SARASWATHI AMMAL EDUCATIONAL AND CHARITABLE TRUST,CHENNAI V. ACIT CENTRE CIRCLE II, NOIDA

ITA 2181/DEL/2023

AI Insights

The case involves multiple appeals and cross-objections related to the income tax assessments of Saraswati Ammal Educational & Charitable Trust for various assessment years. The primary issues revolved around the additions made by the Assessing Officer under sections 69A and 69C of the Income Tax Act, 1961, concerning alleged unaccounted capitation fees and unaccounted interest expenses. The Tribunal examined the legality of these additions, considering the documents seized during the search operations and the testimonies provided. The Tribunal's decision emphasized the lack of direct evidence linking the Trust to the alleged capitation fees and the procedural lapses in the assessment process.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781660 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Appeal Filed On: 31-07-2023
• Other Referred Cases: Padmashree Dr. D.Y. Patil University Vs. DCIT, Startex (India)(P) Ltd Vs. DCIT, Sheth Akshay Pushpavadan vs. DCIT, CIT vs. Radico Khaitan, CIT vs. Ansal Properties, Common Cause (a registered society) vs. Union of India, CBI vs. V C Shukla, CIT, Central Vs. Smt Sunita Dhadha, CIT vs. Balaji Educational & Charitable Public Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: RAMESH CHANDER
• Keywords: Set aside; Corroborative evidences; Income from undisclosed sources; Document seized; Documents seized; Gift; Retraction; Principle of natural justice; Search and seizure; Block assessment; Loose papers; Charitable institution; Opportunity of cross examination; Bogus
• Section: 144; 143(3); 142(1); 11; 132; 131; 69C; 133A

Judgement Text

" 1 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘G’ NEW DELHI) BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 2181/DEL/2023 (A.Y. 2016-17) ITA No. 2182/DEL/2023 (A.Y. 2017-18) Saraswati Ammal Educational And Charitable Trust , Plot 5107, H-2, Second Avenue Anna Nagar, Chennai, Tamil Nadu PAN: AAETS3783L Vs Assistant Commissioner of Income Tax, Central Circle-II 2nd floor, ARTO Complex Secrtor-33, Noida, Uttar Pradesh Appellant Respondent ITA No. 2288/DEL/2023 (A.Y. 2014-15) ITA No. 2289/DEL/2023 (A.Y. 2015-16) ITA No. 2290/DEL/2023 (A.Y. 2016-17) ITA No. 2291/DEL/2023 (A.Y. 2017-18) Deputy Commissioner of Income Tax, RTO Complex, Aayakar Bhawan, Sector-33, Noida, Uttar Pradesh Vs. Saraswati Ammal Educational And Charitable Trust , Plot 5107, H-2, Second Avenue Anna Nagar, Chennai, Tamil Nadu PAN: AAETS3783L Appellant Respondent C.O No. 107/DEL/2023 (A.Y 2014-15) C.O No. 108/DEL/2023 (A.Y. 2015-16) Saraswati Ammal Educational And Charitable Trust, Plot 5107, H-2, Second Avenue Anna Nagar, Chennai, Tamil Nadu PAN: AAETS3783L Vs. Deputy Commissioner of Income Tax, RTO Complex, Aayakar Bhawan, Sector-33, Noida, Uttar Pradesh Appellant Respondent Printed from counselvise.com 2 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Assessee by Sh. Ramesh Chander, Advocate and Sh. Deepak Gupta, CA Revenue by Sh. Mahesh Kumar, CIT(DR) Date of Hearing 16/09/2025 Date of Pronouncement 30/09/2025 ORDER PER MANISH AGARWAL, AM: Present appeals are filed by the Assessee in ITA Nos. 2181/Del/2023 and 2182/Del/2023 pertaining to Assessment Years 2016-17 and 2017-18 and the Revenue filed Appeals in ITA No. 2288, 2289, 2290 and 2291/Del/2023 for Assessment Years 2014-15 to 2017-18 respectively, challenging the common order of the Ld. Commissioner of Income Tax [“CIT(A)”, in short] dated 02/06/2023. The Assessee has also preferred Cross Objections in C.O. No. 107/Del/2023 and 108/Del/2023 for Assessment Year 2014-15 & 2015-16 respectively. 2. Since all the above appeals are arising out of the common order of Ld. CIT(A) dated 02/06/2023 and having identical issues to be decided, they are heard together and decided by a common order. 3. Brief facts of the case are that, a search proceedings u/s 132 of the Income Tax Act, 1961 (' the Act' for short) was carried out on 09/03/2017 in the case of M/s Etcetera Entertainment, belonging to Sh. V. Mathiyalgan, the then Vice Chancellor Saraswati Institute Printed from counselvise.com 3 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT of Medical Science, Hapur (hereinafter referred as to ‘SIMS’) at Sector 52, Nodia. During the said search proceedings, various incriminating documents were found and seized. Thereafter, on 10/03/2017, a survey u/s 133A of the Act was conducted in the case of SIMS, which is one of the units of the Assessee Trust. 4. During the course of search operation conducted on M/s Etcetera Entertainment and Sh. V. Mathiyalgan, certain information / documents were found and seized and according to the Revenue, they contained information/documents having bearing on determination of the total income of Assessee herein. Hence satisfaction was recorded and proceedings u/s 153C of the Act were initiated against the Assessee for Assessment Year 2014-15 to 2016-17. For AY 2017-18, regular assessment proceedings were carried out and assessment order was passed u/s 144 of the Act. A notice u/s 153C of the Act was came to be issued on 21/10/2018 and in response to the notice, the Assessee filed Returns of income declaring total income at ‘NIL’ in all the three Assessment Years i.e. Assessment Year 2014-15 to 2016-17. Further, in AY 2017-18, Assessee filed Return on 31/10/2018 declaring total income at NIL and the case was selected for scrutiny. Thereafter notice u/s 142 (1) of the Act were issued alongwith questionnaire from time to time and assessment orders were passed u/s 153 r.w.s. 143(3) by making following additions for Assessment Years 2014-15 to 2017- 18: Printed from counselvise.com 4 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT a) In AY 2014-15, addition of Rs. 22,35,250/- was made u/s.69C of the Act towards unaccounted interest expenses and further addition of Rs. 1.57 Crores was made u/s. 69A of the Act on account of unaccounted capitation fees. b) In AY 2015-16, addition of Rs. 3,01,62,065/- was made u/s. 69A of the Act towards unaccounted interest expenses. c) In AY 2016-17, addition of Rs. 5,79,48,156/- was made u/s. 69C of the Act towards unaccounted interest expenses and further addition of Rs. 17,12,55,000/- was made u/s. 69A of the Act on account of unaccounted capitation fees. d) In AY 2017-18, addition of Rs. 3,92,60,191/- was made u/s. 69C of the Act towards uncounted interest expenses and further addition of Rs. 15,30,10,000/- was made u/s. 69A of the Act on account of unaccounted capitation fees. 5. Aggrieved by these additions made by the A.O., the Assessee preferred four separate Appeals before the Ld. CIT(A) for all the four Assessment Years i.e. AY 2014-15 to AY 2017-18 wherein by a common order dated 02/06/2023, Ld. CIT(A) party allowed the Appeals of the Assessee. The relief granted by ld. CIT(A) is as under: a) For AY 2014-15 ld. CIT(A) deleted both the additions made towards capitation fee of Rs. 1.57 Crore and towards interest on cash loan of Rs. 22,35,250/- by applying doctrine of telescoping. Printed from counselvise.com 5 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT b) For AY 2015-16, ld. CIT(A) deleted addition of Rs. 3,01,62,065/- made towards interest on cash loans by applying the doctrine of telescoping. c). For AY 2016-17, ld. CIT(A) restricted the addition to Rs. 8,13,89,000/- as against the addition of Rs. 17,12,55,000/- made towards capitation fee and deleted the addition of Rs. 5,79,48,156/- made on account of interest on cash loans by applying the doctrine of telescoping. d) For AY 2017-18, ld. CIT(A) restricted the addition to Rs. 8,90,43,000/- as against the addition of Rs. 15,30,10,000/- made towards capitation fee and deleted the addition of Rs. 3,92,60,191/- made on account of interest on cash loans by applying the doctrine of telescoping. 6. As against the order of Ld. CIT(A) in sustaining the additions for AY 2016-17 and 2017-18, Assessee preferred appeals before Tribunal. Against the deletion of additions for AY 2014-15 to AY 2017-18, Revenue also preferred the captioned Appeals. Assessee has also filed Cross-Objection for AY 2014-15 and AY 2015-16 by raising several grounds on both legal/technicalities as wells as on the merits. 7. Since identical issues are involved in all the above appeals, before us both the parties agreed to take up Assessment Year 2017- 18 as lead case, which involved both the additions of alleged Printed from counselvise.com 6 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT capitation fee made u/s 69A of the Act and also towards cash loan made u/s 69C of the Act and accordingly parties have submitted their respective arguments. 8. For the sake of convenience, the grounds of Appeal and the Addl. Grounds of the Assessee for Assessment Year 2017-18 are extracted as under: Assessee’s Grounds of Appeal “1. On the facts and circumstances of the case and in law partial allowance of the first appeal in favour of the appellant trust makes the satisfaction note drawn by the AO incorrect and the proceedings initiated therefrom void-ab-initio. 2. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that the assessment of a charitable trust is made under sections 11 to 13, which falls under Chapter III of the Act, where reference under section 11(1)(a) is to \"income\" and not to \"total income\", which has been specifically defined under sections 2(45) of the Act and in view of the aforesaid reasons, the AO erred in invoking the provisions of sections 69A and 69C of the Act. 3. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the fact that the AO has accepted the aforesaid legal position in respect of the assessment orders for AY 2018-19 and AY 2021-22 and in the reassessment order of AY 2013-14. 4. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in confirming the order of the AO on account of the alleged capitation fee to the tune of Rs. 8,90,43,000/-. 5. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) and the AO have failed to justify the need of the appellant trust to accept alleged cash loans and pay interest out of books. 6. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in confirming the aforesaid addition(s) because the aforesaid additions are totally erroneous, unfounded and based Printed from counselvise.com 7 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT notings/jottings recorded on loose sheets of paper, which have got no evidentiary value. on loose sheets of papers or 7. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that the assessment of a charitable trust is made under sections 11 to 13, which falls under Chapter III of the Act, where reference under section 11(1)(a) is to \"income\" and not to \"total income\", which has been specifically defined under sections 2(45) of the Act and in view of the aforesaid reasons, the AO erred in invoking the provisions of sections 69A and 69C of the Act. 8. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in not appreciating the legal position that any excess expenditure incurred by a charitable trust in earlier AY, is allowed to be set-off against the income of subsequent AYs by invoking section 11, as this legal position is supported by a number of judgements of High Courts and also a judgement of the Supreme Court. 9. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in sustaining additions based on statement of a third person, viz. Shri VM, recorded under section 132(4) of the Act, which could not constitute incriminating material in the case of the appellant Trust. 10. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in sustaining the addition on account of alleged capitation fee because the alleged capitation fees collected by Shri VM was to be assessed in the hands of Shri VM and not in the hands of the appellant Trust. 11. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has erred in confirming the provisions of sections 69A and 69C, as the provisions of Chapter VI \"Aggregation of income and set-off or carry-forward of loss\" are not applicable in the case of a charitable trust, viz. the appellant Trust. 12. On the facts and circumstances of the case and in law, the appellate proceedings got totally vitiated as the remand report was not provided to the appellant trust to furnish its comments. 13. That the Appellant craves to leave to add / alter any / all grounds of appeal before or at the time of hearing of the appeal. 9. Before us, assessee raised following additional grounds of appeal: Printed from counselvise.com 8 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Additional Grounds of Appeal of the Assessee \"1. That in the facts and circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though, partly, the assessment proceedings completed by the Assessing Officer as before completing the assessment mandatory notice as required /s 143(2) of the Income Tax Act was not issued and served. 2. That in the facts and circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though partly, the assessment order dated 10-04-2021 passed by the Assessing Officer despite that it was not enforceable in law in as much as that it does not bear statutorily required Document Identification Number (DIN) and is prayed to be held as never issued. 3. That in the facts and the circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though in part, assessment proceedings completed by the Assessing Officer despite that these hinged upon the Notice issued u/s 153C dated 21-10-2018 which stood withdrawn and viewed void and never issued on 03-12-2018 which also makes subsequent Show Cause Notice 100 invalid/non-est. 4. That in the facts and the circumstances of the case the Commissioner of Income Tax (Appeals), Noida erred in law in upholding, though in part, assessment proceedings completed by the Assessing Officer despite that these also hinged upon the Notice issued u/s 142(1) on 01-11-2018 which itself had become non-est in view of the earlier withdrawal of notice issued u/s 153C of the Act. 5. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating the appeal without noticing that assessment order dated 10-04-2021 passed u/s 144 does not disclose mandatory reasons as to why at all provisions of section 144 of the Income Tax Act, 1961 were invoked. 6. That in the facts and the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating appeal by erroneously invoking the presumption as contained u/s 292C and section 132(4A) of the IT Act, 1961 in the hands of the Appellant. 7. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in adjudicating appeal by holding that unaccounted income subjected to tax by the Assessing Officer has accrued or arisen in the hands of the Appellant. Printed from counselvise.com 9 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 8. That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law in placing reliance in para 5.14.8 and 5.14.9 of his order on certain evidences which were 'dumb' evidences. 9. That in the facts and circumstances of the case and in law the adjudication order of the Commissioner of Income Tax (Appeals), Noida in upholding, though partly, assessment order dated 10-04- 2021 taxing income by invoking provisions of section 115BBE is required to be held as being contrary to the statutory provisions as having been done without serving any notice to the Appellant which was violative of the principles of natural justice and also because in the facts and circumstances of the case income brought to tax was not amenable to tax u/s 694 or 69C of the Act. 10. That in the facts and circumstances of the case and also in law the order of the Commissioner of Income Tax (Appeals), Noida, in upholding, though partly, the assessment order shown dated 10- 04-2021, is required to be held as bad in law as that assessment order is barred by limitation in as much as that while the limitation to pass assessment order ended on 10-04-2021 e- proceeding show the order to have been issued i.e. passed after this date i.e. only on 11-04-2021.\" 10. The Assessee in its Appeals for Assessment Year 2016-17 and 2017-18 has raised several identical Grounds of Appeal and additional Grounds of Appeal as well both on technical/legal and also on merits. However, there are two additions made by the A.O. for Assessment Year 2017-18, which are as under: i) Addition on account of capitation fees u/s.69A of the Act challenged in Grounds of appeal Nos.4, 6, 9 and 10; ii) Addition on account of cash loan and interest paid out of books u/s. 69A of the Act challenged in Grounds of appeal Nos.5, 6 and 9. Printed from counselvise.com 10 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT I. Addition on account of capitation fee: 11. The Ld. Counsel for the Assessee addressing on Grounds of appeal Nos. 4, 6, 9 and 10 made detailed arguments. Ld. Counsel submitted that proceedings against the Assessee were initiated u/s. 153C of the Act solely on the basis of documents which were found during the search conducted in the case of M/s Etcetera Entertainment and Sh. V. Mathiyalgan, who was the Vice Chancellor of SIMS Hapur, which is a Unit of Assessee trust and Sh. V. Mathiyalgan was removed by the Assessee from the post of Vice Chancellor of the SIMS for breach of trust etc. The Ld. Counsel further submitted that solely based on the documents found during the search from the possession of Sh. V. Mathiyalgan, A.O. concluded that capitation fees or the amount as mentioned in the document seized are received by the Assessee trust. However, no such capitation fees was ever received or accrued to the Assessee trust. To substantiate the said claim, Ld. Assessee's Representative submitted that Assessee trust was not at all in a position to charge capitation fee because of the NEET which started UG 2016-17 for the first time. Likewise for UG 2016 and PG before 2017, the Assessee was following Utter Pradesh Un-aided Medical Collage Welfare Association (UPUMCWA) and based on open admission System conducted by UPUMCWA, merit seats were allotted to those students who cleared the examination conducted by UPUMCWA. It is further submitted that, in both the above systems, there was no management quota seats to bargain. When there was no quota to Printed from counselvise.com 11 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT bargain, question of having accrual or receipt of ‘capitation fees’ does not arise. 12. The Ld. Counsel further submitted that, there is not even a single penny of cash recovered during the search proceedings conducted on the said Sh. V. Mathiyalgan which belonged to the Assessee trust. Admittedly, cash recovered from Sh. V. Mathiyalgan during the search stood added in personal capacity of Sh. V. Mathiyalgan which is admittedly pertaining to business of Sh. V. Mathiyalgan and the same is nothing to do with the Assessee trust. He further stated that, documents have been seized from the possession of Sh. V. Mathiyalgan and Assessee trust has not earned any undisclosed income by whatever name called such as ‘capitation fees’ rather as per the entries found noted in the loose papers and documents seized from the possession of Sh. V. Mathiyalgan, the amount over and above the fees were received by Sh. V. Mathiyalgan himself. Thus Ld. AR submitted that it is settled proposition of law, that the income is required to be taxed in the hands of the person who earned it, which in the instant case was earned by Sh. V. Mathiyalgan and the A.O. ought not to have added the same in the hands of the Assessee trust. 13. The Ld. AR argued that addition has been made based on the dumb documents, wherein it is mentioned the word ‘capitation fees’ which do not bear name of the Assessee trust or date of receipt or mode of transaction. Apart from the same, those dumb documents were seized from the custody of Sh. V. Mathiyalgan written in his Printed from counselvise.com 12 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT hand writing and no incriminating material whatsoever were found at the premises of the Assessee in the survey conducted by the Department corroborating to the allegation that such receipts belonged to assessee trust. Therefore, as per Section 292C/134(4) and Section 132(4A) of the Act, presumption should have been drawn against the said Sh. V. Mathiyalgan not against the Assessee trust and assessee has duly rebutted such presumption. 14. The Ld. Counsel has also taken us through the statements of Sh. V. Mathiyalgan recorded on oath u/s 131(1A) as well as 132(4) of the Income Tax Act during the search/post search proceedings and submitted that, at no point of time Sh. V. Mathiyalgan has stated before the Investigation wing/A.O. that he had collected ‘capitation fees’ in cash at the behest or instruction of the Assessee or any of the trustees of the Assessee trust. Further nowhere Sh. V. Mathiyalgan stated that he has handed over such money received in the name of ‘capitation fees’ to the Assessee/any of the trustees of the Assessee. 15. The Ld. Counsel further submitted that regarding the cash found in the premises of Sh. V. Mathiyalgan, it was deposed by him on oath in his statement recorded u/s 132(4) of the Act that, the said cash pertained to his personal business activities i.e. of M/s Etcetera Entertainment and made the disclosures of this cash income in PM Garib Kalyan Yojna (PNGKY) and under Income Disclosure Scheme, 2016 (IDS,2016). Ld. Counsel further Printed from counselvise.com 13 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT submitted that Sh. V. Mathiyalgan had hostile relationship with the Chairperson of Assessee and a divorce case was going on between Sh. V. Mathiyalgan and his wife, who happened to be the daughter of Chairman of the Assessee Trustee. Therefore, if at all Sh. V. Mathiyalgan had received any sum in the name of ‘capitation fees’ in his personal capacity for which the Assessee is neither connected nor the beneficiary of the said alleged act as they have strange relationship. 16. Ld. Counsel further submitted that, pursuant to search operation on M/s Etcetera Entertainment and Sh. V. Mathiyalgan, and survey operation on the Assessee, no further action was taken out by the department on any of the trustees of Assessee trust. 17. The Ld. Counsel further submitted that, Revenue has not brought any material on record to prove that the Assessee trust was indeed having an option to receive capitation fee and no such evidence was brought on record which suggests that Sh. V. Mathiyalgan was authorized to collect capitation fees. There is no evidence on record to show that Sh. V. Mathiyalgan gave alleged capitation fees collected by him to the Assessee trust, therefore, the authorities below have erred in drawing adverse inference in the case of Assessee and made the addition towards such alleged capitation fees. It is further submitted by Ld. Counsel that, the students/parents/guardian who had given their statements before the Investigating wing/A.O., clearly stated that the alleged capitation fees was paid by them to Sh. V. Mathiyalgan and none of Printed from counselvise.com 14 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT them named the Assessee trust or any of the trustees. He further stated what no opportunity of cross-examination was given to the Assessee to cross examine those students/parents/guardian despite there being specific request made by the Assessee to the AO during the Assessment proceedings. 18. The Ld. Counsel further submitted that while making the addition of capitation fees in the hands of the Assessee, A.O. relied on the letter of the Chartered Accountant of Sh. V. Mathiyalgan filed during the search assessment proceedings in the case of Sh. V. Mathiyalgan for Assessment Year 2011-12 to 2017-18, without even confronting the said letter to the Assessee and hence the A.O. committed grave error in relying on the said letter. The Ld. Counsel further submitted that the ‘capitation fees’ if any, received, it was received by Sh. V. Mathiyalgan (who was happens to be the VC of the College/SIMS) for his personal gains, therefore, the amount received him cannot be added in the hands of Assessee trust. The Ld. Counsel relied on plethora of juridical precedents in support of the contentions raised and further relied upon the order of Co- ordinate Mumbai Bench of Tribunal in the case of Padmashree Dr. D.Y. Patil University Vs. DCIT in ITA No. 3264/Mum/2022 and connected matters dated o4/01/2024, and accordingly prayed for the deletion of additions made on account of ‘capitation fees’. 19. Per contra, the Ld. Departmental Representative submitted that during the search, various documents were found and seized from the custody of Sh. V. Mathiyalgan who was happened to be the Printed from counselvise.com 15 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Vice Chancellor of SIMS, a unit of Assessee trust. He further stated that the letter filed by the CA of Sh. V. Mathiyalgan before AO clearly shows that capitation fees was collected by Sh. V. Mathiyalgan wand the said amount was returned back to SIMS, Hapur during Assessment Year 2016-17 and 2017-18 respectively. 20. The Ld. D.R further contended that as per the diary found, marked as LP-, during the search from the possession of Sh. V. Mathiyalgan, contained entries of unaccounted fees receipts of capitation fees from more than 66 students pertaining to UG-2015, UG-2016 and PG 2016-17 and other course for related previous years as well as advance for next year courses. In the said documents, many of the details of capitation fees were written and duly signed by Sh. V. Mathiyalgan and guardian/students. The Investigation wing/ A.O. also recorded statements of some of the parents/guardians/students, who have admitted the fact of paying the capitation fees and some of the students have also filed complaint to the Principal of SIMS, Hapur complaining that Receipts were not issued against the cash amount collected by Sh. V. Mathiyalgan from them. The said ‘capitation fees’ was collected by Sh. V. Mathiyalgan in the capacity of the Vice Chancellor of the SIMS, which is a unit of the Assessee trust and the said amount of capitation fees was returned to the Assessee trust by Sh. V. Mathiyalgan. 21. The Ld. D R further submitted that, the Assessee is trying to shift the burden of capitation fees on Sh. V. Mathiyalgan, whereas, Printed from counselvise.com 16 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT the evidences lead to show that Sh. V. Mathiyalgan has taken huge cash amount depending on the course under which admission was sought as capitation fee over and above the college fee on behalf of the Assessee trust. Thus, the Ld. DR submitted that all these Grounds of Appeal of the Assessee on merits are liable to be dismissed and the additions made by the AO are liable to be confirmed. 22. We have heard both the parties and perused the material available on record. A search action was carried out u/s 132 of the Act on 09/03/2017 in the case of M/s Etcetera Entertainment and Sh. V. Mathiyalgan, who happened to be the Vice Chancellor of SIMS, Hapur, which is one of the unit of Assessee trust namely Saraswati Ammal Educational and Charitable Trust, Chennai. During the search, various loose paper and documents were found and seized from the possession of Sh. V. Mathiyalgan. As per the A.O., these documents are related to SIMS, Hapur. A survey u/s 133A of the Act was also conducted in the case of SIMS, Hapur on 10/03/2017. During the survey operation on the SIMS, Hapur, neither any incriminating material nor any excess cash was found. It is noteworthy to mention that even during the search action conducted on M/s Etcetera Entertainment and on Sh. V. Mathiyalgan no cash belonging to SIMS or of the Assessee Trust was found/seized. The department has not taken any further action on the Assessee trust or any of the trustees of Assessee in order to make further investigation to collect any corroborative material and Printed from counselvise.com 17 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT admittedly no such incriminating documents/excess money was found from the possession of the Assessee during the survey. 23. It is the specific case of the Assessee trust since beginning of the proceedings that the SIMS was not in a position to charge any ‘capitation fee’ because of the NEET which started UG 2016-17 for the first time and prior to that the SIMS used to follow UPUMCWA Admission System and in both the Systems there was no management quota to bargain for getting admission though capitation fee. Therefore, question of receiving capitation fee for admission does not arise. The Revenue has not brought anything on record to contradict the said stand taken by the Assessee. It is the stand taken by the Assessee that there was no complaint against the SIMS/Assessee with regard to collection of capitation fee and the State Government has not taken any action against the SIMS in this regard. The said fact goes against the presumption drawn by the A.O. that the Assessee has collected the capitation fees. 24. In the present case, the alleged documents were seized from the custody of Sh. V. Mathiyalgan at A-78, Sector 62, Noida, which are marked as D4, LP-1 & LP-4 and undisputedly are written in the hand writing of Sh. V. Mathiyalgan and some of them are even signed by Sh. V. Mathiyalgan, wherein he has mentioned the name of the students, capitation fee etc. By relying on these seized documents, Ld. A.O. prepared a chart, wherein he mentioned the names of the students, incriminating material and also mentioned Printed from counselvise.com 18 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT his Interpretation/Remarks, which is reproduced at page 12 to 23 of the assessment order. 