I-T Dept unearths cash-for-seat scam in K’taka medical colleges; over Rs 400 cr blackmoney detected

PTI, Feb 19, 2021, 8:26 AM IST

New Delhi: The Income Tax Department has detected an alleged cash-for-seat scam running in some Karnataka-based medical colleges, as the CBDT said over Rs 400 crore black money has been generated in the name of capitation fee by these institutions.

A statement issued by the Central Board of Direct Taxes said these alleged irregularities were found after nine major trusts, registered in Bengaluru and Mangaluru, running educational institutes, including medical colleges were raided on Wednesday.

”Searches were conducted at 56 different locations across Karnataka and Kerala,” the CBDT, which frames policy for the tax department, said.

”So far, the evidence gathered indicates that Rs 402.78 crore has been accepted as illegal capitation fee by manipulating the online admission process and the same has not been disclosed to the Income Tax Department,” it said.

It said cash amount of Rs 15.09 crore has been seized and gold jewellery worth Rs 30 crore (weighing 81 kilograms), 50-carat diamonds and 40 kilograms of silver articles have been found from the residential premises of the trustees and are prima facie, unexplained.

”Evidence of undisclosed foreign assets of Rs 2.39 crore in Ghana has also been found apart from evidence of huge investments in 35 luxury cars in Benami names,” the CBDT said.

Describing the alleged modus operandi, the CBDT said it was found that the transparent selection process to medical colleges through the National Eligibility cum Entrance Test (NEET) has been ”subverted” by trustees and key persons running these institutions in collusion with agents/brokers and some students who got high ranks in the NEET examination.

”The first stage of malpractice is that some high-ranking students in the NEET examination take admission to MBBS courses through State counselling (who have no intention to join the said colleges as they have secured admissions or likely to get admission elsewhere).

”Thereby blocking seats in the medical stream in a medical college during the Karnataka Examinations Authority (KEA) counselling process, in connivance with agents, middlemen, converters (who provide service of converting the regular seats to management seats),” it said.

The CBDT said, later, these students withdraw from the admission process, thereby making the vacant seats available for the college management. Such seats are made available to the college management for filling up through the ”stray vacancies round” (seats remaining vacant or unfilled in a college after a mop-up round), it claimed.

In this round, the statement claimed, the seats are filled by the college management by admitting less meritorious candidates (low rank in NEET) after collecting huge sums as capitation fee, donations in cash which are illegal under the Karnataka Educational Institutions (Prohibition of Capitation Fee) Act, 1984.

”The capitation fee/donations are collected through a network of brokers/agents employed by the key persons/trustees of these medical colleges,” it claimed.

The CBDT said that ”the search operation resulted in detecting incriminating evidence regarding cash-for-seat malpractices for admission to MBBS, BDS and PG seats in the form of notebooks, handwritten diaries, excel sheets containing the details of cash received from students/brokers for admission in these colleges for various years.”

”It was also observed that the management, faculty, staff, meritorious students and brokers are working in close nexus to manipulate the online admission process,” the CBDT said.

It added that there is evidence indicating that one of the medical colleges have some sort of ‘package arrangement’ for passing management quota students in written examination and viva voce for a fixed sum ranging from Rs 1 lakh to Rs 2 lakh.

”There is evidence which prima facie suggests that the cash money accepted by manipulating the online admission process in these colleges has been diverted for non-charitable purpose by the trustees, which is clearly in violation of Section 12AA of the Income Tax Act, 1961.

Apart from this, evidence has been found regarding a large number of investments made in immovable properties with huge cash component attracting provisions of Section 69 (unexplained deposits) of the Income Tax Act, 1961,” the CBDT alleged.

It added that one of the colleges has diversified into the business of timber/plywood industries where evidence regarding under-invoicing has also been found.