Sukhdev Singh, Chandigarh V. DCIT, Chandigarh

ITA 228/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86140 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: A K SOOD
• Keywords: Unexplained expenditure; Gift; Income from undisclosed sources; Search and seizure; Document seized; Charitable institution; Deemed to accrue or arise in india; Additional evidence; Reasonable cause; Capital receipt; Cancellation of registration; Documents seized
• Section: 69C; 80C; 153A; 133(6); 80G; 12A; 12AA; 131; 68; 145; 37; 12; 28; 15; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A & B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO.214/CHD/2013 (ASSESSMENT YEAR : 2003-04) THE D.C.I.T., VS. INDO GLOBAL EDUCATION FOUNDATION, CENTRAL CIRCLE I, VILLAGE ABHIPUR, TEHSIL MAJRI, CHANDIGARH. KHARAR. PAN: AAATI2838L ITA NO.226/CHD/2013 ( ASSESSMENT YEAR : 2003-04) INDO GLOBAL EDUCATION FOUNDATION, VS. THE D.C.I.T., VILLAGE ABHIPUR, TEHSIL MAJRI, CENTRAL CIRCLE I, KHARAR. CHANDIGARH. PAN: AAATI2838L ITA NO.215/CHD/2013 (ASSESSMENT YEAR : 2004-05) THE D.C.I.T., VS. INDO GLOBAL EDUCATION FOUNDATION, CENTRAL CIRCLE I, VILLAGE ABHIPUR, TEHSIL MAJRI, CHANDIGARH. KHARAR. PAN: AAATI2838L ITA NO.227/CHD/2013 (ASSESSMENT YEAR : 2009-10) INDO GLOBAL EDUCATION FOUNDATION, VS. THE D.C.I.T., VILLAGE ABHIPUR, TEHSIL MAJRI, CENTRAL CIRCLE I, KHARAR. CHANDIGARH. PAN: AAATI2838L ITA NO.213/CHD/2012 (UNDER SECTION 12AA OF THE ACT) INDO GLOBAL EDUCATION FOUNDATION, VS. THE C.I.T.(CENTRAL), VILLAGE ABHIPUR, TEHSIL MAJRI, GURGAON. KHARAR. PAN: AAATI2838L 2 AND ITA NO.228/CHD/2013 ( ASSESSMENT YEAR : 2009-10) SUKHDEV SINGH, VS. THE D.C.I.T., H.NO.244, SECTOR 16-A, CENTRAL CIRCLE I, CHANDIGARH. CHANDIGARH. PAN: ABWPS0274R (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SUDHIR SEHGAL & A.K.SOOD RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 22.12.2014 DATE OF PRONOUNCEMENT : 22.01.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS ORDER SHALL DISPOSE OFF ALL THE ABOVE APPEALS HAVING CONNECTED ISSUES. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BE LOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. ALL T HE APPEALS ARE DECIDED AS UNDER : ITA NO.226/CHD/2014 (ASSESSMENT YEAR 2003-04) (ASSESSEES APPEAL) : & ITA NO.214/CHD/2014 (ASSESSMENT YEAR 2003-04) (REVENUES APPEAL) : 3. BOTH THESE CROSS APPEALS ARE DIRECTED AGAINST TH E ORDER 3 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CEN TRAL), GURGAON DATED 17.12.2012 FOR ASSESSMENT YEAR 2003-0 4. 4. IN THE APPEAL OF THE ASSESSEE, GROUND NOS.1 AND 2 ARE GENERAL, THEREFORE, THE SAME ARE DISMISSED. 5. GROUND NO.3 AND 4 OF THE APPEAL OF THE ASSESSEE READS AS UNDER: 3. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL ) HAS ERRED IN CONFIRMING THE ADDITION OF CORPUS FUND COLLECTED FROM 39 PERSONS AS INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME ON A CCOUNT OF CASH CREDITS U/S 68 OF THE INCOME TAX ACT. 1961 WHERE AS THE SAID AMOUNT IS SUPPORTED BY PROPER RECEIPT MENTIONING NA ME, ADDRESS AND PAN OF THE DONOR AND IS A CAPITAL RECEIPT ON ACCO UNT OF CORPUS FUND RECEIVED WITH SPECIFIC INSTRUCTIONS OF A CAPITAL FUND AND HAS ALREADY BEEN SHOWN AS AN INCOME. 4. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL) H AS ERRED IN CONFIRMING THE ADDITION OF CORPUS FUND COLLECTED FROM TWO PRIVATE LIMITED COMPANIES AMOUNTING TO RS 20.00 LACS AS INCO ME OF THE ASSESSEE ON THE BASIS OF UNCONFIRMED FACTS EVEN IGN ORING AND NOT ACCEPTING THE ADDITIONAL EVIDENCE IN THE FORM OF BA NK STATEMENTS OF THE TWO COMPANIES FILED BEFORE HER AT THE TIME OF A PPELLATE PROCEEDINGS TREATING IT AS UNDISCLOSED INCOME ON ACCOUN T OF CASH CREDITS U/S 68 OF THE INCOME TAX ACT. 1961 WHERE AS THE SAID AMOUNT IS SUPPORTED BY PROPER RECEIPT MENTIONING NAME , ADDRESS AND PAN OF THE DONOR AND IS A CAPITAL RECEIPT ON ACC OUNT OF CORPUS FUND RECEIVED WITH SPECIFIC INSTRUCTIONS OF A CAPITAL FUND AND HAS ALREADY BEEN SHOWN AS AN INCOME. 6. GROUND NO.1 OF THE DEPARTMENTAL APPEAL IS CONNEC TED WITH GROUND NOS.3 AND 4 OF ASSESSEES APPEAL. THE SAME WOULD READ AS UNDER : (I) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN LAW AND ON FACTS IN PARTLY DELETING THE ADDITION 4 OF RS. 1,63,54,699/- MADE U/S 68 OF IT ACT, 1961 ON AC COUNT OF ADDITION TO CORPUS FUND BASED ON CERTAIN INCOMPLETE C ONFIRMATION WHEN THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE DONATIONS AND SAME WERE WITHOUT ANY SPECIFIC DIRECTI ONS IN VIOLATION OF SECTION 11(1)(D)? 7. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT I N THIS CASE SEARCH UNDER SECTION 132(1) OF THE ACT WAS CONDUCTE D ON M/S INDO GLOBAL EDUCATION FOUNDATION GROUP OF CASES ON 15.7.2008. IN RESPONSE TO NOTICE UNDER SECTION 15 3A OF THE ACT, THE ASSESSEE FILED THE RETURN DECLARING THE IN COME AT NIL. THE ASSESSEE CLAIMED INCOME EXEMPTION UNDER SECTION 12A AND 10(23C) OF THE ACT. EXEMPTION UNDER SECTION 8 0G OF THE ACT HAS ALSO BEEN CLAIMED ON DONATIONS. THE ASSES SING OFFICER, HOWEVER, COMPLETED THE ASSESSMENT UNDER SE CTION 153A OF THE ACT COMPUTING THE INCOME AT RS.1,76,81, 798/- ON 31.12.2010. THE ASSESSEE SOCIETY IS CHARITABLE TRU ST REGISTERED UNDER SOCIETIES ACT ON 6.8.2002 WITH THE REGISTRAR OF SOCIETIES, PUNJAB. THE ASSESSEE IS ALSO REGIST ERED UNDER SECTION 12AA OF THE ACT VIDE ORDER OF THE COMMISSIO NER OF INCOME TAX-II, DATED 17.1.2003 EFFECTIVE RETROSPECT IVELY FROM 12.6.2002. THE REGISTRATION UNDER SECTION 80G OF T HE ACT HAS ALSO BEEN GRANTED VIDE ORDER DATED 20.4.2005 AND WA S ALSO APPROVED UNDER SECTION 10(23C) VIDE ORDER DATED 27. 2.2007 OF CHIEF COMMISSIONER OF INCOME TAX, CHANDIGARH. THE ASSESSING OFFICER MADE ADDITION OF RS.1,63,54,699/- UNDER SECTION 68 OF THE ACT CONSIDERING THE UNEXPLAINED I NCOME. IT IS SEEN FROM THE IMPUGNED ORDER THAT THE ASSESSEE H AS SHOWN RS.1,63,54,967/-AS ADDITION TO THE CAPITAL FUND. TH E ASSESSING OFFICER HAS THEREAFTER GIVEN A DESCRIPTIO N OF THE 5 DOCUMENTS SEIZED. PAGES 5-14 OF ANNEXURE D-2 CONTAI NED THE DETAILS OF THE AMOUNT RECEIVED BY THE ASSESSEE FROM VARIOUS PEOPLE AS DONATION/ CORPUS FUND FOR THE FINANCIAL Y EARS 2002-03 AND 2003-04. FURTHER AT THE END OF THE SEI ZED LIST ON EACH PAGE, THE TOTAL OF THESE AMOUNTS HAVE BEEN CAL CULATED ALONG WITH A FIGURE WHICH IS 2% OF THE TOTAL AMOUNT . DOCUMENT AT PAGE 35 OF ANNEXURE D-2 CONTAINS DETAILS OF CHEQ UE / D.D RECEIVED ON VARIOUS DATES AS DONATION / CORPUS FUND . NOTING AT THE TOP OF THE PAGE MENTIONS DELIVERED 25,00,000 /-. AT THE BOTTOM OF THE PAGE, THE TOTAL AMOUNT AS PER THE CAL CULATIONS IS RS.32,99,000/-. DOCUMENT AT PAGE 41 OF ANNEXURE D-2 CONTAIN DETAILS OF CHEQUE / DD RECEIVED ON VARIOUS DATES AS DONATION / CORPUS FUND. NOTING AT THE RIGHT HAND SIDE OF THE PAGE SHOWS AN AMOUNT OF RS.65,980/- WRITTEN AGAINST 'COM MISSION 80G'. AT THE TOP OF THE LIST ON PAGE 45, THE TOTAL OF THESE AMOUNTS I.E. RS.41,37,500/- HAS BEEN CALCULATED ALONG WITH A FIGURE I.E. RS.82,750/- WHICH IS 2% OF THE TOTAL AM OUNT. IN THIS BACKDROP, AFTER CONFRONTING THE DOCUMENTS AS W ELL AS THE RESPONSE TO THE NOTICES ISSUED UNDER SECTION 133(6) TO ASSESSEE, THE DONATIONS WERE TREATED AS UNEXPLAINED AND COMMISSION @2% ON THE AMOUNTS OF DONATION WAS TREAT ED AS UNEXPLAINED EXPENDITURE. 8. THE STAND OF THE ASSESSEE INTER-ALIA WAS THAT : ALL THE TRANSACTIONS HAVE BEEN ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS. THIS WAS THE FIRST YEAR OF THE SOCIETY AND THE ON LY ACTIVITY DURING THE YEAR WAS CONSTRUCTION OF BUILDING AND OTHER INFRASTRUCT URE FACILITIES. PERSONS WERE DEPUTED FOR COLLECTION OF DONATIONS FOR THE CAUSE OF THE SOCIETY. THE CONCERNED PERSONS COLLECTED THE DONATIONS ALONGWITH 6 DETAILS OF DONORS AND SUBMITTED THEIR DETAILS BY CLAIM ING 2% AS THE COLLECTION CHARGES. THE SOCIETY IS A CHARITABLE OR GANIZATION AND SO THE SAID COMMISSION AS CLAIMED BY THE CONCERNED PERSONS WAS NEVER PAID TO THEM. AS REGARDS THE NOTICES U/S 133(6) ISSUED TO VARIOUS PERSONS ON TEST CHECK BASIS TO ASCERTAIN THE GENUINENESS OF THE DON ATIONS, IT WAS STATED THAT ONLY 5 OF THE PERSONS DENIED MAKING THE DONATIONS WHILE 106 CAME BACK UN-SERVED. THAT THE DONATIONS PERTAIN ED TO 08 YEARS AGO AND THE DONORS MAY HAVE DIED / LEFT COUNTRY ETC. HO WEVER, 90 CONFIRMATIONS WERE STATED FILED VIDE THEIR LETTERS DA TED 23.12.2010 AND 2.12.2010. AS REGARDS THE TWO COMPANIES M/S NISHANT FINVEST PVT. LTD. AND M /S SHOBER ASSOCIATES PVT. LTD., NEGATING THE REPORT OF TH E COMMISSION ISSUED U/S 131, IT WAS STATED THAT THE DONATIONS WA S THROUGH ACCOUNT PAYEE CHEQUES DATED 06.03.2003 OF RS. 10 LACS EAC H AND WERE ACTIVE COMPANIES AS EVIDENT FROM THE PARTICULARS DO WNLOADED FROM THE WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS. 9. WRITTEN SUBMISSION OF THE ASSESSEE WAS FORWARDED TO THE ASSESSING OFFICER FOR HIS SPECIFIC COMMENTS REGARDI NG THE RESULT OF CROSS VERIFICATION OF THE DONATIONS MADE TO THE CORPUS FUND CARRIED OUT UNDER SECTION 133(6) OF THE ACT. THE ASSESSING OFFICER IN THE REMAND REPORT SUBMITTED AS UNDER : THAT, THE SEIZED DOCUMENTS SEIZED DOCUMENTS PAGES 5-1 4 OF ANNEXURE D-2 CONTAINED DETAILS OF THE AMOUNTS RECEIVED BY INDO GLOBAL EDUCATION FOUNDATION FROM VARIOUS PEOPLE AS DONATION / CORPUS FUND FOR THE FINANCIAL YEARS 2002-03 AND 2003-04, WHICH WERE CONF RONTED TO THE ASSESSEE THROUGH SHOW-CAUSE NOTICE. .... THESE DOCUMENTS CLEARLY SHOWED THAT 2% COMMISSION HAS BEEN PAID TO ARRANGE DONATIONS. IT WOULD BE PERTINENT TO MENTION THAT THE ASSESSEE IN ITS REPLY HAD VIRTUALLY ACCEPTED THE PAY MENT OF 2% OF COMMISSION. FURTHER AS ADMITTED BY THE ASSESSEE ITSELF ALL THE. ENTRIES ON THESE PAGES ARE ACCOUNTED FOR IN THE BOOKS OF TH E ASSESSEE. HENCE THESE FIGURES OF 2% AND 80G ARE NOT ISOLATED FIGURE S IN THE DOCUMENTS. AT SOME PLACES '80G' 'COMMISSION DELHI' IS WRITTEN AND ALSO NAME OF SOME CA IS WRITTEN. FURTHER, SEIZED DOCUMENTS PAGE NO. 1 & 2 OF ANNEXURE D-2 ARE PHOTOCOPIES OF TWO CHEQUES DATED 06.03.2003 OF RS. 10 LACS EACH IN 7 FAVOUR OF INDO GLOBAL EDUCATION FROM M/S NISHANT FI NVEST PVT. LTD. AND M/S SHOBER ASSOCIATES; PVT. LTD. AN INDEPENDENT ENQUI RY WAS CARRIED OUT THROUGH DC1T, CIRCLE I, FAHDAHAD AND THE INSPECT OR OF INCOME TAX SO DEPUTED, REPORTED THAT THE SAID COMPANIES ARE NOT EXISTING AT THE RELEVANT ADDRESS FOR THE LAST 15-20 YEARS. ON CONF RONTING, THE ASSESSEE STATED THAT THESE DONATIONS WERE RECEIVED THROUGH AC COUNT PAYEE CHEQUES AND THE COMPANIES MIGHT HAVE SHIFTED THEIR PREMISES. THE ASSESSES ENCLOSED THE DETAILS OF THESE COMPANIES FRO M WEBSITE OF MINISTRY OF CORPORATE AFFAIRS. IT WAS NOTICED THAT THE PAID UP CAPITAL OF M/S SOBER ASSOCIATES PVT. LTD. IS RS. 45,00,000/- AND THE DON ATION WAS TO THE TUNE OF RS. 10,00,000/-, HENCE THE DONATION OF SUCH HUGE AMOUNT BY UNKNOWN ENTITY WHOSE OWN EXISTENCE IS DOUBTFUL WAS NOT ACCEPTED, IN RESPECT OF M/S NISHGNT FINVEST IT IS SEEN THAT THE COMPANY IS IN DE FAULT OF FILING OF FORM DIN 3/FORM 32 AND HENCE DETAILS OF DIRECTORS ARE NOT AVAILABLE. IT WAS ALSO NOTED THAT DONATION FROM BOTH T HE COMPANIES WAS ON THE SAME DAY I.E. 06.03.2003 AND FROM THE SAME B ANK THE RESULT/FINDINGS OF THE RESPONSE TO THE REQUISIT ION U/S 133(6) AS TABULATED BY THE AO IS REPRODUCED BELOW : S.NO. PARTICULARS 1 TOTAL NUMBER OF LETTER SENT 272 2. DONATIONS CONFIRMED 140 3. DONATIONS DENIED 5 4. NO REPLY 11 5 ___ REPLY SEEKING CLARIFICATION 10 6. NOTICES U/S 133(6) RECEIVED BACK UN-SERVED. 106 IN THIS CONNECTION, THE AO MENTIONED THAT VIDE LETT ER DATED 23.12.2010 AND 27.12.2010 THE ASSESSEE FILED DETAILS IN RESPECT OF 106 PERSONS, WHICH INCLUDED CONFIRMATIONS LETTERS IN RESPECT OF 83 PERSONS. IT WAS STATED THAT THE REST OF THE PERSONS HAVE EITHER MOVED OUT OF THE PRESENT ADDRES S OR HAVE EXPIRED. THAT DURING THE COURSE OF HEARING W.R.T. THE NOTICE S, THE ASSESSEE ARGUED AS THE MATTER WAS VERY OLD, SOME PERSONS MIGHT HAVE SH IFTED, EXPIRED AND IN SOME CASE THE ADDRESS MAY NOT BE PROPER. IT WAS THEREFOR E CONCLUDED BY THE AO THAT IN SHORT THESE PEOPLE ARE NOT LOCATABLE AT THEIR PRESE NT ADDRESSES AND WERE DIFFICULT TO TRACE. THAT, IT IS IMPORTANT TO NOTE THAT THE PERSO NS TO WHOM THE NOTICES WERE ISSUED ARE FROM ABOUT THREE DISTRICTS OF PUNJAB AND IN SOME CASES THESE PERSONS 8 WERE FROM REMOTE AREAS. ON ONE HAND THE ASSESSEE SA YS THE PERSONS ARE DIFFICULT TO LOCATE ON THE OTHER HAND THE ASSESSEE IS ABLE TO LOCATE THEM IN A SHORT SPAN AND ABLE TO PRODUCE CONFIRMATION ALONGWITH DETAILS OF T HEIR RETURNS, FILES ETC. THIS INDICATED THAT THESE DONATIONS HAVE BEEN MANAGED ME TICULOUSLY TO INTRODUCE BOGUS CORPUS/ CAPITAL FUND, ARRANGED THROUGH 'ENTRY OPERA TOR'. 10. THE ASSESSEE IN THE REJOINDER SUBMITTED AS UND ER : 1. THE SOCIETY RECEIVED CORPUS DONATIONS TOTAL AMOUNTI NG TO RS.1,63,54,699/- IN A.Y. 2003-04 AND 2,84,70,952/- IN THE A.Y. 2004- 05 FROM THE DONORS FOR THE CONSTRUCTION OF BUILDIN G. 2. ANONYMOUS DONATIONS WERE EYEN ALLOWED UP TO THE Y EAR 2007 YET ALL THE DONATIONS RECEIVED FROM DONORS ARE SUPPORTED BY RECEIPTS ISSUED TO THE DONORS ALONG WITH THEIR NAME ADDRESS A ND PAN NUMBER . MOST OF THE DONATIONS ARE RECEIVED THROUGH CHEQUE S AND DRAFTS. 3. DOCUMENTS MARKED 5-14 OF ANNEXURE D-2 SEIZED, REPRESENTED ROUGH WORKING MENTIONING NAME AND ADDRESSES OF PERSO NS ALONG WITH AMOUNT DONATED BY EACH PERSON. 4 ALL THE SAID DONATIONS ARE ACCOUNTED FOR IN THE B OOKS OF ACCOUNTS. THESE ROUGH WORKING WERE SUBMITTED BY THE MEMBERS OF THE MANAGING COMMITTEE ENTRUSTED WITH THE COLLECTION OF FU NDS, A NOMINAL AMOUNT OF 2%OFTHETOTALAMOUNT COLLECTED BY TH EM WERE CLAIMED AS COLLECTION CHARGES. IN THE ABSENCE OF A NY VOUCHERS THE SAID COLLECTION CHARGES WERE NEVER PAID TO ANY B ODY EXCEPT FOR CLAIMED BY THEM AGAINST REGULAR VOUCHERS. 5 THAT ADDITIONS WERE MADE THOUGH NO SPECIFIC DEFE CTS IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE SOCIETY WAS POINT ED OUT. 6. IT IS AMPLY CLEAR THAT OUT OF 272 PERSONS TO WH OM NOTICES WERE ISSUED U/S 133(6), ONLY 5 PERSONS HAVE IN FACT DENIED MAKING PAYMENT OF DONATIONS. THE DEPARTMENT HAS ISSUED NO TICES TO THESE PERSONS WITHOUT MENTIONING THE AMOUNT AND PERIOD OF DONATION. IN THE ABSENCE OF ANY DETAILS ONLY 5 PERSONS HAVE DENIED THE TRANSACTION MAY BE BECAUSE THE AMOU NT WAS LESS AND THE PERIOD TO WHICH THE TRANSACTION BELONGED WA S MORE THAN 8 YEARS OLD . 7. WE HAD PRODUCED BEFORE THE ASSESSING OFFICER REC EIPTS ISSUED TO THOSE PERSONS WHEREBY THEY HAVE MENTIONED THEIR PAN N UMBERS AND HAVE COUNTERSIGNED THE RECEIPTS IN THEIR OWN HAND WRIT ING FOR MAKING PAYMENT. 8. MOST OF THE PERSONS MAKING THE DONATIONS HAVE CLAIMED DED UCTIONS U/S 80C IN THEIR INCOME TAX RETURNS. 9. AS REGARDS THE NATURE OF THE DONATIONS, IT WAS STATED THAT THE DONATION RECEIPTS FILED BEFORE THE AO MENTION THAT S UCH DONATIONS ARE FOR THE CORPUS OF THE SOCIETY. 9 11. THE LEARNED CIT (APPEALS) CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, EVIDENCES AND MATE RIAL ON RECORD DELETED THE SUBSTANTIAL ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE PARTLY ON THESE GROUNDS. HIS FIND INGS IN THE APPELLATE ORDER IN PARAS 5.5 TO 5.7 ARE REPRODUCED AS UNDER : 5.5 1 HAVE CAREFULLY CONSIDERED THE ASSESSEE'S SUB MISSIONS, THE IMPUGNED ASSESSMENT ORDER AS WELL AS THE REMAND REP ORT WITH ITS ENCLOSURES AND THE REJOINDER OF THE ASSESSEE. THE AO HAS PASSED THE IMPUGNED ORDER CONSEQUENT TO THE SEARCH AND SEIZURE OPERATION CONDUCTED ON 15.7.2008 BY THE INVESTIGATION WING, I N THE COURSE OF WHICH CERTAIN DOCUMENTS WERE FOUND AND SEIZED. THE COPIES OF THE SCANNED SEIZED PAPERS HAVE BEEN AFFIXED ON THE MAIN BODY OF THE ORDER. THERE ARE SOME UNDISPUTED FACTS. DOCUMENTS S EIZED CONTAINED VARIOUS DATES ON WHICH CHEQUES\DDS WERE RECEIVED WITH A MENTION OF 2% AT THE END OF THE PAPER. IT IS ALSO UNDISPUTED THA T THESE AMOUNTS HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND THE DONATION RECEIVED DIRECTLY REFLECTED IN THE BALANCE SHEET UN DER 'CAPITAL FUND'. HENCE IT WAS THE AO'S CASE THAT THOUGH THE DONATION AMOUNT OF RS. 1,63,54,967/- HAVE BEEN METICULOUSLY SHOWN IN THE BOO KS, THE SAME WERE NOT GENUINE. IN ADDITION, AS THE SAID AMOUNT HA VE BEEN CREDITED IN THE BALANCE SHEET THE DONATIONS WERE TO BE WITH A SPECIFIC DIRECTION AS TO FORM PART OF THE CORPUS, WHICH WAS NOT SO IN T HE INSTANT CASE. ON THE OTHER HAND THE ASSESSEE'S ARGUMENT WAS THAT DURING THE YEAR THE SOCIETY WAS INVOLVED IN THE PROCESS OF CONSTRUC TION OF BUILDING/ INFRA STRUCTURE FOR ESTABLISHING A COLLEGE AND SO THERE W ERE NO ADMISSIONS. THAT, THE DONATIONS WERE CORPUS DONATIO NS FOR CONSTRUCTION OF THE BUILDING AND THAT NO COMMISSION/CO LLECTION CHARGES, OTHER THAN AGAINST REGULAR VOUCHERS, WERE P AID TO THE CONCERNED PERSONS TOWARDS THEIR EFFORTS IN COLLECTING THE DONATIONS. 5.6 AS EVIDENT FROM THE IMPUGNED ORDER, THE ENTIRE DONATION OF RS.1,63,54,699/- HAS BEEN ADDED AS INCOME OF THE AS SESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS RUNNING AN EDUCATION AL INSTITUTE AS PER THE AIMS AND OBJECTS OF THE SOCIETY. IT IS ALSO NOT IN DISPUTE THAT THE 10 ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT AND THE SA ME HAVE NOT BEEN REJECTED U/S 145 BY THE AO. THE DONATIONS HAVE BEEN DULY ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS IS ALSO A FACT. THUS IN THIS BACKDROP, WITH NO ADMISSIONS UNDERWAY DURING THE YEAR, IT IS DISCERNIBLE THAT THE DONATIONS HAVE BEEN UTILISED F OR CONSTRUCTION OF THE COLLEGE BUILDING AND OTHER INFRA-STRUCTURE FACILITIE S. NO EVIDENCE HAVE BEEN FOUND OR LED BY THE AO AS REGARDS ANY UNA CCOUNTED DONATIONS OR DIVERSION OF THE FUNDS. IN OTHER WORDS , IT IS NOT A CASE WHERE EVEN A PART OF THE DONATIONS CREDITED IN THE B ALANCE SHEET HAVE BEEN FOUND UTILISED BY THE MEMBERS/PROMOTERS OF THE SOCIETY FOR THEIR OWN PERSONAL PURPOSE OR FOR ACTIVITIES OTHER THAN CHARITABLE PURPOSE. 5.7 THE ASSESSEE ALSO POINTED OUT THAT ANONYMOUS DO NATIONS WERE ALLOWED UPTO THE YEAR 2007, BUT IN THIS CASE THE AO SOUGHT TO MAKE FURTHER ENQUIRIES BY ISSUANCE OF REQUISITIONS U/S 133( 6). THE ASSESSEE HAD ALSO CONTENDED THAT THE DONATIONS HAVE BEEN MAI NLY RECEIVED BY CHEQUE/DRAFT AND MOST OF SUCH PERSONS HAVE EVEN CLA IMED DEDUCTIONS UNDER SECTION 80G IN THEIR RESPECTIVE IN COME TAX RETURNS. THAT ALL THE RECEIPTS WHICH WERE FOUND DURING THE S EARCH OPERATIONS, BEAR THE NAMES, ADDRESSES, PAN NUMBERS AND IN THE CASE OF CASH RECEIPTS, IT CONTAINED THE SIGNATURES ACKNOWLEDGING THE PAYMEN T, AS, MADE TOWARDS THE CORPUS FUND. THESE HAVE NOT BEEN CONTROVERTED B Y THE ASSESSING OFFICER. HOWEVER, IT WILL BE IN THE FITNESS OF THINGS TO EXAMINE THE OUTCOME OF THE VARIOUS RESPONSES TO THE REQUISITIONS. 1 AM INCLINED TO REFER TO THE CHART REPRODUCED AT PARA 5.3, TO WHICH ON INCLUDING THE CONFIRMATIONS FURNISHED SUBSEQUENTLY. THE PERSONS WH O HAVE DENIED DONATIONS (5 PERSONS) AS WELL AS NO-REPLY CASES (11 CASES) DESERVE TO BE DISALLOWED. SIMILARLY WHERE PERSONS HAVE BEEN STATED TO HAVE MOVED OUT OR EXPIRED WILL HAVE TO BE DISALLOWED TOO. BENEFIT OF DOUBT CAN GIVEN FOR THE 10 PERSONS SEEKING CLARIFICATIONS AS THE REQUISITION LETTER WAS NOT VERY CLEAR AS TO THE PERIOD UNDER QUERY. NO W COMING TO THE 106 CASES OF NOTICES U/S 133 (6)COMING BACK UN-SERV ED, IT IS SEEN THAT THE ASSESSEE ON BEING CONFRONTED WERE ABLE TO PROCURE CONFIRMATIONS IN 83 CASES WHICH WERE FILED ON 23.12. 2010 AND 27.12.2010. NO DOUBT AS STATED BY THE AO, IF THE AS SESSEE COULD COLLECT THE CONFIRMATIONS IN A SHORT WHILE, IT WOUL D IMPLY THAT THE 11 WHEREABOUTS OF THE PERSONS WERE KNOWN TO HIM SO THE QUESTION OF NOT HAVING FURNISHED THE PROPER AND CORRECT ADDRESS AT THE FIRST INSTANCE SHOULD NOT HAVE ARISEN. BE THAT AS IT MAY, AS CONFIRMATIONS HAD BEEN FILED BEFORE THE AO, ADVERSE REFERENCE IS N OT BEING DRAWN. HOWEVER, IN RESPECT OF THE BALANCE 23 CASES, THE CO NTENTION OF THE ASSESSEE THAT THE PERSONS HAVE EITHER LEFT THE COUN TRY OR HAVE DIED NOT BE ACCEPTABLE. AN EXERCISE HAD BEEN CARRIED OUT BY THE AO, BUT CONSIDERING THE OUTCOME AS DISCUSSED ABOVE, 1 AM OF THE CONSIDERED VIEW THAT THE FACTOR OF PROBABILITIES CANNOT BE APPLIE D TO THE ENTIRE DONATED FUNDS. HENCE, ONLY THE DISALLOWANCE TO THE EXTENT OF AMOUNTS DONATED BY THE 39 PERSONS, AS HIGHLIGHTED A BOVE, IS CONFIRMED AS RECEIPTS FROM UNEXPLAINED SOURCES TO BE TAXED U/S 6 8. THE AO IS DIRECTED TO WORK OUT THE AMOUNT INVOLVED. SO TO THIS LIMITED EXTENT, THE PAR T-ISSUE IS SET ASIDE. 5.7.1 IN THE CASE OF THE TWO COMPANIES, THERE AR E SPECIFIC FINDINGS BASED ON THE ENQUIRY REPORT OF THE LNSPECT OR OF INCOME-TAX THAT THE COMPANIES DID NOT EXIST IN THE GIVEN ADDRE SS SINCE LAST 10- 15 YEARS. IMPORTANTLY ON CONFRONTING, THE ASSESSEE MERELY PROVIDED THE DOWNLOADS FROM THE WEBSITE OF THE MINISTRY OF C ORPORATE AFFAIRS. THESE DOCUMENTS DOWNLOADED WERE EXAMINED BY THE AO WHO CAME TO A SPECIFIC FINDING THAT IN THE CASE OF M/S NISHANT (SUP RA), THE CREDITWORTHINESS WAS NOT PROVED AND IN THE CASE OF M/S SHOBER (SUPRA), THE DIRECTORS WERE NOT AVAILABLE. THE ADDR ESS OF M/S SOBER IS IN A RESIDENTIAL AREA VIZ. MUNIRKA DDA FLATS. HENCE, IT CAN BE RIGHTLY AND SAFELY PRESUMED THAT THE ASSESSEE HAS NOT DISCH ARGED THE INITIAL ONUS OF DEMONSTRATING THE IDENTITY, GENUINEN ESS AND CREDITWORTHINESS OF THESE TWO COMPANIES. EVE N IN APPEAL, NO DOCUMENTS TO FURTHER SUBSTANTIATE THE GENUINENESS O F THE TRANSACTION HAVE BEEN PROVIDED. 5.7.2 THE ASSESSEE FURNISHED COPIES OF BANK ACCOUNT STATEMENTS OF THE TWO COMPANIES. NO DOUBT IT IS TH E ASSESSEE'S CASE THAT THESE BANK STATEMENTS WERE IMP ORTANT PIECE OF EVIDENCE FOR ARRIVING AT A JUST DECISION SHOUL D BE CONSIDERED, PLACING RELIANCE IN THE CASE OF M/S MUKTA METAL AS REPORTED IN 335 1TR 555. HOWEVER, 1 FIND THAT THE SE BANK 12 STATEMENTS WERE NOT FURNISHED BEFORE THE LD AO. IT W AS NOT EVEN PART OF THE ASSESSEE'S WRITTEN SUBMISSIONS WHI CH WERE REMANDED. I ALSO FIND THAT THERE WAS SUFFICIENT OPP ORTUNITY DURING THE ASSESSMENT STAGE FOR THE ASSESSEE TO HAV E FURNISHED THE COPIES OF THE BANK STATEMENTS., BE TH AT AS IT MAY, A BARE READING OF THE RULE 46A SHOWS THAT THE ASSESS EE IS NOT ENTITLED TO PRODUCE ADDITIONAL EVIDENCE UNTIL ONE O F THE CONDITIONS SPELT OUT IN CLS. (A) TO (D) OF SUB RULE (1) OF RULE 46A OF THE RULES IS SATISFIED. THUS THE ASSESSEE CANNOT ADDUCE ADDITIONAL EVIDENCE UNLESS IT ESTABLISHES THAT IT FAL LS WITHIN THE EXCEPTIONAL CLAUSES, AS PRESCRIBED IN RULE 46A. IN THIS CASE, THE ASSESSEE HAS NOT INDICATED THE EXCEPTIONAL CLAUSE UNDER WHICH HE WAS TAKING REFUGE. HENCE, CONSIDERING THE FAC TUAL MATRIX, THE SUBMISSION THAT THE BANK STATEMENTS DURIN G APPEAL PROCEEDINGS, WHICH WERE NOT MADE AVAILABLE DURING TH E ASSESSMENT PROCEEDINGS CANNOT BE ACCEPTED AS ADDITI ONAL EVIDENCE AS THE ASSESSEE CANNOT BE SAID TO HAVE BEE N PREVENTED FROM SUFFICIENT AND REASONABLE CAUSE IN PR ODUCING THE SAME EARLIER. 5.7.3 AS PER PROVISIONS OF SECTION 68, IF THE ASSE SSEE IS UNABLE TO GIVE SATISFACTORY EXPLANATION IN RESPECT OF ANY S UM IS FOUND CREDITED IN THE BOOKS OF ACCOUNTS, THE SAME-CAN BE T REATED AS UNDISCLOSED INCOME. HENCE I AM INCLINED TO SUSTAIN THE ACTION OF THE AO IN TREATING THE AMOUNT OF RS. 20,00,000/- INCLUDED IN RS.L,63,54,699/- AS UNEXPLAINED. 12. THE LEARNED COUNSEL FOR ASSESSEE REITERATED TH E SUBMISSION MADE BEFORE THE AUTHORITIES BELOW. HE H AS REFERRED TO ONE OF THE NOTICES UNDER SECTION 133(6) OF THE ACT ISSUED BY THE ASSESSING OFFICER TO ONE OF THE DONOR S (PB-25) AND SUBMITTED THAT IN THE SAID NOTICE THE ASSESSING OFFICER HAS NOT MENTIONED ANY YEAR OF DONATION AND ANY AMOU NT, SO IT WAS VAGUE NOTICE AND POSSIBLY SOME PERSONS WOULD NO T HAVE 13 BEEN ABLE TO RESPOND TO THE NOTICE OF THE ASSESSING OFFICER IN BETTER WAY. HE HAS REFERRED TO PB-146 WHICH IS ON E OF THE REPLIES FILED BY THE DONOR SHRI HARBIR SINGH, IN WH ICH HE HAS EXPLAINED THAT THE PERIOD IS NOT CLEAR. THEREFORE , HE HAS EXPLAINED THAT NO DONATION HAS BEEN GIVEN. PB-147 IS RECEIPT IN THE CASE OF SHRI HARBIR SINGH HAVING HIS PAN NUM BER AS WELL AS SIGNATURE ON THE RECEIPT. ANOTHER REPLY O F THE DONOR MS. GURVINDER KAUR IS FILED AT PB-148 WHO HAS ALSO EXPLAINED THAT THE PERIOD IS NOT EXPLAINED IN THE NOTICE AND AS FAR AS HER KNOWLEDGE SHE HAS NOT GIVEN ANY DONATION TO THE ASS ESSEE. RECEIPT OF DONATION PB-149 IS HAVING HER PAN NUMBER AND SIGNATURE ON THE RECEIPT. PB-150 IS THE REPLY OF THE DONOR SHRI TARA SINGH ON THE SAME LINE AND THE RECEIPT IN THIS CASE IS PB-151 HAVING PAN NUMBER AND SIGNATURE OF THE DO NOR. PB-152 IS THE REPLY OF THE DONOR SHRI NARJIT SINGH ON THE SAME LINE THAT NO ASSESSMENT YEAR IS MENTIONED IN THE NO TICE OF ASSESSING OFFICER. THE LEARNED COUNSEL FOR ASSESS EE HAS MENTIONED MANY OF SUCH RECEIPTS IN THE PAPER BOOK. THE LEARNED COUNSEL FOR ASSESSEE ALSO REFERRED TO PB-26 WHICH IS A LIST OF 23 PERSONS WHERE NO NOTICES HAVE BEEN SERVE D IN RESPECT OF THE AMOUNT OF RS.3,69,000/-, WHICH IS SU PPORTED BY THE DONATION RECEIPTS HAVING THEIR PAN NUMBERS ON T HE RECEIPTS, SIGNATURE WHEN CASH IS GIVEN AND IN OTHER CASES, DONATIONS ARE GIVEN BY CHEQUES OR DRAFTS. THE DETA ILS ARE FILED AT PAGES 27 TO 49 OF THE PAPER BOOK. PB-50 IS THE LIST OF 5 PERSONS WHO HAVE DENIED DONATION AND THEIR REPLIES ON THE DONATION RECEIPTS ARE FILED AT PB-51 TO 60. THE L EARNED COUNSEL FOR ASSESSEE ALSO SUBMITTED THAT IT IS ADMI TTED FACT 14 THAT NO ADMISSION WAS MADE DURING THE ASSESSMENT YE AR UNDER APPEAL TO ANY OF THE EDUCATIONAL COURSES BECA USE CONSTRUCTION OF THE BUILDING WAS GOING ON AND IT IS ALSO ADMITTED FACT THAT MORE THAN 85% OF THE RECEIPTS HA VE BEEN SPENT ON CONSTRUCTION ACTIVITIES FOR ACHIEVING THE AIMS AND OBJECTS OF THE ASSESSEE. THEREFORE, NO ADDITION IS JUSTIFIED PARTICULARLY WHEN NO ANONYMOUS DONATION WAS PROHIBI TED OR TO BE TAXED UNDER THE INCOME TAX ACT IN THE ASSESSM ENT YEAR UNDER APPEAL. IT IS SUBMITTED THAT THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY DIRECTLY FROM THE DONORS AND O NLY NOTICES UNDER SECTION 133(6) OF THE ACT HAVE BEEN I SSUED, WHICH ARE SUBSTANTIALLY CONFIRMED BY THE CONCERNED PARTIES/DONORS. 12.1 IN RESPECT OF DONATIONS RECEIVED FROM TWO COMPANIES, HE HAS REFERRED PB-21 AND 22 OF THE PAPE R BOOK WHICH ARE THE DETAILS OF THE COMPANIES WHO HAVE GIV EN DONATIONS TO THE ASSESSEE. PB-23 AND 24 ARE COPIE S OF THE BANK ACCOUNTS TO SHOW THAT BOTH THE COMPANIES HAVE SUFFICIENT MEANS TO GIVE DONATIONS TO THE ASSESSEE AND THE CHEQUES ARE CLEARED THROUGH BANKING CHANNELS. PB- 132 IS THE CHEQUE OF THE DONATION AMOUNT. PB-133-140 ARE RESOLUTIONS OF THE COMPANIES TO GIVE DONATION TO TH E ASSESSEE. PB-130 WAS WRITTEN SUBMISSION BEFORE THE LEARNED CI T (APPEALS) EXPLAINING THE REASONS FOR NOT FILING THE BANK ACCOUNTS OF BOTH THE COMPANIES BEFORE THE ASSESSING OFFICER IN WHICH IT WAS EXPLAINED THAT DUE TO SUFFICIENT CA USE, SOME BANK ACCOUNTS WERE NOT PRODUCED. IT WAS SUBMITTE D THAT 15 DUE TO CHANGE OF THE ADDRESS OF THE COMPANIES, THE BANK ACCOUNTS WERE NOT FILED AND RELIED UPON THE DECISIO N OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MUKTA METAL WORKS, 336 ITR 555 (P&H) AND THE DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF TEK RAM (DEAD THROUGH LRS) VS. CIT, 357 ITR 133 (SC). THE LEARNED COUNS EL FOR ASSESSEE, THEREFORE, SUBMITTED THAT SINCE SUFFICIEN T EVIDENCE AND MATERIAL WERE PRODUCED BEFORE THE AUTHORITIES B ELOW TO PROVE THE GENUINENESS OF THE DONATIONS IN THE MATTE R AND DONATIONS ARE SPENT ON CONSTRUCTION OF THE EDUCATIO NAL BUILDING, THEREFORE, THE ADDITION WAS WHOLLY UNJUST IFIED. 13. ON THE OTHER HAND, THE LEARNED D.R FOR THE REV ENUE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND REFERRED TO PB-65 TO 70 TO SHOW THAT FOR LESSER AMOUNT RECEIPTS HAVE BEEN ISSUED TO THE STUDENTS AND PB-5 TO 15 ARE THE SEIZE D PAPERS TO SHOW THAT 2% COMMISSION HAVE BEEN PAID, WHICH WOULD SHOW THAT THE DONATIONS ARE ARRANGED AND MANAGED AFFAIRS OF THE ASSESSEE AND, THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE ENTIRE DONATIONS. THE LEARNED D.R FOR THE REVENUE ALSO REFERRED TO PARA 12 OF THE ORDER OF TH E ASSESSING OFFICER IN SUPPORT OF HIS CONTENTION. THE LEARNED D.R FOR THE REVENUE ALSO SUBMITTED THAT MERELY BECAUSE NO ADMIS SION WAS TAKEN IN THE ACADEMIC YEAR DURING THE ASSESSMENT YE AR UNDER APPEAL TO ANY EDUCATIONAL COURSE IS NO GROUND TO DE LETE THE ADDITION. HE RELIED UPON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE 219 CTR 185. THE L EARNED D.R FOR THE REVENUE ALSO SUBMITTED THAT THE ADDITIO NAL 16 EVIDENCE WAS RIGHTLY REJECTED BY THE LEARNED CIT (A PPEALS) IN RESPECT OF THE TWO COMPANIES WHO HAVE GIVEN DONATIO NS TO THE ASSESSEE. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE AND THE LEARNED CIT (APPEALS) HAS REPRODUCED THE CHART ABOVE TO SHOW THE RESPONSE OF THE PARTIES TO THE REQUISITION ISSUED UNDER SECTION 133 (6) OF THE ACT. IT IS NOT IN DISPUTE THAT DURING THE YEAR TH E ASSESSEE WAS INVOLVED IN THE PROCESS OF CONSTRUCTION OF BUILDING/INFRASTRUCTURE FOR ESTABLISHING EDUCATIONA L INSTITUTION AND SO THERE WERE NO ADMISSIONS. THE DONATIONS WERE CORPUS DONATIONS FOR CONSTRUCTION OF THE BUILD ING. IT IS ALSO NOT IN DISPUTE THAT THE AIMS AND OBJECTS OF TH E ASSESSEE SOCIETY ARE FOR RUNNING THE EDUCATIONAL INSTITUTION . IT IS ALSO NOT IN DISPUTE THAT THE BOOKS OF ACCOUNT OF THE ASS ESSEE HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER UNDER SE CTION 145 OF THE ACT. THE DONATIONS HAVE BEEN DULY ACCOUNTE D FOR IN THE REGULAR BOOKS OF ACCOUNT. IT WAS ALSO NOTICED BY THE LEARNED CIT (APPEALS) FROM RECORD THAT THE DONATION S HAVE BEEN UTILIZED FOR CONSTRUCTION OF EDUCATIONAL BUILD ING AND OTHER INFRASTRUCTURE FACILITIES. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH OF ANY UNACCOUNTED DONATIONS O R DIVERSION OF ANY FUNDS. IT IS ALSO NOT IN DISPUTE THAT SECTION 115BBC WAS INSERTED IN THE INCOME TAX ACT W.E.F. 1. 4.2007, ACCORDING TO WHICH ANONYMOUS DONATIONS COULD BE TAX ED IN CERTAIN CASES OF EDUCATIONAL INSTITUTION W.E.F. 1.4 .2007. IT WOULD, THEREFORE, LEAD TO INFERENCE THAT PRIOR TO T HAT EVEN 17 ANONYMOUS DONATION WAS NOT SUBJECTED TO TAX. IT IS NOT IN DISPUTE THAT DURING THE COURSE OF SEARCH THE RECEIP TS WHICH WERE FOUND BEAR NAMES, ADDRESSES, PAN NUMBERS OF DO NORS AND IN CASE OF CASH RECEIPTS, IT CONTAINED THE SIGN ATURE OF THE DONORS ACKNOWLEDGING THE PAYMENT, AS MADE TOWARDS T HE CORPUS FUND. THE DETAILS CONTAINED IN THE RECEIPTS HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. COPY OF THE NOTICE UNDER SECTION 133(6) OF THE ACT IS FILED IN THE PAPER BOOK AT PAGE 25, IN WHICH THE ASSESSING OFFICER HAS NOT MENTIONED ANY DETAIL IN RESPECT OF ANY PARTICULAR A SSESSMENT YEAR OR AMOUNT IN QUESTION. IT WAS THUS A VAGUE N OTICE. PB- 146 IS A LETTER OF ONE OF THE DONORS SHRI HARBIR SI NGH TO THE ASSESSING OFFICER, IN WHICH THE DONOR ALSO CLAIMED THAT THE PERIOD OF DONATION IS NOT CLEAR AND, THEREFORE, ACC ORDING TO HIS KNOWLEDGE HE STATED THAT NO DONATIONS HAVE BEEN GIV EN. THE DONATION RECEIPT IS FILED AT PAGE 147 OF THE PAPER BOOK, WHICH, HOWEVER, CONTAINED HIS PAN NUMBER AND HIS SIGNATURE . SIMILAR REPLIES ARE FILED IN THE PAPER BOOK AT PAGE S 148 TO 153 WITH RECEIPTS IN RESPECT OF DONOR MS.GURVINDER KAUR , SHRI TARA SINGH AND SHRI NARJEET SINGH. IT WILL, THERE FORE, CLEARLY SHOW THAT THE DONORS WERE ALSO MISLED BY VAGUE NOTI CE ISSUED BY THE ASSESSING OFFICER, OTHERWISE, THEY WOULD HAV E BEEN IN A BETTER POSITION TO MAKE PROPER REPLIES BEFORE THE A SSESSING OFFICER, HAD THE COMPLETE INFORMATION PROVIDED IN T HE NOTICE BY THE ASSESSING OFFICER UNDER SECTION 133(6) OF TH E ACT. PB- 26 IS THE LIST OF CORPUS DONATIONS FROM 23 PERSONS WHERE NOTICES UNDER SECTION 133(6) OF THE ACT WERE RECEIV ED BACK AS UN-SERVED IN A SUM OF RS.3,69,000/-. THIS LIST IS SUPPORTED 18 BY THE DONATION RECEIPTS ON PB-27 TO 49 AND IN ALL THE RECEIPTS WHEREVER DONATION IS GIVEN IN CASH, PAN NUMBERS AND SIGNATURE OF THE DONORS ARE MENTIONED, IN OTHER REC EIPTS, THE DONATIONS ARE GIVEN BY CHEQUES OR/BANK DRAFTS HAVE THE PAN NUMBER OF THE DONOR ALSO. PB-50 IS THE LIST OF 5 PERSONS WHO HAVE DENIED TO HAVE GIVEN ANY DONATION TO THE ASSES SEE BUT THEIR RECEIPTS ARE HAVING PAN NUMBERS OF THE DONORS AND THEIR SIGNATURE. THE ASSESSING OFFICER EXCEPT ISSUING N OTICE UNDER SECTION 133(6) OF THE ACT, HAS NOT MADE ANY ENQUIRY FROM THE DONORS. SINCE DURING THE COURSE OF SEARCH THE DON ORS RECEIPTS WERE FOUND, WHICH CONTAINED NAMES, ADDRESS ES AND PAN NUMBERS OF THE DONORS ALONGWITH THE DETAILS OF MODE OF DONATIONS AND CONFIRMATIONS OF THE DONORS ALSO FILE D DIRECTLY TO THE ASSESSING OFFICER WHO HAVE GIVEN DONATIONS T O THE ASSESSEE, WOULD PROVE THE DONATIONS WERE GENUINE AN D HAVE BEEN APPLIED BY THE ASSESSEE AS CORPUS FOR RAISING CONSTRUCTION OF EDUCATIONAL BUILDING. IT IS, THUS ADMITTED FACT THAT EXCEPT FOR 39 CASES, REMAINING DONORS HAVE CON FIRMED THE DONATION TO THE ASSESSEE DIRECTLY TO THE ASSESSING OFFICER IN THEIR REPLIES UNDER SECTION 133(6) OF THE ACT. TH E LEARNED CIT (APPEALS) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT THE DONATIONS ARE GENUINE IN THE CASE OF THE ASSESSEE A ND HAS CORRECTLY DELETED A SUBSTANTIAL ADDITION. THE DEP ARTMENTAL APPEAL THUS HAS NO MERIT AND IS LIABLE TO BE DISMIS SED. AS FAR AS THE REMAINING AMOUNT DONATED BY 39 PERSONS A RE CONCERNED, 23 CASES ARE WHERE THE CONFIRMATIONS HAV E NOT BEEN FILED FROM THE DONORS AND IN CASE OF 11 DONORS , NO REPLIES HAVE BEEN RECEIVED AND IN THE CASE OF 5 DON ORS, THEY 19 HAVE DENIED THE DONATIONS. HOWEVER, THE AUTHORITI ES BELOW FAILED TO NOTE THAT IN THEIR CASES ALSO, SIMILAR DO NATIONS RECEIPTS WERE PRODUCED ON RECORD AND THE AMOUNTS OF DONATIONS ARE VERY SMALL IN THEIR CASES AND IN ALL THE RECEIPTS THEIR PAN NUMBERS HAVE BEEN MENTIONED AND THE SOURC ES ARE ALSO MOSTLY THE CHEQUES OR DRAFTS. THE AUTHORITIES BELOW INSTEAD OF REJECTING THE CONTENTION OF THE ASSESSEE IN THESE CASES SHOULD HAVE VERIFIED THE FACT FROM THE INCOME TAX RECORDS AS THEIR SPECIFIC PAN NUMBERS HAVE BEEN GIV EN IN THE DONATION RECEIPTS. AS NOTED ABOVE, WHEN THE SUBST ANTIAL DONATIONS HAVE BEEN PROVED BY THE ASSESSEE AND IN T HE CASES OF SMALL PETTY DONATIONS, THE DONORS ARE ASSESSED T O TAX, INSTEAD OF REJECTING THE CLAIM OF THE ASSESSEE THE FACTS SHOULD HAVE BEEN VERIFIED FROM THE RECORD OF THE INCOME TA X DEPARTMENT. THE HON'BLE SUPREME COURT IN THE CASE CIT VS. ORISSA CORPORATION P. LTD., 159 ITR 78 HELD AS UNDE R : HELD, THAT IN THIS CASE THE RESPONDENT HAD GIVEN T HE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITOR S WERE INCOME-TAX ASSESSES. THEIR INDEX NUMBERS WERE IN T HE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING N OTICES UNDER SECTION 131 AT THE INSTANCE OF THE RESPONDENT , DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NO T EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CR EDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CRED ITORS. IN THOSE CIRCUMSTANCES THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES, IF THE TRIBUNA L CAME TO THE CONCLUSION THAT THE RESPONDENT HAD DISCHARGED T HE BURDEN THAT LAY ON IT, THEN IT COULD NOT BE SAID TH AT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO 20 EVIDENCE. IF THE CONCLUSION WAS BASED ON SOME EVID ENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUEST ION OF LAW AS SUCH AROSE. THE HIGH COURT WAS RIGHT IN RE FUSING TO STATE A CASE 15. THE HON'BLE SUPREME COURT IN THE CASE CIT VS. BHARAT ENGINEERING & CONSTRUCTION CO., 83 ITR 187 H ELD AS UNDER : HELD, THAT THE INFERENCE DRAWN FROM THE FACTS PROV ED WAS A QUESTION OF FACT AND THE TRIBUNALS FINDING ON TH AT QUESTION WAS FINAL. A CONSTRUCTION COMPANY TOOK TI ME TO EARN PROFITS AND IT COULD NOT HAVE EARNED A HUGE PR OFIT WITHIN A FEW DAYS AFTER THE COMMENCEMENT OF ITS BUS INESS. HENCE, IT WAS REASONABLE TO ASSUME THAT THE CASH CR EDIT ENTRIES REPRESENTED CAPITAL RECEIPTS THOUGH FOR ONE REASON OR ANOTHER THE ASSESSEE HAD NOT COME OUT WITH THE T RUE STORY AS REGARDS THE SOURCE OF THE RECEIPTS. 16. THE ASSESSEE IS REGISTERED UNDER SOCIETIES ACT ON 6.8.2002 AND REGISTERED UNDER SECTION 12AA OF THE A CT BY COMMISSIONER OF INCOME TAX ON 17.1.2003. APPROVAL UNDER SECTION 80G OF THE ACT IS GRANTED ON 20.4.2005. NO ADMISSION WAS DONE TO ANY EDUCATIONAL COURSE IN ASSESSMENT YE AR. SO NO INCOME IS EARNED BY THE ASSESSEE. HOW THE ASSES SEE WILL EARN UNDISCLOSED INCOME IN THESE YEARS. THE WHOLE FINDINGS OF THE ASSESSING OFFICER ARE, THEREFORE, LIABLE TO BE SET ASIDE. FURTHER NO ADDITIONS ARE MADE IN ASSESSMENT YEARS 2 005-06 TO 2008-09 ON SIMILAR TYPE DONATIONS. RULE OF CONSIST ENCY SHOULD BE FOLLOWED BY THE ASSESSING OFFICER. FURT HER IT IS ALSO NOT IN DISPUTE THAT MORE THAN 85% OF THE CORPU S AMOUNTS HAVE BEEN SPENT ON CONSTRUCTION OF EDUCATIONAL BUIL DING, 21 WHICH IS ALSO ADMITTED BY THE LEARNED CIT (APPEALS) IN PARA 5.6 OF THE APPELLATE ORDER, WOULD PROVE THAT EVEN I F IT WAS ANONYMOUS DONATIONS, IT FORMS PART OF CORPUS AND HA VE BEEN UTILIZED FOR THE PURPOSE OF CONSTRUCTION OF THE BUI LDING AND WAS THUS SPENT FOR ACHIEVING AIMS AND OBJECTS OF AS SESSEE SOCIETY AND AS SUCH SHOULD NOT HAVE BEEN SUBJECTED TO ADDITION IN THE CASE OF THE ASSESSEE. THE ASSESSE E ALSO CLAIMED THAT THE DONORS, WHO HAVE GIVEN DONATIONS T O THE ASSESSEE HAVE CLAIMED DEDUCTION UNDER SECTION 80G O F THE ACT IN THE RETURNS OF INCOME. THE SAID FACT IS ALSO NOT VERIFIED BY THE ASSESSING OFFICER FROM THE INCOME TAX RECORD S OF THOSE CONCERNED DONORS. THE DEFINITION OF ANONYMOUS DON ATIONS AS PROVIDED IN SECTION 115BBC(3) OF THE ACT MEANS ANY VOLUNTARY CONTRIBUTION, WHERE A PERSON RECEIVING SUCH CONTRIB UTION DOES NOT MAINTAIN A RECORD OF IDENTITY INDICATING NAME A ND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTH ER PARTICULARS AS MAY BE PRESCRIBED. HOWEVER, IN THE CASE OF THE ASSESSEE SUCH DETAILS HAVE BEEN MAINTAINED BY THE A SSESSEE, THEREFORE, COULD NOT BE EVEN TERMED AS ANONYMOUS DO NATIONS. 17. CONSIDERING THE ABOVE IN THE LIGHT OF THE OVERWHELMING EVIDENCES AVAILABLE ON RECORD, THE LEA RNED CIT (APPEALS) SHOULD NOT HAVE SUSTAINED THE ADDITION EV EN IN THE REMAINING 39 CASES. THE ORDERS OF THE AUTHORITIE S BELOW ARE, THEREFORE, LIABLE TO BE SET ASIDE EVEN FOR MAKING P ART ADDITION AGAINST THE ASSESSEE. 18. AS FAR AS ADDITIONS OF RS.20 LACS IN RESPECT O F TWO COMPANIES ARE CONCERNED, THE ASSESSEE FILED COMPLET E DETAILS 22 OF THE DIRECTORS AND SHAREHOLDINGS PATTERN OF BOTH THE COMPANIES. THE BOARD OF RESOLUTIONS IN THE CASES OF BOTH THE COMPANIES ARE FILED THAT THESE COMPANIES ARE AUTHOR IZED TO MAKE DONATION TO THE ASSESSEE. BOTH THE COMPANIES HAVE ADMITTEDLY MADE DONATIONS TO THE ASSESSEE THROUGH C HEQUES AND BOTH DONATIONS CHEQUES WERE CLEARED THROUGH BA NKING CHANNEL. THE AUTHORITIES BELOW MERELY BECAUSE NO BANK ACCOUNT IS FILED IN THE CASES OF BOTH THE COMPANIES , HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE CREDITW ORTHINESS OF THE DONOR COMPANIES. THE ASSESSEE, HOWEVER, F ILED COPIES OF THEIR BANK ACCOUNTS BEFORE THE AUTHORITY BELOW A ND WRITTEN SUBMISSION WAS FILED AT PB-130 ENCLOSING COPIES OF THEIR BANK STATEMENTS TO SHOW THAT THE DONATIONS HAVE BEEN MAD E THROUGH BANKING CHANNEL. IT WAS ALSO EXPLAINED TH AT THESE STATEMENTS WERE NOT AVAILABLE TO THE ASSESSEE AND N O CASH HAVE BEEN DEPOSITED IN THEIR ACCOUNTS FOR MAKING DO NATIONS. IT WAS HELD THAT THE DONORS DID NOT EXIST AT GIVEN ADDRESSES. THE LEARNED CIT (APPEALS), HOWEVER, DID NOT ACCEPT THIS ADDITIONAL EVIDENCE BECAUSE NO CASE UNDER RULE 46A OF THE INCOME TAX RULES HAS BEEN MADE OUT. THE LEARNED C IT (APPEALS) NOTED THAT NO EXCEPTIONAL REASONS HAVE BE EN EXPLAINED FOR FILING ADDITIONAL EVIDENCE BEFORE HIM . THE LEARNED CIT (APPEALS) FAILED TO NOTE THAT WHEN THE ASSESSING OFFICER HAS GIVEN OBSERVATION THAT THESE TWO COMPAN IES DID NOT EXIST AT THE GIVEN ADDRESSES, WOULD PROVE THAT EVEN THE ASSESSEE IS NOT ABLE TO LOCATE THE DONORS AT GIVEN ADDRESSES AND AS SUCH, IT WAS DIFFICULT TO OBTAIN COPIES OF T HEIR BANK STATEMENTS FROM THEM. IF THESE WOULD NOT HAVE EXC EPTIONAL 23 REASONS FOR NOT HAVING BANK STATEMENTS AT THE STAGE OF ASSESSMENT, WE FAIL TO UNDERSTAND PROPER MEANING OF EXCEPTIONAL CIRCUMSTANCES. SINCE THE ASSESSEE WA S NOT ABLE TO TRACE OUT THE DONOR COMPANIES AT THE GIVEN ADDRE SSES AND THE ASSESSING OFFICER WAS ALSO NOT ABLE TO SERVE NO TICES UNDER SECTION 133(6) OF THE ACT UPON THESE PARTIES AT THE IR GIVEN ADDRESSES, WOULD PROVE THAT THE ASSESSEE WAS PREVEN TED BY SUFFICIENT CAUSE FROM PRODUCING COPIES OF THEIR BAN K STATEMENTS AT ASSESSMENT STAGE. THE LEARNED CIT ( APPEALS), THEREFORE, INSTEAD OF REJECTING THE CLAIM OF THE AS SESSEE OF ADMISSION OF BANK STATEMENTS AS ADDITIONAL EVIDENCE SHOULD HAVE ADMITTED HIS ADDITIONAL EVIDENCE AT THE APPELL ATE STAGE. IN THE CASE OF TEK RAM (DEAD THROUGH LRS.)(SUPRA), THE HON'BLE SUPREME COURT FINDING THE DOCUMENTS OF SOME RELEVANCE AND SHOULD BE LOOKED INTO BY THE HIGH COU RT RESTORED THE MATTER TO THE FILE OF THE HIGH COURT F OR FRESH DISPOSAL. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MUKTA METAL WORKS (SUPRA) HELD THAT WHEN AD DITIONAL EVIDENCES ARE NECESSARY IN DECIDING THE CASE, IT IS THE DUTY OF THE TRIBUNAL TO CONSIDER THE ADDITIONAL EVIDENCES. THE BANK STATEMENTS OF THE DONOR COMPANIES ARE NECESSARY FOR JUST DECISION IN THE MATTER. WE, THEREFORE, ADMIT THE COPIES OF THE BANK STATEMENTS AS ADDITIONAL EVIDENCE FOR DOING JU STICE BETWEEN THE PARTIES AS RELEVANT TO THE MATTER IN CO NTROVERSY. THE COPIES OF THE BANK STATEMENTS FILED IN THE PAPE R BOOK AT PAGES 23 AND 24 WOULD PROVE THAT THE DONATION CHEQU ES HAVE BEEN CLEARED THROUGH BANKING CHANNEL AND BOTH THE D ONORS ARE HAVING SUFFICIENT BANK BALANCE TO GIVE DONATION S TO THE 24 ASSESSEE. THEREFORE, THE ASSESSEE IS ABLE TO PROV E THE IDENTITY OF THE DONOR COMPANIES AS WELL AS THEIR CREDITWORTHINESS. ON THE BASIS OF EVIDENCES AND M ATERIAL ON RECORD, IT IS CLEAR THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE GENUINENESS OF THE DONATIONS. THEREFORE, THE ADDI TION IS WHOLLY UNJUSTIFIED IN A SUM OF RS.20 LACS. 19. CONSIDERING THE ABOVE DISCUSSION, WHEN THE DON ORS HAVE GIVEN THEIR PAN NUMBERS AND THEIR RECEIPTS WOU LD PROVE THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTI TY OF THE DONORS AS WELL AS PROVED THAT THE DONORS HAVE GIVEN DONATIONS TOWARDS CORPUS OF THE ASSESSEE SOCIETY AND THE DONA TIONS HAVE BEEN UTILIZED FOR THE PURPOSE OF CONSTRUCTION OF TH E EDUCATIONAL BUILDING. THEREFORE, THE AUTHORITIES BELOW SHOULD NOT HAVE MADE ADDITION AGAINST THE ASSESSEE. THER EFORE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE ENTIRE ADDITION. 20. IN THE RESULT, THE GROUND NOS.3 AND 4 OF THE A PPEAL OF THE ASSESSEE ARE ALLOWED AND GROUND NO.1 OF THE DEPARTMENTAL APPEAL IS DISMISSED. 21. ON GROUND NO.5, OF THE APPEAL OF THE ASSESSEE, THE ASSESSEE CHALLENGED THE ADDITION OF RS.65,980/- OUT OF TOTAL ADDITION OF RS.3,27,099/- ON ACCOUNT OF ALLEGED COM MISSION. THE REVENUE ON GROUND NO.2 CHALLENGED THE ORDER OF THE LEARNED CIT (APPEALS), IN PARTLY DELETING THE ADDIT ION OF THE SAME. THE ASSESSING OFFICER MADE ADDITION OF RS.3, 27,099/- AS UN-EXPLAINED EXPENDITURE UNDER SECTION 69C OF TH E ACT. IT 25 IS SEEN THAT THE BASIS OF MAKING THE ADDITION BY TH E ASSESSING OFFICER IS THE SEIZED DOCUMENT, WHERE THE TERM COM MISSION HAS BEEN MENTIONED. THE ASSESSEE HAS REFUTED THE PAYMENT OF ANY COMMISSION AND STATED THAT THE ASSESSING OFF ICER HAS MADE ENQUIRIES UNDER SECTION 133(6) OF THE ACT FROM ALL THE PERSONS MENTIONED IN THE SEIZED DOCUMENTS AT THE TI ME OF THE SEARCH AND TO WHICH MAJORITY OF THE PERSONS HAVE CO NFIRMED THE DONATIONS TOWARDS CORPUS FUNDS, WITH NONE HAVIN G ALLEGED ABOUT COMMISSION PAYMENT/RECEIPT. THE LEARNED CIT ( APPEALS) FOUND THAT THERE IS NO EVIDENCE IN THE SEIZED MATER IAL ABOUT ANY PAYMENT OF SUCH ALLEGED COMMISSION BEING PAID T O ANY OF THE PERSON. THE ONLY EVIDENCE IS THE MENTION OF T HE WORD IN THE DOCUMENT. THE LEARNED CIT (APPEALS) NOTED THA T HE HAS ALREADY HELD THAT ONLY PART OF THE DONATION IS TO B E TREATED AS UNEXPLAINED. THE ASSESSING OFFICER HAS EXAMINED T HE DOCUMENT AT PAGE 41 OF ANNEXURE-D-2, WHEREIN AT THE RIGHT HAND SIDE OF THE PAGE THE AMOUNT OF RS.65,980/- IS WRITTEN AGAINST THE COMMISSION 80G. THIS AMOUNT IS FOUND STATED TO BE EXACTLY 2% OF RS.32,99,000/- MENTIONED IN THE OT HER SEIZED PAGE 35. THE LEARNED CIT (APPEALS) FOUND THAT THE ASSESSEE HAS DENIED THE PAYMENT OF ANY COMMISSION EVEN AT TH E ASSESSMENT STAGE. THE LEARNED CIT (APPEALS) FOUND THAT THE ASSESSEE HAS NOT DENIED THE CONTENTS OF THE DOCUMEN TS UNDER REFERENCE. THEREFORE, THE ADDITION OF RS.65,980/- WAS CONFIRMED UNDER SECTION 69C OF THE ACT AND PARTLY A LLOWED THE APPEAL OF THE ASSESSEE. 22. THE LEARNED COUNSEL FOR ASSESSEE REITERATED TH E 26 SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT NO PAYMENT AS COMMISSION WAS PAID BY THE ASSES SEE. NO EVIDENCE OF COMMISSION PAYMENT WAS FOUND IN SEARCH. PB-5 IS SEIZED DOCUMENT WHERE 65,980/- COMMISSION 80G IS WRITTEN BUT NO SUCH COMMISSION WAS PAID. 23. THE LEARNED D.R FOR THE REVENUE, HOWEVER, RELIE D UPON THE ORDERS OF THE AUTHORITIES BELOW. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD THE ASSESSING OFFICER HAS REL IED UPON THE SEIZED DOCUMENTS IN WHICH AT SOME PAGE COMMISSION W ORD IS MENTIONED BUT NO DETAILS HAVE BEEN FOUND DURING THE COURSE OF SEARCH. IF THE ASSESSEE HAS MADE ANY ACTUAL PA YMENT ON ACCOUNT OF COMMISSION TO ANY PERSON, THE COMMISSION IS STATED TO BE GIVEN TO SOME PERSONS WHO HAVE ARRANGE D THE DONATIONS. MOST OF THE DONORS HAVE ALREADY CONFIR MED GIVING OF DONATIONS TO THE ASSESSEE AND NONE OF THE DONORS HAVE CONFIRMED THE VERSION OF THE ASSESSING OFFICER IF T HEY HAVE GIVEN DONATIONS TO THE ASSESSEE THROUGH COMMISSION AGENT, AGAINST COMMISSION PAYMENT. THEREFORE, THE THEORY OF COMMISSION AGENT ARRANGING THE DONATIONS IS NOT PRO VED THROUGH ANY RELIABLE OR COGENT EVIDENCE. NO MATER IAL WAS ALSO FOUND DURING THE COURSE OF SEARCH TO SUPPORT T HE FINDINGS OF THE AUTHORITIES BELOW IF ANY COMMISSION IS PAID ACTUALLY TO THE COMMISSION AGENT FOR ARRANGING THE DONATIONS. THE ASSESSEE IS CHARITABLE SOCIETY. THEREFORE, THERE W AS NO NEED TO MAKE ANY PAYMENT BY WAY OF COMMISSION AND EVEN I F ANY COMMISSION IS PAID, THIS WOULD HAVE BEEN ALLOWABLE DEDUCTION 27 UNDER SECTION 37 OF THE ACT. THEREFORE, IN THE AB SENCE OF ANY SPECIFIC MATERIAL AVAILABLE ON RECORD, IT IS DIFFIC ULT TO BELIEVE THAT ANY COMMISSION WAS PAID BY THE ASSESSEE. NO ENQUIRIES HAVE BEEN MADE FROM ANY RECIPIENT OF THE AMOUNT. THE ASSESSEE WAS ENGAGED ONLY IN CONSTRUCTION OF THE BU ILDING IN THE YEAR UNDER CONSIDERATION. THEREFORE, THERE WA S NO OTHER SOURCE OF INCOME FROM WHERE IT COULD BE STATED THAT THE ASSESSEE HAS EARNED UNDISCLOSED INCOME OR PAID ANY COMMISSION. WE HAVE ALREADY DECIDED MAJOR ISSUE O F UNEXPLAINED DONATIONS ABOVE AND HAVE DELETED THE EN TIRE ADDITION. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION EVE N TO SUSTAIN PART OF THE ADDITION ON ACCOUNT OF ALLEGED COMMISSION PAYMENT. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. 25. IN THE RESULT, GROUND NO.5 OF THE APPEAL OF TH E ASSESSEE IS ALLOWED AND GROUND NO.2 OF THE APPEAL O F THE REVENUE IS DISMISSED. 26. ON GROUND NO.6 OF THE APPEAL OF THE ASSESSEE, THE ASSESSEE CHALLENGED THE ORDER OF THE LEARNED CIT (A PPEALS) IN CONFIRMING THE TAXING OF THE INCOME OF THE ASSESSEE WHEREAS THE INCOME OF THE ASSESSEE SOCIETY WAS EXEMPT UNDER SECTION 10(23C)(VI) AND SECTION 12AA OF THE ACT. THE REVE NUE ON GROUND NO.3 CHALLENGED THE ORDER OF THE LEARNED CIT (APPEALS) IN ALLOWING THE APPEAL OF THE ASSESSEE AGAINST CONC LUSION OF THE ASSESSING OFFICER OF NOT TREATING THE ACTIVITY OF THE ASSESSEE SOCIETY AS GENUINE BEING VIOLATION OF SECT ION 11(3) 28 AND 13(3) OF THE ACT. 27. BRIEFLY, THE FACTS ARE THAT THIS ISSUE RELATES TO VIOLATION OF SECTIONS 11, 12 AND 13 OF THE ACT. I T IS THE CASE OF THE ASSESSING OFFICER THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AS CORPUS HAS BEEN CREDITED WITH CAPITAL AR RANGED FROM ENTRY OPERATORS THEREBY NOT BEING VOLUNTARY CONTRIBUTIONS. IT WAS ALSO HELD THAT THE CASH FOUN D OF RS.1.60 CRORES AND SEIZED FROM SHRI SUKHDEV SINGLA, CHAIRMA N OF THE ASSESSEE SOCIETY WERE CAPITATION FEES COLLECTED FRO M THE STUDENTS WHICH INDICATED THAT THE SOCIETY WAS BEING RUN ON COMMERCIAL LINES IN VIOLATION OF ITS CHARITABLE PUR POSE FOR WHICH IT WAS SET UP. IT IS EVIDENT THAT THE ASSES SING OFFICER HAS COME TO THE CONCLUSION REGARDING THE VIOLATION OF THE PROVISIONS OF SECTIONS 11,12,13 AND 10(23C) OF THE ACT ON THE BASIS OF THE ADDITIONS AS CONTAINED IN THE IMPUGNED ORDER OF CORPUS FUND, COMMISSION PAYMENT AND DISALLOWANCE UN DER SECTION 11(3). THE ASSESSING OFFICER HAS ALSO MEN TIONED ABOUT CERTAIN RECEIPTS OF CAPITATION FEES AND UNDIS CLOSED CASH FOUND FROM SHRI SUKHDEV SINGLA, CHAIRMAN AND HAS US ED THAT OBSERVATION TO CONCLUDE THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE IN VIOLATION OF SECTIONS 11(3) AND 13(3 )OF THE ACT. THIS MATTER PERTAINS TO ASSESSMENT YEAR 2009-10 AND , THEREFORE, NOT APPLICABLE TO ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT (APPEALS) THAT THE ASSESSMENTS FOR ASSESSMENT Y EARS 2005-06, 2006-07, 2007-08 AND 2008-09 HAVE ALSO BEE N FRAMED BY THE ASSESSING OFFICER ON 31.12.2010 UNDER SECTION 29 153A/143(3) WHEREIN THE RETURNED INCOME WAS ACCEPTE D AND NO ADDITIONS HAVE BEEN MADE IN THESE YEARS DESPITE THE DETAILS OF DONATIONS. THE LEARNED CIT (APPEALS) CONSIDE RING THE FACTS AND CIRCUMSTANCES WAS INCLINED TO HOLD THAT T HERE HAS BEEN NO FINDING AS TO ANY VIOLATION OF THE AIMS AND OBJECTS OF THE SOCIETY DURING THE YEAR. THE ASSESSING OFFICE R HAS ALSO NOT DISPUTED THE APPLICATION OF THE DONATED FUNDS. IT WAS THE YEAR OF ESTABLISHING THE COLLEGE FOR WHICH CONSTRUC TION WORK WAS IN PROGRESS. THE LEARNED CIT (APPEALS) OBSERV ED THAT EVEN IF DONATIONS REMAINED UNSUBSTANTIATED, DOES NO T NECESSARILY MEAN THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTIONS 11, 12 AND 13 OF THE ACT. IT WAS ALSO FOUND THAT OBSERVATIONS IN ASSESSMENT YEAR 2009-10 ARE NOT REL EVANT IN ASSESSMENT YEAR UNDER APPEAL. FURTHER IN OTHER YE ARS, THE ACTIVITIES OF THE ASSESSEE WERE FOUND TO BE GENUINE . THEREFORE, IT WAS HELD THAT THERE WAS NO VIOLATION OF SECTIONS 11(3) AND 13(3) OF THE ACT. THESE GROUNDS OF APPE AL OF THE ASSESSEE WERE ACCORDINGLY ALLOWED. 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR ASS ESSEE STATED THAT REGISTRATION UNDER SECTION 12AA OF THE ACT HAS ALREADY BEEN CANCELLED, AGAINST WHICH THE ASSESSEE IS IN AP PEAL IN ITA NO.213/CHD/2012. THEREFORE, THIS GROUND WILL NOT SURVIVE IN FAVOUR OF THE ASSESSEE. ON CONSIDERATION OF THE A BOVE FACTS IT IS CLEAR THAT ONCE REGISTRATION IS CANCELLED UNDER SECTION 12AA(3) OF THE ACT, THE ASSESSEE WOULD NOT GET BENE FIT OF THE SAME. THIS ISSUE WILL BE DECIDED SEPARATELY IN TH E APPEAL OF 30 THE ASSESSEE IN ITA NO.213/CHD/2012. HOWEVER, AT THIS STAGE THIS GROUND BECOMES INFRUCTUOUS. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON T HIS GROUND STANDS DISPOSED OFF. HOWEVER, IN THE DEPAR TMENTAL APPEAL THE LEARNED CIT (APPEALS) HAS CORRECTLY HELD THAT THERE WAS NO FINDING OF ANY VIOLATION OF AIMS AND OBJECTS OF THE ASSESSEE SOCIETY. THE ASSESSEE WAS AT THE STAGE O F FORMATION I.E. CONSTRUCTION OF EDUCATIONAL BUILDING AND ALL C ORPUS FUNDS APPLIED TOWARDS THE CONSTRUCTION OF THE COLLEGE BUI LDING AND NO SPECIFIC FINDINGS OF FACT HAVE BEEN RECORDED AGA INST THE ASSESSEE IN THIS ASSESSMENT YEAR AND WHATEVER ADDIT IONS HAVE BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DO NORS DONATION OR COMMISSION PAYMENT, WE HAVE ALREADY DEL ETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. THEREFORE, IT IS NOT THE CASE OF VIOLATION OF ANY PROVISIONS O F SECTIONS 11, 12 AND 13 OF THE ACT IN THIS YEAR. THEREFORE, THE LEARNED CIT (APPEALS) WAS JUSTIFIED IN ALLOWING THE APPEAL OF T HE ASSESSEE ON THIS ISSUE. THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 30. IN THE RESULT, THE GROUND OF THE APPEAL OF THE ASSESSEE HAS BECOME INFRUCTUOUS AND IS DISMISSED AS SUCH AND GROUND NO.3 OF THE DEPARTMENTAL APPEAL IS DISMI SSED. 31. IN THE RESULT, THE APPEAL IN ITA NO.226/CHD/20 13 IS PARTLY ALLOWED AND THE DEPARTMENTAL APPEAL IN ITA NO.214/CHD/2013 IS DISMISSED. ITA NO.215/CHD/2013 (ASSESSMENT YEAR 2004-05) 31 (REVENUES APPEAL) : 32. THIS APPEAL FILED BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURGAON DATED 17.12.2012 FOR AS SESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS : (I) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN LAW AND ON FACTS IN PARTLY DELE TING THE ADDITION OF RS. 2,84,70,952/- MADE U/S 68 OF IT ACT, 1961 ON ACCOUNT OF ADDITION TO CORPUS FUND BASED ON CERTAIN INCOMPLETE CONFIRMATION WHEN THE ASSESSEE FAILED TO PROVE THE GENUINENESS O F THE DONATIONS AND SAME WERE WITHOUT ANY SPECIFIC DIRECTIO NS IN VIOLATION OF SECTION 11(1 )(D)? (II) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE LD. CIT(A) IS JUSTIFIED IN LAW AND ON FACTS IN PARTLY DEL ETING THE ADDITION OF RS. 5,69,419/- PAID AS COMMISSION CHARGES FOR ARRANGING DONATIONS FOR SOCIETY AS UNEXPLAINED EXPE NDITURE U/S 69C WHEN SUCH FACTS ARE ESTABLISHED BY SEIZED DOCUM ENTS AND ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE DONATIO NS? (III) 'WHETHER THE LD.CIT(A) IS JUSTIFIED IN LAW AND O N FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE AGAINST AO'S CONCLUSION O F NOT TREATING ACTIVITIES OF THE SOCIETY AS GENUINE BEING IN VIOLATION O F SECTION 11(3) AND 13(3) OF THE INCOME TAX ACT, 1961 AND TREAT ING THE INCOME OF THE ASSESSEE AS TAXABLE BY DENYING EXEMPTI ON U/S 11,12 & 13 EVEN WHEN IT WAS PROVED THAT ACTIVITIES WERE B EING RUN ON COMMERCIAL LINES AND BOGUS DONATIONS WERE INTROD UCED INTO THE CORPUS OF THE SOCIETY? 33. BRIEFLY, THE ASSESSING OFFICER ON THE BASIS OF NON- VERIFICATION OF CERTAIN DONATIONS BY WAY OF MAKING ENQUIRIES UNDER SECTION 133(6) OF THE ACT ON ACCOUNT OF CERTA IN SEIZURE OF THE DOCUMENTS WHERE COMMISSION @ 2% HAS BEEN MEN TIONED AS WELL AS ON THE BASIS OF TWO CHEQUES OF RS.10 LA CS IN FAVOUR 32 OF THE ASSESSEE FROM M/S NISHANT FINVEST PVT. LTD. AND M/S SOBER ASSOCIATES PVT. LTD. CONCLUDED THAT THE ASSES SEE SOCIETY HAS VIOLATED THE PROVISIONS OF SECTIONS 11,12 AND 1 3 OF THE ACT. CONSEQUENTLY AN ADDITION OF ENTIRE CORPUS FU NDS WHICH WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION TO THE TUNE OF RS.2,84,70,952/- ALONG WITH 2% COMMISSION TO THE TUNE OF RS.5,69,419/- WAS MADE BY THE ASSESSING OFFICER. IT WAS SUBMITTED BEFORE THE LEARNED CIT (APPEALS) THAT THE SUBMISSIONS ARE SAME AS HAVE BEEN GIVEN ALONGWITH D ETAILS IN PRECEDING ASSESSMENT YEAR 2003-04. THE LEARNED CI T (APPEALS) FOUND THAT THE ISSUE IS SAME AS HAS BEEN DECIDED IN ASSESSMENT YEAR 2003-04 AND FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2003-04 DELETED THE ADDITION DECIDI NG THE ISSUE IN FAVOUR OF THE ASSESSEE. HIS FINDING IN P ARAS 7 AND 8 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 7. I HAVE GONE THROUGH THE IMPUGNED ASSESSMENT ORD ER AS WELL AS THE SUBMISSIONS MADE BY THE ASSESSEE. I FIND THAT T HERE ARE NO FRESH FACTS VIZ-A-VIZ IN THIS AY 2004-05 UNDER CONSI DERATION AND THE BASIS OF MAKING THE ADDITIONS ON ACCOUNT OF CORPUS F UNDS AND COMMISSION BY THE AO IS THE SAME. THEREFORE, FOLLOW ING MY FINDING FOR AY 2003-04, WHEREIN I HAVE DEALT IN DETAIL THE BA SIS OF ADDITIONS AS GIVEN IN THE ORDER BY THE AO, I AM INCLINED TO HO LD THAT NO ADDITION CAN BE SUSTAINED ON ACCOUNT OF THE ADDITION OF CORPUS FUND MADE TO THE TUNE OF RS.2,84,70,952/- AND COMMISSI ON OF 2% THEREUPON IN THIS YEAR. ASIDE, IN AY 2003-04, I HAVE T REATED DONATIONS TO A CERTAIN EXTENT AS UNEXPLAINED AS WELL A S THE DONATIONS BY THE TWO CORPORATE ENTITIES. CONSEQUENT LY OTHER THAN THE AFORESAID, THE FINDINGS IN AY 2003-04 WILL HOLD GOOD FOR AY 2004-05 TOO. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 33 34. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF B OTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES STA TED THAT ALL THE ISSUES ARE SAME ON THREE GROUNDS OF APPEAL AS H AVE BEEN CONSIDERED IN PRECEDING ASSESSMENT YEAR 2003-04. O N CONSIDERATION OF THESE FACTS AND MATERIAL ON RECORD , WE FIND THAT ALL THE THREE GROUNDS RAISED IN THE DEPARTMENT AL APPEAL ARE SAME AS HAVE BEEN DECIDED IN PRECEDING ASSESSME NT YEAR 2003-04. THEREFORE, FOLLOWING THE ORDER IN ASSESS MENT YEAR 2003-04 WE DISMISS ALL THE THREE GROUNDS OF DEPARTM ENTAL APPEAL. 35. IN THE RESULT THE DEPARTMENTAL APPEAL IN ITA NO.215/CHD/2013 IS DISMISSED. ITA NO.227/CHD/2013 (ASSESSMENT YEAR 2009-10) (ASSESSEES APPEAL) : 36. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURGAON DATED 17.12.2012 FOR AS SESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1. THAT THE ORDERS OF THE COMMISSIONER OF INCOME T AX (APPEALS; (CENTRAL) ARE CONTRARY TO LAW AND THE FAC TS OF THE APPELLANT'S CASE. 2. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL) HAS ERRED IN CONFIRMING THAT THE STATUS MENTIONED IN TH E ASSESSMENT ORDER 'TRUST' AS CORRECT TREATING IT AS INADVERTENT ERROR WHEREAS 'TRUST' IS NO STATUS UNDE R THE INCOME TAX ACT, 1961. 34 3. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS 3,99,950/- ON ACCOUNT OF ALLEGED CAPITATION FEE COLLECTED FROM TH E STUDENTS AS INCOME OF THE ASSESSEE, IGNORING ALL TH E DOCUMENTARY EVIDENCES PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS AS THE SAID AMOUNT HAS BEEN RECEIVED AS SALE OF SCRAP MATERIAL AND HAS BEEN DUL Y ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE SOCIE TY. 4. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL) HAS ERRED IN CONFIRMING ADDITIONS OF RS 1,60,00,000/- B Y CONCLUDING THAT THE INCOME OF RS 1.60 CRORE SURREND ERED BY SH SINGLA IS IN FACT EARNED AS CAPITATION FEE CO LLECTED FROM THE STUDENTS OF INDO GLOBAL EDUCATION FOUNDATI ON. 5. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL) HAS ERRED IN NOT TREATING THE ACTIVITIES OF THE SOCIETY AS GENUINE INDICATING VIOLATION OF SECTION 11(3) AND 1 3(3) OF THE INCOME TAX ACT, 1961 WITHOUT SUBSTANTIATING ANY VIOLATION AND WITH OUT APPRECIATING THE FACT THAT T HE SOCIETY SATISFIES ALL THE CONDITIONS FOR UTILIZATIO N OF 85% OF ITS INCOME FOR THE OBJECTS OF THE SOCIETY. 6. THAT THE LD COMMISSIONER OF INCOME TAX (CENTRAL) HAS ERRED IN CONFIRMING AND TAXING OF INCOME OF RS 1,63,99,950/- WHERE AS THE INCOME OF THE ASSESSEE SOCIETY IS EXEMPT U/S 10(23C)(VI) AND SECTION 12AA OF THE INCOME TAX ACT, 1961. 37. THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.3,99,950/- ON ACCOUNT OF CAPITATION FEES FROM TH E STUDENTS AND ADDITION OF RS.1.60 CRORES BEING CASH FOUND IN THE RESIDENTIAL PREMISES OF THE CHAIRMAN OF THE SOCIETY WHICH HAS BEEN ADDED ON SUBSTANTIVE BASIS IN THE HANDS OF THE SOCIETY- ASSESSEE. CONSEQUENTLY, THE ASSESSEE SOCIETY WAS HELD TO HAVE VIOLATED THE PROVISIONS OF SECTION 11(3) AND 1 3(3) OF THE ACT. THE ASSESSEE WAS AGGRIEVED BY TAXING OF THE AMOUNT OF RS.1,63,99,950/- IN THE HANDS OF THE ASSESSEE SOCIE TY, 35 WHEREAS THE INCOME WAS EXEMPT UNDER SECTION 10(23C) (IV) OF THE ACT. THE ASSESSEE CHALLENGED THE ADDITION BEF ORE THE LEARNED CIT (APPEALS) AND THE LEARNED CIT (APPEALS) DISCUSSED THE FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESS EE IN THE IMPUGNED ORDER AS UNDER: 5.1 CAPITATION FEES ISSUE : IT IS SEEN FROM THE IMPUGNED ORDER AT PARA 10, THAT DURING THE COURSE OF SEARCH AND SEIZU RE AT THE RESIDENCE OF SH. SUKHDEV KUMAR SINGLA, CHAIRMAN OF T HE SOCIETY, A CASH BUNDLE WAS FOUND ALONGWITH HAND-WRITTEN SLIP S WITH RECEIPTS TIED WHICH WAS MARKED AS ANNEXURE D-20. TH E NOTINGS ON THE SLIPS, MENTIONING THE NAMES OF STUDENTS AND AM OUNT PAID BY THEM WERE FOUND NOT MATCHING WITH THE RECEIPTS I SSUED TO THE CONCERNED STUDENT(S). ON CONFRONTING IT WAS THE CASE OF THE ASSESSEE THAT THE SLIP IS A MEMORANDA RECORD OF THE EMPLOYEE OF THE INDO GLOBAL EDUCATION FOUNDATION SOCIETY, ENTRUST ED WITH THE JOB OF REGISTRATION OF STUDENTS FOR ADMISSIONS AS W ELL AS COLLECTION OF PAYMENTS FROM SALE OF SCRAPS OF CONSTRUCTION MATERIALS ETC. THE TOTAL CASH I.E. FEES AND PROCEEDS OF SCRAP SALES, WE RE THEN DEPOSITED WITH THE HEAD OFFICE AT CHANDIGARH AND IN OR DER TO SUBSTANTIATE THE SAME, THE COPY OF ACCOUNT OF THE P ARTICULAR STUDENT ALONG WITH THE COPIES OF THE CASH BOOK PAGES WERE FILED . IT WAS STATED THAT NO CAPITATION FEE WAS CHARGED FR OM THE STUDENTS AND ALSO FILED AFFIDAVITS. 5.1.2. CASH FOUND : CASH OF RS. 1,80,90,305/- WAS FOUND FROM THE RESIDENCE OF THE CHAIRMAN OF THE SOCIETY. IT WAS EXP LAINED BY THE CHAIRMAN, SH SUKDEV SINGLA THAT THE CASH OF RS. 20,9 0,305/- FROM ANNEXE PORTION OF THE HOUSE WHICH IS THE OFFICE OF THE ASSESSEE-SOCIETY, BELONGED TO THE SOCIETY AND THE BAL ANCE CASH OF RS. 1,60,00,000/- WAS HIS. IT WAS STATED THAT THE BALANCE AS PER BOOKS OF ACCOUNTS OF THE SOCIETY WAS RS. 16 LACS WRIT TEN UPTO 11.7.2008. SH. SUKHDEV SINGLA THEREBY SURRENDERED SUM O F RS. 2,40,00,000/- U/S 132 (4) RECORDED ON 16.7.2008 [ RS. 1 .60 CRORES 36 AS UNDISCLOSED INCOME EARNED FROM CONSULTANCY AND L IAISIONING IN RESPECT OF PROPERTY DEALINGS; RS. 20,00,000/- TO COVER ANY DISCREPANCIES IN THE DOCUMENTS SEIZED AND ANOTHER R S. 60,00,000/- ON ACCOUNT OF AMOUNTS RECOVERABLE FROM DIFFERENT PARTIES FOR SERVICES RENDERED IN PROPERTY DEALINGS/ CONSULTANCY ETC. THE ASSESSING OFFICER HOWEVER, CONCLUDED THAT T HE SUM OF RS. 1.60 CRORES IS TO BE CONSIDERED AS INCOME OF THE SOCIE TY U/S 69, SINCE SH. SUKHDEV SINGLA HAD EARLIER STATED U/S 132( 4) ON 15.7.2010 THAT THE SOURCE OF INCOME WAS FROM RENTALS AND, ACCORDINGLY, IT WAS ADDED TO THE INCOME OF THE ASSESS EE-SOCIETY. 5.1.3. SIMILARLY, REGARDING THE CASH SLIPS WHICH WERE FOUND FROM THE BRIEF CASE, THE AO CONCLUDED THAT SINCE AT THE TIME O F SEARCH, THE ASSESSEE COULD NOT RENDER ANY EXPLANATION, EXCEPT S TATING THAT THE SAME WOULD BE KNOWN TO THE ACCOUNTANT, HE HELD THAT THE SALE OF SCRAP EXPLANATION WAS AN AFTERTHOUGHT. LIKEWI SE, AS FAR AS, THE AFFIDAVITS FROM THE STUDENTS TO THE EFFECT THAT NO CAPITATION FEES WERE PAID, WERE CONCERNED IT HAS BE EN STATED THAT ALL THE AFFIDAVITS ARE SELF-SERVING EVIDENCES MA NAGED BY THE ASSESSEE. THEREFORE, THE CAPITATION FEE OF RS. 3,99,950 /- WAS ADDED IN THE HANDS OF THE ASSESSEE-SOCIETY U/S 69. 5.2 CONSEQUENTLY IN PARAGRAPH C OF THE IMPUGNED OR DER, THE AO HELD THAT BY ACCEPTING THE CAPITATION FEE, IT HA S VIOLATED THE AIMS AND OBJECTS OF THE SOCIETY AND THE HUGE CA SH FOUND FROM THE RESIDENT OF SH. SUKHDEV SINGLA ALSO PROVED THAT THERE HAS BEEN VIOLATION OF SECTION 13 (3) OF THE I.T.ACT, 1961. ACCORDINGLY, THE ASSESSMENT WAS FRAMED AT AN INCOME OF RS. 1,63,99,950/-. 38. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT (APPEALS) AS UNDER: I. REGULAR BOOKS OF ACCOUNTS ARE MAINTAINED AND ALL THE ENTRIES HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. 37 II. STATEMENT OF STAFF MEMBERS RECORDED DURING SEARC H OPERATIONS AND ALL HAD DENIED ANY DONATIONS FROM THE STUDENTS. III. AFFIDAVITS FROM STUDENTS WHOSE SLIPS WERE FOUND DUR ING SEARCH WERE FILED WITH THE ASSESSING OFFICER WHEREBY THEY HA VE CONFIRMED PAYMENT OF FEE AND DENIED ANY PAYMENT OF DON ATION TO THE COLLEGE. IV. DURING THE ASSESSMENT PROCEEDINGS A CHART DEPICTING TOTAL SANCTIONED SEATS, SEATS FILLED IN COUNSELING, TOTAL S EATS FILLED AND TOTAL SEATS LEFT BLANK IN RESPECT OF LAST SIX YEARS WAS SUBMITTED TO THE ASSESSING OFFICER. THE CHART CLEARLY INDICATES TH E SEATS LEFT VACANT IN SPITE OF ALL THE EFFORTS BY THE MANAGEMENT. IN THIS SCENARIO IT WAS NOT POSSIBLE FOR ANY STUDENT TO PAY ANY AMOUNT IN ADDITION TO ITS REGULAR FEE WHEN THE SEATS WERE AVAIL ABLE EVEN IN THE NORMAL COUNSELING BY PTU. V. THE SLIP MENTIONING THE NAME OF THE STUDENTS FOUND TA GGED WITH THE BUNDLES IN THE BRIEF CASE REPRESENTED MONEY SENT BY THE EMPLOYEES FROM THE COLLEGE TO HEAD OFFICE INCLUDING AMOUNT RECEIVED FROM THE STUDENTS AND AMOUNT COLLECTED BY THE EMPLOYEES FROM SALE OF SCRAP. VI. BOOKS OF ACCOUNTS ALONG WITH VOUCHERS OF SCRAP BILL S WERE PRODUCED BEFORE THE ASSESSING OFFICER AND NO ADVERS E INFERENCE HAS BEEN DRAWN. VII. THE FINDING OF THE ASSESSING OFFICER IS MERELY BASED ON SEIZED MATERIAL ONLY WITHOUT ANY CORROBORATIVE EVIDENCE. VIII. INCOMES FOR THE A/YEARS 2005-06, 2006-07, 2007-08 AND 2008-09 ACCEPTED AS SUCH AND NO ADVERSE INFERENCE IS DRAWN WHEREIN ISSUES INVOLVED ARE THE SAME. IX. SH SUKHDEV SINGLA IN HIS STATEMENT U/S 132(4) OF THE INCOME TAX ACT, 1961 DURING THE SEARCH OPERATIONS DECLARED UNDISC LOSED INCOME OF RS 2.50 CRORES (RS 10.00 LACS IN A/Y 2008-0 9 AND RS 2.40 CRORES IN A/Y 2009-10) WHICH INCLUDED CASH O F RS 1.60 FOUND FROM THE LOCKERS AND RESIDENTIAL PREMISES OF SH SUKHDEV 38 SINGLA. THE ASSESSING, OFFICER OUT OF RS 2.50 CRORE S DECLARED BY THE ASSESSEE ADDED RS 1.60 CRORES AS INCOME OF THE TRUST FOR THE A/Y 2009-10 WITHOUT ANY RHYME AND REASON ON SELECTIVE B ASIS. X. HOW COME THAT OUT OF TOTAL INCOME OF RS.2.50 CRORES DECLARED BY THE ASSESSEE U/S 132(4). RS.1.60 CRORES REPRESENT AMOUNT COLLECTED BY THE INDO GLOBAL EDUCATION FOUNDATION A S CAPITATION FEE AND BALANCE AMOUNT OF RS. 90.00 LACS REPRESENTS INCOME OF SH. SUKHDEV SINGLA. XI. OUT OF RS. 1.60 CRORES ASSESSED BY THE ASSESSING OFF ICER DURING THE ASSESSMENT YEAR 2009-10 IN THE HANDS OF INDIA GLOB AL EDUCATION FOUNDATION, CASH OF RS. 6,00,000/-WAS FOUND FROM LOCKER NO. 538,SYNDICATE BANK, SECTOR 17-B, CHANDIGARH WHICH WAS LAST OPERATED BY THE ASSESSEE ON 05.05.2008 AND RS. 37,12,000/- WAS FOUND FROM LOCKER NO. 332, PUNJAB NAT IONAL BANK, SECTOR 16, CHANDIGARH WHICH WAS LAST OPERATED ON 28.11.2007 I.E. BEFORE THE A/Y 2009-10. 39. THE LEARNED CIT (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MATERIAL ON RECORD DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARAS 7 TO 9 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 7. I HAVE CONSIDERED THE ARGUMENTS ADVANCED BY TH E ASSESSEE. I HAVE ALSO GONE THROUGH THE FINDINGS GIVEN BY THE AS SESSING OFFICER ABOUT VIOLATION OF SECTION 11,12,13 AND SECTION 10(23C). 7.1 ISSUE OF CAPITATION FEE OF RS. 3,99,950/- : THE CASH AS PER THE BUNDLES FOUND, TO ITERATE, WAS STATED TO BE CASH CO LLECTED FROM THE STUDENTS FOR WHICH RECEIPTS WERE ISSUED AND CASH CO LLECTED DURING THAT PERIOD FROM THE SALE OF SCRAP ITEMS BY THE EMPLOYEE S OF INDO GLOBAL EDUCATION FOUNDATION. EACH OF THE SLIP (NAMES OF 5 STUDENTS WITH STREAM) AND ITS NOTINGS WAS EXPLAINED IN THE ASSESS MENT PROCEEDINGS AND NOW BEFORE ME. FOR SAKE OF BREVITY, ONE SUCH EX PLANATION IS REPRODUCED BELOW: 39 (A). PAGE 17 OF ANNEXURE D-20 IS A HAND WRITTEN SLIP WRITTEN BY EMPLOYEE OF INDO GLOBAL EDUCATION FOUNDATION MENTIONING THE NAME OF SH DIGVIJAY SINGH THAKUR AND D-(90). THE SLIP IS A MEMORANDA RE CORD OF THE EMPLOYEE. PAGE 13 OF ANNEXURE D-20 IS A COMPUTERIZED TYPED RE CEIPT OF RS 40,000/- ISSUED TO SH DIGVIJAY SINGH MENTIONING A DETAIL OF RS 61,700/- BY THE CONCERNED EMPLOYEE. THE EMPLOYEE WAS ENTRUSTED THE DUTIES OF REGISTRATION OF THE STUDENTS FOR ADMISSION TO VARIOUS STREAMS. THE CONCERNED EMPLOYEE WAS ALSO ENTRUSTED TO COLLECT PA YMENTS FOR THE SALE OF SCRAPED CONSTRUCTION MATERIAL AND OTHER MISC SCRAP IT EMS. ON 10.07.2008 THE EMPLOYEE RECEIVED A SUM OF RS 40,000/- FROM DIGVIJAY SINGH THAKUR ON ACCOUNT OF REGISTRATION FEE AND RS 50,000/- FROM JARNAIL SINGH & CO FOR THE SALE OF ALUMINUM SCRAP AND DEPOSITE D RS 90,000/- WITH THE HEAD OFFICE AT CHANDIGARH. BALANCE AMOUNT O F REGISTRATION FEE AMOUNTING TO RS 21,700/- (61,700-40,000) WAS SUBSEQU ENTLY RECEIVED FROM THE STUDENT. COPY OF ACCOUNT OF THE STUDENT SH DIGVIJAY SINGH IN THE BOOKS OF INDO GLOBAL EDUCATION FOUNDATION AND COPIE S OF THE CONCERNED CASH BOOK PAGES ARE ENCLOSED. NO CAPITATION FEE IS BEING CHARGED FROM THE STUDENTS. AFFIDAVIT FROM THE STUDENT WAS FILED (BEFORE TH E ASSESSING OFFICER DURING THE ASSESSMENT-PROCEEDINGS). ' TO SUM UP IT IS THE ASSESSEE'S CASE THAT THE DETAIL S EMANATING FROM THE ANNEXURE D-20 SHOWING FEE RECEIVED AND AMOUNT R ECEIVED ON ACCOUNT OF SALE OF SCRAP AS UNDER; DATE NAME OF STUDENT TUITION FEE SALE OF SCRAP (JARNAIL SINGH & CO) TOTAL 10.07.2008 DIGVIJAY 40,000.00 50,000.00 90,000.00 11.07.2008 MANDIP KAUR 35,000.00 35,000.00 70,000.00 12.07.2008 ASHISH KHURANA 10,000.00 45,000.00 55,000.00 13.07.2008 GUNISH KUMAR 45,050.00 1,54,950.00 2,00,000.00 14.07.2008 NARINDER SINGH RAWAT 35,000.00 1,15,000.00 1,50,000.00 TOTAL 1,65,050.00 3,99,950.00 5,65,000.00 FURTHER, IT WAS ARGUED THAT DURING THE YEAR UNDER R EFERENCE THE TOTAL SANCTIONED SEATS BY ALL INDIA COUNSEL FOR TECHNICAL EDU CATION TO THE SOCIETY WAS 460 SEATS. OUT OF 460 SEATS, 420 SEATS WERE FOR ENGINEERI NG STREAMS AND 40 SEATS FOR B. ARCHITECTURE. 67% SEATS ARE FILLED TH ROUGH COUNSELLING AND 33% SEATS ARE FILLED THROUGH MANAGEMENT QUOTA. ALL THE SEATS ARE FILLED ON THE BASIS OF COMMON ENTRANCE TEST (CET) AND TEN PLUS TWO BASIS. SEATS LEFT UNFILLED BY PUNJAB TECHNICAL UNIVERSITY (PTU) THROU GH COUNSELLING ARE 40 ALSO TRANSFERRED TO THE MANAGEMENT QUOTA. DURING TH E YEAR UNDER REFERENCE ONLY 148 SEATS WERE FILLED THROUGH COUNSE LLING BY PTU AGAINST THE QUOTA OF 307 SEATS. THE SOCIETY THROUGH ITS OWN EFFOR TS WAS ABLE TO FILL ONLY 272 SEATS. 40 SEATS WERE LEFT VACANT FOR THIS ACADEM IC, YEAR. IT IS PERTINENT TO MENTION HERE THAT IF THE SEATS THROUGH PTU COUNS ELLING ARE EVEN LEFT VACANT WHY A STUDENT WILL GIVE ANY AMOUNT ABOVE THE NORMAL FEE DURING MANAGEMENT COUNSELLING. A CHART OF TOTAL SANCTIONED SEATS, SEATS FILLED IN COUNSELLING, TOTAL SEATS FILLED AND TOTAL SEATS LEFT BL ANK IN RESPECT OF LAST SIX YEARS FURNISHED IS REPRODUCED BELOW, WHICH IS STATED TO INDICATE THE SEATS LEFT VACANT IN SPITE OF ALL THE EFFORTS BY THE MANA GEMENT. THUS, IN THIS SCENARIO IT WAS NOT POSSIBLE FOR ANY STUDENT TO PAY ANY AMOUNT IN ADDITION TO ITS REGULAR FEE WHEN THE SEATS ARE AVAI LABLE EVEN IN THE NORMAL COUNSELLING BY PTU. 1 ST YEAR ADMISSIONS YEAR WISE: ENGINEERING AND ARCHITE CTURE COMBINED YEAR TOTAL COUNSELLING SEATS TOTAL NUMBER OF I TOTAL J TOTAL TOTAL SANCT- QUOTA SEATS FILLED IN SANCTIONED MANAGE FILLED VACANT. . - IONED ON BASIS OF COUNSELL MANAGEMENT QUOTA - MENT SEATS SEATS SEATS ENTRANCE TEST ING SEATS AFTER ADDING QUOTA (A+B) AND 10+2 (A) LEFTOVER SEATS FROM SEATS EXAMS COUNSELLING FILLED CONDUCTED BY (B) PTU 2003 200 170 73 127 79 152 48 2004 280 187 16 264 136 152 128 2005 280 187 15 265 171 186 94 2006 280 187 21 259 225 246 34 2007 400 267 159 241 220 379 21 2008 460 307 148 312 272 420 40 IT WAS ALSO HIGHLIGHTED FOR CONSIDERATION AS PER CHART ABOVE, THAT LARGE NUMBER OF SEATS HAVE BEEN LYING VACANT IN ALL THE YEA RS AND, THUS, THERE COULD BE NO JUSTIFICATION FOR PAYMENT OF CAPITATION FEE BY THE STUDENTS. EVEN, DURING THE COURSE OF SEARCH, STATEMENTS OF ST AFF MEMBERS HAVE BEEN RECORDED., WHEREIN THEY HAVE DENIED HAVING RECEIVED A NY DONATION OR CAPITATION FEE FROM THE STUDENTS. 41 FURTHER A CHART SHOWING TOTAL DONATION RECEIVED BY THE SOC IETY FROM 2003-04 TO 2009-10 FURNISHED IS AS UNDER ; A/Y CORPUS DONATIONS PRESUMED CAPITATION FEE BY THE DEPARTMENT REMARKS 2003-04 1,63,54,967.00 ADDITION MADE 2004-05 2,84,70,952.00 ADDITION MADE 2005-06 48,34,800.00 ACCEPTED BY THE AO 2006-07 37,57,300.00 -DO- 2007-08 4,20,000.00 -DO- 2003-09 20,000.00 -DO- 2009-10 - 3,99,950.00 ADDITION MADE TOTAL 5,38,58,019.00 3,99,950.00 0.75% THE ASSESSEE HAS ALSO RELIED UPON THE COPY OF SEIZED CASH BOOK WHEREIN THE DETAIL OF SCRAP SOLD ENTRIES HAVE BEEN RECORDED ALON GWITH COPIES OF THE RECEIPTS OF SCRAP BEFORE THE ASSESSING OFFICER. IT HAS ALSO B EEN ARGUED THAT IN SOME OF THE YEARS I.E. FROM ASSTT. YEAR 2005-06 TO 2008-09, CERTAIN CORPUS FUNDS WERE RECEIVED AND NO ADVERSE VIEW HAD BEEN TAKEN BY THE AS SESSING OFFICER AND ALSO MOST OF THE CASH WAS FOUND FROM THE RESIDENTIAL PORTION OF SH. SUKHDEV KUMAR SJNGLA AND FROM THE LOCKERS AND WHEREAS FROM ANNEXEE PORTION, THE CASH WHICH WAS FOUND HAS BEEN DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS OF SOCIETY AND, THUS, IT WAS STATED THAT THE CHARGE OF CAPITATION FEE IS TOTALLY MISDIRECTING AND ALSO THE CASH AT THE RESIDENTIAL PREM ISES HAVE BEEN OFFERED U/S 132 (4) AND ABOVE, NO OTHER ACTIVITIES HAVE BEEN CARRIED ON BY THE SOCIETY EXCEPT THE EDUCATIONAL ACTIVITY AND, THUS, IT WAS ARGU ED VEHEMENTLY THAT THERE WAS NO VIOLATION OF SECTION 11,12,13 AND SECTION 10(23C). 7.2 ISSUE OF CASH FOUND: REGARDING THE CASH FOUND FROM THE ANNEXE PORTION I.E. FROM THE OFFICE OF THE SOCIETY IT WAS SU BMITTED THAT THE AO HAS NOT BEEN ABLE TO CONTROVERT THAT THE SAID CASH WAS AS PER BOOKS OF ACCOUNTS OF THE SOCIETY AND OTHER CASH WAS FOUND FROM THE RESID ENTIAL PREMISES OF SH. SUKHDEV SINGLA OR FROM LOCKERS. SH. SUKHDEV SINGLA HAS ALREADY SURRENDERED A SUM OF RS. 2.40 CRORES FOR AY 2009-10 U/S 132 (4) AND H AD ALSO EXPLAINED THE 42 MODE AND MANNER OF EARNING SUCH INCOME U/S 132 (4). IT HAS BEEN ALSO ARGUED THAT SH.SUKHDEV SINGLA HAVE BEEN INVOLVED IN R EAL ESTATE BUSINESS FROM THE BEGINNING OF HIS CAREER AND WAS RUNNING A CONST RUCTION COMPANY UNDER THE NAME OF ASHIANA CONSTRUCTION CO. AS BUILDER SINCE 1 992, BUT, THEN THOUGH, HE SOLD HIS SHARE IN THE COMPANY, HE CONTINUED TO HAVE THE INTEREST IN THE REAL ESTATE FROM WHICH, THE CASH WAS GENERATED AND THIS IS FURT HER SUBSTANTIATED BY ONE DIARY WRITTEN BY SH. MANAV SINGLA, UNDER HIS SUPERVIS ION, WHICH WAS RECOVERED DURING THE COURSE OF SEARCH. THUS AS THE CASH FOUND FROM THE RESIDENTIAL PREMISE S AND LOCKERS HAS BEEN OWNED BY SH. SUKHDEV SINGLA, THE ONUS UPON HIM STOOD DISCHARGED AND THE ONUS WAS SHIFTED UPON THE DEPARTMENT TO PROVE THAT THE C ASH AS FOUND DURING SEARCH WAS BELONGING TO INDO GLOBAL EDUCATION FOUNDATION SOCI ETY AND EXCEPT CAPITATION FEE OF RS. 3,99,950/-, NOTHING HAS BEEN FOUND DURING THE COURSE OF SEARCH, WHICH PROVES THAT THE CASH AS RECOVERED FROM THE RESIDENCE OF SH. SUKHDEV SINGLA BELONGS TO INDO GLOBAL EDUCATION FOU NDATION SOCIETY. THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDIT ION OF RS. 1.60 CRORES IN THE HANDS OF SOCIETY. THAT THE ASSESSING OFFICER OUT OF THE AMOUNT OF RS. 2.40 CRORES HAS ASSESSED RS. 1.60 CRORES ON PROTECTIVE BASIS IN THE HA NDS OF SH. SUKHDEV SINGLA AND THE BALANCE SURRENDERED AMOUNT OF RS. 80 LACS HA S BEEN ACCEPTED AS IT IS. THE SOURCES STOOD EXPLAINED U/S 132 (4). THUS, ON O NE HAND, THE AO HAS ACCEPTED THE SOURCE OF RS. 80 LACS AS GIVEN BY SH. S UKHDEV SINGLA IN HIS STATEMENT U/S 132 (4) WHILE THE SOURCE OF RS. 1.60 CRORES HAS NOT BEEN ACCEPTED. 8. THERE ARE SOME UNDISPUTED FACTS, BESIDES THE DOCU MENTS AND BUNDLES OF CASH FOUND. FIRSTLY THAT THE SEATS WERE ALL NOT FILLED UP; RETURNS OF THE ASSESSEE FOR THE YEARS AY 2005-06, 06-07 AND 08-09 HAVE BEEN ACC EPTED WITHOUT ANY DISALLOWANCES; AND CASH OF RS. 2.40 CRORES FOR AY 2 009-10 AND RS. 10 LAKHS FOR AY 2008-09 WAS SURRENDERED AT THE TIME OF SEARCH ON WHI CH TAXES HAVE BEEN PAID AS THE SAME STOOD DECLARED IN THE RETURNS FILED BY SHRI SUKHDEV SINGLA, THE CHAIRMAN OF THE SOCIETY. HOWEVER IT IS ALSO FACT THA T SHRI SUKHDEV SINGLA COULD NOT EXPLAIN THE DISCREPANCIES BETWEEN THE CASH AS PE R THE BUNDLE AND AS PER THE RECEIPT ISSUED IN THE NAME OF THE STUDENT WITH THE B RANCH OF STUDY, ESPECIALLY 43 WHEN THE SLIPS TIED TO THE BUNDLES WERE FOUND IN HIS BRIEFCASE. THIS WAS EVIDENT FROM THE EXTRACTS OF TWO STATEMENTS RECORDED U/S 132(4) WHICH HAS BEEN REPRODUCED IN THE IMPUGNED ORDER. THE AFFIDAVITS OF THE STUDENTS REGARDING NON- PAYMENT OF CAPITATION FEES FILED WAS ALSO REJEC TED BY THE AO AS NOT TO RELIED UPON AS BEING STUDENTS, THEY COULD NOT BE EX PECTED TO GO AGAINST THE INSTITUTION. EVEN ASSUMING THAT THE CASH REPRES ENTED PROCEEDS FROM SALE OF SCRAPS, THERE WAS NO REASON WHY THERE WAS N O INDICATION OF THE SAME IN THE HANDWRITTEN NOTE(S), WHEN THE SAME IS ST ATED RECORDED IN THE BOOKS. HOWEVER THE ASSESSMENT ORDER IS SILENT ON T HIS CONTENTION THAT THE SAME STOOD ENTERED IN THE BOOKS OF ACCOUNTS. AS REGARDS THE CASH FOUND, IT IS THE AO'S CASE THAT THE STATEMENTS RECORDED U/S 132(4) ON 15.7.20C8 AND THEREAFTER ON 16 .7.2008 WERE CONTRADICTORY AS THE ASSESSEE HAD STATED HIS MAIN SOU RCE OF INCOME WAS FROM RENTALS BESIDES AGRICULTURE INCOME AND THAT ONLY AFT ER THE DISCOVERY OF THE CASH OF RS. 1,80,90,305/- THE EXPLANATION THAT MONEY WAS EARNED FROM DIFFERENT SOURCES INCLUDING PROPERTY DEALINGS/ CONS ULTANCY/LIAISING WAS PUT FORTH. IT ; WAS ALSO CONTENDED THAT THE INCOME TAX RETURNS OF THE ASSESSEE REFLECTED ONLY RENTAL INCOME AND NO EVIDENCE OF PROPE RTY DEALINGS WERE FOUND IN THE COURSE OF SEARCH. SO COUPLED WITH THE SLIPS O F FEES AND THE CASH FOUND, IT WAS AO'S CASE THAT THE INCOME OF RS. 1.60 CRORES SURR ENDERED WAS IN-FACT EARNED FROM THE SOCIETY, M/S INDO GLOBAL FOUNDATION. THUS IN THIS BACKDROP AS THE ASSESSEE IS OBJECTING TO THE ADDITION ON SUBSTANTIVE BASIS-OF THE CASH FOUND OF RS. 1.60 CRO RES, IT WOULD BE IN FITNESS ON THE PART OF THE ASSESSEE TO EMBARK UPON THE TASK OF DISPROVING THE AO BY LEADING DOCUMENTARY EVIDENCES TO SUBSTANTIATE TH E CLAIM OF EARNINGS OF UNDISCLOSED INCOME FROM PROPERTY DEALIN GS/CONSULTANCY ETC. THE ASSESSEE COULD HAVE TAKEN THE EXTRA MILE O F OFFERING THE CONTRACTOR SHRI JARNAIL SINGH, OR FOR THAT MATTER THE FIVE STUDENTS WHOSE NAMES WERE IN THE FEE SLIPS, FOR EXAMINATION BY THE A O. WHILE ADJUDICATING THE APPEAL OF SHRI SUKDEV SINGLA, CHAIRMAN OF THE AS SESSEE- SOCIETY, I HAVE HELD FOR REASONS GIVEN IN PARA 7 THAT THE ADDITION ON PROTECTIVE BASIS IN HIS HANDS REQUIRES TO BE DELETED, WHICH READS AS UNDER: 44 THERE IS NO DISPUTE THAT ADDITIONS SHOULD NOT BE MADE ON SURMISES AND CONJECTURES. HOWEVER, WHERE THE EVIDENCE IS QUITE EX PLICIT ESPECIALLY IN THE BACK DROP OF THE NATURE OF THE TRADE/ PROFESSIO N, ORE CANNOT IGNORE THE SAME. FEE SLIPS WERE FOUND WHICH MENTIONS THE NAM E OF THE STUDENT AND THE STREAM OF STUDY, WITH ALSO THE AMOU NTS TALLYING WITH THE LEDGER COPY OF EACH OF THE SAID STUDENTS. THE P ARTICULARS WERE THUS VERY PRECISE. HOWEVER IT BELIES-LOGIC THAT CASH PROC EEDS OF SALE OF SCRAPS SHOULD BE ATTACHED TO THESE FEE RECEIPTS IN THE FOR M OF HANDWRITTEN SLIPS AND PUT IN BUNDLES. THESE PROCEEDS FROM SALE OF SCRAPS ARE IN LUMP SUM FIGURES AND NOTHING VERY CONVINCING ARGUME NTS HAVE BEEN PUT FORTH THAT THE PROCEEDS ARE ACTUALLY FROM SCRAP SALES. AS REGARDS THE EXPLANATION THAT THE CASH FOUND EMANATED FROM THE PROPERTY DEALINGS SEEMS FARFETCHED TOO. IF THAT BE S O AS MADE OUT BY THE ASSESSEE THAN THERE WAS NOTHING TO HOLD BACK TH E ASSESSEE FROM PRODUCING DOCUMENTARY EVIDENCES OF HIS REAL ESTATE D EALINGS BE IT IN THE LINE OF CONSULTANCY OR IN SALE AND PURCHASE. IT IS NOT IN DEBATE THAT ASSESSEE MUST HAVE BEEN WITH THE CONSTRUCTION COMPAN Y 'ASHIANA' BUT WHAT IS GERMANE TO THE ISSUE IS WHETHER THE CASH FOUND CAN BE SAID TO BE FROM HIS PROPERTY DEALINGS PER SE. IT IS ALSO NOT IN DEBATE THAT THE ASSESSEE MAY HAVE SOLD OF HIS AGRICULTURAL LANDS. IN F ACT THE DIARY STATED TO BE BELONGING TO MANAV SINGLA PUT FORTH AS C ORROBORATIVE EVIDENCE, IS FOR PURCHASE OF PROPERTY AND NOT EARNI NGS ON LAND TRANSACTION OF SALE AND PURCHASE. ONE COULD ALSO AR GUE THAT THE MATERIAL FOUND WAS NOT SUFFICIENT TO IMPLY RECEIPT O F CAPITATION FEES. IN THIS REGARD, I WOULD THINK THAT THE MATERIAL IN THE FO RM OF 05 SUCH FEE RECEIPTS WITH HANDWRITTEN NOTES TIED TO CASH BUNDLE S AND THE MANNER OF THE RESPONSES TO THE QUESTIONS POSED TO THE ASSE SSEE AS EVIDENT FROM THE TWO STATEMENTS OF 15.7 AND 16.7.2008 WITH RESPE CT TO THE SOURCE OF HIS INCOME AND CONSEQUENTLY TO THE SOURCE OF CAS H FOUND WAS SUFFICIENT TO ENABLE THE AO TO COME TO AN INFORMED CONCLUSION. SHRI SUKDEV SINGLA COULD NOT EXPLAIN THE DISCREPANCIES BE TWEEN THE CASH AS PER THE BUNDLE AND AS PER THE RECEIPT ISSUED IN THE NAME OF THE STUDENT. EVEN ASSUMING THAT THE CASH REPRESENTED PROCEEDS FR OM SALE OF SCRAPS, THERE WAS NO REASON WHY THERE WAS NO INDICATION OF TH E SAME IN THE SLIPS, WHEN THE SAME IS STATED RECORDED IN THE BOOKS . NEEDLESS TO SAY 45 APPRECIATION OF THE AVAILABLE MATERIAL IS WITHIN THE D OMAIN OF THE AO. THEREFORE CONSIDERING THE TOTALITY OF FACTS AND CIRC UMSTANCES, I AM AFRAID THE EXPLANATION PUT UP BY THE ASSESSEE IS NO T GENUINE, BUT IS A WELL THOUGHT OF ATTEMPT TO COVER THE CHARGING/ RECEI PT OF CAPITATION FEES FROM THE STUDENTS. IN OTHER WORDS THE CONTENTION OF THE AO THAT THE CASH HAS BEEN GENERATED OUTSIDE THE BOOKS FROM ACTIVITIES CARRIED OUT BY THE ASSESSEE-SOCIETY IN WHICH SHRI SUKHDEV SI NGLA WHO IS THE CHAIRMAN IS UPHELD. HENCE THE PORTION WHICH WAS ADDE D AS PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE I.E. RS. L,60,00,000/- IS D IRECTED TO BE DELETED WITH THE SUBSTANTIVE ADDITION BEING CONFIRMED IN THE HANDS OF THE SOCIETY, M/S INDO GLOBAL EDUCATION FOUNDATION IN WH ICH THE ASSESSEE IS THE CHAIRMAN/PROMOTER. THE ASSESSEE THER EFORE FAILS ON THIS GROUND OF APPEAL. IN OTHER WORDS, THE SUBSTANTIVE ADDITION BY THE AO IN THE HANDS OF THE ASSESSEE-SOCIETY THEREFORE IS CONFIRMED. FURTHERMORE, THE CONSEQUENTIAL CONCLUSIONS IN VIEW OF THE ADDITIONS CONFIRMED AS DISCUSSED ABOVE VIZ. ON ACCO UNT OF CAPITATION FEES AND EARNING OF RS. 1.60 CRORES BY THE ASSESSEE-SOCI ETY, THE ASSESSEE- SOCIETY IS THEREFORE HELD TO HAVE VIOLATED THE PROV ISIONS OF SECTIONS 11,12 AND 13 OF THE INCOME TAX ACT. THE TAXING OF THE INC OME OF THE ASSESSEE AT RS. 1,63,99,950/- IS THEREFORE CONFIRMED. CONSEQUEN TLY, THE ASSESSEE FAILS ON THESE GROUNDS OF APPEAL. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. 40. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 41. THE LEARNED COUNSEL FOR ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO PB-1, WHICH IS INVENTORY OF CASH FOUND AND SEIZED F ROM SHRI SUKHDEV KUMAR SINGLA AND SUBMITTED THAT NO CASH WAS FOUND AND SEIZED FROM THE ASSESSEE. PB-61 IS THE STATEM ENT OF SHRI 46 SUKHDEV KUMAR SINGLA RECORDED ON 16.7.2008 IN WHICH THE ASSESSING OFFICER ASKED FOR EXPLANATION OF SHRI SUK HDEV KUMAR SINGLA REGARDING CASH FOUND FROM HIS PREMISES AND LOCKERS AND SHRI SUKHDEV KUMAR SINGLA EXPLAINED THA T SUM OF RS.20,90,305/- WAS RECEIVED FROM THE OFFICE OF THE ASSESSEE SOCIETY AND THE SAME BELONGED TO THE ASSESSEE SOCIE TY AS PER THE BOOKS OF ACCOUNT MAINTAINED AND THE REMAINING A MOUNT OF RS.1.60 CRORES RECOVERED FROM HIS RESIDENCE/LOCKER BELONGED TO HIM. HE HAS DECLARED THE SAID SUM UNDER SECTIO N 132(4) OF THE ACT AND SURRENDERED FOR THE PURPOSE OF TAXATION . HOWEVER, THE TOTAL SURRENDER WAS MADE OF RS.2.50 CR ORES BY MAKING FURTHER SURRENDER OF RS.10 LACS, RS.20 LACS AND RS.60 LACS. SHRI SUKHDEV KUMAR SINGLA MADE THE AFORESA ID SURRENDER OF INCOME OF RS.2.40 CRORES IN HIS RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2009-10 AND THE ASSESSING OFFICER MADE THE ADDITIONS MERELY ON THE BASIS OF SURRENDER OF INCOME. PB-92 TO 102 ARE THE ACKNOWLEDGEMENT OF I NCOME TAX RETURNS FOR ASSESSMENT YEARS 2004-05 AND 2006-07 AL ONGWITH COMPUTATION OF INCOME AND OTHER DETAILS TO SHOW THA T SHRI SUKHDEV KUMAR SINGLA WAS DEALING IN REAL ESTATE AND WAS HAVING SOURCE OF INCOME FROM REAL ESTATE BUSINESS, ETC. THEREFORE, THE SURRENDERED AMOUNT BELONGED TO SHRI SUKHDEV KUMAR SINGLA ONLY. PB-65 TO 69 ARE THE SLIPS FOUN D DURING THE COURSE OF SEARCH PERTAINED TO DIFFERENT STUDENT S. HOWEVER, ACTUAL FEES RECEIPTS FROM THE STUDENTS(PB- 70 TO 74) ARE DULY ENTERED INTO THE BOOKS OF ACCOUNT AND CONT AINED THE DETAILS IN THE RECEIPTS. PB-75 TO 79 ARE THE AFFI DAVITS OF THE SAME STUDENTS IN WHICH THEY HAVE CONFIRMED THAT TH EY HAVE 47 BEN ADMITTED PURELY ON MERITS AND HAVE NOT PAID ANY DONATION/CAPITATION FEE OR ANY OTHER CHARGES OVER A ND ABOVE THE NORMAL COLLEGE FEES. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT NONE OF THE STUDENTS HAVE BEEN EXAMI NED BY THE ASSESSING OFFICER. THEREFORE, THE AVERMENTS C ONTAINED IN THE AFFIDAVITS ARE ADMITTED TO BE GENUINE AND ADMIS SIBLE AGAINST THE REVENUE. PB-105 IS THE REPLY REGARDIN G THE SALE OF SCRAP AND PB-108 IS THE DETAILS OF TOTAL VACANT SEATS IN DIFFERENT ASSESSMENT YEARS INCLUDING ASSESSMENT YEA R UNDER APPEAL TO PROVE THAT NO DONATION/CAPITATION FEE WAS RECEIVED FROM ANY STUDENT. PB-112 IS THE CASH BOOK TO SHOW THAT CORRECT FEES HAVE BEEN RECORDED IN THE BOOKS OF ACC OUNT. PB- 114 TO 117 ARE THE LEDGER ACCOUNTS OF THE STUDENTS IN WHOSE CASES THE RECEIPTS WERE SEIZED TO SHOW THAT THEY HA D PAID MORE FEES WHICH HAVE BEEN ENTERED INTO THE BOOKS OF ACCOUNT AS AGAINST THE SEIZED RECEIPTS. PB-119 TO 120 IS THE CASH BOOKS WHICH WERE SEIZED DURING THE COURSE OF SEARCH IN WHICH ON THE DATES WHEN SEIZED SLIPS OF STUDENTS WERE FOU ND, THERE IS SALE OF SCRAP FROM 10.7.2008 TO 14.7.2008 AND TH E SAME OF SCRAP HAS BEEN NOTED IN THE CASH BOOK. THE STUDEN TS OR THEIR PARENTS HAVE NOT BEEN EXAMINED AND EVEN THE ACCOUNT ANT HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER FOR VERI FICATION. PB-80-86 ARE VARIOUS STATEMENTS OF ADMINISTRATIVE OFFICERS/TEACHING STAFF OF THE ASSESSEE SOCIETY WHO WERE EXAMINED BY THE ASSESSING OFFICER AND NONE OF THEM HAVE SUPPORTED THE CHARGE OF ANY CAPITATION FEES OR DON ATION FROM THE STUDENTS. PB-91 IS THE BANK CERTIFICATE IN TH E CASE OF SHRI SUKHDEV KUMAR SINGLA TO SHOW THAT THE LOCKER N O.332 48 WAS LASTLY OPERATED ON 28.11.2007 AND THEREAFTER IT WAS SEARCHED BY THE INCOME TAX DEPARTMENT ON 15.7.2008 AND AS SUCH WHATEVER WAS FOUND IN THIS LOCKER BELONGED TO SHRI SUKHDEV KUMAR SINGLA AND DID NOT PERTAINED TO THE ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10 AND NO AD DITION HAS BEEN MADE IN ASSESSMENT YEAR 2008-09 EITHER AGA INST THE ASSESSEE OR AGAINST SHRI SUKHDEV KUMAR SINGLA. TH E LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THERE WERE NO B ASIS TO MAKE ADDITION OF CAPITATION FEES CHARGED FROM ANY S TUDENTS. SHRI SUKHDEV KUMAR SINGLA HAS ALREADY DISCLOSED AND DECLARED RS.2.40 CRORES IN HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10. THEREFORE, THE ADDITION OF RS.1.60 CRORES IN THE CASE OF THE ASSESSEE ON SUBSTANTIVE B ASIS IS WITHOUT ANY BASIS AND IS NOT VALID IN LAW. HE HAS SUBMITTED THAT NO DOCUMENT WAS FOUND DURING THE COURSE OF SEA RCH TO PROVE THAT ANY CAPITATION FEE WAS RECEIVED FROM ANY STUDENT AND NO CASH WAS FOUND FROM THE POSSESSION OF THE AS SESSEE SOCIETY. THEREFORE, BOTH THE ADDITIONS ARE WHOLLY UNWARRANTED AND LIABLE TO BE DELETED. THERE IS NO VIOLATION O F SECTION 11 OF THE ACT IN THIS CASE. THE ACTIVITIES OF THE A SSESSEE SOCIETY ARE EDUCATIONAL IN NATURE AND ARE GENUINE. THEREF ORE, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESS EE. HE HAS SUBMITTED THAT THE STATEMENT OF SHRI SUKHDEV KU MAR SINGLA RECORDED ON 15.7.2008 AS IS REFERRED TO BY T HE LEARNED D.R FOR THE REVENUE WOULD NOT DISCLOSE ANYTHING BEC AUSE SHRI SUKHDEV KUMAR SINGLA EXPLAINED THAT AT THE STAGE OF SEARCH HE WAS NOT IN A POSITION TO EXPLAIN THE RECEIPTS AN D SUCH DISCREPANCY COULD BE EXPLAINED BY THIS ACCOUNTANT B UT THE 49 ACCOUNTANT IS NOT EXAMINED BY THE ASSESSING OFFICER . THEREFORE, SUCH STATEMENT IS IRRELEVANT AGAINST THE ASSESSEE. 42. ON THE OTHER HAND, THE LEARNED D.R FOR THE REV ENUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CASH WAS FOUND FROM THE POSSESSION OF SHRI SUKHDEV KUMAR SINGLA FROM HIS PREMISES AS WELL AS FROM LOCK ERS. THE FOUR RECEIPTS PB-65 TO 69 PERTAINED TO FIVE STUDENT S WHICH DISCLOSED THAT THE CAPITATION FEES HAVE BEEN CHARGE D FROM THEM OVER AND ABOVE THE NORMAL FEES AND LESSER FE ES HAVE BEEN SHOWN IN THE BOOKS. HE HAS, HOWEVER, ADMITTE D THAT THE STUDENTS HAVE NOT BEEN EXAMINED IN RESPECT OF WHICH RECEIPTS HAVE BEEN FOUND. THE STATEMENT OF SHRI SUKHDEV KU MAR SINGLA WAS RECORDED ON 15.7.2008 AND IN ANSWER OF Q UESTION NO.19, HE HAS ADMITTED THAT THESE WERE FEES RECEIPT S BUT DID NOT CLARIFY THE DISCREPANCY. THE SALE OF SCRAP WA S NOT EXPLAINED IN THE STATEMENT OF SHRI SUKHDEV KUMAR SI NGLA. THE LEARNED D.R FOR THE REVENUE RELIED UPON THE ORD ER OF THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH IN TH E CASE VODITHALA EDUCATION SOCIETY VS. ASSISTANT DIRECTOR OF INCOME- TAX (EXEMPTION)II, 20 SOT 353 (HYD.) IN WHICH IT WA S HELD THAT WHEN THE ASSESSEE COLLECTED THE MONEY OVER AND ABOVE THE FEES PRESCRIBED BY THE COMMITTEE WOULD AMOUNT T O COLLECTION OF CAPITATION FEE AND THE ASSESSEE IS NO T ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THE LEARNE D D.R FOR THE REVENUE ALSO REFERRED TO THE STATEMENTS OF SMT. NEELAM SINGLA AND SHRI MANAV SINGLA TO SHOW THAT THEY WERE NOT INVOLVED IN THE EDUCATIONAL ACTIVITIES WITH THE ASS ESSEE. 50 43. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. PB-1 IS INVENTORY O F THE CASH FOUND AND SEIZED FROM SHRI SUKHDEV KUMAR SINGLA FRO M HIS RESIDENCE AND LOCKERS. OUT OF THE TOTAL CASH OF RS.1,80,90,305/-, RS.1.60 CRORES WERE SEIZED AND BA LANCE CASH WAS RELEASED. THE OTHER CASH OF RS.20,90,30 5/- WAS ALSO RELEASED. THE STATEMENT OF SHRI SUKHDEV KUMA R SINGLA WAS RECORDED ON 15.7.2008 I.E. THE DATE OF SEARCH, COPY OF WHICH IS FILED BY THE LEARNED D.R FOR THE REVENUE O N RECORD THAT ON THE LAST PAGE IT IS SIGNED BY SHRI SUKHDEV KUMAR SINGLA AND THE SEARCH PARTY ON 16.7.2008. THE LEA RNED D.R FOR THE REVENUE HEAVILY RELIED UPON THE STATEMENT O F SHRI SUKHDEV KUMAR SINGLA TO SHOW THAT THE RECEIPTS SEIZ ED DURING THE COURSE OF SEARCH PERTAINED TO SOME STUDENTS IN WHOSE CASES LESSER AMOUNTS HAVE BEEN SHOWN IN THE BOOKS O F ACCOUNT. SHRI SUKHDEV KUMAR SINGLA STATED IN HIS STATEMENT THAT THE RECEIPTS ARE FOR FEES OF THE STUDENTS GETT ING ADMISSION INTO THE COLLEGE AND WHEN THE SEIZED RECEIPTS WERE COMPARED WITH THE ACTUAL RECEIPTS ENTERED INTO THE BOOKS OF ACCOUNT, SHRI SUKHDEV KUMAR SINGLA EXPLAINED THAT SUCH DISCR EPANCIES CAN BE EXPLAINED BY HIS ACCOUNTANT ONLY. IT IS AD MITTED FACT THAT THE REVENUE DEPARTMENT DID NOT EXAMINED THE AC COUNTANT OF SHRI SUKHDEV KUMAR SINGLA TO EXPLAIN SUCH DISCRE PANCIES. THEREFORE, SUCH A STATEMENT OF SHRI SUKHDEV KUMAR S INGLA CANNOT BE SAID TO BE INCRIMINATING IN NATURE AGAINS T THE ASSESSEE SOCIETY. THE REVENUE DEPARTMENT FURTHER R ECORDED THE STATEMENT OF SHRI SUKHDEV KUMAR SINGLA ON THE S AME DAY ON 16.7.2008 (PB-61) IN WHICH REGARDING THE CASH FO UND FROM 51 HIS PREMISES AND LOCKERS HAS EXPLAINED THAT SUM OF RS.20,90,305/- WAS RECEIVED FROM THE ASSESSEE SOCIE TY WHICH WAS ENTERED INTO THE BOOKS OF ACCOUNT. AS NOTED ABOVE, EVEN IN THE PANCHNAMA, THE SAID CASH BELONGED TO ASSESSE E SOCIETY WAS RELEASED TO SHRI SUKHDEV KUMAR SINGLA AND WAS N OT SEIZED BY THE REVENUE DEPARTMENT AND WAS NOT SUBJEC T TO ADDITION. SHRI SUKHDEV KUMAR SINGLA IN HIS STATEM ENT HAD ADMITTED THAT THE BALANCE CASH OF RS.1.60 CRORES WA S RECOVERED FROM HIS RESIDENCE AND BELONGED TO HIM. HE HAS MADE SURRENDER OF RS.1.60 CRORES UNDER SECTION 132( 4) OF THE ACT AND STATED THAT THE SAME WOULD BE DECLARED IN H IS RETURN OF INCOME. THE CASH RECOVERED FROM LOCKERS WAS AL SO ADMITTED BY HIM TO BE BELONGED TO HIM AND IN ADDITI ON TO THE SURRENDER OF RS.1.60 CRORES FOR TAXATION SHRI SUKHD EV KUMAR SINGLA ALSO SURRENDERED RS.10 LACS, RS.20 ALCS AND RS.60 LACS FOR THE PURPOSE OF TAXATION ON ACCOUNT OF DISCREPAN CIES IN GOLD JEWELLERY AND FOR DIFFERENT DISCREPANCIES TO B E NOTED. THE ASSESSING OFFICER HAS MADE ADDITION IN THESE CA SES ONLY ON THE BASIS OF SURRENDER MADE BY SHRI SUKHDEV KUMA R SINGLA. PB-92 TO 102 ARE ACKNOWLEDGEMENTS OF FILI NG OF THE RETURNS ETC. IN THE CASE SHRI SUKHDEV KUMAR SINGLA FOR ASSESSMENT YEARS 2004-05 AND 2006-07 IN WHICH HIS S OURCE OF INCOME WAS ALSO SHOWN FROM DEALING IN HOUSE PROPERT Y AND REAL ESTATE ETC. IT IS ALSO UNDISPUTED FACT THAT DURING THE SEARCH OPERATION, A HANDWRITTEN DIARY WRITTEN BY SH RI MANAV SINGLA UNDER THE SUPERVISION OF HIS FATHER SHRI SUK HDEV KUMAR SINGLA WAS RECOVERED(PB-103-104), WHICH CONTA INED MARKET SURVEY OF THE PLOTS IN DIFFERENT AREAS AS IN FINANCIAL 52 YEAR 2008-09, THAT SHRI SUKHDEV KUMAR SINGLA HAS A LOT OF KNOWLEDGE IN THE REAL ESTATE AREA, CHANDIGARH. TH E BACKGROUND OF SHRI SUKHDEV KUMAR SINGLA WOULD PROV E THAT HE WAS INVOLVED IN THE LIAISON BETWEEN THE OWNERS O F LAND AND BULK BUYERS OF THE LAND. HE HAS CONFIRMED TO HAVE EARNED UN-DISCLOSED INCOME ON THAT ACCOUNT. SOME OTHER D OCUMENTS WERE ALSO FILED TO SHOW THAT SHRI SUKHDEV KUMAR SIN GLA WAS DEALING IN THE PROPERTIES. THE ASSESSING OFFICER INSTEAD OF EXAMINING THIS ISSUE IN THE LIGHT OF THE DOCUMENTS BROUGHT ON RECORD HAS MERELY DIS-BELIEVED THE STATEMENT OF SHR I SUKHDEV KUMAR SINGLA AND MADE SUBSTANTIVE ADDITION IN THE C ASE OF THE ASSESSEE SOCIETY WITHOUT ANY BASIS. SECTION 1 10 OF THE INDIAN EVIDENCE ACT PROVIDES WHEN THE QUESTION IS WHETHER ANY PERSON IS OWNER OF ANYTHING OF WHICH HE IS SHOW N TO BE IN POSSESSION, THE BURDEN TO PROVING THAT HE IS NOT OW NER IS ON THE PERSON WHO AFFIRMS THAT HE IS NOT THE OWNER. IN THIS CASE, IT IS ADMITTED FACT THAT THE CASH WAS FOUND F ROM THE RESIDENTIAL PREMISES OF SHRI SUKHDEV KUMAR SINGLA A S WELL AS FROM HIS DIFFERENT LOCKERS. SHRI SUKHDEV KUMAR SI NGLA ALSO ADMITTED IN THE STATEMENT RECORDED DURING THE COURS E OF SEARCH OPERATION THAT SUCH CASH BELONGED TO HIM EXC EPT THE AMOUNT OF RS.20,90,305/- IN RESPECT OF WHICH THERE IS NO DISPUTE BETWEEN THE PARTIES. THEREFORE, SHRI SUKH DEV KUMAR SINGLA SURRENDERED A SUM OF RS.2.40 CRORES IN ASSES SMENT YEAR 2009-10 FOR THE PURPOSE OF TAXATION IN HIS PER SONAL INDIVIDUAL CASE. THERE IS NO OTHER EVIDENCE AVAI LABLE ON RECORD TO SHOW AS TO HOW THE ASSESSEE SOCIETY HAS B ECOME THE OWNER AND IN POSSESSION OF THE AFORESAID CASH. SH RI SUKHDEV 53 KUMAR SINGLA WHO WAS FOUND IN POSSESSION OF CASH HA D ADMITTED THE CASH BELONGED TO HIM. THE POSSESSIO N OF CASH WITH SHRI SUKHDEV KUMAR SINGLA AND HIS ADMISSION TH AT THE CASH BELONGED TO HIM IS GOOD EVIDENCE TO PROVE THAT SHRI SUKHDEV KUMAR SINGLA IS OWNER OF CASH SEIZED. THE CASH (CURRENCY) ARE ADMITTEDLY MOVABLE PROPERTY, THEREFO RE, THERE WERE NO BASIS FOR THE ASSESSING OFFICER TO CONCLUDE THAT SUCH CASH BELONGED TO THE ASSESSEE SOCIETY. THE ASSESS ING OFFICER WANTED TO TAX A SUM OF RS.1.60 CRORES ON SUBSTANTIV E BASIS IN THE CASE THE ASSESSEE SOCIETY BUT THE BURDEN UPON T HE ASSESSING OFFICER HAS NOT BEEN DISCHARGED TO SHOW T HAT SHRI SUKHDEV KUMAR SINGLA WAS NOT THE OWNER OF THE CASH FOUND FROM HIM DURING THE COURSE OF SEARCH. SHRI SUKHDE V KUMAR SINGLA ALSO PRODUCED SUFFICIENT EVIDENCE ON RECORD TO SHOW THAT HE HAS SOURCE OF INCOME FROM REAL ESTATE BUSIN ESS. THEREFORE, SAID SOURCE AS WAS ALSO DISCLOSED IN HIS INDIVIDUAL RETURN OF INCOME EARLIER SHOULD HAVE ALSO BEEN ACCE PTED BY THE ASSESSING OFFICER. IT MAY BE NOTED HERE THAT SHRI SUKHDEV KUMAR SINGLA THOUGH HAS SURRENDERED RS.2.40 CRORES FOR THE PURPOSE OF TAXATION IN ASSESSMENT YEAR UNDE R APPEAL IN HIS INDIVIDUAL RETURN OF INCOME BUT THE ASSESSIN G OFFICER ADDED RS.1.60 CRORES ON SUBSTANTIVE BASIS IN THE CA SE THE ASSESSEE SOCIETY AND DID NOT MAKE ANY FURTHER ADDIT ION OF RS.80 LACS IN THE CASE OF ASSESSEE SOCIETY. HOW T HE ASSESSING OFFICER HAS BIFURCATED TO MAKE PART ADDITION OF RS. 1.60 CRORES ON SUBSTANTIVE BASIS IN THE CASE OF ASSESSEE SOCIE TY IS NOT EXPLAINED AT ALL. IT IS ALSO NOT EXPLAINED AS TO WHEN RS.80 LACS CASH WAS ADDED ON SUBSTANTIVE BASIS IN THE CAS E OF SHRI 54 SUKHDEV KUMAR SINGLA ON MAKING SURRENDER IN HIS RET URN OF INCOME, HOW THE ASSESSING OFFICER COULD BIFURCATE T HE AMOUNT OF RS.1.60 CRORES OUT OF TOTAL SURRENDER OF RS.2.40 CRORES FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. FUR THER LOCKER NO.332 BELONGED TO SHRI SUKHDEV KUMAR SINGLA WAS ADMITTEDLY OPERATED BY HIM LASTLY ON 28.11.2007 WOU LD MEAN THAT THE CASH LYING IN THIS LOCKER PERTAINED TO THE ASSESSMENT YEAR 2008-09 BECAUSE AFTER THIS OPERATION ON 28.11. 2007 THIS LOCKER WAS OPENED BY INCOME TAX DEPARTMENT ON 15.7. 2008 ONLY. IT IS ADMITTED FACT THAT NO ADDITION HAVE BEEN MADE IN ASSESSMENT YEAR 2008-09. THEREFORE, THE ADDITION OF RS.37,12,000/- IS CASH FOUND FROM THIS LOCKER COULD NOT BE ADDED IN THE HANDS OF ASSESSEE SOCIETY IN ASSESSMEN T YEAR UNDER APPEAL I.E. 2009-10. THE REVENUE DEPARTMEN T ALSO HEAVILY RELIED UPON THE SLIPS FOUND IN THE CASES OF SOME OF THE STUDENTS, COPIES OF THE SAME ARE FILED AT PAGES 65 TO 69 OF THE PAPER BOOK. HOWEVER, IN THESE SLIPS IT IS NOWHER E MENTIONED IF ANY CAPITATION FEES HAVE BEEN PAID BY THE STUDEN TS TO ASSESSEE SOCIETY. THESE RECEIPTS CONTAINED ONLY THE FIGURE AS D-90 AND THE SAME IS REPEATED IN OTHER SLIPS. T HE ASSESSING OFFICER, THEREFORE, INFERRED THAT THESE S TUDENTS MIGHT HAVE PAID MORE FEES TO ASSESSEE SOCIETY. HO WEVER, THE RECORD OF THE ASSESSEE SOCIETY REVEALED THAT WHATEV ER FEES HAVE BEEN PAID BY THE STUDENTS HAVE BEEN RECORDED I N THE BOOKS OF ACCOUNT AND ALL THESE STUDENTS HAVE FILED THEIR AFFIDAVITS ON RECORD AFFIRMING THAT THEY HAVE PAID THE AMOUNT WHICH IS SHOWN IN THE RECEIPTS ISSUED BY THE ASSESS EE SOCIETY AND THEY WERE ADMITTED PURELY ON MERITS. THEY HAV E AFFIRMED 55 THAT THEY HAVE NOT PAID ANY DONATION/CAPITATION FEE OR ANY EXTRA CHARGES TO THE ASSESSEE SOCIETY. EVEN ALL TH E STUDENTS HAVE NOT BEEN EXAMINED BY THE REVENUE DEPARTMENT AN D THEIR AFFIDAVITS WERE DIS-BELIEVED WITHOUT ASSIGNING ANY VALID REASONS. THE ASSESSEE EXPLAINED THAT THE SLIPS PE RTAINED TO 10.7.2008 TO 14.7.2008 AND ON THE SAME DATES THE AS SESSEE SOCIETY HAD SOLD THE SCRAP. THE COPY OF THE CASH BOOK IS FILED AT PAGE 119 TO 120 OF THE PAPER BOOK TO SHOW THAT O N THE SAME DATES THERE IS SALE OF SCRAP BY THE ASSESSEE S OCIETY AND THE AMOUNTS HAVE BEEN ENTERED INTO THE CASH BOOK. THE SAME CASH BOOK WAS ALSO FOUND DURING THE COURSE OF SEARC H. THE ASSESSEE ALSO EXPLAINED THAT DURING THE YEAR 2003 T O 2008 THERE WERE VACANT SEATS AVAILABLE IN ASSESSEES EDU CATIONAL INSTITUTION AND AS SUCH THERE WAS NO REASON TO DEMA ND ANY CAPITATION FEE FROM ANY OF THE STUDENTS. THE ASSE SSING OFFICER HAS NOT ADVERSELY COMMENTED UPON THE SAME. THEREFORE, IT IS BELIEVABLE FACT THAT WHEN THERE WE RE VACANT SEATS AVAILABLE IN THE EDUCATIONAL INSTITUTION OF A SSESSEE SOCIETY, THERE WAS NO NEED FOR ANY STUDENT TO PAY C APITATION FEE/DONATION TO ASSESSEE SOCIETY. ALL THE RECEIPT S OF THE FEES RECEIVED FROM THE STUDENTS ARE ENTERED INTO THE BOO KS OF ACCOUNT OF THE ASSESSEE. THE COPY OF THE CASH BOO K IS FILED AT PAGE 111 TO 113 OF THE PAPER BOOK. THE ASSESSEE H AS ALSO FILED COPY OF THE LEDGER ACCOUNT OF THE STUDENTS IN WHOSE CASES THE SLIPS WERE FOUND TO SHOW THAT THEY HAVE PAID MO RE AMOUNT TO ASSESSEE SOCIETY AS PER THEIR LEDGER ACCOUNT AS AGAINST THE AMOUNT MENTIONED IN THE SEIZED RECEIPTS. THE COP IES OF SAME ARE FILED AT PAGES 114 TO 117 OF THE PAPER BOO K. IT MAY 56 ALSO BE NOTED HERE THAT THE ASSESSING OFFICER HAS E XAMINED SEVERAL ADMINISTRATIVE OFFICERS/TEACHING STAFF OF A SSESSEE SOCIETY TO ASCERTAIN THE PAYMENT OF CAPITATION FEE/ DONATION AND THEIR STATEMENTS ARE FILED IN THE PAPER BOOK AT PAGES 82 TO 86 AND NONE OF THESE STAFF MEMBERS OF ASSESSEE SOCIETY HAVE CONFIRMED THE PAYMENT OF ANY CAPITATION FEE/DO NATION TO ASSESSEE SOCIETY. RATHER THEY HAVE DENIED THE REC EIPT OF ANY CAPITATION FEE/DONATION BY THE ASSESSEE SOCIETY FRO M ANY STUDENT. SINCE THE SEIZED RECEIPTS DO NOT CONTAIN ANY DETAIL, THEREFORE, IT WAS THE PRESUMPTION OF THE ASSESSING OFFICER ONLY THAT SOME CAPITATION FEES HAVE BEEN RECEIVED FROM T HE STUDENTS BUT SUCH FACTS HAVE NOT BEEN CORROBORATED THROUGH ANY EVIDENCE OR MATERIAL. RATHER THE ASSESSING OF FICER HAS FAILED TO MAKE ANY ENQUIRY FROM THESE STUDENTS IN R ESPECT OF WHOM THESE RECEIPTS WERE PERTAINED. THE EMPLOYEES WHO HAVE ALLEGEDLY MAINTAINED THESE ROUGH RECEIPTS HAVE ALSO NOT BEEN EXAMINED BY THE ASSESSING OFFICER. THE ASSESSEE D ISPUTED THESE SLIPS BECAUSE THEY WERE CONTAINING DETAILS OF FEES RECEIVED FROM THE STUDENTS AS WELL AS THE AMOUNT RE CEIVED BY WAY OF SALE OF SCRAP. IT MAY ALSO BE NOTED HERE T HAT IN ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 AND 2008 -09, THE INCOMES DECLARED BY THE ASSESSEE SOCIETY HAVE B EEN ACCEPTED AND NO ADVERSE INFERENCE HAVE BEEN DRAWN A GAINST THE ASSESSEE. THE ASSESSING OFFICER HAS RELIED UP ON THE SLIPS FOUND DURING THE COURSE OF SEARCH WITHOUT HAVING AN Y CORROBORATIVE EVIDENCE. RATHER THE EVIDENCE PRODUC ED BY THE ASSESSEE CLEARLY SUPPORTS THE CASE OF ASSESSEE SOCI ETY THAT NO CAPITATION FEES HAVE BEEN RECEIVED BY THE ASSESSEE SOCIETY 57 FROM ANY STUDENTS. SINCE THE ENTIRE CASH FOUND HA VE BEEN OWNED BY SHRI SUKHDEV KUMAR SINGLA IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT AND HE HAS ALSO MADE SURRENDER OF THE SAME AMOUNT IN HIS INDIVIDUAL RETU RN OF INCOME AND ALSO EXPLAINED SOURCE OF THE SAME, THERE WAS NO REASON FOR THE ASSESSING OFFICER TO MAKE ANY SUBSTA NTIVE ADDITION IN THE HANDS OF THE ASSESSEE SOCIETY IN RE SPECT OF RS.1.60 CRORES. NO SPECIFIC, RELIABLE OR COGENT E VIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO PROVE THAT THE ASSESSEE SOCIETY RECEIVED ANY CAPITATION FEE OR ANY CASH BEL ONGED TO ASSESSEE SOCIETY. THEREFORE, BOTH THE ADDITIONS O F RS.1.60 CRORES AND RS.3,99,950/- IN THE HANDS OF ASSESSEE S OCIETY ARE WHOLLY UNWARRANTED AND ARE LIABLE TO BE DELETED. S INCE THE ASSESSING OFFICER HAS FAILED TO PROVE HIS CASE AGAI NST THE ASSESSEE ON ACCOUNT OF BOTH THE ADDITIONS, THEREFOR E, THERE IS NO QUESTION OF VIOLATION OF SECTIONS 11(3) AND 13(3 ) OF THE ACT IN THE CASE OF THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND DELETE THE ADDITION OF RS.3,99,950/- AND RS.1.6 0 CRORES IN THE HANDS OF THE ASSESSEE. WE ALSO HELD THAT THER E IS NO VIOLATION OF SECTIONS 11(3) AND 13(3) OF THE ACT IN THE CASE OF THE ASSESSEE. GROUND NOS. 1 TO 5 OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 44. GROUND NO.6 PERTAINS TO EXEMPTION OF INCOME UN DER SECTIONS 10(23C) AND SECTION 12AA OF THE ACT. THE APPEAL FOR CANCELLATION OF REGISTRATION WOULD BE DECIDED IN T HIS ORDER WHICH IS CONSEQUENTIAL IN NATURE AND NO FURTHER FIN DINGS ARE 58 REQUIRED. 45. THE APPEAL OF THE ASSESSEE IN ITA NO.227/CHD/2 013 IS ALLOWED. ITA NO.213/CHD/2012 (U/S 12AA OF THE ACT) (ASSESSEES APPEAL) : 46. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(CENTRAL ), GURGAON DATED 19.12.2011 CANCELLING/WITHDRAWING REGISTRATION UNDER SECTION 12AA OF THE ACT AND APPR OVAL UNDER SECTION 80G(5) OF THE ACT. 47. BRIEFLY, THE FACTS NOTED IN THE IMPUGNED ORDER ARE THAT THE ASSESSEE SOCIETY WAS REGISTERED UNDER SOCI ETIES ACT ON 6.8.2002 WITH REGISTRAR OF SOCIETIES, PUNJAB. THE ASSESSEE SOCIETY WAS REGISTERED UNDER SECTION 12AA VIDE ORDER OF COMMISSIONER OF INCOME TAX-II, DATED 17.1.2003 E FFECTIVE RETROSPECTIVELY FROM 12.6.2002. REGISTRATION UNDE R SECTION 80G WAS ALSO GRANTED TO THIS SOCIETY VIDE ORDER DAT ED 20.4.2005. THE ASSESSEE SOCIETY HAS THE MANAGING BODY. THE DETAILS OF SAME ARE NOTED IN THE IMPUGNED ORDER ALONGWITH AIMS AND OBJECTS WHICH ARE MAINLY AND SOLELY ON ACC OUNT OF EDUCATIONAL ACTIVITIES. THE LEARNED COMMISSIONER OF INCOME TAX ALSO NOTED VARIOUS EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE SOCIETY IN THE IMPUGNED ORDER AND ALSO NOT ED THAT AT THE TIME OF ADMISSION, IN CASE SOME SEATS REMAIN VA CANT AFTER COUNSELING PROCESS, THE SEATS ARE CONVERTED INTO MA NAGEMENT QUOTA SEATS. THE FEES STRUCTURE OF VARIOUS COLLEG ES RUN BY 59 THE ASSESSEE SOCIETY ARE ALSO MENTIONED ALONGWITH F EES FIXED BY THE GOVERNMENT. IT IS ALSO NOTED THAT THE SEA RCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE SOCIETY ON 15 .7.2008 AND VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AS H AVE BEEN DISCUSSED AND CONSIDERED IN THE APPEALS OF THE ASSE SSEE SOCIETY IN ASSESSMENT YEARS 2003-04, 2004-05 AND 20 09-10 ABOVE. IT IS ALSO NOTED THAT THE ASSESSEE SOCIETY HAS ALLEGEDLY RECEIVED CAPITATION FEES FROM THE STUDENT S WHICH ARE NOTED FROM THE SEIZED SLIPS, WHICH ACCORDING TO THE ASSESSEE CONTAINED DETAILS OF FEES AS WELL AS SALE OF SCRAP. IT IS ALSO NOTED THAT ONE RECEIPT WAS SEIZED FROM SHRI SUKHDEV KUMAR SINGLA DATED 26.7.2002 FOR RECEIPT OF RS.10 LACS BY CAPT. BIKRAMJIT SINGH IN CASH AS PAYMENT FOR SALE OF LAND TO THE ASSESSEE SOCIETY, WHICH IS NOT REFLECTED IN THE BOO KS OF ACCOUNT OF THE ASSESSEE SOCIETY AND SOME OTHER DOCU MENTS WERE RECOVERED TO SHOW GIFT DEED OF LAND BY CAPT. B IKRAMJIT SINGH TO THE ASSESSEE SOCIETY. IT IS NOTED THAT C APT. BIKRAMJIT SINGH GIFTED THE LAND OF VALUE OF RS.10,2 3,500/- BUT EARLIER RECEIVED CASH FROM THE ASSESSEE SOCIETY. THE GIFT DEED WAS, THEREFORE, COLORABLE DEVICE USED BY THE A SSESSEE SOCIETY TO PURCHASE THE LAND FROM CAPT. BIKRAMJIT S INGH. IT IS ALSO NOTED IN THE IMPUGNED ORDER ABOUT THE BOGUS /FICTITIOUS DONATION RECEIVED BY THE ASSESSEE SOCIETY IN ASSESS MENT YEARS 2003-04 AND 2004-05 ALONGWITH COMMISSION PAID @ 2%. THE ADDITIONS MADE IN ASSESSMENT YEARS 2003-04 AND 2004 -05 ON THAT ACCOUNT HAVE BEEN DISCUSSED AND NOTED. THE L EARNED COMMISSIONER OF INCOME TAX ALSO NOTED MIS-USE OF FU NDS OF THE ASSESSEE SOCIETY BY THE CHAIRMAN AND HIS FAMILY MEMBERS. 60 THE LEARNED COMMISSIONER OF INCOME TAX ALSO NOTED V ARIOUS CARS USED BY SHRI SUKHDEV KUMAR SINGLA FOR WHICH NO LOGBOOKS HAVE BEEN MAINTAINED. HE HAS ALSO DISCUS SED THE ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WHICH IS COM PLETED ON 31.12.2010 AND THE ASSESSMENT IS REPRODUCED TO S HOW THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER OF RS. 1.60 CRORES AND RS.3,99,950/- IN THE CASE OF ASSESSEE SO CIETY ON SUBSTANTIVE BASIS. IT WAS, THEREFORE, FOUND IN TH E BACKGROUND OF THESE ADDITIONS THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTIONS 11 AND 80G OF THE ACT BE CAUSE THE ASSESSEE WAS INDULGED IN RECEIVING CAPITATION FEES FROM THE STUDENTS VIOLATING THE GENUINENESS OF THE ACTIVITIE S OF THE SOCIETY. THE SHOW CAUSE NOTICE WAS GIVEN TO THE A SSESSEE SOCIETY TO EXPLAIN THE POSITION. THE LEARNED COMM ISSIONER OF INCOME TAX AFTER CONSIDERING VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEARS 2003-04, 2004 -05 AND 2009-10 AND MATERIAL ON RECORD, SUMMARIZED THAT THE ASSESSEE SOCIETY HAS RECEIVED CAPITATION FEES FROM THE STUDENTS OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, THE BOOKS OF ACCOUNT DO NOT REFLECT TRUE AFFAIRS OF THE SOCIE TY. THE ASSESSEE SOCIETY HAS INTRODUCED UNACCOUNTED INCOME IN THE GARB OF CORPUS FUNDS BY PAYING COMMISSION FOR OBTAI NING ACCOMMODATION ENTRY. THE ASSESSEE SOCIETY HAS PAI D CASH TO THE MEMBERS IN LIEU OF LAND DONATED BY THEM AND TH E CASH PAID IS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE FUNDS OF THE ASSESSEE SOCIETY HAVE BEEN MIS-USED BY ITS MEMB ERS FOR PERSONAL USE, LIKE PURCHASE OF CARS AND OTHER HOUSE HOLD ARTICLES, ETC. 61 48. THE LEARNED COMMISSIONER OF INCOME TAX WAS, THEREFORE, SATISFIED THAT THE ACTIVITIES OF THE ASS ESSEE TRUST/SOCIETY ARE NOT GENUINE AND HAVE NOT BEEN CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THEREFOR E, REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 17.1.2003 WAS CANCELLED.. FURTHER RECOGNITI ON UNDER SECTION 80G WAS ALSO WITHDRAWN ACCORDINGLY. 49. THE ASSESSEE IS IN APPEAL CHALLENGING THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX IN CANCELLING/WITHDRAWING THE REGISTRATION UNDER SECTI ONS 12AA AND 80G OF THE ACT IN THIS ORDER. 50. BOTH THE PARTIES STATED THAT THE REGISTRATION WAS CANCELLED UNDER SECTION 12AA OF THE ACT AND APPROVA L UNDER SECTION 80G OF THE ACT WAS WITHDRAWN BECAUSE ALL TH E ADDITIONS WERE MADE IN ASSESSMENT YEARS 2003-04, 20 04-05 AND 2009-10 BY THE ASSESSING OFFICER. THEREFORE, THE FINDINGS ON THIS WOULD DEPEND UPON THE FINDINGS GIV EN IN ASSESSMENT YEARS 2003-04, 2004-05 AND 2009-10 AND T HE ISSUE IS ACCORDINGLY CONSEQUENTIAL IN NATURE. 51. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT APPE ARS THAT THE LEARNED COMMISSIONER OF INCOME TAX CANCELLED THE REGISTRATION UNDER SECTION 12AA OF THE ACT ALONGWIT H THE APPROVAL UNDER SECTION 80G OF THE ACT MAINLY ON THE BASIS OF FINDINGS GIVEN BY THE ASSESSING OFFICER IN ASSESSME NT YEARS 2003-04, 2004-05 AND 2009-10 IN RESPECT OF WHICH TH E 62 APPEALS OF THE ASSESSEE WERE ALSO DECIDED IN THIS O RDER IN ITA NO.214/CHD/2013, ITA NO.226/CHD/2013, ITA NO.215/CHD/2013 AND ITA NO.227/CHD/2013. IN ALL T HE ABOVE APPEALS OF THE ASSESSEE SOCIETY THE ISSUES OF RECEIPT OF DONATIONS/CORPUS FUNDS, COMMISSION PAID ON DONATIONS/CORPUS FUNDS, CAPITATION FEES RECEIVED FR OM THE STUDENTS AND THE CASH AMOUNT RECOVERED FROM THE RES IDENCE OF SHRI SUKHDEV KUMAR SINGLA ARE IN ISSUE. ALL THE I SSUES HAVE BEEN DEALT IN DETAIL AND ALL THE ADDITIONS HAVE BEE N DELETED AGAINST THE ASSESSEE SOCIETY. THEREFORE, NO ADDIT ION IS LEFT FOR CANCELING THE REGISTRATION UNDER SECTIONS 12AA OR WITHDRAWING APPROVAL UNDER SECTION 80G OF THE ACT. IT MAY ALSO BE NOTED HERE THAT THE ISSUE OF GIFT DEED AND RECEIPT OF RS.10 LACS BY CAPT.BIKRAMJIT SINGH IN LIEU OF THE G IFT OF THE LAND REMAINED SUBJECT MATTER IN APPEAL BEFORE THE L EARNED COMMISSIONER OF INCOME TAX IN ASSESSMENT YEAR 2003- 04 AND THE LEARNED COMMISSIONER OF INCOME TAX IN PARA 6.1. 2 HAS NOTED THAT THE ASSESSEE SOCIETY WAS REGISTERED WITH THE REGISTRAR OF SOCIETIES ON 6.8.2002 AND THE ALLEGED TRANSACTION OF RS.10 LACS PERTAINED TO DATED 26.7.2002 I.E. THE PERIOD BEFORE THE REGISTRATION OF THE SOCIETY AND ACCORDIN GLY THE ADDITION WAS DELETED IN THE HANDS OF ASSESSEE SOCIE TY. THE DEPARTMENT HAS PREFERRED APPEAL IN ITA NO.214/CHD/2 013 BUT DID NOT CHALLENGE THE DELETION OF ADDITION OF RS.10 LACS IN THE HANDS OF THE ASSESSEE SOCIETY. THEREFORE, THE SAI D WOULD NOT BE INCRIMINATING CIRCUMSTANCES AGAINST THE ASSESSEE SOCIETY FOR CANCELLATION OF REGISTRATION UNDER SECTION 12AA OR APPROVAL UNDER SECTION 80G OF THE ACT. THE CRUX OF THE FIN DINGS OF THE 63 LEARNED COMMISSIONER OF INCOME TAX IN THE IMPUGNED ORDER WOULD SHOW THAT THE LEARNED COMMISSIONER OF INCOME TAX HAD TAKEN UP ALL THE ISSUES WHICH WERE TAKEN UP BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS FOR ASSESSMENT YEA RS 2003- 04, 2004-05 AND 2009-10 FOR THE PURPOSE OF CANCELIN G THE REGISTRATION UNDER SECTION 12AA AND APPROVAL UNDER SECTION 80G OF THE ACT. HOWEVER, THE APPEALS HAVE BEEN FI NALLY DECIDED BY THE TRIBUNAL AND ALL SUCH ADDITIONS HAVE BEEN DELETED. THEREFORE, THERE IS NO MATERIAL AVAILABL E AGAINST THE ASSESSEE SOCIETY AT THIS STAGE TO SHOW THAT ASSESSE ES ACTIVITIES ARE NOT GENUINE OR HAVE NOT BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. WE MAY ALSO NOTE HERE THAT IN THE REMAINING ASSESSMENT YEARS 2005-06 , 2006- 07, 2007-08 AND 2008-09, THE REVENUE DEPARTMENT DID NOT FIND ANY ADVERSE MATERIAL AGAINST THE ASSESSEE TO P ROVE THAT ITS ACTIVITIES ARE NOT GENUINE. THERE IS NO VIOLA TION OF SECTIONS 11, 12 AND 13 OF THE ACT. THERE IS ALSO NO VIOLATION OF CONDITIONS UNDER SECTION 80G OF THE ACT. THERE FORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES, IT IS CLEAR THAT THE ASSESSEE SOCIETY HAS SOLELY CARRIED OUT THE GENUINE EDUCATIONAL ACTIVITIES AND AS SUCH, THERE I S NO REASON TO CANCEL THE REGISTRATION UNDER SECTION 12AA OF TH E ACT OR WITHDRAWING THE APPROVAL UNDER SECTION 80G OF THE A CT. 52. WE MAY ALSO NOTE HERE THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS PASSED THE IMPUGNED ORDER ON 19.12.2011 WITHOUT WAITING FOR THE APPEALS TO BE DECIDED BY THE LEARNED COMMISSIONER OF INCOME TAX FOR ASSES SMENT 64 YEARS 2003-04, 2004-05 AND 2009-10. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAD DECIDED THE APPEALS OF THE ASSESSEE IN ASSESSMENT YEARS 2003-04 AND 200 4-05 VIDE ORDERS DATED 17.12.2012 AND MOST OF THE ADDITIONS H AVE BEEN DELETED BY HIM AGAINST THE ASSESSEE. THE DEPARTME NTAL APPEALS WERE PENDING BEFORE THE TRIBUNAL. THEREFO RE, IN THE FITNESS OF THE THINGS, THE LEARNED COMMISSIONER OF INCOME TAX SHOULD NOT HAVE TAKEN THE MATTER IN HASTE FOR CANCE LLATION OF REGISTRATION UNDER SECTION 12AA OR WITHDRAWAL OF AP PROVAL UNDER SECTION 80G OF THE ACT AGAINST THE ASSESSEE TILL THE APPEALS IN THE CASE THE ASSESSEE HAVE BEEN FINALLY DECIDED. CONSIDERING THE ABOVE DISCUSSION WE DO NOT FIND ANY JUSTIFICATION FOR LEARNED COMMISSIONER OF INCOME TA X TO PASS THE ORDER ON 19.12.2011 WITHOUT WAITING FOR THE APP EALS TO BE DECIDED BY THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) IN THE CASE OF THE ASSESSEE. CONSIDERING THE TOT ALITY OF THE FACTS AND CIRCUMSTANCES AND HISTORY OF THE ASSESSEE , WE SET ASIDE THE IMPUGNED ORDER DATED 19.12.2011 AND RESTO RE THE REGISTRATION UNDER SECTION 12AA AND APPROVAL UNDER SECTION 80G OF THE ACT IN THE CASE OF THE ASSESSEE AS WAS E ARLIER GRANTED BY THE LEARNED COMMISSIONER OF INCOME TAX. 53. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.213/CHD/2012 IS ALLOWED. ITA NO.228/CHD/2013 (ASSESSMENT YEAR 2009-10) (ASSESSEES APPEAL) :(SHRI SUKHDEV KUMAR SINGLA): 54. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME 65 TAX(APPEALS)(CENTRAL), GURGAON DATED 17.12.2012 FOR ASSESSMENT YEAR 2009-10. 55. THE LEARNED COUNSEL FOR ASSESSEE DID NOT PRESS GROUND NO.3 OF THE APPEAL OF THE ASSESSEE. THE SA ME IS ACCORDINGLY DISMISSED AS WITHDRAWN. 56. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND ARE REJECTED. 57. THE SOLE GROUND OF APPEAL UNDER CHALLENGE IS G ROUND NO.2, CHALLENGING THE ORDER OF THE LEARNED CIT (APP EALS) IN CONFIRMING THE ADDITION OF RS.1.60 CRORES AS DEEMED INCOME UNDER SECTION 69B OF THE ACT IN THE HANDS OF INDO G LOBAL EDUCATION FOUNDATION, WHEREAS THE SAID INCOME WAS E ARNED BY SHRI SUKHDEV KUMAR SINGLA FROM REAL ESTATE BUSINESS . 58. THIS APPEAL PERTAINS TO SHRI SUKHDEV KUMAR SIN GLA. IN THIS CASE, THE FACTS ARE SAME AS HAVE BEEN CONSI DERED IN THE CASE ASSESSEE SOCIETY, NAMELY INDO GLOBAL EDUCA TION FOUNDATION IN ITA NO.227/CHD/2013 FOR ASSESSMENT YE AR 2009-10. THE ASSESSING OFFICER ADDED RS.1.60 CRORE S ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE SOCI ETY AND MADE PROTECTIVE ASSESSMENT OF THE SAME AMOUNT IN TH E HANDS OF SHRI SUKHDEV KUMAR SINGLA ON THE BASIS OF THE SA ME REASONS AS HAVE BEEN GIVEN IN THE CASE OF THE ASSES SEE SOCIETY. THE ASSESSEE MADE SIMILAR SUBMISSIONS BE FORE THE LEARNED COMMISSIONER OF INCOME TAX AND IT WAS EXPLA INED THAT THE ASSESSEE HAD DECLARED RS.2.40 CRORES IN HIS RET URN OF INCOME. THEREFORE, SUCH ADDITION SHOULD NOT BE MA DE ON 66 SUBSTANTIVE BASIS IN THE CASE THE ASSESSEE SOCIETY. THE LEARNED COMMISSIONER OF INCOME TAX, HOWEVER, DID NO T AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND NOTED THAT SINCE THE SUBSTANTIVE ADDITION IS CONFIRMED BY HIM IN THE HAN DS OF THE ASSESSEE SOCIETY M/S INDO GLOBAL EDUCATION FOUNDATI ON, THE PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE OF RS.1.46 CRORES WAS DELETED. 59. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ISSUE IS SAME AS HAVE BEEN CONSID ERED IN THE CASE THE ASSESSEE SOCIETY IN ASSESSMENT YEAR 2009-1 0 IN ITA NO.227/CHD/2013. BOTH THE PARTIES STATED THAT THE ISSUES BEING SAME MAY BE DECIDED ACCORDINGLY AS HAVE BEEN DECIDED IN THE CASE THE ASSESSEE SOCIETY. 60. WHILE CONSIDERING SIMILAR ISSUE IN THE CASE TH E ASSESSEE SOCIETY IN ITA NO.227/CHD/2013 FOR SAME ASSESSMENT YEAR 2009-10, WE HAVE DELETED THE ADDITI ON OF RS.1.60 CRORES IN THE CASE ASSESSEE SOCIETY. THER EFORE, SUBSTANTIVE ADDITION SHALL HAVE TO BE MADE IN THE C ASE OF THE PRESENT ASSESSEE. THE ORDERS OF THE AUTHORITIES B ELOW ARE ACCORDINGLY SET ASIDE AND IT IS DIRECTED THAT THE A MOUNT OF RS.1.60 CRORES SHALL BE ADDED ON SUBSTANTIVE BASIS IN THE HANDS OF THE PRESENT ASSESSEE SHRI SUKHDEV KUMAR SI NGLA AND IT BEING A PART OF THE RETURN OF INCOME, NO SEPARAT E ADDITION IS REQUIRED. 61. IN THE RESULT THE FINDINGS OF THE AUTHORITIES B ELOW IN MAKING PROTECTIVE ASSESSMENT IN THE HANDS OF THE AS SESSEE ARE 67 SET ASIDE AND ARE QUASHED. 62. IN THE RESULT, GROUND NO.2 OF THE APPEAL OF TH E ASSESSEE IS ALLOWED. 63. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.228/CHD/2013 IS PARTLY ALLOWED. 64. IN THE RESULT; I) THE APPEAL OF THE ASSESSEE IN ITA NO.226/CHD/201 3 IS PARTLY ALLOWED. II) THE APPEAL OF THE REVENUE IN ITA NO.214/CHD/201 3 IS DISMISSED. III) THE APPEAL OF THE REVENUE IN ITA NO.215/CHD/2013 IS DISMISSED. IV) THE APPEAL OF THE ASSESSEE IN ITA NO.227/CHD/2013 IS ALLOWED. V) THE APPEAL OF THE ASSESSEE IN ITA NO.213/CHD/2012 IS ALLOWED. VI) THE APPEAL OF THE ASSESSEE IN ITA NO.228/CHD/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND JANUARY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH