Maharashtra Academy of Engineering and Educational Research, Pune V. Dy.CIT, CC-1(1), Pune

ITA 921/PUN/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9499 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL U PATH AK
• Keywords: Unexplained investment; Depreciation; Charitable institution; Opportunity of being heard; Principle of natural justice; Period of limitation; Notional interest; Time period of passing order; Reassessment proceedings; Capital expenditure
• Section: 40A(3); 143(3); 133A; 12A; 69; 132; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 921 TO 923 /P U N/20 1 2 / ASSESSMENT YEAR S : 2005 - 06 TO 20 07 - 08 MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 4110 29 . / APPELLANT PAN: AA AAM1206F VS. THE DY . COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 ( 1 ), PUNE . / RESPONDENT / APPELLANT BY : S /S HRI SUNIL U PATHAK AND MAHAVIR JAIN / RESPONDENT BY : S HRI RAJEEV KUMAR, C IT / DATE OF HEARING : 16 . 0 2 .201 7 / DATE OF PRONOUNCEMENT: 16 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS BUNCH OF APPEALS FILED BY THE ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - III, P UNE , DATED 29 . 0 2 .20 1 2 RELATING TO ASSESSMENT YEAR S 20 0 5 - 0 6 TO 20 07 - 08 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) R.W.S. 147 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 2 2 . ALL THE SE APPEALS RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.921/PUN/2012 , RELATING TO ASSESSMENT YEAR 2005 - 06 3. THE ASSESSEE DURING THE COURSE OF HEARING HAD FILED ABRIDGED GROUNDS OF APPEAL WHICH READ AS UNDER: - T HE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER : ON THE FACTS AND IN LAW, 1. THE REASST . BE HELD TIME BARRED AS THE LIMITATION COULD NOT BE EXTENDED IN VIEW OF THE ILLEGAL ORDER FOR SPECIAL AUDIT U/S 142(2A). 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE VARIOUS ADDITIONS MADE BY THE A.O . AND ALSO ERRED IN ENHANCING THE INCOME ON CERTAIN ISSUES AND AS A RESULT, ERRED IN COMPUTING THE TOTAL INCOME OF RS . 17,09,92,660/ - AS AGAINST THE RETURNED INCOME OF RS . NIL . 3. THE LEARNED CIT(A) ERRE D IN HOLDING THAT THE APPELLANT TRUST WAS NOT ENT I TLED TO THE EXEMPTION U/S . 10(23C)(VI) OF IT ACT . 4. THE LEARNED CIT(A) ERRED IN DENYING EXEMPTION U/S 1 1 TO THE APPELLANT TRUST . 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ACTIVITY OF THE APPELLAN T IS A COMMERCIAL ACTIVITY WITH A PROFIT MOTIVE AND IT DOES NOT EXIST SOLELY FOR CHARITY AND THEREFORE, ERRED IN DENYING THE EXEMPTION U/S 10(23C) /11. 6. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EXPENDITURE ON WORLD PEACE CENTRE IS NOT AN EXPENDITUR E ON THE OBJECTS OF THE TRUST AND THE SAME DOES NOT QUALIFY FOR DEDUCTION AND ACCORDINGLY, ERRED IN DISALLOWING THIS EXPENDITURE. 7. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT VIOLATED THE CONDITIONS OF SECTION 13 OF IT ACT AND ACCORDINGLY, E RRED IN DENYING EXEMPTION U/S 11 ON THE ENTIRE INCOME OF THE APPELLANT . 8. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,00,000/ - MADE BY THE LD . AO AS UNRECORDED DONATIONS. 9. THE LD.CIT(A) ERRED IN CONFIRMING VARIOUS ADDITIONS U/S.43B /40A(7) AND 40A(3) ETC., 10. THE LD.CIT(A) ALSO ERRED IN FURTHER ENHANCING THE INCOME OF THE APPELLANT BY THE FOLLOWING AMOUNTS : A . EXPENSES ON FACILITIES PROVIDED TO SHRI B.E. AVHAD OF RS.8,88,294/ - B . FOREIGN TOUR EXPENSES OF RS.71,325/ - C . NOTIONAL INTEREST ON LOAN TO SHRI RAHUL KARAD RS.31,500/ - 11. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE GROUNDS OF APPEAL. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 3 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT PRELIMINARY ISSUE RAISED BY W AY OF GROUND OF APPEAL NO.1 NEEDS TO BE ADJUDICATED IN THE PRESENT CASE. HE POINTED OUT THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AFTER SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT ON 08.08.2008, AS AGAINST THE TIME PRESCRIBED FO R PASSING THE SAID ASSESSMENT ORDER, WHICH ENDED ON 31.12.2007. HE FURTHER POINTED OUT THAT THE SAID REFERENCE TO CONDUCT SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT WAS MADE WITHOUT ISSUING SHOW CAUSE NOTICE TO THE ASSESSEE ON PRE - DECISIONAL STAGE. I N SUCH CIRCUMSTANCES WHERE THE REFERENCE TO PASS SPECIAL AUDIT WAS NOT AS PER THE ACT, THEN THE ASSESSMENT HAD TO BE COMPLETED WITHIN THE LIMITATION PERIOD. HE ALSO REFERRED TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WHICH HAD DECIDED SIMILAR ISSUE, IN TURN, RELYING ON THE EARLIER ORDER OF THE PUNE BENCH OF TRIBUNAL IN THE CASE OF VILSONS PARTICLE BOARD INDUSTRIES LTD. VS. ITO IN ITA NO.447/PN/2013, ITA NOS. 309 & 310/PN/2013 AND ITA NOS. 448 & 449/PN/2013 VIDE ORDER DATED 21 - 12 - 2016 . 5. THE L EARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FILED THE RETURN OF INCOME ON 28.12.2005. SURVEY OPERATION UNDER SECTION 13 3A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 20.07.2005, SIMULTANEOUSLY, WITH SEARCH OPERATION UNDER SECTION 132 OF THE ACT ON TWO TRUSTEES ON 20.07.2005 . AS PER THE PROVISIONS O F THE ACT, PERIOD FOR COMPLETING THE ASSESSMENT WAS 21 ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 4 MONTHS FROM THE END OF THE ASSESSMENT YEAR I.E. 31.12.2007. THE ASSESSING OFFICER HAD APPOINTED SPECIAL AUDITOR ON 05.12.2007 AND HE HAD COMPLETED IT ON 10.06.2008 AND THE ASSESSMENT ORDER WAS PASSED ON 08.08.2008. THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS THAT WHERE THE REFERENCE TO THE SPECIAL AUDITOR WAS MADE WITHOUT ISSUING SHOW CAUSE NOTICE ON PRE - DECISIONAL STAGE OF MAKING REFERENCE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT, THEN SUCH A REFERENCE IS INVALID IN LAW AND THE ASSESSMENT IN THE CASE HAD TO BE COMPLETED WITHIN STIPULATED PERIOD OF 21 MONTHS FROM THE END OF ASSESSMENT YEAR I.E. BY 31.12.2007, WHEREAS THE ASSESSMENT ORDER WAS PASSED ON 08.08.2008 WHICH IS BEYOND THE PERIOD OF LIMITATION PROVIDED UNDER THE ACT. 7. WE FIND THAT SIMILAR ISSUE OF ASSESSMENT BEING TIME BARRED AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN BUNCH OF APPEALS IN ITA NO S .91 5 /PUN/2012 TO 920/PUN/2012, RELATING TO ASSESSMENT YEAR S 1999 - 2000 TO 20 0 4 - 0 5 , WHEREIN VIDE ORDER DATED 1 0.02.2017 IN ASSESSMENT YEAR 2000 - 01 , THE TRIBUNAL FOLLOWED THE ORDER OF THE PUNE BENCH OF TRIBUNAL IN VILSONS PARTICLE BOARD INDUSTRIES LTD. VS. ITO AND VICE VERSA (SUPRA) AND HELD AS UNDER: - 115. GROUND OF APPEAL NO.2 W HICH IS COMMON FOR ALL THE YEARS RELATES TO VALIDITY OF THE REASSESSMENT PROCEEDINGS ON THE ISSUE OF LIMITATION IN VIEW OF THE ILLEGAL ORDER FOR SPECIAL AUDIT U/S.142(2A). HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE RESTRICTED HIS ARGUMENTS FOR A.Y. 1999 - 200 0 AND 2000 - 2001 ONLY AND DID NOT PRESS THIS GROUND FOR OTHER YEARS. ACCORDINGLY, THIS GROUND FOR OTHER YEARS ARE DISMISSED. SINCE WE HAVE ALREADY HELD IN THE PRECEDING PARAGRAPHS THAT THE ORDER FOR A.Y. 1999 - 2000 IS VOID, THEREFORE, WE CONFINE OUR DISCUSS ION ON THIS ISSUE ONLY FOR A.Y. 2000 - 2001. 116. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHILE DIRECTING FOR SPECIAL AUDIT U/S.142(2A) OF THE I.T. ACT FOR A.YRS. 1999 - 2000, 2000 - 01 AND 2005 - 06 THE ASSESSING OFFICER HAD NOT GIVEN OPPO RTUNITY OF BEING HEARD AS PER THE PROVISO TO SECTION 142(2A) AND ONLY THE LD.CIT HAS GIVEN THE OPPORTUNITY. THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH KUMAR (SUPRA) AND THE DECISION OF HONBLE BOMBAY HIGH ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 5 COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) THE ORDER U/S.142(2A) IS ILLEGAL AND INVALID AND THEREFORE, THE LIMITATION FOR ASSESSMENT COULD NOT BE EXTENDED IN VIEW OF THE ILLEGAL ORDER U/S.142(2A). IT IS ALSO HIS SUBMISSION THAT THE ASSESSMENTS FOR A.YRS. 1999 - 2000, 2000 - 01 AND 2005 - 06 WERE GETTING TIME BARRED IN VIEW OF SECOND PROVISO TO SECTION 153(2) ON 31 - 12 - 2007 WHEREAS THE ASSESSMENT ORDER IS DATED 08 - 08 - 2008. THEREFORE, SUCH ASSESSMENT ORDERS ARE TIME BARRED AND THEREFORE ARE VOID. 117. WE F IND MERIT IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE ASSESSMENT ORDER FOR A.Y. 2000 - 01 IS DATED 08 - 08 - 2008. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSING OFFICER WHILE DIRECTING FOR SPECIAL AUDIT U/S.142(2A) HAS NOT GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE OPPORTUNITY OF BEING HEARD WAS GRANTED ONLY BY THE LD. CIT CENTRAL WHO HAS PASSED A DETAILED ORDER DATED 05 - 12 - 2007 GRANTING APPROVAL ON THE REFERENCE BY THE ASSESSING OFFICER FOR SPECIA L AUDIT U/S.142(2A). UNDER THESE CIRCUMSTANCES WE HAVE TO SEE WHERE THE ASSESSING OFFICER BEFORE SENDING A PROPOSAL FOR CONDUCTING SPECIAL AUDIT U/S.142(2A) OF THE ACT HAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IN VIEW OF THE PROVISO T O SECTION 142(2A) OF THE ACT, WHETHER THE SAID PROPOSAL MADE WITHOUT AFFORDING PREDECISIONAL HEARING TO THE ASSESSEE WAS VALID AND CAN THE PROCEEDINGS CONDUCTED THEREAFTER BE HELD TO BE VITIATED. 118. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. AND VICE VERSA. WE FIND THE TRIBUNAL IN ITA NO.447/PN/2013, ITA NOS. 309 & 310/PN/2013 AND ITA NOS. 448 & 449/PN/2013 VIDE ORDER DATED 21 - 12 - 2016 AFTER CONSIDERING THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH KUMAR AND OTHERS (SUPRA) AND VARIOUS OTHER DECISIONS HAS HELD THAT WHERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE BEFORE MAKING THE ORDER PROPOSING CONDUCT OF SPECIAL AUDIT U/S.142(2A) OF THE ACT A ND SUCH OPPORTUNITY WAS GIVEN ONLY BY THE CIT BEFORE APPROVAL FOR SUCH SPECIAL AUDIT, SUCH ASSESSMENT IS VITIATED BECAUSE OF NON - COMPLIANCE OF PRINCIPLE OF NATURAL JUSTICE. HENCE THE LIMITATION FOR CONCLUSION OF ASSESSMENT CANNOT BE EXTENDED FOR SUCH ILLEG AL ORDER U/S.142(2A). THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 40 ONWARDS OF THE ORDER READ AS UNDER : 40. THE QUESTION WHICH ARISES FOR ADJUDICATION BEFORE US IS THAT IN THE PRESENT SET OF FACTS, WHERE THE ASSESSING OFFICER BEFORE SENDING A PR OPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT HAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IN VIEW OF THE PROVISO TO SECTION 142(2A) OF THE ACT, IS THE SAID PROPOSAL MADE WITHOUT AFFORDING PRE - DECISIONAL HEARING TO THE ASSESSEE VALID AND CAN THE PROCEEDINGS CONDUCTED THEREAFTER BE HELD TO BE VITIATED IN LAW. THE HON'BLE SUPREME COURT IN THREE JUDGE DECISION IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) HAD DECIDED THE ISSUE OF SHOW CAUSE NOTICE TO BE GIVEN ON P REDECISIONAL STAGE AND POST - DECISIONAL STAGE OF STARTING THE PROCEEDINGS UNDER SECTION 142(2A) OF THE ACT AND HAD ALSO REFERRED TO THE EARLIER DECISION OF APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA). THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPRE ME COURT ARE THAT THE PRINCIPLE OF AUDI ALTERAM PARTEM CANNOT BE IGNORED EVEN AT THE STAGE OF PRE - DECISIONAL HEARING. IN OTHER WORDS, IN CASE THE ASSESSING OFFICER IS OF THE VIEW THAT HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS AND INTERESTS OF REVENUE, IT IS NECESSARY TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT, WITH PREVIOUS APPROVAL OF PRINCIPAL CHIEF COMMISSIONER, THEN HE CAN DO SO. HOWEVER, THE PROVISO INSERTED BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007 HAS VERY CATEGORICALLY PROVIDED T HAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN AN OPPORTUNITY OF BEING HEARD. IN OTHER WORDS, THE PRINCIPLES OF NATURAL JUSTICE THAT A PERSON COULD NOT BE ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 6 CONDEMNED UNHEARD, HAVE BE EN INCORPORATED IN SECTION ITSELF W.E.F. 01.06.2007. THE APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) HAD DELIBERATED ON THE PROVISIONS OF THE ACT BEFORE INSERTION OF SAID PROVISO BUT HAD LAID DOWN THE PROPOSITION THAT NOBODY COULD BE UNHEARD EVE N AT THE STAGE OF FORMING AN OPINION THAT IN VIEW OF THE NATURE AND COMPLEXITY OF ACCOUNTS AND INTEREST OF REVENUE, SPECIAL AUDIT IS TO BE CONDUCTED UNDER SECTION 142(2A) OF THE ACT. THE APEX COURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) HAVE UP HELD THE SAID PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT AND HAS ALSO TAKEN NOTE OF THE AMENDMENT W.E.F. 01.06.2007 AND HAVE HELD THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE TO BE FULFILLED EVEN AT THE PRE - DECISIONAL STAGE. IN CONCLUSION, THE APEX COURT DIRECTED THAT THE SAID PROPOSITION WOULD BE APPLICABLE PROSPECTIVELY. THE CASE OF THE ASSESSEE BEFORE US RELATES TO THE PERIOD WHICH IS PROSPECTIVE TO THE DECISION OF THE APEX COURT AND IS ALSO AFTER INSERTION BY THE FINANCE ACT, 2007 W.E.F. 01.06.20 07. REASONABLE OPPORTUNITY OF BEING HEARD ON PRE - DECISIONAL STAGE TO BE ALLOWED BY THE ASSESSING OFFICER TO THE ASSESSEE WAS ON STATUTE WHEN THE PROCEEDINGS WERE TAKEN UP AGAINST THE ASSESSEE. HOWEVER, AS THE FACTS REVEAL BEFORE SUBMITTING THE PROPOSAL DAT ED 11.09.2008 FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT TO THE CIT(C), NO OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE. THE REQUIREMENT OF THE ACT IS THAT THE ASSESSING OFFICER HAS TO GIVE FINDING THAT THERE IS COMPLEXITY OF ACCOUNT S AND THE INTERESTS OF REVENUE WOULD BE AFFECTED, AND IN SUCH CIRCUMSTANCES, SHOW CAUSE NOTICE NEEDS TO BE GIVEN TO THE ASSESSEE TO EXPLAIN ITS CASE. WHERE THE ASSESSEE WAS ABLE TO EXPLAIN THE NATURE OF ENTRIES AND ALSO JUSTIFY THAT THE SAME ARE NOT COMPLE X, THEN THERE IS NO NEED TO PUT THE ASSESSEE TO SUCH HARDSHIP OF CONDUCTING SPECIAL AUDIT. THE ASSESSING OFFICER HAVING FAILED TO GIVE ANY OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE MAKING THE PROPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT AT THE PRE - DECISIONAL STAGE, THEN SUCH PROPOSAL MADE BY THE ASSESSING OFFICER TO THE CIT(C), PUNE IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND SUFFERS FROM INFIRMITY. THE CASE OF REVENUE BEFORE US IS THAT THE CIT(C), PUNE BEFORE PASSING HIS ORDER OF GIVING PERMISSION TO THE ASSESSING OFFICER TO ASK THE ASSESSEE TO GET THE SPECIAL AUDIT CONDUCTED HAD GIVEN FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ROLE OF CIT(C) IS THE ROLE OF APPROVING AUTHORITY. THE ROLE IS NOT THAT OF ADJUDICATING AU THORITY WHICH HAD TO BE CARRIED OUT BY THE ASSESSING OFFICER. THE ADJUDICATING AUTHORITY IN THE PRESENT SET OF FACTS HAS FAILED TO GIVE ANY OPPORTUNITY TO THE ASSESSEE BEFORE MAKING PROPOSAL FOR SPECIAL AUDIT AND THE OPPORTUNITY ALLOWED BY THE APPROVING AU THORITY, WHO IN ANY CASE IS ENSHRINED WITH THE DUTIES OF CHECKING WHETHER THERE IS NO ARBITRARINESS IN FUNCTIONING OF ADJUDICATING AUTHORITY, HAS TO BE SATISFIED BEFORE GIVING APPROVAL. HENCE, THE OPPORTUNITY ALLOWED BY THE CIT(C), PUNE AFTER PROPOSAL WAS MADE BY THE ADJUDICATING AUTHORITY DOES NOT ABSOLVE THE NON - ALLOWANCE OF REASONABLE OPPORTUNITY OF HEARING BY THE ASSESSING OFFICER. 41. APPLYING THE PRINCIPLES LAID DOWN BY THE APEX COURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA), WE HOLD THAT W HERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE BEFORE MAKING THE ORDER PROPOSING CONDUCT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT, IN THE PRESENT CASE AND THE CIT HAVING APPROVED THE SAID PROPOSAL THOUGH AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE IS VITIATED BECAUSE OF NON - COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE ASSESSMENT ORDER PASSED IN THE FACTS OF PRESENT CASE IS BEYOND THE PERIOD OF LIMITATION AND HENCE, THE SAME IS INVALID AND BAD IN LAW. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 7 42. ANOTHER POINT RAISED BY BOTH THE AUTHORITIES WAS IN RESPECT OF EXTENSION GRANTED. WE ARE NOT GOING INTO THE SAID FACTUAL ASPECTS, IN VIEW OF OUR HOLDING THAT THE INITIAL ORDER AT THE PRE - DECISIONAL STAGE PASSED BY THE ASSESSING OFFICER WITHOUT SHOW CAUSING THE AS SESSEE AS TO WHETHER ANY SPECIAL AUDIT SHOULD BE CONDUCTED IN HIS CASE UNDER SECTION 142(2A) OF THE ACT IS BAD IN LAW. HENCE, CONSEQUENTIAL ORDERS OF EXTENSION, IF ANY BECOME OF NO CONSEQUENCE. SINCE, WE HAVE DECIDED THE JURISDICTIONAL ISSUE ON MERITS, THE OTHER GROUNDS OF APPEAL BECOMES ACADEMIC. 119. SINCE IN THE INSTANT CASE THE ASSESSING OFFICER HAS NOT GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DIRECTING HIM TO GET ITS ACCOUNTS AUDITED U/S.142(2A) AND SUCH OPPORTUNITY WAS GRANTED ONL Y BY THE CIT, THEREFORE, THE LIMITATION FOR COMPLETION OF ASSESSMENT CANNOT BE EXTENDED IN VIEW OF SAID ILLEGAL ORDER PASSED U/S.142(2A). SINCE THE ASSESSMENT IN THE INSTANT CASE WAS GETTING TIME BARRED UNDER SECOND PROVISO TO SECTION 153(2) ON 31 - 12 - 2007 AND SINCE THE ASSESSING OFFICER HAS PASSED THE ORDER ON 08 - 08 - 2008, THEREFORE, THE ASSESSMENT ORDER PASSED U/S.143(3)/147 FOR THE IMPUGNED A.Y. 2000 - 2001 IS BARRED BY LIMITATION AND ACCORDINGLY THE SAME IS VOID AND ILLEGAL. GROUND OF APPEAL NO.2 FOR A.Y. 2 000 - 2001 BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 120. SINCE THE ASSESSEE SUCCEEDS ON THIS TECHNICAL GROUND, THE OTHER GROUNDS FOR A.Y. 2000 - 20001 HAVE BECOME ACADEMIC IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. THE APPEAL FILED BY THE ASSESSEE F OR A.Y. 2000 - 2001 IS ACCORDINGLY ALLOWED. 