DCIT CENTRAL CIRCLE-06, NEW DELHI vs. SANTOSH TRUST, NEW DELHI

The instant appeal and Cross Objection filed by the Revenue and assessee respectively are directed against the order passed by the Ld. CIT(A)-24, New Delhi dated 13.02.2023 arising out of the Assessment Order dated 31.12.2019 passed by the Ld. ACIT, CC-6, Delhi under Section 143(3) of the Income Tax Act for Assessment Year 2017-18. Since both the matters arising out of the same order that too in the case of the same assessee, these are heard analogously and being disposed of by a common order.

2. The assessee Trust filed its return of income on 21.08.2017 declaring income at Rs.nil. The case of the assessee was selected for complete scrutiny through CASS and notice therefore, under Section 143(2) of the Act was issued on 12.09.2018 followed by questionnaire under Section 142(1) dated 17.10.2019. Pursuant to the said notice the assessee duly submitted the details as required. The assessee filed return of income reporting cash deposit to the tune of Rs.39,83,63,741/- during demonetization period commencing from 09.11.2016 to 31.12.2016. Show cause as to whether such cash deposit shall not be considered as undisclosed income of the assessee was issued. The assessee replies as follows:

“The source for the cash deposits fee receipts out of IPD/OPD collections and college fee received from students as per receipt issued the same is offered as income of the trust in the return of income.

Comparison of cash deposits Cash Deposits F.Y. 2015-16 F.Y. 2016-17 Total Cash Deposited in FY 36,64,68,587 59,62,82,459 From 01.04.2015/16 to 16,38,58,013 15,18,32,468 08.11.2015/16 From 09.11.2015/16 to 2,59,59,619 39,89,0,491 31.12.2015/16 Comparison of Cash Sales/Fee receipts Cash Sales/Fee receipts FY 2015-16 FY 2016-17 Total Cash Sales Fee receipts in FY 66,41,28,044 66,63,01,905 From 01.04.2015/16 to 48,92,69,042 56,45,26,470 08.11.2015/16 From 09.11.2015/16 to 6,10,12,523 85,30,558 31.12.2015/16

3. Information from various banks, therefore, was also sought for under Section 133(6) of the Act upon consideration whereof it appears that in comparison to the cash flow statement of all the last 3 years, substantial amount of cash deposit during Financial Year 2016-17 was increased in support of which no corroborating evidence had been filed by the assessee as of the opinion of the Ld. AO and hence, cash deposit to the tune of Rs.39,83,63,741/- made during the demonetization period was added in the hands of the assessee under Section 69A r.w.s 115BBE of the Act treating the same as unexplained money which was in turn deleted by the First Appellate Authority. Hence, the instant appeal before us.

4. The assessee a charitable trust duly registered under Section 12A of the Act on 17.06.2009. In fact, the trust came into existence w.e.f 16.12.2004 by and under a trust deed executed by Dr. P. Mahalingam & Mrs. Kuilambal. Further that the assessee was granted exemption in terms of Section 80G(5)(iv) of the Act on 28.09.2011. The main object of the trust is to impart medical education to the student with no discrimination of cast, religion or creed. In order to accomplish this philanthropic objective, the assessee trust has been running medical college named as “Santosh Medical College & Hospital” and another integrated institution named as “Santosh Dental College & Hospital” at Ghaziabad NCR Delhi where apart from medical education, the medical facilities are also provided to the public at large.

5. It is relevant to mention that the services of these two institutions found recognition from the Ministry of Human Resource Development, Government of India and has received the prestigious independent/ autonomous status of deemed university in the name and style of ‘Santosh University’, by and under the notification dated 16.12.2019. The trust having a number of bank accounts where collection of students fee and that of the hospital and the pharmacy used to be deposited. During demonetization period commencing from 09.11.2016 to 30.12.2016 the assessee trust deposited an amount of Rs.39,83,63,741/- in demonetization currency which were treated by the Ld. AO as unexplained money under Section 69A r.w.s 115BBE in the absence of corroborative evidence to justify the source of such deposits which was in turn deleted by the Ld. CIT(A).

6. Before the Ld. CIT(A) the assessee submitted the following in support of the source of SBN i.e. the demonetization currency:

“A. Justification of the source of the SBN in the face of the peculiar factual background of the case.

The Ld. AO rejected the explanation of source of cash deposit during demonetization period by giving following reasons in para 3.3 at page 3 of impugned order:

1. There is substantial amount of increase in cash deposit during FY 201617 as compared to cash deposit during preceding FY 2015-16.

2. The appellant had not filed any corroborating evidence to justify the source of cash deposit.

The appellant seeks to high light the following facts before contesting the validity of the action in applying the provision of sec 69A vis-à-vis the cash deposits during the demonetization period. The relevant facts which need to be considered are as under: i. The appellant trust has been running two independent institutions, one is the medical college having the facility of hospital, pharmacy etc. and the other unit is a dental college and Hospital. ii. The Government of Uttar Pradesh with a view to promote medical education in the state of U.P. in particular invited eligible parties to establish new medical/dental college in the private sector, through open invitation dated 23.12.1994 (PB 137-140). The reason for this initiative, as given in the invitation itself, was that it was difficult for the state Govt to provide funds for opening of new medical/dental colleges from the state exchequer. The settlor / Chairman of the appellant Trust Dr P Mahalingam responded to the above invitation of government in public interest and took a daring decision to shift himself with his resources and family all the way from southern part of India to state of U.P and establish Medical institution in accordance with the open Invitation. The institutions were originally promoted in the auspices of Trust established and managed by Dr P Mahalingam named as 'Maharaji Educational Trust' at Ghaziabad Town, U.P. in the year 1995 and onwards till year 2007. Thereafter, from year 2007, after grant of deemed to be university status by UGC, the operations of the medical/dental college have been run by the present appellant trust. The appellant takes pride in claiming that medical college run by the trust is first of its kind established in private sector in UP, Delhi and NCR. Since its establishment in the year 1995, various feathers in shape of Unqualified permissions/ upgrade of academic courses have been added in its cap which is evident from the online information of the institution proudly made available in the website and under relevant portion is placed at page 100-113. iii. The appellant trust has huge infrastructure with seven hundred teaching and training beds with under graduate/post graduate/doctoral seats available in more than 20 medical and 9 dental departments. The institutions have campus area of 25 Acre with hostel facilities available for 900+ students. The hospital attached to the medical college has state of Art facilities developed/upgraded over a period of time with the missionary spirit of the Trustees actively involved in management of its affairs. A detailed description of recognitions obtained by the institutions are manifest in the downloaded information from the website and the same is placed in paper book at pages 101-113. iv. Coming to the specific issue of the deposit of SBN involved in the present appeal, it is submitted that the total deposit of demonetised currency from 08.11.2016 to 30.12.2016,as per the AO, was the amount totalling Rs 39,83,63,741/- but the AO has clearly has been misled from the incorrect information available on his records which is evident from the fact that the deposit of demonetised currency could not have been in the denomination lower than Rs 500/- and the deposits in the lower denominations could not have been in the demonetised currency. The appellant has placed a chart (PB 114) where the date wise and bank wise detail of cash deposits are given. From the chart it can be seen that in the accounts where the deposits of college fee collection is made the aggregate cash deposits during demonetisation period had been Rs 39,27,63,336/-out of which the deposit of demonetised currency with PNB (Certificates PB 115) was Rs 12,29,836/- thus leaving the quantum of SBN deposits to the amount of Rs 39,15,33,500/-only. Similarly in the bank accounts of the Pharmacy the aggregate cash deposits considered to be demonetised currency was Rs 17,52,500/- out which as per the certificates issued by the Kotak Mahindra Bank (PB 116), the deposit of demonetised currency was Rs 9,36,500/-leaving the reaming an a s 816,000/- being deposit of demonetised currency. In the Vijaya Bank also where hospital receipts are deposited the deposits of Rs 405/- are in demonetised currency as the amounts of lesser denomination than Rs 500/- could not have been the demonetised currency. Considering all the above variation in quantification of the deposit of Demonetised currency, the amount of Rs 20,46,241/- could not muster the test of demonetised currency deposit and the amount of Rs. 39,63,17,500/- is the correct amount of deposit of SBN.

V. The facts show that the AO has not applied his mind in considering the instant issue and adjudicated the issue with closed mind without referring to the relevant facts of the case and without applying his mind to the peculiarity of the fact circumstances of the case duly explained before him and the Investigation Team also. The appellant collects college fee from the students of medical/dental college run by it and besides above there is collection of medical/consultation fee from the patients at the Hospital. Apart from above, there has been collection at pharmacy from provision of medicine to the patients. From the chart drawn on the basis of the details already made available, it can be seen that there is no abnormal hike in cash collection just prior to the announcement of demonetisation by the Hon'ble Prime Minister on the eve of 8' Nov 2016 The relevant charts are reproduced as under: a. Breakup of cash collection and collection through bank in AY 2017- 18 with comparative details in AY 2016-17:-

(Figures in Crores) Collection for whole year Collection till 08th November AY Cash Collection Total % of Cash Cash Gross Collection %of cash Collection through Collection Collection Collection collection of Bank the total receipts 2017- 44.54 46.53 91.07 49% 37.6 79.32 47% 18 2016- 44.24 39.55 83.79 53% 34.07 68.92 49% 17 Note the figures under this head do not include contra entreis of intra bank transactions of RS.22.17 Crore and Rs.22.09 Crore in AY’s 2016-17 and 2017-18 respectively not considered as cash inflows.

From the above, chart it is evident that the appellant trust's proportion of cash collection of fees vis a vis the total collection during AY 2017-18 has come down to 49% from 53% in preceding AY 2016-17. The percentage of cash collection till 08h November to the total collection till that date has also shown decline to 47% from 49% in preceding AY. This fact shows and rather nails the possibility / doubt that the appellant has created the cash balance just before demonetisation by artificially inflating the cash collection. Interestingly, the percentage of cash collection has shown a comparative decline IN ay 2017-18 from preceding AY. It is also interesting to note that the gross income of the trust for AY 2017-18 till 08th November has shown increment of 15% approximately to Rs. 79.32 crore from Rs. 68.92 crore in AY 201617. This increase in revenue matches with the overall increase of 10% in the annual revenue of the appellant trust. The breakup of income of the trust with comparative figures for earlier assessment year is discussed in the succeeding para.

Further the activity wise collection chart at page 65 of the Paper book shows the collection of fee from the students which is the major part of the income of the Appellant Trust has shown normal increase of 11% appx from 60.12 crore to 66.91 Crore from preceding name There can never be any issue on fee collection of the students as the fee to charged on the basis of fee structure placed in the public domain and subjected to approval of various regulatory authorities such as MCI, UGC, Ministry of Health & Family Welfare, Ministry of Human Resource Development and Oversight Committee Constituted by Hon'ble Supreme Court of India and also under the active monitoring of the fee committees formed under the direction of the Apex Court from time to time. Coming to the Hospital receipts, from the Chart it can be seen that the hospital receipts have increased in the corresponding periods 7.89 Crore to Rs 11.28 Crore showing the hike of 43% and this hike is normal considering the huge infrastructure cost incurred Rs. 24.41 Crore (PB 47) and Rs 7.85 Crore (PB 15) in AY 2016-17 and AY 2017-18 respectively. The infrastructure cost is required to incurred to substantially update the facility in the Trust hospital as per the ever-evolving health care requirements and to keep the students undergoing practical training abreast of the latest developments in the medical field. In the process of such of the upgrading of facilities, the standard of treatment to the patients also gets lifted. The upgrade of the facilities in any institution obviously is an on-going process being continuation of the process from year to year. These facilities render fruit in the form of revenue with the passage of time after the certain level of completeness is achieved. The appellant's Trust hospital was able to generate the revenue increment during the relevant period based on the hospital's prominence in the area and increased inflow of patients and state of art infrastructure deployed therein. The pharmacy receipts also witnessed a normal increase from Rs 9.10 Crore till 08h Nov in AY 2016-17 to Rs 11.30 Crore till that date in AY 2017-18 and this increase in pharmacy revenue is 25% which is comparable to the increase in Hospital receipts of 43% as the Pharmacy receipts have semblance of relation with hospital receipts as the pharmacy sale is largely dependent on the inflow of patients in the hospital to which the pharmacy is attached.

So the AO is not correct in taking adverse view regarding the explanation of source of cash deposit in demonetization period that is regular collection from the charitable activities, The Ld AO has apparently based his finding on the wrong premise that appellant has booked unaccounted income in cash, which is the source of demonetized currency. b. From details available on record, it can be seen that till 08.11.2015, the appellant had cash in hand of Rs. 20.91 Crore (PB 63), whereas the cash balance as on corresponding date 08.11.2016 increased to Rs. 40.24 Crore (PB 64). It is the balance of cash balance on 08.11.2016 which is the source of cash deposit of Rs.39,83,63,741/- made during the demonetization period which is considered as undisclosed income. The reason why the higher amount of Rs. 40.24 Crore came to be accumulated, than corresponding balance of 08.11.2015, can be explained from the Income and Expenditure Account in the respective years of comparison. (PB 12 AY 2017-18 & 44 for AY 2016-17) c. The appellant due to the peculiar circumstances was under compulsion to keep the cash in hand in physical form in spite of the appellant having number of bank accounts. The peculiarity of circumstances is that the appellant had been put under constant threat of attachment of bank accounts on account of a determined tax liability of Rs.8,05, 70,371/--for AY's 2008-09 to 2014-15. This is evident from the communication from the Ld AO (PB 117). These liabilities have arisen as a result of search on the appellant assessed which took place during FY 2013-14. The appellant had provided for liabilities in its accounts for AY 201617 to the extent of Rs. 7,04,54,813 Kindly refer to page no.52 at Schedule No. 10 of administrative expenses and Schedule No.4 of Current Liabilities. d. Besides above, the appellant had outstanding liability for AY 2013-14 for non-payment of self-assessment tax of Rs.75,74,120/-. The appellant had the provident fund liability of Rs. 75,60,292/- in addition to the claim raised by the PF authorities Rs. 1, 38,24,409/-.

These outstanding liabilities were statutory liabilities which the appellant was unable to or pay despite its noble intentions to discharge these liabilities and at the same time Keeping the activities afloat in the interest accomplishment of the object of public charity. The appellant was faced with the choice ether to pay liabilities to clean his track record or to run the institutions/hospitals where the future and welfare of so many students/patients was at stake. Settlement Commission for settlement of Income Tax dues and also took a necessary action to contest the PF demands raised. But the sword of recovery of these payments were hanging on the appellant and there is every chance of the amounts left in the bank accounts getting attached leading to welfare of the stakeholders i.e. students and public highly irreparably compromised. e. In that situation of attachment of bank account, the appellant trust and consequently the students and the patients would have been high and dry. The appellant would have failed in its object to impart medical education and provide medical facilities, if the appellant chooses to leave money in the bank accounts. The appellant Trust finally discharged liability in F.Y 2018-19 when the contingency of capex investment having been met leaving surplus of funds with the management from which the liability was discharged post Settlement of the disputes by the Hon'ble ITSC. f. Coming to the reason, as to how the appellant happened to accumulate the excess amount of Rs.20 Crore over corresponding date of 08.11.2015, It is submitted from cash flow statement for AY 2016-17 up to 08.11.2015, it can be seen that there had been two major outgoes i.e. Rs. 16.37 Crore towards capital work in progress and Rs.6.10 Crore towards assistance in meeting the regular expenses of the parent trust M/s Maharaji Educational Trust, the entity engaged in para-medical education to the students. Provision of assistance to above institution is in accordance with the main objects of the appellant trust. The appellant during AY 2017-18 had no occasion to incur those expenses such capital work in progress and assistance to Maharaji Educational Trust. The capital work in progress undertaken last year had reached near stage of completion and therefore no further expenditure was incurred. The appellant therefore had extra availability of cash from the level of cash in hand in AY 2016-17 by the amounts of avoided payments of Rs.16

Crore (Capital Work in Progress) and Rs.6 Crore (Assistance to Maharaji Educational Trust).. g. From the explanation given earlier, the cash collection of the trust during AY 2017-18 till date of demonetization was showing normal increase of 10% over the collection for the corresponding period in AY 2016-17 which matches with the growth of gross collection at the rate of 10% for the whole year from the corresponding AY 2016-17. There is justified reason for the appellant to keept the funds as cash in hand in the interest of institutions kept in active mode to safeguard the intest of students/patients. The appellant had no choice but to keep the cash funds undeposited in the bank accounts. h. The appellant had been pursuing the legal remedies against the demand outstanding and in that respect the appellant had move petition for settlement of dispute u/s 245C of IT Act before the Income Tax Settlement Commission. The Commission vide order us 245D(4) dt: 27.11.2015 settled the pending disputes. The final demand of tax was communicated to the appellant vide letter dt: 19.12.2018 by Pr CIT, Central-1, New Delhi through which the appellant was directed to make payment quarterly as per schedule of payment forming part of order of Income Tax Settlement Commission passed us 245D(4) of IT Act. i. The appellant's Tax demands post passing of the order by the Hon'ble ITSC w/s 245D(4) dated 27.11.2015 and further rectification order dated 26.05.2016,were computed year wise by the Department vide intimations at pages 118-128 of the Paper Book and total demand amounted to Rs 8,05, 70,371/-which was to be paid in 6 quarterly instalments. The liability of payments of quarterly instalments of Rs 1,34,28,395/-commenced from Qtr. Ending 31.03. 2016 and scheduled to end on 30.06.2017. The appellant till 30.06.2016 could deposit Rs 16,75,681/- only against the accrued liability of two instalments of Rs 2,68,56, 790/-In the next Qtr. ending 30.09.2016 no deposit of tax could be made. In the following Qtr. ending 31.12.2016 the appellant made deposit of Rs 2.07 Crore out of which Rs.07 Crore were deposited prior to 08.11.2016 and the remaining amount of Rs 2 Crore was deposited through banking channel during demonetisation period the copy of challan-s and the detail of payment are in the paper book at pages 80- 94. Besides payment of Rs.2 Crore on 10.11.2016 to 21.11.2016 towards income tax payments, the appellant made deposit through banking channels Rs. 1,81,48,052/- as TDS from 15.11.2016 to 27.12.2016 and house tax payment of Rs. 12,44,509/- on 25.11.2016. By virtue of Notification F No. 10/03/2016-CYI dt: 10.11.2016 (PB 141), the assessee were allowed to make such payment in demonetized currency and no enquiry will be made on such account. Copies of payment of tax challans as discussed above are placed in paper book at pages 80-94. The least the AO could have considered was the payments of Rs.3,93,92,561/- made through banking channel being out of the demonetized currency deposited post 08.11.2016 not to be considered for the purpose of invoking section 69A r.w.s. 115BBE of the Act. j. It is also clarified that the deposit of demonetized currency which is normal accrual in the course of running medical college/hospital/pharmacy had been fully used towards normal expenses contingencies of the trust which is evident from the fact that the Ld. AO did not find any instance of diversion of funds for the purposes other than the purposes manifest in its intended objectives for which the registration u/s 12A was granted. The application of income does qualify as deduction u/s 11(1) of the Act. The AO does not dispute the application of income by the appellant and this is the reason the AO has granted exemption us 11(1) of the Act for the expenditure claimed as per the computation of income.

B. Validity of action of invoking section 69A r.w.s. 115BBE on the cash deposits under dispute.

I. The appellant seeks to challenge action of the AO invoking the above deeming provisions of law on the receipts deposited during the demonetisation period notwithstanding the fact that the appellant is able to explain the source of such cash deposits. II. The Hon'ble Delhi High Court in the case of CIT(E) Vs Keshav Social and Charitable Foundation 146 taxmann.com 569 (Del) held that once, cash contributions (SBNs) are treated as deemed income no further onus lies on the trust to prove identity/creditworthiness of the contributors or genuineness of the transaction. Under these circumstances section 68 or 69 or 69A will not be applicable. In order to save itself from taxation, the trust may apply 85% of such contributions to charitable purposes. III. Further, Section 68/69/69A of the Act has no application to the facts of the case because the assessee had in fact disclosed the receipts of the trust in the form of fees from students and patients and the pharmacy receipts as its income and it cannot be disputed that all receipts are income in the hands of the appellant assessee. There was, therefore, full disclosure of income by the assessee and also application of the income for charitable purposes. It is not in dispute that the objects and activities of the assessee were charitable in nature, since it was duly registered under the provisions of section 12A of the Act. Therefore, neither of the sections 68/69/69A of the Act has no application to the facts of the case because the assessee had in fact disclosed the all its income which is the source of the deposit in the demonetization period. A reference can be made to support the above proposition of law, to the decision of the Hon'ble Apex Court in the case of Tiruppani Trust v. CIT (1998) 230 ITR 636 (SC) where principles have been laid down that the donations /voluntarily contributions received by a trust created wholly for a charitable or religious purpose (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purpose Section 11 of the Act deemed it to be the income derived from the property held under trust wholly for charitable or religious purposes in the provisions of Sections 11 & 13 of the Act shall apply accordingly. The assessee offers the all its receipts to income and incurs expenditure for the purpose of the trust, no addition us 68/69/69A of the Act is warranted. IV. In case of institutions exempt under provisions of Income Tax Act either us 10(23C)/12A of IT Act and where the Assessing Officer proposes to invoke either sec 68/69/69A of the Income- tax Act, 1961 on account of unexplained source of investment/credit ultimately leading to denial of exemption available w/s 11 of IT Act, such action is contrary to the decision of the Hon'ble Delhi High Court in case of Director of Income Tax (Exemption) v. Raunaq Education Foundation [2007] 294 ITR 76 (Del.) where it is held that the income cannot be given a restricted meaning following the decision of the Supreme Court in different context in P.R. Prabhakar v. CIT [2006] 284 ITR 548 (SC). Reliance is also placed by the Court on the decision of the Supreme Court in Adityapur Industrial Area Development Authority v. Union of India [2006] 5 Scale 321 (SC), where it was held that an exemption granted cannot be taken away, unless it is expressly provided for. In such cases where the Assessing Officer infers income for a charitable institution other than what is admitted in the books, whether by anonymous donations or by way of loan, the source of which cannot be proved, such income will also be exempt subject only to the conditions for application of such income as well, so that there could be no liability on such income. The above view has also been taken in the case of ACIT v. Muslim Educational Society [2010] 1 ITR (Trib.) 527 (Coch.). V. From the material on record, the AO has not found any credits/income/receipts source of which is remained unexplained. So far as the college fee which is the substantial part of the income of the appellant is concerned, the same is duly explained with reference to the student from it is collected. The next item of income is hospital receipts and pharmacy receipts and the AO had not given any adverse finding regarding the source of such income. In the face of this fact, it is an undisputable fact that the aggregate income of Rs.91.07 Crore is the income which does not partake character of anonymous donation us 115BBC of the Act. As per section 115BBC(1), if any institution, trust, university covered us 10(23C)(iiad), or 10(23C)(vi), or 10(23C)(iiae), or 10(23C)(via), or 10(23C)(iv), or 10(23C)(v) receives any anonymous donations, then they will have to pay income tax @ 30% on aggregate amount of donations exceeding Rs. 1 lakh or 5% of total donation (whichever is higher). Since, having regard to the facts on record, the provisions of section 115BBC (1) will not apply in the present case of trust created or established wholly for religious purposes.

VI. In the decisions of Hon'ble Allahabad High Court in the case of CIT vs. Uttaranchal Welfare Society [2014] 364 ITR 398 (AIl.); Hon'ble Delhi High Court in the case of DIT (Exemptions) vs. Keshav Social & Charitable Trust (supra) and the order of Lucknow Bench of the Tribunal in the case of ITO vs. Saraswati Educational Charitable Trust in for assessment year 2010-11 it is consistently held that since assessee has disclosed donation/income as income, section 68/69/69A of the Act cannot be applied, more so because these donations have been applied for charitable purposes, in support of copy of form 10B along with relevant annexure which included Schedule 'A' of Fixed Assets is available on record proving that expenses have been utilized for accomplishment of the charitable objectives of the trust. Therefore, there is record of identity indicating the name and address of the person making contribution, then it will be outside the purview of definition of anonymous donation also. To support above view, further reliance is placed on following decisions:

• Sh Vivekanand Education & Welfare Society • Sunder Deep Educational Society vs ACIT • ITO vs Tathagat Shiksha Samiti ITA No. 51/LKW/2016 dt: 23.10.2018; • ITO (Exemption) v. Narain Educational & Welfare Trust Income Tax Act No. 15/LKW/2015 dt: 10.07.2015. VII. In view of the authorities cited above it is clear that the appellant has applied the income of the trust for charitable activities which fact is undisputed by the AO also, the application of the deeming income under any of the provisions 19) (sections 68/69/ 69A does not arise. Be that as it may, if that proposition of law is applied the action of invoking and applying higher rate of tax as per section 115 BBE also has no basis.

C. Replies of the specific queries raised by your good self with the clarifications given

The appellant was required to justify contention that there was a regular practise of keeping the cash in hand at significantly higher level. The level vide submission dated 06.08.2021 explained with evidences the practice being followed in the past and justification thereof was also provided with the following submissions

1. Submission dated 06.08.2021 i. The evidence of the practice of having large cash being consistently followed by trust.

The appellant, though, has been maintaining number of bank accounts for the convenience of making payments for attainment of the charitable objects of the Trust, but due to the reasons explained in detail in the main written submission, the Trustees, guided by their collective wisdom, adopted a practice to keep the substantial portion of collection in cash. This is proved from the two charts one showing the monthly cash balances and the other showing monthly bank balances. These charts if considered together highlights this peculiar fact indicating the cash holding being higher in preference to the bank balances which are kept intentionally at being minimal level. It may kindly be noted that the information contained in the charts is the same information which was produced in the submissions made before the Ld AO/ DDIT (Inv). Each of the above charts shows the cash (PB 244-246)/ bank balances (PB 142-143), as the case may be, at close of each month right from AY's 2015-16 to 2017-18. The implication of the chart is explained in brief as under:

A. AY 2015-16 The perusal of the charts will show that the appellant trust had kept the minimal funds in the bank accounts and the majority of the funds have been kept in cash. From the monthly cash chart, it can be seen that the major cash collection was in the month of July 2014 of Rs. 12.79 Crore out of total annual cash collection of Rs. 51.47 Crore and the cash holding in the July month end was Rs.20.01 Crore which was utilised in discharging the obligation of charitable activities of the Trust in succeeding months. The above practice of the appellant finds further support from the bank balance chart (PB 142-143) from which it can be seen that barring in the Month of July 2014, the month of peak collection of college fee, when substantial amount of Rs 4.73 Crore was lying in the bank accounts of the trust, the normal average bank balance was in the region of Rs 50 Lakh to Rs 60 Lakh. The bank balance in July end came down to Rs 71.19 Lakh in following month end i.e., Aug 2014 and the same trend of the bank balance being at the bare minimum level continues in the remaining months thereof.

B. AY 2016-17 There was no departure, in this year too, in the practice of keeping minimum funds in bank accounts and keeping the same largely in physical form. This systematic trend is evident from the charts for AY 2015-16 in the paper book at pages 142-143. The cash held in the months of July 2015, Aug 2015 and Sept 2015 were accumulated from the cash collection and this cash balance got utilised in the cash payments made in later months. The Chart of bank balances supports the above plea of the appellant which is further strengthened from the fact that in the months of June 2015 (Bank Balance Rs 1.16 Crore), July 2015 (Bank Balance Rs 2.75 Crore) and Feb 2016 (Bank balance Rs1.48 Crore) but in the following months, the month end balance were Rs 0.75 Crore in Aug 2016 and Rs 0.42 Crore in March 2016). The fee collection in July 2015 was Rs 16.03 Crore out of total annual collection of Rs 66.41 Crore. This shows an unequivocally undisputable fact that the appellant trust had consciously working on the above policy and there is no element of afterthought crafted by the intention of defending the deposit of demonetised currency in AY 2017-18.

C. AY 2017-18 In the AY under appeal, the monthly balances of the bank accounts had been Rs 50 to 60 of Income Tax Lakh on an average and monthly the bank balance never exceeded the above average range of balances except marginally in some cases. Likewise, the cash balances in the months of July 2016 Rs 33.08 Crore accumulated due to cash collection of Rs 13.52 Crore in July 2016 which remained more or less the same with further additions therein due to subsequent cash collections. This resulted into cash accumulations of Rs 42.92 Crore in Oct 2016. The additional fact for your kind consideration is that the total receipts in AY 2017-18 had shown formidable increase of 10% over the preceding AY. All the evidences in support of explanation of the cash deposit in demonetisation period were submitted firstly before the Investigation Wing on 20.07.2017 (PB 75), thereafter before the AO thrice prior to commencement of impugned assessment proceedings on 18.12.2017 (PB 55), on 21.03.2017(PB 169) and thereafter in the assessment proceedings for AY 2016-17 on 28.11.2018 (PB 154-163), 29.11.2018 (PB 159-163) and 17.12.2018 (PB 147- 153). Therefore, it will not be incorrect if a submission is made on behalf of appellant in the present appeal that department was furnished six times, the similar details and despite that strangely enough, these details have been overlooked by the Ld AO Finally, the appellant was again required to explain the source of the cash deposited once again where the earlier submissions of the appellant were neither discussed nor any adverse evidence was shared which pinned the explanation of the appellant. The non-discussion of the explanation given repeatedly to the department without placing support on the contrary evidences found from enquiry by the AO shows that the AO has not applied his mind independently on the explanation given and the evidences furnished in support thereof.

The assessment of the appellant trust was completed in AY 2016-17 /s 143(3) of the Act and in the course of assessment proceedings the Ld AO vide notice dated 06.09.2018 specifically required the appellant to produce all bank statements and the source of cash deposits during demonetisation period. The appellant in replies thereto vide letter dated 17.12.2018 (PB 147- 153) submitted all bank account statements and perusal of these bank statement confirms the fact that the appellant as a matter of consistent policy had been keeping the funds in physical form instead of keeping the same in banking system. The above factual position is accepted in the assessment completed u/s 143(3) of the Act. In the assessment order for AY 2016-17 the Ld. AO did not make any adverse observation on the above practice of the appellant and has accepted the books of accounts maintained by the appellant and accepted the returned income of the appellant. The returned income was computed by the appellant on the basis of books of account maintained and the evidences made available in the assessment proceedings indicated beyond any shadow of doubt that the appellant had been keeping the large part of funds in physical form rather keeping the same in bank accounts.

The appellant had also furnished similar explanation before the Investigation Wing of the Department and also before the AO in response to the summon us 131(1A) of The Act on 21.03.2017 (PB 169) also prior to even initiation of assessment proceedings for AY 2016-17 and the AY 2017-18. The AO had ample opportunity of examining the veracity of the explanation tendered by the appellant in support of the justification of the cash deposit in demonetisation period. The Ld. AO, in the impugned assessment order, has not discussed as to how and on the basis of which enquiry conducted by him, he opted to reject the explanation of the appellant. The abject rejection of an explanation supported by the factual evidences is denial of the principles of natural justice and when the explanation is given in support of some action which is supported by the evidences on records, the AO is duty bound to test such explanation/ evidences on the touch stone of the counter evidences gathered. Merely because the explanation offered does not subserve the cause of revenue. Rather such approach of adjudicating the issues on prejudged notions, which is the case here, is alien to the lawful discharge of duty by an AO. The duty of the AO to act fairly is inherent in the duty of a revenue officer having dual duties carrying a quasi-judicial function as well as collector of tax in an assessment. ii. Further justification of keeping the physical cash throughout the year From the balance sheets of the appellant trust read with the cash flow statements, it can be seen that the cash accumulations in the mid-year gets exhausted at the close of the financial year. The peculiar trend of cash accruals and cash utilisation is because the major fee collection from the students is in July every year but the contingency of incurring expenditure is spread in more or less the same proportion. The factoring of the impact of coercive action for recovery of income tax other demands led the Trust to decide that the bank accounts should have nominal balances meaning that in case of any coercive recovery action taken by the department, the larger cause of charity does not get compromised. In any case the appellant trust manged to pay off all statutory liabilities of Income tax substantially when the pressure of capital expenditure vanished.

The thought process of the trustees managing the affairs of the Trust is that the trust through its activities is supplementing the public welfare functions of the Govt, and the tax collection are made to serve the same cause of public welfare which the appellant through its charitable activities aims to accomplish.

2. Submission dated 14.02.2022 Reason for keeping the cash in hand and not depositing the same in bank accounts of the trust.

The detailed reason can be found from the written submission Dt: 07.07.2021 in para-V in sub-para (a) to (i) and further explained through the supplementary submission dt: 06.08.2021, also both uploaded on 13.08.2021.

The genesis of the reason is that there had been various statutory liabilities which appellant trust was unable to pay because of the financial constraints. There had been real fear in the minds of the trustees that in case coercive action was taken by the concerned authorities to recover these demands, the activities of the trust will suffer irreversibly which will not be less than the sin and that might lead future of young students, who are promising future of the society as prospective doctors to the state of uncertainty and also the welfare of the patients belonging to poor section of society. The detail of the outstanding liability on account of various proceedings are as under:

1. The Hon'ble Income Tax Settlement Commission dt: 27.11.2015 passed u/s 245D(4) of IT Act and the AO computed the tax liability for various years of settlement i.e for AY's 2008-09, 2012-13, 201314 and 2013-14 at Rs.8,05,70,373/-. The computation of liability was made by the AO vide orders dt: 31.12.2015 (PB 118-127). Year wise chart of tax liability is at page 117. This liability is to be discharged in six quarterly installments of Rs.1.34 Crore commencing from quarter ending 31.03.2016 and ending on 30.06.2017.

2. The appellant, on account of the reason explained earlier, could not make the payment of quarterly installment in time and the amount of Rs. 16,75,681/- only was paid till 30.09.2016 against the installments due Rs 4,02,85,185/- (PB 129). The next payment against the outstanding installments was made for Rs.2.07 crore was made from 19.10.2016 to 21.11.2016. The remaining liabilities amounting to Rs. 6,35,05,445/- excluding interest were paid in various smaller amounts till March 2019. The amounts have been paid much after due dates given by the settlement commission for making such payments.

3. The fear of coercive action came to be true when the department attached the bank accounts of appellant and recovered the minimal amounts lying in the bank accounts. The details of attachments and recovery are as under:

Date Amounts recovered Paper Book reference No. 23.02.2017 30,86,845/- 129 at S. No. 11 to 14 10.11.2017 6,49,067/- 129-130 at S. No. 25 to 28 30.01.2018 9160 130 at S.No. 30 16.03.2018 15,60,800 130 S. No. 43 06.03.2019 29,87,673 130-131 at S. No.54 to 59

The strategy of keeping the funds in cash paid off to serve the charitable cause of the trust which provided lifeline to the appellant trust to keep itself afloat, otherwise the entire demand could have been recovered in first action dt: 13.02.2017 itself and thus in a way leaving the appellant starving for funds to run the charitable trust. Copies of the attachment orders dt: 13.02.2017 at pages 71 to 74. The outstanding amounts of three instalments aggregating Rs. 3.86 Crore excluding interest were due for recovery till 08.11.2016 till date of demonetization in addition to the instalments after due in next quarters. Most of the statutory liabilities have been paid in FY 2018-19 after the capex requirement of the trust was met in FY 2017-18. The chart at page 131 supports the above fact.

4. Besides above, there was PF liabilities of Rs. 1,38,24,409/- which needs to be paid as mentioned in notes to account as on 31.03.2017 (PB 21) and also in notes to account for 31.03.2016 (PB 37).

5. The above practice of keeping cash and the reason for such option had been explained before the AO in the assessment proceedings for AY 2016-17 vide submission dt:17.12.2018 (PB 152153) and also in reply to a show cause notice dt :20.12.2018 (PB 144) when the appellant was once again required to explain the source of cash deposit of Rs.39 Crore during demonetization period. The appellant vides letter dt: 22.12.2018 (PB 146) once again explained the source with the help of explanation already given. The same explanation had also been given before the investigation wing vide letter dt: 20.02.2017 (PB 75-79). It is therefore submitted that the fact of cash kept by the appellant for the sake of survival of the entity as a charitable entity is duly documented.

6. It is also relevant to note that the appellant had discharged statutory liabilities during demonetization period aggregating Rs. 3,93,92,561/- (PB 80-94), source of which should not have been considered for taking adverse view when the such payments could have been deposited in demonetized currency by virtue notification F No.10/03/2016-CYI dt: 10.11.2016. The copy of the above notification enclosed herewith. As per the above notification, the payment of taxes, fees, penalties payable to central/state government including local bodies and payment of utility charges could have been made in demonetized currency. Since, the payments for the taxes and penalties have been made of Rs. 3,93,92,561/- out of the deposit of demonetized currency, the least the AO could have done is to exclude such payments computing the addition u/s 69A of IT Act having regard to the above notification.

Evidence of practice of keeping cash actually in place in the past and the same practice continued till demonetization on 08.11.2016.

The evidences placed in the paper book supports the above practice employed in the past and the same are discussed as under: a. Month wise cash flow statement for FY 2014-15 to 2016-17 (PB 243- 246), the above charts show following distinct features:

I. In all the years covered, the cash collection increases in the month of July/ Aug which is the admission period every year. II. The cash in hand generated from cash collection is at peak in the July month end at Rs.20.01 Crore in FY 2014-15 and Rs. 17.65 Crore and Rs.25.18 Crore in July 2015 and Aug 2015 in FY 2015-16 and Rs. 33.08 Crore in July 2016 in FY 2016-17. In FY 2016-17, the cash balance remained at the same level from month to month and the reason being in the preceding financial year, there had been major cash outgo because of capital expenditure, shown as capital work in progress, Rs.16.37 Crore in FY 2015-16 up to 08.11.2015 (PB 63). The said work in progress attained completion in FY 2016-17the trust was not required to incur any further cost on that item of expenditure. To support the fact of completion of the project, your kind attention is invited to the fact that the capital work in progress of Rs.23.46,77,015/- was transferred to various fixed assets under the head Air Conditioner, Building Structure, Electrical Equipment's and Furniture & Fittings in the audited balance sheet as on 31.03.2017(PB 15)- Notes on accounts Schedule 5 Fixed Assets. Since no major capital expenditure was required to be incurred and actually not incurred during FY 2016-17 upto 08.11.2016 which can be verified from cash flow statement at page 64. The expenditure on account of capital work in progress at Rs. 5,87,50,250/- does not pertain to cash expenditure till 08.11.2016. In view of these, it can be appreciated that since, the appellant was not required to incur capital expenditure for existing projects, there was lesser outgo of cash on that account during FY 2016-17 till 08.11.2016.

III. The statement of monthly balances at paper book page 142-143 is the statement covering FY's 2014-15, 2015-16 and 2016-17. From perusal of the above chart, it can be seen that in July 2014 there was peak bank balance of Rs.4.73 Crore and barring the formidable balance in July 2014, the bank balance remained less than one crore in other months which shows that the appellant had been keeping the bank balance at minimal level just sufficient to keep the trust as a going concern. This also proves that this practice was adopted by the appellant trust uninterruptedly, historically and consistently from the past years. This explanation is therefore not arising out of afterthought.

Similar trend appears in FY 2015-16 where in July 2015 and Aug 2015, the bank balance had been Rs. 1.16 Crore and Rs.2.75 Crore. This balance got liquidated in subsequent months except in month of Feb 2016 where the amount of Rs. 1.48 Crore was there in aggregate all bank accounts. The reason of the balance of Rs. 1.48 Crore in Feb 2016 that there was a loan of Rs. 5 Crore taken from trustees namely Mr P Mahalingam on 26.02.2016 which was utilized partly till Feb end and remaining amount in Mar 2016. In other months, the balance remains at bare minimum levels. In FY 2016-17 too, the bank balances remained at minimum level in all months. This trend shows that collection through banking channels is not retained in the banks and also that the cash collections are not deposited unless the same is required to service the payments made through banking channels.

IV. The trend indicated by the above charts undisputedly proves the fact that whatever collections are made through cash or cheque are utilized for the charitable activities of the trust. The cash accumulation which happens to be substantial in the months of July and Aug every year gets utilized by the end of the financial year every year. In other words, it can be appreciated that the major collection by way of college fee is seasonal but the expenses of the trust are uniformly spread throughout the year and the higher collection in one month does not allow the trust the comfort of utilizing the higher collection for meeting the statutory liabilities as the deficiency in funds due to such utilization could result into funds deficit in the lean period of collection. The balance sheets for all the year shows that at the year end, the trust is left with minimal funds at its disposal.

V. A chart showing percentage of collection in cash vis-a-vis the total collection shows that the proportion of cash collection in AY 201617 was 53% for the whole year and 49% till 08.11.2015. The ratio of cash collection during the AY 2017-18 is at lower level 49% for the whole year and 47% till 08.11.2016. This fact shows that although gross collection of fees has increased from Rs.83.79 crore in AY 2016-17 to Rs.91.07 Crore in AY 2017-18 showing 10% increase, the Cash collection till 08.11.2016 has increased to Rs. 37.60 Crore (previous period RFs.34.07 Crore). The cash collection till 08.11.2016 has increased despite proportionate decrease of the same to the gross collection. The increased cash collection till 08.11.2016 and the absence of need of capital expenditure which was there in AY 2016-17 of Rs. 16.37 Crore led to accumulation of cash of Rs.40 Crore approx. till 08.11.2016 although as explained earlier the cash accumulation till 08.11.2015 had been Rs.20 Crore only approx. Since, there is sufficient reason for keeping huge cash in hand and there is real threat of the recovery by the department which ultimately came to be exercised by the department three or four times, the bonafide decision to keep the cash is rational and is not without any reasonable basis.

VI. Further, Section 68/69/69A of the Act has no application to the facts of the case because the assessee had in fact disclosed the receipts of the trust in the form of fees from students and patients and the pharmacy receipts as its income and it cannot be disputed that all receipts are income in the hands of the appellant assessee. There was, therefore, full disclosure of income by the assessee and also application of the income for charitable purposes. It is not in dispute that the objects and activities of the assessee were charitable in nature, since it was duly registered under the provisions of section 12A of the Act. Therefore, neither of the sections 68/69/69A of the Act has no application to the facts of the case because the assessee had in fact disclosed the all its income which is the source of the deposit in the demonetization period. A reference can be made to support the above proposition of law, to the decision of the Hon'ble Apex Court in the case of Tiruppani Trust v. CIT (1998) 230 ITR 636 (SC) where principles have been laid down that the donations /voluntarily contributions received by a trust created wholly for a charitable or religious purpose (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purpose Section 11 of the Act deemed it to be the income derived from the property held under trust wholly for charitable or religious purposes in the provisions of Sections 11 & 13 of the Act shall apply accordingly. The assessee offers the all its receipts to income and incurs expenditure for the purpose of the trust, no addition us 68/69/69A of the Act is warranted. Similar view has been taken in the cases of CIT(E) Vs Keshav Social and Charitable Foundation 146 taxmann.com 569 (Del), CIT vs. Uttaranchal Welfare Society [2014] 364 ITR 398 (All.), ITO vs. Saraswati Educational Charitable Trust in Sh Vivekanand Education & Welfare Society Sunder Deep Educational Society vs ACIT ITA No.2428/Del/2011, ITO vs Tathagat Shiksha Samiti ITA No. 51/LKW/2016 dt: 23.10.2018, ITO (Exemption) v.Narain Educational & Welfare Trust ITA No. 15/LKW/2015 dt: 10.07.2015.

VII. In case of institutions exempt under provisions of Income Tax Act either u/s 10(23C)/12A of I.T. Act and where the Assessing Officer proposes to invoke either sec 68/69/69A of the Income- tax Act, 1961 on account of unexplained source of investment/credit ultimately leading to denial of exemption available u/s 11 of IT Act, such action is contrary to the decision of the Hon'ble Delhi High Court in case of Director of Income Tax (Exemption) v. Raunaq Education Foundation [2007] 294 ITR 76 (Del.) where it is held that the income cannot be given a restricted meaning following the decision of the Supreme Court in different context in P.R. Prabhakar v. CIT [2006] 284 ITR 548 (SC). Reliance is also placed by the Court on the decision of the Supreme Court in Adityapur Industrial Area Development Authority v. Union of India [2006] 5 Scale 321 (SC), where it was held that an exemption granted cannot be taken away, unless it is expressly provided for. In such cases where the Assessing Officer infers income for a charitable institution other than what is admitted in the books, whether by anonymous donations or by way of loan, the source of which cannot be proved, such income will also be exempt subject only to the conditions for application of such income as well, so that there could be no liability on such income. The above view has also been taken in the case of ACIT v. Muslim Educational Society [2010] 1 ITR (Trib.) 527 (Coch.) VIII. From the material on record, the AO has not found any credits/income/receipts source of which is remained unexplained. So far as the college fee which is the substantial part of the income of the appellant is concerned, the same is duly explained with reference to the student from it is collected. The next item of income is hospital receipts and pharmacy receipts and the AO had not given any adverse finding regarding the source of such income. In the face of this fact, it is an undisputable fact that the aggregate income of Rs.91.07 Crore is the income which does not partake character of anonymous donation /s 115BBC of the Act. As per section 115BBC(1), if any institution, trust, university covered w/s 10(23C)(iiiad), or 10(23C)(vi), or 10(23C)(iiiae), or 10(23C)(via), or 10(23C)(iv), or 10(23C)(v) receives any anonymous donations, then they will have to pay income tax @ 30% on aggregate amount of donations exceeding Rs.1 lakh or 5% of total donation (whichever is higher). Since, having regard to the facts on record, the provisions of section 11SBBC (1) will not apply in the present case of trust created or established wholly for religious purposes.

IX. The appellant has prepared a chart incorporating inter alia the transactions of the appellant trust for AY 2017-18 and the comparative details for preceding AY 2016-17 and from the chart the status cash collection, banking of the same and the frequent withdrawal of cash made from Bank accounts and month end bank balances and cash balances have been provided. The copy of the chart which is prepared from detail already on the records of the AO is enclosed herewith. The perusal of the chart indicates and vindicates the definite pattern that due to the reasons already explained in depth, the appellant had been keeping the minimal balance in the bank accounts and the maximum funds were kept in hand which was just sufficient to meet the contingencies of the charitable activities of the Trust. The fact emerging from the chart indicates that bank balances maintained remained in the region of Rs 1-2 Crore in AY 2016-17 whereas the cash accumulated to the tune of Rs 25 Crore in Aug 2015. Similarly in AY 2017-18 the similar trend is established and the reason larger cash is explained hereinabove i.e. the absence of capital expenditure and need for assistance not there for Maharaja Education Trust during AY 2017-18. It is submitted that our earlier submission dated 06.08.2021 on page 18 to 22 may kindly be not considered and the submission in this para instead may be considered.

3. Submission dated 24.02.2022 In the summary of arguments dt: 14.02.2022, the reason for keeping the cash in hand which was a matter of abundant precaution was explained to be the threat of possible coercive action by the department and consequent recovery of demand through attachments of bank accounts.

The appellant had placed in paper book of bank attachment notices (PB 71-74) done on 13.02.2017 and 17.02.2017 issued to Vijaya Bank, Axis Bank, Punjab National Bank. In fact, the appellant wishes to place on record the collection through attachments on various dates which can be found from the schedule of tax payments at pages 129-131. The evidence of recoveries made by the bank as manifest in the above schedule (PB 129-131) are enclosed herewith to highlight the status of mind of the trustees of the trust who were guided by the larger interest of serving the society through medical services and for that a calculated decision was taken to defer payment of the statutory liability which was ultimately paid when the situation permitted then to do so. That fact can be verified from the above chart (PB 129-131). To further support our above submission, we are placing herewith copies of bank statements for relevant period showing payments of tax through attachments.

To sum up the appellant prays to submit even at the cost of repetition that the appellant has been under the scanner of the department and the assessments have been completed in the past through scrutiny, more particularly for AY 2016-17 where the trend of keeping the cash in the trust's custody was quite evident and specifically explained in reply dated 22.12.2018(PB 146) to Show cause notice (PB 144) raising the specific query. The AO after going through the accounts and the relevant records found that the income shown in the Income & Expenditure account is from the sources explained and there is no receipt where the concept of anonymous income u/s 115BBC(I) is applicable and that the expenditure of the trust was found supported with the vouchers and there was no case made out that the appellant has earned unaccounted income by suppressing the income or claiming bogus expenditure for claiming exemption of 85% of the income as per the provisions of section 11(1) of the Act. Since there is no such dispute raised by the AO in the impugned assessment, the AO was not justified in invoking Section 69A r.w.s 115BBE of the Act. The reliance to various case laws cited in para Il to VII on pages 14-17 is reiterated.

It is therefore prayed that the action of the AO needed by quashed in so far as he applies deeming provision of section 69A and section 115BBE of the Act.”

7. The assessee further filed the following submissions dated 23.09.2022 before the Ld. CIT(A): - “In continuation of the summarized submissions and also in reply to the specific queries raised on following issues, the submission of the appellant is as under:

AY Amount (in Crores) 2016-17 68.92 2017-18 79.32 2018-19 84.03 2019-20 85.79 From the above details, it is evident that there has been gradual increase of fee collection year to year.

2. Copy of settlement order dt: 27.11.2015 is enclosed to establish that the assessee had been allowed to discharge the tax liability determined together with interest in six quarterly installments. The relevant para in the enclosed order is para 26 at page 26 of the order. The department, considering the cash flow problem of the appellant's trust itself requested the Hon’ble Settlement Commission the concession of the payments in the eight quarterly installments but Hon'ble Settlement Commission opted in its wisdom to prescribe six quarterly installments.

3. Your good self has required us to explain the reason why the cash expenses during the assessment year under appeal i.e. AY 2017- 18 has come down drastically from level of expenditure for AY 2016-17. It was also noted by your good self that from the details of cash receipts and payment for AY 2016-17, the average cash expenses were Rs. 5-6 Crores per month upto cut off date of 08.11.2015, the date of demonetization in AY 2017-18 and this cash expenses sharply came down to average expenses of Rs.2 crore approx. per month. In compliance of the above direction, the appellant most humbly seeks to submit that as per the enclosed charts, showing break up of cash expenses of AY 2016-17 and AY 2017-18, the appellant was to incur heavy capital expenditure for provision/upliftment of the infrastructure appropriate for the medical colleges run by the appellant trust. The cash flow statement on page 63 of paper book shows that the appellant had incurred capital expenditure under the head capital work in progress amounting to Rs.16.37 Crore and had to provide assistance to Maharaji Education Trust amounting to Rs.6.10 Crore. The appellant, in addition to above, happened to make cash investments in medical equipment's in AY 2016-17 for Rs. 5.87 Crore in March 2016. All the above expenditure was incurred in cash.

The audited balance sheet of appellant trust for AY 2016-17 shows total capital work in progress incurred during the year was Rs. 23.46 Crore (PB 47). The above capital work in progress, representing ongoing expansion projects, got completed in the beginning of the year under appeal i.e. AY 2017-18. This is the reason why the entire opening balance of work in progress as on 01.04.2016 were transferred to various fixed assets and the capital work in progress remaining as on 31.03.2016 Rs. 5.87 Crore was the amount of expenditure on medical equipment's incurred in March 2016 shown as advances in the audited balance sheet for AY 2016-17 in Schedule No.6 at page 48 of the paper book as part of the loans and advances others of Rs. 57.81 Crore.

The cash expenditure on work in progress was monthly average of Rs.2.5 Crore in AY 2016-17 and since, this expenditure was not needed in AY 2017-18 for the reason that projects got, completed, the cash expenditure in AY 2017-18 came down by average of Rs. 2.5 Crore. Besides above, the sister trust Maharaja Education Trust also did not have any funds requirements, cash outgo at average rate of Rs. 50 lakh per month in AY 2016-17 was not there in AY 2017-18. The net impact of above developments had been that the cash expenditure came down by about Rs. 3 crore per month in AY 2017-18 (Rs.2.50 crore for capital work in progress and Rs.50 lakh for assistance to Maharaji Education Trust) in comparison to cash expenditure for AY 2016-17.”

8. Finally, the assessee submitted as follows by and under the representations dated 24.11.2022 and 30.01.2023:

“The core activity of the appellant trust is running of two charitable institutions namely Santosh Medical College & Hospital and Santosh Dental College & Hospital. The Trust was declared as "Santosh University" by Union Ministry of Human Resource Development ("MHRD") vide its Notification dated 13.06.2007 on the basis of recommendations of University Grants Commission dated 18.05.2007. Copies of UGC Recommendations and MHRD Notification is attached herewith and marked as Annexure – 1 & 2.

Thereafter the Government with the intent to review the working and status of deemed universities across the country happened to form various committees such as Dr Tandon Committee in 2009, Committee of MHRD officers Committee on the direction of Hon'ble Supreme Court dt. 11.01.2011 and finally the UGC Committee, again on the direction of the Hon'ble Supreme Court on 21.01.2014. Each of these committees were mandated to take a col; on the fate of the deemed universities some of which were arbitrarily classified in C Category including the appellant university earlier by Dr Tandan Committee.

Accordingly, in February 2014 and in June 2014, UGC Committee invited Santosh University to make a representation regarding the justification on grant of University status in view of the deficiency earlier noticed. Copies of born the communications are attached herewith and marked as Annexure - 3 & 4 respectively. On July 14, 2014, Santosh University submitted its Rebuttal to Tandon Committee Report to UGC. A copy of Rebuttal to Tandon Committee Report is attached herewith and marked as Annexure - 5.

Meanwhile, Hon'ble Supreme Court vide its order dated 08.09.2015, directed inspection of the all the "Deemed to be Universities" including Santosh University and thereafter, accord the Accreditation depending on their infrastructure and other facilities available in the respective Universities. A copy of the order dated 08.09.2015, passed by Hon'ble Supreme Court is attached herewith and marked as Annexure - 6.

In the financial year 2015-2016, the Trust had to incur huge cash expenditure to create the infrastructure and other teaching facilities to satisfy the various criteria requirements of National Assessment and Accreditation Council to be eligible for Accreditation of Santosh University. The criteria fixed were Curricular aspects, Teaching - learning & Evaluation, Research Consultancy, Infrastructure & learning resources and on other relevant aspects.

To satisfy the aforesaid criteria particularly the infrastructural and learning resources, the Trust was under obligation to incur huge capital expenditure. The resources of the appellant trust including all the cash Income collected through Internal accruals were straight away utilized on the capital expenditure to create the infrastructure instead of depositing the same into the Bank Accounts. The appellant trust had anticipated the need for upgradation of the University as the same was extremely important to save the University from de accreditation in view of this matter being under the active consideration before the Highest Court of the Land. The expenditure in upgradation had to be incurred till Nov 2015 and the payment against the same came to be made till March 2016 when the infrastructure was finally inspected by the Peer Teem members.

From 04.11.2015 to 06.11.2015, a Peer Team Members consisting of 11 experts in the medical field holding the positions of Vice Chancellors of Premier Universities of India appointed by NAAC has visited Santosh University and conducted rigorous inspection continuously for 3 days and thoroughly satisfied with the Criteria's met by the University and recommended to NAAC for Accreditation to Santosh University. A copy of Peer Team Report dated 06.11.2015 is attached herewith and marked as Annexure - 7.

Ultimately, Santosh University was Accredited by NAAC successfully. A copy of Accreditation Certificate issued by NAAC is attached herewith and marked as Annexure - 8.

The said NAAC Accreditation was accepted and approved by Hon'ble Supreme Court vide its order dated 19.02.2016. A copy of the order dated 19.02.2016 is attached herewith and marked as Annexure - 9. Finally, on 16th December 2019, MHRD has recognized Santosh University and issued a Notification to the aforesaid effect. A copy of the Notification dated 16th December 2019 issued by MHRD is attached herewith and marked as Annexure - 10.

In the meantime, the Trust had been continuously striving for increase of intake capacity in lv13BS Course from 100 to 150 on various occasions. The necessary application was made on 26.08.2015 after depositing the prescribed fee of Rs 4,00,000/- through demand drafts. Copies of drafts are enclosed as Annexure-Il along with above application. The appellant in order to obtain additional intake permission was required to increase the class room and the other infrastructure facilities such as lab resources etc for which the additions capital cost had to be incurred till 31.03.2016.

The cost both for accreditation and for the additional intake of students amounting to Rs. 23,46,77,015/-, was incurred in FY 2015-16 and was debited to Capital Work in progress as on 31.03.2016. Since, the accreditation was granted, the capital work in progress was therefore, transferred to various assets in AY 2017-18 and as explained earlier capital expenditure was not required in the absence of any need to create any more infrastructure in AY 2017-18 and therefore, no expenditure was incurred on that account during the AY 2017-18 which was the reason for accumulation of cash in AY 2017-18. This is the reason why the cash of Rs.40,24,83,858/- got accumulated on 08.11.2016 which was deposited in banks during demonetization period.

The above information is submitted for your kind perusal.”

3.4 On 02.12.2022, the AR of the appellant filed another supplementary submission-V dated 01.12.2022 in which it was stated as follows:

Sub: Reply to specific queries raised regarding the claim of attachment of bank account by the department for collection of demand.

May Your Honor Please Be With reference to above subject, we wish to refer to the details of tax payments placed in paper book at pages 129-131. In the above statement, complete detail of tax payments of Rs. 8,58,81, 126/- is given which were made in compliance of the order of settlement commission passed w/s 245D of IT Act. Copy of the Hon' ble Settlement Commission order is placed on record.

The submission of appellant had been that it had been constant threat of bank accounts could tax demands arising out of the Hon'ble ITSC order demand was allowed to be paid in six quarterly instalments but the appellant despite having accruals of regular resources, for the reasons explained in detail in the submission, was unable to make the payments of the demands of tax as per the quarterly instalments allowed by the Hon'ble ITSC.

In the face of our submission that there was constant and genuine fear in the minds of the management that bank accounts are likely to be attached, which is the reason given for non-banking of the regular collection, your good self has required us to substantiate the above reasons through the evidences.

The following evidences will show that it was not only the fear but there was actual possibility of attachment of bank accounts to be undertaken by the department for collection of demands of tax which is evident from the actual attachments of the bank done by the department. If the above precaution was not taken, then result would have been financial stalemate leading to huge impairment of the studies/medical services provided by the appellant trust as part of the core activity.

The appellant seeks to place on record a chart showing tax collection through attachments made by the department and that chart is supported by Form 26AS for various years i.e. AY's 2012-13 to 2014-15. The above chart has reference of the entries made in Form 26AS of respective years. The perusal of the chart supported by entries of Form 26AS will show that there has been attachments of the bank accounts in February 2017, November 2017, January 2018, March 2018 and also collection of tax in FY 2018-19 in the months of April 2018, May 2018, August 2018, October 2018, January 2019 and March 2019. The attachments notices available with the assessee are already been filed with submission dt: 24.02.2022. The Form 26AS downloaded for respective assessment years indicates collection by the departments through attachments and that fact can be verified of BSR Code of SBI given in the Form 26AS which are 00009371 and 0000691.

The appellant has not been provided all the attachment notices either by the bank or the department. Some of the notices of attachment were provided by the bank are already filed on 24.02.2022. The appellant in other cases got the information from the debits made in the bank statements in bank accounts. The copies of the relevant period bank statements are enclosed.”

3.5 During the further appellate proceedings, the AR of the appellant filed another supplementary submission-VI 17.01.2023 in which it was stated as follows:

“The sole issue in present appeal is invocation of sec 69A of the Act considering the quantum of cash deposited during demonetization period amounting to Rs. 39,83,63,741/- as "Unexplained Money" within the meaning of above section. The term "Unexplained Money" is defined in sec 69A of IT Act wherein it is provided that in case the assessee is found to be owner of money or any valuable and the same is not recorded in books of account maintained it partakes the character of "Unexplained Money" where assessee is unable to explain to the satisfaction of the AO the nature and source of such money or valuable as the case may be. In view of the above deeming fiction, the basic pre-requisite of "Unexplained Money" is that it is unrecorded in the books of account maintained. If the money or valuable is accounted for in books of account, in view of the parameter set by the about definition, the concerned asset cannot be held to be "Unexplained Money" for the purpose of addition w/s 69A of the Act. To prove that the explanation that the cash deposit under consideration had been sourced from the regular accruals of the appellant trust and the same have been duly accounted in regular books of account maintained, the appellant seeks to submit that the AO had been repeatedly apprised of above fact situation which is evident from the following evidences forming part of paper book:

1. Letter dt: 21.03.2017 (PB 169) to the Ld AO, in compliance of summon dt: 17.03.2017, issued w/s 131(1A), where the cash book for relevant period, bank statements and documentary evidences in support of cash deposits were filed.

2. Letter dt: 18.12.2017 (PB 55-55A) whereby the source of cash deposited was explained to the AO.

3. Letter di: 17.12.2019 (PB 56-60) filed during assessment proceedings whereby source of cash deposited is explained in para 3 at page 58 and also with the help of the chart on page 60 the cash accrual was detailed out from which cash was deposited with comparative figures for preceding assessment year at page 59.

4. The AO in the impugned assessment order acknowledges the fact that in para 3.3 at page 3 therein that cash flow statement for the year under consideration along with earlier years has been filed and considered with the bank statements.

5. The cash book for the entire financial year had been submitted in the course of assessment proceedings to the AO for AY 2016-17 in reply to the query to enquire into source of cash deposit during demonetization period through letters dt: 17.12.2018 (PB 152-153, relevant para 7 (PB 153)). Further reply dt: 22.12.2018 (PB 146) in reply to show cause notice dt: 20.12.2018 (PB 144) regarding source of cash deposit with particular reference to para 2 thereof where complete details along with requisite chart regarding source of cash deposit during demonetization period were explained as per requirement of summon.

From these details, there is no dispute that the appellant had been forthcoming with consistent explanation of cash deposits being out of the normal charitable activities (IPO/OPD collections and college fee from the students). The cash book of the trust had been submitted for the relevant period for the deposits under dispute i.e. 01.11.2016 to 31.12.2016. The AO has not rejected the books of account which shows that the receipts explained to be source of cash deposits as per the books of account have not been disputed by the AO.

In view of the above facts, it is an undisputed fact that the assessee had explained the source of cash deposits being from the receipts duly accounted for in regular books of account and the only possible view could be that A0 might not have been satisfied with the credits which is explained to be source of cash deposits. Without admitting the same, the possible action could have been invocation of sec 68 of the Act treating the source of cash deposits as unexplained cash credits. This action too could not be taken by the AO in view of various decisions cited in the earlier submission more particularly the decision of jurisdictional Delhi High Court in the case of Keshav Social and Charitable Trust 278 ITR 152 (Del) and various other decision. The relevant portion of the above decision is reproduced as under:

“10. To obtain the benefit of the exemption under section 11 of the Act, the assessed is required to show that the donations were voluntary. In the present case, the assessed had not only disclosed its donations, but had also submitted a list of donors. The fact that the complete list of donors was not filed or that the donors were not produced, does not necessarily lead to the inference that the assessed was trying to introduce unaccounted money by way of agnation receipts. This is more particularly so in the facts of the case where admittedly more than 75 per cent of the donations were applied for charitable purposes.

"I1. Section 68 of the Act has no application to the facts of the case because the assessed had in fact disclosed the donations of Rs.18,24,200 as its income and it cannot be disputed that all receipts, other than corpus donations, would be income in the hands of the assessed. There was, therefore, full disclosure of income by the assessed and also application of the donations for charitable purposes. It is not in dispute that the objects and activities of the assessed were charitable in nature, since it was duly registered under the provisions of section 12A of the Act."

In the present case all the receipts are in the course of carrying out charitable activities of the appellant trust and there is no finding or material to dispute the above fact more particularly when the major part of the receipts are college fee which is supported with the head wise collection of the fee duly approved by the regulatory authorities such as IMA and the other receipts are routine hospital/pharmacy receipts. In view of these facts, since all the receipts have been duly offered as income against exemption u/s 11 is claimed, there remains no doubt that in view of the decision of jurisdictional Delhi High Court in post sec 115BBC era, no addition us 68 could be sustained. The Delhi Bench of Hon'ble ITAT in Shanti Nikentan Trust vs Addl CIT in dt: 07.01.2019 has dealt the applicability of sec 115BBC in case of unaccounted receipts. Para 5.2 of the above decision is relevant where the Keshav Social and Charitable Trust (supra) has also been relied upon. For the sake of avoiding complicity, the other decision of invocation of sec 68 in case of charitable trust are not elaborated when the jurisdictional Delhi High Court decision supports the appellant's contention."

3.6 Further, the AR of the appellant another supplementary submission VII dated 30.01.2023 in which it was stated as follows: "Your good self in the last course of appeal has required the appellant to explain the reason for lower cash expenditure during the year under consideration before the period of demonetization i.e. 01.04.2016 to 08.11.2016 as compared to cash expenditure incurred in corresponding preceding year i.e. AY 2016-17.

In this connection, the appellant wishes to submit a month wise cash payment chart for FY 2015-16 relevant to AY 2016-17 and FY 2016-17 relevant to AY 201617 as Annexure-l and 2 along with justification thereof as Annexure-3. The comparison of above two charts will show that the cash expenditure of the assessee prior to period of demonetization i.e. 01.04.2016 to 08.11.2016 has increased as compared to corresponding preceding year i..e AY 2016-17. Your kind attention is invited to the following summarized cash payment table drawn from above annexures:

Particulars AY 2016-17 AY 2017-18 Pattern of Cash Payments prior 13.84 Crores 17.40 Crore to demonetization on 08.11.2016 Total Regular Cash Payments as per the Chart upto 8th Nov Period Upto demonetization 32 weeks 32 weeks Weekly Cash expenditure 43.25 54.37

Lakh/Week Lakh/Week

From the Charts enclosed it is evident that the Total cash payments in AY 201617 upto date of demonization were 36.32Groke out of which 22.47 Crore were the payments which were in the nature of either the Capital Expenditure or in the nature of assistance to sister trust for pursuing objects similar to the appellant trust. Details of such expenditure is given the chart for FY 2015-16. The regular cash expenditure upto the date of demonetization had been Rs. 13.84 Crore which is lower than the regular expenditure of Rs. 17.40 Crore in FY 201617 relevant to AY 2017-18. It is also submitted that assistance to sister trust i.e. M/s Maharaji Educational Trust and incur of capital expenditure in cash in AY 2016-17 was verified by then AO during assessment proceeding for AY 2016-17 after which the assessment order has been passed u/s 143(3) of IT Act vide order dt: 25.12.2018, copy of assessment order enclosed.

The ratio of cash expenditure per week in AY 2017-18 is not lower than the similar expenditure in preceding AY 2016-17 which is evident from the fact that weekly cash expenditure in AY 2017-18 is Rs. 54.37 Lakh in comparison to Rs. 43.25 Lakh per Week in AY 2016-17. There is no basis for any possible apprehension that the assessee has not booked cash expenditure in AY 2017- 18 prior to the date of demonetisation with the purpose to justify cash accumulation of Rs.39 Crore approx on 08.11.2016.”

9. The assessee before us also filed the following written notes of submission:

“Issue: Relief granted by the Ld CIT(A) of the addition of Rs.39,83,63,741/- u/s 69A rws 115BBE of IT Act of the cash deposited during demonetization period.

Observations of the Ld CIT(A) in support of contention of the assessee that the cash deposited was from the accounted sources of the assessee

1. In para 4.2.13 at page 33 therein, the Ld CIT(A), on the basis of evidences brought on record found that the quantum of cash deposited in SBN is Rs.39,63,17,500/- and not the amount of Rs.39,83,63,741/- taken by the Ld AO to make the addition. Chart showing bank wise details of SBN notes deposited during demonetization along with certificates issued by Kotak Mahindra Bank and PNB are placed in paper book at pages 109-111.

2. To support the bonafides of cash accumulation till 09.11.2016, the Ld CIT(A) in para 4.2.14 at pages 33/34, gave a finding that percentage of cash collection by way of students' college fees, medical consultation in the medical hospital and pharmacy sales (upto the date of demonetization i.e. 08.11.2016) is 47% of the total collection which is lower than 49% in preceding assessment year (upto 08.11.2015). The percentage of cash collection for the whole year in AY 2017-18 at 49% was also lower than the percentage of 53% in preceding assessment year. Chart showing break up of receipts in cash and bank for AY 2016-17 and AY 2017-18 are placed in paper book at pages 241-242.

3. The Ld CIT(A) in para 4.2.15/4.2.16 at pages 34-35 found that increase in total collection under various heads in AY 2017-18 (up to 08.11.2016) is not abnormal in comparison to the collection in preceding assessment year (up to 08.11.2015). The Ld CIT(A) did not accept the finding of the Ld AO in para 3.3. of assessment order that there was no corroborating evidence to justify source of cash deposits. The Ld CIT(A), in para 4.2.18/4.2.19 at page 36 therein, found that assessee had a reasonably bonafide reason to adopt a consistent practice of keeping maximum funds in form of cash leaving the barely minimal balances in the bank accounts. The above contention was supported by a table of monthly cash receipts/cash withdrawals/cash deposits/cash expenses and closing and opening balances of cash/ bank accounts for AY 2016-17 & AY 2017-18 extracted on page 35 in para 4.2.17. From the above table, a persistent trend was emphatically evident that in preceding assessment year i.e. AY 2016-17 also, the cash in hand used to be huge in the months July, August, September which gradually decreased to the optimally minimum level in the month of April. It may be relevant to note that main and regular source of cash is student fees which is collected in the months of July, August and September around the start of academic session. The bank balances used to be barely minimum in all the months. More or less similar trend is found evident in AY 2017-18 where bank balances are invariably minimal and cash balances are substantial in above months of fee collection which gradually decreased at the session end at the minimal level barely enough to meet the unforeseen contingencies.

4. Reason for huge cash in hand on the date of demonetization i.e. 09.11.2016

I. It was explained before Ld CIT(A) that there was a settlement order passed in the assessee's case us 245D(4) of IT Act dated 27.11.2015 as per which a liability of Rs.8,58,81,126/- for various years was fixed and the assessee was supposed to pay the above tax demand through a consequential order by the AO dt 31.12.2015 and 08.06.2016. A provision in the audited accounts for AY 2016-17 for the above tax liability amounting to Rs.7,04,54,813/-was made (Note No.3(e) (PB 52)). The assessee made a request for permission of discharge of the tax liability in installments which was granted by Settlement Commission. The assessee was allowed to discharge the above tax liability in six quarterly installments of Rs. 1,34,28,395/- each starting from quarter ending 31.03.2016 and ending on 30.06.2017. Despite the grant of installments, the assessee was not able to make the payments as per the scheme of instalments sanctioned which is evident from payment chart placed in paper book at pages 112. Copies of consequential orders passed for various years u/s 245D(4) by La AO along with computation of income and tax liability are placed in paper book at pages 113-123 and chart showing payment of tax liability against settlement order at pages 124-126.

II. The above tax liability was fully discharged in AY 2018-19 when the funds position of the assessee in the succeeding years eased (PB 124-126). But till the date of demonetization the demand of tax raised by Settlement Commission was largely payable and the assessee had been under the hanging sword of impending attachments being one of the coercive measures routinely taken by the department against the defaulting assessee. The La CIT(A) also took note of the fact that in para 4.2.22 that there had been attachments by the Income Tax Department in the month of Feb 2017, Nov 2017, Jan 2018 and March 2018 for recovery of the above tax demands but the retention of the smaller amounts kept in bank accounts averted the dent on the already thin resources of the assessee. Copies of attachment orders are placed in paper book at pages 67- 70 and the chart showing attachment of bank accounts is placed in paper book at pages 124-126. III. There were also outstanding statutory liabilities requiring the payment by the assessee which made the assessee vulnerable to attachments (PB 245-247 in para-D). Following liabilities are as under:

• Self-Assessment Tax for AY 2013-14-Rs.75,74,120/-. • PF Liability (Rs.75,60,292/- + Rs. 1,38,24,409/-) - Rs. 2,13,84,701/- • Other liabilities such as House Tax Rs. 12,44,509/-, TDS Liability Rs. 1,81,48,052/- which were paid out of the deposited cash during demonetization (PB 76-89).

IV. The Ld. CIT(A) in para 4.2.22 also considered the logic of the failure of the assessee in the discharge of tax liability of the Settlement Commission order when there was huge cash available. It was explained that the assessee has been running a medical college providing medical education to students and at the same time running a hospital/ pharmacy for providing medical facilities to the general public. As is evident from the trend of cash accrual/spending, whatever cash is generated at the start of the academic session, the same gets exhausted at the end of the session leaving barely a thin cushion of funds and leaving little possibility of any drain on these resources on which the first right is of the beneficiary students and the patients. Had the strategy of keeping cash in hand, till finances allowed the assessee to make the payment of outstanding tax liability, not been employed, there would have been chances of the above charitable activities getting jeopardized leaving the students/ patients/ staff in the lurch besides the assessee being put to unnecessary avoidable litigation. Through this strategy, both the twin objectives of accomplishment of charitable objective and objective of payment of tax demand were achieved with rider being difference of timing in the payment of demand which was ultimately paid with interest.

5. Possibility of the cash expenses not accounted for in AY 2017- 18 to build cash in hand on date of demonetization.

The Ld CIT(A) in para 4.2.27 and 4.2.27 at page 40-43 with the help of the month wise cash payments/expenditure chart for AY 2016-17 & AY 2017-18 ruled out the above possibility with the following conclusion: a. Regular cash payments in AY 2017-18 till 08.11.2016 (PB 284) was Rs. 17.40 Crore which is higher amount in comparison to the similar payments in corresponding period on account of regular contingencies amounting to Rs.13.84 Crore (PB 283). Such weekly payments were Rs.54.37 lakh in AY 2017-18 which is in comparison not lower than amount of Rs.43.25 lakhs in AY 2016-17 (PB 285). b. There was capital work in progress in AY 2016-17 which got completed and the same was capitalized in various assets in AY 2017-18. In view of this, there was no requirement on the part of the assessee to incur expenditure on capital work in progress and for acquisition of the capital assets. A detailed submission on the completion of work in progress was filed and reproduced in the Ld CIT(A) order in para 4.2.25 at pages 38 to 40 and the discussion by the Ld CIT(A) is in para 4.2.26 at page 40. The above submission and annexures are placed in paper book at pages 288-382. c. There was also no requirement to provide assistance to sister charitable trust i.e. Maharaji Educational Trust ("MET") which was required in earlier AY 2016-17. d. The Ld AO failed to make any enquiry and also did not give any adverse finding on factual aspects of the matter. The Ld CIT(A) held that there is no prima facie basis for any possible apprehension that the assessee has not booked cash expenditure in AY 2017-18 prior to date of demonetization to justify cash accumulation of over Rs.40 crore approx. on 08.11.2016. Kindly refer to para 4.2.29 at page 43. The Ld CIT(A) held that pattern of regular expenses in cash in AY 2017-18 and AY 2016-17 are almost similar and rather the regular cash expenses are higher in AY 2017-18 in comparison to AY 2016-17. Kindly refer para 4.2.30 at page 43.

6. Subsequent utilization of deposited cash

In para 4.2.32 at page 43, the Ld. CIT(A) gave a finding that the deposited funds out of SBN deposits were utilized for payment of salaries and assistance to sister trust, payment of income tax, purchase of land/fixed assets, repayments of loans and other routine day to day expenses. The Ld. CIT(A) took note of the fact that neither did the Ld AO draw any adverse inference on the utilization/ channelizing of deposited funds to other unrelated entities and nor could such adverse inference at the appellate stage be drawn on the basis of the utilization details provided by the assessee.

7. Justification of Addition made u/s 69A rws 115BBE of IT Act The submission is part of cross objection raised in Form 36A

There is no dispute on the fact that the source of cash deposits in dispute is from books of account maintained in regular course. The books of accounts have not been found to be incorrect or incomplete and Ld. AO has not rejected the same for passing the assessment order as best judgment assessment u/s 144 of IT Act.

The assessment has, in fact, been completed u/s 143(3) of IT Act implying that Ld. AO was satisfied with the correctness and completeness of books of account. On the basis of this analogy, the Ld AO can't be held to be not satisfied with the source of cash deposits which is routine collection under various heads. The Ld AO also did not find any other source of income through which appellant could have accumulated high amount of cash deposited during demonetization. The Ld CIT(A) held that, as per the reading of section 69A, the appropriate circumstances attracting action under above section would be when the assessee is found to be owner of any money or article which is not recorded in books of account. In the present case, since the cash is undisputedly found duly recorded in books of account, therefore, application of sec 69A of IT Act is ruled out as the genesis of application of above section is absent which is the asset not found recorded in books of account maintained. In para 4.2.36 at page 45, the Ld CIT(A) found the case not fit for invocation of addition u/s 69A of IT Act. In support of above view, reliance is placed on the CBDT circular No.20/1964 dated 07.07.1964 and para 87 therein which lays down emphasis on aspect of applicability of sec 69A when the money/bullion/jewellery or other valuable articles are not recorded in books of account which is not the case in present appeal. The above circular was relied in the decision of DN Singh vs CIT CA No.3738/3739 of 2023 dated 16.05.2023. Further, reliance is placed in the decisions of Sh Hersh Washesher Chadha vs ACIT dated 13.04.2023, ITO vs Zee Bangles P Ltd dated 18.07.2023 (Para 10) wherein various decisions have been relied which are Lalchand Bhagat Ambica Ram 37 ITR 288 (SC), Laxmi Rice Mills vs CIT 97 ITR 258 and DCIT vs Karthik Constructions Company ITA No.2292/Mum/2016. Reliance is also placed in the decision of Ramchandra Kanu Mendadkar vs CIT ITA No. 163/Mum/2023 dated 12.05.2023, Smt. Teena Bethala v. ITO ITA No. 1383/Bang/2019 and ITO v. Pukhraj N. Jain [2005] 95 ITD 281 (Mum.). Further, reliance is placed in the following decisions: • Balsons jewellers vs ITO ITA No.563/Del/2024 dated 16.06.2025; • CIT vs Anoop Jain 424 ITR 115 (Del); • Mohit Sukhija vs NFA ITA No.4661/Del/2024; • Durga Fire Works vs ITO IITA No.383/Del/2024

The Ld CIT(A) in para 4.2.37 also took note of the fact that since the source of cash deposits are the receipts of the charitable trust which has been declared as income against which deduction u/s 11 is claimed, the department is not justified in invocation of sec 68 of IT Act as the receipts are already offered for tax. Reliance has been placed in the decision of Keshav Social and Charitable trust 278 ITR 152 (Del) and also ITAT Delhi Bench decision in the case of Shantiniketan Trust vs Addl CIT dated 07.01.2019. The addition u/s 69A is thus the case of double addition.

Without prejudice to above, your kind attention is invited to decision of Hon'ble ITAT, Delhi B bench in the case of Deepak Sharma vs ACIT dated 26.03.2025 where the applicability of sec 115BBE for AY 2017-18 was also not approved in view of the decision of Hon'ble Madras High Court in the case of S.M.I.L.E Microfinance Ltd. vs ACIT W.P.(MD) 2078 of 2020 and 1742 of 2020 dated 19.11.2024 as it was applicable on the transactions done on or after 01.04.2017.

Submissions in support of grounds raised in Cross Objection as per Form 36A Further, the co-ordinate Delhi Bench of the ITAT in case of M/s Agson Global P Ltd vs ACIT to 3746/Del/2019 dt: 31.10.2019, approved by Hon'ble Delhi High Court in in para (xxvii), held that when books of account are found to be genuine and cash deposit is out of the cash balance available in the cash book, such deposit cannot hold to be income from undisclosed sources. In the above judgement, the decision of Mehta Pareek & Co. vs CIT

30. ITR 181 (SC) was also relied to the effect that when accounts of appellant are accepted as genuine and it is impossible to say having regards to the case, the balance shown therein i.e. SBN, in question, could not have been included therein.

The Hon'ble Jurisdictional Delhi High Court in the case of CIT v. Kailash Jewellery House (Del) held that where the receipts /cash sales are duly recorded in the books and these part of income in P&L Account, such cash sales/ income cannot be treated as undisclosed income and no addition can be made. In the case of PCIT vs M/s Singhal Exim P Ltd ITA 228/2020 dt: 22.02.2021 in para 10 where it was held that no addition u/s 68 when cash have been included in the sales. The Hon'ble Delhi High court considered the issue of taxing the opening stocks in the case of Pr CIT v. Akshit Kumar, [2021] 124 taxmann.com 123 (Delhi) and upheld the order of the ITAT in deleting the addition related to sales. Further, reliance is placed in the decision of ITO vs Ankur Jain and Deepak Sharma vs ACIT ITA No. 2886/Del/2022.

The above addition by the Ld AO is against the Standard Operating Procedure (SOP) dt: 21.02.2017 to be followed by the AO in verification of cash transaction relating to demonetization. In the SOP, in para 6, similar situation, as in the assessee case, had been discussed. As per the procedure prescribed in SOP in para 6.1 that the AO needs to verify if the cash transactions and its quantum is in line with normal practice of concerned assessee as mentioned in earlier returns. In that pursuit, he has to see the background of the case on the following indicators:

1. Abnormal jump in cash sales in demonetization period as compared to the earlier history.

-No such jump found rather cash collection was lower in the impugned year than the previous period.

2. Abnormal jump in percentage of cash sales/Collection.

- No such jump found either by the AO or by Ld CIT(A). Rather percentage of cash collection in the period under dispute was lower than the earlier year period collection.

3. More than one deposit of SBN in Bank account late in the demonetization period. - In the present case, the SBN were deposited on different bank accounts opened for each department of the assessee trust. This fact is evident from bank deposit details at page 109. No adverse finding of the AO on that aspect.

4. Non-availability of stock or attempt to inflate stock by introducing fictitious purchases. -Not applicable in the case of college and hospital collection. No adverse finding on the stock manipulation qua the pharmacy receipts where cash receipts were permitted even in the demonetization period.

5. Transfer of deposited cash to another account or other entity not in line with the history. -No such instance found by the AO and Ld CIT(A)'s finding is pertinent and categorical supporting the case of the assessee.

Non-Cancellation of Registration u/s 12AA and granting of benefit of exemption u/s 11(1) of IT Act.

The lower authorities have not proceeded to cancel registration /s 12AA and also opted to grant benefit of sec 11(1) exemption despite finding huge amount of cash deposits allegedly found to be unaccounted receipts/deposits. Such action shows that despite the above adverse finding on unaccounted deposits/receipts, the authorities found no material or evidence that the activities of the trust are not carried out for fulfillment of charitable objects. It is also a settled law that the department was entitled to invoke provision of sec 115BBC (1) of IT Act treating the receipts (Source of cash deposits) as anonymous donations and there was no power to the Ld AO to invoke provision of sec 68/69/69A of IT Act in view of the Triuppani Trust vs CIT 230 ITR 636 (SC) and other decisions Shantiniketan Trust vs Addl CIT (supra) and Keshav Social and Charitable trust (supra).

Non-Consideration of the submissions by the Ld AO but CIT(A) considering all the submissions The assessee filed following submissions before the Ld AO on the issue of cash deposit during demonetization: a) Dated 20.02.2017 before Investigation Wing (PB 71-75); b) Dated 18.12.2017 before Ld AO (PB 53-54); c) Dated 21.03.2017 before Ld AO (PB 162); d) Dated 28.11.2018 before Ld AO during assessment proceeding for AY 2016-17 (PB 147-151) e) Dated 29.11.2018 before Ld AO during assessment proceeding for AY 2016-17 (PB 152-156); f) Dated 17.12.2018 before Ld AO during assessment proceeding for AY 2016-17 (PB 140-146).

None of these above submissions have been dealt by the Ld AO while passing the order but the Ld AO based on the above submissions have accepted the generation of accumulation of over of Rs.20 Crore in the assessment for AY 2016-17 (PB 64-66). The Ld CIT(A) considered all the submissions made and after considering the submission was inclined to accept the genuineness of the source of cash explained by the assessee. In view of above, it is prayed that order of Ld CIT(A) be kindly sustained.

10. The Ld. CIT(A) took into consideration the entire aspect of the mater of source of cash deposit made by the assessee, the reason for huge cash in hand particularly as on the date of demonetization i.e. 9.11.2016, possibility of cash expenses not accounted for in Assessment Year 2017-18 to build cash in hand on the date of demonetization, further the subsequent utilization of deposited cash and comparison of the cash collection with the earlier year and with the following observations deleted the addition in the hands of the assessee holding the order passed by the Ld. AO upon making addition under Section 69A r.w.s 115BBE is incorrect:

“4.1 I have considered the material on record including written submission of the AR of the appellant filed in course of appellate proceeding. I have also perused the assessment order u/s 143(3) of the Act. In the present appeal the appellant has raised following seventeen grounds of appeal s:

1. That the order passed u/s 143(3) on 31.12.2019 was perverse to the law and to the facts of the case, therefore, not tenable because of making illegal and impugned additions to the tune of Rs. 39,83,63,741/- u/s 69A r.w.s. 115BBE of the Income Tax Act

1961, being the alleged presumptions of unaccounted cash appears to be deposited in the bank account of the appellant Trust.

3. That the additions made of Rs. 39,83,63,741/- was further illegal against the law and to the facts of the case, because the Assessing Officer has made the additions u/s 69A r.w.s 115BBE of the Income Tax Act 1961, though the case of the appellant is not covered under the said provisions of law, as the appellant has explained satisfactorily its nature and source thereof duly supported with the books of accounts which has already been accepted as correct, and the dissatisfaction thereupon recorded by the Assessing Officer is not based upon any material either collected or ever placed upon records, which could have nexus to doubt either about the bonafide or genuineness of the receipt of cash which was consequently deposited in the bank accounts by the appellant.

11. That the order passed was further not correct under the law and to the facts of the case, because the Assessing Officer has failed to adjudicate about the correctness, completeness, genuineness and about the bonafide of the information given and documents uploaded on the e-portal of the Deptt. explaining thereby the source of deposit of cash in the bank account of the appellant to the tune of Rs. 39,83,63,741/-.

4.2 During the course of appellate proceedings, through ITBA portal on 20.05.2022, the following four revised grounds of appeal were also filed by the appellant, which have been admitted above and will be adjudicated in this order: 4.2.1 In Ground No. 1, the appellant has contended that the AO has erred in law in invoking the provisions of 69A r.w.s. 115BBE of IT Act on the amount of cash deposits of Rs. 39,83,63,741/-(correct amount being Rs.39,63,17,500/-) during the demonetisation period (from 08.11.2016 to 30.12.2016) ignoring the fact that there is no adverse finding given by the AO regarding the unaccounted receipts or the bogus payments claimed as application of income u/s 11(1) of the Act. The above action of the AO is contrary to the facts on record and also against the decisions of the jurisdictional Delhi High Court and the Apex Court ruling out application of 68/69/69A on the trusts/institutions claiming exemption u/s 11 of the Act. 4.2.2 In Ground No. 2, the appellant has contended that the action of the AO is not tenable in law and on facts of the case on the ground that the appellant explained in detail the source of cash deposited in the banks during demonetisation period and the AO did not find from the inquiry conducted by him the reason to reject the above explanation of the appellant. 4.2.3 In Ground No. 3, the appellant has contended that the above action of the AO is bad in law as the appellant trust is claiming exemption u/s 11 of the Act and said exemption has been allowed by the AO after considering the application of income as claimed in the ITR u/s 11 of the Act. 4.2.4 In Ground No. 4, the appellant Trust assails their right to amend, alter or change any grounds of appeal at any time even during the course of hearing of this instant appeal. 4.2.5 Since all the original and revised grounds deals with different aspects of the only addition namely the addition of Rs. 39,83,63,741/- made to the total income of the appellant in the form of unexplained money u/s 69A r.w.s 115BBE of Income Tax Act, therefore all the original and revised grounds are related to same issue; all the grounds of appeal are adjudicated together. 4.2.6 The assessment order passed by the Assessing Officer is being reproduced as under:

"Return of Income, in this case was e-filed w/s 139(1) on 21.08.2017 declaring Income at Rs. Nil/- vide acknowledgment no. 180780551210817. The case was selected for complete scrutiny through CAss.

2. Notices under section 143(2) of the Income Tax Act, 1961 was issued on 12.09.2018. Notice u/s 142(1) along with a questionnaire was issued on 17.10.2019. Assessee furnished the details called for vide questionnaire issued and subsequently as called for during the course of assessment proceedings. The details, as called for and filed by the assessee were examined with reference to the details furnished in the return of 3. Cash Deposits during Demonetization During the year under consideration, the assessee had filed ROI which reports cash deposits to the amount of Rs: 39,83,63,741/- during the demonetization period from Nov. 9t 2016 to 31st December 2016. As the reason for selection of case is in relation to source of cash deposits during demonetization period, the assessee has been given show cause notice on 03/12/2019 as under: "In the A. Y 2017-18, you have deposited cash to the amount of Rs. 39,83,63,741/- in your bank account during the, period of demonetization and you have not disclosed the above amount in ITR of A.Y. 2017-18. You are requested to explain the source of such cash deposit along with supporting documents (refer to questionnaire on cash deposits u/s 142(1) already issued in your case). In case of non-compliance, you are requested to explain why such cash deposits should not considered as your undisclosed income."

3.2 In response to above notice, the assessee has responded to the issue of cash deposit of Rs.39,83,63,741/- during the period of demonetization as stated below:

The source for the cash deposits fee receipts out of IPD/OPD collections and college fee received from students as per receipt issued the same is offered as income of the trust in the return of income.

3.3 Cash flow statement for FY 2014-15, 2015-16 & 2016-7 was duly considered all the bank account provided by the assessee was also carefully perused alongwith that this office also called information from various banks us 133(6) is also carefully perused and placed on record. At the fact of the assessment on the careful perusal of the cash flow statement from all the 3 year it is seen that there is substantial amount of increase in cash deposit during FY 2016-17 it is also pertinent to note that cash deposited when compared with cash deposited in FY 2015-16, the ratio is huge. Apart from that assessee has not filed any corroborative evidence to justify the source of cash deposit. It is also noteworthy that this office on regular basis vide different questionnaire dated 17.10.2019 and a show cause 03.12.2019 called assessee to submit all its document on e-filing portal. Considering all the facts & circumstances it is concluded that assessee has failed to dislodge its onus and is deliberately is trying to conceal the source of the cash deposit. Accordingly revenue has no other option then considering it as its undisclosed income us 69A unexplained money.

3.4 In the light of above findings, in the interest of revenue, the cash deposits of the assessee during the demonetization period are taken to be undisclosed income and added to the total income of the assessee in the form of unexplained money u/s 69A rws 115BBE of I.T Act, 1961. Since the income of the assessee determined includes income us 69A rws 115BBE of the Act, I am satisfied that it is a fit case for initiation of penalty us 271AAC of I.T Act, 1961. Penalty proceedings us 271AAC are to be initiated separately. (Addition- Rs. 39,83,63,741/-)

4. After considering the documents placed on record, the income of the assessee trust is assessed as following:

Computation of income Return Income- Rs. Nil/- Addition as per Para 3- Rs. 39,83,63,741/- Assessed Income- Rs. 39,83,63,741/-

5. Compute tax and charge interest as ITNS-150 which is the part of this order.

6. Assessed. Issue notice of demand."

4.2.7 On the perusal of assessment order, the Assessing Officer has observed that the appellant had deposited cash of the amount of Rs. 39,83,63,741/- in its bank accounts during the period of demonetization. In the assessment order, the Assessing Officer observed that there was a substantial amount of increase in the cash deposits during FY 2016-17 and the ratio of cash deposits with reference to FY 2015-16 is huge and the appellant has not filed any corroborative evidence to justify the source of cash deposit. Considering the facts and circumstances the Assessing Officer observed that the appellant has failed to discharge its onus and deliberately tried to conceal the source of cash deposit. Accordingly, the Assessing Officer considered these deposits as undisclosed income u/s 69A as unexplained money and made the addition in the form of unexplained money u/s 69A r.w.s 115BBE of Income Tax Act.

4.2.8 The appellant is a charitable Trust registered u/s 12A of the Income Tax Act and came into existence w.e.f. 16.12.2004. The said Trust has also been granted exemption in terms of Section 80G(5)(iv) of Income Tax Act. The main object of the Trust is to impart medical education to the student and the Trust has been running a medical college named as 'Santosh Medical College and Hospital' and another integrated institution named as 'Santosh Dental College and Hospital' at Ghaziabad. Apart from medical education the medical facilities are also provided to the public. The said institutions were granted independent status of a deemed university in the name and style of "Santosh University'.

4.2.9 The appellant trust, as a matter of regular routine, has number of bank accounts where the collection of student fee and that of the hospital and the pharmacy used to be deposited. As per the Assessing Officer, the trust, during the demonetization period (from 09.11.2016 to 30.12.2016), deposited the demonetized currency (SBNs) aggregating Rs 39,83,63,741/- and the above deposits of SBNs is treated by the Assessing Officer, as undisclosed income and added to the total income of the appellant as unexplained money u/s 69A applying the higher rate of tax as per section 115BBE of the Act.

4.2.10 Therefore, the key issues raised by the Assessing Officer while making the addition are as under:

1. The appellant did not disclose the amount of cash deposited in its Income Tax Return for AY 2017-18.

2. There is a substantial amount of increase in cash deposits during FY 2016-17.

3. Cash deposit when compared with cash deposit in FY 2015-16, the ratio is huge. 4. Assessee did not file any corroborative evidence to justify the source of cash deposit.

These issues are being addressed in the following paragraphs.

4.2.11 As per the returned of income filed by the appellant in ITR-7 for AY 2017-18, the relevant extracts of 'other bank account details' are reproduced as under:

4.2.12 In view of the relevant extracts of the income tax return mentioned above, the appellant had disclosed that he had deposited total cash amount of Rs. 39,54,65,405/- in 9 bank accounts (if aggregate cash deposits during the period >= Rs. 2 lakh). Therefore, the observation of the Assessing Officer that the quantum of the cash deposited during demonetization period was not disclosed in the return of income is factually incorrect as this information was included and was fully disclosed in the income tax return.

4.2.13 With regard to the specific issue of deposit of SBNs, the relevant arguments of the appellant regarding the exact quantum of SBNs are as under:

"Coming to the specific issue of the deposit of SBN involved in the present appeal, it is submitted that the total deposit of demonetised currency from 08.11.2016 to 30.12.2016,as per the AO, was the amount totalling Rs 39,83,63,741/- but the AO has clearly has been misled from the incorrect information available on his records which is evident from the fact that the deposit of demonetised currency could not have been in the denomination lower than Rs 500/- and the deposits in the lower denominations could not have been in the demonetised currency. The appellant has placed a chart (PB 114) where the date wise and bank wise detail of cash deposits are given. From the chart it can be seen that in the accounts where the deposits of college fee collection is made the aggregate cash deposits during demonetisation period had been Rs 39,27,63,336/-out of which the deposit of demonetised currency with PNB (Certificates PB 115) was Rs 12,29,836/- thus leaving the quantum of SBN deposits to the amount of Rs 39,15,33,500/- only. Similarly in the bank accounts of the Pharmacy the aggregate cash deposits considered to be demonetised currency was Rs 17,52,500/-out which as per the certificates issued by the Kotak Mahindra Bank (PB 116), the deposit of demonetised currency was Rs 9,36,500/-leaving the remaining amount of Rs 8,16,000/- being deposit of demonetised currency. In the Vijaya Bank also where hospital receipts are deposited the deposits of Rs 405/- are in demonetised currency as the amounts of lesser denomination than Rs 500/- could not have been the demonetised currency. Considering all the above variation in quantification of the deposit of Demonetised currency, the amount of Rs 20,46,241/- could not muster the test of demonetised currency deposit and the amount of Rs. 39,63,17,500/- is the correct amount of deposit of SBN. The facts show that the AO has not applied his mind in considering the instant issue and adjudicated the issue with closed mind without referring to the relevant facts of the case and without applying his mind to the peculiarity of the fact circumstances of the case duly explained before him and the Investigation Team also."

Therefore, as per the appellant, the amount of Rs.39,63,17,500/- is the correct amount of deposit of SBNs and not the amount of Rs 39,83,63,741/- as considered by the Assessing Officer.

4.2.14 The source of receipts for the appellant during the year is college fee from the students of medical/dental college run by it, the medical/consultation fee from the patients at the hospital and the collection at pharmacy. The breakup of cash collection and collection through bank in AY 2017-18 with comparative details in AY 2016-17 is as under:

Therefore, the percentage of cash collection ill 8th November and for the whole of the year out of the total collection has reduced in AY 2017-18 in comparison to AY 2016-17. The percentage of cash collection has shown a comparative decline in AY 2017-18 from preceding assessment year, whereas the gross income of the Trust for AY 2017-18 has shown increase over AY 2016-17.

4.2.15 The comparative chart of gross receipts for the period of 01.04.2015 to 08.11.2015 and 01.04.2016 to 08.011.2016 containing details of fees collection, other charges collected by college, hospital charges and pharmacy charges is as under:

"For the period From 01.04.2015 to 08.11.2015 4.2.16 Following inferences can be drawn out of the data mentioned above:

1. The contribution of college fees has shown in increase around 11% from the preceding year.

2. The contribution of college fees as a percentage of total gross receipts have reduced from 86% to 82.79%.

3. Hospital receipts have been increased in the corresponding years from Rs. 7.89 Crores to Rs. 11.28 Crores. 4. Pharmacy receipts witnessed an increase from Rs. 9.1 Crores to Rs. 11.3 Crores. 5. Increase in Pharmacy revenue is around 25%, which is comparable to increase in hospital receipts of 43%.

Therefore, the data mentioned in the preceding paragraph is logical, devoid of any abnormal pattern and is apparently correct. The pattern of receipts in AY 2016-17 and AY 2017-18 is consistent and does not prima facie show any abnormality.

4.2.17 At this stage it would be appropriate to analyse the cash receipts or payments for the AY 2016-17 and AY 2017-18. This would give a fair idea for nature of operation of the appellant and the cash in hand over the months/years. These details are mentioned below:

4.2.18 An analysis of table above highlights the following:

1. Total cash receipts in both the years are more or less the same.

2. Huge amounts of cash have been withdrawn from the bank.

3. Sizeable amount of cash is withdrawn from the bank account in such a way that the bank balances are normally maintained somewhere between Rs. 1 to 2 Crores only. 4. Huge cash withdrawals is the modus operandi of the appellant as in both the years sizeable amount of cash has been withdrawn from the bank accounts. 5. During the AY 2017-18 the opening cash in hand was Rs. 1,17,57,764/-, which has increased to Rs. 2,33,98,814/- on 30.04.2016, Rs. 10,56,87,493/- on 31.05.2016, Rs. 13,67,78,622/- as on 30.06.2016, Rs. 33,08,06,435/- as on 31.07.2016, Rs. 37,00,28,223/- as on 31.08.2016, Rs. 38,49,38,712/- as on 30.09.2016 and Rs. 42,92,29,252/- as on 31.10.2016. This amount was reduced to Rs. 2,10,89,138/- on 30.11.2016 as most of the cash was deposited in the bank account subsequent to demonetization by the appellant.

4.2.19 The appellant deposited a sum of more than Rs. 39 Crores in his bank account in the post demonetization period. As per the cash flow statements for the period prior to 8th November in AY 2016-17, the cash in hand as on 08.11.2015 was Rs. 20.91 Crores, which has increased to Rs. 40.24 Crores as on 08.11.2016. Therefore, the appellant in the preceding year maintained cash in hand of around Rs. 20 Crores which has abnormally increased as on 08.11.2016 to around Rs. 40 Crores. This issue is required to be analyzed further.

4.2.20 In view of the discussion above, it can be observed that the appellant was in possession of more than Rs. 40 Crores in cash as cash in hand on the date of demonetization. Two key questions which are required to be addressed are first that why the appellant has been withdrawing such high amount of cash and keeping such high amount of cash in hand and second why the cash expenditure/payments are much lower in the pre-demonetization period during 2016-17 in comparison to the preceding year FY 2015-16.

4.2.21 With regard to the reason as to why the appellant was maintaining such high quantum of cash in hand, the appellant submitted the following:

"Sub: Reply to specific queries raised regarding the claim of attachment of bank account by the department for collection of demand.

May Your Honor Please Be With reference to above subject, we wish to refer to the details of tax payments placed in paper book at pages 129-131. In the above statement, complete detail of tax payments of Rs.8,58,81,126/- is given which were made in compliance of the order of settlement commission passed u/s 245D of IT Act. Copy of the Hon'ble Settlement Commission order is placed on record.

The submission of appellant had been that it had been constant threat of bank accounts could be attached by the Income Tax Department for collection of pending demands. Although, the tax demands arising out of the Hon'ble ITSC order demand was allowed to be paid in six quarterly instalments but the appellant despite having accruals of regular resources, for the reasons explained in, detail in the submission, was unable to make the payments of the demands of tax as per the quarterly instalments allowed by the Hon'ble ITSC.

In the face of our submission that there was constant and genuine fear in the minds of the management that bank accounts are likely to be attached, which is the reason given for non-banking of the regular collection, your good self has required us to substantiate the above reasons through the evidences.

The following evidences will show that it was not only the fear but there was actual possibility of attachment of bank accounts to be undertaken by the department for collection of demands of tax which is evident from the actual attachments of the bank done by the department. If the above precaution was not taken, then result would have been financial stalemate leading to huge impairment of the studies/medical services provided by the appellant trust as part of the core activity.

The appellant seeks to place on record a chart showing tax collection through attachments made by the department and that chart is supported by Form 26AS for various years i.e. AY's 2012-13 to 2014-15. The above chart has reference of the entries made in Form 26AS of respective years. The perusal of the chart supported by entries of Form 26AS will show that there has been attachments of the bank accounts in February 2017, November 2017, January 2018, March 2018 and also collection of tax in FY 2018-19 in the months of April 2018, May 2018, August 2018, October 2018, January 2019 and March 2019. The attachments notices available with the assessee are already been filed with submission dt: 24.02.2022. The Form 26AS downloaded for respective assessment years indicates collection by the departments through attachments and that fact can be verified of BSR Code of SBI given in the Form 26AS which are 00009371 and 0000691.

The appellant has not been provided all the attachment notices either by the bank or the department. Some of the notices of attachment were provided by the bank are already filed on 24.02.2022. The appellant in other cases got the information from the debits made in the bank statements in bank accounts. The copies of the relevant period bank statements are enclosed."

4.2.22 The appellant therefore mentioned that there were income tax demands outstanding against the appellant during that period as a result of ITSC orders for various years and therefore the appellant was under constant fear of attachment of bank accounts. Any attachment of bank account and sudden outgo of cash out of these bank accounts would have adversely impacted the day to day operations of the appellant which includes running of medical college and hospital. This was apparently the reason as to why the appellant has been withdrawing money from bank accounts and did not deposit the cash receipts in its bank accounts, thereby maintaining high cash in hand. The fear of attachment proved to be correct and the attachments of bank account were carried out by the Department in February 2017, November 2017, January 2018 and March 2018. However, in subsequent years the tax demand raised was fully paid by the appellant.

4.2.23 As discussed earlier and on the basis of the analysis of cash in hand of the appellant during FY 2015-16 and FY 2016-17, it is observed that this is a regular practice followed by the appellant. The appellant used to withdraw cash from its bank accounts in such a way that a minimal amount of cash (around Rs. 1-2 Crore) only is maintained in the bank accounts. The fees and the hospital income received in cash is either retained as cash in hand or is deposited in bank and is subsequently withdrawn from the bank. This is a consistent practice being followed by the appellant during FY 2015-16 and therefore this was being followed even prior to the demonetization. The fear of attachment may be one of among the reasons of keeping high amount of cash in hand or there may be another reasons of doing the same but it is duly supported from the cash in hand and cash at bank details of FY 2015-16. Further, there is no denying to the fact that the attachments were actually carried out by the department to recover the tax demands. The practice of keeping high cash in hand may be unusual but is certainly consistent as per the past history of the appellant. It is also noteworthy to mention that scrutiny assessment has been carried out for AY 2016-17 and no adverse inference have been drawn by the Assessing Officer regarding the practice of keeping high cash in hand. 4.2.24 With regard to the second issue, as per the cash flow statements for the period prior to gth November in AY 2016-17, the cash in hand as on 08.11.2016 was Rs. 20.91 Crores, which has increased to Rs. 40.24 Crores as on 08.11.2016. Therefore, the appellant in the preceding year maintained cash in hand of around Rs. 20 Crores, which has abnormally increased to around Rs. 40 Crores as on 08.11.2016. There is a substantial rise in the cash in hand figures as on 08.11.2016. This issue has been analysed and it is noted that the cash expenses during FY 2016-17 have been considerably reduced in comparison to the cash expenses during FY 2015-16. The same are analyzed as under: Details of Cash expenses during FY 2015-16 and FY 2016-17 4.2.25 The appellant's explanation regarding the lower cash expenses is as under:

"The core activity of the appellant trust is running of two charitable institutions namely Santosh Medical College & Hospital and Santosh

Dental College & Hospital. The Trust was declared as "Santosh University" by Union Ministry of Human Resource Development ("MHRD") vide its Notification dated 13.06.2007 on the basis of recommendations of University Grants Commission dated 18.05.2007. Copies of UGC Recommendations and MHRD Notification is attached herewith and marked as Annexure - 1 & 2.

Thereafter the Government with the intent to review the working and status of deemed universities across the country happened to form various committees such as Dr Tandon Committee in 2009, Committee of MHRD officers Committee on the direction of Hon'ble Supreme Court dt 11.01.2011 and finally the UGC Committee, again on the direction of the Hon'ble Supreme Court on 21.01.2014. Each of these committees were mandated to take a col; on the fate of the deemed universities some of which were arbitrarily classified in C Category including the appellant university earlier by Dr Tandan Committee.

Accordingly, in February 2014 and in June 2014, UGC Committee invited Santosh University to make a representation regarding the justification on grant of University status in view of the deficiency earlier noticed. Copies of born the communications are attached herewith and marked as Annexure - 3 & 4 respectively. On July 14, 2014, Santosh University submitted its Rebuttal to Tandon Committee Report to UGC. A copy of Rebuttal to Tandon Committee Report is attached herewith and marked as Annexure - 5.

Meanwhile, Hon'ble Supreme Court vide its order dated 08.09.2015, directed inspection of the all the "Deemed to be Universities" including Santosh University and thereafter, accord the Accreditation depending on their infrastructure and other facilities available in the respective Universities. A copy of the order dated 08.09.2015, passed by Hon'ble Supreme Court is attached herewith and marked as Annexure - 6.

In the financial year 2015-2016, the Trust had to incur huge cash expenditure to create the infrastructure and other teaching facilities to satisfy the various criteria requirements of National Assessment and Accreditation Council to be eligible for Accreditation of Santosh, University. The criteria fixed were Curricular aspects, Teaching - learning & Evaluation, Research Consultancy, Infrastructure & learning resources and on other relevant aspects.

To satisfy the aforesaid criteria particularly the infrastructural and learning resources, the Trust was under obligation to incur huge capital expenditure. The resources of the appellant trust including all the cash Income collected through Internal accruals were straight away utilized on the capital expenditure to create the infrastructure instead of depositing the same into the Bank Accounts. The appellant trust had anticipated the need for upgradation of the University as the same was extremely important to save the University from de accreditation in view of this matter being under the active consideration before the Highest Court of the Land. The expenditure in upgradation had to be incurred till Nov 2015 and the payment against the same came to be made till March 2016 when the infrastructure was finally inspected by the Per Taem members.

From 04.11.2015 to 06.11.2015, a Peer Team Members consisting of 1l experts in the medical field holding the positions of Vice Chancellors of Premier Universities of India appointed by NAAC has visited Santosh University and conducted rigorous inspection continuously for 3 days and thoroughly satisfied with the Criteria's met by the University and recommended to NAAC for Accreditation to Santosh University. A copy of Peer Team Report dated 06.11.2015 is attached herewith and marked as Annexure - 7.

Ultimately, Santosh University was Accredited by NAAC successfully. A copy of Accreditation Certificate issued by NAAC is attached herewith and marked as Annexure - 8.

The said NAAC Accreditation was accepted and approved by Hon'ble Supreme Court vide its order dated 19.02.2016. A copy of the order dated 19.02.2016 is attached herewith and marked as Annexure - 9.

Finally, on 16th December 2019, MHRD has recognized Santosh University and issued a Notification to the aforesaid effect. A copy of the Notification dated 16th December 2019 issued by MHRD is attached herewith and marked as Annexure - 10.

In the meantime, the Trust had been continuously striving for increase of intake capacity in MBBS Course from 100 to 150 on various occasions. The necessary application was made on 26.08.2015 after depositing the prescribed fee of Rs 4,00,000/- through demand drafts. Copies of drafts are enclosed as Annexure-ll along with above application. The appellant in order to obtain additional intake permission was required to increase the class room and the other infrastructure facilities such as lab resources etc for which the additions capital cost had to be incurred till 31.03.2016.

The cost both for accreditation and for the additional intake of students amounting to Rs. 23,46,77,015/-, was incurred in FY 2015-16 and was debited to Capital Work in progress as on 31.03.2016. Since, the accreditation was granted, the capital work in progress was therefore, transferred to various assets in AY 2017-18 and as explained earlier capital expenditure was not required in the absence of any need to create any more infrastructure in AY 2017-18 and therefore, no expenditure was incurred on that account during the AY 2017-18 which was the reason for accumulation of cash in AY 2017-18. This is the reason why the cash of Rs. 40,24,83,858- got accumulated on 08.11.2016 which was deposited in banks during demonetization period. “

4.2.26 The appellant has argued that during FY 2015-16, the appellant had to incur huge cash expenditure to create the infrastructure and other teaching facilities to satisfy the various criteria of requirements of National Assessment and Accreditation Council to be eligible for Accreditation of Santosh University. To satisfy the aforesaid criteria particularly the infrastructural and learning resources, the Trust was under obligation to incur huge capital expenditure. The resources of the appellant trust including all the cash Income collected through internal accruals were straight away utilized on the capital expenditure to create the infrastructure instead of depositing the same into the Bank Accounts. The cost both for accreditation and for the additional intake of students amounting to Rs.23,46,77,015/-, was incurred in FY 2015-16 and was debited to Capital Work in progress as on 31.03.2016. Since, the accreditation was granted, the capital work in progress was therefore, transferred to various assets in AY 2017-18 and further capital expenditure was not required in the absence of any need to create any more infrastructure in AY 2017-18 and therefore, no expenditure was incurred on that account during the AY 2017-18 which was the reason for accumulation of cash in AY 2017-18. This is also the reason as to how the cash of Rs.40,24,83,858/- got accumulated on 08.11.2016, which was later deposited in banks during demonetization period. In view of the above, it is clear that the appellant carried out huge capital expenditure during FY 2015-16 for creating infrastructure facilities and the same expenditure was not required in the subsequent year in FY 2016-17. The lower cash expenses in FY 2016-17 have therefore, resulted into higher accumulation of cash with the appellant, which was later deposited in the bank accounts of the appellant.

4.2.27 As discussed above, the availability of the cash in hand as on the date of demonetization is much higher during AY 2017-18 than the corresponding figure in AY 2016-17. For this purpose a detailed analysis of the expenses made in cash during FY 2015-16 and FY 2016-17 has been carried out and the same is reproduced as under:

4.2.28 The prima facie analysis of the expenditure made in cash during 01.04.2016 to 08.11.2016 as compared to the cash expenditure incurred in corresponding period of preceding year indicate the following:

1. The cash expenditure of the appellant prior to the period of demonetization i.e. 01.04.2016 to 08.11.2016 has increased as compared to corresponding figures in preceding year i.e. AY 2016-17.

2. The pattern of cash payment prior to demonetization on 08.11.2016 indicates that cash expenses of Rs. 17.40 Crores have been made in regular course against an amount of Rs. 13.84 Crores for the same period in the preceding years of AY 2016-17. The regular cash expenditure upto the date of demonetization had been Rs. 17.40 Crore in FY 2016-17 relevant to AY 2017-18, which is higher than the regular expenditure of Rs. 13.84 Crores for the same period during FY 2015-16.

4.2.29 In view of the above, it can be observed that the cash expenditure during AY 2017-18 prior to the date of demonetization on regular heads has been higher than the corresponding figures for the similar period during AY 2016-17. The accumulation of cash during FY 2016-17 prior to demonetization happened due to no corresponding expenditure under the head *Capital work in progress' 'Advances for medical equipments' and 'Assistance to Maharaji Educational Trust. There was an expenditure of Rs. 22.48 Crores on these three heads as on 08.11.2015 during PY 2015-16, which has been reduced to nil in the corresponding period for FY 2016-17. The Assessing Officer did not make any investigation and/or did not provide for any adverse finding regarding accumulation of cash with the appellant from the college fees, hospital/pharmacy charges and cash withdrawals from bank. Therefore, there is no prima facie basis for any possible apprehension that the appellant has not booked cash expenditure in AY 2017-18 prior to the date of demonetisation with the purpose to justify cash accumulation of Rs.40 Crore approx on 08.11.2016.

4.2.30 On the basis of discussion and analysis above, the following points are noteworthy:

1. 1. The cash expenses on regular activities of the appellant were increased during the period prior to demonetization in FY 2016-17 than the corresponding figures during FY 2015-16.

2. The cash expenses under the head 'Capital work in progress', 'Advances for medical equipments' and 'Assistance to Maharaji Educational Trust' were much higher during FY 2015-16 and were reduced to Nil in FY 2016-17 and that is the cause of accumulation of cash in hand of the appellant as on the date of demonetization.

3. The assessment for AY 2016-17 was carried out in scrutiny and there is no adverse finding regarding the said expenditure of capital in nature discussed above.

4. The Assessing Officer did not carry out any investigation or made any adverse finding on these cash expenses which resulted in accumulation of cash as on date of demonetization.

5. The pattern of regular expenses in cash for FY 2015-16 and FY 2016-17 is almost similar. In fact, the regular cash expenses in FY 2016-17, prior to demonetization are higher than the same in corresponding period of FY 2015-16.

4.2.31 In view of the above, there is no justification of any adverse finding with reference to the appellant's books of accounts and details of cash income/expenditure. Therefore, there cannot be any prima facie basis for possible apprehension that the appellant has not booked cash expenditure in AY 2017-18 prior to the date of demonetisation with the purpose to justify cash accumulation of Rs. 40 Crore approx on 08.11.2016.

4.2.32 At this stage it is also noteworthy to mention that during the course of appellate proceedings, the issue of subsequent utilization of the SBNs deposited during demonetization was analyzed. It was observed that the amount deposited in the bank accounts immediately after demonetization was utilized for payment of salary, assistance to sister trust, payment of Income Tax, purchase of land, purchase of fixed asset, repayment of loan and other routine day to day expenses etc. No adverse inference was either drawn by the Assessing Officer on this account during assessment proceedings nor can be drawn at this stage as most of these expenses are related to the routine activities of the trust.

4.2.33 This is a case where the Assessing Officer has made an addition of Rs. 39,83,63,741/- u/s 69A r.w.s 115BBE of Income Tax Act as the same was the cash deposited in SBNs during demonetization. It is noteworthy to mention that the Assessing Officer while making the addition did not reject the books of accounts and have carried out the addition u/s 143(3) of Income Tax Act and not u/s 144 of Income Tax Act. As per section 145 of Income Tax Act:

"Method of accounting.

4.2.34 Therefore, if the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, he could have rejected the books of accounts and could have make an assessment u/s 144 of Income Tax Act. Therefore the primary condition is that the books of accounts should be incorrect and/or incomplete and then the assessment has to be carried out as the best judgment assessment. However, in this case the assessment has been carried out u/s 143(3) of the Income Tax Act. This gives a clear indication that the Assessing Officer was satisfied with the correctness and completeness of the books of accounts of the appellant and therefore he chose not to reject the books of accounts. The Assessing Officer was satisfied with the correctness and completeness of the books of accounts; this would mean that the Assessing Officer found the college fees receipts, hospital and pharmacy receipts and cash expenditure to be correct. The Assessing Officer did not doubt the genuineness of the cash receipts on account of college fees and hospital receipts and therefore, all the receipts of the Trust have been considered to be in order. Further the Assessing Officer did not find any anomaly with the expenditure side of the income and expenditure account also. Even at appellate stage, there is no adverse finding regarding the correctness and completeness of books of account; accordingly even at this stage the correctness and completeness of books of account cannot be doubted. Therefore, the expenditure in cash made by the appellant during the FY 2016-17 also have been considered as correct and complete. If the income and expenditure side of the income and expenditure account have been found to be correct then any addition u/s 69A of Income Tax Act would mean a double addition. Merely, stating that the assessee has failed to discharge its onus and is deliberately is trying to conceal the source of the cash deposit and accordingly revenue has no other option then considering it as its undisclosed income u/s 69A unexplained money, will not be appropriate on the part of the Assessing Officer. The Assessing Officer did not mention about any other source of income through which the appellant could have accumulated such high amount of each to he deposited in the bank account during demonetization. The books of accounts of the appellant have been found to be correct and complete and therefore the receipt and expenditure made by the appellant during the year cannot be disturbed. Accordingly, the action of the Assessing Officer making an addition of cash deposits in SBNs during demonetization u/s 69A of Income Tax Act without rejecting the books of accounts results in double addition and is cannot be considered as appropriate.

4.2.35 At this stage, the issue of correctness and legal validity of the addition u/s 69A of Income Tax Act is also required to be discussed. Section 69A of Income Tax Act is being reproduced as under:

"Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."

4.2.36 As per Section 69A, it is defined as where in any financial year the assessee is found to be the owner of any money and such money is not recorded in the books of accounts and the assessee offers no explanation about the nature and source of acquisition of the money or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money may be deemed to be the income of the assessee for such financial year. Therefore, the term unexplained money is defined as the money of which the appellant is an owner and is not recorded in the books of accounts. Therefore, the basic condition and pre requisite of unexplained money is that it should not be recorded in the books of accounts. However, here is the case where this money has been a part of the books of account and therefore, cannot be considered as 'not recorded in the books of account'. The Assessing Officer has not rejected books of account, which clearly indicates that the receipts which are later considered for cash deposits are as per the books of accounts, which have not been disputed by the Assessing Officer.

4.2.37 The appellant had also submitted that such an addition could not have been made even by invocation of section 68 of Income Tax Act treating the source of cash deposits as unexplained cash credit. The relevant extracts of appellant's submission in this regard are as under:

"In view of the above facts, it is an undisputed fact that the assessee had explained the source of cash deposits being from the receipts duly accounted for in regular books of account and the only possible view could be that A0 might not have been satisfied with the credits which is explained to be source of cash deposits. Without admitting the same, the possible action could have been invocation of sec 68 of the Act treating the source of cash deposits as unexplained cash credits. This action too could not be taken by the AO in view of various decisions cited in the earlier submission more particularly the decision of jurisdictional Delhi High Court in the case of Keshav Social and Charitable Trust 278 ITR 152 (Del) and various other decision. The relevant portion of the above decision is reproduced as under:

"10. To obtain the benefit of the exemption under section 11 of the Act, the assessed is required to show that the donations were voluntary. In the present case, the assessed had not only disclosed its donations, but had also submitted a list of donors. The fact that the complete list of donors was not filed or that the donors were not produced, does not necessarily lead to the inference that the assessed was trying to introduce unaccounted money by way of donation receipts. This is more particularly so in the facts of the case where admittedly more than 75 per cent of the donations were applied for charitable purposes."

"11. Section 68 of the Act has no application to the facts of the case because the assessed had in fact disclosed the donations of Rs. 18,24,200 as its income and it cannot be disputed that all receipts, other than corpus donations, would be income in the hands of the assessed. There was, therefore, full disclosure of income by the purposes. It is not in dispute that the objects and activities of the assessed were charitable in nature, since it was duly registered under the provisions of section 12A of the Act."

In the present case all the receipts are in the course of carrying out charitable activities of the appellant trust and there is no finding or material to dispute the above fact more particularly when the major part of the receipts are college fee which is supported with the head wise collection of the fee duly approved by the regulatory authorities such as IMA and the other receipts are routine hospital/pharmacy receipts. In view of these facts, since all the receipts have been duly offered as income against exemption /s 11 is claimed, there remains no doubt that in view of the decision of jurisdictional Delhi High Court in post sec 115BBC era, no addition us 68 could be sustained. The Delhi Bench of Hon'ble ITAT in Shanti Nikentan Trust vs Addl CIT in dt: 07.01.2019 has dealt the applicability of sec 115BBC in case of unaccounted receipts. Para 5.2 of the above decision is relevant where the Keshav Social and Charitable Trust (supra) has also been relied upon. For the sake of avoiding complicity, the other decision of invocation of sec 68 in case of charitable trust are not elaborated when the jurisdictional Delhi High Court decision supports the appellant's contention."

4.2.38 It is noteworthy to mention that the receipts explained to be source of cash deposits as per the books of accounts have not been disputed by the Assessing Officer and the Assessing Officer has not rejected the books of accounts therefore, even the addition u/s 68 of Income Tax Act would not be appropriate. This would also tantamount to a double addition as the same receipts later deposited in bank accounts have already been accepted as part of gross receipts of the appellant duly recorded in its books of accounts.

4.2.39 Having discussed all the relevant issues pertaining to the addition of cash deposit of SBNs in the bank account of the appellant, the discussion is summed up as under:

1. 1. Since the Assessing Officer did not reject the books of accounts and made assessment us 143(3) of Income Tax Act and not u/s 144 of Income Tax Act; the books of accounts of the appellant have been considered by him to be correct and complete and therefore the receipt and expenditure of the appellant during the year cannot be disturbed.

2. Accordingly, the receipts recorded in the books of accounts have been considered as from college fees, hospital charges and pharmacy charges only and have been considered as correct.

3. The Assessing Officer did not mention about any other source of income which would result in accumulation of cash with the appellant for subsequent deposition in the bank account.

4. There is a consistent practice of the appellant that it is retaining high amount of cash in hand. This high amount of cash in hand created by withdrawals from the bank and/or by not depositing or by withdrawing the cash from bank account. The bank balances have been retained at a figure of roughly around Rs. 1-2 Crores consistently. The reason for retaining such high amount of cash was not disputed during either the assessment or the appellate proceedings.

5. The cash expenses during AY 2017-18 in a period prior to demonetization have been lower in comparison with the figures of cash expenses for AY 2016-17. However, the same can be explained due to higher expenditure in capital works during FY 2016-17.

6. Total cash receipts in both the years are more or less the same and normally the bank balances have been retained at a figure of around Rs. 1-2 Crores consistently; no anomaly have been detected in analysis of receipts and expenditure.

7. The deposits of cash to the extent of Rs. 39,83,63,741/- is out of the cash in hand as on the date of demonetisation and either pertains to the redeposition of cash which was withdrawn earlier from the bank accounts of the appellant and re-deposited due to its non-utilization / use thereof, and/or is out of the college fee, collection from the hospital/ pharmacy, which received in cash from the patients on day to day basis.

8. The appellant has satisfactorily explained the nature and source of cash deposits during the assessment and appellate proceedings and duly supported it with the books of accounts, which have already been accepted as correct. Further, the dissatisfaction of the Assessing Officer is not based upon any material either collected or ever placed upon record, which could have nexus to doubt either about the bonafide or genuineness of the receipt of cash, which was consequently deposited in the bank accounts by the appellant.

9. No adverse inference was either drawn by the Assessing Officer during assessment proceedings nor could be drawn during appellate proceedings regarding subsequent utilization of the SBNs deposited during demonetization, as most of these subsequent payments/expenses are only related to the routine activities of the appellant trust. 10. The cash receipts from hospital, pharmacy and fee have already been declared and form part of the gross receipts appearing in the Income & expenditure account, therefore, the tax cannot be charged twice on the same receipts. The cash collected from hospital, pharmacy and fee in the normal and regular course of their activities which has been accepted as correct in the preceding years. 11. The Assessing Officer did not point out as to how the amount which has been deposited in SBNs in the bank account is not a part of the gross receipts of the appellant and is not recorded in the books of accounts and accordingly, addition u/s 69A of Income Tax Act cannot be made. 12. The Assessing Officer did not raise the issue that the amounts withdrawn by the directors from the bank account or the cash collected as fees, hospital and pharmacy receipts were spent for some other purposes other than those mentioned in the books of accounts and the same was not available with them for re- depositing in the bank.

4.2.40 This is a case where appellant is a charitable Trust and is engaged in medical education and hospital activities. There is no denying to the fact that the appellant is having cash receipts from college fees, hospital charges and pharmacy charges. Further, the appellant has been carrying out substantial amount of expenditure in cash and also have substantial amount of receipts in cash. Appellant, as a regular practice is withdrawing cash from his bank accounts and maintains only a minimal amount of balance in the bank account. Cash receipts are either not deposited in bank account or if deposited in the bank account then they are withdrawn subsequently in sizable amounts. This results in high amount of cash in hand with the appellant in most part of the year. This has been a consistent practice and has been accepted in assessment in the earlier year. The Assessing Officer considered the books of accounts of the appellant as correct and complete and have not disputed or rejected them. Therefore, the correctness of submissions made by the appellant narrating the status of withdrawal, deposit, receipt, expenditure etc. has not been disputed. The Assessing Officer could not identify another source of receipt of cash for the appellant, which could have been deposited in the bank accounts. The details filed during the appellate proceedings stating the details of receipts, expenditure in cash, withdrawals, deposits etc. have been consistent and no specific anomaly could be pointed out. The receipts which ultimately resulted in deposition of SBNs in the bank account/s have already been considered as receipts in the income and expenditure account and have not been doubted by the Assessing Officer. No adverse inference was either drawn by the Assessing Officer during assessment proceedings nor could be drawn during appellate proceedings regarding subsequent utilization of the SBNs deposited during demonetization. Since the receipts form a part of gross receipts which have been disclosed in the books of accounts, the application of Section 69A cannot be considered as appropriate. The undersigned has no reason to doubt high availability of cash with the appellant on the date of demonetization. Demonetization was an event which never happened in the recent past and therefore comparing the cash deposits during demonetization with the past years will not be appropriate. During demonetization the appellant had to deposit entire cash in hand, which was in the form of SBNs. That is the reason due to which the cash deposits in this year has been unusually high with reference to the preceding year/s. The Assessing Officer considered the books of accounts as correct and complete and did not find out any other source of cash income during the course of proceedings. Further, the Assessing Officer did not raise the issue that the amounts withdrawn by the directors from the bank account or the cash collected as fees, hospital and pharmacy receipts were spent for some other purposes other than those mentioned in the books of accounts and the same was not available with them for depositing in the bank. In view of the analysis, arguments and discussion above, I am of the considered opinion that the cash deposited in SBNs in the bank accounts of the appellant is out of the fees, hospital and pharmacy receipts in cash available with the appellant as well as out of the cash withdrawn from the bank accounts only and therefore the source of these deposits is considered as explained. Accordingly, the stand taken by the Assessing Officer that 'the cash deposits of the assessee during the demonetization period are taken to be undisclosed income and added to the total income of the assessee in the form of unexplained money u/s 69A r.w.s. 115BBE of Income Tax Act' cannot be considered as correct. Accordingly, the addition of cash deposits made by the appellant during the demonetization period u/s 69A r.w.s. 115BBE of Income Tax Act is hereby deleted and relief is granted to the appellant.

1. The source of cash deposit by the assessee mainly out of the two independent institution being the medical college having the facility of hospital, pharmacy etc, and the other unit being a dental college and hospital; these are from regular accruals of the assessee trust which has been duly accounted in the regular books of accounts maintained fact of which the AO had already been apprised of by very many letters/representations along with evidences forming part of the paper book filed before us by the assessee which is further mentioned in the appellate authorities order. The receipt of cash explained to be the source of cash deposit in terms of the books of account followed by the assessee consistently as found by the Ld. CIT(A) which was neither objected during assessment proceeding by the Ld. AO and further that the books of accounts maintained by the assessee not having been rejected by the Ld. AO, considering the entire financials produced by the assessee, the source of such cash

deposit in our considered opinion has left no further query against the assessee. We note that for very many reasons the assessee was keeping maximum funds in the form of cash leaving the barely minimum balance in the bank account. We have further examined the table of monthly cash receipts/ cash withdrawals cash deposits and cash expenses and also closing and opening balance of cash/bank accounts in Assessment Year 2016-17 & 2017-18 annexed to the paper book filed before us. The assessee was to discharge huge tax liability in this quarterly installments which starting from quarter ending on 31.03.2016 and 30.06.2017 though the same was duly discharged by the assessee when the funds position of the assessee in the succeeding years eased was further considered. We appreciate that the assessee is running a medical college providing medical education to students and at the same time running a hospital and a pharmacy too for providing medical facilities to the public at large. The trend of cash accruals/spending whatever cash is generated at the start of academic session the same more or less gets exhausted at the end of the session barely a thin cushion of funds and leaving a little possibility of any drain on these resources of which the first right is of the beneficiary students and the patients. Had the strategy of academic cash in hand, till finance allowed the assessee to make the payment of outstanding tax liability not being employed, there would have been chances of the charitable activities getting jeopardized leaving the students or the patients or the staff in the laurch besides the assessee have put to unnecessary avoidable litigation. We further note that the percentage of cash collection by way of students college fees, medical consultation in the medical hospital and pharmacy sales up to the date of demonetization i.e. 08.11.2016 is 47% of the total collection which is admittedly lower than almost 49% in preceding Assessment Year i.e up to 08.11.2015. Further that the percentage of cash collection in the whole Assessment Year 2017-18 at 49% was also lower than the percentage of 53% in preceding assessment year. We have further considered the order passed by the Ld. AO neither mentioned any other income which would result in accumulation of cash with the assessee for subsequent deposition in the bank. The consistent practice of the assessee in retaining high amount of cash in hand accrued by withdrawals from the bank and/or by not depositing and the bank balances retained on a figure more or less 1 to 2 crores consistently which has not been disputed either by the Ld. AO or by the Ld. CIT(A). We have further found that the cash expenses during Assessment Year 2017-18 i.e. period prior to demonetization had been lower compare to cash expenses for Assessment Year 2016-17. The cash receipts in both the years are found to be more or less same. The impugned cash deposit to the tune of Rs.39,83,63,741/- is this found to be out of the cash in hand on the date of demonetization and/or pertains to the redeposition of cash out of withdrawals from the bank accounts due to non utilization of the same or out of the college fee, collection from the hospital or pharmacy which was received in cash from the patients on day to day basis. The nature and source of such cash deposit supported by corroborative evidences particularly the books of accounts had neither been rejected by the authorities below. The dissatisfaction on the part of the Assessing Officer was only non furnishing of corroborative evidences in support of cash deposits made by the assessee whereas at page 24 of the CIT(A)s order speaks of very many documents having been placed by the assessee before the Ld. AO as the documentary evidences in support of the cash deposit made by the assessee. Therefore, such dissatisfaction on the part of the AO cannot be appreciated by us. Rather, we found no enquiry has been conducted by the Ld. AO in regard to such cash deposits made by the assessee and addition without any cogent basis was made in the hands of the assessee. We, thus not find any further reason for the Ld. CIT(A) to ask for remand report from the Ld. AO upon getting the evidences in support of the cash deposits furnished by the assessee as the same were already been placed before the AO. There is no lacking in fulfilling the statutory condition envisaged in regard to the jurisdiction of the Ld. CIT(A) in passing orders upon due examination of documents and further application of mind on the evidences furnished by the assessee particularly when the same though placed before the Ld. AO failed to receive any consideration. The cash received from the hospital, pharmacy or the fee having been declared and formed the part of gross receipt appearing in the income and expenditure account and therefore, the tax cannot be charged twice on the same receipts as already held by the Ld. CIT(A) is found to have no reason to be interfered with. As the receipt from a part of gross which have been duly disclosed in the books of account of the assessee, the addition upon application of the provision of Section 69A cannot said to have proper application of law. As the cash deposit made out fees of college, hospital & pharmacy’s receipt in cash found to have available with the assessee along with cash withdrawal from the bank accounts, the source of cash deposits is found to be duly explained acceptance whereof by the ld. CIT(A) and deletion of addition on account of undisclosed income made by the ld. AO by the Ld. CIT(A) is found to be just and proper so as not to warrant interference.

12. Thus, the appeal preferred by the Revenue is found to have devoid of any merit and thus, dismissed.

Cross Objection No. 58/Del/2023 (AY: 2017-18)

13. As the appeal already allowed, the Cross Objection supporting the assessee passed by the Ld. Appellate Authority preferred by the assessee become infructuous and academic and thus, dismissed as infructuous.

14. The appeal preferred by the revenue is dismissed and Cross Objection filed by the assessee is also dismissed as infructuous.