THE DCIT, TRIVANDRUM vs. M/S.SOUTH EAST EDUCATION TRUST, KOLLAM

Per ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:

This appeal by the Department is against the order of Ld. CIT(A)-IV, Kochi

dated 26/03/2015 for the assessment year 2011-12.

deletion of an addition of Rs.36,20,079/-.

Engineering College called Hindustan College of Engineering. The Trust started

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functioning on 02/08/2008. The Trust had not obtained registration u/s. 12AA of

the Income Tax Act, 1961 (in short the Act). The Engineering College was

running four streams of engineering, namely, civil, mechanical, electronics &

communication and computer science. There was a search carried out in the

premises of assessee on 01/12/2011. During the said search, audited balance

sheet, income and Expenditure Statement were found and seized. A notice u/s.

153A was issued to the assessee on 25/11/2013. Return was filed pursuant to

such notice by assessee on 25/03/2014 wherein income of Rs.79,99,040/- was

declared. Based on the seized materials, Assessing Officer found that assessee

had during the relevant year, effected refunds of fees Rs.36,20,079/-. As per Ld.

AO, assessee could not produce any details of such fees refunded by it.

Disallowance of Rs.36,20,079/- was made. Apart from this, there were

disallowance u/s.40(a)(ia) of the Act, disallowances of certain other expenditure

and an addition for capitation fees.

Officer, submission of assessee was that fees collected were refunded to the

students who left college when they obtained admission in some other college.

As per the assessee, collections made from the students were accounted as

income and when refund of such fees were made to the students who left the

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college, it was shown as expenses. Assessee it seems filed certain evidence in

support of these contentions. Assessee also gave details of the amounts of fees

received and refunded. As per the assessee such refunds were based on

Government regulation. Assessee submitted before the Ld. CIT(A) that details

were filed during the course of assessment proceedings before the Assessing

Officer also. Ld. CIT(A), after going through the submissions of the assessee

held that refund of fees of Rs.36,20,079/-was supported by ledger account which

reflected payment of the refunds through cheques issued by the assessee from

its account maintained with SBT, Madathara. According to him, such refunds

were proved by the assessee. He deleted such addition. With regard to

disallowance of expenditure, assessee got partial relief from CIT(A).

Rs.36,20,079/- for fee refunds. Ld. DR submitted that refund vouchers were

never produced before the Assessing Officer but were only produced before the

CIT(A). As per Ld. DR, CIT(A) gave relief to the assessee without giving

opportunity to the Assessing Officer to examine the details filed by the assessee.

that all the details were furnished before the Assessing Officer.

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the assessment done on the assessee was culmination of a search done on

01/12/2011. It is not disputed that audited balance sheet and income and

expenditure statement of the assessee were seized during such search. It is not

disputed by the Revenue that refund of fees of Rs.36,20,079/- was a part of the

expenditure reflected in the I&E account. At this juncture, it would be apposite

to have a look at section 132(4A) of the Act.

“4A) Where any books of accounts, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed –

(i) that such books of account, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

( ii) that the contents of such books of account and other documents are true; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.”

Once books of account and other documents are seized during the course of

search, contents of such books and documents have to be presumed to be true.

It is not disputed that entry for the refund of fees appeared in the audited

income and expenditure seized during the search. Hence, there is a presumption

which goes in favour of the assessee that the contents of such income and

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expenditure statement filed were true. No doubt, it is a rebutable presumption,

but the Revenue had not proved anything to show that the claim of the refund of

fees was bogus. The books of account were produced before the Assessing

Officer. There is no case for the Revenue that refund of fees to the students was

not reflected in the ledger produced by the assessee. Under such circumstances,

even without considering the details filed by the assessee before the Ld. CIT(A),

the disallowance could not have been done. Such disallowance, in our opinion

was rightly deleted by Ld. CIT(A). We do find any reason to interfere with the

order of the Ld. CIT(A).

Pronounced in the open court on 23-03-2017.

sd/- sd/- (GEORGE GEORGE K.) ( ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: Kochi Dated: 23rd March, 2017 GJ Copy to: 1. M/s. South East Education Trust, Arippa, Chozhiyakode P.O., Kulathupuzha, Kollam-691 317. 2. The Deputy Commissioner of Income-tax, Central Circle, Trivandrum. 3. The Commissioner of Income-tax(Appeals)-IV, Kochi.

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(ASSISTANT REGISTRAR) I.T.A.T., Cochin