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TMI Blog2022 (10) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is utilization of the fund for non-educational purposes. Even otherwise, the disallowance under Section 10(23C) made by the AO is pursuant to search dated 9 January 2018. The impugned assessment year before us is 2012-13. Only evidence based on which the ld AO held that Rs 1 Cr of Donation is not eligible for exemption u/s 10 (23C) are the statements of those persons. For this year, original assessment is already completed u/s 143(3) of the Act on 27 March 2014 therefore, it clearly shows that impugned assessment is a concluded assessment at the time of search. Such retracted statement also cannot be said to be incriminating material found during the course of search, which can be used to enhance the income of assessee u/s 153A of the Act. Thus , there is no incriminating material existing pursuant to search, which could have disturbed the concluded assessment in case of the assessee. Therefore, even on this ground, the exemption u/s 10(23C) cannot be denied to the assessee. Accordingly, ground of the appeal of the learned Assessing Officer is dismissed and order of the CIT (A) is confirmed. Gratuity and leave encashment provision - HELD THAT:- We find that assessee runs e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g grounds of appeal:- 06. Brief fact of the case shows that assessee is a charitable trust registered under Section 12AA (1) (b) (i) of The Income-tax Act, 1961 (the Act) from 3 January 2006 as per registration granted by the Director of Income tax (Exemption), Bangalore. 07. During the year, assessee has earned income from educational activities as well as interest income. Assessee filed return of income under Section 139 of the Act on 21 September 2021 at ₹Nil. The assessment was completed under Section 143(3) of the Act as per order dated 27 March 2014 at ₹ nil. 08. Subsequently, search under Section 132 of the Act was carried out in case of Podar Group on 9 January 2018, where the case of the assessee was also covered. Consequent to that, search notice under Section 153A of the Act was issued on 16th August, 2018, in response to which assessee filed return of income on 11th September, 2019 at ₹ nil. 09. During the course of search, the income tax department found that there are three trust belonging to Podar Group i.e. (i) Anandilal and Ganesh Podar society (ii) Podar Education Trust & (iii) Podar Education & Sports Trust. These trusts gave allegedly bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018-19, assessee replied on 23 December 2019. Meanwhile, the reply to notice under Section 133(6) of the Act was also received from Donee trust. The learned Assessing Officer further asked the bank statement of the Donee trust from F.Y. 2011-12 to 2017-18. As the bank accounts of Donee trust were not received by the learned Assessing Officer, he held that the genuineness of the transaction is not proved. Thereafter, he discussed various other transactions, which are not relevant to these appeals. 012. Meanwhile, assessee submitted that Mr. Kiritkumar suba, Mr. Navin Nishar, Mr. N.K. Sodhani & Mr. Jayesh Zanani, all have retracted their statements and they have also filed the affidavit to this effect. The learned Assessing Officer rejected retraction of statement as well as the affidavit of the parties and held that the information as per statement originally given is correct. In appellate proceedings also, in some of the cases in cross-examinations of all these persons, affirmed their retraction and the affidavit denying the allegations. The learned Assessing Officer held that retractions as well as the affidavit filed by those persons are not reliable and hence, could not be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order preferred the appeal before the learned CIT (A). Assessee challenged the assessment order stating that i. No incriminating material found during the course of search. ii. Assessment order is bad in law as it was framed without providing copy of seized material in electronic form to the assessee. iii. Despite retraction of the statement, reliance was made by the learned Assessing Officer on those statements for making addition without giving an opportunity of cross-examination. iv. Assessee further challenged the addition of ₹1 crore on which exemption under Section 10(23C) of the Act, is not granted for the reason that there is no evidence available to hold that the donation to the above trust is bogus. The assessee also stated that assessee has submitted copy of certificate issued under Section 80G of the Act and 12A of the Donee trust, receipt issued, bank statement of the assessee's trust, reply under Section 133(6) of the Act, received by the learned Assessing Officer and in absence of any other material proving otherwise, the learned Assessing Officer could not have made the disallowance. v. The learned CIT (A) was also shown his own order for A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Paper Book containing to 252 pages and supported the order of the learned CIT (A). It was submitted that i. Undoubtedly, originally same statements were given by some outside persons during the course of search. No employee of assessee made any statement. All these statements were retracted later on. In the cross examination given by the learned Assessing Officer, all of them have confirmed their retracted statement. Therefore, there is no evidence available with the learned Assessing Officer to hold that assessee has given a donation to the party and received back cash. ii. Ld AO has erred in relying upon the statements of the persons, which have been subsequently retracted by them post search. iii. statements recorded u/s 131 of the Act have no evidentiary value and relied upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Khader Khan Sons (2013) 352 ITR 480 and relied upon other judicial pronouncements. iv. During the process of cross examination in the course of the remand proceedings, the above persons stood by their retractions v. that material found of messages of Shri Navin Nishar cannot be applied against the assessee. vi. digital evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenses schedule 7 of the annual accounts. Assessee trust has shown fees income of ₹30.81 crores and has excess of ₹5,20,00,000/- for this year and none of the examination by the learned Assessing Officer proves that assessee is engaged in any activity other than educational activity. xiii. Object of the trust which are duly incorporated in the assessment order passed under Section 143(3) of the Act on 27th March, 2014, at paragraph no. 6 to show that the trust is engaged in perusal of educational activities and further, the trust to which the donation is given is also engaged in educational activities. The page no. 15 of the Paper Book was also shown that the Donee trust is an education society eligible for deduction under Section 80G of the Act. In view of this, the denial under Section 10(23C) of the Act is unwarranted. xiv. The learned Authorized Representative further relied on the order of the learned CIT (A) in assessee's own case for A.Y. 2011-12, wherein the learned CIT (A) has deleted the identical addition. He also referred to that decision of the learned CIT (A) to support his argument. He submitted that though in that case the Revenue has not preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer on the statement of Mr. Kiritkumar Suba, Mr. Navin Nishar and Mr. N.K. Sodhani under Section 131 of the Act and Mr. Jayesh Zanani under Section 132(4) of the Act is unwarranted. Assessee submitted that these are the chartered accountants namely Mr. Navin Nishar, Mr. N.K. Sodhani , Mr. Kirit Dharshibhai Suba is the Auditor of Podar Group and Mr. Jayesh Zanani is the Manager Accounts. Further, the statement of entry operator Mr. Shirish Shah was recorded and Mr. Dhirubhai Thakkar and Mr. Sureshbhai Thakkar of Dhara Angadia Services, Ahmadabad were recorded. Based on these statements, learned Assessing Officer has concluded that the donation of the assessee to Ramrao Adik Education Society is bogus. Assessee submitted that all these persons have retracted their statement by filing an affidavit on various dates. The assessee also sought an opportunity to cross-examine, wherein the cross-examination of these persons have confirmed their retracted statement. Thus, there is no evidence, which can be relied upon by the learned Assessing Officer on such retracted statement. The assessee also submitted that donation is made to Ramrao Adik Education Society. This trust is also registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cross examination such retraction was confirmed. 028. We examine those statements. i. Statement of Mr. Kiritkumar suba, CA, was recorded on 11 January 2018, which has been reproduced on page no. 6 of assessment order. Mr. Kiritkumar suba is a counsel wherein in question no. 14, he has stated that trust and societies of the Podar group donate amounts to various other trusts, such trust returned the cash. Further, Mr. Kiritkumar suba, Mr. N.K. Sodhani identifies to whom the donation is to be made and they earn commission. Cash is received by this person Mr. Kiritkumar suba and Mr. N.K. Sodhani and then, it was informed to Mr. Navin Nishar, who is also chartered accountant and the cash is collected from kantilal and it is delivered to person assigned by Mr. Navin Nishar. He further stated that Mr. Nishar makes the further arrangement. He submitted that he and Mr. Sodhani have done this for commission. He thereafter submitted that amount is then introduced as a share capital in various companies. ii. The statement of Mr. Shri N.K. Sodhani was also recorded on 12 January 2018, he also gave a similar statement. iii. The mobile phone of Mr. Navin Nishar was also seized where, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, these persons were cross-examined, who confirmed the retraction of the statement. Therefore, now these statements do not have any evidentiary value. 032. Even otherwise, in none of the statement recorded by the learned Assessing Officer reproduced shows that there is any evidence with respect to the donation by assessee being bogus i.e. the donation of ₹1 crores made by the assessee to Ramrao Adik Education Society or any cash payment given by that trust to any of the Angadias. 033. learned Assessing Officer relied heavily on the statements of the chartered accounts, who held that donation given by the assessee has been applied for non-education purposes. In the statement of either Mr. Kiritkumar suba, Mr. Sodhani or Mr. Navin, no reference of any donation by assessee to Ramrao Adik Education Society was found. Therefore, these statements do not give any evidence against the assessee with respect to above donation. 034. The statement of Mr. Jayesh Zanani clearly states that the modus operandi has come to his knowledge only through this person i.e. Mr. Kiritkumar suba. When the original source of information is proved not reliable, naturally statement of Mr. Jayesh Zana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that donation made by the assessee to Ramrao Adik Education Society is not for educational purpose. 042. According to the provision of Section 10(23C)(vi) of the Act, any University or any Educational Institutions solely existing for education purposes and not for purposes of profit will have its whole of the income exempt. The proviso to section 10(23C) of the Act provides that if an educational institute applies its income on other than objects of trust or for the purpose of profit, it may lose exemption. Admittedly Ramrao Adik Education Society is also an educational institute, therefore, donation to that society cannot be said to be utilized by assessee for non-educational purposes. This fact has not been denied by the learned Assessing Officer at any time. Thus , It is not the case of the assessee that ₹1 crores given as a donation by the assessee is utilization of the fund for non-educational purposes. 043. Even otherwise, the disallowance under Section 10(23C) of the Act, made by the learned Assessing Officer is pursuant to search dated 9 January 2018. The impugned assessment year before us is 2012-13. Only evidence based on which the ld AO held that Rs 1 Cr of Do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain Charitable Trust Hospital & Research Centre AAATU0192K 1,50,00,000 3 Nathiya Charitable Trust AABTN8918A 25,00,000 For AY 2016-17 Sr No Name of The Trust PAN Donation in Rs 1 Khsetropasana Trust AAATK5385L 15,00,000 2 Prabodh Foundation AACAP3230A 1,00,00,000 3 Surajmal Memorial education society AACTS5981Q 25,00,000 4 Varunarjun Trust AABTV5968K 1,00,00,000 5 Heritage Foundation AAATH5375B 1,00,00,000 6 Shantidevi Murlidhar Education Trust AAMAS5018H 1,00,00,000 AY 2017-18 Sr no Name of The Trust PAN Donation [In Rs] 1 Surajmal memorial Education society AACTS5981Q 1,00,00,000 2 VSPM Academy of Higher Education AAATV0836H 2,00,00,000 047. For all the above assessment years, identical facts and circumstances exists, both the parties have raised identical arguments. 048. We have carefully considered the rival contentions and also per use the orders of the lower authorities. The learned assessing officer has made identically worded assessment orders wherein deduction is denied u/s 10 (23C) of the act to the assessee to the extent of donations made. The learned CIT - A has also passed in identically worded appellate order rejecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donation of ₹ 5 crores u/s 10 (23C) of the income tax act, 1961 which was made in the course of assessment u/s 143 (3) read with Section 153A as the assessee trust contravened the provisions of Section 11 and 12 and thereby rendering itself as in eligible for exemption u/s 10 (23C) of the income tax act 1961 ii. on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in placing reliance on the order u/s 143 (3) read with Section 147 of the income tax act, 1961 in the case of Ms Anandilal and Ganesh Podar society for assessment year 2011 - 12 without appreciating that instant order u/s 143 (3) read with Section 153A of the income tax act 1961 relies on the additional facts and evidences gathered during search/survey on Podar group, post such enquiries and block assessment proceedings which were not considered during reassessment proceedings for assessment year 2011 - 12 iii. on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in placing extensive reliance on the retraction affidavits of Shri Kiritkumar Suba, Shri Navin Nishar and Shri Naresh SOdhani without appreciating that the retraction affidavits were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the learned CIT - A, exemption was allowed to the assessee with respect to the alleged bogus donation holding that there is no evidence available with the learned assessing officer that the donation made by the assessee to those trust are bogus and further the exemption is allowable on provision for leave encashment and gratuity following the decision of the coordinate bench in case of Podar Education Trust. We have dealt extensively all these issues in deciding the appeal of Podar education trust for assessment year 2012 - 13. As there is no change in the facts and circumstances of the case, following that decision, we hold that the exemption denied to the assessee u/s 10 (23C) of the act on donation to various trust as well as on provision of leave encashment and gratuity is not correct. Therefore, we confirm the order of the learned CIT - A for all these years and dismiss the appeal of the learned assessing officer. 059. Accordingly, appeal is filed by the learned assessing officer for assessment year 2014 - 15 to assessment year 2018 - 19 in case of Podar Education and Sports trusts are dismissed. 060. Accordingly, all 11 appeals filed by the learned assessing officer are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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