DY. COMMISSIONER OF INCOME TAX, NOIDA vs. SARASWATI AMMAL EDUCATION AND CHARITABLE TRUST, CHENNAI

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT a) In AY 2014-15, addition of Rs. 22,35,250/- was made u/s.69C of the Act towards unaccounted interest expenses and further addition of Rs. 1.57 Crores was made u/s. 69A of the Act on account of unaccounted capitation fees. b) In AY 2015-16, addition of Rs. 3,01,62,065/- was made u/s. 69A of the Act towards unaccounted interest expenses. c) In AY 2016-17, addition of Rs. 5,79,48,156/- was made u/s. 69C of the Act towards unaccounted interest expenses and further addition of Rs. 17,12,55,000/- was made u/s. 69A of the Act on account of unaccounted capitation fees. d) In AY 2017-18, addition of Rs. 3,92,60,191/- was made u/s. 69C of the Act towards uncounted interest expenses and further addition of Rs. 15,30,10,000/- was made u/s. 69A of the Act on account of unaccounted capitation fees.

a) For AY 2014-15 ld. CIT(A) deleted both the additions made towards capitation fee of Rs. 1.57 Crore and towards interest on cash loan of Rs. 22,35,250/- by applying doctrine of telescoping. b) For AY 2015-16, ld. CIT(A) deleted addition of Rs. 3,01,62,065/- made towards interest on cash loans by applying the doctrine of telescoping. c). For AY 2016-17, ld. CIT(A) restricted the addition to Rs. 8,13,89,000/- as against the addition of Rs. 17,12,55,000/- made towards capitation fee and deleted the addition of Rs. 5,79,48,156/- made on account of interest on cash loans by applying the doctrine of telescoping. d) For AY 2017-18, ld. CIT(A) restricted the addition to Rs. 8,90,43,000/- as against the addition of Rs. 15,30,10,000/- made towards capitation fee and deleted the addition of Rs. 3,92,60,191/- made on account of interest on cash loans by applying the doctrine of telescoping.

6. As against the order of Ld. CIT(A) in sustaining the additions for AY 2016-17 and 2017-18, Assessee preferred appeals before Tribunal. Against the deletion of additions for AY 2014-15 to AY 2017-18, Revenue also preferred the captioned Appeals. Assessee has also filed Cross-Objection for AY 2014-15 and AY 2015-16 by raising several grounds on both legal/technicalities as wells as on the merits.

and the Addl. Grounds of the Assessee for Assessment Year 2017-18 are extracted as under: Assessee’s Grounds of Appeal “1. On the facts and circumstances of the case and in law partial allowance of the first appeal in favour of the appellant trust makes the satisfaction note drawn by the AO incorrect and the proceedings initiated therefrom void-ab-initio.

2. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that the assessment of a charitable trust is made under sections 11 to 13, which falls under Chapter III of the Act, where reference under section 11(1)(a) is to "income" and not to "total income", which has been specifically defined under sections 2(45) of the Act and in view of the aforesaid reasons, the AO erred in invoking the provisions of sections 69A and 69C of the Act.

3. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the fact that the AO has accepted the aforesaid legal position in respect of the assessment orders for AY 2018-19 and AY 2021-22 and in the reassessment order of AY 2013-14.

4. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in confirming the order of the AO on account of the alleged capitation fee to the tune of Rs. 8,90,43,000/-.

5. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) and the AO have failed to justify the need of the appellant trust to accept alleged cash loans and pay interest out of books.

6. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in confirming the aforesaid addition(s) because the aforesaid additions are totally erroneous, unfounded and based & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT notings/jottings recorded on loose sheets of paper, which have got no evidentiary value. on loose sheets of papers or 7. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that the assessment of a charitable trust is made under sections 11 to 13, which falls under Chapter III of the Act, where reference under section 11(1)(a) is to "income" and not to "total income", which has been specifically defined under sections 2(45) of the Act and in view of the aforesaid reasons, the AO erred in invoking the provisions of sections 69A and 69C of the Act.

8. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that any excess expenditure incurred by a charitable trust in earlier AY, is allowed to be set-off against the income of subsequent AYs by invoking section 11, as this legal position is supported by a number of judgements of High Courts and also a judgement of the Supreme Court.

9. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in sustaining additions based on statement of a third person, viz. Shri VM, recorded under section 132(4) of the Act, which could not constitute incriminating material in the case of the appellant Trust.

10. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in sustaining the addition on account of alleged capitation fee because the alleged capitation fees collected by Shri VM was to be assessed in the hands of Shri VM and not in the hands of the appellant Trust.

11. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in confirming the provisions of sections 69A and 69C, as the provisions of Chapter VI "Aggregation of income and set-off or carry-forward of loss" are not applicable in the case of a charitable trust, viz. the appellant Trust.

12. On the facts and circumstances of the case and in law, the appellate proceedings got totally vitiated as the remand report was not provided to the appellant trust to furnish its comments.

13. That the Appellant craves to leave to add / alter any / all grounds of appeal before or at the time of hearing of the appeal.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Additional Grounds of Appeal of the Assessee

1. That in the facts and circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though, partly, the assessment proceedings completed by the Assessing Officer as before completing the assessment mandatory notice as required /s 143(2) of the Income Tax Act was not issued and served.

2. That in the facts and circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though partly, the assessment order dated 10-04-2021 passed by the Assessing Officer despite that it was not enforceable in law in as much as that it does not bear statutorily required Document Identification Number (DIN) and is prayed to be held as never issued.

3. That in the facts and the circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though in part, assessment proceedings completed by the Assessing Officer despite that these hinged upon the Notice issued u/s 153C dated 21-10-2018 which stood withdrawn and viewed void and never issued on 03-12-2018 which also makes subsequent Show Cause Notice 100 invalid/non-est.

4. That in the facts and the circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though in part, assessment proceedings completed by the Assessing Officer despite that these also hinged upon the Notice issued u/s 142(1) on 01-11-2018 which itself had become non-est in view of the earlier withdrawal of notice issued u/s 153C of the Act.

5. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating the appeal without noticing that assessment order dated 10-04-2021 passed u/s 144 does not disclose mandatory reasons as to why at all provisions of section 144 of the Income Tax Act, 1961 were invoked.

6. That in the facts and the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating appeal by erroneously invoking the presumption as contained u/s 292C and section 132(4A) of the IT Act, 1961 in the hands of the Appellant.

7. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating appeal by holding that unaccounted income subjected to tax by the Assessing Officer has accrued or arisen in the hands of the Appellant.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 8. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in placing reliance in para 5.14.8 and 5.14.9 of his order on certain evidences which were 'dumb' evidences.

9. That in the facts and circumstances of the case and in law the adjudication order of the Commissioner of Income Tax (Appeals), Noida in upholding, though partly, assessment order dated 10-04- 2021 taxing income by invoking provisions of section 115BBE is required to be held as being contrary to the statutory provisions as having been done without serving any notice to the Appellant which was violative of the principles of natural justice and also because in the facts and circumstances of the case income brought to tax was not amenable to tax u/s 694 or 69C of the Act.

10. That in the facts and circumstances of the case and also in law the order of the Commissioner of Income Tax (Appeals), Noida, in upholding, though partly, the assessment order shown dated 10- 04-2021, is required to be held as bad in law as that assessment order is barred by limitation in as much as that while the limitation to pass assessment order ended on 10-04-2021 e- proceeding show the order to have been issued i.e. passed after this date i.e. only on 11-04-2021."

i) Addition on account of capitation fees u/s.69A of the Act challenged in Grounds of appeal Nos.4, 6, 9 and 10; ii) Addition on account of cash loan and interest paid out of books u/s. 69A of the Act challenged in Grounds of appeal Nos.5, 6 and 9.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT I. Addition on account of capitation fee: 11. The Ld. Counsel for the Assessee addressing on Grounds of appeal Nos. 4, 6, 9 and 10 made detailed arguments. Ld. Counsel submitted that proceedings against the Assessee were initiated u/s. 153C of the Act solely on the basis of documents which were found during the search conducted in the case of M/s Etcetera Entertainment and Sh. V. Mathiyalgan, who was the Vice Chancellor of SIMS Hapur, which is a Unit of Assessee trust and Sh. V. Mathiyalgan was removed by the Assessee from the post of Vice Chancellor of the SIMS for breach of trust etc. The Ld. Counsel further submitted that solely based on the documents found during the search from the possession of Sh. V. Mathiyalgan, A.O. concluded that capitation fees or the amount as mentioned in the document seized are received by the Assessee trust. However, no such capitation fees was ever received or accrued to the Assessee trust. To substantiate the said claim, Ld. Assessee's Representative submitted that Assessee trust was not at all in a position to charge capitation fee because of the NEET which started UG 2016-17 for the first time. Likewise for UG 2016 and PG before 2017, the Assessee was following Utter Pradesh Un-aided Medical Collage Welfare Association (UPUMCWA) and based on open admission System conducted by UPUMCWA, merit seats were allotted to those students who cleared the examination conducted by UPUMCWA. It is further submitted that, in both the above systems, there was no management quota seats to bargain. When there was no quota to

21. The Ld. D R further submitted that, the Assessee is trying to shift the burden of capitation fees on Sh. V. Mathiyalgan, whereas, & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT the evidences lead to show that Sh. V. Mathiyalgan has taken huge cash amount depending on the course under which admission was sought as capitation fee over and above the college fee on behalf of the Assessee trust. Thus, the Ld. DR submitted that all these Grounds of Appeal of the Assessee on merits are liable to be dismissed and the additions made by the AO are liable to be confirmed.

24. In the present case, the alleged documents were seized from the custody of Sh. V. Mathiyalgan at A-78, Sector 62, Noida, which are marked as D4, LP-1 & LP-4 and undisputedly are written in the hand writing of Sh. V. Mathiyalgan and some of them are even signed by Sh. V. Mathiyalgan, wherein he has mentioned the name of the students, capitation fee etc. By relying on these seized documents, Ld. A.O. prepared a chart, wherein he mentioned the names of the students, incriminating material and also mentioned

25. As per the provision of Section 292C of the Act, where any books of accounts or other documents, money, bullion jewellery or other valuable article or things are or is found in the possession or control of any person in the course of search u/s 132 of the Act , it is presumed that such books of accounts and other documents, money, bullion, jewellery or other valuable article or things belongs to such person and contents of such books of accounts and other documents are true. For the sake of ready reference the provision of Section 292C of the Actis reproduced as under: “Presumption as to assets books of account, etc. 292C. (1)Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133-A] , it may, in any proceeding under this Act, be presumed- (i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)that the contents of such books of account and other documents are true; and (iii)that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (2)Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT section 132-A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132-A, had been found in the possession or control of that person in the course of a search under section 132.”

26. Admittedly all the alleged incriminating material was found and seized from the possession of Sh. V. Mathiyalgan during the search conducted u/s 132 of the Act at his residence. Those incriminating documents are written in the hand writing of Sh. V. Mathiyalgan and signed by him. Therefore, as per Section 292C of the Act, the Assessing Officer has compulsion to presume that those incriminating documents belonged to Sh. V. Mathiyalgan and the A.O. cannot presume or infer that those incriminating documents which are in the hand writing of Sh. V. Mathiyalgan are of the Assessee.

27. The Ld. AO has come to the conclusion that, the capitation fees collected by Sh. V. Mathiyalgan had been handed over to the Assessee trust and made addition based on the entries found recorded in the said which includes diary and loose papers seized from the possession of Sh. V. Mathiyalgan at his premises. However, the fact remains that the Revenue did not find any document/material/evidence with the Assessee to corroborate the allegation of receipt of capitation fees from the students by the Assessee trust.

28. Further as per Section 132(4A) of the Act presumption is required to be drawn vis-à-vis against the person in whose & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT possession or control, the books of accounts, documents, etc. are found and not against any other person. For ready reference, the provision of Section 132(4A) is reproduced as under:- Section 132….. …….. 4-A Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)that the contents of such books of account and other documents are true; and (iii)that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

29. The co-ordinate Mumbai Bench of the Tribunal in the case of Startex (India)(P) Ltd Vs. DCIT reported in 84 ITD 320 (Mum), examined the presumption Sec. 132(4A) and section 292CC of the Act, wherein it was held that the presumption shall apply to the person from whom possession the alleged documents were seized. The relevant extract are reproduced as under:- “The presumption under section 132(4A) is in respect of the person in whose possession the books or documents are found. The use of the words ‘to such person’ in the said section means the person in whose possession the books of account or documents are found. Clause (ii) of section 132(4A) provides that the contents of such books of account or documents are true. This presumption can be applied only against the person in whose possession the books of account or the documents are found. Therefore, so far as the case of N.S. was concerned, the revenue authorities might presume that the books of account or documents found from his possession were correct. However, while utilising those & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT documents in the case of any other person (i.e., the person other than N.S.), there could not be any presumption about the correctness of such books or documents. Therefore, the presumption under section 132(4A) is applicable only against the person in whose possession books of account or other documents are found and not against any other person. Moreover, the presumption under section 132(4A) is a rebuttable presumption and not a conclusive one. Certainly, the burden to rebut the presumption is upon the person against whom the presumption is applicable. The assessee, in its statement before the Assessing Officer, had denied having borrowed any money from ‘N.S.’ in cash.”

30. In the case of Sheth Akshay Pushpavadan vs. DCIT reported in 130 TTJ 42 (Ahd), it has been held that, the addition cannot be made on the basis of material seized from/statement given by a third party, unless those materials were corroborated with any other evidence. The relevant findings are as under:- “The submission of the assessee had not been rebutted by the AO. It therefore, stands proved that there was no evidence on record that assessee paid any on money to any person including the seller. The presumption under s. 132(4A) would not apply in the case of the assessee therefore, it was necessary for the AO to have brought some reliable and cogent material and evidence on Padmashree Dr. D.Y. Patil University 37 record to support his findings or to corroborate the statement of Arora Brothers. It may also be noted that Shri Ajay Arora in his statement later on retracted from his earlier statement as the same fact is mentioned by the AO in his assessment order dt. 28th Feb., 2008 (paper book 8-paper book 18) Therefore, no reliance could be placed on the statements of the Arora Brothers. Moreover, the AO has not mentioned any fact in the assessment order if the statements of Arora Brothers were ever put to the assessee for the purposes of cross- examination on behalf of the assessee. It is settled law that unless the statement is tested under the cross-examination, the same cannot be read in evidence against the assessee. Since, in this case, AO did not allow any cross-examination to the statements of Arora Brothers on behalf of the assessee therefore, their statements cannot be read in evidence against the assessee. The AO tried to use the admission of Arora Brothers made in their statements under s. 132(4) in their cases against the assessee but he has failed to note that admission of others & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT cannot be read in evidence against third party unless there is corroborative evidence on record. The maker of the admission can bind himself but how he can bind others from his statement without there being any corroborative evidence on record is not known in the law. As noted above, even Shri Ajay Arora in his statement, denied any on money paid by the assessee. No evidence was found in the case of the assessee that assessee has paid any on money before the date of the search or that the assessee was required to pay any on money after the date of the search. The AO merely considering the business relation between assessee and Arora Brothers presumed that since they have admitted payment of on money therefore, assessee might have also paid the on money. If Arora Brothers have not recorded any entry in their books of account as noted by the AO, how assessee could be blamed. The above conclusion of the AO is not supported by any material or evidence. The conclusion of the AO is purely based upon suspicion and surmises. It is settled law that suspicion howsoever strong may be could not take place of legal proof.”

31. The Law on presumption given in sec. 132(4A) of the Act has also been interpreted by the Hon’ble Delhi High Court in the case of CIT vs. Radico Khaitan (2017)(83 taxmann.com 375)(Delhi) as under:- “24. Section 132 no doubt mandates a presumption in respect of search and seizure operations; yet textually the presumption relates to material documents and books of account seized of from the assessee's premises and the presumption that can be made from it, not from materials seized and statement recorded, of third parties. Only if the materials that are sought to be relied upon emanate from the premises of the party subject to assessment, that the presumption can be drawn. This is evident from Sections 132 (4) and (4A) of the Act, which read as follows: "Section 132…. (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person' s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested." It is evident that in the absence of these foundational facts, the revenue is under an obligation to establish through materials relatable to the assessee, what it alleged against it. What were the best pointers for further investigation were the discovery of material and evidence, which the revenue claim pointed to the assessee's failure to disclose full facts and income, should have resulted in further investigation and unearthing of material in the form of seized documents from the assessee's premises. Unfortunately the linkage between the material seized from the assessee's premises and those from UPDA's premises as well as the statement of Sh. Miglani was not established through any objective material. It is now settled law that block assessments are concerned with fresh material and fresh documents, which emerge in the course of search and seizure proceedings; the revenue has no authority to delve into material that was already before it and the regular assessments were made having regard to the deposition, the inability of the revenue to establish as it were, that the assessee's expenditure claim was bogus, or it had underreported income and that it resorted to over invoicing and diversion of funds into the funds allegedly maintained by the UPDA, was not established. The findings of the Commission therefore cannot be faulted as contrary to law.”

32. The Hon’ble Delhi High Court while interpreting the application of the presumption given in sec. 132(4A) of the Act, held that presumption could be applied only to the materials found with the searched person. If any material is found from some other & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT person, the above said presumption could not be extended to the assessee. In that case, the Revenue is under an obligation to establish that the information available in the seized material is relatable to the assessee and allegation made against the assessee has to be proved with some other independent material. In the said case before Hon’ble Delhi High Court, alleged details of payment of money by the assessee therein for illegal purpose was found in the place of UPDA (trade association). Based on the said information, addition was made by the AO in the hands of the assessee therein. The Hon’ble Delhi High Court noticed that the assessing officer did not carry out further investigation and further no material that could link the above information with the assessee was found from the premises of the assessee. Accordingly, it was held that the decision reached by Hon’ble Settlement Commission in not making addition was justified.

33. On the basis of the above ratio and the legal principles laid by the Hon'ble High Court and the Tribunal, we are of the opinion that the AO cannot invoke the presumption given in sec. 132(4A) of the Act on the Assessee in respect of materials seized from Sh. V. Mathiyalgan, who was the VC of SIMS which is a unit of Assessee trust, particularly, when the Revenue has not found any material evidence from the assessee to corroborate the same. Further, it is not the case that Assessee Trust has owned up the contents of documents/materials seized from the said Sh. V. Mathiyalgan to be true. On the contrary, the Assessee right from the beginning of & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT proceedings categorically denied the receipt of capitation fees and stated that there was no option to collect the capitation fees, as all the seats are merit seats filled though open examination.

34. The Hon’ble Delhi High Court in the case of CIT vs. Ansal Properties reported in (2018) 98 taxmann.com 398(Delhi), examined the issue as to whether evidences found from a third party could be used against the Assessee, wherein the Hon’ble Court held as under:- “23. The ITAT which rejected the Revenue's appeal on this point held as follows: "Since the diary in question was not recovered from the premises of the assessee, which is independent public limited co., therefore, no presumption under section 132(4A) could be drawn against the assessee. In the block assessment, the burden is upon the AO to prove that the particular item is undisclosed income. Admittedly, no other evidence is recovered during the course of search to prove that in fact any payment of Rs. 30 crores outside the books of account has been made by the assessee to Sri S.K. Jatia. The AO has made addition in the case of the assessee in respect of payment of Rs. 30 crores made to Sri S.K. Jatia. Even in the seized diary the narration is "AdharshilaJatia [Anil Bhalla]". Neither Sri S.K. Jatia nor Anil Bhalla were examined by the AO during the course of assessment proceedings. Therefore, we fail to understand as to how the addition could be sustained in the hands of the assessee. It appears from the above circumstances that the department has made subsequent enquiries against the assessee in order to connect the assessee with the diary in question but such things are not permitted as is held by Bombay Bench of I.T.A.T. in the case of Sundar Agencies (supra). No addition could be made in the block assessment on the basis of assumption and presumptions. Merely some material is recovered during the search, no addition could be made in the hands of the assessee on the basis of some subsequent enquiries and that too purely on assumption and presumptions. The AO observed in the assessment order while making the addition that he made enquiries from the villagers. This was the main reason to make up the theory of the payment made outside the books of account on the basis of inference drawn on estimate basis. It is an admitted case that the & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT villagers had a dealing with M/s Aadharshila Towers Private Ltd. for selling of their land. These transactions were not at all connected with the assessee. The villagers have not made any incriminating statement against the assessee. The inference drawn by the AO that initially M/s ATPL was owned by Sri S.K. Jatia and then subsequently was taken by the assessee by itself is no ground to draw the presumption against the assessee that since some dealing outside the books of account had happened between the villagers and M/s ATPL, there is no presumption that such transaction would have also happened in between ATPL and the assessee.

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

25. This Court is of the opinion both the CIT and ITAT have rendered findings that were sound and reasonable on the question of whether the seized diary per se could in the overall circumstances of the case result in the addition of Rs. 30 crores. The assessee's explanation consistently was that Rs. 30 crores was towards internal and external development charges. This was an aspect which could be easily decided by securing relevant information from the statutory authority, i.e. HUDCO who received the payments. Independent corroboration of these too could have been sought otherwise the relevant books of account could have been checked. Furthermore, the statute does not compel the Revenue to raise a presumption; even when a tax authority does so, the sole basis of an addition entirely hinging upon the interpretation of certain figures in a diary would be flawed. For these reasons, this Court is of the opinion that since the inference drawn with respect to findings are based on essentially factual materials which were analyzed by the CIT and the ITAT, there is no reason to interfere with those findings. This question is accordingly answered against the Revenue and in favour of the assessee.”

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 35. In the present case, Sh. V. Mathiyalgan who was the Vice Chancellor of SIMS and was one of the paid employee of Assessee trust during the relevant point of time and the said SIMS is one of the Units of the Assessee Trust. Since the SIMS comes under the umbrella of Assessee Trust, relationship between the Assessee and Sh. V. Mathiyalgan would be master and servant or employer and employee relationship and all the documents/materials were seized from the possession of Sh. V. Mathiyalgan only. It is categorically stated by the assessee trust that, it had not authorized anyone to collect capitation fees on its behalf. It is the case of the Assessee that the said Sh. V. Mathiyalgan might have collected the capitation fee for his personal benefits without any authority from the Assessee trust.

11. Now the Grounds remaining in the appeal of the Revenue are Ground Nos. 9 & 10, which relate to an addition of Rs.30,00,000/- made by the Assessing Officer as unaccounted receipts. 11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of Rs.30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr. Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such loose papers were given to him by the assessee to be kept with him. As per the Assessing Officer, the contents of the relevant seized material, which has been reproduced in para-13 of the assessment order, indicates that one Mr. Suresh Agarwal paid the assessee Rs.30,00,000/- in March, 2006 in two instalments of Rs.15,00,000/- each. It is further noticed by the Assessing Officer that though there was an account of Mr. Suresh Agarwal in the account books of asessee's proprietary concern, M/s. Gupta Steel Corporation, but the aforesaid amount was not accounted for. For the said reasons, the Assessing Officer treated the sum of Rs.30,00,000/- as unaccounted income of the assessee. 11.2 Before the CIT(A), assessee reiterated that the paper was found and seized from Mr. Bharat G. Shah and not from the assessee. Further, there was no material to say that such seized material related to the assessee for any of his activities. The assessee also pointed out that such loose papers were printed account papers and on top of it is written "Trial Data" and that assessee had no knowledge as to who has written or printed the same. 11.3 The CIT(A) has considered the submissions put forth by the assessee and found that there was no material brought on record to establish that the seized papers belonged to the assessee. The CIT(A) also found that the seized documents do not indicate who is the recipient of the amounts mentioned and in what connection the money was paid. According to the & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT CIT(A), merely because there is an account appearing in the account books of the assessee in the name of Mr. Suresh Agarwal, it would not lead to an assumption that the seized document reflect transactions between assessee and Mr. Suresh Agarwal. In fact, the CIT(A) infers that the document reflects transaction between Mr. Bharat G. Shah and Mr. Suresh Agarwal, as the document was found in the possession of Bharat G. Shah. Under these circumstances, CIT(A) has deleted the addition in the hands of the assessee. 11.4 Before us, the ld. Departmental Representative pointed out that the employee from whom the impugned loose papers were found is a trusted employee of the assessee and the notings in the seized paper showed that it pertain to the assessee. It was, therefore, contended that the addition has been wrongly deleted by the CIT(A). 11.5 On the other hand, the ld. Representative for the assessee pointed out that the CIT(A) was justified in deleting the addition as there was no material to link the said seized document with the transactions undertaken by the assessee with Mr. Suresh Agarwal; which were duly accounted for in the account books. 11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is hereby affirmed and accordingly Revenue fails on Grounds of appeal

Nos.9 & 10 also.”

38. Thus, applying the above ratio, the act of collecting the capitation fee if done by the said Sh. V. Mathiyalgan cannot be considered to be within the scope of his employment and in such an 39. We have also gone through the statements given of Sh. V. Mathiyalgan recorded under Section 131 (1A) and 132(4) of the Act which are available at pages No. 01 to 16 of the Paper Book of the Revenue. In the said statements Sh. V. Mathiyalgan, at no point of time has mentioned that such ‘capitation fees’ was received from various students and over to the Assessee trust. As could be seen from the statements, most of the questions and answers are regarding Sh. V. Mathiyalgan’s personal affairs and his personal business. In so far as cash seized from Sh. V. Mathiyalgan, the same has been added in his individual capacity connected with his personal business and is not connected to either SIMS or the Assessee trust in any manner. Therefore, there is no reason for the A.O. to make the impugned addition in the hands of the Assessee trust.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Mathiyalgan received the capitation fee. However, it is the specific case of the Assessee that there is no room for receiving capitation fees for any of the seats and it never authorized Sh. V. Mathiyalgan to receive the capitation fees nor received any capitation fees from any students. The Assessee contended that obviously inter alia because of his strain relationship with the chairman of the trust and only to escape from the tax liability, Sh. V. Mathiyalgan has falsely stated through his CA that the amount has been handed over to the Assessee herein.

7. Taking into consideration the observation made by the Tribunal regarding not allowing cross-examination of Mr. Thakkar from whose documents the amount is alleged to have been taken in the interest of the assessee.

8. In that view of the matter the finding recorded by the Tribunal is just and proper and issues is answered in favour of the of the assessee against the department. 9. The appeals stand dismissed. A copy of this judgment be placed in each file. 47. At the most, those statements can only be used against the persons who make the statements, therefore, the addition made on the basis of those statements cannot be sustained in the eyes of law.

22. The alternative contention of the assessee is that, even if it is taken that the AO could not have used the materials seized from the employees without corroborating the same with any other material available with the assessee, i.e., it is the case of the assessee that these materials, per se, do not have any evidentiary value for arriving at the conclusion that the assessee-trust was collecting capitation fees, unless any other independent material was brought in to corroborate such a conclusion. In support of this contention also, the assessee placed reliance on certain case laws.

23. Before us, the Ld A.R has filed written submissions summarizing his contentions on the above said two points discussed in the earlier paragraphs. ……………………. ………….

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

"Since the diary in question was not recovered from the premises of the assessee, which is independent public limited co., therefore, no presumption under section 132(4A) could be drawn against the assessee. In the block assessment, the burden is upon the AO to prove that the particular item is undisclosed income. Admittedly, no other evidence is recovered during the course of search to prove that in fact any payment of Rs. 30 crores outside the books of account has been made by the assessee to Sri S.K. Jatia. The AO has made addition in the case of the assessee in respect of payment of Rs. 30 crores made to Sri S.K. Jatia. Even in the seized diary the narration is "AdharshilaJatia [Anil Bhalla]". Neither Sri S.K. Jatia nor Anil Bhalla were examined by the AO during the course of assessment proceedings. Therefore, we fail to understand as to how the addition could be sustained in the hands of the assessee. It appears from the above circumstances that the department has made subsequent enquiries against the assessee in order to connect the assessee with the diary in question but such things are not permitted as is held by & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Bombay Bench of I.T.A.T. in the case of Sundar Agencies (supra). No addition could be made in the block assessment on the basis of assumption and presumptions. Merely some material is recovered during the search, no addition could be made in the hands of the assessee on the basis of some subsequent enquiries and that too purely on assumption and presumptions. The AO observed in the assessment order while making the addition that he made enquiries from the villagers. This was the main reason to make up the theory of the payment made outside the books of account on the basis of inference drawn on estimate basis. It is an admitted case that the villagers had a dealing with M/s Aadharshila Towers Private Ltd. for selling of their land. These transactions were not at all connected with the assessee. The villagers have not made any incriminating statement against the assessee.

The inference drawn by the AO that initially M/s ATPL was owned by Sri S.K. Jatia and then subsequently was taken by the assessee by itself is no ground to draw the presumption against the assessee that since some dealing outside the books of account had happened between the villagers and M/s ATPL, there is no presumption that such transaction would have also happened in between ATPL and the assessee.

25. This Court is of the opinion both the CIT and ITAT have rendered findings that were sound and reasonable on the question of whether the seized diary per se could in the overall circumstances of the case result in the addition of Rs. 30 crores. The assessee's explanation & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT consistently was that Rs. 30 crores was towards internal and external development charges. This was an aspect which could be easily decided by securing relevant information from the statutory authority, i.e. HUDCO who received the payments. Independent corroboration of these too could have been sought otherwise the relevant books of account could have been checked. Furthermore, the statute does not compel the Revenue to raise a presumption; even when a tax authority does so, the sole basis of an addition entirely hinging upon the interpretation of certain figures in a diary would be flawed. For these reasons, this Court is of the opinion that since the inference drawn with respect to findings are based on essentially factual materials which were analyzed by the CIT and the ITAT, there is no reason to interfere with those findings. This question is accordingly answered against the Revenue and in favour of the assessee."

In this case also, it has been reiterated that corroboration of material seized from other persons with any other independent material is necessary for making addition on the basis of materials seized from other persons.

11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of Rs.30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr. Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such loose papers were given to him by the assessee to be kept with him. As per the Assessing Officer, the contents of the relevant seized material, which has been reproduced in para-13 of the assessment order, indicates that one Mr. Suresh Agarwal paid the assessee Rs.30,00,000/- in March, 2006 in two instalments of Rs.15,00,000/- each. It is further noticed by the Assessing Officer that though there was an account of Mr. Suresh Agarwal in the account books of asessee's proprietary concern, M/s. Gupta Steel Corporation, but the aforesaid amount was not accounted for. For the said reasons, the Assessing Officer treated the sum of Rs.30,00,000/- as unaccounted income of the assessee.

11.2 Before the CIT(A), assessee reiterated that the paper was found and seized from Mr. Bharat G. Shah and not from the assessee. Further, there was no material to say that such seized material related to the assessee for any of his activities. The assessee also pointed out that such loose papers were printed account papers and on top of it is written "Trial Data" and that assessee had no knowledge as to who has written or printed the same.

11.3 The CIT(A) has considered the submissions put forth by the assessee and found that there was no material brought on record to & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT establish that the seized papers belonged to the assessee. The CIT(A) also found that the seized documents do not indicate who is the recipient of the amounts mentioned and in what connection the money was paid.

According to the CIT(A), merely because there is an account appearing in the account books of the assessee in the name of Mr. Suresh Agarwal, it would not lead to an assumption that the seized document reflect transactions between assessee and Mr. Suresh Agarwal. In fact, the CIT(A) infers that the document reflects transaction between Mr. Bharat G. Shah and Mr. Suresh Agarwal, as the document was found in the possession of Bharat G. Shah. Under these circumstances, CIT(A) has deleted the addition in the hands of the assessee.

11.4 Before us, the ld. Departmental Representative pointed out that the employee from whom the impugned loose papers were found is a trusted employee of the assessee and the notings in the seized paper showed that it pertain to the assessee. It was, therefore, contended that the addition has been wrongly deleted by the CIT(A).

11.5 On the other hand, the ld. Representative for the assessee pointed out that the CIT(A) was justified in deleting the addition as there was no material to link the said seized document with the transactions undertaken by the assessee with Mr. Suresh Agarwal; which were duly accounted for in the account books.

11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Q 8:- I am showing you the statement of Smt Shivani Patil recorded u/s 132(4) from 27-07-2016 to 31-07-2016 wherein at Q.51 onwards it has been stated capitation fee in cash is collected at Colleges under D Y Patil University, Nerul. Please Comment.

Ans.:- As per my understanding, Smt Shivani Patil has stated that D Y Patil University has management seats and fees is collected for the same. I agree that various colleges under D Y Patil University, Nerul have management Quota as allowed by the relevant rules upto 15% and fees is collected for the same. The fees for the management quota is higher than other seats. Apart from the 15% management quota, there is no other seat for which higher fees is charged.

Q 9:- In the statement of Smt. Shivani Patil, she has stated at Q 53 that fees for management quota is collected in cash. How is it you are able to say that no capitation fees is collected?

Ans.: I agree that fees is paid in cash by some students. We don't refuse cash payments. However, all cash payments are accounted in the books of accounts. Such cash payments are either regular fees for regular seats or fee for management quota fees. There is no cash collected towards capitation fee in the colleges under DY Patil University, Nerul, as no capitation fees is collected by our colleges. Accordingly, we agree with the contentions of the assessee that neither Shri Vijay Patil nor SmtShivaniPatil has stated that the assessee trust is collecting capitation fees. Hence the AO could not have placed reliance on the statement given by Smt Shivani Patil.

(c) The AO has also found a file containing cheque details of certain amounts received by the assessee, in the pen drive of Shri Pratap Patil. It was noticed that those cheque receipts were found accounted for in the books of the assessee trust. Another file found in the pen drive was containing details of payments made outside the books of accounts.

Accordingly, the AO has expressed the view that the information found in the pen drive should be considered in totality and the payments details should also be considered to be true, since details of receipts by way of cheques were found to be true. We are unable to agree with the said opinion expressed by the AO. We notice that the AO is referring to two different files found in the pen drive, i.e., one file contained details of & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT receipts by way of cheques, another file contained details of receipts by way of cash and yet another file contained payment details. There should not be any dispute that the pen drive is in the nature of 'Storage vault' containing several files. Each file may contain different details and hence it may not be proper to hold that the contents of one file, if found to be correct then the content of other files are also to be considered as true. The opinion of the AO may be accepted, if the same file contains details of partly accounted and partly unaccounted transactions, which is not the case. Further, the assessee herein is contending that the collection of capitation fee is an un-authorised act of the employees. The assessee is not accepting the transactions noted down in the pen drive. Hence, we are of the view that the AO was not right in extending the interpretation given to one file to another file. The Ld A.R contended that Shri Pratappatil was having access to the records of the college and it is quite possible that he might have copied the file relating to receipt of fees by way of cheques. Accordingly, he contended that it does not mean that the information contained in other files should also be considered to be correct. In any case, since there is no material to link these payment details to the assessee, the same cannot be used against the assessee. The details/documents which have not been accepted by the assessee can be used only by bringing any other corroborate/independent material on record which would vindicate those information. Accordingly, we are of the view that the AO was not justified in accepting the details of payments without carrying out due examination and bringing any other corroborative evidence. (d) The AO has also relied upon certain discrepancies found in the OMR answer sheets pertaining to entrance examinations conducted by the assessee trust for admitting students in the management quota. According to AO, signatures were missing in the attendance sheets in some cases or it did not tally with the signature available in OMR sheets. According to the AO, those discrepancies are available in the case of students from whom capitation fees has been collected. We notice that the assessee has given explanations with regard to this deficiency. Be that as it may, the point to be considered here is whether the deficiencies found in the OMR sheets would show that the assessee was collecting capitation fees?. First of all, the explanation given by the assessee for the deficiencies has not been proved to be incorrect by the AO. Secondly, in the enquiry conducted by the AO with the students, all of them have expressed ignorance about the deficiencies. Thirdly, the deficiencies noticed were related to the signature in attendance sheets. There is no evidence to show that the answer sheets themselves were manipulated, which might be an important incriminating material. Fourthly and most importantly, the AO did not ask any question with the students about payment of capitation fees. Hence, we are of the view that the deficiencies noted in the OMR sheets do not prove the receipt of capitation fees by the assessee trust. The Ld A.R also submitted that & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT some students have also filed affidavit stating that they have not paid any capitation fee. Accordingly, in our view, this detail also does not support the case of the AO. (e) We also notice that the revenue has questioned the trustees, viz., Shri Vijay Patil and Smt Shivani Patil. We noticed earlier that both of them have denied collection of capitation fees. We notice that the revenue did not question other trustees with regard to the allegation of collection of capitation fees. We also notice that the officials at helm of affairs, viz., Vice Chancellor, Controller of Examinations were also not questioned. (f) The AO had placed reliance on the statements given by the employees, trustee and certain employees of another trust. However, all of them have retracted the statements given by them. We notice that most of them have retracted within 15 days from the date of conclusion of search. The AO however rejected the retraction by holding that the same is an afterthought and without any reasoning. However, we notice that they have stated that they were under mental pressure when the statement u/s 132(4) of the Act was taken from them and could not give proper reply. The Ld A.R also submitted that, since the employees have collected capitation fees without the authority of the assessee trust, naturally they would be under the threat of exposure. Hence, in order to save their skin, they might have stated initially that the capitation fees were collected upon the instruction of Shri Vijay Patil. Subsequently, when they reached proper mental state, they have filed retraction statements. The Ld A.R also submitted that the cash was recovered from the employees only and not from the assessee trust. The Ld A.R submitted that, it reinforces the fact that the employees were only collecting capitation fees without the authority. The Ld A.R also submitted that the employees have owned up the cash seized from them and have declared the same as their respective income under Income Declaration Scheme, 2016. This fact would support their respective retraction statement and also the stand of the assessee trust. The Ld A.R submitted that the income declared by the employees have been accepted by the revenue. Accordingly, it was contended by the Ld A.R that the original statements given u/s 132(4) could not have been relied upon by the AO. Considering the facts and circumstances of the case discussed above, in our view, these contentions of Ld A.R merit acceptance. ] (g) We notice that the AO has also conducted enquiries with some of the parents. The Ld A.R has advanced his arguments on the reliability/effectiveness of their statements, which we have summarized in the earlier paragraphs. We have noticed that most of them have given donations by way of cheques only. The parents who had given cash had taken back the cash, as their respective children changed their minds. None of the parents have admitted that the assessee trust has collected & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT capitation fees in the form of donations, i.e., there is no material to show that the donations were not voluntary. It is only the AO who has presumed that the donations given by the parents are in the nature of capitation fee collected by way of cheque. Hence, we are of the view that the AO could not have placed reliance on the statements given by the parents. (h) The AO has also relied upon the documents seized from employees of another trust, viz., Taruna Maheswari and Pravin Patil and made additions on protective basis towards receipts of money recorded in those statements. Both of them said that the payments were received on behalf of Vijay D Patil. However, no corroborative material was brought on record to prove the trustworthiness of the transactions recorded therein. We notice that the AO has only presumed that the payments have been given by Shri Vijay Patil, as noted in the above said documents, out of the capitation fees only. However, no material was available to support the above said presumption of the AO. If at all any such payment has been made by Shri Vijay D Patil, it may be his personal transaction and hence it is nothing to do with the assessee trust. Both the above said parties have initially stated that they had received money from Tukaram Patil and others, but later retracted it. In any case, no contra entry was available in the record maintained by Shri TukaramPatil. Further, the revenue did not examine Tukaram Patil with regard to the entries of receipt of cash noted by Taruna Maheswari and Pravin Patil. In any case, those transactions are between two parties and there is no other material to show that the said transactions, if at all true, were related to the assessee. The foregoing discussions would show that the above said statements/materials do not vindicate or link the information/evidences found from the employees. The revenue also did not find/seize any credible material from the assessee trust to corroborate the information/document seized from the employees. In respect of alleged receipt of capitation fee and in respect of payments recorded in the materials, the AO did not make enquiries with the payer/recipient of money. In the absence of any independent material to link/vindicate the information found from the employees, we are of the view that the AO could not have made additions on the basis of that information.

7.6 With regard to the seizure of cash of over Rs.44 Lakhs from the residence of the Chairman of the Assessee Trust, it is not in dispute that the said sum has been assessed in the hands of the Chairman for the assessment year 2008-2009 and the same was received from the petrol pump business, the turnover of which is more than Rs.30 Crores. Moreover, the Assessing Officer has accepted the disclosure of the seized cash as the income of the individual and, therefore, in our considered opinion, it cannot be said that assessee trust had accepted contributions by way of capitation fee. The said issue cannot be used both ways. The assessment of the undisclosed income at the hand of the individual ends the issue there. It has no relevance to the affairs of the Trust and there is no material to hold so.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 7.7 In our considered opinion, based on the loose sheets and cash seized, which have been held as irrelevant to the present issue, it cannot be held that for all the assessment years the assessee received capitation fee for admission of students in the management quota. This is a perverse inference. Without conducting any enquiry in this regard to make allegation is unsustainable. The information obtained from the Public Information Officer to a query raised under the Right to Information Act to the effect that "There is no any complaint received from any student/parent regarding capitation fee charged by the above institutions so far" also tilts the balance in favour of the assessee. It disproves the department's allegation of involuntary collection of amounts. That apart, the order passed under Section 264 of the Act for the assessment years 1998-1999 to 2001-2002 clearly states that the donation received from students or the parents is not compulsory in nature and, therefore, the same is not capitation fee. There is no material to controvert this fact which is to the knowledge of the department. No endeavour is made to sustain the allegation of involuntary donation. In any event, as rightly held by the Tribunal, it is not relevant in the present case as the allegation is violation of Section 13 r/w Section 11 of the Act.

7.8 We find that factually the Commissioner of Income Tax (Appeals) and the Tribunal have come to the conclusion that the donations received do not partake the character of capitation fee. There is no element of involuntary nature of donation. A specific finding is given that no investigation has been done to show that any parent or student has complained about the nature of donation. The department has failed to dispel the finding of fact.

7.9 In any event, the learned Standing Counsel for the department pleads that since the assessee had not submitted the list of students, the Assessing Officer had to make an estimate adopting his own methodology. This we cannot accept for the simple reason that the show cause notice proceeds on the basis that the assessee has to submit the list of donors alone. A reply was submitted by the assessee and in paragraph 6(iii), the Assessing Officer states that all the statements tallied. However, the assessing officer comes to a different conclusion that contribution is not voluntary, and it is relatable to admission of students. We find this finding of the Assessing Officer, as & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT has been rightly held by the Commissioner of Income Tax (Appeals) and the Tribunal, is not supported by documents, but on the basis of Assessing Officer's inference. It cannot be now stated that something was not furnished, nevertheless, he tallied all the materials and came to the conclusion as stated above. If the Assessing Officer has tallied the figures then the assessees case of actual contribution to Trust has to be accepted. It has been shown in the return of income. A bald statement in paragraph (7) of the assessment order that the assessee is not carrying on charitable activities for the purpose of Section 13 read with Section 11 of the Act appears to be the mainstay of the department's case.

7.10 In effect, it is clear that the authority has confused himself with the admission of students in management quota with the carrying on activities of the trust. The distinction is obvious that if the department wanted to make out a case of violation of Section 13 of the Act by the trust, it cannot be based on the perception of the Assessing Officer that donations to the trust are not voluntary. We hasten to add that there is no material to support the plea that the donations are not voluntary. 7.11 Having invoked Section 13, the mainstay of the case of the department should be based on the activities of the trust to plead that the same are not in consonance with Section 13 of the Act and, therefore, exemption under Section 11 of the Act should be denied, which we find is abysmally silent in the show cause notice and the assessment order. 7.12 We do not find any reason to come to a different conclusion on facts, as has been addressed by the Commissioner of Income Tax (Appeals) as well as the Tribunal on these two issues relating to seizure of cash and loose sheets. Apparently, there is no dispute on that fact. All that the department is trying to show is that there is something improper in the manner in which the donations are handled. Both these factors clearly establish that the allegations have nothing to do with the trust and its activities in relation to the charitable objects."

II. Addition on account of cash loan and interest paid

60. Additional Ground No.1 is not pressed hence, dismissed.

61. Additional Ground No.2 is with respect to non-issuance of notice u/s 143(2) of the Act though the assessee has filed return of income in response to notice issued u/s 153C of the Act.

( A.Y 2016-17) (Assessee) 64. The Assessee vide Ground No. 6, 8, 10 and 11 challenged the additions made by the Revenue on account of ‘capitation fees’.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 66. The Assessee vide Grounds appeals Nos. 7, 8 and 10, challenged the addition made towards cash loan and payment of interest out of books.

(A.Y. 2015-16)(Revenue)

(A.Y. 2016-17)(Revenue) (A.Y. 2017-18) (Revenue) 69. The above appeals are filed by the Revenue challenging the additions deleted by the Ld. CIT(A). There are broadly two additions made by the A.O. in the hands of the Assessee herein i.e. capitation fees and payment of interest on cash loans. The Ld. CIT(A) has given partial relief to the Assessee by deleting the partial addition which are called in question by the Revenue in the above Appeals.

& ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 71. However, we have already decided both the issues of capitation fees and cash loan and payment of interest out of books and held that the Revenue has committed error in making those additions in the hands of the Assessee while deciding the Appeal in for A.Y 2017-18 and directed the A.O. to delete entire additions. By adopting very same reasoning mutatis mutandis, the present Appeals filed by the Revenue challenging the deletion of partial addition will not survive accordingly, Grounds of Appeal of the Revenue in all the above Appeals are dismissed.

C.O No. 107/DEL/2023 (A.Y 2014-15) (Assessee) C.O No. 108/DEL/2023 (A.Y. 2015-16) (Assessee) 72. The above Cross Objections are filed by the Assessee challenging the order of the Ld. CIT(A), wherein several grounds of Appeal and Additional Grounds of Appeal urged. We have already dismissed the Appeals of the Revenue for both the subject Assessment Years on the ground that additions on account of ‘capitation fees’ and ‘cash loan and payment of interest out of books’ could not have been made in the hands of the Assessee. Therefore, the C.O No. 107/Del/2023 and 108/Del/2023 filed by the Assessee have become in-fructuous.

A). Appeals filed by the Assessee in ITA No. 2182/Del/2023(A.Y 2017-18) and ITA No. 2181/Del/2023(A.Y 2016-17) are partly allowed.

B). Appeals filed by the Revenue in (A.Y. 2014-15), (A.Y. 2015-16),ITA No. 2290/DEL/2023 (A.Y. 2016-17) and (A.Y. 2017-18) are dismissed.

C). Cross Objections filed by the Assessee in C.O Nos. 107/Del/2023 and 108/Del/2023 are dismissed.

Order pronounced in open court on 30th September, 2025.