Dy. Commissioner of Income Tax (Exemption), Lucknow V. M/s Bhagwat Saran Educational Trust, Bijnor

ITA 475/LKW/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7567 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 27-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FACTS
• Keywords: Unexplained cash credit; Business income; Charitable institution; Question of law; TDS; Set aside
• Section: 40(a)(ia); 12AA; 68; 11

Judgement Text

I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 DY.C.I.T. (EXEMPTIONS), LUCKNOW. VS. M/S BHAGWAT SARAN EDUCATIONAL TRUST, HARIDWAR ROAD, NAJIBABAD BIJNOR. PAN:AABTB 3924 B (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A), DATED 30/05/2017 PERTAINING TO ASSESSMENT Y EAR 2013-2014. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND FACTS BY ALLOWING THE BENEFIT OF SECTION 11 THEREBY DELETING THE ADDITION OF SURPLUS OF RS.2,28,47,433/ - IGNORING THE FACT THAT THE ASSESSEE CHARGED RS.57,75,900/- I N THE FORM OF BOOK BANK FEES, DRESS CHARGES EXAMINATION FEE AN D MISCELLANEOUS FEES BEYOND THE PRESCRIBED AMOUNT OF FEES AS DECIDED BY THE GOVT. AUTHORITIES, WHICH CLEARLY IND ICATES THAT THE OBJECTS OF THE ASSESSEE ARE NOT CHARITABLE. APPELLANT BY SHRI A. K. BAR, CIT (DR) RESPONDENT BY SHRI K. R. RASTOGI, F.C.A. SHRI SHUBHAM RASTOGI, F.C.A. DATE OF HEARING 22/04/2019 DATE OF PRONOUNCEMENT 26/04/2019 I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 2 2. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION/DISALLOWANCE OF RS.28,80,000/- IGNORING THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE IT'S CLAIM WITH DOCUMENTARY EVIDENCES AND ALSO COULD NOT PROVE THE GENUINENESS OF TRANSACTIONS AND CREDIT WORTHINESS OF THE PEOPLE WHO HAVE DONATED. FURTHER THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT GHAZIABAD VS. UTTARANCHAL WELFARE SOCIETY IS RELATE D TO NON- CORPUS DONATIONS. 3. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY DELETING THE ADDITION OF RS.2,11,95,39 8/- IGNORING THE FACT THAT THE ASSESSEE TRUST DID NOT FURNISH TH E RESPECTIVE BANK PASS BOOKS, COPIES OF ACKNOWLEDGEMENTS OF INCO ME TAX RETURNS TO PROVE THE GENUINENESS OF THE TRANSACTION S AND CREDIT WORTHINESS OF THE PARTIES WHO HAVE GIVEN UNS ECURED LOANS AND ALSO THE ASSESSEE TRUST DID NOT FURNISH T HE POSTAL ADDRESSES OF THE CONCERNED PARTIES TO ENABLE A.O. T O ENQUIRE ABOUT THE DETAILS OF TRANSACTIONS. 4. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY DELETING THE ADDITION/DISALLOWANCE MAD E BY THE AO ON ACCOUNT OF HELP TO POOR STUDENTS AMOUNTING TO RS.58,22,900/- OUT OF ADDITION OF RS.62,61,862/-. 5. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY DELETING THE ADDITION/DISALLOWANCE MAD E BY THE AO AMOUNTING TO RS.3,69,940/- VIOLATING THE PROVISI ONS OF SECTION 40(A) OF THE I.T. ACT, 1961. 2. AT THE OUTSET, LEARNED D. R. INVITED OUR ATTENTI ON TO THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAD NOTED THAT THE ASSESSEE HAD RECEIVED HUGE AMOUNT OF RS.57,75,900/- IN THE FORM OF FEES AND OTHER CHARGES WHICH INCOME IS A CAPITATION FEES AND THERE FORE, THE ASSESSING OFFICER RELYING ON THE ORDER OF HON'BLE SUPREME COU RT IN THE CASE OF UNNI KRISHANAN J.P. & OTHERS VS. STATE OF ANDHRA PRADESH & OTHERS HAD RIGHTLY TREATED THE ACTIVITIES OF THE ASSESSEE AS COMMERCIA L AND THEREFORE, RIGHTLY HELD THE TOTAL INCOME DECLARED BY THE ASSESSEE AS I NCOME FROM BUSINESS. IT I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 3 WAS ARGUED THAT LEARNED CIT(A) HAS NOT APPRECIATED THE FACTS OF THE CASE AND HAS WRONGLY ALLOWED RELIEF TO THE ASSESSEE. 