SHRI KENDRIYA ACADEMY VIDHYALAY SHIKSHA SAMITI, Kota V. ACITR, Kota

ITA 482/JPR/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5161 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S DAGUR CIT DHK
• Assessee Lawyers: B V MAHESHWARI
• Keywords: Reopening of assessment; Business income; Depreciation; Charitable institution; Benefit of exemption; Capital expenditure
• Section: 133A; 12A; 12AA; 147; 246; 148; 12; 154; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.482,483,918 & 919/JP/12 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 TO 2008-09 KENDRIYA ACADEMY VIDHYALAYA SHIKSHA SAMITI, CENTRAL ACADEMY SCHOOL, CHHOTA CHAURAHA, DADABARI, KOTA CUKE VS. THE ACIT, CIRCLE-1, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATK 5660 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.946 & 947/JP/12 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 TO 2008-09 THE ACIT, CIRCLE-1, KOTA CUKE VS. KENDRIYA ACADEMY VIDHYALAYA SHIKSHA SAMITI, CENTRAL ACADEMY SCHOOL, CHHOTA CHAURAHA, DADABARI, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATK 5660 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.V. MAHESHWARI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S. DAGUR (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.07.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/08/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 2 THESE ARE SET OF COMMON APPEALS FILED BY THE ASSESS EE AND CROSS APPEALS BY THE REVENUE AGAINST THE ORDERS PASSED BY LD. CIT(A) , KOTA FOR THE RESPECTIVE ASSESSMENT YEARS. SINCE COMMON ISSUES ARE INVOLVED , ALL THESE APPEALS WERE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDE R. 2. THE FUNDAMENTAL ISSUE THAT PERVADES THROUGH ALL THESE APPEALS IS WHETHER THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 READ WITH SECTION 13 OF THE ACT. FOR SAKE OF DISCUSSIONS, WE WILL TAKE UP THE APPEAL FOR AY 2005-06 (ITA NO.482/JP/12). 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE SOCI ETY IS RUNNING VARIOUS SCHOOLS IN KOTA AND BARAN. THE SOCIETY WAS REGISTERED UNDE R SECTION 12AA OF THE ACT VIDE CITS ORDER DATED 13.08.2004 W.E.F 01.04.2003 WHIC H WAS LATER ON WITHDRAWAN BY THE CIT KOTA VIDE ORDER DATED 16.07.2009. SUBSEQUEN TLY, ON APPEAL BY THE ASSESSEE SOCIETY, THE COORDINATE BENCH VIDE ITS ORDER (ITA NO.704/JP/2009) DATED 21.04.2011 RESTORED THE REGISTRATION GRANTED U/S 12 AA OF THE IT ACT 1961. IN COMPLIANCE WITH THE ORDER OF THE COORDINATE BENCH, CIT KOTA VIDE ITS ORDER DATED 24.8.2011 RESTORED THE EARLIER REGISTRATION U/S 12A A DATED 13.8.2004 GRANTED TO THE ASSESSEE SOCIETY. HOWEVER WHEN THE ORDER U/S 147/143(3) DATED 28.02.2011 WAS PASSED BY THE AO, THE ORDER OF ITAT RESTORING T HE REGISTRATION WAS NOT AVAILABLE. THE AO THEREFORE COMPLETED THE ASSESSME NT OF THE SOCIETY UNDER NORMAL PROVISIONS APPLICABLE TO ANY BUSINESS/PROFES SION HOLDING THAT THE SOCIETY IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 IN ABSE NCE OF REGISTRATION U/S 12AA OF THE ACT AND ALSO IN VIEW OF NON-COMPLIANCE OF THE P ROVISIONS OF SECTION 13(2)(A), (G) & (H) OF THE ACT. WHEN THE MATTER CAME UP BEFO RE THE LD CIT(A), HE HAS TAKEN COGNISANCE OF RESTORATION OF REGISTRATION UNDER 12A A OF THE ACT BUT AT THE SAME ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 3 TIME HELD THAT ASSESSEE SOCIETY IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT IN VIEW OF THE VIOLATION OF SECTION 13 OF THE ACT. 3.1 GIVEN THE LONG APPELLATE HISTORY IN THE MATTER, IT WOULD BE RELEVANT TO GO THROUGH THE OBSERVATIONS OF LD CIT, LD CIT(A) AND T HE COORDINATE BENCH. FIRSTLY, IT WOULD BE RELEVANT TO NOTE THE OBSERVATION OF THE LD CIT KOTA WHO HAD CANCELLED THE REGISTRATION OF THE ASSESSEE SOCIETY UNDER SECTION 12A OF THE ACT AND THE SUBSEQUENT OBSERVATIONS AND FINDINGS OF THE COORDIN ATE BENCH IN ITA NO.704/JP/2009 DATED 21.4.2011 RESTORING THE RE GISTRATION. 3.2 CIT KOTAS OBSERVATION IN HIS ORDER WITHDRAWING THE REGISTRATION UNDER SECTION 12A OF THE ACT DATED 16.07.2009: AS NARRATED EARLIER, I AM SATISFIED THAT THE ACTIV ITIES OF THE TRUST ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANC E WITH THE OBJECTS OF THE TRUST OR INSTITUTION AND HENCE REGISTRATION GRANTED TO THE TRUST IS REQUIRED TO BE CANCELLED. THE ASSESSEE HAS NOT USED THE FUND O F TRUST AS PER THE OBJECT OF TRUST AND THE PROPERTIES HAVE BEEN REGISTERED IN TH E TERMS OF PROVISIONS OF TRANSFER OF PROPERTY ACT GOVERNING PROPERTY TRANSF ERS IN THE NAME OF INDIVIDUALS. IT IS A UNDISPUTED FACT THAT OVER A PERIOD OF TIME, PROPERTY VALUE GETS INCREASE AND SUCH APPRECIATION WILL AUTOMATICA LLY CREATE WEALTH IN THE NAME OF INDIVIDUAL. IN THE EYES OF THE LAW THE PRO PERTIES PURCHASED IN THE NAME OF INDIVIDUAL BY NO STRETCH OF IMAGINATION CA N BE SAID TO BE OWNED BY THE SOCIETY AND THESE ASSETS ARE WEALTH OF THE IND IVIDUALS WHO ARE SEPARATE ENTITIES. IT IS WORTHWHILE TO NOTE THAT NO LEASE AG REEMENT IS ENTERED INTO. THE INDIVIDUALS IN WHOSE NAME ASSETS ARE REGISTERED CA N SALE AT ANY TIME IN THE FUTURE THESE PROPERTIES AND SOCIETY HAS NO CONTROL OR POSSESSION OF THESE PROPERTIES. IT IS A CLEAR CASE OF BREACH OF TRUST A ND APPLICATION OF FUNDS IN ENLARGING PERSONAL BENEFITS OF INDIVIDUALS AND SUC H AN ACT IS CONTRARY TO THE OBJECTS OF THE SOCIETY. THE INCOME OF SOCIETY CAN BE SAID TO HAS BEEN USED FOR THE BENEFIT OF THE INDIVIDUALS AND THEIR FAMILIES AND HAD NOT BEEN UTILIZED FOR THE OBJECT OF THE TRUST AND HENCE REGISTRATION GRAN TED TO THE TRUST IS REQUIRED TO BE WITHDRAWN. ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 4 CONSIDERING THE FACTS AND CIRCUMSTANCES, I HEREBY W ITHDRAW THE REGISTRATION GRANTED TO THE SOCIETY UNDER SECTION 12AA(3) OF THE IT ACT, GRANTED WITH EFFECT FROM 01.04.2003 3.3 NOW, WE REFER TO THE COORDINATE BENCHS FINDING S AND DIRECTIONS IN ITA NO.704/JP/2009 DATED 21.4.2011 WHEREIN THE REGISTRA TION UNDER SECTION 12A WAS RESTORED WHICH READS AS UNDER: 4. ....AFTER TAKING INTO CONSIDERATION THE MATERIA L ON RECORD, IT IS SEEN THAT THOUGH CERTAIN PROPERTIES WHICH ARE LOCATED IN THE RESIDENTIAL AREA ARE PURCHASED IN THE NAME OF INDIVIDUAL FOR THE SIM PLE REASON THAT IN RESIDENTIAL AREA THE PROPERTIES CANNOT BE PURCHASED BY THE TRUST. THEREFORE, THESE PROPERTIES WERE PURCHASED IN THE NAME OF INDIVIDUALS. HOWEVER, THE MAIN FACT WHICH HAS NOT BEEN TAKEN INT O CONSIDERATION EITHER BY THE AO WHO SENT THE REPORT TO THE LD. CIT OR BY THE LD. CIT THAT THESE PROPERTIES HAVE BEEN SHOWN IN THE BALANCE SH EET OF THE TRUST. THESE ARE ASSETS OF THE TRUST. THESE PROPERTIES WE RE PURCHASED FROM THE FUNDS OF THE TRUST. MERELY BUYING THE PROPERTY IN T HE NAME OF INDIVIDUAL, THOSE INDIVIDUAL CANNOT BE HELD AS OWNER OF THE PR OPERTY AS THE RIGHTS IN THE PROPERTIES ARE VESTED WITH THE TRUST. DUE TO TECHNICAL PROBLEM THESE PROPERTIES WERE PURCHASED IN THE NAME OF INDI VIDUAL. THEREFORE, IT CANNOT BE SAID THAT THE INDIVIDUAL HAS BEEN BENEFIT ED IN PURCHASING THE PROPERTIES IN THEIR INDIVIDUAL NAMES. BALANCE SHEE T OF THE TRUST IS PREPARED EACH AND EVERY YEAR AND THE SAME HAS BEEN FILED WITH THE DEPARTMENT AND THESE PROPERTIES HAVE BEEN SHOWN IN THESE BALANCE SHEET. THEY CAN BE VERIFIED AS THEY ARE VERIFIABLE. ANOTHER MAIN REASON IS THAT THE PRESIDENT, SECRETARY AND OTHER OFFICE B EARERS HAVE GIVEN STATEMENT THAT THEY ARE NOT AWARE OF THE ENTIRE AFF AIRS OF THE ASSESSEE ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 5 TRUST. THIS IS ALSO IN OUR CONSIDERED VIEW IS NO T VALID REASON FOR WITHDRAWING REGISTRATION ALREADY GRANTED. SHRI S.C. AGARWAL HAS BEEN ASSIGNED THE DUTIES TO LOOK AFTER THE ACTIVITIES OF THE TRUST AND SHRI S.C.AGARWAL ALONGWITH HIS OTHER FAMILY MEMBERS ARE TAKING KEEN INTEREST IN THE ACTIVITIES OF THE TRUST WHICH ARE CHARITABLE IN NATURE AS THE ASSESSEE TRUST IS IMPARTING EDUCATION TO THOUSA NDS OF STUDENTS IN THE AREA. THE SOCIETY WAS GRANTED REGISTRATION IN THE YEAR 2004 AND SINCE THEN THEY ARE IMPARTING EDUCATION TO VARIOUS STUDENTS AS PER BYE LAWS AND OBJECTS OF THE TRUST AND NO COMPLAINT WHAT SOEVER HAS BEEN FILED AGAINST THE ASSESSEE TRUST THAT THE TRUST I S OVER CHARGING FEE FOR EXPLOITING THE STUDENTS IN ANY MANNER. THEREFORE, IN OUR CONSIDERED VIEW, WITHDRAWAL OF REGISTRATION IS NOT JUSTIFIED A T ALL. IF ANY WRONG ACTIVITY OR VIOLATION OF PROVISIONS HAS BEEN MADE, THEN OF COURSE THEY CAN BE CONSIDERED WHILE CONSIDERING THE EXEMPTION U /S 11 OF THE ACT. EXEMPTION U/S 11 IS SUBJECT TO YEAR-WISE AND IF ASS ESSEE TRUST HAS NOT SATISFIED THE CONDITIONS FOR EXEMPTION, THEN OF COU RSE THE ASSESSING OFFICER IS FREE TO DENY THE EXEMPTION TO THE TRUST. 15. FACTS OF THE PRESENT CASE ARE SIMILAR TO THE CA SES DISCUSSED ABOVE. IN THIS CASE ALSO NOTHING HAS BEEN BROUGHT ON RECOR D THAT FUNDS OF THE SOCIETY HAVE BEEN MISUSED. THE ONLY ALLEGATION AS STATED ABOVE IS THAT MEMBERS OF THE SOCIETY HAS PURCHASED CERTAIN PROPER TIES IN THEIR INDIVIDUAL NAMES BUT PURCHASE OF THOSE PROPERTIES I N THE INDIVIDUAL NAME IS FOR THE USE OF THE SOCIETY ONLY. SCHOOLS A RE RUNNING IN THOSE PROPERTIES AND THEY ARE PART AND PARCEL OF THE ASSE SSE SOCIETY AND NOT OF THE INDIVIDUAL. ALL RECEIPTS FROM THOSE SCHOOLS AR E SHOWN IN THE HANDS OF THE SOCIETY AND NOT IN THE HANDS OF THOSE INDIVIDUA L. ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 6 16. SIMILARLY, THE STATEMENT OF PRESIDENT, SECRETA RY AND OTHER MEMBERS ARE NOT AGAINST THE SOCIETY AS THEY HAVE ON LY STATED THAT THEY ARE NOT FULLY AWARE OF THE ACTIVITIES OF THE TRUST, BUT SHRI S.C. AGARWAL IS AWARE OF THE ACTIVITIES OF THE TRUST WHO HAS BEEN A SSIGNED ALL THE ACTIVITIES OF THE TRUST. AFFIDAVITS OF ALL THESE P ERSONS HAVE BEEN FILED BEFORE OF CIT(A) BUT THESE AFFIDAVITS HAVE NOT BEEN TAKEN INTO CONSIDERATION. IN THESE AFFIDAVITS THEY HAVE CATE GORICALLY ADMITTED THAT THOUGH THEY HAVE STATED EARLIER THAT ACTIVITIES OF THE TRUST HAS BEEN LOOKED AFTER BY SHRI S.C. AGARWAL BUT THEY HAVE NOT STATED ANYWHERE IN THEIR RESPECTIVE STATEMENT THAT SHRI S.C. AGARWAL H AS MISUSED THE FUNDS OF THE ASSESSEE SOCIETY FOR HIS INDIVIDUAL BENEFIT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT WITHDRAW AL OF REGISTRATION GRANTED EARLIER WAS NOT JUSTIFIED. ACCORDINGLY, WE RESTORE THE REGISTRATION GRANTED ALREADY UNDER SECTION 12A OF T HE ACT. 3.4 WE NOW REFER TO THE OBSERVATION AND FINDINGS OF THE AO IN THE IMPUNGED ASSESSMENT ORDER: A SURVEY ACTION WAS CARRIED OUT AT THE PREMISE OF ASSESSEE ON 16.02.2009. ON EXAMINATION OF IMPOUNDED DOCUMENTS IT IS FOUND THAT THE ASSESSEE IS VIOLATING PROVISIONS OF SECTION 13 HENCE REGISTRATION GRANTED U/S 12A(A) OF INCOME TAX ACT WITHDRAWN. H ENCE NORMAL PROVISIONS OF INCOME TAX ACT ARE APPLICABLE IN THE CASE OF ASSESSEE. FURTHER IN SPECIAL AUDIT FOLLOWING OBSERVATION WERE MADE: THAT FROM THE FUNDS OF THE ASSESSEE, SEVERAL IMMOV ABLE PROPERTIES WERE PURCHASED AND MOST OF THEM WERE PURCHASED IN T HE NAME OF INDIVIDUAL PERSONS NAMELY S.C. AGARWAL, MANJU AGARW AL, PRATEEK AGARWAL, SCA (HUF) ETC. EVEN THE VEHICLES CAPITAL IZED IN THE BOOKS OF THE ASSESSEE HAVE BEEN PURCHASED IN INDIVIDUAL NAME S AND BANK LOAN ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 7 WERE ALSO TAKEN N INDIVIDUAL NAMES. THE ASSESSEE I S CLAIMING NOT ONLY THE INTEREST AND RUNNING EXPENSES OF VEHICLES BUT I S ALSO CLAIMING DEPRECIATION THEREON. WE HAVE ALSO FOUND SEVERAL I NSTANCES WHERE HUGE AMOUNT OF CASH WAS WITHDRAWN FROM THE BOOKS OF THE ASSESSEE. WE HAVE ALSO NOTICED FREQUENT BANK TRANSACTIONS BET WEEN ASSESSEE BANK AND PERSONAL BANK ACCOUNT. WE HAVE ALSO SEEN THAT AFTER PURCHASING THE PROPERTIES IN INDIVIDUAL NAMES, THE SAID PROPERTY WAS TRANSFERRED IN THE BOOKS OF THE ASSESSEE, IT IS IN TERESTING TO NOTE THAT LAND AT KOTA JUNCTION WAS PURCHASED FROM THE FUNDS OF THE ASSESSEE BUT THE PROPERTIES WERE REGISTERED IN THE INDIVIDUAL N AME OF SHRI S.C. AGARWAL AND SMT. MANJU AGARWAL THEN THE ASSESSEE IS PAYING RENT ALSO. THUS EVEN THEN THESE PROPERTIES WERE SHOWN IN THE B OOKS OF THE ASSESSEE BUT FOR ALL PRACTICAL PURPOSES AND ALSO LE GALLY THE OWNERSHIP IS REST WITH OTHER PERSONS AND THEY ARE TREATING IT TH ERE PERSONAL PROPERTIES. THEY HAVE NOTED THE SAME IN THEIR INDI VIDUAL DIARIES AS THEIR PERSONAL PROPERTIES. CONSIDERING THESE FACTS, IT E STABLISHED THAT THE SAMITI IS NOT RUNNING WHOLLY OR CHARITABLE PURPOSES WHICH IS THE PRIMARY CONDITION UNDER SECTION 11(1)(A) OF THE INCOME TAX ACT. THE ASSESSEE IS ALSO VIOLATING THE PROVISIONS O F SECTION 13(2)(A)( G)(H) OF THE INCOME TAX AT AND IS THEREFORE NOT ENTITLED TO CLAIM EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT. 3.5 WE NOW REFER TO THE OBSERVATION AND FINDINGS OF THE LD CIT(A) WHEREIN THE DENIAL OF EXEMPTION TO THE ASSESSEE SOCIETY UND ER SECTION 11 OF THE ACT HAS BEEN CONFIRMED WHICH READS AS UNDER: (I) THE ASSESSEE HAS PURCHASED VARIOUS PROPERTIES IN THE NAME OF SHRI SUBHASH CHANDRA AGARWAL AND HIS FAMILY MEMBERS. (II) I HAVE GONE THROUGH THE SEIZED MATERIAL, BANK ACCOUNT OF ASSESSEE, BANK ACCOUNT OF SHRI SUBHASH CHANDRA AGARWAL, SHRI PRATEEK AGARWAL (HIS SON) AND IT WAS SEEN THAT THERE WERE FREQUENT TRANSACTIONS BETWEEN THESE PERSONS. THE FREQUENCY AND THE MANNER SUGGESTS THAT THE SOCIETY WAS RUN LIKE A PROPRIETARY CONCERN OF S HRI SUBHASH CHANDRA AGARWAL. HE HAD ABSOLUTE CONTROL OVER THE AFFAIRS OF THE SOCIETY AND DID WHATEVER HE WANTED. THE FREQUENT TRANSACTIONS MENTIONED ABOVE CLEARLY SHOWS THAT DAY TO DAY TRANSACTIONS WERE CAR RIED OUT AS PER THE WISHES OF SHRI SUBHASH CHANDRA AGARWAL WITHOUT ANY PERMISSION FROM THE MEMBERS AND OFFICE BEARERS OF THE SOCIETY . ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 8 (III) THE HONBLE ITAT WHILE RESTORING THE REGISTRA TION U/S 12A OBSERVED THAT MEMBERS OF THE SOCIETY HAS PURCHASED CERTAIN PROPER TY IN THEIR INDIVIDUAL NAMES BUT PURCHASE OF THESE PROPERTIES I N THE INDIVIDUAL NAMES FOR THE USE OF SOCIETY ONLY. THE HONBLE ITA T FURTHER OBSERVED THAT SCHOOLS WERE RUNNING IN THOSE PROPERTIES AND T HEY WERE PART AND PARCEL OF THE ASSESSEE SOCIETY AND NOT OF THE INDIV IDUAL, ALL RECEIPTS FROM THOSE SCHOOLS WERE SHOWN IN THE HANDS OF SOCIETY AN D NOT IN THE HANDS OF THOSE INDIVIDUALS. THE HONBLE ITAT AFTER OBSERVING THE ABOVE DID NOT FOUND ANY FAULT IN THE WORKING OF SOCIETY. IN MY VIEW, THE HONBLE ITAT OVER LOOKED THE PROVIS IONS OF THE BENAMI TRANSACTIONS PROHIBITION ACT, 1988. THIS ACT PROVI DES THAT IF ANY PROPERTY IS PURCHASED IN THE NAME OF OTHER PERSON, THEN THE PERSON IN WHOSE NAME THE PROPERTY IS PURCHASED WILL BE TREATE D AS LAW FULL OWNER OF THE PROPERTY. WHEN THE ASSESSEE PURCHASED THESE PROPERTIES IN THE NAME OF SHRI SUBHASH CHANDRA AGARWAL AND HIS FAMI LY MEMBERS FOR ALL PURPOSES AND AS PER THE LEGAL POSITION THESE PERSON S BECAME OWNER OF THE SAID PROPERTIES. PRACTICALLY THE ASSESSEE IS N OT AT THE MERCY OF THESE PERSONS. THESE PERSONS CAN ANY TIME CLAIM OWNERSHI P OF THESE PROPERTIES AND ASSESSEE CANNOT DO ANYTHING. EVEN S HOWING THESE PROPERTIES IN THE BOOKS OF ASSESSEE WILL HAVE NO IM PACT IN VIEW OF SPECIFIC PROVISIONS OF THE BENAMI TRANSACTIONS PROH IBITION ACT, 1988. IN MY OPINION THIS SINGLE ACT OF ASSESSEE MAKES HIM IN ELIGIBLE FOR EXEMPTION U/S 11 R.W.S. 13 OF THE IT ACT. IN VIEW O F THE ABOVE DISCUSSION, I AM OF THE FIRM OPINION THAT THE AO HAS RIGHTLY NO T ALLOWED EXEMPTION U/S 11 READ WITH SECTION 13 OF THE IT ACT. THE ADDI TION OF RS.23,82,437/- IS CONFIRMED. 4. WE NOW REFER TO THE SUBMISSIONS OF THE LD AR. T HE LD AR IN RESPONSE TO THE LD CIT(A)S OBSERVATION THAT THE ITAT OVERLOOK ED BENAMI TRANSACTIONS PROVISIONS ACT, 1998 SUBMITTED THAT IF ANY PROPERTY IS PURCHASED WITH THE FUNDS OF THE SOCIETY, AND THE SAID PROPERTY IS BOO KED IN THE BOOKS OF ACCOUNTS AND USED BY THE SOCIETY, THEN IT CANNOT BE SAID TO BE BENAMI PROPERTY. THE BENAMI TRANSACTIONS PROVISIONS ACT I S APPLICABLE WHEN THERE IS NO INVESTMENT EITHER IN THE BOOKS OF ANY PERSON OR THE PERSON IS NOT ABLE TO ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 9 PROVE THE GENUINE SOURCE OF WHICH THE SAME HAS BEEN ACQUIRED WHEREAS IN THIS CASE THE PRICES PAID ARE BOOKED IN THE BOOKS O F ACCOUNTS OF THE SOCIETY; THE SOCIETY HAS CONSTRUCTED SCHOOL ON THESE LAND AN D PREMISES; THESE ARE USED BY THE SOCIETY FOR THE PURPOSE OF SCHOOL. HOW EVER, DUE TO CERTAIN RESTRICTIONS OF THE GOVERNMENT, THE SAID PROPERTIES WERE PURCHASES IN THE NAME OF THE SOCIETY MEMBERS. HOWEVER, IN ONE CASE EVEN AFTER MAKING THE AGREEMENT IN THE NAME OF THE SOCIETY, THEREFORE THE REGISTRATION WAS MADE IN THE INDIVIDUAL NAME. AS SUCH, WHEN THE TOTAL ASSET S ARE PROPERLY DECLARED, THEN THERE IS NO QUESTION OF APPLICATION OF BENAMI TRANSACTIONS PROVISIONS ACT, HENCE THE OBSERVATIONS OF THE LD. CIT(A) ARE N OT FIT IN THIS CASE. KINDLY OVERRULE THE SAME, ALLOW THE BENEFIT OF EXEMPTION U /S 11 READ WITH SECTION 13 OF THE ACT, 1961 TO THE SOCIETY. 4.1 FURTHER, REGARDING THE OBSERVATION OF THE AO RE GARDING VIOLATION OF SECTION 11 & 13, THE LD AR REITERATED ITS SUBMISSIO NS MADE BEFORE THE LD CIT(A) WHEREIN IT WAS SUBMITTED AS UNDER: THE LD. AO HAS ALLEGED THAT FROM FUNDS OF THE AS SESSEE SOCIETY SEVERAL IMMOVABLE PROPERTIES WERE PURCHASED AND MOST OF TH EM WERE PURCHASED IN INDIVIDUAL NAMES SAY SHRI S.C. AGARWAL, SMT. MANJ U AGARWAL, SHRI PRATEEK AGARWAL ETC., EVEN THE VEHICLES CAPITALIZED IN BOOK S OF THE ASSESSEE HAVE BEEN PURCHASED IN INDIVIDUAL NAMES AND BANK LOANS WERE A LSO TAKEN IN INDIVIDUAL NAMES. IN THIS RELATION WE HAVE SUBMITTED BEFORE THE HONB LE CIT AT THE TIME OF PROCEEDINGS U/S 12A AND BEFORE THE HONBLE ITAT THA T THE INVESTMENT MADE IN IMMOVABLE PROPERTIES HAVE BEEN BOOKED IN THE BOO KS OF ACCOUNTS OF THE ASSESSEE SOCIETY. THERE WERE SEVERAL REASONS FOR PU RCHASE OF PROPERTIES IN THE INDIVIDUAL NAMES, BUT THE UTMOST REASON WAS THAT IN SOME AREAS PROPERTIES WERE NOT REGISTERED IN THE NAME OF SOCIETY AND THE ASSESSEE WAS RUNNING THE SCHOOLS OVER THERE, THEREFORE, THESE WERE GOT REGIS TERED IN THE NAME OF THE ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 10 SOCIETY MEMBERS WHEREAS IN ALL THE CASES FUNDS WERE FLOWN FROM THE BOOKS OF ASSESSEE SOCIETY. IN RELATION TO THE VEHICLES IT IS SUBMITTED THAT MO ST OF THE VEHICLES ARE IN THE NAME OF SOCIETY AND A LIST WAS SUBMITTED EARLIER TH ESE HAVE BEEN CAPITALIZED THERE IN THE SOCIETY AND THE DEPRECIATION HAS BEEN CLAIMED BECAUSE THESE ARE OWNED & USED ONLY BY THE SOCIETY FOR TRANSPORT OF S TUDENTS TO VARIOUS SCHOOLS THUS AFTER GOING THROUGH THE SUBMISSION THE HONBLE CIT HAS NOT FOUND ANY MISTAKE IN THE SAME AND , THEREFORE, THE REGISTRATI ON U/S 12A WAS REINSTATED. THE LD. AO ALSO STATED THE ASSESSEE IS CLAIMING INT EREST AND RUNNING EXPENDITURE FOR VEHICLES. FOR THIS WE AGAIN SUBMIT THAT WHEN THESE VEHICLES ARE USED AND CAPITALIZED IN THE BOOKS OF THE SOCIET Y THEN ALL THE EXPENDITURE SHOULD BE BORNE BY THE SOCIETY AND INTEREST AND DEP RECIATION ARE CLAIMED. THE LEARNED A.O. ALSO STATED THAT THERE ARE SEVERAL INSTANCES WHERE HUGE AMOUNT OF CASH WAS WITHDRAWN. THIS VAGUE STATEMENT AND HAS NOTHING TO DO. HE HAS ALSO ALLEGED THAT THERE ARE FREQUENT BANK TR ANSACTIONS BETWEEN THE SOCIETY AND ITS MEMBERS. A COPY OF THE ACCOUNT OF THE SOCIETY MEMBERS IS ENCLOSED. THEY HAVE WITHDRAWN THE MONEY OUT OF THE CREDIT BALANCE, SINCE THEY ARE DUTY BOUND TO RUN THE SCHOOLS, THEREFORE, IN CASE OF A NEED, MONEY HAS BEEN GIVEN AND WHEN THERE IS SURPLUS THAT HAS B EEN TAKEN BACK. IT IS ALSO THE OBSERVATION OF THE LD. AO THAT AFTER PURCHASING PROPERTIES IN INDIVIDUAL NAMES, THE SAID PROPERTIES WERE TRANSFER RED IN THE NAME OF THE SOCIETY AND FOR THAT HE HAS CITED THE EXAMPLE OF KO TA JN. WE HAVE ALREADY CLARIFIED AT THE EARLIER STAGES THAT THE LAND WAS P URCHASED IN THE NAME OF THE SOCIETY FOR RUNNING THE SCHOOL AT KOTA JN. BUT DUE TO SOME TECHNICAL PROBLEMS THE REGISTRATION WAS NOT DONE IN THE NAME OF THE SO CIETY BY THE SELLER, THEREFORE, IT WAS REGISTERED IN THE NAME OF SHRI S .C. AGARWAL AND SMT. MANJU AGARWAL. HOWEVER, THE INVESTMENT HAS BEEN MADE FROM THE SOCIETY. IN RELATION TO PAYMENT OF RENT, WE HAVE SUBMITTED THA T CERTAIN INVESTMENTS IN THE BUILDING WERE MADE BY MR. & MRS. AGARWAL OUT OF THEIR INDIVIDUAL FUNDS AND AGAINST THAT RENT WAS PAID TO THEM. WHAT HE HAS OBSERVED IS THAT THE PROPERTIES WERE SH OWN IN THE BOOKS OF ASSESSEE. HE HAS GONE INTO THE DEEP AND CERTIFIED T HAT ALSO THE PROPERTIES ARE ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 11 IN THE BOOKS OF THE ASSESSEE, BUT HE HAS ALLEGED TH AT FOR ALL PRACTICAL PURPOSES AND LEGALLY THE OWNERSHIP RESTS WITH OTHER PERSONS. IN THIS RELATION WE RESPECTFULLY SUBMIT THAT THE PROPERTIES ARE POSSESS ED BY THE SOCIETY IN WHICH SCHOOLS ARE RUN AND NO PERSONAL BENEFIT IS DERIVED TO THE SOCIETY MEMBERS OUT OF THE SAID PROPERTIES. EVEN IF THE PART OF T HE PROPERTY IS GIVEN ON RENT TO THIRD PARTY, RENT IS CREDITED IN THE BOOKS OF THE SOCIETY. FOR THIS WE SUBMIT THAT THE PROPERTY AT DADABARI MAIN BUILDING OF THE SCHOOL IS OWNED BY SHRI S.C. AGARWAL AND SMT. MANJU AGARWAL. HOWEVER, WHEN THE BUILDING WAS CONSTRUCTED BY THE SOCIETY THEN THE PART OF AREA W AS GIVEN ON RENT TO CENTRAL BANK OF INDIA, THEREFORE, RENT IS TAKEN IN N THE NA ME OF THE SOCIETY. IT IS ALSO ALLEGED THAT THE SOCIETY MEMBERS HAVE NO TED THE PROPERTY IN THEIR INDIVIDUAL DIARIES AND AS THEIR PERSONAL PROPERTY. THIS IS TOTALLY WRONG. IT IS JUST LISTING OUT THE PROPERTIES OF THE SOCIETY AS W ELL AS SELF. HENCE THE ALLEGATIONS, MADE BY THE LD. AO ABOVE ARE TOTALLY A GUESS WORK, NOT SUPPORTED BY ANY DOCUMENT AND OUT OF GENERAL OBSERVATION HE S TATED THAT THE PRIMARY CONDITION U/S 11(1A) HAS BEEN VIOLATED AND HE HAS A LSO STATED THAT THE ASSESSEE IS ALSO VIOLATING THE PROVISIONS OF SEC 13 (2), WHICH IS TOTALLY WRONG. IN THIS RELATION WE AGAIN SUBMIT THAT ON ALL THESE OBS ERVATIONS THE HONBLE CIT, KOTA HAD DEREGISTERED THE SOCIETY U/S 12AA WHICH HA S BEEN REINSTATED AGAIN BY ISSUE OF FRESH CERTIFICATE OF DATED 24.08.2011 A CCEPTING THE ORDER OF THE HONBLE ITAT THERE IS NO FURTHER APPEAL BY THE DEPA RTMENT. AS SUCH THE OBSERVATION ON ELIGIBILITY AND VIOLATION OF SEC. 11 , 13, HAS NOTHING TO DO AT THIS STAGE AND, THEREFORE, WE SUBMIT THAT YOUR HONOUR SH OULD GO ON THE FACTS OF THE CASE AND OTHER LEGAL ISSUES GIVEN IN THE GROUND S OF APPEAL. 5. HERE IT WOULD BE RELEVANT TO REFER TO THE RELEVA NT PROVISIONS WHICH HAVE A BEARING ON THE MATTER UNDER CONSIDERATION: 13. (1) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF ( A ) ANY PART OF THE INCOME FROM THE PROPERTY HELD UND ER A TRUST FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENURE FOR THE BEN EFIT OF THE PUBLIC; ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 12 ( B ) IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF TH IS ACT, ANY INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR E STABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; ( C ) IN THE CASE OF A TRUST FOR CHARITABLE OR RELIGIOU S PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THEREOF ( I ) IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND UNDER THE TERMS OF THE TRUST OR THE RULES GOVERNING THE INSTITUTION, ANY PART OF SUCH INCOME ENURES, OR ( II ) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR THE INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DURING THE PRE VIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSO N REFERRED TO IN SUB-SECTION (3) : PROVIDED THAT IN THE CASE OF A TRUST OR INSTITUTION CREATED OR ESTABLISHED BEFORE THE COMMENCEMENT OF THIS ACT, THE PROVISIONS OF SUB-CLAUSE ( II ) SHALL NOT APPLY TO ANY USE OR APPLICATION, WHETHER DIRECT LY OR INDIRECTLY, OF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INST ITUTION FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB-SECTION (3), IF SUCH USE OR APPLICATION IS BY WAY OF COMPLIANCE WITH A MANDATORY TERM OF THE TRUST OR A MANDATORY RULE GOVERNING THE INSTITUTION : (2) WITHOUT PREJUDICE TO THE GENERALITY OF THE PROV ISIONS OF CLAUSE ( C ) AND CLAUSE ( D ) OF SUB-SECTION (1), THE INCOME OR THE PROPERTY OF THE TRUST OR INSTITUTION OR ANY PART OF SUCH INCOME OR PROPERTY SHALL, FOR THE PURPOSES OF THAT CLAUSE, BE DEEMED TO HAVE BEEN USED OR APPLIED FOR THE BENEFIT OF A PERSON REFERRED TO IN SUB-SECTION (3), ( A ) IF ANY PART OF THE INCOME OR PROPERTY OF THE TRUS T OR INSTITUTION IS, OR CONTINUES TO BE, LENT TO ANY PERSON REFERRED TO IN SUB-SECTION (3) FOR ANY PERIOD DURING THE PREVIOUS YEAR WITHOUT EITHER ADEQ UATE SECURITY OR ADEQUATE INTEREST OR BOTH; ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 13 ( B ) IF ANY LAND, BUILDING OR OTHER PROPERTY OF THE TR UST OR INSTITUTION IS, OR CONTINUES TO BE, MADE AVAILABLE FOR THE USE OF ANY PERSON REFERRED TO IN SUB- SECTION (3), FOR ANY PERIOD DURING THE PREVIOUS YEA R WITHOUT CHARGING ADEQUATE RENT OR OTHER COMPENSATION; ( C ) IF ANY AMOUNT IS PAID BY WAY OF SALARY, ALLOWANCE OR OTHERWISE DURING THE PREVIOUS YEAR TO ANY PERSON REFERRED TO IN SUB-SECT ION (3) OUT OF THE RESOURCES OF THE TRUST OR INSTITUTION FOR SERVICES RENDERED B Y THAT PERSON TO SUCH TRUST OR INSTITUTION AND THE AMOUNT SO PAID IS IN EXCESS OF WHAT MAY BE REASONABLY PAID FOR SUCH SERVICES; ( D ) IF THE SERVICES OF THE TRUST OR INSTITUTION ARE M ADE AVAILABLE TO ANY PERSON REFERRED TO IN SUB-SECTION (3) DURING THE PREVIOUS YEAR WITHOUT ADEQUATE REMUNERATION OR OTHER COMPENSATION; ( E ) IF ANY SHARE, SECURITY OR OTHER PROPERTY IS PURCH ASED BY OR ON BEHALF OF THE TRUST OR INSTITUTION FROM ANY PERSON REFERRED TO IN SUB-SECTION (3) DURING THE PREVIOUS YEAR FOR CONSIDERATION WHICH IS MORE THAN ADEQUATE; ( F ) IF ANY SHARE, SECURITY OR OTHER PROPERTY IS SOLD BY OR ON BEHALF OF THE TRUST OR INSTITUTION TO ANY PERSON REFERRED TO IN SUB-SEC TION (3) DURING THE PREVIOUS YEAR FOR CONSIDERATION WHICH IS LESS THAN ADEQUATE; ( G ) IF ANY INCOME OR PROPERTY OF THE TRUST OR INSTITU TION IS DIVERTED DURING THE PREVIOUS YEAR IN FAVOUR OF ANY PERSON REFERRED TO I N SUB-SECTION (3): PROVIDED THAT THIS CLAUSE SHALL NOT APPLY WHERE THE INCOME, OR THE VALUE OF THE PROPERTY OR, AS THE CASE MAY BE, THE AGGREGATE OF THE INCOME AND THE VALUE OF THE PROPERTY, SO DIVERTED DOES NOT EXCEED ONE THOUSAND RUPEES; ( H ) IF ANY FUNDS OF THE TRUST OR INSTITUTION ARE, OR CONTINUE TO REMAIN, INVESTED FOR ANY PERIOD DURING THE PREVIOUS YEAR (NOT BEING A PERIOD BEFORE THE 1ST DAY OF JANUARY, 1971), IN ANY CONCERN IN WHICH ANY PERS ON REFERRED TO IN SUB- SECTION (3) HAS A SUBSTANTIAL INTEREST. (3) THE PERSONS REFERRED TO IN CLAUSE ( C ) OF SUB-SECTION (1) AND SUB-SECTION (2) ARE THE FOLLOWING, NAMELY : ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 14 ( A ) THE AUTHOR OF THE TRUST OR THE FOUNDER OF THE INS TITUTION; ( B ) ANY PERSON WHO HAS MADE A SUBSTANTIAL CONTRIBUTIO N TO THE TRUST OR INSTITUTION, THAT IS TO SAY, ANY PERSON WHOSE TOTAL CONTRIBUTION UP TO THE END OF THE RELEVANT PREVIOUS YEAR EXCEEDS FIFTY THOUSAN D RUPEES; ( C ) WHERE SUCH AUTHOR, FOUNDER OR PERSON IS A HINDU U NDIVIDED FAMILY, A MEMBER OF THE FAMILY; ( CC ) ANY TRUSTEE OF THE TRUST OR MANAGER (BY WHATEVER NAME CALLED) OF THE INSTITUTION; ( D ) ANY RELATIVE OF ANY SUCH AUTHOR, FOUNDER, PERSON, MEMBER, TRUSTEE OR MANAGER AS AFORESAID; ( E ) ANY CONCERN IN WHICH ANY OF THE PERSONS REFERRED TO IN CLAUSES ( A ), ( B ), ( C ), ( CC ) AND ( D ) HAS A SUBSTANTIAL INTEREST. (4) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE ( C ) OF SUB-SECTION (1) BUT WITHOUT PREJUDICE TO THE PROVISIONS CONTAINED IN CL AUSE ( D ) OF THAT SUB- SECTION], IN A CASE WHERE THE AGGREGATE OF THE FUND S OF THE TRUST OR INSTITUTION INVESTED IN A CONCERN IN WHICH ANY PERSON REFERRED TO IN SUB-SECTION (3) HAS A SUBSTANTIAL INTEREST, DOES NOT EXCEED FIVE PER CENT OF THE CAPITAL OF THAT CONCERN, THE EXEMPTION UNDER SECTION 11 OR SECTION 12 SHALL NOT BE DENIED IN RELATION TO ANY INCOME OTHER THAN THE INCOME ARISIN G TO THE TRUST OR THE INSTITUTION FROM SUCH INVESTMENT, BY REASON ONLY TH AT THE FUNDS OF THE TRUST OR THE INSTITUTION HAVE BEEN INVESTED IN A CONCERN IN WHICH SUCH PERSON HAS A SUBSTANTIAL INTEREST. 5.1 WE ALSO REFER TO THE RELEVANT PROVISIONS OF THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988: 2. DEFINITIONS- IN THIS ACT, UNLESS THE CONTEXT OTH ERWISE REQUIRES,-- (A) BENAMI TRANSACTION MEANS ANY TRANSACTION IN WHICH PROPERTY IS TRANSFERRED TO ONE PERSON FOR A CONSIDERATION PAID OR PROVIDED BY ANOT HER PERSON; (B) PRESCRIBED MEANS PRESCRIBED BY RULES MADE UNDER THIS ACT; ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 15 (C) PROPERTY MEANS PROPERTY OF ANY KIND, WHETHER MO VABLE OR IMMOVABLE, TANGIBLE OR INTANGIBLE, AND INCLUDES ANY RIGHT OR I NTEREST IN SUCH PROPERTY. 3. PROHIBITION OF BENAMI TRANSACTIONS- (1) NO PERSON SHALL ENTER INTO ANY BENAMI TRANSACTI ON. (2) NOTHING IN SUB-SECTION (1) SHALL APPLY TO THE P URCHASE OF PROPERTY BY ANY PERSON IN THE NAME OF HIS WIFE OR UNMARRIED DAUGHTE R AND IT SHALL BE PRESUMED, UNLESS THE CONTRARY IS PROVED, THAT THE S AID PROPERTY HAD BEEN PURCHASED FOR THE BENEFIT OF THE WIFE OF THE UNMARR IED DAUGHTER. (3) WHOEVER ENTERS INTO ANY BENAMI TRANSACTION SHAL L BE PUNISHABLE WITH IMPRISONMENT FOR A TERM WHICH MAY EXTEND TO THREE Y EARS OR WITH FINE OR WITH BOTH. (4) NOTWITHSTANDING ANYTHING CONTAINED IN THE CODE OF CRIMINAL PROCEDURE, 1973, AN OFFENCE UNDER THIS SECTION SHALL BE NON-CO GNIZABLE AND BAILABLE. 4. PROHIBITION OF THE RIGHT TO RECOVER PROPERTY HEL D BENAMI- (1) NO SUIT, CLAIM OR ACTION TO ENFORCE ANY RIGHT I N RESPECT OF ANY PROPERTY HELD BENAMI AGAINST THE PERSON IN WHOSE NAME THE PROPERT Y IS HELD OR AGAINST ANY OTHER PERSON SHALL LIE BY OR ON BEHALF OF A PERSON CLAIMING TO BE THE REAL OWNER OF SUCH PROPERTY. (2) NO DEFENCE BASED ON ANY RIGHT IN RESPECT OF ANY PROPERTY HELD BENAMI, WHETHER AGAINST THE PERSON IN WHOSE NAME THE PROPER TY IS HELD OR AGAINST ANY OTHER PERSON, SHALL BE ALLOWED IN ANY SUIT, CLAIM O R ACTION BY OR ON BEHALF OF A PERSON CLAIMING TO BE THE REAL OWNER OF SUCH PROPER TY. (3) NOTHING IN THIS SECTION SHALL APPLY-- (A) WHERE THE PERSON IN WHOSE NAME THE PROPERTY IS HELD IS A COPARCENER IN A HINDU UNDIVIDED FAMILY AND THE PROPERTY IS HELD FOR THE BENEFIT OF THE COPARCENERS IN THE FAMILY; OR ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 16 (B) WHERE THE PERSON IN WHOSE NAME THE PROPERTY IS HELD IS A TRUSTEE OR OTHER PERSON STANDING IN A FIDUCIARY CAPACITY, AND THE PR OPERTY IS HELD FOR THE BENEFIT OF ANOTHER PERSON FOR WHOM HE IS A TRUSTEE OR TOWARDS WHOM HE STANDS IN SUCH CAPACITY. 6. THE LD DR IS HEARD WHO HAS RELIED HEAVILY ON THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND CAREFULLY GONE THROUGH THE ASSESSMENT AND THE APPELLATE HISTORY OF THE ASSESSEE SOCIETY WHICH IS AVAILABLE ON RECORD. A SURVEY WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 16.0 2.2009 AND ON EXAMINATION OF THE IMPOUNDED DOCUMENTS, IT WAS NOTICED BY THE A O THAT THE ASESSEE WAS VIOLATING THE PROVISIONS OF SECTION 13 HENCE REGIST RATION GRANTED U/S 12A(A) OF THE ACT WAS WITHDRAWN. THE SAID REGISTRATION HA S SINCE BEEN RESTORED BY THE LD. CIT PURSUANT TO THE DIRECTIONS OF THE CO-OR DINATE BENCH VIDE ITS DECISION DATED 21.4.2011 (SUPRA). HENCE THE ISSUE O F ASSESSEE SOCIETY REGISTRATION U/S 12A IS NOT IN DISPUTE FOR THE PURP OSE OF AVAILING EXEMPTION U/S 11 OF THE ACT. FURTHER, DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS THE AO INVOKED THE PROVISIONS OF SECTION 142(2A) OF THE ACT AND DIRECTED TO CARRY OUT A SPECIAL AUDIT. A COPY OF THE REPORT GI VEN BY THE ACCOUNTANT WHO CONDUCTED THE SPECIAL AUDIT HAS NOT BEEN BROUGHT ON RECORD. AT THE SAME TIME THE AO HAS DRAWN REFERENCE TO CERTAIN OBSERVAT IONS MADE IN THE SPECIAL AUDIT WHILE FRAMING THE ASSESSMENT ORDER. AS PER T HE OBSERVATIONS IN THE SPECIAL AUDIT, SEVERAL IMMOVABLE PROPERTIES HAVE BE EN PURCHASED FROM THE FUNDS OF THE ASESSEE SOCIETY AND MOST OF THE PROPER TIES WERE PURCHASED IN THE NAME OF INDIVIDUAL PERSONS NAMELY SHRI S.C.AGAR WAL, SMT. MANJU AGARWAL SHRI PRATEEK AGARWAL & SCA (HUF) ETC. IT IS ALSO O BSERVED THAT AFTER PURCHASING THE PROPERTIES IN INDIVIDUAL NAMES THE S AID PROPERTIES WERE TRANSFERRED IN THE BOOKS OF THE ASSESSEE. FURTHER IT IS OBSERVED THAT FOR ALL PRACTICAL PURPOSES AND ALSO LEGALLY THE OWNERSHIP OVER THESE PROPERTIES REST WITH THESE PERSONS AND THEY ARE TREATING IT AS THEI R PERSONAL PROPERTIES. FURTHER THERE ARE OBSERVATIONS REGARDING VEHICLES PURCHASED IN THE INDIVIDUAL NAMES THOUGH CAPITALISED IN THE BOOKS OF THE ASSESS EE. CONSIDERING THESE FACTS AS PER THE SPECIAL AUDITOR, THE AO HELD THAT THE SAMITI IS NOT RUNNING ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 17 WHOLLY FOR CHARITABLE PURPOSES WHICH IS A PRIMARY CONDITIONS U/S 11(1)(A) OF THE ACT AND ASSESSEE IS ALSO VIOLATING PROVISIONS OF SECTION 13(2)(A)(G)(H) AND IS THEREFORE, NOT ENTITLED TO CLAIM EXEMPTION U/S 1 1 AND 12 OF THE ACT. RELYING ON THESE OBSERVATIONS AS MADE IN SPECIAL AUDIT THE AO COMPUTED THE INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF THE ACT. AS PER LD CIT, KOTA, THE ASSESSEE HAS NOT USED THE FUNDS OF THE TRUST AS PER OBJECTS OF TRUST AND THE PROPERTIES HAVE BEEN REGISTERED IN THE NAME OF INDIVIDUALS . AS PER LD. CIT, IT IS AN UNDISPUTED FACT THAT OVER A PERIOD O F TIME, PROPERTY VALUE GETS INCREASED AND SUCH APPRECIATIONS WILL AUTOMATICALL Y CREATE WEALTH IN THE HANDS OF THE INDIVIDUAL. IN THE EYE OF LAW, PROPERT Y PURCHASED IN THE NAME OF INDIVIDUAL BY ANY STATUTORY IMAGINATION CAN BE SAID TO BE OWNED BY THE SOCIETY AND THESE PROPERTIES ARE WEALTH OF THE IND IVIDUALS WHO CAN SELL THEM AT ANY TIME IN FUTURE AND SOCIETY HAS NO CONTROL OR POSSESSION OVER THIS PROPERTIES . WITH THESE OBSERVATIONS, THE LD. CIT KOTA HELD THAT IT IS A CLEAR CASE OF APPLICATION OF FUNDS IN ENLARGING PERSONAL BENEFIT OF INDIVIDUALS AND SUCH AN ACT IS CONTRARY TO THE OBJECT OF THE ASSESS EE. WHEN THE MATTER REACHED THE COORDINATE BENCH THOUGH IN THE CONTEXT OF DENIAL OF EXEMPTION U/S 12A OF THE ACT, THE COORDINATE BENCH OBSERVED THAT CERTAIN PROPERTIES WHICH ARE LOCATED IN THE RESIDENTIAL AREAS ARE PURC HASED IN THE NAME OF INDIVIDUALS FOR THE SIMPLE REASON THAT IN RESIDENTI AL AREA THE PROPERTY CANNOT BE PURCHASED BY THE TRUST. IT WAS FURTHER OBSERVED THAT THESE PROPERTIES HAVE BEEN SHOWN IN THE BALANCE SHEET OF THE TRUST. THES E ARE ASSETS OF THE TRUST. THESE PROPERTIES WERE PURCHASED FROM THE FUNDS OF T HE TRUST, MERELY BUYING THE PROPERTY IN THE NAME OF INDIVIDUAL, THOSE INDIV IDUALS CANNOT BE HELD AS OWNER OF THE PROPERTY AS THE RIGHTS IN THE PROPERTI ES ARE VESTED WITH THE TRUST. FURTHER DUE TO TECHNICAL PROBLEMS, THESE PROPERTIE S WERE PURCHASED IN THE NAME OF INDIVIDUALS, THEREFORE, IT CANNOT BE SAID T HAT THE INDIVIDUALS HAVE BEEN BENEFITED IN PURCHASING THE PROPERTIES IN THEI R INDIVIDUAL NAME. THE BALANCE SHEET OF THE TRUST IS PREPARED EACH AND EV ERY YEAR AND THE SAME HAVE BEEN FILED WITH THE DEPARTMENT AND THESE PROPERTIES HAS BEEN SHOWN IN THE BALANCE SHEET WHICH CAN BE VERIFIED. IT WAS FURTH ER OBSERVED THAT NOTHING HAS BEEN BROUGHT ON RECORD THAT FUNDS OF THE SOCIETY HA VE BEEN MISUSED . THE ONLY ALLEGATION IS THAT THE MEMBERS OF THE SOCIETY HAVE PURCHASED CERTAIN PROPERTIES IN THEIR INDIVIDUAL NAMES. THE SCHOOLS A RE RUNNING IN THE PROPERTIES AND THEY ARE PART AND PARCEL OF THE ASSESEE SOCIET Y AND NOT OF THE INDIVIDUALS. ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 18 ALL RECEIPTS FROM THE SCHOOLS ARE SHOWN IN THE HAND S OF THE SOCIETY AND NOT IN THE HANDS OF THESE INDIVIDUALS. THE ABOVE OBSERVAT IONS OF THE CO-ORDINATE BENCH WERE RENDERED IN THE CONTEXT OF DENIAL OF THE EXEMPTION U/S 12A OF THE ACT. AT THE SAME TIME, THESE ARE EQUALLY IMPORTANT OBSERVATIONS FOR EXAMINATION OF EXEMPTION U/S 11 OF THE ACT AND DEFI NITELY CARRY A PERSUASIVE IF NOT A BINDING VALUE. IT IS FOR THE REVENUE TO C ONTROVERT THE SAID FINDINGS OF THE CO-ORDINATE BENCH AND IF THE ASSESSEE SOCIETY H AS NOT SATISFIED THE CONDITIONS OF EXEMPTIONS, THE REVENUE IS WELL WITHI N ITS RIGHTS TO DENY THE EXEMPTION TO THE ASSESSEE SOCIETY. AS WE HAVE NOTE D ABOVE, THE REVENUE HAS RELIED ON THE SURVEY PROCEEDINGS AND THE OBSERVATIO NS MADE IN THE SPECIAL AUDIT REPORT AND IT IS NOTED THAT NOTHING NEW OR T ANGIBLE HAS BEEN BROUGHT ON RECORD OTHER THAN WHAT WAS THERE BEFORE THE CO-ORD INATE BENCH. HENCE THE FINDINGS OF THE CO-ORDINATE BENCH CONTINUES TO BE R ELEVANT FOR DETERMINATION OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE ONLY ADDITIONAL CONTENTION WHICH HAS BEEN RAISED BY LD. CIT IS THAT IN THE EYE OF LAW THE PROPERTY IS PURCHASED IN THE NAME OR INDIVIDUAL BY NO SUCH OF I MAGINATION CAN BE SAID TO BE OWNED BY THE ASSESSEE. THE INDIVIDUALS IN WHOSE NAME ASSETS ARE REGISTERED CAN SELL AT ANY TIME IN FUTURE AND SOCIE TY HAS NO CONTROL OR POSSESSION OVER THESE PROPERTIES AND THE INCOME OF THE ASSESSEE THEREFORE, HAS BEEN HELD TO BE USED FOR THE BENEFIT OF THE IND IVIDUAL AND ITS FAMILY MEMBERS. FURTHER, EXTENDING THE SAME REASONING, TH E LD. CIT(A) HAS STATED THAT THE PROVISIONS OF THE BENAMI TRANSACTIONS PROH IBITION ACT SHOULD BE CONSIDERED. WHILE REFERRING TO THE PROVISIONS OF BENAMI TRANSACTIONS PROHIBITION ACT, THE LD. CIT(A) HAS OBSERVED THAT W HEN THE ASSESSEE PURCHASED THESE PROPERTIES IN THE NAME OF SHRI SUBHASH CHAND AGARWAL AND HIS FAMILY MEMBERS, FOR ALL PURPOSES AND AS PER THE LEGAL PRO VISIONS THESE PERSONS BECAME OWNER OF THE SAID PROPERTIES. THE LD. CIT(A ) FURTHER OBSERVED THAT THESE PERSONS CAN AT ANY TIME CLAIM THE OWNERSHIP OF THESE PROPERTIES AND ASSESSEE CANNOT DO ANYTHING AND SHOWING THESE PROPE RTIES IN THE BOOKS OF THE ASSESESEE SHALL HAVE NO IMPACT IN VIEW OF THE SPE CIFIC PROVISIONS OF THE BENAMI TRANSACTIONS PROHIBITION ACT. PER CONTRA, A S PER THE LD AR, IF ANY PROPERTY IS PURCHASED WITH THE FUNDS OF THE SOCIET Y AND THE SAID PROPERTY IS BOOKED IN THE BOOKS OF ACCOUNTS AND USED BY THE AS SESSEE THEN IT CANNOT BE SAID TO BE BENAMI PROPERTY. THE LD. AR FURTHER SUB MITTED THAT BENAMI TRANSACTIONS PROHIBITION ACT IS APPLICABLE WHEN THE RE IS NO INVESTMENT EITHER ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 19 IN THE HANDS OF ANY PERSON OR THE PERSON IS NOT ABL E TO DISCLOSE ANY GENUINE SOURCE FROM WHICH THE SAME HAS BEEN ACQUIRED. IN T HE INSTANT CASE THE PRICES PAID FOR THE PROPERTIES ARE SHOWN IN THE BOOKS OF T HE ACCOUNT OF THE SOCIETY, THE SOCIETY HAS CONSTRUCTED SCHOOLS ON THIS LAND A ND THE PREMISES ARE USED BY THE SOCIETY FOR THE PURPOSE OF RUNNING SCHOOL. HOW EVER, FOR CERTAIN REGULATORY RESTRICTIONS, THE SAID PROPERTY WERE PUR CHASED IN THE NAME OF THE SOCIETY MEMBERS. AS SUCH THE TOTAL ASSETS ARE PROP ERLY DECLARED THEN THERE IS NO QUESTION OF APPLICATION OR BENAMI TRANSACTIONS PROHIBITION ACT. ON PERUSAL OF THE BENAMI TRANSACTIONS PROHIBITION ACT, THE BEN AMI TRANSACTION HAS BEEN DEFINED AS ANY TRANSACTION IN WHICH THE PROPERTY I S TRANSFERRED TO ONE PERSON FOR A CONSIDERATION PAID OR PROVIDED BY ANOTHER PER SON. IT IS FURTHER PROVIDED IN SECTION 4(1) OF THE SAID ACT THAT NO SUIT, CLAIM OR ACTION TO ENFORCE ANY RIGHT IN RESPECT OF ANY PROPERTY HELD BENAMI AGAINST TH E PERSON IN WHOSE NAME THE PROPERTY IS HELD OR AGAINST ANY OTHER PERSON S HALL LIE BY OR ON BEHALF OF A PERSON CLAIMING TO BE A REAL OWNER OF SUCH PROPERT Y. HOWEVER, THE SAID PROVISION CARRIES AN EXCEPTION AS PROVIDED IN SECTI ON 4(3)(B) OF THE ACT WHICH PROVIDES THAT THE RIGHT OF A PERSON CLAIMING TO BE A REAL OWNER OF THE SAID PROPERTY SHALL LIE WHERE THE PERSON IN WHOSE NAME THE PROPERTY IS HELD IS A TRUSTEE OR OTHER PERSON STANDING IN A FIDUCIARY CAP ACITY, AND THE PROPERTY IS HELD FOR THE BENEFIT OF ANOTHER PERSON FOR WHOM HE IS A TRUSTEE OR TOWARDS WHOM HE STANDS IN SUCH CAPACITY. PER CONTRA, THE L D AR SUBMITTED THAT ALL THESE PROPERTIES HAVE BEEN HELD BY THE SOCIETY MEMB ERS FOR THE BENEFIT OF THE SOCIETY AND NOT FOR THEIR INDIVIDUAL AND PERSO NAL BENEFIT AND THE SOCIETY IS IN THE POSSESSION OF THE SAID PROPERTIES AND EVEN T HE RIGHT TO DISPOSE OFF THE SAID PROPERTIES LIES WITH THE SOCIETY AND THERE ARE DOCUMENTATIONS TO SUPPORT THE SAME. 7.1 HERE, WE DRAW REFERENCE TO THE PROVISIONS OF SE CTION 13(1)(C)(II) WHICH PROVIDES THAT THE PROVISIONS OF SECTION 11 OR SECTI ON 12 WOULD NOT APPLY TO EXCLUDE ANY INCOME FROM ITS TOTAL INCOME OF THE PRE VIOUS YEAR, IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR THE INS TITUTION IS DURING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECT LY FOR THE BENEFIT OF ANY SPECIFIED PERSON REFERRED TO IN SUB-SECTION (3). W HAT IS THEREFORE RELEVANT FOR INVOKING THE SAID PROVISION IS THAT FIRSTLY, THE AC T OF USAGE OR APPLICATION OF THE TRUST INCOME OR PROPERTY SHOULD HAPPEN DURING THE P REVIOUS YEAR. SECONDLY, ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 20 SUCH USAGE OR APPLICATION COULD BE DIRECT OR INDIRE CT FOR THE BENEFIT OF THE SPECIFIED PERSONS. DIRECT BENEFIT WOULD MEAN THAT A CLEAR AND DIRECT NEXUS EXISTS BETWEEN THE SPECIFIED PERSON AND THE TRANSFE R OF FUNDS FOR THE BENEFIT OF SUCH PERSON, LIKE A LOAN GIVEN WITHOUT INTEREST OR WITHOUT ADEQUATE SECURITY. INDIRECT BENEFIT WOULD MEAN BENEFIT GRANT ED IN A CIRCUITRY MANNER SUCH AS FUNDS TRANSFERRED FOR AN APPARENT CAUSE OF THE TRUST TO AN INDEPENDENT CONCERN FROM WHERE THE BENEFIT IN ONE F ORM OR THE OTHER IS OBTAINED BY THE SPECIFIED PERSON. IN THE CONTEXT O F FUNDS UTILISED FOR THE PURCHASE OF THE IMMOVABLE PROPERTY, THE DIRECT BENE FIT WOULD MEAN POSSESSION, UTILISATION AND/OR EXPLOITATION OF THE IMMOVABLE PROPERTY FOR THE USE OR BENEFIT OF THE SPECIFIED PERSON EITHER FOR H IS OWN PURPOSES OR FOR COMMERCIAL PURPOSES. IT WOULD ALSO MEAN BENEFIT IN FORM OF CAPITAL APPRECIATION AND RIGHT TO MORTGAGE FOR THE PURPOSES OF RAISING FUNDS, DISPOSE OFF THE SAID PROPERTY, ETC. IN OUR VIEW, IT IS THE SUBSTANCE OF THE TRANSACTION RATHER THAN FORM THAT SHOULD BE EXAMINED IN THE SPE CIFIC FACT PATTERN TO DETERMINE THE TRUE NATURE OF THE BENEFIT. FURTHER, IN THE CONTEXT OF SECTION 11 READ WITH SECTION 13, THE WHOLE FOCUS AND EMPHAS IS OF THE LEGISLATURE HAS BEEN THAT THE FUNDS SHOULD BE UTILISED FOR THE BENE FIT OF THE SOCIETY AND NOT FOR THE PERSONAL BENEFIT OF THE INDIVIDUAL MEMBERS. THERE ARE OCCASIONS WHERE THE INDIVIDUAL MEMBERS CARRY OUT THEIR FUNCTI ONS IN THEIR FIDUCIARY CAPACITY AND SUCH ACTS SHOULD NOT BE HELD TO BE IN VIOLATION OF SPIRIT OF THE LEGISLATION. IN THE CONTEXT OF PRESENT FACTS, WHER E THE PROPERTIES ARE HELD IN THE INDIVIDUAL NAMES OF THE SOCIETY MEMBERS, WHAT N EEDS TO BE EXAMINED IS THE REASONS FOR DOING SO. WHETHER THERE ARE ANY RE GULATORY REASONS FOR NOT REGISTERING THE PROPERTIES IN THE NAME OF THE SOCIE TY. WHETHER THE PROPERTIES HAVE BEEN HELD IN THE FIDUCIARY CAPACITY FOR THE BE NEFIT OF THE SOCIETY OR IN THE PERSONAL CAPACITY. ARE THERE ANY BENEFITS AVAILABLE TO THE INDIVIDUAL MEMBERS IN TERMS OF UTILISATION, EXPLOITATION, DISPOSITION, ETC. MERELY BY STATING THAT THE PROPERTIES HAVE BEEN REGISTERED IN THE NAME OF THE INDIVIDUAL MEMBERS AND HE HAS DERIVED OR WILL DERIVE THE BENEFIT THERE OF WOULD NOT BE SUFFICIENT ENOUGH TO DENY THE EXEMPTION. ALSO THE CLAIM OF THE APPELLANT THAT IT IS THE BENEFICIAL OWNER OF THE SAID PROPERTIES AND THE RIG HT TO DISPOSE OFF THE SAID PROPERTIES ALSO LIES WITH THE SOCIETY NEEDS TO BE V ERIFIED. IN OUR VIEW, IT IS THE SUBSTANCE OF THE TRANSACTION RATHER THAN THE FORM T HAT SHOULD BE EXAMINED IN THE SPECIFIC FACT PATTERN RELATING TO EACH OF THE T RANSACTIONS RELATING TO THE ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 21 INVESTMENT IN IMMOVABLE PROPERTY TO DETERMINE THE T RUE CAPACITY OF THE PROPERTY HOLDER AND THE NATURE OF THE DIRECT/INDIRE CT, PROXIMATE/REMOTE BENEFIT THAT IS ACCRUING OR WILL ACCRUE TO THE INDI VIDUAL MEMBERS, IF ANY. 7.2 IN THE CONTEXT OF PRESENT FACTS, WHAT WE NOTICE D IS THAT THERE ARE BROAD OBSERVATIONS AND CONTENTIONS RAISED ON BEHALF OF BO TH THE PARTIES. HOWEVER, AS WE HAVE HELD ABOVE, THE AO HAS TO COME TO A DEFI NITE FINDING RELATING TO EACH OF THE TRANSACTIONS RELATING TO THE INVESTMENT IN IMMOVABLE PROPERTY AND TO WHAT EXTENT THERE ARE VIOLATIONS OF SECTION 13 OF THE ACT. WITH THESE OBSERVATIONS, WE SET-ASIDE THE MATTER TO THE FILE O F THE AO TO EXAMINE THIS MATTER AFRESH. THE ASSESSEE SHALL BE AT LIBERTY TO SUBMIT APPROPRIATE DOCUMENTATION TO THE AO. NEEDLESS TO SAY BOTH THE PARTIES SHALL CO-OPERATE AND COMPLETE THESE PROCEEDINGS IN A TIME BOUND FASH ION. 7.3 WITH THE ABOVE DIRECTIONS, THE GROUND RELATING TO DENIAL OF EXEMPTION U/S 11 IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN GROUND NO.2, THE ASSESSEE SOCIETY HAS CHALLEN GED THE ACTION OF THE AO IN NOT ALLOWING THE EXEMPTION U/S 10(23C)(VI) OF I.T ACT. THE LD AR SUBMITTED THAT THE SOCIETY IS RUNNING VARIOUS EDUCA TIONAL INSTITUTIONS AND HAS APPLIED FOR EXEMPTION U/S 10(23C)(VI) VIDE APPLICAT ION DATED 24.06.2004 AND PRESUMED THAT THE SAID APPLICATION WOULD HAVE BEEN DEALT BY THE HONBLE CCIT, THEREFORE, IT IS TREATED THAT THE INSTITUTION IS REGISTERED U/S 10(23C) OF THE I.T. ACT FROM THE DATE OF FILING OF THE APPLICA TION, HENCE NO INCOME OF THE SOCIETY IS LIABLE TO BE TAXED. AND AS SUCH THE DEMA ND CREATED IS WRONG AND MAY KINDLY BE DELETED. 8.1 IN GROUND NO.3, THE ASSESSEE SOCIETY HAS CHALLE NGED THE ACTION OF THE AO IN GETTING THE AUDIT U/S 142(2A) OF THE I.T. AC T, 1961. THE LD AR SUBMITTED THAT THE LD. AO INFORMED ABOUT GETTING THE AUDIT DO NE U/S 142(2A). IN THIS RELATION WE HAVE SUBMITTED TO THE LD. AO VIDE OUR L ETTER DATED NIL THAT THERE IS NO NEED OF ANY SPECIAL AUDIT SINCE THERE IS NO COMP LICATION IN THIS CASE, BUT IGNORING OUR OBJECTION THE LD. AO WAS STRICT FOR GE TTING THE AUDIT DONE. THE REASON BEHIND GETTING THE AUDIT DONE U/S 142(2A) WAS TAKING OF TIME FOR ASSESSMENT. THE LD. AO WAS NOT ABLE TO COMPLETE THE ASSESSMENT IN GIVEN TIME AS PER LAW HENCE HE TOOK THE RESORT OF THIS PR OVISION. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED AND NO PA RTICULAR MISTAKE WAS FOUND IN THE AUDITED BOOKS OF ACCOUNTS EXCEPT FOR S OME SMALL ERROR. IT IS ALSO ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 22 SUBMITTED THAT THERE ARE VARIOUS FLAWS IN THIS CASE SURVEY U/S 133A. REPORT OF THE AO ALLEGING VARIOUS THINGS AND ON THE SAID REPO RT THE LD. CIT WITHDREW THE EXEMPTION GRANTED U/S 12A AND THEN AUDIT U/S 142(2A ) AND FINALLY THE ASSESSMENT, BUT THERE IS NO LINK WITH EACH OTHER, HENCE AUDIT CONDUCTED BY THE DEPARTMENT WITHOUT CONSIDERING THE OBJECTS OF T HE SOCIETY IS UNLAWFUL, THEREFORE, IT MAY BE TREATED NULL & VOID. 8.2 IN GROUND NO.4, THE ASSESSEE SOCIETY HAS CHALLE NGED THE ACTION OF THE AO IN WRONGLY CONDUCTING SURVEY U/S 133A OF THE IT ACT, 1961 AND USED THE MATERIAL AGAINST THE ASSESSEE WITHOUT VERIFICATION. THE LD AR SUBMITTED THAT THE DEPARTMENT HAS CONDUCTED A SURVEY U/S 133A OF T HE IT ACT, 1961. ON PERUSAL OF THE PROVISIONS OF THE SURVEY, IT IS GIVE N THAT THE BUSINESS PREMISES CAN BE SURVEYED IN DAY HOURS WHEREAS THE ASSESSEE I S NOT DOING ANY BUSINESS, IT IS RUNNING EDUCATIONAL INSTITUTIONS AND THAT DOE S NOT COME UNDER THE PURVIEW OF THE BUSINESS. THERE WAS NO TAX EVASION A ND WITHOUT VERIFICATION THE PAPERS FOUND AND SEIZED IN COURSE OF SURVEY, HAVE BEEN USED AGAINST THE ASSESSEE. IT IS IMPERATIVE ON THE PART OF THE LD. AO THAT WHATEVER MATERIAL GATHERED BY THEM, IT CAN BE USED AGAINST THE ASS ESSEE AFTER VERIFICATION. IN CASE OF STATEMENT, THE SAID STATEMENT GIVEN, SHOULD BE CROSS EXAMINED, BUT NOTHING WAS DONE, THEREFORE SURVEY AND ITS PROCEEDI NGS WERE UNWARRANTED, HENCE BASED ON THESE ACTS THE ASSESSMENT IS UNLAWFU L, SHOULD BE NULL AND VOID. 8.3 IN RESPECT OF GROUND NO. 2, 3 &4, THE LD. CIT(A ) HAS GIVEN HIS FINDINGS STATING THAT ORDER U/S 10(23C)(VI), ORDER U/S 142( 2A), SURVEY PROCEEDINGS U/S 133A CANNOT BE SUBJECT MATTER OF APPEAL AS PER SEC TION 246 OF THE IT ACT, 1961. 8.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL ON RECORD. FIRSTLY, THE ASSESSEE SOCIETY HAS RAISED A PRESUMPTION THAT ITS APPLICATION UNDER SECTION 10(23C)(VI) WOULD HAVE BE EN DEALT BY THE HONBLE CCIT AND THE AO SHOULD HAVE CONSIDERED THE SAME. A PRESUMPTION CANNOT FORM THE BASIS OF AN ASSESSMENT. EITHER THE ASSESS EE SOCIETY HAS BEEN NOTIFIED BY THE PRESCRIBED AUTHORITY OR NOT NOTIFIE D. IN THE INSTANT CASE, NOTHING HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT ASSESSEE SOCIETY HAS BEEN NOTIFIED. HENCE, WE DONT SEE ANY ERROR ON THE PAR T OF THE AO IN NOT CONSIDERING SUCH EXEMPTION WHILE COMPLETING THE ASS ESSMENT PROCEEDINGS. 8.5 THE SUBJECT MATTER OF APPEAL BEFORE US IS THE O RDER PASSED BY THE AO UNDER SECTION 147/143(3) OF THE ACT. UNDER SECTION 142(2A), AT ANY STAGE OF ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 23 THE PROCEEDINGS BEFORE HIM, WHERE THE ASSESSING OFF ICER IS OF THE OPINION THAT GIVEN THE NATURE AND COMPLEXITY OF THE ACCOUNTS AND OTHER RELEVANT CONSIDERATION, IT IS ESSENTIAL TO DO SO, HE CAN DIR ECT THE ACCOUNTS TO BE AUDITED BY AN ACCOUNTANT WITH THE PREVIOUS PERMISSION OF TH E CONCERNED CIT. THE DIRECTION OF CARRYING OUT THE SPECIAL AUDIT SHALL B E AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE AND FURTHER, ANY MATERI AL GATHERED ON THE BASIS OF SUCH AUDIT AND PROPOSED TO BE UTILISED FOR THE PURP OSE OF ASSESSMENT SHALL BE AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSES SEE. IN THE INSTANT CASE, IT IS NOT THE CASE OF THE ASSESSEE THAT REASONABLE OPP ORTUNITY HAS NOT BEEN AFFORDED TO IT TO REPRESENT ITS CASE BEFORE THE AO EITHER AT THE STAGE OF DIRECTING THE SPECIAL AUDIT OR SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHERE THE MATERIAL GATHERED DURING THE SPECIAL AUDIT, IF ANY THAT WAS USED AGAINST THE ASSESSEE