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2024 (1) TMI 357
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....-04-2006. It is also approved u/s. 80G of the Act. The assessee, inter alia, runs a Medical college, Dental college, physiotheraphy, Biotechnology and Nursing colleges at Nerul, Navi Mumbai. Shri Vijay D Patil and Smt. Shivani Patil are the main trustees. Shri Vijay D Patil is the President/Chancellor. Smt. Shivani Patil is the spouse of Shri Vijay D Patil. 3. The revenue carried out search and seizure operations in the hands of the assessee on 27-07-2016 u/s. 132 of the Act. It was concluded on 01-08- 2016. Consequent thereto, the assessments of AY 2013-14 to 2016-17 were completed u/s. 153A r.w.s 143(3) of the Act. The assessment of AY 2017-18, being the year of search was completed u/s. 143(3) of the Act. The case of the revenue is that the assessee has collected Capitation fees though various employees for giving admission to students in various courses conducted by it. Such collection of capitation fees has not been accounted in the books and further, it was in violation of the clauses of the Trust deed and also Maharashtra Educational Institutions (Prohibition of Capitation fee) Act. Accordingly, the AO held that the assessee cannot be considered to be carrying on any char....
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....first appellate authority. The revenue is in appeal challenging the decision of Ld CIT(A) in deleting the protective additions in some of the years. 5. We notice that all the issues revolve around the question as to whether the assessee has collected Capitation fees or not?. All the additions made by the AO were consequent to his view that the assessee has collected capitation fees. While the assessee denies collection of any capitation fee, the case of the AO is that the various evidences coupled with the Statements recorded from key employees prove that the assessee has collected capitation fees from students for giving admissions to them. Hence, we are of the view that we should first adjudicate above question. In our view, the decision rendered to the above said question will determine the sustainability of most of other additions made by the AO. 6. It is pertinent to note that the search officials did not unearth any material from the assessee which revealed collection of capitation fees. All the materials were seized from the residences of employees only. We notice that the assessing officer has relied upon the statements given by employees of the assessee and also upon....
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....D Y Patil University, Nerul) and Shivani Patil approve the names discussed. After the approval the cash is collected and if there is any balance remaining to be paid blank cheques are taken as a surety for future payment and same is returned/destroyed once cash is received finally. Further there are certain brokers who meet the management directly. After approval from Mr Vijay Patil (President, D Y Patil University, Nerul) and Mrs Shivani Patil names are finalized and list is sent to University Registrar for enrollment. My role in whole process is of taking basic details of students interested in paying capitation fees and getting the same approved from Mr Vijay Patil (President, D Y Patil University, Nerul) and Mrs Shivani Patil and sequent collection of cash. Further I spent/disburse the cash as per direction of Sh Vijay Patil. (President, D Y Patil University, Nerul)" (d) He admitted that the brown diary titled "Royal Diary - JAYPEE" belongs to him and entries therein were made by him. He admitted that the entries represented cash collected by him and expenditure met by him as per the directions of Shri Vijay Patil. (e) The amounts were written in codes/symbols....
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.... of Shri Tukaram Patil. He is an employee of D.Y Patil University and is mentioned as personal confidant of Shri Vijay Patil. His chamber is located in the President's office. Two pen drives were seized from him. However, it was noticed that the data in the pen drives was deleted/modified by Shri Tukaram Patil. Hence, he has given details of capitation fees out of his memory. Accordingly, the AO has mainly relied upon the answers given by Shri Tukaram Patil to various questions posed to him in the statement taken u/s. 132(4) of the Act. The gist of observations made by the AO is summarised below:- (a) Since the data in those pen drives were deleted by Shri Tukaram Patil, he has given the details of collection of capitation fee out of his memory. (b) He has admitted that capitation fees are being collected and also identified persons who are handling cash with regard to each of the institutions. (c) Out of his memory, he could furnish the names of 18 students, the course in which they were admitted and also the exact amount of capitation fee collected from each of the students. He also stated that the capitation fees were refunded to five students. ....
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....demy and M/s Ramrao Adik Education Society. The AO interpreted that the cheques were taken as donations from parents who could not give amount in cash, instead of taking the same capitation fee in cash. (d) One of the documents showed that a parent has asked for refund of Rs. 50.00 lakhs, which was paid by him earlier as part NRI fees. The AO made enquiries with the parent (named Shri Shahnawaz Kheraj) u/s. 131 of the Act and he admitted that he has given Rs. 50.00 lakhs to the representatives of assessee trust in the Nerul office for admitting his daughter into MBBS. He got the refund, since his daughter changed her mind. (e) Shri Unmesh Khanvilkar also explained the process of taking capitation fee or donation in the form of cash over and regular fees as under:- "Sir, the students/parents approach the admission cell department which in front the Presidents' Office in Dr D Y Patil University Building. The Students/parents first meet the receptionist who directs the parents/ students to people sitting in the administration cell department. There are four people who sit in the administration cell department namely Tukaram Patil, D D Kolte, Pratap Patil and....
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.... academic year 2016-17 and furnished details of 50 students(meaning, he has given the details out of his memory). The details furnished by him included the name of student, course in which they are admitted and the amount collected from each of them. He also submitted that he used furnish details of amount collected to Shri Vijay Patil, whenever he meets him in person. (h) He also expressed his ignorance as to how Shri Vijay Patil maintains the data of total collection of capitation fee in cash. (i) Shri Unmesh Khanvilkar had stated that a sum of Rs. 1.25 crores was collected from a student named Shri Choudhary for admitting him in PG-pediatrics. The AO examined Shri Mohsin Abbar Chaudhary, father of the student. He admitted in his statement that he has paid a sum of Rs. 1.25 crores by way of cheque to M/s D Y Patil Sports Academy. He also admitted that he was guided by the persons in the University to pay donation of Rs. 1.25 crores to M/s D Y Patil Sports Academy for securing M D Pediatrics seat for his daughter. The AO has noted that the assessee was given opportunity of cross examination, but the assessee did not avail the same. (j) Shri Unmesh Khanvi....
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....ed once cash is received finally. Further there are certain brokers who meet the management directly. After approval from Mr Vijay Patil and Mrs Shivani Patil names are finalized and list is sent to University Registrar for enrollment. My role in whole process is of taking basic details of students interested in paying capitation fees and getting the same approved from Mr Vijay Patil and Mrs Shivani Patil and subsequent collection of cash. Further I spent/disburse the cash as per direction of Sh Vijay Patil." (We have extracted earlier the answer given by Shri Pratap Patil and Shri Unmesh Khanvilkar to an identical question posed to both of them. It can be noticed that this reply given by Shri D D Kolte verbatim copy of the replies given by Shri Pratp Patil and Shri Unmesh Khanvilkar with same grammatical mistakes and different types of salutation to the name of trustees.) (c) The revenue also seized some loose papers from Shri Datta Patil, who was attendant of Shri D D Kolte. When questioned about the same, Shri DD Kolte admitted that they were given to Datta Patil on 26-07-2017, being the day prior to the date of search. He also explained the contents of the doc....
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....reafter handed over to the person deputed by the management. (c) An amount of Rs. 1.90 crores was seized from the bank locker of Shri Sunil Gaikwad and further cash of Rs. 59.75 lakhs was seized from the residence of Shri Rajesh Sawant, his assistant. When questioned about the cash, Shri Sunil Gaikwad has admitted the same was collected as capitation fees/donations. Shri Rajesh Sawant admitted that the cash of Rs. 59.75 lakhs was given by Shri Sunil Gaikwad. (d) A laptop was collected from Shri Sunil Gaikwad and it contained data relating to collection of capitation fees. (e) The total capitation fees received by Shri Sunil Gaikwad was determined as Rs. 4.55 crores in FY 2016-17 (Cash of Rs. 1.90 crores and Rs. 59.75 lakhs seized plus cash of Rs. 2.05 crores handed over to Shri Tukaram Patil). Since all these collections were related to another trust, viz., M/s Ramrao Adik Education Society, the AO did not assess the above said amount in the hands of the assessee. (f) The AO has stated that Shri Sunil Gaikwad has also collected Rs. 161.50 lakhs in aggregate from three students in 2014 for admission into BDS, MD-Medicine and MDS -Pedo). All these ....
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....r authority. 13. Another important point noticed by the AO is that all these persons have owned up the cash seized from them as their own and have declared them as their respective income under Income Declaration Scheme (IDS), 2016. All of them have filed the declaration on 30-09-2016, i.e., on the last date of the IDS. The AO took the view that these persons have owned up cash and filed declarations on the direction of the assessee-trust only. He also took support of the decision rendered by Hon'ble Supreme Court in the case of ITO vs. Atchaiah (1996)(1 SCC 417), wherein the Hon'ble Apex Court has held that the right person and the right person alone has to be taxed by the I T Authorities. Accordingly, the AO has expressed the view that these employees cannot be considered as right persons to be taxed, when one looks at their earning capacity, statements, incriminating evidences and other surrounding circumstances. Accordingly, the AO held that the capitation fees collected by these persons are taxable as income of the assessee trust only. 14. The AO has also referred to the statement given by the trustee Smt Shivani Patil, more particularly, following answer given by her:- ....
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....00 lakhs handed over to Shri Bhagirath Patil included the above said amount of Rs. 60.00 lakhs received from Shri Pratap Patil. Accordingly, the AO assessed the amount of Rs. 65 lakhs in the hands of the assessee-trust in AY 2017-18. 16. From the seized documents, it was noticed that, apart from cash collection details, it contained the details of payments made by various employees. It was noticed that the said payments were also not accounted for in the books. The AO took the view that these payments have been given out of capitation fees collected by them. The AO also noticed that the search conducted in the hands of certain other persons, viz., Smt Taruna Maheswari and Shri Pravin Patil, also revealed that they have received money allegedly from Shri Vijay D Patil or from the employees on his instructions. The AO took the view that those money transactions have also been done out of capitation fee collections only. Accordingly, he assessed those payments on protective basis. Apart from the above, the AO held that some of the expenses accounted for by the assessee represent bogus purchases. Though the assessee contended that it is genuine purchase, yet the AO did not accept th....
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....s capitation fees. However cash found with him was Rs. 19.49 crores only. Accordingly, he was asked to explain the difference amount of Rs. 24.02 crores. Mr Khanvilkar submitted that he has given Rs. 15 crores to a person named Shri Devan Mehta for increasing the medical PG seats; Rs. 2 crores to Smt Taruna Maheshwari and Rs. 5 crores to a person named Mr Om. He could not explain the balance amount of Rs. 2.02 crores. He submitted that all these payments have been made as per the direction given by Shri Vijay D Patil. The AO assessed the above said amount aggregating to Rs. 22 crores (15+2+5) on protective basis in AY 2017-18. (d) From the documents seized from Shri Tukaram Patil, expenses and payments aggregating to Rs. 1915.77 lakhs was noticed. The AO assessed the same on protective basis in AY 2017-18 holding the same as application of amount collected as capitation fee. (e) The AO has also examined the Answer/OMR sheets relating to Entrance Examination and noticed that there were differences in signature between attendance sheet and OMR sheets in respect of certain students. In some place, the signature of student was found missing. The AO compared the name o....
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....on fee, but they have not retracted their statement. They are (a) Shri Rajesh Sadashiv Sawant, Office Assistant and Personal assistant of Shri Sunil Gaikwad; (b) Smt Mansvi Naik, Manager. (j) The AO, throughout the assessment, has observed that the assessee was aware of intending search action and accordingly removed cash/documents in the night of 26-07-2016, i.e., the day earlier to the date of search and hence could transfer cash and records. 17. We noticed earlier that all the statements given by various persons were retracted. Those statements were also confronted with Shri Vijay Patil. According to the AO, he neither denied nor accepted the receipt of capitation fee. The assessing officer has listed out the cash found at various places aggregating to Rs. 3072.19 lakhs at page 145 of the assessment order relating to AY 2017-18. Shri Vijay D Patil expressed his inability to explain the same. According to Ld A.R, the said list contained items, which are not related to the persons connected with the assessee-trust. With regard to the capitation fee, Shri Vijay Patil stated that the employees might have collected it on their own without his knowledge or University or wi....
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....ials listed above, the revenue has seized cash from various employees from different places. The details of the persons from whom and the place from which cash was seized are tabulated below:- S. No. Name of Person Cash seized Place of seizure 1. Dr. Unmesh Khanvilkar 5,10,76,500 1,39,68,000 2,89,82,000 10,00,00,000 ------------------ 19,40,26,500 ============ Vashi residence Chembur residence Residence of his driver Room No.702, PG Hostel 2. Shri Pratap Patil 74,96,500 Store room in Medical college 3. Shri Sunil Gaikwad 1,90,00,000 59,75,000 ------------------ 2,49,75,000 ============ Personal locker in bank Residence of attendant 4. Shri D D Kolte 96,30,000 In his Car parked in DY Patil campus 5. Shri Bhagirath Patil 65,00,000 In his Parel residence TOTAL 24,26,28,000 Apart from the above, cash aggregating to Rs. 2,38,87,500/- and jewellery worth Rs. 11,62,50,820/- was seized from the lockers/residence of Smt. Shivani Patil. Even though the AO has discussed about these items, as noticed earlier, the AO did not....
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....it cannot be said that the answers to various questions were given by these employees and the same proves that the statements given by employees are not reliable. (d) No document or material corroborating the entries found in the Pen drive or diary was found from the premises of the assessee trust. (e) In question no.19, he has stated that he has given Rs. 20.50 lakhs to Abhijit Shirke on the instructions of Shri Vijay Patil. In Question No.21, he has stated that he is making entries for Abhijit Shirke. These answers were not cross verified with Abhijit. It is pertinent to note that the very same person, viz., Shri Abhijit Shirke was arrested in 2015 in connection with accepting money of Rs. 62.50 lakhs for securing a medical seat in D Y Patil Medical College, Nerul. The Ld A.R submitted that the relevant news paper report is placed at pages 279 & 280 of paper book relating to AY 2015-16. This information further supports the case of the assessee trust that it is not collecting capitation fees. Some employees may be doing it without the knowledge of the assessee trust. (f) With regard to the entries made in the Diary, Shri Pratap Patil could explain the c....
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.... that both receipts and payments have been noted in the very same page/file. It is possible that Shri Pratap Patil might have got access to the information about receipt of payments by way of cheques. Hence to protect himself, he might have copied it in his pen drive also. Further, the payments noted in the separate file have not been corroborated with any other independent evidence. Hence the said payments could be taken as conclusive evidence warranting addition. (B) TUKARAM PATIL:- (a) Shri Tukaram Patil has partially deleted the documents in the pen drives and it actually incriminates him. (b) The pen drives were found at his premises. It is not mentioned anywhere that both the pen drives belong to the assessee trust. Hence they are as his personal items only. The revenue did not find any document or material from the possession of the assessee that would corroborate the entries found in the Pen drives. (c) Since the data has been deleted by him, the information about details of students and amount of capitation fees collected from them have been given by him 'out of his memory'. Hence it is a case of oral evidence, which is not supported by ....
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.... actually asked him to remove cash from D Y Patil University premises apprehending income tax raid, how Shri Vijay Patil would allow Shri Unmesh Khanvilkar to keep Rs. 10.00 crores at Room No 702 in PG Hostel?. This proves that there was no instruction from Shri Vijay Patil. (d) Modus operandi of taking capitation fee has been explained by Shri Pratap Patil, Shri Unmesh Khanvilkar and Shri D D Kolte. It can be noticed that they are worded in identical manner, i.e., the answer given by each of them at different places/occasions tally with each other, i.e., they matches word to word; they suffer from same type of grammatical mistakes; that different types of salutations used against the name of trustees is also identical. It was contended that this fact proves that the search officials only have prepared the answers. Accordingly, it was contended that it cannot be said that the answers to various questions were given by these employees. (e) If the information available in his laptop is considered to be in the knowledge of the assessee trust, then the trust will not take the risk of allowing him to keep the records, as there is a possibility of manipulating the entri....
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.... by Shri Pratap Patil, Shri Unmesh Khanvilkar and Shri D D Kolte. It can be noticed that they are worded in identical manner, i.e., the answer given by each of them at different places/occasions tally with each other, i.e., they matches word to word; they suffer from same type of grammatical mistakes; that different types of salutations used against the name of trustees are also identical. It was contended that this fact proves that the search officials only have prepared the answers. Accordingly, it was contended that it cannot be said that the answers to various questions were given by these employees. (c) No document or material corroborating the entries found in the Pen drive or diary was found from the premises of the assessee trust. (d) Though he has originally stated that the capitation fees are collected on behalf of the assessee trust, later he filed retraction affidavit on 16-08-2016 (within 15 days from the date of conclusion of search). The retraction has been confirmed by him in the statement taken u/s. 131 of the Act during the course of assessment proceedings. (e) While the AO has accepted the statement that the capitation fee has been coll....
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....s in her answers. (e) She has declared the cash and jewellery as her income under Income Declaration Scheme, 2016. (G) OTHERS:- (a) Cash of Rs. 65.00 lakhs seized from Shri Bhagirath Patil. But there is no evidence to show that it is part of capitation fees. (b) Statement of Smt Taruna Maheshwari. She has retracted her statement. In any case, she is an employee of another trust namely Ajeenkya D Y Patil, which is a separate group. Hence the entries made by her are not binding upon the assessee. In any case, no corresponding entries were found in the records of the assessee. If at all there is some transaction with the employees of assessee trust, the same may be in their personal capacity only. (c) Statement of Shri Pravin Patil. He has retracted his statement. In any case, he is an employee of another trust, viz.,Ajeenkya D Y Patil, which is a separate group. Hence the entries made by her are not binding upon the assessee. In any case, no corresponding entries were found in the records of the assessee. If at all there is some transaction with the employees of assessee trust, the same may be in their personal capacity only. (d) ....
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....AO should not have made additions in the hands of the assessee relying upon the evidences seized from the employees and others. When the bench asked the assessee as to when the AO could have taken support of those documents, the Ld A.R further submitted that the revenue could rely upon the materials that were seized from other persons, only in a case where the revenue has found/seized any other corroborative material from the assessee. In the instant case, the revenue did not seize any material from the assessee which will vindicate the contents of the evidences seized from the employees. It was further submitted that the president of the assessee trust, Shri Vijay D Patil has categorically denied receipt of capitation fees by the assessee trust and has further stated that the concerned employees might be doing so without the knowledge of the assessee trust. Accordingly, the Ld A.R contended that, in the facts and circumstances of the present case and also in view of the presumption enshrined in sec. 132(4A) of the Act, the materials seized from the employees shall belong to the concerned employees only and hence they cannot be used against the assessee. 22. The alternative cont....
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....Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested." From the above, the seizure should be of "books of account, other documents" etc. The diary found in the possession of Mr Pratap Patil is held by Courts to be books of account, and loose sheets, print-out from pendrives, laptops, etc w....
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.... - 130 TTJ 42 (Ahd) "The submission of the assessee had not been rebutted by the AO. It therefore, stands proved that there was no evidence on record that assessee paid any on money to any person including the seller. The presumption under s. 132(4A) would not apply in the case of the assessee therefore, it was necessary for the AO to have brought some reliable and cogent material and evidence on record to support his findings or to corroborate the statement of Arora Brothers. It may also be noted that Shri Ajay Arora in his statement later on retracted from his earlier statement as the same fact is mentioned by the AO in his assessment order dt. 28th Feb., 2008 (paper book 8-paper book 18) Therefore, no reliance could be placed on the statements of the Arora Brothers. Moreover, the AO has not mentioned any fact in the assessment order if the statements of Arora Brothers were ever put to the assessee for the purposes of cross-examination on behalf of the assessee. It is settled law that unless the statement is tested under the cross-examination, the same cannot be read in evidence against the assessee. Since, in this case, AO did not allow any cross-examination to the stat....
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....ove that the appellants have indeed accepted capitation fees. Courts have time and again held that suspicion however strong cannot take place of hard evidence and suspicion cannot be a basis of making huge additions. 14.5 Even otherwise, since the said papers are unsigned and the entries therein are not sufficient to fasten liability on the assessee, the impugned addition requires to be deleted. 14.6. The print out taken from the files contained in the laptops, pen-drives and the loose papers found from the employees do not constitute books of account. Revenue has not even alleged that the entries in these loose sheets and electronic data have been kept regularly during the course of business. The Apex Court in the case of Common Cause (A Registered Society) reported in 394 ITR 220 has held that such detailed documents recovered by the authorities have no evidentiary value. Uncorroborated loose papers found in the search cannot be taken as a sole basis for determination of undisclosed income. 14.7. The Supreme Court in the case of CBI vs V.C. Shukla and Ors has held that - "In Mukundram (supra) after dealing with the word 'book' (to which....
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....nd whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words such statements shall not alone be sufficient to charge any person with liability. The probative value of the liability created by an entry in books of account came up for consideration in Chandradhar vs. Gauhati Bank [1967 (1) S. C. R. 898]. That case arose out of a suit filed by Gauhati Bank against Chandradhar (the appellant therein) for recovery of a loan of Rs. 40,000/- . IN defence he contended, inter alia, that no loan was taken. To substantiate their claim the Bank solely relied upon certified copy of the accounts maintained by them under Section 4 of the Bankers' Book Evidence Act, 1891 and contended that certified copies became prima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court o....
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....." In Beni Vs. Bisan Dayal [A. I. R 1925 Nagpur 445] it was observed that entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability.....
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....thentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person" (emphasis ours). 14.9 Thus, it is submitted that only evidence in the form of notings in the hands of a third person is not enough evidence to fasten liability on the assessee-trust. There has to be some evidence found in the hands of the assessee-trust to corroborate what was found in the hands of that third person - such evidence can be in the form of any paper found, noting found, or even acceptance by the assessee in the statement on oath. In other words, it is contended that evidence in form of records (laptop or diary) found in the possession of the employees of the assessee-trust are not sufficient to establish that the assessee-trust has accepted capitation fees. Reliance is also placed on the following case laws - (i) Common Cause vs UOI - 394 ITR 220 (SC) (ii) Sunil Kumar Sharma vs DCIT - 448 ITR 485 (Kar) (iii) ACIT vs Katrina Rosemary Turcotte - 190 TTJ 681 (Mum T) (iv) ACIT vs Kishore Lal Balwant Rai - 17 SOT 380 (Chandigarh T) - the Tribunal has held that addition cannot be sustained as s....
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....oceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act.] (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed....
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.... said information, the addition was made by the AO in the hands of the assessee. The Hon'ble Delhi High Court noticed that the assessing officer did not carry out further investigation and further no material that could link the above information with the assessee was found from the premises of the assessee. Accordingly, it was held that the decision reached by Hon'ble Settlement Commission in not making addition was justified. 26. On the basis of legal principles explained in the above said cases, it can be noticed that the AO cannot invoke the presumption given in sec. 132(4A) in respect of materials seized from the employees, particularly when the revenue has not found any material from the assessee that will corroborate them. Further, it is not the case that the assessee trust has owned up the contents of documents/materials seized from the employees to be true. On the contrary, the trustees have categorically denied the receipt of capitation fees. 27. The Hon'ble Delhi High Court has examined the issue as to whether the evidences found from a third party could be used against the assessee in yet another case of CIT vs. Ansal Properties (2018)(98 taxmann.com 398)(Delhi). ....
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.... the presumption against the assessee that since some dealing outside the books of account had happened between the villagers and M/s ATPL, there is no presumption that such transaction would have also happened in between ATPL and the assessee. 24. The Revenue contests the findings of the ITAT and submits that the presumption drawn in the circumstances of the case was upon analysis of materials and that AO's view was justified. It was pointed out that independent corroboration in regard to the seized diary was by way of consideration paid for acquisition of shares in Aadharshila Towers for Rs. 70 crores. The diary clearly stated that the total cost was Rs. 100 crores. The farmers who received the consideration were paid partly in cash. These corroborative materials were insufficient in income tax proceedings, on an application of principles of evidence to hold that Rs. 30 crores was the undisclosed cash component of the consideration. 25. This Court is of the opinion both the CIT and ITAT have rendered findings that were sound and reasonable on the question of whether the seized diary per se could in the overall circumstances of the case result in the addition....
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....s placed at pages 279 & 280 of paper book relating to AY 2015-16. This information further supports the case of the assessee trust that it is not collecting capitation fees and only the employees might have collected money without its authority. We notice that the co-ordinate bench of Tribunal, in the case of Anil Mahavir Gupta (2017)(82 taxmann.com 122)(Mum Trib) has considered the issue as to whether the documents seized from employees could be relied upon for making addition in the hands of the assessee. It was decided in favour of the assessee as under:- 11. Now the Grounds remaining in the appeal of the Revenue are Ground Nos. 9 & 10, which relate to an addition of Rs. 30,00,000/- made by the Assessing Officer as unaccounted receipts. 11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of Rs. 30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr. Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such....
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.... hand, the ld. Representative for the assessee pointed out that the CIT(A) was justified in deleting the addition as there was no material to link the said seizeddocument with the transactions undertaken by the assessee with Mr. Suresh Agarwal; which were duly accounted for in the account books. 11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is hereby affirmed and accordingly Revenue fails on Grounds of appeal Nos.9 & 10 also."....
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....tanding, Smt Shivani Patil has stated that D Y Patil University has management seats and fees is collected for the same. I agree that various colleges under D Y Patil University, Nerul have management Quota as allowed by the relevant rules upto 15% and fees is collected for the same. The fees for the management quota is higher than other seats. Apart from the 15% management quota, there is no other seat for which higher fees is charged. Q 9:- In the statement of Smt Shivani Patil, she has stated at Q 53 that fees for management quota is collected in cash. How is it you are able to say that no capitation fees is collected? Ans.: I agree that fees is paid in cash by some students. We don't refuse cash payments. However, all cash payments are accounted in the books of accounts. Such cash payments are either regular fees for regular seats or fee for management quota fees. There is no cash collected towards capitation fee in the colleges under DY Patil University, Nerul, as no capitation fees is collected by our colleges. Accordingly, we agree with the contentions of the assessee that neither Shri Vijay Patil nor Smt Shivani Patil has stated that the assessee ....
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....ng any other corroborate/independent material on record which would vindicate those information. Accordingly, we are of the view that the AO was not justified in accepting the details of payments without carrying out due examination and bringing any other corroborative evidence. (d) The AO has also relied upon certain discrepancies found in the OMR answer sheets pertaining to entrance examinations conducted by the assessee trust for admitting students in the management quota. According to AO, signatures were missing in the attendance sheets in some cases or it did not tally with the signature available in OMR sheets. According to the AO, those discrepancies are available in the case of students from whom capitation fees has been collected. We notice that the assessee has given explanations with regard to this deficiency. Be that as it may, the point to be considered here is whether the deficiencies found in the OMR sheets would show that the assessee was collecting capitation fees?. First of all, the explanation given by the assessee for the deficiencies has not been proved to be incorrect by the AO. Secondly, in the enquiry conducted by the AO with the students, all of th....
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....ithout the authority. The Ld A.R also submitted that the employees have owned up the cash seized from them and have declared the same as their respective income under Income Declaration Scheme, 2016. This fact would support their respective retraction statement and also the stand of the assessee trust. The Ld A.R submitted that the income declared by the employees have been accepted by the revenue. Accordingly, it was contended by the Ld A.R that the original statements given u/s. 132(4) could not have been relied upon by the AO. Considering the facts and circumstances of the case discussed above, in our view, these contentions of Ld A.R merit acceptance. (g) We notice that the AO has also conducted enquiries with some of the parents. The Ld A.R has advanced his arguments on the reliability/effectiveness of their statements, which we have summarized in the earlier paragraphs. We have noticed that most of them have given donations by way of cheques only. The parents who had given cash had taken back the cash, as their respective children changed their minds. None of the parents have admitted that the assessee trust has collected capitation fees in the form of donations, i.e....
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....'ble Supreme Court in the case of Common Cause (a registered society) reported in 394 ITR 220, it was held that the documents recovered by the authorities will have no evidentiary value unless it is corroborated with any other independent evidence, i.e., uncorroborated loose papers found in the search cannot be taken as sole basis for determination of undisclosed income. The Hon'ble Supreme Court has held in the case of CBI vs. V C Shukla (supra) that even correct and authentic entries in books of account cannot fix a liability upon a person without independent evidence of their trustworthiness. We notice that the Hon'ble Supreme Court has dealt with the entries made in a diary which was considered to be regular books of account and held that it cannot be relied upon. However, in the instant case, the evidences relied upon by the AO are certain abstract statements maintained by the employees in their respective laptops. Hence, in our view, it cannot be said that those uncorroborated materials have any evidentiary value viz-a-vis the assessee unless any other independent material is brought on record to prove the trustworthiness of those abstract information. 31. At this stage, w....
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....under the Right to Information Act to the effect that "There is no any complaint received from any student/parent regarding capitation fee charged by the above institutions so far" also tilts the balance in favour of the assessee. It disproves the department's allegation of involuntary collection of amounts. That apart, the order passed under Section 264 of the Act for the assessment years 1998-1999 to 2001-2002 clearly states that the donation received from students or the parents is not compulsory in nature and, therefore, the same is not capitation fee. There is no material to controvert this fact which is to the knowledge of the department. No endeavour is made to sustain the allegation of involuntary donation. In any event, as rightly held by the Tribunal, it is not relevant in the present case as the allegation is violation of Section 13 r/w Section 11 of the Act. 7.8 We find that factually the Commissioner of Income Tax (Appeals) and the Tribunal have come to the conclusion that the donations received do not partake the character of capitation fee. There is no element of involuntary nature of donation. A specific finding is given that no investigation has been d....
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....nd the assessment order. 7.12 We do not find any reason to come to a different conclusion on facts, as has been addressed by the Commissioner of Income Tax (Appeals) as well as the Tribunal on these two issues relating to seizure of cash and loose sheets. Apparently, there is no dispute on that fact. All that the department is trying to show is that there is something improper in the manner in which the donations are handled. Both these factors clearly establish that the allegations have nothing to do with the trust and its activities in relation to the charitable objects." 32. In view of the foregoing discussions, we are of the view that documents seized from employees cannot be considered as having any evidentiary value and cannot be considered to have trustworthiness, since no other corroborative material was brought on record to support the veracity of the same. None of the material would show that the assessee trust was collecting capitation fees. Hence, the AO could not have placed reliance on the materials seized from the employees to draw conclusion that the assessee was collecting capitation fees. 33. Another important aspect that was brought to our notice b....
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....hus, it is not case of lack of proper enquiry as envisaged in the above said decision rendered by Hon'ble Delhi High Court. Accordingly, this decision also does not support the case of the revenue. (c) The Ld D.R submitted that the declaration of income by the employees under Income declaration scheme is not sacrosanct. He brought to our notice a news reported in a news paper that a person had declared Rs. 13,860 crores under Income declaration Scheme and the same is being probed by the Income tax department. In our view, there is no reason to suspect the facts of the present case on the basis of the facts prevailing in some other case, i.e., the revenue should bring some material to prove that the declarations given by the employees are not correct. On the contrary, the Ld A.R submitted that the declarations of the all the employees have been accepted by the revenue. (d) The Ld D.R also invited our attention to a newspaper clipping, which described the memory of 12 year old student. Accordingly, he submitted that the statement given by Shri Tukaram Patil and Shri Unmesh Khanvilkar out of their memories should be taken as evidentiary value, since some people are g....
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.... of the AO, in the instant case, would be that the trustees have siphoned off the capitation fees collected by the assessee trust, by not accounting the same in the books and it may attract the provisions of sec.13. We have noticed earlier that there is no evidence to show that either the trust or the trustees have collected capitation fees. We have also held that the AO has arrived at such a conclusion only on presumptions. In that view of the matter, it cannot be said that the trustees have siphoned off money belonging to the assessee trust. Hence it cannot be said that there was violation as mentioned in the provisions of sec.13 of the Act. 38. Another important point is that the CIT(E) has not withdrawn the registration granted u/s. 12A of the Act to the assessee. When the registration granted u/s. 12A was intact, the AO could not have denied exemption u/s. 11 of the Act. 39. The assessee had received corpus donations in the form of development fees from some of the parents of the students. The assessee claimed the same as exempt u/s. 11(1)(d) of the Act. The assessee had also received other corpus donations. The AO took the view that the donation given by the parents are....
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....was considered by Madras High Court in Balaji Educational & Charitable Public Trust's case (supra) and it is held as follows: '4.7 The question, as has been posed by the Tribunal, is whether the contributions or donations are voluntary or involuntary and what is the effect of such donation. The Tribunal was of the view that there is no concept of involuntary contributions and went on to hold that voluntary contributions should be treated as income under section 12 of the Act and that corpus donations to be treated as capital receipt under section 11(1)(d) of the Act and corpus donations are not generally in the nature of income. It further held that voluntary contributions are taxable only if not applied for charitable purposes. The emphasis is on, not applying the same for charitable purposes. 4.8 Whether contribution is voluntary or involuntary and its implication in relation to these provisions was considered by the Tribunal in the following manner: "35. To proceed further, we have to examine the (30) scheme of law of charities provided under the Income-tax Act, 1961. There is no concept of involuntary contributions in that scheme. The only dis....
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....he assessee had in this case not utilized the donations or income for charitable purpose. The clear finding of the Tribunal is that if the assessee had not utilized the amount for charitable purpose, it would automatically become taxable and the assessee would not be entitled to exemption. But, on the contrary, without there being a finding of violation of section 13 of the Act, an inference is drawn on an alleged receipt of donation and consequently, the allegation is made that there is a violation of section 13(1)(d) of the Act. A hypothetical finding is given that because capitation fee is charged, it is not an income in terms of section 11 of the Act and, therefore, there is a violation of section 13(1)(d) of the Act. The Tribunal held that such a reasoning cannot be accepted because if the donations are offered for income and if the department wants to disprove the nature of income on the basis of material, as has been pointed (33) out by the Commissioner of Income-tax (Appeals), it should be borne out by records based on investigation, which the Assessing Officer failed to do, except falling back on a statement which is not supported by materials'. 14. We are in ....
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....eciding the applications for approval under section 10(23C). 9. Undisputed facts of this case in hand are, the exemption certificate was in force as on the date of issuance of notice. The AO has denied the benefit of exemption by holding that the assessee had received a sum of Rs. 27,23,55,000/- as capitation fee in the guise of voluntary contribution. 10. Shri Huilgol pointed out from para 18 of the impugned order that the assessee had filed an affidavit before the ITAT stating that no action under the KEI (Prohibition of Capitation Fee) Act, was initiated against the assessee. The ITAT has recorded that the learned departmental representative had not contradicted the said affidavit either orally or by filing a counter affidavit. Based on this factual aspect, the ITAT has recorded thus in the impugned order; "37. In the light of the above, we are of considered opinion that the Appellant is carrying out education which is charitable within the meaning of section 2(15), it has applied and/or accumulated sums as required by section 11(1)(a), the explanation thereto and section 11(2), it is duly registered under section 12A and has not violated section 13. F....
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....5 12,25,31,425 8,09,60,000 2015-16 13,92,85,176 46,80,000 2016-17 12,03,14,344 1,34,15,000 2017-18 10,13,32,005 1,63,16,749 Accordingly, we set aside the order passed by Ld CIT(A) on this issue in all the years under consideration and direct the AO to grant exemption u/s. 11(1)(d) of the Act in respect of above items of corpus donations. 42. The AO did not allow capital expenditure incurred by the assessee as application of income, since he had denied exemption u/s. 11 of the Act. Since we have restored the exemption u/s. 11 to the assessee, the income of the assessee for all the years under consideration has to be computed in accordance with the provisions of sec.11 of the Act. Hence the capital expenditure incurred by the assessee is required to be treated as application of income. The capital expenditure disallowed in various years is tabulated below:- Assessment year Capital expenditure 2013-14 8,28,49,654 2014-15 19,06,56,436 2015-16 23,13,80,737 2016-17 165,29,88,113 2017-18 49,17,30,341 Accordingly, we set aside the order passed by Ld CIT(A) on this issue in all the years under consideration and di....
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.... relevant to AY 2013-14, but claimed a sum of Rs. 3,64,50,974/- only as application of income after deducting the value of assets deleted. In any case, it is the submission of the assessee that the capital gain arising on sale of assets is offered as income. The Ld CIT(A) confirmed the addition by observing that the same is consequential to rejection of benefit of exemption u/s. 11 of the Act. Since we have restored the exemption u/s. 11 to the assessee, this addition is not called for. Accordingly, we direct the AO to delete the disallowance of Rs. 20.00 lakhs made in AY 2013-14. 47. In AY 2014-15, the assessee is challenging the decision of Ld CIT(A) in confirming the addition of Rs. 84.50 lakhs treated by the AO as bogus purchases. The assessee has purchased certain materials from a company named M/s Monarch Trading Co in the years relevant to AY 2013-14 and 2014-15. The value of material purchased was Rs. 60.00 lakhs and Rs. 24.50 lakhs respectively. The assessee made the payment of Rs. 84.50 lakhs during the year relevant to AY 2014-15. Based on the statement given by Smt Taruna Maheswari, employee of another trust, the AO treated the above said expenses as bogus in nature ....
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....terial to show that the assessee has collected capitation fees. We also notice that there is no material to link the above said cash balances seized from the employees with the assessee trust. Hence there is no reason to make this addition in the hands of the assessee on substantive basis, since the onus to explain the cash balances will lie upon Shri Pratap Patil and Shri Unmesh Khanvilkar. We noticed that both these persons have owned up the cash balances and offered the same as their income under Income declaration Scheme, 2016. Accordingly, we direct the AO to delete both the above said additions in AY 2017-18. 49. We shall now take up the appeal filed by the revenue. In AY 2014-15, the revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition of Rs. 2.15 crores relating to unexplained expenditure. In AY 2016-17, the revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition of Rs. 6.10 crores relating to unexplained expenditure. 49.1 On examination of pen drive seized from Shri Pratap Patil, an Excel file titled as "Shree Swami" was found. It contained details of payment of Rs. 2.15 crores to certain persons in June and July, 2013 to the ....
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....ddition of Rs. 65.00 lakhs, being the cash seized from Shri Bhagirath Patil. We noticed earlier that Shri Bhagirath had originally stated that he has received the above said amount from Smt Shivani Patil for keeping it in safe custody one day prior to the date of search. Later, he retracted his statement and submitted the same represents his money accumulated out of savings and agricultural income. He also revised his return of income relating to AY 2016-17 in order to show availability of cash. The AO did not accept the revised version of Shri Bhagirath Patil. He noticed that Smt. Shivani had stated that she has received a sum of Rs. 60.00 lakhs from Mr Pratap Patil one week prior to the date of search. The AO took the view that the amount received from Pratap Patil is out of capitation fees. Accordingly he took the view that the amount of Rs. 65 lakhs given to Shri Bhagirath Patil consisted of Rs. 60 lakhs said to have been received from Shri Pratap Patil. Accordingly, the AO held that the amount of Rs. 65 lakhs given to Shri Bhagirath Patil is also part of capitation fees only. Accordingly, he assessed the amount of Rs. 65.00 lakhs as income of the assessee in AY 2017-18. 50.....