JAYA EDUCATIONAL TRUST,THIRUVALLUR V. DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI

CO 60/CHNY/2025

AI Insights

The case involves multiple appeals and cross-objections related to the assessment years 2016-17, 2017-18, 2018-19, and 2020-21 concerning Jaya Educational Trust. The primary issues revolved around the denial of exemption under section 11 of the Income Tax Act due to alleged violations of section 13(1)(c) and section 13(1)(d), and the treatment of corpus donations and surplus income. The Assessing Officer (AO) had treated the trust as an Association of Persons (AOP) and taxed the income at the maximum marginal rate (MMR). The CIT(A) partly allowed the assessee's appeal, which was contested by the revenue. The Tribunal's decision focused on the proper application of sections 11 and 13 of the Act, the extent of the trust's compliance with these provisions, and the correct interpretation of the law as supported by various judicial precedents and CBDT circulars.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786579 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 17-07-2025
• Other Referred Cases: CIT v. Vindhya Metal Corporation, Ajith Jain v. CIT, DIT v. Bharat Diamond Bourse, CIT v. Working Women's Forum, DIT v. Sheth Mafatlal Gagalbhai Foundation Trust, CIT Vs Fr. Mullers Charitable Institutions, CIT v. Audyogik Shikshan Mandal, Navajbhai Ratan Tata Trust vs ADIT (Exemption), Board of Control of Cricket in India Vs Income Tax Officer (Exemp)- Ward -1(1), Mumbai, PCIT -1 vs Indo Shell Cast Pvt. Ltd, St. Xavier Educational Trust vs CIT(Exemptions), The DCIT, Exemptions vs Sri Nandhanam Educational & Social Welfare Trust
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BIPIN C.N.; C.I.T
• Assessee Lawyers: Y. SRIDHAR; F
• Keywords: Set aside; Reasonable cause; Question of law; Principle of natural justice; Search and seizure; Charitable institution; Maximum Marginal Rate
• Section: 143(3); 11; 132; 153A; 12; 10; 40A(3)

Judgement Text

" आयकर अपीलीय अिधकरण, ‘सी’ ा यपीठ, चे\u0012ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI \u0014ी मनु क ुमा र िग\u0019र, ा ियक सद\u001b एवं \u0014ी एस. आर. रघुना था , लेखा सद\u001b क े सम\" BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60, 61 & 62/Chny/2025 (in ITA Nos. 234, 235, 236 & 237/Chny/2025) िनधा \u000fरण वष\u000f / Assessment Years: 2016-17, 2017-18, 2018-19 & 2020-21 Deputy Commissioner of Income Tax, Central Circle -1(2), Chennai. vs. Jaya Educational Trust, No.8, Krishnapuram, II Main Road, Thiruninravur, Thiruvallur – 602 024. (अपीलाथ#/Appellant) [PAN:AAATJ-0369-D] ($%थ#/Respondent) Assessee by : Shri. Y. Sridhar, F.C.A. Department by : Shri. Bipin C.N., C.I.T. सुनवाई की तारीख/Date of Hearing : 26.08.2025 घोषणा की तारीख/Date of Pronouncement : 17.11.2025 आदेश /O R D E R PER BENCH : The captioned ITA Nos.234 to 237/Chny/2025 filed by the revenue are against the common order of Learned Commissioner of Income Tax (Appeal) - 18, Chennai, (in short “Ld.CIT(A)”) dated 20.11.2024 for the assessment years 2016-17 to 2018-19 and 2020-21 passed u/s.250 of the Income-Tax Act, 1961 (in short “The Act”). The C.O.Nos.59 to 62/Chny/2025 filed by the assessee are cross objections against the same orders of ld.CIT(A)-18, Chennai, in Printed from counselvise.com :-2-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 respect of which the revenue has preferred appeals in the aforesaid ITA Nos.234 to 237/Chny/2025. 2. In the first three appeals pertaining to A.Y.2016-17 to 2018-19 (ITA Nos.234 to 236/Chny/2025), the grounds are common, except figures. Even for the appeal pertaining to AY 2020-21 in ITA No.237/Chny/2025, except for the last ground of appeal, therein, which relates to disallowance u/s.40A(3) of the Act, all the other grounds of appeal are common. The assessee has filed cross-objections in respect of all the four appeals filed by the revenue. Therefore, we heard all the appeals and cross-objections together and disposing of the same by this common order. 3. Since the issue and facts are similar in all the assessment years, for the sake of convenience the grounds raised by the revenue in ITA No. 234/Chny/2025 are reproduced below. 1. The order of the ld. Commissioner of I.T. (Appeals) is opposed to law and facts of the case. 2. The ld. CIT(A) erred in allowing the corpus donation of Rs.14,51,14,000/- disallowed by the AO and which was not considered for exemption u/s.11 of the Act and further taxing the surplus income of Rs.32,52,27,918/- inter alia total income of the trust at maximum marginal rate (MMR) without confining to the extent of income determined which violated the provisions of section 13 of the Income-Tax Act, 1961. 3. The ld. CIT(A) erred in directing the AO to adopt the difference in intra institutional fee of Rs.4,76,82,339 instead of Rs.5,03,05,143/- based on the reconciliation submitted by the assessee, when the assessee has not produced any new evidence in support of the claim. 4. The ld. CIT(A) erred in admitting fresh evidence of the assessee in respect of utilization of funds towards agricultural land, in violation of Rule 46A of the I.T. Rules, 1962, without giving any opportunity to the AO to examine the Printed from counselvise.com :-3-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 veracity of the same and calling for remand report as prescribed under Rule 46A of the Income-Tax Rules, 1962. 5. The ld. CIT(A) erred in observing that, if at all, there is violation of section 13(1)(c) of the Act, the exemption could be denied, and maximum marginal rate of taxation could be applied only to that part of income which is in violation of section 13(1)(c). 6. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of ld. CIT(A) may be set aside on this ground and that of the Assessing Officer be restored. 4. In ITA No.237/Chny/2025 for the A.Y.2020-21, the revenue has raised one more ground of appeal, after Ground No.5 and before Ground No.6 (residuary ground of appeal) supra which is as follows : The ld. CIT(A) erred in restricting the disallowance u/s.40A(3) made by the AO for Rs.40,32,994/- to Rs.11,98,434/- considering the submission of the assessee that the actual expenses incurred would be many in numbers with less than Rs.10,000/- and cash was incurred for conducting various functions in Schools/Colleges run by the trust are grouped together under the head function expenses. 5. The cross-objections of the assessee are identical for all the assessment years 2016-17 to 2018-19 and 2020-21, which are reproduced below : 1. For that the order of the Commissioner of Income-Tax (Appeals) is contrary to law, facts and circumstances of the case to the extent prejudicial to the interest of the respondent and is opposed to the principles of natural justice, equity and fair play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the search initiated in the case of the appellant is illegal and ultra vires the provisions of section 132(1)(a), (b) & (c) of the Act. 3. For that the Commissioner of Income Tax (Appeals) failed to appreciate the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132(2) is bad in law [CIT v. Vindhya Metal Corporation, 224 ITR 614(SC)] and consequent assessment under section 153A is null and void abinitio on the parity of the ratio of the decision of the Hon’ble Apex Court in the case of Ajith Jain, reported in 260 ITR 80. Printed from counselvise.com :-4-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 4. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the order passed under section 143(3) r.w.s.153A of the Act is further bad in law as there is no valid search on the appellant under section 132 of the Act a valid search is a sine qua non for making a valid assessment under section 153A of the Act. 5. For that the Commissioner of Income Tax (Appeals) although principally accepted that the trust had utilized the monies for its objects, however not provided the entire relief for Rs.10.65 crores spent for the purchase of agriculture lands for establishing Agri. College and not considered the other contemporaneous evidences. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the avg. price per acre is Rs.24,00,000/-, which is based on the registered sale deed document in the sub registrar office. The Commissioner of Income Tax (Appeals) erred in adopting the avg. price of Rs.8,25,000/- per acre, based on cash receipt. 7. Your Trust craves leave to add, alter or amend any of the above Grounds of cross objections. 6. The brief facts of the case are that the assessee group is educational trusts and operates over 20 educational institutions including schools, art and science colleges, Engineering colleges, Nursing colleges, B.Ed. colleges, Dental college etc. The assessee trust was registered u/s.12A of the Act in the year 1992. The trust is managed by Sri.A.Kanagaraj and his family members namely Smt.K.Vijayakumari, Sri.K.Navaraj and Smt.Deena. 7. A search and seizure operation u/s.132 The act was carried out 23.03.2021 in the premises of the assessee group. During search and seizure primarily 33 notebooks / Diaries maintained by the cashier Sri Srinivasan at the head office of the trust were found and seized. These notebooks / Diaries contain actual daily receipts of the school / college fee collections received in cash from all the institutions of the group, the details of cash expenses against Printed from counselvise.com :-5-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 the said receipts and it was made out that some of these cash receipts were not admitted in the regular books of account. 8. In response to the notice u/s.153A of the Act, the assessee filed returns of income admitting NIL income. Thereafter the Assessing Officer(AO) passed the assessment order u/s.143(3) r.w.s 153A of the Act on 26.09.2022 for all the four A.Ys. involved by adding suppressed fees receipts and determined the taxable income: A.Y. 2016-17 2017-18 208-19 2020-21 Returned Income 0 0 0 Add: Suppression of fee receipts 5,03,05,143 27,03,76,170 3,67,55,646 6,21,86,441 Surplus of Income as per I & E A/c 32,52,27,918 32,52,14,055 52,64,46,830 32,58,64,585 Corpus Donation (denial of exemption u/s 11) 14,51,14,000 1,00,00,000 0 0 Disallowance u/s.40A(3) 0 0 0 40,32,997 Assessed Income 52,06,47,061 60,55,90,225 56,32,02,476 39,20,84,023 In doing so, AO denied exemption u/s.11 of the Act by observing that there is violation of provisions of section 13(1)(c), treated corpus fund donation as not applied for earning income and consequently not applied for the purposes of the trust treated the assessee as an AOP for the purposes of taxation and brought the taxable income at MMR on the assessed income as above. Printed from counselvise.com :-6-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 9. Aggrieved by the orders of the AO, the assessee preferred appeals for all the above said A.Ys. before the ld.CIT(A), Chennai -18. The ld.CIT(A) after taking into consideration the submissions of the assessee partly allowed the grounds raised by assessee by passing a common order dated 20.11.2024. 10. Aggrieved by the order of the ld.CIT(A), the revenue is in appeal before us for the A.Ys.2016-17 to 2018-19 and 2020-21. 11. First, we adjudicate the revenue appeals in ITA Nos.234 to 236/Chny/2025. 12. Ground No.1 is general in nature and no adjudication is called for and hence dismissed. Allowance of corpus donation and Taxation of surplus income and denial of exemption and taxability at MMR only on the income which is in violation of section 13(1)(c): 13. The Ground No.2 and Ground No.5 are inter-connected and hence taken together for adjudication. 14. In Ground No.2, the revenue has challenged the decision of the ld.CIT(A) in allowing the corpus donation of Rs.14,51,14,000/- u/s.11 of the Act and not applying MMR to surplus income of Rs.32,52,27,918/-. Printed from counselvise.com :-7-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 15. In Ground No.5 raised by the revenue for the AYs 2016-17 to 2018-19 and 2020-21 is on the aspect of denial of exemption to only that part of the income which is in violation of section 13(1)(c) of the Act. 16. The ld. DR submitted that MMR should not be restricted to only that part of the income determined which violated provisions of section 13 of the Act and it should be extended to corpus donation of Rs.14,51,14,000/- as well as the surplus income of Rs.32,52,27,918/- and has relied upon the assessment order. The ld. DR, inter alia, also quoted the decision of the Hon’ble Supreme Court in the case of DIT v. Bharat Diamond Bourse (259 ITR 280) in support of his contentions. 17. Per contra, the ld. AR brought before the Tribunal, the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Working Women’s Forum (53 taxmann.com 85) and also quoted Circular No.387 dated 06.07.1984 issued by the Central Board of Direct Taxes (CBDT or Board, for short). 18. We have heard both the parties perused material available on records and gone through the orders of the authorities along with the case laws relied on. In respect of the above grounds, it is worthwhile to refer to the discussion in the order of ld.CIT(A), which are reproduced hereunder: “8. The next ground to be considered is Ground no.3, which was raised against denial of benefit u/s 11. In the sub-grounds thereunder, the appellant Printed from counselvise.com :-8-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 contended that the AO erred in taxing the surplus income as per Income and Expenditure account and that the corpus donations were also not considered as application of income disregarding the benefit of section 80G. 8.1 In the assessment order, as was brought out earlier in para no.7, the AO had observed that there is violation of provisions of section 13(1)(c), inasmuch as the Trustees have utilised the suppressed fee receipts for individual purposes, as evidenced by the payments side of the seized note books, and accordingly proposed taxability of net income under MMR, by denying exemption u/s 11 and section 12. In response, during assessment proceedings, the appellant submitted that only such part of income which has been applied for benefit of interested persons shall be excluded from the total income, not the entire net income, and exemption u/s 11 be allowed for the balance income. In support of the same, the appellant relied on various case laws. However, distinguishing the case laws, the AO brought to tax the entire surplus funds. Further the corpus donations were also taxed. The trust was treated as AOP and the entire income was taxed at MMR. 8.2 Against the above treatment, the appellant, during the course of appeal proceedings while maintaining their stance of applying all the receipts, including suppressed fee receipts for the purpose of Trust, alternatively submitted that the denial of exemption, if any, shall be restricted only to the part of income which has been applied in violation of provisions of section 13 and not to the entire income. In support of the above, the appellant relied on different case laws, including the decisions of jurisdictional High Court decisions of ITAT, wherein the case laws relied upon by the AO were clearly distinguished. The appellant also relied on the Board’s Circular No.387 of 1984, the provisions of section 164(2) of the Act and the amendment brought in through Finance Act 2022 to the provisions of section 13(1)(c) and contended that the denial of exemption u/s 11 be restricted to the amount of violation u/s 13(1)(c)/(d). The operative portion of the submissions of the appellant is reproduced hereunder: 1. “In support of the above view, the appellant had relied on plethora of judicial precedents including that of jurisdictional high court as under: • Jurisdictional Madras High Court in the case of CIT vs Working Women's Forum in [2015] 53 taxmann.com 85 (Madras) • Bombay High Court in the case of DIT vs Sheth Mafatlal Gagalbhai Foundation Trust in [2001] 114 Taxman 19 (Bombay) • Karnataka High Court in the case of CIT Vs Fr. Mullers Charitable Institutions in [2014] 44 taxmann.com 275 (Karnataka). • The SLP filed by the revenue against the above decision of Fr. Mullers Charitable Institutions (Supra) has been dismissed by the Apex Court in [2014] 51 taxmann.com 378 (SC) • Delhi High Court in the case of DIT v. Agrim Charan Foundation [2002] 253 ITR 593/ [2001] 119 Taxman 569 Printed from counselvise.com :-9-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 • The Bombay High Court in CIT v. Audyogik Shikshan Mandal [2019] 101 taxmann.com 247 (Bombay) • Mumbai Tribunal rulings in the case of Board of Control of Cricket in India Vs Income Tax Officer (Exemp)- Ward -1(1), Mumbai in [2018] 100 taxmann.com 246 (Mumbai – Trib) • Navajbhai Ratan Tata Trust vs ADIT (Exemption) in [2022] 140 taxmann.com 157 (Mumbai – Trib). 2. The appellant also stated that when the exemption under section 11 is denied on account of violations u/s.13(1)(c)/(d) of the Act, then the provisions of section 164 of the Act shall apply. As per section 164 of the Act, the tax shall be charged only on the relevant income or part of the relevant income which is not exempt under section 11 or 12. 3. It clearly implies that only that part of the relevant income which is not exempt under section 11 or section 12 is brought to tax, as the income of an AOP and the balance of income of the charitable trust/institution, will remain exempt. 4. Further, as per the proviso to section 164(2), where the whole or any part of the relevant income is not exempt under section 11 or section 12, by virtue of the provisions of section 13(1)(c) or section 13(1)(d), tax shall be charged on the relevant income or part of relevant income [emphasis supplied] , at the maximum marginal rate. 5. For the sake of convenience, we have reproduced section 164(2) as under:… (2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons. Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. 6. The Appellant had further referred to the legislative intent of introducing the “proviso” to section 164(2) of the Act vide CBDT Circular 387 of 1984 in which it has been clarified that where a trust contravenes the provisions of section 13(1)(c) or 13(1)(d) of the Act, the maximum marginal rate of income- tax will apply only to that part of income, which has forfeited exemption under the said provisions and not on the entire income of the trust. For the sake of clarity, the relevant extract of CBDT Circular 387 of 1984 is provided below: Printed from counselvise.com :-10-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 28.6 It may be noted that new sub-section (1A) inserted in section 161 of the Income-tax Act, which provides for taxation of the entire income received by trusts at the maximum marginal rate is applicable only in the case of private trusts having profits and gains of business. So far as the public charitable and religious trusts are concerned, their business profits are not exempt from tax, except in the cases falling under clause(a) or clause (b) of section 11(4A) of the Income-tax Act. As the maximum marginal rate of tax under the new proviso to section 164(2) applies to the whole or a part of the relevant income of a charitable or religious trust which forfeits exemption by virtue of the provisions of the Income-tax Act in regard to investment pattern or use of the trust property for the benefit of the settlor, etc., contained in section 13(1)(c) and (d) of that Act, the said rate will not apply to the business profits of such trusts which are otherwise chargeable to tax. In other words, where such a trust contravenes the provisions of section 13(1)(c) or (d) of the Act, the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provisions. [emphasis supplied]. The CBDT Circular no 387 of 1984 is attached as Annexure 1 to this submission for your goodself reference. 7. The Appellant finally referred to the Amendment made in the Finance Act 2022, wherein a major clarification was brought in to clear the ambiguity in interpreting the provisions of section 13(1)(c)/(d) and accordingly the said section have been amended to provide that only such part of income which has been applied for the benefit of interested person / or which has been invested in violation of section 11(5) shall be excluded from the total income of the previous year. 8. The memorandum explaining the Finance Bill 2022 has clearly provides that: Following incomes of the trusts or institutions are chargeable to tax, under different provisions of the Act:- (a) The trusts or institutions under the first or second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. For the trusts or institutions under the second regime, clause (c) of sub-section (1) of section 13 of the Act provides that the entire exemption shall be denied to the trust irrespective of the amount of benefit passed on. For trusts or institutions under the first regime similar provisions is proposed by way of insertion of twentieth proviso to clause (23C) of section 10 of the Act. (b) It is mandatory for any trust or institution under the first regime, to keep their funds in the specified modes. Third proviso of clause (23C) of section 10 of the Act specifically provides that the funds of such trusts or institutions shall be maintained in these specified modes. For the trusts or institutions under the second regime, clause (d) of sub-section (1) of section 13 of the Act provides that the exemption shall be denied to the trust irrespective of the amount of investment in non-specified modes. Printed from counselvise.com :-11-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 Denying exemption to the trust, for small amount of income applied in violation to the provisions referred in clause (a) and (b) above creates difficulties to the trusts or institutions under both the regimes as there is “ambiguity” about the manner of taxation of such income. Further, there is need for special provision to ensure that the income applied in violation is taxed at special rate without deduction. Accordingly, in order to rationalise the provisions, the following amendments are proposed:- (a) It is proposed to amend clause (c) of sub-section (1) of section 13 of the Act to provide that only that part of income which has been applied in violation to the provisions of the said clause shall be liable to be included in total income. (b) It is also proposed to insert twenty first proviso in clause (23C) of section 10 to specifically provide that where the income of any trust under the first regime, or any part of the such income or property, has been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13, such income or part of income or property shall be deemed to be income of such person of the previous year in which it is so applied. The provisions of sub-section (2), (4) and (6) of section 13 of the Act shall also apply to it. (c) It is proposed to amend clause (d) of sub-section (1) of section 13 of the Act to provide that only the that part of income which has been invested in violation to the provisions of the said clause shall be liable to be included in total income. 9. From the above extract of the memorandum explaining the finance bill 2022, it is very much clear that there was an ambiguity about the manner of taxation of income which is in violation as referred in section 13(1)(c)/(d) of the Act and the same has been clarified by specific amendments to section 13(1)(c)/(d) of the Act and therefore the same shall be taken into consideration from the introduction of section 13(1)(c)/(d) of the Act. We submit that it is a settled legal position that the above is an amendment of clarificatory in nature and needs to be reckoned for the earlier periods as well. 10. The copy of the submission dated 15.09.2022 filed before the Ld.AO is attached as Annexure 2 to this submission for your goodself reference. 11. However, the Ld.AO had denied the exemption u/s 11 for the AY 2016-17, 2017- 18, 2018-19, 2020-21 and also surprisingly for the AY 2021-22, where no such difference in fees or in payments between the seized notebooks and the financials. The Ld.AO in the assessment order had placed reliance on the decision of Apex Court in the case of DIT vs Bharat Diamond Bourse [2003] 259 ITR 280 (SC) and denied the benefit of section 11 of the Act for the unaccounted fee receipts as well as for the entire net income accounted in the books of accounts. Printed from counselvise.com :-12-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 12. The Appellant would like to draw your goodself attention that the Ld.AO failed to consider the submission made by the appellant on 15.09.2022 wherein the appellant had referred to the recent judgment of Bombay High Court in the case of CIT v. Audyogik Shikshan Mandal [2019] 101 taxmann.com 247 (Bombay) in which the court has distinguished the decision of Bharat Diamond Bourse (Supra) that the decision is not clear whether the denial of section 11 benefit is only to the extent of income diverted or the entire income. The extract from the said judgement is provided below for ease of reference….. 13. The Appellant would like to submit that the facts of Bharat Diamond Bourse (Supra) are completely different from the appellant’s case. While the appellant is an educational trust, Bharat Diamond Bourse is a company and its members are profit oriented business people, who are into diamond trading and polishing business. In the case of your appellant, there was no violation of section 13(1)(c) as the search covered all the office bearers of the appellant and no materials were unearthed in the search to the effect that the office bearers have benefited or the department could not find any unaccounted assets or investments or any incrementing material with respect to the affairs of the office bearers. This stand of your appellant stands affirmed from the completion of assessments in the case of office bearers. Your appellant had already explained about the utilization of funds, which were spent only for the objects of the trust. As the facts are different, the reliance by the Ld.AO on the Bharath Diamond Bourse case is incorrect and to be ignored. 14. Further, as held in Audyogik Shikshan Mandal (Supra), the apex court in the case of Bharat Diamond Bourse (Supra) has left open the issue of whether the relevant Income which violated as per section 13(1)(c) is taxable or entire Income is taxable and accordingly the reliance made by the Ld.AO on such decision is grossly untenable. 15. The Ld.AO in para 11.4 of the assessment order had stated that the Apex Court in the case of Fr. Mullers Charitable Institutions (supra) has kept the question of law open and hence the same cannot be constructed as reversing its earlier decision of Bharat Diamond Bourse (Supra). 16. The above observation of the Ld. AO is on the premise that the SLP filed by the Revenue in the case of CIT Vs Fr. Mullers Charitable Institutions was dismissed ny the Hon’ble Apex court without going into the merits and hence the Ld.AO has come to a conclusion that the Apex court had kept the question of law open and accordingly, the same cannot be construed as reversing its earlier decision of Bharath Diamon Bourse case. 17. The above stand of the Ld.AO is legally incorrect and in this regard, your appellant rely on the principles held by the jurisdictional Madras High Court in the case of PCIT -1 vs Indo Shell Cast Pvt. Ltd in T.C.A.No.665 of 2016 where in the court has observed that in a case where the Apex Court dismisses a case without providing any reason, the only inference that can Printed from counselvise.com :-13-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 be drawn is that the Supreme Court did not find any warrant to interfere with the judgment of the lower court and not any other reason. Furthermore, it has also been held that Judicial discipline and purpose of maintaining continuity requires to follow the judgment of the jurisdictional court. 18. Thus, in the given case, where the Apex Court has dismissed the SLP filed by the revenue against the decision of Karnataka High Court in the case of CIT Vs Fr. Mullers Charitable Institutions in [2014] 44 taxmann.com 275 (Karnataka), the same cannot be interpreted that the question of law has been kept open but shall be inferred that Supreme Court did not find any warrant to interfere with the judgment of the Karnataka High court. 19. Similarly, the apex court has dismissed the SLP filed by the revenue against the ruling of jurisdictional High Court in the case of Working Women's Forum (Supra) and accordingly the ruling of Working Women's Forum (Supra) is binding on the Chennai Jurisdiction within which the appellant falls. 20. Apart from the rulings listed in para 4.4 above, it is also brought to your goodself attention that there is plethora of judicial precedents which has been decided after the decision of Bharat Diamond Bourse (Supra) which had held that denial of benefit under section 11 will be restricted only to that income of trust which was used/ applied directly or indirectly for benefit of prohibited persons. Further many of these rulings have also distinguished the decision of Bharat Diamond Bourse (Supra) and support the view of the Appellant as well. 21. Few of such recent judicial precedents are provided below for your goodself reference: • Bombay High Court in the case of CIT (Exemption) vs Maharashtra Academy of Engineering and Educational Research in [2024] 161 taxmann.com 290 (Bombay) • Jurisdictional Madras High Court in the case of St. Xavier Educational Trust vs CIT(Exemptions) in [2021] 128 taxmann.com 198 (Madras) following the decision of Working Women's Forum (Supra) had held that it is a settled law that denial of exemption under section 11 should only be to extent of income which is violative of section 13(1)(d) and not total denial of exemption • Jurisdictional Chennai Tribunal in the case of The DCIT, Exemptions vs Sri Nandhanam Educational & Social Welfare Trust in ITA No.: 1109/CHNY/2019 had restricted the disallowance of exemption to the extent of amount of violation as per provisions of section 13(1)(d) of the Act. 22. The Appellant further states that section 11 of the Act is an incentive provision, granting tax benefit to charitable institutions. It is a well settled position in law that an incentive provision should be liberally construed. Reliance in this regard is placed on the following decisions: • P.R. Prabhakar v. CIT [2006] 154 Taxman 503/284 ITR 548 (SC) • Bajaj Tempo Ltd. v. CIT [1992] 62 Taxman 480/196 ITR 188 (SC) • Mysore Minerals Ltd. v. CIT [1999] 106 Taxman 166/239 ITR 775 (SC) Printed from counselvise.com :-14-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 23. In summary your appellant prays that the Apex court ruling of Bharat Diamond Bourse (supra) was pronounced in the year 2003 and subsequent to which the Hon’ble Apex Court has dismissed the SLP filed by the department in both Fr. Mullers Charitable Institutions (Supra) and in Working Women's Forum (Supra) in year 2014 and 2015 respectively and which are binding as on date. The above view is explained by the Jurisdictional Madras High Court in the case of M/s. Indo Shell Cast Pvt. Ltd as explained supra in this submission. Your appellant also brings your good self’s attention to the binding effect of the judgement of Jurisdictional High court upon all the subordinate authorities working in the state. 24. With the above submissions we request your good self to restore / allow the exemption u/s 11 of the Act in the case of your appellant and direct the Ld.AO to delete all the additions which are added in consequence to denial of exemption u/s 11 of Act namely taxing the surplus income as per Income and expenditure A/c and allow the donation paid and rework the computation and oblige. Thus, your appellant prays that if your goodself denies allowing the ground no 5 in favor of the appellant, then the denial of exemption 11 shall be restricted only to that part of income which has been applied in violation to the provisions of section 13(1)(c) of the Act and the same shall be taxed at maximum marginal rate and not the entire income of the Appellant Trust.” 8.3 I have perused the assessment order, submissions of the appellant, reliance on Board’s Circular, provisions of section 164(2), amended provisions of section 13(1)(c) and the case laws relied upon. While deciding the grounds relating to quantum of suppressed fee receipts and their application, it was decided that the same be considered as under assessment year-wise: A.Y. Suppression of fee confirmed vide para (6) above Application considered ** Balance cash unspent 2016-17 4,76,82,339 3,41,59,235 1,35,23,104 2017-18 25,60,99,023 - 25,60,99,023 2018-19 - 0 - 2019-20 0 - 2020-21 4,09,64,325 0 4,09,64,325 2021-22 - 34,47,45,687 3,41,59,235 31,05,86,452 8.4 As could be seen from the above figures, an amount of Rs.3,41,59,235/- for the Asst. Year 2016-17 is considered as utilized for the purposes of the Trust and the balance aggregate amount of Rs.31,05,86,452/- was treated as not spent for the purposes of the Trust for the AYs 2016-17, 2017-18 and Printed from counselvise.com :-15-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 2020-21. Therefore, the discernable inference that can be drawn from the above position is that there is violation of provisions of section 13(1)(c) inasmuch as the suppressed fee receipts funds were utilized by the Trustees indirectly, if not directly, in the absence of sufficient evidences furnished by the appellant. 8.5 Now the issue for consideration is when there is indirect violation of provisions of section 13(1)(c), whether exemption u/s 11 can be allowed to the extent of utilisation of funds for the purpose of Trust and only the balance violated funds must be taxed or the entire receipts for the year be taxed under MMR? In the assessment order, the AO concluded that as there is violation of provisions of section 13(1)(c), exemption is to be disallowed and the entire receipts are to be taxed under MMR against which the appellant contends that the disallowance of exemption be restricted to the amount made out as spent in violation of provisions of section 13(1)(c) only. 8.5.1 Referring to a similar situation in the appellant’s own case involving, inter-alia, A.Y. 2017-18, in a common order, the jurisdictional Tribunal in ITA Nos.2915, 3114, 3115/Chny/2019, discussing the issue at length, held as under: “The provisions of sec.164(2) of the Act, states that in a case where the whole or any part of the relevant income is not exempt u/s 11 or sec.12 by virtue of provisions contained in clause (c) or clause (d) of sub-sec. (1) of section 13 of the Act, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. Therefore, if the trust allows any benefit to interested persons, then only that part of the income which is in violation of section 13(1)( c) is chargeable to tax at the maximum marginal rate of tax; but not whole income of the trust. This proposition is supported by the decision of the Hon’ble Bombay High Court in the case of DIT (Exemption) v Sheth Mafatlal Gagalbai Foundation Trust [2001] 249 ITR 533/114 Taxman 19 and also the decision of the Hon’ble Kamataka High Court in the case of CIT v Fr. Mullers Charitable Institutions [2014] 363 ITR 230/44 taxmann.com 275/[2015] 228 Taxman 319. We further observe that the Hon’ble Supreme Court has dismissed the Special Leave Petition filed by the revenue against the order of the Hon’ble Karnataka High Court, in the case of CIT v Fr, Mullers Charitable Institutions [2014] 51 taxmann.com 378/227 Taxman 369 (SC). In view of the clear provisions of the Act, and also the decision of the Hon’ble Supreme Court in the case, cited supra, it is clear that in case there is violation referred to under section 13(1)(c), then tax can be charged on such income which violates the provisions of section 13(1)(c); but not whole income of the Trust. This position is further strengthened by the decision of Hon’ble Jurisdictional High Court of Madras in the case of CIT v. Working Women’s Forum (supra), where it was held that denial of exemption u/s.11 should be restricted to the extent of income, which is in violation of section 13(1)(c) & 13(1)(d) of the Act. The Hon’ble Supreme Court had dismissed the SLP filed by the Revenue and affirmed the findings of the Hon’ble Jurisdictional High Court of Madras. In this case, the AO has levied tax on total income of the Trust at maximum marginal rate, contrary to settled position of law. We, therefore, are of the considered view Printed from counselvise.com :-16-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 that the AO as well as the ld. CIT (A) were erred in rejecting exemption claimed u/s 11 to total income of the trust.” 8.6 While rendering the above decision, the Tribunal has discussed all the case laws discussed and distinguished by the Assessing Officer in the assessment order. Respectfully following the decision of the ITAT in the appellants own case, the Assessing Officer is directed to restrict the denial of exemption u/s 11 to the extent of income which is in violation of section 13(1)(c) / 13(1)(d) of the Act indirectly and not to whole income of the Trust. 8.7 The appellant has relied upon various case laws in its support at paras 12 to 21 of its submission. As there is a direct decision of ITAT in appellant’s own case, these case laws are not being elaborately discussed. 8.8 Having decided that the denial of exemption u/s 11 be restricted to the amount of violation u/s 13(1)(c)/(d), the corpus donations of Rs.14,51,14,000/- and Rs.1,00,00,000/- for the Asst. Years 2016-17 & 2017- 18 respectively are directed to allowed as claimed. Accordingly, this ground no.3 is allowed. 9. Ground nos. 6 & 7 also against the treating the appellant trust as AOP and taxing the entire income at MMR and request for restricting the MMR tax rate to the extent of violation u/s 13. Since these issues were covered in favour of the appellant while deciding ground no.3 above, these two grounds do not require any further discussion and accordingly, these two grounds are allowed”. 19. From the facts of the case on record and having regard to the above findings and detailed discussion by the Ld.CIT(A), we find ourselves in agreement with his conclusion to tax the amounts which are in violation of section 13(1)(c) of the Act. Further, the ld.CIT(A) has extensively examined the factual matrix, applicable statutory provisions, CBDT circulars, and judicial precedents, including decisions of the Hon’ble Supreme Court, various High Courts, and the jurisdictional Tribunal in the appellant’s own case. The ld.CIT(A) has rightly held that the violation of provisions u/s.13(1)(c) of the Act, if any, warrants denial of exemption u/s.11 only to the extent of the income applied in contravention of such provisions, and not the entire income of the trust. Printed from counselvise.com :-17-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 20. This view is in line with the binding precedent of the jurisdictional High Court in the case of CIT v. Working Women’s Forum and affirmed by the Hon’ble Supreme Court in Fr. Mullers Charitable Institutions, wherein the Special Leave Petition filed by the Revenue was dismissed. We further note that the ld.CIT(A) has applied this principle consistently and allowed exemption u/s.11 for the balance income, including the corpus donations, after verifying the factual application of suppressed fee receipts. Further, we find that the Hon’ble Madras High Court in the aforesaid case of CIT v. Working Women’s Forum (53 taxmann.com 85) has put the issue under consideration beyond doubt by holding ‘only that part of income which is violative of section 13(1)(d) can be brought to tax at MMR’. This decision rendered in the context of section 13(1)(d) applies in equal measure to violation u/s 13(1)(c) also, since, both are similar sections dealing with application of funds of a trust, one for application in favour of an interested person and the other application by way of investment in non- specified modes. Also, the Circular No.387, in unequivocal terms, lays down as follows: ‘28.6. …where such a trust contravenes the provisions of section 13(1)(c) or 13(1)(d) of the Act, the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provisions’. 21. The ld. DR quoted the Supreme Court’s decision in the case of DIT v. Bharat Diamond Bourse (259 ITR 280). We find that the Hon’ble Supreme Court in the said case, dealt with the question of violation of section 13(1)(c) on diversion of trust funds to a substantial contributor and the question as to Printed from counselvise.com :-18-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 whether such a violation would result in denial of exemption to the whole income of the Trust was never before the Supreme Court. In fact, we also find that the question whether forfeiture of exemption will apply to the entire income or only to that part of income violative of section 13(1)(c) or section 13(1)(d) of the Act was never before the Supreme Court in the case of Bharat Diamond Bourse. 22. On the contrary, we find that the Hon’ble Jurisdictional Madras High Court in the case of CIT v. Working Women’s Forum (53 taxmann.com 85), quoting para 28.6 of Board Circular No.387 dated 06.07.1984, held that ‘where a trust contravenes section 13(1)(d) of the Act, the maximum marginal rate of income- tax will apply only to that part of the income which has forfeited exemption under the said provision and not to the entire income’. We also draw support from the aforesaid Board Circular wherein, it has been held that ‘where such a trust contravenes the provisions of section 13(1)(c) or 13(1)(d) of the Act, the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provisions’. 23. Thus, it cannot be gain said that in case of violation of section 13(1)(c) of the Act, MMR has to be applied only to that part of the income which has forfeited exemption under the said provision, viz., section 13(1)(c) of the Act. 24. Hence, we have no hesitation in following the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Working Women’s Forum (53 taxmann.com 85) and the CBDT Circular No.387 dated 06.07.1984. Further, Printed from counselvise.com :-19-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 as captured by CIT(A) in his order referring to a similar situation in the appellant’s own case for the AY 2017-18, dealt by this Tribunal in ITA Nos.2915/3114/3115/Chny/2019. 25. In view of the foregoing, we find no reason to interfere with the well- reasoned and detailed order of the ld.CIT(A). The appeals filed by the Revenue are accordingly dismissed. 26. Since, this ground of appeal and facts are identical for all the other three AYs also, viz., 2017-18, 2018-19 and 2020-21, therefore the reasoning and decision rendered for AY 2016-17 applies mutatis mutandis to the other three AYs also. 27. In the light of the above, the order of the ld. CIT(A) on these issues are upheld and the appeal of the revenue in Ground Nos.2 and 5 for all the AYs 2016-17 to 2018-19 and 2020-21 are dismissed. Difference in cash fee collection : 28. With respect to Grounds No.3 of the revenue, it is seen that the AO, on the basis of note book/diary seized in the course of search which had particulars of cash fees collected vis-à-vis cash fees disclosed in the Original Return of Income, came to the conclusion that the assessee has suppressed cash fee collection of Rs.5,03,05,143/-. Printed from counselvise.com :-20-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 29. The ld. CIT(A) after taking into consideration the cash receipts appearing in the seized note books/diaries which contain not only the fee receipts, but also cash withdrawn from banks, contra receipts and cash withdrawn by Trustees personal bank accounts and given to cashier at Head Office, has given relief to the assessee, by restricting the addition to Rs.4,76,82,339/-. 30. For convenience sake, the addition made by the AO, on this issue, and the part of addition sustained by the ld.CIT(A) are given below: Assessment Year Difference in fees added by AO Addition sustained by CIT(A) 2016-17 5,03,05,143 4,76,82,339 2017-18 27,03,76,170 25,60,99,023 2018-19 3,67,55,646 0 2020-21 6,21,86,441 4,09,64,325 31. The ground raised by the Revenue pertains to the Ld. CIT(A)’s decision in reducing the addition made by the AO on account of alleged suppression of fee receipts based on entries in 33 seized notebooks maintained by the cashier at the Head Office of the assessee trust group. We have heard the rival submissions, perused the orders of the lower authorities, and the detailed findings of the Ld. CIT(A). The findings of the ld.CIT(A) on this aspect are reproduced hereunder: “6. The first effective ground to be adjudicated is Ground No.4, which is against determination of quantum of suppression of fee receipts. Though in the main Ground and sub-grounds raised thereunder, the appellant Printed from counselvise.com :-21-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 contended that there is no suppression of fee receipts, the 33 note books seized from the Head Office of the Trust evidence that certain cash receipts were not admitted in the regular books of account. The scribe of the said books, Sri VRM Srinivasan, Cashier at Head Office in a sworn statement recorded during the course of search had explained the contents of the cash entries in the books to some extent. Further, the excerpts of the statement recorded from Sri Srinivasan were put before the Managing Trustee, Sri A, Kanagaraj on 23.03.2021, for his comments. Sri Kanagaraj had confirmed the version of the cashier and also explained in detail most of the contents of the seized material transactions, where no narration is available. Later, during post search proceedings, all the cash entries appearing in the 33 seized books were tabulated and the appellant had arrived at the fees receipts and compared the same with the Tally data, based on which regular books of account were prepared. In the said tabulation, the appellant had arrived at certain figures, which were not part of regular books of account. Therefore, the ground raised that there is no suppression of fee receipts, in general, is against the facts of the case and not defensible. Therefore, the issue to be adjudicated is only the quantum of such suppressed receipts, based on the entries available in the seized material and the explanation / reconciliation offered by the appellant. 6.1 From the seized note books / dairies, the Assessing Officer made out that suppression of fee receipts by the appellant is Rs.5,03,05,143/- for the year under consideration, against which the appellant submitted during assessment proceedings that the suppression of fee receipts works out to Rs.4,76,82,339/- only after intra-institutional fee reconciliation. However, not satisfied with the said reconciliation, the AO had considered the suppression of fee receipts at Rs.5.03.05.143/-. During appeal proceedings, against the difference in suppressed fee receipts, the appellant submitted as under: 2. The search proceedings were finally concluded on 20.05.2021 in the middle of Covid pandemic and complete lockdown. In the sworn statement recorded from Mr. A Kanagaraj, the chairman of the appellant trust, the authorized officers had sought his explanations with respect to the receipts and payments as noted by Mr Sreenivasan in the 33 seized books. In this respect, he had stated that the data are very old, voluminous and running into thousands of pages and considering the Covid lockdown, requested time for reconciliation of the receipts and payments with that of the books of accounts of the Trust and other institutions as the receipts noted in the notebook contains receipts of fees for all institutions of the group and then segregated and deposited in the respective bank accounts of the institutions / trust. 3. The appellant trust after receipt of the seized materials, had made a detailed analysis of the seized notebooks, carried out a reconciliation of receipts and payments as appeared in those notebooks and made an elaborate submission before the ITO (Inv.), Unit 2, Chennai on 04.08.2021 and 17.08.2021 along with various annexures. 4. In the aforesaid mentioned letter 04.08.2021 filed before the ITO (Inv.), Unit 2, Chennai, the appellant submitted as under: i. The notebooks seized by the department vide ANN/KK/JET/B&D/S 1-33 was maintained by Mr. Printed from counselvise.com :-22-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 Sreenivasan, who is the cashier and coordinator at HO level. These are not regular books of accounts but maintained only as a rough/ katcha book and it contains the details of fees received by the various institutions of our group, which are subsequently on reconciliation deposited in the respective bank accounts and recorded in the regular books of the institutions / trust. ii. The receipts side of these books not only contains the fees receipts but also contains cash withdrawn from banks, Contra receipts (payment made either received back either in full or part) and in few instances money withdrawn from trustee’s personal bank accounts and given to the cashier. iii. The appellant further explained the manner of reconciliation carried out by it including on the intra institutions fees reconciliation. This means that in some instances, the fees noted by the cahier inadvertently under one institution are subsequently handed over / deposited into the bank accounts of other institution on reconciliation. These receipts thus handed over on reconciliation are recorded in the regular books of accounts of the other institution / trust leaving no shortfall / suppression in fees that was recorded in rough notebook and the fees recorded in the books of respective institutions………. 5. Your appellant had in the said submission dated 04.08.0221 elaborated that the receipts side of these books not only contains the fees receipts but also contains cash withdrawn from banks, Contra receipts (payment made either received back either in full or part) and in few instances money withdrawn from trustee’s personal bank accounts and given to the cashier. 6. Your appellant further explained the manner of reconciliation carried out by it including on the intra institutions fees reconciliation. This means that in some instances, the fees or admission fees simply noted by the cashier were subsequently segregated / reconciled with the heads of the institutions and handed over / deposited into the bank accounts of the respective institution on reconciliation. This is for the reason that Shri Sreenivasan, being a common cashier at HO level, collects the fees which pertains to number of institutions and branches of education. Only after this robust reconciliation, the difference in fees was quantified at Rs.36,15,32,068/-. 7. While the facts are as above, in Para 9.1.8 of the impugned order, the AO has stated that the assessee could not give any intra-institutional reconciliation nor the same is available in the seized materials and hence the gross fees as quantified by this office is added to tax. This observation of the Ld.AO is completely incorrect as the entire exercise of reconciliation of the entries in notebooks of about 33000 plus line items (approx.) was carried out only by the assessee even in peak COVID period and thereby quantified the difference in fees for each year and institution. This reconciliation was presented with an elaborate submission dated 04.08.2021 filed before the ITO(inv.) in the post search proceedings. 8. This is factually acknowledged by the Ld.AO herself in para 9.1.2 and 9.1.3 of the assessment order. It is humbly submitted before your goodself that the Authorized officers of the search had only seized the 33 notebooks maintained by the cashier which are for various assessment years and did not quantify any amounts towards fees suppression. It is only the appellant, Printed from counselvise.com :-23-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 which has carried out the mammoth task of carrying out the complete reconciliation of about 33000 plus line items, culled out the details of fees received in cash, compared the same with the cash fees which are accounted in books of each of the institutions and finally quantified the difference in fees. 9. Your appellant submits that the Ld.AO from the table of reconciliation presented before the Investigation officer had cherrypicked only the shortfall in the fees between the amounts noted in the scroll cash books and the amount of cash fees accounted in the books of accounts of the institutions and conveniently ignored when the cash fees accounted in the books of appellant’s trust group and institutions were higher compared to the fees as noted in the scroll cash books maintained by Shri Sreenivasan, which amounts was captured in the intra-institutional reconciliation by your appellant. This stand of the Ld.AO goes against the principles of basic arithmetic in as much as considering only the shortfall and not considering the excess. We have attached herewith the extract of reconciliation presented before the Investigating authority as Annexure-3 to this submission. A simple look on the said reconciliation would reveal that the correct amount of difference is only Rs.34,47,45,687/- and not Rs.41,96,23,400/-. The addition made by the Ld.AO is not based on any independent findings but based only on the table of reconciliation provided by your appellant. Your appellant states that difference in fees were already accounted in the books of accounts of other institutions and to this extent the additions made by the Ld.AO results in assessing the fees twice in the respective institutions. 10. It is pertinent to note that the Ld.AO has not considered the fact that admission fees collected is related to various group trusts and same is evident from the seized notebooks, the narrations in seized notebook is written as ‘first year admission fees’ against which that respective day admission fees collected amount is written, which pertains to overall group admission fees not only the Jaya Educational Trust. 11. The Ld.AO erred in not considering the intra institutional reconciliations, as the seized material (notebooks) consists of fees relating to all the group trusts / societies and number of institutions under these trusts/societies and hence the fees as found noted in the seized books should be compared for overall group and not in isolation. The appellant trust further submits that it is only a rough book maintained manually by Shri Sreenivasan and cannot be relied upon for determination of difference in fees without considering the reconciliations among intra / inter institutions. 12. Your appellant submits that it has correctly accounted the fees in the respective trusts after inter / intra institutional reconciliations and accordingly the same stands reconciled which amount should have been considered for the purpose of the making additions in the assessment. Your appellant submits that in all, there are no escapement of Income as the total fees as found noted in notebooks were FULLY admitted to income in all the institutions. The additions made by the Ld.AO of Rs.26,22,804/- for the AY 2016-17; Rs.1,42,77,147/- for the AY 2017-18; Rs.3,67,55,646/- for the AY 2018-19 and Rs.2,12,22,116/- for the AY 2020-21 is in excess, results in Printed from counselvise.com :-24-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 assessing the fees twice in the respective institutions, which were again subjected to assessment by the same Ld.AO. Your appellant humbly submits that it had sincerely reconciled and presented the difference in fees to Rs.34,47,45,687/-, which are after reconciliation and even the amount of additions of Rs.7,48,77,713/- in the fees were already accounted as fees in other institutions which fact can be seen from the table of reconciliation presented before your goodself in Annexure-3. Hence, we request your goodself to delete the arbitrary addition made by the Ld.AO of Rs.7,48,77,713/- in the fees pertaining to AYs 2016- 17, 2017-18, 2018-19 and 2020-21 and oblige. 22.2 The said Annexure-3 submitted by the appellant, which is intra- institutional fee reconciliation, is reproduced hereunder: FY 2015-16 (AY 2016-17) JAYA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 54,23,11,883 Less: Fees Transferred to Srinivasa Educational Trust 25,29,952 Less: Fees Transferred to Besant Educational and Cultural Society 92,852 Total fees after intra- institutional reconciliation 53,96,89,079 As per Tally accounts 49,20,06,740 Shortfall/(Excess) after intra- institutional reconciliation 4,76,82,339 SRINIVASA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 1,98,53,177 Add: Fees Transferred from Balalok Educational Society 21,47,459 Add: Fees Transferred from Jaya Educational Trust 25,29,952 Total fees after intra- institutional reconciliation 2,45,30,588 As per Tally accounts 2,45,30,588 Shortfall/(Excess) after intra- institutional reconciliation - Printed from counselvise.com :-25-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 BALALOK EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 1,36,67,051 Less: Fees Transferred to Srinivasa Educational Trust 21,47,459 Total fees after intra- institutional reconciliation 1,15,19,592 As per Tally accounts 1,15,19,592 Shortfall/(Excess) after intra- institutional reconciliation - BESANT EDUCATIONAL AND CULTURAL SOCIETY FEES COLLECTION Amount As per Seized materials 42,02,817 Add: Fees Transferred from Jaya Educational Trust 92,852 Total fees after intra- institutional reconciliation 42,95,669 As per Tally accounts 42,95,669 Shortfall/(Excess) after intra- institutional reconciliation - GRAND TOTAL FEES COLLECTION Amount As per Seized materials (note books) 58,00,34,928 As per Tally accounts of overall group 53,23,52,589 Difference 4,76,82,339 FY 2016-17 (AY 2017-18) JAYA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 61,67,77,744 Less: Fees Transferred to Srinivasa Educational Trust 70,79,696 Printed from counselvise.com :-26-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 Less: Fees Transferred to Ragas Educational Society 18,71,117 Less: Fees Transferred to Balalok Educational Society 51,66,883 Less: Fees Transferred to Besant Educational and Cultural Society 1,59,451 Total fees after intra-institutional reconciliation 60,25,00,597 As per Tally accounts 34,64,01,574 Shortfall/(Excess) after intra- institutional reconciliation 25,60,99,023 SRINIVASA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 93,83,373 Add: Fees Transferred from Jaya Educational Trust 70,79,696 Total fees after intra-institutional reconciliation 1,64,63,069 As per Tally accounts 1,64,63,069 Shortfall/(Excess) after intra- institutional reconciliation - RAGAS EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 10,61,46,082 Add: Fees Transferred from Jaya Educational Trust 18,71,117 Total fees after intra-institutional reconciliation 10,80,17,199 As per Tally accounts 10,80,17,199 Shortfall/(Excess) after intra- institutional reconciliation - BALALOK EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 5,63,66,632 Printed from counselvise.com :-27-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 Add: Fees Transferred from Jaya Educational Trust 51,66,883 Total fees after intra-institutional reconciliation 6,15,33,515 As per Tally accounts 6,15,33,515 Shortfall/(Excess) after intra- institutional reconciliation - BESANT EDUCATIONAL AND CULTURAL SOCIETY FEES COLLECTION Amount As per Seized materials 43,76,421 Add: Fees Transferred from Jaya Educational Trust 1,59,451 Total fees after intra-institutional reconciliation 45,35,872 As per Tally accounts 45,35,872 Shortfall/(Excess) after intra- institutional reconciliation - GRAND TOTAL FEES COLLECTION Amount As per Seized materials (note books) 79,30,50,252 As per Tally accounts of overall group 53,69,51,229 Difference 25,60,99,023 FY 2017-18 (AY 2018-19) JAYA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 54,17,59,394 Less: Fees Transferred to Srinivasa Educational Trust 5,53,753 Less: Fees Transferred to Ragas Educational Society 3,44,17,591 Less: Fees Transferred to Balalok Educational Society 5,58,598 Less: Fees Transferred to Besant Educational and Cultural Society 65,083 Printed from counselvise.com :-28-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 Less: Fees Transferred to Techno Educational Trust 59,85,800 Total fees after intra-institutional reconciliation 50,01,78,569 As per Tally accounts 50,50,03,748 Shortfall/(Excess) after intra- institutional reconciliation -48,25,179 SRINIVASA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 80,50,357 Add: Fees Transferred from Jaya Educational Trust 5,53,753 Total fees after intra-institutional reconciliation 86,04,110 As per Tally accounts 86,04,110 Shortfall/(Excess) after intra- institutional reconciliation - RAGAS EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 5,38,57,793 Add: Fees Transferred from Jaya Educational Trust 3,44,17,591 Total fees after intra-institutional reconciliation 8,82,75,384 As per Tally accounts 8,82,75,384 Shortfall/(Excess) after intra- institutional reconciliation - BALALOK EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 4,89,34,921 Add: Fees Transferred from Jaya Educational Trust 5,58,598 Total fees after intra-institutional reconciliation 4,94,93,519 Printed from counselvise.com :-29-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 As per Tally accounts 4,94,93,519 Shortfall/(Excess) after intra- institutional reconciliation - BESANT EDUCATIONAL AND CULTURAL SOCIETY FEES COLLECTION Amount As per Seized materials 39,21,087 Add: Fees Transferred from Jaya Educational Trust 65,083 Total fees after intra-institutional reconciliation 39,86,170 As per Tally accounts 39,86,170 Shortfall/(Excess) after intra- institutional reconciliation - TECHNO EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 1,57,800 Add: Fees Transferred from Jaya Educational Trust 59,85,800 Total fees after intra-institutional reconciliation 61,43,600 As per Tally accounts 61,43,600 Shortfall/(Excess) after intra- institutional reconciliation - GRAND TOTAL FEES COLLECTION Amount As per Seized materials (note books) 65,66,81,352 As per Tally accounts of overall group 66,15,06,531 Difference - 48,25,179 Printed from counselvise.com :-30-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 FY 2019-20 (AY 2020-21) JAYA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 30,12,59,758 Less: Fees Transferred to Ragas Educational Society 1,95,19,416 Less: Fees Transferred to Balalok Educational Society 16,97,245 Less: Fees Transferred to Besant Educational and Cultural Society 5,455 Total fees after intra-institutional reconciliation 28,00,37,642 As per Tally accounts 23,90,73,317 Shortfall/(Excess) after intra- institutional reconciliation 4,09,64,325 SRINIVASA EDUCATIONAL TRUST FEES COLLECTION Amount As per Seized materials 20,99,990 Less: Fees Transferred to Balalok Educational Society 2,70,945 Total fees after intra-institutional reconciliation 18,29,045 As per Tally accounts 18,29,045 Shortfall/(Excess) after intra- institutional reconciliation - RAGAS EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 4,28,09,844 Add: Fees Transferred from Jaya Educational Trust 1,95,19,416 Total fees after intra-institutional reconciliation 6,23,29,260 As per Tally accounts 6,23,29,260 Printed from counselvise.com :-31-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 Shortfall/(Excess) after intra- institutional reconciliation - BALALOK EDUCATIONAL SOCIETY FEES COLLECTION Amount As per Seized materials 3,69,00,039 Add: Fees Transferred from Srinivasa Educational Trust 2,70,945 Add: Fees Transferred from Jaya Educational Trust 16,97,245 Total fees after intra-institutional reconciliation 3,88,68,229 As per Tally accounts 3,88,68,229 Shortfall/(Excess) after intra- institutional reconciliation - BESANT EDUCATIONAL AND CULTURAL SOCIETY FEES COLLECTION Amount As per Seized materials 4,66,245 Add: Fees Transferred from Jaya Educational Trust 5,455 Total fees after intra-institutional reconciliation 4,71,700 As per Tally accounts 4,71,700 Shortfall/(Excess) after intra- institutional reconciliation - GRAND TOTAL FEES COLLECTION Amount As per Seized materials (note books) 38,35,35,876 As per Tally accounts of overall group 34,25,71,551 Difference 4,09,64,325 6.3 I have gone through the assessment orders, submissions of the appellant and the Annexure thereto. The Assessing Officer had taken the gross receipts appearing in the relevant seized material pages, as such, and has apparently Printed from counselvise.com :-32-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 not considered the submissions made by the appellant during assessment proceedings. It was brought by the appellant that the cash receipts appearing in the seized note books / dairies contain not only the fee receipts, but also cash withdrawn from banks, contra receipts and in few instances cash withdrawn by Trustees personal bank accounts and given to cashier at Head Office. With regard to reconciliation / intra-institution fees, it was submitted that the fees noted by the cashier inadvertently under one institution in the rough books was reconciled while recording the same in the regular books of account and depositing the same in the bank account. Except brushing aside the submissions made by the appellant, the AO had not brought out any reason for not considering the reconciled suppressed receipts. Further, as could be seen from pages 98-102 of the paper book, reproduced above, the fee collections / amounts reduced from one institution were added to the respective institution and the same were compared with the Tally data / fee considered in the regular books of account. The gross receipts figures has not been disturbed by the AO but only the inter institutional adjustment has not been accepted without any particular reason. The suppressed fee receipts of the group has been accounted after reconciliation of the fee receipts institution wise. Therefore, the AO is directed to adopt the reconciled figures, as under, towards suppression of fee receipts for the respective assessment years: Assessment Year Difference in fee added by AO Reconciled fee to be adopted now 2016-17 5,03,05,143 4,76,82,339 2017-18 27,03,76,170 25,60,99,023 2018-19 3,67,55,646 0 2020-21 6,21,86,441 4,09,64,325 6.4 Accordingly, this Ground No.4 is treated as partly allowed” 32. On perusal of the findings of the ld.CIT(A) it is an admitted fact that the 33 notebooks seized during the search at the Head Office were maintained by Shri VRM Srinivasan, the cashier, and were rough/katcha books and not part of the regular books of account. These notebooks recorded fee collections of multiple institutions under the assessee group and not just of the assessee-trust alone. The Ld.CIT(A), after considering the sworn statements of both the cashier and the Managing Trustee Shri A. Kanagaraj, noted that the entries in Printed from counselvise.com :-33-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 the seized notebooks were thoroughly reconciled by the assessee during post- search proceedings. The reconciliation process, which involved over 33,000 line items, was carried out by the assessee despite the Covid-related disruptions and lockdowns and was supported by detailed submissions dated 04.08.2021 and 17.08.2021 made before the ITO (Inv.), Unit 2, Chennai. The Ld.CIT(A) found merit in the assessee’s submission that the same receipts noted in the seized books were eventually recorded in the books of different institutions within the group and thus, considering them again in the hands of the assessee-trust without adjusting for intra-institutional reconciliation would amount to double taxation. 33. The Ld.CIT(A) further observed that the AO, while making the addition of Rs.5,03,05,143/-, had selectively considered shortfalls in reconciliation without giving credit for instances where the fees recorded in the regular books were more than those noted in the seized material. This cherry-picking approach by the AO was rightly held to be unsustainable. 34. The reconciliation submitted by the assessee, which reduced the quantum of alleged suppression to Rs.34,47,45,687/- (as against Rs.41,96,23,400/-), was found to be reasonable, methodical, and substantiated by documentary evidence. Of this, a further sum of Rs.7,48,77,713/- was explained to have been already accounted for in other institutions under the same management. Printed from counselvise.com :-34-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 35. In view of the above findings, the Ld.CIT(A) held that there was no escapement of income to the extent assessed by the AO and rightly deleted the addition of Rs.7,48,77,713/- made for AYs 2016-17, 2017-18, 2018-19, and 2020-21. We find no infirmity in the detailed factual and legal analysis carried out by the Ld.CIT(A), who has examined the seized material, the reconciliation exercise, and the assessee’s submissions in a comprehensive manner. The department has not brought any contrary material on record to rebut these findings or demonstrate that the receipts so reconciled were not ultimately accounted for in the books of group institutions. 36. Accordingly, we uphold the order of the Ld. CIT(A) and find no merit in the Revenue’s appeal. Rule 46A of the I.T. Rules, 1962 in respect of utilization of funds towards agricultural land: 37. As regards, the ground no.4 of the revenue which relates to utilization of funds towards agricultural land and violation of Rule 46A of the I.T. Rules, 1962, it is submitted by the ld.AR for the assessee that the ld.CIT(A) has decided the utilization of suppressed fee receipts which evidence was available with the AO at the time of assessment proceedings itself in the form of seized material. Further, ld.AR stated that from the facts on record it can be seen that the assessee had filed all the materials before the ITO(Inv.) Unit 2, Chennai, vide its letter dated 04.08.2021 and 17.08.2021 along with annexures during the Printed from counselvise.com :-35-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 search proceedings, which materials were available before the AO at the time of assessment. Hence, the ld.AR pleased that there has been no violation of Rule 46A of the I.T. Rules, 1962. 38. As regards Ground No. 4 raised by the Revenue regarding alleged violation of Rule 46A of the I.T. Rules, 1962, and utilization of funds towards agricultural land, we find no merit in the Revenue’s contention. 