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Facts
During a search operation at the premises of the assessee trust, loose sheets containing financial data of students were found. These sheets indicated cash collections from students for admission and fees. The AO made additions based on these documents and statements recorded, alleging unaccounted cash receipts. The assessee contested the additions, arguing that the loose sheets were not reliable evidence, that statements were obtained under duress, and that discounts were given due to COVID-19, not concealed income.
Held
The Tribunal noted that the seized material consisted of loose sheets and jottings without proper authentication or corroboration. The Tribunal found that the AO relied heavily on statements recorded under Section 132(4) which were unsubstantiated. The Tribunal also observed that the assessee's students and parents, in their statements and affidavits, denied paying unaccounted fees. The Tribunal considered various legal precedents emphasizing the need for corroborative evidence for additions based on loose documents and statements.
Key Issues
Whether the additions made by the AO based on loose sheets and sworn statements are sustainable without corroborative evidence.
Sections Cited
132, 132(4), 164(2), 13(1)(c), 11(5), 131, 292B, 153A, 153C
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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI SOUNDARARAJAN K.
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against the order of CIT(A)-2. Panaji dated 27.3.2024 for the assessment year 2021-22. The assessee has raised following grounds of appeal:
1. The Appellate Order dated 27-03-2024 passed by the Ld. CIT(Appeal) — 2, Panaji — Goa is opposed o the Law, facts judicial decisions and weight of evidence of the facts and circumstances of the case
2. Ld. CIT(A) has erred in confirming the addition of Rs.6,61,00,000/- made by the AO without appreciating the facts and circumstances of the case
3. The Ld. CIT(A) has &red in confirming the addition of Rs.6,61 made by the AO solely based on the statement recorded by the employees of the Appellant Trust.
4. The Ld. CIT(A) has erred in confirming the addition of Rs.6,61,00,000/- made by the AO solely based on the statement recorded by the employees from whom the search team has not Laxmi Memorial Education Trust, Mangalore Page 2 of 108 impounded any books of account, documents, money, bullions, jewellery or any incriminating documents.
5. Ld. CIT(A) has erred in confirming the addition of Rs.6,61,00,000/- made by the AO on the basis of some dumb loose sheets said to have been found in the searched premises during the course of search without appreciating the fact the alleged dumb loose sheets cannot constitute books f account.
6. Ld. CIT(A) has erred in confirming the addition of Rs.6,61,00,000/- made by the AO on the basis of dumb loose sheets which were not in the nature of incriminating documents
7. Ld. CIT(A) has erred in confirming the addition of Rs.6,61,00,000/- made by the AO without appreciating the fact that the alleged contention of handing over amount of Rs.6,61,00,000/- to the management was not supported by any conclusive evidence as has been held by the CIT(A).
8. The Commissioner of Income Tax (Appeals) erred in not considering Form 9A filed by the appellant Trust.
Facts of the case are that during the course of search proceedings u/s 132 of IT Act 1961 in the case of the assessee at the premises of A.J. Institute of Medical Sciences and Research Centre, Mangalore, some handwritten loose sheets were found and seized. These same handwritten sheets were also recovered from the mobile of Mr. Vishwantath Shetty, the key employee of the assessee trust. The digital evidences were also seized. On examination, it was found that the documents contained similar types of data of students of UG and PG of medical sciences for academic batches from 2017-18 to 2019-20. 2.1 The seized material included a document titled as 'Old collection' which contained date, name of the students along with their academic batch year and amount. Similarly, a few other pages had the details of student enrolled in MBBS course in the then current academic year of 2020-21, which had the data of students enrolled in MBBS 2020-21 batch, their complete fee package of Laxmi Memorial Education Trust, Mangalore Page 3 of 108 MBBS course, the first fee installment through RTGS, pending fee to be paid in the coming years. 2.2 It was found that above mentioned handwritten loose sheets were maintained by Mr. Vishwanath Shetty and they were in his own hand writing. The same images of these sheets were also found in his mobile. In his sworn statement dated 20.02.2020, Shri. Vishwanath Shetty stated that these figures reflected the cash collected by him from the students enrolled in PG and UG courses in either management quota or NRI quota. The document with the title 'Old collection' suggested the collection made by Mr. Vishwanath Shetty from the students who were enrolled in MBBS and MD/MS courses in academic years 2017-18, 2018-19 and 2019-20. 2.3 M/S A.J Institute of Medical Sciences and Research Centre had appointed one Mr. Ravindra to call either the students or their parents to remind them to pay pending fee on time. The students who were studying in medical and dental education courses were reminded by him to pay the pending fee. In this regard, he maintained excel sheets which contained the details of students, course name, balance fee, date of the payment etc. The same were found and seized during the course of search proceedings at the premises OF A.J. Institute of Medical Science and Research centre.
2.4 Since Mr. Ravindra left the job, one Mr. Dilip Kumar was appointed in his place and he continued to carry out the same job done earlier by Mr. Ravindra. During the course of the search proceeding, Mr. Dilip Kumar confirmed that loose excel sheets were maintained by him which were found and seized. Mr. Dilip has written fee receipt transactions on the same sheet in his own handwriting.
2.5 The AO observed that Mr. Dilip Kumar maintained the record of the due fee of the students pursuing their study in medical and Laxmi Memorial Education Trust, Mangalore Page 4 of 108 dental courses and for those who have gotten admission in management and NRI quota in the college. That the amounts received through banking channel were scribbled down by Mr. Dilip Kumar in pen in front of the particular row which contained the details of the student and there were encircling made in pencil also in some cases.
2.6 During the course of search proceedings, a sworn statement dated 20.02.2021 of Mr. Dilip Kumar was recorded u/ 132(4) of the Act, in which he AX stated that Mr. Vishwanath Shetty had collected some part of their fee directly and in such cases, he recorded 'pd to V.S' in pencil. Mr. Dilip Kumar categorically admitted that 'Pd to V.S' means cash paid to Mr. Vishwanath Shetty.
2.7 In subsequent statements, he again confirmed that while calling the students to remind them to pay their due fee, he came to know about the cash paid by them to Mr. Vishwanath Shetty. The amount of cash paid to Mr. Vishwanath Shetty was cross verified by calling him over the phone and confirming the same from Mr. Vishwanath Shetty. Once he confirmed the receipt of cash from student or their parents, he encircled the pending fee using pencil and had written either 'NIL' or 'Pd to V.S'.
2.8 The sworn statement of Mr. Vishwanath Shetty dated 20.02.2021, in which he too stated that he collected cash from the students not only during the admission year but also during the subsequent years. The same had been maintained by him in the loose sheets separately maintained by him. This sheet revealed that the total remaining amount after payment of fee at the admission time was divided in equal installments for the remaining years in most of the cases. In case of payment of fee in cash to Mr. Vishwanath Shetty by the parents, the same were Laxmi Memorial Education Trust, Mangalore Page 5 of 108 intimated to Mr. Dilip Kumar, who updated the records as 'pd to v.s'.
2.9 The records maintained by Mr. Dilip Kumar were validated by Mr. Vishwanath Shetty and confirmed that he collected the cash from the students and the details of the same were conveyed to Mr. Dilip Kumar. He admitted that the noting made by Mr. Dilip Kumar in pencil 'pd to v.s' were the cash collected by him.
2.10 Explaining the contents of seized materials, Mr. Vishwanath Shetty stated that he maintained the total cash received from the students of various UG and PG batches of medical Sciences who were enrolled either on Management seat or the NRI seat in academic years 2017-18 to 2019-20. Accordingly, the AO determined that Mr. Vishwanath Shetty collected cash of Rs. 6,71 from the students of various streams in financial year 2020-21. 2.11 Mr. Vishwanath Shetty filed a retraction letter dated 25.02.2021 before the DDIT(Inv.), Mangalore. The AO rejected the retraction claim stating that the retraction filed was a bald one without specifying the exact reasons for retraction and without substantiating what was specifically false in the statement record during the search.
2.12 In the later statements, Mr. Vishwanath Shetty claimed that the amount mentioned on the seized materials were maintained for follow-up purposes and that these loose sheets had the data related to cash collected by the agents. He also mentioned that the students paid cash to agents through whom they got admission and claimed that he had not received the said cash.
2.13 The AO observed that the aforesaid claims were contradictory, and that the role of agents were limited to introducing students to the college and carrying out all the documentation and procedure Laxmi Memorial Education Trust, Mangalore Page 6 of 108 for admission, and they received commission for the same. The agent had no role post the admission of the students. Therefore, the AO asserted it is highly unlikely that the agents would have received the cash from the students as claimed by Mr. Vishwanath Shetty and no evidence for the claims made were found during the search. Mr. Vishwanath Shetty also claimed that the handwritten figures in the seized materials were nothing but discounts given to students. The AO countered these arguments with evidences in the assessment order and discredited the claim. 2.14 Mr. A.J Shetty is the President of the assessee Trust. He along with his son Mr. Prashanth Shetty looked after the overall functioning of the colleges registered under the Trust. All the decisions were taken by Mr. A. J Shetty regarding the financial matters of trust and he was the authorized signatory for expenditure related payment of trust. Mr. Vishwanath Shetty, the admission manager reported directly to Mr. AJ Shetty or to Mr. Prashanth Shetty. 2.15 During the course of search proceedings at the residential premises of Mr. AJ. Shetty, in his statement recorded u/s 132(4), he sought sometime to explain/comment on the evidences found and statements recorded from the employees including post search investigation, Mr. A.J Shetty's statement was recorded wherein he claimed that students of management or NRI quota were given discounts at their discretion and at any stage during the course period, and the amounts sanctioned by him were communicated to the students/parents by him or through Mr. Vishwanath Shetty.
2.16 The AO asserted that the college administration had not maintained any record for the discounts granted, and there were no policies or said procedures to extend the discounts to eligible students. There is a huge variation in giving the so-called discount to students. Further, there were no applications received from the Laxmi Memorial Education Trust, Mangalore Page 7 of 108 students who got the so-called discount. Had the student been genuinely granted discount for the pending fee, Mr. Dilip Kumar would have recorded as discount not as 'pd to V.S' etc.
2.17 Further, no enquiry was ever conducted by the college administration to find out the eligibility of the candidates to avail the discounts. He also added that has the discount granted by the assessee was bona fide in nature, the discounts would have been granted for other academic years too, whereas the discounts granted to the students by Mr. A.J Shetty was only for academic year 2020-21. If the reason for such abnormality was due to COVID Pandemic, the candidates who had got admission in current year 2020-21 in medical courses should also have been granted discounts but this was not the case. Therefore, the AO rejected the claim of the Mr. A J Shetty as one without any supporting evidence.
2.18 The assessee was accorded an opportunity to cross summons Mr. Dilip Kumar and Mr. Vishwanath Shetty. During the cross examinations, both Mr. Dilip Kumar and Mr. Vishwanath Shetty claimed that cash was not collected for admission process to MBBS and MD seats and instead, concession was given to students due to covid and others reasons by the management of the trust. It was crystal clear that Mr. Mr. Vishwanath Shetty and Mr. Dilip Kumar had turned hostile by changing their stance and deposition on oath.
2.19 The AO pointed out that even there were contradictions in the statements dated 29.09.2021 and 17.08.2021 deposed by Mr. Vishwanath Shetty and Mr. Dilip Kumar and he specified certain instances to prove the same. Further, the AO stated that the retracting statements given were nothing but an afterthought to cover up the cash received by them from the students. The AO Laxmi Memorial Education Trust, Mangalore Page 8 of 108 referred to and relied upon many judicial pronouncements to support his action that the statements recorded u/s 132(4) and 131 of the Act have great evidentiary value and cannot be denied in a summary manner. Hence, the unaccounted cash receipts ofRs.6,61,00,000/- was treated as income of the assessee. 2.20 Further, it is seen from the assessment order that the AO claimed that incriminating materials were found at the search premises with respect to seat blocking and cancellation scam by the assessee. The AO explained the concept of "Stray Vacancies", which were nothing but unallotted seats which are lying vacant after the end of MOP-UP round of counseling. In the case of the assessee, the total seats filled under management quota was 40, whereas the total seats available under management quota was 30. This is because, as per the KEA Rules, no seats were to be surrendered post MOP-UP to prevent merit seats from becoming vacant. Accordingly, the cancelled seats were reallocated to the assessee trust to fill under the management quota. 2.21 The AO compared the prescribed fee structure for merit seats and that of the management seats and ascertained that the assessee would get profited by Rs.4,82,51,730/- (Rs.9,30,00,000 – Rs.4,47,48,270) over a period of 5 years on the cancelled seats which were filled up by students under management quota. 2.22 The AO asserted that during the search and post search investigations, it was learnt that the assessee was actively involved in blocking of seats in OPN category and later surrendering the seats. Post MOP-UP round and admitting management quota students in the place of those seats, by colluding with some students with higher ranks, the assessee has profiteered Rs.4,82,51,730/- over a period of 5 years. He further claimed that during the admission, cash was collected from replaced students. Therefore, 20% of Rs, 4,82,51,730 (i.e. Rs.96,50,346/-) was added as cash received during this year in the hands of the Trust.
Laxmi Memorial Education Trust, Mangalore Page 9 of 108 2.23 The AO proposed to invoke section 164(2) of the Act to tax the entire unaccounted cash receipts at maximum marginal rate of tax citing the judicial pronouncements in the case of CIT vs. Fr. Mullers Charitable Institution (2014) (Kar) (363 ITR 230) and CIT vs Krupanidhi Education Trust (ITA No.230/2016 c/w dated 20.09.2021). 2.24 The aforesaid decisions were on the issue of violation of section 13(1)(c) & 13(1)(d) r.w.s 11(5) and the tax liability u/s 164(2) of the Act. The AO observed that Mr. Vishwanath Shetty in his statement u/s 132(4) had admitted that the cash collected had been paid to Mr. A J Shetty, the Trustee of the assessee Trust.
2.25 Based on the statement of Mr. Vishwanath Shetty, the AO concluded that the sum of Rs. 7,57,50,346/- was applied to the benefit of the Trustee which is in contravention of the provision of section 13(1)(c), and following the jurisdictional High court's decision mentioned above, the AO held that the amount of Rs.7,57,50,346/- was to be taxed in the hands of the assessee trust at the maximum marginal rate under section (13)(1) (c) r.w.s 164.
2.26 On analyzing the corroborating evidences found during the search, the AO established that unaccounted cash receipts from students aggregated to Rs. 6,61,00,000/- during F.Y 2020-21 and these receipts were not accounted by the assessee Trust.
2.27 Against this assessee went in appeal before ld. CIT(A) who has confirmed the order of ld. AO with regard to addition of Rs 6,61,00,000/- and given a partial relief. Once again, the assessee is in appeal before us. 3. First, ground Nos.1 to 7 are with regard to addition of Rs.6.61 Crores on the basis of statement recorded u/s 132(4) of the Act supported by unsubstantiated documents found during the course of search.
Laxmi Memorial Education Trust, Mangalore Page 10 of 108 3.1 The ld. A.R. submitted that the Learned CIT(A) erred by acknowledging the addition of Rs. 6.61 crores made by the learned AO solely on the basis of sworn statement and loose sheets found in the possession of employees of the trust, which is not sustainable under law. The Learned CIT(A) also erred in upholding the decision of Ld. AO to tax Rs. 6.61 crores by treating the same as unaccounted cash receipts from students without considering the facts and circumstances of the case. He erred by accepting the addition of Rs. 6.61 crores without considering the fact that Mr. Dilip, being the employee of the appellant trust, who’s role is to follow up with students for the pending fees, is a new recruitment to the said role wherein the possibilities of error committed by him is more due to lack of experience to the said role. The Learned CIT(A) erred in sustaining the addition by disregarding the fact that the retraction of sworn statements by employees of the appellant was due to their health issues, furnishing of incorrect facts etc. and the presumption by the Income-tax department that such retraction was due to pressure from the appellant is baseless. The Learned CIT(A) erred by not appreciating the fact that the discounts given by the appellant was instructed to the parents and students to not to reveal the same to the employees of the trust such as Mr. Dilip Kumar and Mr. Vishwanath Shetty, as stated by a parent, Mr. Udaya Shetty, in his sworn statement dated 14th March 2022. This decision was taken by the appellant to avoid the employees from taking any undue advantage from it. The Learned CIT(A) erred in upholding the finding of Ld. AO by merely relying on evidence in the form of WhatsApp messages exchanged between the employees of the appellant and the parent of a student wherein the message was worded as if the amount was remitted in cash just to disguise the discount granted by the appellant. The Learned CIT(A) failed to consider that this fact was clearly established by the sender of the message himself (i.e. parent) in the sworn Laxmi Memorial Education Trust, Mangalore Page 11 of 108 statement recorded on 14th March, 2022. The Learned CIT(A) erred in upholding the finding of Ld. AO by ignoring the sworn statements recorded from the appellant’s students and parent on 14th March, 2022 who themselves acknowledged the fact that they were granted discount in payment of fee by the appellant due to the COVID-19 pandemic. The Learned CIT(A) erred by concluding that the discounts granted are not genuine in nature without considering the fact that the discounts were given on account of the COVID-19 abnormality and not regularly. 3.2 The ld. A.R. for the assessee further submitted regarding Covid that Vishwanath Shetty was suffering from Covid from 11-09- 2020 to 12-11-2020. The medical certificates are already been submitted in assesee’s Paper book dtd 23-04-2024 in SL No.3 page 95-98. Amount mentioned during this period is Rs.1,75,50,000 which amounts to around 38% of Rs.4,57,00,000. When he was in ICU etc how can he take cash. But initially on 20-02-2021 in his statement on oath said to be taken under section132(4) of the act, he stated he has received cash, Also stated in Page 58 of the assessment order (In his answer to question No 5 ), that Mr. Vishwanath Shetty was suffering from Covid-19 for the above period. No corroborative evidence in the seized material: in Para 13 of page 46 of the Assessment Order, the learned Assessing Officer has stated as follows: “There are cases where the search team could not find the other corroborating evidence like cheque leaves, the records maintained by the Mr. Dilip Kumar except the data maintained in loose sheet folder marked as A/AJIMS/02’.” 3.3 Thus, he submitted that the learned Assessing Officer himself has stated that there is no corroborative evidence in most of the cases. Apart from that whatever seized (A/AJIMS/02) is loose sheets only. Further, in answer to question no 5 as reproduced in Page 58 of the assessment order, Vishwanath Shetty stated that Laxmi Memorial Education Trust, Mangalore Page 12 of 108 “these are details which are convened and compelled to write on Paper in my own handwriting these are not cash transaction.” 3.4 He submitted that in page 74 of the assessment order, in sworn statement Uday Shetty told there is no cash involved. (Students father from whom it was alleged Rs 15,00,000 was received in cash). Page 179 of assessee’s paper book dtd.23-04- 2024– Mr. Vishwanath Shetty claimed it is only a list of pending fee. Therefore, it is only a loose sheet. Also in page 23/24 of the Assessment Order it is mentioned that it is only a loose sheet/ dumb sheet, therefore additions cannot be made on the basis of loose sheets. In Page 31, Para 9.3 of the assessment order , the Assessing Officer based on the sworn statement of Mr. Vishwanath Shetty has stated that A/AJIMS/02 is discount, still pending / outstanding fees or wrong data. In other words, it is not cash transaction. 3.5 Regarding Mistakes in A/AJIMS/02 the ld. A.R. submitted as follows: • In one case, Mr. Bhaskar Gorla as reproduced in Page 145 of assessee’s paper book dtd.23-04-2024 and page 33 of assessment order Mr. Vishwanath Shetty has mentioned Rs.8,00,000 instead of Rs.5,00,000. • Aishwarya R: Mr. Vishwanath Shetty has taken Rs.23,50,000 instead of Rs.13,50,000. Thus there are various mistakes only few are pointed out by the appellant. 3.6 In page 58 of the Assessment Order, Mr. Vishwanath Shetty said he was forced /compelled to write a statement. Statement of oath u/s 132(4) of the Act is not called for in the case of employees, that is Mr. Vishwanath Shetty and Mr. Dileep. In which regard, he relied on Madras High Court judgment in the case of CIT vs Smt. Jayalaksmi Ammal 390 ITR 189 (2017). Phone numbers of students/ parents were available as on the date of the search.
Laxmi Memorial Education Trust, Mangalore Page 13 of 108 Investigation wing not called them and made independent enquiry of the alleged payment of fees in cash during the search or post search enquiry. In Page 11, Dileep in sworn statement stated he knows nothing about cash payment by Utsav /Uday Shetty (Page 20 of the assessment order) – In answer to question no.17 of the sworn statement dtd 11-08-2021. While showing whatsapp message to Mr. Dilip and when the said whatsapp message was shown to Mr. Vishwanath Shetty. Mr. Viswanath Shetty has the said amount must have been collected by agent. Affidavit for not giving cash in the case of 33 students. In addition, other students / parents gave sworn statement before the assessing officer, during the assessment proceedings. Section31 of the Indian Evidence Act 1872 states that statements/admissions are not conclusive proof. He relied on various precedents which are kept on record.
4. The ld. D.R. submitted that the above issue based on the seized materials found during the search and the statements recorded from various persons at that time. The AO brought out the relevant evidences recovered from the search premises and analyzed these documents in detail along with the statements recorded from Mr. Dilip Kumar and Mr. Vishwanath Shetty. The seized materials, which are the primary evidences, are unambiguously clear in incriminating the appellant on the collection of unaccounted cash receipts from the students. 4.1 The seized documents clearly showed the name of the students, year of admission, batch, the course admitted to, total fees to be paid, dates, the amount paid in RTGS/other bank modes and other amounts with remarks as to whom they were paid to. The titles of these documents such as "old collection" made the purpose evident and the fact that the amounts recorded in the seized material with the title "old collection" were not recorded in the books of account clearly established that these were the unaccounted cash receipts. The statements from the persons in Laxmi Memorial Education Trust, Mangalore Page 14 of 108 whose handwriting these documents were written were also unblemished and corroborative. There were not discrepancies or inaccuracies in the statements provided by those persons during the search. Only those retraction statements filed after the search were questionable and unsubstantiated. These retraction statements were only picking up on some negligible gaps and made some bare claims to escape tax liability and other consequent penal actions. 4.2 The arguments such as discounts offered to certain group of students have been raised before the AO who had considered these arguments carefully and pointed out very clearly that the gap between the prescribed fees for the respective courses and the fees shown to have been collected from students and reflected in the books of account of the appellant are not discounts but unaccounted cash receipts of the appellant. Neither the appellant had produced any evidences regarding the policies adopted for discounts nor were there any evidences found during the search relating to discounts actually offered to those students. Further, no evidence regarding cash commission received by agents who introduced the students was produced by the appellant to prove such claim relating to the involvement of agents. The claims made by the appellant were inconsistent and unreliable.
4.3 According to Ld DR, the evidences found are self-speaking, self- explanatory, unambiguous and incriminating against the appellant. explanation offered by the appellant justifies the claim and does not stand in the way of the evidences found and the assessment made in this regard. The abbreviated noting on the amounts received by Mr. Vishwanath Shetty was clarified by him in his sworn statement and this matched with the other evidences found during the search. Based on the documents found, the amount of Rs.6,61 was arrived at by the AO as unaccounted cash receipts Laxmi Memorial Education Trust, Mangalore Page 15 of 108 from the old students who were pursuing the courses and from new admissions. She supported the findings of lower authorities and prayed that the addition of Rs.6,61,00,000/was collected by the appellant from the students as unaccounted cash receipts in A.Y 2021-22 to be sustained. 4.4 Further, she relied on the following case laws: (i) Judgement of Hon’ble Supreme Court of India in the case of Video Master Vs. JCIT reported in (2015) 378 ITR 374 (SC), wherein held as under: “A search and seizure operation was carried on at premises of the assessee’ firm and others where in partner of the assessee disclosed certain undisclosed income. Accordingly, an addition was made to the income of the assessee. The Tribunal held that statement made by partner could be used as evidence and accordingly upheld the assessment order. The High Court dismissed appeal of the assessee. Held that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record.”
(ii) Judgement of Hon’ble High Court of Kerala in the case of CIT, Kozhikode Vs. O. Abdul Razak reported in (2013) 350 ITR 71 (Kerala) where held as follows: “IT: As self-serving retraction, without anything more cannot dispel statement made under oath under section 132(4)”.
(iii) Judgement of Hon’ble High Court of Jharkhand in the case of Mahabir Prasad Rungta Vs. CIT, Ranchi reported in (2014) 266 CTR 175 (Kharkhan) (9.1.2014) wherein held as under: “IT: Where assessee has not adduced any rebuttal evidence to show that entries made in diary/loose sheets recovered during search are not income in hands of assessee, addition is to be upheld.”
(iv) Judgement of Hon’ble Supreme Court of India in the case of Roshanlal Sanchiti Vs. PCIT reported in (2023) 150 taxmann.com 228 (SC), wherein held that “retraction of statement recorded u/s 132(4) of the Act has to be made within reasonable time or Laxmi Memorial Education Trust, Mangalore Page 16 of 108 immediately after statement of assessee is recorded and hence where retraction of statement recorded u/s 132(4) and later confirmed in statement recorded u/s 131 had been made by assessee after almost 8 months same was to be disregarded.” (v) Judgement of Hon’ble Delhi High Court in the case of CIT Vs. Chetan Das Lachman Das wherein held as follows: “13. Coming to the order of the Tribunal, we are of the view that the reasons given by it to distinguish the judgment of the Supreme Court cited (supra) are not sound. Firstly, there was seized material in the present case to show that the assessee has been indulging in off-record transactions. The observation of the Tribunal that no evidence was found to show that the actual turnover of the assessee was more than the declared turnover is hair splitting. The Tribunal lost sight of the fact that all was not well with the books of account maintained by the assessee and it has been keeping away its income from the books. That should have been sufficient for the Tribunal to examine the estimate made by the Assessing Officer, having regard to the principles laid down in the judgment of the Supreme Court (supra). The Tribunal also failed to note the difference between Section 158BB appearing in the Chapter-XIVB and the assessment made by virtue of the provisions of Section 153A of the Act. Secondly, the Tribunal expects the purchasers from the assessee to come forward and declare that they have paid more than what was appearing in the sale bills issued to them and has commented upon the lack of any inquiry from the purchasers on this line. Suffice to say that this throws an impossible burden on the Assessing Officer, having regard to the observations of the Supreme Court that the assessee cannot be permitted to take advantage of his own illegal acts, that it was his duty to place all facts truthfully before the assessing authority, that if he fails to do his duty She cannot be allowed to say that assessing authority failed to establish suppression of income, that the facts are within his personal knowledge and therefore it was the burden of the assessee to prove that there was no suppression. Thirdly, the Tribunal has stated that there was no corroborative material to substantiate the contents of the loose papers found during the search. We are not impressed by this reason at all. The papers are not denied or disputed by the assessee. The CIT (Appeals) has found that the partners of the assessee firm had admitted to the practice of suppressing the profits. The papers themselves show two different rates, one higher and the other lower and on comparison with the sale bills it has been found that the sale bills show the lower rate and these findings have not been denied by the assessee. The Tribunal, therefore, erred in looking for some other corroboration to substantiate the contents of the loose papers, overlooking that the loose papers needed no further corroboration and the sale bills compared with the seized papers themselves corroborated the suppression of income. Fourthly, the Tribunal has relied on the observations of the CIT (Appeals) that no serious consideration can be given to the loose papers and has held that this shows that there is "nothing more in Revenue s kitty apart from those said loose papers pertaining to November, 2005 (financial year 2005-06) to support suppression of sales receipts on the part Laxmi Memorial Education Trust, Mangalore Page 17 of 108 of the assessee firm". The Tribunal, with respect, has misread the observations of the CIT (Appeals) and has relied on a single observation without reading the order of the CIT (Appeals) as a whole. Moreover, in such cases, it is expected of the Tribunal to also independently examine the decision of the CIT (Appeals) which is impugned before it. In such cases it would be more appropriate to find out or ascertain whether there is any positive material which is in support of the assessee’s case or anything upon which the assessee can rely in order to discharge the burden placed upon him in the light of the judgment of the Supreme Court in H M Esufali H. M. Abdulali (supra). Mere negative findings should not be made use of to throw out the case of the department. Lastly, the reliance placed by the Tribunal on the judgment of this Court in CIT v. Anand Kumar Deepak Kumar, (2007) 294 ITR 497 does not seem appropriate. There it was held that there was no presumption that unaccounted sales in the pre-search period would continue in the post search period also. This judgment has no application to the present case because the search took place on 13.12.2005 which falls in the year relevant to the assessment year 2006-07. The assessments under Section 153A of the Act have been completed up to and including the assessment year 2006-07. Even if there can be no presumption that after 13.12.2005 there could have been unaccounted sale of Hing or compound Hing, it is hardly material since only a period of 31/2 months were left aft e date of search till the end of the previous year i.e. 31.3.2006.”
We have heard the rival submissions and perused the materials available on record. The ld. AO in this case made additions as follows: 1. Unaccounted cash received from Rs.50,00,000/- students as per discussion in para 11.1 to 11.4 of the assessment order
2. Unaccounted cash received from Rs.4,57,50,000/- students as per para 12 to 12.6 of the assessment order
3. Unaccounted cash received from Rs.1,23,50,000/- students as per para 13 to 13.2 of the assessment order
Unaccounted cash received from Rs.30,00,000/- students as per para 14 of the assessment order Total Rs.6,61,00,000/- Laxmi Memorial Education Trust, Mangalore Page 18 of 108 5.1 The summary of the seized material relied for making above additions and corresponding statements from the various parties are as follows: Affidavit or Page Sworn Seized Material No. of Statement SL. Name of Reference in Assessment Extract the Batch given by NO Student Order/ Paper book Reference in paper Students/ Paper book book Parents No.3 Sworn Page No 71& 72 of Page No 113 of Paper book No 1 01-02 Statement Assessment order 1 BH Gyan 2019-20 Man Shetty Page No 114 of Somanath 03 Paper book No 1 Sudarshan 2 2019-20 Not able to contact Sworn Statement from Page No 115-116 Mr.Uday 04-05 of Paper book No Shetty (Father 1 of Utsav Page No 73& 75 of 3 Utsav Shetty 2019-20 Shetty) Assessment order Kunwar Assessee’s Paper book Page No 116 of 06 Rahihikmat No.1 (Page No. 72 & 73). Paper book No 1 4 2017-18 Affidavit Assessee’s Paper book Page No 117 of 07 No.1 (Page No. 74). Paper book No 1 5 Lekha Bhat 2017-18 Affidavit Shashank D Assessee’s Paper book Page No 118 of 08 Raghavan No.1 (Page No. 89) Paper book No 1 6 2017-18 Affidavit Akshara Assessee’s Paper book Page No 118-119 Shetty No.1 (Page No. 37 & 38) 09-10 of Paper book No 7 2018-19 Affidavit 1 Ankit Page No 120 of Malligarjun 11 Sworn Page No 69& 70 of Paper book No 1 Hudalogi 8 2018-19 Statement Assessment order Kadeejath Page No 121 of Shanifa 12 Assessee’s Paper book Paper book No 1 Farveen 9 2018-19 Affidavit No.1 (Page No. 68 & 69). Krishna Priya Assessee’s Paper book Page No 122-123 HK No.1 (Page No. 70 & 71). of Paper book No 13-14 10 2018-19 Affidavit 1 Shivaprakash Assessee’s Paper book Page No 123-124 P No.1 (Page No. 90 & 91). of Paper book No 15-16 11 2018-19 Affidavit 1 Shravan Assessee’s Paper book Page No 124-125 Kumar Shetty No.1 (Page No. 92 & 93) of Paper book No 17 12 2018-19 Affidavit 1 Suha Suman Assessee’s Paper book Page No 125-126 AV No.1 (Page No. 94) of Paper book No 18-19 13 2018-19 Affidavit 1 Aishwarya Assessee’s Paper book Page No 127 of 20 14 Ajay 2019-20 Affidavit No.1 (Page No. 33 & 34). Paper book No 1 Laxmi Memorial Education Trust, Mangalore Page 19 of 108 Aishwarya Assessee’s Paper book Page No 128 of Paper book No 2 21-22 Arvind No.1 (Page No. 35 & 36). 15 2019-20 Affidavit Assessee’s Paper book Page No 129 of 23 No.1 (Page No. 39 & 40). Paper book No 2 16 Ananth Patil 2019-20 Affidavit Assessee’s Paper book Page No 130 of 24 17 Nibina Nisar 2019-20 Affidavit No.1 (Page No. 78 & 79). Paper book No 1 Assessee’s Paper book Page No 130-131 No.1 (Page No. 80 & 81). of Paper book No 24A 18 Panchami 2019-20 Affidavit 1 Assessee’s Paper book Page No 131 - No.1 (Page No. 61 & 62). 132 of 25 19 Richa Kumari 2019-20 Affidavit Paper book No 2 Assessee’s Paper book Page No 132-133 No.1 (Page No. 63 & 64). of Paper book No 26 20 Shreya MB 2019-20 Affidavit 1 Assessee’s Paper book Page No 133 - No.1 (Page No. 59 & 60). 134 of 27 21 Nithin HS 2018-19 Affidavit Paper book No 2 Akhil S Assessee’s Paper book Page No 134 of 28 22 Plackiel 2018-19 Affidavit No.1 (Page No. 45 & 46). Paper book No 1 Page No 135 of 29 Anantha Assessee’s Paper book Paper book No 2 23 Padmanabhan 2019-20 Affidavit No.1 (Page No. 47 & 48). Assessee’s Paper book Page No 136 of 30 No.1 (Page No. 51 & 52). Paper book No 2 24 Karthik BA 2019-20 Affidavit Kaveesh S Sworn Page No 67& 68 of Page No 137 of 31 Shetty Statement Assessment order Paper book No 1 25 2019-20 Sworn Page No 65& 66 of Page No 137-138 Statement Assessment order of Paper book No 32 26 Rishab Jain 2019-20 1 Dr Aishwarya Assessee’s Paper book Page No 138- R No.1 (Page No. 43 & 44). 139 of 33 27 2019-20 Affidavit Paper book No 2 Nikitha Assessee’s Paper book Page No 139-140 Nagesh No.1 (Page No. 57 & 58). of Paper book No 34 28 2019-20 Affidavit 1 Chidrawaj Page No 140 of Yogendra 35 Assessee’s Paper book Paper book No 1 Prakash 29 2019-20 Affidavit No.1 (Page No. 49 & 50). Assessee’s Paper book Page No 141 of 36 No.1 (Page No. 65). Paper book No 1 30 Tejasvi Mathur 2019-20 Affidavit Meenal Singh Assessee’s Paper book Page No 141-142 Rajput No.1 (Page No. 75 & 76). 37 of Paper book No 31 2019-20 Affidavit 1 Arjun Assessee’s Paper book Page No 142-143 Venugopal 38 No.1 (Page No. 41 & of Paper book No 32 2019-20 Affidavit 42). 1 Adya P Assessee’s Paper book Page No 143 of 39 Shenoy No.1 (Page No. 31 & 32). Paper book No 1 33 2017-18 Affidavit Assessee’s Paper book Page No 143-144 40 No.1 (Page No. 82 & 83). of Paper book No 34 Rasmitha R 2017-18 Affidavit Laxmi Memorial Education Trust, Mangalore Page 20 of 108 1 Saiyed Maria Assessee’s Paper book Page No 144 of 41 Imtiyaz No.1 (Page No. 85 & 86). Paper book No 1 35 2017-18 Affidavit He completed course in the Page No 145 of year of 2020 and we are not 42 Paper book No 1 able to contact him 36 Bhaskar Gorla 2017-18 Vangara Assessee’s Paper book Page No 145 of 43 Sushmita No.1 (Page No. 66 & 67). Paper book No 1 37 2018-19 Affidavit Mohd. Ashar Assessee’s Paper book Page No 146 of 44 EK No.1 (Page No. 55 & 56). Paper book No 2 38 2018-19 Affidavit Assessee’s Paper book Page No 146 of 45 No.1 (Page No. 53 & 54). Paper book No 1 39 Kaushik Raju 2019-20 Affidavit Assessee’s Paper book Page No 147 of 46 No.1 (Page No. 87 & 88). Paper book No 1 40 Shaludeen 2019-20 Affidavit Assessee’s Paper book Page No 148 of 47 No.1 (Page No. 77). Paper book No 2 41 Musin Farook 2015-16 Affidavit Yaswanth Page No 148- Goud 149 of 48-49 42 2018-19 Not able to contact Paper book No 2 Roshan V Assessee’s Paper book Page No 149-150 Shetty No.1 (Page No. 84). 50-51 of Paper book No 43 2019-20 Affidavit 1 INFORMATION OF MEDICAL STUDENT AS AVAILABLE IN LOOSE SHEETS A/AJIMS.02 & A.AJIMS/06 and our comments on it as follows.
I) First Addition of Rs. 50,00,000/-:
Utsav Shetty Laxmi Memorial Education Trust, Mangalore Page 21 of 108 Remarks for above loose sheet SL Name of the Point Page Batch Year Remarks as per A/AJIMS/06 No Students No no Amount MBBS 201920 Rs. 25,00,000 was Due on 25- 3 072020. Utsav Shetty 15,00,000 1 310 In rightside written in Pen "Neft Dt 1-2-21Rs. 10L XX 9972". Therefore pending amount as per this is Rs.15,00,000.
Encircled Rs.25,00,000 and written Rs.15,00,000 over it.. Written in pencil "15L Pd". But it was not mentioned that it was paid to Vishwanath Shetty or it was paid in cash. In rightside written in pencil "Nil as per V.S 2-02-21" As per Dilip Rs. 10,00,000 was due on 25-07-2020. 2 312 Encirled Rs. 10,00,000 and rightside in Pen written " Rs. 10L Neft Dt 01- 02-21 XX 9972", that means Rs.10,00,000 paid via banking channel.mentioned This is same neft details given here which is given in Page No. 310, which means this Rs. 10,00,000 is part of the above Rs.25,00,000 which is already been discussed.
Utsav Shetty:
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 07-01-2021 Utsav Shetty MBBS19-20 15,00,000 16 Laxmi Memorial Education Trust, Mangalore Page 22 of 108 The Student’s father Mr. Uday Shetty in his sworn statement dated 14-03-2022 before assessing officer which is reproduced in Page No. 73 to 75 of the assessment order, he mentioned that Rs.15,00,000 was the discount given by the management and remaining fees Rs.10,00,000 was paid through RTGS. He has also clarified that management told not to disclose about discount to any employees, therefore he has worded cash instead of discount in his whatsapp message and he has said Rs, 15,00,000 paid in cash.
Observation of AO in Para 11.4(1), 11.4(2) & 11.4(3) of Page No.38 to 40 of the assessment order Utsav Shetty has to pay Rs. 25 lakh each for 2020,2021 & 2022. For the year 2020, he has paid 10lakhs through NEFT on 01- 02-2021. Mr. Dilip Kumar has mentioned in pencil that „15L pd to V.S‟ which he himself decoded as „Rs. 15 lakhs are paid to Vishwanath Shetty in his statement.
However, it may be noted that Mr. Dilip Kumar has not mentioned answer to question No.14 of sworn statement dated 11- 08-2021 that Rs.15,00,000 was paid to Vishwanath Shetty. His answer to question No.14 of the sworn statement dated 11-08-2021 is as follows: “15 denotes amount was cleared to Vishwanath Shetty (V.S) by the students then I called them.” It may be noted that nowhere he has mentioned in his answer that Rs. 15,00,000 was paid to Vishwanath Shetty and he has also said in his answer to next question that he has not paid any attention to whatsapp message of Mr. Uday Shetty.
However, it can be noted that Rs.15,00,000 is not encircled. Further Mr. Uday Shetty has sent similar whatsapp message to Mr. Vishwanath Shetty which has been reproduced by the assessing officer in page 30 of the assessment order. In the said whatsapp message paid through Vishwanath Shetty is not there. Therefore, no Laxmi Memorial Education Trust, Mangalore Page 23 of 108 amount has given to Vishwanath Shetty as per this whatsapp message of Mr. Uday Shetty.
5.2 Now we will examine the seized material relevant to this addition of Rs.50 lakhs. For making addition of Rs.50 lakhs, the ld. AO relied on the following seized materials i.e. A/AJIMS/02,04,05 & 06 at page 204 received from Utsav Shetty for the academic year 2019-20 containing two cheques bearing Nos.170133 & 170134 for Rs.25 lakhs each for MBBS course. The screen shot of the ledger submitted by the assessee in this case shows that Utsav Shetty paid Rs.40 lakhs and Rs.10 lakhs on 19.8.2019 and 1.2.2021 respectively for the academic year 2019-20. 5.3 From the above, ld. AO made addition of Rs.50 lakhs as unaccounted fees collected from Utsav Shetty. It is to be see that statement from Uday Shetty, father of the student has been recorded on 14.3.2022. He stated that Rs.15 lakhs discount has been given by management due to Covid and remaining fees Rs.10 lakhs was paid through RTGS and he was advised by the management not to disclose the giving of discount to him and therefore, he has mentioned cash instead of discount in his Whatsapp message and he has paid only Rs.15 lakhs cash. However, the ld. AO observed that Dilip Kumar as mentioned in the seized material of “15 L pd to V.S”. The ld. AO decoded 15LRs. Paid to Vishwanath Shetty in his statement. However, Dilip Kumar has not mentioned to the question No.14 to sworn statement dated 11.8.2021 that Rs.15 lakhs was paid to Vishwanath Shetty. His answer to question No.14 in the sworn statement dated 11.8.2021 is as follows: “15 denotes amount was CLEARED TO Vishwanath Shetty (V.S.) by the students them I called them”. 5.4 It may be noted that nowhere he has mentioned in his answer that Rs.15 lakhs was paid to Vishwanath Shetty and he also said in his answer to next question that he has not paid any attention of Laxmi Memorial Education Trust, Mangalore Page 24 of 108 whatsapp message of Uday Shetty, father of Utsav Shetty. However, it is to be noted that the amount of Rs.15 lakhs is not encircled in the seized material. Being so, it cannot be said that the said amount of Rs.15 lakhs has been paid.
II SECOND ADDITION OF Rs.4,57,00,000/- The above addition was made in respect of following students:
Laxmi Memorial Education Trust, Mangalore Page 25 of 108 Now we will examine the seized material related to each of this student.
Kunwar Rahihikmat Our Remarks for above loose sheet SL Name of the Page no Remarks as per Batch Year Amount No Students A/AJIMS/06 Category-2 Fees due amount not mentioned. Payment Kunwar MBBS 1 432 details also not given so Rahihikmat 201718 12,50,000 it cannot be considered as cash payment.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty
Page Date Name Dept Amount No 12-Nov kunwar Rahi Hikmat MBBS 17-18 12,50,000 8 Laxmi Memorial Education Trust, Mangalore Page 26 of 108 Observation of AO:
In loose sheet A/AJIMS/06 no amount is written where as Mr. Vishwanath Shetty has written Rs.12,50,000. There is mismatch no clarification/ details obtained from Mr. Dilip & Mr. Vishwanath Shetty.
In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 72 & 73), Mr. Kunwar Rahi Hikmat mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Lekha Bhat Our Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 As per this loose sheet Rs. 9,00,000 was written MBBS 2 Lekha Bhat 432 Dilip was not scribbled 201718 3,50,000 anywhere in this column. Noting as per A/AJIMS/02- Written by Vishwanath Shetty
Page Date Name Dept Amount No 6-Nov Lekha Bhat MBBS 17-18 3,50,000 12 Observation of AO: In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 74), Ms. Lekha Bhat mentioned she has not paid any amount of fees in cash to the management. Also in the said Laxmi Memorial Education Trust, Mangalore Page 27 of 108 affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Shashank D Raghavan Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 Fees due amount not mentioned. Payment Shashank D MBBS details also not given 3 426 Raghavan 201718 6,00,000 so it cannot be considered as cash payment.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 29-12-2021 Shashank Raghavan MBBS17-18 6,00,000 16 Observation of AO:
In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 89), Mr. Shashank D Raghavan mentioned he has not paid any amount of fees in cash to the Trust or management of the college. Also in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Akshara Shetty Laxmi Memorial Education Trust, Mangalore Page 28 of 108 Our Remarks for above loose sheet SL Name of Point Page no Batch No the Amount No Remarks as per A/AJIMS/06 Year Students Akshara MBBS As per Dilip Rs.25,00,000 was Due on 25- Shetty 201819 10,00,000 07-2020. 4 1 362 Encircled it in Pen and written Rs.10,00,000 over it in pen. This is not encircled. That means its outstanding. Near to that Rs.15,00,000 is Written in pencil. This is also not encircled.
In rightside of the page in Pen written " Rs. 15L Neft Dt. 04-012021 XX 8141" In pencil, it is written "Pd to V.S". But it was not mentioned that it was paid in cash. Rs.15,00,000 was Due on 25-072020. 2 364 Encircled It in pen and rightside in pen written "Rs. 15L Neft Dt. 04-01- 2021 XX 8141", that means Rs.15,00,000 paid via banking channel. This is same neft details given here which is given in Page No. 362, which means this Rs. 15,00,000 is part of the above Rs.25,00,000 which is already been discussed. Notings as per A/AJIMS/02 Written by Vishwanath Shetty
Page Date Name Dept Amount No 04-01-2021 Akshara Shetty MBBS18-19 10,00,000 16 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 37 & 38), Ms. Akshara Shetty mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Laxmi Memorial Education Trust, Mangalore Page 29 of 108 Observation of AO in Para 7.6 of Page No.12 of the assessment order Mr. Dilip Kumar has encircled the balance amount of 25 lakh in pen and has written 10 lakhs over it. After payment of 15lakh using NEFT, the due amount is 10 lakhs. Later on, Mr. Dilip Kumar encircled the balance of 10 lakhs in pencil and recorded “pd to v.s” in pencil.
However, when we were verifying the copy of seized material (As per page 129 of paper book no.1) this 10,00,000 is not encircled. Which means it is not paid. However, assessing officer has concluded Rs.10,00,000 is encircled.
Ankit Malligarjun Hudalogi Our Remarks for above loosesheet SL Name of the Batch Amount Point Remarks as per A/AJIMS/06 Page No no Students Year No 5 Ankit MBBS 1 As per Dilip Rs. 20,00,000 was Due on 25-07-2020. 362 Malligarjun 2018-19 5,00,000 Hudalogi Encircled Rs.20,00,000 in pen and rightside in pen written "Rs. 20L RTGS Dt. 04-12-20 XX19035".
2 Rs. 20,00,000 was Due on 25- 364 07-2020.
Encircled Rs.20,00,000 in pen and rightside in pen written "Rs. 20L RTGS Dt. 04-12-20 XX19035".
Laxmi Memorial Education Trust, Mangalore Page 30 of 108 This is same neft details given here which is given in Page No. 362. Hence the total fees due on 25- 07-2020 was received through banking channel.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty
Page Date Name Dept Amount No 5-Dec Ankit M Mudalagi MBBS 18-19 5,00,000 8 In the Students sworn statement dated 14-03-2022 is reproduced in Page No. 69 & 70 of the assessment order, Mr. Ankit Malligarjun Hudalogi mentioned Rs.5,00,000 was the discount given by the management and remaining fees paid through banking channels.
Kadeejath Shanifa Farveen Remarks for above loose sheet SL Name of Batch Point Page Remarks as per No the Year Amount No no A/AJIMS/06 Students Kadeejath MBBS Rs. 25,00,000 was due on 6 Shanifa 1 358 2018-19 12,50,000 2507-2020. Farveen In right side mentioned B 12.5L RTGS Dt 17-12- 2020 SBI 4329. Encircled Rs.25,00,000 in pen and written Rs.12,50,000 over It in pen. Rs.12,50,000 was encircled in pencil & also written Nil in pencil.
Laxmi Memorial Education Trust, Mangalore Page 31 of 108 Rightside of the page In pencil written "Nil as per V. shetty 1002-2021". It was not mentioned that payment of Rs. 12,50,000 was made via banking channel. Fees due amount for 2020 2 not mentioned. 360 Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 19-12-2020 Kadeejath Shanifa MBBS18-19 12,50,000 16 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 68 & 69), Ms. Kadeejath Shanifa Farveen mentioned she has not paid any amount of fees in cash to the management. Also in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Krishna Priya HK Remarks for above loose sheet Name of SL Batch Point Remarks as per A/AJIMS/06 Page the Amount No Year No no Students MBBS Krishna Rs. 25,00,000 was due on 25- 7 2018- 1 354 Priya HK 10,00,000 072020. 19 Laxmi Memorial Education Trust, Mangalore Page 32 of 108 In rightside of the page "Rs. 6L RTGS Dt 15-10-2020 XX98594, Rs. 4L RTGS Dt 20-10-2020 XX62417, Rs.5L RTGS Dt 02-12-2020 XX10061" was written in pen. Encircled Rs.25,00,000 in pen & written Rs.19,00,000 over it in pen. Rs. 19,00,000 encircled in pen and written Rs.15,00,000 over it in pen. Rs.15,00,000 encircled and written Rs.10,00,000. This Rs. 10,00,000 encircled in pencil & written „Nil‟ over it in pencil. In pencil written" Rs.10L Pd to K.V.S" but It was not mentioned that it was paid in cash. Fees due amount for 2020 not mentioned 2 356 Krishna Priya Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 23-12-2020 Krishna Priya M.K MBBS18-19 10,00,000 16 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 70 & 71), Ms. Krishna Priya H K mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Shivaprakash P Laxmi Memorial Education Trust, Mangalore Page 33 of 108 Remarks for above loose sheet SL Name of the Point Remarks as per Page Batch Year Amount No Students No A/AJIMS/06 no Shivaprakash MBBS Rs 12,50,000 was 8 1 348 P 201819 due on 25-072020 12,50,000 Encircled Rs.12,50,000 in pen and written Rs.7,50,000 over it in Pen. But this Rs.7,50,000 was not encircled. In right side mentioned "B 5L RTGS dt 06-02-2021 ** 2744" In pencil written "Rs. 7.5 pd to V.S". It was not mentioned that it was paid in cash. As per Dilip 2 Rs.12,50,000 was 350 due on 25-07-2020 Encircled Rs.12,50,000 in pen and written Rs. 7,50,000 over it in pen. But this Rs.7,50,000 was not encircled. In right side of the page in Pen written "B 5L RTGS dt 06- 02-2021 xx2744", that means Rs.5,00,000 paid via banking channel.
Laxmi Memorial Education Trust, Mangalore Page 34 of 108 This is same neft details given here which is given in Page No. 348, which means this Rs. 5,00,000 is part of the above Rs.12,50,000 which is already been discussed. This is same neft details given here which is given in Page No. 348, which means this Rs. 5,00,000 is part of the above Rs.12,50,000 which is already been discussed.
Shiva Prakash P.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 7-Feb Shivaprakash P MBBS 18-19 12,50,000 8 Observation of AO in Para 8.5 of Page No.18 of the assessment order Mr. Dilip Kumar has again confirmed that Mr. Vishwanath Shetty has collected cash of Rs. 7.5 lakhs and 5 lakhs from Mr. Shivaprakash and Ms. Suhasuman respectively in the FY 2020-21. Therefore he has recorded these events as “Rs.. 5L pd to v.s” and “Rs. 7 pd to v.s”.
In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 90 & 91), Mr. Shivaprakash P mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Laxmi Memorial Education Trust, Mangalore Page 35 of 108 It will be noted that Mr. Dilip Kumar in his sworn statement dated 20-02-2021 has not stated that the alleged amount was paid in cash. It was only in his sworn statement dated. 06-07-2021 which has been reproduced in page 18 of Assessment Order he has said that Rs. 7,50,000 was paid in cash to Mr. Vishwanath Shetty (Answer to Question No.8 of his sworn statement dated 06-07-2021) However Mr. Dilip Kumar has filed a letter dated 17-08-2021 before the investigation wing, which has been reproduced in page 21 of assessment order, clarified that he was started bleeding through his nose. The same brought to the notice of the authorities but the same was not paid heed to. That means sworn statement dated 06- 07-2021 was not correct.
Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 Shravan MBBS Rs 12,50,000 9 Kumar Shetty 201819 1 348 12,50,000 Given due on 25- 072020 Encircled 12,50,000 in pen. In right side mentioned RTGS dt 14-09-2020 ** 83840 but amount received through RTGS was not written. Rs 12,50,000 was 2 350 due on 25-072020 Laxmi Memorial Education Trust, Mangalore Page 36 of 108 Encircled 12,50,000 in pen. In right side mentioned RTGS dt 14-09-2020 ** 83840 but amount received through RTGS was not written. Hence the total fees due on 25- 072020 was encircled Balance amount is not written it can be said that total fees is received through banking channel.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 14-Sep Shravan Kumar Shetty MBBS 18-19 12,50,000 10 In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 92 & 93). Mr. Shravan Kumar Shetty mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily Suha Suman AV Noting as per A/AJIMS/06- Written by Dileep Laxmi Memorial Education Trust, Mangalore Page 37 of 108 Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 Suha Suman MBBS Rs. 25,00,000 was 10 1 348 AV 201819 due on 25-072020 5,00,000 In right side in Pen written "Rs. 999,940 RTGS dt 10-09-2020 xx 90024, B 10L RTGS dt 23-12- 2020 xx 90023". Encircled Rs.25,00,000 in pen and written Rs. 15,00,060 over it in Pen. Encircled Rs. 15,00,060 in pen and written Rs.5,00,060 over it in pen. Also encircled Rs.5,00,060 in Pencil & Written Nil over it in pencil. In Rightside of the page "Rs.5L Pd to V.S" Written in pencil.. It was not mentioned that it was paid in cash. Fees due amount 2 350 for 2020 not mentioned.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 20-01-2021 Suha Suman A.U MBBS18-19 5,00,000 14 Laxmi Memorial Education Trust, Mangalore Page 38 of 108 Suha Suman In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 94), Mr. Suha Suman A U mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily Observation of AO in Para 8.5 of Page No.18 of the assessment order Mr. Dilip Kumar has again confirmed that Mr. Vishwanath Shetty has collected cash of Rs. 7.5 lakhs and 5 lakhs from Mr. Shivaprakash and Ms. Suhasuman respectively in the FY 2020-21. Therefore he has recorded these events as “Rs. 5L pd to v.s and Rs. 7 pd to v.s”.
Aishwarya Ajay Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 As per Dilip Rs.30,00,000 was due on 25- MBBS 11 Aishwarya Ajay 1 07-2020 is 258 201920 20,00,000 circled and written in pen Rs.20,00,000 Laxmi Memorial Education Trust, Mangalore Page 39 of 108 above it
Rs 20,00,000 encircled in pencil written Nil over it in pencil. In right side written as "Rs 10L RTGS dt 11- 09-2020 xx85569". and in pencil written "Nil as per V.S 0202-2021". . It was not mentioned that it was paid to Vishwanath Shetty or it was paid in cash. Fees due amount 2 262 for 2020 not mentioned.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 05-01-2021 Aishwarya Ajay MBBS19-20 20,00,000 16 In the Student’s Affidavit is part of Assessee’s Paper book No.1(Page No. 33 & 34), Ms. Aishwarya Ajay mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Laxmi Memorial Education Trust, Mangalore Page 40 of 108 Aishwarya Arvind Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 As per Dilip Rs.20,00,000 was due on 25-07-2020 12 Aishwarya MBBS 1 258 circled in pen and Arvind 201920 20,00,000 Rs. 10,00,000 written above it in pen In right side "Rs 10L RTGS dt 06- 012021 xx2459" written in pen. "Nil as per V.S 02-02- 2021" written in pencil. Rs 10,00,000 not encircled. Near this 10L pd nil is written in pencil. Banking channel payment Rs.10,00,000 only written. Rs.10,00,000 was 2 due on 25-07- 262 2020 circled Right side written in pen as "Rs 10L RTGS dt 06-01- 2021xx2459", that means Rs.10,00,000 paid via banking channel Laxmi Memorial Education Trust, Mangalore Page 41 of 108 Same neft details which is given in page no.258 was written here, which means this Rs. 10,00,000 is part of the above Rs.20,00,000 which is already been discussed.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 2-Dec Aishwarya Aravind MBBS 19-20 10,00,000 8 07-01-2021 Aishwarya Aravind MBBS 19-20 10,00,000 16 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 35 & 36), Ms. Aishwarya Arvind mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily Ananth Patil Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 MBBS Rs. 12,00,000 was due 13 Ananth Patil 266 201920 on 25-072020 23,00,000 In rightside written in pencil “Not Paid”
In right side written "Transfer dt 10- 09-2020 xx10470" but amount received Laxmi Memorial Education Trust, Mangalore Page 42 of 108 through RTGS was not written.
Circled Rs. 12,00,000 in pen. In name column written "Before ______" However it is not so ligible. Hence the total fees due on 25-072020 was encircled. Balance amount of fees is not written so it can be said that total fees is received through banking channel.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 12-Nov Ananth Patil MBBS 19-20 11,00,000 8 14 Oct Ananth Patil MBBS 19-20 12,00,000 12 Vishwanath Shetty by oversight has written two amounts Rs.11,00,000 and Rs.12,00,000 whereas as per Dilip total amount due is Rs.12,00,000.
In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No.39 & 40). Ms. Ananth Patil mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Nibina Nisar Laxmi Memorial Education Trust, Mangalore Page 43 of 108 Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 MBBS Rs. 12,00,000 was due on 14 Nibina Nisar 266 201920 15,00,000 25-072020 Encircled Rs. 12,00,000 in pen. In name column written "Correct Vishwanath" in Pencil. In right side written "RTGS dt 12-102020 xx 26902"in pen. But amount paid not written. "No dues as per V.S 20-01- 2021" written in pencil. It was not mentioned that it was paid to Vishwanath Shetty or it was paid in cash. Hence the total fees due on 25-072020 was encircled. The Balance fees is not written here so it can be said that total fees is received through banking channel.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 20-01-2021 Nibina Nisar MBBS19-20 15,00,000 14 There is mismatch of amount in two loose sheets. In A/AJIMS/06 it is written as Rs. 12,00,000 in A/AJIMS/02 its written as Rs.15,00,000. Amount mismatch no details asked.
In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No.78 & 79), Ms. Nibina Nisar mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily Laxmi Memorial Education Trust, Mangalore Page 44 of 108 Panchami Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 MBBS Rs. 15,00,000 was due on 15 Panchami 250 201920 25-122020 30,00,000 Encircled Rs. 15,00,000 in pen. In right side written "F.Tr dt 05-012021 xx217953". Transfer amount not written. Hence the total fees due on 25-072020 was encircled The balance amount is not written here so it can be said that total fees is received through banking channel.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 8-Sep Panchami MBBS 19-20 30,00,000 10 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No.80 & 81). Ms. Panchami mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily Laxmi Memorial Education Trust, Mangalore Page 45 of 108 Richa Kumari Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 MBBS Rs. 4,00,000 was 16 Richa Kumari 201920 1 due on 25-07- 310 15,00,000 2020. Encircled Rs. 4,00,000 and above written Nil in pencil. In right side ''Nil as per VS 02-022021" written in pencil. It was not mentioned that it was paid to Vishwanath Shetty or it was paid in cash. Fees due amount for 2 312 2020 not mentioned.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 17 Oct Richa Kumari MBBS19-20 7,00,000 12 30-11-2020 Richa Kumari MBBS19-20 4,00,000 8 21-12-2020 Richa Kumari MBBS19-20 4,00,000 16 As against one entry of Rs.4,00,000 in the loose sheet written by Dilip, Vishwanath Shetty has written three entries. The Laxmi Memorial Education Trust, Mangalore Page 46 of 108 details/clarification was not asked/obtained from Mr. Vishwanath Shetty.
In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No.61 & 62), Ms. Richa Kumari mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily Shreya MB Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 MBBS Rs. 12,00,000 was 17 Shreya MB 264 201920 due on 25-072020. 20,00,000 Circled Rs. 12,00,000 in pen In right side written in Pen "Neft Dt 29- 09-2020 XX68768". Here neft amount not written. Hence the total fees due on 25-072020 was encircled. The balance amount is not written here so it can be said that total fees is received through banking channel. Noting as per A/AJIMS/02- Written by Vishwanath Shetty
Page Date Name Dept Amount No 12-01-2021 Shreyas M.B MBBS19-20 20,00,000 14 Laxmi Memorial Education Trust, Mangalore Page 47 of 108 In the loose sheets written by Mr. Dilip 12 lacs vs written 20 lacs not details asked.
In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No.63 & 64), Ms. Shreya M B mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Nithin HS Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 Rs.20,00,000 was due on 20-052020. Encircled PG 2018-19 Rs.20,00,000 in 18 Nithin HS 1 418 20,00,000 pencil and written Rs.10,00,000 over it but this Rs. 10,00,000 is not encircled. Rightside written in pencil" 10L Pd as per V.Shetty" & "As per V.S -Nil" but its not mentioned that it was paid to Vishwanath Shetty and also its no mentioned that it was paid in cash. Rs. 10,00,000 was due 2 420 on 20-052020 In Right side written in Pencil "as per V Shetty - Nil"
Laxmi Memorial Education Trust, Mangalore Page 48 of 108 Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 07-09-2020 Dr Nithin H.S G.M 18-19 10,00,000 10 19-12-2020 Dr Nithin H.S MPG18-19 10,00,000 16 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 59 & 60), Dr. Nithin HS mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Akhil S Plackiel Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 Akhil S Rs. 11,00,000 was due 19 PG 2018-19 412 Plackiel on 20-052020. 14,00,000 Amount circled in pen. In right side written in Pencil "RTGS Rs. 20L Dt. 28-08- 2020" In right side written in Pen "11L RTGS Dt 22- 09-2020 XX9931" Hence the total fees due on 25-072020 was received through banking channel.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 29-Sep Dr Akhil Plachel G S 18-19 14,00,000 10 Laxmi Memorial Education Trust, Mangalore Page 49 of 108 It is not clear How Rs.14,00,000 was written in loose sheet A/AJIMS/02 by Mr. Vishwanath Shetty . Details not obtained from Mr. Vishwanath Shetty.
In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 45 & 46), Dr. Ananth Padmanabha mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Anantha Padmanabhan Remarks for above loose sheet SL Name of the Page Batch Year Amount Remarks as per A/AJIMS/06 No Students no Anantha Rs. 13,00,000 was due on 20- 20 PG 2019-20 27,00,000 76 Padmanabhan 052020.
Circled Rs. 13,00,000 In pencil and written Rs. 2,50,000 above it in pencil. Nowhere its mentioned by Dilip that “pd to v.s”. Circled Rs. 2,50,000 in pencil and written Nil near that in pencil. Noting as per A/AJIMS/02- Written by Vishwanath Shetty
Page Date Name Dept Amount No 30-Nov Dr Ananth Padmanabha MPG 19-20 14,00,000 8 23-12-2020 Dr Ananth Padmanabha MPG 19-20 2,50,000 16 04-01-2021 Dr Ananth Padmanabha MPG 19-20 5,00,000 16 07-01-2021 Dr Ananth Padmanabha MPG 19-20 5,50,000 16 Laxmi Memorial Education Trust, Mangalore Page 50 of 108 It is not clear how Mr. Vishwanath Shetty made four entry in the loose sheet. The details was in loose sheet as against amount of Rs.13,00,000 was written by Mr. Dilip.
In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 47 & 48), Dr. Ananth Padmanabha mentioned he has not paid any amount of fees in cash to the management. Also in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Karthik BA Remarks for above loose sheet SL Name of the Remarks as per Page Batch Year Amount No Students A/AJIMS/06 no Rs. 20,00,000 was due on 21 Karthik BA PG 2019-20 74 30,00,000 20-052020. Circled Rs. 20,00,000 and written in pencil Nil above it. But its not mentioned that it was paid to Vishwanath Shetty and also its not mentioned that it was paid in cash In Right side written in pencil as "Rs. 15L Vishwanath Shetty Cld as 23___Nil as on 22nd Dec 7/12" Noting as per A/AJIMS/02- Written by Vishwanath Shetty
Page Date Name Dept Amount No 17-09-2020 Dr Karthik B.A Rxp Mod 19-20 10,00,000 10 21-12-2020 Dr Karthik B.A MPG19-20 20,00,000 16 Laxmi Memorial Education Trust, Mangalore Page 51 of 108 In loose sheets A/AJIMS/06 Rs.20,00,000 written where as Mr. Vishwanath Shetty written Rs.30,00,000. There is mismatch no details have been obtained.
In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 51 & 52), Dr. Karthik BA mentioned he has not paid any amount of fees in cash to the management. Also in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Kaveesh S Shetty Remarks for above loose sheet SL Name of the Page Batch Year Amount Remarks as per A/AJIMS/06 No Students no Kaveesh S Rs. 50,00,000 was due on 20- 22 PG 2019-20 66 Shetty 5,00,000 052020.
Circled Rs. 50,00,000 in Pen, written Rs. 15,00,000 above in pen.
Circled Rs. 15,00,000 and written Rs. 10,00,000 above in Pen and its not circled.
In right side written in pen Rs. 35L RTGS Dt 05-11-20 ICICI Br 850165, Rs. 5L RTGS 02-02- 2021 XX6956.
In Pencil Written as" By PM Jan 2021(21/1/21)
Laxmi Memorial Education Trust, Mangalore Page 52 of 108 Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 16-Oct Dr Kavish Shetty Ortho PG 19-20 5,00,000 12 In the Student’s sworn statement dated 14-03-2022 is reproduced in Page No. 67 & 68 of the assessment order, Dr. Kaveesh S Shetty has mentioned Rs.5,00,000 was the discount given by the management and remaining fees paid through banking channels.
Rishab Jain Noting as per A/AJIMS/06- Written by Dileep SL Name of the Amount Point Page Remarks as per Batch Year No Students No no A/AJIMS/06 Rs. 55,00,000 was due on 20-052021. PG 2019-20 Fees due for 2020 23 Rishab Jain 64 details not given 35,00,000 here. Fees payment details not given.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Ortho 19- 28-Sep Dr Rishab Jain 20 35,00,000 10 Laxmi Memorial Education Trust, Mangalore Page 53 of 108 In the Student’s sworn statement dated 14-03-2022 is reproduced in Page No. 65 & 66 of the assessment order, Dr. Rishab Jain has mentioned Rs.35,00,000 was the discount given by the management and remaining fees paid through banking channels Dr Aishwarya R Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Name of the Amount Point Page Remarks as per Batch Year No Students No no A/AJIMS/06 PG 2019-20 Rs. 9,70,000 was due 24 Aishwarya R 1 60 on 20-052020. 13,50,000 Circled Rs. 9,70,000 in pencil and written 3,20,000 over it. In right side in pencil written ''Pd to V Shetty 1-1-21" but its not mentioned that it was paid to Vihwanath Shetty ans also its not mentioned that it was paid in cash Rs. 3,20,000 was due 2 62 on 20-052020. Fees payment not mentioned. Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No 19-12-2020 Dr Aishwarya .R MPG19-20 6,50,000 16 Ortho PG 16-10-2020 Dr Aishwarya R 19-20 3,00,000 12 29-09-2020 Dr Aishwarya R OBG 19-20 4,00,000 10 Laxmi Memorial Education Trust, Mangalore Page 54 of 108 In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 43 & 44), Dr. Aishwarya R mentioned she has not paid any amount of fees in cash to the management. Also in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Nikitha Nagesh Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 Rs. 25,00,000 was due on 20-052021. PG 2019-20 Fees due for 2020 25 Nikitha Nagesh 1 46 15,00,000 details not given here. Fees payment details not given. This is same details 2 54 given here which is given in Page No.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No 30-Nov Dr Nikitha Nagesh MPG 19-20 15,00,000 8 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 57 & 58), Dr. Nikitha Nagesh mentioned she has not Laxmi Memorial Education Trust, Mangalore Page 55 of 108 paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Chidrawar Yogendra Prakash Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Name of the Remarks as per Batch Year Amount Page no No Students A/AJIMS/06 Rs. 20,00,000 was due on 20-092021. Chidrawar Fees due for 2020 PG 2019-20 26 Yogendra details not given 44 15,00,000 Prakash here. Fees payment details not given.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Page Date Name Dept Amount No 22-Oct Dr Yogendra Mch URO 19-20 15,00,000 12 In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 49 & 50), Dr. Chidrawar Yogendra Prakash mentioned he has not paid any amount of fees in cash to the management. Also in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Laxmi Memorial Education Trust, Mangalore Page 56 of 108 Tejasvi Mathur Noting as per A/AJIMS/06- Written by Dileep SL Name of the Point Remarks as Page No Students Batch Year Amount No no per A/AJIMS/06 Rs. 55,00,000 was due on 20-052021. Fees due for PG 2019-20 27 Tejasvi Mathur 76 2020 details 8,00,000 not given here. Fees payment details not given. Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Dr Tejaswi 14-Sep Mathur GM 19-20 8,00,000 10 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 65), Dr. Tejasvi Mathur mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Meenal Singh Rajput Noting as per A/AJIMS/06- Written by Dileep Laxmi Memorial Education Trust, Mangalore Page 57 of 108 Remarks for above loose sheet SL Name of the Point Remarks as Page No Students Batch Year Amount No no per A/AJIMS/06 Rs. 30,00,000 was due on 25-072021 &Rs. 30,00,000 was due on 28 Meenal Singh MBBS 25-07-2022. 252 Rajput 201920 30,00,000 Fees due for 2020 details not given here. Fees payment details not given.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Meena Singh Rajput MBBS 1920 (Bhat - 11-Sep 30) MBBS 19-20 10 30,00,000 This is not taken in Amount column in hard copy but was mentioned under Name column In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 75 & 76), Ms. Meenal Singh Rajput mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Arjun Venugopal Noting as per A/AJIMS/06- Written by Dileep Laxmi Memorial Education Trust, Mangalore Page 58 of 108 Remarks for above loose sheet SL Name of the Remarks as Page No Students Batch Year Amount per no A/AJIMS/06 Rs. 25,00,000 was due on 20- 05-2021. Fees due for 2020 29 Arjun MBBS 2019- 256 & details not Venugopal 2020 260 12,50,000 given here. Fees payment details not given.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No MBBS 19- 03-Dec Arjun Venugopal 20 12,50,000 8 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 41 & 42), Mr. Arjun Venugopal mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Laxmi Memorial Education Trust, Mangalore Page 59 of 108 III THIRD ADDITION RS.1,23,50,000/- in respect of 9 students is as follows:
Now we will examine the seized material related to each of this student.
Adya P Shenoy Remarks Name of the Remarks as per SL No Batch Year Amount Students A/AJIMS/06 This Student details not 1 Adya P Shenoy MBBS 2017-18 12,50,000 found Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No 19-Sep Adya P Shenoy MBBS 17-18 12,50,000 10 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 31 & 32), Ms. Adya P Shenoy mentioned she has Laxmi Memorial Education Trust, Mangalore Page 60 of 108 not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Rasmitha R Remarks SL Name of the Remarks as per Batch Year Amount No Students A/AJIMS/06 This Student details not 2 Rasmitha R MBBS 2017-18 12,50,000 found Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Rashmitha 18-Sep R MBBS 17-18 12,50,000 10 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 82 & 83), Ms. Rashmitha R mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Observation of AO in Para 13.1 of Page No.47 of the assessment order There was no data found in her name except the data entered in seized material marked as „A/AJIMS/02‟. Saiyed Maria Imtiyaz Noting as per A/AJIMS/06- Written by Dileep Laxmi Memorial Education Trust, Mangalore Page 61 of 108 Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 Saiyed Maria MBBS Fees due mount Imtiyaz 201718 12,00,000 not mentioned. 3 430 Also fees payment details not given.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Syed Maria 25-Nov Imtiaz MBBS 17-18 12,00,000 8 In the Students Affidavit is part of Assessee’s Paper book No.1 (Page No. 85 & 86), Ms. Saiyed Maria Imtiyaz mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily. Bhaskar Gorla Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Page no Name of the Remarks as per Batch Year Amount No Students A/AJIMS/06 Rs. 5,00,000 was due on 15- PG 2017-18 4 Bhaskar Gorla 082020. Fees 308 8,00,000 payment details not given.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Dr Bhaskar 15-Oct Gorla MPG 17-18 8,00,000 12 Laxmi Memorial Education Trust, Mangalore Page 62 of 108 He completed course in the year of 2020 and we are not able to contact him. However, Vishwanath shetty said he has written wrong amount.
Vangara Sushmita Remarks SL Name of the Point Remarks as No Students Batch Year Amount No per A/AJIMS/06 Vangara This Student 5 Sushmita PG 2018-19 30,00,000 details not found Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Dr Vangara 21-Oct Sushmitha OBG 18-19 30,00,000 12 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 66 & 67), Dr. Vangara Sushmitha mentioned she has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by her voluntarily.
Mohd. Ashar EK Remarks SL Name of the Remarks as per Batch Year Amount No Students A/AJIMS/06 PG 2018-19 Mohd. Ashar This Student details not 6 EK found 2,50,000 Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Page No Amount 10-Sep Dr Mohd Ashar Ortho 18-19 10 2,50,000 Laxmi Memorial Education Trust, Mangalore Page 63 of 108 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 55 & 56), Dr. Mohd. Ashar mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily. Kaushik Raju Noting as per A/AJIMS/06- Written by Dileep Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 Rs 80,00,000 was 7 Kaushik Raju PG 2019-20 46 20,00,000 due on 20-052020. Circled Rs. 80,00,000 and written Rs.60,00,000 above it in pencil it is not encircled. In right side written in pencil ''20L Pd to VS, Rs 50,00,000 by 15th Jan, Rs 10,00,000 by 31st Jan 2021'' Not mentioned that amount was paid to Vishwanath Shetty and also its not mentioned that it was paid in cash.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No 13-12-2020 Dr Kaushik Raju Radio 19-20 20,00,000 16 Laxmi Memorial Education Trust, Mangalore Page 64 of 108 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 53 & 54), Dr. Kaushik Raj mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Shajaluddeen Remarks for above loose sheet SL Name of the Point Page Remarks as per Batch Year Amount No Students No no A/AJIMS/06 MBBS Rs. 12,00,000 due 8 Shaludeen 266 201920 23,00,000 on 25-07-2020. Circled Rs.12,00,000 in pen. In right side written ''TR xx28569 dt 11- 09-2020'' Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No 03-Dec Shahaluddeen MBBS 19-20 23,00,000 8 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 87 & 88), Mr. Shahaluddeen mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Laxmi Memorial Education Trust, Mangalore Page 65 of 108 Musin Farook Remarks SL Name of the Remarks as per Batch Year Amount No Students A/AJIMS/06 MBBS This Student details not 9 Musin Farook 20142015 3,00,000 found Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Musin 13-11-2020 Farook MBBS 14-15 3,00,000 8 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 77), Mr. Musin Farook mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Yaswanth Goud Remarks for above loose sheet SL Name of the Amount Point Page Remarks as per Batch Year No Students No no A/AJIMS/06 Yaswanth Rs. 15,00,000 1 Goud PG 18-19 1 418 was due on 25- 27,00,000 052020. Circled Rs 15,00,000 in pencil and above written Nil in pencil. but amount not written.
Laxmi Memorial Education Trust, Mangalore Page 66 of 108 Details of payment in cash not written. In right side written '' time given upto 27-01- 2021 in pencil'' 2 420 Fees due amount not mentioned.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No Dr Yashwanth 07-11-2020 Gowda MPG18-19 12,00,000 8 Dr Yashwanth 01-01-2021 Gowda MPG18-19 15,00,000 16 Not able to contact him. Amount mismatch no clarification asked by the employees of the trust.
IV FOURTH ADDITION OF RS.30,00,000/- in respect of two students Now we will examine the seized material related to each of this student.
Yashwanth Gaud Observation of AO in Para 14 and Para 14.1 of Page No.48 and Page No.49 of the assessment order Laxmi Memorial Education Trust, Mangalore Page 67 of 108 Mr. Vishwanath Shetty has received the cash of Rs. 15 lakh and 12 lakhs from him and recorded on the loose sheet folder inventoried as 'A/AJIMS/02'.
Mr. Yashwanth Goud has made the cash payment of Rs. 15 lakh and 12 lakhs on 01.01.2021 and 07.11.2020 respectively. Mr. Dilip Kumar has recorded the due fee of 15 lakh as per the excel sheet maintained by him in seized material marked as 'A/AJIMS/06'. The list maintained by Mr. Dilip is for the pending dues after the payment of Rs. 12 lakhs are made in cash; therefore, it only says Rs. 15 lakhs is pending. This Rs. 15 Lakhs is paid in cash to Mr. Vishwanath Shetty on 01.01.2021 and the same is recorded in A/AJIMS/02. Roshan V Shetty Remarks for above loose sheet SL Name of the Page Remarks as per Batch Year Amount No Students no A/AJIMS/06 Roshan V Shetty Rs. 17,00,000 was due on 2 PG 18-19 44 3,00,000 20-092020.
Circled Rs. 17,00,000 in pen and Rs. 2,00,000 written above. In right side written "Rs 5L Dt 2409-2020 P519659 chd 022, Rs 5L Dt 25-09-2020 HDFC 009, Rs 5L 2509-2020 HDFC 002, Total Rs. 15L'' Total Fees due is Rs.17,00,000 in This Rs.15,00,000 is received through banking channels.
Laxmi Memorial Education Trust, Mangalore Page 68 of 108 Rs.2,00,000 was the balance its not mentioned that it was paid in cash.
Noting as per A/AJIMS/02- Written by Vishwanath Shetty Date Name Dept Amount Page No 10 Dr Roshan 19-Sep Shetty MCH 19-20 3,00,000 In the Student’s Affidavit is part of Assessee’s Paper book No.1 (Page No. 84), Dr. Roshan Shetty mentioned he has not paid any amount of fees in cash to the management. Also, in the said affidavit student has affirmed that said declaration in the affidavit is given by him voluntarily.
Roshan Shetty Observation of AO in Para 14.2 and Para 14.3 of Page No.49 of the assessment order As per the data found in the seized material marked as A/AJIMS/02, it can be seen that the student paid the amount of Rs. 3 lakhs to Mr. Vishwanath Shetty. The student has paid 20 lakhs through RTGS and Mr. Dilip Kumar has maintained the pending fee of 17 lakh for the year. It means that the student has paid the amount of Rs. 3 lakhs in cash. 5.5 Further, the assessing officer issued notice to all the 43 parties who said to be paid unaccounted fees to the assessee. Out of the 43 students, following persons numbering 35 filed affidavit confirming that they have not paid any unaccounted fees to the assessee: Kunwar Assessee’s Paper book Page No 116 of Paper Rahihikmat No.1 (Page No. 72 & 73). Paper book No 1 book page 1 2017-18 Affidavit no.06 Assessee’s Paper book Page No 117 of 07 No.1 (Page No. 74). Paper book No 1 2 Lekha Bhat 2017-18 Affidavit Shashank D Assessee’s Paper book Page No 118 of 08 Raghavan No.1 (Page No. 89) Paper book No 1 3 2017-18 Affidavit Laxmi Memorial Education Trust, Mangalore Page 69 of 108 Akshara Assessee’s Paper book Page No 118-119 Shetty No.1 (Page No. 37 & 38) 09-10 of Paper book No 4 2018-19 Affidavit 1 Kadeejath Page No 121 of Shanifa 12 Assessee’s Paper book Paper book No 1 Farveen 5 2018-19 Affidavit No.1 (Page No. 68 & 69). Krishna Priya Assessee’s Paper book Page No 122-123 HK No.1 (Page No. 70 & 71). of Paper book No 13-14 6 2018-19 Affidavit 1 Shivaprakash Assessee’s Paper book Page No 123-124 P No.1 (Page No. 90 & 91). of Paper book No 15-16 7 2018-19 Affidavit 1 Shravan Assessee’s Paper book Page No 124-125 Kumar Shetty No.1 (Page No. 92 & 93) of Paper book No 17 8 2018-19 Affidavit 1 Suha Suman Assessee’s Paper book Page No 125-126 AV No.1 (Page No. 94) of Paper book No 18-19 9 2018-19 Affidavit 1 Aishwarya Assessee’s Paper book Page No 127 of 20 Ajay No.1 (Page No. 33 & 34). Paper book No 1 10 2019-20 Affidavit Aishwarya Assessee’s Paper book Page No 128 of Paper book No 2 21-22 Arvind No.1 (Page No. 35 & 36). 11 2019-20 Affidavit Assessee’s Paper book Page No 129 of 23 No.1 (Page No. 39 & 40). Paper book No 2 12 Ananth Patil 2019-20 Affidavit Assessee’s Paper book Page No 130 of 24 No.1 (Page No. 78 & 79). Paper book No 1 13 Nibina Nisar 2019-20 Affidavit Assessee’s Paper book Page No 130-131 No.1 (Page No. 80 & 81). of Paper book No 24A 14 Panchami 2019-20 Affidavit 1 Assessee’s Paper book Page No 131 - No.1 (Page No. 61 & 62). 132 of 25 15 Richa Kumari 2019-20 Affidavit Paper book No 2 Assessee’s Paper book Page No 132-133 No.1 (Page No. 63 & 64). of Paper book No 26 16 Shreya MB 2019-20 Affidavit 1 Assessee’s Paper book Page No 133 - No.1 (Page No. 59 & 60). 134 of 27 17 Nithin HS 2018-19 Affidavit Paper book No 2 Akhil S Assessee’s Paper book Page No 134 of 28 Plackiel No.1 (Page No. 45 & 46). Paper book No 1 18 2018-19 Affidavit Page No 135 of Anantha 29 Assessee’s Paper book Paper book No 2 19 Padmanabhan 2019-20 Affidavit No.1 (Page No. 47 & 48). Assessee’s Paper book Page No 136 of 30 No.1 (Page No. 51 & 52). Paper book No 2 20 Karthik BA 2019-20 Affidavit Dr Aishwarya Assessee’s Paper book Page No 138- R No.1 (Page No. 43 & 44). 33 139 of 21 2019-20 Affidavit Paper book No 2 Nikitha Assessee’s Paper book Page No 139-140 Nagesh No.1 (Page No. 57 & 58). of Paper book No 34 22 2019-20 Affidavit 1 Laxmi Memorial Education Trust, Mangalore Page 70 of 108 Chidrawaj Page No 140 of Yogendra 35 Assessee’s Paper book Paper book No 1 Prakash 23 2019-20 Affidavit No.1 (Page No. 49 & 50). Assessee’s Paper book Page No 141 of 36 No.1 (Page No. 65). Paper book No 1 24 Tejasvi Mathur 2019-20 Affidavit Meenal Singh Assessee’s Paper book Page No 141-142 Rajput No.1 (Page No. 75 & 76). of Paper book No 37 25 2019-20 Affidavit 1 Arjun Assessee’s Paper book Page No 142-143 Venugopal No.1 (Page No. 41 & of Paper book No 38 26 2019-20 Affidavit 42). 1 Adya P Assessee’s Paper book Page No 143 of 39 27 Shenoy 2017-18 Affidavit No.1 (Page No. 31 & 32). Paper book No 1 Assessee’s Paper book Page No 143-144 No.1 (Page No. 82 & 83). of Paper book No 40 28 Rasmitha R 2017-18 Affidavit 1 Saiyed Maria Assessee’s Paper book Page No 144 of 41 Imtiyaz No.1 (Page No. 85 & 86). Paper book No 1 29 2017-18 Affidavit Vangara Assessee’s Paper book Page No 145 of 43 Sushmita No.1 (Page No. 66 & 67). Paper book No 1 30 2018-19 Affidavit Mohd. Ashar Assessee’s Paper book Page No 146 of 44 EK No.1 (Page No. 55 & 56). Paper book No 2 31 2018-19 Affidavit Assessee’s Paper book Page No 146 of 45 32 Kaushik Raju 2019-20 Affidavit No.1 (Page No. 53 & 54). Paper book No 1 Assessee’s Paper book Page No 147 of 46 No.1 (Page No. 87 & 88). Paper book No 1 33 Shaludeen 2019-20 Affidavit Assessee’s Paper book Page No 148 of 47 No.1 (Page No. 77). Paper book No 2 34 Musin Farook 2015-16 Affidavit Roshan V Assessee’s Paper book Page No 149-150 Shetty No.1 (Page No. 84). of Paper book No 50-51 35 2019-20 Affidavit 1 5.6 The following persons confirmed in the sworn statement before authorities that they have not paid any unaccounted fees to the assessee. Sworn Page No 71& 72 of Page No 113 of Paper book No 1 01-02 Statement Assessment order 1 BH Gyan 2019-20 Sworn Statement from Page No 115-116 Mr.Uday of Paper book No 04-05 Shetty (Father 1 of Utsav Page No 73& 75 of 2 Utsav Shetty 2019-20 Shetty) Assessment order Ankit Page No 120 of Malligarjun 11 Sworn Page No 69& 70 of Paper book No 1 Hudalogi 3 2018-19 Statement Assessment order Kaveesh S Sworn Page No 67& 68 of Page No 137 of 31 Shetty Statement Assessment order Paper book No 1 4 2019-20 Laxmi Memorial Education Trust, Mangalore Page 71 of 108 Sworn Page No 65& 66 of Page No 137-138 Statement Assessment order 32 of Paper book No 5 Rishab Jain 2019-20 1 5.7 It is to be noted that whereabouts of these students not known and no response received from their end when the enquiry was caused by ld. AO to prove the collection of unaccounted fees from them: i. Man Shetty Somnath Sudarshan ii. Bhaskar Gorla iii. Yashwant Gowda 5.8 Hence, enquiry made by ld. AO with the above 43 students shows that there was no payment of unaccounted fees to the assessee in the assessment year under consideration as the students or parents of the students confirmed in their affidavit/sworn statements. With regard to other two students, there was no reply to the notice sent by the ld. AO and AO has not taken any effort to trace them and their whereabouts not known. Thus, evidence collected by the department not suggests that assessee has collected any unaccounted fees from the students in the assessment year under consideration. 5.9 It is to noted that the assessee was accorded an opportunity to cross summons Mr. Dilip Kumar and Mr. Vishwanath Shetty. During the cross examinations, both Mr. Dilip Kumar and Mr. Vishwanath Shetty claimed that cash was not collected for admission process to MBBS and MD seats and instead, concession was given to students due to covid and others reasons by the management of the trust. It was crystal clear that Mr. Mr. Vishwanath Shetty and Mr. Dilip Kumar had turned hostile by changing their stance and deposition on oath. In our opinion, these two persons are not reliable witness to take support of their acceptance or rejection of collection of unaccounted fees. Their Laxmi Memorial Education Trust, Mangalore Page 72 of 108 statements to be rejected as it is and no credence could be given to consider a true statement. 5.10 Further, it was brought to our notice that the details recorded in the dairy/loose slips which contain only the details for follow-up action to be made and thus, there was no conclusive evidence to suggest any unaccounted collection of fees. In our opinion, the addition cannot be made only on the basis of statement recorded u/s 132 (4) of the Act from the assessee’s employees and the basis of unsubstantiated confession statement. Further, the Chairman Mr. Alake Janardhan Shetty (aged 80 years old) in all his statements recorded u/s 132(4) of the Act on 17.2.2021, u/s 131 of the Act on 12.8.2021 & 23.9.2021, u/s 132(4) of the Act 24.9.2021 has categorically stated that the Trust does not collect from students any unaccounted fees and no cash has been handed over to him. Further, it is also admitted fact that there was a physical cash of Rs.53,00,750/- which was the cash balance appearing in the books of accounts of the assessee as on the said date on 17.2.2021. Being so, the said cash balance is duly explained and it cannot be treated as unaccounted physical cash found during the course of search. The addition cannot be made only on the basis statement recorded u/s 132(4)/131 of the Act with unsubstantiated documents or loose slips found during the course of search action unless it is supported by any other documents, money, bullion, jewellery or other valuable property or articles or thing belong to this assessee. In our opinion, when these loose sheets, scribblings and jottings having no signature or authorization from the assessee's side, these are unsubstantiated documents. These documents won’t suggest the undisclosed assets of assessee in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets. As such, no addition could be made on this count.
Laxmi Memorial Education Trust, Mangalore Page 73 of 108 5.11 We also take support of various decisions for our above conclusions as below:
(i) In the case of CIT Vs. Dr. N. Thippa Setty (322 ITR 525) (Karn.), the jurisdictional High Court has held as under:
Held, dismissing the appeals, that it was clear that the statements made by the assessee under section 132(4) of the Act were retracted not once but twice and that the Department had accepted the retraction. No cogent and valid reasons had been assigned by the Assessing Officer for reopening the assessment. There were no good or sufficient reasons for reopening of the assessment under section 148 of the Act against the assessee.
5.12 Further, the ld. AO cannot solely rely on the statement recorded u/s 132(4) of the Act without appropriate corroborative materials as recently held by Hon’ble Delhi High Court in the case of PCIT Vs. Pavitra Realcon Pvt. Ltd. reported in dated 29.5.2024, wherein held as under: “17. We have heard the learned counsels appearing on behalf of the parties and perused the record.
The primary grievance which arises in the present appeals pertains to whether the ITAT was right in deleting additions made under Section 68 of the Act by holding that no assessment could have been made on mere presumption of existence of incriminating material.
Undisputedly, during the period of search, no incriminating material appears to have been found. However, the Revenue proceeded to issue notice under Section 143(2) of the Act on the pretext of the statements of the Directors of the respondent-assessee companies recorded under Section 132(4) of the Act and material seized from the search conducted on Jain group of companies. The assessment order was also passed under Section 143(3) read with Section 153C of the Act making additions under Section 68 of the Act.
However, it is an undisputed fact that the statement recorded under Section 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements.
Laxmi Memorial Education Trust, Mangalore Page 74 of 108 In the case of Kailashben Manharlal Chokshi v. CIT1, the Gujarat 21. High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph no. 26 of the said decision has been reproduced hereinbelow: - 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary state ment, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retrac tion made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee.
[Emphasis supplied]
Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal2, wherein, it was held that merely because an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below: - “20. In our view, a plain reading of section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4) of the Act. However, such statements on a stand alone basis without reference to any other material discovered during Laxmi Memorial Education Trust, Mangalore Page 75 of 108 search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation. [Emphasis supplied]
In our opinion, the Act does not contemplate computing of undisclosed income solely on the basis of statements made during a search. However, these statements do constitute information, and if they relate to the evidence or material found during the search, they can be used in proceedings under the Act, as specified under Section 132(4) of the Act. Nonetheless, such statements alone, without any other material discovered during the search which would corroborate said statements, do not grant the AO the authority to make an assessment.
Coming to the findings of the ITAT with respect to incriminating material in the case of M/s Pavitra Realcon Pvt. Ltd and M/s Delicate Real Estate Pvt. Ltd, it is seen that the ITAT has explicitly held in paragraph no. 18 that no addition has been made on the basis of any incriminating material found during the course of search. Further, the ITAT relied on the decision of the Supreme Court in the case of CIT v. Sinhgad Technical Education Society1 and held as follows: - “18. Further, while writing the order it has come to our notice that the Hon’ble Apex Court in the case of Sinhgad Technical Education Society has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 19. In view of the above, the additional grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd. And M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned.”
Also, the Supreme Court in the case of CIT v. Abhisar Buildwell 25. (P) Ltd.4, has clarified that in case no incriminating material is found during the search conducted under Section 132 of the Act, the AO will have no jurisdiction to make an assessment. The relevant paragraph is reproduced herein below: - “36.4. In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into Laxmi Memorial Education Trust, Mangalore Page 76 of 108 consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132-A of the 1961 Act. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved.” [Emphasis supplied] This Court in the case of CIT v. Kabul Chawla5, has explicitly 26. noted that the information/material which has been relied upon for assessment has to relate with the assessee. The relevant portion of the said decision is extracted herein below: - (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material."
[Emphasis supplied]
Recently, this Court, in the case of Saksham Commodities Limited v. Income Tax Officer, Ward 22(1), Delhi & Anr6, while relying upon the decision of the Supreme Court in Abhisar Buildwell (supra) and this Court’s decision in the case of CIT v. RRJ Securities Ltd.7, upheld the position of law that the AO would not be justified to assess income in case no incriminating material is found during the search. The relevant paragraph is reproduced herein below: - “54. In any case, Abhisar Buildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of Laxmi Memorial Education Trust, Mangalore Page 77 of 108 the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory compulsion or an inevitable consequence which was advocated ***** 56. We also bear in mind the pertinent observations made in RRJ Securities when the Court held that merely because an article or thing may have been recovered in the course of a search would not mean that concluded assessments have to “necessarily” be reopened under Section 153C and that those assessments are not liable to be revised unless the material obtained have a bearing on the determination of the total income. This aspect was again emphasised in para 38 of RRJ Securities with the Court laying stress on the existence of material that may be reflective of undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income for a particular AY.”
[Emphasis supplied] 28. So far as the submission made by the learned counsel for the Revenue that the AO acted on a bona fide belief that the date of search has to be taken as the date of initiation of proceedings under Section 153C of the Act is concerned, it is apposite to refer to our decision in the case of CIT v. Ojjus Medicare (P) Ltd.8 This Court, in the said case, reiterated the already settled law that the date of initiation of assessment proceedings under Section 153C would be calculated from the date of handing over of the books of accounts, documents or assets seized to the jurisdictional AO of the non-searched person. The relevant paragraphs of the said decision are extracted herein below: - “K. SUMMARY OF CONCLUSIONS 119. We thus record our conclusions as follows:
Laxmi Memorial Education Trust, Mangalore Page 78 of 108 A. Prior to the insertion of Sections 153A, 153B and 153C, an assessment in respect of search cases was regulated by Chapter XIVB of the Act, comprising of Sections 158B to 158BI and which embodied the concept of a block assessment. A block assessment in search cases undertaken in terms of the provisions placed in Chapter XIVB was ordained to be undertaken simultaneously and parallelly to a regular assessment. Contrary to the scheme underlying Chapter XIVB, Sections 153A, 153B and 153C contemplate a merger of regular assessments with those that may be triggered by a search. On a search being undertaken in terms of Section 153A, the jurisdictional AO is enabled to initiate an assessment or reassessment, as the case may be, in respect of the six AYs' immediately preceding the AY relevant to the year of search as also in respect of the “relevant assessment year”, an expression which stands defined by Explanation 1 to Section 153A. Of equal significance is the introduction of the concept of abatement of all pending assessments as a consequence of which curtains come down on regular assessments.
B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs' consequent to the addition of the stipulation of “relevant assessment year” and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the “relevant assessment year”. The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or “likely to amount to” INR 50 lakhs or more in the “relevant assessment year” or in aggregate in the “relevant assessment years”. C. Section 153C, on the other hand, pertains to the non- searched entity and in respect of whom any material, books of accounts or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of Section 153A, Section 153C was also to apply to all searches that may have been undertaken between the period 01 June 2003 to 31 March 2021. In terms of that provision, the AO stands similarly empowered to undertake and initiate an assessment in respect of a non-searched entity for Laxmi Memorial Education Trust, Mangalore Page 79 of 108 the six AYs' as well as for “the relevant assessment year”. The AYs', which would consequently be thrown open for assessment or reassessment under Section 153C follows lines pari materia with Section 153A. D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges upon the phrase “immediately preceding the assessment year relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it “from the end of the assessment year”. This distinction would have to necessarily be acknowledged in light of the statute having Laxmi Memorial Education Trust, Mangalore Page 80 of 108 consciously adopted the phraseology “immediately preceding” when it be in relation to the six year period and employing the expression “from the end of the assessment year” while speaking of the ten year block.”
[Emphasis supplied] 29. It is thus seen that in order to determine block of six AYs, one must first identify the FY in which the search occurred, leading to the identification of the AY relevant to the previous year of the search. The block of six AYs will then be those immediately preceding the AY relevant to the search year. For a search assessment under Section 153C of the Act, the only difference is that the previous year of the search is replaced by the date or year in which the seized books of accounts, documents, and assets are handed over to the jurisdictional AO, rather than the year of the search, which is the basis for an assessment under Section 153A of the Act. Therefore, the relevant AY in the present case would come under the block of six AYs immediately preceding the AY in which the satisfaction note was recorded by the AO of the respondent-assessee companies.
Further, in the case of M/s Design Infracon Pvt. Ltd., the ITAT held that there is violation of principles of natural justice as neither the statement of owner of Jain group of companies was provided to the said company, nor the opportunity of cross-examination was given. The ITAT in paragraph no. 23 has held as under: - “23.Now, coming to Design Infracon (P) Ltd., we find from the material available on record that there is brazen violation of principles of natural justice inasmuch as neither the statement of Mr. Jain recorded at the time of search nor his cross- examination was provided to the assessee by both the lower authorities despite specific and repeated requests made by the assessee in this regard. The Hon'ble Supreme Court in the case of M/s Andaman Timber Indusgies vs. CCE reported in 281 CTR 241 has held that not giving opportunity of cross- examination makes the entire proceedings invalid and nullity. The Co-ordinate Bench of the Tribunal in the case of Best City Infrastructure Ltd. (supra) has also held that not providing opportunity of cross-examination makes the addition invalid. It has come to our notice that the Hon'ble Delhi High Court recently has upheld the said decision as reported in 397 ITR 82.”
On this aspect, it is beneficial to refer to the decision of the Supreme Court in the case of Andaman Timber Industries v. CCE9, wherein, it was held that not providing the opportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant paragraph of the said decision is extracted herein below: - Laxmi Memorial Education Trust, Mangalore Page 81 of 108 “6. According to us, not allowing the assessee to cross- examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to crossexamine those dealers and what extraction the appellant wanted from them.” [Emphasis supplied] 32. Additionally, the Supreme Court in the case of State of Kerala v. K.T. Shaduli Grocery Dealer2, held that tax authorities being quasi- judicial authorities are bound by the principles of natural justice. The relevant paragraph is extracted herein below: - “2. Now, the law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi- judicial functions and they are bound to observe principles of natural justice in reaching their conclusions. It is true, as pointed out by this Court in Dhakeswari Cotton Mills Ltd. v. CIT [AIR 1955 SC 154 : (1955) 1 SCR 941 : (1955) 27 ITR 126] that a taxing officer “is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law”, but that does not absolve him from the obligation to comply with the fundamental rules of justice which have come to be known in the jurisprudence of administrative law as principles of natural justice. It is, however, necessary to remember that the rules of natural justice are not a constant: they are not absolute and rigid rules having universal Laxmi Memorial Education Trust, Mangalore Page 82 of 108 application. It was pointed out by this Court in Suresh Koshy George v. University of Kerala [AIR 1969 SC 198 : (1969) 1 SCR 317 : (1969) 1 SCJ 543] that “the rules of natural justice are not embodied rules” and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel v. Duke of Norfolk [(1949) 1 All ER 109] :“There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.”
[Emphasis supplied] 33. Further, the argument of learned counsel for the Revenue that this mistake is curable under Section 292B of the Act lacks merit as the plain language of the said Section makes it abundantly clear that this provision condones the invalidity which may arise merely by mistake, defect or omission in notice. The said Section reads as under: - 292-B. Return of income, etc., not to be invalid on certain grounds.—No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.
Reliance can also be placed upon the decision in the case of CIT v. Micron Steels P. Ltd.11, whereby, it was held that the jurisdictional defects cannot be cured under Section 292B of the Act and they render the entire proceedings null and void.
In the present case, it is seen that the Revenue has failed to allude to any steps which were taken to determine that the seized material belonged to the respondent-assessee group. Notably, the satisfaction note has also been prepared in a mechanical format and it does not provide any details about the incriminating material. Therefore, a failure on the part of the Revenue to manifest as to how the material gathered from the search of Jain group of Laxmi Memorial Education Trust, Mangalore Page 83 of 108 companies belonged to the respondent-assessee group and the same is incriminating, vitiates the entire assessment proceedings.
Accordingly, we find no reason to intermeddle with the order of the ITAT which has rightly set aside the assessment order and deleted the additions made therein.
In view of the aforesaid and on the basis of the findings of fact arrived at before the authority, these appeals do not raise any substantial question of law and consequently, they stand dismissed. Pending applications, if any, are also disposed of.”
5.13 Further, Hon’ble Supreme Court in the case of Common Cause (A registered Society) Vs. Union of India in Writ Petition (Civil) No.505 of 2015 dated 2.7.2018 [2017] 394 ITR 220 (SC) wherein considered and observed that the entries in the loose papers/sheets are not “books of accounts” and has no evidentiary value u/s 34 of the Indian Evidence Act. The Hon’ble Supreme Court dismissing the writ petition filed by Common Cause, a registered society, refused to give nod to investigate against the Sahara and Birla Groups in the alleged payoff scandal. The factual setting of the case are that, a search was conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminating materials and an amount of Rs.25 crores were recovered. CBI referred the matter to Income Tax Department. In another search, the IT department recovered certain incriminating materials and unaccounted money of Rs.135 crores from Sahara Group of Companies. Allegedly the department recovered certain print out of excel sheets showing that Rs.115 crores were paid to several public figures. The settlement commission granted immunity to the Sahara Group of Companies on ground that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives, etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disks and pen drives, etc. do not comply with the requirement of the Laxmi Memorial Education Trust, Mangalore Page 84 of 108 Indian Evidence Act and are not admissible evidence. The Income Tax Settlement Commission has also observed that department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. The petitioner, Common Cause, impugned the orders before the Hon’ble Supreme Court. Dismissed the petition Supreme Court clarified that the evidence that had surfaced was not credible and cogent. The Attorney General contended that documents which have been filed by the Birla as well as Sahara Group are not in the form of Account books maintained in the regular course of business. They are random sheets and loose papers and their correctness and authenticity even for the purpose of income mentioned therein have been found to be unreliable having no evidentiary value, by the concerned authorities of Income Tax. Analysing the veracity of the evidences procured from the companies, the Supreme Court, relied upon the ratio laid in V.C. Shukla case and observed that the entries in loose sheets of papers are not in the form of “Books of Accounts” and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act, and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation, that those are admissible. 5.14 Tribunal in the case of ACIT Vs. Manchukonda Shyam in ITA 87/Viz/2020 dt.23.09.2020 wherein the Tribunal at paras 6 and 6.1 has held as under: “6. We have heard both the parties, gone through the orders of the authorities below. Shri Lanka Anil Kumar is an employee of M/s Navaratna Estates Ltd. A search u/s 132 was conducted in the residence of Shri Lanka Anil Kumar and certain sums were found in whatsapp messages in digits. When asked to explain, Shri Anil Kumar stated that the amounts were written in thousands represent lakhs and the total sum of Rs.1,05,00,000/-was taken as loan from the assessee in cash for his business purposes. When confronted with the assessee, he explained that the amounts mentioned in thousands are correct and the total amount would be in the range of Rs.5,000/- and Rs.10,000/- Laxmi Memorial Education Trust, Mangalore Page 85 of 108 given to Shri Anil Kumar to meet the petty cash or miscellaneous expenses from M/s Navaratna Estates during registration of properties. A search u/s 132 was conducted in the case of Shri Lanka Anil Kumar as well as the assessee and the survey u/s 133A was conducted in the case of M/s Navaratna Estates. No evidence was found by the department either in the premises of the assessee or in the premises of M/s Navaratna Estates, having given loan to Sri Anil Kumar to the extent of Rs.1,05,00,000/-. In the search proceedings in the residence of Shri Anil Kumar also, no evidence with regard to unaccounted investment or expenditure representing the loan supposed to be taken from the assessee was found. Merely on the basis of the statement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the assessee to cross examine the third party nor disproved the explanation given by the assessee. As found from the order of the AO Sri Lanka Anil Kumar is an employee of M/s Navaratna Estates and drawing the salary of Rs.25000/- per month. He explained that the sums mentioned in the whatsapp messages were related to the amounts given to Sri Lanka Anil Kumar in the range of Rs.5,000/- to Rs.10,000/- to meet the petty cash and miscellaneous expenses. No evidence was found with regard to the investment made by Shri Anil Kumar in his own business out of the loans stated to have given by the assessee. In the above facts and circumstances there is no reason to disbelieve the statement given by the assessee that the payments were given for meeting petty cash or miscellaneous expenses. The Ld.CIT(A) following the decisions of Hon’ble Jurisdictional High Court as well as this Tribunal held that on the basis of notings and loose sheets found from third parties and the statement of third parties, the additions cannot be made without having corroborative / independent evidences. For the sake of clarity and convenience, we extract relevant part of the order of Ld.CIT(A) in para No.6.2 of page No.13 which reads as under : “6.2. I have considered the assessment order and submissions of the appellant. It is seen that the addition made by the AO is solely based on the social media (whatsapp) messages exchanged between the appellant and Mr. Anil Kumar, an employee of M/s Navaratna Estates. A statement u/s.132 recorded from Mr. L, Anil Kumar during the course of Search during which Mr. L. Anil Kumar was questioned and he explained the nature and 'details of messages exchanged by him with the appellant. The messages contain details of transactions in digits. Those were explained to be in lakhs of rupees and the transaction was loans advanced by the appellant to Mr.L. Anil Kumar whereas the appellant explained the same to be in thousands of rupees which were given for miscellaneous expenses. Mr.L. Anil Kumar also took similar stand in his assessment proceedings and said that the statement given during Search was under duress. The AO has not brought on record any evidences as to utility of such amount nor any Laxmi Memorial Education Trust, Mangalore Page 86 of 108 other corroborative evidence to support the findings. Such evidences(Messages) without any supporting/corroborative along with admission of third person cannot be, basis for AO to come to conclusion and make addition in the assessment order. The low or the issue is laid down by the jurisdictional High Court, and followed by ITAT consistently in the following cases.
• K. V. Lakshmi Savitri Devi Vs ACT 148 ITJ 517 (Hyd). • K. V. Lakshmi Savjtri Devi Vs ACIT ITTA 563 of 2017 (AP)(HC) • Jawahar Bhai Atmaram Hathiwala Vs ITO 128 ITJ 36 (Ahd) • DCIT Vs B. Vijaya Kumar & 931 of 2009 (Hyd). • CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) • CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 • Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. • P. Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012. The ratio laid down is that solely on the basis evidences such as notings in loose sheets found with third parties and the statement of third parties, additions cannot be made without corroborative evidences and independent enquiries. Applying the above ratio to the facts of the case, it is held that the addition made is not warranted, the same is deleted.” 6.1. No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search and no evidence was found regarding utilization of purported advances by Shri Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the statement and clarified that he has not received any cash loans from the assessee. Addition was made merely on the basis of whatsapp messages and the statement recorded from section 132(4) from Shri Lanka Anil Kumar which was subsequently retracted. Therefore we are of the view that the addition made by the AO is unsustainable and the Ld.CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed.”
5.15 In the light of the above decisions, statements recorded u/s 132(4) of the I.T. Act, 1961 solely cannot constitute as incriminating material so as to make these additions.
Laxmi Memorial Education Trust, Mangalore Page 87 of 108 5.16 The Hon’ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) held as follows:- “Not allowing the assessee to cross-examine the witness by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. (para 6) Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. (para 7) If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice. (para 8)” 5.17 The Delhi Tribunal in the case of Veena Gupta v. ACIT in dated 27.11.2018 relying on the above judgment of Hon’ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded.
5.18 The Hon’ble Supreme Court in the case of Mehta Parikh & Co. v. CIT, 30 ITR 181 held as under:-
Laxmi Memorial Education Trust, Mangalore Page 88 of 108 “In the instant case a mere calculation of the nature indulged in by the ITO or the AAC was not enough, without any further scrutiny, to dislodge the position taken up by the assessee, supported as it was, by the entries in the cash book and the affidavits put in by the assessee before the AAC. The Tribunal also fell into the same error. It could not negative the possibility of the assessee being in possession of a substantial number of these high denomination currency notes. It, however, considered that it was impossible for the assessee to have had 61 such notes in the cash balance in their hands on 12-1-1946, and then it applied a rule of the thumb treating 31 out of such 61 notes as within the bounds of possibility, excluding 30 such notes as not covered by the explanation of the assessee. This was pure surmise and had no basis in the evidence, which was on the record of the proceedings. Facts proved or admitted may provide to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question. The High Court treated this finding of the Tribunal as a mere finding of fact and recognised this position in effect but went wrong in applying the true principles of interference with such findings of fact to the present case. Really speaking the Tribunal had not indicated upon what material it held that Rs. 30,000 should be treated as secret profit or profits from undisclosed sources and the order passed by it was bad. The assessee had furnished a reasonable explanation for the possession of the high denomination notes of the face value of Rs. 61,000 and there was no justification for having accepted it in part and discarded it in relation to a sum of Rs. 30,000. The High Court ought to have held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs. 61,000, for income-tax and excess profits tax and business profits tax purposes, representing the value of the high denomination notes which were encashed.” 5.19 The Hon’ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises, 210 ITR 103 (Cal) held as follows:- “8. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Laxmi Memorial Education Trust, Mangalore Page 89 of 108 Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But, we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination, if necessary.
It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through account payee cheques. In reply to question No. 5, he stated that he had seven full-time employees whose names are mentioned by him. He also claimed to have maintained books of account like sales books, purchase books, cash books and sale bills. In reply to question No. 18, he, on his own, stated that his big customers were the Reliance Oil Mills and Eastern Commercial Enterprises, the assessee, in the present reference. As for his cash withdrawals, he explained that his business required ready cash for purchase of raw materials which explained his large drawings of cash from the bank. Learned counsel then cited a host of decisions to bring home the point that no evidence or document can be relied upon unless it is shown to the assessee. Kishanchand Chellaram v. CIT. Similarly, the requirement of cross-examination as the requirement of the rules of natural justice has been underlined by the Bombay High Court in Vasanji Ghela and Co. v. CST [1977] 40 Laxmi Memorial Education Trust, Mangalore Page 90 of 108 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross- examine the witness hostile to him.
In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross-examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the adverse party, the assessee, is relied upon as truthful, still remains the question of estimation of the profit. The assessee no doubt has given a comparative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result we decline to answer the question.” 5.20 As held by the Hon’ble Calcutta High Court in the above judgment, in the present case, evidence collected by the department cannot be considered as a reliable witness.
5.21 Reliance on this incomplete statement cannot be appreciated as held by the Hon’ble Supreme Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 713 (SC) as follows:- “Held, reversing the decision of the High Court, (i) on the facts, that the two letters dated February 18, 1955 , and March 9, 1957 did not constitute any material evidence which the Tribunal could take into account for the purpose of arriving at the finding that the sum of Rs.1,07,350 was remitted by the assessee from Madras, and if these two letters were eliminated, there was no material evidence at all which could support its finding. The statements of managers in those two letters were based on hearsay, as in the absence of evidence, it Laxmi Memorial Education Trust, Mangalore Page 91 of 108 could not be taken that he must have been in charge of the Madras office on October 16, 1946, so as to have personal knowledge. The department ought to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. It was true that proceedings under the income-tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter dated March 9, 1957, and what statement he had made.” 5.22 Further, third party statement cannot be relied upon without proper enquiry and providing proper cross-examination to the assessee. In CIT v. P.V. Kalyana Sundaram, 294 ITR 49 (SC), the Hon’ble Supreme Court observed that no reliance could be placed on loose sheets seized during the course of search and third party statements unless provided cross-examination. Collection of unaccounted fees is governed by Karnataka Institutions (Prohibition of Capitation Fees) Act, 1984 and there was no violation noticed by the State authorities and also Medical Council of India. In such circumstances, it is not possible to conclude on the basis of various loose sheets and jottings found during the search action u/s. 132 that assessee has collected unaccounted fees from students.
5.23 Further, the Bangalore Bench in the case of Anand Social & Education Trust in dated 29.05.2020 by placing reliance on the judgment of Hon’ble Madras High Court in the case of Balaji Educational & Charitable Public Trust, 56 taxmann.com 182 in similar circumstances observed that the AO had not conducted any enquiry with the students or parents or others. The cash seized during the search was accepted as not belonging to the assessee. There was no complaint received from Laxmi Memorial Education Trust, Mangalore Page 92 of 108 any student or parent regarding unaccounted fee charged by the institution. In the above case also the AO had estimated the unaccounted fees received from the students under the management quota for various years. The Hon’ble Madras High Court held it to be a perverse inference. Further the Tribunal observed the AO had only drawn certain inference on surmises and conjectures. He did not conduct any independent enquiry with the related party to find out the truth. He has also not brought any material on record to show that the explanation given by the assessee was not correct. In any case, the assessee was not given opportunity to cross-examine the parties whoever managed the diary. Accordingly, the Tribunal deleted the addition by placing reliance on the judgment of Balaji Educational & Charitable Public Trust (supra).
5.24 In this case also, the addition made by the AO is based on unsubstantiated loose sheets and jottings or Excel sheets. Being so, it cannot be stated as full-proof of material evidence to substantiate the addition. In our opinion seized documents do not support the AO’s contention that assessee has received unaccounted fees for admission of the students to the college. Going through the entire facts of the case it creates only a suspicion in the minds of the revenue authorities that the assessee has collected unaccounted fees. However, the suspicion not enough to hold that the assessee has collected unaccounted fees in absence of concrete evidence bought on record by the authorities concerned. The suspicion cannot replace the material evidence brought on record by the authorities.
5.25 The rough noting in the loose papers are not full-proof evidence without proving the correctness of the same. Nothing was recorded in the orders of lower authorities that assessee has deviated from its objects for which approval u/s. 12A was granted Laxmi Memorial Education Trust, Mangalore Page 93 of 108 and not applied its funds towards its objects. No evidence was brought out to show that the amount of unaccounted fees alleged to have been collected resulted in creation of any unaccounted assets by the trust or trustees or by any interested person. On this count also the addition cannot be sustained.
5.26 No assets commensurate with the alleged estimated collection of fees were found by the revenue authorities. The unbounded loose sheets having jottings are not speaking either by itself or in the company of others and not corroborated by enquiry, cannot be the basis of any inference that unaccounted fees was collected not entered in the accounts so as to sustain the addition. 5.27 Considering the facts of the case, we are of the opinion that the evidence collected by the authority is not sufficient to establish that the assessee has collected unaccounted fees for admission of students to various courses in the assessee’s college. We are aware that entire evidence has to be appreciated in a wholesome manner and even where there is documentary evidence in favour of an assessee, the same can be overlooked if there are surrounding circumstances to show that the claim of assessee is opposed to normal course of human thinking, conduct and human probability. Even applying this principle to the present case, we have difficulty in rejecting the assessee’s plea as opposed to normal course of human conduct. The circumstances surrounding the case are also not enough to reject the assessee’s explanation. We have considered all the material on record and also the statement of the parties as discussed in the earlier paragraphs. We are of the opinion that the department cannot rely on those statements, more so when it was confronted to the assessee’s employees during cross- examination, they have denied the collection of unaccounted fees. The department failed to collect proper information from any source corroborating collection of unaccounted fees, except un- corroborating entries in the loose sheets. It is also supported by the Laxmi Memorial Education Trust, Mangalore Page 94 of 108 following observation of assessing officer in the impugned assessment order: No corroborative evidence in the seized material: in Para 13 of page 46 of the Assessment Order, the learned Assessing Officer has stated as follows: “There are cases where the search team could not find the other corroborating evidence like cheque leaves, the records maintained by the Mr. Dilip Kumar except the data maintained in loose sheet folder marked as A/AJIMS/02’.” 5.27.1 Thus, the learned Assessing Officer himself has stated that there is no corroborative evidence in most of the cases. Apart from that whatever seized (A/AJIMS/02), other is loose sheets only. Further, in answer to question no 5 as reproduced in Page 58 of the assessment order, Vishwanath Shetty stated that “these are details which are convened and compelled to write on Paper in my own handwriting these are not cash transaction.”
5.27.2 All attempts for corroboration failed. There is nothing to suggest that the trust has deviated from the objects for which registration was granted and not applied the funds for its objects. No evidence was brought on record to show that amount of alleged unaccounted fees which have been collected and misused by the assessee or by any interested persons. There is no instance of recovery of any assets commensurate with the alleged estimated unaccounted collection of unaccounted fees as found by the AO. The activities of the trust are genuine. There is no allegation by the lower authorities that activities of the trust are not genuine. Also there was no allegation that the activities of the trust are not carried on in accordance with the objects of the trust. There is no allegation that the assessee is not imparting education and it is an admitted fact that thousands of students are studying in the college and assessee has been carrying on educational activities imparting Laxmi Memorial Education Trust, Mangalore Page 95 of 108 medical education. It fulfilled the requirement of imparting education which are not doubted or challenged by the authorities. Being so, the impugned collection of unaccounted fees cannot be determined and brought to tax.
5.28 Further, the Bangalore Bench of the Tribunal in the case of Venkatesha Education Society in to 106/Bang/2012 and M.J. Balachander in ITA Nos.90 to 94/Bang/2012, order dated 21.12.2012 considered the case in similar circumstances where Mr. M.J. Balachander was collecting extra tuition fees without any authority or consent of the society and the conclusion of the CIT(Appeals) was that extra tuition fees was collected by Mr. Balachander on his own and society has nothing to do with extra tuition fees collection. Being so, the Tribunal held that the assessee cannot be faulted and approval cannot be withdrawn so as to deny the benefit of section 11 of the Act. The relevant observations of the Tribunal are as follows:- ““In this regard, the ld. counsel for the assessee brought to our notice that the agreed tuition fee which the Society can collect for admission has also been collected and this is duly reflected in the statement found in the seized documents. It was submitted that the total collections in the form of DD was a sum of Q 1,16,74,975 and the amount stated to have been deposited by the Secretary in the Head Office is only a sum of Q 80,000 on 02.06.2005 and Q 14,33,500 on 19.10.05. It was submitted that the reference in the seized document might be with regard to the normal tuition fee which the society can collect. It was submitted that the entries in page 54 cannot be conclusive to show that the Secretary was also involved in collecting the ETF. We are of the view that the submissions made on behalf of the assessee in this regard appear to be convincing. In this regard, we also find that Indira Devi, who is stated to have written letter dated 08.12.07, has not been examined by the AO . In those circumstances, it cannot be said that the seized document on which the AO has placed reliance conclusively proves that it was only the Society which received the ETF. On the other hand, the circumstances pointed out by the Society only go to show that it was MJB who was collecting ETF without the knowledge and authority of the Society.” • ACIT v. Mamatha Educational Society 2015 (8) TMI 367 - ITAT Hyderabad [Paragraphs 24 and 25] Laxmi Memorial Education Trust, Mangalore Page 96 of 108 • In CIT v. KLE University [ITA No. 5016 of 2012 C/W 5017 of 2012], the Hon’ble Karnataka High Court held as under:- “11. Our answer to the above point is in the affirmative for the following reasons:
(i) that the donations received by the society cannot be construed as capitation fee for the admission of students by the KLE University; (ii) that providing hostel to the students/ staff working for the society is incidental to achieve the object of providing education, namely, the object of the society; (iii) that the Revenue appears to have not properly appreciated the legal point that though the chairman and a few members of "the society" are the chairman and members of "the KLE University", they are separate legal entities; (iv) that there is no violation of any of the conditions stipulated under the Income-tax Act, warranting for cancellation of registration of the society; (v) that the Tribunal on proper appreciation of the grounds urged by the society and the Revenue, has rightly restored the registration.”
5.29 Further the Hyderabad Tribunal in the case of Prathima Educational Society, Hyderabad in vide order dated 08.11.2013, wherein the Accountant Member is a party to the order, held that the evidence collected not speaking with regard to collection of cash of unaccounted fees, cannot be a reason to deny exemption u/s. 11 of the Act. The seized material on which reliance is placed by the revenue authorities is not conclusive evidence to sustain the addition.
Laxmi Memorial Education Trust, Mangalore Page 97 of 108 5.30 Further the Hyderabad Bench of the Tribunal in the case of ACIT v. B. Srinivasa Rao, 159 TTJ 483 (Hyd) [wherein the AM herein was the author observed as under:-
“8. As for the first reason put forth for cancellation of registration, viz., collection of capitation fee, it is submitted that in the course of search, excel sheets were found containing the names of students, names of parents and the amount. In the course of search and, thereafter, statements of chairman of the assessee trust were recorded on a number of occasions, with reference to the entries in these excel sheets. It was explained that circumstances in which the excel sheets were found were not ascertainable. It was contended that uncorroborated notings in the excel sheets should not be acted upon to derive any inference against the society. In support of this contention that the said excel sheets are not reliable, the learned counsel for the assessee put forth the following reasons :
(a) The notings in the excel sheets lacked corroboration of the notings although the Department attempted in that direction. (b) In course of search and post-search investigation, in the statements recorded under s. 132(4)/131, chairman of the assessee trust, Sri Srinivasa Rao expressed his inability to explain the circumstances in which those sheets were found from the premises of the assessee-society. (c) Despite repeated questioning on various occasions, the said Srinivasa Rao denied that the assessee-society has collected capitation fee from any student. (d) The computer printout was not recovered/retrieved from any of the computers maintained in the society's office at the time of search, although the same were verified and that too with the recovery tool which is a usual method adopted by the Department at the time of search. (e) In the course of assessment proceedings, the seized hard disks were operated in the office of the AO with the help of IBM official but there was no impression in the hard disk that the same was typed and prepared in any of the computers belonging to the society. No data conforming to the notings in the excel sheets could be found from the seized computer hard disks. He submitted that the only purpose of scanning the seized hard disk was intended for recovery of the excel sheets so as to corroborate the same, as the assessee has denied to have generated the same. Since it resulted in a futile exercise, it was clearly established that the excel sheets were not prepared by the assessee-society. The assessment order passed by the AO makes no mention of any such recovery.
Laxmi Memorial Education Trust, Mangalore Page 98 of 108 (f) The author of the excel sheets could not be identified. In terms of s. 60 of the Indian Evidence Act, computerised information is within the realm of hearsay evidence and therefore, not relevant at all by itself. In such cases either authority who has fed the information must be identified or he must appear personally and testify before the Court about the source of information. Hence, in the absence of any such corroboration, the evidence remained a hearsay evidence, carrying no evidentiary value, in the absence of any corroboration. (g) At the time of seizure, the excel sheets were not authenticated either by the assessee or by the witnesses or by an authorized officer. This is an unsigned document and as such it loses its evidentiary value for want of authentication. In support of this proposition reliance is placed on the decision of Ahmedabad Bench of the Tribunal in the case of Sanskruti Township v. Department of IT [IT Appeal No. 1885 (Ahd.) of 2006, dated 23-9-2011] and Hyderabad Bench of the Tribunal in the case of Dy. CIT v. C. Krishna Yadav [2011] 12 taxmann.com 4/46 SOT 250 (Hyd.)(URO). (h) There is evidence in the seized record that the Department has typed some information by making use of assessee's computer and made part of the Panchnama. This fact was pointed out by the chairman of the assessee, Sri B. Srinivasa Rao in the course of his statement recorded on 17th Dec, 2009. This act on the part of the search party raises an eyebrow. (i) The Dy. Director of IT in course of post-search investigation made extensive enquiries to corroborate the notings in the excel sheets. One of the steps taken by him was that he summoned all the parents of the students under s. 131 to take evidence. In course of assessment proceedings, the assessee made requests to supply the copies of these statements. Repeated requests made by the assessee fell in deaf ears and so far these statements have not been provided. On being directed by the AO in course of assessment proceeding, the assessee contacted the office of Director General of IT and reminded on a number of occasions but no information was supplied, despite the fact that this fact was also brought to the notice of Director General of IT. As a principle, neither the assessee can suppress the best evidence in his possession nor the Department. It is settled principle that whenever the assessee desires, he can have access to all information, whether favourable or adverse to him as laid down in Suraj Mall Mohta & Co. v. A.V. Visvanatha Sastri [1954] 26 ITR 1 (SC), SMC Share Brokers Ltd. v. CIT [2008] 22 SOT 7 (Delhi)(URO), CIT v. Simon Carves Ltd. [1976] 105 ITR 212 (SC). In this case the assessee has every reason to believe that the evidences tendered by the parents, who were Departmental witnesses, were all favourable Laxmi Memorial Education Trust, Mangalore Page 99 of 108 to assessee and therefore, the Department was apprehensive of providing these statements as the same would go against the Department. The conduct of the Department is not fair as the notings in the Excel sheets formed the basis of addition and subsequent cancellation. Assessee is enclosing herewith some of the summons issued to the parents who appeared to give testimony. (j) Even the AO failed to summon these witnesses in course of assessment proceedings for corroboration when the assessee was consistently denying collection of capitation fees and based his entire conclusion on the report of the Dy. Director of IT which was based on suspicion. This shows total non-application of mind by the adjudicating officer when the informations supplied to him were disputed and not-corroborated by the Dy. Director of IT. His attempt to verify the facts from two witnesses namely Sri Tirupathi Reddy and Madhav Reddy could not yield any further evidence. (k) It was brought to the notice of authorities that notings in the loose sheet remained uncorroborated till end as the same was not a speaking document and no supporting evidence by way of money receipt and other evidences was found. It was pointed out that the same was a dumb document and therefore not to form the basis of cancellation of registration under s. 12AA. With regard to evidentiary value of notings in the loose sheet, the appellant relies on the following decisions : (a) C. Krishna Yadav (supra); (b) Asstt. CIT v. Satyapal Wassan [2007] 295 ITR (AT) 352 (Jab.) ; (c) Asstt. CIT v. Dr. Kamla Prasad Singh [2010] 3 ITR (Trib) 533 (Pat.) ; (d) CIT v. Khazan Singh & Bros. [2008] 304 ITR 243/[2007] 164 Taxman 30 (Punj. & Har.) ; (e) CIT v. Girish Chaudhary [2008] 296 ITR 619/[2007] 163 Taxman 608 (Delhi) ; (f) Bansal Strips (P.) Ltd. v. Asstt. CIT [2006] 99 ITD 177 (Delhi) ; (g) CIT v. Maulikkumar K. Shah [2008] 307 ITR 137 (Guj.). (l) As regards the presumption under s. 132(4A), it was submitted that a loose sheet is not a book/document so as to raise the presumption. For this proposition, reliance was placed on the decision of Apex Court in the case of CBI v. V.C. Shukla [1998] 3 SCC 410. Further the presumption in this section is not mandatory. This can supplement but cannot supplant evidence. Nothing was found by the Department to support their suspicion.
Laxmi Memorial Education Trust, Mangalore Page 100 of 108 (m) Therefore, the Excel sheets which are not speaking either by itself or in the company of others, or corroborated by enquiry, cannot be the basis of any inference that capitation fees were collected and not entered in the accounts to cancel registration.
5.31 Thus, it is seen from the seized material and Excel sheets that these are handwritten loose documents and undisclosed income of the assessee cannot be determined on the basis of these documents. There is no direct evidence or conclusive evidence to prove the collection of the unaccounted fees. The statements of parties of whosoever is relied upon are evasive replies given to the revenue authorities on the basis of which the AO made an estimate of collection of fees. This is only based on conjectures and surmises and only on circumstantial evidence. The AO failed to established the live link between the seized material and the unaccounted fees which resulted in creation of any unaccounted assets in the form of possession of money, bullion, jewellery or other articles or any immovable properties in the name of the trust or the trustees.
5.32 In our opinion, the unsubstantiated and uncorroborated seized material alone cannot be considered as conclusive evidence to frame these assessments. The words “may be presumed” in section 132(4) of the Act given an option to the AO concerned to presume these things, but it is rebuttable and it does not give a definite authority and conclusive evidence. The assessee is having every right to rebut the same. The entire case depends upon the rule of evidence. There is no conclusive presumption with regard to unsubstantiated seized material to come to the conclusion that that assessee has collected unaccounted fees. In the present case, the assessee categorically denied collection of unaccounted fees. If it was collected, it was unauthorized collection by the person who is looking after the admission and that it is why it is unauthorized by Laxmi Memorial Education Trust, Mangalore Page 101 of 108 the trust. Further, there is no confirmation from the students who get admitted into various courses and even there was statements recorded from two students/parents which were not confronted to the assessee for cross-examination. The revenue authorities cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong, cannot take place the material in place of evidence of the AO. The AO should act in a judicial manner, proceed in a judicial spirit and come to the judicial conclusions. The AO is required to act fairly as a reasonable person, not arbitrarily and capriciously. The assessment u/s. 153A of the Act should have been supported by adequate material and it should stand on its own leg. The AO without examining the students / parents who have paid the unaccounted fees cannot come to the conclusion that the assessee has received unaccounted fees. The basis for donation is notebook / loose sheet. This notebook or loose sheets found during the course of search is only circumstantial evidence and not full proof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence in the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has collected unaccounted fees. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of revenue that assessee is collecting huge unaccounted fees in the guise of carrying on educational activities.
5.33 Being so, in our opinion the seized material relied by the assessing officer for sustaining addition is not speaking one in itself Laxmi Memorial Education Trust, Mangalore Page 102 of 108 and also not speaking in conjunction with some other evidence with authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non- speaking document without any corroborative material, evidence on record and finding that such document has not materialised into transactions giving rise to income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. In these cases, moreover these documents are relied upon by the AO without confronting them for cross examination. In our opinion, these documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of search from the possession and control of such document are true. What has to be noted here is that deemed presumption cannot bring such a document in the tax net and the presumption is rebuttable one and the deemed provisions have no help to the department. In our opinion, in these cases addition is made by AO on arbitrary basis relying on the loose papers, containing scribbling, rough and vague noting’s in the absence of any corroborative material and these materials cannot be considered as transacted into collection of unaccounted fees by assessee giving rise to income which are not disclosed in the regular books of accounts by assessee. We place reliance on the following judgements in support of our above findings:
(i) CIT vs D.K.Gupta 174 Taxman 476 (Delhi) (ii) Ashwini Kumar vs ITO 39 ITD 183 (Delhi) (iii) S.P.Goyal vs DCIT (Mum) (TM) 82 ITD 85 (MUM) (iv) D.A.Patel vs DCIT 72 ITD 340 (Mum)
Laxmi Memorial Education Trust, Mangalore Page 103 of 108 (v) Amarjeet Singh Bakshi (HUF) vs ACIT 86 ITD 13 (Delhi) (TM) (vi) Nagarjuna Construction Co Ltd vs DCIT 23 Taxman.com 239 (vii) CIT vs C.L.Khatri 174 Taxman 652 (viii) T.S.Venkatesan vs ACIT 74 ITD 298 (ix) CIT vs Atam Valves Pvt Ltd 184 Taxman 6 (P&H) 5.34 In our opinion, there is no documentary evidence either to support the statements of employees or of the parents of the students; and 5.35 Further, the seized material are in the form of various loose sheets, scribblings, jottings and Excel sheets taken from the computer having no signature or authorization from the assessee’s side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, search action not resulted in recovery of any undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets.
5.36 It is also noted that on cross examination of the employees, they have denied the receipt of the unaccounted fees. Further, out of 43 students alleged to have been paid unaccounted fees, 35 students denied the same in affidavit, 5 denied in their sworn statement and whereabouts of 3 students were not known. No efforts has been done to find out their whereabouts. 5.37 Further, some of the statements have been recorded under section 131 by the authorized officer subsequent to completion of search and these statements cannot be considered as conclusive evidence in view of the below mentioned CBDT Circular in file no.286/98/2013-IT (Inv.II) dated 18.12.2014 which states as under:
Laxmi Memorial Education Trust, Mangalore Page 104 of 108 “Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light.
2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.
In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the IT Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely.” From the above Circular, it is amply clear that the CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. ……………………………………………………………………………… ……………………………………………………………………………… 5.38 In our opinion, this circular is binding on the department and it is to be followed in true spirit. 5.39 Further, judgement in the case of CIT vs. S. Khader Khan Son (300 ITR 157), the Madras High Court held as follows:
The principles relating to section 133A of the Income Tax Act, 1961, are as follows: (i) an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper Laxmi Memorial Education Trust, Mangalore Page 105 of 108 opportunity to show that the books of accounts do not correctly disclose the correct state of facts; (ii) in contradistinction to the power under section 133A, section 132(4) enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law; (iii) The expression such other materials or information as are available with the Assessing Officer" contained in Section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under Section 133A; (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment; (v) Finally, the word "may" used in Section 133A (3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under Section 133A are not conclusive piece of evidence by itself.
A survey was conducted in the premises of the assessee-firm. One of the partners in his sworn statement offered an additional income of Rs.20 lakhs for the assessment year 2001-02 and Rs.30 lakhs for the assessment year 2002-03. However, the said statement was retracted by the assessee- firm in its letter dated August 3, 2001, stating that the partner from whom a statement was recorded during the survey operation under section 133A, was new to the management and he could not answer the enquiries made and as such he agreed to an ad hoc addition. The Assessing Officer based on the admissions made by the assessee, which were directly relatable to the defects noticed during the action under section 133A of the Act, recomputed the assessment. The order was set aside by the Commissioner of Income-tax (Appeals) and this order was upheld by the Tribunal. On appeal to the High Court: “Held, dismissing the appeal, that in view of the scope and ambit of the materials collected during the course of survey action under section 133A shall not have any evidentiary value. It could not be said solely on the basis of the statement given by one of the partners of the assessee-firm that the disclosed income was assessable as lawful income of the assessee.”
Laxmi Memorial Education Trust, Mangalore Page 106 of 108 10. On further appeal by the Department in Civil Appeal No. 13224 of 2008 and 6747 of 2012 dated 20/09/2012, the Supreme Court held as follows:
“Heard Counsels on both sides. Leave granted. Civil Appeal filed by the Department pertains to 2001-02. In view of the concurrent findings of the fact, this Civil Appeal is dismissed.” 5.40 The above ratio laid down by the Madras High Court was confirmed by the Supreme Court. 5.41 From the foregoing discussion, the following principles could be culled out: i. An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of accounts do correctly disclose the correct state of facts, vide decision of the Apex Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [(1973) 91 I.T.R. 18]; ii. In contradistinction to the power under section section 132(4) of the Income-tax Act enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act if it is supported by corroborative materials. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. Commissioner of Income-tax [(2003) 263 I.T.R. 101]; iii. The word "may" used in Section 133A (3)(iii) of the Act, viz., "record the statement of any person which may be Laxmi Memorial Education Trust, Mangalore Page 107 of 108 useful for, or relevant to, any proceeding under this Act, makes it clear that the materials collected and the statement recorded during the survey under Section 133A are not conclusive piece of evidence by itself. iv. Finally, the statement recorded by the Assessing Officer on various dates u/s 132(4) or u/s 131 cannot be the basis to sustain the addition since it is not supported by corroborative material.
5.42 In our opinion, the Assessing Officer has made the addition only on the basis of sworn statements of the various parties backed by unsubstantiated loose slips/excel sheets, which cannot be basis for addition on that reason that it is uncorroborated as discussed above. 5.43 Further, on the date of search action on 6.8.2015, the search party found physical cash of Rs. Rs.53,00,750/-. This has been compared with the books of account on the date of search and it was observed by ld. AO that this has been tallied with the same. Being so, it cannot be said any unaccounted cash was unearthed during the course of search action. This also supports the assessee’s argument that there were no unaccounted fees collected by the assessee in the assessment year under consideration as in the earlier assessment years. It is to be accepted that the discount has been given by assessee to its students for payment of full fees only in this assessment year due to Covid Pandemic which has been given to them on their request on need basis considering the hardship faced by their parents during this Covid period. On this count, it is not possible disbelieve it and to hold that assessee is involving in collection fees in the guise of discount by not accounting the same, more so, the beneficiaries confirmed the getting of discount in fees payment during the Covid period.