Apeejay Education Society, Jalandhar V. The Asstt. Commissioner of Income-tax, Jalandhar

ITA 712/ASR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9596 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH TAKKYAR
• Assessee Lawyers: BRIJ KISHORE NANDAN
• Keywords: Bogus purchase; Capital asset; Business income; Depreciation; Income from undisclosed sources; Loose papers; Charitable institution; Principle of natural justice; Maximum Marginal Rate; Source of fund; Retrospective amendment; Tangible material; Corroborative evidences; Accommodation entries; Capital receipt; Onus to prove; Retraction; Cancellation of registration; Revised return; Revenue expenditure
• Section: 143(3); 244A; 142(1); 133A; 80G; 12A; 12AA; 131; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.712 TO 714(ASR)/2014 ASSESSMENT YEARS:2008-09, 2010-11 & 2011-12 PAN:AAATA3534F M/S. APEEJAY EDUCATION SOCIETY VS. ASSTT. COMMR. OF INCOME TAX, NEW JAWAHAR NAGAR, CIRCLE-III, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) ITA NOS.706 TO 709(ASR)/2014 ASSESSMENT YEARS: 2007-08, 2008-09, 2010-11 & 2011- 12 PAN:AAATR2430F M/S. RAJESHWARI SANGEET ACADEMY, VS. ASSTT. COMMR. OF INCOME TAX, NEW JAWAHAR NAGAR, CIRCLE-III, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. SALIL KAPOOR, ADV. SH. NIRMAL MAHA JAN, CA, SH. SAMIT LAL CHANDANI, ADV. & BRIJ KISHORE NANDAN RESPONDENT BY: SH. UMESH TAKKYAR, DR DATE OF HEARING: 20/05/2016 DATE OF PRONOUNCEMENT: 12/08/2016 ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 2 ORDER PER A.D. JAIN, JM: PARTIAL INDEX DOCUMENT DATE PAGES PARA AO ORDER FOR A.Y. 2010-11 28.03.2013 010 - 057 6 GROUNDS OF APPEAL BEFORE CIT(A) NIL 057 - 058 7 ASSESSEES WRITTEN SUBMISSIONS BEFORE CIT(A) 13.08.2014 059 - 070 8 AOS REMAND REPORT 15.09.2014 070 - 070 9 ASSESSEES COUNTER COMMENTS 22.09.2014 071 - 072 10 ASSESSEES SUBMISSIONS BEFORE CIT(A) 26.09.2014 072 - 078 11 IMPUGNED ORDER 26.09.2014 078 - 083 13 ASSESSEES SUBMISSIONS BEFORE ITAT NIL 085 - 087 18 ASSESSEES COMPARATIVE CHART OF STATEMENTS OF SANJAY SONAWANI NIL 088 TO 091 19 IST STATEMENT OF SANJAY SONAWANI 16.03.2011 092 - 097 (I) 2 ND STATEMENT OF SANJAY SONAWANI 12.04.2011 097- 099 (II) 3 RD STATEMENT OF SANJAY SONAWANI 12.05.2011 099 - 105 (III) 4 TH STATEMENT OF SANJAY SONAWANI 30.12.2011 105 - 107 (IV) ASSESSEES WRITTEN SUBMISSIONS BEFORE ITAT NIL 111 - 113 34 ASSESSEES SUBMISSIONS BEFORE CIT(A) 21.08.2014 114 - 116 37 STATEMENT OF MS. ANITA PAUL 29.03.2011 128 - 132 6 0 STATEMENT OF SH. AMITAVA MISRA 29.03.2011 132 - 13 6 62 EXPERT REPORT 11.09.2012 143 - 145 76 ASSESSEES REQUEST FOR APPOINTING EXPERT 25.03.2013 146 - 147 78 HIGH COURT ORDER UPHOLDING GRANT OF REGISTRATION 10.03.2015 151 - 151 88 COMPUTATIONS OF INCOME NIL 153 - 156 92 NOTE : THIS PARTIAL INDEX HAS BEEN NECESSITATED D UE TO THE FACT THAT RELEVANT PORTIONS OF THE ASSESSMENT ORDER AND THE C IT(A)S ORDER IN ONE OF THE APPEALS, AND RELEVANT PARTS OF THE RECORD, AS MENTI ONED IN THIS INDEX, HAVE BEEN REPRODUCED IN EXTENSO IN THE BODY OF THE ORDER. THI S INDEX, IT IS HOPED, WILL FACILITATE A READY REFERENCE TO THESE DOCUMENTS. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 3 1. THESE ARE THE ASSESSEES APPEALS FOR THE ASSES SMENT YEARS 2008-09, 2010-11 & 2011-12 IN ITA NOS. 712 TO 714(ASR)/2014, RESPECTIVELY, AND THE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 20 07-08, 2008-09, 2010-11 & 2011-12 IN ITA NOS. 706 TO 709(ASR)/2014, RESPECTIVELY, IN THE CASES OF M/S. APEEJAY EDUCATION SOCIETY AND M/S . RAJESHWARI SANGEET ACADEMY, JALANDHAR. THE ISSUES INVOLVED BEI NG COMMON, THEY ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER. THE ARGUMENTS HAVE BEEN ADDRESSED WITH REFERENCE TO ITA NO.713(ASR)/2014, I .E., THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2010-11 IN THE CASE OF M/S. APEEJAY EDUCATION SOCIETY. 2. THE FOLLOWING ARE THE REVISED GROUNDS OF APPEAL RAISED BY THE ASSESSEE: 1. THAT THE ASSESSMENT ORDER PASSED IS BAD IN LAW, WITHOUT JURISDICTION AND BARRED BY TIME LIMITATION. 2. THAT THE CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT ORDER AND ALSO IN UPHOLDIN G THE DENIAL OF EXEMPTION U/S 11 OF THE ACT BY THE ASSESS ING OFFICER. 3. THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ASS ESSMENT ORDER FRAMED BY THE AO, IN GROSS VIOLATION OF SETTL ED POSITION OF LAW THAT ONCE REGISTRATION U/S 12A OF THE ACT WA S GRANTED TO THE ASSESSEE, IT WAS THEREAFTER NOT OPEN TO THE AO TO MAKE ANY ENQUIRY REGARDING THE EXEMPTION U/S 11 OF THE A CT. 4. THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ACT ION OF THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SEC TION 13(L)(C) OF THE ACT, ALTHOUGH THERE IS NO EVIDENCE OR EVEN A LLEGATION THAT AMOUNT OF PURCHASE OF SOFTWARE FROM WASHINGTON SOFTWARE LTD HAS REACHED THE ASSESSEE TRUST OR ANY OF TRUSTEES. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 4 5. THAT THE CIT(A) HAS ERRED IN LAW BY UPHOLDING T HE CONTENTION OF THE ACIT, CIRCLE III, JALANDHAR, IN H OLDING THAT THE APPELLANT HAS VIOLATED THE PROVISIONS OF S. 13 OF THE INCOME TAX ACT, 1961. 6. THAT THE CIT(A) HAS ERRED IN LAW BY UPHOLDING TH E CONTENTION OF THE ACIT, CIRCLE III, JALANDHAR IN ASSESSING THE INCOME AS BUSINESS INCOME INSTEAD OF ASSESSING THE SAME U/SS 11 TO 13 OF THE INCOME TAX ACT, 1961. 7. WITHOUT PREJUDICE AND IN THE ALTERNATIVE, THE AO / CIT(A) HAS WRONGLY HELD THAT THE WHOLE INCOME IS TAXABLE AND N OT RESTRICTING THE TAXABILITY TO THE AMOUNT WHICH IS A LLEGEDLY COVERED U/S 13(1) (C) OF THE ACT. 8. THAT THE DEPRECIATION ON COMPUTER SOFTWARE HAS B EEN ILLEGALLY AND WRONGLY DENIED AND THE CIT(A) HAS ERR ED IN UPHOLDING THE SAME. 9. WITHOUT PREJUDICE AND IN THE ALTERNATIVE, EXPEN SES CLAIMED HAS BEEN ILLEGALLY AND WRONGLY DISALLOWED AND INCOM E HAS BEEN WRONGLY AND ILLEGALLY ASSESSED AT A HIGHLY EXO RBITANT FIGURE. 10. THAT THE EVIDENCE FILED AND MATERIALS AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUED AND JUDICIOUSLY INTERPRETED, HENCE THE ADDITION/DISALLOWANCE MADE A RE UNCALLED FOR. 11. THAT INTEREST U/S 234A, 234B, 234C AND 234D OF THE INCOME TAX ACT, 1961 HAS BEEN WRONGLY AND ILLEGALLY CHARGE D AND HAS BEEN WRONGLY WORKED OUT. 12. THAT THE APPLICANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEF ORE THE TIME OF HEARING. 3. AS STATED AT THE BAR BY THE LD. COUNSEL FOR THE ASSESSEE AND NOT DISPUTED BY THE LD. DR AND AS ALSO DISCERNED FROM THE RECORD, GROUND NOS. 1 TO 6 CONCERN THE MAIN ISSUE, GROUND NOS. 7 & 8 ARE WITH REGARD TO THE FIRST WITHOUT PREJUDICE CHALLENGE AND GROUN D NO. 9 IS THE SECOND ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 5 ALTERNATIVE ARGUMENT. GROUND NO.11 IS CONSEQUENTIAL , WHEREAS THE GROUND NOS. 10 & 12 ARE GENERAL. 4. THE SOLE ISSUE RAISED BY WAY OF GROUND NOS. 1 TO 6 IS THE ASSESSEES CHALLENGE TO THE DENIAL OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 (HEREINAFTER, REFERRED TO ALSO AS THE AC T) BY INVOKING THE PROVISIONS OF SECTION 13(1)(C) THEREOF AND ASSESSIN G THE ASSESSEES INCOME AS BUSINESS INCOME, INSTEAD OF ASSESSING THE SAME U NDER SECTIONS 11 TO 13 OF THE ACT. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SOCIETY, WHICH IS STATED TO BE ENGAGED IN THE ACTIVITIY OF RUNNING OF EDUCATIONAL INSTITUTIONS, FILED ITS RETURN OF INCOME FOR THE Y EAR UNDER CONSIDERATION ON 27.09.2010, DECLARING THEREIN NIL INCOME. THE AS SESSEE SOCIETY IS REGISTERED WITH THE REGISTRAR OF SOCIETIES UNDER TH E SOCIETIES REGISTRATION ACT. THE ASSESSEE SOCIETY WAS ALSO GRANTED REGISTRA TION UNDER SECTION 12AA OF THE INCOME TAX ACT WITH EFFECT FROM 01.04.1 998 BY THE COMMISSIONER OF INCOME TAX, JALANDHAR, VIDE ORDER D ATED 13.05.1999, WHICH WAS SUBSEQUENTLY WITHDRAWN BY COMMISSIONER OF INCOME TAX-II, JALANDHAR, VIDE HIS ORDER DATED 25.03.2013, WITH R ETROSPECTIVE EFFECT FROM A.Y. 2004-05. HOWEVER, THE REGISTRATION GRANTE D TO THE ASSESSEE SOCIETY WAS RESTORED BY THE HONORABLE ITAT, AMRITSA R, VIDE ORDER IN ITA NO. 228(ASR)/2013 DATED 08.05.2014. THE TRIBUNAL OR DER WAS CONFIRMED BY THE HONBLE HIGH COURT VIDE JUDGMENT DATED 10.03 .2015. 5.1 THE ASSESSEE SOCIETY IS STATED TO BE RUNNING MA NY EDUCATIONAL/MANAGEMENT INSTITUTIONS UNDER ITS MANAG EMENT AND CONTROL, WHICH INCLUDE THE FOLLOWING INSTITUTIONS:- I. APEEJAY SCHOOL, JALANDHAR. II. APEEJAY SCHOOL, NOIDA. III. APEEJAY SCHOOL, FARIDABAD. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 6 IV. APEEJAY INSTITUTE OF MANAGEMENT, RAMA MANDI, JALAND HAR. V. APEEJAY SCHOOL OF MANAGEMENT. IT WAS NOTICED THAT INFORMATION WAS RECEIVED BY TH E ASSESSING OFFICER ABOUT A SEARCH & SEIZURE OPERATION CONDUCTED UNDER SECTION 132(1) OF THE ACT BY THE DIRECTOR OF INCOME-TAX (INVESTIGATIO N)-II, MUMBAI AT THE BUSINESS PREMISES OF ONE SH. PARAG V MEHTA, CA, LOC ATED AT 114/114A, JOLLY BHAWAN NO.1, 10 MARINE LINES, MUMBAI, DURING THE COURSE OF WHICH, IT WAS FOUND THAT SH. PARAG V MEHTA HAD GIVE N TABLE SPACE IN HIS OFFICE PREMISES TO VARIOUS BOGUS COMPANIES, WHICH D ID NOT ACTUALLY TRANSACT ANY BUSINESS, BUT WERE ENGAGED IN PROVIDI NG ACCOMMODATION ENTRIES TO NEEDY PERSONS/CONCERNS AND WHICH HELPE D THESE PERSONS/CONCERNS TO CLAIM BOGUS EXPENSES. SUCH COMP ANIES INCLUDED M/S WASHINGTON SOFTWARE LTD., WHICH IS STATED TO HA VE BEEN RUN BY ONE SH. SANJAY D SONAWANI. THE FACT THAT M/S WASHINGTON SOFTWARE LTD. WAS A BOGUS COMPANY WAS ALSO STATED TO HAVE BEEN ADMITT ED BY SH. PARAG V MEHTA IN HIS STATEMENT RECORDED DURING THE COURSE O F SEARCH & SEIZURE OPERATION ON 22.03.2011. IT WAS FURTHER STATED TO B E ADMITTED BY SH. PARAG V MEHTA THAT THE SAID BOGUS COMPANY WAS PROVI DING ACCOMMODATION BILLS TO INTERESTED PARTIES/CONCERNS AND SH. SANJAY D. SONAWANI WAS MANAGING ALL THE AFFAIRS OF THE SAID C OMPANY. SH. SANJAY D. SONAWANI, IN HIS STATEMENTS RECORDED ON 16.03.20 11, 12.04.2011 AND 12.05.2011, WAS ALSO STATED TO HAVE ADMITTED THAT H IS COMPANY, M/S WASHINGTON SOFTWARE LTD., WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES AND HE WAS ALSO STATED TO HAVE ACCEPTED THE FACT THAT HE HAD PROVIDED ACCOMMODATION ENTRIES TO THE APEEJAY GROUP OF CASES THROUGH HIS COMPANY, M/S WASHINGTON SOFTWARE LTD. THE STATE MENT OF SH. SANJAY D. SONAWANI S/O SH. DEVI DASS SONAWANI, CHAIRMAN AN D DIRECTOR OF M/S WASHINGTON SOFTWARE LTD., UNDER SECTION 131 OF THE ACT, WAS STATED TO HAVE BEEN RECORDED BY THE DDIT(INV.) UNIT-I(I), PUNE, ON 16.03.2011, IN WHICH, HE HAD PARTICULARLY ADMITTED TO HAVE PROV IDED ACCOMMODATION ENTRIES TO THE APEEJAY GROUP OF CASES, INCLUDING TH E ASSESSEE SOCIETY. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 7 THE RELEVANT PORTION OF THE SAID STATEMENT OF SHRI SANJAY D. SONAWANI HAS ALSO BEEN REPRODUCED BY THE ASSESSING OFFICER I N THE ASSESSMENT ORDER. 5.2 DURING THE COURSE OF POST-SEARCH INVESTIGATIONS IN THE CASE OF SH. PARAG V MEHTA, THE BENEFICIARY PARTIES WERE STATED TO HAVE BEEN IDENTIFIED AND INFORMATION WAS STATED TO HAVE BEEN PASSED ON TO VARIOUS FIELD OFFICERS BY THE INVESTIGATION WING, MUMBAI FOR TAKI NG FURTHER NECESSARY ACTION AT THEIR END. AS A RESULT OF THIS INFORMATIO N, SURVEY OPERATIONS WERE STATED TO HAVE BEEN CONDUCTED UNDER SECTION 13 3A OF THE ACT BY THE DEPARTMENT AT THE PREMISES OF VARIOUS INSTITUTIONS AND HEAD OFFICE OF THE APEEJAY GROUP OF ON 29.03.2011, WHICH INCLUDED THE ASSESSEE SOCIETY, I.E., APEEJAY EDUCATIONAL SOCIETY. DURING THE COURS E OF THE SURVEY OPERATIONS AT THE ABOVE MENTIONED PREMISES, THE GEN UINENESS OF PURCHASE OF SOFTWARE BY THE ASSESSEE GROUP FROM M/S WASHINGTON SOFTWARE LTD. WAS STATED TO HAVE BEEN EXAMINED FROM DIFFERENT ASPECTS. AT THE TIME OF THE SURVEY OPERATIONS AT DIFFERENT P REMISES OF THE ASSESSEE GROUP, STATEMENTS OF DIFFERENT PERSONS ACTIVELY INV OLVED IN THE MANAGEMENT AND RUNNING OF THE APEEJAY GROUP OF INST ITUTIONS, NAMELY, MS. ANITA PAUL, PRINCIPAL OF APEEJAY SCHOOL, SAKET, SHRI ALOK SAKLANI, DIRECTOR, DEEPANKAR CHAKARBORTI, DEON & IT HEAD, SH . NAGENDRA NAUTIYAL, ACCOUNTANT, APEEJAY SCHOOL OF MANAGEMENT, DWARKA, SHRI AMITAVA MISRA, HEAD OF IT DEPARTMENT AND SH. VIJAY BERLIA (TRUSTEE), GENERAL SECRETARY AND AUTHORIZED SIGNATORY OF THE ASSESSEE SOCIETY WAS STATED TO BE RECORDED. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE COPIES OF THE STATEMENTS OF MS. AN ITA PAUL, PRINCIPAL OF APEEJAY SCHOOL, SAKET, SHRI ALOK SAKLANI, DIRECTOR, DEEPANKAR CHAKARBORTI DEAN & IT HEAD AND SH. NAGENDRA NAUTIYA L, ACCOUNTANT, APEEJAY SCHOOL OF MANAGEMENT, DWARKA, SHRI AMITAVA MISRA, HEAD OF IT DEPARTMENT AND SH. VIJAY BERLIA (TRUSTEE), GENERAL SECRETARY AND AUTHORIZED SIGNATORY OF THE ASSESSEE SOCIETY WERE A LSO STATED TO HAVE BEEN PROVIDED TO THE LD. AR OF THE ASSESSEE SOCIETY BY THE ASSESSING ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 8 OFFICER. THE RELEVANT PORTIONS OF THE STATEMENTS OF THE PERSONS AS MENTIONED ABOVE HAVE ALSO BEEN REPRODUCED IN THE AS SESSMENT ORDER. APART FROM REPRODUCTION OF THE ABOVE MENTIONED STAT EMENTS, THE RELEVANT PORTION OF THE STATEMENT OF SHRI SANJAY D SONAWANI, DATED 12.05.2011, HAS ALSO BEEN REPRODUCED IN THE ASSESSMENT ORDER. 5.3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO EXAMINED THE STATEMENTS GIVEN BY SH. SANJAY D. SONAWANI AND OTHER PERSONS, AS WELL AS THE VARIOUS SUBMISSIONS FILED BY THE ASSESS EE SOCIETY TO THE CONTRARY AND HE CAME TO THE CONCLUSION THAT NO SOFT WARE WAS EVER PURCHASED BY THE ASSESSEE FROM M/S WASHINGTON SOFTW ARE LTD. THE ASSESSING OFFICER CAME TO SUCH A CONCLUSION, AS O N PHYSICAL VERIFICATION DURING THE COURSE OF SURVEY OPERATIONS UNDER 133A O F THE ACT, CONDUCTED AT VARIOUS PREMISES OF THE ASSESSEE GROUP, INCLUDI NG ITS HEAD OFFICE, THE SOFTWARE ALLEGED TO HAVE BEEN PURCHASED FROM WASHIN GTON SOFTWARE LTD. WAS NOT FOUND, WHEREAS BOGUS BILLS FROM M/S WASHING TON SOFTWARE LTD. WERE FOUND TO HAVE BEEN ENTERED IN THE BOOKS OF ACC OUNT OF DIFFERENT ENTITIES OF THE GROUP. THE ASSESSING OFFICER HAS FU RTHER POINTED OUT THAT PERSONS OF VARIOUS ENTITIES OF THE ASSESSEE GROUP H AD ADMITTED THAT THEY RECEIVED ONLY BILLS FOR ENTERING IN THE BOOKS OF AC COUNTS AND NO SOFTWARE WAS EVER INSTALLED, OR RECEIVED BY THEM. THE ASSESS ING OFFICER HAS FURTHER MENTIONED THAT ALL THE PAYMENTS MADE TO M/S WASHING TON SOFTWARE LTD., WERE PERSONALLY APPROVED BY SH. VIJAY BERLIA, GENER AL SECRETARY & AUTHORIZED SIGNATORY OF THE ASSESSEE SOCIETY, HE BE ING A TRUSTEE AND A SPECIFIED PERSON COVERED UNDER THE DEFINITION GIVEN UNDER SECTION 13(3) OF THE ACT. THE ASSESSING OFFICER HAS ALSO OBSERVED TH AT A PERUSAL OF THE STATEMENT OF SHRI VIJAY BERLIA, AS REPRODUCED IN PA RA 6(VI) OF THE ORDER, CLEARLY SHOWS THAT SHRI VIJAY BERLIA GAVE EVASIVE R EPLIES TO ALMOST ALL THE QUESTIONS. IT HAS ALSO BEEN OBSERVED THAT SHRI VIJA Y BERLIA WAS THE PERSON AT THE HELM OF AFFAIRS OF THE SOCIETY, BESID ES BEING THE PERSON WHO HAD APPROVED HUGE PAYMENTS TOTALING TO RS. 15 CROR E FROM FINANCIAL YEAR 2003-04 TO FINANCIAL YEAR 2009-10, TO A COMPANY, WI THOUT RECEIVING ANY ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 9 PRODUCT OR SERVICE IN RETURN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT SH. VIJAY BERLIA WAS ACCORDED SEVERAL OPPORTUN ITIES TO CONSULT VARIOUS IT PROFESSIONALS AND PURCHASE AND ACCOUNTS PERSONS, WHO WERE STATED TO HAVE BEEN PRESENT DURING THE SURVEY OPER ATION AND ALSO THROUGH TELEPHONE, AND EVEN AFTER CONSULTING ALL OF THEM, HE FAILED TO GIVE ANY EXPLANATION AND COULD NOT PRODUCE ANY EVIDENCE AS TO WHERE THE ALLEGED SOFTWARE WAS INSTALLED. HIS ASSERTION THAT HE APPROVED BILLS FOR PAYMENT ONLY ASSUMING THAT MATERIAL MUST HAVE COME , HAS NOT BEEN CONSIDERED BELIEVABLE, SINCE THIS IS NOT A CASE OF A SINGLE TRANSACTION, BUT OF A SERIES OF TRANSACTIONS RUNNING INTO RS. 15 CR ORES, SPREAD OVER A PERIOD OF EIGHT YEARS. IN THE OPINION OF THE ASSESS ING OFFICER, ALL THESE ENQUIRIES INDICATE AND PROVE BEYOND ANY DOUBT THAT THE ASSESSEE SOCIETY HAS BEEN TAKING ONLY ACCOMMODATION ENTRIES FROM M/S . WASHINGTON SOFTWARE LTD., IN THE FORM OF BOGUS BILLS OF PURCHA SE OF ERP SOFTWARE, WITHOUT RECEIVING ANY ACTUAL DELIVERY THEREOF. IT H AS FURTHER BEEN OBSERVED BY THE ASSESSING OFFICER THAT PAYMENTS GIV EN TO M/S WASHINGTON SOFTWARE LIMITED WERE RECEIVED BACK IN C ASH AFTER PAYING SOME COMMISSION IN RESPECT OF THE ACCOMMODATION ENT RIES. IN VIEW OF ALL THESE OBSERVATIONS, THE ASSESSING OFFICER HAS CONCL UDED THAT THE ASSESSEE SOCIETY HAS VIOLATED THE PROVISIONS OF SEC TIONS 13(L)(C)/13(3) OF THE ACT AND IT IS NOT ENTITLED FOR EXEMPTION OF ITS INCOME UNDER SECTIONS 11 & 12 OF THE ACT. HE, THEREFORE, DISALLOWED THE D EDUCTION CLAIMED BY THE ASSESSEE SOCIETY UNDER SECTIONS 11 & 12 OF THE ACT AND COMPUTED THE TAXABLE INCOME OF THE ASSESSEE SOCIETY UNDER THE PR OVISIONS OF SECTIONS 28 TO 44 OF THE ACT. AS PER THE PROVISIONS OF SECT IONS 28 TO 44 OF THE ACT, THE ASSESSING OFFICER COMPUTED THE EXCESS OF INCOME OVER EXPENDITURE AT RS. 10,05,35,645/- AND BROUGHT IT TO TAX. APART FRO M THIS, THE ASSESSING OFFICER HAS ALSO DISALLOWED THE DEPRECIATION OF RS. 1,91,69,549/- ON ALLEGED BOGUS PURCHASES OF ERP SOFTWARE CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, AS WELL AS IN EARLIER YEARS. APART FROM THIS, EXPENSES STATED TO BE INCURRED ON BOGUS PURCHASE OF SOFTWARE AMOUNTING ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 10 TO RS.38,60,900/- FROM M/S WASHINGTON SOFTWARE LIMI TED AND CLAIMED AS REVENUE EXPENSES HAVE ALSO BEEN DISALLOWED AND A DDED TO THE TAXABLE INCOME OF THE ASSESSEE SOCIETY. THE DEDUCTION CLAIM ED BY THE ASSESSEE SOCIETY UNDER SECTION 80GOF THE ACT HAS ALSO BEEN R ESTRICTED TO RS.3,50,53,564/-, AS AGAINST THAT CLAIMED BY THE A SSESSEE SOCIETY AT RS.25,00,00,000/-. THE ASSESSMENT IN THIS CASE WAS ULTIMATELY COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 14 3(3) OF THE ACT VIDE ORDER DATED 28.03.2013, AT AN ASSESSED INCOME OF RS .33,85,12,530/, WHICH INCLUDED THE ABOVE MENTIONED ADDITIONS. 