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TMI Blog2021 (6) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... h the assessee submitted reply along with supporting documents. The AICTE put up the said case before the standing complaint committee consisting of Justice P.S. Patankar, Professor Manik Rao Solunke and Professor K. Tirumaran. After detailed discussion, the three members committee by referring to a letter dated 07-02-2013 issued by the western regional office of AICTE held that there was anything wrong in the admissions and absolutely no evidence or any document suggesting that the assessee was charging capitation fees or donations . The AICTE again put up the said report of three members committee before the One Man Justice P.C. Jain, committee for vetting/final opinion. The One Man Justice committee fully agreed with the report of three members committee. On perusal of the finding of the Hon ble One Man Justice committee clearly establishes that there was no evidence suggesting that the assessee charged capitation fee and consequent thereto the AICTE dropped the complaint against the assessee. Therefore, the arguments made by the ld. DR are rejected. AO does not have jurisdiction to make the addition in the hands of the assessee without any incriminating material found as a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have been received in cash by the assessee for admission of students in L N Welingkar Institute of Management under management quota. 5. The brief facts relating to the issue are that the assessee is a public charitable trust registered under the Bombay Charitable Trust Act and is running 61 educational institutions. The assessee runs reputed educational institutions one amongst them is L N Welingkar Institute of Management Development and Research. A search was conducted on 20- 11-2010 in the case of Dr. Uday Salunkhe, Director of L N Welingkar Institute of Management Development and Research. During search certain documents/loose papers belonging to assessee were seized. After recording satisfaction, the AO issued notice to the assessee u/s. 153C of the Act for entire block years for A.Ys. 2005-06 to 2011-12. This case was transferred to Pune in terms of the order passed by the Hon‟ble High Court of Bombay. In response to the above said notice u/s. 153C of the Act the assessee filed return of income declaring a total income of Rs. Nil. Notice u/s. 143(2) of the Act was issued. The AO on the basis of evidences collected during the search operation and statements record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na Hans was also recorded u/s. 132(4) of the Act wherein she admitted her role in negotiation of capitation fee vide replies to Q‟s 4 to 9 of the statement recorded u/s. 132(4) at page 9 to 12 of paper book filed by the assessee. In addition, she also stated that Shri Pandurang Pawaskar, Shri Kanu Doshi are also involved in the process. She further confirmed that cash was being collected by office peons namely Shri Prakash Bekhare and Shri Ravi Sumbhe. Shri Pandurang Pawaskar also confirmed the statement of Ms. Kalpana Hans on the same day. 9. Likewise, he submits that, on the date of search, the statement of one Mr. Kanu Doshi was also recorded u/s. 132(4) of the Act wherein he confirmed his role in the admission process vide replies to Q‟s 6 and 17 of the statement recorded u/s. 132(4) at page 63 to 75 of the paper book filed by the assessee. He explained the complete admission process in the assessee‟s flow chart in reply to Q‟s 13 and 14 of the statement. He admitted that certain students who did not clear the cut-off marks in written test were also called for Interview and Group discussion and these students paid cash donations vide reply to Q‟s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in such retraction affidavits. We find letters requesting to furnish copies of seized material, other related documents, retraction affidavits etc. page Nos. 9 to 168 of the paper book 1 filed by the assessee. 12. On perusal of the proceedings in respect of Ms. Kalpana Hans at page No. 9, in reply to Q. No. 2 she stated that her portfolio is to take care of compliance of statutory and regulatory bodies and meeting all the deadlines given by the Government bodies in the statement recorded u/s. 132(4) of the Act. In the retraction affidavit at page No. 21 of the paper book she stated that she was literally shocked to read contents made in the statement recorded u/s. 132(4) of the Act, further, she expressed her shock to read statements of Dr. Uday Salunkhe, Mr. Kanu Doshi, Mr. Samir Karkhanis, Mr. Prakash Bekhare and Ravindra Sumbe. In her retraction affidavit in para No. 12 she clearly stated that she has been unnecessarily implicated in the issues where she nowhere concerned either personally or in carrying out her duties in official capacity. Further, she stated she felt deeply pained, hurt, harassed, embarrassed and above all cheated by the officers of the entire search par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l these persons followed the same procedure be that of Ms. Kalpana Hans that requesting the DCIT to furnish the statement recorded u/s. 132(4) of the Act on 21-11-2010, a letter enclosing retraction affidavit, retraction affidavit and cross-examination. We note that the contents in all the letters of the said persons are one of the same and also incidentally the questions put them by the DCIT in their cross-examination are also similar. Therefore, discussion by us in respect of their retraction affidavit and crossexamination leads to repetitive, thus, the findings given by us in respect of Ms. Kalpana Hans is applicable to all these persons also. 13. Further, the ld. DR lead his submission as to why retraction of statements recorded u/s. 132(4) of the Act is not valid. It was submitted that the statement recorded u/s. 132(4) of the Act is of great evidentiary value and it is a well settled legal position that the same can be relied upon for making additions during assessment. Only exceptions to such admission where the statement are retracted (i) when the statement is recorded under coercion, threat, duress, undue influence, etc. Or (ii) when the facts recorded in the statement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, although all of them are residing in different parts of Mumbai. Also, it is not clear as to how all of them procured stamp papers during the night from the same vendor and these facts clearly indicate major contradictions in their retractions/statements recorded during cross examination. 14. He contends that when confronted in cross examination, Ms. Kalpana Hans (Q‟s No. 33 and 34 page 30 of paper book) stated that besides herself and Shri Pawaskar no one else was there at the Notary on 16.12.2010. Shri Kanu Doshi (Q‟s 32 page 92 of paper book) stated that besides him, Ms. Kalpana Hans and Samir were there although Kalpana Hans denies it. When Samir was asked, he says that he has no idea as to who else besides him was there. Mr. Pawaskar says Mr. Kanu Doshi and Kalpana Hans were there. This clearly shows major contradictions in their statements during cross examination. It may also be noted that in reply to Q‟s 35 page 107, Mr. Pawaskar says that they were at notary at 3.00 PM while Mr. Kanu Doshi says that they were at Notary at 12.00 PM. This also shows the contradictions in their statements during cross examination. He vehemently argued that initially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressure, etc. during recording of statement u/s. 132(4) of the Act during the course of search. 16. The ld. AR, Shri Shah submits that the aforesaid retraction was made by all the persons explaining the fact that the answers were written in the statement recorded at the time of search on the whims and fancies of the officers and that they were never allowed to view and read what was being written at the time of recording of the statement. They also confirmed in their affidavit that what was written was contrary to answers given by them. We submit that such a statement cannot be considered to be voluntary and reliable. It was also explained by the assessee that there were several flaws and contradictions in the statements of above persons recorded by the officers at the time of search. The detailed explanation on such flaws and contradictions are filed at Page 314-329 of PB No. 2. Further, according to him, that these persons never had any authority to indulge in collection of fees, much less capitation fees. The hierarchy of the institutions and its personnel and their scope of duties are explained in the organizational chart enclosed at Page 169-174 of PB No. 1, which proves th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m more than one officer and all of them signed such statements without reading the same as they were very tensed and frightened as they were surrounded and questioned by many officers. It is also pertinent to mention that all of them requested the DCIT to furnish the statement recorded u/s. 132(4) of the Act on the very next day of recording i.e. 21-11-2010 and only Ms. Kalpana Hans could see her statement on 15-12-2010 the day prior to filing of retraction affidavit. In all the retraction affidavits all of them confirmed that the search officers recorded contrary to the answer given by them, therefore, in our opinion such statements are not voluntarily and cannot be considered reliable evidence as they were stated to have been signed under pressure. In this regard we may have to prefer the judgment of the Jurisdictional High Court of Bombay in the case of Uttam Chand Jain Vs. CIT reported in 320 ITR 554 (BOM.), wherein the facts of the said case are that the assessee therein claimed to have been sold the jewellery declared under the VDIS to a proprietary concern. The Income Tax authority conducted a survey at the business premises of said proprietary concern. A confession was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the figure mentioned against each student is not of capitation fee but of placement brochures. Besides this, he has admitted all other contents of the paper. He submits that when confronted about his new theory of 'placement brochures' during the cross- examination, he admitted that he is not an incharge of distribution of placement brochures. He also stated that no record of students to whom brochures were given was maintained by the institute and denied of maintaining any data regarding the distribution of placement brochures. He also could not satisfactory explain as to why he was maintaining the data of placement brochures given to each student and could not give any specific reply as to why brochures in odd figures i.e. 22 brochures were given to any student. No documentary or supporting evidence was filed in support of his claim that the figures actually refers to number of placement brochures. Neither any evidence was filed to support his claim that the said students were from the placement unit or contacted companies inviting them to the Institute for placement. There was not a whisper about 'placement brochures' in his statement u/s. 132(4) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Some of the notings like "check more" suggest that these notings are not related to any capitation fees. Such a page only amounts to a dumb document which cannot be relied upon to come to any conclusion, much less, a definite conclusion that the figures written on the said page were figures of capitation fees accepted from the students. In this regard, reliance is placed on the decisions wherein it has been held that no addition can be made on the basis of a dumb document in the cases of S. P. Goyal Vs. DCIT [269 ITR 59 (Mum.)(AT)] [Page 481-505 of PB No. 3] (Refer Page 503 - from last para on the page) and CIT Vs. Maulikkumar K. Shah [307 ITR 137 (Guj.)] [Page 506-511 of PB No. 3] (Refer Page 508-511, Para 3 and 4). 21. The Assessing Officer has also relied upon the statements of various persons recorded at the time of search wherein the persons such as Kalpana Hans, Manager- Faculty (IT) Department, Samir Karkhanis, Head- Marketing and Business Development, Kanu Doshi, Head- Finance, Pandurang Pawaskar, Manager- Administrations, Prakash Bhekre, Peon and Ravindra Sumbhe, Peon had stated and allegedly accepted that the said torn piece of paper reflected the notings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve with corroborate evidence that the entries in the said seized document actually represents the capitation fee. There was no supporting evidence to hold that the figures represents in hard cash towards the capitation fee at ₹ 20 lakhs per student. When the assessee claims the said figures are a mere entries of placement brochures and then the Revenue has to show some circumstantial evidence to support that those entries really represent cash of ₹ 20 lakhs for each student and admittedly there was no such evidence found by the Revenue in the search in the form of actual cash. Thus, the mere entries found in the haphazard manner in the torn piece of paper are not sufficient to prove that the assessee has indulged in accepting capitation fee as the notings on such torn seized documents does not indicate the actual transaction. Therefore, the charge made by the AO is merely based on suspicion and surmises and there is no material whatsoever to support the conclusion of the AO. We take support from the order of Mumbai Benches ITAT in the case of S.P. Goyal reported in 269 ITR 59 which held the Revenue cannot reject the explanation offered by the assessee when there is no c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittee of justice (Retd.) P. C. Jain who confirmed that no irregularities are found in the admission process and that the complaint regarding collection of the capitation fees by the assessee trust is dropped. This is crucial evidence in support of the assessee as, upon complaint made by the Assessing Officer and upon consideration of all direct and consequential evidences presented by Assessing Officer, the Government regulatory body has concluded that there was no evidence of collection of capitation fees by the assessee. Even the enquiries conducted by the Government regulatory body failed to find any irregularities in the admission process and did not find the complaint of acceptance of capitation fees by the assessee trust to be valid. The assessee also submits that inspite of the massive search action, the Assessing Officer has not found any cash equivalent to the amount of capitation fees determined by him in the case of assessee. 26. The ld. AR submits that further, even the Assessing Officer has not been able to bring any evidence on record to prove that students have filed any complaint stating that they have paid capitation fees. The assessee relies upon the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y last opinion dated 30.10.2014, I advised to issue a Show Cause Notice to the Institute. Accordingly, the notice was issued and the whole matter was considered by the Standing Complaint Committee on 05.12.2014 and detailed report was given consisting in 22 paras. I have carefully gone through the report. Each finding/conclusion has been supported by relevant documents as Annexures. I fully concern with the report and the same be complied with." 8. The above observations/recommendation of the Standing Complaint Committee dated 05.12.2014 and the Justice (Retd.) P.C. Jain Committee dated 19.12.2014 have been considered by the Council. Keeping in view the facts mentioned herein above, the Council has decided to drop the complaint against Welingkar Institute of Management Development and Research, Mumbai, regarding collection of capitation fees, donations etc. 9. This has approval of the Competent Authority dated 22.12.2014 at page No. 26/N, on F. No. 431-27-54/B-II/BOS (M) 94." 28. On perusal of the finding of the Hon‟ble One Man Justice committee clearly establishes that there was no evidence suggesting that the assessee charged capitation fee and consequent thereto t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions for earlier years as well. 31. What follows above discussion is that the statements given by the Kalpana Hans, Samir Karkhanis, Kanu Doshi, Pandurang Shankar, Prakash Bekhre and Ravindra Sumbhe u/s. 132(4) of the Act has no evidentiary value as the said statements were validly retracted subsequently. Then the only piece of evidence forming the part of the basis for making the impugned addition is a torn loose sheet found during the course of search proceedings in the case of Shri Uday Sakunkhe which is placed at page No. 175 of the paper book. No doubt a loose sheet is document within the meaning of section 292C of the Act but the question is whether the contents of said document indicates anything to say that taxable event had taken place. It appears that on perusal of the said loose document, it does not contain any date and does not indicate whether the amounts were received by the said persons or amount were paid to the said persons, whose names find place in the loose sheet. Since, the statements of Kalpana Hans, Samir Karkhanis, Kanu Doshi, Pandurang Shankar, Prakash Bekhre and Ravindra Sumbhe u/s. 132(4) of the Act were held to be of no evidentiary value for the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) accordingly, it is justified. Thus, grounds raised by the revenue fails, hence, are dismissed. 35. The assessee raised an application under Rule 27 of the ITAT Rules questioning the validity of assessment order in question in the above appeal. 36. The ld. AR submits that the assessee has filed an application in Rule 27 of the Appellate Tribunal Rules challenging the validity of the assessment order for AY. 2005-06 to A.Y. 2011-12. He submits that all the assessments for A.Y. 2005-06 to AY. 2011-12 were unabated assessments and the notice u/s. 153C of the Act can be issued only if, in respect of the unabated assessments, any incriminating evidence was found as a result of search. The said torn piece evidence cannot be considered as incriminating as the said document is not only a dumb document, but also the contents of the said page do not reveal any notings of receipt of capitation fees by the assessee. The assessment in the present years cannot be made by the Assessing Officer by issue of notice u/s. 153C of the Act. He placed reliance on the Writ petition filed by the then Vice President of the assessee Trust in Shri Bal Jagannath Maharaj Pandit Vs. Addl. Director of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter was filed before him. The trust also stated that it will not raise any technical ground in its proceedings. Considering these letters from the trust and the grounds of appeal of the trust filed before Ld CIT(A) in trust's case, it was held that no addition in the hands of Shri Salunkhe can be made and additions were deleted without discussing the issue on merits. The Hon'ble ITAT while disposing the appeals in the case of Shri Uday Salunkhe also confirmed the same. (Para No. 4.4.2 to 4.4.7 of the order of Hon'ble ITAT placed at page 2 to 12 of the paper book filed by the department). In view of above, the assessee trust should not be permitted to raise any technical stage. He vehemently argued that the assessee cannot be permitted to raise such grounds under Rule 27. 39. After hearing both the parties we note that no ground questioning the validity of proceedings u/s. 153C of the Act raised for any of the assessments and no decision rendered by the CIT(A) on such validity of assessment. It is an established principle that Rule 27 would not extend to permit respondent-assessee scope of an appeal to question the decision on such issues which are not subject matte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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