Sri Muthukumaran Educational Trust, CHENNAI V. DCIT Central Circle 2(1), CHENNAI

ITA 832/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8171 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN
• Assessee Lawyers: G BASKAR
• Keywords: Accommodation entries; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ I.T.A.NOS.831 & 832/CHNY/2019 ( [ [ / ASSESSMENT YEARS: 2012-13 & 2013-14) M/S. SRI MUTHUKUMARAN EDUCATIONAL TRUST, 61, RAMASAMY SALAI, K.K. NAGAR, CHENNAI 600 078. VS THE DCIT, CENTRAL CIRCLE 2(1), CHENNAI-34. PAN: AA BTS6980L ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE / RESPONDENT BY : SHRI A. SUNDARARAJAN, ADDL.CIT /DATE OF HEARING : 25.10.2019 /DATE OF PRONOUNCEMENT : 21.01.2020 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)18, CHENNAI FOR THE ASSESSMENT YEARS 2012-13 AND 2013- 14. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THE SAME TOGETHER AND DISPOSING OFF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS. 831 & 832/CHNY/2019 2. SHRI G. BASKAR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE ON 29.09.2008. CONSEQUENTLY THE ASSESSMENT WAS COMPLETED FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09. THERE WAS A SECOND SEARCH IN THE PREMISES OF THE ASSESSEE ON 15.12.2010. THE ASSESSMENT PROCEEDING WAS ALSO COMPLETED FOR THE ASSESSMENT YEARS 2005-06 TO 2010-11 CONSEQUENT TO THE SECOND SEARCH. ACCORDING TO THE LD.COUNSEL, THERE WAS A THIRD SEARCH IN THE PREMISES OF THE ASSESSEE ON 30.07.2013. CONSEQUENT UPON THE SEARCH, A NOTICE WAS ISSUED TO THE ASSESSEE U/S.153A OF THE ACT, FOR FILING THE RETURN OF INCOME. 3. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS AN EDUCATIONAL TRUST REGISTERED U/S.12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE TRUST ESTABLISHED AND MANAGING SEVERAL INSTITUTIONS SUCH AS MEDICAL COLLEGE, ENGINEERING COLLEGE, POLYTECHNIC COLLEGE, ARTS & SCIENCE COLLEGE, CATERING COLLEGES APART FROM SCHOOLS. DURING THE COURSE OF SEARCH PROCEEDINGS, ACCORDING TO LD.COUNSEL,, THE REVENUE AUTHORITIES FOUND THE RECEIPT OF VOLUNTARY DONATIONS FROM VARIOUS INDIVIDUALS. THE ASSESSEE BY LETTER DATED 11.01.2016 DISCLOSED THE ASSESSING OFFICER THE RECEIPT OF ` 6,69,09,000/- BEING THE VOLUNTARY 3 I.T.A. NOS. 831 & 832/CHNY/2019 DONATIONS SAID TO BE RECEIVED FROM VARIOUS INDIVIDUALS FOR THE ASSESSMENT YEAR 2012-13. HOWEVER AS PER THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE REQUIRED A SUM OF ` 15.25 CRORES. ACCORDING TO LD.COUNSEL, THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER, THE RECEIPT OF VOLUNTARY DONATION TO THE EXTENT OF ` 15.25 CRORES. THE ASSESSEE HAS FILED THE CONFIRMATION LETTERS FROM THE DONORS. THE LD. COUNSEL FURTHER SUBMITTED THAT IN SPITE OF FILING THE CONFIRMATION LETTERS FROM DONORS, IN ORDER