Income Tax Appellate Tribunal - Cochin
M/S.Quilon Medical Trust, Kollam vs Assessee on 13 November, 2013
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ITA No.19, 20 & 21/Coch/2012
CO Nos. 07, 08 & 09/Coch/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri N.R.S. Ganesan (JM) and Shri B.R. Baskaran (AM)
I.T.A Nos. 19 to 21/Coch/2012
(Assessment years 2007-08 to 2009-10)
A.C.I.T., Cent.Cir vs M/s Quilon Medical Trust
Kollam Medicity, Thattamala
Kollam
PAN : AAATQ0108P
(Appellant) (Respondent)
C.O. Nos 07 to 09/Coch/2012
(Arising out of I.T.A Nos. 19 to 21/Coch/2012)
(Assessment years 2007-08 to 2009-10)
M/s Quilon Medical Trust vs A.C.I.T., Cent.Cir.
Medicity, Thattamala, Kollam Kollam
PAN : AAATQ0108P
(Cross Objector) (Respondent)
Revenue by : Shri M Anil Kumar
Assessee by : Shri Iype Mathew
Date of hearing : 13-11-2013
Date of pronouncement : 13-01-2014
ORDER
Per N.R.S. Ganesan (JM) The revenue has filed the appeals against the respective orders of the CIT(A)-III, Kochi dated 17-11-2011 pertaining to assessment years 2 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 2007-08 to 2009-10. The assessee filed the cross objections to support the orders of the CIT(A). Therefore we heard the appeals and the cross objections together and dispose of the same by this common order.
2. Let us first take the appeal of the revenue for the assessment year 2007-08. The first ground of appeal is with regard to quantification of unaccounted investment for making additions u/s 69, 69A, etc. without rejecting the books of account.
3. Shri M. Anil Kumar, the ld.DR submitted that the CIT(A) found that a duty was cast upon the assessing officer to reject the books of account if he / she adopts other methods for computation of total income of the trust. In this case, according to the ld.DR, the undisclosed investment was found in the course of search operation. According to the ld.DR, the assessee trust invested an amount of Rs. 3,39,16,920 outside the books of account for the construction of the building during the year under consideration. Incriminating materials found during the course of search operation showed that unexplained investment was made in the construction of hospital and medical college. However, in the balance-sheet as on 31-03- 2007 the assessee has disclosed only an amount of Rs.1,18,54,356. During the course of search operation a statement was recorded u/s 3 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 132(4) of the Act. The trustees, Shri Abdul Salam and Shri A.A. Salam admitted that an amount of Rs.5 crores each was declared by them as undisclosed income for the assessment year 2009-10. In view of the materials found during the course of search which indicated the investment of funds in the construction outside the books of account, according to the ld.DR, the assessing officer has rightly computed the undisclosed income. Even though there is no specific reference for rejection of books of account in the assessment order, the fact remains is that books of account was rejected and the income was estimated on the basis of the seized material. Therefore, the CIT(A) is not correct in observing that the books of account ought to have been rejected.
4. On the contrary, Shri Iype Mathew, the ld.representative for the assessee submitted that the assessee trust established and maintained a hospital and medical college. A search was conducted u/s 132 of the Act in the premises of the assessee trust. The department claims that they have found incriminating materials with regard to undisclosed investment outside the books of account. If that is so, the assessing officer is expected to specifically reject the books of account before proceeding to compute the income on the basis of the search material. Unfortunately, the assessing officer has not rejected the books of account. Therefore, 4 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 according to the ld.representative, the assessing officer cannot travel beyond the books of account since the same was not rejected.
6. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the order of the lower authorities. During the course of search operation on 06-01-2009 incriminating materials was found which disclosed investment of undisclosed income for construction of the building. The assessing officer found that during the year under consideration, the assessee has spent an amount of Rs.4,57,71,276. The seized material QMT-97, 112, 114, 165, etc. was considered by the assessing officer to compute the total investment in the building. However, the assessee has shown the investment as on 31-03-2007 at Rs.1,18,54,356. The assessing officer came to the conclusion that the assessee trust invested an amount of Rs.3,39,16,920 outside the books of account for construction of the building. If this is so, this Tribunal is of the considered opinion that the assessing officer has to reject the books of account maintained in the course of regular activity. As rightly submitted by the ld.representative for the assessee, the books of account were not rejected by the assessing officer. The CIT(A), however, has not deleted any addition on that basis. A casual reference made in the appellate order 5 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 by the CIT(A) with regard to obligation of the assessing officer to reject the books of account before proceeding to estimate the income on the basis of the seized material may not prejudice the interest of the revenue in any way. This Tribunal is of the considered opinion that in the assessment proceedings consequent to the search, the material found during the course of search operation along with the books of account maintained in the course of regular activity has to be taken into consideration. Therefore, the observation made by the CIT(A) with regard to rejection of books of account may not prejudice the interest of revenue in any way. Accordingly, we do not find any infirmity in the order of lower authority. The same is confirmed.
7. The next ground of appeal is with regard to providing of adequate opportunity to the assessee.
8. Shri M Anil Kumar, the ld.DR submitted that at paragraph 8.2 of the CIT(A)'s order, the CIT(A) observed that sufficient opportunity was not given to the assessee which resulted in duplication of the addition. According to the ld.DR, sufficient opportunity was given to the assessee to represent the matter before the assessing officer. 6
ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012
9. On the contrary, Shri Iype Mathew, the ld.rperesentative for the assessee submitted that the assessee received the pre-assessment notice on the evening of 21-12-2010. The replies were filed immediately on 27- 12-2010. According to the ld.representative six days' period allowed to the assessee was not sufficient to explain the various points raised by the assessing officer. According to the ld.representative, 22nd to 27th December, were holidays for Christmas. The assessing officer sent a questionnaire of 169 pages. According to the ld.representative, this prejudices the interest of the assessee, therefore, the CIT(A) has rightly observed that sufficient opportunity was not given.
10. We have considered the rival submissions on either side and also perused the material available on record. The CIT(A) found that the assessing officer suo motu rejected the objections filed by the assessee which witnessed in three or four instances of duplication. The fact remains is that an opportunity was provided by the assessing officer on 03-12-2010 and 08-12-2010 and ultimately, the order was passed on 30-12-2010. Therefore, if further time was given to the assessee they would have explained the investment before the assessing officer. At the very same time, we have to take into consideration the time constraint of the assessing officer. There is a statutory limit for passing the assessment 7 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 order. This Tribunal is of the considered opinion that the assessing officer has done everything possible within the prescribed time by affording an opportunity to the assessee. Therefore, this objection of the assessee may not prejudice the assessment proceedings at all. Hence, this Tribunal do not find any reason to interfere with the order of the lower authorities on this issue.
11. The next ground of appeal is with regard to enhancement of income on account of credit mismatch to the extent of Rs.161.62 lakhs.
12. Shri M. Anil Kumar, the ld.DR submitted that the CIT(A) ought to have enhanced the income to the extent of Rs.161.62 lakhs due to mismatch of the credits. The ld.DR submitted that the submissions made by the assessing officer was not considered by the CIT(A). Therefore, the CIT(A) committed an error in not enhancing the income. We heard, Shri Iype Mathew, the ld.DR also.
13. The CIT(A) has discretion to enhance the income on the basis of the material available on record. Under the Income-tax Act, the CIT(A) is conferred with a power which is co-terminus with that of the assessing officer. Therefore, the CIT(A) can do whatever the assessing officer could 8 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 have done or might have done. Therefore, whenever there is material available on record suggesting enhancement of income, the CIT(A) ought to have taken note of the same to determine the income on the basis of the material available on record. However, this is the discretion vested on the CIT(A). Under the Income-tax Act, this Tribunal is empowered to adjudicate the matter. This Tribunal cannot place the assessee in a worst position than he was before the CIT(A). If the CIT(A) failed to enhance the income of the assessee, then certainly, this Tribunal also cannot enhance the income for the simple reason that this Tribunal is not empowered to place the assessee in a worst position than he was before the CIT(A). Therefore, we are not going to the material with regard to the mismatch of the credits for the year under consideration. Suffice to say that this Tribunal cannot place the assessee in a worst position than it was before the CIT(A). Therefore, this Tribunal has no jurisdiction to enhance the taxable income due to mismatch of the account.
14. The next ground of appeal is with regard to payment of South Kerala Cashew Export on behalf of the assessee trust.
15. Shri M Anil Kumar, the ld.DR submitted that an expenditure of Rs.1,76,15,372 was incurred for the year under consideration by South 9 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 Kerala Cashew Export. In the absence of any material, according to the ld.DR, the assessing officer made the addition. The assessee explained before the assessing officer that the transactions were recorded in the vouchers of South Kerala Cashew Export. The assessee has also explained before the assessing officer that the transactions are not related to the assessment year under consideration. However, on examination of the material, the assessing officer found that the transactions entered into through vouchers of South Kerala Cashew Export did not belong to the assessee trust. Therefore, the assessing officer rejected the contention of the assessee. According to the ld.DR, South Kerala Cashew Export is a proprietorship concern of Shri Abdul Salam and Shri AA Salam who has not carried out any construction activities in the premises of the assessee trust. Therefore, the payment said to be made by South Kerala Cashew Export is not related to the assessee.
16. On the contrary, Shri Iype Mathew, the ld.representative for the assessee submitted that for the year under consideration, the assessee has spent a sum of Rs.4,57,71,276 towards construction of the building. Out of these entries, Rs.21,98,727 pertains to payment made to Maac Steels for purchase of hardware / steels, etc and another sum of Rs.15 lakhs was deposited in Union Bank of India. The entry for these payments 10 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 revealed in the statement of bank account of South Kerala Cashew Export with Union Bank of India. Another sum of Rs.1,37,00,115 was paid by South Kerala Cashew Exports. This is also evident from the material available on record. Another sum of Rs.2,70,000 represents petty cash payments for revenue expenditure. Totally, South Kerala Cashew Export paid Rs.1,76,15,372 on behalf of the assessee trust for the year under consideration. A reconciliation statement was filed before the CIT(A) which was reproduced at page 8 of the appellate order. The CIT(A), after considering the materials available on record found that the assessee reconciled the amount except to the extent of Rs.2,54,782. Therefore, according to the ld.representative, the CIT(A) confirmed the addition only to the extent of Rs.2,54,782.
17. We have considered the rival submissions on either side and also perused the material available on record. The material available on record suggests that the payment was made by South Kerala Cashew Export. The assessee has produced copies of the vouchers / invoices. The assessee has also filed a reconciliation statement before the CIT(A) which was reproduced on page 8 of the CIT(A)'s order. The CIT(A) after considering the proposals made by the assessing officer and the balance- sheet entries for the assessment year 2007-08 found that the assessee 11 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 could not explain a sum of Rs.2,54,782. Accordingly, he confirmed the addition to the extent of Rs.2,54,782. This Tribunal do not find any infirmity in the order of lower authority; the same is confirmed.
18. In the result, the appeal of the revenue for the assessment year 2007-08 is dismissed.
19. Now coming to cross objection of the assessee for the assessment year 2007-08, the only objection of the assessee is that assessment order ought to have been quashed since the CIT(A) found serious irregularities in not rejecting the books of account and in not providing opportunity to the assessee.
20. We heard the ld.representative for the assessee and the ld.DR. The error / mistake pointed out by the assessee is a procedural matter. This Tribunal is of the considered opinion that while discussing the revenue's appeal we found that this has not resulted in invalidating the assessment proceedings. If at all there are any procedural irregularities, the proceedings have to be reinitiated at the stage from which the irregularities were occurred. This Tribunal is of the considered opinion that the irregularities as pointed out by the assessee may not invalidate the 12 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 assessment proceedings. Therefore, the cross objection has no merit at all. Accordingly, the cross objection of the assessee for assessment year 2007-08 is dismissed.
21. Now let us take the appeal of the revenue for assessment year 2008-09. The first ground of appeal is with regard to enhancement of income due to difference in credits to the extent of Rs.255.08 lakhs.
22. The only contention of the ld.DR is that the assessing officer made a request to the CIT(A) to enhance the assessment due to difference in credits. This Tribunal is of the considered opinion that though the CIT(A) has a discretion to enhance the income in exercise of his appellate jurisdiction, this Tribunal cannot compel the CIT(A) to enhance the income. The CIT(A) ought to have exercised his jurisdiction since he has powers which is co-terminus with that of the assessing officer. The jurisdiction of the Tribunal cannot be extended to put the assessee in jeopardy. In other words, the assessee cannot be placed in a worst position than he was before the CIT(A) by the Tribunal. At the best, we may set aside the order of the CIT(A) wherein the addition made by the assessing officer was deleted. However, this Tribunal cannot make any further addition. In view 13 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 of the above, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed.
23. The next ground of appeal is with regard to opportunity to the assessee. As we have already observed while dealing with the appeal of the revenue for the assessment year 2007-08, though adequate opportunity should have been given to the assessee, we have to take into consideration of the statutory requirement of time limit to complete the assessment proceeding. This Tribunal is of the considered opinion that the assessing officer has taken much pain in completing the assessment within the available period of time by providing the opportunity to the assessee on 03-12-2010 and 08-12-2010. Therefore, the observations made by the CIT(A) may not prejudice the interest of the revenue in any way.
24. The next ground of appeal is with regard to unaccounted investment to the extent of Rs.46,18,176.
25. Shri M Anil Kumar, the ld.DR submitted that the CIT(A) observed that the assessee has explained and reconciled the expenditure except a balance of Rs.46,18,176. According to the ld.DR, the main objection of the 14 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 assessee before the CIT(A) is that the assessing officer has not provided any sufficient opportunity to the assessee to explain the same. According to the ld.DR, the balance-sheet as on 31-03-2008 reflected the cost of construction at Rs.20,28,90,265. The contention of the assessee was not verified by the assessing officer during the course of assessment proceedings. The CIT(A) found that the assessment was made in a hurried manner. If that is so, according to the ld.DR, he ought to have examined the matter himself after calling for the remand report. According to the ld.DR, the CIT(A) deleted the addition on the basis of the report of the District Valuation Officer ignoring the materials found during the course of search operation.
26. On the contrary, Shri Iype Mathew, the ld.representative for the assessee submitted that the assessee reconciled the entire expenditure on the basis of the income and receipt for the year under consideration. A remand report was also called for by the CIT(A). The assessing officer has filed a para-wise remark before the CIT(A) with respect to each expenditure. Referring to the order of the CIT(A), more particularly pages 28 & 29, the ld.representative submitted that for the assessment years 2008-09 and 2009-10 an amount of Rs.49,10,01,554 was remained to be explained. This amount was reconciled which was exactly reproduced by 15 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 CIT(A) in his order. The CIT(A) further found that the balance amount remained to be reconciled was Rs.46,18,176. After referring to the irregularities committed by the assessing officer in the assessment proceedings, the CIT(A) found that the District Valuation Officer of the Income-tax Department, Chennai found that the cost of construction is Rs.59,19,09,000. The CIT(A) further found that this cost of construction has to be spread over from 2007-08 to 2011-12. The balance-sheet of the assessee for the assessment year 2008-09 shows the cost of construction at Rs.21,47,45,621 and for the assessment year 2009-10 it disclosed the construction cost of Rs.20,44,07,891. The CIT(A) further found that the assessing officer estimated the cost of construction against the District Valuation Officer's report for two assessment years. The CIT(A) found that there is no reason to disbelieve the cost of construction. He deleted the addition made by the assessing officer. Therefore, according to the ld.representative, when the District Valuation Officer of the department estimated the actual investment, the assessing officer cannot go beyond what was actually estimated by the District Valuation Officer.
27. We have considered the rival submissions on either side and also perused the material available on record. After considering the explanation of the assessee and the para-wise remarks filed by the 16 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 assessing officer, the CIT(A) found that the assessee has reconciled the entries except a balance of Rs.46,18,176. In fact, the CIT(A) extracted the reconciliation on pages 28 and 29 of his order which reads as under:
"a) AMT-110, Page No.542 dated 23.05.2007 - Nazar -
Rs.85 lakhs:- This is explained to be a demand draft received from Shri A Nazarudeen, a trustee of the trust. The explanation regarding the DD given by Shri Nazarudeen has been accepted by the AO during the course of assessment proceedings of M/s South Kerala Cashew Exporters for the AY 2008-09. Since this is a receipt in the hands of the assessee trust, the investment has been overstated to this extent.
b) It has been explained that two or three copies of vouchers are prepared each for accounts department, stores department, purchase department and R&D department, etc. During the course of search operations, file containing vouchers of all these departments were seized and while tabulating the amount the AO has taken the duplicate vouchers also. It is therefore gathered that the proposal was overstated by an amount of Rs.10,82,80,207/- on account of duplicate entries for AY 2008-09 and for an amount of Rs.10,61,92,205/- for the AY 2009-10.
c) It is further inferred that revenue items were also included in the working tabulated for cost of construction. Such entries are totaling to the tune of Rs.18,80,713/- for AY 2008-09 and Rs.75,12,872/- for AY 2009-10.
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ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012
d) The total value of other fixed assets (furniture, computer, medical and lab equipment, etc. were also included towards determination of cost of construction and such assets have been added to the tune of Rs.2,05,39,771/- for AY 2008- 09 and Rs.21,12,37,726/- for AY 2009-10.
e) Another category of vouchers which referred to requisition for payment or correspondence letters, etc. which do not form part of cost of building have been added to the tune of Rs.2,55,57,436/- for the AY 2008-09 and Rs.3,18,02,111/- for the AY 2009-10.
f) Land leveling charges which is paid through M/s PMK Construction and does not form part of the building, but part of land, has been added towards cost of construction for AY 2008-09 to the tune of Rs.3,35,34,397/-. Similarly, payment made to PMK Construction for meeting the above expenses were also added by the AO separately for the same assessment year to the tune f Rs.3,35,34,397/-, hence this is duplication of the entries.
g) Other construction materials purchased and payment made through PMK Construction have been added to the tune of Rs.52,92,720/- for the AY 2008-09. In the AO's proposal, invoices of material purchased as well as payments made against these invoices were included and the total of such invoices and the payments made thereon amounts to Rs.2,37,46,343/- for the AY 2008-09.
h) It has also been found from the records that out of Rs.1,60,46,396/- excluded from AY 2007-08 and included in 18 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 the AY 2008-09, Rs.1,49,46,716/- relates to estimates intended to assessment year 2008-09.
i) Bank deposits included in the cost of building for AY 2009-10 stands at Rs.1,46,80,000/-, which is mentioned by the AO at rs.14,68,000/- is therefore overstated by Rs.1,32,12,000/- the fact which has against been verified from records by the present Assessing Officer, who has intimated the same vide his letter dated 16.09.2011."
The total cost of construction was estimated by the District Valuation Officer at Rs.59,19,09,000. The assessing officer found that certain revenue expenditures were incurred. However, in the absence of any details in the seized material with regard to revenue expenditure, he has taken the entire amount as unexplained investment in the cost of construction. When the assessee has incurred huge amount of construction to the extent of Rs.59,19,09,000 as observed by the assessing officer, an amount of Rs.46,18,176 might have been incurred towards revenue account. The assessing officer rejected the claim of the assessee only on the ground that the details were not available. When the income was estimated disbelieving the books of account maintained by the assessee and the assessing officer was of the opinion that the assessee has incurred expenditure towards revenue account, a reasonable estimation has to be made. In the block assessment income has to be 19 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 computed primarily on the basis of the material available on record including the seized material. Therefore, the seized material as well as the valuation done by the District Valuation Officer has to be taken into consideration. When the District Valuation Officer estimated the cost of construction and there is a difference in reconciliation to the extent of Rs.46,18,176 this Tribunal is of the considered opinion that this Rs.46,18,176 might have been relating to the revenue expenditure. Therefore, we hold that the CIT(A) has rightly deleted the addition made by the assessing officer. We confirm his order on this issue.
28. The next ground of appeal is with regard to exemption u/s 10(23C) of the Act.
29. We heard Shri M Anil Kumar, the ld.DR and Shri Iype Mathew, the ld.representative for the assessee.
30. Since the deletion of Rs.46,18,176 is confirmed on merit, this Tribunal is of the considered opinion that the ground of appeal relating to exemption u/s 10(23C) becomes infructuous. However, the ld.representative for the assessee claims that on the basis of the judgment of the Kerala High Court in ITA No.171 of 2009 dated 04-10-2010 all 20 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 incomes of the assessee is exempt u/s 10(23C) of the Act. We have carefully gone through the provisions of section 10(23C) of the Act which reads as follows:
"23C) any income received by any person on behalf of -
(i) to (iiiac) xxxxxxxxxxxxxxxxxxxxxx (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or 2educational institution do not exceed the amount of annual receipts s may be prescribed.
(iiiae) to (v)
(vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority."
By referring to the term "any income", the ld.representative for the assessee contends that "any income" of the assessee is exempt u/s 10(23C) of the Act provided the prescribed authority accorded approval as required under the Act. The question arises for consideration is whether all receipts of the assessee would fall within the term " any income". This Tribunal is of the considered opinion that all receipts of the assessee cannot be considered to be income of the assessee. The word "any 21 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 income" means the income generated out of the property held under trust and the income in the course of performing the charitable activity, viz. running of the educational institution. A voluntary donation in cash or kind may also fall within the term "any income". However, an income or receipt, received in contraventions of the Act or which is prohibited by law cannot be construed as income for the purpose of section 10(23C) of the Act. The Kerala state legislature prohibited the collection of capitation fees for admission of the students in schools and colleges. Therefore, any amount collected for admission of the students over and above the prescribed fee has to be considered as capitation fee and that cannot be construed as income of the assessee within the meaning of section 10(23C). In other words, capitation fee would fall outside the purview of section 10(23C) and hence is liable for taxation under the Income-tax Act. The capitation fee collected for admission of students over and above the prescribed fee shall be treated as taxable income and the same is not eligible for exemption either under section 11 or u/s 10(23C) of the Act. The Income-tax Act provides for exemption in respect of the trust or institution which generates funds in the course of legal activity. It is not the intention of the Parliament to exempt any income which was earned contrary to the provisions of the law and contrary to the social norms. Collection of capitation fee is inhuman, contrary to all social norms besides being contrary to the 22 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 provisions of Constitution of India. This view of ours is fortified by the judgment of the Apex Court in T.M.A. Pai Foundation & Ors vs State of Karnataka & Ors (2002) 8 SCC 481 and Islamic Academic Education vs State of Karnataka (2003) 6 SCC 677. Therefore, this Tribunal is of the considered opinion that the term "any income" has to be considered as income of the property held under the trust and the income generated in the course of running of the institution in the legal manner. It cannot include capitation fee collected for admission of the students. In this case, it is not the contention of the revenue that the assessee collected any capitation fee for admission of the students. Moreover, no material is on record to suggest that the assessee has collected any capitation fee for admission of the students. The trustees Shri Abdul Salam and Shri AA Salam happened to be businessmen and admitted that they have invested their own funds in the statement recorded u/s 132(4) of the Act. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition made by the assessing officer. This Tribunal do not find any infirmity in the order of the CIT(A). accordingly, the same is confirmed.
31. In the result, the appeal of the revenue for the assessment year 2008-09 is dismissed.
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32. Now coming to the cross objection filed by the assessee, the cross objection is filed only to support the order of the CIT(A). Since this Tribunal confirmed the order of the lower authority, the cross objection becomes infructuous. Accordingly, the cross objection stands dismissed.
33. Coming to the appeal filed by the revenue for the assessment year 2009-10 the first ground of appeal is that the CIT(A) erred in disregarding the A.O's request for enhancement of income on account of difference in credit shown against trustees AA Salam & A Abdul Salam.
34. We have heard the ld.DR and the ld.representative for the assessee. While dealing with the department's appeals for assessment years 2007- 08 and 2008-09 we have already held that though the CIT(A) has discretion to enhance the income while exercising his appellate jurisdiction, this Tribunal cannot compel the CIT(A) to enhance the income. The CIT(A) ought to have exercised his jurisdiction since he has powers which is co-terminus with that of the assessing officer. The jurisdiction of the Tribunal cannot be extended to put the assessee in jeopardy. In other words, the assessee cannot be placed in a worst position than he was before the CIT(A) by the Tribunal. At the best, we may set aside the order of the CIT(A) wherein the addition made by the assessing officer was 24 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 deleted. However, this Tribunal cannot make any further addition. Consistent with the decision already taken by us, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed.
35. The next ground of appeal is with regard to opportunity to the assessee. As we have already observed while dealing with the appeals of the revenue for the assessment years 2007-08, and 2008-09 though adequate opportunity should have been given to the assessee, we have to take into consideration of the statutory requirement of time limit to complete the assessment proceeding. This Tribunal is of the considered opinion that the assessing officer has taken much pain in completing the assessment within the available period of time by providing the opportunity to the assessee on 03-12-2010 and 08-12-2010. Therefore, the observations made by the CIT(A) may not prejudice the interest of the revenue in any way.
36. The next ground of appeal is with regard to dropping of the enhancement proceedings in respect of unaccounted payments made to doctors to the extent of Rs. 1,80,94,677.
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ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012
37. Shri M Anil Kumar, the ld.DR submitted that the CIT(A) initiated the proceedings to enhance the income to the extent of Rs. 1,80,94,677. However, the same was dropped without any reasons. This Tribunal is of the considered opinion that unless the addition is made by the CIT(A) in the enhancement proceedings or the addition made by the assessing officer is confirmed by the CIT(A), this Tribunal cannot step into the shoes of the lower authority and make the assessment. This Tribunal cannot put the assessee in a worst position than he was before the CIT(A). In the absence of any specific addition made by the CIT(A) in the course of first appellate proceedings, this Tribunal cannot make any further addition in the course of second appellate proceedings. Therefore, this Tribunal do not find any infirmity in the order of the lower authority.
38. The next ground of appeal is with regard to estimation of cost of construction on the basis of the value estimated by the District Valuation Officer. This issue was considered by this Tribunal in the earlier part of the order while dealing with the appeal for the assessment year 2008-09. This Tribunal found that on the basis of the valuation of the District Valuation Officer and the seized material an amount of Rs.46,18,176 remained to be reconciled which has to be treated as revenue expenditure since the assessing officer himself found that the assessee has incurred certain 26 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 expenditure on the revenue account. For the reasons stated by this Tribunal while dealing with the appeal of the revenue for the assessment year 2008-09 in the earlier part of the order, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition. The order of the CIT(A) on this issue is confirmed.
39. Now coming to the exemption u/s 10(23C), this issue also stands decided by us while deciding the appeal for the assessment year 2008-09. We have found that it is not the contention of the revenue that the assessee collected any capitation fee for admission of the students and that no material is on record to suggest that the assessee has collected any capitation fee for admission of the students. For the detailed reasons given therein, we hold that the CIT(A) has rightly deleted the addition. We uphold the order of the CIT(A) on this issue.
40. In the result, the appeal filed by the revenue for the assessment yer 2009-10 is dismissed.
41. Coming to the cross objection filed by the assessee, the cross objection is filed only to support the order of the CIT(A). Since this 27 ITA No.19, 20 & 21/Coch/2012 CO Nos. 07, 08 & 09/Coch/2012 Tribunal confirmed the order of the lower authority, the cross objection becomes infructuous. Accordingly, the cross objection stands dismissed.
42. In the result, the appeals filed by the revenue and the cross objections filed by the assessee are dismissed Order pronounced in the open court on this 31st January, 2014.
Sd/- sd/- (B.R. Baskaran) (N.R.S. Ganesan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dt : 31st January, 2014 pk/- copy to: 1. A.C.I.T., Cent.Cir., Kollam
2. M/s Quilon Medical Trust, Medicity, Thattamala, Kollam
3. The Commissioner of Income-tax (Central), Kochi
4. The Commissioner of Income-tax(A)-III, Kochi
5. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench