2019 (7) TMI 709 - HC - Income Tax

Addition u/s 69C - capitation fee for admission in medical college - search conducted on medical college - Chairman and managing trustee of college had accepted receipt of capitation fees and name of assessee son was also appeared - Assessee, stated before AO that the admission process was undertaken by the Assessee s father-in-law - HELD THAT - The Court finds that the AO has taken pains to summon Shri Bhati, the father-in-law of the Assessee and record his statement. Unfortunately, the statement made by the Assessee s father-in-law was not helpful in explaining the source of payment of ₹ 23 lacs as capitation fees. Shri Bhati only explained the payment of ₹ 7.18 lacs as regular fees. With there being no credible explanation offered by the Assessee for the payment made as capitation fee, the AO is justified in adding it to the Assessee s income. The Court is unable to find any legal error committed by the ITAT in dismissing the appeal of the present Appellant. - No substantial question of law arises

Summary

Issues:
1. Delay in re-filing the appeal
2. Addition of capitation fee to the Assessee's income
3. Dismissal of appeals by CIT(A) and ITAT
4. Legal error in ITAT's decision

Delay in re-filing the appeal:
The judgment condoned the delay in re-filing the appeal based on the reasons provided in the application. The delay was explained, and the applications were allowed, ensuring justice with exceptions.

Addition of capitation fee to the Assessee's income:
The case revolved around the addition of a capitation fee to the Assessee's income for the Assessment Year 2013-14. The Assessee did not file an income tax return, and during a search at Santosh Group of Institutions, it was revealed that the Assessee paid a capitation fee for his son's admission to medical college. Despite the Assessee's claim of not being aware of the payment, the AO added the fee to the Assessee's income under Section 69C of the Income Tax Act. The Court upheld this decision, stating that no credible explanation was provided for the payment, justifying its addition to the Assessee's income.

Dismissal of appeals by CIT(A) and ITAT:
Both the appeals filed by the Assessee before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were dismissed. The Assessee's counsel argued that the capitation fee should be added to the income of another individual involved in the admission process, not the Assessee. However, the Court disagreed, noting that despite efforts to clarify the source of payment, no credible explanation was provided. Therefore, the appeals were dismissed.

Legal error in ITAT's decision:
The Court found no legal error in the ITAT's decision to dismiss the Assessee's appeal. It was concluded that no substantial question of law arose from the ITAT's order, leading to the dismissal of the appeal and the pending application. The judgment affirmed the ITAT's decision regarding the addition of the capitation fee to the Assessee's income, emphasizing the lack of a credible explanation for the payment.