2021 (10) TMI 23 - AT - Income Tax

Reopening of assessment u/s 147 - survey action u/s.133A conducted in the premises of Sarvajanik Janakalyan Parmarthik Nyas, Bhopal and some loose papers were impounded - on the basis of those loose paper, the AO issued notice u/s.148 and found amount in cash paid for the admission of his son in MBBS course - HELD THAT - It is an admitted fact that during the course of survey, some loose papers were impounded and on the basis of same, it was gathered that some students have taken admission in MBBS course by giving donation. Out of those students, the name of the assessee s son is appearing having paying ₹ 3,50,000/-. But the issue for consideration before us is, as to whether, the amount written in pencil and impounded from the third person, can be taken as basis for adding the amount to the income of the assessee. It is also noted in the orders of lower authorities that some students have admitted of giving donation for taking admission but in the case of the assessee, he has denied to give any donation for the admission of his son. Merely because some students/parents have admitted, that cannot be used against the assessee without any plausible materials - Decided in favour of assessee.

Summary

Issues:
1. Initiation of proceedings u/s.147 of the Act
2. Addition of ?3,50,000 without evidence in the name of the assessee

Analysis:
1. The appeal was filed against the CIT(A)'s order for the assessment year 2006-07. The AO initiated reassessment proceedings u/s.147 based on loose papers impounded during a survey, alleging a cash payment of ?3,50,000 for admission to a medical college. The assessee denied making such a payment, arguing the lack of valid evidence from the impounded documents. The CIT(A) upheld the addition, citing corroborative evidence from an inquiry.

2. The assessee relied on previous ITAT decisions to support their case, emphasizing the lack of concrete evidence supporting the cash payment. The AR highlighted precedents where similar additions were deleted due to insufficient evidence. The Sr. DR supported the lower authorities' orders, emphasizing the impounded materials as the basis for the addition.

3. The Tribunal analyzed the impounded documents and the statements of students/parents admitting to donations for admissions. However, the Tribunal emphasized that mere admissions by others cannot be used against the assessee without substantial evidence. Referring to a Chennai ITAT decision, the Tribunal concluded that the addition lacked a valid basis and deleted the ?3,50,000 addition, following previous precedents.

4. The Tribunal rejected the revenue's argument based on a letter alleging excess fees, emphasizing the lack of direct evidence to support the claim. Citing Supreme Court decisions on human probabilities and realities in income-tax matters, the Tribunal upheld the deletion of the addition. Relying on previous decisions, the Tribunal quashed the addition of ?3,50,000, allowing the assessee's appeal.

In conclusion, the Tribunal ruled in favor of the assessee, deleting the addition of ?3,50,000, as the impounded documents and admissions by others were deemed insufficient to support the claim against the assessee. The decision was based on the lack of concrete evidence and precedents emphasizing the need for substantial proof in such cases.