DCIT, Hyderabad V. Sri Sarada Educational Society, Hyderabad

ITA 238/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3372 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Salary income; Deemed to accrue or arise in india; Revised return
• Section: 69C; 133A; 139(5); 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.237/H/2010 ASSESSMENT YEAR 2004-05 ITA NO.238/H/2010 ASSESSMENT YEAR 2005-06 THE DY. CIT, CENTRAL CIRCLE 6 HYDERABAD VS SMT. SARADA EDUCATIONAL SOCIETY, HYDERABAD. (PAN AABAS 0063 P) APPELLANT RESPONDENT APPELLANT BY : SHRI K.E. SUNIL BABU RESPONDENT BY : SHRI P. MURALI MOHAN RAO ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEAL PREFERRED BY THE REVENUE IS DIRE CTED AGAINST THE COMMON ORDER PASSED BY THE CIT(A) I, HYDERABAD DATED 20.12.2007 AND PERTAINS TO THE ASSESSMENT YEARS 2004-05 & 2005-06. SINCE ISSUES INVOLVED IN THESE TWO APPEALS ARE COMMON IN NATURE, THEY ARE CLUBBED, HEARD AND DISPOSED OFF TOGETHER VIDE THIS COMMON ORDER FOR TH E SAKE OF CONVENIENCE. 2. THE MAIN COMMON GRIEVANCE OF THE REVENUE IN IT S APPEALS IN ITA NOS.237 & 238/H/2010 ARE THAT THE CIT(A) ERRED IN ALLOWING EXEMPTION U/S 10(23C)(VI) OF THE IT ACT. THOUGH AS CLAIMED, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 10(23C) ((IIAD) IF ITS GROSS RECEIPTS ARE LESS THAN 1 CRORE, SUCH CLAIM CAN BONAFIDELY BE CLAIMED WHEN THE AFFAIRS OF THE INSTITUTION WERE CONDUCTED IN ALL FAIRNESS WITHOUT RESORTING TO ANY DUBIOUS AND UNFAIR MEANS TO SUPPRESS THE REAL RECEIPTS. 3. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT WAS CONDUCTED IN THE GROUP CASES OF SHRI. MALLESH YADAV ON 4.8.2005. APPARENTLY, THE ASSESSEES TRUST IS A TENANT IN THE BUILDING OWNED BY SHRI B. ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 2 MALLESH YADAV. ACCORDINGLY, THE ASSESSEES PREMISE S WERE ALSO SURVEYED U/S 133A OF THE ACT. DURING THE COURSE OF SURVEY, IT W AS FOUND THAT THE ASSESSEE HAD TAKEN TWO PREMISES ONE OWNED BY SHRI B. MALLESH YADAV AND THE OTHER OWNED BY SMT. CH. HEMAVATHI LOCATED AT AMEERPET, HY DERABAD. IT WAS FOUND THAT SUBSTANTIAL AMOUNT WAS PAID BY WAY OF CA SH TO THE OWNERS OF THE BUILDING TOWARDS RENT. FOR EXAMPLE, FOR THE BUILDI NG OWNED BY SHRI B. MALLESH YADAD, THE MONTHLY RENT WAS RS.80,000 OUT O F WHICH ONLY RS.23,000/- WAS BEING PAID BY CHEQUE AND BALANCE RS .57,000/- IN CASH. SIMILARLY, THE MONTHLY RENT OF THE BUILDING OWNED B Y SMT. HEMAVATHI WAS RS.50,000/- OUT OF WHICH RS.20,000/- ONLY WAS BEING PAID BY CHEQUE AND THE BALANCE IN CASH. DURING THE SURVEY STATEMENT OF THE ACCOUNTANT OF THE TRUST AND THE TREASURER WAS ALSO RECORDED, WHO CONF IRMED THAT THE PORTION OF THE RENT WAS BEING PAID IN CASH. IT WAS STATED BY THE TREASURER THAT THE CASH PAYMENTS HAVE BEEN MADE BASED ON ORAL UNDERSTANDING AND ON REQUEST FROM THE BUILDING OWNERS AND PROPER VOUCHERS HAVE B EEN MAINTAINED FOR SUCH PAYMENTS. IT WAS STATED THAT SINCE THE TRUST NEEDED SUITABLE PLACE TO RUN ITS COLLEGES THEY WERE FORCED TO MAKE SUCH CASH PAYMENTS. THE VOUCHERS RELATING TO THE CASH PAYMENTS WERE ALSO PR ODUCED BEFORE THE OFFICIALS PRESENT DURING THE SURVEY. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FILE THE DETAILS OF RENTAL PAYMENTS PAID T O THE OWNERS BOTH THROUGH BANKING CHANNELS AND CASH. AS PER THE DETAILS FURN ISHED THE CASH PAYMENTS MADE DURING THE FY 2003-04 AND 2004-05 TO THE BUILD ING OWNERS ARE AS BELOW: F. Y F.Y 2003-04 2004-05 A) B. MALLESH YADAV RS.6,03,092 RS.6,72,062 B) SMT HEMAVATHI & SMT PUSHPA LATHA RS.3,12,560 RS.3,65,007 ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 3 3.2. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 WAS FILED PRIOR TO THE DATE OF SURVEY AND THAT OF ASSESSMENT YEAR 2005-06 WAS FILED ON 10.11.2005 AFTER THE DATE OF SURVEY. IN THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 153C FOR THE ASSESSMENT YEAR 2004-05, TH E ASSESSEE FILED REVISED RECEIPT AND PAYMENT ACCOUNT, WHEREIN IT HAD INCREAS ED THE RECEIPT TO THE EXTENT OF UNACCOUNTED EXPENDITURE ON RENT AND HAD C ORRESPONDINGLY INCREASED THE EXPENDITURE ON RENT. IN COURSE OF TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A LETTER DATED 17.1 1.2007 WHEREIN IT WAS SUBMITTED THAT THEIRS WAS AN EDUCATION INSTITUTION WHICH COMES UNDER THE PROVISION OF SECTION 10(23C)(IIIAD). SINCE THE GRO SS RECEIPTS OF THE INSTITUTIONS FOR ALL THE YEARS COVERED UNDER ASSESS MENT WAS BELOW RS.1 CRORE THE INCOME OF THE INSTITUTION WAS EXEMPT UNDE R THE AFORESAID PROVISION. THE ASSESSEE SUBMITTED THAT THE RECEIPT S AND PAYMENTS ACCOUNT WAS MODIFIED SHOWING THE ACTUAL PAYMENT OF RENT OUT OF CORRECT RECEIPTS OF THE YEAR AND THE REVISED RETURNS HAVE BEEN FILED VO LUNTARILY DULY SUPPORTED BY AUDIT REPORT. IT WAS ALSO SUBMITTED THAT SECTIO N 10(23C) (IIIAD) GIVES A BLANKET EXEMPTION OF THE INCOME OF THE INSTITUTION SINCE THE GROSS RECEIPTS DOES NOT EXCEED RS.1 CRORE AND THE INSTITUTIONS EXI STS SOLELY FOR THE PURPOSE OF EDUCATION. MOREOVER, THE ENTIRE RENT PAID WAS A PPLIED FOR THE PURPOSE OF ADVANCEMENT OF EDUCATION AND NOT FOR ANY OTHER PURP OSE. THE SAME HAVING BEEN APPLIED FOR THE PURPOSE OF WHICH THE INSTITUTI ON EXISTED NO ADVERSE INFERENCE MAY BE DRAWN FOR THE MISTAKE WHICH HAD CR EPT INTO THE COMPUTATION OF INCOME AS THERE WAS A MATCHING MISTA KE BY WAY OF RECEIPT AS WELL AS EXPENDITURE. 3.3. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE CLAIM THAT SINCE THE RECEIPT OF THE INSTITUTION IS BELOW RS.1 CRORE A BLANKET EXEMPTION WAS PROVIDED U/S 10(23C)(IIIAD). THE ASSESSING OFF ICER WAS OF THE VIEW THAT THE ASSESSEE WOULD BE ELIGIBLE FOR THE EXEMPTION WH EN THE AFFAIRS OF THE INSTITUTION IS CONDUCTED WITH ALL FAIRNESS WITHOUT ANY DUBIOUS OR UNFAIR MEANS. ACCORDINGLY, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND ADDED THE RENT PAID IN CASH DURING THE FY 2003- 04 AND 2004-05 ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 4 TREATING THE SAME AS UNEXPLAINED EXPENDITURE U/S 69 C OF THE IT ACT. THUS THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2003-05 AN D 2005-06 WAS COMPUTED AT RS.9,15,652/- AND RS.10,37,069 RESPECTI VELY. 4. ON APPEAL THE CIT(A) OBSERVED THAT SINCE THE A SSESSEE HAS FILED RETURN IN RESPONSE TO NOTICE U/S 153C OF THE IT ACT ALONG WITH THE REVISED RECEIPT AND PAYMENTS ACCOUNT WITH DULY CERTIFIED BY THE AUDIT REPORT AND THE EXPENDITURE IN THE FORM OF CASH PAYMENT OF RENT REFLECTED IN THE PROFIT AND LOSS ACCOUNT AND THE SAME SAID TO BE EXPLAINED BY THE ASSESSEE AND THE ADDITION U/S 69C IS NOT POSSIBLE. REGARDING DENIAL OF EXEMPTION U/S 10(23C), HE HAS OBSERVED THAT THE INCOME ASSESSED U NDER THE HEAD INCOME FROM OTHER SOURCES WHICH IS ALSO AN INCOME SAID TO HAVE BEEN RECEIVED BY THE EDUCATIONAL INSTITUTIONS AND THE SAID INCOME UN DISPUTEDLY APPLIED FOR THE PURPOSE OF EDUCATIONAL INSTITUTION BY WAY OF PA YMENT OF RENT AND ACCORDINGLY, PROVISIONS OF SECTION 10(23)(IIIAD) WI LL APPLY TO THAT INCOME AND THE ASSESSEE IS ENTITLED EXEMPTION U/S 1023(C) (III AD) OF THE IT ACT. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT CASE, AN ADDIT ION OF SUM OF RS.9,50,652/- FOR THE ASSESSMENT YEAR 2004-05 AND R S.10,37,069/- FOR THE ASSESSMENT YEAR 2005-06 WAS MADE ON ACCOUNT OF NON RECORDING OF CASH PAYMENT OF RENT TO THE LAND LORD. THIS FACT WAS UN EARTHED BY THE DEPARTMENT CONSEQUENT TO THE SURVEY ACTION, U/S 133 A OF THE IT ACT. CONSEQUENT TO SURVEY, NOTICE U/S 153C DATED 10.8.20 06 WAS ISSUED CALLING FOR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2000-0 1 TO 2005-06. THIS SURVEY WAS W.R.T. SEARCH U/S 132 OF THE ACT WAS CAR RIED OUT ON THE RESIDENTIAL PREMISES OF MR.B. MALLESH YADAV WHO IS THE LAND LORD OF THE ASSESSEE. THE ASSESSEE ORIGINALLY FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 30.10.2004 AND FOR THE A SSESSMENT YEAR 2005- 06 ON 1.8.2005. CONSEQUENT TO NOTICE U/S 153C, THE ASSESSEE FILED REVISED RETURN ON 25.8.2006 FOR THE ASSESSMENT YEARS 2004-0 5 AND 2005-06. IN THE ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 5 REVISED RETURN, THE ASSESSEE HAS TAKEN INTO CONSIDE RATION THE NON ACCOUNTING OF RENTAL PAYMENTS TO LANDLORDS. THE AS SESSING OFFICER WAS OF THE OPINION THAT THIS IS AN AFTER THOUGHT AND CONSI DERED THE IMPUGNED CASH PAYMENT OF RENT AS UNEXPLAINED INCOME U/S 69C OF TH E IT ACT. ADMITTEDLY, THERE IS A LAPSE ON THE PART OF THE ASSESSEE TO ACC OUNT THE CASH PAYMENT OF RENT AS FOLLOWS: SHRI C.P. MALLESH YADAV F.Y. 2003-04 (AY 2004-05) RS.6,03,092 FY 2004-05 (AY 2005-06) RS.6,72,062 UPTO JUNE, 2005 (AY 2006-07) RS.1,74,500 SMT. CH. HYMAVATHI & SMT. CH. PUSHPALATHA: F.Y. 2003-04 (AY 2004-05) RS.3,12,560 FY 2004-05 (AY 2005-06) RS.3,65,007 UPTO JUNE, 2005 (AY 2006-07) RS.97,095 6. THE CONTENTION OF THE ASSESSEES COUNSEL HEREI N IS THAT THE ASSESSEE HAS CONSIDERED THESE PAYMENTS IN THE REVIS ED RETURN AND THERE IS NO SURVIVING LAPSE ON THAT ISSUE. NEITHER THE ADDI TION CAN BE MADE ON THIS NEITHER COUNT NOR EXEMPTION U/S 10(23C) (IIIAD) CAN BE DENIED. 7. IN OUR OPINION, THE QUESTION OF UN-RECORDING O F CASH PAYMENT OF RENT IS TO BE DETERMINED W.R.T. THE ORIGINAL RETURN . EVEN THE EXPENDITURE IS ACCOUNTED WHILE FILING THE REVISED RETURN AFTER THE SURVEY U/S 133A OF THE ACT OR CONSEQUENT TO THE SEARCH ACTION, THE ASSESSE E STILL HAS TO EXPLAIN WHY THE EXPENDITURE WAS NOT SHOWN OR FURNISHED IN THE O RIGINAL RETURN. IN CASE OF BONA FIDE ERROR OR IN CASE OF A TECHNICAL OR VEN IAL BREACH, THE ASSESSEE MIGHT NOT BE HELD GUILTY OF DEFAULT. ON THE OTHER HAND, WHEN THE ASSESSEE HAS INTENTIONALLY UN-RECORDED THE CASH PAYMENT OF R ENT AND THE ASSESSEE WAS FORCED TO FILE REVISED RETURN CONSEQUENT TO SUR VEY OPERATIONS, THE ASSESSEE CANNOT CLAIM THAT IT HAS ACTED BONAFIDELY. BLAME WORTHINESS ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 6 ATTACHED TO THE ASSESSEE W.R.T. THE ORIGINAL RETURN CANNOT BE AVOIDED BY FINING REVISED RETURN AFTER CONCEALMENT WAS DETECTE D BY THE REVENUE AUTHORITIES IN THE COURSE OF SURVEY/SEARCH ACTION. WHERE THE UN-ACCOUNTING OF THE CASH PAYMENT OF RENT WAS NOTICED BY THE REVE NUE AUTHORITIES IN THE COURSE OF SURVEY ACTION, AND THE ASSESSEE WAS FILED REVISED RETURN CONSIDERING THE UNACCOUNTED PAYMENT OF RENT IN THE REVISED RETURN WHICH IS NOT VOLUNTARY BUT WAS AS A RESULT OF DETECTION BY T HE REVENUE AUTHORITIES, FILING OF REVISED RETURN IS OF NO CONSEQUENCE. SEC TION 139(5) APPLIES TO LIMITED RECOURSE OF CASES WHEREIN THE ORIGINAL RETU RN THERE WAS ANY OMISSION OR ANY WRONG STATEMENT AND NOT TO CASES OF CONCEALM ENT OR FALSE STATEMENT BY THE ASSESSEE. IF A CASE DOES NOT FALL U/S 139(5 ) OF THE IT ACT, THE FACT THAT REVISED RETURN WAS FILED AFTER ANY INVESTIGATION ST ARTED BY THE IT DEPARTMENT WILL BE OF NO CONSEQUENCE. IN THE PRESENT CASE, AD MITTEDLY, THE ASSESSEE HAS NOT DISCLOSED THE IMPUGNED CASH PAYMENT OF RENT IN ITS BOOKS OF ACCOUNT. THERE IS NO WHISPER ABOUT THESE PAYMENTS IN THE ORI GINAL RETURN. THE DEPARTMENT DETECTED THESE CASH PAYMENTS IN THE COUR SE OF SURVEY ACTION AND THEREAFTER ISSUED NOTICE U/S 153C. AFTER RECEI PT OF THE NOTICE, THE ASSESSEE HAS FILED REVISED RETURN DISCLOSING THE IM PUGNED CASH PAYMENT OF RENT WHICH IS NOTHING BUT AN AFTERTHOUGHT. IN OUR O PINION, INCLUSION OF CASH PAYMENT OF RENT IN THE REVISED RETURN IS OF NO HE LP TO THE ASSESSEE. THE ASSESSEE WAS NOT ABLE TO EXPLAIN HOW THE CASH PAYME NT OF RENT HAS ESCAPED FROM ACCOUNTING. THE IMPUGNED CASH PAYMENT WAS DET ECTED BY THE DEPARTMENT CONSEQUENT WHICH THE ASSESSEE HAS FILED THE REVISED RETURN. THESE PAYMENTS WOULD NOT HAVE BEEN DISCLOSED TO THE DEPARTMENT, HAD THE DEPARTMENT HAS NOT DETECTED THE SAME. THE ASSESSEE ADMITTED THE UNEXPLAINED PAYMENTS OF RENT IN THE REVISED RETURN AND THIS ACTION OF THE ASSESSEE DOES NOT MAKE ANY DIFFERENCE FOR TREATING THE SAME AS UNEXPLAINED EXPENDITURE BY THE ASSESSING OFFICER. IN OUR OPINI ON, THE ADDITION MADE BY THE ASSESSING OFFICER U/S 69C OF THE ACT WAS JUSTIF IED AND WE CONFIRM THE SAME. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT (A) ON THIS ISSUE. ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 7 8. THE OTHER CONTENTION OF THE ASSESSEES COUNSEL IS THAT THE EXPENDITURE WHICH IS TREATED AS INCOME OF THE ASSES SEE U/S 69C OF THE ACT AND THE SAME IS TO BE CONSIDERED AS INCOME ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) AS THE TOTAL RECEIPT OF THE ASSESSEE IS LESS THAN RS.1 CRORE. IN OUR OPINION, THIS IS NOT PERMITTED U/S 69C OF THE A CT WHICH READS AS FOLLOWS: SECTION 69C : WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INC URRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTO RY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY B E, MAY BE DEEDED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. 8.1. THIS PROVISO WAS INSERTED BY THE FINANCE (NO., 2) ACT, 1998 W.E.F. 1 ST APRIL, 1999 THEREBY IT PROHIBITS ANY DEDUCTION TOWA RDS UNEXPLAINED EXPENDITURE WHICH IS OFFERED AS DEEMED INCOME U/S 6 9C OF THE ACT. U/S 4 OF THE ACT, THE INCOME IS TO BE CHARGED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT IN RESPECT OF TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON. AS PROVIDED BY SECTION 5, THE TOTAL INCOME OF ANY PREV IOUS YEAR OF A PERSON WOULD, INTER ALIA, INCLUDE ALL THE INCOME FROM WHAT EVER SOURCE DERIVED WHICH IS RECEIVED OR IS DEEMED TO BE RECEIVED BY SUCH PER SON, SUBJECT TO THE PROVISIONS OF THE ACT. IT WILL BE SEEN FROM S.69C OF THE ACT THAT WHERE IN ANY FINANCIAL YEAR THE ASSESSEE INCURS THE EXPENDITURE AND THE ASSESSEE FAILS TO OFFER SATISFACTORY EXPLANATION TO THE ASSESSING OFF ICER, THE AMOUNT COVERED BY SUCH EXPENDITURE MAY BE TREATED AS DEEMED INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. THE SCHEME OF S.69C OF THE ACT, W OULD SHOW THAT IN CASES WHERE THE NATURE AND SOURCE OF INVESTMENTS MADE BY THE ASSESSEE OR THE ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 8 NATURE AND SOURCE OF ACQUISITION OF ANY ASSET OWNED BY ASSESSEE ARE NOT EXPLAINED AT ALL OR NOT SATISFACTORILY EXPLAINED, T HEN, THE VALUE OF SUCH INVESTMENTS AND MONEY OR THE VALUE OF ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNT OR THE UNEXPLAINED EXPENDITURE MAY BE DEEME D TO BE THE INCOME OF THE ASSESSEE. IT FOLLOWS THAT THE MOMENT A SATISFA CTORY EXPLANATION IS GIVEN ABOUT SUCH NATURE AND SOURCE BY THE ASSESSEE, THEN THE SOURCE WOULD STAND DISCLOSED AND WILL, THEREFORE, BE KNOWN AND THE INC OME WOULD BE TREATED UNDER THE APPROPRIATE HEAD OF INCOME FOR ASSESSMENT AS PER THE PROVISIONS OF THE ACT. HOWEVER, WHEN THESE PROVISIONS APPLY B ECAUSE NO SOURCE IS DISCLOSED AT ALL ON THE BASIS OF WHICH THE INCOME C AN BE CLASSIFIED UNDER ONE OF THE HEADS OF INCOME U/S 14 OF THE ACT, IT WOULD NOT BE POSSIBLE TO CLASSIFY SUCH DEEMED INCOME UNDER ANY OF THESE HEADS INCLUDI NG INCOME FROM OTHER SOURCES WHICH HAVE TO BE SOURCES KNOWN OR EXPLAINE D. WHEN THE INCOME CANNOT BE SO CLASSIFIED UNDER ANY ONE OF THE HEADS OF INCOME U/S 14, IT FOLLOWS THAT THE QUESTION OF GIVING ANY DEDUCTIONS/ EXEMPTION UNDER THE PROVISIONS OF THE ACT WHICH CORRESPOND TO SUCH HEA DS OF INCOME WILL NOT ARISE. IF IT IS POSSIBLE TO PEG THE INCOME UNDER A NY ONE OF THOSE HEADS BY VIRTUE OF A SATISFACTORY EXPLANATION BEING GIVEN, T HEN THESE PROVISIONS OF SS. 69, 69A, 69B AND 69C WILL NOT APPLY IN WHICH EVENT, THE PROVISIONS REGARDING DEDUCTIONS, ETC. APPLICABLE TO BE RELEVAN T HEAD OF INCOME UNDER WHICH SUCH INCOME FALLS WILL AUTOMATICALLY BE ATTRA CTED. 8.4. THE OPENING WORDS OF S.14 SAVE AS OTHERWISE PROVIDED BY THIS ACT CLEARLY LEAVE SCOPE FOR DEEMED INCOME OF THE NATURE COVERED UNDER THE SCHEME OF SS.69, 69A, 69B AND 69C BEING TREATED SEP ARATELY, BECAUSE SUCH DEEMED INCOME IS NOT INCOME FROM SALARY, HOUSE PROP ERTY, PROFITS AND GAINS OF BUSINESS OR PROFESSION, OR CAPITAL GAINS, NOR IS IT INCOME FROM OTHER SOURCES BECAUSE THE PROVISIONS OF SS.69, 69A, 69B AND 69C TREAT UNEXPLAINED INVESTMENTS, UNEXPLAINED MONEY, BULLION , ETC. AND UNEXPLAINED EXPENDITURE AS DEEMED INCOME WHERE THE NATURE AND S OURCE OF INVESTMENT ACQUISITION OR EXPENDITURE, AS THE CASE MAY BE, HAV E NOT BEEN EXPLAINED OR SATISFACTORILY EXPLAINED. THEREFORE, IN THESE CASE S, THE SOURCE NOT BEING ITA NOS.237 & 238/H/2010 M/S SARADA EDUCATIONAL SOCIETY, HYDERABAD 9 KNOWN, SUCH DEEMED INCOME WILL NOT FALL EVEN UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE, THE CORRESPONDING DEDUC TIONS WHICH ARE APPLICABLE TO THE INCOMES UNDER ANY OF THESE VARIOU S HEADS, WILL NOT BE ATTRACTED IN THE CASE OF DEEMED INCOME WHICH ARE CO VERED UNDER THE PROVISIONS OF SS.69, 69A, 69B AND 69C OF THE ACT IN VIEW OF THE SCHEME OF THOSE PROVISIONS. 8.5. IT IS THEREFORE, CLEAR THAT WHEN THE EXPEND ITURE WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE FAILED TO OFFER SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH EXP ENDITURE, IT IS THE DEEMED INCOME OF THE ASSESSEE, SUCH DEEMED INCOME D ID NOT FALL UNDER THE HEAD INCOME, OF PROFITS AND GAINS OF BUSINESS OR P ROFESSION. IN OUR OPINION, THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE AS SESSEE IS ELIGIBLE EXEMPTION U/S 10(23C) (IIIAD) OF THE IT ACT. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESS ING OFFICER. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N: 21.4. 2011 SD/- SD/- G.C. GUPTA CHANDRA POOJA RI VICE PRESIDENT ACCOUNTANT MEMBE R DATED THE 21 ST APRIL, 2011 COPY FORWARDED TO: 1. THE DCIT, CENTRAL CIRCLE 6, HYDERABAD 2. M/S SRI SARADA EDUCATIONAL SOCIETY, 8-2-897/4, NAG ARJUNA NAGAR COLONY, YELLAREDYGUDA, AMEERPET, HYDERABAD 3. THE CIT(A) I, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP