Sri Devaraj Urs Educational Trust Vs ACIT (ITAT Bangalore)
No Cash, No Assets, No Trail- Dumb Documents Can’t Sustain ₹23 Cr Addition – ITAT Bangalore Deletes ₹23.77 Cr Capitation Fee Addition & Restores Exemption u/s 11
Background:
Sri Devaraj Urs Educational Trust (Kolar), running medical & allied institutions, faced search u/s 132 on 10.10.2019. Excel sheets seized from cashier’s computer & documents from an alleged agent (Shri T. Babu) suggested collection of capitation fees for admissions. AO treated these as incriminating & added ₹23.77 Cr for AY 2020-21; similar additions were made in other years. AO also denied exemption u/s 11, citing violation of charitable objects & diversion of funds. CIT(A) upheld additions & partly denied exemption. Both Trust & Revenue filed appeals.
Assessee’s Contentions:
- Excel/loose sheets were dumb documents—unsigned, undated, no official seal, hence no evidentiary value.
- Contradictions: cashier admitted preparing sheets but denied handling cash; Secretary denied knowledge; agent alleged payments—but no corroboration.
- No cash seizure, no unaccounted assets, no expenditure trail found.
- Statements of students/parents not provided → violation of natural justice.
- Past years (AYs 2010-11 to 2016-17) similar additions already deleted by ITAT.
CIT(A)’s View:
- Held seized Excel & agent’s documents as speaking documents.
- Statements of cashier & agent corroborated details; names matched Registrar’s list.
- Confirmed addition of ₹23.77 Cr capitation fee.
- Allowed exemption u/s 11 only to the extent of declared income; denied for capitation fee receipts.
Tribunal’s Findings:
- Excel sheet was not part of regular books, unsigned, unauthenticated—limited evidentiary value.
- Cashier, Secretary & agent gave contradictory versions; no consistent chain of evidence.
- Third-party papers of agent cannot be used without clear linkage to Trust.
- No physical cash, unaccounted assets, or application of such large sums (₹23.77 Cr) found—absence of utilization trail fatal to Revenue’s case.
- Statements of students/parents (primary parties) not furnished—denial of cross-examination & violation of natural justice.
- Loose sheets & third-party notes, without corroboration, cannot justify additions (relying on SC in CBI v. V.C. Shukla & Common Cause Society).
Result on Capitation Fee:
