Raichur/Bengaluru: The Karnataka High Court has upheld the Income-Tax Department’s action of withdrawing exemption granted to a Raichur-based leading educational institution from payment of income tax after it was revealed from raids that the Trust was illegally collecting crores of rupees as capitation fee and donations, besides indulging in “money laundering”.
Justice Vineet Kothari passed the order while dismissing petitions filed by Navodaya Education Trust, which runs a medical, dental, engineering colleges, besides other educational institutions in Raichur city, and its four trustees — Sunki Rajendra Reddy and others. The petitioners had questioned the department’s December 21, 2017, order of withdrawing exemption from income tax under Section 23-C(vi) of the Income Tax Act.
The department’s raid found that the Trust had been collecting a staggering Rs. 50 to Rs. 100 crore of unaccounted money in the form of voluntary donations/capitation fee every year, and was maintaining complete records for this purpose, but was not officially declaring this income.
The documents seized from the raids, conducted in December 2015 on the premises of the Trust-run educational institutions and the trustees, had disclosed that such unaccounted donations and capitation fee were used for construction of a temple, paying speed money for getting approvals, incurring election expenses of one, Sunki Rajender Reddy, to buy personal assets for the trustees, and for money laundering to claim bogus long-term capital gains and gifts, etc.
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