Sree Educational Society, Hyderabad V. ACIT., Central Circler-1, Hyderabad

ITA 114/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5948 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MYTHILI RANI
• Assessee Lawyers: AJAY GANDHI
• Keywords: Capital asset; Business income; Income from undisclosed sources; Search and seizure; Document seized; Charitable institution; Capital receipt; Cancellation of registration; Documents seized
• Section: 143(3); 153A; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 111 TO 117/HYD/2014 ASSESSMENT YEARS: 2004-05 TO 2010-11 SREE EDUCATIONAL SOCIETY, HYDERABAD. PAN AAATS7411B VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE (1), HYDERABAD. ASSESSEE RESPONDENT ASSESSEE BY: SRI AJAY GANDHI RESPONDENT BY: SMT. K. MYTHILI RANI DATE OF HEARING: 29/01/2016 DATE OF PRONOUNCEMENT: 11/03/2016 O R D E R PER BENCH: THESE 7 APPEALS PREFERRED BY THE ASSESSEE ARE DIRE CTED AGAINST A COMMON ORDER OF THE CIT(A) - I, HYDERABAD DATED 23/12/2013 FOR ASSESSMENT YEARS 2004-05 TO 2010-11. AS IDENTICAL ISSUES ARE INVOLVED IN THESE APPEALS, THE SAME WERE CLUBBED AND HEARD TOGETHER, THEREFORE, WE FIND IT C ONVENIENT TO DISPOSE OF THESE APPEALS BY WAY OF COMMON AND CONSO LIDATED ORDER. 2. BRIEFLY THE FACTS OF THE CASE ARE: A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 10-9-2009 IN THE CASE OF SREENIDHI EDUCATIONAL SOCIETY AND ALSO THE RESIDEN CES OF THE MAIN TRUSTEES, SHRI K.T. MAHI AND SMT. K.SARITA MAH I. SEARCH WAS ALSO CONDUCTED AT THE RESIDENCE OF SHRI P.NARSI MHA REDDY, PRINCIPAL, SNIST. I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 2 2.1 AS MENTIONED IN THE ASSESSMENT ORDERS, THE ASSE SSEE SOCIETY IS A REGISTERED SOCIETY AND HAD BEEN GRANTE D REGISTRATION U/S 12A OF THE ACT BY THE COMMISSIONER OF INCOME-TAX-I, HYDERABAD ON 2-4-1998. SUBSEQUENTLY, IT WAS ALSO GRANTED APPROVAL U/S 10(23C)(VI) OF THE I.T. A CT, BY THE CCIT-1, HYDERABAD ON 21-9-2007, WITH EFFECT FROM ASSESSMENT YEAR 2003-04 TO 2005-06 RETROSPECTIVELY, WHICH WAS RENEWED ON 14-2-2008 FROM THE ASSESSMENT YEAR 2 006- 07 ONWARDS. THE ASSESSEE SOCIETY IS RUNNING AN ENGI NEERING COLLEGE BY THE NAME SREENIDHI INSTITUTE OF SCIENCE AND TECHNOLOGY (SNIST) AND ITS MAIN OBJECTS ARE TO PROV IDE EDUCATION, VOCATIONAL GUIDANCE, TRAINING AND RESEAR CH PROGRAMMES, TO PROMOTE TECHNICAL, PROFESSIONAL AND VOCATIONAL EDUCATION ETC. TO THE STUDENTS. 2.2 IN THE COURSE OF SEARCH AT THE RESIDENCE OF SH RI K.T. MAHI AND SMT. SARITA MAHI, CASH OF RS.2,84,110/- AN D JEWELLERY OF RS.22,36,380/- WERE FOUND, OUT OF WHIC H RS. 2,00,000/- AND RS.8,59,680/- RESPECTIVELY, WERE SEI ZED. IN ADDITION TO THE SAME, DOCUMENTS RELATING TO UNACCOU NTED INCOME GENERATION AND INVESTMENTS THEREOF WERE ALSO FOUND AND SEIZED, WHICH POINTED TO THE FACT THAT THE ASSE SSEE SOCIETY WAS COLLECTING AMOUNTS OVER AND ABOVE THE REGULAR FEES AND THE TRUSTEES WERE UTILIZING THE AMOUNTS FO R THEIR PERSONAL BENEFITS AND PERSONAL BUSINESSES. IT WAS F OUND THAT THE DONATIONS/CAPITATION FEES COLLECTED ARE NOT ACC OUNTED FOR IN THE BOOKS OF ACCOUNT BUT ARE USED FOR UNACCOUNTE D INVESTMENTS AS PERSONAL ASSETS. 2.3 EVIDENCE COLLECTED IN THE COURSE OF SEARCH FURT HER INDICATED THAT THE SOCIETY WAS COLLECTING FEES FROM STUDENTS, OVER AND ABOVE THE PRESCRIBED FEES (IN THE FORM OF DONATIONS/CAPITATION FEES) FOR GRANTING ADMISSION I NTO I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 3 ENGINEERING COURSES. THE EXCESS AMOUNTS SO COLLECT ED WERE NOT RECORDED IN THE BOOKS OF THE SOCIETY. THE EVIDE NCE RELATING TO COLLECTION OF DONATIONS/CAPITATION FEES WAS FOUN D AND SEIZED IN THE COURSE OF SEARCH FROM THE OFFICE PREM ISES OF THE ASSESSEE SOCIETY AND SEIZED AS ANNEXURE A/SNIST/OFF /35 TO 41 AND A/KTMGH/04 & 06. IT WAS ALSO FOUND THAT THE ENTRIES IN RESPECT OF COLLECTION OF CAPITATION FEE/DONATION, A S RECORDED IN THOSE INCRIMINATING DOCUMENTS, WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. 2.4 DURING THE COURSE OF SEARCH, SHRI M. RAMESH BA BU, EMPLOYEE OF THE ASSESSEE SOCIETY, IN HIS STATEMENT DATED 10- 9-2009, CLEARLY STATED THAT THE FEE FOR THE CONVENE R AND MANAGEMENT QUOTA SEATS WAS COLLECTED THROUGH BANKER S CHEQUES/DDS AND THE CAPITATION FEES WAS COLLECTED I N CASH, WHILE FOR THE REST OF THE COURSES, FEE WAS COLLECTE D IN THE FORM OF BANK DEMAND DRAFTS ONLY. IN A SEPARATE STATEMENT RECORDED ON THE SAME DAY, SHRI RAMESH BABU FURTHER CLARIFIED THAT THE CASH DONATIONS RECEIVED FOR MANAGEMENT SEATS ARE US ED TO CLEAR THE EXPENSES IN CASH AND ARE ALSO DEPOSITED I NTO THE PERSONAL A/C OF SHRI K.T. MAHI WITH ANDHRA BANK AND THAT FROM THERE, THE CASH DEPOSITED WAS TRANSFERRED INTO THE ACCOUNTS OF VARIOUS SCHOOLS, AS PER DAY'S REQUIREMENT. HE STATE D THAT THE CASH DONATION FOR 2 YEARS WAS CLOSE TO ABOUT RS.21 CRORES. THE ASSESSING OFFICER NOTED THAT AS PER THE EVIDENC E FOUND IN THE COURSE OF SEARCH, COLLECTIONS TOTALLED TO RS.23 ,05,24,200/-. 2.5 SHRL K.T. MAHI, THE CONVENER, WAS NOT AVAILABLE ON THE DATE OF SEARCH. WHEN CONFRONTED WITH THE ABOVE STAT EMENT OF SHRI RAMESH BABU AND ALSO THE RELEVANT SEIZED MATER IAL, HE, IN HIS STATEMENT RECORDED U/S.131 DATED 3-11-2009, ADMITTED THAT THE NOTINGS IN RESPECT OF CASH TRANSACTIONS RE FLECTED IN THE SEIZED MATERIAL WERE DIFFICULT TO EXPLAIN. HE ALSO STATED THAT I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 4 EVIDENCE TO EXPLAIN THE SAME SATISFACTORILY CANNOT BE ADDUCED. ACCORDINGLY, AFTER DELIBERATING ON THE ISS UE, HE, IN HIS STATEMENT RECORDED U/S.132(4) ON 6-11-2009 ADMI TTED ADDITIONAL INCOME OF RS.16.50 CRORES IN HIS INDIVID UAL HANDS WITH A VIEW TO SET RIGHT THE LAPSES, OMISSIONS AND COMMISSIONS IN HIS INDIVIDUAL BUSINESS AFFAIRS AND ALL ISSUES I NVOLVED IN THE SEIZED MATERIAL. 2.6 HOWEVER, THE ASSESSING OFFICER, AFTER GOING THR OUGH THE RELEVANT MATERIAL NOTICED THAT, THE TOTAL UNACCOUNT ED MONIES, RECEIVED OVER AND ABOVE THE PRESCRIBED FEE, CAME TO RS.16,62,26,600/- (AFTER REDUCING THE AMOUNT OF RS.6,42,97,600/- ON ACCOUNT OF FEE COLLECTIONS AND CERTAIN REFUNDS), AS AGAINST THE ADMISSION OF RS.16.50 CROR ES BY SHRI MAHI. HE ALSO NOTED THAT EVEN THOUGH SHRI MAHI HAD ADMITTED SUCH ADDITIONAL INCOME IN HIS INDIVIDUAL HANDS, SOU RCE FOR THE SAME STEMMED FROM THE COLLEGE ONLY. 2.7 THE ASSESSING OFFICER HAS QUANTIFIED THE UNACCO UNTED RECEIPTS FOR VARIOUS YEARS, AFTER REDUCING THE FEES AND FUNDS OUT OF THE TOTAL AMOUNTS COLLECTED FROM STUDENTS AS PER THE SEIZED ANNEXURE AS UNDER: ASSESSMENT YEAR UNACCOUNTED RECEIPTS (RS.) 2005-06 18,62,000/- 2006-07 1,35,17,000/- 2009-10 9,00,44,700/- 2010-11 6,04,02,900/- 2.8 THE ASSESSING OFFICER HAS ALSO LISTED OUT YEAR- WISE INVESTMENTS AS APPEARING IN THE SEIZED MATERIAL I N THE NAMES OF OTHER ENTITIES FROM OUT OF DONATIONS/CAPITATION FEES COLLECTED FROM STUDENTS AND NOT RECORDED IN THE BOOKS OF THE SOCIETY, AS UNDER: AY AMOUNT DIVERTED UTILIZED BY WHOM AND WHETHER RECORDED WHETHER REFLECTED IN I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 5 (RS.) PURPOSE IN THE BOOKS OF THE ENTITY THE BOOKS OF THE SOCIETY 2005- 06 18,62,000 KT MAHI AND M/S SREENIDHI INTERNATIONAL PVT. LTD. YES NO 2006- 07 1,35,17,000 -DO- YES NO 2009- 10 9,00,44,700 -DO- YES NO 2010- 11 6,04,02,900 -DO- YES NO 2.9 HE CONSIDERED THE STATEMENT RECORDED U/S.132(4 ) WAS RECORDED FROM SHRI M RAMESH BABU, AN OFFICE EXECUTI VE OF SNIST IN THE COURSE OF SEARCH AND THE DOCUMENTS FOU ND FROM HIS CHAMBER WHICH WERE SEIZED AS ANNEXURE A/SNIST/ OFF/35 TO 41 AND A/KTMGH/04 TO 06, WHICH WERE SPIRAL-BOUND BOOKS, CONTAINING DETAILS OF STUDENTS ADMITTED IN THE MANA GEMENT QUOTA. HE DISCUSSED ONE ENTRY FROM EACH OF THE SAID NOTE BOOKS IN THE ASSESSMENT ORDER. FOR EXAMPLE, PAGE 69 OF ANNEXURE A/SNIST/36 SHOWED THAT THE STUDENT SHRI RAMAYANAM AMITESH WAS ADMITTED TO THE ECE COURSE AN D THE TOTAL AMOUNT FINALIZED IN HIS CASE WAS RS.13,75,000 /-. OUT OF THE SAME, RS.4 LAKHS WERE RECEIVED ON 9-7-2008, RS .5 LAKHS ON 11-7-2008 AND RS.4.75 LAKHS ON 14-7-2008. AS AGA INST THIS, THE PRESCRIBED FEE WAS RS. 91,700/- ONLY. THE ASSES SING OFFICER HAS GIVEN SIMILAR INSTANCES FROM VARIOUS OT HER SEIZED DIARIES. HE NOTED THAT THE TOTAL AMOUNTS RECEIVED A S PER THE SEIZED MATERIAL FOUND FROM THE CHAMBER OF SHRI M RA MESH BABU CAME TO RS. 16,62,25,600/- 2.10 THE STATEMENT OF SHRI RAMESH BABU ALSO REVEALE D THAT THE CASH COLLECTED BY WAY OF DONATIONS/CAPITATION F EES WAS BEING DEPOSITED IN THE INDIVIDUAL ACCOUNT OF SHRI K T MAHI. PART OF THE CASH WAS ALSO HANDED OVER TO SHRI MURTHY, CA SHIER OF THE COLLEGE FOR VARIOUS EXPENSES TO BE INCURRED IN CASH FOR I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 6 RUNNING THE ENGINEERING COLLEGE, SCHOOL AS ALSO THE PERSONAL USE OF SHRI MAHI. 2.11 DURING THE COURSE OF POST SEARCH ENQUIRIES, SH RI KT MAHI SUBMITTED A DETAILED CASH FLOW STATEMENT, CREDITING THE UNDISCLOSED INCOME OF VARIOUS YEARS BESIDES SHOWING THE UNACCOUNTED PAYMENTS BASED ON THE SEIZED MATERIAL I NCLUDING THE UNACCOUNTED CREDIT CARD PAYMENTS. 