M/S. SRI DEVARAJ URS EDUCATIONAL TRUST FOR BACKWARD CLASSES (REGD),KOLAR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), BANGALORE
Income Tax Appellate Tribunal, ‘A’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
ITA No.1060-1559-1560-1561/Bang/2024 &
903-1547-1548-1549/Bang/2024
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PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is a set of 8 cross appeals filed by the assessee and the revenue arising from the order of Commissioner of Income Tax (Appeal)
[hereafter learned CIT(A)] for A.Ys. 2017-18 to 2019-20 dated 28th June
2024 and order for A.Y. 2020-21 dated 29th March 2024. First, we take up ITA No. 1060/Bang/2024, an appeal by the assessee for the A.Y. 2020-21 as the lead case.
The Ground No. 1 of the assessee’s appeal is general in nature and therefore the same does not require any separate adjudication. Therefore, the same is hereby dismissed as infructuous.
The issue raised by the assessee through Ground Nos. 2.1 and 2.3 to 3.6 are interconnected and pertains to the addition of Rs. 23,77,50,000/- on account of collection of capitation fees.
The relevant facts are that the assessee i.e. M/s Devaraj Urs Educational Trust for Backward Classes, Kolar, was set up to provide education in the fields like medicine, engineering, pharmacy, nursing, and schooling. The trust was officially registered on 14th November 1984. Shri R. L. Jalappa is the founder trustee and chairman, and his children Shri J. Rajendra and Smt. J. Saraswati are also trustees. Shri G. H. Nagaraj is the secretary of the assessee trust and actively involved in day-to-day affairs of the assessee trust. The trust is running several educational institutions.
ITA No.1060-1559-1560-1561/Bang/2024 &
903-1547-1548-1549/Bang/2024
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4.1
A search under section 132 of the Act was carried out at the trust on 10th October 2019. During the search at the premises of Sri Devaraj
Urs Medical College Tamka Kolar, an excel sheet was found and seized from the computer operated by the cashier namely Shri P
Narayanaswami. The impugned excel sheet was maintained in tabular form containing details such as S. Nos., Name of Doctor, course, total,
Fee, Balance, Received and Balance.
2 The impugned sheet was confronted to the cashier Shri P Narayanaswami while recording his statement under section 132(4) of the Act. He explained that the impugned sheet reflects the details of the doctors who enrolled in assessee’s medical college for PG courses, the amount written there is in lakh. He further explained that amount noted in Total column reflect total amount payable including capitation fee, the fee column reflects the amount of course fee, the balance column reflects the capitation fee in cash, the Rcd column reflects the amount received out of capitation fee and last column i.e. bal reflects capitation fee yet to be received. However, Shri P Narayanswami claimed that he has not received the cash. He (Shri P Narayanaswami) stated that cash was received by Shri Nagaraj. He (Shri P Narayanaswami) only maintained the excel sheet at his (Shri Nagaraj) instruction/direction. He further confirmed his statement in the statement recoded under section 131(1) of the Act subsequent to the search operation.
3 The first page of impugned excel sheet contained names of 15 doctors allegedly enrolled in different medical courses offered by the assessee. Applying the explanation of the cashier, the assessee from ITA No.1060-1559-1560-1561/Bang/2024 & 903-1547-1548-1549/Bang/2024
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these doctors allegedly charged capitation fee of Rs. 9.82 crore out which Rs. 2.72 crore was received and 7.10 crore was yet to be received. Below to the names of 15 doctors, it mentions Old (UG) against which noted capitation fee of Rs. 5 crore which is still outstanding. The next page further contains names of 5 doctors from whom capitation fee of Rs. 2.505 crores were charged out of which 1.735 crores received and Rs. 77 lakh was yet to be received. Below that it mentions Old PG allegedly on which capitation of fee of Rs. 1.2 crore was charged which has been fully received.
4 When the impugned excel sheet and statement of cashier Shri P Narayanaswami was confronted to Shri GH Nagpal, he stated that he does not know anything about the same.
5 Besides above, a search proceeding was also carried out in the case of Sri Siddhartha Education Society as on 10th October 2019 (same date on which search was carried in the case of present assessee). In connection with the search at Sri Siddhartha Education Society, the residential premises of one agent namely Shri T Babu was also covered. As a result, incriminating documents in relation to the admission got done by him in various medical colleges for UG/PG courses against the capitation fee were found and seized marked as annexure A/TB/2, A/TB/3 and A/TB/5. The statement of Shri T Babu was recorded as on the date of search i.e. 10th October 2019 under section 132(4) of the Act where he explained the modus operandi for admission of the student in various medical colleges under management quota. He explained the noting on the seized materials etc. Further, his statement was recorded
ITA No.1060-1559-1560-1561/Bang/2024 &
903-1547-1548-1549/Bang/2024
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under section 131(1) of the Act as on 05th November 2019 wherein it was enquired about the admissions, he got done in the assessee‘s medial college. To which, he replied that during the financial year 2019-
20, he got the admissions of 15 students in MBBS courses (relevant seized materials Pages 25 to 39 of annexure A/TB/3), 4 students in PG
Course. He provided the names of those students showing total course fees, capitation fee agreed (including his commission), capitation fee collected out of the agreed amount. As per the details provided by Shri T
Babu, capitation fee of Rs. 10.1025 crore was agreed for admission of 15
students under MBBS course out which an amount of Rs. 4.625 crore only was collected. Likewise, for admission in PG courses capitation fee was agreed for only 2 students for Rs. 75 Lakh each and out of the same
Rs. 60 lakh was collected. The name of the student provided by the agent Shri T Babu for admission in PG course (4) are matching with the name appearing in the excel sheet found and seized from the computer operated by the cashier of the assessee at Sri Devaraj Urs Medical
College.
In view of the above the finding of search proceedings, the AO was of the opinion for the receipt of unaccounted money based on the excel sheet being found from assessee’s premises, the cashier who maintained the sheet admitted the receipt of capitation fees in the statement recorded under section 132(4) of the Act which was further confirmed by him in the statement recorded under section 131(1) of the Act after the search. The statement was not retracted at any stage. As per the ratio laid down by the Hon’ble Kerala High Court in the case of Abdul Razzack reported in 20 taxmann.com 48, the statement carries
ITA No.1060-1559-1560-1561/Bang/2024 &
903-1547-1548-1549/Bang/2024
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evidentiary value unless contra evidence brough on record. The details recorded in excel sheet is further corroborated by the materials found at the premises of agent Shri T Babu and his statement recorded under section 132(4) and 131(1) of the Act. The names of the students noted in the seized materials found from the cashier and agent Shri T Babu were real students studying with the assessee’s college which has been confirmed by the information received from