The ACIT, Central Circle, Vijayawada v. M/s Nalanda EAMCET Coaching Centre, Vijayawada

IT(SS)A NOS. 16 TO 19 OF 2006 NALANDA EDUCATIONS GUN TUR & VIJAYAWADA PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER IT(SS)A NO.16/VIZAG/2006 BLOCK PERIOD : 1.4.1995 TO 21.11.2001 ACIT CENTRAL CIRCLE VIJAYAWADA VS. NALANDA EDUCATIONAL INSTITUTIONS GUNTUR (APPELLANT) (RESPONDENT) PAN NO: AAEFN 4803 G IT(SS)A NO.17/VIZAG/2006 BLOCK PERIOD: 1.4.1995 TO 21.11.2001 ACIT CENTRAL CIRCLE VIJAYAWADA VS. NALANDA MAHILA KALASALA VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO: AABFN 7732 K G IT(SS)A NO.18/VIZAG/2006 BLOCK PERIOD: 1.4.1995 TO 21.11.2001 ACIT CENTRAL CIRCLE VIJAYAWADA VS. NALANDA RESIDENTIAL JUNIOR COLLEGE VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO: AAEFN 7733 S IT(SS)A NO.19/VIZAG/2006 BLOCK PERIOD: 1.4.1995 TO 21.11.2001 ACIT CENTRAL CIRCLE VIJAYAWADA VS. NALANDA EAMCET COACHING CENTRE VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO: AABFN 7733 J DEPARTMENT BY: SHRI T.H. LUCAS PETER CIT (DR) ASSESSEE BY: SMT. K. NEERAJA ADVOCATE ORDER PER BENCH: ALL THESE APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE REVENUE AND THEY ARE DIRECTED AGAINST THE ORDERS PASSED BY LEAR NED CIT (A)-I HYDERABAD IN THE RESPECTIVE HANDS OF THE ASSESSEES CITED ABOV E FOR THE BLOCK PERIOD FROM 1.4.1995 TO 21.11.2001. ALL THESE ASSESSEES B ELONG TO SAME GROUP AND THE ISSUES AGITATED IN THESE APPEALS ARE IDENTI CAL IN NATURE. HENCE THESE IT(SS)A NOS. 16 TO 19 OF 2006 NALANDA EDUCATIONS GUN TUR & VIJAYAWADA PAGE 2 OF 6 APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE APPEALS THE REVENUE IS ASSAILING TH E DECISION OF THE LEARNED CIT (A) IN GRANTING PARTIAL RELIEF OUT OF A DDITION MADE TOWARDS SUPPRESSED FEE COLLECTIONS. 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. ALL THESE ASSESSEES ARE RUNNING EDUCATIONAL INSTITUTIONS IMPA RTING EDUCATION IN THE FIELD OF INTERMEDIATE EDUCATION COACHING FOR ENTRAN CE EXAMINATIONS LIKE EAMCET IIT-JEE. THESE INSTITUTIONS OFFER DIFFERENT TYPE OF EDUCATION PROGRAMS LIKE INTERMEDIATE ALONE COACHING FOR ENT RANCE EXAMS INTERMEDIATE AND COACHING FOR ENTRANCE EXAMS ETC. THE FEE STRUCTURE VARIES DEPENDING UPON THE TYPE OF EDUCATION PROGRAM. THES E ASSESSEES ARE HAVING BRANCHES IN MANY PLACES AND THEIR CENTRAL DE PARTMENT DETERMINES THE FEE STRUCTURE FOR VARIOUS EDUCATION PROGRAMS AN D ACCORDINGLY ISSUES CIRCULARS EVERY YEAR. THE DEPARTMENT CARRIED OUT SE ARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE ACT ON 21.11.20 01 IN THE HANDS OF THESE ASSESSEES. DURING THE COURSE OF SEARCH FOLLOW ING DOCUMENTS WERE SEIZED. A) CIRCULARS ISSUED BY THE CENTRAL ADMINISTRATION O F THE GROUP FOR FEE COLLECTION FOR ACADEMIC YEARS 1997-98 2000-01 AND 2001- 02. B) SHEETS OF DAILY COLLECTION OF FEES THE ASSESSING OFFICER COMPARED THE FEE STRUCTURE AS PER CIRCULAR THE DAILY COLLECTION SHEETS AND ACCOUNTS OF THE ASSESSEES AND NOTICED THAT THERE WAS SUPPRESSION OF FEES. THE ASSESSING OFFICER ALSO CO NFRONTED THIS ISSUE WITH SOME OF THE STAFFS AND THEY ALSO CONFIRMED THE FACT OF SUPPRESSION OF FEES. ACCORDINGLY THE ASSESSING OFFICER QUANTIFIED THE SU PPRESSION AT AN AVERAGE RATE OF RS.5 000/- PER STUDENT IN RESPECT OF RESIDE NTIAL (HOSTEL) STUDENTS AND AT RS.2 000/- PER STUDENT IN RESPECT OF DAY SCHOLAR S. ACCORDINGLY THE ASSESSING OFFICER ESTIMATED THE AGGREGATE AMOUNT OF SUPPRESSION OF FEES FOR ALL THE YEARS EXCEPT FOR THE ACADEMIC YEAR REL EVANT TO THE ASSESSMENT YEAR 2001-02 IN THE BLOCK PERIOD. FOR EXTRAPOLATI NG THE SUPPRESSION OF FEES IT(SS)A NOS. 16 TO 19 OF 2006 NALANDA EDUCATIONS GUN TUR & VIJAYAWADA PAGE 3 OF 6 OVER ALL THE YEARS FALLING IN THE BLOCK PERIOD THE ASSESSING OFFICER PLACED RELIANCE ON THE DECISION OF HON'BLE JURISDICTIONAL A.P HIGH COURT IN THE CASE OF RAJNIK & CO.(251 ITR 561). FOR THE ACADEMIC YEA R RELEVANT TO THE ASSESSMENT YEAR 2001-02 THE ASSESSING OFFICER ARRI VED AT THE SUPPRESSION ON THE BASIS OF CIRCULAR DATED 31.5.2000. ACCORDIN GLY THE ASSESSING OFFICER TREATED THE SUPPRESSED FEES QUANTIFIED BY HIM AS TH E UNDISCLOSED INCOME OF THE ASSESSEES. 4. IN THE APPEAL THE LEARNED CIT (A) IT WAS PO INTED OUT THAT THE CIRCULAR DATED 31.5.2000 RELIED ON BY THE ASSESSING OFFICER ACTUALLY RELATES TO LONG TERM COACHING FOR EAMCET-2001 AND IIT-JEE 2001 AND SAID TYPE OF EDUCATION PROGRAM WAS NOT CONDUCTED BY THE FIRST TH REE ASSESSES MENTIONED ABOVE. THE LEARNED CIT(A) ACCEPTED THE S AID EXPLANATIONS AND ACCORDINGLY CALCULATED THE SUPPRESSION OF FEES FOR THE ACADEMIC YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02 ALSO BY ADO PTING THE RATE OF RS.5000/- FOR HOSTEL STUDENTS AND RS.2 000/- FOR DA Y SCHOLARS BY OBSERVING THAT THERE WERE ARITHMETICAL ERRORS IN THE CALCULAT IONS MADE BY THE ASSESSING OFFICER. ACCORDINGLY THE LEARNED CIT(A) REVISED THE AGGREGATE AMOUNT OF SUPPRESSED FEES. 5. THE ADDITIONS MADE BY THE ASSESSING OFFICER THE AMOUNTS REVISED BY THE LEARNED CIT (A) AND THE AMOUNT CONFIRMED BY TH E LEARNED CIT (A) ARE TABULATED BELOW: A.O REVISED BY CIT (A) CONFIRMED BY CIT (A) HOSTEL DAY SCHOLAR TOTAL HOSTEL DAY SCHOLAR TOTAL HOSTEL DAY SCHOLAR NALANDA EDUCATIONAL INSTITUTIONS 80 22 500 20 15 500 100 38 000 64 25 000 14 50 000 78 75 000 62 96 500 - NALANDA MAHILA KALASALA 1 92 53 500 23 72 000 2 16 25 500 1 84 40 000 23 72 000 2 08 12 000 1 80 71 200 - NALANDA RESIDENTIAL JR.COLLEGE 6 05 88 000 1 24 63 000 7 30 51 000 5 41 25 000 1 24 63 000 6 65 88 000 5 30 42 500 - NALANDA EAMCET COACHING CENTRE 1 20 55 000 1 54 48 000 * 2 75 03 000 1 20 55 000 1 38 98 000 2 59 53 000 1 18 13 900 6 72 000 * ( IT IS STATED BY CIT (A) THAT THE ASSESSING OFFICER HAS RECTIFIED THIS FIGURES TO RS.1 38 98 000/-) IT(SS)A NOS. 16 TO 19 OF 2006 NALANDA EDUCATIONS GUN TUR & VIJAYAWADA PAGE 4 OF 6 6. THE LEARNED CIT (A) ACCEPTED THE CONTENTIONS OF THE ASSESSEES THAT THEY WERE GRANTING CONCESSIONS IN FEES FOR MERITORIOUS A ND POOR STUDENTS AND ACCORDINGLY GRANTED RELIEF TOWARDS CONCESSIONS AT A N ESTIMATED RATE OF 2% OF THE FEES PERTAINING TO THE HOSTEL STUDENTS AND C ONFIRMED THE BALANCE AMOUNT. THE LEARNED CIT(A) DELETED THE ADDITIONS P ERTAINING TO SUPPRESSED FEES OF DAY SCHOLARS IN RESPECT OF FIRST THREE ASSESSEES ON THE GROUND THAT THERE IS NO SUCH SUPPRESSION OF FEES IN THEIR CASES. IN RESPECT OF NALANDA EAMCET COACHING CENTRE IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD WRONGLY ADOPTED THE TOTAL NUMBER OF STU DENTS AND ACCORDINGLY THE LEARNED CIT(A) RESTRICTED THE ADDITION TO THE E XTENT OF NUMBER OF STUDENTS AS SUBMITTED BY THE ASSESSEE. THUS THE LE ARNED CIT(A) GRANTED RELIEF PARTIALLY ON THE FOLLOWING LINES: A) REDUCTION IN THE TOTAL AMOUNT OF SUPPRESSED FEES ON ACCOUNT OF ARITHMETICAL ERRORS B) RELIEF OF 2% TOWARDS FEE CONCESSION FOR HOSTEL STUD ENTS. C) DELETION OF ADDITION PERTAINING TO DAY SCHOLARS IN FIRST THREE CASES. D) REDUCTION OF ADDITION PERTAINING TO DAY SCHOLARS IN THE CASE OF NALANDA EAMCET COACHING CENTRE. THE REVENUE IS AGITATING OVER THE ABOVE SAID RELIEF GRANTED BY LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. IN SO FAR AS THE FIRST ISSUE IS CONCERNED IT WAS SU BMITTED THAT THE ASSESSING OFFICER HAD RELIED UPON THE CIRCULAR DATED 31.5.200 0 TO ARRIVE AT THE SUPPRESSED FEES FOR THE ACADEMIC YEAR RELEVANT TO T HE ASSESSMENT YEAR 2001-02 AND THE SAID CIRCULAR IS APPLICABLE ONLY FO R LONG TERM COACHING FOR EAMCET-2001 AND IIT-JEE 2001. ACCORDINGLY IT WAS SUBMITTED THAT THE SAID TYPE OF COACHING WAS CARRIED OUT ONLY IN THE C ASE OF THE ASSESSEE- NALANDA EAMCET COACHING CENTRE AND NOT BY OTHER THR EE ASSESSEES. IT WAS SUBMITTED THAT SEPARATE CIRCULARS HAVE BEEN ISSUED IN RESPECT OF OTHER ASSESSEES. 7.1 WE ALSO NOTICE THAT THE SAID CIRCULAR IS ME ANT FOR ENTRANCE TEST COACHING AND THERE IS NO EVIDENCE TO SHOW THAT THE FIRST THREE ASSESSES IT(SS)A NOS. 16 TO 19 OF 2006 NALANDA EDUCATIONS GUN TUR & VIJAYAWADA PAGE 5 OF 6 HAVE CONDUCTED THE SAID TYPE OF COACHING IN THEIR I NSTITUTIONS. HENCE THE LEARNED CIT(A) HAS ADOPTED THE AMOUNT OF RS.5 000/- FOR HOSTEL STUDENTS AND RS.2 000/- FOR DAY SCHOLARS FOR QUANTIFYING THE SUPPRESSED FEES FOR THE ACADEMIC YEAR RELEVANT TO THE ASSESSMENT YEAR 2 001-02 ALSO. ACCORDING TO THE ASSESSEE THE APPLICABLE CIRCULAR FOR THE AC ADEMIC YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02 IS THE CIRCULAR DATED 1.6.2 000 WHICH IS PLACED IN PAGE NO.28 OF ASSESSEES PAPER BOOK. BOTH THE PART IES AGREED THAT THE ISSUE OF QUANTIFYING THE SUPPRESSED FEES FOR THE ACADEMIC YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02 MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR ARRIVING THE AMOUNT OF SUPPRESSED FEES ON THE BASIS OF APPLICABLE CIRCULAR. ACCORDINGLY WE SET ASIDE T HE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO QUANTIFY THE SUPPRESSED FEES FOR THE ACADEMIC YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02 ON COMPARING THE AP PLICABLE CIRCULAR WITH THE ACCOUNTED FEE. HOWEVER IF THE AMOUNT SO QUANT IFIED BY THE ASSESSING OFFICER FALLS SHORT OF THE AMOUNT QUANTIFIED BY LEA RNED CIT(A) THEN THE AMOUNT QUANTIFIED BY LEARNED CIT(A) SHALL BE RESTOR ED AS THE ASSESSEE IS NOT AGGRIEVED BY THE ORDER OF THE LD CIT (A). 8. THE NEXT ISSUE RELATES TO THE GRANTING OF FE E CONCESSION AT THE ESTIMATED RATE OF 2% ON THE SUPPRESSED FEES FOR HOS TEL STUDENTS. THE CONTENTION OF THE DEPARTMENT IS THE GENUINE DISCOUN TS IF ANY SO OFFERED SHALL NORMALLY BE DEDUCTED FROM THE ACCOUNTED PORTI ON OF THE FEES ONLY. HOWEVER IN OUR VIEW THE CONCESSION IS NORMALLY GI VEN FROM THE TOTAL AMOUNT OF FEES THAT WERE QUOTED TO THE STUDENTS. IT IS THE ASSESSEE WHO IS SEGREGATING THE FEE COLLECTIONS INTO ACCOUNTED AND UNACCOUNTED PORTION. LOOKING FROM THIS PERSPECTIVE THE CONCESSION SHOUL D BE AVAILABLE BOTH FOR ACCOUNTED AND UNACCOUNTED PORTION. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LEARNED CIT(A) ON THIS ISSUE. 9. THE LAST ISSUE RELATES TO THE DELETION OF SU PPRESSED FEE PERTAINING TO THE DAY SCHOLARS. IT WAS NOT DISPUTED THAT ALL THE FOUR ASSESSEES ARE IMPARTING EDUCATION TO DAY SCHOLARS ALSO. WE NOTIC E THAT THE LEARNED CIT(A) HAS DELETED/REDUCED THE IMPUGNED ADDITION ON THE BA SIS OF STATEMENTS IT(SS)A NOS. 16 TO 19 OF 2006 NALANDA EDUCATIONS GUN TUR & VIJAYAWADA PAGE 6 OF 6 RECORDED FROM THE STAFFS. THOUGH THE LEARNED AUTHO RISED REPRESENTATIVE SUBMITS THAT THERE WAS NO SUPPRESSION IN RESPECT OF FEES COLLECTED FROM DAY SCHOLARS IN OUR VIEW THE MATTER REQUIRES EXAMINAT ION BY THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE ORDER OF LE ARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING O FFICER WITH A DIRECTION TO ASCERTAIN THE FEE SUPPRESSION IF ANY BY COMPARING THE CIRCULARS OF RELEVANT YEARS THE BOOKS OF ACCOUNT AND ANY OTHER RECORD AS HE MAY DEEM FIT TO EXAMINE. NEEDLESS TO MENTION THE ASSESSEES SHOULD BE GIVEN NECESSARY OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 4 TH FEBRUARY 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 04-02-2011 COPY TO 1 THE ACIT CENTRAL CIRCLE VIJAYAWADA 2 NALANDA EDUCATIONAL INSTITUTIONS D.NO.40 - 27 - 16 GAYATRI NAGAR PINNAMANENI POLY CLINIC ROAD VIJAYAWADA 520 008 3 4. NALANDA MAH ILA KALASARA (RES.) D.NO.40 - 27 - 16 GAYATRI NAGAR PINNAMANENI POLY CLINIC ROAD VIJAYAWADA 520 008 5 NALANDA RESIDENTIAL JR. COLLEGE D.NO.40 - 27 - 16 GAYATRI NAGAR PINNAMANENI POLY CLINIC ROAD VIJAYAWADA 520 008 6 NALANDA EAMCET COACHING CENTRE D.NO.40 - 2 7 - 16 GAYATRI NAGAR PINNAMANENI POLY CLINIC ROAD VIJAYAWADA 520 008 7 THE CIT (A) I HYDERABAD 8 THE CIT CENTRAL HYDERABAD 9 THE DR ITAT VISAKHAPATNAM. 10 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM