No Additions Towards Capitation Fee Relying Upon Documents Found From Employees of Trust | ITAT

Case Details: Padmashree Dr. D.Y. Patil University v. DCIT - [2024] 159 taxmann.com 353 (Mumbai-Trib.)

Judiciary and Counsel Details

• • Pavan Kumar Gadale, Judicial Member & B. R. S Baskaran, Accountant Member
  • Neelkanth Khandelwal for the Appellant.
  • K.C. Selvamani for the Respondent.

Facts of the Case

Assessee-charitable trust registered under section 12A ran colleges. During the search, the Assessing Officer (AO) observed that the assessee had collected capitation fees through various employees for giving admission to students in various courses conducted by it and said the collection had not been accounted for in books.

Thus, he held that the collection violated clauses of the trust deed and the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act. He denied exemption under section 11 on the ground that the assessee was not carrying out any charitable activity.

The matter was reached before the Mumbai Tribunal.

ITAT Held

The Tribunal held that AO had concluded that the assessee had collected capitation fees based on data found in laptops, pen drives, diaries, and loose papers seized from various employees of the assessee from their residences.

Also, the trustees of the assessee had stated that they had not authorized anyone to collect capitation fees. Furthermore, AO did not find/seize any credible material from the assessee to corroborate information/documents seized from employees.

Documents seized from employees could not be considered as having any evidentiary value and could not be considered to have trustworthiness. Since no other corroborative material was brought on record to support the veracity of the same, additions made by the Assessing Officer were to be deleted.