Sabarigiri Trust, Kollam V. The ACIT, Kollam

MA 60/COCH/2014

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 3992 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2016
• Assessment Year: misc
• Appeal Filed On: 12-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: C B M WARRIER
• Section: 139

Judgement Text

MP 60/COCH/2014 . 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M MISCELLANEOUS PETITION NO. 60/COCH/2014 ARISING OUT OF IT(SS) A NO. 186/COICH/2005 ( BLOCK PERIOD 1.4.1996 TO 28.5.2002 ) M/S SABARIGIRI TRUST A NCHAN KOLLAM VS THE ASST COMMR OF INCOME TAX CENTRAL CIRCLE, KOLLAM ( APP LICANT ) (RESPONDENT) PAN NO. AAATS6504P ASSESSEE BY SH C B M WARRIER, CA REVENUE BY SH K P GOPAKUMAR, SR DR DATE OF HEARING 29.JAN 2016 DATE OF PRONOUNCEMENT 2 ND FEB 2016 OR D ER PER GEORGE GEORGE. K. J M: THIS MISCELLANEOUS PETITION, AT THE INSTANCE OF THE ASSESSEE , ARISE OUT OF THE TRIBUNALS ORDER DATED 3.1.2014 IN IT(SS)A NO. 186/COCH/2005 PERTAINING TO THE BLOCK PERIOD 1.4.1996 TO 28.5.2002. 2 TWO GRIEVANCES ARE RAISED IN THIS MISCELLANEOUS PETITION; NAMELY; I) IN PARA 9 OF THE TRIBUNALS ORDER, IT IS STATED THAT THE LD REPRESENTATIVE SHRI CBM WARRIER HAS ADMITTED THAT THE EDUCATIONAL TRUST WAS NOT REQUIRED TO FILE RETURN OF INCOME TILL 1.4.2006. IT IS SUBMITT ED THAT THE STATEMENT OF THE TRIBUNAL IN PARA 9 OF ITS ORDER , IS CONTRARY TO THE FACTS AND APPROPRIATE CORRECTION MAY BE MADE . MP 60/COCH/2014 . 2 II) IN PARA 20 OF THE ORDER , THE TRIBUNAL HAD CONSIDERED THE ISSUE REGARDING THE ADDITION OF RS.19,82,672/ - . IT WAS SUBMITTE D BY THE LD AR , THAT THE ESTIMATION OF CONCEALMENT FOR THE WHOLE YEAR ON THE BASIS OF THE FINDING OF CONCEALMENT FOR 4 MONTHS I.E. 19.11.2001 TO 27.3.2002, IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 WE SHALL CONSIDER THESE GRIEVANCES OF THE ASSESSEE AS UNDER: IN PAR A 9 OF THE TRIBUNALS ORDER, IT IS OBSERVED AS UNDER: 9 ON THE CONTRARY, SHRI CBM WARRIER, THE LD REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS AN EDUCATIONAL TR UST, THEREFORE, ELIGIBLE FOR EXEMPTION U/S 10(22) OF THE ACT AS IT WAS EXISTE D THEN. ACCORDING TO THE LD REPRESENTATIVE, AN EDUCATIONAL TRUST WAS NOT REQUIRED TO FILE RETURN OF INCOME TILL 1.4.2006. 4 I N THE COURSE OF HEARING OF THIS MISCELLANEOUS PETITION, THE LD AR SUBMITTED THAT THIS OBSERVATION OF THE TRIBUNAL IS CONTRARY TO THE FACTS. IT WAS SUBMITTED THAT THE SUBMISSION DURING THE COURSE OF HEARING OF THE APPEAL IN IT(SS)A NO.186/COCH/2014 WAS THAT SUBSEQUENT TO INTRODUCTION OF SECTION 139(4C) W.E.F 1.4.2003, FILING OF RETURN OF INCOME WAS MANDATORY FOR TRUST, UNIVERSITIES , HOSPITALS AND OTHER EDUCATIONAL INSTITUTIONS. HOWEVER, THE ASSESSEES INSTITUTION WAS FILING RETURN OF INCOME FOR THE ASSESSMENT YEARS COVERED IN THE BLOCK PERIOD. THE LD DR PRESENT WAS DULY HEARD. 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. SECTION 139(4C) OF THE ACT WAS INTRODUCED BY THE FINANCE ACT 2002 W.E.F 1.4.2003. WITH THE INTRODUCTION OF SECTION 139 ( 4C ) OF THE ACT, FILING OF RETURN OF INCOME, IN THE CASE S LIKE THAT OF THE ASSESSEE, WAS MADE MANDATOR Y. IN OTHER MP 60/COCH/2014 . 3 WORDS, PRIOR TO THE INTRODUCTION OF SECTION 139(4C) OF THE A CT, FILING OF RETURN OF INCOME WAS ONLY DIRECTORY AND NOT MANDATORY. THEREFORE, THE OBSERVATION IN PARA 9 OF THE TRIBUNAL ORDER IS SUITABLY MODIFIED TO MEAN THAT EDUCATI ONAL TRUST WAS NOT REQUIRED TO FILE RETURN OF INCOME TILL 1.4.2003 ( INSTEAD OF 1.4.200 6 AS MENTIONED IN TRIBUNAL ORDER DATED 31.1.2014) . IT IS ORDERED ACCORDINGLY. 6 ADDITION OF RS. 19 , 82,672/ - THE ABOVE ADDITION OF RS. 19,82,672/ - WAS MADE BY THE AO BY MAKING THE FOLLOWING OBSERVATIONS: 8. OMISSION IN ACCOUNTING TERM FEE: AT THE TIME OF SEARCH IN THE CASE OF DR V K JAYAKUMAR THE BOOKS RELATING TO THE TRUST WERE ALSO SEIZED. SEIZED MATERIAL AM 1 27 IS THE PRIMARY CASH BOOK SHOWING RECE IPT OF MONTHLY FEE, TERM FEE ETC. AM 16 IS THE REGULAR CASH BOOK OF THE TRUST FOR THE PERIOD FROM 12 .12.01 ONWARDS. VERIFICATION OF THESE BOOKS SHOWED THAT WHEN THE ACCOUNTS ARE TRANSFERRED TO THE CASH BOOK, THE TERM FEE IS COMPLETELY OMITTED TO BE ACCOUNTED. 8A . THE DATA - WISE OMISSION WAS COMMUNICATED TO THE ASSESSEE VID E LETTER DATED 10.12.04 CALLING FOR EXPLANATION AND PROPOSING TO TAX THE SAME AS UNDISCLOSED INCOME. THE ASSESSEE HAS REPLIED THAT THE ALLEGATION OF NON ACCOUNTING IS NOT TRUE. IT IS CLAIMED THAT AFTER AUDIT THE ENTIRE AMOUNT HAS BEEN FULLY ACCOUNTED. THE RETURN OF INCOME FILED IS BASED ON SUCH AUDITED ACCOUNTS AND THEREFORE THERE ARE NO OMISSIONS AT ALL. 8B. THE ASSESSEES CONTENTION IS CONSIDERED. THE OMISSION FOUND RELATED TO THE PERIOD ENDED 31.3.02. THE BOOKS WERE SEIZED AT THE TIME OF SEARCH. THE RET URN NOW FILED IS AFTER THE SEARCH AND AFTER NOTICE U/S158BD WAS ISSUED TO THE ASSESSEE. BUT FOR THE SEARCH NONE OF THESE OMISSIONS WOULD HAVE COME TO LIGHT. THE ASSESSEE CANNOT CLAIM THAT THE DIFFERENCES IN TERM FEE WERE VOLUNTARILY OFFERED BY THE ASSESSEE FOR ASSESSMENT. 8C. AS POINTED OUT IN THE PRE - ASSESSMENT ORDER, SUCH OMISSIONS FOR 4 MONTHS FROM19.11.01 TO 27.3.202 CAME TO RS. 7,41,752/ - . SINCE THE ASSESSEE HAS ADOPTED THESE FIGURES ONLY AFTER THE SEARCH, THE ABOVE AMOUNT IS TREATED AS UNACCOUNTED. SINCE TERM FEE IS COLLECTED EVERY TERM SUCH OMISSIONS ARE MP 60/COCH/2014 . 4 ESTIMATED AT RS.19,82,672/ - PROPORTIONATELY FOR 12 MONTHS. THIS IS BROUGHT TO TAX AS UNDISCLOSED I COME FOR THE YEAR ENDED 31.3.02. ADDITION RS. 19,82,672/ - 7 THE GRIEVANCE OF THE LD AR IS THAT THE TRIBUNAL IN ITS ORDER DATED 3.1.2014 HAS NOT CONSIDERED THE ESTIMATED ADDITION FOR THE PERIOD OF 12 MONTHS ON THE BASIS OF THE FINDING OF CONCEALMENT FOR 4 MONTHS FROM 19.11.2011 TO 27.3.2002. 8 THE TRIBUNALS FINDING WITH REGARD TO THE ADDITION OF RS 19,82,672/ - AT PAGE 17 READ AS U NDER: 20. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITION OF RS.19,82,672. THE ASSESSING OFFICER FOUND THAT SEIZED MATERIAL AM 127 SHOWS THE RECEIPT OF MONTHLY FEE AND THE TERM FEE FOR THE SCHOOL RUN BY THE TRUST. SEIZED MATERIAL AM 16 IS THE REGU LAR CASH BOOK FOR THE PERIOD 12 - 12 - 2001 ONWARDS. THE ASSESSEE ALSO ADMITTED BEFORE THE ASSESSING OFFICER THAT THE RECEIPT OF TERM FEE AND MONTHLY FEE WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. THE ONLY CONTENTION OF THE ASSESSEE IS THAT ON THE DATE OF THE SEARCH, THE PERIOD FOR FILING THE RETURN OF INCOME HAS NOT EXPIRED. THE RECEIPT OF MONTHLY FEE AND TERM FEE WAS DISCLOSED TO THE DEPARTMENT IN THE REGULAR RETURN OF INCOME FILED SUBSEQUENT TO THE SEARCH, THEREFORE, IT CANNOT BE TREATED AS UNDISCLOSED INCOM E. 21. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 158BB(1)(D) WHICH READS AS FOLLOWS: (D) WHERE THE PREVIOUS YEAR HAS NOT ENDED OR THE DATE OF FILING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF 18 IT(SS)A NO.186/COCH/2005 SECTION 139 H AS NOT EXPIRED, ON THE BASIS OF ENTRIES RELATING TO SUCH INCOME OR TRANSACTIONS AS RECORDED IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE SEARCH OR REQUISITION RELATING TO SUCH PREVIOUS YEARS. I N VIEW OF THIS SUB CLAUSE, VIZ. SECTION 158BB(1)(D), WHEREVER THE DATE OF FILING OF THE RETURN OF INCOME U/S 139(1) HAS NOT EXPIRED, THE ENTRIES RELATING TO INCOME FOUND IN THE BOOKS OF ACCOUNT MAINTAINED IN THE NORMAL COURSE OF ACTIVITY BEFORE THE DATE OF SEARCH NEEDS TO BE EXCLUDED. IN THIS CASE, ADMITTEDLY, THE MONTHLY FEE AND TERM FEE COLLECTED FROM THE STUDENTS WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. IT WAS UNEARTHED DURING THE COURSE OF SEARCH OPERATION. BUT FOR THE SEARCH, THE COLLECTION OF MONTH LY FEE AND TERM FEE FROM THE STUDENTS WOULD NOT HAVE COME TO LIGHT. THE LEGISLATURE HAS PRESCRIBED A SPECIFIC MODE OF COMPUTATION OF UNDISCLOSED INCOME. WHEREVER, THE BOOKS OF ACCOUNT ARE MP 60/COCH/2014 . 5 MAINTAINED IN THE REGULAR COURSE OF ACTIVITY AND THE ENTRIES WERE FO UND IN SUCH BOOKS OF ACCOUNT, THE INCOME ARISING OUT OF SUCH TRANSACTION HAS TO BE EXCLUDED IN CASE THE DUE DATE OF FILING OF THE RETURN HAS NOT ENDED. IN THIS CASE, THE RECEIPT, VIZ. MONTHLY FEE AND TERM FEE WAS NOT RECORDED IN THE BOOKS 19 IT(SS)A NO.186 /COCH/2005 OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF ACTIVITIES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE TIME LIMIT FOR FILING THE RETURN OF INCOME HAS NOT EXPIRED, THE RECEIPT WHICH WAS NOT ENTERED IN THE BOOKS OF ACCOUNT C ANNOT BE EXCLUDED. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE JUDGMENT OF THE MADHYA PRADESH HIGH COURT IN NITIN MUNJE (2003) 185 CTR (MP) 255 IS NOT AP PLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 9 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL , AFTER ANALYZING THE RELEV ANT PROVISION { SECTION 158BB ( 1)(D) } HAD COME TO AN ELABORATE / CATEGORICAL CONCLUSION THAT THE MONTHLY FEES, AND TERM FEES COLLECTED FROM THE STUDENTS WERE NOT FULLY ACCOUNTED IN THE BOOKS OF ACCOUNT. IT WAS FURTHER HELD BY THE TRIBUNAL BUT FOR THE SEARCH OP ERATION, THE ABOVE CONCEALMENT W OULD NOT HAVE BEEN UNEARTHED. THE TRIBUNAL ALSO GAVE A CATEGORICAL FINDING THAT THE ASSESSEE ALSO HAD ADMITTED BEFORE THE AO THAT THE RECEIPT OF THE TERM FEE AND MONTHLY FE E WERE NOT FULLY ACCOUNTED IN THE B OOKS OF ACCOUNT . THE TRIBUNAL FURTHER HELD THAT THE ONLY CONTENTION THAT WAS RAISED DURING THE COURSE OF HEARING O F IT(SS) WAS THAT AS ON THE DATE OF SEARCH , THE PERIOD OF FILING OF RETURN HAS NOT BEEN EXPIRED AND WHAT IS DISCLOSED IN THE RETURN OF INCOME FILED CANNOT BE TREATED AS UNDISCLO SED INCOME. THUS, THE CONTENTION OF THE LD AR THAT THE TRIBUNAL HAS NOT CONSIDERED THE ESTIMATED INCOME FOR THE WHOLE YEAR WAS NEVER A QUESTION THAT WAS RAISED IN THE COURSE OF HEARING OF APPEAL IN IT(SS) NO. 186/COCH/2005. MOREOVER, ON IDENTICAL FA CTS A MP 60/COCH/2014 . 6 SIMILAR CONTENTION RAISED BY THE LD AR IN CASE OF M /S SABARIGIRI EDUCATIONAL & CULTURAL SOCIETY, IN MP NO. 61/COCH/2014 , ARISING OUT OF IT(SS) NO 188/COCH/2005 , WAS REJECTED. (M/S SABARIGI EDUCATIONAL & CULTURAL SOCIETY IS SISTER CONCERN OF THE ASSESSEE) 10 IN VIEW OF THE AFORESAID REASONING, WE HOLD THAT THE SECOND GRIEVANCE OF THE LD AR IS WITHOUT ANY LEGAL BASIS AND HENCE, THE PLEA OF THE ASSESSEE IS REJECTED. 11 IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF FEB 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 2 ND FEB 2016 RAJ* MP 60/COCH/2014 . 7 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN 1 DATE OF DICTATION 1 FEB 2015 2 DT ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 FEB 2016 3 DT ON WHICH THE APPROVED DRAFT COMES TO THE SR PS/PS 4 DT ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER 5 DT OF PRONOUNCEMENT 6 DT ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DT ON WHICH THE FILE GOES TO THE HEAD CLERK 8 DT ON WHICH THE FILE GOES TO AR 9 DT OF DISPATCH OF THE ORDER