SHRI Pradeep Kumar Bansal, Harda V. THE ITO-2, Itarsi

ITA 214/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5828 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S N AGRAWAL
• Keywords: Loose papers; Tangible material
• Section: 133A; 131; 148

Judgement Text

PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO.214/IND/2016 A.Y.2006-07 PRADEEP KUMAR BANSAL HARDA ::: APPELLANT VS INCOME TAX OFFICER-2 ITARSI ::: RESPONDENT APPELLANT BY SHRI S.N. AGRAWAL RESPONDENT BY SHRI MOHD. JAVED DATE OF HEARING 23.6.2016 DATE OF PRONOUNCEMENT 04 . 7 .2016 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 29.1.2016 OF THE LEARNED CIT(A) -I, BHOPAL. PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED RETURN OF INCOME ON 31.10.2006 DECLARING TOTAL INCOME AT RS.2,41,710/-. THE CASE WAS PROCESSED U/S 143(1) ON 28.11.2006. SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED O N 27.3.2012 WHICH WAS DULY SERVED ON THE ASSESSEE ON 28.3.2012 AFTER RECORDING REASONS AND OBTAINING PRIOR APPROVAL OF ADDL CIT, RANGE-1, BHOPAL. 3. IN THIS CASE, THE ASSESSING OFFICER RECEIVED INFO RMATION FROM ACIT 1(1), BHOPAL THAT A SURVEY U/S 133A OF THE A CT WAS CONDUCTED ON 9.8.2005 AT THE PREMISES OF SARVAJANI K JANKALYAN PARMARTHIK NYAS AND DURING THE COURSE OF SURVEY FROM THE BRIEF CASE OF SHRI RAM VILAS VIJAYWARGI YA SOME LOOSE PAPERS WERE FOUND WHICH REVEALED THAT THE AMOUNT WERE RECEIVED BY PEOPLES COLLEGE OF MEDICAL SCIENCE & RESEARCH CENTRE IN LIEU OF ADMISSION GIVEN TO VARIOUS STUDENTS IN MBBS IN ADDITION TO THE PRESCRIBE D FEES. AT SERIAL NO. 40 NAME OF STUDENT IS MENTIONED SURBHI PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 3 BANSAL C/O PRADEEP BANSAL AND THE AMOUNT OF DONATION IS NOTED 15 LAKH. KUM SURBHI BANSAL IS DAUGHTER OF THE ASSESSEE. THE ASSESSEE DID NOT SHOW THIS AMOUNT OF DONATION OF RS.15 LAKHS IN ITS BOOKS OF ACCOUNTS AS WEL L AS IN THE CAPITAL ACCOUNT. HENCE, THE INCOME OF RS. 15 LA KHS ESCAPED FROM ASSESSMENT. THE ASSESSING OFFICER, THER EFORE, RECORDED REASONS THAT FOR THE FAILURE OF THE ASSESSEE T O DISCLOSE THE DONATION OF RS. 15 LACS THE INCOME OF RS .15 LACS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND AFTER OBTAINING APPROVAL ISSUED NOTICE U/S 148 OF THE ACT. BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.15 LACS TO BE GIVEN OUT OF UNDISCLOSED SOURCES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. FELT AGGRIEVE D, THE ASSESSEE APPROACHED THE LEARNED CIT(A) BUT FAILED. NOW T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 4 4. BEFORE ME, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO REASON WITH THE ASSESSING OFFICER TO BELIEVE THAT THE INCOME HAS ESCAPED THE ASSESSMENT AND AS SUCH THE NOTICE U/S 148 WAS WITHOUT ANY BASIS. HE SUBMITTED THAT THE ASSESSING OFFICER HAS STATED THAT SOME OF THE PERSONS U/S 131 PROCEEDINGS H AVE ACCEPTED THAT THEY HAVE GIVEN DONATIONS TO GET THEIR CHILDREN ADMITTED, IN NO WAY AFFECT THE CASE OF THE ASSESSEE. THE ASSESSEE RIGHT FROM BEGINNING STATED THAT NO AMOUNT WAS PAID OVER AND ABOVE IN THE FORM OF DONATION FOR GETTING ADMISSION IN MBBS. IT IS A SETTLED LAW T HAT THE STATEMENT RECORDED BEHIND THE BACK OF THE ASSESSEE CAN NOT BE USED AGAINST THE ASSESSEE. THE ASSESSING OFFICER H AS ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE E VEN THOUGH THERE WAS NO TANGIBLE MATERIAL ON THE BASIS OF WHICH HE REACHED THE CONCLUSION THAT THE ASSESSEE HAS PAID THE AMOUNT OF RS. 15 LACS FOR GETTING HER DAUGHTER PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 5 ADMITTED IN MBBS COURSE IN THE MEDICAL COLLEGE WHEN T HE ASSESSEE HAS DENIED THE STATEMENT BEFORE THE LEARNED CIT(A). THE BOOKS OF ACCOUNTS ARE SUBJECT TO AUDIT, THEREFORE, THE SAME SHOULD BE ACCEPTED. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE CHANNAI BENCH OF THE TRIBUNAL IN THE CASE OF SAVEETHA INSTITUTE OF MEDICAL & TECHNICAL SCIENCES VS. ACIT; ITA NOS.90 & 204/MAD/2011. 5. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IN THE CASE OF SHRI RAM VILAS VIJAYWARGIYA AN IDENTICAL ISSUE AROSE AND IN THAT CASE THE STATEMENT WAS RECORDED WHEREIN HE HAS ADMITTED THAT RS.14 LACS WERE PAID AS DONATION. THEREFORE, RELYING UPON THE STATEMENT OF ONE MOHANLAL DHANERIA, THE LEARNED CIT(A) HAS CONFIRMED THE SAME. THEREFORE, IT IS ALSO AN ADMITTED FACT THAT NO ADMISSION IN PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 6 MBBS COURSE CAN BE DONE WITHOUT PAYING DONATION, THEREFORE, IT MAY BE CONFIRMED. 5. I HAVE HEARD BOTH THE SIDES. LOOKING TO THE FACTS AN D CIRCUMSTANCES I FIND THAT THERE WAS SURVEY U/S 133A OF THE ACT CONDUCTED ON 9.8.2005 AT THE PREMISES OF SARVAJANI K JANKALYAN PARMARTHIK NYAS AND DURING THE COURSE OF SURVEY FROM THE BRIEF CASE OF SHRI RAM VILAS VIJAYWARGI YA SOME LOOSE PAPERS WERE FOUND WHICH REVEALED THAT THE AMOUNT WERE RECEIVED BY PEOPLES COLLEGE OF MEDICAL SCIENCE & RESEARCH CENTRE IN LIEU OF ADMISSION GIVEN TO VARIOUS STUDENTS IN MBBS IN ADDITION TO THE PRESCRIBE D FEES. AT SERIAL NO. 40 NAME OF STUDENT IS MENTIONED SURBHI BANSAL C/O PRADEEP BANSAL AND THE AMOUNT OF DONATION IS NOTED 15 LAKH. KUM SURBHI BANSAL IS DAUGHTER OF THE ASSESSEE. THE AMOUNTS WERE WRITTEN IN CODE IN PENCIL. DURING THE COURSE OF SECTION 131 PROCEEDINGS STATEME NTS OF ALL THE PERSONS WHOSE NAMES ARE APPEARING IN THESE LOOSE PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 7 PAPERS WERE RECORDED ON OATH. SOME OF THE STUDENTS H AVE ADMITTED THAT THEY HAVE MADE CASH PAYMENTS TO PEOPLES GROUP FOR ADMISSION IN MEDICAL COURSE. IN THE CHART OF THESE LOOSE PAPERS ONE SURBHI BANSALS NAME IS MENTION ED. SHE IS THE DAUGHTER OF THE ASSESSEE. MR. VIJAY VARGIYA DURING THE COURSE OF STATEMENT RECORDED ON OATH DENIE D TO HAVE RECEIVED ANY AMOUNT FROM THE ASSESSEE. SIMILARLY, THE ASSESSEE HAS ALSO DENIED TO HAVE MADE ANY PAYMENT. I AM, THEREFORE, OF THE VIEW THAT THE STATEMENT OF THE INDIVIDUAL CASE HAS TO BE SEEN AND IT HAS TO BE USED INDEPENDENTLY. IN THE STATEMENT RECORDED SOME OF THE STUDENTS ADMITTED THAT THEY HAVE PAID DONATION BUT THIS STATEMENT OF THE THIRD PARTY CANNOT BE USED AGAINST THE ASSESSEE WHO HAS DENIED TO HAVE MADE ANY PAYMENT. I AM OF THE VIEW THAT THERE ARE 1000S OF REASONS FOR APPEARIN G HER NAME IN THE CODE BUT IT CANNOT BE USED AGAINST THE ASSESSEE UNLESS PROPER OPPORTUNITY OF MAKING CROSS PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 8 EXAMINATION IS GIVEN TO THE ASSESSEE AFTER GIVING A COP Y OF STATEMENT TO THE ASSESSEE AND THEREAFTER THIS STATEMEN T CAN BE USED, BUT I AM OF THE VIEW THAT THE STATEMENT RECORDED OF THE SOME PERSONS IS IN THEIR INDIVIDUAL CAPACITY BUT CANNOT BE USED AGAINST THE ASSESSEE. THEREFORE, THI S WILL NOT SERVE THE PURPOSE FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. MOREOVER, THE ASSESSEES BOOKS OF ACCOUNTS ARE SUBJECT TO AUDIT. THE ASSESSEE ALSO DENIED TO HAVE MADE ANY PAYMENT THEN UNLESS SOME INCRIMINATING MATERIAL IS FOUND FROM THE MEDICAL COLLEGE, NO ADDITIO N CAN BE MADE. FOR THIS PROPOSITION, I RELY ON THE DECISI ON OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF SAVEETHA INSTITUTE OF MEDICAL & TECHNICAL SCIENCES VS. ACIT; ITA NOS.90 & 204/MAD/2011 WHEREIN IT WAS OBSERVED AS UNDE R :- PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 9 9. WE HAVE EXAMINED THE ENTIRE RECORD BEFORE US. WE HAVE ALSO TREADED THROUGH THE STATEMENTS IN QUESTION. ALMOST IDENTICAL LINES OF A RGUMENTS WERE TAKEN BY BOTH SIDES AS WERE TAKEN BEFORE THE LD. CIT(A). WE HAVE COGITATED THE ENTIRE FACTS, EVIDENCE AND ORAL SUBMISSIONS IN THE LIGHT OF PROVISIONS OF THE ACT A ND RELATED PRECEDENTS. WE HAVE GONE THROUGH THE ENTIRE STATEMENT OF DR.B.MUTHUKUMARAN, A COPY OF WHICH IS ENCLOSED IN THE PAPER BOOK. FROM THIS STATEMENT, IT IS EVIDENCED TH AT THE PORTION ON WHICH THE ASSESSING OFFICER IS RELYING HAS BEEN RECORDED AFTER THE VERI FICATION THAT TOO ON THE NEXT DAY. THE SEARCH PARTY HAD ADDED MORE QUESTIONS VIZ. QUESTION NO.18 &19. THERE IS A WHISPER OF COLLECTION OF CAPITATION FEES. BUT NOWHERE ELSE THE RE IS SUCH AN ADMISSION MADE BY HIM. THE DOCUMENT NO.56 ON WHICH HEAVY RELIANCE HAS BEEN PLA CED BY THE ASSESSING OFFICER IS NOTHING BUT A PIECE OF PAPER CONTAINING DETAILS OF NUMBER OF SEATS ALLOTTED TO MANAGEMENT QUOTA AND GOVERNMENT QUOTA. THIS DOCUMENT CANNOT BE SAID TO BE EVEN AN ITA 99&100/11 204 & 205/11 :- 10 -: INCRIMINATING DOCUMENT BECAUS E THIS IS A DECLARED TRUTH WHICH IS ALSO RECORDED IN THE BOOKS OF THE TRUST. THE STATEMENT R ECORDED AFTER THE VERIFICATION CANNOT BE ACCEPTED WITHOUT DOUBT. SO, WE CAN SAFELY CONCLUDE THAT DOCUMENT NO.56 CANNOT BE TREATED AS INCRIMINATING DOCUMENT BY ANY STRETCH OF IMAGINA TION. NOTHING INCRIMINATING IS SCRIBE ON IT. NOTHING HAS BEEN MENTIONED ON THIS PIECE OF PAP ER REGARDING COLLECTION OF ANY CAPITATION FEES OR EVEN THE AMOUNT OF FEES WHICH IS LEGALLY CH ARGEABLE. HENCE, WE CANNOT GIVE MEANING IN ONE WAY OR THE OTHER, MORE SPECIFICALLY, SUITABL E TO THE REVENUES INTEREST ON THE BASIS OF ALLEGED STATEMENT, WHICH HEAVILY SUFFERS FROM CONTR ADICTIONS AND ALSO STAND REFUTED BY THE MANAGEMENT WHEN THESE STATEMENTS WERE PUT TO THEM D URING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS CATEGORICALLY DENIED TO HAVE CO LLECTED ANY CAPITATION FEES. AFTER VERIFICATION WHEN SOMETHING IS RECORDED WHICH IS CO NTRARY TO THE MAIN BODY OF STATEMENT, IT CANNOT BE ACCEPTED AS A VOLUNTARY STATEMENT. THERE BEING NO INCRIMINATING EVIDENCE REGARDING RECEIPT OF CAPITATION FEES, PARTICULARLY WHEN NO DOCUMENT WAS PUT TO DR.B.MUTHUKUMARAN REGARDING CHARGING OF CAPITATION FEES, SUCH A STATEMENT CANNOT BE MADE A BASIS FOR MAKING SUCH A HUGE ADDITION. HIS S TATEMENT WAS RATHER DENIED BY THE MANAGING TRUSTEE/PRESIDENT. SHRI T.A.VARADGARAJAN, FINANCE MANAGER ALSO DENIED THE STATEMENT OF DR.B.MUTHUKUMARAN. IN ANY OTHER CASE, EVEN ONE GOES BY THIS ITA 99&100/11 204 & 205/11 :- 11 -: STATEMENT, THIS WOULD NOT MAK E ANY MEANINGFUL SENSE. DR.B.MUTHUKUMARAN HAS STATED THAT THE MONEY HAD BEE N HANDED OVER TO ONE SHRI SARAVANAN, ACCOUNTS OFFICER, BUT SHRI SARAVANAN WAS NEVER ENQUIRED BY THE DEPARTMENT. THE STATEMENT OF DR.N.M.VEERAIYAN, WHO IS THE PRESI DENT/MANGEMENT TRUSTEE OF THE TRUST, NEVER ACCEPTED HAVING RECEIPT OF CAPITATION FEES OR DONATION AND HE HAD REJECTED AND DENIED THE STATEMENT OF DR.B.MUTHUKUMARAN. STATEMEN T OF DR.N.M.VEERAIYAN WAS RECORDED U/S 131 ON 9.11.2007, IN WHICH HE HAS STAT ED THAT WHATEVER WAS RECEIVED FROM THE STUDENTS WAS REFLECTED IN THE BOOKS OF ACCOUNT. THI S STATEMENT CONFIRMS THE CONTENTION OF THE ASSESSEE THAT SOME WELL WISHERS WERE GIVING DON ATIONS WHICH WERE DULY RECEIVED AND REFLECTED IN THE BOOKS OF ACCOUNT. IN FACT, THE STA TEMENT OF DR.N.M.VEERAIYAN WAS RECORDED U/S 131 ON 9.11.2007 WHICH HAS ALSO BEEN MADE A BAS IS FOR THIS ADDITION. HE WAS NOT EXAMINED U/S 132(4) OF THE ACT. A STATEMENT MADE U/ S 131 CANNOT BE EQUATED WITH A STATEMENT RECORDED U/S 132(4) OF THE ACT. A STATEME NT RECORDED U/S 132(4) IS A VALID AND RELEVANT PIECE OF EVIDENCE BUT A STATEMENT RECORDED U/S 131 IS NOT SO RELEVANT. NEVERTHELESS, EVEN A STATEMENT RECORDED U/S 132(4) CAN NOT BE MADE A SOLE BASIS FOR ANY SUCH ADDITION UNLESS CORROBORATED BY SEIZED MATERIA L. IF ANY ADMISSION IS MADE IN A STATEMENT RECORDED U/S 132(4), THIS CAN BE USED WIT H REFERENCE TO ANY PIECE OF EVIDENCE FOUND ITA 99&100/11 204 & 205/11 :- 12 -: DURING TH E COURSE OF SEARCH. IN THIS CASE, AS WE PRADEEP KUMAR BANSAL ITA NO. 214/IND/2016 10 HAVE STATED ABOVE, NO SUCH PIECE OF EVIDENCE OR TO SAY ANY INCRIMINATING EVIDENCE WAS EITHER FOUND OR SEIZED. WHAT WAS FOUND WAS A NOTING GIVING BREAK-UP OF NUMBER OF STUDENTS WHO WERE ADMITTED UNDER DIFFERENT QUOTAS IN VARIOUS COURSES. IN OUR WELL CONSIDERED VIEW, THIS ADDITION COULD NOT HAVE BEEN MADE AT ALL IN TH E HANDS OF THE ASSESSEE-TRUST ON THE BASIS OF SUCH EVIDENCE. RECORDING OF SOME QUESTIONS AFTER VERIFICATION COULD BE VIEWED AS A INVOLUNTARY STATEMENT, EXTRACTED FROM THE DEPONENT. IN ANY CASE, A POSSIBILITY OF SUCH INFERENCE IS ALWAYS THERE. WITH REGARD TO SUCH STAT EMENT, THE CBDT HAS ISSUED INSTRUCTIONS VIDE CIRCULAR NO.286/2/2003-IT, WHEREIN IT HAS BEEN DIRECTED THAT SEARCH PARTY SHALL NOT OBTAIN CONFESSIONS. SO, THE ADMISSION MADE U/S 132( 4) BY THE CONCERNED OFFICER CANNOT BE TREATED EVEN AS A VALID PIECE OF EVIDENCE. THERE BE ING NO INCRIMINATING DOCUMENT HAVING BEEN FOUND OR SEIZED DURING SEARCH AND THE STATEMEN T ALSO BEING ABSTRUSE, THE ADDITION IN QUESTION HAS NO LEGS TO STAND ON. HAD THERE BEEN A VALID STATEMENT, EVEN THEN, SOLELY ON THE BASIS THEREOF, ADDITION COULD NOT HAVE BEEN MADE. T HIS IS A WELL SETTLED PRINCIPLE OF LAW BY NOW AND THERE ARE UMPTEEN DECISIONS IN SUPPORT OF T HIS VIEW. 10. WE ARE NOT CONVINCED WITH THE LD.DR THAT THE LE TTER DATED 26.8.2003 WRITTEN BY THE DIRECTOR OF MEDICAL EDUCATION/CHAIRMAN, ITA 99&100/ 11 204 & 205/11 :- 13 -: GRIEVANCE COMMITTEE ALLEGING THAT THE ASSESSEE WAS CHARGING E XCESS FEE AGAINST THE PRESCRIBED FEE STRUCTURE WOULD PROVE THE RECEIPT OF CAPITATION FEE S BY THE ASSESSEE PARTICULARLY WHEN THIS IS A SEARCH CASE AND NOTHING WAS FOUND DURING SEARCH T O SUPPORT THIS ALLEGATION. THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS DURG APRASAD MORE, 82 ITR 540 AND SUMATI DAYAL VS CIT, 214 ITR 801, WHICH SPEAK ABOUT HUMAN PROBABILITIES AND REALITIES WHICH HAVE TO BE TAKEN INTO CONSIDERATION WHILE DEALING WITH I NCOME-TAX MATTERS. IN FACT, THIS IS NOT SUCH A CASE. THE RATIO DECIDENDI OF THESE DECISIONS WOULD NOT APPLY IN THE ABSENCE OF ANY DIRECT PIECE OF EVIDENCE AVAILABLE ON RECORD. THE R EALITY OF LIFE WHICH MAY BE TREATED AS SUCH IN A PARTICULAR CASE, MAY NOT BE REALITY OF LIFE IN ANOTHER CASE. THERE IS NOTHING ON RECORD TO CORELATE BETWEEN ANY SUCH REALITY OF LIFE TO WHICH THE ASSESSING OFFICER IS POINTING TO. WHO PREVENTED THE ASSESSING OFFICER TO RECORD THE STATE MENTS OF THE STUDENTS; OR THEIR WARDS? ON SIMPLE CONJECTURES AND SURMISES, NO ADDITION CAN BE MADE UNDER THE INCOME-TAX ACT, 1961. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. C IT(A) IN DELETING THE ADDITION OF ` 5,37,00,000/-. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THE ADD ITION MADE IS HEREBY DELETED. I ORDER ACCORDINGLY. PRONOUNCED IN OPEN COURT ON 4 TH JULY, 2016 SD/- (D.T. GARASIA) JUDICIAL MEMBER 4 TH JULY, 2016 DN/-