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TMI Blog2023 (8) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... tation fees collected from students was far-fetched and based purely on conjecture surmise. Particularly when, Shri Patil who had been examined twice by the Department viz., in the course of search and in the post search proceedings, had denied collecting capitation fees from students. It is indeed true that a simple denial is not sufficient but at the same time it is also to be seen as to whether the accusation being levelled is supported by material or corraborative evidence found in the course of search. From the facts on record, it is evident that there was no evidence found in the course of search which would show that the assessee had received capitation fees from students. Much ado has been made by the Revenue before us that since the search operation began first at the other group of DY Patil at Navi Mumbai, the assessee society had received prior information about the search operation and for that reason no corraborative evidence or material was gathered in the course of search. Without going into the veracity of this contention, we find that the Ld. CIT(A) had rightly held that, search operation being leaked cannot be an alibi for making addition in an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the assessee furnished it explanation vide letter dated 05-12-2018 which has been extensively reproduced by the AO at Pages 4 to 9 of the assessment order. The AO however did not find the submissions of the assessee to be acceptable. The AO primarily relied on the statements of Shri Dilip Kashid, Shri Herambh Shelke and Shri Karan Singh Vihol which were recorded in the search action u/s 132 of the Act wherein, according to the AO, they had stated that the assessee received cash from students for admission to medical/dental courses. Before the AO, the assessee had filed notarized retraction affidavits of these persons, which were rejected as after-thought. 4. The AO further noted that the statements of Shri Dilip Kashid Shri Herambh Shelke were confronted to Shri Sanjay Patil, trustee of the assessee Trust, in the course of search u/s 132 of the Act. The AO also extracted the relevant portions of his statement recorded u/s 132(4) of the Act wherein Shri Patil had denied these allegations. According to AO, however this denial was unacceptable in view of the fact that the statements of these persons stood corroborated by the cash of Rs. 1.05 crores seized from the premises o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was found from the premises of Shri Sanjay Patil document seized and marked as Annexure 1, Page Nos. 1 2 , corroborated the version of Shri Kashid. According to Ld. DR, the incriminating statement of Shri Kashid and the aforesaid corroborative evidences was sufficient enough to justify the addition made by the AO. Per contra, the Ld. AR fully supported the order of the Ld. CIT(A). 6. We have heard both the parties and perused the records. It is noted that, the case of the Revenue is that, the assessee was receiving capitation fees in lieu of admission of students. This premise primarily hinges on the statements of Shri Heramb Shelke, Shri Karan Vihol, Shri Vijay Shinde Shri Dilip Kashid recorded in the course of search. According to Revenue, these statements stand corroborated by the (a) the cash seized from the premises of Shri Sanjay Patil and (b) document Annexure 1, Page Nos. 1 2 found from the premises of Shri Dilip Kashid. Therefore, in order to adjudicate the issue at hand, it is first relevant to examine the statements of the aforesaid four (4) persons which have been relied upon by the AO. 7. Let us first examine the statement of Shri Herambh Shelke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that, apart from levelling general bald allegations, the statement of Shri Phelke did not contain anything incriminating per-se based on which any prudent person could reasonably infer that the assessee had received capitation fees. It is noted that the Ld. CIT(A) had analyzed the statement of Shri Herambh Shelke and thereafter recorded the following findings: - 8.4.42. It is also evident from the statement of Shri Heramb Shelke that apart from his business income, he is having salary from DY Patil Education society federation Varale, Talegaon, Pune where he works as a guest lecturer. The case of the assessee is that it has no relation with the said institution and that this Institution is not even a part of DY Patil Group of Kolhapur. In the given facts of the case, even if it is believed that Shri Karan Singh Vihol has stated a fact that Shri Heramb Shelke works for DY Patil Institute, that has to be taken as the institution for which Shri Shelke works, which is not DY Patil Medical College. Hence, in absence of any other evidence to corroborate and implicate the assessee as to the same, in my considered view, it cannot be held that the cash referred to by Shri Karan Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard is that Shri Shelke is not in any manner related to the assessee Trust and has no role or function in any matter, including admission, in any of the Institutions run by the assessee Trust and therefore he does not have authority to provide any admission to any one or to ensure any admission to anyone. The assessee also claimed that Shri Heramb Shelke in his statement has not taken name of Dr. Sanjay D. Patil or any of the trustees who could be said to be involved in receipt of any capitation fees and therefore, his statement has no evidentiary value. As mentioned previously, I find that there is nothing on record to establish the Involvement of Shri Heramb Shelke with functioning of the institutions run by the assessee Trust. Furthermore, he has simply said that when any one approached him for admission, he directed them to Mr. Dilip Kashid. He could not identify any student or parent who has approached him for admission or who has taken admission through him. There was no documentary evidences found from his premises to substantiate his involvement with the admission in any of the institutions run by the assessee Trust. 8.4.44. I have also given due consideration to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Malad, Yamunanagar etc. He also receives cash at other Angadias. I also undertake his local cash collection. He undertakes exchange of cash on large scale and hence is one of our good customers. 11. It is noted that the Investigating authorities had questioned him in relation to a Paper/page which was marked as Annexure-1 and attached to his statement [Page 178 of PB]. Perusal of this document shows that, it contained twenty (20) names with corresponding amounts varying from Rs. 1000/- to Rs. 37,09,780/-. It also contained another chart which showed that that, money has been distributed to thirteen (13) persons which inter alia included the name of Shri Herambh Shelke to whom amount of Rs. 57,19,500/- was paid. The Ld. AR brought to our notice that, Shri Shelke had been questioned regarding this noting and that he had stated under oath that Shri Vihol would handle the cash collections of his wine shop at Pune (Maharaja Wines). According to Ld. AR, Shri Vihol s statement that Shri Herambh Shelke works for D.Y. Patil is correct because undisputedly he is working as guest lecturer for another group D.Y. Patil, Pune (which has nothing to do with assessee group/Kolhapur). And Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Branch, Pune. 12. The next statement relied upon by the Revenue is the statement of Shri Vijay Shinde, which has been placed at Page no. 182 to 193 of PB. It is noted that Shri Shinde is a qualified person holding BE Computer and a MBA degree. He is also a visiting lecturer in Dr. D.Y. Patil Engineering College at Old Pune (not the assessee trust or institution). He is noted to be a director of Soft-pro Consultancy Services Pvt. Ltd. which is engaged in customized software development, website designing e-learning software etc. He is a partner in firm M/s. Plentos Ventures along with Shri Herambh Shelke from which he draws salary of Rs. 2.5 lacs. With regard to the documents/books found from his possession, he had categorically averred that it related to M/s Maharaja Wines which is owned by his partner, Shri Shelke. In respect of the cash of Rs. 25 Lakhs found from his possession/locker he is noted to have stated that it represented commission earned for arrangement of admission. The question and answer in this regard is reproduced as under: Page 192 of PB. Q. 20. After operating the locker which is in your name, there was cash amount of Rs. 25 Lakhs found? Kindly explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the Ld. AO that any of the documents found and seized from the premises of Shri Shinde was pertaining to or having any reference of any transactions relating to the assessee Trust. As such, there was no documents found from his possession as to receipt of any capitation fees by the assessee Trust. Rs. 25 lakhs in cash was found from his locker which was stated to be commission for arrangement of admission, but he has not identified any institutions wherein such admissions were made. The contention of the assessee is that it is not in any manner related to Mr. Vijay Shinde and he has no role or function in any of the institutions run by the assessee Trust. The assessee has also contended that in his statement. Shri Shinde has not even taken name of the assessee Trust or the Medical College run by the assessee and his statement does not in any manner refer anything relating to the assessee Trust. I find that in the statement of Shri Vijay Shinde, there is no reference of the assessee or any institutions run by the assessee Trust. The documents found from his possession are without any dispute relating to Maharaja Wine Shop, which is the personal business of Shri Heramb Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh Yadav, earlier received for admission of his daughter in the Medical College. The Ld. DR also brought to our notice that cash of Rs. 8,66,975/- was seized from the possession of Shri Kashid who had admitted that it comprised of commission received for securing admission for students. Although later on Shri Kashid had denied this statement and disclosed the cash by way of his agricultural income, but according to Ld. DR, the fact that the Revenue had ultimately assessed the cash by way of his unaccounted commission income lends credence to their version that the assessee Trust was indeed receiving capitation fees for securing admission of students. 16. The Ld. AR, on the other hand, brought to our notice that Shri Kashid was only a clerk in the college and he did not have any say or authority in the admissions. According to him therefore, this statement should be given any weightage. Moreover, Shri Kashi was doing separate business also (as a partner of Megh Sparsh Infra Services). The Ld. AR thereafter took us through the statements of the Dean, Registrar Finance Officer of the college, to show that the persons who are responsible for admissions and have a say in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unaccounted income and asserted that the statement was taken from him under duress/coercion. He thus contended that the cash of Rs. 8,66,975/- found from his possession did not implicate that assessee charged capitation fees from students. 19. We note that the Ld. CIT(A) has examined each of the contentions raised by the Revenue before us in support of the veracity of the statement of Shri Kashid in light of the submissions of the assessee and thereafter he held that, the statement of Shri Kashid was unreliable. The Ld. CIT(A) has also analyzed the contents of the document Annexure 1, Pages 1 2 and has held that, it did not contain anything which implicated the assessee society with receipt of capitation fees. The Ld. CIT(A) is further noted to have held, that the addition of Rs. 8,66,975/- in relation to the cash found by way of unaccounted income of Shri Kashid did not have any bearing in the case of the assessee, as there was nothing brought on record to establish the source of the commission income viz., the name of the persons who paid, students whose admissions were secured etc. The relevant findings of the Ld. CIT(A) are as follows: 8.4.48 On perusal of the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dr. Vishwanath V. Bhosale, Registrar as to the admission process. On perusal of their statements, it is evident that none of them has stated that Shri Dilip Kashid had any role in the admissions. Dr. Sharma has clearly stated that the admissions were supervised by him and being looked upon by the Registrar of DY Patil Education Society Kolhapur. Mr. Shyam Piraji Kole, Finance Officer has also stated that the Registrar of the Deemed university is responsible for the admissions, whereas the Registrar has clearly explained the admission process The relevant part of the their statements relied upon by the assessee are extracted below for ready reference: 1. The relevant part of statement of Dean (Dr Rakesh Kumar Sharma) is as under:- Q No. 6 Whether the admission process is supervised conducted by you? if not who does the same? Ans- Admission are supervised by me. This work is being looked after by the Registrar of DY Patil Education Society (Deemed University). Kolhapur. The students who qualify, joins the college, the list is provided to the college by the Deemed University. Q. No 7 What is the process of admission to this college? Who finalizes the final list of candidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I would like to clarity is that the process of admission as explained above, has not been followed in the instant year in view of the NEET Exams being conducted by the Central Government in all the States as well as the State Government in some of the States, including the state of Maharashtra Q. No. 41, Whether all the cash received on account of fees from the students is accounted for in the books of account of D.Y Patil Education Society (Deemed University)? Ans. Yes, we account for all the cash received on account of fees from the students in books of account of D.Y. Patil Education Society (Deemed University) 1. The relevant part of the statement of Registrar (Dr. Vishwanath V. Bhosale) dated 27/07/2016 is as under:- Q. No. 14. Who is the person responsible for admission of students of DY Patil Education Society (Deemed University)? Ans. The Board of Management, consisting of 3 nominees of Chancellor, 2 Professors/ Deans, appoints Competent Authority. The Registrar of the Deemed University is generally the Competent Authority for the purposes of admission of students and other related matters. So, I look after the process of admission to this Deemed University ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by the assessee Trust in the aforesaid statement and it is also not the case of the Ld. AO. Rather Shri Sharma, Dean, has categorically denied of having knowledge of any capitation fees received for admissions. It is, therefore, evident that there are statements of Senior functionaries of the College which contradicts the statement of Shr Dilip Kashid. 8.4.51. It is found that a document vide Annexure A1 was seized from the residence of Shri Dilip Kashid, which is a receipt dated 02.03.2013 which says that one Shri Vijay Singh Yadav has paid Rs 1,20,000/- to one Shri Prashant Sinha for admission of his daughter in MBSS course in Management Quota, which was received back by him and now he has nothing to collect from Shri Prashant Sinha or MCD Sanstha in this regard. Shri Dilip Kashid in his statement dated 27.07.2016, has stated that Dr. Sanjay D. Patil has told him to keep this document with him. He, however, stated in his answer to Q.no.33, that he did not know who is this Prashant Sinha. On perusal of this document it is evident that it has no reference of the Medical College run by the assessee Trust or any of the officer/Trustee associated with the Trust or the Medical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch commissions or who have paid any capitation fees for admissions as claimed by him in his statement. 20. The above findings of the Ld. CIT(A) and his analysis of the statement of Shri Kashid remain uncontroverted before us. We therefore do not see any reason to interfere with the same. 21. On overall consideration of the above facts, we also find ourselves in agreement with the Ld. CIT(A) that none of these four (4) persons, whose statements were relied upon by the AO, were persons holding any important post or having any authority in the college or Trust and therefore their statements cannot be the sole basis of addition, particularly when no evidence was gathered either from the premises of the assessee Trust or the premises of these four persons which would otherwise justify the addition impugned before us. It is noted that, the AO did not have in his possession any material or evidence to come to a conclusion that the assessee had received Rs. 2 crores by way of capitation fees. Instead, the impugned addition solely hinged on the bald statement of Shri Kashid that assessee received Rs. 1.5 crores Rs. 2 crores each year, which as noted by us above, was an empty averme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f DY Patil at Navi Mumbai, the assessee society had received prior information about the search operation and for that reason no corraborative evidence or material was gathered in the course of search. Without going into the veracity of this contention, we find that the Ld. CIT(A) had rightly held that, search operation being leaked cannot be an alibi for making addition in an assessment, as the assessment has to be made based on evidences and not on suspicion and conjectures. 24. We also gainfully refer to the following findings ultimately recorded by the Ld. CIT(A) while deleting the additions impugned before us. 8.4.80. In this case, I am of the considered view that the very basis set out in the order of the Ld. AO for coming to the conclusion that the assessee Trust has received Rs 2.00 crore as capitation fees is not based on any evidence as no documents having any such details were found and seized from any place during the course of search. The addition completely hinges on evidence gathered through third-party statements, being statement of a Clerk of the college run by the Trust, that is Shri Dilip Kashid and other individuals who are found to be having no relation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of such other persons. As such, even the presumption, as expressly provided in Section 132(4A)/292C of the Act, does not hold good in the case of the assessee as the search was not conducted in the case of the assessee. 8.4.83. Hence, in consideration of the facts in its entirety and also in view of the judicial pronouncements relied upon by the assessee and referred to earlier, I am of the considered view that the evidence which was collected during the course of search in the form of statement of Shri Dilip Kashid and Shri Heramb Shelke as to receipts of capitation fees was not with reference to any transactions pertaining to the assessee appearing in any of the documents seized during the course of search. Even these individuals have not identified anyone having paid capitation fees for admissions and there was no evidence found from the Medical College or the residence of Dr. Sanjay D. Patil or even from the said third parties, whose statements have been relied upon in the assessment order, which could be said to be having even a reference of any capitation fees received by the assessee Trust. It is further found that these third party statements were not corrobo ..... 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