9911796707
TMI Blog2013 (11) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee trust as well as his residence at "Ashirvad", Bharati Nagar, Paud Road, Kothrud, Pune. As noted by the Assessing Officer, Shri Ramchandra Dada Shinde is the trusted employee of the trustees and he was also working as Accounts Officer looking after the Accounts of various trusts of Bharti Vidyapeeth Group including the present assessee. In this case the registration of the assessee trust was cancelled by the CIT(Central), Pune by exercising his powers u/s. 12AA (3) of the Act vide order dated 08-11-2007. The assessee had challenged the cancellation of the registration before the ITAT, Pune and order of CIT(Central), Pune was cancelled and registration granted to the assessee u/s. 12A was restored. 3. Another aspect to be considered in this case that is the reference was made by the Assessing Officer u/s. 142(2A) for the special audit and the entire assessment is based as per the audit report given by the Special Auditors. The assessee has not pressed the grounds taken in respect of reference made to the special audit u/s. 142(2A) and hence, we are also skipping the discussion on the said issue. In the present case, there is no dispute about the fact that no searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in holding that the appellant trust has violated the provisions of section 13(1)(c) of the Act. 7. The learned CIT(A) erred in holding that the appellant trust was charging some capitation fee for admissions to the students without appreciating the correct facts of the case. 8. The learned CIT(A) erred in holding that the cash and the loose papers found with Shri Shinde belonged to the appellant and not to Shri Shinde and that the appellant had received the capitation fee as per these papers. 9. The learned CIT(A) erred in confirming an addition of ₹ 2,00,50,000/- made to the total income of the appellant on the basis of the various loose papers found with Shri Shinde. 10. The learned CIT(A) erred in confirming the addition of ₹ 3, 14,83,8707- made by the learned A.O. being the cash found with Shri Shinde on the ground that the same pertained to the appellant and not to Shri Shinde. 11. The learned CIT(A) erred in confirming the following additions to the total income in the hands of the appellant - i. Disallowance of ₹ 77,69,011/- u/s 40(a)(ia) ii. Contribution of ₹ 1,10,039/- to gratuity fund iii. Disallowance u/s 40A(3) - ₹ 26, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973. Numerous educational and allied institutions in diverse fields, including medical colleges, engineering colleges, management institutes and schools etc. have been opened and run under the aegis of this trust since the granting of registration in 1973 entitling BVP exemption from the payment of taxes under the Income-tax Act. As per the list given approximately 208 institutes are presently run in and around Pune, Mumbai, Thane, Navi Mumbai, Solapur, Satara, Kolhapur and Sangli etc. in Maharashtra and others in Delhi. Bharati Vidyapeeth, deemed university is also part of the above trust. BVP has been enjoying the exemption from payment of taxes since 1973 till A.Y. 1998-99. Exemption for subsequent assessment years has been either withdrawn or denied subsequent to the search and discovery of certain facts held adverse by the Income-tax Department in respect of the conduct of the appellant trust. 5.2 After noticing reports from various corners about the illegal practices being carried out in the educational institutes in and around Pune, the investigation unit of the Income-tax Department at Pune, after apparently carrying out necessary ground work, carried out searches and sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the cash should be held to be belonging to Sri Shinde and not the trust. Such a proposition does not appear correct. First of all, the presumption is not mandatory because the word used in s.132(4A) is "may" and not "shall". Therefore, the option is with the department to exercise it or not and if exercise it, in what manner? Furthermore, the presumptions are required to be applied where the evidences found are not indicative of its real ownership. In other words, where it is not possible to infer or attach an evidence to a particular person, the above provision comes to the rescue of the department. Had that not been the case, section 153C would not have been on the statute wherein, the AO on coming to the satisfaction that seized material belongs to other than the searched person, can initiate proceeding similar to S.153A in the case of that other person. Because in that case, the department is permitted legally to presume that the same belong to the other person from whom it is not seized. It can further be seen, in the present case that even if the warrant was in the name of Mr. Shinde, the premise searched was that of the appellant and therefore, the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the findings that huge cash was actually seen deposited in the building fund accounts and other trust accounts of various institutes and BVP. This part of the statement of Mr.Shinde appears to have been given in spontaneity, as the same do not match with the stand that he has been taking generally in his statement that the money belong to him for his consultation. If he was giving consultancy and money seized represented the same, where is the question of such earnings made in earlier years getting deposited in the accounts of appellant instead of that of Mr. Shinde. Such a statement given in spontaneity is known to be true as per the principles of psychology. Even though the appellant and Mr.Shinde have attempted to dilute this statement during the course of crossexamination of Mr.Shinde by the appellant, it got corroborated due to the finding of huge cash deposits in different fund accounts. The cash deposits in fund accounts were, however, claimed by the appellant to be arising from coupon donations collected through dedicated volunteers. Such coupon donations from unidentified persons in unsubstantiated manner was claimed to have been collected through volunteers from villager ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r associated materials and developments, assessment order of the AO passed in this case as well as the order of the CIT(Central) passed u/s.12AA(3) can be referred to. Such findings in the facts and circumstances of the case look logical and acceptable. 5.5 The statements of Shri R.D. Shinde, recorded on 20/7/2005 and thereafter including his cross examination made by appellant and re-examination made by the Addl.CIT on behalf of CIT(Central) during the course of 12AA(3) proceedings, are vital, important and relevant. Both the department and the appellant have tried to rely on them selectively and conversely. However, if his statement is seen considering the fact that he was the trusted employee of appellant entrusted with the job of collecting money while granting admission in certain cases (especially under management quota) then inference becomes easy and it more or less shows that the departmental understanding and reliance is correct and credible. From the perusal of statements recorded during survey and search and thereafter during cross examination on the demand of the appellant and in the re-examination made by Addl.CIT, it is not difficult to see that Shri Shinde except f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claimed by him and the appellant, the same was held to be belonging to the BVP. Some such noting given below gives its nature quite clearly to establish, as per the AO, that the money collected was by the BVP and for the admissions :- Page No. 5 7+fee Page No. 6 13+fees Page No. 9 12+fee & 5+fee Page No. 16 7+fees & 15+fee Page No.29 35+fee Page No. 30 1+fee Page No. 52 7+fee Page No. 56 9+fee Page No. 60 12+fee Page No. 61 11+fee Page No. 65 10+fees Page No. 76 3 to 4+fee It is worthwhile to note that at no place reference to "consultancy" is appearing in these documents. Shri Shinde however, in response to question No.17 and 18 of his statement dt.20/7/2005 admitted that the prefix amounts are in lakhs and the same are to be collected from students in addition to regular fee. The total of such collections for A.Y.2006-07 was determined by the AO to be at ₹ 9,47,21,850/-. The " + " appearing in the above referred documents have been argued by the AO to indicate that the cumulative amount has been quoted to the students seeking admissions on behalf of the trust by its trusted employee Shri Shinde. It has been also stated that the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 20, 31) and bundle A-8(page 140). Following students were found to have been given admission in the academic year 2005-06, as noted in the assessment order at page 38. S.No Bundle No Page No Name of Student Capitation Amount Institute 1 1 85 Gesti Sabharwal 125000 BV Engineering College, Pune BE (Civil) 2 2 24 Prashant Patil 200000 BV Management Institute, Pune 3 2 39 KCKurian 100000 BV Nursing College, Pune 4 A-l 19 Narayan Kumar 1 75000 BVEngg College, Pune BE(Chem) 5 A-4 1 Mcdvika Singh 150000 BVEngg College, Pune BE(Comp) 6 A-6 13-20 Sidharth Shukla 125000 BVEngg College, Pune BE (Prodn Engg) 7 A-6 31 Bhav inkumar Maheshbhai Tilva 700000 BV Medical College, Sangli 8 A-8 140 Pooja Ravindra Shah 650000 BV Dental College, Mumbai 5.9 Shri Shinde in response to Q.No.7 & 8 of his statement recorded on 21/7/2005, on the issue of collection of money (consultations) in earlier years, admitted that such additional income earned by him in these two years at around ₹ 2 crores each, which according to him, were deposited in the banks in Building Fund Account and Trust Account. The AO thereafter found huge cash deposits in many b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capitation fee / collection of money for granting admissions. It was stated that the onus is on the assessee to prove that the particular donation whether coupon or otherwise, has in fact been given by the donor voluntarily. The claim of the appellant that the rural folk after knowing the good work of the trust, have voluntarily given these donations could not be accepted in the facts of the case. It was observed by the AO that such large rural population cannot be expected to know about the activities of the trust, when they hardly affect them. Such collections were seen in large quantity not only in the case of the appellant trust but also in the case of other group trusts who are hardly known to have any activities which could influence / impact the large rural population. A table showing such collections for different trusts has been given at page 68 of the assessment order and the same is quoted below:- Sr. No. Name of the trust AY 99-00 AY 00- 01 AY 01- 02 AY 02- 03 AY 03-04 AY 04- 05 AY 05-06 AY 06-07 1 Bharati Kala Academy 22.63 48.05 23.45 37.50 24.20 8.28 9.00 26.70 2 Yeshwantrao Smriti Nyas 22.63 25.30 00.65 1.31 0.00 0.00 00.05 0.00 3 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has in certain cases accepted the donations/capitation fees in cheque from the students or their guardians in the name of group trusts. In other words AO held even donations from identifiable cases also as of for securing admissions. 5.12 The details of students admitted under management quota in various college/institutions during academic year 1999-2000 to 2005-06 were collected and have been enclosed at Annexure-ll of the assessment order. As the list is huge, the same is not quoted below but can be referred to know the extent of admissions which have been granted under this quota. The documents seized further indicated that the rate of capitation fee for different courses were as below (as given at page 61/62 of the assessment order : Name of the course Rates for admission (Rs.) Medical (MBBS) 15 lakhs to 20 lakhs B.D.S. 6 lakhs to 7 lakhs M.S. (Ortho) 30 lakhs Electrical Engineering 2 lakhs Computer Engineering 1.5 lakhs Information Technology 1 lakh Civil/I. T./Chem. Engg. 2 lakhs M.Sc. Nursing 0.75 lakhs M.S. (Surgery) 25 lakhs Hotel Management 1 lakh B.Sc. (Nursing) llakh M.B.A. 1.5 lakh M.D. (Gynac.) 35 lakhs to 40 lakhs M.C.A. 1.5 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the nature described above and on receipt of a report from the AO, as described in the order passed u/s.12AA(3), the CIT (Central), Pune initiated action u/s.12AA(3) and cancelled the registration granted in the past u/s.12A on 13/9/1973, vide his order dated 8/11/2007 after making necessary inquiries and giving opportunity of being heard to the appellant. In this order, the activity of the trust for the reasons described therein in detail were held to be not genuine as a consequence of findings made during search / survey and other post search inquiries conducted by the department. This order of cancellation of registration was challenged by the appellant in appeal filed with ITAT, Pune in ITA N0.1793/PN/08. The Hon'ble Bench in their Oder dt. 19/9/2008 have vacated the order of the CIT(Central) passed u/s.12AA(3) and restored the registration granted u/s.12A by saying that "For the reasons set out above, and respectfully following the decisions of various coordinate benches on the scope of powers u/s.12AA(3), we hold that the impugned order was vitiated in law in as much as the learned Commissioner did not have powers to cancel the registration granted u/s.12A." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .V. Medical College (B.V.M.C.), Sangali. Total ₹ 6,34,479/- - Page No. 33 to 37- List of teaching staff of B. V.M.C. Sangali. - Bundle No. A-9 :- Page No. 45 - Counterfoil of cash deposit in Bharati Sahakari Bank in Poona College of Pharmacy building fundA/cNo. 69557 ₹ 1,75,000/-. - Bundle No. A-9 :- Page No. 50 - Expenditure voucher of Bharati Vidyapeeth Trust. - Bundle No .15:-This is a long book maintained by assessee trust as a inward register maintained for applications received under management quota for admission in MDS course. - Bundle no 16- this is long book maintained by assessee trust as a inward register for receiving applications under management quota for admission in medical, dental, BHMS and BAMS course. 8. The Assessing Officer has noted that Shri R.D. Shinde in his statement recorded u/s. 132(4) on 27-07-2005 has stated that the amount of ₹ 2 Crores on account of consultancy charges from the students has been deposited in the past to the building (Imarat) fund and equipment fund of the various trusts of the Bharati Vidyapeeth Group. It is further noted by the Assessing Officer that on examination of the seized books of account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in such activities. Such large financial incentives increases the possibility its abuse which necessitates in turn the existence of strict restrictive clauses and regular checks. Therefore, very rightly such checks and balances have been built in these provisions, which can be seen from a careful reading of provisions contained in section 11 to 13 and 10(23C) of the I.T. Act. In fact, it can further be seen that the rigours for allowing exemption is higher in respect of cases covered u/s.10(23C). A plain study of all the provisions relating to the assessment of assessees engaged in the activity of charitable purposes claiming exemption from payment of taxes, reveal a clear scheme. As per the same, firstly, the activities should be of the nature of charitable purposes as defined in section 2(15) of the Act. Thereafter, such assessees have to follow the procedure as are laid in provisions contained u/s.11 to 13 or 10(23C) of the IT. Act. Any assessee engaged in any activity of charitable purposes can follow the procedure laid in section 11 to 13. However, if the activities are such which are covered under 10(23C)(iiiab) or (iiiac) or (iiiad) or (iiiae)or (iv) or (v) or (vi) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was cancelled by the Ld. CIT exercising his powers u/s. 12AA(3) of the Act but the fact is that same has been restored by the Tribunal by squashing order of the Ld. CIT, Pune. The assessee trust was granted the registration u/s. 12A of the Act on 13-09-1973 only after examining the objects of the trust that the main object of the assessee trust was to impart the education and running of the educational institutions. Moreover, even presuming that assessee is also entitled for getting the exemption u/s. 10(23C) of the I.T. Act, in our opinion it is option of the assessee whether to avail the benefit u/s.10(23C) of the Act or to opt for the benefits of Sec. 11. We do not agree with the stand of Ld. CIT(A) that the assessee's case is squarely covered u/s. 10(23C) of the Act and hence, being it is special provision the assessee cannot claim the benefit of Sec. 11. The Ld. CIT(A) has referred to the decision of the Hon'ble High Court of Kerala in the case of Brahmin Educational Society Vs. ACIT, 227 ITR 317 (Ker). In the said case the assessee petitioner claimed the exemption u/s. 80G of the I.T. Act for the donations received. The CIT had granted exemption u/s. 80G for the A.Ys. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares Bharati Sahakari Bank - Sangli College 3,31,000/- Shares Bharati Sahakari Bank (Engg College Delhi) 1,000/- Shares Bharati Sahakari Bank (Engg. College, Kolhapur) 2,50,000/- Shares Bharati Sahakari Bank (Engg.Colllege,Pune) 55,000/- Shares Bharati Sahakari Bank (JNIOT)" 100/- Shares in Bharati Sahakari Bank (P.Press) 25,000/- Advance Umesh Goyal Delhi 1,06,19,255/-. 13. In this case, the assessee has made the investment in shares of Abhyuday Sahakari Bank and Bharati Sahakari Bank Ltd from which the assessee has obtained loans for its different institutions situated at different locations/towns. We confine ourselves to the investments made by the assessee for acquisition of shares in this year which is alleged violation of Sec. 11(5) r.w.s. 13(1)(d) and the discussion on this issue by the Ld. CIT(A) is as under: 14.1. Bharati Sahakari Bank: As per the appellant, as contended at different stages described above, the shares in the above bank were purchased to become the member of the society running the bank with the objective of availing loans for the purpose of the trust. The loans availed, as per the appellant are verifiable from the balance sheet of the trust. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bye-laws of Bank that the loans would not be sanctioned unless the assessee had purchased particular number of shares and becomes member. Even if both the authorities have also considered and discussed the investment in the shares of K.T. Kukkut Palan Sangh, Sagareshwar Soot Girni and Sonhira Sugar Factory (all Co-operative Societies) but we find that the assessee had not made any investment in those societies during the A.Y. 2006-07. Hence, in our opinion, we need not go to examine the acquisition of the shares in above institutions/cooperative societies by the assessee in preceding years. So far as the acquisition of the shares of the Bharati Sahakari Bank Ltd. is concerned nowhere it is controverted before us by the Revenue that the assessee has obtain a loan from the said Bank for the purpose of carrying out activity of the trust. These issues stands squarely covered in favour of the assessee by the decision of the ITAT, Pune in the case of Bharati Vidyapeeth Medical Foundation ITA Nos. 969 & 970/PN/2010 order dated 31-12-2012 in which it is held as under: 18. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no objection by the revenue in the past for holding the shares of the Bank in the scrutiny assessments and that still there is overdraft loan from the Bank also could not be controverted by the Revenue. We find merit in the submission of the learned counsel for the assessee that the purchase of shares of the bank amounting to ₹ 25,250/- is very negligible considering the total assets of the trust at 23.24 crores and the same was under compulsion for obtaining loan from the bank and that the bank while disbursing the loan had deducted the amount towards such share subscription from the loan amount and therefore, the same should be considered as an application of income. In our opinion, under the peculiar facts and circumstances of the case the purchase of shares amounting to ₹ 25,250/- in the past which the assessee continued to hold during this year cannot be a ground to hold the same as in violation of provisions of section 11(5) r.w.s. 13(1)(d) especially when the assessee is still having an overdraft of ₹ 12,87,665/- from the bank as mentioned by the AO. Since the assessee is still enjoying overdraft facility from the bank, therefore, we find no logic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order on this issue shows that the AO has tried to built its case saying that the appellant is engaged in collecting money/capitation fee in cash and part of it has been utilized in depositing the money in the Imarat and other accounts for the trust. The fund of the trust, as per the AO, was utilized for the benefit of the trustees, as evidenced from documents found during search and enlisted in Annexure-IV of the order and also in paras referred to above on this issue, for meeting expenses like agriculture expenses on farms of trustees (Rs.16,19,309/-) and other personal expenses like air tickets etc. and also for diversion of the funds noted in coded words or in abbreviated forms. Considering all these facts and evidences the AO has tried to establish that the case of the appellant is not only that of a trust not genuinely involved in carrying out its affairs properly but is also hit by provisions of s.13(1)(c). 13.6 I have carefully considered the submissions of the appellant and also the assessment order and the remand report. It is important to note that s.13(1)(c) provides to make the benefits available u/s.11 and 12, inoperative, if the trust is found granting benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Family. The AO on this issue has not made any submission. Furthermore, the appellant has also claimed that the agricultural expenses have been met by the Kadam Family from their own sources. The AO has again not made any submission on this issue but has merely relied on the discussions made in the assessment order. However, in the facts that the details of majority of the expenses were found with Mr. Shinde, goes to support the contention of the AO about meeting the expenditure from the funds of the trust. This is because, the documents found during search is admittedly for periods when the caretaker could not meet the trustees or their PAs and therefore, they have to be quite partial in extent. Whereas it seems to be covering almost the entire expenditure shown in the books. That being the case, I find that the actual expenses on the farms has to b§ more than what has been shown in the books and in the facts of the case and the surrounding circumstances available it is not difficult to hold that they must have come from the source AO is claiming. The very fact that these papers were found from Mr.Shinde who was in charge of collecting money / capitation fee shows that he woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd during Special Audit indicating deposits in cash in various Imarat accounts in all the years bring the case of the appellant within the mischief of s.13(1)(c). The direct evidences of collection of money/capitation fees for A.Y.2004- 05 to A.Y.2006-07 got linked to cash deposits in Imarat accounts etc. As such deposits were found in Special Audit in all the years, it automatically gets established that the collection of money/capitation fee were existent from A.Y.1999-2000to A.Y.2006-07. Therefore, illegal earning/violation of s.13(C) get established in all the above years. In view of the above, the cases relied upon by the appellant on the above issue becomes inapplicable. It can further be found and seen that the AO, while describing the violation of s.13(1)(c) has referred to Annexure-IV of the assessment order. The appellant has given submissions in this respect in page 299 to 305 of paper book Vol.I. The perusal of the same very clearly shows that the explanations in most cases are evasive and objected towards protecting the interest of the appellant. In view of discussions made above, I find that the case of the AO to hold the appellant to have violated s. 13(1)(c) in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that Shri Shinde is the only witness who can explain better whether the expenditure is incurred by him or from the funds of the trust. Moreover, not a single document has been found showing that any expenditure pertaining to Agriculture farms has been incurred by Shri Shinde out of the trust's money. He, therefore, pleads that the conclusion of both the authorities below that the assessee trust violated the provisions of Sec. 13(1)(c) is totally baseless without any supporting or corroborative evidence and it is merely on the suspicion. We have heard the Ld. CIT (DR), who relied on the findings of the Ld. CIT(A). 19. In this case, the search was against Shri R.D. Shinde not against the assessee trust. It is clear from the fact that only search warrant was issued on the name of Shri Shinde and his personal cabin was searched as well as there was a search in his residence. During the course of search proceedings certain vouchers/bills in respect of expenditure on agricultural farm of the trustees of the assessee trusts were found. We find merit in the argument of the Learned Counsel as it is not disputed that Shri R.D. Shinde, who has explained the said vouchers has nowhere state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07) the Assessing Officer has noted that Shri Shinde is a trusted employee of Bharati Vidyapeeth (BV) working as Accounts Officer in the main office. As per his reply in response to Q-6 of statement recorded u/s. 133A(3)(iii) dated 20- 07-2005, he looks after admission work of the trust. In response to Q-12 he further stated that applications for admission under Management Quota (MQ) are processed by him and placed before the committee. During the course of search, Shri Shinde admitted that he was earning commission on admissions granted to various aspirants/candidates and the entire cash of ₹ 3,14,83,870/- was his commission income for last fifteen days. He further admitted in Q-4 of statement u/s. 132(4) dated 21-07-2005 that he had been handling admission work for last 2-3 years. In sum and substance, as noted by the Assessing Officer Shri Shinde denied that no part of the money seized from his cabin belongs to the assessee trust. The Assessing Officer has also analyzed the evidence seized including certain figures found recorded in the single or two digits and the relevant discussion is from para nos. 5.2 to 5.21 of the assessment order which is as under: 5.2. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een agreed to be paid by candidates against admission. Some such instances are, as below. (a) Page no 1 & 2- Reference from Shri Shivalirao Kadam (Trustee) in case of Kumari Anjali Girdharlal for BDS course - Student ready to pay 2 + Fee (b) Page 3 & 4 Reference from Shri Shivajirao Kadam for Mr. Yelmar - Student ready to pay 1O to 12.5 lakhs + College fee (c) Page 40 - Reference from Shri Kripa Shankar Singh. Ex-Home Minister of Maharashtra State. Student ready to pay 5 + Fee (d) Page 41- Reference from Shri Raghunath Raje Nimbalkar to Shri Vishwajeet Kadam for Manjula Gaikwad. Student ready to pay fee + 1.5 Lakh (e) Page 54- Reference from Shri Balasaheb Guruv to trustee for Anushka Chikhalika. Student ready to pay fee + 8 Lakh for MBBS course. 5.6. Perusal of Annexure I would show that the trust has been charging donation for admission in professional courses such as MBBS, MD, BDS, BE, MBA, Hotel Management, Nursing etc. The details of students in these papers have been matched with admissions granted in institutes run by BVP under various quotas. Following students were found to be given admission in academic year 2005-06. S No Bundle No Page No Name of Studen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Shri R.D. Shinde and reexamination were also given to the assessee on 31.10.2007. 5.10. In the course of re-examination, Shri R.D. Shinde was cross examined by Shri Vineet Agrawal, Jt. CIT, Central Range-2, Pune, on commission issued by CIT(C), Pune. In response to Q.No. 13, Shri R.D. Shinde categorically stated that he is handling cash and that his cash receipts and cash balances were checked and signed by him and one of the Joint Secretaries viz. Shri V.B. Mhetre and the cash was kept in cash box in his cabin. If this was the position that cash balances were checked everyday and were signed by the Jt. Secretary and thereafter kept in the cash box, it is difficult to believe that cash of more than ₹ 3 crores which was found in search escaped the notice of the Jt. Secretary. 5.11. There are two significant things which came out of the reexamination of Shri R.D. Shinde. In his statement recorded on 14.10.2005, in response to Q.No. 76, Shri Shinde. had categorically stated that he is doing Consultancy business for the last two years. Now, on re-examination it has been stated by him in response to Q.No. 18 on 29.10.2007 that the work of consultancy started in Januar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the expertise or the services which were rendered for which such huge sum was charged. The answer of Shri Shinde in response to Q.No. 19 was totally vague. It was stated by him that the amounts were agreed but were not actually paid unless admission was there. 5.15. He was again asked in response to Q.No. 20, to clarify the expertise or services which were provided for by him for which such hefty amounts were asked for and were paid by the students. The reply thereto was again vague and it was stated by Shri Shinde that he was paid for the knowledge acquired in the educational field and was also guiding the students and parents about the hostel admission, entrance fees etc. Nobody is going to pay such hefty money for this kind of services. It has already been stated in para (iii) above, which is part of the show cause notice that the consultancy fee varies from ₹ 5 lacs to ₹ 30 lacs, is to be believed because in the slips it is written '5+ fee', '10 + fee', '30 + fee' and nobody is going to pay so much of consultancy fee. The assessee has not given any reply to this query. Strangely enough not even a single question has been asked in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the cash found from the room of Shri Shinde it becomes clear that Shri Shinde is that employee. The assessee has filed number of letters from the students to the effect that they have not paid any donation for the purpose of admission. The names of these students are mentioned in the slips which are given in Annexure I. 5.20. There is no denial of the fact that these students are still studying in the College. Therefore, they are under the thumb of the College Authorities and they would be willing to write anything. Therefore, no importance can be attached to these confirmation letters. 5.21 On perusal of the seized material and relevant records, I am in agreement with the discussion made, in the order u/s. 12AA(3) dated 08/11/2007, as above. On the basis of the above discussion, following irresistible conclusions are drawn. a) That cash exceeding ₹ 3.14 crores was found from the office of Shri R.D. Shinde which is located in the premises of the assessee. b) That Shri R.D. Shinde was not in a position to earn so much cash from his alleged consultancy business. c) That even though the cash has been owned up by Shri Shinde, this in fact belongs to the assessee Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also paid entire tax as said amount. 23. The Learned Counsel referred to the copies of the statement given by Shri Shinde which are place at page Nos. 843 and 844 of the compilation. He also referred to the different questions and answers in those statements. He submits that Shri Shinde was under tremendous pressure as his statement was recorded and continued in the late mid night and in one question he answered that earlier cash collected might have been deposited in the building fund account of the trust. The Assessing Officer has capitalized the said answer of Shri Shinde for using against the assessee trust discarding and ignoring all the earlier answers. Shri Shinde has consistently told to investigation team that the said cash belong to him and he has also explained his modus operandi how used to collect the money from the new students who used to approach him for admissions in the different faculties/institutions of the assessee trust. He submits that when Shri Shinde himself has confessed that he was indulged into illegal collection of money from the students, how the Assessing Officer can discard the said confession and put the entire charge on the assessee trust. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 350 ITR 598 (Del). He submits that in the said decision the Hon'ble High Court has held that while issuing the warrant the DI must be of the opinion that the unaccounted income belongs to the persons searched and he cannot have the opinion that someone else's income is with the person searched. He submits that as per the principles laid down in the case of Madhu Gupta (supra) the money found which Shri Shinde belongs to him only and if the Department was of the opinion that cash collection and the papers found with Shri Shinde were actually that of the trust then at least the Revenue could have recorded the statements of the trustees, registrar and other officials of the trust even if the search was carried out against Shri Shinde. Without doing all these exercises there is no justification on the part of the Department to hold that whatever is found with Shri Shinde belonged to the assessee trust. He submits that the presumption engrafted in Sec. 132(4A) is a legal presumption and that overrides the theory of probability. He submits that the presumptions based on theory of probability may be workable in cases where there is no direct provision in the Act to draw the presumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is at all and their finding is based on prejudice. 26. Per contra, the Ld. CIT (DR) argues that Shri Shinde has stated in his statement that part of the collections made by him was deposited in the assessee trust's Bank A/c. He submits that Shri R.D. Shinde is a trusted employee is of the assessee trust and said information was with the Department and hence, the warrant was issued in the name of Shri R.D. Shinde. He relied on the orders of the authorities below on this issue. 27. We have heard the rival submissions of the parties and perused the record. We are on the core issue to adjudicate whether the cash found and seized from Shri Shinde during the course of search and seizure operation against him in his cabin from the Almari, belongs to the assessee trust or does it belong to Shri R.D. Shinde? In this case there is no dispute about the fact that the search is carried against Shri R.D. Shinde who is Accounts In-charge as well as the employee of the assessee trust. It is also fact that no search warrant was issued against the assessee trust or any of the trustees and no search action is taken against the assessee trust. It is also clear from the fact that the assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Additional Commissioner or] [Joint Director], [Joint Commissioner], [Assistant Director 98[or Deputy Director]], [Assistant Commissioner [or Deputy Commissioner] or Income-tax Officer], or (B) such [Additional Director or Additional Commissioner or] [Joint Director], or [Joint Commissioner], as the case may be, may authorise any [Assistant Director [or Deputy Director]], [Assistant Commissioner [or Deputy Commissioner] or Income-tax Officer], (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to-] (i) enter and search1 any [building, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; [(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le article or thing under clause (iii) :] [Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business:] [Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so.] [(1A) Where any 15[Chief Commissioner or Commissioner], in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the 16[Director General or Director] or any other [Chief Commissioner or Commissioner] or [Additional Director or Additional Commissioner] [or Joint Director or Joint Commissioner] to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such 20[Chief Commissioner or Commissioner] may, notwithstanding anything contained in section 21[120], aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person ; (ii) that the contents of such books of account and other documents are true ; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]" 28. Section 132(1) contemplates the information to form the believe for the situation mentioned in Clauses (a), (b) and (c). The information should be about any specific person against whom the search warrant can be issued. Sec. 132(1) suggests that where the search warrant is issued against a particular person, then the first legal presumption would be that information about undisclose income pertains to that specific person. In the present case, search warrant u/s. 132(1) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en admissions in the Management Quota by using discretion. In majority cases admissions are given in general quota on the merit and there is no scope much so for manipulation. At the most manipulation can be there were the management quota is explored but out of 146 only 8 students were given the admissions in the management quota. This fact also suggests that whatever case is built up by the Department against the assessee trust is having very week foundation. At the time of hearing also we put the query to the Ld. CIT (DR) if the Department was having information that there was undisclosed income of the assessee trust then why the Investigation Department did not search the assessee trust or any of the trustees but there is no answer. We also find that none of the trustees were examined. It is true that on one question put to Shri Shinde he has stated that part of the money collected has been deposited in the building (Imarat) fund account of the assessee trust. There is no direct evidence. In our opinion, the said statement cannot be the basis to fasten the assessee trust with the huge tax liabilities. 30. In the course of search and seizure action if any documents, money, bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the aforesaid discussion and facts of the case, the amount of ₹ 32,31,55,228/- (Silver Jubilee Fund - ₹ 1,98,74,284/- being unproved Corpus Fund + ₹ 30,32,80,944/- being increase in the Building Fund A/c.), is over and above Regular Tuition Fees received from the students is nothing but undisclosed taxable income brought into the books by the assessee in the guise of various funds. However, the said amount is part of the receipts, on account of donations, which are already proposed to be taxed as per the recasted accounts in the special audit report. To this extent, a show cause letter dated 23/06/2O08, was issued. 8.17. The assessee, in response to the show cause notices dated 23/06/2008, 30/06/2008 and 04/07/2008, covering the issues relating to corpus donations, other donations and credits in various funds, furnished certain submissions, vide letters dated 11/07/2008, 21/07/2008 and 24/07/2008. Mostly, the assessee has reiterated the submissions made, on earlier occasions. 8.18. The assessee was asked to furnish the details of names and addresses of the donors in respect of the Corpus fund and other specified funds like Imafat A/c, Fine Arts A/c and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by them are genuine coupon collections but the same is totally devoid of any evidence. As is evident from the said coupons and as admitted by the assessee these coupons do not bear the name and address of the donor from whom the donation is claimed to have been received by the trust. 8.24. In the absence of name and address on the respective coupon the authenticity of so called confirmations are questionable. Incidentally, it is also noticed from the coupons that were produced for verification that the same did not even bear the signature of a person who has collected donations on behalf of the trust nor any date is available on the said coupons. The same bear the facsimile signature of trustee. In the absence of this signature even the verification of so called coupon collector is also not possible. 8.25. It is difficult to believe that such a large number of rural population shall be making payment to a trust, the existence of which is hardly known to them apart from the fact that the activities of the trust hardly affects their welfare. It is also interesting to note that not only the assessee trust but similar donations running into lakhs of rupees have also been coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the donations collected through the corpus cannot be treated as a part of the corpus fund hence, this issue has goes against the assessee. But the next question is whether donations collected through coupons established that the assessee has collected the capitation fee. We are unable to accept finding of the authorities below. The assessee has filed the sample copies of the coupons which are of the smaller denominations i.e. ₹ 100/- to ₹ 500/- . Moreover, there is no evidence to suggest that the donations collected through said coupons are for giving any particular admission. Law is well settled that merely on the suspicion no liability can be fastening on any person how strong the suspicion may be unless there is evidence against the assessee. On the perusal of the discussion on this issue in the assessment order, we find that the Assessing Officer has not even examine any of the donors but his finding only suggest his suspicion. We, accordingly, hold that without any evidence, both the authorities below are wrong to give finding that the donations collected through the coupons having the smaller denominations are towards the capitation fee. We, accordingly, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 9,47,21,850/- made by the Assessing Officer. The Assessing Officer has discussed this issue in para no. 7 onwards in the assessment order which is reproduced below: "7. As already mentioned large number of incriminating documents evidencing collection of donations/capitation fee, over and above regular fee, were found and seized in the course of search operation. For instance, vide Panchanama dated 21/07/2005, Loose Paper Bundle No. 1 containing pages 1 to 85, was seized. Page No. 1 is related to page No.2. In this connection, it was stated by Shri Shinde that Shri Girdharilal came to him through Dr.Kadam (Shri Shivajirao Kadam) for admission of Kum. Anjali Girdharilal. Page No.2 is Hall Ticket of CET-SM-205 Exam conducted by Bharati Vidyapeeth, Pune. On this page, there are notings in pencil in the handwriting of Shri Shinde which he explained as under:- i) Telephone Numbers of parents, ii) Marks obtained in 12th Std. (PCB) iii) Visited for admission in BDS Course in Mumbai College, iv) Double 'tick marks' at two places on this page means information given on this page has been verified and found to be correct, v) Student is ready to pay "2 + Fee" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 (5) Loose Paper B. No. 4 of Panchanama 22.07.2005 - Page No. Amount (Rs.) 1 150000 2 500000 36 150000 37 200000 Total ₹ 10,00,000/- (6) Loose Paper B. No. 6 of Panchanama 22.07.2005 - Page No. Amount (Rs.) 1 80000 12 1650000 13 to 20 125000 23 50000 24 41500 25 to 30 650000 31 650000 Total Rs.32,46,500/- (7) Loose Paper B. No. 8 of Panchanama 22.07.2005 - Page No. Amount (Rs.) 4 & 5 2850000 138 to 142 650000 Total Rs.35,00,000/- (8) Loose Paper B. No. 9 of Panchanama 22.07.2005 - Page No. Amount (Rs.) 12 735000 13 1500000 45 175000 65 490350 Total Rs.29,00,350/- (9) Loose Paper B. No. 7 of Panchanama 22/07/2005 (Page No. 41 & 42) Para 4.12 (7)(A) of the Report ₹ 10,00,000/- 7.2. The total of the above, works out to ₹ 9,47,21,850/- and the same was proposed to be taxed as undisclosed income in the case of Bharati Vidyapeeth. The assessee, vide letter dated 21-07-2008, submitted that Shri Sinde has Shri Shinde has owned up the papers found with him. The assessee stated that the papers found a does not constitute incriminating evidence against the assessee. In effect, the assessee is reiterating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll for the reasons that the papers were found with Shri R D Shinde and it has no connection with the assessee. The assessee also claims that it has not collected any capitation fees from students. Without prejudice, it is also a claim of the assessee that out of the amount of ₹ 9.47 Crs., ₹ 6,59,21,500/- is pertaining to the 112 candidates whose names are noted on the loose papers and who were not given admission or have not been admitted in any of the institutes or colleges of the assessee during the year under consideration. Accordingly, the assessee claims that there is no reason in making addition when none of these candidates were given admission in any institutes of the assessee. 7.3. The assessee, further, submitted that out of the amount of ₹ 9.47 Crs., ₹ 87,50,350/- is pertaining to the various loose papers which are dumb documents in nature and are not relevant to the capitation fees nor does it indicate any other matter for making addition. The list of such papers has been given on Page 2046 of Volume II Part 7. The assessee has discussed each of these papers in detail in para 5.8 of its submission and has also submitted documentary evidences in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated legal issues or on the quantification of ₹ 9.47 crores. So far as the ownership and other legal issues relating to the documents are concerned, it can once again be reiterated that most of them have already been dealt in para 5 of this order and it has been held in the facts and circumstances of the case and also in law that the documents and cash found at the premise of the appellant during the search conducted in the name of Shri R.D. Shinde, belonged to the appellant. However, certain other issues raised in this context, in the detailed submissions quoted above, which were not discussed to keep the discussion in para 5 compact, are now being discussed hereafter. It is important to declare that these issues were also considered while coming to the final decision, but found not so relevent to alter the decision or worthy of discussions there in the objective in which that para was created. On the issue of statements of 15 persons considered by the AO in para 8.3 of the order to show collection of donation for granting admissions, the appellant has, in para 5.9 of his submissions has contended that the opportunity to cross-examine those persons has not been given and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d based on the detailed arguments made in the relevant paras, the appellant has requested for granting relief relating to the above two amounts out of ₹ 9.47 crores. The detailed arguments made by the appellant in their submissions are self explanatory and I do not find it necessary to reiterate them as they are mostly based on facts. In view of the above, the report of the AO submitted under remand u/s. 250(4) is important. It is observed that the AO in his remand report dt. 11/3/2010, on the above additions has stated in para 7.4 that the documentary evidences produced before him during the remand were considered and verified. According to him, the same were not considered during assessment as they were produced at the fag end of the assessment proceedings. However, on verification during remand, of the facts / evidences relating to quantification, the AO has not been able to find or state that the conention of the appellant that admissions to 112 candidates in respect of which collection ₹ 6.59 crores has been calculated and that the documents based on which ₹ 87,50,350/- was added are dumb, are not correct or not acceptable. The AO, is seen to have accepted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief cannot be considered to be allowable. Furthermore, the cash seized was admitted to be relating to the collection of 15 days only and therefore, the actual collection for the entire year has to be presumed to be of a much higher figure. Similarly, the possibility of actual earnings which could be estimated by multiplying the rates of capitation fee for different courses and the total number of admissions granted under management quota in different years, are much higher and therefore, it cannot be said that the total of such figure could be limited to or pegged to any particular figure. Therefore, this argument of the appellant is not considered as allowable. Similarly, the other consequential arguments of the appellant could be seen as made in Ground No.19 of the appeal, wherein the appellant has requested to delete the addition of ₹ 3.14 crores as the same should be considered to be covered by the figure of ₹ 9.47 crores. As the appellant has been granted relief out of the addition of ₹ 9.47 crores and the total remaining addition is now less than ₹ 3.14 crores, this ground of the appellant is of no relevance. Therefore, the same is considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinde has accepted which is also proved subsequently that he was indulged into all mal practices then how those documents can be used against the assessee trust. He also placed his heavy reliance on the remand report of the Assessing Officer. 40. Per contra, the Ld. CIT (DR) argues that Shri Shinde was trusted employee of the trust and whatever he has done that is on behalf of the assessee trust or the trustees. We find force in the argument of the Learned Counsel. In the assessment on the basis of the documents seized from Shri Shinde, the Assessing Officer made very high pitch additions by presuming that whatever the figures are appearing in respect of 146 students all have got the admissions. He further proceeded by estimating the alleged capitation fee and worked out on the basis of the statement of Shri Shinde that whatever the cash was found with him that was in respect of 15 days admissions and he was indulged into the said affair in much more earlier period also. Nothing has been controverted before us that in fact out of the 146 students to the extent of 112 candidates no admissions were given at all in any of the institutions of the assessee trust. This suggests that wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development fees account. 3. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in treating expenses of ₹ 2,45,91,642/- as revenue expenses in the absence of full details and proper reasons for treating them as revenue expenses. 4. Without Prejudice to ground no. 3 and in particular, the Ld. CIT (A) erred in treating the Gramin Vikas Pratishthan expenses as allowable expenses on the ground that these are met out of grants received by the assessee for specific purposes which were credited to income and expenditure account, in the absence of any details of such grants credited to the income and expenditure account. 5. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting a part of the additions u/s. 40A(3) amounting to ₹ 53,756/- when the corresponding payments were not covered by any of the exceptions in Rule 6DD. 6. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in allowing deduction for ₹ 31,99,423/- towards debit balances written off in the absence of full details of such debit balances. 7. Without Prejudice to ground no. 6, the CIT (A) failed to appreciate that a part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na (1,000) Net Total 200,591,394 44. The Ld. CIT(A) has discussed this issue in para no. 18.3 of the impugned order and we preferred to reproduce the same for the sake of clarity. "18.3. The AO has dealt this issue in paras 8 to 8.32 of his order. The details can be seen from the order. It is however noted that the AO in his order has referred to the seizure of cash of ₹ 3.14 crores from the premise of the appellant in the search of Shri R.D. Shinde, and also the statement recorded on 21/7/2005, wherein Shri Shinde is stated to have said that the amount seized represents money collected from students in last 15 days and on being further confronted about such collections made in earlier year, he has stated that he has earned ₹ 2 crores each in earlier two years, which were probably deposited in building fund accounts or trust accounts. The AO has further stated in the order, that in view of the above statement of Shri Shinde all such building fund accounts for the period of June.r 2004 to July 2005 were scrutinized and huge deposits mainly in cash was noted, which were ultimately transferred to the account of BVP. The summary of such details has been given in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In para 8.6 the AO has further referred to Annexure-ll of the order wherein the details of the number of students admitted under management quota in various colleges / institutions for the academic years 1999- 2000 to 2005-06 are given. The AO has further given a table of rates at which collection for different courses were made, based on the seized documents. The said table is also given below: Name of the course Rates for admission (Rs.) Medical (MBBS) 15 lakhs to 20 lakhs B.D.S. 6 lakhs to 7 lakhs M.S. (Ortho) 30 lakhs Electrical Engineering 2 lakhs Computer Engineering 1.5 lakhs Information Technology 1 lakh Civil/I. T./Chem. Engg. 2 lakhs M.Sc. Nursing 0.7 5 lakhs M.S. (Surgery) 25 lakhs Hotel Management 1 lakh B.Sc. (Nursing) 1 lakh M.B.A. 1.5 lakh M.D. (Gynac.) M.C.A. 35 lakhs to 40 lakhs M.C.A. 1.5 la khs D.G.O. 20 lakhs. In addition to the above discussions, the AO has also referred to findings made in searches simultaneously conducted in the case of Shri Rajendra Singh Yadav Group at Wadhwani Plaza, Pimpri, Pune- 18 including the statement of Mr. Yadav, to support that the appellant was engaged in collecting money for granting admissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect, the Assessing Officer has further referred to documents seized at Page Nos. 11 to 18 of Bundle No. 14 of Panchnama dated 22-7-2005. These pages are stated to be counterparts of the pay-in-slips for deposits in cash in Bharati Sahakari Bank Ltd. in the accounts of the institutions affiliated to the Bharati Vidyapeeth. It is noted in the assessment order that Shri Shinde explained these documents to represent cash collected through coupons by Organizers of the Trust, well wishers etc. As per the AO, the assessee was given an opportunity to prove the coupon donations or other donations. They were asked to furnish the details of names and addresses of the donors in respect of the Corpus fund and other specified funds like Imarat A/c, Fine Arts A/c and other Imarat A/cs etc. The assessee was also asked to furnish confirmation letters of such donors. It may be noted that, as per the AO, the onus was on the assessee to prove that a particular donation, be it in the form of Coupon or otherwise has in fact been given by the donor as Corpus donation. From the discussions made in the order, it is seen the AO formed the opinion that the appellant had no identifiable proof, whatsoever, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st hardly affects their welfare. It is also interesting to note that not only the assessee trust but similar donations running into lakhs of rupees have also been collected by the other trusts of the same group from very same villages in a similar manner by way of unnamed unsigned coupon collections of small donations and also in all the years as indicated below: - S. No. Name of the trust AY 99-00 AY 00-01 AY 01-02 AY 02-03 AY 03-04 AY 04-05 AY 05-06 AY 06-07 1 Bharati Kala Academy 22.63 48.05 23.45 37.50 24.20 8.28 9.00 26.70 2 Yeshwantrao Smriti Nvas 22.63 25.30 00.65 1.31 0.00 0.00 00.05 0.00 3 Patangrao Kadam Pratishtan 32.40 47,25 24.36 36.20 23.00 8.60 18.90 25.80 4 Yeshwantrao Mohite Pratishtan 22.70 25.20 00.10 00.15 0.00 0.00 0.00 0.00 5 Bharati Vidyapith Medical Foundation 9.10 31.25 48.45 43.50 53.55 13.05 50.93 38.65 6 Abhijit Kadam Memorial Foundation 0.00 0.00 43. 75 45.22 29.10 29.26 9.85 26.75 7 Matoshri Bayabai Kadam Memorial Foundation 22.28 46.35 46.30 36.83 47.40 19.15 8.40 25.48 8. Sonhira Foundation for Rural Development 0.00 47.70 28.97 38.15 23.05 3.75 8.05 26.05 9 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a specific direction was there or not, even where there were no written directions accompanying the donations. However, at the same time, it has to be kept in view that the specific direction should be that of the donor and not of the donee. In other words, it will not be sufficient for the donee alone to declare that the voluntary contributions were being allocated to the corpus. There should be evidence to show that the direction came from the donor."" 8.30 Merely because the assessee produced stray evidences incapable of verification, it cannot be held that it has discharged its onus of proving the genuineness of the transactions claimed by it. The said receipts are therefore liable to be brought to tax as unproved donations. Once they are taxed so, they lose to enjoy the benefit of exemption under Section 11, because the Section considers the exemption only to the donations and not to unproved and dubious donations. However, in the present case, as the registration is cancelled, all receipts on account of donations are considered for the purpose of taxation, unless the receipts are shown to be on account of capital account. 8.31 The assessee, vide letter dated 11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the corpus of the trust. The learned A.O. has totally ignored these letters. Once, the donation was towards the corpus of the trust, the said amount is exempt from tax u/s 11(1)(d). Accordingly, the assessee submits that this amount of ₹ 3,71,00,000/- is exempt from tax u/s 11(1)(d) and hence, there is no reason to treat the said amount as revenue receipt. 12.4 The assessee has received the following donations through issue of coupons - i. Building fund Donations ₹ 20,000/- ii. Building fund head office ₹ 3,37,20,460/- The appellant trust has been collecting donations through coupons from the public at large. In the state of Maharashtra, the appellant's main trustee Dr. Shri Patangrao Kadam and his family members through the medium of Bharati Vidyapeeth a charitable trust in the field of education, have done a substantial work in the field of education. It has set up educational institutions in Pune, Sangli, Satara, Kolhapur, Mumbai districts. It has also set up the educational institutions in New Delhi. After noticing their work in the educational field, there are number of willing donors who contribute donations to the various charitable trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2007 wherein it is stated that in the case of a charitable trust, the anonymous donations would be taxed as an income @ 30%. This amendment also shows that the legislature itself has accepted that in the case of a charitable trust, the anonymous donations are received. Further, we submit that the affidavits given from the donors and the volunteers are not contravened by the dept. by cross examining them and therefore, the question of holding a view that this money is out of unexplained cash credits is not possible. 12.6 There is no doubt that as per section11(1)(d) that there should be a specific direction by the donor that the donation shall form a part of the corpus. It is submitted that the trust had received the donations against the coupons issued. The coupons clearly stated the purpose of the donations. If that be so, it is very clear that the noting on the coupons impliedly constituted the direction from the donors for the donations given and which was clearly a direction that the donation was towards the corpus. It is further submitted that a mere look at the balance sheet and the accounts of the assessee would indicate that such donations have been accumulated in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f transfer from the income expenditure account to the development fund account. This amount of ₹ 50,62,500/- is nothing but appropriation entry passed by the assessee and it is not a case of any donations / grants received by the assessee. This aspect is clear from the fact that the said amount of ₹ 50,62, 500/- is debited to the income and expenditure account and the said amount is also not allowed as an expenditure by the special auditor. In para 6.2(b), he has given the details of the expenses not allowed while computing the income and amount of ₹ 50,62,500/- is clearly stated in respect of development fund expenses. Accordingly, he has made double addition and secondly, this amount being transferred from income and expenditure account cannot be considered as income of the assessee and hence, the same should be deleted. 12.11 As regards the addition in respect of amounts collected various funds namely, university dev. Fund, college dev. Fund, student welfare fund, Grant Funds, etc. Those amounts are collected from the students as per the circulars and norms of fee collection prescribed by the AICTE, Fee Fixation Committee and various rules and regulations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ICAI in this respect. The accounting standard specifies that the capital grant received should be treated as capital receipt. The project grants are of repetitive nature also. As already clarified earlier, the assessee trust receives grants from the Govt. for various purposes. The trust is running various educational institutions on grantable and non-grantable basis. There are number of schools and colleges giving profession, vocational and regular curriculum, sports education and training. The Central government, HRD Department and the state government education, social welfare and various other depts. has got allocation in their budget for promotion, research and up-liftment of lower class. Accordingly, our institution receives different type of grants from different authorities with the specific purpose for which the grants can be utilized by the assessee. It is binding on the institution to spend the said grant as per the directions and submits the audited utilization statement duly certified by the chartered accountant. If any surplus is their in the grant in a particular year, it has to be spent in the next year and again necessary utilization certificate for the total amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the emergency situation of the students. So the said amount is a liability of the trust and income. 46. The Ld. CIT(A) has called remand report of the Assessing Officer on the above submissions of the assessee. The relevant part of the remand report is reproduced by the Ld. CIT(A) in para no. 18.5 of the impugned order. The assessee's submissions in rejoinder to the remand report of the Assessing Officer are reproduced in para no. 18.6 by the Ld. CIT(A). The assessee contended that the donations were received mainly by cheques and all the donors are identified. The assessee further contended that all the donors have issued the letters confirming that the donations were given towards the corpus of the assessee trust. Once it is established that the donors are identified and the purpose of the donations then there is no justification for the Assessing Officer to take the difference stand. The assessee also contended that whatever the alleged information is gathered by the Assessing Officer in respect of the donations recorded in books of account for arriving at misplaced conclusion that the assessee collected the donations for giving the admissions is not sustainable in law as no i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the personal benefits of persons described in s.13(3) of the IT.Act. These findings were supported by the AO with the seizure of cash and documents from the head office of the BVP, in the search of Mr. Shinde, one of the trusted employees of the group looking after the accounts as well as the admissions in BVP's institutions. Therefore, it can be seen that the AO has established from the cash and documents seized, that the appellant has been charging capitation fee / donation for granting admissions. Even though the said evidences were directly relating to A.Y.2006-07, but the same was the situation in at least earlier two years was established by the AO from the statement of Mr. Shinde wherein he confirmed to have collected money of approximately ₹ 2 crores each in earlier two years and have deposited it in the building and other fund accounts of the various institutes and the trust. This contention of the AO has been further established to be true from the finding made showing huge amount of cash deposits in different fund accounts in different assessment years. On noticing this linkage that part of the collections made were going into the fund accounts, the AO after o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In the absence of identity of the donors and directions from , the donors, the coupon donations cannot be regarded as donations towards corpus/earmarked funds. The total amount stated to be collected by coupon donations during the year under consideration is quantified at Rs.................. , which is in agreement with the amount recorded in the books of account. The assesses could not make available for our verification the counterfoils of all coupons issued against coupon donations, the coupon donation Registers and other relevant records and, therefore, we were unable to check the entire amounts collected as coupon donations. The particulars of coupon donations verified by us, and the reconciliation with consolidated audited accounts is given in Exhibit-'F1'." The above report of the auditors clearly establishes that the coupon donations are from unnamed persons without any directions for its utilization for any specific purposes and the details maintained in respect of the above were neither complete nor verifiable. In the light of the above and the fact that the only evidence available with the appellant in the form of statements of so called volunteers asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, being a capital receipt cannot be taxed u/s.28, it is observed that such an argument is based on the presumption that the gift / donations are genuine. In a case where the receipts are either in lieu of exchange or trade off for granting admissions, or are fully unexplained, they are definitely of the nature of business assessable u/s.28. On careful consideration of the items appearing in para 6.2(a) of the Auditor's Report, already quoted at para 18.2 of this order in the light of the submissions of the appellant made to show that certain items appearing therein deserve to be considered differently even on the argument of the department vis. a. vis. the argument of the AO made in the assessment order and the remand report, it is noticed that the AO has examined this aspect in detail before submitting the remand report. The relevant portion of the remand report available on this ground of appeal has already been quoted at para 18.5. The AO has already reconciled various items appearing in para 6.2(a) of the Audit Report which has gone into the computation of income as assessable income with the submissions of the appellant and has arrived at a conclusion after discussing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant. Items appearing at 'c' and 'd' of the table have been more or less accepted by the AO in the remand report to be non-taxable in view of the submissions made and evidences submitted during remand proceedings. On careful consideration during the appeal and on submissions made in this regard by the appellant before and after the remand, I find that the AO has rightly accepted these items appearing in para 6(2)(a) of the Audit Report as not taxable. Collections made from students as per the circulars of the Govt. / other statutory bodies for the purchase of capital items and the grant received from UGC, AICCE etc. have been held as not taxable as revenue receipts. However, it is important to point out that the AO has incorrectly included the items relating to "appropriation of development fund" under the head 'c' which is for "fees collected from students as per circular etc.". They should have been bifurcated here to separately show the amount relating to development fund appropriation account which for this assessment year is of ₹ 50,62,500/-. The same amount is appearing in para 6.2(b) of the Special Audit Report as capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as income of the assessee trust. The identical issue has been dealt with by us in assessee's appeal also and the same has been decided against the assessee save the observation of the Ld. CIT(A) that the donations were collected from donors through coupons for giving the admissions as there is no evidence to suggest that the said coupons were utilized for collection the donations from the candidates or their parent coming for the admissions in the different institutes run by the assessee trust. But so far as nature of the "coupons donations" is concerned, it cannot be treated as a capital receipts in respect of the fees collected from the students. We find that the Ld. CIT(A) has given the reference to the remand report of the Assessing Officer in which the Assessing Officer has accepted that the grants and funds received from various institutes like UGC, AICTE as well as the collection made from the students have been held as non-taxable as revenue receipts. Now the Revenue is in appeal before us. 49. We have heard the parties and perused the record. So far as the issue of the donations collected through coupons are concerned those are to the extent of ₹ 33,720,460/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that this letter was shown to the assessee. It will, therefore, be seen that, even if we assume that this letter was in fact addressed by the manager of the Punjab National Bank Ltd. to the ITO, no reliance could be placed upon it, since it was not shown to the assessee until at the stage of preparation of the supplemental statement of the case and no opportunity to cross examine the manager of the bank could in the circumstances be sought or availed of by the assessee. It is true that the proceedings under the income tax law are not governed by the strict rules of evidence and, therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the I.T. authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him." 50. We, therefore, confirm the finding of the Ld. CIT(A) that the donations from the specified donors are in the nature of the "capital receipts" and part of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Auditor. The Assessee has objected to such addition on the ground that these expenses are of revenue nature and may not be considered as capital expenses. The assessee has however not submitted the documents in support of its claim". 19.6. The appellant in the rejoinder dt. 17.02.2010 to the remand report on the above issue submitted as under:- "9] In para 8, the A.O. has stated that the assessee had objected to the treatment of holding certain expenses as capital expenses. He has stated that the assessee has not submitted any details. The assessee submits that the A.O. has erred in holding that the assessee has not submitted any such details. It is submitted that all during the remand proceedings. Therefore, the A. O. is not correct in holding that no details are submitted by the assessee trust. Secondly, as per the chart submitted by the assessee trust, it is clear that the A.O. has erred in treating some of the expenses as capital expenses. The A.O. has only relied upon the special auditor's report while making the disallowance. It is submitted that in view of the detailed submissions made by the assessee trust, the claim of the assessee may kindly be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to purchase of land, d) Ground Development Expenses, relating to maintenance of play-grounds etc. of various educational institutes, e) Insurance Expenses, relating to various buildings owned by the appellant and alredy under use, and f) Remaining which are apparently of capital nature. A table was accordingly prepared after discussing the above matter with the appellant and the same is placed below for A.Y.2000-01 to A.Y.2006- 07. In this table, the items out of the above, which on examination appear to be of the nature of revenue has been shown. Accordingly, the total relief which the appellant would get is appearing in the last column. Development Fund Expenses and other expenses which are considered not allowable being capital in nature will continue to remain disallowed. The Gramin Vikas Pratisthan Expenses was explained to be relating to project expenses carried out by the appellant for rural development ory behalf of State Govt. As per the appellant, this was shown as expenditure as the receipts were also shown as income. Otherwise, neither the expenditure nor the receipt relates to the appellant as they are working only as an implementing agency to fulfil their commitme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead "fees collected from students" and Assessing Officer has held the said amount is not in revenue nature. The main thrust of the Assessing Officer is on the Special Audit Report and during the assessment proceedings the Assessing Officer has not at all the considered submissions of the assessee. We find that the Ld. CIT(A) has made the analysis of the expenditure which were disallowed by the Assessing Officer on the basis of the Special Audit Report which are to extend of ₹ 141,257,069/- concerning the assessment years 2000-01 to 2006-07 and allowed the expenses to the extent of ₹ 47,951,804/- in respect of expenditure incurred (a) Gramin Vikas Pratisthan Expenses, (b) Interest on Loan, Bank Charges, and Stamp Paper Expenes, (c) Ground Development Expenses and (d) Insurance Expenses are allowed as a revenue expenditure. 54. So far as A.Y. 2006-07 is concerned the Assessing Officer disallowed ₹ 37,346,892/- but the Ld. CIT(A) has sustained the addition to ₹ 1,27,55,250/- giving the substantial relief to the assessee. We find that the grants received for "Gramin Vikas Pratisthan"'s expenditure are treated as revenue receipt by the assessee in his books and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee but only an amount written back in the books by mere book entry and therefore is not an income in the hands of the assessee. Hence it is requested to kindly delete the same. Secondly, it is further submitted that the assessee has a. same time written off the unrecoverable debit balances in all the years under consideration. It may be kindly be noted by your honour that these amounts were allowed as deduction by the special auditor but the Id. A.U. has erred in disallowing the same. He has relied upon para 6.2(d) of the audit report and has made an addition of ₹ 31,99,423/-. In this connection we would like to submit that the assessee is having a number of institutions and thousands of staff members, lecturers, etc. In a normal course of activities, the assessee has to give these employees certain advances for festivals, car, personal problems, etc. etc. Some of these employees who have left the service have not repaid their advances. Despite the best efforts, the assessee has not recovered such advances from these persons and accordingly, the same are written off. The details of these advances pertaining to some of the institutions are given. There is no rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances and fees receivable written off. It is the claim of the AO that the liabilities written back of ₹ 41,53,082/- in this year is taxable in view of specific provision contained in explanation to proviso to s.41(1). The appellant also seem to have no objection to the same in view of the specific provisions available in the statute. Therefore, it is held that the action of the AO to disallow liabilities written back under the above quoted provision was legally correct and is accordingly confirmed. So far as the claim of the appellant to allow debit balances like advances and fees receivable written off as bad debt is concerned, I find that the AO in the remand report has not raised any objection in respect of the nature of the debit balances are concerned which have been written off in this year. This amount for this assessment year was shown at ₹ 31,99,423/-. The appellant claims that the above amount was allowed by the Special Auditor but added back by the Assessing Officer despite the objection raised by them. On reiteration of facts relating to the above adjustment, the Assessing Officer has not raised any further objection but has simply stated that it should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 - 07 in the hands of the appellant trust was not available against the income of the appellant for this year. 4. The learned CIT(A) erred in holding that the capital expenditure incurred of ₹ 18,90,76,715/- is not allowable as a deduction from the income for this year. 5. The learned CIT(A) erred in holding that the amount of ₹ 16,39,64,625/- being the capital expenditure incurred by the appellant out of earmarked funds is not allowable as a deduction from the additions to the earmarked funds. 6. The learned CIT(A) erred in holding that the donations collected from various persons/institutions towards the corpus/endowment funds worth ₹ 3,02,123/- are neither corpus donations as per section ll(l)(d) nor capital receipts and therefore chargeable to tax. 7. Without prejudice, the learned CIT(A) erred in directing to verify the claim of the appellant regarding the fees collected from students as per Circulars & norms of the'Govt. authorities instead of directly allowing the amount of ₹ 20,20,62,721/- as the issue was already decided in the cases for earlier years 8. The learned CIT(A) erred in holding that the benefit of 15% as allowable u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order which is reproduced below: "5. A major important issue in the case of the assessee relates to violation of Section 11(2) r.w.s. Section 11(5) of the I T Act. After carefully perused the balance sheets and the accounts of the assessee and I find that the assessee has freely continued to violate the provisions of section 11(2) r.w.s. 11(5) in the year under consideration like that of the earlier years. For the sake of convenience the details about such investments in the under year under consideration is compared as under - Nature of Violation Amount Rs. Shares - Bharati Sah. Bank- Boys Hostel Kolhapur 3,31,000 Shares - Bharati Sah. Bank- Boys Hostel Sangli 4,25,000 Shares - Bharati Sah. Bank- ( Central Office ) 34,57,160 Shares - Bharati Sah. Bank- E.M. School Balewadi 3,30,950 Shares - Bharati Sah. Bank- Girls Hostel, Kolhapur 3,57,500 Shares - Bharati Sah. Bank- Girls Hostel Panchgani 2,56,000 Shares - Bharati Sah. Bank- Girls Hostel, Sangli 4,25,000 Shares - Bharati Sah. Bank- Hospital Sangli 4,25,000 Shares - Bharati Sah. Bank- medical College Sangli 4,25,000 Shares - Bharati Sah. Bank- ( Pharm College, Pune ) 5,600 Shares - Bharati Sah. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares are purchased and the confirmation from the Bharati Sahakari Bank in this regard was also submitted in the earlier assessment proceedings. Further the certified copy of the relevant extract of Reserve Bank of India Circular on Linking of share holding to borrowing was clarified and submitted in asst. proceedings for earlier years. Further, the bank deducts the subscription for the shares from the loans granted to us. The relevant letter from bank is also submitted in the previous assessments, which is produced herewith for verification. Accordingly, this was not an investment made by the trust but it was an expenditure incurred in order to obtain the loans for the purposes of trust activities. Hence, such purchase of shares cannot be considered as an investment in violation of section 11(5). It may further be appreciated in this regard that it was a prerequisite on the part of the assessee to purchase the shares of the bank. Hence, it is not a case that the assessee trust has on its own invested in the shares of Bharati Sahakari Bank. On the other hand, it was purely out of compulsion that the assessee was required to purchase the shares and therefore, the said amount even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bharati Sahakari Bank Ltd. as a condition for availing the loans cannot be said to be the violation of Sec. 11(5) r.w.s. 13(1)(d) of the Act. Accordingly, Ground No. 2 is allowed in faour of the assessee. Ground No. 3 is in respect of set off of the excess deficit. The assessee has not pressed this ground hence, the Ground No. 3 is dismissed as not pressed. 65. Ground Nos. 4, 5, 6, 7 and 8 are concerned the Ld. Counsel submitted that if it is held that the assessee is entitled for benefit of exemption u/s. 11 in that case these grounds become redundant. While deciding the appeal for the A.Y. 2006-07, we have held that the assessee is entitled for the benefit of exemption u/s. 11 of the Income-tax Act in the status as a trust for the details reasons given in the order for the A.Y. 2006-07. We may also put on record that there is a charge against the assessee that in this year there is any violation of Sec. 13(1)(c) of the Act by the trustees by deriving direct or indirect benefit from the money or property of the assessee trust. 66. So far as Ground Nos. 9 and 10 are concerned these are consequential in nature and no specific adjudication is required. So far as applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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