Saraswati Ammal Educational & Charitable Trust Vs ACIT (ITAT Delhi)
Capitation Fee Additions Based on Third-Party Seized Papers Unsustainable – Trust Gets Relief- Capitation Fee Receipts Taxable in Vice Chancellor’s Hands, Not Trust – ITAT Delhi
In this case, search proceedings were conducted on 09.03.2017 in the case of M/s Etcetera Entertainment belonging to Sh. V. Mathiyalgan, then Vice Chancellor of Saraswati Institute of Medical Science (SIMS), Hapur, a unit of Saraswati Ammal Educational & Charitable Trust. Incriminating papers allegedly recording collection of capitation fees were seized from him. Survey was also conducted at SIMS premises. AO invoked provisions of s.153C & completed assessments for AYs 2014-15 to 2017-18, making substantial additions u/s 69A towards unaccounted capitation fee & u/s 69C for unrecorded interest on cash loans.
CIT(A) partly allowed relief by applying doctrine of telescoping & deleting several additions, though restricting some capitation fee additions. Both parties appealed before Tribunal.
The Trust contended that seized papers were dumb documents found in the custody & handwriting of Sh. V. Mathiyalgan, who acted without authority. It was emphasized that after NEET introduction from AY 2016-17 & admission process through UPUMCWA, there was no scope for management quota or capitation fee. No incriminating material or cash was found at SIMS or with the Trust. Statements of students/parents recorded during investigation also pointed only towards payments to Sh. V. Mathiyalgan personally, not to the Trust. Further, opportunity of cross-examination was denied. Reliance on a letter filed by CA of Sh. V. Mathiyalgan admitting collection of fees on behalf of SIMS was challenged as self-serving & never confronted to the Trust.
