Information Found In Pen Drive/Laptop Of Employees Can't Be Considered As Credible Evidence Without Corroborative Evidence: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the information found in the pen drive or laptop of employees cannot be considered credible evidence unless it has been corroborated with any other evidence.

The bench of Pavan Kumar Gadale (Judicial Member) and B.R. Baskaran (Accountant Member) has rejected the capitation fee addition against the appellant/assessee made on the basis of cash, documents seized from its employees, and statements recorded during the search operation.

The appellant/assessee is a deemed university and charitable trust that operates medical, dental, physiotherapy, biotechnology, and nursing colleges. It was registered under Section 12A and approved under Section 80G.

The appellant/assessee, a deemed university and charitable trust, registered under Section 12A and approved under Section 80G, runs a medical college, dental college, physiotherapy, biotechnology, and nursing colleges and was subject to a search and seizure operation under Section 132. It was subjected to a search and seizure operation under Section 132.

The department determined that the assessee could not be regarded as engaging in any charity activity after observing that the assessee collected capitation fees from the students for admittance through a number of employees and that the amounts were unaccounted for.

The department denied exemption under Section 11 for the AYs 2013–14–2017–18 and also rejected the assessee's books of accounts holding the same as being not reliable. The department made total additions towards capitation fees of Rs. 169.02 crore.

The assessee contended that all the materials were seized from the residences of the respective employees, and the assessee was not aware of those transactions. The department did not seize any material from the assessee that would corroborate the documents seized from the residence of employees. The assessee cannot be burdened with or put to liability on the basis of the seized materials. The assessee has also taken support of the provisions of Sec. 132(4A) of the Act, as per which the presumption is that the material seized from a person shall belong to that person only. The various evidences are dumb and inconclusive documents, i.e., they do not lead to the conclusion that the assessee-trust was collecting capitation fees.

The department contended that the AO has made thorough inquiries relating to the issue, i.e., the AO has brought on record a number of materials and also relied upon the statements given by various persons.

The tribunal has held that documents seized from employees cannot be considered to have any evidentiary value and cannot be considered to have trustworthiness since no other corroborative material was brought on record to support the veracity of the same.

Counsel For Appellant: Neelkanth Khandelwal

Counsel For Respondent: K.C. Selvamani

Case Title: Padmashree Dr. D.Y. Patil University Versus DCIT

Case No.: I.T.A. No. 3264/Mum/2022

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