SOCIETY. INFACT, THE ASSESSEE HAS PLACED ON RECORD ITS OBJECTIONS FILED BEFORE THE AO VIDE ITS LETTER DATED 31.05.2010 AND 3.03.2010. THE SAID OBJECTIONS HAVE BEEN DULY CONS IDERED AND THEREAFTER, THE AO PROCEEDED WITH THE ISSUING THE DIRECTIONS FOR CO NDUCTING THE SPECIAL AUDIT. FURTHER, NOTHING HAS BEEN BROUGHT ON RECORD TO SUGG EST ANY PERVERSITY IN THE ORDER OF THE AO DIRECTING THE SPECIAL AUDIT. NOW C OMING TO THE SURVEY PROCEEDINGS UNDER SECTION 133A, IT IS THE CONTENTIO N OF THE ASSESSEE SOCIETY THAT MATERIAL HAS BEEN GATHERED AND STATEMENTS HAVE BEEN RECORDED BUT THE ASSESSEE SOCIETY HAS NOT BEEN AFFORDED AN OPPORTUNI TY TO VERIFY THE SAID MATERIAL OR CROSS EXAMINE THE PERSONS WHOSE STATEME NTS HAVE BEEN RECORDED. IN OUR VIEW, WHERE ANY MATERIAL IS GATHE RED AND STATEMENTS ARE RECORDED, THE ASSESSEE SOCIETY DESERVE AN OPPORTUNI TY TO VERIFY SUCH MATERIAL AND CROSS-EXAMINE THE PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED AND USED BY THE AO. THE AO IS ACCORDINGLY DIRECTED TO PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE SOCIETY TO EXAMINE SUCH MATERIAL COLLECTED DURING THE SURVEY AND CROSS-EXAMINE THE PERSONS WHOSE STAT EMENTS HAVE BEEN RECORDED. THE GROUNDS NO. 2, 3 &4 ARE DISPOSED OFF WITH ABOVE DIRECTIONS. 9. IN GROUND NO.5, THE ASSESSEE SOCIETY HAS CHALLEN GED THE ACTION OF THE AO TO TAX THE SURPLUS OF RS. 23,82,437/- AS TAXABLE INCOME. THE LD AR SUBMITTED THAT THE BENEFIT HAS SUBSEQUENTLY BEEN GI VEN BY THE AO, CONSIDERING RESTORATION OF REGISTRATION U/S 12A(A) OF IT ACT, 1961, VIDE ORDER U/S 154 DATED 08.10.2012 HENCE THE GROUND IS WITHD RAWN. HENCE, GROUND NO. 5 IS DISMISSED AS WITHDRAWN. 10. IN GROUND NO.6, THE ASSESSEE SOCIETY HAS CHALLE NGED THE ACTION OF THE AO AS WELL AS THE LD.CIT(A) IN TAKING AND SUSTAINI NG ACTION U/S 147/148 AND REOPENED THE CASE OF ASSESSEE. THE LD AR SUBMITTED THAT THE LD. AO HAS TAKEN ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 24 THE SHELTER OF SEC. 147/148 ON THE BASIS THAT THE A SSESSEE IS NO MORE HAVING REGISTRATION U/S 12A, HENCE THE RETURN FILED BY THE ASSESSEE DOES NOT ENJOY EXEMPTION GRANTED U/S 11 & 13 AND ACCORDINGLY ASSE SSMENT WAS DONE. HOWEVER THE VERY BASIS THAT THE SOCIETY IS NOT REGI STERED U/S 12A HAS BEEN DECIDED AGAINST THE DEPARTMENT. THE REGISTRATION I S AVAILABLE WHICH IS CLEAR BY THE ORDER OF THE HONBLE TRIBUNAL, THEREFORE, WHOLE BASIS TAKEN U/S 148 IS WRONG AND THE ASSESSMENT IS NULL AND VOID, BAD IN L AW. 10.1 WE HAVE GONE THROUGH THE ORDER OF LD CIT(A) AN D DONT SEE ANY INFIRMITY IN HIS ORDER AND HIS FINDINGS AS UNDER ARE CONFIRME D: THE ASSESSEE CHALLENGED REOPENING OF ASSESSMENT ON THE GROUND THAT THE REGISTRATION U/S 12A WAS RESTORED BY HONBLE ITAT, THEREFORE, THE BASIS OF REOPENING WAS WRONG AND ASSESSMENT AS NULL & VOID. IN THIS CASE THE REGISTRATION OF THE SOCIETY U/S 12A WAS WITHDRAWN B Y THE CIT, KOTA VIDE ORDER DATED 16.07.2009. SUBSEQUENTLY HONBLE ITAT VIDE ITS ORDER DATED 21.04.2011 RESTORED THE REGISTRATION GRANTED U/S 12A OF THE IT ACT, 1961 (ITA NO.794/JP/2009). HOWEVER, WHEN THE ORDER WAS PASSED BY THE AO THE ORDER OF HONBLE ITAT WAS NOT AVAILABLE AS IT WAS PASSED AFT ER THE ORDER OF THE AO AND THEREFORE, THE ORDER OF CIT, KOTA WAS IN FULL FORCE . MOREOVER EVEN IF ASSESSEE IS GRANTED REGISTRATION U/S 12A, THE ASSESEE EIS NOT ENTITLED EXEMPTION U/S 11 AUTOMATICALLY. AS HELD BY ME IN GROUND NO. 5, THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S 11 DUE TO VIOLATIONS OF PROVISIONS OF SECTION 13. THIS WAS ALSO ONE OF THE REASONS FOR REOPENING OF THE ASSESS MENT. IN THE CASE OF ASSESSEE, A SURVEY OPERATION WAS CARRIED OUT AND VA RIOUS INCRIMINATING DOCUMENTS WERE SEIZED. THE ACCOUNTS OF ASSESSEE WE RE SUBJECT TO SPECIAL AUDIT AND THE SPECIAL AUDITOR ALSO POINTED OUT VIOL ATIONS OF SECTION 13 ALONGWITH OTHER DEFECTS. AS PER THE PROVISIONS OF S ECTION 147 FOR REOPENING AN ASSESSMENT, THE AO SHOULD HAVE A PRIMA FACIE CASE T HAT INCOME HAS ESCAPED ASSESSMENT. IN VIEW OF THE ABOVE DISCUSSION, I AM O F THE VIEW THAT AO HAD SUFFICIENT MATERIAL BEFORE HIM TO HAVE A PRIMA-FACI E SATISFACTION THAT INCOME OF ASSESSEE HAS ESCAPED ASSESSMENT. THEREFORE, REO PENING O F ASSESSMENT U/S 147/148 IS UPHELD. THIS GROUND OF APPEAL IS THERE FORE DISMISSED. 11. IN GROUNDS NO.7 TO 14, THE ASSESSEE SOCIETY HAS CHALLENGED THE ACTION OF THE AO IN DISALLOWING VARIOUS EXPENSES. THE DISA LLOWANCES RANGE FROM CASH PAYMENTS UNDER SEC. 40A(3), PAYMENTS WITHOUT TDS U NDER SECTION 40(A)(IA), CAPITAL EXPENDITURE IN TERMS OF LAND AND DEVELOPMEN T EXPENSES AND VARIOUS OTHER MISCELLANEOUS EXPENSES. HERE, IT WOULD BE RE LEVANT TO NOTE THAT THESE DISALLOWANCES HAVE BEEN MADE BY THE AO HOLDING THE ASSESSEE SOCIETY AS NOT ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 25 ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND THE PROVISIONS RELATING TO COMPUTATION OF BUSINESS INCOME HAVE BEEN INVOKED . WHERE THE ASSESSEE SOCIETY IS HELD ELIGIBLE FOR EXEMPTION UNDER SECTIO N 11 OF THE ACT, WHAT NEEDS TO BE SEEN IS THAT WHETHER THE FUNDS OF THE SOCIETY HAVE BEEN UTILISED PROPERLY FOR THE PURPOSES OF ADVANCEMENT OF OBJECTS OF THE S OCIETY OR NOT AND WHETHER THE OTHER PROVISIONS CONTAINED IN SECTION 11 TO 13 ARE COMPLIED WITH AND THE PROVISIONS GOVERNING COMPUTATION OF BUSINESS INCOME SHALL NOT APPLY. AS WE HAVE ALREADY SET-ASIDE THE MATTER RELATING TO EXEMP TION UNDER SECTION 11 OF THE ACT TO THE FILE OF THE AO, WE DEEM IT FIT TO RE STORE THESE MATTERS BACK TO THE FILE OF THE AO TO DECIDE A FRESH. 12. IN ITA NO. 483, 918, 919/JP/12 FOR AY 2006-07, 2007-08 AND 2008-09 RESPECTIVELY, SIMILAR GROUNDS OF APPEAL HAVE BEEN T AKEN BY THE ASSESSEE. OUR FINDINGS AND DIRECTION AS CONTAINED IN ITA NO. 482/ JP12 SHALL APPLY MUTATIS MUTANDIS TO THESE MATTERS. 13. IN ITA NO. 946 & 947/JP/12, THE REVENUE HAS FIL ED CROSS APPEAL FOR AY 2007-08 AND AY 2008-09 AND CHALLENGED THE DELETION OF ADDITIONS MADE BY THE AO IN TERMS OF SALARY, INSURANCE ON VEHICLE, IN VESTMENTS IN LAND, ETC. IN THESE CASES ALSO, THE AO HAS INVOKED THE NORMAL PRO VISIONS OF THE ACT FOR COMPUTATION OF TAXABLE INCOME AND SINCE WE HAVE ALR EADY SET-ASIDE THE MATTER RELATING TO GRANT OF EXEMPTION UNDER SECTION 11 OF THE ACT TO THE FILE OF THE AO IN ITA NO. 918/JP/12 & 919/JP/12, WE DEEM IT FIT TO RESTORE THESE MATTERS BACK TO THE FILE OF THE AO TO DECIDE A FRES H. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE AND REVENUE ARE DISPOSED OFF WITH ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 26/08 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR PILLAI ITA NO. 482, 483,918, 919, 946 & 947/JP/12 KENDRIYA ACADEMY VIDHYALAYA SHIKSHAN SAMITI, KOTA VS. ACIT, CIRCLE-1, KOTA 26 VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI KENDRIYA ACADEMY VIDHYALAYA SHI KSHA SAMITI KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-1, KOTA 3. VK;DJ VK;QDR@ CIT KOTA 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-KOTA 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.482,483,918,946,919 & 947 /JP/20 12) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR