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TMI Blog2014 (4) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-12-2010 and ultimately, the order was passed on 30-12-2010 - if further time was given to the assessee they would have explained the investment before the AO - There is a statutory limit for passing the assessment order- the AO has done everything possible within the prescribed time by affording an opportunity to the assessee thus, there is no reason to interfere with the order of the CIT(A) Decided against Revenue. Enhancement of income on account of credit mismatch Held that:- The Tribunal is empowered to adjudicate the matter - The Tribunal cannot place the assessee in a worst position than he was before the CIT(A) - If the CIT(A) failed to enhance the income of the assessee, then certainly, the Tribunal also cannot enhance the income for the simple reason that the Tribunal is not empowered to place the assessee in a worst position than he was before the CIT(A) - the assessee cannot be placed in a worst position than it was before the CIT(A) - the Tribunal has no jurisdiction to enhance the taxable income due to mismatch of the account Decided against Revenue. Payment made on behalf of assessee trust Payment made to South Kerala Cashew Export Held that:- Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... running of the institution in the legal manner - It cannot include capitation fee collected for admission of the students - no material is on record to suggest that the assessee has collected any capitation fee for admission of the students - The trustees Shri Abdul Salam and Shri AA Salam happened to be businessmen and admitted that they have invested their own funds in the statement recorded u/s 132(4) of the Act - the CIT(A) has rightly deleted the addition made by the AO there was no infirmity in the order of the CIT(A) Decided against Revenue. Dropping of the enhancement proceedings Unaccounted payments made to doctor Held that:- Unless the addition is made by the CIT(A) in the enhancement proceedings or the addition made by the AO is confirmed by the CIT(A), the Tribunal cannot step into the shoes of the lower authority and make the assessment - The Tribunal cannot put the assessee in a worst position than he was before the CIT(A) - In the absence of any specific addition made by the CIT(A) in the course of first appellate proceedings, the Tribunal cannot make any further addition in the course of second appellate proceedings Decided against Revenue. - CO Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the books of account ought to have been rejected. 4. On the contrary, Shri Iype Mathew, the ld.representative for the assessee submitted that the assessee trust established and maintained a hospital and medical college. A search was conducted u/s 132 of the Act in the premises of the assessee trust. The department claims that they have found incriminating materials with regard to undisclosed investment outside the books of account. If that is so, the assessing officer is expected to specifically reject the books of account before proceeding to compute the income on the basis of the search material. Unfortunately, the assessing officer has not rejected the books of account. Therefore, according to the ld.representative, the assessing officer cannot travel beyond the books of account since the same was not rejected. 6. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the order of the lower authorities. During the course of search operation on 06-01-2009 incriminating materials was found which disclosed investment of undisclosed income for construction of the building. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot sufficient to explain the various points raised by the assessing officer. According to the ld.representative, 22nd to 27th December, were holidays for Christmas. The assessing officer sent a questionnaire of 169 pages. According to the ld.representative, this prejudices the interest of the assessee, therefore, the CIT(A) has rightly observed that sufficient opportunity was not given. 10. We have considered the rival submissions on either side and also perused the material available on record. The CIT(A) found that the assessing officer suo motu rejected the objections filed by the assessee which witnessed in three or four instances of duplication. The fact remains is that an opportunity was provided by the assessing officer on 03-12-2010 and 08-12-2010 and ultimately, the order was passed on 30-12-2010. Therefore, if further time was given to the assessee they would have explained the investment before the assessing officer. At the very same time, we have to take into consideration the time constraint of the assessing officer. There is a statutory limit for passing the assessment order. This Tribunal is of the considered opinion that the assessing officer has done everything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration by South Kerala Cashew Export. In the absence of any material, according to the ld.DR, the assessing officer made the addition. The assessee explained before the assessing officer that the transactions were recorded in the vouchers of South Kerala Cashew Export. The assessee has also explained before the assessing officer that the transactions are not related to the assessment year under consideration. However, on examination of the material, the assessing officer found that the transactions entered into through vouchers of South Kerala Cashew Export did not belong to the assessee trust. Therefore, the assessing officer rejected the contention of the assessee. According to the ld.DR, South Kerala Cashew Export is a proprietorship concern of Shri Abdul Salam and Shri AA Salam who has not carried out any construction activities in the premises of the assessee trust. Therefore, the payment said to be made by South Kerala Cashew Export is not related to the assessee. 16. On the contrary, Shri Iype Mathew, the ld.representative for the assessee submitted that for the year under consideration, the assessee has spent a sum of Rs.4,57,71,276 towards construction of the building. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue s appeal we found that this has not resulted in invalidating the assessment proceedings. If at all there are any procedural irregularities, the proceedings have to be reinitiated at the stage from which the irregularities were occurred. This Tribunal is of the considered opinion that the irregularities as pointed out by the assessee may not invalidate the assessment proceedings. Therefore, the cross objection has no merit at all. Accordingly, the cross objection of the assessee for assessment year 2007-08 is dismissed. 21. Now let us take the appeal of the revenue for assessment year 2008-09. The first ground of appeal is with regard to enhancement of income due to difference in credits to the extent of Rs.255.08 lakhs. 22. The only contention of the ld.DR is that the assessing officer made a request to the CIT(A) to enhance the assessment due to difference in credits. This Tribunal is of the considered opinion that though the CIT(A) has a discretion to enhance the income in exercise of his appellate jurisdiction, this Tribunal cannot compel the CIT(A) to enhance the income. The CIT(A) ought to have exercised his jurisdiction since he has powers which is co-terminus with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reconciled the entire expenditure on the basis of the income and receipt for the year under consideration. A remand report was also called for by the CIT(A). The assessing officer has filed a para-wise remark before the CIT(A) with respect to each expenditure. Referring to the order of the CIT(A), more particularly pages 28 29, the ld.representative submitted that for the assessment years 2008-09 and 2009-10 an amount of Rs.49,10,01,554 was remained to be explained. This amount was reconciled which was exactly reproduced by CIT(A) in his order. The CIT(A) further found that the balance amount remained to be reconciled was Rs.46,18,176. After referring to the irregularities committed by the assessing officer in the assessment proceedings, the CIT(A) found that the District Valuation Officer of the Income-tax Department, Chennai found that the cost of construction is Rs.59,19,09,000. The CIT(A) further found that this cost of construction has to be spread over from 2007-08 to 2011-12. The balance-sheet of the assessee for the assessment year 2008-09 shows the cost of construction at Rs.21,47,45,621 and for the assessment year 2009-10 it disclosed the construction cost of Rs.20,44,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en added to the tune of Rs.2,05,39,771/- for AY 2008- 09 and Rs.21,12,37,726/- for AY 2009-10. e) Another category of vouchers which referred to requisition for payment or correspondence letters, etc. which do not form part of cost of building have been added to the tune of Rs.2,55,57,436/- for the AY 2008-09 and Rs.3,18,02,111/- for the AY 2009-10. f) Land leveling charges which is paid through M/s PMK Construction and does not form part of the building, but part of land, has been added towards cost of construction for AY 2008-09 to the tune of Rs.3,35,34,397/-. Similarly, payment made to PMK Construction for meeting the above expenses were also added by the AO separately for the same assessment year to the tune f Rs.3,35,34,397/-, hence this is duplication of the entries. g) Other construction materials purchased and payment made through PMK Construction have been added to the tune of Rs.52,92,720/- for the AY 2008-09. In the AO s proposal, invoices of material purchased as well as payments made against these invoices were included and the total of such invoices and the payments made thereon amounts to Rs.2,37,46,343/- for the AY 2008-09. h) It has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the considered opinion that the ground of appeal relating to exemption u/s 10(23C) becomes infructuous. However, the ld.representative for the assessee claims that on the basis of the judgment of the Kerala High Court in ITA No.171 of 2009 dated 04-10-2010 all incomes of the assessee is exempt u/s 10(23C) of the Act. We have carefully gone through the provisions of section 10(23C) of the Act which reads as follows: 23C) any income received by any person on behalf of - (i) to (iiiac) xxxxxxxxxxxxxxxxxxxxxx (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or 2educational institution do not exceed the amount of annual receipts s may be prescribed. (iiiae) to (v) (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority. By referring to the term any income , the ld.representative for the assessee contends that any income of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al manner. It cannot include capitation fee collected for admission of the students. In this case, it is not the contention of the revenue that the assessee collected any capitation fee for admission of the students. Moreover, no material is on record to suggest that the assessee has collected any capitation fee for admission of the students. The trustees Shri Abdul Salam and Shri AA Salam happened to be businessmen and admitted that they have invested their own funds in the statement recorded u/s 132(4) of the Act. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition made by the assessing officer. This Tribunal do not find any infirmity in the order of the CIT(A). accordingly, the same is confirmed. 31. In the result, the appeal of the revenue for the assessment year 2008-09 is dismissed. 32. Now coming to the cross objection filed by the assessee, the cross objection is filed only to support the order of the CIT(A). Since this Tribunal confirmed the order of the lower authority, the cross objection becomes infructuous. Accordingly, the cross objection stands dismissed. 33. Coming to the appeal filed by the revenue for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he enhancement proceedings or the addition made by the assessing officer is confirmed by the CIT(A), this Tribunal cannot step into the shoes of the lower authority and make the assessment. This Tribunal cannot put the assessee in a worst position than he was before the CIT(A). In the absence of any specific addition made by the CIT(A) in the course of first appellate proceedings, this Tribunal cannot make any further addition in the course of second appellate proceedings. Therefore, this Tribunal do not find any infirmity in the order of the lower authority. 38. The next ground of appeal is with regard to estimation of cost of construction on the basis of the value estimated by the District Valuation Officer. This issue was considered by this Tribunal in the earlier part of the order while dealing with the appeal for the assessment year 2008-09. This Tribunal found that on the basis of the valuation of the District Valuation Officer and the seized material an amount of Rs.46,18,176 remained to be reconciled which has to be treated as revenue expenditure since the assessing officer himself found that the assessee has incurred certain expenditure on the revenue account. For the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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