ACIT, Faridabad V. M/s SSRD Somany Shikshan Sansthan, Rewari

ITA 3803/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2296 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 19-11-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 07-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAJANAD MEENA
• Keywords: Search and seizure

Judgement Text

I.T.A. NO.3557,3803 & 3804 /DEL/09 1/13 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO.3557 /DEL/2009 ASSESSMENT YEAR : 200708 SSRD SOMANY SIKSHAN SANSTHAN, ACIT, KHOL HOUSE, CIRCULAR ROAD, FARIDABAD. REWARI, HARYANA. V. AND I.T.A. NO.3803 & 3804/DEL/09 ASSESSMENT YEAR :2006-07 & 07-08 ACIT, V. SSRD SOMANY SIKSHAN FARIDABAD. SANSTHAN, KHOL HOUSE, REWARI, HARYANA. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAETS-2539-Q ASSESSEE BY: SHRI R.S. SINGHVI, C.A. DEPARTMENT BY : SHRI GAJANAD MEENA, CIT-DR. ORDER PER A.K. GARODIA, AM: THERE ARE TWO CROSS APPEALS OF THE ASSESSEE AND REV ENUE FOR ASSESSMENT YEAR 2007-08 AND THERE IS ONLY ONE APPEAL OF THE RE VENUE FO ASSESSMENT YEAR 2006-07 WHICH ARE DIRECTED AGAINST TWO SEPARATE ORD ERS OF LD CIT(A), LUDHIANA DATED 11.6.2009 FOR ASSESSMENT YEAR 2007-08 AND DAT ED 25.6.2009 FOR . I.T.A. NO.3557,3803 & 3804/DEL/09 2/13 ASSESSMENT YEAR 2006-07. FOR THE SAKE OF CONVENIEN CE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C OMMON ORDER. 2. IT IS SUBMITTED BY THE LD DR OF THE REVENUE THAT SINCE THE ORDER OF THE LD CIT(A) FOR ASSESSMENT YEAR 2007-08 IS OF AN EARLIER DATE, THE APPEALS FOR THAT YEAR SHOULD BE HEARD FIRST. ACCORDINGLY, WE HEAR T HE CROSS APPEALS FOR ASSESSMENT YEAR 2007-08 FIRST. 3. IT WAS SUBMITTED THAT GROUND NO.1 & 2 OF THE REV ENUES APPEAL AND GROUND NO.1 OF THE ASSESSEES APPEAL ARE INTER-CONNECTED W HICH READ AS UNDER: I.T.A. NO.3804/DEL/09 (FOR ASSESSMENT YEAR 2007-08) (REVENUES APPEAL 1. THE LD CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S OF THE CASE IN TREATING THE RECEIPTS OF RS.18,87,000/- AS DOUBLE ADDITION EVEN WHEN HE HAS CATEGORICALLY ARRIVED AT THE FINDING THAT THE AMOUN T INVOLVED WAS NOTHING BUT CAPITATION FEE AS CONCLUDED BY THE ASSESSING OFFICER. 2. THE LD CIT(A) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN ACCEPTING THE RECEIPT OF RS.18,87,000/- WAS ADVANCE FEE AND HOLDING THAT OUT OF THE SAID RECEIPT, A SUM OF RS.3,60,400/- PER TAINS TO ASSESSMENT YEAR 2007-08 AND THE BALANCE PERTAINS TO SUBSEQUENT ASSESSMENT YEAR WHEN HE HIMSELF HAS HELD THAT THE SAID RECEIPT WAS NOTHING BUT CAPITATION FEE. I.T.A. NO. 3557/DEL/09 (FOR ASSESSMENT YEAR 2007-08 ) (ASSESSEES APPEAL): 1. ON THE FACTS BROUGHT ON RECORD BEFORE THE CIT(A ), THE CIT(A) PASSING AN ORDER THEREBY MAKING AN ADDITION OF RS.3,60,400/ - WHILE AGREEING IN HIS ORDER THAT THE ADDITION OF AN AMOUNT OF RS.18,87,00 0/- TREATED BY THE . I.T.A. NO.3557,3803 & 3804/DEL/09 3/13 ASSESSING OFFICER AS RECEIVED BY THE ASSESSEE ON AC COUNT OF CAPITATION FEE WHICH HAS BEEN DISCLOSED AND OFFERED FOR TAXATI ON IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE AS ADVANCE FEE IS TO BE DE LETED BECAUSE SUCH ADDITION WOULD RESULT INTO THE DOUBLE TAXATION, SHO WN AS RECEIVED AND ADJUSTED AGAINST SUCH ADVANCE OF RS.18,87,000/- IN SUBSEQUENT YEAR TO THE RETURNED INCOME OF THE APPELLANT SINCE THESE FE E FALL IN THE SUBSEQUENT ASSESSMENT YEAR, IS CONTRARY TO THE LAW AND ON FACT S OF THE CASE AND ALSO CONTRADICTION OF HIS OWN ORDER. THEREFORE, THE ADDI TION OF RS.3,60,400/- MADE ON THE AFORESAID GROUND IS WITHOUT ANY BASIS A ND SHOULD NOT HAVE BEEN TREATED AGAIN AS INCOME ONLY BECAUSE THE SAID AMOUNT BECOMES DUE AND FALL IN SUBSEQUENT ASSESSMENT YEAR WHEREAS THE SAME HAS ALREADY BEEN OFFERED FOR TAXATION IN EARLIER YEAR W HICH WOULD ALSO RESULT INTO DOUBLE ADDITION, AS HAS BEEN AGREED BY THE CIT (A) IN HIS ORDER HIMSELF. 4. BRIEF FACTS OF THE CASE ARE THAT THE PREMISES OF THE ASSESSEE ALONG WITH OTHER RELATED PERSONS WERE COVERED UNDER SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE DEPARTMENT ON 24.8.2006. THE ASSESSEE S OCIETY WAS CREATED BY THE MEMBERS OF THE SOMANY FAMILY AND WAS REGISTERED AS RD SOMANY MEMORIAL SAMITI, REWARI ON 21.6.1993 VIDE REGISTRATION NO. 4 42 OF 1993. THE SAID SOCIETY WAS LATER RE-NAMED AS SWANTANTRA SENANI RD SOMANY SHIKSHAN SANSTHAN W.E.F. 2.4.2000. THE MAIN ACTIVITY OF THE SOCIETY I S TO MANAGE AND RUN AN ENGINEERING AND MANAGEMENT COLLEGE/INSTITUTE IN THE NAME AND STYLE OF SOMANY INSTITUTE OF TECHNOLOGY AND MANAGEMENT (SITM) AT RE WARI. FROM THE OFFICE PREMISES OF SITM, A SLIP PAD ANNEXURE A-62 HAS BEEN FOUND AND SEIZED DURING THE COURSE OF SEARCH. THIS CONTAINED DETAILS OF SO ME OF THE STUDENTS, AS PER ASSESSING OFFICER FROM WHOM CAPITATION FEE HAS BEEN ACCEPTED OVER AND ABOVE THE NORMAL FEES FOR ACADEMIC SESSION 2006-07 IN VAR IOUS COURSES. AS PER PAGE 10 OF THE ANNEXURE A-62, WHICH IS DATED 20.7.2006, CONTENTS HAVE BEEN REPRODUCED BY THE LD CIT(A) ON PAGE NO.2 OF HIS ORD ER, WHICH IS AS UNDER:- . I.T.A. NO.3557,3803 & 3804/DEL/09 4/13 1+ FEE BALANCE 20,000 HIMANI YADAV D/O BHRAM PARKASH PRINTING 1 ,08,000/- 106000 MANOJ KR. S/O RAM NIWAS MBA NIL 1+FEE 106000 ANAND KR. S/O ARVIND KR. MBA NIL 1+FEE 26405 RAJ KR. S/O RAVINDER KR. KHANDELWAL. AIEEE COLLEGE FEE 32000 RAJ KR. S/O RAVINDER KR. KHANDELWAL H.FEE 128000 ANIL KATARIA, S/O SUKHBEER KATARIA MEC H. NIL 5. IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, WHICH W ERE PRODUCED BEFORE THE ASSESSING OFFICER, IT WAS SHOWN THAT SHRI MANOJ KUM AR HAS PAID RS.1,00,000/- ON 20.7.2007 AS ADVANCE FEE AND RECEIPT NO.1 WAS IS SUED TO HIM FOR THAT. THIS ADVANCE WAS ADJUSTED AGAINST HIS DUES BY ISSUING FU RTHER RECEIPT TO HIM FOR RS.15,200/- AND RS.15,300/- OF 17.2.2006 AND 17.11. 2007. ACCORDINGLY, AN AMOUNT OF RS.48,780/- STOOD ADJUSTED AND RS.41,220/ - WAS SHOWN AS OUTSTANDING TO HIS CREDIT. IT IS FURTHER NOTED BY THE LD CIT(A) THAT SIMILAR WAS THE POSITION WITH REGARD TO OTHER STUDENTS, NAMES OF WH ICH HAVE BEEN MENTIONED IN THE ABOVE PARA. IT IS FURTHER NOTED BY THE LD CIT(A ) THAT SIMILAR INFORMATION WAS FOUND TO BE CONTAINED ON PAGE NO.12 OF ANNEXURE A-6 2 WHICH IS DATED 27.7.2006. CONTENTS OF THIS SEIZED PAPER ARE REPRO DUCED BY THE LD CIT(A) ON PAGE NO.3 OF HIS ORDER WHICH IS AS UNDER:- BALANCE 20000 DEEPAK S/O RFAMAVTAR MBA 10,000/- 138000 SAHI KR. YADAV S/O JAGMAL SINGH IT REGD. NO.10. 26405 NITIN YADAV AIEEE FEE MARCH 1. 28405 NARENDER S/O SH SATBIR AIEEE 2 7814 47030 ASHISH SHARMA S/O SH. DEV RAJ. 3 - 7815 32000 -DO- HOSTEL FEE 26405 RAKHA BAI D/O VIRENDER AIEEE FEE - 7816 . I.T.A. NO.3557,3803 & 3804/DEL/09 5/13 6. WHEN THE ASSESSING OFFICER COMPARED THE INFORMAT ION AS PER THESE DOCUMENTS WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE , HE FOUND THAT THE AMOUNT OF RS.1,10,000/- SHOWN TO BE RECEIVED FROM SHRI SAH I KUMAR YADAV S/O JAGMAL SINGH ON 21,.7.2007 WAS SHOWN AS AN ADVANCE FEE AND RECEIPT NO.5 WAS ISSUED TO HIM FOR THAT. AS IN THE CASE OF ENTRIES CONTAIN ED ON PAGE NO.10 ALSO, THIS AMOUNT WAS FOUND TO BE ADJUSTED BY ISSUING RECEIPT FOR RS.20,625/- ON 18.12.2006, RS.23705/- ON 12.4.2007 AND RS.20,625/- ON 27.11.2007. IN THIS MANNER IN THE CASE OF SHRI SAHI KUMAR YADAV, AN AMO UNT OF RS.64,955/- STOOD ADJUSTED AND REST WAS SHOWN AS CREDIT. IT IS FURTH ER NOTED BY THE LD CIT(A) THAT SIMILAR WAS THE POSITION FOUND TO BE THERE IN RESPE CT OF ENTRIES CONTAINED ON PAGES 13,14,17,19 & 20 OF ANNEXURE A-62. THEREAFTER , IT IS NOTED BY THE LD CIT(A) THAT AS PER THESE DETAILS, THE ASSESSEE RECE IVED RS.18.87 LAKHS FROM 19 STUDENTS WHICH WAS SHOWN AS ADVANCE FEES RECEIVED F ROM THEM. ON PAGE NO.4, IT IS NOTED BY LD CIT(A) THAT THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE CASH BOOK OF THE ASSESSEE WAS FOUN D TO BE NOT WRITTEN FOR ALMOST THREE MONTHS AS ON THE DATE OF SEARCH. IT IS ALSO NOTED THAT ALL THE ADVANCES WERE FOUND TO BE RECEIVED IN CASH ONLY. THE ASSESSI NG OFFICER, THEREFORE, WONDERED THAT WHEN 30 ODD STUDENTS HAVE PAID ADVANC E FEES WHY NOT OTHERS. AS PER HIM, THERE WAS NO PROVISION FOR TAKING ADVAN CE FEE EITHER IN AICTE NORMS, NOR IN THE PROSPECTUS/BROCHURES OF THE INSTITUTE. T HE ASSESSING OFFICER MADE ADDITION OF THIS AMOUNT OF RS.18.87 LAKHS TO THE IN COME OF THE ASSESSEE TREATING THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. BEF ORE DOING THAT, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH CLA RIFICATION AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSIN G OFFICER HAS COME TO THE CONCLUSION. BEING AGGRIEVED, THE ASSESSEE CARRIED T HE MATTER IN APPEAL BEFORE LD CIT(A). IT WAS HELD BY THE LD CIT(A) THAT THE ASSES SING OFFICER WAS JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS.18.87 LAKHS CONSTITUT ED CAPITATION FEE RECEIVED BY THE ASSESSEE BUT HE WAS NOT JUSTIFIED TO ENHANCE TH E INCOME OF THE ASSESSEE AGAIN BY THE SAME AMOUNT BECAUSE THE ASSESSEE HAS S HOWN THIS AMOUNT AS . I.T.A. NO.3557,3803 & 3804/DEL/09 6/13 ADVANCE FEES RECEIVED BY THE ASSESSEE AND THE ASSES SEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. THEREAFTER, IT IS NOTED BY T HE LD CIT(A) ON PAGE NO.9 OF HIS ORDER THAT AS PER THE DETAILS FILED BY THE ASSE SSEE, SECOND TERM FEE RECEIVED FROM THESE TWO STUDENTS DURING THE MONTH OF NOVEMBE R, 2006 WAS RS.3,60,400/- AND THE OTHER INSTALLMENTS OF THE FEES RECEIVED FRO M THESE STUDENTS FALL IN THE SUBSEQUENT ASSESSMENT YEAR. ON THIS BASIS, IT WAS HELD BY THE LD CIT(A) THAT ADDITION OF RS.3,60,400/- WAS REQUIRED TO BE MADE T O THE RETURN OF INCOME OF THE ASSESSEE. IN THIS MANNER, LD CIT(A) HAS CONFIRMED T HE ADDITION OF RS,.3,60,400/- OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER O F RS.18.87 LAKHS. IN THIS MANNER, THE LD CIT(A) HAS ALLOWED TO THE ASSESSEE R ELIEF OF RS.15,26,600/-. NOW, THE REVENUE IS IN APPEAL REGARDING ADDITION DE LETED BY THE LD CIT(A) AND THE ASSESSEE IS IN APPEAL FOR THE ADDITION CONFIRME D BY THE LD CIT(A) OF RS.3,60,400/-. 7. IT IS SUBMITTED BY THE LD AR OF THE ASSESSEE THA T AS PER ANNEXURE-I TO THE ASSESSMENT ORDER WHICH IS AVAILABLE ON PAGE NO.1 OF THE PAPER BOOK, OUT OF TOTAL RECEIPT OF RS.18.87 LAKHS, AN AMOUNT OF RS.3,60,400 /- WAS ADJUSTED AGAINST FEES OF SECOND TERM ON VARIOUS DATES OF NOVEMBER, 2006 A ND THE REMAINING AMOUNT WAS ADJUSTED IN THE NEXT YEAR AGAINST THE FEES OF T HIRD SEMESTER AND 4 TH SEMESTER. THEREAFTER ALSO, THERE WAS BALANCE LYING TO THE CREDIT OF VARIOUS STUDENTS. IT IS SUBMITTED THAT OUT OF THIS AMOUNT O F RS.18.87 LAKHS, RS.50,000/- WAS REFUNDED TO ONE STUDENT SHRI SANDEEP KUMAR ON 2 .9.2006 AS NOTED BY THE ASSESSING OFFICER ALSO IN THE SAID ANNEXURE LEAVING AMOUNT OF RS.18.37 LAKHS. OUR ATTENTION WAS DRAWN TO THE INCOME AND EXPENDITU RE ACCOUNT AS APPEARING ON PAGE NO.13 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT RS.14,76,600/- IS CREDITED AS INCOME ON ACCOUNT OF ADVANCE FEES AND T HE BALANCE AMOUNT OF RS.3,60,400/- WHICH WAS ADJUSTED DURING THIS YEAR A GAINST SECOND SEMESTER FEE IS INCLUDED IN THE TUITION FEE CREDITED IN THE INCO ME & EXPENDITURE ACCOUNT OF RS.372.89 LAKHS AND HENCE THIS ENTIRE AMOUNT OF RS. 18.37 LAKHS WAS TAKEN INTO INCOME BY THE ASSESSEE IN THE PRESENT YEAR AND HENC E NO ADDITION IS JUSTIFIED ON THIS ACCOUNT. . I.T.A. NO.3557,3803 & 3804/DEL/09 7/13 8. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT OR DER. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE DISPUTE IS RE GARDING RECEIPT OF RS.18.87 LAKHS WHICH IS ACCOUNTED FOR BY THE ASSESSEE AS ADV ANCE FEES WHEREAS AS PER THE ASSESSING OFFICER, THE SAME IS CAPITATION FEE R ECEIVED BY THE ASSESSEE. WE FIND THAT LD CIT(A) HAS DECIDED THIS ASPECT OF THE MATTER AND IT WAS HELD BY HIM THAT THE SAME IS CAPITATION FEES RECEIVED BY THE AS SESSEE AND AGAINST THIS FINDING OF LD CIT(A), THERE IS NO GROUND RAISED BY THE ASSE SSEE OR BY THE REVENUE AND HENCE THIS ASPECT HAS BECOME FINAL,. WE HAVE TO DE CIDE REGARDING THE ADDITION OF RS.18.87 LAKHS MADE BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME OUT OF WHICH LD CIT(A) HAS CONFIRMED THE ADDITION OF RS.3, 60,400/- AND IN THIS REGARD, WE FIND THAT AS PER THE ASSESSING OFFICER ALSO, OUT OF THIS AMOUNT OF RS.18.87 LAKHS, A SUM OF RS.50,000/- WAS REFUNDED TO ONE STU DENT SHRI SANDEEP KUMAR ON 2.9.2006 AND BALANCE AMOUNT IS ONLY RS.18,.37 LA KHS. OUT OF THIS, THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.14,76,600/- T O INCOME AND EXPENDITURE ACCOUNT UNDER THE HEAD ADVANCE FEE. SINCE THIS AMOU NT HAS BEEN CREDITED BY THE ASSESSEE TO INCOME & EXPENDITURE ACCOUNT, NO ADDITI ON CAN BE MADE FOR THIS AMOUNT. REGARDING BALANCE AMOUNT OF RS.3,60,400/- (RS.18.37 LAKHS RS.14,76,600/-), WE FIND THAT THIS IS THE SUBMISSIO N OF THE ASSESSEE THAT THIS AMOUNT WAS ALSO CREDITED TO INCOME & EXPENDITURE AC COUNT AS THE SAME WAS INCLUDED IN TUITION FEE BECAUSE THE SAME WAS ADJUST ED AGAINST SECOND SEMESTER FEES. WE FIND THAT THIS IS NOT THE CASE OF THE ASS ESSING OFFICER THAT RS.3,60,400/- WAS RECEIVED BY THE ASSESSEE OVER AND ABOVE THIS AM OUNT OF RS.18.87 LAKHS OUT OF WHICH RS.50,000/- WAS REFUNDED. THE ENTIRE AMOU NT OF RS.18.37 LAKHS WAS TAKEN BY THE ASSESSEE IN INCOME EITHER BY INCLUDING THE SAME IN REGULAR FEES OR SHOWING THE SAME AS INCOME UNDER THE HEAD ADVANCE F EES TO THE EXTENT OF RS.14,76,600/-. UNDER THESE FACTS, WE FEEL THAT NO ADDITION IS JUSTIFIED ON THIS ACCOUNT BECAUSE THE ENTIRE AMOUNT OF RS.18.37 LAKHS IS DECLARED BY THE . I.T.A. NO.3557,3803 & 3804/DEL/09 8/13 ASSESSEE AS INCOME. WE, THEREFORE, ALOW GROUND NO.1 OF THE ASSESSEE AND GROUND NO.1 & 2 OF THE REVENUE ARE REJECTED. 10. NOW, THERE IS ONLY ONE GROUND LEFT I.E. GROUND NO.3 OF THE REVENUES APPEAL IN ASSESSMENT YEAR 2007-08. THIS GROUND READS AS UN DER:- THE LD CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS.14,33,132/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF SALARY PAID BY THE ASSESSEE TO HIS EMPLOYEES AND THEREAFTER RECEIVED BACK FROM THEM. 11. BRIEF FACTS OF THE CASE ARE THAT ON PAGE NO.106 -108 OF THE SEIZED DOCUMENT OF ANNEXURE A-63, CONTAINED DETAILS OF SAL ARY FOR THE FINANCIAL YEAR 2006-07 PAYABLE TO MEMBERS OF THE STAFF AS PER OFFI CIAL RECORD. NO DETAILS OF WAGES HAS BEEN MENTIONED BUT SIGNATURES WERE TAKEN ON REVENUE STAMP IN RESPECT OF 122 STAFF MEMBERS. IT IS ALSO NOTED THA T ANNXURE 38 IS ALSO WAGES PAYMENT REGISTER. IT IS ALSO NOTED THAT SIMILAR WA S THE POSITION AS ANNEXURE A-24 OF SITM FOR DIFFERENT MONTHS FOR THE RELEVANT PERIO D. DURING THE COURSE OF SEARCH, STATEMENT OF SHRI ANIL SHARMA, THE ACCOUNT OF TRHE SITM WAS RECORDED ON OATH. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT D URING THE COURSE OF SEARCH STATEMENT ON OATH WAS RECORDED OF ONE SHRI SURINDER MIGLANI S/O SHRI OM PARKASH RESIDENT OF ROHTAK. AT THE COLLEGE PREMISE S, SELF PAID BLANK SIGNED CHEQUES BOOKS OF BANK ACCOUNTS MAINTAINED BY THE TE ACHERS/STAFF WITH UTI BANK REWARI WERE FOUND. SHRI MIGLANI WAS A LECTURER IN MBA WITH SITM SINCE AUGUST, 2005. AS PER HIS STATEMENT, SHRI SURINDER MIGLANI STATED THAT AS PER THE COLLEGE RECORD, HIS SALARY WAS RS.13,150/- PER MONTH BUT HE WAS ACTUALLY PAID RS.10,000/- PER MONTH. THE ASSESSING OFFICER HAS F URTHER NOTED THAT SIMILAR STATEMENT WAS ALSO RECORDED FROM 11 OTHER PERSONS W HOSE NAMES ARE MENTIONED IN PARA 10.6. OF THE ASSESSMENT ORDER AND IN THOSE STATEMENTS, THESE PERSONS HAVE CONFIRMED HAVING RECEIVED THE SAME AMOUNT OF S ALARY AS BEING WRITTEN IN THE BOOKS OF THE ASSESSEE BUT THESE STATEMENTS WERE NOT CONSIDERED BY THE . I.T.A. NO.3557,3803 & 3804/DEL/09 9/13 ASSESSING OFFICER. THE AFFIDAVIT OF SHRI SURINDER M IGLANI WAS ALSO FILED DURING THE ASSESSMENT PROCEEDINGS WHEREIN WHATEVER HAD BEEN R ECORDED IN THE STATEMENT EARLIER DURING THE COURSE OF SEARCH WHICH WAS CLAIM ED TO BE NOT GIVEN UNDER FREE CONSENT BUT THE ASSESSING OFFICER DID NOT ACCEPT TH E AFFIDAVIT OF SHRI SURINDER MIGLANI THAT HE WAS NOT AN ASSESSEE WHEN HIS STATEM ENT WAS RECORDED AND THEREFORE HIS STATEMENT WAS NOT RECORDED U/S 132(4) OF THE INCOME TAX ACT, 1961. IT WAS FURTHER HELD BY THE ASSESSING OFFICER THAT THERE WAS NO MATERIAL ON RECORD THAT THE STATEMENT WAS RECORDED UNDER DURESS . UNDER THESE FACTS, THE ASSESSING OFFICER CONSIDERED IT REASONABLE TO DISAL LOW THE EXPENSES CLAIMED AS SALARY OF STAFF DURING THE PRESENT YEAR AT RS.59,82 ,757/- BY THE SAME RATIO AS BROUGHT OUT FROM TRHE STATEMENT OF OATH OF SHRI OM PARKASH MIGLANI I.E. RS.10,000/-RS.13,150/-. THIS RESULTED INTO DISALLO WANCE OF RS.14,33,132/- WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. BEING AGGR IEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) WHO HAS DELET ED THIS DISALLOWANCE AND NOW THE REVENUE IS IN APPEAL BEFORE US. 12. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS LD AR OF THE SUPPORTED THE ORDER OF LD CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD CIT(A) HAS DEC IDED THIS ISSUE AFTER DISCUSSING ALL THE FACTS IN PROPER PERSPECTIVE AND HENCE WE REPRODUCE BELOW THE FINDING OF LD CIT(A) FROM PAGE NO.13 TO 15 OF HIS O RDER:- I HAVE CAREFULLY CONSIDERED THE CONTNTI0ON OF THE LD COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. THE ASSE SSING OFFICER HAS MADE THIS ADDITION MAINLY ON THE BASIS OF STATEMENT OF SHRI SURINDER MIGLANI S/O SHRI OM PRAKASH MIGLANI, WHO WAS A LECT URER OF MBA WITH SSRD SINCE AUGUST, 2005. THIS STATEMENT WAS RECORD ED DURING THE COURSE OF SEARCH. THOUGH SHRI MIGLANI HAS RETRACTED FROM HIS STATEMENT BY FILING AFFIDAVIT BEFORE THE ASSESSING OFFICER, THIS AFFIDAVIT HAS NOT BEEN . I.T.A. NO.3557,3803 & 3804/DEL/09 10/13 ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THA T SHRI SURINDER MIGLANI WAS NOT AN ASSESSEE, WHO FACING SEARCH AC T ION WHEN HIS STATEMENT ON OATH WAS RECORDED. HOWEVER, THE ASSES SING OFFICER CANNOT BE SAID TO BE JUSTIFIED IN REJECTING THE SWORN AFFI DAVIT OF SHRI MIGLANI ON THE ABOVE GROUND. THOUGH I AGREE WITH THE ASSESSING OFF ICER THAT NONE CAN BE ALLOWED TO RETRACT FROM THE STATEMENT MADE DURING T HE COURSE OF SEARCH, UNLESS THERE WAS EVIDENCE TO ESTABLISH THAT SUCH ST ATEMENT WAS RECORDED UNDER DURESS ETC., IN THE CASE OF THE APPELLANT, TH OUGH THERE IS APPARENTLY NO EVIDENCE OF SUCH DURESS ETC. THIS ASPECT IS TO B E SEEN KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES. AS BRO UGHT OUT IN THE ASSESSMENT ORDER ALSO, THE STATEMENTS OF OTHER 11 EMPLOYEES WAS ALSO RECORDED DURING THE COURSE OF SEARCH. EVEN THE NAM ES OF THESE PERSONS ARE MENTIONED IN PARA 10.2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ADMITS IN THE ASSESSMENT ORDER ITSELF THAT ALL THESE STATEMENTS WERE IN FAVOUR OF THE APPELLANT. HOWEVER, HE HAS RE JECTED SUCH EVIDENCE ON THE GROUND THAT THE EMPLOYEES WOULD SPEAK IN CON FORMITY WITH INTEREST OF THEIR EMPLOYEES. HOWEVER, AGAIN THE ASSESSING OF FICER CANNOT BE HELD TO BE JUSTIFIED IN REJECTING THE EVIDENCE AS ABOVE ON THIS GROUND. WHEREAS HE HAS BASED HIS ENTIRE ASSESSMENT ORDER ON THE BAS IS OF STATEMENT OF ONE SUCH EMPLOYEE, HE HAS IGNORED THE STATEMENTS OF OTHER 11 SIMILAR EMPLOYEES. IF THE STATEMENTS OF ALL THESE 11 PERSO NS ARE CONSIDERED, THE ADVERSE INFERENCE DRAWN BY THE ASSESSING OFFICER AG AINST THE APPELLANT IS NOT SUSTAINABLE. IN ADDITION TO THE ABOVE EVIDENCE, THE ASSESSING OF FICER HAS HIMSELF MENTIONED THAT HE WAS MAKING ADDITION ON THE BASIS OF CERTAIN CIRCUMSTANTIAL EVIDENCE. CIRCUMSTANTIAL EVIDENCE MA Y BE IMPORTANT FOR DECIDING AN ISSUE IN THE ASSESSMENT PROCEEDINGS IN A NORMAL CASE. HOWEVER, IN MY OPINION, WHEN AN ASSESSEE IS SUBJECT ED TO SEARCH AND ALL THE IMPORTANT PREMISES ARE COVERD, THERE COULD NOT BE ANY SCOPE FOR MAKING SUCH HUGE ADDITIONS ON THE BASIS OF CIRCUMST ANTIAL EVIDENCE. . I.T.A. NO.3557,3803 & 3804/DEL/09 11/13 FINDING OF BLANK SIGNED CHEQUES BOOKS OF THE EMPLOY EES HAVE BEEN CONSIDERED FOR ADVERSE INFERENCE BY THE ASSESSING O FFICER. HOWEVER, AS BROUGHT OUT IN PARA 10.2 OF THE ASSESSMENT ORDER IT SELF, IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ITSELF, SHRI A NIL SHARMA ACCOUNTANT OF SITM HAS DULY EXPLAINED THE REASONS FOR THE SAME . WHAT HAS BEEN STATED BY SHRI ANIL SHARMA IS THE CONSISTENT STAND OF THE APPELLANT RIGHT FROM THE DATE OF SEARCH. THEREFORE, THE CONCLUSION DRAWN BY THE ASSESSING OFFICER THAT THE AMOUNT FROM THE RESPECTIVE BANK AC COUNTS OF THE EMPLOYEES IS FIRST WITHDRAWN BY THE APPELLANT AND T HEN PART OF IT IS HANDED OVER TO THE EMPLOYEES AFTER POCKETING THE BALANCE I S WITHOUT EVIDENCE. NOT EVEN SINGLE SEIZED DOCUMENT HAS BEEN DISCUSSED WHIC H SHOWED THAT THE APPELLANT DID RETAIN PART OF CASH WITHDRAWN FROM TH E RESPECTIVE BANK ACCOUNTS OF THE EMPLOYEES. IF THE VERSION OF THE A SSESSING OFFICER WAS CORRECT, THERE SHOULD HAVE BEEN AT LEAST SOME EVIDE NCE FOUND DURING THE COURSE OF SEARCH IN THIS REGARD. THE INCREASE IN SA LARY FROM ASSESSMENT YEAR 2005-06 TO 2006-07, IN ITSELF WOULD FURTHER NO T CONSTITUTE CONCLUSIVE EVIDENCE THAT THE APPELLANT CLAIMED CERTAIN IN GENU INE EXPENSES UNDER THE HEAD. KEEPING IN VIEW THE ABOVE DISCUSSION, I AM NOT INCL INED TO AGREE WITH THE ASSESSING OFFICER THAT THE APPELLANT INFLATED EXPEN SES UNDER THE HEAD SALARY. THOUGH ON THE BASIS OF STATEMENT OF SHRI SURINDER MIGLANI RECORDED DURING THE COURSE OF SEARCH, ADVERSE INFER ENCE COULD BE DRAWN AGAINST THE APPELLANT, AS FAR AS PAYMENT OF SALARY TO HIM ALONE IS CONCERNED, KEEPING IN VIEW THE ENTIRETY OF THE FACT S AND CIRCUMSTANCES I.E. STATEMENT OF 11 OTHER EMPLOYEES RECORDED DURING TH E COURSE OF SEARCH AND THE SUBSEQUENT AFFIDAVIT OF SHRI MIGLANI WHICH HAS BEEN REJECTED BY THE ASSESSING OFFICER NOT FOR SOME GOOD AND VALID R EASONS, IT WOULD NOT BE APPROPRIATE EVEN TO SUSTAIN ADDITION EVEN IN RESPEC T OF SALARY PAID TO SHRI MIGLANI. IN VIEW OF THE ABOVE, ADDITION OF RS.14,33 ,132/- MADE BY THE ASSESSING OFFICER IS, THEREFORE, DELETED. . I.T.A. NO.3557,3803 & 3804/DEL/09 12/13 14. FROM THE ABOVE, WE FIND THAT LD CIT(A) HAS DECI DED THIS ISSUE IN PROPER PERSPECTIVE BECAUSE THE ASSESSING OFFICER HAS BASED HIS CONCLUSION ON THE STATEMENT OF ONE EMPLOYEE WHEREAS 11 OTHER EMPLOYEE S HAVE STATED IN THE STATEMENTS THAT THEY WERE GETTING FULL SALARY AS DE BITED BY THE ASSESSEE IN ITS BOOKS. WE ALSO FIND THAT THE STATEMENT OF ONE EMPLO YEE OF SHRI MIGLANI WAS ALSO RETRACTED BY HIM BY FILING AN AFFIDAVIT. UNDER THES E FACTS, WE FIND NO GOOD REASON TO INTERFERE IN THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND HENCE WE UPHOLD THE SAME. THIS GROUND OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED. 16. NOW, WE TAKE UP THE APPEAL OF THE REVENUE FOR A SSESSMENT YEAR 2006-07. 17. THE ONLY GROUND RAISED BY THE REVENUE READS AS UNDER:- THAT LD CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.9,41,945/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALARY PAID BY THE ASSESSEE TO HIS EMPLOYEES AND TH EREAFTER RECEIVED BACK FROM THEM. 18. IT WAS AGREED BY BOTH SIDES THAT THIS ISSUE IN THE PRESENT YEAR CAN BE DECIDED ON SIMILAR LINES AS GROUND NO,.3 OF THE REV ENUES APPEAL FOR ASSESSMENT YEAR 2007-08. IN THAT YEAR, GROUND NO.3 OF THE REV ENUES APPEAL WAS DECIDED BY US IN FAVOUR OF THE ASSESSEE AS PER PARA NO. 14 AB OVE. ACCORDINGLY, IN THIS YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESS EE. THIS GROUND OF THE REVENUE IS DISMISSED. 19. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. . I.T.A. NO.3557,3803 & 3804/DEL/09 13/13 20. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED. 21. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH DE CEMBER, 2009. SD/- SD/- (GEORGE MATHAN) (A.K. GARO DIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 4. 12.2009. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).