TaxTMI 
TaxTMI 
2025 (8) TMI 1753
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....e of convenience and brevity, we dispose all the appeals by this consolidated order. 2. Before adverting to the grounds taken in the cross appeals, it is first relevant to cull out the background facts of the case. The assessee is a registered charitable trust u/s 12AA of the Act, which is running one college in the name of M/s Bannari Amman Institute of Technology and one school in the name of M/s Bannari Amman Vidya Niketan Matric Higher Secondary School. A survey action u/s 133A of the Act was conducted upon the assessee trust on 25.02.2020. Later on, a search and seizure action u/s 132 of the Act was conducted in the Chettinad Group of cases on 09.12.2020. During the course of search upon Chettinad Group, three diaries vide ANN/CTSPL/SB/B&D/S (1 to 3) and one loose sheet folder vide ANN/CLTSP/SB/LS/S were seized, which according to the Investigation officers, contained evidence for receipt of cash by Chettinad Builders Private Limited (in short 'CBPL') from M/s Bannari Amman Sugars Pvt. Ltd. (in short 'BASPL'). From these notings, it was inferred that, the cash was received by CBPL in lieu of rebate of 15% given in the construction bills. According to the AO of the searched ....
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.... AMMAN SUGARS 5000000 B&D(2)-103 26.04.2019 BANNARI AMMAN SUGARS 10000000 B&D(2)-104 07.12.2019 BANNARI AMMAN SUGARS 30000000 B&D(1)-222 11.06.2020 BANNARI AMMAN SUGARS 10000000 47-LS, B&D(1)-222 16.07.2020 BANNARI AMMAN SUGARS 10000000 B&D(3)-20 17.07.2020 BANNARI AMMAN SUGARS 10000000 B&D(3)-20 21.05.2019 JAI FROM BANNARI AMMAN SUGARS 2125000 48-LS 20.09.2019 BANNARI AMMAN SUGARS 1199000 48-LS B&D(1)-220 21.10.2019 BANNARI AMMAN SUGARS 802660 48-LS B&D(1)-220 Total 9,26,72,850 4.2 The AO observed that, several bills which were raised by CBPL for the construction work of various buildings undertaken for the assessee, was also found and seized from the same premises of the Chettinad Group. The AO noted from the bills raised by CBPL upon the assessee, that, a rebate of 15% was given on the gross value of all the bills which were from inception till date i.e., FYs 2014-15 to 2020-21. According to the AO, Shri Yegappan, the Finance officer/cashier in CBPL, Shri M. V. Jayashankar, Ex-General Manager of CBPL and Shri S. P. Palaniappan, Assistant Vice-P....
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....naccounted cash payments across AYs 2015-16 to 2021-22. 4.4 The assessee, vide letter dated 28.02.2022 objected to the validity of the notice issued u/s 153C of the Act and inter alia contended that the seized material didn't pertain to it in as much as the jottings made in the seized diaries were vague and inconclusive. The assessee further contended that, even in the sworn statements, the name of the assessee was not mentioned. In the same submission, the assessee further pointed out the errors and defects in the seized notings, basis which, it was being alleged that they represented cash transactions of the assessee. The assessee is noted to have attempted to negate the theory propounded by the AO regarding the payment of cash in lieu of rebate on various fronts. The summarized version of the assessee's arguments has been reproduced by the AO at Pages 5-6 of his assessment order, which is extracted below:- "7.1 Vide its letter dated 28.02.2022, the assessee has objected to the notice uls 1530 which are summarised below: i. The expression 'pertain to' (or information contained therein 'relate to') brought in the Statute w.ef. 1.6.2015 would normally indica....
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....sessment years. ..... 7.3 In the same submission, the assessee has stated that without admitting the so called transaction on the basis of vague diary noting, the assessee has explained the transactions with Chettinad group and has highlighted the errors and defects in the alleged cash transaction from its perception as summarised below: i. After necessary negotiations based on the large volume of construction works, the assessee requested for discount at the rate of 15% of the bill value which was duly agreed and confirmed by the Chettinad. Based on the same all the bills were raised by the contractor, i.e. Chettinad granting a discount of 15% and payments were effected through banking channels only. ii. the assessee does not derive any advantage by booking less than the value reflected in the bills. It is a common knowledge and business principle that every assesses would like to book the legitimate expenditure supported by vouchers so that the expenditure can be fully claimed while computing the total income. 7.4 The assessee has made further submissions vide letter dated 5.7.2022, objecting to the notice u/s 153C and denying the enti....
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....jottings as was being contended by the assessee. The AO reproduced sample loose sheets seized from the premises of the Chettinad Group at Pages 8 & 9 of his assessment order, which for the sake of convenience, is also extracted below: 4.6 The AO was of the view that, the above notings are not vague but are very specific and relates to the assessee. The AO further observed that, Shri Muthu and Shri Yegappan, employees of the searched person, had stated that, they had received the cash from the head cashier of M/s Bannari Amman Sugar Limited for the work done at Tiruvannamalai and the above notings were recorded at the instructions of Shri M V Jayashankar. The relevant portion of their statements are noted to be as under: "Statement of Mr. V Muthu Q.No.11. I am showing you a Blue Diary of Chettinadu Buildersseized during the course of Search in the case of M/s Chettinadu Lignite Transport Service Private Limited at Rani Meyyamai Building, No.43, Race Course Road, Coimbatore - 641018 vide Annexure Ann/CLTSPL/SB/B &D/S, dated 09.12.2020 SI No.2, page no. 103 of the said book. Please identify and explain all the entries made in the page. Ans. I have careful....
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....Burgundy, a housing project undertaken by our company. 2. The entry in sl. No.2 corresponds to the receipt of Rs.1,00,00,000/- in cash from Bannari Amman Group through Mr. Jalshankar. 3. The entry in sl. No.3 corresponds to the handing over of Rs.1,50,00,000/- in cash to Mr. GK (Ph.: 8754703956) for transfer to Chennai as instructed by RMPL (R.M. PALANIAPPAN) (Mob: 9941796999, 8428266216). The delivery was against token no. 22Q529629 through Mr. Jaishankar. Q.No.17. I am showing you a Blue Diary of Chettinadu Builders seized during the course of Search in the case of M/s Chettinadu Lignite Transport Service Private Limited at Rani Meyyamai Building, No.43, Race Course Road, Coimbatore 641018 vide Annexure Ann/CLTSPL/SB/B &D/S, dated 09.12.2020 SI No.2, page no. 111 of the said book. Please identify and explain the entry made on 21.05.19 in the page. Ans. I have carefully perused the entry dated 21.05.19 of page no.11-1 of the said note book shown to me. I am to state that, it is the entry corresponds to Rs.21,25,000/- received in cash from M/s Bannariamman group by Mr. Jaishankar and handed over to me on 21.05.2019. Q.No.22. I am showing....
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....0 7 17.07.2020 BANNARI AMMAN SUGARS 10000000 10 21.05.2019 JAI FROM BANNARI AMMAN SUGARS 2125000 Total 9,06,71,190 Ans. Yes sir. I have scrutinized entire cash transactions. All the cash transactions summarized above are same as I have entered in my diaries and loose sheets. It is reflecting the transactions I have entered in my Diary, the above cash received from various persons were to Mr RM Palaniappan through the persons sent by Mr. RM Palanippan's Phone (Mob: 9941796999, 8428266216) Statement of Mr. Yegappan Q.No.6. Please explain the nature of your work in in M/s Chettinad Products & Services Private Ltd. Ans: My main duty involves cashier work only. I receive self-cheques from head office towards petty cash expenses, which is encashed and given for day to day expenses of the company. Petty cash register is maintained in the office computer. No other books of account are maintained by me. I am also looking after the maintenance of construction bills raised for project undertaken with Bannari Amman group of companies. I receive the bills raised by the company M/s Chettinad Products & Services....
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....Limited at Rani Meyyamai Building, No.43, Race Course Road, Coimbatore -641018 vide Annexure Ann/CLTSPL/SB/B &D/S, dated 09.12.2020 Sl No.1, page no. 220 and 222 of the said book. Please give details of the entries made in these two pages. Ans: I have carefully perused the note book shown to me, the entries are notings of cash received from Bannari amman sugars limited on the following dates: 1. Rs.11,90,000/-on 20.09.2019 2. Rs.8,02,660/- on 21.10.2019 3. Rs.14,15,500/- on 27.01.2020 4. Rs.3,00,00,000/- on 07.12.2019 5. Rs.1,00,00,000/- on 11.06.2020 for the 15% rebate given on the bills raised against the work done by our company chettinadu products and services limited. The above cash received by me from cashier of Bannari Amman Sugars Limited on the instructions of Assistant Vice President (Finance) Mr. S.P. Palaniappan and handed over the amount to Mr. V. Muthu, PRO at Coimbatore office. Mr. V. Muthu transferred these amounts to Mr. R.M. Palaniappan in Chennai. The above entries in the notebook made by Mr. Yegappan, Finance officer (Cashier) on my instructions. Q.No.8. I am showing you box files seized dur....
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.... i. As already explained in the show cause notice dated 13.02.2023, the notings in the loose sheets are well corroborated and are not vague notings as alleged by the assessee. ii. Even though mode of receipt is not mentioned, the persons who have received confirmed that the same has been received in cash. iii. The persons who have maintained the loose sheets and diaries have clearly mentioned that the notings mentioned in abbreviated form relates to the iv. The name of the assessee is only mentioned in abbreviated form, as is the practice while recording unaccounted transactions where the persons recording the same would record the same in a manner he only understands. v. Mr. Muthu and Mr. Yegappan have only recorded the transactions as directed by Shri M. V. Jayashankar, while Shri M. V. Jayashankar, in the sworn statement recorded from him u/s 132(4) of the Act on the date of search has clearly stated that he has received the cash from M/s Bannariamman Sugars Ltd. and also that the same has been received against 15% rebate. vi. There is no requirement to provide opportunity to the assessee before initiating proceedings u/s 153C of the ....
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.... to have summarized the arguments put forth by the assessee at Para 5.3 of his appellate order, which is reproduced below: "i) The assessment u/s 153C of the Act has been initiated merely based on the notings of seized documents (diaries and loose sheets) and the sworn statement of employees/personnel of CBPL on the basis of the assumption that alleged cash has been received by CBPL from the appellant against the rebate of 15% allowed in the bills for the construction works carried out by CBPL for the appellant. ii) The appellant and M/s. CBPL have entered into an agreement for undertaking various construction activities for the appellant and M/s. CBPL had provided a discount of 15% on all the bills raised on the appellant for the construction activities/ works carried out by CBPL considering the long association with the appellant and on considering the charitable activity carried out by the appellant. iii) The entries on page no. 222 of loose sheets on 07.12.2019 & 11.06.2020 have a gap of six months but the writing shows that it is written on the same day and it is an afterthought and also the appellant's name is not mentioned. iv) In the ....
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....se persons in the appellate order, observed that, since FY 2016-17, CBPL was doing civil construction work for Bannari Amman Institute of Technology and the sworn statement of employees revealed that the rebate of 15% given in the bills raised by CBPL was actually collected in cash from the assessee by Shri Jayashankar and Shri Muthu, who would send the cash to Chennai. The Ld. CIT(A) was of the view that the persons at Chennai head office were actually aware of the projects in which the assessee had paid cash and that the employees at Coimbatore had acted only under the directions of the Head Office. 5.2 The Ld. CIT(A) thereafter noted that, Smt. V. Valliammai, CFO of Chettinad Group, in her later statement recorded u/s 131 of the Act on 30.07.2021 had explained the nature of activities carried out by the Chettinad Group for the construction undertaken for the assessee. She had clarified that, the rebate was provided by CBPL to the assessee from FY 2014-15 and onwards by way of 15% of the value of bills raised, and when, CBPL had requested for rate revision, the assessee in lieu had offered to pay the 15% discount amount in cash from FY 2016-17 and onwards, which was again disc....
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....atement(s), he held that the addition on account of unexplained cash payment(s) could be validly made only in FY 2016-17 and onwards. He thus confirmed the additions made in AYs 2017-18 to 2021-22 and deleted the additions made by the AO in FYs 2014-15 and 2015-16 as they were neither backed by any seized material nor supported by any sworn statements of the employees of the Chettinad Group. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before us in AYs 2017-18 to 2021-22 and the Revenue has come up in appeal in AY 2015-16. 6. The Ld. AR/Counsel appearing for the assessee, Shri Vikram Vijayaraghavan, vehemently opposed the action of the lower authorities and contended that the seized material were dumb documents from which, no prudent person properly instructed in law could have inferred that they related or pertained to the assessee. He also pointed out several defects and fallacies in the notings, which, in his view, showed that the said jottings didn't relate to the assessee. He also took us through the sworn statements of the employees of the Chettinad Group, which were relied upon by the lower authorities and argued that, if one, closely analyses t....
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....g through the seized material was that, the Chettinad Group had received cash from M/s Bannari Amman Sugars Pvt Ltd/ BASPL and not the assessee. For this, he invited our attention to the details of the notings found in these seized diaries/loose sheets across various dates, whose details we have already extracted above, but at the cost of repetition, the same is again set out below: Date Transacting Company Amount in Rs. 29.01.2020 BANNARI AMMAN SUGARS LIMITED TRIUVANAMALAI 1415500 22.04.2019 BANNARI AMMAN SUGARS 2130690 23.04.2019 BANNARI AMMAN SUGARS 10000000 25.04.2019 BANNARI AMMAN SUGARS 5000000 26.04.2019 BANNARI AMMAN SUGARS 10000000 07.12.2019 BANNARI AMMAN SUGARS 30000000 11.06.2020 BANNARI AMMAN SUGARS 10000000 16.07.2020 BANNARI AMMAN SUGARS 10000000 17.07.2020 BANNARI AMMAN SUGARS 10000000 21.05.2019 JAI FROM BANNARI AMMAN SUGARS 2125000 20.09.2019 BANNARI AMMAN SUGARS 1199000 21.10.2019 BANNARI AMMAN SUGARS 802660 Total 9,26,72,850 8.1 It is noticed by us that, in none of the notings/jottings found in the seized material, was the name ....
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....discount was done under the instructions of Shri SP Palaniappan, Assistant Vice President, Finance, who had also confirmed the same in his statement. Later on, it is noted that, another sworn statement u/s 131(1A) of the Act was recorded from Smt. V. Valliammai on 30.07.2021, almost after six (6) months from the date of search. In this summon enquiry, she was required to explain the impugned notings and was also confronted with the details of construction bills which were raised by CBPL upon the assessee. The Investigating officer had pointed out to her that, the figures of the bills and the rebate of 15% allowed to the assessee did not correspond to the notings found in the seized material. To this, she is noted to have explained that, though the rebates were given across all the bills raised from FYs 2014-15 to 2020-21, but, no cash was received in FYs 2014-15 and 2015-16 and that, only when a request for rate revision was made in FY 2016-17, that the assessee had paid the 15% discount amount in cash from FYs 2016-17 to 2019-20 and that, again from FY 2020-21 and onwards, no cash was received in lieu of the discount amount. According to her, if the discount value is quantified fr....
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....ness of those entries, which is a requirement to fasten the liability. The Hon'ble Supreme Court in case of Common Cause (A Registered Society) & Ors Vs. UOI (394 ITR 220) following the judgment rendered in case of V.C. Shukla (supra) explained that, ordinarily entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act. It was held that, entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence, no relief can be given to the party who relies upon such entries to support his claim against another. The Hon'ble Apex Court further held that, even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any third person with liability. It is not enough to merely prove that the books have been regularly kept in the course of business and the entries th....
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....ted by the maker of the diary and therefore, in his view, the number '50' could not be assumed to be '50 lacs', particularly when the maker of the entry in the same page had written full figures for the amounts which were in lacs. Likewise, he pointed out that there was another entry as Sl. No. 8, on this page where 'Bannari Amman' was jotted with '100 Recvd'. The Ld. AR again claimed that this noting was quite vague and dumb to be inferred as cash received from the assessee trust and that too, '100 lacs'. The Ld. AR further invited our attention to another entry on the same page, which was assumed to be relating to the assessee in the name of 'Alagappan Account'. He pointed out that, there was no such person on the payroll of the assessee and therefore there was no basis to infer this noting to be pertaining to the assessee. Having perused the above notings in light of the explanation put forth by the assessee, we find that, if these notings are to be considered on a stand-alone basis, then, it does appear to be ambiguous & vague and is not clinching enough to be tied to the assessee. 8.8 The Ld. AR similarly took us through other seized pages and showed us similar infirmities ....
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.... by independent evidence as discussed infra 17.07.2020 Bannari Received - '1 C' Bannari D - A/c 1,00,00,000 B&D(1)-220 20.09.2019 TVmalai work - Recvd from BASL & handed over to Mr.Muthu @ RO 11,99,000 These are noted to be repeated notings as found mentioned on seized page 'LS-48" already discussed above. Again these entries does not have any mention of the name of the assessee and the assessee does not have any such construction work at the mentioned location. 21.10.2019 Compound Wall work Recvd from BASL & handed over to Mr.Muthu @ RO 8,02,660 29.01.2020 Recvd from BASL & handed over to Mr.Muthu @ RO 14,15,500 8.9 Having gone through the notings/jottings found in the seized loose papers/diaries at the third party premises, and in light of our observations as mentioned in the above table, at first blush, we find force in the Ld. AR's argument that, the notings were vague and cannot be said to relate to or pertain to the assessee. It was also pointed out to us that, the usage of the term 'Bannari' is not exclusive to the assessee trust and it is a wellknown place situated at Tamil Nadu-Karnataka border viz., BannariAmman Kovil, and that....
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....d view, such an inference drawn by the AO, from these notings/jottings appear to be farfetched qua the assessee. 8.10 According to the Ld. CIT, DR however, the fact that, CBPL was constructing building for the assessee and there was mention of 'Bannari Amman' or 'BASL' in these notings, which were associates of the assessee Trust, it was reasonable to infer that these notings pertained to the assessee. It is noted that, this contention is based on an assumption without there being any independent corroborative evidence to back the same. Ordinarily, the impugned notings being found from the possession of a searched person is admissible as evidence and the contents thereof are presumed to be true qua such searched person and corroboration, unless required under the statute, only goes on the add weight to the value of evidence. This principle however does not apply to a third party. It is a sound rule in practice in income-tax laws that, while dealing with the same evidence (impugned notings) in the case of a third party (assessee), it cannot be acted upon in absence of independent corroboration. As stated earlier, this principle is based on the basic rule of prudence. It is settle....
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....tioned in the construction bills raised by CBPL upon the assessee. According to him, this aspect was clarified by Smt. Valliamai in her subsequent statement(s) dated 26.07.2021 & 30.07.2021. As already noted above, these notings by itself did not relate or pertain to the assessee. Also, the sworn statements which were recorded from the maker of these notings (Mr. Yegappan) and the person under whose instructions these notings were made (Mr. Jayashankar) had not implicated the assessee or stated that these notings related to the assessee. It is thus noticed that, the Revenue had acted on a mere hunch and suspicion. According to us, when the impugned notings itself did not speak of the assessee trust and even the main witnesses in their testimonies had specifically named BASPL and not the assessee trust, the suspicion of the Revenue is held to be unfounded. So far as their reliance on the subsequent statement of Smt Valliamai is concerned, it is noted that, neither did the maker of these notings (Mr. Yegappan) nor the person under whose instructions these notings were made (Mr. Jayashankar) had averred that, Smt. Valliamai was aware about the contents of these notings and therefore i....
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....ed by CBPL upon the assessee trust in 2019 (upto 30.06.2019) was less than Rs.3 crores (lower than the value of notings itself) and the corresponding rebate amount to these invoices was almost Rs.45 lacs. According to him, the purported notings suggested that the assessee had paid aggregate cash of Rs.4 crores in lieu of 15% rebate in 2019, which did not correlate with the actual rebate of Rs.45 lacs allowed in the relevant period. He thus argued that the impugned notings also did not correlate with the contemporaneous facts and therefore these notings were unreliable. 8.16 The Ld. CIT DR on behalf of the Revenue however contended that, the impugned notings inter alia represented the cash paid by the assessee in lieu of 15% rebate given by CBPL on all their construction bills raised between FYs 2014-15 to 2020-21. It is noticed that, the notings found on this particular page was only dated 2019 and related to FY 2019-20. Further all other notings found across all other pages of the seized material were also dated either 2019 or 2020, which along with the impugned notings of Rs.4 crores, aggregated to Rs.9,26,72,850/-. There is merit in the Ld. AR's contention that, it is highly ....
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....t it was raising bills progressively depending upon the quantum of work completed. Taking us through the ledger of CBPL and their sample bills which were placed at Pages 210 to 277 of the Paper Book, he showed us that CBPL had been raising invoices regularly and the assessee was also making the payments through banking channels from FYs 2014-15 to 2021-22. The Ld. AR in light of these contemporaneous evidence submitted before us that, the case sought to be made out by the Revenue was illogical as it would be commercially absurd for a builder to collect cash payments for the work already done / completed starting from FY 2014-15, after a gap of four/five years in 2019 & 2020. He pointed out that, as per the AO's logic, though the builder had undertaken and completed the tasks on progressive basis from FYs 2014-15 to 2019- 20 for which bills were also raised and banking payments had been made by the assessee in the respective years, but the cash component viz. the 15% rebate amount mentioned in all these bills had been collected from the assessee lock stock and barrel in the years 2019 & 2020. The Ld. AR was of the view that, such an inference defies commercial prudence. In light of ....
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....18-19 10,40,45,518 1,56,06,828 8,84,38,690 1,37,71,816 10,22,10,507 91,35,125 2019-20 21,41,73,748 3,21,26,062 18,20,47,686 3,27,68,583 21,48,16,269 1,88,04,309 2020-21 19,85,19,815 2,97,77,972 16,87,41,843 3,03,73,532 19,91,15,375 Ranges from 5% to 10% From April 2019 2,58,93,889 2021-22 9,91,17,920 1,48,67,688 8,42,50,232 1,51,65,042 9,94,15,274 1,29,28,424 8.21 From the above, it is seen that, the assessee had from time to time agreed for a rate increase, as and when proposed by CBPL, whose approximate value for the period FYs 2016-17 to 2019-20 (leaving aside 2.5% increase of FY 2014-15) worked out to Rs.7.56 crores. These facts relating to the upward rate revisions agreed & acted upon between the assessee and CBPL apparently contradicts the AO's theory that impugned notings related to the rate revision component of 15% which was being paid in cash by the assessee. There is also merit in the Ld. AR's argument that, if both the parties had already agreed that a certain component of the construction cost would be paid in cash, then there was no rationale to first increase the bill valu....
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.... acknowledgment or seal of the assessee on any of these pages and no other independent corroborative evidence was found to justify the contents of these notings; (v) The makers of these entries had recorded these notings on hearsay and therefore these notings are not reliable; (vi) There was no other independent material or evidence found in the course of search which would corroborate or justify the impugned notings; (vii) The assessee has also brought on record several contemporaneous facts regarding the construction work done by CBPL, bills raised by them, rate revisions agreed upon etc., as discussed above, which disproves the theory of the Revenue that the 15% discount given by CBPL on their bills was being paid by the assessee in cash. 8.23 According to us therefore, the impugned notings/jottings on standalone basis were vague & unreliable. We however find that the case made out by the lower authorities actually rests on the statement(s) of the employee(s) of the Chettinad Group wherein they have purportedly averred that these impugned notings (though not in assessee's name) pertained to the assessee trust and it represented the cash returned in ....
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....d he was required to specifically identify which notings pertained to whom and also provide the details of the person from whom he would receive the cash and the modus in which this cash transaction was being carried out. We find that, in his answer, he submitted that nobody from BASPL had ever handed over the cash to him and rather it was only Shri Jayashankar who would hand over the cash to him. He also clarified that, the notings made by him in these names, was under the instructions of Shri Jayashankar and that he did not know whether the cash actually belonged to BASPL or the assessee trust. The relevant portion of Question Nos. 11 and 12 and his answers, are reproduced below: "Q.No.11. During the course of search proceedings at the office of M/s. Chettinad Lignite Transport Service Private Limited at Rani Meyyammai Building, No. 43, Race Course Road, Coimbatore a sworn statement was recorded from you. In your statement, you have stated that you also received cash from the representative of M/s. Bannari Amman Sugars Pvt Ltd (BASPL). Who is the representative person of M/s. BASPL from whom you have received cash? Ans. No body from M/s. BASPL has ever come and ....
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....ly counted the number of bundles and leave my office. After that, I used to call back Shri R.M Palaniappan and confirmed that as per instruction the cash was given to the person who connected me to Shri palanlappan on his phone. I have entered details of the cash given to Siddarth's staff in my diary, which was seized by Income Tax Department during the course of search in December, 2020."[emphasis given] 8.25 According to us, this subsequent statement of Shri Muthu flips over the averments made by him in his original statement recorded at the time of search. Co-joint reading of both of his statements dated 09.12.2020 and 26.07.2021 reveals that, he actually had no clue as to the source of cash, as it was being handed over to him by Shri M V Jayashankar and that he was also unaware whether the cash was actually received from the assessee trust or not. The notings made by him in his diary is thus found to be based on only hearsay. He was simply a book keeper who was making the notings under the instructions of another person, i.e. Shri M V Jayashankar, completely unaware whether these notings were actually true or not. We note that the lower authorities had failed to take cog....
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.... is noticed that, Mr. Yegappan had specifically stated that, the noting was made by him for the cash which he received from the head cashier of BASPL. We find that, though Mr. Yegappan had named BASPL [not the assessee trust] to whom the entry related to, but he had surreptitiously refrained from identifying the 'head cashier' of BASPL. It is highly improbable that the person receiving the cash would not even know the basic details of the person who handed over the cash viz., his name or address etc. Shri Yegappan is found to be aware of the person-in-charge of affairs of CBPL (Mr. Jayashankar), to whom he handed over the cash (Mr. Muthu) but does not know the person who gave the cash ('head cashier'). It is noticed that, in the same question, when he was enquired regarding the notings found on Page No. 222, he submitted that these related to cash received by Shri Jayashankar from BASPL (not the assessee trust), which Shri Jayashankar had handed over to Shri Muthu. It is again observed that, he had not linked the impugned notings to the assessee trust but at the same time, he again answered evasively by not providing the details of the person from BASPL who handed over the cash to ....
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....case. We thus now proceed to examine the statement of Shri M V Jayashankar, which is extracted as under:- Sworn Statement of Shri.M.V. Jayasankar (Aadhar card no 938273542191), aged 55 years, S/o. Shri.M. Venugopal, recorded u/s.131(1A) of the Income Tax Act, 1961, on 09.12.2020, at Rani Meyyamai Building, No.43, Race Course Road, Coimbatore 641018 (Phone no. 7358981505) during the course of Search proceedings conducted u/s 132 of the Income Tax Act, 1961, in the case of M/s Chettinadu Lignite Transport Service Private Limited, at the above mentioned address. The sworn statement was deposed before, Shri. S. Bharathi, IRS, Assistant Commissioner of Income Tax, Central Circle-2, Coimbatore. Oath Administered I, Shri.M.V. Jayasankar (Aadhar card no 938273542191), aged 55 years, S/o. Shri.M. Venugopal, recorded u/s.131(1A) of the Income Tax Act, 1961, on 09.12.2020, at Rani Meyyamai Building, No.43, Race Course Road, Coimbatore - 641018, Swear in the name of God that I will speak the truth, the whole truth and nothing but the truth. Q.No.1. Please identify yourself? Ans: I am Shri.M.V. Jayasankar (Aadhar card no 938273542191), aged 55 years,....
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....egion namely: 1. KMCH 2. TICEL 3. Bannari Sugars 4. Bannari educational institutions 5. NGP 6. JSS 7. Chettinadu Burgundy "Q.No.7. I am showing you a Blue Diary of Chettinadu Builders seized from Mr. Yegappan, Cashier (Chettinadu Builders Pvt. Ltd.) during the course of Search in the case of M/s Chettinadu Lignite Transport Service Private Limited at Rani Meyyamai Building, No.43, Race Course Road, Coimbatore -641018 vide Annexure Ann/CLTSPL/SB/B &D/S, dated 09.12.2020 Sl No.1, page no. 220 and 222 of the said book. Please give details of the entries made in these two pages. Ans: I have carefully perused the note book shown to me, the entries are notings of cash received from Bannari amman sugars limited on the following dates: 1. Rs.11,90,000/-on 20.09.2019 2. Rs.8,02,660/- on 21.10.2019 3. Rs.14,15,500/- on 27.01.2020 4. Rs.3,00,00,000/- on 07.12.2019 5. Rs.1,00,00,000/- on 11.06.2020 for the 15% rebate given on the bills raised against the work done by our company chettinadu products and services limited. The above cash received by me from cashie....
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.... and loose sheets, the above cash received against 15% rebate allowed to Bannari Amman Sugars/Bannari Amman educational trust were handed over to V. Muthu and transferred to Mr RM Palaniappan. Q.No.34. Do you want to say anything else. Ans. Nothing sir. I have stated truth to the best of my knowledge. I once again reiterate that all the averments above are truth, the whole truth and nothing but the truth. I also assure to co-operate the Department in all future proceedings. 8.29 It is observed that, Shri Jayashankar in his answer to the nature of work which he was in-charge of, had submitted that, he was involved in execution or coordination with consultants and completion of projects in Coimbatore Region for KMCH, TICEL, Bannari Sugars, Bannari Educational Institutions, NJP, JSS and Chettinadu Burgundy. Thereafter, it is noted that, three (3) questions were put to him which specifically related to the impugned material seized from the possession of Shri V Muthu and Shri M Yegappan. It is observed that, in Question No. 7, he was asked to provide the details of the entries found in Page Nos. 220 and 222 of the seized material. In his answer, he is found to have ....
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....tigating Officer had thereafter showed him all the box files of CBPL, which contained the construction bills raised by them inter alia including the bills raised upon the Bannari Amman Group of Companies and in Question No. 8, Shri Jayashankar was required to explain the rebate of 15% given on the total value of contracts. Shri Jayashankar is noted to have answered that, these bills are for the work undertaken for Bannari Amman Group of Companies and that the rebate @ 15% was allowed in the bills to receive the amount in cash. The Ld. AR again contended that this answer was also vague has Shri Jayashankar had not specifically identified the assessee trust to be involved in making any unaccounted cash payment. Instead, Shri Jayashankar had averred that, the cash in lieu of rebate was being received in relation to the bills raised upon the companies of the Bannari Group, which suggested that the assessee which was a charitable trust was not involved in the same. He again pointed out that, CBPL had actually not allowed rebate of 15% in any of their bills raised upon the companies of Bannari Group and therefore this answer given by Shri Jayashankar was also factually erroneous. Accordi....
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....hri Jayashankar had not named the assessee Trust in his answers to Question Nos. 7 & 8 (as discussed above), the Revenue could not assume that the '15% rebate' mentioned in his statement was meant for the assessee trust and not BASPL. If the Revenue intended to infer so, then in law, they were required to summon and again re-examine Shri Jayashankar on this aspect, which has not been done in the present case. The Ld. AR showed us that, the 15% rebate which was allowed in all the bills of assessee Trust was appropriately accounted for in the books of accounts and it reconciled with the bills found inside the box files and therefore these construction bills by itself cannot be said to incriminate the assessee of any wrong-doing or unaccounted cash payment. He contended that, only because the assessee was allowed 15% rebate in their bills, could not be ipso facto assumed to have been paid back in cash, because Shri Jayashankar had averred that CBPL was receiving cash in lieu of rebate of 15% from BASPL (which has also been found to be factually erroneous). Having considered these submissions put forth by the Ld. AR in light of the findings rendered by Ld. CIT(A), in our considered vie....
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....ed his statement to be unreliable. 8.33 It was also brought to our notice that, apart from making the above averment, Shri M V Jayashankar has not provided any specifics relating to this so-called cash dealings with the assessee trust viz., particulars of project for which it was received, why the cash was received much later than the construction, person from whom it was received etc. The Ld. AR contended that, his answer to Question No. 9 was generic wherein he simply roped in the assessee as well to be one of the persons to whom the impugned cash notings pertained to, solely at the instigation of the Investigating Officer, without providing any context to the same. The Ld. AR reiterated that, the assessee had demonstrated that the construction work was actually done and the bills were raised by CBPL across FYs 2014-15 to 2020-21 and therefore the statement of Shri Jayashankar that, the 15% rebate allowed in these bills were received back in cash much later viz., 2019 & 2020 lacked credibility. Also, as noted earlier, even the value of the notings did not correlate with the quantum of rebates allowed in these bills. The Ld. AR further reminded us that, the rate revision sought....
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....R had also pointed out that, Shri M V Jayashankar had retracted his original statement on 27.03.2023 and this fact was available before the lower authorities. For the aforesaid reasons, we are therefore of the view that, it cannot be said the testimony of Shri Jayashankar was the true version. His testimony, in our view, is not strong enough to wipe out the evidences and contemporaneous facts brought in this regard by the assessee as it is contrary to what the starwitness has stated, thereby rendering his testimony to be unworthy. 8.35 It was also shown to us that, the only relevant questions put forth by the Investigating Officer to Shri Jayashankar just related to Bannari Amman Group, as discussed above. The Ld. AR pointed out that, though Shri Jayashankar had averred in his initial answers that, he was looking after several other projects during his time at CBPL but no other questions regarding the Chettinad Group or the other projects overseen by him, were put to him by the Investigating Officer. The Ld. AR showed us that, the seized diary found from the possession of Shri V Muthu not only comprised of the alleged entries relating to 'Bannari Amman' but also included several....
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....ncies and was not free from all blemish and even the circumstantial evidences pointed out by the Ld. AR showed that it was not credible enough to be solely relied upon to implicate the assessee. Rather, the assessee is found to be consistent with the contemporaneous material placed before us. Hence, if the Revenue wanted to act upon such a vague and inconsistent testimony to implicate the assessee, it was crucial for the Revenue to have reexamined Shri Jayashankar to iron out the gaps and infirmities in his answers, which we find was not done in the present case. According to us, it was imperative to unravel and atleast bring on record the identity of 'chief cashier' who was paying the cash to Shri Jayashankar, confront the said person and unearth the purported modus operandi which was being allegedly followed by the parties. It was also necessary to ascertain from Shri Jayashankar as to why did he mention that cash was being received from BASPL in lieu of rebate of 15%, when evidently there was no such rebate discernible from their bills. It was also essential to understand from Shri Jayashankar as to why the alleged cash was being paid by the assessee trust in 2019-2020 in lieu o....
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....ed credibility. We may in this regard, gainfully refer to the decision of Hon'ble Apex Court in the case of CIT v. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64/266 Taxman 461/418 ITR 315. In this decided case, the Revenue had disallowed the purchases made by the assessee holding it to be bogus based on the statements given by a third party. On appeal, the Ld. CIT(A) noted that, on one hand, the assessee had discharged its initial burden of substantiating the purchases by producing all relevant documentary evidences which it was ordinarily required to maintain in the regular course of business, whereas on the other hand, the Revenue had denied the opportunity of cross examination to the assessee. The Ld. CIT(A) therefore held the purchases to be acceptable and deleted the disallowance made by the AO. On the self-same reasoning, this Tribunal and later on, the Hon'ble High Court also dismissed the appeal of the Revenue. On further appeal, the Hon'ble Supreme Court also concurred with the findings of the Ld. CIT(A) and did not find any infirmity in the orders passed by the lower appellate authorities and accordingly dismissed the appeal of the Revenue. The relevant p....
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....he statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 8.40 In view of the above judicial precedents (supra) and the reasons elaborately set out above, we are of the considered view that, the AO's failure to allow the assessee opportunity to cross examine this Departmental witness, Shri Jayashankar, on whose statement he was relying upon, was a serious and fundamental error which rendered the impugned addition(s) to be untenable. 8.41 We now turn our attention to the statement(s) of Smt. V Valliammai recorded u/s 131 of the Act on 26.07.2021 and 30.07.2021, which has been extensively relied upon by the Ld. CIT(A) to justify the impugned addition. Unlike Shri Muthu, Shri Yegappan and Shri Jayashankar who had stated that the impugned notings related to BASPL, Smt. V Valliammai had categorically controverted their testimonies and averred that the impugned notings exclusively pertained to the assessee trust and that no cash whatsoever was ever received in lieu of the rebate allowed to B....
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.... in the negotiations of the rebate in the construction contract of the assessee, she had answer in the negative. The Ld. AR thus wondered that, when she was neither the CFO of CBPL nor was involved in the negotiations with the assessee and even the concerned employees who were making the impugned notings had not identified her to be in-charge of the affairs of CBPL, then how was she identified to be in a position to explain the nuances of the rebates allowed by CBPL in the bills of the assessee and other customers as well. According to him, her statement suffered from bias as she had given answers to suit the requirements of CBPL having no actual knowledge of the transactions and that her answers were based on hearsay. The Ld. AR claimed that her statement was analogous to that of an accomplice turned approver, whose statement by its very nature was suspect being that of a participator in the whole case. 8.43 In support of his above contention, the Ld. AR first invited our attention to Question No. 2 of her statement, where she was enquired regarding the 15% rebate given by CBPL for the projects undertaken on behalf of Bannari Amman Group. To this, she is noted to have answered ....
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....ized material and was therefore capable of narrating any tutored version qua the impugned vague notings which would suit their purpose. The Ld. AR showed us that, in her answer to Question No. 4, Smt. V Valliammai had herself admitted that, the total contract value from FYs 2014-15 to 2020- 21 was Rs.95.60 crores and the rebate was Rs.14.34 crores, but she had quantified the value of rebate received back in cash only for FYs 2016-17 to 2019-20. He pointed out that, if the bills for FYs 2016-17 to 2019-20 is considered, and bills for FYs 2014-15, 2015-16 and 2020-21 are ignored, then, the value of the net basic amount would work out to Rs.52,52,96,465/-, and the discount component worked out in the ratio of 85:15, would yield an answer of Rs.9,26,99,376/-. The Ld. AR showed us that, the aggregate cash notings as per the seized material was Rs.9,26,72,850/-, which somewhat matched the figure quantified by Smt. V Valliammai. He thus argued that, Smt. V Valliammai, had selectively picked and chosen only those bills whose rebate in total, would somehow match with the notings/jottings found in the seized material. According to him, by doing so, she was able to ensure that these notings a....
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....ut forth by Smt. V Valliammai (much later after the date of search) was a biased one which was tailor made to suit their purpose to reduce the tax incidence on Chettinad Group and mitigate other adverse implications. According to him, it was a case where though the name of assesse was nowhere mentioned in the seized notings, the statement was given by her with the malafide intent to shift the onus & implication onto the assessee and save CBPL from higher tax liability or save others who actually gave cash as consideration. He thus argued that, such an apparent self-serving statement could not be used against the assessee. Having considered the foregoing, we find force in the submissions of the Ld. AR and the statement of Smt. Valliamai does not inspire confidence being riddled with material infirmities, and found to be based on interestedness, incompetence and subordination which was tailor made to suit the purpose of Chettinad Group. Hence, this statement cannot be relied upon as it is not free from all blemish. 8.46 It is further observed from reading of her statement that, even the Investigating Officer was not convinced with her initial reply. In Question No. 5 put to her, t....
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....d. CIT(A). Going by her statement, addition(s) was warranted only in AYs 2017-18 to 2020-21 and that no addition(s) could have justifiably been made in AY 2014-15, 2015-16 & 2021-22. The very fact that the Department itself has not embraced her statement in its entirety, and has ignored those averments by making additions in all years as it did not serve the Department's stance vitiates the reliability of the statement, which as discussed earlier, also lacks consistency, competency, and corroboration. 8.48 It is further noted that, Smt. V Valliammai in her statement had submitted that, CBPL would give rebate of 7.5% in all other contracts but these rebates were actual and genuine. The Investigating Officer had pointed out to her that, CBPL had also given rebate of 7.5% to BASPL in their construction bills and therefore questioned her whether such rebate was being received back in cash or not. To this, she had submitted that, this rebate was also genuine and was allowed a part of business negotiation prior to signing the contract. According to her, it was only the rebate given to the assessee-Trust and that too for a specific period of FYs 2016-17 to 2019-20 was not genuine b....
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....have required her to provide the names of the persons with whom she had negotiated the 15% rebate given to the assessee, to which she had answered that, one Shri H.B. Srinivasa, Vice-President of CBPL, was involved in the negotiations, who has since left the company. It is observed that even she also unable to name even a single trustee or officer-in-charge of the assessee trust who had agreed to pay back the 15% discount rebate in cash. So to recapitulate, neither was the cashier, Shri Yegappan nor the manager, Shri Jayashankar nor the purported CFO, Smt. Valliamai were aware about the identity of the person who was paying cash to them for and on behalf of the assessee. It is indeed surprising that no one knows where the cash came from. According to us, the absence of this vital link to the assessee vitiates the testimonies of these employees. 8.51 It is further noted that Smt. Valliamai was thereafter specifically asked as to whether she was present when the alleged negotiation of paying back cash in lieu of discount was finalized with the assessee, to which, she again answered in negative. Inspite of saying so, she is noted to have confirmed that, the diary notings mentioned ....
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....evidence was found which would suggest that the assessee had made unaccounted payments for construction of their building. It is also not a case that, any bogus expense or revenue leakage was identified by the survey team, which would otherwise justify the source of such huge amounts of cash paid in the years 2019 and 2020. Undisputedly, the assessee is a charitable trust which is providing education and therefore has limited sources of revenues. It is not the case of the Revenue that, any unaccounted fee collections, etc. was found in the course of survey, out of which, the impugned unaccounted cash payments could have been made. Moreover, the assessee being a registered charitable trust u/s 12AA of the Act is enjoying exemption from Income-tax u/s 11 of the Act. The Ld. AR pointed out that, all the receipts of the trust, whether in cash or in cheque, are eligible for exemption u/s 11 of the Act and that, any payments made towards construction of building, either in cash or in cheque, is eligible to be treated as application of income u/s 11 of the Act. He also brought to our notice that the provisions of Section 40A(3), 40(a)(ia), 43B were not applicable to the assessee trust. Th....
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....to the decision of the coordinate Bench at Lucknow in the case of Mahendra Lalka Vs ITO (ITA No. 172/Lkw/2023). In the decided case, a search action was conducted upon one SSS Group, in the course of which, a ledger copy of the assessee was found which according to AO contained several entries, some of which, matched with the cheque entries in the books of the assessee. Based on the statement of Mr. Patel of SSS Group, the AO held that the unmatched entries represented unaccounted transactions of the assessee and added the same to the total income. On appeal, this Tribunal observed that, the assessee had denied the contents of the ledger at all stages and therefore it was incumbent upon the lower authorities to have investigated further to bring out the correct facts. It was noted that, there was no clinching evidence brought on record to support the ledger entries and also the assessee was not given an opportunity to cross examine Mr. Patel. The Tribunal is according noted to have deleted the addition, by observing as under:- "7. It is very much evident in the face of such specific denial by the assessee not only before the Assessing Officer but before the first appellate....
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.... unaccounted cash payment was unjustified both on facts and in law. Our findings for arriving at this conclusion is summarized as follows :- (a) The impugned seized material comprising of notings/jottings in a diary/loose sheets seized from third party premises cannot be treated as admissible evidence in the matters of the assessee. [Refer decision of SC in V C Shukla (supra) & Common Cause (supra)] (b) The notings found in the impugned seized material are vague and did not bear the name of the assessee or any endorsement or acknowledgment of the assessee and therefore such entries are not conclusive proof against the assessee, without independent corroboration. (c) There are several factual consistencies found in the impugned notings qua the case sought to be made out by the AO viz., there is no mention of any details of work/order etc. for which the payments were made or the name of person from whom it was received and the locations/places mentioned in the impugned notings does not co-relate with the location of the assessee's construction site, and therefore these entries are not reliable on stand-alone basis. (d) The assessee has further demo....
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....renders the reliance on such bald statement to be vitiated in law. (j) Smt. Valliammai is noted to be an interested witness and who is found to be artificial and unnatural. Her testimony is found to be riddled with material infirmities and is suspicious of incompetence, interestedness and subordination, for the reasons elaborately discussed above. Even the lower authorities have found her statement to be partially incorrect and thus only picked up selective portions of her answers which suited their convenience to justify the impugned addition, which according to us was vitiated having regard the discrepancies made out before us. (k) Moreover, the survey action conducted upon the assessee prior to the date of search did not reveal any unearthing of unaccounted cash payment or unexplained asset or unknown sources of income etc. which would justify such huge cash payments. (l) The assessee is noted to be a charitable trust enjoying exemption u/s 11 of the Act in respect of all their receipts, whether in cash or cheque and all the expenses on construction of college, irrespective in cash or cheque is allowable as application of income. In that view of the ma....
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....of the view that such extra / additional fees collected by way of 'value added course fees' (optional fees) was in violation of the prescribed norms. According to the AO, such amount collected from the students for extra / value added courses cannot be construed as for the purposes of charity. The AO accordingly quantified the surplus from value addition course fees and added the same by way of Business Income of the assessee in AYs 2017-18 to 2021-22. Aggrieved by the impugned order, the assessee preferred appeal before the Ld. CIT(A) who was pleased to delete the same. Now, the Revenue is in appeal before us. 10. Heard both the parties. The Ld. CIT, DR appearing for the Revenue has reiterated the findings recorded by the AO for making the impugned addition and contended that, since the value addition course fees was being collected over and above the fees fixed by the Fee Fixation Committee, the AO had rightly added the surplus by way of Business Income. It is noticed that the assessee is running a college which is having an autonomous status from UGC and is also recognized by AICTE. The Ld. AR had pointed out that the college follows the curriculum specified by Anna Universit....
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....o make those expectations fulfilled and make the students more knowledgeable and employable, the appellant is providing various value-added course to bring the students knowledgeable and employable when they are graduated and for this purpose it had charged a nominal fee for imparting the value addition. It was also submitted by the appellant that the fees collected for various value-added courses are in the nature of fees received for imparting education to the students as an extension to the curriculum prescribed by AICTE. Further, the appellant had also submitted that it is not the case that the surplus generated out of these value-added courses has been diverted to the benefit of the trustees or applied to any other object other than the educational purposes. It was also submitted by the appellant that the surplus generated was utilized in improving the infrastructure and the other facilities of the college every year. Further, the appellant had submitted that these fees were collected once the students were admitted in the college, meaning that it is not in the nature of capitation fees for admitting the students in the colleges run by the appellant. It was also submitted by t....
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....ts and entire fees collected is also accounted in the books of accounts of the appellant. It is also not the case of the appellant that there are no expenses on this activity. The expenses were regularly booked and the resultant surplus out of this activity is either added in to total surplus of the trust or utilized for the purpose of object of the trust. The AO could not bring any evidence regarding diversion of surplus either for the personal benefits of the trustees or purposes other than the object of the trust. On the basis of the facts and circumstances of the case, I am of the opinion that even though the appellant has collected extra fees over and above fees fixed by Fee Fixation Committee but the surplus generated out of such activity was applied only for the purpose of objective of the trust and the AO did not bring any material evidence that it is being mis utilized or diverted to the personal benefit of the trustees which is in violation to the provisions of sec 13 of the Act. Therefore, the addition made by the AO is hereby deleted and grounds raised by the appellant are allowed." 10.2 We find that the case of the assessee is also supported by the decision of the c....
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....le objects and the surplus is applied towards charitable purposes and separate books of accounts are maintained for such activity. According to the AO, though it was not in dispute that, the impugned activities were incidental to education, and was being provided by the assessee to the students alone, and that the surplus was being used for educational purposes, but he was of the view that the assessee had not maintained separate books of accounts, as provided in law. The AO held that, all the conditions of Section 11(4A), as discussed in aforesaid, were required to be cumulatively satisfied by the assessee. In his view, since the assessee failed to meet one condition viz., maintenance of separate books of accounts, he held that the benefit of Section 11(4A) cannot be allowed in respect of the surplus derived from such incidental activities. Upon being show caused on this aspect, the assessee is noted to have provided the separate Income & Expenditure Account for each of these incidental activities before the AO. The AO is noted to have brought to tax such surplus derived from the incidental activities by way of business income and denied the benefit of Section 11(4A) on the ground....
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....al activity was easily extractable from the accounting software. He brought to our notice that, the assessee had furnished the separate accounts extracted from this accounting system for each of these incidental activities before the AO. We observe that, the Ld. CIT(A) had called for the impounded books of accounts which was maintained in electronic data and after going through the same, the Ld. CIT(A) observed that, though no separate books of accounts was maintained on standalone basis, but, since the assessee was maintaining individual ledgers, it was possible to segregate and obtain the individual Income & Expenditure Account for each of the activity. The Ld. CIT(A) found that the assessee had drawn up the separate accounts from the detailed accounts maintained in this computerized data and the same was noted to be verifiable. It is also noticed that, the AO did not dispute the correctness of the separate accounts furnished by the assessee and the computation of surplus for each of these incidental activities. Having gone through the details placed before us, we find that the value of addition impugned before us, is in fact, the same figure which is disclosed in these separate ....
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....as also submitted by the appellant that during the course of assessment proceedings, the books of accounts for hostel, transport and stationery were extracted from the separate books of accounts and submitted to the AO and the AO has accepted the income and expenditure accounts extracted from the books of accounts maintained by the appellant and the AO had accepted in totality the income and expenditure submitted by the appellant derives from the separate books of accounts maintained by the appellant. Hence, according the appellant the claim of exemption on the surplus generated out of the above activities cannot be denied and it is eligible for the exemption u/s 11(1) of the Act. 5.5.4. In order to verify whether separate books of accounts were maintained by the appellant or not, I had sought the books of accounts impounded from the premises of Bannari Amman Educational Trust, Satyamangalam Campus during the survey proceedings conducted on 25.02.2020 from the AO. As requested, the AO had made available the impounded books of accounts of the trust in the course survey proceedings on 25.02.2020 in soft copy format to verify the nature of accounts maintained by the appellant....
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....39;ble ITAT Chennai, held that providing the incidental activities like sale of textbook to the students, plying of buses and running of canteen are incidental to the attainment of main objects of the assessee's society. Further, the Hon'ble ITAT also held that the AO himself in the assessment order has computed income and expenditure from various activities in the part of assessment order itself which undoubtedly clear that there are books of accounts maintained by the appellant and allowed the exemption claimed u/s 11 of Act in the said case. The relevant part of the decision is reproduced as under. 24. Coming back to generating income from incidental activities. It is an admitted fact that the assessee is providing various incidental activities like sale of textbooks to students, plying of buses for the benefit of commutation of students, running of canteen and renting out sports ground for the purpose of sports tournaments. These activities are incidental to the attainment of the main objects of the assessee society, because, in any school these facilities are essential. Therefore, there is no dispute on the incidental activities carried out by the assessee whi....
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....s. Therefore, the addition made by the AO of Rs.11,98,98,607/- is deleted and these grounds of appeal of the appellant are allowed." 12.2 For the above reasons, we see no reason to interfere with the same. Accordingly, these grounds raised by the Revenue stands dismissed. 13. The assessee in their appeals has also raised legal grounds (Ground No.14), inter alia, challenging the validity of the satisfaction note recorded prior to issuance of notice u/s 153C of the Act and the assessment framed u/s 153C/143(3) for the unabated assessments for want of incriminating material. Since we have already deleted the addition(s) impugned in their appeals on merits, these legal grounds have become academic in nature and are therefore not being separately adjudicated upon and is left open. 14. In the result, all the appeals filed by the assessee are partly allowed and the appeals filed by the Revenue as well as CO's filed by assessee are dismissed. Order pronounced on the 14th day of August, 2025, in Chennai. ============= Document 1 1 8604195555 3 Cx. Reed, from BASS for Sebate 15% On - 07. 12.19 07.12.19 11.06.2020 1 Gr. Read. from BASE for Reparte 15% on 11.06.....