DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), BENGALURU vs. M/S. GOKULA EDUCATION FOUNDATION (MEDICAL), BENGALURU

, 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

3. Similarly, common grounds are raised in CO Nos.12 to 14/Bang/2021 and hence, the grounds raised

in CO 12/Bang/21 are reproduced as under:-

1. The order of the learned Commissioner of Income-tax [Appeals] in so far as it is against the Respondent / Cross Objector are opposed to law, weight of evidence, natural justice, facts and circumstances of the case.

2. The order passed by the learned Commissioner of Income-tax [Appeals] in so far as it is in favour of the Respondent / Cross Objector is just and proper and the appeal filed by the department requires to be dismissed on the facts and circumstances of the case.

3. Without prejudice, the Respondent / Cross Objector denies itself liable to be assessed under section 143[3] r.w.s. 153A of the Act under the impugned order, on the ground that: - i. The search initiated in the case of the Respondent / Cross Objector is illegal and ultra vires the provisions of section 132[1][a], [b] [c] of the Act; ii. That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132[2] is bad in law [ 224 ITR 19 [SC] ] and consequent assessment under section 153A is null and void-ab-initio on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajith Jain, reported in 260 ITR 80. iii. The learned authorities below have not discharged the burden of proving that there is a valid initiation of search under section 132[1][a], [b] 8 [c] of the Act, its execution and its completion in accordance with law to render the proceedings valid and to assume jurisdiction to make an assessment under section 153A of the Act.

4. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajit Jain, reported in 260 ITR 80 , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru Page 4 of 34 and also reliance is placed on the decision of the Hon'ble Karnataka High Court in the case of C. Ramaiah Reddy Vs. DCIT, reported in 339 ITR 210.

5. Without further prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the order of assessment passed by the learned assessing officer is bad in law as the mandatory conditions to invoke the jurisdiction u/s. 153A of the Income-tax Act, 1961 did not exist or having not been complied with and consequently the assessment made is bad in law for want of requisite jurisdiction.

6. Without further prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that before issuing a notice under section 153A of the Act, an inference of liability ought to have been recorded based on the materials seized during the course of search which are said to be incriminating in nature and in the absence of incriminating materials or in the absence of such recording, no notice under section 153A of the Act should have been issued on the facts and circumstances of the case.

7. Without Prejudice the Respondent / Cross Objector denies itself liable to be assessed over and above the total income reported by the Respondent / Cross Objector of Rs. NIL/- under the facts and circumstances of the case.

Page 5 of 34 10. The Respondent / Cross Objector craves leave of this Hon'ble Tribunal, to add, alter, delete or substitute any of the grounds urged above.

4. Now we will deal with the grounds in above revenue appeals. A search u/s 132 of the Income-tax Act,1961 ['the Act' for short] was conducted in the case of M/s Gokula Education Foundation (Medical) on 23/08/2016. The case was centralized with Asst. Commissioner of Income Tax, Central Circle-1(2) by the order of the Commissioner of Income Tax (Exemption), Bangalore vide Notification u/s 127 in F.No. CIT(E)/Centralisation/2016-17 dated 15/12/2016. Consequent to search proceedings, notice u/s 153A of the Act dated 14/09/2017 was issued to the appellant requiring it to file Return of Income. In response to the notice issued, the aassessee submitted a copy of return of income vide his letter dated 18/12/2017 for AY 2011-12 declaring total income as Nil. Original Return of Income was filed by the assessee on 30/09/2011 declaring Nil income. Scrutiny assessment was completed u/s 143(3) of the Act on 29/03/2014 determining total income at Rs. 24,63,42,292/- by the Addl. DIT(E), Range 17, Bangalore. In the order u/s 153A/143(3) of the Act for AY 2011-12, the AO assessed assessee at Rs. 8,33,22,427/- which was the same income determined by Ld CIT(A) vide appellate order dated 31/01/2017. For AY 2012-13, assessee was assessed at Rs. 53,65,39,683/- and for AY 2013-14, assessee was assessed at Rs. 29,91,29,660/-. The assessee is aggrieved that assessee was assessed as AOP and not as an AOP(Trust). , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

5. The Ld. CIT(A) observed on this issue as follows:-

“8. The appellant has questioned the validity of assumption of jurisdiction by the AO u/s 153A of the Act. The contention of the appellant is that no incriminating material was found and seized during the search conducted in the premises of the appellant. Thus, appellant contends question of assessing any income u/s 153A does not arise, in the absence of any finding and seizure of incriminating material during the search conducted in the premises belonging to the appellant. The appellant has argued that consequently centralization of its case is also invalid. Further the material relied upon to make the addition was not found in any premises belonging to the appellant but alleged to have been found during the course of a survey proceeding u/s 133A of the Act in a premise not belonging to the appellant and not connected to the appellant. Thus, the appellant contends that initiation of proceedings u/s 153A is incorrect and invalid.

9. The appellant has also objected to the notice under section 143(2) of the Act dated 17/05/2018 since it does not contain the date of return of income filed by the appellant and states that the said notice was issued to the Principal Officer which is also bad in law. The appellant states that under section 143(2) ought to have been issued to the appellant M/s Gokula Education Foundation (Medical). Further the notice issued is not as per the prescribed format as per Notification No.F.No.225/157/2017/ITA II dated 23/06/2017. Consequently no valid mandatory notice under section 143(2) has been issued to the appellant to pass a valid assessment order u/s 143(3) of the Act.

10. In the assessment order, the AO did not accept appellant's NIL returned income of and concluded the assessment by following the assessment order u/s 143(3), passed previously during the course of regular assessment:

AY 2011-12 Particulars Amount in Rs. Income as per OGE, dated 11/10/2017 8,33,22,427/- to order of CIT(A) Assessed income u/s 153A 8,33,22,427/- , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 7 of 34 AY 2012-13 Particulars Amount in Rs. Assessed Income u/s 143(3) 53,65,39,688/- Assessed income u/s 153A 53,65,39,688/- AY 2013-14 Particulars Amount in Rs. Assessed income u/s 143(3) 29,91,29,660/- Assessed income u/s 153A 29,91,29,660/-

11. It may be noted that for AY 2011-12 scrutiny assessment was completed u/s 143(3) of the IT Act on 29/032014 determining total income at Rs.24,63,42,292/- by the Addl DIT (E) . On appeal filed by the appellant, the Id CIT (A) vide her order dated 31/01/2017 held income of the appellant as Rs.8,33,22,427/-. The AO in order passed u/s 153A rws 143(3) on 31/12/2018 held the same income of Rs. 8,33,22,427/- as taxable income of appellant. As brought out in the chart in para 10, for AY 2012-13, assessed income u/s 143(3) was Rs. 53,65,39,688/- and assessed income u/s 153A was also Rs. 53,65,39,688/-. For AY 201314, assessed income u/s 143(3) was Rs. 29,91,29,660/- and u/s 153A also assessed income was Rs. 29,91,29,660/-.

Page 8 of 34 opine may contain material etc pertaining to the appellant can be searched u/s 132 or subjected to survey u/s 133A. Thus, the objection on the ground that the material relied upon to initiate proceedings u/s 153A was not found in the premises belonging to the appellant and therefore no proceeding can be initiated u/s 153A is untenable and is therefore rejected.

15. The appellant has also questioned the validity of the very warrant of authorisation of search. The explanation to section 132(1), does not empower the CIT (A) to look into this issue and decide on-the same. In view of the fact that the CIT (A) has no jurisdiction to adjudicate on the same, this ground is rejected being infructuous and not maintainable. 16. The appellant has raised another ground stating that the AO was not justified in assessing the income as AOP instead of AOP (Trust). 17. In this context, it may be noted that since Assessing Officer has not cancelled the registration u/s 12A, changing the status of the appellant as AOP is not in order. A charitable trust has to be assessed under the status of AOP Trusts. The AO could not have changed the status under the facts and circumstances of the case and an assessment on a wrong status is fatal which will entail the assessment order to be quashed. The appellant has relied upon the decision of the Hon'ble Apex Court in the case of Adinaryana Murthy 65 ITR 607; Karnataka high court in the case of Abdul sattar Mokashi 174 ITR 370; The Andhra Pradesh high court in Gutta Anjaneylu and Co., 347 ITR 135. 18. It is seen from the facts that the AO has merely adopted the income assessed in the original assessments concluded u/s 143(3) of the Act and has not made any fresh additions during the impugned assessment years. The original assessments were made as AOP Trust and not AOP. The AO was not correct in assessing the , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 9 of 34 appellant in the status of AOP for the" impugned assessment years and this ground of the appellant is allowed 19. The appellant has also objected to the fact that the AO is not justified in law in assessing the income u/s143(3) of the Act as the income assessed u/s 153A of the Act on the facts and circumstances of the case.

Page 10 of 34 in the reassessment proceeding u/s 153A, in as much it will amount to an addition being made twice as the assessment in which the addition was originally made had not abated. In the absence of any further additions being made to the returned income, other than the additions which already form part of the assessments which have not abated, the AO ought to have accepted the returned income as it is. This ground of the appellant is upheld.”

6. Against this revenue is in appeal before us.

Date of assessment order Assessment year passed u/s 143(3) Date of search of the Act 2011-12 29.3.2014 23.8.2016 2012-13 31.3.2015 23.8.2016 2013-14 12.3.2016 23.8.2016 7.1. The contention of the Ld. A.R. is that assessment for these assessment years were already completed u/s 143(3) of the Act before the date of search i.e. on 23.8.2016 and the assessment is not pending as on the date of search. There were no seized material to frame assessment u/s 153A of the Act. As such, the assessment was rightly annulled by the Ld. CIT(A). Contrary to this Ld. D.R. submitted that section 153A of the Act empower the AO to assess or re-assess the total income and AO could redetermine the total income of the assessee by considering all additions made previously while completing order u/s 153A of the Act. For better understanding the scope of section 153A of the Act as held by Mumbai Special bench in , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru the case of All Cargo Global Logistics Ltd. Vs. DCIT 23 Taxcmann.com 103 as follows:-

“The scope of provisions of section 153A of the Act could be summarized as follows as per the order of the Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. Vs. Deputy Commissioner of Income-tax (23 taxmann.com 103):-

Scenario Scope of Section 153A 1. No return of income is filed by the Since no return has been filed, the entire assessee (whether or not time limit to income shall be regarded as file return of income has expired. undisclosed income.

Consequently, AO would have the authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). No requirement to restrict to documents found during the course of search.

2. Return of Income just filed by the Since return filed is even pending to be assessee – return yet to be processed processed, the return would be treated u/s 143(1) – Time limit for issue of as pending before the AO. notice u/s 143(2) not expired. Consequently, AO would have authority/jurisdiction to assessee the entire income, similar to jurisdiction in regular assessment u/s 143(3).

Consequently, AO would have authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). 4. Return of income filed by the Return of income of the assessee shall assessee. Intimation passed or not u/s be treated as having being accepted and 143(1) and time limit for issue of notice u/s 143(2) has expired.

, 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru attained finality. AO loses jurisdiction to verify the return of income

Since, no assessment would be pending there would be no abatement of any proceedings.

Accordingly, the scope of assessment u/s 153A would be restricted to incriminating material found during the course of search.

5. Notice u/s 143(2) issued and Pending regular assessment assessment pending u/s 143(3) proceedings would abate and would converge/merge in proceedings u/s 153A.

Accordingly the scope of assessment under section 153A would cover the pending return filed as well and would not be restricted to incriminating material found during the course of search. 6. Assessment u/s 143(3) completed. Since regular assessment proceedings have been completed & are not pending, there would be no abatement of proceedings.

