NILESH B. MEHTA, MUMBAI V. ITO 22(1)4, MUMBAI

ITA 5234/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55675 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-10-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI R.K. PANDA (ACCOUNTANT MEMBER) ITA NO.5234/MUM/2010 ASSESSMENT YEAR- 2000-01 SHRI NILESH B. MEHTA, 8, KAILASH PRAKASH, R.N. NARKAR MARG, GHATKOPAR (E), MUMBAI-400 077 PAN-AAHPM 3763F VS. THE ITO-22 (1)4, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATISH R. MODY RESPONDENT BY: SHRI G.P. TRIVEDI DATE OF HEARING :19.10.2011 DATE OF PRONOUNCEMENT:21.10.2011 O R D E R PER B.R. MITTAL, JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2000-01 AGAINST ORDER OF LD. CIT(A) DT.20.4.2010 IN CONFIRM ING THE ADDITION OF 6,28,000/- MADE BY AO. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSING OFFICER INITIATED REASSESSMENT PROCEEDINGS U/.147 OF THE AC T ON THE GROUND THAT AN INTIMATION WAS RECEIVED THAT ASSESSEE HAD PAID CAPI TATION FEE/DONATION TO RAMRAO ADIK INSTITUTE OF TECHNOLOGY (HEREINAFTER REF ERRED TO RAIT), NERUL ON ACCOUNT OF ADMISSION OF HIS DAUGHTER MISS. DISHA ME HTA OF B.E. (ELECTRONIC ENGINEERING) DEGREE ADMISSION. IN THIS REGARD, AO S TATED THAT THERE WAS A SEARCH IN THE CASE OF M/S. RAMARAO ADIK EDUCATION S OCIETY AND DURING THE COURSE OF SEARCH, IT WAS REVEALED THAT ASSESSEE PAI D RS. 6,50,000/- FOR ADMISSION OF HIS DAUGHTER AS UNDER: ITA NO. 5234/M/10 2 DATE OF PAYMENT AMOUNT (RS.) 2.6.1999 30,000 1.7.1999 2,00,000 24.4.1999 3,00,000 13.5.1999 50,000 19.5.1999 70,000 TOTAL 6,50,000 3. THE ASSESSEE DISPUTED THE VALIDITY OF INITIATION OF REASSESSMENT AND ALSO STATED THAT HE HAD NOT PAID ANY AMOUNT APART F ROM ADMISSION FEE OF RS. 28,000/- AND RS. 4,000/- BY PAY ORDER PAYABLE TO THE PRINCIPAL, V.J.T.I., MUMBAI. THE ASSESSEE ALSO FILED AFFIDAVIT DENYING PAYMENT OF ANY CAPITATION FEES. HOWEVER, AO CONSIDERED THE CASE OF SHRI BHAR AT S. SHAH AND AFTER REPRODUCING THE STATEMENT WHICH WERE RECORDED IN TH E CASE OF SHRI BHARAT S. SHAH, REPRODUCED IN PARAS 7.1 & 7.2 OF ASSESSMENT O RDER, STATED THAT ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF, INVES TMENT/EXPENSES INCURRED IN RESPECT OF CAPITATION FEE/DONATION OF RS. 6,50,000/ - AND ACCORDINGLY MADE ADDITION OF RS. 6,28,000/-. IT IS RELEVANT TO STATE THAT AO MADE SAID ADDITION OF RS. 6,28,000/-, THE AMOUNT WHICH WAS STATED TO H AVE BEEN PAID AS CAPITATION FEE/DONATION IN THE CASE OF ADMISSION OF SON OF SHRI BHARAT S. SHAH. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE FIRST APPELLATE AUTHORITY. 4. ON BEHALF OF ASSESSEE, IT WAS CONTENDED THAT DAU GHTER OF ASSESSEE WAS A BRILLIANT STUDENT AND SHE SCORED 81.675% AGGREGAT E AND 92% PCM IN HSC EXAMINATION. SHE GOT ADMISSION ON MERIT AND NO CAP ITATION FEE/DONATION WAS PAID FOR HER ADMISSION. THE ATTENTION OF LD. CIT(A ) WAS DRAWN THAT AO HAS MADE THE ADDITION CONSIDERING THE CASE OF SHRI BHAR AT S. SHAH WHO DISCLOSED SUCH ADDITIONAL INCOME OF RS. 6,28,000/- IN HIS STA TEMENT AND THEREFORE AO AFTER DISCUSSING THE FACTS OF THAT CASE MADE ADDIT ION IN THE CASE OF ASSESSEE. IT IS OBSERVED THAT LD. CIT(A) CALLED REMAND REPORT FROM AO. THE AO STATED THAT DURING THE COURSE OF SEARCH, STATEMENT OF SHR I SHASHIKANT J MANDAVKAR, ACCOUNTS CLERK WAS RECORDED AND IN HIS REPLY HE STA TED THAT DIARIES WERE MAINTAINED AND THE FIGURES REPRESENTS THEREIN WAS D ISBURSEMENT OUT OF CASH ITA NO. 5234/M/10 3 COLLECTED FOR THE STUDENTS AT THE TIME OF THEIR ADM ISSION. THE AO STATED THAT NAME OF THE STUDENTS WERE MATCHING WITH THE NAMES A DMITTED FOR VARIOUS COURSES. THUS, IT IS OBVIOUS THAT ASSESSEE HAS ACT UALLY PAID THE CAPITATION FEE AGGREGATING TO RS. 6,50,000/- WHICH IS WRITTEN IN T HE DIARIES MAINTAINED BY CLERK OF D.Y. PATIL COLLEGE. IN VIEW OF ABOVE, AO J USTIFIED THE ADDITION MADE IN THE ASSESSMENT ORDER. 5. THE LD. CIT(A) CALLED REPLY TO REMAND REPORT FRO M ASSESSEE AND THE REPLY FILED BY ASSESSEE IS REPRODUCED IN PARA 2.4.1 OF THE IMPUGNED ORDER WHICH IS AS UNDER: LD. AR VIDE LETTER NO. NIL DT. NIL THANKS THE CIT( A) FOR FURNISHING COPY OF REMAND REPORT AND SUBMITTED PARA WISE REPLY, WHEREIN IT WAS ALLEGED BY THE LD. AR THAT THE APPEL LANTS PLEA FOR INDEPENDENT VERIFICATION FROM DIRECTORATE OF EDUCAT ION WAS NOT FAVOURABLY CONSIDERED BY AO. LD. AR ALSO MENTIONED THAT APPELLANTS DAUGHTER WAS A STUDENT OF ENGINEERING COURSE WHEREA S LD. AO HAS MENTIONED ABOUT SOME DR. MEHTA IN THE REMAND REPORT . HE VEHEMENTLY ARGUED THAT THE FACTS MENTIONED IN THE R EMAND REPORT ARE CONTRADICTORY AND POSSIBLY NOT APPLICABLE TO APPELL ANTS CASE. LD. AR ARGUED THAT THE DEPARTMENT FAILED TO DISCHARGE THE ONUS AND HAS NOT GIVEN ANY PROOF OF PAYMENTS OF SUCH CAPITATION FEE BY THE APPELLANT. REGARDING SEARCH CONDUCTED IN THE CASE OF D.Y. PATI L GROUP EVIDENCES OF RECEIPT OF CAPITATION FEES OF RS. 6,50,000/- FRO M THE APPELLANT, AS ADMITTED BY THE RESPONSIBLE PERSON OF THE SAID D.Y. PATIL GROUP, IT WAS ARGUED BY THE LD. AR THAT IT IS THE MATTER OF COMMON KNOWLEDGE THAT PERSON WHO HAD ALLEGED WRONG PAYMENT FROM OTHER PAR TY WOULD NEVER CONFIRM THAT MONEY HAS NOT BEEN RECEIVED BY HIM. T HERE IS NO NEED TO GET ANY CONFIRMATION FROM THE INSTITUTION WHEN NO M ONEY HAS BEEN PAID LD. AR ALSO TRIED TO DISTINGUISH APPELLANT S CASE FROM THE CASE OF SHRI BHARAT S. SHAH BY SAYING THAT IN BHARAT SHA HS CASE THE AO HAS FOUND CASH WITHDRAWAL FROM BANK. LD. AR CONCLUDED THAT THE ADDITION MADE BE DELETED BECAUSE THE ADMISSION WAS ON MERITS , THAT NO DONATION/CAPITATION FEES WAS PAID, THAT THE ALLEGAT ION BY THIRD PARTY WAS SELF SERVING AND MISCHIEVOUS AND THAT THE APPEL LANT WAS NOT SUMMONED TO EXPLAIN ALLEGATION. 6. THE LD. CIT(A) CONFIRMED THE ORDER OF AO ON THE GROUND THAT STATEMENT MADE BY RESPONSIBLE PERSON AND ULTIMATE C ONFESSION AND ACCEPTANCE BY SIMILAR PERSONS WHOSE CHILDREN ALSO G OT ADMISSION IN SAME ITA NO. 5234/M/10 4 ENGINEERING COLLEGE IN THE SAME YEAR. HENCE ASSESS EE IS IN FURTHER APPEAL BEFORE TRIBUNAL. 7. DURING THE COURSE OF HEARING, LD. AR SUBMITTED T HAT THE SAID ADDITION WAS MADE MERELY ON THE BASIS OF STATEMENT OF A THIR D PERSON AND NO EVIDENCE OR MATERIAL HAS BEEN PLACED ON RECORD THAT ASSESSEE PAID A SUM OF RS. 6,50,000/- FOR THE ADMISSION OF HIS DAUGHTER. HE S UBMITTED THAT THE DAUGHTER OF ASSESSEE GOT ADMISSION ON MERIT, SHE SCORED 81. 675% IN AGGREGATE AND 92% PCM IN HSC EXAMINATION. HE FURTHER STATED THAT THE AO COMPARED THE CASE OF SHRI BHARAT S. SHAH AND ONLY AFTER DISCUSSI NG THE STATEMENT RECORDED IN THAT CASE, THE ADDITION HAS BEEN MADE IN THE CAS E OF ASSESSEE. THE LD. AR REFERRED QUESTION-12 AND SUBMITTED THAT IN THAT CAS E SHRI BHARAT SHAH DECLARED ADDITIONAL INCOME OF RS. 6,28,000/- UNLIKE IN THE CASE OF ASSESSEE WHERE ASSESSEE HAS FILED AFFIDAVIT DENYING PAYMENT OF ANY CAPITATION FEE/DONATION FOR ADMISSION OF HIS DAUGHTER. HE SUB MITTED THAT SAID ADMISSION HAS BEEN MADE ONLY ON PRESUMPTION AND ASSUMPTION A ND IS NOT BASED ON ANY DOCUMENT. HOWEVER, LD. DEPARTMENTAL REPRESENTA TIVE SUPPORTED THE ORDER OF AUTHORITIES BELOW. HE SUBMITTED THAT PRIN CIPAL OF COLLEGE ADMITTED THAT THEY ARE ACCEPTING CAPITATION FEE/DONATION FRO M STUDENT. HE FURTHER SUBMITTED THAT IN THE CASE OF OTHER STUDENTS, IT WA S ACCEPTED BY THEM THAT CAPITATION FEE WAS PAID TO THE INSTITUTE AND THEREF ORE THE ASSESSEE MUST HAVE PAID CAPITATION FEE/DONATION FOR ADMISSION OF HER D AUGHTER OF SAID INSTITUTE. 8. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF LD. REPRESENTATIVES OF THE PARTIES. WE OBSERVE THAT THE AO HAS PRESUMED ON THE BASIS OF DIARIES SEIZED DURING THE COURSE OF SEARCH AT THE SAID INSTITUTE THAT ASSESSEE HAS ALSO PAID THE CAPITATION FEE/DONATION FOR ADMISSION OF HIS DAUGHTER. IN THIS RESPECT, THE AO HAS CONSIDERED T HE CASE OF ONE SHRI BHARAT SHAH. WE OBSERVE THAT IN THE CASE OF SHRI BHARAT S HAH, HE DECLARED THE ADDITION OF RS. 6,28,000/-. HOWEVER IN THE CASE OF ASSESSEE, ASSESSEE HAS FILED AN AFFIDAVIT THAT HIS DAUGHTER GOT ADMISSION ON MERIT AND HE HAS NOT PAID ANY AMOUNT OTHER THAN ADMISSION FEE OF RS. 28,000/- AND RS. 4,000/- TO THE ITA NO. 5234/M/10 5 INSTITUTE. CONSIDERING THE MARKS OF ASSESSEES DAU GHTER THAT SHE SCORED 81.675% AGGREGATE AND 92% PCM IN HSC EXAMINATION, W E ARE OF THE CONSIDERED VIEW THAT THERE IS MERIT IN THE CONTENTI ON OF LD. AR THAT ASSESSEES DAUGHTER GOT ADMISSION ON MERIT AND IN THE ABSENCE OF ANY MATERIAL ON RECORD BROUGHT BY DEPARTMENT, THE ADDITION OF RS. 6,28,000 /- IS NOT JUSTIFY BY DRAWING INFERENCE THAT EVERY PERSON MUST HAVE PAID CAPITATION FEE/DONATION IF THERE WAS AN ADMISSION IN THE SAID INSTITUTE. IT IS A FACT THAT MANY STUDENTS GET ADMISSION IN EACH AND EVERY INSTITUTE ON MERIT AND IF CAPITATION FEE/DONATION IS PAID TO THE INSTITUTE IT COULD BE O NLY IN RESPECT OF A FEW SEATS AND IT IS NOT THE FACT THAT FOR EVERY ADMISSION CAP ITATION FEE/DONATION HAS TO BE PAID. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE DO NOT FIND ANY MERIT IN MAKING SAID ADDITION OF RS. 6,28,000/- BY AUTHOR ITIES BELOW. HENCE, WE DELETE THE SAID ADDITION BY ALLOWING GROUND OF APPE AL TAKEN BY ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF OCTOBER, 2011 SD/- SD/- ( R.K. PANDA) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 21 ST OCTOBER, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 5234/M/10 6 DATE INITIALS 1. DRAFT DICTATED ON: 19.10.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 19.10.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: