TaxTMI 
TaxTMI 
2023 (4) TMI 126
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....(1) of the Act. As stated by the Assessing Officer, the assessee is a doctor by profession and has earned income from profession. It is alleged, in course of a search and seizure operation conducted under section 132 of the Act in the premises of Santosh Medical College, it was found that in addition to regular course fee paid in DD/cash by parents of the students for taking admission in various medical courses, the college used to receive capitation fee in cash. The information revealed that while admitting his daughter, Dr. Sugandha Bhalla in Santosh Medical College in the financial year relevant to assessment year 2011-12, the assessee, in addition to regular fee of Rs.18 lakhs, has paid capitation fee of Rs.27 lakhs. Similarly, in financial year relevant to assessment year 2012-13, while admitting his son, Dr. Pulkit Bhalla to Santosh Medical College, the assessee, in addition to regular fee of Rs.30,01,500/-, paid capitation fee of Rs.8,98,500/-. Based on such information, the Assessing Officer reopened the assessment under section 147 of the Act. In course of assessment proceeding, the Assessing Officer called upon the assessee to explain the source of payments made to Santos....
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....course for a duration of 3 years and for pursuing such course she had paid regular fee of Rs.18,50,000/- in three years. It was submitted by the assessee that entire fee was paid by his daughter from her own sources, savings and Stridhan. 5. As regards admission fee of his son, Dr. Pulkit Bhalla, it was submitted by the assessee that his son was pursuing five years MBBS Course for which regular fee of Rs.30 lakhs over a period of 5 years starting from 2011 to 2015 was paid. It is a fact on record that except third party evidence, being statement recorded from Dr. P. Mahalingam and information received from the search and seizure operation in case of Santosh Group, no other materials have been brought on record to conclusively prove that the assessee has paid the amounts, as alleged by the Assessing Officer. 6. It is also a fact on record that, though, third party statement/evidence were utilized in detriment to assessee's interest, however, no opportunity of cross examination or even confrontation of the adverse material was made. This, in my view, is in gross violation of Rules of Natural Justice. When, the Assessing Officer is making an addition based on certain adverse materia....
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....ught two days time to produce the evidence of payment of amount in question by assessee to the Medical College. However, nothing is produced on record if assessee made actual payment to the Medical College. The assessee since beginning of the re-assessment proceedings have denied to have paid any amount to the Medical College. The assessee in his explanation in writing as well as affidavit has affirmed that he has not paid any amount for admission of his daughter to MBBS Course because of the losses suffered by him in the business. The assessee further explained that amount of admission fees was paid by his brothers on behalf of his daughter which is supported by documentary evidences, though the same were not accepted by the Revenue. The daughter of the assessee has also owned-up that amount in question have been paid through her uncle for admission to the Medical College. The receipt executed by the College is also affirmed this fact that daughter of the assessee has made the payment for MBBS Course. Thus, no material is available on record to prove that assessee made any payment on behalf of the daughter for admission to the MBBS Course. Since the Revenue alleged that the amount....
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.... above the regular course fees, paid in cash by the parents of students admitted of accepting the donation/ capitation fees in cash and offered the unaccounted money so received for taxation in the relevant assessment year, In the case of the assessee, it was mentioned that he had made cash payment of Rs.19,75,000/- towards donation/ capitation fee over and above the regular course fees to the above college. Therefore, notice under section 148 was issued. The assessee was confronted with the query regarding cash payment to the above college. The assessee was asked to furnish documentary evidences of the source of the aforesaid payments in cash. The assessee is a Doctor by profession. During the course of assessment proceedings, statement of assessee was recorded under section 131 of the Income-Tax Act. The A.O. noted that Dr P Mahalingam has admitted in his statement under section 132(4) of the Income Tax Act that he had accepted the capitation fees from the assessee and surrendered the amount for taxation. The assessing officer, therefore, made addition of Rs.19,75,000/- in the hands of the assessee. 2.1. The assessee challenged the reopening of the assessment as well as the add....
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....e Income Tax Act, have been referred to, but, it is nowhere mentioned in which statement, if such copy of the statement was provided to assessee for explanation of assessee. The assessee denied to have made any cash payment to Dr P Mahalingam. The assessing officer in the assessment order also did not mention any fact if statement Dr P Mahalingam have been provided to the assessee for his comments or was confronted to assessee at any stage. The assessing officer did not record in the assessment order if statement of Dr. P Mahalingam recorded at the back of the assessee by the Investigation Wing, was allowed for cross examination on behalf of the assessee at any stage, therefore, statement of third party, cannot be used against the assessee unless assessee has been allowed a right to cross-examine such statement. The A.O. in the assessment order also did not mention, if any, material found during the course of search, was confronted to the assessee. Thus, assessee was justified in denying in making any cash payment to Dr. P Mahalingam at any stage. There is no material available on record to justify the addition against the assessee on merits. In the absence of any material on recor....
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....ers no explanation about the nature and source of such credit. In the facts of the present appeals, admittedly, the amounts of Rs.45 lakhs and Rs. 39 lakhs, respectively, added to the income of the assessee under section 68 of the Act for the assessment years 2011-12 and 2012-13 were not found credited in the books of account of the assessee. 10. On the contrary, as per the allegation of the departmental authorities, in course of search and seizure operation conducted in Santosh Group, it was found that the assessee had paid these amounts at the time of admission of his children. Thus, the primary condition of section 68 that the amount must be credited to the books of account of the assessee is not fulfilled. Though, learned Commissioner (Appeals) has made an attempt to cover up the legal lacuna by stating that the Assessing Officer has treated the payment of fee in cash as unexplained expenditure under section 69C of the Act, however, such observation of learned Commissioner (Appeals) is factually incorrect, hence, cannot be accepted. Thus, the conditions of section 68 of the Act having not being satisfied, the addition made under the said provision has to be deleted. Accordingl....