ACIT, NEW DELHI vs M/S. MAHARAJI EDUCATION TRUST, GHAZIABAD

Income Tax Appellate Tribunal, [ DELHI BENCH “E”: NEW DELHI ]

Before: SHRI KULDIP SINGH & SHRI PRASHANT MAHARISHI

For Appellant: Shri Suresh Gupta, C. A

For Respondent: Ms. Paramita M. Biswas[CIT]–

Hearing: 21/09/2021Pronounced: 13/10/2021

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH “E”: NEW DELHI ] BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (Through Video Conferencing) ITA. No. 5138/Del/2016 (Assessment Year: 2007-08) ACIT, M/s. Maharaji Education Vs. Trust, Central Circle : 6, No. 1 – Santosh Nagar, Pratap Vihar, New Delhi. Ghaziabad – 201 009. PAN: AAATM5225F (Appellant) (Respondent)

Assessee by : Shri Suresh Gupta, C. A. Department by: Ms. Paramita M. Biswas[CIT]– DR Date of Hearing : 21/09/2021 Date of pronouncement : 13/10/2021

O R D E R PER PRASHANT MAHARISHI, A. M.

This appeal is filed by the Assistant Commissioner of Income Tax, Central Circle–6, New Delhi (the learned AO) and respondent is M/s. Maharaji Education Trust, (assessee) for Assessment Year (AY) 2007-08 against the order of the CIT (Appeals)–24, New Delhi (The learned CIT – A). 2. The ld. Assessing Officer has preferred the following grounds of appeal:-

“1. The order of Ld. CIT(A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 10,80,98,671/- by allowing the exemption u/s 11 of the Act. 3. On the facts and circumstances of the case, the CIT (A) has erred in holding that the assessee was entitled to exemption u/s 11 Page | 1

in view of the face that the assessee was charging capitation fees from the students seeking admission in MBBS/PG courses thereby indulging in commercializing the education and thus violated the objects for which it was created. 4. On the facts and circumstances of the case, the CIT (A) has erred in deleting the addition of Rs. 10,16,64,790/- of unaccounted receipts. 5. On the facts and circumstances of the case, the CIT (A) has erred in relying on the order of ITSC, when the order of ITSC itself is being contested on account of perversity of facts. 6. On the fact and circumstances of the case, the CIT (A) has erred in holding that the impounded documents don not pertain to trust and hence the trustee Mr. Mahalingam was justified in declaring additional income on that basis. 7. On the fact and circumstances of the case, the CIT (A) has erred in holding that Mr. Mahalingam has declared income on the basis of these documents, when he has not been able to establish direct nexus between entries in the documents and calculation of additional income. 8. The appellant craves leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal. “

Briefly stated the facts are that assessee is a charitable trust carrying on activities in the field of education. It is a part of Santosh Group, which is also engaged in the field of education in Medical, Dental, Para-medical and other courses. For AY 2007-08, assessee filed its return of income on 31st October, 2007 4. stating that it has excess of expenditure over income amounting to Rs. 2,69,34,371/-, and return of income was filed at Rs. ‘NIL’. The case was processed under Section 143(1) of the Income Tax Act, 1961 (the Act) on 5.02.2009. Subsequently, it was selected for scrutiny. Notice under Section 143(2) of the Act dated 31.07.2008 was issued to the assessee. The Assessing Officer noted that assessee is registered under Section 12A of the Act vide order dated 31.01.1995 as assessee is running medical, dental and para-medical courses at Ghaziabad and para-medical college at Chennai. Assessing Officer further noted that survey under Section 133A of the Act was carried out at the premises of the assessee trust at Ghaziabad on 10.08.2006 and certain documents were impounded listed Page | 2

at Annexure A-1 to A-11. Based on this the assessment under Section 143(3) of the Act was passed on 31.12.2009 by the ld. Assessing Officer determining total income of the assessee at Rs. 15,03,47,006/-. The learned assessing officer made the addition of (1) Rs. 2,50,74,146/- u/s 69C of the Act, (2) addition of Rs. 1,70,23,219/- was made on account of unexplained receipt as per Annexure A-10 u/s 68 of the Act and (iii) addition of Rs. 1,50,970/- was made on account of unexplained expenditure as per Annexure A-10 u/s 69 of the Act. 5. Assessee preferred an appeal before the Commissioner (Appeals)–12, New Delhi, who passed an order on 14.01.2011 and deleted the addition of Rs. 4,22,48,335/- against which the Revenue as well as the assessee both preferred an appeal before the co-ordinate bench. I. T. Appeal No. 1477/Del/2011 for assessment year 2007-08, which was decided on 17th March 2016. The co-ordinate bench vide para No. 8 upheld the order of the ld. CIT (Appeals) vide order dated 17th March 2016. 6. Thereafter , Search under Section 132 of the Act was carried out in Santosh group of cases on 27.06.2013. The case of the assessee was also covered under the search. During the course of search, it was found that group was charging capitation fee for admission in these courses and such fee was not reflected in the returns of income filed. Thereafter reasons were recorded by the ld. Assessing Officer on 7.11.2013 and notice under Section 148 of the Act was issued on 27.11.2013. The approval of the Commissioner of Income Tax was also obtained under Section 151 of the Act. Vide letter dated 26.12.2014 assessee submitted that the return filed originally on 31st October, 2007 may be treated as return of income filed in response to notice under Section 148 of the Act. Consequently, notice under Section 143(2) of the Act was issued on 10.10.2014. The assessee raised objection vide letter dated 24.11.2014. On 02nd February 2015, the objections of the assessee were communicated and disposed of as rejected. Thus assessment proceedings continued. 7. During the course of assessment proceedings, learned Assessing Officer noted that assessee is a trust established on 6.01.1993, Dr. P. Mahalingam is the managing trustee, and Smt. Kuilambal was the settler. Page | 3

Subsequently, the trust deed was amended on 4.03.1996 and the sole object of the assessee was converted to education only. The assessee was also granted approval under Section 10(23C)(vi) of the Act as per order dated 27th March 2009 with effect from 1.04.2007. 8. Learned Assessing Officer noted that during search, certain incriminating documents pointing to collection of unaccounted fees from the students were seized. On questioned, assessee submitted that assessee has shown receipt of Rs. 36.31 crores that also included the capitation fee under different heads of course-wise fees. Though in the reasons recorded ld Assessing Officer noted that unaccounted fee was to the tune of Rs. 19,64,97,500/-, but there was some dispute about the actual fee not accounted for in the books of a/cs by the assessee and, therefore, after examination of the details, the learned Assessing Officer sent the details to the concerned DDIT, Investigation, to know the exact amount of unaccounted fees, and how it is said that assessee has not accounted for the fees of Rs. 19,64,97,500/-. Learned AO submitted that on the basis of the copies of the re-conciliation furnished by the assessee along with the relevant photo-copies of the registrations and pointed out of the soft-ware disc, DDIT was intimated vide letter dated 2.02.2015 about discrepancy in the working of unaccounted fees worked out by the Investigation Wing. On 13.03.2015, DDIT wrote back to the Assessing Officer that since all the seized and impounded material has been handed over to the Assessing Officer, he was requested to take the material available into consideration and arrive at his own independent conclusions. On further examination the assessee submitted that the fee worked out in the reasons recorded is wrongly mentioned at Rs. 19,64,97,500/- whereas in fact it is Rs. 14,94,46,000/-. The assessee also objected to the exact amount of the working stating that:- a. Instead of ₹ 196,497,500 as mentioned in the reasons recorded by the learned assessing officer for reopening of the assessment, assessee has only received an amount of ₹ 149,446,004 the purpose of the project work. b. Further in amount of Rs 290,36,000 was not received during the year Under consideration Page | 4

c. the amount of fees pertaining to financial year 2005 – 06 is RS 1 70,85,000 instead of Rs. 10 2,85,000 d. the assessee further objected on the basis of the register where only there is an agreement for payment of the fees but same was not paid 9. The learned Assessing Officer noted that the sum of Rs 117,85,000 is for assessment year 2005 – 06 and further a sum of ₹ 74,651,210/– is already included by the assessee in the income and expenditure account as fees , thus , net unaccounted income of fees not declared in the income and expenditure account works out to ₹ 103,830,790/–. Other contention of the assessee were not accepted and learned AO held that amount of fees not declared in the return of income works out to Rs. 10,38,30,790/-. The ld. Assessing Officer thereafter made an addition of Rs. 10,38,30,790/- to the total income of the assessee i.e. excess of expenditure over expenditure of Rs. 10,80,98,671/-. The learned assessing officer further held that exemption u/s 11 of the income tax act to assessee is also not allowable and the income of the assessee was assessed in the status of Association Of Persons. Learned AO assessed assessee at a total income of Rs. 21,19,29,461/- by order under Section 143(3) read with Section 148 of the Act dated 19th March 2015. 10. The assessee aggrieved with the order of the ld. Assessing Officer preferred an appeal before the CIT (Appeals)–24, New Delhi. The assessee challenged the assumption of jurisdiction under Section 148 of the Act as well as the addition made by the Assessing Officer on its merits. Assessee also challenged the denial of exemption under Section 11 of the Act. As per ground Nos. 1–7 of the appeal, the assessee challenged re-opening of the assessment and from Ground Nos. 8 to 16 assessee challenged the addition on the merits as well as denial of deduction under Section 11, 12 and 13 of the Act. 11. The learned CIT appeal held that a. Merely because the assessee is engaged in commercial activity the exemption u/s 11 cannot be withdrawn. He further held that the denial of exemption u/s 11 is also not valid because of the reason that the learned assessing officer has reopened the matter in the Page | 5

current proceedings which has attained finality on account of the decision of the coordinate bench in the assessee’s own case for the same assessment year granting the assessee exempt u/s 11 of the act. b. The learned CIT (Appeals) held that re-opening is valid. c. With respect to the addition of Rs. 10,80,98,671/-, he held that only donation to the extent of Rs. 21,66,000/- can be taxed as anonymous donation is to be sustained and to be taxed separately under Section 115BBC of the Act. Thus on the balance sum of ₹ 108,098,671 a sum of ₹ 2,166,000 he directed the learned assessing officer to allow exemption u/s 11 of the act. d. On the merits of the addition of ₹ 103,830,790/– 12. He has further given his independent reasons for the deletion of the above amount as per para No. 4.1.10 of his order. Consequently, vide order dated 29.07.2016 he partly allowed the appeal of the assessee. Thus, Revenue is aggrieved with the order of the ld. CIT (Appeals) and has preferred this appeal. At the time of hearing, the ld. AR referred to an application dated 3rd 13. September 2021 under Rule 27 of the ITAT Rules stating that re- assessment has been upheld by the ld. CIT (Appeals) against the assessee and, therefore, this issue is decided against the assessee. Assessee is agitating the same by invoking the above Rule 27. It was stated that the impugned re-assessment is invalid and without jurisdiction as the same is completed without complying with legal provisions of requirement of provisions of Section 147 and 148 of the Act and, therefore, it is liable to be quashed. It further challenged that the re- assessment is also required to be quashed as the satisfaction recorded by the CIT, C-1, New Delhi, is mechanical and without application of mind. It further states that the re-assessment further suffers from jurisdictional error, as it does not meet the requirement of first proviso to Section 147 of the Act. 14. The ld. DR vehemently objected to the invocation of Rule 27 of the ITAT Rules stating that if assessee is so aggrieved by upholding the re-

assessment proceedings by the first appellate authority, it should have filed an appeal. 15. We have carefully considered the contentions of the parties and find that Rule 27 provides that though the respondent might not have appealed against on any of the grounds decided against him, he can support the order of the learned CIT – A . Honourable High Court in case of Sanjay Sawhney vs. PCIT in ITA No. 834/2019 dated May 18, 2020 has held that:

i. Rule 27 does not mandate an application to be made in writing, hence oral application cannot be refused.

ii. The word ‘thereon’ used in section 254 (1) implies that the tribunal has to confine itself to the ‘subject matter’ of appeal only. However, the ‘subject matter’ is comprehended so as to encompass the entire controversy between the parties which is sought to be got adjudicated upon by the Tribunal.

iii. Rule 27 cannot to be applied narrowly. Assessee cannot be precluded to challenge that part of CIT(A) which is against him. It cannot be said that by resorting to such grounds, the scope of ‘subject matter of appeal’ was being violated.

iv. In case an assessee having succeeded before CIT (Appeals) but opts not to file cross objection even when an appeal has been preferred by the department, from that it cannot be inferred that the assessee has accepted that part of the order which was against him.

v. When order of the CIT(A) is at large before the Tribunal, and as the assessee had taken the jurisdictional legal ground before CIT(A), the respondent (here assessee) would be entitled to defend the order of the CIT(A) on all grounds including on those held against him.

vi. He can rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him.

Thus, we find that assessee is entitled to invoke the above Rule. Hence, it is allowed.

16.

As the assessee has challenged the re-opening of the assessment, the ld. AR was heard on jurisdictional issue first, which goes to the root of the matter. 17. The ld. AR first referred to Paper book page Nos. 17 & 18 which are reasons recorded by the ld. Assessing Officer on 7.11.2013. He submitted that it shows that the Assessing Officer has not applied his mind before initiating action under Section 147 of the Act. He stated that in the present case search under Section 132 of the Act was conducted on 27.06.2013 and notice under Section 148 of the Act was issued on 27.11.2013 for assessment year 2007-08. He submitted that the material seized during the course of search by invoking the provisions of Section 143(3) of the Act for six assessment years i.e. Assessment Years 2008-09 to 2013-14. He submitted that action for Assessment Year 2007-08 was taken under Section 147 of the Act on the basis of material seized in the course of the search. He referred to the provisions of Section 153A of the Act and submitted that it bars invocation of the provisions of Section 147 of the Act. He submitted that Revenue unjustly has tried to extend the block period for the six assessment years by in- directly by invoking the provisions of Section 147 of the Act on the basis of the material seized during the course of search. He claimed that such action would run contrary to the provisions of Section 153A of the Act. Thus, he submitted that the action of the Assessing Officer of invoking Section 147 of the Act is clear violation of Section 153A of the Act. For this proposition, he relied on following judicial precedents:- i. Cargo Clearing Agency vs. JCIT 307 ITR 1 (Guj); ii. Rajat Shubra Chatterji v. ACIT (ITA 2430/Del/2015) 47 CCH 0135;

iii. ACIT v. Arun Kapur – 140 TTJ 249 (Amritsar); iv. Sangeeta Chhabravs ITO (ITA 1853/Del/2017 Dated 21.04.2017) ; v. G Koteswara Rao vs DCIT 64 Taxmann.com 159 (Viz Bench of ITAT); vi. Shri Navratan Kothari Vs ACIT(ITA 425/JP/2017 Dt 13.12.2017); vii. Sushil Gaur and Shelly Agarwal vs ITO in ITA No.1500& 1501/Del/2017 Dated 08.08.2017 reported in 58 ITR 57 (Del); viii. ITO vs Kamlesh Kumar ITA 86/Agra/2017 Dated:31.08.2018; ix. Girish Chandra Sharma vs ITO ITA987/Del/2018Dt:30.11.2018; x. M/s. Saurashtra Color Tones Pvt. Ltd. v. ITO ITA No 6276/Del/2018 dt 22.01.2020; xi. Shri Adarsh Agrawal v. ITO 2020 ITA No.777/DEL/2019 dt: 14.01.2020 (DB); xii. Nawal Oils & Containers P Ltd v ITO ITA No852/Del/2019 dated04.03.2020; xiii. City Life Projects P Ltd vs ITO ITA No.2668/Del/2019 dt; 17.09.2021.

18.

He further referred to the Paper book page No. 16, which is a notice dated 27.11.2013 issued under Section 148 of the Act. He submitted that notice did not mention the fact that it has been issued after satisfaction of authority under Section 151 of the Act. He submitted that non-mentioning of this jurisdictional fact renders the re-assessment notice invalid in law. For this proposition, he relied on the decision of the co-ordinate bench in GTL Ltd. Vs. ACIT 37 ITR (Trib) 376 which was based on the decision of Hon’ble Bombay High Court in DSJ Communications Vs. DCIT 222 Taxman 129 (Bom.) wherein it has been

held that non-mentioning of the above fact in the notice under Section 148 of the Act vitiates the entire initiation of re-opening proceedings.

19.

He further stated that at the time of issue of notice under Section 147 of the Act, the ld. Assessing Officer did not look at the return of income and the assessment history for assessment year 2007-08, which reached up to the level of the co-ordinate bench. He further referred to the original assessment order passed under Section 143(3) of the Act, the order of the CIT (Appeals) and the order of the co-ordinate bench. He further submitted that the ld. Assessing Officer as per letter dated 7.11.2013, required the assessee to provide the copy of the return, computation and audited financial statement, which were provided on 21.11.2013. Thus, the contention was that Assessing Officer issued 147 notices without looking at the return of income filed by the assessee and its consequent appellant history. He submitted that the failure of Assessing Officer to look into the return of income is a sufficient reason to quash the re- assessment proceedings. For this proposition he relied on the decision of Hon’ble Delhi High Court in Pr. CIT Vs. Meenakshi Overseas Pvt. Ltd. 395 ITR 677 (Del), Shamshad Khan Vs. ACIT (2017) 395 ITR 265 (Del.) and the decision of the co-ordinate bench in Brijpal Singh Tomar Vs. ITO in ITA. 2539/Del/2019 dated 26.04.2019. 20. He further referred to the proforma for obtaining sanction of the Act u/s 151 of the Act and referred to column No. 6.1 of the proforma stating that the Assessing Officer mentioned that assessed income of the assessee is Rs.15,03,47,006/-, but he missed out the consequent appellate orders where ultimately the income of the assessee was assessed at Rs. 21,66,000/-. He submitted that mentioning the incorrect income proves that the Assessing Officer has not examined the returned income of the assessee as well as consequent appellate order and mentioning of such incorrect fact shows non-application of mind both by the Assessing Officer and by the authorities granting sanction. To support his contention, he referred to the decision of the Hon’ble Delhi High Court in Residing Asia PTE Ltd. Vs. DDIT in WPC No. 614/2014 dated 31.08.2017 and passed Cyber City Pvt. Ltd. Vs. ITO in WPC No. Page | 10

12360/2018 dated 21.05.2019. He further referred to para No. 10 at Page Nos. 18 to 25 of the decision of Omkar Developers Vs. ITO in ITA. No. 6862/Del/2018 dated 11.05.2021. He further referred to the following judicial precedents of the co-ordinate benches to support his contentions:- i. Smt Kalpana Shantilal Haria Vs ACIT W.P.(L) No.3063/2017 dated 22.12.2017 (Bom); ii. M/s Ganesh Ganga Investments P Ltd vs ITO ITA No.1579/Del/2019 dt: 07.11.2019; iii. M/s VRC Township P Ltd vs ITO ITA No.1503/Del/2017 dt: 14.10.2020; iv. M/s Maheshwari Roller Flour Mills P Ltd vs ITO ITA No.4257/Del/2019 dt: 17.12.2020; v. M/s Madhu Apartments P Ltd vs ITO ITA No.3869- 3780/Del/2018 dt: 01.02.2021; M/s vi. Omkam Developers Ltd vs ITO ITA No.6862/Del/2018 dt: 11.05.2021. 21. He further submitted that there is a mistake in quantification of income escaping assessment where excess application is of Rs.2,69,34,371/-. Therefore, the income quantified in the reasons is inflated by a sum of Rs.11,08,84,956/-. 22. He further stated that the Assessing Officer himself has accepted in para No. 5.1 of the assessment order that out of alleged undisclosed receipt of Rs.19,64,97,500/-, a sum of Rs.746 lakhs is accounted for in the regular books of accounts and a sum of Rs.1,18,00,000/- is pertaining to assessment year 2005-06. Therefore, he worked out the addition of Rs. 10,38,30,790/-. However, in the reasons record he worked out such sum at Rs.19,64,97,500/-. Even otherwise he submitted that there is an error in computing the sum of Rs.19,64,97,500/-. Even otherwise he submitted that there is an error in computing the sum of Rs.19,64,97,500/- which is in fact Rs. 14,94,46,000/-. Thus, he submitted that re-assessment is based on incorrect facts. He submitted that From above facts, it is evident clear the reopening is based on incorrect facts, reliance is placed on following decisions: Page | 11

i. M/s Synfonia Tradelinks P Ltd vs ITO W.P.(C) No.12544/2018 dt: 26.03.2021 (Del); ii. Shamshad Khan vs ACIT 395 ITR 265 (Del); iii. Pr CIT vs M/S SNG Developers Ltd 404 ITR 312 (Del) approved by Hon’ble Apex Court by dismissing SLP of revenue in SLP © 42379/2017 Dt: 09.02.2018; iv. CIT vs Suren International Pvt Ltd 357 ITR 24 (Del); v. Pr. CIT vs. RMG Polyvinyl (I) Ltd (2017) 396 ITR 5 (Del), vi. CIT vs., Atlas Cycle industries (1989) 180 ITR 319 (P&H); vii. Siemens Information System Ltd., vs. ACIT & Others (2007) 293 ITR 548 (Bom.); viii. Ankita A. Choksey vs. Income Tax Officer And Others (2019) 411 ITR 207 (Bon.); ix. DCIT vs M/s KLA Foods (India) Ltd and others ITA No.2846/Del/2015 dt: 08.04.2019 x. M/s SPJ Hotels P Ltd ITA No.2857/Del/2017, xi. M/s Superior Build well P Ltd ITA No.3301/Del/2017, xii. M/s Superior Technologies P Ltd ITA No.2269/Del/2017, xiii. M/s Shiv Sai Infrastructure P Ltd ITA No.2527/Del/2017, xiv. ITO vs Randeep Investment (P) Ltd ITA No.4365 & 4005/Del/2015 dt: 26.03.2019 xv. Shree Balkrishan Aggarwal Glass Industries Ltd ITA No.5798/Del/2016 dt: 21.09.2020 23. He further submitted that non-application of mind is further evident from the fact that the Assessing Officer failed to consider the important answers given by Dr. P. Mahalingam. He referred to page Nos. 21 to 45 of the Paper book. He stated that Dr. P. Mahalingam never admitted any un-accounted in the hands of the appellant trust, but he has admitted un- accounted receipts in the hands of M/s. Santosh Trust. He further stated that the reasons shown that as per Annexure A-62 to A-64 and the other annexure such as A-58 to A-61 are not pertaining to this year, but to assessment year 2008-09 to assessment year 2013-14. Thus, the recording of the reasons for Annexure A-58 to A-64 is devoid of any merit demonstrates non-application of mind as Annexure A-58 to A-61 does not Page | 12

pertain to assessment year 2007-08. He further stated that the figure stated in Annexure A-63 and A-64 of Rs.318.30 lakhs and Rs.61.60 lakhs does not match with the amounts with the above Annexure, which are Rs.139.50 lakhs and Rs.60.10 lakhs. He submitted that this is blatant non-application of mind by the Assessing Officer. He submitted that in Pr. CIT Vs. Meenakshi Overseas Pvt. Ltd. (supra) Hon’ble Delhi High Court has held that reproduction of information without showing how the material referred in relates to the year does not show application of mind by the Assessing Officer. It was held that in absence of any specific discussion on the material on the basis of which independent prima facie belief is reached that income has escaped assessment, the re-assessment deserves to be quashed. For this proposition also he referred to the following decisions:- i. Pr. CIT vs. RMG Polyvinyl (I) Ltd., (2017) 396 ITR 5 (Del; ii. Pr. CIT v. G & G Pharma India Ltd 384 ITR 147 (Del.); iii. CIT vs Independent Media Pvt Ltd in ITA 108/2015 (Del); iv. Signature Hotels P. Ltd. Vs. ITO – [2011] 338 ITR 0051 (Del) v. CIT Vs. SFIL Stock Broking Ltd. 325 ITR 285 (Del); vi. Sarthak Securities Co. P. Ltd. Vs. ITO 329 ITR 110 (Del); vii. CIT Vs. Supreme Polypropolene (P) Ltd.ITA No.266/2011 (Del); viii. CIT vs. Multiplex Trading & Industrial Co. Ltd 378 ITR 351 (Del.); ix. Hindustan Lever Ltd. Reported in [2004] 137 TAXMAN 479 (BOM.); x. CIT vs. Greenworld Corporation 314 ITR 81 (SC); xi. M/s Synfonia Tradelinks P Ltd vs ITO (supra) (Del) 24. He further submitted that the reasons for re-opening must be complete, self-explanatory and relevant based on the relevant material in possession of the Assessing Officer. He relied upon the decision of Hon’ble Delhi High Court in Sabh Infrastructure Ltd. Vs. ACIT 398 ITR 198 (Del.) and BDR Builders & Developers Pvt. Ltd. Vs. ACIT 2017 OnLine SCC Del. 9425 wherein it has been held that the reason to belief have to be self-explanatory. Page | 13

25.

He further referred to the fact that there is mechanical approval granted by the CIT as inconsistency and omissions already pointed out. This should have been corrected before the approval was accorded. As they were not corrected, it shows that the above authority has acted mechanically in granting satisfaction under Section 151 of the Act. He relied on the decision of the Hon’ble Delhi High Court in Symphony Trade Links Vs. ITO (supra) and the decision of the co-ordinate bench in Eminent Computers Pvt. Ltd. Vs. ITO (ITA. No. 6372/Del/2019 dated 24.11.2020. He specifically referred to para Nos. 20 to 23 of the said decision. He further relied on following judicial precedents:- i. Chhugamal Rajpal vs. S.P. Chaliha & Ors. - 79 ITR 603 (SC); ii. Arjun Singh vs Asstt. Director of Income Tax (M.P.) reported in (2000) 246 ITR 363 (MP); iii. CIT vs M/s S.Goyanka Lime and Chemicals Ltd 231 Taxman 0073 Dated 15.10.2014 (MP) approved by Hon'ble Supreme Court in 64 taxmann.com 313 (SC). iv. Pr. CIT vs. N. C. Cables Ltd 391 ITR 11 (Del) v. Maruti Clean Coal& Power Ltd Vs ACIT WP(T) No.346 of 2017 Dated 03.01.2018 (Chattisgarh High Court); vi. German Remedies Ltd. vs. Dy. CIT (2006) 287 ITR 494 (Bom); vii. United Electrical Company PLtd. vs. CIT & Ors(2002) 258 ITR 317 (Del)"; viii. Central India electric Supply Co. Ltd. Vs .ITO, 333 ITR 237 (Del); 26. He further submitted that the first proviso to Section 147 of the Act is clearly applicable as first assessment under Section 143(3) of the Act was already made on 31st December 2009 and more than four years have elapsed from the end of the assessment year at the time of invoking jurisdiction under Section 147 of the Act. Assessee has disclosed the complete facts and there is no allegation that assessee failed to disclose truly and fully all material facts during the assessment proceedings. For this proposition, he relied upon several judicial precedents such as :-

i. CIT vs Viniyas Finance & Investment Pvt Ltd ITA No.271/2012 (Del) dt: 11.02.2013 that “On going through the purported reasons we find that there is no mention of the respondent-assessee not having made a full and true disclosure of the material facts necessary for assessment.” ii. CIT Vs. DCM Ltd.,(2009) 24 DTR 72 (Del.), iii. Haryana Acrylic Manufacturing Co. vs. CIT and Anr 308 ITR 38 (Del.), iv. Wel Intertrade (P) Ltd. & Anr. vs. ITO 308 ITR 22 (Del), v. CIT vs. Purolator India Limited 343 ITR 0155 (Del), vi. BLB Limited vs. ACIT 343 ITR 0129 (Del), vii. JSRS Udyog Limited & Another vs. ITO 313 ITR 321(Del.) viii. Atma Ram Properties Pvt. Ltd. vs. DCIT 203 Taxman 0408 (Del).

27.

In the end, he supported his contention by decision of the Hon’ble Supreme Court in NDTV Vs. DCIT dated 3.04.2020 wherein it has been held that the assessee has to disclose the primary facts as a duty and assessee is not required to disclose the secondary facts. He further submitted that it is held that assessee is also not required to give any assistance to the Assessing Officer by disclosure of other facts. It is for the Assessing Officer to decide what inferences should be drawn from the above facts. Thus, he stated that re-opening is not sustainable. 28. The ld. DR vehemently supported the order of the ld. Assessing Officer and the CIT (Appeals). She submitted that re-opening has been correctly initiated. The ld. DR further submitted that a. the income amount mentioned in column No. 8a of the proforma has been correctly mentioned. He stated that at this income the assessee was originally assessed. b. It was further referred to serial No. 11 wherein the satisfaction is challenged. It was stated that ‘I am satisfied’ is a proper satisfaction as the reasons recorded are backed by proper material referring to page No. 18 of the Paper book. She Referred to the decision of Honourable Delhi High court in case of Experion Page | 15

Developers Limited as well as decision of Synfonia Trade link where the earlier decision is upheld. c. re-opening has been made on the statement of Mr. Mahalingam with respect to the several discrepancies pointed out by the ld. AR in the figures. She submitted that these are figures given by investigation wing , but not absolute figures based on which re- opening has been made. The figures are given by the Investigation Wing. The ld. DR supported her argument by the decision of Aas Paas Multimedia Ltd. of Hon’ble Gujarat High Court 405 ITR 512 , Ankit Aggarwal of Hon’ble Rajasthan High Court and Mona Mahesh BHojani [2017] 83 taxmann.com 363 (Gujarat) of Hon’ble Gujarat High Court. d. at the time of recording of the reasons, the Assessing Officer is not required to correctly state the quantum of escaped income otherwise what is left to be done at the time of the assessment. It was further stated that the reasons are required to be noted by preponderance of probabilities and it cannot be ‘cast iron’ figures at the time of recording such reasons. She further relied upon the decision of the Hon’ble Delhi High Court in the case of Paramount communications Limited . She also referred to the decision of the Hon’ble Supreme Court in the case of Rajesh Jhaveri. e. This assessment year was beyond the set of years covered u/s 153A of the act and therefore there is no bar in invoking provision of section 147/148 of the act. She submitted that bar “ Notwithstanding ‘ clause applies only with respect to the six years contained in 153 A proceedings. This AY 2007-08 is 7th prior years, which is validly covered u/s 147 of the Act. she submitted that provisions of Section 153A of the Act mandate only the re- assessment of six preceding years. If the material is available prior to that period, the Act mandates the same to be assessed under Section 147 of the Act only. Therefore, she submitted that for assessment year 2007-08, which is beyond the bracket period of six years has been correctly framed under Section 147 of the Act by the ld. Assessing Officer. Page | 16

f. Thus, it was submitted that there is no infirmity in the reasons recorded or assumption of jurisdiction under Section 147 of the Act by the ld. Assessing Officer. 29. As this appeal is been filed by the learned AO, on the merits of the appeal the learned CIT DR submitted that the learned assessing officer has correctly rejected the claim of the assessee u/s 11 of the income tax act and further the amount quantified for the addition was based on the actual working made by the learned assessing officer considering the amount already booked by the assessee in its income and expenditure account. She submitted that the addition has been made on the basis of the statement of Mr. Mahalingam and therefore no infirmity could be found in the order of the learned assessing officer. She further stated that the learned CIT – A has ignored all the findings of the learned assessing officer and incorrectly granted the exemption u/s 11 of the act as well as deleted the addition and retains only the addition to the extent of an anonymous donation. 30. Countering the submission of the learned CIT DR on the merits of the case, the learned authorised representative submitted that:- i. with respect to Ground Nos.2 and 3 of the appeal of the learned AO with respect to Allowance of exemption u/s 11 of IT Act of Rs.10,80,98,671/-, it was submitted that reason given by the AO is in para 6 at page 7 of assessment order, as per which, the assessee respondent is not engaged in charitable activities and activities of the assessee trust is commercial in nature. The Ld AO found that the appellant has been charging different amount from different students on the basis of the bargaining with the students or his/her parents. The AO has confirmed that sec 2(15) are not satisfied in the present case. The respondent trust is duly registered u/s 12A of the Act as charitable trust, registration has been granted by the CIT from 13.01.1995 (PB 103), and the same has not been withdrawn till date. So far as the application of sec 2(15) is concerned, it is submitted that as per proviso to sec 2(15), the applicability of this section is restricted to the entities pursuing any other objects of public utility implying that the institutions engaged in Page | 17

education/medical relief are not within the ambit of the above proviso. The CBDT Circular No.11/2008 dt: 19.12.2008 in para 2.1 clarifies that “The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15), i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute ‘charitable purpose’ even if it incidentally involves the carrying on of commercial activities.”

Reliance is placed in the decision of DIT(E) vs Sabarmati Ashram Gaushala Trust TA No.1162 of 2013 (dt: 15.01.2014 (Guj).

ii. On the objection of Ld AO that the institution was run by profit motive drawing support from the charge of capitation fee from the students, the respondent seeks to submit that the respondent trust is under obligation to apply the income including capitation fee for the purpose of advancement of education/medical relief. He referred to para 2 of the trust deed dt: 06.01.1993 internal page 7 therein. In the face of these facts, the case of the appellant is directly covered by the decision of Hon’ble Apex Court in the case of TMA Pai Foundation & Ors. vs. State of Karnataka & Ors., (2002) 8 SCC 481 held as under: “69. In such professional unaided institutions, the Management will have the right to select teachers as per the qualifications and eligibility conditions laid down by the State/University subject to adoption of a rational procedure of selection. A rational fee structure should be adopted by the Management, which would not be entitled to charge a capitation fee. Appropriate machinery can be devised by the state or university to ensure that no capitation fee is charged and that there is no profiteering, though a reasonable surplus for the furtherance of education is permissible. Conditions granting recognition or affiliation can broadly cover academic Page | 18

and educational matters including the welfare of students and teachers."

Further reliance is placed in the decision of Islamic Academy of Education & Anr. Vs. State of Karnataka & Ors. (2003) 6 SCC 697. 3 The exemption u/s 11 has been allowed to the trust in other years except the year under consideration. The co-ordinate Bench of ITAT though common order in respondent case for AY 2004-05 to AY 2007-08 (PB 74-92) has allowed exemption u/s 11 (Relevant para 10 PB 90). The above exemption for AY 2007-08 has been withdrawn by the AO in reassessment order under appeal.

iii. Likewise in subsequent years, there is no denial of exemption u/s 11 in the Hon’ble Income Tax Settlement Commission order dt: 27.11.2015 (PB 104-133) and also acknowledgment of the fact that in para 8 to 8.3 at pages 117-118 that the registration u/s 12AA and notification under 10(23C)(vi) has been granted and the same has not been withdrawn. Withdrawal of exemption u/s 11 is a case of judicial in-discipline and against the principle of consistency. The reason being the lower authorities i.e. DCIT are not competent to revisit the issue of grant of exemption u/s 11 of the Act based on the registration u/s 12A granted by the higher authorities i.e. CIT. The Ld CIT(A) has rightly followed the circular No.11 of 2008 and proviso to sec 2(15) in para 4.1.4 at internal page 13 and the Hon’ble ITAT order dt: 17.03.2016 in appellant’s own case for assessment years including the AY under appeal to allow exemption u/s 11 of IT Act. He referred to para 4.1.5 at internal page 13-14. In the context of sec 11 of IT Act, the Hon’ble Apex Court in case of CIT Vs. Andhra Pradesh State Road Trpt. Road Corpn. 159 ITR 1 (SC) have held that a trust or institution may run on commercial lines. If the dominant object is to carry out charitable activities and not to earn profit, the purpose would not loose charitable character merely because some profit arose from the activity. No doubt, profit may result in the running of the enterprises, but the balance of the income by way of profit was again to be spent for a purpose of Page | 19

charitable activity. If that is the case, it was held to be entitled to exemption. During assessment, the AO can only determine whether the income has been applied for charitable purpose. The reasons for denying exemption in the present 4 case is that the assessee is earning surplus year after year even though the assessee has submitted that it had applied 85% of its income every year for charitable purposes. Once the Commissioner had made the determination that the trust was a charitable one, the AO is not entitled to re-examine the question as to whether the trust is charitable or not, as held by the Hon'ble Supreme Court in the case of Surat City Gymkhana 300 ITR 214 (SC). The Hon'ble Punjab & Haryana High Court in the case of Sonepat Hindu Educational and Charitable Society Vs. CIT (2005) 278 ITR 262 have held that "Registration of an Institution u/s 12A is sufficient proof of it being established for charitable purpose."

Similar view has been affirmed in the decisions of CIT Vs. Ootacamund Gymkhana Club 110 ITR 392 (Mad.), Madhya Pradesh Madhyan Vs. CIT 256 ITR 277 (MP) and Hiralal Bhagwati Vs. CIT ) 246 ITR 188, 193 (Guj.) approved by Apex Court in above decision and Ahmedabad Urban Development Authority, 2017 396 ITR 323 (Gujarat). The power of such cancellation is vested only with the Commissioner and not with the AO. The AO cannot determine that the objects of the institution are not charitable. However, till such time that the registration u/s 12A or 12AA is not cancelled, it has to be presumed that the trust or institution is charitable. Once that is so, the AO during assessment, cannot hold that the trust or institution is not 'eligible' for deduction u/s 11. Merely making of profits or of surplus will not disentitled an eligible trust from exemption u/s 11 of the Act as long as the objects of the trust are charitable, its activities are genuine and the income is applied towards the charitable purposes authorized to be undertaken by the trust or the institution; conversely, if the income is diverted to persons mentioned in section 13 of the Act or is spent for purposes Page | 20

which are not charitable, exemption may be denied to the assessee trust or institution. No such converse finding has been given by the AO in this case. Respondent also draws support from Circular no.194/16- 17 II(AI) in which the question referred to board is; whether an educational institution existing solely for educational purpose but which shows some surplus at the end of the year is 5 eligible for exemption. The board had replied this question in the following manner:

“If the profit of the educational institution can be diverted for the personal use of the proprietor thereof, then the income of the educational institution will be subject to tax. However, there may be cases where the educational institutions may be owned by the trusts or societies to whom the provisions of section 11 may be applicable. Where all the objects of these trusts are educational, and the surplus, if any, from running the educational institution is used for educational purposes only, it can be held that the institution is existing for educational purposes and not for purposes of profit. However, if the surplus can be used for non-educational purposes, it cannot be said that the institution is existing solely for educational purposes and such institutions will not be liable for exemption u/s 10(22). But, in such cases, the applicability of section 11 can be examined and if the conditions laid down therein are satisfied, the income will be exempt u/s 11.”

iv. With respect to Ground Nos.4 to 7 In the above ground, the department is aggrieved by the deletion of addition of Rs.10,16,64,790/- of unaccounted receipts. The department has computed the unaccounted receipts on the basis of seized annexure A-58 to A-64 (PB 17-19 of reasons recorded). The Ld CIT(A) has taken into account-seized annexure A-21 (Back Page 114) which is complete summary of unaccounted receipts and unaccounted expenditure. In the annexure A-21, a higher amount of collection and receipts are shown which is Rs.24.21 Crore and Rs.24.86 Crore (PB 162). It is may kindly be noted that there were details of Page | 21

unaccounted receipts as well as unaccounted expenditure have been found in the seized material and hence the AO has to take into consideration the seize material in its totality and cannot apply the pick and choose theory which is totality un-justified and bad in law. Reliance is placed in the decision of Hon’ble Apex Court in the case of Indore Malwa United mills Ltd vs State of Madhya Pradesh 60 ITR 41 (SC) wherein it has been held that it is not open to the assessing authorities to pick and choose some of the part of the records before them 6 which were more favorable to them. Similar reliance is placed in the decision of Jurisdictional Delhi High Court in the case of CIT vs Indeo Airways P Ltd 349 ITR 85 (Del). The Ld CIT(A) based on the finding given by the settlement commission for AY 2008-09 to AY 2014-15, order U/S 245D(4) dt: 27.11.2015 (Relevant para 15 at internal page 21) and finding in para 27 at page 27 therein determined the expenditure to the extent of 78% as application of income for charitable purposes and the balance amount of 22% in each year is held to be spent for purposes other than charitable purposes. The above balance expenditure which comes to Rs.5,46,92,000/- for AY 2007-08 was considered as net surplus available for application u/s 11 of IT Act. Out of that surplus, the Ld CIT(A) allowed benefit of set off of Rs.3 Crore income on that account offered by the Managing Trustee Dr P Mahalingam in its return of income for AY 2007-08. The offer of additional income of Rs.3 Crore has been considered by the co- ordinate Bench in ITAT order for AY 2007-08 in ITA No.1477/Del/2011 dt:17.03.2016 in para 8.4 therein and the Hon’ble ITAT has approved the grant to exemption u/s 11 of IT Act as allowed by the Ld CIT(A). Although decision of the Settlement Commission is not for the AY 2007-08 and strictly not binding on authorities for the matters for AY 2007-08 but Ld CIT(A) has followed the above finding in other years but for the sake of consistency, the surplus of 22% is accepted by the Ld CIT(A). A Chart showing the calculation of exemption u/s 11 for the assessment year under appeal after taking into account the seized Page | 22

annexure A-21 (Back Page 114) shows that the ultimate income left after granting exemption u/s 11 is Nil.

He therefore submitted that the issue of taxability of the above sum is also correctly decided by the learned CIT – A. In the result he submitted that appellant prays that the reopening of the assessment proceeding is held to be invalid and even otherwise on the merits of the addition the issue is correctly decided by the learned CIT – A.

31.

We have carefully considered the rival contentions and perused the orders of the lower authorities. Both the parties have referred to plethora of judicial precedents. We have considered all those decisions during the course of our adjudication process. Though all these judicial precedents have been decided on the facts of their own case however, The relevant judicial precedents are referred to at the places where we found them to be relevant. 32. In this case we find that in assessment order u/s 143 (3) of the income tax act was passed by the additional director of income tax exemption for assessment year 2007 – 08 on 31st of December 2009 by assessing the total income of the assessee at ₹ 150,347,006/–. This assessment was framed pursuant to survey u/s 133A of the income tax act was conducted on the assessee on 10 August 2006 where certain documents were impounded. The above assessment was challenged before the learned CIT (A) and who passed an order on 14th/1/2011 which was further challenge before the coordinate bench in ITA number 1477/Del/2011 where the coordinate bench decided this issue wide order dated 17th of March 2016 where all the appeals of the revenue were dismissed at all the appeals of the assessee were allowed. It is not in dispute that assessee is registered u/s 12 A of the income tax act by the registration certificate dated 31/1/1995 and further registered for exemption u/s 10 (23C) (vi) vide order dated 27th of March 2009. 33. This assessment was reopened by the learned assessing officer by recording the reasons on 7/11/2013 (the date called out from the pro forma for obtaining the approval u/s 151 of the income tax act for reopening of the assessment) as Under:- Page | 23

“M/s Maharaj Ji educational trust assessment year 2007 – 08 subject: reasons for reopening of the assessment u/s 147 of the IT act, 1961 in the case of Maharaj educational trust assessment year 2007 – at – regarding A search and seizure operation u/s 132 of the IT act was carried out on 27.060 2013 in Santosh group of cases. During the search operation it was observed that various medical, dental, paramedical and para dental courses run by the group Under the umbrella of two trusts – M/s Maharaji educational trust and M/s Santosh trust The detailed working of unaccounted receipts on account of capitation fee/donation on the basis of the seized documents has been prepared. As per this working the total unaccounted receipts for the financial year 2006 – 07 has been worked to ₹ 196,497,500/– in the case of Maharaj educational trust. The list of Year wise and annexure wise summary of such unaccounted receipt of fee/donation received in cash, worked out on the basis of seized documents is reproduced as Under:- annexure 2006 – 07 /financial year 21,00,000 A – 58 19,75,000 A – 59 74,51,500 A – 60 2,70,61,000 A-61 13,79,50,000 A – 62 1,39,50,000 A – 63 60,10,000 A – 64

19,64,97,500 Total

Dr P Mahalingam, in his statement recorded u/s 132 (4) of the IT Act, during the course of search on 27/6/2013 (which continued and concluded on 29.6.2013) admitted the fact in unambiguous terms that the receipts appearing in seized documents/registers were not recorded in the regular books of accounts of the trust and the source of such receipts which were in addition to the regular fees, is in the form of unaccounted fees /donations from various students who are allowed admission in various courses of the institution. In view of the above I have reason to believe that assessee has failed to disclose truly and fully all metal facts in his return of income for above assessment year, the income chargeable to tax for financial year 2006 – 07 relevant to assessment year 2007 – 08 has escaped assessment within the meaning of Section 147 of the act. I, deem it, proper to initiate the proceedings Under the provisions of Section 147 of the act 1961. If approved notice u/s 148 may be issued for the assessment year 2007 – 08, in this case the assessment u/s 143 (3) has been completed wide order dated 31/12/2009. Hence approval of CIT ( C ) –I , New Delhi is requested as per provisions of Section 151 (1) of the IT Act, for issuance of notice u/s 148 of the act, 1961.” 34. Based on the above reasons notice u/s 148 of the income tax act was issued to the assessee on 27/11/2013. The above reasons were also given to the assessee along with the pro forma for obtaining approval u/s 151 of the income tax act. In this case a serial number 8 (A) the total income originally assessed by the learned assessing officer was mentioned at ₹ 150,347,006/–. Further the date of recording of the reasons were also taken from the pro forma for approval where the AO has signed the above reform on 7/11/2013 but the reasons recorded by the learned assessing officer are undated. At para number 11 with respect to the satisfaction recorded by the additional Commissioner on Page | 25