5. THE AO, THUS, DISALLOWED THE DEDUCTION CLAIMED B Y THE ASSESSEE SOCIETY UNDER SECTIONS 11 & 12 OF THE ACT, ON THE G ROUND THAT THE ASSESSEE SOCIETY HAD VIOLATED THE PROVISIONS OF SEC TIONS 13(1)(C)/13(3) OF THE ACT, AND BROUGHT TO TAX AN INCOME OF RS.33,85, 12,530/-. 6. IN THE ASSESSMENT ORDER, DATED 28.03.2013, THE A O HELD AS UNDER: THE ASSESSEE HAS FILED RETURN OF INCOME ON 27.09.2 010 DECLARING TOTAL INCOME OF RS. NIL AND THE SAME WAS PROCESSED UNDER SEC. 143(1) OF THE INCOME#TAX ACT, 1961 ON ASSESSEE 'S CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143( 2) WAS ISSUED ON 15.09.2011 AND SERVED UPON ASSESSEE ON 19.09.2011. NOTICES U/S 143(2)/ 142(1) ALONGWITH QUESTIONNAIRE WERE ISSUED ON 23.07.2012 AND SERVED UPON ASSESSEE ON 30.07.2012. NOTICE U/S 143(2) & 142(1) WERE AGAIN ISSUED ON 06.08.2012 AND SERVED U PON ASSESSEE ON 07.08.2012. 2. IN RESPONSE THERETO, SH. NIRMAL MAHAJAN, CA, SH . JAGDISH RAJ CA, SH. BHARAT BHUSHAN , GM, SH. RAJIV JAIN, ACCOUN TS OFFICER ALONGWITH SH. DEEPAK GUPTA ACCTT., APEEJAY INSTITUT E OF MANAGEMENT RAMA MANDI, SH. D.R. SETHI, OS AND SH. Y OGESH GUPTA, IT (MANAGER) OF APEEJAY SCHOOL, JALANDHAR, S H. NAGENDRA NAUTIYAL ACCTT., APEEJAY SCHOOL OF MANAGEMENT, SH. GOPAL KRISHAN, SR. ACCTT., APEEJAY SCHOOL NOIDA AND SH. MAHESHWAR JHA ACCTT., APEEJAY SCHOOL FARIDABAD, ATTENDED THE ASSESSMENT P ROCEEDINGS FROM TIME TO TIME AND FURNISHED REQUISITE INFORMATI ON/DETAILS. THE CASE HAS BEEN DISCUSSED WITH THEM. BOOKS OF ACCOUNT / BILLS/ VOUCHERS HAVE BEEN PRODUCED AND EXAMINED BY TEST CH ECK. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 11 3. THE ASSESSEE SOCIETY IS REGISTERED WITH REGISTRA R OF SOCIETIES UNDER THE 'SOCIETY REGISTRATION ACT, (XXI OF 1860) AND AS AMENDED BY PUNJAB AMENDMENT ACT, 1957. THE ASSESSEE WAS ALS O REGISTERED U/S 12AA OF THE I.T. ACT, 1961 W.E.F. 01.04.1998 VI DE ORDER NO. CIT# JULTO(TECH.)/99#2000/1466 DATED 13.05.1999. THE ASS ESSEE SOCIETY IS RUNNING 24 EDUCATIONAL INSTITUTIONS IN V ARIOUS CITIES OF INDIA UNDER ITS CONTROL AND MANAGEMENT. 4. BRIEF FACTS OF THE CASE ARE THAT INFORMATION WAS RECEIVED THAT A SEARCH & SEIZURE OPERATION U/S 132(1) OF THE INCOME TAX ACT, 1961 WAS CONDUCTED BY THE DIRECTOR OF INCOME#TAX (INVEST IGATION)#II,. MUMBAI AT THE PREMISES OF ONE SH. PARAG V MEHTA LOC ATED AT 114/114A, JOLLY BHAWAN NO. 1,10 MARINE LINES, MUMBA I. DURING THE COURSE OF SEARCH & SEIZURE OPERATION, IT WAS FO UND THAT SH. PARAG V MEHTA HAD GIVEN TABLE SPACE TO VARIOUS BOGU S#COMPANIES IN HIS PREMISES WHICH DO NOT ACTUALLY TRANSACT ANY BUS INESS BUT ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO CERTA IN PERSONS/ CONCERNS. SUCH COMPANIES INCLUDED M/S WASHINGTON SO FTWARE LTD., (WSL) WHICH WAS BEING RUN BY ONE SH. SANJAY D SONAW ANI. THE FACT THAT M/S WASHINGTON SOFTWARE LTD. WAS A BOGUS COMPA NY WAS ADMITTED BY SH. PARAG V MEHTA IN HIS STATEMENT RECO RDED DURING THE COURSE OF SEARCH & SEIZURE OPERATIONS ON 22.03.2011 . IT WAS FURTHER ADMITTED BY SH. PARAG V MEHTA THAT THE SAID BOGUS C OMPANY WAS PROVIDING ACCOMMODATION BILLS TO INTERESTED PARTIES AND SH. SANJAY D. SONAWANI WAS MANAGING ALL THE AFFAIRS OF SAID CO MPANY. SH. SANJAY D. SONAWANI IN HIS STATEMENTS RECORDED ON 16 .03.2011, 12.04.2011 AND 12.05.2011 ALSO ADMITTED THAT HIS CO MPANY M/S WASHINGTON SOFTWARE LTD. WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES AND ALSO ACCEPTED THE FACT THAT HE HAS PROV IDED ACCOMMODATION ENTRIES TO THE APEEJAY GROUP THROUGH HIS COMPANY, M/S WASHINGTON SOFTWARE LTD. 5. A STATEMENT U/S 131 OF THE INCOME TAX ACT 1961 O F SH. SANJAY D. SONAWANI S/O SH. DEVI DASS SONAWANI, CHAIRMAN AND D IRECTOR OF M/S WASHINGTON SOFTWARE LTD. WAY RECORDED BY THE DDIT(INV.) UNIT# I(I), PUNE ON 16.03.2011, THE RELEVANT PORTION OF W HICH IS REPRODUCED AS UNDER: Q.5 WHAT ARE THE VARIOUS BUSINESS ACTIVITIES OF M/S WASHINGTON SOFTWARES LIMITED? ANS. TILL 2003 THIS COMPANY WAS ACTUALLY DEVELOPING VARIOUS KIND OF SOFTWARES SUCH AS MECHANICAL DESIGN SOFTWARE, PROCE SS AUDIT SOFTWARE, MY HOME AND BUSINESS (BRAND NAME) SOFTWAR E, ETC. IN THE YEAR 2003 THERE WERE SOME FINANCIAL AND LEGAL P ROBLEMS ON ACCOUNT OF WHICH I WAS NOT IN A POSITION TO PAY ATT ENTION TO THE DAY ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 12 TO DAY AFFAIRS OF THE COMPANY. ALL THE OTHER DIRECT ORS OF THE COMPANY NAMELY I) SHRI ABHAY ANANT SHASHTRI, PUNE II) LATE ROHIDAS KUMBHARKAR, PUNE AND HI) SHRI VINOD SONAWANE DESERT ED THE COMPANY. THE EMPLOYEES ALSO LEFT THE ORGANIZATION A ND THE SOURCE CODE WAS ALSO STOLEN BY SOME OF THE EMPLOYEES. TO A DD TO THIS, THE DEVELOPMENT CREDIT BANK ATTACHED PERSONAL AS WELL A S COMPANY PROPERTIES AND THE OFFICE PREMISES WAS ALSO ATTACHE D. THUS, VIRTUALLY THERE IS NO PHYSICAL ACTIVITY OF ANY SOFTWARE DEVEL OPMENT AFTER FINANCIAL YEAR 2003#04. THE COMPANY SINCE FINANCIAL YEAR 2003- 04 IS NEITHER HAVING THE NECESSARY SETUP FOR DEVELO PING ANY SOFTWARE NOR THE MAN POWER AND EXPERTISE REQUIRED. AS ON DATE THE COMPANY IS VIRTUALLY DEFUNCT WITH NO ACTIV ITY SINCE LAST SEVEN YEARS. Q.6 YOUR AUTHORIZED REPRESENTATIVE BEFORE UNDERSIGN ED ON 02.03.2011 AND 11.03.2011 AND FURNISHED THE. DETAIL S OF SALES MADE BY M/S WASHINGTON SOFTWARE LIMITED (WSL). FROM FY 2003#04 UP TO CURRENT FINANCIAL YEAR. THE DETAILS OF SUCH S ALES MADE ARE GIVEN BELOW IN A TABULAR MANNER: SR. NO. FINANCIAL YEAR SALES MADE (IN RS.) 01. 2003#04 16,18,25,345/# 02. 2004#05 6,36,30,300/# 11 U/S 143(3) 03. 2005#06 7,86,30,300/# 04. 2006#07 5,94,35,001/# 05. 2007#08 1,06,00,090/# 06 2008#09 4,62,11,110/# 07. 2009#10 4,85,10,900/# 08. 2010#11 5,70,00,000/# TOTAL 52,58,42,956/# ANS. YES, I DO AGREE THAT THE PROFIT AND LOSS ACCOU NT AND THE BALANCE SHEET OF THE COMPANY FROM FY 2003#04 TO FY 2009#10 ARE SHOWING THE SALE FIGURES AS TABULATED ABOVE. I ALSO AGREE T HAT THE SALES FIGURE FOR CURRENT FINANCIAL YEAR ARE SHOWN TO BE AT RS. 5 7000000F HOWEVER IN A SOUND STATE OF MIND I AM MAKING A RESP ONSIBLE STATEMENT WHEREBY I IN THE CAPACITY OF CHAIRMAN OF WASHINGTON SOFTWARE LIMITED CONFIRM THAT ALL THESE SALES ARE N ON#GENUINE SALES (BOGUS SALES). THERE ARE NO ACTUAL DELIVERY CLIALLA NS IN THE CASE OF ANY OF THESE SALES AS THE PHYSICAL SALE OF ANY SOFT WARE HAS NEVER TAKEN PLACE. ALL THE SALES HILLS RAISED ARE NON#GEN UINE AND BOGUS ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 13 SALE BILLS. THE DELIVERY CHALLAN NUMBERS MENTIONED ON THE BILLS ARE FALSE SINCE SUCH DELIVERY CLIALLANS ARE NON#EXISTEN T. I CONFIRM THAT ALL THESE SALES ARE IN THE FORM OF ACCOMMODATION ENTRIE S PROVIDED TO VARIOUS CORPORATE ENTITIES IN ORDER TO HELP THEM IN FLATING THEIR EXPENS ES. MY COMPANY M/S WASHINGTON SOFTWARE LIMITED WAS NEVER THE DIRECT BENEFICIARY OF THE HUGE AMOUNTS RE CEIVED TOWARDS THESE NON#GENUINE SALES AND MY COMPANY USED TO ONLY GET 1 % COMMISSION ON THE SALE BILL VALUE OF EACH BILL. Q. 7 AS REPLIED BY YOU IN THE PRECEDING QUESTION, PLEASE EXPLAIN THE ACTUAL MODUS OPERANDI IN RESPECT OF PROVIDING SUCH ACCOMMODATION ENTRIES TO THESE CORPORATE ENTITIES ANS. MY COMPANY WAS IN DEEP FINANCIAL CRISIS IN YEAR 2003 DUE TO LEGAL AND OTHE R PERSONAL PROBLEMS. DURING THAT PERIOD SHRI PARAG MEHTA WHO I S A CHARTERED ACCOUNTANT HAVING HIS OFFICE AT 115, JOLLY BHAVAN, 10 MARINE LINES. CHURCHGATE MUMBAI #20 APPROACHED ME AND MADE AN OFF ER OF PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGU S SALES AS STATED ABOVE FOR A CONSIDERATION OF 1% COMMISSION O N SUCH BILLS. HE HAD ASKED ME TO OPEN A CURRENT ACCOUNT AT ICICI BAN K, NARIMON POINT. MUMBAI. I HAD ONLY SIGNED THE DOCUMENTS IN T HIS REGARDS AND REST OF THE FORMALITIES WERE DONE BY HIM. THE CHEQU E BOOK OF THIS ACCOUNT IN WHICH ALL THE CHEQUES WERE SIGNED BY ME, WAS KEPT IN HIS PERSONAL CUSTODY AND ACCORDINGLY HE USED TO TRANSACT WITH THIS. MR. PARAG MEHTA USED TO SEND ME THE SOFT COPIES/HAR D COPIES OF SUCH BOGUS SALES BILLS, W HICH I AFTER SIGNING USED TO SEND TO MR. PARAG MEHTA. I WOULD LIKE TO I DID NOT KNOW TO WHOM OR TO WHICH PARTIES THESE CHEQUES WERE GIVEN OR R. PAR AG MEHTA. IN 2005 THIS ACCOUNT WAS CLOSED AND A NEW ACCOUNT WAS LXIS BANK, KOTHRUD BRANCH, PUNE AND IN THIS CASE ALSO THE CHEQ UE BOOK OF IT IN WHICH ALL THE CHEQUES WERE SIGNED BY ME, WAS KEPT I N PERSONAL CUSTODY RAG MEHTA AND ACCORDINGLY HE USED TO TRANSA CT WITH THIS. HOWEVER DURING THE 2004#05 I WAS IN PRISON FOR SOME TIME, THE BILLS AND INVOICES ISSUED IN THIS RE NOT IN MY KNOWLEDGE AND NOT THE COMPANY HAS RECEIVED ANY MONEY FOR THAT. Q.8 AFTER GOING THROUGH THE BALANCE SHEET OF YOUR C OMPANY FOR VARIOUS FINANCIAL IT SEEMS THAT YOU HAVE DEBITED SO FTWARE DEVELOPMENT RELATED EXPENSES. PLEASE OUR COMMENTS I N THIS REGARD. ANS. YES, I AGREE THAT IN THE BALANCE SHEET OF WSL FOR VARIOUS FINANCIAL YEARS THERE ARE S RELATED TO SOFTWARE DEV ELOPMENT EXPENSES. I CONFIRM THESE EXPENSES ARE NON- GENUINE (BOGUS EXPENSES). AS ALREADY STATED ABOVE THERE, WAS NO ANY ACTUAL ACTIVITY H REGARD TO DEVELOPMENT OF SOFTWARE. AS SU CH THE FIGURES DEBITED ARE ADJUSTED FIGURES MATCH UP WITH THE SALE S. THOUGH THE ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 14 BOOKS OF ACCOUNTS ARE AUDITED, THE BOOKS OF 'COUNTS WERE NEVER MAINTAINED AND NO ACTUAL AUDIT TOOK PLACE. Q.9 FROM THE BALANCE SHEET IT IS OBSERVED THAT THE RE IS SUBSTANTIAL INVESTMENT IN THE NON#TRADE SHARES OF VARIOUS COMPA NIES SUCH AS ISHU SOFTWARE LTD, SURYODHA ALLO#METAL POWER LTD.,# AMITY INTERLINKED STEEL P. LTD., ANGARIKA INVESTMENT & FI NANCIAL PVT. LTD., ASHISH FASHIONS PVT. LTD., BEGANI DYEING MILLS PVT. LTD., C.S. COMPONENTS PVT. LTD. ETC. ANS. I HEREBY CONFIRM THAT ALL THESE TRANSACTIONS P ERTAINING TO INVESTMENT USED TO BE TAKEN CARE BY SH. PARAG MEHTA , HE USED TO SEND ME BLANK SHARE APPLICATION FORMS AS WELL AS SH ARE TRANSFER FORMS WHICH AFTER SIGNING I USED TO SEND HIM BY POS T/ COURIER. TO THE BEST OF MY KNOWLEDGE HE USED TO UTILIZE THE FUNDS A VAILABLE IN THE BANK ACCOUNTS OF WSL FOR PAYMENT TOWARDS THESE INVE STMENTS. Q.10 PLEASE GIVE DETAILS OF ALL THE ENTITIES (CORPO RATE AND NON# CORPORATE) TO WHOM SUCH ACCOMMODATION ENTRIES HAVE BEEN PROVIDED BY YOUR COMPANY M/S WASHINGTON SOFTWARE LIMITED, PU NE. ANS. THE ENTITIES IN RESPECT OF WHOM THE ACCOMMODAT ION ENTRIES IN THE FORM OF BOGUS SALES HAVE BEEN PROVIDED BY M/S W ASHINGTON SOFTWARE LIMITED, PUNE FOR A PERIOD BETWEEN FY 2003 #04 TO THE CURRENT FINANCIAL YEAR ARE AS FOLLOWS: SR.NO. NAME OF THE ENTRY 1 . SHAF BROADCAST PVT. LTD. 21 HIMACHAL FUTURISTIC CO. LTD. 3. TVC SKYSHOP CO. LTD. 4. - - - 36. APEEJAY SCHOOL OF DESIGN 37. APEEJAY INSTITUTE OF DESIGN 38. APEEJAY INSTITUTE OF MANAGEMENT 39. APEEJAY SCHOOL OF FINE ARTS 40. APEEJAY SCHOOL OF MARKETING 41. APEEJAY SVARN INSTITUTE OF BIO-SCIENCE AND CLINICAL RESEARCH ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 15 42. APEEJAY EDUCATION SOCIETY 43. APEEJAY INTERNATIONAL SCHOOL 44. COUNCIL FOR EDUCATIONAL AND PROFESSIONAL SERVICES 45. RAJESHWARI SANGEET ACADEMY I ONCE AGAIN-CONFIRM THAT ONLY SALES BILL HAS BEEN RAISED IN RESPECT OF THESE ENTITIES AND NO ACTUAL SALE HAS TA KEN PLACE. Q. 11 WHAT IS THE TOTAL AMOUNT OF COMMISSION M/S WA SHINGTON SOFTWARE LIMITED HAS RECEIVED FROM MR. PARAG MEHTA DURING THIS PERIOD I.E. FY 2003#04 TO CURRENT FINANCIAL YEAR? A LSO EXPLAIN THE MODE OF RECEIPT OF SUCH AMOUNT. ANS. THE COMPANY HAS SO FAR RECEIVED COMMISSION OF RS. 32 LAKHS DURING THE ABOVE MENTIONED PERIOD FROM TIME TO TIME IN CASH FROM SH. PARAG MEHTA. OVER THE TURNOVER OF RS. 52 CRORES COMPANY WAS DUE FOR GETTING A COMMISSION OF RS. 52 LAKHS BUT SH . MEHTA DUPED FOR RS. 20 LAKHS AND THE COMPANY SO FAR HAS GOT ONL Y RS. 32 LAKHS. THIS COMMISSION OF RS. 32 LAKHS HAS NOT BEEN RECORD ED IN M/S WASHINGTON SOFTWARE LIMITED REGULAR BOOKS OF ACCOUN T AND THEREFORE I ON BEHALF OF M/S WASHINGTON SOFTWARE LIMITED VOLUNTARILY DISCLOSE UNACCOUNTED INCOME OF RS. 32 LAKHS FOR VAR IOUS ASSESSMENT YEARS, THE YEAR WISE BREAKUP OF THIS WILL BE SUBMITTED TO YOUR HONOUR SHORTLY. DURING THE COURSE OF POST SEARCH INVESTIGATIONS, TH E BENEFICIARY PARTIES WERE IDENTIFIED INFORMATION WAS PASSED ON T O VARIOUS FIELD FORMATIONS BY THE INVESTIGATION WING, MUMBAI FOR TA KING FURTHER ACTION. AS A RESULT OF THIS INFORMATION, SURVEY OPE RATIONS WERE CONDUCTED ON 3.2011 U/S 133A OF THE INCOME TAX ACT, 1961 BY THE DEPARTMENT AT THE PREMISES OF VARIOUS ITUTES AND HE AD OFFICE OF THE APEEJAY EDUCATIONAL GROUP WHICH INCLUDED THE ASSESS EE :IETY AND RAJESHWARI SANGEET ACADEMY TRUST. DURING THE COURSE OF THE SURVEY OPERATIONS, GENNUINENESS OF PURCHASE OF SOFTWARE BY ASSESSEE FROM M/S WASHINGTON SOFTWARE LTD. WAS X. MINED FROM DIFF ERENT ASPECTS. ALSO THE STATEMENTS OF VARIOUS PERSONS ACTIVELY INV OLVED IN THE MANAGEMENT AND RUNNING OF APEEJAY GROUP OF INSTITUT IONS WERE RECORDED LIKE MS. ANITA PAUL, PRINCIPAL OF APEEJAY SCHOOL SAKET, SH. ALOK SAKLANI DIRECTOR, DEEPANKAR CHAKARBORTI DEEN & IT HEAD AND SH. NAGENDRA NAUTIYAL, ACCOUNTANT, APEEJAY SCHOOL O F MANAGEMENT DWARKA, SH. AMITAVA MISRA, HEAD OF IT DEPARTMENT AN D SH. VIJAY KUMAR BERLIA, GENERAL SECRETARY AND AUTHORISED SIGN ATORY OF ASSESSEE. NONE OF THESE PERSONS INCLUDING SH. VIJAY BERLIA, (WHO HAS PERSONALLY APPROVED ALL THE BILLS OF WSL) COULD GIV E ANY SATISFACTORY REPLY REGARDING THE PURCHASE AND INSTALLATION OF SO FTWARE STATED TO ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 16 BE BOUGHT FROM M/S WASHINGTON SOFTWARE LTD. COPIES OF ALL THESE STATEMENTS WERE PROVIDED TO ASSESSEES AR DURING AS SESSMENT PROCEEDINGS. THE RELEVANT PORTION OF THESE STATEMEN TS IS REPRODUCED AS UNDER: (I) STATEMENT ON OATH DATED 29.03.2011 OF SMT. ANIT A PAUL, PRINCIPAL OF APEEJAY SCHOOL, SAKET. Q.22 I AM AGAINASKING YOU THAT THE SOFTWARE PURCHA SED VIDE VOUCHERS DATED 25.03.2008, 16.09.2006, 11.02.2006 A ND 09.03.2004 ARE NOT INSTALLED AT YOUR SCHOOL. IN THI S REGARD, I AM GIVING YOU ANOTHER OPPORTUNITY TO CHECK AND CONFIRM THROUGH YOUR I. T. PROFESSIONALS AT YOUR SCHOOL. ANS. NO, THEY ARE NOT INSTALLED. I HAVE CHECKED UP WITH THE I.T. PROFESSIONALS WHOSE SIGNATURES ARE ATTESTED BELOW 1. - SIGNATURE - 2. - SIGNATURE # RAKESH KUMAR JHA MAMTA GHAI COMPUTER LAB INCHARGE PGT, COMPUTER 558/1, DEVLI, BANK COLONY C#203, PARYAVARAN COMPL EX DEVLI NEW DELHI #302 NEW DELHI#30 Q.23. IS THERE ANY ADMISSION SOFTWARE OR SCHOLAR SO FTWARE INSTALLED IN THIS SCHOOL. ANS. NO, NO SUCH TYPE OF SOFTWARES ARE INSTALLED AT MY SCHOOL INDEPENDENTLY WHICH I HAVE AGAIN CHECKED/ CONFIRMED WITH I. T. PROFESSIONALS NAMED ABOVE. Q.23. IS THERE ANY ADMISSION SOFTWARE OR SCHOLAR SO FTWARE INSTALLED IN THIS SCHOOL. ANS. NO, NO SUCH TYPE OF SOFTWARES ARE INSTALLED AT MY SCHOOL INDEPENDENTLY WHICH I HAVE AGAIN CHECKED/ CONFIRMED WITH I. T. PROFESSIONALS NAMED ABOVE. Q.24. A PERSON NAMED AMITAVA MISRCTI.T. PERSON OR H IS TEAM, WHO IS WORKING AT YOUR HEAD OFFICE HAS EVER INSTALLED ANY SOFTWARE AT YOUR SCHOOL? ANS. HE HAS VISITED THE SCHOOL FOR INSTALLING THE S YMENTEC ANTIVIRUS SOFTWARE AND MONITORING THE FUNCTIONING OF I. T. DEPARTMENT OF THE SCHOOL. (II) STATEMENT ON OATH DATED 29.03.2011 OF SH. ALOK SAKLANI, DIRECTOR OF APEEJAY SCHOOL OF MANAGEMENT, DWARKA. Q. 10DO YOU KNOW ONE SOFTWARE COMPANY WITH THE NAM E M/S WASHINGTON SOFTWARE LTD.? IF YES, THEN HOW? ANS. I HAVE NEVER HEAR THE NAME OF THIS SOFTWARE COMPANY PRIOR TO YOUR MENTIONED OF THE SAME. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 17 Q.LL. DID YOU HAVE ANY BUSINESS TRANSACTION WITH TH IS COMPANY EVER IN THE PAST? PLEASE ELABORATE. ANS. NO, WE DID NOT EVER PURCHASE ANY SOFTWARE FROM THE IMPUGNED COMPANY FOR THIS INSTITUTE. Q. 12 DID THE HEAD OFFICE EVER PURCHASED ANY SOFTWA RE FROM M/S WSL FOR ANY OF YOUR REQUIREMENT EITHER ON YOUR REQU ISITION OR ON THEIR OWN? ANS. AS FAR AS I KNOW, THERE WAS NO SOFTWARE EVER P URCHASED BY HEAD OFFICE FROM THIS COMPANY FOR OUR REQUIREMENT O N OUR REQUISITION OR ON THEIR OWN. (III) STATEMENT ON OATH DATED 29.03.2011 OF DEEPXMKAR CHAKARBORTI, DEAN OF APEEJAY SCHOOL OF MANAGEMENT, DWARKA. Q. 10 DID YOU BUY ANY SOFTWARE EVER FROM M/S WSL? I F YES, PLEASE TELL 1. THE YEAR OF TRANSACTION. 2. THE PURPOSE FOR WHICH IT WAS PURCHASED?. 3. NAME OF SOFTWARE MODULE. 4. WHETHER FRESH VERSION OR UPDATED VERSION OF ANY PREVIOUS SOFTWARE. 5. IF A STANDARD VERSION OF ANY SOFTWARE OR TAILOR MADE CATERING TO YOUR SPECIFIC REQUIREMENTS. 