Joint Commissioner Of Income Tax (OSD) (Exemptions), Circle- 1, Bangalore V. M/s. Sri Srinivasa Education And Charitable, Bangalore

ITA 421/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3543 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-11-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 26-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRASHANTH G S
• Keywords: Search and seizure; Charitable institution
• Section: 143(3); 153A; 13; 132; 11

Judgement Text

ITA NO.421/BANG/2020 M/S. SRI SRINIVASA EDUCATION AND CHARITABLE TRUST, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.421/BANG/2020 ASSESSMENT YEAR: 2013-14 JCIT (OSD)(E) CIRCLE-1 BENGALURU PAN NO : AADCM7259F VS. M/S. SRI SRINIVASA EDUCATION AND CHARITABLE TRUST 619/G, 36 TH CROSS RAJAJINAGAR 2 ND BLOCK BENGALURU-560 010 APPELLANT RESPONDENT APPELLANT BY : MS. NEERA MALHOTRA, D.R. RESPONDENT BY : SHRI PRASHANTH G.S., A.R. DATE OF HEARING : 11.11.2020 DATE OF PRONOUNCEMENT : 11.11.2020 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST O RDER OF THE CIT(A)-6 DATED 30.10.2019 FOR THE A.Y. 2013-14. 2. THE FACTS OF THE CASE ARE THAT A SEARCH U/S 13 2 OF THE INCOME- TAX ACT,1961 ['THE ACT' FOR SHORT] WAS CONDUCTED IN THE APPELLANTS CASE ON 18.7.2013. THE SEARCH ASSESSMENT WAS COMPL ETED U/S 143(3) R.W.S. 153A OF THE ACT ON 13.1.2016. AFTER RECTIFICATION, THE TOTAL INCOME ASSESSED WAS RS.58,09,69,110/- AND A D EMAND OF RS.25,26,97,630/- WAS RAISED. A PENALTY NOTICE U/S 271AAB OF THE ACT WAS ALSO ISSUED BY THE ASSESSING OFFICER (A.O.) ON 13.1.2016. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS U/132 ON ITA NO.421/BANG/2020 M/S. SRI SRINIVASA EDUCATION AND CHARITABLE TRUST, BANGALORE PAGE 2 OF 4 18.7.2013, SEVERAL PAYMENTS MADE FOR NON-SPECIFIED PURPOSES IN CASH TO CONTRACTORS, OTHER RELATED CONCERNS, TO PRO MOTERS ETC., WERE FOUND TO THE EXTENT OF RS.43,33,00,000/- RELEVANT T O THE A.Y. 2013- 14. DURING THE COURSE OF SEARCH PROCEEDINGS, THE A PPELLANT WAS ASKED TO CLARIFY THE NATURE AND PURPOSE OF THE ABOV E EXPENSES CLAIMED. THE APPELLANT CLAIMED THAT THE SAID EXPEN DITURE WAS ACTUALLY INCURRED ON CONSTRUCTION OF THE COLLEGE AN D HOSPITAL AND RECORDED IN THE BOOKS OF ACCOUNTS OF THE TRUST MAIN TAINED IN THE REGULAR COURSE OF OPERATIONS BUT THAT IT AGREED FOR DISALLOWANCE OF RS.25 CRORES FOR THE SAKE OF BUYING PEACE WITH THE DEPARTMENT. HOWEVER, SINCE THE APPELLANT FAILED TO EXPLAIN THE GENUINENESS OF THE SAME WITH PROPER BILLS AND VOUCHERS, IN THE SEARCH ASSESSMENT, THE AMOUNT OF RS.43.33 CRORES WAS TREATED AS EXPENDITUR E NOT INCURRED FOR THE OBJECTS OF THE TRUST. THE MATERIAL WHICH W AS FOUND DURING THE COURSE OF THE SEARCH OPERATIONS ALSO SHOWED THE RECEIPT OF MONEY OVER AND ABOVE THE FACTS PRESCRIBED BY THE GOVERNME NT, FOR ADMITTING THE STUDENTS UNDER THE MANAGEMENT QUOTA. THE MONEY SO COLLECTED WAS PAID TO PERSONS IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C). IN VIEW OF THE ABOVE FINDINGS, IN THE SEARCH ASSESS MENT, THE CLAIM OF EXEMPTION U/S 11 OF THE ACT WAS DISALLOWED AND THE APPELLANT WAS TREATED AS AN AOP. IN THE SEARCH ASSESSMENT ADDITI ON WAS ALSO MADE ON ACCOUNT OF PAYMENTS UNSECURED LOANS RS.7.03 CROR ES AND CASH PAYMENTS RS.5,54,50,500/- TO RELATED PARTIES IN VIO LATION OF THE OBJECTIVES OF THE TRUST. THE ABOVE PAYMENTS WERE T REATED AS EXPENSES ATTRACTING THE PROVISIONS OF SECTION 13(1)(C) R.W.S . 13(3) OF THE ACT. THOUGH AN AMOUNT OF RS.7,50,00,000/- HAD BEEN ADMIT TED BY THE APPELLANT DURING THE COURSE OF THE SEARCH PROCEEDIN GS U/S 132(4), THE SAME WAS NOT ADMITTED IN THE RETURN OF INCOME FILED ON 14.3.2014 IN RESPONSE TO THE NOTICE ISSUED U/S 153A DATED 18.2.2 014. THIS AMOUNT WAS ADMITTED ONLY IN THE REVISED COMPUTATION OF TOTAL INCOME FILED ON 14.12.2015 DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS. ITA NO.421/BANG/2020 M/S. SRI SRINIVASA EDUCATION AND CHARITABLE TRUST, BANGALORE PAGE 3 OF 4 IN VIEW OF THE SAME, THE A.O. HELD THAT THE AMOUNTS OF RS.43,33,00,000/- RS.7,03,00,000/- AND RS.5,54,50,5 00/- FELL UNDER THE PURVIEW OF PENALTY U/S 271AAB(1) OF THE A CT. HENCE PENALTY @ 30% WAS LEVIED BY ON THE AGGREGATE AMOUNT OF RS.55,90,50,500/-. THE PENALTY SO LEVIED AMOUNTED TO RS.16,77,15,150/-. 3. ON APPEAL, CIT(A) DELETED THE PENALTY. AGAINST THIS REVENUE FILED AN APPEAL BEFORE US. AT THE TIME OF HEARING, BOTH THE PARTIES CONCEDED THAT THE ABOVE ISSUES WERE SUBJECT MATTER APPEAL BEFORE THIS TRIBUNAL IN ITA NO.712/BANG/2018 AND TRIBUNAL DELETED THE ABOVE ADDITIONS MADE BY LOWER AUTHORITIES AND ALLOW ED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 4.9.2019. BEING SO, THERE WAS NO SURVEYING OF QUANTUM ADDITIONS IN THIS CASE. ACCOR DINGLY, LEVY OF PENALTY IS NOT WARRANTED AND THE DELETION OF PENALT Y U/S 271AAB(1) OF THE ACT IS CONFIRMED. APPEAL OF THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOV, 2020. SD/- (N.V. VASUDEVAN ) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER BANGALORE, DATED 11 TH NOV, 2020. VG/SPS ITA NO.421/BANG/2020 M/S. SRI SRINIVASA EDUCATION AND CHARITABLE TRUST, BANGALORE PAGE 4 OF 4 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.