the reasons recorded by the assessing officer it was stated by additional CIT, Cr-III , New Delhi that:- “ yes, I am satisfied that it is a fit case for issue of notice u/s 148.” Further on 22/11/2013 CIT C – I, New Delhi at serial number 12 of the pro forma where it is to be stated that whether the Commissioner or board are satisfied on the reasons recorded by the ITO/AC/DC that it is a fit case for issue of notice u/s 148, the learned CIT recorded her satisfaction that:- “yes, I am satisfied that it is a fit case for issue of notice u/s 148 of the IT act.” 35. It is also important to note that on the basis of the above search the assessee filed petition for settlement of the tax issue dispute before the income tax settlement commission in case of the assessee, Santos trust for the assessment year 2008 – 09 to 2014 – 15, which was decided by the order dated 23/05/2014. Accordingly, in the assessee trust total disclosure for these assessment years was made of ₹ 33.87 crores whereas in the Santos trust it was ₹ 18 crores. Further for the impugned assessment year in case of the trustee Dr P Mahalingam the assessee also offered a sum of ₹ 3 crores which was assessed by order u/s 143 (3) of the act for assessment year 2007 – 08 at the total income of ₹ 30,942,840/–. 36. It is also important to note that assessee has recorded the total fee income of ₹36,31,73,074 the financial year 2006 – 07 relevant to the assessment year 2007 – 08. According to the objects of the trust, it is established for the sole purpose of providing education through medical, dental, paramedical in para dental colleges located at Chennai and at Ghaziabad. 37. The assessee raised an objection on 24/11/2014 on the issue of notice u/s 148 of the act, which was disposed of by the learned assessing officer by passing an order on 2/2/2015 rejecting all the contentions of the assessee. During the course of reassessment proceedings assessee explained before the learned assessing officer that the fee recorded in the reasons for reopening of ₹ 196,497,500 by the learned assessing officer Page | 26

based on the investigation wing report is incorrectly mentioned and the correct figure is ₹ 149,446,000 the assessee also submitted the detailed reconciliation, which was also verified by the learned assessing officer. It was submitted that out of total sum of ₹ 196,497,500, a sum of Rs 170,85,000 pertains to financial year 2005 – 06 (assessment year 2006 – 07) and further amount of Rs 2 90,36,000 as stated in the seized document itself is not at all received and further a sum of Rs 1 5,26,500 is pertaining to financial year 2007 – 08 (pertaining to assessment year 2008 – 09) which is already been taken care of in the case of application before the settlement commission. Further, there is a difference of ₹ 4,296,000 in seized document itself. Therefore the amount pertains to financial year 2006 – 07 is only ₹ 149,446,000 against which the assessing officer has recorded in the reasons the amount of ₹ 196,497,500. 38. It was stated that out of the above sum of ₹ 149,446,000/– a sum of ₹ 74,651,210/– has already been transferred and taken in the fees account in the regular books of accounts maintained in the normal and regular course of manner which has also been verified by the learned assessing officer during the course of original assessment as well as during the course of reassessment. It was further stated that a sum of Rs 170,23,219/– has already been taken into income from the project work receipts while finalizing the assessment order for the assessment year 2007 – zero at by the concerned assessing officer and therefore this sum his already been taxed in the original assessment and cannot be taxed twice and cannot be said to be an escaped income. It was further stated that a sum of Rs. 2 52,25,116 have already been charged to tax as income of the assessee trust file finalizing the original assessment proceedings relating to assessment year 2007 – 08. It was further stated that there is no unaccounted income in the seized documents. The assessee submitted the detailed reconsideration is Under:- serial particulars amount in Rs. amount in Rs. number Amount received during the 14,94,46,000

year financial year 2006 – 07 as the reconciliation statement filed and examined amount out of project work 7,46,51,210 Less receipts transferred to fee account during the year in the books of accounts as disclosed in the income tax return excess of receipt taken in 60,19,364 Less settlement commission is opening balance for the assessment year 2008 – 09 Amount of project work 1,70,23,219 Less receipt already added as income of the trust in assessment order passed u/s 143 (3) for the assessment year 2007 – 08 Balance of receipts 5,32,52,207

amount of expenses of the 2,52,25,116 Less project work already added as income of the trust in assessment year passed for the assessment year 2007 – 08 and receipts already accounted Net amount of receipts 2,65,27,091

Expenses out of the 2,65,27,091 Less remaining receipts as appears in dSR which also

applied in charitable activities Excess if any Nil

Therefore, the assessee claimed that there is no unaccounted income required to be taxed in the hands of the assessee.

39.

Based on the above was submission made by the assessee, the learned AO verified the claim of the assessee and the seized registers also with the details furnished by the assessee. He also verified these details from the hard disk containing accounts of the assessee seized during the search. (Paragraph number 5 of the assessment order). 40. Therefore the learned assessing officer noted in the assessment order in paragraph number 5 as Under:- “ since, the amount of ₹ 196,497,500/– was worked out by the investigation wing during post search proceedings, this information was sent to the concerned DDIT (investigation) why this office letters dated 2 – 2 – 2015 and 5 – 3 – 2015. Copies of reconciliation furnished by the assessee, relevant photocopies of the registers (where discrepancies were found,) and printouts of hard disk were sent to him. He was requested to intimate observation if any to this office. The DDIT wide is letter dated 13/3/2015 stated that “ since all the seized and impounded material has been handed over to you by this unit, you are requested to take due cognizance of the material available with you and arrive at your own independent conclusions please.” 41. Thereafter the learned assessing officer made his own exercise after examining the copy of the reasons again as stated in paragraph number 5.1. The learned assessing officer further agreed that a sum of ₹ 74,651,210/– is already included in the income and expenditure statement and further the sum of Rs 1 17,85,000/– instead of Rs 12,85,000/– is pertaining to financial year 2005 – 06 (assessment year 2006 – 07) and therefore out of the sum of ₹ 196,497,500, he reduced a sum of Rs 117,85,000 and found the balance fees of ₹ 178,482,000. He Page | 29

further noted that as sum of ₹ 74,651,210/– is already income included in the income and expenditure statement the amount of the balance sum required to be added is only ₹ 103,830,790/–. Thereafter he denied the exemption to the assessee u/s 11 of the act and made an addition of ₹ 103,830,709 to the returned income of the assessee of ₹ 108,098,671/– and determined the total income of the assessee has ₹ 211,929,461. The learned CIT – A upheld the reopening of the assessment but has granted assessee the benefit of Section 11 and therefore the addition was deleted. 42. On the above set of the facts, we need to examine whether the reopening is valid or not and further if the reopening is valid, whether the addition has been made correctly by the learned assessing officer or not. 43. The first argument of the learned authorised representative is that the present assessment year i.e. assessment year 2007 – 08 could not have been reopened by invoking the provisions of Section 147 of the income tax act as the search in the case of the assessee took place on 27/6/2013. He further referred to the provisions of Section 153A of the act, which bars the application of provisions of Section 147 of the income tax act. In the present case, the date of search is indisputably 27/6/2013, therefore the previous six-assessment year covered Under the provisions of Section 153A are assessment year 2008 – 09 to assessment year 2013-14. The assessee has relied upon the plethora of judicial precedents to say that the provisions of Section 147 of the income tax act are bad when there is assessment pursuant to search u/s 153A of the act. We have carefully gone through all the decisions cited before us on this issue by the learned authorised representative do not agree because all those decisions are related to those six assessment years which are covered Under the provisions of Section 153A and not prior to that. In the present case the issue before us is whether, for assessment year 2007 – 08 which is prior to the period of six assessment years covered u/s 153A of the act could be disturbed by invoking the provisions of Section 147 of the act or not. This issue is squarely covered against the assessee by the decision of the honourable but the progress High Court in case of Radha ballabh Gupta versus ACIT 288 ITR 347 wherein it has been held that where be Page | 30

on the block assessment years (six specified assessment years u/s 153A) if other conditions are satisfied, the learned assessing officer can invoke provisions of Section 147/148 of the income tax act. The learned assessing officer is only barred to issue notice u/s 148 where assessment years are covered and jurisdiction is rightly assumed u/s 153A/153C of the act. Accordingly, we uphold the action of the learned assessing officer so far this issue is concerned. 44. The next ground taken by the learned authorised representative is that as the approval granted by the learned Commissioner of income tax merely states that “yes, I am satisfied that it is a fit case for issue of notice u/s 148 of the IT act.” Is invalid. We find that this issue is squarely covered against the assessee by the decision of the honourable Delhi High Court in case of Experion developers private limited versus ACIT 422 ITR 355 (Del) wherein it has been held as Under:-

“(d) Whether proper sanction as required under section 151 of the Act was obtained or not ? 40. It is a requirement for issuance of notice for reopening of assessment proceedings under section 151 of the Act that the Principal Chief Page No : 0386 Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for issuance of such notice. 41. In the recorded reasons also, it has been noted that "necessary sanction to issue notice under section 148 of the Act is being obtained separately from the Principal Commissioner of Income-tax, Delhi-03, New Delhi as per the provisions of section 151 of the Act". In its reply on this issue, in the order dated September 25, 2019 dismissing objections of the petitioners to the notice under section 148, it has been pointed out that the approval of the competent authority was obtained vide note sheet entries dated March 31, 2019 and the same was enclosed along with the order. However, the same has not been annexed to the present petitions. It has been argued that obtaining approval of the Additional Commissioner of Income-tax is not provided for under section 151 and therefore, the same is not justified. However, in the present case, approval/sanction has been obtained from both, the Addl. Page | 31

Commissioner of Income-tax as well as the Principal Commissioner of Income-tax, which is the appropriate authority for issuance of such sanction, as noted in CIT-8 (Erstwhile CIT-III) v. Soyuz Industrial Resources Ltd. [2015] 58 taxmann.com 336 (Delhi). 42. Further, it is the case of the petitioner that there was no independent application of mind by the sanctioning authorities for according approval. Whilst it is the settled position in law that the sanctioning authority is required to apply his mind and the grant of approval must not be made in a mechanical manner, however, as noted by the Division Bench of the Calcutta High Court in Prem Chand Shah (Jaiswal) v. Asst. CIT [2016] 383 ITR 597 (Cal) ; [2016] 67 taxmann.com 339 (Cal), the mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted under section 151(2) when the reasons on the basis of which sanction was sought could not be assailed and even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires. The decision in United Electrical Co. P. Ltd. v. CIT [2002] 258 ITR 317 (Delhi), as relied upon by the petitioner is distinguishable from the present case, as in the said case, there was no material on record to provide foundation for Assessing Officer's reasons to believe. Therefore, it was held that the recording of the satisfaction by the Assessing Officer was unjustified and without independent application of mind. However, there is no requirement to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the Assessing Officer. Similarly, in Virbhadra Singh v. Deputy Commissioner [2017] 9 Page No : 0387 ITR-OL 519 (HP) ; [2017] 88 taxmann.com 888 (HP) where the competent authority was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded with proper application of mind, by recording "I am satisfied that it is a fit case for issuance of notice under section 148", the issuance of notice under section 147/148 was held to be valid. 43. Therefore, it is clear that necessary sanction for issuance of notice under section 148, as required under section 151 had been obtained.”

45.

The identical issue was also challenged before the honourable Delhi High Court in case of Synfonia Trade links Pvt Ltd in 435 ITR 642 (Del) Page | 32

wherein the honourable High Court after considering the decision of the Experion Developers has held as Under:-

“10.4. The reliance placed by Mr. Singh on paragraphs 40 to 43 of the judgment of a Division Bench of this court in Experion Developers Pvt. Ltd. v. Asst. CIT [2020] 422 ITR 355 (Delhi) in support of his submissions that the order granting sanction for initiation of proceedings under section 147 was valid is misconceived as a careful perusal of paragraph 42 of the said judgment would show that the learned judges were of the view that there was no requirement to provide elaborate reasoning while granting approval if the Principal Commissioner was satisfied with the reasons recorded by the Assessing Officer. In that case, while according sanction, the Principal Commissioner had at least paid lip service to the provision by noting "I am satisfied that it is a fit case for notice under section 148". In the instant case, respondent No. 2, i. e., the Principal Commissioner, has not even made such an endorsement. This apart, the endorsement of the Assistant Commissioner of Income-tax should have been indicated to respondent No. 2 if nothing else that there was something amiss when the escaped income is quantified as Rs. 25,95,277 whereas in the order record ing reasons, penned by respondent No. 1, the escaped income was quan tified as Rs. 26,93,500. 10.5. As noted above, in the instant case, because of the failure on the part of respondent No. 1 to correlate the information received with the ostensible formation of belief by him, respondent No. 2 attempted to con nect, via her counter- affidavit, that the escaped income with the "suspi cious" unsecured loan entries reflected in the assessee's returns for the Page No : 0658 assessment years 2010-11 and 2011-12. As correctly argued by Mr. Kochar, the counter-affidavit and the submissions made across the bar cannot be used to sustain the impugned actions. The order recording reasons and the order granting sanction should speak for themselves. (See observations made Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR 1952 SC 16 and Mohinder Singh Gill v. Chief Election Commissioner, New Delhi [1978] 1 SCC 405.” Therefore, on careful reading of the above provision we find that both the above decisions held that if the satisfaction is recorded on the correct state of reasoning. Therefore, the crux of the issue is that if the reasons are correct and are irrefutable, the manner of recording the approval by the higher authority generally could not be held to be invalid. Therefore, Page | 33

on this reasons we find that there cannot be any fault found with the approval authority if it is mentioned that “yes, I am satisfied that it is a fit case for issuance of notice u/s 148 of the IT act.” Therefore, subject to finding whether there is an application of mind by the learned assessing officer in recording the satisfaction u/s 147 of the act, we hold that the approval has been correctly provided by the higher authority. 46. Now we come to the another argument of the learned authorised representative that in paragraph number eight (A) of the performer the learned assessing officer has mentioned the income originally assessed at ₹ 150,347,006/–. According to him that original assessment has changed in view of the subsequent order of the learned CIT – A and of the coordinate bench and therefore the learned assessing officer should have mentioned the final income therein. In addition, for this reason the reopening of the assessment is invalid as incorrect facts are recorded in the performa for seeking approval. We have carefully considered this argument, find that the Performa for seeking an approval is an internal mechanism of the income tax department, and are not a statutory form. Despite this, it is correct that incorrect recording of the facts therein the approval granted by the higher authority is invalid. There cannot be any doubt on this issue. The issues have also been decided by the various coordinate benches where one of us is an author laying the above principle. Nonetheless, on the facts of this case it is required to be seen that whether the learned assessing officer should have recorded the income finally assessed after the order of the coordinate bench or he has correctly recorded the income originally assessed. We find that income originally assessed is ₹ 150,347,006 according to the order passed u/s 143 (3) of the act. There is no requirement to mention there the income pursuant to the orders of the appellate authorities subsequently. In view of this objection of the learned authorised representative does not deserve to be considered hence rejected. 47. Now we come to the fact that whether the learned assessing officer has correctly applied his mind to the information found during the course of search for recording of reasons u/s 147 of the act for reopening of the assessment for assessment year 2007 – 08 or not. We fully agree with Page | 34

the contention of the learned departmental representative that the learned assessing officer at the time of recording reasons u/s 147 of the income tax act has to prima facie show his own satisfaction that the income has escaped assessment. He is not obliged to determine the correct amount of the escaped income at the time of recording the reasons. It is also correct that if that is done at the time of recording of the reasons there is nothing further required to be done. However, it is also correct that the reasons recorded by the learned assessing officer should be after application of his own mind on the tangible material made available to him. It is also true that if the learned assessing officer applies his mind to the material based on which is going to reopen the case, the, recorded as escaped income will not go for a toss. It will also not be wayward. More so when the reasons recorded when the assessee is originally assessed u/s 143 (3) of the act, the AO will have the complete assessment records before him also. 48. In this case, the fact emerges shows that AO has recorded reasons stating that a sum of ₹ 196,497,500 has escaped the assessment. In reason, the learned AO stated that the detailed working of unaccounted receipts on account of donation has been prepared on the basis of these materials. AO also noted that the list of Year wise, annexure by summary of such unaccounted receipt was also worked out. The learned AO also referred 7 annexure (annexure A – 58 to A – 64). The learned assessing officer further referred to the statement of Mr. P Mahalingam. Raised in all these the learned AO recorded the reason that he has reason to believe that assessee has failed to disclose truly and fully all material facts in its return of income. He also noted that the above sum has escaped assessment therefore. 49. In the reasons recorded, the learned assessing officer did not disclose what is the source of the information. When assessee questioned the escaped income amount, that the sum mentioned by the learned assessing officer in reason recorded is incorrect, learned AO immediately approached learned DDIT (investigation) stating that there are inconsistencies in the sum recorded as escaped income for reopening the assessment. The learned AO sent the DDIT the complete annexure, Page | 35

reconciliation of the assessee, as well as the printout of the hard disk. The learned DDIT did not come out on these annexure and informed the learned AO to work out escaped income on his own. This wool instance at the time of assessment came to light that the learned assessing officer has recorded the reasons on what was stated by investigation wing and did not look at several annexure. Otherwise, there would not have been an occasion to write to the investigation wing at the time of assessment. Had learned AO applied his mind at time of recording of the reasons such a situation not have arisen. This shows that the learned assessing officer did not apply his mind to the information received from investigation wing. The learned AO also did not disclose in the reasons recorded that he has received an information from the investigation wing on account of search and seizure operation u/s 132 of the income tax act carried out on 27/6/2013. The learned assessing officer has also recorded that the above sum has been disclosed by Dr P Mahalingam in the form of unaccounted income. During the course of assessment proceedings, the sum stated by the learned assessing officer is escaped income gone for a toss. Even the learned assessing officer could not defend that sum. 50. There is one more aspect to this issue. The assessee has been assessed u/s 143 (3) of the act for assessment year 2007 – 08 provide order passed u/s 143 (3) of the act on 31st of December 2009. Therefore, the complete information with respect to the audited accounts, income and expenditure of the assessee was available before the assessing officer. During the course of assessment proceedings when questioned AO himself agreed that assessee has already recorded a sum of ₹ 74,651,210 in the income and expenditure account as fees income. Therefore he reduced the sum of the escaped income recorded in the reasons of ₹ 196,497,500/–. This clearly proves that when the learned assessing officer has recorded the reasons for reopening of the assessment, he did not look at the assessment records. The income and expenditure account from which he agreed that assessee has already recorded a sum of ₹ 74,651,210/– as the fee, in the reasons itself he should have reduced the above sum as escaped income. Thus including the sum, which is already been disclosed by the assessee in its profit and loss account (income and Page | 36

expenditure account) was only scrutinized posts survey u/s 133A of the act and thereafter the assessment order u/s 143 (3) was passed, as escaped income and that too the extent of ₹ 74,651,210/– most 40% of the escaped income clearly shows that there is nonapplication of mind by the learned assessing officer at the time of recording of reasons. 51. In the reasons recorded, the learned assessing officer has referred 7 annexures for determining the sum of ₹ 196,497,500 as escaped income. Out of these, seven annexures, only annexure A – 62 to A – 64 related to the impugned assessment year 2007 – 08. Other annexures did not belong to the impugned assessment year. This argument raised by the learned authorised representative also could not be negatived by the learned DR. The assessee has filed paper book – 2 containing all the annexures from page number 162 – 422. The learned departmental representative could show us that annexure A – 58 to A – 61 relates to assessment year 2007 – 08. This also shows that the learned assessing officer is failed to apply his mind even to the seized material to determine the escaped income. 52. The learned assessing officer in paragraph number 3 after recording the table of various annexures categorically stated that Dr P Mahalingam in his statement recorded u/s 132 (4) of the act is admitted that this income belongs to the assessee. When the statement of Mr. Mahalingam which is placed at page number 21 – 45 of the paper book wherein in answer to question number 52 he declared a sum of ₹ 195,714,500 in his own hands and not in the hence of any of the trust. Therefore, the statement of the income is contrary to the reasons recorded by the learned assessing officer. 53. Further in answer to question number 64 Mr. Mahalingam were shown annexure A – 44 to annexure A 64. In answer to this question, he replied that these belong to institutions run by Santosh trust. In question number 65, Mr. Mahalingam also stated that these fees are recorded in the regular books of accounts of the trust i.e. Santosh trust. Despite this fact, the learned assessing officer did not verify this fact that the time of recording of the reasons that how much fees is already recorded by the trust. Therefore recording of the reasons on the basis of these annexure Page | 37

in the case of the assessee there is no reason given by the learned assessing officer that though, those have been stated to be belonging to Santosh trust how they belong to assessee trust. Further, on reading the statement of Mr. Mahalingam does not is also supported the reasons recorded by the AO. This is so because the learned assessing officer has heavily relied on the statement of Mr. Mahalingam to reach at a conclusion that their reason escapement of income. 54. Based on the above observation it is clear that therefore, the correlation between the underlying material and the information, which was available in the balance sheet and income and expenditure account of the assessee, was clearly not made. Therefore the formation of belief by the Income-tax Officer that income of the assessee chargeable to tax had escaped assessment, was unreasonable and irrational, as it could not be related to the underlying information ; something which was discernible from a bare reading of the order recording reasons. Further, the learned assessing officer also failed to correlate the statement of Mr. Mahalingam with the reasons recorded by the learned assessing officer and resultant amount of escapement of income. The facts in this case are similar to the facts decided by the honourable Delhi High Court in case of Sinfonia Tradelinks private limited versus ACIT (2021) 435 ITR 642 (Delhi) where the honourable Delhi High Court quashed reassessment wherein even the assessment was earlier not made u/s 143 (3) of the act for not correlating the information available in the original return filed by the assessee. In the present case the assessment was already made u/s 143 (3) of the act, therefore, the case of the assessee is on much stronger footing against the facts of the case decided by the honourable Delhi High Court. 55. In view of the above facts, we do not have any hesitation in holding that the learned assessing officer has not applied his mind at the time of recording of the reason u/s 148 of the act and therefore the reopening is quashed. Accordingly order of the learned CIT – A on this issue is reversed. Accordingly, the prayer of the assessee as per 27 of the ITAT rules is allowed.

56.

Even otherwise on the merits of the case, it respect to the allowing the exemption u/s 11 of the income tax act we find that the assessee is registered u/s 12 A of the act as well as u/s 10 (23C) (IV) of the act also. This registration certificate is still valid and not withdrawn. Assessee is also held to wholly exist for the purpose of education. The addition of the donation is not been made in the hence of the assessee u/s 68 of the income tax act but as income of the charitable trust denying the exemption u/s 11 of the act. We find that there is no reason to deny assessee benefit of Section 11 of the act when the assessee is registered u/s 12 A as well as u/s 10 (23C)(iv) of the act. It is the case of the revenue that assessee is not utilizing the sum so received towards educational activities. In view of this, we do not find any reason that assessee should not be allowed exemption u/s 11 is and 12 of the income tax act as assessee is doing a charitable activity. Therefore we dismiss ground number 2 and 3 of the appeal of the learned assessing officer and uphold the order of the learned CIT – A that extent. 57. Coming to ground number 4 – 7 of the appeal of the learned assessing officer, the learned CIT – A has deleted the above addition to the extent of ₹ 103,830,790 in paragraph number 4.1.10 of his order as Under:- “4.1.10 I have considered the submissions of the appellant. In the submissions made by the appellant, it does not contest that the register seized as numbers A – 58 A – 64 are indeed fees received registers maintained student wise. The appellant has also not contested the final competition of undisclosed capitation fees of ₹ 103,830,790/–. However, the appellant submits that these seized registers only reflect the receipts and not any expenditure. Various expenditures have also been incurred which are not accounted for. The appellant requested that this expenditure should be allowed. He (it) made the same request before the AO but the AO did not take cognizance of the same. In support of its contention, the appellant points out another seized document annexure A – 21, page 114, which contains unaccounted capitation fees as well as unaccounted expenditure for the assessment years 2007 – 08, 2008 – 09 and 2009 – 10. Honourable settlement commission while dealing with Page | 39

the application of the applicant for assessment year 2008 – 09 and 2009 – 10 has taken cognizance of the very same document as evidence of both unaccounted receipts and unaccounted expenditures. After considering the seized documents, honourable settlement commission has held that undisclosed the surplus has to be taken at the rate of 22% of the expenditure shown in the seized documents annexure A – 21 Page – 114. I am of the view that the seized document at A – 21, page 11 constitutes evidence that the appellant has incurred undisclosed expenditure as well, as held by the honourable settlement commission. I also of the view that the value of excess over expenditure at the rate of 22% as adopted by the Honourable Commissioner though not binding, is salutary and reasonable and requires to be followed for the assessment year 2007 – 08 also. The total expenditure shown for assessment year 2007 – 08 in the seized document A – 21, page 11 is ₹ 24.86 crores, thus the taxable amount is ₹ 54,692,000. This amount is to be set-off by the excess of expenditure over receipt disclosed in the accounts, amounting to Rs 269,34,371/– leaving us with an undisclosed excess of income over expenditure of Rs 2 77,57,629/– (including anonymous donation). However, as noted earlier, a sum of ₹ 3 crores has already been offered to tax by Shri P Mahalingam, and it has been held by the honourable ITAT that income of the appellant can be allowed set-off of ₹ 3 crores. This disclosure being more than the undisclosed excess (excluding anonymous donation), there is no net taxable income in the appellant’s hands except a sum of ₹ 2,150,000 which is to be brought to tax separately u/s 115BBC.” 58. The learned departmental representative could not show us any infirmity in the order of the learned CIT – A. We also find that the learned CIT – A has adopted the findings of the settlement commission in case of the assessee for deriving at the set-off of the expenditure. There is no reason to hold that that the reason given by the settlement commission which is adopted by the learned CIT – A is not a plausible way of computing excess of income over the expenditure of the assessee. The learned CIT – Page | 40

A correct held that a sum of Rs 2 77,57,629/– after applying the ratio laid down by the settlement commission is an unaccounted excess of income over the expenditure of the assessee. Further, the trustee has disclosed a sum of ₹ 3 crores in his hands has also been granted as a set of against the above addition based on the decision of the coordinate bench in case of the assessee. In view of this, we do not find any infirmity in the order of the learned CIT – A. Accordingly ground numbers 4 – 7 of the appeal are dismissed. 59. Accordingly, appeal filed by the learned assessing officer is dismissed. Order pronounced in the open court on : 13/10/2021.

Sd/- Sd/- ( KULDIP SINGH ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated : 13/10/2021. *MEHTA* Copy forwarded to 1. Appellant; 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi

Date of dictation 13.10.2021 Date on which the typed draft is placed before the 13.10.2021 dictating member Date on which the typed draft is placed before the 13.10.2021 other member Date on which the approved draft comes to the Sr. 13.10.2021 PS/ PS Date on which the fair order is placed before the 13.10.2021 Page | 41

dictating member for pronouncement Date on which the fair order comes back to the Sr. 13.10.2021 PS/ PS Date on which the final order is uploaded on the 13.10.2021 website of ITAT date on which the file goes to the Bench Clerk 13.10.2021 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order

ACIT, NEW DELHI vs. M/S. MAHARAJI EDUCATION TRUST, GHAZIABAD