6. WHETHER ONLY ONE TIME PURCHASE OR REGULAR TRANS ACTIONS IN THE FORM OF ANNUAL MAINTENANCE CONTRACT (AMC). PLEASE EXPLAIN? ANS. NO, WE DID NOT ANY TRANSACTION WITH M/S WSL FINANCIALLY OR OTHERWISE. I AM HEARING THIS NAME FOR THE FIRST THROUGH YOU, HENCE, THE NEED TO REPLY TO ALL THE SIX POINTS MENTIONED IN QUESTION ABOVE DOES NOT ARISE AT ALL. Q.11 I AM GIVING YOU OPPORTUNITY TO THINK AGAIN WHETHER YO UR INSTITUTE HAD ANY RELATIONSHIP WITH M/S WSL EVER IN THE PAST? ANS. I CANNOT RECALL BECAUSE I HAVE HEARD THIS NAME FOR THE FIRST TIME, HENCE, MY REPLY TO THIS QUESTION IS ALSO THE SAME AS THAT TO THE QUESTION NO. 10. Q.16 I AM SHOWING YOU ANNEXURES# B , C AND D MADE PART OF THE STATEMENT OF SH. NAGENDRA NAUTIAL, ACCOUNTANT. THESE ANNEXURES#B, C AND D ARE THE TRIAL BALANCES O F APEEJAY SCHOOL OF MANAGEMENT FOR THE FY 2009#10, 2005#06 AND 2006#07 WHERE IN PURCHASE OF COMPUTER SOFTWARES WORTH RS. 1,83,15,40 8/#, RS. 30,00,000/# AND RS. 30,50,489.31 HAVE BEEN RECORDED RESPECTIVELY. PLEASE EXPLAIN WHICH SOFTWARES HAVE BEEN PURCHASED DURING THESE THREE FINANCIAL YEARS. PLEASE GIVE A BRIEF DESCRIPT ION AND DEMONSTRATION OF THESE SOFTWARES. PLEASE ALSO EXPLA IN HOW THE REQUIREMENT OF THESE SOFTWARES WAS IDENTIFIED, WHO TOOK THE DECISION ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 18 TO PURCHASE THESE SOFTWARES AND WHERE THESE SOFTWAR ES HAVE BEEN INSTALLED? ANS. AS FAR AS I REMEMBER, SINCE 2006, 1 AM LOOKING AFTER THE WORK AS 1. T. HEAD HOWEVER, SINCE 2006 NO NEW SOFTWARE H AS BEEN PURCHASED. AND ALSO AS PER MY KNOWLEDGE NO NEW SOFTWARE HAS BEEN INSTALLED DURING THIS PERIOD ONLY THE OLD SOFT WARES WERE UPDATED/ RENEWED DURING THIS PERIOD. THEREFORE, IN VIEW OF THIS THE QUESTION OF DEMONSTRATION OF THESE SOFTWARES AN D OTHER RELATED QUERIES DOES NOT ARISE AT ALL. (IV) STATEMENT ON OATH DATED 29.03.2011 OF SH. NAGENDRA NAUTIYAL, ACCOUNTANT IN APEEJAY SCHOOL OF MANAGEMENT, DWARKA. Q.12 PERUSAL OF ANNEXURE A OF YOUR STATEMENT REVE ALS THAT YOU HAVE PAID CERTAIN AMOUNT OF M/S WASHINGTON SOFTWARE S LTD. AS PER DETAILS BELOW: PAGE NO. OF ANNEXURE A OF THE STATEMENT DATE AMOUNT (IN RS.) F.Y. 1 08.03.200 7 30,00,000/# 2006#07 3 J 17.03.200 9 30,00,000/# 2008#09 7 26.06.200 9 40,00,000/# 2009#10 7 11.07.200 9 10,00,000/# 2009#10 7 28.07.200 9 10,00,000/# 2009#10 7 29.07.200 9 10,00,000/# 2009#10 7 30.07.200 9 5,00,000/# 2009# 110 10 7 31.07.200 9 10,00,000/# 2009# 10 7 03.08.200 9 10,00,000/# 2009# 10 7 12.08.200 9 10,00,000/# 2009# 10 7 08.10.200 9 25,00,000/# 2009# 10 7 06.05.200 9 50,00,000/# 2009# 10 TOTAL 2,40,00,000/# PLEASE EXPLAIN FOR WHAT PURPOSES THESE AMOUNTS HAVE BEEN PAID TO THIS COMPANY AND ALSO PROVIDE THE BILLS OF THE SAME ? ANS. THESE PAPERS CONTAINING THE ENTRIES RELATED TO M/S WASHINGTON SOFTWARE ARE SENT TO US BY THE HEAD OFFI CE JUST TO RECORD THESE ENTRIES IN OUR REGULAR BOOKS OF ACCOUN TS. BEYOND THAT I KNOW NOTHING ABOUT THESE ENTRIES. ALSO WE DO NOT HAVE ANY BILL RELATED TO M/S WSL AND FOR THE MATTER OF FACT, AS ALREADY ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 19 MENTIONED BY ME, WE HAVE NO BILLS FOR ANY OF THE EN TRY SENT TO US THROUGH ANNEXURE A TO THIS STATEMENT. Q. 13.1 AM SHOWING YOU PAGE NOS. 59 TO 66 OF ANNEXU RE, A#L WHICH CONTAINS THE LEDGER ACCOUNT OF COMPUTER SOFTWARE OF THE INSTITUTE APEEJAY SCHOOL OF MANAGEMENT FOR THE PERIOD 2003#04 TO 2010#11. FEW OF THESE LEDGER ACCOUNTS ARE BLANK, HOWEVER IN OTHER LEDGER ACCOUNTS SPECIFIC NARRATIONS HAVE BEEN GIVEN AGAINS T THE ENTRIES MADE ON 31 S ' MARCH OF THE RELEVANT PERIOD. THESE NARRATIONS AR E REPRODUCED AS PER THE DETAILS GIVEN BELOW: PERIOD NARRATION AMOUNT 2005#06 AMOUNT SPENT BY AES ON OUR BEHALF 30,00,000/ # 2006#07 AMOUNT SPENT BY H.O. ON OUR BEHALF 30,00,000/ # 2007#08 # # 2009-10 SECONDARY COST CENTRE ADMINISTRATOR BEING THE AMOUNT PAID BY H.O. DURING THE YEAR 2009-10 NOW ENTRIES TAKEN BY US AS PER RECONCILIATION 1,80,00,0 00/- PLEASE EXPLAIN WHAT THESE NARRATIONS MEANS AND WHAT CONTEXT THESE NARRATIONS HAVE BEEN MADE IN THE BOOKS? ANS. THESE NARRATIONS ONLY MEANS TO HIGHLIGHT THE P ARTICULAR TRANSACTIONS RECORDED AGAINST THESE NARRATIONS THAT THESE ENTRIES HAVE BEEN MADE ONLY AT THE DIRECTIONS# OF PLEAD OF FICE. THESE NARRATIONS HAVE BEEN MADE IN THE END OF THE FINANCI AL YEARS IN WHICH THESE ENTRIES HAVE BEEN SENT TO US FOR RECORD ING OF THEM IN THE BOOKS AS PER THEIR IONS LE. AT THE INSTRUCTION OF H EAD OFFICE. Q.14. I AM SHOWING YOU ANNEXURE #B TO THIS STATEMENT WHICH IS A TRIAL BALANCE OF 2Y SCHOOL OF MANAGEMENT FOR THE PE RIOD 01.04.2009 TO 31.03.2010 CONTAINING ONE REE (1 TO 3) PAGES. AS PER THIS ANNEXURE#B AT FIRST PAGE UNDER THE SUB#HEAD OUTER S OFTWARE OF FIXED ASSETS IT IS SEEN THAT AN AMOUNT OF RS. 1,83,15,408 /# HAS BEEN IT ON PURCHASE OF COMPUTER SOFTWARE. PLEASE EXPLAIN WHICH COMPUTER SOFTWARE HAVE N PURCHASED DURING THIS PERIOD AND WH ERE THE BILLS OF THESE PURCHASES ARE LYING? EASE PRODUCE THESE BILLS RELATED TO THE PURCHASE OF COMPUTER SOFTWARE OF RS. 83,15,408/#. SIMILARLY, I AM SHOWING YOU ANNEXURE C AND D MADE PART OF THIS TATE MENT AND ARE TRIAL BALANCE OF APEEJAY SCHOOL OF MANAGEMENT FOR T HE PERIOD 31.04.2005 TO 31.06.2006 AND 01.04.2006 TO 31.03.20 07. IN THESE ALSO AMOUNT OF RS. 30.00,000/# AND RS. 30,50,489/# HAVE BEEN ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 20 SPENT ON PURCHASE OF COMPUTER SOFTWARES FOR THE RES PECTIVE PERIODS. PLEASE ALSO EXPLAIN WHICH COMPUTER SOFTWARE HAVE BE EN PURCHASED DURING THE PERIOD 20.05.2006 AND 2006#07 AND PRODUC E THEIR BILLS ALSO? ANS. BILLS OF ONLY THREE SOFTWARES PURCHASED DURIN G F. Y. 2009-10 ARE FOUND AND WE ARE PRODUCING THE SAME I.E . AMOUNTING TO RS. 10,200/-, RS. 9,880/- AND RS. 2,95 ,328/-. ALL OTHER ARE ONLY ENTRIES WHICH HAVE BEEN MADE IN THE END OF THE RESPECTIVE FINANCIAL YEAR AT THE DIRECTION OF T HE HEAD OFFICE AS I HAVE ALREADY MENTIONED IN MY STATEMENT EARLIER. THE ENTRIES OF PURCHASE OF SOFTWARES AMOUNTING TO RS. 1,80,00,000/#, RS.30,50,489/# AND RS. 30,00,000/# HAVE BEEN MADE O NLY AT THE DIRECTIONS OF THE HEAD OFFICE DURING THE PERIOD FRO M 01.04.2009 TO 31.03.2010, 01.04.2005 TO 31.03.2006 TO 31.03.2007. NO BILLS ARE AVAILABLE FOR THESE ENTRIES. (V) STATEMENT ON OATH DATED 29.03.2011 OF SH. AMITA VA MISRA, HEAD OF THE IT DEPARTMENT OF APEEJAY EDUCATIONAL SO CIETY. Q.12. PLEASE PRODUCE THE SOFTWARE CDS PURPORTEDLY S UPPLIED BY M/S WASHINGTON SOFTWARES LTD. ANS. WE CAN SHOW YOU THE SOFTWARE INSTALLED ON THE SYSTEM OF THE OFFICE. HOWEVER, WE DO NOT HAVE THE ORIGINAL SOFTWARE CDS OF M/S WASHINGTON SOFTWARES LTD. Q. 13. WE HAVE SEARCHED FOR THE ABOVE CDS ALONGWITH YOU AND WITH YOUR TEAM AND COULD NOT FIND THE ORIGINAL CDS PURPORTEDLY SUPPLIED BY THE ABOVE COMPANY. YOUR PEO PLE HAVE ALSO SHOWN US THE SOFTWARES PURPORTEDLY PROCURED FROM TH E ABOVE COMPANY. HOWEVER, NOWHERE IN THE ABOVE SOFTWARE THE NAME OF M/S WASHINGTON SOFTWARES LTD. APPEARED, RATHER THE NAME OF YOUR INSTITUTIONS I.E. APEEJAY EDUCATION SOCIETY. CAN YO U SHOW US ANY EVIDENCE THAT THE SAID SOFTWARE WERE DEVELOPED OR C ONCEPTUALIZED BY ANY OTHER ENTITY OTHER THAN YOUR APEEJAY EDUCATI ON SOCIETY? ANS. NO. (VI) STATEMENT ON OATH DATED 29.03.2011 OF SIT. VIJ AY BERLIN, GENERAL SECRETARY AND AUTHORIZED SIGNATORY: Q. 5 WHAT KINDS OF TRANSACTIONS ARE BEING CARRIED O UT BY YOUR SOCIETIES WITH M/S WASHINGTON SOFTWARE LTD. ? ANS. I DONT KNOW MUCH ABOUT THE TRANSACTION BUT TH EY ARE REGULARLY SUPPLIERS OF OUR SOFTWARE AS I WAS NOT INVOLVED DIR ECTLY TO DEAL WITH THE PARTIES. Q. 6 WHAT IS THE NORMAL PROCEDURE FOLLOWED IN PURCH ASE OF ANY COMMODITY FOR ANY OF THE SCHOOL/ INSTITUTION OF THE SOCIETY? ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 21 ANS. I AM NOT FULLY AWARE OF THE PROCEDURE AS I AM NOT LOOKING THE DAY TO DAY AFFAIRS OR ALL THE TRANSACTIONS. Q. 9 IT IS LEARNT THAT YOU HAVE ENDORSED CHEQUES/ P AYMENT ADVICES TO THE BANK FOR MAKING PAYMENT TO M/S WASHINGTON SO FTWARE LTD. PLEASE STATE WHAT WAS THE PURPOSE/ BASIS OF MAKING SUCH PAYMENTS? ANS. SO MANY CHEQUES COMES FOR SIGNING, SOMETIME CH EQUES COMES ALONG THE VOUCHERS, SOMETIME NOT, I SIMPLY SIGN THE CHEQUES. Q. 10 HOW DO YOU VERIFY THE AUTHENTICITY OF THE VOU CHERS AS TO WHETHER GOODS WERE ACTUALLY RECEIVED OR NOT, OR WHE THER THE HEAD UNDER WHICH THE PAYMENT IS MADE IS AUTHENTICATED OR NOT? ANS. I DONT DO IT MYSELF I TRUST MY PEOPLE. Q. 11 YOU ARE HEREBY SHOWN A BUNCH OF LOOSE PAPERS MENTIONED AS ANNEXURE A#L, IMPOUNDED FROM YOUR APEEJAY SCHOOL, S AKET. THESE ARE BILLS OF M/S WASHINGTON SOFTWARE LTD. AND THEIR RESPECTIVE VOUCHERS. IN ALL THE VOUCHERS YOUR SIGNATURES ARE THERE. IN T HE BILLS ALSO YOUR SIGNATURE ALONG WITH THE WORD APPR OVED IS MENTIONED IN YOUR HAND WRITING. PLEASE COMMENT IN THE LIGHT OF YOUR ABOVE REPLY. ANS. I APPROVED THE ABOVE BILLS FOR PAYMENT ONLY ASSUMIN G THAT THE MATERIAL MUST HAVE COME. IT IS THE NORMAL COURSE. Q. 12 WHO AUTHENTICATE THE ACTUAL RECEIPT OF SUCH GOODS? ANS. I HAVE NO KNOWLEDGE. Q. 13 IT IS BROUGHT TO YOUR NOTICE THAT SMT. ANITA PAUL PRINCIPAL OF YOUR SAKET SCHOOL HAS STATED ON OATH THAT THE SOFTWARES MENTIONED IN THE ABOVE BILLS WERE NEVER RECEIVED IN THE SCHOO L OR INSTALLED IN THE COMPUTERS SYSTEMS OF THE SCHOOL SHE ALSO CATEGORICA LLY STATED THAT PAYMENT TO THE ABOVE COMPANY WAS MADE ON YOUR APPRO VAL ONLY. IT IS NOT OUT OF PLACE TO MENTION HERE THAT NO RECEIPT (ACTUAL) OF ANY SOFTWARE FROM THE ABOVE COMPANY COULD BE ASCERT AINED FROM THE PREMISE ALSO EVEN WITH THE HELP OF YOUR I. T. PEOPLE, PURCHASE AND ACCOUNTS PEOPLE. PLEASE COMMENT ON THI S. ANS. I CANNOT COMMENT ON THE SUBJECT AS I AM NOT A TECHNICAL MAN AND I HAVE APPROVED THE BILLS IN THE NORMAL COURSE. Q. 14 YOU ARE ONCE AGAIN ACCORDED AN OPPORTUNITY TO CONSU LT THE RELEVANT PERSONS AS THEY ARE AVAILABLE IN THE PREMISES. ANS. I HAVE CONSULTED THEM BUT AT PRESENT I AM NOT IN A POSITION TO EXPLAIN THE SAME. Q. 15 FROM THE RECORDS OF THE SOCIETY AVAILABLE IN THE OFFICE. IT IS SEEN THAT SEVERAL PAYMENT HAVE BEEN MADE TO THE ABO VE COMPANY ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 22 UNDER YOUR SIGNATURE. YOU ARE HEREBY SHOWN THE RELE VANT VOUCHERS. WHY THESE PAYMENT HAVE BEEN MADE? ANS. PRESENTLY I AM NOT IN A POSITION TO MAKE ANY C OMMENT. Q. 16 IT IS SEEN THAT AN AMOUNT OF RS. 2.60 CRORES HAVE BEEN PAID TO THE ABOVE COMPANY WITHIN A PERIOD FROM SEPT 2010 TO FEB. 2011 WITHOUT ANY RECEIPT OF BILLS OR GOODS. IT IS THE PERIOD AFTER THE SAD DEMISE OF SHRI SATYA PAUL. PLEASE EXPLAIN. ANS. THIS ORDER MUST HAVE BEEN PLACED WHEN HE WAS A LIVE. INVOICES MUST HAVE COME WHICH IS NOT AVAILABLE/ TRACEABLE AT THE MOMENT. Q. 19 IN REPLY TO SEVERAL ABOVE QUESTION YOU HAVE M ADE EVASIVE REPLIES SAYING THAT YOU WERE NOT AWARE, YOU WERE NO T IN A POSITION TO COMMENT ETC. YOU BEING THE PERSON AT THE HELM OF TH E AFFAIR AT THE SOCIETY BESIDES THE PERSON BEING MAKING HUGE PAYMEN TS TO NON DESCRIPT COMPANY WITHOUT ACTUALLY RECEIVING ANY COM MODITY OR SERVICES. ALL THE RELEVANT PERSONS ARE PRESENT HERE AND YOU HAVE ALSO CONSULTED THEM. YOU HAVE ALSO BEEN ACCORD ED OPPORTUNITIES TO CONSULT RELEVANT PERSONS TELEPHONI CALLY STILL NO CORRECT REPLIES HAS COME OUT. PLEASE STATE WHY Y OU ARE NOT IN A POSITION TO FURNISH THE REPLIES AND WHO IS THE PERSON WHO CAN REPLY ALL SUCH QUESTIONS? ANS. I WAS NOT FULLY INVOLVED WITH THE SOCIETY WORK I WAS DOING ALL THE WORK AS CASUAL MANNER. AS YOU HAVE SEEN THAT I HAVE NOT KNOW THE FULL PROCEDURE. HENCE, I AM NOT IN A POSITION TO GI VE THE ANSWER. I AM NOT IN A POSITION TO ANSWER THE QUESTION THAT WH O CAN REPLY ALL SUCH QUESTION. 6.1 IT IS SEEN FROM THE ABOVE STATEMENTS, THAT NO SOFTW ARE WERE EVER PURCHASED FROM WSL. MOREOVER, ON PHYSICAL VERIFICAT ION BY SURVEY TEAM, SOFTWARE ALLEGED TO HAVE BEEN PURCHASED FROM M/S WASHINGTON SOFTWARE LTD. WERE NOT FOUND TO BE INSTA LLED AND EVEN THE ORIGINAL CD COULD NOT BE LOCATED THOUGH THE HEA D OF IT DEPARTMENT WAS PRESENT. HOWEVER, BOGUS BILLS FROM M /S WASHINGTON SOFTWARE LTD. WERE FOUND TO BE ENTERED I N THE BOOKS OF ACCOUNT OF DIFFERENT ENTITIES OF THE ASSESSEE. IT W AS ALSO ADMITTED BY THE KEY PERSONS THAT VARIOUS ENTITIES OF THE GROUP HAVE RECEIVED ONLY BILLS FOR ENTERING IN THE BOOKS OF ACCOUNTS AND NO SOFTWARE WERE EVER INSTALLED OR RECEIVED BY THEM. IT IS PERTINENT TO M ENTION HERE THAT ALL THE PAYMENTS MADE TO M/S WASHINGTON SOFTWARE LTD., WERE PERSONALLY APPROVED BY SH. VIJAY BERLIA, GENERAL SE CRETARY & AUTHORISED SIGNATORY OF ASSESSEE SOCIETY. HE BEING A MEMBER/OFFICE BEARER, IS A SPECIFIED PERSON AND COVERED UNDER DEF INITION GIVEN U/S 13(3). PERUSAL OF HIS STATEMENT AS REPRODUCED IN PA RA 6(VI) ABOVE, CLEARLY SHOWS THAT HE GAVE EVASIVE REPLIES T O ALMOST ALL THE QUESTIONS. HE IS THE PERSON AT HELM OF AFFA IRS AT THE SOCIETY BESIDES BEING THE PERSON WHO HAS APPROVED H UGE PAYMENTS TOTALING OVER RS. 15 CRORE FROM FINANCIAL YEAR 2003- ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 23 04 TO 2010-11, TO A COMPANY WITHOUT RECEIVING ANY P RODUCT OR SERVICE IN RETURN. AS SEEN FROM THE STATEMENT, SH. BERLIA WAS ACCORDED SEVERAL OPPORTUNITIES TO CONSULT VARIOUS I T PROFESSIONALS, PURCHASE AND ACCOUNTS PERSON, WHO WERE PRESENT DURI NG SURVEY AND ALSO THROUGH TELEPHONE, AND EVEN AFTER CONSULTING A LL OF THEM, HE FAILED TO GIVE ANY EXPLANATION AND COULD HOT PRODUC E ANY EVIDENCE AS TO WHERE THE ALLEGED SOFTWARE WAS INSTALLED. HIS ASSERTION THAT HE APPROVED BILLS FOR PAYMENT ONLY ASSUMING THAT MATERIAL MUST HAVE COME, IS NOT AT ALL BELIEVABLE, SINCE THIS IS NOT A CASE OF SINGLE TRANSACTION BUT A SERIES OF TRANSACTIONS RUN NING INTO MORE THAN RS. 15 CRORES OVER A PERIOD OF EIGHT YEAR S. ALL THESE ENQUIRIES INDICATE AND PROVES BEYOND ANY DOUBT THAT THE ASSESSEE SOCIETY HAS BEEN TAKING ONLY ACCOMMODATION ENTRIES FROM M/S WASHINGTON SOFTWARE LTD. IN THE FORM OF BOGUS BILLS OF PURCHASE OF ERP SOFTWARE WITHOUT RECEIVING ANY ACTUAL DELIVERY THEREOF. 7. VIOLATION UNDER SECTION 13 OF THE INCOME TAX ACT , 1961. IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT NO AC TUAL PROCUREMENT OF THE SOFTWARE WAS MADE BY ASSESSEE FROM M/S WASHINGT ON SOFTWARE LTD. THE ASSESSEE MERELY PROCURED BILLS FROM WSL AN D BOOKED THE AMOUNT OF BILL AS EXPENSES IN ITS BOOKS OF ACCOUNTS AND INFLATED ITS EXPENSES TO THAT EXTENT OVER A PERIOD OF TIME. DURI NG THE POST SURVEY PROCEEDINGS, INVESTIGATION WING, MUMBAI WAS REQUEST ED TO CONDUCT FURTHER INQUIRY IN THIS REGARD. STATEMENT OF SH. SA NJAY SONAWANI WAS AGAIN RECORDED BY DDIT (INV.), UNIT#VII(4), MUM BAI ON 12.05.2011. IN THIS STATEMENT, IN ADDITION TO OTHER ASPECT OF THE CASE, QUESTIONS RELATED TO ISSUANCE OF FICTITIOUS B ILLS AND ROUTING OF MONEY WERE SPECIFICALLY ASKED. SH. SONAWANI CATEGOR ICALLY STATED THAT HE USED TO SEND FICTITIOUS BILLS TO APEEJAY GR OUP THROUGH AN EMPLOYEE OF THE GROUP AND THAT THE AMOUNT USED TO B E DEPOSITED IN HIS ACCOUNT EITHER THROUGH CHEQUES OR RTGS TRANSACT IONS. REGARDING ROUTING BACK OF AMOUNT, SH. SONAWANI STATED THAT HE USED TO DISCOUNT THOSE CHEQUES FROM SOME PARTIES OF ZAVERI BAZAR, MUMBAI AND CASH RECEIVED FROM THEM WERE GIVEN BACK TO THE APEEJAY GROUP. COPIES OF ALL THE STATEMENTS OF SH. SANJAY SONAWANI HAVE BEEN PROVIDED TO ASSESSEES AR. RELEVANT PORTION OF STAT EMENT DATED 12.05.2011 OF SHRI SONAWANI IS REPRODUCED BELOW: Q. 8 WHO BROUGHT THE CLIENTS OR INTERESTED PARTIES TO YOU? ANS. AS STATED EARLIER UPTO 2007, MR. ROHIDAS KUMBA RKAR WERE HANDLING ALL THE PARTIES AND TO THE BEST OF MY KNOW LEDGE MR. ROHIDAS KUMBARKAR WAS RESPONSIBLE FOR GETTING THE P ARTIES. AFTER 2007 ONLY ONE PARTY WAS THERE LE. APEEJAY GROUP WHO WAS HANDLED BY ME. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 24 Q. 9. PLEASE TELL ME THE NAME OF THE CONTRACT PERSO NS OF THE PARTIES WHO USED TO COLLECT THESE BILLS FROM YOU? ANS. I DONT REMEMBER THE EXACT NAMES OF THE PERSON S BUT THE BILLS WERE COLLECTED BY ONE OF THE EMPLOYEE OF THE APEEJA Y GROUP. Q. 10. DID YOU GIVE THESE BILLS TALKING TO ANY IMPO RTANT PERSONS OF THE INTERESTED COMPANIES? ANS. SINCE WE WERE ALREADY GIVING BILLS TO APEEJAY GROUP PRIOR TO 2007, THE REQUIREMENT WAS NEVER THERE. Q. 26. HOW WERE YOU GENERATING CASH TO GIVE BACK TO PARTIES? ANS. WE WERE INFLATING EXPENSES AND ALSO DISCOUNTIN G CHEQUES WITH VARIOUS PARTIES IN ZAVERI BAZAR AND THE CASH RECEIV ED FROM THEM WERE GIVEN BACK TO THE BILLING PARTIES AFTER DEDUCT ING THE COMMISSION. Q. 27. HOW DID YOU ENSURE THE FLOW OF FUNDS BACK TO THE BENEFICIARY WHO HAVE TAKEN AN ENTRY FROM YOU. DESCRIBE THE PROC EDURE IN DETAILS? ANS. WE WOULD ISSUE THE BILLS TO THE PARTY, THE PAR TY WOULD DEPOSIT THE CHEQUE/ RTGS IN OUR ACCOUNT AND THEN WE WOULD D ISCOUNT CHEQUES WITH PARTIES IN ZAVERI BAZAR & CASH RECEIVE D FROM THEM WAS GIVEN BACK TO THE BILLING PARTY. Q. 28. PLEASE TELL ME THE NAME AND ADDRESSES OF VAR IOUS PARTIES (5 TO 10) ATLEAST THOUGH WHICH YOU USED TO DISCOUNT CH EQUES? ANS. WE WERE DOING IT THROUGH ONE MAJOR PARTY DEEPI KA ENTERPRISES AT KALBADEVI (CONTACT PERSON WAS MUKESH JAIN MOBILE NO. 9820263331). PERUSAL OF BANK ACCOUNTS OF SOCIETY REVEALS THAT AL L THE PAYMENTS FOR SOFTWARE HAS BEEN MADE BY CHEQUES OR BANK DRAFTS (I .E RS. 1,80,00,000 FROM DENA BANK A/C OF SOCIETY, RS. 50,0 0,000FROM HDFC BANK A/C OF APE EJAY SCHOOL NOIDA AND BALANCE RS. 38,60,900/# THROUGH VARIOUS BANK DRAFTS). THUS, AS PER STATEMENT OF SH. SONAWANI, THE AMOUNT DEBITED IN BOOKS OF ASSESS EE FOR PURCHASE OF ALLEGED SOFTWARE FROM WSL, WAS RECEIVED BACK BY THE PERSONS MANAGING THE AFFAIRS OF ASSESSEE SOCIETY. T HIS AMOUNT DID NOT COME BACK TO THE CORPUS OF ASSESSEE, MEANING TH EREBY, THE INCOME DERIVED FROM THE PROPERTY OF TRUST WAS MISUT ILIZED BY THE BENEFICIARIES/ MEMBERS OF ASSESSEE SOCIETY OVER A C ONTINUOUS PERIOD FOR MANY YEARS. AS PER SECTION 13(L)(C) R.W.S. 13(3 ) OF THE INCOME#TAX ACT, 1961, THIS IS A CLEAR VIOLATION OF EXEMPTION G RANTED TO THE ASSESSEE SOCIETY U/S 12AA. 7.1. IN THIS CASE, ON THE BASIS OF EVIDENCES, GATHE RED DURING SURVEY OPERATION DATED 29.03.2011, A REPORT WAS SENT BY MY PREDECESSOR (WHICH HAS BEEN FOLLOWED UP BY ME) TO COMMISSIONER OF INCOME TAX, ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 25 JALANDHAR#II, JALANDHAR, REQUESTING HIM TO REVIEW T HE REGISTRATION U/S 12AA ALREADY GRANTED TO ASSESSEE SOCIETY VIDE O RDER DATED 13.05.1999. ON THE BASIS OF SAID REPORTS, THE WORTH Y COMMISSIONER OF INCOME TAX#II, JALANDHAR AFTER CONSIDERING THE P ROVISIONS OF SECTION 13(L)(C) R.W.S. 13(3) OF IT. ACT, 1961 AND AFTER PROVIDING DUE OPPORTUNITY TO ASSESSEE, CANCELLED THE REGISTRATION UNDER THE PROVISIONS OF SECTION 12AA(3) WITH THE FOLLOWING OB SERVATION: '. IAM SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE S OCIETY ARE NOT GENUINE, AS #ITS FUNDS ARE BEING MISUTILIZED CONTINUOUSLY FOR MANY Y EARS AS MENTIONED ABOVE AND HENCE THE REGISTRATION GRANTED TO IT U/S 12AA(1) OF THE INCOME TAX ACT, 1961 IS LIABLE TO BE WITHDRAWN AND CANCELLED. I AM ALSO SATISFIED THAT THE FUNDS OF TH E ASSESSEE SOCIETY ARE ALSO NOT BEING UTILIZED FOR THE OBJECTS OF THE SOCIETY FROM THE PAST MANY YEARS. ACCORDINGLY, TAKING RECOURSE TO THE PRO VISIONS OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961, THE REGISTRATI ON GRANTED TO THE ASSESSEE SOCIETY ON 13.05.1999 IS HEREBY CANCELLED WITH EFFECT FROM ASSESSMENT YEAR 2004#05. 7.2 ON THE BASIS OF FINDINGS GIVEN IN PARA 7 OF THI S ORDER, IT IS CONCLUDED THAT THE ASSESSEE SOCIETY IS CLEARLY HIT BY PROVISIONS OF SECTION 13(L)(C) R.W.S. 13(3), AND THEREFORE, DOES NOT QUALIFY TO CLAIM ANY EXEMPTION U/S 11 & 12 OF IT ACT, 1961. IN ADDIT ION TO THIS, THE REGISTRATION GRANTED TO ASSESSEE U/S 12AA HAS ALSO BEEN CANCELLED BY THE COMMISSIONER OF INCOME TAX, JALANDHAR II W.E .F. AY 2004#05 VIDE HIS ORDER PASSED U/S 12AA(3) DATED 25.03.2013 AND THEREFORE , THE INCOME OF ASSESSEE SOCIETY SHALL BE COMPUTED AS AN ASSOCIATION OF PERSON, UNDER THE PROVISIONS OF SECTION 28#44 OF IT ACT, 1961 WITHOUT GIVING ANY EFFECT TO SECTION 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VIDE O RDER SHEET NOTING DATED 12.12.2012 THE ASSESSEES AR WAS REQUIRED TO EXPLAIN AS UNDER: IT HAS BEEN FOUND THAT APEEJAY SCHOOL AND APEEJAYS CHOOL OF MARKETING RUN BY THE SOCIETY HAVE SHOWN FOLLOWING P URCHASES OF SOFTWARE FROM M/S WASHINGTON SOFTWARE LTD. IN THE F INANCIAL YEAR 2009#10 RELEVANT TO A.Y. 2010#11: SR. NO. NAME OFENTITV DATE OF AMOUNT 1 . APEEJAY SCHOOL 21.04.2009 50,00,000/ # 2. APEEJAY SCHOOL 05.05.2009 30,00,000/ # 3. APEEJAY SCHOOL 14.05.2009 50,00,000/ # 4. APEEJAY SCHOOL 26.05.2009 50,00,000/ # ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 26 5. APEEJAY SCHOOL 02.12.2009 5,54,000/# 6. APEEJAY SCHOOL 14.12.2009 6,84,000/# 7. APEEJAY SCHOOL 28.12.2009 12,02,000/ # 8. APEEJAY SCHOOL 06.01.2010 11,84,000/ # 9. APEEJAY SCHOOL 18.01.2010 2,35,000/# 10. APEEJAY SCHOOL OF MARKETING 27.04.2009 50,00,000/ # TOTAL 2,68,59,0 AS PER INFORMATION AVAILABLE IN THIS OFFICE, A STAT EMENT U/S 131 OF THE INCOME TAX ACT 1961 OF SH. SANJAY D. SONAWANI S /O SH. DEVI DASS SONAWANI DIRECTOR OF M/S WASHINGTON SOFTWARE L TD. WAS RECORDED BY THE DDLTFLNV.) UNIT#I(I), PUNE ON 16.3. 2011. IN THIS STATEMENT SH. SANJAY D. SONAWANI HAS STATED THAT HI S COMPANY PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF BOGUS SALES FROM F. Y 2003#04 TO F. Y 2010#11. HE ALSO STATED THAT SINCE FINANCIAL YEAR 2003#04, THERE WAS NEITHER NECESSARY SET UP FOR DEV ELOPING OF SOFTWARE NOR THE MAN POWER AND EXPERTISE REQUIRED I N THE COMPANY. THEREAFTER A SURVEY U/S 133A WAS CONDUCTED IN YOUR CASE AT NEW DELHI ON 29.3.2011 AND STATEMENT OF MS. ANITA PAUL, PRINCIPAL OF APEEJAY SCHOOL, SAKET, NEW DELHI WAS RECORDED WHERE IN SHE STATED THAT THERE WAS NO ADMISSION OR SCHOLAR SOFTWARE WAS INSTALLED IN THE SCHOOL. SHE STATED THAT SOFTWARE PURCHASED FROM M/S WASHINGTON SOFTWARE LTD. WHOSE BILLS WERE FOUND FROM THE SCHOO L WERE NEVER INSTALLED IN THEIR SCHOOL. SHE SAID THAT THE PAYMEN TS WERE APPROVED BY SH. VIJAY KUMAR BERLIA, SECRETARY OF APEEJAY EDU CATION SOCIETY. STATEMENT OF SH. VIJAY KUMAR BERLIA WAS ALSO RECORD ED ON 29.3.2011. SH. VIJAY KUMAR BERLIA, COULD NOT GIVE S ATISFACTORY REPLY REGARDING THE PURCHASE AND INSTALLATION OF SOFTWARE STATEDLY BOUGHT FROM M/S WASHINGTON SOFTWARE LTD. (THE COPIES OF AL L THE STATEMENTS, WERE ALREADY GIVEN TO YON DURING THE CO URSE OF ASSESSMENT PROCEEDINGS FOR A. Y. 2004#05) IN THE LIGHT OF EH ABOVE FACTS, PLEASE SHOW CAUSE A S TO WHY NOT THE EXPENSES OF RS.2,68,59,000/# IN THE NAME OF PURCHAS E OF SOFTWARE BE TREATED AS BOGUS AND ADDED TO THE TOTAL INCOME. CASE ADJOURNED TO 31.12.2012. ON 3112.2012, THE AR OF ASSESSEE ATTENDED BUT NO RE PLY WAS FURNISHED, ON HIS REQUEST CASE WAS ADJOURNED TO 08. 01.2013. ON THE SAID DATE NEITHER ANYBODY ATTENDED NOR WAS ANY WRIT TEN EXPLANATION FURNISHED. THEREFORE, NOTICES U/S 143(2 ) & 142(1) WERE ISSUED ON 09.01.2013FIXING CASE FOR 15.01.2013. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 27 8.1 IN RESPONSE THERETO, THE ASSESSEE'S AR VIDE REP LY DATED 15.01.2013 SUBMITTED AS UNDER: THE, DETAILED REPLY TO POINT RAISED AT THE TIME OF LAST HEARING IS AS UNDER: THIS QUERY IS BASED ON THE STATEMENT OF MR. SANJAY D. SONAWANI WHICH HAS BEEN RECORDED BEHIND OUR BACK. BEFORE MOV ING FURTHER, WE MAY CLARIFY THAT THE COMPANY WASHINGTON SOFTWARE LIMITED IS A LISTED COMPANY AND UNDER THE CONTROL OF SEBI. IT IS NOT A CLOSELY HELD COMPANY THAT THE DIRECTORS CAN WORK AT THEIR WHIMS AND FANCIES. HERE THE PUBLIC AT LARGE IS INTERESTED AND RIDES AN D REGULATIONS OF THE SEBI ALONG WITH PROVISIONS OF THE INDIAN COMPAN IES ACT, 1956 APPLY. THE STATEMENT OF MR. SANJAY D. SANOWANI IS N OTHING BUT MISLEADING AND BUNDLE OF LIES. FOR EXAMPLE HE IN RE PLY TO QUESTION NO. 4 OF THE STATEMENT HAS STATED THAT THE BOARD OF DIRECTORS OF THE COMPANY CONSISTED OF SANJAY D SONAWANI, SH. MAHESH KADU AND SH. PRAJFUL MEHTA, WHEREAS AS PER INFORMATION DOWNL OADED FROM THE SITE OF MCA, THE BOARD OF DIRECTORS CONSISTED OF SA NJAY DEVIDAS SONAWANI, PUSHPA SANJAY SONAWANI, ARVIND DEVIDAS SO NAWANI AND MEENA SURENDAR NAIDU. HOW IS IT POSSIBLE THAT T HE PERSON DOES NOT. REGARDING SHAREHOLDING PATTERN HE HAS STATED THAT H E IS HOLDING 355000 SHARES, MAHESH KADU 10 SHARES AND PRAFULL ME HTA 10 SHARES. WHEREAS AS PER RECORD OF MCA THE PAID UP CA PITAL IS 1,10,52,000 SHARES AND OUT OF IT SANJAY D SONAWANI IS HOLDING 1865000 SHARES AND PUSHPA SANJAY SONAWANI IS HOLDIN G 90,000 SHARES AND AS PER LAST RECORD AVAILABLE AT THE SITE OF MCA THERE ARE 1480 SHAREHOLDERS. SO HERE AT THE FIRST INSTANCE IT SELF HE HAS TOTALLY MISLED THE DEPARTMENT EVEN AFTER TAKING OATH. HOW T HE STATEMENT OF SUCH PERSON CAN BE TRUSTED. IN REPLY TO QUESTION 5 HE HAS ADMITTED THAT THE COM PANY WAS CARRYING ON THE BUSINESS OF SOFTWARE DEVELOPMENT UP TO FINANCIAL YEAR 2003#04. FURTHER, HE IS CLAIMING THAT HE WAS I MPRISONED BUT FOR WHAT OFFENCE HE WAS IMPRISONED, HE HAS NOT CLARIFIE D. MAY BE HE WAS DOING DEVELOPMENT WITHOUT PROPER PERMISSIONS AN D JUST FOR THAT HE WAS ARRESTED AND TO COVER UP THAT HE IS DENYING HAVING DONE ANY DEVELOPMENT WORK. REASON FOR HIS IMPRISONMENT NEEDS TO BE VERIFIED. FURTHER HE IS SAYING IN HIS STATEMENT THA T HE WAS RETTING HIS ACCOUNTS AUDITED BUT NO ACCOUNTS WERE BEING MAINTAI NED. JUST AGREEING TO HIS CONTENTION THAT HE WAS NOT MAINTAIN ING ANY ACCOUNTS, HOW HE CAN REMEMBER NAMES OF THE PARTIES AND THE AMOUNT OF BILLS GIVEN TO THEM WHEN HE IS NOT AWARE OF COMPOSITION OF BOARD OF DIRECTORS AND EVEN THAT OF SHAREHOLDING PA TTERN. IF HE IS SAYING THAT NO ACCOUNTS WERE BEING MAINTAINED BUT S TILL AUDITED, DID THE DEPARTMENT TRY TO EXAMINE THE AUDITORS OF THE C OMPANY ON OATH ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 28 TO JIND OUT THE SANCTITY OF THE PERSON WHO IS TELLI NG NOTHING BUT LIES TO COVER HIS MISDEEDS. OTHERWISE ALSO THE STATEMENT RECORDED BEHIND THE BA CK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE UNLESS HE IS GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PERSON WHO HAS DEP OSED AGAINST HIM. RELIANCE IS BEING PLACED ON HONOURABLE PUNJAB AND HARYANA HIGH COURT IN ITA NO. 638 OF 2007 DECIDED ON 16.01. 2009 IN THE CASE OF CIT # LUDHIANA V.S\ SANJEEV KUMAR JAIN. WE MAY BE GIVEN THE OPPORTUNITY TO CROSS EXAMINE MR. SANJAY D. SONA WANI. AS REGARDS THE PURCHASE OF SOFTWARE IS CONCERNED, I T HAS DULY BEEN PURCHASED AND EVEN SANJAY D SONAWANI HAS ADMITTED T HAT DURING THE FINANCIAL YEAR 2003#04, HE WAS DOING THE BUSINE SS OF SOFTWARE DEVELOPMENT. FURTHER, THE DESIRED SOFTWARE IS BEING USED IN HEAD OFFICE AT DELHI AND SAME HAS BEEN TOLD TO THE OFFIC IAL VISITING ASSESSEES OFFICE IN DELHI AND ALSO LATER ON IN THE OFFICE OF DDI CONCERNED A DEMONSTRATION WAS ALSO GIVEN. AS REGARDS THE STATEMENT OF ANITA PAUL IS CONCERNED , SHE HAS CLEARLY ADMITTED THAT THE SOFTWARE MAY HAVE BEEN INSTALLED IN HEAD OFFICE. HERE WE MAY CLARIFY THAT THIS IS SPECIALISED SOFTWA RE BEING USED FOR MAJORITY OF THE SCHOOLS FOR VARIOUS JOBS AND MONITO RING AT HEAD OFFICE. THE COST OF THE SAME HAS BEEN ALLOCATED AMO NG THE VARIOUS SCHOOLS/ INSTITUTIONS AS PER PROCEDURE AND THAT IS WHY THERE IS NO ENTRY IN THE RECORDS OF THOSE SCHOOLS EXCEPT BOOKS OF ACCOUNTS AND THE STAFF WORKING IN THE SCHOOLS IS NOT AWARE OF TH E SAME. AS REGARDS SH. VIJAY BERLIA IS CONCERNED, HE COULD NOT GIVE SATISFACTORY REPLY AT THAT TIME BECAUSE HE IS NOT A N IT PROFESSIONAL AND QUESTIONS WERE RAISED TO HIM ALL OF A SUDDEN LA TE IN THE EVENING. KEEPING IN VIEW THE ABOVE, IT IS CLEAR THAT THE STA TEMENT OF MR. SANJAY D SONAWANI IS NOTHING BUT BUNDLE OF LIES AND CANNOT BE RELIED. KEEPING IN VIEW THE ABOVE IT IS PRAYED THAT PURCHASE MAY NOT BE TREATED AS BOGUS ON THE BASIS OF A FALSE STATEME NT BY A PERSON WHO HIMSELF IS MAN OF DUBIOUS CHARACTER. IN CASE ANY FURTHER INFORMATION/ CLARIFICATION IS R EQUIRED OR YOU WANT TO HOLD A CONTRARY VIEW, FURTHER OPPORTUNITY TO EXP LAIN, MAY PLEASE BE GIVEN. TO FURTHER ELABORATE, WE MAY BE PROVIDED THE COPIES OF BALANCE SHEETS AND ALSO BANK STATEMENTS OF WASHINGT ON SOFTWARE LIMITED. IN CASE STILL ANY ADVERSE OPINION IS TO BE FORMED, AN OPPORTUNITY MAY BE GIVEN TO US TO ELABORATE OUR CAS E. 8.2 THE REPLY OF ASSESSEE AS REPRODUCED ABOVE HAS B EEN CAREFULLY CONSIDERED. IT IS SEEN THAT ASSESSEES AR STRESSED MORE ON THE ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 29 GENERAL CONDUCT OF SH. SANJAY D. SONAWANI AND DID N OT GIVE ANY EXPLANATION REGARDING THE FINDINGS OF SURVEY AND CO ULD NOT PRODUCE ANY SUPPORTING EVIDENCE TO SHOW WHEN AND WHERE THE ALLEGED SOFTWARE WAS ACTUALLY INSTALLED. FROM THE STATEMENT S OF KEY PERSONS INCLUDING IT HEADS OF ASSESSEE SOCIETY, IT IS CLEAR THAT NONE OF THESE PERSONS EVER HEARD THE NAME OF COMPANY M/S WASHINGT ON SOFTWARE LTD. THE DEAN/IT HEAD EVEN STATED THAT NO NEW SOFTW ARE IS INSTALLED SINCE 2006 AND THAT ONLY OLD SOFTWARE WERE UPDATED. THE IT HEAD OF SOCIETY, SH. AMITAVA MISRA WAS SPECIFICALLY ASKED T O PRODUCE ORIGINAL CD FROM WSL WHICH HE FAILED TO PRODUCE & C D COULD ALSO NOT BE TRACED ON PHYSICAL VERIFICATION OF PREMISE. IT IS FURTHER SEEN FROM THE BILLS OF WSL THAT THOUGH 10 BILLS WERE REC EIVED WITH THE DELIVERY ADDRESS OF 10 DIFFERENT SCHOOLS/ INSTITUTE S, TOTALING RS. 2,68,60,900/# WHICH INCLUDES ONLY ONE BILL OF RS. 5 0.00.000/# IN THE NAME OF APEEJAY SCHOOL OF MANAGEMENT, WHEREAS RS. 1 ,80,00,000/# HAVE BEEN DEBITED TO ITS BOOKS IN THE END OF FINANC IAL YEAR, AT THE INSTRUCTION OF HEAD OFFICE. IN VIEW OF ALL THE MATE RIAL AND STATEMENTS AVAILABLE ON RECORD, THE AR WAS SPECIFICALLY ASKED VIDE ORDER SHEET ENTRY DATED 14.02.2013 TO EXPLAIN AS UNDER: 'DURING THE COURSE OF SURVEY, IT WAS FOUND THAT NO ACTUAL DELIVERIES OF ANY SERVICES OR SOFTWARE ETC WERE PROVIDED BY M/ S WASHINGTON SOFTWARE LTD. TO ASSESSEE SOCIETY, THOUGH BILLS WER E RECEIVED AND CLAIMED IN YOUR ACCOUNTS. STATEMENTS OF KEY PERSONS LIKE PRINCIPALS, DIRECTORS, IT PERSONNEL AND GENERAL SECRETARY & AUT HORISED SIGNATORY OF THE SOCIETY WERE RECORDED ON OATH. IN THEIR STATEMENTS ON OATH, THEY ALL HAVE STATED T HAT THEY HAVE NEVER HEARD THE NAME OF M/S WASHINGTON SOFTWARE LTD ., THEY HAVE ALSO ACCEPTED THE FACT THAT NO SOFTWARE WAS PURCHAS ED FROM M/S WASHINGTON SOFTWARE LTD. THEY HAVE NEVER ORDERED OR RECOMMENDED ANY SOFTWARE FROM THE ABOVE MENTIONED COMPANY. IN A LMOST EVERY INSTITUTION THEY HAVE PROVIDED THE LIST OF THE SOFT WARE INSTALLED IN THEIR INSTITUTIONS/SCHOOLS ALONG WITH THE NAME OF T HE COMPANIES, WHICH DID NOT INCLUDE THE NAME OF SOFTWARE PURCHASE D FROM M/S WASHINGTON SOFTWARE LTD. SH. ALOK SAKLANI, DIRECTOR OF APEEJAY SCHOOL OF MAN AGEMENT , SEC. 8 DWARKA, NEW DELHI CATEGORICALLY STATED THAT ON REQUISITION MADE BY CONCERNED DEPARTMENT OF HIS INSTITUTION, HE EITH ER DIRECTLY SEEK QUOTATIONS FROM PROSPECTIVE VENDORS OR WITH THE PRI OR APPROVAL OF HEAD OFFICE OR SEND REQUISITION TO HEAD OFFICE. HE FURTHER ADMITTED THAT NO SOFTWARE FROM WASHINGTON SOFTWARE LTD. HAVE EVER BEEN PURCHASED BY HIS INSTITUTION. YOUR ATTENTION IS INV ITED TO HIS REPLIES GIVEN TO QUESTION NO. 10, 11 & 12 OF STATEMENT RECO RDED U/S 131(1) DATED 29.03.2011. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 30 SECONDLY, SH. DEEPANKAR CHAKARBARTI, DEAN OF APEEJAY SCHOOL OF MANAGEMENT, DWARKA ALSO ADMITTED THAT NO SOFTWARE HAS EVER BEEN PURCHASED BY HIS INSTITUTION FROM WASHINGTON S OFTWARE LTD. YOUR ATTENTION IS INVITED TO REPLIES GIVEN BY HIM T O QUESTION NO. 10 & 11 OF HIS STATEMENT RECORDED U/S 131(1) ON 29.03.20 13. FURTHER, IN REPLY TO QUESTION NO. 16, HE STATED THA T SINCE 2006 NO NEW SOFTWARE HAS BEEN PURCHASED. FURTHER, SH. NAGENDER NAUTIYAL, ACCOUNTANT IN APEEJAY SCHOOL OF MANAGEMENT, DWARKA WAS SPECIFICALLY ASKED TO EXPLAIN THE PROCESS OF ACCOUNTING AND ENTRIES PERTAINING TO PAY MENT MADE TO M/S WASHINGTON SOFTWARE LTD., IN BOOKS OF ACCOUNTS. HE CATEGORICALLY STATED THAT HE RECORDS THESE ENTRIES IN HIS BOOKS ON THE INSTRUCTIONS OF HEAD OFFICE AND THAT NO RELATED BIL LS#OF WASHINGTON SOFTWARE LTD. WERE EVER PROVIDED TO HIM. YOUR ATTEN TION IS INVITED TO REPLIES GIVEN BY HIM TO QUESTION NO.12, 13 & 14 OF HIS STATEMENT DATED 29.03.2011 RECORDED U/S 131(1) OF IT ACT. STATEMENT OF SMT. ANITA PAUL, PRINCIPAL OF APEEJAY SCHOOL, SAKET, NEW DELHI WAS ALSO RECORDED ON OATH. SHE WAS ASKED TO CHECK WHETHER THE SAID SOFTWARE WAS INSTALLED IN TH E SYSTEMS OF THE SCHOOL WITH THE HELP OF IT PROFESSIONAL AT THE SCHO OL. IN HER REPLY, SHE ACCEPTED THAT THE SOFTWARE WERE NEVER INSTALLED AT HER SCHOOL. YOU ATTENTION IS INVITED TO HER REPLY GIVEN TO QUESTION NO. 22, 23 & 24 OF HER STATEMENT DATED 29.03.2011. FURTHERMORE, STATEMENT OF SH. AMITAVA MISRA, HEAD OF THE IT DEPARTMENT OF APEEJAY EDUCATIONAL GROUP, WAS RECORDED ON OATH ON 29.03.2011 AND HE WAS ASKED TO PRODUCE THE SOFTWARE CDS, PURPORTEDLY SUPPLIED BY M/S WASHINGTON SOFTWARE LTD . AS DEVELOPER OF SOFTWARE. HE ACCEPTED THAT THEY DO NOT HAVE ANY ORIGINAL SOFTWARE CDS FROM WASHINGTON SOFTWARE LTD. AND WAS UNABLE TO SHOW THE NAME OF 'WASHINGTON SOFTWARE LTD.' AS DEVELOPER OF THE SOFTWARE INSTALLED ON THE COMPUTER. YOUR ATTENTION IS INVITE D TO REPLIES GIVEN BY HIM TO QUESTION ON. 12 & 13 OF HIS STATEMENT DAT ED 29.03.2011. STATEMENT OF SH. VIJAY KUMAR BERLIN, GENERAL SECRETARY AND AUTHORIZED SIGNATORY OF ASSESSEE SOCIETY WAS ALSO RECORDED U/S 131 BY DDIT (INV.) UNIT VI(3), NEW DELHI ON SH. VIJ AY KUMAR BERLIA, COULD NOT GIVE SATISFACTORY REPLY REGARDING THE PUR CHASE AND NSTALLATION OF SOFTWARE STATEDLY BOUGHT FROM M/S WA SHINGTON SOFTWARE LTD. HIS REPLIES TO QUESTION NO. 5,6,9,10, 11,12,13,14,15,16, & 19 OF SAID STATEMENT CLEARLY SHOWS THAT HE GAVE E VASIVE REPLIES AND TRIED TO ESCAPE HIS RESPONSIBILITY OF BEING GEN ERAL SECRETARY AND AUTHORIZED SIGNATORY OF ASSESSEE SOCIETY, THOUGH AL L THE PAYMENTS TO ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 31 M/S WASHINGTON SOFTWARE LTD. WERE APPROVED BY HIM. HE WERE GIVEN ENOUGH OPPORTUNITIES TO REPLY AFTER CONSULTIN G THE RELEVANT PERSONS BUT HE FAILED TO PRODUCE ANYTHING IN SUPPOR T OF TRANSACTION WITH M/S WASHINGTON SOFTWARE LTD. (COPIES OF ALL TH E STATEMENTS SEPARATELY HANDED OVER). YOU ARE REQUESTED TO OFFER AN EXPLANATION TO ALL TH E ABOVE OBSERVATIONS AND TO EXPLAIN THAT WHEN IT HAS BEEN P ROVED BEYOND ANY DOUBT DURING SURVEY OPERATION DATED 29.03.2011 THAT NO SOFTWARE WAS EVER PURCHASED FROM WASHINGTON SOFTWAR E LTD. AND INSTALLED AT ANY OF THE INSTITUTION/ SCHOOL, THOUGH BILLS WERE ENTERED IN THEIR BOOKS AT THE INSTRUCTION OF HEAD OFFICE, P LEASE EXPLAIN WHY THE ENTIRE PURCHASE FROM WASHINGTON SOFTWARE LTD. S HOULD NOT BE TREATED AS BOGUS. PLEASE FURNISH COMPLETE DETAIL OF SOFTWARE PURCHASE D AND PAYMENT MADE TO WASHINGTON SOFTWARE LTD. AS PER YOUR BOOKS AND FURNISH COPIES OF BILLS & VOUCHERS FOR VERIFICATION. ALSO FURNISH EVIDENCE THAT SOFTWARE WAS ACTUALLY RE CEIVED AND WERE INSTALLED ON COMPUTER SYSTEMS OF VARIOUS INSTITUTIONS FROM WHERE PAYMENT HAS BEEN MADE. ALSO SHOW ENTRIES OF SOFTWARE, RESPECTIVE CDS AND THEIR LICEN CE IN THE STOCK REGISTER OF ALL INSTITUTIONS. AS PER BILLS ISSUED BY WASHINGTON SOFTWARE LTD. AVAILABLE IN THIS OFFICE, SOFTWARE OF RS. 50,00,000/# WAS PURCHASED IN APEEJAY SCHOOL OF MARK ETING (NOW MANAGEMENT) DWARKA WHEREAS AS PER BOOKS IMPOUNDED F ROM ABOVE INSTITUTION DURING SURVEY, IT IS SEEN THAT SOFTWARE OF RS. 1,80,00,000/# HAS BEEN PURCHASED IN THIS INSTITUTIO N AND VOUCHERS ENTERED IN BOOKS, THOUGH BILLS WERE NOT FOUND AVAIL ABLE AT INSTITUTION. PLEASE RECONCILE THE DIFFERENCE AND EXPLAIN THE ACT UAL AMOUNT OF SOFTWARE PURCHASES FROM WASHINGTON SOFTWARE LTD. DE BITED IN VARIOUS INSTITUTIONS OF SOCIETY. PRODUCE COMPLETE BOOKS & BILLS FOR VERIFICATION AND COPY OF BANK A/C STATEMENTS FROM WHICH PAYMENT WAS MADE TO M/S WASHI NGTON SOFTWARE LTD. DURING THE COURSE OF SURVEY OPERATION S U/S 133A OF I.T. ACT, 1961 ON 29.03.2011 CERTAIN DOCUMENTS AND COMPUTER HARD DISC WERE IMPOUNDED AS PER IMPOUNDING ORDER DATED 2 9.03.2011, IT IS#REQUESTED E AUTHORISED PERSON SHOULD BE PRESENT AT NEXT DATE OF HEARING SO THAT THE RULED MATERIAL MAY BE CONFRONTE D. CASE ADJOURNED TO 22.02.2013. 9. CRESS EXAMINATION OFSH. SANIAV D. SONAWANI VIDE REPLY DATED 15.01.2013, THE ASSESSEES AR HAS STATED THAT STATEMENT OF SH. SANJAY SONAWANI HAS BEEN RECORDED BEHIND THE BACK OF ASSESSEE AND IT CANNOT BE USED AGAINST THE ASSESSEE UNLESS HE IS GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PER SON WHO HAS ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 32 DEPOSED AGAINST HIM. THE AR PLACED RELIANCE ON THE JUDGMENT OF HON BLE PUNJAB AND HARYANA HIGH COURT IN TA NO. 63 8 OF2007 DECIDED ON 16.01.2009 AND REQUESTED THAT THE OPPORT UNITY TO CROSS EXAMINE MR. SANJAY D. SONAWANI MAY BE PROVIDED TO A SSESSEE. 9.1. SH. SANJAY D. SONAWANI IS A RESIDENT OF PUNE, MAHARASHTRA, AND THEREFORE, IN THE VIEW OF REQUEST FOR CROSS EXA MINATION MADE BY ASSESSEES AR, A COMMISSION U/S 131(L)(D) WAS ISSUE D VIDE THIS OFFICE LETTER NO. 6754#59 DATED 18.02.2013 TO THE D DITFINV.) UNIT I (I), PUNE REQUIRING HIM TO CROSS#EXAMINE SH. SONAWANI ON 04.03.2013 IN THE PRESENCE OF PRINCIPAL OFFICER OF ASSESSEE SOCIE TY. 9.2 THE AR OF THE ASSESSEE SOCIETY APPEARED ON 27.0 2.2013 AND STATED THAT HE SHALL FILE REPLY TO VARIOUS OBSERVAT IONS GIVEN VIDE ORDER SHEET DATED 14.02.2013, AFTER CROSS#EXAMINING SH. SANJAY D. SONAWANI ON 04.03.2013 AT PUNE, AND THEREFORE, CONF IRMED THAT HE SHALL BE GOING PUNE ON 04.03.2013 TO AVAIL THE OPPO RTUNITY OF CROSS# EXAMINING SH. SANJAY D. SONAWANI. THE ENTIRE ARRANG EMENT WAS MADE BY THE DDITFINV.) PUNE FOR CROSS EXAMINATION O N 04.03.2013. HOWEVER, THE ASSESSEE SOCIETY VIDE ITS LETTER SUBMI TTED ON THE RECEIPT COUNTER OF RANGE#ILL, JALANDHAR ON 01.03.20 13 SUBMITTED AS UNDER: WE ACKNOWLEDGE THE RECEIPT OF YOUR LETTER NUMBER A CIT/C# I1I/JAL/2012#13/6758 DATED 18.02.2013 ADDRESSED TO DDITFINV), PUNE AND COPY TO US. IN THE SAME YOU HAVE DIRECTED US TO VISIT PUNE ON 04.03.2013 AND CROSS EXAMINE MR. SANJAY D. SONAW ANI IN THE OFFICE OF DDITFINV.), PUNE. IN REGARD TO SAME IT IS SUBMITTED AS UNDER: THAT ASSESSMENT PROCEEDING IN OUR CASE IS GOING ON BEFORE AND YOU ARE OUR ASSESSING OFFICER. WE WANT TO CROSS EXAMINE THE WITNESS IN YOUR PRESENCE AS YOU HAVE TO DECIDE OUR CASE ON THE BASIS OF HIS CROSS EXAMINATION. NO DOUBT HE IS WITNESS OF THE DEPARTMENT AND WE HAV E RIGHT TO CROSS EXAMINE HIM AT JALANDHAR. HOWEVER, KEEPING IN VIEW YOUR LIMITATIONS AND WE BEING LAW ABIDING CITIZENS ARE READY TO BEAR ALL THE EXPENDITURE OF MR. SANJAY D. SONAWANI FOR TRAVELLING TO, JALANDHAR AS WITNESS. FOR THIS PURPOSE WE ARE ENCLO SING HEREWITH DEMAND DRAFT NO.652343 DATED 27.02.2013 DRAWN ON OB C PUNE FOR RS. 15000/# IN THE NAME OF MR.SANJAY D. SONANVANI. YOU ARE REQUESTED TO CALL HIM TO DEPOSE HERE IN JAL ANDHAR BEFORE YOU. IN CASE HIS EXPENDITURE IS MORE THAN THIS, WE WILL REIMBURSE THE SAME ON HIS ARRIVAL OR IF YOU WANT WE CAN PAY IN AD VANCE. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 33 HENCE IT IS PRAYED THAT HE MAY PLEASE BE CALLED TO JALANDHAR. 9.3. IN REPLY TO COMMISSION DATED 18.02.2013, THE DDLT(LNV) U#L(L), PUNE VIDE LETTER NO. PN/DDIT(INV.)/WSL/2012#13/960 DATED 06.03.2013 INFORMED THAT NEITHER THE PRINCIPAL OFFI CER NOR THE REPRESENTATIVE OF ASSESSEE SOCIETY ATTENDED HIS OFF ICE ON THE SPECIFIED DATE I.E. ON 04.03.2013 FOR CROSS#EXAMINA TION OF SH. SANJAY D. SONAWANI AND THEREFORE, CROSS#EXAMINATION COULD NOT BE MATERIALIZED IN THE ABSENCE OF CROSS#EXAMINEE. 9.4. THE ASSESSEES AR VIDE HIS LETTER FILED ON 01. 03 2013 HAD REQUESTED THAT SH. SANJAY D. SONAWANI MAY BE CALLED TO JALANDHAR FOR CROSS EXAMINATION. IN THIS RESPECT, IT IS PERTI NENT TO MENTION HERE THAT THIS OFFICE IS QUASI#JUDICIAL AUTHORITY/COURT OF LAW AS PER SECTION 131 OF I.T. ACT, WHICH DRAWS ITS POWERS FRO M THE CODE OF CIVIL PROCEDURE, 1908. IN THIS RESPECT, ORDER 16 RULE 19 OF CPC, IS REPRODUCED AS UNDER: '19. NO WITNESS TO BE ORDERED TO ATTEND IN PERSON U NLESS RESIDENT WITHIN CERTAIN LIMITS. NO ONE SHALL BE ORDERED TO ATTEND IN PERSON TO GIVE EVIDENCE UNLESS HE RESIDES# (A) WITHIN THE LOCAL LIMITS OF THE COURTS ORDINARY ORI GINAL JURISDICTION, OR (B) WITHOUT SUCH LIMITS BUT AT A PLACE LESS THAN O NE HUNDRED OR (WHERE THERE IS RAILWAY OR STEAMER COMMUNICATION OR OTHER ESTABLISHED PUBLIC CONVEYANCE FOR FIVE SIXTHS OF TH E DISTANCE BETWEEN THE PLACE WHERE HE RESIDES AND THE PLACE WH ERE THE COURT IS SITUATE LESS THAN FIVE HUNDRED KILOMETERS DISTANCE FROM THE COURT HOUSE. PROVIDED THAT WHERE TRANSPORT BY AIR IS AVAILABLE B ETWEEN THE TWO PLACES MENTIONED IN THIS RULE AND THE WITNESS I S PAID THE FARE BY AIR, HE MAY BE ORDERED TO ATTEND IN PERSON. HIGH COURT AMENDMENTS ALLAHABAD. IN ORDER 16, RULE 19(B): INSERT THE WORDS OR PRIVATE CONVEYANCE RUN FOR HIRE BETWEEN THE WORDS 'PUBLIC ~'# X CON VEYANCE AND FOR FIVE#SIXTHS AND PUNJAB ADD THE FOLLOWING PROVISO TO RIDE 19(B): PROVIDED THAT ANY COURT SITUATE IN THE STATE OF PU NJAB MAY REQUIRE THE PERSONAL ATTENDANCE OF ANY WITNESS RESI DING IN THE PUNJAB OR DELHI STATE. 9. 5 THE ABOVE PROVISIONS OF CPC MAKES IT CLEAR BEYOND ANY DOUBT THAT AS PER LAW, FOR A DISTANCE BEYOND 500 KMS, AND IN CASE OF STATE OF PUNJAB, A WITNESS WHO IS NOT RESIDING IN P UNJAB OR DELHI, CAN BE ORDERED TO ATTEND IN PERSON ONLY IF TRANSPOR T BY AIR IS AVAILABLE BETWEEN THE TWO PLACES. NOW, SH. SANJAY D . SONAWANI, IS ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 34 A RESIDENT OF PUNE AND DISTANCE BETWEEN PUNE AND JALANDHAR IS 1828 KMS, AND FURTHER THE CITIES OF PUNE AND JALANDHAR ARE NOT AT ALL CONNECTED BY AIR, SINCE THERE IS NO AIRPORT AT JALANDHAR. THERE IS NO DIRECT AIR CONNECTIVITY EVEN BETWEEN CI TIES OF PUNE AND AMRITSAR (I.E. THE AIRPORT NEAREST FROM JA LANDHAR), THEREFORE, IN VIEW OF PROVISIONS OF CPC, THIS OFFIC E HAS NO JURISDICTION TO ISSUE SUMMONS TO SH. SANJAY D. SONAWANI TO APPEA R IN PERSON AT JALANDHAR FOR CROSS EXAMINATION. THE ONLY WAY AVAIL ABLE FOR PROVIDING AN OPPORTUNITY OF CROSS#EXAMINATION OF SH . SANJAY D. SONAWANI TO ASSESSEE, WAS TO ISSUE COMMISSION U/S 1 31(L)(D) TO MY COUNTERPART AT PUNE, WHO HAS TERRITORIAL JURISDICTI ON OVER SH. SONAWANI. ACCORDINGLY, IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNITY WAS AFFORDED TO THE ASSESSEE TO CROSS#E XAMINE SH. SONAWANI BEFORE DDIT(INV.) AT PUNE, VIDE THIS OFFIC ES LETTER NO. 7099 DATED 11.03.2013 WHICH IS REPRODUCED AS UNDER: LAST AND FINAL OPPORTUINTY TO, M/S APEEJAY EDUCATION SOCIETY, APEEJAY SCHOOL BUILDING, BHAGWAN MAHAVIR MARG, NEW JAWAHAR NAGAR, JALANDHAR PAN: AAA TA3534F SIR, SUB: ASSESSMENT PROCEEDINGS IN THE CASE APEEJAY EDU CATION SOCIETY, JALANDHAR FOR AY 2010-11- REG REF: YOUR LETTER DATED 28.02.2013 SUBMITTED IN THIS OFFICE ON 01.03.2013 (DEMAND DRAFT NO. 652344 DATED27.02.2013 IN ORIGINAL ENCLOSED). * **************** KINDLY REFER TO THE ABOVE. 2. IN THIS REGARD, IT IS HEREBY BROUGHT TO YOUR NOTIC E THAT, VIDE PARA 3 OF YOUR SAID LETTER, YOU HAVE STATED THAT THE ASS ESSMENT PROCEEDINGS IN YOUR CASE ARE GOING ON BEFORE THE UN DERSIGNED AND THAT YOU WANT TO CROSS#EXAMINE SHRI. SANJAY SON AWANI, IN THE PRESENCE OF UNDERSIGNED AT JALANDHAR. 3. THERE IS NO GAINSAYING THE FACT THAT THE OFFICE OF THE UNDERSIGNED IS A QUASI JUDICIAL AUTHORITY/COURT OF LAW AS PER P ROVISIONS OF SEC 131 OF THE INCOME TAX ACT, WHICH DRAWS ITS POWERS F ROM THE CODE OF CIVIL PROCEDURE. HOWEVER, YOUR ASSERTION TH AT, 'ALL THE PROCEEDINGS, INTER ALIA THE CROSS#EXAMINATION OF SH RI. SANJAY SONAWANI, HAS TO BE NECESSARILY CONDUCTED IN THE OF FICE OF THE UNDERSIGNED AT JALANDHAR, IS BASED ON FAULTY UNDERS TANDING OF THE PROVISIONS OF LAW. AS PER THE CODE OF CIVIL PRO CEDURE, SUMMONS CAN BE ISSUED TO A PERSON ONLY IF HE IS WIT HIN 500 KMS OF THE DISTANCE FROM THE ISSUING AUTHORITY. WHERE T HE PERSON/WITNESS IS MORE THAN 500 BN AWAY FROM THE SU MMONS ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 35 ISSUING AUTHORITY, COMMISSION HAS TO BE ISSUED BY S UCH AUTHORITY, AUTHORIZING OTHER AUTHORITY TO CAUSE/CARRY OUT SUCH NECESSARY EXAMINATION/CROSS#EXAMINATION/REEXAMINATION, ON HIS /HER BEHALF. 4. IN THE INSTANT CASE, THE PERSON YOU WISH TO CROSS#E XAMINE, NAMELY SHRI. SANJAY D. SONAWANI, IS A RESIDENT OF P UNE AND AS SUCH, THE UNDERSIGNED IS NOT EMPOWERED TO ISSUE SUM MONS TO HIM SO AS TO ACCORD AN OPPORTUNITY OF CROSS#EXAMINA TION TO YOU. IHEREFORE, THE UNDERSIGNED HAS NO OTHER ALTERNATIVE BUT TO ISSUE COMMISSION TO DEPARTMENTAL OFFICER IN PUNE TO MAKE YOU AVAILABLE AN OPPORTUNITY OF CROSS#EXAMINING SHRI. S ANJAY D SONAWANI. 5. ACCORDINGLY, THE UNDERSIGNED HAS ISSUED COMMISS ION U/S I31(L)(D) OF THE IT ACT TO THE DDL'T, INV, U#I(L), PUNE VIDE THIS OFFICES LETTER NO. 6754#59 DATED 18.02.2013FOR CONDUCTING C ROSS# EXAMINATION OF SH. SANJAY D SONAWANI IN THE PRESENC E OF PRINCIPAL OFFICER OF ASSESSEE. A COPY OF THIS COMMI SSION WAS ISSUED TO YOU STATING THAT THE SAME# IS FINAL OPPOR TUNITY GRANTED TO YOU FOR CROSS#EXAMINING THE WITNESS. YOUR AR APP EARED BEFORE THE UNDERSIGNED ON 27.02.2013 AND STATED THAT HE IS GOING PUNE ON 4.03.2013 TO CROSS#EXAMINE SH. SONAWANI. HOWEVER , PERUSAL OF YOUR LETTER DATED 28.02.2013 REVEALS THAT YOU FA ILED TO AVAIL THE OPPORTUNITY GRANTED TO YOU FOR CROSS#EXAMINATIO N OF SH. SANJAY SONAWANI. THE DDIT, INV, U#I(L), PUNE WAS BE EN REQUESTED AGAIN AND HE HAS ACCORDINGLY CONVEYED ME HIS AVAILA BILITY ON MARCH 20#21, 2013 . THEREFORE, YOU ARE REQUESTED TO CAMP IN PUNE BETWEEN MARCH 20#21, 2013 AND PRESENT YOURSELF IN THE OFFICE OF DDIT, INV, U#I(L), PUNE, SO AS TO AVAIL T HE OPPORTUNITY OF CROSS#EXAMINATION OF THE DEPARTMENTAL WITNESS SHRI. SANJAY SONAWANI. 6. IN CASE, YOU WISH TO AVAIL THIS OPPORTUNITY OF C ROSS#EXAMINATION AS STATED ABOVE, KINDLY COMMUNICATE YOUR INTENTION IN WRITING TO THE UNDERSIGNED ON OR BEFORE 15.03.2013, SO THAT NE CESSARY ARRANGEMENTS COULD BE MADE. IN CASE, YOU DO NOT WIS H TO AVAIL THIS OPPORTUNITY, KINDLY COMMUNICATE THE SAME. 7. IF YOUR REPLY IN THIS REGARD IS NOT RECEIVED ON OR BEFORE 1100 HRS ON 15.03.2013, THE UNDERSIGNED WILL BE CONSTRAINED TO PRESUME THAT YOU DO NOT WISH TO CROSS#EXAMINE THE DEPARTMEN TAL WITNESS SHRI. SANJAY SONAWANI AND THAT YOU AGREE WITH THE F ACTUAL POSITION NARRATED BY HIM IN HIS STATEMENTS THAT HE HAS ONLY ISSUED SALES BILLS AND NO ACTUAL SALES TOOK PLACE, ON WHICH RELIANCE IS PLACED BY THE DEPARTMENT, AND RESULTANT LY SURVEY OPERATION WAS CONDUCTED AT YOUR DIFFERENT PREMISES WHEREIN IT ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 36 WAS SEEN THAT NO SOFTWARE HAS EVER BEEN RECEIVED AN D INSTALLED AT ANY OF YOUR INSTITUTES AND HEAD OFFICE. 8. YOUR REPLY IN THIS REGARD SHOULD REACH THE OFFI CE OF THE UNDERSIGNED ON OR BEFORE 15/03/2013 BY 1100 HRS. NON# COMPLIANCE SHALL LEAD TO FINALIZATION OF ASSESSMENT S ON THE LINES AS STATED IN EARLIER SHOW#CAUSE NOTICES. 9. THE DEMAND DRAFT NO. 652344 DATED 27.02.2013 DR AWN ON OBC PUNE IN THE NAME OF SH. SANJAY D SONAWANI ENCLOSED BY YOU VIDE ABOVE REFERRED LETTER IS RETURNED HERE WITH, A S THE UNDERSIGNED HAS NO POWER UNDER CPC TO ISSUE SUMMONS TO SH. SANJAY D SONAWANI WHO RESIDES AT PUNE. YOURS FAITHFULLY, (RA TINDER KAUR) IRS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE III, JALANDHAR END: ORIGINAL DEMAND D RAFT 9.6 IN RESPONSE TO ABOVE LETTER, THE ASSESSEES AR VIDE LETTER ATED 14.03.2013 STATED AS UNDER: ' 'WE ACKNOWLEDGE THE RECEIPT OF YOUR LETTER NUMBER A CIT/C# III/JAL/2012#13/7099 DATED 11.03.2013. IN RESPONSE TO SAME IT IS SUBMITTED AS UNDER: AS ALREADY REPLIED VIDE EARLIER LETTER, WE WOULD LI KE TO CROSS EXAMINE MR. SANJAY D. SONAWANI AT JALANDHAR. MR. SO NAWANI IS THE WITNESS OF THE DEPARTMENT AND THE ONUS TO BR ING/ ENSURE PRESENCE OF ITS OWN WITNESS SQUARELY LIES WI TH THE DEPARTMENT AND THE SAME CANNOT BE RELEGATED TO THE ASSESSEE. FURTHER THERE IS NO BAR FOR DISTANCE UNDE R AMENDED PROVISIONS OF THE CPC. HENCE IT IS PRAYED THAT HE M AY PLEASE BE CALLED TO JALANDHAR. 9.7. IN VIEW OF REPLIES FILED BY ASSESSEE ON 01.03 .2013 AND 14.03.2013, IT IS SEEN THAT THOUGH THE ASSESSEE WAS PROVIDED A REASONABLE AND SUFFICIENT OPPORTUNITY TO CROSS#EXAM INE SH. SANJAY D. SONAWANI, WITHIN THE PROVISIONS OF LAW, THE ASSE SSEE SOCIETY PREFERRED NOT TO AVAIL THE OPPORTUNITY AND RATHER I T AVOIDED TO CARRY OUT CROSS#EXAMINATION OF SH. SONAWANI. THUS, IT IS CONCLUDED THAT THE ASSESSEE DID NOT WISH TO CROSS#EXAMINE SH. SANJ AY D. SONAWANI, FOR THE REASONS BEST KNOWN TO IT, THEREFO RE, NOW IT HAS NO GROUND AND JUSTIFICATION TO OBJECT TO THE CONTENTS OF STATEMENT GIVEN BY SH. SANJAY D. SONAWANI. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 37 10. ON THE NEXT DATE OF HEARING I.E. 06.03.2013, AG AIN NO REPLY TO THE OBSERVATIONS GIVEN VIDE ORDER SHEET DATED 14.02 .2013 WAS FILED. THE BOOKS OF ACCOUNT FOR APEEJAY INSTITUTE OF MANAG EMENT, RAMA MANDI WERE PRODUCED AND EXAMINED BY TEST CHECK. THE ASSESSEES AR WAS ASKED VIDE ORDERSHEET ENTRY OF SAME DATE AS UNDER: TO FURTHER FURNISH: I) COMPLETE REPLY TO QUERIES RAISED VIDE ORDER SHEE T NOTING DATED 15.01.2013 & 14.02.2013. II) PRODUCE ORIGINAL CDS ALONGWITLI COPIES OF BILL S FOR PURCHASE OF COMPUTER SOFTWARE, ALSO STATE WHERE EACH SUCH SOFTW ARE FOR WHAT PURPOSE SAME ARE USED. (INSTITUTE#WISE). III) PRODUCE FIXED ASSET REGISTERS AND STOCK REGIST ER WHERE THE SOFTWARE HAVE BEEN ENTERED AFTER PURCHASE. IV) PRODUCE BOOKS ALONGWITH BANK STATEMENTS OF FOLL OWING INSTITUTIONS. A) APEEJAY SCHOOL, NOIDA B) APEEJAY SCHOOL, GREATER NOIDA C) APEEJAY SCHOOL, FARIDABAD. D) APEEJAY SCHOOL, JALANDHAR. E) APEEJAY SCHOOL OF MARKETING NOW (MANAGEMENT), DWAR KA. 10. ON THE NEXT DATE OF HEARING I.E. 07.03.2013, AG AIN NO REPLY WAS FURNISHED. THE AR PRODUCED BOOKS OF ACCOUNTS OF APEEJAY SCHOOL, JALANDHAR AND SAME WERE EXAMINED. AS PER IN FORMATION AVAILABLE IN THIS OFFICE SOFTWARE WORTH RS. 50 LAKH HAS BEEN PURCHASED FROM WSL WHICH IS DELIVERED TO APEEJAY SC HOOL, JALANDHAR AS PER INVOICE NO. WSL/DC/012 DATE 26.05. 2009 ISSUED BY M/S WASHINGTON SOFTWARE LTD., PUNE. HOWEVER, DUR ING EXAMINATION OF BOOKS, IT WAS SEEN THAT NO SUCH SOFT WARE WAS PURCHASED OR INSTALLED AT APEEJAY SCHOOL, JALANDHAR . THE PERUSAL OF SAID BILL FURTHER REVEALS THAT THE PAYMENT OFRS. 50 ,00,000/# HAS BEEN APPROVED BY SH. VIJAY BERLIA, GENERAL SECRETAR Y OF SOCIETY AND NO OTHER DETAIL WHATSOEVER WAS FOUND TO BE MENTIONE D ON SAID BILL I.E. WHEN THE SOFTWARE WAS RECEIVED, WHETHER INSTAL LED/WORKING, ENTERED ON WHICH PAGE NUMBER OF STOCK REGISTER/FIXE D ASSETS REGISTER ETC., AS IS DONE IN THE CASE OF ALL OTHER SOFTWARE PURCHASED BY THE SCHOOL (COPIES OF CERTAIN BILLS OF SOFTWARE OTHER T HAN PURCHASED FROM WSL HAVE BEEN TAKEN, SIGNED BY ACCOUNTANT AND ARE P LACED ON RECORD). THESE FACTS HAVE BEEN DULY NOTED VIDE ORDER SHEET O F SAME DATE (07.03.2013) SIGNED BY ASSESSEES AR AND ACCOU NTANT AND THE AR WAS REQUIRED TO FURTHER EXPLAIN AS UNDER: (I) FROM WHERE PAYMENT OF THIS RS. 50 LAKH HAS BEE N MADE. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 38 (2) PRODUCE STOCK REGISTER/FIXED ASSETS REGISTER FOR VERIFICATION ALONGWITH IT MANAGER OF THE ASSESSEE SCHOOL. (3) REPLY TO QUERIES RAISED VIDE ORDER SHEET DATED 15.01.2013, 14.02.2013 AND 06.03.2013. (4) PRODUCE BOOKS OF OTHER INSTITUTES AS PER O/S 06 .03.2013. 10.2 ON THE NEXT DATE OF HEARING I.E. 08.03.2013, AGAIN NO REPLY WAS FURNISHED. THE AR OF ASSESSEE ATTENDED ALONGWIT H SH. YOGESH GUPTA, IT (MANAGER) OF APEEJAY SCHOOL JALAND HAR (ALL# BRANCHES). SH. YOGESH GUPTA IS SPECIFICALLY ASKED A BOUT HOW SOFTWARE IS PURCHASED. TO THIS, HE EXPLAINED THAT R EQUIREMENT FOR SOFTWARE PURCHASE & UP GRADATION IS PROJECTED T O VICE# PRESIDENT OF SOCIETY AND AFTER HIS APPROVAL SOFTWAR E IS PURCHASED. PURCHASE INVOICE IS APPROVED BY VICE# PR ESIDENT AND CROSS#VERIFIED BY PRINCIPAL OF SCHOOL AND SIGNE D BY IT (MANAGER) AFTER INSTALLATION OF SOFTWARE, WHICH IS ALSO ENTERED ON STOCK REGISTER. STOCK REGISTER WAS ALSO PRODUCED AND IT WAS SEEN THAT NO SOFTWARE FROM M/S WASHINGTON SOFTW ARE LTD. HAS EVEN BEEN PURCHASED OR INSTALLED ON THE CO MPUTER SYSTEM OF SCHOOLS AT JALANDHAR. PHOTOCOPY OF RELEVA NT PAGES OF STOCK REGISTER, SIGNED BY IT (MANAGER) ARE TAKEN AND PLACED ON RECORD. SH. YOGESH IS WORKING WITH SOCIETY SINCE YEAR 2003 AND HE HAS CATEGORICALLY STATED THAT ERP SOFTW ARE FROM M/S WASHINGTON SOFTWARE LTD. IS NEVER INSTALLED AT ANY SCHOOL OF JALANDHAR SINCE 2003. FURTHER, HE STATED THAT HE HAS NEVER HEARD NAME OF M/S WASHINGTON SOFTWARE LTD. ALL THES E PROCEEDINGS ARE RECORDED VIDE ORDER SHEET DATED 08. 03.2013 DULY SIGNED BY ASSESSEES AR AND SH. YOGESH GUPTA, IT (MANAGER). THE ASSESSEES AR WAS AGAIN ASKED TO FUR NISH REPLY TO EARLIER ORDER SHEETS AND TO PRODUCE BOOKS OF OTHER INSTITUTES FOR VERIFICATION. 10.3 ON THE NEXT DATE OF HEARING I.E. 11.03.2013, AGAIN NO REPLY WAS FURNISHED. BOOKS OF ACCOUNTS OF APEEJAY S CHOOL OF MANAGEMENT DWARKA, AND APEEJAY SCHOOL NOIDA AS WELL AS FARIDABAD WERE PRODUCED AND SAME WERE EXAMINED BY T EST CHECK. EXAMINATION OF IMPOUNDED RECORD ALONGWITH BOOKS OF ACCOUNTS OF APPEJAY SCHOOL OF MANAGEMENT (EARLIER A PEEJAY INSTITUTE OF MARKETING), DWARKA REVEALS THAT ENTRY OF RS. 1,80,00,000/# HAS BEEN TAKEN FROM HO ON 31.03.2013, HOWEVER, THERE WAS ONLY ONE BILL AMOUNTING TO RS. 50,00,000/# RELATED TO PURCHASE OF SOFTWARE FROM WS L IN THE NAME OF THIS INSTITUTE. THE RELEVANT DOCUMENTS OUT OF IMPOUNDED RECORD HAVE BEEN PHOTOCOPIED, SIGNED BY T HE ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 39 ACCTT., SH. NAGENDRA NAUTIYAL AND ARE PLACED ON REC ORD. FURTHER, PERUSAL OF STATEMENT OF SH. NAGENDRA NAUTI YAL RECORDED U/S 131 DURING SURVEY ON 29.03.2011 REVEAL ED THAT NO BILLS FOR PURCHASE OF SOFTWARE FROM WSL WERE AVA ILABLE WITH THE RESPECTIVE INSTITUTE AND ACCOUNTANT STATED ON OATH THAT HE WAS DIRECTED BY HO TO PASS THE ENTRY FOR PU RCHASE OF SOFTWARE AMOUNTING TO RS. 1.80CRORE ON 31.03.2010, (THE COPY OF VOUCHER SIGNED BY ACCTT. IS PLACED ON RECORD.) S H. NAUTIYAL IS SHOWN HIS STATEMENT RECORDED DURING SURVEY ON 29.03.2011, ESPECIALLY QUESTION NO. 7, 8, 9, 10, 11 , 12, 13, 14, 15 & 16, WHEREIN HE HAS CATEGORICALLY STATED THAT H E RECORDED THESE ENTRIES ON THE INSTRUCTIONS OF HO AND NO BILL OR LEDGER ACCOUNT OF WSL WAS AVAILABLE WITH THEM. WHEN THIS S TATEMENT IS CONFRONTED TO SH. NAUTIYAL, HE STATED THAT HE ST ANDS BY THE REPLIES GIVEN BY HIM AND THAT BILLS FROM WSL WERE N EVER PROVIDED TO THE INSTITUTE, ONLY ENTRIES WERE MADE I N BOOKS AT THE INSTRUCTIONS OF HEAD OFFICE. FURTHER PERUSAL OF STOCK REGISTER PRODUCED DURING HEARING ALSO SHOWS THAT ER P SOFTWARE WAS NEVER RECEIVED OR INSTALLED AT THIS IN STITUTE. COPY OF RELEVANT PAGE OF STOCK REGISTER IS TAKEN, S IGNED BY ACCTT, SH. NAUTIYAL AND IS PLACED ON RECORD. FURTHER, FROM THE PERUSAL OF THE INVOICES RAISED BY M/S WASHINGTON SOFTWARE LTD. IN THE NAME OF VARIOUS SCHOOLS/INSTITUTES OF ASSESSEE SOCIETY, IT IS SEEN THAT THE DESCRIPTION OF THE ITEM REFERS TO MULTIPLE USER ER P SOFTWARE IN MOST OF THE CASES. THEREFORE, ASSESSEE'S AR WAS SPECIFICALLY ASKED TO PROVIDE FOLLOWING INFORMATION RELATED TO ALLEGED ERP SOFTWARE VIDE ORDER SHEET ENTRY DATED 11.03.2013, THE RELEVANT PART OF WHICH IS AS UNDER: IN RE.SPECT OF ERP SOFTWARE PURCHASED FROM M/S WSL , PLEASE FURNISH FOLLOWING DETAILS: A) WHAT IS THE NAME OF ERP SOFTWARE. MENTION UNIQUE NA ME GIVEN TO IT BY ITS DEVELOPER? B) ON WHICH PLATFORM IT IS BASED, WHETHER ORACLE OR SO ME OTHER? C) WHAT ARE DIFFERENT MODULES OF THIS ERP? D) WHO HAD BEEN GIVEN THE ACCESS TO DIFFERENT MODULES OF ERP? E) WHO ARE THE PERSON IN CHARGE OF THE SERVER OF ERP? F) NAME OF THE PERSON WHO HANDLES THE MAINTENANCE ISS UES OF ERP? G) NAME OF PERSON WHO HANDLES THE UPDATES OF THIS ERP SYSTEM? H) AFTER HOW MANY MONTHS, THE ERP IS UPDATED? ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 40 I) WHO SUPERVISED THE INSTALLATION OF ACTIVATION OF E RP IN EACH INSTITUTE? J) NAME THE PERSON, WHO GAVE/ GIVES TRAINING FOR E RP OPERATIONS? K) WHO ARE THE PERSONS ACTUALLY OPERATING THIS ERP IN EACH INSTITUTE? L) MENTION IN DETAIL, HOW THE ERP SOFTWARE FROM M/S WASHINGTON SOFTWARE LTD. IS BEING PURCHASED, I.E. W HETHER THE SOCIETY CALLED QUOTATIONS, HOW ORDER IS PLACED, HOW BILLS RAISED/RECEIVED AND HOW PAYMENT IS BEING MADE. HOW THE DELIVERING OF SOFTWARE IS :EH ED & HOW IT IS INSTAL LED, ON COMPUTER. TO FURNISH REPLIES TO ORDER SHEET ENTRIES DATED 15. 01.2013, 14.02.2013, 5.03.2013, 08.03.2013. TO PRODUCE SOME AUTHORISED PERSON FROM APEEJAY EDUCATION OCIETY SO THAT THE MATERIAL & HARD DISK IMPOUNDED DURING SURVEY AT SOC IETY HO AT DELHI MAY BE EXAMINED IN HIS PRESENCE. FURNISH C OPY OF BANK ACCOUNT OUT OF WHICH PAYMENT TO WASHINGTON SOF TWARE LTD. HAS BEEN MADE. 10.4 AFTER SEEKING AN ADJOURNMENT, THE ASSESSEES AR FURNISHED REPLY DATED 18.03.2013 AND SUBMITTED AS U NDER: THE REPLY TO QUERIES RAISED AT THE TIME OF LAST HEA RING WHICH ARE STILL PENDING IS AS UNDER: AT THE OUTSET, WE MAY CONFIRM HAVING PURCHASED THE SOFTWARE IN QUESTION FOR RS.2,68,59,500/#. EVEN THOUGH THE P URCHASE IS DEBITED IN VARIOUS INSTITUTIONS TAKING THEM AS COST CENTRES, THE SOFTWARE IN QUESTION IS INSTALLED IN HEAD/CENTRAL O FFICE OF THE SOCIETY IN DELHI. THE BILLS OF SOFTWARE SUPPLIED BY WSL ARE ENCLOSED HEREWITH. (ANNEXURE AL# A14). AS REGARDS T HE STATEMENT OF MR. SANJAY D SONAWANI IS CONCERNED, IT IS NOTHING BUT BUNDLE OF LIES. HE HAS GOT NO LEGS TO S TAND. DURING THE YEAR HE HAS GIVEN FOUR STATEMENT, TWO EACH BEFO RE DDIT PUNE AND MUMBAI. IF YOU GO THROUGH ALL THOSE STATEM ENTS THAT HE WAS RETRACTED FROM MAJOR POINTS IN HIS SUBSEQUEN T STATEMENT RECORDED BY DDIT MUMBAI BUT AGAIN WHEN HE APPEARED BEFORE THE DDIT PUNE FOR THE SECOND TIME, HE RETRACTED FROM HIS STATEMENTS IN MUMBAI AND CONFIRM ED THE CONTENTS OF FIRST STATEMENT GIVEN IN PUNE. HOW RELI ANCE CAN BE MADE ON THE STATEMENT OF THE PERSON, WHO HAS CLAIME D TO BE GIVING STATEMENT ON OATH, BUT THERE IS A HUGE DIFFE RENCE IN HIS STATEMENTS BEFORE TWO AUTHORITIES ON SAME MATTER. I F WE SEE HIS STATEMENT, HE HAS DISCUSSED ABOUT HIS SHARE HOL DING, IF WE COMPARE THE SAME WITH THE INFORMATION FILED WITH THE ROC ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 41 REGARDING SHAREHOLDING AND DIRECTORSHIP IT TOTALLY DIFFERS. A PERSON WHO DOES NOT KNOW ABOUT HIS SHAREHOLDING AND DIRECTORSHIP HOW CAN HE TELL ABOUT HUGE TRANSACTION S FOR A NUMBER OF YEARS THAT TOO WITHOUT FOLLOWING BOOKS OF ACCOUNTS WFIICH HE CLAIMS HE HAS NEVER MAINTAINED. HE HIMSEL F HAS STATED THAT HIS ACCOUNTS HAVE BEEN PREPARED BY HIS CHARTERED ACCOUNTANT WITHOUT MAINTAINING BOOKS OF ACCOUNTS AN D HAVE EVEN BEEN AUDITED. WE MAY LET YOU KNOW THAT COMPANY WSIL IS A PUBLIC LIMITED COMPANY AND DULY REGISTERED ON# STOCK EXCHANGE. HOW A PUBLIC LIMITED COMPANY WHICH IS DUL Y REGISTERED ON STOCK EXCHANGES CAN DARE TO SAY THAT IT IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. TO VERIFY HIS ST ATEMENT, HAS THE DEPARTMENT TRIED TO EXAMINE THE AUDITOR OF THE COMPANY OR INFORMED THE SEBI ABOUT THAT. THE DEPART MENT HAS STARTED THE PROCEEDINGS AGAINST THE INNOCENT CU STOMERS WHO HAVE PURCHASED SOFTWARE RELYING ON AN UNRELIABL E PERSON AND HAS NOT BOTHERED TO VERIFY FROM AUDITOR OR INFO RM THE SEBI FOR VIOLATIONS AND TO VERIFY SANCTITY OF HIS STATEM ENT. RELYING ON A PART OF THE FALSE STATEMENT AND NOT BOTHERING ABOUT THE FACTS OF THE OTHER PART OF THE STATEMENT IS NOTHING BUT AGAINST THE JUSTICE. OTHERWISE ALSO IT HAS BEEN HELD BY THE HON 'BLE CHENNAI HIGH COURT THAT STATEMENT U/S 133A IS NOT A STATEMENT ON OATH AND HAS NO EVIDENTIARY VALUE UNLE SS IT IS SUPPORTED BY SOME DOCUMENTARY EVIDENCE. THE SLP OF THE DEPARTMENT HAS DULY BEEN DISMISSED BY HONBLE APEX COURT. HERE THE DEPARTMENT IS ACTING AGAINST US JUST ON HI S STATEMENT AND HAS NOT BOTHERED TO COLLECT ANY DOCUMENTARY EVI DENCE BY CROSS EXAMINING THE AUDITORS WHO HAVE AUDITED THE A CCOUNTS. FURTHER THE ASSESSMENTS OF WSIL MUST HAVE BEEN REOP ENED, WHAT HAS HAPPENED TO THEM? WHAT TREATMENT HAS BEEN GIVEN TO SALE SHOWN BY HIM? WE HAVE FULL RIGHT TO KNOW AB OUT THAT. HENCE THIS ACT OF DEPARTMENT OF ACTING ON ONE PART OF STATEMENT AND NOT TAKING ANY ACTION ON OTHER PART O F STATEMENT IS NOTHING BUT INJUSTICE. IT IS LIKE PUNI SHING THE INNOCENT AND NOT TAKING ANY ACTION AGAINST GUILTY. HENCE THIS STATEMENT OF MR, SONAWANI HAS GOT NO VALUE. OTHERWI SE ALSO THE STATEMENT OF MR. SONAWANI HAS BEEN RECORDED BEH IND OUR BACK AND WE HAVE NOT BEEN PROVIDED ANY OPPORTUNITY TO CROSS EXAMINE HIM IN YOUR PRESENCE AT JALANDHAR. UNLESS W E ARE GIVEN OPPORTUNITY TO CROSS EXAMINE HIM AT JALANDHAR IN YOUR PRESENCE, IT CANNOT BE USED AGAINST US. SO FAR AS STATEMENT OF MR. ALOK SAKLANI, DEEPANKAR CHAKRABARTI AND ANITA PAUL, THEY ARE ACADEMICIAN AN D DO NOT HAVE A COMPUTER BACKGROUND. SAME IS SITUATION WITH MR. NAGENDAR NAUTIYAL HE BEING AN ACCOUNTANT. DURING TH E ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 42 SURVEY, THEY MADE A CATEGORICAL STATEMENT THAT SOFT WARES WERE PURCHASED FROM VARIOUS SOFTWARE COMPANIES INCL UDING FROM WASHINGTON SOFTWARES LTD. WHILE INSTITUTION ST AFF MAKES USE TO THEIR OWN SOFTWARES FOR THEIR DAY TO DAY USE , THEY NEED NOT KNOW ABOUT SOFTWARE WHICH WAS ADMITTEDLY INSTALLED AT THE HEAD OFFICE. AS THE HEAD OFFICE IN DELHI IS WEL L EQUIPPED TO INSTALL AND MAINTAIN ESPECIALLY SINCE THE SOFTWARES ARE FOR MANAGEMENT INFORMATION/ CONTROL PURPOSES TO WHICH S CHOOL STAFF IS NOT FULLY PRIVY TO. AS THE SOFTWARE WAS IN STALLED AT THE HEAD OFFICE SHE ALSO STATED THAT THE SOFTWARE MAY H AVE BEEN INSTALLED AT HEAD OFFICE. AS ALREADY MENTIONED, THE COST OF THE SOFTWARE IS DEBITED TO DIFFERENT COST CENTRES BUT S AME IS INSTALLED AT HEAD OFFICE. AS REGARDS MR. AMITAVA MI SRA, EVEN THOUGH HE SHOWED IGNORANCE ABOUT THE AVAILABILITY OF ORIGINAL CDS BUT HE AT NO STAGE ADMITTED THAT WSL SOFTWARE IS NOT INSTALLED. HE MAY NOT HAVE BEEN ABLE TO SHOW ANY PR INTING AT HAT TIME DUE TO CONFUSION. VARIOUS REPORTS GENERATE D FROM THE SOFTWARE ARE BEING PRODUCED HEREWITH FOR YOUR VERIF ICATION AND FOR YOUR RECORD. BEING VOLUMINOUS, THE SAME ARE BEING PROVIDED SEPARATELY AND NOT BEING ATTACHED WITH THI S REPLY. AS REGARDS MR. VIJAY BERLIA, HE DID NOT HAVE THE CO MPLETE BACKGROUND ON ACADEMIC ISSUES OF THE INSTITUTIONS A ND SOFTWARE DECISIONS THAT HAD BEEN MADE BY THE CHAIRM AN DR. STYA PAUL (SINCE DECEASED) WHO DIRECTLY HANDLED AND WAS RESPONSIBLE FOR ALL MATTERS INCLUDING ACADEMICS, SO FTWARE AND DAY TO DAY ADMINISTRATION OF THE INSTITUTIONS. MRS. BERLIA WAS FOLLOWING HIS DIRECTIONS. FURTHER IT WAS LATE EVENI NG WHEN HE FACED THE SURVEY TEAM AND BEING TRIED GOT CONFUSED AND COULD NOT RECOLLECT FULL DETAILS. THE SOFTWARE PURCHASED FROM WASHINGTON SOFTWARE LTD . THOUGH DEBITED TO VARIOUS INSTITUTIONS, IS INSTALLE D IN THE CENTRAL SERVER AT THE HEAD OFFICE BEING OF UTMOST I MPORTANCE AND REQUIRING SECRECY. THE SOFTWARE INCLUDES VARIOU S MODULES AND VARIOUS TYPES OF REPORTS ARE GENERATED WHICH IN CLUDE DATA OF STUDENTS AND ALSO ABOUT THE INSTITUTIONS. IT GEN ERATES REPORTS WHICH ARE VERY BIG AND CONTAINS LARGE NUMBE R OF PAGES. SOME OF THE REPORTS ARE BEING PRODUCED HEREW ITH FOR YOUR VERIFICATION AND ALSO FOR PERUSAL AT YOUR END. FROM THESE REPORTS YOU WILL BE SATISFIED THAT THE SOFTWARE HAS DULY BEEN INSTALLED IN REAL SENSE AND IT CONTAINS SOURCE KEY GENERATED BY WASHINGTON SOFTWARE LTD., WHICH THE PARTY IS NOW TRYING TO DENY DUE TO REASONS BEST KNOWN TO HIM. IN ADDITION TO ABOVE REPLY TO YOUR QUERIES IT IS FU RTHER SUBMITTED THAT REGARDING NO SUPPLY OF SOFTWARE BY T HE VENDOR, ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 43 IT SEEMS TO BE A CONCOCTED STORY BY THE VENDOR TO S AVE HIS SKIN AND PUTTING ONUS ON OTHERS TO PROVE IT. WE ARE ENCL OSING HEREWITH BALANCE SHEETS AND PROFIT AND LOSS ACCOUNT OF WASHINGTON SOFTWARE LTD. (PAGE 1 TO 65). FROM THE S AME IT IS CLEAR THAT THE SALE AND PROFITABILITY HAS LEAD TO I NCREASE IN ASSETS OF THE COMPANY AND REDUCTION OF LIABILITIES. NO WHERE IT APPEARS THAT FINANCIAL POSITION OF THE COMPANY HAS GONE DOWN DUE TO CLOSURE TO BUSINESS (AS STATED BY MR. SANJAY SONAWANI).PAGE 66 TO 68 SHOW THAT WASHINGTON SOFTWA RE IS US BASED COMPANY AND WE ARE SURE THAT COMPANY IN IN DIA WAS WORKING IN COLLABORATION WITH IT. MAY BE AS STA TED BY US EARLIER, IT LOST CONTRACT WITH THAT COMPANY AND IT STARTED SELLING SOFTWARE ILLEGALLY AND WHEN CAUGHT, WITH A FEAR OF PROSECUTION IT DENIED HAVING SUPPLIED ANY SOFTWARE. PAGE 69 TO 99 CONTAIN VARIOUS DOCUMENTS WHICH SHOW THAT SEBI HAS ALSO TAK EN ACTION AGAINST THE COMPANY AND ITS DIRECTORS A NUMB ER OF TIMES. FURTHER IT IS A LISTED COMPANY AND AUDITED A CCOUNTS CANNOT BE TAKEN AS FALSE AND FABRICATED AS CLAIMED BY MR. SONAWANI. .. AS REGARDS QUERY PERTAINING TO SOME POINTS REGARDIN G ERP SOFTWARE, IT IS SUBMITTED AS UNDER: NO. QUESTION _ REPLY A. WHAT IS THE NAME OF THE SOFTWARE? ERP FOR SCHOOLS B. ON WHICH PLATFORM IT IS BASED, WHETHER ORACLE OR SOME OTHER? DATABASE : MS SQL SERVER 7 .0 DEV TOOL : MS VISULA BASIC 6.0 & CRYSTAL REPORTS C. WHAT ARE DIFFERENT MODULES OF THIS ERP? ATTENDANCE FINANCE INVENTORY FEES PAYROLL LIBRARY ADMISSION STUDENT DEVELOPMENT TIME TABLE E # LEARNING ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 44 D. WHO HAD BEEN GIVEN THE ACCESS TO DIFFERENT MODULES OF ERP? ERP WAS INSTALLED AND USED CENTRALLY. IT WAS PRIMARILY USED TO HOLD DATA AND GENERATE REPORTS AS WELL WHEN NEEDED. IT WAS INITIALLY OPERATED BY MR. K.K. VARGHESE. IT IS CURRENTLY OPERATED BY MR. A.D. DUTT A. E. WHO ARE THE PERSON IN CHARGE OF THE SERVER OF ERP? CURRENTLY MR. A.D. DUTTA F NAME OF THE PERSON WHO HANDLES THE MAINTENANCE OF ERP? DURING THE YEAR UNDER CONSIDERATION NO MAINTENANCE WAS REQUIRED. G NAME OF PERSON WHO HANDLES THE UPDATES OF THIS ERP SYSTEM? PERSONS FORM WASHINGTON SOFTWARE LIMITED WHO DELIVERED THE SOFTWARE ALSO INSTALLS THE UPDATE. H. A FTER HOW MANY MONTHS, THE ERP IS UPDATED? WASHINGTON SOFTWARE LIMITED DELIVERED AND INSTALLED UPDATE AS AND AS WHEN THEY HAD THEM READY. WHO SUPERVISED THE INSTALLATION OF ACTIVATION OF ERP IN EACH INSTITUTE? ERP WAS INSTALLED CENTRALLY TO SAFE GUARD DATA AND MAINTAIN CONFIDENTIALITY AS ALSO TO AVOID BEING HACKED AND MISUSED. I J . NAME THE PERSON WHO GAVE/ GIVE TRAINING FOR ERP OPERATIONS? I NITIALLY TRAINING WAS GIVEN TO MR. K.K. VARGHESE AT THE CENTRAL OFFICE BY WASHINGTON SOFTWARE LIMITED PERSONS. K. WHO ARE THE PERSONS ACTUALLY OPERATING THIS ERP IN EACH INSTITUTE? NOT APPLICABLE, AS ERP WAS INSTALLED CENTRALLY. L MENTION IN DETAIL, HOW THE ERP SOFTWARE FROM WASHINGTON SOFTWARE LTD. IS BEING PURCHASED, I.E. WHETHER SOCIETY CALLED QUOTATIONS, HOW ORDER IS PLACED, HOW BILLS RAISED/ RECEIVED AND HOW PAYMENTS IS BEING MADE. HOW THE DELIVERY OF SOFTWARE IS . RECEIVED & HOW IT IS INSTALLED IN C OMPUTER. THE PURCHASE OF SOFTWARE WAS HANDLED DIRECTLY BY DR. STYA PAUL, CHAIRMAN. (SINCE DECEASED). BILLS WERE RECEIVED FROM TIME TO TIME AND THE BILLS WERE PAID BY BANKING, CHANNEL. SOFTWARE WAS DELIVERED BY WASHINGTON SOFTWARE, LIMITED PERSONS AND INSTA LLED CENTRALLY. THE BILLS OF SOFTWARES PURCHASED FROM WSL ALONG WIT H BANK STATEMENTS ARE ENCLOSED HEREWITH AND REPLY TO SAME HAS ALREADY ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 45 BEEN FURNISHED IN THIS REPLY. AS REGARDS PRESENCE O F IT EXPERT IS CONCERNED, WE FEEL IT WILL NOT SERVE ANY PURPOSE AS THE ' HARD DISK COPIES BY THE OFFICIALS IS FROM DIFFERENT SERVER AN D NOT FROM MAIN SERVER CONTAINING REPORTS GENERATED OUT OF WSL SOFT WARE. 11. THE REPLIES OF ASSESSEE AS SUBMITTED FROM TIME TO TIME HAVE BEEN CAREFULLY CONSIDERED IN THE LIGHT OF MATERIAL IMPOUNDED DURING SURVEY DATED 29.03.2011 AS WELL AS BOOKS OF ACCOUNT S AND OTHER DOCUMENTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ARGUMENTS GIVEN BY ASSESSEE S AR VIDE HIS SUBM ISSIONS HAVE BEEN CLOSELY GONE THROUGH AND IT IS SEEN THAT THE A R HAS TAKEN UP THE FOLLOWING ISSUES: A) THAT THE STATEMENT OF SH. SANJAY D. SONAWANI, IS NOTHING BUT BUNDLE OF LIES AND THAT HE HIMSELF IS OF DOUBTFUL C HARACTER AND WAS IMPRISONED. FURTHER THAT HE HAS BEEN CHANGING HIS S TANCE IN VARIOUS STATEMENTS. ALSO THAT SEBI HAS TAKEN ACTION AGAINST THE WSL. B) THAT THE STATEMENT OF SH. SANJAY D. SONAWANI HAS BEEN RECORDED U/S 133A AND IT IS NOT A STATEMENT ON OATH AND HAS NO EVIDENTIARY VALUE. C) THAT THE STATEMENT OF SH. SANJAY D. SONAWANI, H AS BEEN RECORDED BEHIND THE ASSESSEE'S BACK AND THE SAME CA NNOT BE USED AGAINST ASSESSEE UNLESS OPPORTUNITY TO CROSS#E XAMINE HIM IS PROVIDED TO ASSESSEE. D) THAT ACCOUNTS OF WSL ARE AUDITED AND THE DEPART MENT HAS NOT EXAMINED THE AUDITOR CONCERNED. FURTHER, THAT T HE ASSESSMENTS OF WSL MUST HAVE BEEN REOPENED. E) REGARDING STATEMENTS OF SMT. ANITA PAUL, SH. AL OK SAKLANI AND SH. DEEPANKAR CHAKRABARTI, THE AR STATED THAT T HEY ARE ACADEMICIANS AND DOES NOT HAVE A COMPUTER BACKGROUN D AND THAT SAME IS THE SITUATION WITH SH. NAGENDRA NAUTIY AL, HE BEING AN ACCOUNTANT. FURTHER, THAT THE WHILE INSTIT UTION STAFF MAKES USE OF THEIR OWN SOFTWARE FOR DAY TO DAY USE, THEY NEED NOT KNOW ABOUT SOFTWARE INSTALLED AT HEAD OFFI CE, SINCE THESE ARE FOR MANAGEMENT INFORMATION/ CONTROL TO WH ICH SCHOOL STAFF IS NOT FULLY PRIVY TO. F) THAT REGARDING STATEMENT OF SH. AMITAVA MISRA, EVEN THOUGH HE SHOWED IGNORANCE ABOUT THE AVAILABILITY OF ORIGI NAL CDS BUT HE NOT ADMITTED THAT WSL SOFTWARE IS NOT INSTAL LED. FURTHER, THAT HE MAY NOT HAVE BEEN ABLE TO SHOW ANY PRINTING DUE TO CONFUSION. THE AR ALSO PRODUCED CERTAIN REPO RTS ALLEGEDLY GENERATED FROM SOFTWARE AS AN EVIDENCE FO R ITS INSTALLATION. G) REGARDING STATEMENT OF SH. VIJAY BERLIA, THE AR HAS STATED THAT HE DID NOT HAVE THE COMPLETE BACKGROUND OF ACA DEMIC ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 46 ISSUES OF THE INSTITUTIONS AND SOFTWARE DECISIONS W ERE MADE BY CHAIRMAN DR. STYA PAUL (SINCE DECEASED). FURTHER THAT SH. BERLIA, BEING TIRED ON THE DAY OF SURVEY, GOT CONFU SED. H) SOFTWARE PURCHASED FROM WSL IS INSTALLED IN THE CENTRAL SERVER AT THE HEAD OFFICE BEING OF UTMOST IMPORTANC E AND REQUIRING SECRECY. I) THAT THE ASSESSEE IS AN INNOCENT CUSTOMER WHO H AS PURCHASED SOFTWARE RELYING ON AN UNRELIABLE PERSON. 