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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri Laliet Kumar
O R D E R PER LALIET KUMAR, J.M.
The appeal of the assessee for A.Y. 2012-13 arises from the order of Commissioner of Income Tax (Appeals) – 12, Hyderabad dt.21.01.2022 invoking proceedings under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (in short, “the Act”).
The grounds raised by the assessee reads as under :
The order of the Learned Commissioner of Income Tax (Appeals) is against law, weight of evidence and probabilities of the case.
2. The learned Commissioner of Income Tax (Appeals) erred in confirming the order of the Assessing Officer by sustaining addition of the alleged payment caption of fee of Rs. 24,50,000 for the son of Kartha of the appellant HUF from the purported unexplained sources.
3. The Learned Commissioner of Income tax' (Appeals) erred in not addressing the basic contention that was being agitated by the appellant that the learned AO had used certain evidences against it for making an addition without providing copies of such details or evidences thereby denying a basic opportunity to counter the allegations made by the learned AO. 4. The learned Commissioner of Income tax (Appeals) erred in not providing the details or evidences - that the learned Commissioner of Income tax ( Appeals) had gathered and used to confirm the addition made by the learned AO , to the appellant thereby denying the appellant a basic and fair opportunity to counter the allegations of the Commissioner of Income tax (Appeals).
Facts of the case, in brief, are that the a search & seizure operation u/s.132 of the IT Act, 1961 was conducted in the case of M/s. Arihant Educational Society, which is running a medical college in the name of Chalimeda Anand Rao Institute of Medical Science (CAIMS) at Bommakal Village. During the course of search operation, certain documents were seized. The details of payment of fee paid by the assessee, emanating from the seized material was communicated to the AO to verify the sources for the payment of fee by the assessee and to be assessed u/s.153C of the IT Act, 1961. Accordingly, notice u/s.153C of the IT Act, 1961 was issued and served on the assessee by the AO. Notices u/s.143(2) & 142(1) of the Act were issued and the same were served on the assessee by the AO. The counsel for the assessee submitted a letter stating that assessee paid only Rs.5,50,000/- towards admission fee into the said medical college. Based on the reply given by the assessee and the material available, Assessing Officer had completed the assessment under section 143(3) r.w.s.153C of the Act on 08.12.2017, making an addition of Rs.24,50,000/- towards donation fee.
Feeling aggrieved with the order of Assessing Officer, assessee carried the matter before ld.CIT(A), who dismissed the appeal of assessee.
Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.
The case before us is that the assessee during the assessment proceedings had asked the Assessing Officer to provide the copy of the seized material which shows that the assessee had paid an amount of Rs.30 lakhs for the admission of his son in M.B.B.S for the academic year 2011-12. In this regard, our attention was drawn to the letter dt.22.11.2017. The Assessing Officer despite repeated requests of the assessee has not provided the impugned documents, neither seized the material nor the documents on the basis of which, it can be inferred that the assessee had paid an amount of Rs.30 lakhs to the college for the purpose of seeking admission into M.B.B.S. Course. Feeling aggrieved with the order of the Assessing Officer, assessee challenged his case before the ld.CIT(A) who also noticed in Para 5.5. of his order that the assessee had information with respect to the incriminating material on the basis of which the addition was made. After noticing the above in Para 5.5, the ld.CIT(A) on his own had decided the issue against the assessee as mentioned in Para 5.5 to 5.7 which reads as under :
“5.5 I have carefully considered the submissions of the appellant, the order of the Assessing Officer, remand report of the AO as well as of the counter comments of the AR thereon. Briefly the facts are during the course of search in M/s. Arihant Educational Society running a medical college in the name of Chalimeda Ananda Rao Institure of Medical science (CALMS) incriminating evidence was found which indicated that the assessee's son Sri Madhavapeddy Rajavardhan Reddy has paid an amount of Rs. 30,00,000/- towards capitation fee for his admission in MBBS course during academic year 2011-12. The AO issued a notice u/s. 153C of the Act and made addition of Rs. 24,50,000/- towards unexplained expenditure u/s. 69C of the Act. The appellant contended that he has not been given a copy of the incriminating material that was used against him while making the said addition. Further, it was also stated that increase in the books of third party cannot be used against him unless the said evidence is independently corroborated. Therefore, the appellant submitted that the addition may not be sustained. 5.6 The contentions of the AR were perused. Since the appellant questioned the existence of the seized material, I have called for the case records and examined the same. It is seen that Page No.24 of Annexure A/CAIMS/04 contained a list of the candidates and the amount that was agreed to be received by the medical college and the actual amount paid by them in cash and the amount due from each candidate. A copy of the incriminating document, for ready reference is reproduced below : XXXXXX 5.7 As can be seen at Sl.No.5 of the above document, the name of Sri Madhavapeddy Rajavardhan Reddy, the appellant’s son is reflected wherein it shows the agreed amount was Rs. 30,00,000/- and out of which KNR Cash' of Rs. 30,00,000/- was paid by him and there was nothing due from him . Evidently, this document shows that the appellant has paid an amount of Rs. 30,00,000/- towards capitation fee for admission to MBBS course, and there was no unpaid amount due from him. The AO has asked for the yearly fee receipts for the MBBS course and the appellant produced bills showing that he had paid Rs. 5,50,000/- per annum for five years totaling to Rs. 27,50,000/-. In other words, the said capitation fee of Rs. 30,00,000/- is not adjusted against the annual fee of Rs. 27,50,000/- paid to the medical college on account of regular fees each year. The AO had given benefit of Rs. 5,50,000/- paid during the F.Y. 2011-12 i.e. the admission year and brought to tax the remaining amount of Rs. 24,50,000/- as unexplained expenditure on account of capitation fee. I find that the seized document clearly shows that the appellant has paid Rs. 30,00,000/- towards capitation fee while taking admission for MBBS course. The AO has given the benefit of first year fee of Rs. 5,50,000/- by reducing the same from the capitation fee of Rs. 30,00,000/-. Therefore, I find that the assessment order is reasonable and the addition of Rs. 24,50,000/- made on account of payment towards capitation fee is sustained. In view of the same, the appeal of the appellant is DISMISSED.”
The contention of the ld. AR is that the lower authorities are duty bound to provide all the documents on which the addition was made. Despite repeated requests by the assessee in the appellate proceedings as well as assessment proceedings, the said documents have not been provided to the assessee. Further, the assessee relied upon the decision of SMC Bench in the case of Venkata Satya Surya Sree Ranganadha Raju Alluri Vs. ITO, Ward – 14(1), Hyderabad (at Page 44 of the paper book) wherein in an identical case, the SMC Bench has granted relief to the assessee. Further, in support of his case, the assessee also relied on the decisions of Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata (at 53 of the paper book) and Kishinchand Chellaram Vs. CIT (at 57 of paper book).
8. On the other hand, ld. DR had submitted that the orders passed by the lower authorities are in accordance with the law. Further, he had submitted that the ld.CIT(A) before deciding the issue had called for remand report from the Assessing Officer and the Assessing Officer had filed the remand report to the ld.CIT(A) after affording due opportunity to the assessee and in the remand report in Paras 7 and 8, it was categorically mentioned by the Assessing Officer as under :
“7. In this connection, a letter dt.14.02.2019 was sent to the assessee giving one more opportunity to substantiate his claim that he has not paid the whole amount at the time of admission, instead the payment was made in the subsequent years. In response, the assessee submitted a letter dt.22.02.2019 hoping the same thing that the payment of Rs.5,50,000/- was made in five years totaling to Rs.27,50,000/- for admission fee in Chalimeda Anand Rao Institute of Medical Science for his son. He further stated that he again confirms the genuineness of those receipts and payments of Rs.5,50,000/- on yearly basis for 5 years.
It is reasonably possible that the assessee has paid total Rs.27,50,000/- in five consecutive years. Simultaneously, it does not give loophole to the assessee to escape from that he has not paid over and above prescribed fee i.e. Rs.2,50,000/- without any corroborative evidences. And, that evidences are on the records upon which the assessee is silent. Thus, it cannot be denied that the payment of Rs.30,00,000/- was made at the time of admission.
We have heard the rival submissions and perused the material on record. It is the case of the assessee before us that despite repeated requests made by the assessee, the necessary incriminating documents / evidence have not been provided to the assessee by the Assessing Officer and the ld.CIT(A). In our view, when the quasi judicial authorities are deciding the issue which has civil and criminal consequences, it is always necessary for the said quasi judicial authority to provide those documents to the person who is likely to be affected from the outcome of the proceedings. In the present case, the Assessing Officer and the ld.CIT(A) had relied not only upon the incriminating material but also on the statement of Managing Trustee of the said college recorded u/s 132 of the Act for the purpose of making the addition. Neither the incriminating documents nor the statement copy nor any opportunity of cross-examining the person was provided to the assessee. The assessee has been prejudiced on account of the non-supply of the documents. We are in agreement with the submission of the assessee that if the documents are provided to the assessee then the assessee would be in a position to canvass his case that the proceedings u/s 153C are not maintainable either on account of non- recording of satisfaction or on account of absence of any incriminating material pertaining to the year under consideration, then the assessment made by the Assessing Officer is bound to fail. In the present case, as mentioned hereinabove, despite repeated requests, the documents, seized material, incriminating documents, the statement of the cashier of the M/s.Arihant Education Society has not been provided to the assessee. In our view, there is a serious lapse and violation of principle of natural justice by the lower authorities.
In the light of the above, we deem it appropriate to remand back the matter to the file of the ld.CIT(A) with a direction to ld.CIT(A) to provide the copy of the seized material, copy of 132 statement of the cashier of M/s. Arihant Education Society etc, to the assessee. The ld.CIT(A) is directed to decide the issue after providing the above said documents and seeking the response thereon from the assessee as well as the Assessing Officer in this regard and pass a detailed speaking order. In view of the above, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.