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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
These are appeals by revenue directed against the different orders of CIT(A), Bangalore for the assessment years 2006-07, 2010- 11 & 2012-13.
First, we will take up ITA No.1469/Bang/2018 for the A.Y. 2006-07. The first ground in this appeal is with regard reopening of assessment u/s 147 of the Income-tax Act,1961 ['the Act' for short]. The assessee is a registered charitable Trust, recognized and granted registration u/s 12A and 80G of Income-tax Act and is imparting education. The assessee had filed its original return
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of income, for the A.Y. 2006-07, on 31/10/2006 declaring NIL income. The said return of income filed by the assessee Trust was processed under section 143[1] of the Act. Subsequently, the case of the assessee Trust was taken up for scrutiny and assessment was completed by passing an order of assessment under section 143[3] of the Act dated 07/11/2008 and the return of income filed by the assessee Trust was accepted by department. The assessee Trust was subjected to a survey under section 133A of the Act on 06/08/2012 which was subsequently converted into a search operation as per the provisions of section 132 of the Act. During the course of search certain incriminating documents were allegedly found which were supposedly belonging to the assessee Trust and the same were seized. As a consequence of the search the case of the assessee Trust was reopened u/s 147 of the Act by issue of a notice under section 148 dated 26/03/2013. The assessee in response to and in compliance of the said notice filed a letter dated 29/04/2013 requesting that the return of income filed for the impugned Assessment Year 2006-07on 31/10/2006 be treated as a return filed in response. to the notice of re-assessment and also sought for the reasons for re-opening of assessment. The AO called for certain details and explanations and the same were provided by the assessee Trust. The AO concluded the assessment making an addition of Rs. 6,90,05,600/- as unexplained income vide her order of assessment passed under section 143[3] of the Act, dated 30/03/2014 [Ref. Annexure-1]. The AO determined the total income of the assessee trust at Rs. 6,90,05,600/- as against the income returned by the assessee Trust at Rs. NIL. Before Ld. CIT(A), the assessee challenged the re-opening of assessment. The Ld. CIT(A) observed that the reason recorded does not
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contain the finding that “reason to believe that such escapement is by reason of the omission or violation on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment” and the same being totally absent in the reasons recorded, it has to be necessarily hold, in view of the binding judicial decision relied upon by the assessee, for the reason recorded are bad in law assumption of jurisdiction u/s 147 of the Act is not valid. The very notice which is issued u/s 148 of the Act without proper jurisdiction and ought to be struck down as an illegal notice. Consequently, he held reopening of assessment as bad in law. Accordingly, he annulled the assessment. Against this, revenue is in appeal before us by raising the grounds that the reassessment is valid since the reassessment was based on the seized documents collected during the course of search & seizure action, which shows that there is escapement of income. In this case, the assessment is reopened by recording the reasons by A.O. as follows:- “In the case of M/s. Srinivasa Trust A survey u/s 133A of the Income Tax Act, 1961 was carried ouit in the case of M/s. Srinivasa Trust by the assessing officer viz. DDIT (Exemptions), Circle- 17(2), Bangalore on 06/08/2012 at the Premise(s) of Vydehi Institute of Medical Sciences and Research Centre, No. 82, EPIP Area, Whitefield, Bangalore - 560 066 and at No. 17, lst Floor, Sankey Road, Bangalore. During the course of survey excess cash to the tune of Rs.72,22,730/- was reported and survey was duly converted into search u/s 132.