AO loses jurisdiction to review the completed assessment. Accordingly, , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru the scope of assessment u/s 153A would be restricted to incriminating material found during the course of search. 7. Proceedings u/s 147 pending where: Pending assessment/reassessment (a) Assessment originally completed proceedings u/s 147 would abate and u/s 143(3) OR would converge/merge in proceedings (b) No assessment earlier completed u/s 153A. u/s 143(3)

Accordingly, the powers of the AO, in both the cases, shall extent to: (a) Assess income that would validly be assessed in the pending proceedings u/s 147, and 7.2. In the light of above, we examine the facts of the present case. As discussed in earlier table, the assessment u/s 143(3) of the Act were already completed before the date of search i.e. on 23.8.2016. As held by Special bench in the case of All Cargo Global Logistics cited(supra) that in case of assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred u/s 153A of the Act for which assessment shall be made for each of 6 assessment years separately. In other cases, income that has already been assessed, the assessment u/s 153A of the Act will be made on the basis of incriminating material, which in the context of relevant provisions means – (i) books of accounts, other documents, found in the course of search but not produced in the course of original assessment (ii) undisclosed income of property disclosed in the course of search. The argument of the Ld. A.R. is that in these , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru assessment years, there were no seized material none the less incriminating materials to frame the assessment u/s 153A of the Act and there is no necessity of framing any assessment u/s 153A of the Act. On the other hand, Ld. D.R. submitted that AO has not made any addition in these assessment years. He only reinstated the income what is assessed u/s 143(3) of the Act. In these cases, the AO framed the assessment u/s 153A of the Act as he framed the assessment u/s 143(3) of the Act, which can be seen from the following table.

Assessment year Income determined Income determined by AO in assessment by AO passed u/s order passed u/s 153A of the Act 143(3) of the Act 2011-12 8,33,22,427/- 8,33,22,427/- 2012-13 53,65,39,688/- 53,65,39,688/- 2013-14 29,91,29,660/- 29,91,29,660/- 7.3. As seen from above, there is no change in the total taxable income as computed u/s 143(3) of the Act and section 153A of the Act in these assessment years. Further, Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla {380 ITR 573 (Del)}, wherein held that in the absence of incriminating material, the completed assessment can be reiterated and the abated assessment or re- assessment can be made. The word “assess” in section 153A of the Act is relatable to abated proceedings and the word “re-assess” is relatable to the completed assessment proceedings. The AO framed the assessment by accepting income computed u/s 143(3) of the Act and which is based on the regular return filed by the assessee and no addition made based on any seized material/incriminating material found during the course of search while framing assessment u/s 53A of the Act. , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru 7.4. Therefore, as mentioned in the judgement in the case of Kabul Chawla cited (supra), it is clear that, the assessment for those assessment years in case of persons searched, where the assessments are concluded as on the date of search, cannot make addition unless incriminating material pertain to such assessment year is found and seized during the course of search. Hence, in our opinion, completed assessment cannot be tinkered without the support of any incriminating material found during the course of search.

7.5 In the present case, Ld. CIT(A) in his order at the end of para 22 has observed as follows:- “In other words, income added in the earlier assessment cannot be added again in the reassessment proceedings u/153A, in as much it will amount to an addition being made twice as the assessment in which the addition was originally made had not abated. In the absence of any further additions being made to the returned income, other than the additions which already form part of the assessments which have not abated, the AO ought to have accepted the returned income as it is. This ground of the appellant is upheld.”

For these above findings, we do not find any infirmity and these findings of Ld. CIT(A) is in conformity with the judgement of Hon’ble Delhi High Court in the case of Kaul Chawla cited (supra). Before us, Ld. A.R. made one more plea that the department enforced the demand created in these assessment years consequent to assessment u/s 143(3) of the Act and also demand created as a result of assessment framed u/s 153A of the Act and he also filed copies of demand notices for these assessment years stating that department is enforcing both the demands which amount to double taxation of same income. We make it clear that the department cannot enforce both the demands, which is created vide assessment u/s 143(3) of the Act and assessment framed u/s 153A of the Act. As held by , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru Hon’ble Delhi High Court in the case of Kabul Chawla cited (supra), department has to ensure the enforcement of only one demand created consequent to the search action and framing of assessment u/s 153A of the Act and we direct accordingly. 7.6 In the result, the department’s appeals in 500 & 501/Bang/2021 are dismissed and COs filed by the assessee in CO Nos.12 to 14/Bang/2021 are dismissed as infructuous. & 509/Bang/2021 & CO Nos.15 & 16/Bang/2021: (A.Y. 2014-15 & 2017-18)

8. Now we will take up & 509/Bang/21 CO Nos.15 & 16/Bang/21 for adjudication for the AYs 204-15 & 2017-18 respectively.

9. The revenue has raised common grounds of appeal in & 509/Bang/2021 for the A.Y. 2014-15 & 2017- 18, which are as follows:

1. “Whether CIT(A) is justified in holding that assessment order passed in case of assessee in status of AOP is bad in law as correct status of assessee would be AOP(Trust), when the fact remains that as per definition of "Person" contained in section 2(31) of Income Tax Act, there is no status enlisted as AOP(Trust)? 2. Whether CIT(A) is justified in holding that benefit u/s.11 has been denied for violation of section 13 above, when the fact remains that assessment order states that in addition to section 13 violations the assessee was seen to the operating its activities in , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 17 of 34 complete contrast to 'charitable nature' as defined u/s. 2(15) of Income Tax Act? 3. Whether CIT(A) is correct in deleting the addition to tune of Rs. 4,65,00,000k, (unaccounted fees received from students) when the same is emanating from the impounded material and corroborated for by the statements recorded on the ground that same was not corroborated by making enquiring from the students from whom fees were received? 4. Whether CIT(A) is correct in deleting the addition to tune of Rs.12,25,00,000/- (unaccounted cash receipts) when the same is emanating from the impounded material and corroborated by the statements corded, on the ground that same was not corroborated by making enquiry from the students from whom fess was received?”

10. The next common grounds raised by assessee in CO Nos.15 & 16/Bang/2021 and we reproduce here ground of appeal in CO No.15/Bang/2021 as follows:

7. Without further prejudice, the learned Commissioner of Income- tax [Appeals] failed to appreciate that before issuing a notice under section 153A of the Act, an inference of liability ought to have been recorded based on the materials seized during the course of search which are said to be incriminating in nature and in the absence of incriminating materials or in the absence of such recording, no notice under section 153A of the Act should have been issued on the facts and circumstances of the case.

8. Without Prejudice the Respondent / Cross Objector denies itself liable to be assessed over and above the total income reported by the Respondent / Cross Objector of Rs. NIL/- under the facts and circumstances of the case.

11. The Respondent / Cross Objector craves leave of this Hon'ble Tribunal, to add, alter, delete or substitute any of the grounds urged above. , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 20 of 34 12. In view of the above and other grounds that may be urged at the time of hearing of the Cross Objection, your Respondent / Cross Objector humbly pray that the Cross Objection may be allowed in the interest of equity and justice.”

11.1. Facts of the case in AY 2014-15 are that the AO made an addition of Rs.4,65,00,000/- under the terminology 'Unaccounted Fees Received in Cash'. The said addition was made based on certain notings found in page 4 of impounded material labelled as GEF(M)/133A/5 which are loose sheets as, holding the same to be fees received in cash. It is the case of the AO that the assessee collected these amounts mentioned against the names of the persons mentioned therein by way of fees and has not accounted the same in its books of accounts. The AO has in the assessment order relied upon the statements of Mr. D. V. Guruprasad which are found at pages 11, 12 and 13 of the assessment order and which are reproduced below, for the sake of convenience:-

“2.2.3. A statement under oath of Shri. D V Guruprasad, CEO of Gokula Education Foundation (Medical) was also recorded on 26.08.2016 and the impounded documents were confronted to him. The relevant question / answers of the statement recorded from him is reproduced hereunder:

12. Please go through the page no. I to 6 of impounded document GEF(M)/ 133A/05 and kindly explain the content therein written in pencil and also confirm whose handwriting it is. Ans: I am confirming my handwriting in pencil in the page no. I to 6 of impounded document GEF(M)/ 133A/05. At this point of time, I don't remember the context of these writings; it looks to be some reconciliation.

, 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 21 of 34 13. Please go through the contents of Page no. 6 of impounded document GEF(M)/ 133A/ 05 which has the following notings and explain the same.

I do not recollect at this stage under what circumstances I made this notings in the above said page and what it represents.

14. Please state whether these transactions were made in cash or cheque?

Ans: It appears that these are cash figures, but not sure under which circumstances I had written on this paper. 15. On the top of the page, it is written 'Ramchandra'. Please let me know who this person is? Ans: I don't know to whom it refers.

16. The CFO of M/S. Gokula Education Foundation (Engineering) is Mr.Ramchandra. Please state, whether you referred the CFO of Gokula Education foundation (Engineering) as 'Ramchandra' in the above notings? Ans: I don't know to whom it refers.

17. Please keep in mind that you are giving this statement under oath and consequence of giving false statement on oath. You are once again asked to explain these notings in detail. Ans: As I see the notings are of the year 2013. At this point of time really do not remember.

Ans: When I had written these notings, I might have known but right now I don't recollect as it is very old.

20. It appears that "R" stands for receipt. What do you say?

, 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Ans: It might be.

21. Please go through the contents of Page no. 4 of impounded document GEF(M)/ 1343A/05 which has the following notings and explain the same. Ashok D.R. Varsha 75, 00,000 Jeria 1,85,00,000 Sujata 1,25,00,000 Poornima 80, 00, 000

4,65,00,000

Ans: I think the name Ashok D. R represents our former principal of MSR Medical college Dr. Ashok, who resigned about 9-10 months back. The other names I do not recollect now.

2 2 . Please go through the list of students for NRI/IP PG admission for the academic year 2013-14. The above four names "Varsha", "Jeria", "Sujatha" and "Poornima" are appearing in the list. Now, please confirm that whether names appearing on the page 4 of the referred impounded document are same as appearing in serial number 2, 8, 12, 21 in the said list. Ans: It looks to be the same.

Ans: It is apparent that there are discrepancies between fees fixed for these four students and the amount written with their name in the page 4 of the referred impounded document. But I don't remember whether anybody explained me the reason for higher figures as mentioned on the page 4 as shown above. I might have noted down the figures as informed to me then. But unfortunately, I don't remember who has informed these to me.

, 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 23 of 34 Ans: It may be. I do not know.”

11.2 The assessee has made a detailed submission in this regard and has contended that from the impounded material and statements relied upon by the AO there is no evidence which warrants an addition. It states the notings on the slip of paper do not indicate as to what could be the nature of transactions. Further it states that the answers given in the statement recorded of persons, which are relied upon by the AO for making additions are not conclusive or definite and do not indicate any undisclosed income. The assessee has contended that the AO has not conducted any inquiry during the course of assessment proceedings inspite of assessee submitting details of persons from whom money was said to be received by the AO. The assessee states that the AO failed to conduct further inquiry which is necessary. The assessee states that AO without conducting further inquiry merely relied upon impounded material and statements which do not confirm receipt of monies and proceeded to make additions which is impermissible in law. It is contended that an addition cannot be made merely based on a material which does not stand corroborated.

11.3. According to Ld. CIT(A), as seen from the assessment order, the AO has relied upon statements recorded and loose sheets impounded during survey u/s 133A for making additions. A reading of sworn statements of Mr. D.V. Guruprasad shows that he is rather ambivalent in his replies, neither confirming nor denying, categorically the veracity of the documents shown to him. This certainly leads one to infer that there is a distinct possibility that , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru impounded document represents amounts actually 'received by. assessee. But unfortunately, the same is not backed by any other evidence as assessment order is based on statements recorded and loose sheets. In this context, it may be noted that inquiry from persons, students who allegedly paid the money was essential to corroborate the loose sheets as required by the decision of Hon'ble Supreme Court in the case of CBI vs VC Shukla (1998) 3 SCC and Common Cause (A Registered Society) and Others vs Union of India in Writ Petition Civil Appeal No 505 of 2015 reported in 394 ITR 220(SC). Therefore, one is constrained from sustaining an addition so made without necessary corroborative evidence in view of the decisions of the Hon'ble Supreme Court cited supra. In view of the above facts, Ld. CIT(A) observed that addition of Rs.4,65,00,000/- made for AY 2014-15 is found to be unsustainable. Against this revenue is in appeal before us.

11.4. We have heard the rival submissions and perused the materials available on record. In this regard, as held by Hon’ble Supreme Court in the case of Kishinchand Chellaram Vs. CIT 125 ITR 713 (SC), wherein it was held that “evidence collected from the witness cannot be considered without giving an opportunity of cross examination to the assessee”. In the aforesaid case the Hon’ble Supreme Court held as under:- “Held, reversing the decision of the High Court, (i) on the facts, that the two letters dated February 18, 1955 , and March 9, 1957 did not constitute any material evidence which the Tribunal could take into account for the purpose of arriving at the finding that the sum of Rs.1,07,350 was remitted by the assessee from Madras, and if these two letters were eliminated, there was no material evidence at all which could support its finding. The statements of managers in those two letters were based on hearsay, as in the absence of evidence, it could not be taken that he must have been in charge of the Madras office on October 16, 1946, so as to have personal knowledge. The department , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru Page 25 of 34 ought to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. It was true that proceedings under the income-tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income- tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter dated March 9, 1957, and what statement he had made.” 11.5. Further, the Hon’ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises, 210 ITR 103 (Cal) held as follows:- “8. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But, we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re-examination, if necessary.

9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru Page 26 of 34 inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through account payee cheques. In reply to question No. 5, he stated that he had seven full-time employees whose names are mentioned by him. He also claimed to have maintained books of account like sales books, purchase books, cash books and sale bills. In reply to question No. 18, he, on his own, stated that his big customers were the Reliance Oil Mills and Eastern Commercial Enterprises, the assessee, in the present reference. As for his cash withdrawals, he explained that his business required ready cash for purchase of raw materials which explained his large drawings of cash from the bank. Learned counsel then cited a host of decisions to bring home the point that no evidence or document can be relied upon unless it is shown to the assessee. Kishanchand Chellaram v. CIT. Similarly, the requirement of cross-examination as the requirement of the rules of natural justice has been underlined by the Bombay High Court in Vasanji Ghela and Co. v. CST [1977] 40 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross-examine the witness hostile to him.

Page 27 of 34 parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result we decline to answer the question.” 11.6. The Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2017 (5) TMI 1354 held that it is clear that the presumption of facts u/s 292C of the Act is not a mandatory or compulsory presumption but a discretionary presumption. Since, the word used in the said Section is “may be” and not “shall”. Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact not a presumption of law. In the present case, the assessee from the very beginning stated that the documents found during the course of search did not belong to him. Therefore, the addition made by the AO is only on the basis of surmises and conjecture without bringing any cogent material on record to substantiate that the assessee was engaged in the business of gold and jewellery and the AO had not brought any material on record to substantiate that the denial of the assessee was false.

11.7. The Bangalore Tribunal in the case of Kirloskar Investments & Finance Ltd. v. Assistant Commissioner of Income-tax [1998] 67 ITD 504 (Bang.) held that the provision of the copy of the statement or letters is not sufficient opportunity. Oral evidence of persons concerned with the transaction are important piece of evidence and before it could replace the written evidence, the party against whom such oral evidence is being used must be allowed the opportunity of examining the person because, both the types of evidences need to weighed properly before rejecting one for the other. , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru 11.8. In Sunrise Tooling Systems Pvt. Ltd v. ITO 2012 (11) TMI 1081 - ITAT Delhi, the Tribunal held as under:- “The opportunity of cross-examining, Sh. Nitin Aggarwal, a partner of Shree Laxmi Industrial Corporation has also been denied to the assessee on wrong basis by the authorities below that an opportunity of cross examines needs to be given only when third party is involved or a party not known to the assessee or a hostile witness is involved and further that the onus for cross examination does not lie with the department but lies with the assessee who allegedly made purchases in his books of accounts from the said concerns.”

11.9 Same view has been taken in the case of Sri Devaraj Urs Educational Trust for Backward Classes (Regd.) Vs. ACIT in to 506/Bang/2020 dated 16.8.2021.

11.10. Adverting to the facts of present case, AO relied upon the statement recorded and loose sheets impounded during the survey u/s 133(1A) for making addition. The statement of D.V. Guruprasad cannot be relied in its entirety and this is not supported by any corroborated evidence. In such circumstances, we are not in a position to uphold the addition made on that basis. Accordingly, the Ld. CIT(A) is justified in deleting the addition. The order of the Ld. CIT(A) on this issue is confirmed.

12. Next ground is with regard to deletion of addition of Rs.12.25 crores. Facts of the case are that Ld. CIT(A) in his detailed order stated that the AO has relied upon the notings in page no.3 of impounded material GEF(M)/133A/05 which are loose sheets as seen in para 23 page 19 of assessment order and the answers given to Q.No.28 & 29 by Mr. D.V. Guruprasad in his statements recorded on 26/08/2016, which are reproduced below: , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 29 of 34 27. Please go through the contents of Page No.3 of impounded document GEF(M)/133A/05 which has the following notings and explain the same. Total R DU 7,00,00,000 PU 5,25,50,000 Ashok 4,65,00,000 Total 16,90,50,000

Total P Ramchan 2,50,00,000 Chair — 1 2,00,00,000 Chair — 2 2,64,00,000 Chair — 3 5.24.00,000 12,38,00,000 Hand 4,52,50,000 To Pritam 50,00,000

Ans: I do not recollect at this stage under what circumstances I made this notings in the above said page and what it represents.

28 . Please state what does "Total R" and "Total P" stand for? Ans: I don't remember. But it looks like that "Total R" and "Total P" stand for total receipt and total payment.

12.1. In this context, Ld. CIT(A) observed that it may not be out of place to reproduce relevant excerpts of the decision of Hon'ble Supreme Court rendered in the case of VC Shukla which are as below: - , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 30 of 34 "Book" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as book for they can be easily detached and replaced. Thus, spiral notebooks and spiral pads can be regarded as "books" within the meaning of Section 34 of the Indian Evidence Act, but not the loose sheets of paper contained in the files. Further to ascertain that the books of account has been regularly kept, the nature of occupation is an eminent factor to be considered.

In order to charge any person with liability it is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is also necessary for the person relying upon those entries to prove that they were in accordance with facts. In other words, even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness fix a liability upon a person. (C. B. I. v. V.C. Shukla 1998 3 Scc 410 at 425).

Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another.

Para "37. In Beni v. Disan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said, that the rule as laid down in Section 34 of The Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru

Page 31 of 34 charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts." 12.2. Further, Ld. CIT(A) observed that with regard to the evidentiary value of impounded loose sheets, the Hon'ble Supreme Court in Common Cause (A Registered Society) and Others vs Union of India and Others in Writ Petition Civil Appeal No. 505 of 2015 reported in 394 ITR 220 (SC) held as under:-

17. It has further been laid down in V C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability"

12.3 Ld. CIT(A) further observed that the AO has relied upon the sworn statements of Mr. D.V. Guruprasad which are ambivalent in nature which certainly necessitates further inquiry , 500, 501, 508 & 509/Bang/221 & CO Nos.12 to 16/Bang/2021 M/s. Gokula Education Foundation (Medical) Bengaluru and gathering of clinching/formidable evidence to justify the addition.

12.4. Ld. CIT(A) observed that inquiry from persons, students who allegedly paid the money was essential to corroborate loose sheets as required by the decision of Hon'ble Supreme Court in the case of CBI vs VC Shukla (1998) 3 SCC and Common Cause (A Registered Society) and Others vs Union of India in Writ Petition Civil Appeal No 505 of 2015 reported in 394 ITR 220(SC). And since such corroborative evidence is not found, one is constrained from sustaining an addition so made in view of the decisions of the Hon'ble Supreme Court cited supra. Hence the addition is found to be unsustainable.

12.5. As discussed earlier, there is no corroborated evidence other than the statement of Shri D.V. Guru Prasad to support the entries in the loose sheets. Accordingly, as discussed in earlier para, we delete the addition. A.Y. 2017-18:

Page 33 of 34 14. Now ground Nos. 1 &2 have become infructuous in view of our findings on deletion of addition made by Ld. CIT(A) is justified with regard to the unaccounted cash receipts in these two assessment years and the status of assessee cannot be changed, since there is no violation u/s 13 of the Act. Accordingly, ground nos.1 & 2 of revenue in these two assessment years 2014-15 and 2017-18 are dismissed as infructuous.

16. Now coming to the CO Nos.15 & 16/Bang/2021, which have become infructuous in view of dismissal of appeals of the revenue in these two assessment years.