The Tax Publishers2020 TaxPub(DT) 1344 (Hyd-Trib) : (2020) 203 TTJ 0025

INCOME TAX ACT, 1961

Section 153C

Since assessee specifically denied payment of any amount other than the amount as per the Government prescribed fee for admission of his son to the medical college, the AO was not justified in making addition in the hands of the assessee on account of undisclosed source simply on the basis of the material seized during the search operation in the case of the medical college without giving opportunity to the assessee to cross-examine the person who had given statement under section 132(4) on behalf of the college.

Search and Seizure - Assessment under section 153C - Addition on account of undisclosed income - Addition based on statement recorded under section 132(4)

A search and seizure operation was carried on in case of an educational society, where seized material was found indicating that assessee paid Rs. 30 lakhs over and above the regular fees towards admission of his son in the medical college. Further, a statement of the cashier was recorded under section 132(4) and accordingly the assessee was issued notices calling explanation in respect of the same. Assessee explained that he did not pay any amount over and above the fee as prescribed by the Government. However, the AO did not accept the explanation of the assessee and based on the seized material and statement of the cashier, addition of Rs. 30 lakhs was made as unexplained source in the hands of the assessee. Held: When the seized material was found in the premises of the college, it had to be presumed that it was belonging to the college. Further, when the addition was proposed in the hands of the assessee on the basis of the statement of the cashier recorded under section 132(4) and when the assessee specifically denied the same, the AO should have given opportunity to cross-examine the cashier, which he failed to do so. Therefore, without giving opportunity to the assessee to cross-examine the person who had given statement under section 132(4) on behalf of the college, simply addition was made on the basis of seized material, which was not correct. Therefore, the addition made by the AO was deleted.

REFERRED : Andaman Timber Industries v. CCE (2015) 281 CTR (SC) 241 : 2015 TaxPub(DT) 5186 (SC).

FAVOUR : In assessee's favour

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 69

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