Case Law Details
Sushil Bansal Vs PCIT-19 (Delhi High Court)
The appeal before the Delhi High Court challenged an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year (AY) 2013-14. The assessee had not filed a return of income for the relevant assessment year. During a search under Section 132 of the Income-tax Act conducted in the Santosh Group of Institutions, material was found indicating that, at the time of admission of the assessee’s son to an MBBS course in Santosh Medical College, a payment of ₹23 lakh had been received as capitation fee in addition to the regular college fees. The Chairman and Managing Trustee of the group admitted to accepting capitation fees and furnished student-wise working sheets in which the name of the assessee’s son appeared with a capitation fee entry of ₹23 lakh.
Based on this material, proceedings were initiated by issuing a notice under Section 148 of the Act. Notices under Section 142(1) were also issued, but the assessee did not initially respond. Subsequently, pursuant to summons under Section 131, the assessee appeared before the Assessing Officer (AO) and stated that the admission process had been handled by his father-in-law and that he was unaware of any payment of capitation fee.
The AO also summoned the father-in-law under Section 131. In his statement, he stated that he had paid only ₹7.18 lakh towards the regular college fees, of which ₹3 lakh had been provided by the assessee’s father and ₹4.18 lakh had been withdrawn from his own bank account. He did not recollect making any payment towards capitation fee.
As no credible evidence was produced to explain the source of the ₹23 lakh paid as capitation fee, the AO treated the amount as unexplained expenditure and added it to the assessee’s income under Section 69C of the Income-tax Act.
The assessee’s appeals before the Commissioner of Income Tax (Appeals) and the ITAT were dismissed. Before the High Court, the assessee reiterated that the addition, if any, ought to have been made in the hands of his father-in-law, who had undertaken the admission process, and not in his own hands. It was further contended that the assessee had consistently maintained that he had no knowledge of the payment of capitation fee or its source and that the statement of his father-in-law had not been properly appreciated.
The Delhi High Court rejected these submissions. It observed that the AO had made adequate efforts by summoning the father-in-law and recording his statement. However, that statement explained only the payment of ₹7.18 lakh towards the regular fees and did not explain the source of the ₹23 lakh shown as capitation fee. In the absence of any credible explanation from the assessee regarding the payment of the capitation fee, the AO was justified in making the addition under Section 69C.
The Court found no legal error in the ITAT’s decision dismissing the appeal. It further held that no substantial question of law arose from the impugned order. Accordingly, the appeal and the pending application were dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 30435/2019 (exemption)
1. Allowed, subject to all just exceptions.
CM APPL. 30436/2019 (delay)
2. For the reasons explained in the application, the delay in re-filing the appeal is condoned and the applications are allowed.
ITA 601/2019 and CM APPL. 30434/2019 (stay)
3. This appeal by the Assessee is directed against an order dated 23rd October 2018 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No.4441/Del/2017 for Assessment Year (‘AY’) 2013-14.
4. Brief facts are that for the AY in question, the Assessee did not file any return of income. During the course of a search conducted in the Santosh Group of Institutions under Section 132 of the Act on 27th June 2013, it transpired that the Assessee had paid Rs.30.18 lacs at the time of admission of his son Dr.Jatin Bansal in the MBBS course in the Santosh Medical College, Ghaziabad on 8th August 2012. The Chairman and managing trustee of the group in his statement given before the investigation wing of the Department admitted that in addition to the regular fees of the medical college, they had also accepted capitation fees. The complete working sheets indicating the capitation fees receipts student-wise for each financial year were also filed before the investigation wing. The name of the Assessee’s son Dr.Jatin Bansal was found appearing at Sl.No.72. The capitation fee was shown as Rs.23 lacs.
5. On the above basis, notice was issued to the Assessee under Section 148 of the Act on 23rd March 2015. He was also issued notices under Section 142(1) on 23rd June and 9th July 2015 but neither he nor anyone on his behalf attended the hearing of the Assessing Officer (AO) in response thereto.
6. Finally, in response to summons under Section 131 of the Act issued on 12th January 2016, the Assessee appeared before the AO and statements were recorded. According to the Assessee, the admission process was undertaken by the Assessee’s father-in-law Shri Jile Ram Bhati. The Assessee claimed not to be aware of any payment of capitation fee.
7. On the above basis, summons under Section 131 of the Act were issued to Shri Bhati and his statements were recorded. According to Shri Bhati, he gave a total fees of Rs.7.18 lacs to Santosh Medical College for the admission of Dr. Jatin Bansal. He had no recollection of payment of any capitation fee. Further, out of the abovementioned Rs.7.18 lacs, Rs.3 lacs was stated to have been given by the grandfather of the present Appellant/Assessee and the remaining Rs.4.18 lacs was withdrawn from the bank account of Shri Bhati.
8. Since no credible evidence explaining the source of Rs.23 lacs paid as capitation fee was forthcoming, the AO added it to the income of the Assessee under Section 69C of the Act.
9. The appeals filed by the Assessee both before the Commissioner of Income Tax (Appeals) [‘CIT(A)’] as well as the ITAT were dismissed.
10. Counsel for the Appellant has repeated the arguments urged before the CIT(A) and ITAT. According to him, the aforementioned sum of Rs.23 lacs ought to be added to the income of Shri Bhati, who had undertaken the admission process for the Assessee’s son Dr.Jatin Bansal, and not to the income of the Assessee himself. According to him, the Assessee had categorically stated that he was not even aware of the payment of capitation fees, much less its source. He submitted that the statements of his father-in-law were not considered in their true perspective.
11. This Court is unable to agree with the above submissions. The Court finds that the AO has taken pains to summon Shri Bhati, the father-in-law of the Assessee and record his statement. Unfortunately, the statement made by the Assessee’s father-in-law was not helpful in explaining the source of payment of Rs.23 lacs as capitation fees. Shri Bhati only explained the payment of Rs.7.18 lacs as regular fees. With there being no credible explanation offered by the Assessee for the payment made as capitation fee, the AO is justified in adding it to the Assessee’s income.
12. The Court is unable to find any legal error committed by the ITAT in dismissing the appeal of the present Appellant. No substantial question of law arises from the impugned order of the ITAT. The appeal is accordingly dismissed. The pending application is also dismissed.
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