25. As per the provision of Section 292C of the Act, where any books of accounts or other documents, money, bullion jewellery or other valuable article or things are or is found in the possession or control of any person in the course of search u/s 132 of the Act , it is presumed that such books of accounts and other documents, money, bullion, jewellery or other valuable article or things belongs to such person and contents of such books of accounts and other documents are true. For the sake of ready reference the provision of Section 292C of the Actis reproduced as under: “Presumption as to assets books of account, etc. 292C. (1)Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133-A] , it may, in any proceeding under this Act, be presumed- (i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)that the contents of such books of account and other documents are true; and (iii)that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (2)Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of Printed from counselvise.com 19 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT section 132-A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132-A, had been found in the possession or control of that person in the course of a search under section 132.” 26. Admittedly all the alleged incriminating material was found and seized from the possession of Sh. V. Mathiyalgan during the search conducted u/s 132 of the Act at his residence. Those incriminating documents are written in the hand writing of Sh. V. Mathiyalgan and signed by him. Therefore, as per Section 292C of the Act, the Assessing Officer has compulsion to presume that those incriminating documents belonged to Sh. V. Mathiyalgan and the A.O. cannot presume or infer that those incriminating documents which are in the hand writing of Sh. V. Mathiyalgan are of the Assessee. 27. The Ld. AO has come to the conclusion that, the capitation fees collected by Sh. V. Mathiyalgan had been handed over to the Assessee trust and made addition based on the entries found recorded in the said which includes diary and loose papers seized from the possession of Sh. V. Mathiyalgan at his premises. However, the fact remains that the Revenue did not find any document/material/evidence with the Assessee to corroborate the allegation of receipt of capitation fees from the students by the Assessee trust. 28. Further as per Section 132(4A) of the Act presumption is required to be drawn vis-à-vis against the person in whose Printed from counselvise.com 20 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT possession or control, the books of accounts, documents, etc. are found and not against any other person. For ready reference, the provision of Section 132(4A) is reproduced as under:- Section 132….. …….. 4-A Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)that the contents of such books of account and other documents are true; and (iii)that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 29. The co-ordinate Mumbai Bench of the Tribunal in the case of Startex (India)(P) Ltd Vs. DCIT reported in 84 ITD 320 (Mum), examined the presumption Sec. 132(4A) and section 292CC of the Act, wherein it was held that the presumption shall apply to the person from whom possession the alleged documents were seized. The relevant extract are reproduced as under:- “The presumption under section 132(4A) is in respect of the person in whose possession the books or documents are found. The use of the words ‘to such person’ in the said section means the person in whose possession the books of account or documents are found. Clause (ii) of section 132(4A) provides that the contents of such books of account or documents are true. This presumption can be applied only against the person in whose possession the books of account or the documents are found. Therefore, so far as the case of N.S. was concerned, the revenue authorities might presume that the books of account or documents found from his possession were correct. However, while utilising those Printed from counselvise.com 21 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT documents in the case of any other person (i.e., the person other than N.S.), there could not be any presumption about the correctness of such books or documents. Therefore, the presumption under section 132(4A) is applicable only against the person in whose possession books of account or other documents are found and not against any other person. Moreover, the presumption under section 132(4A) is a rebuttable presumption and not a conclusive one. Certainly, the burden to rebut the presumption is upon the person against whom the presumption is applicable. The assessee, in its statement before the Assessing Officer, had denied having borrowed any money from ‘N.S.’ in cash.” 30. In the case of Sheth Akshay Pushpavadan vs. DCIT reported in 130 TTJ 42 (Ahd), it has been held that, the addition cannot be made on the basis of material seized from/statement given by a third party, unless those materials were corroborated with any other evidence. The relevant findings are as under:- “The submission of the assessee had not been rebutted by the AO. It therefore, stands proved that there was no evidence on record that assessee paid any on money to any person including the seller. The presumption under s. 132(4A) would not apply in the case of the assessee therefore, it was necessary for the AO to have brought some reliable and cogent material and evidence on Padmashree Dr. D.Y. Patil University 37 record to support his findings or to corroborate the statement of Arora Brothers. It may also be noted that Shri Ajay Arora in his statement later on retracted from his earlier statement as the same fact is mentioned by the AO in his assessment order dt. 28th Feb., 2008 (paper book 8-paper book 18) Therefore, no reliance could be placed on the statements of the Arora Brothers. Moreover, the AO has not mentioned any fact in the assessment order if the statements of Arora Brothers were ever put to the assessee for the purposes of cross- examination on behalf of the assessee. It is settled law that unless the statement is tested under the cross-examination, the same cannot be read in evidence against the assessee. Since, in this case, AO did not allow any cross-examination to the statements of Arora Brothers on behalf of the assessee therefore, their statements cannot be read in evidence against the assessee. The AO tried to use the admission of Arora Brothers made in their statements under s. 132(4) in their cases against the assessee but he has failed to note that admission of others Printed from counselvise.com 22 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT cannot be read in evidence against third party unless there is corroborative evidence on record. The maker of the admission can bind himself but how he can bind others from his statement without there being any corroborative evidence on record is not known in the law. As noted above, even Shri Ajay Arora in his statement, denied any on money paid by the assessee. No evidence was found in the case of the assessee that assessee has paid any on money before the date of the search or that the assessee was required to pay any on money after the date of the search. The AO merely considering the business relation between assessee and Arora Brothers presumed that since they have admitted payment of on money therefore, assessee might have also paid the on money. If Arora Brothers have not recorded any entry in their books of account as noted by the AO, how assessee could be blamed. The above conclusion of the AO is not supported by any material or evidence. The conclusion of the AO is purely based upon suspicion and surmises. It is settled law that suspicion howsoever strong may be could not take place of legal proof.” 31. The Law on presumption given in sec. 132(4A) of the Act has also been interpreted by the Hon’ble Delhi High Court in the case of CIT vs. Radico Khaitan (2017)(83 taxmann.com 375)(Delhi) as under:- “24. Section 132 no doubt mandates a presumption in respect of search and seizure operations; yet textually the presumption relates to material documents and books of account seized of from the assessee's premises and the presumption that can be made from it, not from materials seized and statement recorded, of third parties. Only if the materials that are sought to be relied upon emanate from the premises of the party subject to assessment, that the presumption can be drawn. This is evident from Sections 132 (4) and (4A) of the Act, which read as follows: \"Section 132…. (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a Printed from counselvise.com 23 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person' s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.\" It is evident that in the absence of these foundational facts, the revenue is under an obligation to establish through materials relatable to the assessee, what it alleged against it. What were the best pointers for further investigation were the discovery of material and evidence, which the revenue claim pointed to the assessee's failure to disclose full facts and income, should have resulted in further investigation and unearthing of material in the form of seized documents from the assessee's premises. Unfortunately the linkage between the material seized from the assessee's premises and those from UPDA's premises as well as the statement of Sh. Miglani was not established through any objective material. It is now settled law that block assessments are concerned with fresh material and fresh documents, which emerge in the course of search and seizure proceedings; the revenue has no authority to delve into material that was already before it and the regular assessments were made having regard to the deposition, the inability of the revenue to establish as it were, that the assessee's expenditure claim was bogus, or it had underreported income and that it resorted to over invoicing and diversion of funds into the funds allegedly maintained by the UPDA, was not established. The findings of the Commission therefore cannot be faulted as contrary to law.” 32. The Hon’ble Delhi High Court while interpreting the application of the presumption given in sec. 132(4A) of the Act, held that presumption could be applied only to the materials found with the searched person. If any material is found from some other Printed from counselvise.com 24 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT person, the above said presumption could not be extended to the assessee. In that case, the Revenue is under an obligation to establish that the information available in the seized material is relatable to the assessee and allegation made against the assessee has to be proved with some other independent material. In the said case before Hon’ble Delhi High Court, alleged details of payment of money by the assessee therein for illegal purpose was found in the place of UPDA (trade association). Based on the said information, addition was made by the AO in the hands of the assessee therein. The Hon’ble Delhi High Court noticed that the assessing officer did not carry out further investigation and further no material that could link the above information with the assessee was found from the premises of the assessee. Accordingly, it was held that the decision reached by Hon’ble Settlement Commission in not making addition was justified. 33. On the basis of the above ratio and the legal principles laid by the Hon'ble High Court and the Tribunal, we are of the opinion that the AO cannot invoke the presumption given in sec. 132(4A) of the Act on the Assessee in respect of materials seized from Sh. V. Mathiyalgan, who was the VC of SIMS which is a unit of Assessee trust, particularly, when the Revenue has not found any material evidence from the assessee to corroborate the same. Further, it is not the case that Assessee Trust has owned up the contents of documents/materials seized from the said Sh. V. Mathiyalgan to be true. On the contrary, the Assessee right from the beginning of Printed from counselvise.com 25 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT proceedings categorically denied the receipt of capitation fees and stated that there was no option to collect the capitation fees, as all the seats are merit seats filled though open examination. 34. The Hon’ble Delhi High Court in the case of CIT vs. Ansal Properties reported in (2018) 98 taxmann.com 398(Delhi), examined the issue as to whether evidences found from a third party could be used against the Assessee, wherein the Hon’ble Court held as under:- “23. The ITAT which rejected the Revenue's appeal on this point held as follows: \"Since the diary in question was not recovered from the premises of the assessee, which is independent public limited co., therefore, no presumption under section 132(4A) could be drawn against the assessee. In the block assessment, the burden is upon the AO to prove that the particular item is undisclosed income. Admittedly, no other evidence is recovered during the course of search to prove that in fact any payment of Rs. 30 crores outside the books of account has been made by the assessee to Sri S.K. Jatia. The AO has made addition in the case of the assessee in respect of payment of Rs. 30 crores made to Sri S.K. Jatia. Even in the seized diary the narration is \"AdharshilaJatia [Anil Bhalla]\". Neither Sri S.K. Jatia nor Anil Bhalla were examined by the AO during the course of assessment proceedings. Therefore, we fail to understand as to how the addition could be sustained in the hands of the assessee. It appears from the above circumstances that the department has made subsequent enquiries against the assessee in order to connect the assessee with the diary in question but such things are not permitted as is held by Bombay Bench of I.T.A.T. in the case of Sundar Agencies (supra). No addition could be made in the block assessment on the basis of assumption and presumptions. Merely some material is recovered during the search, no addition could be made in the hands of the assessee on the basis of some subsequent enquiries and that too purely on assumption and presumptions. The AO observed in the assessment order while making the addition that he made enquiries from the villagers. This was the main reason to make up the theory of the payment made outside the books of account on the basis of inference drawn on estimate basis. It is an admitted case that the Printed from counselvise.com 26 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT villagers had a dealing with M/s Aadharshila Towers Private Ltd. for selling of their land. These transactions were not at all connected with the assessee. The villagers have not made any incriminating statement against the assessee. The inference drawn by the AO that initially M/s ATPL was owned by Sri S.K. Jatia and then subsequently was taken by the assessee by itself is no ground to draw the presumption against the assessee that since some dealing outside the books of account had happened between the villagers and M/s ATPL, there is no presumption that such transaction would have also happened in between ATPL and the assessee. 24. The Revenue contests the findings of the ITAT and submits that the presumption drawn in the circumstances of the case was upon analysis of materials and that AO's view was justified. It was pointed out that independent corroboration in regard to the seized diary was by way of consideration paid for acquisition of shares in Aadharshila Towers for Rs. 70 crores. The diary clearly stated that the total cost was Rs. 100 crores. The farmers who received the consideration were paid partly in cash. These corroborative materials were insufficient in income tax proceedings, on an application of principles of evidence to hold that Rs. 30 crores was the undisclosed cash component of the consideration. 25. This Court is of the opinion both the CIT and ITAT have rendered findings that were sound and reasonable on the question of whether the seized diary per se could in the overall circumstances of the case result in the addition of Rs. 30 crores. The assessee's explanation consistently was that Rs. 30 crores was towards internal and external development charges. This was an aspect which could be easily decided by securing relevant information from the statutory authority, i.e. HUDCO who received the payments. Independent corroboration of these too could have been sought otherwise the relevant books of account could have been checked. Furthermore, the statute does not compel the Revenue to raise a presumption; even when a tax authority does so, the sole basis of an addition entirely hinging upon the interpretation of certain figures in a diary would be flawed. For these reasons, this Court is of the opinion that since the inference drawn with respect to findings are based on essentially factual materials which were analyzed by the CIT and the ITAT, there is no reason to interfere with those findings. This question is accordingly answered against the Revenue and in favour of the assessee.” Printed from counselvise.com 27 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 35. In the present case, Sh. V. Mathiyalgan who was the Vice Chancellor of SIMS and was one of the paid employee of Assessee trust during the relevant point of time and the said SIMS is one of the Units of the Assessee Trust. Since the SIMS comes under the umbrella of Assessee Trust, relationship between the Assessee and Sh. V. Mathiyalgan would be master and servant or employer and employee relationship and all the documents/materials were seized from the possession of Sh. V. Mathiyalgan only. It is categorically stated by the assessee trust that, it had not authorized anyone to collect capitation fees on its behalf. It is the case of the Assessee that the said Sh. V. Mathiyalgan might have collected the capitation fee for his personal benefits without any authority from the Assessee trust. 36. Under the principle of vicarious liability, the employer is normally liable for any act performed by his employees during the course of employment. However, when an employee does anything that is neither directed nor controlled by the employer, then the said action of employee cannot be considered to be within the scope of his employment. In such event, the employer is not liable for the action of the employee and hence is not liable for damages. 37. The Co-ordinate Mumbai bench of Tribunal in the case of Anil Mahavir Gupta reported in (2017) 82 taxmann.com 122 (Mum Trib) has considered the issue as to whether the documents seized from employees could be relied upon for making addition in the hands of Printed from counselvise.com 28 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT the assessee. The relevant portion of the order of the Tribunal is reproduced as under: 11. Now the Grounds remaining in the appeal of the Revenue are Ground Nos. 9 & 10, which relate to an addition of Rs.30,00,000/- made by the Assessing Officer as unaccounted receipts. 11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of Rs.30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr. Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such loose papers were given to him by the assessee to be kept with him. As per the Assessing Officer, the contents of the relevant seized material, which has been reproduced in para-13 of the assessment order, indicates that one Mr. Suresh Agarwal paid the assessee Rs.30,00,000/- in March, 2006 in two instalments of Rs.15,00,000/- each. It is further noticed by the Assessing Officer that though there was an account of Mr. Suresh Agarwal in the account books of asessee's proprietary concern, M/s. Gupta Steel Corporation, but the aforesaid amount was not accounted for. For the said reasons, the Assessing Officer treated the sum of Rs.30,00,000/- as unaccounted income of the assessee. 11.2 Before the CIT(A), assessee reiterated that the paper was found and seized from Mr. Bharat G. Shah and not from the assessee. Further, there was no material to say that such seized material related to the assessee for any of his activities. The assessee also pointed out that such loose papers were printed account papers and on top of it is written \"Trial Data\" and that assessee had no knowledge as to who has written or printed the same. 11.3 The CIT(A) has considered the submissions put forth by the assessee and found that there was no material brought on record to establish that the seized papers belonged to the assessee. The CIT(A) also found that the seized documents do not indicate who is the recipient of the amounts mentioned and in what connection the money was paid. According to the Printed from counselvise.com 29 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT CIT(A), merely because there is an account appearing in the account books of the assessee in the name of Mr. Suresh Agarwal, it would not lead to an assumption that the seized document reflect transactions between assessee and Mr. Suresh Agarwal. In fact, the CIT(A) infers that the document reflects transaction between Mr. Bharat G. Shah and Mr. Suresh Agarwal, as the document was found in the possession of Bharat G. Shah. Under these circumstances, CIT(A) has deleted the addition in the hands of the assessee. 11.4 Before us, the ld. Departmental Representative pointed out that the employee from whom the impugned loose papers were found is a trusted employee of the assessee and the notings in the seized paper showed that it pertain to the assessee. It was, therefore, contended that the addition has been wrongly deleted by the CIT(A). 11.5 On the other hand, the ld. Representative for the assessee pointed out that the CIT(A) was justified in deleting the addition as there was no material to link the said seized document with the transactions undertaken by the assessee with Mr. Suresh Agarwal; which were duly accounted for in the account books. 11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is hereby affirmed and accordingly Revenue fails on Grounds of appeal Nos.9 & 10 also.” 38. Thus, applying the above ratio, the act of collecting the capitation fee if done by the said Sh. V. Mathiyalgan cannot be considered to be within the scope of his employment and in such an Printed from counselvise.com 30 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT event, the Assessee trust cannot be held liable for the said act of Sh. V. Mathiyalgan. 39. We have also gone through the statements given of Sh. V. Mathiyalgan recorded under Section 131 (1A) and 132(4) of the Act which are available at pages No. 01 to 16 of the Paper Book of the Revenue. In the said statements Sh. V. Mathiyalgan, at no point of time has mentioned that such ‘capitation fees’ was received from various students and over to the Assessee trust. As could be seen from the statements, most of the questions and answers are regarding Sh. V. Mathiyalgan’s personal affairs and his personal business. In so far as cash seized from Sh. V. Mathiyalgan, the same has been added in his individual capacity connected with his personal business and is not connected to either SIMS or the Assessee trust in any manner. Therefore, there is no reason for the A.O. to make the impugned addition in the hands of the Assessee trust. 40. It is observed that during the search assessment proceedings of Sh.V. Mathiyalgan for Assessment Years 2011-12 to 2017-18, C.A of Sh. V. Mathiyalgan has filed a letter dated 15/12/2018, wherein it is admitted that Sh. V. Mathiyalgan has received total capitation fees of Rs. 812 lakhs for Assessment Year 2016-17 and 823 lakhs for Assessment Year 2017-18 and the total money retained was of Rs. 37,00,000/- on behalf of the Trust (SIMS), Hapur and all the amount was returned back to the trust during Assessment Year 2016-17 and 2017-18 respectively’. The copy of Printed from counselvise.com 31 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT the letter written by the CA of the Sh. V. Mathiyalgan dated 15/12/2018 is reproduced as under:- 41. The Department while making the addition relied on the said letter filed by the C.A of Sh. V. Mathiyalgan during his assessment proceedings. From the said letter, it is seen that the said Sh.V. Printed from counselvise.com 32 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Mathiyalgan received the capitation fee. However, it is the specific case of the Assessee that there is no room for receiving capitation fees for any of the seats and it never authorized Sh. V. Mathiyalgan to receive the capitation fees nor received any capitation fees from any students. The Assessee contended that obviously inter alia because of his strain relationship with the chairman of the trust and only to escape from the tax liability, Sh. V. Mathiyalgan has falsely stated through his CA that the amount has been handed over to the Assessee herein. 42. It can be seen from the said letter that there is no date of handing over of alleged capitation fee received by him to the Assessee was stated and likewise the name and other particulars of the person who received the amount is also not mentioned thus it is not clear whether the amount was ever given to any of the person related to the assessee Trust. Apart from the same, the said letter was written by the CA of Sh. V. Mathiyalgan during the assessment proceedings of Sh. V. Mathiyalgan and Assessee was never confronted thus placing heavy reliance on such document by the A.O. in the hands of Assessee cannot be justified in law. Further the said letter written by the C.A of Sh. V. Mathiyalgan is nothing but an attempt to improve the statement of Sh. V. Mathiyalgan recorded u/s 133(1A)and 132(4) of the Act, though nowhere in such statement fact of returning the amount/capitation fee collected by Sh. V. Mathiyalgan to the Assessee was stated. In our considered opinion, the said statement of the C.A. of the Assessee is self- Printed from counselvise.com 33 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT declaration and contradictory to the statement made by Sh. V. Mathiyalgan himself given on oath and as observed above, said letter was filed by the C.A. with the sole intention to escape from liability on account of such capitation fee received by him. 43. In view of above discussion, the A.O. should not have given credential to the said letter written by the CA of Sh. V. Mathiyalgan. Moreover, the said letter was filed by the C.A. and never confronted to Assessee, therefore, it has no evidentiary value and cannot be used against the Assessee. Adverse inference, if any, based on such letter could be taken against the persons who make the statements; therefore, the addition made on the basis of the said letter cannot be sustained. 44. We have also gone through the statements given by the students/parents. Out of 66 students, Investigation wing/A.O. recorded statements of only 7 students/guardians wherein they have accepted that that the amount was paid to Sh. V. Mathiyalgan as per his direction / instruction / demand and in none of the statement, it is stated that any amount was paid to the Assessee trust or any of the trustees on its behalf. The statement given by those 7 students/guardians further support the fact that Sh. V. Mathiyalgan had collected the fees and nothing adverse is stated against the Assessee trust. However, it is found that Assessee during the assessment proceedings, vide letter dated 07/04/2021, requested for cross examination of those students/parents who claimed to have given capitation fees to Sh. V. Mathiyalgan and Printed from counselvise.com 34 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT used against the assessee, however, A.O. has not provided the opportunity to the Assessee to cross-examine those persons. Since the credibility of the said statement of students/guardians have not been tested by way cross-examination despite requesting for the same by the Assessee, those statements cannot be used against the Assessee. 45. The Hon’ble Supreme Court in the case of M/s Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II reported in [2015] 281 CTR 241 (SC) wherein it has been held as under:- “As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony 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 determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. 46. The hon’ble Supreme Court in the case of CIT, Central Vs. Smt Sunita Dhadha in SLP No. (CIVIL) Diary No(s). 9432/2018 Printed from counselvise.com 35 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT has dismissed the SLP filed by the revenue and confirmed the order of Tribunal wherein the Tribunal has deleted the addition made for the reason that statement of third party and opportunity to cross examination of such third person was not allowed. The observations made by the hon’ble court is as under: 6. We have heard learned counsel for the parties. 7. Taking into consideration the observation made by the Tribunal regarding not allowing cross-examination of Mr. Thakkar from whose documents the amount is alleged to have been taken in the interest of the assessee. 8. In that view of the matter the finding recorded by the Tribunal is just and proper and issues is answered in favour of the of the assessee against the department. 9. The appeals stand dismissed. A copy of this judgment be placed in each file. 47. At the most, those statements can only be used against the persons who make the statements, therefore, the addition made on the basis of those statements cannot be sustained in the eyes of law. 48. In an identical case, the Co-ordinate Bench of the Mumbai bench of Tribunal in the case of Dr. D.Y. Patil University Vs. DCIT vide order dated 12/10/2023 in ITA No. 3264/Del/2022 and ors held as under: 21. The contentions of the assessee, as noticed earlier, are that these materials have not been recovered from its premises or possession. Hence they cannot be relied upon for making additions in its hands. According to the assessee, the presumption u/s 132(4A) of the Act Printed from counselvise.com 36 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT cannot be invoked in its hands, since these materials have not been seized from its premises. The presumption u/s 132(4A) is that the said materials shall belong to the person from whom they were seized. Accordingly, it was submitted that the AO should not have made additions in the hands of the assessee relying upon the evidences seized from the employees and others. When the bench asked the assessee as to when the AO could have taken support of those documents, the Ld A.R further submitted that the revenue could rely upon the materials that were seized from other persons, only in a case where the revenue has found/seized any other corroborative material from the assessee. In the instant case, the revenue did not seize any material from the assessee which will vindicate the contents of the evidences seized from the employees. It was further submitted that the president of the assessee trust, Shri Vijay D Patil has categorically denied receipt of capitation fees by the assessee trust and has further stated that the concerned employees might be doing so without the knowledge of the assessee trust. Accordingly, the Ld A.R contended that, in the facts and circumstances of the present case and also in view of the presumption enshrined in sec. 132(4A) of the Act, the materials seized from the employees shall belong to the concerned employees only and hence they cannot be used against the assessee. 22. The alternative contention of the assessee is that, even if it is taken that the AO could not have used the materials seized from the employees without corroborating the same with any other material available with the assessee, i.e., it is the case of the assessee that these materials, per se, do not have any evidentiary value for arriving at the conclusion that the assessee-trust was collecting capitation fees, unless any other independent material was brought in to corroborate such a conclusion. In support of this contention also, the assessee placed reliance on certain case laws. 23. Before us, the Ld A.R has filed written submissions summarizing his contentions on the above said two points discussed in the earlier paragraphs. ……………………. …………. 24. We shall now examine the facts prevailing in the instant case. We noticed earlier that the AO has come to the conclusion that the assessee- trust has collected capitation fees on the basis of data found in laptops, pen drives, diary, loose papers seized from various employees from their residences. The AO has also concluded that the cash found from the employees of the Trust are part of capitation fees collected by the assessee. But the fact remains that the revenue did not find any document/material/evidence with the assessee, which will corroborate the allegation of collection of capitation fees from the students. Printed from counselvise.com 37 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 25. We also notice that the presumption given in sec. 132(4A) and section 292CC of the Act has been explained by the Tribunal in the case of Startex (India)(P) Ltd (supra), wherein it was held that the presumption shall apply to the person from whom the documents were seized. In ShethAkshayPushpavadan vs. DCIT (supra), it was held that the addition cannot be made on the basis of material seized from/statement given by a third party, unless those materials were corroborated with any other evidence and opportunity of cross examination was given. The Law on presumption given in sec. 132(4A) has been explained by Hon'ble Delhi High Court in the case of CIT vs. RadicoKhaitan (2017)(83 taxmann.com 375)(Delhi) as under:- \"24. Section 132 no doubt mandates a presumption in respect of search and seizure operations; yet textually the presumption relates to material documents and books of account seized of from the assessee's premises and the presumption that can be made from it, not from materials seized and statement recorded, of third parties. Only if the materials that are sought to be relied upon emanate from the premises of the party subject to assessment, that the presumption can be drawn. This is evident from Sections 132 (4) and (4A) of the Act, which read as follows: \"Section 132.... (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act.] (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; Printed from counselvise.com 38 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person' s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.\" It is evident that in the absence of these foundational facts, the revenue is under an obligation to establish through materials relatable to the assessee, what it alleged against it. What were the best pointers for further investigation were the discovery of material and evidence, which the revenue claim pointed to the assessee's failure to disclose full facts and income, should have resulted in further investigation and unearthing of material in the form of seized documents from the assessee's premises. Unfortunately the linkage between the material seized from the assessee's premises and those from UPDA's premises as well as the statement of Sh. Miglani was not established through any objective material. It is now settled law that block assessments are concerned with fresh material and fresh documents, which emerge in the course of search and seizure proceedings; the revenue has no authority to delve into material that was already before it and the regular assessments were made having regard to the deposition, the inability of the revenue to establish as it were, that the assessee's expenditure claim was bogus, or it had underreported income and that it resorted to over invoicing and diversion of funds into the funds allegedly maintained by the UPDA, was not established. The findings of the Commission therefore cannot be faulted as contrary to law. The Hon'ble Delhi High Court has explained that the presumption given in sec. 132(4A) could be applied only to the materials found with the searched person. If any material is found from some other person, the above said presumption could not be extended to the assessee. In that case, the revenue is under an obligation to establish that the information available in the materials is relatable to the assessee and allegation made in that material against the assessee has to be proved with some other independent material. In the case before Hon'ble Delhi High Court, alleged details of payment of money by the assessee for illegal purpose was found in the place of UPDA (trade association). Based on the above said information, the addition Printed from counselvise.com 39 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT was made by the AO in the hands of the assessee. The Hon'ble Delhi High Court noticed that the assessing officer did not carry out further investigation and further no material that could link the above information with the assessee was found from the premises of the assessee. Accordingly, it was held that the decision reached by Hon'ble Settlement Commission in not making addition was justified. 26. On the basis of legal principles explained in the above said cases, it can be noticed that the AO cannot invoke the presumption given in sec. 132(4A) in respect of materials seized from the employees, particularly when the revenue has not found any material from the assessee that will corroborate them. Further, it is not the case that the assessee trust has owned up the contents of documents/materials seized from the employees to be true. On the contrary, the trustees have categorically denied the receipt of capitation fees. 27. The Hon'ble Delhi High Court has examined the issue as to whether the evidences found from a third party could be used against the assessee in yet another case of CIT vs. Ansal Properties (2018)(98 taxmann.com398)(Delhi). The relevant observations made by Hon'ble Delhi High Court in the above said case are extracted below:- \"23. The ITAT which rejected the Revenue's appeal on this point held as follows: \"Since the diary in question was not recovered from the premises of the assessee, which is independent public limited co., therefore, no presumption under section 132(4A) could be drawn against the assessee. In the block assessment, the burden is upon the AO to prove that the particular item is undisclosed income. Admittedly, no other evidence is recovered during the course of search to prove that in fact any payment of Rs. 30 crores outside the books of account has been made by the assessee to Sri S.K. Jatia. The AO has made addition in the case of the assessee in respect of payment of Rs. 30 crores made to Sri S.K. Jatia. Even in the seized diary the narration is \"AdharshilaJatia [Anil Bhalla]\". Neither Sri S.K. Jatia nor Anil Bhalla were examined by the AO during the course of assessment proceedings. Therefore, we fail to understand as to how the addition could be sustained in the hands of the assessee. It appears from the above circumstances that the department has made subsequent enquiries against the assessee in order to connect the assessee with the diary in question but such things are not permitted as is held by Printed from counselvise.com 40 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Bombay Bench of I.T.A.T. in the case of Sundar Agencies (supra). No addition could be made in the block assessment on the basis of assumption and presumptions. Merely some material is recovered during the search, no addition could be made in the hands of the assessee on the basis of some subsequent enquiries and that too purely on assumption and presumptions. The AO observed in the assessment order while making the addition that he made enquiries from the villagers. This was the main reason to make up the theory of the payment made outside the books of account on the basis of inference drawn on estimate basis. It is an admitted case that the villagers had a dealing with M/s Aadharshila Towers Private Ltd. for selling of their land. These transactions were not at all connected with the assessee. The villagers have not made any incriminating statement against the assessee. The inference drawn by the AO that initially M/s ATPL was owned by Sri S.K. Jatia and then subsequently was taken by the assessee by itself is no ground to draw the presumption against the assessee that since some dealing outside the books of account had happened between the villagers and M/s ATPL, there is no presumption that such transaction would have also happened in between ATPL and the assessee. 24. The Revenue contests the findings of the ITAT and submits that the presumption drawn in the circumstances of the case was upon analysis of materials and that AO's view was justified. It was pointed out that independent corroboration in regard to the seized diary was by way of consideration paid for acquisition of shares in Aadharshila Towers for Rs. 70 crores. The diary clearly stated that the total cost was Rs. 100 crores. The farmers who received the consideration were paid partly in cash. These corroborative materials were insufficient in income tax proceedings, on an application of principles of evidence to hold that Rs. 30 crores was the undisclosed cash component of the consideration. 25. This Court is of the opinion both the CIT and ITAT have rendered findings that were sound and reasonable on the question of whether the seized diary per se could in the overall circumstances of the case result in the addition of Rs. 30 crores. The assessee's explanation Printed from counselvise.com 41 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT consistently was that Rs. 30 crores was towards internal and external development charges. This was an aspect which could be easily decided by securing relevant information from the statutory authority, i.e. HUDCO who received the payments. Independent corroboration of these too could have been sought otherwise the relevant books of account could have been checked. Furthermore, the statute does not compel the Revenue to raise a presumption; even when a tax authority does so, the sole basis of an addition entirely hinging upon the interpretation of certain figures in a diary would be flawed. For these reasons, this Court is of the opinion that since the inference drawn with respect to findings are based on essentially factual materials which were analyzed by the CIT and the ITAT, there is no reason to interfere with those findings. This question is accordingly answered against the Revenue and in favour of the assessee.\" In this case also, it has been reiterated that corroboration of material seized from other persons with any other independent material is necessary for making addition on the basis of materials seized from other persons. 28. In the instant case, all the documents/materials have been seized from the employees only. It has been categorically stated by the trustees of the assessee trust that have not authorized anyone to collect capitation fees. The trustee has also stated that the employees might have collected it without the authority of the trust. Under the principle of vicarious liability, the employer is normally liable for any act performed by his employees during the course of employment. However, when an employee does anything that is neither directed nor controlled by the employer, then the said action of employee cannot be considered to be within the scope of his employment. In that kind of situation, the employer is not liable for the action of the employee and hence is not liable for damages. We noticed earlier that Shri Pratappatil had stated that he has recorded transactions on instruction from Shri AbhijitShirke. The Ld A.R submitted that the very same Shri AbhijitShirke was arrested in 2015 in connection with accepting money of Rs.62.50 lakhs for securing a medical seat in D Y Patil Medical College, Nerul. The Ld A.R further submitted that the relevant news paper report is placed at pages 279 & 280 of paper book relating to AY 2015-16. This information further supports the case of the assessee trust that it is not collecting capitation fees and only the employees might have collected Printed from counselvise.com 42 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT money without its authority. We notice that the co-ordinate bench of Tribunal, in the case of Anil Mahavir Gupta (2017)(82 taxmann.com 122)(Mum Trib) has considered the issue as to whether the documents seized from employees could be relied upon for making addition in the hands of the assessee. It was decided in favour of the assessee as under:- 11. Now the Grounds remaining in the appeal of the Revenue are Ground Nos. 9 & 10, which relate to an addition of Rs.30,00,000/- made by the Assessing Officer as unaccounted receipts. 11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of Rs.30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr. Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such loose papers were given to him by the assessee to be kept with him. As per the Assessing Officer, the contents of the relevant seized material, which has been reproduced in para-13 of the assessment order, indicates that one Mr. Suresh Agarwal paid the assessee Rs.30,00,000/- in March, 2006 in two instalments of Rs.15,00,000/- each. It is further noticed by the Assessing Officer that though there was an account of Mr. Suresh Agarwal in the account books of asessee's proprietary concern, M/s. Gupta Steel Corporation, but the aforesaid amount was not accounted for. For the said reasons, the Assessing Officer treated the sum of Rs.30,00,000/- as unaccounted income of the assessee. 11.2 Before the CIT(A), assessee reiterated that the paper was found and seized from Mr. Bharat G. Shah and not from the assessee. Further, there was no material to say that such seized material related to the assessee for any of his activities. The assessee also pointed out that such loose papers were printed account papers and on top of it is written \"Trial Data\" and that assessee had no knowledge as to who has written or printed the same. 11.3 The CIT(A) has considered the submissions put forth by the assessee and found that there was no material brought on record to Printed from counselvise.com 43 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT establish that the seized papers belonged to the assessee. The CIT(A) also found that the seized documents do not indicate who is the recipient of the amounts mentioned and in what connection the money was paid. According to the CIT(A), merely because there is an account appearing in the account books of the assessee in the name of Mr. Suresh Agarwal, it would not lead to an assumption that the seized document reflect transactions between assessee and Mr. Suresh Agarwal. In fact, the CIT(A) infers that the document reflects transaction between Mr. Bharat G. Shah and Mr. Suresh Agarwal, as the document was found in the possession of Bharat G. Shah. Under these circumstances, CIT(A) has deleted the addition in the hands of the assessee. 11.4 Before us, the ld. Departmental Representative pointed out that the employee from whom the impugned loose papers were found is a trusted employee of the assessee and the notings in the seized paper showed that it pertain to the assessee. It was, therefore, contended that the addition has been wrongly deleted by the CIT(A). 11.5 On the other hand, the ld. Representative for the assessee pointed out that the CIT(A) was justified in deleting the addition as there was no material to link the said seized document with the transactions undertaken by the assessee with Mr. Suresh Agarwal; which were duly accounted for in the account books. 11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is Printed from counselvise.com 44 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT hereby affirmed and accordingly Revenue fails on Grounds of appeal Nos.9 & 10 also.\" 29. In the instant case, we notice that the AO has relied upon statements taken from the trustees and also certain discrepancies in OMR Sheets found from the premises of the assessee in order to support his conclusion that the assessee has, in fact, collected capitation fees. We shall examine whether those materials actually support the case of the assessing officer. (a) The AO has referred to the Statement given by Chairman/President of the trust Shri Vijay Patil. However, we notice that he has denied collection of capitation fee. No material was found from the assessee to disprove the said statement of the Chairman. Hence the statement of Shri Vijay D Patil cannot be taken support of by the AO. (b) The AO has relied upon the statement given by another trustee Smt. Shivani Patil, who is the spouse of Shri Vijay Patil, particularly on the following answer given by Smt Shivani Patil to arrive at the conclusion that she has admitted that the trust was collecting capitation fee. Q 52 Please provide the fees for management seats reserved in each of the college specified above. Ans:- I don't know about the management seats for engineering college. This year the admission for Dental College have not been done. As per my knowledge, last year the seats were sold for typically 7 - 8 lakhs per seat. For MBBS the price is typically 30- 40 lakh. However for post graduate seats the prices is higher than MBBS. However, I don't know the exact figure. The management rates for Ayurveda and Physiotheraphy is typically 4-5 lakhs per seat as these are not sought after courses.\" However, it is the contention of the assessee that she has not mentioned about Capitation fee at all. She has only stated that the fees of management seats are higher than the regular seats. A perusal of the above said reply given by Smt Shivani Patil, in our view, does not show that she has confessed anything about collection of capitation fee. We notice that this aspect has been clarified by Shri Vijay Patil also in his statement in the following questions & answers:- Printed from counselvise.com 45 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Q 8:- I am showing you the statement of Smt Shivani Patil recorded u/s 132(4) from 27-07-2016 to 31-07-2016 wherein at Q.51 onwards it has been stated capitation fee in cash is collected at Colleges under D Y Patil University, Nerul. Please Comment. Ans.:- As per my understanding, Smt Shivani Patil has stated that D Y Patil University has management seats and fees is collected for the same. I agree that various colleges under D Y Patil University, Nerul have management Quota as allowed by the relevant rules upto 15% and fees is collected for the same. The fees for the management quota is higher than other seats. Apart from the 15% management quota, there is no other seat for which higher fees is charged. Q 9:- In the statement of Smt. Shivani Patil, she has stated at Q 53 that fees for management quota is collected in cash. How is it you are able to say that no capitation fees is collected? Ans.: I agree that fees is paid in cash by some students. We don't refuse cash payments. However, all cash payments are accounted in the books of accounts. Such cash payments are either regular fees for regular seats or fee for management quota fees. There is no cash collected towards capitation fee in the colleges under DY Patil University, Nerul, as no capitation fees is collected by our colleges. Accordingly, we agree with the contentions of the assessee that neither Shri Vijay Patil nor SmtShivaniPatil has stated that the assessee trust is collecting capitation fees. Hence the AO could not have placed reliance on the statement given by Smt Shivani Patil. (c) The AO has also found a file containing cheque details of certain amounts received by the assessee, in the pen drive of Shri Pratap Patil. It was noticed that those cheque receipts were found accounted for in the books of the assessee trust. Another file found in the pen drive was containing details of payments made outside the books of accounts. Accordingly, the AO has expressed the view that the information found in the pen drive should be considered in totality and the payments details should also be considered to be true, since details of receipts by way of cheques were found to be true. We are unable to agree with the said opinion expressed by the AO. We notice that the AO is referring to two different files found in the pen drive, i.e., one file contained details of Printed from counselvise.com 46 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT receipts by way of cheques, another file contained details of receipts by way of cash and yet another file contained payment details. There should not be any dispute that the pen drive is in the nature of 'Storage vault' containing several files. Each file may contain different details and hence it may not be proper to hold that the contents of one file, if found to be correct then the content of other files are also to be considered as true. The opinion of the AO may be accepted, if the same file contains details of partly accounted and partly unaccounted transactions, which is not the case. Further, the assessee herein is contending that the collection of capitation fee is an un-authorised act of the employees. The assessee is not accepting the transactions noted down in the pen drive. Hence, we are of the view that the AO was not right in extending the interpretation given to one file to another file. The Ld A.R contended that Shri Pratappatil was having access to the records of the college and it is quite possible that he might have copied the file relating to receipt of fees by way of cheques. Accordingly, he contended that it does not mean that the information contained in other files should also be considered to be correct. In any case, since there is no material to link these payment details to the assessee, the same cannot be used against the assessee. The details/documents which have not been accepted by the assessee can be used only by bringing any other corroborate/independent material on record which would vindicate those information. Accordingly, we are of the view that the AO was not justified in accepting the details of payments without carrying out due examination and bringing any other corroborative evidence. (d) The AO has also relied upon certain discrepancies found in the OMR answer sheets pertaining to entrance examinations conducted by the assessee trust for admitting students in the management quota. According to AO, signatures were missing in the attendance sheets in some cases or it did not tally with the signature available in OMR sheets. According to the AO, those discrepancies are available in the case of students from whom capitation fees has been collected. We notice that the assessee has given explanations with regard to this deficiency. Be that as it may, the point to be considered here is whether the deficiencies found in the OMR sheets would show that the assessee was collecting capitation fees?. First of all, the explanation given by the assessee for the deficiencies has not been proved to be incorrect by the AO. Secondly, in the enquiry conducted by the AO with the students, all of them have expressed ignorance about the deficiencies. Thirdly, the deficiencies noticed were related to the signature in attendance sheets. There is no evidence to show that the answer sheets themselves were manipulated, which might be an important incriminating material. Fourthly and most importantly, the AO did not ask any question with the students about payment of capitation fees. Hence, we are of the view that the deficiencies noted in the OMR sheets do not prove the receipt of capitation fees by the assessee trust. The Ld A.R also submitted that Printed from counselvise.com 47 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT some students have also filed affidavit stating that they have not paid any capitation fee. Accordingly, in our view, this detail also does not support the case of the AO. (e) We also notice that the revenue has questioned the trustees, viz., Shri Vijay Patil and Smt Shivani Patil. We noticed earlier that both of them have denied collection of capitation fees. We notice that the revenue did not question other trustees with regard to the allegation of collection of capitation fees. We also notice that the officials at helm of affairs, viz., Vice Chancellor, Controller of Examinations were also not questioned. (f) The AO had placed reliance on the statements given by the employees, trustee and certain employees of another trust. However, all of them have retracted the statements given by them. We notice that most of them have retracted within 15 days from the date of conclusion of search. The AO however rejected the retraction by holding that the same is an afterthought and without any reasoning. However, we notice that they have stated that they were under mental pressure when the statement u/s 132(4) of the Act was taken from them and could not give proper reply. The Ld A.R also submitted that, since the employees have collected capitation fees without the authority of the assessee trust, naturally they would be under the threat of exposure. Hence, in order to save their skin, they might have stated initially that the capitation fees were collected upon the instruction of Shri Vijay Patil. Subsequently, when they reached proper mental state, they have filed retraction statements. The Ld A.R also submitted that the cash was recovered from the employees only and not from the assessee trust. The Ld A.R submitted that, it reinforces the fact that the employees were only collecting capitation fees without the authority. The Ld A.R also submitted that the employees have owned up the cash seized from them and have declared the same as their respective income under Income Declaration Scheme, 2016. This fact would support their respective retraction statement and also the stand of the assessee trust. The Ld A.R submitted that the income declared by the employees have been accepted by the revenue. Accordingly, it was contended by the Ld A.R that the original statements given u/s 132(4) could not have been relied upon by the AO. Considering the facts and circumstances of the case discussed above, in our view, these contentions of Ld A.R merit acceptance. ] (g) We notice that the AO has also conducted enquiries with some of the parents. The Ld A.R has advanced his arguments on the reliability/effectiveness of their statements, which we have summarized in the earlier paragraphs. We have noticed that most of them have given donations by way of cheques only. The parents who had given cash had taken back the cash, as their respective children changed their minds. None of the parents have admitted that the assessee trust has collected Printed from counselvise.com 48 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT capitation fees in the form of donations, i.e., there is no material to show that the donations were not voluntary. It is only the AO who has presumed that the donations given by the parents are in the nature of capitation fee collected by way of cheque. Hence, we are of the view that the AO could not have placed reliance on the statements given by the parents. (h) The AO has also relied upon the documents seized from employees of another trust, viz., Taruna Maheswari and Pravin Patil and made additions on protective basis towards receipts of money recorded in those statements. Both of them said that the payments were received on behalf of Vijay D Patil. However, no corroborative material was brought on record to prove the trustworthiness of the transactions recorded therein. We notice that the AO has only presumed that the payments have been given by Shri Vijay Patil, as noted in the above said documents, out of the capitation fees only. However, no material was available to support the above said presumption of the AO. If at all any such payment has been made by Shri Vijay D Patil, it may be his personal transaction and hence it is nothing to do with the assessee trust. Both the above said parties have initially stated that they had received money from Tukaram Patil and others, but later retracted it. In any case, no contra entry was available in the record maintained by Shri TukaramPatil. Further, the revenue did not examine Tukaram Patil with regard to the entries of receipt of cash noted by Taruna Maheswari and Pravin Patil. In any case, those transactions are between two parties and there is no other material to show that the said transactions, if at all true, were related to the assessee. The foregoing discussions would show that the above said statements/materials do not vindicate or link the information/evidences found from the employees. The revenue also did not find/seize any credible material from the assessee trust to corroborate the information/document seized from the employees. In respect of alleged receipt of capitation fee and in respect of payments recorded in the materials, the AO did not make enquiries with the payer/recipient of money. In the absence of any independent material to link/vindicate the information found from the employees, we are of the view that the AO could not have made additions on the basis of that information. 30. In the decision rendered by Hon'ble Supreme Court in the case of Common Cause (a registered society) reported in 394 ITR 220, it was held that the documents recovered by the authorities will have no evidentiary value unless it is corroborated with any other independent evidence, i.e., uncorroborated loose papers found in the search cannot be taken as sole basis for determination of undisclosed income. The Hon'ble Supreme Court has held in the case of CBI vs. V C Shukla (supra) that even correct and authentic entries in books of account cannot fix a liability upon a Printed from counselvise.com 49 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT person without independent evidence of their trustworthiness. We notice that the Hon'ble Supreme Court has dealt with the entries made in a diary which was considered to be regular books of account and held that it cannot be relied upon. However, in the instant case, the evidences relied upon by the AO are certain abstract statements maintained by the employees in their respective laptops. Hence, in our view, it cannot be said that those uncorroborated materials have any evidentiary value viz-a-vis the assessee unless any other independent material is brought on record to prove the trustworthiness of those abstract information. 31. At this stage, we may refer to the decision rendered by Hon'ble Madras High Court in the case of The CIT vs. Balaji Educational & Charitable Public Trust (374 ITR 274)(Mad). We notice that the facts considered by the Hon'ble Madras High Court were to some extent identical with the facts of the present case. The relevant portion of the decision rendered by Hon'ble Madras High Court is extracted below:- \"7.5 As rightly held by the Tribunal, if the Assessing Officer had any doubt about the receipt of capitation fee or the explanation given, he should have conducted enquiry either with the students or with their parents or with any other person interested in the activities carried on by the assessee trust. But, without doing so, the Assessing Officer estimated the collection of contributions on the basis of the number of seats available under management quota multiplied by the amount of contribution attributable to individual seats. Any determination for purpose of tax cannot be based on hypothetical facts or conjectures or surmises. The inference drawn by the Original Authority is based on probability. 7.6 With regard to the seizure of cash of over Rs.44 Lakhs from the residence of the Chairman of the Assessee Trust, it is not in dispute that the said sum has been assessed in the hands of the Chairman for the assessment year 2008-2009 and the same was received from the petrol pump business, the turnover of which is more than Rs.30 Crores. Moreover, the Assessing Officer has accepted the disclosure of the seized cash as the income of the individual and, therefore, in our considered opinion, it cannot be said that assessee trust had accepted contributions by way of capitation fee. The said issue cannot be used both ways. The assessment of the undisclosed income at the hand of the individual ends the issue there. It has no relevance to the affairs of the Trust and there is no material to hold so. Printed from counselvise.com 50 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 7.7 In our considered opinion, based on the loose sheets and cash seized, which have been held as irrelevant to the present issue, it cannot be held that for all the assessment years the assessee received capitation fee for admission of students in the management quota. This is a perverse inference. Without conducting any enquiry in this regard to make allegation is unsustainable. The information obtained from the Public Information Officer to a query raised under the Right to Information Act to the effect that \"There is no any complaint received from any student/parent regarding capitation fee charged by the above institutions so far\" also tilts the balance in favour of the assessee. It disproves the department's allegation of involuntary collection of amounts. That apart, the order passed under Section 264 of the Act for the assessment years 1998-1999 to 2001-2002 clearly states that the donation received from students or the parents is not compulsory in nature and, therefore, the same is not capitation fee. There is no material to controvert this fact which is to the knowledge of the department. No endeavour is made to sustain the allegation of involuntary donation. In any event, as rightly held by the Tribunal, it is not relevant in the present case as the allegation is violation of Section 13 r/w Section 11 of the Act. 7.8 We find that factually the Commissioner of Income Tax (Appeals) and the Tribunal have come to the conclusion that the donations received do not partake the character of capitation fee. There is no element of involuntary nature of donation. A specific finding is given that no investigation has been done to show that any parent or student has complained about the nature of donation. The department has failed to dispel the finding of fact. 7.9 In any event, the learned Standing Counsel for the department pleads that since the assessee had not submitted the list of students, the Assessing Officer had to make an estimate adopting his own methodology. This we cannot accept for the simple reason that the show cause notice proceeds on the basis that the assessee has to submit the list of donors alone. A reply was submitted by the assessee and in paragraph 6(iii), the Assessing Officer states that all the statements tallied. However, the assessing officer comes to a different conclusion that contribution is not voluntary, and it is relatable to admission of students. We find this finding of the Assessing Officer, as Printed from counselvise.com 51 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT has been rightly held by the Commissioner of Income Tax (Appeals) and the Tribunal, is not supported by documents, but on the basis of Assessing Officer's inference. It cannot be now stated that something was not furnished, nevertheless, he tallied all the materials and came to the conclusion as stated above. If the Assessing Officer has tallied the figures then the assessees case of actual contribution to Trust has to be accepted. It has been shown in the return of income. A bald statement in paragraph (7) of the assessment order that the assessee is not carrying on charitable activities for the purpose of Section 13 read with Section 11 of the Act appears to be the mainstay of the department's case. 7.10 In effect, it is clear that the authority has confused himself with the admission of students in management quota with the carrying on activities of the trust. The distinction is obvious that if the department wanted to make out a case of violation of Section 13 of the Act by the trust, it cannot be based on the perception of the Assessing Officer that donations to the trust are not voluntary. We hasten to add that there is no material to support the plea that the donations are not voluntary. 7.11 Having invoked Section 13, the mainstay of the case of the department should be based on the activities of the trust to plead that the same are not in consonance with Section 13 of the Act and, therefore, exemption under Section 11 of the Act should be denied, which we find is abysmally silent in the show cause notice and the assessment order. 7.12 We do not find any reason to come to a different conclusion on facts, as has been addressed by the Commissioner of Income Tax (Appeals) as well as the Tribunal on these two issues relating to seizure of cash and loose sheets. Apparently, there is no dispute on that fact. All that the department is trying to show is that there is something improper in the manner in which the donations are handled. Both these factors clearly establish that the allegations have nothing to do with the trust and its activities in relation to the charitable objects.\" 32. In view of the foregoing discussions, we are of the view that documents seized from employees cannot be considered as having any evidentiary value and cannot be considered to have trustworthiness, since no other corroborative material was brought on record to support the veracity of the same. None of the material would show that the assessee trust was collecting capitation fees. Hence, the AO could not have placed Printed from counselvise.com 52 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT reliance on the materials seized from the employees to draw conclusion that the assessee was collecting capitation fees. 33. Another important aspect that was brought to our notice by Ld A.R is that the assessee is prohibited from collecting capitation fees under Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. It is the submission of the assessee that there was no complaint against the assessee with regard to collection of capitation fees and the State Padmashree Dr. D.Y. Patil University Government has not taken any action against the assessee in this regard. This fact also goes against the presumption drawn by the AO. 34. We shall now advert to certain contentions raised by Ld D.R and also to the case laws relied upon by him. (a) The first case law relied on by Ld D.R is the decision rendered by Pune bench of Tribunal in the case of Sinhagad Technical Education Society vs. DCIT (2022)(139 taxmann.com 270) (Pune-Trib). In this case, the AO had brought corroborative evidences in the form of refund of capitation fees, recommendation seeking waiver/reduction in capitation fee/donation. Further, enquiries were made with three persons and they have confirmed payment of capitation fees. Most importantly, the incriminating materials in the form of loose sheets were found at the premises of the assessee therein. Under these set of facts, it was held that the loose sheets would have evidentiary value. On the contrary, in the instant case, no material was found/seized from the premises of the assessee. The materials were found at the residences of the employees. The assessee has categorically denied collection of capitation fees. The AO could not bring any material on record to link those materials with the assessee or to prove that the assessee only was indulging in collection of capitation fees. Accordingly, we are of the view that the decision rendered by Pune bench of Tribunal in the case of Sinhagad Technical Education Society (supra) is not applicable to the facts of the present case. (b) The Ld D.R also relied upon the decision rendered by Hon'ble Delhi High Court in the case of CIT vs. Jansampark Advertising & Marketing P Ltd (2015)(56 taxmann.com 286)(Delhi) and contended that the Tribunal may conduct proper enquiry, if the AO had failed to discharge his functions properly. In our view, this decision will also not apply to the facts of present case. We have noticed that there was no material to link the assessee with the materials seized from the employees and hence the very inference drawn by the AO was rejected by us. Thus, it is not case of lack of proper enquiry as envisaged in the above said Printed from counselvise.com 53 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT decision rendered by Hon'ble Delhi High Court. Accordingly, this decision also does not support the case of the revenue. (c) The Ld D.R submitted that the declaration of income by the employees under Income declaration scheme is not sacrosanct. He brought to our notice a news reported in a news paper that a person had declared Rs.13,860crores under Income declaration Scheme and the same is being probed by the Income tax department. In our view, there is no reason to suspect the facts of the present case on the basis of the facts prevailing in some other case, i.e., the revenue should bring some material to prove that the declarations given by the employees are not correct. On the contrary, the Ld A.R submitted that the declarations of the all the employees have been accepted by the revenue. (d) The Ld D.R also invited our attention to a newspaper clipping, which described the memory of 12 year old student. Accordingly, he submitted that the statement given by Shri TukaramPatil and Shri UnmeshKhanvilkar out of their memories should be taken as evidentiary value, since some people are gifted with good memory capacity. However, in the legal process, oral submissions do not carry much evidentiary value. 35. Accordingly, we are of the view that all the additions made by the AO including the protective additions, on the basis information found in the laptops, diaries and other documents found/seized from the employees and third parties (employees of another trust) are liable to be deleted. Accordingly, we direct the AO to delete the addition made towards Capitation fees and other additions made on the basis of the materials seized from the employees in all the years under consideration.” 49. The Ld. Departmental Representative contended that in the case of Padmashree Dr. D.Y Patil University (supra), the documents and cash were seized from the custody of the employees, however, in the present case, the incriminating documents seized from Sh. V. Mathiyalgan who was the VC of SIMS which is one of the units of the Assessee Trust, therefore, the Ld. DR submitted that facts of the case of DY Patil University (supra) are distinguishable and not applicable to the case in hand. Printed from counselvise.com 54 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 50. It is observed that even in the present case, as per the department, the said Sh. V. Mathiyalgan was a VC of SIMS at the relevant point of time. The SIMS is one of the units of Assessee trust and salary was paid to Sh. V. Mathiyalgan by the Assessee trust. Therefore, there exists employer and the employee relationship between the Assessee and Sh. V. Mathiyalgan. Further neither any cash nor any incriminating material was found from the possession of Assessee and all the incriminating documents were seized from the possession/premises of the said Sh. V. Mathiyalgan. Further department has not carried out any search operation in the case of any of the trustees of the Assessee to collect any corroborative material. Further as observed earlier, even in the statement recorded on oath of Sh. V. Mathiyalgan, nowhere admitted handing over of the alleged capitation fees to the Assessee and even the students/parents/guardians never named the Assessee or its trustees of receiving any money from them. The addition has been made in the hands of Assessee based on the documents seized from the custody of third person. Therefore, in our considered opinion, case of Assessee trust is on a better footing than that of the Assessee in the case of Padmashree D.Y. Patil University (Supra). Therefore, the contention of the Ld. DR. is hereby negated. 51. In view of discussions, we are of the opinion that the addition made on account of capitation fees in the hands of the Assessee trust is unwarranted and we thus allow Grounds of appeal No. 4, 6, Printed from counselvise.com 55 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 9 & 10 of the Assessee in ITA No. 2182/Del/2023 (A.Y 2017-18) and direct the A.O. to delete the subject Addition made in the hands of the Assessee. II. Addition on account of cash loan and interest paid 52. Based on the documents seized from the custody/possession of Sh. V. Mathiyalgan during the search conducted u/s 132 of the Act on 09/03/2017 in the case of M/s Etcetera Entertainment and Sh. V. Mathiyalgan, the A.O. further made the addition of Rs. 3,92,60,191/- u/s. 69C of the Act on account of uncounted interest expenses. Ld. CIT(A) by observing that addition towards unaccounted receipts made u/s 69A of the Act has already been confirmed, by allowing the benefit of telescoping and set off and accordingly, deleted the addition of Rs. 3,92,60,191/-, though in para 5.21 of the Order confirmed the addition in totality on merits of the issue. Grounds of appeal No. 5, 6 and 9 of the Assessee are taken against the addition sustained in principle by the Ld. CIT(A). 53. The Ld. AR adopting the very same argument canvassed on the issue of capitation fees above and submitted that addition has been made based on the document found from premises of Sh. V. Mathiyalgan and no incriminating document was seized either from the possession of SIMS or from the possession of Assessee trust or any of its trustees. The documents were in the hand writing of Sh. V. Mathiyalgan, wherein name of the Assessee trust or the trustees of the Assessee were not appearing anywhere and therefore, the Printed from counselvise.com 56 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT said documents has evidentiary value so far in the case of assessee. The Ld. Counsel further submitted that even if those documents are believed to be true which are admittedly seized from the possession of Sh. V. Mathiyalgan, the addition should be made in the hands of Sh. V. Mathiyalgan not in the hands of Assessee. Further, no action has been taken by the Revenue in the hands of recipients of alleged interest paid in cash. He further stated that no examination of the persons was carried out whose name are appearing in the seized document, more particularly when the Assessee has specifically contended that those documents do not belong to the Assessee and not even connected to the Assessee. Without bringing any corroborative evidence addition was made in the hands of Assessee purely based on the assumption and presumption, thus, sought for deletion of the addition made on account of interest paid on alleged cash loan. 54. The Ld. Departmental Representative has also adopted the very same argument which was canvassed on the issue of capitation fees and further contended that, the said Sh. V. Mathiyalgan being a VC of SIMS, which is one of the units of the Assessee and the incriminating documents were seized from his custody which clearly shows that the cash loans were taken in large amounts from various persons, monthly interest paid has also been found mentioned in the seized pertained to assessee. The Ld. DR further placed reliance on the findings of A.O. and sought for dismissal of the Grounds No. 5, 6 and 9 of the Assessee. Printed from counselvise.com 57 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 55. We have heard both the parties and perused the material available on record. It is a matter of fact that the addition has been made based on the loose sheets found during the search operation conducted u/s 132 of the Act on 09/03/2017 in the case of M/s Etcetera Entertainment and Sh. V. Mathiyalgan. It is also an admitted fact that all these documents are seized from the custody of Sh. V. Mathiyalgan and are in his hand writing only. We have already adjudicated in detail regarding the issue of documents seized from the custody of Sh. V. Mathiyalgan which are in his hand writing. We have tested the presumption of those documents against the Assessee as per Section 292C, 132(4) and 132(4A) of the Act while deciding the issue of ‘capitation fees’ and held that the A.O. has committed error in drawing presumption against the Assessee and made the additions based on those documents seized from the custody of Sh. V. Mathiyalgan. Therefore, the deliberation and the findings drawn thereon shall apply mutatis mutandis to the present issue. 56. Further, in the seized documents name of assessee trusts have not been mentioned in so far as either receipt of loan or payment of interest is concerned. Even if these documents are believed to be correct, addition, if any, must be made only in the hands of Sh. V. Mathiyalgan not in the case of Assessee trust as admittedly these documents are in the hand writing of Sh. V. Mathiyalgan and were not seized from the possession of assessee. Further, no action was taken in the case of alleged recipients of such interest in cash and Printed from counselvise.com 58 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT Revenue has not made any investigation of the persons mentioned in the seized documents and no statement of the alleged recipients of the interest in cash were recorded in order to corroborate the allegation against the assessee. When the Assessee has categorically denied that these documents do not belong to Assessee, the burden shifts on the Revenue to prove the contrary by collecting corroborative evidence and recording of statements from those persons who have received the interest in cash. 57. Before the A.O. as well as before ld. CIT(A), Assessee Trust produced Audited financial statements in respect of unsecured loans for all the assessment years, which are produced before us at page No. 334 to 341 of Assessee’s Paper Book wherein the parties from whom Assessee Trust took Loans have been highlighted with details of total Loans taken from the said parties vis-à-vis Satisfaction Note. From the said tables it is clear that Loans taken by the Assessee Trust from the parties have been reflected in the audited books and the Interest paid on the above Loans has also been reflected in the audited books. Therefore, the addition made on account of unsecured loan based on the documents found from the custody of Sh. V. Mathiyalgan is not called for. The Ld. AR contended that for Assessment Year 2017-18, the A.O. has not even provided the details of the Loans. The A.O. has made addition to the total income for Assessment Year 2017-18 by way of Interest on Loans by mere extrapolating. In the light of the above, addition made to the income by way of Interest paid on Loans in the hands Printed from counselvise.com 59 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT of the Assessee is totally erroneous. Thus, we allow Grounds of appeal Nos. 5, 6 and 9 of the Assessee in ITA No. 2182/Del/2023 (A.Y 2017-18) and direct the A.O. to delete the subject Addition made in the hands of the Assessee. 58. During the course of hearing, assessee has taken various additional grounds of appeal which are reproduced herein above, and prayed that these grounds are purely legal grounds, requires no fresh verification therefore, the same deserves to be admitted for adjudication. Reliance is placed on the judgement of CIT Vs. NTPC Ltd. 229 ITR 383 (SC). 59. After hearing both the parties and from the perusal of the additional grounds taken, it is found that these are purely legal in nature and requires no fresh verification/investigation on the part of the AO therefore, by respectfully following the judgement of hon’ble Supreme court in the case of NTPC Ltd., (supra) the additional grounds of appeal taken by the assessee are admitted and discussed as under: 60. Additional Ground No.1 is not pressed hence, dismissed. 61. Additional Ground No.2 is with respect to non-issuance of notice u/s 143(2) of the Act though the assessee has filed return of income in response to notice issued u/s 153C of the Act. 62. As we have already allowed grounds of appeal taken by the assessee wherein the assessee has challenged the additions made Printed from counselvise.com 60 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT after considering the merits of the issue involved therefore, this ground of appeal become academic. 63. The remaining grounds of appeal are also taken by the assessee wherein assessee has challenged the assessment order on other legal issues. However, since we have already deleted the additions by considering assessee’s on merits therefore, these grounds become academic and requires no separate adjudication. ITA No. 2181/Del/2023( A.Y 2016-17) (Assessee) 64. The Assessee vide Ground No. 6, 8, 10 and 11 challenged the additions made by the Revenue on account of ‘capitation fees’. 65. We have already adjudicated the said issue of ‘capitation fees’ while deciding Grounds of Appeal No. 4, 6, 9 & 10 taken by the Assessee in ITA No. 2182/Del/2023 (A.Y 2017-18). Since the facts and circumstances are identical except variation in the amount thus, by applying the findings and conclusion made thereon mutatis mutandis, we hold that the Revenue committed error in making addition in the hands of the Assessee on account of ‘capitation fees’. Thus, we allow Grounds of appeal Nos. 6, 8, 10 & 11 of the Assessee in ITA No. 2181/Del/2023 (A.Y 2016-17) and direct the A.O. to delete the subject Addition made in the hands of the Assessee. Printed from counselvise.com 61 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 66. The Assessee vide Grounds appeals Nos. 7, 8 and 10, challenged the addition made towards cash loan and payment of interest out of books. 67. We have already adjudicated this issue of cash loans and payment of interest out of books while deciding Grounds of Appeal No. 5, 6 and 9 of the Assessee in ITA No. 2182/Del/2023 (A.Y 2017- 18). Since, the facts and circumstances are identical except little variations in the amount, by applying findings and conclusion made thereon mutatis mutandis, we hold that the Revenue committed error in making addition in the hands of the Assessee on account of cash loan and payment of interest out of books. Thus we allow the Grounds No.7, 8 and 10 of the Assessee in ITA No. 2181/Del/2023 (A.Y 2016-17) and direct the A.O. to delete the subject Addition made in the hands of the Assessee. 68. Though the Assessee has raised several other grounds of Appeal and additional Grounds of Appeal on the technical and legal issues and since we have decided the Appeals of the Assessee for Assessment Year 2016-17 and 2017-18 holding that both the additions made in the hands of the Assessee on account of ‘capitation fees’ and ‘cash loan and payment of interest out of books’ are not sustainable and deleted the same, we refrain from deciding the other Grounds of Appeal and the additional Grounds of Appeal in both the years as the same have become academic in nature. Those Grounds which are not adjudicated as not Printed from counselvise.com 62 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT necessary are kept open for the Assessee to urge the same in case of necessity. ITA No. 2288/DEL/2023 (A.Y. 2014-15) (Revenue) ITA No. 2289/DEL/2023 (A.Y. 2015-16)(Revenue) ITA No. 2290/DEL/2023 (A.Y. 2016-17)(Revenue) ITA No. 2291/DEL/2023 (A.Y. 2017-18) (Revenue) 69. The above appeals are filed by the Revenue challenging the additions deleted by the Ld. CIT(A). There are broadly two additions made by the A.O. in the hands of the Assessee herein i.e. capitation fees and payment of interest on cash loans. The Ld. CIT(A) has given partial relief to the Assessee by deleting the partial addition which are called in question by the Revenue in the above Appeals. 70. It is observed that in the Assessment Year 2015-16, though there was no addition made under Section 69A of the Act on account of Capitation fee, the Ld. CIT(A) has applied the principle of telescoping and deleted the addition made on account of interest paid in cash for cash loans. The revenue has challenged the said action of the CIT(A) in ground No.1 of the Appeal for A.Y.2015-16. We find merit in the said ground. The Ld. CIT(A) has committed error in deleting the addition made on account of Capitation fee, though there was no second addition made by the A.O. in order to invoke telescoping Accordingly, the said ground No. 1 of the Revenue is allowed. Printed from counselvise.com 63 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT 71. However, we have already decided both the issues of capitation fees and cash loan and payment of interest out of books and held that the Revenue has committed error in making those additions in the hands of the Assessee while deciding the Appeal in ITA No. 2182/Del/2023 for A.Y 2017-18 and directed the A.O. to delete entire additions. By adopting very same reasoning mutatis mutandis, the present Appeals filed by the Revenue challenging the deletion of partial addition will not survive accordingly, Grounds of Appeal of the Revenue in all the above Appeals are dismissed. C.O No. 107/DEL/2023 (A.Y 2014-15) (Assessee) C.O No. 108/DEL/2023 (A.Y. 2015-16) (Assessee) 72. The above Cross Objections are filed by the Assessee challenging the order of the Ld. CIT(A), wherein several grounds of Appeal and Additional Grounds of Appeal urged. We have already dismissed the Appeals of the Revenue for both the subject Assessment Years on the ground that additions on account of ‘capitation fees’ and ‘cash loan and payment of interest out of books’ could not have been made in the hands of the Assessee. Therefore, the C.O No. 107/Del/2023 and 108/Del/2023 filed by the Assessee have become in-fructuous. 73. In the final result, decisions in all appeals are as under:- A). Appeals filed by the Assessee in ITA No. 2182/Del/2023(A.Y 2017-18) and ITA No. 2181/Del/2023(A.Y 2016-17) are partly allowed. Printed from counselvise.com 64 ITA No. 2181/Del/2023 & ors Saraswati Ammal Educational & Charitable Trust Vs. ACIT B). Appeals filed by the Revenue in ITA No. 2288/DEL/2023 (A.Y. 2014-15), ITA No. 2289/DEL/2023 (A.Y. 2015-16),ITA No. 2290/DEL/2023 (A.Y. 2016-17) and ITA No. 2291/DEL/2023 (A.Y. 2017-18) are dismissed. C). Cross Objections filed by the Assessee in C.O Nos. 107/Del/2023 and 108/Del/2023 are dismissed. Order pronounced in open court on 30th September, 2025. Sd/- Sd/- [ANUBHAV SHARMA] [MANISH AGARWAL] JUDICIAL MEMBER ACCOUNTANT MEMBER Date:-30.09.2025 *Amit Kumar, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "