TaxTMI 
TaxTMI 
2019 (10) TMI 976
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.... This society runs various educational institutes in the name of Dev Bhoomi Group of Institutes at Dehradun and Saharanpur. The society has also been approved for exemption under clause 10(23C)(vi) of the I.T. Act, 1961 by the CCIT, Dehradun vide order F.No. CCIT/DDN/5/10(23C)(vi) and (via) dated 18.03.2008 w.e.f. 1.4.2007. A search & seizure operation was conducted u/s 132 of the I.T. Act, 1961 on the Dev Bhoomi Institute of Technology, Uttrakhand Uthan Samiti and other group concerns on 26.04.2012. Vide centralization order u/s 127 of the Income Tax Act, 1961 dated 16.01.2013 of Commissioner of Income Tax, Dehradun, the case of the above assessee has been centralized with Central Circle, Dehradun falling within the administrative control of the DGIT(Inv.), Lucknow. Certain evidences were gathered during the course of search & seizure, post search enquiries by the investigation wing and subsequent enquiries by the Assessing Officer during the course of assessment proceedings. As a result of enquiry, certain facts emerged which indicated that the activities of the assessee society was not in accordance with conditions for allowance of exemption u/s.10(23C)(vi) of the Income Tax Act....
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....rn whose introducer was Shri Sanjay Bansal. The total receipts and withdrawals from this account during the F.Y. 2008-09 to 2010-11 was Rs. 2.99 crore and Shri Dandriyal was showing income from salary of Rs. 1 lakh in the return filed u/s 139 for earlier years upto assessment year 2011-12. However, after the search, he has disclosed business income from sale of computers in two concerns, namely, M/s Fortech Computer System and M/s Cad Arena who have shown to have started business in F.Y. 2008-09. He noted that in the case of M/s Cad Arena, whose proprietor is Shri Sunil Dandriyal, the bank account was opened on 25th September, 2010 which remained operative till 12th February, 2011 and there were deposits to the tune of Rs. 17,86,174/-. Similarly, there was another concern in the name of Shri Sunil Dandriyal, namely, M/s Nice Home Builders which is the proprietor concern of Shri Sunil Dandriyal wherein the total receipts and withdrawals during the F.Y. 2010-11 were to the tune of Rs. 58,50,000/-. He observed that M/s Drishti Associates was the proprietorship concern of Smt. Mamta Dandriyal, w/o Shri Sunil Dandriyal wherein receipts and withdrawals to the tune of Rs. 58 lakhs has ....
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....have also been forged in names of non-existent concerns and persons. ii) Most of these bogus concerns were started with meager capital. iii) No books of account were found in cases of concerns where search was carried out. Even in other cases no books of accounts produced even before the AO. iv) These concerns were having only one client that is Uttarkhand Uthan Samiti. These were not supplying anything to any other person. In many case proprietors did not have any business experience. v) The amounts credited in the bank accounts of the fictitious concerns are from the term loans and OD accounts of Uttarakhand Uthan Samiti and bank account of DBIT college for expenditure booked against the bogus purchases shown from these concerns. The repayments of these term loan and OD accounts have been made from funds of the society through account number 1175009301046063 with PNB, Kaulagarh road Dehradun of society and account number 1175002100008302 of DBIT college. Payments have been made through cheques, and subsequently cash has been immediately withdrawn from the bank accounts of these fictitious concerns by issuing bearer cheques which have been exami....
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....nder: (a) A term loan of Rs. 224.64 lakhs was sanctioned by the Punjab National Bank, NAV, Saharanpur to the society Uttrakhand Uthan Samiti, Dehradun vide letter dated 25.3.2009 for purchase of laptops. This loan was sanctioned to be reimbursed to the society in lieu of 800 laptops worth Rs. 299.52 lakhs purchased for distributing to the students in favour of Uttrakhand Uthan Samiti. This loan amount was disbursed through account No. 117500IC00000378. The bank provided the copy of sanction letter dt. 25.3.2009, copy of invoice No. 1984 dated 16.10.2008 of M/s Fortech Computer Systems Pvt. Ltd. (2008-09), G-10, Sidhartha Building, 96-Nehru Place, New Delhi and a copy of letter dated 14.11.2008 of Uttarakhand Uthan Samiti addressed to Branch Manager, PNB, Kaulagarh Road, Dehradun stating that the society has received the laptop in 20.10.2008 via Bill No. 1984 dated 16.10.2008 and the payment paid to the supplier by the society from Society's reserved fund. From the details furnished by the bank, it is seen that the bank has sanctioned loan of Rs. 224.64 lacs to the society to be reimbursed to the society in lieu of 800 laptops worth Rs. 299.52 lakhs purchased for distributi....
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...., Anekant Place, Dehradun to the bank for purchase of 950 nos. of HP-C-510 Business Note Book for Rs. 3,55,68,000/-. The above loan was sanctioned by the bank on the basis of the said Invoice No.SM 09-10/1331 dated 4.12.2009 of M/s Strategic Marketing. The copy of the invoice mentioned above is the only documents submitted by M/s Uttrakhand Uthan Samiti to the bank in support of the purchase of 950 Business Note Book (computers) and the end use of the loan sanctioned. After sanctioning and disbursing the said Term Loan, the bank has not obtained the purchase bill from the society in support of purchase of Laptop/computers for which the loan was sanctioned. Moreover, while sanctioning the loan vide letter dt. 05.11.2009, the bank has waived the condition of insurance of laptops/ Business Note Books. Moreover, no Inspection report in respect of End Use of the Term loan is available with the bank as stated in letter dt. 27.7.2012 of Chief Manager, PNB, Avas Vikas branch, Saharanpur .Therefore, as already confirmed by the firm M/s Strategic marketing, bogus expenditure has been debited in their names in books of society. (c) A further term loan of Rs. 262 lakhs was sanctioned ....
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....st 19, 2010 for the value of Rs. 3,93,12,000/-. From the above facts, it is clear that the documents (Proforma Invoice No. J9AD109932) of Hewlett-Packard India Sales Pvt. Ltd., the alleged letter by Naman Patil (Manager Sales-North India) of HPISPL confirming advance of Rs. 59,99,500/- on behalf of CAD ARENA ) are found to be not genuine and fabricated one. In view of the reply of HPISPL only 251 laptop were purchased by Devbhoomi Institute of Technology and no computer/laptops were supplied by them against the purchase order No. DBIT/Order/09-10/198 dated 9.8.2010 of Uttrakhand Uthan Samiti. These three documents namely Proforma Invoice No. J9AD109932) of Hewlett-Packard India Sales Pvt. Ltd., the alleged letter by Naman Patil (Manager Sales-North India) of HPISPL, and purchase order No. DBIT/Order/09-10/198 dated 9.8.2010 of Uttrakhand Uthan Samiti are the only documents made available by the bank in support of purchase of 1050 laptops and in support of the end use of the term loan of Rs. 262 lakh disbursed to the society. From the above facts, it is established that Uttrakhand Uthan Samiti has not purchased any laptop/computers (HP Compaq 420 Business class Not....
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....7547 dt. 2.11.2010 to Dev Bhoomi Institute of Technology, Dehradun have been recorded. M/s Universion Iron Store also provided to this office copies of original bills No. 7891 and 7547 as was available with them. From the analaysis of bills of Universal Iron Store, it was revealed that Shri Sanjay Bansal had forged the bills issued by the above concerns to him for supply of goods at DBIT, Dehradun. By forging, altering, fake bills purportedly issued by Univeral Iron Store, Dhamala Wala, Dehradun in the name Dev Bhoomi Institute of Technology, Saharanpur have been prepared by Shri Sanjay Bansal. In fact, no such bills were issued by M/s Universal Iron Store, Dhamawala Dehradun. The Society has thus, claimed bogus expenses of Rs. 2,30,100/- and Rs., 1,38,597/- through these two bogus bills. (b) Bills of Shree Jee Enterprises Pro: Anuj Rana, Lower Tunwala Dehradun for supply of bricks : Shri Anuj Rana, Propr. Shree Jee Enterpries, Lower Tunwala, Dehradun in his statement denied of being engaged in the business of supply of bricks. However, he admitted of having supplied 48,000 bricks (four trucks) to Shri Sanjay Bansal for his college at Dehradun directly fr....
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....the premises of Dev Bhoomi Institute of Technology at Manduwala, Navgaon, Dehradun. Sh.Rishiraj admitted in his statement recorded u/s 13 l(l)(b) to have no place of business in Saharanpur and has never supplied any building material for college at Saharanpur but only in DBIT at Manduwala Dehradun. He also denied to have issued any of the above bills. Though he stated that original bill book was asked by Sanjay Bansal only for the purpose of tally of his accounts and was given in march just before the search. (d) Bills of Pawan Kumar, Uttrakhand. Similarly various bills of Pawan Kumar, Uttrakhand were submitted by Shri Sanjay Bansal to the bank in support of purchase of Yamuna Dust. As already discussed that bank account opened in the name of Pawan Kumar and co. was bogus and therefore expenditure debited to this account is bogus. (e) The bills of following parties submitted to the PNB bank had been forged. The bills of these parties submitted to bank show that the bills issued by these parties against the supply made to DBIT/UUS Dehradun have been tempered with and fabricated showing inflated amount of bill and also showing address of DBIT Sahar....
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....9 2010-11 178340690 160614144 177471 Nil. Exempt u/s 10(23C)(vi) 15.10.2010 2011-12 220785347 219694484 107836 Nil. Exempt u/s 10(23C)(vi) 28.09.2011 2012-13 298121824 297026755 107007 Nil. Exempt u/s 10(23C)(vi) 30.09.2012 7. Therefore, a show cause notice was issued to the assessee vide letter dated 22.11.2013. Thereafter, a number of opportunities were granted to the assessee. However, there was no compliance from the side of the assessee. In view of the above, ld. DGIT (Inv.), Lucknow, held that the assessee is neither existing solely for educational purposes nor it is 'not for the purpose of profit.' He, therefore, held that the society is not existing solely for the purpose of education and, he, therefore, cancelled the approval granted u/s 10(23C)(vi) of the IT Act to the assessee trust from assessment year 2007-08 onwards. The relevant observations of DGIT (Inv.), vide para 14 of his order read as under:- "14. A show cause notice was issued to the assessee vide letter dated 22/11/2013. Thereafter opportunities were further provided vide letters dated 03.01.2014 & 31.01.2014 & 08.07.2014, but the assessee h....
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.... "Additional Ground: 2 - That the order passed by Director General of Income Tax (Investigation) dated 26.03.2015 cancelling the approval granted u/s 10(23C)(vi) of the Act is illegal, bad in law and without jurisdiction. Additional Ground: 3- That on the facts and in the circumstances of the case and in law the Director General of Income Tax (Investigation) erred in withdrawing approval granted u/s 10(23C)(vi) with retrospective effect from A. Y. 2007-08 onwards, on basis of order dated 26.03.2015. Additional Ground: 4- That show cause notice dated 22.11.2013 issued by the Joint Director of Income Tax is illegal, bad in law and without jurisdiction as the show cause notice has to be issued by the 'Prescribed Authority' at the relevant time. Additional Ground: 5- That on the facts and in the circumstances of the case and in law the Director General of Income Tax (Investigation) has erred in passing ex-parte i.e. without giving any proper and reasonable opportunity of presenting its case and of being heard, which is in violation of the principles of natural justice. Additional Ground 6 - That the documents filed or available on reco....
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....d that the prescribed authority may withdraw the approval so granted after it is satisfied that: "(i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not- (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution- (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved,..." 13. He submitted that in the instant case, the show cause notice has to be issued after the satisfaction of the competent authority. Unless such satisfaction is discernible from the show cause notice, the assessee could not have objected to the show cause notice. He submitted that the assessee has to be put on notice after the satisfaction of the competent authority. S....
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....t was never mentioned that the approval u/s 10(23C)(vi) of the IT Act is going to be cancelled for assessment year 2007-08 onwards, therefore, in absence of the same in the mandatory show cause notice, the competent authority could not have cancelled such approval with retrospective effect. The ld. counsel also relied on the following decisions:- 1. CIT Vs. SPL'S Siddhartha Ltd., in ITA No. 836/2011 dated 14.09.2011 Passed by Hon'ble High Court of Delhi at New Delhi; 2. Varkeychacko Vs. CIT, [1993] 203 ITR 885 (SC); 3. Ghanshyam K. Khabrani Vs. ACIT, [2012] 346 ITR 443 (Bom.); 4. DSJ Communication Ltd. Vs. DCIT, [2014] 41 taxmann.com 151 (Bom.); 5. Modem School society Vs. CIT, ITA No. 1118/JP/2016 dated 20.12.2017 Passed by IT AT, Jaipur Bench, Jaipur; 6. Orissa Trust of Technical Education Vs. CCIT, [2009] 178 Taxman 363 (Orissa); 7. The CIT (Exemptions), Jaipur Vs. Modern School Society, MA No. 53/JP/2018 in ITA No. 1118/JP/2016 dated 24.07.2018 Passed by ITAT, Jaipur Bench, Jaipur; 8. CIT Vs. Modern School Society, D.B.ITA No. 172/2018 dated 31.07.2018 passed by Hon'ble High Court of Judicature for Rajastha....
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....ing heard and, thereafter the assessee has to be show caused which in the instant case was given. Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs. Amitabh Bachchan reported in 384 ITR 200, he submitted that the Hon'ble Supreme Court in the said decision has held that section 263 does not require any specific show cause notice detailing specific ground on which revision of assessment order is tentatively being proposed. Referring to the decision of the Hon'ble Delhi High Court in the case of BSES Rajdhani Power Ltd. vs. PCI, 399 ITR 228 (Del), he submitted that the failure to issue notice on a particular issue does not vitiate the exercise of power u/s 263 of the Act as long as the assessee is heard and given opportunity. Referring to the decision of the Jaipur Bench of the Tribunal in the case of Indian Medical Trust vs. PCIT, 99 taxmann.com 273, he submitted that the Tribunal in the said decision has held that where the assessee, a trust registered u/s 12AA was running various educational institutions at Calcutta, huge amount of capitation fees from students for admission to medical colleges, the impugned order passed by the Commissioner....
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....468-3472, reported in 2018-261-HC-KAR. 17. The ld. counsel for the assessee, in his rejoinder, submitted that in the case of Indian Medical Trust relied on by the ld. DR in the said decision, the various incriminating materials were confronted to the assessee whereas in the instant case such materials were not confronted to the assessee, therefore, the said decision is distinguishable and not applicable to the facts of the present case. 18. We have considered the rival arguments made by both the sides and perused the order of the DGIT (Inv.) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the ld. DGIT (Inv.), on the basis of the evidence gathered during the course of search and post search inquiries observed that the activities of the assessee society was not in accordance with the conditions laid down for allowance of exemption u/s 10(23C)(vi) of the IT Act, 1961 and it has violated the provisions contained in clause (a) and clause (b) of the 13th proviso to section 10(23C)(vi) of the IT Act. Despite repeated opportunities granted, the assessee did not file any justification for the irregulariti....
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....come-tax (Inv.). Therefore, the second objection of the ld. counsel also is without any merit and the same is rejected. 20.1 The third objection of the ld. counsel for the assessee is that the ld. Director General of Income-tax (Inv.) could not have withdrawn the approval granted u/s 10(23C)(vi) of the IT Act with retrospective effect from assessment year 2007-08 onwards on the basis of order dated 26th March, 2015. Here also, we do not find any merit. The order passed by the DGIT (Inv.) is based on the numerous incriminating documents found and seized during the course of search and post search enquiries which establishes various forged documents, the manipulation of the bank accounts and the diversion of funds for personal purposes which proves beyond doubt that the trustees were misusing the benefit of exemption granted u/s 10(23C)(vi) of the IT Act. Therefore, the argument of the ld. counsel on this issue is also without any merit and accordingly the same is dismissed. 20.2 So far as the argument of the ld. counsel that the Director General of Income-tax (Inv.) has passed an ex parte order without giving any proper and reasonable opportunity of presenting its case and on ....