TMI Blog2021 (8) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... y insertion of aforesaid Explanation by the Parliament in section 132 by the Finance Act, 2017 w.r.e.f. 1.4.1962 and it was held that the Appellate Authorities could not go into the reasons recorded by the concerned Income Tax Authority for directing Search action. In view of this, we are of the opinion that the assessee is precluded in challenging the validity of search action before the Tribunal. Validity of notice issued u/s. 153A - HELD THAT:- As per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and whether after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. Similar view was taken in the case of Rajesh Exports Ltd.[ 2018 (12) TMI 278 - ITAT BANGALORE] in para 17 of the Tribunal s order. In this view of the matter, this ground is dismissed. Status of the assessee - According to the ld. AR, trust is not a person referred to in section 2(31) of the Act and the CIT(Appeals) ought to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the authorities concerned. The suspicion cannot replace the material evidence brought on record by the authorities Statement of 2 cannot be basis for making such huge additions on collection of capitation fees. It cannot be considered as appropriate sample to frame the assessment on the basis of their statement - assessee requested for cross examination of all the parties whoever have given the statements against the assessee, if any, which was not provided at all - such statements cannot be relied upon.The revenue authorities bound to follow the principle of natural justice and ought to have given proper opportunity of examination and cross examination of the parties concerned whose statements are relied upon to frame the assessment. In our opinion the discovery of documents not only sufficient to conclude the collection of unaccounted capitation fees, cross examination of concerned parties is also important. The revenue authorities recorded statement of only 5 students out of more than 800 students and out of 5 only 2 are confirmed. The two statements recorded cannot be relied upon without confronting the same to the assessee. The statement of these two persons confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the AO concerned to presume these things, but it is rebuttable and it does not give a definite authority and conclusive evidence. The assessee is having every right to rebut the same. No addition can be made in the absence of any corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of revenue that assessee is collecting huge unaccounted capitation fees in the guise of carrying on educational activities. As already held that there are various loose sheets, scribblings, jottings and Excel sheets taken from the computer having no signature or authorization from the assessee s side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, it does not show any recovery of the undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets - Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Poona , [ 2017 (12) TMI 1067 - SUPREME COURT] the AO is directed to grant depreciation for AY 2010-11. Undisclosed cash receipts - HELD THAT:- We have already held in earlier para of this order that unsubstantiated material cannot be full-proof material evidence to sustain the addition. We also hold that mere existence of concealment even in one year is not sufficient to estimate the income of other years on that basis. It is pertinent to place reliance on the order of this Tribunal in the case of Anjaneya Brick Works. [ 2002 (1) TMI 256 - ITAT BANGALORE] wherein it was held that estimation of income could not be made relying on the seized documents which related to another accounting period and not the accounting year under consideration and, therefore, addition could not be made on the basis of incriminating documents relating to subsequent year. So the rule of uniformity cannot be and should not be applied on the estimate basis. There can be time and times when the uniformity can be maintained but for that case there should be some direct evidence available in a given case - As decided ANAND KUMAR DEEPAK KUMAR. [ 2006 (8) TMI 166 - DELHI HIGH COURT] merely becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President of the trust. Shri. Rajesh Jagdale was one of the trustees of the assesse trust and for this purpose the trust has established the following educational institutions and providing education to a very large number of students:- a) Medical College and Hospital b) RLJ Institute of Technology c) RLJ Industrial Training Institute d) Sri Devaraj Urs School PU College e) Sri Devaraj Urs International Residential School f) Sri Devaraj Urs Institute of Management g) Sri Devaraj Urs Educational Trust Pharma h) Sri Devaraj Urs School/College of Nursing i) R L Jalappa Central School j) Sri Devaraj Urs Educational Trust 3. The assessee trust has been filing return of income under the Income-tax Act, 1961 [ the Act ]. It is registered u/s. 12A of the Act as on date. 4. For the AY 2010-11, original return of income was filed on 16.09.2010 and intimation u/s. 143(1) dated 30.3.2011 was issued. Exemption u/s. 11 of the Act has been granted. 5. A search u/s. 132 of the Act was conducted on 6.8.2015 and statements recorded from various persons. It was stated by the assessee that the AO did not furnish a copy of the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollected capitation fee from various students and incurred expenditure for non-charitable purposes. Therefore the assessee trust was not carrying on the activities in a charitable manner, but in a commercial manner. Hence exemption u/s. 11(1)(a) of the Act was not available to the assessee. 6.2 Disallowance of expenditure in the nature of Capital Expenditure ₹ 7,29,24,571 : The assessee had spent a sum of ₹ 7,29,24,571 during the previous year relevant to AY 2010-11 towards capital expenditure for the purpose of the trust. Since the exemption u/s. 11(1)(a) was denied, the AO did not allow the capital expenditure claimed as application. 6.3 Disallowance of donation ₹ 10,00,000/-: During the previous year relevant to AY 2010-11 the assessee had donated ₹ 10,00,000 as recognized charitable institution. Since the exemption u/s. 11 of the Act was denied, the AO did not allow the payment of donation as application. 6.4 Undisclosed cash receipts ₹ 27,42,00,000 : The Trustees in a meeting held on 06.12.2017 found that many entries in the seized material revealed that some amount has been spent for the purpose of the trust. Therefore, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount (In Rs.) Excess of Income over Expenditure as per I E Account 25,76,28,031 Add: Depreciation 7,29,88,721 Balance 33,06,16,752 Less: Allowable Depreciation 1,53,05,869 Balance 31,53,10,883 Add: Loss from redemption of mutual funds 8,65,293 Add: Maintenance expenses towards Benz Car 3,47,192 Taxable Income 31,65,23,368 Add: Long Term Capital gain as ROA 4,31,496 Total Taxable Income 31,69,54,864 9. Consequently, on the basis of search u/s. 132 on 6.8.2015 and on similar facts and similar reasoning as in AY 2010-11, the AO determined the total income at ₹ 46,13,25,960 on the following components:- i. Total Income as per Order u/s. 143(3) ₹ 31,69,54,864. ii. Undisclosed cash receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 18,42,16,642. ii. Surplus accumulated u/s. 11(2) ₹ 2,31,21,458 : This disallowance was also made on the same ground that assessee had collected capitation fee from various students and incurred expenditure for non-charitable purposes. Therefore the activities of the trust were not charitable, but commercial. Depreciation was also denied on the same reasoning as held u/s. 11(1)(a). iii. Expenditure in the nature of Capital Expenditure ₹ 12,90,63,825. iv. Disallowance of donations u/s 37 ₹ 10,52,000. v. Undisclosed cash receipts ₹ 79,87,00,000 : In this year also, as held in the previous years, the AO held that a sum of ₹ 6,885 lakh is entered as cash receipts in seized material. He further extrapolated that a sum of ₹ 1,102 lakh would have been received which was not accounted even in the seized material. 13. For the AY 2016-17 , Registration u/s. 12A and Exemption u/s. 11 of the Act continued. On the basis of search u/s. 132 on 6.8.2015 and on similar facts and same reasoning as in AY 2010-11, the AO determined the total income at ₹ 121,63,33,681 on the following components :- i. Surplus set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 1.4.1962 prohibiting appellate authorities to go into the reasons recorded by the concerned appellate authorities for directing search against the assessee which reads as follows:- Explanation.-For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal. 20. Being so, this amendment will have effect in the present case. Therefore, the Tribunal cannot be expected to go into the said question. It is only for the Constitutional posts to examine the validity of search action. More so, this issue was also decided by the Hon ble High Court of Karnataka in the case of Prathibha Jewellery House v. Commissioner of Income-tax, (Appeal) [88 taxmann.com 94 (Kar)] where the writ petition was dismissed holding that law was amended by insertion of aforesaid Explanation by the Parliament in section 132 by the Finance Act, 2017 w.r.e.f. 1.4.1962 and it was held that the Appellate Authorities could not go into the reasons recorded by the concerned Income Tax Authority for directing Search action. In view of this, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and the question of assessment/reassessment is as per clause (d) of sub-section (1) of section 153A. Both these clauses are separate and should not be mixed. 24. We have heard both the parties and perused the material on record. As per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and whether after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. Similar view was taken in the case of Rajesh Exports Ltd. (supra) in para 17 of the Tribunal s order. In this view of the matter, this ground is dismissed. 25. Ground No.5 is with regard to status of the assessee. According to the ld. AR, trust is not a person referred to in section 2(31) of the Act and the CIT(Appeals) ought to have held that assessment made on a nonexistent status is bad in law. The ld. DR relied on the order of lower authorities. 26. We have heard both the parties and perused the material on record. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty to challenge the addition made by the AO if aggrieved, but assessment cannot be quashed. 31. Ground No.7 relates to reliance on seized material and post-search statements. The ld. AR submitted that material seized during the course of search is as under:- Seized material no. reference Consists of Reference to Assessment Order Remarks A/DUU/01 [Copy enclosed at pages no. 508 to 600 of this Paper Book] Loose sheets (printed and manual) Page No. 39 to 48 of Asst. Order Some are manual; some are printed; entries in the sheets are struck off in considerable instances; The notings are obscure; Nothing can be deciphered from the same Many sheets do not contain dates nor the period to which they belong; many of the entries and sheets are unsigned; Few sheets contain only list of names and some figures Few sheets consist of only list of names and some year Few sheets consist of obscure notings made manually; They contain certain names, mobile number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (manually written) Consists of only names, mobile numbers and addresses; There is nothing to show that it belongs to the appellant. It does not contain either the name or seal of the appellant Though the assessing officer has made reference to the said material at page 100 of the assessment order, he has not analysed the same. He has not stated as to how this seized material is relevant. He has not drawn reference to any specific portion of the material. A/DUU/08 [Copy enclosed at pages no. 1309 to 1365 of this Paper Book] Note Book (manually written) Consists of only names, mobile numbers and addresses; There is nothing to show that it belongs to the appellant. It does not contain either the name or seal of the appellant It has not been discussed in the assessment order It has not been relied upon by the assessing officer A/DUU/09 [Copy enclosed at pages no. 1366 to 1419 of this Paper Book] Long note book (manually written) Consists of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heets (Most of them are printed; few are manual) Page No. 42 to 46, 64 83 of Asst. Order Most of it is a repeat of hard copy of material seized A/DUU/01 Certain sheets containing notings which are obscure Copies of some bank receipts There is nothing to show that it belongs to the appellant except few sheets which essentially represent donation receipts A/DUU/14 [Copy enclosed at pages no. 1806 to 1838 of this Paper Book] Copy of digital data retrieved Page 70 of Asst. Order Most of it is a repeat of hard copy of material seized A/DUU/01 There is nothing to show that it belongs to the appellant. A/DUU/15 [Copy enclosed at pages no. 1839 to 2028 of this Paper Book] Note book Consists of only names, mobile numbers and addresses; There is nothing to show that it belongs to the appellant. It does not contain either the name or seal of the appellant It has not been discussed in the assessment order It has not been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the word describe used in the definition as given in the New Shorter Oxford English Dictionary is portray in words, recite the characteristics of, in a detailed or graffic account of . The meaning of the word express used in the definition as per the New Shorter English Dictionary is A graphic representation as image; an act of expressing or representing by words, signs or actions, expressions, a mode of speech, of phrase; an utterance . According to the Hon ble Supreme Court in the case of Ramji Dayawala Sons (P.) Ltd. v. Invert Import AIR 1981 SC 2085, mere proof of the handwriting of a document would not tantamount to a proof of all the contents or the facts stated in the documents, if the truth of the facts stated in a document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the fact or contents of the document. The truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e., by the evidence of those persons who can vouchsafe for the truth of the facts in issue. 34. Further, the Hon ble Supreme Court in the case of Mohd. Yusuf Anr. v. D. Anr. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from premises of another person in course of search action on such other person. It is a fact that the said rough loose sheets of papers scribbled by some anonymous person and seized in course of search of another person cannot be termed as 'documents' having any evidentiary value within the meaning of section 132 or section 132A of the Act. Thus, the entire assessment u/s 153A of the Act in case of the assessee rests on shaky and incorrect foundation and thus deserves to be quashed. ..........In light of the aforesaid judgment, we are of the view that the impugned loose sheets of papers cannot come within the ambit of definition of the word document to be used as evidence and the same cannot form the basis for assessing the undisclosed income of the assessee. Admittedly, the said loose papers are not in the form of pro-notes or duly executed documents or books of account or certificates or money receipts which can prove conclusively the factum of any undisclosed income earned by the assessee or any unaccounted investments or expenditure made by him. Additions cannot be made simply on the basis of rough scribbling made by some unidentified person on few loose sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of receipt of cash cheque over a period of time. It has been written over a period of time, after due thinking and consideration, as and when events like rate finalization, rate renegotiation, cash received, cheque /draft received have taken place. It contains all or most of details in respect of the sale transactions mentioned therein, viz- XI. Name of the main person negotiating for purchase of flat. XII. Contact details of said person. XIII. Super built up area XIV. The rate finally decided to be charged per sq. f. super built up area. XV. Total money receivable XVI. Breakup of money receivable into accounted and unaccounted portion. XVII. Where renegotiation of rate has taken place, the renegotiated rate, revised total consideration and its breakup. XVIII. Details of cheque received from time to time XIX. Details of cash received from time to time. XX. Details of balance receivable 17. It is clear, therefore that your contention that these papers are rough workings only is clearly wrong, as discussed above. It is not rough working, but a systematic working. 38. The above would show that the rough notings whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held on 6th December 2017 decided that to that extent the trust will make a conditional offer to the Income Tax department to include in its gross receipts provided the deduction towards the revenue and capital expenditure recorded in the seized materials is allowed. During the assessment proceedings the trustees categorically denied that the trust has anything to do with the entries in the seized records. It was averred that the trust had not authorized any person to collect the fees in cash from the students or the parents. 41. It was submitted that the notings in the loose sheets, note pads have been prejudicially and erroneously interpreted by the AO. The loose sheets do not evidence any concluded transactions. The inferences drawn by the AO are based on surmises and conjectures. The inferences are outcome of a prejudicial or speculative reading of the material not supported by any independent, cogent and reliable evidences. The AO sought to rely on undated, unsigned dumb loose sheets which are not reliable material at all as held in the decision quoted above. 42. The ld. AR reiterated the submissions made supra with regard to the provisions of section 132(1)(i) to ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be raised in respect of the seized material. That is presumably the reason why even the assessing officer has not averred that the presumption under section 292C can be invoked in respect of the seized material. 46. The ld. AR submitted that assuming but without admitting that section 292C applies even with reference to loose sheets, note pads containing unsigned entries a perusal of section 292C would show that the presumption is only with regard to books of account, other documents, money, bullion, jewellery or other valuable article or thing found during the course of search under section 132. Moreover, it is a search induced assessment. Section 132(4A) also contains similar presumption. Section 132(4A) should be read harmoniously with reference to sub-section (1) of section 132. The books of account or other documents referred to in section 132(4A) are those referred to in section 132(1)(iii) read with section 132(1)(a) / (b). The appellant has established that the authorising officer could not have formed a reasonable belief that eventualities stated in section 132(1)(a) / (b) exist. Therefore, section 132(4A) cannot come into play. Consequently, section 292C does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sec 142(1) of the Act, wherein the assessee had taken objection to assessment in the absence of seized material. The AO has not rebutted the assertions made by the appellant. He merely made a bald assertion that the assessment has been made based on incriminating materials found during the course of search. It is submitted that while the jurisdictional Tribunal and High Court have consistently held that assessment under sec 153A cannot be made in the absence of incriminating material, the AO cannot get away by making bald assertion by stating that the assessments have been made based on incriminating material. In fact, the assertion of the AO is contrary to his own reliance upon material belonging to a period other the period for which assessment is made. By relying upon material belonging to some other year other than the year for which the assessment is made, the AO has impliedly acknowledged that there is no material seized leave alone incriminating material. The findings in paragraph 10.9.2 at pages152 to 154 no doubt pertain to AY 2010-11. But this is one of the several instances where it can be demonstrated that the AO has made assessment in an arbitrary and capricious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the separate submissions made for each of the impugned assessment years. A perusal of the same would show the desperation in which the learned assessing officer has attempted to justify the assessment. The computation is fraught with high degree of subjectivity and arbitrariness. Whatever discussion of the material which the AO has made at various places in the assessment order are general and no objective conclusion can be drawn from the same which is evident from the assessing officer s own decision not to rely upon that discussion while making the actual computation. If the AO could really base his computation on specific portion of seized material, he would have made specific references to the same while making computation and would have also drawn references to the discussions made in the previous paragraphs of the assessment order. But he chose to make reference to specific pages of the seized material in few cases and no such reference in few other cases. Even so far as the years in respect of which he has drawn attention to specific pages of the seized material, the computation cannot be correlated to the data in such seized material. Therefore, there is an element of estim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specific submissions on grounds pertaining to extrapolation of income and these submissions, it is established that the seized materials do not qualify as incriminating material at all. The method of quantification of undisclosed cash receipts is not at all scientific. The AO makes assumption for one year say Y1 and quantifies the undisclosed cash receipts for that year. He takes the quantification made for Y1 [which is already based on estimation] to compute the undisclosed cash receipts for another year say Y2. This manner of computation would go on increasing the element of assumption. If the degree of assumption goes on increasing, how can such quantification be close to reality? Therefore, the entire assessment should fall based on the concession of the AO that he did not find directly incriminating material. 54. This would show that the AO has not been able to ascertain the undisclosed income from the material. If he could ascertain the undisclosed income from the seized material, then there was no need to make estimation. The AO is making a lame attempt to justify the irrational manner in which he made the assessment. The very fact that the AO was left with no choice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Technical Education Society s case [2015] 378 ITR 84 (Bom.) , the Court has reiterated the principle that no addition can be made in the absence of incriminating material in a search based assessment. Though the above decision has been held in the context of section 153C the same would apply even to section 153A as held by Hon ble Karnataka High Court in IBC Knowledge Park (P) Ltd. s case [385 ITR 346 (Karn.)]. It has been categorically held that the seized material should be correlated to each year. If any incriminating material is found for any year in the block of 6 years, addition can be made only for that year. An overall approach of analysing the seized material should be refrained. 59. It is submitted that the department has not discharged the burden of proof cast on it to establish that the executive committee of the trustees was actively involved in collecting cash etc. The entire edifice of the case is built on the statement given by Mr. Goli Srinivas, the Accountant, Mr. G.H. Nagaraj, Secretary of the trust and parents of certain students. The appellant denies that it was involved in any manner in collecting cash from any student. The trustees deny any such collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cross-examine the witness, if any. It was similarly held in M/s Obulapuram Mining Company Pvt. Ltd. v. DCIT 2016 (7) TMI 1435 ITAT Bangalore . 63. In the next judgment of the Hon ble Delhi High Court rendered in the case of CIT Vs Pradeep Kumar Gupta (Supra) also, it was held by the Hon ble Delhi High Court that it was mandatory for the revenue to produce A for cross examination by the assessee on the specific demand in this regard and thereafter, it was held that the violation of the revenue to produce A for cross examination by the assessee assumes fatal consequences. Hence, as per these two judgments, for this reason alone that the revenue has not made available these persons for cross examination of the assessee despite such request by the assessee before the AO, these statements cannot be used against the assessee and without taking help from these statements of the transporters, the disallowance made by the AO out of transportation charges is not sustainable as per these two judgments relied upon by the ld. AR of the assessee and no contradictory judgment of the Hon ble jurisdictional High Court or Apex Court or of any other High Courts could be made available b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the AO has not given copies of all the statements of the parents and students that he had recorded. While taking the statement of Sri. G H Nagaraj on 16.10.2015, the authorised officer confronted him with 2 statements alleged to have been given by parents of some students. The copy of those statements is extracted in the copy of the statement of Sri. G H Nagaraj. The authorized officer has, further, confronted Sri G H Nagaraj with statements of parents of 4 more students. Copies of these statements have neither been extracted in the copy of statement of Sri G H Nagaraj nor has the same been separately furnished to the appellant. Appellant neither had the occasion to look into those statements nor an opportunity to cross-examine those persons (Parents). The AO has nowhere relied upon the statements of parents referred to in question no. 23 of the statement dated 16.10.2015 of G H Nagaraj. Therefore, it means that they do not form evidence at all for the allegations made against the appellant. 68. Except for the above, no other statement of any other parent or student has either been confronted to Sri. G H Nagaraj or Sri. Goli V. Srinivas or furnished to the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained from these two persons are invalid as they have been recorded without authority. Even the assessing officer has not obtained any statement from any of the parents or students. He relied solely upon the statements recorded by the authorized officer. This means that it is as good as not having obtained statement from any of the parents or students. It was submitted as stated that in the earlier submissions, the appellant has also established that these statements cannot be relied upon even on merits. 71. The AO has not furnished the copies of all the statements recorded. The appellant had requested the assessing officer to afford an opportunity to cross-examine the persons whose statements were relied upon. The AO has not afforded any opportunity to the appellant to cross-examine the persons whose statements are relied upon. 72. Moreover, the statements of the parents have been recorded postsearch. They do not have any evidentiary value. Reliance is placed on the decision of the Hon ble Bombay High Court in Commissioner of Income-tax v. Shankarlal Bhagwatiprasad Jalan [2017] 84 taxmann.com 275 (Bombay) wherein it was held as under:- (h) A bare reading of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is recorded Recorded by assessing officer or authorized officer Person whose statement is recorded 06.08.2015 132(4) ACIT, Circle 7(1)(2) R L Jalappa 04.09.2015 132(4) Authorised Officer R L Jalappa 07.08.2015 131 Authorised Officer G H Nagaraj 13.08.2015 131 Authorised Officer G H Nagaraj 13.08.2015 131 Authorised Officer G H Nagaraj 20.08.2015 132(4) Authorised Officer G H Nagaraj 21.09.2015 132(4) Authorised Officer G H Nagaraj 16.10.2015 131 Authorised Officer G H Nagaraj 06.08.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash by the appellant. In this regard, it was pointed out to queries no. 18 to 24 and the replies to the said queries in statement of G H Nagaraj recorded on 16.10.2015. The statement of Sri. G H Nagaraj and statement of parents are contradictory as discussed earlier. 77. It was further submitted that the AO has discussed regarding reliability of statements of Sri. Goli V. Srinivas. The AO has not demonstrated as to how the statement of Sri. Goli V. Srinivas is reliable evidence. Just because he is a close confidant of the trustees, it would not mean that whatever he states are to be accepted at face value without looking out for corroborating evidence to support what he has said. The AO throughout the order sought to rely upon the statement of Sri. Goli V. Srinivas. He did not make any further enquiries or collect any evidence to verify the veracity of the said statement. It is submitted that reliance on statement obtained without corroborating evidence is not tenable. As the AO has relied solely upon the statement of Sri. Goli V. Srinivas and made assessment relying upon such statement, the entire assessment should fall. 78. In a nutshell, the statements cannot be reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. In Dr. B.G. Memorial Trust v. CIT (Exemption), Kolkata 2017 (11) TMI 1586 - ITAT Kolkata , the Tribunal held as under:- 6. We have carefully considered the entire gamut of facts, rival contentions raised by the parties before us and also the material referred to during the course of hearing. In the instant case originally Ld. CIT(Ex) cancelled the registration certificate u/s.12A of the Act vide order dated 22-2-2016. Against the order of Ld. CIT(Ex) assessee preferred an appeal who directed the Revenue to provide an opportunity of cross-examination to assessee. Accordingly, appeal was allowed for statistical purpose. 80. In this connection the ld. AR also relied on the case CIT Vs. S. Khader Khan Son reported in 352 ITR 480 (SC) where the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of ₹ 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee. 81. Reliance is placed on the following decision wherein it was held that addition cannot be made based on the statement of an employee or partner in the absence of corroborative evidence:- In CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. It was submitted that the AO ought to have appreciated that such a huge amount of cash, if physically available, cannot be hidden physically. The only manner in which its physical existence could have been concealed, if it is really concealed, is that either it should have been converted into some other asset or should have been expended away. The assessing officer has not made any attempt to identify the assets which have been created out of such unaccounted cash. It is not enough to merely allege that such huge amount of cash is collected. When the search was made, only cash of ₹ 2,67,28,900 was seized. The theory of the assessing officer is that appellant has collected capitation fee in cash and diverted the same for the benefit of trustees. The AO though made allegations on diversion of funds for the benefit of trustees, he has not proved the same with reliable evidence. 83. The AO has tabulated the amounts alleged to have been diverted to the trustees which is reproduced below:- AY G. H. Nagaraj R. L. Jalappa J. P. Narayanaswamy Rajesh Jagdale 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. 85. The jurisdiction under section 153C(1) can be assumed if the assessing officer of the searched person has reason to believe that the seized material pertains to or relates to a person other than the person referred to in section 153A, then such seized material is to be handed over to the assessing officer of the other person to initiate assessment or reassessment proceedings in case of such other person. The expression used is belongs to or .pertains to or relates to the other person. Therefore, the mandate is it should belong to or pertain to or relate only to the other person and not to the searched person . Having not reached this conclusion, the AO chose to make protective assessment. Two inferences can be drawn from this action of the AO:- (i) the seized material is not conclusive proof to make assessment under section 153A in case of appellant and hence, he chose either to invoke section 153C himself [where he has jurisdiction over the trustees] or hand over the material to the assessing officer having jurisdiction over the trustees in order to enable them to invoke section 153C in case of trustees. (ii) The seized material is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc. Therefore, when there is no evidence to prove these allegations, the only fall out would be that the alleged unaccounted cash has been utilised for the purpose of the objects of the trust. But the assessing officer has not accepted the contention that the alleged capitation fee has been utilised for the purpose of objects of the trust. By applying the theory of elimination, the only possibility is that capitation fee has not been collected. 89. The AO has stated that the assessee which has gone ahead and collected capitation fee and not recorded the same in books of account, has now come around and admitted that fact of having received amounts in cash which were not recorded in books of account vide submissions received in this office dated 20/12/2017 and revised submissions of returns dated 26/12/2017. He also noted that vide submission dated 20/12/2017 assessee has admitted having received around ₹ 140 crores based on the evidences forming part of the very same seized material. The AO observed how can some part of same notebook or loose sheet be true and the other part false. In this regard, it is submitted that just because the appellant has filed revised retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly if any incriminating material is found during the course of search. This is without prejudice to the main contention that no assessment can be made under sec 153A in the absence of incriminating material. The search in the present case has been initiated on 06.08.2015. The history of assessment of the assessment year 2010-11 to 2015-16 is as under: Assessment Year Filing of return u/s. 139(1) Intimation u/s. 143(1) Notice u/s. 143(2) Assessment Order u/s. 143(3) 2010-11 16/09/2010 30/03/2011 16/09/2011 12/03/2013 2011-12 28/09/2011 05/09/2012 21/03/2014 2012-13 27/09/2012 20/08/2013 23/09/2013 31/03/2015 2013-14 29/09/2013 22/09/2014 - 2014-15 27/09/2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the six assessment years separately ; (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. The above decision has been confirmed by the Hon ble Bombay High Court in the case of Commissioner of Income-tax v. All Cargo Global Logistics Ltd [2015] 58 taxmann.com 78 (Bombay) / [2015] 374 ITR 645 (Bom.), the Hon ble Court held that no addition can be made in respect of assessments which have become final if no incriminating material is found during search. The Hon ble Delhi High Court in CIT v. Kabul Chawla (2016) 380 ITR 573 (Delhi) held as under:- Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been properly accounted in the books of account and audited. The appellant denies the allegation that it has spent any of its funds or income for the personal benefits of the trustees. The evidence brought on record by the department is sketchy and cannot be relied on to show that the trust has incurred the expenses for the personal benefit of the trustees. At the cost of repetition, it is submitted that the entries in documents are made by private persons and the trust has nothing to do with it. Just because they happen to be a trustee or accountant of the trust it cannot be presumed that they have acted at the behest of the trustees or on the authorization of the executive committee. Any such conclusions are tenuous and are not legally tenable. The appellant has established therein that it has not violated section 13(1)(c)(ii). The findings regarding violation of section 13(1)(c)(ii) are perverse as they are not supported by any materials and evidences on record. The findings of the assessing officer regarding violation of section 13(1)(c)(ii) are based on totally unreliable documents. The ld. AR further submitted that the entire assessment is made based on the statement of Sri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements recorded from Goli Srinivas were done when he was in charge of the trust office premises during the course of search proceedings. Therefore his statement is being considered as that of a person who is part and parcel of the organization and not that of a third party. Being an employee of the trust, if there was anything that the assessee wanted to bring on record, the assessee must have produced the said employee of the trust. Also it is not clear as to why the assessee asked for cross-examination of Goli Srinivas alone, when Shri G H Nagaraj was the person who made the bulk of the factual admissions. 99. The ld. AR submitted that the above observations of the AO are not legally tenable. The right to cross-examine is not dependent upon the assessee s relationship with the deponent / witness. The right to cross-examine is dependent upon the fact that the statement of a party is used to the prejudice of the assessee. Therefore, mere fact that the statement sought to be relied upon by the assessing officer is that of an employee would not deprive the assessee of his right to cross-examine. Therefore, the ratio of the decisions relied upon by the appellant squarely apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue. The AO has not considered those portions of the statements wherein the trustees have denied any wrong doing. Relevant queries and replies have been discussed at various places in the submissions. The reference of the query and reply is given below: Query no. 20 and reply in statement under section 132(4) of Sri R L Jalappa recorded on 06.08.2015 Query no. 25 and reply in statement under section 132(4) of Sri R L Jalappa recorded on 06.08.2015 Query no. 9 and reply in statement under section 132(4) of Sri R L Jalappa recorded on 04.09.2015 Query no. 12 and reply in statement under section 132(4) of Sri R L Jalappa recorded on 04.09.2015 Query no. 15 and reply in statement under section 132(4) of Sri R L Jalappa recorded on 04.09.2015 Query no. 7 and reply in statement under section 131 of Sri G H Nagaraj recorded on 07.08.2015 Query no. 11 and reply in statement under section 131 of Sri G H Nagaraj recorded on 07.08.2015 Query no. 16 and reply in statement under section 131 of Sri G H Nagaraj recorded on 07.08.2015 Query no. 6 and reply in statement under section 131 of Sri G H Nagaraj recorded on 13.08.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraphs. 107. The AO sought to rely upon reply to question no 19 of the statement under section 132(4) of Sri. Goli V. Srinivas recorded on 06.08.2015. The said question and the same were confronted to Sri. Goli V. Srinivas. Relying upon the said pages of the seized material and the statement of Sri. Goli V. Srinivas, the AO observed as under at page 14 of the assessment order: Upon examination of the above exhibited image of the seized material, it is seen that against the name of the student, their PG course specialization, package amount and installment wise details of the payments made on certain dates mentioned against the same have been seized. From the sheets it can be seen that the package amounts are significantly higher than stipulated fee for the relevant courses. 108. It is submitted that the conclusion drawn by the AO cannot be deduced either from the seized material or from the statement of Sri. Goli V. Srinivas. The pages 4,6 and 8 of the seized material do not mention anything about the alleged package fee. No date or period is mentioned in those sheets. It is not known to which period it belongs to. Certain entries are cancelled. They are mere l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order: From the above3 scanned exhibits of the materials seized it can be total of 28 students were admitted under NRI category and against multiple names such as entry number 65, 63, 58, 56, etc, it has been clearly mentioned as 40 + fee or 66 package . Therefore, it can be inferred that in the case of NRI category student capitation fee was being received over and above the stipulated regular fee. An interesting observation made from the said scanned material is that in some instances receipts are made in dollars which are later being returned in cash. At page 39 of the assessment order: From a cursory glance also, it can be seen from the above sheets as to what is the total number of students in whose case it is seen that capitation fee is being collected in cash apart from the regular fee collections. This handwritten list alone has a total of 83 entries. For a college offering only 150 MBBS seats, a list of 83 students, that too all belonging to the very same batch of admissions proves the point that it is not students in a certain category of admission like NRI or Institutional (Management Quota) alone who are being forced to pay capitation fee but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in certain note books, statement of Sri. Goli V. Srinivas and has come to the above conclusion. The conclusions drawn by him are not forthcoming from the documents and statements. The AO has made his own analysis below each extract of the seized material. The analysis is not supported by any corroborative evidence. 117. In the submissions made with respect to ground on extrapolation of income, the appellant has demonstrated with reference to specific instances that seized material which the AO has sought to rely upon to compute the unaccounted cash is not cogent evidence. The appellant reiterates those submissions. 118. Without prejudice to the contention that the replies given to various queries are not tenable in law as they are not supported by any material evidence, it is submitted that the inferences drawn by the AO do not directly emerge from the statement of Sri. Goli V. Srinivas. The only base for the analysis of the loose sheets, note books containing obscure notings and the excel sheets is the statement of Sri. Goli V. Srinivas. The inferences reflect more of the zeal of the AO to tax rather than an objective analysis. The seized material does not contain any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd conjecture. Addition made merely based on the statement of a person recorded under section 132(4) of the Act which he later on either partly retracts or subsequently makes any statement which either contradicts or lessens the rigours of his own statement made earlier, goes to shackle the truth or veracity of the first-mentioned statement. The same cannot be relied upon. 122. The AO has merely relied upon reply to question no. 12 of statement recorded on 06.08.2015 and ignored the reply to question no. 6 in the statement recorded on 12.08.2015. It is submitted that the AO cannot pick and choose to rely upon a portion of the statement. All the statements that are recorded during the course of search or subsequently should be read together. In case of inconsistency and in the absence of any corroborative evidence which resolves the inconsistency, the inconsistent portion should be ignored. We hasten to add that mere consistency in the statement would not be sufficient for it to be relied upon for making addition in an assessment under section 153A. The same is required to be corroborated with external evidence. 123. It is submitted that Sri. Goli V. Srinivas manages all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted that Sri. Goli V. Srinivas nowhere stated that the cash is collected at the behest of the executive committee. Therefore, the statement of Sri. Goli V. Srinivas cannot be treated as evidence to hold that the appellant has received capitation fee in cash. In answer to question no. 19 of statement dated 16.10.2015, Sri. G H Nagaraj has clearly stated that no cash was received from students and all fees are received through cheques and DDs. In fact in answer to question no. 22 to a pointed question that cash has been collected from Mr. Rangaraju T, father of Ms. C.R. Pavana, but however, Mr. Nagaraj has denied the receipt of cash. He has stated this is absolutely false . A further perusal of the answer would show that the fees are collected only through cheque and DDs and not through cash. Therefore, the conclusion reached by the AO that capitation fee is received in cash is a mere surmise and conjecture not based on any material on record. 126. Apart from the loose sheets / note pads, the AO also relied upon the seized material no. A/DUU/16 consisting of copies of unrealized cheques. At paragraph 6.23 of the submissions, the appellant established that the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the seized unrealized cheques are also not reliable evidence to hold that appellant has received any capitation fee in cash and the observations of the AO are liable to be quashed. 130. At pages 78 to 86, the AO has discussed regarding the admission process and the modus operandi adopted allegedly followed by the appellant to collect capitation fee. He has observed at page 80 of the assessment order that From the above it can be clearly inferred that for admission to various courses, the Trust also makes use of agents who used to supply candidates for admission with capitation fee as requested by the Trust. The amount of commission paid to the agents is also not accounted in the Books of the Trust as the same is in cash . He relied upon seized material A/DUU/01, A/DUU/02 and statement under section 132(4) of Sri. Goli V. Srinivas recorded on 06.08.2015 to arrive at this conclusion. It is submitted that seized material which is relied upon does not demonstrate the allegation that certain agents supply candidates for the appellant. There is nothing in the seized material which would demonstrate the process of admission followed by the appellant. The appellant vide its let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their statements. The AO did not obtain any such statement. He chose to merely rely upon the statement of Sri. Goli V. Srinivas which cannot be treated as evidence. There is no evidence whatsoever to prove that appellant was following the modus operandi as stated by Sri. Goli V. Srinivas in the statement regarding admission process. 131. At this juncture, it is also relevant to note the statement of Sri Goli V. Srinivas with regard to contrary stands taken by him with regard to engagement of agents for the purpose of admission. Initially, in reply to query no. 12 of the statement under section 132(4) recorded on 06.08.2015, Sri. Goli V. Srinivas stated that Moreover, I am handling the payment to the broker / agent who brings candidates for admission. I only used to manage the accounts of all payment received by candidates and also all the payment made to the agents / brokers etc . 132. The authorized officer confronted Sri. Goli V. Srinivas, while recording his statement under section 131 on 13.08.2015, whether he would confirm the reply to query no. 12 of the statement recorded on 06.08.2015. [query 6 of the Statement of Sri Goli V Srinivas recorded on 13.08.2015]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as asked to furnish the list of students who have been admitted to Medical College / Dental College / Engineering College as the case may be, both UG and PG courses along with details of fee collected from them under various head. In response to the same the assessee vide letter dated 16.02.2017 submitted the same. On going through the submissions it is seen that for the AY: 2012-13 with respect to admission for MBBS seat a total of 127 students have been admitted with a fees of ₹ 4,10,000/-, 3 are NRI sponsored seats with fees ranging from 60000$ to 75000$ and balance 20 are Malaysian students admitted with fees of ₹ 37750$ (Sic) ............ The above material seized during the course of search u/s 132 on 06.08.2015 in A/DUU/01 Page 33 contains statement of dues of MBBS students for the Academic Year 2011-12. On comparison of the names of the above mentioned students with the list submitted by the assessee in response to the aforesaid letter, it is noticed that all the above students comes in the list of 127 students who have been admitted with a fees of ₹ 4,10,000/-. The afore pasted seized material shows that the students have been admitted with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sri Rangaraju is not reliable. Moreover, the said statement does not throw light upon the allegations regarding conversion of merit quota into management quota. The statement of Sri. Goli V. Srinivas is general without any corroborative evidence to prove the same. In fact, his dilly dallying on engagement of agents destroys the theory of quota conversion advanced by the AO . The AO has not obtained the statement of the consultants named in the statement. The AO ought to have analysed as to out of the entire list of students, how many belonged to merit list and how many got admitted through management quota. He should have further analysed whether the ranks obtained by the students is sufficient for them to obtain a seat in the branch they desired so far as PG courses are concerned. Further, the AO ought to have obtained statements from the parents of the students as well students who were admitted into the college under merit quota to enquire about the fee paid by them, whether any fee is paid in cash, whether they were required to pay any fee over and above what is fixed by the committee even though the relevant student was entitled to get admitted through merit quota commensura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trance exam and later drop-out. There is no discussion in the assessment order which would justify such an action on the part of the merit students. Page 79 also does not support the allegation the theory of drop-outs. Just because page 79 lists certain candidates under the heading against drop-outs it does not mean that any such scheme of drop-outs is weaved by the appellant. There is nothing on record to show that the candidate listed under the heading Against dropouts are against those very candidates whom the alleged agent Abrar procured to write entrance exams and subsequently dropped-out at the behest of Abrar. Pages 77 and 79 of the seized material are unconnected. No material has been brought on record to prove the connection. There is nothing in page 102 of the seized material to show that there is such scheme of drop-out. Page 102 has been relied upon as evidence for amount payable to Abrar. This is not at all evident from the said page. Pages 77, 79 and 102 which are relied upon are unsigned. Neither the authorised officer nor the AO have obtained the statement of Abrar. The AO has not brought on record any proof to evidence the fact that the students who wrote the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chairman Sri R L Jalappa. 143. The ld. AR submitted that neither the statement of Sri. Goli V. Srinivas nor the statement of Sri Rangaraju Thimmaiah would prove that the appellant is involved in fee negotiations. The allegation is only with respect to students admitted under management / NRI quota. The statement of Sri. Goli V. Srinivas and Sri Rangaraju Thimmaiah is not enough to prove this allegation. The appellant has not been permitted to cross-examine Sri. Goli V. Srinivas and Sri Rangaraju Thimmaiah. Moreover, for reasons stated supra the statement of Sri. Goli V. Srinivas and Rangaraju cannot be relied upon. Approximately 1400 students are admitted to the medical college during the period FY 2009-10 to FY 2015- 16. The AO has sought to rely upon statement of 1 parent and that too there is nothing to show that appellant has received any capitation fee from merit student or for that matter any student. 144. The AO has discussed regarding fee charged per seat to hold that fee collected is more than what is fixed by the committee. There is no proof to hold that the appellant has charged fee per seat as alleged. At page 90, the AO observed as under:- As per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above it can be inferred that Nagaraj decides the course fee under management and NRI quota. The candidates reserve the seats of their choice after making advance booking in the range of ₹ 5 25 lacs in cash for which receipts are also not issued and the seats are reserved for them. At the same time the installment for balance payment will also be fixed and cleared before the admission is made Sri Goli V Srinivas keeps track of the payment. Further in PG courses under NRI quota the amount over and above which is published in the brochures are collected in cash. Further it is also seen that the Trust collects cheques as a security against the installment granted for the balance payment. 147. It is submitted that there is nothing at all to support the above allegations of the AO . As stated earlier, the appellant has submitted the detailed process of admission. No contravention has been reported by any of the authorities regarding violation of admission process. A perusal of the queries would show that question no. 14 deals with the admission process. In reply to the said query, Sri Goli V. Srinivas talked about engagement of certain consultants through whom a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no seat. After around one and half months, he called and told that there was a vacancy and asked for ₹ 50 lakhs for the same in addition of the regular fees. After one week, I alongwith my son visited the college and paid ₹ 25,00,000 in cash to Mr. Goli Srinivas for which I was not given any receipt. One the same day i.e., 18.07.2013, I paid the first year fee of ₹ 10,67,438 also. The fee of ₹ 10,67,438 was paid through DD. Subsequently, I paid ₹ 5 lakhs, ₹ 10 lakhs and ₹ 10 lakhs on 21.05.2013, 23.05.2013 and 28.05.2013 respectively to Mr. Goli Srinivas for which I was not given any receipt. The sources of these payments are savings from my husband s salary. 150. The ld. AR submitted that the above would show that the payment has been made to Sri. Goli V. Srinivas. In fact, there is nothing to show that Sri. Goli V. Srinivas acted on behalf of the trust or pursuant to the directions of any trustee. The statement of Smt. Padiyar has not been confronted to Sri. Goli V. Srinivas. The appellant has not been permitted to cross-examine either Smt. Padiyar or Sri. Goli V. Srinivas with regard to her statement. A perusal of the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year 2011-12 to MBBS course cannot be relied upon for the following reasons. The questions no. 6 and 7 and the corresponding replies from the statement read as under: Q. 6 Please furnish the details of fees paid in respect of admission of your daughter Ms. Pavana C R to MBBS course in Sri Devaraj Urs Medical College Ans. I have paid an amount of ₹ 18.45 lakhs fees. In addition to this, I have paid ₹ 20 lakhs. First I met Mr. Goli Srinivas for my daughter s admission. He told me that I would have to pay ₹ 25 lakhs apart from the regular fees for admission in MBBS course. I requested him to admit my daughter taking the regular fees only. But he did not agree. Then I met Mr. G H Nagaraj requesting the same. He told me that I would have to pay ₹ 22 lakhs and waived ₹ 3 lakhs. When requested, he allowed me to pay ₹ 22 lakhs in four instalments. I paid all the four instalments to Mr. Goli Srinivas in cash. I was not given any receipts for the same. The source of the fees paid are Education loan of ₹ 7.50 lakhs and Gold loan of ₹ 1.91 lakhs. Balance amount I paid out of my savings from agricultural income. Q.7 Please e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls numbers as A/DUU/02, A/DUU/03, A/DUU/04 various payments from the capitation fee collected in the form of cash were being made on a daily basis. For these purposes, parallel form of unaccounted books of account were being maintained. A/DUU/02, A/DUU/03, A/DUU/04 are some such books which were being maintained by Shri GVS in which the entries were verified by Shri GH Nagaraj and Shri Anjanappa. 155. It is submitted that these findings are perverse. Sri Goli V. Srinivas did not state that cash is being collected at trust office. There is no evidence found to demonstrate that cash is held at the trust office to make disbursements in cash. The observations of the AO that the appellant is maintaining parallel books for unaccounted payments is incorrect. The appellant has stated time and again that the executive committee did not authorize entries found in the seized material. Mere fact that the seized material contains initials of G H Nagaraj and his brother does not mean that the entries therein have been made at the behest of the executive committee of the trust. In fact, the AO rejected the alternate claim of the appellant regarding expenditure on the ground that it is not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elieves that the seized material would not be sufficient to conclusively prove that the appellant has received capitation fee. The AO has not categorically stated that the authorizes under the Karnataka Educational Institution (Prohibition of Capitation Fees) Act, 1984 would hold the appellant guilty of violation of that Act based on the seized material. This would imply that the AO is in doubt as to the reliability of the seized material for holding appellant guilty of capitation fee. It means the seized material is not a conclusive proof for receipt of capitation fee. 159. Further, it was submitted that there are lot of loose ends and contradictions in the theory advanced by the AO to support his allegation that appellant has collected capitation fee. The AO stated that the appellant collected capitation fee by weaving a scheme of conversion of merit quota into management quota. To achieve this scheme, it has engaged agents who procured merit students, made them to take entrance exam, asked them to drop out subsequently after counselling and later allot that vacant seat under management quota who may also be a candidate procured by the agents. Statements of none of the agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their personal benefit. He submitted that in the submissions made supra, it has been demonstrated that the allegations of AO that appellant has received capitation fee are perverse it being not supported by any evidence. Therefore, this by itself would also destroy the allegation that the funds are diverted to the trustees for their private benefit because when the very existence of source from which funds are said to have been diverted has not been proved, the allegation of diversion should fail. 163. Without prejudice to the above, the ld. AR made submissions to deal with the allegations of the AO regarding diversion of funds to trustees for their personal benefit and hence, has violated section 13(1)(c)(ii) of the Act. 164. The AO extracted pages 1 to 5 of seized material no. A/DUU/2. The AO also extracted the relevant portion of the statement of Sri. Goli V. Srinivas recorded under section 132(4) of the Act on 06.08.2015 wherein the said pages 1 to 5 were confronted to him. After extracting the seized material and the portion of the statement of Sri. Goli V. Srinivas, the AO observed at page 56 as under: From the above it can be seen that GVS has admitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished any proof to support his statement nor the authorized officer / assessing officer made an attempt to collect evidences to verify the veracity of statement made by Sri. Goli V. Srinivas. Interestingly, in case of many entries contained in A/DUU/2 which were confronted to Sri. Goli V. Srinivas, he merely reiterated what is stated in the said material. But when it came to entries related to payment to chairman, Sri. Goli V. Srinivas stated that the payments were made to Chairman for personal purpose. 167. The AO sought to rely upon the statement of Sri. Goli V. Srinivas to hold that funds were diverted for to the trustees for their personal benefit. He ignored the statement made by Sri. G H Nagaraj. It is relevant to note the following query and reply from the statement of Sri. G H Nagaraj recorded on 07.08.2015:- Q. No. 16 Please go through the page numbers from 1 to 7 of folder A/DUU/13 seized and explain about the entries made in the said pages. Ans: Yes, I have gone through the page numbers. 1 to 7. These entries are mostly payments given to the respective persons. The decision of making the payments were taken collectively by all the trustees. But at this po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2,00,00,000 was given to one mediator by name H Raju for acquisition of land for the purpose of expansion of Doddaballapur engineering campus Q. 17 I am showing you page No. 28 of the seized material marked as A/DUU/01 dated 06.08.2015 seized during the course of search conducted u/s 132 on 06.08.2015. Please explain the entry dated 31.07.2014 under the caption R J Rajendra (Babu) for hand DB pur 100-00 . Please explain the entry Ans. A total sum of ₹ 1 crore was handed over to Shri R J Rajendra for the purchase of trust land at Doddaballapura campus 170. It was submitted that the above would show that cash has been utilized for the purpose of the trust. ₹ 2 crore has been paid to one Mr. Raju and ₹ 1 Crore has been paid to Sri R J Rajendra for acquisition of land for the purpose of expansion of Doddaballapur engineering campus. Therefore, the above would show that the cash has been utilized for the purpose of objects of the trust. This is upon assumption without admission that cash has been collected by the trust. 171. It is pertinent to note the following observations of the AO at page 134 of the assessment order:- It is stran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards repairs and maintenance of the house of the Chairman would benefit the trust. Therefore, the allegation that amount spent towards repairs and maintenance of the house of the Chairman would amount to diversion of funds of the trust for personal benefit of the Chairman is not tenable. 177. It was further submitted that the AO has tabulated the alleged payments made to trustees. Based on this table, the AO has chosen to make protective assessment upon the trustees mentioned there. This by itself would show that the material is not sufficient to prove that funds have been diverted for the benefit of the trustees. The AO has noted that the payments are made out of alleged capitation fee received in cash and not out of the funds duly accounted. The appellant has established that it has not received capitation fee at all. Funds collected by private person would not become funds of the trust. 178. Moreover, except for making a bald allegation that the payments have been made for the benefit of the trustees, the AO has not brought on record any material to prove the same. Mere payment to trustees does not automatically mean that it is for their benefit. The AO has not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/DUU/08 [Copy enclosed at pages no. 1309 to 1365 of this Paper Book] Note Book (manually written) A/DUU/09 [Copy enclosed at pages no. 1366 to 1419 of this Paper Book] Long note book (manually written) A/DUU/10 [Copy enclosed at pages no. 1420 to 1554 of this Paper Book] Long Note Book (manually written) Page No. 61 of the Asst. Order A/DUU/11 [Copy enclosed at pages no. 1555 to 1635 of this Paper Book] Long Note Book (manually written) Page No. 100 of Asst. Order A/DUU/12 [Copy enclosed at pages no. 1636 to 1697 of this Paper Book] Long Note Book (manually written) A/DUU/13 [Copy enclosed at pages no. 1698 to 1805 of this Paper Book] Loose sheets (Most of them are printed; few are manual) Page No. 42 to 46, 64 83 of Asst. Order A/DUU/14 [Copy enclosed at pages no. 1806 to 1838 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat statement u/s. 132(4) during the course of search action not only has to be offered to the assessee, but an opportunity to cross-examine has to be given. If it was not provided, it is sufficient to discard such statement which is evident from para 37 of that judgment. Similar view was taken by Lucknow Bench of the Tribunal in the case of M/s Fateh Chand Charitable Trust v. CIT (Exemptions) Lucknow 2016 (4) TMI 1119 - ITAT Lucknow / [2016] 49 ITR (Trib) 276 wherein it was held that even when the assessee disputed the correctness of the statement recorded u/s. 132(4) and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee and held that testimony of witnesses has to be discharged as there was no material with the department on the basis of which it could justify its action. Further in the case of M/s Obulapuram Mining Company Pvt. Ltd. v. DCIT 2016 (7) TMI 1435, the ITAT Bangalore held that in the absence of third party being made available for cross-examination despite repeated requests by the assessee, his statement could not be relied upon detriment to the assessee. This decision was based on the judgment of the Hon ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been or will not be otherwise produced by the assessee in regular course on issue of summons or notice. In the assessee's case, as stated above, the purported search action did not lead to discovery of any unaccounted money, bullion, jewellery or other valuable article or thing. Further, no books of account revealing any undisclosed transactions of the assessee were found during the course of search. The entire assessment order revolves around scribbling in loose sheets of papers seized from premises of another person in course of search action on such other person. It is a fact that the said rough loose sheets of papers scribbled by some anonymous person and seized in course of search of another person cannot be termed as 'documents' having any evidentiary value within the meaning of section 132 or section 132A of the Act. Thus, the entire assessment u/s 153A of the Act in case of the assessee rests on shaky and incorrect foundation and thus deserves to be quashed. 183. In view of the aforesaid judgments, since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es contained therein reflect income and also that such income was in the control of the assessee. Thus, Revenue has to establish, with necessary corroborative evidence, that various entries contained in the seized document reflect sales of rice and broken rice effected by the assessee. Considering the entirety of circumstances, in the absence of any material to support the nature and ownership of the entries found in the seized document, no addition is permissible in the hands of the assessee as undisclosed income by merely arithmetically totalling various figures jotted down on such document. 186. Further the AO relied on the statement of Shri Nagaraj, Secretary wherein the AO mentioned that Mr. Nagaraj was aware of the transactions and confirmed it. The AO has not referred to the following answers of Mr. Nagaraj to Question Nos.8 to 11:- (a) In answer to Q.8 to the statement recorded on 13.8.2015, [page 2164 PB), he has stated that he does not know anything about the entries made in the loose sheets. (b) In answer to Q14 (page 2165 PB), he denied any consideration paid to MCA Inspectors nor any cash paid to donors to enable them claim 80G deduction. (c) In ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 669 to 775 which shows certain payment entries and it is very strange to believe that the assesse has authorised any person to write it as it does not contain any attestation from the assesse side being not having any name or seal of the assesse. 190. The seized material A/DUU/04 which is placed on record at PB page no 776 to 864 which shows certain payment entries and it is very strange to believe that the assesse has authorised any person to write it as it does not contain any attestation from the assesse side being not having any name or seal of the assesse. It also shows certain amount taken from PG students. However there is no attestation to this document from the trust side to suggest that it was authorised by the assesse. Being so no credence to be given to this document. 191. The seized material A/DUU/05 to 09 is not relied upon by the AO while framing assessment and making additions, hence no findings are required. 192. The seized materials A/DUU/10 are placed in pages 1420 to 1554 of PB. The AO relied on page 5 placed at page 1549 of PB. According to AO, this amount has been paid to agents for seat conversion. The AO mentioned about this in page 61 of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the voluntary payment of ₹ 30,000 towards corpus donation by cheque. (vi) PB 1779 Letter from T Venkatsubbaiah confirming the voluntary payment of ₹ 70,000 towards corpus donation by cheque. (vii) PB 1780 (Duplicate of above) Letter from T Venkatsubbaiah confirming the voluntary payment of ₹ 70,000 towards corpus donation by cheque. (viii) PB 1784 Letter from P Kumara Swamy confirming the voluntary payment of ₹ 50,000 towards corpus donation by cheque. (ix) PB 1787 Letter from B S Amarnatha confirming the voluntary payment of ₹ 50,000 towards corpus donation by cheque. (x) PB 1790 1791 Letter from Dr.C.L.Gayathridevi confirming the voluntary payment of ₹ 50,000 towards corpus donation by cheque. (xi) PB 1793 Letter from B P Ravi Kumar confirming the voluntary payment of ₹ 25,000 towards corpus donation by cheque. 200. In all the above cases the voluntary contribution towards corpus donation has been received by cheque and duly accounted in the books of account of the assesse. There are also some photocopy of bank receipts and cheque receipts other than this which are insignificant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the provisions of section 153A. Therefore, if the material seized belongs to or pertains to or relates to a person other than the searched person, only then section 153C comes into play. Hence, it is axiomatic to state that if the material seized belongs to or pertains to or relates to some other person, it does belong to or pertain to or relate to the searched person. Under such circumstances, one cannot invoke the presumption under section 292C that the material seized belongs to the searched person as the assessing officer by his own action of making assessment under section 153C in the case of trustees relying upon the very same seized material. 203. The Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2017 (5) TMI 1354 held that it is clear that the presumption of facts u/s 292C of the Act is not a mandatory or compulsory presumption but a discretionary presumption. Since, the word used in the said Section is may be and not shall . Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact not a presumption of law. In the present case, the assessee from the very beginning stated that the documents fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -examination of the parties was requested by the assessee s letter dated 09.12.2017. Vide assessee s letter dated 22.02.2017, copies of seized / incriminating material relied upon to make the addition was requested. The assessee vide letter dated 29.10.2017 also requested for documents in digital form taken at the time of search u/s. 132. 208. The AO vide letter dated 01.08.2017 furnished copies of seized material A/DUU/01 to A/DUU/17 to the assessee. However, it is crucial to note that the assessee s request for cross-examination of students, parents and donors of capitation fees was not provided by the revenue authorities. 209. The assessee by letter dated 09.12.2017 made submissions that collection of amounts by Shri G.H. Nagaraj, Secretary of the trust were on his own and spent a portion of the amount on the infrastructure and development activities. 210. In our opinion, the statement of Mr. G.H. Nagaraj, who is Secretary of the trust cannot be considered as true and correct. He has changed his versions and proved to be an evasive person as a witness. At one stage, he admitted collection of fees over and above the prescribed fees and not paid the same back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the subject matter of the cross-examination and make the remarks as mentioned above. (para 7) 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. (para 8) 212. The Delhi Tribunal in the case of Veena Gupta v. ACIT in ITA No.5662/Del/2018 dated 27.11.2018 relying on the above judgment of Hon ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded. 213. The Hon ble Supreme Court in the case of Mehta Parikh Co. v. CIT, 30 ITR 181 held as under:- In the instant case a mere calculation of the nature indulged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncashed. 214. Further the Hon ble Supreme Court in the case of CIT v. Odeon Builders (P.) Ltd., 418 ITR 315 (SC) head-note is as follows:- Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re-examination, if necessary. 9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result we decline to answer the question. 217. As held by the Hon ble Calcutta High Court in the above judgment, in the present case, Mr. Nagaraj cannot be considered as a reliable witness. More so, when the assessee was not given any opportunity to cross-examine him. In this regard, we also place reliance on the decision of the Hon ble Supreme Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 713 (SC) wherein it was held that evidence collected from witness cannot be considered without giving opportunity of cross-examination to the assessee. 218. We have also carefully gone through the statement of Mr. G H Nagraj, Secretary of the assessee trust. It was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust activities. It was also reiterated that the committee never authorised Shri G H Nagraj for collection of any fees or spending any amount for trust activities. The assessing officer considered this letter as an acceptance of collection of capitation fees without considering the real meaning of that letter. It cannot be construed as the acceptance of collection of capitation fees by assessee. It was clearly stated that if it is collected, it is unauthorised collection by the Secretary and Shri G H Nagraj has to explain to the Income Tax authorities, even after considering the expenditure incurred out of it for the purpose of trust activities. In our opinion assessment in search cases has to be framed on the basis of seized material bought on record and not on the basis of confession. The action of assessing officer placing reliance on the letter of assessee dated 09-12-2017 is unjustified. 221. Further, there was an allegation by AO that assessee has received donation in return for giving cash to them and facilitated to the donor to claim deduction u/s 80G and accordingly AO observed that donation is bogus. After examining one donor by name Shri Hanumantharaya whose state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Had there was a cross-examination, the DR very well could have produced the copy of the same for our consideration. The DR failed to do so. Hence, it is observed that the assessee was not afforded any opportunity to cross-examine any of the persons including the parents whose statements were relied upon for the purpose of making assessment. Such statements cannot be relied upon. Reliance was placed upon by the AR on various case law is support the case of the assessee. 227. Further, the AO recorded at page 125 of his order that he has sent summons to parents of students out of which only 5 students statements were recorded. Only two persons confirmed the payment of capitation fee. Vide assessee s letter dated 02.12.2017 assessee asked for information about enquiry with the students. No information was provided by the AO to the assessee. In this regard, statement of 2 persons out of 800 cannot be relied upon and it is not appropriate to come to the conclusion that these are full-proof of evidence which the AO can rely upon. Reliance on this incomplete statement cannot be appreciated as held by the Hon ble Supreme Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has collected unaccounted capitation fees from management and NRI quota. 229. Further, the Bangalore Bench in the case of Anand Social Education Trust in ITA Nos. 2542-2548(B)/2017 dated 29.05.2020 by placing reliance on the judgment of Hon ble Madras High Court in the case of Balaji Educational Charitable Public Trust, 56 taxmann.com 182 in similar circumstances observed that the AO had not conducted any enquiry with the students or parents or others. The cash seized during the search was accepted as not belonging to the assessee. There was no complaint received from any student or parent regarding capitation fee charged by the institution. In the above case also the AO had estimated the capitation fee received from the students under the management quota for various years. The Hon ble Madras High Court held it to be a perverse inference. Further the Tribunal observed the AO had only drawn certain inference on surmises and conjectures. He did not conduct any independent enquiry with the related party to find out the truth. He has also not brought any material on record to show that the explanation given by the assessee was not correct. In any case, the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave given statement. There is no discussion in Assessment order with regard to other 3 persons. In our opinion the statement of 2 cannot be basis for making such huge additions on collection of capitation fees. It cannot be considered as appropriate sample to frame the assessment on the basis of their statement. Further, the assessee requested for cross examination of all the parties whoever have given the statements against the assessee, if any, which was not provided at all. In view of this, such statements cannot be relied upon. The department despite its attempts failed to collect any corroborative information regarding collection of capitation fees, except relying on uncorroborated entries in the loose papers/Excel sheets, wants to frame the assessments in all these assessment years relying upon the same which is not acceptable. The revenue authorities bound to follow the principle of natural justice and ought to have given proper opportunity of examination and cross examination of the parties concerned whose statements are relied upon to frame the assessment. In our opinion the discovery of documents not only sufficient to conclude the collection of unaccounted capitation fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd and also the statement of the parties as discussed in the earlier paragraphs. We are of the opinion that the department cannot rely on those statements, more so when it was not confronted to the assessee for cross-examination and the same cannot be relied upon. The department failed to collect proper information from any source corroborating payment of capitation fees, except in corroborating entries in the loose sheets. All attempts for corroboration failed. There is nothing to suggest that the trust has deviated from the objects for which registration was granted and not applied the funds for its objects. No evidence was brought on record to show that amount of alleged capitation fees which have been collected was misused by the assessee or by any interested persons. There is no instance of recovery of any assets commensurate with the alleged estimated unaccounted collection of capitation fees as found by the AO. The activities of the trust are genuine. There is no allegation by the lower authorities that activities of the trust are not genuine. Also there was no allegation that the activities of the trust are not carried on in accordance with the objects of the trust. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has nothing to do with extra tuition fees collection. Being so, the Tribunal held that the assessee cannot be faulted and approval cannot be withdrawn so as to deny the benefit of section 11 of the Act. The relevant observations of the Tribunal are as follows:- In this regard, the ld. counsel for the assessee brought to our notice that the agreed tuition fee which the Society can collect for admission has also been collected and this is duly reflected in the statement found in the seized documents. It was submitted that the total collections in the form of DD was a sum of Q 1,16,74,975 and the amount stated to have been deposited by the Secretary in the Head Office is only a sum of Q 80,000 on 02.06.2005 and Q 14,33,500 on 19.10.05. It was submitted that the reference in the seized document might be with regard to the normal tuition fee which the society can collect. It was submitted that the entries in page 54 cannot be conclusive to show that the Secretary was also involved in collecting the ETF. We are of the view that the submissions made on behalf of the assessee in this regard appear to be convincing. In this regard, we also find that Indira Devi, who is stated to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apitation fee, it is submitted that in the course of search, excel sheets were found containing the names of students, names of parents and the amount. In the course of search and, thereafter, statements of chairman of the assessee trust were recorded on a number of occasions, with reference to the entries in these excel sheets. It was explained that circumstances in which the excel sheets were found were not ascertainable. It was contended that uncorroborated notings in the excel sheets should not be acted upon to derive any inference against the society. In support of this contention that the said excel sheets are not reliable, the learned counsel for the assessee put forth the following reasons : ( a ) The notings in the excel sheets lacked corroboration of the notings although the Department attempted in that direction. ( b ) In course of search and post-search investigation, in the statements recorded under s. 132(4)/131, chairman of the assessee trust, Sri Srinivasa Rao expressed his inability to explain the circumstances in which those sheets were found from the premises of the assessee-society. ( c ) Despite repeated questioning on various occasions, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information by making use of assessee's computer and made part of the Panchnama. This fact was pointed out by the chairman of the assessee, Sri B. Srinivasa Rao in the course of his statement recorded on 17th Dec, 2009. This act on the part of the search party raises an eyebrow. ( i ) The Dy. Director of IT in course of post-search investigation made extensive enquiries to corroborate the notings in the excel sheets. One of the steps taken by him was that he summoned all the parents of the students under s. 131 to take evidence. In course of assessment proceedings, the assessee made requests to supply the copies of these statements. Repeated requests made by the assessee fell in deaf ears and so far these statements have not been provided. On being directed by the AO in course of assessment proceeding, the assessee contacted the office of Director General of IT and reminded on a number of occasions but no information was supplied, despite the fact that this fact was also brought to the notice of Director General of IT. As a principle, neither the assessee can suppress the best evidence in his possession nor the Department. It is settled principle that whenever the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikkumar K. Shah [2008] 307 ITR 137 (Guj.). ( l ) As regards the presumption under s. 132(4A), it was submitted that a loose sheet is not a book/document so as to raise the presumption. For this proposition, reliance was placed on the decision of Apex Court in the case of CBI v. V.C. Shukla [1998] 3 SCC 410. Further the presumption in this section is not mandatory. This can supplement but cannot supplant evidence. Nothing was found by the Department to support their suspicion. ( m ) Therefore, the Excel sheets which are not speaking either by itself or in the company of others, or corroborated by enquiry, cannot be the basis of any inference that capitation fees were collected and not entered in the accounts to cancel registration. 239. Thus, it is seen from the seized material and Excel sheets that these are handwritten loose documents and Excel sheet print-outs taken from the computer and undisclosed income of the assessee is determined on the basis of these documents. There is no direct evidence or conclusive evidence to prove the collection of the capitation fees. The statements of parties of whosoever is relied upon are evasive replies given to the revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence in the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has collected unaccounted capitation fees. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of revenue that assessee is collecting huge unaccounted capitation fees in the guise of carrying on educational activities. 241. The contention of the ld. DR is that cross-examination of parties whose statements were relied on by the AO to frame the assessment need not be given. On the other hand, if it is required to be given, the issue may be remitted back to the AO to give such opportunity. For this purpose, he relied on the judgment of the Hon ble Allahabad High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed material. 243. Further ld. DR relied on the judgment of the Hon ble Supreme Court in the case of ITO v. M. Pirai Choodi, 334 ITR 262 (SC) wherein the facts are that the department refused to accept the interest income shown by the assessee placing reliance on a statement alleged to have been obtained from the Village Administrative Officer behind the back of the petitioner, overlooking the material furnished by the assessee to substantiate his agricultural income and without giving opportunity to cross-examine the Village Administrative Officer, violating the principles of natural justice. Therefore, writ petition could not be dismissed on alternative remedy and assessment order could not be quashed. On further appeal by the department, the Honb le Supreme Court held that that instead of setting aside the assessment order, the High Court should have remitted the matter to the Assessing Officer to grant opportunity of cross-examination of the concerned witnesses. Further the assessee failed to avail of the statutory remedy. The assessee was given to move the CIT(Appeals). 244. Coming to the reliance placed by the ld. DR on the order of the Tribunal in the case of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement not tested by cross-examination is invalid and it is vitiated, but the invalidity is not, however, of such a nature, which goes to the root of the proceedings. It can be set aside for being re-done de novo. The Commissioner (Appeals) should not have upheld the addition on the basis of such a statement. [Para 24] The omission to allow cross-examination merely prevents the Assessing Officer from making an addition and can be corrected by allowing the cross-examination and the Assessing Officer can be directed to proceed further to examine the matter afresh on the basis of cross-examined statement. The power of setting aside the order of assessment, where it is illegal, is inherent in any Appellate Court. Its order would be perfectly legal order in directing the Assessing Officer to issue notice to the assessee before making an assessment because it was not satisfied regarding the correctness of the assessee s return. The Tribunal/ Commissioner (Appeals) has ample jurisdiction to give directions to the Assessing Officer to comply with the requirements of law. It has inherent power to set aside illegal order of assessment and direct the Assessing Officer to comply with requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re relied upon by the AO without confronting them for cross examination. In our opinion, these documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of search from the possession and control of such document are true. What has to be noted here is that deemed presumption cannot bring such a document in the tax net and the presumption is rebuttable one and the deemed provisions have no help to the department. In our opinion, in these cases addition is made by AO on arbitrary basis relying on the loose papers, containing scribbling, rough and vague noting s in the absence of any corroborative material and these material cannot be considered as transacted into collection of capitation fees by assessee giving rise to income which are not disclosed in the regular books of accounts by assessee. We place reliance on the following judgements in support of our above findings: (i) CIT vs D.K.Gupta 174 Taxman 476 (Delhi) (ii) Ashwini Kumar vs ITO 39 ITD 183 (Delhi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institutions in all faculties including medical, dental, pharmacy, engineering and electronics and other higher technical institutions in all parts of Karnataka particularly in backward areas like Kolar. For this purpose the trust has established educational institutions. 252. It is submitted that exemption under sec 11 can be denied only under certain specific circumstances. Section 11(1) reads as under:- 11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property; (b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d payments serially numbered from 1 to 85 Seized material marked as A/DUU/16 being scanned copy of unrealized cheques serially numbered from 1 to 54 255. Apart from the above seized material, the AO has relied upon the statement under section 132(4) of Sri. Goli V. Srinivas recorded on 06.08.2015. 256. In the submissions made in respect of ground number 7. the appellant has established that the seized material is not incriminating in nature. Therefore, it is not conclusive proof for receipt of capitation fee. The appellant reiterates those submissions. Under such circumstances, the AO erred in relying on such material to deny exemption under section 11. The AO has concluded that the appellant has received capitation fee merely on the basis of statements and unsigned documents which cannot be relied on as evidence. As far as the statements of Mr. Srinivas and Mr. Nagaraj are concerned, the appellant reiterates that they have not acted at the behest of the trust. 257. The appellant has stated categorically that the said loose sheets / note books referred to above have not been maintained by it. The mandate under section 11(1)(a) is that income derived from pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if they do carry on certain activity as trustees, they are accountable in their capacity as trustees. Thus, lifting of veil or piercing of the veil is an exercise which is not permissible in the field of the law of trusts. The only conclusion was that there was no trust of the business because there was no obligation to carry on the business. That was the only conclusion which the Tribunal arrived at and when one analyses the order of the Tribunal and finds that its approach is wrong, the conclusion is of no consequence. 259. The above decision has been affirmed by the Hon ble Supreme Court in CIT v. K T Doctor [1998] 230 ITR 744 (SC) . 260. One needs to put a dividing line between what is done by the personnel of the trust in their official capacity and their personal capacity. The trust cannot be held responsible for the acts of the personnel of the trust in their personal capacity. Therefore, the consequences of such acts cannot affect the trust in any manner including its eligibility to claim exemption u/s. 11. When the trust has neither received the alleged capitation fee nor has control on such alleged capitation fee where is the question of it being responsible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the theory advanced by the AO is that the appellant has collected capitation fee in cash and used such funds to make payments towards illegal activity. In paragraphs 8.1 to 8.39, supra, it has been demonstrated that the allegation of AO that appellant has received capitation fee is perverse as it is not supported by any evidence. Therefore, this by itself would also destroy the allegation that the funds are utilized for illegal activities because when the very existence of source from which funds are said to have been diverted has not been proved, the allegation of diversion should fail. 266. Without prejudice to the above, regarding the allegations regarding expenditure on illegal activities, the AO has alleged that the activities of the appellant are not in accordance with the objects of the trust and it has been used as a conduit for tax evasion, it was submitted that the allegation of deviations from the objects of the trust is based on the seized documents. The appellant has already established that these documents have no connection whatsoever with the trust. These are privately maintained by some other person. And if they have spent some money out of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Diversion of Trust funds for political purposes As can be seen from the seized material (as discussed in earlier sections of this order), at least ₹ 3,00,00,000 have been paid by the trust from the capitation fee funds for funding parties in elections, in stark violation of objects of the trust and in violation of laws governing elections in India. [Para 7.10, page 103] 270. The learned AR submitted that the AO relying upon a stray entry at page 85 of the seized material marked as A/DUU/13 and the statement of Sri. Goli V. Srinivas and Sri. G H Nagaraj has generalized that the appellant has diverted funds for funding elections for candidates of various political parties. The replies given by Sri. Goli V. Srinivas and Sri. G H Nagaraj does not divulge the details of political parties to whom such payments have been made. The AO also has not brought on record as to whether any elections did take place during the relevant period when the alleged payments were made. Just because the Chairman is a politician, it does not mean that payments are made to political parties. It is submitted that the allegations of the AO are incorrect. There is nothing either in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, there is not even circumstantial evidence for him to extrapolate one stray entry. The finding of the AO regarding diversion of funds for elections is to be restricted only to AY 14-15 and it cannot be extended to other years. This is without prejudice to the contention that the finding of the AO that trust funds have been diverted for funding elections is perverse as it is not based on cogent evidence. 272. Without prejudice to the above, it is submitted that the seized material marked as A/DUU/02 to A/DUU/04 and A/DUU/13 do not contain any entry pertaining to FY 2009-10, relevant to AY 2010-11. Therefore, this finding of the AO cannot be extended to AY 2010-11 even on this ground. Counter to the allegation: Payments to agents 273. The AO has, at para 5.2.3.1d, page 60, tabulated his analysis of seized material no. A/DUU/2 with respect to alleged payments made to agents. He also relied upon page 5 of seized material no. A/DUU/10. The AO has extracted the relevant portion from the statement of G H Nagaraj with reference to payment to agents. He has also extracted at the said paragraph, pages 71 and 72, the replies received from Sri. Goli V. Srinivas when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment could expire. 277. Without prejudice to the above, it was submitted that the statement recorded on 28.11.2017 has neither been furnished to the appellant nor the appellant has been afforded an opportunity for cross-examination. For reasons stated earlier submissions, it was submitted that such statement cannot be relied upon. Counter to the allegation: Payment of kickbacks and promotion of corruption 278. The AO has, at page 62, tabulated his analysis of seized material no. A/DUU/2 with respect to alleged payments made to MCI Inspectors. He has extracted the relevant portion from the statement of Sri. Goli V. Srinivas with reference to the aforementioned entries in seized material no. A/DUU/02. At page 70, the AO extracted the statement under section 131 of Sri. Goli V. Srinivas recorded on 28.11.2017 pertaining to deposition before CBI. 279. Relying upon the above materials, the AO at serial no. 5, page 100, para 7.1 of the AO , alleged as under: The trust funds have been mis-utilized for payment of gifts and bribes during MCI Inspections to unknown officials /persons as seen from seized material vide Annexure A/DUU/02 (such entries foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 131 on 13.08.2015, he was confronted with reply to question no. 37 in the statement of Sri. Goli V. Srinivas and was asked to offer his comments. In reply to aforesaid query no. 14, Sri. G H Nagaraj stated that no cash payments are made to MCI Inspectors. 287. The appellant, in its reply dated 02.12.2017 to notice under sec 142(1) dated 15.11.2017 had objected to the allegation of the AO that it had paid bribe to MCI inspectors. The AO, in the final assessment order, has not addressed the objections taken by the appellant. It means that the AO has not disagreed with the contentions of the appellant. That being the case, the AO erred in retaining the perverse findings in the final assessment order. 288. Without prejudice to the above, the material relied upon by the AO contains dates falling in FY 13-14. Sri G H Nagaraj in the statement under section 132(4) recorded on 20.08.2015 in reply to question no. 8 has stated that MCI Inspection takes place every year till the year of recognition and once recognition is granted, the inspection is made once in 5 years. Deemed University recognition was granted in the year 2006. That being the case, how can there be occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e donors or should have handed over the relevant documents to the jurisdictional AO of the alleged bogus donors. There is nothing on record to show that the AO has taken any such action. 291. The statement of Sri. Goli V. Srinivas is not supported by any evidence. The statement made by Sri. Goli V. Srinivas can be true only if he has access to the income-tax returns and assessment records of the bogus donors. He has nowhere accepted in his statement that he has access to any such documents. That being the case, he cannot make an authoritative statement that the ..paid for various 80G receipt holders who had made cheque payment to our organization for the period to avail benefit under the Income Tax Act. The said statement cannot be relied upon in the absence of cogent material. The AO has alleged that the appellant has not submitted anything to prove that the donations received are genuine. It is submitted that the appellant has received donations through cheque and it has issued receipts for the same. 292. Further, it was stated that statements whatever relied on by the AO was not confronted to the assessee. Hence, it may not be relied upon. Counter to allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trust and explained by the trustee that the same was received as capitation fee. Thus the gist of modus establishes that assessee s activities cannot be called as charitable activities as per the objects of the trust and it is not genuine, hence exemption u/s. 11 cannot be granted. 295. We have heard both the parties and perused the material on record on this issue. In the present case, exemption u/s. 11 was denied on the reasons that assessee has collected unaccounted capitation fee from management and NRI quota which is based on unsupported seized material on which no opportunity to cross-examine was given to the assessee. Hence we have observed that no addition can be made on this basis. Now coming to the activities of the assessee, no material has been brought on record that the assessee has not solely existed for the purpose of carrying out educational activities and books of account have not been rejected. It cannot be said that the activities carried on by the assessee is not genuine. In our opinion, the assessee solely existing for non-profit purpose. Unless the department shows that there was breach of conditions laid down for grant of exemption u/s. 11 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure that that can be claimed by the assessee against the receipts. As depreciation has already been claimed by the assessee against the capital expenditure made, no further depreciation is allowed. Therefore, he denied depreciation on the ground that the depreciation has already been claimed by the assessee against the capital expenditure made, hence no further depreciation is allowed. The assessment has been made under section 143(3) for the impugned assessment year. 298. The ld. AR submitted that a perusal of the computation of income shows that the surplus before claiming exemption under section 11(1)(a) is ₹ 6,85,70,097. The same has been arrived at as under:- Gross receipts 58,73,36,562 Less: Application of income Revenue Expenditure as per Income Expenditure Account (excluding depreciation) 44,58,41,894 Capital Expenditure 7,29,24,571 Total application of income 51,87,66,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amendment brought to section 11(6) of the Act by the Finance (No.2) Act, 2014 which became effective from AY 2015-16 and depreciation in such case being precipitation in nature. Accordingly, by placing reliance on the decision of the Hon ble Supreme Court in the case of CIT v. Rajasthan Gujarati Charitable Foundation Poona, 402 ITR 441 (SC) , the AO is directed to grant depreciation for AY 2010-11. 304. In AYs 2011-12 to 2016-17, the ground relating to depreciation is not pressed. Accordingly, the same is dismissed as not pressed. 305. Ground No.10 with regard to computation of income under the heads of income applying the provisions of sections 28 to 43C of the Act is not pressed at the time of hearing and hence the same is dismissed as not pressed. 306. Ground No.11 is with regard to extrapolation of income. The AO has added ₹ 27,42,00,000 towards undisclosed cash receipts in AY 2010-11. Similar is the position in other assessment years. The break-up of the same for AY 2010-11 is as under:- Description of course Alleged unaccounted cash generated during FY 2009-10 (Amount in Rs.) UG- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant has vide its letter dated 23.12.2017 [filed on 26.12.2017] has enclosed the year-wise details of number of students permitted and actual number of seats admitted to the college in respect of UG and PG courses. It is not known as to how the number of seats in respect of which the capitation fee is collected is arrived at. An asterisk mark has been put next to the number of seats i.e., 63. But there is no note below the table explaining the asterisk mark. The seized material does not contain any such data so far as AY 2010-11 is concerned. In the remarks column (k) of the table, it is stated as On page 151 of the Seized Material No. A/DUU/06 . A perusal of this page would show that it contains only the list of the names, addresses and contact details of some persons. It is not known as to how from the entries contained in this page, one can arrive at a conclusion that 63 students have paid unaccounted cash. Even the package fee of ₹ 35 lakh mentioned in column F of the table appears to have been taken based on the scribbling. The figure of 35 scribbled therein is assumed to be 35 lakh by the department. It is difficult to comprehend as to how assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.xls;Sheet:2 The third table has the caption STATEMENT OF ADMISSION AGAINST DROPS (sic) OUT 2008-09 . Below the table, the source is stated. Source is stated to be digital seized material: file name: Seats 2008-09 1.xls;Sheet:2 312. The AO at page 153, has stated that from the above 3 extracts of digital data seized during the course of search proceedings, it is seen that at least 44 students had been admitted by collecting capitation fee in cash for admissions in FY 2008-09. Being beyond limitation period, these evidences were not discussed in earlier sections of this order. However, it is a significant evidence that capitation fee in large scale was been collected in FY 2008-09 also, which happens to be the year preceding FY 2009-10 (i.e., AY 2010-11). Therefore, according to the AO, it is safely concluded that the practice of collecting capitation fee in cash predates the limitation period and exists at least from FY 2008-09. 313. The ld. AR submitted that the evidences extracted and the conclusion of the AO would show that he has relied upon the material pertaining to FY 2008-09 for quantifying the cash generated during the FY 2009-10. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it is having more or less chambers, the work was got done. When two views are possible, the one which is in favour of the assessee/appellant is to be given effect to. We accept this plea of the appellant. The Tribunal in the case of Raviraj Kothari Associates v. DCIT 2016 (10) TMI 553 - ITAT PUNE held as under: 14. In the facts and circumstances of the case and documents on record we hold that the addition in respect of on-money received in respect of Shop No. 129 i.e. the shop in respect of which the document was seized during survey is upheld. Whereas, in the absence of any material to show that on-money was received in respect of other shops sold or booked during the financial year 2006-07, the addition on account of on-money is not sustainable. The principle of extrapolation of on- money on the other shops sold/booked during the period relevant to assessment year under appeal is rejected in the absence of any material on record. In Commissioner of Income-tax v. Anand Kumar Deepak Kumar [2007] 160 Taxman 206 (Delhi) / [2007] 294 ITR 497 (Del.) , the Hon ble Court held as under:- 7. The Commissioner as well as the Tribunal found that in fact there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und. The evidence cannot be used for extrapolating the receipts for balance period, which is after the date of search; since, no evidence has been brought on record to establish that the same practice has been followed by the assessee in the period pursuant to the date of search. Accordingly, the Assessing Officer is directed to compute the income in the respective years in the hands of assessee. In M/s. J.B. Educational Society And Joginapally Br. Educational Society v. ACIT 2013 (12) TMI 777 - ITAT Hyderabad: [2013] 28 ITR (Trib) 284 (ITAT [Hyd] ) Further, unless there is evidence or material indicating any suppression of collection of fees towards management quota seats for the academic year 2003-2004 to 2007-2008 having been found during search, and no admission from the assessee, Assessing Officer was not justified, to estimate the same on the materials seized relating to academic year 2008-2009 and 2009- 2010 indicating suppression of collection of fees for management seats, in assuming suppressed/unaccounted receipts of fees for earlier assessment years. The calculation of unaccounted income from collection of fees from management seats should be based on mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is ₹ 81 lakh. This cannot be considered as evidence for receipt of capitation fee during the FY 2009-10. 316. Without prejudice to the above, it is submitted that the findings of the AO are contradictory. At page 149, AO seeks to rely upon page 151 of the seized material no. A/DUU/06 to support his computation of the alleged unaccounted cash generated during FY 2009-10. In para 10.9.2, where he has attempted to explain the evidences in support of his quantification for AY 2010-11, there is no reference to the aforementioned page 151 of the seized material no. A/DUU/06. At para 10.9.2, he extracts certain evidences which purportedly belong to FY 2008-09. As stated in earlier paragraph, even this evidence for FY 2008-09 is not reliable and acceptable and cannot form basis for drawing any conclusion for FY 2009- 10. Moreover, the alleged evidences have neither been confronted to Sri Goli V Srinivas / Sri G H Nagaraj nor copy of the same is given to the appellant. It is submitted that all the above would go to prove that there is no material found during the course of search which supports the allegations that the appellant received capitation fee during the FY 2009-10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the previous year in which such search is conducted. On a harmonious reading of section 132 and section 153A, it is trite to state that section 132 doesn t confer power on the authorizing officer to authorize search whose consequence would result in seizure of material pertaining to a period falling or likely to fall outside the period stipulated under section 153A. The seizure of material made in respect of such period is invalid. Such invalidly seized material cannot be validly handed over to the assessing officer under section 132(9A). Even if the same is handed over, such material cannot be relied upon by the assessing officer for making assessment under section 153A. In the present case, the search is conducted on 06.08.2015. The six assessment years referred in section 153A would be AY 2010-11 to 2015-16. Therefore, material pertaining to period prior to FY 2009-10 cannot be considered. Therefore, even upon this ground, such materials cannot be relied upon. This is without prejudice to the main contention that no addition can be made in any assessment year in the absence of incriminating material for that year. 319. It was submitted that the addition of ₹ 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s arrived at. An asterisk mark has been put next to the number of seats i.e., 42. But there is no note below the table explaining the asterisk mark. The seized material does not contain any such data so far as AY 2010-11 is concerned. In the remarks column (I) of the table, at page 151, it is as The rate of growth from FY: 2010-11 to 2011-12 is arrived at 21.46%. The same rate of growth is adopted for 2009-10 to 2010-11 to arrive at figures for FY: 2009-10 . 324. A perusal of the basis of computation as given in the remarks column would show that the addition is made towards alleged unaccounted cash generated during FY 2009-10 in respect of PG course is merely based on estimation. The estimation is made based on growth rate of 21.46% which percentage is arrived at by considering the data for FY 2010- 11 and FY 2011-12. It is pertinent to note that the value for FY 2011-12 is estimated based on data for FY 2010-11 and 2012-13. To make an estimation again based on such data which itself is derived by way of estimation is an unscientific manner of computation. In fact, in the evidences discussed at pages 152 and 153 of the assessment order, none of the materials pertain to PG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any capitation fee. 329. The ld. DR relied on the orders of lower authorities. 330. We have heard both the parties and perused the material on record on this issue. In all these years, the undisclosed cash receipts on the basis of incriminating material in the form of notings, jottings in the loose sheets are unsubstantiated material. We have already held in earlier para of this order that unsubstantiated material cannot be full-proof material evidence to sustain the addition. We also hold that mere existence of concealment even in one year is not sufficient to estimate the income of other years on that basis. It is pertinent to place reliance on the order of this Tribunal in the case of Anjaneya Brick Works. v. ACIT , 74 TTJ 921 (Bang) wherein it was held that estimation of income could not be made relying on the seized documents which related to another accounting period and not the accounting year under consideration and, therefore, addition could not be made on the basis of incriminating documents relating to subsequent year. So the rule of uniformity cannot be and should not be applied on the estimate basis. There can be time and times when the uniformity can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in sub-section (1), no allowance shall be made in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party. 333. In order to claim deduction u/s.37, the expenditure under consideration, should satisfy the following conditions:- a. It should not be of the nature described in sections 30 to 36 b. It should not be capital expenditure c. It should not personal in nature d. It should be laid out wholly and exclusively for the purpose of business or profession e. It should not be incurred for any purpose which is an offence or which is prohibited by any law f. It should not have been incurred on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party 334. It is nobody s case that the conditions stated in (a) to (c), (e) and (f) are not satisfied in case of donations made by the appellant. The only point of debate is satisfaction of condition stipulated in (d) supra. The expression wholly and exclusively for the purpose of business has been judicially interpreted. 335. In CIT v. Chandulal Keshavlal Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alappa Foundation which is duly registered u/s. 12A of the Act by way of account payee cheque and the same is to be allowed as an application of income. This ground of the appeal of the assessee is allowed. 339. Ground no. 13 regarding Rate of Tax is raised for all the assessment years. The contention of the AR is that even if exemption u/s. 11 is denied, maximum margin rate of tax cannot be applied in view of the CBDT circular number 320 dated 11/01/1982 reported in 134 ITR 166 (St) and 577 dated 04/09/1990 reported in 185 ITR 49 (St). We have heard both the parties on this issue. Though, we are agreeing with the contention of the AR. in our opinion this ground of appeals does not require any adjudication as we have already held that assessee is entitled for exemption 11 of the I.T. Act. 340. Further in AY 2012-13, the assessee has raised the ground that the AO has charged tax on long term capital gain @ 30% instead of applicable rate of 20%. In our opinion, long term capital gain is also income u/s. 2(24) of the Act. Therefore, for the purpose of section 11(1)(a) of the Act, capital gain is also considered as part of the income of trust. Accordingly, capital gains are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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