2.1 ARGUING GROUND NO. 2 LEARNED D. R. SUBMITTED TH AT THE ASSESSEE HAD MADE ADDITIONS TO THE CORPUS FUND TO THE TUNE OF RS .28,80,000/- AND ASSESSEE WAS SHOW CAUSED TO FURNISH EVIDENCES PROVI NG THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE PERSON S WHO HAD GIVEN THE DONATION AND IN THE ABSENCE OF THE ASSESSEE HAVING FILED BANK PASS-BOOK AND COPIES OF ACKNOWLEDGEMENT OF INCOME TAX RETURN OF THE DONOR, THE ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND WHICH LEARNED CIT(A) HAS WRON GLY ALLOWED. 2.2 ARGUING GROUND NO. 3 LEARNED D. R. SUBMITTED TH AT ASSESSEE HAD RECEIVED VARIOUS AMOUNTS FROM VARIOUS PERSONS AND O N AN EXPLANATION SOUGHT BY THE ASSESSING OFFICER REGARDING GENUINENE SS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PERSONS, THE ASSESSEE HAD F AILED TO PROVE THE SAME AND THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY MA DE ADDITION U/S 68 AND WHICH THE LEARNED CIT(A) HAS WRONGLY ALLOWED. 2.3 ARGUING GROUND NO. 4 LEARNED D. R. SUBMITTED TH AT ASSESSEE HAD DEBITED AN AMOUNT OF RS.62,61,703/- UNDER THE HEAD HELP TO POOR STUDENTS AND ASSESSING OFFICER HAD OBSERVED THAT MOST OF THE ENTRIES WERE JOURNAL ENTRIES AND IN THE CASE OF CASH PAYMENT THE EVIDENC E COULD NOT BE VERIFIED AS IN SOME CASES THE NAMES OF THE STUDENTS WERE NOT MENTIONED AND THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY MADE T HE ADDITION OF RS.62,61,703/- AND LEARNED CIT(A) HAS WRONGLY ALLOW ED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.58,22,900/-. 2.4 ARGUING LAST GROUND OF APPEAL, LEARNED D. R. SU BMITTED THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE ASSESSEE I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 4 HAD NOT DEDUCTED TDS ON PAYMENTS MADE TO K. LOUNGE TAILORS AND THEREFORE, ASSESSING OFFICER HAD RIGHTLY MADE THE D ISALLOWANCE WHICH THE LEARNED CIT(A) HAS WRONGLY ALLOWED. 3. LEARNED A. R., ON THE OTHER HAND, SUBMITTED THAT THE EXTRA AMOUNT RECEIVED BY THE ASSESSEE FROM THE STUDENTS IN THE F ORM OF BOOK BANK FEES, DRESS CHARGES, EXAMINATION FEE AND MISC. FEES WERE NOT PART OF THE TUITION FEE AS THESE WERE SPECIFIC CHARGES WHICH THE ASSESS EE HAD RECEIVED ON THE SPECIFIC REQUEST OF THE STUDENTS. AS REGARDS DRESS CHARGES, LEARNED A. R. SUBMITTED THAT THE STUDENTS OF THE INSTITUTION BELO NG TO VARIOUS ADJOINING VILLAGES OF THE AREA AND ON THEIR REQUEST ONLY THE DRESS WERE MADE FOR THEM AND ACCORDINGLY THEY WERE CHARGED FOR THE DRESS CHA RGES. LEARNED A. R. IN THIS RESPECT INVITED OUR ATTENTION TO PAGE 171 OF T HE PAPER BOOK WHERE THE DRESS EXPENSES INCURRED BY THE ASSESSEE WERE PLACED . LEARNED A. R. SUBMITTED THAT THESE DRESS EXPENSES WERE INCURRED B Y THE ASSESSEE AGAINST THE RECEIPT OF DRESS CHARGES AND THEREFORE, THE ASS ESSEE CANNOT BE SAID TO HAVE PROFITED FROM THE ABOVE ACTIVITIES. AS REGAR DS THE EXAMINATION FEE, THE LEARNED A. R. SUBMITTED THAT THIS FEES WERE FOR SPECIFIC PURPOSE AND WAS NOT PART OF TUITION FEES AND THEREFORE, THE RELIANC E PLACED BY THE ASSESSING OFFICER ON THE ORDER OF HON'BLE SUPREME COURT IS NO T APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IT WAS SUBM ITTED THAT THE ORDER OF FEE FIXATION COMMITTEE, PLACED AT PAGES 48 TO 53 OF THE PAPER BOOK, IS RELEVANT FOR DETERMINING THE TUITION FEE TO BE CHAR GED AS PER THE GUIDELINE WHICH DEPENDED UPON THE NUMBER OF STUDENTS, INFRAST RUCTURE FACILITIES, AUDITED INCOME AND EXPENDITURE ACCOUNT AND BALANCE SHEET OF THE INSTITUTION. LEARNED A. R. INVITED OUR ATTENTION T O AN ORDER OF HON'BLE LUCKNOW BENCH OF THE TRIBUNAL IN I.T.A. NO.265 AND 266/LKW/2017 IN THE CASE OF PRAYAG DANT VIGYAN ANUSANDHAN SANSTHAN WHER EIN UNDER SIMILAR FACTS AND CIRCUMSTANCES THE HON'BLE TRIBUNAL HAD AL LOWED RELIEF TO THE I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 5 ASSESSEE. OUR ATTENTION WAS ALSO INVITED TO DETAIL ED FINDINGS OF LEARNED CIT(A) WHERE HE HAS DEALT WITH THE ENTIRE ISSUE. T HEREFORE, IT WAS PRAYED THAT GROUND NO. 1 OF THE APPEAL MAY BE DISMISSED. 3.1 ARGUING GROUND NO. 2 REGARDING ADDITION OF RS.2 8,80,000/- U/S 68 OF THE ACT, LEARNED A. R. SUBMITTED THAT DURING ASSESS MENT PROCEEDINGS ALL THE DETAILS OF THE DONORS ALONG WITH THEIR ADDRESS AND PAN WERE SUBMITTED TO THE ASSESSING OFFICER AND IN THIS RESPECT OUR ATTEN TION WAS INVITED TO PAGES 81 & 82 OF THE PAPER BOOK WHERE THE DETAILS OF NAME S, PAN, ADDRESS WERE PLACED. IT WAS SUBMITTED THAT THE REQUIREMENT OF T HE ASSESSING OFFICER TO PRODUCE BANK PASSBOOK, COPIES OF ACKNOWLEDGEMENT OF INCOME TAX RETURN ALONG WITH THE COMPUTATION OF INCOME WAS NOT JUSTIF IED AS THE ASSESSEE HAD RECEIVED DONATIONS OF SMALL AMOUNTS AND MAJOR OF TH E DONATIONS WERE OF RS.10,000/- WHICH IS APPARENT FROM THE LIST OF DONO RS PLACED AT PAGES 81 & 82 OF THE PAPER BOOK. IT WAS FURTHER SUBMITTED THA T THE COMPLETE ADDRESS ALONGWITH PAN OF THE DONORS WAS ALSO FURNISHED AND THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDITION. 3.2 ARGUING GROUND NO. 3 FOR THE ADDITION OF RS.2,1 1,95,398/- U/S 68 OF THE ACT, LEARNED A. R. SUBMITTED THAT THE ASSESSEE HAD RECEIVED UNSECURED LOANS FROM FIVE PERSONS WHICH WERE ALREADY DEPOSITO RS WITH THE ASSESSEE AS IS APPARENT FROM THE COPY OF ACCOUNTS OF THESE DEPO SITORS PLACED AT PAGES 98 TO 145 OF THE PAPER BOOK. OUR SPECIFIC ATTENTIO N WAS INVITED TO PAGE NO. 99 WHERE COPY OF ACCOUNT OF AVINASH KUMAR AGARWAL W AS PLACED AND WHEREIN THE OPENING BALANCE WAS MENTIONED AT RS.9,0 0,000/-. OUR ATTENTION WAS ALSO INVITED TO PAGE NO. 106 OF THE P APER BOOK WHERE COPY OF ACCOUNT OF NARESH KUMAR AGARWAL WAS PLACED WHEREIN ALSO THERE WAS OPENING BALANCE. OUR FURTHER ATTENTION WAS INVITED TO PAGE NO. 129 OF THE PAPER BOOK WHERE COPY OF ACCOUNT OF IKRAR AHMAD CON TRACTOR WAS PLACED I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 6 WHERE AGAIN THE OPENING BALANCE WAS THERE. IT WAS SUBMITTED THAT IN THE EARLIER YEAR THERE WAS NO SUCH ADDITION MADE ON ACC OUNT OF THESE RECEIPTS AS THESE WERE GENUINE UNSECURED LOANS RAISED BY THE ASSESSEE AND THE FUNDS WERE RECEIVED THROUGH CHEQUES. IT WAS SUBMITT ED THAT ALL THESE DETAILS WERE SUBMITTED IN THE PRECEDING YEAR ALSO AND ASSES SING OFFICER HAD NOT MADE ANY ADDITION AND IN THIS RESPECT INVITED OUR A TTENTION TO COPY OF ASSESSMENT ORDERS PLACED AT PAGES 63 TO 80 OF THE P APER BOOK. LEARNED A. R. SUBMITTED THAT DURING ASSESSMENT PR OCEEDINGS ALL THE DOCUMENTS INCLUDING BANK ACCOUNT AND PAN OF DEPOSIT ORS WERE FURNISHED. OUR SPECIFIC ATTENTION WAS INVITED TO THE ACCOUNT O F IKRAR AHMAD CONTRACTOR WHERE THE AMOUNT WAS RS.85,55,826/-. IT WAS SUBMI TTED THAT THE OPENING BALANCE IN THIS ACCOUNT WAS RS.1,00,29,220/- AND IN FACT DURING THE YEAR UNDER CONSIDERATION THE LOAN AMOUNT HAS REDUCED. 3.3 COMING TO GROUND NO. 4 REGARDING EXPENDITURE IN CURRED BY THE ASSESSEE UNDER THE HEAD HELP TO POOR STUDENTS, LEAR NED A. R. SUBMITTED THAT FOR POOR STUDENTS THE ASSESSEE USED TO PASS ON PART OF FEES RECEIVED FROM THEM INTO THEIR ACCOUNTS AND ENTRY WAS USED TO BE MADE THROUGH JOURNAL ENTRY AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO LEDGER ACCOUNT OF HELP TO POOR STUDENTS PLACED AT PAPER BOOK PAGES 162 TO 170. IT WAS SUBMITTED THAT FOR CASH PAYMENTS, THE LEARNED CIT(A ) DID NOT ALLOW RELIEF TO THE ASSESSEE WHEREAS IN THE CASE OF CHEQUE PAYMENTS AND JOURNAL ENTRY PAYMENTS, THE LEARNED CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE. 3.4 COMING TO LAST GROUND OF APPEAL, LEARNED A. R. SUBMITTED THAT FOR DRESS CHARGES INCURRED ON BEHALF OF THE ASSESSEE, T HE ASSESSEE HAD ENGAGED A TAILOR TO WHOM STITCHING CHARGES WERE PAID AND OU R ATTENTION WAS INVITED TO PAGE NO. 172 OF THE PAPER BOOK WHERE COPY OF ACC OUNT OF K. LOUNGE TAILORS WAS PLACED. IT WAS SUBMITTED THAT LEARNED CIT(A) HAS RIGHTLY DELETED I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 7 THE DISALLOWANCE. IT WAS FURTHER ARGUED THAT WITHO UT PREJUDICE EVEN IF THIS DISALLOWANCE IS MADE THE TAXABLE INCOME OF THE ASSE SSEE BEING EXEMPT U/S 11 WILL NOT HAVE ANY REVENUE EFFECT. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSING OFFICER D ISALLOWED THE CLAIM OF THE ASSESSEE U/S 11 OF THE ACT BY HOLDING THAT THE ASSE SSEE HAD RECEIVED BOOK BANK FEES, DRESS CHARGES, EXAMINATION FEE AND MISC. FEES AMOUNTING TO RS.57,75,900/- WHICH WAS IN THE FORM OF CAPITATION FEE. HOWEVER, WE FIND THAT THESE CHARGES WERE CHARGED TO THE STUDENTS AS THE ASSESSEE HAD PROVIDED EXTRA FACILITIES LIKE PROVIDING DRESS TO T HE STUDENTS. THE EXAMINATION FEE CHARGED BY THE ASSESSEE WAS DEPOSIT ED WITH THE UPTU WHO IS ENGAGED IN CONDUCTING EXAMS. THE LEARNED CIT(A) HAS HELD THAT IN THE EARLIER YEARS UNDER SIMILAR CIRCUMSTANCES THE ASSES SING OFFICER HAD NOT MADE ANY ADDITION. THE ASSESSEE, BEFORE LEARNED CI T(A), HAS ALSO FILED FEE FIXATION COMMITTEE LETTER. IT WAS FURTHER SUBMITTE D TO HIM THAT THE CHARGES WERE CHARGED FOR ADDITIONAL FACILITIES WHICH INCLUD ED WIFI SYSTEM. THE FINDINGS OF LEARNED CIT(A) IN THIS RESPECT ARE QUIT E RELEVANT WHICH IS REPRODUCED BELOW: 5.3 I HAVE EXAMINED THE APPELLANT CONTENTION AND F OUND THAT IT HAS FORCE. THE APPELLANT ARGUE THAT IN EARL IER YEARS THE AO HAD GRANTED EXEMPTION U/S 11. THERE WAS NO CHANG E OF ACTIVITIES IN THE CURRENT YEAR TO WARRANT SUCH ADDI TION. THE APPELLANT HAD BEEN GETTING THE BENEFIT OF SECTION 1 1 SINCE AY 2010-11 AND 2012-13 AND THE AO HAD GRANTED THEM ON SIMILAR ACTIVITIES. THERE WAS NO NEW FACT OR SITUATIONS THA T WERE BROUGHT IN RECORD TO DENY THE BENEFIT OF SECTION 11 TO THE APPELLANT IN THE CURRENT YEAR. NOR HAS THE AO ESTAB LISHED THE FACT OF PROFITEERING DIRECTLY OR INDIRECTLY BY THE APPELLANT. PERHAPS IT WAS NOT NECESSARY ON HIS PART TO DO SO S INCE DURING THAT POINT IN TIME THE REGISTRATION U/S 12AA AS A C HARITABLE ORGANISATION WAS NOT AVAILABLE TO THE ASSESSEE. THE REFORE THE I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 8 DECISION OF THE AO MAY HAVE BEEN COLOURED DUE TO TH IS FACT. EVEN THEN, REJECTION OF BENEFIT OF SECTION 11 SHOUL D HAVE BEEN DONE ONLY AFTER PROPER EXAMINATION. 5.4 IN THE INSTANT CASE THE AO HAS NOT, ACTUALLY ES TABLISHED 'PROFIT MOTIVE' PUT OF THE FEES COLLECTED BY THE AP PELLANT TRUST. HE HAS NOT EVEN EXAMINED WHETHER THE ACTIVITIES OF THE INSTITUTION WAS SOLELY TO GENERATE PROFIT OR WHETHE R THE FACILITIES PROVIDED ON DEMAND WAS FOR THE BENEFIT O F THE STUDENTS OR NOT. THEREFORE THE AMOUNT CANNOT BE REG ARDED AS PROFIT AND BE TREATED AS SUCH. THUS TH6 TREATMENT O F THE SURPLUS OVER EXPENDITURE OF RS.2,28,47,433/- AS INC OME FROM BUSINESS IS WRONG AND LIABLE TO BE JETTISONED. THE APPELLANT GETS RELIEF TO THIS EXTENT. 4.1 THE ABOVE FINDINGS OF LEARNED CIT(A) ARE QUITE EXHAUSTIVE AND MOREOVER THE HON'BLE TRIBUNAL, UNDER SIMILAR CIRCUM STANCES IN THE CASE OF DCIT VS. PRAYAG DANT VIGYAN ANUSANDHAN SANSTHAN, VI DE ORDER DATED 30/11/2018 HAS HELD THE EXTRA CHARGES, CHARGED FROM THE STUDENTS AS NOT A CAPITATION FEES AND HAS ALLOWED RELIEF TO THE ASSES SEE BY HOLDING AS UNDER: 13. AS REGARDS GROUND NO.1 IN ITA NO.266/LKW/2017, WE FIND THAT THE ASSESSING OFFICER HAD DISALLOWED THE BENEFIT OF SECTION 11 BY MAKING ADDITION OF WHOLE OF EXCESS OF INCOME OVER EXPENDITURE TREATING THE SAME AS BUSINESS INCO ME AS IN HIS OPINION ASSESSEE HAD CHARGED FEE WHICH WAS BEYOND T HE PRESCRIBED AMOUNT OF FEES DECIDED BY THE GOVERNMENT AUTHORITIES. HOWEVER, LD. CIT(A) ALLOWED RELIEF TO ASSESSEE BY HOLDING AS UNDER:- ON PERUSAL OF THE DETAILS FILED AND THOSE AVAILABL E ON RECORDS, IT IS SEEN THAT THE ASSESS.EE TRUST HAS BE EN CHARGING TUITION FEES AS PER THE NORMS SET BY THE UPTU. THE ASSESSEE TRUST HAS ALSO CHARGED ADDITIONAL FEES/CHARGES FOR SPECIFIC PURPOSES, LIKE EXAMINATIONS, LAB FEES ETC. THESE AR E NOT ILLEGAL RECEIPTS NOR HAS THE UPTU BARRED THE APPELL ANT FORM THESE ADDITIONAL CHARGES, AS THE MONETARY CAP IS ON LY ON TUITION FEES. IN ANY CASE, SUCH ADDITIONAL RECEIPTS ARE DE- MINIMIS AND ARE COLLECTED FOR SPECIFIC PURPOSES. TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UNIKRIS HNAN, JP I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 9 & OTHERS WHICH HAS BEEN CITED BY THE A.O. IN HIS OR DER, DEALS WITH THE RECEIPT OF CAPITATION FEES. IN THIS CASE, ADMITTEDLY, THERE IS NO CAPITATION FEES, THUS, THE SAID DECISION OF THE HON'BLE SUPREME COURT IS NOT AT ALL APPLICABLE TO THE INSTANT CASE. THESE FEES/ CHARGES, COLLECTED IN ADDITION TO THE TUITION FEES, WERE FULLY RECORDED A ND ACCOUNTED FUNDS AND THESE HAVE BEEN SPENT FOR THE PURPOSES/ OBJECTS OF THE TRUST. EVEN ASSUMING THAT THE ASSESSEE TRUST HAD CHARGED SOME ADDITIONAL FEES/ CH ARGES WHICH WAS IN VIOLATION OF THE UPTU NORMS, IT WAS FO R THE UPTU TO TAKE APPROPRIATE ACTION. THE A.O. CANNOT ST EP INTO THE SHOES OF THE UPTU TO DETERMINE THE EXCESS AMOUN T, IF ANY, CHARGED. FURTHER, IT IS NOW A SETTLED LAW THAT 'EDUCATION' PER SE IS A CHARITABLE ACTIVITY AND EVE N IF SOME SURPLUS IS EARNED BY THE TRUST WHILE IMPARTING EDUC ATION, THE SAME CANNOT BE CONSIDERED AS A BUSINESS ACTIVITY AS LONG AS THE FUNDS OF THE TRUST ARE USED FOR THE PURPOSES/ O BJECTS OF THE TRUST. IN THIS VIEW OF THE MATTER, THE OBSERVAT IONS OF THE A.O. THAT THE ASSESSEE WAS INDULGING IN A BUSINESS ACTIVITY IS NOT IN ACCORDANCE WITH THE SETTLED LAW AND, THEREFO RE, IT HAS TO BE HELD THAT THE SURPLUS OF THE TRUST IS NOT TO BE TREATED AS BUSINESS INCOME. ACCORDINGLY, THIS ADDITION OF RS.3,65,41,344/- IS HEREBY DELETED. 4.2 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AN D FOLLOWING THE JUDICIAL PRECEDENT, GROUND NO. 1 OF THE APPEAL OF T HE REVENUE STANDS DISMISSED. 5. NOW COMING TO GROUND NO. 2 REGARDING DELETION OF ADDITION OF RS.28,80,000/-, WE FIND THAT THE ASSESSING OFFICER HAS MADE THIS ADDITION BY HOLDING THAT THE ASSESSEE HAD NOT PRODUCED COPY OF INCOME TAX RETURN AND BANK STATEMENT OF THE DONORS. HOWEVER, WE FIND THA T THE ASSESSEE HAD FURNISHED COMPLETE LIST OF DONORS INCLUDING THE NAM ES, ADDRESSES AND PAN NUMBERS OF THE DONORS, A COPY OF WHICH IS PLACED AT PAGES 81 & 82 OF THE PAPER BOOK. THE LIST, AS NOTED ABOVE, DEMONSTRATES THAT MOST OF THE DONORS HAVE GIVEN AMOUNTS OF RS.10,000/- AND THE LIST CONT AINS THE NAMES, ADDRESSES AND ALSO THE MODE OF PAYMENT AS TO WHETHE R CHEQUE OR CASH. I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 10 SIMILARLY, WE FIND THAT THE ASSESSEE ON ITS OWN HAD ADDED BACK THE AMOUNT OF RS.28,80,000/- IN ITS INCOME WHICH IS EVIDENT FR OM THE COPY OF COMPUTATION SHEET PLACED AT PAGE 55 OF THE PAPER BO OK AND AFTER INCLUSION OF SUCH AMOUNT IN THE INCOME THE ASSESSEE HAS APPLI ED THE SAME FOR THE CHARITABLE PURPOSES WHICH IS ALSO APPARENT FROM PAG E 55 OF THE PAPER BOOK. THE LEARNED CIT(A) HAS CATEGORICALLY MENTIONED THIS FACT IN HIS ORDER. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE FIND INGS OF LEARNED CIT(A). IN VIEW OF THE ABOVE, GROUND NO. 2 ALSO STANDS DISMISS ED. 6. NOW COMING TO GROUND NO. 3 REGARDING ADDITION ON ACCOUNT OF UNSECURED LOANS, WE FIND THAT ASSESSING OFFICER HAD MADE THIS ADDITION ON ACCOUNT OF UNSECURED LOANS FROM FIVE PERSONS, DETAI LED AS UNDER: 1. MR AVNISH KUMAR, NAJIBABAD RS.40,00,000 2. MR NARESH KUMAR RS.40,00,000 3. MR IKRAR AHMAD, NAJIBABAD RS.85,55,826 4. MR NITIN GUPTA, MUMBAI RS.26,34,572 5. SHRI GANGA KHANDSARI UDYOG RS.20,05,000 6.1 THE ASSESSING OFFICER WANTED THE ASSESSEE TO PR OVIDE COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN, COMPUTATION O F INCOME AND OTHER DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF TR ANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE ASSESSING OFF ICER NOTED THAT ASSESSEE HAD NOT PROVIDED THESE DETAILS AND THEREFORE, HE MA DE ADDITION U/S 68 OF THE ACT. BEFORE US, LEARNED A. R. INVITED OUR ATTE NTION TO THE COPY OF ACCOUNT OF AVNISH KUMAR, NARESH KUMAR, NITIN GUPTA, IKRAR AHMAND AND SHREE GANGA KHANDSARI UDYOG. FROM THE COPY OF ACCO UNTS OF AVNISH KUMAR, PLACED AT PAGE 99 OF THE PAPER BOOK, WE FIND THAT THERE WAS AN OPENING BALANCE OF RS.9,00,000/- AND RS.40,00,000/- WAS RECEIVED DURING THE YEAR. SIMILARLY, IN THE CASE OF NARESH KUMAR, THE OPENING BALANCE OF RS.10,48,000/- WAS THERE AND RS.40,00,000/- WAS REC EIVED DURING THE YEAR. I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 11 SIMILAR IS THE POSITION WITH RESPECT TO IKRAR AHMAD WHEREIN THE OPENING BALANCE WAS TO THE TUNE OF RS.1,00,29,220/-. LEARN ED A. R. HAD ALSO INVITED OUR ATTENTION TO THE COPY OF BANK STATEMENTS AND CO PY OF ITRS WHICH WERE FILED BEFORE THE AUTHORITIES BELOW TO PROVE THE GEN UINENESS OF CREDITWORTHINESS OF THE UNSECURED LOAN HOLDERS. IT WAS FURTHER ARGUED THAT OUT OF FIVE UNSECURED LOAN HOLDERS, IN THE CASE OF THE THREE ACCOUNT HOLDERS THERE WERE OPENING BALANCES AND FOR WHICH THE ASSES SING OFFICER HAD NOT MADE ANY ADDITION. THE DETAILED SUBMISSIONS WERE M ADE TO LEARNED CIT(A) REGARDING THESE DEPOSITORS WHICH THE LEARNED CIT(A) HAS NOTED IN HIS ORDER AT PAGES 19 TO 21. THE LEARNED CIT(A) IN HIS FINDI NGS HAS HELD THAT ONE OF THE DEPOSITOR AVNISH KUMAR WAS THE TRUSTEE AND CHAI RMAN OF THE SOCIETY AND SIMILARLY NARESH KUMAR ANOTHER DEPOSITOR WAS TR USTEE. THE LEARNED CIT(A) HAS FURTHER HELD THAT AVNISH KUMAR WAS PARTN ER IN SHREE GANGA KHANDWARI UDYOG WHICH HAD ADVANCED RS.20,00,000/-. THE FINDINGS OF LEARNED CIT(A) IN THIS RESPECT ARE CONTAINED IN PAR A 8.1, WHICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCED BELOW: 8.1 IT IS SEEN THAT THE AO HAS MADE A NUMBER OF AL LEGATIONS WITH REGARD TO THE DETAILS HE HAD REQUIRED WHICH WE RE NOT FURNISHED BEFORE HIM SUCH AS POSTAL ADDRESS, PROOF OF IDENTITY, ITR, COPY ETC. I HAVE GONE THUS THE SUBMISSION OF T HE APPELLANT. IT WILL NOT BE OUT OF PLACE HERE TO MENT ION THAT MR. AVNISH KUMAR WAS THE TRUSTEE, AND CHAIRMAN OF THE S OCIETY WHO USED TO APPEAR BEFORE THE AO. HOW IS THAT THE AO WA S NOT CONVINCED ABOUT HIS IDENTITY AND ADDED THE AMOUNT G IVEN BY HIM TO THE TRUST AS LOAN, AS UNVERIFIABLE? SIMILARL Y SRI NARESH KUMAR WAS ALSO A TRUSTEE. HIS COPY OF A/C, ITR, BAN K A/C AND STATEMENT OF TRUST WAS ON RECORD AND ALSO FURNISHED DURING THE APPELLATE PROCEEDINGS. MR AVNISH KUMAR AGRAWAL WAS A PARTNER OF SREE GANGA KHANDSARI UDYOG WHICH ADVANCED RS.20, 05,000/- AS LOAN TO THE TRUST. THE A.O. SEEMED TO HAVE IGNOR ED THESE FACTS. I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 12 THESE DOCUMENTS MUST HAVE BEEN AVAILABLE TO THE AO ALSO AS THESE ARE BANK AND IT RECORDS AND ARE HANDMADE. IT IS NOT UNDERSTOOD AS TO HOW AND WHY THE AO COULD COMPLETEL Y DISREGARD SUCH EVIDENCES. THERE WAS NO APPLICATION OF MIND, ENTHUSIASM TO PROVE FOUND IN HIS ORDER. HE MADE TH E ADDITION MECHANICALLY WITHOUT ANY EVIDENCE TO SUPPORT HIS OR DER. SIMILARLY MR IKRAR AHMAD AND SRI NITIH GUPTA, MUMBA I HAD GIVEN THE LOAN TO THE TRUST BY CHEQUES HAVING SUFFICIENT BALANCE IN THEIR ACCOUNTS. INTERESTS WERE ALSO PAID TO THEM. T HE APPELLANT HAS RELIED ON THE FOLLOWING CASE LAWS: 1. [2013] 38 TAXMANN.COM 239 (ALLAHABAD)/218 TAXMAN 157, HIGH COURT OF ALLAHABAD COMMISSIONER OF INCOME-TAX - 1 VS. KAPOOR CHANDL MANGESH CHAND. COPY OF THE SAME IS AT PAGE__75 ___OF THE CASE LAW INDEX. SECTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDIT [BURDEN OF PROOF], -LOAN WAS ADVANCED AND REPAID THROUGH ACCOUNT PAYEE CHEQUES - PAN NUMBER OF OFFENDERS WERE FURNISHED - LENDERS HAD SUFFICIENT FUNDS IN THEIR BANK ACCOUNTS AND CASH WAS NOT DEPOSITED ON DATE PRECEDING TO OR AT TIME WHEN CHEQUES WERE ISSUED BY LENDERS - WHETHER NO ADDITION UNDER SECTION 68 WAS CALLED FOR- HELD, YES [PARA 5] IN FAVOUR OF THE ASSESSEE. 2. [2015] 54 TAXMANN.COM 75/229 TAXMAN 532 COMMISSIONER OF INCOME-TAX, CENTRAL, KANPUR V. ANURAG AGARWAL, COPY OF THE SAME IS AT PAGE 76-77 OF THE CASE LAWS INDEX. SECTION 68: OF THE INCOME-TAX ACT, 1961 - CASH CREDITS (ONUS OF PROOF) -ASSESSMENT 'YEAR 2002- 03 --WHETHER WHERE IN RESPECT OF CREDIT ENTRIES, ASSESSES ESTABLISHED IDENTITY OF CREDITORS BY BRINGING ON RECORD THEIR PAN AND COMPLETE ADDRESSES AND MOREOVER TRANSACTION WAS MADE THROUGH PROPER BANKING CHANNEL, IMPUGNED ADDITION MADE U/S 68 WAS TO BE SET ASIDE- HELD', YES [PARA. 7] [IN FAVOUR OF ASSESSEE] 3. [2015] 54 TAXMANN.COM 216/230 TAXMAN 165 (ALLAHABAD) HIGH COURT OF ALLAHABAD IN THE CASE OF COMMISSIONER OF INCOME-TAX, MEERUT, V. AVANT GRADE CARPETS LTD. COPY OF THE SAME IS AT PAGE 78-79 OF THE CASE LAW INDEX. SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS (LOAN) -ASSESSMENT YEAR 2009-10 - WHETHER WHERE APPELLATE AUTHORITIES AFTER CONSIDERING BALANCE SHEET OF LENDER AS WELL AS CONFIRMATORY CERTIFICATES IN RESPECT OF ADVANCES GIVEN TO ASSESSEE, DELETED ADDITION MADE BY ASSESSING OFFICER UNDER-SECTION 68, ORDER SO PASSED DID NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW - HELD, YES [PARA 6] [IN FAVOUR OF ASSESSEE] 6.2 THE ABOVE FINDINGS OF LEARNED CIT(A) ARE QUITE EXHAUSTIVE AND WE DO NOT FIND ANY INFIRMITY. IN VIEW OF THE ABOVE, GROU ND NO. 3 ALSO STANDS DISMISSED. 7. NOW COMING TO GROUND NO. 4 REGARDING RELIEF GIVE N BY LEARNED CIT(A) FOR HELP TO POOR STUDENTS, WE FIND THAT ASSESSEE HA S INCURRED AN EXPENDITURE OF RS.62,61,703/- ON ACCOUNT OF HELP TO POOR STUDEN TS, THE DETAIL OF WHICH IS I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 13 PLACED AT PAGES 162 TO 170 OF THE PAPER BOOK. THE EXPENSES BOOKED UNDER THIS HEAD ARE ON ACCOUNT OF JOURNAL ENTRIES WHICH S HOWS THAT THE AMOUNTS WERE CREDITED TO THE STUDENTS THE NAMES OF WHICH IS ALSO MENTIONED IN THE LEDGER ACCOUNT. THE LEARNED CIT(A) CONFIRMED THE A DDITION TO THE EXTENT OF RS.4,38,803/- AND HAS ALLOWED RELIEF FOR THE REMAIN ING AMOUNT BY HOLDING AS UNDER: 9.1 I HAVE PERSONALLY EXAMINED THE LEDGER ACCOUNT WHERE IN AN EXPENSE OF RS.62,61,703/- HAVE BEEN SHOWN AS HEL P TO POOR STUDENTS. MOST OF THE ENTRIES ARE JOURNAL ENTRIES A ND THE STUDENTS HAVE BEEN CREDITED WITH CERTAIN AMOUNTS SU CH AS TUITION FEES, EXAMINATION FEES, MISC/INTERNET FEES ETC. EACH ONE OF THEM HAVE THE DETAILS OF NAME, FATHER'S NAME AND THE COURSE NAME ETC. THE TOTAL AMOUNT WAS RS.58,22,900/-. SIN CE THESE ARE JOURNAL ENTRIES AND THE STUDENTS WHO WERE POOR, WERE CREDITED WITH VARIOUS FEES WITHOUT BRINGING EVIDENC ES TO THE CONTRARY, THE AO SHOULD NOT HAVE DISALLOWED THE EXP ENSES. HOWEVER, THERE WERE CERTAIN PAYMENTS IN CASH TO VAR IOUS OTHER STUDENTS ON SEVERAL DATES AMOUNTING TO A TOTAL OF R S.4,38,803/- THIS AMOUNT WERE PAID IN CASH OF DIFFERENT PERSONS AS PRIZE MONEY, SOME OF THEM WERE NOT THE STUDENT OF THE INS TITUTE WHEN A COMPETITION NEED IN THE INSTITUTE. OBVIOUSLY THERE IS NO WAY TO EXAMINE THIS EXPENDITURE WHETHER THEY HAD AC TUALLY BEEN INCURRED OR NOT. I THEREFORE CONFIRM THE ADDI TION MADE ON THIS GROUND. THE APPELLANT GETS RELIEF TO THE EXTEN T OF THE BALANCE AMOUNT. 7.1 THE ABOVE FINDINGS OF LEARNED CIT(A) ARE QUITE EXHAUSTIVE AND ARE BASED UPON THE FACTS AND CIRCUMSTANCES OF THE CASE THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF L EARNED CIT(A). ACCORDINGLY, GROUND NO. 4 IS DISMISSED. 8. NOW COMING TO LAST GROUND REGARDING ADDITION MAD E U/S 40(A)(IA) OF THE ACT, WE FIND THAT LEARNED CIT(A) HAS HELD THAT SECTION 40(A)(IA) IS NOT APPLICABLE AS THE INCOME OF THE ASSESSEE WAS NOT TA XABLE UNDER THE HEAD BUSINESS OR PROFESSION. THE FINDINGS OF LEARNED CI T(A) ARE CORRECT AS THE I.T.A. NO.475/LKW/2017 ASSESSMENT YEAR:2013-14 14 ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 AND PROVIS ION OF SECTION 40(A)(IA) ARE APPLICABLE ONLY UNDER THE HEAD BUSINESS AND PRO FESSION APPEARING IN CHAPTER-IV OF THE ACT. WE FURTHER FIND THAT EVEN I F DISALLOWANCE IS UPHELD THE ADDITION WILL RESULT INTO ENHANCED INCOME WHICH AGAIN WILL BE EXEMPT U/S 11 OF THE ACT. THEREFORE, WE DO NOT FIND ANY INFIR MITY IN THE FINDINGS OF LEARNED CIT(A). GROUND NO. 5 IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:26/04/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR