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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE, SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER (ASSESSMENT YEAR 2010-11) (ASSESSMENT YEAR 2011-12) Mr. Narender Singh Income Tax Officer 66, Yadav General Ward-2, Model Town Hospital, Opp. Sanpiper Vs. Rewari-123 401 (HR) Circular Road Rewari-123 401 (HR) PAN-ACXPS 4019E (Appellant) (Respondent) Appellant by Mr. Sanjeev Jain, CA Respondent by Mr. S.L. Anuragi, SR-DR Date of Hearing 02/05/2023 Date of Pronouncement 11/05/2023 ORDER PER YOGESH KUMAR U.S., JM: These two appeals have been filed by Assessee against the common order passed by the Learned Commissioner of Income Tax (Appeals)-Rohtak [“Ld. CIT(A)”, for short], dated 21/01/2020 for Assessment Years 2010-11 and 2011-12 respectively. & 1577/Del/2020 Narender Singh vs. DCIT
Since, the issues involved in both appeals are common in nature; hence, they are clubbed together, heard together and disposed off by this common and consolidate order for the sake of convenience.
The common grounds raised by assessee in both appeals except variance of amount which are as under:
“1. That the Ld. CIT(A) has erred on facts and in circumstances of the case and in law, in confirming the action of the Assessing Officer for initiation of proceedings u/s 147/148 of the Income Tax Act, 1961 which actually are invalid and illegal as the reasons recorded do not reflect any satisfaction of the Assessing Officer regarding escapement of income but are based upon borrowed satisfaction of the Investigation Wing of the Department.
2. That having regards to the facts and circumstances of the case, Ld. CIT(A) has grossly erred in law and on facts, in confirming the orders framed by the Ld. AO because the reasons so recorded by the Ld. Assessing Officer talks about the information only and not about any material if any be received from the office of DI (Inv.), Delhi, prior to record reasons and thereafter to the issuance of notice u/s 148 to the appellant, as such, the orders passed are illegal and not tenable.
3. That having regards to the facts and circumstances of the case, Ld. CIT(A) has grossly erred in law and on facts, in confirming the orders framed by the Ld. AL u/s 143/147 copy of statement of Dr. P. Mahalingam of Santosh Medical College received from DI (Inv.), Delhi and possessed by Ld. Assessing Officer did not confirm that appellant has paid the donation/capitation fee of Rs.50,00,000/- in cash at the time of admission of his daughter in Santosh Medical College, Ghaziabad, against whom the proceedings have been invoked/initiated u/s 147/148 of the Income Tax Act, 1961. Therefore, the assessment completed as such may be held ab- initio invalid. Page 2 of 13 & 1577/Del/2020 Narender Singh vs. DCIT
4. That having regards to the facts and circumstances of the case, Ld. CIT(A) has grossly erred in law and on facts which makes the assessment invalid and illegal as the principles of natural justice have been completely violated and no opportunity of cross examination of the statement recorded by the Revenue Department at the back of the assessee was provided to the appellant in spite on specific request of appellant as well as specific direction of Ld. CIT(A) to Ld. AO during appeal proceedings.
5. That the ld. CIT(A) has erred in not appreciating that the proceedings could not be assessment could have been made only under section 153C on the basis of the documents/information found during the course of search.
6. That the Ld. CIT(A) has erred on facts and in circumstances of the case and in law by not appreciating the fact that the order passed by Ld. Assessing Officer were also wrong and not tenable, because of getting and granting the approval by the Addl. CIT, on a mechanical manner u/s 151 of the Income Tax Act, 1961. 7. That the appellant craves, leave to add, modify and/or delete any of the ground of appeal at the time of hearing of appeal, if deemed necessary, in the interest of justice and equity.”
There is a delay of 159 days in filing the present appeal and the assessee filed an application for condoning the delay and relied on the order of the Hon’ble Supreme Court in suo moto writ petition (Civil) No.3/2020 dated 23/03/2020 wherein the Hon’ble Supreme Court has relaxed the limitation period due to Covid-19 pandemic situation. Considering the fact that the order of the Commissioner has been passed on 21/01/2020 and by relying on the order of the Hon’ble Supreme Court in suo moto writ petition No.3/2020 dated & 1577/Del/2020 Narender Singh vs. DCIT 23/03/2020, the delay of 159 days in filing the present appeals are condoned.
First, we take up the assessee’s appeal in for AY 2010-11 and consider the facts of the said assessment year.
The brief facts of the case are that in this case search was conducted at the premises of Santosh Medical College, Ghaziabad and information was received from the Inv. Wing that donation/capitation fees for admission was paid by the assessee and documentary evidence and information was received in this regard from the Inv. Wing. Thereafter, enquiry letter was issued to the assessee to explain the source of the money but there was no explanation and in accordance with provisions of the Act the case was re-opened as income had escaped assessment within the meaning of section 147 of the Act. During the assessment proceedings, the assessee was confronted with the information received from DDIT (Inv.) regarding capitation fees of Rs 50,00,000/- paid in FY 2009-10. The statement of Chairman clarified that capitation fees was received and the registers seized and annexurised as A44 to A64 contained entries of both accounted Page 4 of 13 & 1577/Del/2020 Narender Singh vs. DCIT and unaccounted receipts. The name of assessee’s daughter figures in the list of such names at Sr. No. 110 and as per the code given the figure of fees paid and donation given and their total is clearly stated and it is the same pattern in all the cases. The statement of Chairman clarified that capitation fees was received and the registers seized and annexurised as A44 to A64 contained entries of both accounted and unaccounted receipts. The AO formed prima facie belief and case was reopened on this issue. After giving proper opportunity to the assessee and as the explanation was not found acceptable addition was made of Rs 50 lacs to the income of the assessee.
Aggrieved by the assessment order, the assessee has preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 21/01/2020 dismissed the appeal filed by the assessee by confirming the assessment order.
Aggrieved by the order of the CIT(A) dated 21/01/2020, the assessee has preferred the present appeal on the ground mentioning above. & 1577/Del/2020 Narender Singh vs. DCIT 9. The Ld. Counsel for the assessee submitted that the assessee will not be pressing Ground Nos.1 & 2, recording statements of the Ld. Authorized Representatives (“Ld. AR” for short), grounds No.1 & 2 of the assessee’s appeal are dismissed.
Addressing on the Ground No. 3 and 4 the Ld. Counsel for the assessee vehemently submitted that the sole basis for making the addition which has been confirmed by the Ld. CIT(A) is on the statement of Dr. P. Mahalingam of Santosh Medical College received from DDIT (Inv.) New Delhi and possessed by Ld. Assessing Officer which did not confirmed that the assessee has paid the donation/capitation fee of Rs.50,00,000/- in cash at the time of admission of his daughter in Santosh Medical College, Ghaziabad, against whom the proceedings have been invoked/initiated u/s 147/148 of the Income Tax Act, 1961. Therefore submitted that, the assessment completed has become invalid. Further submitted that, the assessee has not been given opportunity of cross examination of the said Dr. P. Mahalingam of Santosh Medical College, which violated the principles of natural justice. Even after seeking specific permission, the authorities have failed to secure the person who & 1577/Del/2020 Narender Singh vs. DCIT has given the alleged statement against the assessee. Further, the Ld. Counsel for the Assessee has also relied on the order of the Tribunal in the case of Sulekha Chand Singhal Vs. ACIT in and submitted that the Assessee’s case is squarely covered by the said order of the Tribunal. Therefore, submitted that the additions made by the AO which was confirmed by the Ld. CIT(A) is deserves to be deleted.
On the other hand, the Ld. Departmental Representative (“Ld. DR”, for short) contended that it is not in dispute that the assessee took admission in PG Course in Santosh Medical College and the assessee admitted that fee as per schedule maintained by the College has been duly paid. Further submitted that, during the search operation, the Chairman of the Institution provided details as per the record maintained by the Institution and per the said record, an amount of Rs.17,85,000/- has been received by the institution as fee of the student and balance of Rs.50,00,000/- have been received as donation/capitation fee. Therefore, the addition made by the AO sustained by the Ld. CIT(A) requires no interference. & 1577/Del/2020 Narender Singh vs. DCIT
We have heard both the parties and perused the materials on record.
While making the addition the A.O. as relied on the records maintained by the Santosh Medical College and as per the said record, it is found that an amount of Rs.17,85,000/- has been received by the Institution as fee of the student and balance Rs.50,00,000/- have been received as donation/capitation fees and as per the information, schedules of fee paid in respect of Ms. Bhanu Priya (daughter of the assessee) are as under:
Date Rs. No. C. Fee H. Fee HSD Other Cash Total Balance Sign 08.12.2009 TR 3,50000 - - - 3,50000 3,50000 11,50,000 14.12.2009 TR 1,50,000 - - - 1,50,000 1,50,000 10,00,000 07.05.2010 070083 - 55,000 25,000 - 80,000 80,000 5,000 07.05.2010 070205 10,00,000 - - 10,00,000 10,00,000 5,000 - 07.05.2010 70228 - - - 15,000 15,000 15,000 5,000 05.06.2010 0702250 - 5,000 - - 5,000 5,000 - 07.05.2010 100997 - 60,000 - 5,000 65,000 65,000 - 31.05.2011 101056 - - - 20,000 20,000 20,000 - 30.04.2012 01711 - 1,00,000 - - 1,00,000 1,00,000
12. Further the AO has also relied on the statement given by Dr. P.
Mahalingam, Chairman of Maharaji Educationa Trust and Santosh Trust & Santosh Hospital (P) Ltd. which is extracted as under:
“Q.64 I am now showing your register seized from your premises during the course of search and annexurized as A-44 to A-64. Please describe these registers. Ans. These registers contain details of candidates who have been admitted to various medical courses in Santosh Medical College and Santosh Dental College, both run by Santosh Trust. Q.65 It is seen that the above referred registers contain entries of amounts received from the candidates. Please explain whether the receipts & 1577/Del/2020 Narender Singh vs. DCIT are accounted for in the regular books of account. If yes, then please give the name of the entity in whose books the receipts are accounted and please produce the same.
Ans. These receipts mentioned in the registers are partly accounted for in the regular books of account of Santosh Trust. The entire receipts are not entered in the books of account. I will who you the entries in the books of Santosh Trust later since due to last more than 48 hours of search action I am unable to get the details located.
Q.66 Please go through the above referred registers and work out the . amount of unaccounted receipts register wise, financial year wise ?
Ans. I have gone through the above referred registers annexurized as A- 44 to A- 64, I have got the unaccounted receipts complied with the help of Sh. Kamala Kannan, Financial Controller in Santosh Trust. The register- wise compilation is submitted herewith to be attached as annexure to this statement. The total unaccounted receipts register-wise works out as under. ”
Theassessee both during the assessment proceedings and Ld. CIT(A) has categorically denied payment of donations/capitation fee
amounting to Rs.50,00,000/-. It is also found from the record that the assessee has not given opportunity to cross examine the said Sh. P.
Mahalingam. Even during the appellate proceedings, the assessee has specifically sought for cross examination of Dr. P. Mahalingam; but the same has not been granted to the assessee but the Ld.CIT(A) has confirmed the addition.
& 1577/Del/2020 Narender Singh vs. DCIT
Similar issue has came up for considerations before the Tribunal
in the case of Sulekh Chand Singhal vs. ACIT in ITA
No.6700/Del/2019, wherein the same college and the very same
Doctor’s statement was in dispute and the Assessee therein was denied with the opportunity of Cross-examination wherein the Co- ordinate Bench of the Tribunal has held as under:
“6. We have considered the rival submissions. It is a fact that the entire addition is based on the statement made by Dr. P. Mahalingam which were recorded under section 132(4) of the I.T. A c t i n which, he has admitted to have received donation/capitation fees in cash which was surrendered for taxation. The assessee, however, denied to have paid any amount in cash on account of donation/ capitation fees to Dr. P. Mahalingam or the College in which his son was admitted for MBBS Course. Since the Revenue Department alleged that assessee has paid cash of Rs.27 lakhs as donation/capitation fees, therefore, onus is upon A.O. to prove through cogent and reliable evidence that assessee has in fact paid cash by way of donation of capitation fees to the Medical College and Dr. P. Mahalingam. In the present case, the entire case is set-up on the basis of statement of Dr. P. Mahalingam recorded during the course of search under section 132(4) of the I.T. Act, 1961, in which, he has admitted to have received donation/capitation fees in cash. However, the assessment order is silent if any right of cross-examination have been allowed on behalf of the assessee at the assessment stage. It is also a fact that the Ld. CIT(A) at the appellate stage asked the A.O. for production of Dr. P. Mahalingam and allow an opportunity to the assessee for cross- examination. The A.O. issued summons to Dr. P. Mahalingam at the appellate stage for providing an opportunity to the assessee to cross- examine his statement, but, Dr. P. Mahalingam did not appear at the appellate stage, therefore, the fact remained that assessee has been denied right to make cross-examination to the statement of Dr. P. Mahalingam. It is well settled Law that any adverse material collected at the back of the assessee when not confronted and that if any statement is & 1577/Del/2020 Narender Singh vs. DCIT recorded by the A.O./Revenue Department at the back of the assessee and such statement is not allowed for cross-examination on behalf of the assessee, such material cannot be considered against the assessee in the Income Tax proceedings and such material/statement cannot be read in evidence against the assessee. We rely upon Judgments of the Hon’ble Supreme Court in the case of Kishanchand Chellaram 125 ITR 713 (SC) and Andaman Timber Industries 281 CTR 214 (SC). Thus, the statement of Dr. P. Mahalingam cannot be relied upon against the assessee. There is no other material available on record so as to make any addition against the assessee. Thus, onus upon the Revenue Department to prove that assessee paid cash to Dr. P. Mahalingam or the Medical College is not discharged in the present case. In view of the above discussion, we set aside the Orders of the authorities below and delete the addition. The assessee in this appeal also challenged the reopening of the assessment. However, this issue is now left with academic discussion only because we have already deleted the addition on merit. Accordingly, appeal of the assessee is allowed. ”
In view of the fact that even in the present case, the assessee has been deprived of with the opportunity of cross-examining Dr. P.
Mahalingam which was ultimately resulted in making the addition of similar nature, in our opinion, the addition made by the Revenue is in violation of the natural justice which requires to be interfere. By relying the order of the Co- ordinate Bench of ITAT, Delhi, we allow the grounds of appeal of the Assessee and delete the addition made by the AO which was confirmed by the Ld. CIT(A). In the result, the ITA
No.l576/Del/2020 for AY 2010-11 filed by assessee is allowed.
& 1577/Del/2020 Narender Singh vs. DCIT
The appeal of the assessee for AY 2011-12 in also contain the identical issue. Both the parties have agreed that the issue raised in AY 2011-12 is identical to that raised in AY 2010-11. Hence, the decision rendered by us herein above for AY 2010-11 shall apply mutatis mutandis for AY 2011-12 also except which variance in figures. Accordingly, grounds raised by the assessee for AY 2011-12 are allowed.
In the result, the appeal in is allowed.
Order pronounced in the open Court on 11th May, 2023.