TaxTMI 
TaxTMI 
2025 (10) TMI 473
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....el/2023 and 108/Del/2023 for Assessment Year 2014-15 & 2015-16 respectively. 2. Since all the above appeals are arising out of the common order of Ld. CIT(A) dated 02/06/2023 and having identical issues to be decided, they are heard together and decided by a common order. 3. Brief facts of the case are that, a search proceedings u/s 132 of the Income Tax Act, 1961 (' the Act' for short) was carried out on 09/03/2017 in the case of M/s Etcetera Entertainment, belonging to Sh. V. Mathiyalgan, the then Vice Chancellor Saraswati Institute of Medical Science, Hapur (hereinafter referred as to 'SIMS') at Sector 52, Nodia. During the said search proceedings, various incriminating documents were found and seized. Thereafter, on 10/03/2017, a survey u/s 133A of the Act was conducted in the case of SIMS, which is one of the units of the Assessee Trust. 4. During the course of search operation conducted on M/s Etcetera Entertainment and Sh. V. Mathiyalgan, certain information / documents were found and seized and according to the Revenue, they contained information/documents having bearing on determination of the total income of Assessee herein. Hence satisfaction was recorde....
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....on to Rs. 8,13,89,000/- as against the addition of Rs. 17,12,55,000/- made towards capitation fee and deleted the addition of Rs. 5,79,48,156/- made on account of interest on cash loans by applying the doctrine of telescoping. d) For AY 2017-18, ld. CIT(A) restricted the addition to Rs. 8,90,43,000/- as against the addition of Rs. 15,30,10,000/- made towards capitation fee and deleted the addition of Rs. 3,92,60,191/- made on account of interest on cash loans by applying the doctrine of telescoping. 6. As against the order of Ld. CIT(A) in sustaining the additions for AY 2016-17 and 2017-18, Assessee preferred appeals before Tribunal. Against the deletion of additions for AY 2014-15 to AY 2017-18, Revenue also preferred the captioned Appeals. Assessee has also filed Cross-Objection for AY 2014-15 and AY 2015-16 by raising several grounds on both legal/technicalities as wells as on the merits. 7. Since identical issues are involved in all the above appeals, before us both the parties agreed to take up Assessment Year 201718 as lead case, which involved both the additions of alleged capitation fee made u/s 69A of the Act and also towards cash loan made u/s 69C of the A....
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....rust is made under sections 11 to 13, which falls under Chapter III of the Act, where reference under section 11(1)(a) is to "income" and not to "total income", which has been specifically defined under sections 2(45) of the Act and in view of the aforesaid reasons, the AO erred in invoking the provisions of sections 69A and 69C of the Act. 8. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that any excess expenditure incurred by a charitable trust in earlier AY, is allowed to be set-off against the income of subsequent AYs by invoking section 11, as this legal position is supported by a number of judgements of High Courts and also a judgement of the Supreme Court. 9. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in sustaining additions based on statement of a third person, viz. Shri VM, recorded under section 132(4) of the Act, which could not constitute incriminating material in the case of the appellant Trust. 10. On the facts and circumstances of the case and in law, the Learned Comm....
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....roceedings completed by the Assessing Officer despite that these also hinged upon the Notice issued u/s 142(1) on 01-11-2018 which itself had become non-est in view of the earlier withdrawal of notice issued u/s 153C of the Act. 5. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating the appeal without noticing that assessment order dated 10-04-2021 passed u/s 144 does not disclose mandatory reasons as to why at all provisions of section 144 of the Income Tax Act, 1961 were invoked. 6. That in the facts and the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating appeal by erroneously invoking the presumption as contained u/s 292C and section 132(4A) of the IT Act, 1961 in the hands of the Appellant. 7. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating appeal by holding that unaccounted income subjected to tax by the Assessing Officer has accrued or arisen in the hands of the Appellant. 8. That in the facts and circumstances of the case the Ld. Commi....
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....rust etc. The Ld. Counsel further submitted that solely based on the documents found during the search from the possession of Sh. V. Mathiyalgan, A.O. concluded that capitation fees or the amount as mentioned in the document seized are received by the Assessee trust. However, no such capitation fees was ever received or accrued to the Assessee trust. To substantiate the said claim, Ld. Assessee's Representative submitted that Assessee trust was not at all in a position to charge capitation fee because of the NEET which started UG 2016-17 for the first time. Likewise for UG 2016 and PG before 2017, the Assessee was following Utter Pradesh Un-aided Medical Collage Welfare Association (UPUMCWA) and based on open admission System conducted by UPUMCWA, merit seats were allotted to those students who cleared the examination conducted by UPUMCWA. It is further submitted that, in both the above systems, there was no management quota seats to bargain. When there was no quota to bargain, question of having accrual or receipt of 'capitation fees' does not arise. 12. The Ld. Counsel further submitted that, there is not even a single penny of cash recovered during the search proceedings ....
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.... Ld. Counsel further submitted that regarding the cash found in the premises of Sh. V. Mathiyalgan, it was deposed by him on oath in his statement recorded u/s 132(4) of the Act that, the said cash pertained to his personal business activities i.e. of M/s Etcetera Entertainment and made the disclosures of this cash income in PM Garib Kalyan Yojna (PNGKY) and under Income Disclosure Scheme, 2016 (IDS,2016). Ld. Counsel further submitted that Sh. V. Mathiyalgan had hostile relationship with the Chairperson of Assessee and a divorce case was going on between Sh. V. Mathiyalgan and his wife, who happened to be the daughter of Chairman of the Assessee Trustee. Therefore, if at all Sh. V. Mathiyalgan had received any sum in the name of 'capitation fees' in his personal capacity for which the Assessee is neither connected nor the beneficiary of the said alleged act as they have strange relationship. 16. Ld. Counsel further submitted that, pursuant to search operation on M/s Etcetera Entertainment and Sh. V. Mathiyalgan, and survey operation on the Assessee, no further action was taken out by the department on any of the trustees of Assessee trust. 17. The Ld. Counsel further submitt....
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....ncellor of SIMS, a unit of Assessee trust. He further stated that the letter filed by the CA of Sh. V. Mathiyalgan before AO clearly shows that capitation fees was collected by Sh. V. Mathiyalgan wand the said amount was returned back to SIMS, Hapur during Assessment Year 2016-17 and 2017-18 respectively. 20. The Ld. D.R further contended that as per the diary found, marked as LP-, during the search from the possession of Sh. V. Mathiyalgan, contained entries of unaccounted fees receipts of capitation fees from more than 66 students pertaining to UG-2015, UG-2016 and PG 2016-17 and other course for related previous years as well as advance for next year courses. In the said documents, many of the details of capitation fees were written and duly signed by Sh. V. Mathiyalgan and guardian/students. The Investigation wing/ A.O. also recorded statements of some of the parents/guardians/students, who have admitted the fact of paying the capitation fees and some of the students have also filed complaint to the Principal of SIMS, Hapur complaining that Receipts were not issued against the cash amount collected by Sh. V. Mathiyalgan from them. The said 'capitation fees' was collected by ....
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....refore, question of receiving capitation fee for admission does not arise. The Revenue has not brought anything on record to contradict the said stand taken by the Assessee. It is the stand taken by the Assessee that there was no complaint against the SIMS/Assessee with regard to collection of capitation fee and the State Government has not taken any action against the SIMS in this regard. The said fact goes against the presumption drawn by the A.O. that the Assessee has collected the capitation fees. 24. In the present case, the alleged documents were seized from the custody of Sh. V. Mathiyalgan at A-78, Sector 62, Noida, which are marked as D4, LP-1 & LP-4 and undisputedly are written in the hand writing of Sh. V. Mathiyalgan and some of them are even signed by Sh. V. Mathiyalgan, wherein he has mentioned the name of the students, capitation fee etc. By relying on these seized documents, Ld. A.O. prepared a chart, wherein he mentioned the names of the students, incriminating material and also mentioned his Interpretation/Remarks, which is reproduced at page 12 to 23 of the assessment order. 25. As per the provision of Section 292C of the Act, where any books of accounts or....
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....iting of Sh. V. Mathiyalgan and signed by him. Therefore, as per Section 292C of the Act, the Assessing Officer has compulsion to presume that those incriminating documents belonged to Sh. V. Mathiyalgan and the A.O. cannot presume or infer that those incriminating documents which are in the hand writing of Sh. V. Mathiyalgan are of the Assessee. 27. The Ld. AO has come to the conclusion that, the capitation fees collected by Sh. V. Mathiyalgan had been handed over to the Assessee trust and made addition based on the entries found recorded in the said which includes diary and loose papers seized from the possession of Sh. V. Mathiyalgan at his premises. However, the fact remains that the Revenue did not find any document/material/evidence with the Assessee to corroborate the allegation of receipt of capitation fees from the students by the Assessee trust. 28. Further as per Section 132(4A) of the Act presumption is required to be drawn vis-à-vis against the person in whose possession or control, the books of accounts, documents, etc. are found and not against any other person. For ready reference, the provision of Section 132(4A) is reproduced as under:- Secti....
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....inst any other person. Moreover, the presumption under section 132(4A) is a rebuttable presumption and not a conclusive one. Certainly, the burden to rebut the presumption is upon the person against whom the presumption is applicable. The assessee, in its statement before the Assessing Officer, had denied having borrowed any money from 'N.S.' in cash." 30. In the case of Sheth Akshay Pushpavadan vs. DCIT reported in 130 TTJ 42 (Ahd), it has been held that, the addition cannot be made on the basis of material seized from/statement given by a third party, unless those materials were corroborated with any other evidence. The relevant findings are as under:- "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 Padmashree Dr. D.Y. Patil University 37 record to support his findings or to corroborate the statement of Arora Brothers. It may also be noted th....
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....ch and seizure operations; yet textually the presumption relates to material documents and books of account seized of from the assessee's premises and the presumption that can be made from it, not from materials seized and statement recorded, of third parties. Only if the materials that are sought to be relied upon emanate from the premises of the party subject to assessment, that the presumption can be drawn. This is evident from Sections 132 (4) and (4A) of the Act, which read as follows: "Section 132.... (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding 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....
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....on of funds into the funds allegedly maintained by the UPDA, was not established. The findings of the Commission therefore cannot be faulted as contrary to law." 32. The Hon'ble Delhi High Court while interpreting the application of the presumption given in sec. 132(4A) of the Act, held that presumption could be applied only to the materials found with the searched person. If any material is found from some other person, the above said presumption could not be extended to the assessee. In that case, the Revenue is under an obligation to establish that the information available in the seized material is relatable to the assessee and allegation made against the assessee has to be proved with some other independent material. In the said case before Hon'ble Delhi High Court, alleged details of payment of money by the assessee therein for illegal purpose was found in the place of UPDA (trade association). Based on the said information, addition was made by the AO in the hands of the assessee therein. 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 wa....
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....ies against the assessee in order to connect the assessee with the diary in question but such things are not permitted as is held by Bombay Bench of I.T.A.T. in the case of Sundar Agencies (supra). No addition could be made in the block assessment on the basis of assumption and presumptions. Merely some material is recovered during the search, no addition could be made in the hands of the assessee on the basis of some subsequent enquiries and that too purely on assumption and presumptions. The AO observed in the assessment order while making the addition that he made enquiries from the villagers. This was the main reason to make up the theory of the payment made outside the books of account on the basis of inference drawn on estimate basis. It is an admitted case that the villagers had a dealing with M/s Aadharshila Towers Private Ltd. for selling of their land. These transactions were not at all connected with the assessee. The villagers have not made any incriminating statement against the assessee. The inference drawn by the AO that initially M/s ATPL was owned by Sri S.K. Jatia and then subsequently was taken by the assessee by itself is no ground to draw the presumpti....
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....nce the SIMS comes under the umbrella of Assessee Trust, relationship between the Assessee and Sh. V. Mathiyalgan would be master and servant or employer and employee relationship and all the documents/materials were seized from the possession of Sh. V. Mathiyalgan only. It is categorically stated by the assessee trust that, it had not authorized anyone to collect capitation fees on its behalf. It is the case of the Assessee that the said Sh. V. Mathiyalgan might have collected the capitation fee for his personal benefits without any authority from the Assessee trust. 36. Under the principle of vicarious liability, the employer is normally liable for any act performed by his employees during the course of employment. However, when an employee does anything that is neither directed nor controlled by the employer, then the said action of employee cannot be considered to be within the scope of his employment. In such event, the employer is not liable for the action of the employee and hence is not liable for damages. 37. The Co-ordinate Mumbai bench of Tribunal in the case of Anil Mahavir Gupta reported in (2017) 82 taxmann.com 122 (Mum Trib) has considered the issue as to wheth....
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....ccount books of the assessee in the name of Mr. Suresh Agarwal, it would not lead to an assumption that the seized document reflect transactions between assessee and Mr. Suresh Agarwal. In fact, the CIT(A) infers that the document reflects transaction between Mr. Bharat G. Shah and Mr. Suresh Agarwal, as the document was found in the possession of Bharat G. Shah. Under these circumstances, CIT(A) has deleted the addition in the hands of the assessee. 11.4 Before us, the ld. Departmental Representative pointed out that the employee from whom the impugned loose papers were found is a trusted employee of the assessee and the notings in the seized paper showed that it pertain to the assessee. It was, therefore, contended that the addition has been wrongly deleted by the CIT(A). 11.5 On the other 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 seized document 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 th....
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....Hapur and all the amount was returned back to the trust during Assessment Year 2016-17 and 2017-18 respectively'. The copy of the letter written by the CA of the Sh. V. Mathiyalgan dated 15/12/2018 is reproduced as under:- 41. The Department while making the addition relied on the said letter filed by the C.A of Sh. V. Mathiyalgan during his assessment proceedings. From the said letter, it is seen that the said Sh.V. Mathiyalgan received the capitation fee. However, it is the specific case of the Assessee that there is no room for receiving capitation fees for any of the seats and it never authorized Sh. V. Mathiyalgan to receive the capitation fees nor received any capitation fees from any students. The Assessee contended that obviously inter alia because of his strain relationship with the chairman of the trust and only to escape from the tax liability, Sh. V. Mathiyalgan has falsely stated through his CA that the amount has been handed over to the Assessee herein. 42. It can be seen from the said letter that there is no date of handing over of alleged capitation fee received by him to the Assessee was stated and likewise the name and other particulars of the person who rec....
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....used against the assessee, however, A.O. has not provided the opportunity to the Assessee to cross-examine those persons. Since the credibility of the said statement of students/guardians have not been tested by way cross-examination despite requesting for the same by the Assessee, those statements cannot be used against the Assessee. 45. The Hon'ble Supreme Court in the case of M/s Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II reported in [2015] 281 CTR 241 (SC) wherein it has been held as under:- "As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of crossexamination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be subject mat....
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.... the presumption u/s 132(4A) of the Act cannot be invoked in its hands, since these materials have not been seized from its premises. The presumption u/s 132(4A) is that the said materials shall belong to the person from whom they were seized. Accordingly, it was submitted that the 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....
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....aitan (2017)(83 taxmann.com 375)(Delhi) as under:- "24. Section 132 no doubt mandates a presumption in respect of search and seizure operations; yet textually the presumption relates to material documents and books of account seized of from the assessee's premises and the presumption that can be made from it, not from materials seized and statement recorded, of third parties. Only if the materials that are sought to be relied upon emanate from the premises of the party subject to assessment, that the presumption can be drawn. This is evident from Sections 132 (4) and (4A) of the Act, which read as follows: "Section 132.... (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding 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 th....
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....ee's expenditure claim was bogus, or it had underreported income and that it resorted to over invoicing and diversion of funds into the funds allegedly maintained by the UPDA, was not established. The findings of the Commission therefore cannot be faulted as contrary to law. The Hon'ble Delhi High Court has explained that the presumption given in sec. 132(4A) could be applied only to the materials found with the searched person. If any material is found from some other person, the above said presumption could not be extended to the assessee. In that case, the revenue is under an obligation to establish that the information available in the materials is relatable to the assessee and allegation made in that material against the assessee has to be proved with some other independent material. In the case before Hon'ble Delhi High Court, alleged details of payment of money by the assessee for illegal purpose was found in the place of UPDA (trade association). Based on the above 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....
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..../2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Bombay Bench of I.T.A.T. in the case of Sundar Agencies (supra). No addition could be made in the block assessment on the basis of assumption and presumptions. Merely some material is recovered during the search, no addition could be made in the hands of the assessee on the basis of some subsequent enquiries and that too purely on assumption and presumptions. The AO observed in the assessment order while making the addition that he made enquiries from the villagers. This was the main reason to make up the theory of the payment made outside the books of account on the basis of inference drawn on estimate basis. It is an admitted case that the villagers had a dealing with M/s Aadharshila Towers Private Ltd. for selling of their land. These transactions were not at all connected with the assessee. The villagers have not made any incriminating statement against the assessee. The inference drawn by the AO that initially M/s ATPL was owned by Sri S.K. Jatia and then subsequently was taken by the assessee by itself is no ground to draw the presumption against the assessee that since some dealing outside the books....
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.... been seized from the employees only. It has been categorically stated by the trustees of the assessee trust that have not authorized anyone to collect capitation fees. The trustee has also stated that the employees might have collected it without the authority of the trust. Under the principle of vicarious liability, the employer is normally liable for any act performed by his employees during the course of employment. However, when an employee does anything that is neither directed nor controlled by the employer, then the said action of employee cannot be considered to be within the scope of his employment. In that kind of situation, the employer is not liable for the action of the employee and hence is not liable for damages. We noticed earlier that Shri Pratappatil had stated that he has recorded transactions on instruction from Shri AbhijitShirke. The Ld A.R submitted that the very same Shri AbhijitShirke 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 further submitted that the relevant news paper report is placed at pages 279 & 280 of paper book relating to AY 2015-16. This....
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....brought on record to establish that the seized papers belonged to the assessee. The CIT(A) also found that the seized documents do not indicate who is the recipient of the amounts mentioned and in what connection the money was paid. According to the CIT(A), merely because there is an account appearing in the account books of the assessee in the name of Mr. Suresh Agarwal, it would not lead to an assumption that the seized document reflect transactions between assessee and Mr. Suresh Agarwal. In fact, the CIT(A) infers that the document reflects transaction between Mr. Bharat G. Shah and Mr. Suresh Agarwal, as the document was found in the possession of Bharat G. Shah. Under these circumstances, CIT(A) has deleted the addition in the hands of the assessee. 11.4 Before us, the ld. Departmental Representative pointed out that the employee from whom the impugned loose papers were found is a trusted employee of the assessee and the notings in the seized paper showed that it pertain to the assessee. It was, therefore, contended that the addition has been wrongly deleted by the CIT(A). 11.5 On the other hand, the ld. Representative for the assessee pointed out t....
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....not been done. As per my knowledge, last year the seats were sold for typically 7-8 lakhs per seat. For MBBS the price is typically 30-40 lakh. However for post graduate seats the prices is higher than MBBS. However, I don't know the exact figure. The management rates for Ayurveda and Physiotheraphy is typically 4-5 lakhs per seat as these are not sought after courses." However, it is the contention of the assessee that she has not mentioned about Capitation fee at all. She has only stated that the fees of management seats are higher than the regular seats. A perusal of the above said reply given by Smt Shivani Patil, in our view, does not show that she has confessed anything about collection of capitation fee. We notice that this aspect has been clarified by Shri Vijay Patil also in his statement in the following questions & answers:- Q 8:- I am showing you the statement of Smt Shivani Patil recorded u/s 132(4) from 27-07-2016 to 31-07-2016 wherein at Q.51 onwards it has been stated capitation fee in cash is collected at Colleges under D Y Patil University, Nerul. Please Comment. Ans.:- As per my understanding, Smt Shivani Patil has stated that D Y P....
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....t be proper to hold that the contents of one file, if found to be correct then the content of other files are also to be considered as true. The opinion of the AO may be accepted, if the same file contains details of partly accounted and partly unaccounted transactions, which is not the case. Further, the assessee herein is contending that the collection of capitation fee is an un-authorised act of the employees. The assessee is not accepting the transactions noted down in the pen drive. Hence, we are of the view that the AO was not right in extending the interpretation given to one file to another file. The Ld A.R contended that Shri Pratappatil was having access to the records of the college and it is quite possible that he might have copied the file relating to receipt of fees by way of cheques. Accordingly, he contended that it does not mean that the information contained in other files should also be considered to be correct. In any case, since there is no material to link these payment details to the assessee, the same cannot be used against the assessee. The details/documents which have not been accepted by the assessee can be used only by bringing any other corroborate/inde....
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....tatements given by the employees, trustee and certain employees of another trust. However, all of them have retracted the statements given by them. We notice that most of them have retracted within 15 days from the date of conclusion of search. The AO however rejected the retraction by holding that the same is an afterthought and without any reasoning. However, we notice that they have stated that they were under mental pressure when the statement u/s 132(4) of the Act was taken from them and could not give proper reply. The Ld A.R also submitted that, since the employees have collected capitation fees without the authority of the assessee trust, naturally they would be under the threat of exposure. Hence, in order to save their skin, they might have stated initially that the capitation fees were collected upon the instruction of Shri Vijay Patil. Subsequently, when they reached proper mental state, they have filed retraction statements. The Ld A.R also submitted that the cash was recovered from the employees only and not from the assessee trust. The Ld A.R submitted that, it reinforces the fact that the employees were only collecting capitation fees without the authority. The Ld A....
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....eceived money from Tukaram Patil and others, but later retracted it. In any case, no contra entry was available in the record maintained by Shri TukaramPatil. Further, the revenue did not examine Tukaram Patil with regard to the entries of receipt of cash noted by Taruna Maheswari and Pravin Patil. In any case, those transactions are between two parties and there is no other material to show that the said transactions, if at all true, were related to the assessee. The foregoing discussions would show that the above said statements/materials do not vindicate or link the information/evidences found from the employees. The revenue also did not find/seize any credible material from the assessee trust to corroborate the information/document seized from the employees. In respect of alleged receipt of capitation fee and in respect of payments recorded in the materials, the AO did not make enquiries with the payer/recipient of money. In the absence of any independent material to link/vindicate the information found from the employees, we are of the view that the AO could not have made additions on the basis of that information. 30. In the decision rendered by Hon'ble ....
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....from the residence of the Chairman of the Assessee Trust, it is not in dispute that the said sum has been assessed in the hands of the Chairman for the assessment year 2008-2009 and the same was received from the petrol pump business, the turnover of which is more than Rs. 30 Crores. Moreover, the Assessing Officer has accepted the disclosure of the seized cash as the income of the individual and, therefore, in our considered opinion, it cannot be said that assessee trust had accepted contributions by way of capitation fee. The said issue cannot be used both ways. The assessment of the undisclosed income at the hand of the individual ends the issue there. It has no relevance to the affairs of the Trust and there is no material to hold so. 7.7 In our considered opinion, based on the loose sheets and cash seized, which have been held as irrelevant to the present issue, it cannot be held that for all the assessment years the assessee received capitation fee for admission of students in the management quota. This is a perverse inference. Without conducting any enquiry in this regard to make allegation is unsustainable. The information obtained from the Public Information Offic....
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....allied the figures then the assessees case of actual contribution to Trust has to be accepted. It has been shown in the return of income. A bald statement in paragraph (7) of the assessment order that the assessee is not carrying on charitable activities for the purpose of Section 13 read with Section 11 of the Act appears to be the mainstay of the department's case. 7.10 In effect, it is clear that the authority has confused himself with the admission of students in management quota with the carrying on activities of the trust. The distinction is obvious that if the department wanted to make out a case of violation of Section 13 of the Act by the trust, it cannot be based on the perception of the Assessing Officer that donations to the trust are not voluntary. We hasten to add that there is no material to support the plea that the donations are not voluntary. 7.11 Having invoked Section 13, the mainstay of the case of the department should be based on the activities of the trust to plead that the same are not in consonance with Section 13 of the Act and, therefore, exemption under Section 11 of the Act should be denied, which we find is abysmally silent in th....
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....es of the assessee therein. Under these set of facts, it was held that the loose sheets would have evidentiary value. On the contrary, in the instant case, no material was found/seized from the premises of the assessee. The materials were found at the residences of the employees. The assessee has categorically denied collection of capitation fees. The AO could not bring any material on record to link those materials with the assessee or to prove that the assessee only was indulging in collection of capitation fees. Accordingly, we are of the view that the decision rendered by Pune bench of Tribunal in the case of Sinhagad Technical Education Society (supra) is not applicable to the facts of the present case. (b) The Ld D.R also relied upon the decision rendered by Hon'ble Delhi High Court in the case of CIT vs. Jansampark Advertising & Marketing P Ltd (2015)(56 taxmann.com 286)(Delhi) and contended that the Tribunal may conduct proper enquiry, if the AO had failed to discharge his functions properly. In our view, this decision will also not apply to the facts of present case. We have noticed that there was no material to link the assessee with the materials seized from....
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....50. It is observed that even in the present case, as per the department, the said Sh. V. Mathiyalgan was a VC of SIMS at the relevant point of time. The SIMS is one of the units of Assessee trust and salary was paid to Sh. V. Mathiyalgan by the Assessee trust. Therefore, there exists employer and the employee relationship between the Assessee and Sh. V. Mathiyalgan. Further neither any cash nor any incriminating material was found from the possession of Assessee and all the incriminating documents were seized from the possession/premises of the said Sh. V. Mathiyalgan. Further department has not carried out any search operation in the case of any of the trustees of the Assessee to collect any corroborative material. Further as observed earlier, even in the statement recorded on oath of Sh. V. Mathiyalgan, nowhere admitted handing over of the alleged capitation fees to the Assessee and even the students/parents/guardians never named the Assessee or its trustees of receiving any money from them. The addition has been made in the hands of Assessee based on the documents seized from the custody of third person. Therefore, in our considered opinion, case of Assessee trust is on a better....
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....ment, more particularly when the Assessee has specifically contended that those documents do not belong to the Assessee and not even connected to the Assessee. Without bringing any corroborative evidence addition was made in the hands of Assessee purely based on the assumption and presumption, thus, sought for deletion of the addition made on account of interest paid on alleged cash loan. 54. The Ld. Departmental Representative has also adopted the very same argument which was canvassed on the issue of capitation fees and further contended that, the said Sh. V. Mathiyalgan being a VC of SIMS, which is one of the units of the Assessee and the incriminating documents were seized from his custody which clearly shows that the cash loans were taken in large amounts from various persons, monthly interest paid has also been found mentioned in the seized pertained to assessee. The Ld. DR further placed reliance on the findings of A.O. and sought for dismissal of the Grounds No. 5, 6 and 9 of the Assessee. 55. We have heard both the parties and perused the material available on record. It is a matter of fact that the addition has been made based on the loose sheets found during the se....
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....e parties have been reflected in the audited books and the Interest paid on the above Loans has also been reflected in the audited books. Therefore, the addition made on account of unsecured loan based on the documents found from the custody of Sh. V. Mathiyalgan is not called for. The Ld. AR contended that for Assessment Year 2017-18, the A.O. has not even provided the details of the Loans. The A.O. has made addition to the total income for Assessment Year 2017-18 by way of Interest on Loans by mere extrapolating. In the light of the above, addition made to the income by way of Interest paid on Loans in the hands of the Assessee is totally erroneous. Thus, we allow Grounds of appeal Nos. 5, 6 and 9 of the Assessee in ITA No. 2182/Del/2023 (A.Y 2017-18) and direct the A.O. to delete the subject Addition made in the hands of the Assessee. 58. During the course of hearing, assessee has taken various additional grounds of appeal which are reproduced herein above, and prayed that these grounds are purely legal grounds, requires no fresh verification therefore, the same deserves to be admitted for adjudication. Reliance is placed on the judgement of CIT Vs. NTPC Ltd. 229 ITR 383 (SC)....
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.... the facts and circumstances are identical except little variations in the amount, by applying findings and conclusion made thereon mutatis mutandis, we hold that the Revenue committed error in making addition in the hands of the Assessee on account of cash loan and payment of interest out of books. Thus we allow the Grounds No.7, 8 and 10 of the Assessee in ITA No. 2181/Del/2023 (A.Y 2016-17) and direct the A.O. to delete the subject Addition made in the hands of the Assessee. 68. Though the Assessee has raised several other grounds of Appeal and additional Grounds of Appeal on the technical and legal issues and since we have decided the Appeals of the Assessee for Assessment Year 2016-17 and 2017-18 holding that both the additions made in the hands of the Assessee on account of 'capitation fees' and 'cash loan and payment of interest out of books' are not sustainable and deleted the same, we refrain from deciding the other Grounds of Appeal and the additional Grounds of Appeal in both the years as the same have become academic in nature. Those Grounds which are not adjudicated as not necessary are kept open for the Assessee to urge the same in case of necessity. ITA No. 228....