2012 (3) TMI 566

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....ization of education. 3. That the Ld. CIT came to these conclusions without application of mind and solely relying on the conclusions drawn by the ld. Assessing Officer framing the assessment for A.Y.2006-07. 4. That the order passed is against principles of natural justice and no reasonable opportunity was provided to the appellant to explain its case." 2. The assessee is a trust running nine educational institutions under various names catering to different kind of education like Management, Engineering, Medial Sciences, Nursing, Pharmacy, etc. It was granted registration u/s 12AA(2) of the Act by CIT, Panchkula vide his order dated 30th May, 2001 w.e.f. 26th November, 1993. A search was conducted at the official premises of the assessee as well as on the residential premises of its trustees on 7th September, 2005. During the course of search, unexplained assets as well as incriminating documents were seized on the basis of which ld. CIT has drawn a conclusion that the activities of the trust were not being carried out in accordance with the objects for which it was set up. Accordingly, he initiated proceedings u/s 12AA(3) of the Act and issued show cause notice to the a....

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....ation to the assessee. Copy of this order is placed at page 219 of the paper book. He submitted that in the same order ld. CIT has stated as follows:- "2. Satisfied about the genuineness of the Trust and of its present activities, the undersigned is registering the Trust u/s 12AA of the IT Act, 1961 and its registration has been recorded at Sr. No.1/JB/12AA/2008-09 in the Register of Application under Section 12AA maintained in this office. 3. As per provisions contained in 12A(2) of the IT Act, this registration shall have effect from Assessment Year 2008-09 onwards." 4. He further stated that in the impugned order ld. CIT has rejected the registration of the assessee on two grounds: firstly, regarding the payment of salary to the doctors aggregating to a sum of Rs. 45,66,372/-. He submitted that this issue was considered by the Tribunal for Assessment Year 2006-07 in the case of the assessee and the Tribunal vide its order dated 30th October, 2009 in ITA No.2489/Del/2008 (departmental appeal) has confirmed the deletion made by the CIT (A) and resultantly the departmental appeal was dismissed (refer to copy of order placed at pages 1-4 of the paper book). He referred to t....

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....s made in their affidavits. There are about 74 doctors employed by the trust. Out of them, statements of only two doctors were recorded. All these doctors have filed affidavits during assessment proceedings denying any cash payment. Therefore, there is no justification for making addition in respect of 72 doctors ignoring their affidavits. Though the statements recorded during search have evidentiary value but the statement was not that of the assessee himself but of the third parties. Therefore, admission by third parties when retracted, cannot be admitted in evidence. He accordingly deleted the addition. The revenue is in further appeal before us. 4. At the time of hearing we have heard Shri Rajesh Kedia, Sr. DR for the revenue and Shri Ashwani Kumar, CA for the assessee. 5. There is no dispute that the assessee trust is registered under section 12AA and entitled to exemption under sections 11 & 12 of the Act. The basis of addition is the statements of Shri D.K. Bansal, Accountant and Shri R.P. Aggarwal, Principal of M.M. Medical College, recorded during the course of search. They are the witnesses on behalf of revenue and not on behalf of the assessee. The statement is not....

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....the case of an assessee being a trust whose income is to be computed under sections 11 & 12 of the Act. Thus the addition made under section 69C will be nullified by the expenditure incurred on the object of the trust and hence no further addition is called for." 5. He further referred to the assessment order for Assessment Year 2006-07 the copy of which has been placed at pages 124 to 151 of the paper book and showing the income computed therein it was submitted by him that the only addition made by the Assessing Officer to the returned loss of Rs. 22,03,50,033/- was a sum of Rs. 44,70,372/- reducing the loss of the assessee to Rs. 21,58,79,661/-. He submitted that the aforementioned addition of Rs. 44,70,372/- was out of the aforementioned amount of Rs. 45,66,372/- referred by the CIT. 6. He further submitted that the second allegation of the CIT in his order is regarding shortage of cash found at the time of search in the hands of the trust. He submitted that no adverse inference of this fact has been drawn by the Assessing Officer in the assessment order for Assessment Year 2006-07 though a search was effected on 7th September, 2005. He further submitted that the excess c....