9911796707
TMI Blog2022 (5) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... iety runs a medical college, a hospital, a nursing college and other educational institutions in Bengaluru. The assessee is also chairman of the medical college run by the Society under the name MVJ Medical College. The revenue carried out search and seizure operations in the hands of Venkatesha Education Society and also in the hands of the assessee on 19-09- 2013. Based on certain documents found during the course of search, the AO came to the conclusion that above said Society was collecting capitation fees for admission of students into MBBS and PG Courses. Even though the documents were related to a particular year, yet the AO concluded that the above said society would have been collecting capitation fee from all the students in all the years under consideration. Accordingly, on the basis of those documents, the AO estimated the capitation fee collected and extrapolated the same to all students in all the years. 4. The facts relating to the first addition are that, during the course of search, a document no. A/MJM/02, Pg. 2,3,4,5,6 was found from the residence of the assessee herein. It contained the name and address of students seeking admission into various PG Courses for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from penal and prosecution proceedings. Subsequently, vide letter dated 20-11- 2013 written to DDIT (Inv), the assessee agreed to disclose additional amount of Rs.5 crores over and above the amount of Rs.20 crores, referred above. However, the assessee did not offer above said amount of Rs.25 crores separately in the return of income filed subsequently for AY 2014-15. When questioned, the assessee submitted that he has offered capital gains arising on sale of a property located at Sholingur, Chennai, which was sold for a consideration of Rs.20 crores, i.e., it was submitted that the offer made by him in the sworn statement was related to the capital gains arising on sale of above said property. The AO, however, did not accept the explanations of the assessee. He expressed the view that the additional income of Rs.25 crores surrendered by the assessee should mean income which was not already accounted for. He also expressed the view that the assessee has agreed to offer the above said amount in view of the incriminating document related to collection of capitation fee not accounted for. Accordingly, the AO assessed the above said sun of Rs.25 crores in the hands of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, the protective addition of Rs.20,70,00,000/- is hereby deleted." 7. With regard to the addition of Rs.25.00 crores relating to income surrendered by the assessee in the sworn statement, the Ld CIT(A) agreed with the view taken by the AO. Accordingly, he confirmed the addition made in AY 2014-15 with the following observations:- "PARA 31. I have considered the stand of the Appellant in the present appeal on the said issue and the approach of the Assessing Officer while I am convinced on the stand taken by the AO in the assessment order in making the separate addition for the offer made by the Appellant at the time of search in delinking such offer relating to a property transaction. It is seen that the return came to be filed later but the offer of additional income was immediately after the search, i.e., on 20-12-2013. This offer looks as having been consciously made by the appellant. In this view of the matter, the addition on account of voluntary offer of Additional income of Rs.25 crores - offered in terms of sec. 132(4) statement is deemed as separate and distinguishable from the Income from Capital gains. The offer of additional income is retained as such and the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is a printed document found from the residence of the Secretary Shri M J Mohan. Against each of the student, some numbers were found noted in pen. For example, one number"20" is written against a student. Adjacent to this number 20, it is written as 10C and 10 A/c. The amount so mentioned against each of the students ranged from 10 to 1.50 Cr. The source of this document was traced to the iMac Desktop computer seized from the office of Medical College. We noticed earlier that the AO has interpreted "C" as cash and "A/c" as cheque payments. The AO took the view that amounts mentioned therein in "C" represent capitation fees. The AO estimated average amount of capitation fee collected at Rs.45.00 lakhs per student and accordingly applied the same to all the students in all the years under consideration. 19.1 We noticed earlier that the Secretary has stated that the noting made in pen are not either in his hand writing or in the handwriting of any of employees. We notice that the Ld CIT(A) has extracted following question and answers from the Sworn statement given by the Secretary:- (I) Answer to Question No.8 of the sworn statement dated 21.10.2013:- "These are not my han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of presumption prescribed u/s 132(4A) and sec.292C with regard to the noting found in the seized document. In our view, the presumption prescribed in the above provisions of the Act by legal fiction has been effectively rebutted by the assessee on the basis of actual amount received from the students and also entries made in the books of account. The entries may be presumed to be correct, if the cheque amounts mentioned in the seized document tallied with the actual receipts. It is not the case here, which the assessing officer is also aware of. Accordingly, we are of the view that the noting made in the above said list lacks credence. 19.3 We may derive support for our view from one more fact submitted before us, i.e., it was submitted that the investigation wing had issued summons to some or all the students in the list and also recorded the statements from them. However, the result of the said enquiry was not conveyed to the assessee in spite of specific request made by the assessee in this regard. The AO has also not discussed anything in the assessment order about the enquiry conducted and the results thereof. Accordingly, there is merit in the contentions of Ld A.R th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal filed by the assessee for AY 2014-15, wherein the assessee is assailing the decision of Ld CIT(A) in confirming the addition of Rs.25.00 crores. 13. The Ld A.R submitted that the assessee had made disclosure of Rs.20.00 crores initially in the sworn statement given on 21-10- 2013. Subsequently, it was increased to Rs.25.00 crores, vide letter dated 20-11-2013. He submitted that the assessing officer has wrongly understood that the above said disclosure was related to capitation fee collected by the assessee. He submitted that the assessee has, nowhere, stated that the above said disclosure was on account of collection of capitation fee. In fact, the assessee has denied collection of capitation fee and further he has expressed ignorance about the noting made in Pen on the sheet. However, it is the AO who has considered the noting as related to collection of capitation fee. Accordingly, he submitted that there is no correlation of the disclosure made in the sworn statement and the alleged collection of capitation fee. The Ld A.R further submitted that the assessee was constrained or might have been compelled to make disclosure in view of various difficulties created during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income to Rs.25.00 crores, which could not have been done without proper application of mind. Accordingly, the Ld D.R submitted that the assessee has consciously admitted additional income after the appraisal of all facts surrounding his case. Since the assessee had offered additional income, the revenue did not carry out further investigation. The Ld D.R placed his reliance on the following case laws in support of his contentions:- (a) T.Lakhamshi Ladha & Co vs. CIT (2016)(386 ITR 245)(Bom) (b) Raj Hans Towers (P) Ltd vs. CIT (2015)(373 ITR 9)(Delhi) (c) Pr. CIT vs. Avinash Kumar Setia (2017)(395 ITR 235)(Delhi) Accordingly he submitted that the Ld CIT(A) was justified in confirming the addition of Rs.25 crores made by the AO. 15. The Ld A.R, in the rejoinder, submitted that the impugned addition of Rs.25.00 crores is not based on any material and further, it was not shown that the same is represented by any undisclosed income, if any, found during the course of search in the form of any asset or otherwise. He submitted that it is well settled proposition of law that the tax can be levied only on real income, meaning thereby, an assessee cannot be subjected to tax for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.20 crores (Rupees Twenty crores) totalling to Rs.25 crores (Rupees Twenty five crores) to complete post search enquiries and without prejudice shall act in accordance with the provisions of law." A careful perusal of the both the replies referred above would show that the replies given by the assessee are couched with many caveats. We shall dissect the Reply given on 21-10-2013 to question no.19. It contains following sentences. (a) I hereby disclose Rs.20 crores as additional income (b) either in my hands or in the hands of any other person(s) (c) on the appraisal of factual position existing on this day (d) based on the issues discussed till date. A perusal of various other questions posed to the assessee in the sworn statement would show that they are related to jewellery, family settlement, document containing list of PG students, report given to MCI, loan given to Smt. Dharini Mohan. None of the questions was related to any undisclosed income, if any, earned by the assessee. During the course of arguments, the Ld A.R submitted that the disclosure was made in order to come out of certain difficulties created during the course of search like freezing of bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 20-11-2013 and the statement given on 20-12-2013. In this letter, referring to the statement given on 20.12.2013, the assessee has stated that the sale of property at Chennai was admitted at Rs.20 crores in the return of income filed for the AY 2014-15. At the end, the assessee has stated as under:- "Right from the end of the search, I was under confusion with regard to disclosure of income. The change in the quantum of income was necessitated by facts obtained/emerged later. As on date my offer of additional income may please be taken as Rs.20 crores as originally offered." 18. On a combined reading of above said replies, we notice that the assessee has not identified any additional income, i.e., it does not appear to be surrender of income in a blanket manner, as presumed by the tax authorities. In our view, It appears that there was some kind of compulsion upon the assessee to make surrender of additional income. The confusion/uncertainty in the mind of the assessee in this regard is also discernible from the various replies given by the assessee. Hence the assessee appears to have stated that the surrender is on appraisal of factual position as well as in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of filing return and completion of assessment. The AO was well aware that the assessee has not offered the additional income (as understood by the AO) in the return of income filed. In fact, the AO has also raised a specific query in this regard and the reply given by the assessee was extracted earlier. Subsequent enquiries made by the AO also did not bring out any undisclosed income, if any, belonging to the assessee. Under these set of facts, in our view, the question of estopping the revenue from carrying out further investigation does not arise in the present case. 21. In fact, the assessee has also explained the nature of surrender made by him before the assessing officer. If the AO was of the view that the additional income surrendered could not be related to 'capital gains', it was within the powers of the AO to probe the matter further. However, it is a fact that no incriminating material relating to alleged undisclosed income of the assessee was found during the course of search or nor did AO carry out any further enquiry during the course of assessment proceedings. Hence, it is very much clear that the AO has made the impugned addition of Rs.25 crores merely on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T" merely confirmed the same. The Hon'ble High Court noticed that the income was surrendered in the context of signed black vouchers and loose papers found during the search. These loose papers were explained as record of payments made outside the books of accounts. So far as blank signed vouchers are concerned, it was stated that the figures are filled in later so as to enable inflating the expenses actually incurred. Under these set of facts, it was held by Hon'ble Bombay High Court that the retraction is an afterthought. It can be noticed that, in this case, (i) the department has unearthed specific incriminating materials, which could not be disowned by the assessee. Hence the assessee had no other option, but to surrender additional income. (ii) the income so surrendered by partner "T" was endorsed by another partner at the time of making statement. (iii) the retraction was some other partner and it was merely confirmed by partner "T". Under these set of facts, subsequent retraction was rejected. It can be noticed that the decision has been rendered in facts prevailing in the above said case, which is not applicable to the facts of the present case. 23.2 The next case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the actual reply to the show cause notice is silent as to the date. This itself casts doubt as to whether the retraction was in fact made or was claimed as an afterthought. 11. Furthermore, this Court is of the opinion that in the circumstances of the case both the CIT (A) and ITAT were correct in adding back the amount of Rs.63,33,260/- after adjusting the expenditure indicated. The explanation given by the assessee, in the course of the appellate proceedings, that the surrender was in respect of a certain portion of the receipt which had remained undisclosed or that some parts of it were supported by the books, is nowhere borne out as a matter of fact, in any of the contentions raised by it before the lower authorities. For these reasons, this Court is of the opinion that no substantial question of law arises. The appeal is accordingly dismissed." We notice that the Hon'ble High Court has taken into consideration that (i) the claim of alleged retraction could not be proved by the assessee. (ii) certain incriminating materials were also found during the course of survey. (iii) the claim of the assessee that some portion of receipt was actually supported by books, wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not including the said amount in the return of income filed by the assessee on 26th September, 2009." In view of the above facts, the decision rendered by ITAT was reversed. From these discussions, it can be noticed that the Hon'ble Delhi High Court has rendered the decision on the basis of facts prevailing in that case. 24. The facts prevailing in the present case is totally different. The initial declaration of Rs.20 crores was obtained in the statement taken u/s 132(4) of the Act and we have found that the same is not supported by any incriminating material. Subsequently, the amount was increased to Rs.25 crores, again without any basis. We have also noticed that the surrender was not blanket surrender as presumed by the tax authorities. We also noticed that the surrender was couched with various caveats. In any case, the surrender of income without any basis is against the circular issued by CBDT (referred supra). We also noticed that the assessee has explained later before the AO that the capital gain was in his mind while making surrender. Hence the facts prevailing in the present case are totally different from the facts that prevailed in the above said cases relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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