DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, BALLARI, BALLARI vs. MS AL BADAR EDUCATIONAL AND CHARITABLE TRUST, BALLARI

ITA 1483/BANG/2024Status: DisposedITAT Bangalore22 April 2025AY 2017-1819 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the retraction of the Section 132(4) statement by the Secretary was an afterthought and not valid, citing the Hon'ble Madras High Court's observations that retractions must be made within a reasonable time and supported by convincing evidence. The Tribunal found no force in the assessee's argument regarding retraction. Regarding the CIT(Appeals)'s observation about ascertaining total income and accumulation, the Tribunal stated it was irrelevant because the impugned cash was collected as capitation fees. Both the Hon'ble Delhi High Court and the Hon'ble Madras High Court have held that benefits of Sections 11 and 12 are not applicable to amounts collected as capitation fees. Affidavits from students were also deemed irrelevant as they would be against their own interest. Consequently, the appeals of the Revenue were allowed. The assessee's appeal was dismissed on various grounds, including general grounds, issues related to notice under Section 153A, approval under Section 153D, reference to Valuation Cell, time-barring of assessment, and carry forward of expenses, as well as mandatory interest under Sections 234A, B, and C. Grounds 7 & 8 were rendered irrelevant due to the allowance of the departmental appeal.

What were the facts?

The assessee, Al-Badar Educational & Charitable Trust, running a Dental Science College, is in appeal for AY 2016-17, while the Revenue has appealed for AYs 2016-17 and 2017-18 against the CIT(Appeals)'s order. A search under Section 133A (converted from survey) was conducted on 06.09.2017. During the search, 300 receipts were seized. Of these, 124 were accounted for by the assessee, while 176 were found prepared but not entered in the books of account. The Revenue alleged these 176 receipts represented unaccounted capitation fees, while the assessee claimed they were not issued as payments were not received. The Assessing Officer (AO) taxed these 176 receipts at the maximum marginal rate under Section 164(2). The CIT(Appeals) held that the trust received unaccounted cash from students but allowed the appeal, stating these receipts were part of the assessee's income and applied for charitable purposes.

What were the issues?

1. Whether the CIT(Appeals) erred in deleting the addition of Rs.2,47,06,000/- (for AY 2016-17) and Rs.1,96,86,240/- (for AY 2017-18) made under Section 164(2) on account of unaccounted receipts, based on seized materials and statements recorded under Section 132(4)? Assessee's Contentions: - Statements recorded under Section 132(4) are not reliable on a standalone basis without corroborative material. - The Secretary of the Trust retracted his Section 132(4) statement. - Even if receipts are unaccounted, they form part of the assessee's income, and since the Section 12A registration is not withdrawn, the assessee is entitled to benefits under Sections 11 and 12. Revenue's Contentions: - The addition was based on seized materials (Annexures ABDCH/01, ABDCH/02, ABDCH/03) and statements recorded under Section 132(4) from the Accountant and Secretary, who admitted these were unaccounted cash receipts. - The Secretary's statement confirmed these receipts were distributed among trustees and spent for purposes other than trust activities. - The CIT(Appeals) erred in allowing exemptions under Section 11 as the receipts were unaccounted and not applied for charitable purposes. - The assessee paid Rs.1.7 crore to Dr. Revathi for increasing Dental College seats, constituting a bribe.

Which sections of the Income-tax Act were involved?

Section 12A,Section 11,Section 12,Section 164(2),Section 133A,Section 132(4),Section 131,Section 153A,Section 153D,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI WASEEM AHMED & SHRI PRAKASH CHAND YADAV

For Respondent: Smt. Neha Sahay, Jt.CIT(DR)UTAT), Bengaluru

Per Prakash Chand Yadav, Judicial Member

These are 3 appeals, 2 appeals are filed by the revenue for the AYs 2016-17 & 2017-18 and one appeal has been filed by the assessee for AY 2016-17 against the common order of the CIT(Appeals)-2, Panaji dated 27.5.2024 having DIN ITBA/APL/M/250/2024- 25/1065142470(1) & D

The order continues below.

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