Case Number: ITA 1576/DEL/2020
Appellant: Narender Singh, Rewari
Respondent: ITO Ward-2, Rewari
Assessment Year: 2010-11
Case Filed On: 2020-09-10
Order Type: Final Tribunal Order
Date of Order: 2023-05-11
Date of Pronouncement: 2023-05-11
This appeal by the assessee is directed against the order dated 21.01.2020 of the learned Commissioner of Income Tax (Appeals)-Rohtak, for the assessment year 2010-11. The primary issue in this case is the addition of Rs. 50,00,000/- as alleged capitation fee payment for the admission of the appellant’s daughter in Santosh Medical College, Ghaziabad.
Narender Singh, the appellant, is a resident of Rewari. A search was conducted at the premises of Santosh Medical College, Ghaziabad, and information was received from the Investigation Wing that a capitation fee of Rs. 50,00,000/- was allegedly paid by the appellant for the admission of his daughter in the college. Based on this information, the AO reopened the case under section 147 of the Act, believing that income had escaped assessment.
During the assessment proceedings, the appellant was confronted with the information received from the DDIT (Inv.) regarding the alleged capitation fee payment. The AO relied on the statement of Dr. P. Mahalingam, Chairman of the Santosh Medical College, and registers seized during the search, which allegedly contained entries of both accounted and unaccounted receipts, including the name of the appellant’s daughter.
The appellant contested the assessment order before the learned Commissioner of Income Tax (Appeals), Rohtak, who dismissed the appeal and confirmed the addition made by the AO. The appellant then filed the present appeal before the ITAT.
The appellant’s counsel, Mr. Sanjeev Jain, argued that the addition was based solely on the statement of Dr. P. Mahalingam and the registers seized, which did not conclusively prove that the appellant had paid the alleged capitation fee. The counsel emphasized that the appellant was not given an opportunity to cross-examine Dr. P. Mahalingam, which violated the principles of natural justice. Additionally, the appellant denied any payment of capitation fees and submitted that the assessment was invalid.
The department representative, Mr. S.L. Anuragi, contended that the appellant had admitted to paying the scheduled fees for his daughter’s admission and that the seized registers indicated the payment of additional capitation fees. Therefore, the addition made by the AO and confirmed by the CIT(A) was justified.
The ITAT, comprising Shri Anil Chaturvedi, Accountant Member, and Shri Yogesh Kumar U.S., Judicial Member, heard the case on 02.05.2023 and pronounced the order on 11.05.2023. The Tribunal observed the following:
Based on the material placed on record, the AO relied on the statement of Dr. P. Mahalingam and the seized registers, which indicated the receipt of capitation fees. However, the appellant was not given an opportunity to cross-examine Dr. P. Mahalingam, despite specifically requesting it during the appellate proceedings.
The Tribunal noted that similar issues had been addressed in the case of Sulekha Chand Singhal vs. ACIT (ITA No. 6700/Del/2019), where the addition was based on the same college and the statement of Dr. P. Mahalingam. In that case, the Tribunal held that any adverse material collected at the back of the assessee, if not confronted and cross-examined, could not be used against the assessee.
The Tribunal concluded that the addition made by the AO, which was confirmed by the CIT(A), was in violation of the principles of natural justice as the appellant was deprived of the opportunity to cross-examine Dr. P. Mahalingam. Therefore, the addition of Rs. 50,00,000/- was deleted.
In conclusion, the Tribunal allowed the appeal by Narender Singh, deleting the addition of Rs. 50,00,000/- made by the AO and confirmed by the CIT(A). The appeal for the assessment year 2010-11 was allowed.
Order signed by:
[ANIL CHATURVEDI] – ACCOUNTANT MEMBER
[YOGESH KUMAR U.S.] – JUDICIAL MEMBER
Date: 11.05.2023
Location: Delhi
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