2020 (6) TMI 606 - AT - Income Tax

Reopening of assessment u/s 147 - Addition u/s 69/69C - Unexplained expenditure - assessee has paid fees/capitation fee and donation to M/s Santosh Medical College for admission of his daughter in MBBS Stream - entire case is set-up on the basis of information received from DDIT (Inv.), New Delhi in respect of the search conducted and statement recorded of Shri P. Mahalingam, Chairman/Director of Santosh Medical College Group - HELD THAT - The assessee since beginning of the re-assessment proceedings have denied to have paid any amount to the Medical College - assessee in his explanation in writing as well as affidavit has affirmed that he has not paid any amount for admission of his daughter to MBBS Course because of the losses suffered by him in the business - further explained that amount of admission fees was paid by his brothers on behalf of his daughter which is supported by documentary evidences, though the same were not accepted by the Revenue. The daughter of the assessee has also owned-up that amount in question have been paid through her uncle for admission to the Medical College. The receipt executed by the College is also affirmed this fact that daughter of the assessee has made the payment for MBBS Course. Thus, no material is available on record to prove that assessee made any payment on behalf of the daughter for admission to the MBBS Course. Since the Revenue alleged that the amount in question is paid by assessee for admission of her daughter to the Medical Course, therefore, burden is very heavy upon Revenue to prove by positive evidence that assessee has in fact made the payment to the Medical College for admission for her daughter. However, no evidence is available on record to prove such contention rather the evidences on record and initial denial of the assessee itself supports the explanation of assessee that no amount is paid by assessee for admission of her daughter in Medical Course. In the light of material on record as well as Order of the Tribunal in the case of Shri Naresh Pamnani, Delhi . 2019 (3) TMI 1787 - ITAT DELHI we are of the view that no addition could be made against the assessee of the impugned amount. In view of the above, we set aside the Orders of the authorities below and delete the entire addition in the hands of the assessee. - Decided in favour of assessee.

Summary

Issues Involved:
1. Initiation of reassessment proceedings under section 148.
2. Addition of ?32,50,000 under section 69 of the I.T. Act.
3. Direction issued under section 150(1) for taking action in the hands of Ms. Priyanka Kadian.

Issue-wise Detailed Analysis:

1. Initiation of Reassessment Proceedings Under Section 148:
The assessee challenged the initiation of reassessment proceedings on the grounds that the case was set up based on information received from the DDIT (Inv.), New Delhi, regarding a search conducted and a statement recorded from Shri P. Mahalingam, Chairman/Director of Santosh Medical College Group. The statement was never provided to the assessee nor was the assessee allowed to cross-examine Shri P. Mahalingam. The Tribunal noted that the reopening of the assessment was based on this unverified statement and no other material was available to justify the addition. The Tribunal referenced the case of Shri Naresh Pamnani, Delhi vs. ITO, where similar facts led to the deletion of the addition on merits. Consequently, the Tribunal found the reassessment proceedings to be flawed due to the lack of evidence and cross-examination.

2. Addition of ?32,50,000 Under Section 69 of the I.T. Act:
The assessee denied making any payment for his daughter's admission to the medical course, asserting that the amount was paid by his brothers from their agricultural income. The assessee provided affidavits and other documentary evidence to support this claim. The Tribunal found that the Revenue failed to provide any positive evidence that the assessee made the payment. The Tribunal emphasized that the burden of proof was on the Revenue to show that the assessee had indeed made the payment, which was not met. The Tribunal referred to the case of Shri Naresh Pamnani, where the addition was deleted due to the lack of cross-examination and evidence. Similarly, the Tribunal deleted the addition of ?32,50,000 in the hands of the assessee.

3. Direction Issued Under Section 150(1) for Taking Action in the Hands of Ms. Priyanka Kadian:
The assessee also challenged the direction issued by the CIT(A) under section 150(1) to take action in the hands of Ms. Priyanka Kadian. The Tribunal noted that since the addition on merits was deleted, the issue of reopening the assessment became an academic discussion and did not propose to decide on it. However, the Tribunal allowed the Revenue the liberty to pursue any remedy against Ms. Priyanka Kadian as per the law.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the orders of the authorities below and deleting the entire addition of ?32,50,000. The Tribunal found that no evidence supported the Revenue's claim that the assessee made the payment, and the reassessment proceedings were based on unverified statements without cross-examination. The issue of reopening the assessment was left as an academic discussion due to the deletion of the addition on merits.