Vaishnavi Educational Society,, Hyderabad v. Dy.CIT, Central Circle,, Tirupathi

ITA 1180/HYD/2014 | 2008-2009
Pronouncement Date: 07-11-2014 | Result: Allowed

Appeal Details

RSA Number 118022514 RSA 2014
Assessee PAN AAATV9994Q
Bench Hyderabad
Appeal Number ITA 1180/HYD/2014
Duration Of Justice 4 month(s) 25 day(s)
Appellant Vaishnavi Educational Society,, Hyderabad
Respondent Dy.CIT, Central Circle,, Tirupathi
Appeal Type Income Tax Appeal
Pronouncement Date 07-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 07-11-2014
Assessment Year 2008-2009
Appeal Filed On 12-06-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER I.T.A. NO. 1179/HYD/2014 A.Y. 2007-08 I.T.A. NO. 1180/HYD/2014 A.Y. 2008-09 I.T.A. NO. 1181/HYD/2014 A.Y. 2009-10 M/S. VAISHNAVI EDUCATIONAL SOCIETY TIRUPATI RURAL PAN: AAATV9994Q VS. THE DEPUTY CIT CENTRAL CIRCLE TIRUPATI APPELLANT RESPONDENT APPELLANT BY: SRI K.A. SAI PRASAD RESPONDENT BY: SRI RAJAT MITRA DATE OF HEARING: 21.10.2014 DATE OF PRONOUNCEMENT: 07.11.2014 O R D E R PER ASHA VIJAYARAGHAVAN JM: THE ABOVE THREE APPEALS BY THE ASSESSEE ARE DIRECT ED AGAINST COMMON ORDER OF THE CIT(A) GUNTUR DATED 24 .2.2014 FOR ASSESSMENT YEARS 2007-08 2008-09 AND 2009-10. SINC E THE ISSUES INVOLVED ARE COMMON THESE APPEALS ARE CLUBBE D TOGETHER HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO. 1179/HYD/2014 A.Y. 2007-08 2. THE ONLY ISSUE IN THIS YEAR IS THAT THE LEARNED CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 12 50 0 00 AS ANONYMOUS DONATIONS ATTRACTING THE PROVISIONS OF SE CTION 115BBC OF INCOME-TAX ACT 1961. I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 2 3. FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACT ION AT THE RESIDENCE OF DR. K. RAMACHANDRA ON 12.2.2009. DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS BELONGING TO TH E ASSESSEE- SOCIETY WERE SEIZED. SUBSEQUENTLY NOTICES U/S. 15 3C WERE ISSUED TO THE ASSESSEE WHO FILED ITS RETURNS OF INC OME FOR A.YS. 2007-08 AND 2008-09 ON 1.10.2010 ADMITTING NIL INCO ME FOR BOTH THE ASSESSMENT YEARS AND FOR A.Y. 2009-10 THE ASSESSEE ADMITTED LOSS OF RS. 1 73 054. 4. ASSESSMENT ORDER U/S. 143(3) R.W.S. 153C WAS PASSED ON 24.12.2010 ADDING AN AMOUNT OF RS. 12 50 000 BEING ANONYMOUS DONATIONS U/S. 115BBC OF INCOME-TAX ACT 1961 FOR A.Y. 2007-08. 5. THE ASSESSEE SOCIETY WAS FORMED ON 30.1.2006. DURI NG THE YEAR RELEVANT TO THE A.Y. 2007-08 THE ASSESSEE AOP STARTED CONSTRUCTION OF A COLLEGE. IT WAS NOTICED FROM THE RECEIPTS & PAYMENTS A/C. THAT THE SOCIETY WAS IN RECEIPT OF UN SECURED LOANS LOAN ON FDR AND ALSO CORPUS DONATIONS OF RS. 12 50 000. THE ENTIRE AMOUNT RECEIVED UNDER THESE HEADS WAS IN VESTED IN FDS AND CONSTRUCTION OF THE BUILDING. DURING THE A SSESSMENT PROCEEDINGS IT WAS NOTICED THAT 43 PERSONS HAVE CO NTRIBUTED AMOUNTS RANGING FROM RS. 23 000 TO RS. 25 000 WHIC H TOTALLED TO RS. 12 50 000. THE SOCIETY CLAIMED THAT SINCE T HEY HAVE FILED THE NAMES AND ADDRESSES OF THE DONORS THE CORPUS D ONATION SHALL NOT BE ADDED U/S 115BBC OF THE IT ACT. THE A O POINTED OUT THAT THE ASSESSEE AOP APPLIED FOR REGISTRATION U/S. 12A AFTER THE SEARCH AND SEIZURE ACTION TOOK PLACE AND FURTHE R IT WAS ALSO NOT CLEAR AS TO WHY THESE PERSONS GAVE THE ALLEGED DONATION TO THE SOCIETY. THE CLAIM OF THE ASSESSEE WAS REJECTE D ON THE FOLLOWING GROUNDS: I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 3 1) IT HAS NOT COMMENCED ITS ACTIVITY OF IMPARTING EDUCATION. 2) NO REASON WAS OFFERED BY THE SOCIETY REGARDING THE ALLEGED DONATION RECEIVED FROM VARIOUS PERSONS. 3) IN GENERAL DONATION MAY BE GIVEN AT THE TIME OF ADMISSION. 4) IN THE PRESENT CASE THE ADMISSION PROCESS HAD NOT YET STARTED. 5) FURTHER NO DONOR HAS GIVEN ANY CONFIRMATION LETTER FOR THE SAID DONATION. 6. HENCE THE ASSESSING OFFICER TREATED THE ENTIRE COR PUS DONATION OF RS. 12 50 000 AS ANONYMOUS DONATIONS U/ S 115BBC OF THE IT ACT AND ADDED BACK TO THE RETURNED INCOME. DURING APPELLATE PROCEEDINGS IT HAD BEEN SUBMITTED BY THE ASSESSEE SOCIETY THAT THE ADDITION U/S. 115BBC IS U NWARRANTED AND UNJUSTIFIED SINCE NAMES OF DONORS ALONG WITH TH EIR ADDRESSES WERE RECORDED BY THE ASSESSEE SOCIETY WH ICH WERE PRODUCED BEFORE THE ASSESSING OFFICER. HENCE THE S OCIETY HAD FULFILLED THE REQUIREMENTS LAID DOWN U/S. 115BBC AN D THUS THE DONATIONS CANNOT BE REFERRED TO AS ANONYMOUS. THE SOCIETY HAS ALSO PLACED RELIANCE ON THE DECISION OF ITAT DELHI BENCH IN THE CASE OF HANS RAJ SAMARAK SOCIETY (133 ITD 530). TH E ASSESSEE SOCIETY HAS STATED THAT THE REGULAR BOOKS OF ACCOUN TS CONTAIN ALL DETAILS OF DONATIONS AND THESE WERE PRODUCED BEFORE THE ASSESSING OFFICER. MOREOVER THE DETAILS OF DONORS OFFICE COPIES OF THE RECEIPTS AS WELL AS CONFIRMATION LETTERS FRO M THE DONORS WERE SUBMITTED BEFORE THE INVESTIGATION WING DURING POST SEARCH INVESTIGATIONS. HENCE IT WAS SUBMITTED THAT THE DON ATIONS ARE NOT ANONYMOUS AND SECTION 115BBC SHOULD NOT BE APPL IED. 7. DURING THE APPELLATE PROCEEDINGS THE CIT(A) REFERR ED TO THE PROVISIONS OF S. 115BBC(1) WHICH STATES THAT 'WHERE THE TOTAL INCOME OF AN ASSESSEE BEING A PERSON IN RECEIPT OF INCOME ON I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 4 BEHALF OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTI TUTION OR ANY HOSPITAL OR OTHER INSTITUTION INCLUDES ANY INCOME B Y WAY OF ANY ANONYMOUS DONATION. THE INCOME TAX PAYABLE SHALL BE AGGREGATE OF THE AMOUNT OF INCOME TAX CALCULATED AT THE RATE OF THIRTY PER CENT ON THE AGGREGATE OF ANONYMOUS DONATIONS RECEIV ED IN EXCESS OF THE HIGHER OF THE FOLLOWING NAMELY (A) FIVE PER CENT OF THE TOTAL DONATIONS RECEIVED BY THE ASSESSEE: OR (B) ONE LAKH RUPEES'. HE HELD THAT THIS SECTION HAS BEEN BROUGHT INTO THE ST ATUTE BOOK BY THE FINANCE ACT 2006 WITH A VIEW TO PREVENT CHANNE LIZATION OF UNACCOUNTED MONEY TO TRUSTS AND OTHER INSTITUTIONS BY WAY OF ANONYMOUS DONATIONS. HENCE THE TERM ANONYMOUS HAS TO BE READ IN A MANNER SO AS TO INCLUDE UNACCOUNTED MONEY . HE OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT M ERE SUBMISSION OF NAMES AND ADDRESSES OF ALLEGED DONORS IS ENOUGH TO SATISFY THE REQUIREMENT OF SECTION 115BBC IS MIS PLACED AND MISLEADING AND THE PURPOSE BEHIND THE SECTION IS TO PREVENT UNACCOUNTED MONEY BEING INTRODUCED IN THE BOOKS OF TRUSTS AS TAX EXEMPT DONATIONS. HENCE HE CONCLUDED THAT THE PRINCIPLES APPLIED IN THE CASE OF UNEXPLAINED CASH CREDITS SHA LL ALSO APPLY IN THE CASE OF ANONYMOUS DONATIONS U/S. 115BBC. THE CIT(A) POINTED OUT THAT THE BURDEN OF PROOF ON THE ASSESSE E SOCIETY DOES NOT SHIFT MERELY BY SUBMISSION OF THE NAMES AN D ADDRESSES OF THE DONORS BUT THE RECIPIENT SOCIETY SHOULD ALSO BE IN A POSITION TO IDENTIFY THE DONOR AND ESTABLISH HIS C APACITY TO GIVE A DONATION OF THE AMOUNT MENTIONED AGAINST HIS NAME . IT WAS SATED BY THE CIT(A) THAT THE ASSESSEE SOCIETY DID N OT MAINTAIN ANY RECORDS OF THE DONATIONS MADE AT THE TIME OF S EARCH AT THE RESIDENCE OF DR. K. RAMACHANDRA FOUNDER SECRETARY OF THE SOCIETY AND THE SUBMISSIONS REGARDING NAMES AND AD DRESSES OF DONORS WAS GIVEN SUBSEQUENT TO THE SEARCH AND SEIZ URE ACTION DURING THE COURSE OF POST SEARCH ENQUIRIES CARRIED OUT BY THE INVESTIGATION WING. THE CIT(A) OBSERVED THAT AT THE TIME OF I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 5 SEARCH THERE WAS NO RECORD AVAILABLE REGARDING ANY OF THE DONORS AND HENCE IT CANNOT BE HELD THAT THE ASSESSE E HAD MAINTAINED A COMPLETE RECORD OF THE DONORS REFLECTE D IN ITS BOOKS OF ACCOUNTS. 8. THE CIT(A) OBSERVED THAT AT THE TIME OF SEARCH AT T HE PREMISES OF DR. K. RAMACHANDRA THE ASSESSEE SOCIET Y HAD NOT EVEN MAINTAINED ITS BOOKS OF ACCOUNTS. HE OBSERVED THAT THE IMPUGNED DONATIONS ARE ALL IN THE REGION OF RS. 23 000 TO RS. 25 000 AND HAVE BEEN ALLEGEDLY RECEIVED FROM 43 PER SONS AND ANY PERSON CAN BE PUT UP AS A DONOR AND IT SHALL BE IMPOSSIBLE TO HOLD THAT HE DID NOT HAVE AMOUNTS IN THE REGION OF RS. 23 000 TO RS. 25 000 AVAILABLE WITH HIM FOR DONATION. THE CIT(A) WAS OF THE VIEW THAT THE REQUIREMENT IS THAT A COMPLETE RE CORD OF THE DONOR INCLUDING HIS NAME AND ADDRESS SHOULD BE AVA ILABLE CONTEMPORANEOUSLY WITH THE RECEIPT OF THE DONATION. THE CIT(A) OBSERVED THAT IN THE PRESENT CASE IF SUCH A RECORD OF THE ACTUAL DONORS WAS AVAILABLE AT THE TIME OF SEARCH IT COUL D FOR ARGUMENTS SAKE BE CONSIDERED THAT THE ASSESSEE SOC IETY HAS MAINTAINED A RECORD OF DONORS. HOWEVER IN THE CAS E OF THE ASSESSEE SOCIETY THIS DID NOT HAPPEN AND IF THE SO CIETY IS ALLOWED TO PREPARE A LIST OF DONORS ON A SUBSEQUENT DATE IT SHALL DEFEAT THE VERY PURPOSE OF SECTION 115BBC SINCE ANY SOCIETY IN THAT CASE CAN INTRODUCE A LARGE BODY OF INDIVIDUALS AS DONORS EACH CONTRIBUTING A SMALL AMOUNT IN CASH. HE WAS O F THE OPINION THAT IT IS IN THIS ASPECT THAT THE ASSESSEE SOCIETY'S CASE DIFFERS FROM THE HANS RAJ SAMARAK SOCIETY CASE RELI ED UPON BY THE ASSESSEE AND DISCUSSED ELSEWHERE IN HIS ORDER. 9. THE CIT(A) HELD THAT IT CANNOT BE SAID THAT THE SO CIETY HAS BEEN ABLE TO ESTABLISH THE IDENTITY AND THE CAPACIT Y OF THE DONORS AND DISCHARGED THE BURDEN OF PROOF VESTED UP ON IT BY THE I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 6 PROVISIONS OF SECTION 115BBC. ACCORDINGLY HE SUST AINED THE ADDITION OF RS. 12 50 000 MADE BY THE ASSESSING OFF ICER AND DISMISSED THE APPEAL OF THE ASSESSEE FOR A.Y. 2007- 08. 10. THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. THE LEARNED AR REITERATED THE ARGUMENTS ASSESSEE MADE B EFORE THE REVENUE AUTHORITIES. 11. THE LEARNED DR RELIED ON THE ORDERS OF THE ASSESSIN G OFFICER AND THE CIT(A). 12. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE NAMES OF THE DONORS ALONG WITH THEIR ADDRESSES WERE FURNISHED BEFORE THE INVESTIGATION W ING OF THE DEPARTMENT AND WERE ALSO RECORDED IN THE BOOKS PROD UCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. HENCE S UCH DONATIONS CANNOT BE CLASSIFIED AS 'ANONYMOUS DONATI ONS' AS PER THE PROVISIONS OF SECTION 115BBC(3) OF THE ACT. SE CTION 115BBC(3) IS AS UNDER: 115BBC. (1) ... (2) (3) FOR THE PURPOSES OF THIS SECTION 'ANONYMOUS DONATION' MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB-CLAUSE (IIA) OF CLAUSE (24) OF SECTION 2 WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NA ME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED.] 13. HENCE WE ARE OF THE OPINION THAT THE ONLY REQUIREM ENT U/S. 115BBC(3) IS THAT THE NAMES AND ADDRESSES OF T HE DONORS ARE TO BE RECORDED. THE LEARNED CIT(A) HAS WRONGLY APPLIED THE PROVISIONS OF SECTION 68 IN THE CASE OF THE ASSESSE E BY STATING THAT THE RECIPIENT SOCIETY SHOULD ALSO BE IN A POSI TION TO IDENTITY THE DONORS AND ESTABLISH THE CAPACITY TO GIVE A DON ATION OF THE I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 7 AMOUNT MENTIONED AGAINST THEIR NAMES. IN THIS CONT EXT RELIANCE IS PLACED ON THE DECISION OF THE DELHI BEN CH OF THIS TRIBUNAL IN THE CASE OF HANSRAJ SAMARAK SOCIETY (13 3 ITD 530) WHEREIN HT HAS BEEN HELD AS UNDER: ' ... 4.4 SUB-SECTION (1) OF THE AFORESAID PROVISIO N PROVIDES THAT WHERE THE INCOME OF AN INSTITUTION ET C. REFERRED TO IN SECTION 11 INCLUDES INCOME BY WAY OF ANONYMOUS DONATION THE INCOME-TAX PAYABLE BY IT SHALL BE AGGREGATE OF - (I) 30% OF THE ANONYMOUS DONATION AND(II) THE INCOME-TAX PAYABLE ON THE TOTA L INCOME AS REDUCED BY ANONYMOUS DONATION. SUB SECTION (2) EXCLUDES WHOLLY RELIGIOUS INSTITUTIONS FROM THE PURVIEW OF THE AFORESAID PROVISION. IT FURTHER EXCLUDES WHOLLY RELIGIOUS AND CHARITABLE INSTITUTIO NS FROM THE PURVIEW OF THE AFORESAID PROVISION IF THE ANONYMOUS DONATION IS MADE WITH THE SPECIFIC DIRECTION THAT SUCH DONATION IS FOR PURPOSES OTHER THAN FOR ANY UNIVERSITY EDUCATIONAL INSTITUTION HOSPITAL OR MEDICAL INSTITUTION. IT IS CLEAR THAT T HIS PROVISION EXCLUDES RELIGIOUS INSTITUTION AND INSTIT UTION WHOSE OBJECTS ARE WHOLLY RELIGIOUS AND CHARITABLE. SUB-SECTION (3) DEFINES THE EXPRESSION ''ANONYMOUS DONATION' IN AN EXHAUSTIVE MANNER TO BE A CASE WHERE THE INSTITUTION ETC. DOES NOT MAINTAIN RECOR D OF IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING THE CONTRIBUTION. NO FURTHER PARTICULARS REMAINED TO BE MAINTAINED HAVE BEEN PRESCRIBED UNDER THIS SUB-SECTION.' 14. RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION SU PRA WE ARE OF THE OPINION THAT THE CIT(A) ERRED IN CONFIRM ING THE ADDITION OF RS. 12 50 000 AS ANONYMOUS DONATIONS AT TRACTING THE PROVISIONS OF S. 115BBC. HENCE THE GROUND TAKE N BY THE ASSESSEE IS ALLOWED. 15. IN THE RESULT APPEAL OF THE ASSESSEE IN 1179/HYD/2 014 FOR A.Y. 2007-08 IS ALLOWED. I.T.A. NO. 1180/HYD/2014 A.Y. 2008-09 16. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 8 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION OF RS. 21 30 000 AS ANONYMOUS DONATIONS ATTRACTING THE PROVISIONS OF SECTION 1115BBC. 2. THE LEARNED FIRST APPELLATE AUTHORITY IN CONFIRMING THE ADDITION OF RS. 21 30 000 FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HIMSELF IN HIS ORDER AT PARA 1 PAGE 2 ADMITTED THAT THE LIST OF PERSONS (DONOR) AND THEIR ADDRESSED WER E FURNISHED BEFORE HIM. 3. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 21 30 000 ON THE GROUND THAT THE RECORD OF DONOR WAS NOT AVAILABLE AT THE TIME OF SEARCH IGNORING T HE VERY FACT THAT ALL THE DETAILS WERE FILED IN THE CO URSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER AS ACKNOWLEDGED IN THE ASSESSMENT ORDER. 4. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE LEGAL POSITION THAT APPELLANT MAINTAINED AND PRODUCED BEFORE THE ASSESSING OFFICER THE RECORD OF IDENTITY INDICATING THE NAME AND ADDRESS OF THE DONOR SUCH DONATIONS CANNOT BE CLASSIFIED AS 'ANONYMOUS DONATION' AS PER THE PROVISIONS OF S. 158BBC(3) OF THE IT ACT. 5. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THAT THE ASSESSING OFFICER IN SPITE OF HAVING ALL THE INFORMATION ON RECORD MADE THE ADDITION WITHOUT BRINGING ON RECORD ANYTHING CONTRADICTING THE SAID DETAILS. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE OF RS. 3 30 000 U/S. 40(A)(IA). 7. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN HOLDING THAT PROVISIONS OF SEC 10(23C) ARE NOT APPLICABLE TO THE FACTS OF THE CASE. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON OF RS. 3 57 569 REPRESENTING CAPITAL EXPENDITURE. I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 9 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS ROT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 18 24 000 MADE AS UNACCOUNTED RECEIPTS. 17. IN THIS YEAR ORDER U/S. 143(3) R.W.S. 153C WAS PASS ED ON 24.12.2010 WITH THE FOLLOWING ADDITIONS: SL. NO. PARTICULARS ADDITION (RS.) 1. ADDITION OF CORPUS DONATION U/S. 115BBC 36 22 50 0 2. DISALLOWANCE OF EXPENDITURE U/S. 40(A)(IA) 3 3 0 000 3. DISALLOWANCE OF CAPITAL EXPENDITURE 3 57 569 4. ADDITION ON ACCOUNT OF SUPPRESSION OF RECEIPTS. 18 24 000 18. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER TH E ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) . 19. THE FIRST ISSUE IS WITH RESPECT TO ADDITION OF RS. 36 22 500 AS ANONYMOUS DONATIONS U/S. 115BBC OF THE ACT. FAC TS OF THE CASE ARE THAT THE ASSESSEE SOCIETY WAS IN RECEIPT O F CORPUS DONATION OF RS. 36 22 500. DURING ASSESSMENT PROCE EDINGS IT WAS NOTICED THAT THAT 85 PERSONS HAVE CONTRIBUTED A MOUNTS RANGING FROM RS. 23 000 TO RS. 25 000 WHICH TOTALLE D TO RS. 21 30 000. THE SOCIETY HAD CLAIMED THAT SINCE THEY HAVE FILED THE NAMES AND ADDRESSES OF THE DONORS THE CORPUS D ONATION SHOULD NOT BE ADDED UNDER SECTION 115BBC OF THE ACT . THE AO POINTED OUT THAT THE ASSESSEE AOP APPLIED FOR REGIS TRATION U/S. 12A AFTER THE SEARCH AND SEIZURE ACTION TOOK PLACE AND FURTHER IT WAS ALSO NOT CLEAR AS TO WHY THOSE PERSONS GAVE THE ALLEGED DONATION TO THE SOCIETY. THE CLAIM OF THE ASSESSEE WAS REJECTED ON THE FOLLOWING GROUNDS: (A) NO REASON WAS OFFERED BY THE SOCIETY REGARDING THE ALLEGED DONATION RECEIVED FROM VARIOUS PERSONS. (B) FURTHER NO DONOR HAS GIVEN ANY CONFIRMATION LE TTER FOR THE SAID DONATION. I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 10 (C) AS PER THE BOOKS OF ACCOUNT AND RECEIPT & PAYME NT ACCOUNT TOTAL CORPUS DONATION RECEIVED WAS RS. 36 22 500 WHEREAS THE SOCIETY HAS FURNISHED THE NAM ES AND ADDRESSES OF 85 PERSONS TOTALLING RS. 21 30 000 ONLY. (D) IT HAS NOT FURNISHED ANY CONFIRMATION LETTERS F ROM THE ALLEGED DONORS AND ALSO THE PURPOSE OF SUCH DON ATION. (E) HENCE THE GENUINENESS OF THE TRANSACTIONS SHAL L NOT BE ACCEPTABLE. 20. HENCE THE ASSESSING OFFICER TREATED THE ENTIRE COR PUS DONATION OF RS. 36 22 500/- AS ANONYMOUS DONATIONS UNDER SECTION 115BBC OF THE ACT AND ADDED THIS AMOUNT BAC K TO THE RETURNED INCOME. 21. DURING THE APPELLATE PROCEEDINGS IT HAS BEEN SUBMI TTED BY THE ASSESSEE SOCIETY AS UNDER: 'THE FIGURE OF RS. 36 22 500 CONSISTED OF THE FOLLO WING THREE DIFFERENT ITEMS: (A) DONATIONS OF RS. 21 30 000 BY 85 PERSONS (B) CORPUS/BUILDING FUND OF RS. 14 82 500 PAID BY 2 28 STUDENTS; AND (C) DONATION OF RS. 10 000 BY DR. B. MANOHARAMMA W/O. SRI K. RAMACHANDER JOINT SECRETARY OF THE ASS ESSEE SOCIETY BY SBI CROSSED CHEQUE NO. 658504. IN REGARD TO ITEM (A) ABOVE I.E. DONATIONS OF RS. 21 30 000 THE DETAILS OF DONATIONS FROM 85 PERSONS WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. A COPY OF THE LIST IS ENCLOSED FOR PERUSAL. IN REGARD TO ITEM (B) I.E. CORPUS/BUILDING FUND OF RS. 14 82 500 THE LIST OF 228 STUDENTS WHO CONTRIBUTE D TO CORPUS/BUILDING FUND AMOUNTING TO RS. 14 82 500 WA S ALSO SUBMITTED TO THE ASSESSING OFFICER. A COPY OF THE LIST IS ENCLOSED FOR PERUSAL. I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 11 IN VIEW OF THE ABOVE THE ADDITION U/S. 115BBC IS UNWARRANTED AND UNJUSTIFIED SINCE NAMES OF DONORS A LONG WITH THEIR ADDRESSES WERE RECORDED BY THE ASSESSEE SOCIETY WHICH WERE PRODUCED BEFORE THE ASSESSING O FFICER. HENCE THE SOCIETY HAD FULFILLED THE REQUIREMENTS L AID DOWN U/S. 115BBC AND THUS THE DONATIONS CANNOT BE REFERRED TO AS ANONYMOUS.' 22. THE SOCIETY HAS ALSO PLACED RELIANCE ON THE DECISIO N OF ITAT DELHI BENCH IN THE CASE OF HANS RAJ SAMARAK S OCIETY (133 ID 530). THE ASSESSEE SOCIETY HAS STATED THAT THE R EGULAR BOOKS OF ACCOUNTS CONTAIN ALL DETAILS OF DONATIONS AND TH ESE WERE PRODUCED BEFORE THE ASSESSING OFFICER. HENCE THE D ONATIONS ARE NOT ANONYMOUS AND SECTION 115BBC SHOULD NOT BE APPL IED. 23. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE HAS FURNISHED A LIST OF 85 PERSONS WHO HAVE MADE DONAT IONS AGGREGATING RS. 21.30 LAKHS. FROM THE SAID LIST IT IS SEEN THAT ALL DONATIONS ARE BETWEEN RS. 21 000 AND RS. 29 000 . THE NAMES OF THE DONORS AND THEIR VILLAGES HAVE BEEN ME NTIONED. THIS RECORD WAS NOT AVAILABLE AT THE TIME OF SEARCH AT THE PREMISES OF DR. K. RAMACHANDRA. HE FURTHER OBSERVE D THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE ALSO NOT AVA ILABLE AT THE TIME OF SEARCH AND THE ENTIRE AMOUNT OF DONATION IS BY CASH. THE CIT(A) STATED THAT AS DISCUSSED WHILE DISPOSING OF APPEAL FOR ASST. YEAR 2007-08 THE PURPOSE BEHIND INTRODUCING SECTION 115BBC WAS TO PREVENT UNACCOUNTED MONEY BEING INTRO DUCED IN THE BOOKS OF TRUST AS TAX EXEMPT DONATIONS AND THE BURDEN OF PROOF IS ON THE ASSESSEE SOCIETY TO NOT ONLY SUBMIT THE NAMES AND ADDRESSES OF THE DONORS BUT TO MAINTAIN SUCH RE CORD SIMULTANEOUS WITH THE RECEIPT OF THE DONATION. ANY SOCIETY CAN ON A SUBSEQUENT DATE DRAW UP A LIST OF A LARGE NUM BER OF INDIVIDUALS SHOWING DONATIONS OF SMALL AMOUNTS IN T HE REGION OF RS. 25 000. THE CIT(A) OPINED THAT IF SUCH SMALL AM OUNTS IN I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 12 CASH ARE NOT READILY AMENABLE TO INVESTIGATION AND IF A SOCIETY IS ALLOWED TO MAKE SUCH POST FACTO SUBMISSIONS IT WOU LD DEFEAT THE VERY PURPOSE OF SECTION 115BBC. IN VIEW OF THE ABOVE DONATIONS AMOUNTING TO RS. 21.30 LAKHS ARE UPHELD B Y THE CIT(A) AS ANONYMOUS DONATIONS AND THE CIT(A) HELD T HAT THE AO'S ACTION IN ADDING THE SAME IS HELD TO BE CORREC T AND IS TO BE SUSTAINED. 24. REGARDING THE BALANCE DONATIONS OF RS. 14 82 500 PA ID BY 228 STUDENTS AND RS. 10 000 PAID BY DR. B. MANOHARA MMA WIFE OF DR. K. RAMACHANDRA BY CHEQUE THE CIT(A) OB SERVED THAT THE ASSESSEE HAS FURNISHED NECESSARY SUPPORTING EVI DENCE. A LIST OF 228 STUDENTS WITH ROLL NUMBER AND DATE OF D EPOSIT HAS BEEN SUBMITTED AS WELL AS THE ENGINEERING BRANCH IN WHICH SUCH STUDENT HAD SOUGHT AND OBTAINED ADMISSION. EA CH STUDENT HAS PAID RS. 6 500/RS. 6 000 AND THE PAYMEN T IS STATED TO BE TOWARDS CORPUS/BUILDING FUND. THE CIT (A) WAS OF THE OPINION THAT THE ASSESSEE'S CONTENTION IS CORRE CT AND THE ABOVE CANNOT BE TREATED AS AN ANONYMOUS DONATION. IN VIEW OF THE SAME HE DELETED THE ADDITION OF RS. 14 92 500 ON ACCOUNT OF ANONYMOUS DONATION U/S. 115BBC. ACCORDINGLY HE AL LOWED GROUND NO. L PARTLY. 25. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US IN R ESPECT OF ADDITION OF RS. 21 30 000. 26. THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE RECORD OF DONORS HAS BEEN ACKNOWLEDGED IN THE ASSESSMENT ORDER ITSELF BY THE ASSESSING OFFICER AN D HENCE SUBMITTED THAT THE CIT(A) IS INCORRECT IN HIS STATE MENT THAT THE RECORD OF DONORS WAS NOT AVAILABLE AT THE TIME OF S EARCH. AS IN THE A.Y. 2007-08 SINCE THE ASSESSEE MAINTAINED AND PRODUCED BEFORE THE ASSESSING OFFICER THE RECORD OF IDENTIT Y INDICATING I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 13 NAMES AND ADDRESSES OF THE DONORS IN OUR OPINION S UCH DONATIONS CANNOT BE CLASSIFIED AS ANONYMOUS DONATIO NS AS PER THE PROVISIONS OF SECTION 115BBC(3) OF THE ACT. TH IS ISSUE IS SIMILAR TO THE ISSUE DECIDED IN THE A.Y. 2007-08 AN D THE SAME CONCLUSION IS TO BE DRAWN IN THIS YEAR ALSO. HENCE GROUND NOS. 1 TO 5 RAISED BY THE ASSESSEE ARE ALLOWED. 27. THE NEXT ISSUE IN GROUND NO. 6 IS WITH REGARD TO CONFIRMATION OF ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE OF RS. 3 30 000 U/S. 40(A)(IA) OF THE A CT AND GROUND NO. 7 STATES THAT THE CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF S. 10(23) ARE NOT APPLICABLE. 28. THE AO POINTED OUT THAT THE ASSESSEE HAD PAID INTER EST AMOUNTING TO RS. 3 30 000 TO ONE MR. P. SRIRAM WITH OUT DEDUCTING TAX. HENCE THE SAME WAS DISALLOWED U/S. 40(A)(IA) OF THE ACT. DURING APPELLATE PROCEEDINGS IT HAS BEEN SUBMITTED BY THE ASSESSEE SOCIETY THAT IT IS A SOCIETY EXEMPT U/ S. 10(23C) AND THEREFORE THE INCOME IS NOT COMPUTED UNDER TH E PROVISIONS OF SECTIONS 30 TO 38 TO ATTRACT THE DISALLOWANCE U/ S 40(A)(IA). THE ASSESSEE HAD CITED THE DECISION OF ITAT MUMBAI BENCHES IN THE CASE OF MAHATMA GANDHI SEVA MANDIR (21 TAXMANN. COM 321) IN SUPPORT OF ITS CONTENTION AND REQUESTED TO DELETE THE ADDITION MADE U/S. 40(A)(IA). 29. THE LEARNED CIT(A) HELD THAT IN THE CASE OF MAHATMA GANDHI SEVA MANDIR THE SAID SOCIETY WAS DULY REGIS TERED U/S. 12A AND HENCE ITS INCOME AND EXPENDITURE WAS TO BE COMPUTED IN TERMS OF SECTION 11 BUT IN THE CASE OF THE ASSES SEE THERE IS NO REGISTRATION WHICH HAS BEEN GRANTED U/S. 12A FO R THE RELEVANT ASSESSMENT YEAR. THE SOCIETY HAS CLAIMED E XEMPTION U/S. 10(23C)(IIIAD) ON THE GROUND THAT IT IS RECEIV ING INCOME BY RUNNING OF AN EDUCATIONAL INSTITUTION AND THAT ITS RECEIPTS ARE I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 14 BELOW THE PRESCRIBED RS. 1 CRORE. THE CIT(A) HELD T HAT AS PER THE PROVISIONS OF SECTION 10(23C) INCOME HAS TO BE COM PUTED ON COMMERCIAL PRINCIPLES BEFORE SUCH INCOME IS GRANTED EXEMPTION. THE CIT(A)OBSERVED THAT THE ASSESSEE SOCIETY HAS RE CEIVED FEES AMOUNTING TO RS. 82 89 000- AS PER ITS OWN BOOKS O F ACCOUNTS. FURTHER DOCUMENTS SEIZED AS ANNEXURE A/RAM/RES/P03 4 SHOW THAT THE ASSESSEE SOCIETY RECEIVED AN ADDITION AL AMOUNT OF RS. 18 24 000 AND THESE RECEIPTS ARE EVIDENCED BY T HE SEIZED RECEIPT BOOKS AND HAVE NOT BEEN SATISFACTORILY EXPL AINED BY THE ASSESSEE SOCIETY. THE CIT(A) CONCLUDED THAT THE TO TAL RECEIPTS IN THE CASE OF THE ASSESSEE HENCE EXCEED THE FIGURE OF RS. L CRORE AND THE SOCIETY IS NOT ENTITLED TO EXEMPTION U/S. 1 0(23C)(IIIAD) FOR THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE SOCI ETY IS RUNNING AN ENGINEERING COLLEGE AND THE INCOME FROM THE SAME HAS TO BE TREATED AS INCOME FROM BUSINESS AND ALL P ROVISIONS APPLICABLE TO BUSINESS INCOME SHALL APPLY IN THE CA SE OF THE ASSESSEE. IN VIEW OF THE SAME HE HELD THAT THE ADD ITION MADE BY THE ASSESSING OFFICER IS CORRECT AND SUSTAINED THE SAME. ACCORDINGLY THE CIT(A) DISMISSED THIS GROUND. AGG RIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 30. WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE TOTAL RECEIPTS REFLECTED IN THE INCOME & EXPENDITURE STAT EMENT AS TUITION FEES WAS RS. 82 89 000. IT WAS HELD BY THE ASSESSING OFFICER THAT DURING THE COURSE OF SEARCH & SEIZURE OPERATIONS CERTAIN RECEIPT BOOKS ARE FOUND AND SEIZED AND PLAC ED IN THE ANNEXURE A/RAM/RES/PO34. ON EXAMINATION OF SEIZED MATERIAL THE RECEIPTS BETWEEN 02.10.2007 AND 20.10. 2007 HAS NOT BEEN ACCOUNTED. THE DETAILS ARE AS UNDER: DATE AMOUNT (RS.) 02.10.2007 86000 03.10.2007 86000 04.10.2007 86000 I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 15 05.10.2007 86000 06.10.2007 86000 06.10.2007 86000 07.10.2007 86000 10.10.2007 86000 11.10.2007 86000 11.10.2007 86000 12.10.2007 86000 12.10.2007 61000 12.10.2007 60000 12.10.2007 70000 13.10.2007 56000 13.10.2007 56000 15.10.2007 25000 17.10.2007 70000 18.10.2007 76000 18.10.2007 86000 24.10.2007 50000 24.10.2007 75000 25.10.2007 72000 26.10.2007 35000 TOTAL 1824000 31. THE ASSESSING OFFICER STATED THAT THE AR OF THE ASS ESSEE SOCIETY HAS APPEARED ON 11.11.2010 AND HE WAS ASKED TO FURNISH THE CLARIFICATION FOR THE ABOVE SAID UNACCO UNTED RECEIPTS. HOWEVER HE HAS NOT FURNISHED ANY EXPLAN ATION FOR THE SAME. ACCORDINGLY THE ENTIRE AMOUNT OF RS. 18 24 000 WAS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE SOCIETY FOR THE A.Y. 2008-09. 32. THE LEARNED COUNSEL FOR THE ASSESSEE SRI SAI PRASAD AT THE TIME OF HEARING SUBMITTED THE STATEMENT OF COR PUS/ BUILDING FUND AND ALSO THE LEDGER ACCOUNT OF THE SO CIETY. HE CONTENDED THAT THE NAMES CONTAINED IN THE SEIZED M ATERIAL A/RAM/RS/P034 DO APPEAR IN THE REGULAR STUDENT LIST AND HENCE THERE IS NO SUPPRESSION OF RECEIPTS. THE SEIZ ED MATERIAL IS A ROUGH BOOK AND THE OFFICIAL RECEIPTS AND LIST WER E ALSO FILED BEFORE ASSESSING OFFICER AND FIRST APPELLATE AUTHOR ITY. COPIES WERE NOW FILED BEFORE HON'BLE INCOME TAX APPELLATE AUTHORITY. IT WAS SUBMITTED THAT THE DIFFERENCE IN THE FEES INDIC ATED IN THE I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 16 SEIZED MATERIAL AND THE ACTUAL FEES ACCOUNTED FOR I S NOTHING BUT THE CONCESSIONAL DISCOUNTS GIVEN AT THE TIME OF ACT UAL FINAL RECEIPT. IT WAS FURTHER SUBMITTED THAT THE ASSESSIN G OFFICER CAN BRING TO TAX ONLY THAT PORTION OF RECEIPTS WHICH AR E INDICATED OVER AND ABOVE THE ACTUAL FEES ACCOUNTED. 33. FURTHER WITH RESPECT OF SECTION 10(23C) IT WAS SU BMITTED THAT THE GROSS RECEIPTS REFERRED TO IN SECTION 10(2 3C) DO NOT INCLUDE EXTRAORDINARY ITEMS AND THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON TWO CASE LAWS (I) DDIT VS. MADAR ASA E BAKHIYATH VS. SALIHATH ARABIC COLLEGE (62 SOT 1) (C HENNAI) AND PARAM HANS SWAMI UMA BHARTI MISSION VS. ACIT (140 I TD 429) (DELHI). IT WAS FURTHER SUBMITTED THAT THE INCOME & EXPENDITURE A/C. SIGNED BY THE CA SHOWS THAT THE GR OSS RECEIPTS ARE LESS THAN RS. 1 CRORE AND HENCE THE EX EMPTION U/S. 10(23C) IS TO BE GRANTED TO THE ASSESSEE. 34. WE FIND THAT WITH RESPECT TO SUPPRESSION OF RECEIPT S THE ASSESSING OFFICER HAS TO THOROUGHLY VERIFY AND EXAM INE AND ARRIVE AT THE AMOUNT OVER AND ABOVE THE ACTUAL FEES ACCOUNTED FOR. FURTHER THE ELIGIBILITY FOR THE ASSESSEE U/S . 10(23C) IS TO BE DETERMINED ONLY AFTER SUCH EXERCISE BY THE ASSESSIN G OFFICER AS IN THIS CASE THE RECEIPTS ARE AT RS. 82 89 000 AND IF THE SUPPRESSION OF THE RECEIPTS WHICH TOTALS TO RS. 18 24 000 IS BEING REDUCED ON VERIFICATION BY THE ASSESSING OFFI CER THEN THE TOTAL RECEIPTS MIGHT FIGURE AT LESS THAN RS. 1 CROR E WHICH WOULD ENTITLE THE ASSESSEE FOR THE BENEFIT OF SECTION 10( 23C). HENCE WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE SAM E AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 35. THEREFORE WITH REFERENCE TO GROUND NO. 6 WE ARE O F THE OPINION THAT IF THE ASSESSEE IS EXEMPTED U/S. 10(23 C) THE INCOME IS NOT COMPUTED UNDER SS. 30 TO 38 IN ORDER TO ATTRACT I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 17 DISALLOWANCE U/S. 40(A)(IA). HENCE THE AO SHALL DE CIDE THIS GROUND AFTER GIVING A FINDING WITH REFERENCE TO EXE MPTION U/S. 10(23C). 36. GROUND NO. 8 IS WITH RESPECT TO CONFIRMATION OF ADD ITION OF RS. 3 57 569 REPRESENTING CAPITAL EXPENDITURE. THE ASSESSEE SUBMITTED THAT EXEMPTION HAS BEEN CLAIMED U/S. 10(2 3C)(IIIAD) WHICH STATES THAT INCOME RECEIVED FROM ANY UNIVERSI TY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSES WILL NOT FORM PART OF THE TOTAL INCOME. WE REMIT T HIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AF TER GIVING A FINDING ABOUT THE ELIGIBILITY OF THE ASSESSEE FOR E XEMPTION U/S. 10(23C) OF THE ACT. 37. IN THE RESULT THE ASSESSEE'S APPEAL IN ITA NO. 118 0/HYD/ 2014 FOR A.Y. 2008-09 IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. I.T.A. NO. 1181/HYD/2014 A.Y. 2009-10 38. THE ONLY ADDITION SUSTAINED BY THE CIT(A) IS WITH R ESPECT TO UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT OF R S. 10 LAKHS. THE ASSESSEE CLAIMED TO HAVE RECEIVED RS. 10 00 000 AS UNSECURED LOAN FROM ONE SRI K. KRISHNAIAH. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED T O FURNISH CONFIRMATION FROM SRI K. KRISHNAIAH ALONG WITH ADD RESS SOURCE AND COPY OF BANK ACCOUNT OF THE CREDITOR. THE ASSES SEE SOCIETY FILED A CONFIRMATION LETTER FROM THE CREDITOR WHO ACCEPTED THE LOAN AND STATED THAT IT WAS OUT OF HIS AGRICULTURAL INCOME. HOWEVER BANK ACCOUNT COPIES PAN ETC. WHICH WERE ASKED FOR BY THE ASSESSING OFFICER WERE NOT FURNISHED. THE A O HELD THAT THE ASSESSEE SOCIETY HAD FAILED TO ESTABLISH THE CR EDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION AND ADDED BACK RS. 10 LAKHS AS UNEXPLAINED CASH CREDIT U/S. 6 8 OF THE ACT. I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 18 THE AO ALSO CITED THE FOLLOWING JUDICIAL PRONOUNCEM ENTS IN SUPPORT OF HIS ACTIONS: (A) SUMATI DAYAL V. CIT 214 ITR 801 (SC) (B) CIT V. DEVI PRASAD VISHWANATH PRASAD 72 ITR 194 (S C) (C) CIT V. M. GANAPATHI MUDALIYAR 53 ITR 623 (SC) 39. DURING APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTE D AS UNDER: ''IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICE R DID NOT EXPRESS ANY DOUBT ABOUT THE CREDIT AFTER FI LING THE CONFIRMATION LETTER BEFORE CONCLUDING THAT THE CONFIRMATION LETTER DID NOT CONTAIN ANY PARTICULARS OF THE SOURCES/BANK ACCOUNT COPIES AND PAN ETC. IN FACT THE AMOUNT OF RS. 10 LAKHS WAS RECEIVED THROUGH CROSSED BANK CHEQUE THIS CAN BE SEEN FROM THE COPY OF THE ASSESSEE'S STATE BANK OF INDIA ACCOUNT WHICH IS AVAILABLE WITH THE LEARNED ASSESSING OFFICER. COPY OF ) THE ACCOUNT IS ENCLOS ED. THE CREDITOR SRI KRISHNAIAH IS ONLY AN AGRICULTURI ST AND NOT AN INCOME TAX ASSESSEE. A FRESH CONFIRMATION LETTER FROM SRI K. KRISHNAIAH IS NOW SUBMITTED SEPARATELY. THIS LETTER EXPLAINS THAT THE AMOUNT IS GIVEN BY ING VYSYA BANK CHEQUE NO. 912427 AND THAT THE SOURCES OF THE AMOUNT WAS OUT OF SAVINGS FROM AGRICULTURAL INCOME AND COMPENSATION RECEIVED FROM GOVERNMENT FOR COMPULSORY ACQUISITION OF AGRICULTURAL LANDS. COPIE S OF THE (I) LAND ACQUISITION DRAFT DECLARATION AND ( II) PATTADAR PASS BOOK ARE ENCLOSED TO THE CONFIRMATION LETTER. IT IS THEREFORE PRAYED THAT THE HON'BLE COMMISSIO NER OF INCOME TAX (APPEALS) BE PLEASED TO ADMIT THE FRESH EVIDENCE IN THE INTERESTS OF JUSTICE AND DIRE CT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITIO N OF RS. 10 LAKHS U/S. 68.' 40. THE CIT(A) HELD THAT THE ASSESSEE SOCIETY HAS CLAIM ED THAT THE CREDITOR HAD AGRICULTURAL INCOME AND HAS FURNIS HED COPIES OF PATTADAR PASS BOOK OF THE SAID CREDITOR WHICH INDI CATE THAT HE HAS APPROXIMATELY 3 ACRES OF LAND. THE CIT(A) OBSER VED THAT THE ASSESSEE SOCIETY HAS CLAIMED THAT THE CREDITOR ALSO RECEIVED I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 19 COMPENSATION FROM GOVERNMENT FOR ACQUISITION OF AGR ICULTURAL LAND. HOWEVER NO EVIDENCE OF SUCH PAYMENT OF COMPE NSATION HAS BEEN FILED. FURTHER THE CIT(A) OBSERVED THAT T HE BANK ACCOUNT PASSBOOK ASKED FOR BY THE A.O. HAS NEITHER BEEN FILED AT THE ASSESSMENT STAGE OR AT THE APPELLATE STAGE AND FROM 3 ACRES OF LAND IT IS DOUBTFUL WHETHER THE CREDITOR COULD HAVE GENERATED AGRICULTURAL INCOME OF THE MAGNITUDE THAT WOULD AL LOW HIM TO MAINTAIN HIS FAMILY AND ALSO GENERATE ENOUGH SURPLU S TO GIVE CREDIT TO THE ASSESSEE SOCIETY. IT WAS FURTHER POIN TED OUT THAT THE CLAIM OF COMPENSATION RECEIVED FROM THE GOVERNMENT CANNOT BE ACCEPTED IN THE ABSENCE OF ANY EVIDENCE LED BY THE ASSESSEE SOCIETY. IN VIEW OF THE SAME THE CIT(A) OBSERVED T HAT THE SOCIETY HAS FAILED TO DISCHARGE THE ONUS OF PROOF IN AS MUC H AS THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE CREDITOR HAVE NOT BEEN ESTABLISHED. ACCORDINGLY TH E CIT(A) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICE R AND THE GROUND TAKEN BY THE ASSESSEE. 41. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE FILED THE CONFIRMATION LETT ER WHICH STATED THAT THE SOURCES OF THE CREDITOR ARE THE COM PENSATION FROM THE ANDHRA PRADESH GOVERNMENT. THE LOWER AUTH ORITIES ARE OF THE OPINION THAT A MAN WITH 3 ACRES OF LAND CANNOT LEND RS. 10 LAKHS. THE LEARNED FIRST APPELLATE AUTHORIT Y IN SPITE OF THE EVIDENCES FILED BEFORE HIM IGNORED THE FACT OF COMPENSATION RECEIVED BY THE SAID CREDITOR. COPIES OF CONFIRMAT ION LETTER LAND ACQUISITION DRAFT ORDER BANK STATEMENT OF THE ASSE SSEE FILED BEFORE THE FIRST APPELLATE AUTHORITY ARE NOW FILED BEFORE US. WE FIND THE ASSESSEE HAS PROVED THE CASH CREDIT WITH S UFFICIENT EVIDENCE. THE ADDITION OF RS. 10 00 000 IS DELETED. THIS ISSUE IS ANSWERED IN FAVOUR OF THE ASSESSEE. I.T .A. NOS. 1179-1181/HYD/2014 M/S. VAISHNAVI EDUCATIONAL SOCIETY ========================== 20 42. IN THE RESULT ASSESSEE'S APPEAL IN ITA NO. 1181/HYD/2014 FOR A.Y. 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER 2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD DATED THE 7 TH NOVEMBER 2014 TPRAO COPY FORWARDED TO: 1. M/S. VAISHNAVI EDUCATIONAL SOCIETY C/O. M/S. CH. P ARTHA - SARATHY & CO. 1-1-298/2/B/3 1 ST FLOOR SOWBHAGYA AVENUE ST. NO. 1 ASHOKNAGAR HYDERABAD-20. 2. THE DEPUTY CIT CENTRAL CIRCLE TIRUPATI. 3. THE CIT(A) GUNTUR. 4. THE CIT (CENTRAL) HYDERABAD. 5. THE DR B BENCH ITAT HYDERABAD