2.12 AFTER ANALYZING THE SEIZED DOCUMENTS, THE ASS ESSING OFFICER CONCLUDED THAT PART OF THE FEES RECORDED T HEREIN WAS REFLECTED IN THE BOOKS OF ACCOUNT, IMPLYING THAT T HE REMAINING PART APPEARING IN THE SEIZED PAPERS BUT NOT RECORDE D IN THE BOOKS WAS ALSO TRUE. IT WAS ALSO FOUND THAT THE STU DENTS WHOSE NAMES WERE APPEARING IN THE SEIZED MATERIAL WERE AC TUALLY STUDYING IN THE COLLEGE AND THEIR NAMES COULD BE TR ACED OUT IN THE BOOKS WITH THE DETAILS OF FEES PAID BY THEM. HE FURTHER NOTED THAT THE ABOVE MENTIONED SEIZED MATERIAL WAS FOUND AND SEIZED FROM THE TABLE OF SHRI RAMESH BABU ONLY, WHO CATEGORICALLY STATED THAT THE SAID BOOKS REFLECTED THE AMOUNTS OF CASH RECEIVED FROM VARIOUS PERSONS AS CONSIDERAT ION FOR COURSES OFFERED TO THEM. HE ALSO EXPLAINED HOW THE SAID CASH WAS BEING USED BY SHRI KT MAHI FOR INVESTMENTS IN R EAL ESTATE, PERSONAL EXPENDITURE, ETC. SHRI RAMESH BABU ALSO EX PLAINED THE MODE OF RECEIPT OF FEES AND DONATION/CAPITATION FEE, STATING THAT FOR THE MANAGEMENT QUOTA SEATS, ONLY F EE IS COLLECTED THROUGH BANKERS CHEQUE/DD, WHILE CAPITATI ON FEE IS COLLECTED IN CASH. HE ALSO EXPLAINED THAT THE FEE I N THE FORM OF CHEQUES WAS BEING DEPOSITED INTO THE BANK A/C OF SN IST- COLLECTION A/C IN ANDHRA BANK, SULTAN BAZAR, WHILE THE CASH DONATIONS WERE BEING DEPOSITED INTO KT MAHIS PERSO NAL A/C WITH, ANDHRA BANK OR INDIAN BANK. IN THE STATEMENT DATED 3- 11-2009, SHRL KT MAHI ALSO ADMITTED THAT THE ABOVE SAID I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 7 BOOKS WERE IN THE HANDWRITING OF SHRI M RAMESH BABU , TRANSPORT IN-CHARGE OF BUSES BELONGING TO SNIST. HE EXPLAINED THAT SHRI BABU WAS WRITING THE NAMES OF S TUDENTS AND THEIR CONTACT NUMBERS FOR COMMUNICATING THE BUS TIMINGS AND TRANSPORTATION FEE TO BE COLLECTED FROM THE PA RENTS FROM TIME TO TIME. HOWEVER, SHRI MAHI DID NOT AGREE WITH THE STATEMENT OF SHRI RAMESH BABU. DESPITE THIS, IN THE STATEMENT RECORDED U/S.132(4) ON 6-11-2009, SHRI MAHI CAME OU T WITH THE DISCLOSURE OF ADDITIONAL INCOME OF RS.16.50 CRO RES IN HIS INDIVIDUAL HANDS FOR VARIOUS YEARS. SUCH DISCLOSURE WAS MADE ALLEGEDLY WITH A VIEW TO SET RIGHT THE LAPSES, OMIS SIONS AND COMMISSIONS IN HIS INDIVIDUAL BUSINESS AFFAIRS AND THE LAPSES INVOLVED IN THE SEIZED MATERIAL ALSO. HE SUBSEQUENT LY SUBMITTED A BREAK UP OF SUCH DISCLOSURE ALSO AS UND ER: FY AMOUNT DECLARED (RS.) 2004-05 15,00,000/- 2005-06 1,30,00,000/- 2006-07 2,00,000/- 2007-08 3,00,000/- 2008-09 9,00,00,000/- 2009-10 6,00,00,000/- TOTAL 16,50,00,000/- 2.13 IN VIEW OF THE FINDINGS OF THE SEARCH AND SEIZ URE OPERATIONS AND THE EVIDENCE COLLECTED THEREIN AS DI SCUSSED ABOVE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER SENT A PROPOSAL TO THE DGIT(INV), HYDERABAD, RECOMMENDING RESCINDING OF THE APPROVAL GRANTED U/S 10(23C)(VI). THE DGIT VIDE HIS PROCEEDINGS IN F.NO.DGIT(INV)/HYD/APP &. RENEWAL U/S.10(23C)/SES/2 011- 12, DATED 16-12-2011, WITHDREW/RESCINDED THE RECOGN ITION WITH EFFECT FROM 2003-04. THE HON'BLE DGIT HELD THAT IN THE INSTANT CASE, AMOUNTS WERE COLLECTED BY WAY OF CAPITATION F EES/ DONATIONS IN CASH WHICH WERE NOT RECORDED IN THE BO OKS OF ACCOUNTS AND CONSEQUENTLY NOT UTILIZED FOR THE PURP OSE OF I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 8 EDUCATION. CONSEQUENT THERE TO, THE AO PROPOSED TO ASSESS THE INCOME OF THE ASSESSEE AS NORMAL INCOME WITHOUT CONSIDERING THE CLAIM OF EXEMPTION U/S 11. 2.14 IN ADDITION TO THE ABOVE, WHILE CONSIDERING T HE ELIGIBILITY OF THE ASSESSEE TO CLAIM EXEMPTION U/S 11, THE AO N OTED THAT IN THE CASE OF MOHINI JAIN VS. STATE OF KARNATAKA AND OTHERS (1992) 2 SCC 666, THE HONBLE SUPREME COURT HAS OPI NED THAT CAPITATION FEE IS NOTHING BUT A PRICE FOR SELLING E DUCATION. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ALSO USED THE CHARITABLE ACTIVITY/EDUCATIONAL INSTITUTION AS AN A PPARATUS FOR SELLING EDUCATION AND THAT THE ELEMENT OF CHARITY N O LONGER REMAINED THE ACTIVITY OF THE ASSESSEE. HE CONCLUDED THAT SINCE THE SOCIETY SELLS SEATS OF PROFESSIONAL COURSES AND COLLECTS CAPITATION FEE AND THEREFORE, THE ACTIVITY OF THE A SSESSEE NO MORE REMAINS CHARITABLE ACTIVITY WITHIN THE MEANING OF SEC. 2(15) OF THE ACT. THE ASSESSING OFFICER HELD THAT T HE MATERIAL SEIZED IN THE COURSE OF SEARCH CLEARLY ESTABLISHES THE COLLECTION OF MONEY OVER AND ABOVE THE PRESCRIBED F EES AND THIS FACT WAS ADMITTED BY THE EMPLOYEES OF THE SOCI ETY, WHO EVEN ADMITTED THAT THE AMOUNT SO COLLECTED WAS BEIN G HANDED OVER TO THE CHAIRMAN AND INTERESTED PERSONS IN THE SOCIETY. THE ASSESSING OFFICER OPINED THAT WHEN THE SOCIETY ADMITS STUDENTS UNDER THE MANAGEMENT QUOTA IN CONSIDERATIO N OF AN AMOUNT, WHICH IS OVER AND ABOVE THE PRESCRIBED FEES , IT CLEARLY ESTABLISHES THE INTENTION OF THE ASSESSEE TO EARN P ROFITS AND THAT THE ASSESSEE'S CASE, THE SEIZED DOCUMENTS SHO WED THAT COLLECTION OF SUCH AMOUNTS WAS A REGULAR PHENOMENON . HE ALSO TOOK NOTE OF THE FACT THAT EVEN IN THE STATE O F ANDHRA PRADESH, A COMMITTEE HAS FIXED THE FEES THAT MAY BE COLLECTED BY THE PROFESSIONAL EDUCATIONAL INSTITUTIONS PER SE MESTER/YEAR BUT THAT THE ASSESSEE SOCIETY HAD COLLECTED FEES FO R THE ENTIRE COURSE IN ADVANCE, BESIDES COLLECTING AMOUNTS OVER AND ABOVE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 9 SUCH FEES, WHICH WAS TO BE TREATED AS COLLECTION OF CAPITATION FEES. HE NOTICED THAT EVEN THE ADVANCE FEES WAS NOT DEPOSITED/INVESTED IN ANY BANK, VIOLATING THE PROVI SIONS OF SEC.11(5) OF THE ACT AND THAT THE ENTIRE MONEY WAS UTILIZED BY THE PERSONS INTERESTED IN THE SOCIETY, SHOWING MISU SE OF FUNDS OF THE INSTITUTION, THEREFORE, ACCORDING TO HIM, IT WAS CLEAR THAT THE ASSESSEE SOCIETY DID NOT EXIST SOLELY FOR THE P URPOSE OF EDUCATION BUT EXISTED ONLY FOR PROFIT. HE FURTHER N OTICED THAT IT WOULD NOT AFFECT THE ASSESSMENT OF INCOME IN THE HA NDS OF SOCIETY EVEN IF THE CAPITATION FEE IS COLLECTED BY THE TRUST PER SE OR BY SOME INTERESTED PERSONS. HE FELT THAT IN T HE ASSESSEE'S CASE THE COLLECTION OF CAPITATION FEE CO ULD NOT EVEN BE TERMED AS A BUSINESS INCOME AS ENVISAGED U/S.1 1(4A). BESIDES, HE OBSERVED THAT THERE HAD BEEN VIOLATIONS OF PROVISIONS OF SEC. 13(1)(C) AS THE AMOUNTS COLLECTE D OVER AND ABOVE THE PRESCRIBED FEE WERE BEING HANDED OVER TO THE CHAIRMAN AND OTHER INTERESTED PERSONS OF THE SOCIET Y. ACCORDINGLY, HE CONCLUDED THAT EVEN ON THIS ACCOUNT , THE ASSESSEE WOULD NOT BE ENTITLED TO THE EXEMPTION U/S . 11 OF THE ACT. 2.15 THE AO NOTED THAT EVEN IN VIEW OF THE DECISION OF THE HON'BLE ITAT, HYDERABAD IN THE CASE OF VODITHALA ED UCATIONAL SOCIETY AND ADINATAR EDUCATIONAL INSTITUTION VS. AC IT (224 LTR 310), THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U /S. 11 AS IT DID NOT EXIST FOR THE SOLE PURPOSE OF EDUCATION BUT EXISTED FOR THE PURPOSE OF PROFIT. HE ALSO REFERRED TO THE DECI SION OF HON'BLE APEX COURT IN THE CASE OF T.M. PAI VS, STAT E OF KARNATAKA (2002) 8 SSC 481, HOLDING THAT THE SOCIET Y WOULD NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OR 10(23C) WHE RE IT FAILS TO PROVE THAT THE CONTRIBUTIONS ARE NOT IN THE NATURE OF CAPITATION FEES. ACCORDINGLY, HE HELD THAT THE ASSESSEE IS NEI THER ELIGIBLE FOR EXEMPTION U/S 10(23C)(VI), NOR IS IT, ELIGIBLE FOR EXEMPTION I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 10 U/S 11. HE ACCORDINGLY, PROCEEDED TO ASSESS THE IN COME OF THE ASSESSEE IN THE CAPACITY OF AOP. 2.16 WITH THE ABOVE VIEW, .THE ASSESSING OFFICER I SSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO OFFER ITS COMM ENTS ON HIS PROPOSITION TO TAX THE UNACCOUNTED RECEIPTS FOR VARIOUS YEARS, CONSIDERING THE SITUATION THAT THE COVER OF SEC.10(23C)(VI) WAS NOT AVAILABLE TO IT. HE ALSO P ROVIDED COPIES OF VARIOUS STATEMENTS RECORDED DURING THE CO URSE OF SEARCH, AS REQUESTED BY THE ASSESSEE, VIDE LETTER D ATED 26- 12-2012, THE ASSESSEE STATED THAT THE STATEMENT GIV EN BY SHRI RAMESH BABU IS FALSE, BASELESS, INCORRECT AND WITHO UT KNOWING THE FACTS. IT WAS ALSO STATED THAT THE BOOK S SEIZED WERE NOT AT ALL RELATED TO ANY OF THE TRANSACTIONS OF THE ASSESSEE SOCIETY AND WERE MAINTAINED PURELY BY SHRI RAMESH BABU IN HIS PERSONAL CAPACITY. THEREFORE, THE ASSES SEE CLAIMED THAT THOSE COULD NOT BE ACCEPTED AS THE BOO KS OF ACCOUNT OF THE SOCIETY. IT ALSO RELIED UPON THE AFF IDAVIT FILED BY SHRI KT MAHI BEFORE THE ADIT, EMPHASIZING THE FACT THAT CROSS-EXAMINATION OF THESE PERSONS WOULD BEGIN A LO NG AND PROTRACTED LITIGATION, AND THEREFORE, TO AVOID LITI GATION AND HAVE PEACE OF MIND, THE INCOME WAS ADMITTED. ON A CONSID ERATION OF THE ASSESSEE'S SUBMISSIONS, THE ASSESSING OFFICE R NOTED THAT IN HIS REPLY TO QUESTION, NO.5, SHRI KT MAHI H AD STATED THAT NOTINGS WITH RESPECT TO CASH TRANSACTIONS REFL ECTED IN THE SEIZED MATERIAL ARE PRONE WITH DIFFICULTIES FOR EXP LANATION, AND EVIDENCE TO THE LEVEL DESIRED CANNOT BE ADDUCED BY HIM. ACCORDINGLY, SHRI MAHI ADMITTED RS.16.50 CRORES AS ADDITIONAL INCOME IN HIS INDIVIDUAL HANDS U/S.132(4). THE ASSE SSING OFFICER FELT THAT EVEN THOUGH SHRI MAHI ADMITTED TH E ADDITIONAL INCOME IN HIS INDIVIDUAL HANDS, APPARENTLY THE SOUR CES FOR THE SAID ADDITIONAL INCOME STEMMED FROM THE COLLEGE FEE RECEIPTS, COLLECTED OVER AND ABOVE THE PRESCRIBED FEE AS EVID ENCED BY I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 11 THE SEIZED MATERIAL. HE NOTED THAT THE SEIZED MATER IAL INDICATED THAT WHEREVER CAPITATION FEE WAS COLLECTE D IN CASH, IT WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND ONLY T HE REGULAR FEES WERE RECORDED. BESIDES, AO FELT THAT AFTER ADM ITTING PART OF THE DOCUMENT IN RESPECT OF REGULAR FEES AS CORRE CT, THE ASSESSEE COULD NOT HAVE DENIED THE REMAINING PART O F THE SAME DOCUMENT EVIDENCING RECEIPT OF CAPITATION FEE IN CASH. 2.17 SINCE THE ACTUAL AMOUNT AS PER THE SEIZED MAT ERIALS FOR THE ASSESSMENT YEARS 2005-06 TO 2010-11 CAME TO RS. 16.62 CRORES, AS AGAINST RS.16.50 CRORES, DECLARED, AND A LSO BECAUSE NO RECONCILIATION COULD BE GIVEN BY THE ASS ESSEE, THE AGGREGATE SUM OF RS.16.62 CRORES WAS ASSESSED IN TH E RESPECTIVE YEARS IN THE HANDS OF ASSESSEE. 2.18 THE ASSESSING OFFICER ALSO NOTED THAT IN VIEW OF THE EVIDENCE SEIZED, IT COULD BE CONCLUDED THAT THE CO LLECTION OF AMOUNTS OVER AND ABOVE THE PRESCRIBED FEES (CAPITATION/DONATION) IS NOT AN ISOLATED INSTANCE. HE NOTED THAT SHRI KT MAHI HAS BEEN COLLECTING AMOUNTS OVER AND A BOVE THE PRESCRIBED FEE AND THE SAME ARE BEING DEPOSITED IN THE PERSONAL BANK A/C OR BEING INVESTED IN THE PERSONAL BUSINESS OF KT MAHI. ACCORDINGLY, IT COULD BE CONCLUDED THAT THE SOCIETY WAS COLLECTING CAPITATION FEES IN THE PREVIOUS YEAR S ALSO. IN THIS REGARD, HE DREW SUPPORT FROM THE DECISION OF T HE HON'BLE AP HIGH COURT IN THE CASE OF RAJNIK & CO. VS. ACIT (251 ITR 561), WHEREIN, REFERRING TO THE DECISION IN THE CAS E OF H.M. ESUFALL (90 ITR 271), ESTIMATION OF SUPPRESSED INCO ME BASED ON PART PERIOD EVIDENCES AND SWORN DEPOSITION OF PA RTNER OF THE ASSESSEE FIRM WAS UPHELD. HE NOTE THAT EVEN IN THE CASE OF M/S BAWARCHL RESTAURANT VS. DCIT, THE HON'BLE IT AT, HYDERABAD IN THEIR ORDER IN IT(SS)A NO.117/HYD/2005 , DATED 14-7-2006 HAVE OBSERVED THAT WHEN THE ASSESSEE IS I N THE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 12 HABIT OF SUPPRESSING TURNOVER CONSISTENTLY, THE ONL Y ISSUE TO BE EXAMINED IS WHETHER THE AO'S ESTIMATION OF UNDISCL OSED TURNOVER IS FAIR, BONA FIDE AND REASONABLE. 2.19 APPLYING THE ABOVE RATIO, IN VIEW OF THE FACTS AVAILABLE IN THE ASSESSEE'S CASE REGARDING CHARGING OF CAPITATIO N FEE, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE SOCIE TY WAS INTO THE PRACTICE OF COLLECTION OF CAPITATION FEE F OR THE EARLIER YEARS ALSO. RELYING ON THE SEIZED MATERIAL, THE AVE RAGE EXCESS FEE RECEIVED WAS WORKED OUT BY HIM. IN VIEW OF THE ABOVE CONCLUSION, THE ASSESSING OFFICER ESTIMATED THE EXC ESS AMOUNT COLLECTED FOR AYS 2004-05 TO 2007-08 AS UNDE R: S. NO. ACADE- MIC YEAR AY NO. MANAG -EMENT SEATS ESTIMATED EXCESS AMOUNT COLLECTED TOTAL AMOUNT 1 2003-04 2004-05 78 1,00,000 78,00,000 2 2004-05 2005-06 77 1,50,000 1,15,50,000 3 2005-06 2006-07 4 2006-07 2007-08 115 2,50,000 2,87,50,000 5 2007-08 2008-09 130 3,00,000 3,90,00,000 2.20 SINCE THE APPROVAL U/S 10(23C) HAD ALREADY BEE N RESCINDED BY THE HONBLE DGIT (INV) BY WAY OF HIS ORDER DATED 16-12-2011, THE CLAIM OF EXEMPTION UNDER THE SAID S ECTION WAS REJECTED. IN VIEW OF THE FOREGOING DISCUSSION, THE AO CONCLUDED THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXE MPTION U/S 11 OF THE ACT ALSO AND ACCORDINGLY PROCEEDED TO ASS ESS THE ASSESSEE IN THE STATUS OF AN AOP AND PROCEEDED TO C OMPUTE THE TOTAL INCOME FOR ASST. YEARS 2004-05 TO 2010-11 AS UNDER: 2.21 ASST. YEAR 2004-05 : THE ASSESSING OFFICER NOTED THAT THE INCOME AND EXPENDITURE STATEMENT SHOWED A DEFIC IT OF RS.66,14,326/-. WHILE, THERE WAS AN ADDITION OF RS. 11,50,000/- TO THE 'CAPITAL FUND' AND 'COLLECTION OF DEVELOPMEN T FEE OF RS.64,54,100/-. IN THE ABSENCE OF ELIGIBILITY FOR E XEMPTION, HE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 13 CONCLUDED THAT THE 'CAPITAL FUND' PARTOOK THE NATUR E OF INCOME AND WAS NOT TO BE TREATED AS CAPITAL RECEIPTS. BES IDES, IN THE ABSENCE OF ANY EVIDENCE FOR THE CONTRIBUTION OF RS. 1 LAKH DEBITED TO THE INCOME AND EXPENDITURE A/C, HE DISAL LOWED THE CLAIM OF SUCH CONTRIBUTION. ACCORDINGLY, THE TOTAL INCOME WAS WORKED OUT TO RS.24,35,634/-. 2.22 ASST. YEAR 2005-06 THE AO CONSIDERED THE SURPLUS OF RS.79,37,347/-. BESIDES, IN VIEW OF THE PAYMENT OF TDS DEDUCTED FROM PAYMENTS TOWARDS CONTRACTS, RENT, PRO FESSIONAL AND CONSULTANCY CHARGES, AFTER MARCH OF THIS YEAR, THE CLAIM OF EXPENDITURE UNDER THOSE HEADS OF RS.6,33,100/-, RS. 1,51,470/- AND RS.3,25,580/- RESPECTIVELY, WERE DIS ALLOWED U/S.40(A)(IA), AFTER INCLUDING THE SURPLUS, DISALL OWANCES AND THE UNACCOUNTED INCOME, THE TOTAL INCOME WAS WORKED OUT AT RS.2,38,22,727/-. 2.23 ASST. YEAR 2006-07 : THE INCOME AND EXPENDITURE STATEMENT FOR THIS ASST. YEAR SHOWED A SURPLUS OF RS.8,37,525/-. BESIDES, IN VIEW OF THE PAYMENT OF T DS DEDUCTED FROM PAYMENTS TOWARDS CONTRACTS AND RENT, AFTER MARCH OF THE YEAR, THE CLAIM OF EXPENDITURE UNDER T HOSE HEADS OF RS.29,18,370/- AND RS.3,47,570/- RESPECTIVELY, W ERE DISALLOWED U/S.40(A)(IA), AFTER INCLUDING THE SURPL US, DISALLOWANCES AND THE UNACCOUNTED INCOME, THE TOTAL INCOME WAS WORKED OUT AT RS.2,51,58,145/-. 2.24 ASST. YEAR 2007-08 : IN THE I & E, STATEMENT, THE ASSESSEE HAD SHOWN A DEFICIT OF RS.53,20,801/-. BES IDES, IN VIEW OF THE PAYMENT OF TDS DEDUCTED FROM PAYMENTS T OWARDS CONTRACTS, RENT AND PROFESSIONAL/CONSULTANCY CHARGE S, AFTER MARCH OF THE YEAR, THE CLAIM OF EXPENDITURE UNDER T HOSE HEADS I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 14 OF RS.11,08,180/-, RS.23,22,540/- AND RS.4,50,230/- RESPECTIVELY, WERE DISALLOWED U/S.40(A)(IA), AFTER INCLUDING THE SURPLUS, DISALLOWANCES AND THE UNACCOUNTED INCOME, THE TOTAL INCOME WAS WORKED OUT AT RS.3,81,51,751/-. 2.25 ASST. YEAR 2008-09 : IN THE I &. E STATEMENT, THE ASSESSEE HAD SHOWN A DEFICIT OF RS.5,92,51,208/-. B ESIDES, IT HAD ALSO DEBITED RS.86,472/- ON ACCOUNT OF LOSS ON SALE OF VEHICLES WHICH IN HIS OPINION WAS TO BE DISALLOWED AS THE VEHICLE BEING THE CAPITAL ASSET WAS TO HAVE AN EFF ECT ON THE BLOCK OF ASSETS. CONSIDERING THESE AND THE UNACCOUN TED INCOME, THE TOTAL LOSS WAS WORKED OUT AT RS.(-) 1,9 8,64,736/-. 2.26 ASST. YEAR 2009-10 : THE INCOME AND EXPENDITURE STATEMENT FOR THIS ASST. YEAR SHOWED A SURPLUS OF RS.8,13,821/-. CONSIDERING THE SAME AND THE UNACCOU NTED INCOME, THE TOTAL INCOME WAS WORKED OUT AT RS.9,12, 58,521/-. 2.27 ASST. YEAR 2010-11 : THE INCOME AND EXPENDITURE STATEMENT FOR THIS ASST. YEAR SHOWED A SURPLUS OF RS.98,07,374/-. BESIDES, THE ASSESSING OFFICER DISA LLOWED THE CLAIM OF DONATION OF RS.2,23,409/- IN THE ABSENCE O F ANY EVIDENCE. CONSIDERING THE SAME AND THE UNACCOUNTED INCOME, THE TOTAL INCOME WAS WORKED OUT AT RS.7,04,33,683/ -. 3. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) DECIDED THE APPEALS AS UNDER: 4.1 THE CIT(A) OBSERVED THAT DURING THE APPEAL PROCEEDINGS, THE ASSESSEE REITERATED WHAT WAS STATE D BEFORE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 15 THE ASSESSING OFFICER AND SUBMITTED THAT THE HON'BL E ITAT, 'HYDERABAD 'A' BENCH HAS DECIDED ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(CENTRAL), HYDERABAD U/S.12AA(3 ) OF I.T. ACT CANCELLING THE REGISTRATION GRANTED TO THE SOCI ETY IN ASSESSEES FAVOUR AND RESTORED THE REGISTRATION GRA NTED. SINCE THE REGISTRATION WAS CANCELLED BY THE CIT(CENTRAL) ON THE BASIS OF THE FINDINGS GIVEN BY THE ASSESSING OFFICER WHIC H ARE ALSO THE BASIS FOR THE ASSESSMENT ORDER UNDER CONSIDERAT ION, THE FINDINGS OF THE HON'BLE TRIBUNAL NEED TO BE CONSIDE RED FOR FINALIZING THE INSTANT APPEAL. THE RELEVANT PORTION OF THE TRIBUNAL DECISION IS REPRODUCED HEREUNDER: 'WE HAVE ,HEARD BOTH THE PARTIES, PERUSED THE RECO RD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AS WELL AS DECISIONS CITED. IN THE CASE OF A JIT EDUCATION TRUST VS. CIT, (2010)134 TTJ (AHD) 483, THE AHMEDABAD BENCH HELD THAT 'AMENDMENT OF SUBSECTION (3) OF S. 12AA W.E.F. 1ST JUNE, 2010 SHOULD NOT BE APPLICABLE RETROSPECTIVELY AND ITS OPERATION HAS T O BE EFFECTIVE FROM THE DATE IT WAS INTRODUCED AND ONWA RDS AND THEREFORE CIT WAS NOT JUSTIFIED IN CANCELLING THE REGISTRATION GRANTED TO ASSESSEE U/S 12A, BY INVOK ING PROVISIONS OF SECTION 12AA(3) FURTHER, THE TRUST B EING AN EDUCATIONAL INSTITUTION END UNDISPUTEDLY IMPARTING EDUCATION, CANCELLATION OF REGISTRATION WAS NOT IN ACCORDANCE WITH LAW. THE SAME RATIO HAS BEEN FOLLO WED BY THE LUCKNOW BENCH OF ITAT IN THE CASE OF KAPOO R EDUCATIONAL SOCIETY VS. CIT (2010) 134 TTJ(LUCKNO W) 250. FURTHER, WE ARE OF THE OPINION THAT SRI K.T. MAHI SEEMS TO HAVE COLLECTED CAPITATION FEES ON HIS OWN WITHO UT ANY AUTHORITY OF THE SOCIETY, THEREFORE, THE SOCIETY I S NOT INVOLVED IN COLLECTION OF CAPITATION FEES IN CASH. THE ARGUMENT OF THE LEARNED DR THAT THE ACTS OF THE SE RVANT WILL BIND THE MASTER CANNOT BE APPLIED TO THE FACT S OF THE PRESENT CASE FOR THE REASON THAT SRI K.T. MAHI WAS NEVER AUTHORIZED TO COLLECT THE EXCESS CAPITATION FEES. THE AUTHORITY TO COLLECT THE EXCESS FEES SHOULD HAVE B EEN GIVEN BY THE SOCIETY AND IT IS ONLY, THEN, IT CAN BE SAID THAT THE ACTS OF THE EMPLOYEES WILL BIND THE PRINC IPAL. ANYTHING DONE BY THE EMPLOYEE BEYOND THE SCOPE OF POWERS GIVEN TO HIM WILL NOT BIND THE PRINCIPAL SO CIETY. THE CASH DEPOSITED IN THE HEAD OFFICE BY ITSELF CA NNOT I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 16 BE TREATED AS FUND COLLECTED BY THE SOCIETY. THE S AID AMOUNT HAS BEEN ASSESSED IN THE PERSONAL HANDS OF SRI K.T. MAHI AS THE COLLECTED AMOUNTS HAVE NOT REACHE D THE SOCIETY, THEREFORE, THE EXEMPTION U/S. 11 CANN OT BE DENIED. IT CANNOT ALSO BE SAID THAT THE SEIZED DOC UMENTS ON WHICH, THE ASSESSING OFFICER HAD PLACED RELIANC E CONCLUSIVELY PROVED THAT IT WAS ONLY THE SOCIETY, WHICH IS RECEIVED THE EXCESS MONEY. THE CIRCUMSTANCES ONLY SHOW THAT IT WAS SRI K.T. MAHI, WHO HAS COLLECTED EXCESS MONEY WITHOUT THE KNOWLEDGE OR THE AUTHORITY OF TH E SOCIETY. IN OTHER WORDS, NONE OF THE MONIES WERE COLLECTED BY SRI K.T. MAHI ON THE AUTHORITY OF THE SOCIETY. IN THE CASE OF CIT VS. GEETHANJALI UNIVERSITY, 21 4 TAXMAN (RAJ), IT WAS HELD THAT WHAT IS REQUIRED FO R PURPOSE OF SEEKING APPROVAL U/S 10(23)(C) IS THAT UNIVERSITY OR EDUCATION TRUST SHALL EXIST SOLELY F OR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE OF PROFIT . FURTHERMORE THOUGH THE ADMISSIONS WERE NOT IN ACCORDANCE WITH PRESCRIBED RULES STILL THE SAID VI OLATION COULD NOT BE TO ITS LOSING CHARACTER AS AN ENTITY EXISTING SOLELY FOR EDUCATIONAL PURPOSES. FOLLOWING THE RA TIOS OF THE DECISIONS AS MENTIONED ABOVE, IN THE PRESENT CASE THOUGH EXCESS FEES HAS BEEN COLLECTED BY SRI K.T. MAHI, THE SOCIETY DOES NOT LOSE ITS CHARACTER AS THE IN STITUTION WHICH IS EXISTING FOR EDUCATIONAL PURPOSES. WE ALSO FORTIFIED BY THE DECISION OF BANGALORE 'B' BENCH IN THE CASE OF SRI M.J. BALACHANDER VS. DCIT IN IT A NOS.90 TO 94/BANG/2012 AND OTHERS VIDE ORDER DATED 21-12-2012 WHEREIN SIMILAR ISSUE HAS BEEN CONSIDER ED AND THE TRIBUNAL HAS HELD THAT M.J. BALACHANDER W AS COLLECTING. (ETF) EXTRA TUITION FEES ON HIS OWN WI THOUT ANY AUTHORITY OR CONSENT OF THE SOCIETY AND THE CONCLUSION OF THE CIT WAS THAT ETF WAS COLLECTED B Y M.J. BALACHANDER ON HIS OWN AND THE SOCIETY HAS NOTHING TO DO WITH ETF COLLECTION. THE ITAT CONFIRMED THE FINDINGS OF THE CIT. IN THE PRESENT CASE, NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE SOLELY EXISTS FOR PROFIT MOTIVE. THE DEPARTMENT HAS NOT BEEN ABLE TO DISCHA RGE ITS ONUS OF SHOWING AS TO HOW THE CONDITIONS FOR G RANT OF REGISTRATION HAVE BEEN BREACHED BY THE ASSESSEE. T HE REGISTRATION HAS BEEN GRANTED TO THE SOCIETY FOR M ANY YEARS IN THE PAST UNDER THE SAME FACTS AND THERE I S NO CHANGE IN THE FACTS OR IN THE ACTIVITIES OF THE SO CIETY IN THE PRESENT YEAR. IT HAS ALSO NOT BEEN DEMONSTRATE D BY THE DEPARTMENT AS TO HOW THE OBJECT OF THE ASSESSE E HAS I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 17 TURNED INTO A COMMERCIAL ONE. THE PREDOMINANT OBJ ECT OF THE ASSESSEE IS AND REMAINS TO CARRY OUT CHARIT ABLE PURPOSE OF ADVANCEMENT OF EDUCATION AND NOT TO EAR N PROFIT. IN FACT, NO PROFIT HAS BEEN ESTABLISHED TO HAVE BEEN EARNED BY THE ASSESSEE. THE DIT HAS FAILED TO SPECIFY AS TO HOW PROFIT EARNING IS THE PREDOMINAN T ACTIVITY OF THE ASSESSEE AND THE SOCIETY HAS BEEN PURSUING ITS OBJECT OF IMPARTING EDUCATION TO STUD ENTS. THEREFORE, THE ASSESSEE-SOCIETY CANNOT BE DEPRIVED OFF OF THE BENEFIT OF REGISTRATION GRANTED BY THE DIT( E) U/S 11 OF THE ACT. BEING SO, IN OUR OPINION, REGISTRAT ION GRANTED U/S.12AA OF THE ACT CANNOT BE CANCELLED. HOWEVER, THE AFORESAID FINDINGS GIVEN BY US ARE NO THING TO DO WITH THE ALLOWABILITY OF EXEMPTION U/S.11 OF THE ACT. IN CASE ANY DISCREPANCY OR IRREGULARITY WITH REGAR D TO THE ALLOWABILITY OF U/S.11 IS NOTICED BY THE ASSESSING OFFICER, HE CAN MAKE AN INDEPENDENT ENQUIRY/EXEMPTION AT TH E TIME OF ASSESSMENT FOR EACH ASSESSMENT YEAR AND DECIDE IN ACCORDANCE WITH LAW. 4.2 THE CIT(A) OBSERVED THAT THOUGH THE HON'BLE TR IBUNAL HAS RESTORED THE REGISTRATION OF THE SOCIETY U/S. 1 2AA OF I.T. ACT, AS PER THE SAID DECISION, THE ALLOWABILITY OF EXEMPTION U/S 11 OF I.T. ACT NEEDS TO BE DECIDED ON THE FACTS OF THE CASE AS OBSERVED BY THE HON'BLE ITAT. IT MAY BE NOTED THAT THE ASSESSING OFFICER HAS CATEGORICALLY BROUGHT OUT THE DISCREPANCY/IRREGULARITY WITH REGARD TO THE ALLOWAB ILITY OF EXEMPTION U/S 11 IN THE ASSESSMENT ORDER. 4.3 THE CIT(A) AFTER ANALYSING THE ISSUE WITH RELEV ANT SECTIONS AND FOLLOWING THE DECISION OF THE JURISDIC TIONAL HIGH COURT IN THE CASE OF M/S AHURA HOLDINGS LTD. VS. DC IT REPORTED IN 2012-TIOL-357-HC-AP-IT & GOPAL LAL BADR UKA VS. DCIT 346 ITR 106, HELD AS FOLLOWS: 09.14 , IN THE PRESENT CASE, THE ASSESSING OFFICE R ESTIMATED THE SUPPRESSION OF CAPITATION FEE IN THE EARLIER YEARS ON THE BASIS OF THE INCRIMINATING SEIZED MAT ERIAL FOUND FOR ASST. YEARS 2009-10 AND 2010-11 WHICH HA S BEEN ADMITTED BY THE MANAGING TRUSTEE, SRI K.T. M AHI AS CAPITATION FEE RECEIVED BY HIM AND OFFERED IT T O TAX IN HIS HANDS. IT MAY BE NOTED THAT IN THE PRECEDING P ARAS, I I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 18 HAVE HELD THAT THE ENTIRE CAPITATION FEE RECEIVED, NEEDS TO BE CONSIDERED IN THE HANDS OF THE SOCIETY IN VI EW OF THE VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT BY THE SOCIETY AND THAT THE SOCIETY LOSES THE COVE R OF EXEMPTION U/S.11 OF THE I.T. ACT. THERE HAS BEEN INCRIMINATING MATERIAL FOR AYS 2009-10 AND 2010-11 AND SRI K.T. MAHI HAS ADMITTED TO HAVE RECEIVED CAPITA TION FEE FOR ADMISSION IN TO THE COLLEGES RUN BY THE SO CIETY NOT ONLY IN THOSE YEARS BUT ALSO IN THE PAST YEARS AND OFFERED SOME AMOUNT AS INCOME ON ACCOUNT OF UNDISCLOSED CAPITATION FEE RECEIVED BY HIM FOR EAR LIER YEARS ALSO I.E. ASST. YEARS 2004-05, 2005-06, 2007 -08 AND 2008-09. THIS SHOWS THAT COLLECTION OF CAPITA TION FEE IS NOT AN ISOLATED INSTANCE AND THIS IS NOTHIN G BUT CORROBORATIVE EVIDENCE WHICH JUSTIFIES EXTRAPOLATI ON OF SUPPRESSED INCOME IN THOSE YEARS. AS OBSERVED BY THE HON'BLE ITAT IN THE CASE OF M/S BAWARCHI RESTAURAN T VS. DCIT IN IT(SS)A.NO.117/HYD/2005 WHEN THE ASSESSEE IS IN THE HABIT OF SUPPRESSING TURNOVER CONSISTENTLY, THE ONLY ISSUE TO BE EXAMINED IS WHE THER THE ASSESSING OFFICERS ESTIMATION OF UNDISCLOSED TURNOVER IS FAIR, BONAFIDE AND REASONABLE. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS TRIED TO MAKE THE ESTIMATION AS FAIR, BONAFIDE AND REASONABLE AS POS SIBLE ON THE BASIS OF MATERIAL AVAILABLE. THEREFORE, IT IS HELD THAT THE ASSESSEE SOCIETY RECEIVED CAPITATION FEE EVEN IN THOSE YEARS ALSO AND THE ASSESSING OFFICER IS JUST IFIED BY TAKING REFERENCE TO THE NUMBER OF MANAGEMENT SE ATS OFFERED AND THE FEE COLLECTED OVER AND ABOVE THE PRESCRIBED FEE AND WORKED OUT THE LIKELY UNDISCLO SED INCOME ON THE BASIS OF THE EVIDENCE AVAILABLE FOR THE SUBSEQUENT YEARS. ACCORDINGLY, THE EXTRAPOLATION O F INCOME FOR ASST. YEARS 2004-05, 2005-06, 2007-08 A ND 2008-09 IS JUSTIFIED. SINCE THE SOCIETY DOES NOT E NJOY THE EXEMPTION COVER, THE INCOME SO ESTIMATED NEEDS TO BE ASSESSED IN THE HANDS OF THE SOCIETY AND THEREFORE , THE UNDISCLOSED INCOME ESTIMATED BY THE ASSESSING OFFI CER FOR ASST. YEARS 2004-05, 2005-06, 2007-08 AND 2008 -09 TOTALLING TO RS. 8,71,00,000/- IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEALS BEFORE US FOR THE AYS 2004-05 TO 2010-11 AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE C OMMON IN ALL THE APPEALS, EXCEPT FOR THE QUANTUM OF THE ADDI TIONS MADE: I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 19 GROUNDS OF APPEAL: 1. THE COMMISSIONER (APPEALS) HAS ERRED ON FACTS A ND IN LAW AND THE ORDER IS BAD IN LAW. 2. THE COMMISSIONER (APPEALS) OUGHT TO HAVE HELD T HAT THE SEARCH ON THE SOCIETY WAS WITHOUT PROPER JURISDICTION. THE COMMISSIONER (APPEALS) OUGHT TO HAVE HELD THAT THE AO DID NOT ACQUIRE JURISDICTION TO D O THE ASSESSMENTS AND THAT IT OUGHT TO HAVE BEEN DECLARE D A NULLITY. 3. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE ASSESSMENT UNDER THE STATUS OF AN AOP. 4. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG AN ADDITION OF RS. 78,00,000, ON ACCOUNT OF ESTIMA TED SUPPRESSION (EXTRAPOLATION) OF CAPITATION FEES, AS SOCIETY'S UNDISCLOSED INCOME. A. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE ASSUMPTION OF EXTRAPOLATION IRRESPECTIVE OF AN Y EVIDENCE FROM THE SEIZED MATERIAL. B. THE COMMISSIONER {APPEALS} HAS ERRED IN UPHOLDI NG THE INFERENCE OF THE ASSESSING OFFICER THAT THE AS SESSEE EARNED UNDISCLOSED INCOME. C. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE INFERENCE OF THE ASSESSING OFFICER THAT KT MAH I, THE TRUSTEE, COLLECTED THE CAPITATION FEE ON BEHALF OF THE SOCIETY. D. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE INFERENCE OF THE ASSESSING OFFICER THAT THE AS SESSEE WAS INTO THE PRACTICE OF COLLECTING CAPITATION FEE . E. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE INFERENCE OF THE ASSESSING OFFICER THAT THE AS SESSEE SOCIETY EXISTS NOT SOLELY FOR EDUCATIONAL PURPOSE BUT ONLY FOR PROFITS. F. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE INFERENCE OF THE ASSESSING OFFICER THAT THE SO CIETY'S FUNDS WERE UTILIZED BY THE PERSONS INTERESTED IN T HE SOCIETY IN VIOLATION OF SEC 11(5) . I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 20 G. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE INFERENCE OF THE ASSESSING OFFICER THAT THE AS SESSEE HAD VIOLATED THE PROVISIONS OF S 13(1)(C). H. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE DENIAL OF EXEMPTION U/S 11. 5. THE COMMISSIONER (APPEALS) HAS ERRED IN SUSTAIN ING DENIAL, MADE BY THE ASSESSING OFFICER, OF EXEMPTIO N U/S 10(23C). 6. THE COMMISSIONER (APPEALS) HAS ERRED IN OVERLOO KING THE WRITTEN SUBMISSIONS AND EVIDENCES WITH RESPECT TO DONATION OF CORPUS FUND OF RS.1,00,000 AND DIRECTI NG THE ASSESSING OFFICER TO VERIFY THE CLAIM. 7. THE COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDI NG THE ASSESSMENT OF TOTAL INCOME OF THE SOCIETY AT RS.24,35,634. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRED THE OBSERVATIONS OF THE TRIBUNAL, IN ITS ORDER DATED 31 JULY 2013 IN ITA NO. 564/HYD/2012, WHICH ARE AS UNDER: 13. FURTHER, WE ARE OF THE OPINION THAT SHRI K.T. MAHI SEEMS TO HAVE COLLECTED CAPITATION FEES ON HIS OWN WITHOUT ANY AUTHORITY OF THE SOCIETY, THEREFORE, T HE SOCIETY IS NOT INVOLVED IN COLLECTION OF CAPITATIO N FEES IN CASH. THE ARGUMENT OF THE LEARNED DR THAT THE ACTS OF THE SERVANT WILL BIND THE MASTER CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE FOR THE REASON THAT SHRI K.T. MAHI WAS NEVER AUTHORIZED TO COLLECT THE EXCESS CAPITATION FEES. THE AUTHORITY TO COLLECT THE EXCE SS FEES SHOULD HAVE BEEN GIVEN BY THE SOCIETY AND IT IS ON LY, THEN, IT CAN BE SAID THAT THE ACTS OF THE EMPLOYEE S WILL BIND THE PRINCIPAL. ANYTHING DONE BY THE EMPLOYEE BEYOND THE SCOPE OF POWERS GIVEN TO HIM WILL NOT B IND THE PRINCIPAL/SOCIETY. THE CASH DEPOSITED IN THE H EAD OFFICE BY ITSELF CANNOT BE TREATED AS FUND COLLECT ED BY THE SOCIETY. THE SAID AMOUNT HAS BEEN ASSESSED IN THE PERSONAL HANDS OF THE SHRI K.T. MAHI AS THE COLLEC TED AMOUNTS HAVE NOT REACHED THE SOCIETY, THEREFORE, T HE EXEMPTION U/S 11 CANNOT BE DENIED. IT CANNOT ALSO BE SAID THAT THE SEIZED DOCUMENTS, ON WHICH, THE AO H AD PLACED RELIANCE CONCLUSIVELY PROVED THAT IT WAS ON LY THE SOCIETY, WHICH IS RECEIVED THE EXCESS MONEY. THE CIRCUMSTANCES ONLY SHOW THAT IT WAS SHRI K.T. MAHI , WHO HAS COLLECTED EXCESS MONEY WITHOUT THE KNOWLEDGE O R THE AUTHORITY OF THE SOCIETY. IN OTHER WORDS, NONE OF THE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 21 MONIES WERE COLLECTED BY SHRI K.T. MAHI ON THE AUT HORITY OF THE SOCIETY. 