S. 69C : Unexplained expenditure-Capitalisation fee-Admission in medical college-Scribbling made on the back side of two pages which does not reveal that assessee had made any payment- Failure to give an opportunity of cross examination of Dean- Addition was deleted. [S. 132]
The AO issued show cause notice to the Assessee stating that he received an information from the DCIT, Central Circle-2(2), Pune regarding payment of Capitation fee/Donation of Rs.95,00,000/- by the Assessee to Singhad Technical Education Society (STES) for admission of his daughter Smt. Dr. Sai Shrikrishna Pawar for securing admission for the course of Post- Graduation (PG) in Dermatology for academic year 2013-14 and asked the source of the payment. The Assessee denied making any payment of Capitation Fees for securing admission for Dr. Sai for MD. Dermatology. However the Assessing Officer made the addition under section 69C of the Act. On appeal the CIT(A) confirmed the addition relying on the judgement of the Supreme Court in Sushil Bansal v. PCIT (2020) 115 taxmann.com 226 / 274 Taxman 1 (SC). On appeal the Tribunal held that on the facts of the case the Assessee has denied the payment of capitalisation fee and submitted that the addition made by the AO cannot be sustained based on scribbling made on the back side of two pages which does not reveal that Assessee had made any payment of Rs.95,00,000/- as capitation fees for securing admission for assesses daughter (Dr. Sai) for Post-Graduation admission only on the basis of the scribbling, addition cannot be made for two (2) reasons (i) the documents on which these scribbling have been found, has been admittedly seized from the office of the Dean of the Medical College, so, before drawing adverse inference against the assessee it could have been prudent on the part of the AO to have summoned the Dean Dr. Arvind V. Bhore and asked him to explain about the aforesaid scribbling. And if the dean had made any statement which incriminates the Assessee / Dr. Sai, then the AO ought to have given an opportunity to the Assessee to have cross-examined the Dean and if the Dean is able to sustain the cross-examination (i.e, credibility of evidence of Dean couldn’t be shaken), then AO could have drawn adverse inference against Assessee/Dr. Sai. Without doing such an exercise, no addition could have been legally made. Secondly, the AO ought to have enquired as to whether capitation/donation is being taken by STES for admitting students; and if so, who collects the same on behalf of STES; and from that person, enquiries should have been conducted as to whether the Assessee/Dr. Sai gave capitation fees for securing admission as alleged by the AO/Investigation Wing. Having not done so, the action of the AO/Ld. CIT(A) to have made the addition simply on the strength of scribbling as noted supra is not sustainable in the eyes of law. The Tribunal also held that the case law relied by the CIT(A ) is not applicable to the facts of the appellant. ( ITA No. 151/Mum/2022 dt . 25-4-2023 (AY. 2014- 15)
Krishna D. Pawar v. ITO (Mum.)(Trib.) www.itatonline.org
[Coram : Hon’ble Shri Aby T. Varkey, JM And Hon’ble Shri Amarjit Singh, AM]