TaxTMI 
TaxTMI 
2023 (8) TMI 380
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....e assessee is running five schools, namely, : Sr.No. Name of the School Location 1 St. Lawrence High School Town Centre, CIDCO, Aurangabad 2 St. Lawrence High School (Marathi) N-1, CIDCO, Aurangabad 3 St. Lawrence High School Jalgaon 4 St. Peter's School Bangalore 5 Kishanlal Tapadia Memorial School Near A.S. Club, Waluj, Aurangabad 3. A survey action was taken u/s. 133A of the Act on 27-02-2019. During the course of survey, certain vouchers were found bearing only signature of the recipients but the details of recipients, amount and signature of Trustee/Accountant and details of expenses were not mentioned. These vouchers pertained to Bonus, Perquisites and Allowances etc. Statement of Ms. Flavia Alburquerque, a trustee of both the trusts, was recorded u/s. 131 on the date of survey, wherein, she admitted undisclosed income of Rs. 9.00 crore relating to both the trusts in this batch of appeals. The amount surrendered was spread over certain years in both the trusts. Returns were accordingly filed thereafter, duly incorporating the income offered by the trustee. The assessments also got completed consequently. Thereafter, the Assessing Officer (AO) made a referen....
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.... of the 15th proviso to section 10(23C) of the Act, pursuant to the reference made by the AO. Here, it would be apposite to consider the mandate of the relevant parts of the proviso under which the registration has been cancelled. 7. The opening part of the proviso states that where the trust etc. has been granted registration, inter alia, u/s. 10(23C)(vi) and then clause (b) states that subsequently: 'the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year', the Principal Commissioner or Commissioner shall: '(ii) pass an order in writing cancelling the approval of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution, on or before the specified date, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violation has taken place.' The crux of the provision is that if registration was earlier granted u/s. 10(23C)(vi) and thereafter, the AO makes a reference to the Pr.CIT for any prev....
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.... trust etc. in the present case would constitute specified violation, warranting cancellation of the registration granted earlier u/s. 10(23C)(vi) of the Act. 10. The ld. Pr.CIT has opined that certain incriminating evidences were found during the course of survey action u/s. 133A, which divulged that the assessee did not reflect the true and correct state of affairs - as the books were not available in any of the premises; the Audit reports filed along with the returns of income were doctored and not true; no supporting bills and vouchers were found during the course of survey; huge expenditure was debited to financials which was either not vouched or not verifiable; and further that Ms. Flavia Albuquerque, trustee of the assessee-trust, in her statement recorded u/s. 131 accepted that there were discrepancies in expenses booked under various heads, which instigated her to offer additional income. The ld. Pr.CIT completed the chain, firstly, by connecting surrender of income with deficient vouchers; and then deficient vouchers with the fact that the funds were diverted and misappropriated and resultantly not applied wholly and exclusively to the objects for which the assessee was....
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....ily collection of fees, cash receipts and cheque receipts details, cash expenses details and net day-wise cash balance in respect of Cambridge School, which was correctly maintained. Then, she explained the modus operandi from the collection of fees at Cambridge School till it gets deposited in the bank, by stating that Vaishali Tushor Mohol hands over the net cash in hand daily to her with details, which is deposited in the bank after 2-3 days. In response to question no.11 about the source of the availability of cash to the tune of Rs. 25,45,790/-, she submitted that the cash was out of admission fee receipts of Cambridge school. The last cash deposited in the bank was on 21-02-2019, which included closing cash till 20-02-2019. Cash collection from 21-02-2019 till the date of survey, namely, 27-02-2019 was kept at her residential premises, which amounted to Rs. 24,75,400/-. The differential amount of Rs. 70,390/- was stated to be cash out of withdrawals and family savings. There is nothing amiss in the reply nor has it been displaced by any of the Revenue authorities. 13. The ld. Pr.CIT has accentuated on question nos. 14 to 16 to justify the cancellation of registration. Thus, ....
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....d and other heads are not found at the premise. Kindly explain where the said vouchers are kept and explain the discrepancy". Her reply was that: "Sir, the vouchers of expenses are kept at respective schools. Sir, I am not in a position to substantiate the said discrepancies as mentioned in the question and also not in a position to give the details about vouchers which are found at the various premises where survey is conducted." The first part of the question just records the factual aspect that the assessee had booked expenses under various heads in cash. The discrepancy was pointed out in the later part of the question that the vouchers regarding bonus, perks and allowances were not available in the premises and question was that where were they kept. The reply was swift that the vouchers were kept at respective schools. There was no further questioning on this score. Howbeit, the answer records her inability to substantiate the discrepancy. The question and the answer again show that there was nothing wanting on the part of the assessee. Another connected question no.38 was about the expenses booked under the head bonus, allowances and perks for A.Y. 2013-14 in the case of St.....
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.... CA arrived and pay due taxes on the same in due course". This question and answer again refer to the expenses under the head bonus and perks to staff etc. and her making a surrender, which aspect has been discussed supra. 17. She was also enquired about the details of objects of the trust and the list of educational institutions run by the trusts. She gave answer, enlisting the educational institutions of the trusts. In response to question no.24 about the status of income-tax returns filed by two trusts, she submitted that: "Both the Trust are regular filer of return of income and both the trusts had filed return of income till assessment year 2018-19." This shows that the assessee was regular in filing income tax returns. Then, question no. 25 was aimed at enquiring about the activities of school, number of students, which was also promptly answered giving all the needful details. Question no.26 was enquiring about the fee structure for the students of the school. She gave the reply, which has been tabulated in the statement, giving an account of monthly fees charges from KG to 10th standard ranging between Rs. 5,200/- to Rs. 5,600/-. She further submitted that: "This monthly f....
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....ation 2(a) is that the income of the trust etc. is applied other than for the objects for which it is established. This violation deals with the application of income on objects other than for which the trust was established. An inference has been drawn that the assessee recorded bogus expenses and took away the corresponding cash for personal use by the trustees. There is no basis for drawing such inference, firstly, because the deficient vouchers clearly bore signature of the recipients but did not carry other details and secondly, no evidence was found during the course of survey that the assessee applied any amount for any object other than for which it was established. Apart from the deficient vouchers of certain expenses relating to salary, perquisites and bonus etc., there is no evidence to demonstrate that the assessee spent the income on any object other than for which it was established. 22. Explanation 2(b) deals with the specified violation towards the trust etc. having income from 'profits and gains of business', which is not incidental to the attainment of its objects. This clause deals with the receipt of income. The entire case of the Revenue is founded only on def....
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....se of survey governed by section 133A. Sub-section (3)(iii) of section 133A empowers an income-tax authority acting under this section to 'record the statement of any person which may be useful for, or relevant to, any proceeding under this Act'. Sub-section (6) of section 133A provides that: 'If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under sub-section (1) of section 131 for enforcing compliance with the requirement made'. 27. On a conjoint reading of sub-sections (3) and (6), it emerges that the statement of the person surveyed is usually recorded u/s. 133A of the Act. Recourse to sub-section (6) can be taken only if a person, who, inter alia, is required to have his statement recorded, either refuses or evades to do so. It is only then that the income-tax authority gets all the powers under section 131(1) including 'examining him on oath'. When we view the ingredient....