TaxTMI 
TaxTMI 
2023 (8) TMI 909
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.... & COs were heard together. Both the parties also argued them together raising similar arguments on the common issues involved. Accordingly, for the sake of brevity, we dispose of all the appeals by this consolidated order. 2. We first take up the appeals preferred by the Revenue. Briefly stated, the facts of the case are that, a search u/s 132 of the Income-tax Act, 1961 ('the Act') was conducted against the DYP-Kolhapur Group on 29-07-2016. The AO of the searched person was of the view that several incriminating statements/evidences regarding capitation fees earned by the assessee in lieu of admission of students in Medical College operated by assessee Trust was found and therefore as per the satisfaction note dated 18-09-2018, the relevant documents/accounts were handed over to the AO of the assessee on 07-07-2017. Based on the statements/documents etc, received from the AO of the searched persons, the AO of the assessee Trust recorded his satisfaction note on 18-09-2018, pursuant to which he reopened the assessments for the relevant AYs 2013-14 to 2015-16 by issue of notices u/s 153C of the Act dated 19-09-2018. 3. Based on the statements recorded and evidences available ....
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....ear by way of capitation fees and therefore added the same by way of income u/s 69A of the Act. The AO accordingly also denied benefit of Section 11/12 of the Act holding that it did not exist for charitable purpose and accordingly assessed it in the status of AOP. Being aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to delete the same. Aggrieved, the Revenue is now in appeal before us. 5. Assailing the action of the Ld. CIT(A), the Ld. DR appearing on behalf of the Revenue heavily relied on the findings recorded by the AO. Taking us through the statement of Shri Hemrambh Shelke, which was extracted at Pages 10 & 11 of the assessment order, the Ld. DR showed us that Shri Shelke had admitted on oath that the assessee Trust has received capitation fees for admission of students which was being managed by Shri Dilip Kashid and that any person/student who approached him would be directed to Shri Kashid. Thereafter, the Ld. DR invited our attention to the statement of Shri Dilip Kashid, extracted at Pages 11 & 12 of the assessment order, particularly his answers to Q No. 15 to 20, wherein according to Ld. DR, Shri Kashid had l....
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....omponent for admission in colleges of the group. To the specific question as to the role of Shri Dilip Kashid in the admission process in that group of colleges, his statement is noted to be as under: - "Ans. Students who are willing to pay cash for admission in DY Patil Group of colleges meet Mr. Dilip Kashid. Then parties have discussion with Dilip Kashid about cash amount to be paid for admission for various courses. Then the final cash amount is collected by Mr. Dilip Kashid either directly or through his agents. After that I do not know exactly what Mr. kashid does with the cash." 8. It is noted that Shri Shelke had denied being involved in this process or receiving any cash donations, except in one or two instances. Instead, he stated that, if any students approach him for getting admission by paying cash, he directed them to Shri Dilip Kashid. When questioned about those instances at Q No. 17, Shri Shelke is noted to have given a vague and generalised answer without naming on whose behalf or for whose admission did he receive the payment. The only averment made by him was that he received Rs. 8 lakhs & Rs. 2 lacs on two different occasions, which amount also he d....
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....helke is business partner of Shri Dilip Kashid. In his statement dated 27.07.2016, he has stated that Shri Dilip Kashid collects cash for admission in DY Patil Group of colleges for various courses. He further stated that the students, who were willing to pay cash for admission, meet Shri Kashid and that after having discussion as to this they pay cash amount to Shri Dilip Kashid. As to his role in admission he has stated in his reply to Q. No. 15 that when any willing students ready to pay cash approaches me, I direct him to contact Mr. Dilip Kashid As described above. Mr. Dilip Kashid takes the process forward. He further stated that he did not receive or collect cash from anyone. However, in one or two instances he stated to have received cash directly from the party However, he has also stated in response to Q. No. 17 that he did not remember the name of the parties from whom he has stated to have received cash but about 3 months back he received Rs. 8 lakhs from one party and Rs 2 lakhs from other party and the amount was deposited in the bank account of Maharaja Wines current account it is, therefore apparent that Shri Heramb Shelke has not identified any student or parent wh....
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....ust, in his statement given before the DDIT (Inv), had categorically denied to have any knowledge about any such payments. It is also not the case of the Id.AO that this statement was corroborated by any other evidence by way of any enquiry during the course of search or assessment proceedings. As such, I find merit in the submissions of the assessee that his statement of Shri Heramb Shelke could not be held as sufficient to implicate the assessee for receiving any capitation fees for admissions." 9. We find ourselves in agreement with the above findings of the Ld. CIT(A) that the statement of Shri Shelke did not contain any tangible incriminating evidence to implicate that the assessee trust had received capitation fees even without considering the retraction made by him. 10. Next, we take up the statement of Shri Karan Singh Vihol, which is found placed at page no. 163 to 181 of PB. It is noted that Shri Vihol had admitted that, he was an angadia/courier who would collect and disburse cash through hawala across different cities in India. He also stated that, Shri Heramb Shelke ran a liquor business and that he was also working for D Y Patil Institute. The relevant portion o....
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.... the issue at hand. "8.4.41. Coming to the merit of the evidences and statements recorded during the course of search, on perusal of the statement of Shri Karan Singh Vihol, it is evident that he is working in a firm which transfers cash from one place to another for their clients. In other words, the firm is a Hawala Operator. It is evident from his statement that names of various persons have been identified by Shri Karan Singh Vihol as those who have taken their services. Shri Karan Singh Vihol has also identified Shri Heramb Shelke as his client. He has also stated that Shri Shelke is working for DY Patil Institute. However, it is evident that there was no evidences found from the premises of the said Hawala Operator which will have name of DY Patil Medical College or the assessee Trust in respect of any transactions. Even the Annexure-1 of his statement, which although is not a document found and seized during the course of search, has name of Shri Heramb Shelke on it. It is further found that Shri Heramb Shelke in his statement dated 27.07.2016, has clearly stated that Shri Karan Singh Vihol handles cash of his wine shop in Pune. The relevant Q. No. 21 and its answer....
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.... with the statement of Shri Vijay Shinde recorded during search & post search proceeding. And in this regard, the Ld. AR further brought to our notice the specific finding of the Ld. CIT(A) that, Shri Shinde had admitted and offered the cash of Rs. 25 lacs from his possession by way of income from consultancy provided to students for securing admission in different courses. This according to Ld. CIT(A) all the more corraborated the contention of the assessee that the cash of Rs. 25 lacs found from the possession of Shri Vijay Shinde did not have any nexus with the assessee Trust. The relevant analysis of the statement of Shri Vijay Shinde as undertaken by the Ld. CIT(A) is noted to be as follows :- "8.4.45. It is further found that Shri Vijay Shinde, whose statement has been referred in assessment order, is only a business partner of Shri Heramb Shelke and in his statement recorded u/s 132(4) of the Act, he has identified himself as business partner of Shri Heramb Shelke and he is also a visiting lecturer in DY Patil Engineering College at Old Pune-Mumbai Highway, which is not an institution run by the assessee Trust As to the documents found from his possession, he has ca....
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....u/s 132 of the Act on 27.07.2016. The Ld. CIT DR showed us that, Shri Kashid in his statement had averred that he was serving as a Head Clerk in the assessee's Medical College (Kolhapur) for the last twelve (12) years drawing salary of Rs. 54,000/- per month. It was brought to our notice that, the Investigating Officer again questioned him about his exact nature of work, and in answering these Question Nos. 14 to 15 (page 149 of PB), he admitted to have received (capitation fee) for admission under the management quota. According to Shri Kashid, some parents contacted him seeking admission for Medical College under the management quota to which he informed them that donation of Rs. 25 Lakhs is necessary for admission in MBBS course in cash. And, only if they are ready to pay then he would introduce them to Shri Sanjay Patil. The money received in cash from the parents would be handed over to Shi Sanjay Patil, President of the assessee's society. Thereafter, he stated that, he would also receive around Rs. 1-2 lacs commission per admission and as per his estimate, he collected Rs. 1.5 - 2 cr by way of donation in a year, which he would hand over to Shri Sanjay Patil. The Ld. DR also....
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.... of Shri Kashid could not divulge any specific details viz., name of students, relevant course, date of admission, donation received etc., based on which he made the averment that capitation fees collected each year was Rs. 1.5 - 2 crores. The Ld. AR also laid stress on the fact that there was no material or evidence or document which was unearthed in the course of search which would corraborate the version of the assessee. 17. In respect of the document Annexure - 1, Pages 1 & 2, the Ld. AR first pointed out that the document did not contain any reference to the assessee society or the college or the relevant course and therefore according to him, the contents of this document did not pertain to the assessee. The Ld. AR showed us that, the only link between this document and the assessee society was the narrated version of Shri Kashid in his answer to Q No. 33. However, according to Ld. AR, his answer was contradictory as in the first instance he stated that this document represented cash refunded to Shri Yadav which was paid to Shri Prasant Sinha upon cancellation of her admission in the college but in the same breath, Shri Kashid stated that he did not know Shri Prashant Sinh....
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....9 as reproduced previously he has said that he did not remember the exact details of admission done through him although he claimed that usually 4 to 5 such admissions are done through him in this manner in a year. As such, the content of his statement remained unverifiable as there are no one identified by him as someone having actually paid any capitation fees for admissions. 8.4.49 I have also taken note of the fact that Mr. Dilip Kashid in his statement, when asked about how the remaining seats in the management quota are filled, has stated that remaining seats are being directly handled by Dr. Sanjay D. Patil, but even though residence of Dr. Sanjay D. Patil and also the campus of DY Patil Medical college was covered by the search operation but there was no evidence at all found during the course of search to give even any indication that Dr. Sanjay D. Patil was involved in receipt of any capitation fees for admissions. In the given facts of the case, there is reason to believe that the statement of Shri Dilip Kashid was not found to be correct as to any admissions handled by Dr. Sanjay D. Patil in the manner as stated by Shri Dilip Kashid. There are absolutely no evi....
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....emed University) Kolhapur. Ans. It is general practice that ours being Deemed University, conducts entrance test at different centers spread all over India, which is generally carried out in the month of Apr/May every year, which is preceded by news publication in different newspapers published all over India The results of such entrance test examination are declared generally in the month May/June every year. Accordingly, a merit list is published in the official website of the DY Patil Education Society (Deemed University). Kolhapur The admission process commences on the basis of merit list so published and the admission is given to the students on first come first serve basis, but purely based on the merit list This admission is provisional, which is subject to the payment of the prescribed fees and also subject to approval of the students names by the Medical Council of India (MCI) Al the time of giving provisional admission Le before receiving the prescribed fees from the students, we collect their original educational certificates along with the admission form in the prescribed format duly signed by the students as well as their parents/guardians After this procedure....
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....n provided by the College / Institutions being run and managed by Deemed University of D.Y. Patil Education Society? Ans. The entire admission process for the year 2014 is explained on page Nos 98, 99 & 100 of the Annual Report for the year 2015, which I have already provided. However, a copy of the relevant pages is provided herewith. (copy of pages Nos. 98, 99 & 100 of the Annual Report for the year 2015, explaining the admission process for the year 2014, as submitted by the deponent, is annexed hereto and made as a part of this Statement and marked as Annexure "C"] I am also providing a copy of the Note on Admission process for the year 2 Admission process of MBBS & MD/MS/PG Diploma for the year 2015, as submitted by [Note on the deponent, is annexed hereto and made as a part of this Statement and marked as Annexure "D"] Q.No. 17. What is the difference between the admission process involved in the year 2014 and 2015? Ans. The entire admission process takes place in accordance with the provisions of the UGC Act, 1956 till the year 2014, 15% seats for MBBS were reserved for management quota and 50% seats for MD/MS/PG Diploma were rese....
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.... of the AO that the candidate, Ms. Meena Yadav, whose name is appearing in the said document has taken admission in DY Patil Medical College Kolhapur. As such, in my considered view, this document has nothing to implicate the assessee Trust with receipt of any capitation fees. 8.4.52. During the course of search at the residence of Shri Dilip Kashid, cash amounting to Rs. 8,66,975/- was found which he stated to be representing commission for getting candidates admissions in DY Patil Medical College, Kolhapur. It is however, found that he has not identified anyone who has paid any such commission to him. In his return of income he claimed the sum partly representing his agricultural income and partly savings of his family. This cash has been taxed in his hands as unaccounted income but there is no evidence on record to confirm the fact that the cash represented commission received by him for admission in the Medical College. He himself has offered this cash as agricultural income and partly as his personal savings denying the content of his original statement and nothing further was brought on record during his assessment establish that the said cash could be commission rec....
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.... this cash represented capitation fees received on behalf of assessee Trust. Instead, in his statement recorded u/s 131 of the Act in the post-search proceedings, it is noted that he had explained the source of the remaining sum as income derived from his agricultural holdings. Although the Revenue did not accept this contention and added the remaining sum of Rs. 53,51,615/- in the hands of Shri Patil as his undisclosed income. However, nothing was brought on record by the Revenue before us, to show that this cash found with Shri Patil represented capitation fees collected from students. The facts placed before us reveal that Shri Patil derived income from several different sources/agriculture etc; and therefore we agree with the findings of the Ld. CIT(A) that, the assumption made by the AO that this cash represented capitation fees collected from students was far-fetched and based purely on conjecture & surmise. Particularly when, Shri Patil who had been examined twice by the Department viz., in the course of search and in the post search proceedings, had denied collecting capitation fees from students. 23. It is indeed true that a simple denial is not sufficient but at the sa....
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....2003] 84 ITO 320 (Mum), it was held that presumption under section 132(4A) is only against the person in whose possession the search material is found and not against any other person. It is further held that the presumption is rebuttable and not conclusive and it cannot be applied in the absence of corroborative evidence. Further, it was held in the case of Prarthana Construction (P) Ltd. Vs. Deputy Commissioner of Income Tax (2001) 118 Taxman 112 (IT AT- Ahmedabad) (Mag) that loose papers and documents seized from premises of third parties and statement recorded at back of assessee without it being afforded opportunity to interrogate said documents and without bringing on record any supporting evidence, could not be made basis for adding undisclosed income in the hands of assessee. 8.4.82. In this regard, I have also taken note of the fact that the Search operation was not conducted in the case of the assessee. Although, DY Patil Medical College, Kolhapur, which is a constituent of the assessee was covered in the search operation but there is absolutely no evidences found there from in respect of receipt of any capitation fee. Neither, any such evidences were found from ....