DCIT CENTRAL CIRCLE 7 (1) , MUMBAI vs. RAMRAO ADIK EDUC SOCIETY, MUMBAI

(Assessment Year: 2011-12) (Assessment Year: 2016-17) I.T.A. No. 2276/Mum/2025 (Assessment Year: 2014-15) DCIT, Central Circle-7(1), Ramrao Adik Education Society, 653, 6th Floor, Aayakar Bhavan, Patil Building, Adarsh Nagar, M.K. Road, Mumbai-400020. Vs. Opp Mig Colony, Worli, Mumbai-400018. PAN: AAATR3978A Appellant) : Respondent) Appellant /Assessee by : Shri Rajiv Khandelwal, CA Revenue / Respondent by : Shri Umashankar Prasad, CIT-DR Date of Hearing : 12.08.2025 Date of Pronouncement : 04.09.2025 O R D E R Per Bench: These cross appeals by the assessee and the revenue are against the common order of the Commissioner of Income Tax (Appeals)-49, Mumbai [In short to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) all dated 30.01.2025 for Assessment Year (AY) 2011-12 to 2017-18. The issues contended by the assessee and the revenue are common across all these appeals and therefore these appeals were heard together and disposed of by this common order. The common issues contended by the assessee through various grounds are tabulated below: Issue AY AY AY AY AY AY AY 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Validity of Ground Ground Ground Ground Ground Ground notice issued No.1 No.1 No.1 No.1 No.1 No.1 u/s 153C Approval u/s Ground Ground Ground Ground Ground Ground 153D No.2 No.2 No.2 No.2 No.2 No.1 Framing of Ground order u/s No.2 143(3) Unaccounted Ground Ground Ground Ground Ground Ground capitation fee- No.3 No.3 No.3 No.3 No.3 No.3 & Shri Sunil 4 Gaikwad / D.D. Kolte Denial of Ground Ground Ground Ground Ground Ground exemption u/s No.4 No.4 No.4 No.4 No.6 No. 6 11 in respect of capitation fee Addition Ground towards No.4 corporate donation received from Abdul Fakir Malim Addition Ground towards No.5 foreign currency seized Addition Ground towards cash No.5 found to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 2. The common issues contended by the Revenue through various grounds are tabulated below – Issue AY AY AY AY AY AY AY 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 The CIT(A) Ground Ground Ground Ground Ground Ground Ground giving relief No. 6 to No. 1 to No. 1 to No. 1 to No. 1 to No. 1 to No. 1 to towards 8 3 3 3 3 3 3 corporate donations added under section 68 by the AO The CIT(A) Ground Ground Ground Ground Ground Ground Ground giving relief No.1, 9 No. 4 to No. 4 to No. 4 to No. 4 to No. 4 to No. 4 to towards & 10 6 6 6 6 6 6 development fees added under section 68 by the AO. Rejection of Ground Ground Ground Ground Ground Ground Ground books of No. 2 No. 7 No. 7 No. 7 No. 7 No. 7 No. 7 accounts Denial of Ground Ground Ground Ground Ground Ground Ground Exemption No.3 & No. 8 & No. 8 & No. 8 & No. 8 & No. 8 & No. 8 & under section 4 9 9 9 9 9 9 11 Depreciation Ground Ground Ground Ground Ground Ground Ground on opening No.5 No. 10 No. 10 No. 10 No. 10 No. 10 No. 10 balance of assets

“It becomes pertinent to recall that Section 153A, as it stood prior to 01 April 2017, envisaged a search assessment being undertaken "in respect of each assessment year falling within six assessment years" "referred to in clause (b) thereof. Clause (b) of Section 153A(1) provided for the identification of the six AYs' with reference to the "previous year in which the search is conducted or requisition is made". The block of six AYs' were to be identified commencing from AD the AY "immediately preceding the assessment year relevant to the previous year" in which the search may have been conducted. The Finance Act, 2017 stretched the search assessment to an additional four AYs' with the introduction of the concept of "relevant assessment year and which was defined by Explanation 1 to Section 153A(1) as being the period which would fall beyond "six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year" in which search was to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society conducted. A block period of ten AYs' consequently become liable to assessment in the case of a search post the enactment of Finance Act, 2017" The constitution of a block of ten AYs' in Section 153A was contemporaneously added and introduced in Section 153C. Post Finance Act, 2017, an assessment triggered by a search could thus hypothetically extend to a block period of ten years both in the case of a searched as well as a non- searched entity. The amendments introduced in Section 153C, were essentially intended to place both Sections 153A and 153C at par and for both statutory provisions being available to be invoked for the purposes of assessment covering a block of ten AYs'. It however becomes relevant to note that Section 153C applies equally to all non-searched entities and neither carves out an exception nor does it create a separate regime pertaining to a contingency where the AO of the searched and the non-searched entity are one and the same. If the submission of appellant were to be accepted, it would amount to the Hon'ble Bench carving out an exception in respect of those cases where the jurisdictional AO of the searched and non-searched entity are the same. Since, 153C proceedings initiated in this case vide noticed issued on 06.08.2018. Therefore, for A.Ys. 2011-12 & 2012-13, the AO has correctly assessed the appellant u/s 153C of the Act 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 to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society of search as per the proviso to section 153C(1). The revenue's argument is that since the AO of the both the parties is same, there is no question handing over of materials seized to assessee's AO separately and accordingly the date of search in the case of parties assessed under section 153A would be date of search in assessee's case also for the purpose of section 153C. Therefore the issue for our consideration whether the date of satisfaction note is to be considered as the date of search for the purpose of section 153C and accordingly AY 2011-12 & 2012-13 are outside the purview of assessment under section 153C.

10. However the above proviso is interpreted by the revenue to contend that the same is applicable only for determining the assessment years which shall abate and it is not with respect to the number of assessment years wherein assessments under 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 insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials of the third party, under section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be the search party, under section 132-would take his own time to forward the papers and materials belonging contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years. the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts.

11. For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.”

11. It is relevant to mention here that the review petition filed against the above order has been dismissed by the Hon'ble Supreme Court vide order dated 26.03.2025 ([2025] 173 taxmann.com 575 (SC)). From the above observations of the Hon'ble Supreme Court it is clear that the period of six years for the purpose of assessment under section 153C would recon from the date on which the materials are forwarded to the AO of the third person by the AO of the searched person. In assessee's case it is an admitted fact that the AO of the assessee received the satisfaction note along with the relevant materials from the AO of the searched person only on 02.08.2018 (refer para 5 from page 2 of AO's order). When we apply the ratio laid down by the Apex court to the facts in the present case, then the period of six years has to be reckoned from AY 2019-20 i.e. AY 2013-14 to AY 2018-19. Therefore we see merit in the submission of the ld AR that AYs 2011-12 and AY 2012-13 for which the AO has carried out the assessment under section 153C are outside the period of six years and hence the 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.

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.

Mum 2025 – Assessee's appeal & 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 ld AR. Hence these grounds are dismissed as not pressed.

Addition towards unaccounted capitation fees – Assessee's Ground No.3

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 to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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 Income Declaration Scheme (IDS), 2016 for the reason that it does not pertain to the impugned capitation but is towards other undisclosed income pertaining to the individual. Accordingly the AO proceeded to make an addition of Rs. 6,91,60,000/- towards unaccounted capitation fee under section 69A of the Act. On further appeal CIT(A) confirmed the addition made by the AO.

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. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society Appellant has relied upon the decision of Hon'ble ITAT, Mumbai where identical issue has been decided in its favour. The decision of Hon'ble ITAT is with respect to the Padmashree DY Patil Trust and the same is not applicable in this case. Reasons are as under:- i) CIT(A) has given categorical finding that case of appellant is not covered as Hon'ble bench decision is in respect of DY Patil university. Facts being different, he respectfully begged to differ from the decision of Hon'ble ITAT relied upon by the appellant. ii) Facts of this case are distinguished. Shri Sunil Gaikwad is the registrar of M/s Ramrao Adik Institute of Technology which is run by appellant and a key-person since past 30 years. And therefore the material found and seized in the premises of Shri Sunil Gaikwad is relevant for the case of appellant Trust. During search, data from the Office Laptop accessed and seized contains incriminating documents which categorically proved that capitation fees was taken from students of college run by appellant only and Shri VIJAY Patil was fully aware of it. In this regard vide his statement recorded u/s 132(4) of the IT Act, 1961on 30-07- 2018particularly Q. Nos. 22 to 36; wherein he has admitted the same. Again, statement of Shri Sunil Gaikwad was recorded on 26.10.18, after his retraction made on 16.08.18.In his statement of Shri Sunil Gaikwad recorded on 26.10.18, details of capitation fees and comments of seized materials was again confronted and he reaffirmed the statement given during search proceedings on 30-07-2018.Similarly, D.D. Kolte, assistant registrar and employee of appellant statement was again recorded on 26.10.2018 and he also affirmed that entries in seized documents are explained during statement recorded u/s 132 (4) of the Act. These crucial facts and statement were somehow missed by Hon'ble bench while deciding the case of Padmashree DY Patil Trust and both employees are of appellant only. Therefore, decision of Hon'ble Bench in the case of Padmashree DY Patil Trust cannot be applied here. iii) In the present case, the details related to the collection of capitation fee/donations have been found in laptop of the trusted employee of the group namely Shri Sunil Gaikwad. Shri Sunil Gaikwad is a registrar of M/s Ramarao Adik College of Engineering, Shri Sunil Gaikwad has, in the statement under oath, stated that the said details relate to 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 to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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 action on the DY Patil Group. His premises have been ever covered under search action, because he was employed with the Group. Generally, it is seen that the records/documents of unaccounted/undeclared transactions of searched assesses, especially the big corporates or Trusts, as in the present case, are maintained with their trusted employee/s or confidante/s. Before launching the search action, efforts are made to identify such employee/s or confidante/s and information is collected about the place where such records/documents are likely to be kept/ maintained. Therefore, whenever the search action is carried out on such assesses, the premises belonging to the trusted employee/s or confidante/s also get covered. In the present case, the premises of Shri Sunil Gaikwad were covered because he was handling the admission matters and was maintaining the records of capitation fee collected during the admission process. He had admitted the same in the statement recorded u/s 132(4) of the Act. The entire modus operandi of the admissions process and collection of capitation fee was explained by him in the statement. Though the laptop was found in the premises of Shri Sunil Gaikwad, it is clear that the contents therein do not pertain to him but belong to the appellant trust. Accordingly, the case of the appellant was rightly selected for assessment u/s 153C of the Act. v) It is difficult to accept the contention of the appellant that so many employees are collecting cash from hundreds of students every year for past so many years, without the knowledge of the Trust. There is no evidence of any FIR filed or any action taken by the Trust against Shri Sunil Gaikwad. Therefore, the stand taken by the trust is self-serving and does not appeal to reason. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society vi) Another argument taken by the appellant is that the statement recorded during the search action has been retracted by Shri Sunil Gaikwad. In his affidavit filed on 10/8/2016, before the Investigation wing, Shri Sunil Gaikwad has stated that he was panic stricken and his statement was recorded when he was in confused state of mind and that he had replied to the questions without understanding the documents. He had stated that he would clarify all the answers in proper state of mind, when desired. The statement recorded during the search and the contents of the retraction affidavit been carefully examined. 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 higher ups in the department or with the police authorities. It is stated by Shri Sunil Gaikwad, that he would clarify all the answers in proper state of mind. During the assessment proceedings, he has owned up the cash found during the search and declared the same in the IDS. But he has not provided any fresh explanation for the data in the laptop. As held by various Hon'ble Courts and Tribunals, -The burden lay on assessee to show that admission made by director in his statement was wrong and such retraction had to be supported by a strong evidence showing that earlier statement was recorded under duress and coercion (Hon'ble Supreme Court of India in the case of Bannalal Jat Constructions (P.) Ltd. vs Assistant Commissioner of Income-tax* [2019] 106 taxmann.com 128 (SC) -Such retraction was required to be made as soon as possible or immediately after statement of assessee was recorded (Hon'ble HIGH COURT OF RAJASTHAN in the case of Principal Commissioner of Income-tax vs Roshan Lal Sancheti)

-The statements given to Assessing Officer under section 132 (4) have legal force and unless retractions are made within a short span of time, supported by affidavit swearing that contents are incorrect and it was obtained under force, coercion and by lodging a complaint with higher officials, same cannot be treated as retracted (Hon'ble High Court OF MADRAS in the case of Commissioner of Income-tax Vs MAC Public Charitable Trust) vii) More importantly, the statement of Shri Sunil Gaikwad is not the only basis for making the addition. The details found on the office laptop of Shri Sunil Gaikwad clearly establish that the appellant Trust is accepting capitation fee/ donation from its students. Both the material found in the search and the statement of Shri Sunil Gaikwad corroborate each other. Same is further corroborated by the fact that the details found on the office laptop matches with the students who had taken admission in Ramrao Adik Technical Institute. The argument of the appellant that the additions should be deleted just because Shri Sunil Gaikwad has retracted the statement. made by It is found that similar the retraction by Shri Sunil to save the appellant trust the retractions have and filed a been retraction other employees of the group. It is highly improbable that all the employees had suffered panic attack 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 Amount of Nature of which the undisclosed undisclosed income undisclosed to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society income pertains income 1 2012-13 38,25,000/ Left blank 2 2013-14 52,00,000/ Left blank 3 2014-15 57,00,000/ Left blank 4 2015-16 50,00,000/ Left blank 5 2016-17 52,50,000/ Left blank 2,49,75,000/ Left blank Total Refer page no. 27 of paper book submitted by appellant on 30.06.25. Nature of Undisclosed Income is left blank. As can be noted from above that nothing offered on account of Capitation fees or cash seized which could have been offered in the nature of undisclosed income. Facts in respect of IDS in the case of D.D. Kolte is same. x) On questioning Vijay Patil (son of D.Y. Patil) regarding the source of cash found at DY Patil University, Nerul, as capitation fees the cash of around Rs. 30 crores found in the University and in the hands of various employees of the University. He answered that "To my knowledge the cash was found in the custody of employees in their respective rooms/houses. The employees must have collected it without the knowledge of the University. Thus, it is admitted by Vijay Patil that cash has been taken from students for admission without his knowledge". Thus, it is undisputed admitted fact that it has been admitted by trustee that cash has been taken but without the knowledge of Trust and trustee. xi) Comments on applicability of Section 132(4A) in this case: Section 132(4A) is reproduced as under: [(4-4) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed-(i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)that the contents of such books of account and other documents are true; and(iii)that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] 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 proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.] [ Inserted by Act 4 of 1988, Section 37 (w.e.f. 1.4.1989).] Sunil Gaikwad has stated that documents found during search belongs to appellant and never stated that it belongs to him only. He never stated even in retraction filed that capitation fees used to be taken by him without the knowledge of Vijay Patil, main trustee of appellant and used for its own purpose. As in retraction statement also, facts remained the same that capitation fees were taken for admission in appellant's college only. In fact, again statement of Shri Sunil Gaikwad recorded on 26.10.18, after his retraction made on 16.08.18.in his statement of Shri Sunil Gaikwad recorded on 26.10.18, details of capitation fees and comments of seized materials was again confronted and he reaffirmed the statement given during search proceedingson 30-07-2018. Therefore, presumption u/s 132(4A) of the Act shifts to appellant only and appellant has failed to discharge the onus that appellant has nothing to do with seized materials containing details of student from whom cash were taken which was not recorded in its books. Therefore, it is humbly submitted that case of appellant should be decided on the basis of facts and materials related to this case only, without getting to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society influenced from Hon'ble ITAT decision in the case of Padmashree Dr. DY Patil University. Xii) Evidences related to Capitation fee in cash was found from Shri Sunil Gaikwad, Registrar in Ramrao Adik Institute of Technology and Shri D.D. Kolte, Asst. Registrar, M/s Ramrao Adik Institute of Technology. These are not third party, as they are key employees and college of assessee run by them only. Specific evidence of cash received such as capitation fees in the name of students, amount, branch, date and balance amount receivable was found to be maintained in systematic manner. It is settled position of law that during the search assessment, evidence of key employees can be used for making assessment in assessee's case, as they can't be termed as third party.”

21. We heard the parties and perused the material on record. As part of search conducted in the case of D Y Patil group, the residence of Shri Sunil Gaikwad who is the registrar in the educational institutions run by the assessee, was also searched. 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 – to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society “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 Abhudhay Bank, Nerul Branch) and Rs. 59,75,000/- seized from your possession (from your attendant hands) and their respective treatment in books of account?

Ans. Yes, I acknowledge to have seen the same. I have declared these amounts in Income Declaration Scheme, 2016.

Que. 14 Please furnish the copy of IDS, 2016 declaration and the relevant forms.

Ans. I am furnishing the relevant Form of IDS, 2016 (1-10 pages).

Que. 15 As seen from your previous ITR and your sources of income, the amount declared in IDS, 2016 is not justified. Further, during the search action, the cash seized was found belonging to DY Patil University RAIT/DY Patil Group, Navi Mumbai and you have accepted the same in your statement. Therefore, why the declaration made in IDS, 2016 may not be treated as null and void-ab-initio?

Ans. This cash belonged to me and found in my locker & my attendant Mr. Rajesh Sawant and I was planning to file IDS, 2016; meanwhile search happened at D Y Patil University/ Ramrao Adik Institute of Technology and I filed the IDS. 2016 as guided to me by my Chartered Accountant.

Que. 17 Please confirm that Annexure-A-1/1(Laptop imaging seizure) and its contents as explained were seized from your residential premise (Panchratna, CBD Belapur), as 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.”

22. After perusing the documents found in the laptop, the statement recorded from Shri Sunil Gaikwad the AO came to the conclusion that the assessee is collecting capitation fee from the students in cash and the same is not accounted in the books of the assessee. The AO further held that the assessee has collected the to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society capitation fees in violation of Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act 1987. The AO also held that the activities of the assessee are not in accordance with its objectives and does not satisfy "charitable purpose" envisaged in section 2(15) of the Act due to which the assessee cannot claim 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 case is subsequently retracted. Accordingly there is merit in the submission that the statement recorded under section 132(4) solely relied by the AO does not have evidentiary value. It is also relevant to mention here that during the course of search no incriminating material was found in assessee's possession and the entire addition is based on the cash found, documents in the laptop seized from the residence of the employees. One of the contentions of the assessee is that the explanation provided by Shri Sunil Gaikwad during the course of assessment against the entries found in the laptop (refer Answer to Q.No.17 as extracted in to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society earlier part of this order) was not made available to the assessee. From the perusal of the AO's order we notice that though the AO has reproduced various statements recorded, has not mentioned anything with regard to the explanations given during assessment proceedings but has heavily relied on the statements recorded only. During the course of hearing it is also brought to our attention that the statements recorded from different persons under section 132(4) are identical word by word and therefore the same cannot be relied on as actual statements made by the deponents.

23. In the light of the above factual position, we will now look at the decision of the Co-ordinate Bench in one of the group entity's case Padmashree Dr. D.Y. Patil University (supra) where identical additions towards capitation fees based on the same statement recorded under section 132(4) have been made. The relevant findings of the coordinate bench are extracted herein below – “18. We heard the parties and perused the record. It is the case of the assessee that none of these materials was seized from it. Further, they do not belong to it also. All these materials were seized from the residences of the respective employees and the assessee was not aware of those transactions. It was also contended that the revenue did not seize any material from the assessee that will corroborate the documents seized from the residence of employees. Accordingly, it was contended that the assessee cannot be burdened with or put to liability on the basis of those materials. In this regard, the assessee has also taken support of the provisions of sec. 132(4A) of the Act, as per which the presumption is that the material seized from a person shall belong to 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 to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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 Residential premises of brown diary Shri Pratap Patil 2 Shri Tukaram Patil 2 pen drives First pen drive kept with Narendra Gaikwad and Second pen drive kept in DY Patil Sports Stadium Office. 3 Dr Unmesh Laptop His residence at Khanvilkar Chembur 4 Shri D D Kolte Loose Papers Kept with attendant Datta Patil 5 Shri Sunil Gaikwad Laptop Residential premises of Sunil Gaikwad. In addition to the materials listed above, the revenue has seized cash from various employees from different places. The details of the persons from whom and the place from which cash was seized are tabulated below:- S.No. Name of Person Cash seized Place of seizure 1 Dr Unmesh 5,10,76,500 Vashi residence Khanvilkar 1,39,68,000 Chembur residence 2,89,82,000 Residence of his driver 10,00,00,000 Room No.702, PG 19,40,26,500 Hostel =========== 2 Shri Pratap Patil 74,96,500 Store room in Medical college 3 Shri Sunil Gaikwad 1,90,00,000 Personal locker in bank 59,75,000 Residence of attendant 2,49,75,000 =========== 4 Shri D D Kolte 96,30,000 In his Car parked in DY Patil campus 5 Shri Bhagirath Patil 65,00,000 In his Parel residence Total 24,26,28,000 Apart from the above, cash aggregating to Rs.2,38,87,500/- and jewellery worth Rs.11,62,50,820/- was seized from the lockers/residence of Smt. Shivani Patil. Even though the AO has discussed about these items, as noticed earlier, to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society the AO did not make any addition in the hands of assessee in respect of the cash/jewellery seized from Smt Shivani Patil. Further, a sum of Rs.65.00 lakhs was seized from Shri Bhagirath Patel, who has claimed initially that the said sum was received from Smt Shivani Patil, but retracted from it later.