39. The Ld. CIT(A) has clearly recorded that the materials relied upon for adjudicating this issue—particularly the utilization of suppressed fee receipts— were already available with the AO at the time of assessment, being part of the seized material obtained during the search. Further, the reconciliation statements, supporting annexures, and explanations had been submitted before the Investigation Wing (ITO - Inv., Unit 2, Chennai) on 04.08.2021 and 17.08.2021, and formed part of the official record well before the completion of assessment. Thus, there was no introduction of new evidence before the CIT(A), and therefore, no violation of Rule 46A can be said to have occurred. The Revenue’s claim on this count is without factual or legal basis. 40. Accordingly, the order of the ld. CIT(A) on this issue stands confirmed and ground nos. 3 & 4 of the revenue are dismissed. Disallowance u/s 40A(3) of the Act : 41. This ground of appeal (Ground No.6) applies only to AY 2020-21 in ITA No.237/Chny/2025. Printed from counselvise.com :-36-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 42. The AO disallowed a sum of Rs.40,32,994/- u/s.40A(3) of the Act, on the submission of the assessee in the course of assessment proceedings that cash payments of the said amount were made. 43. On appeal by the assessee, the ld. CIT(A), after examining the cash book of the assessee, came to the conclusion that cash payments of the following amounts totalling to Rs.11,98,434/- were only made in the previous year relevant to the AY 2020-21 in excess of the limit prescribed u/s.40A(3) of the Act, i.e. Rs.10,000/- per payment per person in a day. The details of which are furnished below: Date Particulars Amount 16.05.2019 YSSP Program 1,05,500 03.08.2019 PB College of Engineering 3,00,000 13.02.2020 Ashok Thangamaligai 1,00,000 27.02.2020 Pharmacy Council of India, New Delhi 70,000 31.03.2020 D. Sampooranam 76,000 31.03.2020 Mr.P. Chakrapani 68,700 31.03.2020 Land 1,16,011 31.03.2020 Land 80,602 31.03.2020 C S Sugumari 1,64,493 31.03.2020 CORDOVA Publications (P) Ltd. 1,17,128 Total 11,98,434 44. The ld.AR submitted that the ld.CIT(A) has clearly given a finding that the cash book has been verified and violation of section 40A(3) of the Act is only to the extent of payment of Rs.11,98,434/- and restricted the disallowance Printed from counselvise.com :-37-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 accordingly. Since, the revenue has not let in any new evidence to reverse the order of the ld. CIT(A) on this ground of appeal of the department, the ld.AR prayed for dismissing the said ground of appeal of the revenue. 45. The ld.DR relied on the order of the AO and prayed for confirming the disallowance. 46. We notice that it is evident from the record that the Ld. CIT(A)’s conclusion was based on verification of primary books of account, specifically the cash book, and not on any fresh evidence that would trigger Rule 46A. In the absence of any material to displace the factual verification carried out by the ld.CIT(A), and considering that the AO had made the disallowance on an aggregate basis without linking individual payments with actual violations, we find no reason to interfere with the reasoned order of the ld.CIT(A). The restriction of disallowance to ₹11,98,434/- is therefore upheld. Hence, this ground of appeal (Ground No.6 for AY 2020-21) of the revenue is dismissed and the order of the ld.CIT(A) on the issue is confirmed. 47. The last ground of appeal in all the appeals of the revenue for the AYs 2016-17 to 2018-19 and 2020-21 is residuary ground of appeal and no adjudication is called for, on that ground and hence dismissed. C.O.Nos.59 to 62/Chny/2025: 48. Now coming to the Cross-objection raised by the assessee for all the AYs 2016-17 to 2018-19 and 2020-21, we find that there is a delay of about 80 days, Printed from counselvise.com :-38-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 which has been condoned based on the reasonable cause established by the assessee and hence admit the same for adjudication. 49. Ground No.1 of the cross-objection is general in nature and needs no adjudication and hence dismissed. 50. Ground Nos.2 to 4 relate to validity of search. However, except relying on same case laws, the assessee has not demonstrated as to what were the presumptions and assumptions that led to the search action. It is apparent that, as recorded by the ld. CIT(A) on this issue, the assessee has not gathered / requisitioned any information which led to recording of satisfaction for initiation of search proceedings. Further, this forum is not the appropriate one to challenge the validity of search. Hence, ground nos.2 to 4 of the assessee’s cross-objection are dismissed. 51. On Ground Nos.5 and 6, which relate to utilization of suppressed fee receipts towards purchase of agricultural land at Kizhpakkam, the assessee submitted that the Trust was in the process of setting up an agricultural college from 2015 and in connection with the said objective, the A.R. brought out the rigours involved in meeting the guidelines set forth by Tamil Nadu Agricultural University especially on the matter of acquiring contiguous land of 110 acres. The ld.AR submitted that for the purpose of acquiring contiguous land of 110 acres, the assessee made payments right from the previous year relevant to the AY 2016-17 and acquiring contiguous lands of around 100 acres, which Printed from counselvise.com :-39-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 posed a problem for the assessee. In the process, the assessee was forced to pay on-money in cash to the sellers / farmers at Kizhpakkam village and these cash payments were met from the suppressed cash fee receipts. The assessee also produced list of lands purchased to an extent of 98.33 acres and submitted that the transaction made on 22.03.2021 in respect of purchase of 38.51 acres of land for Rs.9.25 crores which is the documented value and the same may be taken as benchmark for arriving at the actual money paid for acquiring the balance lands in the vicinity and accordingly, the ld.AR submitted that the cost per acre which works out to Rs.24.00 lakhs should be adopted as the average purchase price. 52. On this issue, we find that the ld.CIT(A) has adopted the average purchase price after considering the on-money payment at Rs.8,25,000/- in place of the documented value for purchase of 98.33 acres. 53. We also find that the factors/difficulties involved in establishing an agricultural college by the assessee, particularly with respect to the acquisition of around 100 acres, cannot be simply brushed aside. In this regard, we cannot close our eyes to the unfortunate practice of payment of on-money in the real estate sector in our country and none can deny this factual situation and more so in the case of acquiring agricultural lands in village. This is all the more so, when an assessee is forced to acquire contiguous lands to an extent of around 100 acres. Printed from counselvise.com :-40-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 54. In these circumstances, the quantification of on-money payment is the only aspect to be decided on this issue raised by the assessee. While, the ld.CIT(A), has adopted the average rate per acre of Rs.8,25,000/- as on-money payment, the ld.AR contends that the average rate per acre is to be adopted at Rs.24,00,000/- and on-money be quantified for the 98.33 acres, on such a basis. 55. We find that the average rate of purchase considered by the ld.CIT(A) is based on the purchase price of the land at Rs.8.25 Lakhs per acre for the A.Y.2016-17. Therefore, it is undisputed fact that there is on-money paid for purchase of agricultural land from the farmers. However, the assessee has furnished a registered sale deed for purchase of agricultural land at immediate vicinity of the agricultural lands at Rs.24.01 Lakhs per acre by paying Rs.9.25 crores for 38.51 acres during the A.Y.2021-22. In this peculiar circumstances of the present case, we can reasonably estimate the on-money could have been paid by the assessee for purchase of balance land of 59.82 acres out of 98.33 acres totally purchased by allocating incremental growth in the rate per acre from Rs.8.25 lakhs in the A.Y. 2016-17 to Rs.24.01 lakhs per acre in the A.Y.2021-22. Hence, the total incremental rate per acre is Rs.15,75,000/- for a span of 5 years, i.e. Rs.3,15,000/- per acre per year. Therefore, in order to meet the ends of justice, we are of the considered view that the estimated cost of land acquired including on-money payments made by the assessee shall be considered as detailed below: Printed from counselvise.com :-41-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 A.Y. Extent of Land Acquired Rate per acre in Rs. Purchase Value in Rs. 2016-17 0.40 8,25,000/- 3,30,000/- 2017-18 7.49 11,40,000/- 85,38,600/- 2018-19 14.89 14,55,000/- 2,16,64,950/- 2019-20 36.00 17,70,000/- 6,37,20,000/- 2020-21 1.04 20,85,000/- 21,68,400/- 2021-22 38.51 24,01,973/- 9,25,00,000/- TOTAL 98.33 18,89,21,950/- 56. In light of the above discussion, we direct the Assessing Officer that the on-money payment from suppressed fee receipt in cash be quantified by adopting the average price as per the table (supra). 57. In view of the foregoing, we decide this ground of cross-objection of the assessee as partly allowed. 58. In the result, the appeals of the revenue are dismissed and the cross- objections of the assessee for the AYs 2016-17 to 2018-19 and 2020-21 are partly allowed. Order pronounced in the open court on 17th November, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार िग\u0019र) (MANU KUMAR GIRI) ाियक सद\u001b/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद\u001b/Accountant Member चे\u0003ई/Chennai, \u0005दनांक/Dated, the 17th November, 2025 SP Printed from counselvise.com :-42-: ITA. Nos.:234, 235, 236 & 237/Chny/2025 & CO Nos.59, 60,61 & 62/Chny/2025 आदेश की $ितिलिप अ+ेिषत/Copy to: 1. अपीला थ#/Appellant 2. $%थ#/Respondent 3.आयकर आयु