Assistant Commissioner of Income Vs. Peter Thorose - Court Judgment

Excerpt:
1. the appeal is directed at the instance of the revenue against the order of the learned c1t(a).2. the ao while passing assessment order under section 158bd r/w section 158bc(b) and section 144 of the act vide order dt. 25th sept., 2003 has arrived at the conclusion for the block assessment of mr.peter's thorose, the order being passed treating him as the real owner of st. peter's higher secondary school and college by virtue of both direct and circumstantial evidence.3. while arriving at the conclusion on the basis of statement of miss dancy dora syiem, officiating vice principal under section 132(4) of the act and statement of smt. t. blah under section 131 of the act recorded on 12th nov., 2001 and seized documents.4. the assessee filed appeal before the learned cit(a) and the learned cit(a) has observed as under: in my considered opinion financial control would imply ownership of property or the acquiring of rights in such property, the receipt of income from such property and its use by the appellant among other things. there is nothing on record that clinches this issue beyond doubt. further, even if the statements of mrs. d.d. syiem and mrs. t. blah to diverge on some issues it would not still ipso facto make the appellant the owner of the st. peter's higher secondary school and college in the absence of any other facts or evidence to support such a supposition.5. the revenue is in appeal before us and relied on the order of intimation.6. the learned departmental representative relied on the order of the ao.7. the learned counsel of the assessee submitted affidavit filed by miss dancy dora syiem, which is brought on record at p. 16 of the paper book swearing that she is the proprietor of st. peter's higher secondary school and college, shillong-793003 and mr. peter thorose has been appointed as principal of the school and college since inception on honorary basis. the affidavit is not controverted. the assessee has filed photocopy of the pf challan which is at p. 5 of the paper book dt. 15th jan., 2006 showing miss dancy dora syiem as proprietor. these two documents are cogent evidence showing that miss dancy dora syiem is the proprietor and mr. thorose is the principal on honorary basis. the assessee has brought on record the certificate from vijaya bank certifying that miss dancy dora syiem as proprietor of st. peter's higher secondary school and college and the documents show that st.peter's higher secondary school and college is owned by miss dancy dora syiem and mr. peter thorose is the principal of the school.8. we have heard the rival submissions, perused the records and the paper book before us and the documents relied on by the assessee. the documents i.e. certificate from vijaya bank, affidavit of miss dancy dora syiem and pf deposit challan show that miss dancy dora syiem is the owner of st. peter's higher secondary school and college. smt. t.blah and miss dancy dora syiem were attached to the school and college since the beginning for development of the school and college. these facts were not properly brought on record by the ac).9. vijaya bank certificate, affidavit filed by miss dancy dora syiem and pf deposit challan show that miss dancy dora syiem is the owner of st. peter's higher secondary school and college and, therefore, we direct the ao to treat miss dancy dora syiem as owner of st. peter's higher secondary school and college.1. i have perused the order of the learned jm. the learned jm dismissed the appeal of the department and held that in view of certificate from vijaya bank, affidavit filed by miss dancy dora syiem and pf deposit challan. it is seen that miss dancy dora syiem was the owner of st.peter's higher secondary school and college and the ao is directed to treat miss dancy dora syiem as the owner of the aforestated school and college. the facts of the case in brief are discussed as under: 2. there was a search in the case of mr. alexander aviet thorose proprietor of st. peter's school, shillong, on 26th sept., 2001. in view of various ambiguous and contradictory claims of ownership advanced by certain individuals whose income was exempt from tax and in view of discussion in the assessment order dt. 25th sept., 2003, the ao held that st. peter's higher secondary school and college was run as per the dictate of mr. peter thorose who is the son of mr. alexander aviet thorose, proprietor of st. peter's school, shillong. he accordingly taxed the income from st. peter's higher secondary school and college determined at rs. 34,10,000 in the hands of the assessee.3. the learned c1t(a) as per his impugned order dt. 17th june, 2005 held that financial control of the aforestated st. peter's higher secondary school and college would imply ownership of property or the acquiring of right in such property and the receipt of income and use thereof by the assessee could not be established beyond doubt. he accordingly allowed the appeal of the assessee on this issue.4. on careful consideration of the orders of the lower authorities and other issues with due respect. i am of the opinion that the issue was not properly examined by the lower authorities. the learned c1t(a) has mainly relied on the statement of miss dancy dora syiem and her assistant mrs. blah whereas the ao has rejected their claim of ownership of the institute in view of contradiction in their statements and other such reasons discussed in the assessment order dt. 25th sept., 2003. it is very clear from discussion at p. 5 of the impugned order of the learned cit(a) that his predecessor had come to the conclusion on the basis of the examination of the records that certain investigations/enquiries were to be made to ascertain the ownership of the school/college. the learned cit(a) has given the details of such investigation and enquiries required to be carried out as per the direction of his predecessor. it is very clear from the discussion at p. 6 of the impugned order that no reply was received from the ao.neither the date of issue of letter requiring the ao to make such enquiry has been given by the learned cit(a) nor has he specified the date on which the compliance was to be made by the ao. it is also not known why the learned cit(a) could not enforce compliance of his remand order or letter, if any, issued to the ao in this regard. it is also not known why he could not wait further to receive the relevant compliance report from the ao or why could not he make the enquiry himself in case the ao had failed to do so. the learned cit(a) himself has observed that "there is nothing on record that clinches this issue beyond doubt." thus the issue in my considered opinion, was decided by the learned cit(a) without making enquiries considered necessary by his predecessor and he himself was not sure as to the facts for correct determination of the issue in dispute before him. i am, therefore, of the considered opinion that the order of the lower authorities are required to be set aside with the direction that the ao should conduct enquiry as per the direction of the predecessor of the learned c1t(a) and such other enquiries as he may consider necessary. he should decide the issue fresh after making necessary enquiries and giving proper opportunity to the assessee. a few documents, in my considered opinion referred to above were not sufficient to show that miss dancy dora syiem was, in fact, the owner of st. peter's higher secondary school and college especially in view of her statement that the college in question was run by the firm constituted by her along with mrs. blah and the further fact that miss dancy dora syiem as officiating vice-principal of st. peter's school has stated in her statement that mr. alexander aviet thorose was the owner of the institution and she was concerned only with the academic matter and had no knowledge of financial matters. i. therefore do not agree with my learned brother on this issue. the assessment is accordingly set aside with the direction that the ao should finalise fresh assessment in view of the directions given above.5. as a result, the appeal of the department is treated as allowed for statistical purpose.in this appeal there is difference of opinion between the members of the bench. therefore, the following question is referred to the hon'ble president of the tribunal under section 255(4) of the it act, 1961 for opinion of the third member. the question framed is as under: (i) whether the learned cit(a) in the facts and circumstances of the case, has rightly allowed the appeal of the assessee without considering all the relevant facts and without obtaining the report of the ao on the necessary enquiries directed to be made by his predecessor? 1. on account of difference between the learned members of gauhati bench of tribunal, the following issue has been referred to me under section 255(4) of the it act, 1961: whether the learned c1t(a) in the facts and circumstances of the case, has rightly allowed the appeal of the assessee without considering all the relevant facts and without obtaining the report of the ao on the necessary enquiries directed to be made by his predecessor? 2. the facts of the case are that a search was carried on the premises of mr. a.a. thorose, who was admittedly owner of st. peter's school, shillong, on 26th sept., 2001. during the course of said search, statement under section 132(4) of ms. d.d. syiem was recorded. she claimed to be a teacher and after 1987 full fledged vice principal of the school. mr. a.a. thorose was stated to be the owner of the institution. as regards ownership of the st. peter's college, she claimed that she along with mrs. t. blah was the owner of college having 50 per cent share each. in the course of assessment proceeding.ms. d.d. syiem was again examined relating to working of the school. in the statement she stated that her assistant ms. t. blah was operating accounts of the school and that mr. peter thorose was principal of st.peter's higher secondary school. he was carrying job on honorary basis.she also stated that loan of rs. 5 lakhs was given out of school accounts to mrs. kong jene through mr. peter thorose. the above statement was recorded on 2nd nov., 2001. she was again examined on 12th nov., 2001 and certain questions relating to mnd-24, which is balance sheet of st. peter's higher secondary school as on 3rd june, 2006, were put to her. she stated that out of cash balance of rs. 9,60,000, rs. 5 lakhs was given to one mrs. kong jene and rs. 2,50,000 was deposited in fdr. she again stated that rs. 5 lakhs given to mrs.kong jene, who was friend of mr. peter thorose. was taken back and later fdr was obtained in her name. the other amount withdrawn was also utilized to make fdr in her name.2.1 in her subsequent statement, ms. d.d. syiem had pointed out that she was running the school and the college on the basis of written permission given by mr. a.a. thorose vide letter dt. 25th nov., 1989.2.2 on the basis of the statement, which was contradictory in nature, the ao found the plausible motive for stating that ownership of the school was that of ms. d.d. syiem or ms. t. blah was the following two: (i) to abuse the provisions of section 10(26) of the act, wherein local resident scheduled tribals are exempted from the it act; and (ii) to misuse the concept of the prevailing custom amongst the khasi tribe that inheritance is to go to the daughter.therefore, the names of ms. d.d. syiem and ms. t. blah were used and it was claimed that they had inherited sufficient properties.2.3 however, the ao observed that he did not believe the above claim.he held as under: to simply and obviously put it, ms. dancy d. syiem and mrs. t. blah have been used as benamidars of mr. peter thorose. this block assessment of mr. peter thorose is therefore being passed treating him, by virtue of both direct and circumstantial evidence, as the real owner of st. peter's higher secondary school and college.2.4 the ao also made protective assessment of income of school in the hands of mr. a.a. thorose, observing as under: nonetheless, considering that the office of the higher secondary school and college is being run from the same office of the st. peter's school, and that ms. dancy d. syiem is an employee of the st. peter's school, and that as stated by ms. dancy d. syiem in her statement under section 132(4) in q. no. 4 that mr. a.a. thorose is the owner of the institution (implying all activities), and in her statement under section 131 in q. no. 3 that the higher secondary school has understanding with the st. peter's school and as such there is no need for separate registration/affiliation with mbose, and as stated in the appraisal report of the investigation wing that the boys of the higher secondary school are wearing the same uniform as that of st. peter's school, and therefore in view of these statements and also on the facts of the case applying the provisions of section 60 of the it act, whereby there cannot be transfer of income where there is no transfer of assets, the income of the secondary school and college shall also be taxed in the hands of mr. a.a. thorose on protective basis.the undisclosed income of the school, i.e. higher secondary school and college for the block period was thus taken at rs. 34,10,000 by the ao vide order dt. 25th sept., 2003.3. the assessee impugned above assessment in appeal before the cit(a), shillong, who noted facts and circumstances of the case as emerging from the assessment order and held that assessment of the assessee under section 158bd r/w sections l58bc(b) and 144 was quite in order.he upheld the same.3.1 the learned cit(a) further noted statements under section 132(4) and statements recorded during the course of assessment proceeding under section 131 of ms. d.d. syiem. he also took into consideration statement of mrs. t. blah. after examining the facts and circumstances of the case, he found that his predecessor vide letter dt. 5th aug., 2004 had asked the ao to make enquiry on the following points: 1. what are the requirements for starting the higher secondary school or college and how those requirements were met. who has undertaken to meet those requirements 2. in the statement. miss daney syiern mentioned about the contributions/investments for starting the higher secondary school/college. she has also mentioned the amount of contribution made by her and the other person. she simply stated that both the persons inherited a lot of property from the parent side and invested in the college. no investigation or examination was made to ascertain the correctness of the statements. you will examine the evidences of sources of the investment to ascertain the truth. 3. it appears that school/college was run in a rented building. you will call for the documents regarding hiring of the building and ascertain the person from whom the building was hired and also the person who has hired the building. 4. the main source of income of the school/college will be fees collected from the students. you will examine how those fees were collected and what was done with the amounts collected. are books of accounts maintained for income and expenditure who has maintained the books of accounts or records all the persons involved should be thoroughly examined. you will ascertain who is the person in-charge of the affairs. 5. is there any bank account for the school/college whether the deposits and withdrawal in the bank account of mr. peter thorose related to the income or expenditure of the school has miss dancy syiern maintained bank account and whether the deposits and withdrawal related to the income and expenditure of the school 6. you have mentioned that seized documents marked sk 4 is the last will of mr. a.a. thorose. you will ascertain what is the ultimate fate of the will. in my opinion the materials brought on record in the assessment order are not sufficient to determine the true ownership of the school/college....3.2 the ao did not file any report or reply to the above query. so the learned c1t(a) proceeded to dispose of the appeal vide order dt. 17th june, 2005. he found that letter dt. 8th aug., 1996 of mr. peter thorose, assessee, to the jt. d.p.i., government of meghalaya seeking permission for starting class xi and xii and other letter dt. 7th april, 2001 to director, higher and technical education, meghalaya for starting degree classes, were written by him in his capacity as principal of the institution. these letters only showed that he had the administrative control of the institution which is required by a principal. the learned cit(a) further found that bank account admittedly maintained with si3i was operated upon jointly by mr. peter thorose and mrs. t. blah. he further observed that mr. peter thorose was one of the account-holders in his role as principal and mrs. t.blah was other account-holder in her role as treasurer of the institution. according to the learned cit(a), the financial control exercised through the joint operation of the account was not good enough material to hold that mr. peter thorose was the owner of the institution. he observed that mr. peter thorose was doing honorary job and was paid honorarium, was not disputed at any stage of the proceeding. the learned c1t(a) held that two views mentioned by the ao in para 6.3 of the order were not supported by facts and evidence on record.3.3 the learned cit(a) ultimately accepted the claim of the assessee with the following observation: in my considered opinion financial control would imply ownership of property or the acquiring of rights in such property, the receipt of income from such property and it is use by the appellant among other things. there is nothing on record that clinches this issue beyond doubt. further even if the statements of ms. d.d. syiem and ms. t. blah do diverge on some issues it would not still ipso facto make the appellant the owner of the st. peter's higher secondary school and college in the absence of any other facts or evidence in support of such a supposition.4. the revenue carried the matter in appeal before the tribunal. after hearing the case the learned members passed separate and dissenting orders. the learned jm after considering statement of ms. d.d. syiem and mrs. t. blah agreed with the order of learned c1t(a). further, on the basis of affidavit of ms. d.d. syiem available at p. 16 of the paper book that assessee, mr. peter thorose, was principal of school and college since inception and on the basis of photocopy of pf challan showing ms. d.d. syiem as proprietress, the learned jm held that mr.thorose was honorary principal of the institution. he also relied upon certificate from vijaya bank to the effect that ms. d.d. syiem was the owner of st. peter's school and college and mr. peter thorose was its principal. he held that the above facts were not controverted by the revenue. in the light of above documentary evidence, learned jm did not find any merit in this ease. in his proposed order, he dismissed the appeal of the department.5. the learned am did not agree with the above view of the learned jm.he observed that in the assessment order dt. 25th sept., 2003, the ao had found ambiguous and contradictory claims of ownership advanced by certain individuals. the ao observed that higher secondary school and college were run as per the dictate of the assessee, who was the son of mr. a.a. thorose, proprietor of st. peter's school, shillong. in his view, when no reply was received from the ao to the queries raised by the learned cit(a), the cit(a) should have enforced compliance of his remand order. he further observed that "it is also not known why he could not wait further to receive the relevant compliance report from the ao or why could not he make the enquiry himself in case the ao had failed to do so". he was of the view that the learned c1t(a) was wrong in deciding the issue without making enquiries considered necessary by his predecessor and by himself. the learned am, therefore, thought that orders of lower authorities are required to be set aside with directions to ao to conduct enquiry as per the directions of the predecessor of the learned cit(a) and such further enquiry as he may consider necessary. the learned am further observed-"a few documents, in my considered opinion, referred to above were not sufficient to show that miss dancy dora syiem was, in fact, the owner of st. peter's higher secondary school and college especially in view of her statement that the college in question was run by the firm constituted by her along with mrs. blah." on the above facts and circumstances of the case, the learned am did not agree with the view of the learned jm in the proposed order and directed that the matter be remanded.6. the third member case was fixed for hearing and i have heard sri s.s.p. singh for the revenue and sri nirmal singh dugar for the assessee. the learned departmental representative pointed out that issue involved related to higher secondary school and college, but did not pertain to st. peter's school which was being run by mr. a.a.thorose for the last several years. he supported the proposed orders of learned am. he pointed out that enquiries directed to be carried by predecessor cit(a) vide letter dt. 5th aug., 2004 were relevant.without above enquiries, the facts and circumstances were confused as ladies ms. d.d. syiem and mrs. t. blah made contradictory statements.he further argued that the learned cit(a) has himself written that he was not in a position to give uncontroverted finding. the learned departmental representative admitted that case of benami was not fully established although there were some indications that financial control of higher secondary school and college was with the assessee. he relied upon the following decisions: (b) jt. cit v. swarup vegetable products industries ltd. (2005) 98 ttj (del) 420 : (2005) 96 itd 468 (del).the learned departmental representative further argued that when enquiries were started by learned c1t(a), whose powers are coterminous with that of the ao. it was necessary that the matter should have been carried to its logical conclusion. this was not done and, accordingly, the impugned order of the learned c1t(a) suffered from an error which could be rectified by remanding the case back to the ao. the learned departmental representative, accordingly, supported the order of the learned am.7. the learned counsel for the assessee, on the other hand, argued that the assessee was principal of school and college and this claim was never disputed or controverted in any statement or document. there was no evidence on record to show that he was proprietor or owner of the school. he further filed copy of letter issued by asstt. pf commr., government of india, ministry of labour, shillong dt. 3rd jan., 2007 (also referred to and relied upon by learned jm) which clearly showed that college had proprietress and it was not owned by the assessee.8. i have given my careful consideration to the rival submissions of the parties and examined the facts and material on record including proposed orders of my learned brothers. it is well settled rule of law is that apparent state of affairs is real unless contrary is proved.the burden of proving that property stands in a benami name is always on the person who alleges it. in the present case revenue is trying to prove a ease that ms. d.d. syiem and mrs. t. blah are benamidars of the assessee and the assessee is the real owner of school and college. the burden was on the revenue to prove this fact. kindly see krishnanand agnihotri v. state of mp and 409 and jagdayal podar v. mst bibi air 1974 sc 1971 and ced v. aloke mitra .however, no material, direct documentary or circumstantial, has been placed on record to establish that the assessee is the owner of school and college. there is no doubt that his father mr. a.a. thorose started st. peter's school several years earlier and that the assessee as principal had a role to play in starting of xi and xii classes in st.peter's school, shillong. but above facts are not sufficient to treat the assessee as owner of the higher secondary school and college. this conclusion has specifically been arrived at by the learned jm in the impugned order. it is not disputed even by the learned am that "there is nothing on record that clinches this issue beyond doubt", which are the observations of learned cit(a) referred to and relied upon in the order proposed by the learned am although he thought that it was a fit case to be remanded back for fresh enquiry.8.1 in the light of the above admitted position, it is not necessary to examine in detail the other facts and circumstances relied upon by the ao in annexures for holding the assessee as owner of school and college, yet it would facilitate to determine the points raised before me. these are as under: (a) annex. 1 shows order of inspector of schools, shillong showing constitution of management committee of the school. in the said constitution, the assessee is shown as headmaster--joint secretary. mr. a.a. thorose is shown as donor and ms. d.d. syiem as teachers' representative. (b) annex. 2 contains details of inspection report and throws no light on the ownership of the property. (c) annex. 3 is letter dt. 25th nov., 1989 from mr. a.a. thorose, principal of st. peter's school to ms. d.d. syiem, headmistress. in the letter, she is authorized to open classes for higher education as per her wish and use the school at no cost. (d) annex. 4 is copy of salary receipt register which shows receipt of salary mainly by jailin blah. (e) annexs. 5, 6 and 7 are letters from the assessee to jt. d.p.i., shillong, director of higher and technical education, government of meghalaya, shillong and to the director of college development council, shillong, respectively relating to permission for starting classes xi and xii and college. in all these letters written by the assessee it is clear that these are written as principal of the institution.8.2 apart from above, the assessment order is full of extracts from statements of ms. d.d. syiem, mrs. t. blah and those of assessee which contains contradiction. but in no statement it is stated or alleged that the assessee is owner of the school. the important question to be considered was as to who was in control or utilizing the funds/income of the school. the answer given by mrs. t. blah was that withdrawals made from school account were used by her in purchasing fdr in her name. this claim has not been contradicted by the ac) with reference to another material on record. the ac) has further admitted by passing protective assessment in the name of mr. a.a. thorose treating him to be an ostensible owner of the school and college. in fact from the letter dt. 5th aug., 2004, it is absolutely clear that no attempt was made by the ao to prove the case alleged by him.8.3 it is, therefore, clear from the record that neither possession nor control over the management of school/college or over the management or utilization of income or document of title or through other evidence, it was proved that the assessee is the owner of the school/college. it is to be remembered that in this case, the revenue authorities had used their longest arm of search which yielded no cogent material to establish their case. thereafter proceedings under section 158bc were taken. then, the assessee was served with a notice under section 158bd of the it act. it is not shown nor it is recorded that, satisfaction held to be a prerequisite for initiating valid proceedings under section 158f3d by their lordships of supreme court was ever recorded.therefore, the proceedings were bad in law. be that as it may, the ao did not make any efforts to establish the case of a benamidar of ownership. on the facts of the case, there was no justification to allow any further opportunity to the revenue to have a second innings to carry investigation which may or may not yield any result. the revenue has not asked for any such opportunity as is clear from the grounds of appeal raised by them before the tribunal. in fact, according to the revenue, they have already collected clinching evidence regarding ownership. this is more than clear from the ground no. 1 raised by the revenue as under: that the learned cit(a) erred in taking into account the whole gamut of facts which clearly clinches the issue of ownership in favour of shri peter thorose.it is, therefore, clear that learned am has allowed an opportunity to the revenue which they did not ask for and are not interested in the background that according to them, case of benamidar already stands proved. therefore, the order proposed by the learned am, in my view, is not justified. the reasons for the above view may once again be summarized as under: (i) it is a search case and proceedings under sections 158bc and 158bd have already been taken. longest arm available to the revenue has already been utilized, jurisdiction under section 158bd were not legally assumed. (ii) burden of proof to establish case of benamidar as asserted by revenue was not discharged. this is held by learned cit(a) in unequivocal terms and not disputed by both the learned members of the tribunal. (iii) learned cit(a) again as per letter dt. 5th aug., 2004 allowed one more opportunity to the ao to carry on further investigation. nothing was done. it is reasonable to infer that either further inquiry was not possible or did not yield any fruitful result. this inference is possible from the grounds of appeal raised by the revenue before the tribunal. (iv) the revenue has not asked for nor has shown that they have any material in their possession which could be usefully utilized if the matter was remanded to the ao. remand for a roving inquiry is not permissible.9. therefore, on facts there is no question of remand for providing another opportunity or another innings to the revenue to collect further material. the learned am, in my considered opinion, has gone overboard by attaching too much importance to the dates of communication, which are clearly available on record. he has, however, not considered other important circumstances on record, which are narrated above relating to burden of proof etc. i am afraid, it is not the duty of appellate authority, i.e. cit(a) or tribunal, to collect material and make out case for and on behalf of the revenue. it is a separate issue if material available on record is not properly considered by the ao and the learned cit(a) is required to invoke his powers to correct an error or conclusion as is warranted by facts and circumstances of the case. such are not the facts in this case. there is no material which could have been used against the assessee. the second innings is being proposed to be given by the learned am to find out material in support of the ease of the revenue by making further investigation and inquiry. this, in my view, is uncalled for. the above view of mine is also supported by an earlier decision dt. 8th feb., 2007 on a third member case of tribunal, guwahati in the case of asstt.cit us. south point montessorie school [reported at (2007) 109 ttj (gau)(tm) 488-ed.] 10. for the aforesaid reasons. i agree with the proposed order passed by the learned jm.11. the order passed in this case should now be placed before the regular bench for passing consequential order in accordance with law.

Judgment:
1. The appeal is directed at the instance of the Revenue against the order of the learned C1T(A).

2. The AO while passing assessment order under Section 158BD r/w Section 158BC(b) and Section 144 of the Act vide order dt. 25th Sept., 2003 has arrived at the conclusion for the block assessment of Mr.

Peter's Thorose, the order being passed treating him as the real owner of St. Peter's Higher Secondary School and College by virtue of both direct and circumstantial evidence.

3. While arriving at the conclusion on the basis of statement of Miss Dancy Dora Syiem, officiating vice principal under Section 132(4) of the Act and statement of Smt. T. Blah under Section 131 of the Act recorded on 12th Nov., 2001 and seized documents.

4. The assessee filed appeal before the learned CIT(A) and the learned CIT(A) has observed as under: In my considered opinion financial control would imply ownership of property or the acquiring of rights in such property, the receipt of income from such property and its use by the appellant among other things. There is nothing on record that clinches this issue beyond doubt. Further, even if the statements of Mrs. D.D. Syiem and Mrs.

T. Blah to diverge on some issues it would not still ipso facto make the appellant the owner of the St. Peter's Higher Secondary School and College in the absence of any other facts or evidence to support such a supposition.

5. The Revenue is in appeal before us and relied on the order of intimation.

6. The learned Departmental Representative relied on the order of the AO.7. The learned Counsel of the assessee submitted affidavit filed by Miss Dancy Dora Syiem, which is brought on record at p. 16 of the paper book swearing that she is the proprietor of St. Peter's Higher Secondary School and College, Shillong-793003 and Mr. Peter Thorose has been appointed as principal of the school and college since inception on honorary basis. The affidavit is not controverted. The assessee has filed photocopy of the PF challan which is at p. 5 of the paper book dt. 15th Jan., 2006 showing Miss Dancy Dora Syiem as proprietor. These two documents are cogent evidence showing that Miss Dancy Dora Syiem is the proprietor and Mr. Thorose is the principal on honorary basis. The assessee has brought on record the certificate from Vijaya Bank certifying that Miss Dancy Dora Syiem as proprietor of St. Peter's Higher Secondary School and College and the documents show that St.

Peter's Higher Secondary School and College is owned by Miss Dancy Dora Syiem and Mr. Peter Thorose is the principal of the school.

8. We have heard the rival submissions, perused the records and the paper book before us and the documents relied on by the assessee. The documents i.e. certificate from Vijaya Bank, affidavit of Miss Dancy Dora Syiem and PF deposit challan show that Miss Dancy Dora Syiem is the owner of St. Peter's Higher Secondary School and College. Smt. T.Blah and Miss Dancy Dora Syiem were attached to the school and college since the beginning for development of the school and college. These facts were not properly brought on record by the AC).

9. Vijaya Bank certificate, affidavit filed by Miss Dancy Dora Syiem and PF deposit challan show that Miss Dancy Dora Syiem is the owner of St. Peter's Higher Secondary School and College and, therefore, we direct the AO to treat Miss Dancy Dora Syiem as owner of St. Peter's Higher Secondary School and College.

1. I have perused the order of the learned JM. The learned JM dismissed the appeal of the Department and held that in view of certificate from Vijaya Bank, affidavit filed by Miss Dancy Dora Syiem and PF deposit challan. it is seen that Miss Dancy Dora Syiem was the owner of St.

Peter's Higher Secondary School and College and the AO is directed to treat Miss Dancy Dora Syiem as the owner of the aforestated school and college. The facts of the case in brief are discussed as under: 2. There was a search in the case of Mr. Alexander Aviet Thorose proprietor of St. Peter's School, Shillong, on 26th Sept., 2001. In view of various ambiguous and contradictory claims of ownership advanced by certain individuals whose income was exempt from tax and in view of discussion in the assessment order dt. 25th Sept., 2003, the AO held that St. Peter's Higher Secondary School and College was run as per the dictate of Mr. Peter Thorose who is the son of Mr. Alexander Aviet Thorose, proprietor of St. Peter's School, Shillong. He accordingly taxed the income from St. Peter's Higher Secondary School and College determined at Rs. 34,10,000 in the hands of the assessee.

3. The learned C1T(A) as per his impugned order dt. 17th June, 2005 held that financial control of the aforestated St. Peter's Higher Secondary School and College would imply ownership of property or the acquiring of right in such property and the receipt of income and use thereof by the assessee could not be established beyond doubt. He accordingly allowed the appeal of the assessee on this issue.

4. On careful consideration of the orders of the lower authorities and other issues with due respect. I am of the opinion that the issue was not properly examined by the lower authorities. The learned C1T(A) has mainly relied on the statement of Miss Dancy Dora Syiem and her assistant Mrs. Blah whereas the AO has rejected their claim of ownership of the institute in view of contradiction in their statements and other such reasons discussed in the assessment order dt. 25th Sept., 2003. It is very clear from discussion at p. 5 of the impugned order of the learned CIT(A) that his predecessor had come to the conclusion on the basis of the examination of the records that certain investigations/enquiries were to be made to ascertain the ownership of the school/college. The learned CIT(A) has given the details of such investigation and enquiries required to be carried out as per the direction of his predecessor. It is very clear from the discussion at p. 6 of the impugned order that no reply was received from the AO.Neither the date of issue of letter requiring the AO to make such enquiry has been given by the learned CIT(A) nor has he specified the date on which the compliance was to be made by the AO. It is also not known why the learned CIT(A) could not enforce compliance of his remand order or letter, if any, issued to the AO in this regard. It is also not known why he could not wait further to receive the relevant compliance report from the AO or why could not he make the enquiry himself in case the AO had failed to do so. The learned CIT(A) himself has observed that "there is nothing on record that clinches this issue beyond doubt." Thus the issue in my considered opinion, was decided by the learned CIT(A) without making enquiries considered necessary by his predecessor and he himself was not sure as to the facts for correct determination of the issue in dispute before him. I am, therefore, of the considered opinion that the order of the lower authorities are required to be set aside with the direction that the AO should conduct enquiry as per the direction of the predecessor of the learned C1T(A) and such other enquiries as he may consider necessary. He should decide the issue fresh after making necessary enquiries and giving proper opportunity to the assessee. A few documents, in my considered opinion referred to above were not sufficient to show that Miss Dancy Dora Syiem was, in fact, the owner of St. Peter's Higher Secondary School and College especially in view of her statement that the college in question was run by the firm constituted by her along with Mrs. Blah and the further fact that Miss Dancy Dora Syiem as officiating vice-principal of St. Peter's School has stated in her statement that Mr. Alexander Aviet Thorose was the owner of the institution and she was concerned only with the academic matter and had no knowledge of financial matters. I. therefore do not agree with my learned Brother on this issue. The assessment is accordingly set aside with the direction that the AO should finalise fresh assessment in view of the directions given above.

5. As a result, the appeal of the Department is treated as allowed for statistical purpose.

In this appeal there is difference of opinion between the Members of the Bench. Therefore, the following question is referred to the Hon'ble President of the Tribunal under Section 255(4) of the IT Act, 1961 for opinion of the Third Member. The question framed is as under: (i) Whether the learned CIT(A) in the facts and circumstances of the case, has rightly allowed the appeal of the assessee without considering all the relevant facts and without obtaining the report of the AO on the necessary enquiries directed to be made by his predecessor? 1. On account of difference between the learned Members of Gauhati Bench of Tribunal, the following issue has been referred to me under Section 255(4) of the IT Act, 1961: Whether the learned C1T(A) in the facts and circumstances of the case, has rightly allowed the appeal of the assessee without considering all the relevant facts and without obtaining the report of the AO on the necessary enquiries directed to be made by his predecessor? 2. The facts of the case are that a search was carried on the premises of Mr. A.A. Thorose, who was admittedly owner of St. Peter's School, Shillong, on 26th Sept., 2001. During the course of said search, statement under Section 132(4) of Ms. D.D. Syiem was recorded. She claimed to be a teacher and after 1987 full fledged vice principal of the school. Mr. A.A. Thorose was stated to be the owner of the institution. As regards ownership of the St. Peter's College, she claimed that she along with Mrs. T. Blah was the owner of college having 50 per cent share each. In the course of assessment proceeding.

Ms. D.D. Syiem was again examined relating to working of the school. In the statement she stated that her assistant Ms. T. Blah was operating accounts of the school and that Mr. Peter Thorose was principal of St.

Peter's Higher Secondary School. He was carrying job on honorary basis.

She also stated that loan of Rs. 5 lakhs was given out of school accounts to Mrs. Kong Jene through Mr. Peter Thorose. The above statement was recorded on 2nd Nov., 2001. She was again examined on 12th Nov., 2001 and certain questions relating to MND-24, which is balance sheet of St. Peter's Higher Secondary School as on 3rd June, 2006, were put to her. She stated that out of cash balance of Rs. 9,60,000, Rs. 5 lakhs was given to one Mrs. Kong Jene and Rs. 2,50,000 was deposited in FDR. She again stated that Rs. 5 lakhs given to Mrs.

Kong Jene, who was friend of Mr. Peter Thorose. was taken back and later FDR was obtained in her name. The other amount withdrawn was also utilized to make FDR in her name.

2.1 In her subsequent statement, Ms. D.D. Syiem had pointed out that she was running the school and the college on the basis of written permission given by Mr. A.A. Thorose vide letter dt. 25th Nov., 1989.

2.2 On the basis of the statement, which was contradictory in nature, the AO found the plausible motive for stating that ownership of the school was that of Ms. D.D. Syiem or Ms. T. Blah was the following two: (i) To abuse the provisions of Section 10(26) of the Act, wherein local resident Scheduled Tribals are exempted from the IT Act; and (ii) To misuse the concept of the prevailing custom amongst the Khasi Tribe that inheritance is to go to the daughter.

Therefore, the names of Ms. D.D. Syiem and Ms. T. Blah were used and it was claimed that they had inherited sufficient properties.

2.3 However, the AO observed that he did not believe the above claim.

He held as under: To simply and obviously put it, Ms. Dancy D. Syiem and Mrs. T. Blah have been used as benamidars of Mr. Peter Thorose.

This block assessment of Mr. Peter Thorose is therefore being passed treating him, by virtue of both direct and circumstantial evidence, as the real owner of St. Peter's Higher Secondary School and College.

2.4 The AO also made protective assessment of income of school in the hands of Mr. A.A. Thorose, observing as under: Nonetheless, considering that the office of the higher secondary school and college is being run from the same office of the St.

Peter's School, and that Ms. Dancy D. Syiem is an employee of the St. Peter's School, and that as stated by Ms. Dancy D. Syiem in her statement under Section 132(4) in Q. No. 4 that Mr. A.A. Thorose is the owner of the institution (implying all activities), and in her statement under Section 131 in Q. No. 3 that the higher secondary school has understanding with the St. Peter's School and as such there is no need for separate registration/affiliation with MBOSE, and as stated in the appraisal report of the Investigation Wing that the boys of the higher secondary school are wearing the same uniform as that of St. Peter's School, and therefore in view of these statements and also on the facts of the case applying the provisions of Section 60 of the IT Act, whereby there cannot be transfer of income where there is no transfer of assets, the income of the secondary school and college shall also be taxed in the hands of Mr.

A.A. Thorose on protective basis.

The undisclosed income of the school, i.e. higher secondary school and college for the block period was thus taken at Rs. 34,10,000 by the AO vide order dt. 25th Sept., 2003.

3. The assessee impugned above assessment in appeal before the CIT(A), Shillong, who noted facts and circumstances of the case as emerging from the assessment order and held that assessment of the assessee under Section 158BD r/w Sections l58BC(b) and 144 was quite in order.

He upheld the same.

3.1 The learned CIT(A) further noted statements under Section 132(4) and statements recorded during the course of assessment proceeding under Section 131 of Ms. D.D. Syiem. He also took into consideration statement of Mrs. T. Blah. After examining the facts and circumstances of the case, he found that his predecessor vide letter dt. 5th Aug., 2004 had asked the AO to make enquiry on the following points: 1. What are the requirements for starting the higher secondary school or college and how those requirements were met. Who has undertaken to meet those requirements 2. In the statement. Miss Daney Syiern mentioned about the contributions/investments for starting the higher secondary school/college. She has also mentioned the amount of contribution made by her and the other person. She simply stated that both the persons inherited a lot of property from the parent side and invested in the college. No investigation or examination was made to ascertain the correctness of the statements. You will examine the evidences of sources of the investment to ascertain the truth.

3. It appears that school/college was run in a rented building. You will call for the documents regarding hiring of the building and ascertain the person from whom the building was hired and also the person who has hired the building.

4. The main source of income of the school/college will be fees collected from the students. You will examine how those fees were collected and what was done with the amounts collected. Are books of accounts maintained for income and expenditure Who has maintained the books of accounts or records All the persons involved should be thoroughly examined. You will ascertain who is the person in-charge of the affairs.

5. Is there any bank account for the school/college Whether the deposits and withdrawal in the bank account of Mr. Peter Thorose related to the income or expenditure of the school Has Miss Dancy Syiern maintained bank account and whether the deposits and withdrawal related to the income and expenditure of the school 6. You have mentioned that seized documents marked SK 4 is the last will of Mr. A.A. Thorose. You will ascertain what is the ultimate fate of the will.

In my opinion the materials brought on record in the assessment order are not sufficient to determine the true ownership of the school/college....

3.2 The AO did not file any report or reply to the above query. So the learned C1T(A) proceeded to dispose of the appeal vide order dt. 17th June, 2005. He found that letter dt. 8th Aug., 1996 of Mr. Peter Thorose, assessee, to the Jt. D.P.I., Government of Meghalaya seeking permission for starting Class XI and XII and other letter dt. 7th April, 2001 to Director, Higher and Technical Education, Meghalaya for starting degree classes, were written by him in his capacity as principal of the institution. These letters only showed that he had the administrative control of the institution which is required by a principal. The learned CIT(A) further found that bank account admittedly maintained with SI3I was operated upon jointly by Mr. Peter Thorose and Mrs. T. Blah. He further observed that Mr. Peter Thorose was one of the account-holders in his role as principal and Mrs. T.Blah was other account-holder in her role as treasurer of the institution. According to the learned CIT(A), the financial control exercised through the joint operation of the account was not good enough material to hold that Mr. Peter Thorose was the owner of the institution. He observed that Mr. Peter Thorose was doing honorary job and was paid honorarium, was not disputed at any stage of the proceeding. The learned C1T(A) held that two views mentioned by the AO in para 6.3 of the order were not supported by facts and evidence on record.

3.3 The learned CIT(A) ultimately accepted the claim of the assessee with the following observation: In my considered opinion financial control would imply ownership of property or the acquiring of rights in such property, the receipt of income from such property and it is use by the appellant among other things. There is nothing on record that clinches this issue beyond doubt. Further even if the statements of Ms. D.D. Syiem and Ms. T. Blah do diverge on some issues it would not still ipso facto make the appellant the owner of the St. Peter's Higher Secondary School and College in the absence of any other facts or evidence in support of such a supposition.

4. The Revenue carried the matter in appeal before the Tribunal. After hearing the case the learned Members passed separate and dissenting orders. The learned JM after considering statement of Ms. D.D. Syiem and Mrs. T. Blah agreed with the order of learned C1T(A). Further, on the basis of affidavit of Ms. D.D. Syiem available at p. 16 of the paper book that assessee, Mr. Peter Thorose, was principal of school and college since inception and on the basis of photocopy of PF challan showing Ms. D.D. Syiem as proprietress, the learned JM held that Mr.

Thorose was honorary principal of the institution. He also relied upon certificate from Vijaya Bank to the effect that Ms. D.D. Syiem was the owner of St. Peter's School and College and Mr. Peter Thorose was its principal. He held that the above facts were not controverted by the Revenue. In the light of above documentary evidence, learned JM did not find any merit in this ease. In his proposed order, he dismissed the appeal of the Department.

5. The learned AM did not agree with the above view of the learned JM.He observed that in the assessment order dt. 25th Sept., 2003, the AO had found ambiguous and contradictory claims of ownership advanced by certain individuals. The AO observed that higher secondary school and college were run as per the dictate of the assessee, who was the son of Mr. A.A. Thorose, proprietor of St. Peter's School, Shillong. In his view, when no reply was received from the AO to the queries raised by the learned CIT(A), the CIT(A) should have enforced compliance of his remand order. He further observed that "It is also not known why he could not wait further to receive the relevant compliance report from the AO or why could not he make the enquiry himself in case the AO had failed to do so". He was of the view that the learned C1T(A) was wrong in deciding the issue without making enquiries considered necessary by his predecessor and by himself. The learned AM, therefore, thought that orders of lower authorities are required to be set aside with directions to AO to conduct enquiry as per the directions of the predecessor of the learned CIT(A) and such further enquiry as he may consider necessary. The learned AM further observed-"A few documents, in my considered opinion, referred to above were not sufficient to show that Miss Dancy Dora Syiem was, in fact, the owner of St. Peter's Higher Secondary School and College especially in view of her statement that the college in question was run by the firm constituted by her along with Mrs. Blah." On the above facts and circumstances of the case, the learned AM did not agree with the view of the learned JM in the proposed order and directed that the matter be remanded.

6. The Third Member case was fixed for hearing and I have heard Sri S.S.P. Singh for the Revenue and Sri Nirmal Singh Dugar for the assessee. The learned Departmental Representative pointed out that issue involved related to higher secondary school and college, but did not pertain to St. Peter's School which was being run by Mr. A.A.Thorose for the last several years. He supported the proposed orders of learned AM. He pointed out that enquiries directed to be carried by predecessor CIT(A) vide letter dt. 5th Aug., 2004 were relevant.

Without above enquiries, the facts and circumstances were confused as ladies Ms. D.D. Syiem and Mrs. T. Blah made contradictory statements.

He further argued that the learned CIT(A) has himself written that he was not in a position to give uncontroverted finding. The learned Departmental Representative admitted that case of benami was not fully established although there were some indications that financial control of higher secondary school and college was with the assessee. He relied upon the following decisions: (b) Jt. CIT v. Swarup Vegetable Products Industries Ltd. (2005) 98 TTJ (Del) 420 : (2005) 96 ITD 468 (Del).

The learned Departmental Representative further argued that when enquiries were started by learned C1T(A), whose powers are coterminous with that of the AO. it was necessary that the matter should have been carried to its logical conclusion. This was not done and, accordingly, the impugned order of the learned C1T(A) suffered from an error which could be rectified by remanding the case back to the AO. The learned Departmental Representative, accordingly, supported the order of the learned AM.7. The learned Counsel for the assessee, on the other hand, argued that the assessee was principal of school and college and this claim was never disputed or controverted in any statement or document. There was no evidence on record to show that he was proprietor or owner of the school. He further filed copy of letter issued by Asstt. PF Commr., Government of India, Ministry of Labour, Shillong dt. 3rd Jan., 2007 (also referred to and relied upon by learned JM) which clearly showed that college had proprietress and it was not owned by the assessee.

8. I have given my careful consideration to the rival submissions of the parties and examined the facts and material on record including proposed orders of my learned Brothers. It is well settled rule of law is that apparent state of affairs is real unless contrary is proved.

The burden of proving that property stands in a benami name is always on the person who alleges it. In the present case Revenue is trying to prove a ease that Ms. D.D. Syiem and Mrs. T. Blah are benamidars of the assessee and the assessee is the real owner of school and college. The burden was on the Revenue to prove this fact. Kindly see Krishnanand Agnihotri v. State of MP and 409 and Jagdayal Podar v. Mst Bibi AIR 1974 SC 1971 and CED v. Aloke Mitra .

However, no material, direct documentary or circumstantial, has been placed on record to establish that the assessee is the owner of school and college. There is no doubt that his father Mr. A.A. Thorose started St. Peter's School several years earlier and that the assessee as principal had a role to play in starting of XI and XII classes in St.

Peter's School, Shillong. But above facts are not sufficient to treat the assessee as owner of the higher secondary school and college. This conclusion has specifically been arrived at by the learned JM in the impugned order. It is not disputed even by the learned AM that "there is nothing on record that clinches this issue beyond doubt", which are the observations of learned CIT(A) referred to and relied upon in the order proposed by the learned AM although he thought that it was a fit case to be remanded back for fresh enquiry.

8.1 In the light of the above admitted position, it is not necessary to examine in detail the other facts and circumstances relied upon by the AO in Annexures for holding the assessee as owner of school and college, yet it would facilitate to determine the points raised before me. These are as under: (a) Annex. 1 shows order of Inspector of Schools, Shillong showing constitution of management committee of the school. In the said constitution, the assessee is shown as headmaster--joint secretary.

Mr. A.A. Thorose is shown as donor and Ms. D.D. Syiem as teachers' representative.

(b) Annex. 2 contains details of inspection report and throws no light on the ownership of the property.

(c) Annex. 3 is letter dt. 25th Nov., 1989 from Mr. A.A. Thorose, principal of St. Peter's School to Ms. D.D. Syiem, headmistress. In the letter, she is authorized to open classes for higher education as per her wish and use the school at no cost.

(d) Annex. 4 is copy of salary receipt register which shows receipt of salary mainly by Jailin Blah.

(e) Annexs. 5, 6 and 7 are letters from the assessee to Jt. D.P.I., Shillong, Director of Higher and Technical Education, Government of Meghalaya, Shillong and to the Director of College Development Council, Shillong, respectively relating to permission for starting classes XI and XII and college. In all these letters written by the assessee it is clear that these are written as principal of the institution.

8.2 Apart from above, the assessment order is full of extracts from statements of Ms. D.D. Syiem, Mrs. T. Blah and those of assessee which contains contradiction. But in no statement it is stated or alleged that the assessee is owner of the school. The important question to be considered was as to who was in control or utilizing the funds/income of the school. The answer given by Mrs. T. Blah was that withdrawals made from school account were used by her in purchasing FDR in her name. This claim has not been contradicted by the AC) with reference to another material on record. The AC) has further admitted by passing protective assessment in the name of Mr. A.A. Thorose treating him to be an ostensible owner of the school and college. In fact from the letter dt. 5th Aug., 2004, it is absolutely clear that no attempt was made by the AO to prove the case alleged by him.

8.3 It is, therefore, clear from the record that neither possession nor control over the management of school/college or over the management or utilization of income or document of title or through other evidence, it was proved that the assessee is the owner of the school/college. It is to be remembered that in this case, the Revenue authorities had used their longest arm of search which yielded no cogent material to establish their case. Thereafter proceedings under Section 158BC were taken. Then, the assessee was served with a notice under Section 158BD of the IT Act. It is not shown nor it is recorded that, satisfaction held to be a prerequisite for initiating valid proceedings under Section 158F3D by their Lordships of Supreme Court was ever recorded.

Therefore, the proceedings were bad in law. Be that as it may, the AO did not make any efforts to establish the case of a benamidar of ownership. On the facts of the case, there was no justification to allow any further opportunity to the Revenue to have a second innings to carry investigation which may or may not yield any result. The Revenue has not asked for any such opportunity as is clear from the grounds of appeal raised by them before the Tribunal. In fact, according to the Revenue, they have already collected clinching evidence regarding ownership. This is more than clear from the ground No. 1 raised by the Revenue as under: That the learned CIT(A) erred in taking into account the whole gamut of facts which clearly clinches the issue of ownership in favour of Shri Peter Thorose.

It is, therefore, clear that learned AM has allowed an opportunity to the Revenue which they did not ask for and are not interested in the background that according to them, case of benamidar already stands proved. Therefore, the order proposed by the learned AM, in my view, is not justified. The reasons for the above view may once again be summarized as under: (i) It is a search case and proceedings under Sections 158BC and 158BD have already been taken. Longest arm available to the Revenue has already been utilized, jurisdiction under Section 158BD were not legally assumed.

(ii) Burden of proof to establish case of benamidar as asserted by Revenue was not discharged. This is held by learned CIT(A) in unequivocal terms and not disputed by both the learned Members of the Tribunal.

(iii) Learned CIT(A) again as per letter dt. 5th Aug., 2004 allowed one more opportunity to the AO to carry on further investigation.

Nothing was done. It is reasonable to infer that either further inquiry was not possible or did not yield any fruitful result. This inference is possible from the grounds of appeal raised by the Revenue before the Tribunal.

(iv) The Revenue has not asked for nor has shown that they have any material in their possession which could be usefully utilized if the matter was remanded to the AO. Remand for a roving inquiry is not permissible.

9. Therefore, on facts there is no question of remand for providing another opportunity or another innings to the Revenue to collect further material. The learned AM, in my considered opinion, has gone overboard by attaching too much importance to the dates of communication, which are clearly available on record. He has, however, not considered other important circumstances on record, which are narrated above relating to burden of proof etc. I am afraid, it is not the duty of appellate authority, i.e. CIT(A) or Tribunal, to collect material and make out case for and on behalf of the Revenue. It is a separate issue if material available on record is not properly considered by the AO and the learned CIT(A) is required to invoke his powers to correct an error or conclusion as is warranted by facts and circumstances of the case. Such are not the facts in this case. There is no material which could have been used against the assessee. The second innings is being proposed to be given by the learned AM to find out material in support of the ease of the Revenue by making further investigation and inquiry. This, in my view, is uncalled for. The above view of mine is also supported by an earlier decision dt. 8th Feb., 2007 on a Third Member case of Tribunal, Guwahati in the case of Asstt.

CIT us. South Point Montessorie School [reported at (2007) 109 TTJ (Gau)(TM) 488-Ed.] 10. For the aforesaid reasons. I agree with the proposed order passed by the learned JM.11. The order passed in this case should now be placed before the regular Bench for passing consequential order in accordance with law.