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TMI Blog2015 (9) TMI 1709X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has been made wholly on adhoc basis which could not be sustained in law - The findings of the Assessing Officer have no basis what-so-ever, therefore, ld. CIT(Appeals) was justified in deleting the addition - Decided against revenue. Addition on account of discrepancies in two set of trial balances found at the time of search - HELD THAT:- The assessee has given complete details of complete trial balances and incomplete trial balances and the remarks and the reasons for difference in the figure. These figures have been reconciled and is supported by all the entries made in the books of account. The difference in both the trial balances was thus, due to certain missing entries which have been even reconciled before us during the course of arguments. When all these reconciliations were submitted to the AO for his comments, the explanation of the assessee was not rebutted by the AO in any manner. CIT(Appeals) on the basis of material on record, was rightly satisfied with reconciliation done between incomplete trial balance and complete trial balance. Thus, ld. DR failed to point out any error in order of ld. CIT(Appeals) in deleting the addition. When assessee prepared th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to point out any infirmity in the order of ld. CIT(Appeals) in deleting the addition - On going through the material on record, we find that ld. CIT(Appeals) was justified in deleting the addition in respect of duplicate entries/double additions made by the Assessing Officer and part of the amount which was not recorded. From the above discussion in the light of the findings of the ld. CIT(Appeals), we do not find any justification to interfere with the order of ld. CIT(Appeals). The departmental appeal, thus, stands dismissed on ground Nos. 1 2. Addition on the same issue based on rough notings in the seized diaries - HELD THAT:- The entries contained in the diary itself are not corroborated by any material or evidence on record. The ld. CIT(Appeals) also in his findings in column No. 5, as reproduced above, has mentioned that the students who have not taken admission during the year but maintained addition of ₹ 28,25,000/- on the reasons that the remand report mentioned specific dates with amount against the students. The findings of the authorities below are wholly unjustified because when the students whose names have been mentioned in column No. 5 as per the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has received the fees and how they have been recorded in the books of account. Therefore, the amounts, even if do not match with the seized diary, when have been recorded in the regular books of account even prior to the search, there was no justification for the authorities below to make the addition of ₹ 1,66,40,072/-. Similarly, the students who have not admitted to the assessee trust, there is no question of receipt of fees of ₹ 28,25,000/- from them, therefore, addition of ₹ 28,25,000/- was wholly unjustified. For the sake of argument, even if it is believed that Shri Anoop Garg has received any alleged amount but there is no evidence on record to prove that Shri Anoop Garg has handed over the alleged amount to the assessee trust. The amount of ₹ 75.80 lacs, once accepted by Shri Anoop Garg of his own, therefore, same can not come to the assessee in any manner and therefore, the balance amount of ₹ 80.48 Cr in the hands of the assessee in respect of column No. 7 which is balance amount left, which is the estimation by Shri Anoop Garg, could not be added in the hands of the assessment trust. This amount could only be considered in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of ld. CIT(Appeals) Central, Gurgaon dated 26.02.2013 for assessment years 2004-05, 2006-07, 2007-08 and 2008-09. 2. In this case, search seizure operation was conducted on 15.07.2008 at the residence and office premises at individual and group of concerns of M/s B.R. Institute of Medical Sciences. The assessee society is granted registration under section 12AA of the Income Tax Act on 06.06.1997. 3. We have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material available on record. All the appeals are decided as under. ITA 478/2013 : A.Y. 2004-05 (Departmental Appeal) 4. The revenue on ground No. 1 challenged the order of ld. CIT(Appeals) in deleting disallowance made on account of vehicle running expenses and depreciation of car in terms of Section 13(2)(b) of the Income Tax Act. The Assessing Officer noted that provisions of Section 13(2)(b) and (c) applies in the case of the assessee and that disallowance out of salary, allowances or otherwise paid to the trustees out of the resources of the institution for services rendered by such persons to such institution need to be disallowed if there is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding payment of salary was found in the course of search. The case made out by the Assessing Officer was that there is no requirement to maintain luxury cars. The ld. CIT(Appeals), considering these facts found that the Chairman did not have his own vehicle. The ld. CIT(Appeals) relied upon decision of the Delhi High Court in the case of Moti Bagh Mutual Aid Education 298 ITR 190 in which it was held that, Even if there are minor contradictions or deviations in the accounts of assessee, that by itself cannot substantiate the allegation that assessee does not exist solely for educational purposes or that it exist partly for profit motive. The ld. CIT(A) noted that providing of car, whatever be the model, to the Chairman, who devoted full time to the trust, cannot be said to be unreasonable. It was also noted that depreciation is a statutory allowance, therefore, disallowance should not be made. The ld. CIT(Appeals), accordingly, set aside the order of the Assessing Officer and deleted the additions. The Assessing Officer has not brought any material on record as to how he has given his finding that the cars have been purchased for the benefit of the Chairman. The Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The written submission of the assessee is reproduced in the appellate order in which the assessee briefly explained that the trial balances having total of ₹ 9.01 Cr was incomplete and cannot be relied upon which fact could be verified from the balance sheet which has been finalized on the basis of the trial balance with total amount of ₹ 10.88 Cr. The total of the balance sheet when finalized is more as against the figure adopted by the Assessing Officer. It was submitted that Assessing Officer merely on the basis of doubts and assumptions of certain facts and without pointing out any specific defect, made the addition. The accounts of the assessee are maintained in a computer software known as Tally and in the said software, entries are passed for a particular financial year. Whenever we get the print out of the trial balance, the software would given the print out of whole period. It was submitted that difference in two trial balances could not be treated as undisclosed income of the assessee. The incomplete trial balance was because of the error on the part of the accountant. The submissions of the assessee were forwarded to the Assessing Officer and the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the trial balances was thus, due to certain missing entries which have been even reconciled before us during the course of arguments. When all these reconciliations were submitted to the Assessing Officer for his comments, the explanation of the assessee was not rebutted by the Assessing Officer in any manner. Thus, the ld. CIT(Appeals) on the basis of material on record, was rightly satisfied with reconciliation done between incomplete trial balance and complete trial balance. Thus, ld. DR failed to point out any error in order of ld. CIT(Appeals) in deleting the addition. Further, when assessee prepared the balance sheet on the basis of complete data available in the trial balances, the figure came to more as compared to the lesser figure taken by the Assessing Officer from the incomplete trial balance. Therefore, this itself would show that there were no basis what-so-ever for making addition against the assessee. It was merely a mistake in not making certain entries in incomplete trial balance, thus could not be termed as undisclosed income of the assessee. The ld. CIT(Appeals) on proper appreciation of facts and reconciliation statement filed before him, was justified in del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various departments, co-ordination with several government authorities etc. He has submitted that assessee claimed salary payment of ₹ 10 lacs to the Chairman, Assessing Officer without any reasons disallowed ₹ 5 lacs. The services rendered by the Chairman have not been doubted who was whole time Chairman of the assessee trust. He has submitted that ld. CIT(Appeals) has agreed that Assessing Officer has not given any basis for the addition and no material was found during the course of search, therefore, addition was wholly unjustified. He has submitted that assessee maintained three institutions i.e. one at Moga and two at Panchkula and the distance is very wide between them, therefore, Chairman has to visit several places and various government authorities in connection with the activities of the assessee trust, therefore, salary paid to Chairman was reasonable. 16. On the other hand, ld. DR relied upon orders of the authorities below and submitted that no basis have been given for paying ₹ 10 lacs as salary to the Chairman. 17. We have considered rival submissions. The ld. CIT(Appeals) noted in the findings that no incriminating material was found during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 2006-07, it could not be said to be unreasonable. In those years, even the persons in Govt. managerial capacity would be getting salary more than ₹ 85,000/- per month. The Assessing Officer has not brought any evidence of comparable institution to show that any excess salary has been paid to the Chairman. In the absence of any adequate evidence or material on record, particularly when during the course of search, admittedly no incriminating material was found regarding excess salary paid to the Chairman, addition is wholly unjustified. Therefore, we do not subscribe to the views of the authorities below in making and sustaining the addition. We, therefore, set aside the orders of authorities below and delete the addition of ₹ 5 lacs. 19. In the result, appeal of the assessee is allowed. ITA 445/2913 (A.Y. 2007-08) (Assessee's Appeal) 20. In this appeal, assessee challenged the addition of ₹ 6 lacs on account of disallowance of salary paid to Shri Anoop Garg, Chairman under section 13(2)(b)(c) of the Act. In this year, Chairman has been paid salary of ₹ 11 lacs. The Assessing Officer found ₹ 5 lacs as reasonable salary and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cross appeals. 27. In the appeal of assessee, assessee has challenged addition of ₹ 2,68,13,920/- out of the total addition amounting to ₹ 4 Crores based upon the rough notings in the diary seized during the course of search on ground No. 1 to 3. On the same issue, the revenue has raised ground Nos. 1 and 2 in the departmental appeal challenging the deletion of addition to the extent of ₹ 38,80,000/-. 28. In the impugned order, it is stated that two diaries marked as A-1 and A-2 were found and seized from the residence of the Chairman of the assessee society Shri Anoop Garg. On comparing the contents of the diary with the books of account impounded during the course of search and in the absence of any reconciliation furnished, the Assessing Officer concluded that the assessee was receiving capitation fees from the students over and above the normal fees and in the bargain, the assessee had violated the provisions of Section 2(24)(ii) of the Income Tax Act. The Assessing Officer by referring to copy of the seized paper and list of 59 students in the assessment order found that several receipts are not accounted for by the assessee and accordingly, made add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of the total addition of ₹ 3.29 Cr. Affidavits of some of the students who have already left the institute were filed. In the diary itself, there were addresses of the students and Assessing Officer should have taken steps for issuing summons against the students under section 131 of the Act for clarifying the entries. The assessee has not shown any extra receipts in the management quota. The assessee trust have 15% of the total seats as NRI seats and fee prescribed for them was duly recorded in the books of account. The assessee relied upon the order of ITAT Chennai Bench in the case of M/s Saveetha Institute of Medical Technical Sciences Vs ACIT in ITA 99/2011 dated 18.07.2011 wherein on similar facts, during the course of search, documents relating to Management quota seats were found and addition was made on the basis of estimation. The Tribunal held, There is nothing on record to co-relate between any such reality of life to which the Assessing Officer is pointing to who prevented the Assessing Officer to record the statements of the students or their wards. On simple conjectures and surmises, no addition can be made under Income Tax Act. We, therefore, confirm ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary has been tabulated and comments offered after examining from the seized materials and the ledgers, were also counter-commented upon by the assessee. It emerges that there are instances of double additions on account of duplicate entries in respect of amounts as well as in the names of some students. The other contention of the assessee being that some students had not taken admission during the year though the fee amounts were entered, besides claiming that some amounts which have been recorded in the books out of the amounts mentioned in the diaries added by the AO in the impugned order. For easy reference an abridged chart, comprising name of the student as serially mentioned in the assessment order alongwith outcome of the remand proceedings and claim of assessee is given below. 1 SI. no as per assessment order 2 Name of the student 3 Amount for which addition has been made by the AO in assessment order 4 Benefit after remand proceedings 5 Studen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta 300000 233200 66800 15 Sukhbandan Kaur 500000 500000 0 16 Somya Bagga 350000 350000 0 17 Sampada 475000 475000 0 18 Deepika Aggarwal 1000000 500000 500000 0 19 Neeti 1420000 710000 551080 158920 20 Kiran Deep Kaur 1200000 600000 346080 253920 21 Sneekha Sharma 1285000 600000 640000 45000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500000 0 38 Rahul 1256000 844000 412000 39 Deepti 500000 500000 0 40 Surbhi 600000 '600000 0 41 Dr. Rupinder 120000 120000 0 42 Anil mittal 215000 215000 0 43 Rupinder 200000 200000 0 44 Prajal Taiwan 200000 200000 0 45 Shivani 400000 400000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 pertain to duplicate entries of names. For instance at SI 5 and 55 is Shiwangi Chanana; at SI 35 and 16 is Somya Bagga etc. 2. Sls.25, 26, 30, 32, 33, 55 and 58 pertain to amounts recorded in the books. 3. Sls. 18,19,20,21 and 27 pertain to double additions. 4. Sls. 3,7,8, 23 and 56 where part of the sum are not recorded. Benefit to the assessee works out to ₹ 1,31,86,080/-. Column 5. In respect of sis 48, 50, 51, 52 and 53, it is the claim of the assessee that these students did not take admission during the year. However the remand report mentions specific dates with amounts against these students, so the contention that these were written on estimate basis and the same had not been received does not hold strength. The ostensible approved registered list of students were part of the additional evidence but the same are in-house list, so no credence can be given. Column 6. The sums in this column are claimed by the assessee as recorded in the books. However on remand, the AO has after due verification, categorically stated that the dates appearing in the seized books do not either match with the ledger accounts. Hence these assertions by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hart prepared on the basis of the seized material and ₹ 38,66,792/- is the amount which was recorded in the books of account after the date of search which is clear from column 10 of the chart prepared and filed on record. He has, therefore, submitted that the entire addition was wholly unjustified. The entries in the seized diary are the estimated amount of the fees to be received from the students for whole of the course which runs for 4 years in case of BDS and three years in case of MDS. He has also submitted that the dates corresponding to the entries in the diaries are mostly for the month of July,2007 and August,2007. Sample copies of the pages are filed on record but the Counselling of the students to be admitted for the course were actually till September,2007. He has submitted that after completion of the Counselling Session and on receipt of the approved list, the students were admitted. He has, therefore, submitted that entire addition is unjustified in the hands of the assessee trust. 35. On the other hand, ld. DR relied upon orders of the authorities below. 36. We have considered the rival submissions and perused the material available on record. The reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch. Copy of the same is placed on record. Several questions were asked to him during his examination seeking explanation with regard to entries contained in the diary. He has, however, did not make any statement against the assessee trust with regard to receipt of any capitation fees/extra fees received on behalf of the assessee trust. According to the statement of the assessee, the entries found in the seized diary are the estimated amount of fees to be received from the students during the whole course because the course runs for three to four years. The assessee in the Paper Book has filed the Admission Counselling held by the University for admission in the Institution of the assessee trust and also filed approved list of the students to be admitted. The Counselling has been held from 13.07.2007 to 27.09.2007. Thus, the fees would have been received by the assessee trust after approval of the list by the university. There is no question of receipt of any fees by the assessment trust later on i.e. date of search 15.07.2008. The date of search is 15.07.2008 and as such revenue should have proved the nexus of the entries contained in the seized diary with the amount received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capitation fees or fee to the assessee trust. Therefore, there was no justification to make addition of such students who have not taken admission in the Institution of the assessee trust merely because their names were mentioned in the seized diary. The addition of ₹ 28,25,000/- is liable to be deleted. 37(ii) The ld. CIT(Appeals) (in column No. 6) has confirmed the addition of ₹ 1,66,40,072/- in respect of the amount, out of the balance amount which have been recorded in the books. . When the findings of the ld. CIT(Appeals) based on the remand report of the Assessing Officer says that the amount of ₹ 1.66 Cr has been recorded in the books of account of the assessee trust, where is a question of making addition against the assessee trust. The ld. CIT(Appeals), on the basis of the remand report noted that the dates appearing in the seized diary do not match with the ledger account, therefore, addition was made. As is noted above, since seized diary was the estimated figures made by the Chairman Shri Anoop Garg, therefore, there is no question of matching the dates with the entries contained in the regular books of account maintained by the assessee. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his case for assessment year under appeal. In the appeals of Shri Anoop Garg which were heard together with these appeals, the ld. counsel for the assessee seek permission to withdraw the same appeals and vide separate orders, the same have been dismissed as withdrawn. The amount of ₹ 75.80 lacs, once accepted by Shri Anoop Garg of his own, therefore, same can not come to the assessee in any manner and therefore, the balance amount of ₹ 80.48 Cr in the hands of the assessee in respect of column No. 7 which is balance amount left, which is the estimation by Shri Anoop Garg, could not be added in the hands of the assessment trust. This amount could only be considered in the case of Shri Anoop Garg, Chairman of the assessee trust and sine surrendered amount of ₹ 75.80 lacs has already been made in the case of Chairman and his appeals have been dismissed separately, there was no justification to make double addition of ₹ 80.48 lacs in the hands of the assessee trust. 38. Considering the totality of the facts and circumstances and above discussion, we do not find any justification for ld. CIT(Appeals) to sustain the addition of ₹ 2,68,13,920/- out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear future but was never done. The amounts have been received through cheques and have been entered into the books of account. He has relied upon decision of Gujrat High Court in the case of Radhe Developers India Ltd. 329 ITR 1 in which it was held that where the addition made on the basis of figures in the loose paper has been deleted by the Tribunal after appreciating evidence on record found that the said figures were projected estimates and no actual transactions had taken place and no evidences on record to indicate to contrary is found, no interference is called for in the order of the Tribunal. He has also relied upon decision of the Gujrat High Court in the case of CIT V Maulik Kumar K. Shah 307 ITR 137 in which it was held that When no other evidence had been shown to justify that these amounts were received from the purchasers, the concurrent finding was that on the basis of these loose papers, no addition was justified. The assessee also filed explanation regarding details noted in these diaries which is noted at page 19-20 of the appellate order in which the assessee explained that as regards the entry of Jattana, Anand and Pudda, these we4re unsecured loans taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed to be raised and that such loans were mostly received in cheques and were duly recorded. This argument of the assessee that some of the figures represent estimates cannot be accepted. I am afraid these assertions appear to my mind to be after thoughts to fit into the judicial decisions being relied upon. During the remand proceedings the AO had vehemently stated that the claim of the assessee that an amount of ₹ 82,00,000/- out of the addition of ₹ 1.67 crores had been received and duly recorded should not be accented as no corroborative documentary evidence had been filed. 1 find that the assessee in PB 249-269 had furnished copy of Balance Sheet of BRS Institute of Medical Sciences for AY 2007-08 wherein in at page 151 in the List of unsecured loans as on 31.3.2007, the names of Dr. (Mrs)Bhupinder Kaur Padda (₹ 18,00,000/0; jatana (₹ 6,00,000/-) and Anand (₹ 5,00,000/-) are reflected. These three names as well as the amounts correspond to the names in the seized documents though in the case of Jatana, the figure in the document is ₹ 10 lakhs instead of ₹ 6 lakhs. Similarly in the List of secured loans at page 151, there is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank and have been shown in the balance sheet as on 31.03.2007. The ld. CIT(Appeals) gave benefit of bank entries of ₹ 53 lacs only but was not justified in not deleting the entire addition on the same basis. Since the four loans pertain to assessment year 2007-08, therefore, no addition could be made in assessment year under appeal 2008-09. Even otherwise, provisions of Section 68 would not apply in the case of the assessee because for rest amount there is no entry in the books of account. Shri Anoop Garg admitted in his statement that he has taken some loan in cash and there is no evidence on record to connect the assessee trust with any loan taken by him in his personal capacity. He has submitted that it may be an estimate of the Chairman and referred to certificate of Punjab National Bank (PB-1099 and balance sheet as on 31.3.2007 PB-252). He has, therefore, submitted that entire addition is liable to be deleted. On the other hand, ld. DR relied upon orders of the authorities below. 45. We have considered rival submissions. The assessee filed balance sheet as on 31.3.2007 and the certificate of the Punjab National Bank intimating the availing of term loan by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of account of the assessee. The addition under section 68 of the Act could be made if any sum is found credited in the books of account of the assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer as satisfactory, the sum so credited could be charged to income tax as income of the assessee of that previous year. Since there is no sum found credited in the books of account of the assessee in assessment year under appeal and no reliable evidence was found during the course of search, that these were genuine loans taken by assessee in assessment year under appeal, no addition could be made with the help of Section 68 of the Act of the rest of amount. 45(i) It may also be noted here that when the ld. CIT(Appeals) deleted the addition in respect of the loans mentioned in preceding assessment year of the bank, the ld. CIT(Appeals) should not have sustained the addition of ₹ 29 lacs in respect of three unsecured loans recorded in bla and balance sheet of the assessee as on 31.3.2007. The Hon'ble Delhi High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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