TaxTMI 
TaxTMI 
2012 (4) TMI 662
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.... (JM):- This appeal by the Revenue and cross objection filed by the assessee are directed against an order dated 15-07-2008 passed by the Learned Commissioner of Income-tax (Appeals)-I, [hereinafter referred to as the 'learned CIT(A)'] Surat for Assessment Year (AY) 2000-01. The grounds raised by the Revenue in their appeal are as under:- ITA no.3203/Ahd/2008 [Revenue's Appeal]: [1] On the fact and circumstances of the case and in law, the learned CIT(A)-I, Surat has erred in holding that the A.O. had not afforded cross examination of the Clerk of Ramrao Adik Education Society from whose Diary the information regarding payment of capitation fees paid by the assessee was elucidated, without appreciating the fact the A.O. of the Trust had issued summons to the Clerk of the Trust but he had never attended but the CIT(A) has not appreciated that Shri Mandavarkar, Clerk of the Trust had admitted the receipt of capitation fees from the assessee before the authorized Officer during the course of search in his statement on oath and Shri Mandvarkar or the Trust had not retracted therefrom. [2] On the facts and circumstances of the case and in law, the learned CIT(A)-I, Surat has no....
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.... 6,82,772/- was adopted by the AO as returned income in this return filed in reply to notice u/s 148 of the Act. During the assessment proceedings, the AO asked as to why the amount of Rs. 18,27,500/- paid as capitation fee should not be added to the total income of the assessee as representing unexplained income. It was pointed out by the AO in his letter addressed to the assessee that the payment of Rs. 18,27,500/- was totally in cash and paid in two instalments of Rs. 13,00,000/- on 07-07-99 and balance of Rs. 5,27,500/- on 02-08-99. It was also pointed out that the assessee has made this payment for securing admission of his son Shri Ashish Bhootra in MBBS course. The assessee's contention before the AO was that he had got admission of his son through his personal contact and had not paid any capitation fee of Rs. 18,27,500/- and payment made by him was only Rs. 4,72,500/- which is recorded in his regular books of account. The assessee also asked for the copy of evidence which the AO wanted to rely on and also wanted opportunity to cross examine the person who had made such statement for giving such evidence. The AO gave copy of pages 19 and 27 of Annexure-A seized during....
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....father i.e. the assessee. 4 Aggrieved, the assessee filed an appeal before the first appellate authority and objected to the addition on following grounds:- (a) No cross examination of the person on whose statement and seized material the appellant's case was reopened has been allowed to the appellant. (b) The appellant has desired the cross examination of Shashikant Jairam Mandavkar. The appellant has stated that during the assessment proceedings his cross examination was requested but the AO has denied the cross examination. (c) The loose papers i.e. the cash book and stray papers found cannot be taken as evidence. (d) Since there was vacancy no donation was required to be given." Before the learned CIT(A), the assessee also placed reliance on the decision of the Hon'ble Delhi High Court in the case of CIT vs. SMC Share Brokers Ltd. 288-ITR-345 and on the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Arjundas Surender Kumar & Co. 239-ITR-859. On these submissions of the assessee, the Remand Report from the AO was called for by the learned CIT(A). The AO was also asked by the learned CIT(A) to give cross examination opportunity to....
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....en settled substantially. The assessee group has surrendered the donations received from the students as unaccounted receipts and the same may be brought to the knowledge of the CIT(A), as fait accompli. The relevant portion of the confidential annexure of the Settlement application herewith (Statement 1, 2 & 4) for your ready reference. You may do the needful, as you deem fit." The learned CIT(A) called for another Remand Report from the AO on the following lines:- "2 Your report vide letter dated 19.6.2008 has been received in this office along with enclosures. It has been stated that the donations received from the students have been surrendered before Settlement Commission by M/s Ram Rao Adhik Education Society which runs D.Y. Patil Medical College and Hospital at Nerul. It has also been stated that the Settlement Commission order u/s 245D(4) has been passed where the donations have been surrendered. 3 In view of the above, you are requested to obtain the information from M/s Ram Rao Adhik Education Society u/s 133(6) or whatever manner you think fit as to whether the donation in respect of the admission of Ashish Bhootra, son of Dr. Radhakishan Bhootra has also been s....
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....rom the students has been offered by the trust in lump sum and that there is no individual bifurcation. It is further stated by him that it can be presumed that offer of additional income by the assessee includes all donations made the students, including Shri Ashish Bhootra." Both the Remand Reports obtained from the AO were given to the assessee by the learned CIT(A) for his comments. The comments of the assessee can be summarized as under:- (i) In the remand report dated 09.06.2008 the AO has categorically expressed his inability to grant the crossexamination of Shri Shashikant J. Mandavkar on the basis of whose statement the addition was made. Therefore, the statement of Shri Mandavkar cannot be relied upon as an evidence as per the settled position of law. (ii) Further, the AI has pointed out in his second remand report dated 07.07.2008 that the managing Trustee of D.Y. Patil Group, vide his letter dated 01.07.2008, has categorically stated that they have neither surrendered any of the amounts that may have been received from students or others, nor have they submitted any list of students before the Hon'ble Settlement Commission. In view of this reason the assess....
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....dividually and the trustees have also stated that they have not surrendered any amount Individually. In view of this reason, it is clear that the statement of Shri Mandavkar cannot be admitted as evidence following the settled position of law as enunciated in the decision of the Hon'ble Delhi High Court in the case of SMC Share Broker Vs. CIT (supra) and the decision of the Hon'ble Punjab & Haryana High Court in the case of Arjundas Surendar Kumar & Co. (supra). Since the statement of Shri Mandavkar cannot be admitted as evidence, therefore, the diary entry cannot be relied upon for making the addition. The AO has also not brought any other evidence on record for making the addition. In view of these reasons, the addition made by the AO is deleted and these grounds of appeal are allowed." 5 Aggrieved by this order of the learned CIT(A) , now the Revenue is in appeal before us. At the time of hearing, the learned DR vehemently supported the order of the AO and further submitted that the search and seizure operation u/s 132 of the Act was carried out in the case of M/s Ramrao Adhik Education Society and the diary indicating collection of donation / capitation fee for admis....
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....ssee on whose statement addition has been made. This statement is also a general statement as nowhere in this statement, the name of the assessee has appeared and therefore, the same cannot be used by the Revenue for making this addition. It was further submitted that the seized documents on the basis of which this addition has been made are not signed either by Shri Shashiknt J Mandavkar or by the search party, therefore, the same has no evidentiary value. The assessee's contention has been that no capitation fee has been paid by the assessee for getting admission of his son and this admission was given due to personal contact. The assessee's son is income-tax assessee himself since 1990 and if at all any addition was required to be made, it should have been considered in the hands of son Shri Ashish Bhootra. The learned counsel further submitted that the addition has been made by the AO on the presumption that unaccounted donation received from the students by D.Y.Patil Group Trust which was offered by them before the Settlement Commission included the amount of capitation fee of Shri Ashish Bhootra though there is no such evidence on record to show that any amount received by th....
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.... the another basis of making this addition in the hands of the assessee that the surrendered amount by D.Y.Patil Medical College and Hospital before the Settlement Commission included the alleged donation of the assessee to get his son admitted in the MBBS Course. 8 There is no dispute about the fact that nowhere in the statement of Shri Shashikant J Mandavkar, name of the assessee or name of his son appears. No specific question was asked about Shri Ashish Bhottra's admission to MBBS course and whether any capitation fee by the assessee was paid for his admission in this course. It is also not in dispute that the assessee was not given opportunity to cross examine Mr. Shashikant J Mandavkar at any stage of the proceedings though the Revenue claimed that they tried hard to give such opportunity to the assessee. In the absence of Mr. Shashikant J Mandavkar being made available for cross examination by the assessee despite his repeated requests, his statement cannot be used for drawing an adverse inference against the assessee and, therefore, the diary entries loose their evidentiary value for making this addition. This view of ours get support from the decision of the Hon'ble Del....
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.... the AO for reopening the assessment and no proper evidence was brought on record for opening the assessment. The appellant also argued that the reopening is wrong because the name mentioned in the diary was that of assessee's son and not that of the assessee. All these arguments are not acceptable for the simple reason that the AO has rightly reopened the assessment upon receiving a specific outside information along with prima facie evidence, in the form of a diary noting and statement of the person who wrote the diary pertaining to the trust which run the Medical College, that for the purpose of admission of son, the assessee has paid a donation/capitation fee which is not reflected in the return of the assessee. Even though the son may be an assessee but since he had no source of income to the extent of the amount mentioned in the diary, the reopening of the assessment of the assessee was right in law and hence the ground No.1 is dismissed." 11 At the time of hearing before us, the learned counsel for the assessee submitted that the reopening has been done by the AO on the basis of information received from the Investigation Wing of the Department without application of ....