6.1 REFERRING TO THE ABOVE OBSERVATIONS, THE LD. AR SUBMITTED THAT IN THE PRESENT CASE NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE SOLELY EXISTS FOR PROFIT MOTIVE AND THAT THE DEPARTMENT HAS NOT BEEN ABLE TO DISCHARGE ITS ONUS OF SHOWING AS TO HOW THE CONDITI ONS FOR GRANT OF REGISTRATION HAVE BEEN BREACHED BY THE ASS ESSEE. THE REGISTRATION HAS BEEN GRANTED TO THE SOCIETY FOR MA NY YEARS IN THE PAST UNDER THE SAME FACTS AND THERE IS NO CHANG E IN THE FACTS OR IN THE ACTIVITIES OF THE SOCIETY IN THE PR ESENT YEAR. HE SUBMITTED THAT IT HAS ALSO NOT BEEN DEMONSTRATED BY THE DEPARTMENT AS TO HOW THE OBJECT OF THE ASSESSEE HAS TURNED INTO A COMMERCIAL ONE. THE PREDOMINANT OBJECT OF TH E ASSESSEE IS AND REMAINS TO CARRY OUT CHARITABLE PUR POSE OF ADVANCEMENT OF EDUCATION AND NOT TO EARN PROFIT. IN FACT NO PROFIT HAS BEEN ESTABLISHED TO HAVE BEEN EARNED BY THE ASSESSEE. ACCORDING TO HIM, THE DIT HAS FAILED TO S PECIFY AS TO HOW PROFIT EARNING IS THE PREDOMINANT ACTIVITY OF T HE ASSESSEE AS THE SOCIETY HAS BEEN PURSUING ITS OBJECT OF IMPA RTING EDUCATION TO STUDENTS. THEREFORE, ACCORDING TO HIM, THE ASSESSEE SOCIETY CANNOT BE DEPRIVED OF THE BENEFIT OF REGISTRATION GRANTED BY THE DIT(E) U/S 11 OF THE AC T. BEING SO, IN HIS OPINION, REGISTRATION GRANTED U/S 12AA OF TH E ACT CANNOT BE CANCELLED. HE SUBMITTED THAT IN CONCLUSION, THE TRIBUNAL GAVE UNAMBIGUOUS AND CATEGORICAL FINDING OF FACTS T HAT: THE EXCESS AMOUNTS/CAPITATION FEES WAS COLLECTED BY SHRI K T MAHI IN HIS INDIVIDUAL CAPACITY THE SAID AMOUNTS WERE NOT COLLECTED BY THE SOCIE TY, OR UNDER ITS AUTHORITY, THAT THEY CANNOT BE ATTRIBUTED TO THE SOCIETY, THAT THEY NEVER REACHED THE SOCIETY I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 22 AND THAT THEY SHOULD BE CONSIDERED ONLY IN THE H ANDS OF SHRI K T MAHI 6.2 LD. AR SUBMITTED THAT THE ORDER OF THE COMMISSI ONER TO RESCIND THE REGISTRATION U/S 12AA WAS PASSED AFTER THE ASSESSMENT ORDER WAS PASSED AND REFERS TO THE ASSES SMENT ORDER, RELEVANT SEIZED MATERIAL AND ASSESSMENT RECO RDS EXTENSIVELY. HE SUBMITTED THAT THE FINDINGS IN THE ASSESSMENT ORDER WERE CONSIDERED AND THE ASSESSMENT ORDERS (OF THE SOCIETY AND SHRI K T MAHI) WERE PART OF THE PAPER B OOKS SUBMITTED BEFORE THE HON'BLE TRIBUNAL DURING HEARIN G OF THE APPEALS IN THE 12AA MATTER AND WERE CONSIDERED BY I T. NO NEW FACTS (OTHER THAN THOSE IN THE ASSESSMENT ORDERS) W ERE DISCOVERED OR BROUGHT OUT BY THE ASSESSING OFFICER, COMMISSIONER OR COMMISSIONER (APPEALS). HE, THEREFO RE, SUBMITTED THAT THE HON'BLE TRIBUNAL, IN THE PRESENT CASE, MAY KINDLY FOLLOW ITS OWN ORDER IN ITA NO. 564/H/12. (S UPRA). 6.3 FINALLY, THE LD. AR SUBMITTED THAT IN VIEW OF THE FINDINGS OF THE HON'BLE TRIBUNAL THAT THE SAID AMOUNTS WAS C OLLECTED BY SHRI K T MAHI AS AN INDIVIDUAL AND NEVER REACHED TH E SOCIETY, THEY COULD NOT BE ASSESSED IN THE HANDS OF THE ASSE SSEE. HE POINTED OUT THAT THE ORDER OF THE HON'BLE TRIBUNAL IN ITA NO. 564/H/12 IS BINDING ON THE HON'BLE TRIBUNAL IN THIS MATTER BECAUSE THE EARLIER ORDER IS BASED ON THE VERY SAME FACTS AND RECORDS AND THE TRIBUNAL HAS GIVEN CATEGORICAL FIND INGS WHICH ARE REQUIRED TO BE CONSIDERED IN THE PRESENT CASE. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING CASE LAWS: 1. MARUBENI CORPORATION (LIAISON OFFICE) VS JCIT 83 LTD 577 PRECEDENT-BINDING NATURE-ORDER OF TRIBUNAL-WHEN THE FACTS ARE SIMILAR, THEN THERE SHOULD NOT BE CONTRAR Y DECISION AND THE ORDER OF THE TRIBUNAL SHOULD BE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 23 FOLLOWED FOR THE SAKE OF CONSISTENCY-A DEPARTURE FR OM THIS PRINCIPLE IS NOT ORDINARILY CALLED FOR, UNLESS IT IS SHOWN THAT EARLIER DECISION WAS AN ERROR ARISING OU T OF WRONG APPLICATION OF LAW-FACT THAT THE DEPARTMENT H AD FILED FURTHER APPEAL AGAINST THE EARLIER ORDER WAS NOT A VALID GROUND FOR NOT FOLLOWING THE SAME.-CIT VS. L G. RAMAMURTHI 1977 CTR (MAD) 416 (1977) 110 ITR 453 (MAD), UNION OF INDIA VS. KAUMUDINI NARAYAN DALAL (2001)168 CTR (SC) 3: (2001) 249 ITR 219 (SC), CIT VS. AL. RAMANATHAN (2000) 159 CTR (MAD) 255: (2000) 245 ITR 494 (MAD) AND UNION OF INDIA & ORS. VS. KAMALAKSHAY FINANCE CORPN. LTD. AIR 1992 SC 711 FOLLOWED 2. CIT VS TRAVANCORE TITANIUM PRODUCTS LTD 265 ITR 526 (KERALA) 3. S SHANMUGAVEL NADAR VS STATE OF TAMIL NADU 263 ITR 658 (SC) 4. CIT VS STERLING FOODS 237 ITR 579 (SC) 5. CIT VS B R CONSTRUCTIONS 202 ITR 222 (FB) 6. AP BIDYA DEVI VS CIT 263 ITR 52 (CALCUTTA) 7. CIT VS NESTLE INDIA 83 CCH 76 (DELHI) ITA 644/ 2 012 8. CIT VS SHYAMALAL M SONI 276 ITR 156 (MP) 9. ACIT VS AFFECTION INVESTMENTS LTD 2 SORT 165 (AHMEDABAD) 10. AP STATE WAREHOUSING CORP LTD VS DCLT 41 CCH 43 (HYDERABAD) ITA 456,673,673/H/ 2014 11. DC OF WT VS ASHWIN C SHAH 82 LTD 573 (MUMBAI) 12. DCIT VS MANGAL DAYAK CHIT FUND P LTD 92 LTD 258 (HYD) 13. DCLT VS MANAGALAM CEMENT LTD 92 LTD 44 (TM) (JAIPUR) 14. MARUBENI CORPORATION (LIAISON OFFICE) VS JCIT 8 3 LTD 577 (DELHI) 15. MTNL VS AD CIT 8 SOT 376 (DELHI) 16. VENKATESHWARA FARMS P LTD VS DCLT 84 LTD 212 (PUNE) 17. DECCAN CEMENTS LTD VS DCIT 76 TIJ 691 (HYDERABAD) ITA 1983/HYD/1996 I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 24 6.4 THE LD. AR SUBMITTED THAT THE COMMISSIONER (APP EALS) OUGHT TO HAVE FOLLOWED THE FINDINGS OF THE HON'BLE TRIBUNAL. ACCORDING TO HIM, HAVING IGNORED THE FINDINGS WITHO UT ANY NEW MATERIAL OR FACTS, SHE HAS EXCEEDED HER POWERS, VIT IATING HER ORDER. IT WAS THEREFORE PRAYED THAT THE ORDER OF TH E CLT(A) CONFIRMING THE ASSESSMENT BE CANCELLED. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE RELIED ON THE FOLLOWING C ASE LAW: 1. DECCAN CEMENTS LTD. VS DCIT 76 TTJ 691(HYD) ITA 19831HYDL1996 AO COULD NOT DISALLOW THE CLAIM FOR 50 PER CENT OF THE GUEST-HOUSE EXPENSES BY WAY OF PRIMA FACIE ADJUSTME NT UNDER S. 143(1)(A) WHICH WAS BACKED BY THE DECISION OF THE TRIBUNAL INVOLVING THE VERY EXPENDITURE GIVEN I N ASSESSEE'S OWN CASE IN EARLIER YEARS PRECEDENT TRIBUNAL DECISION-BINDING NATURE- THERE I S HIERARCHY IN THE JUDICIAL SYSTEM AND THE DECISION O F THE HIGHER JUDICIAL AUTHORITY DESERVES NOT ONLY RESPECT BUT ALSO UNEQUIVOCAL COMPLIANCE AND ADHERENCE BY LOWER JUDICIAL AUTHORITIES- ORDER OF THE TRIBUNAL IS BIND ING ON THE AO AND THE FIRST APPELLATE AUTHORITY-ACTION OF CIT(A) IN NOT FOLLOWING THE TRIBUNAL'S ORDER GIVEN IN ASSE SSEE'S OWN CASE IN EARLIER YEARS, AND THAT TOO WITHOUT DISTINGUISHING THE FACTS AND TERMING IT AS RUNNING COUNTER TO THE LAW, WAS AN OUTRAGEOUS AND CONTEMPTUOUS ACT WHICH DESERVES OUTRIGHT CONDEMNATI ON AND REPRIMAND BY THE TRIBUNAL 2. MTNL VS AD CIT 8 SOT 376 (DELHI) ITA 3448 TO 345 0 /DEL/2003 A JUDGMENT DELIVERED BY THE TRIBUNAL IS BINDING ON THE AO. HE IS BOUND TO FOLLOW THE JUDGMENT OF THE TRIBU NAL IN ITS TRUE LETTER AND SPIRIT, THE AO BEING AN INFE RIOR OFFICER VIS-A-VIS THE TRIBUNAL, WAS BOUND BY THE JU DGMENT OF THE TRIBUNAL AND THEREFORE, HE SHOULD NOT HAVE T RIED TO DISTINGUISH THE SAME ON UNTENABLE GROUNDS. IT IS AL SO NECESSARY FOR THE JUDICIAL UNITY AND DISCIPLINE THA T ALL THE AUTHORITIES BELOW TRIBUNAL MUST ACCEPT AS BINDING JUDGMENT OF THE TRIBUNAL. THE CIT (A), THEREFORE, S HOULD I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 25 NOT HAVE COMMITTED ANY JUDICIAL IMPROPRIETY IN REFU SING TO FOLLOW THE ORDER OF THE TRIBUNAL. EVEN IF SHE HA D SOME RESERVATIONS ABOUT THE CORRECTNESS OF THE DECISION OF THE TRIBUNAL, SHE SHOULD HAVE FOLLOWED THAT ORDER. - BA NK OF BARODA VS. H.C. SRIVASTAVA (2002) 175 CTR (BAM) 663 : (2002) 256 ITR 385 (BOM) AND AGGARWAL WAREHOUSING & LEASING LTD. VS. CIT (2002) 177 CTR (MP) 15: (2002) 257 ITR 235 (MP) APPLIED. 3. NPAR DRUGS P LTD VS OAR 98 ITO 285 (TM) (DELHI) - IT (55) 206/DEL/2002 APPEAL (TRIBUNAL)-PRECEDENT-BINDING NATURE- TRIBUNA L IS NOT A FORMAL SOURCE OF LAW IN THE SENSE HIGH COURTS ARE- IT IS NOT A COURT OF RECORD- TRIBUNAL IS THE FINAL FACT- FINDING AUTHORITY WHILE THE ISSUE BEFORE THE HIGH C OURT COMES TO AN END ONCE A JUDGMENT IS DELIVERED AND TH E QUESTION IS NOT RAISED AGAIN, THE SAME QUESTION MAY BE RAISED AGAIN BEFORE THE TRIBUNAL IN A FRESH ASSESSM ENT- THUS, DECISION OF A BENCH OF THE TRIBUNAL, EVEN IN THE CASE OF THE SAME ASSESSEE IN A PARTICULAR ASSESSMEN T YEAR DOES NOT CONSTITUTE A BINDING PRECEDENT ON SUBSEQUENT CO- ORDINATE BENCH OF THE TRIBUNAL IN RELATION TO ANOTHER ASSESSEE OR ANOTHER ASSESSMENT YEAR OF THE SAME ASSESSEE - HOWEVER, A SUBSEQUENT BENCH CAN DRAW DIFFERENT CONCLUSION IF THERE IS ADE QUATE JUSTIFICATION TO DEPART FROM THE EARLIER VIEW, E.G. , WHERE SUBSEQUENTLY NEW OR MORE FACTS OR MATERIAL OR EVIDE NCE COME TO LIGHT-HOWEVER/IF IT IS ONLY A CASE OF DIFFE RENT OPINION BEING HELD ON THE SAME FACTS, MATERIAL AND ASPECTS ALREADY CONSIDERED, THE SUBSEQUENT BENCH SHOULD NOT PROCEED ON ITS OWN TO MAKE A CONTRARY DECISION BUT SHOULD REFER THE MATTER FOR CONSTITUTI ON OF A LARGER BENCH 4. AGRAWAL WAREHOUSING AND LEASING LTD VS CIT 257 ITR 235 (MP) 6.5 AS REGARDS ALLOWABILITY OF EXEMPTION U/S 11, TH E LD.AR SUBMITTED THAT THE HON'BLE TRIBUNAL, IN THE CLOSING PARAGRAPH OF THE AFORESAID ORDER, SAID AS UNDER: 'HOWEVER, THE AFORESAID FINDINGS GIVEN BY US ARE NO THING TO DO WITH THE ALLOWABILITY OF EXEMPTION U/S 11 OF THE ACT. IN CASE ANY DISCREPANCY OR IRREGULARITY WITH REGARD TO THE ALLOWABILITY OF EXEMPTION U/S 11 IS NOTICED BY THE AO, HE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 26 CAN MAKE AN INDEPENDENT ENQUIRY/EXAMINATION AT THE TIME OF ASSESSMENT FOR EACH ASSESSMENT YEAR AND DECIDE IN ACCORDANCE WITH LAW.' HE SUBMITTED THAT THE CIT(A) TOOK COVER UNDER THESE OBSERVATIONS TO COMPLETELY IGNORE THE CATEGORICAL F INDINGS OF THE HON'BLE TRIBUNAL GIVEN IN THE ENTIRE ORDER, AND COME TO TOTALLY CONTRARY FINDINGS. IT IS SUBMITTED THAT THE HON'BLE TRIBUNAL GAVE CATEGORICAL FINDINGS AS DESCRIBED ABO VE AND THEREAFTER SUGGESTED THAT IF THERE ARE ANY DISCREPA NCIES OR IRREGULARITIES (OTHER THAN THE FINDINGS GIVEN BY IT ), THEN THEY OUGHT TO BE CONSIDERED BY THE ASSESSING OFFICER DUR ING ASSESSMENT. THE HON'BLE TRIBUNAL COULD NOT HAVE GIV EN CATEGORICAL FINDINGS AND THEN PASSED OBSERVATIONS A LLOWING THE LOWER AUTHORITIES TO IGNORE SUCH FINDINGS WITHOUT A NY NEW EVIDENCE OR MATERIAL. 6.6 LD. AR SUBMITTED THAT EVEN FOR THE YEARS WHERE NO INCRIMINATING EVIDENCE WAS DISCOVERED DURING THE SE ARCH, THE AO HAS MADE ADDITIONS BY ESTIMATIONS, EXTRAPOLATING FIGURES FROM OTHER YEARS. IT IS SUBMITTED THAT IF THE ORIGI NAL AMOUNTS ARE NOT ASSESSABLE IN THE HANDS OF THE ASSESSEE, TH E QUESTION OF EXTRAPOLATIONS WOULD NOT ARISE. NO ESTIMATION WO ULD, THEREFORE, BE PERMISSIBLE. 6.7 LD. AR SUBMITTED THAT IN THE CASE OF THE SOCIET Y, BY THE DATE OF SEARCH, ASSESSMENTS UP TO AY 2008-09 WERE COMPLETED AND NO PROCEEDINGS WERE PENDING, OR THE TIME TO ISSUE NOTICES U/S 143(2) HAD EXPIRED. HE SUBMITTED THAT THE LAW ON THE MATTER IS THAT COMPLETED CASES ARE NOT P ERMITTED TO BE DISTURBED UNLESS THERE IS MATERIAL DISCOVERED DU RING THE SEARCH WARRANTING SUCH RECONSIDERATION. FOR THIS, H E RELIED ON THE FOLLOWING DECISION: I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 27 1. PRATAP JADEJA VS ACIT, ITA NO. 1469 TO 1475 OF 2012 ITAT HYDERABAD (AFTER CONSIDERING ALL CARGO, A ND AP HIGH COURT JUDGMNTS IN GOPAL LAL BADRUKA AND AHU RA HOLDINGS ETC.) HE SUBMITTED THAT IN VIEW OF THIS, FOR ASSESSMENT Y EAR UP TO 2008-09, NO ASSESSMENT CAN BE MADE BASED ON ESTIMAT ION WITHOUT ANY INCRIMINATING EVIDENCE BEING FOUND. 6.8 LD. AR FURTHER SUBMITTED THAT ABATED CASES WHIC H ARE OPEN FOR ASSESSMENT ARE REQUIRED TO BE ASSESSED LIK E ANY OTHER NORMAL ASSESSMENT. AS PER SETTLED LAW, THESE ASSESSMENTS SHOULD BE BASED ON RELEVANT MATERIAL WH ICH IS JUSTIFIABLE. WHEREAS IN THE PRESENT CASE, THE AO HA S MADE ADDITIONS BASED ON MATERIAL RELATED TO OTHER YEARS. HE SUBMITTED THAT EACH YEAR IS DIFFERENT AND THE AO CA NNOT RELY ON OTHER YEARS' ASSESSMENT TO MAKE AN ADDITION. FOR THIS PROPOSITION HE RELIED ON THE FOLLOWING CASES: ACIT VS GURUMUKH M JAGWANI - LAXMI INDUSTRIES, NO.ITA 1771 TO 1773 OF 2007, ITAT PUNE ACIT VS THAKKAR POPATLAL VELJI SALES LTD, ITAT MUMBAI, NO. ITA 4812,4813 AND 4845 ALL OF 2010 JB EDUCATION SOCIETY V ACIT, 55 TAXMAN.COM 322, I TA 29 TO 41 OF 2013 HYDERABAD WHERE IT WAS OBSERVED TH AT 'HELD THAT IN THE ABSENCE OF EVIDENCE OR MATERIAL INDICATING ANY SUPPRESSION ABOUT COLLECTION OF FEES TOWARDS MANAGEMENT QUOTA SEATS FOR THE ACADEMIC YEARS 2003-04 TO 2007-08 HAVING BEEN FOUND DURING SEARCH, AND THERE BEING NO ADMISSION FROM THE ASSESSEE, THE ASSESSING OFFICER WAS NOT JUSTIFIED I N ESTIMATING THE SAME ON THE MATERIALS SEIZED RELATIN G TO ACADEMIC YEARS 2008-09 AND 2009-10 INDICATING SUPPRESSION ABOUT COLLECTION OF FEES FOR MANAGEMENT SEATS, IN ASSUMING SUPPRESSED/UNACCOUNTED RECEIPTS OF FEES FOR EARLIER ASSESSMENT YEARS. THE ASSESSING OF FICER WAS DIRECTED TO QUANTIFY THE RECEIPT OF FEES FOR MANAGEMENT QUOTA SEATS, IF ANY, ON THE BASIS OF AVAILABLE SEIZED MATERIAL AS WELL AS OTHER MATERIAL , IF I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 28 ANY RELATING TO ACADEMIC YEARS 2003-04 TO 2007-08 A ND NOT ON THE BASIS OF SEIZED MATERIALS RELATING TO AC ADEMIC YEARS 2008-09 AND 2009-10. IN CIT V CONTINENTAL WAREHOUSING, 374 ITR 645, TH E MUMBAI HIGH COURT HAS DISTINGUISHED THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT V ANIL KUMA R BHATYIA, 211 TAXMAN 453 DELHI AND APPROVED THE ORDE R OF THE SPECIAL BENCH IN ALL CARGO. 6.9 THE LD. AR SUBMITTED THAT EVEN IN THE EVENTUA LITY IT IS HELD THAT ESTIMATION OF INCOME WAS PERMISSIBLE, THE ASSESSMENT ORDER CANNOT BE SUSTAINED FOR THE FOLLOW ING REASONS: THE AO HAS NOT DONE ANY INVESTIGATION INTO WHY T HERE IS NO EVIDENCE IN SOME YEARS AND IGNORED THE POSSI BILITY THAT THERE WAS NO CAPITATION FEE COLLECTED FOR THO SE YEARS. BASIS OF COMPUTATION BY AO IS NOT RATIONAL, NOT CONSIDERING REALITIES ABOUT DIFFERENT STREAMS OF EDUCATION, MAKING THE ESTIMATION ARBITRARY. WAS NOT PUT UP TO THE ASSESSEE WITHOUT SHOWING PARALLELS IN OTHER YEARS THERE IS ERRONEOUS ASSUMPTION THAT ALL MANAGEMEN T SEATS LED TO COLLECTION OF CAPITATION FEES WHICH W OULD NOT HAPPEN. 6.10 AS REGARDS THE DISALLOWANCES U/S 40(A)(IA), THE LD. AR SUBMITTED THAT IT IS NOT SUSTAINABLE IN VIEW OF T HE FOLLOWING ORDERS: ITAT ORDER IN VAISHNAVI EDUCATIONAL SOCIETY, ITA T HYDERABAD, ITA NO. WHICH RELIED UPON MAHATMA GANDH I SEVA MANDAI, ITAT MUMBAI, 21 TAXMAN.COM 321 ITA NO. 4138/MUM/2011. MAHATMA GANDHI SEVA MANDAI, ITAT MUMBAI, 21 TAXMAN.COM 321 ITA NO. 4138/MUM/2011 I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 29 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE BESIDES RELYING ON THE ORDERS OF THE REVENUE AUTHORITIES, R ELIED UPON THE FOLLOWING DECISIONS IN SUPPORT OF CONTENTION SU PPORTING THE ORDERS OF THE AUTHORITIES BELOW: 1. ITA NO. 430/HYD/08 IN CASE OF M/S VODITHALA EDUCATIONAL SOCIETY, ORDER DATED 30 TH SEPTEMBER, 2010. 2. ADITANAR EDUCATIONAL INSTITUTION VS. ADDL. CIT, 90 TAXMAN 0528 3. ITA NO. 1120/HYD/09 IN CASE OF M/S VASAVI ACADE MY OF EDUCATION, HYDERABAD, ORDER DATED 29 TH JANUARY, 2010. 4. ITA NO. 1369/HYD/2012 IN THE CASE OF M/S SAIVAN I EDUCATIONAL SOCIETY, ORDER DATED 9 TH JANUARY, 2013. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS ORDERS OF REVENUE AUTHORITIES. WE HAVE ALSO CAREFULLY GONE THROUGH TH E DECISIONS CITED. SUBSEQUENT TO SURVEY AND BASED ON THE RECOR DS FOUND BY THE REVENUE, NO DOUBT THAT THE EVIDENCE FOUND, E STABLISHES THAT ADDITIONAL FEES WAS COLLECTED BY THE PEOPLE IN VOLVED IN THE MANAGEMENT OF THE EDUCATION IN THE COLLEGE. NOW , THE QUESTION THAT ARISES IS, WHO ACTUALLY COLLECTED THE ADDITIONAL/ CAPITATION FEES. ON PERUSAL OF THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL ON THE VERY SAME SET OF FACT S, IT CLEARLY SPELT OUT THAT THE ADDITIONAL FEES WAS COLLECTED BY MR. K.T. MAHI WITHOUT CLEAR AUTHORITY OF THE SOCIETY. WITH T HE ABOVE FACTUAL FINDINGS, IT IS HELD THAT MR. K.T. MAHI HA S COLLECTED ADDITIONAL/COLLECTION FEES AND THE SAME SHOULD BE A SSESSED ONLY IN THE HANDS OF MR. MAHI. MOREOVER, THE SAME W AS ALSO ACCEPTED BY MR. MAHI AND OFFERED TO TAX VOLUNTARILY TO BUY PEACE FROM THE DEPARTMENT. IT IS IMPORTANT TO MENTI ON HERE THAT THE DEPARTMENT HAS CHOSEN TO BRING TO TAX THE SAME ADDITIONAL/CAPITATION FEES COLLECTED, BOTH IN THE H ANDS OF SOCIETY AS WELL AS IN THE HANDS OF MR. K.T. MAHI. T HE SAME AMOUNT CANNOT BE BROUGHT TO TAX IN THE HANDS OF TWO PERSONS. FROM THIS, IT IS EVIDENT THAT THE ASSESSING OFFICER IS NOT ABLE TO COME TO ANY CONCLUSION AS THE PERSON TO WHOM, THIS INCOME I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 30 BELONGS. THE SUBSTANTIVE ADDITIONS IN THE HANDS OF BOTH THE ASSESSEES ARE NOT SUSTAINABLE. SHRI K.T. MAHI HAS O FFERED THE INCOME IN HIS HANDS AND THEREFORE THE REVENUE HAD N O OPTION BUT TO ACCEPT THE RETURNED INCOME BY SHRI K.T. MAHI . SINCE, THE REVENUE HAS ACCEPTED THE INCOME OFFERED BY SHRI K.T. MAHI IN HIS HANDS, BRINGING THE SAME TO TAX IN THE HANDS OF THE SOCIETY ALSO BY MAKING ADDITION AMOUNTS TO DOUB LE TAXATION OF THE SAME AMOUNT WHICH IS NOT JUSTIFIED AS THE PRINCIPLE THAT IS APPLICABLE IN TAX STATUTES IS TH AT AN INCOME CAN BE SUBJECTED TO TAX IN THE HANDS OF ONE PERSON ONLY. THEREFORE, WE HOLD THAT THE INCOME CANNOT BE CHARGE D TO TAX IN THE HANDS OF SOCIETY AS WELL AS IN THE HANDS OF TRUSTEE CUM SECRETARY OF THE SOCIETY. 8.1 WE ARE INCLINED TO ADJUDICATE THAT THE ADDITION AL FEES COLLECTED SHOULD BE ASSESSED ONLY IN THE HANDS OF M R. MAHI AND THE SAME SHOULD BE DELETED TO BE ASSESSED IN TH E HANDS OF SOCIETY. 9. WITH REGARD TO QUANTIFICATION OF UNACCOUNTED REC EIPTS BY THE ASSESSING OFFICER, THE ASSESSING OFFICER HAD QU ANTIFIED THE SAME AT RS. 16.62 CRORES INSTEAD OF RS. 16.50 CROR ES AS ACCEPTED BY MR. MAHI. THE CALCULATION IS BASED ON T HE INVESTMENT MADE BY MR. MAHI IN HIS INDIVIDUAL NAME AS WELL AS IN HIS OWN COMPANIES AND THE MATERIAL SEIZED DURING SEARCH. AS THE ASSESSING OFFICER HAD ASSESSED THE SAME IN T HE HANDS OF MR. K.T. MAHI, THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE SOCIETY. 10. WITH REGARD TO ESTIMATION/EXTRAPOLATION OF EXCE SS AMOUNT COLLECTED FOR AY 2004-05 TO AY 2007-08 BASED ON THE ASSUMPTION OF THE ASSESSING OFFICER THAT THE ASSESS EE WAS IN THE PRACTICE OF COLLECTION OF CAPITATION FEES FOR T HE EARLIER YEARS ALSO, WE FIND THAT RELYING ON THE SEIZED MAT ERIAL, THE I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 31 AVERAGE EXCESS FEES RECEIVED WAS WORKED OUT AT RS. 3.5 LAKHS IN THE LATEST YEAR. ASSESSING OFFICER HAD ESTIMATED FOR OTHER EARLIER YEARS BY GIVING DISCOUNT OF RS. 50,000 PER YEAR AS BELOW: AY ESTIMATE NO. OF STUDENTS AMOUNT 1. 2004-05 1,00,000 78 78,00,000 2. 2005-06 1,50,000 77 115,50,000 3. 2006-07 2,00,000 - - 4. 2007-08 250,000 45 287,50,000 5. 2008-09 3,00,000 130 390,00,000 FROM THE ABOVE CALCULATION, IT IS CLEARLY ESTABLIS HED THAT ASSESSING OFFICER HAD PRESUMED THAT THE SOCIETY OR MR. MAHI HAD COLLECTED THE ABOVE SAID AMOUNT BUT COULD NOT P ROVIDE ANY COGENT MATERIAL TO SUBSTANTIATE THE ABOVE PRESUMPTI ON. HE RELIED ON THE TWO JUDGMENTS VIZ., RAJWIK & CO VS. ACIT AND M.S BAWARCHI RESTAURANT (SUPRA) TO JUSTIFY THE EXTR APOLATION. IN THE CASE OF RAJWIK, IT WAS ESTABLISHED THAT THE ASSESSEE HAD SUPPRESSED INCOME BASED AS PART PERIOD EVIDENCE S AND SWORN DEPOSITION OF PARTNER OF THE FIRM, WHICH WAS UPHELD. WHEREAS IN THE GIVEN CASE, NO DOUBT, IT WAS ESTABLI SHED THAT MR. MAHI COLLECTED EXCESS FEES BUT THE EXCESS COLLE CTION WAS NOT FOR PART PERIOD NOR HE HAD ACCEPTED IN THE SWOR N DEPOSITION ANYTHING MORE THAN RS. 16.50 CRORES. ON THE OTHER HAND, THE DECISION OF M/S BAWARCHI CAN BE APPLIED W HEN THE SITUATION ARISES FOR ESTIMATION. NOT IN THE PRESENT CASE. MOREOVER, AS PER THE RECORDS SUBMITTED BY ASSESSEE , THE ASSESSMENTS OF THE SOCIETY WERE COMPLETED UP TO AY 2008-09, NO PROCEEDINGS WERE PENDING ON THE DATE OF ASSESSME NT. BASED ON THE DECISION OF THE TRIBUNAL IN THE CASE O F PRATAP JADEJA VS. ACIT (SUPRA), ASSESSING OFFICER CANNOT DISTURB THE COMPLETED ASSESSMENTS EXCEPT WHERE THE COGENT MATER IAL PERTAINING TO THE RELEVANT AY WAS FOUND IN THE SEAR CH I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 32 PROCEEDINGS. FOR THE SAKE OF CONVENIENCE, WE REPROD UCE THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL: 9. LEARNED D.R. ON THE OTHER HAND HAS RELIED ON THE DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF GOPALLAL BH ADRUKA VS. DCIT 346 ITR 106 WHEREIN IT WAS HELD THAT FOR THE PURPOSE O F SECTION 153A/153C OF THE ACT, THE A.O. CAN TAKE INTO CONSIDERATION M ATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZURE OPERATION FOR MAKING AN ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD, THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPALLAL BHADRUKA (SUPRA) HAS ALREADY BEEN CONSIDE RED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF A CIT VS. SRINIVASA RAO (ITA.NO.1767 & 1768/HYD/2011 DATED 08.11.2013) AND THE SAME HAS BEEN FOUND TO BE DISTINGUISHABLE ON FACTS AS IN TH E SAID CASE, THE PARTNERS OF THE ASSESSEE FIRM HAD CONFIRMED THE RE CEIPT OF ON MONEY IN OTHER YEARS WHICH WAS RELIED UPON FOR MAKING TH E ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE FIRM. SINCE IN THE CASE OF B. SRINIVASA RAO (SUPRA), THERE WAS NO SUCH ADMISSION BY THE ASSESSEE, THE TRIBUNAL HELD BY RELYING INTER ALIA ON DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL BHALLA 322 ITR 19 (DEL.), ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RML MA HAPATRA 320 ITR 403 (ALL) AND HONBLE SUPREME COURT DECISION IN TH E CASE OF COMMISSIONER OF SALES TAX VS. H.M. ESUFALI H.M. AB DULALI 90 ITR 271 (SC) THAT UNDISCLOSED INCOME CANNOT BE ESTIMATED F OR THE ASSESSMENT YEAR IN QUESTION ON THE BASIS OF SEIZED MATERIAL R ELATING TO SOME OTHER ASSESSMENT YEARS. 10. THE COORDINATE BENCH OF THIS TRIBUNAL IN THE C ASE OF MR. B. SRINIVAS (SUPRA) THUS FOLLOWED THE PROPOSITION LAID DOWN BY THE SPECIAL BENCH OF THIS ITAT IN THE CASE OF ALL CARGO GLOBAL LOGIS TICS LTD., (SUPRA) WHEREIN IT WAS HELD THAT THE A.O. AS PER THE SCHEM E OF THE ACT AND AS PER SECTION 153A OF THE ACT, NO DOUBT, SHALL INITI ATE THE ASSESSMENTS FOR ALL THE SIX YEARS PRIOR TO THE ASSESSMENT YEAR IN WHICH THE SEARCH HAD TAKEN PLACE, BUT HE WILL GET THE FREE HAND ONL Y IN RESPECT OF THOSE ASSESSMENTS WHICH HAD NOT ATTAINED FINALITY ON THE DATE OF SEARCH. IT WAS HELD THAT THE PENDING ASSESSMENTS IN SUCH CASE S WILL ABATE AND THE A.O. WHILE FRAMING THE ASSESSMENT UNDER SECTIO N 153A/153C OF THE ACT WILL GET FREE HAND THROUGH ABATEMENT AND W ILL FRAME THE ASSESSMENT AFRESH. IT WAS HELD THAT WHERE PROCEEDI NGS HAVE REACHED FINALITY, THE ASSESSMENT UNDER SECTION 153A READ W ITH 143(3) HOWEVER HAS TO BE MADE AS WAS ORIGINALLY MADE/ASSESSED AND FURTHER ADDITION SHOULD BE RESTRICTED ONLY TO THE EXTENT THEY ARE S UPPORTED/JUSTIFIED BY ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 33 11. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE AR E OF THE VIEW THAT THE ASSESSING OFFICER CANNOT ESTIMATE THE UNACCOUNTED RECEIPTS FOR ALL THE ASSESSMENT YEARS B ASED ON THE MATERIAL FOUND IN THE SEARCH PROCEEDINGS RELATI NG TO A PARTICULAR AY WITHOUT ANY COGENT MATERIAL AVAILABLE FOR THE OTHER AYS AND WITHOUT ANY STATEMENT/DEPOSITION OF A NY OF THE OFFICE BEARERS OF THE SOCIETY THAT IT HAS COLLECTED ADDITIONAL FEES IN THE EARLIER YEARS ALSO. WITH REGARD TO PEND ING ASSESSMENTS WHICH ABATED IN VIEW OF THE PROVISIONS OF SECTION 153A OF THE ACT, THE ASSESSING OFFICER HAD ALREADY MADE ADDITION BASED ON THE MATERIALS SEIZED DURING THE C OURSE OF SEARCH. APART FROM THAT, REVENUE HAS NOT FOUND ANYT HING MORE TO SUGGEST THAT THE ASSESSEE HAD COLLECTED BEYOND S EIZED MATERIALS NOR IT HAS GOT ANY DEPOSITION FROM THE OF FICE BEARERS OF THE SOCIETY THAT IT HAD COLLECTED BEYOND SEIZED MATERIALS. IN THE ABSENCE OF SUCH FINDINGS, WE DELETE THE ADDITIO NS MADE BASED ON ESTIMATION OF ADDITIONAL CAPITATION FEES C OLLECTED. 12. WITH REGARD TO DISALLOWANCE U/S 40(A)(IA), AS H ELD IN THE CASE OF MAHATMA GANDHI SEVA MANDIR VS. DDIT(E) (SUP RA), SECTION 40 IS APPLICABLE ONLY WHEN DEDUCTIONS U/S 3 0-38 ARE BEING MADE IN COMPUTING INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION U/S 2 8. SIMILARLY, PROVISIONS OF SECTION 40(A) ARE NOT APPLICABLE IN C ASE OF CHARITABLE TRUST OR INSTITUTION WHERE INCOME AND EX PENDITURE IS COMPUTED IN TERMS OF SECTION 11. SIMILAR VIEW WAS E XPRESSED IN THE CASE OF VAISHNAVI EDUCATIONAL SOCIETY (SUPRA ) BY THE COORDINATE BENCH OF THIS TRIBUNAL. RESPECTFULLY FOL LOWING THE ABOVE DECISIONS, WE DELETE THE ADDITIONS MADE U/S 4 0(A)(IA) OF THE ACT. I.T.A. NO. 111 TO 117/HYD/2014 SREE EDUCATIONAL SOCIETY 34 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE UNDER CONSIDERATION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2016 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 11 TH MARCH, 2016 KV 1. SREE EDUCATIONAL SOCIETY, C/O GANDHI & GANDHI, C AS, 1002, PAIGAH PLAZA, BASHEERBAGH, HYDERABAD 500 063. 2. ACIT, CENTRAL CIRCLE 1, HYDERABAD 3. CIT(A) -I, HYDERABAD 4 CIT (CENTRAL), HYDERABAD 5 THE DR, ITAT, HYDERABAD