Rakesh Garg, J. - (1.) THIS is a bunch of five appeal Nos. 266 to 270 of 2007, which have been filed by the assessee against the consolidated order dt. 6th Oct., 2006 of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short 'the Tribunal'), passed in ITA Nos. 253, 254, 255 and 256/Asr/2002, for the asst. yrs. 1994 -95, 1995 -96, 1997 -98 and 1998 -99 and ITA Nos. 281 and 282/Asr/2002, asst. yrs. 1995 -96 and 1996 -97 in the appeals filed by the assessee as well as Revenue against the same order of the Commissioner of Income Tax (Appeals) [for short the 'CIT(A)'], dt. 21st May, 2002. Since the issue involved in the appeals filed by the assessee are inter -related and arise from the same common order of the Tribunal, all the appeals are being disposed of with common order for the sake of convenience.
(2.) THE facts of the case common to all the assessment years are that the assessee filed the returns of income for the asst. yrs. 1994 -95, 1995 -96, 1996 -97, 1997 -98 and 1998 -99 on 1st July, 1994, 30th June, 1995, 28th June, 1996, 27th June, 1997 and 17th Aug., 1998 respectively declaring therein Nil income, as the assessee had claimed exemption in respect of its income, under Section 10(22) of the IT Act, 1961 (for short the Act'), on the plea that the assesses was an educational institution. These returns were processed under Section 143(1)(a)/143(1) of the IT Act, 1961. Subsequently, it appears that the AO carried out inquiries with the prior permission of the CIT under Sub -section (6) of Section 133 of the Act. Such inquiries revealed that assessee was not running any educational institution/school/college/ vocational institute at village Sarai Naga or its surrounding areas. There was only a sign board of its name, placed outside a room occupied by security guard of Brar family. The AO observed that in the absence of any educational institution/school or building for educational purposes, the assessee was not entitled to exemption as claimed under Sub -section (22) of Section 10 of the Act and the funds have not been utilized for this object. The AO, therefore, initiated action under Section 147 of the Act by issuing notices under Section 148 on 2nd March, 2000. In response to said notices, the returns, declaring Nil income were filed for all the assessment years. Thereafter, the case was picked up for scrutiny. The AO issued a detailed questionnaire and observed that the assessee failed to furnish replies in respect of many questions. He observed that in the returns of income filed, the assessee had mentioned code No. 8 for AOP (Trust). However, the assessee was a society registered with Registrar of Societies. He observed that the assessee had claimed wrong status and it was repeatedly asked to clarify the position by issue of several notices/letters, but the same was not properly explained. The AO therefore, adopted the status as an AOP with code No. 7 for all the assessment years. During the course of assessment proceedings, the assessee was asked to explain how it had claimed exemption in respect of its income under Section 10(22) of the Act, whereas no expenditure was incurred and the income was not utilized for educational purposes. The assessee stated that the institution has been formed with the sole object of setting up educational institute/college. However, the same could not be set up due to nonavailability of sufficient funds. The assessee had claimed exemption under Section 10(22) of the Act because it had reimbursed the school tuition fee to help needy students. It was also explained that funds collected had been invested in certain limited companies for the better returns and secured investments. Thus, it was contended that it had not violated the provisions of Sections 11 and 12 of the Act. The AO examined the explanation and observed that the list of students to whom tuition fee had been reimbursed were studying in premier schools/colleges of Chandigarh, Panchkula and Mohali and the students belonged to the elite class who could very well afford the study and therefore, the contention of the assessee that object was to help the needy students in backward area was factually incorrect. He also went on to observe that students to whom such fee was reimbursed belonged to the families who were closely connected with Brar family or the persons who made donations to society. He specifically mentioned such names in the assessment order. He also observed that assessee reimbursed a meagre sum of Rs. 1,41,305 by way of tuition fee to some students out of available funds of Rs. 79,41,734 collected by the assessee. He also observed that though the society was registered with the Registrar of Societies in 1993, the only action taken by the assessee was the purchase of the land for an amount of Rs. 15,41,250. The balance amount was invested in share application money and also deposits in various companies of Brar family who were members of the assessee society. He also observed that major chunk of donations amounting to Rs. 54,00,000 had been received from Tilok Tirath Vidyawati Chuttani Charitable Trust, of which Dr. Chuttani was a founder member and he had very close relations with Brar family. He also observed that the assessee was not entitled to exemption under Section 10(22) of the Act because it was not running any educational institute/school/college/vocational institute itself.
(3.) THE AO also observed that in the present case, the assessee has not been able to establish its own institution though it had been in existence for the last 8 years. That apart, it had not even undertaken any activity other than buying a land for setting up the institution or even related to educational field. He also observed that sole purpose of setting up the society was to act as a conduit to route money received from other trusts and certain individuals to the companies run by Brar family on purely commercial consideration. Thus, he held that the assessee had violated the provisions of Section 13(1)(d) of the Act and was, therefore, not entitled to exemption of its income under Sections 10(22) and 11 of the Act. The AO, therefore, completed the assessment for the above mentioned years by disallowing exemptions both in respect of its income and donations received from the various persons in the respective assessment years.;