K.R. Dixit, Judicial Member - (1.) IN both the above appeals, the facts and the grounds are materially the same. Therefore, they are dealt with by this common order.
(2.) There are a number of grounds but the most important one is regarding the addition of the income of certain schools to the income of the assessee. It is the assessee's case that the income of these schools belongs to certain trusts but the ITO regarded it as that of the assessee. The facts from which this controversy arises, are as follows: The assessee filed two returns of income: one original and the other revised. In the original return, the assessee had disclosed the income from the business of running schools while in the revised return, by a note, the assessee denied any business of his own, thus, claiming that the income from the schools was not his own. The ITO has noticed that both the aforesaid returns were filed after the search and seizure were carried out at the assessee's schools and residential premises and that the revised return was filed only during the assessment proceedings and after enquiries. The ITO did not regard the revised return as valid under Section 139(5) of the Income-tax Act, 1961 ('the Act') and proceeded to decide the question on the basis of the contentions raised before him that the income from the schools did not belong to the assessee. There were two kinds of schools run by the assessee, one the primary and pre-primary and the other a high school. With regard to the former, a trust called 'Haeems Education Trust' was started on 28-4-1970 and registered soon thereafter with the Charity Commissioner and regarding the latter another trust called 'Nelson Education Trust' was started in 1966 and duly registered in that year. The assessee stated before the ITO that the former trust was created because the Ahmedabad municipal corporation made it compulsory that the primary schools be owned by a public charitable trust, if recognition from the school board was desired. He duly produced the following documents before the ITO: (a) Copy of the trust deed. (b) Copy of the registration certificate under the Bombay Public Trusts Act. (c) Copies of the two inspection reports of municipal school board wherein it is specifically mentioned the name of 'Haeems Education Trust' as an owner of the trust. (d) Copy of the recognition certificate from the Ahmedabad municipal school board. (e) During these years from 1-4-1970 and, therefore, (sic.) I was acting as a principal or as a managing trustee of the said trust. (f) Separate bank accounts were also operated for both these primary schools known as 'Nelson's English School' at Khanpur and Maninagar. Similar documents were filed regarding the trust for the high schools. The ITO arrived at his conclusion, inter alia, on the following grounds: 1. No books of account were maintained for the business of primary and pre-primary schools and none were submitted to the Charity Commissioner. 2. The assessee had shown income from the schools as his income in the original return for these years and also for the subsequent year 1977-78. In the bank account of the high school only an amount of Rs. 501 was deposited at the start and thereafter another amount of Rs. 150 and no transaction thereafter was made in that account. In spite of the fact that the assessee had applied for exemption under Section 11, which was duly granted under Section 12 of the Act, the assessee had shown the income as his income. 3. Regarding the primary school, the assessee had not applied for any such exemption and had shown the income as his income.
(3.) NO Income-tax at source was deducted for the salary paid to the assessee.;