ACIT, Bhubaneswar V. Orissa Computer Academy, Bhubaneswar

ITSSA 56/CTK/2009

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7531 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 02-04-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 16-03-2009
• Court: TRIBUNAL
• Department Lawyers: ARE AGAINST
• Keywords: Bogus purchase; Unexplained cash credit; Income from undisclosed sources; Search and seizure; Document seized; Charitable institution; Deemed to accrue or arise in india; Corroborative evidences; Assessment record; Benefit of exemption; Cancellation of registration; Documents seized
• Section: 143(3); 142(1); 153A; 12A; 12AA; 68; 132; 12; 11

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM IT (SS) A NO. 56,57,58,59 AND 60/CTK/2009 (ASSESSMENT YEAR S 2000 - 01, 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05) ACIT, CIRCLE 1(2), BHUBA NESWAR VERSUS ORISSA COMPUTER ACADEMY, PUBASASANA, KAUSALYAGANGA,BHUBANESWAR PAN: AAAAO 0070 D (APPELLANT) (RESPONDENT) IT (SS) A NO. 61,62,63,64 AND 65/CTK/2009 (ASSESSMENT YEAR 2000 - 01, 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 C.O.NOS.2,3,4, 5 AND 6/CTK/2 009 (FILED BY THE ASSESSEE) ORISSA COMPUTER ACADEMY, PUBASASANA, KAUSALYAGANGA,BHUBANESWAR PAN: AAAAO 0070 D VERSUS ACIT, CIRCLE 1(2), BHUBANESWAR (APPELLANT) (RESPONDENT) FOR THE DEPARTMENT: S MT. PARAMITA TRIPATHY, CIT - DR FOR THE ASSESSEE: SHRI P.S .PANDA/K.AGARWALLA, ARS DATE OF HEARING : 02.04.2012 DATE OF PRONOUNCEMENT : 25.04.2012 ORDER PER BENCH : THESE APPEALS BY THE REVENUE ARE AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ALLOWING THE ASSESSEES CONTENTI ONS OF BEING ELIGIBLE FOR CLAIMING EXEMPTION U/S.11 OF THE INCOME - TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WHEN THE PURPORTED CAPITATION FEES BROUGHT TO TAX ON ESTIMATION BY THE AO HAVE BEEN CONSIDERED FIT FOR DELETION ON THE BASIS OF F ACTS AND CIRCUMSTANCES AS BROUGHT ON RECORD BY HIM. 2. THE ASSESSEE HAS FILED CORRESPONDING CROSS OBJECTIONS ON THE ISSUES RAISED BY THE REVENUE IN THE INDIVIDUAL ASSESSMENT YEARS SUPPORTING THE LEARNED CIT(A)S FINDINGS. 3. THE ASSESSEE IN TURN IS IN APPEAL ON PAR T CONFIRMATION OF THE ADDITIONS FOR THE ASSESSMENT YEARS 2000 - 01, 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 2 W HICH ALL HAVE BEEN ON THE MERIT OF QUANTUM ADDITIONS SUSTAINED BY THE LEARNED CIT(A) ARE TO BE CONSIDERED INDIVIDUALLY. 4. SINCE ISSUES ARE COMMON IN T HEIR RESPECTIVE APPEALS FILED BY THE REVENUE AS WELL AS THE ASSESSEE AND THE CROSS OBJECTIONS, ALL THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 5. THE REVENUES ASSERTION THAT THE SEARCH PROCEEDINGS HAVE CLARIFIED THE STAND OF THE ASSESSEE NOT ENTITLED FOR CLAIMING EXEMPTION U /S.11 ON FINDINGS AS BROUGHT ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE WHEN THE PURPORTED CANCELLATION OF REGISTRATION/S.12AA WAS SUBSEQUENT TO THE DATE OF SE ARCH AND APPEALED AGAINST BEFORE THE TRIBUNAL WHEN THE TRIBUNAL WAS PLEASED TO ADJUDICATE THE ISSUE OF ALLOWING THE ASSESSEE TO BE CONTINUED WITH THE REGISTRATION AND WAS FURTHER CHALLENGED BY THE REVENUE BEFOR E THE HONBLE HIGH COURT U/S.260 A. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO CONSIDER THE RIVAL CONTENTIONS OF BOTH THE PARTIES AT LENGTH AND HAVE PERUSED THE MATERIAL ON R ECORD. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE NAMELY ORISSA COMPUTE R ACADEMY (IN SHORT OCA) IS AN INSTITUTION REGISTERED UNDER THE SOCIETIES REGISTRATION ACT,1860 AND ENGAGED IN RUNNING OF DIFFERENT EDUCATIONAL INS TITUTIONS OF ENGINEERING AND MANAGEMENT COURSE . THE MAIN SOURCE OF INCOME OF THE SOCIETY IS RECEIPTS OF ADMISSION AND TUTION FEE FROM THE STUDENTS. THERE WERE ALLEGATIONS THAT THE SOCIETY USED TO COLLECT CAPITATION F EE/DONATIONS FROM THE STUDENTS WHO GOT ADMISSION IN DIFFERENT STREAMS OF ENGINEERING AND MANAGEMENT COURSES UNDER MANAGEMENT QUOTA SEATS. THE MONEY SO IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 3 COLLECTED WAS ALLEGED TO HAVE NOT BEEN ACCOUNTED FOR IN THE BOOKS AT ACCOUNT OF THE SOCIETY AND WAS UTILIZED BY THE PRESIDENT AND THE DIRECTORS FOR THEIR PE RSONAL GAINS. A SEARCH AND SEIZURE OPERATION U/S.132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE SOCIETY ON 9.8.2005 AS WELL AS THE RESIDENTIAL PREMISES OF THE CHAIRMAN AND OTHER DIRECTORS OF THE SOCIETY. BOOKS OF ACCOUNT AND OTHER INCRIMINATING DOCUME NTS WERE FOUND AND SEIZED. NOTICE U/S.153A OF THE ACT DT.8.3.2006 WAS ISSUED IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN SHOWING TOTAL INCOME AT NIL. NOTICES U/S.143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED AND AFTER CONSIDERING THE MATERIAL MADE AVAILABLE AS MENTIONED IN THE ASSESSMENT ORDER AND CONSIDERING VARIOUS SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS U/S.153A/143(3) OF THE ACT AND BROUGHT TO TAX THE EXCESS OF INCOME OVER EXPENDITURE AND MADE V ARIOUS ADDITIONS. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) AND THE LEARNED CIT(A) PARTLY ALLOWED THE APPEALS AGAINST WHICH BOTH THE ASSESSEE AS WELL AS THE REVENUE HAVE FILED APPEALS BEFORE THE TRIBUNAL. 7. THE LEARNED CIT - DR CHOSE TO INITIATE HER ARGUMENTS FOR THE REVENUE IN VIEW OF THE LEARNED CIT(A) HAVING PRACTICALLY ALLOWED THE ASSESSEES APPEAL IN TOTO. SHE SUBMITTED THAT T HE ASSESSEE ORISSA COMPUTER ACADEMY ( IN SHORT OCA) IS ENGAGED IN RUNNING OF DIF FERENT EDUCATIONAL INSTITUTIONS OF ENGINEERING AND MANAGEMENT COURSES. THE MAIN SOURCE OF INCOME OF THE SOCIETY IS RECEIPT OF ADMISSION FEES FROM THE STUDENTS. A SEARCH & SEIZURE OPERATION U/S 132 OF THE IT ACT, 1961 WAS CONDUCTED AT THE PREMISES OF THE SO CIETY ON 09.08.2005 AS WELL AS THE RESIDENTIAL PREMISES OF THE CHAIRMAN O F THE SOCIETY. ASSESSMENT U/S 1 53A WAS COMPLETED IN THE FOLLOWING CASES IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 4 1. DR. BHABANI CHARAN RATH, 2. SMT. SARMISTHA RATH, 3. SRI SUBRAT PRASSANA MISHRA, 4. SMT. SANGHAMITRA MISHRA. 5. ORISSA COMPUTER ACADEMY, APART FROM THE ABOVE THERE ARE SOME CASES WHERE ASSESSMENTS U/S 153C WERE COMPLETED . THERE WERE ALLEGATIONS THAT THE SOCIETY USED TO COLLECT CAPITATION FEES, DONATIONS FROM THE STUDENTS WHO GOT ADMISSION TO DIFFERENT SCHEMES OF ENGINEERING AND MANAGEMENT COURSES UNDER MANAGEMENT QUOTA, THE MONEY SO COLLECTED NOT HAVING BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE SOCIETY AND UTILIZED BY THE PRESIDENT AND THE DIRECTORS FOR THEIR PERSONAL GAINS. DURING THE SEARCH - & - SEIZURE OPE RATION SOME DOCUMENTS WERE SEIZED BY THE DEPARTMENT . THE CIRCUMSTANTIAL EVIDENCES COLLECTED BY THE ASSESSING OFFICER AND THE INFERENCES DRAWN BY THE ASSESSING OFFICER ENABLED THE AO TO COME OUT WITH THE FINDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE BEN EFI T OF THE PROVISION OF SECTION 1 1 OF THE IT ACT FOR NOT FULFILLING CONDITIONS AS STIPULATED IN SECTION 13 OF THE I T ACT. THE ASSESSING OFFICER BASED HIS DECISION ON THE FINDINGS AS FOLLOWS: 1. IMPROPER MAINTENANCE OF BOOKS OF ACCOUNT . THE ASSESSING OFFI CER HAS UTILIZED THE EVIDENCE COLLECTED DURING THE SEARCH - &SEIZURE OPERATION THAT PROVE THAT THE ASSESSEE HAS NOT MAINTAINED ITS BOOKS OF ACCOUNT IN THE MANNER AS PRESCRIBED. TO QUOTE SOME SUCH FINDINGS I) THE COMPUTERISED DAY BOOK AND MANUAL CASH BOOK S DO NOT TALLY AS EVIDENT FROM SEIZED MATERIAL WITH THE IDENTIFICATION MARK OCA - 3 IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 5 WHICH IS A CASH BOOK. FROM 27.09.2004 TO 13.12.2004, I.E., FOR SIX MONTHS THERE WERE NO ENTRIES IN THE CASH BOOK. II) THE LEDGERS FOR THE F.Y. 2002 - 03 MARKED OCA - 7 AND FOR 2003 - 04 MARKED OCA - 2 - 3 CONTAIN COURSES FEE RECEIVED, THE NAMES OF THE STUDENTS AND BALANCE OUTSTANDING ETC. DO NOT CONTAIN NAMES OF ALL THE STUDENTS. EVEN THE NAME OF THE DISCIPLINE IN WHICH THE STUDENTS WERE ADMITTED HAD NOT BEEN MENTIONED. PAG E NO - 35 - 3 7, OF OCA - 7 AND PAGE N O. 46 - 47 OF OCA - 6 ARE ANNEXED HEREWITH. (ANNEXURE - I). III) THE SEIZED ADMISSION REGISTER IDENTIFIED AS OCA WAS FOR THE F.Y. 2005 - 06 HAS ONLY ONE PAGE WRITTEN ON 11.07.2005. IV) THE SEIZED MATERIAL BCR - 36, BCR - 37 AND BCR - 38 FOR THE F .Y. 2005 - 06 SHOW THAT THE SOCIETY RECEIVED MONEY IN EXCESS OF ADMISSION FEES THAN THAT FIXED BY THE INDUSTRIES DEPARTMENT, GOVT. OF ORISSA. THE ASSESSEE DID NOT RECORD THOSE EXCESS MONEY IN THE CASH BOOK OF THE RELEVANT YEAR. PAGE 13 OF BCR38, FOR EXAMPLE, CONTAINS NAMES OF THREE STUDENTS , NAMELY, 1. SANTOSH KU. MOHANTY, 2. SUDARSHAN SWAIN, AND 3. SUNIDHI PATTANAIK , WHO PAID 30,000 , 5,000 AND 10,000 IN CASH RESPECTIVELY ON 24.06.2005. THE CASH BOOK OCA - 2 FOR F.Y. 2005 - 06 (PAGE NO.102) DOES NOT CONTAI N THE NAME OF ANY OF THE ABOVE MENTIONED THREE STUDENTS. THE RELEVANT PAGES OF BCR 38 AND THE REGISTER OCA - 2 ARE ANNEXED HEREWITH. (ANNEXURE - 2). V. SERIAL N O. 14 OF BCR 37 - SHOWS THAT ONE JAYDEV CHAKRABARTY PAID 50,000 ON 01.07.2005, BUT THE SAME HAS NOT BEEN RECORDED IN THE CASH BOOK OCA - 2. THE RELEVANT PAGES OF BCR - 37 AND THE REGISTER OCA - 2 ARE ANNEXED HEREWITH. (ANNEXURE - 3) IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 6 VI. THE ADMISSION REGISTER S.N.3, PERTAINING TO THE F.Y. 2004 - 05 AND 2005 - 06 IS WRITTEN ONLY FROM 05.10.2004 TO 11.07,2005. TH E ADMISSION REGISTER OCA - 1 OF KRUPAJA L ENGINEERING SCHOOL FOR THE F.Y 2003 - 05 BEING A CASH BOOK HAS BEEN WRITTEN FOR 2 DAYS. WITH SUCH GLARING DISCREPANCIES IN THE MAINTENANCE OF BOOKS OF ACCOUNTS, IT CAN EASILY BE CONSTRUED THAT THE BOOK RESULTS OF THE AS SESSEE ARE NOT PROPER. THE RECEIPT AND PAYMENT ARE NOT ACCURATELY ACCOUNTED FOR AND THEREFORE THE CORRECT INCOME HAS NOT BEEN SHOWN BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES RELIANCE CANNOT BE PLACED ON THE PROFIT - A - LOSS ACCOUNT/INCOME - EXPENDITURE OF THE ASSESSEE. AS PER SECTION 1 1, THE ASSESSEE IS TO APPLY 85% OF ITS INCOME FOR THE OBJECTIVES OF THE SOCIETY. WHEN THE INCOME IS NOT ACCURATELY DETERMINED AND WHEN A PART OF THE INCOME HAS BEEN RECEIVED IN CASH AND NOT ENTERED IN THE CASH BOOKS, IT IS DEDUCED THAT THE ASSESSEE HAS EARNED MORE THAN THE AMOUNT IT HAD SHOWN AND THE APPLICATION OF INCOME IS MUCH LESS THAN 85%. THUS THE SOCIETY DOES NOT FULFILL THE CONDITIONS LAID DOWN U/S 11 OF IT ACT 1961. 2. CONTROL AND MANAGEMENT : THE SOCIETY IS TOTALLY CONTROL LED AND MANAGED BY THE FOUNDER AND HIS FAMILY MEMBERS WHO HAVE BEEN SEARCHED. IT IS STATED THAT THE DIRECTOR OF OCA WHO IS THE FOUNDER, MR. B.C. RATH, SHALL OPEN AN ACCOUNT IN ANY BANK / POST OFFICE AND OPERATE THIS ACCOUNT ON BEHALF OF THE ORGANIZATION AN D IS ENTITLED TO WITHDRAW AND DEPOSIT MONEY ON BEHALF OF THE ORGANIZATION. THE DIRECTOR WILT SIGN ALL DOCUMENTS RELATED TO FINANCE SUCH AS BANK LOAN, FIXED DEPOSIT ETC. ON BEHALF OF THE ORGANIZATION. IT IS ALSO STATED THAT THE ADDI. DIRECTOR, SRI SUBRAT IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 7 PR ASANNA MISHRA HAS EQUAL POWERS BY VIRTUE OF A WRITTEN AUTHORIZATION BY THE DIRECTOR. 3. SIPHONING OF EXCESS FUND . DURING THE SEARCH IT WAS FOUND THAT ON MOST OF THE DAYS THE COLLECTION MADE FROM THE STUDENTS WAS HANDED OVER TO THE CHAIRMAN, SRI B.C. RATH. ONE SUCH EXAMPLE IS THE TOTAL AMOUNT HANDED OVER TO SRI RATH DURING THE F.Y. 20 05 - 06 FOUND BE AT 1,56,400 . HOWEVER IN THE BANK STATEMENT OF OCA, DEPOSIT OF THE SAME HAS NOT BEEN FOUND. PERUSAL OF THE INDIVIDUAL ASSESSMENT RECORDS OF THE PERSON S INVOLVED IN THE SEARCH GROUP HAS CONFI RMED THAT THE DIRECTOR, THE ADDL . DIRECTOR HAVE GATHERED A HUGE AMOUNT OF MONEY WHICH THEY HAVE DISCLOSED DURING THE SEARCH - & - SEIZURE OPERATION AND OFFERED THE SAME FOR TAXATION. THE DISCLOSURES ARE AS FOLLOWS: SRI B.C. RATH HAS STATED THAT HE EARNED INCOME FROM CONSULTANCY, NSC INTEREST AND INCOME FROM OTHER SOURCES. SRI SUBRAT PRASANNA MISHRA IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 8 HAS STATED THAT HE EARNED INCOME BY WAY OF HONORARIUM, LONG TERM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. BOTH THE DIREC TORS REFERRED TO THE DISCLOSURE AS SURRENDERED INCOME IN VARIOUS CORRESPONDENCES WITH THE ASSESSING OFFICER. THE CASH FLOW STATEMENTS OF BOTH THE DIRECTORS SHOW THIS SURRENDERED INCOME UNDER THE HEAD MISC. INCOME. IT IS FOR CONSIDERATION AND DEDUCTION THAT WHEREFROM THE DIRECTOR, SRI B.C. RATH AMASSED 5,39,99,999 AND SRI SUBRAT PRASANNA MISHRA, ADDI. DIRECTOR, 86,37,000 IN SUCH SHORT PERIOD OF TIME AND OFFERED THE SAME FOR TAXATION AS SURRENDERED INCOME AFTER SEARCH - A - SEIZURE OPERATION BY THE DEPARTMENT. THIS CLEARLY SHOWS THAT THE SOCIETY HAS EARN ED A HUGE AMOUNT OF UNACCOUNTED MONEY THAT HAS BEEN ILLEGALLY TRANSFERRED TO THE FAMILY MEMBERS OF THE SOCIETY. THERE HAS BEEN CASH SEIZURE OF 30,00,000 FROM THE RESIDENTIAL PREMISES OF SRI B.C. RATH. THE FOUNDER, SRI B.C. RATH AND HIS FAMILY MEMBERS HAV E INVESTED IN SOME OTHER CONCERNS NAMELY M/S GLOBAL SOFT OF BHUBANESWAR, M/S SPHERE, BHUBANESWAR, ACHUTA EDUCATIONAL TRUST, BHUBANESWAR WHERE ASSESSMENTS U/S 153C WERE DONE. SRI B.C. RATH MANAGES THE SOFTWARE CONSULTANCY FIRM M/S GLOBAL SOFT WHICH GETS INC OME FROM TRAINING AND PLACEMENT FEES RECEIVED FROM STUDENTS OF KEC, OCA AND AMS. CASH AMOUNTING 30 LA KHS HAS BEEN DEPOSITED IN M/S GLOBAL SOFT A/C ON 14 TH JULY 2005. FROM THE COPY OF THE BANK STATEMENT OF GLOBAL SOFT IN IDBI BANK IT IS SEEN THAT THE TOTAL DEPOSITS AMOUNTS TO 1,39,00,400, WHEREAS THE TOTAL WITHDRAWAL AMOUNTS TO 1,08,00,000. IT IS STATED THAT ALL THE CASH DEPOSITS REPRESENT TRAINING - A - PLACEMENT FEES RECEIVED FROM STUDENTS OF KEC AND THE DEPOSIT OF 30 LAKHS AND 34 LAKHS ARE AMOUNTS TRANSFERRED FROM SB A/C OF SRI B.C. IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 9 RATH IN ICICI BANK. SIMILARLY , IT IS EXPLAINED THAT THE CASH W ITHDRAWALS OF 34 LAKHS ARE AMOUNTS TRANSFERRED FROM SB A/C OF SRI B.C. RATH IN ICICI BANK. THE GROUP , THROUGH OTHER FAMILY MEMBER S , HAVE ALSO INVESTED IN M/S PALL AVI , A RETAIL OUTLET OF READYMADE GARMENTS AND IN M/S SPECTRA VISION, A RETAIL OUTLET OF HOUS EHOLD ELECTRONIC GOODS AND DOMESTIC APPLIANCES WHERE SURVEY U/S 133(A) WAS DONE. THE MANAGING PARTNER OF THE CONCERN, M/S PATLAVI IS SRI SAKTIKANTA RATH WHO IS THE BROTHER OF SRI B.C. RATH AND ALSO THE ASST. EX. DIRECTOR OF THE SOCIETY WHEREAS SRI DEVRAJ R ATH, BROTHER OF SRI B.C. RATH AND ASST. EX. DIRECTOR OF THE SOCIETY IS THE MANAGING PARTNER OF M/S SPECTRA VISION. SRI B.C. RATH, DI RECTOR OF THE SOCIETY HAS MADE L ARGE - SCALE INVESTMENTS IN ACQUISITION OF LAND AND BUILDING IN THE NAME OF SELF, SPOUSE AND F AMILY MEMBERS. FROM THE SEIZED DOCUMENTS IT IS FOUND THAT SRI B.C. RATH OWNS DIFFERENT PLOTS TOTALING TO AREA OF 10.36 ACRES WHICH WAS APPROXIMATELY 60 LAKHS. HE HAS PURCHASED A RESIDENTIAL HOUSE PROPERTY AT B - 20, BJB NAGAR, BHUBANESWAR FOR 20 LAKHS AND RENOVATED THE SAME AFTER THE PURCHASE. HE HAS ALSO ACQUIRED A HOUSE PROPERTY FROM BDA AT CHANDRASEKHARPUR. SRI B.C. RATH HAS PAID 5 LAKHS ON 28.09.2003 AND 22 LAKHS ON 28.10.2004 BY WAY PREMIA FOR INVESTMENT GAIN SCHEME OF BAJAJ ALLIANZ INSURANCE COMPA NY. HE HAS DONATED 20,00,000 TO THE SOCIETY AS A PROMOTER. HE HAS INVESTED LA RGE AMOUNTS IN PURCHASE OF 50 THOUSAND SHARES OF DIFFERENT COMPANIES. SMT. SARMISTHA RATH, WIFE OF SRI B.C. RATH, WHO HAD ALSO BEEN ASSESSED U/S 153A HAS MADE FIXED DEPOSIT FOR 13,00.000 IN IDBI BANK, BHUBANESWAR. A HOUSE PROPERTY AT B - 717, BJB NAGAR HAD BEEN IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 10 PURCHASED IN THE NAME OF SMT. RATH FOR 29,10,937 AND RENOVATED AT A COST OF 9,73,554. SHE HAS MADE LARGE - SCALE INVESTMENT IN PURCHASE OF SHARES. SRI SUBRAT PRASANNA M I SHRA, VICE - CHAIRMAN OF KGI AND ADDI. DIRECTOR OF OCA OWNS ONE HOUSE, ONE COMMERCIAL COMPLEX, RUNS ACHUT EDUCATIONAL TRUST AND HAS MADE HUGE FIXED DEPOSITS IN BANKS. ALL THIS WEALTH AMASSED BY THE DIRECTOR AND HIS FAMILY MEMBERS WAS ACQUIRED AFTER ESTABLISH ING THE SOCIETY OCA AND KRUPAJAL GROUP OF ENGINEERING COLLEGES. IT IS DEFINITELY A MATTER OF GREAT WONDER TO THINK WHEREFROM THIS MONEY BECAME AVAILABLE TO THE ABOVE GROUP OF PERSONS. CLEARLY THE UNACCOUNTED MONEY AND CAPITATION FEES RECEIVED BY THE SOCIET Y HAD BEEN FED TO ACQUIRE SUCH PROPERTY. THE SOCIETY CLEARLY VIOLATES THE CONDITIONS LAID DOWN U/S 11 AND THE PROVISIONS OF SECTION 13 OF THE IT ACT AND THEREFORE SHOULD NOT AVAIL ITSELF OF THE BENEFIT OF EXEMPTION OF INCOME. THE RATIO OF THE CASES OF CIT VRS HAWBAI TRUST, 172 ITR 140 KER.) 1988, CIT (CENTRAL) KANPUR VRS SHERVANI CHARITABLE TRUST, 164 TAXMAN 268 (ALLD.),2007 ARE APPLICABLE TO THE PRESENT CASE WHERE INCOME SET APART FOR AUGMENTING TRUST PROPERTIES WAS INVESTED FOR ACQUISITION AND CONSTRUCTIO N OF PROPERTIES AND BUILDINGS. ALSO HUGE AMOUNTS OF THE SURPLUS WERE SIPHONED TOWARDS THE BENEFIT OF FAMILY MEMBERS AND RELATIVES OF THE FOUNDER OF THE SOCIETY. SARAH CHERLYAN TRUST VRS ITO, 41 TAXMAN 61(KER) 1988 (ANNEXURE - 4) 4. RECEIPT OF CAPITATION FEES . IT IS NOTICED FROM SEIZED MATERIALS THE SOCIETY COLLECTED MONEY IN EXCESS OF ADMISSION FEES FIXED BY THE INDUSTRIES DEPT., GOVT. OF ODISHA IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 11 (BCR - 36, BCR - 37 AND BCR - 38). THE EXCESS MONEY RECEIVED IN CASH IS NOTHING BUT CAPITATION FEE. THE ASSESSING OFFICER HAS ANALYZED THIS ASPECT IN A VERY CLARIFICATORY MANNER IN PARA 5.1 TO 5.5.6 OF THE ASSESSMENT ORDER FOR A.Y. 2006 - 07 IN THE CASE OF THE ASSESSEE. (ANNEXURE - 5) . THE RATIO OF THE DECISION OF HONBLE ITAT HYDERABAD BENCH (B) IN THE CASE OF VODITHALA EDUCATI ON SOCIETY VRS ASST. DIRECTOR OF INCOME TAX [ 20 SOT 353 ( HYD.) ] , 2008 (ANNEXURE - 6) IS FAIRLY APPLICABLE TO THE PRESENT CASE. THE HONB L E BENCH HELD THAT SINCE THE ASSESSEE HAD COLLECTED MONEY OVER AND ABOVE THAT PRESCRIBED BY THE CONCERNED AUTHORITY FOR A DMISSION OF STUDENTS, SUCH AN AMOUNT WAS TO BE CLASSIFIED AS CAPITATION FEE AND IT COULD BE SAID THAT IT WAS A CLEAR CASE OF SALE OF EDUCATION BY THE ASSESSEE AND THEREFORE IT COULD NOT BE CONSIDERED AS A CHARITABLE INSTITUTION U/S 2(15) OF THE I.T.ACT,196 1. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A) ON THE ISSUES RAISED BY THE REVENUE AND ON THE SUBMISSIONS OF THE LEARNED CIT - DR, HE SUBMITTED THAT WHILE PASSING THE ORDER, THE LEARNED CIT(A) ALLOWED THE BENEFIT U/S.11 OF THE ACT WITH A DIRECTION TO THE ASSESSING OFFICER TO ALLOW THE SAME SUBJECT TO SATISFACTION OF OTHER CONDITIONS PROVIDED IN THE SAID SECTION WITHOUT SPECIFYING ANY PARTICULAR CONDITION. IN THIS REGARD HE REFERRED TO THE OBSERVATION OF THE LEARNED CIT (A) IN PARA 4 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER : I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANTS COUNSEL MR. PANI AND THE ORDER OF THE AO, IT IS CLEAR THAT THE AO HAS NOT DISOBEYED THE ORDER OF THE HONBLE ITAT, CUTTACK BENCH, CUTTACK BUT D ENIED THE BENEFIT OF SECTION U/S.11 OF THE I.T ACT, 1961 ON THE REASON MENTIONED IN PARA - 2 OF THE ASSESSMENT ORDER. THE BENEFIT OF SECTION 11 CAN BE DENIED EVEN IF THE TRUST/SOCIETY IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 12 REGISTERED U/S. I2AA OF THE I.T. ACT, 1961. THEREFORE, IT IS INCORRECT ON THE PART OF MR. PANI THAT THE AO HAS DISOBEYED THE ORDER OF THE HON BLE ITAT, CUTTACK BENCH, CUTTACK. EVEN THEREAFTER, IN CERTAIN CIRCUMSTANCES PROVIDED U/S. 13, BENEFIT OF EXEMPTION U/S. 11 AND 12 CAN BE DENIED. IN THE PRESENT CASE, THE AO HAS GIVEN REASO N IN PARA - 2 OF ITS ASSESSMENT ORDER FOR DENYING THE BENEFIT U/S 11 OF THE I.T. ACT, 1961 FOR THE ACCOUNTING YEAR . SOME OF THE REASON MENTIONED BY THE AO MA Y BE SUFFICIENT TO DENY/WITHDRAW REGISTRATION GRANTED U/S. 12AA OF THE IT. ACT., 1961. THE OTHER TWO CONDITIONS I.E. CONDITION MENTIONED IN SECTION 12A ARE FULLY SATISFIED AT THE TIME OF MAKING THE ASSESSMENT. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW THE BENEFIT U/S. 11 TO THE APPELLANT SUBJECT TO SATISFACTION OF OTHER CONDITIONS PROVIDED IN SAID SECTION, IN VIEW OF THE ABOVE FACT, THESE TWO GROUNDS OF APPEAL ARE ALLOWED. THE MAIN THRUST BEFORE THE LEARNED CIT(A) WAS THAT ADDITION HAD BEEN MADE ON ESTIMATION BY COMPUTING PURPORTED CASH RECEIPTS GOING BACKWARDS FROM 2006 - 07 AND THE ASSESSING OFFICER ALLOW ING EXCESS OF INCOME OVER EXPENDITURE ONLY TO BE TAXED U/S.153A HAD ACTUALLY GRANTED EXEMPTION U/S.11. THE LEARNED CIT - DR HAS TRIED TO IMPORT THE IRRELEVANT SUBMISSIONS WHEN ALL THE ASSESSEES WERE DEALT WITH BY THE SAME CIT(A) AND SUITABLY CONSIDERED. 9. T HE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS ON THE ASSESSEES APPEAL SUBMITTED WITH RESPECT TO THE CONFIRMATION OF THE ADDITIONS BEING THE UNSECURED LOANS RECEIVED AMOUNTING TO 30.77 LAKHS IN THE ASSESSMENT YEAR 2001 - 02 BEFORE THE ASSESSI NG OFFICER THAT THE SAME WERE RECEIVED FROM FRIENDS AND RELATIVES COULD NOT BE CONSIDERED AS UNEXPLAINED INCOME OF THE ASSESSEE BEING A REGISTERED SOCIETY. IT WAS SUBMITTED THAT -- IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 13 1. THE APPELLANT HAD RECEIVED THE AFORESAID UNSECURED LOAN FROM FEW OF TH E EMPLOYEES FRIENDS AND RELATIVES, THE DETAILS OF WHICH IS ENCLOSED AS ANNEXURE - 1 OF THE PB. 2. ALL THE RECEIPTS WERE THROUGH BANK AND ALL THE LENDERS ARE GENUINE PERSONS. 3. IT MAY BE MENTIONED HERE THAT THE INCOME OF THE APPELLANT IS NOT TAXABLE AS PE R THE PROVISION OF SECTION 11 OF THE INCOME TAX ACT. 4. HENCE, IT IS NEVER ADVISABLE TO SUPPRESS REGULAR INCOME AND BRING THERE BACK THROUGH IRREGULAR MANNER 5. THE AO S CONTENTION THAT THE FUNDS ARE OUT OF UNACCOUNTED INCOME OF THE APPELLANT IS OUT OF P LACE BECAUSE HAVING EXEMPTION OF INCOME FROM TAXATION DOES NOT JUSTIFY CREATING UNACCOUNTED INCOME. 6. MOREOVER, DURING THE ENTIRE SEARCH PROCEEDINGS NOT A SINGLE DOCUMENT WAS FOUND SUBSTANTIATING THE CLAIM OF THE LD. A.O. FOR GENERATING UNACCOUNTED INCOM E. 7. NOT COMPLYING TO CERT AIN QUERIES RAISED BY THE LD. AO CANNOT LEAD TO CONCLUSION THAT THE LOANS ARE NOT GENUINE. 8. IT IS ALWAYS VERY DIFFICULT TO PRODUCE PERSONS BEFORE I.T. AUTHORITIES AND THAT TO O AFTER 7 YEA RS. 9.1. FOR THE ASSESSMENT YEAR 2002 - 03, THE LEARNED CIT(A) CONFIRMED THE UNSECURED LOAN OF 6 LAKHS INSPITE OF THE ASSESSEE CLAIMING THAT THE RECEIPTS WERE THROUGH BANK AND THE LENDERS WERE GENUINE PERSONS AND IN ANY CASE ON HAVING ADJUDICATED THE ISSUE OF UPHOLDING THE CLAIM OF EXEMPTION U /S.11 OF THE LEARNED CIT(A) THE ASSESSEE COULD NOT BE BURDENED WITH THE TAXATION WITH THE SUM AS UNDISCLOSED INCOME WHEN THE SAME HAS BEEN ASSESSED AS REGULAR INCOME. 9.2. FOR THE ASSESSMENT YEAR 2004 - 05, THE LEARNED CIT(A) CONFIRMED THE PURCHASE OF LABORA TORY EQUIPMENTS HOLDING IT AS BOGUS PURCHASES ASSESSED IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 14 BY THE ASSESSING OFFICER AMOUNTING TO 3,85,865. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT 1 . THE APPELLANT HAD PURCHASED THE ABOVE EQUIPMENTS AND THE PAYMENTS WERE MADE THROUGH BANK. 2. THE NAME AND ADDRESS OF THE SUPPLIER ALONG WITH DETAIL PA RTICULARS OF THE BANK ACCOUNT OF SUPPLIER WAS AVAILABLE WITH THE LD. A.O. 3. MERE NON - SERVICE OF THE NOTICE DUE TO THE CLOSER OF THE BUSINESS CAN NOT BE A GROUND FOR CONSIDERING THE EXPENSES AS BOGUS. 4. IT IS PERTINENT TO MENTION HERE THAT THE APPELLANT H AD MADE TRANSACTIONS IN THE MONTH OF MARCH2004 AND THE ENQUIRY WAS CONDUCTED SOMETIME IN THE LATTER PART O F 2007, WHICH IS ALMOST AFTER 3 YEARS. 5. SINCE THE APPELLANT WAS NOT IN TOUCH WITH THE ABOVE SUPPLIER AFTER THE SAID PURCHASES AND PAYMENTS ARE MA DE AGAINST THAT ITS DIFFICULT ON THE PART OF THE APPELLANT TO TRACE OUT THE SUPPLIER. 6. FROM THE AVAILABLE RECORD IT WAS FOUND THAT THE SUPPLIER HAS CLOSED HIS BANK ACCOUNT ON 27.09.2007 AND HE MIGHT HAVE SHIFTED TO SOME OTHER PLACE OR CLOSED THE BUSINES S. 7. HENCE, CONSIDERING THE ABOVE TRANSACTION AS BOGUS DUE TO NON PRODUCTION OF THE SUPPLIER AND THAT TO ALMOST AFTER 3 YEARS OF THE TRANSACTION TOOK PLACE AS ILLEGAL IS BAD IN LAW. 8. MOREOVER, IN THE BOOKS OF THE APPELLANT FOR 7 YEARS THIS IS THE ONL Y TRANSACTION WHICH THE A.O. HAS DOUBTED AND THAT TO O WITHOUT ANY INCRIMINATE EVIDENCE DURING THE SEARCH PROCESS. IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 15 9. IT IS PERTINENT TO MENTION HERE THAT THE APPELLANT IS AVAILING BENEFIT U/S 11 OF THE I.T. ACT., 1961. IN SUCH A SITUATION , WHY IT WILL CLAI M BOGUS EXPENDITURE & REDUCE THE INCOME . 10. THE LEARNED CIT - DR IN REPLY TO THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE ON THE ASSESSEES APPEALS FULLY SUPPORTED THE ORDERS OF THE LEARNED CIT(A) BY REFERRING TO PARAGRAPH 6.1 OF THE CIT(A)S ORDE R, WHICH IS REPRODUCED AS UNDER : I HAVE CONSIDERED THE SUBMISSION OF MR. PANI AND THE ORDER OF THE A.O. FROM THE ASSESSMENT ORDER, IT IS FOUND THAT THE APPELLANT WAS REQUESTED TO FURNISH THE NAME AND CONFIRMATION REGARDING UNSECURED LOAN OF 30,77,000 BY THE AO BUT THE APPELLANT KEPT MUM I.E. DID NOT SUBMIT ANY REPLY. NOW BEFORE ME, IT IS NOT KNOWN FROM WHERE MR. PANI HAS SUBMITTED A LIST OF 35 PERSONS AND HAS REQUESTED FOR TIME ON THE GROUND THAT THESE PERSONS HAVE LEFT THE SERVICES AT BHUBANESWAR. MR . PANI HAS ALSO NOT SPECIFIED THE TIME REQUIRED FOR FURNISHING THE CONFIRMATION FROM THESE PERSONS. THUS, IT IS CLEAR THAT THE APPELLANT HAS AVAILED AMPLE TIME TO PROVE THE GENUINENESS OF THE UNSECURED LOAN APPEARING IN THE BALANCE SHEET. ACCORDINGLY, THE ADDITION MADE BY THE AO OF 30,77,000 AS UNEXPLAINED CASH CREDIT IS CONFIRMED. I WOULD LIKE TO MENTION HERE THAT IT IS NOT THE INCOME/ DEEMED INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST/ INSTITUTION, ACCORDINGLY IT IS NOT ENTITLED FOR ANY BENEFI T U/S II OF THE I.T. ACT, 1961. 10.1. FOR THE ASSESSMENT YEAR 2002 - 03, THE LEARNED CIT - DR REFERRED TO THE FACTS OF THE ISSUE WHICH WAS ADJUDICATED BY THE LEARNED CIT(A) IN PARA 6 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER : IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 16 THE FOURTH GROUND OF APPEAL IS THAT THE LD. AO HA ERRE D BOTH IN LAW AND FACT BY TREATING THE APPELLANT SOCIETY AS A NORMAL BUSINESS ASSESSEE WITHOUT APPRECIATING THAT THIS IS AN ASSESSEE WHOSE SURPLUS AFTER ALLOWING THE EXPENSES ARE TO B E TAXED AND MADE ADDITIONS OF UNEXPLAINED CASH CR EDIT OF 6,00,000 WITHOUT COMING INTO ANY CONCLUSION ABOUT THE NATURE AND SOURCE OF THE ALLEGED CASH CREDIT WHICH IS CONTRARY TO THE WEIGHT OF EVIDENCE ON RECORD AND IS BAD IN LAW. MR. PANI SUBMITTED THAT THESE LOANS HAVE BEEN BROUGHT FROM THE FRIENDS AND RELATIVES. IT IS STATED THAT 1 LAKH EACH LOANS WERE TAKEN F ROM GAJENDRA BOITAL, YGNYASENI S UNDRA Y , ANIRADHA TRIPATHY, PITAMBAR TRIPATHY, SAMBIT ROUTRAY AND TARUN KUMAR DAS. WITHOUT PROVIDING ANY FURTHER DETAILS, MR. PANI REQUESTED TO GIVE SOME MORE TIME TO FURNISH THE DETAILS OF CREDITORS, W HICH WAS DENIED AS THE APPELLANT HAS ALREADY AVAILED AMPLE TIME FROM ASSESSMENT TO APPELLATE PROCEEDING TO FURNISH THE AFORESAID DETAILS. IN VIEW OF THE ABOVE FACT, THE ADDITION MADE BY THE AO OF 6,00,000 AS UNEXPL AINED CASH CREDIT U/S 68 OF THE I. T. ACT, 1961 IS CONFIRMED. I WOULD LIKE TO MENTION HERE THAT IT IS NOT THE INCOME/DEEMED INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST/INSTITUTION, ACCORDINGLY IT IS NOT ENTITLED FOR AN Y BENEFIT U/S 11 OF THE IT. ACT, 1961. 10.2. FOR THE ASSESSMENT YEAR 2004 - 05, ON SUSTAINING THE ADDITION BY THE ASSESSING OFFICER ON PURPORTED LABORATORY EQUIPMENT PURCHASES, THE LEARNED CIT(A) OBSERVED IN PARA 6.1 AS UNDER : I T IS SEEN THAT A COPY OF THE BANK STATEMENT OF M/S. SN TYN SNI SCIENTIFIC AG ENCY & CO. WITH AXIS BANK WAS FOUND AND AFTER SCRUTINY IT WAS SEEN THAT THE APPELLANT HAS MADE A PAYMENT OF SUM OF 2,13,512 AND 1,72,355 DURING THE MONTH OF MARCH2004. ON ENQUIRY, IT HAS BEEN STATED BEFORE T HE AO THAT IT IS FOR TH E PURCHASE OF LABORATORY EQUIPMENT AND DENIED TO IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 17 PRODUCE ANY EVIDENCE IN VIEW OF THE FACT THAT ALL THE BOOKS OF ACCOUNT OF THE APPELLANT WERE DESTROYED BY THE LOCAL MOBS AND STUDENTS. HE HAS NOT FURNISHED ANY EVIDENCE OF SUCH DESTRUCTION BY MOBS AND STUDEN TS. THE AO HAS ALSO FURTHER MADE AN ENQUIRY FRO M THE BANK AND FOUND THAT THE ACCOUNT IS CLOSED ON 27.09.2007 WITH A BALANCE OF 58,452 IN THE CUSTODY OF THE BANK. NO SUCH PERSON WAS ALSO FOUND AT THE ADDRESS OF M/S. SAT YA SAL AGENCY AT RASULGARH, BHUBANESWAR. IN VIEW OF THE ABOVE FACT, THE AO TREATED THE AFORESAID EXPENDITURE AS A BOGUS AND ADDED IN THE INCOME. THE LEARNED CIT - DR FULLY SUPPORTED THE SAME. 11. AFTER HEARING THE RIVAL PARTIES AT LENGTH AND PERUSING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL BROUGHT ON RECORD BEFORE THE TRIBUNAL, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LEARNED CIT(A) INSOFAR A S THE REVENUES APPEALS ARE CONCERNED. THE CAPITATION FEES HAVE BEEN BROUGHT TO TAX UN DER THE PROVISIONS OF SECTION 15 3A R.W.S. 143(3) ON THE PREMISE THAT THE SEARCH DOCUMENTS REVEALED EARNING OF SUCH INCOME WHICH HAD NOT BEEN RENDERED TO TAX. THE ASSESSEE CONTINUES TO ENJOY THE EXEMPTION INSOFAR AS IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO CORRELATE THE EARNING OF INCOME OTHER THAN AS DECLARED BY THE ASSESSEE ON ASSUMPTIONS AND PRESUMPTIONS. THE LEARNED CIT(A) THEREFORE, PROCEEDED TO CONSIDER THE CAS E OF THE ASSESSEE WHEN HE, AFTER TAKING INTO COGNIZANCE OF THE TOTALITY OF THE CIRCUMSTANCES , HELD THAT THERE WAS NO MATERIAL EVIDENCE IN THE HANDS OF THE AO FOR FURTHER ADDITION OF RECEIPTS OF THE CAPITATION FEES. THE ASSESSING OFFICER ON THE BASIS OF SO ME DISCRIMINATING PAPER FOUND DURING THE COURSE OF SEARCH IN THE ASSESSMENT YEAR 2006 - 07 PRESUMED THAT THERE MIGHT BE SOME RECEIPTS OF CAPITATION FEES IN THE EARLIER ASSESSMENT YEARS WHICH HE ESTIMATED INSPITE OF THE SEARCH DOCUMENTS AVAILABLE TO HIM DID N OT INDICATE THAT THE CAPITATION IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 18 FEES MUST HAVE BEEN RECEIVED IN THE IMPUGNED AYS AS WELL. THE ASSESSEE HAD RELIED ON THE DECISION OF ITAT, KOLKATA IN THE CASE OF LMJ INTERNATIONAL V. (119 TTJ 214) TO SUBSTANTIATE THAT THE UNDISCLOSED INCOME CANNOT BE BROUGHT TO TAX ON ASSUMPTION EITHER BY GOING FORWARD OR BACKWARD WHEN THE SPECIFIC ASSESSMENT HAS TO BE MADE ON THE BASIS OF DIFF ERENCE BETWEEN THE DISCLOSED INCOME AND THE UNDISCLOSED INCOME FOUND AT THE TIME OF SEARCH FOR THE BLOCK PERIOD. THE SUBMISSIONS OF THE LEARNED CIT - DR ARE ON MERE ASSUMPTIONS AND PRESUMPTIONS TO BE CORRELATED FOR CRYSTALLIZATION JUST BECAUSE THE AO OPINES SO. THE TRIBUNAL HAD ALREADY CONSIDERED THE CASE OF THE ASSESSEE GRANTING REGISTRATION U/S.12AA WAS NOT TO BE LOST SIGHT OF WHICH THE LEARNED CIT(A) KEPT IN MIND BY IDENTIFYING THE PURPORTED UNDISCLOSED INCOME BROUGHT ON RECORD BY THE ASSESSING OFFICER BY ACCEPTING THE OTHER CORROBORATIVE EVIDENCES WHICH ONLY RELATED TO THE FACT THAT THE ASSESSEE HAD DECLARED THE INCOMES IN ACCORDANCE WITH THE PROVISIONS OF SECTION 11 AND 13 OF THE I.T.ACT. WE WILL BE DELIBERATING TO THE GROUP CASES AS OTHERWISE BROUGHT ON RECORD BY THE LEARNED CIT - DR AS PART OF HER SUB MISSIONS WHICH MAY BE DEALT IN ACCORDANCE WITH THE SUBMISSIONS OF THE RIVAL PARTIES THERE TO. A DOUBT ON THE BASIS OF SUBSEQUENT CANCELLATION OF REGISTRATION BY THE CIT WAS TO BE GIVEN A NAME BY THE ASSESSIN G OFFICER BUT NOT FOR THE PURPOSE OF BRINGING TO TAX INCOMES WHICH NEVER WERE PART OF THE RECEIPTS OF THE ASSESSEE. THOUGH WERE NOT ALSO PART OF SEARCHED DOCUMENTS INSOFAR AS HAD THAT BEEN SO THE ASSESSING OFFICER WOULD NOT HAVE RESORTED TO ESTIMATION WHIC H THE LEARNED CIT(A) AFTER TAKING INTO CONSIDERATION OF THE PRESUMPTIONS AND ASSUMPTIONS OF THE AO AND REPRODUCING THE SAME IN HIS ORDER THOUGHT IT FIT TO DELETE THE ADDITIONS BY ALLOWING THE ASSESSEE THE BENEFIT OF EXEMPTION U /S.11 FOR THE IMPUGNED AYS BE FORE US. THEREFORE, IN THIS VIEW OF THE MATTER, WE ARE INCLINED TO UPHOLD THE IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 19 ORDERS OF THE LEARNED CIT(A) AND DISMISS THE APPEALS FILED BY THE REVENUE AND CORRESPONDINGLY ALLOW THE CROSS OBJECTIONS OF THE ASSESSEE SUPPORTING THE ORDERS OF THE CIT(A) ON TH IS ISSUE. 12. ON THE ASSESSEES APPEALS FOR THE AYS 2001 - 02, 2002 - 03 INSOFAR AS THE LEARNED CIT(A) HAS CONFIRMED THE UNSECURED LOANS REMAINING UNEXPLAINED AND THE LEARNED CIT - DR SUPPORTING THE CONTENTION OF THE LEARNED CIT(A), THE LEARNED COUNSEL FOR THE A SSESSEE WAS NOT ABLE TO FURTHER EXPLAIN THE HELPLESSNESS OR CORRELATING AS TO HOW THE SAME COULD NOT BE TAXED U/S.153A INSPITE OF THE LEARNED CIT(A) ACCEDING TO THE FINDING THAT THE ASSESSEE WAS ENTITLED FOR CLAIMING EXEMPTION U/S.11 AND 13 OF THE ACT. WE ARE UNABLE TO SATISFY OURSELVES TO THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE ON THE ISSUE OF UNSECURED LOANS REMAINING UNEXPLAINED AMOUNTING TO 30.77 LAKHS IN THE ASSESSMENT YEAR 2001 - 02, 6 LAKHS IN THE AY 2002 - 03 EVEN NOW WHICH, WE ARE INCL INED TO CONFIRM AS PER THE ORDER OF THE LEARNED CIT(A) AND ALSO AS POINTED OUT BY THE LEARNED CIT - DR SUPPORTING THE OBSERVATIONS OF THE LEARNED CIT(A). 13. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS POINTED OUT THE REASONS FOR THE LEARNED CIT(A) DE LETING THE ADDITION ON ACCOUNT OF EXPENDITURE DISALLOWED U/S.40A(3) WHICH ONLY FORTIFIED THE ASSESSEES CONTENTION FOR AVAILING EXEMPTION U/S.11 OF THE ACT WAS PREDOMINANTLY IN THE MIND OF THE LEARNED CIT(A) WHO ALSO OUGHT TO HAVE ALLOWED THE CLAIM OF 3.86 LAKHS AS PURCHASES OF LABORATORY EQUIPMENT IN THE ASSESSMENT YEAR 2004 - 05 WHICH WAS NEVER CLAIMED AS EXPENDITURE IN THE FIRST PLACE . THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LEARNED CIT(A) HAS OBSERVED THAT THIS EXPENDITURE WAS IN CURRED FOR PURCHASE OF THE ASSETS OF THE INSTITUTION THEREFORE, CANNOT BE CONSIDERED FOR DISALLOWANCE AS BOGUS INSOFAR AS THEY ARE IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 20 PART AND PARCEL OF THE EDUCATIONAL INSTITUTION WHICH HAVE BEEN INCURRED FOR ASSISTING IN IMPARTING EDUCATION FOR WHICH THE LE ARNED CIT(A) HAS GRANTED EXEMPTION U/S.11 OF THE ACT. THE ASSESSING OFFICER THEREFORE ERRED IN DISALLOWING IT AS AN EXPENDITURE, WHICH WAS NOT CLAIMED AS EXPENDITURE MORE SO THOUGH WERE ADDITION TO THE ASSETS OF THE INSTITUTION CANNOT BE DISALLOWED UNDER T HE PROVISIONS OF SECTION 153A. THEREFORE, THE ASSESSEES AP PEAL FOR THE ASSESSMENT YEAR 20 04 - 05 ON THE SOLITARY ISSUE IS DIRECTED TO BE ALLOWED BY DELETING TH IS ADDITION AS OTHERWISE SUSTAINED BY THE LEARNED CIT(A).THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2001 - 02 AND 2002 - 03 IS DISMISSED AS NO FURTHER SUPPORTIVE MATERIAL HAVE BEEN BROUGHT ON RECORD TO DEMOLISH THE STAND TAKEN BY THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A). 14. IN RESPECT OF THE REMAINING COMMON GROUNDS IN ALL THE APPEALS FILED BY THE ASSESSEE, THE ONLY ISSUE RAISED I S COMMON TO THE ALL THE AYS UNDER CONSIDERATION INSOFAR AS THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE LEARNED CIT(A) HAVING OBSERVED THAT THE ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION U/S.11 OF THE ACT AFTER SPECI FYING SOME OTHER ADDITIONS HAD NOT SPELT OUT THE CONTENTIONS WHICH COULD ONLY BE CLARIFIED BY THE REVENUE IN THEIR APPEALS WAS THEREFORE A QUESTION TO BE SETTLED ONLY AFTER HEARING THE REVENUES APPEAL BECOMES INFRUCTUOUS TO THE EXTENT THAT THIS ISSUE HAS BEEN DEALT BY US AND DISPOSED OF IN THE ASSESSEES C.OS. SUPPORTING THE ORDERS OF THE LEARNED CIT(A) ON THIS ISSUE AND IN ACCORDANCE WITH THE GROUNDS RAISED BY THE REVENUE ON THE FACTUAL FINDING BY THE LEARNED CIT(A) IN FAVOUR OF THE ASSESSEE E NTITLED TO E XEMPTION U/S.11 WHEN THE ESTIMATED CAPITATION FEES HAS BEEN HELD FIT FOR DELETION BY HIM ENTITLING THE ASSESSEE THE CLAIM OF EXEMPTION U/S.11 OF THE ACT. IT(SS)A NO.56,57,58,59 AND 60/CTK/2009 IT(SS)A NO.61,62,63,64 AND 65/CTK/2009 AND C.O.NOS.2,3,4, 5 AND 6/CTK/2009 (FI LED BY THE ASSESSEE) 21 15. IN THE RESULT, THE ASSESSEES APPEALS ARE PARTLY ALLOWED AND THE REVENUES APPEALS ARE DISMISSED A ND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ON THE APPEALS OF THE REVENUE ARE ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 25.04.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE A SSESSEE : ORISSA COMPUTER ACADEMY, PUBASASANA, KAUSALYAGANGA,BHUBANESWAR 2. THE DEPARTMENT: ACIT, CIRCLE 1(2), BHUBANESWAR 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.