DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), CHENNAI, CHENNAI vs. SRI MUTHUKUMARAN EDUCATIONAL TRUST, CHENNAI

The brief facts, as emanate from the records, are that the assessee is a charitable trust duly registered u/s.12A/12AA of the Act and is engaged in running various educational institutions in and around Chennai, offering a range of academic streams such as Medical, Engineering, Polytechnic, Arts & Science, Hotel Management and School education, etc.

Subsequently, notice u/s.143(2) of the Act was issued on 02.09.2014, followed by various statutory notices u/s.142(1) of the Act. In response thereto, the assessee furnished the details and information called for.

Thereafter, the assessment was completed by the AO u/s.143(3) r.w.s 153A of the Act vide order dated 31.03.2016, determining the total income at Rs.22,11,96,692/-, inter alia making the following additions:

Aggrieved, the assessee preferred an appeal before the Ld. Commissioner of Income Tax (Appeals) – 18, who, vide order dated 06.03.2019 in dismissed the appeal and confirmed the additions made by the AO. Before the Ld. CIT(A), the assessee trust conceded the additions relating to accommodate receipts amounting to Rs.2,94,22,400/- and :-4-: ITA. No: 1262/Chny/2025 & CO No.63/Chy/2025 Rs.8,49,66,500/-, aggregating to Rs.11,43,88,900/-, as disclosed in letters dated 11.01.2016 and 07.03.2016, respectively.

In respect of the balance additions viz., unaccounted anonymous donations, voluntary donations treated as anonymous, and accommodated salary/material advances, the assessee carried the matter in further appeal before this Tribunal. The Tribunal, vide order dated 21.01.2020 in set aside the orders of the lower authorities and restored the matter to the file of the AO with the following directions: “……….Accordingly, the orders of both the authorities below are set aside and the entire issue raised by the assessee including voluntary donations, anonymous donations and salary advance said to be received from the staff, etc., are remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and bring on record the nexus between the donations and the donors in respect of each donation and thereafter decide the issue afresh, in accordance with law, after giving a reasonable opportunity to the assessee.”

Pursuant to the aforesaid directions of the Tribunal, the AO framed the assessment afresh and passed the impugned assessment order dated 08.02.2021 u/s.143(3) r.w.s 153A r.w.s 254 of the Act, assessing total income at Rs.22,84,39,570/- by reiterating the additions made in the first round. Accordingly, the AO once again made the following additions towards:

Being aggrieved, the assessee preferred appeal before the Ld.CIT(A). The Ld. CIT(A), after considering the facts and material on record, deleted the additions towards (a) unaccounted anonymous donations of Rs. 2,93,33,950/-, and (b) accommodated salary advance, festival advance and material advance of Rs. 3,92,55,497/-. However, the Ld.CIT(A) sustained the addition of :-5-: ITA. No: 1262/Chny/2025 & CO No.63/Chy/2025 Rs. 3,82,18,345/- made towards voluntary donations treated as anonymous donations, while granting relief to the extent of 5% in terms of section 115BBC(1)(i) of the Act.

It is pertinent to note that the Revenue has not challenged the deletion of addition of Rs. 2,93,33,950/- made towards unaccounted anonymous donations. Accordingly, the said issue has attained finality.

In the present ground, the Revenue is in appeal against the action of the Ld. CIT(A) in deleting the addition of Rs.3,92,55,497/- made towards accommodated salary advance, festival advance and material advance.

The Ld. CIT(A) deleted the addition of Rs,3,92,55,497/- observing as under:- “6.11.5 The undersigned has carefully examined the issue under consideration. The appellant during the course of assessment proceedings admitted the following viz... Sl. No Particulars Amount (Rs.) 1 Accommodated receipts treated as 2,94,22,400 anonymous donation disclosed vide letter dated 11.01.2016 2 Accommodated receipts treated as 8,49,66,500 anonymous donation disclosed vide letter dated 07.03.2016 Total 11,43,88,900 6.11.6 On examination of the facts, it can be seen that the appellant trust has introduced the cash donations received by way of donation(s) into the books of accounts under various heads such as Extra Curricular fees, Transport Fees collection, Caution deposit, Refund of salary advance, Refund of material advance, Hostel caution deposits, Hostel mess deposits etc. The appellant has duly admitted such accommodated receipts during the course of assessment proceedings amounting Rs. 11,43,88,900/-. The AO in the order passed u/s 143(3) r.w.s 153A of the Act dated 31.03.2016 has accepted these accommodated receipts disclosed by the appellant. The AO in the set aside assessment proceedings has attempted to make the addition of Rs. 3,92,55,497/- as accommodated salary advance and material advance, which was already subsumed in the amount of Rs. 11,43,88,900/- . This addition contemplated by the AO is not the outcome of any findings made by the AO during the course of the set aside proceedings. Unless and until, the AO come across any new evidence, subsequent to the completion of the original assessment, contemplating any addition in respect of the disclosed amount can only be illusionary and therefore the addition of Rs.

Aggrieved of the above relief to the assessee, Revenue is in appeal before this Tribunal.

The Ld.DR, appearing on behalf of the Revenue, drew our attention to the ledger accounts pertaining to “Salary Advance – Festival Advance” and “Material Advance” for the periods 01.04.2011 to 31.03.2012 and 01.04.2012 to 31.03.2013. The Ld.DR submitted that during A.Y. 2012-13, the assessee had allegedly accommodated various cash receipts by recording the same under the aforesaid heads as advances, and that in A.Y. 2013-14, the assessee had received back the cash so accommodated under the guise of recovery of advances.

On the basis of the above, the Ld.DR contended that the entries reflected as recovery of advances in the impugned assessment year are not genuine, but bogus entries, and therefore the said amounts are liable to be brought to tax in the impugned assessment year, which, according to the Ld.DR, the AO has rightly done.

The Ld.DR further placed reliance on the assessment order dated 31.03.2016, passed by the AO u/s.143(3) r.w.s 153A of the Act, and prayed that the order of the Ld.CIT(A) deleting the impugned addition be reversed, and that the addition as made by the AO be restored.

Per contra, the Ld.AR appearing for and on behalf of the assessee, submitted that during the course of assessment proceedings the AO computed cash deposits in the assessee’s bank account at Rs.11,77,33,447/-, alleging that such cash deposits represented unaccounted/anonymous receipts shown

It was contended that out of the aforesaid cash deposits, sums of Rs.2,94,22,400/- and Rs.8,49,66,500/-, aggregating to Rs.11,43,88,900/-, were admitted by the assessee and the same were accepted by the AO. The Ld. AR further submitted that the said admitted amount of Rs.11,43,88,900/- already includes the component of refund of salary advance and refund of material advance amounting to Rs.3,92,55,497/-, which has been separately added by the AO.

Accordingly, it was argued that the addition of Rs.3,92,55,497/- constitutes a duplication/double addition, and is therefore untenable and unwarranted in law and on facts. The Ld.AR submitted that the said amount, if at all, ought to have been telescoped/set-off against the addition of Rs.11,43,88,900/- already made towards accommodated receipts as admitted by the assessee.

In view of the foregoing, the Ld.AR submitted that the Ld.CIT(A) has rightly deleted the impugned addition made by the AO, and such deletion cannot be characterized as perverse. The Ld. AR therefore prayed that the grounds raised by the Revenue be dismissed.

We have heard the rival submissions, perused the orders of the authorities below and carefully examined the material available on record. The issue arising for our adjudication is whether the Ld.CIT(A) was justified in directing deletion of the addition of Rs.3,92,55,497/-, which was made by the AO towards “Accommodated salary advance - festival advance and material advance treated as anonymous donation”, or whether such amount is liable to be taxed separately in the impugned assessment year as contended by the Revenue.

At the outset, we find that the Ld.CIT(A) has dealt with the issue in a detailed and reasoned manner in para 6.11.5 and 6.11.6 of the appellate order. The Ld. CIT(A) has recorded that during the course of the original assessment proceedings, the assessee trust itself admitted the existence of accommodated receipts treated as anonymous donation aggregating to Rs.11,43,88,900/-, as per details furnished by the assessee vide letters dated 11.01.2016 and 07.03.2016.

The Ld.CIT(A) further noted, on examination of facts and records, that the assessee trust had introduced the cash receipts into its books under various heads such as Extra-curricular fees, Transport Fees collection, Caution deposit, Refund of salary advance, Refund of material advance, Hostel caution deposits, Hostel mess deposits, etc. It is an undisputed position that these admitted accommodated receipts amounting to Rs. 11,43,88,900/- were accepted by the AO himself in the original assessment order dated 31.03.2016 passed u/s 143(3) r.w.s 153A of the Act, and the said amount stood brought to tax.

Now, in the set-aside proceedings, the AO sought to again make a separate addition of Rs. 3,92,55,497/- on account of “refund of salary advance (festival advance)” and “refund of material advance”, alleging these to be anonymous donations/accommodated receipts for the impugned year. The Revenue’s contention, as advanced by the Ld.DR, is that during A.Y.2012-13, the assessee had allegedly accommodated various cash receipts by recording the same as advances (salary advance and material advance) and, in A.Y. 2013-14, it received back the cash so accommodated under the guise of recovery/refund of advances. In support, the Ld. DR drew our attention to the ledger accounts for “Salary Advance – Festival Advance” and “Material Advance” for the periods 01.04.2011 to 31.03.2012 and 01.04.2012 to 31.03.2013. According to the Ld. DR, such recovery entries are bogus in nature

However, on careful appreciation of the material on record, we are unable to accept the above contention of the Revenue. The Ld.AR has convincingly demonstrated, and which is also recorded in the order of Ld.CIT(A), that during the original assessment proceedings the AO computed cash deposits in the assessee’s bank account at Rs. 11,77,33,447/-, alleging that the said cash deposits were unaccounted anonymous receipts routed/recorded under various heads including refund of salary advance (festival advance) and refund of material advance. Out of such cash deposits, the assessee admitted and disclosed Rs. 11,43,88,900/- as accommodated receipts/anonymous donation, which was accepted by the AO. The crucial contention of the assessee, which finds support from the record, is that the component of refund of salary advance and refund of material advance aggregating to Rs. 3,92,55,497/- already formed part and parcel of this admitted figure of Rs.11,43,88,900/-.

Thus, once the entire accommodated receipts under various heads, including the impugned heads, have already been admitted by the assessee and accepted and taxed by the AO in the original assessment order, there remains no justification to separately tax the same amount again, unless the Revenue is able to show, by cogent material, that the amount now sought to be taxed is over and above the already admitted and taxed sum of Rs. 11,43,88,900/-, or that there is some fresh tangible evidence unearthed in set- aside proceedings establishing escapement of income distinct from the earlier disclosure.

In our considered view, the key finding recorded by the Ld.CIT(A) is that the addition of Rs.3,92,55,497/- proposed by the AO is already subsumed in the admitted and assessed amount of Rs.11,43,88,900/-. This factual finding has not been rebutted by the Revenue by placing any contrary evidence on record.

We also agree with the reasoning of the Ld. CIT(A) that the impugned addition is not based on any new findings in the set-aside proceedings. It is a settled proposition that while completing assessment pursuant to remand/set- aside, the AO must confine himself to the scope of remand and cannot make roving additions on the same material already considered and accepted earlier, unless fresh incriminating evidence is found. In the present case, the Revenue has not demonstrated the existence of any such new material discovered subsequent to the original assessment order which would justify re-taxing the already disclosed accommodated receipts.

The reliance placed by the Ld. DR on ledger accounts does not alter the position, because the issue is not whether there were accommodation entries, but whether the impugned amount has already been taxed once as part of the larger admitted and assessed anonymous donation of Rs.11,43,88,900/-. The assessee has admitted accommodation receipts and the Department has already taxed them. If the AO was of the view that a particular component required separate treatment, the only permissible course would have been to ensure correct computation and telescoping/set-off of the amounts to avoid duplication, rather than making a separate addition again. Therefore, even assuming without admitting that the entries are not genuine, the taxability cannot be duplicated for the same receipts.

In view of the foregoing discussion, we find that the order of the Ld.CIT(A) deleting the addition of Rs.3,92,55,497/- is based on correct appreciation of :-11-: ITA. No: 1262/Chny/2025 & CO No.63/Chy/2025 facts and law, and cannot be held to be perverse or erroneous. We therefore uphold the order of the Ld.CIT(A) on this issue. Consequently, the ground of appeal raised by the Revenue is devoid of merit and is accordingly dismissed.

The assessee has filed cross objection with a delay of 51 days and not offered any reasonable explanation for the said delay. Thus, the cross objection filed by the assessee is dismissed as unadmitted.

In the result, the appeal filed by the Revenue as well as the cross objection filed by the assessee are dismissed.