TO SETTLE / AVOID THE PROLONGED LITIGATION, THE ASSESSEE OFFERED THE VOLUNTARY DONATION TO THE EXTENT OF ` 6.69 CRORES RECEIVED IN CASH FOR TAXATION. ACCORDING TO THE LD. COUNSEL RECEIPT OF VOLUNTARY DONATION IS NOT PROHIBITED UNDER THE ACT. THE ASSESSEE HAS RECEIVED VOLUNTARY DONATIONS FROM VARIOUS INDIVIDUALS AND ACCOUNTED THE SAME. THE VOLUNTARY DONATIONS WERE UTILIZED FOR THE EDUCATIONAL ACTIVITY AS PER THE OBJECT OF THE TRUST. SIMILARLY, THE ASSESSEE HAS ALSO ADMITTED ` 9,17,35,325/-. ACCORDING TO THE LD.COUNSEL, THE VOLUNTARY DONATION RECEIVED BY THE ASSESSEE WAS TREATED AS ANONYMOUS DONATION BY BOTH THE LOWER AUTHORITIES. ACCORDING TO THE LD.COUNSEL, THE ASSESSEE HAS FURNISHED THE ENTIRE DETAILS OF THE DONATION RECEIVED FROM VARIOUS INDIVIDUALS. THEREFORE, IT CANNOT BE CONSTRUED AS ANONYMOUS DONATION. MOREOVER, THE REFUND OF SALARY ADVANCE WAS ALSO CONSIDERED TO BE ANONYMOUS AMOUNT 4 I.T.A. NOS. 831 & 832/CHNY/2019 RECEIVED BY THE ASSESSEE. ACCORDING TO THE LD.COUNSEL, THE CIT(A) WITHOUT CONSIDERING THE MATERIAL AVAILABLE ON RECORD CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. ACCORDING TO THE LD.COUNSEL, FOR THE ASSESSMENT YEAR 2012-13, A SUM OF ` 23,74,000/- WAS RECEIVED THROUGH MUTHUKUMARAN MEDICAL COLLEGE HOSPITAL AND RESEARCH INSTITUTE. THE SAID SUM WAS RECEIVED FROM THE STAFF OF THE MEDICAL COLLEGE TO WHOM SALARY ADVANCE WAS PAID EARLIER. THE LD.COUNSEL SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION IN THE LIGHT OF THE CONFIRMATION LETTERS FILED BY THE ASSESSEE. 4. ON THE CONTRARY, SHRI A. SUNDARARAJAN, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, SEVERAL INCRIMINATING MATERIALS WERE FOUND IN THE PREMISES OF THE ASSESSEE. THE ASSESSEE APPEARS TO HAVE COLLECTED VARIOUS DONATIONS FROM INDIVIDUALS. EVEN THOUGH THE ASSESSEE CLAIMED THAT IT WAS VOLUNTARY DONATION, THE ASSESSEE COULD NOT ESTABLISH THE INDIVIDUAL IDENTITY THROUGH WHOM THE DONATIONS WERE RECEIVED. THEREFORE THE ASSESSING OFFICER RIGHTLY TREATED THE SO CALLED DONATIONS AS ANONYMOUS AND BROUGHT THE SAME FOR TAXATION. ACCORDING TO THE LD.DR, SHRI MUTHUKUMARAN EDUCATIONAL TRUST AND 5 I.T.A. NOS. 831 & 832/CHNY/2019 M/S. MEENAKSHI AMMAL TRUST WERE FUNCTIONING IN THE SAME PREMISES. DURING THE COURSE OF SEARCH OPERATION, IT WAS FOUND BY THE REVENUE AUTHORITIES THAT THE ASSESSEE WAS IN THE HABIT OF RECEIVING DONATIONS. THE LD.DR FURTHER SUBMITTED THAT THE SO CALLED DONATION SAID TO BE RECEIVED BY THE ASSESSEE IS ALSO DEPOSITED IN THE BANK ACCOUNT IN VARIOUS BRANCHES OF SEVERAL BANKS. THE LD.DR FURTHER SUBMITTED THAT THE ACCOUNTANT OF THE ASSESSEE TRUST WAS EXAMINED. SHRI MUTHUSAMY, THE CHIEF ACCOUNTANT OF THE ASSESSEE TRUST EXPLAINED BEFORE THE ASSESSING OFFICER THAT M/S. MUTHUKUMARAN EDUCATIONAL TRUST MANAGES 7 EDUCATIONAL INSTITUTIONS AND M/S. MEENAKSHI AMMAL TRUST MANAGES 19 EDUCATIONAL INSTITUTIONS. EVEN THOUGH THE ASSESSEE FILED AN AFFIDAVIT AND A LETTER DATED 11.01.2016 BEFORE THE ASSESSING OFFICER, ACCORDING TO LD.DR DURING THE COURSE OF SEARCH OPERATION THE ASSESSEE ADMITTED THAT SEVERAL PERSONS GAVE DONATION BY CASH. HOWEVER MAJORITY OF THE DONORS HAVE NOT FILED CONFIRMATION LETTERS. EVEN THOUGH THE ASSESSEE CLAIMED THAT ALL DONATION WAS OFFERED TO TAXATION WHILE FILING THE RETURN OF INCOME, ACCORDING TO LD.DR NO SUCH ANONYMOUS DONATIONS WERE OFFERED FOR TAXATION. THE REVENUE AUTHORITIES HAS ALSO EXAMINED BOOKS OF ACCOUNT AND FOUND VARIOUS ACCOMMODATION ENTRIES. EVEN THOUGH THE ASSESSEE CLAIMS THAT THE IDENTITY OF THE DONORS WAS ESTABLISHED, ACCORDING TO LD.DR, THERE IS NO 6 I.T.A. NOS. 831 & 832/CHNY/2019 MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS FILED ANY MATERIAL TO ESTABLISH THE IDENTITY OF THE DONORS. THEREFORE THE LD.DR SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION. 5. HAVING HEARD THE LD.COUNSEL FOR THE ASSESSEE AND THE LD.DR, WE HAVE CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDERS OF THE CIT(A) AND THE ASSESSING OFFICER. ADMITTEDLY, THERE WERE THREE SEARCHES IN THE PREMISES OF THE ASSESSEE. THE ASSESSMENT WAS COMPLETED FOR THE EARLIER TWO SEARCHES. THE PRESENT PROCEEDING ARISES OUT OF THE THIRD SEARCH CONDUCTED BY THE REVENUE AUTHORITIES. IT IS NOT IN DISPUTE THAT THE ASSESSEE TRUST WAS REGISTERED U/S.12AA OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE TRUST ESTABLISHED AND MANAGES SEVERAL EDUCATIONAL INSTITUTIONS SUCH AS MEDICAL COLLEGE, ENGINEERING COLLEGE, POLYTECHNIC COLLEGE, ARTS & SCIENCE COLLEGE BESIDES SCHOOLS. DURING THE COURSE OF SEARCH OPERATION, IT WAS FOUND THAT VARIOUS DONATIONS WERE SAID TO BE RECEIVED BY THE ASSESSEE. THE ASSESSEE CLAIMS THAT IT IS A VOLUNTARY DONATION. THE ASSESSEE ALSO CLAIMS BEFORE THIS TRIBUNAL, CONFIRMATION LETTERS WERE FILED FROM VARIOUS INDIVIDUALS WHO DONATED THE FUNDS. MAJORITY OF THE DONATIONS 7 I.T.A. NOS. 831 & 832/CHNY/2019 WERE SAID TO BE RECEIVED IN CASH HOWEVER A PART OF THE DONATION IS SAID TO BE RECEIVED IN CHEQUE / DEMAND DRAFT. THE ASSESSING OFFICER FOUND THAT THE DONATIONS WERE NOT VOLUNTARY, IT IS ANONYMOUS. MOREOVER, THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY OF THE DONORS. THEREFORE, THE ASSESSING OFFICER BROUGHT THE ENTIRE DONATIONS FOR TAXATION. FOR THE ASSESSMENT YEAR 2012-13 & 2013-14, THE ASSESSING OFFICER MADE ADDITION OF ` 23,74,000/- & ` 3,91,44,497/- RESPECTIVELY, WHICH SAID TO BE PERTAINING TO ADVANCE SALARY, FESTIVAL ADVANCE, ETC., THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS IN THE HABIT OF COLLECTING DONATIONS AND ACCOMMODATING SUCH DONATIONS RECEIVED AS FEES AS THEY WERE RECEIVED FROM STUDENTS. IN FACT, THE ASSESSING OFFICER OBSERVED AS FOLLOWS IN THE IMPUGNED ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2012-13 IN PARA NO.3.2.1:- DURING THE COURSE OF SEARCH IT WAS FOUND THAT THE ASSESSEE TRUST WAS IN THE HABIT OF RECEIVING DONATIONS BUT ACCOMMODATING SUCH DONATIONS RECEIVED AS IF THEY WERE RECEIVED FROM STUDENTS. IT WAS EVIDENT FROM RECEIPT BOOKS AND TORN VOUCHERS SEIZED FROM THE TRUST OFFICE VIDE ANN/CS/MAT/B&D/S1/1 TO 5 FROM THE ABOVE OBSERVATION OF THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2012-13, AN IMPRESSION WAS CREATED AS IF THEY WERE COLLECTED FROM STUDENTS. HOWEVER, IT IS NOT KNOWN WHETHER SUCH 8 I.T.A. NOS. 831 & 832/CHNY/2019 DONATIONS WERE COLLECTED FROM THE STUDENTS OVER AND ABOVE THE FEES PRESCRIBED BY THE HIGH LEVEL COMMITTEE CONSTITUTED BY THE STATE GOVERNMENT HEADED BY THE RETIRED JUDGE OF HIGH COURT. 5.1 IT IS A KNOWN FACT THAT THE STATE GOVERNMENT HAS CONSTITUTED A HIGH LEVEL COMMITTEE HEADED BY A HIGH COURT JUDGE FOR DETERMINING THE FEES FOR THE PROFESSIONAL COLLEGES. ONCE THE FEE WAS PRESCRIBED BY THE HIGH LEVEL COMMITTEE, THE ASSESSEE IS EXPECTED TO COLLECT ONLY THOSE FEES FIXED BY THE COMMITTEE. IN THIS CASE, THE SEIZED MATERIAL AS REFERRED TO IN PARA NO.3.2.1 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2012-13 GIVES AN IMPRESSION THAT THE AMOUNT WAS COLLECTED FROM THE STUDENTS. HOWEVER, IT IS NOT KNOWN WHETHER SUCH DONATIONS WERE COLLECTED FROM STUDENTS OR ANY OTHER PARTY WHO ARE RELATED TO THE STUDENTS AT THE TIME OF ADMISSION. THESE FACTS WERE NOT EXAMINED EITHER BY THE ASSESSING OFFICER OR BY THE CIT(A). EVEN THOUGH THERE WAS NO PROHIBITION FOR RECEIVING VOLUNTARY DONATIONS FROM THE GENERAL PUBLIC, COLLECTING CAPITATION FEE FOR ADMISSION OF THE STUDENTS IN ANY EDUCATIONAL INSTITUTION IS PROHIBITED AND IT IS A PUNISHABLE OFFENCE UNDER THE STATE ENACTMENT. THE ASSESSEE CLAIMS THAT NECESSARY MATERIALS WERE FILED BEFORE THE ASSESSING OFFICER TO ESTABLISH THE IDENTITY OF THE DONORS AND ALSO THE 9 I.T.A. NOS. 831 & 832/CHNY/2019 CONFIRMATION LETTERS. IN THIS SITUATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE RAISED BY THE ASSESSEE INCLUDING VOLUNTARY DONATIONS, ANONYMOUS DONATIONS AND SALARY ADVANCE SAID TO BE RECEIVED FROM THE STAFF, ETC., ARE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND BRING ON RECORD THE NEXUS BETWEEN THE DONATIONS AND THE DONORS IN RESPECT OF EACH DONATION AND THEREAFTER DECIDE THE ISSUE AFRESH, IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 21 ST JANUARY, 2020 AT CHENNAI. SD/- SD/- ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, /DATED, THE 21 ST JANUARY, 2020. RSR 10 I.T.A. NOS. 831 & 832/CHNY/2019 /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF