Same earning cannot be taxed twice only because lying in the hands of other as undisclosed income

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The assessee is a trust running nine educational institutions under various names catering to different kind of education like Management, Engineering, Medial Sciences, Nursing, Pharmacy, etc. It was granted registration u/s 12AA (2) of the Act by CIT, Panchkula vide his order dated 30th May, 2001 w.e.f. 26th November, 1993. A search was conducted at the official premises of the assessee as well as on the residential premises of its trustees on 7th September, 2005. During the course of search, unexplained assets as well as incriminating documents were seized on the basis of which ld. CIT has drawn a conclusion that the activities of the trust were not being carried out in accordance with the objects for which it was set up. Accordingly, he initiated proceedings u/s 12AA(3) of the Act and issued show cause notice to the assessee as to why the registration should not be cancelled. The ld. CIT after referring to the examination of the pages 1 to 7 of the bunch of documents captioned as A-37 seized during the course of search has found that the assessee had made payments in cash to the doctors of medical and dental colleges run by the assessee. Such payments were calculated at a sum of Rs. 45,66,372/- and these documents were shown to Shri Darshan Kumar Bansal, Sr. Accountant of the assessee trust who stated on oath that he himself has made these payments in cash outside the books of account to various teachers. Similar statement was given by Dr. R.P. Aggarwal, the principal of one of the medical colleges. Ld. CIT, further referred to page 81 of the bunch styled as A-35 which contained entries of payments in cash towards advance, traveling allowance and increments. The said documents were signed by Shri Tarsem Garg being the Chairman of the assessee trust. On perusal of all these documents ld. CIT has come to the conclusion that there is a manipulation in the books of account and cash transactions have been made outside the books of account. He referred to the fact that total cash found at the time of search was a sum of Rs. 13,98,476/- as against the cash available as per books of account of Rs. 26,61,781/- and, thus, he arrived at a conclusion that the assessee trust is not maintaining its books of account properly and the trustees are manipulating the accounts to siphon off the funds of the trust for their personal benefits. He ignored the contention of the assessee that the Assessing Officer in the assessment order for Assessment Year 2006-07 has accepted that the assessee trust is engaged in genuine charitable activities in terms of Section 2 (15) of the Act. Ld. CIT observed that as the benefit of registration can be given to the trust only if it is engaged in genuine charitable activities and referring to these discussions ld. CIT has cancelled the registration. The assessee is aggrieved, hence, has raised the aforementioned grounds of appeal.

Citation :
ITA No.277/Chd/2008 Assessment Year: 2006-07 Maharishi Markandeshwar Education Trust,55, Model Town,Ambala City.(Appellant)Vs. Commissioner of Income Tax (Central),Ludhiana. (Respondent)