Appeal Details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 6310 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 2 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-08-2021
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
05-04-2021
Assessment Year
2015-2016
Appeal Filed On
15-06-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO S . 500 TO 506 /BANG/20 20 ASSESSMENT YEAR S : 20 1 0 - 1 1 TO 201 6 - 1 7 SRI DEVARAJ URS EDUCATIONAL TRUST FOR BACKWARD CLASSES (REGD.), NO.1, TAMAKA, KOLAR 563 101. PAN: AAATS 5344P VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMASUBRAMANIAM, CA RESPONDENT BY : SHR I MUZAFFAR HUSSAIN, C IT(DR) (ITAT), BENGALURU. DATE OF HEARING : 16.07 .202 1 DATE OF PRONOUNCEMENT : 16 .0 8 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T THE SEPARATE INDIVIDUAL ORDERS, ALL DATED 28.02.2020 OF THE CIT( APPEALS)-11, BANGALORE FOR THE ASSESSMENT YEARS 2010-11 TO 2016-17. THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE AND BREVITY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE TRUST WAS FORMED IN THE YEAR 1984 WITH A VIEW TO PROMOTE EDUCATION AMON G THE BACKWARD CLASSES AND GENERAL PUBLIC WHICH IS RUNNING VARIOUS EDUCATIONAL INSTITUTIONS FOR BACKWARD CLASSES. SHRI R L JALAPPA IS FOUNDER T RUSTEE AND CHAIRMAN OF THE ASSESSEE TRUST AND HIS CHILDREN SHRI. J. RAJEND RA AND SMT. J. SARASWATI ITA NOS.500 TO 506/BANG/2020 PAGE 2 OF 183 ARE ALSO TRUSTEES OF THE TRUST. SHRI G.H. NAGARAJ I S THE SECRETARY OF THE TRUST AND IS LOOKING AFTER THE DAY TO DAY AFFAIRS OF THE TRUST. SHRI.J.P. NARAYANSWAMY WAS ONE OF THE TRUSTEE AND VICE PRESID ENT OF THE TRUST. SHRI. RAJESH JAGDALE WAS ONE OF THE TRUSTEES OF THE ASSES SE TRUST AND FOR THIS PURPOSE THE TRUST HAS ESTABLISHED THE FOLLOWING EDU CATIONAL INSTITUTIONS AND PROVIDING EDUCATION TO A VERY LARGE NUMBER OF STUDE NTS:- A) MEDICAL COLLEGE AND HOSPITAL B) RLJ INSTITUTE OF TECHNOLOGY C) RLJ INDUSTRIAL TRAINING INSTITUTE D) SRI DEVARAJ URS SCHOOL & PU COLLEGE E) SRI DEVARAJ URS INTERNATIONAL RESIDENTIAL SCHOO L F) SRI DEVARAJ URS INSTITUTE OF MANAGEMENT G) SRI DEVARAJ URS EDUCATIONAL TRUST PHARMA H) SRI DEVARAJ URS SCHOOL/COLLEGE OF NURSING I) R L JALAPPA CENTRAL SCHOOL J) SRI DEVARAJ URS EDUCATIONAL TRUST 3. THE ASSESSEE TRUST HAS BEEN FILING RETURN OF INC OME UNDER THE INCOME-TAX ACT, 1961 [THE ACT]. IT IS REGISTERE D U/S. 12A OF THE ACT AS ON DATE. 4. FOR THE AY 2010-11, ORIGINAL RETURN OF INCOME WA S FILED ON 16.09.2010 AND INTIMATION U/S. 143(1) DATED 30.3.20 11 WAS ISSUED. EXEMPTION U/S. 11 OF THE ACT HAS BEEN GRANTED. 5. A SEARCH U/S. 132 OF THE ACT WAS CONDUCTED ON 6. 8.2015 AND STATEMENTS RECORDED FROM VARIOUS PERSONS. IT WAS S TATED BY THE ASSESSEE THAT THE AO DID NOT FURNISH A COPY OF THE REASONS R ECORDED U/S. 132 NOR COPY OF SATISFACTION NOTE. AFTER ISSUING VARIOUS N OTICES AND EXAMINING THE SEIZED RECORD AND THE STATEMENTS RECORDED, THE AO V IDE ORDER DATED 30.12.2017 PASSED THE ASSESSMENT ORDER U/S. 153A R. W.S. 143(3) OF THE ACT ITA NOS.500 TO 506/BANG/2020 PAGE 3 OF 183 AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE TRU ST AT RS.41,66,94,668 FROM THE FOLLOWING COMPONENTS:- I. SURPLUS SET APART U/S. 11(1)(A) RS.6,85,70,097 II. EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE RS.7,29,24,571. III. DISALLOWANCE OF DONATIONS U/S. 37 RS.10,00,000. IV. UNDISCLOSED CASH RECEIPTS RS.27,42,000. 5.1 IN THE ASSESSMENT ORDER, THE AO DENIED EXEMPTI ON U/S. 11 OF THE ACT FOR THE FOLLOWING REASONS:- (I) THE ASSESSEE HAS NOT CARRIED OUT THE ACTIVITI ES IN ACCORDANCE WITH THE TRUST DEED. (II) THE ASSESSEE HAS BEEN COLLECTING CAPITATION F EES FOR ADMISSION OF STUDENTS FOR BOTH MANAGEMENT QUOTA AND NRI QUOTA. (III) THE ASSESSEE HAS INDULGED IN MASS PRACTICE OF CONVERTING MANY SEATS INTO MANAGEMENT SEATS SO AS T O SELL THE SAME AT EXORBITANT PRICE OF MANAGEMENT FEES. (IV) MISUSE OF TRUST FUND FOR THE BENEFIT OF TRUST EES AS WELL AS FOR POLITICAL PARTIES. 5.2 THE AO ALSO PLACED RELIANCE ON THE SEIZED MATE RIAL AND STATEMENT OF SHRI G.H. NAGARAJ, SECRETARY OF TRUST AND SHRI GOLI SRINIVAS FOR THE PROPOSITION THAT HE IS COLLECTING CAPITATION FEES A ND MAKING VARIOUS PAYMENTS TO THE INTERESTED PARTIES AND SEIZED MATER IAL SHOWS AMPLE PROOF OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE TRUST IN THE NAME OF IMPARTING EDUCATION. FURTHER ON THE BASIS OF SEIZED MATERIAL HE ADOPTED THE PACKAGE PRICE ON THE AVERAGE OF FY 2009-10 & 2011-12 TO COM PUTE THE TOTAL NUMBER OF SEATS AND TOTAL AMOUNT OF CAPITATION FEES COLLEC TED IN ALL THESE ASSESSMENT YEARS FOR BOTH UG AND PG SEATS. THUS, T HE CRUX OF THE FINDINGS OF THE AO IS THAT ASSESSEE HAS BEEN COLLEC TING THE CAPITATION FEE ITA NOS.500 TO 506/BANG/2020 PAGE 4 OF 183 AND RUNNING THE MEDICAL COLLEGE IN A COMMERCIAL MAN NER AND ACTIVITIES OF THE ASSESSEE CANNOT BE CONSIDERED AS CHARITABLE IN NATURE. 6. IT IS SUBMITTED THAT THE AO DID NOT FURNISH THE COPY OF SATISFACTION RECORDED U/S. 153A OF THE ACT AND IN THE NOTICE U/S . 153A, THERE WAS NO MENTION WHETHER IT IS A CASE OF ASSESSMENT OR REASS ESSMENT. DISALLOWANCES/ADDITIONS : 6.1 DISALLOWANCE OF EXEMPTION CLAIMED U/S. 11(1)(A) OF RS.6,85,70,097: THE AO HELD THAT ASSESSEE HAD COLLECTED CAPITATION FEE FROM VARIOUS STUDENTS AND INCURRED EXPENDITURE FOR NON-CHARITABL E PURPOSES. THEREFORE THE ASSESSEE TRUST WAS NOT CARRYING ON THE ACTIVITI ES IN A CHARITABLE MANNER, BUT IN A COMMERCIAL MANNER. HENCE EXEMPTION U/S. 1 1(1)(A) OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE. 6.2 DISALLOWANCE OF EXPENDITURE IN THE NATURE OF C APITAL EXPENDITURE RS.7,29,24,571 : THE ASSESSEE HAD SPENT A SUM OF RS.7,29,24,571 DURING THE PREVIOUS YEAR RELEVANT TO AY 2010-11 TOWARDS CA PITAL EXPENDITURE FOR THE PURPOSE OF THE TRUST. SINCE THE EXEMPTION U/S. 11(1)(A) WAS DENIED, THE AO DID NOT ALLOW THE CAPITAL EXPENDITURE CLAIMED AS APPLICATION. 6.3 DISALLOWANCE OF DONATION RS.10,00,000/-: D URING THE PREVIOUS YEAR RELEVANT TO AY 2010-11 THE ASSESSEE HAD DONATE D RS.10,00,000 AS RECOGNIZED CHARITABLE INSTITUTION. SINCE THE EXEMP TION U/S. 11 OF THE ACT WAS DENIED, THE AO DID NOT ALLOW THE PAYMENT OF DON ATION AS APPLICATION. 6.4 UNDISCLOSED CASH RECEIPTS RS.27,42,00,000 : THE TRUSTEES IN A MEETING HELD ON 06.12.2017 FOUND THAT MANY ENTRIES IN THE SEIZED MATERIAL REVEALED THAT SOME AMOUNT HAS BEEN SPENT FOR THE PU RPOSE OF THE TRUST. THEREFORE, IT WAS DECIDED TO MAKE A CONDITIONAL OFF ER TO THE INCOME TAX DEPARTMENT TO INCLUDE IN ITS GROSS RECEIPTS, PROVID ED DEDUCTION TOWARDS THE ITA NOS.500 TO 506/BANG/2020 PAGE 5 OF 183 REVENUE AND CAPITAL EXPENDITURE RECORDED IN THE SEI ZED MATERIAL IS ALLOWED. DURING THE ASSESSMENT PROCEEDINGS, THE TRUSTEES DEN IED THAT THE TRUST HAS ANYTHING TO DO WITH THE ENTRIES IN THE SEIZED RECOR D. IT WAS AVERRED THAT THE TRUST HAS NOT AUTHORIZED ANY PERSON TO COLLECT THE FEES IN CASH FROM THE STUDENTS OR THE PARENTS. THE AO ESTIMATED UNDISCLO SED CASH RECEIPTS EVEN WHEN NO MATERIAL WAS SEIZED OF INCRIMINATING NATURE . IT IS SUBMITTED THAT THE AO EXTRAPOLATED THAT A SUM OF RS.2,742 LAKHS WOULD HAVE BEEN RECEIVED WHICH HAS NOT BEEN ACCOUNTED EVEN IN THE SEIZED MAT ERIAL. THE AO DID NOT ALLOW DEPRECIATION OF RS.7,05,73,193 EVEN THOUGH EX EMPTION U/S. 11(1) OF THE ACT WAS DENIED. THE AO HELD THAT THE ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED HAS ALREADY BEEN ALLOWED AS APPLIC ATION IN THE EARLIER YEARS. HE ALSO INVOKED CERTAIN PROVISIONS RELATING TO COMPUTATION OF INCOME UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION. THE ASSESSEE WAS ASSESSED IN THE STATUS OF TRUST AND LE VIED TAX MAXIMUM MARGINAL RATE. 7. FOR THE AY 2011-12 , REGISTRATION U/S. 12A OF THE ACT CONTINUED. THE RETURN WAS FILED ON 28.9.2011. EXEMPTION U/S. 11 O F THE ACT HAS BEEN CONTINUED. ON THE BASIS OF SEARCH U/S. 132 ON 6.8.2 015 AND ON SIMILAR FACTS AND SAME REASONING AS IN AY 2010-11, THE AO DETERMI NED THE TOTAL INCOME AT RS.46,13,25,960 ON THE FOLLOWING COMPONENTS:- I. SURPLUS SET APART U/S. 11(1)(A) RS.2,75,66,935. II. EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE RS.9,97,59,025. III. UNDISCLOSED CASH RECEIPTS RS.33,40,00,000. THE A O HELD THAT A SUM OF RS.1457.75 LAKH IS ENTERED AS CA SH RECEIPTS IN SEIZED MATERIAL. HE FURTHER EXTRAPOLAT ED THAT A SUM OF RS.1,882 LAKH WOULD HAVE BEEN RECEIVED WHICH WAS NOT ACCOUNTED EVEN IN THE SEIZED MATERIAL. ITA NOS.500 TO 506/BANG/2020 PAGE 6 OF 183 8. FOR THE AY 2012-13 , REGISTRATION U/S. 12A OF THE ACT CONTINUED. THE RETURN WAS FILED ON 20.8.2013. THE CASE WAS SELECTE D FOR SCRUTINY AND NOTICE U/S. 143(2) ISSUED TO THE ASSESSEE. THE ASS ESSMENT WAS CONCLUDED BY ORDER DATED 31.3.2015 DENYING EXEMPTION U/S. 11 OF THE ACT. THE INCOME WAS COMPUTED BY APPLYING THE REGULAR PROVISI ONS OF THE ACT AS ENVISAGED UNDER CHAPTER VI OF THE ACT AS FOLLOWS:- PARTICULARS AMOUNT (IN RS.) EXCESS OF INCOME OVER EXPENDITURE AS PER I&E ACCOUN T 25,76,28,031 ADD: DEPRECIATION 7,29,88,721 BALANCE 33,06,16,752 LESS: ALLOWABLE DEPRECIATION 1,53,05,869 BALANCE 31,53,10,883 ADD: LOSS F RO M REDEMPTION OF MUTUAL FUNDS 8,65,293 ADD: MAINTENANCE EXPENSES TOWARDS BENZ CAR 3,47,192 TAXABLE INCOME 31,65,23,368 ADD: LONG TERM CAPITAL GAIN AS ROA 4,31,496 TOTAL TAXABLE INCOME 31,69,54,864 9. CONSEQUENTLY, ON THE BASIS OF SEARCH U/S. 132 ON 6.8.2015 AND ON SIMILAR FACTS AND SIMILAR REASONING AS IN AY 2010-1 1, THE AO DETERMINED THE TOTAL INCOME AT RS.46,13,25,960 ON THE FOLLOWIN G COMPONENTS:- I. TOTAL INCOME AS PER ORDER U/S. 143(3) RS.31,69,54 ,864. II. UNDISCLOSED CASH RECEIPTS RS.38,48,00,000: HERE AGAIN, ON THE SEARCH ACTION U/S. 132 ON 6.8.2015 AND ON SI MILAR FACTS AS IN AY 2010-11, THE AO DETERMINED THE TOTAL INCOME AT RS. 38,48,00,000 CONCLUDING THAT A SUM OF RS.228 LAKH IS ENTERED AS CASH RECEIPTS IN SEIZED M ATERIAL. HE FURTHER EXTRAPOLATED THAT A SUM OF RS.3620 LAKH WOULD HAVE BEEN RECEIVED WHICH HAS NOT BEEN ACCOUNTED EVE N IN THE SEIZED MATERIAL. 10. FOR THE AY 2013-14 , REGISTRATION U/S. 12A OF THE ACT CONTINUED. THE RETURN WAS FILED ON 28.9.2011. EXEMPTION U/S. 11 OF THE ACT CONTINUED. ON THE BASIS OF SEARCH U/S. 132 ON 6.8.2015 AND ON SIM ILAR FACTS AND SAME ITA NOS.500 TO 506/BANG/2020 PAGE 7 OF 183 REASONING AS IN AY 2010-11, THE AO DETERMINED THE T OTAL INCOME AT RS.46,13,25,960 ON THE FOLLOWING COMPONENTS :- I. SURPLUS SET APART U/S. 11(1)(A) RS.10,97,18,847. II. EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE RS.20,50,59,700. III. UNDISCLOSED CASH RECEIPTS RS.44,04,00,000. IN TH IS YEAR ALSO, THE AO GAVE SIMILAR FINDINGS AS IN AY 2010-11 AND HELD THAT A SUM OF RS.4290.51 LAKH IS ENTERED AS CA SH RECEIPTS IN SEIZED MATERIAL. HE FURTHER EXTRAPOLAT ED THAT A SUM OF RS.114 LAKH WOULD HAVE BEEN RELIEVED WHICH W AS NOT ACCOUNTED EVEN IN THE SEIZED MATERIAL. 11. FOR THE AY 2014-15 , REGISTRATION U/S. 12A AND EXEMPTION U/S. 11 OF THE ACT CONTINUED. ON THE BASIS OF SEARCH U/S. 13 2 ON 6.8.2015 AND ON SIMILAR FACTS AND SAME REASONING AS IN AY 2010-11, THE AO DETERMINED THE TOTAL INCOME AT RS.46,13,25,960 ON THE FOLLOWING CO MPONENTS :- I. SURPLUS SET APART U/S. 11(1)(A) RS.12,58,01,044. II. EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE RS.28,59,29,344. III. DISALLOWANCE OF DONATIONS U/S. 37 RS.2,54,000. IV. UNDISCLOSED CASH RECEIPTS RS.50,45,00,000 : IN THIS YEAR, AS IN THE PREVIOUS YEARS, THE AO HELD THAT A SUM OF RS.3,739 LAKH IS ENTERED AS CASH RECEIPTS IN SEIZED MATERIAL. HE FURTHER EXTRAPOLATED THAT A SUM OF RS .1,306 LAKH WOULD HAVE BEEN RECEIVED WHICH WAS NOT ACCOUNT ED EVEN IN THE SEIZED MATERIAL. 12. FOR THE AY 2015-16 , REGISTRATION U/S. 12A AND EXEMPTION U/S. 11 OF THE ACT CONTINUED. ON THE BASIS OF SEARCH U/S. 13 2 ON 6.8.2015 AND ON SIMILAR FACTS AND SAME REASONING AS IN AY 2010-11, THE AO DETERMINED THE TOTAL INCOME AT RS.46,13,25,960 ON THE FOLLOWING CO MPONENTS :- ITA NOS.500 TO 506/BANG/2020 PAGE 8 OF 183 I. SURPLUS SET APART U/S. 11(1)(A) RS.18,42,16,642. II. SURPLUS ACCUMULATED U/S. 11(2) RS. 2,31,21,458 : THIS DISALLOWANCE WAS ALSO MADE ON THE SAME GROUND THAT ASSESSEE HAD COLLECTED CAPITATION FEE FROM VARIOUS STUDENTS AND INCURRED EXPENDITURE FOR NON-CHARITABLE PURPOSE S. THEREFORE THE ACTIVITIES OF THE TRUST WERE NOT CHAR ITABLE, BUT COMMERCIAL. DEPRECIATION WAS ALSO DENIED ON THE SA ME REASONING AS HELD U/S. 11(1)(A). III. EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE RS.12,90,63,825. IV. DISALLOWANCE OF DONATIONS U/S 37 RS.10,52,000. V. UNDISCLOSED CASH RECEIPTS RS.79,87,00,000 : IN THIS YEAR ALSO, AS HELD IN THE PREVIOUS YEARS, THE AO HE LD THAT A SUM OF RS.6,885 LAKH IS ENTERED AS CASH RECEIPTS I N SEIZED MATERIAL. HE FURTHER EXTRAPOLATED THAT A SUM OF RS .1,102 LAKH WOULD HAVE BEEN RECEIVED WHICH WAS NOT ACCOUNT ED EVEN IN THE SEIZED MATERIAL. 13. FOR THE AY 2016-17 , REGISTRATION U/S. 12A AND EXEMPTION U/S. 11 OF THE ACT CONTINUED. ON THE BASIS OF SEARCH U/S. 13 2 ON 6.8.2015 AND ON SIMILAR FACTS AND SAME REASONING AS IN AY 2010-11, THE AO DETERMINED THE TOTAL INCOME AT RS.121,63,33,681 ON THE FOLLOWING C OMPONENTS :- I. SURPLUS SET APART U/S. 11(1)(A) RS.19,21,19,133. II. SURPLUS ACCUMULATED U/S. 11(2) RS. 5,77,28,333 : THIS DISALLOWANCE WAS ALSO MADE ON THE SAME GROUND THAT ASSESSEE HAD COLLECTED CAPITATION FEE FROM VARIOUS STUDENTS AND INCURRED EXPENDITURE FOR NON-CHARITABLE PURPOSE S. THEREFORE THE ACTIVITIES OF THE TRUST WERE NOT CHAR ITABLE, BUT COMMERCIAL. DEPRECIATION WAS ALSO DENIED ON THE SA ME REASONING AS HELD U/S. 11(1)(A). III. EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE RS.8,21,61,215. ITA NOS.500 TO 506/BANG/2020 PAGE 9 OF 183 IV. DISALLOWANCE OF DONATIONS U/S 37 RS.63,25,000. V. UNDISCLOSED CASH RECEIPTS RS.87,72,00,000 : IN THIS YEAR ALSO, AS HELD IN THE PREVIOUS YEARS, THE AO HE LD THAT A SUM OF RS.2,382.75 LAKH IS ENTERED AS CASH RECEIPTS IN SEIZED MATERIAL. HE FURTHER EXTRAPOLATED THAT A SU M OF RS.6,389.25 LAKH WOULD HAVE BEEN RECEIVED WHICH WAS NOT ACCOUNTED EVEN IN THE SEIZED MATERIAL. 14. AGGRIEVED BY THE ORDERS OF THE AO, THE ASSESSE E WENT IN APPEAL FOR ALL THE ASSESSMENT YEARS BEFORE THE CIT(APPEALS), W HO HAS CONFIRMED THE ORDERS OF AO IN ALL THESE YEARS. 15. THE LD. AR SUBMITTED THAT THERE ARE COMMON GROU NDS OF APPEAL INVOLVED IN THESE YEARS. 16. GROUND NO.1 THIS GROUND IN THESE APPEALS IS GENERAL IN NATURE WHICH DOES NOT REQUIRE ANY ADJUDICATION. 17. GROUND NO.2 IS THAT THE ORDER PASSED BY THE CIT(APPEALS) IS WI THOUT PROPER APPLICATION OF MIND. AT THE TIME OF HEARING , THIS GROUND WAS NOT PRESSED AND ACCORDINGLY THE SAME IS DISMISSED AS NO T PRESSED. 18. GROUND NO.3 IS WITH REGARD TO VALIDITY OF SEARCH. THIS IS A C OMMON GROUND IN AYS 2010-11 TO 2015-16 (6 APPEALS). THE CONTENTION OF THE LD. AR IS THAT SEARCH ACTION WAS NOT VALID AND DUE PROC EDURE LAID DOWN U/S. 132 OF THE ACT WAS NOT FOLLOWED. THE LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND SUBMITTED THAT SEARCH WAS CARRIED O UT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 132 OF THE ACT AFTER SERV ING VALID WARRANT TO THE ASSESSEE AND AFTER DRAWING PROPER PANCHANAMA. THER E WAS NO VIOLATION WHATSOEVER AS ALLEGED BY THE LD. AR. 19. WE HAVE HEARD BOTH THE PARTIES. IN THIS CASE, SEARCH WAS CONDUCTED U/S. 132 OF THE ACT ON 15.10.2015 BY ISSUING VALID WARRANT IN THE NAME OF ASSESSEE AND ALSO PANCHANAMA WAS DRAWN WITH PROPER LOCAL WITNESSES. ITA NOS.500 TO 506/BANG/2020 PAGE 10 OF 183 AS ON DATE THERE WAS EXPLANATION INSERTED IN SECTIO N 132 BY THE FINANCE ACT, 2017 WITH RETROSPECTIVE EFFECT FROM 1.4.1962 PROHIBITING APPELLATE AUTHORITIES TO GO INTO THE REASONS RECORDED BY THE CONCERNED APPELLATE AUTHORITIES FOR DIRECTING SEARCH AGAINST THE ASSESS EE WHICH READS AS FOLLOWS:- EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE REASON TO BELIEVE, AS RECORDED BY THE INCO ME-TAX AUTHORITY UNDER THIS SUB-SECTION, SHALL NOT BE DISCLOSED TO A NY PERSON OR ANY AUTHORITY OR THE APPELLATE TRIBUNAL. 20. BEING SO, THIS AMENDMENT WILL HAVE EFFECT IN T HE PRESENT CASE. THEREFORE, THE TRIBUNAL CANNOT BE EXPECTED TO GO IN TO THE SAID QUESTION. IT IS ONLY FOR THE CONSTITUTIONAL POSTS TO EXAMINE THE VALIDITY OF SEARCH ACTION. MORE SO, THIS ISSUE WAS ALSO DECIDED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF PRATHIBHA JEWELLERY HOUSE V. COMMISSIONER OF INCOME-TAX, (APPEAL) [88 TAXMANN.COM 94 (KAR)] WHERE THE WRIT PETITION WAS DISMISSED HOLDING THAT LAW WAS AMENDED BY INSER TION OF AFORESAID EXPLANATION BY THE PARLIAMENT IN SECTION 132 BY THE FINANCE ACT, 2017 W.R.E.F. 1.4.1962 AND IT WAS HELD THAT THE APPELLAT E AUTHORITIES COULD NOT GO INTO THE REASONS RECORDED BY THE CONCERNED INCOME T AX AUTHORITY FOR DIRECTING SEARCH ACTION. IN VIEW OF THIS, WE ARE O F THE OPINION THAT THE ASSESSEE IS PRECLUDED IN CHALLENGING THE VALIDITY O F SEARCH ACTION BEFORE THE TRIBUNAL. 21. FURTHER, THE SAME VIEW WAS TAKEN BY THE TRIBUNA L IN THE CASE OF RAJESH EXPORTS LTD. IN ITA NOS.928 TO 931/BANG/2017 VIDE ORDER DATED 27.11.2018 AS FOLLOWS:- 14. FIRST, WE DECIDE THE TECHNICAL ASPECTS ONE BY ONE. FIRST TECHNICAL ASPECT IS ABOUT VALIDITY OF SEARCH RAISED IN A. YS. 2008 09 TO 2013 14. IN THIS REGARD, VARIOUS SUBMISSI ONS ARE MADE ITA NOS.500 TO 506/BANG/2020 PAGE 11 OF 183 BY BOTH SIDES. AS PER THE LEARNED DR OF THE REVENUE , RELIANCE HAS BEEN PLACED ON A JUDGMENT OF HONBLE APEX COURT REN DERED IN THE CASE OF N. K. JEWELLERS VS. CIT AS REPORTED IN 85 T AXMANN.COM 361 AND IT IS SUBMITTED THAT IN THIS CASE, IT WAS H ELD THAT IN VIEW OF THE AMENDMENTS MADE IN SECTION 132 BY FINANCE AC T, 2017, THE REASON TO BELIEVE OR REASON TO SUSPECT AS THE C ASE MAY BE, SHALL NOT BE DISCLOSED TO ANY PERSON OR AUTHORITY O R APPELLATE TRIBUNAL AS RECORDED BY THE INCOME TAX AUTHORITY U/ S 132. RELIANCE WAS ALSO PLACED ON A JUDGMENT OF HONBLE K ARNATAKA HIGH COURT RENDERED IN THE CASE OF PRATIBHA JEWELLE RY HOUSE VS. CIT AS REPORTED IN 88 TAXMANN.COM 94 AND THE RETROS PECTIVE AMENDMENT IN SECTION 132 W.R.E.F. 01.04.1962 WAS TA KEN NOTE OF AND IT WAS HELD THAT EVEN THE APPELLATE AUTHORITIES ARE PROHIBITED FROM GOING INTO THE REASONS RECORDED BY THE CONCERN ED INCOME TAX AUTHORITY AGAINST THE ASSESSEE OR TAX PAYER. LE ARNED AR OF THE ASSESSEE WAS ALSO HEARD. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND BY RESPECTFULLY FOLLOWING THE JUDGMENTS CITED BY THE LEARNED DR OF THE REVENUE OF HONBLE APEX COURT AND HONBLE KARNATAKA HIGH CO URT AS NOTED ABOVE, WE DECLINE TO INTERFERE IN THE ORDER O F CIT (A) ON THIS ISSUE,. ACCORDINGLY, THIS TECHNICAL ASPECT IS DECIDED AGAINST THE ASSESSEE. 22. ACCORDINGLY, THIS GROUND OF APPEALS IS REJECTED . 23. GROUND NO. 4 IS REGARDING VALIDITY OF NOTICE ISSUED U/S. 153A O F THE ACT. THIS IS A COMMON GROUND IN AYS 2010-11 TO 201 5-16 (6 APPEALS). THE CONTENTION OF THE LD. AR IS THAT NOTICE U/S. 153A I S ISSUED WITHOUT RECORDING PROPER SATISFACTION AND IT DOES NOT SPECIFY WHETHER THE NOTICE IS ISSUED TO ASSESS OR REASSESS THE INCOME. AS SUCH, CONSEQUENT ASSESSMENT ORDER IS BAD IN LAW. ACCORDING TO THE LD. AR, NOTICE WAS IS SUED REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME FOR THE RELEVANT SIX YEARS AS PER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 153A OF THE ACT AND T HE QUESTION OF ASSESSMENT/REASSESSMENT IS AS PER CLAUSE (D) OF SUB -SECTION (1) OF SECTION 153A. BOTH THESE CLAUSES ARE SEPARATE AND SHOULD NOT BE MIXED. ITA NOS.500 TO 506/BANG/2020 PAGE 12 OF 183 24. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS PER CLAUSE (A) OF SUB SECTION (1) OF SECTION 153 A, AT THE STAGE OF ISSUE OF NOTICE U/S 153A, THE ONLY REQUIREMENT IS TO ASK THE ASSESSEE TO FILE RETURN OF INCOME FOR RELEVANT SIX YEARS COVERED BY SECTION 15 3A AND WHETHER AFTER FILING OF RETURN OF INCOME, THE ASSESSMENT TO BE MA DE BY THE AO WILL BE ASSESSMENT OR REASSESSMENT HAS TO BE DETERMINED AFT ERWARDS AND NOT AT THE TIME OF ISSUE OF NOTICE U/S 153A. SIMILAR VIEW WAS TAKEN IN THE CASE OF RAJESH EXPORTS LTD. (SUPRA) IN PARA 17 OF THE TRIBUNALS ORDER. IN THIS VIEW OF THE MATTER, THIS GROUND IS DISMISSED. 25. GROUND NO.5 IS WITH REGARD TO STATUS OF THE ASSESSEE. ACCORDI NG TO THE LD. AR, TRUST IS NOT A PERSON REFERRED TO IN SE CTION 2(31) OF THE ACT AND THE CIT(APPEALS) OUGHT TO HAVE HELD THAT ASSESSMENT MADE ON A NON- EXISTENT STATUS IS BAD IN LAW. THE LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES. 26. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE ITSELF HAS FILED RETURN OF INCOME IN THE STATUS OF TRUST AND THE SAME WAS FOLLOWED BY THE AO IN FRAM ING ASSESSMENT U/S. 153A OF THE ACT. BEING SO, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF AO. THIS GROUND IS DISMISSED. 27. GROUND NO.6 IS REGARDING THE VALIDITY OF ASSESSMENT., WHICH IS A COMMON GROUND IN ALL THE ASSESSMENT YEARS. ACCORD ING TO THE LD. AR, THE SEIZED MATERIAL IN THE COURSE OF SEARCH IN ALL THE ASSESSMENT YEARS ARE NOT INCRIMINATING IN NATURE AND THE AO ALSO RELIED ON T HE MATERIAL HANDED OVER BY THE AUTHORISED OFFICER BEYOND THE TIME LIMIT STI PULATED IN SECTION 132 OF THE ACT IGNORING THE FACT THAT SUCH MATERIAL HAS NO EVIDENTIARY VALUE IN THE EYE OF LAW. APPROVAL U/S. 153A HAVING BEEN GIVEN M ECHANICALLY WITHOUT PROPER APPLICATION OF MIND, AS SUCH CONSEQUENT ASSE SSMENT ORDER FRAMED THEREON IS BAD IN LAW. ITA NOS.500 TO 506/BANG/2020 PAGE 13 OF 183 28. THE LD. DR SUBMITTED THAT AT THE TIME OF SEARCH ACTION VARIOUS INCRIMINATING DOCUMENTS RELATING TO ASSESSEE WERE F OUND AND THE SAME WERE HANDED OVER BY THE AUTHORISED OFFICER TO THE C ONCERNED AO. HENCE IT IS NOT ACCEPTABLE THAT NO INCRIMINATING MATERIAL WA S FOUND AND THEREFORE THIS GROUND OF THE ASSESSEE HAS TO BE REJECTED. 29. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS SEEN FROM THE FACTS OF THE CASE, THERE ARE VARIO US INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND AS RIGHTLY PO INTED OUT BY THE LD. DR, IT CANNOT BE ACCEPTED THAT NO INCRIMINATING MATERIA L WAS FOUND DURING THE SEARCH ACTION. THE HONBLE HIGH COURT OF KARNATAKA IN CANARA HOUSING DEVELOPMENT CO. V. DCIT, 274 CTR 122 (KAR) HELD THAT ONCE THE ASSESSMENT IS VALIDLY REOPENED, THE AO HAS TO TAKE INTO ACCOUNT ALL THE THREE TYPES OF INCOME TO COMPLETE THE ASSESSMENT OR REASSESSMENT, AS THE CASE MAY BE. THE THREE TYPES OF INCOME ARE (I) INC OME DISCLOSED IN THE RETURN OF INCOME, (II) UNDISCLOSED INCOME DURING TH E SEARCH, AND (III) ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN AND NOT UNEARTHED DURING THE SEARCH. IN OUR CONSIDERED OPINION, IF INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH U/S. 153A, ALL THREE TYPES OF INCOME HAS TO BE ASSESSED BY THE AO AND IN VIEW OF THE JUDGMENT OF T HE HONBLE HIGH COURT OF KARNATAKA IN CANARA HOUSING DEVELOPMENT CO. (SUPRA) THIS LEGAL GROUND HAS NO MERIT. 30. BEING SO, FRAMING OF ASSESSMENT U/S. 153A IS VA LID. HOWEVER, THE ASSESSEE IS AT LIBERTY TO CHALLENGE THE ADDITION MA DE BY THE AO IF AGGRIEVED, BUT ASSESSMENT CANNOT BE QUASHED. 31. GROUND NO.7 RELATES TO RELIANCE ON SEIZED MATERIAL AND POST-SE ARCH STATEMENTS. THE LD. AR SUBMITTED THAT MATERIAL SEI ZED DURING THE COURSE OF SEARCH IS AS UNDER:- ITA NOS.500 TO 506/BANG/2020 PAGE 14 OF 183 SEIZED MATERIAL NO. REFERENCE CONSISTS OF REFERENCE TO ASSESSMENT ORDER REMARKS A/DUU/01 [COPY ENCLOSED AT PAGES NO. 508 TO 600 OF THIS PAPER BOOK] LOOSE SHEETS (PRINTED AND MANUAL) PAGE NO. 39 TO 48 OF ASST. ORDER SOME ARE MANUAL; SOME ARE PRINTED; ENTRIES IN THE SHEETS ARE STRUCK OFF IN CONSIDERABLE INSTANCES; THE NOTINGS ARE OBSCURE; NOTHING CAN BE DECIPHERED FROM THE SAME MANY SHEETS DO NOT CONTAIN DATES NOR THE PERIOD TO WHICH THEY BELONG; MANY OF THE ENTRIES AND SHEETS ARE UNSIGNED; FEW SHEETS CONTAIN ONLY LIST OF NAMES AND SOME FIGURES FEW SHEETS CONSIST OF ONLY LIST OF NAMES AND SOME YEAR FEW SHEETS CONSIST OF OBSCURE NOTINGS MADE MANUALLY; THEY CONTAIN CERTAIN NAMES, MOBILE NUMBERS AND SOME FIGURES THERE IS NOTHING TO SHOW THAT THE MATERIAL BELONGS TO THE APPELLANT; NONE OF THE SHEETS CARRY EITHER THE NAME OR THE SEAL OF THE APPELLANT A/DUU/02 [COPY ENCLOSED AT PAGES NO. 601 TO 668 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 52 TO 77 OF ASST. ORDER CONSISTS OF CERTAIN PAYMENT ENTRIES THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT A/DUU/03 [COPY ENCLOSED AT PAGES NO. 669 TO 775 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 64 OF ASST. ORDER CONSISTS OF CERTAIN PAYMENT ENTRIES THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT ITA NOS.500 TO 506/BANG/2020 PAGE 15 OF 183 A/DUU/04 [COPY ENCLOSED AT PAGES NO. 776 TO 864 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 46, 65 & 66 OF ASST. ORDER CONSISTS OF CERTAIN PAYMENT ENTRIES THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT A/DUU/05 [COPY ENCLOSED AT PAGES NO. 865 TO 991 OF THIS PAPER BOOK] SPIRAL NOTE BOOK (MANUALLY WRITTEN) CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT IT HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER IT HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER A/DUU/06 [COPY ENCLOSED AT PAGES NO. 992 TO 1151 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT IT HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER IT HAS NOT BEEN RELIED UPON BY THE ASSES SING O FFICER A/DUU/07 [COPY ENCLOSED AT PAGES NO. 1152 TO 1308 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT THOUGH THE ASSESSING OFFICER HAS MADE REFERENCE TO THE SAID MATERIAL AT PAGE 100 OF THE ASSESSMENT ORDER, HE HAS NOT ANALYSED THE SAME. HE HAS NOT STATED AS TO HOW THIS SEIZED MATERIAL IS RELEVANT. HE HAS NOT DRAWN REFERENCE TO ANY SPECIFIC PORTION OF THE MATERIAL. ITA NOS.500 TO 506/BANG/2020 PAGE 16 OF 183 A/DUU/08 [COPY ENCLOSED AT PAGES NO. 1309 TO 1365 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT IT HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER IT HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER A/DUU/09 [COPY ENCLOSED AT PAGES NO. 1366 TO 1419 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT IT HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER IT HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER A/DUU/10 [COPY ENCLOSED AT PAGES NO. 1420 TO 1554 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 61 OF THE ASST. ORDER MAJOR PORTION CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT EXCEPT PAGE NO. 5, THE REST OF THE MATERIAL HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER EXCEPT PAGE NO. 5, REST OF THE MATERIAL HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER PAGE NO. 5 CONTAINS CERTAIN OBSCURE NOTINGS AND FIGURES. NOTHING CAN BE DECIPHERED FROM THE SAME A/DUU/11 [COPY ENCLOSED AT PAGES NO. 1555 TO 1635 OF THIS PAPER LONG NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 100 OF ASST. ORDER CONSISTS OF LIST OF NAMES SOME OBSCURE NOTINGS CONTAINS SOME LEDGER ACCOUNTS; NOTHING TO SHOW HOW THOSE ACCOUNTS ARE CONNECTED TO THE APPELLANT THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT ITA NOS.500 TO 506/BANG/2020 PAGE 17 OF 183 BOOK] CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT THOUGH THE ASSESSING OFFICER HAS MADE REFERENCE TO THE SAID MATERIAL AT PAGE 100 OF THE ASSESSMENT ORDER, HE HAS NOT ANALYSED THE SAME. HE HAS NOT STATED AS TO HOW THIS SEIZED MATERIAL IS RELEVANT. HE HAS NOT DRAWN REFERENCE TO ANY SPECIFIC PORTION OF THE MATERIAL. A/DUU/12 [COPY ENCLOSED AT PAGES NO. 1636 TO 1697 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT IT HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER IT HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER A/DUU/13 [COPY ENCLOSED AT PAGES NO. 1698 TO 1805 OF THIS PAPER BOOK] LOOSE SHEETS (MOST OF THEM ARE PRINTED; FEW ARE MANUAL) PAGE NO. 42 TO 46, 64 & 83 OF ASST. ORDER MOST OF IT IS A REPEAT OF HARD COPY OF MATERIAL SEIZED A/DUU/01 CERTAIN SHEETS CONTAINING NOTINGS WHICH ARE OBSCURE COPIES OF SOME BANK RECEIPTS THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT EXCEPT FEW SHEETS WHICH ESSENTIALLY REPRESENT DONATION RECEIPTS A/DUU/14 [COPY ENCLOSED AT PAGES NO. 1806 TO 1838 OF THIS PAPER BOOK] COPY OF DIGITAL DATA RETRIEVED PAGE 70 OF ASST. ORDER MOST OF IT IS A REPEAT OF HARD COPY OF MATERIAL SEIZED A/DUU/01 THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. A/DUU/15 [COPY ENCLOSED AT PAGES NO. 1839 TO 2028 OF NOTE BOOK CONSISTS OF ONLY NAMES, MOBILE NUMBERS AND ADDRESSES; THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN EITHER THE NAME OR SEAL OF THE APPELLANT ITA NOS.500 TO 506/BANG/2020 PAGE 18 OF 183 THIS PAPER BOOK] IT HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER IT HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER A/DUU/16 [COPY ENCLOSED AT PAGES NO. 2029 TO 2138OF THIS PAPER BOOK] CONTAINS SCANNED COPIES OF UNREALISED CHEQUES PAGE NO. 46 TO 50 OF THE ASST. ORDER THERE IS NOTHING TO SHOW THAT IT BELONGS TO THE APPELLANT. IT DOES NOT CONTAIN NAME OF THE PAYEE. MOST OF THE CHEQUES ARE UNDATED. A/DUU/17 COPY NOT GIVEN TO THE APP ELLANT 32. THE LD. AR SUBMITTED THAT THE AO HAS RELIED UPO N LOOSE SHEETS, UNSIGNED ENTRIES IN NOTE BOOKS TO HOLD THAT THE APP ELLANT HAS COLLECTED CAPITATION FEE IN CASH WHICH IS UNACCOUNTED. IT IS SUBMITTED THAT LOOSE SHEETS, SCRIBBLED NOTE BOOKS CANNOT BE TREATED AS I NCRIMINATING MATERIAL UNLESS THEY ARE CORROBORATED WITH COGENT EVIDENCES. THE LOOSE SHEETS, NOTE PADS, ETC., RELIED UPON BY THE ASSESSING OFFIC ER ARE NOT SPEAKING ONES. THEY ARE DUMB DOCUMENTS. THEY CANNOT BE RELIED UPO N. IN FACT, THE ASSESSING OFFICER AT PAGE 166 OF THE ASSESSMENT ORD ER, HAS OBSERVED AS UNDER: ONLY TABULATED SHEETS OF RECEIPTS FROM STUDENT NEE D NOT BE CONSIDERED AS INCRIMINATING MATERIAL THE ABOVE OBSERVATION WOULD MEAN THAT THE AO HAS AC KNOWLEDGED THAT THE SEIZED MATERIAL ARE DUMB DOCUMENTS. HE RELIED ON TH E DECISION OF THE HONBLE SUPREME COURT IN COMMON CAUSE (A REGISTERED SOCIETY) V. UOI [2017] 394 ITR 220 (SC) . 33. IT WAS SUBMISSION OF THE AR THAT THE TRIBUNAL IN THE CASE OF ATUL KUMAR JAIN V. DCIT [1999] 64 TTJ (DELHI) 786 CONSTRUED THE MEANING OF ITA NOS.500 TO 506/BANG/2020 PAGE 19 OF 183 THE EXPRESSION DOCUMENT IN THE CONTEXT OF SECTION 132 OF THE ACT AS UNDER:- 6.4 WE FIND THAT THE ASSESSING OFFICER HAS MADE OUT THE CASE FOR MAKING SUCH ADDITION BASED EXCLUSIVELY ON THE S AID PIECE OF PAPER FOUND AND SEIZED DURING THE COURSE OF SEARCH. IT IS, THEREFORE, TO BE EXAMINED WHETHER THE SAID PAPER FO UND AND SEIZED IS A DOCUMENT HAVING EVIDENTIARY VALUE TO PR OVE THE FACT OF THE TRANSACTION. THE WORD 'DOCUMENT' HAS BEEN DEFIN ED IN SECTION 32 OF THE INDIAN EVIDENCE ACT TO MEANANY MATTER EX PRESSED OR DESCRIBED UPON ANY SUBSTANCE BY MEANS OF LETTERS, F IGURES, OR MARKS OR BY MORE THAN ONE OF THOSE MEANS, INTENDED TO BE USED OR WHICH MAY BE USED FOR THE PURPOSE OF RECORDING THAT MATTER. THE WORD 'DOCUMENT' HAS ALSO BEEN SIMILARLY DEFINED IN THE GENERAL CLAUSES ACT. THE MEANING OF THE WORD 'DESCRIBE' USE D IN THE DEFINITION AS GIVEN IN THE NEW SHORTER OXFORD ENGLI SH DICTIONARY IS 'PORTRAY IN WORDS, RECITE THE CHARACTERISTICS OF , IN A DETAILED OR GRAFFIC ACCOUNT OF'. THE MEANING OF THE WORD 'EXPRE SS' USED IN THE DEFINITION AS PER THE NEW SHORTER ENGLISH DICTI ONARY IS 'A GRAPHIC REPRESENTATION AS IMAGE; AN ACT OF EXPRESSI NG OR REPRESENTING BY WORDS, SIGNS OR ACTIONS, EXPRESSION S, A MODE OF SPEECH, OF PHRASE; AN UTTERANCE'. ACCORDING TO THE HONBLE SUPREME COURT IN THE CASE OF RAMJI DAYAWALA & SONS (P.) LTD. V. INVERT IMPORT AIR 1981 SC 2085, MERE PROOF OF THE H ANDWRITING OF A DOCUMENT WOULD NOT TANTAMOUNT TO A PROOF OF AL L THE CONTENTS OR THE FACTS STATED IN THE DOCUMENTS, IF THE TRUTH OF THE FACTS STATED IN A DOCUMENT IS IN ISSUE, MERE PROOF OF THE HANDWR ITING AND EXECUTION OF THE DOCUMENT WOULD NOT FURNISH EVIDENC E OF THE TRUTH OF THE FACT OR CONTENTS OF THE DOCUMENT. THE TRUTH OR OTHERWISE OF THE FACT OR CONTENTS SO STATED WOULD H AVE TO BE PROVED BY ADMISSIBLE EVIDENCE I.E., BY THE EVIDENCE OF THOSE PERSONS WHO CAN VOUCHSAFE FOR THE TRUTH OF THE FACT S IN ISSUE. 34. FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF MOHD. YUSUF & ANR. V. D. & ANR. AIR 1968 BOM . 112 HAS OBSERVED THAT THE EVIDENCE OF THE CONTENTS CONTAINED IN DOCUMENT IS HEARSAY EVIDENCE UNLESS THE WRITER THEREOF IS EXAMINED BEFORE THE COURT. THE HONBLE C OURT, THEREFORE, HELD THAT THE ATTEMPT TO PROVE THE CONTENTS OF THE DOCUM ENT BY PROVING THE ITA NOS.500 TO 506/BANG/2020 PAGE 20 OF 183 SIGNATURES OF THE HANDWRITING OF THE AUTHOR THEREOF IS TO SET AT NOUGHT, THE WELL-RECOGNISED RULE THAT HEARSAY EVIDENCE CANNOT B E ADMITTED. 35. HE SUBMITTED THAT THE TRIBUNAL IN ACIT V. LAYERS EXPORTS P. LTD [2017] 53 ITR (TRIB) 416 (MUMBAI) HELD AS UNDER:- 33. IN ENTIRETY OF THE MATTER, WE ARE OF THE VIE W THAT AN ADDITION IN ASSESSMENTS CARRIED OUT PURSUANT TO SEA RCH ACTION U/S 132 OF THE ACT HAS TO BE RELATED TO COGENT AND POSI TIVE MATERIALS FOUND DURING SEARCH WHICH PROVE CONCLUSIVELY THAT T HE ASSESSEE HAS EITHER EARNED AN INCOME OR MADE AN INVESTMENT W HICH HAS NOT BEEN RECORDED IN HIS REGULAR BOOKS OF ACCOUNT OR TH AT HIS CASE IS COVERED UNDER ANY OF THE DEEMING PROVISIONS CONTAIN ED IN SECTIONS 68, 69, 69A TO 69D OF THE ACT. HOWEVER, AD DITIONS CANNOT BE SUSTAINED MERELY ON THE BASIS OF ROUGH NO TING MADE ON FEW LOOSE SHEETS OF PAPERS UNLESS THE AO BRINGS ON RECORD SOME INDEPENDENT AND CORROBORATIVE MATERIALS TO PROVE IR REFUTABLY THAT THE SAID NOTING REVEAL EITHER UNACCOUNTED INCOME OR UNACCOUNTED INVESTMENT OR UNACCOUNTED EXPENDITURE OF THE ASSESS EE. AS DISCUSSED ABOVE, IN THE INSTANT CASE, ASSESSMENTS F OR THE IMPUGNED YEARS HAVE BEEN COMPLETED U/S 153A OF THE ACT WHICH RELATES TO ASSESSMENT IN CASE OF SEARCH OR REQUISIT ION. THE PREREQUISITE CONDITION FOR APPLICATION OF SEC. 153A OF THE ACT IS A SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT OR AN Y REQUISITION MADE UNDER SECTION 132A OF THE ACT TO UNEARTH HIDDE N INCOME OR PROPERTY. THUS, THE VERY PURPOSE/ ESSENCE OF SEARCH CONDUCED U/S 132 OF THE ACT IS TO UNEARTH HIDDEN INCOME OR PROPE RTY OR GET HOLD OF BOOKS OF ACCOUNT OR DOCUMENTS WHICH HAS NOT BEEN OR WILL NOT BE OTHERWISE PRODUCED BY THE ASSESSEE IN REGULAR CO URSE ON ISSUE OF SUMMONS OR NOTICE. IN THE ASSESSEE'S CASE, AS ST ATED ABOVE, THE PURPORTED SEARCH ACTION DID NOT LEAD TO DISCOVERY O F ANY UNACCOUNTED MONEY, BULLION, JEWELLERY OR OTHER VALU ABLE ARTICLE OR THING. FURTHER, NO BOOKS OF ACCOUNT REVEALING AN Y UNDISCLOSED TRANSACTIONS OF THE ASSESSEE WERE FOUND DURING THE COURSE OF SEARCH. THE ENTIRE ASSESSMENT ORDER REVOLVES AROUND SCRIBBLING IN LOOSE SHEETS OF PAPERS SEIZED FROM PREMISES OF ANOT HER PERSON IN COURSE OF SEARCH ACTION ON SUCH OTHER PERSON. IT IS A FACT THAT THE SAID ROUGH LOOSE SHEETS OF PAPERS SCRIBBLED BY SOME ANONYMOUS PERSON AND SEIZED IN COURSE OF SEARCH OF ANOTHER PE RSON CANNOT BE TERMED AS 'DOCUMENTS' HAVING ANY EVIDENTIARY VALUE WITHIN THE ITA NOS.500 TO 506/BANG/2020 PAGE 21 OF 183 MEANING OF SECTION 132 OR SECTION 132A OF THE ACT. THUS, THE ENTIRE ASSESSMENT U/S 153A OF THE ACT IN CASE OF TH E ASSESSEE RESTS ON SHAKY AND INCORRECT FOUNDATION AND THUS DESERVES TO BE QUASHED. ..........IN LIGHT OF THE AFORESAID JUDGMENT, WE A RE OF THE VIEW THAT THE IMPUGNED LOOSE SHEETS OF PAPERS CANNOT COME WIT HIN THE AMBIT OF DEFINITION OF THE WORD 'DOCUMENT' TO BE US ED AS EVIDENCE AND THE SAME CANNOT FORM THE BASIS FOR ASS ESSING THE UNDISCLOSED INCOME OF THE ASSESSEE. ADMITTEDLY, THE SAID LOOSE PAPERS ARE NOT IN THE FORM OF PRO-NOTES OR DULY EXE CUTED DOCUMENTS OR BOOKS OF ACCOUNT OR CERTIFICATES OR MO NEY RECEIPTS WHICH CAN PROVE CONCLUSIVELY THE FACTUM OF ANY UNDI SCLOSED INCOME EARNED BY THE ASSESSEE OR ANY UNACCOUNTED IN VESTMENTS OR EXPENDITURE MADE BY HIM. ADDITIONS CANNOT BE MADE S IMPLY ON THE BASIS OF ROUGH SCRIBBLING MADE BY SOME UNIDENTI FIED PERSON ON FEW LOOSE SHEETS OF PAPERS. 36. IN VIEW OF THE AFORESAID JUDGMENTS, IT IS SUBMI TTED THAT SINCE THE IMPUGNED SEIZED PAPERS ARE UNDATED, HAVE NO ACCEPTA BLE NARRATION AND DO NOT BEAR THE SIGNATURE OF THE ASSESSEE OR ANY OTHER PARTY, THEY ARE IN THE NATURE OF DUMB DOCUMENTS HAVING NO EVIDENTIARY VALU E AND CANNOT BE TAKEN AS A SOLE BASIS FOR DETERMINATION OF UNDISCLO SED INCOME OF THE ASSESSEE. WHEN DUMB DOCUMENTS LIKE THE PRESENT LOOS E SHEETS OF PAPERS ARE RECOVERED AND THE REVENUE WANTS TO MAKE USE OF IT, THE ONUS RESTS ON THE REVENUE TO COLLECT COGENT EVIDENCE TO CORROBORA TE THE NOTING THEREIN. THE REVENUE HAS FAILED TO CORROBORATE THE NOTING BY BRINGING SOME COGENT MATERIAL ON RECORD TO PROVE CONCLUSIVELY THAT THE N OTING IN THE SEIZED PAPERS REVEAL THE UNACCOUNTED ON-MONEY RECEIPTS OF THE ASSESSEE. FURTHER, NO CIRCUMSTANTIAL EVIDENCE IN THE FORM OF ANY UNACCOUNTED CASH, JEWELLERY OR INVESTMENTS OUTSIDE THE BOOKS OF ACCOU NT WAS FOUND IN COURSE OF SEARCH IN THE CASE OF ASSESSEE. THUS, THE IMPUGN ED ADDITION WAS MADE BY THE AO ON GROSSLY INADEQUATE MATERIAL OR RATHER NO MATERIAL AT ALL AND AS SUCH, DESERVES TO BE DELETED. HENCE, AN ASSESSMENT CARRIED OUT IN PURSUANCE OF SEARCH, NO ADDITION CAN BE MADE SIMPLY ON THE BASIS OF ITA NOS.500 TO 506/BANG/2020 PAGE 22 OF 183 UNCORROBORATED NOTING IN LOOSE PAPERS FOUND DURING SEARCH BECAUSE THE ADDITION ON ACCOUNT OF ALLEGED ON-MONEY RECEIPTS MA DE SIMPLY ON THE BASIS OF UNCORROBORATED NOTING AND SCRIBBLING ON LOOSE SH EETS OF PAPERS MADE BY SOME UNIDENTIFIED PERSON AND HAVING NO EVIDENTIARY VALUE, IS UNSUSTAINABLE AND BAD-IN-LAW. 37. HE FURTHER SUBMITTED THAT THE AO AT PAGE 177 OF HIS ORDER, HAS OBSERVED THAT THE DECISION IN ACIT VS LAYER EXPORTS PVT LTD . 53 ITR (TRIB) 416 RELATES TO ONLY THOSE CASES WHERE ADDITION IS S OLELY BASED ON ROUGH NOTINGS, CONTRARY TO THE INSTANT CASE WHERE STRUCTU RED TABULATIONS, NOTEBOOKS AND REGISTERS HAVE BEEN FOUND AND SEIZED AND ALSO SAME HAVE BEEN CORROBORATED WITH OTHER EVIDENCE. AT PAGES 4 29 AND 430 OF 53 ITR (TRIB), IN THE CASE OF LAYER EXPORTS, THE OBSERVATI ONS OF THE AO CONCERNED ARE GIVEN. THE RELEVANT EXTRACT IS AS UNDER:- FURTHER, THESE PAPERS CAN'T BE JUST IGNORED AS ROU GH NOTHINGS, AS THE PAPERS ACTUALLY ARE INFORMAL LEDGER ACCOUNTS OF THE FLAT PURCHASERS. THESE PAGES CONTAIN NOTHINGS REGARDING THE VALUE OF FLATS (INCLUDING UNACCOUNTED RECEIPTS), NOTING OF C HANGE IN SALES CONSIDERATION (UPON BARGAINING ETC.), DETAILS OF RE CEIPT OF CASH & CHEQUE OVER A PERIOD OF TIME. IT HAS BEEN WRITTEN O VER A PERIOD OF TIME, AFTER DUE THINKING AND CONSIDERATION, AS AND WHEN EVENTS LIKE RATE FINALIZATION, RATE RENEGOTIATION, CASH RE CEIVED, CHEQUE /DRAFT RECEIVED HAVE TAKEN PLACE. IT CONTAINS ALL O R MOST OF DETAILS IN RESPECT OF THE SALE TRANSACTIONS MENTIONED THERE IN, VIZ- XI. NAME OF THE MAIN PERSON NEGOTIATING FOR PURCH ASE OF FLAT. XII. CONTACT DETAILS OF SAID PERSON. XIII. SUPER BUILT UP AREA XIV. THE RATE FINALLY DECIDED TO BE CHARGED PER S Q. F. & SUPER BUILT UP AREA. XV. TOTAL MONEY RECEIVABLE ITA NOS.500 TO 506/BANG/2020 PAGE 23 OF 183 XVI. BREAKUP OF MONEY RECEIVABLE INTO ACCOUNTED AN D UNACCOUNTED PORTION. XVII. WHERE RENEGOTIATION OF RATE HAS TAKEN PLACE, THE RENEGOTIATED RATE, REVISED TOTAL CONSIDERATION AND ITS BREAKUP. XVIII. DETAILS OF CHEQUE RECEIVED FROM TIME TO TIM E XIX. DETAILS OF CASH RECEIVED FROM TIME TO TIME. XX. DETAILS OF BALANCE RECEIVABLE 17. IT IS CLEAR, THEREFORE THAT YOUR CONTENTION THA T THESE PAPERS ARE ROUGH WORKINGS ONLY IS CLEARLY WRONG, AS DISCUSSED ABOVE. IT IS NOT ROUGH WORKING, BUT A SYSTEMATIC WORKING. 38. THE ABOVE WOULD SHOW THAT THE ROUGH NOTINGS WHI CH WERE UNDER CONSIDERATION IN THAT CASE ARE SIMILAR TO THOSE NOT INGS WHICH THE ASSESSING OFFICER HAS ALLEGED TO BE PRESENT IN THE LOOSE SHEE TS SEIZED IN THE PRESENT CASE. DESPITE THAT THE TRIBUNAL HELD IN LAYER EXPO RTS CASE THAT ROUGH LOOSE SHEETS OF PAPERS SCRIBBLED COULD NOT BE TERMED AS ' DOCUMENTS' HAVING ANY EVIDENTIARY VALUE WITHIN MEANING OF SECTION 132. TH E TRIBUNAL IN THE CASE OF SRI Y. SIDDAIAH NAIDU, TIRUPATHI VS. ASST. COMMISSI ONER OF INCOME-TAX 2015 (2) TMI 403 - ITAT HYDERABAD TOOK SIMILAR VIEW. RELIANCE WAS PLACED ON CIT V. M/S KHOSLA ICE & GENERAL MILLS 2013 (1) TMI 451 - PUNJAB & HARYANA HIGH COURT . 39. HE SUBMITTED THAT THE TRIBUNAL IN THE ABOVE CAS ES IT WAS NOTED THAT THE DOCUMENT D-22 OF ANNEXURE A-18 DID NOT GIVE ANY CLEAR PICTURE ABOUT THE NATURE AND OWNERSHIP OF ENTRIES THEREIN AND, TH EREFORE, ANY ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS THEREOF WOUL D NOT BE TENABLE. LEARNED COUNSEL FOR THE REVENUE MADE FEEBLE ATTEMPT TO SHOW THAT DOCUMENT D-22 OF ANNEXURE A-18 CLEARLY DEPICTED UND ISCLOSED INCOME BUT WAS UNABLE TO SUBSTANTIATE HIS PLEA. IN THE ABSENCE OF ANY CLEAR DECIPHERING OF DOCUMENT D-22 OF ANNEXURE A-18, THE DELETION OF RS. ITA NOS.500 TO 506/BANG/2020 PAGE 24 OF 183 5,95,900/- AND RS.11,17,596/- FROM UNDISCLOSED INCO ME CANNOT BE HELD TO BE UNJUSTIFIED. 40. THE LD. AR SUBMITTED THAT THE LD. AO HIMSELF ST ATED AT PAGE 177 OF THE ORDER AS TO WHEN DOCUMENTS CAN BE CALLED AS DU MB DOCUMENTS. A PERUSAL OF THESE OBSERVATIONS WOULD SHOW THAT THE A O HAS FAILED TO NOTE THESE ARE DUMB DOCUMENTS. HE HAS ALSO FAILED TO NO TICE ALL THE FACTORS JUDICIALLY DISCUSSED BY VARIOUS COURTS AND TRIBUNAL S. THE AO HAS STATED THAT ONLY IN THREE SCENARIOS LISTED BY HIM, A DOCUM ENT CAN BE TERMED AS DUMB. IT IS NOT SO AS IS EVIDENT FROM THE VARIOU S DECISIONS DISCUSSED IN THIS REGARD. EVEN OTHERWISE, THE MATERIAL IN THE P RESENT CASE ARE NOT BACKED BY ANY CORROBORATIVE EVIDENCE. THE INFERENC ES DRAWN BY THE AO FROM THE DOCUMENTS ARE ALSO NOT SUPPORTED BY ANY EX PLANATION. THEREFORE, THE MATERIAL, IN THE PRESENT CASE CAN BE TERMED AS DUMB EVEN AS PER THE NARROW DEFINITION ADOPTED BY THE AO. THE APPELLANT STRONGLY OBJECTED WITH THE FINDING OF THE AO THAT ALSO THE ASSESSEE HAS VIDE SUBMISSION DATED 20/12/2017 ACCEPTED THE CONTENTS OF SUCH MATERIAL P ARTIALLY . ATTENTION OF WAS DRAWN TO PARA 3 AND 4 OF THE REPLY DATED 09.12. 2017 WHEREIN THE TRUSTEES IN A MEETING HELD ON 6 TH DECEMBER 2017 DECIDED THAT TO THAT EXTENT THE TRUST WILL MAKE A CONDITIONAL OFFER TO THE INCO ME TAX DEPARTMENT TO INCLUDE IN ITS GROSS RECEIPTS PROVIDED THE DEDUCTIO N TOWARDS THE REVENUE AND CAPITAL EXPENDITURE RECORDED IN THE SEIZED MATE RIALS IS ALLOWED. DURING THE ASSESSMENT PROCEEDINGS THE TRUSTEES CATEGORICAL LY DENIED THAT THE TRUST HAS ANYTHING TO DO WITH THE ENTRIES IN THE SEIZED R ECORDS. IT WAS AVERRED THAT THE TRUST HAD NOT AUTHORIZED ANY PERSON TO COL LECT THE FEES IN CASH FROM THE STUDENTS OR THE PARENTS. 41. IT WAS SUBMITTED THAT THE NOTINGS IN THE LOOSE SHEETS, NOTE PADS HAVE BEEN PREJUDICIALLY AND ERRONEOUSLY INTERPRETED BY T HE AO. THE LOOSE SHEETS DO NOT EVIDENCE ANY CONCLUDED TRANSACTIONS. THE IN FERENCES DRAWN BY THE ITA NOS.500 TO 506/BANG/2020 PAGE 25 OF 183 AO ARE BASED ON SURMISES AND CONJECTURES. THE INFE RENCES ARE OUTCOME OF A PREJUDICIAL OR SPECULATIVE READING OF THE MATE RIAL NOT SUPPORTED BY ANY INDEPENDENT, COGENT AND RELIABLE EVIDENCES. THE AO SOUGHT TO RELY ON UNDATED, UNSIGNED DUMB LOOSE SHEETS WHICH ARE NOT R ELIABLE MATERIAL AT ALL AS HELD IN THE DECISION QUOTED ABOVE. 42. THE LD. AR REITERATED THE SUBMISSIONS MADE SUPR A WITH REGARD TO THE PROVISIONS OF SECTION 132(1)(I) TO (V), 132(1)(A) TO (C), 132(1)(III), 132(9A), 132A AND 132B AND ASSESSMENT UNDER SEC 153A ON THE JURISDICTION OF TH E AO IN POSSESSION OF VALID SEIZED MATERIAL. 43. IT WAS SUBMITTED THAT THE PRESUMPTION UNDER SEC TION 292C IS WITH REFERENCE TO BOOKS OF ACCOUNTS, OTHER DOCUMENTS, MO NEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. THE LOOSE SHEE TS, SCRIBBLED NOTE-PADS DO NOT QUALIFY AS BOOKS OF ACCOUNTS AND OTHER DOCUMENT S. THAT BEING THE CASE THE PRESUMPTION CONTAINED IN SECTION 292C CANN OT BE APPLIED BY THE REVENUE MERELY BECAUSE THE LOOSE SHEETS, NOTE-PADS ARE SEIZED FROM THE PREMISES OF THE APPELLANT. THEREFORE, THE BURDEN I S CAST UPON THE REVENUE TO PROVE THAT THE LOOSE SHEETS OR NOTE PADS BELONG TO THE APPELLANT. THERE IS NOTHING IN THE LOOSE SHEETS, NOTE PADS TO HOLD T HAT THEY BELONG TO THE APPELLANT. THE LOOSE SHEETS / NOTE PADS DO NOT CON TAIN NAME OF THE APPELLANT OR SEAL OF THE APPELLANT. NEITHER THE AU THORISED OFFICER NOR THE ASSESSING OFFICER HAVE DISCHARGED THE BURDEN CAST U PON THEM TO PROVE THAT THE LOOSE SHEETS / NOTE PADS BELONG TO THE APPELLAN T. IT IS TO BE NOTED THAT THE EXPRESSION USED IN SECTION 292C IS MAY BE PRES UMED. THEREFORE, IT IS A REBUTTABLE PRESUMPTION. THE APPELLANT HAS CONTEND ED THAT THE SEIZED MATERIAL DOES NOT BELONG TO IT. THE ENTRIES CONTAI NED THEREIN ARE NOT MADE AT THE BEHEST OF THE EXECUTIVE COMMITTEE OF THE APP ELLANT. 44. IN FACT, THE AO HAS NOT EVEN INVOKED THE PRESUM PTION UNDER SECTION 292C TO HOLD THAT THE SEIZED MATERIAL BELONGS TO TH E APPELLANT NOR HAS HE ITA NOS.500 TO 506/BANG/2020 PAGE 26 OF 183 ESTABLISHED THAT THE SAID MATERIAL BELONGS TO THE A PPELLANT. THE AO HAS AT PARAGRAPH 10(1)(A) TO (E) [PAGES 121 TO 123 OF THE ASSESSMENT ORDER] HAS DISCUSSED THE QUALITY OF EVIDENCE. HE HAS NOT ESTA BLISHED AS TO HOW THE SEIZED MATERIAL BELONGS TO APPELLANT. MERELY BECAU SE CERTAIN ENTRIES IN SUCH MATERIAL HAVE BEEN INITIALED, IT DOES NOT MEAN THAT THE SAID MATERIAL BELONGS TO THE APPELLANT. AS STATED EARLIER, THE M ATERIAL DOES NOT CONTAIN EITHER THE NAME OF THE APPELLANT NOR THE SEAL OF TH E APPELLANT. MERELY BECAUSE THE MATERIAL IS SEIZED FROM THE PREMISES OF THE APPELLANT, IT CANNOT BE PRESUMED THAT THE SAME BELONGS TO THE APPELLANT. THE PRESUMPTION UNDER SECTION 292C DOES NOT APPLY. 45. ACCORDING TO AR THE SAID SEIZED MATERIAL DOES N OT QUALIFY EVEN AS BOOKS OF ACCOUNTS OR OTHER DOCUMENTS. THEREFORE, T HE PRESUMPTION UNDER SECTION 292C CANNOT BE RAISED IN RESPECT OF THE SEI ZED MATERIAL. THAT IS PRESUMABLY THE REASON WHY EVEN THE ASSESSING OFFICE R HAS NOT AVERRED THAT THE PRESUMPTION UNDER SECTION 292C CAN BE INVOKED I N RESPECT OF THE SEIZED MATERIAL. 46. THE LD. AR SUBMITTED THAT ASSUMING BUT WITHOUT ADMITTING THAT SECTION 292C APPLIES EVEN WITH REFERENCE TO LOOSE S HEETS, NOTE PADS CONTAINING UNSIGNED ENTRIES A PERUSAL OF SECTION 29 2C WOULD SHOW THAT THE PRESUMPTION IS ONLY WITH REGARD TO BOOKS OF ACCOUNT , OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND DURING THE COURSE OF SEARCH UNDER SECTION 132. MOREOVER, IT I S A SEARCH INDUCED ASSESSMENT. SECTION 132(4A) ALSO CONTAINS SIMILAR PRESUMPTION. SECTION 132(4A) SHOULD BE READ HARMONIOUSLY WITH REFERENCE TO SUB-SECTION (1) OF SECTION 132. THE BOOKS OF ACCOUNT OR OTHER DOCUMEN TS REFERRED TO IN SECTION 132(4A) ARE THOSE REFERRED TO IN SECTION 13 2(1)(III) READ WITH SECTION 132(1)(A) / (B). THE APPELLANT HAS ESTABLISHED THA T THE AUTHORISING OFFICER COULD NOT HAVE FORMED A REASONABLE BELIEF THAT EVEN TUALITIES STATED IN ITA NOS.500 TO 506/BANG/2020 PAGE 27 OF 183 SECTION 132(1)(A) / (B) EXIST. THEREFORE, SECTION 132(4A) CANNOT COME INTO PLAY. CONSEQUENTLY, SECTION 292C DOES NOT APPLY. 47. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT ASSESSMENT U/S. 153C HAVE BEEN MADE IN THE CASE OF THE TRUSTEES REL YING UPON THE VERY SAME MATERIAL. UNDER SUCH CIRCUMSTANCES, THE PRESU MPTION UNDER SECTION 292C GETS AUTOMATICALLY REBUTTED. SECTION 153C(1) S TATES THAT WHERE THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFI ED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG, SEIZED OR REQUISITIONED, BELONGS TO; OR ANY BOOKS OF ACCOUNT OR DOCUMENTS, S EIZED OR REQUISITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINE D THEREIN, RELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITI ONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION O VER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EA CH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. TH EREFORE, IF THE MATERIAL SEIZED BELONGS TO OR PERTAINS TO OR RELATES TO A PE RSON OTHER THAN THE SEARCHED PERSON, ONLY THEN SECTION 153C COMES INTO PLAY. HENCE, IT IS AXIOMATIC TO STATE THAT IF THE MATERIAL SEIZED BELO NGS TO OR PERTAINS TO OR RELATES TO SOME OTHER PERSON, IT DOES BELONG TO OR PERTAIN TO OR RELATE TO THE SEARCHED PERSON. UNDER SUCH CIRCUMSTANCES, ONE CAN NOT INVOKE THE PRESUMPTION UNDER SECTION 292C THAT THE MATERIAL SE IZED BELONGS TO THE SEARCHED PERSON AS THE ASSESSING OFFICER BY HIS OWN ACTION OF MAKING ASSESSMENT UNDER SECTION 153C IN THE CASE OF TRUSTE ES RELYING UPON THE VERY SAME SEIZED MATERIAL. THE LD. AR PLACED RELIAN CE ON THE DECISION OF THE DELHI TRIBUNAL IN VIJAY KUMAR AGGARWAL V. ACIT 2017 (5) TMI 1354 - ITAT DELHI. ITA NOS.500 TO 506/BANG/2020 PAGE 28 OF 183 48. WITHOUT PREJUDICE TO THE SUBMISSIONS THAT LOOSE SHEETS / NOTE PADS ARE NEITHER BOOKS OF ACCOUNTS NOR DOCUMENTS, IT IS SUBMITTED BY AR THAT UNLESS THE BURDEN OF PROVING THAT THE MATERIALS AND CASH BELONG TO THE ASSESSEE IS DISCHARGED THOSE MATERIALS CAN NEITHER BE SEIZED UNDER SECTION 132 NOR RELIED UPON TO MAKE ASSESSMENT UNDE R SECTION 153A. THEREFORE THE SEIZURE OF SUCH MATERIAL IS ILLEGAL. THE AO CANNOT RELY UPON SUCH MATERIAL WHOSE SEIZURE IS ILLEGAL AND THE HENC E, ASSESSMENT IS VOID AB INITIO . 49. HE DREW OUR ATTENTION TO THE ASSESSEES LETTER DATED 23.12.2017 IN REPLY TO NOTICE DATED 21.12.2017 ISSUED UNDER SEC 1 42(1) OF THE ACT, WHEREIN THE ASSESSEE HAD TAKEN OBJECTION TO ASSESSM ENT IN THE ABSENCE OF SEIZED MATERIAL. THE AO HAS NOT REBUTTED THE ASSER TIONS MADE BY THE APPELLANT. HE MERELY MADE A BALD ASSERTION THAT TH E ASSESSMENT HAS BEEN MADE BASED ON INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. IT IS SUBMITTED THAT WHILE THE JURISDICTIONAL TRIBU NAL AND HIGH COURT HAVE CONSISTENTLY HELD THAT ASSESSMENT UNDER SEC 153A CA NNOT BE MADE IN THE ABSENCE OF INCRIMINATING MATERIAL, THE AO CANNOT GE T AWAY BY MAKING BALD ASSERTION BY STATING THAT THE ASSESSMENTS HAVE BEEN MADE BASED ON INCRIMINATING MATERIAL. IN FACT, THE ASSERTION OF THE AO IS CONTRARY TO HIS OWN RELIANCE UPON MATERIAL BELONGING TO A PERIOD OT HER THE PERIOD FOR WHICH ASSESSMENT IS MADE. BY RELYING UPON MATERIAL BELON GING TO SOME OTHER YEAR OTHER THAN THE YEAR FOR WHICH THE ASSESSMENT I S MADE, THE AO HAS IMPLIEDLY ACKNOWLEDGED THAT THERE IS NO MATERIAL SE IZED LEAVE ALONE INCRIMINATING MATERIAL. THE FINDINGS IN PARAGRAPH 10.9.2 AT PAGES152 TO 154 NO DOUBT PERTAIN TO AY 2010-11. BUT THIS IS ON E OF THE SEVERAL INSTANCES WHERE IT CAN BE DEMONSTRATED THAT THE AO HAS MADE ASSESSMENT IN AN ARBITRARY AND CAPRICIOUS MANNER. ITA NOS.500 TO 506/BANG/2020 PAGE 29 OF 183 50. THE AO WHILE REBUTTING THE CONTENTIONS OF THE A PPELLANT THAT ASSESSMENT CANNOT BE MADE UNDER SEC 153A IN THE ABS ENCE OF INCRIMINATING MATERIAL HAS STATED THAT MATERIAL EVIDENCE FOUND, HAVE BEEN DISCUSSED AT LENGTH IN THE VARIOUS PARAGRAPHS RELAT ING TO RECEIPT OF CAPITATION FEE AND VARIOUS PAYMENTS RELATING TO THE SAME. COMPREHENSIVE DISCUSSIONS HAVE BEEN MADE ON VARIOUS VIOLATIONS CO MMITTED BY THE ASSESSEE IN THE PRECEDING PARAGRAPHS OF THIS ORDER. THE AO HAS STATED SIMILARLY AT MORE THAN ONE PLACE IN THE ASSESSMENT ORDER. IT IS SUBMITTED THAT THE DISCUSSION WHICH THE AO REFERS TO IN THE A BOVEMENTIONED COUNTER IS ALSO GENERAL IN NATURE. HE HAS ONLY MADE BALD AS SERTIONS THAT THE ASSESSMENT HAS BEEN MADE BASED ON INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH. IT IS NOT ENOUGH TO STATE TH AT THE MATERIAL SEIZED IS INCRIMINATING. IT SHOULD BE DEMONSTRATED THAT IT I S SO. IT CAN BE DEMONSTRATED ONLY IF A REASONABLE PERSON WOULD BE A BLE TO STATE CATEGORICALLY WITHOUT MINCING ANY WORDS, THAT THE M ATERIAL REPRESENTS UNDISCLOSED INCOME OR AN UNDISCLOSED ASSET. 51. AS STATED EARLIER, IT WAS SUBMITTED BY AR THAT THE ASSESSEE HAS FILED SEPARATE SUBMISSIONS IN RESPECT OF EACH ASSESSMENT YEAR IN RESPECT OF CERTAIN GROUNDS. THE APPELLANT HAS MADE SPECIFIC S UBMISSIONS FOR EACH ASSESSMENT YEAR SO FAR AS EXTRAPOLATION OF INCOME I S CONCERNED. IN THESE SUBMISSIONS, THE APPELLANT HAS DISCUSSED THE ARBITR ARY MANNER IN WHICH THE ASSESSING OFFICER HAS EXTRAPOLATED THE INCOME. THE SE SUBMISSIONS WOULD SHOW THAT THE AO HAS EXPRESSLY IN SOME CASES AND IM PLIEDLY IN CERTAIN OTHER CASES HAS CONCEDED THE FACT THAT THERE IS NO INCRIMINATING MATERIAL FOUND BASED ON WHICH ALLEGED UNDISCLOSED INCOME COU LD BE ASSESSED. THE CAPRICIOUS MANNER IN WHICH THE ASSESSMENT IS DONE I S MANIFEST IN THE MANNER IN WHICH THE UNDISCLOSED INCOME IS QUANTIFIE D. THEREFORE, ALL SAID AND DONE, THE AO HIMSELF COULD NOT ELEVATE THE MATE RIAL SEIZED TO THE LEVEL OF INCRIMINATING MATERIAL. THIS IS EVIDENT FROM TH E REMARKS COLUMN OF THE ITA NOS.500 TO 506/BANG/2020 PAGE 30 OF 183 TABLE AT PAGES 149 TO 151OF THE ASSESSMENT ORDER WH EREIN THE AO HAS COMPUTED THE ALLEGED UNACCOUNTED CASH GENERATED FR OM UG-MBBS COURSE AND PG COURSE CONDUCTED BY THE APPELLANT. T HE REMARKS COLUMN ESSENTIALLY DESCRIBES THE MATERIAL RELIED UPON BY T HE LEARNED ASSESSING OFFICER TO MAKE THE AFOREMENTIONED COMPUTATION. TH IS HAS BEEN DISCUSSED IN DETAIL IN THE SEPARATE SUBMISSIONS MADE FOR EACH OF THE IMPUGNED ASSESSMENT YEARS. A PERUSAL OF THE SAME WOULD SHOW THE DESPERATION IN WHICH THE LEARNED ASSESSING OFFICER HAS ATTEMPTED T O JUSTIFY THE ASSESSMENT. THE COMPUTATION IS FRAUGHT WITH HIGH D EGREE OF SUBJECTIVITY AND ARBITRARINESS. WHATEVER DISCUSSION OF THE MATE RIAL WHICH THE AO HAS MADE AT VARIOUS PLACES IN THE ASSESSMENT ORDER ARE GENERAL AND NO OBJECTIVE CONCLUSION CAN BE DRAWN FROM THE SAME WHI CH IS EVIDENT FROM THE ASSESSING OFFICERS OWN DECISION NOT TO RELY UPON T HAT DISCUSSION WHILE MAKING THE ACTUAL COMPUTATION. IF THE AO COULD REA LLY BASE HIS COMPUTATION ON SPECIFIC PORTION OF SEIZED MATERIAL, HE WOULD HA VE MADE SPECIFIC REFERENCES TO THE SAME WHILE MAKING COMPUTATION AND WOULD HAVE ALSO DRAWN REFERENCES TO THE DISCUSSIONS MADE IN THE PRE VIOUS PARAGRAPHS OF THE ASSESSMENT ORDER. BUT HE CHOSE TO MAKE REFERENC E TO SPECIFIC PAGES OF THE SEIZED MATERIAL IN FEW CASES AND NO SUCH REFERE NCE IN FEW OTHER CASES. EVEN SO FAR AS THE YEARS IN RESPECT OF WHICH HE HAS DRAWN ATTENTION TO SPECIFIC PAGES OF THE SEIZED MATERIAL, THE COMPUTAT ION CANNOT BE CORRELATED TO THE DATA IN SUCH SEIZED MATERIAL. THEREFORE, TH ERE IS AN ELEMENT OF ESTIMATION IN ALL CASES. 52. FURTHER, THE LD. AR SUBMITTED THAT THE AO HAS S TATED AT PAGE 148 OF THE ASSESSMENT ORDER THAT IT IS BROUGHT ON RECORD HERE, THAT VARIOUS INCRIMINATING EVIDENCES TO PROVE THAT CAPITATION FE E WAS BEING IN ALL YEARS SUBJECT TO ASSESSMENT HAVE BEEN SEIZED AND ALSO DIS CUSSED IN DETAIL AS A PART OF THIS ORDER. FOR THE PURPOSE OF QUANTIFICAT ION, IT WAS NECESSARY TO LOOK FOR THOSE MATERIAL WHICH GIVE MAXIMUM POSSIBLE DETAIL WITH RESPECT TO ITA NOS.500 TO 506/BANG/2020 PAGE 31 OF 183 QUANTUM OF CAPITATION FEE BEING COLLECTED AND THAT IT IS AGAIN REITERATED THAT THE ONLY PURPOSE OF CONSIDERING CERTAIN EVIDEN CES FOR THE PURPOSE OF QUANTIFICATION IS TO DELIVER MOST REASONABLE POSSIB LE ESTIMATION AND THE ONE CLOSE TO REALITY. AT PAGE 168 OF THE ASSESSMENT O RDER, THE LEARNED ASSESSING OFFICER HAS STATED THAT THE ESTIMATION I S BOTH SCIENTIFIC AND REASONABLY ACCURATE. HAD THE TRUTH BEEN BROUGHT FO RWARD BY THE ASSESSEE, IT WOULD HAVE BEEN MORE ACCURATE TO THE DECIMAL VAL UES. UNFORTUNATELY THIS OFFICE HAD TO DEAL WITH AN EVASIVE ASSESSEE, AND NO TWITHSTANDING ANY OF IT, A REASONABLE ESTIMATION HAS BEEN MADE. 53. FURTHER AO IS MERELY TRYING TO JUSTIFY HIS ESTI MATION OF UNACCOUNTED CASH RECEIPTS. HE HAS CONCEDED THAT HE HAS NOT FOU ND DIRECTLY INCRIMINATING EVIDENCE. IF HE HAS NOT FOUND ANY D IRECTLY INCRIMINATING EVIDENCE, HE CANNOT MAKE ANY ADDITION IN SECTION 15 3A ASSESSMENT. THE WHOLE PRINCIPLE OF AN ASSESSMENT WHICH IS PRECEDED BY SEARCH IS THAT AN OFFICER SPECIFIED IN SECTION 132(1) HAS REASON TO B ELIEVE IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION THAT ANY OF THE EVENT UALITIES STATED IN SECTION 132(1)(A) TO (C) EXIST. SO THERE ARE TWO STAGES: O NE STAGE, WHERE THE AUTHORIZING OFFICER HAS INFORMATION IN HIS POSSESSI ON PRIOR TO THE SEARCH AND SECOND STAGE, WHERE THE AUTHORIZED OFFICER FINDS DU RING THE COURSE OF SEARCH BY EXERCISING ANY OF THE POWERS STIPULATED I N SECTION 132(1)(I) TO (V) FOR WHICH HE IS AUTHORIZED. THEREFORE, ASSESSMENT UNDER SECTION 153A R.W.S. 132 IS A UNIQUE KIND OF ASSESSMENT WHERE THE FOCUS IS ON ASSESSING INCOME ON INCRIMINATING MATERIAL AND SUCH MATERIAL SHOULD BE REPRESENTATIVE OF CONCEALED INCOME. THE AO CANNOT MERELY SAY THAT IT IS DIFFICULT TO FIND DIRECTLY INCRIMINATING EVIDENCE A ND HENCE, HE WANTS TO RESORT TO ESTIMATION. PRESENCE OF INCRIMINATING MATERIAL ALONE CONFERS JURISDICTION TO MAKE ASSESSMENT UNDER SECTION 153A. IT WAS SUBM ITTED THAT IN THE SPECIFIC SUBMISSIONS ON GROUNDS PERTAINING TO EXTRA POLATION OF INCOME AND THESE SUBMISSIONS, IT IS ESTABLISHED THAT THE SEIZE D MATERIALS DO NOT QUALIFY ITA NOS.500 TO 506/BANG/2020 PAGE 32 OF 183 AS INCRIMINATING MATERIAL AT ALL. THE METHOD OF QU ANTIFICATION OF UNDISCLOSED CASH RECEIPTS IS NOT AT ALL SCIENTIFIC. THE AO MAK ES ASSUMPTION FOR ONE YEAR SAY Y1 AND QUANTIFIES THE UNDISCLOSED CASH REC EIPTS FOR THAT YEAR. HE TAKES THE QUANTIFICATION MADE FOR Y1 [WHICH IS ALRE ADY BASED ON ESTIMATION] TO COMPUTE THE UNDISCLOSED CASH RECEIPTS FOR ANOTHE R YEAR SAY Y2. THIS MANNER OF COMPUTATION WOULD GO ON INCREASING THE EL EMENT OF ASSUMPTION. IF THE DEGREE OF ASSUMPTION GOES ON INCREASING, HOW CAN SUCH QUANTIFICATION BE CLOSE TO REALITY? THEREFORE, THE ENTIRE ASSESSMENT SHOULD FALL BASED ON THE CONCESSION OF THE AO THAT HE DID NOT FIND DIRECTLY INCRIMINATING MATERIAL. 54. THIS WOULD SHOW THAT THE AO HAS NOT BEEN ABLE T O ASCERTAIN THE UNDISCLOSED INCOME FROM THE MATERIAL. IF HE COULD ASCERTAIN THE UNDISCLOSED INCOME FROM THE SEIZED MATERIAL, THEN T HERE WAS NO NEED TO MAKE ESTIMATION. THE AO IS MAKING A LAME ATTEMPT T O JUSTIFY THE IRRATIONAL MANNER IN WHICH HE MADE THE ASSESSMENT. THE VERY FACT THAT THE AO WAS LEFT WITH NO CHOICE BUT TO ESTIMATE THE UNACCOUNTED CASH GENERATED WOULD SHOW THAT THE MATERIAL IS NOT INCRIMINATING. 55. IT WAS FURTHER SUBMITTED THAT THE AO REFERRING TO THE MINUTES OF THE TRUST MEETING HELD ON 06.12.2017, HAS OBSERVED IT WOULD HAVE BEEN AN APPRECIABLE IF THE DEPARTMENT COULD HAVE LAID ITS H ANDS ON MATERIAL EVIDENCES FOR THE ENTIRE AMOUNT, BUT THE TRUSTEES A ND SHRI GH NAGARAJ HAVE ALL REMAINED SILENT ON WHAT HAPPENED TO THE RE ST OF THE CAPITATION FEE COLLECTED. IT IS SUBMITTED THAT THESE OBSERVATION S OF THE AO WOULD SHOW THAT THERE IS NO INCRIMINATING MATERIAL FOUND WHICH WOULD CONCLUSIVELY PROVE THAT THE APPELLANT HAS RECEIVED ANY CAPITATION FEE. THE AO HAS ACKNOWLEDGED THAT THE DEPARTMENT COULD NOT LAY HAND S UPON ANY MATERIAL EVIDENCE. ITA NOS.500 TO 506/BANG/2020 PAGE 33 OF 183 56. ON THE ONE HAND, THE LD. AO STATES THAT INCRIMI NATING MATERIAL IS AVAILABLE FOR EACH ASSESSMENT YEAR AND ON THE OTHER HAND, HE HASTENS TO ADD THAT IT WAS NECESSARY TO LOOK FOR THOSE MATERIAL WHICH GIVE MAXIMUM POSSIBLE DETAIL WITH RESPECT TO QUANTUM OF CAPITATI ON FEE BEING COLLECTED . IT IS SUBMITTED THAT THE ASSESSMENT SHOULD BE MADE FOR EACH OF THE YEARS SEPARATELY. THE AO HAS COMPLETELY MISSED THE FUNDA MENTAL CONCEPT PERTAINING TO ASSESSMENT. 57. THE LD. AR SUBMITTED THAT THE SEIZED MATERIAL H AS NOT BEEN ANALYSED BY THE AO FINANCIAL YEAR-WISE. HE HAS MADE A CONSO LIDATED ANALYSIS AND HAS CONSIDERED THE SAME FOR ALL YEARS. AS A RESULT , THERE IS DISCORD BETWEEN THE DISCUSSION MADE IN RESPECT OF SEIZED MA TERIAL AND THE TABLE WHEREIN THE ALLEGED UNACCOUNTED CASH GENERATED HAS BEEN TABULATED YEAR- WISE. IT IS SUBMITTED THAT THE ANALYSIS OF THE SEI ZED MATERIAL SHOULD BE MADE YEAR-WISE CONSIDERING THE TRUE SPIRIT OF THE P ROVISIONS PERTAINING TO SEARCH AND SEIZURE. IF A CONSOLIDATED ANALYSIS IS MADE FOR ALL THE 6 YEARS INVOLVED, IT WOULD BE END-UP BEING A SUBJECTIVE ANA LYSIS RATHER THAN AN OBJECTIVE ANALYSIS. AN OBJECTIVE ANALYSIS ALONE WO ULD HELP IN DETERMINING WHETHER THE SEIZED MATERIAL WOULD QUALIFY AS INCRIM INATING MATERIAL WARRANTING AN ADDITION IN THE ASSESSMENT UNDER SECT ION 153A FOR A PARTICULAR YEAR. OTHERWISE, ONE WOULD END-UP MAKIN G ADDITION FOR ONE ASSESSMENT YEAR BASED UPON THE ANALYSIS FOR ANOTHER ASSESSMENT YEAR. THIS IS AGAINST THE LETTER AND SPIRIT OF THE PROVIS IONS DEALING WITH SEARCH, SEIZURE AND CONSEQUENT ASSESSMENT. 58. HE SUBMITTED THAT AS CAN BE SEEN FROM THE DECIS ION IN SINGHAD TECHNICAL EDUCATION SOCIETYS CASE [2015] 378 ITR 8 4 (BOM.) , THE COURT HAS REITERATED THE PRINCIPLE THAT NO ADDITION CAN B E MADE IN THE ABSENCE OF INCRIMINATING MATERIAL IN A SEARCH BASED ASSESSMENT . THOUGH THE ABOVE DECISION HAS BEEN HELD IN THE CONTEXT OF SECTION 15 3C THE SAME WOULD ITA NOS.500 TO 506/BANG/2020 PAGE 34 OF 183 APPLY EVEN TO SECTION 153A AS HELD BY HONBLE KARNA TAKA HIGH COURT IN IBC KNOWLEDGE PARK (P) LTD.S CASE [385 ITR 346 (KARN.) ]. IT HAS BEEN CATEGORICALLY HELD THAT THE SEIZED MATERIAL SHOULD BE CORRELATED TO EACH YEAR. IF ANY INCRIMINATING MATERIAL IS FOUND FOR A NY YEAR IN THE BLOCK OF 6 YEARS, ADDITION CAN BE MADE ONLY FOR THAT YEAR. AN OVERALL APPROACH OF ANALYSING THE SEIZED MATERIAL SHOULD BE REFRAINED. 59. IT IS SUBMITTED THAT THE DEPARTMENT HAS NOT DIS CHARGED THE BURDEN OF PROOF CAST ON IT TO ESTABLISH THAT THE EXECUTIVE CO MMITTEE OF THE TRUSTEES WAS ACTIVELY INVOLVED IN COLLECTING CASH ETC. THE E NTIRE EDIFICE OF THE CASE IS BUILT ON THE STATEMENT GIVEN BY MR. GOLI SRINIVAS, THE ACCOUNTANT, MR. G.H. NAGARAJ, SECRETARY OF THE TRUST AND PARENTS OF CERT AIN STUDENTS. THE APPELLANT DENIES THAT IT WAS INVOLVED IN ANY MANNER IN COLLECTING CASH FROM ANY STUDENT. THE TRUSTEES DENY ANY SUCH COLLECTION . ASSUMING BUT WITHOUT ADMITTING THAT CASH HAS BEEN COLLECTED FROM THE STU DENTS IT HAS BEEN DONE WITHOUT THE KNOWLEDGE OF THE EXECUTIVE COMMITTEE AN D WOULD HAVE BEEN COLLECTED FOR THE PERSONAL BENEFIT OF THE PERSONS C ONCERNED. THERE IS NO PROOF THAT THE TRUST HAD AUTHORIZED COLLECTION OF C ASH FROM THE STUDENTS NOR IT HAD AUTHORIZED THE ALLEGED PAYMENTS TO VARIOUS P ERSONS AS ALLEGED IN THE NOTICE AND ASSESSMENT ORDER. 60. IT IS SUBMITTED THAT VARIOUS STATEMENTS RELIED UPON BY THE ASSESSING OFFICER ARE NOT VALID AND RELIABLE. THE AO SOUGHT T O RELY UPON STATEMENT OF PARENTS OF 5 STUDENTS. THE APPELLANT VIDE ITS LETT ER DATED 22.02.2017 HAD REQUESTED THE AO TO FURNISH THE COPIES OF THE STATE MENTS OF PARENTS AND ALSO AFFORD IT AN OPPORTUNITY TO CROSS-EXAMINE THEM . THE AO HAS FURNISHED COPY OF STATEMENTS OF PARENTS OF ONLY 2 STUDENTS. THE STATEMENTS OF THE REMAINING 3 HAVE NOT BEEN FURNISHED AT ALL. IT IS SUBMITTED THAT UNDER SUCH CIRCUMSTANCES, THE AO CANNOT RELY UPON THE STATEMEN TS OF THE THREE PARENTS WHICH HAVE BEEN RECORDED BEHIND THE BACK OF THE APPELLANT. WHEN ITA NOS.500 TO 506/BANG/2020 PAGE 35 OF 183 STATEMENTS OF PERSONS ARE RECORDED BEHIND THE BACK OF THE APPELLANT AND NEITHER THE COPIES OF THE SAME HAVE BEEN FURNISHED TO THE ASSESSEE NOR THE ASSESSEE IS PERMITTED TO CROSS-EXAMINE THEM, SUCH S TATEMENTS CANNOT BE RELIED UPON. THE APPELLANT RELIES ON THE FOLLOWING DECISIONS :- THE HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTR IES V. CCE 2015 (10) TMI 442 - SUPREME COURT / 2015 (324) E.L.T. 641 (SC) KIRLOSKAR INVESTMENTS & FINANCE LTD. V. ASSISTANT C OMMISSIONER OF INCOME-TAX [1998] 67 ITD 504 (BANG.) 61. THEREFORE, MERE FURNISHING THE COPY OF STATEMEN TS RECORDED IS NOT SUFFICIENT. THE ASSESSEE AGAINST WHOM THE STATEMEN TS ARE TO BE USED SHOULD BE PROVIDED AN OPPORTUNITY TO CROSS-EXAMINE THE PERSON WHO HAS GIVEN STATEMENT. RELIANCE IS PLACED ON THE HONBL E DELHI HIGH COURT IN PRINCIPAL COMMISSIONER OF INCOME-TAX, DELHI-2 V. BE ST INFRASTRUCTURE (INDIA) (P.) LTD. [2017] 84 TAXMANN.COM 287 (DELHI) / [2017 ] 397 ITR 82 (DELHI) . 62. THE HONBLE TRIBUNAL IN M/S FATEH CHAND CHARITABLE TRUST V. CIT (EXEMPTIONS) LUCKNOW 2016 (4) TMI 1119 - ITAT LUCKN OW / [2016] 49 ITR (TRIB) 276 HELD THAT IT IS SETTLED POSITION OF LAW THAT ANY EV IDENCE COLLECTED AT THE BACK OF THE ASSESSEE CANNOT BE USED ADVERSEL Y UNLESS AND UNTIL IT IS CONFRONTED TO THE ASSESSEE AND THE ASSESSEE IS ALLO WED TO CROSS-EXAMINE THE WITNESS, IF ANY. IT WAS SIMILARLY HELD IN M/S OBULAPURAM MINING COMPANY PVT. LTD. V. DCIT 2016 (7) TMI 1435 ITAT BANGALORE . 63. IN THE NEXT JUDGMENT OF THE HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS PRADEEP KUMAR GUPTA (SUPRA) ALSO, IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT IT WAS MANDATORY FOR THE REVENUE TO PRODUCE A FOR CROSS EXAMINATION BY THE ASSESSEE ON THE SPEC IFIC DEMAND IN THIS REGARD AND THEREAFTER, IT WAS HELD THAT THE VIOLATI ON OF THE REVENUE TO ITA NOS.500 TO 506/BANG/2020 PAGE 36 OF 183 PRODUCE A FOR CROSS EXAMINATION BY THE ASSESSEE ASS UMES FATAL CONSEQUENCES. HENCE, AS PER THESE TWO JUDGMENTS, FO R THIS REASON ALONE THAT THE REVENUE HAS NOT MADE AVAILABLE THESE PERSO NS FOR CROSS EXAMINATION OF THE ASSESSEE DESPITE SUCH REQUEST BY THE ASSESSEE BEFORE THE AO, THESE STATEMENTS CANNOT BE USED AGAINST THE ASSESSEE AND WITHOUT TAKING HELP FROM THESE STATEMENTS OF THE TR ANSPORTERS, THE DISALLOWANCE MADE BY THE AO OUT OF TRANSPORTATION C HARGES IS NOT SUSTAINABLE AS PER THESE TWO JUDGMENTS RELIED UPON BY THE LD. AR OF THE ASSESSEE AND NO CONTRADICTORY JUDGMENT OF THE HONB LE JURISDICTIONAL HIGH COURT OR APEX COURT OR OF ANY OTHER HIGH COURTS COU LD BE MADE AVAILABLE BEFORE US BY THE LD. DR OF THE REVENUE AND THEREFO RE, RESPECTFULLY FOLLOWING THESE TWO JUDGMENTS OF THE HONBLE DELHI HIGH COURT , IT WAS HELD THAT IN THE FACTS OF THAT CASE, THESE DISALLOWANCE OUT OF TRANS PORTATION ALLOWANCE IS NOT SUSTAINABLE. 64. HE DREW OUR ATTENTION TO THE DETAILS OF STATEME NTS OF PARENTS WHOSE STATEMENTS HAVE BEEN EXTRACTED IN THE STATEMENT OF G H NAGARAJ RECORDED ON 16.10.2015 ARE AS UNDER:- DATE ON WHICH THE STATEMENT IS RECORDED SECTION UNDER WHICH THE STATEMENT IS RECORDED RECORDED BY ASSESSING OFFICER OR AUTHORIZED OFFICER PERSON WHOSE STATEMENT IS RECORDED 30.09.2015 131 AUTHORISED OFFICER SRI. RANGARAJU [PARENT OF A STUDENT NAMELY PAVANA C R] 28.09.2015 131 AUTHORISED OFFICER SMT. VASUDHA G PADIYAR [PARENT OF A STUDENT NAMELY BADRAGIRI V. PADIYAR 65. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE SEARCH WAS COMPLETED ON 07.08.2015 . A PERUSAL OF THE STATEMENTS DETAIL ED ABOVE WOULD SHOW THAT THE SAID STATEMENTS HAVE BEEN OBTAINED BY DDIT (INV), UNIT 1(3), ITA NOS.500 TO 506/BANG/2020 PAGE 37 OF 183 BANGALORE ON 28 TH SEPTEMBER AND 30 TH SEPTEMBER 2015 . IT MEANS THE STATEMENTS HAVE BEEN OBTAINED AFTER COMPLETION OF S EARCH. 66. IT WAS SUBMITTED BY AR THAT A PERUSAL OF SECTI ON 131(1A) WOULD SHOW THAT AN AUTHORIZED OFFICER REFERRED TO IN SECT ION 132(1) CAN MAKE ENQUIRY OR INVESTIGATION BY EXERCISING THE POWERS U NDER SECTION 131(1). BUT SUCH POWER IS TO BE EXERCISED PRIOR TO TAKING ACTIO N UNDER CLAUSES (I) TO (V) OF SECTION 132(1). IN THE PRESENT CASE, THE ACTION UNDER CLAUSES (I) TO (V) OF SECTION 132(1) WAS TAKEN ON 07.08.2015. THEREFORE, THE JURISDICTION OF THE AUTHORIZED OFFICER CEASED ON 07.08.2015. THE STATE MENT OF SMT. VASUDHA G. PADIYAR RECORDED UNDER SECTION 131 ON 28.09.2015 AND THE STATEMENT OF SRI RANGARAJU RECORDED UNDER SECTION 131 ON 30.09.2 015 BY THE AUTHORIZED OFFICER ARE INVALID. SUCH STATEMENTS CANNOT BE REL IED UPON AS THE STATEMENTS HAVE BEEN RECORDED WITHOUT ANY POWER BY THE AUTHORIZED OFFICER. 67. THE APPELLANT VIDE ITS DATED 22.02.2017 REQUEST ED THE ASSESSING OFFICER TO FURNISH THE COPY OF THE STATEMENTS OF PA RENTS AND STUDENTS WHO WERE SUMMONED AND WHOSE STATEMENTS WERE RECORDED. IT IS SUBMITTED THAT THE AO HAS NOT GIVEN COPIES OF ALL THE STATEMENTS O F THE PARENTS AND STUDENTS THAT HE HAD RECORDED. WHILE TAKING THE ST ATEMENT OF SRI. G H NAGARAJ ON 16.10.2015, THE AUTHORISED OFFICER CONFR ONTED HIM WITH 2 STATEMENTS ALLEGED TO HAVE BEEN GIVEN BY PARENTS OF SOME STUDENTS. THE COPY OF THOSE STATEMENTS IS EXTRACTED IN THE COPY O F THE STATEMENT OF SRI. G H NAGARAJ. THE AUTHORIZED OFFICER HAS, FURTHER, CON FRONTED SRI G H NAGARAJ WITH STATEMENTS OF PARENTS OF 4 MORE STUDENTS. COP IES OF THESE STATEMENTS HAVE NEITHER BEEN EXTRACTED IN THE COPY OF STATEMEN T OF SRI G H NAGARAJ NOR HAS THE SAME BEEN SEPARATELY FURNISHED TO THE A PPELLANT. APPELLANT NEITHER HAD THE OCCASION TO LOOK INTO THOSE STATEME NTS NOR AN OPPORTUNITY TO CROSS-EXAMINE THOSE PERSONS (PARENTS). THE AO HAS NOWHERE RELIED UPON ITA NOS.500 TO 506/BANG/2020 PAGE 38 OF 183 THE STATEMENTS OF PARENTS REFERRED TO IN QUESTION N O. 23 OF THE STATEMENT DATED 16.10.2015 OF G H NAGARAJ. THEREFORE, IT MEA NS THAT THEY DO NOT FORM EVIDENCE AT ALL FOR THE ALLEGATIONS MADE AGAIN ST THE APPELLANT. 68. EXCEPT FOR THE ABOVE, NO OTHER STATEMENT OF ANY OTHER PARENT OR STUDENT HAS EITHER BEEN CONFRONTED TO SRI. G H NAGA RAJ OR SRI. GOLI V. SRINIVAS OR FURNISHED TO THE APPELLANT. THEREFORE, IT MEANS THAT THE ASSESSING OFFICER APART FROM THE STATEMENTS OF SRI. G H NAGARAJ AND SRI. GOLI V. SRINIVAS, HE HAS NOT RELIED ON STATEMENT OF ANY OTHER PERSON. THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT WHA TEVER MATERIAL HE SOUGHT TO RELY UPON HAS BEEN FURNISHED TO THE APPELLANT. IT IS SUBMITTED THAT STATEMENTS OBTAINED UNDER SECTION 131 OR 132(4) CAN NOT BE TERMED AS INFORMATION RELATING TO INVESTIGATION WHICH THE ASS ESSING OFFICER HAS NO OBLIGATION TO SHARE. COPIES OF STATEMENTS OBTAINED UNDER SECTIONS 131 OR 132(4) SHOULD NECESSARILY BE FURNISHED TO THE ASSES SEE. IF THE SAME HAVE NOT BEEN FURNISHED IT MEANS THAT THE SAME HAVE NOT BEEN RELIED UPON. THE HON'BLE APEX COURT IN THE CASE OF KISHIN CHAND CHELLARAM VS. CIT, 125 ITR 713 HAS HELD THAT EVIDENCE TO BE USED AGAINST THE ASSE SSEE MUST BE PROVIDED TO THE ASSESSEE AND AN OPPORTUNITY TO CONF RONT SHOULD BE GIVEN TO THE ASSESSEE ELSE IT CANNOT BE USED AND NO ADVERSE INFERENCE CAN BE DRAWN ON SUCH MATERIAL. 69. HE PLACED RELIANCE ON THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF C. VASANTLAL AND COMPANY V. CIT 1962 (2) TMI 7 - SUPREME COURT / [1962] 45 ITR 206 (SC) HELD AS UNDER:- THE INCOME-TAX OFFICER IS NOT BOUND BY ANY TECHNIC AL RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT M ATERIALS TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED OF THE MATERIAL AND MUST BE GIVEN AN ADEQUATE OPPORTUN ITY OF EXPLAINING IT. THE STATEMENTS MADE BY ACHALDAS AND POONAMCHAND BEFORE THE INCOME-TAX OFFICER WERE MATE RIAL ON ITA NOS.500 TO 506/BANG/2020 PAGE 39 OF 183 WHICH THE INCOME-TAX AUTHORITIES COULD ACT PROVIDED THAT THE MATERIAL WAS DISCLOSED AND THE ASSESSEES HAD OPPORT UNITY TO RENDER THEIR EXPLANATION IN THAT BEHALF. 70. BY NOT FURNISHING THE COPY OF STATEMENTS OF THE PARENTS REFERRED TO IN QUESTION 23 OF THE STATEMENT OF SRI G H NAGARAJ, IT IS IMPLIED THAT THE ASSESSING OFFICER HAS NOT RELIED UPON ANY THOSE STA TEMENTS. EVEN IN THE ASSESSMENT ORDER, ASSESSING OFFICER HAS MADE REFERE NCE ONLY TO THESE TWO STATEMENTS. THEREFORE, THOUGH THE ASSESSING OFFICE R MENTIONED AT PARA 10.3.1, PAGE 125 OF THE ASSESSMENT ORDER THAT STATE MENTS OF 5 PARENTS HAVE BEEN OBTAINED, ALL THE 5 HAVE NOT BEEN RELIED UPON. ONLY 2 STATEMENTS APPEAR TO HAVE BEEN RELIED UPON I.E., OF SMT. VASUDHA G PADIYAR AND SRI. RANGARAJU. THE STATEMENTS OBTAINE D FROM THESE TWO PERSONS ARE INVALID AS THEY HAVE BEEN RECORDED WITH OUT AUTHORITY. EVEN THE ASSESSING OFFICER HAS NOT OBTAINED ANY STATEMENT FR OM ANY OF THE PARENTS OR STUDENTS. HE RELIED SOLELY UPON THE STATEMENTS REC ORDED BY THE AUTHORIZED OFFICER. THIS MEANS THAT IT IS AS GOOD AS NOT HAVI NG OBTAINED STATEMENT FROM ANY OF THE PARENTS OR STUDENTS. IT WAS SUBM ITTED AS STATED THAT IN THE EARLIER SUBMISSIONS, THE APPELLANT HAS ALSO ESTABLI SHED THAT THESE STATEMENTS CANNOT BE RELIED UPON EVEN ON MERITS. 71. THE AO HAS NOT FURNISHED THE COPIES OF ALL THE STATEMENTS RECORDED. THE APPELLANT HAD REQUESTED THE ASSESSING OFFICER T O AFFORD AN OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE STATEMENTS WERE RELIED UPON. THE AO HAS NOT AFFORDED ANY OPPORTUNITY TO THE APPELLANT T O CROSS-EXAMINE THE PERSONS WHOSE STATEMENTS ARE RELIED UPON. 72. MOREOVER, THE STATEMENTS OF THE PARENTS HAVE BE EN RECORDED POST- SEARCH. THEY DO NOT HAVE ANY EVIDENTIARY VALUE. R ELIANCE IS PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN COMMISSIONER OF INCOME-TAX V. SHANKARLAL BHAGWATIPRASAD JALAN [2017] 84 TAXMAN N.COM 275 (BOMBAY) WHEREIN IT WAS HELD AS UNDER:- ITA NOS.500 TO 506/BANG/2020 PAGE 40 OF 183 (H) A BARE READING OF SECTION 132(4) OF THE ACT IN DICATES THAT AN AUTHORIZED OFFICER IS ENTITLED TO EXAMINE A PERS ON ON OATH DURING THE COURSE OF SEARCH AND ANY STATEMENT MADE DURING SUCH EXAMINATION BY THE SUCH PERSON (THE PERSON BEING EX AMINED ON OATH) WOULD HAVE EVIDENTIARY VALUE UNDER SECTION 13 2(4) OF THE ACT. THE KARNATAKA HIGH COURT IN CHIEF CIT V. PAMPA PATHI [2008] 175 TAXMAN 318/[2009] 310 ITR 64 IN THE CONT EXT OF FACTS BEFORE IT VIZ. THE SEARCH ON THE ASSESSEE THEREIN W AS COMPLETED ON 13TH DECEMBER, 1994. ON 25TH JANUARY, 1995, A LE TTER WAS WRITTEN BY THE ASSESSEE THEREIN MAKING CERTAIN SELF INCRIMINATING STATEMENT WHICH THE REVENUE SOUGHT TO RELY UPON AS BEING A STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. THE REVENUE'S CONTENTION WAS NEGATIVED. THIS BY INTER-ALIA HOLDIN G THAT THE LETTER DATED 25TH JANUARY, 1995 IS NOT RECORDED ON OATH BY THE AUTHORIZED OFFICER DURING THE COURSE OF SEARCH. THE REFORE, IT CANNOT BE OF AN EVIDENTIARY VALUE IN TERMS OF SECTI ON 132(4) OF THE ACT. THE FACTS IN THE PRESENT CASE ARE IDENTICA L. 73. THEREFORE, THE STATEMENTS RECORDED POST-SEARCH DO NOT HAVE ANY EVIDENTIARY VALUE. THE SAME DO NOT HAVE ANY VALUE UNLESS THERE IS ANY OTHER TANGIBLE EVIDENCE TO CORROBORATE WHAT IS STAT ED THEREIN. THE ASSESSING OFFICER RELIED UPON THESE STATEMENTS TO C ORROBORATE WHAT IS FOUND IN THE SEIZED MATERIAL. WHEN THESE STATEMENTS ITSE LF DO NOT HAVE ANY EVIDENTIARY VALUE, THEY CANNOT BE RELIED UPON TO CO RROBORATE WHAT IS STATED IN THE SEIZED MATERIAL. THIS IS WITHOUT PREJUDICE TO THE CONTENTION THAT THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH ARE REBUTTABLE. 74. IT WAS SUBMITTED THAT THE OBSERVATION OF THE AO THAT THE CONTENTS OF THE STATEMENTS ARE CORROBORATED BY MATERIAL FOUND A ND SEIZED DURING SEARCH IS NOT TRUE. HOW CAN LOOSE SHEETS / NOTEPAD S WHICH THEMSELVES DO NOT QUALIFY AS RELIABLE MATERIAL CORROBORATE ANY OT HER MATERIAL? IN THE SUBMISSIONS MADE BY THE APPELLANT VIDE LETTER DATED 09.12.2017, IT HAS NOWHERE ACKNOWLEDGED THE CORRECTNESS OF THE STATEME NTS OF PARENTS. THESE SUBMISSIONS DO NOT IMPLY EVEN REMOTELY THAT T HE APPELLANT IS ACKNOWLEDGING THAT STATEMENTS MADE BY PARENTS ARE T RUE. ITA NOS.500 TO 506/BANG/2020 PAGE 41 OF 183 75. HE ALSO DREW OUR ATTENTION TO THE DETAILS OF ST ATEMENTS OBTAINED FROM SRI. GOLI V. SRINIVAS AND SRI. G H NAGARAJ ARE AS U NDER:- DATE ON WHICH THE STATEMENT IS RECORDED SECTION UNDER WHICH THE STATEMENT IS RECORDED RECORDED BY ASSESSING OFFICER OR AUTHORIZED OFFICER PERSON WHOSE STATEMENT IS RECORDED 06.08.2015 132(4) ACIT, CIRCLE 7(1)(2) R L JALAPPA 04.09.2015 132(4) AUTHORISED OFFICER R L JALAPPA 07 .08.2015 131 AUTHORISED OFFIC ER G H NAGARAJ 13.08.2015 131 AUTHORISED OFFICER G H NAGARAJ 13.08.2015 131 AUTHORISED OFFICER G H NAGARAJ 20.08.2015 132(4) AUTHORISED OFFICER G H NAGARAJ 21.09.2015 132(4) AUTHORISED OFFICER G H NAGARAJ 16.10.2015 131 AUTHORISED OFFICER G H NAGARAJ 06.08.2015 132(4) AUTHORISED OFFICER GOLI V. SRINIVAS 13.08.2015 131 AUTHORISED OFFICER GOLI V. SRINIVAS 28.11.2017 131 NOT KNOWN AS COPY HAS NOT BEEN GIVEN TO THE APPELLANT GOLI V. SRINIVAS 76. HE SUBMITTED THAT ON PERUSAL OF THE ABOVE TABLE WOULD SHOW THAT CERTAIN STATEMENTS HAVE BEEN OBTAINED BY THE AUTHOR ISED OFFICER AFTER THE COMPLETION OF SEARCH. THOSE STATEMENTS CANNOT BE R ELIED UPON AS THEY ARE INVALID AS SUBMITTED EARLIER. THE RELIABILITY OF THE STATEMENTS OBTAINED FROM SRI. GOLI V. SRINIVAS AND SRI. G H NAGARAJ HAVE BEE N DISCUSSED AT VARIOUS PLACES IN THESE SUBMISSIONS. THE AO HAS DISCUSSED THE RELIABILITY OF THE STATEMENTS OF SRI. GOLI V. SRINIVAS AND SRI. G H NA GARAJ AT PAGES 124 AND 125 OF THE ASSESSMENT ORDER TO THE EFFECT SRI G.H. NAGARAJ HAS ALSO ADMITTED CONTENTS OF THE NOTEBOOKS AND ASSESSEE ALS O VIDE LETTER DATED 20.12.2017 HAS ADMITTED/CLAIMED CERTAIN ENTRIES FRO M THE SEIZED MATERIAL AND FROM THE SAME IT CAN BE CONCLUDED THAT SUCH NOT EBOOKS ARE ADMISSIBLE AS EVIDENCE. IT IS SUBMITTED THAT THE APPELLANT HAS NOT ADMITTED ANY ENTRY IN ITA NOS.500 TO 506/BANG/2020 PAGE 42 OF 183 THE SEIZED MATERIAL. THE APPELLANT REITERATES THE SUBMISSIONS MADE EARLIER. SHRI. G H NAGARAJS ADMISSION IS NOT AN ADMISSION B Y THE APPELLANT. HE HAS MADE THE STATEMENT IN HIS PERSONAL CAPACITY AND NOT AS THE SECRETARY OF THE TRUST. IT IS SUBMITTED THAT MERE ADMISSION OF THE ENTRY IN THE NOTEBOOKS DO NOT MAKE THEM EVIDENCE. THE AO HAS NOTED THE FACT THAT G H NAGARAJ IS THE SECRETARY OF THE TRUST AND HE LOOKS INTO THE DAY TO DAY AFFAIRS OF THE TRUST. THESE FACTS WOULD NOT JUSTIF Y RELIANCE ON STATEMENTS OF G H NAGARAJ TO HOLD THAT THE APPELLANT HAS RECEIVED ANY CAPITATION FEE OR ANY PORTION OF THE FEE IN CASH. THE AO FURTHER OBS ERVED THAT THE CONTENTS OF STATEMENT OF GH NAGARAJ MATCH WITH FACTUAL OCCUR RENCE OF EVENTS, STATEMENTS OF PARENTS OF STUDENTS WHO GOT ADMISSION , AND THAT OF THE ACCOUNTANT. THE SAME HAVE ALSO BEEN FOUND TO BE IN LINE WITH THE PARTIAL ADMISSION OF RECEIPTS MADE BY THE ASSESSEE ITSELF. THESE FINDINGS OF THE AO ARE INCORRECT. THE STATEMENT OF NAGARAJ DOES NO T CONCUR IN ANY MANNER WITH THESE FINDINGS. SRI. G H NAGARAJ HAS CATEGORI CALLY STATED IN HIS STATEMENT THAT NO FEE IS RECEIVED IN CASH BY THE AP PELLANT. IN THIS REGARD, IT WAS POINTED OUT TO QUERIES NO. 18 TO 24 AND THE REP LIES TO THE SAID QUERIES IN STATEMENT OF G H NAGARAJ RECORDED ON 16.10.2015. THE STATEMENT OF SRI. G H NAGARAJ AND STATEMENT OF PARENTS ARE CONTRADICT ORY AS DISCUSSED EARLIER. 77. IT WAS FURTHER SUBMITTED THAT THE AO HAS DISCUS SED REGARDING RELIABILITY OF STATEMENTS OF SRI. GOLI V. SRINIVAS. THE AO HAS NOT DEMONSTRATED AS TO HOW THE STATEMENT OF SRI. GOLI V . SRINIVAS IS RELIABLE EVIDENCE. JUST BECAUSE HE IS A CLOSE CONFIDANT OF THE TRUSTEES, IT WOULD NOT MEAN THAT WHATEVER HE STATES ARE TO BE ACCEPTED AT FACE VALUE WITHOUT LOOKING OUT FOR CORROBORATING EVIDENCE TO SUPPORT W HAT HE HAS SAID. THE AO THROUGHOUT THE ORDER SOUGHT TO RELY UPON THE STA TEMENT OF SRI. GOLI V. SRINIVAS. HE DID NOT MAKE ANY FURTHER ENQUIRIES OR COLLECT ANY EVIDENCE TO VERIFY THE VERACITY OF THE SAID STATEMENT. IT IS S UBMITTED THAT RELIANCE ON ITA NOS.500 TO 506/BANG/2020 PAGE 43 OF 183 STATEMENT OBTAINED WITHOUT CORROBORATING EVIDENCE I S NOT TENABLE. AS THE AO HAS RELIED SOLELY UPON THE STATEMENT OF SRI. GOL I V. SRINIVAS AND MADE ASSESSMENT RELYING UPON SUCH STATEMENT, THE ENTIRE ASSESSMENT SHOULD FALL. 78. IN A NUTSHELL, THE STATEMENTS CANNOT BE RELIED UPON FOR THE FOLLOWING REASONS:- NO OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE S TATEMENTS HAVE BEEN RELIED UPON IS AFFORDED. SOME OF THE STATEMENTS HAVE BEEN RECORDED UNDER SEC TION 131 BY THE AUTHORIZED OFFICER SUBSEQUENT TO COMPLETION OF SEARCH. THERE IS NO DOCUMENTARY EVIDENCE EITHER TO SUPPORT THE STATEMENTS OF SRI. GOLI V. SRINIVAS OR OF THE PARENTS OF THE S TUDENTS. 79. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT NO ADDITIONS CAN BE MADE SOLELY BASED ON THE STATEMENTS OF THIRD PAR TIES. RELIANCE IS PLACED ON FOLLOWING DECISIONS: THE HONBLE DELHI HIGH COURT IN COMMISSIONER OF INCOME-TAX V. HARJEEV AGGARWAL [2016] 70 TAXMANN.COM 95 (DELHI) HELD AS UNDER: 21. A PLAIN READING OF SECTION 132 (4) OF THE ACT INDICATES THAT THE AUTHORIZED OFFICER IS EMPOWERED TO EXAMINE ON O ATH ANY PERSON WHO IS FOUND IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNTS, DOCUMENTS, MONEY, BULLION, JEWELLERY OR AN Y OTHER VALUABLE ARTICLE OR THING. THE EXPLANATION TO SECTIO N 132 (4), WHICH WAS INSERTED BY THE DIRECT TAX LAWS (AMENDMENT ) ACT, 1987 W.E.F. 1ST APRIL, 1989, FURTHER CLARIFIES THAT A PERSON MAY BE EXAMINED NOT ONLY IN RESPECT OF THE BOOKS OF ACCOUN TS OR OTHER DOCUMENTS FOUND AS A RESULT OF SEARCH BUT ALSO IN RE SPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGAT ION CONNECTED WITH ANY PROCEEDING UNDER THE ACT. HOWEVER, AS STAT ED EARLIER, A STATEMENT ON OATH CAN ONLY BE RECORDED OF A PERSON WHO IS FOUND IN POSSESSION OF BOOKS OF ACCOUNTS, DOCUMENTS, ASSET S, ETC. PLAINLY, THE INTENTION OF THE PARLIAMENT IS TO PERM IT SUCH EXAMINATION ONLY WHERE THE BOOKS OF ACCOUNTS, DOCUME NTS AND ITA NOS.500 TO 506/BANG/2020 PAGE 44 OF 183 ASSETS POSSESSED BY A PERSON ARE RELEVANT FOR THE PU RPOSES OF THE INVESTIGATION BEING UNDERTAKEN. NOW, IF THE PROVISIO NS OF SECTION 132(4) OF THE ACT ARE READ IN THE CONTEXT OF SECTIO N 158BB(1) READ WITH SECTION 158B(B) OF THE ACT, IT IS AT ONCE CLEA R THAT A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CAN BE USED IN EVIDENCE FOR MAKING A BLOCK ASSESSMENT ONLY IF THE SAID STAT EMENT IS MADE IN THE CONTEXT OF OTHER EVIDENCE OR MATERIAL DISCOV ERED DURING THE SEARCH. A STATEMENT OF A PERSON, WHICH IS NOT R ELATABLE TO ANY INCRIMINATING DOCUMENT OR MATERIAL FOUND DURING SEA RCH AND SEIZURE OPERATION CANNOT, BY ITSELF, TRIGGER A BLOCK ASSESSMENT. THE UNDISCLOSED INCOME OF AN ASSESSEE HAS TO BE COMP UTED ON THE BASIS OF EVIDENCE AND MATERIAL FOUND DURING SEAR CH. THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT MAY ALSO BE USED FOR MAKING THE ASSESSMENT, BUT ONLY TO THE EXTE NT IT IS RELATABLE TO THE INCRIMINATING EVIDENCE/MATERIAL UN EARTHED OR FOUND DURING SEARCH. IN OTHER WORDS, THERE MUST BE A NEXUS BETWEEN THE STATEMENT RECORDED AND THE EVIDENCE/MATE RIAL FOUND DURING SEARCH IN ORDER TO FOR AN ASSESSMENT T O BE BASED ON THE STATEMENT RECORDED. IN DR. B.G. MEMORIAL TRUST V. CIT (EXEMPTION), KOLK ATA 2017 (11) TMI 1586 - ITAT KOLKATA , THE TRIBUNAL HELD AS UNDER:- 6. WE HAVE CAREFULLY CONSIDERED THE ENTIRE GAMUT O F FACTS, RIVAL CONTENTIONS RAISED BY THE PARTIES BEFORE US AND ALSO THE MATERIAL REFERRED TO DURING THE COURSE OF HEARING. IN THE IN STANT CASE ORIGINALLY LD. CIT(EX) CANCELLED THE REGISTRATION C ERTIFICATE U/S.12A OF THE ACT VIDE ORDER DATED 22-2-2016. AGAI NST THE ORDER OF LD. CIT(EX) ASSESSEE PREFERRED AN APPEAL WHO DIR ECTED THE REVENUE TO PROVIDE AN OPPORTUNITY OF CROSS-EXAMINAT ION TO ASSESSEE. ACCORDINGLY, APPEAL WAS ALLOWED FOR STATI STICAL PURPOSE. 80. IN THIS CONNECTION THE LD. AR ALSO RELIED ON TH E CASE CIT VS. S. KHADER KHAN SON REPORTED IN 352 ITR 480 (SC) WHERE THE HONBLE SUPREME COURT HAS HELD THAT:- SECTION 133A DOES NOT EMPOWER ANY IT AUTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS N O EVIDENTIARY ITA NOS.500 TO 506/BANG/2020 PAGE 45 OF 183 VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MADE THE BASIS FOR ADDITION. THE HONBLE TRIBUNAL IN KAMLA DEVI S. DOSHI V. INCOME-TAX OFFICER [2017] 88 TAXMANN.COM 773 (MUMBAI - TRIB.) / [2017] 57 ITR(T) 1 (MUMBAI - TRIB.) HELD AS UNDER:- WE HOWEVER ARE UNABLE TO PERSUADE OURSELVES TO SUBS CRIBE TO THE VIEW THAT SUCH INFORMATION ARRIVED AT ON THE BAS IS OF THE STAND ALONE STATEMENT OF THE AFORESAID PERSON, VIZ. SH. MUKESH CHOKSHI (SUPRA), FALLING SHORT OF ANY CORROBORATIVE EVIDENCE WOULD HOWEVER JUSTIFY DRAWING OF ADVERSE INFERENCES AS REGARDS THE GENUINENESS OF THE SHARE TRANSACTIONS IN THE HA NDS OF THE ASSESSEE. WE THOUGH ARE ALSO NOT OBLIVIOUS OF THE SE TTLED POSITION OF LAW, AS PER WHICH A VERY HEAVY ONUS IS CAST UPON THE ASSESSEE TO SUBSTANTIATE THE LTCG ON SALE OF SHARES, AS PROJ ECTED BY HER IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON. THUS TO BE BRIEF AND EXPLICIT, THOUGH THE REOPENING OF THE CASE OF THE ASSESSEE IN THE BACKDROP OF THE AFORESAID FACTUAL MA TRIX CANNOT BE FAULTED WITH, HOWEVER SUCH STAND ALONE INFORMATION, I.E THE STATEMENT OF SH. MUKESH CHOKSHI (SUPRA), CANNOT BE ALLOWED TO FORM THE SOLE BASIS FOR DISLODGING THE CLAIM OF THE ASSESSEE IN RESPECT OF THE LTCG REFLECTED BY HER IN THE RETURN O F INCOME FOR THE YEAR UNDER CONSIDERATION. WE WOULD NOT HESITATE TO OBSERVE THAT THE LOWER AUTHORITIES WHICH HAVE RUSHED THROUG H THE FACTS TO ARRIVE AT A CONCLUSION ON THE BASIS OF PRINCIPLE OF PREPONDERANCE OF HUMAN PROBABILITY, HAD HOWEVER ABSOLUTELY FAILED TO APPRECIATE THAT THE SAID PRINCIPLE COULD HAVE BEEN V ALIDLY APPLIED ONLY ON THE BASIS OF A CONSIDERATE VIEW AS REGARDS THE FACTS OF THE CASE IN TOTALITY, AND NOT MERELY ON TH E BASIS OF THE STAND ALONE STATEMENT OF THE AFORESAID THIRD PARTY, VIZ. SH. MUKESH CHOKSI. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI V. COMMISSIONER OF INCOME-TAX [20 08] 174 TAXMAN 466 (GUJARAT) HELD AS UNDER:- 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINC ING, HAS NOT ITA NOS.500 TO 506/BANG/2020 PAGE 46 OF 183 BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITIONS WERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEME NT RECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE T HE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO EVIDENCE H AS BEEN LED BY THE REVENUE AUTHORITY. WE ARE, THEREFORE, OF THE VI EW THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAV E BEEN SUBJECTED TO SUCH ADDITIONS UNLESS AND UNTIL, SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. WE ARE ALSO OF THE VIEW THAT FROM THE STATEMENT RECORDED AT SUCH O DD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, IF IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSION. HENCE THERE IS NO REASON NOT TO DIS BELIEVE THE RETRACTION MADE BY THE ASSESSING OFFICER AND EXPLANA TION DULY SUPPORTED BY THE EVIDENCE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN MAKING ADDITION O F RS. 6 LAKHS ON THE BASIS OF STATEMENT RECORDED BY THE ASSESSING O FFICER UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS CO MMITTED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSE E. 81. RELIANCE IS PLACED ON THE FOLLOWING DECISION WH EREIN IT WAS HELD THAT ADDITION CANNOT BE MADE BASED ON THE STATEMENT OF A N EMPLOYEE OR PARTNER IN THE ABSENCE OF CORROBORATIVE EVIDENCE:- IN CIT V. INDRAJIT SINGH SURI 2013 (8) TMI 111 - GUJA RAT HIGH COURT , THE HONBLE COURT HELD AS UNDER: 9. QUESTION NO. [G] CONCERNS DELETION OF ADDITION OF RS.7,43,000/- AND RS.2,00,000/- MADE BY ASSESSING OF FICER BEING UNACCOUNTED INVESTMENT MADE IN JAY SHIV APARTMENTS. IT IS CONTENDED BY THE LEARNED COUNSEL THAT THE ASS ESSEE HAD ACCEPTED THE CONTENTION OF MR. UPENDRA MISTRY WHERE HE STATED THAT RS.2 LAKHS HAD BEEN PAID IN CASH, BUT, FOR THE BALANCE HE RELIED ON THE RETRACTION FILED BY MS. UPENDRA MISTRY & THIS GLARING FACT WAS IGNORED BY THE TRIBUNAL AND THEREFO RE, IT DELETED THE ENTIRE AMOUNT. IT CAN BE NOTICED FROM THE RECORD THAT THIS AMOUNT W AS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE ON THE BASIS OF STATEMENT OF ONE OF THE PARTNERS OF THE SCHEME OF JAY SHIV APART MENT WHO ITA NOS.500 TO 506/BANG/2020 PAGE 47 OF 183 STATED THAT THE FLATS WERE SOLD AT RS. 7,04,000/- E ACH. THE ASSESSING OFFICER CONCLUDED THAT DIFFERENCE OF RS. 7,43,000/- BETWEEN COST OF RS.14,80,000/- LESS THE PAYMENT OF R S. 6,65,000/- REPRESENTED PAYMENT IN CASH OUT OF UNACCOUNTED INCO ME. THE TRIBUNAL HELD THUS: '16.4 WE HAVE DULY CONSIDERED THE CONTENTION OF T HE ASSESSEE AND ALSO PERUSED THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. ON PERUSING THE FACTS IT IS APPAREN T THAT THE ADDITION IS MADE BASED ON THE GENERAL PRACTICE OF C ASH PAYMENTS MADE OUTSIDE THE BOOKS OF ACCOUNTS IN THE CASE OF IM MOVABLE PROPERTY TRANSACTIONS. REVENUE WAS OF THE OPINION T HAT THERE ARE AMPLE INSTANCES THAT CASH PAYMENTS ARE MADE ALMOST ABOUT 50% OUTSIDE THE BOOKS OF ACCOUNTS IN EFFECTING REAL EST ATE TRANSACTIONS AND THEREFORE, THE STATEMENT MADE BY ONE OF THE PART NER CAN BE RELIED AND THE ADDITION SUSTAINABLE. HOWEVER, WE DO NOT SUBSCRIBE TO THIS VIEW OF THE REVENUE. IN ORDER TO ES TABLISH THAT THE ASSESSEE HAD PAID AMOUNT OUTSIDE THE COOKS OF A CCOUNTS FOR EFFECTING REAL ESTATE TRANSACTIONS SUBSTANTIAL EVID ENCE HAS TO BE PLACED ON RECORD WHICH IS ABSENCE IN THIS CASE. IT WOULD BE UNJUST IF AN ADDITION IS MADE ON THE APPELLANT BASED ON A S TATEMENT MADE BY ONE OF THE PARTNERS OF THE FIRM WITHOUT FURT HER MAKING INQUIRIES AND COLLECTING EVIDENCE. THEREFORE, WE HE REBY DELETE THE ADDITION OF RS.7,43,000/- AND RS.2,00,000/- MAD E BY THE LD. AO AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS).' THIS ENTIRE QUESTION IS BASED ON FACTS AND THEREFORE , NO INTERFERENCE IS NECESSARY. 82. IT WAS SUBMITTED THAT THE AO OUGHT TO HAVE APPR ECIATED THAT SUCH A HUGE AMOUNT OF CASH, IF PHYSICALLY AVAILABLE, CANNO T BE HIDDEN PHYSICALLY. THE ONLY MANNER IN WHICH ITS PHYSICAL EXISTENCE COU LD HAVE BEEN CONCEALED, IF IT IS REALLY CONCEALED, IS THAT EITHE R IT SHOULD HAVE BEEN CONVERTED INTO SOME OTHER ASSET OR SHOULD HAVE BEEN EXPENDED AWAY. THE ASSESSING OFFICER HAS NOT MADE ANY ATTEMPT TO IDENT IFY THE ASSETS WHICH HAVE BEEN CREATED OUT OF SUCH UNACCOUNTED CASH. IT IS NOT ENOUGH TO MERELY ALLEGE THAT SUCH HUGE AMOUNT OF CASH IS COLL ECTED. WHEN THE ITA NOS.500 TO 506/BANG/2020 PAGE 48 OF 183 SEARCH WAS MADE, ONLY CASH OF RS. 2,67,28,900 WAS S EIZED. THE THEORY OF THE ASSESSING OFFICER IS THAT APPELLANT HAS COLLECT ED CAPITATION FEE IN CASH AND DIVERTED THE SAME FOR THE BENEFIT OF TRUSTEES. THE AO THOUGH MADE ALLEGATIONS ON DIVERSION OF FUNDS FOR THE BENEFIT O F TRUSTEES, HE HAS NOT PROVED THE SAME WITH RELIABLE EVIDENCE. 83. THE AO HAS TABULATED THE AMOUNTS ALLEGED TO HAV E BEEN DIVERTED TO THE TRUSTEES WHICH IS REPRODUCED BELOW:- AY G. H. NAGARAJ R. L. JALAPPA J. P. NARAYANASWAMY RAJESH JAGDALE 2012 - 13 219,93,000 181,48,250 2013 - 14 966,00,000 697,09,850 614,00,000 800,00,000 2014 - 15 1535,68,711 380,72,104 300,00,000 400,90,000 2015 - 16 32 75 ,68,850 458,55,350 250,00, 000 270,00,0 00 2016 - 17 397,15,833 200,00,000 TOTAL 5997,30,561 2115,01,387 1164,00,000 1670,90,000 84. BASED ON THE ABOVE ANALYSIS, THE AO HAS MADE AS SESSMENTS IN THE CASE OF THE ABOVE MENTIONED TRUSTEES UNDER SECTION 153C OF THE ACT ON PROTECTIVE BASIS. FROM THE ASSESSMENT ORDER DATED 3 0.12.2017 PASSED UNDER SECTION 153C R.W.S 143(3) FOR AY 12-13 IN THE CASE OF SRI R L JALAPPA, IT IS SUBMITTED THAT ON THE ONE HAND, THE ASSESSING OFFICER STATES THAT THE PAYMENTS EVIDENCED BY THE SEIZED MATERIAL ARE NOT VERIFIABLE AND ON THE OTHER HAND, HE MAKES ADDITION ON PROTECTIVE BASIS IN THE HANDS OF TRUSTEES ON THE GROUND THAT THE SEIZED MATERIAL EVI DENCING PAYMENTS ARE ADEQUATE TO MAKE ADDITIONS IN THE HANDS OF THE TRUS TEES. THE VERY FACT THAT THE AO HAS MADE PROTECTIVE ASSESSMENT AND NOT SUBST ANTIVE ASSESSMENT WOULD SHOW THAT THE ASSESSING OFFICER HAS NO INCRIM INATING MATERIAL TO PROVE THAT ANY FUNDS OF THE TRUST HAVE BEEN DIVERTE D TO THE TRUSTEES. THIS WOULD LEAD ONLY TO TWO POSSIBILITIES; ONE, UNACCOUN TED CASH HAS NOT BEEN RECEIVED BY THE APPELLANT AT ALL AND THE OTHER POSS IBILITY IS THAT THE FUNDS HAVE BEEN USED FOR THE PURPOSE OF THE OBJECTS OF TH E TRUST. REASON IS IF THE ITA NOS.500 TO 506/BANG/2020 PAGE 49 OF 183 FUNDS HAVE NEITHER BEEN DIVERTED FOR THE BENEFIT OF THE TRUSTEES NOR UTILISED FOR THE OBJECTS OF THE TRUST, THEN CASH SHOULD HAVE BEEN LYING WITH THE TRUST. DURING THE COURSE OF SEARCH ONLY RS. 2.67 CRORE WAS SEIZED. EVEN THAT DID NOT BELONG TO THE TRUST. WHERE DID THE CASH GO? I F THE AO HAD REASON TO BELIEVE THAT THE FUNDS ARE DIVERTED TO THE TRUSTEES BASED ON THE SEIZED MATERIAL HE WOULD HAVE MADE A SUBSTANTIVE ADDITION ON THE TRUSTEES AND NOT A PROTECTIVE ASSESSMENT. 85. THE JURISDICTION UNDER SECTION 153C(1) CAN BE A SSUMED IF THE ASSESSING OFFICER OF THE SEARCHED PERSON HAS REASON TO BELIEVE THAT THE SEIZED MATERIAL PERTAINS TO OR RELATES TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN SUCH SEIZED MATER IAL IS TO BE HANDED OVER TO THE ASSESSING OFFICER OF THE OTHER PERSON TO INI TIATE ASSESSMENT OR REASSESSMENT PROCEEDINGS IN CASE OF SUCH OTHER PERS ON. THE EXPRESSION USED IS BELONGS TO OR.PERTAINS TO OR RELATES TO THE OTHER PERSON. THEREFORE, THE MANDATE IS IT SHOULD BELONG TO OR PERTAIN TO OR RELATE ONLY TO THE OTHER PERSON AND NOT TO THE SEARCHED PERSON. HAVING NOT REACHED THIS CONCLUSION, THE A O CHOSE TO MAKE PROTECTIVE ASSESSMENT. TWO INFERENCES CAN BE DRAWN FROM THIS ACTION OF THE AO:- (I) THE SEIZED MATERIAL IS NOT CONCLUSIVE PROOF TO MAKE ASSESSMENT UNDER SECTION 153A IN CASE OF APPELLANT AND HENCE, HE CHOSE EITHER TO INVOKE SECTION 153C HIMSE LF [WHERE HE HAS JURISDICTION OVER THE TRUSTEES] OR HA ND OVER THE MATERIAL TO THE ASSESSING OFFICER HAVING JURISD ICTION OVER THE TRUSTEES IN ORDER TO ENABLE THEM TO INVOKE SECT ION 153C IN CASE OF TRUSTEES. (II) THE SEIZED MATERIAL IS NOT CONCLUSIVE PROOF THAT IT BELONGS TO THE TRUSTEES. HENCE, THOUGH SECTION 153C IS INVOKE D, ONLY PROTECTIVE ASSESSMENT HAS BEEN SOUGHT TO BE MADE IN THE CASE OF TRUSTEES. THEREFORE, ACCORDING TO THE LD. AR, THE SEIZED MATE RIAL IS NOT INCRIMINATING AT ALL. ITA NOS.500 TO 506/BANG/2020 PAGE 50 OF 183 86. THE ASSESSING OFFICER, AT PAGE 113, OBSERVED TH AT THE SAID RS. 109 CRORES [BEING THE FUNDS ALLEGED TO HAVE BEEN DIVERT ED TO TRUSTEES] IS IN THE NATURE OF DRAWING, DIVIDENDS OR OTHER SUCH APPROPRIATION OF PROFITS IF THE SAID RS. 109 CRORES IS IN THE NATURE OF DRAWING, DIVIDENDS OR OTHER SUCH APPROPRIATION OF PROFITS THE AO COULD NOT HAVE MADE ANY ASSESSMENT ON THE TRUSTEES. BUT DESPITE THAT HE HAS CHOSEN TO MA KE ASSESSMENT UNDER SECTION 153C. THIS LEADS TO TWO INFERENCES. THE A O HAS, IN THE GARB OF DIVERSION OF FUNDS TO TRUSTEES, IN FACT MADE A PROT ECTIVE ASSESSMENT OF A PORTION OF THE ALLEGED UNACCOUNTED CASH COLLECTED, IN THE HANDS OF TRUSTEES. IN OTHER WORDS, HE HAS CHARACTERISED A PORTION OF A LLEGED UNACCOUNTED CASH COLLECTED AS DIVERSION OF FUNDS FOR THE BENEFIT OF TRUSTEES. THEREFORE, THE AO HAS ASSESSED A PORTION OF THE UNACCOUNTED CASH R ECEIPTS IN THE HANDS OF THE TRUSTEES. HE HAS USED THE VERY SAME MATERIA L TO TAX THE APPELLANT AS WELL AS THE TRUSTEES. THIS WOULD SHOW THAT THE AO COULD NOT ASCERTAIN TO WHOM THE SEIZED MATERIAL BELONGED TO. UNDER SUCH C IRCUMSTANCES, NEITHER ASSESSMENT COULD BE MADE UNDER SECTION 153A [IN THE CASE OF APPELLANT] NOR UNDER SECTION 153C [IN THE CASE OF TRUSTEES]. 87. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE AO BY MAKING PROTECTIVE ASSESSMENT IN THE HANDS OF TRUSTEES BASE D ON WHICH VERY MATERIAL HE HAS DENIED EXEMPTION UNDER SECTION 11 O F THE ACT TO THE APPELLANT ON THE GROUND THAT THE FUNDS HAVE BEEN DI VERTED FOR THE BENEFIT OF THE TRUSTEES, WOULD SHOW THAT THE MATERIAL CANNOT B E TRANSCENDED TO QUALIFY AS INCRIMINATING MATERIAL SO AS TO FORM CONCLUSIVE PROOF FOR MAKING ASSESSMENT UNDER SECTION 153A. IT CAN, AT THE MOST , AROUSE A SUSPICION WHICH CANNOT BE SUBSTITUTED FOR LEGAL EVIDENCE. 88. THE AO HAS HELD THAT THE PAYMENTS CONTAINED IN THE SEIZED MATERIAL ARE NOT VERIFIABLE. IT MEANS THAT THERE IS NO INCR IMINATING MATERIAL TO SUPPORT HIS ANALYSIS WHICH HE HAS USED TO MAKE ALLEGATIONS REGARDING DIVERSION OF ITA NOS.500 TO 506/BANG/2020 PAGE 51 OF 183 FUNDS FOR THE PERSONAL BENEFIT OF TRUSTEES, BOGUS D ONATIONS, ADDITIONAL SALARY PAYMENTS, PAYMENTS TO MCI INSPECTORS, ETC. THEREFORE, WHEN THERE IS NO EVIDENCE TO PROVE THESE ALLEGATIONS, THE ONLY FALL OUT WOULD BE THAT THE ALLEGED UNACCOUNTED CASH HAS BEEN UTILISED FOR THE PURPOSE OF THE OBJECTS OF THE TRUST. BUT THE ASSESSING OFFICER HAS NOT AC CEPTED THE CONTENTION THAT THE ALLEGED CAPITATION FEE HAS BEEN UTILISED FOR TH E PURPOSE OF OBJECTS OF THE TRUST. BY APPLYING THE THEORY OF ELIMINATION, THE ONLY POSSIBILITY IS THAT CAPITATION FEE HAS NOT BEEN COLLECTED. 89. THE AO HAS STATED THAT THE ASSESSEE WHICH HAS G ONE AHEAD AND COLLECTED CAPITATION FEE AND NOT RECORDED THE SAME IN BOOKS OF ACCOUNT, HAS NOW COME AROUND AND ADMITTED THAT FACT OF HAVIN G RECEIVED AMOUNTS IN CASH WHICH WERE NOT RECORDED IN BOOKS OF ACCOUNT VI DE SUBMISSIONS RECEIVED IN THIS OFFICE DATED 20/12/2017 AND REVISE D SUBMISSIONS OF RETURNS DATED 26/12/2017. HE ALSO NOTED THAT VIDE SUBMISS ION DATED 20/12/2017 ASSESSEE HAS ADMITTED HAVING RECEIVED AROUND RS 140 CRORES BASED ON THE EVIDENCES FORMING PART OF THE VERY SAME SEIZED MATERIAL. THE AO OBSERVED HOW CAN SOME PART OF SAME NOTEBOOK OR LOOS E SHEET BE TRUE AND THE OTHER PART FALSE. IN THIS REGARD, IT IS SUBMIT TED THAT JUST BECAUSE THE APPELLANT HAS FILED REVISED RETURNS CONSIDERING THE ALLEGED UNACCOUNTED CASH RECEIPTS AND CASH PAYMENTS, IT DOES NOT MEAN T HAT THE APPELLANT HAS CONCEDED THAT IT HAS RECEIVED PORTION OF THE FEE IN CASH. THE APPELLANT HAS FILED REVISED RETURN FOR REASONS STATED IN LETTER D ATED 09.12.2017. THE APPELLANT TAKING CUE FROM THE MANNER IN WHICH THE A O MADE THE COMPUTATION, MADE AN ATTEMPT TO COMPUTE THE ALLEGED UNACCOUNTED CASH GENERATED ON THE SAME LINES AS THAT OF THE AO. THE APPELLANT STUCK TO THE SEIZED MATERIAL RELIED UPON BY THE ASSESSING OFFICE R. JUST BECAUSE THE APPELLANT FILED REVISED RETURNS BASED ON ITS CALCUL ATIONS TAKING A CUE FROM THE CALCULATION MADE BY THE AO, IT DOES NOT MEAN TH AT THE APPELLANT HAS MADE ANY SORT OF CONCESSION. MERE FILING OF THE RE VISED RETURNS IS NOT AN ITA NOS.500 TO 506/BANG/2020 PAGE 52 OF 183 ADMISSION TO THE ALLEGED OFFENCE. THE APPELLANT ME RELY MADE AN ALTERNATIVE CLAIM. AN ASSESSEE CANNOT BE ESTOPPED FROM MAKING ALTERNATIVE CLAIMS. THE APPELLANT MADE THE ALTERNA TIVE CLAIM WITHOUT PREJUDICE TO THE MAIN CONTENTION THAT IT HAS NEITHE R RECEIVED ANY CAPITATION FEE NOR MADE ANY PAYMENTS FROM SUCH FEE. IT IS A W ELL-SETTLED LEGAL PRINCIPLE THAT ASSESSEE CAN MAKE ALL POSSIBLE LEGAL AND FACTUAL CLAIMS. 90. WITHOUT PREJUDICE TO THE SUBMISSIONS MADE ABOVE , IT IS SUBMITTED THAT ASSESSMENT CANNOT BE MADE UNDER SECTION 153A I N THE ABSENCE OF INCRIMINATING MATERIAL FOR THOSE YEARS WHERE ASSESS MENT IS EITHER NOT PENDING OR HAS NOT ABATED. AN ANALYSIS OF SECTION 153A WOULD SHOW THAT IT STATES, INTER ALIA, THAT WHERE A SEARCH IS INITIATE D UNDER SECTION 132 IN CASE OF A PERSON THE ASSESSING OFFICER SHALL ISSUE NOTIC E TO SUCH PERSON TO FILE RETURN OF INCOME AND ASSESS OR REASSESS THE TOTAL I NCOME OF 6 ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED. THE SECOND PROVISO TO SE CTION 153A(1) STATES THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING T O ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS R EFERRED TO IN SECTION 153A(1) WHICH IS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 SHALL ABATE. THEREFORE, THE ASSESSMENT OR REAS SESSMENT PENDING ON THE DATE OF INITIATION OF SEARCH WOULD ALONE ABATE. THE ASSESSMENT OR REASSESSMENT OF THE REST OF THE YEARS FALLING WITHI N THE SAID 6 ASSESSMENT YEARS STANDS UNABATED. THEREFORE, AN ASSESSMENT UN DER SECTION 153A IN RESPECT OF THOSE YEARS WHOSE ASSESSMENT IS UNABATED CAN BE MADE ONLY IF ANY INCRIMINATING MATERIAL IS FOUND DURING THE COUR SE OF SEARCH. THIS IS WITHOUT PREJUDICE TO THE MAIN CONTENTION THAT NO AS SESSMENT CAN BE MADE UNDER SEC 153A IN THE ABSENCE OF INCRIMINATING MATE RIAL. THE SEARCH IN THE PRESENT CASE HAS BEEN INITIATED ON 06.08.2015. THE HISTORY OF ASSESSMENT OF THE ASSESSMENT YEAR 2010-11 TO 2015-16 IS AS UND ER: ITA NOS.500 TO 506/BANG/2020 PAGE 53 OF 183 ASSESSMENT YEAR FILING OF RETURN U/S. 139(1 ) INTIMATION U/S. 143(1) NOTICE U/S. 143(2) ASSESSMENT ORDER U/S. 143(3) 2010 - 11 16/09/2010 30/03/2011 16/09/2011 12/03/2013 2011 - 12 28/09/2011 05/09/2012 21/03/2014 2012 - 13 27/09/2012 20/08/2013 23/09/2013 31/0 3/ 2015 2013 - 14 29/09 /2013 2 2/09/2014 - 2014 - 15 27/09/2014 - 2015 - 16 30/09/2015 - 2016 - 17 14/10/2016 - 91. IT IS SEEN FROM THE ABOVE TABLE THAT ASSESSMENT FOR AY 2010-11, 2011-12, 2012-13 HAS BEEN COMPLETED PRIOR TO 06.08. 2015. THE ASSESSMENTS COMPLETED UNDER SECTION 143(3) WOULD RE MAIN UNABATED. UNDER SUCH CIRCUMSTANCES, THE ASSESSMENT CAN BE MAD E ONLY ON THE BASIS OF INCRIMINATING MATERIAL PERTAINING TO THE SAID YE AR FOUND DURING THE COURSE OF SEARCH. THIS IS INHERENT IN THE SCHEME OF SECTI ON 153A. IF THE INTENTION OF THE LEGISLATURE IS THAT THE ENTIRE ASSESSMENT WO ULD OPEN UP IN CASE OF NON-PENDING AND UNABATED ASSESSMENTS, THE SECOND PR OVISO TO SECTION 153A(1) WOULD LOSE ITS RELEVANCE. IT IS A WELL-SET TLED LEGAL PRINCIPLE THAT ONE CANNOT ARTIFICIALLY INCREASE THE SCOPE OF THE PROVI SIONS. THE PROVISIONS OF THE STATUTE SHOULD NOT BE INTERPRETED IN A MANNER T HAT IT INCREASES THE SCOPE OF WHAT THE PROVISION ACTUALLY INTENDS TO ACH IEVE. IF THE ENTIRE ASSESSMENT OF THE NON-PENDING AND UNABATED ASSESSME NT OF ANY ASSESSMENT YEAR IS OPENED UP, IT WOULD RENDER THE S ECOND PROVISO TO SECTION 153A(1) OTIOSE. IN THE SUBMISSIONS ON THE GROUND ON EXTRAPOLATION OF INCOME IN CASE OF AY 2010-11, THE APPELLANT HAS ESTABLISHED THAT THERE IS NO MATERIAL LEAVE ALONE INCRIMINATING MATERIAL W HICH IS FOUND AND SEIZED FOR AY 2010-11. THEREFORE, NO ADDITION CAN BE MADE IN AN ASSESSMENT UNDER SEC 153A FOR AY 2010-11. IN THE SUBMISSIONS O N THE GROUND ON EXTRAPOLATION OF INCOME IN CASE OF AY 2011-12 AND 2 012-13, THE APPELLANT ITA NOS.500 TO 506/BANG/2020 PAGE 54 OF 183 HAS ESTABLISHED THAT THERE IS NO INCRIMINATING MATE RIAL WHICH IS FOUND AND SEIZED FOR THE SAID ASSESSMENT YEARS. THEREFORE, NO ADDITION CAN BE MADE IN AN ASSESSMENT UNDER SEC 153A FOR AYS 2010-11 TO 2012-13. THE ASSESSMENT MADE UNDER SECTION 153A IS UNTENABLE IN LAW. THE APPELLANT RELIES ON THE FOLLOWING DECISIONS: IN ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT [2012] 23 TAXMANN.COM 103 (MUM.) (SB) , THE SPECIAL BENCH HELD AS UNDER: 58. THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UN DER : (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON TH E BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUM ENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN TH E COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. THE ABOVE DECISION HAS BEEN CONFIRMED BY THE HONBL E BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X V. ALL CARGO GLOBAL LOGISTICS LTD [2015] 58 TAXMANN.COM 78 (BOMBAY) / [2015] 374 ITR 645 (BOM.), THE HONBLE COURT HELD THAT NO ADDITION CAN BE MADE IN RESPECT OF ASSESSMENTS WHIC H HAVE BECOME FINAL IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH. THE HONBLE DELHI HIGH COURT IN CIT V. KABUL CHAWLA (2016) 380 ITR 573 (DELHI) HELD AS UNDER:- COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF ITA NOS.500 TO 506/BANG/2020 PAGE 55 OF 183 SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED I NCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THE HONBLE KARNATAKA HIGH COURT IN CIT V. IBC KNOW LEDGE PARK P. LTD [2016] 385 ITR 346 (KARN.) HELD THAT IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH, CONCLUDED ASSESSMENTS CANNOT BE REOPENED. 92. THE AO HAS STATED THAT ACCEPTANCE OF UNACCOUN TED CAPITATION FEES IN CASH FROM THOSE SEEKING ADMISSION INTO THE MEDIC AL COLLEGE IS A VIOLATION OF THE KARNATAKA EDUCATIONAL INSTITUTIONS (PROHIBIT ION OF CAPITATION FEE) ACT, 1984. THIS SHOWS THAT THE TRUST IS INVOLVED IN ACTIVITIES WHICH ARE ILLEGAL AND IS COLLECTING FUNDS IN THE GUISE OF CHARITABLE PURPOSE IN ILLEGAL MANNER. THIS EVIDENCES FOR THE SAME INCLUDE THE MATERIALS S EIZED FROM THE PREMISES OF THE TRUST INCLUDING ANNEXURE A/DUU/01, A/DUU/07, AND A/DUU/13, APART FROM OTHER SEIZED MATERIAL, WHEREIN EXPLICIT MENTIO N OF DEMAND AND RECEIPT OF FEE IN VIOLATION OF THE SAID ACT HAS BEEN MADE. OTHER EVIDENCES INCLUDE THE STATEMENTS GIVEN BY VARIOUS PERSONS INC LUDING THE ACCOUNTANT RECEIVING AND MANAGING ACCOUNTS OF SUCH CASH COLLEC TIONS. 93. AT THE COST OF REPETITION, THE LD. AR SUBMITTED THAT THE AO ERRED IN RELYING UPON MATERIALS MAINTAINED BY OTHERS EVEN TH OUGH THE APPELLANT HAD NOT AUTHORIZED THE COLLECTION OF ANY RECEIPTS IN CA SH OR INCURRING EXPENDITURE IN CASH. THE SAID MATERIAL DOES NOT BEL ONG TO THE APPELLANT. THE APPELLANT IN SPECIFIC SUBMISSIONS TO GROUND PER TAINING TO EXTRAPOLATION OF INCOME HAS ESTABLISHED THAT THE SEIZED MATERIALS DO NOT BELONG TO IT. IT HAS ALSO SUBMITTED THEREIN THAT THE SEIZED MATERIAL S CONSTITUTE ONLY LOOSE SHEETS AND NOTE PADS CONTAINING UNSIGNED ENTRIES AR E DUMB DOCUMENTS AND CANNOT BE TREATED AS INCRIMINATING MATERIAL TO MAKE ANY ADDITION. THE ITA NOS.500 TO 506/BANG/2020 PAGE 56 OF 183 APPELLANT REITERATES THE SUBMISSIONS MADE IN RESPEC T OF THE ABOVE MENTIONED GROUNDS. 94. THE AO HELD THAT THE FUNDS OF THE TRUST HAVE BE EN UTILIZED FOR THE ACQUISITION OF LAND, REPAIR OF PERSONAL PROPERTIES FOR THE TRUSTIES FOR THEIR PERSONAL GAIN AS SEEN FROM MULTIPLE ENTRIES IN SEIZ ED MATERIAL ANNEXURES A/DUU/02 TO A/DUU/04, AND A/DUU/11). HE ALSO ALLEG ED THAT THE APPELLANT HAS VIOLATED SECTION 13(1)(C)(II). 95. THE LD. AR SUBMITTED THAT THE ABOVE ALLEGATIONS OF THE AO ARE NOT TENABLE. ALL THE EXPENSES INCURRED INCLUDING THE C APITAL EXPENDITURE HAVE BEEN PROPERLY ACCOUNTED IN THE BOOKS OF ACCOUNT AND AUDITED. THE APPELLANT DENIES THE ALLEGATION THAT IT HAS SPENT A NY OF ITS FUNDS OR INCOME FOR THE PERSONAL BENEFITS OF THE TRUSTEES. THE EVID ENCE BROUGHT ON RECORD BY THE DEPARTMENT IS SKETCHY AND CANNOT BE RELIED ON T O SHOW THAT THE TRUST HAS INCURRED THE EXPENSES FOR THE PERSONAL BENEFIT OF THE TRUSTEES. AT THE COST OF REPETITION, IT IS SUBMITTED THAT THE ENTRIE S IN DOCUMENTS ARE MADE BY PRIVATE PERSONS AND THE TRUST HAS NOTHING TO DO WIT H IT. JUST BECAUSE THEY HAPPEN TO BE A TRUSTEE OR ACCOUNTANT OF THE TRUST I T CANNOT BE PRESUMED THAT THEY HAVE ACTED AT THE BEHEST OF THE TRUSTEES OR ON THE AUTHORIZATION OF THE EXECUTIVE COMMITTEE. ANY SUCH CONCLUSIONS ARE TENUOUS AND ARE NOT LEGALLY TENABLE. THE APPELLANT HAS ESTABLISHED THER EIN THAT IT HAS NOT VIOLATED SECTION 13(1)(C)(II). THE FINDINGS REGARD ING VIOLATION OF SECTION 13(1)(C)(II) ARE PERVERSE AS THEY ARE NOT SUPPORTED BY ANY MATERIALS AND EVIDENCES ON RECORD. THE FINDINGS OF THE ASSESSING OFFICER REGARDING VIOLATION OF SECTION 13(1)(C)(II) ARE BASED ON TOTA LLY UNRELIABLE DOCUMENTS. THE LD. AR FURTHER SUBMITTED THAT THE ENTIRE ASSESS MENT IS MADE BASED ON THE STATEMENT OF SRI. GOLI V. SRINIVAS, G H NAGARAJ AND PARENTS OF CERTAIN STUDENTS. THE APPELLANT VIDE ITS LETTER DATED 22.0 2.2017 HAD REQUESTED THE AO TO AFFORD IT AN OPPORTUNITY TO CROSS-EXAMINE THE ABOVE PERSONS. THE ITA NOS.500 TO 506/BANG/2020 PAGE 57 OF 183 AO DID NOT AFFORD OPPORTUNITY TO THE APPELLANT TO C ROSS-EXAMINE THEM. IT IS SUBMITTED THAT UNDER SUCH CIRCUMSTANCES, THE STATEM ENTS CANNOT BE RELIED UPON TO MAKE ASSESSMENT. THE ASSESSMENT MADE BASED ON SUCH STATEMENTS IS LIABLE TO BE QUASHED. 96. THE AO HAS STATED THAT SUMMONS WAS SENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO THE AFOREMENTIONED PARENT S IN ORDER TO ALLOW CROSS-EXAMINATION BY THE ASSESSEES REPRESENTATIVES . ONE OF THE PARENTS APPEARED AND RECONFIRMED. THE LD. AR SUBMITTED THA T THOUGH STATEMENTS OF PARENTS OF 5 STUDENTS WERE SAID TO HAVE BEEN OBT AINED, ONLY ONE PARENT HAS APPEARED AND RECONFIRMED THE CONTENTS OF HIS EA RLIER STATEMENT. AS THE PARENTS OF 4 OF THE STUDENTS DID NOT APPEAR FOR CRO SS-EXAMINATION, THEIR STATEMENTS CANNOT BE RELIED UPON AS THE APPELLANT C OULD NOT CROSS-EXAMINE THEM. THE FACT THAT THEY DID NOT RESPOND TO THE SU MMONS WOULD SHOW THAT THE CREDIBILITY OF THEIR STATEMENTS IS HIGHLY DOUBT FUL. WHEN THE APPELLANT HAS NEITHER BEEN GIVEN COPY OF THE STATEMENT NOR HAS GO T THE OPPORTUNITY TO CROSS-EXAMINE THE PERSON GIVING STATEMENT, SUCH STA TEMENTS CANNOT BE RELIED UPON. 97. WITH REGARD TO THE AOS OBSERVATIONS THAT THE R ESPONSES GIVEN BY THE SAID PARENT REMAINED THE SAME DURING THE COURSE OF CROSS EXAMINATION BY ASSESSEE AND HE REITERATED THAT THE PARENTS HAV E BEEN CROSS-EXAMINED BY THE APPELLANT, THE LD. AR SUBMITTED THAT THE ABO VE OBSERVATIONS ARE PERVERSE. THE APPELLANT WAS NOT AFFORDED ANY OPPO RTUNITY TO CROSS- EXAMINE ANY OF THE PERSONS INCLUDING THE PARENTS WH OSE STATEMENTS WERE RELIED UPON FOR THE PURPOSE OF MAKING ASSESSMENT. SUCH STATEMENTS CANNOT BE RELIED UPON. 98. THE LD. AR POINTED OUT TO THE OBSERVATIONS OF A O REFERRING TO THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN KOT HARI METALS LTD 377 ITR 581 ABOUT STATEMENTS OF A THIRD PARTY. THE AO NOTED IN THE INSTANT ITA NOS.500 TO 506/BANG/2020 PAGE 58 OF 183 CASE THE PERSONS WHO HAVE DEPOSED ARE SECRETARY & T RUSTEE OF THE TRUST AND AN EMPLOYEE ON THE ROLES OF THE TRUST. THE EMP LOYEE HAS ALSO NOT GIVEN ANY SWEEPING STATEMENTS AND GENERAL TALK. HE HAS SIMPLY RESPONDED TO THE SPECIFIC QUESTIONS ASKED IN RELATI ON TO THE WORK BEING UNDERTAKEN BY HIM AS ASSIGNED TO HIM BY HIS HIGHER UPS. ALSO THE STATEMENTS RECORDED FROM GOLI SRINIVAS WERE DONE WH EN HE WAS IN CHARGE OF THE TRUST OFFICE PREMISES DURING THE COURSE OF S EARCH PROCEEDINGS. THEREFORE HIS STATEMENT IS BEING CONSIDERED AS THAT OF A PERSON WHO IS PART AND PARCEL OF THE ORGANIZATION AND NOT THAT OF A TH IRD PARTY. BEING AN EMPLOYEE OF THE TRUST, IF THERE WAS ANYTHING THAT T HE ASSESSEE WANTED TO BRING ON RECORD, THE ASSESSEE MUST HAVE PRODUCED TH E SAID EMPLOYEE OF THE TRUST. ALSO IT IS NOT CLEAR AS TO WHY THE ASSE SSEE ASKED FOR CROSS- EXAMINATION OF GOLI SRINIVAS ALONE, WHEN SHRI G H N AGARAJ WAS THE PERSON WHO MADE THE BULK OF THE FACTUAL ADMISSIONS. 99. THE LD. AR SUBMITTED THAT THE ABOVE OBSERVATION S OF THE AO ARE NOT LEGALLY TENABLE. THE RIGHT TO CROSS-EXAMINE IS NOT DEPENDENT UPON THE ASSESSEES RELATIONSHIP WITH THE DEPONENT / WITNESS . THE RIGHT TO CROSS- EXAMINE IS DEPENDENT UPON THE FACT THAT THE STATEME NT OF A PARTY IS USED TO THE PREJUDICE OF THE ASSESSEE. THEREFORE, MERE FAC T THAT THE STATEMENT SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER I S THAT OF AN EMPLOYEE WOULD NOT DEPRIVE THE ASSESSEE OF HIS RIGHT TO CROS S-EXAMINE. THEREFORE, THE RATIO OF THE DECISIONS RELIED UPON BY THE APPEL LANT SQUARELY APPLY. MOREOVER, IT IS ASSESSEES PREROGATIVE TO DECIDE WH OM IT WANTS TO CROSS- EXAMINE. FOR THE PROPOSITION THAT THE RIGHT TO CRO SS-EXAMINE IS NOT RESTRICTED ONLY TO THOSE CASES WHERE THE DEPONENT / WITNESS IS A THIRD PARTY, RELIANCE IS PLACED ON THE DECISION OF SMT. MADHU GUPTA V. DCIT 2006 (2) TMI 496 - ITAT MUMBAI / [2006] 8 SOT 691 (MUM.) AND GARGI DIN JWALA PRASAD V. CIT [1974] 96 ITR 97 (ALL) . ITA NOS.500 TO 506/BANG/2020 PAGE 59 OF 183 100. IN THE CASE OF NAGULAKONDA VENKATA SUBBA RAO (SUPRA) ALMOST THE SAME PROPOSITION WAS ACCEPTED BY THE HONBLE ANDHRA PRADESH HIGH COURT. THE HONBLE HIGH COURT HELD THAT WHILE ESTIM ATING THE INCOME FROM OTHER MATERIALS, IT IS THE DUTY OF THE ASSESSING OF FICER TO DISCLOSE SUCH MATERIALS TO THE ASSESSEE AND TO GIVE HIM AN OPPORT UNITY TO REBUT. FOR THE SAME PROPOSITION, ASSESSEES RELIANCE ON THE DECISI ON IN THE CASE OF M.O. THOMAKUTTY (SUPRA) IS TO BE ACCEPTED. THIS WAS A CASE WHEREIN THE FIN DING OF THE INCOME-TAX AUTHORITIES WAS INFLUENCED BY THE INFORMATION GATHERED FROM THE GOVERNMENT AUTHORITY, BUT BROUGHT WITHOUT THE KNOWLEDGE OF THE ASSESSEE AND THE ASSESSEE WAS NOT GIVEN AN OPPORTUN ITY TO CONTROVERT THE STATEMENT OBTAINED. THE STAND OF THE REVENUE IS TH AT SINCE THE PERSONS FROM WHOM STATEMENTS/EVIDENCES OBTAINED WERE ASSESS EES OWN EMPLOYEES, IT WAS NOT NECESSARY TO GIVE THE ASSESSE E AN OPPORTUNITY. WE ARE UNABLE TO CONCUR WITH THE ABOVE VIEW. THE EVIDE NCES BEING USED AGAINST THE ASSESSEE; AS SUCH IT SHOULD HAVE BEEN B ROUGHT TO THE KNOWLEDGE OF THE ASSESSEE AND THE ASSESSEE SHOULD H AVE BEEN QUESTIONED. IT WAS HELD THAT ASSESSEES CONTENTION ON THIS POINT IS ACCEPTABLE. 101. IN SUNRISE TOOLING SYSTEMS PVT. LTD V. ITO 2012 (11) TMI 1081 - ITAT DELHI , THE TRIBUNAL HELD AS UNDER:- THE OPPORTUNITY OF CROSS-EXAMINING, SH. NITIN AGGA RWAL, A PARTNER OF SHREE LAXMI INDUSTRIAL CORPORATION HAS A LSO BEEN DENIED TO THE ASSESSEE ON WRONG BASIS BY THE AUTHOR ITIES BELOW THAT AN OPPORTUNITY OF CROSS EXAMINES NEEDS TO BE G IVEN ONLY WHEN THIRD PARTY IS INVOLVED OR A PARTY NOT KNOWN T O THE ASSESSEE OR A HOSTILE WITNESS IS INVOLVED AND FURTHER THAT T HE ONUS FOR CROSS EXAMINATION DOES NOT LIE WITH THE DEPARTMENT BUT LI ES WITH THE ASSESSEE WHO ALLEGEDLY MADE PURCHASES IN HIS BOOKS OF ACCOUNTS FROM THE SAID CONCERNS. 102. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTE D THAT THE AO HAS SOUGHT TO RELY UPON THOSE PORTIONS OF THE STATEMENT S WHICH FAVOURED THE ITA NOS.500 TO 506/BANG/2020 PAGE 60 OF 183 REVENUE. THE AO HAS NOT CONSIDERED THOSE PORTIONS OF THE STATEMENTS WHEREIN THE TRUSTEES HAVE DENIED ANY WRONG DOING. RELEVANT QUERIES AND REPLIES HAVE BEEN DISCUSSED AT VARIOUS PLACES IN TH E SUBMISSIONS. THE REFERENCE OF THE QUERY AND REPLY IS GIVEN BELOW: QUERY NO. 20 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI R L JALAPPA RECORDED ON 06.08.2015 QUERY NO. 25 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI R L JALAPPA RECORDED ON 06.08.2015 QUERY NO. 9 AND REPLY IN STATEMENT UNDER SECTION 13 2(4) OF SRI R L JALAPPA RECORDED ON 04.09.2015 QUERY NO. 12 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI R L JALAPPA RECORDED ON 04.09.2015 QUERY NO. 15 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI R L JALAPPA RECORDED ON 04.09.2015 QUERY NO. 7 AND REPLY IN STATEMENT UNDER SECTION 13 1 OF SRI G H NAGARAJ RECORDED ON 07.08.2015 QUERY NO. 11 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 07.08.2015 QUERY NO. 16 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 07.08.2015 QUERY NO. 6 AND REPLY IN STATEMENT UNDER SECTION 13 1 OF SRI G H NAGARAJ RECORDED ON 13.08.2015 QUERY NO. 7 AND REPLY IN STATEMENT UNDER SECTION 13 1 OF SRI G H NAGARAJ RECORDED ON 13.08.2015 QUERY NO. 14 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 13.08.2015 QUERY NO. 13 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 13.08.2015 QUERY NO. 13 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI G H NAGARAJ RECORDED ON 20.08.2015 QUERY NO. 17 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI G H NAGARAJ RECORDED ON 20.08.2015 QUERY NO. 16 AND REPLY IN STATEMENT UNDER SECTION 1 32(4) OF SRI G H NAGARAJ RECORDED ON 20.08.2015 QUERY NO. 16 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 16.10.2015 QUERY NO. 19 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 16.10.2015 QUERY NO. 23 AND REPLY IN STATEMENT UNDER SECTION 1 31 OF SRI G H NAGARAJ RECORDED ON 16.10.2015 ITA NOS.500 TO 506/BANG/2020 PAGE 61 OF 183 103. IT IS SUBMITTED THAT THE AO CANNOT DO CHERRY-P ICKING WHILE RELYING UPON THE STATEMENTS RECORDED. THE FINDING OF THE AO IN PAGE 113 OF THE ORDER IS PERVERSE AS SUCH EXPLANATION IS VERIFIABLE . 104. IT IS SUBMITTED THAT THE FINDING OF THE AO THA T THE APPELLANT HAD ADMITTED THE CONTENTS OF THE SEIZED MATERIALS VIDE ITS LETTER DATED 09.12.2017 SUBMITTED ON 20.12.2017 IS PERVERSE AS I T IGNORES THE FACT THAT IT WAS A CONDITIONAL OFFER AND WITHOUT PREJUDICE TO TH E MAIN CONTENTION THAT NO CAPITATION FEE IN CASH WAS EVER AUTHORIZED TO BE CO LLECTED BY THE TRUST. 105. THE AO RELIED ON CERTAIN CHEQUE LEAVES MENTION ED IN PARAGRAPH 5.2.1.4 AT PAGES 47 TO 49 OF THE ASSESSMENT ORDER. IT IS SUBMITTED THAT SUCH MATERIALS WERE NOT MENTIONED IN ANY OF THE NOTICES/ LETTERS ISSUED BY THE LEARNED ASSESSING OFFICER DURING THE ASSESSMENT PRO CEEDINGS. THE ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNITY TO THE APPELLANT TO REBUT THESE OBSERVATIONS. THE APPELLANT HAS NOT BEEN PRO VIDED COPY OF THE MATERIALS RELIED UPON TO MAKE THE SAID ANALYSIS. 106. A PERUSAL OF THE SEIZED MATERIAL WHICH IS EXTR ACTED IN THE ASSESSMENT ORDER AND THE REPLY TO THE QUERIES FROM THE STATEMENT OF SRI. GOLI V. SRINIVAS WHICH IS RELIED UPON WOULD SHOW TH AT THEY ARE NOT CONCLUSIVE EVIDENCE TO HOLD THAT THE APPELLANT HAS RECEIVED ANY CAPITATION FEE. THE CONCLUSIONS DRAWN BY THE AO CANNOT BE IN FERRED FROM THE SEIZED MATERIAL. FEW INSTANCES ARE DISCUSSED IN THE FOLLO WING PARAGRAPHS. 107. THE AO SOUGHT TO RELY UPON REPLY TO QUESTION N O 19 OF THE STATEMENT UNDER SECTION 132(4) OF SRI. GOLI V. SRINIVAS RECOR DED ON 06.08.2015. THE SAID QUESTION AND THE SAME WERE CONFRONTED TO SRI. GOLI V. SRINIVAS. RELYING UPON THE SAID PAGES OF THE SEIZED MATERIAL AND THE STATEMENT OF SRI. GOLI V. SRINIVAS, THE AO OBSERVED AS UNDER AT PAGE 14 OF THE ASSESSMENT ORDER: ITA NOS.500 TO 506/BANG/2020 PAGE 62 OF 183 UPON EXAMINATION OF THE ABOVE EXHIBITED IMAGE OF T HE SEIZED MATERIAL, IT IS SEEN THAT AGAINST THE NAME OF THE S TUDENT, THEIR PG COURSE SPECIALIZATION, PACKAGE AMOUNT AND INSTALLME NT WISE DETAILS OF THE PAYMENTS MADE ON CERTAIN DATES MENTI ONED AGAINST THE SAME HAVE BEEN SEIZED. FROM THE SHEETS IT CAN BE SEEN THAT THE PACKAGE AMOUNTS ARE SIGNIFICANTLY HIGHER THAN S TIPULATED FEE FOR THE RELEVANT COURSES. 108. IT IS SUBMITTED THAT THE CONCLUSION DRAWN BY T HE AO CANNOT BE DEDUCED EITHER FROM THE SEIZED MATERIAL OR FROM THE STATEMENT OF SRI. GOLI V. SRINIVAS. THE PAGES 4,6 AND 8 OF THE SEIZED MAT ERIAL DO NOT MENTION ANYTHING ABOUT THE ALLEGED PACKAGE FEE. NO DATE OR PERIOD IS MENTIONED IN THOSE SHEETS. IT IS NOT KNOWN TO WHICH PERIOD IT B ELONGS TO. CERTAIN ENTRIES ARE CANCELLED. THEY ARE MERE LOOSE SHEETS AND CANN OT BE TREATED AS INCRIMINATING MATERIAL. THERE IS NOTHING IN THE SH EET TO EVIDENCE COLLECTION OF CAPITATION FEE BY THE APPELLANT. 109. THE AO EXTRACTED PAGES 9 AND 11 OF THE SEIZED MATERIAL NO. A/DUU/01 AND ALSO CONFRONTED THE SAME TO SRI. GOLI V. SRINIVAS. THE REPLY OF SRI. GOLI V. SRINIVAS IS REPRODUCED AT PAGE 18 O F THE ASSESSMENT ORDER. THESE TWO PAGES CANNOT BE TREATED AS EVIDENCE. IT IS NOT KNOWN TO WHICH PERIOD THESE TWO SHEETS BELONG TO. NO DATES ARE ME NTIONED IN THESE SHEETS. IT CONTAINS ONLY NAMES OF CERTAIN PERSONS WITH SOME FIGURES. THESE SHEETS ALSO CANNOT BE RELIED UPON TO HOLD THA T THE APPELLANT HAS COLLECTED CAPITATION FEE. 110. AT PAGE 19 OF THE ASSESSMENT ORDER, THE AO HAS EXTRACTED PAGE 31 OF A/DUU/01 AND OBSERVED AS UNDER:- THE ABOVE EXHIBIT IS AN IMAGE OF SEIZED MATERIAL A /DUU/01, PAGE NO. 31 WHICH HAS INFORMATION TABULATED ABOUT T HE STATEMENT OF MBBS ADMISSIONS FOR YEAR 2014-15. I N READING THE ABOVE TABLE IT CAN EASILY BE INFERRED THAT THE THIRD COLUMN REFERS TO THE FEE DEMAND MADE, FOLLOWED BY COLUMN S OF FEE COLLECTED AND BALANCE FEE RECEIVABLE AS CAN BE SEEN FROM THE ITA NOS.500 TO 506/BANG/2020 PAGE 63 OF 183 COLUMN HEADINGS................FROM THIS SHEET OF S EIZED MATERIAL IT CAN ALSO BE SEEN THAT IN CASE OF A MAJORITY OF STUD ENTS LISTED OUT IN THE SHEET, THE PAYMENT OF ENTIRE DEMAND HAS ALREADY BEEN MADE BY THE DATE OF SEARCH WHICH WAS IN AUGUST 2015, JUS T ABOUT ONE YEAR FROM THE ADMISSION OF THESE STUDENTS (AS THEY ALL BELONG TO 2014-15 ACADEMIC YEAR ADMISSIONS.. 111. THE SAID PAGE 31 DOES NOT CONTAIN ANY DETAILS ABOUT REGULAR FEE. THE AO MERELY PRESUMED THAT THE ENTIRE AMOUNT SHOWN UNDER DEMAND COLUMN IS RECEIVED IN CASH. THERE IS NO INFORMATIO N REGARDING REGULAR FEE. HOW CAN ANY UNACCOUNTED CASH BE COMPUTED BASED ON S UCH DOCUMENT. THE AOS CONCLUSION DOES NOT EMERGE FROM THE PERUSA L OF THE SAID SHEET. 112. THE AO HAS AT PAGES 33 TO 41 EXTRACTED PAGES 8 4 TO 91 OF THE SEIZED MATERIAL NO. A/DUU/01 AND OBSERVED AS UNDER: - AT PAGE 34 OF THE ASSESSMENT ORDER: FROM THE ABOVE IMAGE, IT IS SEEN THAT A COLLECTION IN DOLLARS HAS BEEN MADE. THE SAME IS BEING WRITTEN IN THE CONVERSI ON FORMULA AS 135USD = 5L. FROM THE SAME, IT CAN BE CONCLUDED THAT 135 ACTUALLY MEANS 13,500 US DOLLARS GIVEN THE THEN CON VERSION RATES. SUBSEQUENT EXHIBITS SHOW HOW THE DOLLARS REC EIVED WERE DEALT WITH AT PAGE 35 OF THE ASSESSMENT ORDER: FROM THE ABOVE3 SCANNED EXHIBITS OF THE MATERIALS SE IZED IT CAN BE TOTAL OF 28 STUDENTS WERE ADMITTED UNDER NRI CATE GORY AND AGAINST MULTIPLE NAMES SUCH AS ENTRY NUMBER 65, 63, 58, 56, ETC, IT HAS BEEN CLEARLY MENTIONED AS 40 + FEE OR 66 PACK AGE. THEREFORE, IT CAN BE INFERRED THAT IN THE CASE OF NR I CATEGORY STUDENT CAPITATION FEE WAS BEING RECEIVED OVER AND A BOVE THE STIPULATED REGULAR FEE. AN INTERESTING OBSERVATION MADE FROM THE SAID SCANNED MATERIAL IS THAT IN SOME INSTANCES REC EIPTS ARE MADE IN DOLLARS WHICH ARE LATER BEING RETURNED IN CASH. AT PAGE 39 OF THE ASSESSMENT ORDER: FROM A CURSORY GLANCE ALSO, IT CAN BE SEEN FROM THE ABOVE SHEETS AS TO WHAT IS THE TOTAL NUMBER OF STUDENTS IN WHOSE CASE IT IS SEEN ITA NOS.500 TO 506/BANG/2020 PAGE 64 OF 183 THAT CAPITATION FEE IS BEING COLLECTED IN CASH APART FROM THE REGULAR FEE COLLECTIONS. THIS HANDWRITTEN LIST ALO NE HAS A TOTAL OF 83 ENTRIES. FOR A COLLEGE OFFERING ONLY 150 MBBS S EATS, A LIST OF 83 STUDENTS, THAT TOO ALL BELONGING TO THE VERY SAME BAT CH OF ADMISSIONS PROVES THE POINT THAT IT IS NOT STUDENTS IN A CERTAIN CATEGORY OF ADMISSION LIKE NRI OR INSTITUTIONAL (MA NAGEMENT QUOTA) ALONE WHO ARE BEING FORCED TO PAY CAPITATION FEE BUT ALSO STUDENTS GETTING ADMITTED UNDER THE CATEGORY OF ME RIT 113. IT IS SUBMITTED THAT THE OBSERVATIONS OF THE A O ARE PERVERSE. THERE IS NOTHING IN THESE PAGES WHICH WOULD ENABLE A PERS ON TO ARRIVE AT THE AFORESAID CONCLUSION. A PERUSAL OF THE SAID PAGES NO. 84 TO 91WOULD SHOW THAT THERE ARE SOME ROUGH NOTINGS. THEY CONTAIN CE RTAIN NAMES, MOBILE NUMBERS AND SOME FIGURES. NOTHING CAN BE MADE OUT AS TO WHAT THOSE ENTRIES ARE ALL ABOUT. THESE PAGES DO NOT EVEN CON TAIN THE DATES OR PERIOD. MOST OF THE ENTRIES ARE SCORED OFF. THIS MATERIAL CANNOT BE TREATED AS AN EVIDENCE TO SUPPORT THE CONTENTION OF THE AO THAT C APITATION FEE IS BEING RECEIVED EVEN FROM STUDENTS ADMITTED UNDER MERIT QU OTA. 114. THE AO HAS SIMILARLY EXTRACTED CERTAIN OTHER P AGES OF THE SEIZED MATERIAL NO. A/DUU/01 AND MADE OBSERVATIONS WHICH A RE NOT SUPPORTED BY THE PAGE RELIED UPON. AFTER NOTING THE EXTRACTS O F THE AFOREMENTIONED SEIZED MATERIALS AND THE STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED ON 06.08.2015, THE AO OBSERVED AT PAGE 41 OF THE ASSES SMENT ORDER:- ON ANALYSIS OF THE SEIZED MATERIALS AND THE REPLY GIVEN BY GVS TO THE QUESTIONS ASKED W.R.T THE SEIZED MATERIALS G OES TO SHOW THAT FEES ARE RECEIVED IN CASH. THE NOTING ARE MADE IN LOOSE SHEETS TO KEEP AN ACCOUNT OF THE PAYMENT RECEIVED IN CASH AND ALSO TO KEEP THE ENTRY OUT OF BOOKS. HENCE IT CAN BE INFERRED T HAT CASH RECEIPT IS NOT ACCOUNTED IN BOOKS. FURTHER, THE REPLY GIVE N TO QUESTIONS ASKED FROM Q. NO. 13 TO Q. NO. 17 DURING THE COURSE OF SEARCH OPERATION U/S 132 ON 06.08.2015 BY GVS AGAIN GOES T O SHOW THAT CASH IS RECEIVED AND IS NOT ACCOUNTED IN THE BOOKS ITA NOS.500 TO 506/BANG/2020 PAGE 65 OF 183 115. AT PAGES 42 TO 46 OF THE ASSESSMENT ORDER, THE AO EXTRACTED CERTAIN PAGES FROM SEIZED MATERIAL NO. A/DUU/13 AND CERTAIN QUERIES AND REPLIES FROM THE STATEMENT OF SRI. GOLI V. SRINIVAS. HE OB SERVED AT PAGE 46 OF THE ASSESSMENT ORDER AS UNDER:- THE SEIZED MATERIAL IN A/DUU/13 AS WELL AS DIGITAL EVIDENCE CONFIRM THE FACT THAT CASH HAS BEEN RECEIVED OVER A ND ABOVE THE COURSE FEE AND THE SAME IS ALSO NOT ACCOUNTED IN TH E BOOKS. AGAIN EXTRACT OF THE REPLY OF GVS TO Q. NO. 39 WHEN SHOWN SEIZED MATERIAL A/DUU/4 FROM THE AFOREMENTIONED STA TEMENT ALSO CONFIRMS THE FACT THAT CAPITATION FEES WAS RECEIVED IN CASH. 116. IT IS SUBMITTED THAT THE ABOVE OBSERVATIONS OF THE AO ARE NOT SUSTAINABLE. HE HAS MERELY RELIED UPON THE LOOSE PAPERS, OBSCURE NOTINGS MADE IN CERTAIN NOTE BOOKS, STATEMENT OF SR I. GOLI V. SRINIVAS AND HAS COME TO THE ABOVE CONCLUSION. THE CONCLUSIONS DRAWN BY HIM ARE NOT FORTHCOMING FROM THE DOCUMENTS AND STATEMENTS. THE AO HAS MADE HIS OWN ANALYSIS BELOW EACH EXTRACT OF THE SEIZED MATER IAL. THE ANALYSIS IS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. 117. IN THE SUBMISSIONS MADE WITH RESPECT TO GROUND ON EXTRAPOLATION OF INCOME, THE APPELLANT HAS DEMONSTRATED WITH REFEREN CE TO SPECIFIC INSTANCES THAT SEIZED MATERIAL WHICH THE AO HAS SOU GHT TO RELY UPON TO COMPUTE THE UNACCOUNTED CASH IS NOT COGENT EVIDENCE . THE APPELLANT REITERATES THOSE SUBMISSIONS. 118. WITHOUT PREJUDICE TO THE CONTENTION THAT THE R EPLIES GIVEN TO VARIOUS QUERIES ARE NOT TENABLE IN LAW AS THEY ARE NOT SUPP ORTED BY ANY MATERIAL EVIDENCE, IT IS SUBMITTED THAT THE INFERENCES DRAWN BY THE AO DO NOT DIRECTLY EMERGE FROM THE STATEMENT OF SRI. GOLI V. SRINIVAS. THE ONLY BASE FOR THE ANALYSIS OF THE LOOSE SHEETS, NOTE BOOKS CONTAINING OBSCURE NOTINGS AND THE EXCEL SHEETS IS THE STATEMENT OF SRI. GOLI V. S RINIVAS. THE INFERENCES ITA NOS.500 TO 506/BANG/2020 PAGE 66 OF 183 REFLECT MORE OF THE ZEAL OF THE AO TO TAX RATHER TH AN AN OBJECTIVE ANALYSIS. THE SEIZED MATERIAL DOES NOT CONTAIN ANY RELIABLE E VIDENCE. 119. AT PAGE 10 OF THE ASSESSMENT ORDER, THE AO REL IED UPON REPLY TO QUERY NO. 12 FROM THE STATEMENT UNDER SECTION 132(4 ) OF SRI. GOLI V. SRINIVAS RECORDED ON 06.08.2015 WHICH IS AS UNDER:- IN THE SWORN STATEMENT U/S 132(4) OF THE INCOME-TA X ACT, 1961 RECORDED FROM SHRI GOLI VEERAVENKATA SRINIVAS DURIN G THE COURSE OF SEARCH OPERATION U/S 132 DT: 06.08.2015 HE WAS A SKED ABOUT HIS ROLE AND RESPONSIBILITIES IN SRI DEVARAJ URS MEDICA L COLLEGE. THE EXTRACT OF HIS REPLY WITH RESPECT TO THE QUESTI ON ASKED AND ANSWER GIVEN TO VIDE SL. NO. 12 TAKEN FROM HIS STAT EMENT ON OATH IS: ......... FROM THE ABOVE STATEMENT OF GVS IT CAN BE INFERRED THAT CAPITATION FEE IS RECEIVED IN CASH. BROKERS / AGEN TS ARE USED AS INTERMEDIARIES FOR BRINGING OF STUDENTS FOR ADMISSI ON WITH THE PAYMENT OF CAPITATION FEE. FURTHER FROM THE STATEM ENT IT CAN ALSO BE INFERRED THAT THE SECRETARY AND CHAIRMAN IS ALSO INVOLVED IN THE RECEIPT OF CASH AS SRI. GOLI V SRINIVAS FOLLOWS THE DIRECTIONS GIVEN BY THEM. 120. IT IS SUBMITTED THAT MERELY BECAUSE THE ACCOUN TANT HAS MADE A STATEMENT THAT CAPITATION FEE IS RECEIVED, IT IS NO T SUFFICIENT. IT IS NECESSARY TO CORROBORATE WITH EXTERNAL EVIDENCE. THE PERUSAL OF THE ENTIRE ASSESSMENT ORDER WOULD SHOW THAT THE AO MERELY RELI ED UPON STATEMENT OF SRI. GOLI V. SRINIVAS. HE DID NOT MAKE ANY FURTHER ENQUIRY AND COLLECT EVIDENCE TO VERIFY THE VERACITY OF THE SAME. IN FA CT, IN THE STATEMENT GIVEN ON 13.08.2015, SRI. GOLI V. SRINIVAS IN RESPONSE TO QUESTION NO. 6, PARTLY RETRACTED FROM THE RESPONSE GIVEN TO QUESTION NO. 1 2 IN HIS STATEMENT RECORDED ON 07.08.2015. QUESTION NO. 6 AND REPLY A S PER THE STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED ON 13.08.2015 IS AS UNDER:- ITA NOS.500 TO 506/BANG/2020 PAGE 67 OF 183 Q.6 I AM SHOWING YOU, YOUR REPLY TO Q. NO. 12 OF THE STATEMENT RECORDED ON 06.08.2015 ON THE DAY OF THE SEARCH U/S 132 CONDUCTED IN THE PREMISES OF SRI DEVARAJ URS ME DICAL COLLEGE. DO YOU CONFIRM THE SAME? ANS. YES, I CONFIRM THE CONTENTS OF THE STATEMENT GIVEN BY ME DURING THE COURSE OF SEARCH CONDUCTED ON 06.08.2015 AS MENTIONED ABOVE. HOWEVER IN RESPECT OF PAYMENTS / BROKERS, IT IS CLARIFIED THAT IT IS NOT A ROUTINE OR REGULAR AFFAI R. BUT THE SAME IS AN OCCASIONAL EVENT / HAPPENING. 121. THIS WOULD SHOW THAT SRI. GOLI V. SRINIVAS IS NOT SURE ABOUT THE CORRECTNESS OF HIS OWN STATEMENT. HE HAS GIVEN THE STATEMENT BASED ON SURMISE AND CONJECTURE. ADDITION MADE MERELY BASED ON THE STATEMENT OF A PERSON RECORDED UNDER SECTION 132(4) OF THE ACT W HICH HE LATER ON EITHER PARTLY RETRACTS OR SUBSEQUENTLY MAKES ANY STATEMENT WHICH EITHER CONTRADICTS OR LESSENS THE RIGOURS OF HIS OWN STATE MENT MADE EARLIER, GOES TO SHACKLE THE TRUTH OR VERACITY OF THE FIRST-MENTI ONED STATEMENT. THE SAME CANNOT BE RELIED UPON. 122. THE AO HAS MERELY RELIED UPON REPLY TO QUESTIO N NO. 12 OF STATEMENT RECORDED ON 06.08.2015 AND IGNORED THE REPLY TO QUE STION NO. 6 IN THE STATEMENT RECORDED ON 12.08.2015. IT IS SUBMITTED THAT THE AO CANNOT PICK AND CHOOSE TO RELY UPON A PORTION OF THE STATEMENT. ALL THE STATEMENTS THAT ARE RECORDED DURING THE COURSE OF SEARCH OR SUBSEQU ENTLY SHOULD BE READ TOGETHER. IN CASE OF INCONSISTENCY AND IN THE ABSE NCE OF ANY CORROBORATIVE EVIDENCE WHICH RESOLVES THE INCONSISTENCY, THE INCO NSISTENT PORTION SHOULD BE IGNORED. WE HASTEN TO ADD THAT MERE CONSISTENCY IN THE STATEMENT WOULD NOT BE SUFFICIENT FOR IT TO BE RELIED UPON FO R MAKING ADDITION IN AN ASSESSMENT UNDER SECTION 153A. THE SAME IS REQUIRE D TO BE CORROBORATED WITH EXTERNAL EVIDENCE. 123. IT IS SUBMITTED THAT SRI. GOLI V. SRINIVAS MAN AGES ALL THE ACCOUNTS OF MEDICAL COLLEGE AND WORKS DIRECTLY UNDER THE REGIST RAR OF THE MEDICAL ITA NOS.500 TO 506/BANG/2020 PAGE 68 OF 183 COLLEGE. HE IS AN ACCOUNTANT-CUM-CLERK OF SRI DEVA RAJ URS ACADEMY OF HIGHER EDUCATION AND RESEARCH OF WHICH THE MEDICAL COLLEGE IS A PART AFTER BEING DEEMED AS UNIVERSITY. [QUESTION NO. 10 OF THE STATEMENT UNDER SECTION 131 OF SRI. G H NAGARAJ RECORDED ON 07.08.2 015]. 124. THE AO, AT PAGE 6 OF THE ASSESSMENT ORDER, EXT RACTED QUESTION NO. 7 AND THE REPLY FROM THE STATEMENT UNDER SECTION 131 OF SRI. G H NAGARAJ RECORDED ON 07.08.2015. IT PERTAINS TO THE ROLE OF SRI. G H NAGARAJ IN THE TRUST. SRI. G H NAGARAJ STATED THAT HE LOOKED AFTE R THE DAY-TO-DAY AFFAIRS OF ALL THE EDUCATIONAL INSTITUTIONS UNDER THE AEGIS OF THE TRUST EXCEPT THE MEDICAL COLLEGE. HE HAS STATED THAT THE MEDICAL CO LLEGE COMES UNDER THE DEEMED UNIVERSITY. SO ITS AFFAIRS ARE MANAGED BY T HE VICE-CHANCELLOR OF THE DEEMED UNIVERSITY. FURTHER IN REPLY TO QUESTIO N NO. 13 REGARDING FUNCTIONS AND DUTIES IN THE CAPACITY OF SECRETARY O F TRUST, SRI. G H NAGARAJ, IN STATEMENT UNDER SECTION 131 RECORDED ON 13.08.20 15 STATED THAT THE APPOINTMENT OF STAFF AND DISBURSEMENT OF SALARIES T O STAFF TO ALL INSTITUTIONS EXCEPT THE DEEMED UNIVERSITY IS TAKEN BY HIM. THE SAME IS RATIFIED BY THE TRUSTEES DURING THE TRUST MEETINGS. IN CASE OF DEE MED UNIVERSITY, THE SYNDICATE MEMBERS TAKE DECISIONS IN RUNNING THE ADM INISTRATION OF THE UNIVERSITY. THE DEEMED UNIVERSITY IS HEADED BY THE VICE-CHANCELLOR AND REGISTRAR. THEREFORE, THE ROLE OF SRI. G H NAGARAJ IS LESS WHEN IT COMES TO ADMINISTRATION OF DEEMED UNIVERSITY. SRI. JALAPPA IN REPLY TO QUESTION NO. 25 IN THE STATEMENT UNDER SECTION 132(4) RECORDED O N 06.08.2015 HAS STATED THAT HE HAS NOTHING TO DO WITH THE MANAGEMEN T OF MEDICAL COLLEGE. THAT BEING THE CASE, HOW CAN SRI. GOLI V. SRINIVAS BLINDLY OBEY THEIR INSTRUCTIONS? IF SRI. GOLI V. SRINIVAS HAS BLINDLY FOLLOWED THE INSTRUCTION OF JALAPPA OR SRI. G H NAGARAJ AS HE DEPOSED, IT IS HI S MISTAKE. HE DOES NOT HAVE A MANDATE TO FOLLOW AN INSTRUCTION OF A TRUSTE E IF SUCH INSTRUCTION IS CONTRARY TO THE RULES AND REGULATIONS GOVERNING THE TRUST OR THE UNIVERSITY. IF, FOR ANY REASON, HE HAS OBEYED ANY SUCH INSTRUCT ION OF ANY TRUSTEE WHICH ITA NOS.500 TO 506/BANG/2020 PAGE 69 OF 183 ARE CONTRARY TO OR VIOLATE THE SAID RULES AND REGUL ATIONS AND THERE IS NO OFFICIAL DOCUMENT EMPOWERING THE TRUSTEE TO GIVE AN Y SUCH INSTRUCTIONS, THE TRUST CANNOT BE MADE RESPONSIBLE. 125. IT IS TO BE NOTED THAT SRI. GOLI V. SRINIVAS N OWHERE STATED THAT THE CASH IS COLLECTED AT THE BEHEST OF THE EXECUTIVE CO MMITTEE. THEREFORE, THE STATEMENT OF SRI. GOLI V. SRINIVAS CANNOT BE TREATE D AS EVIDENCE TO HOLD THAT THE APPELLANT HAS RECEIVED CAPITATION FEE IN CASH. IN ANSWER TO QUESTION NO. 19 OF STATEMENT DATED 16.10.2015, SRI. G H NAGARAJ HAS CLEARLY STATED THAT NO CASH WAS RECEIVED FROM STUDENTS AND ALL FEES ARE RECEIVED THROUGH CHEQUES AND DDS. IN FACT IN ANSWER TO QUESTION NO. 22 TO A POINTED QUESTION THAT CASH HAS BEEN COLLECTED FROM MR. RANG ARAJU T, FATHER OF MS. C.R. PAVANA, BUT HOWEVER, MR. NAGARAJ HAS DENIED TH E RECEIPT OF CASH. HE HAS STATED THIS IS ABSOLUTELY FALSE. A FURTHER P ERUSAL OF THE ANSWER WOULD SHOW THAT THE FEES ARE COLLECTED ONLY THROUGH CHEQU E AND DDS AND NOT THROUGH CASH. THEREFORE, THE CONCLUSION REACHED BY THE AO THAT CAPITATION FEE IS RECEIVED IN CASH IS A MERE SURMISE AND CONJE CTURE NOT BASED ON ANY MATERIAL ON RECORD. 126. APART FROM THE LOOSE SHEETS / NOTE PADS, THE A O ALSO RELIED UPON THE SEIZED MATERIAL NO. A/DUU/16 CONSISTING OF COPIES O F UNREALIZED CHEQUES. AT PARAGRAPH 6.23 OF THE SUBMISSIONS, THE APPELLANT ESTABLISHED THAT THE SAME CANNOT QUALIFY AS INCRIMINATING MATERIAL AT AL L. THE AO HAS DRAWN CERTAIN INFERENCES BELOW THE EXTRACT OF SCANNED COP Y OF THE SAID UNREALIZED CHEQUES. THIS ANALYSIS IS NOT BORNE OUT FROM ANY E VIDENCE. THE SAID INFERENCES CANNOT EVEN REMOTELY BE CONNECTED TO THE STATEMENT OF SRI. GOLI V. SRINIVAS. IN FACT, SRI GOLI V. SRINIVAS STATED IN HIS STATEMENT IN REPLY TO QUESTION NO. 33 THAT CHEQUES ARE RECEIVED ONLY FROM NRI AND MANAGEMENT QUOTA. THERE IS NOTHING IN THIS REPLY TO SUPPORT T HE CONTENTION OF THE AO THAT CHEQUES ARE RECEIVED AS SECURITY FOR FUTURE IN STALMENT OF FEE. IT DOES ITA NOS.500 TO 506/BANG/2020 PAGE 70 OF 183 NOT TALK ABOUT OF ANY FUTURE INSTALMENT OF FEE PAYA BLE IN CASH. WITHOUT PREJUDICE TO THE CONTENTION THAT SAID UNREALIZED CH EQUES ARE NOT RELIABLE EVIDENCE, IT IS SUBMITTED THAT THERE IS NOTHING TO PROVE THAT SUCH CHEQUES ARE RECEIVED FROM MERIT STUDENTS. 127. WITHOUT PREJUDICE TO THE ABOVE, THE ANALYSIS M ADE BY THE AO IS BASELESS AND DEVOID OF ANY MERIT. THE AO DID NOT E VEN OBTAIN STATEMENTS FROM THE CANDIDATES WHOM HE HAS REFERRED TO IN THE ASSESSMENT ORDER AT PAGES 47, 48 AND 49 OF THE ASSESSMENT ORDER [WHERE HE HAS DISCUSSED REGARDING UNREALIZED CHEQUES] NOR ANY OF THEIR PARE NTS. 128. IT IS RELEVANT TO NOTE QUERY NO. 18 AND REPLY IN THE STATEMENT UNDER SECTION 131 OF SRI G H NAGARAJ RECORDED ON 13.08.20 15. THEY ARE REPRODUCED BELOW: Q. 18 WHETHER THE ABOVE MENTIONED FEES IS FOR ONE ACADEMIC YEAR OR FOR FULL DURATION OF THE COURSE. ANS. RS. 5,70,000 WHICH IS FIXED FOR THE MERITORIOU S STUDENTS IS AN ANNUAL FEE AND $ 1,40,000 IS THE FEES FIXED FOR THE NRI STUDENTS FOR THE ENTIRE DURATION OF THE COURSE. SU M OF RS. 5,70,000 IS NORMALLY PAID IN ONE INSTALMENT. HOWEV ER, IN THE CASE OF NRI STUDENTS AS THE FEES PAYABLE IS QUITE H IGH AND FOR THE ENTIRE DURATION OF THE COURSE, HENCE, THE SAME IS O FTEN PAID BY THE STUDENTS IN 2 OR 3 INSTALMENTS AS PER THEIR REQUEST S. BEFORE THAT THE POST DATED CHEQUES ARE COLLECTED AS A SECURITY AS AND WHEN THE FEES IS PAID IN INSTALLMENT EITHER THROUGH DD OR RT GS / NEFT, THE CHEQUES ARE RETURNED TO THE CANDIDATES. 129. THE ABOVE WOULD SHOW THAT THE POST-DATED CHEQU ES ARE COLLECTED AS SECURITY AS AGAINST FUTURE INSTALMENTS OF FEE PAYAB LE BY THE CANDIDATES WHO REQUEST FOR INSTALMENT FACILITY FOR PAYING THE FEE. IT IS NOT MEANT FOR HOLDING AS SECURITY AGAINST FUTURE INSTALMENTS RECEIVABLE I N RESPECT OF CASH PORTION OF THE FEE. THEREFORE, THE SEIZED UNREALIZED CHEQUE S ARE ALSO NOT RELIABLE ITA NOS.500 TO 506/BANG/2020 PAGE 71 OF 183 EVIDENCE TO HOLD THAT APPELLANT HAS RECEIVED ANY CA PITATION FEE IN CASH AND THE OBSERVATIONS OF THE AO ARE LIABLE TO BE QUASHED . 130. AT PAGES 78 TO 86, THE AO HAS DISCUSSED REGARD ING THE ADMISSION PROCESS AND THE MODUS OPERANDI ADOPTED ALLEGEDLY FO LLOWED BY THE APPELLANT TO COLLECT CAPITATION FEE. HE HAS OBSERV ED AT PAGE 80 OF THE ASSESSMENT ORDER THAT FROM THE ABOVE IT CAN BE CLEARLY INFERRED THAT FOR ADMISSION TO VARIOUS COURSES, THE TRUST ALSO MAKES USE OF AGENTS WHO USED TO SUPPLY CANDIDATES FOR ADMISSION WITH CAPITA TION FEE AS REQUESTED BY THE TRUST. THE AMOUNT OF COMMISSION PAID TO THE AGENTS IS ALSO NOT ACCOUNTED IN THE BOOKS OF THE TRUST AS THE SAME IS IN CASH. HE RELIED UPON SEIZED MATERIAL A/DUU/01, A/DUU/02 AND STATEME NT UNDER SECTION 132(4) OF SRI. GOLI V. SRINIVAS RECORDED ON 06.08.2 015 TO ARRIVE AT THIS CONCLUSION. IT IS SUBMITTED THAT SEIZED MATERIAL W HICH IS RELIED UPON DOES NOT DEMONSTRATE THE ALLEGATION THAT CERTAIN AGENTS SUPPLY CANDIDATES FOR THE APPELLANT. THERE IS NOTHING IN THE SEIZED MATERIAL WHICH WOULD DEMONSTRATE THE PROCESS OF ADMISSION FOLLOWED BY THE APPELLANT. THE APPELLANT VIDE ITS LETTER DATED 28.11.2017 HAS SUBMITTED THE DETAILED PROCESS OF THE ADMISSION FOLLOWED BY IT. THE AO HAS IGNORED THE S AME. SRI G H NAGARAJ IN HIS STATEMENT UNDER SECTION 131 RECORDED ON 13.0 8.2015, IN REPLY TO QUERY NO. 16 HAS EXPLAINED THE ADMISSION PROCESS. THE AO IGNORED IT COMPLETELY. HE HAS MERELY RELIED UPON THE STATEMEN T OF SRI. GOLI V. SRINIVAS. THERE IS NO EVIDENCE TO CORROBORATE THE STATEMENT OF SRI. GOLI V. SRINIVAS REGARDING THE ADMISSION PROCESS STATED TO BE FOLLOWED BY THE APPELLANT. EVEN THE SEIZED MATERIAL DOES NOT CORRO BORATE WITH THE STATEMENT OF SRI. GOLI V. SRINIVAS. IN THE REPLY T O QUESTION NO. 14 OF THE STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED ON 07.0 8.2015 WHEREIN HE WAS ASKED TO FURNISH INFORMATION REGARDING CONSULTANTS ENGAGED FOR GETTING CANDIDATES FOR ADMISSION IN NRI / MANAGEMENT QUOTA, SRI. GOLI V. SRINIVAS MENTIONED NAMES OF CERTAIN CONSULTANTS. NEITHER TH E AUTHORIZED OFFICER NOR ITA NOS.500 TO 506/BANG/2020 PAGE 72 OF 183 THE AO OBTAINED THE STATEMENT OF THE ALLEGED AGENTS MENTIONED IN REPLY TO QUESTION 14 OF THE STATEMENT OF SRI. GOLI V. SRINIV AS RECORDED ON 06.08.2015. IN THE STATEMENT OF SRI. GOLI V. SRINI VAS RECORDED ON 28.11.2017, SRI. GOLI V. SRINIVAS WAS ASKED TO EXPL AIN IN DETAIL THE ROLE PLAYED BY ONE MR. ABRAR IN RELATION TO THE ADMISSIO N TO MEDICAL COLLEGE. THE RELEVANT QUERIES AND THE REPLIES HAVE BEEN REPR ODUCED AT PAGE 79 OF THE ASSESSMENT ORDER. THE REPLIES GIVEN BY SRI. GV S ARE VERY GENERAL. NO SPECIFIC DETAILS ARE GIVEN. IN FACT, MR. GVS STATE D THAT HE DID NOT HAVE DETAILED IDEA ABOUT THE ROLE AND ACTIVITIES OF ABRA R. HE ALSO STATED THAT HE DID NOT KNOW ANY FURTHER DETAILS ABOUT THE OTHER AG ENTS. IT IS SUBMITTED THAT THE STATEMENT OF SRI. GOLI V. SRINIVAS IS NOT A CON CLUSIVE PROOF FOR THE ALLEGATIONS MADE BY THE AO AT PAGE 80 THAT APPELLAN T ENGAGED AGENTS TO SUPPLY CANDIDATES. NEITHER THE AUTHORIZED OFFICER NOR THE AO CONFRONTED / OBTAINED STATEMENTS OF ANY PARENT OR STUDENT WHO HA VE BEEN ADMITTED THROUGH MR. ABRAR OR ANY OTHER AGENT. FROM THE STA TEMENTS THAT HAVE BEEN OBTAINED FROM CERTAIN PARENTS, IT IS SEEN THAT THEY HAVE NOT BEEN POSED ANY SPECIFIC QUESTION REGARDING THE ADMISSION PROCESS F OLLOWED BY THE APPELLANT. MOREOVER, WHEN SRI. GOLI V. SRINIVAS HA S STATED THAT HE DOES NOT HAVE ANY DETAILS REGARDING THE ROLE AND ACTIVITIES OF THE AGENTS ALLEGED TO HAVE BEEN ENGAGED BY THE APPELLANT, THE AO OUGHT TO HAVE ISSUED SUMMONS TO SUCH AGENTS AND OBTAINED THEIR STATEMENT S. THE AO DID NOT OBTAIN ANY SUCH STATEMENT. HE CHOSE TO MERELY RELY UPON THE STATEMENT OF SRI. GOLI V. SRINIVAS WHICH CANNOT BE TREATED AS EV IDENCE. THERE IS NO EVIDENCE WHATSOEVER TO PROVE THAT APPELLANT WAS FOL LOWING THE MODUS OPERANDI AS STATED BY SRI. GOLI V. SRINIVAS IN THE STATEMENT REGARDING ADMISSION PROCESS. 131. AT THIS JUNCTURE, IT IS ALSO RELEVANT TO NOTE THE STATEMENT OF SRI GOLI V. SRINIVAS WITH REGARD TO CONTRARY STANDS TAKEN BY HI M WITH REGARD TO ENGAGEMENT OF AGENTS FOR THE PURPOSE OF ADMISSION. INITIALLY, IN REPLY TO ITA NOS.500 TO 506/BANG/2020 PAGE 73 OF 183 QUERY NO. 12 OF THE STATEMENT UNDER SECTION 132(4) RECORDED ON 06.08.2015, SRI. GOLI V. SRINIVAS STATED THAT MOREOVER, I AM HANDLING THE PAYMENT TO THE BROKER / AGENT WHO BRINGS CANDIDATES FOR ADMISSION. I ONLY USED TO MANAGE THE ACCOUNTS OF ALL PAYMENT RECEIVED BY CANDIDATES AND ALSO ALL THE PAYMENT MADE TO THE AGENTS / BROKERS E TC . 132. THE AUTHORIZED OFFICER CONFRONTED SRI. GOLI V. SRINIVAS, WHILE RECORDING HIS STATEMENT UNDER SECTION 131 ON 13.08. 2015, WHETHER HE WOULD CONFIRM THE REPLY TO QUERY NO. 12 OF THE STAT EMENT RECORDED ON 06.08.2015. [QUERY 6 OF THE STATEMENT OF SRI GOLI V SRINIVAS RECORDED ON 13.08.2015]. QUERY NO. 6 AND THE REPLY FROM THE ST ATEMENT DATED 13.08.2015 OF SRI GOLI V SRINIVAS ARE AS UNDER: Q.6 I AM SHOWING YOU, YOUR REPLY TO Q. NO. 12 OF THE STATEMENT RECORDED ON 06.08.2015 ON THE DAY OF THE SEARCH U/S 132 CONDUCTED IN THE PREMISES OF SRI DEVARAJ URS MEDICA L COLLEGE. DO YOU CONFIRM THE SAME? ANS. YES, I CONFIRM THE CONTENTS OF THE STATEMENT G IVEN BY ME DURING THE COURSE OF SEARCH CONDUCTED ON 06.08.2015 AS MENTIONED ABOVE. HOWEVER IN RESPECT OF PAYMENTS / BROKERS, IT IS CLARIFIED THAT IT IS NOT A ROUTINE OR REGULAR AFFAI R. BUT THE SAME IS AN OCCASIONAL EVENT / HAPPENING. 133. THE ABOVE WOULD SHOW THAT SRI GOLI V. SRINIVAS PARTIALLY RETRACTED FROM HIS STATEMENT WITH REGARD TO PAYMENTS TO BROKE RS / AGENTS. 134. STATEMENT OF SRI GOLI V. SRINIVAS WAS OBTAINED ONCE AGAIN ON 28.11.2017 . QUERIES NO. 12, 14 AND 16 FROM THE SAID STATEMENT AND THE RELEVANT REPLIES ARE REPRODUCED AT PAGES 78 AND 79 OF THE ASSESSMENT ORDER. THE PERUSAL OF THE SAID REPLIES WOULD SHOW THAT SRI GOLI V. SRINIVAS DID NOT KNOW ANY DETAILS OF THE MODUS OPERANDI OF T HE ALLEGED AGENTS / BROKERS. THE AO, WHEN HE DISCUSSED REGARDING THE P ROCESS OF ADMISSION BY USING AGENTS, DID NOT CONSIDER THE RETRACTION OF SRI. GOLI V. SRINIVAS ON 13.08.2015 AND THE IGNORANCE OF SRI GOLI V. SRINIVA S AS EXPRESSED IN HIS ITA NOS.500 TO 506/BANG/2020 PAGE 74 OF 183 STATEMENT DATED 28.11.2017 REGARDING THE MODUS OPER ANDI OF THE AGENTS. UNDER SUCH CIRCUMSTANCES, THE STATEMENT OF SRI. GOL I V. SRINIVAS IS NOT RELIABLE AT ALL SO FAR AS ENGAGEMENT OF AGENTS IN T HE ADMISSION PROCESS IS CONCERNED. IN THEORY ADVANCED BY THE AO WITH REGAR D TO CONVERSION OF MERIT QUOTA INTO MANAGEMENT QUOTA, THE AGENTS PLAY A MAJOR ROLE. IF THE ROLE OF THESE AGENTS IS EITHER MEAGRE OR NIL, HIS E NTIRE THEORY WOULD FALL. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THE ALLEGED ROLE PLAYED BY THE AGENTS IN THE ADMISSION PROCESS. THEREFORE, HIS THEORY OF CONVERSION OF MERIT QUOTA INTO MANAGEMENT QUOTA WHI CH IS AN ESSENTIAL PART TO SUPPORT HIS ALLEGATION OF COLLECTION OF CAP ITATION FEE IS NOT BUYABLE. HENCE, AS A NATURAL FALL-OUT HIS THEORY OF RECEIPT OF CAPITATION FEE SHOULD ALSO FAIL. 135. AT PARAGRAPH 5.2.4.2, THE AO HAS DISCUSSED REG ARDING THE SYSTEM OF QUOTA CONVERSION ALLEGEDLY FOLLOWED BY THE APPELLAN T. HE HAS OBSERVED AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE VIDE THIS OFFICE LETTER DATED 25.01.2017 WAS ASKED TO FU RNISH THE LIST OF STUDENTS WHO HAVE BEEN ADMITTED TO MEDICAL COLLEGE / DENTAL COLLEGE / ENGINEERING COLLEGE AS THE CASE MAY BE, B OTH UG AND PG COURSES ALONG WITH DETAILS OF FEE COLLECTED FROM THEM UNDER VARIOUS HEAD. IN RESPONSE TO THE SAME THE ASSESSEE VIDE LETTER DATED 16.02.2017 SUBMITTED THE SAME. ON GOING THRO UGH THE SUBMISSIONS IT IS SEEN THAT FOR THE AY: 2012-13 WIT H RESPECT TO ADMISSION FOR MBBS SEAT A TOTAL OF 127 STUDENTS HAV E BEEN ADMITTED WITH A FEES OF RS. 4,10,000/-, 3 ARE NRI S PONSORED SEATS WITH FEES RANGING FROM 60000$ TO 75000$ AND BALANCE 20 ARE MALAYSIAN STUDENTS ADMITTED WITH FEES OF RS. 37750$ (SIC) ............ THE ABOVE MATERIAL SEIZED DURING THE COURSE OF SEA RCH U/S 132 ON 06.08.2015 IN A/DUU/01 PAGE 33 CONTAINS STATEMENT O F DUES OF MBBS STUDENTS FOR THE ACADEMIC YEAR 2011-12. ON CO MPARISON OF THE NAMES OF THE ABOVE MENTIONED STUDENTS WITH T HE LIST ITA NOS.500 TO 506/BANG/2020 PAGE 75 OF 183 SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE AFORES AID LETTER, IT IS NOTICED THAT ALL THE ABOVE STUDENTS COMES IN THE LI ST OF 127 STUDENTS WHO HAVE BEEN ADMITTED WITH A FEES OF RS. 4,10,000/-. THE AFORE PASTED SEIZED MATERIAL SHOWS THAT THE STU DENTS HAVE BEEN ADMITTED WITH A DEMAND RANGING FROM 40 LACS TO 48.75 LACS WHEREIN THE COURSE FEES IS 18.45 LACS AND THE BALAN CE HAS BEEN RECEIVED BY CASH. THIS GOES TO SHOW THAT THE MERIT QUOTA SEAT HAS BEEN CONVERTED TO MANAGEMENT QUOTA AND SOLD AT A VE RY HIGH PRICE. SIMILARLY THERE ARE EVIDENCES IN A/DUU/01 V IDE PAGES 31, 36, 37, 39, 41, 49 ETC., WHEREIN IT CAN BE SEEN THA T THE REGULAR QUOTA HAS BEEN CONVERTED IN MANAGEMENT QUOTA AND TH E SEAT HAS BEEN SOLD IN PACKAGES (COURSE FEE + CASH). AGAIN I N THE STATEMENT ON OATH RECORDED DURING THE COURSE OF SEARCH OPERAT ION U/S 132 GVS WAS ASKED VIDE Q. NO. 13 & Q NO. 14 ABOUT THE D ETAILS OF THE ADMISSION FOR MBBS AND PG MEDICAL COURSES UNDER MANAGEMENT QUOTA AND NR (SIC) QUOTA. THE REPLY GIV EN BY GVS IS ANNEXED BELOW: .................. FROM THE ABOVE STATEMENT IT CAN BE ADHERED THAT ALL THE SEATS TO VARIOUS PG AND UG COURSES ARE BOOKED IN ADVANCE AND ADVANCE CASH IS ALSO RECEIVED. ALL THE SEATS ARE MANAGEMEN T SEATS AND NO SEATS ARE GIVEN UNDER MERIT QUOTA THOUGH ENTRANCE I S A MANDATE FOR DECIDING THE CATEGORY / QUOTA TO WHICH A STUDEN T IS ELIGIBLE FOR ADMISSION. FURTHER AS THE SEATS ARE CONVERTED TO M ANAGEMENT QUOTA, THE DESERVING STUDENTS ARE ALSO LEFT IN LURC H FOR WANT OF MONEY. THE ENTIRE PROCESS SHOWS THAT THE INSTITUTI ON WAS IN EXISTENCE FOR MAXIMIZING GAINS FROM ADMISSION PROCE SS RATHER THAN FOR CHARITABLE PURPOSES. 136. IT WAS SUBMITTED THAT IT IS NOT KNOWN HOW THE ABOVE DISCUSSION WOULD EVER JUSTIFY THE ALLEGATIONS MADE BY THE AO. A PER USAL OF THE LETTER DATED 25.01.2017 WOULD SHOW THAT THE AO HAS MERELY SOUGHT LIST OF STUDENTS WHO HAVE BEEN ADMITTED TO THE COLLEGE WITH THE DETAILS OF FEE COLLECTED AND DONATION COLLECTED, IF ANY. THE APPELLANT FILED TH E RELEVANT DETAILS VIDE ITS LETTER DATED 16.02.2017. THE AO GOES ON TO MAKE RE FERENCE TO PAGE 33 OF THE SEIZED MATERIAL NO. A/DUU/01. THE SAID SHEET C ONTAINS 9 ENTRIES. THE DETAILS FURNISHED BY THE APPELLANT WERE OF 150 STUD ENTS. THE AO STATES THAT ITA NOS.500 TO 506/BANG/2020 PAGE 76 OF 183 THE 9 STUDENTS WHICH ARE LISTED IN THE SEIZED MATER IAL ARE ALSO FOUND IN THE LIST OF 127 STUDENTS WHOSE DETAILS HAVE BEEN CALLED FOR AND HENCE, HE CONCLUDED THAT THE MERIT QUOTA SEATS HAVE BEEN CONV ERTED INTO MANAGEMENT QUOTA. THE AO HAS NEITHER OBTAINED STAT EMENT FROM ANY OF THE STUDENTS MENTIONED IN PAGE 33 OF THE SAID SEIZE D MATERIAL NOR FROM ANY OF THEIR PARENTS EXCEPT PARENT OF C R PAVANA I.E., SRI RANGARAJU. THE STATEMENT OF SRI RANGARAJU IS NOT RELIABLE. MOREOV ER, THE SAID STATEMENT DOES NOT THROW LIGHT UPON THE ALLEGATIONS REGARDING CONVERSION OF MERIT QUOTA INTO MANAGEMENT QUOTA. THE STATEMENT OF SRI. GOLI V. SRINIVAS IS GENERAL WITHOUT ANY CORROBORATIVE EVIDENCE TO PROVE THE SAME. IN FACT, HIS DILLY DALLYING ON ENGAGEMENT OF AGENTS DESTROYS THE THEORY OF QUOTA CONVERSION ADVANCED BY THE AO . THE AO HAS NOT OBT AINED THE STATEMENT OF THE CONSULTANTS NAMED IN THE STATEMENT. THE AO OUGHT TO HAVE ANALYSED AS TO OUT OF THE ENTIRE LIST OF STUDENTS, HOW MANY BELONGED TO MERIT LIST AND HOW MANY GOT ADMITTED THROUGH MANAGE MENT QUOTA. HE SHOULD HAVE FURTHER ANALYSED WHETHER THE RANKS OBTA INED BY THE STUDENTS IS SUFFICIENT FOR THEM TO OBTAIN A SEAT IN THE BRANCH THEY DESIRED SO FAR AS PG COURSES ARE CONCERNED. FURTHER, THE AO OUGHT TO HA VE OBTAINED STATEMENTS FROM THE PARENTS OF THE STUDENTS AS WELL STUDENTS WHO WERE ADMITTED INTO THE COLLEGE UNDER MERIT QUOTA TO ENQU IRE ABOUT THE FEE PAID BY THEM, WHETHER ANY FEE IS PAID IN CASH, WHETHER THEY WERE REQUIRED TO PAY ANY FEE OVER AND ABOVE WHAT IS FIXED BY THE COMMITT EE EVEN THOUGH THE RELEVANT STUDENT WAS ENTITLED TO GET ADMITTED THROU GH MERIT QUOTA COMMENSURATE WITH THE RANK OBTAINED. THE AO OUGHT TO HAVE OBTAINED STATEMENTS FROM PARENTS OF THOSE STUDENTS WHO WERE ADMITTED THROUGH MANAGEMENT QUOTA AS WELL AS THE STUDENTS, SHOULD HA VE ENQUIRED ABOUT THE FEE PAID BY THEM, SHOULD HAVE ASCERTAINED WHETH ER THEY WERE MERIT STUDENTS OR NOT. INSTEAD OF DOING SO, THE AO HAS M ERELY COMPARED THE LIST OF STUDENTS APPEARING IN PAGE 33 OF THE SEIZED MATE RIAL WITH THE LIST OF STUDENTS WHOSE DETAILS ARE FURNISHED BY THE APPELLA NT. ITA NOS.500 TO 506/BANG/2020 PAGE 77 OF 183 137. MERE APPEARANCE OF THE NAMES OF THE STUDENTS A PPEARING IN PAGE 33 OF THE SEIZED MATERIAL IN THE LIST OF MERIT STUDENT S FURNISHED BY THE APPELLANT IS NOT SUFFICIENT TO PROVE THAT THERE IS CONVERSION OF MERIT SEATS INTO MANAGEMENT QUOTA. THERE SHOULD BE DOCUMENTARY EVID ENCE TO PROVE THAT CAPITATION FEE HAS BEEN RECEIVED FROM SUCH STUDENTS . 138. THE AO, AT PARAGRAPH 5.2.4.2, HAS DISCUSSED TH E SCHEME OF DROP- OUTS ALLEGED TO HAVE BEEN CARRIED OUT BY THE APPELL ANT. THE AO SOUGHT TO RELY UPON PAGES 77, 79 AND 102 OF SEIZED MATERIAL N O. A/DUU/13. 139. IT IS SUBMITTED THAT THE ANALYSIS OF THE AO DO ES NOT EMERGE FROM THE SHEET OF PAPER THAT HE HAS RELIED UPON. WHY WOULD MERIT STUDENTS TAKE UP ENTRANCE EXAM WITH AN INTENTION TO DROP-OUT SUBSEQU ENTLY. THIS DEFIES LOGIC. MERE FACT THAT THE STUDENTS HAVE TAKEN UP E NTRANCE EXAM AND DROPPED OUT DOES NOT MEAN THAT IT IS DONE SO INTENT IONALLY. THE AO HAS NOT BROUGHT ON RECORD AS TO WHAT BENEFIT WOULD SUCH STU DENT WOULD GET. THE AO HAS NOT OBTAINED STATEMENTS OF EITHER THE PARENT S OF SUCH STUDENTS OR OF SUCH STUDENTS WHO HAVE WRITTEN ENTRANCE EXAM AND DR OPPED-OUT SUBSEQUENTLY AFTER COUNSELLING. PAGE 77 OF THE SEI ZED MATERIAL NO A/DUU/13 RELIED UPON BY THE AO TO SHOW THAT DROP-OU TS HAVE BEEN PROVIDED DOES NOT EVEN GIVE THE LIST OF CANDIDATES WHO HAVE WRITTEN THE ENTRANCE EXAM AND BACKED-OUT. IT DOES NOT STATE THE PERIOD. THIS PAGE NOWHERE EVIDENCES THE FACT THAT MERIT STUDENTS HAVE WRITTEN ENTRANCE EXAM AND DROPPED OUT AT THE BEHEST OF ABRAR. THE REASON FOR DROPPING-OUT CAN BE VARIOUS. THE AO OUGHT TO HAVE OBTAINED LIST OF STUDENTS WHO WROTE THE ENTRANCE EXAMS AND DROPPED-OUT. HE SHOULD HAVE TAK EN STATEMENTS FROM THEM TO ENQUIRE THE REASONS AS TO WHY THEY WROTE TH E ENTRANCE EXAM AND DROPPED-OUT SUBSEQUENTLY. NO MATERIAL HAS BEEN BRO UGHT ON RECORD TO PROVE THAT THE ALLEGED AGENT NAMED ABRAR APPROACH ED THE MERIT CANDIDATES, INSISTED THEM TO GIVE THE ENTRANCE EXAM AND LATER DROP-OUT. ITA NOS.500 TO 506/BANG/2020 PAGE 78 OF 183 THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER WHIC H WOULD JUSTIFY SUCH AN ACTION ON THE PART OF THE MERIT STUDENTS. PAGE 79 ALSO DOES NOT SUPPORT THE ALLEGATION THE THEORY OF DROP-OUTS. JUST BECAUSE P AGE 79 LISTS CERTAIN CANDIDATES UNDER THE HEADING AGAINST DROP-OUTS IT DOES NOT MEAN THAT ANY SUCH SCHEME OF DROP-OUTS IS WEAVED BY THE APPELLANT . THERE IS NOTHING ON RECORD TO SHOW THAT THE CANDIDATE LISTED UNDER THE HEADING AGAINST DROP- OUTS ARE AGAINST THOSE VERY CANDIDATES WHOM THE AL LEGED AGENT ABRAR PROCURED TO WRITE ENTRANCE EXAMS AND SUBSEQUENTLY D ROPPED-OUT AT THE BEHEST OF ABRAR. PAGES 77 AND 79 OF THE SEIZED MAT ERIAL ARE UNCONNECTED. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO PROVE THE CONNECTION. THERE IS NOTHING IN PAGE 102 OF THE SEIZED MATERIAL TO SHOW THAT THERE IS SUCH SCHEME OF DROP-OUT. PAGE 102 HAS BEEN RELIED UPON AS EVIDENCE FOR AMOUNT PAYABLE TO ABRAR. THIS IS NOT AT ALL EVIDENT FROM THE SAID PAGE. PAGES 77, 79 AND 102 WHICH ARE RELIED UPON ARE UNSI GNED. NEITHER THE AUTHORISED OFFICER NOR THE AO HAVE OBTAINED THE STA TEMENT OF ABRAR. THE AO HAS NOT BROUGHT ON RECORD ANY PROOF TO EVIDENCE THE FACT THAT THE STUDENTS WHO WROTE THE ENTRANCE EXAMS AND DROPPED O UT ARE IN FACT, MERIT STUDENTS. AS STATED EARLIER, THE STATEMENT OF SRI. GOLI V. SRINIVAS DESTROYS THE THEORY OF DROP-OUTS BECAUSE THE DROP-OUT SCHEME CANNOT BE CARRIED OUT WITHOUT AGENTS AND AS PER SRI. GOLI V. SRINIVAS ENG AGEMENT OF AGENTS IS NOT A ROUTINE AFFAIR AND THE MODUS OPERANDI OF THE AGEN TS IS ALSO NEITHER KNOWN NOR THE EXISTENCE OF THEIR ROLE IS SUPPORTED BY ANY MATERIAL. 140. IN FACT, SRI G H NAGARAJ IN REPLY TO QUERY NO. 11 OF THE STATEMENT RECORDED ON 07.08.2015, REGARDING FIXATION OF FEE H AD STATED THAT PERCENTAGE OF MANAGEMENT FEE VARIED FROM COURSE TO COURSE. FOR MOST DEMANDED COURSES, MANAGEMENT SEATS WOULD BE GIVEN P RIORITY. IN CASE OF ANY WITHDRAWAL OF ADMISSION AFTER COUNSELLING BY ME RITORIOUS STUDENTS, THE VACANT SEATS WOULD BE CONVERTED INTO MANAGEMENT SEA TS AND ADMISSION ITA NOS.500 TO 506/BANG/2020 PAGE 79 OF 183 PROCESS WOULD BE INITIATED FOR THE SAME. THIS WOUL D SHOW THAT THE THEORY OF DROP-OUTS ADVANCED BY THE AO IS TOTALLY INCORRECT. 141. THE AO, AT PAGES 84 TO 86, PARAGRAPH 5.2.4.5, HAS DISCUSSED THE VIOLATION OF EXAMINATION PROCESS. THE AO HAS RELIE D UPON THE STATEMENT OF SRI. GOLI V. SRINIVAS AND THE ALLEGED DROP-OUTS SCH EME DISCUSSED AT PAGES 82 TO 84, PARAGRAPH 5.2.4.2 OF THE ASSESSMENT ORDER . IT WAS SUBMITTED THAT IT WAS ALREADY ESTABLISHED THAT THE MATERIALS RELIE D UPON IN PARAGRAPH 5.2.4.2 TO SUPPORT THE ALLEGATION ABOUT DROP-OUTS A RE NO EVIDENCE AT ALL. THEY DO NOT LEAD A PERSON WITH REASONABLE MIND TO R EACH A CONCLUSION WHICH THE AO HAS ARRIVED AT. THE STATEMENT OF SRI. GOLI V. SRINIVAS IS ALSO GENERAL AND NOT SUPPORTED BY ANY CORROBORATIVE EVID ENCE. IN VIEW OF THE ABOVE, THE MATERIAL RELIED UPON BY THE AO TO HOLD T HAT THERE ARE VIOLATIONS IN EXAMINATION PROCESS CANNOT BE TREATED AS EVIDENC E AND HENCE, THE ALLEGATION REGARDING VIOLATION OF EXAMINATION PROCE SS SHOULD ALSO FALL. 142. THE AO HAS DISCUSSED THE FINDINGS RELATING TO FEE COLLECTION AND THE ALLEGED FEE NEGOTIATIONS. THE AO REPRODUCED QUERY 4 AND REPLY FROM THE STATEMENT OF SRI. RANGARAJU. THE AO, SUBSEQUENTLY OBSERVED AS UNDER: FURTHER THERE ARE ALSO EVIDENCE IN MATERIAL SEIZED DURING THE COURSE OF SEARCH U/S. 132 ON 6.5.2015 (SIC) MARKED AS A/DUU/01 IN PAGE 33 WHEREIN AN AMOUNT OF RS. 3 LAKHS WAIVED OFF WITH RESPECT TO CANDIDATE PAVAN C R. ALL THESE EVIDENCE GOES TO SHOW THAT NEGOTIATION IN FEES IS CARRIED OUT BY SRI G H NAGARAJ WITH THE KNOWLEDGE OF THE CHAIRMAN SRI R L JALAPPA. 143. THE LD. AR SUBMITTED THAT NEITHER THE STATEMEN T OF SRI. GOLI V. SRINIVAS NOR THE STATEMENT OF SRI RANGARAJU THIMMAI AH WOULD PROVE THAT THE APPELLANT IS INVOLVED IN FEE NEGOTIATIONS. THE ALLEGATION IS ONLY WITH RESPECT TO STUDENTS ADMITTED UNDER MANAGEMENT / NRI QUOTA. THE STATEMENT OF SRI. GOLI V. SRINIVAS AND SRI RANGARAJ U THIMMAIAH IS NOT ENOUGH TO PROVE THIS ALLEGATION. THE APPELLANT HAS NOT BEEN PERMITTED TO ITA NOS.500 TO 506/BANG/2020 PAGE 80 OF 183 CROSS-EXAMINE SRI. GOLI V. SRINIVAS AND SRI RANGARA JU THIMMAIAH. MOREOVER, FOR REASONS STATED SUPRA THE STATEMENT OF SRI. GOLI V. SRINIVAS AND RANGARAJU CANNOT BE RELIED UPON. APPROXIMATELY 1400 STUDENTS ARE ADMITTED TO THE MEDICAL COLLEGE DURING THE PERIOD F Y 2009-10 TO FY 2015- 16. THE AO HAS SOUGHT TO RELY UPON STATEMENT OF 1 PARENT AND THAT TOO THERE IS NOTHING TO SHOW THAT APPELLANT HAS RECEIVE D ANY CAPITATION FEE FROM MERIT STUDENT OR FOR THAT MATTER ANY STUDENT. 144. THE AO HAS DISCUSSED REGARDING FEE CHARGED PER SEAT TO HOLD THAT FEE COLLECTED IS MORE THAN WHAT IS FIXED BY THE COM MITTEE. THERE IS NO PROOF TO HOLD THAT THE APPELLANT HAS CHARGED FEE PE R SEAT AS ALLEGED. AT PAGE 90, THE AO OBSERVED AS UNDER:- AS PER THE FEE FIXATION COMMITTEE THE FEE CHARGED FOR EACH OF THE NRI SEAT IS OUTSIDE THE FEE TO BE FIXED BY THE COMM ITTEE. AFTER STUDYING THE GENERAL TREND PREVAILING IN THE FIELD AND ALSO CONSIDERING THE FACT THAT DURING THE PREVIOUS YEAR THE COLLEGE HAS TAKEN NRI SEATS AT EXTRA FEE, THE COMMITTEE HAS DEC IDED THAT THE EXTRA FEE COLLECTED FROM NRI CATEGORY SHOULD BE CON SIDERED WHILE FIXING THE FEES FOR THE REMAINING 85% OF THE SEATS IN EACH OF THE UNDER GRADUATE AND POST GRADUATE COURSES. THUS, THE AMOUNT COLLECTED BY THE COLLEGE FROM THE NRI STUDENTS IS CONSIDERED WHILE FIXING THE FEE FOR NON NRI STUD ENTS. FROM THE AFORESAID EXHIBIT IT CAN BE SEEN THAT IN THE CASE O F THE STUDENTS NAMED VARTIKA AND ALEKHYA REDDY THOUGH THE COURSE F EE IS 20.49 LAKHS THE AMOUNT OF FEE COLLECTED IN CASH IS A HUGE 104.51 AND 109.51 LAKHS RESPECTIVELY. FROM THIS IT CAN BE INF ERRED THAT THE TRUST HAS TAKEN MONEY IN CASH TO PREVENT THE FEE FI XATION COMMITTEE FROM FIXING THE COURSE FEE AT A LOWER RAT E FOR THE REMAINING 85% OF SEATS IN UG AND PG COURSES. 145. ACCORDING TO THE LD. AR, THESE OBSERVATIONS OF THE AO ARE PERVERSE. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO DE MONSTRATE THAT THE APPELLANT HAS COLLECTED FEE IN CASH FROM NRI STUDEN TS IN ORDER TO INFLUENCE THE FEE THAT WOULD GET FIXED BY THE FEE FIXATION CO MMITTEE IN CASE OF NON - NRI ITA NOS.500 TO 506/BANG/2020 PAGE 81 OF 183 STUDENTS. AS THE CONCEPT OF CAPITATION FEE DOES NO T APPLY TO STUDENTS ADMITTED THROUGH MANAGEMENT QUOTA / NRI QUOTA THE A O IS TRYING TO MAKE A CASE FOR ALLEGED CASH COLLECTED FROM STUDENTS ADM ITTED THROUGH MANAGEMENT / NRI QUOTA. NO STATEMENT FROM ANY OF T HE PARENTS OF STUDENTS ADMITTED THROUGH MANAGEMENT / NRI QUOTA HA VE BEEN OBTAINED. THE AO HAS RELIED UPON THE ALLEGED FEE CHARGED TO O NE MS VARTHIKA AND MS ALEKHYA REDDY WHOSE NAMES APPEAR IN PAGE 41 OF S EIZED MATERIAL NO. A/DUU/01 TO STATE THAT FEE IS BEING COLLECTED IN CA SH FROM NRI STUDENTS SO AS TO PREVENT FEE FIXATION COMMITTEE FROM FIXING TH E COURSE FEE AT A LOWER RATE FOR THE REMAINING 85% OF THE SEATS. THE AO IS NOT PERMITTED TO MAKE SUCH SWEEPING STATEMENTS WITHOUT BRINGING EVIDENCE ON RECORD. HE OUGHT TO HAVE OBTAINED STATEMENTS OF THESE TWO STUDENTS. 146. FURTHER, THE AO DISCUSSES THE MODUS OPERANDI O F FEE COLLECTION. HE RELIED UPON REPLIES TO QUESTIONS NO. 13 TO 17 AND 3 3 OF STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED ON 06.08.2015 AND OBSERVE D AT PAGE 92 AS UNDER:- FROM THE ABOVE IT CAN BE INFERRED THAT NAGARAJ DEC IDES THE COURSE FEE UNDER MANAGEMENT AND NRI QUOTA. THE CAN DIDATES RESERVE THE SEATS OF THEIR CHOICE AFTER MAKING ADVA NCE BOOKING IN THE RANGE OF RS. 5 25 LACS IN CASH FOR WHICH RECE IPTS ARE ALSO NOT ISSUED AND THE SEATS ARE RESERVED FOR THEM. AT THE SAME TIME THE INSTALLMENT FOR BALANCE PAYMENT WILL ALSO BE FIXED AND CLEARED BEFORE THE ADMISSION IS MADE SRI GOLI V SRINIVAS KE EPS TRACK OF THE PAYMENT. FURTHER IN PG COURSES UNDER NRI QUOTA THE AMOUNT OVER AND ABOVE WHICH IS PUBLISHED IN THE BROCHURES ARE COLLECTED IN CASH. FURTHER IT IS ALSO SEEN THAT THE TRUST CO LLECTS CHEQUES AS A SECURITY AGAINST THE INSTALLMENT GRANTED FOR THE BA LANCE PAYMENT. 147. IT IS SUBMITTED THAT THERE IS NOTHING AT ALL T O SUPPORT THE ABOVE ALLEGATIONS OF THE AO . AS STATED EARLIER, THE APP ELLANT HAS SUBMITTED THE DETAILED PROCESS OF ADMISSION. NO CONTRAVENTION HA S BEEN REPORTED BY ANY OF THE AUTHORITIES REGARDING VIOLATION OF ADMISSION PROCESS. A PERUSAL OF THE ITA NOS.500 TO 506/BANG/2020 PAGE 82 OF 183 QUERIES WOULD SHOW THAT QUESTION NO. 14 DEALS WITH THE ADMISSION PROCESS. IN REPLY TO THE SAID QUERY, SRI GOLI V. SRINIVAS TA LKED ABOUT ENGAGEMENT OF CERTAIN CONSULTANTS THROUGH WHOM ADMISSION IS DONE. THESE CONSULTANTS ARE NOTHING BUT THE AGENTS WHICH ARE REFERRED TO EA RLIER. SRI GOLI V SRINIVAS HAS STATED EARLIER THAT HE IS NOT AWARE OF THE MODU S OPERANDI OF THE AGENTS. YET, THE AO SOUGHT TO RELY UPON QUERY 14 TO BASE HI S THEORY OF FEE COLLECTION. ONE ANOTHER QUESTION NO. 17 PERTAINS T O THE PERCENTAGE OF AMOUNT OF COURSE FEE WHICH IS COLLECTED IN CASH. S RI GOLI V SRINIVAS HAS STATED THAT HE CANNOT ESTIMATE THE PERCENTAGE OF AM OUNT COLLECTED IN CASH. EVEN THIS QUERY WOULD NOT HELP THE THEORY OF THE AO . THE AO HAS SOUGHT TO RELY UPON VAGUE AND GENERAL REPLIES. HE DID NOT EVEN SEEK TO COLLECT FURTHER EVIDENCE TO CORROBORATE THESE STATEMENTS. IN FACT, THE AO DID NOT CONFRONT THE ADMISSION PROCESS AND FEE COLLECTION M ODUS OPERANDI AS NARRATED BY SRI GOLI V SRINIVAS EITHER TO ANY OF TH E PARENTS OR TO ANY OF THE STUDENTS. 148. THE AO DISCUSSED MODE OF RECEIPTS OF FEE AND H ELD THAT NO RECEIPTS HAVE BEEN GIVEN BY THE ACADEMY FOR THE FEE RECEIVED BY IT FROM THE STUDENTS. HE RELIED SOLELY UPON THE STATEMENT OF S MT. VASUDHA G. PADIYAR [PARENT] AND SRI RANGARAJU T [PARENT]. AS DISCUSSED EARLIER IN THESE SUBMISSIONS, IT WAS SUBMITTED THAT THESE STATEMENTS ARE NOT RELIABLE. SRI G H NAGARAJ, IN THE STATEMENT RECORDED ON 16.10.2015, WAS CONFRONTED WITH THE STATEMENTS OF THE ABOVE 2 PARENTS. HE CATEGORI CALLY STATED THAT FEE RECEIPT IS ISSUED FOR EVERY RECEIPT OF FEE AND THAT NO FEE IS RECEIVED IN CASH. 149. IT WAS SUBMITTED, AT THIS JUNCTURE, IT IS NECE SSARY TO ASSAIL THE STATEMENTS OF THE PARENTS RELIED UPON ON MERITS. TH E STATEMENTS OF SMT. VASUDHA G PADIYAR AND SRI. RANGARAJU HAD BEEN CONFR ONTED TO SRI. G H NAGARAJ WHILE RECORDING HIS STATEMENT UNDER SECTION 131 ON 13.10.2015. WE SHALL FIRST DISCUSS THE STATEMENT OBTAINED FROM SMT. VASUDHA G. ITA NOS.500 TO 506/BANG/2020 PAGE 83 OF 183 PADIYAR. QUESTION NO. 7 OF THAT STATEMENT AND REPL Y OF SMT. PADIYAR ARE AS UNDER:- Q. 7 WHOM DID YOU MEET IN CONNECTION WITH THE ADMI SSION OF YOUR SON? PLEASE FURNISH THE DETAILS OF FEES PAID IN RESPECT OF ADMISSION OF YOUR SON BADRAGIRI V PADIYAR TO MS (EN T) COURSE IN SRI DEVARAJ URS MEDICAL COLLEGE ANS. I DO NOT REMEMBER THE NAME OF THE PERSON I ME T. AFTER THE RESULT WAS ANNOUNCED ON THE INTERNET, MY SON WAS CA LLED FOR THE COUNSELLING. SINCE, HIS RANK WAS 432, HE WAS OFFER ED PRE CLINICAL BRANCH WHICH MY SON DID NOT WANT. AFTER T HAT, I APPROACHED MR. GOLI SRINIVAS. HE SAID THAT AS OF N OW THERE WAS NO SEAT. AFTER AROUND ONE AND HALF MONTHS, HE CALL ED AND TOLD THAT THERE WAS A VACANCY AND ASKED FOR RS 50 LAKHS FOR T HE SAME IN ADDITION OF THE REGULAR FEES. AFTER ONE WEEK, I AL ONGWITH MY SON VISITED THE COLLEGE AND PAID RS. 25,00,000 IN CASH TO MR. GOLI SRINIVAS FOR WHICH I WAS NOT GIVEN ANY RECEIPT. ON E THE SAME DAY I.E., 18.07.2013, I PAID THE FIRST YEAR FEE OF RS. 10,67,438 ALSO. THE FEE OF RS. 10,67,438 WAS PAID THROUGH DD. SUBS EQUENTLY, I PAID RS. 5 LAKHS, RS. 10 LAKHS AND RS. 10 LAKHS ON 21.05.2013, 23.05.2013 AND 28.05.2013 RESPECTIVELY TO MR. GOLI SRINIVAS FOR WHICH I WAS NOT GIVEN ANY RECEIPT. THE SOURCES OF THESE PAYMENTS ARE SAVINGS FROM MY HUSBANDS SALARY. 150. THE LD. AR SUBMITTED THAT THE ABOVE WOULD SHOW THAT THE PAYMENT HAS BEEN MADE TO SRI. GOLI V. SRINIVAS. IN FACT, T HERE IS NOTHING TO SHOW THAT SRI. GOLI V. SRINIVAS ACTED ON BEHALF OF THE TRUST OR PURSUANT TO THE DIRECTIONS OF ANY TRUSTEE. THE STATEMENT OF SMT. P ADIYAR HAS NOT BEEN CONFRONTED TO SRI. GOLI V. SRINIVAS. THE APPELLANT HAS NOT BEEN PERMITTED TO CROSS-EXAMINE EITHER SMT. PADIYAR OR SRI. GOLI V. S RINIVAS WITH REGARD TO HER STATEMENT. A PERUSAL OF THE STATEMENT OF SMT. PADI YAR WOULD SHOW THAT THERE IS NOTHING IN THE SAID STATEMENT WHICH WOULD ESTABLISH WHETHER ANY PAYMENT HAS BEEN MADE IN CASH AT ALL. THE AUTHOR IZED OFFICER, AFTER CONFRONTING THE STATEMENT OF SMT. PADIYAR TO SRI G H NAGARAJ, HE SHOWED HIM PAGE 53 OF THE SEIZED MATERIAL NO. A/DUU/01. S RI. G H NAGARAJ STATED THAT ALL THE FEES IS RECEIVED THROUGH CHEQUE / DD AND T HE SAME IS AS PER ITA NOS.500 TO 506/BANG/2020 PAGE 84 OF 183 GUIDELINES OF THE FEES FIXATION COMMITTEE. FOR ALL THE FEES RECEIVED FEE RECEIPTS ARE DULY ISSUED TO THE CANDIDATES. IF THE CANDIDATE HAD PAID THE ABOVE MENTIONED FEES THEN IN THAT CASE WE WOULD HAV E ISSUED THE RECEIPT. LET THE CANDIDATE PRODUCE THE FEE RECEIPT ISSUED BY US . THEREFORE, SRI G H NAGARAJ HAS CONFIRMED THAT NO PORTION OF THE FEE IS RECEIVED IN CASH. PAGE 53 OF A/DUU/01 IS A LOOSE SHEET WHICH CANNOT BE REL IED UPON AS EVIDENCE. SRI. G H NAGARAJ HAS NOT BEEN CONFRONTED WITH THE E NTRY IN THE BANK STATEMENT OF SMT. PADIYAR OR HER HUSBAND. THE AUTH ORISED OFFICER HAS NOT STATED WHETHER ANY CASH WITHDRAWAL WAS MADE DURING THE RELEVANT PERIOD BY SMT. PADIYAR OR HER HUSBAND WHICH WOULD SUPPORT WHAT IS STATED IN THE STATEMENT OF SMT. PADIYAR. HE DID NOT CONFRONT HER WITH ANY SUCH QUESTION. MOREOVER, THERE IS CONTRADICTION BETWEEN WHAT IS ST ATED IN THE STATEMENT OF SMT. PADIYAR AND PAGE 53 OF THE SEIZED MATERIAL AS NOTED BY THE AUTHORIZED OFFICER HIMSELF. THERE IS NOTHING TO SHOW WHETHER THE SOURCE SPECIFIED BY SMT. PADIYAR FOR PAYMENT OF FEE IN CASH IS CORRECT OR NOT. 151. A PERUSAL OF REPLY TO QUESTION NO. 7 OF SMT. P ADIYAR WOULD SHOW THAT THE STUDENT, IN QUESTION, SRI. BADRAGIRI V. PADIYAR HAD OBTAINED 432 ND RANK. HE WAS NOT INTERESTED IN THE BRANCH WHICH WAS OFFER ED TO HIM IN KEEPING WITH HIS RANK. IF A STUDENT DOES NOT WANT TO TAKE UP A BRANCH WHICH HE IS ENTITLED AS PER HIS RANK, HE CANNOT GET THE BRANCH THAT HE IS INTERESTED IN THROUGH MERIT QUOTA AS THE RANK DOES NOT ENTITLE HI M TO GET SEAT IN THAT BRANCH. IF HE STILL WANTS TO GET ADMITTED TO THE S AME COLLEGE, HE CAN DO SO BY GETTING ADMITTED ONLY THROUGH MANAGEMENT QUOTA. HOW CAN THIS STATEMENT GIVEN BY SMT. PADIYAR HELP ANYONE TO CONC LUDE THAT MERIT QUOTA IS BEING CONVERTED INTO MANAGEMENT QUOTA AND THAT C APITATION FEE IS RECEIVED EVEN FROM STUDENTS WHO GET ADMITTED THROUG H MERIT QUOTA. 152. THE STATEMENT DATED 30.09.2015 OF SRI RANGARAJ U T, FATHER OF MS. PAVANA C R WHO HAD OBTAINED ADMISSION IN THE YEAR 2 011-12 TO MBBS ITA NOS.500 TO 506/BANG/2020 PAGE 85 OF 183 COURSE CANNOT BE RELIED UPON FOR THE FOLLOWING REAS ONS. THE QUESTIONS NO. 6 AND 7 AND THE CORRESPONDING REPLIES FROM THE STAT EMENT READ AS UNDER: Q. 6 PLEASE FURNISH THE DETAILS OF FEES PAID IN RE SPECT OF ADMISSION OF YOUR DAUGHTER MS. PAVANA C R TO MBBS C OURSE IN SRI DEVARAJ URS MEDICAL COLLEGE ANS. I HAVE PAID AN AMOUNT OF RS. 18.45 LAKHS FEES . IN ADDITION TO THIS, I HAVE PAID RS. 20 LAKHS. FIRST I MET MR. GOLI SRINIVAS FOR MY DAUGHTERS ADMISSION. HE TOLD ME THAT I WOULD H AVE TO PAY RS. 25 LAKHS APART FROM THE REGULAR FEES FOR ADMISS ION IN MBBS COURSE. I REQUESTED HIM TO ADMIT MY DAUGHTER TAKIN G THE REGULAR FEES ONLY. BUT HE DID NOT AGREE. THEN I MET MR. G H NAGARAJ REQUESTING THE SAME. HE TOLD ME THAT I WOULD HAVE TO PAY RS. 22 LAKHS AND WAIVED RS. 3 LAKHS. WHEN REQUESTED, HE A LLOWED ME TO PAY RS. 22 LAKHS IN FOUR INSTALMENTS. I PAID ALL T HE FOUR INSTALMENTS TO MR. GOLI SRINIVAS IN CASH. I WAS NO T GIVEN ANY RECEIPTS FOR THE SAME. THE SOURCE OF THE FEES PAID ARE EDUCATION LOAN OF RS. 7.50 LAKHS AND GOLD LOAN OF RS. 1.91 LA KHS. BALANCE AMOUNT I PAID OUT OF MY SAVINGS FROM AGRICULTURAL I NCOME. Q.7 PLEASE EXPLAIN THE SOURCE OF RS. 22 LAKHS PAID TO MR. GOLI SRINIVAS. ANS. RS. 4 LAKHS I BORROWED FROM MY ELDER BROTHER W HO HAD RETIRED AS TEACHER OF GOVT. PRIMARY SCHOOL. RS. 7. 5 LAKHS I GOT FROM SELLING EQUILIPTUS TREE (WOODEN TREE) DURING T HE YEAR 2012. BALANCE AMOUNT WAS PAID OUT OF MY SAVINGS FROM AGRI CULTURAL INCOME. 153. IT WAS SUBMITTED THAT THERE IS NOTHING TO SHOW THAT THE ABOVE CANDIDATE IS A MERIT STUDENT. NEITHER THE AO NOR T HE AUTHORIZED OFFICER HAVE BROUGHT ANYTHING ON RECORD DEMONSTRATE THAT FE E IN CASH WAS, IN FACT, PAID. SRI G H NAGARAJ HAS NOT BEEN CONFRONTED WITH THE RELEVANT ENTRY IN THE BANK STATEMENT OF SRI RANGARAJU TO PROVE THAT C ASH HAS BEEN WITHDRAWN FROM THE BANK BY SRI RANGARAJU IN OR AROU ND THE PERIOD WHEN ALLEGED FEE IN CASH WAS PAID. THERE IS NEITHER DIR ECT NOR CIRCUMSTANTIAL EVIDENCE TO PROVE THAT FEE BY WAY OF CASH HAS IN FA CT BEEN PAID. THE ITA NOS.500 TO 506/BANG/2020 PAGE 86 OF 183 STATEMENT ALSO HAS NOT STATED ON WHAT DATES SRI RAN GARAJU PAID THE RELEVANT PORTION OF THE FEE IN CASH. THEREFORE, TH E STATEMENT OF SRI. RANGARAJU THAT PORTION OF FEE HAS BEEN PAID IN CASH IS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. IT IS NOT KNOWN WHETHER TH E SOURCE OF INCOME OUT OF WHICH THE FEE HAS BEEN PAID IS VERIFIED OR NOT. SRI RANGARAJU HAS STATED THAT HE PAID CASH TO SRI GOLI V. SRINIVAS. SRI GOL I V. SRINIVAS IS NOT CONFRONTED WITH THE STATEMENT OF SRI RANGARAJU. EV EN THE APPELLANT HAS NOT BEEN PERMITTED TO CROSS-EXAMINE SRI RANGARAJU. T HE AUTHORIZED OFFICER CONFRONTED PAGE 33 OF THE SEIZED MATERIAL NO. A/DUU /01 TO SRI G H NAGARAJ TO EVIDENCE THE PAYMENT IN CASH BY SRI RANGARAJU TO WARDS ADMISSION OF HIS DAUGHTER C R PAVANA. SRI G H NAGARAJ, IN REPLY TO QUERY NO. 23, STATED CATEGORICALLY STATED THAT IT IS ABSOLUTELY FALSE. THE FEE HAS NOT BEEN RECEIVED IN CASH AND THAT FEE FIXED BY THE COMMITTE E ALONE IS COLLECTED. 154. AT PAGE 97, THE AO HAS STATED AS UNDER: FINDINGS RELATING TO CASH HANDLING CASH OF AROUND RS. 2.7 CRORES WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS AT THE PREMISES OF THE TRUST OFF ICE. CASH WAS BEING COLLECTED AT THE VERY TRUST OFFICE. SHRI GVS HAS IN HIS STATEMENT RECORDED DURING SEARCH PROCEEDINGS ADMITT ED THAT CASH WAS BEING COLLECTED AT THE TRUST OFFICE. CASH WAS BEING COLLECTED IN INSTALLMENTS FROM THE STUDENTS. MAINTENANCE OF PARALLEL BOOKS FOR UNACCOUNTED PAYME NTS IT IS SEEN FROM THE SEIZED MATERIALS NUMBERS AS A/ DUU/02, A/DUU/03, A/DUU/04 VARIOUS PAYMENTS FROM THE CAPITA TION FEE COLLECTED IN THE FORM OF CASH WERE BEING MADE ON A DAILY BASIS. FOR THESE PURPOSES, PARALLEL FORM OF UNACCOUNTED BO OKS OF ACCOUNT WERE BEING MAINTAINED. A/DUU/02, A/DUU/03, A/DUU/04 ARE SOME SUCH BOOKS WHICH WERE BEING MAINT AINED BY SHRI GVS IN WHICH THE ENTRIES WERE VERIFIED BY SHRI GH NAGARAJ AND SHRI ANJANAPPA. ITA NOS.500 TO 506/BANG/2020 PAGE 87 OF 183 155. IT IS SUBMITTED THAT THESE FINDINGS ARE PERVER SE. SRI GOLI V. SRINIVAS DID NOT STATE THAT CASH IS BEING COLLECTED AT TRUST OFFICE. THERE IS NO EVIDENCE FOUND TO DEMONSTRATE THAT CASH IS HELD AT THE TRUST OFFICE TO MAKE DISBURSEMENTS IN CASH. THE OBSERVATIONS OF THE AO THAT THE APPELLANT IS MAINTAINING PARALLEL BOOKS FOR UNACCOUNTED PAYMENTS IS INCORRECT. THE APPELLANT HAS STATED TIME AND AGAIN THAT THE EXECUT IVE COMMITTEE DID NOT AUTHORIZE ENTRIES FOUND IN THE SEIZED MATERIAL. ME RE FACT THAT THE SEIZED MATERIAL CONTAINS INITIALS OF G H NAGARAJ AND HIS B ROTHER DOES NOT MEAN THAT THE ENTRIES THEREIN HAVE BEEN MADE AT THE BEHEST OF THE EXECUTIVE COMMITTEE OF THE TRUST. IN FACT, THE AO REJECTED THE ALTERNATE CLAIM OF THE APPELLANT REGARDING EXPENDITURE ON THE GROUND THAT IT IS NOT ROUTED THROUGH BOOKS. THE AO CANNOT BLOW HOT AND COLD. 156. AT PARA 7.2, PAGE 101, THE AO HAS MADE OBSERVA TIONS ON THE VIOLATIONS OF THE KARNATAKA EDUCATIONAL INSTITUTION S (PROHIBITION OF CAPITATION FEE) ACT, 1984. THE APPELLANT DENIES THAT IT IS INVOLVED IN ANY ILLEGAL ACTIVITIES AND THAT IT HAS VIOLATED THE PRO VISIONS OF KARNATAKA EDUCATIONAL INSTITUTION (PROHIBITION OF CAPITATION FEES) ACT 1984. THE AUTHORITIES UNDER THOSE ACTS HAVE NOT TAKEN ANY ACT ION AGAINST THE APPELLANT. WHEN AUTHORITIES CONSTITUTED UNDER SPEC IFIC ACT HAVE NOT TAKEN ANY ACTION IT IS NOT OPEN FOR THE DEPARTMENT TO ALL EGE VIOLATION OF THOSE ACTS. THE APPELLANT RELIES ON THE DECISION OF THE HONBLE CESTAT IN S.K. KAREEMUN V. CCE 2016 (42) STR 988 (TRI-BANG) WHEREIN IT WAS HELD AS UNDER:- IF THE PARTIES HAVE ENTERED INTO AN AGREEMENT WHIC H IS CONTRARY TO THE PROVISIONS OF ANY LAW, IT IS FOR THE LAW ENF ORCING AUTHORITY TO TAKE PROPER ACTION. THE CONTRACT IS BETWEEN THE TWO PARTIES AND IF BOTH OF THEM HAVE NO GRIEVANCE WITH THE PROPOSIT ION AND ENTERED INTO AN AGREEMENT, IT IS VOIDABLE AT THE OP TION OF THE PERSON WHO DID NOT KNOW THE LEGAL PROVISION. IT IS FOR THE PARTIES CONCERNED OR FOR THE LAW ENFORCING AUTHORITY TO TAK E PROPER ACTION. IN THIS CASE IF THE CONTRACT BETWEEN APSRTC AND THE ITA NOS.500 TO 506/BANG/2020 PAGE 88 OF 183 APPELLANTS WAS ILLEGAL AND CONTRARY TO LAW, IT WAS FOR THE AUTHORITIES WHO ENFORCE MOTOR VEHICLES ACT 1988 TO TAKE ACTION AND ENSURE THAT THE STAGE CARRIAGE PERMIT ISSUED TO THE APPELLANTS IS WITHDRAWN AND APPELLANTS ARE VISITED WITH PENALT Y, IF ANY, IMPOSABLE UNDER THE LAW. APPARENTLY STATE TRANSPORT AUTHORITIES HAVE NOT TAKEN ANY SUCH ACTION. IT IS NOT FOR US TO EXAMINE THIS ASPECT. OUR EXAMINATION HAS TO BE LIMITED TO EXAMIN E THE FACTS OF CASE AND AGREEMENT TO ARRIVE AT THE NATURE OF TRANS ACTION BETWEEN THE PARTIES TO SEE WHETHER THE TRANSACTION IS COVER ED BY THE DEFINITION OF SERVICE OR NOT. 157. AS FAR AS THE DOCUMENTS REFERRED TO IN VARIOUS SEIZED MATERIAL, THE APPELLANT HAS ALREADY STATED THAT THE TRUST HAS NOT HING TO DO WITH THEM AND THEY CANNOT BE RELIED ON TO MAKE ANY ALLEGATIONS AG AINST THE TRUST. 158. A PERUSAL OF THE OBSERVATIONS OF THE AO THAT ONCE IT COMES TO THEIR NOTICE, ONLY THEN IF THEM (SIC) CLEAR THE ASSESSEE OFF ALL ALLEGATIONS, COULD IT BE CONSIDERED THAT THE ASSESSEE HAS PERHAPS NOT VIO LATED THE SAID ACT. THIS OBSERVATION BY ITSELF PROVES THAT THE AO ALSO BELIEVES THAT THE SEIZED MATERIAL WOULD NOT BE SUFFICIENT TO CONCLUSIVELY PR OVE THAT THE APPELLANT HAS RECEIVED CAPITATION FEE. THE AO HAS NOT CATEGORICA LLY STATED THAT THE AUTHORIZES UNDER THE KARNATAKA EDUCATIONAL INSTITUT ION (PROHIBITION OF CAPITATION FEES) ACT, 1984 WOULD HOLD THE APPELLANT GUILTY OF VIOLATION OF THAT ACT BASED ON THE SEIZED MATERIAL. THIS WOULD IMPLY THAT THE AO IS IN DOUBT AS TO THE RELIABILITY OF THE SEIZED MATERIAL FOR HOLDING APPELLANT GUILTY OF CAPITATION FEE. IT MEANS THE SEIZED MATERIAL IS NOT A CONCLUSIVE PROOF FOR RECEIPT OF CAPITATION FEE. 159. FURTHER, IT WAS SUBMITTED THAT THERE ARE LOT O F LOOSE ENDS AND CONTRADICTIONS IN THE THEORY ADVANCED BY THE AO TO SUPPORT HIS ALLEGATION THAT APPELLANT HAS COLLECTED CAPITATION FEE. THE A O STATED THAT THE APPELLANT COLLECTED CAPITATION FEE BY WEAVING A SCH EME OF CONVERSION OF MERIT QUOTA INTO MANAGEMENT QUOTA. TO ACHIEVE THIS SCHEME, IT HAS ENGAGED AGENTS WHO PROCURED MERIT STUDENTS, MADE TH EM TO TAKE ENTRANCE ITA NOS.500 TO 506/BANG/2020 PAGE 89 OF 183 EXAM, ASKED THEM TO DROP OUT SUBSEQUENTLY AFTER COU NSELLING AND LATER ALLOT THAT VACANT SEAT UNDER MANAGEMENT QUOTA WHO MAY ALS O BE A CANDIDATE PROCURED BY THE AGENTS. STATEMENTS OF NONE OF THE AGENTS HAVE BEEN OBTAINED. EVEN SRI. GOLI V. SRINIVAS HAS STATED TH AT HE IS NOT AWARE OF THE MODUS OPERANDI OF THE AGENTS. THE AO HAS NOT CONFR ONTED ANY OF THE PARENTS REGARDING ENGAGEMENT OF AGENTS BY THE APPEL LANT. HE HAS ALSO NOT CONFRONTED THE PARENTS WITH THE ALLEGED MODUS OPERA NDI ADOPTED BY THE APPELLANT TO MAKE ADMISSION. THERE IS NO PROOF WHA TSOEVER TO SUPPORT THE ALLEGATION OF THE AO REGARDING MODUS OPERANDI PURPO RTEDLY ADOPTED BY THE APPELLANT FOR MAKING ADMISSIONS. THE AO DID NOT MA KE ANY ATTEMPT TO MAKE ENQUIRIES OR COLLECT EVIDENCES REGARDING THE S AID ALLEGED ADMISSION PROCESS. NONE OF THE AUTHORITIES HAVE TAKEN ANY AC TION NOR ANY VIOLATION IN THE ADMISSION PROCESS HAS BEEN BROUGHT TO THE NOTIC E OF THE AUTHORITIES. THE ADMISSION PROCESS OF THE APPELLANT IS TRANSPARE NT AND REGULATED. ANY VIOLATION WOULD GET NOTICED IMMEDIATELY BY THE AUTH ORITIES. THEREFORE, THE SCHEME OF DROP-OUTS AND CONVERSION OF MERIT QUOTA I NTO MANAGEMENT QUOTA WHICH ARE THE PILLARS FOR THE THEORY ADVANCED BY TH E AO REGARDING ALLEGED COLLECTION OF CAPITATION FEE DO NOT HAVE LEGS TO ST AND AND HENCE, ALL ALLEGATIONS BASED ON SUCH PILLARS SHOULD NATURALLY FALL. 160. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE ALLEGATIONS OF THE AO THAT THE APPELLANT HAS COLLECTED CAPITATION FEE ARE PERVERSE BEING NOT BASED UPON ANY EVIDENCE ARE LIABLE TO BE QUASHED. 161. NOW, TO REBUT THE ALLEGATIONS REGARDING DIVERS ION OF FUNDS FOR THE BENEFIT OF TRUSTEES, THE LD. AR SUBMITTED THAT THE AO HAS MADE OBSERVATIONS THAT THE PRIMARY OBJECTIVE OF COLLECTI NG CAPITATION FEE IS TO BE ABLE TO MISAPPROPRIATE AS MUCH FUNDS AS POSSIBLE FO R PERSONAL BENEFIT OF THE TRUSTEES. THIS IS IN STARK CONTRAST TO THE VER Y PRINCIPLES OF CHARITY OF TRUST. IT IS NOTED THAT WITHOUT PREJUDICE TO THE I LLEGAL NATURE OF CAPITATION FEE ITA NOS.500 TO 506/BANG/2020 PAGE 90 OF 183 COLLECTION, THE SOURCE OF THE SAME IS APPLICATION O F ASSETS OF THE TRUST ITSELF. LARGE QUANTUM OF MONEY IS DIVERTED FOR THE BENEFIT OF THE TRUSTEES, MOSTLY IN THE FORM OF DIRECT PAYMENT OF CASH, AND TO A SMA LLER EXTENT IN THE FORM OF EXPENDITURE FOR THEIR BENEFIT. THE AO NOTED THAT F ROM THE ABOVE TABULATION IT CAN BE THAT AT LEAST AN AMOUNT OF RS. 109,47,21, 948 HAS BEEN SIPHONED OFF FROM CAPITATION FEE RECEIPTS SO RECEIVED. 162. THE LD. AR SUBMITTED THAT THE THEORY ADVANCED BY THE AO IS THAT THE APPELLANT HAS COLLECTED CAPITATION FEE IN CASH SO A S TO DIVERT IT TO THE TRUSTEES FOR THEIR PERSONAL BENEFIT. HE SUBMITTED THAT IN THE SUBMISSIONS MADE SUPRA, IT HAS BEEN DEMONSTRATED THAT THE ALLEG ATIONS OF AO THAT APPELLANT HAS RECEIVED CAPITATION FEE ARE PERVERSE IT BEING NOT SUPPORTED BY ANY EVIDENCE. THEREFORE, THIS BY ITSELF WOULD ALSO DESTROY THE ALLEGATION THAT THE FUNDS ARE DIVERTED TO THE TRUSTEES FOR THE IR PRIVATE BENEFIT BECAUSE WHEN THE VERY EXISTENCE OF SOURCE FROM WHICH FUNDS ARE SAID TO HAVE BEEN DIVERTED HAS NOT BEEN PROVED, THE ALLEGATION OF DIV ERSION SHOULD FAIL. 163. WITHOUT PREJUDICE TO THE ABOVE, THE LD. AR MAD E SUBMISSIONS TO DEAL WITH THE ALLEGATIONS OF THE AO REGARDING DIVERSION OF FUNDS TO TRUSTEES FOR THEIR PERSONAL BENEFIT AND HENCE, HAS VIOLATED SECT ION 13(1)(C)(II) OF THE ACT. 164. THE AO EXTRACTED PAGES 1 TO 5 OF SEIZED MATERI AL NO. A/DUU/2. THE AO ALSO EXTRACTED THE RELEVANT PORTION OF THE STAT EMENT OF SRI. GOLI V. SRINIVAS RECORDED UNDER SECTION 132(4) OF THE ACT O N 06.08.2015 WHEREIN THE SAID PAGES 1 TO 5 WERE CONFRONTED TO HIM. AFTE R EXTRACTING THE SEIZED MATERIAL AND THE PORTION OF THE STATEMENT OF SRI. G OLI V. SRINIVAS, THE AO OBSERVED AT PAGE 56 AS UNDER: FROM THE ABOVE IT CAN BE SEEN THAT GVS HAS ADMITTE D THAT THE AMOUNT HAS BEEN PAID TO THE PARTIES DESCRIBED ABOVE . 165. THE AO MADE ANALYSIS OF SOME MORE PAGES OF SE IZED MATERIAL NO. A/DUU/02 AND HAS PUT HIS ANALYSIS AT PARAGRAPH 5.2. 3.1A, PAGES 57 TO 60 ITA NOS.500 TO 506/BANG/2020 PAGE 91 OF 183 OF THE ASSESSMENT ORDER. FEW PAGES / ENTRIES WERE CONFRONTED TO SRI. GOLI V. SRINIVAS. RELYING UPON THE ABOVEMENTIONED MATER IAL AND STATEMENT, THE AO OBSERVED AT PAGE 67, PARAGRAPH 5.2.3.3.1, AS UN DER:- ANALYSIS OF SEIZED MATERIALS A/DUU/2 PG NO. 1 TO P G. NO. 63 SHOWS VARIOUS EXPENDITURES MADE. SL. NO. 5.2.3.1 M ENTIONED ABOVE GIVES SCANNED COPY OF SEIZED MATERIAL SHOWING PAYMENT MADE TO VARIOUS TRUSTEES. FURTHER THERE IS ALSO CO LUMN WITH HEADING PAID TO CHAIRMAN AND TRUSTEE. ON GOING T HROUGH THESE IT CAN BE SAFELY BE INFERRED THAT CASH PAYMENTS HAV E BEEN MADE TO CHAIRMAN FOR HIS PERSONAL EXPENSES, TO RAJESH JAGDA LE CHANCELLOR OF SRI DEVARAJ URS ACADEMY OF HIGHER EDU CATIONS, SECRETARY OF THE TRUST, VICE CHANCELLOR AND OTHER T RUSTEES LIKE HANUMANTH RAJU. FROM THE ABOVE, IT CAN BE SEEN THAT SUBSTANTIAL AM OUNT HAS BEEN PAID TO MULTIPLE TRUSTEES ACROSS MULTIPLE YEARS, TH EREBY ESTABLISHING THE FOLLOWING FACTS: IT WAS AN ORGANIZED ACTIVITY AND MULTIPLE TRUSTEES WERE AWARE OF THE SAME THERE WERE MULTIPLE BENEFICIARIES OF SUCH COLLECTIO N OF CAPITATION FEE IN THE GUISE OF BEING TRUSTEES THERE WAS MISUSE OF THEIR POSITION AS TRUSTEES IN O RDER TO DIVERT THE FUNDS OF THE TRUST THE QUANTUM OF AMOUNTS TABULATED IN THE ABOVE MENTIONED TABLE SHOWS THAT A LARGE FRACTION OF ALL CAPITATION FEE COLLECTED ACTUALLY WENT INTO THE HAN DS OF THE TRUSTEES AND WAS ULTIMATELY FOR THEIR BENEFIT. 166. IT IS SUBMITTED THAT THERE IS NOTHING IN THE A FOREMENTIONED ENTRIES WHICH WOULD SHOW THAT THE PAYMENTS HAVE BEEN MADE F OR THE PERSONAL BENEFIT OF THE TRUSTEES. THE AO HAS MERELY RELIE D UPON THE STATEMENT OF SRI. GOLI V. SRINIVAS. THE AO DID NOT MAKE ANY ATT EMPT TO COLLECT ANY EVIDENCES TO CORROBORATE THE STATEMENT GIVEN BY SRI . GOLI V. SRINIVAS NOR SRI. GOLI V. SRINIVAS PRODUCED ANY EVIDENCE TO SUPP ORT HIS STATEMENT. THE AO HAS TABULATED AT PAGE 59 CERTAIN ENTRIES CONTAI NED IN SEIZED MATERIAL NO. A/DUU/2. AGAINST FEW ENTRIES IN THE SAID TABLE , UNDER REMARKS COLUMN, ITA NOS.500 TO 506/BANG/2020 PAGE 92 OF 183 HE HAS STATED AS PERSONAL EXPENSES. IT IS SUBMIT TED THAT THIS REMARK HAS BEEN MADE PURELY ON THE BASIS OF THE STATEMENT OF S RI. GOLI V. SRINIVAS. NEITHER SRI. GOLI V. SRINIVAS FURNISHED ANY PROOF T O SUPPORT HIS STATEMENT NOR THE AUTHORIZED OFFICER / ASSESSING OFFICER MADE AN ATTEMPT TO COLLECT EVIDENCES TO VERIFY THE VERACITY OF STATEMENT MADE BY SRI. GOLI V. SRINIVAS. INTERESTINGLY, IN CASE OF MANY ENTRIES CONTAINED IN A/DUU/2 WHICH WERE CONFRONTED TO SRI. GOLI V. SRINIVAS, HE MERELY REIT ERATED WHAT IS STATED IN THE SAID MATERIAL. BUT WHEN IT CAME TO ENTRIES RELATED TO PAYMENT TO CHAIRMAN, SRI. GOLI V. SRINIVAS STATED THAT THE PAYMENTS WERE MADE TO CHAIRMAN FOR PERSONAL PURPOSE. 167. THE AO SOUGHT TO RELY UPON THE STATEMENT OF S RI. GOLI V. SRINIVAS TO HOLD THAT FUNDS WERE DIVERTED FOR TO THE TRUSTEES F OR THEIR PERSONAL BENEFIT. HE IGNORED THE STATEMENT MADE BY SRI. G H NAGARAJ. IT IS RELEVANT TO NOTE THE FOLLOWING QUERY AND REPLY FROM THE STATEMENT OF SRI. G H NAGARAJ RECORDED ON 07.08.2015:- Q. NO. 16 PLEASE GO THROUGH THE PAGE NUMBERS FROM 1 TO 7 OF FOLDER A/DUU/13 SEIZED AND EXPLAIN ABOUT THE ENTRIE S MADE IN THE SAID PAGES. ANS: YES, I HAVE GONE THROUGH THE PAGE NUMBERS 1 TO 7. THESE ENTRIES ARE MOSTLY PAYMENTS GIVEN TO THE RESPECTIVE PERSONS. THE DECISION OF MAKING THE PAYMENTS WERE TAKEN COLLECTI VELY BY ALL THE TRUSTEES. BUT AT THIS POINT OF TIME I AM NOT A BLE TO REMEMBER FOR WHOM AND WHY THE PAYMENTS WERE MADE BUT I WOULD LIKE TO STATE THAT ALL THE PAYMENTS WERE MADE FOR THE WELL BEING OF THE TRUST AND NO PERSONAL PAYMENTS WERE TAKEN FOR MYSEL F AND BY THE TRUSTEES. IF ANY PAYMENTS WHERE TRUSTEES OR MY NAM E IS WRITTEN IN THOSE LOOSE SHEETS, THOSE PAYMENTS ARE RECEIVED BY US AND SPENT FOR THE OBJECTS OF THE TRUST. 168. IT IS FURTHER RELEVANT TO NOTE THE FOLLOWING Q UERY AND REPLY FROM THE STATEMENT OF SRI. G H NAGARAJ RECORDED ON 13.08.201 5: ITA NOS.500 TO 506/BANG/2020 PAGE 93 OF 183 Q. 6 I AM SHOWING YOU PAGE NO. 43, 35, 29, 28 AND 2 OF THE SEIZED FOLDER MARKED AS A/DUU/01 AND ALSO PAGE NO. 87, 86, 85 OF THESE SEIZED MATERIALS MARKED AS A/DUU/13 DATED 06.08.2015 WHEREIN CERTAIN PAYMENTS TO VARIOUS PARTIES HAVE BE EN MADE. THE ENTRIES ARE IN THE HANDWRITING OF SHRI GOLI SRINIVA S. FOR WHICH YOU HAVE APPENDED YOUR SIGNATURE. PLEASE EXPLAIN W HY THESE PAYMENTS ARE MADE TO VARIOUS PERSONS NAMED THEREIN AND EXPLAIN THE PURPOSE AND NATURE OF THESE PAYMENTS. ANS. THESE PAYMENTS ARE MADE TO VARIOUS PARTIES LIK E CHAIRMAN, SECRETARY, SHRI RAJESH JAGDALE, SHRI J P NARAYANASW AMY, SHRI R J RAJENDRA AND VARIOUS OTHER PERSONS MENTIONED THEREI N. WHEREVER THE CASH IS MENTIONED THAT CASH IS GIVEN TO SHRI GO LI SRINIVAS TO FURTHER MAKE PAYMENT TO SUNDRY EXPENSES WHOSE DETAI LS ARE MAINTAINED BY SHRI GOLI SRINIVAS IN A SEPARATE EXPE NDITURE BOOK Q. 7 YOU ARE ONLY CONFIRMING THAT THE PAYMENTS HAV E BEEN MADE BY SHRI GOLI SRINIVAS AS PER YOUR INSTRUCTION HOWEV ER, YOU ARE NOT STATING THE NATURE OF THESE PAYMENTS ANS. IT IS STATED THAT THESE PAYMENTS HAVE ULTIMAT ELY BEEN UTILIZED FOR THE TRUST LIKE PURCHASING LAND FOR THE TRUST, DEVELOPMENT OF BUILDINGS / RENOVATION, CIVIL WORKS, BUILDING OF COMPOUND WALLS, CONSTRUCTION OF TEMPLES (ANJANAYA S WAMI TEMPLE AT DODDABALLAPURA AND BABA MANDIR IN CHIKBAL LAPUR) ETC. 169. FURTHER, QUERIES NO. 13 AND 17 AND THEIR REPLI ES IN STATEMENT UNDER SECTION 132 OF SRI G H NAGARAJ RECORDED ON 20.08.20 15 READ AS UNDER:- Q. 13 I AM SHOWING YOU PAGE NO. 2 OF THE SEIZED MA TERIAL MARKED AS A/DUU/01 DATED 06.08.2015 SEIZED DURING T HE COURSE OF SEARCH CONDUCTED U/S 132 ON 06.08.2015. PLEASE EXPLAIN THE ENTRY DATED 15.05.2015 UNDER THE CAPTION SEND TO H RAJU 50- 00 AND ONE MORE ENTRY DATED 02.06.2015 UNDER THE C APTION H RAJU FOR LAND 150 00. PLEASE EXPLAIN THE ENTR IES ANS. A TOTAL SUM OF RS. 2,00,00,000 WAS GIVEN TO O NE MEDIATOR BY NAME H RAJU FOR ACQUISITION OF LAND FOR THE PURP OSE OF EXPANSION OF DODDABALLAPUR ENGINEERING CAMPUS Q. 17 I AM SHOWING YOU PAGE NO. 28 OF THE SEIZED MA TERIAL MARKED AS A/DUU/01 DATED 06.08.2015 SEIZED DURING T HE COURSE ITA NOS.500 TO 506/BANG/2020 PAGE 94 OF 183 OF SEARCH CONDUCTED U/S 132 ON 06.08.2015. PLEASE EXPLAIN THE ENTRY DATED 31.07.2014 UNDER THE CAPTION R J RAJEN DRA (BABU) FOR HAND DB PUR 100-00. PLEASE EXPLAIN THE ENTR Y ANS. A TOTAL SUM OF RS. 1 CRORE WAS HANDED OVER TO SHRI R J RAJENDRA FOR THE PURCHASE OF TRUST LAND AT DODDABAL LAPURA CAMPUS 170. IT WAS SUBMITTED THAT THE ABOVE WOULD SHOW THA T CASH HAS BEEN UTILIZED FOR THE PURPOSE OF THE TRUST. RS. 2 CRORE HAS BEEN PAID TO ONE MR. RAJU AND RS. 1 CRORE HAS BEEN PAID TO SRI R J RAJEN DRA FOR ACQUISITION OF LAND FOR THE PURPOSE OF EXPANSION OF DODDABALLAPUR ENGINEERING CAMPUS. THEREFORE, THE ABOVE WOULD SHOW THAT THE CASH HAS B EEN UTILIZED FOR THE PURPOSE OF OBJECTS OF THE TRUST. THIS IS UPON ASSU MPTION WITHOUT ADMISSION THAT CASH HAS BEEN COLLECTED BY THE TRUST. 171. IT IS PERTINENT TO NOTE THE FOLLOWING OBSERVAT IONS OF THE AO AT PAGE 134 OF THE ASSESSMENT ORDER:- IT IS STRANGE THAT SOME OF THE UNACCOUNTED ACTIVIT IES, SUCH AS CONSTRUCTION OF WALL, BUILDINGS ETC, FOR THE PURPOS E OF OBJECTS OF THE ASSESSEE IS NOT KNOWN TO THE TRUSTEES, WHEN THE Y WERE CARRIED OUT IN THE PROPERTIES BELONGING TO THE ASSESSEE. 172. IT WAS SUBMITTED THAT THE ABOVE OBSERVATION WO ULD SHOW THAT THE AO HAS ACKNOWLEDGED THAT THE UNACCOUNTED CASH IS UTILI SED TOWARDS THE OBJECTS OF THE TRUST. THEREFORE, THE OBSERVATION O F THE AO THAT THE EXPENDITURE IS NOT INCURRED FOR THE OBJECTS OF THE TRUST IS CONTRARY TO HIS OWN FINDINGS. THIS IS WITHOUT PREJUDICE TO THE MAIN CO NTENTION THAT THE APPELLANT HAS NOT COLLECTED ANY CAPITATION FEE. 173. FROM THE ABOVE, IT IS CLEAR THAT THE PAYMENTS HAVE BEEN MADE ONLY FOR THE PURPOSE OF THE OBJECTS OF THE TRUST. THE A O HAS CARRIED OUT A CHERRY-PICKING EXERCISE WHILE RELYING UPON THE STAT EMENTS RECORDED. ITA NOS.500 TO 506/BANG/2020 PAGE 95 OF 183 174. FURTHER, WHILE ANALYSING VARIOUS PAYMENTS, THE AO NOTED THAT CERTAIN PAYMENTS PERTAIN TO REPAIRS / RENOVATION OF THE HOUSE OF THE CHAIRMAN. WITHOUT PREJUDICE TO THE CONTENTION THAT NO FUNDS HAVE BEEN DIVERTED FOR THE PERSONAL BENEFIT OF THE TRUSTEES, IT WAS POINTED TO QUERY 15 FROM THE STATEMENT UNDER SECTION 132(4) OF SRI JALA PPA RECORDED ON 04.09.2015. THE SAID QUERY AND REPLY ARE AS UNDER: - Q. 15 IN WHOSE NAME THE RESIDENTIAL HOUSE LOCATED AT NO. 147, 2 ND MAIN, 2 ND STAGE, I BLOCK, RMV EXTENSION, BANGALORE STANDS? ANS. THIS HOUSE WAS PURCHASED BY ME WAY BACK IN 197 8. ON 05.04.2010 I HAVE MADE A WILL IN THE NAME OF THE TR UST FOR THE ABOVE MENTIONED PROPERTY. I AM SUBMITTING THE COPY OF THE WILL. 175. FURTHER, QUERY NO 16 AND REPLY FROM THE STATEM ENT OF SRI. G H NAGARAJ RECORDED UNDER SECTION 132(4) ON 20.08.2015 ARE AS FOLLOWS:- Q. 16 I AM SHOWING YOU YOUR REPLY TO Q. NO. 14 OF THE STATEMENT RECORDED ON 13.08.2015 U/S 131 OF THE INCOME TAX AC T WHEREIN YOU HAVE STATED THAT CERTAIN SUMS WERE SPENT FOR RE NOVATION OF THE HOUSE OF CHAIRMAN LOCATED IN DOLLARS COLONY. PLEASE CONFIRM YOUR STATEMENT ANS. YES, I CONFIRM THAT THE SAID SUM WAS SPENT FOR THE RENOVATION OF THE HOUSE OF CHAIRMAN LOCATED IN DOLL ARS COLONY. IT IS FURTHER STATED THAT THE SAID HOUSE WHICH WAS IN THE NAME OF SHRI R L JALAPPA WAS DONATED TO THE TRUST. 176. THE LD. AR SUBMITTED THAT THE ABOVE WOULD SHOW THAT THE HOUSE IN WHICH SRI JALAPPA STAYS HAS BEEN WILLED TO THE TRUS T. ANY AMOUNT ALLEGED TO HAVE BEEN SPENT TOWARDS REPAIRS AND MAINTENANCE OF THE HOUSE OF THE CHAIRMAN WOULD BENEFIT THE TRUST. THEREFORE, THE A LLEGATION THAT AMOUNT SPENT TOWARDS REPAIRS AND MAINTENANCE OF THE HOUSE OF THE CHAIRMAN WOULD AMOUNT TO DIVERSION OF FUNDS OF THE TRUST FOR PERSONAL BENEFIT OF THE CHAIRMAN IS NOT TENABLE. ITA NOS.500 TO 506/BANG/2020 PAGE 96 OF 183 177. IT WAS FURTHER SUBMITTED THAT THE AO HAS TABU LATED THE ALLEGED PAYMENTS MADE TO TRUSTEES. BASED ON THIS TABLE, TH E AO HAS CHOSEN TO MAKE PROTECTIVE ASSESSMENT UPON THE TRUSTEES MENTIO NED THERE. THIS BY ITSELF WOULD SHOW THAT THE MATERIAL IS NOT SUFFICIE NT TO PROVE THAT FUNDS HAVE BEEN DIVERTED FOR THE BENEFIT OF THE TRUSTEES. THE AO HAS NOTED THAT THE PAYMENTS ARE MADE OUT OF ALLEGED CAPITATION FEE REC EIVED IN CASH AND NOT OUT OF THE FUNDS DULY ACCOUNTED. THE APPELLANT HAS ESTABLISHED THAT IT HAS NOT RECEIVED CAPITATION FEE AT ALL. FUNDS COLLECTE D BY PRIVATE PERSON WOULD NOT BECOME FUNDS OF THE TRUST. 178. MOREOVER, EXCEPT FOR MAKING A BALD ALLEGATION THAT THE PAYMENTS HAVE BEEN MADE FOR THE BENEFIT OF THE TRUSTEES, THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THE SAME. MERE PAYMEN T TO TRUSTEES DOES NOT AUTOMATICALLY MEAN THAT IT IS FOR THEIR BENEFIT. T HE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE TRUSTEES WERE ACTUALLY BENEFITTED. MERE RELIANCE ON THE STATEMENT OF SRI. GOLI V. SRIN IVAS IS NOT SUFFICIENT. THE AO OUGHT TO HAVE MADE ENQUIRIES AS TO HOW THE PAYM ENTS MADE TO TRUSTEES OR PURPORTED TO HAVE BEEN MADE TO TRUSTEES WERE UTILISED FOR THEIR BENEFIT. 179. THE LD. DR SUBMITTED THAT DURING THE SEARCH PR OCEEDINGS VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED AND T HE SAME WERE AUTHENTICATED BY THE ASSESSEE. THE EVIDENCE WITH R EGARD TO UNACCOUNTED CAPITATION FEE AND CASH WERE SEIZED FROM THE PREMIS ES OF ASSESSEE AS PER ANNX. A/DUU/01, A/DUU/03 & A/DUU/07. THE TRUSTEE OF THE ASSESSEE WAS CONFRONTED WITH THE INCRIMINATING MATERIAL WHICH WA S SEIZED AND THEREAFTER ASSESSMENT ORDER WAS PASSED PLACING RELIANCE ON SUC H SEIZED MATERIAL. BEING SO, THERE IS NO MERIT IN THE ARGUMENTS OF THE LD. AR FOR THE ASSESSEE. 180. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD ON THIS ISSUE. THE MATERIAL SEIZED DURING THE COUR SE OF SEARCH IS AS UNDER:- ITA NOS.500 TO 506/BANG/2020 PAGE 97 OF 183 SEIZED MATERIAL NO. REFERENCE CONSISTS OF REFERENCE TO ASSESSMENT ORDER A/DUU/01 [COPY ENCLOSED AT PAGES NO. 508 TO 600 OF THIS PAPER BOOK] LOOSE SHEETS (PRINTED AND MANUAL) PAGE NO. 39 TO 48 OF ASST. ORDER A/DUU/02 [COPY ENCLOSED AT PAGES NO. 601 TO 668 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 52 TO 77 OF ASST. ORDER A/DUU/03 [COPY ENCLOSED AT PAGES NO. 669 TO 775 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 64 OF ASST. ORDER A/DUU/04 [COPY ENCLOSED AT PAGES NO. 776 TO 864 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 46, 65 & 66 OF ASST. ORDER A/DUU/05 [COPY ENCLOSED AT PAGES NO. 865 TO 991 OF THIS PAPER BOOK] SPIRAL NOTE BOOK (MANUALLY WRITTEN) A/DUU/06 [COPY ENCLOSED AT PAGES NO. 992 TO 1151 OF THIS PAPER BOOK] NOTE BOOK (MANUALLY WRITTEN) A/DUU/07 [COPY ENCLOSED AT PAGES NO. 1152 TO 1308 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) A/DUU/08 [COPY ENCLOSED AT PAGES NO. 1309 TO 1365 OF THIS PAPER BOOK] NOTE BO OK (MANUA LLY WRITTEN) A/DUU/09 [COPY ENCLOSED AT PAGES NO. 1366 TO 1419 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) A/DUU/10 [COPY ENCLOSED AT PAGES NO. 1420 TO 1554 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WR IT TEN) PAGE NO. 61 OF THE ASST. ORDER A/DUU/11 [COPY ENCLOSED AT PAGES NO. 1555 TO 1635 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) PAGE NO. 100 OF ASST. ORDER ITA NOS.500 TO 506/BANG/2020 PAGE 98 OF 183 A/DUU/12 [COPY ENCLOSED AT PAGES NO. 1636 TO 1697 OF THIS PAPER BOOK] LONG NOTE BOOK (MANUALLY WRITTEN) A/DUU/13 [COPY ENCLOSED AT PAGES NO. 1698 TO 1805 OF THIS PAPER BOOK] LOOSE SHEETS (MOST OF THEM ARE PRINTED; FEW ARE MANUAL) PAGE NO. 42 TO 46, 64 & 83 OF ASST. ORDER A/DUU/14 [COPY ENCLOSED AT PAGES NO. 1806 TO 1838 OF THIS PAPER B OO K] COPY OF DIGITAL DATA RETRIEVED PAGE 70 OF ASST. ORDER A/DUU/15 [COPY ENCLOSED AT PAGES NO. 1839 TO 2028 OF THIS PAPER BOOK] NOTE BOOK A/DUU/16 [COPY ENCLOSED AT PAGES NO. 2029 TO 2138OF THIS PAPER BOOK] CONTAINS SCANNED COPIES OF UNREALISED CHEQUES PAGE NO. 46 TO 50 OF THE ASST. ORDER A/DUU/17 COPY NOT GIVEN TO THE APPELLANT 181. WITH REGARD TO SEIZED MATERIAL A/DDU/1 TO 4 ( PAGE NO 508 TO 864 OF PAPER BOOK), THE DETAILS OF THE CONTENT OF THESE SE IZED MATERIALS ARE MENTIONED IN ABOVE TABLE. THE AO VERIFIED THESE SEI ZED DOCUMENTS ACCORDING TO HIM IT SHOWS CERTAIN RECEIPTS OF UNACC OUNTED FEES AND PAYMENTS TO TRUSTEES AND OTHERS MENTIONED THEREIN. THESE SEIZED MATERIAL DOES NOT BARE ANY SIGNATURES OF ANY PERSON. OUR OBS ERVATIONS ARE THAT THESE SEIZED MATERIAL CONSISTING OF LOOSE SHEETS AN D NOTE BOOKS AND THE STATEMENT RECORDED FROM MR. GOLI SRINIVAS. THE AS SESSEE VIDE LETTER DATED 22.02.2017 AND 09.12.2017 ASKED FOR CROSS-EXAMINATI ON OF SHRI GOLI SRINIVAS WHICH WAS NOT PROVIDED BY THE AUTHORITY. THE CONTENTION OF THE LD. DR IS THAT MR. GOLI SRINIVAS BEING EMPLOYEE OF THE ASSESSEE, IT IS NOT NECESSARY TO PROVIDE SUCH AN OPPORTUNITY TO THE ASS ESSEE. THE AO HAS ITA NOS.500 TO 506/BANG/2020 PAGE 99 OF 183 REFERRED TO THESE SEIZED MATERIALS IN PARAS 4, 6, 8 , 15, 16, 18, 19, 36-40 OF HIS ORDER. ACCORDING TO THE AO, A/DUU/01 SHOWS THE DETAILS OF STUDENTS, AMOUNTS COLLECTED FOR ADMISSION AND DURATION OF PAY MENTS. HOWEVER, IT DOES NOT CONTAIN THE NAME OF ASSESSEE OR SIGNATURE OF ANY PERSON AUTHORISED BY THE ASSESSEE. THEY ARE MERE NON-SPEA KING LOOSE SHEETS CONTAINING UNSUBSTANTIATED JOTTINGS HAVING NO EVIDE NTIARY VALUE. FIRST OF ALL TO COME TO THE CONCLUSION THAT THESE ARE FULL PROOF DOCUMENTS, THE DEPARTMENT SHOULD HAVE GIVEN CROSS-EXAMINATION OF T HE AUTHOR OF THESE LOOSE SHEETS WHICH WAS NOT PROVIDED. AS HELD BY T HE HONBLE DELHI HIGH COURT IN PRINCIPAL COMMISSIONER OF INCOME-TAX V. BEST INFRAS TRUCTURE (INDIA) (P.) LTD ., 397 ITR 82 (DEL) , STATEMENT RECORDED U/S. 132(4) DID NOT BY THEMSELVES SUBSTITUTE INCRIMINATING MATERIAL AND ON THAT BASIS ASSUMPTION OF JURISDICTION U/S. 153A AND CONSEQUENT ADDITION M ADE BY AO WERE NOT JUSTIFIED. FURTHER IT WAS OBSERVED THAT STATEMENT U/S. 132(4) DURING THE COURSE OF SEARCH ACTION NOT ONLY HAS TO BE OFFERED TO THE ASSESSEE, BUT AN OPPORTUNITY TO CROSS-EXAMINE HAS TO BE GIVEN. IF I T WAS NOT PROVIDED, IT IS SUFFICIENT TO DISCARD SUCH STATEMENT WHICH IS EVIDE NT FROM PARA 37 OF THAT JUDGMENT. SIMILAR VIEW WAS TAKEN BY LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF M/S FATEH CHAND CHARITABLE TRUST V. CIT (EX EMPTIONS) LUCKNOW 2016 (4) TMI 1119 - ITAT LUCKNOW / [2016] 49 ITR (T RIB) 276 WHEREIN IT WAS HELD THAT EVEN WHEN THE ASSESSEE DISPUTED THE C ORRECTNESS OF THE STATEMENT RECORDED U/S. 132(4) AND WANTED TO CROSS- EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE AND HELD THAT TESTIMONY OF WITNESSES HAS TO BE DISCHARG ED AS THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION. FURTHER IN THE CASE OF M/S OBULAPURAM MINING COMPANY PVT. LTD. V. DCIT 2016 (7) TMI 1435, THE ITAT BANGALORE HELD THAT IN THE ABSENCE OF THIR D PARTY BEING MADE AVAILABLE FOR CROSS-EXAMINATION DE SPITE REPEATED REQUESTS BY THE ASSESSEE, HIS STATEMENT COULD NOT B E RELIED UPON DETRIMENT TO THE ASSESSEE. THIS DECISION WAS BASED ON THE JU DGMENT OF THE HONBLE ITA NOS.500 TO 506/BANG/2020 PAGE 100 OF 183 DELHI HIGH COURT IN THE CASE OF CIT V. PRADEEP KUMAR GUPTA, 303 ITR 95 (DEL). 182. THE CONTENTION OF THE LD. DR IS THAT THE DEPA RTMENT RELIED UPON THE STATEMENT OF ASSESSEES OWN EMPLOYEE, WHO NEED NOT CROSS-EXAMINE ITS OWN EMPLOYEE AND THERE IS NO MISTAKE IN NOT PROVIDI NG OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE. HOWEVER, WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF THE LD. DR. THE RIGHT TO CR OSS-EXAMINE IS NOT DEPENDENT UPON THE ASSESSEES RELATIONSHIP WITH THE WITNESSES. THE RIGHT TO CROSS-EXAMINE DEPENDS UPON THE FACT THAT STATEME NT OF THE PARTY IS USED AGAINST THE ASSESSEE. THEREFORE THE MERE FACT THAT THE STATEMENT SOUGHT TO BE RELIED UPON BY THE AO IS THAT OF THE EMPLOYEE WO ULD NOT DISENTITLE THE ASSESSEE TO CROSS-EXAMINE. THEREFORE, THE RATIO RE LIED UPON BY THE ASSESSEE SQUARELY APPLIES AND IT IS THE PREROGATIVE OF ASSESSEE WHETHER IT WANTS TO CROSS-EXAMINE OR NOT. IT WAS HELD IN THE CASE OF SMT. MADHU GUPTA V. DCIT 2006 (2) TMI 496 - ITAT MUMBAI / [200 6] 8 SOT 691 (MUM.) THAT EVEN IF THE ASSESSEE WAS PROVIDED A COPY OF T HE STATEMENT RECORDED BY THE REVENUE ON THE SPUR OF THE MOMENT, THAT SHOULD NOT BE TREATED AS AN EFFECTIVE OPPORTUNITY GIVEN TO THE AS SESSEE. IN THAT CASE THE TRIBUNAL RELIED UPON THE JUDGMENT OF THE HONBLE AL LAHABAD HIGH COURT IN THE CASE OF GARGI DIN JWALA PRASAD V. CIT [1974] 96 ITR 97 (ALL ) WHEREIN IT WAS HELD THAT PERMISSION TO CROSS-EXAMINE WITNESS G IVEN, BUT NAMES OF THE WITNESSES AND SUBSTANCE OF THE STATEMENT MADE BY TH EM NOT GIVEN IS NOT A PROPER OPPORTUNITY AND ON THAT GROUND ASSESSMENT WA S VITIATED BY THE PRINCIPLES OF NATURAL JUSTICE AS PERMISSION TO CROS S-EXAMINE ALL THE WITNESSES ARE ILLUSORY. FURTHER IN THE PRESENT CA SE, THESE SEIZED MATERIAL A/DUU/1 TO 4 THOUGH DID NOT CONTAIN THE NAME OF ASS ESSEE OR SIGNATURE OF ANY PERSON, THEY ARE MERELY UNSUBSTANTIATED LOOSE S HEETS. AS HELD BY THE TRIBUNAL IN THE CASE OF ACIT V. LAYERS EXPORTS P. LTD [2017] 53 ITR (TRIB) 416 (MUMBAI) , ADDITION CANNOT BE SUSTAINED MERELY ON THE BASIS OF ROUGH ITA NOS.500 TO 506/BANG/2020 PAGE 101 OF 183 NOTING MADE ON FEW LOOSE SHEETS, UNLESS AO BRINGS O N RECORD SOME INDEPENDENT AND CORROBORATIVE MATERIAL TO PROVE IRR EFUTABLY THAT THE SAID NOTING REVEALED UNACCOUNTED INCOME OR UNACCOUNTED I NVESTMENT OR UNACCOUNTED EXPENDITURE OF THE ASSESSEE. THE VERY PURPOSE OF SEARCH CONCLUDED U/S. 132 IS TO UNEARTH HIDDEN INCOME OR P ROPERTY OR GET HOLD OF BOOKS OF ACCOUNT OR DOCUMENTS WHICH HAS NOT BEEN OR WILL NOT BE OTHERWISE PRODUCED BY THE ASSESSEE IN REGULAR COURSE ON ISSUE OF SUMMONS OR NOTICE. IN THE ASSESSEE'S CASE, AS STATED ABOVE, TH E PURPORTED SEARCH ACTION DID NOT LEAD TO DISCOVERY OF ANY UNACCOUNTED MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. FURTH ER, NO BOOKS OF ACCOUNT REVEALING ANY UNDISCLOSED TRANSACTIONS OF THE ASSES SEE WERE FOUND DURING THE COURSE OF SEARCH. THE ENTIRE ASSESSMENT ORDER R EVOLVES AROUND SCRIBBLING IN LOOSE SHEETS OF PAPERS SEIZED FROM PR EMISES OF ANOTHER PERSON IN COURSE OF SEARCH ACTION ON SUCH OTHER PER SON. IT IS A FACT THAT THE SAID ROUGH LOOSE SHEETS OF PAPERS SCRIBBLED BY SOME ANONYMOUS PERSON AND SEIZED IN COURSE OF SEARCH OF ANOTHER PERSON CA NNOT BE TERMED AS 'DOCUMENTS' HAVING ANY EVIDENTIARY VALUE WITHIN THE MEANING OF SECTION 132 OR SECTION 132A OF THE ACT. THUS, THE ENTIRE ASSESS MENT U/S 153A OF THE ACT IN CASE OF THE ASSESSEE RESTS ON SHAKY AND INCORREC T FOUNDATION AND THUS DESERVES TO BE QUASHED. 183. IN VIEW OF THE AFORESAID JUDGMENTS, SINCE THE IMPUGNED SEIZED PAPERS ARE UNDATED, HAVE NO ACCEPTABLE NARRATION AN D DO NOT BEAR THE SIGNATURE OF THE ASSESSEE OR ANY OTHER PARTY, THEY ARE NOT IN THE NATURE OF SELF-SPEAKING DOCUMENTS HAVING NO EVIDENTIARY VALUE AND CANNOT BE TAKEN AS A SOLE BASIS FOR DETERMINATION OF UNDISCLOSED IN COME OF THE ASSESSEE. WHEN DOCUMENTS LIKE THE PRESENT LOOSE SHEETS OF PAP ERS ARE RECOVERED AND THE REVENUE WANTS TO MAKE USE OF IT, THE ONUS R ESTS ON THE REVENUE TO COLLECT COGENT EVIDENCE TO CORROBORATE THE NOTING T HEREIN. THE REVENUE HAS FAILED TO CORROBORATE THE NOTING BY BRINGING SOME C OGENT MATERIAL ON RECORD ITA NOS.500 TO 506/BANG/2020 PAGE 102 OF 183 TO PROVE CONCLUSIVELY THAT THE NOTING IN THE SEIZED PAPERS REVEAL THE UNACCOUNTED CAPITATION FEES/RECEIPTS OF THE ASSESSE E. FURTHER, NO CIRCUMSTANTIAL EVIDENCE IN THE FORM OF ANY UNACCOUN TED CASH, JEWELLERY OR INVESTMENTS OUTSIDE THE BOOKS OF ACCOUNT WAS FOUND IN COURSE OF SEARCH IN THE CASE OF ASSESSEE. THUS, THE IMPUGNED ADDITION W AS MADE BY THE AO ON GROSSLY INADEQUATE MATERIAL OR RATHER NO SUFFICI ENT MATERIAL AT ALL AND AS SUCH, DESERVES TO BE DELETED. HENCE, WE ARE OF THE VIEW THAT AN ASSESSMENT CARRIED OUT IN PURSUANCE OF SEARCH, NO A DDITION CAN BE MADE SIMPLY ON THE BASIS OF UNCORROBORATED NOTING IN LOO SE PAPERS FOUND DURING SEARCH BECAUSE THE ADDITION ON ACCOUNT OF ALLEGED R ECEIPTS MADE SIMPLY ON THE BASIS OF UNCORROBORATED NOTING AND SCRIBBLING O N LOOSE SHEETS OF PAPERS MADE BY SOME UNIDENTIFIED PERSON AND HAVING NO EVID ENTIARY VALUE, IS UNSUSTAINABLE AND BAD-IN-LAW. 184. THE TRIBUNAL IN THE CASE OF SRI Y. SIDDAIAH NAIDU, TIRUPATHI VS. ASST. COMMISSIONER OF INCOME-TAX 2015 (2) TMI 403 - ITAT HYDERABAD HELD THAT IT IS VERY MUCH CLEAR THAT FROM SUCH NOTINGS, IT CANNOT BE DEDUCED WHETHER THEY ARE RECEIPT OR PAYMENTS NOR IT CAN BE CONCLUDED WHETHER THEY ARE IN RELATION TO ANY PARTICULAR TRANSACTION AS NO NAMES HAVE BEEN MENTIONED. IN THESE CIRCUMSTANCES, NO ADDITION CAN BE MADE ON THE BASIS OF SUCH DOCUMENT. 185. IN CIT V. M/S KHOSLA ICE & GENERAL MILLS 2013 (1) TMI 451 - PUNJAB & HARYANA HIGH COURT , THE HONBLE COURT HELD THAT ASSESSEE RIGHTLY CONTENDED THAT THE IMPUGNED DOCUMENT WAS A NON-SPEA KING DOCUMENT INASMUCH AS IT DOES NOT CONTAIN ANY INTELLIGIBLE NA RRATION IN SUPPORT OF THE INFERENCE DRAWN BY THE ASSESSING OFFICER THAT IT RE FLECTED SALES CARRIED OUT BY THE ASSESSEE OUTSIDE THE REGULAR BOOKS OF ACCOUN T. WHEN A DUMB DOCUMENT, IS TO BE MADE THE BASIS TO FASTEN TAX LIA BILITY ON THE ASSESSEE, THE BURDEN IS ON THE REVENUE TO ESTABLISH WITH CORR OBORATIVE EVIDENCE THAT ITA NOS.500 TO 506/BANG/2020 PAGE 103 OF 183 THE NATURE OF ENTRIES CONTAINED THEREIN REFLECT INC OME AND ALSO THAT SUCH INCOME WAS IN THE CONTROL OF THE ASSESSEE. THUS, RE VENUE HAS TO ESTABLISH, WITH NECESSARY CORROBORATIVE EVIDENCE, THAT VARIOUS ENTRIES CONTAINED IN THE SEIZED DOCUMENT REFLECT SALES OF RICE AND BROKEN RI CE EFFECTED BY THE ASSESSEE. CONSIDERING THE ENTIRETY OF CIRCUMSTANCES , IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE NATURE AND OWNERSHIP OF THE ENTRIES FOUND IN THE SEIZED DOCUMENT, NO ADDITION IS PERMISSIBLE IN THE HANDS OF THE ASSESSEE AS UNDISCLOSED INCOME BY MERELY ARITHMETICALLY TOTA LLING VARIOUS FIGURES JOTTED DOWN ON SUCH DOCUMENT. 186. FURTHER THE AO RELIED ON THE STATEMENT OF SHRI NAGARAJ, SECRETARY WHEREIN THE AO MENTIONED THAT MR. NAGARAJ WAS AWARE OF THE TRANSACTIONS AND CONFIRMED IT. THE AO HAS NOT REFERRED TO THE F OLLOWING ANSWERS OF MR. NAGARAJ TO QUESTION NOS.8 TO 11:- (A) IN ANSWER TO Q.8 TO THE STATEMENT RECORDED ON 1 3.8.2015, [PAGE 2164 PB), HE HAS STATED THAT HE DOES NOT KNOW ANYTH ING ABOUT THE ENTRIES MADE IN THE LOOSE SHEETS. (B) IN ANSWER TO Q14 (PAGE 2165 PB), HE DENIED ANY CONSIDERATION PAID TO MCA INSPECTORS NOR ANY CASH PAID TO DONORS TO EN ABLE THEM CLAIM 80G DEDUCTION. (C) IN ANSWER TO Q.8 (PAGE 2167 PB), IN THE STATEME NT RECORD ON 21.9.2015, HE DID NOT AGREE TO DISCLOSE ANY AMOUNT AS UNDISCLOSED INCOME OF THE TRUST. (D) IN ANSWER TO Q. 14 (PAGE 2183 PB) OF STATEMENT RECORDED ON 13.10.2015, HE DENIED PAYMENT OF CASH TO ANY DONOR. ITA NOS.500 TO 506/BANG/2020 PAGE 104 OF 183 (E) IN ANSWER TO Q.22 (PG. 2191 PB), HE EMPHATICALL Y DENIED THAT ANY CASH WAS RECEIVED FROM STUDENT/PARENT IN RESPONSE T O STATEMENT OF SHRI RANGARAJU (PG. 2189 & 2190 PB). (F) IN ANSWER TO Q.24 (PG. 2192 PB), HE DENIED COLL ECTION OF FEE IN CASH. 187. HENCE THE REVENUE AUTHORITIES CONTENTION THAT MR.NAGARAJ HAS ADMITTED PAYMENT OF CASH AND RECEIPT OF FEES IN CAS H IS NOT BASED ON STATEMENT OF MR. NAGARAJ. 188. FURTHER FROM THE SEIZED MATERIAL A/DUU/02 & 03 , THE AO CAME TO THE CONCLUSION THAT CASH BEEN PAID TO TRUSTEES EITH ER DIRECTLY OR TO A THIRD PARTY FOR THEIR BENEFIT. THE STATEMENTS OF SHRI R.L . JALAPPA, SHRI RAJESH JAGDALE AND LATE SHRI J.P. NARAYAN SWAMY WERE RECOR DED, BUT NO QUESTIONS WERE PUT TO THEM WHETHER STATEMENT OF MR. SRINIVAS THAT CASH HAS BEEN PAID TO TRUSTEES OR TO A THIRD PARTY ON THEIR BEHALF IS CORRECT. THE STATEMENT OF MR. JALAPPA IS ON RECORD AT PAGE 2140 TO 2158 OF PB. PERUSAL OF THE SAME SHOWS THAT HE WAS NOT CONFRONTED WITH T HE STATEMENT OF MR. SRINIVAS. THE OBSERVATIONS IN PARA 8 & 9 OF THE AS SESSMENT ORDER DO NOT SHOW THAT SHRI RAJESH JAGDALE AND LATE MR. J.P. NAR AYAN SWAMY WERE ALSO NOT CONFRONTED WITH THE STATEMENT OF MR. SRINIVAS. THE AO STATED THAT SEIZED MATERIAL A/DUU/01 REVEALED THAT TRUST HAS EN GINEERED DROPOUT SEATS AND CONVERTED THE MERIT QUOTA SEATS INTO MANAGEMENT QUOTA SEATS THROUGH SERVICES OF MIDDLEMEN LIKE MR. ABRAR. THE AO DISCUS SED THESE FACTS IN PAGE NO 78 TO 86 OF THE ASSESSMENT ORDER IT SHOWS T HAT HE RELIED ON THE STATEMENT OF SHRI G SRINIVASA. SHRI G SRINIVASA HAS STATED THAT MR. SYED ABRAR, MR. SHIVA PRASAD, MR. BASAVARAJA, MR. AMANUL LAH, MR. PRASAD AND MR. THOMAS ARE THE COMMISSION AGENTS WHO BRING PROS PECTIVE STUDENTS FOR ADMISSION TO NRI QUOTA SEATS AND SOME OTHER SEATS. THESE CANDIDATES HAVE TO MAKE PAYMENTS IN CASH FOR WHICH NO RECEIPTS ARE ISSUED. BUT THE AO HAS NOT EXAMINED MR. ABRAR OR ANY OTHER ALLEGED MIDDLEMEN. IN THE ITA NOS.500 TO 506/BANG/2020 PAGE 105 OF 183 ABSENCE OF SUCH EXAMINATION, THE STATEMENT OF SHRI SRINIVAS THAT MIDDLEMEN WERE ENGAGED FOR SEAT CONVERSION CANNOT B E RELIED UPON. 189. THE SEIZED MATERIAL A/DUU/03 WHICH IS PLACE D ON RECORD AT PB PAGE NO 669 TO 775 WHICH SHOWS CERTAIN PAYMENT ENTR IES AND IT IS VERY STRANGE TO BELIEVE THAT THE ASSESSE HAS AUTHORISED ANY PERSON TO WRITE IT AS IT DOES NOT CONTAIN ANY ATTESTATION FROM THE ASSESS E SIDE BEING NOT HAVING ANY NAME OR SEAL OF THE ASSESSE. 190. THE SEIZED MATERIAL A/DUU/04 WHICH IS PLACED ON RECORD AT PB PAGE NO 776 TO 864 WHICH SHOWS CERTAIN PAYMENT ENTR IES AND IT IS VERY STRANGE TO BELIEVE THAT THE ASSESSE HAS AUTHORISED ANY PERSON TO WRITE IT AS IT DOES NOT CONTAIN ANY ATTESTATION FROM THE ASSESS E SIDE BEING NOT HAVING ANY NAME OR SEAL OF THE ASSESSE. IT ALSO SHOWS CERT AIN AMOUNT TAKEN FROM PG STUDENTS. HOWEVER THERE IS NO ATTESTATION TO THI S DOCUMENT FROM THE TRUST SIDE TO SUGGEST THAT IT WAS AUTHORISED BY THE ASSESSE. BEING SO NO CREDENCE TO BE GIVEN TO THIS DOCUMENT. 191. THE SEIZED MATERIAL A/DUU/05 TO 09 IS NOT RELI ED UPON BY THE AO WHILE FRAMING ASSESSMENT AND MAKING ADDITIONS, HENC E NO FINDINGS ARE REQUIRED. 192. THE SEIZED MATERIALS A/DUU/10 ARE PLACED IN PAGES 1420 TO 1554 OF PB. THE AO RELIED ON PAGE 5 PLACED AT PAGE 1549 OF PB. ACCORDING TO AO, THIS AMOUNT HAS BEEN PAID TO AGENTS FOR SEAT CO NVERSION. THE AO MENTIONED ABOUT THIS IN PAGE 61 OF ASSESSMENT ORDER AND THERE IS ONLY REFERENCE TO PAGE 5 OF SEIZED MATERIAL (PLACED AT 1 549 OF THE PAPER BOOK) IN THIS ORDER. ACCORDING TO HIM, IT CONTAINS DETAILS OF CASH PAYMENTS MADE TO AGENTS. WE HAVE CAREFULLY GONE THROUGH THE ABOVE SE IZED MATERIAL. IN OUR HUMBLE OPINION THIS SEIZED MATERIAL DOES NOT SHOW A NY PAYMENT WHICH HAS BEEN MADE TO AN AGENT FOR SEAT CONVERSION. BEING SO , AS DISCUSSED EARLIER, ITA NOS.500 TO 506/BANG/2020 PAGE 106 OF 183 THESE ARE LOOSE SHEETS HAVING NO SIGNATURE OF ANY P ERSON, CANNOT BE TREATED AS INCRIMINATING MATERIAL WITHOUT ANY SUPPO RTIVE DOCUMENT AND THE STATEMENTS ARE RELIED UPON BY THE AO WITHOUT GIVING OPPORTUNITY OF CROSS- EXAMINATION. 193. THE BANGALORE TRIBUNAL IN THE CASE OF KIRLOSKAR INVESTMENTS & FINANCE LTD. V. ASSISTANT COMMISSIONER OF INCOME-TA X [1998] 67 ITD 504 (BANG.) HELD THAT THE PROVISION OF THE COPY OF THE STATEME NT OR LETTERS IS NOT SUFFICIENT OPPORTUNITY. ORAL EVIDENCE OF PERSONS CO NCERNED WITH THE TRANSACTION ARE IMPORTANT PIECE OF EVIDENCE AND BEF ORE IT COULD REPLACE THE WRITTEN EVIDENCE, THE PARTY AGAINST WHOM SUCH ORAL EVIDENCE IS BEING USED MUST BE ALLOWED THE OPPORTUNITY OF EXAMINING THE PE RSON BECAUSE, BOTH THE TYPES OF EVIDENCES NEED TO WEIGHED PROPERLY BEFORE REJECTING ONE FOR THE OTHER. 194. IN VIEW OF THE ABOVE, IN OUR OPINION, IT CANNO T BE CONCLUDED AS PAYMENTS BY THE ASSESSEE TOWARDS SEAT CONVERSION. 195. THE SEIZED MATERIAL A/DUU/11 IS PLACED AT PAGE S 1555 TO 1635 OF PB. ACCORDING TO THE LD. DR, IT SHOWS UNACCOUNTED UTILISATION OF CAPITATION FEES FOR THE BENEFIT OF TRUSTEES. THESE ARE UNSIGN ED DOCUMENTS AND NOT SUPPORTED BY ANY CORROBORATIVE MATERIAL. FURTHER T HE BENEFICIARIES ARE NOT EXAMINED OR CROSS-EXAMINED. AT THIS POINT, IT IS APPROPRIATE TO RELY ON THE JUDGMENT OF THE MUMBAI BENCH IN THE CASE OF ACIT V. LAYERS EXPORTS P. LTD [2017] 53 ITR (TRIB) 416 (MUMBAI) , WHEREIN IT WAS HELD THAT NO ADDITION COULD BE SIMPLY MADE ON THE BASIS OF UNCORROBORATED NOTINGS IN THE LOOSE PAPERS FOUND DURING THE SEARCH BECAUSE ADDITION ON ACCOUNT OF ALLEGED RECEIPT MADE SIMPLY ON THE BASIS OF UNCORROBORATED NOTING AND SCRIBBLING ON LOOSE SHEETS MADE BY SOME PERSON HAVE NO EVIDENT IARY VALUE AND IS UNSUSTAINABLE AND BAD IN LAW. ITA NOS.500 TO 506/BANG/2020 PAGE 107 OF 183 196. THE HONBLE SUPREME COURT IN COMMON CAUSE (A REGISTERED SOCIETY) V. UOI [2017] 394 ITR 220 (SC) OBSERVED WITH REGARD TO EVIDENTIARY VALUE THAT ENTRIES IN BOOKS OF ACCOUNT ARE NOT BY THEMSELVES SUFFICIENT TO CHARGE ANY PERSON WITH LIABILITY, THE REASON BEING THAT A MAN CANNOT BE ALLOWED TO MAKE EVIDENCE FOR HIMSELF BY W HAT HE CHOOSES TO WRITE IN HIS OWN BOOKS BEHIND THE BACK OF THE PARTI ES. THERE MUST BE INDEPENDENT EVIDENCE OF THE TRANSACTION TO WHICH TH E ENTRIES RELATE AND IN ABSENCE OF SUCH EVIDENCE NO RELIEF CAN BE GIVEN TO THE PARTY WHO RELIES UPON SUCH ENTRIES TO SUPPORT HIS CLAIM AGAINST ANOT HER. IN HIRA LAL V. RAM RAKHA THE HIGH COURT, WHILE NEGATIVING A CONTENTION THAT IT HAVING BEEN PROVED THAT THE BOOKS OF ACCOUNT WERE REGULARLY KEP T IN THE ORDINARY COURSE OF BUSINESS AND THAT, THEREFORE, ALL ENTRIES THEREI N SHOULD BE CONSIDERED TO BE RELEVANT AND TO HAVE BEEN PROVED, SAID THAT THE RULE AS LAID DOWN IN SECTION 34 OF THE ACT THAT ENTRIES IN THE BOOKS OF ACCOUNT REGULARLY KEPT IN THE COURSE OF BUSINESS ARE RELEVANT WHENEVER THEY R EFER TO A MATTER IN WHICH THE COURT HAS TO ENQUIRE WAS SUBJECT TO THE S ALIENT PROVISO THAT SUCH ENTRIES SHALL NOT ALONE BE SUFFICIENT EVIDENCE TO C HARGE ANY PERSON WITH LIABILITY. IT IS NOT, THEREFORE, ENOUGH MERELY TO P ROVE THAT THE BOOKS HAVE BEEN REGULARLY KEPT IN THE COURSE OF BUSINESS AND T HE ENTRIES THEREIN ARE CORRECT. IT IS FURTHER INCUMBENT UPON THE PERSON RE LYING UPON THOSE ENTRIES TO PROVE THAT THEY WERE IN ACCORDANCE WITH FACTS. IT IS APPARENT FROM THE AFORESAID DISCUSSION THAT LOOSE SHEETS OF PAPERS AR E WHOLLY IRRELEVANT AS EVIDENCE BEING NOT ADMISSIBLE UNDER SECTION 34 OF E VIDENCE ACT SO AS TO CONSTITUTE EVIDENCE WITH RESPECT TO THE TRANSACTION S MENTIONED THEREIN BEING OF NO EVIDENTIARY VALUE. THE ENTIRE PROSECUTI ON BASED UPON SUCH ENTRIES WHICH LED TO THE INVESTIGATION WAS QUASHED BY THE COURT. THERE HAS TO BE SOME RELEVANT AND ADMISSIBLE EVIDENCE AND SOM E COGENT REASON, WHICH IS PRIMA FACIE RELIABLE AND THAT TOO, SUPPORT ED BY SOME OTHER CIRCUMSTANCES POINTING OUT THAT THE PARTICULAR THIR D PERSON AGAINST WHOM THE ALLEGATIONS HAVE BEEN LEVELLED WAS IN FACT INVO LVED IN THE MATTER OR HE ITA NOS.500 TO 506/BANG/2020 PAGE 108 OF 183 HAS DONE SOME ACT DURING THAT PERIOD, WHICH MAY HAV E CO-RELATIONS WITH THE RANDOM ENTRIES. IN CASE WE DO NOT INSIST FOR ALL TH ESE, THE PROCESS OF LAW CAN BE ABUSED AGAINST ALL AND SUNDRY VERY EASILY TO ACHIEVE ULTERIOR GOALS AND THEN NO DEMOCRACY CAN SURVIVE IN CASE INVESTIGA TIONS ARE LIGHTLY SET IN MOTION AGAINST IMPORTANT CONSTITUTIONAL FUNCTIONARI ES ON THE BASIS OF FICTITIOUS ENTRIES, IN ABSENCE OF COGENT AND ADMISS IBLE MATERIAL ON RECORD, LEST LIBERTY OF AN INDIVIDUAL BE COMPROMISED UNNECE SSARILY. 197. IN VIEW OF THE ABOVE, RELIANCE ON SEIZED MAT ERIAL A/DUU/11 FOR MAKING ADDITION CANNOT BE SUSTAINED. 198. THE AO HAS NOT REFERRED TO THE SEIZED MATERIAL SEIZED MATERIAL A/DUU/12 AND THERE IS NO NECESSITY OF COMMENTING ON IT. 199. REGARDING SEIZED MATERIAL A/DUU/13, PLACED AT PB 1698 TO 1805 WHICH CONTAINS COMPUTER TYPED STATEMENTS, SCRIBBLIN GS AND MANUAL SCRIBBLINGS AND NOTINGS. MOST OF THE ENTRIES IS A REPEAT OF HARD COPY OF SEIZED MATERIAL A/DUU/01. FURTHER THERE ARE CERTAIN LETTERS AS FOLLOWS: (I) PB 1767 LETTER FROM A MURTHY CONFIRMING THE VOLUNTARY PAYMENT OF RS.50,000 TOWARDS CORPUS DONATION BY CHE QUE (II) PB 1768 (DUPLICATE OF ABOVE) LETTER FROM A M URTHY CONFIRMING THE VOLUNTARY PAYMENT OF RS.50,000 TOWARDS CORPUS DONAT ION BY CHEQUE. (III) PB 1771 LETTER FROM B RAJASHEKHAR CONFIRM ING THE VOLUNTARY PAYMENT OF RS.30,000 TOWARDS CORPUS DONATION BY CHE QUE. (IV) PB 1772 (DUPLICATE OF ABOVE) LETTER FROM B R AJASHEKHAR CONFIRMING THE VOLUNTARY PAYMENT OF RS.30,000 TOWAR DS CORPUS DONATION BY CHEQUE. (V) PB 1777 LETTER FROM K SHANTHARAM CONFIRMING THE VOLUNTARY PAYMENT OF RS.30,000 TOWARDS CORPUS DONATION BY CHE QUE. ITA NOS.500 TO 506/BANG/2020 PAGE 109 OF 183 (VI) PB 1779 LETTER FROM T VENKATSUBBAIAH CONFI RMING THE VOLUNTARY PAYMENT OF RS.70,000 TOWARDS CORPUS DONAT ION BY CHEQUE. (VII) PB 1780 (DUPLICATE OF ABOVE) LETTER FROM T V ENKATSUBBAIAH CONFIRMING THE VOLUNTARY PAYMENT OF RS.70,000 TOWAR DS CORPUS DONATION BY CHEQUE. (VIII) PB 1784 LETTER FROM P KUMARA SWAMY CONFIRM ING THE VOLUNTARY PAYMENT OF RS.50,000 TOWARDS CORPUS DONAT ION BY CHEQUE. (IX) PB 1787 LETTER FROM B S AMARNATHA CONFIRMI NG THE VOLUNTARY PAYMENT OF RS.50,000 TOWARDS CORPUS DONATION BY CHE QUE. (X) PB 1790 & 1791 LETTER FROM DR.C.L.GAYATHRID EVI CONFIRMING THE VOLUNTARY PAYMENT OF RS.50,000 TOWARDS CORPUS DONAT ION BY CHEQUE. (XI) PB 1793 LETTER FROM B P RAVI KUMAR CONFIRM ING THE VOLUNTARY PAYMENT OF RS.25,000 TOWARDS CORPUS DONATION BY CHE QUE. 200. IN ALL THE ABOVE CASES THE VOLUNTARY CONTRIBUT ION TOWARDS CORPUS DONATION HAS BEEN RECEIVED BY CHEQUE AND DULY ACCOU NTED IN THE BOOKS OF ACCOUNT OF THE ASSESSE. THERE ARE ALSO SOME PHOTOCO PY OF BANK RECEIPTS AND CHEQUE RECEIPTS OTHER THAN THIS WHICH ARE INSIG NIFICANT PAPERS DOES NOT SUGGEST ANY MATERIAL EVIDENCE. 201. THE SEIZED MATERIAL A/DUU/14 IS DIGITAL DATA. ACCORDING TO THE AO, IT SHOWS UNACCOUNTED CAPITAL RECEIPTS RECEIVED IN C ASH FROM MANAGEMENT/NRI QUOTA STUDENTS UTILIZED FOR PAYMENT TO POLITICAL PARTIES AS PER INSTRUCTION OF MR. G.H. NAGARAJ. THESE DIGITAL DATA ARE USED BY THE AO WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS-EXAMINAT ION OF MR. SRINIVAS. THERE IS NO EVIDENCE TO SHOW THAT ASSESSEE HAS AUTH ORISED COLLECTION OF THESE PAYMENTS. THESE ARE REPEAT OF HARD COPY OF A /DUU/01. WITH REGARD TO THE DIGITAL EVIDENCE, THE PURPOSE OF SUCH ELECTR ONIC RECORD IS NOT KNOWN. THE MANNER IN WHICH SUCH ELECTRONIC RECORD IS PRODU CED AND BY WHOM IT IS PRODUCED IS NOT KNOWN. THE DATA AND TIME OF PREPAR ATION AND SEARCH OR LIST ITA NOS.500 TO 506/BANG/2020 PAGE 110 OF 183 OF SUCH ELECTRONIC DATA IS NOT BROUGHT ON RECORD. SOURCE OF SUCH RECORD AND DATA AND TIME AND PRINTING OF SUCH RECORD IS NOT KN OWN. THE ASSESSEES KNOWLEDGE OF THE CONTENTS THEREIN AND THE CORRECTNE SS OF THE CONTENTS IS NOT KNOWN. THE RESOURCES USED FOR PREPARATION OF S UCH DATA AND THE CORRECTNESS OF FUNCTIONING OF THE COMPUTER IS NOT K NOWN. PRINT-OUT OR COPY FURNISHED WAS TAKEN FROM WHICH COMPUTER IS NOT KNOW N. IN SUCH CIRCUMSTANCES, THESE DIGITAL DATA CANNOT BE RELIED UPON. THE CONTENTION OF LD. DR IS THAT PRESUMPTION U/S. 292C SHOWS THAT IT BELONGS TO THE ASSESSEE AND IT CANNOT BE DENIED. HOWEVER, WE ARE NOT IN A POSITION TO APPRECIATE THE ARGUMENT OF THE LD. DR FOR THE REASONS DISCUSSE D BELOW. 202. ASSESSMENT U/S. 153C HAS BEEN MADE IN THE CASE OF THE TRUSTEES RELYING UPON THE VERY SAME MATERIAL. UNDER SUCH CI RCUMSTANCES, THE PRESUMPTION UNDER SECTION 292C GETS AUTOMATICALLY R EBUTTED. SECTION 153C(1) STATES THAT WHERE THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING, SEIZED OR REQUISITIONED, BELONGS TO; OR ANY BOOKS O F ACCOUNT OR DOCUMENTS, SEIZED OR REQUISITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN, RELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR AS SETS, SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 153A. THEREFORE, IF THE MATERIAL SEIZED BELONGS TO OR PERTAINS TO OR RELATES TO A PERSON OTHER THAN THE SEARCHED PERSON, ONLY TH EN SECTION 153C COMES INTO PLAY. HENCE, IT IS AXIOMATIC TO STATE THAT IF THE MATERIAL SEIZED BELONGS TO OR PERTAINS TO OR RELATES TO SOME OTHER PERSON, IT DOES BELONG TO OR PERTAIN TO OR RELATE TO THE SEARCHED PERSON. UNDER SUCH CIRCUMSTANCES, ONE CANNOT INVOKE THE PRESUMPTION UNDER SECTION 292 C THAT THE MATERIAL ITA NOS.500 TO 506/BANG/2020 PAGE 111 OF 183 SEIZED BELONGS TO THE SEARCHED PERSON AS THE ASSESS ING OFFICER BY HIS OWN ACTION OF MAKING ASSESSMENT UNDER SECTION 153C IN T HE CASE OF TRUSTEES RELYING UPON THE VERY SAME SEIZED MATERIAL. 203. THE DELHI TRIBUNAL IN VIJAY KUMAR AGGARWAL V. ACIT 2017 (5) TMI 1354 HELD THAT IT IS CLEAR THAT THE PRESUMPTION OF FAC TS U/S 292C OF THE ACT IS NOT A MANDATORY OR COMPULSORY PRESUMPTION BUT A DISCRETIONARY PRESUMPTION. SINCE, THE WORD USED IN THE SAID SECTI ON IS MAY BE AND NOT SHALL. SECONDLY, SUCH A PRESUMPTION IS REBUTTABLE PRESUMPTION AND NOT A CONCLUSIVE PRESUMPTION BECAUSE IT IS A PRESUMPTION OF FACT NOT A PRESUMPTION OF LAW. IN THE PRESENT CASE, THE ASSESS EE FROM THE VERY BEGINNING STATED THAT THE DOCUMENTS FOUND DURING TH E COURSE OF SEARCH DID NOT BELONG TO HIM. THEREFORE, THE ADDITION MADE BY THE AO IS ONLY ON THE BASIS OF SURMISES AND CONJECTURE WITHOUT BRINGING A NY COGENT MATERIAL ON RECORD TO SUBSTANTIATE THAT THE ASSESSEE WAS ENGAGE D IN THE BUSINESS OF GOLD AND JEWELLERY AND THE AO HAD NOT BROUGHT ANY M ATERIAL ON RECORD TO SUBSTANTIATE THAT THE DENIAL OF THE ASSESSEE WAS FA LSE. 204. UNLESS THE BURDEN OF PROVING THAT THE MATERIAL S AND CASH BELONG TO THE ASSESSEE IS DISCHARGED THOSE MATERIALS CAN NEIT HER BE SEIZED UNDER SECTION 132 NOR RELIED UPON TO MAKE ASSESSMENT UNDE R SECTION 153A. THEREFORE THE SEIZURE OF SUCH MATERIAL IS ILLEGAL. THE AO CANNOT RELY UPON SUCH MATERIAL WHOSE SEIZURE IS ILLEGAL AND THE HENC E, ASSESSMENT IS VOID AB INITIO . THEREFORE, ADDITION MADE ON ACCOUNT OF SUCH SEI ZED MATERIAL IS NOT SUSTAINABLE. 205. SEIZED MATERIAL A/DUU/15 PB PAGE NO 1839 TO 20 28 A NOTE BOOK CONTAINING NAMES, MOBILE NUMBERS AND ADDRESS HAVING NO ATTESTATION OF THE ASSESSEE WITH REGARD AUTHENTICITY THAT IT BELON G TO ASSESSEE. THIS WAS NOT DISCUSSED IN THE ASSESSMENT ORDER BEING SO IT I S TO BE TREATED THAT IT ITA NOS.500 TO 506/BANG/2020 PAGE 112 OF 183 DOES NOT RELATE TO THE ADDITION MADE BY THE AO AND REQUIRES NO ADJUDICATION. 206. THE AO ALSO RELIED ON SEIZED MATERIALS A/DUU/1 6 PLACED AT PAPER BOOK PAGE NO 2029 TO 2138. WE HAVE CAREFULLY GONE T HROUGH IT, THESE ARE BLANK CHEQUES FOUND AT THE PREMISES OF THE ASSESSE DURING THE COURSE OF SEARCH ACTION. THE AO DISCUSSED THIS ISSUE IN HIS O RDER AT PAGE NUMBER 46 TO 50, AND DREW INFERENCE THAT THESE ARE THE CHEQUE S GIVEN BY THE STUDENTS AS A SECURITY FOR PAYMENT OF CAPITATION FEES. HE AL SO RELIED ON THE STATEMENT OF GOLI SRINIVAS. HOWEVER WE FOUND THAT THESE ARE BLANK CHEQUES WITHOUT MENTIONING THE NAME OF THE ASSESSE. FURTHER, THE PE RSON WHO HAS ISSUED THE CHEQUES HAS NOT BEEN EXAMINED BY THE AO. SIMILA RLY, NO CROSS EXAMINATION WAS PROVIDED TO THE ASSESSE. IN THIS CI RCUMSTANCES, THE INFERENCE DRAWN BY THE AO HAVE NO LEGS TO STAND AND DESERVE TO BE REJECTED. OTHER BEING LOOSE SHEETS CANNOT BE RELIED UPON SINCE NO OPPORTUNITY TO CROSS EXAMINE MR. GOLI SRINIVAS WAS PROVIDED AS DISCUSSED EARLIER. 207. THE ASSESSEE VIDE LETTER DATED 22.02.2017 ASK ED FOR COPIES OF THE STATEMENTS RECORDED FROM THE STUDENTS, PARENTS AND DONORS DURING THE SEARCH PROCEEDINGS AND ALSO OPPORTUNITY TO CROSS-EX AMINE THE PARTIES. FURTHER COPY OF STATEMENTS RECORDED AND CROSS-EXAMI NATION OF THE PARTIES WAS REQUESTED BY THE ASSESSEES LETTER DATED 09.12. 2017. VIDE ASSESSEES LETTER DATED 22.02.2017, COPIES OF SEIZED / INCRIMI NATING MATERIAL RELIED UPON TO MAKE THE ADDITION WAS REQUESTED. THE ASSES SEE VIDE LETTER DATED 29.10.2017 ALSO REQUESTED FOR DOCUMENTS IN DIGITAL FORM TAKEN AT THE TIME OF SEARCH U/S. 132. 208. THE AO VIDE LETTER DATED 01.08.2017 FURNISHED COPIES OF SEIZED MATERIAL A/DUU/01 TO A/DUU/17 TO THE ASSESSEE. HOW EVER, IT IS CRUCIAL TO ITA NOS.500 TO 506/BANG/2020 PAGE 113 OF 183 NOTE THAT THE ASSESSEES REQUEST FOR CROSS-EXAMINAT ION OF STUDENTS, PARENTS AND DONORS OF CAPITATION FEES WAS NOT PROVIDED BY T HE REVENUE AUTHORITIES. 209. THE ASSESSEE BY LETTER DATED 09.12.2017 MADE S UBMISSIONS THAT COLLECTION OF AMOUNTS BY SHRI G.H. NAGARAJ, SECRETA RY OF THE TRUST WERE ON HIS OWN AND SPENT A PORTION OF THE AMOUNT ON THE IN FRASTRUCTURE AND DEVELOPMENT ACTIVITIES. 210. IN OUR OPINION, THE STATEMENT OF MR. G.H. NAGA RAJ, WHO IS SECRETARY OF THE TRUST CANNOT BE CONSIDERED AS TRUE AND CORRE CT. HE HAS CHANGED HIS VERSIONS AND PROVED TO BE AN EVASIVE PERSON AS A WI TNESS. AT ONE STAGE, HE ADMITTED COLLECTION OF FEES OVER AND ABOVE THE P RESCRIBED FEES AND NOT PAID THE SAME BACK TO THE INSTITUTION. THERE WAS A LETTER DATED 09.12.2017 WHEREIN THE TRUSTEE STATED THAT MR. G.H. NAGARAJ CO LLECTED THE AMOUNT FROM STUDENTS / PARENTS AND SPENT THE AMOUNT FOR THE ACT IVITIES OF THE TRUST. HE ALONE HAS TO EXPLAIN THE COLLECTION OF FEES TO THE INCOME-TAX AUTHORITY. THEREFORE, HIS STATEMENTS ARE CONTRADICTORY IN NATU RE. NO VALUE COULD BE ATTACHED TO HIS STATEMENT AND HIS CONDUCT IS NEUTRA LIZING THE VALUE AS A WITNESS. FURTHER, THE AO IN PARA 3.4 THE TABULATED STATEMENT IN RESPONSE TO ASSESSEES SUBMISSION AT PAGE 206-207 OF HIS ORDER NOTED AS FOLLOWS:- SHRI G.H. NAGARAJ, HAS TIME AND AGAIN CHANGED HIS POSITION THEREFORE THAT VERSION OF HIS STATEMENTS WHICH IS I N LINE WITH THE MATERIAL FOUND AND SEIZED DURING THE SEARCH IS ONLY BEING CONSIDERED. ALSO SEIZED MATERIAL HAS SHEETS WITH T ABULATIONS WHERE THE WORD CASH HAS BEEN CONSISTENTLY USED. ALSO, THE ASSESSEE HAS NOT MADE ANY SUBMISSIONS TO PROVE THAT THE SUBSEQUENTLY ADMITTED RECEIPTS OF RS.146 CRORES WER E TAKEN THROUGH CHEQUES OR DDS. 211. THE HONBLE SUPREME COURT IN ANDAMAN TIMBER IN DUSTRIES V. COMMISSIONER OF CENTRAL EXCISE, 281 CTR 241 (SC) HE LD AS FOLLOWS:- NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WIT NESS BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES ITA NOS.500 TO 506/BANG/2020 PAGE 114 OF 183 WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERI OUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNT ED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEM ENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSES SEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CRO SS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPOR TUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFI CALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORIT Y. (PARA 6) APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STA TEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS- EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE-LIST AS MAINTAINED AT THE DEPOT TO D ETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETH ER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES A T THE PRICE WHICH IS MENTIONED IN THE PRICE-LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE AD JUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTI ONED ABOVE. (PARA 7) IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDI TED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHI CH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESA ID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW-CAUSE NOTICE . (PARA 8) 212. THE DELHI TRIBUNAL IN THE CASE OF VEENA GUPTA V. ACIT IN ITA NO.5662/DEL/2018 DATED 27.11.2018 RELYING ON THE ABOVE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) QUASHED THE ASSESSMENT ORDER ON THE REASON OF NOT P ROVIDING CROSS- EXAMINATION OF WITNESSES WHOSE STATEMENTS WERE RECO RDED. ITA NOS.500 TO 506/BANG/2020 PAGE 115 OF 183 213. THE HONBLE SUPREME COURT IN THE CASE OF MEH TA PARIKH & CO. V. CIT, 30 ITR 181 HELD AS UNDER:- IN THE INSTANT CASE A MERE CALCULATION OF THE NATU RE INDULGED IN BY THE ITO OR THE AAC WAS NOT ENOUGH, WITHOUT ANY F URTHER SCRUTINY, TO DISLODGE THE POSITION TAKEN UP BY THE ASSESSEE, SUPPORTED AS IT WAS, BY THE ENTRIES IN THE CASH BOO K AND THE AFFIDAVITS PUT IN BY THE ASSESSEE BEFORE THE AAC. THE TRIBUNAL ALSO FELL INTO THE SAME ERROR. IT COUL D NOT NEGATIVE THE POSSIBILITY OF THE ASSESSEE BEING IN POSSESSION OF A SUBSTANTIAL NUMBER OF THESE HIGH DENOMINATION CURRENCY NOTES. I T, HOWEVER, CONSIDERED THAT IT WAS IMPOSSIBLE FOR THE ASSESSEE TO HAVE HAD 61 SUCH NOTES IN THE CASH BALANCE IN THEIR HANDS ON 12 -1-1946, AND THEN IT APPLIED A RULE OF THE THUMB TREATING 31 OUT OF SUCH 61 NOTES AS WITHIN THE BOUNDS OF POSSIBILITY, EXCLUDIN G 30 SUCH NOTES AS NOT COVERED BY THE EXPLANATION OF THE ASSESSEE. THIS WAS PURE SURMISE AND HAD NO BASIS IN THE EVIDENCE, WHICH WAS ON THE RECORD OF THE PROCEEDINGS. FACTS PROVED OR ADMITTED MAY PROVIDE TO SUPPORT FUR THER CONCLUSIONS TO BE DEDUCED FROM THEM, WHICH CONCLUSI ONS MAY THEMSELVES BE CONCLUSIONS OF FACT AND SUCH INFERENC ES FROM FACTS PROVED OR ADMITTED COULD BE MATTERS OF LAW. THE COU RT WOULD BE ENTITLED TO INTERVENE IF IT APPEARS THAT THE FACT F INDING AUTHORITY HAS ACTED WITHOUT ANY EVIDENCE OR UPON A VIEW OF TH E FACTS, WHICH COULD NOT REASONABLY BE ENTERTAINED OR THE FACTS FO UND ARE SUCH THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTR UCTED AS TO THE RELEVANT LAW WOULD HAVE COME TO THE DETERMINATION I N QUESTION. THE HIGH COURT TREATED THIS FINDING OF THE TRIBUNAL AS A MERE FINDING OF FACT AND RECOGNISED THIS POSITION IN EFF ECT BUT WENT WRONG IN APPLYING THE TRUE PRINCIPLES OF INTERFEREN CE WITH SUCH FINDINGS OF FACT TO THE PRESENT CASE. REALLY SPEAKI NG THE TRIBUNAL HAD NOT INDICATED UPON WHAT MATERIAL IT HELD THAT R S. 30,000 SHOULD BE TREATED AS SECRET PROFIT OR PROFITS FROM UNDISCLOSED SOURCES AND THE ORDER PASSED BY IT WAS BAD. THE ASS ESSEE HAD FURNISHED A REASONABLE EXPLANATION FOR THE POSSESSI ON OF THE HIGH DENOMINATION NOTES OF THE FACE VALUE OF RS. 61,000 AND THERE WAS NO JUSTIFICATION FOR HAVING ACCEPTED IT IN PART AND DISCARDED IT IN RELATION TO A SUM OF RS. 30,000. ITA NOS.500 TO 506/BANG/2020 PAGE 116 OF 183 THE HIGH COURT OUGHT TO HAVE HELD THAT THERE WERE N O MATERIALS TO JUSTIFY THE ASSESSMENT OF RS. 30,000 FROM OUT OF TH E SUM OF RS. 61,000, FOR INCOME-TAX AND EXCESS PROFITS TAX AND B USINESS PROFITS TAX PURPOSES, REPRESENTING THE VALUE OF THE HIGH DE NOMINATION NOTES WHICH WERE ENCASHED. 214. FURTHER THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ODEON BUILDERS (P.) LTD., 418 ITR 315 (SC) HEAD-NOTE IS AS FOLLOWS:- SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINE SS EXPENDITURE - ALLOWABILITY OF (BOGUS PURCHASE) - CE RTAIN PORTION OF PURCHASES MADE BY ASSESSEE WAS DISALLOWED - COMM ISSIONER (APPEALS) FOUND THAT ENTIRE DISALLOWANCE WAS BASED ON THIRD PARTY INFORMATION GATHERED BY INVESTIGATION WING OF DEPAR TMENT, WHICH HAD NOT BEEN INDEPENDENTLY SUBJECTED TO FURTH ER VERIFICATION BY ASSESSING OFFICER AND HE HAD NOT PR OVIDED COPY OF SUCH STATEMENTS TO APPELLANT, THUS, DENYING OPPO RTUNITY OF CROSS EXAMINATION TO APPELLANT, WHO ON OTHER HAND, HAD PRIMA FACIE DISCHARGED INITIAL BURDEN OF SUBSTANTIATING P URCHASES THROUGH VARIOUS DOCUMENTATION INCLUDING PURCHASE BI LLS, TRANSPORTATION BILLS, CONFIRMED COPY OF ACCOUNTS AN D FACT OF PAYMENT THROUGH CHEQUES, VAT REGISTRATION OF SELLER S AND THEIR INCOME-TAX RETURN - HE HELD THAT PURCHASES MADE BY APPELLANT WAS ACCEPTABLE AND DISALLOWANCE WAS TO BE DELETED - TRIBUNAL DISMISSED REVENUE'S APPEAL - HIGH COURT AFFIRMED JU DGMENTS OF COMMISSIONER (APPEALS) AND TRIBUNAL BEING CONCURREN T FACTUAL FINDINGS - WHETHER NO SUBSTANTIAL QUESTION OF LAW A ROSE FROM IMPUGNED ORDER OF TRIBUNAL - HELD, YES [PARA 4] [IN FAVOUR OF ASSESSEE] 215. THE HONBLE HIGH COURT OF KARNATAKA IN KOTHARI METALS V. ITO, 377 ITR 581 (KARN) HELD AS UNDER:- HELD, ALLOWING THE APPEAL, THAT THE NON-FURNISHING THE REASONS FOR RE-OPENING AN ALREADY CONCLUDED ASSESSMENT GOES TO THE VERY ROOT OF THE MATTER. SINCE SUCH REASONS HAD NOT BEE N FURNISHED TO THE APPELLANT, EVEN THOUGH A REQUEST FOR THEM HAD B EEN MADE, PROCEEDINGS FOR THE RE-ASSESSMENT COULD NOT HAVE BE EN TAKEN FURTHER ON THIS GROUND ALONE. ITA NOS.500 TO 506/BANG/2020 PAGE 117 OF 183 BESIDES THIS, THE STATEMENT OF SOME OTHER PERSON WH ICH WAS RECORDED WAS THE BASIS OF REASSESSMENT AND THE ASSE SSEE WAS ASKED TO EXPLAIN IT BUT THE STATEMENT WAS ITSELF NO T FURNISHED TO THE ASSESSEE. AS SUCH, BESIDES NON-FURNISHING OF T HE REASONS FOR RE-OPENING THERE WAS ALSO A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THE REASSESSMENT WAS NOT VALID. 216. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. EASTERN COMMERCIAL ENTERPRISES, 210 ITR 103 (CAL) HELD AS FOLLOWS:- 8. WE HAVE CONSIDERED THE CONTESTING CONTENTIONS OF THE PARTIES. IT IS TRUE THAT SHRI SUKLA HAS PROVED TO B E A SHIFTY PERSON AS A WITNESS. AT THE EARLIER STAGES, HE CLAIMED ALL HIS SALES TO BE GENUINE BUT BEFORE THE ASSESSING OFFICER IN THE CAS E OF THE ASSESSEE, HE DISOWNED THE SALES SPECIFICALLY MADE T O THE ASSESSEE. THIS STATEMENT CAN AT THE WORST SHOW THAT SHRI SUKL A IS NOT A TRUSTWORTHY WITNESS AND LITTLE VALUE CAN BE ATTACHE D TO WHAT HE STATED EITHER IN HIS AFFIDAVITS OR IN HIS EXAMINATI ON BY THE ASSESSING OFFICER. HIS CONDUCT NEUTRALISES HIS VALU E AS A WITNESS. A MAN INDULGING IN DOUBLE-SPEAKING CANNOT BE SAID B Y ANY MEANS A TRUTHFUL MAN AT ANY STAGE AND NO COURT CAN DECIDE ON WHICH OCCASION HE WAS TRUTHFUL. IF SHRI SUKLA IS NEUTRALI SED AS A WITNESS WHAT REMAINS IS THE ACCOUNTS, VOUCHERS, CHALLANS, B ANK ACCOUNTS, ETC. BUT, WE WOULD OBSERVE HERE THAT WHICH WAY LIES THE TRUTH IN SHRI SUKLA'S DEPOSITIONS, COULD HAVE BEEN REVEALED ONLY IF HE WAS SUBJECTED TO A CROSS-EXAMINATION BY THE ASSESSEE. A S A MATTER OF FACT, THE RIGHT TO CROSS-EXAMINE A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUNITY OF SU CH CROSS- EXAMINATION IS ONE OF THE CORNER-STONES OF NATURAL JUSTICE. HERE SHRI SUKLA IS THE WITNESS OF THE DEPARTMENT. THEREF ORE, THE DEPARTMENT CANNOT CUT SHORT THE PROCESS OF TAKING O RAL EVIDENCE BY MERELY HAVING THE EXAMINATION-IN-CHIEF. IT IS TH E NECESSARY REQUIREMENT OF THE PROCESS OF TAKING EVIDENCE THAT THE EXAMINATION-IN-CHIEF IS FOLLOWED BY CROSS-EXAMINATI ON AND RE- EXAMINATION, IF NECESSARY. 9. IT IS NOT JUST A QUESTION OF FORM OR A QUESTION OF GIVING AN ADVERSE PARTY ITS PRIVILEGE BUT A NECESSITY OF THE PROCESS OF TESTING THE TRUTH OF ORAL EVIDENCE OF A WITNESS. WITHOUT TH E TRUTH BEING TESTED NO ORAL EVIDENCE CAN BE ADMISSIBLE EVIDENCE AND COULD NOT FORM THE BASIS OF ANY INFERENCE AGAINST THE ADVERSE PARTIES. WE ITA NOS.500 TO 506/BANG/2020 PAGE 118 OF 183 HAVE ALSO EXAMINED THE RECORDS AND WE FIND THAT THI S SHRI SUKLA WAS EXAMINED BY A NUMBER OF OFFICERS. THE ASSISTANT DIRECTOR OF INVESTIGATION EXAMINED HIM ON AUGUST 4, 1987, AND I N REPLY TO QUESTION NO. 2 IN THAT DEPOSITION HE CONFIRMED THAT HE WAS A DEALER IN LUBRICATING OIL SINCE 1977. IN REPLY TO Q UESTION NO. 3, HE CONFIRMED HAVING BEEN ASSESSED TO INCOME-TAX. AGAIN , IN REPLY TO QUESTION NO. 4, HE EXPLAINED THAT HE USED TO PURCHA SE LUBRICATING OIL FROM DIFFERENT GARAGES AS WELL AS THROUGH VARIO US BROKERS. SUCH LUBRICATING OIL WAS PROCESSED BY HIM IN HIS FA CTORY FOR SALE. ALL PAYMENTS WERE RECEIVED BY HIM THROUGH ACCOUNT P AYEE CHEQUES. IN REPLY TO QUESTION NO. 5, HE STATED THAT HE HAD SEVEN FULL-TIME EMPLOYEES WHOSE NAMES ARE MENTIONED BY HI M. HE ALSO CLAIMED TO HAVE MAINTAINED BOOKS OF ACCOUNT LIKE SA LES BOOKS, PURCHASE BOOKS, CASH BOOKS AND SALE BILLS. IN REPLY TO QUESTION NO. 18, HE, ON HIS OWN, STATED THAT HIS BIG CUSTOME RS WERE THE RELIANCE OIL MILLS AND EASTERN COMMERCIAL ENTERPRIS ES, THE ASSESSEE, IN THE PRESENT REFERENCE. AS FOR HIS CASH WITHDRAWALS, HE EXPLAINED THAT HIS BUSINESS REQUIRED READY CASH FOR PURCHASE OF RAW MATERIALS WHICH EXPLAINED HIS LARGE DRAWINGS OF CASH FROM THE BANK. LEARNED COUNSEL THEN CITED A HOST OF DECI SIONS TO BRING HOME THE POINT THAT NO EVIDENCE OR DOCUMENT CAN BE RELIED UPON UNLESS IT IS SHOWN TO THE ASSESSEE. KISHANCHAND CHE LLARAM V. CIT. SIMILARLY, THE REQUIREMENT OF CROSS-EXAMINATION AS THE REQUIREMENT OF THE RULES OF NATURAL JUSTICE HAS BEE N UNDERLINED BY THE BOMBAY HIGH COURT IN VASANJI GHELA AND CO. V. C ST [1977] 40 STC 544. IT IS TRITE LAW THAT CROSS-EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERS E INFERENCE CAN BE DRAWN AGAINST A PARTY UNLESS THE PARTY IS PU T ON NOTICE OF THE CASE MADE OUT AGAINST HIM. HE MUST BE SUPPLIED THE CONTENTS OF ALL SUCH EVIDENCE, BOTH ORAL AND DOCUMENTARY, SO THAT HE CAN PREPARE TO MEET THE CASE AGAINST HIM. THIS NECESSAR ILY ALSO POSTULATES THAT HE SHOULD CROSS-EXAMINE THE WITNESS HOSTILE TO HIM. 10. IN ANY CASE, WE HAVE NOTHING TO RELY UPON TO COME TO A DECISION THIS WAY OR THE OTHER. THE FIRST THING IS THAT WHICH OF THE STATEMENTS OF SHRI SUKLA IS CORRECT, IS ANYBODY'S G UESS. THEREFORE, IT IS NECESSARY TO DELVE OUT THE TRUTH FROM HIM AND FOR THAT MATTER A CROSS-EXAMINATION IS NECESSARY. SECONDLY, IF THE STATEMENT OF SHRI SUKLA AS A WITNESS AGAINST THE ADVERSE PARTY, THE ASSESSEE, IS RELIED UPON AS TRUTHFUL, STILL REMAINS THE QUESTION OF ESTIMATION OF ITA NOS.500 TO 506/BANG/2020 PAGE 119 OF 183 THE PROFIT. THE ASSESSEE NO DOUBT HAS GIVEN A COMPA RATIVE INSTANCE OF GROSS PROFIT RATE BUT IT IS ALSO NECESS ARY FOR THE DEPARTMENT TO COME TO A FINDING AS TO THE NORM OF T HE GROSS PROFIT ON THE BASIS OF COMPARATIVE CASES. THEREFORE, IT IS THE DUTY OF THE ASSESSING OFFICER TO COUNTER THE COMPARATIVE STATEM ENT CITED BY THE ASSESSEE BEFORE HE CAN HAVE THE OPTION TO ESTIM ATE THE GROSS PROFIT. AGAIN, IT IS THE COMPARATIVE INSTANCE THAT ALONE CAN BE THE FOUNDATION OF SUCH ESTIMATE IN CASE THE ACCOUNTS AR E REALLY FOUND TO BE UNRELIABLE AND REQUIRING TO BE REJECTED. THER EFORE, IN THE INTEREST OF JUSTICE FOR BOTH THE PARTIES, THE ASSES SEE AND THE REVENUE, IT IS NECESSARY FOR US TO DIRECT THE TRIBU NAL TO REMAND THE CASE TO THE ASSESSING OFFICER FOR RECONSIDERING THE WHOLE MATTER IN THE LIGHT OF THE OBSERVATIONS MADE BY US IN THE FOREGOING AND REDO THE ASSESSMENT ACCORDINGLY. ALL OPPORTUNITIES SHOULD BE GIVEN TO THE ASSESSEE IN ORDER TO LEAD AN Y EVIDENCE THAT THE ASSESSEE MAY FEEL NECESSARY TO REBUT THE CASE A GAINST HIM. AS A RESULT WE DECLINE TO ANSWER THE QUESTION. 217. AS HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE ABOVE JUDGMENT, IN THE PRESENT CASE, MR. NAGARAJ CANNOT BE CONSIDER ED AS A RELIABLE WITNESS. MORE SO, WHEN THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE HIM. IN THIS REGARD, WE ALSO PLACE R ELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM V. CIT, 125 ITR 713 (SC) WHEREIN IT WAS HELD THAT EVIDENCE COLLECTED FROM WI TNESS CANNOT BE CONSIDERED WITHOUT GIVING OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE. 218. WE HAVE ALSO CAREFULLY GONE THROUGH THE STATEM ENT OF MR. G H NAGRAJ, SECRETARY OF THE ASSESSEE TRUST. IT WAS MAI NLY DISCUSSED IN PAGE NO 64, 65, 74, 75 AND 76 OF ASSESSMENT ORDER. HE WAS A SKED TO EXPLAIN THE SEIZED MATERIALS A/DUU/03 AND A/DUU/13 ON 13-08-201 5. HE HAS CONFIRMED THE COLLECTION OF CAPITATION FEES ON SOME OCCASIONS. HOWEVER, ON CERTAIN OCCASIONS WHEN CONFRONTED, THE STATEMENTS O F SOME PERSONS WHO HAS STATED THAT THEY HAVE PAID THE CAPITATION FEES IN CASH, HE DENIED THE COLLECTION OF CAPITATION FEES WHICH IS EVIDENT FROM THE ANSWER TO QUESTION NO . ITA NOS.500 TO 506/BANG/2020 PAGE 120 OF 183 16 OF HIS STATEMENT RECORDED ON 16-10-2015 WHICH IS PLACED ON RECORD IN PB 2183. HE ALSO STATED THAT THE PAYMENT FROM THE P ERSONS WHICH ALLEGED TO HAVE BEEN RECEIVED IS ONLY IN THE FORM OF CHEQUE AND THEY ARE GENUINE DONATIONS. IN ANSWER TO QUESTION NO 22 HE HAS STATE D THAT THE STATEMENT OF SHRI RANGARAJU IS ABSOLUTELY FALSE AND ALL THE FEES ARE COLLECTED ONLY IN CHEQUE. THERE ARE CONTRADICTIONS IN HIS STATEMENTS WHICH CANNOT BE RELIED UPON. 219. THE AO ALSO RELIED ON SEIZED MATERIAL A/DUU/02 TO A/DUU/04 TO COME TO CONCLUSION THAT THE ASSESSEE HAS MADE PAYME NT TO THE TRUSTEES. THESE STATEMENTS ARE MADE BY THE AO WITHOUT CONFRON TING THIS SEIZED MATERIAL TO THE TRUSTEE THOUGH THEY WERE EXAMINED B Y THE AUTHORITIES CONCERNED. WITHOUT CONFRONTING THE SEIZED MATERIAL AND STATEMENT OF SHRI SRINIVAS IT IS NOT POSSIBLE TO HOLD THAT THERE WAS UNACCOUNTED CASH PAYMENT TO THE TRUSTEES. FURTHER, SHRI. R L JALAPPA ONE OF THE TRUSTEE DENIED THE FACT OF RECEIVING ANY MONEY AS NOTED IN THE SEIZED DOCUM ENT. HOWEVER, THE ASSESSING OFFICER MADE PROTECTIVE ADDITIONS IN HAND S OF SHRI. R L JALAPPA IN THESE ASSESSMENT YEARS AFTER MAKING SUBSTANTIATIVE ASSESSMENT IN HANDS OF TRUST. THIS SHOWS THAT ASSESSING OFFICER IS NOT SURE IN WHOSE HANDS THE ADDITIONS TO BE MADE. BEING SO, WE FIND FORCE IN AR GUMENT OF ASSESSING COUNSEL THAT AO IS NOT JUSTIFIED IN HOLDING THAT TH ERE WAS VIOLATION OF PROVISIONS OF SECTION 13(1)(C)(II) OF THE IT ACT ON THIS COUNT. 220. FURTHER, THE AO TAKEN THE SUPPORT OF ASSESSEE LETTER DATED 09.12.2017 PLACED AT PB 2704 TO 2706 WHEREIN ASSESS EE STATED THAT A SUM OF RS.14,611.94 LAKHS HAS BEEN SPENT FOR OBJECT OF THE TRUST. IT IS ALSO STATED THAT SHRI G H NAGRAJ, SECRETARY OF THE TRUST COLLEC TED THE UNACCOUNTED CAPITATION FEES ON HIS OWN WITHOUT THE KNOWLEDGE OF THE TRUSTEES OR WITHOUT AUTHORISATION OF THE COMMITTEE OF TRUSTEES AND ALSO OUT OF IT HE HAS SPENT RS.14,611.94 LAKHS FOR THE PURPOSE OF TRUST ACTIVIT IES. IT WAS ALSO REITERATED ITA NOS.500 TO 506/BANG/2020 PAGE 121 OF 183 THAT THE COMMITTEE NEVER AUTHORISED SHRI G H NAGRAJ FOR COLLECTION OF ANY FEES OR SPENDING ANY AMOUNT FOR TRUST ACTIVITIES. T HE ASSESSING OFFICER CONSIDERED THIS LETTER AS AN ACCEPTANCE OF COLLECTI ON OF CAPITATION FEES WITHOUT CONSIDERING THE REAL MEANING OF THAT LETTER . IT CANNOT BE CONSTRUED AS THE ACCEPTANCE OF COLLECTION OF CAPITATION FEES BY ASSESSEE. IT WAS CLEARLY STATED THAT IF IT IS COLLECTED, IT IS UNAUT HORISED COLLECTION BY THE SECRETARY AND SHRI G H NAGRAJ HAS TO EXPLAIN TO THE INCOME TAX AUTHORITIES, EVEN AFTER CONSIDERING THE EXPENDITURE INCURRED OUT OF IT FOR THE PURPOSE OF TRUST ACTIVITIES. IN OUR OPINION ASSESSM ENT IN SEARCH CASES HAS TO BE FRAMED ON THE BASIS OF SEIZED MATERIAL BOUGHT ON RECORD AND NOT ON THE BASIS OF CONFESSION. THE ACTION OF ASSESSING OF FICER PLACING RELIANCE ON THE LETTER OF ASSESSEE DATED 09-12-2017 IS UNJUSTIF IED. 221. FURTHER, THERE WAS AN ALLEGATION BY AO THAT AS SESSEE HAS RECEIVED DONATION IN RETURN FOR GIVING CASH TO THEM AND FACI LITATED TO THE DONOR TO CLAIM DEDUCTION U/S 80G AND ACCORDINGLY AO OBSERVED THAT DONATION IS BOGUS. AFTER EXAMINING ONE DONOR BY NAME SHRI HANUM ANTHARAYA WHOSE STATEMENT IS AVAILABLE ON RECORD ON PB PAGE NO 2181 . SHRI NAGARAJ WHEN CONFRONTED HIM WITH REGARD TO HIS STATEMENT, HE DEN IED THE SAME. BEING SO, IT CANNOT BE HELD THAT THE ASSESSEE RECEIVED ANY BO GUS DONATION. 222. THERE WAS AN ALLEGATION BY AO THAT ASSESSEE MA DE ILLEGAL PAYMENTS INTO MCI OFFICIALS. ACCORDING TO LD. DR THE SEIZED MATERIAL MARKED AS A/DUU/02 SHOWS SUCH ALLEGED PAYMENT. THE SECRETARY SHRI NAGRAJ DEPOSED BEFORE THE AUTHORITIES AND RECORDED HIS STA TEMENT ON 13-08-2015 PLACED AT PB PAGE NO 2165 THAT THE OFFICIALS OF MCI REFUSED TO RECEIVE ANY GIFTS AND THERE WAS NO ANY PAYMENT OF CASH TO THEM. THERE WAS NO EXAMINATION OF RECIPIENT SUCH ALLEGATION CANNOT BE MADE WITHOUT EXAMINING THE CONCERNED PARTIES AND NO ADVERSE INFERENCE COUL D BE DRAWN AGAINST THE ASSESSEE ON THIS COUNT. ITA NOS.500 TO 506/BANG/2020 PAGE 122 OF 183 223. FURTHER, THERE WAS AN ALLEGATION THAT ON THE B ASIS OF SEIZED MATERIAL MARKED AS A/DUU/13 THERE WAS A PAYMENT OF DONATION TO POLITICAL PARTIES. AS WE OBSERVED ON EARLIER OCCASION THE NOTINGS IN SEIZED MATERIAL WHICH IS OBSCURE BEING LOOSE SHEETS CANNOT BE RELIED UPON WI THOUT ANY CORROBORATION. 224. SEIZED MATERIAL A/DUU/17 COPY OF WHICH IS NOT PROVIDED TO THE ASSESSEE AND CROSS-EXAMINATION OF MR. GOLI SRINIVAS WAS NOT PROVIDED TO THE ASSESSEE CANNOT BE RELIED UPON. 225. THE ASSESSING OFFICER HAS STATED THAT SUMMONS WAS SENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO THE PARENTS IN ORDER TO ALLOW CROSS- EXAMINATION BY THE ASSESSEES REPRESENTATIVES. ONE OF THE PARENTS APPEARED AND RECONFIRMED. IT IS NOTED THAT THOUGH S TATEMENTS OF PARENTS OF 5 STUDENTS WERE SAID TO HAVE BEEN OBTAINED, ONLY ON E PARENT HAS APPEARED AND RECONFIRMED THE CONTENTS OF HIS EARLIER STATEME NT. AS THE PARENTS OF 4 OF THE STUDENTS DID NOT APPEAR FOR CROSS-EXAMINATIO N, THEIR STATEMENTS CANNOT BE RELIED UPON AS THE APPELLANT COULD NOT CR OSS-EXAMINE THEM. THE FACT THAT THEY DID NOT RESPOND TO THE SUMMONS WOULD SHOW THAT THE CREDIBILITY OF THEIR STATEMENTS IS HIGHLY DOUBTFUL. WHEN THE APPELLANT HAS NEITHER BEEN GIVEN COPY OF THE STATEMENT NOR HAS GO T THE OPPORTUNITY TO CROSS-EXAMINE THE PERSON GIVING STATEMENT, SUCH STA TEMENTS CANNOT BE RELIED UPON. 226. WITH REGARD TO THE AOS OBSERVATIONS THAT THE RESPONSES GIVEN BY THE SAID PARENT REMAINED THE SAME DURING THE COURSE OF CROSS EXAMINATION BY ASSESSEE AND HE REITERATED THAT THE PARENTS HAVE NEVER BEEN CROSS- EXAMINED BY THE APPELLANT. HAD THERE WAS A CROSS-EX AMINATION, THE DR VERY WELL COULD HAVE PRODUCED THE COPY OF THE SAME FOR OUR CONSIDERATION. THE DR FAILED TO DO SO. HENCE, IT IS OBSERVED THAT THE ASSESSEE WAS NOT AFFORDED ANY OPPORTUNITY TO CROSS-EXAMINE ANY OF TH E PERSONS INCLUDING THE ITA NOS.500 TO 506/BANG/2020 PAGE 123 OF 183 PARENTS WHOSE STATEMENTS WERE RELIED UPON FOR THE P URPOSE OF MAKING ASSESSMENT. SUCH STATEMENTS CANNOT BE RELIED UPON. RELIANCE WAS PLACED UPON BY THE AR ON VARIOUS CASE LAW IS SUPPOR T THE CASE OF THE ASSESSEE. 227. FURTHER, THE AO RECORDED AT PAGE 125 OF HIS OR DER THAT HE HAS SENT SUMMONS TO PARENTS OF STUDENTS OUT OF WHICH ONLY 5 STUDENTS STATEMENTS WERE RECORDED. ONLY TWO PERSONS CONFIRMED THE PAYM ENT OF CAPITATION FEE. VIDE ASSESSEES LETTER DATED 02.12.2017 ASSESSEE AS KED FOR INFORMATION ABOUT ENQUIRY WITH THE STUDENTS. NO INFORMATION WA S PROVIDED BY THE AO TO THE ASSESSEE. IN THIS REGARD, STATEMENT OF 2 PERSO NS OUT OF 800 CANNOT BE RELIED UPON AND IT IS NOT APPROPRIATE TO COME TO TH E CONCLUSION THAT THESE ARE FULL-PROOF OF EVIDENCE WHICH THE AO CAN RELY UP ON. RELIANCE ON THIS INCOMPLETE STATEMENT CANNOT BE APPRECIATED AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM V. CIT, 125 ITR 713 (SC) AS FOLLOWS:- HELD, REVERSING THE DECISION OF THE HIGH COURT, (I ) ON THE FACTS, THAT THE TWO LETTERS DATED FEBRUARY 18, 1955 , AND MARCH 9, 1957 DID NOT CONSTITUTE ANY MATERIAL EVIDENCE WHICH THE TRIBUNAL COULD TAKE INTO ACCOUNT FOR THE PURPOSE OF ARRIVING AT TH E FINDING THAT THE SUM OF RS.1,07,350 WAS REMITTED BY THE ASSESSEE FROM MADRAS, AND IF THESE TWO LETTERS WERE ELIMINATED, THERE WAS NO MATERIAL EVIDENCE AT ALL WHICH COULD SUPPORT ITS FI NDING. THE STATEMENTS OF MANAGERS IN THOSE TWO LETTERS WERE BA SED ON HEARSAY, AS IN THE ABSENCE OF EVIDENCE, IT COULD NO T BE TAKEN THAT HE MUST HAVE BEEN IN CHARGE OF THE MADRAS OFFICE ON OCTOBER 16, 1946, SO AS TO HAVE PERSONAL KNOWLEDGE. THE DEPART MENT OUGHT TO HAVE CALLED UPON THE MANAGER TO PRODUCE THE DOCU MENTS AND PAPERS ON THE BASIS OF WHICH HE MADE THE STATEMENT AND CONFRONTED THE ASSESSEE WITH THOSE DOCUMENTS AND PA PERS. IT WAS TRUE THAT PROCEEDINGS UNDER THE INCOME-TAX LAW WERE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE, AND, THER EFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF TH E BANK IN EVIDENCE TO PROVE THE LETTER DATED FEBRUARY 18, 195 5, IT COULD BE TAKEN INTO ACCOUNT AS EVIDENCE. BUT BEFORE THE INC OME-TAX ITA NOS.500 TO 506/BANG/2020 PAGE 124 OF 183 AUTHORITIES COULD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONT ROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY TO CROSS- EXAMINE THE MANAGER OF THE BANK WITH REFERENCE TO T HE STATEMENTS MADE BY HIM. NOR WAS THERE ANY EXPLANATION REGARDI NG WHAT HAPPENED WHEN THE MANAGER APPEARED IN OBEDIENCE TO THE SUMMONS REFERRED TO IN THE LETTER DATED MARCH 9, 19 57, AND WHAT STATEMENT HE HAD MADE. 228. FURTHER, THIRD PARTY STATEMENT CANNOT BE RELI ED UPON WITHOUT PROPER ENQUIRY AND PROVIDING PROPER CROSS-EXAMINATION TO T HE ASSESSEE. IN CIT V. P.V. KALYANA SUNDARAM, 294 ITR 49 (SC), THE HONBLE SUPREME COURT OBSERVED THAT NO RELIANCE COULD BE PLACED ON LOOSE SHEETS SEIZED DURING THE COURSE OF SEARCH AND THIRD PARTY STATEMENTS UNL ESS PROVIDED CROSS- EXAMINATION. COLLECTION OF CAPITATION FEE IS GOVERN ED BY KARNATAKA INSTITUTIONS (PROHIBITION OF CAPITATION FEES) ACT, 1984 AND THERE WAS NO VIOLATION NOTICED BY THE STATE AUTHORITIES AND ALSO MEDICAL COUNCIL OF INDIA. IN SUCH CIRCUMSTANCES, IT IS NOT POSSIBLE TO CONCLU DE ON THE BASIS OF VARIOUS LOOSE SHEETS AND JOTTINGS FOUND DURING THE SEARCH ACTION U/S. 132 THAT ASSESSEE HAS COLLECTED UNACCOUNTED CAPITATION FEES FROM MANAGEMENT AND NRI QUOTA. 229. FURTHER, THE BANGALORE BENCH IN THE CASE OF A NAND SOCIAL & EDUCATION TRUST IN ITA NOS. 2542-2548(B)/2017 DATED 29.05.2020 BY PLACING RELIANCE ON THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF BALAJI EDUCATIONAL & CHARITABLE PUBLIC TRUST, 56 TAXMANN.COM 182 IN SIMILAR CIRCUMSTANCES OBSERVED THAT THE AO HAD NOT CONDUCTED ANY ENQUIRY WITH THE STUDENTS OR PARENTS OR OTHERS. THE CASH S EIZED DURING THE SEARCH WAS ACCEPTED AS NOT BELONGING TO THE ASSESSEE. THE RE WAS NO COMPLAINT RECEIVED FROM ANY STUDENT OR PARENT REGARDING CAPIT ATION FEE CHARGED BY THE INSTITUTION. IN THE ABOVE CASE ALSO THE AO HAD EST IMATED THE CAPITATION FEE RECEIVED FROM THE STUDENTS UNDER THE MANAGEMENT QUO TA FOR VARIOUS YEARS. THE HONBLE MADRAS HIGH COURT HELD IT TO BE A PERVE RSE INFERENCE. FURTHER ITA NOS.500 TO 506/BANG/2020 PAGE 125 OF 183 THE TRIBUNAL OBSERVED THE AO HAD ONLY DRAWN CERTAIN INFERENCE ON SURMISES AND CONJECTURES. HE DID NOT CONDUCT ANY I NDEPENDENT ENQUIRY WITH THE RELATED PARTY TO FIND OUT THE TRUTH. HE H AS ALSO NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE EXPLANATION GIV EN BY THE ASSESSEE WAS NOT CORRECT. IN ANY CASE, THE ASSESSEE WAS NOT GIV EN OPPORTUNITY TO CROSS- EXAMINE THE PARTIES WHOEVER MANAGED THE DIARY. ACC ORDINGLY THE TRIBUNAL DELETED THE ADDITION BY PLACING RELIANCE ON THE JUD GMENT OF BALAJI EDUCATIONAL & CHARITABLE PUBLIC TRUST (SUPRA). 230. IN THIS CASE ALSO, THE ADDITION MADE BY THE A O IS BASED ON UNSUBSTANTIATED LOOSE SHEETS AND JOTTINGS WITHOUT P ROPER CROSS-EXAMINATION OF THE PERSON WHO HAS ADMITTED THE CONTENTS THEREIN . BEING SO, IT CANNOT BE STATED AS FULL-PROOF OF MATERIAL EVIDENCE TO SUB STANTIATE THE ADDITION. IN OUR OPINION SEIZED DOCUMENTS DO NOT SUPPORT THE AO S CONTENTION THAT ASSESSEE HAS RECEIVED UNACCOUNTED CAPITATION FEES F OR ADMISSION OF THE STUDENTS TO THE COLLEGE. IT ALSO DOES NOT SUGGEST T HAT THE ASSESSEE HAS PAID COMMISSION TO AGENTS TO BRING THE STUDENTS FOR ADMI SSION TO COLLEGE. SIMILARLY IT DOES NOT SUGGEST PAYMENT OF ANY AMOUNT TO THE TRUSTEES FOR THEIR SELF-BENEFIT. GOING THROUGH THE ENTIRE FACTS OF THE CASE IT CREATES ONLY A SUSPICION IN THE MINDS OF THE REVENUE AUTHORITIES T HAT THE ASSESSEE HAS COLLECTED UNACCOUNTED CAPITATION FEES. HOWEVER, THE SUSPICION NOT ENOUGH TO HOLD THAT THE ASSESSEE HAS COLLECTED UNACCOUNTED CAPITATION FEES IN ABSENCE OF CONCRETE EVIDENCE BOUGHT ON RECORD BY TH E AUTHORITIES CONCERNED. THE SUSPICION CANNOT REPLACE THE MATERIA L EVIDENCE BROUGHT ON RECORD BY THE AUTHORITIES. IT IS ALSO NOTED THAT TH E ASSESSEE VIDE THEIR LETTER DATED 22-02-2017 ASKED FOR FOLLOWING INFORMATION: (I) NUMBER OF STUDENT/PARENTS TO WHOM SUMMONS WER E ISSUED (II) HOW MANY OF SUCH NOTICES WERE SERVED ? (III) HOW MANY WERE RETURNED UNSERVED? (IV) THE NUMBER OF STUDENTS/PARENTS WHO APPEARED BEFORE THE AO ITA NOS.500 TO 506/BANG/2020 PAGE 126 OF 183 (V) HOW MANY OF THEM DENIED THE TRANSACTION? (VI) HOW MANY OF THEM ACCEPTED THE TRANSACTION? (VII) HOW MANY OF THEM STATED THAT THEY PAID THE FE ES IN CASH AT THE INSTANCE OF THE TRUSTEE. 231. THE AO FAILED TO RESPOND TO THE ASSESSEES LET TER. IT IS ADMITTED FACT THAT IN EVERY YEAR 150 MBBS STUDENTS WERE ADMITTED TO THE COLLEGE IN ADDITION TO 68 POST GRADUATE STUDENTS. THE TOTAL NU MBER OF STUDENTS IN COLLEGE ADMITTED DURING THE LAST 7 YEARS WAS APPROX IMATELY 1526 PERSONS. THE LD. AO ALLEGED IN THE ASSESSMENT ORDER THAT ASS ESSEE HAS BEEN COLLECTING THE CAPITATION FEES FROM AROUND 800 STUD ENTS FOR ADMISSION IN VARIOUS COURSES. OUT OF 800, 5 STUDENTS/PARENTS RES PONDED TO THE AOS LETTER AND OUT OF THEM 2 PERSONS HAVE GIVEN STATEME NT. THERE IS NO DISCUSSION IN ASSESSMENT ORDER WITH REGARD TO OTHER 3 PERSONS. IN OUR OPINION THE STATEMENT OF 2 CANNOT BE BASIS FOR MAKI NG SUCH HUGE ADDITIONS ON COLLECTION OF CAPITATION FEES. IT CANNOT BE CONS IDERED AS APPROPRIATE SAMPLE TO FRAME THE ASSESSMENT ON THE BASIS OF THEI R STATEMENT. FURTHER, THE ASSESSEE REQUESTED FOR CROSS EXAMINATION OF ALL THE PARTIES WHOEVER HAVE GIVEN THE STATEMENTS AGAINST THE ASSESSEE, IF ANY, WHICH WAS NOT PROVIDED AT ALL. IN VIEW OF THIS, SUCH STATEMENTS C ANNOT BE RELIED UPON. THE DEPARTMENT DESPITE ITS ATTEMPTS FAILED TO COLLECT A NY CORROBORATIVE INFORMATION REGARDING COLLECTION OF CAPITATION FEES , EXCEPT RELYING ON UNCORROBORATED ENTRIES IN THE LOOSE PAPERS/EXCEL SH EETS, WANTS TO FRAME THE ASSESSMENTS IN ALL THESE ASSESSMENT YEARS RELYI NG UPON THE SAME WHICH IS NOT ACCEPTABLE. THE REVENUE AUTHORITIES BO UND TO FOLLOW THE PRINCIPLE OF NATURAL JUSTICE AND OUGHT TO HAVE GIVE N PROPER OPPORTUNITY OF EXAMINATION AND CROSS EXAMINATION OF THE PARTIES CO NCERNED WHOSE STATEMENTS ARE RELIED UPON TO FRAME THE ASSESSMENT. IN OUR OPINION THE DISCOVERY OF DOCUMENTS NOT ONLY SUFFICIENT TO CONCL UDE THE COLLECTION OF UNACCOUNTED CAPITATION FEES, CROSS EXAMINATION OF C ONCERNED PARTIES IS ALSO IMPORTANT. ITA NOS.500 TO 506/BANG/2020 PAGE 127 OF 183 232. FURTHER AT A COST OF REPETITION, WE OBSERVE TH AT THE REVENUE AUTHORITIES RECORDED STATEMENT OF ONLY 5 STUDENTS O UT OF MORE THAN 800 STUDENTS AND OUT OF 5 ONLY 2 ARE CONFIRMED. THE TW O STATEMENTS RECORDED CANNOT BE RELIED UPON WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. THE STATEMENT OF THESE TWO PERSONS CONFIRMING PAYMENT O F CAPITATION FEES IS FULLY UNCORROBORATED AND NON-PRODUCTION OF THEM FOR CROSS-EXAMINATION CANNOT BE CONSIDERED AS INCRIMINATING MATERIAL SO A S TO SUSTAIN THE ADDITION. THE ROUGH NOTINGS IN THE LOOSE PAPERS AR E NOT FULL-PROOF EVIDENCE WITHOUT PROVING THE CORRECTNESS OF THE SAME. NOTHI NG WAS RECORDED IN THE ORDERS OF LOWER AUTHORITIES THAT ASSESSEE HAS DEVIA TED FROM ITS OBJECTS FOR WHICH APPROVAL U/S. 12A WAS GRANTED AND NOT APPLIED ITS FUNDS TOWARDS ITS OBJECTS. NO EVIDENCE WAS BROUGHT OUT TO SHOW THAT THE AMOUNT OF CAPITATION FEES ALLEGED TO HAVE BEEN COLLECTED RESU LTED IN CREATION OF ANY UNACCOUNTED ASSETS BY THE TRUST OR TRUSTEES OR BY A NY INTERESTED PERSON. ON THIS COUNT ALSO THE ADDITION CANNOT BE SUSTAINED . 233. NO ASSETS COMMENSURATE WITH THE ALLEGED ESTIMA TED COLLECTION OF CAPITATION FEES BY THE REVENUE AUTHORITIES WERE FOU ND. THE UNBOUNDED LOOSE SHEETS HAVING JOTTINGS ARE NOT SPEAKING EITHE R BY ITSELF OR IN THE COMPANY OF OTHERS AND NOT CORROBORATED BY ENQUIRY, CANNOT BE THE BASIS OF ANY INFERENCE THAT CAPITATION FEES WAS COLLECTED NO T ENTERED IN THE ACCOUNTS SO AS TO SUSTAIN THE ADDITION. 234. CONSIDERING THE FACTS OF THE CASE, WE ARE OF T HE OPINION THAT THE EVIDENCE COLLECTED BY THE AUTHORITY IS NOT SUFFICIE NT TO ESTABLISH THAT THE STAND THAT THE ASSESSEE HAS COLLECTED UNACCOUNTED C APITATION FEES FOR ADMISSION OF STUDENTS TO VARIOUS COURSES IN THE ASS ESSEES COLLEGE. WE ARE AWARE THAT ENTIRE EVIDENCE HAS TO BE APPRECIATE D IN A WHOLESOME MANNER AND EVEN WHERE THERE IS DOCUMENTARY EVIDENCE , THE SAME CAN BE OVERLOOKED IF THERE ARE SURROUNDING CIRCUMSTANCES T O SHOW THAT THE CLAIM OF ITA NOS.500 TO 506/BANG/2020 PAGE 128 OF 183 ASSESSEE IS OPPOSED TO NORMAL COURSE OF HUMAN THINK ING, CONDUCT AND HUMAN PROBABILITY. EVEN APPLYING THIS PRINCIPLE TO THE PRESENT CASE, WE HAVE DIFFICULTY IN REJECTING THE ASSESSEES PLEA AS OPPOSED TO NORMAL COURSE OF HUMAN CONDUCT. THE CIRCUMSTANCES SURROUNDING TH E CASE ARE ALSO NOT ENOUGH TO REJECT THE ASSESSEES EXPLANATION. WE HA VE CONSIDERED ALL THE MATERIAL ON RECORD AND ALSO THE STATEMENT OF THE PA RTIES AS DISCUSSED IN THE EARLIER PARAGRAPHS. WE ARE OF THE OPINION THAT THE DEPARTMENT CANNOT RELY ON THOSE STATEMENTS, MORE SO WHEN IT WAS NOT CONFRO NTED TO THE ASSESSEE FOR CROSS-EXAMINATION AND THE SAME CANNOT BE RELIED UPON. THE DEPARTMENT FAILED TO COLLECT PROPER INFORMATION FRO M ANY SOURCE CORROBORATING PAYMENT OF CAPITATION FEES, EXCEPT IN CORROBORATING ENTRIES IN THE LOOSE SHEETS. ALL ATTEMPTS FOR CORROBORATION F AILED. THERE IS NOTHING TO SUGGEST THAT THE TRUST HAS DEVIATED FROM THE OBJECT S FOR WHICH REGISTRATION WAS GRANTED AND NOT APPLIED THE FUNDS FOR ITS OBJEC TS. NO EVIDENCE WAS BROUGHT ON RECORD TO SHOW THAT AMOUNT OF ALLEGED CA PITATION FEES WHICH HAVE BEEN COLLECTED WAS MISUSED BY THE ASSESSEE OR BY ANY INTERESTED PERSONS. THERE IS NO INSTANCE OF RECOVERY OF ANY A SSETS COMMENSURATE WITH THE ALLEGED ESTIMATED UNACCOUNTED COLLECTION O F CAPITATION FEES AS FOUND BY THE AO. THE ACTIVITIES OF THE TRUST ARE G ENUINE. THERE IS NO ALLEGATION BY THE LOWER AUTHORITIES THAT ACTIVITIES OF THE TRUST ARE NOT GENUINE. ALSO THERE WAS NO ALLEGATION THAT THE ACTIVITIES OF THE TRUST ARE NOT CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THERE IS NO ALLEGATION THAT THE ASSESSEE IS NOT IMPARTING EDUCATION AND IT IS AN AD MITTED FACT THAT THOUSANDS OF STUDENTS ARE STUDYING IN THE COLLEGE A ND ASSESSEE HAS BEEN CARRYING ON EDUCATIONAL ACTIVITIES IMPARTING MEDICA L EDUCATION. IT FULFILLED THE REQUIREMENT OF IMPARTING EDUCATION WHICH ARE NO T DOUBTED OR CHALLENGED BY THE AUTHORITIES. BEING SO, EXEMPTION U/S. 11 OF THE ACT CANNOT BE DENIED. ITA NOS.500 TO 506/BANG/2020 PAGE 129 OF 183 235. FURTHER REFERENCE IS MADE TO THE JUDGMENT OF T HE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF DIT(E) V. SRI BELIMATHA MAHASAMSTHANA SOCIO CULTURAL AND EDUCATIONAL TRUST, 336 ITR 694 (KARN) . IN THIS CASE, THE ASSESSEE A SOCIAL, CULTURAL AND EDUCATIONAL TRUST, RUNNING EDU CATIONAL INSTITUTIONS AND HAVING VARIOUS PROFESSIONAL COURSE S FILED ITS RETURN OF INCOME FOR THE AY 2001-02. THE AO DENIED EXEMPTION U/S. 11 OF THE ACT HOLDING THAT THE SUMS COLLECTED TOWARDS DONATIONS F ROM STUDENTS WERE CONTRARY TO THE KARNATAKA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 1984. THE AO ALSO DISALLOWED THE SUM SH OWN AS CORPUS DONATION AS THE SOURCE OF SUCH DONATIONS HAD NOT BE EN PROVED BY THE ASSESSEE AND, THEREFORE, THE SAID AMOUNT WAS ALSO N OT ALLOWED AS AN EXEMPTION UNDER SECTION 11(1)(D) OF THE ACT. THE C IT(APPEALS) CONFIRMED THE ORDER OF AO. THE TRIBUNAL ALLOWED THE BENEFIT OF EXEMPTION U/S. 11. ON APPEAL, IT WAS HELD THAT MERELY BECAUSE THE ASSESSE E IS AN INSTITUTION WHICH IS RUNNING PROFESSIONAL COURSES, THE AO COULD NOT HAVE PRESUMED THAT THE AMOUNTS WHICH ARE RECEIVED AS DONATION WER E ATTRIBUTABLE TO THE ALLOTMENT OF SEATS IN THE RELEVANT ASSESSMENT YEAR. IN THE ABSENCE OF THERE BEING ANY FOUNDATION FOR SUCH A CONTENTION THAT THE DONATION RECEIVED DURING THE PERIOD WAS NOT IN VIOLATION OF THE KARNA TAKA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 1 984 AND THE ASSESSEE HAS NOT ACTED AS OPPOSED TO THE PUBLIC POLICY, EXEMPTIO N U/S. 11 COULD NOT HAVE BEEN DENIED. 236. FURTHER, THE BANGALORE BENCH OF THE TRIBUNAL I N THE CASE OF VENKATESHA EDUCATION SOCIETY IN ITA NOS.100 TO 106/ BANG/2012 AND M.J. BALACHANDER IN ITA NOS.90 TO 94/BANG/2012, ORDER DA TED 21.12.2012 CONSIDERED THE CASE IN SIMILAR CIRCUMSTANCES WHERE MR. M.J. BALACHANDER WAS COLLECTING EXTRA TUITION FEES WITHOUT ANY AUTHO RITY OR CONSENT OF THE SOCIETY AND THE CONCLUSION OF THE CIT(APPEALS) WAS THAT EXTRA TUITION FEES WAS COLLECTED BY MR. BALACHANDER ON HIS OWN AND SOC IETY HAS NOTHING TO DO ITA NOS.500 TO 506/BANG/2020 PAGE 130 OF 183 WITH EXTRA TUITION FEES COLLECTION. BEING SO, THE T RIBUNAL HELD THAT THE ASSESSEE CANNOT BE FAULTED AND APPROVAL CANNOT BE W ITHDRAWN SO AS TO DENY THE BENEFIT OF SECTION 11 OF THE ACT. THE RELE VANT OBSERVATIONS OF THE TRIBUNAL ARE AS FOLLOWS:- IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE AGREED TUITION FEE WHICH THE SOCIET Y CAN COLLECT FOR ADMISSION HAS ALSO BEEN COLLECTED AND THIS IS DULY REFLECTED IN THE STATEMENT FOUND IN THE SEIZED DOCUMENTS. IT WAS SUBM ITTED THAT THE TOTAL COLLECTIONS IN THE FORM OF DD WAS A SUM O F Q 1,16,74,975 AND THE AMOUNT STATED TO HAVE BEEN DEPOSITED BY THE SECRETARY IN THE HEAD OFFICE IS ONLY A SUM OF Q 80,000 ON 02.06. 2005 AND Q 14,33,500 ON 19.10.05. IT WAS SUBMITTED THAT THE RE FERENCE IN THE SEIZED DOCUMENT MIGHT BE WITH REGARD TO THE NORMAL T UITION FEE WHICH THE SOCIETY CAN COLLECT. IT WAS SUBMITTED THAT THE ENTRIES IN PAGE 54 CANNOT BE CONCLUSIVE TO SHOW THAT THE SECRE TARY WAS ALSO INVOLVED IN COLLECTING THE ETF. WE ARE OF THE VIEW THAT THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE IN THIS RE GARD APPEAR TO BE CONVINCING. IN THIS REGARD, WE ALSO FIND THAT INDIRA DEVI, WHO IS STATED TO HAVE WRITTEN LETTER DATED 08.12.07 , HAS NOT BEEN EXAMINED BY THE AO . IN THOSE CIRCUMSTANCES, IT CANN OT BE SAID THAT THE SEIZED DOCUMENT ON WHICH THE AO HAS PLACED RELIANCE CONCLUSIVELY PROVES THAT IT WAS ONLY THE SOCIETY WH ICH RECEIVED THE ETF. ON THE OTHER HAND, THE CIRCUMSTANCES POINT ED OUT BY THE SOCIETY ONLY GO TO SHOW THAT IT WAS MJB WHO WAS COL LECTING ETF WITHOUT THE KNOWLEDGE AND AUTHORITY OF THE SOCIETY. ACIT V. MAMATHA EDUCATIONAL SOCIETY 2015 (8) TMI 36 7 - ITAT HYDERABAD [PARAGRAPHS 24 AND 25] IN CIT V. KLE UNIVERSITY [ITA NO. 5016 OF 2012 C/W 501 7 OF 2012] , THE HONBLE KARNATAKA HIGH COURT HELD AS UNDER:- 11. OUR ANSWER TO THE ABOVE POINT IS IN THE AFFIRMA TIVE FOR THE FOLLOWING REASONS : (I) THAT THE DONATIONS RECEIVED BY THE SOCIETY CANN OT BE CONSTRUED AS CAPITATION FEE FOR THE ADMISSION OF ST UDENTS BY THE KLE UNIVERSITY ; ITA NOS.500 TO 506/BANG/2020 PAGE 131 OF 183 (II) THAT PROVIDING HOSTEL TO THE STUDENTS/ STAFF WORKING FOR THE SOCIETY IS INCIDENTAL TO ACHIEVE THE OBJECT OF PROV IDING EDUCATION, NAMELY, THE OBJECT OF THE SOCIETY ; (III) THAT THE REVENUE APPEARS TO HAVE NOT PROPERL Y APPRECIATED THE LEGAL POINT THAT THOUGH THE CHAIRMAN AND A FEW MEMBERS OF 'THE SOCIETY' ARE THE CHAIRMAN AND MEMBERS OF 'THE KLE UNIVERSITY', THEY ARE SEPARATE LEGAL ENTIT IES ; (IV) THAT THERE IS NO VIOLATION OF ANY OF THE COND ITIONS STIPULATED UNDER THE INCOME-TAX ACT, WARRANTING FOR CANCELLATI ON OF REGISTRATION OF THE SOCIETY ; (V) THAT THE TRIBUNAL ON PROPER APPRECIATION OF THE GROUNDS URGED BY THE SOCIETY AND THE REVENUE, HAS RIGHTLY RE STORED THE REGISTRATION. 237. FURTHER THE HYDERABAD TRIBUNAL IN THE CASE OF PRATHIMA EDUCATIONAL SOCIETY, HYDERABAD IN ITA NO.720/HYD/2012 VIDE ORDE R DATED 08.11.2013 WHEREIN THE ACCOUNTANT MEMBER IS A PARTY TO THE ORD ER, HELD THAT THE EVIDENCE COLLECTED NOT SPEAKING WITH REGARD TO COLL ECTION OF CASH OF UNACCOUNTED CAPITATION FEES, CANNOT BE A REASON TO DENY EXEMPTION U/S. 11 OF THE ACT. THE SEIZED MATERIAL ON WHICH RELIANCE IS PLACED BY THE REVENUE AUTHORITIES IS NOT CONCLUSIVE EVIDENCE TO SUSTAIN T HE ADDITION AND DENY EXEMPTION U/S. 11 OF THE ACT. 238. FURTHER THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V. B. SRINIVASA RAO, 159 TTJ 483 (HYD) [WHEREIN THE AM HEREIN WAS THE AUTHOR OBSERVED AS UNDER:- 8. AS FOR THE FIRST REASON PUT FORTH FOR CANCELLATION OF REGISTRATION, VIZ., COLLECTION OF CAPITATION FEE, IT IS SUBMITTED THAT IN THE COURSE OF SEARCH, EXCEL SHEETS WERE FOUND CONTAINING THE NAMES OF STUDENTS, NAMES OF PARENTS AND THE AMOUNT. IN THE COURSE OF SEARCH AND, THEREAFTER, ST ATEMENTS OF CHAIRMAN OF THE ASSESSEE TRUST WERE RECORDED ON A NUMBER OF OCCASIO NS, WITH REFERENCE TO THE ENTRIES IN THESE EXCEL SHEETS. IT WAS EXPLAINED THA T CIRCUMSTANCES IN WHICH THE ITA NOS.500 TO 506/BANG/2020 PAGE 132 OF 183 EXCEL SHEETS WERE FOUND WERE NOT ASCERTAINABLE. IT WAS CONTENDED THAT UNCORROBORATED NOTINGS IN THE EXCEL SHEETS SHOULD N OT BE ACTED UPON TO DERIVE ANY INFERENCE AGAINST THE SOCIETY. IN SUPPORT OF TH IS CONTENTION THAT THE SAID EXCEL SHEETS ARE NOT RELIABLE, THE LEARNED COUNSEL FOR THE ASSESSEE PUT FORTH THE FOLLOWING REASONS : ( A ) THE NOTINGS IN THE EXCEL SHEETS LACKED CORROBORATION OF THE NOTINGS ALTHOUGH THE DEPARTMENT ATTEMPTED IN THAT DIRECTION . ( B ) IN COURSE OF SEARCH AND POST- SEARCH INVESTIGATION, IN THE STATEMENTS RECORDED UNDER S. 132(4)/131, CHAIRMAN OF THE ASSES SEE TRUST, SRI SRI NIVASA RAO EXPRESSED H IS INABILITY TO EXPLAIN THE CIRCUMSTANCES IN WHICH THOSE SHEETS WERE FOUND FROM THE PREMISES OF THE ASSESSEE - SOCIETY. ( C ) DESPITE REPEATED QUESTIONING ON VARIOUS OCCASIONS, THE SAID SRINIVASA RAO DENIED THAT THE ASSESSEE-SOCIETY HAS COLLECTED CAPI TATION FEE FROM ANY STUDENT. ( D ) THE COMPUTER PRINTOUT WAS NOT RECOVERED/RETRIEVED F ROM ANY OF THE COMPUTERS MAINTAINED IN THE SOCIETY'S OFFICE AT THE TIME OF SEARCH, ALTHOUGH THE SAME WERE VERIFIED AND THAT TOO WITH T HE RECOVERY TOOL WH ICH IS A U SUAL METHOD ADOPTED BY THE DEPARTMENT AT THE TIME OF SEARCH. ( E ) IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE SEIZED HARD DISKS WERE OPERATED IN THE OFFICE OF THE AO WITH THE HELP OF I BM OFFICIAL BUT THERE WAS NO IMPRESSION IN THE HARD DISK THAT THE SAME WA S TYPED AND PREPARED IN ANY OF THE COMPUTERS BELONGING TO THE SOCIETY. N O DATA CONFORMING TO THE NOTINGS IN THE EXCEL SHEETS COULD BE FOUND FROM THE SEIZED COMPUTER HARD DISKS. HE SUBMITTED THAT THE ONLY PURPOSE O F SCANNING THE SEIZED HARD DISK WAS INTENDED FOR RE COVERY OF THE EXCEL SHEETS SO AS TO CORROBORATE THE SAME, AS THE ASSESSEE HAS DENIED TO HAVE GENERATED THE SAME. SINCE IT RESULTED IN A FUTILE EXERCISE, IT WAS CLEARLY ESTAB LISHED THAT THE EXCEL SHEETS WERE NOT PREPARED BY THE ASSESSEE-SOCIETY. THE ASSE SSM ENT ORDER PASSED BY THE AO MAKES NO MENTION OF ANY SUCH RECOVERY. ( F ) THE AUTHOR OF THE EXCEL SHEETS COULD NOT BE IDENTIF IED. IN TERMS OF S. 60 OF THE INDIAN EVIDENCE ACT, COMPUTERISED INFORMATION I S WI THIN THE REALM OF HEARSAY EVIDENCE AND THEREFORE, N OT RELEVANT AT ALL BY ITSELF. IN SUCH CASES EITHER AUTHORITY WHO HAS FED THE INFORMATION MUST B E IDENTIFIED OR HE MUST APPEAR PERSONALLY AND TESTIFY BEFORE THE COURT ABOU T THE SOURCE OF INFORMATION. HENCE, IN THE ABSENCE OF ANY SUCH CORR OBORATI ON, THE EVID ENCE REMAINED A HEARSAY EVIDENCE, CARRYING NO EVIDE NTIARY VALUE, IN THE ABSENCE OF ANY CORROBORATION. ( G ) AT THE TIME OF SEIZURE, THE EXCEL SHEETS WERE NOT A UTHENTICATED EITHER BY THE ASSESSEE OR BY THE WITNESSES OR BY AN AUTHORIZE D OFFICER. THIS IS AN ITA NOS.500 TO 506/BANG/2020 PAGE 133 OF 183 UNSIGNED DOCUMENT AND AS SUCH IT LOSES ITS EVIDENTI ARY VALUE FOR WANT OF AUTHENTICATION. IN SUPPORT OF THIS PROPOSITION RELI ANCE IS PLACED ON THE DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SANSKRUTI TOWNSHIP V. DEPARTMENT OF IT [IT APPEAL N O. 1885 (AHD.) OF 2006, DATED 23-9-2011] AND HYDERABAD BENCH OF THE TRIBUNAL IN T HE CASE OF DY. CIT V. C. KRISHNA YADAV [2011] 12 TAXMANN.COM 4/46 SOT 250 (HYD.)(URO) . ( H ) THERE IS EVIDENCE IN THE SEIZED RECORD THAT T HE DEPARTMENT HAS TYPED SOME INFORMATION BY MAKING USE OF ASSESSEE'S COMPUTER AN D MADE PART OF THE PANCHNAMA. THIS FACT WAS POINTED OUT BY THE CHAIRMA N OF THE ASSESSEE, SRI B. SRINIVASA RAO IN THE COURSE OF HIS STATEMENT REC ORDED ON 1 7TH DEC, 2 009. THIS AC T ON THE PART OF THE SEARCH PARTY RAISES AN EYEBROW . ( I ) THE DY. DIRECTOR OF IT IN COURSE OF POST- SEARCH INVESTIGATION MADE EXTENSIVE ENQUIRIES TO CORROBORATE THE NOTINGS IN T HE EXCEL SHEETS. ONE OF THE STEPS TAKEN BY HIM WAS THAT HE SUMMONED ALL THE PA RENTS OF THE STUDENTS UNDER S. 131 TO TAKE EVIDENCE. IN COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE REQUESTS TO SUPPLY T HE COPIES OF THESE STATEMENTS. REPEATED REQUESTS MADE BY THE ASSESSEE FELL IN DEAF EARS AND SO FAR THESE STATEMENTS HAVE NOT BEE N PROVIDED. ON BEING DIRECTED BY THE AO IN COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE CO NTACTED THE OFFICE OF DIRECTOR GENERAL OF IT AND REMINDED ON A NUMBER OF OCCASIONS BUT NO INFORMATION WAS SUPPLIED, DESPITE THE FACT THAT THI S FACT WAS ALSO BROUGHT TO THE NOTICE OF DIRECTOR GENERAL OF IT. AS A PRINCIPL E, NEITHER THE ASSESSEE CAN SUPPRESS THE BEST EVIDENCE IN HIS POSSESSION NO R THE DEPARTMENT. IT IS SETTLED PRINCIPLE THAT WHENEVER THE ASSESSEE DESIRE S , HE CAN HAVE ACCESS TO ALL INFORMATION, WHETHER FA VOURABLE OR ADVERSE TO HIM AS LAID DOWN IN SURAJ MALL MOHTA & CO. V. A.V. VISVANATHA SASTRI [1954] 26 ITR 1 (SC), SMC SHARE BROKERS LTD. V. CIT [2008] 22 SOT 7 (DELHI)(URO), CIT V. SIMON CARVES LTD. [1976] 105 ITR 212 (SC) . IN THIS CASE THE ASSESSEE HAS EVERY REASON TO BELIEVE THAT THE EVIDENCES TENDERED BY THE PARENTS, WHO WERE DEPARTMENTAL WITNESSES , WERE ALL FAVOURABLE TO ASSESSEE AND THEREFORE, TH E DEPARTMENT WAS APPREHENSIVE OF PROVIDING THESE STATEMENTS AS THE SAME WOULD GO AGAINST THE D EPARTMENT. THE CONDUCT OF THE DEPARTMENT IS NOT FAIR AS THE NOTING S IN THE EXCEL SHEETS FORMED THE BASIS OF ADDITION AND SUBSEQUENT CANCELL ATION. ASSE SSEE IS ENCL OSING HEREWITH SOME OF THE SUMMONS ISSUED TO THE PA RENTS WHO APPEARED TO GIVE TESTIMONY. ( J ) EVEN THE AO FAILED TO SUMMON THESE WITNESSES IN COU RSE OF ASSESSMENT PROCEEDINGS FOR CORROBORATION WHEN THE ASSESSEE WAS CONSISTENTLY DENY ING COLLECTION OF CAPI TATION FEES AND BASED HIS ENTIRE CONCLUSION ON THE REPORT OF THE DY. DIRECTOR OF IT WHICH WAS BASED ON SUSPIC ION. THIS SHOWS TOTAL NON - APPLICATION OF MIND BY THE ADJUDICATING OFFICER WHE N THE INFORMATIO NS ITA NOS.500 TO 506/BANG/2020 PAGE 134 OF 183 SUPPLIED TO HIM WERE DISPUTED AND NOT-CORROBORATED BY THE DY. DIRECTOR OF IT. HIS ATTEMPT TO VERIFY THE FACTS FROM TWO WITNES SES NAMELY SRI TIRUPATHI REDDY AND MADHAV REDDY COULD NOT YIELD AN Y FURTHER EVIDENCE. ( K ) IT WAS BROUGHT TO THE NOTICE OF AUTHORITIES THAT NO TINGS IN THE LOO SE SHEET REMAINED UNCO RROBORATED TILL END AS THE SAME WAS NOT A SPEAKING DOCUMENT AND NO SUPPORTING EVIDENCE BY WAY OF MONEY RECEIPT AND OTHER EVIDENCES WAS FOUND. IT WAS POINTED OUT THAT THE SA ME WAS A DUMB DOCUMENT AND THEREFORE NOT TO FORM THE BASIS OF CAN CELLATI ON OF REGIST RATION UNDER S. 12AA. WITH REGARD TO EVIDENTIARY VA LUE OF NOTINGS IN THE LOOSE SHEET, THE APPELLANT RELIES ON THE FOLLOW ING DECISIONS : ( A ) C. KRISHNA YADAV ( SUPRA ); ( B ) ASSTT. CIT V. SATYAPAL WA SSA N [2007] 295 ITR (AT) 352 (JA B.) ; ( C ) ASSTT. CIT V. DR. KAMLA PRASAD SINGH [2010] 3 ITR (TRIB) 533 (PAT.) ; ( D ) CIT V. KHAZAN SINGH & BROS. [2008] 304 ITR 243/[2007] 164 TAXMA N 3 0 (PUNJ. & HAR.) ; ( E ) CIT V. GIRISH CHAUDHARY [2008] 296 ITR 619/[2007] 163 TAXMAN 608 (DELHI) ; ( F ) BANSAL STRIPS (P.) LTD. V. ASSTT. CIT [2006] 99 ITD 177 (DELHI) ; ( G ) CI T V. MAULIKKUMAR K. SHAH [2008] 307 ITR 137 (GUJ.) . ( L ) AS REGARDS THE PRESUMPTION UNDER S. 132(4A), IT WAS SUBMITTED THAT A LOOSE SHEET IS NOT A BOOK/DOCUMENT SO AS TO RAISE THE PRE SUMPTION. FOR THIS PROPOSITION, RELIANCE WAS PLACED ON THE DECISION OF APEX COURT IN THE CASE OF CBI V. V.C. SHUKLA [1998] 3 SCC 410. FURTHER THE PRESUMPTION IN THIS SECTION IS NOT MANDATORY. THIS CAN SUPPLEMENT BUT C ANNOT SUPPLANT EVIDENCE. NOTHING WAS FOUND BY THE DEPARTMENT TO SU PPORT THEIR SUSPICION. ( M ) THEREFORE, THE EXCEL SHEETS WHICH ARE NOT SPEAKING EITHER BY ITSELF OR IN THE COMPANY OF OTHERS, OR CORROBORATED BY ENQUIRY, CANNOT BE THE BASIS OF ANY INFERENCE THAT CAPITATION FEES WERE COLLECTED A ND NOT ENTERED IN THE ACCOUNTS TO CANCEL REGISTRATION. 239. THUS, IT IS SEEN FROM THE SEIZED MATERIAL AND EXCEL SHEETS THAT THESE ARE HANDWRITTEN LOOSE DOCUMENTS AND EXCEL SHEET PRI NT-OUTS TAKEN FROM THE COMPUTER AND UNDISCLOSED INCOME OF THE ASSESSEE IS DETERMINED ON THE ITA NOS.500 TO 506/BANG/2020 PAGE 135 OF 183 BASIS OF THESE DOCUMENTS. THERE IS NO DIRECT EVIDE NCE OR CONCLUSIVE EVIDENCE TO PROVE THE COLLECTION OF THE CAPITATION FEES. THE STATEMENTS OF PARTIES OF WHOSOEVER IS RELIED UPON ARE EVASIVE REP LIES GIVEN TO THE REVENUE AUTHORITIES ON THE BASIS OF WHICH THE AO MADE AN ES TIMATE OF COLLECTION OF CAPITATION FEES. THIS IS ONLY BASED ON CONJECTURE S AND SURMISES AND ONLY ON CIRCUMSTANTIAL EVIDENCE. THE AO FAILED TO ESTAB LISHED THE LINK BETWEEN THE SEIZED MATERIAL AND THE CAPITATION FEES WHICH R ESULTED IN CREATION OF ANY UNACCOUNTED ASSETS IN THE FORM OF POSSESSION OF MON EY, BULLION, JEWELLERY OR OTHER ARTICLES OR ANY IMMOVABLE PROPERTIES IN TH E NAME OF THE TRUST OR THE TRUSTEES. 240. IN OUR OPINION, THE UNSUBSTANTIATED AND UNCOR ROBORATED SEIZED MATERIAL ALONE CANNOT BE CONSIDERED AS CONCLUSIVE E VIDENCE TO FRAME THESE ASSESSMENTS. THE WORDS MAY BE PRESUMED IN SECTIO N 132(4) OF THE ACT GIVEN AN OPTION TO THE AO CONCERNED TO PRESUME THES E THINGS, BUT IT IS REBUTTABLE AND IT DOES NOT GIVE A DEFINITE AUTHORIT Y AND CONCLUSIVE EVIDENCE. THE ASSESSEE IS HAVING EVERY RIGHT TO REBUT THE SAM E. THE ENTIRE CASE DEPENDS UPON THE RULE OF EVIDENCE. THERE IS NO CON CLUSIVE PRESUMPTION WITH REGARD TO UNSUBSTANTIATED SEIZED MATERIAL TO C OME TO THE CONCLUSION THAT THAT ASSESSEE HAS COLLECTED UNACCOUNTED CAPITA TION FEES. IN THE PRESENT CASE, THE ASSESSEE CATEGORICALLY DENIED COL LECTION OF CAPITATION FEES. IF IT WAS COLLECTED, IT WAS UNAUTHORIZED COL LECTION BY THE PERSON WHO IS LOOKING AFTER THE ADMISSION AND THAT IT IS WHY IT I S UNAUTHORIZED BY THE TRUST. FURTHER, THERE IS NO CONFIRMATION FROM THE STUDENTS WHO GET ADMITTED INTO VARIOUS COURSES AND EVEN THERE WAS STATEMENTS RECOR DED FROM TWO STUDENTS/PARENTS WHICH WERE NOT CONFRONTED TO THE A SSESSEE FOR CROSS- EXAMINATION. THE REVENUE AUTHORITIES CANNOT DRAW I NFERENCE ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. SUSPICION, HOWEVER STRONG, CANNOT TAKE PLACE THE MATERIAL IN PLACE OF EVIDENCE OF THE AO. THE AO SHOULD ACT IN A JUDICIAL MANNER, PROCEED IN A JUDICIAL SPIRIT AND COME TO THE JUDICIAL ITA NOS.500 TO 506/BANG/2020 PAGE 136 OF 183 CONCLUSIONS. THE AO IS REQUIRED TO ACT FAIRLY AS A REASONABLE PERSON, NOT ARBITRARILY AND CAPRICIOUSLY. THE ASSESSMENT U/S. 153A OF THE ACT SHOULD HAVE BEEN SUPPORTED BY ADEQUATE MATERIAL AND IT SHO ULD STAND ON ITS OWN LEG. THE AO WITHOUT EXAMINING THE STUDENTS / PAREN TS WHO HAVE PAID THE CAPITATION FEES CANNOT COME TO THE CONCLUSION THAT THE ASSESSEE HAS RECEIVED UNACCOUNTED CAPITATION FEES. THE BASIS F OR DONATION IS NOTEBOOK / LOOSE SHEET. THIS NOTEBOOK OR LOOSE SHEETS FOUND DURING THE COURSE OF SEARCH IS ONLY CIRCUMSTANTIAL EVIDENCE AND NOT FULL PROOF EVIDENCE TO SUSTAIN THE ADDITION. NO ADDITION CAN BE MADE IN THE ABSEN CE OF ANY CORROBORATIVE MATERIAL. IF IT IS CIRCUMSTANTIAL EVIDENCE IN THE FORM OF LOOSE SHEETS AND NOTEBOOK, IT IS NOT SUFFICIENT TO COME TO THE CONCL USION THAT THERE IS CONCLUSIVE EVIDENCE TO HOLD THAT ASSESSEE HAS COLLE CTED UNACCOUNTED CAPITATION FEES. THE NOTES IN THE DIARY/LOOSE SHEE TS ARE REQUIRED TO BE SUPPORTED BY CORROBORATIVE MATERIAL. SINCE THERE WAS NO EXAMINATION OR CROSS-EXAMINATION OF PERSONS CONCERNED, THE ENTIRE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF UNCORROBORATED WRITING S IN THE LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH CANNOT BE SUSTAIN ED. THE EVIDENCE ON RECORD IS NOT SUFFICIENT TO UPHOLD THE STAND OF REV ENUE THAT ASSESSEE IS COLLECTING HUGE UNACCOUNTED CAPITATION FEES IN THE GUISE OF CARRYING ON EDUCATIONAL ACTIVITIES. 241. THE CONTENTION OF THE LD. DR IS THAT CROSS-EXA MINATION OF PARTIES WHOSE STATEMENTS WERE RELIED ON BY THE AO TO FRAME THE ASSESSMENT NEED NOT BE GIVEN. ON THE OTHER HAND, IF IT IS REQUIRED TO BE GIVEN, THE ISSUE MAY BE REMITTED BACK TO THE AO TO GIVE SUCH OPPORTUNITY . FOR THIS PURPOSE, HE RELIED ON THE JUDGMENT OF THE HONBLE ALLAHABAD HIG H COURT IN THE CASE OF MOTI LAL PADAMPAT UDYOG LTD. V. CIT, 293 ITR 565 ( ALL) WHEREIN IT WAS HELD THAT : IT WAS NOT IN DISPUTE THAT THE ADVERSE MATERIAL WH ICH WAS FOUND BY THE INCOME-TAX AUTHORITIES DURING THE COURSE OF SEARCH IN THE BUSINESS ITA NOS.500 TO 506/BANG/2020 PAGE 137 OF 183 PREMISES OF V HAD BEEN CONFRONTED TO THE ASSESSEE WHO WAS HAVING REGULAR BUSINESS DEALING WITH THE SAID FIRM. SOME O F THE ENTRIES, RECORDED IN THE ROUGH CASH BOOK SEIZED DURING THE S EARCH OPERATION, TALLIED WITH THE ENTRIES RECORDED IN THE REGULAR BO OKS OF ACCOUNT OF THE ASSESSEE AS ALSO THAT OF V. THE ASSESSEE WAS ISSU ED THE COPY OF THE ROUGH CASH BOOK AS ALSO THE STATEMENTS OF PARTNERS OF V. IT HAD SUBMITTED ITS REPLY BY LETTERS. THE EXPLANATION FUR NISHED BY THE ASSESSEE HAD BEEN DISBELIEVED. IN ONE LETTER, THE O PPORTUNITY TO CROSS- EXAMINE THE PARTNERS AND THE EMPLOYEES OF V WAS SO UGHT FOR IN THE EVENT THEIR STATEMENTS HAD NOT ALREADY BEEN RECORDE D WITH A REQUEST THAT THEY MIGHT BE SUMMONED AND THEIR STATEMENTS ON OATH BE RECORDED IN THEIR PRESENCE. THE SAID REQUEST WAS MA DE IN THE EVENT THE STATEMENTS HAD NOT ALREADY BEEN RECORDED EARLIER. A S THE STATEMENTS HAD ALREADY BEEN RECORDED, THE OPPORTUNITY TO CROSS -EXAMINE THE SAID PERSONS DID NOT ARISE. THE ASSESSEE HAD AMPLE OPPOR TUNITY TO EXPLAIN THE THINGS. [PARA 12] IN THE INSTANT CASE, THE COPIES OF THE ROUGH CASH B OOKS AND THE STATEMENTS OF THE PARTNERS OF V WHICH WERE RECORD ED, HAD BEEN PROVIDED TO THE ASSESSEE AND, IN FACT, THE ASSESSEE HAD ALSO SUBMITTED ITS REPLY. IN THE LETTER AN OPPORTUNITY TO CROSS-EX AMINE WAS ASKED FOR ONLY IN CASE THE STATEMENTS HAD NOT BEEN RECORDED. AS, IN THE INSTANT CASE, THE ASSESSEE HAD PROPER OPPORTUNITY TO CONTRO VERT THE MATERIAL GATHERED BY THE ASSESSING AUTHORITY AND USED AGAINS T IT, THERE HAD BEEN COMPLIANCE OF THE PRINCIPLE OF NATURAL JUSTICE . [PARA 14] IN VIEW OF THE ABOVE, THE TRIBUNAL WAS FULLY JUSTIF IED IN THE VIEW IT HAD TAKEN. 242. IN OUR OPINION, THIS JUDGMENT OF THE ALLAHABAD HIGH COURT CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. IN THAT CASE, THE ASSESSEE ASKED FOR CROSS-EXAMINATION OF PERSONS WAS SOUGHT FOR IN THE EVENT THEIR STATEMENTS WERE NOT RECORDED, AS SUCH THE HONBLE H IGH COURT OBSERVED THAT CROSS-EXAMINATION OF THOSE PERSONS WERE NOT RE QUIRED AS THEIR STATEMENTS HAD ALREADY BEEN RECORDED DURING THE COU RSE OF SEARCH AND THE ASSESSEE HAD PROPER OPPORTUNITY TO CONTROVERT THE G ATHERED MATERIAL. 243. FURTHER LD. DR RELIED ON THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF ITO V. M. PIRAI CHOODI, 334 ITR 262 (SC) WHEREIN THE FACTS ARE THAT THE DEPARTMENT REFUSED TO ACCEPT THE INTEREST INCOME SHOWN ITA NOS.500 TO 506/BANG/2020 PAGE 138 OF 183 BY THE ASSESSEE PLACING RELIANCE ON A STATEMENT ALL EGED TO HAVE BEEN OBTAINED FROM THE VILLAGE ADMINISTRATIVE OFFICER BE HIND THE BACK OF THE PETITIONER, OVERLOOKING THE MATERIAL FURNISHED BY T HE ASSESSEE TO SUBSTANTIATE HIS AGRICULTURAL INCOME AND WITHOUT GI VING OPPORTUNITY TO CROSS- EXAMINE THE VILLAGE ADMINISTRATIVE OFFICER, VIOLATI NG THE PRINCIPLES OF NATURAL JUSTICE. THEREFORE, WRIT PETITION COULD NOT BE DIS MISSED ON ALTERNATIVE REMEDY AND ASSESSMENT ORDER COULD NOT BE QUASHED. ON FURTHER APPEAL BY THE DEPARTMENT, THE HONBLE SUPREME COURT HELD THAT THAT INSTEAD OF SETTING ASIDE THE ASSESSMENT ORDER, THE HIGH COURT SHOULD H AVE REMITTED THE MATTER TO THE ASSESSING OFFICER TO GRANT OPPORTUNIT Y OF CROSS-EXAMINATION OF THE CONCERNED WITNESSES. FURTHER THE ASSESSEE FAIL ED TO AVAIL OF THE STATUTORY REMEDY. THE ASSESSEE WAS GIVEN TO MOVE T HE CIT(APPEALS). 244. COMING TO THE RELIANCE PLACED BY THE LD. DR ON THE ORDER OF THE TRIBUNAL IN THE CASE OF CENTURION INVESTMENT & INTERNATIONAL TRADING CO. (P.) LTD. V. ITO, 126 ITD 356 (DEL) WHEREIN IT WAS HELD AS FOLLOWS:- IT WAS A MATTER OF RECORD THAT THE ASSESSEE HAD NO T BEEN ALLOWED THE CROSS-EXAMINATION OF THE PARTY WHOSE ST ATEMENT HAD BEEN USED AGAINST IT IN MAKING THE ASSESSMENT. THE ADDITION WAS, THUS, IN VIOLATION OF PRINCIPLES OF NATURAL JU STICE. NOT ALLOWING CROSS EXAMINATION IS A DEFECT WHICH IS PROCEDURAL I N NATURE. IT IS ONLY A PROCEDURAL REQUIREMENT TO BE COMPLIED WITH B EFORE MAKING THE ASSESSMENT UNDER THE ACT. NOT FOLLOWING THE PRO CEDURAL PROVISIONS LIKE ALLOWING CROSS EXAMINATION WILL NOT MAKE AN ASSESSMENT NULL AND VOID. AT MOST IT CAN BE AN IRRE GULARITY LIABLE TO BE CURED AND IN SUCH A CASE, THE ASSESSMENT CAN BE SET ASIDE TO BE REDONE. AN ADDITION MADE DOES NOT CEASE TO BE AN ADDITION MERELY BY REASON OF WANT OF CROSS-EXAMINATION. IT W ILL BE A PROCEEDING LIABLE TO BE CHALLENGED AND CORRECTED. [ PARA 13] THE ORDER OF THE ASSESSING OFFICER THOUGH WAS VITIA TED BY AN ILLEGALITY WHICH SUPERVENED, NOT AT THE INITIAL STA GE OF THE PROCEEDINGS BUT DURING THE COURSE OF IT AND, THEREF ORE, ASSESSMENT COULD NEITHER BE ANNULLED, NOR THE ADDIT ION COULD BE DELETED BECAUSE OF THAT ILLEGALITY OR IRREGULARITY. THE MATTER WAS ITA NOS.500 TO 506/BANG/2020 PAGE 139 OF 183 REQUIRED TO BE SET ASIDE TO BE REPROCESSED AND REST ART FROM THAT STAGE OF ILLEGALITY/IRREGULARITY. [PARA 14] THEREFORE, THE ORDER OF THE ASSESSING OFFICER ON TH IS ISSUE WAS TO BE SET ASIDE WITH A DIRECTION TO HIM THAT THE STATE MENT OF S SHOULD BE MADE AVAILABLE TO THE ASSESSEE. THE ASSES SEE MUST BE ALLOWED CROSS-EXAMINATION OF THE SAID PERSON AND THEREAFTER THE MATTER BE DECIDED AFRESH ON THE BASIS OF THE RE SULT OF THE CROSS-EXAMINATION. [PARA 22] FROM THE DISCUSSION ABOVE, IT WAS EVIDENT THAT MERE LY BY REASON OF WANT OF CROSS-EXAMINATION, THE ADDITION CANNOT B E DELETED. IT WILL BE AN ADDITION LIABLE TO BE CHALLENGED AND COR RECTED. AN OMISSION TO SERVE NOTICES OR ANY DEFECT IN THE SERV ICE OF NOTICES DOES NOT EFFACE OR ERASE THE LIABILITY TO PAY TAX W HERE SUCH LIABILITY IS CREATED BY DISTINCT SUBSTANTIVE PROVIS IONS (CHARGING SECTIONS). ANY SUCH OMISSION OR DEFECT MAY RENDER T HE ORDER MADE IRREGULAR DEPENDING UPON THE NATURE OF THE PRO VISIONS NOT COMPLIED WITH BUT CERTAINLY NOT VOID OR ILLEGAL. AT THE WORST, THEY ARE DEFECTIVE PROCEEDINGS OR IRREGULAR PROCEEDINGS LIABLE TO BE CURED. AN ADDITION MADE ON THE BASIS OF A STATEMENT NOT TESTED BY CROSS-EXAMINATION IS INVALID AND IT IS VITIATED, BUT THE INVALIDITY IS NOT, HOWEVER, OF SUCH A NATURE, WHICH GOES TO TH E ROOT OF THE PROCEEDINGS. IT CAN BE SET ASIDE FOR BEING RE-DONE DE NOVO. THE COMMISSIONER (APPEALS) SHOULD NOT HAVE UPHELD THE A DDITION ON THE BASIS OF SUCH A STATEMENT. [PARA 24] THE OMISSION TO ALLOW CROSS-EXAMINATION MERELY PREV ENTS THE ASSESSING OFFICER FROM MAKING AN ADDITION AND CAN B E CORRECTED BY ALLOWING THE CROSS-EXAMINATION AND THE ASSESSING OFFICER CAN BE DIRECTED TO PROCEED FURTHER TO EXAMINE THE MATTE R AFRESH ON THE BASIS OF CROSS-EXAMINED STATEMENT. THE POWER OF SETTING ASIDE THE ORDER OF ASSESSMENT, WHERE IT IS ILLEGAL, IS INHERENT IN ANY APPELLATE COURT. ITS ORDER WOULD BE PERFECTLY L EGAL ORDER IN DIRECTING THE ASSESSING OFFICER TO ISSUE NOTICE TO THE ASSESSEE BEFORE MAKING AN ASSESSMENT BECAUSE IT WAS NOT SATI SFIED REGARDING THE CORRECTNESS OF THE ASSESSEES RETURN. THE TRIBUNAL/ COMMISSIONER (APPEALS) HAS AMPLE JURISDICTION TO GI VE DIRECTIONS TO THE ASSESSING OFFICER TO COMPLY WITH THE REQUIRE MENTS OF LAW. IT HAS INHERENT POWER TO SET ASIDE ILLEGAL ORDER OF ASSESSMENT AND DIRECT THE ASSESSING OFFICER TO COMPLY WITH REQUIRE MENTS WHILE MAKING DE NOVO ASSESSMENT. [PARA 25] ITA NOS.500 TO 506/BANG/2020 PAGE 140 OF 183 245. IN OUR OPINION, THE FACTS OF THE PRESENT CASE BEFORE US ARE ENTIRELY DIFFERENT. IN THE PRESENT CASE, WE HAVE ALREADY HE LD THAT THERE ARE VARIOUS LOOSE SHEETS, SCRIBBLINGS, JOTTINGS AND EXCEL SHEET S TAKEN FROM THE COMPUTER HAVING NO SIGNATURE OR AUTHORIZATION FROM THE ASSESSEES SIDE. THESE ARE UNSUBSTANTIATED DOCUMENTS AND THERE IS NO THING TO SUGGEST ANY UNDISCLOSED ASSETS OF ASSESSEE FOUND DURING THE COU RSE OF SEARCH. MORE SO, IT DOES NOT SHOW ANY RECOVERY OF THE UNDISCLOSE D ASSETS IN THE FORM OF LANDED PROPERTY, BUILDING, INVESTMENTS, MONEY, BULL ION, JEWELLERY OR ANY KIND OF MOVABLE OR IMMOVABLE ASSETS. IN SUCH CIRCU MSTANCES, WE ARE OF THE OPINION THAT THE DECISIONS RELIED ON BY THE LD. DR CANNOT BE APPLIED TO THE FACTS OF THE ASSESSEES CASE. 246. FURTHER IT IS TO BE NOTED THAT WE HAVE ALREAD Y RELIED ON THE SUPREME COURT JUDGMENT IN ANDAMAN TIMBER INDUSTRIES V. COMM ISSIONER OF CENTRAL EXCISE, 281 CTR 241 (SC) WHEREIN IT WAS HELD THAT O PPORTUNITY OF CROSS- EXAMINATION NOT GIVEN LEADS TO NULLITY AND ASSESSME NT ORDER TO BE QUASHED. IT IS ALSO PERTINENT TO MENTION HEREIN THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN ACIT V. VIREET INVESTMENTS (P) LTD. 165 ITD 27 (DELHI TRIB.) (SB) WHEREIN IT WAS HELD THAT WHEN TWO REASONABLE C ONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WH ICH FAVOURS THE ASSESSEE MUST BE ADOPTED, WHICH IS IN LINE WITH THE SUPREME COURT JUDGMENT IN THE CASE OF CIT V. VEGETABLE PRODUCTS, 88 ITR 192 (SC). THIS IS A WELL- ACCEPTED CONSTRUCTION RECOGNIZED BY VARIOUS COURTS. ACCORDINGLY, WE ALSO REJECT THIS ARGUMENT OF THE LD. DR. 247. BEING SO, IN OUR OPINION THE SEIZED MATERIAL R ELIED BY THE ASSESSING OFFICER FOR SUSTAINING ADDITION IS NOT SPEAKING ONE IN ITSELF AND ALSO NOT SPEAKING IN CONJUNCTION WITH SOME OTHER EVIDENCE WI TH AUTHORITIES FOUND DURING THE COURSE OF SEARCH OR POST SEARCH INVESTIG ATION. THUS, THE WELL SETTLED LEGAL POSITION IS THAT A NON-SPEAKING DOCUM ENT WITHOUT ANY CORROBORATIVE MATERIAL, EVIDENCE ON RECORD AND FIND ING THAT SUCH DOCUMENT ITA NOS.500 TO 506/BANG/2020 PAGE 141 OF 183 HAS NOT MATERIALISED INTO TRANSACTIONS GIVING RISE TO INCOME OF THE ASSESSEE WHICH HAD NOT BEEN DISCLOSED IN THE REGULAR BOOKS O F ACCOUNTS OF THE ASSESSEE HAS TO BE DISREGARDED FOR THE PURPOSE OF A SSESSMENT TO BE FRAMED PURSUANT TO SEARCH AND SEIZURE ACTION. IN TH ESE CASES, MOREOVER THESE DOCUMENTS ARE RELIED UPON BY THE AO WITHOUT C ONFRONTING THEM FOR CROSS EXAMINATION. IN OUR OPINION, THESE DOCUMENTS CANNOT BRING ASSESSEE INTO TAX NET BY MERELY PRESSING TO SERVICE THE PROV ISION OF SEC 132(4A) R.W.S SEC 292C OF THE IT ACT, WHICH CREATES DEEMING FICTI ON ON THE ASSESSEE SUBJECT TO SEARCH WHEREIN IT MAY BE PRESUMED THAT A NY SUCH DOCUMENT FOUND DURING THE COURSE OF SEARCH FROM THE POSSESSI ON AND CONTROL OF SUCH DOCUMENT ARE TRUE. WHAT HAS TO BE NOTED HERE IS THA T DEEMED PRESUMPTION CANNOT BRING SUCH A DOCUMENT IN THE TAX NET AND THE PRESUMPTION IS REBUTTABLE ONE AND THE DEEMED PROVISIONS HAVE NO HE LP TO THE DEPARTMENT. IN OUR OPINION, IN THESE CASES ADDITION IS MADE BY AO ON ARBITRARY BASIS RELYING ON THE LOOSE PAPERS, CONTAINING SCRIBBLING, ROUGH AND VAGUE NOTINGS IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL AND TH ESE MATERIAL CANNOT BE CONSIDERED AS TRANSACTED INTO COLLECTION OF CAPITAT ION FEES BY ASSESSEE GIVING RISE TO INCOME WHICH ARE NOT DISCLOSED IN TH E REGULAR BOOKS OF ACCOUNTS BY ASSESSEE. WE PLACE RELIANCE ON THE FOLL OWING JUDGEMENTS IN SUPPORT OF OUR ABOVE FINDINGS: (I) CIT VS D.K.GUPTA 174 TAXMAN 476 (DELHI) (II) ASHWINI KUMAR VS ITO 39 ITD 183 (DELHI) (III) S.P.GOYAL VS DCIT (MUM) (TM) 82 ITD 85 (MUM ) (IV) D.A.PATEL VS DCIT 72 ITD 340 (MUM) (V) AMARJEET SINGH BAKSHI (HUF) VS ACIT 86 ITD 13 (DELHI) (TM) (VI) NAGARJUNA CONSTRUCTION CO LTD VS DCIT 23 TAX MAN.COM 239 (VII) CIT VS C.L.KHATRI 174 TAXMAN 652 (VIII) T.S.VENKATESAN VS ACIT 74 ITD 298 (IX) CIT VS ATAM VALVES PVT LTD 184 TAXMAN 6 (P&H ) 248. THUS, WE ARE AGREEING WITH THE CONTENTION OF L D. AR THAT PLACING RELIANCE ON THE SEIZED MATERIAL IS NOT PROPER AND A LL THE ADDITIONS ON THE BASIS OF THE ABOVE ARE DELETED IN ALL THE ASSESSMEN T YEARS SINCE,: ITA NOS.500 TO 506/BANG/2020 PAGE 142 OF 183 I) NO OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE S TATEMENTS HAVE BEEN RELIED UPON IS AFFORDED; II) SOME OF THE STATEMENTS HAVE BEEN RECORDED UND ER SECTION 131 BY THE AUTHORIZED OFFICER SUBSEQUENT TO COMPLETION OF SEAR CH; III) THERE IS NO DOCUMENTARY EVIDENCE EITHER TO SU PPORT THE STATEMENTS OF SRI. GOLI V. SRINIVAS OR OF THE PARENTS OF THE STUD ENTS; AND IV) THE SEIZED MATERIAL ARE IN THE FORM OF VARIOUS LOOSE SHEETS, SCRIBBLINGS, JOTTINGS AND EXCEL SHEETS TAKEN FROM THE COMPUTER H AVING NO SIGNATURE OR AUTHORIZATION FROM THE ASSESSEES SIDE. THESE A RE UNSUBSTANTIATED DOCUMENTS AND THERE IS NOTHING TO SUGGEST ANY UNDIS CLOSED ASSETS OF ASSESSEE FOUND DURING THE COURSE OF SEARCH. MORE SO, SEARCH ACTION NOT RESULTED IN RECOVERY OF ANY UNDISCLOSED ASSETS IN THE FORM OF LANDED PROPERTY, BUILDING, INVESTMENTS, MONEY, BULL ION, JEWELLERY OR ANY KIND OF MOVABLE OR IMMOVABLE ASSETS. 249. HOWEVER, ON THE DATE OF SEARCH ACTION ON 6.8.2 015, THE SEARCH PARTY FOUND PHYSICAL CASH OF RS.2,67,28,900. THIS SHOULD BE COMPARED WITH THE BOOKS OF ACCOUNT ON THE DAY AND THE BALANCE OVER AN D ABOVE THE BOOK BALANCE SHOULD BE BROUGHT TO TAX IN THE ASSESSMENT YEAR RELEVANT TO THE FINANCIAL YEAR IN WHICH THE SEARCH TOOK PLACE I.E., AY 2016-17. THIS GROUND OF APPEAL IS ALLOWED IN AYS 2010-11 TO 2015-16 AND PARTLY ALLOWED IN AY 2016-17. 250. GROUND NO.8 IS REGARDING DENIAL OF EXEMPTION U/S. 11 OF THE AC T IN ALL THE YEARS. THE AO DENIED THE EXEMPTION UNDER SEC 11 OF THE AC T FOR THE MAJOR REASON THAT THE TRUST HAS RECEIVED CAPITATION FEE IN CASH AND HAS BEEN CARRYING ON THE ACTIVITIES WHICH ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 251. THE APPELLANT IS A TRUST REGISTERED UNDER SEC 12A OF THE ACT W.E.F. 14.11.1984. THE MAIN OBJECT OF THE TRUST IS TO EST ABLISH EDUCATIONAL INSTITUTIONS IN ALL FACULTIES INCLUDING MEDICAL, DE NTAL, PHARMACY, ENGINEERING AND ELECTRONICS AND OTHER HIGHER TECHNICAL INSTITUT IONS IN ALL PARTS OF KARNATAKA PARTICULARLY IN BACKWARD AREAS LIKE KOLAR . FOR THIS PURPOSE THE TRUST HAS ESTABLISHED EDUCATIONAL INSTITUTIONS. 252. IT IS SUBMITTED THAT EXEMPTION UNDER SEC 11 CA N BE DENIED ONLY UNDER CERTAIN SPECIFIC CIRCUMSTANCES. SECTION 11(1 ) READS AS UNDER:- ITA NOS.500 TO 506/BANG/2020 PAGE 143 OF 183 11. (1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 T O 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOM E (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, W HERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEE N PER CENT OF THE INCOME FROM SUCH PROPERTY; (B) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IN PART ONLY FOR SUCH PURPOSES, THE TRUST HAVING BEEN CREATED BE FORE THE COMMENCEMENT OF THIS ACT, TO THE EXTENT TO WHICH SU CH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY S UCH INCOME IS FINALLY SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO SET APART IS NOT IN E XCESS OF FIFTEEN PER CENT OF THE INCOME FROM SUCH PROPERTY; (C) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST (I) CREATED ON OR AFTER THE 1ST DAY OF APRIL, 195 2, FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATI ONAL WELFARE IN WHICH INDIA IS INTERESTED, TO THE EXTENT TO WHIC H SUCH INCOME IS APPLIED TO SUCH PURPOSES OUTSIDE INDIA, AND (II) FOR CHARITABLE OR RELIGIOUS PURPOSES, CREATE D BEFORE THE 1ST DAY OF APRIL, 1952, TO THE EXTENT TO WHICH SUCH INC OME IS APPLIED TO SUCH PURPOSES OUTSIDE INDIA: PROVIDED THAT THE BOARD, BY GENERAL OR SPECIAL ORDE R, HAS DIRECTED IN EITHER CASE THAT IT SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSON IN RECEIPT OF SUCH INCOME; (D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION. 253. AS LONG AS THE INCOME DERIVED FROM THE PROPERT Y HELD FOR CHARITABLE PURPOSES HAS BEEN SPENT FOR THE OBJECTS OF THE TRUS T, EXEMPTION UNDER SECTION 11 CANNOT BE DENIED. THERE IS NO ALLEGATIO N EITHER IN THE SHOW ITA NOS.500 TO 506/BANG/2020 PAGE 144 OF 183 CAUSE NOTICE OR IN THE ASSESSMENT ORDER THAT ANY OF THE TRANSACTIONS ACCOUNTED IN THE BOOKS OF ACCOUNT SHOW THAT THEY AR E NOT FOR THE OBJECTS OF THE TRUST. THE ENTIRE EXPENDITURE I.E., BOTH REVEN UE OR CAPITAL ARE INCURRED ONLY FOR THE PURPOSE OF OBJECTS OF THE TRUST. THIS IS NOT DISPUTED BY THE AO . IT IS SUBMITTED THAT THE ACCOUNTS OF THE APPELLANT HAVE BEEN AUDITED REGULARLY AND THERE HAS BEEN NOT EVEN A SINGLE INST ANCE OF VIOLATION REPORTED. 254. THE AO HAS ALLEGED THAT THE APPELLANT HAS RECE IVED CAPITATION FEE IN CASH AND SAME HAS NOT BEEN ACCOUNTED IN THE BOOKS A ND THAT THE CAPITATION FEE SO RECEIVED HAS BEEN DIVERTED FOR TH E BENEFIT OF TRUSTEES AS WELL AS EXPENDED ON ILLEGAL ACTIVITIES. THE AO HAS RELIED UPON THE FOLLOWING MATERIAL:- SEIZED MATERIAL MARKED AS A/DUU/01 WHICH CONTAINS L OOSE SHEETS SERIALLY NUMBERED FROM 1 TO 91 SEIZED MATERIAL MARKED AS A/DUU/13 BEING FOLDER CONTAINING LOOSE SHEETS SERIALLY NUMBERED FROM 1 TO 102 SEIZED MATERIAL MARKED AS A/DUU/14 BEING DIGITAL DA TA RETRIEVED FROM THE SYSTEM SEIZED MATERIAL MARKED AS A/DUU/04 BEING NOTE BOOK CONTAINING CERTAIN RECEIPTS AND PAYMENTS SERIALLY N UMBERED FROM 1 TO 85 SEIZED MATERIAL MARKED AS A/DUU/16 BEING SCANNED CO PY OF UNREALIZED CHEQUES SERIALLY NUMBERED FROM 1 TO 54 255. APART FROM THE ABOVE SEIZED MATERIAL, THE AO H AS RELIED UPON THE STATEMENT UNDER SECTION 132(4) OF SRI. GOLI V. SRIN IVAS RECORDED ON 06.08.2015. 256. IN THE SUBMISSIONS MADE IN RESPECT OF GROUND N UMBER 7. THE APPELLANT HAS ESTABLISHED THAT THE SEIZED MATERIAL IS NOT INCRIMINATING IN NATURE. THEREFORE, IT IS NOT CONCLUSIVE PROOF FOR RECEIPT OF CAPITATION FEE. THE APPELLANT REITERATES THOSE SUBMISSIONS. UNDER SUCH CIRCUMSTANCES, THE AO ERRED IN RELYING ON SUCH MATERIAL TO DENY EX EMPTION UNDER SECTION ITA NOS.500 TO 506/BANG/2020 PAGE 145 OF 183 11. THE AO HAS CONCLUDED THAT THE APPELLANT HAS RE CEIVED CAPITATION FEE MERELY ON THE BASIS OF STATEMENTS AND UNSIGNED DOCU MENTS WHICH CANNOT BE RELIED ON AS EVIDENCE. AS FAR AS THE STATEMENTS OF MR. SRINIVAS AND MR. NAGARAJ ARE CONCERNED, THE APPELLANT REITERATES THA T THEY HAVE NOT ACTED AT THE BEHEST OF THE TRUST. 257. THE APPELLANT HAS STATED CATEGORICALLY THAT TH E SAID LOOSE SHEETS / NOTE BOOKS REFERRED TO ABOVE HAVE NOT BEEN MAINTAIN ED BY IT. THE MANDATE UNDER SECTION 11(1)(A) IS THAT INCOME DERIVED FROM PROPERTY HELD UNDER TRUST SHOULD BE APPLIED FOR CHARITABLE PURPOSES. PARA 9 OF THE TRUST DEED STATES THAT THE PROPERTY OF THE TRUST SHALL BE THE INITIAL CONTRIBUTIONS AND SUCH OTHER PROPERTIES AS MAY BE DONATED OR OTHERWIS E ACQUIRED BY THE TRUST. THEREFORE, INCOME FROM SUCH PROPERTY SHOULD BE APPLIED FOR CHARITABLE PURPOSES IN ORDER TO CLAIM BENEFIT OF SE CTION 11(1)(A). PARA 5 OF THE TRUST DEED STATES THAT THE PROPERTIES, THE ASSETS, EFFECTS, FUNDS AND THE LIKE OF THE TRUST SHALL VEST UPON THE TRUST, THE TR USTEES PERPETUALLY AND IRREVOCABLY FOR THE DUE FULFILMENT AND EFFECTUATION OF THE OBJECT, AND THE PURPOSE OF THE SRI DEVARAJ URS EDUCATIONAL TRUST FO R BACKWARD CLASSES / CASTES. ALL THE DONATIONS, GIF TS, ETC, SHALL BE TAKEN OVER POSSESSION ONLY IN THE NAME OF THE TRUST AND THE CHAIRMAN OR THE SECRETARY IN HIS OFFICIAL CAPACITY AS A TRUE RE PRESENTATIONS OF THE TRUST AND CAN NEVER BE IN HIS PERSONAL CAPACITY. 258. TRUST HAS RESPONSIBILITY ONLY VIS--VIS WHAT I S RECEIVED IN ITS NAME BY THE CHAIRMAN OR SECRETARY IN THEIR OFFICIAL CAPACIT Y. THE TRUST CANNOT BE MADE ACCOUNTABLE FOR WHAT THE TRUST PERSONNEL HAVE RECEIVED IN THEIR PERSONAL CAPACITY BY ABUSING THEIR POSITION. THE T RUST CANNOT BE MADE RESPONSIBLE FOR SUCH RECEIPTS. ALL CONSEQUENCES ON ACCOUNT OF SUCH RECEIPTS CANNOT AFFECT THE CHARITABLE NATURE OF THE TRUST. THE VIOLATION ON THE PART OF THE PERSONNEL OF THE TRUST WHO HAVE ABU SED THEIR POSITION WOULD ITA NOS.500 TO 506/BANG/2020 PAGE 146 OF 183 BE BREACH OF TRUST. THIS BREACH OF TRUST IS CONCER NED WITH INTERNAL MANAGEMENT OF THE TRUST AND CANNOT BE MADE THE BASI S FOR HOLDING THAT THE TRUST IS NOT CHARITABLE IN NATURE. IT IS RELEVANT TO NOTE THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF K.T. DOCTOR V. COMMISSIONER OF INCOME-TAX [1980] 4 TAXMAN 208 (GUJ.) / [1980] 124 ITR 501 (GUJ.) WHEREIN IT WAS HELD AS UNDER: AS REGARDS THE ALTERNATIVE ARGUMENT REGARDING LIFT ING OF THE VEIL, WE ARE AFRAID, NO SUCH EXERCISE IS PERMISSIBLE IN L AW SO FAR AS TRUSTEES ARE CONCERNED. THE CONCEPT OF LIFTING THE VEIL IS PERMISSIBLE ONLY IN THE CASE OF A COMPANY WITH A VI EW TO FIND OUT THE REAL PERSONS BEHIND THE CORPORATE BODY, NAMELY, THE COMPANY, BUT IN THE CASE OF TRUSTEES, THEY ARE UNDER LEGAL O BLIGATION TO CARRY OUT THE OBJECTS OF THE TRUST AND TO ACT IN ACCORDAN CE WITH THE DEED OF TRUST SUBJECT TO THE OVERALL PROVISIONS OF THE I NDIAN TRUSTS ACT, AND IF THEY FAIL IN THEIR DUTY OR IF THEY DO CARRY ON CERTAIN ACTIVITY AS TRUSTEES, THEY ARE ACCOUNTABLE IN THEIR CAPACITY AS TRUSTEES. THUS, LIFTING OF VEIL OR PIERCING OF THE VEIL IS AN EXERCISE WHICH IS NOT PERMISSIBLE IN THE FIELD OF THE LAW OF TRUSTS. THE ONLY CONCLUSION WAS THAT THERE WAS NO TRUST OF THE BUSIN ESS BECAUSE THERE WAS NO OBLIGATION TO CARRY ON THE BUSINESS. T HAT WAS THE ONLY CONCLUSION WHICH THE TRIBUNAL ARRIVED AT AND W HEN ONE ANALYSES THE ORDER OF THE TRIBUNAL AND FINDS THAT I TS APPROACH IS WRONG, THE CONCLUSION IS OF NO CONSEQUENCE. 259. THE ABOVE DECISION HAS BEEN AFFIRMED BY THE HO NBLE SUPREME COURT IN CIT V. K T DOCTOR [1998] 230 ITR 744 (SC) . 260. ONE NEEDS TO PUT A DIVIDING LINE BETWEEN WHAT IS DONE BY THE PERSONNEL OF THE TRUST IN THEIR OFFICIAL CAPACITY A ND THEIR PERSONAL CAPACITY. THE TRUST CANNOT BE HELD RESPONSIBLE FOR THE ACTS O F THE PERSONNEL OF THE TRUST IN THEIR PERSONAL CAPACITY. THEREFORE, THE C ONSEQUENCES OF SUCH ACTS CANNOT AFFECT THE TRUST IN ANY MANNER INCLUDING ITS ELIGIBILITY TO CLAIM EXEMPTION U/S. 11. WHEN THE TRUST HAS NEITHER RECE IVED THE ALLEGED CAPITATION FEE NOR HAS CONTROL ON SUCH ALLEGED CAPI TATION FEE WHERE IS THE QUESTION OF IT BEING RESPONSIBLE FOR THE RECEIPT AN D UTILIZATION OF THE SAME. ITA NOS.500 TO 506/BANG/2020 PAGE 147 OF 183 261. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS SUBMIT TED THAT THE APPELLANT HAS NOT DIVERTED ANY FUNDS FOR THE BENEFIT OF TRUST EES AND THERE IS NO VIOLATION OF SECTION 13(1)(C)(II). 262. THE AO RELIED UPON THE DECISION OF THE HONBL E DELHI HIGH COURT IN MOOL CHAND KHAIRATI RAM TRUST V. DIT (EXEMPTION) [2 015] 377 ITR 650 (DEL) AND HELD AT PARA 8.2, PAGE 104 OF THE ASSESSMENT O RDER HOLDING THAT IN THE INSTANT CASE ALSO THE ASSESSEE HAS GROSSLY V IOLATED THE PROVISIONS BY NOT APPLYING THE RECEIPTS EARNED THROUGH CAPITATION FEE COLLECTION, AND RATHER BY THE TRUSTEES APPROPRIATING THE SAME. 263. IT IS SUBMITTED THAT THE DECISION RELIED UPON BY THE AO DOES NOT SUPPORT THE CONCLUSION DRAWN BY HIM. WITHOUT PREJU DICE TO THE MAIN CONTENTION THAT THE APPELLANT HAS NEITHER RECEIVED ANY CAPITATION FEE NOR DIVERTED ANY OF ITS FUNDS FOR THE BENEFIT OF THE TR USTEES, IT IS SUBMITTED THAT THE ABOVE DECISION IS NOT APPLICABLE TO THE FACTS O F THE PRESENT CASE. THE ISSUE IN THE ABOVE CASE WAS WHETHER INCOME FROM PRO PERTY HELD UNDER TRUST CAN BE APPLIED FOR A PURPOSE EVEN THOUGH CHARITABLE , IF SUCH PURPOSE IS NOT THE OBJECT OF THE TRUST. THIS IS NOT AT ALL THE IS SUE IN THE PRESENT CASE. THE RATIO OF THE SAID DECISION DOES NOT SUPPORT THE ALL EGATIONS MADE BY THE AO . 264. WITHOUT PREJUDICE TO THE CONTENTION THAT FUNDS HAVE NOT BEEN DIVERTED FOR THE BENEFIT OF TRUSTEES, THE AO HAS T ABULATED THE PAYMENTS MADE TO TRUSTEES BASED ON HIS ANALYSIS OF THE SEIZE D MATERIAL (SUPRA). A PERUSAL OF THE SAID TABLE WOULD SHOW THAT THERE ARE NO SUCH PAYMENTS PERTAINING TO AY 2010-11 AND 2011-12 AS PER THE ANA LYSIS OF THE AO HIMSELF. IT IS PERTINENT TO NOTE THAT THE ASSESSME NTS FOR AY 2010-11 AND 2011-12 HAVE BEEN COMPLETED UNDER SECTION 143(3) PR IOR TO DATE OF SEARCH. THE ASSESSMENTS FOR THESE YEARS WOULD NOT ABATE. N O ADDITION OR ALLEGATION CAN BE MADE WITHOUT INCRIMINATING MATERI AL FOUND AND SEIZED DURING THE COURSE OF SEARCH. THEREFORE, IN THE ABS ENCE OF INCRIMINATING ITA NOS.500 TO 506/BANG/2020 PAGE 148 OF 183 MATERIAL, DIVERSION OF FUNDS FOR THE BENEFIT OF TRU STEES CANNOT BE GROUND FOR THESE TWO YEARS FOR DENYING EXEMPTION U/S. 11. 265. NOW, TO REBUT THE ALLEGATIONS MADE BY THE AO THAT THE APPELLANT HAS MADE PAYMENTS FOR ILLEGAL ACTIVITIES AND HENCE, HAS VIOLATED THE OBJECTS OF THE TRUST AND ALSO ALLEGATION THAT THE APPELLANT HA S BEEN A CONDUIT FOR TAX EVASION. IT IS SUBMITTED THAT THE THEORY ADVANCED BY THE AO IS THAT THE APPELLANT HAS COLLECTED CAPITATION FEE IN CASH AND USED SUCH FUNDS TO MAKE PAYMENTS TOWARDS ILLEGAL ACTIVITY. IN PARAGRAPHS 8 .1 TO 8.39, SUPRA, IT HAS BEEN DEMONSTRATED THAT THE ALLEGATION OF AO THAT A PPELLANT HAS RECEIVED CAPITATION FEE IS PERVERSE AS IT IS NOT SUPPORTED B Y ANY EVIDENCE. THEREFORE, THIS BY ITSELF WOULD ALSO DESTROY THE AL LEGATION THAT THE FUNDS ARE UTILIZED FOR ILLEGAL ACTIVITIES BECAUSE WHEN THE VE RY EXISTENCE OF SOURCE FROM WHICH FUNDS ARE SAID TO HAVE BEEN DIVERTED HAS NOT BEEN PROVED, THE ALLEGATION OF DIVERSION SHOULD FAIL. 266. WITHOUT PREJUDICE TO THE ABOVE, REGARDING THE ALLEGATIONS REGARDING EXPENDITURE ON ILLEGAL ACTIVITIES, THE AO HAS ALLE GED THAT THE ACTIVITIES OF THE APPELLANT ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND IT HAS BEEN USED AS A CONDUIT FOR TAX EVASION, IT WAS SUBMITTED THAT THE ALLEGATION OF DEVIATIONS FROM THE OBJECTS OF THE TRUST IS BASED O N THE SEIZED DOCUMENTS. THE APPELLANT HAS ALREADY ESTABLISHED THAT THESE DO CUMENTS HAVE NO CONNECTION WHATSOEVER WITH THE TRUST. THESE ARE PR IVATELY MAINTAINED BY SOME OTHER PERSON. AND IF THEY HAVE SPENT SOME MON EY OUT OF SUCH COLLECTION, IT CANNOT BE SAID THAT TRUST HAS CARRIE D ON ITS ACTIVITIES IN VIOLATION OF ITS OBJECTS. THEREFORE, THE EXEMPTION U/S 11 CA NNOT BE DENIED ON THIS GROUND. 267. THE VARIOUS ALLEGATIONS OF THE AO REGARDING P AYMENT FOR ILLEGAL ACTIVITIES AND BEING A CONDUIT FOR TAX EVASION CAN BE CATEGORIZED AS UNDER: (I) PAYMENT TO POLITICAL PARTIES FOR FUNDING ELECTION S ITA NOS.500 TO 506/BANG/2020 PAGE 149 OF 183 (II) PAYMENT TO AGENTS FOR PROCURING CANDIDATES (III) PAYMENT OF KICKBACKS AND PROMOTION OF CORRUPTION (IV) PAYMENTS FOR ROUTING MONEY INTO BOOKS AND AIDING TA X EVASION THROUGH RECEIPT OF BOGUS DONATIONS (V) AIDING TAX EVASION BY MAKING ADDITIONAL PAYMENTS OF SALARY IN CASH TO STAFF 268. THE ABOVEMENTIONED ALLEGATIONS ARE COUNTERED B ELOW. COUNTER TO THE ALLEGATION: PAYMENT TO POLITICAL PAR TIES 269. THE AO HAS TABULATED HIS ANALYSIS OF SEIZED M ATERIAL NO. A/DUU/13 WITH RESPECT TO ALLEGED PAYMENT MADE FOR ELECTIONS. THE RELEVANT ENTRY NO. 85 OF SEIZED MATERIAL NO. A/DUU/13 WAS CONFRONTED T O SRI. GOLI V. SRINIVAS AND SRI. G H NAGARAJ. THE RELEVANT PORTION OF THE STATEMENTS IS EXTRACTED IN THE EARLIER SUBMISSIONS. BASED ON THE ABOVE MATERI AL, THE AO OBSERVED AS UNDER:- PARA VIDE SL. NO. 5.2.3.1H DEALS WITH THE PAYMENT OF RS. 300 LACS MADE TO POLITICAL PARTIES. WHEN PG. 85 OF THE SEIZED MATERIALS A/DUU/13 WAS SHOWN AND GVS AND SRI G H NAGARAJ WAS CONFRONTED THEY HAVE STATED THAT THIS A MOUNT WAS PAID TO VARIOUS POLITICAL PARTIES AND CANDIDATE S CONTESTING ELECTION. AN EXTRACT OF THEIR REPLY HAS BEEN ANNEXED IN PARA 5.2.3.1H. HOWEVER, THEY HAVE NOT G IVEN FURTHER DETAILS OF AS TO WHOM SUCH PAYMENTS WERE MA DE TO. IT IS PERTINENT AT THIS JUNCTURE TO NOTE THAT THE C HAIRMAN OF THE TRUST IS POLITICIAN. SUCH PAYMENTS MADE TO POL ITICAL PARTIES HAVE TWO VIOLATIONS, ONE BEING THAT THEY VI OLATE THE OBJECTIVE OF THE TRUST BY SPENDING INCOME FROM PROP ERTY OF TRUST TO THE PURPOSES OTHER THAN CHARITABLE PURPOSE AND SECOND BEING THE FACT THAT THEY DIRECTLY OR INDIREC TLY AID BENEFIT ONE OF THE TRUSTEES. [PARA 5.2.3.3.4, PAGE 70] THE TRUST FUNDS HAVE BEEN MISUTILIZED BY DIVERTING THEM FOR THE FUNDING ELECTIONS FOR CANDIDATES OF VARIOUS POL ITICAL PARTIES AS SEEN FROM MULTIPLE ENTRIES IN SEIZED MAT ERIAL ITA NOS.500 TO 506/BANG/2020 PAGE 150 OF 183 ANNEXURES A/DUU/02 TO A/DUU/04 WHICH WAS CONFRONTED TO THE SECRETARY ALSO DURING THE RECORDING OF HIS S TATEMENT. [SERIAL NO. 3, PARA 7.1, PAGE 100] DIVERSION OF TRUST FUNDS FOR POLITICAL PURPOSES AS CAN BE SEEN FROM THE SEIZED MATERIAL (AS DISCUSS ED IN EARLIER SECTIONS OF THIS ORDER), AT LEAST RS. 3,00, 00,000 HAVE BEEN PAID BY THE TRUST FROM THE CAPITATION FEE FUND S FOR FUNDING PARTIES IN ELECTIONS, IN STARK VIOLATION OF OBJECTS OF THE TRUST AND IN VIOLATION OF LAWS GOVERNING ELECTI ONS IN INDIA. [PARA 7.10, PAGE 103] 270. THE LEARNED AR SUBMITTED THAT THE AO RELYING U PON A STRAY ENTRY AT PAGE 85 OF THE SEIZED MATERIAL MARKED AS A/DUU/13 A ND THE STATEMENT OF SRI. GOLI V. SRINIVAS AND SRI. G H NAGARAJ HAS GENE RALIZED THAT THE APPELLANT HAS DIVERTED FUNDS FOR FUNDING ELECTIONS FOR CANDIDATES OF VARIOUS POLITICAL PARTIES. THE REPLIES GIVEN BY SRI. GOLI V. SRINIVAS AND SRI. G H NAGARAJ DOES NOT DIVULGE THE DETAILS OF POLITICAL P ARTIES TO WHOM SUCH PAYMENTS HAVE BEEN MADE. THE AO ALSO HAS NOT BRO UGHT ON RECORD AS TO WHETHER ANY ELECTIONS DID TAKE PLACE DURING THE REL EVANT PERIOD WHEN THE ALLEGED PAYMENTS WERE MADE. JUST BECAUSE THE CHAIR MAN IS A POLITICIAN, IT DOES NOT MEAN THAT PAYMENTS ARE MADE TO POLITICAL P ARTIES. IT IS SUBMITTED THAT THE ALLEGATIONS OF THE AO ARE INCORRECT. THE RE IS NOTHING EITHER IN THE SAID PAGE 85 OF THE SEIZED MATERIAL OR THE STATEMEN T OF SRI. GOLI V. SRINIVAS AND SRI. G H NAGARAJ TO HOLD THAT THE APPELLANT HAS DIVERTED THE FUNDS OF THE TRUST FOR FUNDING ELECTIONS. THE APPELLANT HAS NOT AUTHORIZED SUCH PAYMENTS. THE ENTRY HAS BEEN MADE BY MR. SRINIVAS AT THE BEHEST OF SRI G H NAGARAJ IN HIS PERSONAL CAPACITY AND NOT UPON AUT HORIZATION BY THE TRUST. THERE IS NO ALLEGATION THAT THE RELEVANT PAYMENT HA S BEEN MADE OUT OF THE FUNDS OF THE TRUST WHICH ARE DULY ACCOUNTED. THE V ERY FACT THAT THE PAYMENT HAS BEEN MADE OUT OF THE FUNDS NOT CONNECTED TO THE TRUST, WOULD SHOW THAT THE PAYMENT HAS BEEN MADE WITHOUT THE AUTHORITY OF TRUST. THE ENTRY AT PAGE 85 OF THE SEIZED MATERIAL AND THE STATEMENT OF SRI. GOLI V. SRINIVAS / ITA NOS.500 TO 506/BANG/2020 PAGE 151 OF 183 SRI. G H NAGARAJ IS NOT SUPPORTED BY ANY CORROBORAT IVE EVIDENCE. THE AO HAS STATED THAT THE PAYMENTS MADE TO POLITICAL PARTIES HAVE TWO VIOLATI ONS, ONE BEING THAT THEY VIOLATE THE OBJECTIVE OF THE TR UST BY SPENDING INCOME FROM PROPERTY OF TRUST TO THE PURPOSES OTHER THAN C HARITABLE PURPOSE AND SECOND BEING THE FACT THAT THEY DIRECTLY OR INDIREC TLY AID BENEFIT ONE OF THE TRUSTEES . IT IS SUBMITTED THAT THESE FINDINGS ARE CONTRARY TO HIS OWN FINDING THAT THE PAYMENTS HAVE BEEN MADE OUT OF ALLEGED CAP ITATION FEE. IT HAS BEEN ESTABLISHED BY THE APPELLANT THAT THE CAPITATI ON FEE HAS BEEN NEITHER RECEIVED BY THE TRUST NOR DOES IT FORM PART OF THE FUNDS OF THE TRUST. SUCH BEING THE CASE, THE QUESTION OF DIVERTING FUNDS OF THE TRUST FOR THE PURPOSE OF BENEFIT OF TRUSTEES DOES NOT ARISE. 271. WITHOUT PREJUDICE TO THE ABOVE, THE AO HAS ST ATED THAT THERE ARE MULTIPLE ENTRIES IN SEIZED MATERIAL MARKED AS A/DUU /02 TO A/DUU/04 WHICH WOULD SHOW THAT THE TRUST FUNDS HAVE BEEN DIVERTED FOR FUNDING ELECTIONS. IT IS SUBMITTED THAT THE AO CANNOT GENERALIZE A STRA Y ENTRY NOTED AND CONFRONTED TO SRI. GOLI V. SRINIVAS / SRI. G H NAGA RAJ TO HOLD THAT THERE ARE MULTIPLE SUCH CASES. THE AO HAS NOT DRAWN ATTENT ION TO NOT EVEN ONE SUCH ENTRY IN SEIZED MATERIALS MARKED AS A/DUU/02 T O A/DUU/04. THE AO IS NOT PERMITTED TO EXTRAPOLATE THE SAME TO OTHER Y EARS IN THE ABSENCE OF ANY MATERIAL. AS STATED EARLIER, THE ENTRY IN PAGE 85 OF THE SEIZED MATERIAL MARKED A/DUU/13 AND THE STATEMENT OF SRI. GOLI V. S RINIVAS / SRI. G H NAGARAJ ARE NOT SUPPORTED BY CORROBORATIVE EVIDENCE . THE AO OUGHT TO APPRECIATE THE FACT THAT ELECTIONS ARE NOT CONDUCTE D ALL YEARS. THEREFORE, THERE IS NOT EVEN CIRCUMSTANTIAL EVIDENCE FOR HIM T O EXTRAPOLATE ONE STRAY ENTRY. THE FINDING OF THE AO REGARDING DIVERSION OF FUNDS FOR ELECTIONS IS TO BE RESTRICTED ONLY TO AY 14-15 AND IT CANNOT BE EXT ENDED TO OTHER YEARS. THIS IS WITHOUT PREJUDICE TO THE CONTENTION THAT TH E FINDING OF THE AO THAT TRUST FUNDS HAVE BEEN DIVERTED FOR FUNDING ELECTION S IS PERVERSE AS IT IS NOT BASED ON COGENT EVIDENCE. ITA NOS.500 TO 506/BANG/2020 PAGE 152 OF 183 272. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTE D THAT THE SEIZED MATERIAL MARKED AS A/DUU/02 TO A/DUU/04 AND A/DUU/1 3 DO NOT CONTAIN ANY ENTRY PERTAINING TO FY 2009-10, RELEVANT TO AY 2010-11. THEREFORE, THIS FINDING OF THE AO CANNOT BE EXTENDED TO AY 2 010-11 EVEN ON THIS GROUND. COUNTER TO THE ALLEGATION: PAYMENTS TO AGENTS 273. THE AO HAS, AT PARA 5.2.3.1D, PAGE 60, TABULA TED HIS ANALYSIS OF SEIZED MATERIAL NO. A/DUU/2 WITH RESPECT TO ALLEGED PAYMENTS MADE TO AGENTS. HE ALSO RELIED UPON PAGE 5 OF SEIZED MATER IAL NO. A/DUU/10. THE AO HAS EXTRACTED THE RELEVANT PORTION FROM THE STAT EMENT OF G H NAGARAJ WITH REFERENCE TO PAYMENT TO AGENTS. HE HAS ALSO E XTRACTED AT THE SAID PARAGRAPH, PAGES 71 AND 72, THE REPLIES RECEIVED FR OM SRI. GOLI V. SRINIVAS WHEN HE WAS CONFRONTED WITH THE AFOREMENTIONED ENTR IES IN SEIZED MATERIAL NO. A/DUU/02. 274. AT PAGES 78 AND 79, THE AO HAS EXTRACTED TH E RELEVANT PORTION OF THE STATEMENTS OF SRI. GOLI V. SRINIVAS RECORDED ON 06.08.2015 UNDER SECTION 132(4) AND ON 28.11.2017 UNDER SECTION 131 WITH REFERENCE TO ROLE OF AGENTS. 275. RELYING UPON THE ABOVE MATERIALS, THE AO, AT P AGE 100, PARA 7.1 OF THE ASSESSMENT ORDER, ALLEGED AS UNDER:- THE TRUST FUNDS HAVE BEEN MIS-UTILIZED FOR MAKING PAYMENTS TO VARIOUS BROKERS/AGENTS TO PROCURE STUDENTS FOR ADMI SSION INTO THE MEDICAL COLLEGES AND FACILITATION OF PAYMENT OF CAP ITATION FEES AS SEEN FROM SEIZED MATERIAL ANNEXURE A/DUU/01 PAGE 67 , A/DUU/02 PAGE 61, A/DUU/13 PAGES 10, 11 AND VARIOUS OTHER SUCH EVIDENCES FOUND AND SEIZED. ITA NOS.500 TO 506/BANG/2020 PAGE 153 OF 183 276. THE LD. AR SUBMITTED THAT A PERUSAL OF THE ABO VE PARAGRAPHS WOULD SHOW THAT THE AO HAS RELIED UPON CERTAIN PORTION O F SEIZED MATERIAL MARKED AS A/DUU/01, A/DUU/02, STATEMENT OF G H NAGARAJ REC ORDED U/S 132(4) ON 20.08.2015, STATEMENT OF SRI. GOLI V. SRINIVAS RECO RDED UNDER SECTION 132(4) ON 06.08.2015 AND UNDER SEC 131 ON 28.11.201 7. THE AO ALSO SOUGHT TO RELY UPON PAGE 5 OF SEIZED MATERIAL NO. A /DUU/10. THIS PAGE CONSISTS ONLY OF CERTAIN OBSCURE NOTINGS AND FIGURE S. NOTHING CAN BE DECIPHERED FROM THE SAME. THE PORTION OF SEIZED MA TERIAL RELIED UPON CANNOT BE HELD AS CORROBORATIVE EVIDENCES TO SUPPOR T THE ALLEGATIONS THAT THE APPELLANT HAS PAID COMMISSION TO AGENTS FOR GET TING CANDIDATES FOR ADMISSION WITH CAPITATION FEE. THERE IS NOTHING IN THE SEIZED MATERIAL TO SUPPORT THE ABOVE. EVEN THE STATEMENT OF SRI. GOLI V. SRINIVAS /SRI. G H NAGARAJ WHICH IS RELIED UPON IS NOT SUPPORTED BY AN Y COGENT EVIDENCE. WE HAVE ALREADY ESTABLISHED THAT THE STATEMENT OF SRI. GOLI V. SRINIVAS CANNOT BE RELIED UPON TO PROVE THE ROLE OF AGENT. THE AO OUGHT TO HAVE SUMMONED THE VARIOUS PERSONS REFERRED TO IN THE STA TEMENT GIVEN BY SRI. GOLI V. SRINIVAS. THE AO CANNOT MERELY RELY UPON A STATEMENT WHICH IS NOT SUPPORTED BY ANY EVIDENCE. THE AO HAS SOUGHT TO RELY ON STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED UNDER SEC 131 ON 28. 11.2017 WHICH IS MUCH LATER THAN THE DATE OF SEARCH. IT IS SUBMITTED TH AT RELIANCE CANNOT BE PLACED ON A STATEMENT RECORDED UNDER SECTION 131 POSTSEAR CH IN THE ABSENCE OF RELIABLE MATERIAL DURING THE COURSE OF SEARCH. MORE OVER, IT IS RECORDED ONLY A MONTH BEFORE THE TIME-LIMIT TO MAKE ASSESSMENT CO ULD EXPIRE. 277. WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUBMITT ED THAT THE STATEMENT RECORDED ON 28.11.2017 HAS NEITHER BEEN FURNISHED T O THE APPELLANT NOR THE APPELLANT HAS BEEN AFFORDED AN OPPORTUNITY FOR CROS S-EXAMINATION. FOR REASONS STATED EARLIER SUBMISSIONS, IT WAS SUBMITTE D THAT SUCH STATEMENT CANNOT BE RELIED UPON. ITA NOS.500 TO 506/BANG/2020 PAGE 154 OF 183 COUNTER TO THE ALLEGATION: PAYMENT OF KICKBACKS AND PROMOTION OF CORRUPTION 278. THE AO HAS, AT PAGE 62, TABULATED HIS ANALYSI S OF SEIZED MATERIAL NO. A/DUU/2 WITH RESPECT TO ALLEGED PAYMENTS MADE T O MCI INSPECTORS. HE HAS EXTRACTED THE RELEVANT PORTION FROM THE STAT EMENT OF SRI. GOLI V. SRINIVAS WITH REFERENCE TO THE AFOREMENTIONED ENTRI ES IN SEIZED MATERIAL NO. A/DUU/02. AT PAGE 70, THE AO EXTRACTED THE STATEM ENT UNDER SECTION 131 OF SRI. GOLI V. SRINIVAS RECORDED ON 28.11.2017 PER TAINING TO DEPOSITION BEFORE CBI. 279. RELYING UPON THE ABOVE MATERIALS, THE AO AT SERIAL NO. 5, PAGE 100, PARA 7.1 OF THE AO , ALLEGED AS UNDER: THE TRUST FUNDS HAVE BEEN MIS-UTILIZED FOR PAYMENT OF GIFTS AND BRIBES DURING MCI INSPECTIONS TO UNKNOWN OFFICIALS /PERSONS AS SEEN FROM SEIZED MATERIAL VIDE ANNEXURE A/DUU/02 (S UCH ENTRIES FOUND IN MULTIPLE PAGES). 280. AT PARA 7.8, PAGE 102 OF THE ASSESSMENT ORDER, THE AO HAS ALLEGED PAYMENT OF KICKBACKS AND PROMOTION OF CORRUPTION OBSERVING AS UNDER:- REGULAR KICKBACKS IN THE FORM OF CASH, SILVER PLAT ES, GOLD CHAINS, GIFTS, ETC HAVE BEEN PAID OF INSPECTORS FROM MEDICA L COUNCIL OF INDIA, IN ORDER TO RECEIVE FAVORABLE INSPECTION REP ORTS. THIS ALSO PROVES THAT THE INSTITUTION IS NOT MAINTAINING THE NECESSARY STANDARDS AND COMPLYING WITH NORMS AND IS THEREFORE ATTEMPTING TO BUY THE OFFICIALS THROUGH BRIBERY. 281. THE AO RELIED UPON THE AFOREMENTIONED MATERIAL AND STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED ON 07.08.2015 UNDER SEC 132(4) OF THE ACT AND STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED ON 28.11.2017 UNDER SEC 131 OF THE ACT. 282. THE APPELLANT STRONGLY DENIES THE ALLEGATION T HAT IT HAS PAID BRIBES TO MCI INSPECTORS. THE ALLEGATION IS BASED ON TOTALLY UNRELIABLE DOCUMENTS ITA NOS.500 TO 506/BANG/2020 PAGE 155 OF 183 AND EVIDENCES. IT IS SUBMITTED THAT ALLEGATION ON BRIBES, ETC CANNOT BE MADE LIGHTLY. MERELY BASED ON THE STATEMENTS OF MR . SRINIVAS OR THE ENTRIES MADE IN THE REGISTERS IT CANNOT BE ALLEGED THAT BRI BES HAVE BEEN PAID. KINDLY REFER TO THE DECISIONS OF THE HONBLE SUPREM E COURT IN COMMON CAUSE AND V.C. SHUKLA REFERRED TO IN EARLIER PARAGR APH SUPRA . 283. THE AO HAS SOUGHT TO RELY ON STATEMENT OF SRI. GOLI V. SRINIVAS RECORDED UNDER SEC 131 ON 28.11.2017 WHICH IS MUCH LATER THAN THE DATE OF SEARCH. IT IS SUBMITTED THAT RELIANCE CANNOT BE P LACED ON A STATEMENT RECORDED UNDER SECTION 131 POST SEARCH IN THE ABS ENCE OF RELIABLE MATERIAL DURING THE COURSE OF SEARCH. MOREOVER, IT IS RECORDED ONLY A MONTH BEFORE THE TIME-LIMIT TO MAKE ASSESSMENT COULD EXPI RE. 284. WITHOUT PREJUDICE TO THE ABOVE, THE STATEMENT RECORDED ON 28.11.2017 HAS NEITHER BEEN FURNISHED TO THE APPELL ANT NOR HAS THE APPELLANT BEEN AFFORDED AN OPPORTUNITY FOR CROSS-EX AMINATION. FOR REASONS STATED IN EARLIER SUBMISSIONS SUPRA SUCH STATEMENT CANNOT BE RELIED UPON. 285. IT WAS SUBMITTED THAT THE AO OUGHT TO HAVE ISS UED SUMMONS TO THE MCI INSPECTORS TO WHOM SRI. GOLI V. SRINIVAS, IN HI S STATEMENT, ALLEGED TO HAVE GIVEN BRIBE. THE AO ERRED IN MERELY RELYING UPON THE STATEMENT OF SRI. GOLI V. SRINIVAS WITHOUT VERIFYING ITS VERACIT Y. THERE IS NO EVIDENCE TO PROVE THE CORRECTNESS OF THE STATEMENT. 286. IN QUERY NO. 14 POSED TO SRI G H NAGARAJ WHILE RECORDING STATEMENT UNDER SECTION 131 ON 13.08.2015, HE WAS CONFRONTED WITH REPLY TO QUESTION NO. 37 IN THE STATEMENT OF SRI. GOLI V. SRINIVAS A ND WAS ASKED TO OFFER HIS COMMENTS. IN REPLY TO AFORESAID QUERY NO. 14, SRI. G H NAGARAJ STATED THAT NO CASH PAYMENTS ARE MADE TO MCI INSPECTORS. 287. THE APPELLANT, IN ITS REPLY DATED 02.12.2017 T O NOTICE UNDER SEC 142(1) DATED 15.11.2017 HAD OBJECTED TO THE ALLEGAT ION OF THE AO THAT IT ITA NOS.500 TO 506/BANG/2020 PAGE 156 OF 183 HAD PAID BRIBE TO MCI INSPECTORS. THE AO, IN THE F INAL ASSESSMENT ORDER, HAS NOT ADDRESSED THE OBJECTIONS TAKEN BY THE APPEL LANT. IT MEANS THAT THE AO HAS NOT DISAGREED WITH THE CONTENTIONS OF THE A PPELLANT. THAT BEING THE CASE, THE AO ERRED IN RETAINING THE PERVERSE FI NDINGS IN THE FINAL ASSESSMENT ORDER. 288. WITHOUT PREJUDICE TO THE ABOVE, THE MATERIAL R ELIED UPON BY THE AO CONTAINS DATES FALLING IN FY 13-14. SRI G H NAGARA J IN THE STATEMENT UNDER SECTION 132(4) RECORDED ON 20.08.2015 IN REPLY TO Q UESTION NO. 8 HAS STATED THAT MCI INSPECTION TAKES PLACE EVERY YEAR TILL THE YEAR OF RECOGNITION AND ONCE RECOGNITION IS GRANTED, THE INSPECTION IS MADE ONCE IN 5 YEARS. DEEMED UNIVERSITY RECOGNITION WAS GRANTED IN THE YE AR 2006. THAT BEING THE CASE, HOW CAN THERE BE OCCASION OF MAKING ANY P AYMENTS TO MCI INSPECTORS. THEREFORE, THERE IS NOT EVEN CIRCUMSTA NTIAL EVIDENCE FOR HIM TO EXTRAPOLATE ONE STRAY ENTRY. AT WORST, THE FINDING OF THE AO REGARDING PAYMENT TO MCI INSPECTORS IS TO BE RESTRICTED ONLY TO AY 14-15 AND IT CANNOT BE EXTENDED TO OTHER YEARS. THIS IS WITHOUT PREJUDICE TO OUR CLAIM THAT NO BRIBES WERE PAID TO MCI INSPECTORS. 289. THEREFORE, THIS GROUND CANNOT BE APPLIED TO AL L YEARS FOR DENYING EXEMPTION UNDER SECTION 11. THIS IS WITHOUT PREJUD ICE TO THE CONTENTION THAT THE FINDING OF THE AO THAT TRUST FUNDS HAVE BEEN US ED FOR BRIBING IS PERVERSE AS IT IS NOT BASED ON COGENT EVIDENCE. COUNTERING THE ALLEGATION: AIDING TAX EVASION THRO UGH RECEIPT OF BOGUS 80G DONATIONS : 290. IT IS SUBMITTED THAT THE PERUSAL OF THE ENTRIE S IN THE SAID SEIZED MATERIAL DO NOT SUPPORT THE ABOVE ALLEGATION. THER E IS NOTHING ON RECORD TO PROVE THAT THE CAPITATION FEE COLLECTED IN CASH IS PAID TO CERTAIN PERSONS WHO, IN TURN, ROUTED IT BACK TO THE TRUST BY WAY OF DONATION AND CLAIMED DEDUCTION UNDER SECTION 80G IN RESPECT OF SUCH DONA TIONS. THE RETURNS OF ITA NOS.500 TO 506/BANG/2020 PAGE 157 OF 183 THE ALLEGED BOGUS DONORS WHO HAVE CLAIMED DEDUCTION UNDER SECTION 80G IN RESPECT OF SUCH DONATIONS HAS NOT BEEN BROUGHT O N RECORD. AN ALLEGATION OF AIDING IN TAX EVASION CANNOT BE MADE IN A BALD M ANNER. IT SHOULD BE PROVED THAT THE ALLEGED BOGUS DONOR HAS CLAIMED DED UCTION U/S. 80G IN RESPECT OF SUCH DONATIONS AND THE AMOUNT OF TAX EVA DED BY SUCH DONOR BY CLAIMING SUCH DEDUCTION IS TO BE ASCERTAINED. THE ASSESSMENT RECORDS OF SUCH DONOR SHOULD BE BROUGHT ON RECORD TO SHOW THAT DONATION CLAIM HAS BEEN FOUND TO BE BOGUS DURING THE ASSESSMENT OF SUC H DONOR. THE COPY OF ASSESSMENT ORDER WHEREIN SUCH BOGUS DONATION IS DIS ALLOWED IS TO BE CONFRONTED TO THE TRUST THAT HAS RECEIVED SUCH DONA TIONS. WITHOUT EVEN LOOKING AT THE INCOME-TAX RETURNS AND ASSESSMENT RE CORDS OF THE DONORS, THE AO HAS MADE A SWEEPING STATEMENT THAT THE APPEL LANT HAS AIDED BOGUS DONORS TO EVADE TAX. THE SEIZED MATERIAL WHICH IS RELIED UPON DOES NOT DEMONSTRATE THAT THE APPELLANT HAS AIDED BOGUS DONO RS TO EVADE TAX. IF THE AO IS OF THE OPINION THAT THE DONATIONS MADE ARE N OT GENUINE, THE AO OUGHT TO HAVE TAKEN ACTION AGAINST THE ALLEGED BOGU S DONORS WHO SOUGHT TO CLAIM 80G BENEFIT THROUGH SUCH BOGUS DONATIONS. TH E AO SHOULD HAVE INITIATED PROCEEDINGS UNDER SECTION 153C IN CASE OF DONORS IF HE IS THE AO OF THE DONORS OR SHOULD HAVE HANDED OVER THE RELEVA NT DOCUMENTS TO THE JURISDICTIONAL AO OF THE ALLEGED BOGUS DONORS. TH ERE IS NOTHING ON RECORD TO SHOW THAT THE AO HAS TAKEN ANY SUCH ACTION. 291. THE STATEMENT OF SRI. GOLI V. SRINIVAS IS NOT SUPPORTED BY ANY EVIDENCE. THE STATEMENT MADE BY SRI. GOLI V. SRINI VAS CAN BE TRUE ONLY IF HE HAS ACCESS TO THE INCOME-TAX RETURNS AND ASSESSM ENT RECORDS OF THE BOGUS DONORS. HE HAS NOWHERE ACCEPTED IN HIS STATE MENT THAT HE HAS ACCESS TO ANY SUCH DOCUMENTS. THAT BEING THE CASE, HE CANNOT MAKE AN AUTHORITATIVE STATEMENT THAT THE ..PAID FOR VARIOUS 80G RECEIPT HOLDERS WHO HAD MADE CHEQUE PAYMENT TO OUR ORGANIZATION FOR THE PERIODTO AVAIL BENEFIT UNDER THE INCOME TAX A CT. THE SAID ITA NOS.500 TO 506/BANG/2020 PAGE 158 OF 183 STATEMENT CANNOT BE RELIED UPON IN THE ABSENCE OF C OGENT MATERIAL. THE AO HAS ALLEGED THAT THE APPELLANT HAS NOT SUBMITT ED ANYTHING TO PROVE THAT THE DONATIONS RECEIVED ARE GENUINE. IT IS SUBMITTE D THAT THE APPELLANT HAS RECEIVED DONATIONS THROUGH CHEQUE AND IT HAS ISSUED RECEIPTS FOR THE SAME. 292. FURTHER, IT WAS STATED THAT STATEMENTS WHATEVE R RELIED ON BY THE AO WAS NOT CONFRONTED TO THE ASSESSEE. HENCE, IT MAY NOT BE RELIED UPON. COUNTER TO ALLEGATION: ADDITIONAL SALARY PAYMENTS MADE TO STAFF 293. THE LD. AR SUBMITTED THAT THE APPELLANT DENIES THE ALLEGATION THAT IT HAS PAID REMUNERATION IN CASH TO ENABLE THE FACULTY TO EVADE TAX. THE ALLEGATION MADE BY THE AO IS ABSOLUTELY BASELESS. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE HIS STATEME NT. IN FACT, WHILE DEALING WITH THE CLAIM OF THE APPELLANT REGARDING D EDUCTION OF EXPENDITURE, THE AO HAS SOUGHT TO RELY UPON STATEMENTS OF TWO F ACULTIES DR. KISHORE KUMAR AND DR. NAGARAJ S. A PORTION OF THESE STATEM ENTS IS EXTRACTED AT PAGES 145 AND 146 OF THE ASSESSMENT ORDER. THE FAC ULTIES, IN THE STATEMENTS, HAVE DENIED RECEIPT OF ANY ADDITIONAL S ALARY AS STATED IN PAGE NO. 81 OF SEIZED MATERIAL NO. A/DUU/01. THE AO SOU GHT TO RELY UPON THE STATEMENTS OF FACULTIES TO DENY THE CLAIM OF THE AP PELLANT IN RESPECT OF DEDUCTION FOR EXPENDITURE. IT IS SUBMITTED THAT TH E STATEMENT CONTRADICTS THE ALLEGATION OF THE AO THAT THE APPELLANT HAS PAID SA LARY IN CASH TO STAFF TO AID THEM TO AVOID TAX. WHEN THE FACULTIES HAVE DENIED ACCEPTING ADDITIONAL SALARY, THE QUESTION OF AIDING THEM TO AVOID TAX BY PAYING SALARY IN CASH DOES NOT ARISE. IF THE AO HAD REASON TO BELIEVE T HAT THE REMUNERATION IS PAID IN CASH WITHOUT TDS TO ENABLE THE FACULTY TO E VADE TAX, HE SHOULD HAVE HANDED OVER THE RELEVANT MATERIAL TO THE AO WHO HA D JURISDICTION OVER SUCH FACULTIES TO ENABLE INITIATION OF PROCEEDINGS UNDER SECTION 153C IN RESPECT OF SUCH FACULTIES. BUT THE AO DID NOT CHOOSE TO DO SO. HE HAS NOT EVEN CALLED FOR THE INCOME-TAX RETURNS AND ASSESSMENT RE CORDS OF THOSE ITA NOS.500 TO 506/BANG/2020 PAGE 159 OF 183 FACULTIES. HE HAS NOT EVEN ASCERTAINED WHETHER THE Y ARE LIABLE TO PAY TAX AT ALL. IN THE ABSENCE OF ANY EVIDENCE, THE AO CANNOT MAKE ANY SUCH SWEEPING ALLEGATIONS. THE PAYMENT TO STAFF, WHETHE R REASONABLE OR NOT, IS NOT HIT BY SECTION 13. WITH A MERE INTENTION OF MA KING THESE ALLEGED PAYMENTS OF ADDITIONAL SALARY AS A GROUND TO DENY S ECTION 11, THE AO HAS MADE THE ALLEGATION OF ABETTING TAX EVASION HAVING NO LEGAL SANCTITY. 294. THE LD. DR CONTENDED THAT THE MODUS OPERANDI O F THE ASSESSEE IS THAT THE TRUST RECEIVES CAPITATION FEES FROM STUDEN TS WHICH ARE ROUTED INTO BOOKS OF ACCOUNT AS VOLUNTARY DONATION FROM VARIOUS INDIVIDUALS / ENTITIES. FURTHER A SIGNIFICANT PART OF THE CAPITATION FEES C OLLECTED IN CASH WAS UTILIZED FOR PERSONAL PURPOSES OF THE TRUSTEES. ALSO HUGE C ASH WAS SIZED FROM THE PREMISES OF THE TRUST AND EXPLAINED BY THE TRUSTEE THAT THE SAME WAS RECEIVED AS CAPITATION FEE. THUS THE GIST OF MODUS ESTABLISHES THAT ASSESSEES ACTIVITIES CANNOT BE CALLED AS CHARITABL E ACTIVITIES AS PER THE OBJECTS OF THE TRUST AND IT IS NOT GENUINE, HENCE E XEMPTION U/S. 11 CANNOT BE GRANTED. 295. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD ON THIS ISSUE. IN THE PRESENT CASE, EXEMPTION U/S. 11 WAS DENIED ON THE REASONS THAT ASSESSEE HAS COLLECTED UNACCOUNTED CAP ITATION FEE FROM MANAGEMENT AND NRI QUOTA WHICH IS BASED ON UNSUPPOR TED SEIZED MATERIAL ON WHICH NO OPPORTUNITY TO CROSS-EXAMINE W AS GIVEN TO THE ASSESSEE. HENCE WE HAVE OBSERVED THAT NO ADDITION CAN BE MADE ON THIS BASIS. NOW COMING TO THE ACTIVITIES OF THE ASSESSE E, NO MATERIAL HAS BEEN BROUGHT ON RECORD THAT THE ASSESSEE HAS NOT SOLELY EXISTED FOR THE PURPOSE OF CARRYING OUT EDUCATIONAL ACTIVITIES AND BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED. IT CANNOT BE SAID THAT THE ACTIVITIES CA RRIED ON BY THE ASSESSEE IS NOT GENUINE. IN OUR OPINION, THE ASSESSEE SOLELY E XISTING FOR NON-PROFIT PURPOSE. UNLESS THE DEPARTMENT SHOWS THAT THERE WA S BREACH OF CONDITIONS ITA NOS.500 TO 506/BANG/2020 PAGE 160 OF 183 LAID DOWN FOR GRANT OF EXEMPTION U/S. 11 OF THE ACT , THE BENEFIT OF EXEMPTION U/S. 11 CANNOT BE DENIED. THE ASSESSEE ENJOYED REG ISTRATION GRANTED DURING THIS PERIOD AND THE ASSESSEE ALSO DEMONSTRAT ED THAT THE ASSESSEES PREDOMINANT OBJECTS REMAIN THE SAME I.E., CARRYING OUT THE CHARITABLE ACTIVITIES FOR THE PURPOSE OF ADVANCEMENT OF EDUCAT ION AND NOT TO EARN PROFIT. EARNING SURPLUS INCOME BY CARRYING OUT EDU CATIONAL ACTIVITIES IS NOT A REASON TO DENY EXEMPTION U/S. 11 OF THE ACT. THE A SSESSEES PREDOMINANT ACTIVITY IS CARRYING OUT EDUCATIONAL ACTIVITIES WHI CH IS CHARITABLE IN NATURE. THE TRUST CANNOT BE DEPRIVED OF THE BENEFIT OF EXEM PTION U/S. 11. FURTHER, AS WE HAVE DISCUSSED IN ELSEWHERE IN THE ORDER THER E IS NO CONCRETE EVIDENCE FOR COLLECTION OF UNACCOUNTED CAPITATION F EES AND IT IS NOT POSSIBLE TO DENY THE EXEMPTION U/S 11 OF THE ACT. IT IS ALSO NOTED THAT EVEN IF THE ASSESSEE CONSTRUCTED THE TEMPLE INSIDE THE CAMPUS O F THE EDUCATION INSTITUTION FOR THE BENEFIT OF THE STUDENTS AND EMP LOYEES AND ALSO FOR PUBLIC, IT CANNOT BE CONSTRUED AS VIOLATION OF SECTION 12(1 )(A) OF IT ACT. THERE WAS ONE MORE ALLEGATION THAT ASSESSE HAS COLLECTED EXOR BITANT FEES BUT IN OUR OPINION THE FEES HAS BEEN FIXED BY THE STATE AUTHOR ITY AND THERE WAS NO VIOLATION NOTED BY THE STATE AUTHORITY OR MCI. AS D ISCUSSED IN EARLIER PARA OF THIS ORDER ABOUT THE AUTHENTICITY OF THE SEIZED MAT ERIAL, WE HAVE HELD THAT IT IS NOT FOOLPROOF. IN SUCH CIRCUMSTANCES IT CANNOT B E RELIED UPON. THE VARIOUS DECISIONS RELIED BY THE AO THAT IS THE DELH I HIGH COURT IN DIT(EXEMPTIONS) VS. CHARANJIV CHARITABLE TRUST, MOO L CHAND KHAIRATI RAM TRUST VS. DIT(EXEMPTION) AND VODITHALA EDUCATION SOCIETY VS. ADDL. DIT(EXEMPTION) TO HOLD THAT ASSESSE HAS VIOLATED THE SECTION 13(1 ) ARE NOT APPLICABLE TO THE FACTS OF THE CASE ON THE REASON T HAT THERE WAS NO CONCLUSIVE EVIDENCE TO HOLD THAT THERE WAS COLLECTI ON OF CAPITATION FEES OR VIOLATIONS OF THE SECTION 13(1) OF THE ACT. IN VIE W OF THE ABOVE, THIS GROUND OF THE ASSESSEE IS ALLOWED IN ALL AYS. ITA NOS.500 TO 506/BANG/2020 PAGE 161 OF 183 296. GROUND NO.9 IS WITH REGARD TO ALLOWANCE OF DEPRECIATION (ORIGI NAL GROUND IN AY 2010-11). 297. THE AO OBSERVED THAT GIVEN THE FACT THAT THE B ENEFITS U/S 11 ARE BEING DENIED THE SURPLUS AS SPECIFIED U/S 11(1)(A) & 11(1)(B), THE SURPLUS SPECIFIED U/S 11(2) ARE CONSIDERED TO BE TAXABLE IN COME OF THE ASSESSEE. THE CLAIMS OF CAPITAL EXPENDITURE MADE BY THE ASSES SEE ARE CAPITALIZED AND THEREFORE DISALLOWED AS EXPENDITURE THAT THAT C AN BE CLAIMED BY THE ASSESSEE AGAINST THE RECEIPTS. AS DEPRECIATION HAS ALREADY BEEN CLAIMED BY THE ASSESSEE AGAINST THE CAPITAL EXPENDITURE MAD E, NO FURTHER DEPRECIATION IS ALLOWED. THEREFORE, HE DENIED DEPR ECIATION ON THE GROUND THAT THE DEPRECIATION HAS ALREADY BEEN CLAIMED BY T HE ASSESSEE AGAINST THE CAPITAL EXPENDITURE MADE, HENCE NO FURTHER DEPRECIA TION IS ALLOWED. THE ASSESSMENT HAS BEEN MADE UNDER SECTION 143(3) FOR T HE IMPUGNED ASSESSMENT YEAR. 298. THE LD. AR SUBMITTED THAT A PERUSAL OF THE COM PUTATION OF INCOME SHOWS THAT THE SURPLUS BEFORE CLAIMING EXEMPTION UN DER SECTION 11(1)(A) IS RS. 6,85,70,097. THE SAME HAS BEEN ARRIVED AT AS U NDER:- G ROSS RECEIPTS 58,73,36 ,562 LESS: APPLICATION OF INCOME REVENUE EXPENDITURE AS PER INCOME & EXPENDITURE ACCOUNT (EXCLUDING DEPRECIATION) 44,58,41,894 CAPITAL EXPENDITURE 7,29, 24, 571 TOTAL APPLICATION OF INCOME 51,87,66,465 BALANCE 6,85,70,097 LESS: EXEMPTION U/S 11(1)(A) [15% OF GROSS RECEIPTS RESTRICTED TO SURPLUS AVAILABLE] 6,85,70,097 TOTAL INCOME NIL ITA NOS.500 TO 506/BANG/2020 PAGE 162 OF 183 299. IT IS SUBMITTED THAT THE SURPLUS CONSIDERED BY THE AO IN THE COMPUTATION OF TOTAL INCOME IN THE ORDER DATED 30.1 2.2017 PASSED UNDER SECTION 153A IS ALSO RS. 6,85,70,097. THEREFORE, T HE SAME IS BEFORE THE CLAIM FOR DEPRECIATION. THE AO ALSO ADDED BACK TH E CAPITAL EXPENDITURE CLAIMED AS APPLICATION OF INCOME AS EXEMPTION UNDER SECTION 11 IS DENIED. THEREFORE, THE OBSERVATION OF THE AO THAT THE APPEL LANT HAS CLAIMED DEPRECIATION IS INCORRECT. 300. THEREFORE, WITHOUT PREJUDICE TO THE MAIN CONTE NTION THAT THE APPELLANT IS ENTITLED TO CLAIM EXEMPTION U/S. 11 OF THE ACT, IT IS SUBMITTED THAT THE APPELLANT IS ENTITLED TO CLAIM DEPRECIATIO N AS PER THE PROVISIONS OF THE ACT. 301. WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUBMITT ED THAT THE AO HAS DENIED EXEMPTION UNDER SECTION 11 OF THE ACT. THER EFORE, THE AO IS REQUIRED TO GRANT DEDUCTION TOWARDS DEPRECIATION IR RESPECTIVE OF THE FACT WHETHER DEPRECIATION HAS BEEN CLAIMED AND ALLOWED I N THE BOOKS OF ACCOUNTS OR NOT. THE AO IS REQUIRED TO GRANT DEPRE CIATION AS PER THE NORMAL PROVISIONS OF THE ACT. WHEN THE AO HAS SOUG HT TO COMPUTE THE INCOME UNDER CHAPTER IV-D, HE OUGHT TO HAVE GRANTED DEPRECIATION AS PER SECTION 32 OF THE ACT. IT IS SUBMITTED THAT DEDUCT ION TOWARDS DEPRECIATION SHOULD BE COMPULSORILY BE GIVEN WHETHER THE ASSESSE E HAS MADE THE CLAIM OR NOT. EXPLANATION 5 TO SECTION 32 READS AS UNDER :- EXPLANATION 5.FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT O F DEPRECIATION IN COMPUTING HIS TOTAL INCOME;. 302. THE LD. DR SUBMITTED THAT THE ASSESSEE CLAIMED THE COST OF ASSETS AS CAPITAL EXPENDITURE IN ITS INCOME & EXPENDITURE STATEMENT. BEING SO, THERE CANNOT BE ANY ALLOWANCE OF DEPRECIATION. ITA NOS.500 TO 506/BANG/2020 PAGE 163 OF 183 303. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD ON THIS ISSUE. THE ASSESSEE IS ENTITLED FOR DEPREC IATION U/S. 32 ON ASSETS WHERE IT HAS BEEN LAID OUT AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES U/S. 11(1)(A) OF THE ACT. THE AMENDMENT BROUGHT TO SECTION 11(6) OF THE ACT BY THE FINANCE (NO.2) ACT, 2014 WHICH BECAME EFFECT IVE FROM AY 2015-16 AND DEPRECIATION IN SUCH CASE BEING PRECIPITATION I N NATURE. ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF CIT V. RAJASTHAN & GUJARATI CHARITABLE FOUNDATION P OONA, 402 ITR 441 (SC) , THE AO IS DIRECTED TO GRANT DEPRECIATION FOR AY 2 010-11. 304. IN AYS 2011-12 TO 2016-17, THE GROUND RELATING TO DEPRECIATION IS NOT PRESSED. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 305. GROUND NO.10 WITH REGARD TO COMPUTATION OF INCOME UNDER THE HEADS OF INCOME APPLYING THE PROVISIONS OF SECTIONS 28 TO 43C OF THE ACT IS NOT PRESSED AT THE TIME OF HEARING AND HENCE THE SA ME IS DISMISSED AS NOT PRESSED. 306. GROUND NO.11 IS WITH REGARD TO EXTRAPOLATION OF INCOME IN ALL Y EARS. THE AO HAS ADDED RS. 27,42,00,000 TOWARDS UNDISCLOS ED CASH RECEIPTS IN AY 2010-11. SIMILAR IS THE POSITION IN OTHER ASSES SMENT YEARS. THE BREAK- UP OF THE SAME FOR AY 2010-11 IS AS UNDER:- DESCRIPTION OF COURSE ALLEGED UNACCOUNTED CASH GENERATED DURING FY 2009-10 (AMOUNT IN RS.) UG - M BBS CO URSE 12,34,00,000 PG COURSE 15,08,00,000 TOTAL 27,42,00,000 307. THE AO HAS COMPUTED THE ALLEGED UNDISCLOSED CA SH RECEIPTS FROM UG-MBBS COURSE AND PG COURSE FOR THE IMPUGNED ASSES SMENT YEAR AY 2010-11. THE RELEVANT COMPUTATION FOR AY 2010-11 I S GIVEN AT PAGE 149 [UG-MBBS COURSE] AND PAGE 151 [PG COURSE]. HE HAS COMPUTED THE ITA NOS.500 TO 506/BANG/2020 PAGE 164 OF 183 CAPITATION FEE AND UNACCOUNTED CASH GENERATED IN RE SPECT OF UG-MBBS COURSE FOR AY 2010-11 AS UNDER:- COLUMN HEADING AS PER THE TABLE GIVEN AT PAGE 149 OF THE ASSESSMENT ORDER COLUMN REFERENCE TOTAL SEATS D 150 NO. OF SEATS WHERE CAPITATION FEE IS COLLECTED E 63 (*) PACKAGE PRICE (RS. IN LAKH) F 35 REGULAR FEE PER SEAT FOR THE COURSE (RS. IN LAKH) G 15.41 UNACCOUNTED CASH COMPONENT GENERATED PER SEAT PER COURSE (RS. IN LAKH) F G = H 19.59 TOTAL UNACCOUNTED CASH GENERATED AS PER SEIZED MATERIAL (RS. IN LAKH) I - ESTIMATION OF TOTAL UNACCOUNTED CASH GENERATED (RS. IN LAKH) E * H = J 1234 308. IT IS PERTINENT TO NOTE THAT THE COLUMN I WHIC H DEALS WITH TOTAL UNACCOUNTED CASH GENERATED AS PER SEIZED MATERIAL IS BLANK SO FAR AS AY 2010-11 IS CONCERNED. IT MEANS THAT THE LEARNED AS SESSING OFFICER HAS ACKNOWLEDGED THAT THERE IS NO INCRIMINATING MATERIA L TO PROVE THAT THE APPELLANT HAS RECEIVED UNACCOUNTED FEE IN CASH DURI NG THE FINANCIAL YEAR 2009-10. 309. WITHOUT PREJUDICE TO THE ABOVE, THE AO HAS EST IMATED THE TOTAL NUMBER OF SEATS AT 63 IN RESPECT OF WHICH CAPITATIO N FEE IS RECEIVED. THE QUOTA OF TOTAL SEATS FOR ASSESSMENT YEAR 2010-11 IS 150, OUT OF WHICH 85% ITA NOS.500 TO 506/BANG/2020 PAGE 165 OF 183 SEATS ARE RESERVED UNDER MERIT QUOTA. THE MANAGEMEN T QUOTA IS ONLY 15% WHICH WORKS OUT TO 22. ONE FAILS TO UNDERSTAND AS T O HOW ONE CAN ESTIMATE THAT CASH WAS COLLECTED FROM 63 STUDENTS. IT IS AXI OMATIC THAT THE MERIT STUDENTS WILL NOT PAY ANY CASH. THE APPELLANT HAS VIDE ITS LETTER DATED 23.12.2017 [FILED ON 26.12.2017] HAS ENCLOSED THE Y EAR-WISE DETAILS OF NUMBER OF STUDENTS PERMITTED AND ACTUAL NUMBER OF S EATS ADMITTED TO THE COLLEGE IN RESPECT OF UG AND PG COURSES. IT IS NOT KNOWN AS TO HOW THE NUMBER OF SEATS IN RESPECT OF WHICH THE CAPITATION FEE IS COLLECTED IS ARRIVED AT. AN ASTERISK MARK HAS BEEN PUT NEXT TO THE NUMB ER OF SEATS I.E., 63. BUT THERE IS NO NOTE BELOW THE TABLE EXPLAINING THE AST ERISK MARK. THE SEIZED MATERIAL DOES NOT CONTAIN ANY SUCH DATA SO FAR AS A Y 2010-11 IS CONCERNED. IN THE REMARKS COLUMN (K) OF THE TABLE, IT IS STATED AS ON PAGE 151 OF THE SEIZED MATERIAL NO. A/DUU/06 . A PERUSAL OF THIS PAGE WOULD SHOW THAT IT CONTAINS ONLY THE LIST OF THE NAMES, A DDRESSES AND CONTACT DETAILS OF SOME PERSONS. IT IS NOT KNOWN AS TO HOW FROM THE ENTRIES CONTAINED IN THIS PAGE, ONE CAN ARRIVE AT A CONCLUS ION THAT 63 STUDENTS HAVE PAID UNACCOUNTED CASH. EVEN THE PACKAGE FEE OF RS.3 5 LAKH MENTIONED IN COLUMN F OF THE TABLE APPEARS TO HAVE BEEN TAKEN BA SED ON THE SCRIBBLING. THE FIGURE OF 35 SCRIBBLED THEREIN IS ASSUMED TO BE 35 LAKH BY THE DEPARTMENT. IT IS DIFFICULT TO COMPREHEND AS TO HOW ASSESSING OFFICER CAN COME TO A CONCLUSION THAT THE FIGURE OF 35 REFERS T O 35 LAKH AND IT IS PACKAGE FEE. THE APPELLANT RELIES ON THE DECISION OF THE TRIBUNAL IN ACIT V. SHRI VIREN AHUJA, 2017 (8) TMI 528 - ITAT MUMBAI WH EREIN IT IS HELD AS UNDER:- 10. THE AO ALSO COULD NOT BRING ANY MATERIAL ON RE CORD TO UNDERSTAND THE MEANING AND NATURE OF ENTRIES. HENCE , IN THE ABSENCE OF ANY OTHER CORROBORATIVE MATERIAL, WE ARE OF THE VIEW THAT THE SAID DOCUMENT SHOULD ONLY BE CONSTRUED AS DUMB DOCUMENT. WE ALSO FIND NO REASON FOR EXTRAPOLATING THE FIGURES INTO LAKHS. HENCE THE ADDITION MADE BY THE AO HAS T O BE TAKEN AS AN ADDITION MADE ON SURMISES AND CONJECTURES, WHICH IS LIABLE TO ITA NOS.500 TO 506/BANG/2020 PAGE 166 OF 183 BE DELETED. WE NOTICE THAT THE CO- ORDINATE BENCH O F TRIBUNAL HAS ALSO TAKEN AN IDENTICAL VIEW IN THE ASSESSEES OWN CASE IN THE ORDER DATED 29-04-2015 PASSED IN ITA NO.3890/MUM/20 13 AND OTHERS RELATING TO AY 2006-07 TO 2008-09. WE NOTICE THAT THE ASSESSEE HAS GIVEN DETAILED EXPLANATIONS BEFORE THE LD CIT(A) AND HENCE THE LD CIT(A) HAS DELETED THE ADDITION BY PLACING RELIANCE ON THE DECISIONS REFERRED SUPRA. UNDER THE SE SET OF FACTS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER PASSED BY LD CIT(A) ON THIS ISSUE. ACCORDINGLY WE UPHOLD THE ORD ER PASSED BY HIM ON THIS ISSUE. 310. MOREOVER IN ALL THE OTHER PAGES OF SEIZED MATE RIAL A/DUU/06, THERE IS NOTHING EVEN REMOTELY SUGGESTING THAT SOME CASH HAS BEEN COLLECTED. HENCE, THE RELIANCE ON PAGE 151 TO ESTIMATE THE TOT AL UNACCOUNTED CASH GENERATION IS UNCALLED FOR AND IT IS RESPECTFULLY S UBMITTED THAT NO PERSON REASONABLY INSTRUCTED IN LAW CAN ARRIVE AT THE CONC LUSION AS HAS BEEN ARRIVED AT BY THE DEPARTMENT. 311. AT PAGES 152 AND 153 OF THE ASSESSMENT ORDER, AT PARA 10.9.2, THE AO HAS DISCUSSED THE EVIDENCES IN SUPPORT OF QUANTI FICATION OF UNACCOUNTED CASH RECEIPTS FOR AY 2010-11. THE EVID ENCES RELIED UPON ARE AS UNDER:- THE AO HAS EXTRACTED THREE TABLES UNDER THE HEADING EVIDENCES RELATING TO AY 2009-10 I.E., FY 2008-09 THE FIRST TABLE HAS THE CAPTION STATEMENT OF NRI STUDENTS 2008-09 . BELOW THE TABLE, THE SOURCE IS STATED. SOURCE IS STATED TO BE DIGITAL SEIZED MATERIAL: FILE NAME: SEATS 2008-09.XLS;SHEET:1 THE SECOND TABLE HAS THE CAPTION STATEMENT OF INSTITUTIONAL QUOTA STUDENTS 2008-09. BELOW THE TABLE, THE SOURCE IS STATED. SOURCE IS STATED TO BE DIGITAL SEIZED MATERIAL: FILE NAME: SEATS 2008-09 1.XLS;SHE ET:2 THE THIRD TABLE HAS THE CAPTION STATEMENT OF ADMISSION AGAINST DROPS (SIC) OUT 2008-09. BELOW THE TABLE, THE SOURCE IS STATED. SOURCE IS S TATED TO BE ITA NOS.500 TO 506/BANG/2020 PAGE 167 OF 183 DIGITAL SEIZED MATERIAL: FILE NAME: SEATS 2008-09 1.XLS;SHEET:2 312. THE AO AT PAGE 153, HAS STATED THAT FROM THE A BOVE 3 EXTRACTS OF DIGITAL DATA SEIZED DURING THE COURSE OF SEARCH PRO CEEDINGS, IT IS SEEN THAT AT LEAST 44 STUDENTS HAD BEEN ADMITTED BY COLLECTIN G CAPITATION FEE IN CASH FOR ADMISSIONS IN FY 2008-09. BEING BEYOND LIMITAT ION PERIOD, THESE EVIDENCES WERE NOT DISCUSSED IN EARLIER SECTIONS OF THIS ORDER. HOWEVER, IT IS A SIGNIFICANT EVIDENCE THAT CAPITATION FEE IN LA RGE SCALE WAS BEEN COLLECTED IN FY 2008-09 ALSO, WHICH HAPPENS TO BE T HE YEAR PRECEDING FY 2009-10 (I.E., AY 2010-11). THEREFORE, ACCORDING T O THE AO, IT IS SAFELY CONCLUDED THAT THE PRACTICE OF COLLECTING CAPITATIO N FEE IN CASH PREDATES THE LIMITATION PERIOD AND EXISTS AT LEAST FROM FY 2008- 09. 313. THE LD. AR SUBMITTED THAT THE EVIDENCES EXTRAC TED AND THE CONCLUSION OF THE AO WOULD SHOW THAT HE HAS RELIED UPON THE MATERIAL PERTAINING TO FY 2008-09 FOR QUANTIFYING THE CASH G ENERATED DURING THE FY 2009-10. IT IS SUBMITTED THAT ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN RESPECT OF THE IMPU GNED ASSESSMENT YEAR DURING THE COURSE OF SEARCH. IF NO INCRIMINATING M ATERIAL IS FOUND FOR THE IMPUGNED ASSESSMENT YEAR, THE ADDITION CANNOT BE MA DE BASED ON EARLIER YEARS DATA. THE AO HAS MERELY PRESUMED THAT THE A PPELLANT HAS RECEIVED CAPITATION FEE DURING THE FY 2009-10 JUST BECAUSE H E FOUND CERTAIN MATERIAL PERTAINING TO AY 2009-10 WHICH, ACCORDING TO HIM PU RPORTEDLY REPRESENTED PROOF FOR ALLEGED CAPITATION FEE RECEIVED DURING FY 2008-09. ASSUMING BUT WITHOUT ADMITTING THAT THE MATERIAL PERTAINING TO F Y 2008-09 REPRESENTS EVIDENCE FOR ALLEGED CAPITATION FEE RECEIVED DURING THAT YEAR, IT IS SUBMITTED THAT A PRESUMPTION CANNOT BE DRAWN THAT THERE MUST HAVE BEEN SIMILAR RECEIPT EVEN DURING FY 2009-10 IN THE ABSENCE OF IN CRIMINATING MATERIAL PERTAINING TO FY 2009-10. THE APPELLANT RELIES ON THE FOLLOWING DECISIONS:- ITA NOS.500 TO 506/BANG/2020 PAGE 168 OF 183 IN ANJANEYA BRICK WORKS. V. ACIT (INV.). 2002 (1) TMI 256 ITAT BANGALORE / 74 TTJ 921 , THE TRIBUNAL HELD AS UNDER: (III). THE FIRST LIMB OF ARGUMENTS OF THE LEARNED A UTHORISED REPRESENTATIVE IS THAT SO FAR AS THE ASST. YR. 1991 -92 IN THE CASE OF M/S. ANJANEYA BRICK WORKS IS CONCERNED, THERE IS NO EVIDENCE OF SUPPRESSION OF INCOME. WE ARE CONVINCED BY THE ARGUM ENTS OF LEARNED AUTHORISED REPRESENTATIVE TO THAT EFFECT. T HIS IS ALMOST SETTLED PRINCIPLE OF LAW THAT MERE EXISTENCE OF EVI DENCE TO SUPPORT CONCEALMENT OF INCOME FOR THE NEXT ASSESSME NT YEAR (I.E. 1992-93 IN THIS CASE) CANNOT BE MADE A BASIS JUDICIOU SLY TO ESTIMATE THE INCOME FOR THE CURRENT YEAR OR ANY OTH ER ASSESSMENT YEAR FOR THAT MATTER. ON THE BASIS OF MATERIALS RELA TED TO ASST. YR. 1992-93, WE CANNOT CONCLUDE THAT THERE EXISTED UNAC COUNTED SALES AND INCOME FOR THE PREVIOUS YEAR RELEVANT TO ASST. YR. 1991-92 WHICH IS THE SUBJECT-MATTER OF THIS APPEAL. THE ORD ER OF THE CIT(A) BASED ON THIS PRESUMPTION ALONE CANNOT BE SUS TAINED IN THE EYES OF LAW. MOREOVER, THERE IS NOT A WHIT OF E VIDENCE REGARDING THE UNACCOUNTED INVESTMENT FOR THE YEARS 1991-92 AND 1992-93. AND ALSO THE OTHER CIRCUMSTANCE THAT THE A PPELLANTS ARE ALSO MANAGING THE ACTIVITIES OF THE OTHER FIRM, WHI CH IS A SISTER CONCERN, CAN ALSO BE CONCLUDED TO BE IN FAVOUR OF T HE APPELLANTS, BECAUSE WHEN BOTH THE BUSINESSES ARE RELATED TO ONE FA MILY, IT IS IMMATERIAL IN WHICH OF THE KILN, IRRESPECTIVE OF TH E FACT WHETHER IT IS HAVING MORE OR LESS CHAMBERS, THE WORK WAS GOT DO NE. WHEN TWO VIEWS ARE POSSIBLE, THE ONE WHICH IS IN FAVOUR O F THE ASSESSEE/APPELLANT IS TO BE GIVEN EFFECT TO. WE ACCE PT THIS PLEA OF THE APPELLANT. THE TRIBUNAL IN THE CASE OF RAVIRAJ KOTHARI ASSOCIA TES V. DCIT 2016 (10) TMI 553 - ITAT PUNE HELD AS UNDER: 14. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND DOCUMENTS ON RECORD WE HOLD THAT THE ADDITION IN RESPECT OF ON-M ONEY RECEIVED IN RESPECT OF SHOP NO. 129 I.E. THE SHOP IN RESPECT OF WHICH THE DOCUMENT WAS SEIZED DURING SURVEY IS UPHELD. WHEREA S, IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT ON-MONEY WAS RE CEIVED IN RESPECT OF OTHER SHOPS SOLD OR BOOKED DURING THE FIN ANCIAL YEAR 2006-07, THE ADDITION ON ACCOUNT OF ON-MONEY IS NOT SUSTAINABLE. THE PRINCIPLE OF EXTRAPOLATION OF ON- MONEY ON TH E OTHER SHOPS ITA NOS.500 TO 506/BANG/2020 PAGE 169 OF 183 SOLD/BOOKED DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL IS REJECTED IN THE ABSENCE OF ANY MATE RIAL ON RECORD. IN COMMISSIONER OF INCOME-TAX V. ANAND KUMAR DEEPAK KUMAR [2007] 160 TAXMAN 206 (DELHI) / [2007] 294 IT R 497 (DEL.) , THE HONBLE COURT HELD AS UNDER:- 7. THE COMMISSIONER AS WELL AS THE TRIBUNAL FOUND T HAT IN FACT THERE WAS NO DISCREPANCY NOTED IN THE BOOKS OF ACCOU NT IN THE POST SEARCH PERIOD. THE ASSUMPTION OF THE ASSESSING OFFICER MAY HAVE PERHAPS BEEN VALID IF THE ASSESSING OFFICER HAD FOUND SOME DISCREPANCY IN THE BOOKS OF ACCOUNT OR IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT OUT SOME DISCREPANCIES. BUT IN THE PRES ENT CASE, THE BOOKS OF ACCOUNT WERE EXAMINED BY THE ASSESSING OFFIC ER IN THE MIDDLE OF THE ACCOUNTING YEAR. MERELY BECAUSE THERE WERE SOME DISCREPANCIES IN THE PRE-SEARCH PERIOD, IT CANNOT L EAD TO ANY PRESUMPTION THAT THE DISCREPANCIES WOULD HAVE CONTI NUED IN THE POST-SEARCH PERIOD PARTICULARLY WHEN THERE WAS FACT UALLY NO EVIDENCE AT ALL AS FOUND BY BOTH THE AUTHORITIES BELOW TO SUPPORT SUCH A VIEW. IN CIT V. M/S THAKKAR POPATLAL VELJI SALES LTD. 2016 ( 4) TMI 336 - BOMBAY HIGH COURT S CASE THE REGISTERS EVIDENCING SALES WERE FOUND FOR THE PERIOD AUGUST 2 005 TO SEPTEMBER 2005. THE REVENUE SOUGHT TO EXTRAPOLATE THE SALES RECORDED THEREIN FOR THE ENTIRE ASSESSMENT YE AR. THE TRIBUNAL REJECTED THE CONTENTION OF THE REVENUE AND HELD AS UNDER:- 9. SO FAR AS THE NEXT SUBMISSION ON BEHALF OF THE RE VENUE VIZ. OF EXTRAPOLATION OF EVIDENCE FOUND DURING SEARCH IS CO NCERNED, THIS COURT IN ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAD NEGATIVED THE REVENUE'S SUBMISSION BEFORE IT THAT THE ASSESSME NT UNDER SECTION 153A OF THE ACT IS NOT TO BE RESTRICTED ONLY TO THE ITA NOS.500 TO 506/BANG/2020 PAGE 170 OF 183 INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH BUT WOULD EXTEND TO OTHER MATERIAL ALSO. THEREFORE IN T HE FACTS OF PRESENT CASE THIS ISSUE IS COVERED BY THE DECISION O F THIS COURT IN ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) IN FAVOUR OF THE RESPONDENT-ASSESSEE INASMUCH AS IT RESTRICTS THE AS SESSMENT TO BE MADE ONLY TO THE INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF SEARCH. THE RELIANCE UPON THE DECISION OF THE SU PREME COURT IN H.M. ESUFALI H.M. ABDULALI (SUPRA) IS INAPPROPRIATE. THIS IS SO AS IT WAS PASSED UNDER THE SALES TAX LAW AND IT PROCEE DED ON THE BASIS OF BEST JUDGMENT ASSESSMENT I.E. DISREGARDING T HE ASSESSEE'S BOOKS OF ACCOUNT. IT IS NOT SO. IN ASHOKA INFRASTRUCTURE LTD. V. ACIT 2017 (6) TMI 1167 - ITAT PUNE, THE TRIBUNAL HELD AS UNDER:- SIMILARLY, IN THE YEAR OF SEARCH I.E. ASSESSMENT Y EAR 2010-11, EVIDENCE HAS BEEN FOUND FOR PART OF THE MONTH AND TH E ADDITION IS TO BE RESTRICTED TO THE SAID EVIDENCE FOUND. THE EVIDENCE CANNOT BE USED FOR EXTRAPOLATING THE RECEIPTS FOR BA LANCE PERIOD, WHICH IS AFTER THE DATE OF SEARCH; SINCE, NO EVIDEN CE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE SAME PRACTICE HAS BEEN FOLLOWED BY THE ASSESSEE IN THE PERIOD PURSUANT TO T HE DATE OF SEARCH. ACCORDINGLY, THE ASSESSING OFFICER IS DIREC TED TO COMPUTE THE INCOME IN THE RESPECTIVE YEARS IN THE HANDS OF ASSESSEE. IN M/S. J.B. EDUCATIONAL SOCIETY AND JOGINAPALLY BR. EDUCATIONAL SOCIETY V. ACIT 2013 (12) TMI 777 - ITA T HYDERABAD: [2013] 28 ITR (TRIB) 284 (ITAT [HYD] ) FURTHER, UNLESS THERE IS EVIDENCE OR MATERIAL INDI CATING ANY SUPPRESSION OF COLLECTION OF FEES TOWARDS MANAGEMEN T QUOTA SEATS FOR THE ACADEMIC YEAR 2003-2004 TO 2007-2008 HAVING BEEN FOUND DURING SEARCH, AND NO ADMISSION FROM THE ASSE SSEE, ASSESSING OFFICER WAS NOT JUSTIFIED, TO ESTIMATE TH E SAME ON THE MATERIALS SEIZED RELATING TO ACADEMIC YEAR 2008-200 9 AND 2009- 2010 INDICATING SUPPRESSION OF COLLECTION OF FEES F OR MANAGEMENT SEATS, IN ASSUMING SUPPRESSED/UNACCOUNTED RECEIPTS OF FEES FOR EARLIER ASSESSMENT YEARS. THE CALCULATION OF UNACCO UNTED INCOME FROM COLLECTION OF FEES FROM MANAGEMENT SEATS SHOUL D BE BASED ITA NOS.500 TO 506/BANG/2020 PAGE 171 OF 183 ON MATERIALS AND IT SHOULD BE ON SCIENTIFIC BASIS AN D CANNOT BE MERELY ON ASSUMPTIONS. CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE INCLINED TO DIRECT THE AO TO QUANTIFY THE RE CEIPT OF FEES FOR MANAGEMENT QUOTA SEATS IF ANY, ON THE BASIS OF AVAIL ABLE SEIZED MATERIAL AS WELL AS OTHER MATERIAL IF ANY, RELATING TO ACADEMIC YEAR 2003-2004 TO 2007-2008 AND NOT ON THE BASIS OF SEIZED MATERIALS RELATING TO ACADEMIC YEARS 2008-2009 AND 2009-2010. IN OTHER WORDS, INSTEAD OF ESTIMATING THE UNACCOUNTED RECEIPT FOR THE ACADEMIC YEARS 2003-2004 TO 2007- 2008 (A.YS. 2 004-2005 TO 2008-2009) ON THE BASIS OF SEIZED MATERIAL RELATING TO ACADEMIC YEAR 2008-2009 AND 2009-2010 (A.YS. 2009-2010 AND 2 010-2011 RESPECTIVELY), THE AO SHALL TAKE INTO CONSIDERATION THE SEIZED MATERIAL AS WELL AS OTHER MATERIAL WHAT WAS AVAILABL E DURING THE COURSE OF ASSESSMENT RELATING TO VERY SAME ASSESSME NT YEARS FOR DETERMINING THE UNACCOUNTED INCOME. FOR THIS PURPOS E, WE PLACE RELIANCE UPON THE ORDERS OF THE TRIBUNAL IN THE CASE OF DCIT VS. ROYAL MARWAR TOBACCO PRODUCT (P) LTD. (2009) 120 TT J (AHD.) 387, CIT VS. ANIL BHALLA (322 ITR 191) (DEL). IN TH IS CASE SEARCH AND SEIZURE WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE AND THE PREMISES OF A COMPANY OF WHICH THE ASSESSEE WAS A DIRECTOR. THE ASSESSING OFFICER MADE ADDITIONS UNDER THE HEAD OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE IN COME-TAX ACT, 1961. 314. THE AO REGARDING THE EVIDENCE OF OPENING BALANCE ON 1/4/2010 OBSERVED UPON EXAMINATION OF SEIZED MATERIAL RELATI NG TO PAYMENTS, THAT THERE IS AN OPENING CASH BALANCE OF RS. 81 LAKHS AS ON 1/4/2010. ACCORDING TO THE AO, THIS MEANS THAT RS. 81 LAKHS W AS THE CLOSING BALANCE OF AY 2010-11 I.E., AS ON 31/3/2010. IF NO CAPITAT ION FEE WAS COLLECTED DURING AY 2010-11, THEN THE CLOSING BALANCE OF CASH (UNACCOUNTED) WOULD BE ZERO INSTEAD OF RS. 81 LAKHS AS IS SEEN FROM THE SEIZED MATERIAL. THE SAME OPENING BALANCE IS ALSO SEEN FROM THE SUBMISSI ONS OF THE ASSESSEE VIDE ITS SUBMISSIONS DATED 20/12/2017. 315. THE LD. AR SUBMITTED THAT JUST BECAUSE THE OPE NING CASH BALANCE IS RS. 81 LAKH AS ON 01.04.2010, IT CANNOT BE PRESUMED THAT THE SAME IS OUT ITA NOS.500 TO 506/BANG/2020 PAGE 172 OF 183 OF CAPITATION FEE. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE AO ERRED IN LAW AND ON FACTS IN PRESUMING THAT CAPITAT ION FEE IS COLLECTED DURING FY 2009-10 RELEVANT TO AY 2010-11 JUST BECAUSE THE OPENING CASH BALANCE IS RS. 81 LAKH. THIS CANNOT BE CONSIDERED AS EVIDE NCE FOR RECEIPT OF CAPITATION FEE DURING THE FY 2009-10. 316. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTE D THAT THE FINDINGS OF THE AO ARE CONTRADICTORY. AT PAGE 149, AO SEEKS TO REL Y UPON PAGE 151 OF THE SEIZED MATERIAL NO. A/DUU/06 TO SUPPORT HIS COMPUTA TION OF THE ALLEGED UNACCOUNTED CASH GENERATED DURING FY 2009-10. IN P ARA 10.9.2, WHERE HE HAS ATTEMPTED TO EXPLAIN THE EVIDENCES IN SUPPORT O F HIS QUANTIFICATION FOR AY 2010-11, THERE IS NO REFERENCE TO THE AFOREMENTI ONED PAGE 151 OF THE SEIZED MATERIAL NO. A/DUU/06. AT PARA 10.9.2, HE E XTRACTS CERTAIN EVIDENCES WHICH PURPORTEDLY BELONG TO FY 2008-09. AS STATED IN EARLIER PARAGRAPH, EVEN THIS EVIDENCE FOR FY 2008-09 IS NOT RELIABLE AND ACCEPTABLE AND CANNOT FORM BASIS FOR DRAWING ANY CO NCLUSION FOR FY 2009- 10. MOREOVER, THE ALLEGED EVIDENCES HAVE NEITHER B EEN CONFRONTED TO SRI GOLI V SRINIVAS / SRI G H NAGARAJ NOR COPY OF THE S AME IS GIVEN TO THE APPELLANT. IT IS SUBMITTED THAT ALL THE ABOVE WOUL D GO TO PROVE THAT THERE IS NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH SUPPORTS THE ALLEGATIONS THAT THE APPELLANT RECEIVED CAPITATION FEE DURING THE FY 2009-10. 317. WITHOUT PREJUDICE TO THE ABOVE, THE AO ISSUED NOTICE NO 142(1)/ACIT/CC-1(4)/2017-18 DATED 21.12.2017 U/S.14 2(1) REQUIRING THE APPELLANT TO SHOW CAUSE AS TO WHY THE UNACCOUNTED C ASH GENERATED BE NOT ESTIMATED AS PER THE ANNEXURE ATTACHED TO THE SAID NOTICE. A PERUSAL OF THE ANNEXURE WOULD SHOW THAT SO FAR AS AY 2010-11 IS CO NCERNED, THE AO SOUGHT TO RELY ONLY ON PAGE 151 OF THE SEIZED MATER IAL NO. A/DUU/06. THERE IS NO MENTION AT ALL OF THE EVIDENCES WHICH T HE ASSESSING OFFICER ITA NOS.500 TO 506/BANG/2020 PAGE 173 OF 183 SOUGHT TO RELY UPON IN THE ASSESSMENT ORDER. THE R ELIANCE UPON MATERIAL TO WHICH THE APPELLANT IS NOT PUT TO NOTICE IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. THE APPELLANT, IN ITS REPLY DATED 23.12.2 017 TO THE SAID NOTICE HAD OBJECTED TO RELIANCE ON THE SAID PAGE 151 OF THE SE IZED MATERIAL NO A/DUU/06 FOR PROPOSING ADDITION FOR AY 2010-11. IN ORDER TO COUNTER THIS OBJECTION, THE AO SOUGHT TO RELY UPON MATERIAL PERT AINING TO FY 2008-09. THIS SHOWS THAT THE AO HAS DONE THE ASSESSMENT WITH A PREJUDICED MIND. HE HAS DECIDED TO MAKE THE ADDITION SANS ANY MATERI AL WHICH WARRANTED THE SAME. 318. WITHOUT PREJUDICE TO THE ABOVE, IT IS ALSO PER TINENT TO NOTE THAT THE AO RELIED UPON DATA PERTAINING TO AY 2009-10 THOUGH IT DOESNT FALL WITHIN THE BLOCK OF 6 YEARS CONTEMPLATED UNDER SECTION 153 A(1). IT IS SUBMITTED THAT THE AUTHORIZED OFFICER IS NOT PERMITTED TO SEI ZE THE MATERIAL BELONGING TO A PERIOD WHICH DOESNT FALL OR IS UNLIKELY TO FALL WITHIN THE PERIOD OF 6 ASSESSMENT YEARS CONTEMPLATED BY SECTION 153A. AS STATED EARLIER, THE SEARCH CAN BE INITIATED IF THE AUTHORIZING OFFICER HAS REASON TO BELIEVE THAT IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION ANY OF THE EVENTUALITIES STATED IN CLAUSES (A) TO (C) OF SECTION 132(1) EXIS T. SECTION 153A(1) STATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN T HE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BO OKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME. SECTION 132 AND SEC 153A NEED TO BE READ HARMONIOUSLY. THE ASSESSMENT UNDER SECTION 153A IS PERMITTED ONLY IN RESPECT OF ASSESSMENT YEAR FAL LING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED . ON A HARMONIOUS READING OF SECTION 132 AND SECTION 153A, IT IS TRIT E TO STATE THAT SECTION 132 ITA NOS.500 TO 506/BANG/2020 PAGE 174 OF 183 DOESNT CONFER POWER ON THE AUTHORIZING OFFICER TO AUTHORIZE SEARCH WHOSE CONSEQUENCE WOULD RESULT IN SEIZURE OF MATERIAL PER TAINING TO A PERIOD FALLING OR LIKELY TO FALL OUTSIDE THE PERIOD STIPUL ATED UNDER SECTION 153A. THE SEIZURE OF MATERIAL MADE IN RESPECT OF SUCH PERIOD IS INVALID. SUCH INVALIDLY SEIZED MATERIAL CANNOT BE VALIDLY HANDED OVER TO TH E ASSESSING OFFICER UNDER SECTION 132(9A). EVEN IF THE SAME IS HANDED OVER, SUCH MATERIAL CANNOT BE RELIED UPON BY THE ASSESSING OFFICER FOR MAKING ASSESSMENT UNDER SECTION 153A. IN THE PRESENT CASE, THE SEARC H IS CONDUCTED ON 06.08.2015. THE SIX ASSESSMENT YEARS REFERRED IN S ECTION 153A WOULD BE AY 2010-11 TO 2015-16. THEREFORE, MATERIAL PERTAIN ING TO PERIOD PRIOR TO FY 2009-10 CANNOT BE CONSIDERED. THEREFORE, EVEN UPON THIS GROUND, SUCH MATERIALS CANNOT BE RELIED UPON. THIS IS WITHOUT P REJUDICE TO THE MAIN CONTENTION THAT NO ADDITION CAN BE MADE IN ANY ASSE SSMENT YEAR IN THE ABSENCE OF INCRIMINATING MATERIAL FOR THAT YEAR. 319. IT WAS SUBMITTED THAT THE ADDITION OF RS. 12,3 4,00,000 MADE IN THE ASSESSMENT U/S.153A FOR AY 2010-11 IN RESPECT OF UG -MBBS COURSE IS BASED ON NO MATERIAL AT ALL AND IN THE ABSENCE OF I NCRIMINATING MATERIAL, IT IS NOT SUSTAINABLE AND HENCE, IS LIABLE TO BE QUASHED. 320. THE LD. AR SUBMITTED THAT THE AO HAS COMPUTED THE CAPITATION FEE AND THE UNACCOUNTED CASH GENERATED IN RESPECT OF PG COURSE FOR AY 2010- 11 AS UNDER:- COLUMN HEADING AS PER THE TABLE GIVEN AT PAGE 151 OF THE ASSESSMENT O RDER COLUMN REFERENCE T OTA L S EATS D 68 NO. OF SEATS FOR WHICH CAPITATION FEE IS C OLLECT ED E 42 UNACCOUNTED CASH COMPONENT GENERATED PER SEAT PER COURSE F - ITA NOS.500 TO 506/BANG/2020 PAGE 175 OF 183 (RS. IN LAKH) TOTAL UNACCOUNTED CASH GENERATED AS PER SEIZED MATERIAL (RS. IN LAKH) G - ESTIMATION OF TOTAL UNACCOUNTED CASH GENERATED (RS. IN LAKH) H 1508 321. THE LD. AR SUBMITTED THAT COLUMN F WHICH DEALS WITH UNACCOUNTED CASH COMPONENT GENERATED PER SEAT PER COURSE AND THE COLUMN G WHICH DEALS WITH TOTAL UNACCOUNTED CASH GENERATED AS PER SEIZED MATE RIAL ARE BLANK SO FAR AS AY 2010-11 IS CONCERNED. IT MEANS THAT THE AO HAS ACKNOWLEDGED THAT THERE IS NO INCRIMINATING MATERIA L TO PROVE THAT THE APPELLANT HAS RECEIVED UNACCOUNTED FEE IN CASH DURI NG THE FINANCIAL YEAR 2009-10. 322. WITHOUT PREJUDICE TO THE ABOVE, IT IS NOT KNOW N AS TO HOW THE AO HAS ADOPTED THE NO. OF SEATS IN RESPECT OF WHICH CA PITATION FEE IS RECEIVED AT 42. THE QUOTA OF TOTAL SEATS FOR ASSESSMENT YEA R 2010-11 IS 55, OUT OF WHICH 80% SEATS ARE RESERVED UNDER MERIT QUOTA. THE MANAGEMENT QUOTA IS ONLY 20% WHICH WORKS OUT TO 11. ONE FAILS TO UND ERSTAND AS TO HOW ONE CAN ESTIMATE THAT CASH WAS COLLECTED FROM 42 STUDEN TS. IT IS AXIOMATIC THAT THE MERIT STUDENTS WILL NOT PAY ANY CASH. THE APP ELLANT HAS VIDE ITS LETTER DATED 23.12.2017 FILED ON 26.12.2017 HAS ENCLOSED T HE YEAR-WISE DETAILS OF NUMBER OF STUDENTS PERMITTED AND ACTUAL NUMBER OF S EATS ADMITTED TO THE COLLEGE IN RESPECT OF UG AND PG COURSES. 323. IT IS ALSO NOT KNOWN AS TO HOW THE NUMBER OF S EATS IN RESPECT OF WHICH THE CAPITATION FEE IS COLLECTED IS ARRIVED AT . AN ASTERISK MARK HAS BEEN PUT NEXT TO THE NUMBER OF SEATS I.E., 42. BUT THERE IS NO NOTE BELOW THE TABLE EXPLAINING THE ASTERISK MARK. THE SEIZED MATERIAL DOES NOT CONTAIN ANY SUCH DATA SO FAR AS AY 2010-11 IS CONCE RNED. IN THE REMARKS ITA NOS.500 TO 506/BANG/2020 PAGE 176 OF 183 COLUMN (I) OF THE TABLE, AT PAGE 151, IT IS AS THE RATE OF GROWTH FROM FY: 2010-11 TO 2011-12 IS ARRIVED AT 21.46%. THE SAME RATE OF GROWTH IS ADOPTED FOR 2009-10 TO 2010-11 TO ARRIVE AT FIGURES FOR FY: 2009-10 . 324. A PERUSAL OF THE BASIS OF COMPUTATION AS GIVEN IN THE REMARKS COLUMN WOULD SHOW THAT THE ADDITION IS MADE TOWARDS ALLEGED UNACCOUNTED CASH GENERATED DURING FY 2009-10 IN RESPECT OF PG C OURSE IS MERELY BASED ON ESTIMATION. THE ESTIMATION IS MADE BASED ON GROWTH RATE OF 21.46% WHICH PERCENTAGE IS ARRIVED AT BY CONSIDERIN G THE DATA FOR FY 2010- 11 AND FY 2011-12. IT IS PERTINENT TO NOTE THAT TH E VALUE FOR FY 2011-12 IS ESTIMATED BASED ON DATA FOR FY 2010-11 AND 2012-13. TO MAKE AN ESTIMATION AGAIN BASED ON SUCH DATA WHICH ITSELF IS DERIVED BY WAY OF ESTIMATION IS AN UNSCIENTIFIC MANNER OF COMPUTATION . IN FACT, IN THE EVIDENCES DISCUSSED AT PAGES 152 AND 153 OF THE ASS ESSMENT ORDER, NONE OF THE MATERIALS PERTAIN TO PG COURSE. THEREFORE, IT MEANS THAT THE AO HAD ABSOLUTELY NOTHING ON HAND TO MAKE ANY ADDITION TOW ARDS UNACCOUNTED CASH GENERATED DURING FY 2009-10 IN RESPECT OF PG C OURSE. IT IS SUBMITTED THAT THE ADDITION MADE BASED ON GROWTH OF SOME OTHE R YEARS IS IRRATIONAL. MERELY BECAUSE THERE IS GROWTH THERE CANNOT BE PRES UMPTION THAT CAPITATION FEE IS RECEIVED. 325. IT WAS SUBMITTED THAT THE ADDITION MADE TOWARD S UNACCOUNTED CASH GENERATED DURING FY 2009-10 IN RESPECT OF PG COURSE BASED ON SUCH UNSCIENTIFIC METHOD IS NOT SUSTAINABLE. THE SUBMIS SIONS MADE SUPRA REGARDING INVALIDITY OF ADDITIONS MADE IN ABSENCE O F INCRIMINATING MATERIAL WOULD APPLY MUTATIS MUTANDIS. 326. THE ADDITION OF RS. 15,08,00,000 MADE IN THE A SSESSMENT U/S.153A FOR AY 11-12 IN RESPECT OF PG COURSE BASED ON NO MA TERIAL AT ALL AND IN THE ABSENCE OF INCRIMINATING MATERIAL, IT IS NOT SUSTAI NABLE AND HENCE, IS LIABLE TO BE QUASHED. ITA NOS.500 TO 506/BANG/2020 PAGE 177 OF 183 327. THOUGH THE AO HAS CONSIDERED VARIOUS MATERIALS , AT VARIOUS PLACES IN THE ASSESSMENT ORDER, WHEN IT CAME TO COMPUTATIO N OF UNACCOUNTED CASH FOR AY 2010-11, HE HAS SOUGHT TO MAKE AN ESTIM ATION PURELY BASED ON DATA FOR SOME OTHER YEAR OR YEARS. THIS MEANS THAT HE HAS IMPLICITLY ACKNOWLEDGED THAT NO INCRIMINATING MATERIAL IS FOUN D FOR AY 2010-11 IN RESPECT OF BOTH UG-MBBS COURSE AS WELL AS PG COURSE . THE ANALYSIS OF THE DOCUMENTS AND THE CONCLUSIONS ARRIVED AT BASED ON SUCH ANALYSIS MADE IN THE ASSESSMENT ORDER IS NOT RELEVANT FOR AY 2010-11 AT ALL. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED IN THE CASE OF AY 2010-11 ON 12.03.2013. HENCE, THE ASSESSMENT FO R AY 10-11 IS UNABATED. NO ADDITION CAN BE MADE IN THE ABSENCE O F INCRIMINATING MATERIAL. THEREFORE, THE ENTIRE ASSESSMENT UNDER S ECTION 153A FOR AY 2010-11 IS LIABLE TO BE QUASHED IN THE ABSENCE OF I NCRIMINATING MATERIAL FOUND AND SEIZED IN RESPECT OF THE SAID ASSESSMENT YEAR. 328. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT HAS ANALYSED THE SEIZED MATERIAL AND ARRIVED AT THE ALLEGED UNACCOUN TED CASH GENERATED FOR AY 2010-11 FROM UG-MBBS COURSE AND PG COURSE. THE UNACCOUNTED CASH GENERATED AS PER THE SAID ANALYSIS IS NIL. THE LEARNED ASSESSING OFFICER HAS EXTRAPOLATED THAT A SUM OF RS. 2,742 LA KH WOULD HAVE BEEN RECEIVED WHICH HAS NOT BEEN ACCOUNTED EVEN IN THE S EIZED MATERIAL. THESE SUBMISSIONS ARE MADE WITHOUT PREJUDICE TO THE MAIN CONTENTION THAT THE APPELLANT HAS NOT RECEIVED ANY CAPITATION FEE. 329. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHO RITIES. 330. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD ON THIS ISSUE. IN ALL THESE YEARS, THE UNDISCLOSED CASH RECEIPTS ON THE BASIS OF INCRIMINATING MATERIAL IN THE FORM OF NOTINGS, J OTTINGS IN THE LOOSE SHEETS ARE UNSUBSTANTIATED MATERIAL. WE HAVE ALREADY HELD IN EARLIER PARA OF THIS ORDER THAT UNSUBSTANTIATED MATERIAL CANNOT BE FULL- PROOF MATERIAL EVIDENCE ITA NOS.500 TO 506/BANG/2020 PAGE 178 OF 183 TO SUSTAIN THE ADDITION. WE ALSO HOLD THAT MERE EX ISTENCE OF CONCEALMENT EVEN IN ONE YEAR IS NOT SUFFICIENT TO ESTIMATE THE INCOME OF OTHER YEARS ON THAT BASIS. IT IS PERTINENT TO PLACE RELIANCE ON TH E ORDER OF THIS TRIBUNAL IN THE CASE OF ANJANEYA BRICK WORKS. V. ACIT , 74 TTJ 921 (BANG) WHEREIN IT WAS HELD THAT ESTIMATION OF INCOME COULD NOT BE MADE RE LYING ON THE SEIZED DOCUMENTS WHICH RELATED TO ANOTHER ACCOUNTING PERIO D AND NOT THE ACCOUNTING YEAR UNDER CONSIDERATION AND, THEREFORE, ADDITION COULD NOT BE MADE ON THE BASIS OF INCRIMINATING DOCUMENTS RELATI NG TO SUBSEQUENT YEAR. SO THE RULE OF UNIFORMITY CANNOT BE AND SHOULD NOT BE APPLIED ON THE ESTIMATE BASIS. THERE CAN BE TIME AND TIMES WHEN T HE UNIFORMITY CAN BE MAINTAINED BUT FOR THAT CASE THERE SHOULD BE SOME D IRECT EVIDENCE AVAILABLE IN A GIVEN CASE. FURTHER, IN THE CASE O F CIT V. ANAND KUMAR DEEPAK KUMAR, 294 ITR 497 (DEL.) IT WAS HELD THAT MERELY BECAUSE SOME DISCREPANCIES WERE FOUND IN ASSESSEES BOOKS IN THE PRE-SEARCH PERIOD OF UNACCOUNTED SALES, IT COULD NOT BE PRESUMED THAT SU CH A DISCREPANCY CONTINUED EVEN IN THE POST-SEARCH PERIOD, WHEN THER E IS NO EVIDENCE TO SUPPORT SUCH A VIEW, AND, THEREFORE, ADDITION COULD NOT BE MADE ON THE BASIS THAT THE ASSESSEE HAD MADE UNACCOUNTED SALES THROUGHOUT THE ACCOUNTING YEAR. BEING SO, THERE IS NO QUESTION OF EXTRAPOLATION OF INCOME IN ALL THESE ASSESSMENT YEARS. THIS GROUND OF THE APPEALS OF THE ASSESSEE IS ALLOWED IN ALL ASSESSMENT YEARS. 331. GROUND NO.12 FOR AY 2010-11 IS REGARDING DISALLOWANCE OF DONATI ON FOR THE AY 2010-11 ONLY. THE AO HAS DISALLOWED DON ATION OF RS. 10,00,000 UNDER SECTION 37 OF THE ACT. AT PAGE 192 HE HELD T HAT THE DONATIONS IF ANY MADE BY THE ASSESSEE AS NOT BEING FOR THE PURPOSE O F BUSINESS ARE DISALLOWED U/S 37. HE HAS NOT DEMONSTRATED AS TO HOW THE DONATION MA DE HAS NO NEXUS TO ACTIVITIES OF THE APPELLANT. IT WAS SUBMITTED THAT THE APPELLANT DONATED RS. 10,00,000 TO VIJAYALAKSHMI (R L JALAPPA EDUCATION FOUNDATION) THROUGH CHEQUE. ITA NOS.500 TO 506/BANG/2020 PAGE 179 OF 183 332. WITHOUT PREJUDICE TO THE MAIN CONTENTION THAT THE APPELLANT IS NOT ENGAGED IN ANY COMMERCIAL ACTIVITIES AND THAT THE A PPELLANT IS ENTITLED TO EXEMPTION UNDER SECTION 11, IT IS SUBMITTED THAT TH E DONATION OF RS. 10,00,000 IS ALLOWABLE AS DEDUCTION UNDER SECTION 3 7 OF THE ACT. SECTION 37 OF THE ACT AS IT STOOD DURING THE RELEVANT PERIO D IS AS UNDER: 37. (1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE AS SESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PUR POSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTI NG THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION'. EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR AN Y PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW S HALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUS INESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE M ADE IN RESPECT OF SUCH EXPENDITURE. (2B) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (1), NO ALLOWANCE SHALL BE MADE IN RESPECT OF EXPENDITURE I NCURRED BY AN ASSESSEE ON ADVERTISEMENT IN ANY SOUVENIR, BROCHURE , TRACT, PAMPHLET OR THE LIKE PUBLISHED BY A POLITICAL PARTY . 333. IN ORDER TO CLAIM DEDUCTION U/S.37, THE EXPEND ITURE UNDER CONSIDERATION, SHOULD SATISFY THE FOLLOWING CONDITI ONS:- A. IT SHOULD NOT BE OF THE NATURE DESCRIBED IN SECTION S 30 TO 36 B. IT SHOULD NOT BE CAPITAL EXPENDITURE C. IT SHOULD NOT PERSONAL IN NATURE D. IT SHOULD BE LAID OUT WHOLLY AND EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS OR PROFESSION E. IT SHOULD NOT BE INCURRED FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY ANY LAW F. IT SHOULD NOT HAVE BEEN INCURRED ON ADVERTISEMENT I N ANY SOUVENIR, BROCHURE, TRACT, PAMPHLET OR THE LIKE PUBLISHED BY A POLITICAL PARTY 334. IT IS NOBODYS CASE THAT THE CONDITIONS STATED IN (A) TO (C), (E) AND (F) ARE NOT SATISFIED IN CASE OF DONATIONS MADE BY THE APPELLANT. THE ONLY ITA NOS.500 TO 506/BANG/2020 PAGE 180 OF 183 POINT OF DEBATE IS SATISFACTION OF CONDITION STIPUL ATED IN (D) SUPRA. THE EXPRESSION WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS HAS BEEN JUDICIALLY INTERPRETED. 335. IN CIT V. CHANDULAL KESHAVLAL & CO.[1960] 38 ITR 601 ( SC) , THE HONBLE SUPREME COURT HELD THAT IN DECIDING WHETHER A PAYMENT OF MONEY IS A DEDUCTIBLE EXPENDITURE ONE HAS TO TAKE INTO CO NSIDERATION QUESTION OF COMMERCIAL EXPEDIENCY AND PRINCIPLES OF ORDINARY CO MMERCIAL TRADING. IF THE PAYMENT OR EXPENDITURE IS INCURRED FOR THE PURPOSE OF THE TRADE OF THE ASSESSEE, IT DOES NOT MATTER THAT THE PAYMENT MAY I NURE TO THE BENEFIT OF A THIRD PARTY. ANOTHER TEST IS WHETHER THE TRANSACTIO N IS PROPERLY ENTERED INTO AS A PARTY OF THE ASSESSEE'S LEGITIMATE COMMERCIAL UNDERTAKING IN ORDER TO FACILITATE THE CARRYING ON OF ITS BUSINESS; AND IT IS IMMATERIAL THAT A THIRD PARTY ALSO BENEFITS THEREBY. BUT IN EVERY CASE IT I S A QUESTION OF FACT WHETHER THE EXPENDITURE WAS EXPENDED WHOLLY AND EXC LUSIVELY FOR THE PURPOSE OF TRADE OR BUSINESS OF THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. MALAYALAM PLANTATIONS LTD. [1964] 53 ITR 140 (SC) HELD THAT THE EXPRESSION 'FOR THE PURPOSE OF THE BUSINESS' IS WIDER IN SCOPE THAN THE EXPRESSION 'FOR THE PURPOSE OF EARNING PROFITS'. ITS RANGE IS WIDE : IT MAY TAKE IN NOT ONLY THE DAY TO DAY RUNNI NG OF A BUSINESS BUT ALSO THE RATIONALIZATION OF ITS ADMINISTRATION AND MODER NIZATION OF ITS MACHINERY; IT MAY INCLUDE MEASURES FOR THE PRESERVATION OF THE BUSINESS AND FOR THE PROTECTION OF ITS ASSETS AND PROPERTY FROM EXPROPRI ATION, COERCIVE PROCESS OR ASSERTION OF HOSTILE TITLE ; IT MAY ALSO COMPREHEND PAYMENT OF STATUTORY DUES AND TAXES IMPOSED AS A PRE-CONDITION TO COMMENCE OR FOR CARRYING ON OF A BUSINESS ; IT MAY COMPREHEND MANY OTHER ACTS INCIDE NTAL TO THE CARRYING ON OF A BUSINESS. HOWEVER WIDE THE MEANING OF THE EXPR ESSION MAY BE, ITS LIMITS ARE IMPLICIT IN IT. THE PURPOSE SHALL BE FOR THE PURPOSE OF THE BUSINESS, THAT IS TO SAY, THE EXPENDITURE INCURRED SHALL BE F OR THE CARRYING ON OF THE ITA NOS.500 TO 506/BANG/2020 PAGE 181 OF 183 BUSINESS AND THE ASSESSEE SHALL INCUR IT IN HIS CAP ACITY AS A PERSON CARRYING ON THE BUSINESS. 336. ALTERNATIVELY, IT IS SUBMITTED THAT THE APPELL ANT IS ENTITLED TO DEDUCTION U/S. 80G IN RESPECT OF THE DONATIONS GIVEN TO THE A BOVE ENTITIES. THE DONEE VIJAYALAKSHMI (R L JALAPPA EDUCATION FOUNDATION) IS RECOGNIZED UNDER SECTION 80G. 337. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHO RITIES. 338. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON THIS ISSUE. THE DONATIONS HAVE BEEN GIVEN TO THE REGIST ERED AND APPROVED INSTITUTION I.E., R.L. JALAPPA FOUNDATION WHICH IS DULY REGISTERED U/S. 12A OF THE ACT BY WAY OF ACCOUNT PAYEE CHEQUE AND THE SAME IS TO BE ALLOWED AS AN APPLICATION OF INCOME. THIS GROUND OF THE APPEA L OF THE ASSESSEE IS ALLOWED. 339. GROUND NO. 13 REGARDING RATE OF TAX IS RAISED FOR ALL THE ASSESSMENT YEARS. THE CONTENTION OF THE AR IS THA T EVEN IF EXEMPTION U/S. 11 IS DENIED, MAXIMUM MARGIN RATE OF TAX CANNOT BE APPLIED IN VIEW OF THE CBDT CIRCULAR NUMBER 320 DATED 11/01/1982 REPORTED IN 134 ITR 166 (ST) AND 577 DATED 04/09/1990 REPORTED IN 185 ITR 49 (ST ). WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THOUGH, WE ARE AGREEING WITH THE CONTENTION OF THE AR. IN OUR OPINION THIS GROUND OF APPEALS DOES NOT REQUIRE ANY ADJUDICATION AS WE HAVE ALREADY HELD THAT ASSESSEE IS ENTITLED FOR EXEMPTION 11 OF THE I.T. ACT. 340. FURTHER IN AY 2012-13, THE ASSESSEE HAS RAISED THE GROUND THAT THE AO HAS CHARGED TAX ON LONG TERM CAPITAL GAIN @ 30% INSTEAD OF APPLICABLE RATE OF 20%. IN OUR OPINION, LONG TERM CAPITAL GAI N IS ALSO INCOME U/S. 2(24) OF THE ACT. THEREFORE, FOR THE PURPOSE OF SECTION 11(1)(A) OF THE ACT, CAPITAL GAIN IS ALSO CONSIDERED AS PART OF THE INCOME OF TR UST. ACCORDINGLY, CAPITAL GAINS ARE ALSO CONSIDERED AS PART OF THE TRUST INCO ME AND THEREFORE IF IT IS ITA NOS.500 TO 506/BANG/2020 PAGE 182 OF 183 APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSE, IT CAN NOT BE BROUGHT TO TAX. ORDERED ACCORDINGLY. 341. THE NEXT ISSUE FOR CONSIDERATION IS WITH REGAR D TO JURISDICTION IN AY 2016-17 ONLY. THE LD. AR CONTENDED THAT ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2016-17 ACTUALLY PASSED U/S 153A O F THE ITR THOUGH IT WAS STATED THAT IT WAS PASSED U/S 143(3) R.W.S 153D OF THE ACT. IT WAS THE CONTENTION OF THE LD. AR THAT COMMON NOTICES U/S. 1 53A OF THE ACT HAVE BEEN ISSUED FOR ALL THE AYS 2010-11 TO 2016-17 AND HENCE THE ASSESSMENT ORDER IS DEEMED TO HAVE BEEN PASSED FOR ALL THESE A SSESSMENT YEARS U/S. 153A OF THE ACT. IT IS NOTICED FROM THE ASSESSMENT ORDER FOR AY 2016-17 THAT IT IS PASSED U/S. 143(3) R.W.S. 153B OF THE AC T. THE COMMON NOTICE ISSUED FOR ALL THE ASSESSMENT YEARS COULD NOT MAKE THE ASSESSMENT ORDER FOR AY 2016-17 AS INVALID AND MENTIONING OF WRONG S ECTION IN THE NOTICE IS NOT FATAL IN VIEW OF THE PROVISIONS OF SECTION 292B OF THE ACT WHICH PROVIDES THAT WHERE THE ASSESSEE COOPERATED IN THE ASSESSMEN T PROCEEDINGS AND HAS NOT AT ALL PUT ANY PROTEST FOR THE SAME. THIS GROUND OF THE ASSESSEE IS THEREFORE DISMISSED. 342. GROUND NO 14 : THE NEXT ISSUE IS REGARDING LEVY OF INTEREST U/S. 234B WHICH IS CONSEQUENTIAL AND MANDATORY IN NATURE DOES NOT REQUIRE ADJUDICATION. 343. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF AUGUST, 2021. SD/- ( BE ENA PILLAI ) SD/- ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTAN T MEM BER BANGALORE, DATED, THE 16 TH AUGUST, 2021. / DESAI S MURTHY / ITA NOS.500 TO 506/BANG/2020 PAGE 183 OF 183 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.
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