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TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 90
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....recorded by the Assessing Officer and list of documents included in the above satisfaction was listed out in page 1 of the assessment order. Accordingly, notices u/s 142(1) of the Act were issued and served on the assessee. In response, ld. AR of the assessee attended and submitted the relevant information as called for. 3. On 08.12.2014, assessee filed its return of income u/s 153C of the Act along with revised Balance Sheet and revised Income & Expenditure account. Notice u/s 143(2) was issued and served on the assessee. After considering the detailed submissions filed by the assessee, the Assessing Officer observed that the complete planning of the donations from the assessee to FIIT JEE was made by FIIT JEE itself. Based on the information contained in Annexure A-20 seized from the FIIT JEE premises. The Assessing Officer observed that the document shows that MOU for transfer of donation and subsequent correspondence required to be made by the assessee with FIIT JEE and its Chairman was prepared in their office itself. The Assessing Officer has reproduced the relevant MOU in the assessment order and based on that, the Assessing Officer came to the conclusion that the assesse....
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....ee. Since the assessee has declared the donation in its Income& Expenditure account and donation paid was shown, the same is as donation received. No other expenses were incurred on account of charitable purposes. Accordingly, he disallowed whole donation amount paid. 5. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-5, Delhi and filed detailed submissions. After considering the detailed submissions of the assessee, ld. CIT (A) partly dismissed the appeal preferred by the assessee by observing as under :- 8.11 The claims of the Appellant were analysed vis-a-vis the actual flow of events, and the following Order Sheet entry dated 16.03.17 was made : "16.03.17 Sh. Aseem Gupta, CA and Sh. Madhur Gupta, CA attended and filed Submissions dated 16.03.17. 1. The following documents received from the representatives of M/s FIITJEE Ltd. were handed over to the Ld. Counsels : i. Photocopy of a 'Memorandum of Understanding (in 6 Pages) dated 16.02.09 between M/s Commitments Morality Vision Education Society as First party and M/s FIITJEE Ltd. as Second party, with Pages 1 to 5 each having 3 signatures and Page 6 h....
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.... Deed' dated 28.09.12 and the Photocopy of the claimed 'Deed of Revalidation' dated 05.04.13 did not belong or pertain to the Appellant i.e. M/s Commitment Morality Vision Education Society. d. If the Department is of the view that the Photocopies of the 3 documents as per S. No. i, ii, and iii of Point 1 were valid, then they may be given an opportunity to examine and rebut the Originals, if any. 3. It was pointed out to the Ld. Counsels of the Appellant that it was submitted by M/s FIITJEE Ltd. that Rs. 19,71,87,203/- was paid by M/s Commitment Morality Vision Education Society to M/s FIITJEE Ltd. in A.Y. 11-12 out of which an amount of Rs. 1,65,45,000/- was received by M/s FIITJEE Ltd. but was treated as received on behalf of M/s FIITJEE Hyderabad Classes Ltd. and thus the amount pertaining to M/s FIITJEE Ltd. was Rs. 18,06,42,203/-. It has been further submitted by M/s FIITJEE Ltd. that Rs. 18,11,84,130/- was paid by M/s FIITJEE Ltd. to M/s Commitment Morality Vision Education Society in A.Y. 14-15 which included refund of Original Rs. 18,06,42,203/- and Rs. 5,41,927/- being Interest paid @ 0.3% by M/s FIITJEE Ltd. to M/s Commitment Morality Vision....
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....n Education Society. It has been claimed that the First party could not comply with the specified and agreed conditions in respect of utilization of the conditional grants and that the First party has decided to return the amounts to the Second party. The terms and conditions clearly mentioned that the Second party will not levy/claim any Interest, Penalty, Claims, Damages, nor initiate any legal action. However, Interest @ 0.3% is still claimed to be paid by M/s FIITJEE Ltd. F. Deed of Revalidation in F.Y. 13-14 (A.Y. 14-15) : i. Deed of Revalidation dated 05.04.13 signed by M/s FIITJEE Ltd. as Second party, with the First party being M/s Sad Bhawna Trust. ii. Deed of Revalidation dated 05.04.13 signed by M/s FIITJEE Ltd. as Second party, with the First party being M/s Commitment Morality Vision Education Society. iii. In both the above claimed Deed of Revalidation, it has been stated that the Second party i.e. M/s FIITJEE Ltd. had given Conditional Grants/Donation to the First party i.e. M/s Sad Bhawna Trust in one case and M/s Commitment Morality Vision Education Society in the other case. G. Refund of Money with Interest in F.Y. 13-1....
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....id not have any control over there. In support of the same, it is submitted that, originals may be procured from the Bank for checking authenticity of our claim. 4. In alternative and without prejudice to anything said earlier, it is submitted that, the appellant trust only acted as pass through entity/paper entity. It is the established law that in case of paper entities, they are to be ignored and actual beneficiaries has to be taxed. We would like to rely on the following: "11. The Delhi Bench of the ITAT in the case of M/s Vijay Conductors India Pvt. Ltd., ITA No.3484/Del/2013, Assessment year 2008-09, order dated 28.1.2015 at para 17 held as follows :- ITA No.6991 to 7004/Del/2014 "17. Thus, there is an order of the Settlement Commission as well as the Additional Commissioner of Income Tax under Section 144A holding that Shri S.K. Gupta was providing accommodation entries, he used various companies as conduit for providing the accommodation entries, cash was received through mediators from the persons who wanted to avail the accommodation entries, such cash was deposited in the bank account of the conduit companies and thereafter, cheque of ....
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....s not suffer from any legal infirmity." 8.13 A perusal of the entire facts of the case show that the Appellant has been involved in the receipts and payments on its own behalf and on behalf of M/s FIITJEE Ltd. and the Directors and other persons associated with the FIITJEE Group. The Appellant was provided repeated opportunities to come out with the full facts of the case, but the Appellant kept on giving evasive replies. 8.14 It is seen that the Appellant was involved in the design to defraud the Revenue, and now when the scheme has been exposed, has sought to claim that the Appellant itself had no control over the matters. It is seen that the Bank Account belonged to the Appellant, but it was claimed by the Appellant that the Bank Account was operated by persons of the FIITJEE Group. The Appellant was required to specify the exact persons involved and to explain as to how the FIITJEE Group was carrying out the transactions from the Bank Account of the Appellant. The Appellant was also required to support the claims with full details and evidences. However, the Appellant kept on stating that the FIITJEE Group was having full control over the transactions through ....
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....o relief can be granted to the Appellant. 8.20 In view of the above discussion, the addition made by the Assessing Officer amounting to Rs. 23,59,65,731/- is hereby confirmed. 6. At the time of hearing, ld. AR of the assessee submitted as under: "It is respectfully submitted that the admitted case of the Ld. AO as per paragraph 3-6 of the assessment order is that the complete planning of the donations from the assessee to FIITJEE was made by FIITJEE itself, the bank account of the assessee was opened for this specific purpose of making donation only to FIITJEE and was fully controlled and operated by FIITJEE, and the deposit of donations and their transfer to FIITJEE was controlled by FIITJEE. Accordingly, the Ld. AO held that the assessee is not carrying out any charitable activities during the impugned year, and the amount paid to FIITJEE, to the tune of Rs. 23,59,65,731/- has been brought to tax. In view of the aforesaid facts, it is respectfully submitted that when the case of Ld. AO himself is that the donation received by the assessee and its transfer to FIITJEE were controlled by FIITJEE only, then the amount received as well as the amount paid ....
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....documents belonged to CMV and were incriminating in nature. The Assessing Officer initiated proceedings under Section 153C/144 of the Income Tax Act, 1961, and issued notices on 25 March 2014 requiring CMV to file returns of income for assessment years 2007-08 and 2011-12. After considerable delay and repeated non-compliance, CMV filed revised returns on 08 December 2014- approximately seven months after notice --- along with revised balance sheets and income-expenditure accounts. The assessment proceedings revealed that CMV had opened a bank account with Canara Bank, Hauz Khas (New Delhi) ostensibly for charitable purposes, but the account was operationally controlled by FIIT JEE Group entities, with transactions totaling Rs. 23,59,65,731/- in assessment year 2011-12. Key Findings in Assessment: The Assessing Officer found that: 1. CMV allowed FIIT JEE to use its name for "rotating their certain funds" (per statement of Aseem Gupta, CMV's treasurer and controlling person); 2. Blank account opening forms and blank cheque books were signed by Aseem Gupta and handed over to PUT jgp,s Rajesh Sharma without knowledge of how they would be....
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....nts of the account holder. As established in India Holding Private Limited Vs. ACIT (2015) 371 ITR 295, even photographic copies of such documents found with another party constitute prima facie evidence of ownership and control by the account holder. The Supreme Court in Singhad Technical Education Society Vs. CIT (2017) 84 taxmann.com 290 explicitly held that documents uniquely belonging to an assessee's organization cannot be divorced from that organization merely because they were physically located elsewhere. In the present case, the Assessing Officer's satisfaction note meticulously enumerates documents that are utterly incapable of belonging to anyone but CMV: (1) bank account opening form signed by CMV's authorized representative; (2) cheque book application; (3) resolutions passed by CMV's general body authorizing account operation; (4) memorandum of association defining CM V's governance structure; and (5) certificates of registration with the Registrar of Societies. These documents embody CMV's organizational identity and cannot logically be in FIIT JEE's possession for any purpose other th....
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....tatements only during search, not after search conclusion. Revenue's Argument: A. Procedural Compliance & Post-Search Authority: B. While Section 131(1A) explicitly permits recording statements "in the course of search," the statutory framework under Section 132 of the Income Tax Act is not confined to the physical search operation alone. The "search proceedings" encompass the entire investigative phase, including post-search interrogations, verification of seized documents, and recording of statements of persons connected with seized materials. This interpretation is supported by CIT Vs. Sunita Sharma (1997) 225 ITR 619, wherein the Supreme Court held that "search operations" include the investigative continuum, not merely the physical seizure phase. The statement of Aseem Gupta was recorded during the investigative phase following upon documents seized from FLIT JEE's premises-documents that directly implicated CMV. The seven-day gap between the physical search and the statement recording does not vitiate the statement's admissibility if recorded within the investigative ambit of the search operation itself. The search was ....
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....on-compliance, the admission is substantiated by objective evidence and behavioral patterns. The substantive truth of the statement ecl ipses procedural defects under Section 132(1A). III. DENIAL OF SECTION 11 CHARITABLE EXEMPTION -MISAPPLICATION OF FUNDS Ground of Appeal: Assessee claims that Section 11 exemption should be granted because the original return showed "utilization of funds as per original return of income" and CIT(A) ignored "contradictory findings at page 22 of AO's order." Revenue's Argument: A. Section 11 Exemption Requires Substantive Charitable Application - Not Mere Formal Designation: Section 11 of the Income Tax Act provides exemption from income tax to charitable trusts/societies on income applied for charitable purposes. The Supreme Court in Ramakrishna Param Dhamma Samiti Vs. CIT (1976) 103 ITR 413 established that the test is substantive application of income for charitable purposes, not the formal characterization in returns. A trust cannot claim exemption merely by stating in its return that hinds were applied charitably if the substantive facts reveal otherwise. In the present case: ....
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....rth Rs. 60,000) as mere "coincidence" is untenable. The Assessing Officer's finding that this constitutes consideration for making CMV's charitable status available as a tax shelter vehicle is supported by CIT Vs. Andhra Sanathanam Trust (1989) 176 ITR 441, wherein the Supreme Court held that if consideration flows to the trustee for misuse of the trust's charitable status, the exemption stands forfeited for that period. The temporal sequence is incontrovertible: introduction by Rajesh Gupta (who "introduced" Aseem to FIIT JEE's chairman); subsequent account opening; simultaneous allocation of four audit assignments to Aseem Gupta; fund rotation through CMV's account; and cessation of CMV's involvement post-exposure. This pattern demonstrates quid pro quo. Conclusion on Section 11 Denial: The denial of Section 11 exemption is correct. CMV was not an independent charitable entity but a tax-shelter vehicle deployed by FIIT JEE for extracting tax benefits while maintaining commercial control of funds. IV. RECEIPT & INCOME DETERMINATION - "CATEGORICAL DENIAL" DEFENSE REJECTED Ground of Appeal: Assessee claims it did not receiv....
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....spite ample opportunity over 2010-2011). * CMV's contemporaneous audited accounts (filed with the original return u/s 139) showed these transactions as "donations received and paid" by CMV itself-not as transactions by FIIT JEE through CMV's account. The last point is dispositive: CMV's own audited return u/s 139 (filed before the search) treated the funds as its own donations received and paid out. CM V cannot now claim non-receipt when its own auditor vouched for the transactions as CMV's transactions. Conclusion on Receipt & Income: The Rs. 23,59,65,731/- were received by CMV and constituted taxable income. The denial is factually and legally baseless. V. COLLUSION & MISUSE OF CHARITABLE STATUS Ground of Appeal: Assessee claims there was no "collusion" as funds were routed without CMV's knowledge, and the scheme was entirely FUT JEE's wrongdoing. Revenue's Argument: Collusion is not established by documentary proof of written conspiracy. It is established by conduct, temporal proximity, mutual benefit, and circumstantial inevitability. The Supreme Court in CIT 7s. Surana and Sons Ltd. (1996) 222 1T....
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....ction 144, provides the statutory framework for assessing persons other than the searched person where documents belonging to such persons are found during search and are incriminating. The learned Assessing Officer has meticulously followed the statutory procedure: 1. Search was initiated under Section 132 on 17 December 2012. 2. Documents belonging to CMV were identified and a satisfaction note was recorded on 25 March 2014 (justly recorded after consultation with the appraisal report and seized documents). 3. Notice under Section 153A read with Section 153C was issued on 25 March 2014. 4. The assessee was afforded abundant opportunity to file returns, submit documents, and make submissions (the assessee sought and received multiple extensions). 5. The assessment was finalized on 23 March 2015 under Section 153C/144 after considering all submissions and evidence. The procedure is statutorily sound and judicially established. The assessee cannot escape substantive liability by challenging the procedural label. CONCLUSION The assessment order is legally sustainable, factually well-reasoned, and procedurally com....