8. THE ISSUE ARISING IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE IN ASSESSMENT YEAR 2000 - 01 AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT SINCE NO SHOW CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICE R AT PRE - DECISIONAL STAGE OF MAKING REFERENCE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT , THE ASSESSMENT HAD TO BE COMPLETED WITHIN PERIOD PRESCRIBED UNDER THE ACT I.E. BY 31.12.2007. THE ASSESSMENT ORDER IN THE PRESENT CASE HAS BEEN PASSED ON 08. 08.2008 AND THE SAME BEING BEYOND THE PERIOD OF LIMITATION, IS BARRED AND HENCE, IS HELD TO BE INVALID. SINCE THE ASSESSMENT IS HELD TO BE TIME BARRED, THEN THE OTHER GROUND S OF APPEAL RAISED BY THE ASSESSEE DO NOT SURVIVE AND THE SAME ARE DISMISSED . THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. ITA NO.922/PUN/2012, RELATING TO ASSESSMENT YEAR 2006 - 07 9. THE ASSESSEE DURING THE COURSE OF HEARING HAD FILED ABRIDGED GROUNDS OF APPEAL WHICH READ AS UNDER: - ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 8 THE FOLLOWING GROUNDS ARE TAK EN WITHOUT PREJUDICE TO EACH OTHER : ON THE FACTS AND IN LAW, 1. THE REASST . BE HELD TIME BARRED AS THE LIMITATION COULD NOT BE EXTENDED IN VIEW OF THE ILLEGAL ORDER FOR SPECIAL AUDIT U/S 142(2A). 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE VARIOUS AD DITIONS MADE BY THE A.O . AND ALSO ERRED IN ENHANCING THE INCOME ON CERTAIN ISSUES AND AS A RESULT, ERRED IN COMPUTING THE TOTAL INCOME OF RS . 1 8,21,00,359/ - AS AGAINST THE RETURNED INCOME OF RS . NIL . 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELL ANT TRUST WAS NOT ENT I TLED TO THE EXEMPTION U/S . 10(23C)(VI) OF IT ACT . 4. THE LEARNED CIT(A) ERRED IN DENYING EXEMPTION U/S 1 1 TO THE APPELLANT TRUST . 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ACTIVITY OF THE APPELLANT IS A COMMERCIAL ACTIVITY W ITH A PROFIT MOTIVE AND IT DOES NOT EXIST SOLELY FOR CHARITY AND THEREFORE, ERRED IN DENYING THE EXEMPTION U/S 10(23C) /11. 6. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EXPENDITURE ON WORLD PEACE CENTRE IS NOT AN EXPENDITURE ON THE OBJECTS OF THE TRUS T AND THE SAME DOES NOT QUALIFY FOR DEDUCTION AND ACCORDINGLY, ERRED IN DISALLOWING THIS EXPENDITURE. 7. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT VIOLATED THE CONDITIONS OF SECTION 13 OF IT ACT AND ACCORDINGLY, ERRED IN DENYING EXEMPTION U/ S 11 ON THE ENTIRE INCOME OF THE APPELLANT . 8. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 73,58,000/ - MADE BY THE LD . AO ON ACCOUNT OF MONEY PAID FOR PURCHASE OF LAND, AS UNEXPLAINED INVESTMENT U/S.69. 9. THE LEARNED CIT(A) ERRED IN CON FIRMING THE DISALLOWANCE OF RS.40,32,219/ - MADE BY THE LD.AO IN RESPECT OF PROVISIONS MADE FOR SALARIES PAYABLE AS PER 5 TH PAY COMMISSION REPORT. 10. THE LEARNED CIT(A) ERRED IN CONFIRMING VARIOUS ADDITIONS U/S.43B, 40A(7) AND 40A(3) ETC. 11. THE LD.CIT( A) ALSO ERRED IN FURTHER ENHANCING THE INCOME OF THE APPELLANT BY THE FOLLOWING AMOUNTS : A . EXPENSES ON FACILITIES PROVIDED TO SHRI B.E. AVHAD OF RS.9,06,884/ - B . FOREIGN TOUR EXPENSES OF RS.10,57,333/ - C . SCHOLARSHIP/SUBSIDIES TO SHRI RAHUL KARAD RS.5,44,797/ - D . NOTIONAL INTEREST ON LOAN TO SHRI RAHUL KARAD RS.1,27,529/ - 12. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE GROUNDS OF APPEAL. 10. THE ASSESSEE HAS RAISED SIMILAR GROUNDS OF APPEAL IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. TH E LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUES RAISED IN ASSESSMENT YEAR 2007 - 08 ARE IDENTICAL TO THE ISSUE RAISED IN ASSESSMENT YEAR 2006 - 07 EXCEPT FOR GROUNDS OF ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 9 APPEAL NO.7, 8 AND 10 WHICH ARE WITHDRAWN AS NOT PRESSED. IN ORDER TO ADJUDICATE THE APPEALS, WE MAKE REFERENCE TO THE FACTS AND ISSUES IN ASSESSMENT YEAR 2006 - 07. 11. THE ISSUE IN GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT BEING TIME BARRED. 1 2 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POINTED OUT THAT SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE IN EARLIER YEAR S OTHER THAN ASSESSMENT YEAR 2000 - 01 AND FOLLOWING THE SAME PARITY OF REASONING AND IN VIEW OF SUBMISSION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE , WE DISMISS THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE. 1 3 . THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.2 IS GENERAL IN NATURE AND THE SAME IS ALSO DISMISSED. 1 4 . THE I SSUE IN GROUND OF APPEAL NO.3 IS AGAINST THE DENIAL OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. 15. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SAID ISSUE AROSE IN EARLIER YEAR AND HAS BEEN DECIDED BY THE TRIBUNAL AGAINST T HE ASSESSEE. THE TRIBUNAL VIDE ORDER DATED 10.02.2017 VIDE PARAS 122 AND 123 AT PAGES 74 AND 75 HAS HELD THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AS THE APPROVAL UNDER THE SAID SECTION HAS BEEN WITHDRAWN BY THE C BDT. WE FULLY RELY ON THE FINDINGS OF THE TRIBUNAL IN PARAS 122 AND 123 OF THE EARLIER ORDER. HOWEVER, FOR THE SAKE OF ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 10 BREVITY, THE SAME IS BEING THOUGH REFERRED TO, BUT NOT BEING REPRODUCED. FOLLOWING THE SAME PARITY OF REASONING, THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS THUS, DISMISSED. 16. THE ISSUE IN GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS AGAINST THE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT. 17. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT TH E SAID ISSUE HAS BEEN DECIDED PARTLY IN FAVOUR OF THE ASSESSEE, WHEREIN THE TRIBUNAL HAD GRANTED EXEMPTION UNDER SECTION 11 OF THE ACT EXCEPT ON THE INCOME RESULTING OUT OF VIOLATION OF PROVISIONS OF SECTION 13 OF THE ACT. 18. WE HAVE HEARD THE RIVAL CO NTENTIONS AND PERUSED THE RECORD. THE TRIBUNAL HAD ELABORATELY CONSIDERED THE ISSUE OF CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT, WHEREIN THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND ALSO HOLDING THAT THE ACTIVITY OF ASS ESSEE WAS COMMERCIAL ACTIVITY WITH PROFIT MOTIVE AND IT DOES NOT EXCLUSIVELY EXISTS FOR CHARITY AND HENCE, NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)/11 OF THE ACT. THE TRIBUNAL TOOK NOTE OF THE FACT THAT IN EARLIER APPEAL VIDE ITA NO.1669/PN/2007, ORDER DATED 09.09.2009, THE TRIBUNAL HAD RESTORED THE REGISTRATION WHICH WAS WITHDRAWN UNDER SECTION 12AA(3) OF THE ACT VIDE PARAS 138 AND 139 AT PAGES 82 TO 84 OF THE ORDER. THE TRIBUNAL HAD HELD THAT SINCE THE REGISTRATION CANCELLED EARLIER WAS RESTORED BY THE TRIBUNAL (SUPRA), THEREFORE, THE ASSESSEE WAS HELD TO BE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT SUBJECT TO THE FULFILLMENT OF OTHER CONDITIONS. THEREAFTER, THE TRIBUNAL NOTED THE ALTERNATE PLEA OF THE REVENUE AUTHORITIES THAT THE ASSESSEE WAS NOT ENTITLED TO THE EXEMPTION UNDER SECTION 11 OF THE ACT ON THE ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 11 GROUND THAT THE ACTIVITY OF ASSESSEE WAS COMMERCIAL ACTIVITY WITH PROFIT MOTIVE AND IT DOES NOT EXIST SOLELY FOR CHARITY FOR WHICH, IT WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTIO N 10(23C)/11 OF THE ACT. THE TRIBUNAL HELD THAT IN THE ABSENCE OF ANY APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT, THE ASSESSEE WAS NOT ENTITLED TO THE EXEMPTION UNDER SECTION 10(23C) OF THE ACT. HOWEVER, THE OTHER CLAIM OF ASSESSEE THAT WHETHER THE AS SESSEE WAS ELIGIBLE FOR EXEMPTION OR NOT UNDER SECTION 11 OF THE ACT, FOR ACCEPTING DONATIONS AND WHETHER THE ACTIVITIES OF ASSESSEE TRUST IS COMMERCIAL ACTIVITY WITH PROFIT MOTIVE AND WHETHER IT EXISTED SOLELY FOR CHARITY OR NOT, WAS DELIBERATED VIDE PARA S 140 ONWARDS AT PAGE 84 OF THE ORDER AND IT WAS HELD THAT THE ASSESSEE WAS A CHARITABLE TRUST RUNNING VARIOUS EDUCATIONAL INSTITUTIONS. THE ALLEGATION OF THE REVENUE AGAINST THE ASSESSEE WAS THAT IT WAS COLLECTING CAPITATION FEES IN THE GARB OF EDUCATION AND WAS RUNNING THE INSTITUTE WITH PROFIT MOTIVE. HOWEVER, WHERE NEITHER BEFORE THE ASSESSING OFFICER NOR ANY OF THE PERSONS WHO HAVE STATED BEFORE THE DEPARTMENT THAT THEY HAVE GIVEN DONATION FOR GETTING ADMISSIONS, HAD COMPLAINED TO THE GOVERNMENT OR A PPROPRIATE AUTHORITY, FOR ANY SUCH VIOLATION UNDER THE MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEES) ACT, 1987 AND NO EVIDENCE HAD BEEN BROUGHT ON RECORD THAT ANY STUDENT HAD DENIED ADMISSION FOR NOT GIVING DONATION . T HEREFORE, MER ELY BECAUSE, SOME OF DONORS HAD STATED THAT THEY HAVE GIVEN DONATIONS FOR ADMISSION, WHICH HAD BEEN RETRACTED LATER ON, THE SAME AS PER THE TRIBUNAL, WOULD NOT DIS - ENTITLE THE ASSESSEE TRUST FROM GETTING EXEMPTION, WHICH IS EXISTING SOLELY FOR EDUCATIONAL PURPOSE. THE TRIBUNAL ALSO GAVE A FINDING FROM VARIOUS DETAILS FILED BY THE ASSESSEE THAT IF THE CAPITAL EXPENDITURE AND THE DEPRECIATION THEREON WAS CONSIDERED AS AN APPLICATION, THEN THE ASSESSEE HAD DEFICIT IN EACH YEAR UNDER APPEAL AND IT COULD NOT BE SAID THAT THE TRUST WAS WORKING SOLELY FOR THE PROFIT. THE TRIBUNAL THEREAFTER ALSO HELD THAT EVEN IF THE ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 12 ASSESSEE TRUST HAD ACCEPTED DONATION FROM THE STUDENTS, IT WOULD NOT MEAN THAT THE ASSESSEE TRUST EXISTED FOR PROFIT MAKING ACTIVITY AND NOT FOR THE PURPOSE OF EDUCATION. WHERE THE DONATIONS HAD BEEN ENTERED IN THE BOOKS OF ACCOUNT AND WHERE IT WAS NOT THE CASE OF REVENUE THAT SUCH DONATIONS HAVE BEEN SIPHONED BY THE TRUSTEE OR THE RELATIVES, RELYING ON THE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF DECCAN EDUCATIONAL SOCIETY IN ITA NO.1840/PN/2014, ORDER DATED 13.07.2015 , THE TRIBUNAL HELD THAT THE SIMILAR ISSUE IS TO BE APPLIED WHILE DECIDING ELIGIBILITY UNDER SECTION 11 AND 12A OF THE ACT. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE FROM PARA 14 7 AT PAGES 88 TO 107, WHICH ARE BEING REFERRED TO AND NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. 1 9 . THE LAST ISSUE CONSIDERED BY THE TRIBUNAL WAS DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT. THE TRIBUNAL VIDE PARAS 148 TO 151 AT PAGES 107 TO 112 HELD THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND THE INCOME WHICH IS SUBJECT MATTER OF VIOLATION ONLY, COULD BE BROUGHT TO TAX. THEREAFTER, THE TRIBUNAL VIDE PARA 153 ONWARDS CONSIDERED VARIOUS VIOLATIONS CONTEMPLATED UNDER SECTION 13(1)(C) OF THE ACT AND ALLOWED EXEMPTION UNDER SECTION 11 OF THE ACT SUBJECT TO THE CONDITION THAT NO SUCH EXEMPTION WO ULD BE GIVEN IN RESPECT OF DISALLOWANCE MADE FOR VIOLATING THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. FOLLOWING THE SAME PARITY OF REASONING, GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 20 . THE ISSUE IN GROUND OF APPEAL NO.5 IS AG AINST THE ORDERS OF AUTHORITIES BELOW IN HOLDING THAT THE ACTIVITY OF ASSESSEE IS COMMERCIAL ACTIVITY WITH PROFIT ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 13 MOTIVE AND IT DOES NOT EXIST SOLELY FOR CHARITY AND HENCE, THE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT. WE HAVE ALREADY OBSERVED IN T HE PARAS HEREINABOVE THAT THE FINDINGS OF TRIBUNAL THAT THE ASSESSEE TRUST DOES NOT EXIST SOLELY FOR THE PROFIT AND IS NOT CARRYIN G OUT ANY COMMERCIAL ACTIVITY , IF THE CAPITAL EXPENDITURE AND THE DEPRECIATION IS CONSIDERATION AS APPLICATION OF INCOME, THEN THE ASSESSEE HAD DEFICIT IN EACH OF THE YEARS UNDER APPEAL. FOLLOWING THE SAME PARITY OF REASONING AS HELD BY THE TRIBUNAL (SUPRA) IN ASSESSEES OWN CASE IN EARLIER YEAR IN PARAS 137 TO 145 AT PAGES 82 TO 87, WE ALLOW THE GROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE. 2 1 . THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.6 IS AGAINST THE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT ON ACCOUNT OF DIFFERENT EXPENDITURE FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT. 2 2 . THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE LIST OF EXPENSES WHICH IS ENLISTED AT PAGE 1010 OF THE PAPER BOOK AND POINTED OUT THAT ALL THE SAID EXPENSES WERE INCURRED IN INDIA AND ONLY IN ASSESSMENT YEAR 1999 - 2000, CERTAIN EXPENSES WERE INCURRED OUT SIDE INDIA. HE FURTHER REFERRED TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS, WHEREIN SIMILAR EXPENSES WERE CONSIDERED AND PART OF EXPENSES WERE DISALLOWED AND ON THE SAID DISALLOWANCES, NO EXEMPTION UNDER SECTION 11 OF THE ACT WAS HELD TO BE ALLOWABLE. 2 3 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO REFERRED TO THE GROUND OF APPEAL NO.7 AND POINTED OUT THAT THE SAME IS LINKED TO GROUND OF APPEAL NO.4, WHEREIN THE AUTHORITIES BELOW FOR VIOLATING THE CONDITIONS OF SECTION 13 OF THE ACT, HAD DENIED THE EXEMPTION UNDER SECTION 11 OF THE ACT ON ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 14 THE ENTIRE INCOME OF ASSESSEE. HOWEVER, THE TRIBUNAL HAD RESTRICTED THE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT ON SUCH DISALLOWANCES WHICH WERE MADE UNDER SECTION 11 O F THE ACT AND IN RESPECT OF BALANCE INCOME, THE TRIBUNAL HAD ALLOWED THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. 2 4 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT ANOTHER LINKED GROUND OF APPEAL RAISED BY THE ASSESSE E IS GROUND OF APPEAL NO.11, WHEREIN THE CIT(A) HAD ENHANCED THE INCOME OF ASSESSEE IN RESPECT OF DISALLOWANCE OF VARIOUS OTHER EXPENSES. 2 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACING RELIANCE ON THE ORDERS OF AUTH ORITIES BELOW POINTED OUT THAT THE DISALLOWANCE IN RESPECT OF SUCH EXPENDITURE WHICH IS RELATABLE TO THE TRUSTEES AND MEMBERS OF ASSESSEE TRUST IS HIT BY PROVISIONS OF SECTION 13(1)(C) R.W.S. 13(3) OF THE ACT. HE FURTHER REFERRED TO THE DISALLOWANCE OF HO NORARIUM PAID TO THE PRESIDENT AND THE TRUSTEES WHICH IS DIRECTLY OR INDIRECTLY HIT BY THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. SIMILARLY, THE PAYMENT OF SCHOLARSHIP AND NOTIONAL INTEREST IS SO HIT. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE R EVENUE REFERRED TO THE DETAILS AT PAGE 1010 OF THE PAPER BOOK AND POINTED OUT THAT WHEN SALARY WAS BEING GIVEN TO THE PRESIDENT OF THE TRUST, THEN NO OTHER PERQUISITE WAS TO BE GIVEN. HE FURTHER STATED THAT THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AR E NOT APPLICABLE IN CASE OF REASONABLE EXPENDITURE. 2 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE TRIBUNAL WHILE DECIDING THE APPEAL OF ASSESSEE IN EARLIER YEARS HAD HELD THE ASSESSEE TO BE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT ON PART ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 15 OF THE INCOME AND NO SUCH EXEMPTION WAS HELD TO BE ALLOWABLE ON SUCH DISALLOWANCES WHICH WERE MADE UNDER SECTION 13 OF THE ACT. THE TRIBUNAL THEREAFTER, ALSO CONSIDERED EACH OF EXPENDITURE INCURRED BY THE ASSESSEE WHICH IS IN RELATIO N TO ITS PRESIDENT AND THE TRUSTEES OF THE TRUST AND HAD PARTLY ALLOWED THE CLAIM OF ASSESSEE IN RESPECT OF CERTAIN EXPENDITURE. 2 7 . WE PROCEED TO DECIDE THE PRESENT GROUND OF APPEAL NO.6 ALONG WITH GROUND OF APPEAL NO.7 AND 11 BY REFERRING TO THE ORDER OF TRIBUNAL IN EARLIER YEARS. THE ASSESSEE HAS ENLISTED THE LIST OF EXPENDITURE RELATING TO ASSESSMENT YEAR 2006 - 07 WHICH WERE HELD BY THE ASSESSING OFFICER AS NOT ALLOWABLE ON THE GROUND OF VIO LATION OF SECTION 13 OF THE ACT, WHICH READS AS UNDER: - SR. NO. PARTICULARS A.Y.2006 - 07 1 EXPENDITURE ON PROVIDING FACILITY TO B E AVHAD - VEHICLE MAINTENANCE ( A ) ADDITION BY AO ( B ) ENHANCEMENT BY CIT(A) - DEPRECIATION ON CAR ( A ) ADDITION BY AO ( B ) ENHANCEMENT BY CIT(A) - CREDIT CARD EXPENSES ( A ) ADDITION BY AO ( B ) ENHANCEMENT BY CIT( A) - OTHER EXPENSES - HONORARIUM PAID RS.2,36,191 RS.2,80,057 RS.2,10,636 RS.1,80,000 2 EXPENDITURE ON FOREIGN TOURS ( A ) ADDITION BY AO ( B ) ENHANCED BY CIT(A) RS.10,57,333 3 CONCESSIONAL EDUCATION ( A ) ADDITION BY AO ( B ) ENHANCED BY CIT(A) 4 SCHOLARSHIP GIVEN TO RAHUL KARAD RS.5,44,797 5 NOTIONAL INTEREST ON ADVANCE TO RAHUL KARAD RS.1,27,529 2 8 . THE FIRST EXPENDITURE WHICH HAS BEEN DISALLOWED IS VEHICLE MAINTENANCE EXPENSES OF SHRI B E AVHAD TO THE EXTENT OF RS.2,36,191/ - . THE TRIBUNAL VIDE PARA 153 HAD HELD THAT THE SAID EXPENSE WAS ALLOWABLE TO THE EXTENT OF 50% AND THE BALANCE WAS HELD TO BE HIT BY PROVISIONS OF SECTION 13(1)(C) OF THE ACT. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 16 FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT VEHICLE MAINTENANCE EXPENSES OF RS.2,36,191/ - ARE TO BE ALLOWED TO THE EXTENT OF 50% AND THE BALANCE IS TO BE DISALLOWED UNDER SECTION 13(1)(C) OF THE ACT. SIMILARLY, DEPRECIATION ON CAR OF RS.2,80,057/ - IS TO BE DISALLOWED TO THE EXTENT OF 50% AS PER PARA 154 OF THE ORDER OF THE TRIBUNAL. THE CREDIT CARD EX PENSES OF SHRI B E AVHAD WERE ALSO HELD TO BE ALLOWABLE TO THE EXTENT OF 50% OF EXPENSES AS PER PARA 153 OF THE EARLIER ORDER. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT CREDIT CARD EXPENSES OF RS.2,10,636/ - ARE TO BE ALLOWED TO THE EXTENT OF 50 % AND THE BALANCE IS TO BE DISALLOWED UNDER SECTION 13(1)(C) OF THE ACT. IT MAY BE CLARIFIED HEREIN ITSELF THAT THE DISALLOWANCE MADE UNDER SECTION 13(1)(C) R.W.S. 13(3) OF THE ACT DOES NOT ENTITLE THE ASSESSEE TO CLAIM EXEMPTION UNDER SECTION 11 OF THE A CT. 2 9 . NOW, COMING TO THE HONORARIUM PAID TO SHRI B E AVHAD OF RS.1,80,000/ - FOR PERIOD OF THREE MONTHS . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SHRI B E AVHAD IS THE PRESIDENT AND THE TRUSTEE OF THE ASSESSEE TRUST AND SU CH HONORARIUM WA S REASONABLE VIS - - VIS NATURE OF FUNCTIONS PERFORMED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE ORDER OF TRIBUNAL, WHEREIN IT HAS BEEN HELD THAT THERE IS NO DISPUTE THAT SHRI B E AVHAD WAS LOOKING AFTER LEGAL M ATTERS OF THE TRUST. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT ONLY 50% OF THE SAID EXPENDITURE MERITS TO BE ALLOWED IN THE HANDS OF ASSESSEE AND THE BALANCE IS HIT BY SECTION 13(1)(C) OF THE ACT AND HENCE, ADDED I N THE HANDS OF ASSESSEE, ON WHICH THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 17 30 . THE NEXT EXPENDITURE IS THE EXPENDITURE ON FOREIGN TOUR, WHEREIN THE ASSESSING OFFICER HAD NOT MADE ANY DISALLOWANCE BUT THE CIT(A) MADE AN ENHANCEMENT OF RS. 10,57,333/ - . THE TRIBUNAL HAD VIDE PARA 155 OF ITS ORDER IN EARLIER YEAR HAD DISALLOWED TOTAL FOREIGN TOUR EXPENSES OF TRUSTEES AND THEIR RELATIVES. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT FOREIGN TOUR EXPENSES ARE TO BE DI SALLOWED IN THE HANDS OF ASSESSEE. 3 1 . THE NEXT ITEM IS THE SCHOLARSHIP GIVEN TO RAHUL KARAD, WHO IS SON OF MANAGING TRUSTEE AT RS.5,44,797/ - . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SCHOLARSHIP WAS GIVEN TO RAHUL KARAD IN HIS CAPACITY AS EMPLOYEE, WHO ALSO SIGNED AN UNDERTAKING THAT HE WOULD SERVE THE TRUST FOR A PERIOD OF FIVE YEARS. THE ASSESSEE CLAIMS THAT THE LOAN WAS GIVEN ON BENEFICIAL BASIS SINCE IT WOULD HELP THE TRUST IN EXPANSION OF MANAGEMENT COURSES. THE ASSE SSEE CLAIMS THAT SIMILAR LOANS WERE GIVEN TO UNRELATED EMPLOYEES OF THE ASSESSEE, HENCE, EXPENDITURE MERITS TO BE ALLOWED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US STRESSED THAT THE SAID PERSON WAS TEMPORARILY EMPLOYED BY THE COMPA NY AND AFTER COMPLETING HIS COURSE, ANOTHER COURSE FOR POLITICIAN WAS STARTED IN THE INSTITUTE RUN BY THE ASSESSEE AND HENCE, BENEFICIAL TO THE RUNNING OF ACTIVITIES OF THE TRUST. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE SCHOLARSHIP PAID BY THE ASSESSEE WAS HIT BY SECTION 13(1)(C) OF THE ACT. WE FIND MERIT IN THE PLEA OF LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. THE SCHOLARSHIP PAID TO THE SON OF MANAGING TRUSTEE IS SQUARELY HIT BY THE PRO VISIONS OF SECTION 13(1)(C) OF THE ACT. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE SAID PERSON SHRI RAHUL KARAD WAS NOT AN EMPLOYEE IN THE RELEVANT YEAR AND HE HAD NOT COMPLETED HIS COURSE, FOR WHICH SCHOLARSHIP WAS GIVEN TO HIM. HE IS AN ASSOCIATED PE RSON OF THE ASSESSEE ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 18 TRUST AND IN VIEW THEREOF, THE EXPENDITURE PAID BY THE TRUST TO ITS ASSOCIATED PERSONS IS SQUARELY HIT BY PROVISIONS OF SECTION 13(1)(C) OF THE ACT. THE SCHOLARSHIP PAID BY THE ASSESSEE TRUST TO ITS EMPLOYEES HAS BEEN ALLOWED IN THE H ANDS OF ASSESSEE. HOWEVER, THE PRESENT SCHOLARSHIP HAS BEEN PAID TO THE SON OF MANAGING TRUSTEE , WHO WAS NOT EMPLOYEE DURING THE YEAR AND HENCE, THE EXEMPTION IS HIT BY THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. ACCORDINGLY, WE HOLD SO. 3 2 . THE NEXT ITEM OF EXPENDITURE IS NOTIONAL INTEREST ON ADVANCE MADE TO SHRI RAHUL KARAD AT RS. 1,27,529/ - . AN AMOUNT OF RS.18 LAKHS WAS ADVANCED TO SHRI RAHUL KARAD , ON WHICH NOTIONAL INTEREST OF RS.1,27,529/ - WAS DISALLOWED BY THE CIT(A) BY WAY OF ENHANCEMENT. THE SAID INTEREST IS DUE ON THE LOAN OF RS.18 LAKHS ADVANCED TO SHRI RAHUL KARAD, WHO WAS THE SON MANAGING TRUSTEE , WHICH IS HIT BY PROVISIONS OF SECTION 13(1)(C) OF THE ACT. FOLLOWING THE SAME PARITY OF REASONING AS IN THE CASE OF SCHOLARSHIP PAID TO SHRI R AHUL KARAD, WHO IS NOT THE EMPLOYEE OF ASSESSEE DURING THE YEAR UNDER CONSIDERATION, WE UPHOLD THE INTEREST DUE ON SUCH ADVANCES MADE TO SHRI RAHUL KARAD AT RS.1,27,529/ - . THE GROUNDS OF APPEAL NO.6, 7 AND 11 THUS, PARTLY ALLOWED. 3 3 . NOW COMING TO THE I SSUE IN GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE AGAINST THE ADDITION OF RS.73,58,000/ - . THE FACTS RELATING TO THE ISSUE OF ADDITION OF RS.73,58,000/ - ON ACCOUNT OF ON - MONEY PAYMENT FOR PURCHASE OF LAND ARE THAT DURING THE COURSE OF SEARCH, ONE DOCUME NT WAS FOUND FOR THE PURCHASE OF LAND. THE AGREED PRICE BETWEEN THE PARTIES WAS RS.33.92 LAKHS, WHEREAS ON THE SAID PAPER, THE CONSIDERATION WRITTEN WAS RS.10 7 .50 LAKHS. THE ASSESSING OFFICER HAD ADDED THE DIFFERENCE AS INCOME ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 19 OF THE ASSESSEE AS THE ASSE SSEE HAD NOT FURNISHED COMPLETE INFORMATION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE LAND IN QUESTION BELONGS TO THE SADHU, WHO IN TURN, HAD GIVEN POWER OF ATTORNEY TO RAMK UMAR P. JATYAN , WHO IN TURN, ADMITTED TO HAVE R ECEIVED RS.1.07 CRORES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ASKED FOR CROSS - EXAMINATION BUT SINCE THE ASSESSEE HAD RECEIVED THREATS , COULD NOT CROSS - EXAMINE THE PERSON. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NO RELIANCE COULD BE PLACED ON SUCH DUMB DOCUMENT, WHO IN TURN, HAD THREATENED THE ASSESSEE AND HENCE, NO CROSS - EXAMINATION. FURTHER, THE OWNER OF THE PLOT HAD NOT BEEN QUESTIONED. OUR ATTENTION WAS DRAWN TO THE STATEMENT AT PAGE 1008 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE ASSESSEE WAS IN DEFICIT. 3 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE REFERRED TO THE DOCUMENT WHICH WAS FOUND, COPY OF WHICH IS PLACED AT PAGE 931 OF THE PAPER BOOK 4. HE POINTED OUT THAT THE ASSESSI NG OFFICER HAD CONDUCTED FURTHER ENQUIRIES, WHEREIN MONEY WAS DEPOSITED IN THE BANK ACCOUNT OF JATYAN . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER STATED THAT THE SAID DOCUMENT WAS NOT A DUMB DOCUMENT AND RELIANCE WAS PLACED ON THE OBS ERVATIONS OF CIT(A) FROM PAGE 149 ONWARDS. 3 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT ON THE PREMISES OF ASSESSEE TRUST ON 26.08.2005 , LOOSE PAPER PERTAINING TO THE PURCHASE OF LAND AT KELGAON WAS FOUND IN THE CHAMBER OF SHRI S.V. KULKARNI, REGISTRAR OF THE TRUST. IT IS MENTIONED ON RECOR D THAT THE SAID PAPER WAS TORN BY THE REGISTRAR ON THE SIGHT OF SURVEY TEAM, WHICH WA S RECONSTRUCTED USING THE TORN ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 20 PIECES AND SCAN NED IMAGE OF THE SAME IS REPRODUCED BY THE ASSESSING OFFICER AT PAGE 48 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTES THAT THERE WAS NO COOPERATION FROM THE ASSESSEE SIDE IN EXPLAINING THE NATURE OF ENTRIES RECORDED THEREIN. THE PERUSAL OF THE AGR EEMENT FOR PURCHASE OBTAINED FROM THE ASSESSEE SHOWED THAT THE ASSESSEE HAD SHOWN THE CONSIDERATION AT RS.33,92,000/ - FOR PURCHASE OF TOTAL LAND OF 417 GUNTAS FROM FOUR PERSONS. THE STATEMENT OF ONE OF THE SELLERS NAMELY RAMKUMAR JATYANI WAS RECORDED, WHI CH INDICATED THAT THE ACTUAL SALE CONSIDERATION IN THE SAID CASE WAS RS.17,41,000/ - IN RESPECT OF 59 GUNTAS OF LAND; THOUGH IN THE AGREEMENT, THE SALE VALUE WAS SHOWN AT RS.2,41,000/ - . IN THE STATEMENT RECORDED, SHRI RAMKUMAR JATYAN ADMITTED THAT OUT OF T OTAL CONSIDERATION OF RS.17,41,000/ - , ONLY AGREEMENT AMOUNT OF RS.2,41,000/ - WAS RECEIVED THROUGH CHEQUE, WHEREAS THE REMAINING AMOUNT OF RS.15 LAKHS WAS RECEIVED IN CASH. SUBSEQUENTLY, AN AFFIDAVIT WAS ALSO FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER. THE OTHER THREE SELLERS DID NOT APPEAR BEFORE THE ASSESSING OFFICER DESPITE SERVICE OF SUMMONS ON THEM. THE ASSESSEE FAILED TO AVAIL REPEATED OPPORTUNITIES GRANTED BY THE ASSESSING OFFICER TO CROSS - EXAMINE THE SAID PERSON. THE ASSESSING OFFICER THU S, DREW INFERENCE THAT ON - MONEY WAS PAID OVER AND ABOVE THE VALUE SHOWN IN THE AGREEMENT AND QUANTIFIED THE SAME AT RS.73,88,000/ - . AS PER THE ASSESSING OFFICER, ANALYSIS OF THE IMPOUND ED DOCUMENT SUGGESTED THAT AN AMOUNT OF RS.1,07,50,000/ - WHICH WAS THE HIGHEST FIGURE APPEARING IN THE IMPOUNDED PAPER, COULD BE THE ACTUAL CONSIDERATION PAID FOR THE PURCHASE OF 417 GUNTAS OF LAND. SINCE THE EXTRA CONSIDERATION PAID OF RS. 73,88,000/ - WAS NOT RECORDED IN THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER TREATED T HE SAME AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND ADDED TO THE INCOME. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 21 3 6 . BEFORE THE CIT(A), THE ASSESSEE EXPLAINED THAT IT HAD PURCHASED THE IMPUGNED LAND FROM ONE SWAMI RAMESHWARCHAND GIRI , WHEREIN MR. RAMKUMAR P. JATYAN AND OTHERS WE RE CONFIRMING THE PARTIES. ACCORDING TO THE ASSESSEE, THE SAID RAMKUMAR P. JATYAN AND OTHERS WERE THE TRESPASSERS O N THE LAND AND UNDER CONSENT DEGREE OF COURT, THEY JOINED AS CONFIRMING PARTIES FOR SALE OF THE ABOVE LAND. THE ASSESSEE ALSO STATED THAT T HE AGREEMENT WAS DULY REGISTERED WITH THE SUB - REGISTRAR, KHED, PUNE, WHEREIN THE PURCHASE CONSIDERATION WAS SHOWN AT RS.33,92,000/ - AS PER THE GOVERNMENT RATES. THE ASSESSEE FURTHER CONTENDED THAT OTHER THAN CONSIDERATION SHOWN IN THE DEED, NO OTHER AMOUN T WAS PAID EITHER TO THE OWNER OF LAND OR TO THE CONFIRMING PARTIES. THE ASSESSEE ALSO OBJECTED TO THE RELIANCE PLACED UPON THE PAPER THAT WAS CONFISCATED DURING THE SURVEY OPERATION. RELIANCE PLACED UPON BY THE ASSESSING OFFICER ON THE STATEMENT OF SHRI RAMKUMAR JATYAN THAT HE HAD RECEIVED SUM OF RS.15 LAKHS IN CASH OVER AND ABOVE THE PURCHASE CONSIDERATION WAS ALSO OPPOSED BY THE ASSESSEE BEFORE THE CIT(A). THE ASSESSEE FURTHER CLAIMED THAT NO PROPER OPPORTUNITY TO CROSS - EXAMINE SHRI RAMKUMAR P. JATYAN WAS PROVIDED. THE CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE THAT THE DOCUMENT FOUND WAS DUMB DOCUMENT. THE CIT(A) OBSERVED THAT THE SAID DOCUMENT WAS FOUND IN THE CHAMBER OF THE REGISTRAR OF THE TRUST AND HE HAD ALSO MADE AN ATTEMPT TO DESTROY THE EVIDENCE ON SIGHTING THE SURVEY PART Y . THE FACT THAT THE DOCUMENT RELATED TO PURCHASE OF LAND AT KELGAON AND THE SAME WAS IN THE HANDWRITING OF S.V. KULKARNI, WAS NOT DENIED BY THE ASSESSEE. THE CIT(A) FURTHER NOTED THAT AS PER INFORMATION, THE TOTAL CON SIDERATION SHOWN FOR THE PURCHASE OF 417 GUNTAS I.E. 10 ACRES 17 GUNTAS FROM FOUR PERSONS WAS AT RS.33,92,000/ - , WHEREIN DIFFERENT CONSIDERATIONS WERE PAID FOR DIFFERENT PIECES OF LAND. HE FURTHER NOTED THAT IN THE IMPOUNDED DOCUMENT, THE FIRST ENTRY WHIC H WAS MARKED AS 1 IS RS.33.92, ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 22 WHICH TALLIES WITH TOTAL CONSIDERATION SHOWN IN THE AGREEMENT. THE OTHER ENTRY MARKED AS 2 IS 4.17, WHICH TALLIES WITH THE TOTAL EXTENT OF LAND SHOWN IN THE REGISTERED DEEDS. THE CIT(A) THUS, HELD THAT THE SAID ENTRIE S LEND AUTHENTICITY TO OTHER ENTRIES MADE IN THE DOCUMENT THAT THE FIGURES INDICATED THEREIN REPRESENT THE ACTUAL PURCHASE CONSIDERATION PAID BY THE ASSESSEE FOR THE PURCHASE OF SAID LAND. THUS, HE HELD THAT THE DOCUMENT WAS NOT A DUMB DOCUMENT BUT WAS A SPEAKING DOCUMENT AND IT RELATED TO PURCHASE OF LAND AT KELGAON BY THE ASSESSEE. THE CIT(A) FURTHER NOTED THAT DURING POST SURVEY ENQUIRIES, STATEMENT OF ONE OF THE SELLERS NAMELY JATYAN WAS RECORDED, WHEREIN HE CLEARLY STATED THAT THE ACTUAL CONSIDERATIO N PAID IN THE CASE WAS RS.17,41,000/ - IN RESPECT OF 59 GUNTAS OF LAND, THOUGH IN THE AGREEMENT, PURCHASE CONSIDERATION WAS SHOWN TO BE AT RS.2,41,000/ - . HE IN HIS STATEMENT AND SUBSEQUENT AFFIDAVIT FILED BEFORE THE ASSESSING OFFICER ADMITTED TO HAVE RECEI VED ONLY THE AGREEMENT AMOUNT OF RS.2,41,000/ - IN CHEQUE, WHEREAS THE REMAINING AMOUNT OF RS.15 LAKHS WAS RECEIVED BY CHEQUE. THE SAID SUM OF RS.15 LAKHS IN CASH WAS DEPOSITED IN HIS SAVINGS BANK ACCOUNT NO.6414 WITH THE BANK OF MAHARASHTRA. THE CONTENTI ON OF ASSESSEE THAT SHRI JATYAN WAS ONLY CONSENTING PARTY AND NOT THE OWNER OF LAND WAS HELD TO BE OF NO RELEVANCE , WHERE ACTUAL PAYMENT WAS MADE AT RS.17,41,000/ - . THE CIT(A) NOTED ANOTHER INTERESTING ASPECT WHICH WAS FOUND IN THE COURSE OF EXAMINATION O F THE SAID PERSON , INITIALLY SUM OF RS.5 LAKHS WAS ALSO PAID BY CHEQUE BY THE ASSESSEE IN ADDITION TO PAYMENT OF RS.2,41,000/ - BY CHEQUE SHOWN IN THE REGISTERED DOCUMENT. THE SCANNED COP IES OF CHEQUES ISSUED TO THE SAID VENDOR BY THE ASSESSEE TOWARDS PURC HASE CONSIDERATION ARE REPRODUCED AT PAGE 154 OF THE APPELLATE ORDER. THE STATEMENT OF SHRI JATYAN WAS REFERRED, WHEREIN HE EXPLAINED THAT ON 15.07.2005 WHEN SIGNATURES WERE BEING DONE ON ACCOUNT OF THE SALE OF LAND, THERE WAS SHORTAGE OF CASH OF RS.5 LAK HS AT ALANDI. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 23 SHRI JATYAN WAS ASKED TO COLLECT THE CASH OF RS.5 LAKHS FROM PUNE AND CHEQUE FOR THAT AMOUNT WAS ISSUED AS SECURITY TILL THE PAYMENT OF CASH. SHRI JATYAN FURTHER STATED THAT HE HAD TO SELL THE LAND AGAINST COMPULSION AND CASH WAS ALSO TAKEN AGAINST HIS WISHES. HE ALSO VISUALIZED THE PROBLEM AT A LATER DATE AND HENCE TO BE ON SAFER SIDE HE TOOK A XEROX COPY OF THE ABOVE CHEQUE AND KEPT WITH HIM. THE ORIGINAL CHEQUE WAS RETURNED TO THE ASSESSEE AT THE TIME OF RECEIPT OF CASH OF RS.5 LAKHS. THE ASSESSING OFFICER ALSO VERIFIED FROM THE BANK RECORDS OF THE ASSESSEE TRUST THAT CHEQUE NO.822489 DATED 15.07.2005 FOR RS.5 LAKHS ISSUED IN THE NAME OF JATYAN WAS NOT DEBITED TO THE BANK ACCOUNT AT ANY TIME. THE CIT(A) THUS, OBSERVED FROM THE STATEMEN T OF THE SAID PERSON, IT IS ESTABLISHED THAT IN ADDITION TO THE CONSIDERATION SHOWN IN THE REGISTERED DOCUMENT, ADDITIONAL AMOUNT WAS PAID TO THE SELLERS OR CONSENTING PARTIES FOR PURCHASE OF LAND. THE ASSESSING OFFICER HAD ALLOWED OPPORTUNITY TO CROSS - EX AMINE THE SAID PERSON BUT THE ASSESSEE FAILED TO AVAIL THE SAME. ANOTHER ASPECT NOTED BY THE CIT(A) IS THAT EVEN THOUGH THE REGISTRATION WAS EFFECTED ON 15.07.2005, THE PURCHASE CONSIDERATION VARIED TREMENDOUSLY FROM RS.4085/ - FROM GUNTA TO RS.34,583/ - PE R GUNTA, WHICH FACT CLEARLY SUGGESTS THE PAYMENT OF PURCHASE PRICE MORE THAN THE AMOUNT SHOWN IN THE REGISTERED DEEDS. THE CIT(A) THUS, HELD THAT THE ASSESSEE WAS GENERATING MONEY OUTSIDE THE BOOKS OF ACCOUNT, WHICH HAD BEEN UTILIZED FOR PURCHASE OF LAND. ANOTHER ASPECT NOTED FROM THE PERUSAL OF IMPOUNDED DOCUMENT WAS THE ENTRY MARKED AS 6 SUGGESTING THAT AN AMOUNT OF RS.1,07,50,000/ - , WHICH IS THE HIGHEST FIGURE APPEARING IN THE IMPOUNDED PAPER, COULD BE THE ACTUAL CONSIDERATION PAID FOR PURCHASE OF 41 7 GUNTAS OF LAND. ACCORDINGLY, THE ASSESSING OFFICER HAD ARRIVED AT THE ON - MONEY PAID AT RS.73,88,000/ - AS PER SEIZED DOCUMENT . CONSIDERING THE NATURE AND SEQUENCE OF ENTRIES NOTED IN THE DOCUMENT, THE APPROACH OF ASSESSING OFFICER IN DETERMINING THE ON - MONEY ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 24 COMPONENT IN THE TRANSACTION AT RS.73,88,000/ - WAS FOUND TO BE CORRECT AND SINCE THE EXTRA CONSIDERATION WAS PAID, WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT, THE CIT(A) UP HELD THE ORDER OF ASSESSING OFFICER IN TREATING THE SAME AS UNEXPLAINED IN VESTMENT UNDER SECTION 69 OF THE ACT, WHICH WAS ADDED TO THE INCOME OF ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 3 7 . ON PERUSAL OF RECORD, IT IS CLEAR THAT THE BASIS FOR ADDITION MADE UNDER SECTION 69 OF THE ACT IS THE IMPOUNDED DOCUMENT WHICH WAS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF ASSESSEE. THE SAID DOCUMENT WAS FOUND FROM THE CHAMBER OF SHRI S.V.KULKARNI, WHO WAS THE REGISTRAR OF THE TRUST. ON SEEING SURVEY TEAM, THE SAID PAPER WAS TORN BY THE REGISTRAR AND THE SAME WAS RECONSTRUCTED BY THE SURVEY TEAM AND THE SCANNED COPY OF THE DOCUMENT IS AVAILABLE AT PAGE 48 OF THE ASSESSMENT ORDER AND AT PAGE 150 OF THE APPELLATE ORDER. THE PERUSAL OF THE SAID SCANNED DOCUMENT REFLECTS VAR IOUS ENTRIES WRITTEN ON THE SAID DOCUMENT, WHEREIN THE ENTRY NO.1 IS IN RESPECT OF 33.92. FURTHER, THERE ARE MANY OTHER ENTRIES AND THE HIGHEST ENTRY IS AGAINST ITEM NO.6 AT RS.1,0 7 ,50,000/ - . THE OTHER ENTRY MARKED NO.2 OF 4.17 WHICH TALLIES WITH TOTAL AREA OF PLOT SHOWN IN THE REGISTERED DEED. ADMITTEDLY, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD PURCHASED PIECE OF LAND, WHEREIN THE CONSIDERATION SHOWN IN THE AGREEMENT WAS RS.33.92 LAKHS. THE LAND PURCHASED WAS OF 417 GUNTAS FROM FOUR PERS ONS. THE ASSESSEE CLAIMS THAT ONE OF THE PERSONS WAS THE OWNER OF LAND AND THE BALANCE PERSONS WERE UNAUTHORIZED OCCUPANTS OF THE SAID LAND AND HAD TO BE MADE THE PARTY TO THE SALE DEED. THE AUTHORITIES BELOW HAD COLLATED THE INFORMATION IN RESPECT OF SA LE CONSIDERATION OF RS.33.92 LAKHS WHICH IS AS UNDER: - ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 25 AREA OF LAND IN ACRES / GUNTHAS DATE OF REGISTRATION RATE PER GUNTHA CONSIDERATION AS PER AGREEMENT (RS.) 59 05/08/2005 4085 2,41,000 40 15/07/2005 4325 1,73,000 82 15/07/2005 4220 3,46,000. 59 05 /08/2005 4085 2,41,000 24 15/07/2005 34586 83,000 4 15/07/2005 22500 90,000 149 15/07/2005 9872 14,71,000 417 GUNTHAS (4.17 HECTRES) TOTAL 33,92,000. 3 8 . ADMITTEDLY, WHERE THE ASSESSEE HAD PURCHASED THE LAND FOR RS.33,92,000/ - AND THE TOTAL LAND MEN TIONED IN THE SAID PAPER IS 4.17 WHICH IS EQUIVALENT TO 4 . 