Brij Mohan Loya, Bhopal V. ITO-3(1), Bhopal

ITA 4/Ind/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4934 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S DESHPANDE
• Keywords: Loose papers; Reassessment proceedings; TDS
• Section: 133A; 13; 131

Judgement Text

P A GE 1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE S/SHRI C.M. GARG, JUDICIAL MEMBER AND MANISH BORAD, ACCOUNTANT MEMBER ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 BRIJ MOHAN LOYA, 51, NRI COLONY, KOH-E-FIZA, BHOPAL VS. ITO 3(1), AAYAKAR BHAVAN, HOSHANGABAD ROAD, BHOPAL PAN/GIR NO. LAAIPL 7205 N (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.S.DESHPANDE, CA REVENUE BY : SHRI P.K.SINGH, SR DR DATE OF HEARING : 28 /7/ 2021 DATE OF PRONOUNCEMENT : 29 /9/2021 O R D E R PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-2, BHOPAL, DATED 3.10.2019 FOR THE ASSESSM ENT YEAR 2006-07. 2. ALTHOUGH THE ASSESSEE HAS RAISED TWO VITAL GROUN DS I.E. INITIATION OF PROCEEDINGS U/S.147 OF THE ACT AND CONSEQUENTLY ADD ITION OF RS.3,50,000/- WITHOUT ANY EVIDENCE IN THE NAME OF THE ASSESSEE, B UT HE PRESSED FOR ADJUDICATION OF ADDITION OF RS.3,50,000/-. 3. FACTS OF THE CASE ARE THAT A SURVEY ACTION U/S. 133A OF THE ACT WAS CONDUCTED IN THE PREMISES OF SARVAJANIK JANAKALYAN PARMARTHIK NYAS, BHOPAL ON 9.8.2005 AND SOME LOOSE PAPERS WERE IMPOU NDED. ON THE BASIS ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 2 | 8 OF THOSE LOOSE PAPER, THE AO ISSUED NOTICE U/S.148 OF THE ACT ON 26.3.2013 FOR INITIATION OF REASSESSMENT PROCEEDINGS U/S OF T HE ACT. THE AO ALSO PROVIDED THE REASONS RECORDED U/S.147 OF THE ACT. D URING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE HAD MADE CASH PAYMENT OF RS.3,50,000/- TO PEOPLES COLLEGE OF MEDICAL SCIENCE AND RESEARCH CENTRE, BHOPAL (PCMSRC) FOR SE CURING ADMISSION OF HIS SON SHRI APPOORVA LOYA IN MBBS COURSE . IN REP LY TO SHOW CAUSE NOTICE, THE ASSESSEE REPLIED THAT HE HAD NOT PAID ANY AMOUN T IN CASH FOR THE ADMISSION OF HIS SON IN MBBS COURSE. THE AO DID NO T ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE AMOUNTS RECEIVED BY THE MEDICAL COLLEGE ARE IN CODED FORM AND THAT TOO IN PENCIL. IN THE LIST THE NAME OF SHRI APPORVA LOYA APPEARS IN SL. NO.17, AS PER WHICH, HE HAS TAK EN ADMISSION BY GIVING DONATION OF RS.3,50,000/- IN CASH AND ALSO BY DD NO .53550. SINCE THIS AMOUNT WAS NOT DISCLOSED IN THE RETURN OF INCOME, T HE AO TREATED THE SAME AS PAYMENT FROM UNDISCLOSED SOURCE AND ADDED THE SA ME TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL ALSO, THE ASSESSEE DENIED THE CASH PAY MENT FOR SECURING ADMISSION IN MBBS SOURCE OF HIS SON. IT WAS SUBMIT TED THAT THE ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF DOCUMENTS FOUND AND IMPOUGNED FROM THE BEIEFCASE OF SHRI RAM VILAS VIJAYAVARGIYA, WHICH WE RE IMPOUNDED DURING THE COURSE OF TDS SURVEY ON 9.8.2005. SINCE THIS I S NOT A VALID EVIDENCE, THEREFORE, CANNOT BE A BASIS FOR REOPENING OF ASSES SMENT AND CONSEQUENTLY ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 3 | 8 ADDING THE SAME TO THE INCOME OF THE ASSESSEE. BEF ORE THE CIT(A), THE ASSESSEE RELIED ON THE DECISION OF ITAT INDORE IN T HE CASE OF PRADEEP KUMAR BANSAL IN ITA NO.214/IND/2016 AND SUJAY SHARM A IN ITA NO.819/IND/2014 TO SUPPORT HIS CASE. IT WAS SUBMITTE D THAT WHEN NO EVIDENCE TO PROVE THAT THE ASSESSEE HAS PAID THE AL LEGED DONATION FOR THE ADMISSION IN MBBS COURSE, THE ADDITION HAS BEEN MAD E ON PURE PRESUMPTION AND SURMISES, WHICH SHOULD BE DELETED. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE ON THE GROUND THA T THERE ARE CORROBORATIVE EVIDENCE GATHERED BY WAY OF ENQUIRY, WHICH PROVES THAT THE ASSESSEE HAS PAID DONATION OF RS.,3,50,000/-FOR THE ADMISSION OF HIS SON IN MBBS COURSE. EVEN IF SOME DONORS, WHOSE NAMES ARE APPEARING IN THE LIST IMPUGNED DURING THE COURSE OF SURVEY, HAVE ADMITTED OF GIVING DONATIONS TO ADMIT THEIR CHILD. HENCE, THE LD CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 5. BEFORE US, LD A.R. OF THE ASSESSEE RELIED ON THE DECISION OF INDORE BENCH IN THE CASE OF SHRI SUJAY SHARMA (SUPRA) U/S .263 OF THE ACT, WHEREIN, ON SIMILAR ISSUE, THE TRIBUNAL HAS QUASHED THE ORDER OF LD CIT. LD A.R. ALSO RELIED ON THE DECISION OF THIS BENCH IN T HE CASE OF PRADEEP KUMAR BANSAL (SUPRA), WHEREIN ALSO, THE TRIBUNAL HAS DELE TED THE ADDITION FOLLOWING THE DECISION OF ITAT CHENNAI IN THE CASE OF SAVEETH A INSTITUTE OF MEDICAL & TECHNICAL SCIENCES VS ACIT IN ITA NO.99 & 204/MAD/2 011. HENCE, HE SUBMITTED THAT THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE. ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 4 | 8 6. REPLYING TO ABOVE, LD SR DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. HE SUBMITTED THAT THE ADDITION HAS BE EN MADE ON THE BASIS OF MATERIALS IMPOUNDED DURING THE COURSE OF SURVEY. HE NCE, NO INTERFERENCE IN THE ORDER OF LD CIT(A) IS CALLED FOR. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS OF THE CASE, INTER ALIA, THE DECISIONS RELIED BY LD A.R. O F THE ASSESSEE. IT IS AN ADMITTED FACT THAT DURING THE COURSE OF SURVEY, SOM E LOOSE PAPERS WERE IMPOUNDED AND ON THE BASIS OF SAME, IT WAS GATHERED THAT SOME STUDENTS HAVE TAKEN ADMISSION IN MBBS COURSE BY GIVING DONAT ION. OUT OF THOSE STUDENTS, THE NAME OF THE ASSESSEES SON IS APPEARI NG HAVING PAYING RS.3,50,000/-. BUT THE ISSUE FOR CONSIDERATION BEF ORE 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 BU T IN THE CASE OF THE ASSESSEE, HE HAS DENIED TO GIVE ANY DONATION FOR T HE ADMISSION OF HIS SON. MERELY BECAUSE SOME STUDENTS/PARENTS HAVE ADMITTED, THAT CANNOT BE USED AGAINST THE ASSESSEE WITHOUT ANY PLAUSIBLE MATERIAL S. I FIND THAT THIS BENCH IN THE CASE OF PRADEEP KUMAR BANSAL (SUPRA) HAS DEL ETED SIMILAR ADDITION FOLLOWING THE DECISION OF THE ITAT CHENNAI IN THE C ASE OF SAVEETHA INSTITUTE OF MEDICAL & TECHNICAL SCIENCE (SUPRA), WHEREIN, IT HAS HELD AS UNDER: ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 5 | 8 WE HAVE EXAMINED THE ENTIRE RECORD BEFORE US. WE H AVE ALSO TREADED THROUGH THE STATEMENTS IN QUESTION. ALMOST IDENTICA L LINES OF ARGUMENTS WERE TAKEN BY BOTH SIDES AS WERE TAKEN BEFORE THE L EARNED CIT(A). WE HAVE COGITATED THE ENTIRE FACTS, EVIDENCE AND ORAL SUBMISSIONS IN THE LIGHT OF PROVISIONS OF THE ACT AND 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 EVIDENCE D THAT THE PORTION ON WHICH THE AO IS RELYING HAS BEEN RECORDED AFTER THE VERIFICATION THAT TOO ON THE NEXT DAY. THE SEARCH PARTY HAD ADDED MORE QUEST IONS VIZ. QUESTION NOS. 18 AND 19. THERE IS A WHISPER OF COLLECTION OF CAPITATION FEES. BUT NOWHERE ELSE THERE IS SUCH AN ADMISSION MADE BY HIM . THE DOCUMENT NO. 56 ON WHICH HEAVY RELIANCE HAS BEEN PLACED BY THE A O IS NOTHING BUT A PIECE OF PAPER CONTAINING DETAILS OF NUMBER OF SEAT S ALLOTTED TO MANAGEMENT QUOTA AND GOVERNMENT QUOTA. THIS DOCUMEN T CANNOT BE SAID TO BE EVEN AN INCRIMINATING DOCUMENT BECAUSE THIS I S A DECLARED TRUTH WHICH IS ALSO RECORDED IN THE BOOKS OF THE TRUST. T HE STATEMENT RECORDED AFTER THE VERIFICATION CANNOT BE ACCEPTED WITHOUT D OUBT. SO, WE CAN SAFELY CONCLUDE THAT DOCUMENT NO. 56 CANNOT BE TREATED AS INCRIMINATING DOCUMENT BY ANY STRETCH OF IMAGINATION. NOTHING INC RIMINATING 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 W HICH IS LEGALLY CHARGEABLE. HENCE, WE CANNOT GIVE MEANING IN ONE WA Y OR THE OTHER, MORE SPECIFICALLY, SUITABLE TO THE REVENUES INTEREST ON THE BASIS OF ALLEGED STATEMENT, WHICH HEAVILY SUFFERS FROM CONTRADICTION S AND ALSO STAND REFUTED BY THE MANAGEMENT WHEN THESE STATEMENTS WERE PUT TO THEM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS CATEGORICA LLY DENIED TO HAVE COLLECTED ANY CAPITATION FEES. AFTER VERIFICATION W HEN SOMETHING IS RECORDED WHICH IS CONTRARY TO THE MAIN BODY OF STATEMENT, IT CANNOT BE ACCEPTED AS A VOLUNTARY STATEMENT. THERE BEING NO INCRIMINATING E VIDENCE REGARDING RECEIPT OF CAPITATION FEES, PARTICULARLY WHEN NO DO CUMENT WAS PUT TO DR. B. MUTHUKUMARAN REGARDING CHARGING OF CAPITATION FEES, SUCH A STATEMENT CANNOT BE MADE A BASIS FOR MAKING SUCH A HUGE ADDIT ION. HIS STATEMENT WAS RATHER DENIED BY THE MANAGING TRUSTEE/PRESIDENT . SHRI T.A. VARADGARAJAN, FINANCE MANAGER ALSO DENIED THE STATE MENT OF DR. B. MUTHUKUMARAN. IN ANY OTHER CASE, EVEN ONE GOES BY T HIS STATEMENT, THIS WOULD NOT MAKE ANY MEANINGFUL SENSE. DR. B. MUTHUKU MARAN HAS STATED THAT THE MONEY HAD BEEN HANDED OVER TO ONE SHRI SAR AVANAN, ACCOUNTS OFFICER, BUT SHRI SARAVANAN WAS NEVER ENQUIRED BY T HE DEPARTMENT. THE STATEMENT OF DR. N.M. VEERAIYAN, WHO IS THE PRESIDE NT/MANGEMENT TRUSTEE OF THE TRUST, NEVER ACCEPTED HAVING RECEIPT OF CAPI TATION FEES OR DONATION AND HE HAD REJECTED AND DENIED THE STATEMENT OF DR. B. MUTHUKUMARAN. STATEMENT OF DR. N.M. VEERAIYAN WAS RECORDED UNDER S. 131 ON 9TH NOV., 2007, IN WHICH HE HAS STATED THAT WHATEVER WAS RECE IVED FROM THE STUDENTS WAS REFLECTED IN THE BOOKS OF ACCOUNT. THIS STATEME NT CONFIRMS THE CONTENTION OF THE ASSESSEE THAT SOME WELL WISHERS W ERE GIVING DONATIONS WHICH WERE DULY RECEIVED AND REFLECTED IN THE BOOKS OF ACCOUNT. IN FACT, THE STATEMENT OF DR. N.M. VEERAIYAN WAS RECORDED UNDER S. 131 ON 9TH NOV., 2007 WHICH HAS ALSO BEEN MADE A BASIS FOR THIS ADDI TION. HE WAS NOT ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 6 | 8 EXAMINED UNDER S. 132(4) OF THE ACT. A STATEMENT MA DE UNDER S. 131 CANNOT BE EQUATED WITH A STATEMENT RECORDED UNDER S . 132(4) OF THE ACT. A STATEMENT RECORDED UNDER S. 132(4) IS A VALID AND R ELEVANT PIECE OF EVIDENCE BUT A STATEMENT RECORDED UNDER S. 131 IS N OT SO RELEVANT. NEVERTHELESS, EVEN A STATEMENT RECORDED UNDER S. 13 2(4) CAN NOT BE MADE A SOLE BASIS FOR ANY SUCH ADDITION UNLESS CORROBORA TED BY SEIZED MATERIAL. IF ANY ADMISSION IS MADE IN A STATEMENT RECORDED UNDER S. 132(4), THIS CAN BE USED WITH REFERENCE TO ANY PIECE OF EVIDENCE FOUND DURING THE COURSE OF SEARCH. IN THIS CASE, AS WE HAVE STATED ABOVE, NO S UCH 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 STU DENTS WHO WERE ADMITTED UNDER DIFFERENT QUOTAS IN VARIOUS COURSES. IN OUR WELL CONSIDERED VIEW, THIS ADDITION COULD NOT HAVE BEEN MADE AT ALL IN THE HANDS OF THE ASSESSEE-TRUST ON THE BASIS OF SUCH EVIDENCE. RECOR DING OF SOME QUESTIONS AFTER VERIFICATION COULD BE VIEWED AS A INVOLUNTARY STATEMENT, EXTRACTED FROM THE DEPONENT. IN ANY CASE, A POSSIBILITY OF SU CH INFERENCE IS ALWAYS THERE. WITH REGARD TO SUCH STATEMENT, THE CBDT HAS ISSUED INSTRUCTIONS VIDE CIRCULAR NO. 286/2/2003-IT, WHEREIN IT HAS BEE N DIRECTED THAT SEARCH PARTY SHALL NOT OBTAIN CONFESSIONS. SO, THE ADMISSI ON MADE UNDER S. 132(4) BY THE CONCERNED OFFICER CANNOT BE TREATED EVEN AS A VALID PIECE OF EVIDENCE. THERE BEING NO INCRIMINATING DOCUMENT HAV ING BEEN FOUND OR SEIZED DURING SEARCH AND THE STATEMENT ALSO BEING A BSTRUSE, 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 N OT HAVE BEEN MADE. THIS IS A WELL-SETTLED PRINCIPLE OF LAW BY NOW AND THERE ARE UMPTEEN DECISIONS IN SUPPORT OF THIS VIEW. 10. WE ARE NOT CONVINCED WITH THE LEARNED DEPARTMEN TAL REPRESENTATIVE THAT THE LETTER DT. 26TH AUG., 2003 WRITTEN BY THE DIRECTOR OF MEDICAL EDUCATION/CHAIRMAN, GRIEVANCE COMMITTEE ALLEGING TH AT THE ASSESSEE WAS CHARGING EXCESS FEE AGAINST THE PRESCRIBED FEE STRU CTURE WOULD PROVE THE RECEIPT OF CAPITATION FEES BY THE ASSESSEE PARTICUL ARLY WHEN THIS IS A SEARCH CASE AND NOTHING WAS FOUND DURING SEARCH TO SUPPORT THIS ALLEGATION. THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF C IT VS. DURGA PRASAD MORE 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC) AND SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (S C), WHICH SPEAK ABOUT HUMAN PROBABILITIES AND REALITIES WHICH HAVE TO BE TAKEN INTO CONSIDERATION WHILE DEALING WITH INCOME-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 O N RECORD. THE REALITY OF LIFE WHICH MAY BE TREATED AS SUCH IN A PARTICULAR C ASE, 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 AO IS POINTING TO . WHO PREVENTED THE AO TO RECORD THE STATEMENTS OF THE STUDENTS; OR THEIR WAR DS? ON SIMPLE CONJECTURES AND SURMISES, NO ADDITION CAN BE MADE U NDER THE IT ACT, 1961. WE, THEREFORE, CONFIRM THE ORDER OF THE LEARNED CIT (A) IN DELETING THE ADDITION OF RS. 5,37,00,000. ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 7 | 8 8. ON SIMILAR ISSUE ALSO THIS BENCH HAS QUASHED ORD ER U/S.263 OF THE ACT IN THE CASE OF SUJAY SHARMA (SUPRA). FOLLOWING THE PRECEDENT, WE DELETE THE ADDITION OF RS.3,50,000/- MADE BY THE AO AND CO NFIRMED BY THE LD CIT(A). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED U/R 34(4) OF I.T.RULES, 1963 ON 2 9/9/2021. SD/- SD/- ( MANISH BORAD) (CHABNDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEM BER INDORE ; DATED 29/9/2021 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR.PVT.SECRETARY ITAT, CUTTACK 1. THE APPELLANT : BRIJ MOHAN LOYA, 51, NRI COLONY, KOH-E0FIZA, BHOPAL 2. THE RESPONDENT. ITO 3(1), AAYAKAR BHAVAN, HOSHANGABAD ROAD, BHOPAL 3. THE CIT(A)-2, BHOPAL 4. PR.CIT-2 , BHIOPAL 5. DR, ITAT, INDORE 6. GUARD FILE. //TRUE COPY// ITA NO.04/IND/2020 ASSESSMENT YEAR : 2006-07 P A GE 8 | 8 DATE INITIAL 1. DRAFT DICTATED ON SR.PS 2. DRAFT PLACED BEFORE AUTHOR SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE OS 9. DATE ON WHICH FILE GOES TO THE SPS 10. DATE OF DISPATCH OF ORDER.