2). During the course of search, incriminating documents were seized. The receipt of donations in the by the trust were unearthed for various assessment years. As per the deleted files retrieved from the digital evidences seized during the search proceedings unaccounted income for A.Y 2006-07 is as below:
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3). Deleted files retrieved as on 30-12-2005.xls gives full details of donations collected during AY 06-07. a) As per Work sheet MBBS D( Page 1-2) there are 58 students from whom donations have been accepted to the tune of Rs 11,60,50,000/-, out of which Rs 8,93,60,789/- has been already received while Rs 2,66,89,211 is yet to be received. As per this, a summons was issued to student Ms Nirupama Shivarajkumar who has stated that Rs 24,00,000/- was paid to M/s Srinivasa Trust for the purpose of admission as donations. b) Apart from this confirmation certain amounts have been received by cheque as per deleted files as on 30-12-2005.xls, the details of which are given below: a. Mr. Anubhav Saha has paid Rs 12,50,000/- by cheque b. Mr Soumya Samuel has paid Rs 15,00,000/- by cheque c. Mr. Tushar Paravaraman has paid Rs 20,00,000/- by cheque d. Ms. Jennifa D, Ms Souparna M and Ms Kiran Verma has paid Rs 5,00,000/- each e. Ms B,Taraknath has paid Rs 6,00,000/- by cheque f. Mr Rohan Malla Baruah has paid Rs 15,00,000/- by cheque
c) AS per Work sheet BDS D( Page 7-8 ) shows out of Rs 18,75,000/- accepted donations, Rs 14,50,000/- has been received already. Out of this Rs 13,66,000/- is received by cash and Rs 84,000/- is received by cheque. d) As per Work sheet BSC Nursing D( Page 11-12 ) shows that Rs 66,80,495/- was already received as donations. Out of this Rs 56,40,000/- was by cash and Rs 10,40,495/- is by cheque. A5 per worksheet " GNM D"( Page 16 to 17 ), there is a donation receipt of Rs 7,91,000/-, out of which Rs 7,01,000/- is received by cash and Rs 90,000/- is received by cheque. e) The details below clearly shows that donations (in cash) received in all the courses. INCOMES CASH AMOUNT
MEDICAL DONATION 66220675 MEDICAL TUITION FEE 7215000 MEDICAL STIPEND DEPOSIT 620000
MEDICAL HOSTEL FEE & DEPOSIT 566000
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MEDICAL BUS FEE 108000 MEDICAL MIS FEE 0 TOTAL 74729675
MEDICAL CET MI5 FEE 797500 MEDICAL CET STEPENDERY DEPOSIT 875000 MEDICAL CET HOSTEL FEE & DEPOSIT 312000 MEDICAL CET- BUS FEE 160800 TOTAL 2145300
DENTAL DONATION 1366000 DENTAL TUITION FEE 4403500 DENTAL HSOTEL FEE & DEPOSIT 606000 DENTAL BUSE FEE 56300 TOTAL 6431800
BSC NURSING DOATION 5640000 35C NURSING TUITION FEE 4014950 35C NURSING HOSTEL FEE 590400 35C NURSING COUTION DEPOSIT 420000 TOTAL 10665350
GNM DONATION 701000 GNM TUITION FEE 455000 GNM HOSTEL FEE 165000 SNM COUTION DEPOSIT 85000 TOTAL 1406000
MSC BIOTECH TUITION FEE 1050000 MSC BIOTECH HOSTEL FEE 128000 MSC BIOTECH COUTION DEPOSIT 60000 MSC BIOTECH BUS FEE 37800 TOTAL 1275800
BSC BIOTECH TUITION FEE 758500 BSC BIOTECH HOSTEL FEE 200000 BSC BIOTECH COUTION DEPOSIT 90000 TOTAL 1048500
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COLLECTION 2002-03 850000 COLLECTION 2003-04 800000 COLLECTION 2004-05 4544000 TOTAL 6194000
PARAMEDICAL COURCE
TOTAL CASH COLLECTION 104031425 As per this the total cash collection is Rs 10,40,31,425/- . Out of this Rs 8,01,21,675/- is collected as donations while the remaining Rs 2,39,09,750/-is other collections. Now it is clear that there is cash donations. The same receipts were not accounted in the books of accounts and not assessed to tax for A.Y 2006-07. The assessment order u/s 143(3) was passed for A.Y 2006-07 dated 07-11-2008 assessing the total income as Nil.
Hence I have a reason to believe that income chargeable to tax has escaped assessment is more than Rs. One lakh.”
On going through the above we find that survey action u/s 133A of the Act on 6.8.2012 and also consequent search action revealed the unaccounted collection of the fees. These were not at all disclosed to the department. On that basis, concluded assessments were reopened and being so, the reopening proceedings are well within the power of the A.O. For this purpose, we place reliance on the judgement of jurisdictional High Court in the case of N.M. Vishwanath Vs. CIT reported in 286 ITR 487, wherein they placed reliance on the earlier judgement of the Karnataka High Court in the case of Venkatesh Power Works Vs. CIT 278 ITR 436 and observed that non- disclosure of acquisition of property in written and such acquisition of property unearthed during the search after completion of the assessment and the assessment was reopened after proper approval of the authorities concerned. The reopening is valid. Applying the above ratio, we are of the opinion that in the present case, there is no infirmity in reopening of assessment
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as it was based on the material collected during the course of survey vis-à-vis search action u/s 132 of the Act. Accordingly, we uphold the reopening of assessment. This ground of revenue is allowed.
Next common ground in all these appeals is with regard to the deleting addition on account of unaccounted donation relying on the decision in the case of V.C. Shukla 1998 (3) SCC 410 observed that the A.O. cannot solely rely on data retrieved from computer. Same is not substantiated by corroborative evidence. In these assessment years, additions were made on the basis of seized material towards unaccounted collection of donations for admission of students to medical college. Assessment year Amount of donation (Rs.) 2006-07 6,90,05,600/- 2010-11 1,99,50,000/- 2012-13 2,07,00,000/-
In these assessment years, the seized materials recovered during the course of search action shows the collection of unaccounted donations from students for admission to medical college. These data were retrieved from the computer of the assessee in accordance with the information technology Act. Later these were confronted to the assessee as well as to certain parents of students. The statement recorded u/s 131(1A) of the Act. For example, page 210 of the seized material sl.no.47 mentions Srinivasa, besides this 18:12:6: then comes one phone No. and name of Mr. Balan Subbaraju. A statement u/s 131(1A) of the Act was recorded from father of D. Srinivas on 9.9.2013. In the statement, complete details of consequence 18:12:6 was put-forth to Mr. Damodar Raju, father
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of Srinivas and he explained 18:12:6 which indicates Rs. In lakhs in other words 18: show that Rs.18 lakhs fees demanded by the Vydehi Medical College, 12: means Rs.12 lakhs paid to the College in cash as capitation fees, 6: Rs.6 lakhs balance which was to be paid. It was confronted to the assessee namely to Chairman of the Trust Sri D.K. Adikeshwarulu and he said the computer was maintained by one Mr. Shiv Sankar Babu who is involved in various fraud activities and he was not in contact with the assessee against whom police complaint has been lodged which is pending before Ulsur Police Station. Further, assessee has furnished the list of donations collected by it in each assessment year under consideration. In the assessment year 2006-07, the following transactions were made:- Assessee has collected -Rs.8,93,60,789/- Recorded in books of accounts-Rs.2,54,29,845/- Difference -Rs.6,39,30,944/- However, while making the final addition, the A.O. made updated it at Rs.6,90,05,600/-. Similarly for the other assessment years, the A.O. made addition towards unaccounted donation at Rs.1,99,50,000/- and for assessment year 2012-13 at Rs.2,07,00,000/-. On appeal, CIT deleted addition by observing that placing reliance on the judgement of V.C. Shukla cited (supra). Against this, revenue is in appeal before us.
We have heard the rival submissions and perused the record. The data retrieved from the computer u/s 132(4) of the Act is having evidential value. In this present case, it is also coupled with the statement recorded from the students. Being so, it should be considered as evidence for making addition in the assessment year under consideration. The judgement relied by the Ld. CIT(A) in the case of V.C. Shukla case (supra) and has no bearing for the case on
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hand, as that case was dealing with the criminal proceedings involving criminal conspiracy u/s 120B of the IPC and further it was dealing with “books of accounts”, whereas in the case on hand, it is an income tax proceeding before a quasi-judicial authority. Being so, that judgement has no application. The incriminating material collected during the course of search action u/s 132(4) of the Act is having evidential value and it could be considered for the assessment if it is substantiated by the supporting material. Being so, the deletion of addition made on account of unaccounted collection of donations is not justified. Accordingly, we vacate the findings by placing reliance on the judgement of Madras High Court in the case of M. Vivek Vs. Deputy Commissioner of Income-tax (2020) 121 Taxmann.com 366, where they have considered the earlier judgement of same High Court in the case of CIT Vs. T. Rangroopchand Chardia 241 Taxmann 221 (Mad). In view of this, we remit this entire issue to the file of the A.O. for fresh examination of seized material and furnish all the statements to the assessee for cross examination, if they wanted to do so and decide the issue afresh.
Next ground is common ground in all these appeals which is with regard to the violation of section 13(1)(c)(ii) of the Act. In these assessment years according to the Ld. D.R., the Ld. CIT(A) granted the exemption u/s 11 of the Act though there was violation u/s 13(1)(c)(ii) of the Act.
We have heard the rival submissions and perused the record. In our opinion, as held by Karnataka High Court in the case of CIT Vs. Fr. Mullers Charitable Institutions 363 ITR 230, in case where there is a violation, whether the whole or part of the relevant income
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is not exempted u/s 11 of the Act by virtue of violation u/s 13(1)(c)(ii) of the Act or 13(1)(d) of the Act, tax shall be levied on the relevant income or part of the relevant income at the maximum marginal rate. Thus, the said analogy is applicable to the facts of the present case. Directed accordingly. This ground of appeal of the revenue is partly allowed.
ITA No.1475/Bang/2018 is regarding deletion of anonymous donation of Rs.31,36,058/- made u/s 115BBC of the Act. The contention of the Ld. D.R. is that the assessee has not furnished the details of donors including name and address as required u/s 115BBC of the Act. The Ld. A.R. submitted that the entire amount has been received through banking channel and there is no anonymous donation. After hearing both the parties, we remit the issue to the file of AO with the direction to the assessee to furnish full details with name and address of the donor to the satisfaction of the A.O. Accordingly, the issue remitted to the A.O. for fresh consideration.
In the result all the appeals of the revenue are partly allowed for statistical purposes. Order pronounced in the open court on 20th Apr, 2022
Sd/- Sd/- (Beena Pillai) (Chandra Poojari) Judicial Member Accountant Member
Bangalore, Dated 20th Apr, 2022. VG/SPS
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order
Asst. Registrar, ITAT, Bangalore.