TaxTMI 
TaxTMI 
2025 (9) TMI 1817
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....e AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 AY 2016-17 AY 2017-18 Validity of notice issued u/s 153C Ground No.1 Ground No.1 Ground No.1 Ground No.1 Ground No.1 Ground No.1 Approval u/s 153D Ground No.2 Ground No.2 Ground No.2 Ground No.2 Ground No.2 Ground No.1 Framing of order u/s 143(3) Ground No.2 Unaccounted capitation fee- Shri Sunil Gaikwad / D.D. Kolte Ground No.3 Ground No.3 Ground No.3 Ground No.3 Ground No.3 Ground No.3 & 4 Denial of exemption u/s 11 in respect of capitation fee Ground No.4 Ground No.4 Ground No.4 Ground No.4 Ground No.6 Ground No. 6 Addition towards corporate donation received from Abdul Fakir Malim Ground No.4 Addition towards foreign currency seized  ....
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.... on materials seized during the course of search, the deponents have stated that corpus donations taken by the assessee-trust group entities from donors where in lieu of admissions given to various students in the educational institutions run by the group and that the assessee-trust group entities were in receipt of capitation fees. It is relevant to mention here that the statements were retracted by the deponents under subsequent affidavits sworn on 10.08.2016 and 17.12.2018. As part of the search the residential premises of Shri Sunil Gaikwad was also searched on 27.07.2016 and certain incriminating materials were seized from the premises. In connection with the above proceeding a satisfaction note under 153C of the Act was received with relevant evidences and Punchnama by the Assessing Officer (AO) of the assessee on 02.08.2018. Accordingly, the AO issued a notice under section 153C on 06.08.2018 on the assessee for AY 2011-12 to 2016-17. In response to notice under section 153C the assessee filed the return of income on 23.09.2018 declaring total income at Nil. The AO subsequently issued statutory notices which were duly served on the assessee calling for various details. The A....
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....ereas the AO has completed the assessment under section 143(3). In summary the ld AR submitted that the assessments for AY 2011-12, AY 2012-13 & AY 2017-18 are un-sustainable. The ld. AR in this regard relied on the decision of the Supreme Court in the case of CIT vs Jasjit Singh ([2023] 155 taxmann.com 155 (SC)) 7. The ld. DR on the other hand submitted that the AO of the person searched i.e. Padmashree D Y Patil Trust and the AO of the assessee are one and the same and therefore question of recording satisfaction for drawing jurisdiction for assessee's case from date of search to date of handing over seized documents does not arise. Therefore it is submitted that the date of search of the person who was searched is to be considered for the purpose of section 153C also and that the AO has correctly considered six years from AY 2011-12 to 2016-17. The ld. DR further submitted that the case law relied on by the assessee is not applicable to assessee's case in view of the amendment under section 153C of the Act which came into effect on 01.04.2017. The relevant extracts from the submissions of the ld DR is reproduced below: "It becomes pertinent to recall that Sec....
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....t and they are not time-barred per se. iii) With regards to A.Y. 2017-18; completed u/s 143(3) of the Act, the contention of the appellant that it should have been assessed u/s 153C of the Act is not tenable. The fact being that search was conducted on the assessee during the financial year 2016-17 and provisions of amended section as enumerated above was in force which is evident and as stated above, since AO having jurisdiction over the case u/s 153A & 153C of the Act also. Therefore, date of handing over seized documents does not apply. If it is to be applied, then it should be date when AO received seized materials while assuming jurisdiction u/s 153A of the Act." 8. We heard both the parties and perused the material on record. There was a search and seizure operation in the group entities of D Y Partil from 27.07.2016 to 29.07.2016. Based on the incriminating material found in the house of one of the employees, the assessment in assessee's case was initiate by issue of notice under section 153C. It is the claim of the assessee that the satisfaction note in assessee's case was recorded only on 06.08.2018 and the said is to be considered as the date of search....
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....nder section 153C are to be framed. The assessee's argument is that the purpose of the above proviso is to state that the six years of assessment has to be construed as six assessment years immediately preceding the assessment year relevant to the previous year in which the books of accounts, asset etc. has been received by the assessing officer of such other person not subjected to search. We in this regard, a similar issue has been considered by the Hon'ble Supreme Court in the case of Jasjit Singh (supra) where it has been held that - "9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue's argument is insubstanti....
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....e assessment completed under section 153C cannot be sustained. 12. When we apply the above analogy to the AY 2017-18, for which the AO has done an assessment under section 143(3) r.w.s.153C, we are of the view that AY 2017-18 falls within the block period of six years and therefore the assessment done under section 143(3) r.w.s.153C is without jurisdiction and is liable to be quashed. 13. Since we have quashed the assessment considering the legal contentions of the assessee for AY 2011-12, AY 2012-13 and AY 2017-18, the grounds raised on merits for these AYs have become academic not warranting any adjudication. In view of the same the grounds raised in appeal of the revenue is also dismissed. 14. In result the appeal of the assessee for AY 2011-12, AY 2012-13 and AY 2017-18 are allowed and the appeal of the revenue for AY 2011-12, AY 2012-13 and AY 2017-18 are dismissed. ITA No. 1514 Mum 2025 - Assessee's appeal & ITA No.2275 Mum 2025 - Revenue's appeal 15. Ground No.1 & 2 pertain to the legal contentions on the validity of notice under section 153C and the approval under section 153D. However during the course of hearing these grounds were not pressed by the....
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....dying in the DY Patil Medical/Dental College, Nerul and were under guidance and amenable behavioral control of the respective assessee. Moreover, the students/parents would never admit payment of capitation fees to the assessee Trust taking into account this grave allegation and their career ahead." 17. The AO held that the assessee has received capitation fee to the tune of Rs. 3,320.35 lakhs over various AYs based on the statement of oath and the detail found in the Laptop of Shri Sunil Gaikwad. The AO did not accept the submission of the assessee that the deponents have retracted the statements, for the reason that the affidavit filed retracting the statements are general and does not specify that they are retracting the specific statements recorded under oath. Accordingly, the ld. AO held that the retraction will not come to aid the assessee. The AO also held that the assessee has not taken any action against the employees who according to the assessee have indulged in activities which are not in accordance to the objects of the assessee. The AO also rejected the contention of the assessee that Shri Sunil Gaikwad has declared amount of cash seized from his premises under Inc....
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....s per Q. & Ans.35, of the statement recorded under oath u/s 132(4) of the I.T. Act on 30.07.2016 at RAIT, Nerul, Mumbai. "Ans :- Yes. I confirm that it has been found and seized from my possession. The entries made therein have been explained by me, in response to questions raised to me, in the statement recorded during the search action. However, I have submitted my explanation to these entries again during the assessment proceedings." 19. The ld. AR also drew our attention to the paper clippings where it is reported that certain employees and persons acting as an agents have defrauded gullible parents. The ld. AR submitted that the Co-ordinate Bench in one of the group entity's case who are part of a same search in the case of Padmashree Dr. D.Y. Patil University vs. DCIT (ITA No. 3264 to 3268/Mum/2022 dated 04.01.2024)'s have considered the identical issues and has deleted the addition. 20. The ld. DR on the other hand made a detailed written submission has extracted below: "B. Comments on applicability of Hon'ble ITAT decision in the group case of DY Patil University. Appellant has relied upon the decision of Hon'ble ITAT, Mumbai....
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....o the capitation fee/donation collected from the students for the period from FY 2011-12 to 2015-16. The D-Drive of the laptop contained a folder named 'New Folder' containing sub folders namely 'adm11-12', 'adm12-13', 'ADM 13.14', 'ADM 14.15' and 'ADM 15.16' along with an excel file X-170711/. The data was stored under the headings like total amount negotiated for admission by said student, amount paid by the said student, balance amount to be received from the said student and division or branch, and the names of person who had referred the case. These details co-related to the students who had taken admission in the institute. Therefore, these documents cannot be labelled dumb documents as contented by the appellant. In my view, this evidence is sufficient enough to establish that the trust was collecting the capitation fee/donation from the students. iv) Appellant, while referring to section 132(4A) of the Act, has argued that the said documents should be presumed to be belonging to Shri Sunil Gaikwad. Shri Sunil Gaikwad is an employee of the DY Patil Group and his premises were searched only in connection with the search....
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....mined. The statement of retraction is not made immediately after the search but after an interval of fifteen days, which according to me is fairly long gap. On perusal of statement u/s 132(4), part of which is reproduced in paras above, it is seen that the issue of the cash found during the search and the capitation fee has been covered under series of questions. The replies given by Shri Sunil Gaikwad are coherent, elaborate and factual. In no way does it appear to be a statement made by a panic stricken or confused person. But it is difficult to accept that the replies to all the questions were incorrectly answered because of panic or confusion. The reasons given in the retraction affidavit are vague and generalized and do not, in anyway, establish that Shri Sunil Gaikwad was under duress or confusion or threat or in confused statement of mind. It also does not establish how and in what manner the statement recorded u/s 132(4) was wrong. The onus to prove that he was under the duress and coercion lies on Shri Sunil Gaikwad and that onus has not been discharged. If the statement was recorded under duress or coercion, Shri Sunil Gaikwad could have taken up the matter with the highe....
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....k and got confused at the time of recording the statement during search. It is also difficult to believe that all such employees recovered at the around same time statement in favour of appellant group. The conclusion of the AO that Gaikwad was a result of an afterthought and was made from allegations of accepting capitation fee is correct. viii) Another contention of the appellant was that there was no complaint from anyone against it for charging capitation fee. A parent of a child who has secured admission in the college by paying donation/capitation fee in cash would never same before the Income Tax authorities. Such admission may lead to being initiated against him/her. On similar grounds, such parents admit would the proceedings never complaint against the institute which has favored their child by granting admission. The principle of quid-pro-quo comes into play in such situations. ix) Comments on disclosure under IDS :- Following is the details of income offered in the Income Disclosure Scheme by the appellant. Sl. No. Assessment year to which the undisclosed income pertains Amount of undisclosed income Nature of undisclosed income ....
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....ested.] Section 132 (4A) cannot be read in isolation. If certain incriminating documents or materials are found during search and to know the details and whereabout of these documents etc. and to ascertain the person to whom it belongs, statement has to be recordedunder section 132(4) of the I.T. Act, 1961. Therefore, provision of section 132 (4A) has to read with section 132(4) of the 1.T. Act, 1961 only. (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, but also in respect of all matters relevant for the purposes of any investigation connected with any proceedi....
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.... During the course of search cash amounting Rs. 1,90,00,000 is seized from the bank locker in the name of Shri Sunil Gaikwad and Rs. 59,75,000 was seized from the resident of the attendant Mr. Rajesh Sawant. The laptop in the possession of Shri Sunil Gaikwad was also confiscated. A statement under section 132(4) was recorded from Shri Sunil Gaikwad on 30.07.2016 which was subsequently retracted on 25.08.2016. Based on the materials seized and the statement recorded, the AO initiated proceedings under section 153C in assessee's case. During the course of assessment proceedings the AO recorded statement under oath under section 131(1) of the Act where Shri Sunil Gaikwad was cross examined with regard to his answers during the statement recorded under section 132(4). The following answers of the Shri Sunil Gaikwad are relevant with regard to the impugned issue - "Que. 10 I am showing you page no. 7 & 10 (Que. No. 25 & 37 and its reply respectively) of the statement recorded under oath u/s 132(4) of the I.T. Act on 30.07.2016 at Kamrao Adik Institute of Technology. Nerul premises. Please acknowledge it and state the source of cash of Rs. 1,90,00,000/- (seized in locker of ....
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....laim the benefit under section 11 of the Act. The AO accordingly assessed the assessee as AOP and made addition towards unaccounted capitation fees to the tune of Rs.69.61 lakhs under section 69A of the Act. From the perusal of the findings of AO we notice that the AO has made the addition on the ground that Cash found and seized from Shri Sunil Gaikwad and Mr.Rajesh Sawant belong to the assessee and is different from what is declared under IDS by Shri Sunil Gaikwad. The AO further did not accept the retraction of statement stating that it is general and is an after thought to save the assessee. The AO did not accept the statement recorded from Mr. Vijay Patil who has denied any knowledge with regard to collection of capitation fees. However besides these reasons, the AO has not brought anything on record connecting the assessee to the alleged unaccounted capitation fees. The AO relied on the excel sheet in the seized laptop of Shri Sunil Gaikwad where as per the AO various details regarding the capitation fee are recorded which are unaccounted. The AO for the said allegation mainly placed reliance on the statement recorded under section 132(4) from Shri Sunil Gaikwad which in any ....
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.... that person only. The alternative contention of the assessee is that the various evidences are dumb and inconclusive documents, i.e., they do not lead to the conclusion that the assessee-trust was collecting capitation fees. On the contrary, the Ld D.R fully relied upon the assessment order and submitted that the AO has made thorough enquiries relating to this issue, i.e., the AO has brought on record a number of materials and also relied upon the statements given by various persons. Accordingly, the Ld D R submitted that all of them establish the fact that the assessee was collecting capitation fees. 19. The nature of materials collected by the revenue and their place of seizure has been tabulated by Ld A.R as under. We notice that the AO has relied upon these materials in order to conclude that the assessee was collecting capitation fees by way of cash from students for giving admissions to them. S. No. Name of Employee Items seized Place of seizure 1 Shri Pratap Patil Pen drive and brown diary Residential premises of Shri Pratap Patil 2 Shri Tukaram Patil 2 pen drives First pen drive kept with Nare....
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....f each of the employees :- (A) PRATAP PATIL :- (a) The pen drive and diary have been seized from the residence of Shri Pratap Patil. It is not mentioned anywhere that both the above said items belong to the assessee trust. Hence they should be considered as his personal items. The revenue did not find any material with the assessee which could link it with the documents seized from Shri Pratap patil. (b) Blank cheques are also found at his residence only. He has stated that the cheques were collected as security for the balance amount due from students. If the assessee trust is collecting capitation fee, then it would not have kept the blank cheques with him, since they are the 'security' for ensuring receipt of balance amount of money. (c) 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 all the three answers are similarly worded, i.e., they match word by word that too suffering from same type of grammatical mistakes; that types of salutations used against the name of trustees at different places are also identical. It is pertinent to note t....
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.... the statement taken u/s 131 of the Act during the course of assessment proceedings. Hence the statement given by him could not have been relied upon by the AO. (i) While the AO has accepted the statement that the capitation fee has been collected on behalf of the assessee trust, hedid not accept his retraction. Both admission of certain information and retraction of the same have been done by the concerned employee. The assessee trust is not concerned as to what he said in admission/retraction. Hence assessee-trust cannot be subjected to addition on the basis of the statement of the employees. (j) Shri Pratap Patil has owned up the cash of Rs.74,96,500/- seized from store room and declared the same as his income under Income Declaration Scheme, 2016. (k) Hence the entries found in the pen drive and dairy will not have any evidentiary value. Accordingly, both receipts and payments noted therein cannot be used against the assessee. (l) It is pertinent to note that the AO has accepted the payments at its face value and did not bother to ascertain truth of the same. This is for the reason that amounts received in cheques were found to have been acco....
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.... 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. (g) While the AO has accepted the statement that the capitation fee has been collected on behalf of the assessee trust, the AO did not accept his retraction. It is case of admission and retraction by the employee of the assessee trust. The assessee trust is not concerned as to what he said in admission/retraction. Hence assessee-trust cannot be subjected to addition on the basis of the statement of the employees. (h) Hence the entries found in the pen drives will not have any evidentiary value. Accordingly, both receipts and payments noted therein cannot be used against the assessee. (i) It is pertinent to note that the AO has accepted the payments noted in the pen drives at its face value. He did not bother to ascertain truth of the same by making enquiries with the payees. (C) SHRI UNMESH KHANVILKAR: - (a) All details were given from out his laptop and other documents kept at his residence. He has kept cash at various places. Aggregate amount of cash found with him was Rs.19.40 crore....
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.... during the course of assessment proceedings. (i) While the AO has accepted the statement that the capitation fee has been collected on behalf of the assessee trust, the AO did not accept his retraction. It is a case of admission and retraction of the employee of the assessee trust. The assessee trust is not concerned as to what he said in admission/retraction. Hence assessee-trust cannot be subjected to addition on the basis of the statement of the employees. (j) The AO has referred to a pre-printed form and statement on oath u/s 131 of Mr Shahnawaz Kheraj. It is submitted that there is nothing written on this pre-printed note to suggest that the assessee-trust has been collecting capitation fees. (k) Shri Unmesh Khanvilkar has owned up the cash of Rs.19.40 crores seized from him and declared the same as his income under Income Declaration Scheme, 2016. (l) He has stated that he could remember data relating to capitation fee taken for academic year 2016-17 and furnished details of 50 students, meaning thereby, he has given those details out of his memory. Hence it is a case of oral evidence, which is not supported by any material. Hence AO could not have....
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....rores was found from his locker & residence of his attendant. If it belongs to trust, why should they keep the cash with him? (c) 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 20 days from the date 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. (d) While the AO has accepted the statement that the capitation fee has been collected on behalf of the assessee trust, the AO did not accept his retraction. It is a case of admission and retraction of the employee of the assessee trust. The assessee trust is not concerned as to what he said in admission/retraction. Hence assessee-trust cannot be subjected to addition on the basis of the statement of the employees. (e) He has owned up the cash of RS.2.49 crores and has declared it as his income under Income Declaration Scheme, 2016. (F) Smt. SHIVANI PATIL: - (a) Smt Shivani has retracted her earlier statement and hence it cannot be relied upon. (b) She has no where stated that the as....
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....ve admitted that they have received cash from the trust. (iii) None of the parents has admitted that they have paid capitation fee to the trust. (iv) Shri Vijay Patil has also admitted that they used receive fees in cash also. (f) Statements taken from 3 more parents :- All the three parents have stated that they have given donations only and admission was obtained on merits. (g) Statements taken from driver (Mr Rajesh Sadashiv Sawant); Shri Sandeep Gopalrao Patil and Mrs Manasvi Naik. They are low level employees. How they can be aware of the intricate details of admission process ?. Their statement was not taken on Oath. Hence the AO cannot rely on their statement. Shri Sandeep Gopalrao Patil and Mrs Manasvi have stated about the Mac Desktop of Shri Vijay Patil. The AO did not refer to the said computer in the entire assessment order. The AO also refers to the statement taken from Dr V R Badhwar, Dean. There is no mention about capitation fees. 21. The contentions of the assessee, as noticed earlier, are that these materials have not been recovered from its premises or possession. Hence they cannot be relied upon for ....
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....he impugned additions are based on seizure of (i) laptops (ii) loose papers (iii) pen drives and (iv) diary. Further, there is no dispute that all these evidences are found in the possession of others and not in the possession of the assessee. They are either print-out taken from laptops or loose papers. The name of the assessee-trust is not mentioned on any document found/print-out taken from the pen-drives/laptops, loose papers. Hence they have to be treated as dumb documents/documents having no evidentiary value. No addition can be made simply on the basis of notings on such sheets/loose papers in the absence of corroborative materials. No circumstantial evidence in the form of any unaccounted cash belonging to the appellants or investment outside the books was found during search. Further, even the diary was not found in possession of Trust and hence, it is submitted that, it cannot be considered as regular books of account maintained by the appellant-trust in absence of any such marking or name on the diary. 14.2. The appellants, from the very inception, have denied having any nexus with the seized papers and documents. The said seized items namely, laptops, pen-drive....
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....mployees. Reliance is placed on following case laws: - ● Startex (India) (P.) Ltd vs DCIT - 84 ITD 320 (Mum) "The presumption under section 132(4A) is in respect of the person in whose possession the books or documents are found. The use of the words 'to such person' in the said section means the person in whose possession the books of account or documents are found. Clause (ii) of section 132(4A) provides that the contents of such books of account or documents are true. This presumption can be applied only against the person in whose possession the books of account or the documents are found. Therefore, so far as the case of N.S. was concerned, the revenue authorities might presume that the books of account or documents found from his possession were correct. However, while utilising those documents in the case of any other person (i.e., the person other than N.S.), there could not be any presumption about the correctness of such books or documents. Therefore, the presumption under section 132(4A) is applicable only against the person in whose possession books of account or other documents are found and not against any other person....
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....he assessee was required to pay any on money after the date of the search. The AO merely considering the business relation between assessee and Arora Brothers presumed that since they have admitted payment of on money therefore, assessee might have also paid the on money. If Arora Brothers have not recorded any entry in their books of account as noted by the AO, how assessee could be blamed. The above conclusion of the AO is not supported by any material or evidence. The conclusion of the AO is purely based upon suspicion and surmises. It is settled law that suspicion howsoever strong may be could not take place of legal proof." 14.3 The AO has assumed that cash, papers and documents found in the possession of the employees actually belong to the assessee-trust. The AO has also assumed that the employees are acting at the behest of the assessee-trust. It is submitted that such an assumption by the AO is baseless, incorrect and hence, bad in law. There is no dispute that cash and other evidence are found from the residential premises of the employees. Further, wherever the cash and other evidence are found in the premises of the Institute, it was found in the control of the....
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....in adopting the reasoning adumbrated in the above observations. The underlined portion of the above passage supports the contention of Mr. Altaf Ahmed and rebuts that of Mr. Sibal that Mr 71/91 is only a memorandum for the entries made therein are totalled and balanced. We are, therefore, of the opinion that MR71/91 is a 'book of account' as it records monetary transactions duly reckoned. In response Mr. Sibal submitted that the evidence that has been collected during investigation only shows that the entries were made by J. K. Jain and that the Jain brothers had put certain signatures against some of those entries it there is no evidence whatsoever to prove that monies were actually paid by the Jains and received by the payees as shown in the entries, without proof of which no case, even prima facie, could be said to have been made out against any of them. According to Mr. Sibal and Mr. Jethmalani, learned Counsel for Shri Advani by more proof of a document the truth of the contents thereof is to proved and independent evidence for that purpose is required. In absence of any such evidence, they contended, no liability can be foisted under Section 34. The ....
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....but to eschew prolixity we would confine our attention to some of the judgements on which Mr. Sibal relied. In Yesuvadiyan Vs. Subba Naicker [A. I. R. 1919 Madras 132] one of the learned judges constituting the Bench had this to say: "S.34, Evidence Act, lays down that the entries in books of account, regularly kept in the course of business are relevant, but such a statement will not alone be sufficient to charge any person with liability. That merely means that the plaintiff cannot obtain a decree by merely proving the existence of certain entries in his books of account even though those books are shown to be kept in the regular course of business. he will have to show further by some independent evidence that the entries represent real and honest transactions and that the moneys were paid in accordance with those entries. The legislature however does not require any particular form or kind of evidence in addition to entries in books of account, and I take it that any relevant fact s which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true." While c....
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....count cannot without independent evidence of their trustworthiness; fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34 are admissible under Section 9 of the Act to support an inference about the formers' correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, deleve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the for witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would ....
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....section 292CC of the Act has been explained by the Tribunal in the case of Startex (India)(P) Ltd (supra), wherein it was held that the presumption shall apply to the person from whom the documents were seized. In Sheth Akshay Pushpavadan vs. DCIT (supra), it was 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 and opportunity of cross examination was given. The Law on presumption given in sec. 132(4A) has been explained by Hon'ble Delhi High Court in the case of CIT vs. Radico Khaitan (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) an....
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.... the assessee's premises. Unfortunately the linkage between the material seized from the assessee's premises and those from UPDA's premises as well as the statement of Sh. Miglani was not established through any objective material. It is now settled law that block assessments are concerned with fresh material and fresh documents, which emerge in the course of search and seizure proceedings; the revenue has no authority to delve into material that was already before it and the regular assessments were made having regard to the deposition, the inability of the revenue to establish as it were, that the assessee'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 ca....
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.... addition in the case of the assessee in respect of payment of Rs. 30 crores made to Sri S.K. Jatia. Even in the seized diary the narration is "Adharshila Jatia [Anil Bhalla]". Neither Sri S.K. Jatia nor Anil Bhalla were examined by the AO during the course of assessment proceedings. Therefore, we fail to understand as to how the addition could be sustained in the hands of the assessee. It appears from the above circumstances that the department has made subsequent enquiries 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 inferenc....
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....t to findings are based on essentially factual materials which were analyzed by the CIT and the ITAT, there is no reason to interfere with those findings. This question is accordingly answered against the Revenue and in favour of the assessee." In this case also, it has been reiterated that corroboration of material seized from other persons with any other independent material is necessary for making addition on the basis of materials seized from other persons. 28. In the instant case, all the documents/materials have 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....
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.... assessee reiterated that the paper was found and seized from Mr. Bharat G. Shah and not from the assessee. Further, there was no material to say that such seized material related to the assessee for any of his activities. The assessee also pointed out that such loose papers were printed account papers and on top of it is written "Trial Data" and that assessee had no knowledge as to who has written or printed the same. 11.3 The CIT(A) has considered the submissions put forth by the assessee and found that there was no material 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 ....
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.... (b) The AO has relied upon the statement given by another trustee Smt Shivani Patil, who is the spouse of Shri Vijay Patil, particularly on the following answer given by Smt Shivani Patil to arrive at the conclusion that she has admitted that the trust was collecting capitation fee. Q 52 Please provide the fees for management seats reserved in each of the college specified above. Ans :- I don't know about the management seats for engineering college. This year the admission for Dental College have 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 sho....
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.... of cheques were found to be true. We are unable to agree with the said opinion expressed by the AO. We notice that the AO is referring to two different files found in the pen drive, i.e., one file contained details of receipts by way of cheques, another file contained details of receipts by way of cash and yet another file contained payment details. There should not be any dispute that the pen drive is in the nature of 'Storage vault' containing several files. Each file may contain different details and hence it may not 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 Pratap patil was having ....
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....s not support the case of the AO. (e) We also notice that the revenue has questioned the trustees, viz., Shri Vijay Patil and Smt Shivani Patil. We noticed earlier that both of them have denied collection of capitation fees. We notice that the revenue did not question other trustees with regard to the allegation of collection of capitation fees. We also notice that the officials at helm of affairs, viz., Vice Chancellor, Controller of Examinations were also not questioned. (f) The AO had placed reliance on the statements 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 ....
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.... trustworthiness of the transactions recorded therein. We notice that the AO has only presumed that the payments have been given by Shri Vijay Patil, as noted in the above said documents, out of the capitation fees only. However, no material was available to support the above said presumption of the AO. If at all any such payment has been made by Shri Vijay D Patil, it may be his personal transaction and hence it is nothing to do with the assessee trust. Both the above said parties have initially stated that they had received money from Tukaram Patil and others, but later retracted it. In any case, no contra entry was available in the record maintained by Shri Tukaram Patil. 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 cr....
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....in the activities carried on by the assessee trust. But, without doing so, the Assessing Officer estimated the collection of contributions on the basis of the number of seats available under management quota multiplied by the amount of contribution attributable to individual seats. Any determination for purpose of tax cannot be based on hypothetical facts or conjectures or surmises. The inference drawn by the Original Authority is based on probability. 7.6 With regard to the seizure of cash of over Rs.44 Lakhs 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 r....
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....sessing officer comes to a different conclusion that contribution is not voluntary, and it is relatable to admission of students. We find this finding of the Assessing Officer, as has been rightly held by the Commissioner of Income Tax (Appeals) and the Tribunal, is not supported by documents, but on the basis of Assessing Officer's inference. It cannot be now stated that something was not furnished, nevertheless, he tallied all the materials and came to the conclusion as stated above. If the Assessing Officer has tallied 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,....
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....ne bench of Tribunal in the case of Sinhagad Technical Education Society vs. DCIT (2022)(139 taxmann.com 270)(Pune-Trib). In this case, the AO had brought corroborative evidences in the form of refund of capitation fees, recommendation seeking waiver/reduction in capitation fee/donation. Further, enquiries were made with three persons and they have confirmed payment of capitation fees. Most importantly, the incriminating materials in the form of loose sheets were found at the premises 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 c....
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.... of addition of capitation fees made in various years are detailed below :- Assessment Year Amount (Rs. In crores) 2013-14 2.290 2014-15 24.930 2015-16 33.385 2016-17 53.475 2017-18 54.950 The order passed by Ld CIT(A) on this issue would stand set aside and the AO is directed to delete these addition in all the years under consideration." 24. From the perusal of the above findings of the coordinate bench we notice that the similar arguments of ld DR made in the present case have been considered while deleting the additions made towards capitation fees. Considering the fact and circumstances of the case, in our view, the ratio laid down in the above decision of the coordinate bench is applicable to assessee's case also. Accordingly we direct the AO delete the additions made towards capitation fees under section 69A of the Act. Denial of exemption u/s 11 in respect of capitation fee - Assessee's Ground No.6 and Revenue's Ground No.8 & 9 25. The AO while treating the capitation fee as unexplained also denied the deduction claimed by the assessee under section 11 of the Act stating that the activities of the assessee ar....
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.... was intact, the AO could not have denied exemption u/s 11 of the Act" 27. In assessee's case also there is no evidence to show that either the assessee trust or the trustees have collected capitation fees and we have already deleted the addition made by the AO in this regard. Even in assessee's case the registration under section 12A is not withdrawn by CIT(E) and therefore respectfully following the above decision we hold that there is no infirmity in the decision of the CIT(A) in holding that the exemption under section 11 cannot be denied for the receipts declared and utilised by the assessee. The ground raised by the assessee regarding exemption under section 11 towards capitation fee has become academic in view of our decision with regard the same being treated as unexplained under section 69A. The ground raised by the revenue against the decision of CIT(A) in holding that the AO cannot completely deny the exemption under section 11 is dismissed. Addition towards corpus donations - Assessee's appeal - Ground No.4 and Revenue's appeal - Ground No.1 to 3 28. The AO during the course of assessment under section 153C found that the assessee has received c....
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....s other than the four discussed in the assessment order, the addition of the donation received from such entities cannot be upheld. Out of the four entities, three entities, namely M/s Sudharni Basak Educational Trust, Mr. Anand Pradhan and Mr. Anand Gadodia have confirmed in their statement that they had given donations to the appellant trust. From their statements, no nexus between donation received by the Appellant Trust and admission given to any student in any colleges of DY Patil Group can be established. The AO has observed that the said three parties have not stated whether the donations were general donation or corpus donation. On this issue, the appellant has reasoned that the parties may not be aware of the technicalities of the difference in the corpus and general donations and its implications under the Income Tax Act. I find force in the argument of the appellant. In my view, the source of the donation stands proven. The addition u/s 68 of the Act with respect to the donations from the above-mentioned three parties cannot be upheld. Further, the purpose of making the donation is spelt out in the statement of the three donors. The donation can be treated as being made ....
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.... AO's order to submit that the period to which these donations pertain are outside the year under consideration. The ld. AR submitted in this regard that based on the unsubstantiated finding pertaining to a different AY, the AO treated the donations which are properly accounted in the books of account of the assessee as unexplained which is not sustainable. The ld. AR also submitted that all the parties have given letters confirming that the donations are made towards corpus and therefore, the CIT(A) rightly deleted the addition made by the AO in this regard. 32. The ld. DR on the other hand submitted that the donations received are not evidenced to be voluntary and that the assessee has not discharged the onus of proving the genuineness of the donations. The ld DR placed reliance on various judicial precedents as listed below in this regard - (i) CIT v. P.M. Mohammed Meerakhan (1969) 73 ITR 735 (SC): (ii) CIT v. ITR 540 (SC): Durga Prasad More (1971) 82 itr 540 (SC): (iii) PCIT v. NRA Iron & Steel Pvt. Ltd. (2019) 103 taxmann.com 48 (SC): (iv) CIT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC): 33. We heard the parties and perused the ....
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.... the assessee is given an opportunity to counter the claim on the nexus. Therefore we deem it fit to remit the issue back to the AO for the limited purpose of examining the donation received from Mr. Abdul Fakir Malim by calling for necessary documents and decide in accordance with law. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly. The ground of the assessee in this regard is allowed for statistical purposes. Addition towards Development Fees - Revenue's Ground No.4 to 6 35. The AO noticed that the assessee has treated the development fees collected from students as corpus donations. The AO held that the payment collected from the students are not voluntary payments and therefore cannot be held to be received towards corpus donations. The relevant observations of the AO in this regard are extracted below: "The said payment is received by the assessee Trust along with the tuition fee term fee and other charges in a single receipt of fees which the students are making periodical payments. The term voluntary refers to an act of one's own free will and discretion and not a compulsion or an obligator....
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....rk about the development fee and that they were making the contribution against their will. The charging of development fee is allowed by the UGC and same has been allowed by the Hon'ble Supreme Court. The amount so received has been disclosed by the appellant in its books of account. The development fee is being utilized for the construction of the building of the Trust, which is evident from the fact that the additions of movable and immovable assets are much more than the development charges. There is no record of complaint received by UGC or any other board with respect to non-utilization of development few or diversion of development fee for any other purpose. I have also considered the case laws relied upon by the appellant, where the said issue is decided in its favour, Considering the overall facts and circumstances of the case and the judicial pronouncements relied upon by the appellant, it is held that the Development Fee collected by the appellant is by the way of voluntary contribution made by the students towards the corpus and cannot be treated as revenue receipt. The addition of Rs 4,25,11,338/- is hereby deleted and is treated as part of corpus." 37. The ld. ....
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....ns. In the earlier paragraphs, we have held that the assessee cannot be denied exemption u/s 11 of the Act. Further, it was only a presumption on the part of AO that the corpus donations given in the form of development fees were not voluntary. We have seen that none of the parents have stated that the assessee trust had put such a condition for giving admission to their wards 40. With regard to the above said issues, we take support from the decision rendered by Hon'ble Karnataka High Court in the case of Kammavar Sangham vs. DDIT (Exemption) reported in (2023)(146 taxmann.com 367)(Kar), wherein identical points were examined. The relevant observations made by Hon'ble Karnataka High Court are extracted below :- "9. We have carefully considered the rival contentions and perused the records. 10. Assessee claims to be a charitable society and obtained certificate under section 12(A) of the Act. 11. The assessee has received donations and shown it in the Income and Expenditure account. By the impugned order, the ITAT has denied the benefit under section 11 of the Act. 12. Section 11(1)(d) of the Act relied upon by Shri. Sanmathi, makes it....
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....or charitable purposes. In the present case, the assessee-trust itself has treated the contributions as voluntary contributions in the nature of income. The assessee claims exemption under section 11 not on the basis of the nature of contributions but for the reason that the contributions were applied for charitable purposes. When the assessee-trust itself has treated the contributions as voluntary contribution in the nature of income, which is the best situation that the Revenue would always welcome, what is the relevance of arguing whether the contributions were voluntary or not? 36. Even if the contributions are treated as not voluntary what could be the legal consequence of that finding? Whether the Revenue will treat such (31) involuntary contributions as capital and give exemption from taxation? No, it will not. The Revenue will still find such involuntary contribution as income liable for taxation. If so, what is the real distinction between voluntary contribution and involuntary contribution as far as the taxation of charities is concerned? In both cases, it will be brought for taxation if the assessee has not utilised the contributions for charitable purposes. ....
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....011- 2012 has held that he has made enquiry with the parents and collected information that the amount was not made voluntarily. 16. It was argued by Shri. Chandrashekar that Assessing Officer's view that capitation fee was collected in violation of the Karnataka Educational Institution (Prohibitions of Capitation Fee) Act, 1984, is not sustainable because it is for the appropriate authority, which deals with the said Act to investigate into the matter. In substance, his contention is, the Assessing Officer under the Income-tax Act cannot deny the exemption under section 11 of the Act on the assumption that there is violation of any other statutory provision. He also adverted to section 12(AA) (4) (b) of the Act and contended that the said provision has been substituted with effect from 1-9-2019, giving power to the Principal Commissioner or the Commissioner of Income-tax to cancel the registration of a trust or institution. Thus, it is clear that should there be any violation with regard to receipt of capitation fee, the Assessing Officer could not have denied the benefit under section 11 of the Act so long as the certificate is in force. Admittedly, assessee's ce....
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....11 and 12 of the Act. In the result grounds 3 to 5 of assessee appeal are allowed." The AO had held that there was violation under the KEI (Prohibition of Capitation Fee) Act, and accordingly, brought the money collected by the assessee to tax. In challenge before the ITAT, the assessee has filed an affidavit stating that no action was initiated against the assessee by the State and that has remained uncontroverted. The resultant position is, the AO, based on assumption and surmise, has held that there was violation under the KEI (Prohibition of Capitation Fee) Act by the assessee and that incorrect assumption has been rightly reversed by the ITAT. So far as the authority in New Noble Educational Society's case (supra) is concerned, the Apex Court has held that the registration under different statues is also a relevant consideration while deciding the application for approval under section 10(23C) of the Act. In the case on hand, we are not dealing with a situation where the IT Department was considering any application for granting exemption. On the other hand, the department had issued the exemption certificate and the AO on an incorrect assumption has treated the m....
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....ds the collection of foreign currency from the students and as to how HKD / MYR / AED currencies are obtained during the programme that happened in USA. Before the CIT(A) the assessee reiterated the submissions and further submitted that the foreign currency is kept in the locker of one of the trustees Smt. Shivani V. Patil for security reason and argued that the onus is discharged by the assessee with regard to the source. The CIT(A) however upheld the addition made by the AO by holding that "7.4.2. I have considered the submission of the appellant. Appellant has stated that the foreign currency was contributed by its former students during the alumni meet. Some foreign is stated to be bought by the appellant and payment for the same was made though banking channels. Though the appellant has attempted to provide an explanation for the foreign currency, number of questions still remained unanswered. It is not clear why the alumni should make contribution in foreign currency when the appellant is based out of India. The appellant has not provided details such as details of the alumni meet, details of the payment made through banking channels, details of individuals who had ....
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....claimed that the currency seized belongs to the assessee and that the same is obtained from students and purchased for the purpose of the aluminous programme conducted in the USA. The main ground on which the addition was made by the AO and sustained by the CIT(A) is that the assessee failed to produce any evidence of the programme having conducted in USA, purchase of foreign currency through banking channel and the claim that the same is accounted in the books of accounts. During the course of hearing, the ld. AR fairly conceded that the issue needs factual examination and accordingly prayed for one more opportunity before the lower authorities. The ld. DR did not raise any contention against the prayer of the ld. AR. Accordingly we remit the impugned issue back to the AO to be examined on merits by calling for the required details in this regard. The assessee is directed to furnish the details as may be called for by the AO and co-operate with the assessment proceedings. It is ordered accordingly. Rejection of books of accounts and denial of exemption u/s 11 - Revenue's Ground No.7 45. The revenue has raised this ground against CIT(A) holding that the rejection of books....
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....allowance of Depreciation - Revenue's Ground No.10 48. The AO denied the depreciation on the opening balance of assets on the ground that the same has already been allowed as application in the respective years of purchase. The AO further held that if the deletions during the year have yielded any income then the same will be added to the income of the assessee since the application towards purchase of the asset is already claimed as exemption. The CIT(A) held that the exemption is allowed under section 11 to the extent of receipts disclosed and applied towards the object of the trust. The CIT(A) further held that where the acquisition of capital asset is claimed as deduction towards application, the assessee cannot claim depreciation on the same. Accordingly, the CIT(A) remitted the issue back to the AO for verification. Revenue is contenting the above said decision of the CIT(A) 49. We heard the parties and perused the material on record. We notice that the AO has denied depreciation on opening balance of assets on the ground that the value of concerned assets has been treated as application of income in the year of acquisition. We further notice that such restrictio....