Income Tax Appellate Tribunal - PuneBhaskaracharya Pratishthana vs Assistant Commissioner Of Income-Tax on 29 September, 1994Equivalent citations: [1995]52ITD28(PUNE)ORDERG.K. Israni, Judicial Member1. These two appeals by the assessee are directed against the consolidated order of the learned CIT (Appeals) dated 16-1-1992 in relation to the assessment years 1986-87 and 1987-88.2. The common grounds raised in the appeals are as under:(1) The learned CIT (Appeals) erred in holding that the appellant was not entitled to claim exemption under Section 10(22). The facts and circumstances of the case which he considered were neither relevant nor decisive for the conclusion that he arrived at. As the appellant's claim of the exemption under Section 10(22) had been accepted in the past, and as thereafter there was no change in the objects and working of the appellant, it may kindly be held that the appellant is entitled to exemption under Section 10(22).(2) The learned CIT (Appeals) failed to appreciate that the exemption under Section 10(22) was not made dependent, like Section 10(21) or Section 11, on the mode and manner of application of the income and the application of non-application of the income had no relevance in determining the question of exemption under Section 10(22). He therefore erred in holding that the appellant was not entitled to exemption under Section 10(22) because it had not applied its income towards educational purpose.(3) The learned CIT (Appeals), without appreciating the actual working of the appellant in the field of education and research in Mathematics, erred in holding that the appellant did not exist for the purpose of education and that Section 10(22) did not apply.(4) The learned CIT (Appeals) erred in holding that the appellant was not entitled to exemption under Section 10(21) because (0 it had paid an amount of Rs. 30 lakhs and above to the contractor when it was not necessary, and (ii) the appellant did not spend any money for carrying out scientific research. These findings of the CIT (Appeals) are factually and legally not tenable.(5) The learned CIT (Appeals) erred in holding that the appellant was not entitled to exemption under Section 11 because it had contravened the provisions of Section 11(5) read with Section 13(1)(d) and because it was not running any educational institution.(6) The learned CIT (Appeals) erred in rejecting the contention of the appellant that if the appellant was to be treated as scientific research institution referred to in Section 10(27), then as per law then existing the voluntary contributions could not be treated as its income, and that in deciding whether the income of the appellant was applied towards charitable purpose, such voluntary contributions had to be left out. The CIT (Appeals) in deciding this issue wrongly mixed up another contention of the appellant that part of its donations were towards corpus.(7) The learned CIT (Appeals) erred in rejecting the contention and evidence produced which showed that the donations of Rs. 52,00,000 (assessment year 1986-87) and Rs. 44,00,000 (assessment year 1987-88) were towards corpus and they could not be considered as income. The reasons given for not admitting additional evidence in this behalf are not tenable. In deciding this issue, the actual utilisation of the contribution also was a clear indicator that these donations were towards corpus.(8) The learned CIT (Appeals) erred in holding that in order to earn exemption under Section 10(22), the appellant should have fulfilled conditions under Section 11(5). In the concerned years under appeal this was not the requirement of law.(9) The CIT (Appeals) erred in not considering the alternative contention of the appellant that if it could not be considered to be entitled to exemption under Section 10(21), 10(22) or 11, its income should have been calculated like any ordinary association at ordinary rates applicable, and that there was no reason or justification to penalise the appellant by taxing voluntary contributions and by levying maximum marginal rate.(10) The CIT (Appeals) erred in rejecting the contention of the appellant, that interest under Section 139 or 217 was not leviable.(11) The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal.(12) Considering the substantial hardship that is caused to the appellant which is a public organisation that it may be allowed to adduce such additional evidence as would establish its claim of exemption, which evidence was not admitted for technical reasons by lower authorities.3. Before discussing the issues in dispute, it would be convenient to give the necessary factual background of the case. The assessee is a society registered under theSocieties Registration Act. The Memorandum lists out the following as its objects :(i) to encourage arid facilitate the pursuit of Mathematics;(ii) to promote and encourage the fundamental research in Mathematics;(iii) to support exchange of ideas and propagation of development in Mathematics;(iv) to endeavour in numerous ways to spread and cultivate appreciation and studies in Mathematics at various levels and in various aspects;(v) to encourage and facilitate the pursuit of other branches of knowledge and supportive activities in suitable ways;(vi) to provide facilities in fulfilment of these objects.The assessee has been recognised by the Prescribed