCOUNT IN THE PERSONAL NAME OF DR V.K. JAYAKUMAR AND MRS. SULA JA YAKUMAR. THE 3 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 PROPERTY WAS ALSO PURCHASED IN THE NAME OF DR V.K. JAYAKUMAR AND MRS, SULA JAYAKUMAR. SINCE THE MONEY WAS COLLECTED FROM THE STUDENTS FOR ADMISSION OVER AND ABOVE THE FEES BY DR V.K. JAYKUM AR AND MRS. SULA JAYAKUMAR OUTSIDE THE BOOKS OF ACCOUNT, ACCORDING T O THE LD.DR, THE SOCIETY WAS IN EXISTENCE WITH PROFIT MOTIVE, THEREF ORE, NOT ENTITLED FOR EXEMPTION U/S 10(22) / 10(23C) OF THE ACT. 4. REFERRING TO THE ORDER OF THE CIT(A), THE LD.DR SUBMITTED THAT THE CIT(A) FOUND THAT THE AMOUNT RECEIVED BY THE ASSESS EE TOWARDS BUILDING FUND AND DEVELOPMENT FUND ARE CAPITAL IN NATURE, TH EREFORE, IT CANNOT BE TAKEN AS INCOME OF THE ASSESSEE. ACCORDING TO THE LD.DR, THE AMOUNT RECEIVED IS NOT IN RELATION TO A CAPITAL ASSET. TH IS WAS RECEIVED IN THE COURSE OF RUNNING THE SCHOOL FOR ADMISSION OF THE S TUDENTS. THEREFORE, THIS CANNOT BE TREATED AS A CAPITAL RECEIPT. ACCORDING TO THE LD.DR, THERE IS NO DIRECTION FROM THE PARENTS, WHO PAID THE MONEY TO T REAT THE AMOUNT A CORPUS OF THE SOCIETY. THERE IS NO INSTRUCTION FRO M THE PARENTS, WHO PAID THE MONEY TO USE THE FUNDS FOR A PARTICULAR PURPOSE . THIS AMOUNT WAS COLLECTED COMPULSORILY AT THE TIME OF ADMISSION OF THE STUDENTS BY THE SOCIETY. THEREFORE, IT CANNOT BE TREATED AS CAPITA L RECEIPT AS FOUND BY THE CIT(A). HENCE, THE CIT(A) IS NOT CORRECT IN DELETI NG THE ADDITION MADE BY THE ASSESSING OFFICER. 4 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 5. ON THE CONTRARY, SHRI CBM WARRIER, THE LD.DR SUB MITTED THAT THE ASSESSEE SOCIETY RUNS TWO SCHOOLS AND IT EXISTS ONL Y FOR CHARITABLE PURPOSE. ACCORDING TO THE LD.REPRESENTATIVE, THE A SSESSEE TRUST HAS NO PROFIT MOTIVE. THE LD.REPRESENTATIVE SUBMITTED THA T THE ASSESSEE HAS NOT COLLECTED ANY MONEY FROM THE STUDENTS. THERE IS AN OTHER SOCIETY CALLED PARENTS TEACHERS ASSOCIATION (PTA HEREINAFTER CALL ED) WHICH COLLECTED THE MONEY FROM THE STUDENTS AT THE TIME OF ADMISSION FO R CONSTRUCTION OF THE BUILDING AND DEVELOPMENT FUND. THE FUNDS COLLECTED BY PTA WAS TRANSFERRED TO THE ASSESSEE SOCIETY AND AFTER UTILI ZATION OF THE FUNDS, THE SURPLUS FUND WAS DEPOSITED IN THE NAME OF DR V.K. J AYAKUMAR IN THE NATIONALIZED BANK. ACCORDING TO THE LD.REPRESENTAT IVE, THE SEIZED MATERIAL SHOWS THE NAME OF THE DONOR, THE PURPOSE FOR WHICH THE AMOUNT WAS GIVEN. THE LD.REPRESENTATIVE SUBMITTED THAT RECEIP TS WERE ISSUED TO THE RESPECTIVE PARENTS AND IT WAS ALSO FULLY ACCOUNTED IN THE BOOKS OF ACCOUNT. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE AS SESSEE SOCIETY APPLIED FOR REGISTRATION U/S 12A OF THE ACT ON 23-07-1991. HOWEVER, THE COMMISSIONER, AFTER EXPIRY OF 7 YEARS PERIOD, ON 19-08-1998, REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12 A OF THE ACT BY A NON SPEAKING ORDER. ACCORDING TO THE LD.REPRESENTATIVE , REJECTING THE APPLICATION AFTER 7 YEARS IS NOT JUSTIFIED. THE LD .REPRESENTATIVE FURTHER SUBMITTED THAT SINCE THE AMOUNT WAS NOT COLLECTED B Y THE ASSESSEE AND IT 5 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 WAS COLLECTED BY PTA OF THE SCHOOL, THE SAME CANNOT BE ADDED IN THE HANDS OF THE PRESENT ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE QUES TION ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10(22) / U/S 10(23C) OF THE ACT OR U/S 11 OF THE AC T. THE APPLICATION FILED BY THE ASSESSEE FOR REGISTRATION U/S 12A WAS ADMITTEDL Y REJECTED BY THE COMMISSIONER OF INCOME-TAX. THE ONLY OBJECTION OF THE ASSESSEE IS THAT IT WAS REJECTED AFTER EXPIRY OF 7 YEARS, THEREFORE, TH E ASSESSEE SHOULD BE GIVEN EXEMPTION. THIS TRIBUNAL CANNOT ACCEPT THE C ONTENTION OF THE LD.REPRESENTATIVE FOR THE ASSESSEE. THE INCOME-TAX ACT DOES NOT PROVIDE FOR ANY DEEMED REGISTRATION FOR NON DISPOSAL OF THE APPLICATION WITHIN A PARTICULAR TIME. IN OTHER WORDS, THE CONSEQUENCE O F NON DISPOSAL OF THE APPLICATION U/S 12A IS NOT PROVIDED IN THE INCOME-T AX ACT. THEREFORE, THERE IS NO QUESTION OF ANY DEEMED REGISTRATION. MOREOVE R, THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF THE COMMISSIONER OF INC OME-TAX WHEREBY THE APPLICATION U/S 12A WAS REJECTED. THEREFORE, THE O RDER OF THE COMMISSIONER OF INCOME-TAX HAS ATTAINED FINALITY. THIS VIEW OF OURS IS FORTIFIED BY THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS 6 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 SHEELA CHRISTIAN CHARITABLE TRUST (2013) 354 ITR 47 8 (MAD). THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 O F THE ACT. 7. NOW WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTI ON U/S 10(22) / U/S 10(23C) OF THE ACT? FOR THE ASSESSMENT YEARS 2000- 01 AND 2001-02 THE ASSESSEES GROSS RECEIPTS ADMITTEDLY EXCEEDED RS.1 CRORE, THEREFORE, UNLESS AND UNTIL THE ASSESSEE OBTAINED THE APPROVAL OF THE COMPETENT AUTHORITY, IT IS NOT EXEMPT U/S 10(23C) OF THE ACT. IN RESPECT OF OTHER ASSESSMENT YEARS WHERE THE GROSS RECEIPT IS LESS TH AN RS.1 CRORE, THE APPROVAL OF THE COMPETENT AUTHORITY MAY NOT BE NECE SSARY. BUT THE SOCIETY HAS TO ESTABLISH THAT THE SOCIETY EXISTED SOLELY FO R EDUCATIONAL PURPOSE WITHOUT ANY PROFIT MOTIVE. TO EXAMINE WHETHER THE ASSESSEE TRUST WAS ESTABLISHED FOR PROFIT MOTIVE, WE HAVE TO FIRST EXA MINE THE TRUST DEED UNDER WHICH THE TRUST / SOCIETY WAS ESTABLISHED. BOTH TH E PARTIES DID NOT FILE BEFORE US THE DEED UNDER WHICH THE SOCIETY WAS ESTA BLISHED. THEREFORE, THIS TRIBUNAL IS UNABLE TO RECORD ANY FINDING WHETH ER THE SOCIETY WAS ESTABLISHED FOR PROFIT MOTIVE OR NOT? MOREOVER, CO LLECTION OF CAPITATION FEE FOR ADMISSION OF THE STUDENTS IS PROHIBITED BY STAT E ENACTMENT. IT IS ALSO A FACT THAT THE ACT OF COLLECTION OF CAPITATION FEES BY ANY EDUCATIONAL INSTITUTION AT THE TIME OF ADMISSION OF THE STUDENT S IS MADE AS A PUNISHABLE OFFENCE. THEREFORE, THE MONEY RECEIVED EITHER BY T HE EDUCATIONAL 7 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 INSTITUTION OR BY THE TRUST WHICH RUNS THE INSTITUT ION OR ANYBODY ELSE IN THE NAME OF THE SCHOOL HAS TO BE CONSIDERED AS CAPITAL RECEIPT. THE CAPITATION FEE CANNOT BE CONSIDERED AS INCOME WHICH GENERATED IN THE COURSE OF RUNNING EDUCATIONAL INSTITUTION. THE ASSESSEE CLAI MS THAT PTA COLLECTED THE MONEY AND THE NAME AND ADDRESS OF THE PARENTS, THE PURPOSE FOR WHICH THE MONEY WAS COLLECTED ARE ACCOUNTED AND REC ORDED IN THE BOOKS OF ACCOUNT. THE CIT(A) REFERS TO SOME OF THE SEIZE D MATERIAL MARKED AS A-1 TO A-18, AM-19, AND AM II 33. UNFORTUNAT ELY, COPIES OF THE ABOVE SEIZED MATERIALS ARE NOT FILED BEFORE THIS TRIBUNAL . THEREFORE, THIS TRIBUNAL IS UNABLE TO SAY WHETHER THE MONEY COLLECTED BY THE ASSESSEE FROM THE STUDENTS AT THE TIME OF ADMISSION IS CAPITATION MON EY OR NOT.? THE FACT REMAINS IS THAT THE ASSESSEE COLLECTED THE MONEY OV ER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENTS. THER EFORE, THE NATURE OF THE MONEY COLLECTED NEEDS TO BE EXAMINED BEFORE EXAMINI NG WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10(22) / U/S 10(23C) OF THE ACT. IN THE ABSENCE OF ANY MATERIAL BEFORE THIS TRIBUNAL IN THE FORM OF COPIES OF THE SEIZED MATERIAL OR THE COPIES OF THE DEED UNDER WHI CH THE TRUST WAS ESTABLISHED, THIS TRIBUNAL IS UNABLE TO UPHOLD THE CONTENTION OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT IT NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER AFRES H IN THE LIGHT OF THE TRUST DEED AND THE SEARCH MATERIAL. ACCORDINGLY, T HE ORDERS OF THE LOWER 8 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 AUTHORITIES ARE SET AIDE AND THE ADDITION OF RS.75, 09,000 IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL RE-EXAMINE THE ISSUE IN THE LIGHT OF TRUST DEED AND THE SEARCH MATERIAL AND THEREAFTER RECORD A CATEGORICAL FINDING WHETHER THE SURPLUS FU NDS ARE REINVESTED AND UTILIZED FOR EDUCATIONAL PURPOSE OR IT WAS APPROPRI ATED FOR ANY OF THE INDIVIDUALS BENEFIT. THE ASSESSING OFFICER SHALL ALSO EXAMINE THE SEIZED MATERIAL WHICH ARE CLAIMED TO BE HAVING THE NAMES O F THE DONORS AND THE PURPOSE FOR WHICH IT WAS DONATED. THE ASSESSING OF FICER SHALL ALSO GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE A ND DECIDE THE SAME IN ACCORDANCE WITH LAW. 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDI TION OF RS.50,000. 9. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE ASS ESSEE HAS FILED A CASH FLOW STATEMENT SHOWING THE OPENING CASH BALANC E AS ON 01-04-1996 AT RS.50,000. THE CASH BALANCE AS ON 01-04-1996 AS PER THE BOOKS OF ACCOUNT WAS RS.46,282. NO EXPLANATION WAS FORTHCOM ING FROM THE ASSESSEE FOR SHOWING THE CASH BALANCE AT RS.50,000. DR V.K. JAYAKUMAR WAS EXAMINED AT THE TIME OF SEARCH. HE ADMITTED TH AT FOR THE DEVELOPMENT OF THE SCHOOL, FUNDS WERE RECEIVED WITHOUT ISSUING RECEIPTS. SINCE THE 9 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 AMOUNT WAS RECEIVED WITHOUT ISSUING ANY RECEIPTS IT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1996 -97. 10. ON THE CONTRARY, SHRI CBM WARRIER, THE LD.DR SU BMITTED THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION. THEREFORE, THIS AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. ACCORDING TO THE LD.REPRESENTATIVE, WITHOUT ANY SEI ZED MATERIAL, THERE CANNOT BE ANY ADDITION AS UNDISCLOSED INCOME FOR TH E BLOCK PERIOD. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 158BB(1) CLEARLY SAYS THAT UNDISCLOSED INCOME SHALL BE CALCULATED ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND EVI DENCE RELATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. WHILE INTERPRETING SECTION 158BB(1), THE KERALA HIGH COURT IN THE CASE OF CIT VS HOTEL MERIYA (2011) 332 ITR 537 (KER) FOUND THAT STATEMENT RECOR DED U/S 132(4) OF THE ACT ALSO FORMS PART OF THE MATERIAL / EVIDENCE FOUN D DURING THE COURSE OF SEARCH OPERATION. IN THE COURSE OF RECORDING STATE MENT U/S 132(4), DR V.K. JAYAKUMAR ADMITTED THAT THE AMOUNT WAS COLLECTED WI THOUT ISSUING RECEIPTS. THEREFORE, THIS TRIBUNAL CANNOT SAY THAT THERE WAS NO SEIZED MATERIAL. THE STATEMENT RECORDED U/S 132(4) OF THE ACT FORMS PART OF THE SEIZED MATERIAL WHEREIN IT WAS ADMITTED THAT AMOUNT OF RS.50,000 WAS 10 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 COLLECTED WITHOUT ISSUING RECEIPTS. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . ACCORDINGLY, THE ORDER OF CIT(A) IS SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICER IS RESTORED. 12. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS. 2,85,940 TOWARDS SALE OF APPLICATION FORM. 13. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE SA LE CONSIDERATION RECEIVED FOR SALE OF APPLICATION FORMS WAS NOT ACCO UNTED FOR IN THE BOOKS OF ACCOUNT. THEREFORE, THE SALE PROCEEDS OF THE APPLI CATION FORMS WERE TAKEN AS UNACCOUNTED INCOME OF THE ASSESSEE. HOWEVER, TH E CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE SEIZED MATERIAL BEL ONGS TO ANOTHER SOCIETY BY NAME SABARIGIRI SCHOOL SOCIETY. ACCORDING TO THE LD.DR, THE SEIZED MATERIAL DOES BELONG TO THE ASSESSEE. ACCORDING TO THE LD.DR, THE APPLICATION FORM WAS SOLD FOR THE SCHOOL RUN BY THE ASSESSEE. WHETHER IT IS SOLD BY THE ASSESSEE DIRECTLY OR THROUGH ANY OTHER SOCIETY, THE SALE WAS OF THE ASSESSEE SOCIETY, THEREFORE, THE SALE PROCEEDS OF APPLICATION FORM HAS TO BE ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE. IT IS NOT THE CASE OF THE ASSESSEE THAT THE APPLICATION FORM WAS PRINTED AND DELIVERED TO OTHER SOCIETY FREE OF COST. THEREFORE, ALL THE SALE PROC EEDS HAS TO BE ACCOUNTED 11 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 FOR IN THE BOOKS OF THE ASSESSEE; HENCE THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. 14. ON THE CONTRARY, SHRI CBM WARRIER, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE RECEIPTS ON SALE OF APPLICATION FORMS WERE PROPERLY ACCOUNTED FOR. THE AMOUNT OF RS.2,85 ,940 IS THE RESULT OF WORKING MADE BY THE ASSESSING OFFICER FROM THE SEIZ ED BOOKS OF ACCOUNT OF ANOTHER SOCIETY BY THE NAME SABARIGIRI SCHOOL SOCI ETY. THEREFORE, IF AT ALL ANY ADDITION SHOULD BE MADE THAT SHOULD BE IN THE H ANDS OF THE SABARIGIRI SCHOOL SOCIETY AND IT CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NO T IN DISPUTE THAT AN AMOUNT OF RS.2,85,940 TOWARDS THE SALE OF APPLICATI ON FORMS WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESS EE. THE ASSESSEE NOW CLAIMS THAT THE SEIZED BOOKS RELATE TO SABARIGIRI SCHOOL SOCIETY AND NOT TO THE ASSESSEE UNDER APPEAL. THE DEPARTMENT CLAIMS T HAT THE APPLICATION FORM BELONGS TO THE SCHOOL RUN BY THE PRESENT SOCIE TY BUT THIS FACT IS NOT COMING OUT OF THE ORDERS OF THE LOWER AUTHORITY. I F THE APPLICATION FORM BELONGS TO THE SCHOOL RUN BY THE ASSESSEE SOCIETY, IT IS NOT KNOWN HOW ANOTHER SOCIETY WAS AUTHORISED TO SELL THE APPLICAT ION FORMS. THESE FACTS 12 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 NEED TO BE VERIFIED. IN THE ABSENCE OF ANY MATERIA L ON THE FILE OF THIS TRIBUNAL, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE ASSESSING OFFICER HAS TO VERIFY THE DETAILS. ACCORDINGLY, TH E ORDERS OF LOWER AUTHORITY ARE SET ASIDE AND THE ISSUE OF ADDITION OF RS.2,85, 940 IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. THE ASSESSING OFFICER SHALL RE- EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE MATERI AL AVAILABLE ON RECORD AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH L AW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 16. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.8,37,630. 17. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE CO LLECTION OF MONTHLY FEE AND OTHER FEES FOR THE ASSESSMENT YEAR 2001-02 WAS ENTERED IN THE LEDGER AFTER OMITTING THE THOUSAND DIGITS. ACCORDING TO T HE LD.DR, THE RECEIPT OF 13,720 WAS SHOWN IN THE LEDGER AS 720. SIMILARLY 3 1,560 WAS SHOWN IN THE LEDGER AS 560. THIS METHOD IS CONTINUED FOR AL L OTHER ENTRIES. THOUGH THE PERIOD FOR FILING THE RETURN OF INCOME HAS NOT EXPIRED, ACCORDING TO THE LD.DR, SINCE THE ASSESSEE HAS NOT MAINTAINED THE AC COUNTS PROPERLY, THIS COULD NOT HAVE BEEN DISCLOSED TO THE DEPARTMENT BUT FOR THE SEARCH. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY MADE T HE ADDITION. HOWEVER, THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FILED 13 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 THE RETURN OF INCOME U/S 139(1) DECLARING THE ABOVE SAID AMOUNT. ACCORDING TO THE LD.DR, THE ASSESSEE WOULD NOT HAVE DECLARED THIS AMOUNT IN THE RETURN FILED SUBSEQUENT TO THE SEARCH BUT FO R THE SEARCH, THEREFORE THE CIT(A) IS NOT JUSTIFIED. 18. ON THE CONTRARY, SHRI CBM WARRIER, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE TIME LIMIT FOR FILING T HE RETURN OF INCOME HAS NOT BEEN EXPIRED AS ON THE DATE OF SEARCH. ACCORDING T O THE LD.REPRESENTATIVE, OMISSION IN THE ACCOUNTING HAS OCCURRED AS A RESULT OF MISAPPROPRIATION OF FUNDS BY THE CASHIER WHO WAS INCHARGE OF CASH. AS SOON AS IT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE SOCIETY, THE SAME WAS DECLARED TO THE DEPARTMENT BY FILING RETURN U/S 139(1) BEFORE THE D UE DATE FOR FILING THE RETURN OF INCOME. THEREFORE, THIS CANNOT BE TREATED AS UNDISCLOSED INCOME. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT , THE ENTRIES FOUND IN THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COUR SE OF BUSINESS CANNOT BE TREATED AS UNDISCLOSED INCOME PROVIDED THE TIME LIMIT FOR FILING THE RETURN OF INCOME HAS NOT EXPIRED ON THE DATE OF SEA RCH. IN THIS CASE, THE ASSESSEE APPARENTLY MAINTAINED TWO SETS OF BOOKS FO R RECEIPT OF MONTHLY FEE, TERM FEE, ETC. THE ASSESSING OFFICER, AFTER C OMPARING THE TWO SETS OF 14 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 BOOKS FOUND THAT THOUSANDS DIGITS WERE OMITTED. AS RIGHTLY POINTED OUT BY THE LD.DR, INSTEAD OF 13,720, THE ASSESSEE HAS ENTE RED ONLY 720. SIMILARLY FOR 31,560 THE ASSESSEE HAS SHOWN ONLY 560. THEREF ORE, THE COLLECTION OF FUND WAS NOT ENTERED IN THE BOOKS OF ACCOUNT PROPER LY. THIS IS NOT AN OMISSION AS CLAIMED BY THE LD.REPRESENTATIVE FOR TH E ASSESSEE. WHEN THE ASSESSEE KNEW THAT THERE WERE TWO SETS OF BOOKS OF ACCOUNT MAINTAINED AND THOUSANDS DIGITS WERE LEFT OUT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS IS AN OBVIOUS SUPPRESSION OF RECE IPT FOR THE KNOWN REASONS. THEREFORE, BUT FOR THE SEARCH, THE ASSESS EE COULD NOT HAVE DISCLOSED THE INCOME IN THE REGULAR RETURN OF INCOM E . IN VIEW OF THE LANGUAGE EMPLOYED IN SECTION 158BB(1)(D), THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT THIS AMOUNT CANNOT BE EXCLU DED WHILE COMPUTING THE UNDISCLOSED INCOME. THEREFORE, THE CI T(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. ACCORDINGLY, T HE ORDER OF CIT(A) IS SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OF FICER IS RESTORED. 20. THE REVENUE HAS TAKEN ONE MORE GROUND WITH REGA RD TO LEVY OF SURCHARGE U/S 113 OF THE ACT. 21. AFTER HEARING BOTH SIDES, WE FIND THAT IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS SURESH N GUPTA (20 08) 297 ITR 322 (SC) 15 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 THE ASSESSEE IS LIABLE TO PAY SURCHARGE EVEN THOUGH THE SEARCH TOOK PLACE IN THE PERIOD SUBSEQUENT TO INSERTION OF PROVISO TO SECTION 113 OF THE ACT. THEREFORE, THE ORDER OF THE CIT(A) IS SET AIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 22. NOW COMING TO THE CROSS OBJECTION FILED BY THE ASSESSEE, THE FIRST OBJECTION IS WITH REGARD TO ASSESSMENT MADE U/S 158 BD OF THE ACT. ADMITTEDLY, SEARCH TOOK PLACE IN THE CASE OF DR V.K . JAYAKUMAR AND THE ASSESEE IS A PERSON OTHER THAN THE PERSON SEARCHED, THEREFORE, THE ASSESSMENT HAS TO BE MADE ONLY U/S 158BD OF THE ACT . HENCE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN FRAMING THE A SSESSMENT U/S 158BD OF THE ACT. 23. THE NEXT GROUND OF CROSS OBJECTION IS THAT THER E IS NO SEARCH WARRANT IN THE NAME OF ASSESSEE. THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT WHEN THE WARRANT WAS ISSUED IN THE NAME OF DR V.K. JAYAKUMAR AND THE PLACE OF SEARCH WAS SHOWN AS THE PREMISES OF THE AS SESSEE, THEN THE DEPARTMENT HAS VALIDLY INITIATED SEARCH PROCEEDINGS . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHOR ITIES. ACCORDINGLY, THE SAME IS CONFIRMED. 16 IT(SS)A NO. 188/COCH/2005 CO NO. 20/COCH/2006 24. THE NEXT GROUND OF CROSS OBJECTION IS WITH REGA RD TO THE ISSUANCE OF CORRIGENDUM. THE CORRIGENDUM SAID TO BE ISSUED BY THE ASSESSING OFFICER IS ONLY TO CORRECT THE BLOCK PERIOD. THEREFORE, TH E ISSUANCE OF CORRIGENDUM WILL NOT VITIATE THE PROCEEDINGS AT ALL. 25. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST JANUARY, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 31 ST JANUARY, 2014 PK/- COPY TO: 1. THE ACIT, CENT.CIR., KOLLAM 2. M/S SABARIGIRI EDUCATIONAL & CULTURAL SOCIETY, A NCHAL, KOLLAM 3. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH