2013 (10) TMI 829 - AT - Income Tax

ITAT upholds CIT(A) decision on tuition fees, household withdrawals, and admission fee

ITO, Ward-2 Gandhinagar Versus Hasumatiben Bipinchandra Patel

The ITAT upheld the CIT(A)'s decision to delete the addition of Rs.9,22,500/- on account of tuition fees, emphasizing that the assessee's calculations ... Deletion of Tuition Fees – Proceedings u/s 133A - Whether The CIT (A) had failed to appreciate the fact that in the statement recorded during the course of survey proceedings u/s.133A of the Act – Held that:- Only evidence of actual fee receipt was only in the form of statement of the assessee recorded during the course of survey proceedings - the Revenue has not made any further investigation in the matter after retraction letter dated 5.12.2006 was filed, as they could have ascertained the quantum of fees from the students - The CIT(A) has also recorded that declaration was made by the assessee within a week itself, and at no stage, statement of any student to the contrary was confronted to the assessee - there is no mistake in the order of the learned CIT(A) in deleting the addition and the order of the learned CIT(A) on this issue is confirmed – Decided against Revenue. Deletion of low household withdrawals – Held that:- The assessee has withdrawn a sum and her husband has withdrawn for Household expenses of the family consisting of husband, wife and two children - The expenses seems to be reasonable, and therefore, no interference in the order of the CIT(A) on this issue is called for – Decided against Revenue. Addition in Admission Fee - The CIT(A) has passed a well-reasoned order on the issue - The CIT(A) has recorded that in the business of education, general practice is to take admission fees or entrance fees separately from the tuition fees, and therefore, on the basis of preponderance of probabilities, sustained the addition made by the AO - there is no material before us to take a contrary view, and accordingly order of the CIT(A) on this issue is confirmed – Decided against Assessee. Issues:1. Addition made on account of tuition fees.2. Addition made on account of low household withdrawals.3. Addition of admission fee.Analysis:Issue 1: Addition made on account of tuition feesThe Revenue challenged the deletion of the addition of Rs.9,22,500/- on account of tuition fees by the CIT(A) for A.Y. 2007-2008. The Revenue argued that the assessee had initially confessed to receiving unaccounted tuition income of Rs.20 lakhs during a survey but later retracted and declared only Rs.10,77,500/- as income. The Revenue contended that the retraction lacked valid reasons and that the original confession should be considered. However, the assessee maintained that the calculations were based on the fees charged per student and submitted accurate calculations within a short period, showing income of Rs.10,77,500/-. The ITAT considered the statements recorded during the survey and the subsequent retraction letter filed by the assessee. It was noted that the Revenue failed to produce evidence to contradict the calculations provided by the assessee. The ITAT upheld the CIT(A)'s decision to delete the addition, emphasizing that the assessee's calculations were reasonable and no further investigation was conducted by the Revenue post the retraction.Issue 2: Addition made on account of low household withdrawalsThe Revenue contested the deletion of the addition of Rs.60,000/- on account of low household withdrawals. The ITAT observed that the assessee and her husband had withdrawn sums for household expenses, which were deemed reasonable. The ITAT found no justification to interfere with the CIT(A)'s decision on this issue and dismissed the Revenue's ground.Issue 3: Addition of admission feeThe only ground in the assessee's Cross-Objection (CO) was the confirmation of the addition of Rs.1,00,000/- as admission fee. The ITAT noted that in the education business, admission fees are typically charged separately from tuition fees. The CIT(A) had upheld the addition based on the general practice in the industry. The ITAT found the CIT(A)'s reasoning sound and lacking any contradictory evidence. Consequently, the ITAT confirmed the CIT(A)'s decision on this issue and dismissed the assessee's CO ground.In conclusion, the ITAT dismissed the appeal of the Revenue and the Cross-Objection of the assessee, upholding the decisions made by the CIT(A) regarding the additions made on account of tuition fees, low household withdrawals, and admission fee for the relevant assessment year.