Shikshana Prasaraka Mandali, Pune v. Asst. Comm of Income-tax,, Pune

ITA 1129/PUN/2011 | 2005-2006
Pronouncement Date: 19-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 112924514 RSA 2011
Assessee PAN AABTS7821G
Bench Pune
Appeal Number ITA 1129/PUN/2011
Duration Of Justice 5 year(s) 1 month(s) 10 day(s)
Appellant Shikshana Prasaraka Mandali, Pune
Respondent Asst. Comm of Income-tax,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 19-10-2016
Date Of Final Hearing 04-04-2016
Next Hearing Date 04-04-2016
Assessment Year 2005-2006
Appeal Filed On 08-09-2011
Judgment Text
] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE . . # BEFORE MS. SUSHMA CHOWLA JM AND SHRI R.K. PANDA AM . / ITA NOS.1127 TO 1133/PN/2011 % % / ASSESSMENT YEARS : 2003-04 TO 2009-10 SHIKSHANA PRASARAKA MANDALI SHARADA SABHAGRUH S.P. COLLEGE CAMPUS PUNE 411 030 PAN NO.AABTS7821G . / APPELLANT V/S ACIT CENTRAL CIRCLE-2(2) PUNE . / RESPONDENT / ASSESSEE BY : SHRI S.K. JHA & SHRI KETAN H. SHA H / REVENUE BY : SHRI S.K. RASTOGI / ORDER PER R.K. PANDA AM : THE ABOVE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST THE SEPARATE ORDERS DATED 30-06-2011 OF THE CIT(A) CENTRAL PUNE RELATING TO ASSESSMENT YEARS 2003-04 TO 2009-10 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE ALL THESE APPEALS WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.1127/PN/2011 (A.Y. 2003-04) : 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE SHIKSHANA PRASARAKA MANDALI (IN SHORT SPM) IS A SOCIETY REGISTERE D UNDER THE / DATE OF HEARING : 21.07.2016 / DATE OF PRONOUNCEMENT:19.10.2016 2 ITA NOS.1127 TO 1133/PN/2011 BOMBAY PUBLIC TRUST ACT 1950 AND THE SOCIETIES REGISTRAT ION ACT. IT WAS GRANTED REGISTRATION U/S.12A OF THE I.T. ACT BY THE CIT PUNE VIDE CERTIFICATE OF REGISTRATION DATED 17-09-1973. THE OBJECT OF THE SOCIETY AS PER ITS CONSTITUTION AMONGST OTHER OBJECT IS MAINLY T O IMPART EDUCATION AT REASONABLE COST. IN FURTHERANCE OF ITS OBJE CTS THE ASSESSEE IS RUNNING A NUMBER OF SCHOOLS AND COLLEGES AT VARIOUS PLACES. 3. A SEARCH U/S.132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE SOCIETY AT THERAPEUTIC DRUG MONITORING LABORATORY 194 S CHEME NO.6 ROAD NO.15 SION KOLIWADA SION EAST MUMBAI-22 ON 21-07- 2008. IN RESPONSE TO NOTICE U/S.153A OF THE I.T. ACT THE ASSESSE E FURNISHED ITS RETURN ON 27-05-2009 SHOWING TOTAL INCOME AT NIL. THE AO ISSUED NOTICE U/S.143(2) ON 23-10-2009. THE ASSESSEE VIDE ITS LET TER DATED 24- 09-2010 OBJECTED TO THE ISSUE OF SUCH NOTICE U/S.153A O N THE GROUND THAT IT HAS NOT RECEIVED THE COPY OF THE WARRANT OR C OPY OF PANCHNAMA IN THE NAME OF SHIKSHANA PRASARAKA MANDALI. FURTHER THE CASH AND DOCUMENTS SEIZED BELONG TO SHRI ANANT NILKANT MATE AND N OT TO SPM. THE CASH BOOK WAS NOT SIGNED BY THE AUTHORISED OFFICER O N THE DAY OF THE SEARCH AND THE PLACE SEARCHED IS NOT THE PLACE WHE RE THE ADMISSIONS ARE CONDUCTED OR FEES ARE COLLECTED AND THAT NO OTHER DOCUMENTS OF SPM WERE SEIZED. 4. HOWEVER THE AO REJECTED THE ABOVE CONTENTION OF TH E ASSESSEE ON THE GROUND THAT THE PROVISIONS OF CODE OF CRIMINAL PROCEDU RE 1973 RELATING TO SEARCHES AND SEIZURE APPLY SO FAR AS MAY BE TO SEARCHE S AND SEIZURE U/S.132 OF THE I.T. ACT. THE PROVISIONS RELATING TO THE CONDUCT OF SEARCHES ARE LARGELY FOUND IN SECTION 101 TO 103 OF TH E CODE. UNDER SECTION102 OF THE CODE WHAT IS NECESSARY IS THAT THE WA RRANT MAY BE PRODUCED TO THE PERSON CONCERNED IN THE CASE MENTIONE D IN THE SAID 3 ITA NOS.1127 TO 1133/PN/2011 SECTION. THAT SECTION DOES NOT REQUIRE A COPY OF THE SE ARCH WARRANT IN EVERY CASE TO BE SERVED ON THE PERSON CONCERNED. TH E SEARCH WARRANT WAS SHOWN TO SHRI ANANT N. MATE VICE CHAIRMAN OF THE SP M AND HE HAS SIGNED THE SAME. AS REGARDS THE OBJECTION FOR NON RECEIPT OF PANCHNAMA THE AO STATED THAT THE SAME HAS BEEN HAND ED OVER TO SHRI ANANT MATE ON 21-07-2008. SO FAR AS THE OBJECTION OF T HE ASSESSEE THAT CASH AND DOCUMENTS SEIZED BELONG TO SHRI ANANT MATE AN D NOT TO THE SPM AND THAT THE CASH BOOK WAS NOT SIGNED BY THE AUT HORISED OFFICER ON THE DATE OF THE SEARCH AND THE PLACE SEARCHED IS NO T THE PLACE WHERE ADMISSIONS ARE CONDUCTED OR FEES ARE COLLECTED ETC. THE AO HELD THAT THESE ARE NOT RELEVANT WHILE CONSIDERING THE VALIDITY OF THE NOTICE ISSUED U/S.153A. THE AO THUS REJECTED THE VARIOUS OBJECTIONS RAISED BY THE ASSESSEE ON THE ISSUE OF NOTICE U/S.153A. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO N OTED THAT DURING THE COURSE OF SEARCH A LOOSE PAPER FILE CONTAINING PAGE NOS. 1 TO 15 MARKED AS ANNEXURE A-2 AND A WRITING PAD CONTAINING PAGES 1 TO 19 MARKED AS ANNEXURE A-3 WERE SEIZED FROM THE PREMISES O F SPM. ON MANY OF THE PAGES IN THESE TWO ANNEXURES WERE WRITTEN CERTAIN NAMES AGAINST WHICH CERTAIN PERCENTAGES AND SOME OTHER FIGURES WERE WRITTEN. THE AO OBSERVED THAT IN THE STATEMENT RECORDED U/S.13 2(4) DURING THE COURSE OF THE SEARCH ON 21-07-2008 SHRI ANANT MATE VICE CHAIRMAN OF SPM HAD STATED THAT THE NAMES ARE OF THE STUDENTS/ PARENTS WHO HAD VISITED HIM FOR GETTING ADMISSION TO THE COLLEGES RUN BY THE SOCIETY NAMELY RUIA COLLEGE PODAR COLLEGE AND WELINGIKAR MANAGEMENT INSTITUTE-MUMBAI. HE HAD STATED THAT THE PERCENTAGE NOTED AGAINST THE NAME INDICATES THE PERCENTAGE OF MARKS AND THE OTHER FIG URE INDICATES THE DONATION PAID/TO BE PAID FOR GETTING ADMISSION TO THE COLLEGES. HE HAD FURTHER CLARIFIED THAT THE FIGURE OF RS.1.5 STANDS FOR DO NATION OF 4 ITA NOS.1127 TO 1133/PN/2011 RS.1.5 LAKHS. THE FIGURE 3 STANDS FOR DONATION OF RS.3 LAKHS AND SO ON. ACCORDING TO THE STATEMENT THE AMOUNT OF DONATION TO B E CHARGED WAS DECIDED ON THE BASIS OF THE PERCENTAGE OF MARKS OBTAINED AND THE CAPACITY OF THE PARENTS TO PAY. 6. THE AO FURTHER NOTED THAT AFTER CONSIDERING THE INFORM ATION GATHERED DURING THE COURSE OF SEARCH AND AFTER TAKING INTO ACCOUNT OTHER FACTS AND CIRCUMSTANCES OF THE CASE THE CIT CENT RAL PUNE PASSED ORDER U/S.12AA(3) OF THE I.T. ACT VIDE NO.PN/CIT(C)/12AA(3)/SPM/2010-11/1143 DATED 17-09-2010 CANCELLING THE REGISTRATION GRANTED TO THE ASSESSEE U/S.1 2A. HE OBSERVED THAT IN THE RETURN OF INCOME FILED BY THE ASSES SEE IN RESPONSE TO THE NOTICE U/S.153A THE ASSESSEE HAS CLAIMED EXEMPTIO N IN RESPECT OF ITS INCOME U/S.10(23C)(IIIAB) AND 11 AND 12 OF THE I.T. ACT. HE OBSERVED THAT IN THE ORIGINAL RETURN OF INCOME FILED THE AS SESSEE HAS CLAIMED EXEMPTION U/S.10(23C)(IIIAB) AND U/S.11 AND 12 OF THE I .T. ACT. HE EXAMINED THE ELIGIBILITY OF THE ASSESSEE TO SUCH EXEMPTI ON UNDER EACH OF THESE SECTIONS. ACCORDING TO HIM AS PER THE PRO VISIONS U/S.10(23C)(IIIAB) EXEMPTION TO THE INCOME IS AVAILABLE TO ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FO R EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT A ND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. ACCO RDING TO HIM IN ORDER TO BE ELIGIBLE FOR THE EXEMPTION THE UNIVERSITY O R THE OTHER EDUCATIONAL INSTITUTION HAS TO BE IN EXISTENCE SOLELY FOR E DUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. HOWEVER THE ISSUE AS TO WHETHER THESE EDUCATIONAL INSTITUTIONS ARE EXISTING SOLELY FOR EDUCATIONAL PURPOSE OR THERE IS PROFIT MOTIVE HAD COME UP FOR CONSIDERATION BEFORE THE CIT CENTRAL PUNE IN THE PROCEED INGS U/S.12AA(3). THE CIT IN HER ORDER REFERRED TO ABOVE HAS GIVEN A FINDING 5 ITA NOS.1127 TO 1133/PN/2011 THAT THE EDUCATIONAL INSTITUTIONS ARE RUN ON COMMERCIAL LINE S WITH A PROFIT MOTIVE. FOLLOWING THE ORDER OF THE CIT THE AO HELD T HAT THE ASSESSEE DOES NOT SATISFY THE CONDITION IN THE FIRST LIMB OF THE SECTION. 7. HE OBSERVED THAT THE NEXT LIMB OF SECTION 10(23C)(IIIAB) RE QUIRES THAT THE UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION SHOU LD BE WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. FROM THE DETA ILS FURNISHED BY THE ASSESSEE THE AO NOTED THAT THE GROSS RECEIPTS OF THE ASSESSEE SOCIETY FOR THE IMPUGNED ASSESSMENT YEAR COMES TO RS.45 60 12 267/- THE DETAILS OF WHICH ARE AS UNDER : GROSS RECEIPTS AS PER INCOME & EXPENDITURE ACCOUNT RS. 41 97 69 599 DONATION AND OTHER RECEIPTS TAKEN DIRECTLY TO BALANCE SHEET - RS.3 62 42 668 ------------------------------------ TOTAL RS.45 60 12 267 ------------------------------------ 8. HE NOTED THAT AS AGAINST GROSS RECEIPT OF RS.45 60 12 26 7/- THE SHARE OF FINANCE BY THE GOVERNMENT COMES TO RS.20 42 18 730/- WHICH IS 44.78% OF THE TOTAL RECEIPTS. HE ALSO ANALYSED THE GRA NTS RECEIVES BY THE TRUST FOR VARIOUS OTHER YEARS THE DETAILS OF WHICH ARE AS UNDER : F.Y. COLLECTION OF FEES & GRANTS SURPLUS DEFICIT GRANTS RECEIVED % OF GRANTS TO COLLECTION 2002 - 03 406 765 383 8 990 867 - 204 218 730 50.21% 2003 - 04 425 636 209 - 28 397 025 173 850 542 40.84% 2004 - 05 535 390 467 29 686 644 - 198 427 441 37.06% 2005 - 06 645 045 294 30 555 568 - 212 073 117 32.88% 2006 - 07 813 644 521 73 398 518 - 231 918 765 28.50% 2007 - 08 910 657 975 88 722 809 - 246 505 989 27.07% 2008 - 09 1 036 235 685 71 585 005 - 273 328 019 26.38% 9. IT WAS EXPLAINED BY THE ASSESSEE THAT THE TERM SUB STANTIAL HAS NOT BEEN DEFINED IN THE ACT U/S.10(23C) AND GOING BY ITS DIC TIONARY MEANING AND ITS DEFINITION AT OTHER PLACES IN THE ACT THE C ONDITION WILL BE SATISFIED IF THE SHARE OF GOVERNMENT FINANCE IS 20% OR M ORE. 6 ITA NOS.1127 TO 1133/PN/2011 FURTHER IN THE INSTANT CASE THE GOVERNMENT FINANCE IS MORE THAN 20% WHICH IS WITHOUT TAKING INTO ACCOUNT THE NON SALARY GRANT S WHICH WERE DUE BUT NOT RECEIVED AND THEREFORE NOT CONSIDERED IN TH E BOOKS AND IF THE SALARY GRANTS ARE ALSO CONSIDERED THE PERCENTAGE O F GOVERNMENT FINANCE WILL BE STILL HIGHER. 10. HOWEVER THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT SIMILAR ISSUE WAS INVOLVE D IN A.Y. 2003- 04 IN THE ASSESSMENT COMPLETED U/S.143(3) ON THE BASIS OF RETURN SUBMITTED U/S.139 BY THE ASSESSEE. IT WAS HELD BY THE AO IN THE ORDER PASSED U/S.143(3) THAT THE ASSESSEE DID NOT SATISFY THE STIPULATION OF BEING FINANCED WHOLLY OR SUBSTANTIALLY BY THE GOVERNMENT. THE APPEAL OF THE ASSESSEE WAS ALSO DISMISSED BY THE CIT(A) ON THIS ISSUE. SINCE THE FACTS OF THE PRESENT ASSESSMENT U/S.153A ARE IDENTIC AL TO THE FACTS IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE AO FOLLOWING THE FINDINGS OF THE CIT(A) FOR A.Y. 2003-04 HELD THAT THE ASSESSEE IS NO T WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. THE AO ACCORD INGLY HELD THAT THE ASSESSEE IS NOT ENTITLED TO THE EXEMPTION U/S.10(23C)(IIIAB). 11. SO FAR AS THE CLAIM OF EXEMPTION U/S.11 AND 12 IS CONCE RNED THE AO HELD THAT AS PER THE SAID SECTIONS INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AR E EXEMPT SUBJECT TO CERTAIN CONDITIONS AS MENTIONED IN THESE SECT IONS AND SECTIONS 12A 12AA AND 13 OF THE I.T. ACT. ONE OF THE CO NDITIONS IS THAT THE TRUST SHOULD HAVE BEEN REGISTERED BY THE CIT U/S.1 2A/12AA. SINCE THE REGISTRATION EARLIER GRANTED TO THE ASSESSEE HAS B EEN CANCELLED BY THE CIT THE AO HELD THAT THE ASSESSEE DOES NOT SATIS FY THIS CONDITION AND IS TO BE DENIED THE EXEMPTION U/S.11 AND 12. 7 ITA NOS.1127 TO 1133/PN/2011 12. IT WAS CONTENDED BY THE ASSESSEE THAT THE ORDER PASSED BY THE CIT CENTRAL CANCELLING REGISTRATION OF THE TRUST HAS NO R ETROSPECTIVE EFFECT AND WILL THEREFORE HAVE NO IMPLICATION FOR THIS YEAR. I T WAS ARGUED THAT THE TRUST FULFILS THE CONDITIONS LAID DOWN IN SECTION 12 AA AND HAS NOT VIOLATED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. THE INCOME OF THE TRUST HAS BEEN UTILIZED ON THE OBJECTS OF THE TRUST . THEREFORE THE TRUST IS ENTITLED TO EXEMPTION U/S.11 AND 12 OF THE I.T. A CT. HOWEVER THE AO REJECTED THE ABOVE CONTENTION OF THE ASSESSEE AND HELD THAT THE CIT CENTRAL PUNE HAS NOT INDICATED THE DATE FROM WHICH THE ORDER IS TO TAKE EFFECT. THIS IS FOR THE REASON THAT WHEN THE REGISTR ATION GRANTED U/S.12A IS CANCELLED U/S.12AA(3) IT WILL HAVE THE EFFECT OF WITHD RAWING THE REGISTRATION FROM THE TIME IT WAS GRANTED. HE FURTHER OBSERVED THAT SUB-SECTION (3) OF SECTION 12AA WHICH LAYS DOWN THE PROCED URE FOR CANCELLATION OF THE REGISTRATION DOES NOT INDICATE FROM WHICH DATE THE CANCELLATION WILL HAVE EFFECT. 13. THE AO FURTHER NOTED THAT FOR CLAIMING EXEMPTION 11 AN D 12 THE ASSESSEE HAS TO SATISFY THE CONDITIONS OF SECTION 13 O F THE I.T. ACT. AS PER CLAUSE (D) OF SUB-SECTION (1) OF SECTION 13 THE ASSESSEE WILL LOSE THE EXEMPTION U/S.11 AND 12 IF ANY FUNDS OF THE TRUST OR INSTI TUTION ARE INVESTED OR DEPOSITED OTHERWISE THAN IN ANY ONE OR MORE OF THE FORM OR MODES SPECIFIED IN SUB-SECTION 5 OF SECTION 11. FROM THE D ETAILS FURNISHED BY THE ASSESSEE HE OBSERVED THAT A PART OF A SSESSEES FUNDS STOOD INVESTED IN MODES OR FORMS OTHER THAN THOSE PRES CRIBED IN SECTION 11(5) THE DETAILS OF WHICH ARE AS UNDER : PDCC SHARES RS.300/- SHARES IN COOPERATIVE BANK RS.2 600/- 8 ITA NOS.1127 TO 1133/PN/2011 14. ON BEING ASKED BY THE AO IT WAS SUBMITTED THAT THE TRUST HAS NOT MADE ANY INVESTMENT CONTRARY TO THE PROVISIONS THE SUB MISSION OF THE ASSESSEE ON THIS ISSUE WHICH HAS BEEN REPRODUCED BY AO READS AS UNDER : SIR THE TRUST HAS NOT MADE ANY INVESTMENT CONTRARY T O THE PROVISIONS OF SECTION 11(5) BUT IN CASE OF SHARE OF PDCC BANK AMOUN TING TO RS.300/- AND RS.2 600/- THE SAME WAS OBLIGATORY ON ACCOUNT OF REGUL ATION OF THE STATE GOVERNMENT OR ON ACCOUNT OF OPENING OF THE BANK ACC OUNT. THESE SHARES WERE ACQUIRED IN THE YEAR 1923 IN THE NAME OF THE T HEN INSTITUTIONS OF PUNE FROM PUNE CENTRAL CO.OP. BANK. THIS BANK WAS THEN CO NVERTED INTO PUNE DISTRICT CO.OP. BANK (PDCC BANK). AS PER THE THEN RE GULATION OF THE STATE GOVERNMENT THE TRUST HAS TO COMPULSORILY PURCHASE THIS SH ARES AND TO HAVE ACCOUNT THIS BANK. CONSIDERING THE TRUST REVENUE THI S FIGURE IS VERY VERY SMALL THAT NOBODY CAN CONSIDER THIS AS INVESTMENT WERE T HE REVENUE OF THE TRUST IS IN SOME CRORES OF RUPEES. SIR ALSO THE SAME WAS CONSIDERED WHILE GIVING APPROVAL OF THE TRUST U/S.12A 80G & 10(23C)(V I) AND NOWHERE IT IS CONSIDERED AS INVESTMENT IN CONTRAVENTION OF THE SECTIO N 11(5) AND 13(1)(D). 15. HOWEVER THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM THE PROVISIONS OF SECTION 11(5) DOES NOT PROVIDE FOR ANY EXCEPTIONS THEREFORE THE REASON FOR THE INVESTMENT IN VIOLATION OF THE SECTION IS NOT RELEVANT AND THERE IS VIOLAT ION OF PROVISIONS OF SECTION 13(1)(D). IN VIEW OF THE ABOVE THE AO HE LD THAT THE EXEMPTION U/S.11 AND 12 IS NOT AVAILABLE TO THE ASSESSEE FOR CANCELLATION OF THE REGISTRATION U/S.12AA AND VIOLATION OF PRO VISIONS OF SECTION 13(1)(D). 16. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE FA CT THAT THE EDUCATIONAL INSTITUTIONS WERE BEING RUN BY THE ASSESSEE O N COMMERCIAL LINES WITH PROFIT MOTIVE THE AO HELD THAT THE ASSESSEES IN COME HAS TO BE COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINES S SUBJECT TO THE PROVISIONS OF SECTION 28 TO 44DB. HE OBSERVED THAT THE ASSESSEE HAS RECEIVED VARIOUS DONATIONS DURING THE YEAR SOME OF W HICH THE ASSESSEE HAS CREDITED TO VARIOUS FUNDS AND TAKEN DIRECT LY TO THE BALANCE SHEET WITHOUT CREDITING TO THE INCOME AND EXPEND ITURE ACCOUNT. 9 ITA NOS.1127 TO 1133/PN/2011 SINCE THE ASSESSEE WAS CREATED FOR CHARITABLE PURPOSES (THOUGH IT WAS NOT EXISTING FOR SUCH PURPOSE DURING THE YEAR UNDER CON SIDERATION) THE VOLUNTARY CONTRIBUTIONS RECEIVED BY IT IS INCOME IN TERMS O F CLAUSE (IIA) OF SUB-SECTION 24 OF SECTION 2. THEREFORE ALL THESE CONTRIB UTIONS ARE TO BE CONSIDERED AS THE RECEIPT OF THE ASSESSEE. SIMILARLY V ARIOUS GRANTS WHICH HAVE BEEN DIRECTLY CREDITED TO THE VARIOUS FUNDS ARE ALSO TO BE BROUGHT TO TAX. REJECTING THE EXPLANATION OF THE ASSESS EE THAT THE GRANTS OF RS.94 22 069/- RECEIVED BY IT WAS FOR SPECIFIC PUR POSES AND THEY WERE USED FOR SPECIFIC PURPOSES AND THEREFORE SUCH GRANTS WHICH WERE USED DO NOT FORM PART OF THE ASSESSEES INCOME TH E AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.2 25 72 567/- FOR T HE IMPUGNED ASSESSMENT YEAR. 17. SIMILARLY THE AO COMPUTED THE INCOME OF THE ASSESSEE FOR THE OTHER ASSESSMENT YEARS THE DETAILS OF WHICH ARE AS UNDER : 18. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDITY OF NOT ICE ISSUED U/S.153A ON THE GROUND THAT AS PER THE SEARCH WARRAN T AND PANCHNAMA BOTH DATED 21-07-2008 THE SEARCH WAS INITIAT ED IN RESPECT OF SHRI AANANT N. MATE WHO IS ONE OF THE MANY OFFICE BEAR ERS OF THE ASSESSEE TRUST. FURTHER THE ASSESSEE TRUST IS HAVING THE REGISTERED OFFICE AT PUNE AND SEARCH U/S.132 ACTION WAS HELD AT THER APEUTIC DRUG MONITORING LABORATORY SION MUMBAI IN RESPECT OF SHRI ANA NT MATE WHOSE DESIGNATION IS OFFICE BEARER OF SPM. THEREFORE NOTICE ISSUED U/S.153A TO THE ASSESSEE TRUST IS ILLEGAL AND THEREFORE THE ASSESSME NT IS 2004 - 05 44 37 743/ - 2005 - 06 4 54 00 481 2006 - 07 10 15 34 839 2007 - 08 17 04 84 715 2008 - 09 16 81 25 477/ - 2009 - 10 13 62 29 719/ - 10 ITA NOS.1127 TO 1133/PN/2011 ILLEGAL AND VOID AB-INITIO. IT WAS FURTHER STATED THAT SHRI ANANT MATE HAS OWNED UP THE CASH FOUND DURING THE COURSE OF SEAR CH AS HIS INCOME AND DECLARED THE SAME IN HIS PERSONAL RETURN. TH EREFORE THE MERE ISSUE OF NOTICE U/S.153A AND THE COMPLETION OF ASSES SMENT THEREAFTER IS INVALID AND UNLAWFUL. 19. THE ASSESSEE FURTHER SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DENYING THE BENEFIT U/S.10(23)(IIIAB) BASED ON THE ORDER OF THE CIT CENTRAL U/S.12AA(3) PASSED ON 17-09-2010 WHICH CANNOT BE APPLIED RETROSPECTIVELY IN THE ABSENCE OF SPECIFIC CLAUSE IN THE SE CTION ITSELF. IT WAS SUBMITTED THAT THE CIT CENTRAL VIDE ORDER DATED 17 -09-2010 HAD CANCELLED THE REGISTRATION U/S.12AA(3) AS ACTIVITIES OF THE AS SESSEE TRUST WERE NOT FOUND TO BE GENUINE BY HER. SHE HAD ALSO HELD THAT THE ACTIVITIES OF THE TRUST WERE NOT BEING CARRIED OUT IN ACCO RDANCE WITH THE OBJECTS OF THE TRUST. THE CIT CENTRAL IN HER ORDER H AS NOT MENTIONED THAT HER ORDER WOULD APPLY RETROSPECTIVELY. 20. HOWEVER IN THE ASSESSMENT ORDER PASSED U/S.153A TH E AO HAS GIVEN EFFECT TO THE ORDER OF THE CIT CENTRAL RETROSPECTIV ELY WHICH IS NOT PROPER. RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT IN ABSENCE OF SPECIFIC PROVISION U/S.12AA(3) THE ORDER OF THE CIT CENTRAL C ANCELLING THE REGISTRATION CANNOT APPLY RETROSPECTIVELY AND HAS TO BE APPLIED FROM THE DATE ON WHICH THE SAID ORDER WAS PASSED. SINCE THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR HAS SATISFIED ALL THE CONDITIO NS LAID DOWN IN SECTION 12AA AND HAS NOT VIOLATED PROVISIONS OF SE CTION 13(1)(C) OF THE ACT AND SINCE THE INCOME OF THE TRUST HAS BEEN U TILIZED ON THE OBJECTS OF THE TRUST THEREFORE THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.11 AND 12 OF THE I.T. ACT. 11 ITA NOS.1127 TO 1133/PN/2011 21. SO FAR AS DENIAL OF BENEFIT U/S.10(23)(IIIAB) TO THE ASSESSEE BY THE AO ON THE GROUND THAT TRUST IS NOT SUBSTANTIALLY FINANCE D BY THE GOVERNMENT IS CONCERNED IT WAS ARGUED THAT THE WORD SUBSTANTIAL HAS TO BE UNDERSTOOD IN NORMAL PARLANCE AND STRICT MEANING CANNOT BE ATTACHED TO IT. IT WAS ARGUED THAT IF MAJOR OR SIGNIFICANT PART OF THE EXPENDITURE IS MET BY THE GOVERNMENT THEN IT CAN BE SA FELY SAID THAT THE INSTITUTIONS ARE SUBSTANTIALLY FINANCED BY THE GOVERNM ENT. IT WAS ACCORDINGLY ARGUED THAT THIS ISSUE SHOULD BE DECIDED IN FA VOUR OF THE ASSESSEE. 22. SO FAR AS THE OBSERVATION OF THE AO THAT THE ASSES SEE HAS VIOLATED THE PROVISIONS OF SECTION 13(1)(D)(I) ON ACCOUNT OF INVESTMENT IN PDCC SHARES RS.300/- AND SHARES IN COOPERATIVE BANK RS.2 600 /- IS CONCERNED IT WAS ARGUED THAT THE ASSESSEE HAS NOT MA DE ANY INVESTMENT IN SHARES OF COOPERATIVE BANKS EXCEPT FOR TA KING MINIMUM NUMBER OF SHARES REQUIRED AS CRITERIA FOR TAKING THE LOAN AT SOFTER RATE OF INTEREST AS COMPARED TO COSTLY RATE OF INTEREST ON LOAN IN THE MARKET. IT WAS ARGUED THAT THIS ISSUE WAS THERE WHEN ORIGINAL AS SESSMENTS WERE MADE BUT AFTER DUE CONSIDERATION THE SAME WAS NOT RAISE D BY THE AO. HOWEVER THE ACTION OF THE PRESENT AO IS CHANGE OF OPINION WHICH IS NOT PERMITTED U/S.148 AND IN SIMILAR PROVISION U/S.153A. IT WAS ARGUED THAT THE PROVISIONS U/S.11(5) IS IN CONNECTION WITH PROVISIONS U/S.11(2) OF THE ACT. THE PROVISION U/S.11(2) IS INVOKED WHEN TRUST G OES FOR ACCUMULATION OF INCOME WHEN IT FAILS TO SPEND 85% (EARLIER 75% ) OF THE SAME. IN THE INSTANT CASE THE ASSESSEE TRUST HAS NEV ER INVOKED SECTION 11(2) AND HENCE REQUIREMENT OF SECTION 11(5) DOES NOT ARISE . THUS THE AO HAS WRONGLY CONSIDERED THE REQUIREMENT U/S.11(5) AND PRONOUNCED THE ASSESSEE A WRONG DOER FOR NOT FOLLOWING THE PROVISION S OF SAID SECTION. THE MISCHIEF U/S.13(1)(D) HAS BEEN ERRONEOUSLY CONSIDERED. 12 ITA NOS.1127 TO 1133/PN/2011 23. SO FAR AS THE CONSIDERATION OF DONATIONS AS INCOME BY THE AO IS CONCERNED IT WAS ARGUED THAT THE AO HAS CONSIDERED TH E ASSESSEE TRUST AS BUSINESS ENTITY AND ASSESSED ITS INCOME AS BUSINESS IN COME. HOWEVER AT THE SAME TIME HE HAS ADDED DONATION APPEAR ING IN THE BALANCE SHEET OF THE TRUST UNDER THE HEAD CORPUS DON ATION OR EARMARKED FUNDS AS REVENUE RECEIPTS. IT WAS ARGUED TH AT IN THE HANDS OF BUSINESS ENTITY DONATIONS ARE CAPITAL RECEIPT AND NOT REVENUE RECEIPT. DONATIONS ARE INCOME AS PER DEEMING PROVISIONS U/S.2(24)(IIA) IN THE HANDS OF CHARITABLE TRUST BUT NOT OTHERWISE. THE AO C AN NOT INVOKE THE PROVISIONS APP LI CAB L E TO CHAR I TABLE TRUST WH EN HE D O E S NOT CONSIDER I T THE SAME AND HOLD IT AS BUSI N ESS ENTITY . THE ACT I ON OF AO IS CONTRADICTORY. W I THOUT PREJUD I CE IT WAS ARGUED THAT IF T H E AO CONSIDERS DONAT I ON AS BUSI N ESS I NCO ME THEN HE MUST CONSIDER THE OUTGOING FROM THE SAID DONAT I ON AS R EVE NU E EXPENDITURE. WHAT SURVIVES IN THE HANDS OF ASSESSEE TRUST IS TH E NE T DONATION AND NOT THE GROSS RECEIPTS OF DONAT I ON. IT WAS ARGUED THAT THE BALANCE-SHEET OF T HE ASSESSEE TRUST WAS PREPARED AS A C HARITABLE TRUST CORPUS DONATION FALLS IN THE AMBIT OF SEC.11(1)(D) AND HEN CE T AKEN D I RECTLY TO THE BALANCE-SHEET WHILE NORMAL DONATION AND GRANTS R E C E IV ED WERE TAKEN TO THE INCOME & EXPENDITURE A / C. THE EXPENDITURE INCUR R ED OUT OF THE EARMARKED DONATIONS A N D CORPUS D O NA T I O N S W ERE S H O WN IN THE BALANCE-SHEET AGA I NST SUCH F U ND. THE CON FUSI O N H AS AR I SEN AS THE AO DOES NOT CONSIDER THE ASSESSEE AS CHARIT A BLE TRUST BUT AS A BU SIN ES S ENTITY . 24. BASED ON THE VARIOUS SUBMISSIONS MADE BY THE ASSESS EE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO AND CONFR ONTED THE SAME TO THE ASSESSEE. AFTER CONSIDERING THE VARIOUS SUB MISSIONS OF THE ASSESSEE THE REMAND REPORT OF THE AO AND THE SUBMISSIO N OF THE 13 ITA NOS.1127 TO 1133/PN/2011 ASSESSEE TO SUCH REMAND REPORT THE LD.CIT(A) DISMISSED ALL THE ISSUES RAISED BEFORE HIM. 25. SO FAR AS THE VALIDITY OF PROCEEDINGS U/S.153A IS CONCER NED THE LD.CIT(A) DISMISSED THE SAME BY OBSERVING AS UNDER : 8.5 I HAVE GONE THROUGH THE OBJECTION RAISED BY T HE APPELLANT RELATING TO INVALIDITY OF PROCEEDING U/S.153A OF I.T. ACT. I HAV E PERUSED THE PORTION OF THE ASSESSMENT ORDER DEALING WITH THIS ISSUE. I HAVE ALSO C ONSIDERED SUBMISSION OF THE APPELLANT IN THE APPELLATE PROCEEDIN G COMMENTS OF THE AO THEREON AND SUBMISSION OF THE APPELLANT ON THE COMM ENTS OF THE AO. AFTER CAREFUL CONSIDERATION I AM OF THE CONSIDERED V IEW THAT CONTENTION OF THE APPELLANT THAT PROCEEDINGS U/S.153A OF I.T. ACT I N THE CASE OF APPELLANT WHEN THE WARRANT WAS ISSUED IN THE NAME OF MR.A.N. MAT E AND OTHER OFFICIALS OF THE APPELLANT TRUST WAS INVALID IS NOT CO RRECT. THIS IS BECAUSE OF THE FACT THAT FOR THE PURPOSES OF SECTION 153A OF I.T. ACT RESTRICTED INTERPRETATION TO THE WORD 'PERSON' CANNOT BE GIVEN SO AS TO EXCLUDE THE SERVANTS AND AGENTS OF THE 'PERSON'. IN CASE ACTION U/ S.132(1) OF I.T. ACT IS TAKEN AGAINST A PERSON WHO IS A TRUSTEE OF A TRUST AND THE ACTION IS IN RESPECT OF HIS CAPACITY AS TRUSTEE OF THE TRUST ACTIO N U/S.153A OF I.T. ACT CAN BE TAKEN AGAINST THE TRUST WHOSE TRUSTEE IS THE PERSO N IN RESPECT OF WHOM ACTION U/S.132(1) HAS BEEN TAKEN. THIS VIEW HAS B EEN HELD BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF TAPASYA P ROJECT LTD. VS. ACIT REPORTED IN 2009 TAX LR 30 (ALL.) ALTHOUGH THIS JUD GMENT IS IN RESPECT OF ACTION U/S.153A IN THE CASE OF A COMPANY WHOSE DIRECTO RS WERE SEARCHED U/S.132(1) IT IS EQUALLY APPLICABLE IN THE CASE OF T RUST WHOSE TRUSTEE HAS BEEN SEARCHED U/S.132(1) OF I.T. ACT. IN THIS CASE SE ARCH WAS CONDUCTED ON THE PREMISES OF THE TWO DIRECTORS OF A COMPANY. NOTIC E U/S.153A OF I.T. ACT WAS ISSUED TO THE COMPANY IN WHICH THE TWO SEARCHED PER SONS WERE DIRECTORS. THE COMPANY CHALLENGED THE NOTICE ON THE GROUND THAT SEARCH WAS CONDUCTED ON THE TWO INDIVIDUAL DIRECTORS. THERE FORE THE SEARCH DID NOT AMOUNT TO A SEARCH ON THE COMPANY IN WHOSE CASE NO TICE U/S.153A WAS ISSUED. AFTER DISCUSSING FACTS OF THE CASE IN DETAIL HON BLE HIGH COURT HELD THAT AS THE INDIVIDUALS WERE SEARCHED AS DIRECTORS OF TH E PETITIONER COMPANY THE NOTICE U/S.153A WAS A VALID NOTICE. THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED BELOW : 2. THE PETITIONER IS A COMPANY AND SRI SOM ARORA AND SRI PRAVEEN ARORA ARE ITS DIRECTORS ADMITTEDLY. A SEARCH HAS BE EN CONDUCTED ON THE PREMISES OF THE SAID TWO DIRECTORS AND AS A RESULT OF THE SEARCH NOTICE UNDER SECTION 153A OF THE INCOME TAX ACT 1961 HAS BEEN ISSUED TO THE PETITIONER. THE PETITIONER HAS CHALLENGED THAT NOTICE ON THE GROUND OF THAT SEARCH CONDUCTED ON THE INDIVIDUALS NAMELY THE TWO DIRECTORS DOES NOT AMOUNT TO A SEARCH OF THE PETITIONER COMPA NY UNDER SECTION 132 READ WITH RULE 112 AND ACCORDINGLY NOTICE COUL D NOT HAVE BEEN ISSUED UNDER SECTION 153 A TO THE PETITIONER COMPAN Y. 3. FOR ISSUE OF NOTICE UNDER SECTION 153A ONE OF T HE TWO CONDITIONS GIVEN BELOW MUST BE SATISFIED. 14 ITA NOS.1127 TO 1133/PN/2011 1. EITHER A SEARCH SHOULD BE INITIATED UNDER SECTIO N 132 OR; 2. BOOKS OF ACCOUNT ETC. SHOULD BE REQUISITIONED U NDER SECTION 132A. IT IS NOT THE DEPARTMENT'S CASE THAT THE CASE IS CO VERED BY ANY REQUISITION UNDER SECTION 132A. 4. THE QUESTION IS WHETHER THE SEARCH CONDUCTED ON THE PREMISES OF THESE TWO DIRECTORS SHOULD BE TREATED TO BE A SE ARCH INITIATED IN RESPECT OF THE PETITIONER COMPANY. THE CRUCIAL WORD S IN SECTION 153A ARE 'IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132.' MUCH EMPHASIS HAS BEEN LAID ON THE DEFINITION OF 'PERSON' GIVEN IN SECTION 2(31) OF THE ACT. THE DEF INITION WOULD BE APPLICABLE UNLESS THE CONTEXT OTHERWISE REQUIRES. 5. WE ARE NOT INCLINED TO GIVE SUCH A RESTRICTED I NTERPRETATION TO THE WORD 'PERSON' AS USED IN SECTION 153A SO AS TO EXC LUDE THE SERVANTS AND AGENTS OF THAT 'PERSON' BECAUSE OF THE OBVIOUS UNDESIRABLE RESULTS TO WHICH SUCH STRICT INTERPRETATION WOULD LEAD. THE MATTER WAS TAKEN UP ON 17TH DECEMBER 2007. WE REQUIRED THE SRI CHOPRA T O OBTAIN INSTRUCTIONS WHETHER THE PREMISES OF THESE TWO DIRE CTORS WERE SEARCHED IN THEIR CAPACITY AS DIRECTORS OF THE PETITIONER CO MPANY OR IN THEIR CAPACITY EITHER AS INDIVIDUALS OR AS DIRECTORS OF S OME OTHER COMPANY. TODAY SRI CHOPRA HAS PRODUCED A PHOTOCOPY OF THE A UTHORISATION WARRANT WHICH SPECIFICALLY MENTIONS THE NAME OF THE PETITIONER COMPANY. PRIMA FACIE IT WOULD APPEAR THAT THESE TWO DIRECTO RS HAVE BEEN SEARCHED AS DIRECTORS OF THE PETITIONER COMPANY. TH E OMISSION TO MENTION THIS SPECIFIC DETAIL THAT THEY HAVE BEEN SE ARCHED AS DIRECTORS OF THE PETITIONER COMPANY IN THE PUNCHNAMA PREPARED CO NSEQUENT TO THE SEARCH WOULD NOT NECESSARILY MEAN IN. THE FACE OF THE EXPRESS WORDS OF THE AUTHORISATION WARRANT THAT THESE TWO DIRECTO RS HAVE NOT BEEN SEARCHED IN THEIR CAPACITY AS DIRECTORS OF THE PETI TIONER COMPANY. IN THE CASE OF THE APPELLANT PERUSAL OF WARRANT CLEA RLY REVEALS THAT SHRI ANANT MATE AND OTHER OFFICIALS OF THE APPELLANT TRUST WERE SEARCHED AS TRUSTEE OF THE APPELLANT AND NOT OTHERWISE. THIS CAN B E INFERRED WITHOUT AMBIGUITY BY GOING THROUGH THE FOLLOWING NARRATION IN THE WARRANT OF AUTHORIZATION. IF A SUMMONS UNDER SUB-SECTION (1) OF SECTION 37 OF THE INDIAN INCOME TAX ACT 1922 OR UNDER SUB-SECTION (1) OF SECTION 131 OF THE INCOME- TAX ACT 1961 OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME- TAX 1922 OR UNDER SUB-SECTION (1) OF 142 OF THE INCOME- TAX ACT 1961 IS ISSUED TO TRUSTEES OF SHIKSHAN PR ASARAK MANDALI (NAME OF PERSON) THERAPETIC DRUG MONITORING LABORATORY 194-SCHEME N O 6 SION TO PRODUCE OR CAUSE TO BE PRODUCED BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH WILL BE USEFUL FOR OR RELEVANT TO PROCEEDINGS UNDER THE INDIAN INCOME- TAX ACT 1922 OR UNDER THE INCOM E TAX ACT 1961 HE WOULD NOT PRODUCE OR CAUSE TO BE PRODUCED SUCH BOOKS OF ACCOUNTS OR OTHER DOCUMENTS ARE REQUIRED BY SUCH SUMMONS OR NOTICE. SARVASHRI/SHRI/SHRIMATI ANANT MATE AND OTHER OFFICI ALS OF THE TRUST ARE / IS IN POSSESSION OF ANY MONEY BULLION JEWELLERY O R OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT BE DISCLOSED FOR T HE PURPOSE OF THE INDIAN INCOME-TAX 1922 OR THE INCOME-TAX ACT 196 1. 15 ITA NOS.1127 TO 1133/PN/2011 AND WHEREAS I HAVE REASON TO SUSPECT THAT SUCH BOOK S OF ACCOUNTS OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING HAVE BEEN KEPT AND ARE TO BE FOUND IN SHIKSHA N PRASARAK MANDALI THERAPETIC DRUG MONITORING LABORATORY 194-SCHEME N O.6 ROAD NO.15 SION KOLIWADA SION (EAST) MUMBAI 400022. THIS IS TO AUTHORIZE AND REQUIRE YOU MENTIONED OVER LEAF A) TO ENTER AND SEARCH THE SAID BUILDING/PLACE/VES SEL/VEHICLE/AIRCRAFT. THE WARRANT OF AUTHORIZATION IS UNAMBIGUOUS TERMS IN DICATE THAT WARRANT WAS ISSUED IN THE NAME OF SHRI MATE AND OTHER OFFICIAL S AS TRUSTEES OF THE APPELLANT TRUST. UNDER THE CIRCUMSTANCES PROCEEDINGS U/S.153A OF I.T. ACT IN THE CASE OF APPELLANT TRUST WERE VALID. THEREFORE THIS GROUND OF APPEAL IS DISMISSED. 26. SO FAR AS THE ISSUE RELATING TO THE RETROSPECTIVE APP LICATION OF THE ORDER OF THE CIT CENTRAL U/S.12AA(3) IS CONCERNED HE ALSO DECIDED THE SAME AGAINST THE ASSESSEE ON THE GROUND THAT AFTER INT RODUCTION OF ENABLING PROVISION W.E.F. 01-06-2010 THE CIT IS VESTED WITH THE POWE R TO CANCEL THE REGISTRATION FROM EARLIER DATE. HE OBSERVED TH AT IN THE INSTANT CASE THE ORDER WAS PASSED AFTER 01-06-2010 AN D THEREFORE THE CIT HAS POWER TO CANCEL EVEN THE REGISTRATIONS GRANTED PRIOR TO 01-04- 1997 U/S.12AA OF THE I.T. ACT. DISTINGUISHING THE VARIOUS D ECISIONS CITED BEFORE HIM THE LD.CIT(A) HELD THAT THE AO WAS FULLY JU STIFIED IN DENYING THE BENEFIT U/S.10(23C)(IIIAB) WITH RETROSPECTIVE EFFECT B ASED ON THE ORDER OF THE CIT U/S.12AA(3) WHERE THE CIT HAS CANC ELLED THE REGISTRATION U/S.12AA(3) ON THE GROUND THAT THE ACTIVITIES OF THE ASSESSEE TRUST WERE NOT FOUND GENUINE AND THAT THE AC TIVITIES OF THE TRUST WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 27. SO FAR AS DENIAL OF BENEFIT U/S.10(23C)(IIIAB) ON THE GROUND T HAT ASSESSEE TRUST IS NOT SUBSTANTIALLY FINANCED BY THE GOVE RNMENT IS CONCERNED HE HELD THAT THE CIT(A) IN THE ORDER PASSED U /S.143(3) IN ASSESSEES OWN CASE HAS ALREADY DECIDED THE ISSUE AGAIN ST THE ASSESSEE. 16 ITA NOS.1127 TO 1133/PN/2011 THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S.10( 23C)(IIIAB) AS IT IS NOT SUBSTANTIALLY FINANCED BY THE GOVERNMENT. 28. SO FAR AS DENIAL OF EXEMPTION U/S.11 AND 12 DUE TO INVE STMENT OF THE FUNDS OF THE ASSESSEE TRUST IN MODE OR FORM OTHER T HAN THOSE PRESCRIBED IN SECTION 11(5) OF THE ACT IS CONCERNED THE LD .CIT(A) DECIDED THE ISSUE AGAINST THE ASSESSEE ON THE GROUND THAT THE PROVISIONS CONTAINED IN SECTION 11(5) R.W.S. 13(1)(D) HAS TO BE INTERPRET ED STRICTLY AS THESE PROVISIONS HAVE BEEN BROUGHT INTO TO PREVENT THE MISUSE OF THE FUNDS OF THE TRUST IN VIEW OF NUMEROUS INCENTIVES GRANTED TO A TRUST. ACCORDING TO HIM ONCE THERE IS A SPECIFIC PROVISION IN THE FO RM OF SECTION 11(5) PERMITTING THE INVESTMENTS WHICH CAN BE MADE BY THE TRUST IF ANY AND IF TRUST PURCHASES THE SHARES NOT PERM ITTED THEREIN THEN IT HAS VIOLATED THE PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D). THEREFORE THE SHARES PURCHASED BY THE ASSESSEE TRUST OF THE COOPERATIVE BANKS HAS RESULTED IN VIOLATION OF SECTION 11(5) R.W.S. 13(1)(D). HE ACCORDINGLY REJECTED THE ABOVE CONTENTION OF THE ASSESS EE. 29. AS REGARDS THE TREATMENT OF DONATIONS AS INCOME BY THE AO IS CONCERNED THE LD.CIT(A) UPHELD THE ACTION OF THE AO ON TH E GROUND THAT ASSESSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO CO NTROVERT THE AOS ARGUMENT THAT ANY VOLUNTARY CONTRIBUTION RECEIVED BY A TRUST AND CREATED FOR CHARITABLE OR RELIGIOUS PURPOSES IS INCOME. ACC ORDING TO HIM THE ASSESSEE TRUST WAS CREATED ONLY FOR CHARITABLE PURPOSES AND IN THE RELEVANT PERIOD THE ASSESSEE TRUST TRANSFORMED ITS ELF INTO A BUSINESS VENTURE WITH PROFIT MOTIVE. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE EXPENSES CLAIMED BY IT ARE ALLOW ABLE EXPENSES PARTICULARLY IN VIEW OF THE FACT THAT THE EXPENDITURE OF CAP ITAL NATURE ARE NOT ELIGIBLE FOR DEDUCTION. HE OBSERVED THAT ACCORDING TO THE PROVISIONS 17 ITA NOS.1127 TO 1133/PN/2011 OF SECTION 2(24)(IIA) VOLUNTARY CONTRIBUTION OF TRUST CREATED W HOLLY OR PARTLY FOR CHARITABLE IS INCOME. THERE IS NOTHING IN THIS PR OVISION WHICH SAYS THAT THESE DONATIONS ARE INCOME ONLY IN RESPECT O F PROVISIONS TO WHICH SECTION 11 TO 13 APPLY. HE ANALYSED THE PROVISION S OF SECTION 2(24)(IIA) AND HELD THAT IN ACCORDANCE WITH THE SAID PROVISIONS DONATIONS ARE INCOME. SINCE THE ASSESSEE HAS BEEN ASSE SSED AS A BUSINESS UNDERTAKING WITH PROFIT MOTIVE ITS INCOME HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 29 OF THE I .T. ACT. THE RELEVANT PROVISIONS EXPRESSLY PROHIBIT DEDUCTION ON ACCOU NT OF CAPITAL EXPENDITURE. HE ACCORDINGLY UPHELD THE ACTION OF THE AO IN TREATING THE DONATIONS AS INCOME. 30. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT WHEN THE SEAR CH U/S 132 (1) OF THE ACT WAS NOT INITIATED AGAINST THE APPELLANT TRUST BUT AGAINST ITS TRUSTEE AS REFLECTED BY THE WARRANT OF AUTHORISATION AND ALSO DU LY SUPPORTED BY PANCHNAMA AND WHEN ORDER U/S 153A WAS ALSO PASSED AGAINST THE TRUSTEE BASED ON THE SAME WARRANT AND ALSO WHEN IT WAS NOT THE CASE OF CONSEQUENT ACTION U/S 153C OF THE ACT. 2. THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT TH E WARRANT OF AUTHORIZATION ISSUED IN THE NAME OF TRUSTEE WILL GIVE JURISDICTION U/S 153A OF THE ACT WHEN THIS ISSUE WAS NOT THERE AT THE ASSESSMENT STA GE NOR RAISED FOR DISCUSSION AT THE APPELLANT STAGE JUST BY ERRONEOUSLY REL YING ON THE DECISION OF HONORABLE ALLAHABAD HIGH COURT WHICH IS ON LIMITED F ACTS CONTRARV TO THE FACTS IN THE APPELLANT'S CASE AS IN THAT CASE THE WARRANT HA D THE NAME OF COMPANY AND THE PREMISES OF THE SEARCH WERE OF DIRECTORS. 3. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE STAND OF AO IN GIVING RETROSPECTIVE EFFECT TO THE ORDER PASSED U/ S 12 AA (3) OF THE ACT BY THE CIT (C) WHEN CIT (C) HAS NOT DIRECTED RETROSPECTIVE OPERATION AND WHEN THE CIT (C) COULD NOT HAVE GIVEN SUCH DIRECTION LEGALLY AND FURT HER WHEN THERE WAS NO ENABLING PROVISION FOR CANCELLATION OF REGISTRATION P RIOR TO 01/06/2010 AND THUS VIOLATING THE PRINCIPLES OF LAW. THE LEARNED CIT (A) HAS ERRED IN NOT CONSIDERING THE DETAILED SUBMISSION GIVEN BEFORE HIM. 4. THE LEARNED CIT (A) HAS ERRED BY NOT HOLDING THE APPELLANT TRUST ELIGIBLE FOR EXEMPTION U/S 10 (23C) (IIIAB) OF THE A CT WHEN THE APPELLANT TRUST FULFILL THE ELIGIBILITY CONDITIONS AS PRESCRIBED IN TH E SAID PROVISION. 18 ITA NOS.1127 TO 1133/PN/2011 5. THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT TH E APPELLANT TRUST HAS VIOLATED THE PROVISION OF SECTION 11(5) OF THE ACT JUST BECAUSE THE APPELLANT TRUST WAS CONSTRAINED TO ACQUIRE PREREQUISITE ELIGIBILITY SHARE OF THE CO-OPERATIVE BANK FOR AVAILING LOAN AT SOFTER INTERE ST RATE FROM SUCH CO- OPERATIVE BANK. THE LEARNED CIT (A) HAS ERRED THAT T HE CASE OF THE APPELLANT FALLS IN THE AMBIT OF 13 (1) (D) OF THE ACT WITHOUT APPRECIATING THE MEANING OF THE WORD 'INVESTMENT' AND 'DEPOSIT' AS APPEARING IN TH E SAID SECTION. 6. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE C ONTRADICTORY STAND OF THE AO AS THE AO TAXES EARMARKED / CORPUS DONATIO N AS INCOME WHEN THE APPELLANT HAS BEEN DENIED THE STATUS OF CHARITABLE TRU ST AND TREATED AS BUSINESS ENTITY IGNORING THAT THE DEEMING PROVISION U/S 2 (24) (IIA) IS AVAILABLE ONLY FOR CHARITABLE TRUST AS OTHERWISE DONA TIONS ARE CAPITAL RECEIPTS NOT CHARGEABLE TO TAX. THE LEARNED CIT (A) ALSO ERRE D IN UPHOLDING THE INCLUSION OF INCOMING DONATION AS INCOME BUT NOT ALLO WING THE OUTGOING DONATION AS EXPENDITURE. THE DONATION UPHELD AS INCOM E IS RS. 2 68 20 599/- AND DONATION NOT ALLOWED AS EXPENDITURE IS RS. 13 76 5 79/-. 7. THE APPELLANT CRAVES TO ADD ALTER DELETE OR MO DIFY ANY OF THE ABOVE GROUNDS OF APPEAL AND REQUEST TO CONSIDER EACH OF THE ABOVE GROUNDS WITHOUT PREJUDICE TO ONE ANOTHER. 31. GROUNDS OF APPEAL NO. 1 AND 2 BY THE ASSESSEE RELAT E TO THE VALIDITY OF ASSESSMENT ORDER PASSED U/S.153A OF THE I.T. ACT. 32. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE COP Y OF THE PANCHNAMA DATED 21-07-08 A COPY OF WHICH IS PLACED AT P AGES 53 AND 54 OF THE PAPER BOOK SUBMITTED THAT THE WARRANT HAS B EEN ISSUED IN THE NAME OF SHRI ANANT MATE AND OTHER OFFICIALS OF THE TRUST SH IKSHANA PRASARAKA MANDALI. REFERRING TO PAGE 55 OF THE PAPER BOO K HE SUBMITTED THAT THE WARRANT OF AUTHORIZATION HAS BEEN ISS UED IN THE NAME OF TRUSTEES OF SPM THERAPEUTIC DRUG MONITORING LABO RATORY AT SION MUMBAI. REFERRING TO COPY OF THE ASSESSMENT ORDER H E DREW THE ATTENTION OF THE BENCH TO THE ASSESSMENT ORDER WHERE THE ASSESSMENT HAS BEEN MADE IN THE NAME OF THE ASSESSEE TRUST I.E. SPM. REFERRING TO PAGE 405 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSE SSEE DREW THE ATTENTION OF THE BENCH TO THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S. 153A OF THE ACT IN THE CASE OF SHRI ANANT MATE ON THE B ASIS OF THE SAID SEARCH ACTION ON 21-07-2008. HE SUBMITTED THAT THE AS SESSEE HAD 19 ITA NOS.1127 TO 1133/PN/2011 CHALLENGED BEFORE THE AO THAT THERE WAS NO WARRANT IN T HE CASE OF THE TRUST. THEREFORE THE ISSUANCE OF NOTICE U/S.153A IS ILLEGAL A ND THEREFORE THE SUBSEQUENT PROCEEDINGS ARE ALSO ILLEGAL AND VOID AB-INITIO. HOWEVER THE AO HAS REJECTED THE ARGUMENTS OF THE ASS ESSEE WHICH HAS BEEN UPHELD BY THE CIT(A). 33. REFERRING TO THE PROVISION OF SECTION 153A OF THE I.T. ACT THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID PROVISIO NS COME INTO OPERATION AGAINST A PERSON IN WHOSE CASE SEARCH IS INITIATED. THE SEARCH ACTION U/S.132(1) OF THE ACT TAKES PLACE WITH THE EXECUTION OF WARR ANT OF AUTHORIZATION ON THE PERSON TO BE SEARCHED. REFERRING T O THE FORM NO.45 AND RULE 112 HE SUBMITTED THAT THE WARRANT OF AUT HORIZATION IS IN THE PRESCRIBED FORM AND PROVIDES SPACE FOR THE NAME O F THE PERSON TO BE SEARCHED AT 3 PLACES FOR PERSON FALLING U/S.132(1)(A) OR 132(1)(B) OR 132(1)(C). PLACES TO BE SEARCHED HAVE ALSO A SPECIFIED SPACE IN THE WARRANT FOR ITS FULL ADDRESS. THE WARRANT NAMES THE OFFICE RS AUTHORIZED FOR THE SEARCH ACTION. THE SEARCH ACTION IS SPECIFIC AGAINS T THE NAMED PERSON AND THE PLACE OF SEARCH IS ALSO SPECIFIC. THE AUTHOR ISED OFFICERS ARE NOT LEFT IN ANY DOUBT. 34. HOWEVER IN THE INSTANT CASE THE WARRANT OF AUTHORIZ ATION IS NOT ISSUED AGAINST THE ASSESSEE TRUST BUT IT HAS BEEN ISSU ED AGAINST SHRI ANANT MATE AND OTHER UNNAMED OFFICIALS OF THE TRUST. HE S UBMITTED THAT SHRI ANANT MATE IS NOT THE PRINCIPAL OFFICER OF SPM AS HE IS NEITHER PRESIDENT OF SPM NOR CHAIRMAN OR MANAGING TRUSTEE OF TH E TRUST. THERE IS AN APPOINTED SECRETARY WHO IS THE FACE FOR STATUTORY LETTERS OR NOTICES. MERELY BECAUSE SHRI ANANT MATE IS ONE OF THE 18 TRUSTEES (ACTS AS VICE CHAIRMAN) WHO HAS BEEN IDENTIFIED IN THE WARRANT D OES NOT MEAN THAT WARRANT OF AUTHORIZATION SHOULD BE UNDERSTOOD AS AGAINST 20 ITA NOS.1127 TO 1133/PN/2011 THE TRUST. HE SUBMITTED THAT HAD IT BEEN SO THE AO WO ULD NOT HAVE COMPLETED THE ASSESSMENT IN THE CASE OF SHRI ANANT MAT E U/S.153A OF THE I.T. ACT. FURTHER THE PREMISES OF THE SEARCH WAS N OT A REGULAR OFFICE OF SPM IN PUNE BUT A SCIENTIFIC LABORATORY IN MUMBAI WH ERE ADVANCE RESEARCH IS BEING DONE. SHRI ANANT MATE SITS IN PUNE OFFICE AND OCCASIONALLY VISIT THIS OFFICE IN MUMBAI. FURTHER SEARCH ACTIVITY WAS COMMENCED AT THIS LABORATORY IN THE EVENING WHEN SH RI ANANT MATE HAPPENED TO BE THERE. THE ABOVE FACTS SUPPORT T HE VIEW THAT THE PRESCRIBED AUTHORITY HAD GOT THE INFORMATION IN THEIR POSS ESSION ABOUT SHRI ANANT MATE AND THAT THE SEARCH WAS MEANT AGAINST HIM. THE SEARCH WAS RESTRICTED TO PERSONAL POSSESSION OF SHRI AN ANT MATE AND HIS STATEMENT ALONE WAS RECORDED U/S.132(4) OF THE ACT. HE SUBMITTED THAT THE FACTS OF THE SEARCH INDICATE THAT THE SEARCH WAS CONDUCTED IN RESPONSE OF THE ALLEGATION THAT SHRI ANANT MATE AND HIS ASSOCIATES ARE COLLECTING UNACCOUNTED DONATIONS AS CAPITATION FEE. THE ALLE GATION APPEARS TO BE PERSON SPECIFIC AND NOT AGAINST THE ASSES SEE TRUST AS A WHOLE. AS THERE WAS NO CONSEQUENTIAL ACTION IN THE OFFICE O F THE TRUST AND EVEN THE BOOKS OF ACCOUNT WERE NOT SEEN EITHER U/ S.131 OR 133A OR DURING ASSESSMENT PROCEEDINGS THEREFORE ALL THESE FACTS IN DICATE THAT THE SEARCH ACTION WAS AGAINST SHRI ANANT MATE AND NO P ROCEEDING WAS INTENDED AGAINST SPM. HE SUBMITTED THAT THE PROVISIONS OF SECTION 153A SHOULD BE READ AS IT READS. 35. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS REPORTED IN 362 ITR 673 HE S UBMITTED THAT THE HONBLE APEX COURT IN THE SAID DECISION HAS HELD THAT THE COURT WHILE INTERPRETING THE PROVISIONS OF FISCAL LEGISLATIONS SHOULD N EITHER ADD NOR SUBTRACT A WORD FROM THE PROVISIONS. THE FOREMO ST PRINCIPLE OF INTERPRETATION OF FISCAL STATUTES IN EVERY SYSTEM OF INTERPR ETATION IS THE 21 ITA NOS.1127 TO 1133/PN/2011 RULE OF STRICT INTERPRETATION WHICH PROVIDES THAT WHERE TH E WORDS OF THE STATUTE ARE ABSOLUTELY CLEAR AND UNAMBIGUOUS RECOURSE CANNOT BE HAD TO THE PRINCIPLE OF INTERPRETATION OTHER THAN THE LITERAL RULE. 36. SO FAR AS THE ORDER OF THE CIT(A) IS CONCERNED HE SUB MITTED THAT THE LD.CIT(A) WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE HAS HEAVILY RELIED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF TAPASYA PROJECTS LTD. (SUPRA) WHICH HE HAS REPRODUCED A T PARA 8.5 OF HIS ORDER. HOWEVER THE SAID DECISION IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CAS E THE SEARCH WAS CONDUCTED AT THE PREMISES OF THE DIRECTORS OF THE COMPA NY AND THE COUNSEL OF THE DEPARTMENT HAD PLEADED BEFORETHE HONBLE COURT THAT WARRANT OF AUTHORIZATION SPECIFICALLY MENTIONS THE NAME OF T HE PETITIONER COMPANY. THE SEARCH AT THE PREMISES OF THE DIR ECTORS WAS NOT IN THEIR PERSONAL CAPACITY IN THE FACE OF EXPRESS WORD S IN THE WARRANT OF AUTHORIZATION. HOWEVER IN THE INSTANT CASE TH E SEARCH WAS CONDUCTED AT ONE OF THE PREMISES OF THE TRUST. THE WAR RANT OF AUTHORIZATION IN THE PRESCRIBED NAME COLUMN DOES NOT MEN TION THE NAME OF THE ASSESSEE TRUST BUT OF SHRI ANANT MATE TH E TRUSTEE. THE SEARCH AT LABORATORY PREMISES OF THE TRUST TOOK PLACE WHEN SHRI ANANT MATE WAS PRESENT WITH AN INTENTION TO SEARCH SHRI ANANT MATE. FURTHER IN THE CASE OF TAPASYA PROJECTS LTD. (SUPRA) THE ISSUE BEFORE THE HONBLE COURT WAS NOT THERE THAT TWO PROCEEDINGS U/S.153A WERE SIMULTANEOUSLY STARTED BOTH IN CASES OF THE DIRECTORS AN D THE ASSESSEE COMPANY. HOWEVER IN THE INSTANT CASE THE DEPARTMENT H AS STARTED SIMULTANEOUS PROCEEDINGS U/S.153A BOTH IN THE CASE OF SHR I ANANT MATE AND THE ASSESSEE TRUST. THE CIT(A) HAS NOT ADDR ESSED THE ABOVE ISSUE BUT HAS BLINDLY FOLLOWED THE DECISION OF HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF TAPASYA PROJECTS LTD.(SUPRA) WHICH I S NOT AT ALL 22 ITA NOS.1127 TO 1133/PN/2011 APPLICABLE TO THE FACTS OF THE PRESENT CASE. FURTHER HE HAS ERRED IN PUTTING THE DIRECTORS OF THE COMPANY AND TRUSTEES OF TH E PUBLIC CHARITABLE TRUST ON THE SAME PEDESTAL. WHILE DIRECTORS H AVE PECUNIARY INTEREST IN THE COMPANY HOWEVER THE TRUSTEES DO NOT HAVE SUCH INTEREST. THE LIABILITY OF THE TRUSTEES IS GUIDED BY THE TR UST DEED AND THEY CANNOT BE BRANDED AS SERVANT OR AGENT WHICH THE CIT(A) HAS OPINED. 37. REFERRING TO THE FOLLOWING DECISIONS THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE NOTICE ISSUED U/S.153A TO T HE ASSESSEE TRUST SHOULD BE HELD AS ILLEGAL AND THE SUBSEQUENT PROCEE DINGS ON THE BASIS OF SUCH ILLEGAL NOTICE ALSO SHOULD BE HELD AS ILLEGAL : 1. SIKSHA O. ANUSANDHAN VS. CIT REPORTED IN 336 ITR 112 2. MANISH MAHESHWARI VS. ACIT REPORTED IN 289 ITD 381 3. CIT VS. TIRUPATI OIL CORPORATION REPORTED IN 248 ITR 194 4. JINDAL STAINLESS LTD. VS. ACIT REPORTED IN 120 ITD 301 (DEL.) 5. KOTHAMANGALAM AGGREGATES NILKRISHI VS. DCIT REPORTED I N 21 TAXMANN.COM (COCHIN) (TM) 6. CIT VS. JOLLY FANTASY WORLD LTD. REPORTED IN 373 ITR 530 (GUJ.) 38. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE SEARCH WARRANT WAS ISSUED IN THE NAME OF SHRI ANANT MATE AND OTHER OFFICIA LS OF THE ASSESSEE TRUST. THE TRUSTEES AND OFFICE BEARERS ARE S UPPOSED TO PRODUCE THE BOOKS OF ACCOUNT. THEREFORE IT HAS TO BE A DDRESSED TO THE TRUSTEES. HAD THERE BEEN ANY INTENTION TO SEARCH SHRI ANANT MATE HIS RESIDENCE WOULD HAVE BEEN SEARCHED. SINCE THE ASSESSEE TRUST IS RUNNING PODAR COLLEGE RUIA COLLEGE WELINGIKAR MANAGEMENT I NSTITUTE AT MUMBAI AND SHRI ANANT MATER WAS IN THE MUMBAI OFFICE OF THERAPEUTIC DRUG MONITORING LABORATORY AT SION MUMBAI T HE WARRANT WAS ISSUED IN THE NAME OF THE TRUST AND SHRI ANANT MATE S NAME WAS THERE BECAUSE HE WAS IN POSSESSION OF THE DOCUMENTS. I N HIS ALTERNATE 23 ITA NOS.1127 TO 1133/PN/2011 CONTENTION HE SUBMITTED THAT THE WARRANT IS JOINTLY IN T HE NAME OF SHRI ANANT MATE AND THE TRUST. REFERRING TO THE FINDING OF THE CIT(A) AT PAGE 10 OF HIS ORDER HE SUBMITTED THAT THE LD.CIT(A) HAS GIVEN VALID REASONS FOR UPHOLDING THE ACTION OF THE AO IN INITIATING PROCEEDINGS U /S.153A OF THE I.T. ACT. 38.1 REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF VIDYAVARDHINI VS. ACIT REPORTED IN 51 SOT 17 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT SINCE THE TRUST IS AN ARTIFICIAL JURIDICAL PERSON AND HAS TO ACT THROUGH TRUSTEES OR ANYBODY AUTHORIZED BY TRUSTEES ACTS OF TRUSTEES OR PERSONS SO AUTHORIZED HAVE TO BE CONSIDERED AS ACTS ON BEHALF OF THE TRUST. RE FERRING TO THE DECISION OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE O F ASHOK KUMAR SONI VS. DCIT REPORTED IN 72 TTJ 323 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT WHERE THE SEA RCH WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF ASSESSEES FATHE R S.C. WHERE THE ASSESSEE AND THE OTHER SON OF SC AND FAMILY WERE R ESIDING AND THE SEARCH WARRANT WAS ALSO ISSUED NOT IN THE SOLE/EXCLUSIVE NAME OF SC BUT IN THE NAME OF SC AND FAMILY IT COULD NOT BE SAID TH AT NO SEARCH WARRANT WAS ISSUED WITH RESPECT TO THE ASSESSEE. 39. SO FAR AS THE VARIOUS DECISIONS RELIED ON BY THE LD. CO UNSEL FOR THE ASSESSEE ARE CONCERNED HE SUBMITTED THAT ALL THOSE DECISIONS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESE NT CASE. IN THE INSTANT CASE ACTION HAS BEEN TAKEN U/S.132(1) OF THE ACT AGAINST A PERSON WHO IS TRUSTEE OF A TRUST AND THE ACTION IS IN RE SPECT OF HIS CAPACITY AS TRUSTEE OF THE TRUST. ACTION U/S.153A OF THE ACT CAN BE TAKEN AGAINST THE TRUST WHOSE TRUSTEE IS THE PERSON IN RESPECT OF WHOM ACTION U/S.132(1) HAS BEEN TAKEN. HE ACCORDINGLY SUBMITTE D THAT THE 24 ITA NOS.1127 TO 1133/PN/2011 ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 40. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER SUBM ITTED THAT THE ENTIRE LABORATORY WAS NOT SEARCHED AND THE SEARCH WAS CONFINED ONLY TO THE BRIEFCASE OF SHRI ANANT MATE. THE STATEMENT U/S.132(4) WAS RECORDED ON THAT DATE AND ASSESSMENT IN CASE OF SHRI ANANT MATE HAS BEEN COMPLETED U/S.143(3) R.W.S. 153A OF THE I.T. ACT ON TH E BASIS OF THE SAME SEARCH ACTION. THEREFORE THE NOTICE ISSUED U/S .153A OF THE ACT TO THE ASSESSEE TRUST IS ILLEGAL AND VOID AB-INITIO. THE REFORE THE ENTIRE PROCEEDINGS SUBSEQUENT TO ISSUE OF SUCH NOTICE HA S TO BE HELD AS ILLEGAL AND VOID AB-INITIO. 41. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE SEARCH W ARRANT WAS ISSUED IN THE NAME OF SHRI ANANT MATE AND OTHER OFFICIALS OF THE TRUST SPM AT THERAPEUTIC DRUG MONITORING LABORATORY 194 SCHE ME NO.6 ROAD NO.15 SION KOLIWADA SION (EAST) MUMBAI 400 022. WE FIND THE AO ISSUED NOTICE U/S.153A OF THE I.T. ACT TO THE ASS ESSEE TRUST FOR FILING OF THE RETURN. IT WAS SUBMITTED BEFORE THE AO THAT ASSESSEE HAS NOT RECEIVED THE COPY OF THE WARRANT OR COPY OF THE PA NCHNAMA IN THE NAME OF THE ASSESSEE TRUST SPM. FURTHER CASH AND THE DOCUMENTS SEIZED BELONG TO SHRI ANANT MATE AND NOT OF SPM. FURTHE R THE PLACE SEARCHED IS NOT THE PLACE WHERE ADMISSIONS ARE CONDUCTE D OR FEES ARE COLLECTED AND THAT NO OTHER DOCUMENTS OF SPM WERE SEIZE D. HOWEVER THE AO REJECTED THE ABOVE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE PROVISIONS DO NOT REQUIRE THAT THE COPY OF THE SEARCH WARRANT 25 ITA NOS.1127 TO 1133/PN/2011 IN EVERY CASE BE SERVED ON THE PERSON CONCERNED. THE SEARCH WARRANT WAS SHOWN TO SHRI ANANT MATE VICE CHAIRMAN OF SPM AND H E HAS SIGNED THE SAME. SINCE THE SEARCH HAD TAKEN PLACE IN T HE CASE OF THE ASSESSEE AND INCRIMINATING DOCUMENTS WERE FOUND THEREFORE AS PER THE PROVISIONS OF THE I.T. ACT NOTICE U/S.153A HAS TO BE ISSUED TO THE ASSESSEE FOR SIX YEARS PRECEDING THE YEAR OF SEARCH. 42. WE FIND THE ASSESSEE BEFORE THE CIT(A) CHALLENGED THE VALIDITY OF 153A PROCEEDINGS ON THE GROUND THAT SEARCH WAS CONDU CTED IN THE CASE OF SHRI ANANT MATE AND NO SEARCH HAD TAKEN PLACE IN THE CASE OF THE ASSESSEE TRUST. WE FIND THE LD.CIT(A) RELYING ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF TAPASYA PROJE CTS LTD. (SUPRA) HELD THAT THE WARRANT OF AUTHORIZATION IN UNAMBIGU OUS TERMS INDICATES THAT WARRANT WAS ISSUED IN THE NAME OF SHRI ANA NT MATE AND OTHER OFFICIALS AS TRUSTEES OF THE ASSESSEE TRUST. SHRI AN ANT MATE AND OTHER OFFICIALS OF THE ASSESSEE TRUST WERE SEARCHED AS TR USTEES OF THE ASSESSEE AND NOT OTHERWISE. 43. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). I T IS AN ADMITTED FACT THAT THE SEARCH WARRANT WAS ISSUED IN THE NAME OF SHRI ANANT MATE AND OTHER OFFICIALS OF THE ASSESSEE TRUST. THE ADDRESS IS THERAPEUTIC DRUG MONITORING LABORATORY WHICH AGAIN IS ONE OF THE PREMISES OF THE ASSESSEE TRUST. WE FIND MERIT IN THE SUBM ISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT HAD IT BEEN THE INT ENTION OF THE REVENUE TO SEARCH SHRI ANANT MATE THEN IN THAT CASE H IS RESIDENCE ALSO WOULD HAVE BEEN SEARCHED. HOWEVER IN THE INSTANT C ASE THE RESIDENCE OF THE TRUSTEE SHRI ANANT MATE WAS NOT SEARC HED. THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF TAP ASYA PROJECTS LTD. (SUPRA) WHICH HAS BEEN RELIED UPON BY THE LD.CIT(A) AND 26 ITA NOS.1127 TO 1133/PN/2011 WHICH HAS ALREADY BEEN REPRODUCED AT PARA 25 OF THIS O RDER IS FULLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 44. SO FAR AS THE VARIOUS DECISIONS RELIED ON BY THE LD. CO UNSEL FOR THE ASSESSEE ARE CONCERNED WE FIND THE SAME ARE DISTING UISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE CA SE OF SIKSHA O ANUSANDHAN VS. CIT REPORTED IN 336 ITR 112 IS CONCERNE D THE FACTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE P RESENT CASE. IN THAT CASE THE ASSESSEE SIKSHA O ANUSANDHAN (FOR S HORT THE SOCIETY) IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGIS TRATION ACT 1860. IT WAS CREATED FOR CHARITABLE PURPOSE TO IMPART T ECHNICAL EDUCATION. ACCORDINGLY THE ENGINEERING COLLEGE KNOWN AS IT ER AND OTHER EDUCATIONAL INSTITUTIONS HAVE BEEN ESTABLISHED IN BHUBANESHWAR. THE SOCIETY HAS BEEN CONFERRED THE STAT US OF DEEMED UNIVERSITY BY UGC. THE ASSESSEE SOCIETY GOT REGISTERED U/S.12A OF THE I.T. ACT. ACCORDING TO THE ASSESSEE PURSUANT TO 2 SEA RCH WARRANTS ISSUED IN THE NAME OF SHRI MANOJ RANJAN NAIK SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT IN THE RESIDENTIAL PREMISES O F SHRI MANOJ RANJAN NAIK THE PRESIDENT OF THE SOCIETY AT 194 DHARMA VIHAR KHANDAGIRI BHUBANESHWAR AND AT 224 DHARMA VIHAR KHANDA GIRI BHUBANESHWAR ON 09-08-2005 AND 10-08-2005. IN THE C OURSE OF SEARCH THE AUTHORIZED OFFICER SEIZED THE BOOKS OF ACCOUNT DOCUMENTS ETC. OF THE ASSESSEE SOCIETY FROM 224 DHARMA VIHAR KHAND AGIRI BHUBANESHWAR. PURSUANT TO SEARCH AND SEIZURE OPERATION ASSESSMENT PROCEEDINGS U/S.153A OF THE ACT WERE INITIATED AGAINST THE ASSESSEE TRUST. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDERS PASSED U/S.153A OF THE I.T. ACT BY FILING APPEALS BEFORE THE CIT(A). H AVING BEEN UNSUCCESSFUL BEFORE THE SAID FORUM IT PREFERRED APPEA LS BEFORE THE TRIBUNAL. AN ADDITIONAL GROUND WAS RAISED BEFORE THE TRIBU NAL STATING 27 ITA NOS.1127 TO 1133/PN/2011 THAT AS NO SEARCH WARRANT WAS SERVED ON THE ASSESSE E TRUST PROCEEDINGS INITIATED U/S.153A OF THE ACT ARE NOT ILLEGAL. TH E TRIBUNAL REMITTED THE MATTER TO THE FILE OF THE CIT(A) WITH A DIRECTIO N TO FIRST DECIDE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN AC CORDANCE WITH LAW. THE ASSESSEE TOOK UP THE MATTER TO THE HONBLE H IGH COURT. IT WAS ARGUED THAT THE ORDER PASSED BY THE TRIBUNAL IS T OTALLY ERRONEOUS ILLEGAL AND IRRATIONAL. IT WAS ARGUED THAT SEARCH OPERATIO N CANNOT BE CONDUCTED IN A WILD MANNER. FURTHER IN THE ABSENCE OF P ROPER SEARCH WARRANT THE PROCEEDINGS U/S.153A OF THE I.T. ACT AGAINST THE ASSESSEE ARE INVALID. IT WAS ARGUED THAT THE ASSESSMENT PROCEED INGS AS CONTEMPLATED U/S.153A OF THE I.T. ACT 1961 CAN ONLY BE INITIATED AGAINST A PERSON IN WHOSE CASE SEARCH OPERATION HAS BE EN INITIATED U/S.132(1) OF THE I.T. ACT. RELYING ON VARIOUS DECISIONS IT W AS ARGUED THAT THE ASSESSMENT PROCEEDINGS INITIATED AND COMPLETED U/S.153A OF THE I.T. ACT IN ABSENCE OF INITIATION OF VALID SEARCH AS CONT EMPLATED U/S.132 OF THE I.T. ACT 1961 ARE ILLEGAL. UNDER THESE CIRCU MSTANCES THE HONBLE HIGH COURT HELD THAT AFTER VERIFYING THE RELE VANT SEARCH RECORDS THE TRIBUNAL SHOULD HAVE TAKEN A DECISION ON THE ADDITIONAL GROUND AND SHOULD NOT HAVE REMITTED THE MATTER TO TH E FILE OF CIT(A) FOR ADJUDICATION ON THE ADDITIONAL GROUND . ACCORDINGLY TH E HONBLE HIGH COURT DIRECTED THE TRIBUNAL TO RE-HEAR THE APPEAL. 45. FROM THE ABOVE FACTS IT IS CLEAR THAT SEARCH WAS CON DUCTED AT THE RESIDENTIAL PREMISES OF THE PRESIDENT OF THE ASSESSEE SOCIETY. HOWEVER IN THE INSTANT CASE THE SEARCH WAS CONFINED TO ONE OF THE OFFICE PREMISES OF THE ASSESSEE TRUST AND NOT THE RESIDE NCE OF SHRI ANANT MATE AND THEREFORE THE DECISION OF HONBLE ORISSA H IGH COURT IN THE CASE OF SIKSHA O ANUSANDHAN RELIED ON BY THE LD. C OUNSEL FOR THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 28 ITA NOS.1127 TO 1133/PN/2011 46. SO FAR AS THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT REPORTED IN 289 ITR 341 IS C ONCERNED THE SAME IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CA SE. IN THAT CASE THE ASSESSEE M/S. INDORE CONSTRUCTION COMPANY PV T. LTD. IS A COMPANY REGISTERED AND INCORPORATED UNDER THE COMPAN IES ACT 1956. ONE SHRI RAMESHWAR MAHESHWARI IS ONE OF ITS DIRECTORS. S HRI MAHESHWARI APART FROM BEING A DIRECTOR OF THE SAID COMPAN Y IS ALSO A TAX CONSULTANT. A SEARCH WAS CONDUCTED U/S.132 OF THE I.T. ACT IN THE PREMISES OF THE SAID MAHESHWARI AND HIS WIFE SMT. LALITA DEV I ON 21- 11-1995. SEVERAL INCRIMINATING DOCUMENTS RELATING TO THE B USINESS OF THE COMPANY WERE SEIZED. PROCEEDINGS WERE INITIATED AGA INST THE COMPANY PURPORTED TO BE U/S.158BC OF THE I.T. ACT. WHEN THE ASS ESSEE CHALLENGED THE VALIDITY OF THE ASSESSMENT THE TRIBUNAL OPINE D THAT THE AO HAD NO JURISDICTION TO PROCEED AGAINST THE ASSESSEE FOR MAKING THE BLOCK ASSESSMENT IN TERMS OF CHAPTER XIVB OF THE ACT AS NO SEARCH WAS CONDUCTED IN TERMS OF SECTION 132 OF THE I.T. ACT. THE REVENUE PREFER RED AN APPEAL BEFORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT ALLOWED THE APPEAL FILED BY THE REVENUE BY HOLDING THAT TH E AO HAD THE REQUISITE JURISDICTION IN TERMS OF SECTION 158BD OF THE I.T. ACT R.W.S. 2(31) THEREOF. ON FURTHER APPEAL THE HONBLE SUPREME COUR T HELD THAT WHERE THE PREMISES OF A DIRECTOR OF COMPANY AND HIS WIFE W ERE SEARCHED U/S.132 OF THE I.T. ACT AND A BLOCK ASSESSMENT HAD TO BE DONE IN RELATION TO THE COMPANY THE AO HAD TO (1) RECORD HIS S ATISFACTION THAT ANY UNDISCLOSED INCOME BELONGED TO THE COMPANY AND (2) HAND OVER THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND AS SETS SEIZED TO THE AO HAVING JURISDICTION AGAINST THE COMPANY. 29 ITA NOS.1127 TO 1133/PN/2011 47. THUS THE ABOVE DECISION IS ALSO NOT APPLICABLE TO THE FA CTS OF THE PRESENT CASE. SINCE IN THE INSTANT CASE THE RESIDENCE O F THE TRUSTEE SHRI ANANT MATE HAS NOT BEEN SEARCHED AND THE SEARCH HAD TAKEN PLACE AT ONE OF THE OFFICE PREMISES OF THE ASSESSEE TRUST THERE FORE THIS DECISION IS ALSO NOT APPLICABLE. 48. SO FAR AS THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TIRUPATI OIL CORPORATION (SUPRA) IS CONCERNED WE FIN D IN THAT CASE ALSO SEARCH OPERATION U/S.132 OF THE ACT WAS CARRIE D OUT AT THE RESIDENCE OF THE PARTNER PURSUANT TO WHICH NOTICE U/S.15 8BC OF THE ACT WAS ISSUED TO THE FIRM ON 05-08-1996 REQUIRING THE A SSESSEE FIRM TO FURNISH ITS RETURN OF INCOME FOR THE BLOCK PERIOD. THE AO H AD COME TO A CONCLUSION THAT SINCE A PARTNERSHIP FIRM IS NOT A LEGAL EN TITY THE ASSESSEE FIRM WAS LIABLE WITH REGARD TO THE MATERIAL DETEC TED AT THE RESIDENCE OF ITS PARTNER. THE TRIBUNAL CONCLUDED THAT UND ER THE I.T. ACT A REGISTERED FIRM IS A TAXABLE UNIT AND IF THE AO WANTED TO PROCEED UNDER CHAPTER XIVB OF THE I.T. ACT WITH REGARD TO THE UNDISCLOSED INCOME OF THE PARTNER FOR THE PURPOSE OF MAKING BLOCK ASS ESSMENT ON THE ASSESSEE FIRM THEN THE AO WAS REQUIRED TO INVOKE SE CTION 158BD WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. ACCORDING LY IT WAS HELD THAT THE BLOCK ASSESSMENT MADE ON THE FIRM WITHOUT FOLLOW ING THE PROCEDURE U/S.158BD WAS BAD IN LAW. THE HONBLE HIGH COU RT UPHELD THE ORDER OF THE TRIBUNAL HOLDING THAT THERE IS NO ERROR OF LAW IN THE JUDGMENT OF THE TRIBUNAL. THE VARIOUS OTHER DECISIONS RELIE D ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE ALSO DISTINGUISHABLE AND NOT APPLICA BLE TO THE FACTS OF THE PRESENT CASE. SINCE THE SEARCH WA RRANT IN THE CASE OF THE ASSESSEE CLEARLY REVEALS THAT SHRI ANANT MATE WAS SEARCHED AS TRUSTEE OF THE ASSESSEE TRUST AND NOT OTHERWISE AND T HEIR RESIDENCES HAVE NOT BEEN SEARCHED THEREFORE THE PROCEEDINGS INITIAT ED U/S.153A 30 ITA NOS.1127 TO 1133/PN/2011 OF THE I.T. ACT IN THE CASE OF THE ASSESSEE TRUST ARE V ALID. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE A ND THE GROUNDS OF APPEAL NO.1 AND 2 BY THE ASSESSEE ARE DISMISSED. 49. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEE FOR A.YRS. 2004-05 TO 2008-09. FOLLOWING THE ABOVE REASONINGS THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF ASSESSME NT ORDER PASSED U/S.153A FOR A.YRS. 2004-05 TO 2008-09 ARE ACCO RDINGLY DISMISSED. 50. GROUND OF APPEAL NO.3 RELATES TO THE ORDER OF THE CIT (A) IN UPHOLDING THE ACTION OF THE AO IN GIVING RETROSPECTIVE EFFECT TO THE ORDER PASSED U/S.12AA(3) OF THE ACT. 51. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE TRU ST GOT REGISTRATION U/S.12A OF THE I.T. ACT IN 1973. A SEARCH TOO K PLACE IN THE CASE OF THE ASSESSEE ON 21-07-2008. AFTER CONSIDERING T HE EVIDENCES GATHERED DURING AND AFTER THE SEARCH THE CIT CENTRAL P UNE WAS OF THE VIEW THAT THE ACTIVITIES OF THE SOCIETY WERE NOT GENUINE A ND WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF TH E TRUST. ACCORDINGLY A SHOW CAUSE NOTICE WAS ISSUED TO THE ASS ESSEE. AFTER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSE E THE LD.CIT CENTRAL PUNE NOTED THAT THE ASSESSEE WAS COLLECTING DON ATIONS FROM STUDENTS FOR ADMISSION TO RUIA AND PODAR COLLEGES. THE C IT WAS OF THE OPINION THAT THE COLLECTION OF CAPITATION FEE/DONATION IS ILLEG AL IN TERMS OF THE MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF C APITATION FEES) ACT 1987. ACCORDING TO THE LD.CIT THE ACTIVITY TH AT IS ILLEGAL CANNOT BE THE GENUINE ACTIVITY. THUS THE ACTIVITIES OF TH E SOCIETY ARE NOT GENUINE. AFTER CONSIDERING THE VARIOUS SUBMISSIONS MAD E BY THE ASSESSEE FROM TIME TO TIME THE LD.CIT IN THE ORDER DATED 17-09-2010 31 ITA NOS.1127 TO 1133/PN/2011 CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE U/S.1 2A OF THE I.T. ACT. 52. THE ASSESSEE IN ITS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A CLAIMED EXEMPTION IN RESPECT OF ITS INCOME U/S.10(23 C)(IIIAB) AND 11 AND 12 OF THE I.T. ACT. IN THE ORIGINAL RETURN OF INCOME THE ASSESSEE HAD CLAIMED EXEMPTION U/S.10(23C)(IIIAB) AND 11 AND 1 2 OF THE I.T. ACT. BEFORE THE AO THE ASSESSEE CONTENDED THA T THE ORDER PASSED BY THE CIT CENTRAL PUNE CANCELLING THE REGISTRATIO N OF THE TRUST HAS NO RETROSPECTIVE EFFECT AND WILL THEREFORE HAVE NO IMPLIC ATION FOR THIS YEAR. IT WAS ARGUED THAT SINCE THE TRUST FULFILS THE CONDITIONS LAID DOWN IN SECTION 12AA AND HAS NOT VIOLATED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND SINCE THE INCOME OF THE TRUST HAS BEEN UTILIZED ON THE OBJECTS OF THE TRUST THEREFORE THE ASSESSEE IS ENT ITLED TO EXEMPTION U/S.11 AND 12 OF THE ACT. 53. HOWEVER THE AO DID NOT ACCEPT THE ABOVE CONTENTIO N OF THE ASSESSEE. ACCORDING TO HIM THE CIT CENTRAL PUNE HAS NO T INDICATED THE DATE FROM WHICH THE ORDER IS TO TAKE EFFECT. THEREFOR E WHEN THE REGISTRATION GRANTED U/S.12A IS CANCELLED U/S.12AA(3) IT WILL H AVE THE EFFECT OF WITHDRAWING THE REGISTRATION FROM THE TIME IT WAS G RANTED. ACCORDING TO THE AO SUB-SECTION (3) OF SECTION 12AA WHICH LAYS DOWN THE PROCEDURE FOR CANCELLATION OF THE REGISTRATION DOES N OT INDICATE FROM WHICH DATE THE CANCELLATION WILL HAVE EFFECT. HE ACCORDINGLY REJECTED THE CLAIM OF THE ASSESSEE. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. 54. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 32 ITA NOS.1127 TO 1133/PN/2011 55. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE CIRCULAR NO.1/2011 DATED 06-04-2011 A COPY OF WH ICH IS PLACED AT PAGE 42 OF THE LEGAL COMPILATION. REFERRING TO PARA 7.2 OF THE SAID CIRCULAR HE SUBMITTED THAT IT HAS BEEN HELD IN VARIOUS JUD ICIAL DECISIONS THAT THE COMMISSIONER DOES NOT HAVE POWER TO CANCEL TH E REGISTRATION WHICH WAS OBTAINED EARLIER BY ANY TRUST OR INSTITUTION UND ER PROVISIONS OF SECTION 12A AS IT IS NOT SPECIFICALLY MENTIONED IN SECTION 12AA. ACCORDINGLY SECTION 12AA HAS BEEN AMENDED TO PROVIDE T HAT THE COMMISSIONER CAN ALSO CANCEL THE REGISTRATION OBTAINED U/ S.12A AS IT STOOD BEFORE AMENDMENT BY FINANCE (NO.2) ACT 1996. IT H AS BEEN MENTIONED IN THE SAID CIRCULAR THAT THIS AMENDMENT HAS B EEN MADE APPLICABLE W.E.F. 01-06-2010 AND SHALL ACCORDINGLY APPLY FOR A.Y. 2011- 12 AND SUBSEQUENT ASSESSMENT YEARS. THEREFORE THE A O WAS NOT JUSTIFIED IN APPLYING THE CANCELLATION OF REGISTRATION BY THE CIT TO EARLIER YEARS. 56. REFERRING TO THE FOLLOWING DECISIONS HE SUBMITTED THAT W HERE ASSESSEE HAD BEEN GRANTED REGISTRATION EARLIER THE AMEN DED PROVISION IN SECTION 12AA(3) COULD NOT BE APPLIED AGAINST ASSESSEE RETROSPECTIVELY: 1. MUMBAI CRICKET ASSOCIATION VS. DIT (EXEMPTION) REPORTE D IN 24.TAXMANN.COM 99 (MUMBAI) 2. DIT (EXEMPTION) AHMEDABAD VS. N.H. KAPADIA EDUCATION AL TRUST REPORTED IN 136 ITD 111 3. AGRA DEVELOPMENT AUTHORITY VS. CIT REPORTED IN 141 I TD 336 57. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIB UNAL IN ASSESSEES OWN CASE VIDE ITA NOS. 1348 AND 1349/PN/2010 ORDER DATED 27-03-2014 FOR A.YRS. 2010-11 AND 2011-12 HE SUBMITTED THAT THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE CIT CANCELLING REG ISTRATION 33 ITA NOS.1127 TO 1133/PN/2011 U/S.12A. HE ACCORDINGLY SUBMITTED THAT WHEN THE ORDER OF THE CIT HAS BEEN SET ASIDE THIS GROUND HAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE . 58. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT WHE N THE CIT(A) PASSED THE ORDER THE DECISION OF THE TRIBUNAL SETTING ASID E THE CANCELLATION OF REGISTRATION WAS NOT AVAILABLE. OTHERWISE THE CIT(A) WOULD HAVE TAKEN DIFFERENT VIEW. 59. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE IN THE RETUR N OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A HAD CLAIMED ITS INCOME A S EXEMPT U/S.11 AND 12 OF THE I.T. ACT. THE AO HELD THAT SINCE TH E REGISTRATION GRANTED EARLIER U/S.12A HAS BEEN CANCELLED BY THE CIT CE NTRAL PUNE BY THE ORDER PASSED U/S.12AA(3) DATED 17-09-2010 THEREFORE THE ASSESSEE IS NOT ELIGIBLE TO CLAIM THIS EXEMPTION. THE SUBMIS SION OF THE ASSESSEE THAT THE ORDER PASSED BY THE CIT CENTRAL PU NE CANCELLING REGISTRATION DATED 17-09-2010 DOES NOT HAVE RETROSPEC TIVE EFFECT WAS REJECTED BY THE AO ON THE GROUND THAT SUB-SECTION (3) OF SECTION 12AA WHICH LAYS DOWN THE PROCEDURE FOR CANCELLATION OF THE REGIS TRATION DOES NOT INDICATE FROM WHICH DATE THE CANCELLATION WILL HAVE THE E FFECT. ACCORDING TO HIM ONCE THE REGISTRATION GRANTED U/S.12A IS CANCELLED U/S.12AA(3) IT WILL HAVE THE EFFECT OF WITHDRAWING THE REGISTRAT ION FROM THE TIME IT WAS GRANTED. WE FIND THE LD.CIT(A) UPHELD THE ACTION OF THE AO. 60. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS ALREADY SET ASIDE TH E ORDER OF THE CIT CENTRAL PUNE CANCELLING REGISTRATION U/S.12A. EVEN OTH ERWISE 34 ITA NOS.1127 TO 1133/PN/2011 ALSO IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E IS THAT POWER TO CANCEL THE REGISTRATION U/S.12AA(3) HAVE BEEN BR OUGHT ON STATUTE W.E.F. 01-06-2010 PROSPECTIVELY AND THEREFORE CAN CELLATION OF REGISTRATION MADE W.E.F A.Y. 2003-04 I.E. RETROSPECTIVELY WOULD BE INVALID AND NOT IN ACCORDANCE WITH LAW. 61. WITHOUT GOING INTO THE VARIOUS DECISIONS CITED BY THE L D. COUNSEL FOR THE ASSESSEE WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS. 1348 AND 1349/PN/2010 ORDER DATED 27-03-2014 AT PARA NO. 8 .11 OF THE ORDER HAS SET ASIDE THE ORDER OF THE CIT CENTRA L PUNE CANCELLING REGISTRATION GRANTED U/S.12A OF THE ACT AND HAS RESTORE D THE REGISTRATION GRANTED EARLIER U/S.12A. THEREFORE THIS GROUN D BY THE ASSESSEE HAS TO BE ALLOWED. 62. IDENTICAL GROUND HAS BEEN TAKEN BY THE ASSESSEE IN APPEALS FOR A.YRS. 2004-05 TO 2009-10. FOLLOWING THE REASONINGS GIVEN ABOVE GROUND RAISED BY THE ASSESSEE FOR THE ABOVE ASSESSMEN T YEARS ARE ALLOWED. 63. GROUND OF APPEAL NO.4 RELATES TO THE ELIGIBILITY OF THE TRU ST FOR EXEMPTION U/S.10(23C)(IIIAB) OF THE ACT. 64. AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSEE IN R ETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A CLAIMED EXEMPTION IN RESPECT OF ITS INCOME U/S.10(23C)(IIIAB) OF THE ACT. THE AO FOLLO WING HIS ORDER FOR A.Y. 2003-04 WHICH WAS PASSED U/S.143(3) ON THE BASIS OF RETURN SUBMITTED U/S.139 BY THE ASSESSEE HELD THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S.10(23C)(IIIAB) SINCE THE ASSESSEE IS N OT WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. THE LD.CIT(A ) FOLLOWING 35 ITA NOS.1127 TO 1133/PN/2011 THE ORDER OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR A.Y. 2003-04 UPHELD THE ACTION OF THE AO. 65. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E THAT IN VIEW OF THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF DIT (EXEMPTION) AND ANOTHER VS. DHAMAPAKSHA R.P.B.M.S. EDUCATIO NAL TRUST REPORTED IN 372 ITR 307 WHEN 25% OF THE FINANCE T O THE ASSESSEE INSTITUTIONS FLOWED FROM THE GOVERNMENT IT CONSTITUTED SUBS TANTIAL FINANCE AND THEREFORE IT SATISFIED ALL THE LEGAL REQUIREMENTS P ROVIDED U/S.10(23C)(IIIAB). SINCE IN THE INSTANT CASE THE CONTRIBUTION O F THE GOVERNMENT TO THE ASSESSEE TRUST IS MORE THAN 25% TH EREFORE IT HAS TO BE HELD THAT THE ASSESSEE TRUST IS ELIGIBLE FOR EXEMPTION U/S.10(23C)(IIIAB) OF THE ACT AS THE ASSESSEE TRUST FULFILS THE E LIGIBILITY CONDITIONS AS PRESCRIBED IN THE SAID SECTION. 66. WE FIND MERIT IN THE ABOVE ARGUMENTS OF THE LD. COUNS EL FOR THE ASSESSEE. THE PROVISIONS OF SECTION U/S.10(23C)(IIIAB) READS AS UNDER : ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXIST ING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT AN D WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT OR 67. FROM THE DETAILS FURNISHED BY THE ASSESSEE BEFORE THE AO WHICH HAS BEEN REPRODUCED BY HIM AT PARA 8 OF HIS ORDER WE FIN D THE PERCENTAGE OF GRANTS BY THE GOVERNMENT TO THE TOTAL COLLECTION FOR A LL THE YEARS VARIES FROM 26.38% TO 50.21% I.E. MORE THAN 25% IN E ACH YEAR. WE FIND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF D HAMAPAKSHA R.P.B.M.S. EDUCATIONAL TRUST (SUPRA) HAS HELD THAT WHEN 25% O F THE FINANCE TO THE ASSESSEE INSTITUTIONS FLOWED FROM THE GOVERN MENT IT CONSTITUTED SUBSTANTIAL FINANCE AND THEREFORE IT SATISFIED AL L THE LEGAL REQUIREMENTS PROVIDE U/S.10(23C)(IIIAB). 36 ITA NOS.1127 TO 1133/PN/2011 68. SINCE IN THE INSTANT CASE THE GRANTS RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT IS MORE THAN 25% IN EACH OF THE YEARS U NDER APPEAL THEREFORE WE HOLD THAT THE ASSESSEE TRUST FULFILS THE COND ITIONS PRESCRIBED U/S.10(23C)(IIIAB) AND ACCORDINGLY IT IS ELIGIBLE FOR EXE MPTION U/S.10(23C)(IIIAB). ACCORDINGLY THE GROUND RAISED BY THE ASSE SSEE IS ALLOWED. 69. IDENTICAL GROUND HAS BEEN RAISED BY THE ASSESSEE FOR A.YRS. 2004- 05 TO 2006-07. FOLLOWING THE REASONINGS GIVEN ABOVE GRO UND RAISED BY THE ASSESSEE ON THIS ISSUE FOR THE ABOVE ASSESSMENT YEARS ARE ALLO WED. 70. GROUND OF APPEAL NO.5 RELATES TO THE ORDER OF THE CIT (A) IN UPHOLDING THE ACTION OF THE AO THAT ASSESSEE HAS VIOLATED PROVISIONS OF SECTION 11(5) OF THE ACT. 71. FACTS OF THE CASE IN BRIEF ARE THAT THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS INV ESTED RS.300/- IN THE SHARES OF PDCC (PUNE DISTRICT CENTRAL COOPERATIVE B ANK) AND RS.2 600/- IN THE SHARES OF OTHER COOPERATIVE BANKS. SINC E INVESTMENT IN SHARES OF COOPERATIVE BANKS IS NOT ONE OF THE MODES P RESCRIBED U/S.11(5) THE AO HELD THAT ASSESSEE HAS VIOLATED PROVISIONS OF SECTION 13(1)(D) OF THE I.T. ACT. ACCORDINGLY HE HELD THAT EXEMPTION U/S.11 AND 12 IS NOT AVAILABLE TO THE ASSESSEE ALSO ON ACCOUNT OF VIO LATION OF SECTION 13(1)(D)(I). IN APPEAL THE LD.CIT(A) UPHELD THE ACTION O F THE AO ON THE GROUND THAT THE PROVISIONS CONTAINED IN SECTION 1 1(5) R.W.S. 13(1)(D) HAS TO BE INTERPRETED STRICTLY AS THESE PROVISION S HAVE BEEN BROUGHT IN TO PREVENT THE MISUSE OF THE FUNDS OF THE TRUST AND IN VIEW OF NUMEROUS INCENTIVES GRANTED TO A TRUST. ACCORDING TO HIM ONCE THERE IS SPECIFIC PROVISION IN THE FORM OF SECTION 11(5) PERMITTING TH E 37 ITA NOS.1127 TO 1133/PN/2011 INVESTMENTS WHICH CAN BE MADE BY THE TRUST IF ANY AND IF TRUST PURCHASES THE SHARE NOT PERMITTED THEREIN THEN IT HAS VIOLATED PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT. 72. WE FIND THIS ISSUE HAD COME UP BEFORE THE TRIBUNAL IN A SSESSEES OWN CASE VIDE ITA NOS. 1348 & 1349/PN/2010 ORDER DATE D 27-03-2014 FOR A.YRS. 2010-11 AND 2011-12. WE FIND THE TRIBUNAL AT PAR A 8 TO 8.2 OF THE ORDER HAS DECIDED THE ISSUE AND HELD THAT THE CI T WAS NOT JUSTIFIED IN CANCELLING REGISTRATION GRANTED EARLIER U/S.12A ON ACCOUNT OF VIOLATION OF THE PROVISIONS OF SECTION 11 R.W.S. 13(1)(D) OF THE I .T. ACT. THE RELEVANT OBSERVATION OF THE TRIBUNAL READS AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES PERUSED THE ORDER OF THE LD.CIT AND THE PAPER BOOK F ILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CI TED BEFORE US. WE FIND THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSE E TRUST IS MORE THAN 100 YEARS OLD AND IT RUNS MORE THAN 60 EDUCATIONAL IN STITUTIONS IMPARTING EDUCATION TO MORE THAN 70000 STUDENTS IN VARIOUS FIELD S. THE TRUST WAS GRANTED REGISTRATION EARLIER U/S.12A. HOWEVER THE L D.CIT CANCELLED THE REGISTRATION GRANTED EARLIER ON THE GROUND THAT THE OBJECTS OF THE ASSESSEE TRUST ARE NOT GENUINE SINCE THE ASSESSEE TRUST IS COLLECTI NG HUGE DONATION FROM STUDENTS FOR ADMISSION TO THE VARIOUS INSTITUTES RUN BY IT IN VIOLATION OF THE MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITI ON OF CAPITATION FE) ACT 1987. THE COLLECTION OF SUCH DONATIONS ACCORDIN G TO HIM IS ILLEGAL AND THEREFORE THE ACTIVITIES OF THE SAID SOCIETY ARE NOT GENUINE. HE FURTHER OBSERVED THAT THE INSTITUTES ARE BEING RUN ON COMMERCI AL LINES WITH PROFIT MOTIVE. HE ALSO HELD THAT THE ASSESSEE TRUST HAS VIOLATED PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) BY INVESTING IN SHARES OF COOPERATIVE BANKS. 8.1 NOW COMING TO THE SECOND ISSUE FIRST I.E. THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) BY INVE STING IN SHARES OF THE COOPERATIVE BANK WE FIND THE INVESTMENT IN SHARES OF THE COOPERATIVE BANK WAS RS.5 00 150/- AS PER BALANCE SHEET OF THE TRUST FOR A.Y. 2006-07 TO A.Y. 2009-10 WHEREAS THE BORROWING FROM THE BANK DURING T HE ABOVE ASSESSMENT YEARS ARE RS.18.60 CRORES RS.21.99 CRORES 39.21 CRORES AND RS.33.55 CRORES RESPECTIVELY. WE FIND THE ASSESSEE HAS TAK EN LOAN FROM THE BANK FOR WHICH IT HAD TO INVEST IN THE SHARES OF THE C OOPERATIVE BANK AS PER THE BY-LAWS OF THE SAID BANK. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BHARATI VIDYAPEETH MEDICAL FOUNDATION (SUPRA ) WHILE DECIDING AN IDENTICAL ISSUE HAS OBSERVED AS UNDER : 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VAR IOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE THE AO DENIED THE EXEM PTION U/S.11 ON THE GROUND THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 13(1)(D) R.W.S.11(5) 38 ITA NOS.1127 TO 1133/PN/2011 SINCE THE ASSESSEE HAS MADE THE FOLLOWING INVESTMENTS OR C ONTINUED TO HOLD THE INVESTMENTS FOR THE IMPUGNED ASSESSMENT YEAR AS UNDER : A. SHARES IN BHARATI SAHAKARI BANK RS.25 250/- B. ADVANCE TO BHARATI VIDYAPEETH- DEEMED UNIVERSITY MEDICAL COLLEGE RS. 56 73 499/- C. ADVANCE TO AYURVED HOSPITAL RS.1 06 40 099/- D. ADVANCE TO HOMEOPATHETIC HOSPITAL RS. 59 90 016 /- E. RENT ADVANCE TO BHARATI VIDYAPEETH(TRUST) RS. 8 76 26 124/- 18.1 WE FIND THE LEARNED CIT(A) HELD THAT THERE IS N O VIOLATION OF SECTION 13(1)(D) R.W.S.11(5) ON ACCOUNT OF ITEMS (B) (C) (D) AND (E) ABOVE FOR WHICH THE REVENUE IS NOT IN APPEAL. HOWEVER HE HELD THAT BY CONTINUING TO HOLD THE SHARES IN BHARATI SAHAKARI BANK AFTER THE LOAN WA S REPAID THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13(1)(D) R.W.S.11 (5). IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE SHARES WERE PURCHASED UNDER COMPULSION FOR OBTAINING THE LOAN FRO M THE BANK AS PER THE BYE-LAWS OF THE BANK. THE INVESTMENT IN SHARES AMO UNTING TO RS. 25 250/- IS VERY MEAGRE CONSIDERING THE TOTAL ASSETS OF THE TRUST AMOUNTING TO RS.23 24 CRORES. THERE WAS NO OBJECTION BY THE REV ENUE IN THE PAST FOR HOLDING SUCH SHARES IN THE BHARATI SAHAKARI BANK AND EXEMPTION U/S.11 WAS GRANTED THEREFORE EXEMPTION U/S.11 SHOULD NOT BE DENIED TO THE ASSESSEE. IT IS THE CASE OF THE REVENUE THAT BY INVESTIN G IN SHARES OF THE COOPERATIVE BANK THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13(1)(D) R.W.S.11(5). THE LOAN SO OBTAINED FROM THE BANK HAS ALREADY BEEN REPAID AND ASSESSEE IS HAVING ONLY OVERDRAFT FROM THE BA NK AMOUNTING TO RS.12 87 665/-. THEREFORE THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF EXEMPTION U/S.11. 18.2 THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE INSTANT CASE THE ASSESSEE HAD AVAILED LOAN FROM BHARATI SAHAKARI BANK FOR WHICH IT HAD TO BUY CERTAIN NUMBER OF SHARES OF THE B ANK AS A PRE-CONDITION FOR SUCH LOAN AND THE BANK WHILE GRANTING SUCH LOAN H AD DEDUCTED THE SUBSCRIPTION TO SUCH SHARES COULD NOT BE CONTROVERTED BY THE LEARNED DR. THE FURTHER SUBMISSION OF THE LEARNED COUNSEL FOR THE A SSESSEE THAT THERE WAS NO OBJECTION BY THE REVENUE IN THE PAST FOR HOLD ING THE SHARES OF THE BANK IN THE SCRUTINY ASSESSMENTS AND THAT STILL THERE IS O VERDRAFT LOAN FROM THE BANK ALSO COULD NOT BE CONTROVERTED BY THE REVEN UE. WE FIND MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE PURCHASE OF SHARES OF THE BANK AMOUNTING TO RS.25 250/- IS VERY NEG LIGIBLE CONSIDERING THE TOTAL ASSETS OF THE TRUST AT 23.24 CRORES AND THE SA ME WAS UNDER COMPULSION FOR OBTAINING LOAN FROM THE BANK AND THAT THE BANK WHILE DISBURSING THE LOAN HAD DEDUCTED THE AMOUNT TOWARDS SUC H SHARE SUBSCRIPTION FROM THE LOAN AMOUNT AND THEREFORE THE SAME SHOULD BE CONSIDERED AS AN APPLICATION OF INCOME. IN OUR OPINI ON UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE THE PURCHASE OF SHARE S AMOUNTING TO RS.25 250/- IN THE PAST WHICH THE ASSESSEE CONTINUED TO H OLD DURING THIS YEAR CANNOT BE A GROUND TO HOLD THE SAME AS IN VIOLAT ION OF PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) ESPECIALLY WHEN THE ASSESSEE IS STILL HAVING AN OVERDRAFT OF RS.12 87 665/- FROM THE BANK AS MENTIONE D BY THE AO. SINCE THE ASSESSEE IS STILL ENJOYING OVERDRAFT FACILITY FROM T HE BANK THEREFORE WE FIND NO LOGIC ON THE PART OF THE AO & CIT(A) TO HOL D THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) BECAUSE THE ASSESSEE CONTINUES TO HOLD THE SHARES ONCE THE LOAN WAS REPAID. CONSIDERI NG THE TOTALITY OF THE 39 ITA NOS.1127 TO 1133/PN/2011 FACTS OF THE CASE CONSIDERING THE FACT THAT THE REVEN UE HAD NO OBJECTION IN THE PAST FOR HOLDING THE SHARES OF THE BANK DURING THE TENURE OF LOAN UTILISED BY THE ASSESSEE TRUST AND CONSIDERING THE FACT THAT THE A SSESSEE TRUST IS STILL ENJOYING OVERDRAFT FACILITIES FROM THE BANK WE ARE O F THE CONSIDERED OPINION THAT THERE IS NO VIOLATION OF PROVISIONS OF SECTION 11( 5) R.W.S.13(1)(D) ON ACCOUNT OF HOLDING THE SHARES OF THE BANK. IN THIS VI EW OF THE MATTER WE SET-ASIDE THE ORDER OF THE CIT(A) AND THE GROUNDS RAISE D BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED. SINCE FACTS IN THE INSTANT CASE ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE PUNE BENCH OF THE TRIBUNAL CITED (SUPRA) TH EREFORE RESPECTFULLY FOLLOWING THE ABOVE DECISION WE HOLD THAT BY INVESTIN G IN SHARES IN THE COOPERATIVE BANKS FROM WHICH THE ASSESSEE HAS OBTAINED LO AN THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SECTION 11 R.W.S. 13( 1)(D). THEREFORE THE CIT IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION ON THIS ISSUE. 8.2 SINCE THE ASSESSEE TRUST HAS OBTAINED LOAN FROM THE C OOPERATIVE BANK FOR WHICH IT HAS TO MANDATORILY INVEST IN THE RE QUISITE NUMBER OF SHARES THEREFORE RESPECTFULLY FOLLOWING THE DECISION CITED (SUPRA) WE HOLD THAT THE ASSESSEE TRUST HAS NOT VIOLATED THE PROVISIONS OF SECTION 11 R.W.S. 13(1)(D). THEREFORE THE LD.CIT IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION GRANTED EARLIER U/S.12A ON THIS ISSUE. 73. FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN C ASE ON THIS VERY ISSUE WE HOLD THAT ASSESSEE HAS NOT VIOLATED PROVIS IONS OF SECTION 11(5) OF THE I.T. ACT THEREFORE THE ASSESSEE DOES NOT FALL IN THE AMBIT OF SECTION 13(1)(D) OF THE I.T. ACT. ACCORDINGLY THIS GROUND R AISED BY THE ASSESSEE IS ALLOWED. 74. IDENTICAL GROUND HAS BEEN RAISED BY THE ASSESSEE FOR A.YRS. 2004- 05 TO 2009-10. FOLLOWING THE REASONINGS GIVEN ABOVE GRO UND RAISED BY THE ASSESSEE ON THIS ISSUE FOR THE ABOVE ASSESSMENT YEARS IS ALLOWE D. 75. GROUND OF APPEAL NO.6 BY THE ASSESSEE RELATES TO THE ORDER OF THE CIT(A) IN UPHOLDING THE ACTION OF THE AO IN TREATING THE CORPU S DONATION AS BUSINESS INCOME. 76. AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSEE HAS RECEIVED VARIOUS DONATIONS DURING THE YEAR SOME OF WHICH HAS BEEN CREDITED TO VARIOUS FUNDS AND TAKEN DIRECTLY TO THE BALANCE SHEET W ITHOUT CREDITING THE SAME TO THE INCOME AND EXPENDITURE ACCOUNT. ACCOR DING TO THE AO 40 ITA NOS.1127 TO 1133/PN/2011 SINCE THE ASSESSEE WAS CREATED FOR CHARITABLE PURPOSES THE VOLUNTARY CONTRIBUTIONS RECEIVED BY IT IS ITS INCOME IN TERMS OF CLAUSE (IIA) OF SUB- SECTION (24) OF SECTION 2. HE THEREFORE CONSIDERED ALL THESE CONTRIBUTIONS AS THE RECEIPT OF THE ASSESSEE. SIMILARLY TH E VARIOUS GRANTS WHICH HAVE BEEN DIRECTLY CREDITED TO THE VARIOUS FUNDS WERE ALSO BROUGHT TO TAX. 77. THE SUBMISSION OF THE ASSESSEE BEFORE THE AO THAT T HE DONATIONS RECEIVED ARE NOT INCOME IF THE ASSESSEE IS TREATED AS A BUSINESS ENTITY WAS NOT ACCEPTED BY THE AO. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF REGISTRATION U/S.12A IS GRANTED THE N ALL THESE DONATIONS ARE NOT INCOME. WE FIND MERIT IN THE ABOVE SUB MISSION OF THE LD. COUNSEL FOR THE ASSESSEE. IN THE PRECEDING PARAG RAPHS WE HAVE OBSERVED THAT THE TRIBUNAL HAS ALREADY SET ASIDE THE OR DER OF THE CIT CENTRAL PUNE CANCELLING REGISTRATION GRANTED EARLIER U/S.12 A OF THE I.T. ACT. SINCE THE REGISTRATION GRANTED EARLIER U/S.12A HAS BEEN RESTORED THEREFORE THE DONATIONS RECEIVED BY THE ASSESSEE CANN OT BE TREATED AS ITS INCOME. ACCORDINGLY THE GROUND RAISED BY THE ASSESS EE ON THIS ISSUE IS ALLOWED. 78. IDENTICAL GROUND HAS BEEN RAISED BY THE ASSESSEE FOR A.YRS. 2004- 05 TO 2009-10. FOLLOWING THE REASONINGS GIVEN ABOVE THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE FOR THE ABOVE YEARS IS ALLOWED. 79. GROUND OF APPEAL NO.7 BY THE ASSESSEE FOR A.Y. 2006-0 7 READS AS UNDER : 7. THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER O F AO GIVING RETROSPECTIVE EFFECT OF THE ORDER OF THE DGIT (INV) WITHDRAWING THE NOTIFICATION GRANTED U/S.10(23C)(VI) OF THE ACT WH EN IT IS A SETTLED PRINCIPAL THAT THE ORDERS PASSED HAVE TO BE PROSPECTIVE. THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE PRINCIPLE OF NATURAL JUSTICE AS TH E ORDER OF DGIT (INV) 41 ITA NOS.1127 TO 1133/PN/2011 WAS PASSED JUST ONE DAY BEFORE THE ORDER OF THE AO AND APPELLANT TRUST WAS NOT GIVEN ANY OPPORTUNITY TO OFFER EXPLANATION. 80. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A HAS SOUGHT EXEMPTION UND ER CLAUSE (VI) OF SECTION 10(23C). ACCORDING TO THE AO AS PER THE PROVISIO NS OF SECTION 10(23C)(VI) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EX ISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE S OF PROFIT OTHER THAN THOSE MENTIONED IN SUB-CLAUSE (IIIAB) OR (IIIAD) WHICH IS APPROVED BY THE PRESCRIBED AUTHORITY IS ENTITLED TO EXEMPTION IN RE SPECT OF ITS INCOME. THE APPROVAL WAS GRANTED TO IT BY THE CCIT-II PUNE VIDE HIS ORDER DATED 06-08-2007. HOWEVER IT HAS ALREADY BEEN H ELD THAT THE ASSESSEE DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES AND ON THE CONTRARY ITS INSTITUTIONS ARE RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE. THE AO FURTHER NOTED THAT THE APPROVAL GRANTED TO THE SOCIETY UNDER THIS CLAUSE HAS SINCE BEEN CANCELLED BY THE DGIT (INVESTIG ATION) PUNE VIDE HIS ORDER DATED 30-12-2010. ACCORDINGLY HE HELD TH AT THE ASSESSEE DOES NOT SATISFY THE CONDITION FOR EXEMPTION U/ S.10(23C)(VI). IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. 81. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A WR IT PETITION VIDE W.P.NO.5969 OF 2011 CHALLENGING THE ORDER OF DGIT (INVES TIGATION) IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT THEREFORE THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO SINCE THE ASSESSE E WANTS TO KEEP THE MATTER ALIVE. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION TO THE PROPOSAL OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO. 82. IN VIEW OF THE SUBMISSION OF THE LD. COUNSEL FOR THE A SSESSEE THAT THE WRIT PETITION IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT AND 42 ITA NOS.1127 TO 1133/PN/2011 THE OUTCOME IS AWAITED THEREFORE WE DEEM IT PROPER TO R ESTORE THIS ISSUE TO THE FILE OF THE AO. GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 83. GROUND OF APPEAL NO. 7 RAISED BY THE ASSESSEE IN A.Y. 2 009-10 READS AS UNDER : 7. THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.2 99 35 000/- BEING ALLEGED DONATION RECEIVED FRO M THE STUDENTS WHEN : (A) THE RETRACTED STATEMENT OF SHRI A.N. MATE WAS NOT CON SIDERED. (B) THE OPPORTUNITY TO CROSS EXAMINE THE GUARDIANS WAS NOT GIVEN BY THE AO AS PER THE PRINCIPLES OF NATURAL JUSTICE. (C) THE SEARCH HAS TAKEN PLACE IN CASE OF SHRI A.N. MATE A ND PROCEEDING WAS NOT INITIATED U/S/153C AGAINST APPELLAN T TRUST. (D) ONLY FEW STUDENTS OUT OF 120 STUDENTS WHO ALLEGEDLY PAI D DONATION HAVE BEEN GIVEN ADMISSION AND LD.CIT(A) FAIL ED TO GET THE ISSUE EXAMINED AT THE APPELLATE STAGE WHEN THE ST UDENTS WHO ARE NOT ADMITTED WOULD NOT HAVE PAID THE DONATI ON IF ANY. THE LD.CIT(A) ERRED IN NOT REMANDING THE ISSUE FOR VE RIFICATION OF FACT. 84. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEAR ING DID NOT PRESS GROUNDS OF APPEAL NO.7(A) 7(B) AND 7(D) FOR WHICH THE L D. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDING LY THE ABOVE SUB GROUNDS ARE DISMISSED AS NOT PRESSED. THUS THE ISSUE TO BE ADJUDICATED IN THE GROUND RELATES TO THE ORDER OF THE C IT(A) IN SUSTAINING THE ADDITION OF RS.2 99 35 000/- WHEN THE SEARCH HAD TAKEN PLACE IN CASE OF SHRI ANANT MATE AND PROCEEDINGS WAS NO T INITIATED U/S.153C AGAINST THE ASSESSEE TRUST. 85. FACTS OF THE CASE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE EDUCATIONAL IN STITUTIONS ARE BEING RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE AND THEREFOR E THE INCOME OF THE ASSESSEE ARE TO BE COMPUTED UNDER THE H EAD PROFITS AND 43 ITA NOS.1127 TO 1133/PN/2011 GAINS OF BUSINESS SUBJECT TO THE PROVISIONS OF SECTION 2 8 TO 44DB. HE OBSERVED THAT DURING THE COURSE OF SEARCH IN THE CASE OF THE ASSESSEE ON 21-07-2008 INCRIMINATING DOCUMENTS WERE SEIZED WHICH INDICA TED THAT THE ASSESSEE WAS CHARGING DONATION FOR ADMISSION OF STUD ENTS TO THE VARIOUS INSTITUTES RUN BY THE SOCIETY. HE OBSERVED THAT AS PER THE ENTRIES IN THE SEIZED DOCUMENTS THE TOTAL DONATION COLLEC TED DURING F.Y. 2008-09 COMES TO RS.2.99 CRORES. HE THEREFORE ASKED TH E ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNTS SHOULD NOT BE TAXED IN ITS HANDS. THE ASSESSEE VIDE ITS REPLY DATED 24-11-2010 INTERALIA SUBMIT TED AS UNDER WHICH HAS BEEN REPRODUCED BY THE AO IN THE ASSESSMENT ORDER : REGARDING THE PAPERS SEIZED FROM BRIEFCASE OF MR. MAT E DURING SEARCH & SEIZURE OPERATIONS RELATED TO ALLEGED DONATIONS CHARG ED AT THE TIME OF ADMITTING A STUDENT IN OUR INSTITUTE (AMOUNTING TO RS. 2.99 CRORES AS ALLEGED VIDE YOUR LETTER) WE HEREBY AGAIN DENY OF HAVING AN YTHING TO DO WITH THIS AND AS WELL FURTHER WOULD LIKE TO BRING TO YOUR KIND NOTICE THE FOLLOWING FACTS - A) THE PAPERS ARE NOT OF THE INSTITUTE AS IT NOWHERE HAS ANY IDENTIFICATION MARK OR SEAL OR LETTERHEAD OF THE INST ITUTE. B) THE AMOUNT OF RS. 2. 99 CRORES ALLEGED TO HAVE BEEN COLLECTED IS NOT COLLECTED AND/OR RECEIVED BY THE INSTITUTE AND AS SUCH ANY QUESTION OF ITS ENTRIES BEING MADE IN THE BOOKS OF ACCOUNTS OF THE INST ITUTE DOES NOT ARISE. C) IN SPITE OF OUR REQUEST WE WERE NEVER GIVEN INSPEC TION OF THE DOCUMENTS SEIZED IN RESPECT OF SHRI. MATE. D) HOWEVER IN SPITE OF DENIAL AND WITHOUT PREJUDIC E TO OUR STAND THAT NO DONATIONS ARE CHARGED FOR GIVING ADMISSION TO THE C OURSE RUN BY THE INSTITUTE WE HAVE CAREFULLY SCRUTINIZED THE LIST OF SO CALLED DONOR STUDENTS/ PARENTS (TOTAL 120 STUDENTS) AND WE COULD LOCATE VERY FEW STUDENTS WHO WERE ADMITTED TO VARIOUS COURSES. E) WE ONCE AGAIN REITERATE THAT THE INSTITUTE HAS NO CONNECTION WITH THE LIST OF SAID ALLEGED DONATION OF RS.2.99 CRORES AND WH ATEVER DONATIONS ARE RECEIVED FROM DONORS (VOLUNTARILY) ARE ACCOUNTED FOR IN BOOKS OF ACCOUNTS OF THE INSTITUTE. F) A MERE LIST OF VARIOUS NAMES WITH FIGURES WRITTEN IN FR ONT OF EACH NAME CANNOT BE A BASIS FOR DECIDING/DETERMINING THAT THE TOTAL OF VARIOUS AMOUNTS AS PER LIST OF RS.2.99 CRORES WITHOUT ANY SUPPOR TING DATA &/OR DOCUMENTS CANNOT BECOME A AUTHENTIC PROOF OF HAVING RECEIVED THE SAID AMOUNT AS DONATIONS. 44 ITA NOS.1127 TO 1133/PN/2011 G) ANOTHER VERY IMPORTANT POINT WHICH SEEMS TO HAS BEE N ALTOGETHER OVERLOOKED IN THE ENTIRE PROCEEDINGS IS THAT SHIKSHANA PRASARAKA MANDALI IS A INSTITUTE WHICH IS MORE THAN 125 YEARS OLD AND WH ICH HAVE GIVEN MANY SCIENTIST SCHOLARS BEAUROCRATS SOLDIERS SPORTSMAN AND MORE IMPORTANTLY GOOD CITIZEN TO THE NATION AND AS SUCH THERE ARE MANY INDIVIDUALS CORPORATES ETC WHO WANT TO HELP THE INSTITUTE AND M ANY A TIMES WHEN A PAST STUDENTS SON DAUGHTER OR CLOSE RELATIVE IS SEEKING THE ADMISSION THEN HE CHOOSES THIS OPPORTUNITY TO GIVE SOME VOLUNTARY DONA TION TO EXPRESS HIS GRATITUDE TOWARDS THE INSTITUTE AND IN SUCH CASES IT SHOU LD NOT BE CONSIDERED AS DONATION AGAINST ADMISSION. H) THE ADMISSION OF SHRI. MATE THAT THE ALLEGED CASH B ELONGS TO HIM IS NOT CORROBORATED WITH ANY MATERIAL EVIDENCE CONCLUSIVELY LEGALLY A HALF HEARTED STATEMENT CAN NOT NEGATE THE ACHIEVEMENTS OF THE TRUST . THE ALLEGATION THAT DONATIONS RECEIVED AGAINST ADMISSIONS STANDS AS A FALSE STATE MENT. 86. HOWEVER THE AO WAS NOT SATISFIED WITH THE ABOVE SUBM ISSION GIVEN BY THE ASSESSEE. AS REGARDS THE CONTENTION OF TH E ASSESSEE THAT IT WAS NOT PROVIDED WITH INSPECTION OF THE DOCUMENTS SEIZED IN RESPECT OF SHRI ANANT MATE THE AO OBSERVED THAT SUCH INSPECTION W AS PROVIDED TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND ACCO UNTANT OF THE INSTITUTE ON 29-11-2010. IT WAS CLAIMED BY THE ASSESSEE THAT IT HAS NOT COLLECTED ANY DONATION AND EVEN IF SUCH SEIZED DOCUMENTS ARE TO BE TAKEN TO INDICATE THE COLLECTION OF DONATION THEN IN THAT C ASE SUCH ACTIVITIES WERE CARRIED ON BY SHRI ANANT MATE VICE CHAIRM AN OF THE ASSESSEE TRUST AND THE ASSESSEE HAS NOTHING TO DO WITH IT. THE ASS ESSEE ALSO REFERRED TO THE LETTER FILED BY THE SECRETARY OF THE SOCIETY DATED 12- 09-2008AND THE LETTER WRITTEN BY SHRI ANANT MATE WHERE IN HE HAS STATED THAT OUT OF THE CASH FOUND DURING THE COURSE OF SEARCH AN AMOUNT OF RS.8 LAKHS BELONG TO HIM PERSONALLY. THE AO OBS ERVED THAT SIMILAR PLEA WAS PUTFORTH BY THE ASSESSEE BEFORE THE CIT C ENTRAL PUNE DURING THE COURSE OF THE PROCEEDINGS U/S.12AA(3). HOWEVER THE CIT HAD REJECTED SUCH SUBMISSION OF THE ASSESSEE IN HER ORD ER DATED 17-09- 2010 WHILE CANCELLING REGISTRATION GRANTED EARLIER U/S.12A. T HE AO REPRODUCED THE ORDER OF THE CIT CENTRAL AND ON THE BA SIS OF THE FINDING GIVEN BY THE CIT CENTRAL HE CAME TO THE CONCLUSION THAT THE COLLECTION 45 ITA NOS.1127 TO 1133/PN/2011 OF DONATION BY THE ASSESSEE HAS BEEN ESTABLISHED AND TH E DONATIONS COLLECTED WHICH HAS NOT BEEN ACCOUNTED IN ASSESSEES BO OK IS TO BE ADDED TO ITS TOTAL INCOME. 87. THE ASSESSEE IN ITS SUBMISSION DATED 24-11-2010 STA TED THAT AFTER SCRUTINIZING THE LIST OF DONORS/STUDENTS/PARENTS THE Y COULD LOCATE VERY FEW STUDENTS WHO ARE ADMITTED TO VARIOUS COURSES IN INSTITUTES RUN BY IT. IT WAS CLAIMED THAT ALL THE STUDENTS APPEARING IN T HE LIST ARE NOT ADMITTED TO ANY OF THE INSTITUTES RUN BY IT AND THEREFORE THERE CANNOT BE ANY COLLECTION OF DONATION FROM THOSE WHO ARE NOT SO ADMIT TED. ACCORDING TO THE AO THERE CANNOT BE ANY COLLECTION OF DO NATION FOR GRANTING ADMISSION IF THE ADMISSION ITSELF IS NOT GRANTED. HOW EVER TILL THE DATE OF COMPLETION OF THE ASSESSMENT THE ASSESSEE H AS NOT SUBMITTED THE LIST OF STUDENTS WHO HAVE NOT BEEN ADMITT ED TO ANY OF THE INSTITUTES RUN BY IT. HE THEREFORE ADDED THE ENTIRE AMO UNT OF RS.2 99 35 000/- AS INDICATED BY THE SEIZED PAPERS AS THE IN COME OF THE ASSESSEE. THE AO ACCORDINGLY COMPLETED THE ASSESSMENT DETERMINING THE TOTAL INCOME AT RS.16 61 64 179/-. 88. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 12.5 I HAVE GONE THROUGH THE PORTION OF THE ASSESSMEN T ORDER DEALING WITH THE ISSUE RELATING TO THE ADDITION OF RS.2 99 35 000/-. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT REPORT OF T HE AO ON THE SUBMISSION OF THE APPELLANT AND OTHER MATERIAL AVAILAB LE ON RECORD CAREFULLY. AFTER A CAREFUL CONSIDERATION OF THE. CASE IN TOTALITY I AM OF THE VIEW THAT THE AO WAS JUSTIFIED IN MAKING ADDITION OF THIS AMOUNT TO THE INCOME OF THE APPELLANT. THIS CONCLUSION HAS BEEN ARRI VED AT IN VIEW OF THE DISCUSSION BELOW IN PARA 12.5.1 TO 12.5.11. 12.5.1 THE APPELLANT HAS REPEATEDLY STRESSED THAT THE SE ARCH ACTION HAS TO BE DELINKED FROM THE TRUST AND HAS TO BE SEEN AS ACTION IN RELATION TO ONLY MR. MATE. THE APPELLANT HAS ALSO CONTENDED THAT THE D EPARTMENT HAD AN INTENTION TO TAKE ACTION ONLY AGAINST THE INDIVIDUAL S IN THEIR INDIVIDUAL CAPACITY AND HAD NO INTENTION TO CARRY OUT ANY ACTI ON IN RELATION TO THE APPELLANT. IT HAS FURTHER STRESSED ON THE RETRACTION BY MR. MATE AND ON HIS 46 ITA NOS.1127 TO 1133/PN/2011 OWNING UP THE CASH FOUND DURING THE COURSE OF SEARCH. THESE CONTENTIONS OF THE ASSESSEE NEED TO BE LOOKED IN VIEW OF THE FACTS OF T HE CASE WHICH HAVE BEEN DISCUSSED IN THE SUCCEEDING PARAGRAPHS. 12.5.2 THERE WAS A SEARCH AT THERAPEUTIC DRUG MONITOR ING LABORATORY 194 SCHEME NO.6 ROAD NO.15 SION KOLIWADA SION EAST M UMBAI-22 ON 21/07/2008. THESE PREMISES BELONG TO THE APPELLANT. NOW THE SEARCH HAS BEEN UNDERTAKEN AT THE RELEVANT AND IMPORTANT PREMI SES ONLY IN ORDER TO UNEARTH THE UNACCOUNTED MONEY CAPITATION FEE ETC. SEARCH AND SEIZURE BEING AN INVASIVE TOOL IN THE HANDS OF THE DEPARTMENT IS ALWAYS USED WITH THE UTMOST PRECAUTION AND AT THE MINIMUM SUSPECTED PL ACES SO THAT THE ASSESSEE'S REGULAR BUSINESS WORKING DOESN'T GET AFFECTED. T HIS IS THE REASON WHY SELECTED PREMISES ARE SEARCHED. THE EFFICACY OF THE DEPARTMENT'S ACTION IS EVIDENT FROM THE FACT THAT THE RELEVANT DO CUMENTS AND PERSONS WERE FOUND FROM THE VERY PREMISE THAT WAS SEARCHED. MO RE IMPORTANTLY THE SEARCH WARRANT WAS IN THE NAME OF SHRI MATE IN HIS CAP ACITY AS TRUSTEE OF THE APPELLANT TRUST AND NOT IN HIS INDIVIDUAL CAPACIT Y. THUS THE CONTENTION OF THE APPELLANT THAT THE SEARCH SHOULD BE TREATED AS AN INDIVIDUAL AFFAIR OF MR. MATE DELINKED FROM THE SOCIETY CANNOT BE ACCEPTED. 12.5.3 THE NEXT POINT FOR CONSIDERATION IS THE OWNING UP OF THE PART OF CASH BY SHRI MATE BY RETRACTING HIS EARLIER STATEMENT. DU RING THE COURSE OF THE SEARCH CASH OF RS. 12 12 730/- WAS FOUND AT THE PREMI SES OF THE SOCIETY. SHRI ANANT MATE ADMITTED THAT OUT OF THIS RS. 12 LACS REPRE SENTED DONATION RECEIPTS FOR ADMISSION TO RUIA AND PODDAR COLLEGES. NOW HERE IN HIS STATEMENT DID SHRI MATE MADE EVEN THE SLIGHTEST REFERE NCE TO ANY PART OF THE CASH HAVING BELONGED TO HIM IN HIS INDIVIDUAL CAP ACITY. THE RELEVANT QUESTION AND ANSWER FROM THE SWORN STATEMENT U/S. 132(4) OF SHRI ANANT MATE DATED 21/07/2008 RECORDED DURING THE SEARCH AC TION ARE REPRODUCED BELOW:- 'Q.5 IN REPLY TO Q.29 OF PRELIMINARY STATEMENT RECO RDED U/S. 132(4) ON 21.07.08 YOU HAVE STATED THAT THERE IS RS. 10 LAKHS APPROXIMATELY CASH AT TDM LABORATORY MUMBAI. IS THIS CASH REFLECTED IN BO OKS OF ACCOUNTS OF SPM ? ANS. THIS CASH BELONGS TO SPM. THE CASH WAS COLLECT ED IN CONNECTION WITH DONATION FOR ADMISSION IN RUIA & PODAR COLLEGES: THE CASH WAS COLLECTED AS DONATION FOR ADMISSION IN RUIA & PODAR COLLEGES FROM THE FOLLOWING PERSONS : 1. TAPAS CHOUDHARI RS.1.50 LACS 2. SHAH PUJA RS.1.00LACS 3. THAKKAR RS.1.50 LACS 4. MOTIVALA RS.0.50 LACS THE BALANCE CASH OUT OF RS. 10 LAKHS ABOVE HAS BEEN RECEIVED FROM DIFFERENT STUDENTS FOR ADMISSION IN RUIA AND PODAR COLLEGE T HE NAMES WHEREOF I DO NOT RECOLLECT RIGHT-NOW AND I WILL TELL YOU SHORTLY. T HE ABOVE MENTIONED CASH HAS NOT BEEN ENTERED IN BOOKS OF ACCOUNTS OF SPM. SINCE IT HAS BEEN RECEIVED TODAY ONLY. Q.6 HAVE YOU ISSUED ANY RECEIPTS1VOUCHERSFOR THE RE CEIPT OF THE CASH RECEIVED BY SPM (BY YOU IN THE CAPACITY AS VICE CHA IRMAN OF SPM) AS STATED BY YOU IN ANSWER TO QUESTION NO.5 ABOVE. IF YES PL EASE PRODUCE THE SAME? 47 ITA NOS.1127 TO 1133/PN/2011 ANS. NO WE HAVE NOT ISSUED ANY VOUCHER/RECEIPT. Q.12 IN THE COURSE OF PHYSICAL SEARCH OF PREMISES O F SPM AT TDM LABORATORIES SION MUMBAI CASH OF RS. 12 12 730/- H AS BEEN FOUND. DO YOU CONFIRM THE SAME? ANS. YES I CONFIRM THE SOME. Q.13 PLEASE EXPLAIN THE SOURCE OF THE CASH RECEIVE D? ANS. I HAVE ALREADY EXPLAINED IN REPLY TO Q. NO. 5 TO 11 ABOVE THAT CASH HAS BEEN RECEIVED AS DONATION FOR ADMISSION IN RUIA AND PODAR COLLEGES. THE SAME HAS NOT BEEN ENTERED IN THE BOOKS OF ACCOUNTS AND N O RECEIPTS HAVE ISSUED FOR THE SAME AND THE SAME IS THEREFORE UNACCOUNTED. OUT OF THIS ONLY RS.12 730/- IS ACCOUNTED FOR IN THE CASH BOOK OF TDM LABORATORY .' THUS DURING THE COURSE OF THE SEARCH SHRI ANANT MATE VERY CLEARLY ADMITTED THAT THE CASH FOUND BELONGED TO THE APPELLA NT WHO WAS BEING REFERRED TO AS SPM AND WAS OUT OF THE DONATION RECEIP TS FOR ADMISSION. IN HIS SUBSEQUENT COMMUNICATION HOWEVER SHRI ANANT MATE RETRACTED AND CLAIMED THAT OUT OF RS. 12 LACS RS. 8 LACS BELONGED TO HIM. DURING THE COURSE OF THE PROCEEDINGS BEFORE VARIOUS I.T. AUTHORITIES THE SAME CLAIM HAS BEEN REITERATED. HOWEVER I FIND IT DIFFICULT TO ACCEPT THIS CLAIM IN VIEW OF THE SPECIFIC ADMISSION OF SHRI MATE IN HIS SWORN STATEMENT RE CORDED AT THE TIME OF SEARCH. MR. MATE HAD GIVEN THE EARLIER STATEMENT D URING THE COURSE OF SEARCH FULLY VOLUNTARILY AND WITHOUT ANY PRESSURE. MOR EOVER BEING THE VICE CHAIRMAN OF SHIKSHANA PRASARAKA MANDALI HE CANNOT BE EXPECTED TO MAKE A FALSE STATEMENT ON OATH. MORE IMPORTANTLY ON FILIN G THE STATEMENT OF RETRACTION MR. MATE WAS AGAIN EXAMINED. DURING THIS EXAMINATION MR. MATE COULD NOT EXPLAIN THE SOURCE OF THE AMOUNT OF R S. 8 LACS CLAIMED AS BELONGING TO HIM. IN THIS CONNECTION REPRODUCE BELO W THE RELEVANT QUESTION AND ANSWER FROM HIS STATEMENT RECORDED BY ADIT (LNV) ON 13/09/2008. 'Q 28 IN YOUR REPLY TO SHOW CAUSE NOTICE DTD 02.09.2008 Y OU HAVE WRITTEN THAT CASH OF RS.8 LAKHS BELONGS TO YOU. PLEASE EXPL AIN THE SOURCE THEREOF? ANS: I CANNOT GIVE THE ANSWER IT IS WORTHWHILE TO MENTION THAT THERE WAS A GAP OF A LMOST TWO MONTHS BETWEEN THE STATEMENT U/S. 132(4) RECORDED ON 21.7.2008 AND THE SUBSEQUENT STATEMENT DATED 13.09.2008. EVEN AFTER HAVI NG SUBSTANTIAL TIME AT HIS DISPOSAL MR. MATE COULD NOT IDENTIFY THE SOURCE OF THE CASH BELONGING TO HIM. ALL THESE FACTS SEEN TOGETHER CLEARLY INDICAT E THAT THE SUBSEQUENT CLAIM OF MR. MATE THAT A PART OF THE CASH BELONGED T O HIM IS AN INCREDIBLE AFTERTHOUGHT AS AGAINST THE TRUTH ASSERTED BY HIM IN A STATEMENT MADE VOLUNTARILY IN THE COURSE OF SEARCH. 12.5.4. AS ALREADY MENTIONED THERE WAS A SEARCH AT TH E PREMISES OF THE SOCIETY AT THERAPEUTIC DRUG MONITORING LABORATORY 1 94 SCHEME NO.6 ROAD NO.15 SIAN KOLIWADA SIAN EAST MURNBAI-22 ON 21/07/2008. DURING THE COURSE OF THE SEARCH A WRITING PAD CONTAINING PA GE NO. 1 TO 19 MARKED AS ANNEXURE A3 WAS SEIZED FROM THIS PREMISE OF THE APPE LLANT. NOTED IN THIS WRITING PAD WERE VARIOUS NAMES AGAINST WHICH CER TAIN PERCENTAGES AND SOME OTHER FIGURES WERE WRITTEN. IN HIS STATEMENT R ECORDED U/S. 132(4) DURING THE COURSE OF THE SEARCH ON 21/07/2008 SHRI ANANT NILKANT 48 ITA NOS.1127 TO 1133/PN/2011 MATE VICE CHAIRMAN OF THE ASSESSEE SOCIETY STATED THAT THE NAMES NOTED IN THE WRITING PAD WERE THOSE OF THE STUDENTS/PARENTS WHO HAD VISITED HIM FOR ADMISSION TO THE INSTITUTES RUN BY THE SOCIETY NAMEL Y RUIA COLLEGE PODDAR COLLEGE AND WELINGKAR INSTITUTE. THE PERCENTA GE NOTED AGAINST THE NAMES INDICATED THE PERCENTAGE OF MARKS AND THE OTHER FIGURE INDICATED THE DONATION AMOUNT TO BE PAID BY THEM FOR GETTING THE ADMISSION. THE RELEVANT QUESTION AND ANSWER 14 & 15 ARE REPRODUCED B ELOW: 'Q.14 I AM SHOWING ANNEXURE A-3 CONTAINING P AGE NO.1 TO 19 (WRITTEN PAGES). PLEASE EXPLAIN THE SAME. A N S. TH I S NO T E BOO K CO N T AININ G W RITT EN P AGES 1 TO 19 CO N TA IN S L IST OF STUDENTS/PARENTS W H O H AVE V I SITE D M E FOR ADMISSION. THE AMOUNT WRITTEN AGAINST THEIR NAMES IS IN R U P EES L AK H S FOR EXAMPLE ON PAGE NO.2 ENTRY 1 IE SETHIS SHRUTI AMOUNT IS R S. 1 . 5 L A KH S TH AT AP P EA R S AS 1 . 5. SIMILAR L Y AT PAGE NO.9 EN T RY NO.13 B E L O NGS TO THAKK A R UNN A TI AN AM OUN T OF R S. 1.5 L ACS H AS BEE N RECEIVED FROM H I M AS D O N A TION T OWA R DS AD MI SSION IN P ODAR CO LL EGE. THA T IS R EFLECTED AS 1 . 5 A S PAG E NO . 9 O F A NN EXURE A - 3. THUS THE AMOUNT OF DO N AT I ON RECEIVED/ T O BE R ECEIVED IS W R IT T E N A G AINS T EACH AND EVE R Y ENT R Y IN AN N EX U R E A - 3. Q.15 HOW DO YOU DECIDE THE AMOUNT OF DONATION TO B E RECEIVED FROM DIFFERENT STUDENTS AS MENTIONED IN PAGE NO.1 TO 19 OF ANNEXURE A-3? ANS. WE DECIDE THE AMOUNT OF DONATION TO BE RECEIV ED FROM DIFFERENT STUDENT BASED ON THE FOLLOWING FACTORS: I THE PERCENTAGE OF MARKS OBTAINED BY THE STUDENTS . II THE CAPACITY OF THE PARENTS TO PAY FOR EXAMPLE:- AT PAGE NO. 9 OF ANNEXURE A-3 SHAIKH JANON SECURED 60% THEREFORE DONATION OF RS.3 LACS WAS ASKED WHERE AS PER ENTRY NO.II KANAKIYA VIDDHI HAS SECURED 81% THEREFORE DONATION OF RS. 1.5 LACS WAS ASKED.' THERE WAS THUS A CLEAR ADMISSION BY SHRI ANANT NILKAN T MATE THAT THE SOCIETY WAS COLLECTING DONATION FOR GIVING ADMISSION TO THE STUDENTS. AS MENTIONED IN THE ORDER DATED 17.09.2010 PASSED BY CIT (C) PUNE WITHDRAWING REGISTRATION U/S. 12A OF THE TRUST AS PER THE ENTRIES IN THE SEIZED DOCUMENTS THE TOTAL DONATION COLLECTED / TO BE COLLECTED DURING A SHORT PERIOD IN F.Y. 2008-09 CAME TO A HUGE SUM OF RS. 296 LAC. 12.5.5 THE COLLECTION OF DONATION BY THE ASSESSEE SOCIET Y FOR GRANTING ADMISSION WAS FURTHER CONFIRMED BY THE STATEMENT OF A N UMBER OF PARENTS RECORDED BY THE ADIT(LNV) 5(1) MUMBAI AS PER DETAIL S GIVEN BELOW:- NAME OF THE PERSON WHOSE STATEMENT U/S.131 RECORDED AMOUNT OF DONATION NAME OF STUDENT WHO SOUGHT ADMISSION REMARKS 1 SHRI PRAMOD N. KARLEKAR RS.5 LACS SHRI MACLAR FOR ADMISSION IN 11 TH STANDARD IN RUIA COLLEGE NO RECEIPT 2 SMT. LEENA S. DHARNE RS.4.25 LACS SHRI ADITYA FOR ADMISSION IN 11 TH STANDARD IN RUIA COLLEGE NO RECEIPT 3 SHRI TAPASKUMAR CHOUDHARY RS.65 000/ - SHRI SUVRADIP TAPAS CHOUDHARY FOR ADMISSION IN F.Y. BSC (COMPUTER) NO RECEIPT 49 ITA NOS.1127 TO 1133/PN/2011 4 SHRI ASHOK C. THAKKAR RS.1.50 LACS MISS UNNATI THAKKAR FOR ADMISSION IN F.Y.J.C. (COMMERCE) IN PODAR COLLEGE NO RECEIPT 5 SHRI VIJAY A. THAKKAR RS.1 5LAC MISS TWINKLE V. THAKKAR FOR ADMISSION IN F.Y.J.C. (COMMERCE) IN PODAR COLLEGE NO RECEIPT 6 MRS. ZENOBIA VIRAF MOTIWALA RS. 1 LAC MISS. KARISHMA V. MOTIWALA FOR ADMISSION IN 11 TH STANDARD IN PODAR COLLEGE NO RECEIPT 7 SHRI SUNIL SETHI RS.1.5 LAC MISS. SHRUTI S. SETHI FOR ADMISSION IN 11 TH STANDARD AT PODAR COLLEGE NO RECEIPT 8 SHRI Z. RAHIMAN I. PARKAR RS.50 000/ - MR. MANIC R. PARKAR FOR ADMISSION IN 11 TH STANDARD IN RUIA COLLEGE NO RECEIPT 9 MR. DINESH C. DHAMANI RS.70 000/ - SHRI SUNNY D. DHAMANI FOR ADMISSION IN 11 TH STANDARD (COMMERCE) IN PODAR COLLEGE NO RECEIPT 12.5.6 IN THEIR STATEMENTS THE PARENTS NOT ONLY CONFI RMED THE PAYMENT OF DONATION TO THE ASSESSEE SOCIETY BUT THEY ALSO CATEGORICA LLY STATED THAT THE DONATIONS WERE DEMANDED FOR ADMITTING STUDENTS TO THE INSTITUTES RUN BY THE SOCIETY AND WERE GIVEN ONLY FOR THE PURPOSE OF OB TAINING THE ADMISSIONS. THE ASSESSEE HAS MADE AN ATTEMPT TO MAKE OUT T HAT THESE DONATIONS HAD NOTHING TO DO WITH THE ADMISSIONS AND TH EY WERE PURELY VOLUNTARY DONATIONS. HOWEVER IN THEIR STATEMENTS SEVER AL PARENTS HAVE CATEGORICALLY STATED THAT THE DONATIONS WERE PAID FO R PROCURING ADMISSION. THIS CLEARLY PROVES THAT THE PRACTICE OF GIVING ADMISSI ON AGAINST PAYMENT OF DONATION IS BEING THE COLOUR OF VOLUNTARY DONATION B Y WAY OF AN AFTERTHOUGHT WHICH IS NOT BELIEVABLE. 12.5.7 AS ALREADY STATED AN ATTEMPT HAS BEEN MADE TO DELINK THE DONATIONS FROM ADMISSIONS. HOWEVER THE BELOW MENTIONED QUESTIONS AND ANSWERS FROM THE STATEMENT OF SHRI ANANT MATE DATED. 13/09/2008 (I.E. AFTER ALMOST 2 MONTHS OF THE SEARCH) MAKE IT VERY CLEAR THAT THE T RUE STATE OF AFFAIRS IS WHAT SHRI ANANT MATE HAD STATED ON THE DATE OF THE SE ARCH. Q.23. AS PER THE REPLY TO Q.4 TO Q. 12 OF YOUR STATEMENT DTD 11.09.2008 AND AS PER THE REPLY OF Q.3 TO Q.12 OF Y OUR STATEMENT DTD 13.09.2008 YOU HAVE ADMITTED THAT DIFFERENT PERSON S MENTIONED IN PAGE NO .. I TO 19 OF YOUR NOTE PAD (ANNEXURE A-3) APPROACHED YOU FOR ADMISSION IN RUIA/PODAR COLLEGE. YOU HAVE FURTHER A DMITTED THAT YOU ASKED THEM ABOUT THE PAYMENT OF DONATION TO BE RECE IVED FROM THEM BY SP MANDALI. FURTHER IN REPLY TO Q.22 ABOVE YOU H AVE STATED THAT THERE ARE HARDLY ONE OR TWO PERSONS WHO APPROACHED FOR DONATION TO SP MANDALI WHILE YOUR VISITS AT TDM THE DETAILS WHE REOFYOU ARE NOT ABLE TO SUBMIT. IN THE BACKGROUND OF THESE FACTS PL EASE EXPLAIN AS TO WHETHER THE DONATIONS TO BE RECEIVED BY SP MANDALI FROM DIFFERENT PARENTS/STUDENTS AS PER YOUR NOTE PAD (ANNEXURE A-3 ) ARE FOR GETTING ADMISSION IN RUIA/PODAR COLLEGE. ANS: I CANNOT ANSWER RIGHT NOW. Q. 24 LAM SHOWING YOU STATEMENTS OF SHRI BIPIN MAGANLAL S HETH PRAMOD N. KORLEAR LEENA S. DHORNE CAPT. RAHUL R. BHIVUADKAR SHRI TAPASKUMAR CHOUDHURI VIJAY A THAKKAR ZENOBIA V. M OTIVALA VEEPIN S. THOKAL SUNIL SETHI Z. RAHIMAN IBRAHIM PARKAR DINESH C. DHAMANI 50 ITA NOS.1127 TO 1133/PN/2011 RELEVANT EXTRACTS THEREOF HAVE ALREADY BEEN INCORPO RATED IN THE SHOW CAUSE NOTICE ISSUED TO YOU ON 02.09.2008 AS WELL AS TO PRINCIPAL TRUSTEE SPM ON THE SAME DATE. FROM THESE STATEMENTS IT IS QUITE CLEAR THAT SP MANDALI DOES NOT GIVE ADMISSIONS FROM MANA GEMENT QUOTA WITHOUT DONATION AND SP MANDALI IS AN INSTITUTION P RIMARILY ENGAGED IN PROFITABLE ACTIVITIES. FURTHER THE CONDITIONS ME NTIONED U/S. 11 TO 12AA FOR GETTING EXEMPTION FROM INCOME TAX HAS ALSO BEEN VIOLATED. FURTHER YOU YOURSELF ACCEPTED IN YOUR STATEMENT DTD 21.07.2008 THAT SP MANDALI HAS RECEIVED DONATIONS FOR ADMISSION IN RUIA AND PODAR COLLEGES IN CASH AS WELL AS THROUGH DD. PLEASE EXP LAIN? ANS: I CANNOT TELL YOU ANYTHING RIGHT NOW. Q.25 PLEASE EXPLAIN HOW THE DONATIONS RECEIVED FRO M DIFFERENT PERSONS IN ANNEXURE A-3 HAVE BEEN ENTERED INTO THE BOOKS OF ACCOUNT OF SP MANDALI? ANS: I AM NOT ABLE TO EXPLAIN Q. 26 IN YOUR REPLY TO SHOW CAUSE NOTICE DTD 02.09.2008 Y OU HAVE STATED THAT DONATIONS RECEIVED ARE VOLUNTARY AND YO U HAVE ALSO DENIED THE CLAIMS MADE BY DIFFERENT PARENTS WHOSE STATEMEN TS HAVE BEEN RECORDED IN THIS OFFICE. FURTHER YOU HAVE STATED TH AT ALL THE DD/ CHEQUES OF DONATIONS ARE PROPERLY DEPOSITED IN THE BOOKS OF SP MANDALI. FURTHER YOU HAVE NEGATIVE (SIC) THE STATEM ENT OF MR. SHAH INVOLVING IN DONATION OF RS.4 LAKHS. ALL THESE STAT EMENTS ARE QUITE CONTRARY TO YOUR STATEMENT DTD 21.07.2008 WHEREIN Y OU HAVE ACCEPTED IN CLEAR CUT TERMS THAT SP MANDALI IS GIVI NG ADMISSIONS OUT OF MANAGEMENT QUOTA IN RUIA AND PODAR COLLEGES FOR DONATIONS. FURTHER YOUR STATEMENT REGARDING DONATION RECEIVED FROM MR. TAPAS CHOUDHURI THAKKAR MOTIVALA HAVE BEEN CONFIRMED BY THEM AND THEY HAVE ACCEPTED THAT DONATIONS HAVE BEEN GIVEN FOR AD MISSIONS ONLY. MOREOVER YOU HAVE NOT BEEN ABLE TO PRODUCE ANY BOO KS OF ACCOUNTS SHOWING THE DEPOSIT OF ABOVE MENTIONED DONATIONS. P LEASE EXPLAIN. ANS: I CANNOT EXPLAIN RIGHT NOW. THE ACCOUNTANT OF SPM IS ON LEAVE AND I CANNOT VERIFY THE ENTRY IN THE BOOKS OF ACCOU NTS RIGHT NOW. 12.5.8 IN ITS WRITTEN SUBMISSIONS THE APPELLANT HAS CONTENDED T HAT EVEN IF SHRI ANANT MATE HAS BEEN ENGAGED IN SUCH ACTIVITIES T HE SOCIETY CANNOT BE FAULTED FOR THE SAME. THIS ISSUE HAS BEEN DEALT WITH IN EARLIER PARA. IT MAY BE ADDED THAT THE SOCIETY FUNCTIONS ONLY THROUGH ITS O FFICE BEARERS. SHRI ANANT MATE WAS THE VICE CHAIRMAN OF THE MANAGING COU NCIL OF THE APPELLANT SOCIETY AND WAS ACTING ON BEHALF OF THE SOCI ETY WHILE ADMITTING STUDENTS TO THE VARIOUS INSTITUTES RUN BY THE SOCIETY. ST ATEMENT OF SHRI MATE DURING THE COURSE OF SEARCH MAKES THIS AMPLY CLEAR. TH E APPELLANT SOCIETY CANNOT THEREFORE WASH ITS HANDS OFF ITS RESPONSIBILITY F OR ACTIONS OF SHRI ANANT MATE. 12.5.9 THE APPELLANT HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THE RETRACTION OF THE STATEMENTS GIVEN BY THE PARENTS OF T HE STUDENTS ADMITTING PAYMENT OF DONATION FOR ADMISSION. UNDER THE CIRCUMSTA NCES THE STATEMENT OF THE APPELLANT THAT PARENTS OF THE STUDENT S WHO ADMITTED PAYMENT OF DONATION FOR ADMISSION IN THEIR STATEMENT SU BSEQUENTLY RETRACTED THEIR STATEMENT IS NOT VERIFIABLE. 51 ITA NOS.1127 TO 1133/PN/2011 THE APPELLANT HAS ALSO NOT BROUGHT ON RECORD EVIDENC E TO SHOW THAT ORIGINAL STATEMENTS GIVEN BY THESE PARENTS WERE UNDER D URESS OR UNDER COERCION OR UNDER PRESSURE. UNDER THE CIRCUMSTANCES TH E PLEA RELATING TO THE RETRACTION OF THE STATEMENT BY THE PARENTS OF THE STUDENTS CANNOT BE ENTERTAINED. 12.5.10 THE APPELLANT HAS NOT BROUGHT ON RECORD ANYT HING TO REBUT THE STATEMENT OF THE AO THAT IT HAD NOT IDENTIFIED THE ST UDENTS WHOSE NAMES APPEAR IN THE DIARY SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AND WHO HAD NOT TAKEN ADMISSION. UNDER THE CIRCUMSTANCES THE PLEA OF THE APPELLANT THAT QUESTION OF DONATION FROM THE STUDENTS WHO DID NOT TAKE ADMISSION CANNOT BE ACCEPTED. 12.5.11 A SUBSEQUENT SEARCH TOOK PLACE IN THE CASE OF S HRI MATE AND OTHER TRUSTEES ON 20/11/2010. IT IS UNDERSTOOD THAT THE PROCEEDINGS SUBSEQUENT TO THE SEARCH AND SEIZURE ACTION HAVE NOT BEEN FINALI ZED AS YET. UNDER THE CIRCUMSTANCES THE STATEMENT OF THE APPELLANT THAT 'NO EVIDENCE HAVE BEEN FOUND RELATING TO THE TRUST THAT THE TRUST IS EARNING UNACCOUNTED INCOME' IS NOT CORRECT. EVEN OTHERWISE RESULT OF SUBSEQUENT SEARCH AND SEIZURE ACTION CANNOT NULLIFY THE RESULT OF EARLIER SEARCH AND SEIZUR E ACTION. 12.5.12 IN VIEW OF THE DISCUSSION ABOVE IN PARA 12 TO 12.5.11 THE GROUND OF APPEAL RELATING TO ADDITION OF RS.2 99 35 000/- ON ACCOUNT OF DONATION IS DISMISSED. 89. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 90. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE HAS DECIDED THE A PPEAL FILED AGAINST THE ORDER U/S.12AA(3) OF THE ACT VIDE ORDER DATED 27-03-2014 WHEREIN IT HAS SET ASIDE THE ORDER PASSED BY THE CIT C ENTRAL PUNE CANCELLING THE REGISTRATION GRANTED U/S.12A OF THE I.T. A CT 1961. HE SUBMITTED THAT THE ISSUE OF DONATION OF RS.2.99 CRORES WA S TAKEN FOR DISCUSSION BY THE TRIBUNAL AND IN ITS ORDER THE CHART OF ADMITTED DONATIONS BY 9 STUDENTS WAS REPRODUCED. HE SUBMITTED THAT AT THE TIME OF HEARING IT WAS EXPLAINED TO THE BENCH THAT NO DON ATION REMAINED UNACCOUNTED. AFTER CONSIDERING THE DETAILED SUBM ISSION ALONG WITH BOOKS OF ACCOUNT THE TRIBUNAL WAS SATISFIED THAT DONATION AGAINST 9 STUDENTS WERE DULY ACCOUNTED. HE SUBMITTED T HAT AFTER 52 ITA NOS.1127 TO 1133/PN/2011 INDEPTH INVESTIGATION FOR TWO YEARS BY THE INVESTIGATION W ING AND ALSO BY THE AO AS WELL AS THE CIT CENTRAL PUNE IT WAS SEEN T HAT 9 STUDENTS OUT OF 121 STUDENTS WHOSE NAMES APPEAR IN THE SEIZED D OCUMENTS CONFIRMED TO HAVE GIVEN DONATION. IN SUCH A SITUATION IF A T ALL THERE IS AN ISSUE FOR MAKING ADDITION ON ACCOUNT OF ALLEGED DONATION THEN THE TOTAL AMOUNT OF DONATION COULD HAVE BEEN RS.16.60 LAKHS AP PEARING AGAINST 9 STUDENTS AND NOT THE DONATIONS OF THE VISITORS WHO DID NOT TAKE THE ADMISSION OR WHO REMAINED UNIDENTIFIED. HE SUBMITTED THAT AT THE VERY OUTSET THE AO/CIT(A) SHOULD HAVE CONSIDERED ON MERIT ADDITION OF RS.16.60 LAKHS IN PLACE OF RS.2.99 CRORES WHEN THE CIT(A) H IMSELF GIVES A CHART OF 9 STUDENTS IN HIS ORDER. 91. SO FAR AS THE AMOUNT OF RS.16.60 LAKHS IS CONCERNED HE SUBMITTED THAT THE ISSUE WAS DULY EXAMINED BY THE COORDINATE B ENCHES OF THE TRIBUNAL AND IT DID NOT DISAGREE WITH THE STAND OF THE ASSESSEE THAT THE DONATION OF RS.16.60 LAKHS IS DULY ACCOUNTED IN T HE BOOKS OF ACCOUNT. HE SUBMITTED THAT IN VIEW OF THE ABOVE THE DON ATION WHICH IS DULY ACCOUNTED CANNOT BE ADDED. OTHERWISE ALSO THERE IS NO FINDING OF FACT IN THE ASSESSMENT ORDER OR APPEAL ORDER THAT THE ASSESSEE TRUST TAKES DONATION OUTSIDE THE BOOKS. THE ADDITION WAS MADE MAINLY ON SUSPICION THAT DONATION MAY NOT BE ENTERED IN THE BOOKS . HE SUBMITTED THAT THE ASSESSEE TRUST IS GETTING EXEMPTION U/S.11 OF THE I.T. ACT AND IT WAS SPENDING MUCH MORE THAN THE REQUIRE D 85% OF ITS INCOME ON THE OBJECTS OF THE TRUST. WHEN THE ASSESSEE TRUST WAS SPENDING 90 TO 95% OF ITS INCOME ON ITS OBJECTS THEN THE RE WAS NO REASON NOT TO CONSIDER ANY INCOME IN THE BOOKS OR THA T THE ASSESSEE HAS TAKEN DONATION OUTSIDE THE BOOKS. HE SUBMITTED THA T ADMITTING WITHOUT ACCEPTING THAT RS.2.99 CRORES DONATION WAS RECEIV ED THEN EVEN 53 ITA NOS.1127 TO 1133/PN/2011 IF SAID AMOUNT IS ADDED TO THE TOTAL INCOME STILL THE EXPEND ITURE IS MORE THAN 85% OF THE GROSS INCOME. 92. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SHR I ANANT MATE IS THE VICE CHAIRMAN OF THE TRUST AND HE IS THE ONLY PER SON SEARCHED. FROM HIS BRIEFCASE SOME HANDWRITTEN NOTES WERE RECOVERE D CONTAINING NAMES OF SOME STUDENTS MARKS AMOUNT ETC. THE TOTAL OF S UCH AMOUNT COMES TO RS.2 99 35 000/-. HE SUBMITTED THAT THE ORDER P ASSED U/S.12AA(3) BY THE CIT CENTRAL IS THE ANNEXURE TO THE AS SESSMENT ORDER AND THE BASIS OF THE ORDER PASSED BY THE AO AS WELL AS THE CIT(A) IS ALSO THE ORDER PASSED BY THE CIT CENTRAL PUNE. REFERRI NG TO PARA 9.10 OF THE ORDER OF THE CIT CENTRAL PUNE HE SUBMITTED THAT THE CIT HAS GIVEN A FINDING THAT THE ACTIVITIES OF THE TRUST ARE NO T GENUINE. REFERRING TO THE ORDER OF THE TRIBUNAL HE SUBMITTED THAT THE TRIBUNAL HAS CONSIDERED THE ORDER OF THE CIT. HE SUBMITTED THA T THE DONATION COLLECTED OR TO BE COLLECTED ARE IN RESPECT OF RUIA/PODDAR COLLEGES. EVEN THE SEIZED DOCUMENTS RELATE TO THE ABOVE 2 COLLEGE S ONLY UNDER THE MANAGEMENT QUOTA. HE SUBMITTED THAT AFTER THOROUGH EN QUIRY BY THE INVESTIGATION WING AND ALSO BY THE AO AND THE CIT CENTR AL PUNE IT WAS ONLY 9 STUDENTS OUT OF 121 STUDENTS WHO CONFIRMED TO H AVE PAID DONATION FOR ADMISSION WHICH AMOUNTED TO RS.16 60 000/-. HE SUBMITTED THAT THE ENTIRE DONATION IS ACCOUNTED FOR IN TH E BOOKS OF ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE FILED THE FOLLOWING CHART : TOTAL DONATION RECEIVED RS.5 26 74 852 CORPUS DONATION OUT OF ABOVE RS.3 10 84 351 DONATION CREDITED TO INCOME & EXPENDITURE ACCOUNT RS.2 15 90 501 (INCLUDES ANONYMOUS DONATION OF RS.24 30 000) IN RETURN OF INCOME RS.23 30 000 OFFERED FOR TAXATIO N AS PER THE PROVISION OF 115BBC AS ANONYMOUS DONATION AND TAX IS PAID ON THI S AMOUNT OF THE ABOVE DONATION TOTAL CASH DONATION RECEIVED I S RS.58 69 501 54 ITA NOS.1127 TO 1133/PN/2011 OUT OF THE LIST OF 9 PARTIES TOTAL DONATION RECEIVED RS.16.60 LACS DONATION RECEIVED BY BANK CHEQ/DD RS.10.75 LACS (65%) DONATION RECEIVED BY CASH RS.5.85 LACS CASH DONATION IS RECORDED IN BOOKS AS FOLLOWS : DATE AMOUNT IN RS. 01/08/2008 45 000 04/08/2008 1 80 000 05/08/2008 1 85 000 11/08/2008 1 50 000 11/08/2008 25 000 5 85 000 93. REFERRING TO THE ABOVE HE SUBMITTED THAT AN AMOUNT OF RS.3 10 84 351/- IS EXEMPT U/S.11(1)(D) WHICH HAS BEEN DIRECTLY TAKEN TO THE BALANCE SHEET. OUT OF THE AMOUNT OF RS.24 30 000/- OF ANONYMOUS DONATION AFTER CLAIMING THE BASIC EXEMPTION OF RS.1 LAKH AN AMOUNT OF RS.23 30 000/- HAS BEEN OFFERED FOR TAXATION. SO FAR AS THE AMOUNT OF RS.16 60 000/- RECEIVED FROM THE 9 STUDENTS IS C ONCERNED AN AMOUNT OF RS.10.75 LAKHS HAS BEEN RECEIVED BY CHEQUE/DRA FT AND AMOUNT OF RS.5.85 LAKHS ONLY HAS BEEN RECEIVED IN CASH. H E SUBMITTED THAT THE CASH DONATION HAS BEEN RECORDED IN THE BOOK S AS PER THE DATES MENTIONED IN THE ABOVE CHART. 94. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEARCH TOOK PLACE ON 21-07-2008. THE ADMISSION PROCESS ENDS BY JULY IN THE STATE OF MAHARASHTRA. FURTHER THE ADMISSION BY GOVERNMENT OF MAHARASHTRA ARE UNDER CAP. HE SUBMITTED THAT THE ASS ESSEE TRUST HAS MANAGEMENT QUOTA OF 5% OF THE TOTAL SEATS. ALL THE RECO RDS WERE PRODUCED BEFORE THE AUTHORITIES AND THE INVESTIGATION WIN G CONDUCTED THOROUGH INVESTIGATION SUMMONED THE STUDENTS AND OR TH EIR PARENTS AND COULD IDENTIFY ONLY 9 STUDENTS WHO HAVE GIVEN DONAT ION. THE TRUST 55 ITA NOS.1127 TO 1133/PN/2011 HAS GIVEN ALL THE APPLICATION FORMS AND THE ENTIRE ADMISSION REGISTER INCLUDING THE MANAGEMENT QUOTA LIST TO THE OFFICERS OF THE D EPARTMENT. ONLY 9 OUT OF 121 STUDENTS WERE IDENTIFIED WHO HAD GIVEN DONATION. HE SUBMITTED THAT THE CIT CENTRAL DOES NOT SAY THAT ANY OF THE DONATION HAS NOT BEEN ACCOUNTED FOR. REFERRING TO THE ORDER OF T HE TRIBUNAL A COPY OF WHICH IS PLACED AT PAGES 81 TO 102 OF THE PAPER BOOK HE SUBMITTED THAT THE TRIBUNAL HAS THOROUGHLY CONSIDERED TH E ENTIRE ISSUE AND HAS HELD THAT CIT CENTRAL WAS NOT JUSTIFIED IN CANCELLIN G THE REGISTRATION GRANTED U/S.12A OF THE ACT. IT HAS BEEN HE LD BY THE TRIBUNAL THAT THE FINDING GIVEN BY THE CIT CENTRAL THAT THE ASSESSEE WAS COLLECTING HUGE DONATION FOR ADMISSION OF STUDENTS TO VARIO US INSTITUTES RUN BY IT IN VIOLATION OF PROVISIONS OF MAHARASHTRA EDUCATION AL INSTITUTES (PROHIBITION OF CAPITAL FEE) ACT 1987 FOR WHICH THE ACTIVITIES OF THE TRUST ARE ILLEGAL AND THEREFORE THE ACTIVITIES ARE NO T GENUINE IS NOT CORRECT. THE TRIBUNAL HAS ALSO HELD THAT THE CONCLUSION O F THE CIT CENTRAL THAT THE INSTITUTES ARE BEING RUN ON COMMERCIAL LINE S WITH PROFIT MOTIVE DUE TO SURPLUS CREATED YEAR AFTER YEAR IS ALSO NOT CORRECT . 95. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE REPORTED IN 131 ITR 195 AND THE DECISION O F CIT VS. P.V. KALYANASUNDARAM REPORTED IN 294 ITR 49 HE SUBMITTED T HAT THE BURDEN OF PROOF IS ON THE DEPARTMENT. HE ACCORDINGLY SU BMITTED THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(A) SHOULD BE DELETED. 96. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THER E WERE NO RECEIPTS FOR THE DONATION FROM THE 9 STUDENTS. THERE WA S NO CLAIM BEFORE ANY OF THE AUTHORITY THAT A PART OF THE DONATION WAS RECEIVED BY 56 ITA NOS.1127 TO 1133/PN/2011 CHEQUE OUT OF THE 9 STUDENTS. ONLY BEFORE THE TRIBUNAL THE ASSESSEE TOOK THIS STAND FOR THE FIRST TIME THAT A PART OF THE AMO UNT WAS RECEIVED BY CHEQUE. HE SUBMITTED THAT AN AMOUNT OF RS.24 30 000/- IS ANONYMOUS DONATION OUT OF WHICH THE ASSESSEE HAS OFFERED AN AMOUNT OF RS.23 30 000/- FOR TAXATION AS PER THE PROVISIONS OF SECT ION 115BC. EVEN WHEN THE STATEMENT OF SHRI ANANT MATE WAS RECORD ED AGAIN ON 13-09-2008 SHRI ANANT MATE COULD NOT PRODUCE ANY EVID ENCE. HE SUBMITTED THAT IF WHAT THE LD. COUNSEL FOR THE ASSESSEE I S TELLING IS CORRECT THEN THERE WAS NO NECESSITY FOR PAYING TAX ON ANONYMOUS DONATION. IT IS ALSO NOT KNOWN AS TO WHETHER THE RECEIP TS ARE GIVEN SUBSEQUENTLY AFTER THE CHEQUES WERE DEPOSITED IN BANK. HE SUBMITTED THAT THERE ARE ENOUGH EVIDENCE TO SHOW THAT THE DONA TIONS ARE GIVEN FOR GETTING ADMISSION. THEREFORE THE ADDITION MADE BY THE AO AND UPHELD BY THE CIT(A) SHOULD BE SUSTAINED. 97. REFERRING TO THE DECISION OF HONBLE JHARKHAND HIGH COUR T IN THE CASE OF MAHABIR PRASAD RUNGTA VS. CIT REPORTED IN 266 C TR 175 HE SUBMITTED THAT WHERE THE ASSESSEE HAS NOT ADDUCED AN Y REBUTTAL EVIDENCE TO SHOW THAT ENTRIES MADE IN THE DIARY/LOOSE SH EETS RECOVERED DURING SEARCH ARE NOT INCOME IN HANDS OF THE ASSESSEE A DDITION HAS TO BE UPHELD. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ONE-UP SHARES AND STOCK BROKERS PVT. LTD. VS. CIT REPORTED IN 262 ITR 275 HE SUBMITTED THAT STATEMENT GIVEN BY AS SESSEE HAS AN EVIDENTIARY VALUE AND WEIGHTAGE WAS REQUIRED TO BE GIVEN TO SUCH STATEMENT AND THEREFORE COURT SHOULD NOT INTERFERE WITH THE MATTER OF TRANSFER OF SUCH CASE UNDER ARTICLE 226. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KESRI K. DEBOO VS. ACIT REPORTED IN 313 ITR 186 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT THE CIRCULAR ISSUED BY TH E CBDT IS 57 ITA NOS.1127 TO 1133/PN/2011 PRIMARILY AN ADVICE GIVEN WHERE IT WAS ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIK ELY TO BE DISCLOSED BEFORE THE DEPARTMENT. THIS IS PRIMARILY THE MAT TER OF APPRECIATION OF FACTS AND WOULD DEPEND ON THE FACTS AND E VIDENCE ON RECORD IN A GIVEN CASE. WHERE THE TRIBUNAL HAD AFFIRMED TH E FINDING OF THE AO IN MAKING ADDITION BY RELYING ON STATEMENT RECORD ED U/S.132(4) EVEN THOUGH SUCH STATEMENT WAS SUBSEQUENTLY RETRACT ED ADDITION WAS UPHELD SINCE FINDING HAS BEEN GIVEN BY THE AO AND THE TRIB UNAL THAT THE ASSESSEE HAD UNACCOUNTED INCOME OF RS.35 LAKHS AND THE SEARCH AND SEIZURE OPERATION CONDUCTED IN THE PREMISES OF THE PERSONS WHO ARE CLOSELY RELATED TO THE ASSESSEE IN THE BUSINESS REV EALED TRANSACTIONS RELATING TO UNDISCLOSED INCOME. REFERRING TO THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. A.M. FAZIL REPORTE D IN 252 CTR 397 HE SUBMITTED THAT EVIDENCE OBTAINED FROM ASSESSEE IN THE COURSE OF SEARCH CAN BE COMBINED WITH OTHER RELATABLE EVIDENCE COLLE CTED OTHERWISE BY THE AO. IT WAS HELD THAT CONFIRMATION STATE MENT OF ASSESSEE IS NOT REQUIRED TO ASSESS UNDISCLOSED INCOME. I T CAN BE ASSESSED BASED ON EVIDENCE GATHERED DURING THE COURSE OF SEARCH. HE ALSO RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBU NAL IN THE CASE OF VIDYAVARDHINI VS. ACIT REPORTED IN 51 SOT 17. 98. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER SUBM ITTED THAT FULL DETAILS WERE GIVEN BEFORE THE LOWER AUTHORITIES REGARDING THE DETAILS OF DONATIONS RECEIVED IN CASH/CHEQUE. SO FAR AS THE VARIO US DECISIONS RELIED ON BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE CON CERNED HE SUBMITTED THAT THOSE DECISIONS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE SUBMITTED THAT TH E TRIBUNAL HAS ALREADY SET ASIDE THE ORDER OF THE CIT CENTRAL CANCELLING THE REGISTRATION 58 ITA NOS.1127 TO 1133/PN/2011 GRANTED EARLIER U/S.12A OF THE I.T. ACT. SINCE THE ASSESS EE HAS ACCOUNTED FOR ALL THE DONATIONS RECEIVED THEREFORE THERE IS NO QUESTION OF MAKING ANY ADDITION. HE ACCORDINGLY SUBMITTED THAT TH E ORDER OF THE CIT(A) BE SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE BE ALLOWED. 99. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE AO ON THE BASIS OF THE SEIZE D DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND THE ORDER OF THE CIT CENTRAL PUNE CANCELLING REGISTRATION GRANTED EARLIER U/S.12A WHEREIN HE HAS DISCUSSED IN DETAIL REGARDING THE DONATIONS RECEIVED BY TH E ASSESSEE TRUST FOR GIVING ADMISSION TO VARIOUS COURSES MADE ADDITION OF RS.2 99 35 000/- TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION OF THE AO AND THE REASONS GI VEN BY THE LD.CIT(A) HAS ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ENTIRE ADDITION MADE WAS ON THE BASIS OF THE ORDER OF THE CIT C ENTRAL CANCELLING THE REGISTRATION GRANTED U/S.12A. ACCORDING TO HIM EVEN AFTER INDEPTH INVESTIGATION FOR TWO YEARS BY THE INVESTIG ATION WING AND ALSO BY THE AO AS WELL AS THE CIT CENTRAL PUNE THE REVE NUE COULD GATHER EVIDENCE FROM 9 STUDENTS GIVING DONATION AMOUNTING TO RS.16.60 LAKHS FOR GETTING ADMISSION OUT OF 121 STUDENTS WH OSE NAMES WERE FOUND IN THE SEIZED DOCUMENTS. IT IS ALSO HIS SUBMIS SION THAT THE AMOUNT OF RS.16.60 LAKHS RECEIVED AS DONATION FROM 9 STUDE NTS WAS ALREADY EXAMINED BY THE TRIBUNAL WHILE DECIDING THE ISSUE OF CANCELLATION OF REGISTRATION U/S.12AA(3) BY THE CIT CENTRAL A ND THE TRIBUNAL IN AN ELABORATE ORDER HAS ALREADY SET ASIDE THE ORDER OF THE CIT CENTRAL CANCELLING THE REGISTRATION. IT IS ALSO HIS ALT ERNATE 59 ITA NOS.1127 TO 1133/PN/2011 CONTENTION THAT ADDITION IF ANY CAN BE MADE ONLY TO THE EXTENT OF RS.16.60 LAKHS BEING THE AMOUNT OF DONATION RECEIVED FRO M THE 9 STUDENTS AND NOT OF RS.2 99 35 000/-. 100. WE FIND SOME FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NOS. 1348 & 1349/PN/2010 ORDER DATED 27-03-201 4 FOR A.YRS. 2010-11 AND 2011-12 WHILE DECIDING THE ISSUE OF CANCELLATIO N OF REGISTRATION U/S.12A HAS CONCLUDED AS UNDER : 8.10 IN VIEW OF THE ABOVE CITED DECISIONS WE HOLD T HAT THE FINDING GIVEN BY THE LD.CIT THAT THE ASSESSEE WAS COLLECTING HUGE DONA TION FOR ADMISSION OF STUDENTS TO VARIOUS INSTITUTES RUN BY IT IN VIOLATIO N OF PROVISIONS OF MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF C APITATION FEE) ACT 1987 FOR WHICH THE ACTIVITIES OF THE ASSESSEE TRUST ARE I LLEGAL AND THEREFORE THE ACTIVITIES ARE NOT GENUINE IS NOT CORRECT. FURTH ER THE CONCLUSION OF THE LD. CIT THAT THE INSTITUTES ARE BEING RUN ON COMMERCI AL LINES WITH PROFIT MOTIVE DUE TO THE SUBSTANTIAL SURPLUS CREATED YEAR AFTE R YEAR IS ALSO NOT CORRECT SINCE THE ASSESSEE HAS ACCUMULATED ITS SURPLUS WHICH IS WITHIN THE PERMISSIBLE LIMIT OF 15% U/S.11 AND 12. 8.11 SO FAR AS THE 2 DECISIONS RELIED ON BY LD.CIT ARE CONCERNED WE FIND THE LD. COUNSEL FOR THE ASSESSEE HAS DISTINGUISHED THE SAME . WE FULLY AGREE WITH HIS ARGUMENTS. IN ANY CASE SINCE 2 VIEWS ARE POSSIBL E ON THIS ISSUE THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE ADOPTED IN VIE W OF THE SETTLED PROPOSITION OF LAW. IN THIS VIEW OF THE MATTER WE H OLD THAT THE LD. CIT IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION U/S.12A O F THE I.T. ACT 1961. WE ACCORDINGLY SET-ASIDE THE ORDER OF THE LD.CIT AND DIR ECT HIM TO GRANT REGISTRATION U/S.12A OF THE INCOME TAX ACT. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCO RDINGLY ALLOWED. 101. FROM THE ABOVE IT IS SEEN THAT THE ORDER OF THE CI T CENTRAL HOLDING THAT ASSESSEE WAS COLLECTING HUGE DONATION FOR ADM ISSION OF STUDENTS TO VARIOUS INSTITUTES RUN BY IT IN VIOLATION OF PRO VISION OF MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITAT ION FEES) ACT 1987 FOR WHICH THE ACTIVITIES OF THE ASSESSEE TRUST ARE ILLEGAL AND THEREFORE ARE NOT GENUINE HAS BEEN HELD TO BE INCORREC T. FURTHER THE TRIBUNAL HAS ALSO HELD AS NOT CORRECT THE CONCLUSION OF TH E CIT CENTRAL 60 ITA NOS.1127 TO 1133/PN/2011 THAT THE INSTITUTES BEING RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE DUE TO SUBSTANTIAL SURPLUS CREATED YEAR AFTER YEAR. SINCE TH E AO AS WELL AS THE CIT(A) HAVE BASICALLY BASED THEIR FINDINGS ON THE BASIS OF THE ORDER OF THE CIT CENTRAL AND SINCE THE ORDER OF THE CIT CENTR AL HAS ALREADY BEEN SET ASIDE BY THE TRIBUNAL THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) WAS NOT CORRECT IN BRINGING TO TAX THE WHOLE AMOUNT OF RS.2 99 35 000/- ESPECIALLY WHERE THE REVENUE HA D FOUND EVIDENCE REGARDING DONATION RECEIVED FROM 9 STUDENTS TOT ALING TO RS.16 60 000/- ONLY. 102. THE ASSESSEE DURING THE COURSE OF HEARING BEFORE U S HAD FILED A CHART SHOWING THE DETAILS OF THE AMOUNT RECEIVED FROM THE SAID 9 STUDENTS WHICH IS PLACED ON RECORD. THE CASE OF THE AS SESSEE BEFORE US WAS THAT EXCEPT FOR THE SAID EVIDENCE OF HAVING RECEIVED THE DONATION FROM 9 STUDENTS ON ACCOUNT OF MANAGEMENT QUOTA NO OTH ER AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE FOR GIVING ADMISSION T O THE STUDENTS. HE STRESSED THAT THE WORKING OF THE FIGURE OF RS.2.99 CROR ES IS WITHOUT ANY BASIS. THE NEXT PLEA RAISED BY THE LD. AUTHORISED RE PRESENTATIVE WAS THAT OUT OF SUM OF RS.16 60 000/- SUM OF RS.5 85 000/- W AS RECEIVED IN CASH AND THE SAME HAS BEEN SHOWN AS ANONY MOUS DONATION AND HAVE ALREADY BEEN TAXED IN THE HANDS OF THE ASSESS EE. HOWEVER WE FIND FORCE IN THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESE NTATIVE THAT IF THE ASSESSEE WAS AWARE OF THE NAMES OF THE STUDENTS WHO HAD GIVEN DONATION FOR ADMISSION THERE WAS NO NECESSITY ON THE PAR T OF THE ASSESSEE TO SHOW THE CASH DONATION OF RS.5 85 000/- AS A NONYMOUS DONATION. WITH REGARD TO BALANCE SUM OF RS.10 75 000/- THE ASSESSEE THOUGH BEFORE US CLAIMS THAT IT WAS RECEIVED IN CHEQUE B UT NO SUCH DETAILS WERE FILED EITHER DURING THE COURSE OF SEARCH OR AT THE TIME OF ASSESSMENT PROCEEDINGS. BEFORE US HE TRIED TO EXPLAIN BY WAY OF CERT AIN 61 ITA NOS.1127 TO 1133/PN/2011 RECEIPTS WHICH ARE NEW EVIDENCE AND HAVE NOT BEEN VERIF IED BY ANY AUTHORITY. THE VERACITY AND AUTHENTICITY OF THE SAID REC EIPTS ARE DOUBTFUL AND THE SAME CANNOT BE ACCEPTED AT FACE VALUE. ONCE THE REVENUE HAS CARRIED OUT THE VERIFICATION AND FOUND THE AS SESSEE TO HAVE RECEIVED DONATION FROM 9 STUDENTS FOR GIVING ADMISSION WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT THEN THE SAME IS TO B E ADDED IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND BY THE ASSESSEE IS ACCO RDINGLY PARTLY ALLOWED. 103. IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE AR E PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 19-10-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 19 TH OCTOBER 2016. LRH'K ' (*+ + / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) - THE CIT(A)-CENTRAL PUNE 4. % S / THE CIT-CENTRAL PUNE 5. ( ++ IQ.KS / DR ITAT A PUNE; 6. 0 / GUARD FILE. / BY ORDER ( + //TRUE COPY// 23 + / SR. PRIVATE SECRETARY IQ.KS / ITAT PUNE