AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1061
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....l instances of receipt of unaccounted donation were found in the criminating documents seized during the search proceeding. 2. On the facts and in the circumstances of the case and in law, the id. CIT(A) has erred in deleting the addition of Rs. 1,40,357,65/- on account of unaccounted donation without appreciating the fact involved in this case that several donors have accepted on oath in affidavits of giving donations. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 54,86,947/- on account of disallowance of salary expenses without appreciating the fact involved in this case that seized documents substantiate that salary payments were made to the staff/employees through cheque/RTGS and theses were returning a portion of their salary to the trustee in cash, for which, even bears cheque were handed over by these employees to the accountant of the assessee. 4. On the facts and in the circumstances of the case and in law, the id CITIA) has erred in deleting the addition of Rs. 54,86,947/- on account of disallowance of salary expenses without appreciating the fact involved in this case t....
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....ncurred by the assessee as reduced by the expense disallowed by the AO. 4. The addition on account of unaccounted donations and salary received back was made by the AO by extrapolation .Basis the evidences found during search, he estimated unaccounted donations to have been received from other students also of the same category as those with respect to whom evidences were found during search. Extrapolation was exercised with respect to salaries received back for the impugned year on the basis of evidences found for the succeeding year. The Ld. CIT(A) rejected the extrapolation resorted to by the AO and restricted the addition, both on account of unaccounted donations and salary received back, to the extent revealed from evidences found during search. The deposits in the undisclosed bank accounts was also restricted by the Ld. CIT(A) accepting the evidences filed by the assessee explaining the source of deposits made in the said bank account. 5. Aggrieved by the above order of the Ld. CIT(A), the Revenue is in appeal before us challenging the restriction of addition made on account of unaccounted donations and salary received back to the extent of evidences found during sea....
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.... wherein the Hon'ble Apex Court held that where the AO had evidence of assessee having dealings outside its books of accounts for some days it was open to the officer to infer that the assessee had large scale dealings outside the books. The Apex Court noted that while in such situation it was not possible for the AO to find out precisely the suppressed turnover, he could make a fair estimate of the same. The Hon'ble apex court observed in the said case, that a certain amount of guesswork is involved in estimating the turnover, but, it must have a reasonable nexus to the available material. Thus, it is amply clear that extrapolation can be exercised only when the books of accounts are found unreliable or incomplete, the seized material establishes a recurring modus operandi and the pattern of suppression is found to be systematic and continuous. 9. We shall now apply the principle of extrapolation to the facts of the present case. In relation to unaccounted donation, the facts on record reveal that the evidences relating to unaccounted donations found during search, revealed donations to have been taken from students who had applied for admission through management quot....
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....th the statement of Shri Sanjay Parikh and he also signed on the statement of Shri Sanjay Parikh agreeing to the facts stated by Shri Sanjay Parikh * Comprehensive documentary evidences were found during search revealing the undisclosed income generated through such unaccounted donation being used by trustees to make on-money payments towards purchase of land and real estate properties or deposited in the undisclosed bank accounts. 10. On considering all the above evidences, there is no doubt that it establishes a pattern of receiving donations by the assessee from students enrolled through the management quota. The evidences found with respect to some of the students exhibit the modus operandi followed by the assessee trust for taking donation on admission of students which is corroborated by the statement of the Cashier of the assessee college and of Shri Harsh Shah, son of trustee admitting to the said fact. The evidences establish modus operandi/ systematic and continuous pattern of receiving donations from management quota students and are not in relation to any isolated incidence of receipt of donation. 11. It is incomprehensible as to why the institute would e....
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....was withdrawn by the staff/employees from the salary account using bearer cheques and was handed to the Accountant. The Accountant, in turn, would prepare a report of the amount received in cash from various employees and submit the report alongwith the unaccounted cash to the trustees at their residence. The cash was handed over to the trustees in the envelop on which a report about the total cash receipt was mentioned and the report was signed by the person handing over the cash. The evidences found during search were: * Envelops in which cash were handed over, seized from the premises of Navjivan High School at Baghikhana, Rajmahal Road, Vadodara; * Bearer cheques and withdrawal slips were found and seized from the Bakrol campus of the trust. All the bearers cheques and withdrawals slips were duly signed. Further, different covering letters were made to bifurcate the employees of different branches of Colleges run by the Trust. * Seized documents, as above, when confronted to the Accountant of the assessee institute i.e. Mr. Mahesh Kachiya, he accepted the modus operandi in his statement recorded on oath u/s.131(1A) of the Act,of employees giving self ....
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..... On considering the above we completely agree with the AO that these evidences recorded and demonstrated the trust to be regularly engaged in the activity of generating unaccounted income by receiving salary back from its employees. These are not one of evidences found, pertaining to the unaccounted income being generated by the assessee, but reflecting a pattern being followed by the assessee regularly over the years. The extrapolation, therefore, done by the AO is justified in the impugned year. We see no reason to restrict the extrapolation to some employees alone, as done in the case of unaccounted donations above. In view of the above Ground of appeal No.1-4 of the Revenue stand allowed in above terms. 16. Ground No.5 relates to the issue of addition made on account of deposits from the unaccounted banks of the assessee. The addition made by the AO was to the tune of Rs. 77,82,892/-, which was restricted by the Ld. CIT(A) to the extent of Rs. 30,78,498/-. 17. The facts relating to the issue are that during search one undisclosed bank account in the name of the assessee trust was found. In its submission before the investigation wing of the Income Tax Department, the ....
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....gate of Rs. 25,70,020/- and Rs. 52,12,872/- was added to the total income of the assessee. 18. Before the Ld. CIT(A), the assessee submitted that out of the accounts listed as undisclosed, two accounts were in relation to entities which had accounted for the transactions in their books of accounts and were independently assessed to tax. The assessee pointed out the said entities as being Shah Associates and Shree Takshila Foundation in which total deposits of Rs. 95,38,645/- was made. The assessee pointed out that Shah Associates was the firm which was independently assessed and the transactions were accounted for in its books of accounts. With respect to Shree Takshila Foundation also the assessee made identical submission and furnished certificate of the Auditor of the said entity certifying that the transactions of the bank account of this entity were duly incorporated in the books of the assessee. The Ld. CIT(A) found merit in the contention of the assessee that the above two bank accounts pertaining to Shah Associates and Shree Takshila Foundation could not be attributed to the assessee and the amounts deposited therein needed to be excluded from the additions made in the h....