The Income Tax department ran a major search and seizure operation on Wednesday, in a suspected case of tax evasion by big private medical colleges in Karnataka. Around 200 IT officials searched 9 major trusts registered in Bengaluru and Mangaluru, which run educational institutions including big medical colleges. According to the IT department, searches took place at 56 different locations in Karnataka and Kerala. In Bengaluru, the search and seizure operation was conducted at BGS hospital, Saptagiri hospital and Akash Institute of Medical Sciences and Research.
During the search, the IT sleuths collected evidence which suggest that these colleges have received Rs 402. 78 crore as illegal capitation fees done by manipulating the online admission process. This amount has not been disclosed to the Income Tax department, a press note adds.
Searches were also done at residential premises of the trustees which led to the seizure of Rs 15.09 crore cash, 81 kilos of gold jewellery valued at Rs 30 crore, 50 carat diamonds and 40 kg of silver articles. The source of this remains unexplained.
Further, officials have also found evidence of undisclosed foreign assets of Rs 2.39 crore in Ghana, Africa, along with huge investments in 35 luxury cars in benami names.
Further, 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 purposes by the Trustees which is clearly in violation of Sec 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 components attracting provisions of section 69 of the Income-tax Act, 1961. One of the colleges has diversified into the business of timber/plywood industries where evidence regarding under invoicing has also been found.
The search operation has resulted in detecting evidence on cash-for-seat malpractices for students to get admission to MBBS, BDS and Post Graduate 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.
There was also evidence indicating that one of the medical colleges has a sort of “package arrangement” for passing management quota students in written examination and viva voce for fixed sums ranging from Rs. 1 lakh to Rs. 2 lakh.
There is also evidence to suggest that the transparent selection process to medical colleges through National Eligibility cum Entrance Test (NEET) has been subverted by trustees and senior persons running these medical colleges by colluding with agents and brokers and some students who got high ranks in NEET.
The first stage of malpractice is that some students who got high ranks in NEET examination take admission to MBBS courses through state counselling, but who mostly have no intention of joining these colleges as they have already secured admissions or are likely to get admission elsewhere.
These students block seats in the medical stream in a Medical college during the Karnataka Examinations Authority KEA counselling process, in connivance with agents/middle men/converters (who probe services of converting the regular seats to management seats).
Subsequently these students withdraw from the admission process and thereby make these vacant seats available for the college management.
The college management can then fill these seats up through the Stray Vacancies around (seats remaining vacant or unfilled in a college after mop-up round).
In this round the seats are filled by the college management by admitting candidates who do not have the merit, after collecting huge sums as capitation fee/donations in cash. This is illegal under the Karnataka Educational Institutions (Prohibition of Capitation Fee) Act, 1984. The capitation fee or donations are collected through a network of brokers/ agents employed by the key persons or trustees of these medical colleges.