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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 ..... e trust. In this case, according to the ld.DR, the undisclosed investment was found in the course of search operation. According to the ld.DR, the assessee trust invested an amount of Rs. 3,39,16,920 outside the books of account for the construction of the building during the year under consideration. Incriminating materials found during the course of search operation showed that unexplained investment was made in the construction of hospital and medical college. However, in the balance-sheet as on 31-03- 2007 the assessee has disclosed only an amount of Rs.1,18,54,356. During the course of search operation a statement was recorded u/s 132(4) of the Act. The trustees, Shri Abdul Salam and Shri A.A. Salam admitted that an amount of Rs.5 crores each was declared by them as undisclosed income for the assessment year 2009-10. In view of the materials found during the course of search which indicated the investment of funds in the construction outside the books of account, according to the ld.DR, the assessing officer has rightly computed the undisclosed income. Even though there is no specific reference for rejection of books of account in the assessment order, the fact remains is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the seized material may not prejudice the interest of the revenue in any way. This Tribunal is of the considered opinion that in the assessment proceedings consequent to the search, the material found during the course of search operation along with the books of account maintained in the course of regular activity has to be taken into consideration. Therefore, the observation made by the CIT(A) with regard to rejection of books of account may not prejudice the interest of revenue in any way. Accordingly, we do not find any infirmity in the order of lower authority. The same is confirmed. 7. The next ground of appeal is with regard to providing of adequate opportunity to the assessee. 8. Shri M Anil Kumar, the ld.DR submitted that at paragraph 8.2 of the CIT(A)'s order, the CIT(A) observed that sufficient opportunity was not given to the assessee which resulted in duplication of the addition. According to the ld.DR, sufficient opportunity was given to the assessee to represent the matter before the assessing officer. 9. On the contrary, Shri Iype Mathew, the ld.representative for the assessee submitted that the assessee received the pre-assessment notice on the evening of 21-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer could have done or might have done. Therefore, whenever there is material available on record suggesting enhancement of income, the CIT(A) ought to have taken note of the same to determine the income on the basis of the material available on record. However, this is the discretion vested on the CIT(A). Under the Income-tax Act, this Tribunal is empowered to adjudicate the matter. This 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, this Tribunal also cannot enhance the income for the simple reason that this Tribunal is not empowered to place the assessee in a worst position than he was before the CIT(A). Therefore, we are not going to the material with regard to the mismatch of the credits for the year under consideration. Suffice to say that this Tribunal cannot place the assessee in a worst position than it was before the CIT(A). Therefore, this Tribunal has no jurisdiction to enhance the taxable income due to mismatch of the account. 14. The next ground of appeal is with regard to payment of South Kerala Cashew Export on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side and also perused the material available on record. The material available on record suggests that the payment was made by South Kerala Cashew Export. The assessee has produced copies of the vouchers / invoices. The assessee has also filed a reconciliation statement before the CIT(A) which was reproduced on page 8 of the CIT(A)'s order. The CIT(A) after considering the proposals made by the assessing officer and the balancesheet entries for the assessment year 2007-08 found that the assessee could not explain a sum of Rs.2,54,782. Accordingly, he confirmed the addition to the extent of Rs.2,54,782. This Tribunal do not find any infirmity in the order of lower authority; the same is confirmed. 18. In the result, the appeal of the revenue for the assessment year 2007-08 is dismissed. 19. Now coming to cross objection of the assessee for the assessment year 2007-08, the only objection of the assessee is that assessment order ought to have been quashed since the CIT(A) found serious irregularities in not rejecting the books of account and in not providing opportunity to the assessee. 20. We heard the ld.representative for the assessee and the ld.DR. The error / mistake pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 03-12-2010 and 08-12-2010. Therefore, the observations made by the CIT(A) may not prejudice the interest of the revenue in any way. 24. The next ground of appeal is with regard to unaccounted investment to the extent of Rs.46,18,176. 25. Shri M Anil Kumar, the ld.DR submitted that the CIT(A) observed that the assessee has explained and reconciled the expenditure except a balance of Rs.46,18,176. According to the ld.DR, the main objection of the assessee before the CIT(A) is that the assessing officer has not provided any sufficient opportunity to the assessee to explain the same. According to the ld.DR, the balance-sheet as on 31-03-2008 reflected the cost of construction at Rs.20,28,90,265. The contention of the assessee was not verified by the assessing officer during the course of assessment proceedings. The CIT(A) found that the assessment was made in a hurried manner. If that is so, according to the ld.DR, he ought to have examined the matter himself after calling for the remand report. According to the ld.DR, the CIT(A) deleted the addition on the basis of the report of the District Valuation Officer ignoring the materials found during the course of search operation. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Shri A Nazarudeen, a trustee of the trust. The explanation regarding the DD given by Shri Nazarudeen has been accepted by the AO during the course of assessment proceedings of M/s South Kerala Cashew Exporters for the AY 2008-09. Since this is a receipt in the hands of the assessee trust, the investment has been overstated to this extent. b) It has been explained that two or three copies of vouchers are prepared each for accounts department, stores department, purchase department and R&D department, etc. During the course of search operations, file containing vouchers of all these departments were seized and while tabulating the amount the AO has taken the duplicate vouchers also. It is therefore gathered that the proposal was overstated by an amount of Rs.10,82,80,207/- on account of duplicate entries for AY 2008-09 and for an amount of Rs.10,61,92,205/- for the AY 2009-10. c) It is further inferred that revenue items were also included in the working tabulated for cost of construction. Such entries are totaling to the tune of Rs.18,80,713/- for AY 2008-09 and Rs.75,12,872/- for AY 2009-10. d) The total value of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 as observed by the assessing officer, an amount of Rs.46,18,176 might have been incurred towards revenue account. The assessing officer rejected the claim of the assessee only on the ground that the details were not available. When the income was estimated disbelieving the books of account maintained by the assessee and the assessing officer was of the opinion that the assessee has incurred expenditure towards revenue account, a reasonable estimation has to be made. In the block assessment income has to be computed primarily on the basis of the material available on record including the seized material. Therefore, the seized material as well as the valuation done by the District Valuation Officer has to be taken into consideration. When the District Valuation Officer estimated the cost of construction and there is a difference in reconciliation to the extent of Rs.46,18,176 this Tribunal is of the considered opinion that this Rs.46,18,176 might have been relating to the revenue expenditure. Therefore, we hold that the CIT(A) has rightly deleted the addition made by the assessing officer. We confirm his order on this issue. 28. The next ground of appeal is with regard to exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, any amount collected for admission of the students over and above the prescribed fee has to be considered as capitation fee and that cannot be construed as income of the assessee within the meaning of section 10(23C). In other words, capitation fee would fall outside the purview of section 10(23C) and hence is liable for taxation under the Income-tax Act. The capitation fee collected for admission of students over and above the prescribed fee shall be treated as taxable income and the same is not eligible for exemption either under section 11 or u/s 10(23C) of the Act. The Income-tax Act provides for exemption in respect of the trust or institution which generates funds in the course of legal activity. It is not the intention of the Parliament to exempt any income which was earned contrary to the provisions of the law and contrary to the social norms. Collection of capitation fee is inhuman, contrary to all social norms besides being contrary to the provisions of Constitution of India. This view of ours is fortified by the judgment of the Apex Court in T.M.A. Pai Foundation & Ors vs State of Karnataka & Ors (2002) 8 SCC 481 and Islamic Academic Education vs State of Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made by the assessing officer was deleted. However, this Tribunal cannot make any further addition. Consistent with the decision already taken by us, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed. 35. The next ground of appeal is with regard to opportunity to the assessee. As we have already observed while dealing with the appeals of the revenue for the assessment years 2007-08, and 2008-09 though adequate opportunity should have been given to the assessee, we have to take into consideration of the statutory requirement of time limit to complete the assessment proceeding. This Tribunal is of the considered opinion that the assessing officer has taken much pain in completing the assessment within the available period of time by providing the opportunity to the assessee on 03-12-2010 and 08-12-2010. Therefore, the observations made by the CIT(A) may not prejudice the interest of the revenue in any way. 36. The next ground of appeal is with regard to dropping of the enhancement proceedings in respect of unaccounted payments made to doctors to the extent of Rs. 1,80,94,677. 37. Shri M Anil Kumar, the ld.DR submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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