Bharati Vidyapeeth Medical Foundation, Pune V. DCIT, Cent. Cir.2(2), Pune, Pune

ITA 658/PUN/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59989 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 22-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Income from undisclosed sources; Validity of assessment; Reason to believe
• Section: 143(3); 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND D. KARUNAKARA RAO, ACCOUNTANT MEMBER SR. NO. ITA NO. ASSTT. YEAR APPELLANT V/S. RESPONDENT 1. 282 /PN/20 11 1999 - 2000 PATANGRAO KADAM PRATISHTHAN, BHARATI VIDYAPEETH BHAVAN, LAL BAHADUR SHASHTRI ROAD, PUNE 411 030, PAN: AAATP 1342 A DCIT,CEN. CIR.2(2), PUNE 2 9 56 /PN/20 1 0 1999 - 00 BHARATI VIDYAPEETH MEDICAL FOUNDATION, BHARATI VIDYAPEETH BHAVAN, LAL BAHADUR SHASTRI ROAD,L NAVI PETH, PUNE 411030 PAN: AAATB 1350Q. ACIT, CEN. CIR.2(2) PUNE 3 . 297 /PN/20 11 1999 - 00 BHARATI KALA ACADEMY, BHARAT VIDYAPEETH BHAWAN, LAL BAHADURI SHASTRI ROAD, NAVI PETH,PUNE 411030 PAN : AAATB1351R DCIT, CEN CIR.2(2), PUNE 4 . 658 /PN/20 08 1999 - 00 BHARATI VIDYAPEETH MEDICAL FOUNDATION, BHARATI VIDYAPEEHT BHAVAN, L.B..S. ROAD, PUNE - 30 - DO - 5 . 1035/PN/2010 1999 - 2000 ACIT, CEN CIR. 2(2), PUNE BHARATI VIDYAPEETH MEDICAL FOUNDATION, BHARATI VIDYAPEETH ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 2 BHAVAN, L.B.S. ROAD, PUNE 411 030 PAN : AAATB 1350Q 6 . 904/PN/2011 1999 - 00 ACIT, CIR - 6,PUNE SHRIPATRAO KADAM SMRUTI PRATISTHAN, SHIVNERI, BHARATI NAGAR, PAUD ROAD, PUNE 411 029 PAN :AAATS6156K 7 . 837 /PN/20 11 1999 - 00 SHRIPATRAO KADAM SMRUTI PRATISTHAN, SHIVNERI, BHARATI NAGAR, PAUD ROAD, PUNE 411 029 PAN : AAATS 6156K DCIT, CEN CIR 2(2), PUNE 8 . 443 /PN/20 11 1999 - 00 YASHWANTRAO MOHITE PRATISHTAN, DR. INDRAJEET MOHITE HOSPITAL, KARAD, DIST SATRA PAN : AAATY1596N - DO - 9 . 313 /PN/20 11 1999 - 00 ACIT, CEN CIR. 2(2), PUNE BHARATI KALA ACADEMY, BHARATI VIDAPEETH BHAVAN, L.B.S. ROAD, PUNE 411 030 PAN :AAATB1351R 1 0 . 305 /PN /20 11 1999 - 00 ACIT,CEN CIR 2(2), PUNE PATANGRAO KADAM PRATISHTHAN, BHARATI VIDYAPEETH BHAVAN, LAL BAHADUR SHASHTRI ROAD, PUNE 411 030, PAN: AAATP1342A 1 1 . 407 /PN/20 11 1999 - 00 - DO - YASHWANTRAO MOHITE PRATISHTAN, DR. INDRAJEET MOHITE HOSPITAL, KARAD, DIST SATRA PAN : AAATY1596 N ASSESSEE BY : SHRI. SUNIL PATHAK/SHRI NIKHIL P ATHAK DEPARTMENT BY : SHRI S.K. SINGH DATE OF HEARING :19.1.12 ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 3 DATE OF PRONOUNCEMENT: . 1.12 ORDER PER I.C. SUDHIR, JM THESE ARE TWO SETS OF APPEALS PREFERRED BY THE PAR TIES. IN ONE SET OF APPEALS (ITA NOS. 956/PN/2010 AND 282, 297, 837 & 443/PN/2011) , THE ASSESSEES HAVE QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS. IN ONE OF THE GROUNDS I.E. GROUND NO. 1, THE ASSESSEES HAVE QUESTIONED THE VALIDITY OF RE-OPENING U/S. 14 8 AND ASSESSMENT MADE IN FURTHERANCE THERETO U/S. 147 READ WITH SECTION 143(3) OF THE A CT. SINCE THE ISSUE RAISED IS LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER, WE PREFERRED TO ADJUDICATE THE SAME FIRST. THE ANOTHER SET OF APPEALS ARE ITA NOS. 658/PN/2008, 1035/PN/2010 A ND 305, 313, 904 & 407/PN/2011. IN ITA NO. 658/PN/2008 THE ASSESSEE HAS QUESTIONED T HE VALIDITY OF REVISIONAL ORDER U/S 263 OF THE ACT HOLDING THE ASSESSMENT ORDER FRAMED U/S. 14 7 READ WITH S. 143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. REMAINING ARE THE APPEALS PREFERRED BY THE REVENUE. IN THESE APPEALS THE REVENUE HAS QUESTIONED THE FIR ST APPELLATE ORDER GIVING SOME RELIEFS TO THE ASSESSEES WHICH WERE DENIED BY THE A.O. IN THE ASSESSMENT ORDERS FRAMED U/S. 147 READ WITH SECTION 143(3) QUESTIONED BY THE ASSESSEES, H EREINABOVE. THUS THE FATE OF THESE SECOND SET OF APPEALS ARE DEPENDING UPON THE OUTCOM E OF THE FIRST SET OF APPEALS. ITA NOS. 956 /PN/2010 AND 282,297,837 & 443/PN/2011 GROUND NO. 1 VALIDITY OF RE-OPENING AND ASSESSMEN T MADE IN FURTHERANCE THERETO 2. THE RELEVANT FACTS ARE THAT M/S. PATANGRAO KAD DAM PRATISHTAN WAS ESTABLISHED THROUGH A DEED OF TRUST DATED 15.1.1981 BY DR. PAT ANGRAO SHRIPAD KADDAM. THE TRUST WAS CREATED WITH THE OBJECTIVE RELATING TO FINANCIAL HE LP OF THE INDIVIDUAL AND ORGANIZATION IN THE FIELD OF EDUCATION, SOCIAL, CULTURAL AND FINANCIAL, INDUSTRIAL, MEDICAL WORK ETC., THE TRUST WAS EXEMPTED U/S. 11. THERE ARE SEVERAL OTHER TRUSTS H AVING THEIR REGISTERED OFFICE AT THE SAME ADDRESS. THESE TRUSTS INCLUDE THE FOLLOWING : 1) BHARATI VIDYAPEETH MEDICAL FOUNDATION ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 4 2) PATANGRAO KADDAM PRATISHTAN 3) ABIJIT MEDICAL MEMORIAL TRUST 4) BHARATI KRIDE PRATISHTRAN 5) BHARATI VIDYAPEETH EDUCATION TRUST 6) SONHIRE FOUNDATION OF RURAL DEVELOPMENT 7) BHARATI KALA ACADEMY 8) SRIPATRAO KADDAM SMRUTI PRATISTHAN 9) YESHWANTRAO MOHITE PRATISHTAN THERE WAS SEARCH ON THE PREMISES OF SHRI R.D. SHIND E, ACCOUNTANT, OF BHARATI VIDYAPEETH. NOTICE U/S. 148 WAS SERVED ON THE ASSESSEE AND IN RESPONSE THERETO THE ASSESSEE FILED RETURN DECLARING TOTAL INCOME AT NIL. THE A.Y . INVOLVED IN ALL THESE APPEALS OF THE ASSESSEE TRUSTS IS 1999-2000. THE A.O HELD THAT TH AT THE ASSESSEE IS NOT ENTITLED FOR ANY BENEFIT U/SS. 11 & 12 OF THE ACT AND HAS MADE SEVE RAL ADDITIONS IN THE ASSESSMENT FRAMED U/S. 147 READ WITH SECTION 143(3) OF THE ACT. BEFOR E THE LD CIT(A), THE ASSESSEES QUESTIONED THE VALIDITY OF RE-OPENING AND ASSESSMENT MADE IN FURTHERANCE THERETO, AS WELL AS ADDITIONS MADE BY THE A.O. BUT COULD NOT SUCCEED. HENCE, THE Y ARE IN PRESENT APPEALS. 3. THE LD. A.R. CONTENDED THAT REASONS RECORDED, O N THE BASIS OF WHICH RE-OPENING WAS INITIATED WERE SUPPLIED TO THE ASSESSEE ON ITS REQ UEST. THE LD A.R. DREW OUR ATTENTION TO THE PAGE NO. 1 OF THE PAPER BOOK I.E. COPY OF THE REAS ONS TO BELIEVE RECORDED BY THE A,.O. FOR THE RE-OPENING. THE LD. A.R.. ALSO DREW OUT ATTE NTION TO PAGE NO. 12 OF THE PAPER BOOK I.E. APPROVAL U/S. 151 FOR THE RE-OPENING BY THE ADDITIO NAL CIT. HE SUBMITTED THAT AS PER THESE REASONS, RE-OPENING HAS BEEN RESORTED TO. THE LD C IT(A) HAS NOT ENTERTAINED ADDITIONAL GROUND ABOUT INVALIDITY OF RE-OPENING RAISED BY THE ASSESSEE AND FURTHER WITHOUT PREJUDICE HE HAS HELD THAT REASONS ARE VALID TO JUSTIFY THE RE -OPENING. THE LD CIT(A) HAS HELD THAT THE SEARCH OPERATION ON SHRI R.D. SHINDE, ACCOUNTANT OF BHARATI VIDYAPEETH IN 2005 INDICATE THAT THE TRUSTS WERE COLLECTING CAPITATION FEE AND THE A .O IMPLIED IN THE REASONS THAT SUCH INCOME OF DONATION BY WAY OF COUPON WOULD BE TREATED AS UNDISCLOSED INCOME AND HE HAS NOT ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 5 ALREADY TREATED BUT SAME IS UNDISCLOSED INCOME AND TO THAT EXTENT, THE REASON WAS GRAMMATICALLY WRONG AND LASTLY THE REASONS ARE JUS TIFIED IN VIEW OF THE PROVISIONS OF SECTION 292BB OF THE ACT. 4. THE LD. A.R. SUBMITTED THAT REASONS DO NOT JUSTI FY THE RE-OPENING U/S. 148. OVER THE YEARS, IN ALL THESE VARIOUS ASSESSMENTS, THE ASSESS EE HAS BEEN SHOWING THE RECEIPTS BY WAY OF DONATION IN ITS BOOKS AND THE SAME IS APPARENT FRO M THE ACCOUNTS OF VARIOUS TRUSTS FURNISHED IN THE PAPER BOOK. THUS, IT WAS IN THE KNOWLEDGE OF DEPARTMENT FROM THE ORDERS ON RECORDS. SECONDLY, SHRI R.D. SHINDE, ACCOUNTANT OF BHARATI VIDYAPEETH WAS SEARCHED IN THE YEAR 2005. HE WAS FOUND IN POSSESSION OF SOME CASH. H IS STATEMENT U/S. 132(4) WAS RECORDED AND THE SAME WAS PLACED IN THE PAPER BOOK OF BHA RATI VIDYAPEETH MEDICAL FOUNDATION. THE LD A.R. SUBMITTED THAT IN HIS STATEMENTS SHRI SHIND E HAD ADMITTED THAT HE WAS TAKING SOME AMOUNTS IN CASH FROM THE STUDENTS WHO WERE GIVEN AD MISSION. HE WAS COLLECTING SUCH AMOUNTS FOR TWO YEARS PRIOR TO SEARCH WHEN HE WAS INCHARGE OF THE ADMISSION PROCESS AND FURTHER HE HAD DECLARED THE INCOME IN HIS OWN HANDS ADMITTING IT TO BE HIS OWN MONEY AND NOT THAT OF BHARATI VIDYAPEETH. FROM HIS STATEMENT , IT IS CLEAR THAT EVEN IF HE WAS COLLECTING SOME CAPITAL FEE AT THE TIME OF ADMISSION, HE WAS DOING IT ONLY FOR 2 YEARS AND NOT FOR THE EARLIER PERIOD. THE LD. A.R. CONTENDED THAT THER E IS NO EVIDENCE FOUND FOR THE EARLIER PERIOD BY THE DEPARTMENT THAT THE ASSESSEE TRUSTS WERE COL LECTING MONEY WHILE GRANTING ADMISSION. HENCE, THE STATEMENT OF SHRI SHINDE OR FINDING OF S EARCH DID NOT PERTAIN TO A.Y. 1999-2000 AT ALL AND QUESTION OF RE-OPENING THESE ASSESSMENTS FO R A.Y. 1999-00 DID NOT ARISE THERE-FROM IN A CASE PERTAINING TO THOSE YEAR WHEN SHRI SHIND E WAS ENGAGING IN COLLECTION OF SOME CAPITATION FEE. 5. THE LD. A.R. SUBMITTED FURTHER THAT BHARATI VIDY APEET HAVE BEEN SHOWING THE DONATION COLLECTED THROUGH ISSUE OF COUPON EVERY YEAR IN TH E PAST. THE SAME A.O. AFTER RECORDING THE REASONS U/S. 148 FOR A.Y. 1999-00 ON 28 MARCH 2006 COMPLETED THE ASSESSMENT U/S. 143(3) OF BHARATI VIDYAPEETH AND BHARATI VIDYAPEETH MEDICI AL FOUNDATION FOR A.Y. 2003-04, A COPY OF ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 6 THE SAID ASSESSMENT ORDER HAS BEEN PLACED ON PAGE N OS. 24 & 17 OF THE PAPER BOOK. THE LD. A.R. POINTED OUT THAT IN A.Y. 2003-04 ALSO, THESE A SSESSEES HAD SHOWN THE DONATIONS COLLECTED THROUGH COUPONS IN THEIR ACCOUNTS AND THE BALANCE SHEET AND THE A.O HAS NOT MADE ANY ADDITION ON THIS ACCOUNT AND ON THE CONTRARY, ASSESSED AT RS. NIL ONLY. HENCE, ONLY WITHIN A DAY AFTER THE RECORDING THE REASONS, THE A.O IN THE ASSESSMENTS ACCEPTED THAT THERE IS NO ADDITION WARRANTED ON THIS ACCOUNT. THIS I TSELF INDICATE THAT IN HIS JUDICIAL THINKING, THE ADDITION ON ACCOUNT OF THIS DONATION WAS NOT WARRA NTED IN THE SCRUTINY ASSESSMENTS COMPLETED ON 30 TH MARCH. THE LD. A.R. CONTENDED THAT THE A.O HAS N OT APPLIED JUDICIAL MIND WHILE RECORDING THE REASONS FOR RE-OPENING THE ASS ESSMENTS IN THESE CASES AND THEREFORE, THE RE-OPENING IS NOT VALID. IN SUPPORT, PLACED RELIA NCE ON THE FOLLOWING DECISIONS : 1. RAM NARAIN BHAJNAGARWALLA VS. ITO, 77 ITR 653 (CA L.) 2. S.K. GUPTA & CO. VS. ITO, 246 ITR 56-0 (ACH.) 3. ITO VS. LOKMANI MEWALDAS, 103 ITR 437 (SC) 4. SHIVNATH SINGH VS. ACIT, 82 ITR 147 (SC) 5. MANOJ KUMAR GUPTA VS. ITO, 114 TTJ (JP.) 253 6. THE LD. A.R. SUBMITTED FURTHER THAT A.O STATES THA T THE POST SEARCH ENQUIRIES HAVE REVEALED THAT THE DONATION COLLECTED THROUGH COUPON S ARE NOTHING BUT THE CAPITATION FEE FOR ADMISSION OF THE STUDENTS. AS ALREADY EXPLAINED, M R. SHINDE STATES THAT HE WAS COLLECTING SUCH AMOUNTS ONLY FOR 2 YEARS PRIOR TO SEARCH. TH US, EVEN IF THE DEPARTMENT WANTS TO CAPITALIZE ITS STATEMENT, IT COULD BE USED ONLY FOR TWO YEARS PRIOR TO SEARCH AND NOT FOR A.Y. 1999-2000. THE REVENUE HAS NOT REFERRED TO ANY EVI DENCE COLLECTED, IN THE ASSESSMENT ORDER OR THE FIRST APPELLATE ORDER THAT THEY HAD EVIDENCE TO SHOW THAT THE DONATIONS WERE CAPITATION FEES FOR A.Y. 1999-2000. 7. THE LD. A.R. CONTENDED FURTHER THAT EVEN ASSUMING AND NOT ADMITTING THAT THE DEPARTMENT WANTS TO TAKE SUPPORT FROM SHRI SHINDE S STATEMENT, THE SAME COULD NOT BE USED ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 7 FOR A.Y. 1999-2000 AS IN A NUMBER OF CASES HELD THA T FINDINGS OF ONE YEAR CANNOT BE USED FOR THE OTHER YEARS. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. ACIT VS. RAMDEO OIL INDUSTIRES PVT. LTD.,ITA NOS. 1 375 TO 1378, PUNE (2007), A.YS. 1999-2000 & 2001 TO 2003, ORDER DT. 22 ND JUNE 2-009. 2. ROYAL MARWAR TOBACCO PRODUCTS (P) LTD.) ,120 TTJ 3 8, (AHD.) 3. HC CHANDNA (P.) LTD. VS. DCIT 91 TTJ 243( DEL.) 4. ACIT VS. SMT. RADHA RANI, 101 TTJ 107 (JP)\ 5. ACIT VS. AMBICA FOOD INDUSTRIES LTD., (110 TTJ (HYD .) 6. ACIT VS. M.M. SALES AGENCIES 97 TTJ 575 (JP.)\ 7. STATE OF ORISSA VS. J.P. SIKIRIA 7 CO. (67 STC 101) (ORISSA) 8. CIT VS. GUPTA ABHUSHAN P. LTD., 312 ITR 166 (DEL.) 8. THE LD. A.R. POINTED OUT THAT FOR THE REASONS RE CORDED, THE A.O HAS WRITTEN THAT THESE DONATIONS IN THE HANDS OF 9 TRUSTS HAVE BEEN TREAT ED AS INCOME FROM UNDISCLOSED SOURCES. HE CONTENDED THAT PRIOR TO THE DATE OF RECORDING OF TH E REASONS I.E. 28.3.2006, THERE IS NO ASSESSMENT OF ANY OF THESE 9 TRUSTS WHEREIN SUCH IN COME HAS BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCES. HE SUBMITTED THAT WHEN IT WAS POINTED OUT TO LD CIT(A), HE STATES THAT THE A.O MADE THAT SUCH INCOME BY WAY OF DONATION WILL BE TREATED AS INCOME FROM UNDISCLOSED SOURCES. THE LD CIT(A) WAS THUS NOT JU STIFIED IN CHANGING THE LANGUAGE USED BY THE A.O. THE REASONS RECORDED SHOULD BE READ AS TH EY ARE AND THEY CANNOT BE CHANGED OR SUPPLEMENTED BY AN AFFIDAVIT ETC., IN SUPPORT, THE LD. A.R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) AAYOGEN DEVELOPERS VS. ITO, 335 ITR 234 (GUJ.) 2) PRASANT S. JOSHI VS. ITO, 324 ITR 154 (BOM.) THE LD. A.R. SUBMITTED FURTHER THAT THE VAGUE ALL EGATION CANNOT BE THE BASIS OF THE REASONS FOR REOPENING AND CITED FOLLOWING DECISIONS IN SUPP ORT : ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 8 1) PEERLESS GENERAL FINANCE AND INVESTMENT CO. LTD. VS . DCIT, 273 ITR 16 (CAL.) 2) CHHUGMAL RANJ PAL VS. S.P. CHALIHA, 79 ITR 603 (SC) THE LD. A.R. SUBMITTED FURTHER THAT THE A.O SHOULD HAVE MADE ENQUIRIES BEFORE RE- CORDING THE REASONS FOR THE RE-OPENING IMPUGNED AND PLACED RELI ANCE ON THE FOLLOWING DECISIONS : 1) CIT VS. SMT. PARAMJIT KAUR, 311 ITR 38 (PUN. & HAR. ) 2) SIEMENS INFORMATION SYSTEM LTD. VS. ACIT, 293 ITR 5 48 (BOM.) 3) INDIA FINANCE AND CONSTRUCTION CO. PVT. LTD., VS. D CIT, 200 ITR 710 (BOM) THE LD. A.R. SUBMITTED THAT LD ADDITIONAL CIT HAS GIVEN THE APPROVAL FOR INITIATION OF RE- OPENING PROCEEDINGS BASED ON REASONS RECORDED BY T HE A.O IN A MECHANICAL MANNER WITHOUT EVEN JUDGING THE CORRECTNESS OF THE REASONS. IN SU PPORT, HE REFERRED PAGE NO. 12 OF THE PAPER BOOK. HE SUBMITTED THAT THE LD. ADDL. CIT HAS NOT QUESTIONED THE A.O AS TO IN WHICH CASES, THE A.O HAS TREATED THE DONATION AS UNDISCLOSED IN COME AS MENTIONED IN THE REASONS OR HE HAS NOT GONE THROUGH THE EVIDENCES PERTAINING TO A. Y. 1999-00 AS PER WHICH THE A.O HELD THAT THE DONATIONS ARE CAPITATION FEE FOR ADMISSION S AND THUS IT IS A MECHANICAL APPROVAL ON THE PART OF THE LD. ADDL. CIT WHICH IS ILLEGAL. I N THIS REGARD, LD. A.R. CITED FOLLOWING DECISIONS : 1) CHHUGMAL RAJPAL VS. S.P. CHALLIHA, 79 ITR 603 (SC) 2) UNITED ELECTRICAL CO. (P.) LTD. VS. CIT, 258 ITR 31 7 (DEL.) ACCORDINGLY, THE LD. A.R SUBMITTED THAT ALL THE RE ASONS RECORDED FOR RE-OPENING BY THE A.O DO NOT JUSTIFY RE-OPENING. THEY ARE MERELY ASSUMPT IONS ON WRONG FACTS AND THEY SHOW NON- APPLICATION OF ANY JUDICIAL MIND ON THE PART OF THE A.O AND HENCE, THE RE-OPENING IS NOT VALID IN ALL THESE CASES. 9. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF VALIDITY OF RE-OPENING OF THE ASSESSM ENT. HE SUBMITTED THAT WHAT THE A.O MEANT ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 9 WHILE RECORDING THE REASONS WAS THAT THE DONATIONS ARE GOING TO BE TAXED AS UNDISCLOSED INCOME AND HE HAS WRONGLY WRITTEN THAT THEY ARE ALR EADY TAXED. HE PLACED RELIANCE UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GK N DRIVESHAFT LTD., 259 ITR 19 (SC) FOR THE PROPOSITION THAT IF THE ASSESSEE HAS NOT CHALLENGE D THE RE-OPENING BEFORE THE A.O, HE CANNOT CHALLENGE IT ANY FURTHER IN APPEAL. THE LD. D.R. SUBMITTED FURTHER THAT THERE IS NO ESTOPPELS IN THE INCOME TAX. EVERY ASSESSMENT YEAR IS AN INDE PENDENT UNIT. HE SUBMITTED FURTHER THAT SUFFICIENCY OF REASONS RECORDED BY THE A.O FOR INI TIATION OF RE-OPENING PROCEEDINGS CANNOT BE QUESTIONED BEFORE THE COURT AND PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S. NARAYANAPPA & SONS VS. CIT 63 ITR 2 19 (SC) AND ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF TRIVANDRUM CLUB VS . ACIT, 256 ITR 61 (KERALA). 10. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 11. THE DECISIONS RELIED UPON BY THE PARTIES AND THE R EASONS TO BELIEVE RECORDED BY THE A.O. FOR INITIATION OF RE-OPENING PROCEEDINGS, MA DE AVAILABLE AT PAGE NO.1 OF THE PAPER BOOK ARE BEING REPRODUCED HEREUNDER FOR A READY REFEREN CE : THE REASONS FOR REOPENING THE ASSESSMENT AS RECOR DED BY THE AO ARE REPRODUCED BELOW :- 1. YESHWANTRAO MOHITE PRATISHTAN 2. BHARTI KRIDA PRATISHTAN 3. ABHIJIT KADAM MEMORIAL FOUNDATION 4. BHARATI KALA ACADEMY 5. SHRIPATRAO KADAM SMRUTI PRATISHTAN 6. PATANGRAO KADAM PRATISHTN 7. MATOSHRI BASYABAI SHRIPATRAO KADAM SMRUTI NYAS 8. BHARATI VIDYAPITH MEDICAL FOUNDATION 9. BHARATI VIDYAPEETH PRATISHTAN. THE ABOVE MENTIONED ASSESSEE (TRUST) WHICH ARE CLOSELY ASSOCIATED WITH THE PARENT TRUST VIZ. BHARATI VIDYAPEETH TRUST, IT WAS SEEN THAT DURING THE POST SEARCH ENQUIRY THESE TRUSTS HAVE CREATED VARIOUS FUNDS LIK E DEVELOPMENT FUND (VIKAS NIDITY_), ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 10 VISHWASTH NIDHI, BUILDING FUND, IMARAT NIDHI ETC. B Y DEPOSITING HUGE AMOUNT OF CASH. IT HAS ALSO BEEN ESTABLISHED DURING THE POST SEARCH EN QUIRIES, THAT SUCH FUNDS DARE CLAIMED TO BE OUT OF THE DONATIONS COLLECTED BY WAY OF ISSU E OF COUPONS, COUPON COLLECTIONS IS NOTHING BUT UNACCOUNTED CAPITATION FESS RECEIVED A T THE TIME OF GRANTING ADMISSION TO THE STUDENT IN COLLEGES/INSTITUTES RUN BY BHASRATI VIDYAPITH. THESE DONATIONS IN THE HANDS OF THE ABOVE NINE TRUST HAVE BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCE. THE QUANTUM OF SUCH DONATIONS HAS TO BE WORKED OUT, WHI CH IS LIKELY TO BE AN AMOUNT OF RS.1 LAKH OR MORE. FOR THE ABOVE REASONS, THERE BEING ESCAPEMENT O F THE INCOME, THE INCOME OF THE ABOVE NINE TRUSTS IS TO BE REASSESSED. HENCE TH E ASSESSMENT FOR AY 99/00 IS TO BE REOPENED. ISSUE NOTICE U/S. 148 FOR 99-00 AFTER GE TTING APPROVAL OF THE ADDL. CIT. SD/- ACIT CC 1(1), PUNE\ (S.G.. DESHMUKH) DCIT CC 2(2), PUNE AS PER THE ABOVE REASON, WE FIND THAT THE RE-OPENIN G HAS BEEN RESORTED TO ON THE FOLLOWING GROUNDS : A. DURING THE POST SEARCH ENQUIRY, THE DEPT. NOTIC ED THAT THESE TRUSTS HAVE CREATED VARIOUS FUNDS LIKE DEVELOPMENT FUND, BUILDING FUND, ETC. ETC. BY DEPOSITING HUGE AMOUNTS IN CASH. B. DURING THE POST SEARCH ENQUIRIES, IT HAS BEEN ES TABLISHED THAT SUCH FUNDS ARE CLAIMED TO BE OUT OF DONATIONS COLLECTED BY ISSUE OF COUPONS. C. COUPON COLLECTION IS NOTHING BUT UNACCOUNTED CAP ITATION FEE RECEIVED FOR GRANTING ADMISSIONS TO THE STUDENTS IN BHARATI VIDYAPEETH. D. THESE DONATIONS IN THE HANDS OF THE NINE TRUSTS HAVE BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCES. 12. ONE OF THE CONTENTION OF THE LD A.R. REMAINED THAT THE A.O IN THE REASONS RECORDED HAS WRITTEN THAT DONATIONS (COLLECTED BY WAY OF ISSUE O F COUPONS) IN THE HANDS OF 9 TRUSTS HAVE BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCES, WH ICH IS A WRONG FACT. HE SUBMITTED THAT PRIOR TO THE DATE OF RECORDING THE REASONS I.E. 28 .3.2006, THERE WAS NO ASSESSMENT OF ANY OF ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 11 THESE 9 TRUSTS WHEREIN SUCH INCOME IS TREATED AS IN COME FROM UNDISCLOSED SOURCES. THIS CONTENTION OF THE LD. A.R. HAS NOT BEEN REBUTTED BY THE DEPARTMENT BEFORE US. THE LD. CIT(A) HAS TRIED TO DEFINE THE MANNER OF SUCH STATEMENT OF THE A.O AS IF THE A.O MEANT THAT SUCH INCOME BY WAY OF DONATIONS WILL BE TREATED AS INCOM E FROM UNDISCLOSED SOURCES. WE DO NOT AGREE WITH SUCH DEFINITIONS GIVEN BY THE LD CIT(A) TO THE STATEMENT OF THE A.O, WHICH IS PART OF THE REASONS RECORDED AS THESE DONATIONS IN THE HANDS OF THE ABOVE NINE TRUSTS HAVE BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCE . IT IS FACTUALLY AN INCORRECT REASON RECORDED BY THE A.O PARTICULARLY WHEN THERE IS NO R EBUTTAL OF THE SUBMISSIONS OF THE LD AR THAT PRIOR TO THE DATE OF RECORDING THE REASONS I.E. 28 .3.2006, THERE WAS NO ASSESSMENT IN ALL THESE 9 TRUSTS WHEREIN SUCH INCOME HAS BEEN TREATED AS IN COME FROM UNDISCLOSED SOURCES. IN OUR OPINION , THE WORDINGS HAVE BEEN TREATED ARE REFL ECTED AS A PAST INSTANCE. WE THUS FIND SUBSTANCE IN THE CONTENTION OF THE LD A.R. THAT REC ORDING OF SUCH AN INCORRECT REASON REFLECTS THE NON-APPLICATION OF MIND WHILE RECORDING THE REA SONS BY THE A.O AND EVEN ON THE PART OF THE LD ADDL CIT WHILE GRANTING APPROVAL (U/S. 151) OF SUCH REASONS FOR INITIATION OF THE RE-OPENING PROCEEDINGS. IN THE CITED DECISIONS IN THE CASE O F CHHUGMAL RAJPAL VS. S.P. CHALLIHA (SUPRA), THE HONBLE SUPREME COURT AND IN THE CASE OF UNITE D ELECTRICAL LTD. (SUPRA), THE HONBLE DELHI HIGH COURT HAVE BEEN PLEASED TO HOLD THAT THE AUTH ORITY GRANTING APPROVAL U/S. 151 OF THE I.T. ACT IS REQUIRED TO APPLY HIS MIND AND SUCH POWER C ANNOT BE EXERCISED IN CASUAL MANNER. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SIEMENS IN FORMATION SYSTEM LTD. VS. ACIT (SUPRA) HAS BEEN PLEASED TO HOLD THAT ON INCORRECT FACTS R E-OPENING IS NOT VALID. WE ARE ALSO OF THE VIEW THAT SUCH CASUALNESS IN RECORDING REASON FOR REOPENING BASED ON A FACT WHICH IS NOT CORRECT IS A SERIOUS MATTER SINCE IT IS ULTIMATELY GOING TO DAMAGE THE CASE OF REVENUE. 13. THE FURTHER CONTENTION OF THE LD. A.R. REMAINED TH AT IN HIS STATEMENT U/S. 132(4) SHRI R.D. SHINDE, ACCOUNTANT OF BHARATI VIDYAPEETH, SEAR CHED IN 2005 HAS STATED (COPY PLACED IN THE PAPER BOOK OF THE APPEAL IN THE CASE OF BHARAT I VIDYAPEETH MEDICAL FOUNDATION) THAT HE WAS TAKEN SOME AMOUNTS IN CASH WHICH WERE GIVEN AT ADMISSION. HE WAS COLLECTING SUCH AMOUNTS FOR ABOUT 2 YEARS PRIOR TO THE SEARCH WHEN HE WAS IN-CHARGE OF THE ADMISSION ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 12 PROCESS AND FURTHER HE HAD DECLARED INCOME IN HIS O WN HANDS ADMITTING IT TO BE HIS OWN MONEY AND THAT NOT OF THE BHARATI VIDYAPEETH IT WA S CONTENDED THAT IT IS CLEAR FROM THE SAID STATEMENT THAT EVEN IF SHRI SHINDE WAS COLLECTING S OME CAPITATION FEE AT THE TIME OF ADMISSION, HE WAS DOING IT ONLY FOR 2 YEARS AND NOT FOR THE EARLIER PERIOD. IT WAS CONTENDED THAT THERE IS NO EVIDENCE FOUND FOR THE EARLIER PER IOD BY THE DEPARTMENT THAT THE ASSESSEE TRUST WERE COLLECTING MONEY WHILE GRANTING ADMISS ION. HENCE THE STATEMENT OF SHRI SHINDE OR THE FINDING OF THE SEARCH DID NOT PERTAIN TO A.Y . 1999-00 AT ALL AND THE QUESTION OF RE- OPENING THOSE ASSESSMENT DID NOT ARISE AS THERE WAS NO EVIDENCE PERTAINING TO THIS YEAR INDICATING COLLECTION OF SOME CAPITATION FEE. THER E IS NO REBUTTAL BY THE DEPARTMENT TO THE ABOVE SUBMISSION OF LD A.R. THAT THE STATEMENT OF S HRI SHINDE OR THE FINDING OF SEARCH DID NOT PERTAIN TO A.Y. 1999-00, WE THUS FIND SUBSTANCE IN THE CONTENTION OF THE LD. A.R. THAT THE QUESTION OF RE-OPENING OF THE ASSESSMENT IN A.Y. 19 99-00 DID NOT ARISE IN ABSENCE OF ANY EVIDENCE PERTAINING TO THE ASSESSEE INDICATING COLL ECTION OF SOME CAPITATION FEE DURING THE YEAR RELEVANT FOR A.Y. 1999-00. IN OTHER WORDS, T HERE WAS NO REASON TO BELIEVE THAT ASSESSMENT OF INCOME ON ACCOUNT OF ALLEGED CAPITAT ION FEE COLLECTED BY SHRI. SHINDE WAS ESCAPED IN THE A.Y. 1999-2000. IN THE CASE OF ITO VS. LOKMANI MEWALDAS (SUPRA), THE HONBLE SUPREME COURT HAS BEEN PLEASED TO HOLD THA T THERE SHOULD BE RATIONAL CONNECTION BETWEEN THE MATERIAL ON RECORD AND FORMATION OF BE LIEF . THE BELIEF SHOULD BE IN GOOD FAITH AND NOT A MERE PRETENCE. IN CASE OF ACIT V/S. RA MDEO OIL INDUSTIRES PVT. LTD., (SUPRA), THE PUNE BENCH OF TRIBUNAL PLACING RELIANCE ON SEVERAL DECISIONS HAS HELD THAT NO INCOME CAN BE ESTIMATED FOR THE OTHER YEARS ON THE BASIS OF EVIDE NCE FOUND FOR ONE PARTICULAR YEAR ESPECIALLY WHEN THERE WAS INCRIMINATING EVIDENCE PERTAINING TO ANY OTHER A.Y. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S. GUPTA ABHUSHAN P. LT D., (SUPRA) HAS BEEN PLEASED TO HOLD THAT THE A.O HAD MERE SUSPICION THAT THERE WAS A LIKELIH OOD OF THERE BEING A DISCREPANCY WHEN THE SURVEY WAS CONDUCTED, IT WAS MERELY A REASON TO SUS PECT AND COULD NOT BE THE SAME AS A REASON TO BELIEVE WHICH WAS NECESSARY PRE-CONDITION FOR ANY ACTION U/S. 147 OF THE ACT. IN THAT CASE, THE DECISION OF THE TRIBUNAL HAS BEEN AP PROVED BY THE HONBLE DELHI HIGH COURT THAT A.O WAS NOT JUSTIFIED IN RE-OPENING THE ASSESSMENTS ON THE GROUND THAT THE REASON RECORDED ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 13 DID NOT SHOW INCIDENCE OF ANY EVIDENCE REGARDING ES CAPEMENT OF INCOME IN THE THREE YEARS IN QUESTION. LIKEWISE, THE HONBLE JURISDICTIONAL BOM BAHY HIGH COURT IN THE CASE OF INDIA FINANCE AND CONSTRUCTION PVT. LTD. VS. DCIT (SUPRA), HAS BE EN PLEASED TO HOLD THAT THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT SHOULD BE THAT OF HON EST AND REASONABLE PERSON. ITO CAN ACT ON DIRECT AND CIRCUMSTANTIAL EVIDENCE AND RE-ASSESS MENT CANNOT BE INITIATED ON MERE GOSSIP, RUMOUR OR SUSPICION. FURTHER, THE CONTENTION OF TH E LD A.R. REMAINED THAT THE ASSESSEE TRUST AND BHARAT VIDYAPEETH HAVE BEEN SHOWING THE DONATI ON COLLECTED THROUGH ISSUE OF COUPONS EVERY YEAR IN THE PAST. THE SAME A.O AFTER RECORDI NG THE REASONS U/S. 148 FOR A.Y. 1999-00 ON 28.3.2006 COMPLETED THE ASSESSMENT U/S. 143(3) O F BHARATI VIDHYAPEETH AND BHARATI VIDHYAPEETH MEDICAL FOUNDATION FOR A.Y. 2003-04 AND IN THE SAID ASSESSMENT ORDERS PLACED ON PAGE NOS. 24 & 17 OF THE PAPER BOOK, HE HAS NOT MAD E ANY ADDITION ON THE ACCOUNT OF DONATIONS COLLECTED THROUGH COUPONS SHOWN IN THE AC COUNTS AND BALANCE SHEETS OF THE TRUSTS. THE ASSESSMENT OF THE TRUST BY THE A.O IN THAT A.Y. 2003-04 HAVE BEEN MADE AT NIL INCOME. THE CONTENTION OF THE LD A.R. REMAINED THAT WITHIN A DAY AFTER RECORDING THE REASONS, THE SAME A.O IN THE ABOVE ASSESSMENTS FOR A.Y. 2003-04 HAS ACCEPTED THAT THERE IS NO ADDITION WARRANTED ON THIS ACCOUNT, ITSELF INDICATES THAT IN HIS JUDICIAL THINKING, THE ADDITION ON ACCOUNT OF THE ABOVE DONATION WAS NOT WARRANTED IN THE SCRUTINY ASSESSMENT COMPLETED ON 30 TH MARCH. WE FIND SUBSTANCE IN THIS CONTENTION OF THE LD A.R. THAT BELIEF SHOULD BE IN GOOD FAITH AND NOT A MERE PRETENCE. OF COURSE, IT IS AN ESTABLISHED PROPOSITION OF LAW THAT PRINCIPLE OF THE RES-JUDICATA IS NOT APPLICABLE IN THE CASE O F THE INCOME TAX ACT , BUT THE REVENUE IS REQUIRED TO MAINTAIN CONSISTENCY IN ITS APPROACH ON AN ISSUE UNDER SIMILAR FACTS AND CIRCUMSTANCES. 14. IN VIEW OF THE ABOVE DISCUSSION, ON THE EXISTENCE O F VALIDITY OF THE REASONS TO BELIEVE RECORDED BY THE A.O TO JUSTIFY THE INITIATION OF RE -OPENING IN QUESTION, WE COME TO THE CONCLUSION THAT A.O WAS NOT HAVING ANY REASONS TO BELIEVE TO JUSTIFY THAT INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF ASSESSEE TRUST FOR THE A. Y. 1999-00. IT IS AN ESTABLISHED PROPOSITION OF LAW THAT THERE SHOULD BE RATIONAL CONNECTION BE TWEEN THE MATERIAL ON RECORD AND FORMATION ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 14 OF BELIEF. THE BELIEF SHOULD BE IN GOOD FAITH AND NOT A MERE PRETENCE, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ITO VS. LAXMI MEWAL DA S (SUPRA). IN THE CASE OF MANOJ KUMAR GUPTA VS. ITO (SUPRA), THE JAIPUR BENCH OF TH E TRIBUNAL ON THE BASIS OF THE DECISIONS CITED BEFORE IT, HAS HELD THAT IF THE PARTICULAR IS SUE IS ACCEPTED IN THE EARLIER YEARS, THERE IS NO BASIS OR JUSTIFICATION FOR REOPENING. THE CONTEN TION OF THE LD. A.R. IN THE PRESENT CASE REMAINED UN-REBUTTED THAT IN THE PAST YEARS IN CAS ES OF ALL THESE TRUSTS, THE DEPARTMENTS HAS NEVER DISPUTED THE RECEIPT OF DONATION COLLECTED THROUGH COUPONS SHOWN IN THEIR ACCOUNTS AND BALANCE SHEETS. WE THUS HOLD THAT THE RE-OPENING I NITIATED BY THE A.O IN THE CASES OF PRESENT ASSESSEES IN ABSENCE OF EXISTENCE OF VALID REASONS WAS NOT JUSTIFIED. WE THUS HOLD THE INITIATION OF RE-OPENING IN QUESTION WAS NOT VALID AND THE ASSESSMENTS MADE IN FURTHERANCE THERETO ARE ALSO NOT TENABLE AND ARE QUASHED. THE GROUND NO. 1 IS THUS DECIDED IN FAVOUR OF THE ASSESSEE, AND IS ALLOWED. 15. IN VIEW OF THE ABOVE FINDING REGARDING THE VALIDITY OF ASSESSMENTS, THE OTHER GROUNDS ON MERITS RAISED IN THE APPEALS PREFERRED BY THE A SSESSEE QUESTIONING THE ADDITIONS MADE BY THE A.O AND UPHELD BY THE LD CIT(A) DO NOT NEED ADJ UDICATION. THE SAME ARE DISPOSED OFF ACCORDINGLY. THE APPEALS PREFERRED BY THE ASSESSEE QUESTIONING THE RE-OPENING OF ASSESSMENT ARE THUS ALLOWED. ITA NOS. 658/PN/2008, 1035/PN/2010 AND 305, 313, 9 04 & 407/PN/2011 16. IN CONSEQUENCE, THE APPEAL PREFERRED BY THE ASSESS EE (ITA NO. 658/PN/2008) QUESTIONING THE VALIDITY OF THE REVISIONAL ORDER U/S. 263 OF THE ACT HOLDING THE ABOVE STATED ASSESSMENT ORDER FRAMED U/S. 147 R.W.S. 143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE REMAINING APPEALS PREFERRED BY THE REVENUE QUESTIONING THE RELIEFS GRANTED BY THE LD. CIT(A) TO THE ASSESSEE, WHICH WERE DENIED BY THE A.O IN THE ASSESSMENTS FRAMED U/S. 147 READ WITH S. 143(3), THE SUBJECT MA TTER OF THE FIRST SET OF APPEALS HAVE BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED AS SUCH. ITA . NO 658/PN/2008 BHARATHI VIDYAPEETH MEDICAL FOUNDATION, & ETC., A.Y. 1999- 2000 & ETC. PAGE OF 15 15 17. IN SUMMARY, ITA NOS. 956/PN/2010 AND 282, 297, 837 & 443/PN/2011 ARE ALLOWED, AND ITA NOS. 658/PN/2008, 1035/PN/2010 AND 305, 313 , 904 & 407/PN/2011 ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30TH JA NUARY 2012. SD/- SD/- ( D. KARUNAKARA RAO) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30 TH JANUARY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED, PUNE 4. THE CIT(A)-CONCERNED, PUNE /SATARA 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE