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TMI Blog2019 (10) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice dated 22.11.2013 shows that the Joint Director of Income-tax (Inv.) (Hqrs.) has signed the notice on behalf of the Director General of Income-tax (Inv.), Lucknow. The letter was issued from the office of the Director General of Income-tax (Inv.) and not from the office of the Joint Director of Income-tax (Inv.). Therefore, the second objection of the ld. counsel also is without any merit and the same is rejected. Third objection of that the ld. Director General of Income-tax (Inv.) could not have withdrawn the approval granted u/s 10(23C)(vi) of the IT Act with retrospective effect from assessment year 2007-08 onwards on the basis of order dated 26th March, 2015 finds no merit. The order passed by the DGIT (Inv.) is based on the numerous incriminating documents found and seized during the course of search and post search enquiries which establishes various forged documents, the manipulation of the bank accounts and the diversion of funds for personal purposes which proves beyond doubt that the trustees were misusing the benefit of exemption granted u/s 10(23C)(vi) of the IT Act. Therefore, the argument of the ld. counsel on this issue is also without any merit and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05/1861 dated 12/12/2004 and is also registered u/s 12AA of the I.T. Act, 1961 by the CIT, Dehradun vide Order No.C-40(206)/ Registration/Dehradun/2006-07 /Tech/9703 dated 29.11.2007. Shri Sanjay Bansal r/o 32/4, E.C. Road, Dehradun is the chairman of this society. This society runs various educational institutes in the name of Dev Bhoomi Group of Institutes at Dehradun and Saharanpur. The society has also been approved for exemption under clause 10(23C)(vi) of the I.T. Act, 1961 by the CCIT, Dehradun vide order F.No. CCIT/DDN/5/10(23C)(vi) and (via) dated 18.03.2008 w.e.f. 1.4.2007. A search seizure operation was conducted u/s 132 of the I.T. Act, 1961 on the Dev Bhoomi Institute of Technology, Uttrakhand Uthan Samiti and other group concerns on 26.04.2012. Vide centralization order u/s 127 of the Income Tax Act, 1961 dated 16.01.2013 of Commissioner of Income Tax, Dehradun, the case of the above assessee has been centralized with Central Circle, Dehradun falling within the administrative control of the DGIT(Inv.), Lucknow. Certain evidences were gathered during the course of search seizure, post search enquiries by the investigation wing and subsequent enquiries by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income Tax Act, 1961 on 26/4/2012, various incriminating documents were found and seized. These seized documents revealed that the trustee and chairman of the society, Shri Sanjay Bansal has siphoned off the society's funds in a big way and the funds so siphoned off were utilized for acquiring immovable properties by him and his family members and for other purposes. The ld. DGIT (Inv.) observed that the modus operandi adopted for siphoning off the society s funds is that Shri Sanjay Bansal had floated some fictitious and non-genuine entities in the names of his trusted employees/accountants, namely Shri Sunil Dandriyal, Shri Sushil Kumar and their family members and opened bank accounts in their names by forging the documents submitted with account opening forms . The deposits credited in these accounts were from the term loan/OD accounts of Uttarakhand Uthan Samiti, and Dev Bhoomi Institute of Technology Dehradun. He noted that M/s Fortech Computer System is the proprietorship concern of Mr. Sunil Dandriyal who is the accountant and trusted employee of Shri Sanjay Bansal. An account was opened in the name of the said concern whose introducer was Shri Sanjay Bansal. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar; iii) M/s Confinite, proprietor Shri Sushil Kumar iv) M/s Negi Builders Suppliers, proprietor Shri Mukesh Negi; v) M/s Edisons Sales Corp., proprietor Smt. Bimal Bansal, mother of Shri Sanjay Bansal; vi) M/s Strategic Marketing Pvt. Ltd.; vii) M/s Wali Gramudyog Sansthan, Roorkee, etc. 5. He noted that the above fictitious concerns are shown to be engaged in the business of supply of building material, computers/laptops and civil construction work, etc. and the purchases from them have been debited in the books of the society. The evidences unearthed during the search action and scrutiny proceedings revealed the modus operandi adopted by Shri Sanjay Bansal to divert the funds of the society through the above accounts and other means for his personal benefit and purposes other than educational purposes. Some of the salient features as noted by ld. DGIT (Inv.) from page 7 to page 14 of his order is reproduced as under:- i) While opening the accounts with banks, all these persons have been introduced by Shri Sanjay Bansal or Smt. Seema Bansal w/o Shri Sanjay Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 4 Term loan for laptop from PNB Kaulagarh 64,91,000 5 loan from PNB Kaulagarh against FDR 83,50,000 6 OD limit from PNB 7,00,00,000 7 ICICI Bank Rajpur road 9,62,489 8 Loan against FDR from PNB Kaulagarh road 2,34,61,000 9 Term loan for building from PNB Kaulagarh 3,75,00,000 10 Term loan for laptop from PNB Kaulagarh 2,24,64,000 11 OD limit from SBBJ Saharanpur Chowk Dehradun 80,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20.10.2008 via Bill No. 1984 dated 16.10.2008 and the payment paid to the supplier by the society from Society s reserved fund. From the details furnished by the bank, it is seen that the bank has sanctioned loan of ₹ 224.64 lacs to the society to be reimbursed to the society in lieu of 800 laptops worth ₹ 299.52 lakhs purchased for distributing to the students on the basis of two documents submitted by the society namely Invoice No. 1984 dated 16.10.2008 of M/s Fortech Computer Systems Pvt. Ltd., 96 Nehru Place, Delhi and the letter dt. 14.11.2008 written by Chairman, Uttarakhand Uthan Samiti to PNB, Kaulagarh Road, Dehradun intimating that the society has already purchased and received laptop in 20.10.2008 and has also made payments for the same from the Society s reserved fund. M/s Fortech Computer Systems Pvt. Ltd. vide their letter dt. 25.7.2012 has informed that they had supplied 467 laptops to Uttarakhand Uthan Samiti, Dehradun during the year 2008-09 as under:- - 450 laptops (HP-540) vide Invoice No. Rtl.Inv\1396 dt. 29.9.2008 for ₹ 1,23,61,500/- -16 Laptops (HP-540) 466 laptop bags vide Invoice No. Rtl.Inv.\1514 dt. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition of insurance of laptops/ Business Note Books. Moreover, no Inspection report in respect of End Use of the Term loan is available with the bank as stated in letter dt. 27.7.2012 of Chief Manager, PNB, Avas Vikas branch, Saharanpur .Therefore, as already confirmed by the firm M/s Strategic marketing, bogus expenditure has been debited in their names in books of society. (c) A further term loan of ₹ 262 lakhs was sanctioned by the bank PNB NAV, Saharanpur to the society Uttrakhand Uthan Samit, Dehradun vide letter dated 07.09.2010. This loan was sanctioned for purchase of 1050 laptops worth ₹ 393.12 lakh to be distributed to the students of the institute. This loan amount was disbursed through account No. 117500IC00000448. Bank provided the copy of sanction letter dt. 07.09.2010, copy of proforma invoice of M/s CAD ARENA No.J9AD109932 dated 19.8.2010 which is stated to be authorized dealer of M/s Hewlett Packard India Sales Pvt. Ltd. (HPISPL) 24, Salarpuria Arena Hosure Main Road, Adugodi, Bangalore, Karnataka and a copy of Purchase order by Uttarakhand Uthan Samiti bearing No. DBIT/Order/09-10/198 dated 19.8.2010 to M/s CAD ARENA, 2nd Near ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s namely Proforma Invoice No. J9AD109932) of Hewlett-Packard India Sales Pvt. Ltd., the alleged letter by Naman Patil (Manager Sales-North India) of HPISPL, and purchase order No. DBIT/Order/09-10/198 dated 9.8.2010 of Uttrakhand Uthan Samiti are the only documents made available by the bank in support of purchase of 1050 laptops and in support of the end use of the term loan of ₹ 262 lakh disbursed to the society. From the above facts, it is established that Uttrakhand Uthan Samiti has not purchased any laptop/computers (HP Compaq 420 Business class Notebook (XL189PA#AC) against the Term loan of ₹ 262 lakh sanctioned by the bank. (d) The society allegedly made purchase for building materials and construction material from the above mentioned fictious concerns for construction of college building and saraswati hostel:- s.no Name of party Amount of purchases 1 Negi builders and suppliers 2,32,33,500 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Dev Bhoomi Institute of Technology, D.Dun. M/s Universal Iron Store also furnished copy of ledger account of Dev Bhoomi Institute of Technology, Dehradun in its books of account for the period 1.4.2010 to 31.3.2011. In this ledger account also, sales of only ₹ 36,717/- against bill No.7891 dt. 19.2.2011and ₹ 30,100/- against Bill No. 7547 dt. 2.11.2010 to Dev Bhoomi Institute of Technology, Dehradun have been recorded. M/s Universion Iron Store also provided to this office copies of original bills No. 7891 and 7547 as was available with them. From the analaysis of bills of Universal Iron Store, it was revealed that Shri Sanjay Bansal had forged the bills issued by the above concerns to him for supply of goods at DBIT, Dehradun. By forging, altering, fake bills purportedly issued by Univeral Iron Store, Dhamala Wala, Dehradun in the name Dev Bhoomi Institute of Technology, Saharanpur have been prepared by Shri Sanjay Bansal. In fact, no such bills were issued by M/s Universal Iron Store, Dhamawala Dehradun. The Society has thus, claimed bogus expenses of ₹ 2,30,100/- and Rs., 1,38,597/- through these two bogus bills. (b) Bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal with the bank and also with the Tax authorities. Shri Sanjay Bansal has claimed to have spent this much of amount for construction of his institute building at Saharanpur which he did not incur. (c) Rishiraj Building Material Supplier, Mehndi Sarav, Saharanpur. Details provided by the PNB New Avas Vikas, Saharanpur, it is revealed that Shri Sanjay Bansal has submitted to the bank bills of Rishiraj Building Material Supplier, Mahndi Saray, Saharanpur for an amount of ₹ 85,79,196/- .An original Bill Book of Rishi Raj Building Material Suppliers, Tilwadi, Dehradun (Propr. Rishiraj Singh) was found and seized from the premises of Dev Bhoomi Institute of Technology at Manduwala, Navgaon, Dehradun. Sh.Rishiraj admitted in his statement recorded u/s 13 l(l)(b) to have no place of business in Saharanpur and has never supplied any building material for college at Saharanpur but only in DBIT at Manduwala Dehradun. He also denied to have issued any of the above bills. Though he stated that original bill book was asked by Sanjay Bansal only for the purpose of tally of his accounts and was given in march just before the search. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of the trust as required u/s 10(23C)(vi) of the IT Act. The scheme of forgery and manipulation of bank accounts and diversion of funds according to him proves beyond doubt the intention of Shri Sanjay Bansal to misuse the exemption granted u/s 10(23C)(vi) of the IT Act. He observed that the details of returns of income filed by the assessee for different assessment years are as under:- (Figure in Rs) A.Y. Gross receipts Expenditure Excess of income over expenditure (Surplus) Returned income Date of return 2007-08 24779791 24691009 85358 Nil. Exempt u/s 10(23C)(vi) 31.03.2008 2008-09 60049012 57967849 2971297 Nil. Exempt u/s 10(23C)(v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only logical conclusion is that he has nothing to say in this regard. At this point it is also important to consider that the above analysis is based on the documents, evidences, information found during the course of a search and seizure operation and from part of Panchnama drawn in the case of the assessee. In terms of section 292C of the IT Act, these documents are presumed to be belonging to the assessee and that the contents of such books of account and other documents are true. The assessee has despite repeated opportunities neither tried to give any justification for the irregularities, bogus transactions etc., nor furnished any evidence which may suggest otherwise. Therefore, based on the evidences/material on record as discussed in detail above, it is held that the assessee i.e., Uttarkhand Uthan Samiti is (i) neither existing solely for educational purposes, (ii) nor it is not for the purpose of profit . Therefore, as per provision and condition mentioned in section 10(23C)(vi) of the Income Tax Act-1961, basic condition that it should exist solely for education purpose is not satisfied. In the light of above, in terms of powers vested to the undersigned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 383, the ld. counsel for the assessee submitted that all these grounds go to the root of the matter and the relevant facts are already on record and no new facts are required to be investigated. He accordingly submitted that the additional ground raised by the assessee should be admitted. 10. After hearing both the sides and considering the fact that all relevant facts are already on record and no new facts are required to be investigated, the additional grounds raised by the assessee are admitted for adjudication. 11. The ld. counsel for the assessee referred to copy of show cause notice issued by the DGIT (Inv.) dated 22nd November, 2013 and submitted that the said notice nowhere shows the satisfaction of the DGIT (Inv.). Referring to the decision of the Jaipur Bench of the Tribunal in the case of Modern School Society vs. CIT (E), vide ITA No.1118/JP/2016, order dated 20th December, 2017 the ld. counsel for the assessee submitted that the Tribunal in the said decision has discussed the power and jurisdiction to withdraw the approval granted u/s 10(23C)(vi) of the IT Act and relying on various decisions it has been held that the notice issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice is invalid and, therefore, the subsequent order is also invalid. 14. Without prejudice to the above, the ld. counsel for the assessee submitted that the copy of the order has been signed by the Joint Director of Income-tax and not signed by the Director General of Income-tax (Inv.). Therefore, this notice itself is not valid. Referring to the paper book filed by the ld. DR, he submitted that the proposal was received by the DGIT, Central Circle from the DCIT, Central, Dehradun for cancellation of exemption granted u/s 10(23C)(vi) of the IT Act. Therefore, the due process of law has not been followed and the letter was not given by the Chief Commissioner of Dehradun who had granted the approval to the assessee and, therefore, the requirement of law has not been fulfilled. The ld. counsel for the assessee in another plank of argument submitted that the order passed by the DGIT (Inv.) is not a valid order since the order was passed on 26th March, 2015 whereas he has cancelled the approval with retrospective effect i.e., w.e.f. assessment year 2007-08 onwards. He submitted that the DGIT (Inv.) while passing the order has travelled beyond the show cause notice da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. CIT Vs. Modern School Society SLP(c) dismissal dated 11.02.2019 [SLP (c) Diary No. 4190/2019]; 10. Orissa Trust of Technical Education Vs. CCIT, [2009] 178 Taxman 363 (Orissa); 11. Patel Narshi Thakershi and Ors. Vs. Shri Pradyumansinghji Arjun singhji, (1971) 3 SCC 844; 12. CIT Vs. Rajesh Kumar Pandey, [2012] 25 taxmann.com 242 (All.); 13. M/s. Assam Bengal Carriers Kolkata Vs. CIT, ITA No. 706/Kol/2013 dated 15.01.2016 Passed by ITAT, D Bench, Kolkata; 14. ArunKanti Samanta Vs. CIT, ITA No. 1516/Kol/2014 dated 20.02.2015 Passed by ITAT, A Bench, Kolkata; 15. Sona Exports Vs. The Director of Mines Geology and Ors, W.P.No. 1183/1998 dated 08.09.1998 Passed by Hon ble High Court of Andhra Pradesh at Hyderabad. 16. Nataraj Theatre Vs. Govt, of Andhra Pradesh, WP No. 21691/1995 dated 26.08.1999 Passed by Hon ble High Court of Andhra Pradesh at Hyderabad; 17. T. Varghese George Vs. Kora K. George and Ors, (2012) 1 SCC 369; 18. Welham Boy s School Socy. Vs. Central Board of Direct Taxes [2006] 285 ITR 74 (Uttar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta, huge amount of capitation fees from students for admission to medical colleges, the impugned order passed by the Commissioner (E) cancelling the registration granted to assessee u/s 12AA as well as withdrawing exemption granted to it u/s 10(23C)(vi) and u/s 10(23C)(via) of the IT Act was justified. He submitted that in the case of the assessee also perusal of the order dated 26th March, 2015 clearly and sufficiently reveals that there is enough material brought on record by the DGIT (Inv.) that the assessee was not fulfilling the conditions laid down in section 10(23C)(vi) of the IT Act w.e.f. assessment year 2008-09 onwards. Accordingly, the DGIT (Inv.) has rightly cancelled the exemption to the assessee w.e.f. assessment year 2008-09 onwards. 16.1 So far as the merit of the case is concerned, he submitted that the numerous seized documents extensively discussed by the DGIT (Inv.) in his order dated 26th March, 2015 clearly establishes that the society was not established for the purpose of education and it was not being run as per its stated objects. Various forged documents, manipulation of the bank account and the diversion of funds for personal purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in clause (a) and clause (b) of the 13th proviso to section 10(23C)(vi) of the IT Act. Despite repeated opportunities granted, the assessee did not file any justification for the irregularities, bogus transaction, etc., nor furnished any evidence which may suggest otherwise. He, therefore, cancelled the approval granted earlier u/s 10(23C)(vi) of the IT Act to the assessee w.e.f. assessment year 2007-08 onwards. The first objection of the ld. counsel for the assessee is that before initiating the proceedings u/s 10(23C)(vi) of the IT Act r.w. the 13th proviso to the said section, only the competent authority i.e., the prescribed authority, can only issue a show cause notice giving an opportunity to the assessee to reply and explain its case. According to him, since the approval was granted earlier by the CCIT, Dehradun, vide his order dated 18th March, 2008, therefore, he is the competent authority to cancel the approval granted earlier and, therefore, DGIT (Inv.) has no authority to issue the show cause notice and, thereafter cancel the registration. 18.1 We do not find any merit in the above argument o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the argument of the ld. counsel on this issue is also without any merit and accordingly the same is dismissed. 20.2 So far as the argument of the ld. counsel that the Director General of Income-tax (Inv.) has passed an ex parte order without giving any proper and reasonable opportunity of presenting its case and on being heard is concerned, we find from the order of the DGIT (Inv.) that he had given number of opportunities to the assessee, however, the assessee has not availed of those opportunities. However, since various incriminating documents found during the course of search and evidence gathered during post search enquiries give details of siphoning of funds by the assessee, manipulation and forgery of documents, etc., the same needs to be answered by the assessee. No doubt despite repeated opportunities granted by the DGIT (Inv.), vide letters dated 03.01.2014, 31.01.2014 and 08.07.2014, the assessee has failed to avail the opportunities granted to him. However, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of DGIT (Inv.) with a direction to give on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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