to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society (d) No document or material corroborating the entries found in the Pen drive or diary was found from the premises of the assessee trust. (e) In question no.19, he has stated that he has given Rs.20.50 lakhs to Abhijit Shirke on the instructions of Shri Vijay Patil. In Question No.21, he has stated that he is making entries for Abhijit Shirke. These answers were not cross verified with Abhijit. It is pertinent to note that the very same person, viz., Shri Abhijit Shirke was arrested in 2015 in connection with accepting money of Rs.62.50 lakhs for securing a medical seat in D Y Patil Medical College, Nerul. The Ld A.R submitted that the relevant news paper report is placed at pages 279 & 280 of paper book relating to AY 2015-16. This information further supports the case of the assessee trust that it is not collecting capitation fees. Some employees may be doing it without the knowledge of the assessee trust. (f) With regard to the entries made in the Diary, Shri Pratap Patil could explain the contents of the same, since he only has maintained it. In the diary, he has also noted the name of brokers and doctors. However, none of the brokers/doctors has been examined to corroborate the entries and to link the same with the assessee trust. (g) If the contents of pen drive & diary are presumed for a moment to be in the knowledge of the assessee trust, then the trust will not take the risk of allowing Shri Pratap Patil to keep the secret data with him, as there is a possibility of manipulating the entries to his advantage and to the detriment of the assessee trust. (h) Though Shri Pratap Patil has originally stated that the capitation fees are collected on behalf of the assessee trust, later he has filed retraction affidavit on 16-08-2016 (within 15 days from the date of conclusion of search). The retraction has also been confirmed by him in 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. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society (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 accounted for in the books of the assessee trust. Hence the AO has taken the stand that all the information available in the pen drive should be read together. However, the above said view of the AO is not correct. The details of receipts and the details of payments have been kept in separate files, i.e., it is not the case that both receipts and payments have been noted in the very same page/file. It is possible that Shri Pratap Patil might have got access to the information about receipt of payments by way of cheques. Hence to protect himself, he might have copied it in his pen drive also. Further, the payments noted in the separate file have not been corroborated with any other independent evidence. Hence the said payments could be taken as conclusive evidence warranting addition. (B) TUKARAM PATIL:- (a) Shri Tukaram Patil has partially deleted the documents in the pen drives and it actually incriminates him. (b) The pen drives were found at his premises. It is not mentioned anywhere that both the pen drives belong to the assessee trust. Hence they are as his personal items only. The revenue did not find any document or material from the possession of the assessee that would corroborate the entries found in the Pen drives. (c) Since the data has been deleted by him, the information about details of students and amount of capitation fees collected from them have been given by him ‘out of his memory’. Hence it is a case of oral evidence, which is not supported by any credible material. Hence the information so furnished by him could not have been relied upon by the AO. In any case, the AO did not conduct any enquiry with any of those students in order to find out the veracity of the said information. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society (d) He also claims to have remembered name of five students to whom amounts were refunded. Again it is a case of oral evidence only and the same is not supported by any other material. No enquiry was conducted by the AO with those five students to find out its veracity. (e) Statement of oath dated 31-07-2016 has been signed by witnesses on 30- 07-2016. Hence the statement loses its credibility. (f) Though Shri Tukaram Patil has originally stated that the capitation fees are collected on behalf of the assessee trust, later he filed retraction affidavit on 16-08-2016 (within 15 days from the date of conclusion of search). The retraction has been confirmed by him in the statement taken u/s 131 of the Act during the course of assessment proceedings. (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 crores. It is beyond human probabilities that the assessee-trust would allow to keep such huge amount with an employee. (b) The answers given by him with regard to cash found from him at various places would show that he has been giving answer to suit his convenience. (c) If it is presumed that Shri Vijay Patil had actually asked him to remove cash from D Y Patil University premises apprehending income tax raid, how Shri Vijay Patil would allow Shri Unmesh Khanvilkar to keep Rs.10.00 crores to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society at Room No 702 in PG Hostel?. This proves that there was no instruction from Shri Vijay Patil. (d) Modus operandi of taking capitation fee has been explained by Shri Pratap Patil, Shri Unmesh Khanvilkar and Shri D D Kolte. It can be noticed that they are worded in identical manner, i.e., the answer given by each of them at different places/occasions tally with each other, i.e., they matches word to word; they suffer from same type of grammatical mistakes; that different types of salutations used against the name of trustees is also identical. It was contended that this fact proves that the search officials only have prepared the answers. Accordingly, it was contended that it cannot be said that the answers to various questions were given by these employees. (e) If the information available in his laptop is considered to be in the knowledge of the assessee trust, then the trust will not take the risk of allowing him to keep the records, as there is a possibility of manipulating the entries to his advantage and to the detriment of the assessee trust. (f) No document or material corroborating the entries found in the laptop was found from the premises of the assessee trust. (g) The AO has presumed that the donation of Rs.1.25 crores given by a parent named Shri Mohan Abbas Chaudhary to D Y Patil Sports Academy is the capitation fee collected to give seat in the Medical college. However, it is only a presumption of the AO. The seat was given on merit. The donation was voluntary and it has been duly accounted for. (h) Though he has originally stated that the capitation fees are collected on behalf of the assessee trust, later he has filed retraction affidavit on 16-08- 2016 (within 15 days from the date of conclusion of search). The retraction has been confirmed by him in the statement taken u/s 131 of the Act during the course of assessment proceedings. (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. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society (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 relied upon those oral statements. (D) D.D KOLTE:- (a) The loose papers kept with his attendant Shri Datta Patil has been considered by the AO to make addition. The loose papers are dumb documents and do not have any evidentiary value. (b) Modus operandi of taking capitation fee has been explained by Shri Pratap Patil, Shri Unmesh Khanvilkar and Shri D D Kolte. It can be noticed that they are worded in identical manner, i.e., the answer given by each of them at different places/occasions tally with each other, i.e., they matches word to word; they suffer from same type of grammatical mistakes; that different types of salutations used against the name of trustees are also identical. It was contended that this fact proves that the search officials only have prepared the answers. Accordingly, it was contended that it cannot be said that the answers to various questions were given by these employees. (c) No document or material corroborating the entries found in the Pen drive or diary was found from the premises of the assessee trust. (d) Though he has originally stated that the capitation fees are collected on behalf of the assessee trust, later he filed retraction affidavit on 16-08-2016 (within 15 days from the date of conclusion of search). The retraction has been confirmed by him in the statement taken u/s 131 of the Act during the course of assessment proceedings. (e) While the AO has accepted the statement that the capitation fee has been 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. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society Hence assessee-trust cannot be subjected to addition on the basis of the statement of the employees. (f) Cash of Rs.96,30,000/- was seized from his car. He has owned up the same and declared the same as his income under Income Declaration Scheme, 2016. (E) SUNIL GAIKWAD:- (a) The data is kept in his personal laptop. If they are within the knowledge of the assessee trust, then the trust will not take the risk of allowing him to keep the records, as there is a possibility of manipulating the entries to his advantage and to the detriment of the assessee trust. (b) Total cash of Rs.2.49 crores 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 assessee trust has accepted capitation fees. The answer given by her has been misinterpreted by the AO. (c) She has no where stated that the cash and jewellery found with her has been acquired out of capitation fees.

(d) Her husband has explained the answers given by Smt Shivani Patil and cleared the possible doubts in her answers. (e) She has declared the cash and jewellery as her income under Income Declaration Scheme, 2016. (G) OTHERS:- (a) Cash of Rs.65.00 lakhs seized from Shri Bhagirath Patil. But there is no evidence to show that it is part of capitation fees. (b) Statement of Smt Taruna Maheshwari. She has retracted her statement. In any case, she is an employee of another trust namely Ajeenkya D Y Patil, which is a separate group. Hence the entries made by her are not binding upon the assessee. In any case, no corresponding entries were found in the records of the assessee. If at all there is some transaction with the employees of assessee trust, the same may be in their personal capacity only. (c) Statement of Shri Pravin Patil. He has retracted his statement. In any case, he is an employee of another trust, viz.,Ajeenkya D Y Patil, which is a separate group. Hence the entries made by her are not binding upon the assessee. In any case, no corresponding entries were found in the records of the assessee. If at all there is some transaction with the employees of assessee trust, the same may be in their personal capacity only. (d) Survey on three parents. The statement given by them is not binding upon the assessee. (i) Dr Bhupendra Badhe has stated to have given capitation fee to a person named Shri Sanjay Pawar, who is not an employee of trust. He has not stated that he has paid cash to the trust. (ii) It can be noticed that the survey officials did not ask Dr Pramod Gandhi any question on payment of capitation fees to the trust. (iii) It can be noticed that the survey officials did not ask Dr Santhosh Pillai any question on payment of capitation fees to the trust. (e) Statements taken from various Parents:- to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society (i) Most of the persons have paid donation through banking channels. Those donations cannot be considered to be Capitation fees. All the donations have been recorded in the books. (ii) Those parents, who had paid cash, have 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.

to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society The AO tried to use the admission of Arora Brothers made in their statements under s. 132(4) in their cases against the assessee but he has failed to note that admission of others cannot be read in evidence against third party unless there is corroborative evidence on record. The maker of the admission can bind himself but how he can bind others from his statement without there being any corroborative evidence on record is not known in the law. As noted above, even Shri Ajay Arora in his statement, denied any on money paid by the assessee. No evidence was found in the case of the assessee that assessee has paid any on money before the date of the search or that the 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 employees. As such, it is submitted that the AO cannot assume that the cash and documents belong to or are in control of the assessee-trust. Reliance is placed on R.Bharathan vs ITO – 182 ITR 146 (Ker) 14.4 It is submitted that no corresponding entries/evidence have been found from the possession of the appellants. It is submitted that there has to be a direct and clinching evidence to prove that the appellants have indeed accepted capitation fees. Courts have time and again held that suspicion however strong cannot take place of hard evidence and suspicion cannot be a basis of making huge additions. 14.5 Even otherwise, since the said papers are unsigned and the entries therein are not sufficient to fasten liability on the assessee, the impugned addition requires to be deleted. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 14.6. The print out taken from the files contained in the laptops, pen-drives and the loose papers found from the employees do not constitute books of account. Revenue has not even alleged that the entries in these loose sheets and electronic data have been kept regularly during the course of business. The Apex Court in the case of Common Cause (A Registered Society) reported in 394 ITR 220 has held that such detailed documents recovered by the authorities have no evidentiary value. Uncorroborated loose papers found in the search cannot be taken as a sole basis for determination of undisclosed income. 14.7. The Supreme Court in the case of CBI vs V.C. Shukla and Ors has held that – “In Mukundram (supra) after dealing with the word 'book' (to which we have earlier referred) the Court proceeded to consider what is meant by a 'book of account' under Section 34 and stated as under: "To account is to reckon, and I am unable to conceive any accounting which does not involve either addition or subtraction or both of these operations of arithmetic. A book which contains successive entries of items may be a good memorandum book; but until those entries are totalled or balanced, or both, as the case may be, there is no reckoning and no account. In the making of totals and striking of balances from time to time lies the chief safeguard under which books of account have been distinguished from other private records as capable of containing substantive evidence on which reliance may be placed." We have no hesitation 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 to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society any such evidence, they contended, no liability can be foisted under Section 34. The rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness (wigmore on evidence $ 1546). Since, however, an element of self interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words such statements shall not alone be sufficient to charge any person with liability. The probative value of the liability created by an entry in books of account came up for consideration in Chandradhar vs. Gauhati Bank [1967 (1) S. C. R. 898]. That case arose out of a suit filed by Gauhati Bank against Chandradhar (the appellant therein) for recovery of a loan of Rs. 40,000/- . IN defence he contended, inter alia, that no loan was taken. To substantiate their claim the Bank solely relied upon certified copy of the accounts maintained by them under Section 4 of the Bankers' Book Evidence Act, 1891 and contended that certified copies became prima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court observed that in the face of the positive case made out by Chandradhar that he did not ever borrow any sum from the Bank, the Bank had to prove that fact of such payment and could not rely on mere entries in the books of account even if they were regularly kept in the course of business in view of the clear language of Section 34 of the Act. This Court further observed that where the entries were not admitted it was the duty of the Bank, if it relied on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. ……….. The same question came up for consideration before different High Court on a number of occasions 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: to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society “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 concurring with the above observations the other learned Judge stated as under: " If no other evidence besides the accounts were given, however strongly those accounts may be supported by the probabilities, and however strong may be the evidence as to the honesty of those who kept them, such consideration could not alone with reference to s.34, Evidence Act, be the basis of a decree." In Beni Vs. Bisan Dayal [A. I. R 1925 Nagpur 445] it was observed that entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate andin absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society The evidentiary value of entries relevant under Section 34 was also considered in Hiralal Mahabir Pershad (supra ) I.D. Dua,. (as he then was) speaking for the Court observed that such entries though relevant were only corroborative evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid in accordance with those entries. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account 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 not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (sheet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, section 34 cannot at all be pressed into service against him.” 14.8 The Apex Court in the aforesaid case in para 44 held that “even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person” (emphasis ours). 14.9 Thus, it is submitted that only evidence in the form of notings in the hands of a third person is not enough evidence to fasten liability on the assessee- trust. There has to be some evidence found in the hands of the assessee-trust to corroborate what was found in the hands of that third person – such evidence can be in the form of any paper found, noting found, or even acceptance by the assessee in the statement on oath. In other words, it is contended that evidence in form of records (laptop or diary) found in the possession of the employees of the assessee-trust are not sufficient to establish that the assessee-trust has accepted capitation fees. Reliance is also placed on the following case laws – to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society (i) Common Cause vs UOI – 394 ITR 220 (SC) (ii) Sunil Kumar Sharma vs DCIT – 448 ITR 485 (Kar) (iii) ACIT vs Katrina Rosemary Turcotte – 190 TTJ 681 (Mum T) (iv) ACIT vs Kishore Lal Balwant Rai – 17 SOT 380 (Chandigarh T) – the Tribunal has held that addition cannot be sustained as statement of ‘third party’ was not supported by independent and corroborative evidence.”

24. We shall now examine the facts prevailing in the instant case. We noticed earlier that the AO has come to the conclusion that the assesseetrust has collected capitation fees on the basis of data found in laptops, pen drives, diary, loose papers seized from various employees from their residences. The AO has also concluded that the cash found from the employees of the Trust are part of capitation fees collected by the assessee. But the fact remains that the revenue did not find any document/material/evidence with the assessee, which will corroborate the allegation of collection of capitation fees from the students.

26. On the basis of legal principles explained in the above said cases, it can be noticed that the AO cannot invoke the presumption given in sec. 132(4A) in respect of materials seized from the employees, particularly when the revenue has not found any material from the assessee that will corroborate them. Further, it is not the case that the assessee trust has owned up the contents of documents/materials seized from the employees to be true. On the contrary, the trustees have categorically denied the receipt of capitation fees.

24. The Revenue contests the findings of the ITAT and submits that the presumption drawn in the circumstances of the case was upon analysis of materials and that AO's view was justified. It was pointed out that independent corroboration in regard to the seized diary was by way of consideration paid for acquisition of shares in Aadharshila Towers for Rs. 70 crores. The diary clearly stated that the total cost was Rs. 100 crores. The farmers who received the consideration were paid partly in cash. These corroborative materials were insufficient in income tax proceedings, on an application of principles of evidence to hold that Rs. 30 crores was the undisclosed cash component of the consideration.

25. This Court is of the opinion both the CIT and ITAT have rendered findings that were sound and reasonable on the question of whether the seized diary to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society per se could in the overall circumstances of the case result in the addition of Rs. 30 crores. The assessee's explanation consistently was that Rs. 30 crores was towards internal and external development charges. This was an aspect which could be easily decided by securing relevant information from the statutory authority, i.e. HUDCO who received the payments. Independent corroboration of these too could have been sought otherwise the relevant books of account could have been checked. Furthermore, the statute does not compel the Revenue to raise a presumption; even when a tax authority does so, the sole basis of an addition entirely hinging upon the interpretation of certain figures in a diary would be flawed. For these reasons, this Court is of the opinion that since the inference drawn with respect 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.

to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 11. Now the Grounds remaining in the appeal of the Revenue are Ground Nos. 9 & 10, which relate to an addition of Rs.30,00,000/- made by the Assessing Officer as unaccounted receipts. 11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of Rs.30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr. Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such loose papers were given to him by the assessee to be kept with him. As per the Assessing Officer, the contents of the relevant seized material, which has been reproduced in para- 13 of the assessment order, indicates that one Mr. Suresh Agarwal paid the assessee Rs.30,00,000/- in March, 2006 in two instalments of Rs.15,00,000/- each. It is further noticed by the Assessing Officer that though there was an account of Mr. Suresh Agarwal in the account books of asessee's proprietary concern, M/s. Gupta Steel Corporation, but the aforesaid amount was not accounted for. For the said reasons, the Assessing Officer treated the sum of Rs.30,00,000/- as unaccounted income of the assessee. 11.2 Before the CIT(A), 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 seizeddocument 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 to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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 seizeddocument with the transactions undertaken by the assessee with Mr. Suresh Agarwal; which were duly accounted for in the account books. 11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is hereby affirmed and accordingly Revenue fails on Grounds of appeal

Nos.9 & 10 also.”

29. In the instant case, we notice that the AO has relied upon statements taken from the trustees and also certain discrepancies in OMR Sheets found from the premises of the assessee in order to support his conclusion that the assessee has, in fact, collected capitation fees. We shall examine whether those materials actually support the case of the assessing officer. (a) The AO has referred to the Statement given by Chairman/President of the trust Shri Vijay Patil. However, we notice that he has denied collection of capitation fee. No material was found from the assessee to disprove the said statement of the Chairman. Hence the statement of Shri Vijay D Patil cannot be taken support of by the AO. (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. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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 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 Patil University has management seats and fees is collected for the same. I agree that various colleges under D Y Patil University, Nerul have management Quota as allowed by the relevant rules upto 15% and fees is collected for the same. The fees for the management quota is higher than other seats. Apart from the 15% management quota, there is no other seat for which higher fees is charged. Q 9:- In the statement of Smt Shivani Patil, she has stated at Q 53 that fees for management quota is collected in cash. How is it you are able to say that no capitation fees is collected? Ans.: I agree that fees is paid in cash by some students. We don’t refuse cash payments. However, all cash payments are accounted in the books of accounts. Such cash payments are either regular fees for regular seats or fee for management quota fees. There is no cash collected towards capitation fee in the colleges under DY Patil University, Nerul, as no capitation fees is collected by our colleges. Accordingly, we agree with the contentions of the assessee that neither Shri Vijay Patil nor Smt Shivani Patil has stated that the assessee trust is collecting to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society capitation fees. Hence the AO could not have placed reliance on the statement given by Smt Shivani Patil. (c) The AO has also found a file containing cheque details of certain amounts received by the assessee, in the pen drive of Shri Pratap Patil. It was noticed that those cheque receipts were found accounted for in the books of the assessee trust. Another file found in the pen drive was containing details of payments made outside the books of accounts. Accordingly, the AO has expressed the view that the information found in the pen drive should be considered in totality and the payments details should also be considered to be true, since details of receipts by way 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 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/independent material on record which would vindicate those information. Accordingly, we are of the view that the AO was not justified in accepting the details of payments without carrying out due examination and bringing any other corroborative evidence. (d) The AO has also relied upon certain discrepancies found in the OMR answer sheets pertaining to entrance examinations conducted by the assessee trust for admitting students in the management quota. According to AO, signatures were missing in the attendance sheets in some cases or it did not tally with the signature available in OMR sheets. According to the AO, those discrepancies are available in the case of students from whom capitation fees to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society has been collected. We notice that the assessee has given explanations with regard to this deficiency. Be that as it may, the point to be considered here is whether the deficiencies found in the OMR sheets would show that the assessee was collecting capitation fees?. First of all, the explanation given by the assessee for the deficiencies has not been proved to be incorrect by the AO. Secondly, in the enquiry conducted by the AO with the students, all of them have expressed ignorance about the deficiencies. Thirdly, the deficiencies noticed were related to the signature in attendance sheets. There is no evidence to show that the answer sheets themselves were manipulated, which might be an important incriminating material. Fourthly and most importantly, the AO did not ask any question with the students about payment of capitation fees. Hence, we are of the view that the deficiencies noted in the OMR sheets do not prove the receipt of capitation fees by the assessee trust. The Ld A.R also submitted that some students have also filed affidavit stating that they have not paid any capitation fee. Accordingly, in our view, this detail also does 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 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.R also submitted that the employees have owned up the cash seized from them and have declared the same as their respective income under Income Declaration Scheme, 2016. This fact would to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society support their respective retraction statement and also the stand of the assessee trust. The Ld A.R submitted that the income declared by the employees have been accepted by the revenue. Accordingly, it was contended by the Ld A.R that the original statements given u/s 132(4) could not have been relied upon by the AO. Considering the facts and circumstances of the case discussed above, in our view, these contentions of Ld A.R merit acceptance. (g) We notice that the AO has also conducted enquiries with some of the parents. The Ld A.R has advanced his arguments on the reliability/effectiveness of their statements, which we have summarized in the earlier paragraphs. We have noticed that most of them have given donations by way of cheques only. The parents who had given cash had taken back the cash, as their respective children changed their minds. None of the parents have admitted that the assessee trust has collected capitation fees in the form of donations, i.e., there is no material to show that the donations were not voluntary. It is only the AO who has presumed that the donations given by the parents are in the nature of capitation fee collected by way of cheque. Hence, we are of the view that the AO could not have placed reliance on the statements given by the parents. (h) The AO has also relied upon the documents seized from employees of another trust, viz., Taruna Maheswari and Pravin Patil and made additions on protective basis towards receipts of money recorded in those statements. Both of them said that the payments were received on behalf of Vijay D Patil. However, no corroborative material was brought on record to prove the 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 credible material from the assessee trust to corroborate the information/document seized from to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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.

to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 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 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 Officer to a query raised under the Right to Information Act to the effect that "There is no any complaint received from any student/parent regarding capitation fee charged by the above institutions so far" also tilts the balance in favour of the assessee. It disproves the department's allegation of involuntary collection of amounts. That apart, the order passed under Section 264 of the Act for the assessment years 1998-1999 to 2001-2002 clearly states that the donation received from students or the parents is not compulsory in nature and, therefore, the same is not capitation fee. There is no material to controvert this fact which is to the knowledge of the department. No endeavour is made to sustain the allegation of involuntary donation. In any event, as rightly held by the Tribunal, it is not relevant in the present case as the allegation is violation of Section 13 r/w Section 11 of the Act. 7.8 We find that factually the Commissioner of Income Tax (Appeals) and the Tribunal have come to the conclusion that the donations received do not partake the character of capitation fee. There is no element of involuntary nature of donation. A specific finding is given that no investigation has been done to show that any parent or student has complained about the nature of donation. The department has failed to dispel the finding of fact. 7.9 In any event, the learned Standing Counsel for the department pleads that since the assessee had not submitted the list of students, the Assessing Officer had to make an estimate adopting his own methodology. This we cannot accept for the simple reason that the show cause notice proceeds on the basis that the assessee has to submit the list of donors alone. A reply was submitted to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society by the assessee and in paragraph 6(iii), the Assessing Officer states that all the statements tallied. However, the assessing 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, 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 the show cause notice and the assessment order. 7.12 We do not find any reason to come to a different conclusion on facts, as has been addressed by the Commissioner of Income Tax (Appeals) as well as the Tribunal on these two issues relating to seizure of cash and loose sheets. Apparently, there is no dispute on that fact. All that the department is trying to show is that there is something improper in the manner in which the donations are handled. Both these factors clearly establish that the allegations have nothing to do with the trust and its activities in relation to the charitable objects.”

(c) The Ld D.R submitted that the declaration of income by the employees under Income declaration scheme is not sacrosanct. He brought to our notice a news reported in a news paper that a person had declared Rs.13,860 crores under Income declaration Scheme and the same is being probed by the Income tax department. In our view, there is no reason to suspect the facts of the present case on the basis of the facts prevailing in some other case, i.e., the revenue should bring some material to prove that the declarations given by the employees are not correct. On the contrary, the Ld A.R submitted that the declarations of the all the employees have been accepted by the revenue. (d) The Ld D.R also invited our attention to a newspaper clipping, which described the memory of 12 year old student. Accordingly, he submitted that the statement given by Shri Tukaram Patil and Shri Unmesh Khanvilkar out of their memories should be taken as evidentiary value, since some people are gifted with good memory capacity. However, in the legal process, oral submissions do not carry much evidentiary value.

35. Accordingly, we are of the view that all the additions made by the AO including the protective additions, on the basis information found in the laptops, diaries and other documents found/seized from the employees and third parties (employees of another trust) are liable to be deleted. Accordingly, we direct the AO to delete the addition made towards Capitation fees and other additions made on the basis of the materials seized from the employees in all the years under consideration. The details 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.”

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 are not in accordance with its objectives and that the same does not fall within the definition of "charitable purpose" as per section 2(15) of the Act. The CIT(A) held that the assessee cannot claim exemption towards the capitation fees which is added as unaccounted by the AO. However the CIT(A) also held that the AO cannot deny the exemption under section 11 on those receipts declared and its utilisation to the assessee. Both the assessee and the revenue are in appeal against the decision of the CIT(A).

38. Another important point is that the CIT(E) has not withdrawn the registration granted u/s 12A of the Act to the assessee. When the registration granted u/s 12A was intact, the AO could not have denied exemption u/s 11 of the Act"

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 corpus donation of Rs. 9,05,30,340/-. The assessee submitted before the AO that these are donations received which are accounted in the books to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society of the assessee. The AO did not accept the submissions of the assessee and held that these receipts are linked to the admission and that the donations are received without any specific direction. The AO further held that these donations are received in connection with admission in other educational institutions in D Y Patil University. The AO also relied on the information received from Investigation in connection with a search operation in the case of M/s.Podar Education Group where it is alleged that the assessee has taken some accommodation entries from the said group. In view these findings the AO treated the corpus donations received by the assessee as unexplained credits and accordingly made the addition under section 68 of the Act.

30. The ld. AR submitted that the reason for the CIT(A) to retain addition of Rs. 50,00,000/- is that the amount of donation received from Mr. Abdul Fakir Malim is towards the admission taken by his son in Phd. in Dy. Patil University, Medical College in the year 2015. Accordingly, the CIT(A) held that there is a direct nexus between the donation recorded and the addition and therefore, cannot be treated as part of donation. The ld. AR in this regard drew our attention to the letter given by Mr. Abdul Fakir Malim (page 119 of PB) where he has stated that the donation is for the overall development of education and general public welfare and that the payment is made through A/c payee cheque. The ld. AR argued that the addition is sustained by the CIT(A) without establishing any nexus between the donation given by Mr. Abdul Fakir Malim and the admission of his which are two independent activity.

31. With regard to the addition deleted by the CIT(A), the ld. AR submitted that the CIT(A) has deleted the addition based on the specific finding that the donations have been received by the assessee stands substantiated and the CIT(A) has accepted the contention of the assessee that the donors may not be aware of the technicalities of the difference between corpus and general donations. The ld. AR also contented the reliance placed by the AO in report on the search action initiated against Poddar Education Group to submit that there is no corroborative evidence recorded by the AO and that the AO has simply relied on the report to treat the genuine corporate donations received by the assessee. The ld. AR drew our attention to the list of alleged bogus donations in page 44 of the 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): to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 33. We heard the parties and perused the material on record. From the materials received, the AO noticed that the assessee has received certain amount as corpus donations. The AO did not accept the claim of the assessee that these are genuine donations received and are accounted in the books of the assessee. The AO held that these are accommodation entries and have direct link to the admission of the students. Accordingly the AO treated the said amount as unexplained to be added under section 68 of the Act. The CIT(A) deleted major part of the addition and sustained addition towards one donation received from Mr. Abdul Fakir Malim. We notice that the information received by the AO from the search of M/s.Poddar Group do not relate to the AYs under consideration as has been pointed out by the CIT(A). Further, other than the reference to the report, the AO has brought anything on record in support of the contention that the assessee has received the impugned donations as part of accommodation entries. We further notice that the AO has not carried out any independent findings with regard to the alleged accommodation entries and has merely relied on the report. We also notice that the AO has not examined the claim of the assessee that these donations are accounted in the books. From the perusal of the findings of the CIT(A) we notice that the CIT(A) has factually examined the impugned issue and has given relief to the assessee stating that the donors have mentioned the purpose of giving the donation and hence the same is to be accepted as corpus donations. Accordingly we see no infirmity in the findings of CIT(A) in deleting the addition to the tune of Rs.9,00,38,340. The ground of the revenue in this regard is dismissed

34. With regard to the addition confirmed by the CIT(A) towards donation received from Mr. Abdul Fakir Malim, we notice that the reason as stated by the CIT(A) is that the donor's son has been given admission in D Y Patil University. In this regard we notice that Mr. Abdul Fakir Malim has given a letter stating that he to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society is donating towards the educational cause as carried out by the assessee. We further notice that the CIT(A) while holding that there is a nexus between the admission of the student and the donation received from Mr. Abdul Fakir Malim, has not recorded anything regarding how the nexus is factually examined. We also notice that there is nothing on record to show that 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

36. Before the CIT(A) the assessee made a detailed submission with regard to the development fees and the CIT(A) deleted the addition by making the following observations:

7.3.5. I have considered the submission of the appellant. As stated by the appellant, the parents/students were informed at the time of admission that the institute would charge development fee, which would be used for construction of the building. The students/parents have taken informed decisions to proceed with the admission in the institute knowing fully well that the institute would be charging the development fee. They had an option of approaching any other college/institute, but they chose to seek admission in the appellants' institute. There is nothing brought on record to indicate that the parents were kept in the dark 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. to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 37. The ld. AR argued that the donations are collected through proper banking channel and that the students are informed that the development fees would be charged which would form part of its corpus. The ld. AR further submitted that no complaints are received from the parents or students regarding charging of development fees and collection of management fees for incurring capital expenditure is allowed by UGC notification dated October 1997 as per the prescribed guidelines.

38. The ld DR argued that for the receipt to be treated as part of donation, the key requirement is that it should be voluntary. The ld DR further argued that Development fees which is pre-determined, non-negotiable part of the admission package, not an optional, conscious donation towards corpus where donations are part of contractual obligation or compulsory payments, such contributions cannot be regarded as voluntary, and hence not eligible for exemption as corpus donations. The ld DR also argued that even if the claim of the assessee that the fee collected is within UGC regulations, that does not change the income nature of the receipts since the corpus character is not automatic under UGC guidelines. The ld DR submitted that no material has been brought on record showing any written or express direction from the students/parents earmarking the fee as corpus. In summary the ld DR submitted that the corpus nature cannot be presumed merely because the Trust decides to apply the fund for capital expenditure and the CIT(A) has erred in allowing the claim of the assessee.

“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.

'4.7 The question, as has been posed by the Tribunal, is whether the contributions or donations are voluntary or involuntary and what is the effect of such donation. The Tribunal was of the view that there is no concept of involuntary contributions and went on to hold that voluntary contributions should be treated as income under section 12 of the Act and that corpus donations to be treated as capital receipt under section 11(1)(d) of the Act and corpus donations are not generally in the nature of income. It further held that voluntary contributions are taxable only if not applied for charitable purposes. The emphasis is on, not applying the same for charitable purposes.

4.8 Whether contribution is voluntary or involuntary and its implication in relation to these provisions was considered by the Tribunal in the following manner:

"35. To proceed further, we have to examine the (30) scheme of law of charities provided under the Income-tax Act, 1961. There is no concept of involuntary contributions in that scheme. The only distinction recognized by law is the voluntary contributions to be treated as income under section 12 and the corpus donations to be treated as capital receipt under section 11(1)(d). The corpus donations are not generally in the nature of income. The voluntary contributions are taxable only if not applied for 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?

This reasoning of the Tribunal, we are inclined to accept.

4.9 The finding of the Tribunal is that the department has not established a case that the assessee had in this case not utilized the donations or income for charitable purpose. The clear finding of the Tribunal is that if the assessee had not utilized the amount for charitable purpose, it would automatically become taxable and the assessee would not be entitled to exemption. But, on the contrary, without there being a finding of violation of section 13 of the Act, an inference is drawn on an alleged receipt of donation and consequently, the allegation is made that there is a violation of section 13(1)(d) of the Act. A hypothetical finding is given that because capitation fee is charged, it is not an income in terms of section 11 of the Act and, therefore, there is a violation of section 13(1)(d) of the Act. The Tribunal held that such a reasoning cannot be accepted because if the donations are offered for income and if the department wants to disprove the nature of income on the basis of material, as has been pointed (33) out by the Commissioner of Income-tax (Appeals), it should be borne out by records based on investigation, which the Assessing Officer failed to do, except falling back on a statement which is not supported by materials'.

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 certificate was in force. Though it was cancelled by the Revenue it has been restored by an order passed by this Court in ITA.No.421/2013.

Identical view has been expressed by Hon’ble Karnataka High Court in another case, viz., PCIT vs. Rashtreeya Shiksha Samithi Trust (2023)(152 taxmann.com 664)(Kar) as under:-

“7. We have carefully considered rival contentions and perused records.

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 money collected by the assessee as capitation fee under the KEI (Prohibition of Capitation Fee) Act. Therefore, the said authority does not lend any support to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society to the Revenue. This court has already taken a view in Kammavari Sangham's case (supra) and the same is applicable to the facts of this case.

Accordingly, we hold that the assessee should be granted exemption u/s 11 of the Act in all the years under consideration. We order accordingly.

40. The nature of receipts in assessee's case is identical to the above case and the AO's findings in assessee’s case are also on similar lines. Therefore in our considered view there is no reason for us to interfere with the decision of the CIT(A). The ground raised by the revenue in this regard is dismissed.

Unexplained Foreign Currency – Assessee's Ground No.5

41. During the course of search foreign currency valued at Rs. 24,79,235/- was found and seized from the locker of Smt. Shivani V. Patil at Union Bank of India. The assessee submitted before the AO that the foreign currencies are accounted and was purchased for a programme of Ramarao Adik Institute of Technology in to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society USA. The assessee further submitted that there was an alumnus get together in USA and the foreign currency was given by the students during the course of programme. The assessee also submitted that these foreign currencies are accounted in the books of accounts. The AO however did not accept the submissions of the assessee stating that the assessee has not submitted any documentary evidences towards 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 made the contribution, source of foreign currency of other than USDs, details of refunds made to the unspent currency, details of conversion to other currency, details on how the contribution was brought back in India, whether the same was brought in a single visit or multiple visits etc. Most importantly, it is not understood why the foreign currency which is statedly donated /contributed for the appellant Trust should be found in the personal bank locker of the Trustee. I am not convinced with the explanation provide by the appellant. In all likelihood, the foreign currency represents the currency accumulated by the Trustees during their visits abroad. The appellant has not been able to explain the source of the said foreign currency and whether the same has been accounted for in its books of accounts. I hold that the AO has rightly invoked the provisions of section 69A of the Act. The addition of Rs. 24,79,235/ is upheld.”

to 1515 & 2270 to 2276/Mum/2025 Ramrao Adik Education Society 42. The ld. AR submitted that the foreign currency has purchased by the assessee for the aluminous programme in the USA and that the purchase is accounted in the books since it is done through proper banking channel. The ld. AR further submitted that the students during the course of programme contributed in foreign currency for the function and the same was carried back to India by the people who returned. The ld. AR argued that when the foreign currency is accounted for in the books of accounts with proper explanation for the source etc. the same cannot be treated as unexplained by the AO.

Rejection of books of accounts and denial of exemption u/s 11 – Revenue's Ground No.7

Disallowance of Depreciation – Revenue's Ground No.10