11.1 THE ABOVE ARGUMENTS OF ASSESSEE HAVE BEEN DULY CONSIDERED BUT THE SAME ARE NOT FOUND TO BE ACCEPTABLE DUE TO REASONS MENTIONED BELOW: A) THE GENERAL CONDUCT OF SH. SANJAY D. SONAWANI HA S NO BEARING ON THE PRESENT CASE AS THIS DOES NOT JUSTIFY THE ALLEG ED BOGUS PURCHASES MADE BY THE ASSESSEE FROM M/S WASHINGTON SOFTWARE LIMITED. SH. SONAWANI MIGHT HAVE UNDER GONE IMPRISO NMENT BUT IT WOULD NOT NEGATE THE FACT THAT HE HAS ACTUALLY GIVE RN ACCOMMODATION ENTRIES TO ASSESSEE SOCIETY AND THAT BASED ON THESE ENTRIES THE EXPENSES OF ASSESSEE WERE INFLATED AND ITS FUNDS WERE MISUTILIZED. THE ARGUMENT OF ASSESSEES AR THAT SH. SONAWANI HAS CHANGED HIS STAND IN VARIOUS STATEMENTS AND THEREFO RE, HAS NO FORCE IS NOT ACCEPTABLE BECAUSE SH. SONAWANI HAS NOWHERE BACK#TRACKED FROM HIS MAIN DEPOSITION THAT HIS COMPANY WSL WAS P ROVIDING ONLY BOGUS SALES BILLS WITHOUT ACTUAL DELIVERY OF SOFTWA RE THUS, THE BASIC FACT THAT HIS COMPANY HAD NO INFRASTRUCTURE, MAN PO WER AND EXPERTISE TO DEVELOP SOFTWARE AND THAT ITS SALES WE RE NOT GENUINE, REMAINED THE SAME IN ALL THE STATEMENTS GIVEN BY HI M. HE HAS RETRACTED ONLY ON THE VERSION THAT WHETHER SH. PARA G V MEHTA, CA WAS INSTRUMENTAL IN ALL THE BOGUS ACTIVITIES OF WSL OR HE HIMSELF CONDUCTED ALL THE AFFAIRS OF HIS COMPANY, WSL AND T HIS HAS NO BEARING ON THE PRESENT CASE BECAUSE THE FACT REMAIN S THAT THE ASSESSES WAS PROCURING BOGUS BILL WITHOUT ACTUAL RE CEIPT OF SOFTWARE AND THEREBY, MISUTILIZED THE INCOME DERIVED FROM TH E PROPERTY OF TRUST. IN THIS WAY, THE ASSESSEE HAS BEEN CLAIMING 100% UTILIZATION ON ACCOUNT OF PURCHASE OF SOFTWARE AND FURTHER 60% ON ACCOUNT OF DEPRECIATION ON SAID SOFTWARE IN THE YEAR OF PURCHA SE AND BALANCE DURING NEXT YEARS. THUS, IT WAS CLAIMING DOUBLE BEN EFIT U/S 11 ON ACCOUNT OF ALLEGED SOFTWARE, THOUGH THE SOFTWARE WE RE NEVER RECEIVED AND THE MONEY PAID THROUGH CHEQUES/DRAFTS WAS ROUTED BACK TO THE PERSONS MANAGING AFFAIRS OF ASSESSEE SO CIETY. THIS HAS BEEN DISCUSSED IN DETAIL VIDE PARA 7 OF THIS ORDER. THE ARGUMENT OF AR THAT SEBI HAS TAKEN ACTION AGAINST WSL FURTHER S HOWS THAT ALL WAS NOT WELL WITH THE AFFAIRS OF SAID COMPANY, AND GIVEN THE CIRCUMSTANCES, THE ADMISSION MADE BY SH. SONAWANI, THAT HIS COMPANY RESORTED TO GIVING ACCOMMODATION ENTRIES#FR OM THE YEAR ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 47 2003#04 ONWARDS BECAUSE ITS FINANCIAL HEALTH WAS NO T GOOD, ALL THE MORE PROVED TO BE CORRECT. B) FURTHER, THE ARGUMENT THAT STATEMENT OF SH. SONA WANI HAS NO EVIDENTIARY VALUE, SINCE IT IS RECORDED U/S 133A, I S ALSO NOT ACCEPTABLE BECAUSE THE STATEMENTS OF SH. SANJAY D. SONAWANI HAVE BEEN RECORDED U/S 131, WHICH DRAWS ITS POWER FROM C ODE OF CIVIL PROCEDURE 1908 AND NOT U/S 133A AS ALLEGED BY THEAR , THEREFORE, THESE STATEMENTS HAVE FULL EVIDENTIARY VALUE. C) THE ASSESSEE WAS GIVEN REASONABLE AND SUFFICI ENT OPPORTUNITY TO CROSS EXAMINE SH. SANJAY D. SONAWANI AS PER THE PROVISIONS OF CPC VIDE THIS OFFICES COMMISSION DATED 18.02.2013 AND LETTER DATED 11.03.2013, WHICH HAS BEEN REFUSED BY ASSESSEE FOR THE REASONS BEST KNOWN TO IT. THIS HAS ALREADY BEEN DISCUSSED I N DETAIL VIDE PARA 9 TO 9.7 OF THIS ORDER. D) IT IS WRONG ON THE PART OF ASSESSEE TO ALLEGE T HAT THE DEPARTMENT HAS NOT EXAMINED THE AUDITOR OF WSL, AS THE NECESSARY EXAMINATION HAS BEEN CARRIED OUT IN THIS RESPECT. T HE AUDIT REPORT OF WSL HAS PURPORTEDLY BEEN SIGNED BY ONE SH. K. SAMPA TH, CA HAVING REGISTRATION NO. 14457 AND ADDRESS AT 428/2, NEW MANGALWAR PETH, NEAR APOLLO TALKIES, PUNE#30. FROM THE FIELD ENQUIRIES CONDUCTED BY DDIT(INV.) U#L(L) PUNE, IT W AS FOUND THAT THE ADDRESS AND PHONE NUMBER MENTIONED IN AUDIT REPORT WERE WRONG AND THAT THIS CA ACTUALLY WORKS FROM CHENNAI OF AND HAS NEVER DEALT WITH WSL AND THAT THE SIGNATURE APPEARING ON THE AUDIT REPORT OF WSL DOES NOT MATCH WITH HIS SIGNATURES. (THE COP Y OF LETTER WRITTEN BY SH. SAMPATH TO DDLT(INV.)JJ# 1(1), PUNE IN THIS RESPECT IS PLACED ON RECORD). THIS PROVES THAT THE STATEMENT (REPRODUCED IN PARA 5 OF THIS ORDER) DATED 16.03.2013 OF SH SONAWA NI IS TRUE, WHEN IN REPLY TO QUESTION NO. 8, HE STATED THAT NO ACTUAL AUDIT TOOK PLACE. SECONDLY, THE ASSESSEES AR HAS ARGUED THAT THE ASS ESSMENTS OF WSL SHOULD HAVE BEEN REOPENED AND ACTION SHOULD HAV E BEEN TAKEN AGAINST IT. IN THIS RESPECT, IT IS CLARIFIED THAT W SL IS BEING ASSESSED AT MUMBAI/PUNE AND THE REQUIRED ASSESSMENTS/ REASSE SSMENTS ETC. ARE BEING MADE BY THE DEPARTMENTAL OFFICER WHO HAS JURISDICTION OVER WSL. AS SUCH THE ASSESSMENTS/ SURRENDER OF WSL WOULD HAVE NO IMPACT ON THE ASSESSMENT OF ASSESSEE SOCIETY#, W HICH HAS ARTIFICIALLY INFLATED ITS EXPENSES AND THEREBY MISU TILIZED THE FUNDS, BY PROCURING BOGUS SALES BILLS FROM WSL. E) THE ARGUMENT OF ASSESSEE'S AR THAT SMT. ANITA P AUL, SH: ALOK SAKLANI AND SH. DEEPANKAR CHAKRABARTI ARE ACADEMICI ANS AND DOES NOT HAVE COMPUTER KNOWLEDGE IS ALSO NOT ACCEPTABLE BECAUSE THESE ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 48 PEOPLE ARE HEAD OF INSTITUTIONS AND THE BILLS/ VOUC HERS ETC. ARE ENTERED IN BOOKS ONLY AFTER THEIR APPROVAL. FURTHER , THEY WERE ALLOWED TO CONSULT THE I. T. PROFESSIONALS, PURCHAS E AND ACCOUNTS PERSONS OF INSTITUTIONS WHO WERE PRESENT DURING SUR VEY. ALL OF THEM AND SH. NAUTIYAL, ACCTT., CATEGORICALLY STATED THAT THE BILLS RELATED TO PURCHASE OF SOFTWARE WERE ENTERED IN BOOKS ONLY ON THE DIRECTIONS OF HEAD OFFICE AND THAT NO SOFTWARE FROM WSL HAS EVER BEEN RECEIVED/ INSTALLED AT THEIR INSTITUTIONS. F) THE AR HAS ARGUED THAT SH. VIJAY BERLIA DID NOT HAVE COMPLETE BACKGROUND AND THAT THE SOFTWARE DECISIONS WERE MADE BY DR. STYA PAUL (SINCE DECEASED). THIS ARGUMENT IS NO THING BUT AN EFFORT TO SAVE THE OFFICE BEARER# SH. VIJAY BERLIA, WHO IS AT HELM OF AFFAIRS AT THE SOCIETY BESIDES BEING THE PERSON WHO HAS APPROVED HUGE PAYMENTS TOTALING OVER RS. 15 CRORE FROM FINAN CIAL YEAR 2003# 04 TO 2010#11, TO A COMPANY WITHOUT RECEIVING ANY P RODUCT OR SERVICE IN RETURN. QUESTION 16 OF HIS STATEMENT (AS REPRODUCED IN PARA 6(VI) OF THIS ORDER) PROVES IT BEYOND DOUBT TH AT EVEN AFTER DEMISE OF DR. STYA PAUL, PAYMENT OF RS. 2.60 CRORE WERE APPROVED AND BY SH. BERLIA TO WSL, AND THAT TOO WITHOUT RECE IPT OF ANY BILL OR PRODUCT/ SOFTWARE FROM AND NOT FROM PUNE. ON ENQUIR IES IN THIS RESPECT, SH. K. SAMPATH INFORMED THAT HE IS NOT AWA RE WSL. OTHERWISE ALSO IT CANNOT BE SAID THAT PURCHASE/ PAY MENT FOR SOFTWARE WAS LOOKED AFTER BY DR. STYA PAUL AND NOT SH. BERLIA BECAUSE PERUSALGF IMPOUNDED RECORD REVEALS THAT THE BILLS OF WSL SINCE THE YEAR 2003, WERE SIGNED BY SH. BERLIA AND WORD APPROVED HAS BEEN WRITTEN IN HIS HAND WRITING. THE ASSESSEE IS JUST TRYING TO SHIFT THEENTIRE BLAME FOR WRONG D OING ON A DECEASED PERSON BUT THIS WOULD NOT SERVE ANY PURPOSE BECAUSE THE EVIDENCE PLACED ON RECORD PROVES OTHERWISE. G. G) VIDE ORDER SHEET DATED 11.03.2013, THE ASSESS EE WAS REQUIRED TO EXPLAIN ABOUT VARIOUS MODULES OF EBB SO FTWARE AND AS TO WHO ALL INSTALLS, HANDLES, MANAGE, AND OPERATE E ACH SUCH MODULE AND OVERALL SOFTWARE. THE PERUSAL OF SUBMISSION REV EALS THAT THE AR GAVE VERY INSUFFICIENT AND INCOMPLETE INFORMATION A ND FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF HIS REPLY. IT IS INCORRECT TO SAY THAT THE SOFTWARE HAVE BEEN PURCHASED AND INSTALLED IN THE CENTRAL OFFICE. THE INVESTIGATION CARRIED OUT BY THE DEPART MENT DURING THE COURSE OF SURVEY CLEARLY ESTABLISHED THAT THE EBP S OFTWARE WERE NEVER PURCHASEDFROM WSL OR INSTALLED IN ANY OF THE INSTITUTIONS OR HEAD OFFICE OF THE ASSESSEE SOCIETY. THE PERUSAL OF BILLS OF WSL REVEALS THAT SOFTWARE IN QUESTION IS MULTIPLE USER ERP SOFTWARE, WHERE ERP STANDS FOR ENTERPRISE RESOURCE PLANNING . IT IS A BUSINESS MANAGEMENT SOFTWARE THAT ALLOWS AN ORGANIZ ATION TO USE A SYSTEM OF INTEGRATED APPLICATIONS TO MANAGE ITS BUS INESS. THE ERP ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 49 IN EDUCATIONAL INSTITUTE COVERS THE FUNCTIONALITIES OF THAT INSTITUTE FROM THE PERSPECTIVE OF VARIOUS USERS CARRYING DIFF ERENT ROLES AND RESPONSIBILITIES SUCH AS STUDENTS, TEACHERS, STAFF, PRINCIPAL, MANAGEMENT, PARENTS. ALUMNI ETC. ALL THE DATA IS MA NAGED IN A TIME SENSITIVE MANNER ALONG WITH THE RULES AND POLICIES APPLICABLE AT THAT TIME, SO WHENEVER REQUIRED, THE EXACT INFORMATION C AN BE RE# PRODUCED AS IT IS. AN ERP SOFTWARE CONSISTS OF MANY ENTERPRISE SOFTWAR E MODULES. EACH ERP MODULE IS MOSTLY FOCUSED ON ONE AREA OF BU SINESS PROCESSES, SUCH AS STUDENT ATTENDANCE, PAYROLL, LIBRARY MANAGEMENT ETC. ERP SOFTWARE PACKAGE IS DESIGNED RIGHT FROM THE BEGINNING TO INCORPORATE MOST OF THE INFORMATIO N AN ORGANIZATION NEEDS INTO ONE PROGRAM. THIS MEANS THA T THE SYSTEM IS DESIGNED TO INTEGRATE ALL DEPARTMENTS. AL L THE INFORMATION IS IN ONE SYSTEM, SO MANAGERS AND OWNER S HAVE ACCESS TO THE DATA THEY NEED WHEN THEY NEED IT THE BASIC GOAL OF ERP IS PROVIDE ONE CENTRAL REPOSITORY FOR ALL IN FORMATION THAT IS SHARED BY ALL THE VARIOUS ERP FACETS IN ORD ER TO SMOOTH THE FLOW OF DATA ACROSS THE ORGANIZATION. IN SHORT, ERP IS A COMPREHENSIVE SYSTEM WHICH MANAGES THE ENTIRE INFORMATION OF AN ORGANIZATION AT ONE PLACE. IT IS SEEN FROM REPLY DATED 18.03.2013 THAT THE ASSESSEE HAS MENTIONED FOLLOWING MODULES O F ERP SOFTWARE: ATTENDANCE FINANCE INVENTORY * FEES PAYROLL * LIBRARY * ADMISSION * STUDENT DEVELOPMENT * TIME TABLE * E#LEARNING THE AR HAS FURTHER STATED THAT THE ALLEGED SOFTWARE IS INSTALLED CENTRALLY TO MAINTAIN SECRECY AND THAT ON LY ONE EMPLOYEE SH. K.K VARGHESE WAS TRAINED IN OPERATION OF ERP, T HAN HOW THE ASSESSEE IS ABLE TO OPERATE AND MAINTAIN SUCH A COM PREHENSIVE SOFTWARE AS THE SAME IS MULTIPLE USER SOFTWARE SYST EM WHICH IS DESIGNED TO INTEGRATE ALL DEPARTMENTS? FURTHER, OUT OF MODULES MENTIONED ABOVE, THE MODULES LIKE ATTENDANCE, LIBRA RY, TIME#TABLE, STUDENT DEVELOPMENT AND E#LEARNING ARE INSTITUTION SPECIFIC FOR WHICH THE ACCESS SHOULD HAVE BEEN PROVIDED TO THE R ESPECTIVE INSTITUTIONS/ COLLEGES FOR DATA ENTRY AND USAGE BUT THE SAME HAS NOT BEEN DONE, WHICH IS VERY STRANGE. THE REPLY GIVEN B Y ASSESSEE THAT ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 50 ERP IS INSTALLED CENTRALLY TO SAFE#GUARD DATA AND M AINTAIN CONFIDENTIALLY IS ALSO NOT ACCEPTABLE BECAUSE EVEN AT HEAD OFFICE OF THE ASSESSEE NO SUCH ERP SOFTWARE WAS FOUND TO BE I NSTALLED DURING THE COURSE OF SURVEY OPERATION ON 29.03.2011. DURIN G SURVEY, THE IT HEAD/COMPUTER EXPERTS OF THE SOCIETY COULD NOT SHOW ANY ERP SOFTWARE DEVELOPED BY M/S WASHINGTON SOFTWARE LTD.. PUNE INSTALLED ON THE COMPUTER SYSTEM. NEITHER COULD THEY PRODUCE ORIGINAL CD OR LICENSE RECEIVED FROM WSL. EVEN DURING THE COURSE OF ASSESSMENT, SUFFICIENT OPPORTUNITIES WERE PROVIDED TO ASSESSEE VIDE ORDER SHEET NOTINGS DATED 14.02.2013, 6.03.2013, 7. 03.2013, 8.03.2013 AND 11.03.2013, TO PRODUCE THE ORIGINAL CD OF ERP SOFTWARE, STOCK REGISTER AND FIXED ASSET REGISTER S HOWING RECEIPT OF SOFTWARE AS WELL AS LICENCE OF SOFTWARE. HOWEVER, T HE ASSESSEE FAILED MISERABLY ON ALL THESE COUNTS AND EVEN AFTER REPEATED OPPORTUNITIES, HE COULD NOT SHOW ANY ENTRY REGARDIN G RECEIPT OF SOFTWARE AT CENTRAL OFFICE/SCHOOLS ETC. IN THE STOC K REGISTER/FIXED ASSET REGISTER AND FURTHER HE ALSO FAILED TO PRODUC E ORIGINAL CD OR LICENCE OF THE ALLEGED SOFTWARE. THIS PROVES THAT T HE ALLEGED SOFTWARE WERE ACTUALLY NEVER PURCHASED/ RECEIVED/ INSTALLED AT ANY PREMISE OF ASSESSEE, ONLY THE BILLS WERE RECEIVED AND ENTER ED IN BOOKS. FURTHER, THE REPORTS SUBMITTED DURING ASSESSMENT AN D ALLEGED TO HAVE BEEN GENERATED THROUGH ERP SOFTWARE HAVE BEEN PERUSED BUT THE SAME COULD NOWHERE ESTABLISH THAT T HESE HAVE BEEN GENERATED THROUGH THE SAME ERP SOFTWARE, FOR WHICH HUGE BILLS ARE ENTERED IN BOOKS EVERY YEAR. IT MAY BE A CASE WHERE ASSESSEE HAS INSTALLED A SIMILAR KIND OF SOFTWARE AFTER SURVEY B ECAUSE DURING SURVEY OPERATION ON 29.03.2013, NO SUCH SOFTWARE WA S FOUND TO BE INSTALLED AT ANY PREMISE OF ASSESSEE. H) IT IS PERTINENT TO MENTION HERE THAT PERUSAL OF RECORD REVEALS THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS PROCURED BILLS AMOUNTING TO RS. 2,68,59,000/# FROM WSL, THE DELIVE RY ADDRESS MENTIONED ON THESE BILLS SHOWS THAT THE SOFTWARE HA S BEEN DELIVERED TO THE RESPECTIVE INSTITUTES/ SCHOOLS AND NOT THE H EAD OFFICE AS ALLEGED BY THE ASSESSEE. FOR EXAMPLE PERUSAL OF CER TAIN BILLS SHOWS FOLLOWING DELIVERY ADDRESS: A) INVOICE DATE 21.04.2009, MULTIPLE USER ERP SOFTWARE FOR RS. 50,00,000/# DELIVER TO: APEEJAY SCHOOL, NOIDA (U.P.) B) INVOICE DATE 27.04.2009, MULTIPLE USER ERP SOFTWARE FOR RS. 50,00,000/# DELIVER TO: APEEJAY SCHOOL OF MARKETING, DWARKA, NEW DELHI C) INVOICE DATE 05.05.2009, MULTIPLE USER ERP SOFTWARE FOR RS. 30,00,000/# DELIVER TO: APEEJAY SCHOOL, GREATER NOIDA (U.P.) ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 51 D) INVOICE DATE 14.05.2009, MULTIPLE USER ERP SOFTWARE FOR RS. 50,00,000/# DELIVER TO: APEEJAY SCHOOL, FARIDABAD E) INVOICE DATE 26.05.2009, MULTIPLE USER ERP SOFTWARE FOR RS. 50,00,000/# DELIVER TO: APEEJAY SCHOOL, JALANDHAR. F) INVOICE DATE 28.12.2009, ERP SOFTWARE FOR NURSERY C LASSES FOR RS. 12,02,400/# DELIVER TO: APEEJAY SCHOOL, PITAMPURA. G) INVOICE DATE 18.01.2010, ERP SOFTWARE FOR NURSERY C LASSES FOR RS.2,35,000/# DELIVER TO: APEEJAY SCHOOL, FARIDABAD. ETC.. THE PERUSAL OF BILLS SHOW THAT DURING THE YEAR ASSE SSEE HAS PROCURED A NUMBER OF ERP SOFTWARE (I.E. 5 MULTIPLE USER ERP SOFTWARE AND 5 ERP SOFTWARE FOR NURSERY CLOSES) AND AS PER BILLS, THESE SHOULD HAVE BEEN DELIVERED TO THE RESPECTIVE INSTITUTION AT THE ADDRESSES MENTIONED ABOVE, AND NOT TO THE HEAD OFFI CE AS ALLEGED BY THE ASSESSEE NOW. FURTHER, THE PECULIAR THING IS TH AT ERP SOFTWARE WITH THE SAME DESCRIPTION HAS BEEN PROCURED FOR RS 50 LAKH AS PER INVOICES MENTIONED AT NO. A, B, D & E ABOVE, AND FOR RS. 30 LAKH AS PER INVOICE AT NO. C ABOVE AND THE SAME HAS BEEN THE CASE WITH ERP SOFTWARE FOR NURSERY CLASSES. THE REASON FOR TH IS VARIATION IN RATE COULD NOT BE ASCERTAINED. FURTHER THAT, HAD TH E ASSESSEE ACTUALLY PURCHASED AND INSTALLED THE ERP SOFTWARE A T ITS HEAD OFFICE, THE BILL SHOULD HAVE MENTIONED DELIVERY ADDRESS OF HEAD OFFICE AND THERE WAS NO NEED TO PROCURE MANY SOFTWARE OF SAME KIND FOR THIS PURPOSE BECAUSE ONE MULTIPLE USER ERP SOFTWARE AND ONE ERP FOR NURSERY CLASSES WOULD HAVE SERVED THE PURPOSE OF AS SESSEE. FURTHERMORE, AS PER NORMAL PROCEDURE FOLLOWED BY AS SESSEE DURING PROCUREMENT OF ANY SOFTWARE, THE DATE OF INSTALLATI ON ALONGWITH REPORT OF SUCCESSFUL INSTALLATION/RUNNING OF SOFTWA RE HAVE TO BE MENTIONED ON BILLS OF WSL, ALSO THE SOFTWARE CD AND LICENCE WERE REQUIRED TO BE ENTERED IN STOCK REGISTER/ FIXED ASS ETS REGISTER. HOWEVER, NOTHING OF THIS SORT HAS BEEN DONE IN CASE OF SOFTWARE FROM WSL, WHEREAS ASSESSEE IS FOLLOWING THIS DETAILED PR OCEDURE IN CASE OF ALL THE SOFTWARE OTHER THAN THOSE PURCHASED FROM WSL. THIS SHOWS THAT THE ASSESSEE, WHICH HAS BEEN OVER-CONSCIOUS TO OBTAIN LICENCE AND ORIGINAL CD EVEN IN CASE OF SOFT WARE WORTH FEW THOUSAND RUPEES, COULD NOT BE CONSIDERED AS AN INN OCENT CUSTOMER WHO HAS PURCHASED THE SOFTWARE WORTH SEVERAL CRORES OF RUPEES JUST RELYING ON AN UNRELIABLE PERS ON, AS STATED BY A R, WITHOUT BOTHERING TO OBTAIN ORIGINAL CD AND LICENCE FOR THE SAID SOFTWARE. ACTUALLY, THE FACT IS THAT NO SOFTWARE HAS EVER BEEN PURCHASED; ONLY BOGUS BILLS ARE OBTAINED TO IN FLATE EXPENSES. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 52 I) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE SOCIETY HAS PAID MONEY THROUGH CH EQUES/ BANK DRAFTS WHICH HAVE BEEN CREDITED IN THE AXIS BANK AC COUNT NO. 104010200005128 OF WSL (COPY OF BANK STATEMENT IS P LACED ON RECORD). THE FACT AS NARRATED BY SH. SONAWANI IN HI S STATEMENT THAT HIS COMPANY WSL WAS ACTUALLY NOT DEVELOPING ANY SOF TWARE AND WAS ISSUING ONLY BOGUS SALE BILLS IS FURTHER CORROB ORATED FROM THE FACT THAT AFTER CREDIT OF AMOUNT IN SAID ACCOUNT FR OM THE ASSESSEE, THE CHEQUES WERE IMMEDIATELY ISSUED TO FOLLOWING PA RTIES: DATE CHEQUE NO. NARRATION AMOUNT (RS.) 11.05.20 09 288640 NETANIA SHARES & SECURITIES P. LTD. 5500000/# 12.05.20 09 288641 NETANIA SHARES & SECURITIES P. LTD. 2500000/# 14.05.20 09 288642 OMEGA LIFESTYLES & TECHNOLOGIES 2000000/# 29.05.20 09 288643 NETANIA SHARES & SECURITIES P. LT D. 2500000/# 01.07.20 09 288644 OMEGA LIFESTYLES & TECHNOLOGIES 4000000/# 14.07.20 09 288647 . OMEGA LIFESTYLES & TECHNOLOGIES 1000000/# 31.07,20 09 288648 NETANIA SHARES & SECURITIES PVT. LTD. 1000000/# 10.08.20 09 60003 NETANIA SHARES & SECURITIES PVT. L TD. 1000000/# 12.10.20 09 60007 AMIT INTERNATIONAL LTD. 2500000/# 22.10.20 09 60008 RAHUL ENTERPRISES 1100000/# 22.10.20 09 60010 SANJAY SONAWANI 200000/# 23.10.20 09 60009 SUIYODAY FINMARK 500000/# 15.02.20 10 60016 TOPSUN RIM IRON ORE INDUSTRIES 1000000/# 18.02.20 10 60018 A TO Z ALLOY P. LTD. 1000000/# 12.03.20 10 60024 KARMA ISPAT LTD. 2000000/# 22.03.20 10 60025 SWATI SPENTOSE P. LTD. 5000000/# 23.03.20 10 60026 SWATI SPENTOSE P. LTD. 4000000/# 30.03.20 10 60028 SWATI SPENTOSE P. LTD. 3500000/# FROM THE DESCRIPTION OF THE NAME OF THE PARTIES ITS ELF LIKE NETANIA SHARES & SECURITIES P. LTD., OMEGA LIFESTYLES & TEC HNOLOGIES, TOPSUN RIM IRON ORE INDUSTRIES, A TO Z ALLOY P. LTD ., KARMA ISPAT LTD. AND SWATI SPENTOSE P. LTD, IT IS CLEAR THAT TH E SUBSEQUENT PAYMENTS HAVE BEEN MADE TO PARTIES OTHER THAN THOSE INVOLVED IN SOFTWARE DEVELOPMENT SERVICES. THEREFORE, IT IS PRO VED BEYOND ANY DOUBT THAT THE STATEMENT GIVEN BY SH. SONAWANI THAT HIS COMPANY DID NOT DEVELOP SOFTWARE FROM FY 2003#04 ONWARDS AN D THAT IT WAS PROVIDING ONLY ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 53 SOFTWARE TO CERTAIN CONCERNS, IS CORRECT, THE ASSESSEE BEING ONE OF THE MAJOR BENEFICIARY OF THESE BOGUS TRANSACTIONS. 12. TAKING INTO ACCOUNT THE ENTIRETY OF FACTS, CIRC UMSTANCES. OBSERVATION AND EVIDENCES. IT IS CONCLUDED THAT THE ASSESSEE SOCIETY HAS BEEN PROCURING BOGUS BILLS OF SOFTWARE FROM WSL SINCE FINANCIAL YEAR 2003-04, AND THE MONEY HAS BEE N ROUTED BACK TO THE PERSONS MANAGING AFFAIRS OF ASSESSEE SOCIETY. THUS. THE ASSESSEE IS CLEARLY HIT BY PROVISIONS OF SECTION 13(I)(C) R.W.S. 13(3), AND EXEMPTION CLAIMED U/S 11 OF IT A CT, 1961 IS DENIED FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THE INCOME OF ASSESSEE SOCIETY IS BEING COMPUTED UN DER THE PROVISIONS OF SECTION 28-44 OF THE IT ACT, WITHOUT GIVING ANY EFFECT TO THE PROVISIONS OF SECTION 11 & 12. IN ADDITION TO ABOVE, IT IS PERTINENT TO MENTION HE RE THAT THE REGISTRATION GRANTED U/S 12AA TO ASSESSEE SOCIETY H AS ALSO BEEN CANCELLED BY THE CIT, JALANDHAR II W.E.F. AY 2004#0 5. THUS, OTHERWISE ALSO ASSESSEE IS NOT ENTITLED TO ANY BENE FIT U/S 11. 12.1 PERUSAL OF INCOME & EXPENDITURE A/C REVEALS TH AT OUT OF INCOME OF THE YEAR, THE ASSESSEE HAS TRANSFERRED CERTAIN A MOUNTS TO VARIOUS RESERVES AND PROVISIONS, WHICH IS NOT ALLOWABLE UND ER THE PROVISIONS OF IT ACT, THEREFORE, IN ORDER TO COMPUTE THE ACTUA L AMOUNT OF PROFIT/ SURPLUS FOR THE YEAR UNDER CONSIDERATION, ALL THE R ESERVES & PROVISIONS DEBITED TO I & E A/C ARE BEING ADDED BAC K AS PER FOLLOWING COMPUTATION: DEFICIT AS PER INCOME & 18,95,41,651 EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31.03.2010 ADDITION: PROVISIONS DEBITED TO I &EA/C 10,07,01,700/# DEVELOPMENT FUND GRATUITY RESERVE 3,08,94,802/# RESERVE FOR LEAVE ENCASHMENT 45,25,794/# DEVELOPMENT RESERVE 5,23,77,900/# REPAIRS & RENEWALS RESERVE 5,04,87,100/# CONTINGENCY RESERVE 5,10,90,000/# 29,00,77,926/ # SURPLUS/EXCESS OF INCOME OVER 10,05,35,645/- EXPENDITURE THUS, THE SURPLUS/EXCESS OF INCOME OVER EXPENDITURE OFRS. 10,05,35,645/# IS TAXABLE AND SINCE THE ASSESSEE, B Y PROCURING BOGUS BILLS FOR PURCHASE OF SOFTWARE, CONCEALED ITS INCOME FROM ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 54 ASSESSMENT AND ALSO FURNISHED INACCURATE PARTICULAR S OF ITS INCOME, PENALTY PROCEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT FOR CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PAR TICULARS ARE BEING SEPARATELY INITIATED. 13. BOGUS BILLS FOR SOFTWARE FROM WSL FROM PERUSAL OF RECORD AS WELL AS DETAILS PROVIDED BY ASSESSEE, IT IS SEEN THAT ASSESSEE HAS PROCURED BOGUS BILLS OF SOFT WARE FROM M/S WASHINGTON SOFTWARE LTD. FROM F. Y 2003#04 TO F. Y 2009#10, AS PER FOLLOWING DETAILS: TABLE -1 PURCHASE OF SOFTWARE FROM WSL F.Y. AMOUNT (RS.) 2003#04 1,30,00,000/# 2005#06 2,50,00,000/# 2006#07 3,40,00,000/# 2007#08 80,00,000/# 2008#09 2008#09 1,20,00,000/# 2009#10 2,68,60,900/- (230,00,000 +38,60,900) 13.1 OUT OF TOTAL AMOUNT OF RS.1,68,60,900/# PAID D URING THE YEAR UNDER CONSIDERATION, SOFTWARE WORTH RS. 2,30,0 0,000/# ONLY HAS BEEN TAKEN TO FIXED ASSET BLOCK OF COMPUTER AND DEPRECIATION @ 60% IS BEING CHARGED ON THIS SOFTWARE. WHEREAS THE BALANCE ERP SOFTWARE OF RS. 38,60,900/# HAS NOT BEEN ADDED TO FIXED ASSETS BUT HAS BEEN CLAIMED AS REVENUE EXPENSES BY EITHER DEBITING TO OTHER EXPENSES UNDE R ACTIVITY EXPENSES OR BY WRITING OFF AGAINST THE INCOME SHO WN UNDER 'OTHER FEES. IN FACT IT IS WRONG TO TREAT EXPENSE ON PURCHASE OF SOFTWARE AS REVENUE AS THE SAME IS A CAPITAL ASSET AS PER NEW APPENDIX I TO RULE 5 OF IT RULES AND DEPRECIATI ON RATE IS PRESCRIBED FOR IT. IN THIS CASE, THE ASSESSEE HAS W RONGLY CLAIMED THE SAME AS REVENUE EXPENDITURE. FURTHER, T HESE SOFTWARE ARE ALSO PURCHASED FROM WSL AND DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PROD UCE THE ORIGINAL CD, LICENCE OR ENTRY OF RECEIPT OF THESE S OFTWARE IN STOCK REGISTER, SO IT CANNOT BE SAID THAT WHETHER T HESE SOFTWARE WERE ACTUALLY PROCURED OR NOT. IN VIEW OF THESE FACTS, ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 55 THE EXPENSE OF RS. 38,60,900/- ON PURCHASE OF ERP SOFTWARE WHICH ARE DEBITED TO I&E A/C AS REVENUE EXPENSES, A RE BEING DISALLOWED AND THE ADDED TO TOTAL TAXABLE INCOME OF ASSESSEE. SINCE, THE ASSESSEE HAS CONCEALED AND FURNISHED INA CCURATE PARTICULARS OF ITS INCOME AND EXPENSES, PENALTY PRO CEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT ARE BEING SEPAR ATELY INITIATED. 13.2 IN CASE OF MULTIPLE USER ERP SOFTWARE WORTH R S. 2,30,00,000/#, THE ASSESSEE HAS TAKEN THE SAME TO F IXED ASSETS UNDER THE BLOCK COMPUTER AND HAS BEEN CLAI MING DEPRECIATION ON THE ALLEGED SOFTWARE, AS MENTIONED IN TABLE 1 GIVEN ABOVE, SINCE FY 2003#04. THE SAME REQUIRES TO BE DISALLOWED, SINCE THIS ERP SOFTWARE, WAS NEVER REAL LY INSTALLED AT ANY OF THE PREMISE OF THE ASSESSEE SOC IETY. PERUSAL OF SCHEDULE OF FIXED ASSETS REVEALS THAT TH E TOTAL DEPRECIATION OF RS. 3,53,21,395/# HAS BEEN DEBITED TO I & E A/C FOR THE YEAR ENDING 31.03.2010, IN RESPECT OF B LOCK COMPRISING OF COMPUTER' WHICH INCLUDES SOFTWARE. F OR THE PURPOSE OF COMPUTING THE DEPRECIATION TO BE DISALLO WED FOR THE YEAR UNDER CONSIDERATION, DEPRECIATION HAS BEEN CAL CULATED BY MAKING A SEPARATE BLOCK# COMPUTER SOFTWARE' FROM F Y 2003# 04 TO 2009#10 AS PER TABLE#2 GIVEN BELOW. DEPRECIAT ION ON ALLEGED SOFTWARE, WHICH IS REQUIRED TO BE DISALLOWE D FOR THE FY 2009#10 RELEVANT TO AY2010#11 IS COMPUTED AS UNDER: TABLE 2 BLOCK-COMPULER SOFTWARE F.Y. WDV AS ON 1ST APRIL (RS.) PURCHASE OF SOFTWARE FROM WSL (RS.) TOTAL(RS.) (2+3) DEPRECIATIO N @ 60% (RS.) WDV ON 31ST MARCH (RS.) 1 2 3 4 5 6 2003# 04 0 13000000 13000000 7800000 5200000 2004# 05 5200000 0 5200000 3120000 2080000 2005# 06 2080000 25000000 27080000 16248000 10832000 2006# 07 10832000 34000000 44832000 26899200 17932800 2007# 08 17932800 8000000 25932800 15559680 10373120 2008# 09 10373120 12000000 22373120 13423872 8949248 2009# 10 8949248 23000000 31949248 19169549 12779699 AS PER ABOVE TABLE, OUT OF TOTAL DEPRECIATION OF RS . 3,53,21,395/# DEBITED UNDER THE BLOCK# 'COMPUTER, DEPRECIATION O F RS. 1,91,69,549/# PERTAINING TO ERP SOFTWARE PURCHASED FROM WSL IS ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 56 BEING DISALLOWED FOR THE YEAR UNDER CONSIDERATION A ND THE SAME IS BEING ADDED TO THE TOTAL TAXABLE INCOME OF ASSESSEE . SINCE, THE ASSESSEE HAS CONCEALED AND FURNISHED INACCURATE PAR TICULARS OF ITS INCOME AND EXPENSES, PENALTY PROCEEDINGS U/S 271(1) (C) OF THE INCOME TAX ACT ARE BEING SEPARATELY INITIATED. 14. DONATION TO APEEJAY STY A EDUCATION FOUNDATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAS DEBITED RS. 25,00,00,000/# ON ACCOUNT OF DONATION IN ITS INCOME & EXPENDITURE ACCOUNT. PERUSAL OF RECORD REVEALED THAT SAID AMOUNT HAS BEEN PAID TO APEEJAY STYA EDUCATION FOUNDATION. THE ASSESSEES AR WAS ASKED VIDE ORDER SHEET ENTRY DATED 06.03.2013 AS UNDER: 'V) JUSTIFY THE PAYMENT OF DONATION OF RS. 25 CRORE TO APEEJAY STYA EDUCATION FOUNDATION; ALSO EXPLAIN WHETHER THIS FOU NDATION IS REGISTERED U/S 80G. IN RESPONSE THE ASSESSEES AR VIDE HIS REPLY DATED 18.03.2013 STATED AS UNDER: 2. IN ORDER SHEET ENTRY DATED 06.03.2013 YOU HAVE RAIS E A QUERY ASKING JUSTIFY THE PAYMENT OF DONATION OF RS. 25,0 0,00,000/# TO APEEJAY STYA EDUCATION FOUNDATION, ALSO EXPLAIN WHE THER THIS FOUNDATION IS REGISTERED U/S 80G. IN RESPONSE TO SA ME IT IS 'SUBMITTED AS UNDER: APEEJAY STYA EDUCATION FOUNDATION IS A SECTION 25 C OMPANY DULY REGISTERED U/S 12(AA) D ALSO U/S 80G. THE DONATIONS HAS BEEN GIVEN ABOUT OF THE CURRENT ACCRUALS KEEPING VIEW THE PROV ISIONS OF S. 11 AND 12 AND IS ALLOWABLE. THE VARIOUS DOCUMENTS CONC ERNING REGISTRATION ETC ARE ENCLOSED HEREWITH. (ANNEXURE A 43 #A48) THE REPLY OF ASSESSEE AS REPRODUCED ABOVE HAS BEEN CAREFULLY CONSIDERED BUT THE SAME IS NOT FOUND TO BE ACCEPTAB LE. IT IS SEEN THAT CONSEQUENT TO CANCELLATION OF REGISTRATION OF ASSES SEE SOCIETY BY THE CIT, THE ASSESSEE SOCIETY IS NO MORE REGISTERED U/S 12AA FOR THE YEAR UNDER CONSIDERATION, THUS, THE DONATION PAID O F RS. 25 CRORE TO APEEJAY STYA EDUCATION FOUNDATION IS NOT AN ALLOWAB LE EXPENSE, AS THE MONEY HAS NOT BEEN USED FOR THE PURPOSE OF BUSI NESS OF ASSESSEE. FURTHER, IN VIEW OF PROVISIONS OF SECTION 13(L)(C) R.W.S 13(3), THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 F OR THE YEAR UNDER CONSIDERATION. THEREFORE, OUT OF THIS DONATION, DED UCTION CAN ONLY BE ALLOWED TO ASSESSEE UNDER THE PROVISIONS OF SECTION 80G, MAXIMUM DEDUCTION BEING RESTRICTED TO TEN PER CENT OF GROSS TOTAL INCOME UNDER SECTION 80G(4). THEREFORE, THE DONATION PAID OF RS. 25 CRORE IS BEING DISALLOWED AND OUT OF THIS, DEDUCTION ALLOWED U/S 8 0G IS COMPUTED AS UNDER: SURPLUS/EXCESS OF INCOME OVER EXPENDITURE AS COMPUT ED IN PARAL2.1 ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 57 ABOVE RS. 10,05,35,645/# ADD: DONATION PAID RS. 25,00,00,000/# GROSS TOTAL INCOME RS. 35,05,35,645/# DEDUCTION ALLOWABLE U/S 80G (25,00,00,000 X 50% RESTRICTED TO 10% OF GTI) 3,50, 53,564/# THUS, OUT OF TOTAL DONATION PAID OF RS. 25,00,00,00 0/#, AFTER ALLOWING DEDUCTION OF RS.3,50,53,564/# U/S 80G, NET AMOUNT O F RS.21,49,46,436/# ( I.E. 25,00,00,000 3,50,53,564 ) IS BEING ADDED BACK TO TAXABLE INCOME OF ASSESSEE. PENALTY PROCEED INGS U/S 271(L)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE BEING SEPARATELY INITIATED IN THIS REGARD. 15. IN VIEW OF ABOVE DISCUSSION, THE TOTAL INCOME O F ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS COMPUTED AS UNDER: EXCESS OF INCOME OVER EXPENDITURE AS COMPUTED 10,05,35,645/# IN PARA 12.1 PARA 13.1 ABOVE ADDITION AS DISCUSSED IN RS. 38,6 0,900/# PARA 13.2. ABOVE ADDITION AS DISCUSSED IN RS. 1,9 1,69,549/# PARA 14 ABOVE ADDITION AS DISCUSSED IN RS. 21,49,46,436/# TOTAL TAXABLE INCOME RS. 33,85,12,530/# ASSESSED AS ABOVE. GIVE CREDIT FOR PREPAID TAXES AF TER VERIFICATION. CHARGE INTEREST U/S 234A, 234B, 234C & 234D AND WIT HDRAW INTEREST U/S 244A AS APPLICABLE AS PER INCOME TAX A CT. ISSUE PENALTY NOTICE AS PER PARA 12.1, 13.1, 13.2 & 14, D EMAND NOTICE AND CHALLAN ALONGWITH A COPY OF THIS ASSESSMENT ORDER. 7. BEFORE THE LD. CIT(A), THE ASSESSEE RAISED THE F OLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE LD. ACIT IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN TREATING THE SOFTWARE PURCHASE AS ACCO MMODATION ENTRY MERELY ON THE BASIS OF STATEMENTS OF MR. SONA WANI AND EVEN WITHOUT GIVING THE APPELLANT AN EFFECTIVE OPPO RTUNITY TO CROSS HIM AND ALSO NOT TAKING COGNIZANCE OF WORKING SHEETS OF THE SOFTWARE PROVIDED TO HER. 3. THAT THE LEARNED ASSISTANT COMMISSIONER OF INCOM E TAX IS NOT JUSTIFIED IN FORCING THE ASSESSEE TO GO TO PUNE AND CROSS ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 58 EXAMINE MR. SANJAY D. SONAWANI CITING OLD PROVISION S OF (WHICH WERE AMENDED) EVEN THOUGH SHE KNEW THAT MR SONAWANI IS DEPARTMENT'S WITNESS THAT THE ONUS TO P RODUCE / BRING ITS OWN WITNESS FOR CROSS EXAMINATION IS SQUA RELY ON THE DEPARTMENT. 4. THAT THE LEARNED ASSISTANT COMMISSIONER OF INCOME T AX IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT HAS VIOLATE D THE PROVISIONS OF S. 13 OF THE INCOME TAX ACT, 1961. 5. THAT THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX HAS FAILED TO APPLY HER INDEPENDENT MIND AND PASS THE Q UASI JUDICIAL ORDER. INSTEAD HE HAS BEEN INFLUENCED BY T HE ADMINISTRATIVE ORDER OF WORTHY CLT#LI JALANDHAR. 6. THAT THE LEARNED ASSISTANT COMMISSIONER OF INCOM E TAX IS NOT JUSTIFIED IN ASSESSING THE INCOME AS BUSINESS INCOM E INSTEAD OF ASSESSING THE SAME UNDER S. 11 TO 13 OF THE INCO ME TAX ACT, 1961. 7. THAT LEARNED ASSISTANT COMMISSIONER OF INCOME TAX T HOUGH ADMITTING THAT THE APPELLANT IS RUNNING 24 EDUCATIO NAL INSTITUTIONS WHICH IS AS PER THE OBJECTS OF THE SOC IETY AND IS CARRYING OUT GENUINE EDUCATIONAL ACTIVITIES YET#IGN ORED IT AND ASSESSED THE SAME UNDER S.28 # 44 OF THE INCOME TAX ACT INSTEAD OF ASSESSING THE SAME UNDER SECTION 11 TO 1 3 OF THE INCOME TAX ACT, 1961. WITHOUT PREJUDICE TO THE AFOREGOING AND IN THE ALTE RNATE : 8. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TA X HAS LEGALLY ERRED IN TREATING CAPITAL RECEIPTS AS REVEN UE RECEIPTS. 9. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TA X HAS LEGALLY ERRED IN DISALLOWING THE DONATION MADE BY M ADE BY THE APPELLANT TO ELIGIBLE ENTITY UNDER SECTION 80G. 10. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX H AS LEGALLY ERRED IN DISALLOWING DEPRECIATION ON SOFT WARE ARE PURCHASED DURING THE YEAR. 11. THE LEARNED ASSISTANT COMMISSIONER OF INCOME T AX HAS LEGALLY ERRED IN DISALLOWING, DEPRECIATION ON SOFTW ARE PURCHASED IN THE EARLIER YEARS. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 59 8. THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMIS SIONS DATED 13.08.2014 BEFORE THE LD. CIT(A): THE PRESENT APPEAL IS AGAINST THE ORDER DATED 28.03 .2013 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3, JALANDHAR, UNDER SECTION 143(3) OF THE INCOME TAX. ACT, 1961. WHEN THE ASSESSMENT PROCEEDINGS WERE GOING ON THE REGISTRATI ON UNDER S. 12AA WAS WITHDRAWN BY THE WORTHY CIT 2, JALANDHAR W ITH RETROSPECTIVE EFFECT. HOWEVER THE SAME HAS DULY BEE N RESTORED BY THE HONOURABLE ITAT, AMRITSAR BENCH VIDE ORDER DATE D 08.05.2014. THE ASSESSEE IS AN EDUCATIONAL SOCIETY, DULY REGIST ERED UNDER S. 12AA AND RUNNING VARIOUS EDUCATIONAL INSTITUTIONS. IT IS BEING ASSESSED REGULARLY AND THE YEAR UNDER APPEAL WAS AL SO TAKEN UP FOR SCRUTINY. THE AO ASSESSED THE ASSESSEE AS AOP APPLY ING THE PROVISIONS OF S. 28 TO 44 OF THE INCOME TAX ACT, 19 61. THIS HAS BEEN DONE PRESUMING THAT THE ASSESSEE HAS DONE BOGUS PUR CHASE OF SOFTWARE FROM WASHINGTON SOFTWARE LIMITED PUNE (HER EINAFTER MENTIONED AS WSL). A STATEMENT OF SANJAY SONAWANI D IRECTOR OF WSL WAS RECORDED BY THE ADIT PUNE ON 16.03.2011 AND HE DENIED HAVING SUPPLIED ANY SOFTWARE AND PUT THE BURDEN ON MR. PARAG MEHTA. CONSEQUENT TO THAT OUR PREMISE WAS ALSO SURV EYED AND LATER ON ASSESSMENT MADE AS J 1 AOP. IT IS AGAINST THIS ASSESSMENT THAT THE ASSESSEE IS IN APPEAL. IN THIS CASE WHOLE OF THE STATEMENT IS BASED ON THE STATEMENT OF MR. SANJAY D. SONAWANI WHOM THE AO HAS TREATED AS WORD OF BIBLE. SO IT IS BETTER IF FIRST OF ALL WE SEE HOW TRUE AND RE LIABLE THE STATEMENT OF MR. SONAWANI IS. MR. SONAWANI HAS GIVEN 4 STATEMENT S BEFORE THE ADIT PUNE AND ADIT MUMBAI ON DIFFERENT DATES. IF WE READ THOSE STATEMENTS IT APPEARS THAT THE STATEMENT HAS BEEN G IVEN BY A PERSON WHO HIMSELF IN NOT SURE THAT WHAT HE HAS STATED. TH E STATEMENTS OF MR. SONAWANI WERE RECORDED AS PER CHART BELOW: DATE OF RECORDING STATEMENT OFFICER WHO RECORDED THE STATEMENT PAGE NO. 16.03.2011 DDIT, PUNE 1#11 12.04.2011 DDIT, MUMBAI 12#16 ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 60 12.05.2011 DDIT, MUMBAI 17#25 30.12.2011 DDIT, PUNE 26#35 ON PERUSAL OF THE AFORESAID FOUR STATEMENTS, IT WOU LD BE NOTED THAT THERE WERE CERTAIN GLARING CONTRADICTIONS, AS MENTI ONED UNDER: A. IN THE FIRST STATEMENT, MR. SONAWANI STATED THAT IT WAS MR. PARAG MEHTA, WHO WAS DOING THE ACCOMMODATION ENTRY BUSINESS AND MR. SONAWANI WAS ACTING IN ACCORDANCE WITH LATT ERS DIRECTIONS. IN THE SECOND AND THIRD STATEMENT, MR. SONAWANI COM PLETELY RETRACTED FROM HIS ABOVE STAND AND TOOK THE ONUS ON HIMSELF AND SAID THAT MR. PARAG MEHTA HAD NO ROLE TO PLAY.IN TH E FOURTH STATEMENT, MR. SONAWANI TOOK COMPLETE FL#TURN AND A GAIN, PUT THE ONUS ON MR. PARAG MEHTA. B. IN THE FIRST STATEMENT, IN RESPONSE TO Q. NO. 6, MR . SONAWANI HAD REPLIED THAT TILL 2003 THIS COMPANY WAS ACTUAL LY DEVELOPING VARIOUS KIND OF SOFTWARE SUCH AS IN THE YEAR 2003 THERE WERE SOME FINANCIAL AND LEGAL PROBLEMS ON ACCOUNT OF WHI CH I WAS NOT IN POSITION TO PAY ATTENTION TO DAY TO DAY AFFAIRS OF THE COMPANY. ALL THE OTHER DIRECTORS OF THE COMPANY NAMELY (I)..(II) LATE ROHITDAS KUMBHARKAR, PUNE AND (III).DESERTED THE COMPANY. HOWEVER, IN THE THIRD STATEMENT, IN RESPONSE TO Q. NO. 4 AND 8, MR. SONAWANI HAD REPLIED THAT ANS. TO Q. NO. 4 UPTO 2007, THE BUSINESS WAS HANDLED BY MR. ROHIDAS KUMBHARKAR AND AFTER HIS DEATH THE BUSINESS WAS DRASTICALLY RE DUCED ANS. TO Q.NO.8 AS STATED EARLIER UPTO 2007, MR. ROHIDAS KUMBHARK AR BROUGHT ALL THE PARTIES AND TO THE BEST OF MY KNOWLEDGE MR. ROH IDAS KUMBHARKAR WAS RESPONSIBLE FOR GETTING THE PARTIES. AFTER 2007 ONL Y ONE PARTY WAS THERE, I.E., APEEJAY GROUP WHO WAS HA NDLED BY ME.' ON PERUSAL OF THE ABOVE, THE APPELLANT FAILS TO UND ERSTAND THAT AS TO HOW MR. ROHIDAS KUMBHARKAR WHO DESERTED THE COMPANY IN 2003 COULD BRING CLIENTS TILL 2007. ITA NOS.712 TO 714(ASR)/2014 ITA NOS. 706 TO 709(ASR)/2014 61 C. IN THE FIRST STATEMENT, IN RESPONSE TO Q.NO. 6, MR. SONAWANI HAD REPLIED THAT ALL THESE SALES ARE NON#GENUINE SALES (BOGUS SALES) HOWEVER, IN THE SECOND STATEMENT, IN RESPONSE TO Q. NO. 3, MR. SONAWANI HAD INTER#ALIA, REPLIED THAT 'IN RESPECT OF Q.NO. 61 WOULD LIKE TO MAKE A SLIGHT CORRECTION TO THE ANSWER. THERE ARE SOME SALES WHICH ARE GENUINE. THE PERCENTAGE OF GENUINE SALE WOULD NOT BE HIGHER THAN 3% TO 4% D. IN THE FIRST STATEMENT, IN RESPONSE TO 0. NO. 7 MR. SONAWANI HAD REPLIED THAT MY COMPANY WAS IN DEEP FINANCIAL CRISIS IN THE YEAR 2003 DUE TO LEGAL AND OTHER PERSONAL PROBLEMS ON PERUSAL OF AUDITED ACCOUNTS OF WSL FOR THE FINAN CIAL YEAR 2003# 04, IT WILL BE OBSERVED THAT IN THE BEGINNING OF TH E YEAR, WSL WAS HAVING SHARE CAPITAL AND RESERVES & SURPLUS AGGREGA TING TO RS. 20.50 CRORES. FURTHER DURING THE SAID YEAR, WSL HAD RECORDED SALES .REVENUE AGGREGATING TO RS. 20.12 CRORES AND EARNED THE NET PROFIT OF RS. 2.55 CRORES. IN VIEW OF THE AFORESAID, APPELLANT FAILED TO APPRE CIATE AS TO HOW AND IN WHAT MANNER, THERE WAS ANY FINANCIAL CRISIS. D. IN THE FIRST STATEMENT, IN RESPONSE TO W.NO.8, MR. SONAWANI HAD REPLIED THAT 'THOUGHT THE BOOKS OF ACCOUNTS ARE AUDITED, THE BOO KS OF ACCOUNTS WERE NEVER MAINTAINED AND NO ACTUAL AUDIT TOOK PLAC E. THE APPELLANT FAILS TO APPRECIATE AS TO HOW BEING A LISTED COMPANY, THE ACCOUNTS WERE NOT MAINTAINED. FURTHER, EVEN PRE SUMING ACCOUNTS WERE NOT MAINTAINED, THEN, HOW WAS THE AUD IT DONE BY THE AUDITORS AND AUDITED FINANCIAL STATEMENTS WERE PREP ARED. AS PER AO THE AUDITOR OF THE COMPANY HAS DENIED HAV ING DONE SUCH AUDIT. (PARA 11.1 (D) PAGE 25 OF ASSESSMENT OR DER). IN THE THIRD STATEMENT, IN RESPONSE TO Q.NO. 11, MR . SONAWANI HAD REPLIED THAT CHEQUES/RTGS WERE DIRECTLY BY APEEJAY GROUP IN OUR BANK. FURTHER, IN THE VERY SAME STATEMENT, IN RESPONSE TO Q.N