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TMI Blog2020 (9) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... nsisting of legality of the assessment conducted under section 153 A of the IT Act and denial of exemption under section 11 of the Act. Owing to the similarity in the grounds raised, they are being adjudicated together. 2. The facts of the cases in brief, are that a search and seizure operation u/s.132 of the Income tax Act, 1961, was carried out in this case along with all the institutions/medical colleges and hospitals run by the assessee trust on 18.9.2014 at Head office of Sri Ram Murti Smarak Trsut at 4, LA Place, Lucknow and Registered office of Sri Ram Murti Smarak Trust N-3, & 4 ,MurtiBhawan , Rampur Garden, Civil Lines .Bareilly, (U.P)-243001. 3. The Trust, as part of its educational activity, runs: (I). Shri Ram Murti Smarak Institute of medical Science. (SRMS-IMS), 13 Kilometres on Bareillt Nainital Road, Bhojipura ,Bareilly (II). Shri Ram Murti Smarak School of Nursing 13 Kilometres on Bareilly Nainital Road, Bhojipura, Bareilly. (III) Shri Ram Murti Smarak Institute of Paramedical Science, 13 Kilometres on Bareilly Nainital Road, Bhojipura ,Bareilly 13 Kilometres on Bareilly Nainital Road, Bhojipura ,Bareilly (IV) Shri Ram Murti Smarak Super Speciality Hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 1000*2500 25,00,000 500 *8100 40,50,000 65,00,000 Shri Aditya Murti denied having any knowledge about these two names though the page was found from his bedroom. 8. From the findings of the Party MM-5 at the medical college it was gathered that Shri Shobhit Pal was an undergraduate student admitted to the medical college in the academic session 2013-14. His records were also impounded as Annexure LP-6 from the Medical College. His record showed that Rs. 9,08,500/- was paid as fee and other charges during admission. Hence the AO held that the amount of Rs. 23,00,000/-, as mentioned on the seized paper, is a clear-cut evidence of acceptance of capitation fee over and above the usual fee for the said course. 9. Similarly case records of Shri Anuj Agarwal was found and impounded by the Party- MM-5 as Annexure LP-7. From the record it is evident that Shri Anuj Agarwal is a post graduate (MD) student of the medical college admitted for session 2013-14. An amount of Rs. 18,94,940/- was paid for admission towards fee and other charges. The AO held that the amount of Rs. 50,00,000/- as found written on the seized paper is nothing but the proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the seized paper is one more evidence for acceptance of capitation fee/donation, over and above the normal fee for the course, by the Sri Ram Murti Trust while admitting students to the medical college. 16. During the course of assessment proceedings the assessee trust was again confronted on this point vide point No. 11 of questionnaire dated 07/11/2006 reproduced below:- 1. Pl go through the page No. 27 of Annexure LP-1 seized documents from the Bareilly residence of Shri Dev Murti and family (Party MR-1), containing page number 1 to 27, on which the following two students' name were found: - 1) ShobhitPal 23,00,000 2) AnujAgrawal 50,00,000 73,00,000 C A Sir 7,50,000 65,00,000 Cash De 1000*2500 25,00,000 500 *8100 40,50,000 65,00,000 .. Records of Shobhit Pal and Anuj Agrawal found and impounded as Annexure- LP- 6 and LP-7 respectively from SRMS Medical College, Bareilly (Party-MM-5) shows that in Shobhit pal's case only Rs. 9,08,500/- was paid as fee and other charges during admission. Similarly a piece of paper was received from Shri Ram Murti Smarak C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different. Further, rough calculation is in two different hand writing. Thus , on a small piece of paper three different hand writings are there. In case of any doubt direct confirmation may be obtained from the student by sending notice u/s. 133(6) , as no capitation is received by the trust , whatever fee is received , the same is duly recorded in the books of account." 18. The AO held that these documents cannot be termed as dumb documents. Based on these facts as emerging out of seized /impounded documents the AO held that it may be reasonably inferred that the SRMS Trust had been taking Rs. 25,00,000/- as capitation fees on an average per student for admission in the MBBS course and Rs. 75,00,000/- for MD/MS course. Holding thus the AO made addition of an amounts spread over the 7 years of assessment under section 153A . The details are as under: TABLE-A Batch Range(Rs.) Average 2008 5,00,000 to 7,00,000 6,00,000 2009 7,50,000 to 8,50,000 8,00,000 2010 8,50,000 to 10,00,000 9,25,000 2011 10,00,000 to 12,00,000 11,00,000 2012 11,00,000 to 14,00,000 12,50,000 2013 12,00,000 to 17,50,000 14,75,000 2014 23,00,000 to 25,00,000 24,00,000 MD/MS Post grad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shobhit Pal, Anuj Agarwal and amounts was found to be written, details of which are given as under: 1) ShobhitPal 23,00,000 2) AnujAgrawal 50,00,000 73,00,000 C A Sir 7,50,000 65,00,000 Cash De 1000*2500 25,00,000 500 *8100 40,50,000 65,00,000 ... Further it was noted by the AO that Shri Shobhit Pal was the undergraduate student at the medical College admitted for the academic session 2013-14 which is based on the records impounded as Annexure LP-6 from the Medical College and had paid Rs. 9,08,500/- as fees and other charges. Similarly case records of Shri Anuj Agarwal found & impounded as Annexure LP-7 shows he was admitted as post graduate student in the medical college for session 2013-14 and had paid Rs. 18,94,940/- as admission fees and other charges. The AO held that Rs. 23,00,000/- & Rs. 50,00,0007- written on the paper against the above students showed that the appellant has charged capitation fees in cash for the under graduate & post graduate courses. ... Similarly annexure LP-2, Pg.26 which is a piece of paper recovered from Shri Ram Murti Samarak College ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assuming that capitation fees has been received for all students despite the fact that only 3 loose slips found wherein name of the 3 students were mentioned, out of these 3 students, 2 were admitted in academic session 2013-14 and one student was admitted in academic session 2014-15. The appellant has contended that the AO was not justified in extrapolating the average of capitation fees received in the case of M/s Rohilkhand Educational & Charitable Trust in the case of the appellant. ... On examination, I find that incriminating document annexure LP-1 page 1 to 27 were found and seized from the bedroom of Shri Aditya Murti who is the, consultant and looking after day to day management of the trust on which it is clearly written that the appellant has received Rs. 23,00,000/- from Shri Shobhit Pal and Rs. 50,00,000/- from Shri Anuj Agarwal. And the records of Shri Shobhit Pal and Shri Anuj Agarwal found and impounded as LP-6 & LP-7, showed that they have only paid Rs. 9,08,500/- and was admission fees. The receipt of Rs. 23,00,000/- from Shri Shobhit Pal & from Anuj Agarwal was also not found recorded in the books of account of the appellant and Shri Aditya Murti, son & consult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s charged capitation fees, over and above the admission fees charged for graduate and under graduate courses for the year under consideration, hence addition of Rs. 8,00,00,000/- made by the AO on account of undisclosed receipts of capitation fees on the basis of the comparable case of M/s Rohilkhand Educational & Charitable Trust is held to be justified & is hereby upheld. 22. Aggrieved with the order of the LD.CIT(A), the assessee filed appeal before the ITAT, Lucknow. 23. During the arguments before us, the learned A.R. reiterated the arguments taken before the learned CIT (A). It was argued that the loose slips found during the course of search relates to FY 2014-15 & 14-15 only. It was argued that there were empty envelops and no cash has been found in the envelopes hence, this cannot be treated that any amount has been received from the college students. It was explained that the discretion of the college to admit the students is minimal and the students are alloted to different medical colleges by the U.P. unaided medical colleges welfare association(UPUMCWA). The association in turn calls for advertisement for admission from the eligible people and a merit list is declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her slip which is a visitor's slip. Other than these two slips there was no evidence in the possession of the revenue. Cash of Rs. 7.3 crores was also found during the search action. We have examined the issue in the context of the post search investigations, assessment completed and the material on record. * Whether any examination/enquiry as to the handwriting on the seized material namely, the envelope and the visitor slip - NO * Whether any statement of the students mentioned on the envelopes has been recorded - NO * Whether any other material corroborating the writing on the envelope is available - NO * Whether any statement u/s 132(4) proving the receipt of the donation during the search/post-search/assessment proceeding - NO * Whether any statement of any other student/parent recorded for verification of payment of donation - NO * Is there any other seized material /documents reflecting the receipt of donation - NO * Whether any infarction in admission of students against the guidelines of UPUMCWA were unearthed - NO 29. We have also considered the arguments of ld. DR as to the clause of presumption as per the Income Tax Act. The Revenue is basically relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 132A, had been found in the possession or control of that person in the course of a search under section 132.]" 30. In respect of Section 132(4A), the Hon'ble Supreme Court in the case of P.R. Metrani v. CIT, 287 ITR 609 held that such presumption is restricted to summary assessment under section 132(5) for deciding as to retain or release assets seized in the search for the purposes of determining the estimated tax liability. The presumption does not extend to regular assessment thereafter. 31. In order to overcome this difficulty, Section 292C was introduced which provided raising of presumption in regular assessment in respect of books of account or documents, money bullion, jewellery etc found in the possession or control of any person in the course of search under section 132. However, basic ingredients of these presumptions are contained in Section 132 (4A). These ingredients are (i) books of account, other documents, money, bullion, jewellery or valuable article or things shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there has been a sequence of admission of Shobhit Pal and Anuj Agarwal to the medical courses which has been narrated above. No examination of the students from whom the amounts purportedly have been received has been undertaken by the revenue to prove receipt of donation. The writings on the empty envelops have not been examined. Other than the loose papers, there has been no evidence corroborating receipt of the amounts from these two persons to the tune of Rs. 73 lacs. We also find that no primary evidence has been available with the Revenue authorities extrapolating the amount and work out the donation purportedly received. The addition of Rs. 29.30 crores has been made on the strength of two papers wherein the amount of Rs. 65 lakhs has been purportedly written cannot be held to be valid. The reliance on the case of M/s Rohilkhand Educational & Charitable Trust is found to be misplaced. 35. Hence, keeping in view, the entire facts of the case, having given due consideration to of the seized material, having mulled over the arguments of ld. AR and the ld. DR, after going through the presumption as to assets, books of accounts u/s 292C and after examining the process o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /12/2014, question No. 1 to 5, it was again clarified that the amount found and seized belongs to the assessee trust and is duly accounted for and also complete reconciliation along with the supporting vouchers and bank statements have been submitted. The summary of the cash reconciliation is as under: 40. We have heard the arguments and perused the statement and facts on record. 41. During the search proceedings, it was categorically explained that the cash found belongs to the assessee trust. The relevant portion of the statement of Shri Dev Murti, Trustee of the assessee is as under: 42. Further, we also find that during the statement recorded on 15/03/2014, Shri Dev Murti explained that the cash belongs to the trust and reconciliation has been provided. The relevant part of the statement of Shri Dev Murti is as under: 43. We find that the evidence of cash as per books is in the knowledge of the department. It is not in dispute that the books of account as on the date of search have been seized/impounded by the revenue by the way of computer backups and hard discs. We have gone through the reconciliation filed by the assessee. The cash deposited in the bank account can be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve already adjudicated on the issue of cash seizure in the case of the trust, we hereby delete the addition made in the hands of the trustee. I.T.A.Nos. 437 & 438/Lkw/2019. Valuation of properties/Unexplained investment in the building: 45. During the course of assessment proceedings, the valuation of buildings of various institutions of the SRMS trust at Bareilly was referred to the valuation Cell. The assessee's objections on such reference filed vide its letter dated 30.9.2016 were disposed off vide the office letter dated 14.10.2016. The report of the DVO dated 27.12.2016 was confronted with the assessee trust by the AO. The assessee in the reply dated 29.12.2016 has submitted that no addition on account of difference in the cost of construction reported by its valuer and as per report of the DVO could be made as the difference worked out of Rs. 4,03,72,178/- by the assessee trust is calculated to be less than 15%. It is further stated that the investment of Rs. 2,37,75,119/- made in the financial year 2014-15 has not taken into account by the DVO. However, the AO held that since the DVO has worked out the difference of Rs. 4,03,72,178/- arising upto A.Y.2013-14 in his r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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