Authority as a Scientific Research Association for the purposes ofSection 35(1)(ii)of the Income-tax Act. The assessee was also registered as a public trust by the Charity Commissioner, Pune, vide certificate dated 5-1-1975. The Director of Education, Maharashtra vide his letter dated 31-5-1979 had also granted recognition to the Pratishthana as a research and cultural institute for a period of 3 years in the first instance. The CIT, Pune I & II, Pune, vide his letter dated 7-4-1980 in reply to the assessee's application for registration of trust underSection 12Aof the Income-tax Act had stated as follows :Please refer to your application dated 15-3-1980 for registration of your trust underSection 12A(a)of the IT Act, 1961.2. On going through the objects of your institution it is seen that the income of your institution is exempt from income-tax underSection 10(22)of the IT Act, 1961, being an educational institution. Registration underSection 12A(a)of IT Act, 1961 is, therefore, not necessary in your case and your income is even otherwise exempt from income-tax.This recognition, however, was withdrawn by the CIT by his detailed order dated 28-3-1989 after giving a hearing to the assessee. The assessee was not subjected to any tax in the years earlier to the assessment year 1986-87 which is the subject-matter of the first appeal. According to the assessee, the Pratishthana was an institution existing solely for educational purposes and that scientific research was only an incidental activity and, therefore, whole of its income was exempt underSection 10(22), irrespective of the application of its income. The assessee further claimed that it is an association for the time being approved by the Prescribed Authority for the purposes ofSection 35(1)(ii)and hence its income is exempt as per the provisions ofSection 10(22)of the Act. Yet, one more plea of the assessee was that the Pratishthana is only a charitable trust and that the provisions ofSection 11are applicable. The Assessing Officer, who investigated into the affairs of the Pratishthana and examined its claims of exemption, came to the following conclusions :(a) that the Pratishthana could not be considered as an institution as envisaged underSection 10(22)existing solely for educational purposes;(b) that the income of the Pratishthana was not exempt underSection 10(21)of the Income-tax Act. During the course of the investigation, the Assessing Officer found that no scholarship, as alleged by the assessee, was given nor any expenditure was incurred on the travelling allowance and subsistence allowance nor any books were purchased. Payments claimed running into millions of rupees on these heads were all bogus. The assessee had also not fulfilled the conditions as laid down under the proviso toSection 10(21)as regards the depositing or investing of its contributions in the modes and manners provided inSection 11(5)of the IT Act;(c) as regards the assessee's claim of exemption underSection 11, the Assessing Officer came to the conclusion that the amounts which the assessee -had claimed to have spent on alleged scholarships, travelling and subsistence allowance and purchase of books could not be considered as application of income on the objects of the trust. He accordingly held that the entire amounts would have to be assessed underSection 164(3)at the maximum marginal rate.4. The above findings of the Assessing Officer were challenged in the first appeals. The learned CIT (Appeals) in his detailed order running into about 70 pages made a detailed discussion of the facts, the contentions of the assessee and the department and the findings of the Assessing Officer. After full consideration of all the relevant aspects and hearing the authorised representative(s) of the assessee and the Assessing Officer Shri S.P. Joshi, the learned CIT recorded his findings rejecting the assessee's claims of exemption under all the three sections, namely,Sections 10(22),10(2.1) and 11 of theIncome-tax Act. On the question of claim underSection 10(22), he has held that the assessee is not an educational institution; rather, it is only a scientific research association. He has further held that it cannot be said that the Pratishthana solely existed for the purposes of education and that the provisions ofSection 10(22)are applicable. As regards the claim of exemption underSection 10(21), he has held that the main object of the Pratishthana was to carry out fundamental research in pure mathematics. Moreover, the enquiries and investigation carried out by the Assessing Officer showed that the expenditure had not been incurred on the objects of the Association. The assessee had further contravened the provisions ofSection 11(5)of the Act and, as such, was not entitled to exemption underSection 10(21). One of the requirement ofSection 10(21)was that the assessee must not deposit/invest any sum by way of contributions received but in any mode or form otherwise than as specified inSection 11(5). In the instant case, it was clearly proved that the amount exceeding Rs. 30 lakhs was given to the contractor as deposit/investment and that could not merely be considered as an advance. So far as the assessee's role as a Scientific Research Association is concerned, the learned CIT (Appeals) in para 43 of his impugned order has observed that the assessee had not spent any amount or money for carrying out any scientific research. In other words, the assessee had not applied its income for the purposes of the objects of the Association. He has endorsed the finding of the Assessing Officer to the effect that no scholarship had actually been given, nor any travelling allowance or subsistence allowance was actually paid, nor any expenditure on purchase of books was actually made. The fact that the expenditure had not been incurred on the objects of the Association was clear from the implied conduct of the assessee, i.e., to say that the assessee did not clearly challenge this, nor the assessee showed any interest in cross-examining the concerned persons in spite of the fact that proper opportunity for the same was given to the assessee. Even before him the assessee had not contested this issue and had almost accepted that the expenditure had not been incurred on the objects of the Association. Thus, the assessee did not qualify for exemption underSection 10(21)of the Act. As regards the claim of exemption underSection 11. the learned CIT (Appeals) has again endorsed the finding of the Assessing Officer to the effect that the assessee had contravened the provisions ofSection 11 (5)and therefore fell within the purview ofSection 13(1)(a). In this view of the matter, the assessee was not entitled to any exemption underSection 11of the Act. In view of these findings, the assessee's appeals were dismissed by the learned first appellate authority and it was held that the action of the Assessing Officer to tax the entire income of Rs. 75,98,970 for the assessment year 1986-87 and at Rs. 45,79,300 for the assessment year 1987-88 at the maximum marginal rate was proper and correct.5. In the present appeals, although as many as 12 formal grounds have been raised, yet the issues involved therein are the same as before the learned CIT (Appeals). The issue of levy of interest underSections 139and217has also been raised in ground No. 10 of the appeals. Let us now discuss each issue separately.(A) : Exemption under Section 10(22) of the Act6. On this issue, it was submitted by the learned counsel for the assessee that the very objects of the Association of the Pratishthana would show that the main or rather the exclusive activity of the assessee was to engage itself in imparting knowledge at a higher level in the field of mathematics. The Pratishthana, by way of lectures and research activity, used to spread, facilitate and aid higher learning and research in mathematics. It is, of course, true that the assessee neither conducted any regular classes nor had it established any school or college for formal education in the science of mathematics, yet, the facts would show that the assessee was imparting education and spreading knowledge to the scholars at the doctoral/post-doctoral level and, therefore, the absence of formal and regular activity of teaching would not make any material difference insofar as the assessee's character as an educational institution underSection 10(22)is concerned. In this connection, the learned counsel, apart from referring to the fact that the assessee was recognised as a research and cultural institute, also referred to the following facts:(i) a number of lectures were organised under the joint auspices of Bhaskaracharya Pratishthana and the University of Pune;(ii) the Pune University had recognised the Pratishthana as a research institute in higher studies in mathematics;(iii) the Punjab University, vide letter dated 12-4-1982 had recognised the Pratishthana as a centre for Ph.D. research in mathematics;(iv) a good number of students registered at and getting scholarships/ fellowships from various Universities worked at the Pratishthana. One Mr. Richard A. Ganong was nominated for Visitorship to spend several months at the Pratishthana in connection with his Fellowship to India under the Indo-American Fellowship Programme;(v) some of the students who had participated in the lectures/ programmes in the Pratishthana had qualified from the Punjab University;(vi) the Council of Scientific & Industrial Research, New Delhi, had also granted house rent allowance to the CSIR research fellows working at the Pratishthana;(vii) the Government of India, Department of Atomic Energy had also granted research scholarship to a few scholars to carry out research under the supervision of Prof. S.S. Abhyankar at the Pratishthana;(viii) the Indian Statistical Institute had also organised a joint programme along with the Pratishthana for conducting summer programme in June 1978 in various branches of Algebra.7. On the basis of the above facts and the Court/Tribunal decisions cited below, the learned counsel contended that the Pratishthana was essentially existing solely for the purpose of education and not for profit within the meaning ofSection 10(22)and was, therefore, entitled to exemption under that provision of law:(1) National Institutes of Construction, Management & Research (NICMAR) v. ITO[1990] 34 ITD 445 (Bom.),
 

(2) Gujarat State Co-operative Union v. CIT[1992] 195 ITR 279 (Guj.), and
 

(3) IAC v. Matrusri Educational Society [1994] 48 ITD 583 (Hyd.).Elaborating, he submitted that, apart from being an educational institution, the Pratishthana was also research association engaged in higher learning in the field of mathematics. Inasmuch as the education by way of lectures etc. was being imparted at the doctoral and post-doctoral level, there could not be any formal classes conducted in any school/ college. However, a good number of lectures and seminars were organised to conduct study in research in the field of mathematics. This activity was essentially one of imparting education. According to the learned counsel, the characteristics of scientific research association/educational institution are not mutually exclusive. An Association or Institution can both be a scientific research association as well as an educational institution within the meaning of Clauses (21) and (22) ofSection 10. Therefore, a claim of exemption otherwise valid under Clause (22) cannot be denied merely for the reason that the association/institution also falls within the category of scientific research association within the meaning of Clause (21). During the course of his arguments, the learned counsel also discussed the decision of the Supreme Court in the case ofSole Trustee, Loka Shikshana Trust v. CIT[1975] 101 ITR 234. A discussion of this judgment of the Supreme Court has also been made by the two revenue authorities in their orders.8. As against the above, it was submitted by the learned departmental representative that the assessee was merely a scientific research association, which was engaged only in the activity of organising lectures/seminars for higher learning and research in mathematics. There was no regular activity of teaching, nor any instructions were imparted, nor any teaching was done or classes were conducted on regular basis. Neither any degrees or diplomas were awarded by the Pratishthana nor was there any regular arrangement of teaching/non-teaching staff to impart instructions and manage the affairs of the Pratishthana. Neither any salarles/honoraria/fees was paid to any teachers/lecturers, nor was there any institution as such existing otherwise. The income of the Pratishthana consisted only of donations in millions of rupees. Those donations had attracted exemption underSection 80G, but, in the hands of the Pratishthana instead of being applied to and utilised for the purposes of objects of the Association were consciously and deliberately allowed to be misappropriated. The Pratishthana had thus become a mere conduit for mis-application of donations exempt underSection 80Gwithout serving any purpose or object whatsoever. The Pratishthana was thus neither engaged in the activity of education, nor was it an institution in the true sense of the term, nor was it existing solely for the purpose of education. Rather, the Pratishthana was existing only for the purpose of private profit of persons. As regards the CIT's letter dated 7-4-1980, it was contended by the learned departmental representative that, that letter could not be of any assistance to the assessee in the present case. Firstly, that letter was subsequently cancelled with retrospective effect by the same CIT. Secondly, the view of the matter taken by the CIT in connection with the statutory provisions of theIncome-tax Actcould not validly bind the Assessing Officer in the discharge of his quasi-judicial function of making assessment under the said Act. Reference in this connection was made by him to the following decisions :(1) S.B. Adityan v. First ITO[1964] 52 ITR 453 (Mad.), and
 

(2) Blrla Vidhya Vihar Trust v. CIT[1982] 136 ITR 445 (Cal).The learned departmental representative further contended that even the aforesaid letter of the CIT which was only an administrative act could not serve as a promissory estoppel on the part of the department thereby debarring the department from refusing to grant exemption underSection 10(22). For this purpose, reliance was placed on the decision of the Calcutta High Court in the caseCIT v. Bankam Investment Ltd.[1994] 208 ITR 208.9. We have considered the facts and circumstances of the case and studied the relevant provisions of law and the decisions of the Courts/ Tribunal cited before us. After such consideration and study, we have come to the conclusion that the assessee cannot be held to be an institution - much less an educational institution existing solely for educational purposes. The details of the income and expenditure and the activities relating to lectures/seminars etc. furnished by the assessee clearly show that the assessee was not engaged in any regular manner in the activity of teaching or imparting instructions in any branch of knowledge. What the assessee was actually doing was only organising occasional lectures and seminars. In some stray cases, guidance to research students was also being provided at a level, which could only be seen as a personal or non-institutional level. There were no regular classes. No time schedules for studies or teaching were there. There was no paid teaching staff. No salaries, honoraria or fees of any sort were paid to any teaching staff. The persons who delivered lectures were not legally or contractually bound to do so and did it as a matter of personal gesture or contribution. There was no office or management staff of any size. There was no hierarchy of management with assigned roles, functions or responsibilities. In the assessment year 1986-87, whereas the total income was Rs. 76,28,464, the only expenditure incurred was Rs. 25,851 on administration, Rs. 2,500 on audit fees. Similarly, in the assessment year 1987-88, whereas the total income was Rs. 46,75,558 establishment expenses claimed were mere Rs. 60,379 and all other expenses totalled only Rs. 5,192. This also is an indicator of the fact that there was hardly any administration or management in existence so as to give the Body the shape of an institution. No building was either owned or purchased to carry out the functions of the so-called institution. We were told that even for conducting lectures, there was no space or place and the lectures were conducted as and where convenient. It is of course true that brick and mortar is not an essential ingredient of an institution, but then, it is unquestionably one of the factors which should be taken into consideration in order to arrive at a conclusion as to whether any institution was really in existence and functioning. In the case of the assessee Pratishthana, there was neither body nor soul to make it as an institution. The facts admitted by the assessee and unearthed during the investigation show that calling the assessee Pratishthana "an institution" would be clearly a misnomer. If at all it was an institution, it was only a one-man institution. Moreover, it was not existing solely for educational purposes, but mainly and substantially, if not solely, for the purpose of private profit. The word used in Clause (22) ofSection 10is 'existing' and not 'established' or 'founded'. For howsoever laudable purposes a Body or Oganisation may be established or founded, it cannot be held to be existing for those objects and purposes if a serious deviation or departure is found therefrom. In the present case, for adjudging the issue as to whether the assessee Pratishthana was existing solely for educational purposes, it will have to be seen what had been the concrete nature of its activities and how its income and expenditure has been handled. In other words, it will have to be seen as to whether the income and the expenditure was solely devoted to or applied for the sole purpose of education. It is only then it can be said that such body or organisation was existing solely for the purpose of education. In the present case, after search and seizure operations and detailed investigations, it had been found that sizeable portion of the donations received from the donors was siphoned off and restored in the hands of those donors or nominees. The siphoning was done by various methods which included, inter alia, bogus claims of expenditure on books, scholarships, travelling and subsistence allowance etc. There was no teaching or educational activity or any output of passed out students in any field. No degrees or diplomas were awarded by the Pratishthana. The provision contained in Clause (22) ofSection 10is one of exemption.It has been enacted with a view to promote genuine and organised educational activity. The provision will, therefore, have to be interpreted and applied in that context and with a view to achieve the underlying legislative intent and object. At this stage, let us discuss the various Courts/Tribunal decisions cited on behalf of the assessee. The first such decision is the judgment of the Gujarat High Court inGujarat State Co-operative Union's case (supra). In has been observed therein that :Though in the context of the provisions ofSection 10(22), the concept of education need not be given any wide or extended meaning, it surely would encompass systematic dissemination of knowledge and training in specialised subjects. The question whether an educational institution is existing solely for educational purposes can be decided with reference to the activities actually carried on by it.In the present case, if we look at the activities actually carried on by the assessee Pratishthana we can only conclude that the Pratishthana was existing solely for the purpose of private profit and personal aggrandisement. The next decision on which reliance was placed on behalf of the assessee is the decision of the Hyderabad Bench of the Tribunal in Matrusri Educational Society's case (supra). We find that this decision of the Tribunal can hardly offer any material assistance to the assessee before us. There, it was a case of an engineering college which collected from students fees as capitation fees and out of the collections refunded certain amounts to deserving students as per Government directives. The assessee society in that case was running a regular engineering college, which had civil engineering, mechanical engineering, computer science, electronics and communication engineering branches with 290 annual intake of students. In the case before us, there is neither college or school nor any building to run a college or school nor any paid or duly appointed teachers, nor any laboratory or equipment, nor any payment of salaries, honoraria or fees nor any student regularly enrolled or qualified. In the presence of these facts, it would be difficult to hold that there was any educational institution existing at all.The next such decision is the decision of the Bombay Bench of the Tribunal inNational Institutes of Construction, Management & Research (NICMAR)'s case (supra). In this case, the education given by the assessee was of course of graduate level and therefore, it was observed that there could not be 'normal schooling' as understood in the ordinary parlance. However, the Post-graduate diploma course in construction management was a full-time course of 18 months' duration and was equivalent to M.E. or M.B.A. of Indian universities. Not only that, the assessee was running a core faculty by engaging fulltime and part-time experts. Further, under the United Nations Development Programme, visiting professors of universities in U.S.A. and U.K. came to India to impart knowledge on construction management. It was in this context that it was held that these factors clearly show that the assessee was an educational institution within the meaning ofSection 10(22).Another reference made in this connection was to the decision of the Madras High Court inThanthi Trust v. ITO[1973] 91 ITR 261. From a study of this decision, we find that it only deals with the question of deviation from declared objects or misapplication of funds and whether such deviation affects the validity of a trust. The case before us is one of exemption underSection 10(22)to an educational institution claiming to exist solely for educational purposes. As has already been observed, the word used in Clause (22) is 'existing' and not 'established' or 'founded'. Therefore, in this context, the assessee-Pratisthana cannot be held to be existing solely for educational purposes.10. We would now discuss the decisions of the Courts/Tribunal cited on behalf of the revenue. One such decision is the judgment of the Rajasthan High Court in the case ofCIT v. Maharaja Sawai Mansingh Ji Museum Trust[1987] 33 Taxman 279. In that case, it was observed that :It is amply clear from a bare readingSection 10(22)that the 'educational institution' must exist solely for educational purposes. 'Solely' means exclusively and not primarily. Simply because certain persons may add something to their knowledge by visiting the museum, it cannot be said that the museum exists solely for educational purposes. The emphasis inSection 10(22)is on the word 'solely'.In this context, reference in that decision was made to the judgment of the Supreme Court inSole Trustee, Loka Shikshana Trust's case (supra), wherein the highest court had observed "that visiting a museum in one way is education in the great school of life, but that is not the sense in which the word 'education' is used inSection 2(15)and that 'education' connotes the process or training and developing the knowledge, etc. of students by normal schooling". In the case before us, there is neither any process of training not normal schooling. The activity of occasional and dis-jointed lectures arranged in unsystematic and unorganised manner by personal efforts as distinct from institutional effort cannot constitute such activity into an institution much less an educational institution.The second decision relied upon by the revenue is the judgment of the Calcutta High Court in the case ofBirla Vidhya Vihar Trust(supra). It has been observed therein that in order to attract exemption underSection 10(22), an university or institution must exist solely for educational purposes and not for the purpose of profit. The position in such a case should be determined with respect to cumulative effect of all the relevant facts. For this purpose, the facts of the accounting year are material but not decisive. In the present case, on a cumulative consideration of all the facts and circumstances concerning the constitution, management, functioning, application of income and expenditure and the activities of the assessee Pratishthana, the only conclusion which can be reached is that, firstly, there was no institution as such in existence; secondly, such institution, even if any, was not solely existing for educational purpose and; thirdly, it was existing mainly and substantially, if not solely, for the purposes of private profit, which purpose it has achieved in a substantial measure.11. As regards the question of alleged exemption underSection 10(22)by the CIT, Pune, we agree with the learned departmental representative that this circumstance cannot be pressed into service to the advantage of the assessee in the present case. Firstly, the letter of the CIT dated 7-4-1980 does not purport to grant any exemption underSection 10(22). Secondly, there is no power vested in the CIT in his administrative capacity to grant such exemption. Thirdly, the letter dated 7-4-1980 earlier issued by the CIT was subsequently withdrawn by him after having heard the assessee and, fourthly, the view expressed in that letter could not legally bind the Assessing Officer in the discharge of his quasi-judicial functions. If any case law support is needed on the point, the same is available in the decisions inS.B. Adttyariscase (supra) and Bankam Investment Ltd.'s case (supra). In view of the foregoing discussion, we hold that the income of the assessee was not eligible to be excluded from the computation of total income of the previous years concerned within the meaning ofSection 10(22)of the Income-tax Act.(B): Exemption underSection 10(21):12. Besides seeking exemption under Clause (22) ofSection 10, the assessee has also claimed exemption under Clause (21) of that section. In this context, it was submitted by the learned counsel for the assessee that the provisions of these two clauses are not mutually exclusive and even where an income is entitled to exemption under one clause, it cannot be denied exemption under the other clause, if it is otherwise so entitled. We have given our careful thought to this aspect of the matter and see no reason to differ with the learned counsel insofar as the legal aspect of the matter is concerned. But then, we find that on the basis of the facts and circumstances and the material available on the record, the two revenue authorities were justified in rejecting the assessee's claim for exemption underSection 10(21). It is not disputed that the assessee has been recognised by the Prescribed Authority as a Scientific Research Association for the purposes ofSection 35(1)(ii)of the Income-tax Act. The learned CIT (Appeals) has concurred with the finding of the Assessing Officer to the effect that enquiries and investigations carried out by the Assessing Officer clearly showed that the expenditure had not been incurred on the objects of research. The assessee has further contravened the provisions ofSection 11(5)of the Income-tax Act. One of the requirement ofSection 10(21)was that the assessee must not deposit/invest any sum by way of contributions received by it in any mode or form otherwise than as specified inSection 11(5). In the instant case, it is seen that dis-proportionate amount exceeding Rs. 30 lakhs was given to the contractor. It has rightly been held by the two revenue authorities that in the context of the value of the contract awarded, the value of the work done and the contractual relationship between the parties, the amount paid to the contractor could not be held to be the advance payment of contract money, but was a deposit and investment and there was thus contravention of the provisions contained inSection 11(5). Moreover, the bogus expenditure claimed on account of purchase of books, payment of scholarships, payment of subsistence allowance and travelling allowance clearly shows that the assessee had not applied its income wholly and exclusively to the objects for which it was established and had not accumulated its income and invested the same in the manner and mode laid down and prescribed by Clause (21) ofSection 10, read withSection 11 (5)of the Income-tax Act. So far as the factual findings of the Assessing Officer with regard to the bogus/fraudulent nature of the expenditure payments on account of scholarships, purchase of books and subsistence and travelling allowance, the learned CIT (Appeals) has wholly endorsed the same and we also see no reason to differ with him. The learned counsel for the assessee also did not seriously contest these findings. Otherwise also, on the basis of the material available on the record more particularly the admission of members of Boda group, it can safely be concluded that almost whole of the payment under the major heads is bogus and fraudulent and were contrived with a view to siphon off funds for the private profit of persons. The claim of exemption underSection 10(21)has thus rightly been rejected by the two revenue authorities. The findings of fact on the question of exemption underSection 10(21)have also their bearing on the question of exemption underSection 11. Hereagain, the assessee Pratishthana has failed to apply its income or accumulate or set apart the same in the mannerlaid down inSection 11, more particularly Sub-section (5) thereof. In this connection, the learned counsel for the assessee contended that the donors while making the donations to the Pratishthana had simultaneously directed that the donations be invested into corpus and therefore these receipts were not the income of the assessee. In this connection, the learned counsel sought admission as additional evidence of 8 letters from the Boda group of companies addressed to the assessee -Pratishthana. These letters are purportedly written .on the dates between 12-7-1985 to 3-2-1986. The learned CIT (Appeals) has refused to admit these documents into evidence and, we feel rightly so. No reason has been assigned for the non-production of these documents during the investigation, enquiry conducted by the department, or during the assessment proceedings before the Assessing Officer. No good and cogent reason has been assigned as to why they were not so produced before the Assessing Officer. These documents purport to emanate from the group of companies who are suspected of being privy to the siphoning off the funds of the Pratishthana. Rather, there is a clear admission on oath of a Director of these companies to the effect that large part of the amounts of donations were ploughed back to the donors. The net result was that the donors unlawfully and illegitimately secured exemption underSection 80G. Any document emanating at such late, stage of the proceedings from such source cannot be allowed into evidence.In this connection, it would be gainful to make a reference to the ratio of the decision of the Bombay High Court in the case ofVelji Deoraj & Co. v. CIT[1968] 68 ITR 708. As a result of the discussion above, we hold that the income of the assessee was not entitled to any exemption either underSection 10(21)or underSection 11of the Income-tax Act.13. As regards the common ground relating to the levy of interest underSection 139,217, it was submitted that that issue is consequential in nature. This issue shall, therefore, abide by the result of the appeals.14. In the result, we do not find any force in these appeals and dismiss the same.