Hitesh Rohilla Vs ACIT (ITAT Delhi)
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has deleted an addition of ₹24 lakh made by the Assessing Officer (AO) against Hitesh Rohilla for Assessment Year 2013-14. The addition, categorized as unexplained expenditure under Section 69C of the Income Tax Act, 1961, pertained to alleged capitation fees paid in cash to Santosh Medical College, Ghaziabad. The ITAT’s decision, pronounced on February 7, 2025, primarily hinged on the absence of direct evidence linking the payment to the assessee.
The case originated from information received by the Investigation Wing following a search and seizure operation at Santosh Group of Institutions and its Director, Dr. P. Mahalingam. Seized documents reportedly detailed cash donations or capitation fees paid by “parents of students” for admission to various medical courses from FY 2007-08 to 2013-14. Dr. Mahalingam had also admitted to receiving such payments. Based on this, the AO concluded that Mr. Rohilla, who had taken admission to an MBBS course, must have paid ₹24 lakh as a capitation fee out of undisclosed sources, adding it to his income. This was in addition to the accepted regular fee of ₹7.18 lakh.
Mr. Rohilla, who was 19 years old at the time of admission, consistently denied making any such payment, stating that his parents and extended family managed admission formalities and had sufficient sources for his regular fees. He contended that the addition was made without providing an opportunity for cross-examination of Dr. Mahalingam and relied on information collected behind his back, violating principles of natural justice. He cited previous Delhi Tribunal orders in Shri Naresh Pamnani vs ITO and Shri Manjit Singh Gahlot vs ITO, which emphasized the necessity of sharing adverse evidence and allowing cross-examination. He also invoked PCIT vs Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Delhi HC), asserting that the AO needed to conduct independent inquiries rather than relying solely on investigation reports.
