CIT Vs Saveetha Institute of Medical (Madras High Court)
The High Court dismissed the Revenue’s tax appeals challenging the orders of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal in a case arising from a search conducted under Section 132 of the Income Tax Act at an educational institution. The Department alleged that the trust running the college collected capitation fees from students and diverted funds for personal benefit, relying mainly on seized slips showing student admissions and a statement by a managing trustee admitting collection of ₹1 lakh as capitation fees. However, the statement was later retracted and no corroborative evidence was produced. The appellate authorities found that the slips only contained admission details and did not constitute “books of account,” nor did they indicate collection of capitation fees. Further, the Department failed to examine students or produce supporting material linking seized cash or jewellery to alleged illegal collections. The Court held that the presumptions under Sections 132(4) and 132(4A) are rebuttable and cannot sustain additions without supporting evidence.
1. Core Issue:-Whether exemption under Section 11 can be denied and unaccounted income added based merely on:
Statement recorded during search u/s 132(4), and Presumption under Section 132(4A) without independent corroborative evidence proving collection of capitation fees and diversion of trust income for personal benefit under Section 13(3)(c).