17 HECTRES OR 417 GUNTAS , T HE SAID ENTRIES IN THE IMPOUNDED DOCUMENT LEND AUTHENTICITY TO THE OTHER ENTRIES MADE IN THE SAID DOCUMENT AND ESTABLISHES THE CASE OF THE REVENUE THAT THE FIGURES REPRESE NT THE ACTUAL PURCHASE CONSIDERATION PAID BY THE ASSESSEE FOR PURCHASE OF SAID LAND. ADMITTEDLY, THE ASSESSEE IN THE REGISTERED DOCUMENT HAD SHOWN THE AREA OF LAND AT 417 GUNTAS AND THE SALE CONSIDERATION AT RS.33,92,000/ - AND ONCE THESE TWO ENTRIES ARE A DMITTED TO BE CORRECT, THEN THE BALANCE ENTRIES ON THE SAID DOCUMENT ARE RELATABLE TO THE ASSESSEE AND HENCE, THE ENTRIES ON THE SAID DOCUMENT RELATE TO PURCHASE OF LAND AT KELGAON BY THE ASSESSEE. ANOTHER PLEA RAISED BY THE ASSESSEE BEFORE THE AUTHORITIE S BELOW WAS THAT HE HAD PURCHASED THE SAID LAND FROM SHRI SWAMI RAMESHWARCHAND GIRI AND OTHER PARTIES WERE THE CONSENTING PARTIES. THERE IS NO MERIT IN THE SAID PLEA OF THE ASSESSEE, WHEREIN THE ASSESSEE ITSELF HAD ISSUED DIFFERENT CHEQUES TO THE OTHER SO - CALLED CONSENTING PARTIES. THE ASSESSEE HAS ISSUED CHEQUE NO.822483, DATED 14.07.2005 OF RS.2,41,000/ - TO SHRI RAMKUMAR P. JATYANI. THE AREA OF LAND FOR THIS TRANSACTION WAS 59 GUNTAS, WHEREIN THE RATE PER GUNTA WAS ADOPTED AT RS.4085/ - AND CONSIDERATIO N AS PER THE AGREEMENT WAS RS.2,41,000/ - . HOWEVER, DURING POST SURVEY ENQUIRIES, STATEMENT OF SHRI RAMKUMAR JATYAN WAS RECORDED, WHEREIN HE CLEARLY STATED THAT THE TOTAL SALE ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 26 CONSIDERATION IN HIS CASE WAS RS.17,41,000/ - IN RESPECT OF 59 GUNTAS OF LAND. H E ADMITTED THAT THOUGH IN THE AGREEMENT, PURCHASE CONSIDERATION WAS SHOWN TO BE AT RS.2,41,000/ - , THE BALANCE SUM OF RS.15 LAKHS WAS RECEIVED IN CASH. ANOTHER EVIDENCE WHICH WAS PRODUCED BY SHRI JATYAN DURING RECORDING OF HIS STATEMENT WAS THE CHEQUE ISSU E D BY THE ASSESSEE TRUST IN THE NAME OF RAMKUMAR JATYAN FOR SUM OF RS.5 LAKHS, WHICH IS DATED 15.07.2005 BEARING NO.822489 . HE EXPLAINED THAT ON 15.07.2005, WHEN SIGNATURES WERE BEING PUT ON THE SALE DEED, THERE WAS SHORTAGE OF CASH OF RS.5 LAKHS AT ALAND I. SO, A CHEQUE OF RS.5 LAKHS WAS ISSUED AS GUARANTEE AND SHRI JATYAN WAS ASKED TO COLLECT CASH FROM PUNE. HE HAD KEPT XEROX COPY OF THE SAID CHEQUE AND HAD PRODUCED THE SAME BEFORE THE AUTHORITIES BELOW AND THE SCANNED COPY OF THE SAME IS AVAILABLE AT P AGE 154 OF THE APPELLATE ORDER. THE ASSESSING OFFICER ALSO MADE ENQUIRIES FROM THE BANK OF THE TRUST AND WHEREIN, THE SAID CHEQUE NO.822489 DATED 15.07.2005 WAS NOT DEBITED BY THE BANK AT ANY TIME. ANOTHER ASPECT OF THE CASH RECEIPT OF RS.15 LAKHS BY SHR I JATYAN IS THE DEPOSIT OF SAID AMOUNT IN HIS SAVINGS BANK ACCOUNT NO.6414 WITH BANK OF MAHARASHTRA. IN VIEW OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND THE EVIDENCE COLLECTED AND THE STATEMENT RECORDED, IT ESTABLISHES THE CASE OF REVENUE THAT CASH CONS IDERATION WAS PAID OVER AND ABOVE THE SLATED CONSIDERATION IN THE SALE DEED. THE PLEA OF THE ASSESSEE THAT SHRI JATYAN WAS NOT THE OWNER OF LAND HAS NOT RELEVANCE, WHEREIN THE ASSESSEE HIMSELF HAS PAID SUM OF RS.2,41,000/ - AS PART OF TOTAL CONSIDERATION O F RS.33,92,000/ - TO SHRI JATYAN FOR PURCHASE OF HIS AREA OF LAND OF 59 GUNTAS. THE ASSESSING OFFICER HAD REPEATEDLY ALLOWED THE OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE SHRI JATYANI BUT NO CROSS - EXAMINATION WAS TAKEN BY THE ASSESSEE . THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE BEFORE US HAS STATED THAT THERE WERE THREATS TO THE ASSESSEE AND HENCE, THE ASSESSEE COULD NOT DO ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 27 CROSS - EXAMINATION BUT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OF SUCH THREATS BEING GIVEN TO HIM AND IN THE ABSENCE OF THE SAME, WHERE PROPER OPPORTUNITY OF CROSS - EXAMINATION HAS BEEN PROVIDED BY THE ASSESSING OFFICER, WHICH IN TURN, HAS NOT BEEN AVAILED BY THE ASSESSEE, DOES NOT JUSTIFY THE PLEA OF THE ASSESSEE IN THIS REGARD THAT THE STATEMENT RECORDED OF SHRI JATYAN SHOULD NOT BE RELIED UPON. IT IS NOT ONLY THE STATEMENT OF SHRI JATYAN WHICH ESTABLISHES THE CASE OF REVENUE OF CONSIDERATION BEING PAID IN CASH OVER AND ABOVE THE CONSIDERATION RECORDED IN SALE DEED BUT THE OTHER EVIDENCE I.E. DEPOSIT OF CASH IN THE ACC OUNT OF SHRI JATYAN ON THE SAID DATES AND ALSO THE CHEQUE OF RS.5 LAKHS ISSUED IN THE NAME OF SHRI JATYAN, WHICH ADMITTEDLY, WAS NOT ENCASHED BY HIM SINCE HE RECEIVED THE CASH CONSIDERATION. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE IMPOUNDED DOCUMENT HAS NOTINGS IN RESPECT OF CONSIDERATION REFLECTED IN THE SALE DEED INCLUDING THE AREA OF LAND, THE BALANCE NOTINGS HAVE TO BE CONSIDERED SINCE THE DOCUMENT AS A WHOLE HAS TO BE CONSIDERED FOR ADJUDICATING THE NATURE OF ENTRIES RECOR DED ON THE SAID DOCUMENT. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN HOLDING THAT THE ENTRIES MARKED AS 6 AGAINST AMOUNT OF RS.1,07,50,000/ - , WHICH WAS HIGHEST FIGURE APPEARING IN THE IMPOUNDED DOCUMENT IS THE ACTUAL CONSIDERATION PAID FOR PURCHASE O F 417 GUNTAS OF LAND. IN VIEW OF THE NATURE AND SEQUENCE OF ENTRIES NOTED IN THE SAID DOCUMENT, THE EVIDENCE COLLECTED BY THE ASSESSING OFFICER AND IN VIEW OF THE STATEMENT RECORDED OF SHRI JATYAN, FOR WHICH THE ASSESSEE DID NOT AVAIL OPPORTUNITY OF CROSS - EXAMINATION, THE CASH CONSIDERATION OF RS.73, 5 8,000/ - BEING THE ON - MONEY COMPONENT IN THE TRANSACTION OF PURCHASE OF 417 GUNTAS OF LAND AT KELGAON IS NOT RECORDED IN THE BOOKS OF ACCOUNT AND HENCE, IS TO BE TREATED AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. THE SAME IS THUS, ADDED TO THE INCOME OF ASSESSEE, AGAINST WHICH THE ASSESSEE IS NOT ENTITLED TO CLAIM ANY EXEMPTION ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 28 UNDER SECTION 11 OF THE ACT. ACCORDINGLY, THE ORDER OF CIT(A) IN U PHOLDING THE ADDITION OF RS.73,5 8,000/ - IS CONFIRMED. THE GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE IS THUS, DISMISSED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT EVEN IF THE ADDITION IS MADE IN THE HANDS OF ASSESSEE , AFTER SETTING OFF OF APPLICATION OF INCOME AGAINS T THE RECEIPTS FOR THE YEAR UNDER CONSIDERATION, THERE IS DEFICIT AND HENCE, THE SAME BE ADJUSTED AGAINST THIS ADDITION. HOWEVER, WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE WHERE THE ADDITION IS BEING MADE UNDER SECTION 69 OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO GET THE SET OFF OF THE VALUE OF ADDITIONAL CONSIDERATION PAID IN CASH AS APPLICATION OF INCOME IN THE HANDS OF ASSESSEE AND WE HAVE ALREADY HELD THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT ON THE AFORESAID ADDIT ION. THE ADDITION IS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND THIS IN TURN INCREASES THE COST OF ASSET, HENCE PLEA OF APPLICATION OF INCOME HAS NO BASIS. ACCORDINGLY, THE GROUND OF APPEAL NO.8 IS THUS, DISMISSED. 3 9 . TH E GROUND OF APPEAL NO.9 RAISED BY THE ASSESSEE IS IN RESPECT OF EXPENDITURE CONNECTED WITH THE PROVISION MADE FOR PAY ING HIGHER SALARY TO THE EMPLOYEES AS PER 5 TH PAY COMMISSION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM HOLDING THAT THE PROVISION MADE WAS HIGH. HE FURTHER POINTED OUT THAT IN CASE THE SAID EXPENDITURE WAS DISALLOWED, THEN ITS DEFICIT WOULD DECREASE. 40 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE O N THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 29 4 1 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE CLAIMS TO HAVE MADE A PROVISION TOWARDS PAYMENT OF ADDITIONAL SALARY AND ALLOWANCES TO THE EMPLOYEES ACCORDING TO 5 TH P AY COMMISSION IN FINANCIAL YEAR 1998 - 99. THE ASSESSEE FURTHER STATED THAT OUT OF SAID PROVISION, SUM OF RS. 40,32,219/ - WAS OUTSTANDING AND THE SAME WAS PAYABLE TO THE EMPLOYEES OF ASSESSEE TRUST. THE ASSESSEE HAD SHOWN THE SAID OUTSTANDING AMOUNT AS LIAB ILITY IN THE ACCOUNTS OF TRUST AND LIABILITY CONTINUED TO SUBSIST AS THE ASSESSEE HAD NOT WRITTEN THE OUTSTANDING TO ITS INCOME AND EXPENDITURE ACCOUNT. THE AUDITOR IN THE AUDIT REPORT NOTED THAT THE PROVISION OF RS.1 CRORE WAS MADE BY THE ASSESSEE ON ACC OUNT OF ITS LIABILITY TOWARDS 5 TH PAY COMMISSION DURING THE FINANCIAL YEAR 1998 - 99, HOWEVER, OUT OF THE SAME, SUM OF RS. 40,32,219/ - WAS STILL BEING SHOWN AS OUTSTANDING AS ON 31.03.2006 . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID PROVISION CONTIN UED TO BE SHOWN AS OUTSTANDING WAS AN EXTRA PROVISION AND WAS NO LONGER REQUIRED . T HE SAME WAS TREATED AS INCOME FOR ASSESSMENT YEAR 2006 - 07. THE ASSESSING OFFICER FURTHER OBSERVED THAT ANY LIABILITY IN THIS REGARD COULD BE ALLOWED IN THE YEAR IT WAS PAI D. 4 2 . THE CIT(A) NOTED THE CONTENTIONS OF ASSESSEE AND OBSERVED THAT THE ONLY CLAIM OF ASSESSEE WAS THAT OUTSTANDING AMOUNT WAS SHOWN AS LIABILITY IN THE ACCOUNTS OF TRUST AND THE LIABILITY CONTINUED TO SUBSIST, AS THE ASSESSEE HAD NOT WRITTEN BACK THE S AID OUTSTANDING LIABILITY TO THE INCOME AND EXPENDITURE ACCOUNT. THE CIT(A) FURTHER NOTED THAT THE ASSESSEE HAD NOT FURNISHED ANY DETAILS IN THIS REGARD AT ANY STAGE OF PROCEEDINGS AND HAD ALSO NOT EXPLAINED WHETHER THE SAID LIABILITY WAS DISCHARGED IN SU BSEQUENT YEAR. AS AGAINST THE PROVISION MADE OF RS.1 CRORE IN ASSESSMENT YEAR 1998 - 99, PROVISION OF RS.40.32 LAKHS WAS OUTSTANDING EVEN AFTER NINE YEARS FROM THE YEAR OF MAKING PROVISION AND IT WAS ALSO NOT KNOWN WHETHER THE BALANCE LIABILITY WAS ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 30 DISCHARG ED IN ANY SUBSEQUENT YEARS. THE CIT(A) THUS, HELD THAT THE LIABILITY IN RESPECT OF WHICH THE PROVISION WAS MADE BY THE ASSESSEE, CEASED TO EXIST AND THE ORDER OF ASSESSING OFFICER WAS UPHELD AS THE PROVISION WAS NO LONGER REQUIRED. THE ASSESSEE IS IN APP EAL AGAINST THE ORDER OF CIT(A). 4 3 . THE LIMITED PLEA RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US IS THAT IN CASE EXTRA PROVISION IS ADDED AS INCOME BUT THE EXPENDITURE INCURRED ON THE OBJECTS OF THE TRUST FOR THE YEAR UNDER CONSIDERATION WAS MORE THAN THE INCOME AND AT BEST, THE DEFICIT IN THE INCOME WOULD DECREASE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD, PLACED RELIANCE ON THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), WHEREIN THE ASSE SSING OFFICER WAS DIRECTED TO VERIFY AND ALLOW THE CLAIM CONSIDERING THE EXEMPTION AVAILABLE UNDER SECTION 11 OF THE ACT FOR THE TRUST. 4 4 . WE FIND THAT THE TRIBUNAL IN ASSESSMENT YEAR 2003 - 04 HAD CONSIDERED THE ISSUE OF DISALLOWANCE OF EXCESS PROVISION F OR REFUND OF FEES AND HAD OBSERVED AS UNDER: - 170. THE NEXT ISSUE THAT REQUIRES ADJUDICATION IS GROUND OF APPEAL NO.12 FOR A.Y. 2003 - 04 REGARDING DISALLOWANCE OF EXCESS PROVISION FOR REFUND OF FEES. 171. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSESSE E HAS MADE A PROVISION OF RS.50 LAKHS FOR REFUND OF FEES IN A.Y.2002 - 03 IN RESPECT OF MIT SFS WHICH IS ONE OF ITS CONSTITUENT UNIT. THE UNIT WAS CLOSED DURING A.Y. 2003 - 04. CERTAIN AMOUNT WAS REPAID OUT OF THE PROVISION OF RS.50 LAKHS AND AN AMOUNT OF RS.3 0,96,750/ - REMAINED OUTSTANDING DURING A.Y. 2003 - 04 WHICH REMAINED UNPAID EVEN UPTO 31 - 03 - 2006. THE ASSESSING OFFICER ACCORDINGLY ADDED BACK THE EXCESS PROVISION IN THE YEAR OF CLOSURE OF THE UNIT, I.E. A.Y. 2003 - 04. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT EVEN IF THE AMOUNT IS ADDED AS INCOME FOR A.Y. 2003 - 04 THE APPLICATION OF INCOME IN THIS YEAR IS STILL HIGHER THAN THE INCOME/RECEIPTS AND THEREFORE AFTER EXEMPTION U/S.11 THERE IS NO TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. 172 . SINCE WE HAVE ALREADY HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.11, THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO FIND OUT AS TO WHETHER AFTER DISALLOWANCE OF THE SAME THE APPLICATION OF INCOME IS MORE THAN THE RECEIP T AND IF THERE IS NO TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER WILL PASS APPROPRIATE ORDER. THE GROUND IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 31 4 5 . THE ISSUE ARISING VIDE PRESENT GROUND OF APPEAL NO.9 BEFORE US IS SIMILAR T O THE ISSUE ON ACCOUNT OF EXCESS PROVISION MADE FOR PAYMENT OF SALARIES UNDER 5 TH PAY COMMISSION. FOLLOWING THE SAME PARITY OF REASONING, THE ISSUE IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTION AS IN PARA 172 OF THE ORDER DATED 10.02.2017. THE ASSESSING OFFICER SHALL ACCORDINGLY, PASS AN APPROPRIATE ORDER. THUS, THE GROUND OF APPEAL NO.9 IS ALLOWED FOR STATISTICAL PURPOSES. 46 . THE GROUND OF APPEAL NO.10 RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE OF DEDUCTION UNDER SECTION 43B, 40A(7) AND 40A(3) OF THE ACT IS CLAIMED TO BE DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL VIDE PARAS 160 TO 162 AT PAGE 116 OF THE TRIBUNAL S ORDER. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE AS SESSEE AND ACCORDINGLY, THE GROUND OF APPEAL NO.10 IS ALLOWED. 4 7 . THE GROUND OF APPEAL NO.12 RAISED BY THE ASSESSEE BEING GENERA L , IS DISMISSED. ITA NO.923/PUN/2012, RELATING TO ASSESSMENT YEAR 2007 - 08 4 8 . THE ASSESSEE DURING THE COURSE OF HEARING HAD FILED ABRIDGED GROUNDS OF APPEAL WHICH READ AS UNDER: - THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER : ON THE FACTS AND IN LAW, 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE VARIOUS ADDITIONS MADE BY THE A.O. AND ALSO ERRED IN ENHANCING THE INCOME ON CERTAIN ISSUES AND AS A RESULT, ERRED IN COMPUTING THE TOTAL INCOME OF RS.15,41,74,183/ - AS AGAINST THE RETURNED INCOME. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT TRUST WAS NOT ENT I TLED TO THE EXEMPTION U/S . 10(23C)(VI) OF I T ACT . ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 32 3. THE LEARNED CIT(A) ERRED IN DENYING EXEMPTION U/S 1 1 TO THE APPELLANT TRUST . 4. THE LD.CIT(A) ERRED IN HOLDING THAT THE ACTIVITY OF THE APPELLANT IS A COMMERCIAL ACTIVITY WITH A PROFIT MOTIVE AND IT DOES NOT EXIST SOLELY FOR CHARITY AND THEREF ORE, ERRED IN DENYING THE EXEMPTION U/S.10(23C)/11. 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EXPENDITURE ON WORLD PEACE CENTRE IS NOT AN EXPENDITURE ON THE OBJECTS OF THE TRUST AND THE SAME DOES NOT QUALIFY FOR DEDUCTION AND ACCORDINGLY, ERRED IN D ISALLOWING THIS EXPENDITURE. 6. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT VIOLATED THE CONDITIONS OF SECTION 13 OF IT ACT AND ACCORDINGLY, ERRED IN DENYING EXEMPTION U/S 11 ON THE ENTIRE INCOME OF THE APPELLANT . 7. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 11,00,00,000/ - MADE BY THE LD . AO BEING AMOUNT TRANSFERRED TO RESERVE & SPECIFIED FUND. 8. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF RS.29,87,500/ - AND RS.9,51,000/ - MADE BY THE LD. ASSESSING OFFICER BEING AMOUNT TRANSFERRED TO MANET BUILDING FUND AND BUILDING & EQUIPMENT FUND RESPECTIVELY. 9. THE LEARNED CIT(A) ERRED IN CONFIRMING VARIOUS ADDITIONS U/S.43B, 40A(7) AND 40A(3) ETC. 10. THE LEARNED CIT(A) ERRED IN RESTRICTING THE CLAIM OF DEPRECIATION FOR TH E YEAR AT RS.14,90,79,890/ - AS AGAINST THE CLAIM OF DEPRECIATION OF RS.17,75,24,455/ - . 11. THE LD.CIT(A) ALSO ERRED IN FURTHER ENHANCING THE INCOME OF THE APPELLANT BY THE FOLLOWING AMOUNTS : A . EXPENSES ON FACILITIES PROVIDED TO SHRI B.E. AVHAD OF RS.7,20 ,000/ - B . NOTIONAL INTEREST ON LOAN TO SHRI RAHUL KARAD RS.2,16,000/ - 12. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE GROUNDS OF APPEAL. 4 9 . THE GROUND OF APPEAL NO.1 IS GENERAL IN NATURE, HENCE THE SAME IS DISMISSED. 50 . THE G ROUND OF APPEAL NO.2 IS AGAINST DENIAL OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT IS SIMILAR TO THE GROUND OF APPEAL NO.3 IN ASSESSMENT YEAR 2006 - 07 AND FOLLOWING THE SAME PARITY OF REASONING, THE SAME IS DISMISSED. ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 33 51 . THE GROUND OF APPEAL NO.3 RA ISED BY THE ASSESSEE IS AGAINST DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT WHICH IS SIMILAR TO THE GROUND OF APPEAL NO.4 IN ASSESSMENT YEAR 2006 - 07 , WHEREIN WE HAVE FOLLOWED THE ORDER OF TRIBUNAL OF EARLIER YEAR AND HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT EXCEPT ON THE INCOME WHICH IS TAXED IN THE HANDS OF ASSESSEE ON VIOLATION OF PROVISIONS OF SECTION 13 OF THE ACT. FOLLOWING THE SAME PARITY OF REASONING, GROUND OF APPEAL NO.3 IS PARTLY ALLOWED. 5 2 . THE GROU ND OF APPEAL NO.4 IS IDENTICAL TO THE GROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2006 - 07 AND WE ALLOW THE CLAIM OF ASSESSEE. 5 3 . THE GROUNDS OF APPEAL NO.5, 6 AND 11 ARE IN RESPECT OF DISALLOWANCE OF VARIOUS EXPENSES AND THE SAME BEIN G HIT BY PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND NOT BEING ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT HAS BEEN DECIDED BY US BY WAY OF GROUNDS OF APPEAL NO.6, 7 AND 11 IN ASSESSMENT YEAR 2006 - 07 AND WE DIRECT THE ASSESSING OFFICER TO FOL LOW THE SAME PARITY OF REASONING IN CALCULATING THE QUANTUM OF DISALLOWANCE TO BE MADE IN THE HANDS OF ASSESSEE UNDER SECTION 13(1)(C) OF THE ACT, ON WHICH THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT. 5 4 . THE GROUNDS OF APP EAL NO.7, 8 AND 10 ARE NOT PRESSED AND HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 5 5 . THE GROUND OF APPEAL NO.9 IS AGAINST VARIOUS DISALLOWANCE S UNDER SECTION 43B, 40A(7) AND 40A(3) OF THE ACT , HAS BEEN DECIDED BY THE TRIBUNAL ITA NO S . 921 TO 923 /P U N/20 12 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RESEARCH 34 IN EARLIER YEARS AND IT H AS BEEN HELD THAT WHILE COMP UTING INCOME UNDER SECTION 11 OF THE ACT , THE DISALLOWANCE OR ADDITIONS MADE UNDER SECTION UNDER SECTION 43B, 40A(7) AND 40A(3) OF THE ACT COULD NOT BE MADE UNDER SECTION 28 TO 43 OF THE ACT. FOLLOWING THE SAME PARITY OF REASON ING, THE GROUND OF APPEAL NO.9 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 5 6 . IN THE RESULT, APPEAL OF ASSESSEE IN ASSESSMENT YEAR 2005 - 06 IS ALLOWED AND APPEALS IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 ARE PARTLY ALLOWED. ORDER P RONOUNCED ON THIS 16 TH DAY OF MAY, 2017. SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH MA Y , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - III , PUNE ; 4. / THE CIT , CENTRAL, P UNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE