Maharishi Markandeswar Education Trust, Ambala V. CIT, Ludhiana

ITA 277/CHANDI/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58916 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Income from undisclosed sources; Document seized; Principle of natural justice; Documents seized
• Section: 69C; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.277/CHD/2008 ASSESSMENT YEAR : 2006-07 MAHARISHI MARKANDESHWAR EDUCATION TRUST, 55, MODEL TOWN, AMBALA CITY. VS. COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI KUMAR, CA REVENUE BY : SHRI ALOK SINGH, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT, (CENTRAL), LUDHIANA DATED 3 1 ST JANUARY, 2008 U/S 12AA (3) OF THE INCOME TAX ACT, 1961 (THE ACT). THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT ORDER U/S 12AA(3) OF THE INCOME TAX ACT, 1961 PASSED BY COMMISSIONER OF INCOME TAX (CENTRAL), LUDH IANA CANCELING THE REGISTRATION GRANTED TO THE TRUST U/S 12AA ( 1)(B)(I) IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO HOLD THAT THE TRUST WAS NOT ENGAGED IN GENUIN E CHARITABLE ACTIVITIES. 2. THAT HE WAS FURTHER NOT JUSTIFIED TO HOLD THAT THE PRESI DENT OR OTHER MEMBERS OF THE GOVERNING BODY HAVE APPROPRIA TED THE BENEFITS ACCRUING TO THE TRUST FROM COMMERCIALIZATION OF EDUCATION. 3. THAT THE LD. CIT CAME TO THESE CONCLUSIONS WITHOUT APPLICATION OF MIND AND SOLELY RELYING ON THE CONCLU SIONS DRAWN ITA NO.277/CHD/2008 2 BY THE LD. ASSESSING OFFICER FRAMING THE ASSESSMENT FO R A.Y.2006-07. 4. THAT THE ORDER PASSED IS AGAINST PRINCIPLES OF NATURAL JUSTICE AND NO REASONABLE OPPORTUNITY WAS PROVIDED TO TH E APPELLANT TO EXPLAIN ITS CASE. 2. THE ASSESSEE IS A TRUST RUNNING NINE EDUCATIONAL INSTIT UTIONS UNDER VARIOUS NAMES CATERING TO DIFFERENT KIND OF EDU CATION LIKE MANAGEMENT, ENGINEERING, MEDIAL SCIENCES, NURSING, PH ARMACY, ETC. IT WAS GRANTED REGISTRATION U/S 12AA(2) OF THE ACT BY CIT , PANCHKULA VIDE HIS ORDER DATED 30 TH MAY, 2001 W.E.F. 26 TH NOVEMBER, 1993. A SEARCH WAS CONDUCTED AT THE OFFICIAL PREMISES OF THE ASSESSEE AS W ELL AS ON THE RESIDENTIAL PREMISES OF ITS TRUSTEES ON 7 TH SEPTEMBER, 2005. DURING THE COURSE OF SEARCH, UNEXPLAINED ASSETS AS WELL AS INCRIM INATING DOCUMENTS WERE SEIZED ON THE BASIS OF WHICH LD. CIT HAS DRAWN A CONCLUSION THAT THE ACTIVITIES OF THE TRUST WERE NOT B EING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS FOR WHICH IT WAS SET UP. ACCORDINGLY, HE INITIATED PROCEEDINGS U/S 12AA(3) OF THE ACT AND ISSUE D SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE REGISTRATION SHOULD N OT BE CANCELLED. THE LD. CIT AFTER REFERRING TO THE EXAM INATION OF THE PAGES 1 TO 7 OF THE BUNCH OF DOCUMENTS CAPTIONED AS A-37 SEIZE D DURING THE COURSE OF SEARCH HAS FOUND THAT THE ASSESSEE HAD MADE PAYM ENTS IN CASH TO THE DOCTORS OF MEDICAL AND DENTAL COLLEGES RUN BY THE ASSESSEE. SUCH PAYMENTS WERE CALCULATED AT A SUM OF ` 45,66,372 /- AND THESE DOCUMENTS WERE SHOWN TO SHRI DARSHAN KUMAR BANSAL, SR. ACCOUNTANT OF THE ASSESSEE TRUST WHO STATED ON OATH THAT HE HIMSELF H AS MADE THESE PAYMENTS IN CASH OUTSIDE THE BOOKS OF ACCOUNT TO V ARIOUS TEACHERS. SIMILAR STATEMENT WAS GIVEN BY DR. R.P. AGG ARWAL, THE PRINCIPAL OF ONE OF THE MEDICAL COLLEGES. LD. CIT, FURTHER REFERRED TO PAGE 81 OF THE BUNCH STYLED AS A-35 WHICH CONTAINED E NTRIES OF PAYMENTS IN CASH TOWARDS ADVANCE, TRAVELING ALLOWANCE AND INCREMENTS. THE SAID DOCUMENTS WERE SIGNED BY SHRI TAR SEM GARG ITA NO.277/CHD/2008 3 BEING THE CHAIRMAN OF THE ASSESSEE TRUST. ON PERUSAL OF ALL THESE DOCUMENTS LD. CIT HAS COME TO THE CONCLUSION THAT THER E IS A MANIPULATION IN THE BOOKS OF ACCOUNT AND CASH TRANSACT IONS HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT. HE REFERRED TO TH E FACT THAT TOTAL CASH FOUND AT THE TIME OF SEARCH WAS A SUM OF ` 13,98,4 76/- AS AGAINST THE CASH AVAILABLE AS PER BOOKS OF ACCOUNT OF ` 26,61, 781/- AND, THUS, HE ARRIVED AT A CONCLUSION THAT THE ASSESSEE TRUST IS NOT MAINTAINING ITS BOOKS OF ACCOUNT PROPERLY AND THE TRUSTEES ARE MANIPUL ATING THE ACCOUNTS TO SIPHON OFF THE FUNDS OF THE TRUST FOR THEIR PERSONAL BENEFITS. HE IGNORED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 HAS ACCEPTE D THAT THE ASSESSEE TRUST IS ENGAGED IN GENUINE CHARITABLE ACTIV ITIES IN TERMS OF SECTION 2 (15) OF THE ACT. LD. CIT OBSERVED THAT AS THE BENEFIT OF REGISTRATION CAN BE GIVEN TO THE TRUST ONLY IF IT IS ENGAGED IN GENUINE CHARITABLE ACTIVITIES AND REFERRING TO THESE DISCUSSIONS LD. CIT HAS CANCELLED THE REGISTRATION. THE ASSESSEE IS AGGRIEVED, H ENCE, HAS RAISED THE AFOREMENTIONED GROUNDS OF APPEAL. 3. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY THE LEARNED AR THAT UPON RECEIVING THE IMPUGNED ORDER FROM CIT WHICH IS DATED 31 ST JANUARY, 2008, THE ASSESSEE AGAIN SUBMITTED THE APPLICAT ION FOR REGISTRATION IN PRESCRIBED PROFORMA ON 10 TH MARCH, 2008 AND THE VERY SAME CIT VIDE HIS ORDER DATED 23 RD MAY, 2008 HAS GRANTED REGISTRATION TO THE ASSESSEE. COPY OF THIS ORDER IS PLACED AT PAGE 21 9 OF THE PAPER BOOK. HE SUBMITTED THAT IN THE SAME ORDER LD. CIT HA S STATED AS FOLLOWS:- 2. SATISFIED ABOUT THE GENUINENESS OF THE TRUST AND OF ITS PRESENT ACTIVITIES, THE UNDERSIGNED IS REGISTERING THE TR UST U/S 12AA OF THE IT ACT, 1961 AND ITS REGISTRATION HAS BEEN R ECORDED AT SR. NO.1/JB/12AA/2008-09 IN THE REGISTER OF APPLICA TION UNDER SECTION 12AA MAINTAINED IN THIS OFFICE. ITA NO.277/CHD/2008 4 3. AS PER PROVISIONS CONTAINED IN 12A(2) OF THE IT AC T, THIS REGISTRATION SHALL HAVE EFFECT FROM ASSESSMENT YEAR 200 8-09 ONWARDS. 4. HE FURTHER STATED THAT IN THE IMPUGNED ORDER LD. CIT HAS REJECTED THE REGISTRATION OF THE ASSESSEE ON TWO GROUNDS: FIRSTLY, REGARDING THE PAYMENT OF SALARY TO THE DOCTORS AGGREGATING TO A SUM OF `45,66,372/-. HE SUBMITTED THAT THIS ISSUE WAS CONSIDERED BY THE TRIBUN AL FOR ASSESSMENT YEAR 2006-07 IN THE CASE OF THE ASSESSEE AND THE TRIBUNAL VIDE ITS ORDER DATED 30 TH OCTOBER, 2009 IN ITA NO.2489/DEL/2008 (DEPARTMENTAL APPEAL) HAS CONFIRMED THE DELETION MAD E BY THE CIT (A) AND RESULTANTLY THE DEPARTMENTAL APPEAL WAS DISMISSED (R EFER TO COPY OF ORDER PLACED AT PAGES 1-4 OF THE PAPER BOOK). HE REFERRED TO THE FOLLOWING OBSERVATIONS OF THE TRIBUNAL FROM THE SAID D ECISION:- DURING THE COURSE OF SEARCH, DOCUMENTS DETAILED AS A- 37 WAS SEIZED. THESE PAGES ARE STATED TO CONTAIN ENTRIES REGAR DING CASH PAYMENTS TO DOCTORS OF THE MEDICAL AND DENTAL COLLEGES A S PER FOLLOWING DETAILS:- S.NO. PAGE NO. RELEVANT DATE & CONTENT TOTAL AMOUNT OF PAYMENTS MENTIONED. 1 PAGE 1/A-37 PAYMENT TO DOCTORS OF MEDICAL COLLEGE ON 01.07.05. RS.9,26,450/- 2 PAGE 2/A-37 PAYMENT TO DOCTORS OF DENTAL COLLEGE ON 01.07.05 RS.5,27,245/- 3 PAGE 3/A-37 PAYMENT TO DOCTORS OF MEDICAL COLLEGE ON 01.08.05 RS.9,62,335/- 4 PAGE 4/A-37 PAYMENT TO DOCTORS OF MEDICAL COLLEGE ON 01.08.05 RS.6,82,375/- 5 PAGE 5/A/37 PAYMENT TO DOCTORS OF MEDICAL COLLEGE ON 01.09.05 RS.8,27,617/- 6 PAGE 6/A-37 PAYMENT TO DOCTORS OF MEDICAL COLLEGE ON 01.09.05 RS.6,40,350/- TOTAL: RS.45,66,372/- ITA NO.277/CHD/2008 5 DURING THE COURSE OF SEARCH STATEMENTS OF SHRI D.K. BAN SAL, ACCOUNTANT AND SHRI R.P. AGGARWAL, PRINCIPAL OF M.M. MEDICAL COLLEGE WERE RECORDED ON 7.9.2005. IN THEIR STATEMENTS IT WAS MENTIONED THAT APART FROM CHEQUE PAYMENTS TOWARDS SALARY, CASH PAYMENTS WERE ALSO MADE. WHEN THE STATEMENTS WERE CONFRONTED TO SHRI TARSEM KUMAR GARG, CHAIRMAN OF THE TRUST, HE DENIED OF HAVING PAID SALARY IN CASH. THE CHAIRMAN SOUGHT FOR CROSS-EXAMINATION OF THE ACCOUNTANT AND PRINCIPAL. THE ACCOUNTANT AND PRINCIPAL RETRACTED THEIR STATEMENTS AND FIL ED AFFIDAVITS EXPLAINING AS TO HOW THEIR STATEMENTS WERE REC ORDED WHICH ARE NOT CORRECT. THE ASSESSING OFFICER HOWEVER , OBSERVED THAT AFFIDAVITS ARE SELF-SERVING DOCUMENTS WHICH COULD HAVE NO EVIDENTIARY VALUE. THEY HAVE RETRACTED FROM THEIR STATEM ENTS UNDER THE INFLUENCE OF THEIR PAY-MASTER. ACCORDINGLY, THE AMOUNTS STATED IN THE SEIZED MATERIAL WERE TREATED AS UNEXPLAINED EXPENDITURE AND ADDED UNDER SECTION 69C O F THE ACT. THE LEARNED CIT(A) HELD THAT THE ONLY BASIS FOR MAKING THIS ADDITION IS THE ENTRIES MADE IN THE SEIZED DOCUMENTS AND STATEMENTS OF ACCOUNTANT AND PRINCIPAL RECORDED DURING S EARCH. HOWEVER, BOTH THESE PERSONS HAVE RETRACTED FROM THEIR STATEMENTS BY FILING AFFIDAVIT DURING ASSESSMENT PROCEED INGS. EVEN DURING RE-EXAMINATION, THEY HAVE STUCK TO THEIR STAT EMENTS MADE IN THEIR AFFIDAVITS. THERE ARE ABOUT 74 DOCTORS E MPLOYED BY THE TRUST. OUT OF THEM, STATEMENTS OF ONLY TWO DOCTORS WERE RECORDED. ALL THESE DOCTORS HAVE FILED AFFIDAVITS DUR ING ASSESSMENT PROCEEDINGS DENYING ANY CASH PAYMENT. THE REFORE, THERE IS NO JUSTIFICATION FOR MAKING ADDITION IN RESPEC T OF 72 DOCTORS IGNORING THEIR AFFIDAVITS. THOUGH THE STATEMENTS RECORDED DURING SEARCH HAVE EVIDENTIARY VALUE BUT THE STATEMENT WA S NOT THAT OF THE ASSESSEE HIMSELF BUT OF THE THIRD PARTIES. TH EREFORE, ADMISSION BY THIRD PARTIES WHEN RETRACTED, CANNOT BE ADM ITTED IN EVIDENCE. HE ACCORDINGLY DELETED THE ADDITION. THE R EVENUE IS IN FURTHER APPEAL BEFORE US. 4. AT THE TIME OF HEARING WE HAVE HEARD SHRI RAJESH KE DIA, SR. DR FOR THE REVENUE AND SHRI ASHWANI KUMAR, CA FOR THE ASSESSEE. 5. THERE IS NO DISPUTE THAT THE ASSESSEE TRUST IS REGISTER ED UNDER SECTION 12AA AND ENTITLED TO EXEMPTION UNDER SECTIO NS 11 & 12 OF THE ACT. THE BASIS OF ADDITION IS THE STATEMENTS OF SHRI D.K. BANSAL, ACCOUNTANT AND SHRI R.P. AGGARWAL, PRINC IPAL OF M.M. MEDICAL COLLEGE, RECORDED DURING THE COURSE OF SEARC H. THEY ARE THE WITNESSES ON BEHALF OF REVENUE AND NOT ON BEHALF O F THE ASSESSEE. THE STATEMENT IS NOT OF THE ASSESSEE OR ITS PR INCIPAL OFFICER. WHEN THE CHAIRMAN OF THE ASSESSEE TRUST SOUG HT FOR CROSS-EXAMINATION, BOTH THESE WITNESSES HAVE RETRACTED FR OM THEIR STATEMENTS AND FILED AFFIDAVITS ALSO. THE ASSESSI NG OFFICER HAS NOT EXAMINED ANY OF THE DOCTORS STATED TO HAVE RECEIV ED EXTRA REMUNERATION. EVEN WHEN 2 OF THE DOCTORS WERE EX AMINED, THEY HAVE DENIED HAVING RECEIVED EXTRA REMUNERATION. THE REMAINING 72 DOCTORS HAVE FILED THEIR AFFIDAVITS STATING HAVING NOT ITA NO.277/CHD/2008 6 RECEIVED SUCH EXTRA REMUNERATION. THUS THERE IS NO EV IDENCE REMAINING WITH THE REVENUE TO HOLD THAT ANY REMUNERATION WAS PAID OVER AND ABOVE THE RECORDED REMUNERATION. THUS, THERE IS NO QUESTION OF UNEXPLAINED EXPENDITURE BEING PROVED. ACCORDINGLY, THE ADDITION WAS RIGHTLY DELETED BY THE LEA RNED CIT(A). IT IS SEEN THAT ADDITION IS MADE INVOKING PROVISION OF SECTION 69C OF THE ACT. UNDER SECTION 69C WHEREIN IN F INANCIAL YEAR THE ASSESSEE HAS INCURRED EXPENDITURE AND HE OFF ERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR THE EXPLANATION OFFERED IS NOT IN THE OPINION OF THE ASSESS ING OFFICER SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINAN CIAL YEAR. THEREFORE, EVEN IF IT IS TO BE HELD THAT THE ASSESSEE HA S INCURRED CERTAIN EXPENDITURE AND THE SOURCE OF EXPENDITURE REMAI NS UNEXPLAINED, THE AMOUNT CAN BE ADDED UNDER SECTION 69C OF THE ACT. HOWEVER, IF ON ONE HAND THE AMOUNT IS ADDED AS UNEXPLAINED EXPENDITURE, STILL IT RETAINS THE CHARACTER O F THE EXPENDITURE INCURRED ON THE OBJECT OF TRUST. THEREFORE, THE ASSESSEE WILL BE ENTITLED TO CLAIM DEDUCTION WHILE COMP UTING ITS INCOME UNDER SECTIONS 11 & 12 OF THE ACT. THE PROVISO INSERTED TO SECTION 69C BY FINANCE (NO.2) ACT, 1998 W.E.F. 1.4.19 99 WILL NOT APPLY AS IN THE PRESENT CASE THE INCOME OF THE ASSESSEE IS NOT COMPUTED UNDER ANY HEAD OF INCOME BUT UNDER THE PROVIS ION OF SECTIONS 11 & 12 OF THE ACT. THUS ON ONE HAND, INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IS CHARGEABLE TO TAX, TO TH E EXTENT THE AMOUNT SPENT OR APPLIED FOR THE CHARITABLE OR RELIGI OUS PURPOSES SHALL NOT FORM PART OF THE TOTAL INCOME OF THE A SSESSEE. THE INCOME OF A TRUST IS NOT COMPUTED UNDER THE VARIOUS HEADS OF INCOME AS PRESCRIBED IN SECTION 14 OF THE ACT. THEREF ORE, THE PROVISO TO SECTION 69C WHICH BARS ALLOWABILITY OF DEDU CTION OF SUCH UNEXPLAINED EXPENDITURE UNDER ANY HEAD OF INCOM E WILL NOT APPLY IN THE CASE OF AN ASSESSEE BEING A TRUST WHOSE I NCOME IS TO BE COMPUTED UNDER SECTIONS 11 & 12 OF THE ACT. THUS THE ADDITION MADE UNDER SECTION 69C WILL BE NULLIFIED BY THE EXPENDITURE INCURRED ON THE OBJECT OF THE TRUST AND HENCE NO FURTHER ADDITION IS CALLED FOR. 5. HE FURTHER REFERRED TO THE ASSESSMENT ORDER FOR ASSESSME NT YEAR 2006-07 THE COPY OF WHICH HAS BEEN PLACED AT PAGES 12 4 TO 151 OF THE PAPER BOOK AND SHOWING THE INCOME COMPUTED THEREIN I T WAS SUBMITTED BY HIM THAT THE ONLY ADDITION MADE BY THE ASSESSING OFFICER TO THE RETURNED LOSS OF ` 22,03,50,033/- WAS A SUM OF ` 44,70,372/- REDUCING THE LOSS OF THE ASSESSEE TO ` 21,58,79,661/-. H E SUBMITTED ITA NO.277/CHD/2008 7 THAT THE AFOREMENTIONED ADDITION OF ` 44,70,372/- W AS OUT OF THE AFOREMENTIONED AMOUNT OF ` 45,66,372/- REFERRED BY THE CIT. 6. HE FURTHER SUBMITTED THAT THE SECOND ALLEGATION OF THE CIT IN HIS ORDER IS REGARDING SHORTAGE OF CASH FOUND AT THE TIME OF SEARCH IN THE HANDS OF THE TRUST. HE SUBMITTED THAT NO ADVERSE INFER ENCE OF THIS FACT HAS BEEN DRAWN BY THE ASSESSING OFFICER IN THE ASSESSMENT OR DER FOR ASSESSMENT YEAR 2006-07 THOUGH A SEARCH WAS EFFECTED ON 7 TH SEPTEMBER, 2005. HE FURTHER SUBMITTED THAT THE EXCE SS CASH WAS FOUND TO BE WITH SHRI TARSEM GARG AND SHRI SANJEEV G ARG IN WHOSE HANDS THE ADDITIONS WERE MADE DESPITE THE FACT THAT TH E CASH FOUND WITH THEM WAS BELONGING TO THE TRUST AND THE ADDITION IN THEIR HANDS WERE DELETED BY THE CIT AGAINST WHICH DEPARTMENT HAD PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE OR DER DATED 30 TH NOVEMBER, 2009 IN ITA NO.2490/DEL/2008 IN THE CASE O F SHRI TARSEM GARG AND IN ITA NO.2491/DEL/2008 IN THE CASE OF SHRI SANJEEV GARG HAS CONFIRMED THE DELETION. THE LEARNED AR REFERRED TO THE RELEVANT PORTION OF THIS DECISION WHICH IS REPRODUCED BELOW AND COPY OF WHICH IS PLACED AT PAGES 8-13 OF THE PAPER BOOK:- 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RE CORDS. AS PER THE ADMITTED FACT OF THE CASE THE IMPUGNED CASH WE RE FOUND AT THE RESIDENCE OF THE ASSESSEES DURING THE COUR SE OF SEARCH. IT IS ALSO ADMITTED THAT THE ASSESSEE HAD MENTIO NED BEFORE THE SEARCH PARTY THAT SOME AMOUNT OF CASH IS FROM THE TRUST. THE AO HAS RELIED HEAVILY ON THE BASIS OF STA TEMENT OF SHRI DK BANSAL, SR. ACCOUNTANT. THE AO HAS DRAWN AD VERSE INFERENCE ON THE BASIS OF THE FACT THAT ASSESSES HAD NOT EXACTLY QUANTIFIED THE AMOUNT TAKEN FROM THE TRUST ON THE DATE OF SEARCH. FURTHER RELIANCE HAS BEEN PLACED UPON THE STATEMENT OF SHRI DK BANSAL. 7.1 WE FIND THAT SHRI DK BANSAL HAS HIMSELF ACCE PTED THAT HE WAS NOT HANDLING THE CASH AND FOUR OTHER PERSONS WERE HANDLING CASH. NOW WE REFER THE STATEMENT, OF SHRI DK BANSAL THAT DUE TO CASH SHORTAGES IN THE ACCOUNTS OF THE TRUST AND THE ON TH E ADVICE OF TRUSTEES, HE USED TO PUT IN FICTITIOUS CREDIT E NTRIES. THESE STATEMENTS ONLY SHOW THAT THERE MAY BE EXPENDITURE OUT ITA NO.277/CHD/2008 8 OF UNACCOUNTED CASH OF THE TRUST AT THE INSTANCE OF TRUSTEES/ASSESSES. HENCE, THE PREPONDERANCES OF THE PROBABILITY SHOWS THAT THE CASH RELATING TO THE TRUST WAS LYING WITH THE ASSESSEE. FURTHER, M/S MMET HAD FINALIZED THE ACCOUNTS AND AS PER THE AUDITED ACCOUNT TOTAL CASH WAS RS . 51,95,580/-. M/S MMET HAS ALSO FILED INCOME TAX RETU RN AND THE AUDITED BALANCE SHEET, WHEREIN THE SUMS HAVE BEEN SHOW N AS LYING WITH RESPECTIVE ASSESSES. AS OBSERVED BY THE L D. CIT(A) NO ADVERSE INFERENCE HAS BEEN TAKEN IN THIS REGARD I.E. WITH REFERENCE TO THE ACCOUNTS AND RETURN SUBMITTED BY THE MMET WHEREIN THESE CASH HAVE BEEN SHOWN AS LYING WITH THE A SSESSES. 7.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE DO NOT FIND THAT AS PER THE CIRCUMSTANCES, IT CAN NOT BE CONCLUDED THAT THE SUMS ARE UNACCOUNTED INCOME O F THE ASSESSEES THEMSELVES. THE REVENUE HAVING ACCEPTED THE RETURN OF MMET AND THE AUDITED ACCOUNTS THEREIN DISPLAYING THE FACT THAT THESE CASH BELONG TO THE TRUST AND WERE LYING WITH THE ASSESSES, CANNOT AGAIN SUBJECT TO TAX THE SAME CASH IN THE HANDS OF THE ASSESSEE AS THEIR UNDISCLOSED INCOME. A CCORDINGLY, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) . HENCE, WE AFFIRM THE SAME. 8. THE NEXT ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN DELETING AN ADDITION OF RS. 60,780/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED JEWELLERY NOT DISCLOSED. 7. REFERRING ALL THESE FACTS, IT WAS SUBMITTED BY HIM T HAT BOTH THE GROUNDS ON WHICH LD. CIT HAS CANCELLED THE REGISTRATIO N DO NOT SUBSIST AND, MOREOVER, LD. CIT HIMSELF HAS ACCEPTED THAT THE ACTIVITIES OF THE TRUST ARE GENUINE, THEREFORE, THE REGISTRATION HAS WRO NGLY BEEN WITHDRAWN BY LD. CIT AND HIS ORDER SHOULD BE QUASHED. 8. ON THE OTHER HAND, THE LEARNED DR RELYING UPON T HE ORDER PASSED BY THE CIT, PLEADED THAT IN VIEW OF THE FACTS MENTIO NED IN THE ORDER OF LD. CIT THE REGISTRATION OF THE ASSESSEE HAS RIGHTLY BEEN CANCELLED AND HIS ORDER SHOULD BE UPHELD. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE REASONS UPON WHICH LD. CIT HAS ARRIVED AT A CONCLUSION THAT ACTIVITIES OF THE ASSESSEE T RUST ARE NOT GENUINE, DO NOT SUBSIST AS DELETION OF BOTH THE ADDITIO NS HAVE BEEN ITA NO.277/CHD/2008 9 UPHELD BY THE TRIBUNAL. THE RELEVANT PORTION OF BO TH THE ORDERS OF THE TRIBUNAL ON THESE ASPECTS HAVE ALREADY BEEN REPRODUCED . MOREOVER, IMMEDIATELY AFTER REJECTING THE REGISTRATION, LD. CI T VIDE HIS ORDER DATED 23 RD MAY, 2008 HAS HELD THAT THE ACTIVITIES OF THE ASSESSEE A RE CHARITABLE IN NATURE AND THE ACTIVITIES ARE GENUINE. THEREFORE, WE FIND SUBSTANCE IN THE ARGUMENTS SUBMITTED BY THE LEARNED AR AND IT IS HELD THAT THE REGISTRATION HAS WRONGLY BEEN WITHDRAWN. KE EPING IN VIEW THE ENTIRETY OF THE FACTS MENTIONED ABOVE, WE QUASH THE O RDER PASSED BY LD. CIT AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.03.20 12. SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 23.03.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES